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HIGH COURT OF AUSTRALIA MAURICE BLACKBURN CASHMAN APPELLANT AND RESPONDENT Maurice Blackburn Cashman v Brown [2011] HCA 22 22 June 2011 ORDER Appeal allowed. Set aside so much of the order of the Court of Appeal of the Supreme Court of Victoria made on 25 August 2010 as answered the questions reserved for its opinion and in place thereof order that the questions reserved be answered as follows: Question 1: Do any, and if so which, of the estoppels pleaded in paragraph 1A(i) of the plaintiff's amended reply to amended defence arise? Answer: Question 2: Is this honourable court obliged to accept as final and conclusive in any trial of this action, any, and if so which, of the matters pleaded by the plaintiff at paragraph 1B(a) and (b) of her amended reply to amended defence? Answer: Question 3: Is the defendant precluded from acting in any, and if so which, of the ways claimed by the plaintiff in paragraph 1B(c) of her amended reply to amended defence? Answer: The appellant pay the respondent's costs of the appeal to this Court. On appeal from the Supreme Court of Victoria Representation M F Wheelahan SC with S A O'Meara for the appellant (instructed by Minter Ellison) P W Tree SC with S R McCredie for the respondent (instructed by Lennon Mazzeo) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Maurice Blackburn Cashman v Brown Torts – Negligence – Applicability and effect of legislation – Plaintiff alleged she had suffered injury including psychiatric injury as result of employer's negligence – Plaintiff made claim against employer pursuant to s 98C of Accident Compensation Act 1985 (Vic) ("Act") for compensation for non- economic loss – Pursuant to s 104B(9) of Act, Victorian WorkCover Authority referred questions to Medical Panel about extent of plaintiff's impairment – As result of Medical Panel finding, plaintiff deemed to have a "serious injury" for purposes of Act – As entitled under s 134AB(2) of Act, plaintiff commenced common law proceedings against employer for damages – Section 68(4) of Act provided that "[f]or the purposes of determining any question or matter", opinion of Medical Panel was to be applied by "any court, body or person" – In pleadings, employer denied plaintiff had suffered injury, loss and damage – Whether employer precluded by operation of Act from making that and other contentions in evidence or argument – Whether employer so precluded as a matter of issue estoppel. Words and phrases – "for the purposes of determining any question or matter", "serious injury". Accident Compensation Act 1985 (Vic), ss 68(4), 98C, 104B, 134AB. FRENCH CJ, HAYNE, CRENNAN, KIEFEL AND BELL JJ. The respondent to this appeal ("the plaintiff") was a salaried partner employed by the appellant firm ("the employer") in its legal practice in Melbourne. In 2007 the plaintiff commenced proceedings against the employer in the County Court of Victoria claiming damages for personal injuries she alleged she had suffered as a result of the employer's negligence. She alleged that between January and November 2003 she had been "systematically undermined, harassed and humiliated" by a fellow employee, despite complaints and requests for intervention made to the employer's managing partner, and that, as a result, she had suffered injury, including psychiatric injury. The central issue in the appeal to this Court is whether, as the Court of Appeal of the Supreme Court of Victoria held1, the employer is precluded by operation of the Accident Compensation Act 1985 (Vic) ("the Act") from making certain contentions in evidence or argument in the plaintiff's action in the County Court or is estopped from making those contentions as a matter of issue estoppel. (The question of issue estoppel was argued in, but not decided by, the Court of Appeal and is raised in this Court by the plaintiff on a notice of contention.) Both the issue decided by the Court of Appeal and the issue raised by the notice of contention should be resolved in the employer's favour. The employer is not precluded in the manner alleged by the plaintiff, whether by the Act or as a matter of issue estoppel. The appeal should be allowed. The asserted preclusions To identify the subject of the alleged preclusions it is necessary to deal first with the parties' pleadings in the County Court. By its amended defence the employer denied, among other things, that the plaintiff had suffered injury, loss and damage. The plaintiff filed an amended reply to the amended defence which joined issue with the employer and asserted that the employer was estopped from "making any assertion whether by pleading, submission or otherwise" and from "leading, eliciting or tendering evidence, whether in chief or in cross-examination or re-examination" that was inconsistent with four particular matters described in par 1A(i) of the pleading in the following terms: 1 Brumar (Vic) Pty Ltd v Norris; Brown v Maurice Blackburn Cashman [2010] VSCA 206. Hayne Crennan Bell the panel opinion; the plaintiff having, as at 28 June 2006, a serious injury as defined in s 134AB(37)(c) of the Act; the plaintiff having, as at 28 June 2006, a permanent severe mental disturbance or disorder; the plaintiff having, as at 28 June 2006, a psychological injury arising out of her employment with the defendant." In par 1B of her pleading the plaintiff described the subjects of the alleged preclusions in different terms but nothing turns on those differences. By its rejoinder the employer admitted the facts that were alleged to give rise to the preclusions but denied that it was precluded in the manner alleged. What was described in the plaintiff's reply as "the panel opinion", and each of the other matters identified in the reply as a subject of preclusion, depended upon steps that had been taken under the Act in consequence of the plaintiff notifying the employer that she claimed to have suffered "an injury arising out of or in the course of … employment"2. To explain what those matters were, and how they arose, it is necessary to trace a number of steps that were taken under the Act by the plaintiff or by others in relation to her claim. The plaintiff's claim for compensation In December 2005, the plaintiff had made a claim against the employer, pursuant to s 98C of the Act, for compensation for non-economic loss. Section 98C(1) provided for payment of compensation "in respect of an injury resulting in permanent impairment as assessed in accordance with section 91". Section 91 prescribed how the assessment of a degree of impairment of a worker was to be made. In most cases the assessment was to be made in accordance with a specified edition of the American Medical Association's Guides to the Evaluation of Permanent Impairment ("the AMA Guides") as modified by the Act and any regulations made under the Act3. In the case of psychiatric impairment the AMA Guides were modified pursuant to s 91(6), but the detail of the modifications made need not be noticed. 2 Accident Compensation Act 1985 (Vic), s 82(1). Hayne Crennan Bell The amount of compensation to be allowed under s 98C was calculated according to the particular statutory formula that was engaged. Where, as in this case, the permanent impairment that the plaintiff claimed she suffered was permanent psychiatric impairment, s 98C(3) prescribed the formula that was to be applied. The variable in the formula was "the worker's degree of impairment expressed as a number". No compensation was payable if the degree of impairment was less than 30 per cent4. One of the functions of the Victorian WorkCover Authority ("the Authority") under the Act is5 to "receive and assess and accept or reject claims the function6 of paying for compensation". "compensation to persons entitled to compensation under" the Act. It can7, and in this case did, perform those functions by an agent but it is convenient to describe the steps that were to be taken as if they were taken by the Authority. The Authority also has The plaintiff's claim under s 98C having been made, the Authority was bound8, within a limited time, to take a number of steps. So far as presently relevant, the Authority was bound to accept or reject liability for each injury included in the claim9, to obtain an assessment or assessments in accordance with s 91 of the Act as to the degree of permanent impairment (if any) of the worker resulting from the injury or injuries in respect of which liability is accepted10, to determine the degree of permanent impairment (if any) of the worker11, to s 98C(3)(a). s 20(1)(aa). s 20(1)(b). s 104B(2). s 104B(2)(a). 10 s 104B(2)(b). 11 s 104B(2)(c). Hayne Crennan Bell calculate any entitlement to compensation12, and to advise the worker of the result of each of these steps13. In February 2006, the Authority accepted that the plaintiff had a psychological injury arising out of her employment with the employer. "The panel opinion" The first of the preclusions alleged by the plaintiff in her reply was that the employer could not dispute "the panel opinion". The other preclusions alleged are to be understood as articulations of the issues that were alleged to have been decided by "the panel opinion". The reference to "the panel opinion" was to an opinion given by a Medical Panel constituted under the Act. The opinion in question was given on the date stated in other alleged preclusions: 28 June 2006. It is necessary to refer to the statutory provisions that dealt with Medical Panels and the provisions that were engaged in this case to produce "the panel opinion" referred to by the plaintiff in her reply. Division 3 of Pt III of the Act (ss 63-68) provided, among other things, for the establishment and constitution of Medical Panels14, for their procedures and powers15, for the examination of a claimant by a Panel16, and for the formation and expression by a Panel of its opinion on a medical question referred to it17. As the name "Medical Panels" suggests, all members of a Medical Panel were to be medical practitioners. The members of any particular Panel were to be drawn from a list of members appointed by the Governor in Council18. 12 s 104B(2)(e). 13 s 104B(2)(f). 18 s 63(2) and (4). Hayne Crennan Bell Section 104B(9) of the Act required the Authority "within 14 days of being advised by the worker that the worker disputes the [Authority's] determinations of impairment or total loss in respect of the injury or injuries claimed" to refer two questions "to a Medical Panel for its opinion under section 67" of the Act. Those medical questions were stated, in s 104B(9), as being: the degree of impairment assessed in accordance with section 91 resulting from the injury or injuries claimed for which liability is accepted or established; and (b) whether the worker has an injury or injuries claimed for which liability is accepted or established which is a total loss mentioned in the Table to section 98E(1)". In March 2006, pursuant to s 104B(9), the Authority referred to a Medical Panel for its opinion the following questions concerning the plaintiff: "Question 1. What is the degree of impairment resulting from the accepted injuries assessed in accordance with s 91, and is the impairment permanent? Question 2. Does the [plaintiff] have an accepted injury which has resulted in a total loss injury mentioned in the table in s 98E(1)?" It being accepted that the reference was made under s 104B(9), it may be assumed that the plaintiff had disputed the determination of her impairment that had been made by the Authority. The questions referred to the Panel took a form different from that found in s 104B(9) but both parties have at all times treated the questions as being those for which s 104B(9) provided. In June 2006, the Medical Panel provided its opinion. The answers that the Panel gave were: "Answer to question 1. The Panel is of the opinion that there is a 30% psychiatric impairment resulting from the accepted psychological injury, when assessed in accordance with s 91(2) for the purposes of s 98C and 134AB(3) & (15) of the Act. The degree impairment psychiatric permanent within the meaning of the Act. Hayne Crennan Bell Answer to question 2. The degree of impairment The Medical Panel's assessment in answering questions posed pursuant to s 104B(9), that the degree of impairment suffered by the plaintiff was 30 per cent, was significant for two reasons. First, as has already been noted, no compensation for non-economic loss in respect of permanent psychiatric impairment was to be allowed if the degree of impairment was less than 30 per cent19. Second, and of immediate relevance in this matter, because the assessment made under s 104B was 30 per cent, the injury suffered by the plaintiff was deemed20 to be a "serious injury". And because her injury was deemed to be a "serious injury" she was entitled21 to bring proceedings against her employer at common law. It is necessary to say more about this second consequence of the Panel's answers, not least because it is to be recalled that several of the preclusions alleged in this case were cast in terms that directly or indirectly referred to the definition in s 134AB of the Act of "serious injury". That is, the plaintiff alleged that the employer was precluded from making any assertion or adducing any evidence in her common law action inconsistent with her having suffered what the Act identified as a "serious injury". "Serious injury" and common law action Section 134AB(1) of the Act provided, in effect, that except "as permitted by and in accordance with" the section, a "worker who is, or the dependants of a worker who are or may be, entitled to compensation in respect of an injury arising out of or in the course of, or due to the nature of, employment on or after 20 October 1999", "shall not, in proceedings in respect of the injury, recover any damages" for non-pecuniary or pecuniary loss. Section 134AB(2) provided the exception to that prohibition which is presently relevant. It provided that: "A worker may recover damages in respect of an injury arising out of, or in the course of, or due to the nature of, employment if the injury is a serious injury and arose on or after 20 October 1999." 19 s 98C(3)(a). 20 s 134AB(15). 21 s 134AB(2). Hayne Crennan Bell Section 134AB made several different provisions concerning the subject of "serious injury". The term itself was defined in s 134AB(37). It will be recalled that one of the preclusions alleged by the plaintiff was preclusion from contending that, as at the date of the Medical Panel's opinion, the plaintiff was not in fact suffering an injury that was "a serious injury as defined in s 134AB(37)(c) of the Act". The form of "serious injury" identified in par (c) of the definition was "permanent severe mental or permanent severe behavioural disturbance or disorder". The plaintiff further alleged that the employer was precluded from contending that, as at the date of the Medical Panel's opinion, she was not in fact suffering an injury that was "a permanent severe mental disturbance or disorder". Section 134AB(38)(b) amplified what was meant by the terms "serious" and "severe" but the sub-section provided that this was "[f]or the purposes of the assessment of serious injury in accordance with sub-sections (16) and (19)" (emphasis added). Those sub-sections (directed to cases where an assessment under s 104B of the degree of impairment was less than 30 per cent) were not engaged in this matter. Section 134AB provided for five different ways in which the existence of a serious injury could be established. Of relevance to the plaintiff's claim was that provided by sub-s (15), which said: "If the assessment under section 104B made before an application under sub-section (4) is made of the degree of impairment of the worker as a result of the injury is 30 per centum or more, the injury is deemed to be a serious injury within the meaning of this section." The reference in sub-s (15) to an application under sub-s (4) may be put aside from consideration. There was no dispute in this case that the procedures required by s 134AB(4) had been followed. The other ways in which "serious injury" could be established were: under sub-s (7)(a), by the Authority (or a self-insuring employer) advising the worker, as a result of a determination under s 104B of the degree of impairment of the worker, "that the worker is deemed to have a serious injury"; or under sub-s (7)(b), by the Authority (or a self-insuring employer) issuing a certificate under s 134AB(16)(a) that it was "satisfied that the injury is a serious injury"; or Hayne Crennan Bell under sub-s (9), by the worker being deemed to have a serious injury if the Authority (or a self-insuring employer) failed to advise the worker, within a fixed time of its decision, whether the worker had a serious injury; or under sub-s (19)(a), by a court, other than the Magistrates' Court, on an application of the worker being "satisfied on the balance of probabilities that the injury is a serious injury". In the case of sub-s (19)(a), the court would give leave, under sub-s (16)(b), to the worker to bring a proceeding. The Act thus provided for the ways in which a worker would be deemed to have suffered a serious injury22, by which the Authority or a self-insuring employer could certify that it was satisfied of this fact23 and by which a court could determine whether it was satisfied of this fact24. The deeming or determination of the existence of a serious injury, once made, met the first of the two conditions for a worker to be allowed to recover damages in respect of a work-related injury prescribed by the concluding words of s 134AB(2): "if the injury is a serious injury and arose on or after 20 October 1999". If examination of the relevant provisions of the Act were to stop at this point it would readily be seen that the only fact relevant to the institution or prosecution of a common law action that related to the subject of "serious injury" was that either the Act deemed a plaintiff to have suffered such an injury, or the Authority (or self-insuring employer) or a court was satisfied of that fact. It is necessary, however, to notice two other provisions of s 134AB as it stood at the times relevant to this matter. First, sub-s (19) provided that: "For the purposes of sub-section (16)(b)— 22 s 134AB(7)(a), (9) and (15). 23 s 134AB(7)(b) and (16)(a). 24 s 134AB(16)(b) and (19)(a). Hayne Crennan Bell no finding (other than a finding that the injury is a serious injury) made on an application for leave to bring proceedings shall give rise to an issue estoppel." It will be recalled that s 134AB(16)(b) provided for a court to give leave to commence proceedings and that s 134AB(19)(a) provided that a court must not do that unless satisfied that the injury is a serious injury. The introductory words of sub-s (19), "[f]or the purposes of sub-section (16)(b)", do not sit easily with par (c) of sub-s (19). Paragraph (c) of sub-s (19) was evidently intended to look forward from the proceedings (seeking leave) with which sub-s (16)(b) dealt. Paragraph (c) of sub-s (19) "looked forward" in the sense that it was concerned with what estoppels (necessarily in proceedings other than the leave proceeding) could arise from findings made in a leave proceeding. To speak of these provisions being made for the purposes of the provision governing the leave proceeding would be apposite only if some meaning were to be given to the phrase "for the purposes of" wider than it might normally have. It is not necessary to decide in this case whether that should be done. In this case, no application for leave to commence proceedings was made or was necessary. The plaintiff was deemed by operation of s 134AB(15) to have a serious injury. It is important to notice, however, that if s 134AB(19)(c) were to be construed as speaking to proceedings other than leave proceedings brought under s 134AB(16)(b), the only estoppel that could arise from the determination of an application for leave would preclude debate about whether there was a finding that the injury in question was a serious injury25. That is, the preclusion provided by s 134AB(19)(c) would prevent a defendant in the common law proceeding from disputing that a plaintiff had met the first of the two conditions prescribed by s 134AB(2). That preclusion would not prevent the defendant from disputing whatever may have been the factual bases upon which a conclusion had been reached that the plaintiff had suffered a serious injury. The other provision of s 134AB to which reference must be made is sub-s (23). It provided: "In the trial of a proceeding brought under this section, a jury must not be informed— 25 Dwyer v Calco Timbers Pty Ltd (2008) 234 CLR 124 at 130 [11]; [2008] HCA 13. Hayne Crennan Bell of the monetary thresholds and statutory maximums specified by or under sub-section (22); or that any injury in respect of which the proceeding has been brought has been deemed, found, or required to be found, to be a serious injury; or that the Authority or self-insurer has been satisfied that the injury is a serious injury; or that the Authority or self-insurer has issued a certificate under sub-section (16)(a)." The reference, in par (b) of sub-s (23), to an injury being "found" to be a serious injury is evidently a reference to a finding made under sub-ss (16)(b) and (19)(a). Thus sub-s (23) prohibits a jury being told of such a finding. When read as a whole, sub-s (23) points strongly to the conclusion that the Act treats the steps taken under the Act before common law proceedings may be brought as wholly irrelevant to those common law proceedings. That is, the matters mentioned in sub-s (23) are not to be mentioned to the jury because they are irrelevant. Apart from sub-ss (19)(c) and (23), nothing in the provisions of s 134AB with respect to the determination or deeming of the existence of a serious injury speaks in any way to the conduct of an action brought in accordance with s 134AB(2). And the Court of Appeal did not decide to the contrary. Proceedings in the County Court In the present case, the plaintiff's action against the employer came on for hearing in the County Court before a judge (Judge Lacava) and a jury. Before a jury was empanelled, counsel for the plaintiff informed the trial judge that he would object to the employer cross-examining the plaintiff or her witnesses "in a way which suggests the plaintiff suffered no injury, or no serious injury" and that the plaintiff would also object to the employer calling evidence to that effect. Having regard to what was understood to be the then state of authority in Victoria, particularly the decision of the Court of Appeal in Pope v W S Walker & Sons Pty Ltd26, the parties asked the trial judge to reserve questions in the form of a special case for the opinion of the Court of Appeal pursuant to s 76(1) of the County Court Act 1958 (Vic). The trial judge concluded that in light of the state Hayne Crennan Bell of authority, the expected length of the trial of the action and the pendency of an appeal to the Court of Appeal against the judgment of Beach J of the Supreme Court of Victoria in the matter of Norris v Brumar (Victoria) Pty Ltd27 (which raised similar but not identical issues) it was appropriate to reserve three questions for the opinion of the Court of Appeal. Those questions were: "(1) Do any, and if so which, of the estoppels pleaded in paragraph 1A(i) of the plaintiff's amended reply to the amended defence arise? (2) Is this honourable court obliged to accept as final and conclusive in any trial of this action, any, and if so which, of the matters pleaded by the plaintiff at paragraph 1B(a) and (b) of her amended reply to amended defence? (3) Is the defendant precluded from acting in any, and if so which, of the ways claimed by the plaintiff in paragraph 1B(c) of her amended reply to amended defence?" Proceedings in the Court of Appeal The special case in the present matter was heard at the same time as the appeal against the judgment in Brumar. In the present matter, the Court of Appeal (Ashley and Mandie JJA and Ross AJA) ordered28 that the questions reserved should be answered as follows: "Question (1): Unnecessary to answer. Questions (2) and (3): The defendant is prohibited in this proceeding from – (a) making any assertion, whether by pleading, submission or otherwise; and leading or eliciting evidence, whether in evidence-in-chief, cross-examination or re-examination; 27 [2009] VSC 214. 28 [2010] VSCA 206. Hayne Crennan Bell which is inconsistent with the opinion of the Medical Panel provided on or about 28 June 2006; and in particular from making any assertion, or leading or eliciting evidence, to the contrary of the following: that the plaintiff as at 28 June 2006, suffered a permanent (in the sense of being likely to last into the foreseeable future) mental or behavioural disturbance or disorder which was severe by reference to its consequences with respect to pain and suffering and loss of earning capacity when judged by comparison with other cases in the range of possible mental or behavioural disturbances or disorders. that it was the pain and suffering and loss of earning capacity consequences of the accepted psychological injury which constituted the permanent mental or behavioural disturbance or disorder which was severe." The reasons of the Court of Appeal were delivered by Ashley JA. Those reasons dealt with both the appeal in Brumar and the special case in this matter. Ashley JA concluded29 that the questions raised by the special case in this matter were resolved by reference to the operation of s 68(4) of the Act in the context of the operation of s 134AB. Section 68(4) of the Act provided that: "For the purposes of determining any question or matter, the opinion of a Medical Panel on a medical question referred to the Medical Panel is to be adopted and applied by any court, body or person and must be accepted as final and conclusive by any court, body or person irrespective of who referred the medical question to the Medical Panel or when the medical question was referred." Two reasons were given30 for holding that the opinion of the Medical Panel "was final and conclusive". First, reference was made to the provision in s 68(4) that the opinion was "to be adopted and applied by any court, body or person and 29 [2010] VSCA 206 at [161]. 30 [2010] VSCA 206 at [163]. Hayne Crennan Bell must be accepted as final and conclusive by any court, body or person". The second reason was said to lie in s 104B(12)(a) of the Act. That sub-section provided that: "No appeal lies to any court or Tribunal from a determination or opinion— as to the degree of permanent impairment of a worker resulting from an injury". It may be noted in respect of this second consideration that the Court of Appeal of Victoria has held31 that a provision like s 104B(12) preventing an appeal from the opinion of a Medical Panel does not prevent a person dissatisfied with an opinion expressed by a Medical Panel from seeking judicial review of that opinion, whether pursuant to the Administrative Law Act 1978 (Vic) or otherwise. The plaintiff did not submit that these decisions of the Court of Appeal were wrong. It is, however, unnecessary to consider whether or to what extent the availability of such relief should be understood as qualifying a description of the Panel's opinion as "final and conclusive"32. Ashley JA concluded33 that, in her pleading, the plaintiff had expressed the effect of s 68(4) of the Act too narrowly. That being so, his Honour reframed34 the preclusions which he considered followed from the application of s 68(4) in the broader fashion ultimately incorporated in the answer given by the Court of Appeal to the second and third questions reserved. 31 Masters v McCubbery [1996] 1 VR 635 at 647-648 per Winneke P, 652 per Ormiston JA, 656-658 per Callaway JA; Lianos v Inner & Eastern Health Care Network (2001) 3 VR 136 at 141-142 [20] per Chernov JA (Tadgell and Batt JJA agreeing at 137 [1], [2]). 32 cf Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 581 [99]-[100]; [2010] HCA 1. 33 [2010] VSCA 206 at [176]. 34 [2010] VSCA 206 at [191]. Hayne Crennan Bell Section 68(4) At first sight, s 68(4) of the Act is cast in terms of very general application. Reference is twice made to "any court, body or person". But the sub-section is introduced by the expression "[f]or the purposes of determining any question or matter". Those words should not be given a literal meaning35. The meaning of the phrase that best accords with its context, and which should be adopted, is "for the purposes of determining any question or matter arising under or for the purposes of the Act". Those are the purposes for which the opinion of a Medical Panel on a medical question is to be adopted and applied and accepted as final and conclusive. Once that step is taken, it is then clear that s 68(4) does not speak at all to the litigation of questions or matters that are not questions or matters arising under or for the purposes of the Act. More particularly, s 68(4) does not speak at all to an action for damages brought by a worker against an employer. An action of that kind presents no question or matter to which the opinion of a Medical Panel could be said to relate that is a question or matter arising under or for the purposes of the Act. The action that a worker brings against an employer (commonly for the tort of negligence, but sometimes for other causes of action such as breach of contract or breach of statutory duty) is an action for a cause of action which is not one created by the Act. Each cause of action either is a common law cause of action or has its origin in a statute other than the Act. Of course, as an examination of the provisions of s 134AB of the Act shows, the worker's bringing36 of an action against his or her employer, the damages that may be awarded37 in the action, the amount of interest that may be allowed38 on damages, and even the orders that are to be made39 for costs are all regulated by the Act. And s 134AB makes frequent reference to an action which a worker may bring against an employer as one which is brought "in accordance with"40 or 35 cf Pope v W S Walker & Sons Pty Ltd (2006) 14 VR 435 at 444 [37] per Eames JA. 36 s 134AB(1) and (2). 37 s 134AB(24) and (32). 38 s 134AB(34). 39 s 134AB(28). 40 s 134AB(1), (3), (5), (11), (12), (22), (28) and (34). Hayne Crennan Bell "under"41 the Act. But none of these provisions detracts from the force of the observation that none of the causes of action on which the worker sues the employer is created by the Act. And because the relevant causes of action are not created by the Act, no question or matter arises in the action, to which the opinion of a Medical Panel could be said to relate, that can be described as a question or matter arising under or for the purposes of the Act. Nor does s 104B(12) point to any different result. It provides that there is to be no appeal against a Medical Panel's opinion. That says nothing about when a Medical Panel's opinion must be applied. To the extent to which s 68(4) provides that the opinion of a Medical Panel as to the degree of permanent impairment of a worker resulting from an injury is "final and conclusive", it is necessary to identify from some source other than s 104B(12) the purposes for which, or circumstances in which, that description is legally significant. It is only if s 68(4) is treated as applying to an action brought by a worker against the worker's employer that the description of the Panel's opinion as final and conclusive is significant to the hearing or the determination of that action. And for the reasons given, s 68(4) does not apply to a worker's action for damages against the worker's employer, there not being any question or matter in that action that is a question or matter arising under or for the purposes of the Act. As the plaintiff submitted in argument in this Court, s 134AB of the Act regulates when an action for damages may be brought by a worker against an employer. But contrary to the plaintiff's submission, once the steps required by s 134AB have yielded the result that there is either a determination or a deeming that a serious injury has been suffered, and the conditions prescribed by s 134AB have been satisfied, the prosecution of an action brought by the worker is not a matter with which the Act deals in any respect that permits or requires the application of s 68(4). Issue estoppel The conclusions reached with respect to the construction and application of s 68(4) entail the further conclusion that no issue estoppel arises out of the opinions expressed by a Medical Panel under s 104B(9) in an action later brought by a worker against the worker's employer. 41 s 134AB(23), (24) and (30). Hayne Crennan Bell It is a necessary condition for an issue estoppel to exist between parties that the decision from which the estoppel arises was a final decision42. Where, as here, the statute establishing the body in question prescribes that its decisions are final for the purposes of that Act, no greater ambit of finality should be attributed to its decisions than the Act itself marks out. Thus no estoppel arises because the quality of "finality" which the Act gives to an opinion expressed by a Medical Panel (in this case under s 104B(9)) is finality for the purposes of determining any question or matter arising under or for the purposes of the Act. No wider finality should then be ascribed to a Panel's opinion. These are reasons enough to conclude that the issue estoppels alleged in this case do not arise from the Panel's opinion. It is not necessary in these circumstances to consider the further questions agitated in argument about who should be regarded as the "parties" immediately affected by a Panel expressing its opinion, who should be regarded as a privy of those parties, or whether the opinion expressed by a Panel about degree of impairment can or should be regarded as a "decision" of some question arising between parties. Conclusion and orders The appeal to this Court should be allowed. The Court of Appeal's order answering the questions reserved for its opinion should be set aside. In place of that order there should be an order that the questions reserved be answered as follows: Question 1: Do any, and if so which, of the estoppels pleaded in paragraph 1A(i) of the plaintiff's amended reply to amended defence arise? Answer: Question 2: Is this honourable court obliged to accept as final and conclusive in any trial of this action, any, and if so which, of 42 See, for example, Blair v Curran; Curran and Perpetual Trustee Co Ltd v Blair (1939) 62 CLR 464 at 531-532 per Dixon J; [1939] HCA 23; Administration of Papua and New Guinea v Daera Guba (1973) 130 CLR 353 at 453 per Gibbs J; [1973] HCA 59; Kuligowski v Metrobus (2004) 220 CLR 363 at 373 [21], 375 [25] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ; [2004] HCA 34. Hayne Crennan Bell the matters pleaded by the plaintiff at paragraph 1B(a) and (b) of her amended reply to amended defence? Answer: Question 3: Is the defendant precluded from acting in any, and if so which, of the ways claimed by the plaintiff in paragraph 1B(c) of her amended reply to amended defence? Answer: In accordance with the undertaking given at the time of the grant of special leave, the appellant should pay the respondent's costs of the appeal to this Court. The appellant applied for an order that the plaintiff pay its costs in the Court of Appeal. This being a test case on a point of general application and the undertaking having been given, the orders for costs made by the Court of Appeal in favour of the plaintiff should not be disturbed. |
HIGH COURT OF AUSTRALIA McHUGH ACJ, SIEMENS LTD AND APPELLANT SCHENKER INTERNATIONAL (AUSTRALIA) PTY LTD & ANOR RESPONDENTS Siemens Ltd v Schenker International (Australia) Pty Ltd [2004] HCA 11 9 March 2004 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: P H Greenwood SC with I G B Roberts for the appellant (instructed by O'Reilly Sever & Co) A J Meagher SC with R J H Darke SC for the respondents (instructed by Blake Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Siemens Ltd v Schenker International (Australia) Pty Ltd Contract – Negligence – Limitation of liability – Construction and interpretation – Contract for the international carriage of goods by air – Goods damaged by negligence of carrier – Goods damaged while in transit by road outside perimeter of airport of destination – Limitation of liability clause in air waybill – Whether limitation clause in air waybill applies to carriage by road. Contract – Air waybill for international carriage of goods by air – Whether limitation clause in an air waybill applies to ground transport beyond the perimeter of the airport of destination – Services incidental to such air carriage – Whether limitation of liability must be, and was, expressed clearly to attract restriction on recovery for admitted negligence in ground transport. Carriers – Carriage by air – Warsaw Convention, Arts 18 and 22 – Guadalajara Convention, Art 2 – Civil Aviation (Carriers' Liability) Act 1959 (Cth), s 11 – Whether statutory limitation of liability applies to goods damaged outside perimeter of airport. Words and phrases – "carriage", "international carriage", "actual carrier", "contracting carrier", "air carriage", "other services incidental to such air carriage". Civil Aviation (Carriers' Liability) Act 1959 (Cth), ss 11(1), 25A, Sched 2. Customs Act 1901 (Cth), ss 40AA, 71E(1), 71(2)(a). Convention for the Unification of Certain Rules Relating to International Carriage by Air as amended at The Hague 1955 (Warsaw Convention), Arts 1, Convention, Supplementary to the Warsaw Convention, for the Unification of Certain Rules Relating to International Carriage by Air Performed by a Person Other than the Contracting Carrier, Guadalajara 1961 (Guadalajara Convention), Art 2. McHUGH ACJ. The question in this appeal is whether a limitation of liability clause in a standard form air waybill applies to the road transport of cargo to a bonded warehouse located outside the perimeter of Melbourne Airport. If the clause is applicable, the respondents' liability for damage that occurred to the appellant's goods is reduced from almost A$1.7 million inclusive of interest to US$74,680 plus interest. The specific issues raised by the appeal are: Does the limitation clause in the standard form air waybill concerning the goods apply in circumstances where the Warsaw Convention1 as amended at The Hague 19552 ("the Amended Convention") applies to the carriage in question? Does the reference to "carriage" in the limitation clause of the air waybill: (a) mean "carriage by air", as defined in Art 18 of the Amended Convention; and include other services or "other services incidental to such air carriage"? Did the air waybill continue to have contractual force after the goods were delivered to the nominated airport of destination? Statement of the case Siemens Ltd ("Siemens") sued Schenker International (Australia) Pty Ltd ("Schenker Australia") and Schenker ("Schenker Germany") for damages in the New South Wales Supreme Court as the result of damage to goods that were to be delivered by the Schenker companies to Siemens. The Schenker companies did not dispute that, as bailees of the goods, they were liable for the damage. However, they claimed the benefit of a limitation of liability provision in Art 22 of the Amended Convention or, in the alternative, cl 4 of the standard form air waybill used by the parties. 1 Convention for the Unification of Certain Rules relating to International Carriage by Air, opened for signature 12 October 1929, 137 LNTS 11 (entered into force 13 February 1933). 2 Protocol to amend the Convention for the Unification of Certain Rules Relating to International Carriage by Air signed at Warsaw on 12 October 1929, opened for signature 28 September 1955, 478 UNTS 371 (entered into force 1 August 1963). McHugh ACJ In the Supreme Court, Barrett J held3 that, while the Amended Convention applied to the carriage by air, the limitation provision did not apply to limit the compensation payable because the damage to the goods occurred outside the airport boundary. His Honour also held that cl 4 of the air waybill did not apply because that limitation only related to carriage by air where the Amended Convention did not apply4. His Honour held that, in any event, the terms of the air waybill did not extend to that part of the journey consisting of transportation from Melbourne Airport (Tullamarine) to Schenker Australia's warehouse5. The Schenker companies appealed to the New South Wales Court of Appeal which allowed the appeal. The Court of Appeal (Meagher, Sheller and Stein JJA) held that, while the Amended Convention did not apply beyond the boundary of the airport6, cl 4 of the air waybill applied to the road carriage7. Subsequently, this Court granted Siemens special leave to appeal against the decision of the Court of Appeal. Factual background and decisions below In late 1996, the Siemens group of companies ("Siemens Group") and the Schenker group of companies ("Schenker Group") had an overarching agreement (the "Richtungsverkehr" – literally "Direct Traffic") for the transportation of goods from Germany to Australia. Under that agreement, Schenker Germany undertook to deliver a consignment of telecommunications equipment from the Berlin factory of Siemens AG ("Siemens Germany") to Schenker Australia's bonded warehouse in Melbourne. Siemens had purchased the equipment from Siemens Germany on an FCA ("free to carrier") basis with the result that both property and risk passed at the FCA point. The FCA point in this case was within Tegel Airport in Berlin. 3 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 4 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 5 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 6 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at [4] per Meagher JA, [20] per Sheller JA. 7 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at [9]-[10] per Meagher JA, [36] per Sheller JA. McHugh ACJ The common understanding of the parties was that Schenker Germany and Schenker Australia would together provide all services required to transport the goods to Siemens. Schenker Germany's responsibility commenced at the German airport and ended upon unloading of the aircraft in Australia. Schenker Australia's responsibility commenced at the aircraft unloading point and continued to its bonded warehouse. Schenker Germany arranged for the equipment to be transported by road from Siemens Germany's factory to Tegel Airport in Berlin. It then arranged for Singapore Airlines to carry the goods by air from Tegel Airport8 to Melbourne Airport. To this end Singapore Airlines issued a master air waybill ("the Master Air Waybill") in respect of the cargo in the standard form of the International Air Transport Association ("IATA")9. Schenker Germany issued a house air waybill ("the air waybill") in the standard form of the Fédération Internationale des Associations de Transitaires et Assimilés (International Federation of Freight Forwarders Associations) ("FIATA") for the transportation from Tegel Airport to Melbourne Airport. The air waybill provided for limited liability under the Amended Convention or, if the Convention did not apply, under cl 4 of the waybill. Under the Richtungsverkehr, Schenker Australia was required to collect the goods at Melbourne Airport and transport them by truck for a distance of about four kilometres to the bonded warehouse, which was located outside the boundary of Melbourne Airport. The description of the consignment under the Master Air Waybill was "consolidation cargo as per att[ached] cargo manifest". Delivery of that cargo to Siemens could only be given from the bonded warehouse after the consignment had been "deconsolidated", which involved breaking up the consignment so as to identify the individual consignees, and the cargo had obtained customs clearance. At least by April 1991 Schenker Australia had received permission from the Australian Customs Service to remove consolidations of undelivered cargo from airline freight terminals within Melbourne Airport to a customs approved warehouse, which included the bonded warehouse. Customs clearance would then be obtained after the cargo had been deconsolidated. However, Schenker Australia was not permitted to deliver the deconsolidated cargo until the clearance had been given. 8 There is a dispute between the parties as to whether the trial judge's findings in this regard are accurate. The respondents argue that Singapore Airlines carried the goods from Frankfurt Airport not Tegel Airport. Ultimately, nothing turns on this issue. 9 Containing the conditions of contract contained in IATA resolution 600b. McHugh ACJ On or around 13 December 1996, Schenker Australia collected the equipment from Melbourne Airport. On 15 December 1996, shortly after the truck left the airport, some of the equipment fell from the truck as a result of the negligence of the truck driver and was damaged. Regimes governing transportation of the goods The transportation of the equipment was subject to several complementary regimes which applied to different stages of the journey. Each regime had a separate set of rules relating to liability for damage to the goods. These regimes consisted of the Richtungsverkehr, the Amended Convention, the Guadalajara Convention10, the Singapore Airlines Master Air Waybill and the air waybill. The Richtungsverkehr The commercial relationship between the Siemens Group and the Schenker Group extended back to the 19th century, at least at the level of the German parent companies. In about 1972, the parties formalised the relationship by appointing the Schenker Group as "Richtungsverkehr Spediteur Luftfracht" (roughly translated, "one-way specific airfreight forwarder") to Australia. This was an exclusive appointment of the Schenker Group as a specific freight forwarder for the Siemens Group's airfreight forwarding requirements on the Germany to Australia route. An important reason for the appointment was the ability of the Schenker Group to receive consolidated cargo for deconsolidation and temporary storage, pending release from the Australian Customs Service. Until 1986, Schenker Australia occupied a warehouse within the Melbourne Airport boundary. In 1986, it moved its warehouse out of the airport to accommodate its increased business. The effect of the Richtungsverkehr was that the Siemens Group had a standing arrangement under which it could contact the Schenker Group and have cargo transported on agreed terms and at agreed rates. In 1991, negotiations between the parent companies in Germany, Siemens Germany and Schenker Germany, produced a new agreed basis for the carriage of goods between Germany and Australia. Although the Australian subsidiaries, Siemens and Schenker Australia, were not involved in the discussions, they acquiesced in the results and were parties to the resultant contracts, which were intended to bind all four companies with respect to the various roles that they were to play. 10 Convention, Supplementary to the Warsaw Convention, for the Unification of Certain Rules Relating to International Carriage by Air Performed by a Person Other than the Contracting Carrier, opened for signature 18 September 1961, 500 UNTS 31 (entered into force 1 May 1964). McHugh ACJ A letter from Schenker Australia to Siemens, dated 5 May 1994, described the essence of the Richtungsverkehr as encompassing "a variety of services from the origin city in Germany to hand-over of the goods from Schenker stores in Australia". Further evidence of the scope of the Richtungsverkehr is contained in a letter from Schenker Germany to Siemens Germany, dated 17 January 1991, which states that the Richtungsverkehr involved costs arising from: "Receipt, handling and despatch. Transport to Frankfurt. Consolidation to Siemens 'Richtungsverkehr' including intensive separate documentation. Open freight account. Airfreight costs Frankfurt–Melbourne. Transit to customs controlled warehouse. Break bulk, physical and documentation. Information flow. Hand over in Australia to customs agent. Monthly status report, both to Siemens Melbourne and 'Vertrieb' in Germany. Interest loss through delay in payment." "Break bulk" refers to the process of deconsolidation. This correspondence shows that, under the Richtungsverkehr, the bonded warehouse was to be the end point of the transportation. The evidence does not reveal the exact legal nature and operation of the Richtungsverkehr. However, I see no reason to doubt the correctness of the following statement by Barrett J11: "It must be accepted that the 'Richtungsverkehr' arrangements, as in force from time-to-time, had contractual effect among the parties in relation to each individual consignment and its transportation according to 11 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at McHugh ACJ the roles they played in that consignment and transportation. It must also be accepted that when, in accordance with practice, a house air waybill was issued in respect of particular transportation, its terms supplemented those of the standing arrangement." (emphasis added) There was no limitation of liability provision in the Richtungsverkehr. At the trial, none of the parties disputed that the provisions of the air waybill operated "as a part of or adjunct to the overall contract"12. The trial judge's findings in this regard were not challenged in the Court of Appeal. The Amended Convention The Amended Convention offers a scheme of presumptive air carrier liability for damaged goods13 combined with a strict monetary limitation on this liability14. The Amended Convention applies to all international carriage of persons, baggage or cargo performed by aircraft for reward15. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking16. For the purposes of the Amended Convention, the expression "international carriage" means17: "any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two High Contracting Parties or within the territory of a single High Contracting Party if there is an agreed stopping place within the territory of another State, even if that State is not a High Contracting Party. Carriage between two points within the territory of a single High Contracting Party without an agreed stopping place within the territory of another State is not international carriage for the purposes of this Convention." 12 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 13 Jaycees Patou Inc v Pier Air International Ltd 714 F Supp 81 at 82 (SDNY 1989). 14 Amended Convention, Art 22. 15 Amended Convention, Art 1.1. 16 Amended Convention, Art 1.1. 17 Amended Convention, Art 1.2. McHugh ACJ By virtue of s 11(1) of the Civil Aviation (Carriers' Liability) Act 1959 (Cth), the Amended Convention has the force of law in Australia. Australia and Germany are both High Contracting Parties18. The carriage in question was "international carriage" under The parties contemplated that the carriage would be substantially performed by aircraft. It was therefore subject to the rules of the Amended Convention. the Amended Convention. Article 18 of the Amended Convention imposes liability on the carrier. It provides: The carrier is liable for damages [sic] sustained in the event of the destruction or loss of, or of damage to, any registered baggage or any cargo, if the occurrence which caused the damage so sustained took place during the carriage by air. The carriage by air within the meaning of the preceding paragraph comprises the period during which the baggage or cargo is in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever. The period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome. If, however, such a carriage takes place in the performance of a contract for carriage by air, for the purpose of loading, delivery or trans-shipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air." The carriage to which the Amended Convention applies ends, therefore, when the cargo ceases to be in the charge of the carrier or when it ceases to be within an aerodrome, whichever is the earlier. In this case, the presumption that the damage occurred during carriage by air was rebutted because the Schenker companies established that the damage occurred outside the Melbourne Airport perimeter19. Article 22 limits the amount recoverable under Art 18. Article 22.2(a) provides: 18 Australia ratified the Warsaw Convention on 1 August 1935 and the Protocol on 23 June 1959. Germany ratified the Warsaw Convention on 30 September 1933 and the Protocol on 27 October 1960. 19 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at McHugh ACJ "In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a sum of two hundred and fifty francs per kilogramme, unless the passenger or consignor has made, at the time when the package was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that the sum is greater than the passenger's or consignor's actual interest in delivery at destination." Article 31 provides that, where carriage is performed partly by air and partly by another mode of carriage, the provisions of the Amended Convention apply only to the carriage by air20, where the carriage by air falls within the terms of Art 1. The Guadalajara Convention During argument in this Court, an issue arose as to whether Schenker Germany was an air carrier for the purposes of the Amended Convention. The Guadalajara Convention, which supplements the Warsaw Convention regime in relation to international carriage by air, differentiates between a "contracting carrier" and an "actual carrier". In this case, Singapore Airlines was the actual carrier of the equipment. Schenker Germany was the contracting carrier who made the agreement for carriage with the consignor and performed part of the carriage contemplated by that agreement. Article 2 of the Guadalajara Convention confirms the application of the Amended Convention to Schenker Germany as the contracting carrier. Both Australia and Germany are parties to the Guadalajara Convention. The Convention had the force of law in both Germany and Australia21 at the time of the subject carriage. The air waybills The Amended Convention expressly provides for the use of air waybills. In this case, two air waybills operated in relation to the transportation of the equipment from Germany to Australia, the Master Air Waybill issued by Singapore Airlines and the air waybill issued by Schenker Germany. Air waybills are prima facie evidence of the conclusion of the contract, the receipt of the cargo and the conditions of carriage by air of goods22 from the place of departure to the place of destination. Master air waybills are typically issued by 20 Shawcross and Beaumont: Air Law, 4th ed, vol 1, div VII at [345]. 21 Civil Aviation (Carriers' Liability) Act 1959 (Cth), s 25A. 22 Amended Convention, Art 11.1. McHugh ACJ a carrier in respect of a consolidated consignment, with a cargo manifest detailing each consignment. House air waybills are issued by the freight forwarder to each shipper in respect of that shipper's consignment. In the absence of an air waybill, a carrier is not entitled to avail itself of the limitation of liability under the Amended Convention23. The Master Air Waybill The first of the waybills, the Singapore Airlines Master Air Waybill, was in the IATA standard form. Although Singapore Airlines' liability under the Master Air Waybill is not in issue in these proceedings, the context in which the Master Air Waybill was developed is instructive in relation to the construction of the air waybill. The IATA air waybill is a standard form document. It contains a set of General Conditions of Carriage. These are modelled on the Warsaw Convention. The conditions were developed – originally by the International Air Traffic Association – in order to provide uniformity of liability and conditions for all carriage by air24. The IATA air waybill also provides a parallel regime for carriage by air which is not covered by the Warsaw Convention regime (including the Amended Convention)25. For example, the IATA air waybill may be used in both international and non-international carriage. As the authors of Air Law note26, the Warsaw Convention regime does not apply to carriage that falls outside the definition of "international carriage". In addition, the regime does not provide a comprehensive set of rules to govern all aspects of international carriage. Accordingly, in order to extend the area covered by uniform rules, the airlines that were members of the International Air Traffic Association agreed to introduce General Conditions of Carriage and uniform documents of carriage. The first set of agreed conditions and forms was adopted in 1931. Since 1945, IATA has continued this work. IATA members are obliged to use the standard form air waybill27. The IATA waybill is also used by non-members who 23 Amended Convention, Art 9. 24 Schmitthoff's Export Trade, 10th ed (2000) at 335. 25 Samuel Montagu & Co Ltd v Swiss Air Transport Co Ltd [1966] 2 QB 306 at 316 per Salmon LJ. 26 Shawcross and Beaumont: Air Law, 4th ed, vol 1, div VII at [1162]. 27 Shawcross and Beaumont: Air Law, 4th ed, vol 1, div VII at [1162]. McHugh ACJ participate in carriage involving IATA members or who merely wish to adopt the international standards set by IATA28. The Master Air Waybill in the present case named Singapore Airlines as the carrier, Schenker Germany as the shipper and Schenker Australia as the consignee. The airport of departure was given as "Frankfurt" and the airport of destination "Melbourne Tullamarine". The Master Air Waybill noted that the cargo was "consolidation cargo" and that it was "bond delivery approved", a reference to Schenker Australia having permission to transport the cargo to a bonded warehouse prior to customs clearance. The air waybill The second waybill, the air waybill issued by Schenker Germany, was in the FIATA standard form. The FIATA standard form air waybill is modelled on the IATA standard form air waybill. Like the IATA air waybill, the FIATA air waybill contains a set of "Conditions of Contract" on the reverse side of the document. These conditions adopt the same wording as the IATA form, although the FIATA waybill contains an additional note at the foot of the reverse side. Freight forwarders use the FIATA standard form air waybill when they act as a consolidator and assume the capacity of contracting carrier, or when they act as an agent of a named actual carrier. The air waybill named Schenker Germany as carrier, Siemens Germany as shipper and Siemens as consignee. The conditions shown on the reverse of the air waybill included the following: "1. As used in this contract 'carrier' means all air carriers that carry or undertake to carry the goods hereunder or perform any other services incidental to such air carriage ... 2.1 Carriage hereunder is subject to the rules relating to liability established by the Warsaw Convention unless such carriage is not 'international carriage' as defined by that Convention. To the extent not in conflict with the foregoing, carriage hereunder and other services performed by each carrier are subject to: ... Except as otherwise provided in carrier's tariffs or conditions of carriage, in carriage to which the Warsaw Convention does not apply carriers' liability shall not exceed USD 20.00 or the 28 Schmitthoff's Export Trade, 10th ed (2000) at 335. McHugh ACJ equivalent per kilogram of goods lost, damaged or delayed, unless a higher value is declared by the shipper and a supplementary charge paid. Any exclusion or limitation of liability applicable to carrier shall apply to and be for the benefit of carrier's agents, servants and representatives and any person whose aircraft is used by carrier for carriage and its agent[s], servants and representatives. For purpose [sic] of this provision carrier acts herein as agent for all such persons. 8.1 Carrier undertakes to complete the carriage hereunder with reasonable dispatch. Carrier may use alternate carriers or aircraft and may without notice and with due regard to the interests of the shipper use other means of transportation. ... 11. Notice of arrival of goods will be given promptly to the consignee or to the person indicated on the face hereof as the person to be notified. On arrival of the goods at the place of destination, subject to the acceptance of other instructions from the shipper prior to arrival of the goods at the place of destination, delivery will be made to, or in accordance with the instructions of the consignee." The additional note at the foot of the reverse side of the document reads: "WHEN USED AS AN AIR WAYBILL ISSUED BY A FORWARDER IN A CAPACITY AS CONTRACTING CARRIER FOR AIR TRANSPORTATION THAT SHALL TRANSPORTATION TO THE AIRPORT OF DEPARTURE (AS SHOWN ON THE FACE HEREOF) DOES NOT CONSTITUTE PART OF THIS CONTRACT OF AIR CARRIAGE. AGREED, AS FAR AS THE ISSUER OF THIS AIR WAYBILL TAKES OVER THE ARRANGEMENT OR PERFORMANCE OF SUCH SERVICES, THIS IS DONE UNDER A SEPARATE CONTRACT WHICH IS SUBJECT TO THE CONDITIONS OF NATIONAL FORWARDERS ASSOCIATIONS ONLY. WHERE SUCH CONDITIONS DO NOT EXIST, COMPANY'S CONDITIONS AND THE RESPECTIVE NATIONAL AIR TRANSPORT LEGISLATION APPLY." Schenker Germany as "carrier" under the air waybill is able to rely on the limitation clause. The trial judge found that Schenker Australia, in performing its part of the carriage, was performing a function as an agent, servant or McHugh ACJ representative of Schenker Germany29. This formed the basis of a finding by Sheller JA that Schenker Australia was entitled to the benefit of cl 4 by virtue of cl 7 of the waybill30. Application of cl 4 of the air waybill In this case, the carriage in question was "international carriage" as defined by the Amended Convention. However, Barrett J found that the damage to the equipment did not occur "in an aerodrome" for the purposes of the Amended Convention31. Accordingly, the Convention's liability regime did not apply. After referring to the effect of cll 2.1 and 4 of the air waybill, his Honour said32: "The clear assumption in each of these provisions is that the carriage as a whole will or will not be within the [Amended] Convention's definition of 'international carriage' and that the carriage as a whole will or will not be carriage to which the Convention applies. No half measures are contemplated. The carriage is not regarded as consisting of segments, with some being 'international carriage' for the purposes of the Convention and others not, or with the Convention applying to some but not to others. It is all or nothing." (original emphasis) Accordingly, his Honour held that cl 4 of the air waybill did not apply unless the whole of the carriage was "carriage to which the Warsaw Convention does not apply". He concluded that, as the Amended Convention applied to the carriage in this case – although its liability regime extended only up to the point where the cargo crossed the boundary of the airport – cl 4 did not apply33. 29 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 30 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 31 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 32 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 33 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at McHugh ACJ The Court of Appeal rejected Barrett J's reasoning concerning the operation of cl 2.1. Meagher JA said34: "His Honour read into these words an intention that the airway bill [sic] did not apply unless no part of the carriage was governed by the Warsaw Convention; if the Warsaw Convention did not apply to any part of the carriage, the airway bill [sic] did. I confess to being quite unable to understand this reasoning. In truth, the Schenker companies were transferring the cargo under two régimes: one covering the route from Berlin airport to Melbourne airport, one covering the route from [Siemens'] Berlin factory to [Schenker Australia's] Melbourne bondstore. If the latter, contractual, régime [the Richtungsverkehr] is different from the former, statutory, one, it still operates to the extent it can. It thus covers the short trip from Melbourne airport to the bondhouse." Sheller JA said that cl 2.1 was consistent with that part of the carriage to be performed under the air waybill being subject to the rules relating to liability established by the Amended Convention and part of it not being so subject because it was carriage outside an aerodrome35. His Honour36 referred to a dictum of Lord Denning MR in Samuel Montagu & Co Ltd v Swiss Air Transport Co Ltd37, where his Lordship said that cl 2.1 was "just another way of saying that the carriage is subject to the rules so far as the same are applicable." Siemens contends that, as Barrett J held, cl 4 has no application to carriage by air where the carriage is governed by the Amended Convention. It contends that the circumstances in which cl 4 operates are not predicated on a failure to limit liability pursuant to the provisions of the Amended Convention. Accordingly, in this case, as the Amended Convention did apply, cl 4 was inapplicable. The Schenker companies contend that the rules of the Amended Convention applied for the whole of the carriage contemplated but that the rules concerning liability only applied during the period of "carriage by air" as defined in Art 18. Because this period ceased when the goods were taken beyond the boundary of Melbourne Airport, the rules relating to liability had no application. 34 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 35 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 36 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 37 [1966] 2 QB 306 at 314. McHugh ACJ They contend therefore that cl 4 of the air waybill operates to limit the liability of Schenker Germany. In my opinion, Barrett J correctly construed cll 2.1 and 4 of the air waybill. A combined reading of those clauses indicates that the liability regimes in the Amended Convention and the air waybill operate exclusively of each other. If the Amended Convention does not apply, cl 4 provides the relevant liability regime. Which liability regime applies is determined by reference to whether or not the carriage in question was "international carriage". It is erroneous to determine the applicability of the Amended Convention by reference to whether or not its liability provisions apply to the particular loss in question. The effect of cll 2.1 and 4 is as follows. Carriage under the air waybill is subject to the rules relating to liability in the Amended Convention unless such carriage is not "international carriage" as defined in the Amended Convention. "[C]arriage to which the [Amended] Convention does not apply" in cl 4 is, therefore, carriage which is not "international carriage". The reference to "international carriage" in cl 2.1 confirms that whether or not the carriage is "carriage to which the [Amended] Convention does not apply" in cl 4 is determined by reference to the criteria in Art 1 of the Amended Convention. Clause 4 does not refer to carriage to which "the liability provisions in" the Amended Convention do not apply. None of the cases relied on to support the reasoning of the Court of Appeal assists the Schenker companies. In one of them – Read-Rite Corporation v Burlington Air Express Ltd38 – the Court of Appeals for the Ninth Circuit held that, where the loss to the goods occurs outside the airport, the Warsaw Convention does not apply. However, Read-Rite Corporation concerned the application of federal common law, not the construction of an air waybill. The Court did not consider the effect of clauses similar to cll 2.1 and 4. In another – Samuel Montagu & Co Ltd v Swiss Air Transport Co Ltd39 – the issue was whether the limitation of liability provision in the IATA air waybill complied with requirements of Art 8(q)40 of the Warsaw Convention. In that 38 186 F 3d 1190 (9th Cir 1999); followed in Albingia Versicherungs AG v Schenker International Inc 344 F 3d 931 (9th Cir 2003). 40 Article 8(q) provides that the air waybill "shall contain ... a statement that the carriage is subject to the rules relating to liability established by [the] Convention." Article 8(q) is omitted from the Amended Convention. McHugh ACJ case, Lord Denning MR said that Art 8(q) is satisfied "if the statement says that the carriage is subject to the rules so far as the same are applicable to the carriage."41 (original emphasis) His Lordship was referring to the fact that the carriage under the air waybill "cannot be subject to all the rules relating to liability established by the Convention: for some relate to goods, others to passengers, others Danckwerts and Salmon LJJ both agreed with his Lordship. Samuel Montagu is not authority for the proposition put forward by the Court of Appeal in this case. luggage."42 (original emphasis) Accordingly, the Court of Appeal erred in finding that cl 2.1 is consistent with part of the carriage to be performed under the air waybill being subject to the rules relating to liability established by the Amended Convention. As I have indicated, the carriage in this case was "international carriage" within the meaning of Art 1 of the Amended Convention. Accordingly, the provisions of that Convention apply. As the carriage was not "carriage to which the Warsaw Convention does not apply", cl 4 of the air waybill is inapplicable. The fact that the Amended Convention's liability provisions do not apply to the particular loss in question is beside the point. In these circumstances, it is strictly unnecessary to consider the remaining issues. Nevertheless, as they raise important points, and as the Court of Appeal has dealt with them – erroneously, as I think – it is proper to discuss them. Meaning of "carriage" Barrett J held that by its terms the air waybill was confined to air carriage and did not purport to cover any land element, except where land transportation became a substitute for air carriage under cl 843. His Honour said that in cl 8 "other means of transportation" stands in contrast to "alternate carriers or aircraft", thus indicating that "the principal and expected means is transportation by air."44 His Honour found that the reference to "other services incidental to such air carriage" in the definition of "carrier" in cl 1 was confined to land elements such as loading, unloading, transhipment or other aspects directly 41 Samuel Montagu & Co Ltd v Swiss Air Transport Co Ltd [1966] 2 QB 306 at 314. 42 Samuel Montagu & Co Ltd v Swiss Air Transport Co Ltd [1966] 2 QB 306 at 314. 43 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 44 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at McHugh ACJ related to transportation by air45. Barrett J also held that the fact that either the Amended Convention or the air waybill applies exclusively to the carriage indicates that the concept of "carriage" adopted by the air waybill is intended to correspond with that under the Amended Convention46. On appeal, Sheller JA noted that cl 4 refers to "carriage" – not "air carriage"47 – and that the air waybill was not limited in its operation to carriage by air48. His Honour said49: "With due respect, it would seem to me that the definition of air carrier which includes one who undertakes to perform other services incidental to such air carriage suggests that air carriage includes the performance of services such as warehousing." The Court of Appeal held that the removal of the cargo from the airport to the bonded warehouse where delivery could be effected was a service "incidental to such air carriage"50. It also held that "carriage hereunder" could be read as applying to the carriage of goods by air and/or by other means51. Siemens contends that the Court of Appeal erred in construing "carriage" in cl 4 as having a meaning other than "carriage by air" as used in the Amended Convention. It contends that in cl 1 "air carriage" is differentiated from other services performed that are "incidental to such air carriage". Siemens submits that the reference to "carriage hereunder" in cl 2.1 is to carriage under the air 45 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 46 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 47 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 48 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 49 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 50 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at [6] per Meagher JA, [28] per Sheller JA. 51 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at [8] per Meagher JA, [29] per Sheller JA. McHugh ACJ waybill. It is more restricted than the carriage under the Richtungsverkehr. Siemens also contends that the transport of the goods to the bonded warehouse was not a service "incidental to such air carriage", as it was provided under the Richtungsverkehr, not the air waybill. It contends that services incidental to air carriage would include tasks such as loading and unloading the cargo at the airport, loading the cargo into and unloading the cargo from the aircraft and moving the cargo by truck around the aerodrome. The transportation of the equipment to the warehouse did not fall within such incidental service. The Schenker companies, in contrast, contend that cl 4 is concerned with "carriage" not "air carriage". They submit that the definition of "carrier" in cl 1 indicates that it at least extends to the performance of services that are incidental to the air carriage contracted for. This includes carriage by land performed outside an aerodrome in performance of the contract for carriage by air for the purpose of delivery. The Schenker companies contend that this interpretation is also supported by cl 8, under which the carrier may use "other means of transportation" to complete the carriage under the air waybill. Accordingly, they contend that "carriage hereunder" refers to the activities of carriage identified under the contract evidenced by the air waybill. "Carriage" is not defined in the air waybill. However, cl 1 defines "carrier" to mean "all air carriers that carry or undertake to carry the goods hereunder or perform any other services incidental to such air carriage". The references to "air carrier" and "such air carriage" in that clause indicate that the air waybill is intended to apply to air carriage. In cl 1 "air carriage" is differentiated from other services performed that are "incidental to such air carriage". Similar distinctions are made in cll 2.2 and 8.1 of the air waybill. Clause 7 provides that the limitation provisions in the air waybill also apply in relation to "any person whose aircraft is used by carrier for carriage". As an aircraft is not used for any carriage but air carriage, "carriage" in cl 7 must refer to air carriage. Taken as a whole, the various provisions of the air waybill indicate that "carriage" in cl 4 is confined to "air carriage". In that respect, the provisions of cl 2.1 of the air waybill are compelling. Clause 2.1 provides that "carriage hereunder" is subject to the liability provisions in the Amended Convention. However, a conflict arises if "carriage hereunder" means any carriage, including that which comprises both air and road segments. In such a case, cl 2.1 would render such carriage (including the road segment) "subject to the rules relating to liability established by [that] Convention". This would contradict Art 31 of the Amended Convention, which provides that the provisions of the Convention apply only to air carriage. The FIATA standard form air waybill is intended to supplement, not contradict, the Amended Convention. Accordingly, for the liability provisions in the air waybill to apply, the "carriage hereunder" must be air carriage. McHugh ACJ In my opinion, Barrett J correctly held that "services incidental to such air carriage" are confined to land elements such as loading, unloading, transhipment or other aspects closely related to transportation by air. This conclusion reflects the terms of Arts 18.2 and 18.3 of the Amended Convention. In HIH Marine Insurance Services Inc v Gateway Freight Services, however, in determining whether the holding of goods by the air carrier's agent at the destination (outside the boundary of the airport) for delivery to the consignee was a service "incidental" to air carriage, the Californian Court of Appeal (First District) said52: "It is beyond question that a contract for air carriage embraces the responsibility to hold the goods at the destination for delivery to the consignee. The proper delivery of the goods is as essential as the transportation itself." However, HIH Marine Insurance Services is not a persuasive precedent in the present case. While the delivery of cargo outside an airport may constitute a service incidental to the air carriage in some contexts – as the Californian court found in HIH Marine Insurance Services – such a delivery cannot be subject to the limitations in cl 4 because delivery outside the airport is not "air carriage" within the terms of cl 1. In this case, as Siemens contends, the delivery was not incidental to the air carriage because it arose under the Richtungsverkehr, not the air waybill. The Court of Appeal relied upon three authorities – Read-Rite Corporation v Burlington Air Express Ltd53, Aerofloral Inc v Rodricargo Express Corporation54 and Quantum Corporation Ltd v Plane Trucking Ltd55 – in support of its holding that delivery outside the airport was carriage for the purpose of cl 4. But these authorities are of little assistance in determining the issues in this case. 52 HIH Marine Insurance Services Inc v Gateway Freight Services 116 Cal Rptr 2d 893 at 899 per Swager J, Stein APJ and Marchiano J agreeing (Cal App 1 Dist 53 186 F 3d 1190 (9th Cir 1999). 54 756 So 2d 234 (Fla App 3 Dist 2000). 55 [2001] 2 Lloyd's Rep 133. Reversed on appeal in Quantum Corporation Inc v Plane Trucking Ltd [2002] 1 WLR 2678; [2003] 1 All ER 873. McHugh ACJ In Read-Rite Corporation v Burlington Air Express Ltd56 the damage to the goods occurred at a freight facility outside Heathrow Airport, prior to the goods being transported by air from Luxembourg to San Francisco. The limitation clause in the master air waybill was in the same form as the present air waybill. Although the Court of Appeals held that the air waybill did apply in such circumstances, the Court did not consider the construction issues that arise in the present appeal. As noted above, the issue before the Court was the enforceability of the air waybill under United States federal common law, rather than the waybill's applicability to the circumstances of the case. In Aerofloral Inc v Rodricargo Express Corporation57, cargo was lost at a warehouse located almost a mile from Miami International Airport before the air carriage commenced. The air waybill used by the parties contained a limitation of liability provision in the same terms as the present air waybill. The majority of the District Court of Appeal of Florida, Third District, Goderich and Ramirez JJ, indicated that the warehousing of goods for carriage was a service "incidental to such carriage" as contemplated by the definition of "carrier" in the air waybill58. They remitted the case to the trial court to consider whether the warehousing fell within the word "carriage". Green J, dissenting, said that it was not disputed that the cargo was not "in carriage" at the time it was lost59. Accordingly, the limitation provision did not apply. On the remitter, the trial judge held that the cargo was not in carriage at the time it was lost because the carton had been opened by United States Customs for inspection and was no longer ready for transport. This decision was affirmed on appeal60. In Quantum Corporation Ltd v Plane Trucking Ltd61 the issue was whether a contract for the carriage of goods from Singapore to Dublin, under which goods were flown from Singapore to Paris and then trucked from Paris to Dublin, could be characterised as a contract for the carriage of goods by road to 56 186 F 3d 1190 (9th Cir 1999). 57 756 So 2d 234 (Fla App 3 Dist 2000). 58 Aerofloral Inc v Rodricargo Express Corporation 756 So 2d 234 at 235 (Fla App 3 Dist 2000). 59 Aerofloral Inc v Rodricargo Express Corporation 756 So 2d 234 at 236 (Fla App 3 Dist 2000). 60 Aerofloral Inc v Rodricargo Express Corporation 798 So 2d 756 (Fla App 3 Dist 61 [2001] 2 Lloyd's Rep 133. Reversed on appeal on another point in Quantum Corporation Inc v Plane Trucking Ltd [2002] 1 WLR 2678; [2003] 1 All ER 873. McHugh ACJ which the Convention on the Contract for the International Carriage of Goods by Road62 applied. The relevant air waybill expressly provided that the transportation of the cargo from Paris to Dublin was to be by road. In the present case, the air waybill simply refers to the airport as the place of destination. The relevant limitation provision in Quantum Corporation Ltd was contained in the air carrier's conditions of contract. Accordingly, Tomlinson J did not consider whether the limitation provision in the air waybill would have been applicable. The air waybill's contractual force following delivery of the cargo to Melbourne Airport At first instance, Barrett J held that the parties' intention as objectively manifested determined the point at which the carriage referred to in the air waybill concluded63. His Honour said that, in discovering that intention, it must be borne in mind that the air waybill was used in the context of the wider Richtungsverkehr64. He held that what he termed the "umbrella contract" provided for a continuum of services, with individual contractual relationships arising between different parties in relation to different aspects of the transportation of any individual consignment65. His Honour concluded that the air waybill did not extend to the part of the journey consisting of the transportation from Melbourne Airport to Schenker Australia's warehouse, even though it was included in the Richtungsverkehr66. In the Court of Appeal, Meagher JA said that under the air waybill the place of destination was Melbourne and delivery was to be made to Siemens at Schenker Australia's warehouse. His Honour said that under cl 4 the carrier 62 Opened for signature 19 May 1956, 399 UNTS 189 (entered into force 2 July 63 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 64 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 65 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 66 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at McHugh ACJ remained liable for the goods during the period they were in its charge or the charge of its agent67. Meagher JA concluded68: "In these circumstances, I fail to see how the airway bill [sic] was not either a contract or evidence of a contract whereby the Schenker companies came to take the goods to its bondhouse for delivery to [Siemens]. In particular, I cannot see how the contract could be construed as one which involved [Schenker Australia] in no duties at all once the goods arrived at Tullamarine airport." Sheller JA acknowledged that delivery to the warehouse was not expressed in the air waybill but said that "the parties had agreed that the goods would be available for collection and the carrier or its agent would deliver them at the under bond warehouse"69. His Honour said that the parties had no choice in the matter as the cargo was consolidation cargo and therefore was required to be moved by Schenker Australia from the freight terminal to the warehouse before it could be delivered70. Siemens conceded that it was not possible for the parties to agree for the goods to be collected from the carrier at any earlier or different point in the transportation. Sheller JA said71: "To effect delivery in accordance with the [air waybill] and the instructions of the shipper, the carrier was bound to arrange for the goods to be carried to the under bond warehouse and therefore bound within the meaning of cl 1 to perform a service incidental to the air carriage. That was part of the contract evidenced by the [air waybill]. With due respect there is no sound basis for treating the [air waybill] as evidencing a contract which terminated before delivery to the consignee at the point where the goods crossed the boundary at Melbourne airport." 67 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 68 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 69 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 70 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 71 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at McHugh ACJ Siemens contends that nothing in the evidence suggests that the parties intended that the provisions of the air waybill would apply beyond the nominated "Airport of Destination" stated on the front of the waybill. Rather, the air waybill shows that the parties intended for it to conclude at Melbourne Airport. Siemens contends that the instruction to deliver the goods, upon arrival at Melbourne Airport, into the possession of a land carrier for conveyance to another location and preparation for collection was given as part of the Richtungsverkehr before the air waybill was issued. It submits that the Court of Appeal wrongly assumed that such instructions could extend the operation of the air waybill beyond the nominated destination. The Schenker companies submit that the air waybill did not cease to have contractual effect when the consignment passed beyond the boundary of the airport. They argue that the parties contemplated and agreed that delivery would take place at the bonded warehouse, not the airport. It was to be effected following deconsolidation of the cargo and the obtaining of customs approval for the release of the goods to Siemens' customs agent. This was in accordance with a longstanding course of dealing and was at least in part dictated by practical constraints upon dealings with consolidated cargo. In my opinion, the contention of Siemens is correct. As noted above, cl 11 of the air waybill provides that: "[o]n arrival of the goods at the place of destination, subject to the acceptance of other instructions from the shipper prior to arrival of the goods at the place of destination, delivery will be made to, or in accordance with the instructions of the consignee." Clause 11 does not identify "the place of destination". It is clearly the "Airport of Destination" given on the front of the air waybill. The word "to" in the phrase "delivery will be made to" indicates that the issue is how and to whom delivery is to be made at the place of destination, not where the delivery is to be made. Clause 11 gives effect in practical terms to the provisions of Arts 12 and 13 of the Amended Convention72. Those Articles refer to the delivery of the cargo to "the place of destination". This indicates that cl 11 also contemplates delivery to the place of destination indicated on the face of the air waybill – in this case, Melbourne Airport. Moreover, the instructions concerning delivery to the bonded warehouse were given under the Richtungsverkehr not the air waybill. If the parties had intended that the terms of the air waybill were to extend to the delivery to the warehouse, clear words would surely have been used in the air waybill, as 72 Shawcross and Beaumont: Air Law, 4th ed, vol 1, div VII at [1164]. McHugh ACJ occurred in Jaycees Patou Inc v Pier Air International Ltd73. In that case, the air waybill provided for door to door delivery from France to the plaintiff in the United States. It included separate lines and fees for air shipment and land transportation. The air waybill was therefore evidence of the entire contract for transportation. In the present case the parties could have indicated on the air waybill the bonded warehouse for deconsolidation and customs clearance. A stamp to this effect, such as the "bond delivery approved" stamp on the face of the Master Air Waybill, may have been sufficient. However, they did not take this step, and the air waybill must be construed according to its terms. to be delivery there was that The Schenker companies made much of the fact that the cargo could only be delivered from the warehouse following deconsolidation and customs clearance. But this does not mean that under the air waybill Siemens impliedly gave instructions for the delivery of the goods to the warehouse. Clause 2.2.1 of the air waybill provides that carriage thereunder and other services performed by each air carrier are subject to "applicable laws ..., government regulations, orders and requirements". This does not mean that the permission granted under the Customs Act 1901 (Cth) (and the restrictions on the release of goods prior to clearance by the Australian Customs Service) so operated as to include the delivery to the bonded warehouse within the ambit of the air waybill. Clause 2.2 is prefaced by the words "[t]o the extent not in conflict with the foregoing". If cl 2.2 is interpreted to mean that delivery to the bonded warehouse was within the ambit of the air waybill, it would conflict with the preceding provisions of the waybill – including cl 2.1 – concerning the applicability of the liability provisions of the Amended Convention. As I have indicated, land transportation does not fall within the meaning of "air carriage" and therefore the Amended Convention would not apply. Order In my opinion, the appeal should be allowed. 73 714 F Supp 81 (SDNY 1989). Callinan GUMMOW, CALLINAN AND HEYDON JJ. This is an appeal from the orders of the Court of Appeal of New South Wales74 allowing in part an appeal from the orders of the primary judge75. The facts The facts giving rise to the appeal may be shortly stated. In December 1996, the appellant, Siemens Ltd ("Siemens Australia"), purchased a large consignment of telecommunications equipment valued at $1,657,234.33 from its German parent company, Siemens AG ("Siemens Germany"). The equipment was obtained by Siemens Australia in order to meet a contract between Siemens Australia and Telstra Corporation Ltd ("Telstra") for the supply and delivery of a synchronous digital hierarchy transmission system required for a Telstra installation in Western Australia. The equipment was purchased on an FCA ("free to carrier") basis, meaning that, as between seller and purchaser, the property and risk passed at the "FCA point", being in this case the airport of departure, Tegel Airport, at Berlin. Transport of the equipment from Germany to Australia was organised by the second respondent, Schenker International Deutschland GmbH ("Schenker Germany"). The consignment was consolidated with cargo from other customers of Schenker Germany and forwarded by Schenker Germany to Tullamarine Airport ("Tullamarine"), the journey from Frankfurt am Main to Tullamarine being on Singapore Airlines flights SQ7387 and SQ7294. After arriving at Tullamarine on 13 December, the consignment was collected by an employee of the first respondent, Schenker International (Australia) Pty Ltd ("Schenker Australia"), on 15 December and placed on a truck in readiness for its delivery to the Schenker Australia bonded warehouse some four kilometres from Tullamarine's main gate. However, as a result of the negligence of the truck driver employed by Schenker Australia, a portion of the consignment fell off the truck in transit and was damaged. The accident occurred after the truck had left Tullamarine but prior to its arrival at the Schenker Australia warehouse. The litigation By summons filed in the Supreme Court of New South Wales, Siemens Australia sought damages, interest and costs from Schenker Australia and Schenker Germany (together, "the Schenker Companies"). The Schenker 74 Schenker International (Australia) v Siemens Ltd [2002] NSWCA 172. 75 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469. Callinan Companies did not dispute their liability for the accident. However, they sought to limit that liability by reference to the Convention for the Unification of Certain Rules relating to International Carriage by Air as amended at The Hague ("the Warsaw Convention"), as incorporated into Australian law by Sched 2 of the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("the Carriers' Liability Act"), and, in the alternative, by reference to the house air waybill ("the waybill") issued by Schenker Germany in relation to the consignment. The primary judge (Barrett J) rejected the applicability of the limitation provisions contained in both the Warsaw Convention and the waybill and found the Schenker Companies jointly and severally liable to Siemens Australia in the amount of $1,688,059.50 including interest. The Court of Appeal (Meagher, Sheller and Stein JJA) agreed with the primary judge's holding that the Warsaw Convention did not apply. However, their Honours held that the terms of the waybill governed the rights and obligations of the parties with respect to the accident and that this included the limitation on liability contained in cl 4 of the waybill. The Court of Appeal set aside the orders of Barrett J and, in lieu thereof, entered judgment for Siemens Australia in the limited amount of $US74,680 plus interest. Siemens Australia now appeals to this Court. Two primary issues arise: first, whether the Warsaw Convention, as incorporated into Australian law by the Carriers' Liability Act, applies to limit the liability of the Schenker Companies; and, secondly, whether the limitation of liability clause contained in the waybill issued by Schenker Germany in respect of the consignment applies. As will appear from these reasons, the first question should be answered in the negative and the second in the affirmative, with the result that the appeal should be dismissed. Richtungsverkehr – "Direct Traffic" However, before considering these issues it is convenient to outline in further detail the contractual arrangements pursuant to which the consignment left Germany and arrived in Australia. The starting-point is the commercial relationship then in existence between Siemens Germany and Schenker Germany known as the "Richtungsverkehr" (literally, "Direct Traffic"). That relationship appears to have commenced at some point in the nineteenth century and has seen Schenker Germany regularly act as a carrier of goods for Siemens Germany. Evidence before the primary judge suggested that the subsidiary companies of Siemens Germany and of Schenker Germany were permitted to take advantage of the relationship between their parent companies when desired. No doubt the terms of the Richtungsverkehr have been regularly re-negotiated over the last century or more. Less certain, however, is the precise legal basis on which that arrangement is founded. The parties before this Court Callinan were able to provide little in the way of assistance in that regard. Nor were they able to point to a single document setting out the specific and current terms upon which consignments made under the Richtungsverkehr were to be transported. However, both parties relied upon a letter dated 17 January 1991 from Mr W Gruber of the Schenker Germany head office in Frankfurt to Mr A Damm of Siemens Germany. That letter was written in the context of a re-negotiation of the rates charged by Schenker Germany in respect of cargo carried between Germany and Australia. Mr Gruber sought to justify a refusal on Schenker Germany's part further to reduce its standard rate as follows: "[Schenker Germany] have to recover from the margin [the] following cost factors – Receipt, handling and despatch. Transport to Frankfurt. Consolidation to Siemens 'Richtungsverkehr' including intensive separate documentation. Open freight account. Airfreight costs Frankfurt – Melbourne. Transit to customs controlled warehouse. Break bulk, physical and documentation. Information flow. Hand over in Australia to customs agent. Monthly status report, both to Siemens Melbourne and 'Vertrieb' in Germany. Interest loss through delay in payment." In submissions to this Court, each party relied upon the items listed by Schenker Germany in the above letter, in conjunction with the applicable monetary rate for the consignment, as evidencing the terms of the Richtungsverkehr currently agreed between the parties. Callinan Given the limited specificity of the evidence, it is not surprising that the primary judge approached the matter at a level of some generality76: "It must be accepted that the 'Richtungsverkehr' arrangements, as in force from time-to-time, had contractual effect among the parties in relation to each individual consignment and its transportation according to the roles they played in that consignment and transportation. It must also be accepted that when, in accordance with practice, a house air waybill was issued in respect of particular transportation, its terms supplemented those of the standing arrangement." For present purposes, it is sufficient to accept his Honour's analysis of the contractual underpinnings of the additional observation that the terms of the standing arrangement must be taken to reflect the statements contained in the 17 January 1991 letter set out above. It will be necessary to return to the terms of the standing arrangement when construing the waybill later in these reasons. the Richtungsverkehr, with Warsaw Convention Article 1.1 of the Warsaw Convention provides that the Convention applies to "all international carriage of persons, baggage or cargo performed by aircraft for reward" (emphasis added). For the purposes of the Convention, "international carriage" is relevantly defined to mean77: "any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two High Contracting Parties or within the territory of a single High Contracting Party if there is an agreed stopping place within the territory of another State, even if that State is not a High Contracting Party". Both Germany and Australia are High Contracting Parties to the Warsaw Convention. Although the evidence indicates that the consignment was first flown to Frankfurt prior to its departure from Germany, Art 1.3 of the Warsaw Convention provides that carriage to be performed by several successive air carriers is deemed to be one undivided carriage if it has been regarded by the 76 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 77 Warsaw Convention, Art 1.2. Callinan parties as a single operation. It follows that the carriage of the consignment was "international carriage" within the meaning of the Convention. Accordingly, it is necessary to consider whether the limitations on liability contained in the Warsaw Convention apply in the present case. Those limitations are contained in Ch III which is headed "LIABILITY OF THE CARRIER". The starting-point is Art 18.1 read in the light of the introductory provision in Art 1.1 which speaks of carriage by aircraft. Article 18.1 provides that: "The carrier is liable for damages sustained in the event of the destruction or loss of, or of damage to, any ... cargo, if the occurrence which caused the damage so sustained took place during the carriage by air." Where the damage sustained took place during "carriage by air", the liability of the carrier is prima facie limited to the sum of 250 francs per kilogramme of the cargo damaged, irrespective of the monetary value of that cargo78. Where damage to a portion of a consignment affects the value of part of the consignment that has remained undamaged, the weight of that undamaged cargo may also be taken into account79. The critical phrase in Art 18.1 is "carriage by air". In Art 18.2 that phrase is defined as follows: "The carriage by air within the meaning of [Art 18.1] comprises the period during which the baggage or cargo is in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever." This definition and, in particular, the phrase "whether in an aerodrome or on board an aircraft" appears implicitly to deny the application of the liability regime contained in the Warsaw Convention in respect of damage occurring outside an aerodrome but in circumstances where the cargo remains in the charge of the carrier, other than in the case of landing outside an aerodrome. That construction of Art 18.2 is made express by the statement in Art 18.3 that80: 78 Warsaw Convention, Art 22.2(a). 79 Warsaw Convention, Art 22.2(b). 80 In the present case, the Court is not concerned with the rebuttable presumption contained in the second sentence in Art 18.3. That is because the location and cause of the damage sustained to the consignment is not in doubt. Callinan "[t]he period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome". What is meant by "outside an aerodrome" in this context? The primary judge held that the phrase should be interpreted to mean the physical boundary of Tullamarine, as identified by reference to the definition of "airport site" in s 5 of the Airports Act 1996 (Cth) in conjunction with reg 1.03 and Pt 1.12 of Sched 1 of the Airports Regulations 199781. That approach was adopted with approval by the Court of Appeal. It was not argued by the Schenker Companies that it was incorrect. It follows that the regime established by the Warsaw Convention does not apply to limit the liability otherwise arising as a result of the damage sustained to the consignment. The waybill the The waybill relied upon by the Schenker Companies was issued by Schenker Germany on 9 December 1996. The waybill is in a standard form International Federation of Freight Forwarders recommended by Associations. Several parties are identified on the form: the "Shipper" as Siemens Germany; the "Consignee" as Siemens Australia; the "First Carrier" as "SQ", being the code for Singapore Airlines; and the "Issuing Carrier" as Schenker Germany. Clause 7 of the waybill provides that any limitation of liability applicable to the carrier shall apply to, and be for the benefit of, the carrier's agents, servants and representatives. Although Schenker Australia is not identified as a party to the waybill, the primary judge accepted that Schenker Australia was acting as the agent of Schenker Germany during the accident and was, therefore, able to take advantage of the waybill to the extent it applied to the accident by virtue of cl 782. His Honour also accepted that a sub-bailment or 81 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 473, 477. "Airport site" is defined in s 5 as "a place that is: (a) declared by the regulations to be an airport site; and (b) a Commonwealth place; and (c) used, or intended to be developed for use, as an airport (whether or not the place is used, or intended to be developed for use, for other purposes)". 82 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at Callinan sub-contract arose when Schenker Australia took possession of the cargo at Tullamarine83. Both aspects of his Honour's decision were upheld by the Court of Appeal. Neither aspect of his Honour's decision was challenged before this Court. Accordingly, it is unnecessary to determine the scope of the so-called Himalaya84 clause found in cl 7 of the waybill. A printed statement on the front of the waybill provides that the goods described in the waybill are accepted in apparent good order and condition for carriage, and that carriage is subject to the conditions of contract on the reverse of the waybill. The reverse of the waybill sets out a variety of information. A statement at the head of the page is introduced by the words "NOTICE CONCERNING CARRIERS' LIMITATION OF LIABILITY" and reads: "If the carriage involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable and the Convention governs and in most cases limits the liability of the carrier in respect of loss, damage, or delay to cargo to 250 French gold francs per kilogramme, unless a higher value is declared in advance by the shipper and a supplementary charge paid if required." However, as noted earlier in these reasons, the articles of the Warsaw Convention summarised in that statement do not apply to the damage sustained in the present case. Beneath that statement is a set of provisions entitled "CONDITIONS OF CONTRACT". The Schenker Companies rely upon cl 4 of those conditions. Clause 4 provides: "Except as otherwise provided in carrier's tariffs or conditions of carriage, in carriage to which the Warsaw Convention does not apply carriers' liability shall not exceed USD 20.00 or the equivalent per kilogram of goods lost, damaged or delayed, unless a higher value is declared by the shipper and a supplementary charge paid." Four preliminary points may be noted. First, the waybill does not contain a choice of law clause. Secondly, no point was taken against the proposition that the governing law of the waybill for present purposes is the common law of Australia as modified by federal and State legislation. Thirdly, "carrier" is 83 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 84 See Adler v Dickson [1955] 1 QB 158; New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd [1975] AC 154; Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd (1980) 144 CLR 300. Callinan defined in cl 1 of the waybill to mean "all air carriers that carry or undertake to carry the goods hereunder or perform any other services incidental to such air carriage". That definition should be taken to encompass both the First (or actual) Carrier, being Singapore Airlines, and the Issuing (or contracting) Carrier, Schenker Germany. Such a construction is consistent with the two carriers identified on the front of the waybill and is reinforced by the articles of the Guadalajara Convention85, which provide that the Warsaw Convention applies in its terms to both actual carriers and contracting carriers. The Guadalajara Convention has been incorporated into Australian law by virtue of s 25A and Sched 3 of the Carriers' Liability Act. Fourthly, the terms of cl 4 of the waybill are made subject to the "carrier's tariffs or conditions of carriage". Perhaps because of the difficulties encountered by the parties in identifying with particularity the documentation evidencing those tariffs and conditions in the present case, neither side now seeks to rely on any such tariffs or conditions of carriage when construing cl 4. The construction of cl 4 The primary point of difference between the parties is the extent to which cl 4 has an operation in respect of events occurring beyond the boundaries of the airport of destination nominated as the place for delivery in the waybill; in this case, Tullamarine. Siemens Australia submits that the waybill operates only in respect of "carriage by air" within the meaning of the Warsaw Convention. Given the conclusion reached earlier in these reasons that the Warsaw Convention did not apply to the consignment once it had left the geographical boundaries of Tullamarine, acceptance of Siemens Australia's submission would result in the absence of an applicable limitation clause upon which the Schenker Companies could rely. The primary judge adopted a variation of these submissions. His Honour held that the waybill was "confined to air carriage" and, with an exception not now relevant, did not purport to cover any "land element"86. Critical to his Honour's reasoning was the relationship between cl 4 and cl 2.1. The latter provides that: 85 Supplementary to the Warsaw Convention, for the Unification of Certain Rules Relating to International Carriage by Air Performed by a Person Other than the Contracting Carrier, Guadalajara 1961. 86 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at Callinan "Carriage hereunder is subject to the rules relating to liability established by the Warsaw Convention unless such carriage is not 'international carriage' as defined by that Convention." Clause 2.1, when read with cl 4, was said to evidence an assumption that the carriage "as a whole" will, or will not, fall within the Warsaw Convention's definition of "international carriage". In other words, the waybill, including cl 4, would only operate in circumstances where the entire carriage performed pursuant to that waybill did not fall within the Convention. Given that the Convention applied prior to the point in time at which the consignment was removed from the boundaries of Tullamarine, cl 4 could not be relied upon by the Schenker Companies. This was so notwithstanding that, at the point in time at which the consignment was damaged, the operation of the Convention was spent. The Schenker Companies dispute that construction of the waybill. In their submission, the waybill must be read in conjunction with the terms of the Richtungsverkehr and, in particular, the requirement that the consignment would be transported from Tullamarine to the bonded warehouse of Schenker Australia. It is said to follow that the waybill in the present case continued to operate in its terms at least until delivery to the warehouse had taken place and, as a result, applied to the damage sustained to the consignment en route. The submissions of the Schenker Companies should be accepted. The limitation of liability contained in cl 4 is only available in respect of "carriage". "Carriage" is not defined in the waybill. However, as noted earlier, "carrier" is defined to mean any air carrier which undertakes to carry goods pursuant to the waybill "or perform any other services incidental to such air carriage". Siemens Australia relies on the emphasised phrase as supporting its contention that "carriage" within the meaning of cl 4 is limited to carriage by air. However, several factors suggest a different construction. First, as noted earlier in these reasons, cl 4 itself operates only in respect of carriage to which the Warsaw Convention does not apply. In so providing, the waybill contemplates a disjunction between carriage to which the Convention applies (international carriage by air) and carriage which is governed solely by the terms of the waybill itself. It must follow that "carriage" in cl 4 has a meaning different from that contained in Art 18 of the Warsaw Convention. Secondly, the definition of "carrier" relied upon by Siemens Australia speaks of the carriage of goods "hereunder", ie pursuant to the terms of the waybill. Importantly, the terms of the waybill provide for the transportation of goods other than through carriage by air. This is made clear by cl 11, which provides as follows: Callinan "Notice of arrival of goods will be given promptly to the consignee or to the person indicated on the face hereof as the person to be notified. On arrival of the goods at the place of destination, subject to the acceptance of other instructions from the shipper prior to arrival of the goods at the place of destination, delivery will be made to, or in accordance with the instructions of the consignee. If the consignee declines to accept the goods or cannot be communicated with, disposition will be in accordance with instructions of the shipper." (emphasis added) In the present case, the terms of the Richtungsverkehr appear to have included the transportation of the consignment to Schenker Australia's bonded warehouse. So much is suggested by the 17 January 1991 letter set out earlier in these reasons. Evidence from Mr Jones, the shipping officer at Siemens Australia, was to similar effect. In a statement filed on behalf of Siemens Australia, he noted: "With the subject shipment, as with all shipments carried by [Schenker Germany] from [Siemens Germany] the destination point of the carriage agreed with [Schenker Germany] was the deconsolidation point in Australia, which meant either a Schenker Australia warehouse or another customs bonded store. To the best of my knowledge, deconsolidation always took place in a bonded store away from the airport. That occurred with the subject shipment where it was then made available for pick up by [Siemens Australia] or our agent." to [Siemens Australia], It follows that delivery to the Schenker Australia bonded warehouse was contemplated by Siemens Germany, the Schenker Companies and, most importantly, Siemens Australia in its capacity as consignee. Thirdly, the statutory regime in effect at the time of the consignment's arrival at Tullamarine permitted no other possibility. Evidence before the primary judge indicated that Schenker Australia was permitted by an officer of the Australian Customs Service ("Customs"), from at least April 1991, to transport consolidated cargo for deconsolidation without being required to submit that cargo to customs inspections prior to its removal from the airport. That permission was sought because Schenker Australia lacked facilities to deconsolidate cargo within the boundaries of Tullamarine after 1986 due to the change in location of its bonded warehouse. The permission, which was in evidence, included a condition which provided: from Tullamarine its warehouse "Goods must be moved direct and without delay to the specified premises and not, except with the specific approval of the relevant Collector, be Callinan delivered into home consumption pursuant to a Customs Entry, prior to their arrival at those premises." The permission to which this condition attached was granted pursuant to s 40AA of the Customs Act 1901 (Cth) ("the Customs Act"). Sub-sections (1) and (3) of that section stated87: (1) A Collector88 may give permission in writing to a person specified in the permission to remove goods of a kind specified in the permission that are subject to the control of the Customs from a place so specified to another place so specified and, until the permission is revoked, the permission is authority for the person to remove goods of that kind that are subject to the control of the Customs accordingly. Permission under sub-section (1) … may be given subject to the condition that the person to whom the permission is given complies with such requirements as are specified in the permission, being requirements that, in the opinion of the Collector, are necessary for the protection of the revenue of the Customs or for the purpose of ensuring compliance with the Customs Acts." 87 Section 7 of the Customs and Excise Amendment Act 1982 (Cth) was to amend s 40AA of the Customs Act to allow the Governor-General to make regulations governing the permission regime. The section was to commence by proclamation but no date for proclamation was ever fixed. Consequently, those amendments never entered into force and s 40AA remained as it appears above until its repeal in 88 "Collector" was relevantly defined as any principal officer of Customs or any officer doing duty in the matter in relation to which the expression is used: s 8(1)(a). Callinan Section 40AA was repealed prior to the events giving rise to this appeal89, but there is no dispute that an equivalent regime existed at the time of the accident and was to be found primarily in s 71E of the Customs Act90. Moreover, it appears to have been accepted by all parties that an equivalent condition to that in evidence was contained in the permission given to 89 See s 8 of the Customs and Excise Legislation Amendment Act 1992 (Cth). 90 The relevant provisions of s 71E were as follows: "(1) Where particular goods, or goods of a particular kind, are, or after their importation will be, subject to Customs control, application may be made to Customs, by document or by computer, in accordance with this section, for permission to move those goods, or goods of that kind, or to move them after their importation, to a place specified in the application. (2) A documentary movement application must: (a) be made by the owner of the goods concerned; and (b) be communicated to Customs by giving it to an officer doing duty in relation to import entries or to the movement of goods subject to Customs control. (3) When an application is communicated to Customs under subsection (2) … an officer of Customs must, by notice in writing in respect of a documentary movement application under subsection (2) ... (a) give the applicant permission to move the goods to which the application relates in accordance with the application either absolutely or subject to such conditions as are specified in the notice; or (b) refuse the application and set out in the notice the reasons for that refusal. (3A) A person to whom a permission has been given under subsection (3) must not, without reasonable excuse, move the goods to which the permission relates otherwise than in accordance with the permission." Callinan Schenker Australia by an officer of Customs, pursuant to s 71E of the Customs Act, and relied upon in relation to the damaged consignment. Accordingly, Schenker Australia was prohibited from delivering the consignment to Siemens Australia at any stage prior to the consignment's arrival at Schenker Australia's bonded warehouse and inspection there by Customs officers. In this context, a portion of cl 2.2 of the waybill is important. This states: "2.2 To the extent not in conflict with the foregoing, carriage hereunder and other services performed by each carrier are subject to: 2.2.1 applicable laws (including national [Warsaw] Convention), government requirements". laws the implementing regulations, orders and The result is that, on the proper construction of the waybill, the damage sustained to the consignment in the course of complying with requirements necessary in order to effect delivery of that consignment fell within the terms of cl 4 of the waybill. It should be noted that such a conclusion does not render the waybill inconsistent with the Warsaw Convention. As noted earlier, Art 18.3 of the Convention acknowledges that performance of a contract of carriage by air may involve "carriage" by land performed outside the geographic confines of the airport of destination. In those circumstances, the Convention rules relating to liability do not apply and, in their place, those of the waybill will be engaged until the point in time at which delivery may be effected to the consignee under the laws in force in the country of destination. Authorities in other jurisdictions The Schenker Companies sought to support their construction of the waybill by reference to several United States and United Kingdom decisions. Of most relevance in the present circumstances are two decisions of the United States Court of Appeals of the Ninth Circuit. The first is Read-Rite Corporation v Burlington Air Express Ltd91. In that case, a consignment of cargo to be transported by air from England to San Francisco was damaged en route to Heathrow Airport. An air waybill apparently in terms similar to the one presently under consideration was in force between the relevant parties. The 91 186 F 3d 1190 (1999). Callinan Court of Appeals accepted that, because the consignment had been damaged outside the perimeter of the airport of departure, the Warsaw Convention as it operates in the United States did not apply92. As a result, the limitation clause contained in the relevant air waybill applied, subject to compliance with "federal common law" restrictions on the enforceability of liability limitation provisions93. Leaving aside that latter consideration, the analysis in Read-Rite is consistent with, albeit not determinative of, the construction of the waybill adopted above. However, it should be noted that the waybill used by the parties in the present case provides on its reverse that when used as an air waybill issued by a freight forwarder in a capacity as contracting carrier for air transportation it is agreed that transportation to the airport of departure (as shown on the face of the waybill) does not constitute part of the contract of air carriage. That provision would strengthen the reasoning in Read-Rite. Read-Rite was followed by a differently constituted Court of Appeals for the Ninth Circuit in Albingia Versicherungs AG v Schenker International Inc94. There, the Court was required to determine whether the primary judge had erred in concluding that federal common law95 applied when determining the enforceability of a limitation clause contained in an air waybill issued by the Schenker company. In so doing, the Court proceeded on the basis that the theft of a consignment of electronic equipment owned by a Siemens company while at the Schenker San Francisco warehouse prior to the consignment's departure to Singapore fell within the terms of the limitation clause contained in the waybill96. The terms of that limitation clause did not differ in material respects from those presently under consideration. 92 186 F 3d 1190 at 1194 (1999). 93 186 F 3d 1190 at 1198-1199 (1999). "Federal common law" is used here to identify one of those areas of law which survives the general application of State law in federal jurisdiction required by the decision of the United States Supreme Court in Erie Railroad Co v Tompkins 304 US 64 (1938). See Wright and Kane, Law of Federal Courts, 6th ed (2002) at 413-424. 94 344 F 3d 931 (2003). 95 The federal common law rule is (344 F 3d 931 at 939 (2003)) that "the limit on liability is valid and enforceable if the shipper has reasonable notice of it and a fair opportunity to purchase the means to avoid it". 96 344 F 3d 931 at 939-940 (2003). Callinan Conclusion The appeal should be dismissed with costs. Kirby 105 KIRBY J. This appeal concerns a limitation clause said to apply to contractual dealings between the parties. It presents a problem that would ordinarily be solved by reference to the intentions of the parties, ascertained objectively. The interest of the case arises from the way in which the contest is affected by the interaction of Australian law with the provisions of international law governing the liability of air carriers and the terms of a printed contract ("the air waybill") upon which the parties are taken to have agreed. The ultimate issue to be decided is whether a clause in the agreement extends beyond "international carriage" of cargo by air so as to import into the broader dealings between the parties a restriction on liability calculated not by reference to the value of cargo lost but by reference to the cargo's weight. The facts Loss by negligence: On 15 December 1996 an employee of Schenker International (Australia) Pty Ltd ("Schenker Australia") negligently drove a vehicle in Melbourne in such a way as to dislodge one of two pallets carrying valuable telecommunications products ultimately destined for Siemens Ltd ("Siemens Australia"). The products on the dislodged pallet were destroyed. As a consequence, the products on the accompanying pallet were effectively rendered inoperative and irreparable97. As a result of the negligence, Siemens Australia sued for damages and was awarded approximately A$1.69 million including interest in respect of its loss98. Decision at trial: The loss occurred outside the perimeter of the Melbourne Airport at Tullamarine in Victoria99. The negligence of Schenker Australia and, through it, of its principal, Schenker International Deutschland GmbH ("Schenker Germany"), was not disputed. On the face of things, therefore, Siemens Australia, which was awaiting the cargo from its parent company Siemens AG ("Siemens Germany"), was entitled under Australian law to recover its full loss from the Schenker companies. So, at the trial in the 97 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 98 Siemens Ltd v Schenker International (Australia) Pty Ltd (No 2) [2001] NSWSC 99 The loss was found to have occurred somewhere en route between the main gate of the Melbourne Airport at Tullamarine and a Schenker Australia warehouse located approximately 4 kilometres by road from the airport: Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 470 [1]. Kirby Supreme Court of New South Wales before the primary judge (Barrett J)100, it did. Reversal on appeal: The judgment at trial was reversed by the New South Wales Court of Appeal101. That Court upheld the appeal of the Schenker companies. It set aside the judgment for Siemens Australia and substituted a judgment in favour of that company in the sum of US$74,680. That judgment rested on a finding by the Court of Appeal that, in the circumstances of the loss, the Schenker companies were entitled to invoke a limitation clause appearing in an air waybill issued by Schenker Germany (as carrier) to Siemens Germany (as shipper) and to Siemens Australia (as consignee). The critical issue: Now, by special leave, Siemens Australia appeals to this Court seeking restoration of the judgment recovered at trial. It submits that the limitation clause in the air waybill had no application to the liability of the Schenker companies at the time of the negligence, being limited by its terms to the liability of a "carrier", in the sense of an "international carrier" by air. The liability of the international air carriage, was, according to the latter, governed not by the air waybill but by the terms of normal contractual arrangements that related to road transport after delivery of the cargo to the Melbourne Airport, being the airport of destination of the "carriage" named in the air waybill. Siemens Australia argued that there was no agreed limitation of liability applicable to these wider contractual arrangements. to Siemens Australia, outside the Schenker companies The agreement between the parties The parties' contractual arrangements: Further facts relevant to the resolution of this appeal are set out in the reasons of the other members of this Court102. Those reasons contain an analysis of the broader contractual dealings between the Siemens companies and the Schenker companies, both in Germany and Australia. The air waybill concerned but one aspect of those arrangements. Remarkably enough, the evidence at trial showed that Siemens Germany had dealt with Schenker Germany since the nineteenth century when the latter began providing transport services for Siemens' products. As might be expected, 100 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469. 101 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172. See reasons of McHugh ACJ at [5], [39]-[40], [48]-[49], [62]-[64]. 102 Reasons of McHugh ACJ at [6]-[36]; reasons of Gummow, Callinan and Heydon JJ ("the joint reasons") at [72]-[87]. Kirby in a relationship extending over such a long time, the terms of the legally enforceable rights and obligations of the parties were not all spelt out with precision. They were described by reference to an arrangement encapsulated in the German language by the noun Richtungsverkehr103. Some objective evidence of the terms of the relationship between the companies emerged from exchanges of correspondence that occurred between the German companies in 1991 when the Siemens companies questioned Schenker Germany's charges. This caused Schenker Germany to spell out, in some detail, the full range of the services that it provided. Schenker Germany was at pains to emphasise that those services went far beyond the international carriage of cargo by air. They included various services before and after such carriage from places in Germany to places in Australia. the other reasons104. judge accepted A broader ambit of dealings: Some of the foregoing correspondence is set out the The primary Richtungsverkehr commenced at the uplift of the Siemens products at various Siemens factories in Germany, and proceeded through the performance by the Schenker companies of their "variety of services" until the ultimate "hand-over of the goods from Schenker stores in Australia"105. By necessary inference, the terms of the contractual arrangements governing the rights of the Siemens companies and the duties of the Schenker companies extended beyond those apt to be governed by the law relating to the international carriage of cargo by air and contractual documents (such as an air waybill) drawn to govern the international air "carriage" aspect of the relationship. that It is important to understand this background of dealings between the parties in order to appreciate the conclusion reached by the primary judge concerning the contractual terms governing the parties once the international carriage of cargo by air was complete. He found that such "carriage" was concluded when the cargo left the perimeter of the aerodrome of Melbourne Airport. At the time the cargo was lost and damaged, it was on its way, beyond that airport, to a warehouse of Schenker Australia in pursuance of the wider Richtungsverkehr arrangements provided by the Schenker companies to their Siemens clients. According to Siemens Australia, the "carriage", in the sense of 103 Literally "direct traffic" or more colloquially "directed traffic services". 104 Reasons of McHugh ACJ at [14]; joint reasons at [79]. 105 Letter from Schenker Australia to Siemens Australia of 5 May 1994 quoted by the primary judge: Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 479-480 [35]. Kirby the international air carriage mentioned in the air waybill, was over. The limitation provision appearing in that document was inapplicable. The Warsaw Convention on international air carriage The Convention and legislation: Set out elsewhere106 are relevant terms of the Convention for the Unification of Certain Rules Relating to International Carriage by Air, as amended at The Hague in 1955107. The Convention so amended (which, in deference to the style adopted in the joint reasons, and at some sacrifice to accuracy, I shall call "the Warsaw Convention") is Sched 2 to the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("the Carriers' Liability Act"). By that Act, the Warsaw Convention, so defined, is given the force of law in Australia "in relation to any carriage by air to which the Convention applies"108. Both to secure Australia's compliance with the terms of the Warsaw Convention and doubtless to ensure the unquestioned validity of the Carriers' Liability Act under the Constitution109, the Carriers' Liability Act adheres closely to the terms of the Warsaw Convention. The Convention itself contains in Art 22(2)(a) a severe limitation on the "liability of the carrier" of cargo, as defined. It does so, save for an immaterial exception, in every case to which the Warsaw Convention applies. Had that article of the Warsaw Convention been applicable to the liability of the Schenker companies to Siemens Australia, the recovery of the latter would have been limited to the equivalent of 250 francs per kilogram. Presumably, the original idea behind such a limitation, calculated by reference to the weight of the cargo, was that weight, rather than value, was the prime determinant of the cost of the international carriage of cargo by air and thus of the financial return to the air carriers involved. Weight was thus made the determinant of the liability of air carriers with respect to the loss of the cargo that they carried by air. The Convention did not apply: At trial, the Schenker companies invoked the limitation provision of the Warsaw Convention. That defence had to be considered first by the primary judge. This was because, as he pointed out, if the 106 Reasons of McHugh ACJ at [18]-[23]; joint reasons at [81]-[83]. 107 Done at Warsaw on 12 October 1929, amended at The Hague on 28 September 1955, 1963 Australia Treaty Series 18. 109 Constitution, s 51(xxix). See The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 129-132, 172, 231-232, 262-264. Kirby Convention limitation applied, it governed not only the amount of recovery but also specified the basis of the liability of the Schenker companies110. The primary judge concluded that the Warsaw Convention did not apply to the "carriage" at the time of the loss of the goods belonging to Siemens Australia111. He reached that view on the basis that the liability regime created by the Warsaw Convention had no application beyond the perimeter of the Melbourne Tullamarine "aerodrome"112. The Court of Appeal unanimously upheld this conclusion113. So now do the other members of this Court. On the supposed application of the Warsaw Convention the primary judge was clearly correct. In this respect I agree with the reasons of McHugh ACJ and with the joint reasons. Reliance on the contractual limitation: Beaten down by unanimous conclusions against the argument based on the Warsaw Convention (which Meagher JA described as having been pressed on the Court of Appeal without "over much enthusiasm"114), the Schenker companies filed no notice of contention in this Court to assert the application of the Warsaw Convention. Instead, they concentrated their arguments on an alleged contractual limitation which they traced to cl 4 of the air waybill. In this way, that clause became the only potential source of the limitation in issue115. It follows that the ascertainment of its meaning and application presents the critical point of divergence between the primary judge and the Court of Appeal which this Court must resolve. 110 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 111 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 112 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 477 [23] referring to the Warsaw Convention, Art 18.2. 113 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at [4] per Meagher JA, [20] per Sheller JA, [40] per Stein JA. 114 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 115 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at Kirby The limitation clause in the air waybill The terms of cl 4: Although cl 4 of the applicable air waybill116 is set out in the other reasons, I will repeat it because it is determinative. I will add a little emphasis: "Except as otherwise provided in carrier's tariffs or conditions of carriage, in carriage to which the Warsaw Convention does not apply carriers' liability shall not exceed USD 20.00 or the equivalent per kilogram of goods lost, damaged or delayed, unless a higher value is declared by the shipper and a supplementary charge paid." It may be accepted that the air waybill became part of the contractual arrangements between Schenker Germany and the Siemens companies. It did so both by its terms and by the course of dealings between the two corporate groups. Siemens Australia did not deny this. The contest between the parties concerned the ambit of the air waybill and whether, like the Warsaw Convention itself, it was confined to the international carriage by air to which it refers and was thus limited in operation to the perimeter of the aerodrome117. The Schenker companies submitted that the air waybill extended more generally, so as to become part of the terms of the more extensive contractual dealings between the parties, namely the Richtungsverkehr. In short, the air waybill defined the rights and obligations of the Schenker companies in relation to the Siemens companies beyond the rights and obligations defined by the Warsaw Convention and therefore applied to the transport service being performed when the loss occurred. Arguments for incorporation: A quick reading of the conditions of contract in the air waybill might lead to the conclusion reached by the Court of Appeal and now by a majority of this Court. On the face of the air waybill, the "carrier" is nominated as Schenker Germany and the address of the "first carrier" is given as Berlin-Tegel Airport. In the Conditions of Contract, cl 1 states that: "As used in this contract 'carrier' means all air carriers that carry or undertake to carry the goods hereunder or perform any other services incidental to such air carriage". The delivery of goods beyond the aerodrome might be regarded, in the context of the Richtungsverkehr, as "services incidental to such air carriage". On 116 The respective terms and operation of the Master Air Waybill and the House Air Waybill are explained in the reasons of McHugh ACJ at [25]-[36]. The latter is modelled on the former. 117 Air waybill, cll 1, 2.1. Kirby this footing, the incorporation of the limitation provisions of cl 4 of the conditions of contract into the broader contractual arrangements between the parties appears relatively simple. Although the Warsaw Convention did not "apply" to the "carriage" in question, arguably, cl 4 was broad enough to expand the limitation upon carriers' liability. Schenker Germany was such a "carrier". Schenker Australia was, in this respect, its agent. Accordingly, so the argument ran, the protection which Schenker Australia failed to obtain under the Warsaw Convention was picked up by the incorporation, in the contractual conditions binding the parties, of the limitation expressed in cl 4 of the air waybill. In support of the appeal to the contractual terms, the Schenker companies pointed to cl 11. Upon one view, that clause anticipates the extension of the conditions of contract contained in the air waybill to activities and places beyond the perimeter of the aerodrome: "Notice of arrival of goods will be given promptly to the consignee … On arrival of the goods at the place of destination, subject to the acceptance of other instructions from the shipper prior to arrival of the goods at the place of destination, delivery will be made to, or in accordance with the instructions of the consignee." If this provision envisaged delivery outside the perimeter of the aerodrome (as was argued to be the case because of the location of the warehouse of Schenker Australia at some distance from the aerodrome in Melbourne), the obligation of "delivery" contemplated by the air waybill meant, so the Schenker companies submitted, delivery at least to the warehouse of Schenker Australia. This was what was happening when the negligence occurred that led to the loss for which Siemens Australia sued. It thus occurred during "carriage" within cl 4. It followed that the limitation contained within that clause applied. The contrary view: Most questions involving the interpretation of disputed documents lend themselves to differing outcomes, at least by the time they reach a final court118. Because I agree with the primary judge, I must explain the considerations that have led me to differ from the Court of Appeal and from the majority in this Court. 118 News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 77 ALJR 1515 at 1524 [42] per McHugh J; 200 ALR 157 at 168; Maroney v The Queen (2003) 78 ALJR 51 at 62 [61]; 202 ALR 405 at 420. Kirby The meaning of cl 4 of the air waybill The context – an air waybill: Lord Steyn has remarked, with only a little overstatement, that in the law "context is everything"119. The task before this Court is to ascertain and declare the contractual terms governing the parties at the time of the negligence of Schenker Australia. Despite their earlier exchange of correspondence, directed to exactly what the Schenker companies did for the Siemens companies, no express mention was made there of any limitation of liability with respect to the activities of the Schenker companies beyond the international air carriage of cargo. The only way that the limitation in cl 4 of the air waybill could be incorporated as a limitation of liability otherwise attaching to the services offered by the Schenker companies, before and after the "international carriage" of the cargo by air, was by the incorporation of cl 4. Did this occur? The context argues against such incorporation. The limitation clause exists in a special agreement described as an air waybill. Ostensibly, it was concerned with air carriage and specifically "international carriage" by air. So much appears clear from the repeated references throughout the air waybill to the "Warsaw Convention". The concern, and only concern, of that Convention is with "international carriage"120, relevantly of cargo, by air. On the face of things it would therefore be an odd place to find a condition, limiting the liability of the Schenker companies for their many other services beyond the international carriage of cargo by air, in a clause of a printed document addressed to a particular and limited aspect of the dealings between the parties. Moreover, as Schenker Germany had been at pains to emphasise in the exchange of correspondence, the aspect of the relationship with the Siemens companies that involved carriage by air was but a small portion of the wider services that it offered. When given a chance to explain those services, Schenker Germany said nothing about the incorporation of a special condition limiting liability for those wider services. Ordinarily, in a business context, one would therefore infer that the normal rules of legal liability would attach to such wider services. This would leave the limitation of liability in cl 4 to apply only to the "international carriage" by air. Closer analysis of the air waybill and of the contractual relations between the parties might possibly result in a contrary conclusion. However, there was nothing in the evidence at trial about the Richtungsverkehr that suggested an 119 R (Daly) v Secretary of State for the Home Department [2001] 2 AC 532 at 548 120 Air waybill, cl 2.1. Kirby express agreement to a limitation of liability beyond the "international carriage" to which the air waybill was primarily addressed. To obtain such a result, therefore, the Schenker companies were forced to rely upon a view of the operation of the air waybill derived from the terms of a condition contained in a document whose general character and purpose would not necessarily alert a party to the wider ambit now postulated. These considerations lead me to approach the Schenker companies' arguments with considerable caution. Purpose of the air waybill: Contested words must never be construed in isolation. They take their meaning from their context and purpose. The air waybill is not simply another written agreement between parties that happen to be involved, incidentally, in the "international carriage" of cargo by air. The existence of the air waybill is contemplated by several provisions of the Warsaw Convention. It is the standard agreement for the international carriage of cargo by air referred to in that Convention. Section 3 of Ch II of the Warsaw Convention (Arts 5-16) is headed "Air Waybill". It contains detailed provisions governing the availability, contents and consequences of an air waybill for the purposes of the Convention. Each party to the carriage of cargo (carrier and consignor) has the right under the Convention to require the making and acceptance of such a document121. In the absence of an air waybill, or if, although provided, it does not contain certain information, a "carrier" is not entitled to avail itself of the provisions of the Warsaw Convention limiting its liability122. By the terms of the Convention, the air waybill is prima facie evidence of the conclusion of the contract, of the receipt of the cargo and of the stated conditions of carriage123. A clear objective of such provisions in the Warsaw Convention was to secure certainty and uniformity, relevantly in relation to the international carriage of cargo by air. As an incident of that purpose, an air waybill that conformed to the Convention could provide the specified limitation of liability to a carrier engaged in the "international carriage" of cargo124. In the years since its establishment, the International Air Transport Association ("IATA") has prepared standard form air waybills125, drafted to give 121 Warsaw Convention, Art 5.1. 122 Warsaw Convention, Art 9. 123 Warsaw Convention, Art 11.1. 124 Warsaw Convention, Art 22. 125 D'Arcy, Murray and Cleave, Schmitthoff's Export Trade: The Law and Practice of International Trade, 10th ed (2000) at 335-336 [17-020]; Shawcross and (Footnote continues on next page) Kirby effect to the objectives of the Warsaw Convention. Such air waybills have been designed to apply to all situations of carriage by air. These include cases where the Warsaw Convention applies (that is, international carriage by air between the territory of states parties to the Convention). But the IATA standard air waybill is also designed to apply to cases of air carriage where the Warsaw Convention is not engaged (for example, in the domestic carriage of cargo by air or in international carriage of cargo by air that is not between places within the territories of two states parties to the Convention)126. This understanding of the purpose of the standard air waybill helps to explain why the term relevant to "carriage" contemplates application to "other services"127, not being "carriage" as defined in the Warsaw Convention. Principally, such "other services" were designed to cover air carriage (or any authorised substitute for air carriage), relevantly, of cargo. As befitted its integration with the Warsaw Convention, the air waybill was not, therefore, designed to govern transport or other arrangements not carried out by air. On the contrary, the IATA air waybill, such as that issued by Schenker Germany to the Siemens companies in the present case, was intended to provide uniformity of liability and conditions for all forms of carriage by air128. The air waybill was drafted to recognise the reality that, in a particular case, parts (or the entirety) of an international carriage of cargo by air might fall outside the Warsaw Convention129. As the primary judge pointed out, even the most cursory glance at the air waybill in question in this case indicates that its provisions and purposes were moulded to conform to the Warsaw Convention130. Beaumont: Air Law, 4th ed (2003), vol 1, div VII at [1162]. See also International Federation of Freight Forwarders Associations, The Air Waybill Recommended by FIATA for Use by Freight Forwarders, (1996), par 1.1. 126 Samuel Montagu & Co Ltd v Swiss Air Transport Co Ltd [1966] 2 QB 306 at 316 per Salmon LJ. 127 Air waybill, cl 1. 128 Goldhirsch, The Warsaw Convention Annotated: A Legal Handbook, (2000) at 569. See also Shawcross and Beaumont: Air Law, 4th ed (2003), vol 1, div VII at 129 By involving a domestic or internal (non-"international") carriage or by involving carriage between the territory of non-states parties to the Warsaw Convention or the territory of a non-state party and one of the "high contracting parties". See Warsaw Convention, Art 18. 130 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at Kirby By express provision of the Warsaw Convention "[t]he period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome"131. In such circumstances, it would be unsurprising to conclude that a standard form air waybill, designed to provide for air carriage of cargo, was limited in its purpose and application and generally inapt for operation to a wider range of services happening between the parties. In particular, the references to the Warsaw Convention in cll 1, 2.1 and 4 of the conditions of contract in the subject air waybill indicate that that air waybill is confined to air carriage except for the identified instances where land transportation occurs as a substitute for air carriage. Such substitution is contemplated by the reference in cl 8.1 of the air waybill to the exceptional use by the carrier of "other means of transportation". In the context, the only possible ground transportation to which the air waybill therefore applied was (1) ground transportation within the aerodrome which was part of the international carriage by air; and (2) ground transportation as a substitute for air carriage for part of the carriage otherwise to be performed by air132. Analysis of air waybill's terms: With these contextual considerations in mind, I now turn to the language of the subject air waybill. Close examination of it supports the Siemens companies' submission that the mention of "carriage" in cl 4 of the conditions applies only to carriage by air. The starting point is to notice that cl 1 draws a distinction between those who perform the relevant tasks of carrying ("air carriers") and those who may also provide "other services". The clause states (with emphasis): "As used in this contract 'carrier' means all air carriers that carry or undertake to carry the goods hereunder or perform any other services incidental to such air carriage". The critical word is "such". The "carriage" with which the air waybill is concerned is, and is only, "air carriage". Unsurprisingly, the language of the conditions gives effect to this meaning. "Carriage" in this document ordinarily means "air carriage". 131 Warsaw Convention, Art 18.3. 132 Warsaw Convention, Art 18. For passenger, baggage and cargo transportation involving short journeys it is not uncommon for air carriers in certain places to substitute ground transportation, particularly to avoid delays in adverse weather conditions or following missed connections. The context of cl 8.1 of the air waybill supports this construction, being concerned with the use of alternative carriers, alternative routing and other means of transportation. Kirby In cl 2.1 a definition of "carriage" is given. The purpose is made clear by the opening words, "[c]arriage hereunder". By this phrase, the drafter indicates that, whenever "carriage" is used in the air waybill, it is to take the meaning indicated in cl 2.1. Very clear language would be required to expand, or alter, this express definition. Further, the words used are only really apt to apply to air carriage. The distinction in cl 2.1 between carriage subject to the Warsaw Convention and otherwise is not between air carriage and carriage by truck, car, ship, barge, horse, camel or donkey. It is between "international carriage" by air as defined by the Warsaw Convention and other "carriage" by air which, by the terms of the Convention, is outside its application. Carriage within the airport ("aerodrome") whether on board the aircraft or during loading or unloading, presenting or removing, is treated as part of "international carriage" within the Convention. In order to provide a clear rule governing the ambit of the application of the Convention, the perimeter of the aerodrome is fixed as the criterion. Of its very nature, as invariably in Australia, this will normally be a defined and secure place. As the Convention applies only to carriage by air to, from and within that space, it is unsurprising that the air waybill, designed to give effect to the Convention, is similarly so confined. Whilst it is true that the Convention contemplates that provision might be included in an air waybill for conditions of carriage by modes other than carriage by air133, any such condition must be incidental, and subject, to those regarding the "carriage by air". This alone is governed by the provisions of the Convention and then only in the case of "international carriage" as there defined134. The statement in cl 2.1 of the air waybill that "[c]arriage hereunder" is subject to the Warsaw Convention is obviously a reflection of Art 8(q) of the original Warsaw Convention. That sub-article specifies that the air waybill must contain a statement that the "carriage" is subject to the rules relating to liability established by the Convention. In such a context, the word "carriage" in the air waybill could only mean air carriage by reason of Art 31135. It follows that cl 2.1 in the air waybill, by its reference to "carriage", refers, and refers only, to air 133 Warsaw Convention, Art 31.2. The permission is subject to observance of provisions of the Warsaw Convention as regards the carriage by air. 134 Warsaw Convention, Art 1.2. 135 Warsaw Convention, Art 31.1 provides: "In the case of combined carriage performed partly by air and partly by any other mode of carriage, the provisions of this Convention apply only to the carriage by air, provided that the carriage by air falls within the terms of Article 1." Kirby carriage. If it were intended to refer to other forms of carriage by the many alternatives that are possible, or to other activities in the vast range of potential interaction between a carrier and its customers, a different, clearer and supplementary condition would have been included in the air waybill. Its purpose is to provide a mirror image of the terms of the Warsaw Convention. The air waybill in issue in this appeal does this. Still further support for this confined use of the notion of "carriage" is given by the distinction drawn in cll 1 and 2.2 of the air waybill between "carriage" and "other services". Movement of the goods by road beyond the perimeter of the aerodrome could be such an "other service". But in so far as the conditions of the contract in the air waybill referred to the notion of "carriage", it was addressed to carriage by air. Once this definition of "carriage" is adopted, the meaning of that word, appearing in the limitation clause (cl 4), becomes clear. Its purpose is to address "carriage" to which the Warsaw Convention does not apply, that is, air carriage outside the category of "international carriage", as defined, which enlivens the Warsaw Convention136. Confirmation that this is the intended scope of cl 4 of the air waybill is provided by internal evidence within the clause. It provides a limitation of liability ("shall not exceed USD 20.00 or the equivalent per kilogram of goods lost, damaged or delayed") approximately equivalent to the limitation provided by the Convention (Art 22.2(a)). It would be understandable for the air waybill to provide by contract such a limitation of liability upon analogous activities of air transport which fell outside the Convention regime because the "carriage" in question, although by air, was not covered (being domestic air carriage or international air carriage between the territory of states that were not parties to the Warsaw Convention or between one state that was and another that was not a party to the Convention). For the imposition of liability with respect to the myriad transport and other activities beyond the perimeter of the aerodrome, one would expect a more variable and discerning criterion of liability. Such a criterion would take into account the duration, distance, circumstances and mode of the transport and other services involved. These considerations reinforce the conclusion, derived from the language of cl 4 in the air waybill, that it is concerned, and concerned only, with air carriage. The primary judge was correct to so conclude. He was therefore right to hold that cl 4 did not, by its terms, extend to impose a contractual limitation of 136 Warsaw Convention, Art 1.2. Kirby liability on Siemens Australia for loss caused by the negligence of Schenker Australia's truck driver outside the aerodrome137. This conclusion makes it unnecessary to consider whether, had cl 4 applied to the contractual relationship between Schenker Germany and the Siemens companies, Schenker Australia was entitled to its benefits, directly or by derivative means138. The Court of Appeal erred in disturbing the primary judge's conclusion. Conclusion – limitation inapplicable: Nothing in the language of cl 4 of the conditions of contract in the air waybill, understood in its context and having regard to its purposes, casts doubt upon this conclusion. The "Airport of Destination" identified on the face of the document was the airport at Melbourne: a designation that confirms the limitation of the subject "carriage" to that contemplated by the Warsaw Convention by reference to the air carriage. Pursuant to cl 11 of the air waybill, delivery might well be beyond the boundary of the airport ("aerodrome"). In the case of Schenker Australia, its warehousing arrangements virtually required this as a matter of fact. But such facts, peculiar to this case, say nothing about the scope of the limitation on liability provided in cl 4. It was confined to "carriage" as defined. For the reasons given, that activity, in this context, was limited to air carriage. In its terms, the clause thus had no application to carriage of goods by truck outside the aerodrome. To such carriage, in default of a specific and additional limitation or exception clause, the ordinary law of liability for negligence applied. Consistent application of international standard terms The rule of international comity: Is the foregoing interpretation of the ambit of cl 4 inconsistent with any consideration of similar provisions in air waybills by courts of other countries? In the interests of international comity139 and the consistent interpretation of documents having a source in an international 137 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 138 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 481 [41] referring to Life Savers (Australasia) Ltd v Frigmobile Pty Ltd [1983] 1 NSWLR 431. 139 See Brownlie, Principles of Public International Law, 6th ed (2003) at 28. Kirby treaty, it is appropriate to take any contrary opinions into account so as to promote a generally consistent approach to common transborder problems140. The approach of comity is the settled attitude of this Court in such instances141; and so of other Australian courts142. The primary judge was correct to tackle the two issues before him in this way143. The Court of Appeal did likewise144. It represents a sensible adaptation of the common law in the construction of disputed language appearing in international treaties and domestic legislation giving them effect and in instruments drafted for related purposes. The approach adopted is similar to that applying to legal divergences within a federation145. International case law certainly lent support to the conclusion, now reached at each level in the disposition of this case by Australian courts, concerning the inapplicability of the limitation of liability provided in the Warsaw Convention to the negligence of the carrier occurring in road transport 140 Sturley, "International Uniform Laws in National Courts: The Influence of Domestic Law in Conflicts of Interpretation", (1987) 27 Virginia Journal of International Law 729 at 731-746. See also Mankiewicz, "Conflicting Interpretations of the Warsaw Air Transport Treaty", (1970) 18 American Journal of Comparative Law 177 at 183. 141 Shipping Corporation of India Ltd v Gamlen Chemical Co A/Asia Pty Ltd (1980) 147 CLR 142 at 159; De L v Director-General, NSW Department of Community Services (1996) 187 CLR 640 at 675, 687-688; Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (1998) 196 CLR 161 at 176 [38], 186 [71], 213 [137]; cf Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 at 240, 294. 142 SS Pharmaceutical Co Ltd v Qantas Airways Ltd [1991] 1 Lloyd's Rep 288 at 294 (NSWCA); Emery Air Freight Corporation v Merck Sharpe & Dohme (Australia) Pty Ltd (1999) 47 NSWLR 696 at 704-707 [49]-[65]. 143 Siemens Ltd v Schenker International (Australia) Pty Ltd (2001) 162 FLR 469 at 144 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 145 Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR Kirby beyond the aerodrome. Courts in the United States of America146, England147 and New Zealand148 have adopted a similar interpretation of the ambit of that Convention. Like the Australian courts, they have pointed to the language of the Convention and to the advantage which a clear rule, defined by reference to the ascertainable perimeters of the aerodrome place, introduces into the respective rights and liabilities of carrier, consignor and consignee under the Convention. By analogy, a similar approach would apply to cases concerned not with the Convention, as such, but with a "combined carriage" performed "partly by air and partly by any other mode of carriage" where it is suggested that the air waybill applicable to the air carriage segment of the journey provides conditions also applicable to the conduct of an "other mode of carriage"149. It is therefore appropriate to consider cases in which it is said that overseas courts have decided like questions. Distinguishable international case law: In the Court of Appeal reference was made to three categories of case in an endeavour to support the proposition that the present air waybill, unlike the Convention, operated by contractual extension beyond the perimeter of the aerodrome of destination to restrict the consignee's rights of recovery for loss occurring there. The first category of case involved a reference to the reasons of Lord Denning MR in Samuel Montagu & Co Ltd v Swiss Air Transport Co Ltd150. His Lordship was there dealing with a clause in an air waybill expressed in language similar to cl 2.1 in the present matter. He remarked that the clause was "just another way of saying that the carriage is subject to the rules so far as the same are applicable"151. However, the issue in Samuel Montagu was whether the 146 Victoria Sales Corporation v Emery Air Freight Inc 917 F 2d 705 at 707 (1990); General Electric Company v Harper Robinson & Co 818 F Supp 31 (1993); Read- Rite Corporation v Burlington Air Express Ltd 186 F 3d 1190 at 1194 (1999); HIH Marine Insurance Services Inc v Gateway Freight Services 116 Cal Rptr 2d 893 at 897 (2002); Albingia Versicherungs AG v Schenker International Inc 344 F 3d 931 147 Rolls Royce Plc v Heavylift-Volga DNEPR Ltd [2000] 1 Lloyd's Rep 653 at 658- 148 International Cargo Express Ltd v U-Jin Enterprises Inc [1997] 2 NZLR 712 at 149 Warsaw Convention, Art 31. 151 Samuel Montagu & Co Ltd v Swiss Air Transport Co Ltd [1966] 2 QB 306 at 314. Kirby language of the clause sufficiently complied with Art 8(q) of the original Warsaw Convention requiring that the air waybill contain a statement that the carriage is subject to the Convention's rules relating to liability. The observation made the point that some only of the Convention's provisions would apply to international carriage since the Convention also dealt with liability in respect of passengers and baggage, in addition to cargo. There is nothing inconsistent between the reasoning in Samuel Montagu and the opinion which I favour in the present case. Indeed, that case highlights the unacceptability of extending the words "[c]arriage hereunder" in cl 2.1 of the conditions in the air waybill to all modes of carriage. Clause 2.1 prima facie renders "carriage" subject to the rules relating to liability established by the Warsaw Convention. It would contradict Art 31 of the Convention if the "[c]arriage hereunder" were to apply at large to all modes of transport, however performed and wherever occurring. This is because Art 31 states expressly that the provisions of the Convention apply only to carriage by air and then only if such carriage by air is "international carriage" within the terms of Art 1. It is only when "[c]arriage hereunder" means "air carriage" that cl 2.1 in the conditions in the air waybill correctly reflects the provisions as to liability established by the Convention. Secondly, the Court of Appeal drew upon what Sheller JA152 took to be the reasoning of the English Court of Appeal in Quantum Corporation Inc v Plane Trucking Ltd153. That case concerned the operation of the Convention on the Contract for the International Carriage of Goods by Road ("the Road Convention"). However, the factual circumstances were quite different from those of the present case. There, the road segment of the journey was part of the transportation of the cargo to the place of destination nominated in the air waybill. Accordingly, the English Court of Appeal did not consider whether the limitation in cl 4 applied. By force of English law, the Court was required to give effect to the Road Convention154. The holding in the case was addressed to the application to the facts of Art 1 of the Road Convention. I do not accept that the air waybill remained the contract for "carriage that governed the road transportation from the airport to Schenker Australia's under bond warehouse"155. 152 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at 153 [2002] 1 WLR 2678; [2003] 1 All ER 873. 154 Carriage of Goods by Road Act 1965 (UK). 155 Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at [36] per Sheller JA. Kirby I see nothing in the very different circumstances considered in the Quantum Corporation case that suggests, or warrants, a contrary conclusion. Inc v Rodricargo Express Corporation156 That leaves the third category comprising two United States cases: Aerofloral and Read-Rite Corporation v Burlington Air Express Ltd157. The decision in Aerofloral turned on whether the relevant cargo was any longer "in carriage" when it was lost. The Warsaw Convention, as applicable in the United States, had no application because, as here, the goods had been removed from the Miami International Airport to a warehouse located nearby, but outside the airport perimeter158. The majority in the District Court of Appeal of Florida held that warehousing the goods was a service "incidental to such carriage" and fell within the definition of the term "carrier" in the limitation clause of the air waybill. The Court remanded the matter and directed the trial judge to address whether warehousing was also encompassed in the term "carriage". This preliminary view of the limitation clause does not dissuade me from the interpretation of the air waybill that I favour. The applicability of the equivalent of cl 4 was not argued in Read-Rite. As the other members of this Court point out159, Read-Rite was substantively concerned (as was a later case160) with the requirements in the United States of federal common law. Under that law, a contractual limitation of liability is valid and enforceable if the shipper has reasonable notice of it and a fair opportunity to purchase the means to avoid it. The existence of those questions, the terms of that body of applicable law and the circumstances concerning the purchase of separate insurance161 sharply distinguish the considerations before the United States courts from those before this Court. 156 756 So 2d 234 (2000). See Schenker International (Australia) Pty Ltd v Siemens Ltd [2002] NSWCA 172 at [37]. 157 186 F 3d 1190 (1999). 158 Aerofloral Inc v Rodricargo Express Corporation 756 So 2d 234 at 235 (2000). 159 Reasons of McHugh ACJ at [59]; joint reasons at [101]. 160 Albingia Versicherungs AG v Schenker International Inc 344 F 3d 931 (2003). 161 Held as evidencing "obvious recognition of the waybill limitation" and therefore determinative of the applicability of the limitation clause in the air waybill in Albingia Versicherungs AG v Schenker International Inc 344 F 3d 931 at 939-940 (2003), following Read-Rite Corporation v Burlington Air Express Ltd 186 F 3d Kirby In Read-Rite the United States Court of Appeals for the Ninth Circuit ultimately had before it a challenge to a summary judgment granted at first instance in favour of the carrier. The question posed on appeal was whether, under the federal common law, the carrier had successfully limited its liability by contractual provisions in its air waybills. The Court affirmed the trial judge's conclusion. In doing so, the Court applied established federal law. That holds that the loss or damage to goods by interstate common carriers by air is governed by federal common law162. The Court also had regard to federal legislation on the subject163. The true basis for the decision was a finding that there was no miscarriage of the primary judge's discretion to enter summary judgment164. The Court did not address, as this Court has, the different question of the applicability and meaning of the limitation clause appearing in the standard air waybill. The case is therefore quite different from the present. Conclusion – no settled rule: It follows that none of the case law propounded by the Schenker companies suggests, still less requires, a conclusion different to that which the application of Australian law to the contractual arrangements of the parties would otherwise demand165. Resolution of ambiguity in the ambit of the limitation Failure to propound a clear limitation: There is one final consideration. The issue concerning the applicability of the limitation provision in cl 4 of the parties' air waybill to the contractual relationships of Siemens Australia with the Schenker companies was one for evidence, inference and judgment as well as analysis of the language of the air waybill. In the event of ambiguity concerning the ambit of cl 4, and whether it applied beyond the "international carriage" of cargo by air for which it was designed, such ambiguity should be resolved by reference to the conduct of the parties propounding the clause. These are the Schenker companies which, as "carrier", had the full opportunity in their correspondence with Siemens Germany, or otherwise, to spell out any relevant conditions of their dealings, including any limitation of liability upon which they relied in respect of the Richtungsverkehr. This they failed to do166. 162 Deiro v American Airlines Inc 816 F 2d 1360 at 1365 (1987). See also Boston & Maine Railroad v Piper 246 US 439 at 444 (1918). 163 Read-Rite Corporation v Burlington Air Express Ltd 186 F 3d 1190 at 1196 (1999). 164 Read-Rite Corporation v Burlington Air Express Ltd 186 F 3d 1190 at 1199 (1999). 165 See also reasons of McHugh ACJ at [44]. 166 Contrast the clear terms of the air waybill considered in Jaycees Patou Inc v Pier Air International Ltd 714 F Supp 81 (1989) referred to in the reasons of McHugh ACJ at [68]. Kirby Nor did the Schenker companies spell out the wider contractual limitation of liability in the air waybill for which they now argue. On the face of that document, the inference was readily available that the contractual provision of cl 4 applied in the same way as the Warsaw Convention has been held to apply. Each applied only to "carriage". In the context, that meant carriage by air. The Warsaw Convention attached to "international carriage" by air as defined. Clause 4 of the conditions in the air waybill attached to air carriage outside the scope of such "international carriage". In neither case did the air waybill expand cl 4 clearly to cover all the unspecified contractual dealings of the parties beyond the perimeter of the aerodrome. Obligation to diminish rights clearly: If, then, there is ambiguity in the printed document which the Schenker companies rely upon, the propounded clause should be construed in favour of Siemens Australia167. This rule of construction168 is one that may be invoked effectively as a last resort. But it remains available. In Australia, those who wish to reduce the entitlements of others to prosecute their legal rights to recover damages for conceded negligence must do so clearly169. The Schenker companies did not. Instead, they relied on a standard form air waybill and tried to stretch its operation beyond the aerodrome fixed by the Warsaw Convention, claiming that this was what the parties "agreed". That attempt fails. Orders The judgment of the primary judge should be restored. To give effect to that conclusion the appeal to this Court should be allowed with costs. The judgment of the Court of Appeal of the Supreme Court of New South Wales 167 cf Johnson v American Home Assurance Co (1998) 192 CLR 266 at 274 [19.4]. 168 See discussion of the strict and contra proferentem rule of construction in the context of limitation of liability provisions appearing in standard form contracts in Seddon and Ellinghaus, Cheshire & Fifoot's Law of Contract, 8th Aust ed (2002) at 460-461 [10.74]. See also McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at 602 [74.4] citing and applying Johnson v American Home Assurance Co (1998) 192 CLR 266 at 274-275 [19]. 169 This standard is also reflected in United States federal common law, as applied in Aerofloral, Read-Rite and Albingia. It requires that, to be valid and enforceable, limitation of liability clauses must be distinctly declared and deliberately accepted: The Majestic 166 US 375 at 384-386 (1897); Deiro v American Airlines Inc 816 F 2d 1360 at 1363-1365 (1987). Kirby should be set aside. In place thereof, it should be ordered that the appeal to that Court be dismissed with costs. |
HIGH COURT OF AUSTRALIA Matter No S530/2005 APPELLANT AND ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES RESPONDENT Matter No S531/2005 ANDREW BATISTATOS BY HIS TUTOR APPELLANT AND NEWCASTLE CITY COUNCIL RESPONDENT Batistatos v Roads and Traffic Authority of New South Wales Batistatos v Newcastle City Council [2006] HCA 27 14 June 2006 S530/2005 & S531/2005 ORDER In each matter, the appeal is dismissed with costs. On appeal from the Supreme Court of New South Wales Representation Matter No S530/2005 B M Toomey QC with S J Maybury for the appellant (instructed by T D Kelly & I D Temby QC with C F Hodgson for the respondent (instructed by Crown Solicitor for New South Wales) Matter No S531/2005 B M Toomey QC with S J Maybury for the appellant (instructed by T D Kelly & M J Joseph SC with S P W Glascott for the respondent (instructed by Phillips Fox Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Batistatos v Roads and Traffic Authority of New South Wales Batistatos v Newcastle City Council Abuse of Process – Delay – Proceedings commenced in 1994 in respect of causes of action which accrued in 1965 – Appellant suffered quadriplegia and other injuries in motor accident allegedly caused by the negligence of, and nuisance created by, the respondents – Appellant born mentally retarded and later orphaned – Applications brought by respondents for summary dismissal or permanent stay for abuse of process – Whether, due to the effluxion of time since the causes of action accrued, a fair trial was not possible for the respondents. Abuse of Process – Delay – Factors to be considered in determining whether delay precludes the conduct of a fair trial – Whether actions commenced by appellant untenable or futile – Whether actions commenced by appellant present real question to be determined – Sufficiency of evidence – Relevance of fundamental right to bring legal proceedings – Relevance of summarily denying right to a trial – Relevance of appellant's severely disabled condition – Relevance of the extent of the investigations made by the parties – Relevance of the disparity in the economic resources of the parties – Relevance of fact that the 30 year ultimate limitation bar had not yet descended. Limitation of Actions – Appellant born mentally disabled and suffered quadriplegia in the accident out of which these proceedings arose – Appellant's causes of action not subject to 6 year limitation period which would otherwise have been imposed by the Limitation Act 1969 (NSW) by reason of the appellant's disabilities – Actions commenced within 30 year ultimate limitation period – Whether Limitation Act 1969 (NSW) precludes court from summarily dismissing or permanently staying proceedings for abuse of process when actions commenced before expiry of limitation period – Whether exercise of power to dismiss or stay in such circumstances is exceptional and requires proof of oppressive or contumelious conduct on the part of the plaintiff. Courts – Powers of courts – Whether supplementary power of Supreme Court of New South Wales properly described as inherent or implied – Distinction between inherent powers and implied powers – Basis from which the State Supreme Court derives its jurisdiction to summarily dismiss or permanently stay proceedings. Courts – Powers of courts – Jurisdiction – Rules of Court – Whether Rules of Court are exhaustive of the circumstances in which the Supreme Court can dismiss or stay proceedings for abuse of process – Weight to be given to the relevant legislative context in exercising discretion to dismiss or stay proceedings – Where both Rules of Court and supplementary jurisdiction empower Supreme Court to stay or dismiss proceedings for abuse of process – Relationship between supplementary jurisdiction and Rules of Court. Words and phrases – "abuse of process", "delay", "inherent jurisdiction", "implied jurisdiction". Limitation Act 1623 (Imp) (21 Jac I c 16), ss 3, 7. Limitation Act 1969 (NSW), ss 5, 11(3), 51(1), 52. Supreme Court Act 1970 (NSW). Supreme Court Rules (NSW), Pt 13 r 5. GLEESON CJ, GUMMOW, HAYNE AND CRENNAN JJ. These appeals from the New South Wales Court of Appeal1 were heard together. The issues which arise illustrate the point made by Griffith CJ in Varawa v Howard Smith Co Ltd2 that the term "abuse of the process of the Court" has been (as it still is) used in many senses. Reference to some of these senses of the term should first be made. The meaning of "abuse of process" The process with which these appeals is concerned is that of the Supreme Court of New South Wales. But it appears that the procedures of non-curial bodies may attract the "abuse of process" doctrines. Thus, an unchallenged assumption underlying the majority decision of this Court in Walton v Gardiner3, to which extensive reference was made in submissions in these appeals, was that the entertainment by a tribunal constituted under the Medical Practitioners Act 1938 (NSW) of complaints referred to it, might be stayed as constituting an abuse of process. However, in his dissenting judgment, Brennan J carefully distinguished the concept of alien purpose seen in the principles respecting abuse of administrative power, where the focus is upon the purpose of the repository of the power, rather than upon the purpose of the moving party4. Distinctions also are to be drawn between an order staying pending proceedings as abusive (with which these appeals are concerned) and an action for what have become recognised in Australia as the torts of malicious prosecution and of collateral abuse of process. In their discussion of the subject in Williams v Spautz5, Mason CJ, Dawson, Toohey and McHugh JJ remarked6: "Central to the tort of abuse of process is the requirement that the party who has instituted proceedings has done so for a purpose or to effect an object beyond that which the legal process offers." 1 Newcastle City Council v Batistatos; Roads & Traffic Authority of NSW v Batistatos (2005) 43 MVR 381. (1911) 13 CLR 35 at 55. (1993) 177 CLR 378. See also Herron v McGregor (1986) 6 NSWLR 246. (1993) 177 CLR 378 at 410. (1992) 174 CLR 509 at 522-526. (1992) 174 CLR 509 at 523. Crennan From what follows in these reasons, it will be apparent that the central requirement specified in the above passage does not apply outside the area of tort. There is a further point to be made here. Objections by plaintiffs to the exercise of the power to order a stay which rely upon the point that there are available to the defendant remedies in tort have not prevailed. The reason was explained in the joint judgment in Williams v Spautz as follows7: "Neither the action for malicious prosecution nor the action for collateral abuse offers the prospect of early termination of the subject proceedings. An action for malicious prosecution cannot be brought until those proceedings have terminated. Although an action for collateral abuse can be brought while the principal proceedings are pending, the action is at best an indirect means of putting a stop to an abuse of the court's process which the court should not permit to continue." These appeals concern abuse of process as understood in the exercise of the "inherent jurisdiction" of superior courts to stay proceedings. The phrase "inherent jurisdiction" itself is a slippery one. In Australian Securities and Investments Commission v Edensor Nominees Pty Ltd, Gleeson CJ, Gaudron and "'Jurisdiction' and 'power' are not discrete concepts. The term 'inherent jurisdiction' may be used, for example in relation to the granting of stays for abuse of process, to describe what in truth is the power of a court to make orders of a particular description9. In Harris v Caladine10, 'The distinction between jurisdiction and power is often blurred, particularly in the context of "inherent jurisdiction". But the distinction may at times be important. Jurisdiction is the (1992) 174 CLR 509 at 520. (2001) 204 CLR 559 at 590 [64]. 9 Williams v Spautz (1992) 174 CLR 509 at 518-519. 10 (1991) 172 CLR 84 at 136; see also Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 450-452 [49]-[54]; DJL v Central Authority (2000) 201 CLR 226 at 242-243 [30]-[31]. Crennan authority which a court has to decide the range of matters that can be litigated before it; in the exercise of that jurisdiction a court has powers expressly or impliedly conferred by the legislation governing the court and "such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so Reference in this regard also may be made to the judgment of McHugh J in Solomons v District Court (NSW)12, and to that of Gummow, Hayne and Heydon JJ in Minister for Immigration and Multicultural and Indigenous Affairs v B13. Accordingly, in Hunter v Chief Constable of the West Midlands Police14 Lord Diplock used the term "inherent power" rather than "inherent jurisdiction". In Walton v Gardiner15, the majority, Mason CJ, Deane and Dawson JJ, accepted as correct the passage in Hunter16 in which Lord Diplock spoke of "the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people". His Lordship went on to describe as "very varied" the circumstances where "abuse of process" can arise17. It will be necessary to return to that consideration later in these reasons. In Hunter18, Lord Diplock disavowed the use of the word "discretion" in describing the exercise of the power to prevent abuse of process. Thereafter, in 11 Parsons v Martin (1984) 5 FCR 235 at 241; see also Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 630-631. 12 (2002) 211 CLR 119 at 140-141 [43]. 13 (2004) 219 CLR 365 at 395 [69]. 14 [1982] AC 529 at 536. 15 (1993) 177 CLR 378 at 393. 16 [1982] AC 529 at 536. 17 [1982] AC 529 at 536. 18 [1982] AC 529 at 536. Crennan R v Carroll19, Gaudron and Gummow JJ observed that the use of the term "discretion" in this context indicates no more than that, although there are some clear categories, "the circumstances in which proceedings will constitute an abuse of process cannot be exhaustively defined and, in some cases, minds may differ as to whether they do constitute an abuse". They added20: "It does not indicate that there is a discretion to refuse a stay if proceedings are an abuse of process or to grant one if they are not. However, as with discretionary decisions, properly so called, appellate review of its exercise looks to whether the primary judge acted upon a wrong principle, was guided or affected by extraneous or irrelevant matters, mistook the facts, or failed to take into account some material consideration." A further distinction must now be drawn. It is accepted that the inherent power identified by Lord Diplock applies to both civil and criminal proceedings. However, the power does so with somewhat different emphases attending its exercise. In Williams v Spautz, Mason CJ, Dawson, Toohey and McHugh JJ identified two fundamental policy considerations affecting abuse of process in criminal proceedings. Their Honours said21: "The first is that the public interest in the administration of justice requires that the court protect its ability to function as a court of law by ensuring that its processes are used fairly by State and citizen alike. The second is that, unless the court protects its ability so to function in that way, its failure will lead to an erosion of public confidence by reason of concern that the court's processes may lend themselves to oppression and injustice." These considerations are not present with the same force in civil litigation where the moving party is not the State enforcing the criminal law. Earlier, in Jago v District Court (NSW), Mason CJ had observed22: 19 (2002) 213 CLR 635 at 657 [73]. 20 (2002) 213 CLR 635 at 657 [73]. 21 (1992) 174 CLR 509 at 520. 22 (1989) 168 CLR 23 at 26. Crennan "[T]he criteria for determining what amounts to injustice in a civil case will necessarily differ from those appropriate to answering the question in a criminal context." Abuse of court process What amounts to abuse of court process is insusceptible of a formulation comprising closed categories. Development continues. One example is the line of authority dealing with the stay of proceedings instituted in a second forum where there are pending proceedings in another forum and the continuance of the second proceedings would be an abuse of the process of the first forum23. Again, in Cardile v LED Builders Pty Ltd24, Gaudron, McHugh, Gummow and Callinan JJ referred to the passage in the joint judgment in CSR Ltd v Cigna Insurance Australia Ltd25 where it was said of the grant of an anti-suit injunction that the counterpart of the power of a court to prevent the abuse of its processes was the power of the court to protect the integrity of those processes once set in motion. Their Honours in Cardile were dealing with the doctrinal foundation of asset preservation orders, and continued26: "The integrity of those processes extends to preserving the efficacy of the execution which would lie against the actual or prospective judgment debtor27. The protection of the administration of justice which this involves may, in a proper case, extend to asset preservation orders against third parties to the principal litigation." A convenient starting point for consideration of the development that has occurred is the statement made by Lord Blackburn in 1885, in a case frequently 23 Logan v Bank of Scotland (No 2) [1906] 1 KB 141; Maritime Insurance Co Ltd v Geelong Harbor Trust Commissioners (1908) 6 CLR 194; Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197; Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538. 24 (1999) 198 CLR 380 at 393 [25]. 25 (1997) 189 CLR 345 at 391. 26 (1999) 198 CLR 380 at 393 [25] 27 Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623, 638. Crennan cited in Australian courts28. The causes of action at stake in Metropolitan Bank Ltd v Pooley29 were in tort. Lord Blackburn said30: "[F]rom early times (I rather think, though I have not looked at it enough to say, from the earliest times) the Court had inherently in its power the right to see that its process was not abused by a proceeding without reasonable grounds, so as to be vexatious and harassing – the Court had the right to protect itself against such an abuse; but that was not done upon demurrer, or upon the record, or upon the verdict of a jury or evidence taken in that way, but it was done by the Court informing its conscience upon affidavits, and by a summary order to stay the action which was brought under such circumstances as to be an abuse of the process of the Court; and in a proper case they did stay the action." The references by Lord Blackburn to "power" rather than to "jurisdiction" and to the summary procedure whereby the court informed its conscience upon affidavits are significant. Several other points are to be made respecting that statement in Metropolitan Bank. The first is that Lord Blackburn treated vexatious process as synonymous with, or at least an instance of, abuse of process. Secondly, the issues to be considered go beyond a question as to whether the claim or defence in question is bad in law; the demurrer was developed to deal with that situation. Thirdly, and as later emphasised in this Court in authorities to which reference has already been made in these reasons, Lord Blackburn indicated that the power existed to enable the court to protect itself from abuse of its process thereby safeguarding the administration of justice. That purpose may transcend the interest of any particular party to the litigation. It should be added that, in this Court, it has yet to be determined whether the inherent power identified by Lord Blackburn is, like the power to punish 28 For example, Tringali v Stewardson Stubbs & Collett Pty Ltd [1966] 1 NSWR 354 at 361; (1966) 66 SR (NSW) 335 at 345; R v O'Loughlin; Ex parte Ralphs (1971) 1 SASR 219 at 228; Herron v McGregor (1986) 6 NSWLR 246 at 250; Mickelberg v The Queen (1989) 167 CLR 259 at 312; Walton v Gardiner (1993) 177 CLR 378 at 393; Ridgeway v The Queen (1995) 184 CLR 19 at 74. 29 (1885) 10 App Cas 210. 30 (1885) 10 App Cas 210 at 220-221. Crennan contempt31, an attribute of the judicial power of the Commonwealth provided in Ch III of the Constitution. However, in this Court much attention has been given to the nature and extent of the inherent power to deal with abuse of process. In Ridgeway v The Queen, Gaudron J explained32: "The powers to prevent an abuse of process have traditionally been seen as including a power to stay proceedings instituted for an improper purpose33, as well as proceedings that are 'frivolous, vexatious or oppressive'34. This notwithstanding, there is no very precise notion of what is vexatious or oppressive or what otherwise constitutes an abuse of process. Indeed, the courts have resisted, and even warned against, laying down hard and fast definitions in that regard35. That is necessarily so. Abuse of process cannot be restricted to 'defined and closed categories'36 because notions of justice and injustice, as well as other considerations that bear on public confidence in the administration of justice, must reflect contemporary values and, as well, take account of the circumstances of the case37. That is not to say that the concept of 'abuse of process' is at large or, indeed, without meaning. As already indicated, it extends to proceedings that are instituted for an improper purpose38 and it is clear that 31 Re Colina; Ex parte Torney (1999) 200 CLR 386 at 394-397 [15]-[25], 429 [113]. 32 (1995) 184 CLR 19 at 74-75. See also the remarks of Gleeson CJ, Gummow, Hayne and Heydon JJ in D'Orta-Ekenaike v Victoria Legal Aid (2005) 79 ALJR 755 at 768 [74]-[75]; 214 ALR 92 at 109-110. 33 Williams v Spautz (1992) 174 CLR 509. 34 See, eg, Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210. 35 See, eg, Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 242-243, 246-247, and the cases there cited. 36 Hamilton v Oades (1989) 166 CLR 486 at 502, citing Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 639 and Tringali v Stewardson Stubbs & Collett Ltd (1966) 66 SR (NSW) 335 at 340, 344. See also Jago v District Court (NSW) (1989) 168 CLR 23 at 25-26, 47-48, 74; Walton v Gardiner (1993) 177 CLR 378 at 393-395; Rogers v The Queen (1994) 181 CLR 251 at 255, 285-286. 37 See Dietrich v The Queen (1992) 177 CLR 292 at 328-329, 364. Crennan it extends to proceedings that are 'seriously and unfairly burdensome, prejudicial or damaging'39 or 'productive of serious and unjustified trouble and harassment'40." Earlier, in Rogers v The Queen, McHugh J observed41: "Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute." "Many, perhaps the majority of, cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court's process." To that it should be added that the power to deal with procedural abuse extends to the exclusion of particular issues which are frivolous and vexatious43. Further, the failure to take, as well as the taking of, procedural steps and other delay in the conduct of proceedings are capable of constituting an abuse of the process of the court. The width of these propositions, drawn from judgments in this Court, the appellant seeks to restrict. The appellant relies in particular upon a House of 38 As to what constitutes improper purpose, see Williams v Spautz (1992) 174 CLR 509 at 526-530, 532-537, 553-556; see also at 543-551. 39 Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 40 Hamilton v Oades (1989) 166 CLR 486 at 502. 41 (1994) 181 CLR 251 at 286. 42 (1994) 181 CLR 251 at 286. 43 Mickelberg v The Queen (1989) 167 CLR 259 at 312. Crennan Lords decision which predated Hunter44, namely Birkett v James45. It will be necessary to return to Birkett v James later in these reasons. Delay and the "inherent jurisdiction" The appellant in this Court wishes to be freed of the permanent stay upon his actions which was imposed by the Court of Appeal. The causes of action he asserts are given by the common law and are subject to any applicable statutory limitation but not to equitable defences of laches, acquiescence and delay. Those defences, in relation to a suit to establish the existence of a trust of land, were considered by this Court in Orr v Ford46. It was accepted by the majority that prejudice occasioned by the loss of evidence as a result of delay by the plaintiff might be raised as part of a defence of laches47. The absence in the Anglo-Australian common law of the importation of such equitable doctrines as laches, acquiescence and delay as defences to legal claims to legal remedies has emphasised the significance of the development of the inherent power with respect to abuse of process to supplement the "long-stop" barriers imposed by limitation statutes. In various jurisdictions in the United States, matters developed rather differently. First, various judicially developed "tolling doctrines" may be relied upon by plaintiffs to lengthen statutory limitation periods48. Secondly, the doctrine of laches has been used to shorten statutory periods; and, in that respect, laches has been treated as a defence available equally in actions at law49. Inherent power and Rules of Court 46 (1989) 167 CLR 316. 47 (1989) 167 CLR 316 at 330. 48 See the discussion by Ormiston JA in Kuek v Victoria Legal Aid [1999] 2 VR 331 49 Teamsters & Employers Welfare Trust of Illinois v Gorman Bros Ready Mix 283 F 3d 877 at 881 (2002), where the leading judgment of the Court of Appeals for the Seventh Circuit was delivered by Judge Posner. Crennan Rules of Court in their various forms may be influenced by, and to differing degrees restate, the characteristics of the inherent power to stay for abuse of process. That relationship between the Rules of the Supreme Court of New South Wales and its inherent power is significant for understanding the issues of the present appeals. Before turning to the facts and the history of the litigation in the Supreme Court, something more should be said of the development of the inherent power alongside the formulations found in Judicature system Rules of Court, such as those in New South Wales introduced by the Fourth Schedule to the Supreme Court Act 1970 (NSW) ("the 1970 Act"). In England, the demurrer was abolished in 188350 and replaced by provisions in RSC, O XXV rr 3-4 which were described as forms of proceedings "in lieu of demurrer". Among other things, RSC, O XXV r 4 then empowered the court to order a pleading to be struck out on the ground that it disclosed "no reasonable cause of action or answer". In that case, and also in the case of the action or defence being shown by the pleadings "to be frivolous or vexatious", the court might order the action to be stayed or dismissed or judgment to be entered accordingly, as might be just. The first limb of the new rule might be seen as providing a procedure in place of the demurrer (overlapping r 3 which created the procedure by which a preliminary point of law can be taken on the pleadings and dealt with separately). However, the second limb, with its reference to frivolous or vexatious actions or defences, went further and into the field of abuse of process. Yet it was decided that the procedure under r 4 did not permit the court to inform itself by affidavits, so that if the pleading did not disclose that the action was bad on its face and extrinsic evidence was required to show that the action was bad, the rule did not apply51. Hence the point made by Professor Jolowicz52 that it was not surprising that the English courts held soon after 1883 that the inherent jurisdiction was unaffected by the introduction of r 4. Hence also the emphasis by Dixon J in Dey v Victorian Railways Commissioners53 upon the inherent authority of the 50 Rules of the Supreme Court 1883, O XXV r 1. But, in this Court, see High Court Rules 2004, r 27.07. 51 Attorney-General of the Duchy of Lancaster v London and North Western Railway Co [1892] 3 Ch 274 at 278; Goodson v Grierson [1908] 1 KB 761 at 764; Winfield, The Present Law of Abuse of Legal Procedure, (1921) at 240. 52 "Abuse of the Process of the Court: Handle With Care", (1990) 43 Current Legal Problems 77 at 83. 53 (1949) 78 CLR 62 at 91. Crennan Supreme Court of Victoria to stop the abuse of its process when employed for groundless claims. His Honour indicated that the question on the summons to dismiss the plaintiff's action did not arise on the statement of claim and involved no matter of pleading. The local equivalent of RSC, O XXV r 4 therefore did not apply. Rather, the application, which was supported by affidavit evidence, invoked the inherent powers of the Supreme Court of Victoria. However, things were to change. The revised Rules of the Supreme Court introduced in England in 196254 permitted evidence on strike-out applications and the phrase "an abuse of the process of the court" appeared in terms55. The result in England was described by Professor Jolowicz56 as incorporating in the 1962 Rules the inherent jurisdiction and supplying two sources, express and inherent, from which the court drew power to bring the proceedings to an end in summary fashion. In New South Wales, as introduced in the Fourth Schedule to the 1970 Act, Pt 13 r 5 of the Supreme Court Rules ("the Rules") provided: "(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings – no reasonable cause of action is disclosed; the proceedings are frivolous or vexatious; or the proceedings are an abuse of the process of the Court, the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings. The Court may receive evidence on the hearing of an application for an order under subrule (1)." 54 Rules of the Supreme Court (Revision) 1962. 55 RSC, O 18 r 19(1)(d). 56 "Abuse of the Process of the Court: Handle With Care", (1990) 43 Current Legal Problems 77 at 84-85. Crennan Part 13 r 5 remained unchanged and was in force at the time of the events giving rise to these appeals57. If the provenance of Pt 13 r 5 is kept in mind, it is apparent that it serves several purposes, not all of a piece. Rule 5(1)(a) may be traced to the provision made in England in 1883 after the departure of the demurrer. Paragraph (b) of r 5(1) may be seen as a species of the genus of abuse of process identified specifically for the first time in par (c). A further and significant consideration is that, at the critical time for this litigation, there existed in the Supreme Court both the inherent jurisdiction or power to which reference has been made and the power under Pt 13 r 5 of the Rules to order a stay or dismissal of proceedings as an abuse of the process of the court, in each situation evidence being admissible on an application. It is with the several fields of operation of Pt 13 r 5 itself and with the duality of available avenues with respect to the agitation of allegations of an abuse of process leading to stay or dismissal, and the attendant possibility of confusion at several levels, that attention should be given to what now follows in these reasons. The conduct of the applications giving rise to these appeals displayed an imperfect appreciation of these distinctions and coincident remedial avenues outlined above. This, in turn, was significant for the approach taken by the Court of Appeal in its reasons now under appeal. The litigation Interlocutory applications were brought by the present respondents, the Roads and Traffic Authority of New South Wales ("the RTA") and the Newcastle City Council ("the Council") (collectively "the defendants") seeking the summary dismissal or permanent stay of an action for damages which had been commenced in the Supreme Court against each of them for the appellant ("the plaintiff") by his tutor on 21 December 1994. The plaintiff requisitioned a jury trial. The action was brought upon a cause of action which accrued over 40 years ago on 21 August 1965 after a motor vehicle accident in which the plaintiff was severely injured allegedly due to the negligence of the defendants. 57 No issue arises respecting changes to procedure in 2005 by the Uniform Civil Procedure Rules. However, Pt 13 r 13.4 of the new Rules does not appear to be materially different from its predecessor. Crennan It was the plaintiff's pleaded case that, notwithstanding the lapse of 29 years since the accident, he was not barred from bringing his action by the Limitation Act 1969 (NSW) ("the Limitation Act"). This was because he was and has always been a "person under a disability" within the meaning of s 11(3) of that statute. The consequence was that s 52 had suspended the running of any limitation period under the Act subject to the ultimate bar of 30 years fixed by The proceedings were at all times conducted in the Supreme Court on the basis that the Limitation Act was the relevant statute. At the time when the cause of action accrued the Limitation Act 1623 (Imp) remained in force58 in New South Wales under the Australian Courts Act 1828 (Imp)59. Section 5 of the Limitation Act applied to the repeal of the 1623 Act the preservation of the accrued rights provision made in s 8 of the Interpretation Act 1897 (NSW)60. After the conclusion of oral argument in this Court written submissions were filed by the parties respecting the appropriate limitation period. The RTA and the Council now submit that the relationship between the 1623 statute and the Limitation Act was such that, so long as the plaintiff remains disabled, he may bring his claim at any time. It is unnecessary to pursue these matters to any conclusion. Whatever the limitation period, or lack of it, the plaintiff sued within time, and, as further explained in these reasons, an action commenced in time may attract the exercise of a power to stay it for abuse of process. The applications by the RTA and the Council were for orders that the plaintiff's action be summarily dismissed or permanently stayed pursuant to the Rules as an abuse of process, or alternatively in what was identified as the inherent jurisdiction of the Supreme Court. Reduced to its essence, the presently relevant basis for these applications was that by reason of the effluxion of time since 1965, for the defendants a fair trial was not possible. That submission 58 The presently relevant provisions of the Limitation Act 1623 (Imp), 21 Jac I c 16, were repealed by s 4 and Sched 1 of the Limitation Act, which commenced on 1 January 1971. 59 9 Geo IV c 83, s 24. See Waung v Subbotovsky (1969) 121 CLR 337. 60 Now repealed by the Interpretation Act 1987 (NSW), s 82 and Sched 2, s 30 of which is to the same effect. Crennan failed before the primary judge (Hoeben J)61, but was successful in the Court of Appeal (Mason P, Giles and Bryson JJA). Hence the appeal by the plaintiff to this Court. The plaintiff's cause of action The plaintiff was born on 11 April 1932 in Sydney and, following the death of his mother and the inability of his father and other relatives to care for him, spent much of his early childhood in the St Anthony's Home at Croydon. On 1 March 1938, the plaintiff was "scheduled" under the Lunacy Act 1898 (NSW) and committed to the Newcastle Mental Asylum. He was released on leave of absence on 30 July 1954, and ultimately discharged on 10 January 1956. From around the date of his release on leave of absence up to the date of the accident, the plaintiff was employed with the Department of Public Works in Newcastle as a cleaner. On the evening of 20-21 August 1965, while returning from a party the plaintiff was involved in an accident in Fullerton Street, Stockton. The plaintiff pleaded that the accident occurred when he "came upon an unmarked and unposted bend in the road in the vicinity of Meredith Street and its northern approaches", causing the motor vehicle he was driving to run off the road into a depressed ditch and overturn. He sustained spinal injuries, and was rendered quadriplegic. The plaintiff's case as pleaded was that either the Commissioner for Main Roads (to whom the RTA is the statutory successor62) or the Council had the care, control and management of Fullerton Street and that either the RTA or the Council constructed, designed and maintained the bend in Fullerton Street which allegedly caused the accident. The particulars of negligence were broad-ranging, alleging negligence in design, construction or maintenance of the road, together with failure to provide adequate warning of the bend and permitting the road to be used whilst in an unsafe condition. The lapse of time Following the accident the plaintiff remained a patient at various hospitals and rehabilitation hospitals. In 1979 or shortly thereafter, the plaintiff was 61 Andrew Batistatos by his tutor Nita Lavinia Batis v Roads & Traffic Authority [2004] NSWSC 796. 62 Transport Administration Act 1988 (NSW), Sched 7, Pt 2, Div 5. Crennan located by his brother, whom he had not seen since the date he was committed to the Newcastle Mental Asylum, and his sister, who had been placed in the care of a different orphanage. They made arrangements for him to come to Sydney in 1982 and ultimately, in 1983, the plaintiff came to live with his sister. She continues to provide his basic care. The plaintiff's present solicitor was instructed in or about December 1993, and commenced investigating the circumstances of the accident over the ensuing 12 months before filing the Statement of Claim on 21 December 1994. Neither the RTA nor the Council sought to attribute blame for the lapse of time (to use a neutral expression instead of the legally connotative word "delay") between the accident and the filing of the Statement of Claim to the plaintiff or any person who cared for him. In so far as the defendants' applications for summary stay or dismissal of the proceedings relied upon the lapse of time, the gravamen of their submission (in a position to which both adhered in this Court) was that the objective consequence of the lapse of time was that a fair trial was no longer possible, and so constituted an abuse of process. The determination of the interlocutory applications proceeded on this basis. It is useful to note the effects of the lapse of time relied upon by the defendants in support of the contention that a fair trial was no longer possible. In their written submissions before this Court, these related generally to the deterioration of the evidence and encompassed six broad grounds: (1) the inability to obtain any police records of investigations relating to the accident; (2) the inability to locate hospital or medical records concerning the plaintiff's treatment before 1980; (3) neither the Council nor the RTA had most of the documents relevant to the design and construction of Fullerton Street for the period from 1965 to 1980; (4) difficulty in identifying and locating any person who had active involvement in road maintenance work in and before 1965 who could give evidence of considerations affecting design and construction; (5) the inability to locate any record that could assist in proving the insurer on risk at the relevant time; and (6) the physical state of the road where the accident occurred had altered substantially due to a reconstruction of Fullerton Street carried out by the Council in or about 1985 eliminating the bend which the plaintiff had alleged caused the accident (such evidence as remains regarding the reconstruction not bearing on establishing the signage, vegetation, lighting or other relevant circumstances at the time of the accident). The first four grounds were considered in detail by Hoeben J, whereas the latter two (while raised before Hoeben J) assumed greater significance before the Court of Appeal. There was a further lapse of time between the initial close of pleadings in 1996 and the determination of the interlocutory applications in 2000. However, Crennan the defendants did not rely upon delay in conducting proceedings after the issue of the Statement of Claim in December 1994 to support their applications. The course of proceedings in the Supreme Court In order to understand the way the proceedings developed, it is necessary to set out the defences filed by the RTA and the Council. In its Defence filed 9 May 1996, the Council pleaded contributory negligence and that the plaintiff's cause of action was not maintainable by reason of non-compliance with s 580(6) of the Local Government Act 1919 (NSW) ("the LGA"), which was in force at the time of the accident63. This provided a distinct statutory bar to the commencement of proceedings against councils. In its Defence filed 9 October 1997, the RTA pleaded contributory negligence and that the plaintiff's cause of action was not maintainable by reason of the general six year limitation provision in s 14(1) of the Limitation Act64. Following the close of pleadings, the Council and the RTA each moved for an order that the proceedings be dismissed or permanently stayed under Pt 13 r 5 of the Rules, which has been set out earlier in these reasons. Alternatively, the defendants sought orders striking out the plaintiff's pleading pursuant to Pt 15 r 26 of the Rules, which was in similar terms, but confined in its terms to the striking out of pleadings. In what follows, attention is directed to Pt 13 r 5. The motions came before Master Harrison on 2 June 200065, but the Master stood over the motions to be heard by a judge in so far as they relied upon the inherent power of the Court66. This course was adopted because Pt 60 r 1A of the Rules does not extend to permit the Master to exercise the inherent jurisdiction of the Court. It does not appear from the reasons given by the Master why the motions were thought to rely upon the inherent jurisdiction as distinct from merely the relevant provisions of the Rules. 63 Section 580(6) was later repealed by the Notice of Action and Other Privileges Abolition Act 1977 (NSW). 64 Although the RTA filed an Amended Notice of Grounds of Defence dated 11 April 2001, the additional ground is not relevant to this appeal. 65 Batistatos v Roads and Traffic Authority of NSW [2000] NSWSC 506. 66 [2000] NSWSC 506 at [1]. Crennan Be that as it may, the Master dealt only with the Council's claim relating to the application under Pt 13 r 5 of the Rules that the plaintiff's proceedings be summarily dismissed as against the Council for non-compliance with s 580(6) of the LGA. The Master declined to dismiss the proceedings summarily on this basis67. An appeal from the Master's decision on this point was dismissed by Bergin J. The balance of the motions were adjourned by Bergin J to permit the plaintiff's legal representatives to make further specified inquiries directed to locating further evidence. Following another lengthy delay, the motions came before Hoeben J on 25 August 2004. His Honour had before him all the evidence which had been before Bergin J, together with further affidavits resulting from the plaintiff's solicitor's inquiries in the interregnum. The evidentiary material was the subject of a detailed summary by Bryson JA in the Court of Appeal68, and it is unnecessary for the resolution of this appeal to repeat it. In his reasons, Hoeben J identified, under the heading "Absence of triable issue", the first submission of the defendants. This was that the claim by the plaintiff "was so obviously untenable that it could not succeed"69. The submission was framed in terms which appeared to state as a principle remarks made by Barwick CJ in a passage in General Steel Industries Inc v Commissioner for Railways (NSW)70. Barwick CJ pointed out that, on the one hand, great care was to be exercised to ensure that a plaintiff was not improperly deprived of the opportunity for the trial of the case "under the guise of achieving expeditious finality", and, on the other, the summary intervention of the court was not reserved for cases where "argument is unnecessary to evoke the futility of the plaintiff's claim". His Honour then immediately continued71: "Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed." 67 [2000] NSWSC 506 at [22]. 68 (2005) 43 MVR 381 at 385-389. 69 [2004] NSWSC 796 at [14]. 70 (1964) 112 CLR 125 at 130. 71 (1964) 112 CLR 125 at 130. Crennan The conclusion in General Steel was that Barwick CJ was satisfied that the statement of claim did not disclose a reasonable cause of action so that this Court was authorised by O 26 r 18 of the then High Court Rules to strike out that pleading72. To reach that conclusion, extensive argument was considered respecting the construction and application of the Crown use provisions of the Patents Act 1952 (Cth). The statements in General Steel should not be given canonical force. More recently, in Agar v Hyde73, Gaudron, McHugh, Gummow and Hayne JJ observed: "It is, of course, well accepted that a court whose jurisdiction is regularly invoked in respect of a local defendant (most often by service of process on that defendant within the geographic limitations of the court's jurisdiction) should not decide the issues raised in those proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways74, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way." Hoeben J referred to affidavit evidence provided for the plaintiff by three deponents who said they were familiar with Fullerton Street as it was in 1965 and that they would give evidence as to its configuration, the height and location of grass, control measures provided by the Council, maintenance provided by the Council, and lighting provided in the vicinity of the accident site. Hoeben J concluded that the plaintiff had discharged "any evidentiary onus which he bears to indicate that there is evidence available which could, if accepted, establish his case"75. The upshot was that his Honour rejected the submission by the defendants that the plaintiff's claim was so obviously untenable that it could not 72 (1964) 112 CLR 125 at 137. 73 (2000) 201 CLR 552 at 575-576 [57]. 74 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 per Dixon J; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130 per Barwick CJ. 75 [2004] NSWSC 796 at [21]. Crennan possibly succeed or was "so manifestly faulty that it does not admit of argument"76. The latter phrase also appeared in the judgment of Barwick CJ in General Steel77. Hoeben J then went on under the heading "Prejudice" to deal with the further submission by the defendants that the effluxion of time was such that a fair trial for the defendants was not possible. His Honour treated this submission as founded upon the ground of abuse of process appearing both in Pt 13 r 5 and as an element in the inherent jurisdiction of the Supreme Court. Hoeben J concluded that the defendants, who bore the onus, had failed to satisfy him that they could not have a fair trial in the circumstances of the case and he dismissed the defendants' motions that the proceedings be permanently stayed or dismissed. The Court of Appeal The course taken in the submissions to Hoeben J helps explain the path taken in the judgment of Bryson JA in the Court of Appeal. In truth, the absence of a triable issue, as well as the impossibility of the defendants obtaining a fair trial in the circumstances of the case, may be seen as instances of abuse of process and that term is not applicable solely to the latter situation. It will be recalled that, in the passages set out earlier in these reasons from the judgments of Gaudron J in Ridgeway v The Queen78 and McHugh J in Rogers v The Queen79, the jurisdiction was described in terms sufficiently ample to encompass both situations. The leading judgment in the Court of Appeal was delivered by Bryson JA. His Honour treated as the same in substance the complaints made by the defendants that the proceedings were an abuse of process and that they were irretrievably prejudiced by reason of the delay in the bringing of the proceedings; he treated the remaining complaint as distinct and as depending upon Pt 13 r 5, it would seem, as the only possible basis of power. This complaint was that the defendants were highway authorities at the relevant time and that there was no evidence relating to the circumstances and causation of the accident and injury sustained by the plaintiff. 76 [2004] NSWSC 796 at [26]. 77 (1964) 112 CLR 125 at 129. 78 (1995) 184 CLR 19 at 74-75. 79 (1994) 181 CLR 251 at 286. Crennan To that complaint, Bryson JA treated as applicable the reasoning in General Steel80. His Honour said that the "test" was to the effect that the defendants had to demonstrate "that the case is so clearly untenable that it cannot possibly succeed"81. His Honour then treated the task of the defendants as being to show by evidence that the plaintiff was not in a position to call any evidence raising any question for determination at trial of the pleaded allegations. Bryson JA did not accept the conclusion of Hoeben J that the affidavit evidence relied upon by the plaintiff indicated clear recollections by the deponents. However, Bryson JA went on to disagree with an assumption by the primary judge that the plaintiff had no recollection of how the accident occurred. There was nothing in the nature of an admission by the plaintiff that he had no recollection of what happened; even though there was no basis upon which it could be found that the plaintiff was able to do so, it might well be that the plaintiff was in a position to give some evidence about the events. The defendants in their strike-out application had not met "the standard of certitude" required for them to succeed, with the result that the conclusion reached by Hoeben J on the summary disposal application "under Pt 13 r 5" was correct82. His Honour then turned to consider, as a distinct matter, the exercise of the inherent jurisdiction to stay proceedings by reason of the great delay in the commencement of the action. Bryson JA referred to the statement by Dixon J in Cox v Journeaux [No 2]83: "A litigant is entitled to submit for determination according to the due course of procedure a claim which he believes he can establish, although its foundation may in fact be slender. It is only when to permit it to proceed would amount to an abuse of jurisdiction, or would clearly inflict unnecessary injustice upon the opposite party that a suit should be stopped." His Honour discountenanced any approach which saw the absence of a statutory time bar as in some sense an authorisation to bring proceedings at the 80 (1964) 112 CLR 125 at 128-130. 81 (2005) 43 MVR 381 at 385. 82 (2005) 43 MVR 381 at 394. 83 (1935) 52 CLR 713 at 720. Crennan particular time within the statutory period when they were instituted. His Honour, correctly, emphasised that statutory time bars speak to the consequence of the passage of time, regardless of other considerations. He said84: "Delay is not what the [Limitation Act] authorises, literally or in substance. It operates in quite another way, by preventing proceedings being brought after prescribed times, irrespective of whether or not the proceedings can be fairly adjudicated. Some statutory time limits are quite short, for example time limits of 2 years or 3 are sometimes prescribed, and there must be many cases where a fair hearing could be conducted even if those statutory limits have not been observed. The present case is one at the extremes, as almost 3 decades passed before the proceedings were commenced, and 4 decades will have passed before the proceedings ever go to trial. The [Limitation Act] cannot in my view close the court's eyes to the practical inability of reaching a decision based on any real understanding of the facts, and the practical impossibility of giving the defendants any real opportunity to participate in the hearing, to contest them or, if it should be right to do so, to admit liability on an informed basis." The critical holding by Bryson JA appears in the sentence85: "No more than a formal enactment of the process of hearing and determining the plaintiff's claim could take place; it cannot be expected that the process would be just." "To my mind the simple and overwhelmingly clear position is that no useful evidence is available upon which to conduct a trial into the question whether the plaintiff's injuries were caused by negligence of the defendants, and no further search or inquiry is in any way likely to locate any such evidence; so that a trial of the proceedings could not rise above a debate about the effect of scraps of information, and it is impossible to inform the debate with any realistically useful information." 84 (2005) 43 MVR 381 at 405-406. 85 (2005) 43 MVR 381 at 406. 86 (2005) 43 MVR 381 at 405. Crennan In his concurring reasons, Giles JA dealt as follows with the two strands in the defendants' applications for a permanent stay. His Honour dealt with the first strand saying87: "While the defendants did not establish that the plaintiff's case was untenable, nor did the plaintiff demonstrate its strength; on the limited material disclosed, it is not a strong case." With respect to the other strand, his Honour observed that whether the defendants could have a fair trial necessarily required consideration of the negligence alleged against them. The negligence was alleged in broad terms and the more generously the terms of the pleading of the plaintiff's case, the more difficult it was for the defendants to meet the allegations after so long a time. His "The plaintiff's case was not narrowed by proffering a meaningful account from the plaintiff of how he came to run off the road, or an expert report identifying material deficiences in the design, construction, maintenance or state of the roadway. It is particularly against that background that it would be unfair and oppressive on the defendants to require them to attempt to meet such a generous case under the difficulties brought about by the lapse of time." The third member of the Court of Appeal, Mason P, agreed with both judgments. The appeals to this Court There is no issue by way of cross-appeal or notice of contention by the defendants in respect of the treatment by the Court of Appeal of the failure of the defendants to establish that the cause of action was "untenable". The focus of the appeal is upon the other strand in the reasoning in the Court of Appeal. Here the ground taken by the plaintiff is one which, if accepted, would have denied, in the circumstances, the existence of the power to order the permanent stay. The plaintiff accepts that his case in the Court of Appeal would have failed if there had been misconduct shown on his part which caused the inability of the defendants to have a fair trial. But, the plaintiff submits, in the 87 (2005) 43 MVR 381 at 382. 88 (2005) 43 MVR 381 at 381-382. Crennan absence of such a showing of misconduct, there was no power to make the order complained of by the plaintiff. It is in this respect that the plaintiff relies particularly upon Birkett v James89, a decision of the House of Lords which has been accorded significant standing in several Australian intermediate courts of appeal90. Counsel for the plaintiff developed the submission by placing particular emphasis upon the operation of s 52 of the Limitation Act. This had suspended the running of the limitation period for the duration of the disability suffered by the plaintiff. Reference was made to a number of English authorities91. These were said to demonstrate that where there is a statutory limitation period any exercise of power to stay proceedings commenced within that period must be exceptional and could not be supported merely by prejudice which might be expected to flow from the effluxion of time within the limitation period. The plaintiff submitted that some element of "oppressive" conduct on the part of the plaintiff must be discernible before the court would exercise the power to order a permanent stay. The "oppression" lay in conduct which was burdensome, harsh, wrongful. Conclusions on the appeals There is no substance in the negative implication which the plaintiff seeks to draw from an unexpired statutory limitation period. As Bryson JA pointed out, periods of statutory limitation operate indifferently to the existence of what might be classified as delay on the part of a plaintiff. Section 63 of the Limitation Act provides for the extinction of causes of action "to recover any debt damages or other money". But s 68A requires a party claiming the benefit of extinction to plead that extinguishment. To say that a limitation period has not run is to say that the potential defendant, if now sued, has no accrued defence to the action. 90 De Nier v Beicht [1982] VR 331; Williams v Zupps Motors Pty Ltd [1990] 2 Qd R 91 Tolley v Morris [1979] 1 WLR 592; [1979] 2 All ER 561; Hogg v Hamilton and Northumberland Health Authority [1993] 4 Med LR 369; Bull v Devon Area Health Authority [1993] 4 Med LR 117; Headford v Bristol and District Health Authority [1995] 6 Med LR 1. Crennan In that setting it is unsatisfactory to speak of a common law "right" which may be exercised within the applicable statutory limitation period, and of the enacting legislature as having "manifested its intention that a plaintiff should have a legal right to commence proceeding with his action". The words are those of Lord Diplock in Birkett v James92. The difficulty is in the expression "a legal right". The plaintiff certainly has a "right" to institute a proceeding. But the defendant also has "rights". One is to plead in defence an available limitation defence. Another distinct "right" is to seek the exercise of the power of the court to stay its processes in certain circumstances. On its part, the court has an obligation owed to both sides to quell their controversy according to law. It is a long, and impermissible, step to deny the existence of what may be the countervailing right of a defendant by imputation to the legislature of an intent, not manifested in the statutory text, to require the court to give absolute priority to the exercise by the plaintiff within the limitation period of the right to initiate proceedings. The truth is that limitation periods operate by reference to temporal limits which are indifferent to the presence or absence of lapses of time which may merit the term "delay". The "right" of the plaintiff with a common law claim to institute an action is not at large. It is subject to the operation of the whole of the applicable procedural and substantive law administered by the court, whose processes are enlivened in the particular circumstances. This includes the principles respecting abuse of process. Birkett v James concerned a second action commenced in anticipation that a strike-out motion, for want of prosecution, would dispose of the first action. Lord Diplock said that in such a situation93: "[E]xceptional cases apart, where all that the plaintiff has done has been to let the previous action go to sleep, the court in my opinion would have no power to prevent him starting a fresh action within the limitation period and proceeding with it with all proper diligence notwithstanding that his previous action had been dismissed for want of prosecution". 92 [1978] AC 297 at 320. 93 [1978] AC 297 at 320-321. Crennan What those "exceptional cases" might include was not explored beyond the possible example given by Lord Diplock of Spring Grove Services Ltd v Deane94, but it is apparent from other passages95 that "contumelious disregard" by a plaintiff in observance of the more important steps in the preparation of the action for trial could enliven the exercise of the inherent power of the court. Such default was not relied on in Birkett v James96 itself. However, it is upon this footing that the present plaintiff points to a requirement of "oppressive conduct", to its conceded absence in this case, and to consequent error in principle by the Court of Appeal. The decisions in England since Birkett v James were analysed recently and in detail by the New Zealand Court of Appeal in Bank of New Zealand v Savril Contractors Ltd97. It is unnecessary to repeat what is there said, beyond making one point. This is that, as exemplified by the decision of the English Court of Appeal in Securum Finance Ltd v Ashton98, the new Civil Procedure Rules have been taken in England as giving a wider scope for the use of principles of abuse of process in dealing with dilatory plaintiffs. It has been suggested that the significance of Birkett v James has been "overtaken" by the strictures of the new procedural code99. The descriptions, rather than definitions, given in this Court and set out earlier in these reasons post-date Birkett v James and do not provide any ground for a requirement of oppressive conduct by the plaintiff. Rather, as in the circumstances of the present case, attention must be directed to the burdensome effect upon the defendants of the situation that has arisen by lapse of time. The 94 (1972) 116 Sol Jo 844. In that case the plaintiff's action had been dismissed for want of prosecution within the limitation period. When the same writ was filed two years later, the Court struck it out as an abuse of process, the plaintiff's solicitor having previously told the defendant the action was abandoned, so resulting in the defendant falling out of touch with a principal witness. 95 [1978] AC 297 at 318. 96 [1978] AC 297 at 318. 97 [2005] 2 NZLR 475. 99 Andrews, "Slow Progress in Striking Out Dilatory Litigants: 'No Second Bite at the Cherry'", [2001] Cambridge Law Journal 56 at 58. Crennan Court of Appeal held that this was so serious that a fair trial was not possible. The result was that to permit the plaintiff's case to proceed would clearly inflict unnecessary injustice upon the defendants. What Deane J said in Oceanic Sun Line Special Shipping Company Inc v Fay100, with respect to the staying of local proceedings, is applicable also to a case such as the present one. His Honour emphasised that there was no "requirement that the continuance of the action would involve moral delinquency on the part of the plaintiff"; what was decisive was the objective effect of the continuation of the action. In assessing that effect, there must be taken into account the consideration expressed by Dixon J in Cox v Journeaux [No 2]101 and set out earlier in these reasons. Bryson JA in terms did so. He went on to remark in that connection that the defendants had not shown that the plaintiff's action was "clearly without foundation". But, he concluded that there was "in practical terms nothing of utility to place in the balance against the defendants' claim for a permanent stay"102. There was no error of principle in the decision of the Court of Appeal. Orders The appeals should be dismissed with costs. 100 (1988) 165 CLR 197 at 247. See also the judgment of Mason CJ, Deane, Dawson and Gaudron JJ in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 101 (1935) 52 CLR 713 at 720. 102 (2005) 43 MVR 381 at 405. Kirby KIRBY J. Mr Andrew Batistatos ("the appellant") has suffered serious mental retardation from birth and gross disadvantages in life. He was catastrophically injured in a motor accident which left him paralysed by quadriplegia. After the accident, he lived for 14 years, confined and friendless, in a hospital and later a nursing home, until his siblings (from whom he had been separated as an infant) sought him out. Eventually, his sister arranged for him to retain a legal practitioner. Subsequently, having been appointed the appellant's tutor, she commenced proceedings for negligence on his behalf against two public authorities that, it was claimed, had caused his accident. The proceedings were brought within 30 years, the ultimate ("long stop") time limit fixed by the statute of limitations accepted by all parties below to be applicable to the case103. These appeals to this Court concern the law of limitations in New South Wales104. But chiefly they relate to the power of the Supreme Court of that State to provide a permanent stay of the appellant's proceedings as an abuse of process. The respondents sought such relief on the basis that the appellant's delay in bringing the proceedings would occasion an unfair trial. Reversing orders of the primary judge (Hoeben J)105, the New South Wales Court of Appeal106 permanently stayed the appellant's proceedings. Although mentally disabled before injury, profoundly injured by the accident, within the time limit to bring his case and found to have a "not untenable" cause of action, the appellant is thus denied access to the courts to decide his proceedings as they would normally be decided: after a trial on the evidence and based on the relevant law. By special leave, the appellant appeals to this Court to restore the orders of the primary judge so that he can proceed to trial. In Holt v Wynter107, Priestley JA observed that "different judges have somewhat different ideas" upon the matters debated in these appeals. However, the outcome now reached by the majority appears so counter-intuitive as to demand the closest scrutiny of the arguments that succeed. 103 Limitation Act 1969 (NSW), s 51(1). 104 Specifically the Limitation Act 1969 (NSW), ss 14, 51 and 52. 105 Batistatos v Roads & Traffic Authority [2004] NSWSC 796. 106 Newcastle City Council v Batistatos (2005) 43 MVR 381. 107 (2000) 49 NSWLR 128 at 142 [79]. Kirby The majority conclusion involves error of law. It gives inadequate weight to the right of access to the courts and to the parliamentary law that considered, and provided for, a long stop limitation bar in the case of persons whose delay in commencing proceedings is excused by their mental disability. The judgment of the primary judge should be restored. A trial should be had. No sufficient reason of fact or law supports the contrary, exceptional, conclusion. The facts Long delayed proceedings: The background to this case is found in the reasons of Gleeson CJ, Gummow, Hayne and Crennan JJ ("the joint reasons")108. Mr Andrew Batistatos was born in April 1932. He was effectively orphaned soon afterwards. From birth, he suffered from mental disability – so much so that he was scheduled under the Lunacy Act 1898 (NSW). Until the age of 22, the appellant spent most of his life confined to a mental asylum. Tests disclosed an IQ of 69 points. This is ranked as mental retardation. He had little formal education. Dr Gordon Kerridge reported that he "suffered from a significant mental disability which had substantially impeded him in the management of his affairs". The appellant's disabilities were compounded when, in the subject motor accident on 21 August 1965, he suffered a fracture of the spine at the C7/T1 level, causing quadriplegia. Dr Keith Mayne concluded that he was "unable to manage his own affairs, and although he can perform simple calculations and understands the nature of money, he is unable to read, to write cheques or to conduct business of any complexity". Self-evidently, such a person, and particularly after such an injury, was seriously impeded in bringing an action to court to protect his legal rights. In practical terms, the appellant was dependent upon others to do that for him. The appellant's injuries occurred when he was driving his vehicle in Fullerton Street, Stockton, near Newcastle. At the relevant time, Fullerton Street followed an "S" curvature. This was shown in an aerial photograph tendered in evidence. It had been taken 36 days after the accident. As ultimately pleaded, the appellant's claim was that his vehicle ran off the road at night into a ditch and overturned. The pleading blamed the accident, and the consequent injuries and losses, on the fact that the appellant's vehicle had come "upon an unmarked and unposted bend in the road in the vicinity of Meredith Street". After the accident, Fullerton Street was reconstructed so as to travel through the former Stockton Soccer Club field. This reduced the curvature of the 108 Joint reasons at [27]-[31]. Kirby previous design109. Arguably, this alteration decreased the risk to a motorist such as the appellant. According to the evidence, before the reconstruction, Fullerton Street was known as a "black spot"110. The appellant argues that it was so dangerous as to suggest that the respondents, or one of them, were negligent, among other things, in allowing it to be and remain that way. The appellant has spent his life since the accident in a wheelchair. He spent the ensuing 14 years in a hospital and later a nursing home. It was at that point that he met his brother and sister again. The appellant's legal practitioner was instructed in 1993. Within the year following, he brought the present proceedings. As was his right, the plaintiff requested a trial by jury. Defences and summary relief: The defendants named by the appellant (now the respondents) were the Roads and Traffic Authority of New South Wales ("the RTA"), as successor to the former Commissioner for Main Roads and the Newcastle City Council ("the Council"). The appellant alleges that the respondents had the care, control and management of Fullerton Street and were responsible for the design, construction and maintenance of the road at the point at which the accident occurred. However, the respondents applied for the summary dismissal, or a permanent stay, of the proceedings. Their applications were made both under the Rules of the Supreme Court, providing for such relief111, and under the "inherent" jurisdiction of the Supreme Court, operating to similar effect. The basis for the respondents' claims was not the descent of a limitation bar and extinguishment of the appellant's cause of action, as is often the case where a great delay has followed an occurrence, allegedly tortious. Nor was this a case where, to commence and maintain his proceedings, the appellant needed to obtain an extension of time under the limitation statute to bring the action outside the applicable limitation period112. Instead, making common cause, the respondents sought summary relief on the basis that the appellant's proceedings were legally and factually untenable or that, because of the objectively lengthy lapse of time, a fair trial of the action was no longer possible thereby rendering the proceedings an abuse of the process of the Supreme Court. In so far as the relief was sought by the respondents on the basis that the action was "clearly without foundation", the primary judge in the Supreme Court 109 Batistatos v Roads & Traffic Authority of NSW [2001] NSWSC 237 at [65]-[66]. 110 [2004] NSWSC 796 at [6]. 111 Supreme Court Rules (NSW), Pt 13 r 5. 112 Cf Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234. Kirby rejected that claim. He did so based on the Supreme Court Rules113. The Court of Appeal accepted that, in this respect, the primary judge's conclusion was correct, in outcome if not in all of the reasoning114. In this Court, both of the respondents accepted that the appellant's case had not been shown to be "untenable"115. Accordingly, that issue is not before this Court. No cross-appeal, nor any notice of contention, raising that issue, or contesting the proceedings on any other basis, was filed by either of the respondents. Instead, invoking the "inherent" jurisdiction of the Supreme Court, to provide relief against the proceedings, the respondents sought a permanent stay. It was that relief that the primary judge refused and the Court of Appeal granted. The ultimate issue in these appeals is, thus, whether the appellant has demonstrated error in the Court of Appeal's approach to the exercise of its jurisdiction and powers, allowing the reinstatement of the primary judge's orders or other relief. Evidentiary deficiencies and repair: As appears in the joint reasons116, the respondents relied heavily on the suggested imperfections in the evidence available to them, with which to defend themselves against the appellant's claims. Specifically, the respondents relied on the difficulties presented by what they claimed was the unavailability of (1) reports of police investigations of the accident; (2) hospital or medical records relating to treatment of the appellant before 1980; (3) documents relevant to the design, maintenance and construction of Fullerton Street before 1980; (4) identification of witnesses involved in road design, construction and maintenance in the street prior to the accident; (5) proof of the insurer(s) on risk at the applicable time; and (6) evidence as to the physical state of the road when the accident occurred, having regard to the post-accident reconstruction which eliminated the bend and other features on the road of which the appellant complained. The decisions at first instance The initial hearings: Before the respondents' proceedings for summary relief were heard by Hoeben J, there had been two earlier hearings in the Supreme Court. The first, before Master Harrison, was eventually confined to an application for summary relief based on the appellant's failure, before action, to give a notice of intended action, as then provided for in s 580 of the Local 113 [2004] NSWSC 796 at [49]. 114 (2005) 43 MVR 381 at 394 [48]. 115 Cf joint reasons at [58]. 116 Joint reasons at [37]. Kirby Government Act 1919 (NSW). The Master declined to dismiss the proceedings summarily on that basis117. Her refusal was affirmed by Bergin J, in an appeal from her orders118. That issue has not been pressed in this Court. It can be disregarded. In the balance of her reasons, Bergin J turned to an alternative claim for relief advanced by the respondents. This invoked the Supreme Court Rules and the "inherent" powers of the Supreme Court to terminate or stay the appellant's proceedings permanently119. Bergin J's consideration of the arguments of the parties on those issues was well advanced when the appellant's legal practitioner made a late application for an adjournment. This application was granted to permit further investigations following a grant of legal aid for the proceedings120. With the consent of all parties, the resumed proceedings came before Hoeben J121. The intervening decision in Brodie: Two consequences followed this interruption. The first was a development in the law which, as Hoeben J recognised, made one aspect of the respondents' resistance to the appellant's proceedings more difficult for them. This was the decision of this Court in Brodie v Singleton Shire Council122. That decision overruled previous understandings of the common law. The former "highway immunity rule"123 had limited the liability for negligence of highway authorities, such as the respondents, to positive acts of misfeasance. It relieved them of liability for relevant nonfeasance. Accordingly, if the appellant could prove that both or either of the respondents were responsible for the design, construction or maintenance of Fullerton Street (such that, for example, they ought to have eliminated the bend in that street and the "black spot" said to have caused or contributed to the appellant's accident before he was injured and not after), the appellant would begin building his case. Certainly, Brodie would make the appellant's task easier. 117 [2000] NSWSC 506 at [1]. 118 [2001] NSWSC 237 at [39]. 119 [2001] NSWSC 237 at [41]. 120 [2001] NSWSC 237 at [71]. 121 [2004] NSWSC 796 [13]. 122 (2001) 206 CLR 512. 123 See Gorringe v The Transport Commission (Tas) (1950) 80 CLR 357 at 375-376. Kirby The ruling (being with respect to common law doctrine) would apply retrospectively to the time when the appellant was injured in August 1965124. The reasoning of the primary judge: Also important for Hoeben J's conclusion was the use that the appellant's solicitor had made of the adjournment. During that interval, he had gathered evidence from three witnesses, namely Messrs Lanham, Wynne and Alston125. Affidavits from these witnesses were received by Hoeben J. Each of them deposed that he was "familiar with Fullerton Road, as it was in 1965, and would be able to give evidence as to its configuration, the location and height of grass, control measures provided by the Council, maintenance provided by the Council, and lighting provided in the vicinity of the accident site"126. As recorded by Hoeben J127, Mr Alston "actually saw the [appellant's] vehicle in position off the road not long after the accident". "[A]lthough the [appellant's] vehicle had been removed by the time [Mr Wynne] went to the accident site, he observed marks on the road and off the road at the accident site"128. The witnesses could give evidence about these facts. By reference to this evidence, to the aerial photograph of the road taken within days of the accident, to survey plans of the road dating from 1984/1985 and to internal Council documents concerning complaints about the road and photographs of parts of the road to which those complaints related129, Hoeben J concluded that relevant evidence would be available at a trial of the appellant's claim. It would describe the condition of the road at the time of his accident and relate that condition to subsequent objective evidence about the road after its trajectory was changed. In his reasons, Hoeben J contrasted the success of those representing the appellant in locating the three persons mentioned and the alleged inability of the respondents to find any evidence at all. He pointed out that Mr Lanham had, for many years, been an alderman of the respondent Council. The three newly found witnesses had "detailed recollection of the road and of events which had 124 Ha v New South Wales (1997) 189 CLR 465 at 503-504. 125 [2004] NSWSC 796 at [19]. 126 [2004] NSWSC 796 at [19]. 127 [2004] NSWSC 796 at [20]. 128 [2004] NSWSC 796 at [20]. 129 [2004] NSWSC 796 at [23]-[25]. Kirby happened in relation to the road at the relevant time"130. As Hoeben J "There was no suggestion that these witnesses were partisan or that their evidence would necessarily favour the [appellant]. These witnesses now having been identified could be interviewed by the [respondents] and through them it may well be possible to locate other persons with knowledge of the road and of the accident." The conclusions of the primary judge: There is no doubt that the interval between the appellant's accident and the commencement of his proceedings was significant. It imposed burdens and disadvantages on both sides. So much was not denied by the appellant. However, he disputed that the delay was such as to prevent a fair trial being had or even attempted. He also asked why his legal representative had been able to turn up relevant evidence but the respondents, by inference, with much larger resources, had failed to pursue lines of enquiry that were obvious, might have been fruitful and could still be explored132. By reference to such evidentiary material, Hoeben J concluded133: "I am not satisfied that the [respondents] have thus far taken steps reasonably open to them to identify and locate other persons, particularly from their own organisations, who may have similar information. Of particular importance is the aerial photograph taken thirty six days after the accident which shows the road and surrounding features and houses with considerable clarity. There is no evidence before me that there was any significant change to the road between 1965 and the early 1980s when the survey plans were prepared and when the photograph attached to Mr Garner's report were taken." 130 [2004] NSWSC 796 at [40]. 131 [2004] NSWSC 796 at [40]. 132 [2004] NSWSC 796 at [36]-[37] referring to the earlier reasons of Bergin J at [2001] NSWSC 237 at [38], [39], [40], [45]. 133 [2004] NSWSC 796 at [45]-[46]. Kirby The reasons of the Court of Appeal Finding the action not untenable: The respondents appealed to the Court of Appeal. In that Court, Mason P agreed in the reasons of Bryson JA and also with additional remarks of Giles JA134. In those remarks, Giles JA, who likewise agreed with Bryson JA, noted the broad terms in which the appellant's case had been pleaded and particularised and the failure of the appellant himself to give evidence in the applications for summary relief. Nevertheless, as Giles JA recognised, the appellant's case was basically about the "design, construction, maintenance or state of the roadway"135. He observed, correctly, that any trial would depend significantly upon expert testimony136. Inferentially, expert evidence about the standards of road design, construction and maintenance at the time of the appellant's injury in August 1965, would be available. It would be derived from contemporary texts and from the evidence of engineers having the necessary recollection, knowledge or training. Armed with the contemporaneous aerial photograph and with detailed lay evidence of the kind gathered by the appellant's legal representative, the prospects of a fair trial, involving contesting experts, seemed within reach. The essential reason that led Giles JA to his conclusion, adverse to the appellant, was137: "While the [respondents] did not establish that the [appellant's] case was untenable, nor did the [appellant] demonstrate its strength; on the limited material disclosed, it is not a strong case. I agree that the balance plainly comes down in favour of a stay of the proceedings." Except by cross-reference to the reasons of Bryson JA, neither Mason P nor Giles JA gave explicit weight to the appellant's ordinary entitlement to approach the court for a determination, in a full trial, of a serious action at law. This was so despite the significance of such a trial for the appellant and his carers and his desire to present his case for decision on the basis of full evidence and argument. Nor did any member of the Court of Appeal give explicit weight to the significance of the fact that the appellant, in his disabled condition, was bringing his claim within the time fixed by Parliament before his cause of action was 134 (2005) 43 MVR 381 at 381 [1]. 135 (2005) 43 MVR 381 at 382 [3]. 136 (2005) 43 MVR 381 at 381-382 [3]. 137 (2005) 43 MVR 381 at 382 [4]. Kirby extinguished by the long stop bar provided by law. Nor did any of their Honours refer, or give weight to, the entitlement of the respondents or either of them, at or after the close of the appellant's case at trial, to submit that the appellant's proceedings should be dismissed at that stage, on the basis that there was no case to answer138. Application of inherent jurisdiction: After concluding that Hoeben J had not erred in refusing summary disposal of the proceedings under Pt 13, r 5 of the Supreme Court Rules139 Bryson JA, for the Court of Appeal, turned to the "inherent" jurisdiction of the Supreme Court. He declared that such jurisdiction had been "reconferred by s 23 of the Supreme Court Act 1970 (NSW), to stay proceedings ... upon the ground that the continuance of the proceedings is harsh, oppressive and an abuse of process … [including by reason of] great delay in the commencement or in the conduct of the proceedings"140. After reference to the evidence and to judicial authority in this Court141, in the Court of Appeal itself142 and in England143, Bryson JA explained why he considered that Hoeben J had erred. Although acknowledging that, historically, "there has been a strong general reluctance to dismiss proceedings … where the statutory time limits have not expired"144 Bryson JA went on145: 138 Supreme Court Rules (NSW), Pt 34 r 8. See also Pt 34 r 7; cf Uniform Civil Procedure Rules (NSW), Pt 29 rr 9-10. 139 (2005) 43 MVR 381 at 394 [48]. 140 (2005) 43 MVR 381 at 394 [49]. 141 Cox v Jorneaux [No 2] (1935) 52 CLR 713 at 720; Jago v District Court (NSW) (1989) 168 CLR 23 at 25-26, 45-47, 57-61, 73-76; Walton v Gardiner (1993) 177 CLR 378 at 392-395; Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 552-554: see (2005) 43 MVR 381 at 396-399 [53]-[56], 399 [59], 142 Herron v McGregor (1986) 6 NSWLR 246 at 251, 253-255; Holt (2000) 49 NSWLR 128 at 142-143 [79]-[84]. 143 Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210 at 214; Birkett v James 144 (2005) 43 MVR 381 at 399 [56]. 145 (2005) 43 MVR 381 at 399 [57]. Kirby "However I am unable to see any reason in principle why the power should not be exercised in a proper case. The existence of apparent authorisation in a statute of limitation is not in principle a reason why great delay may not be an abuse of process, or a reason why the power of the court may not be exercised." Relevance of the limitation statute: This reasoning indicates (and nothing contradicts it) that Bryson JA gave no, or no particular, weight to the provisions of the limitation statute applicable to proceedings brought by persons with disabilities, such as the appellant. This approach was confirmed, later in Bryson JA's reasons, when he said146: "Delay is not what the Limitation Act 1969 authorises, literally or in substance. It operates in quite another way, by preventing proceedings being brought after prescribed times, irrespective of whether or not the proceedings can be fairly adjudicated. … The present case is one at the extremes, as almost 3 decades passed before the proceedings were commenced, and 4 decades will have passed before the proceedings ever go to trial. … No more than a formal enactment of the process of hearing and determining the [appellant's] claim could take place; it cannot be expected that the process would be just." Despite the substantive evidence to which Hoeben J had referred in his reasons (and the defaults and omissions of both of the respondents that he, and earlier Bergin J, had enumerated) Bryson JA went on147: "To my mind the simple and overwhelmingly clear position is that no useful evidence is available upon which to conduct a trial into the question whether the [appellant's] injuries were caused by negligence of the [respondents], and no further search or inquiry is in any way likely to locate any such evidence; so that a trial of the proceedings could not rise above a debate about the effect of scraps of information, and it is impossible to inform the debate with any realistically useful information. The balancing exercise in Walton v Gardiner148 can hardly be carried out, as there is in practical terms nothing of utility to place in the balance against the [respondents'] claim for a permanent stay." This was a somewhat hyperbolic description of the evidentiary state of the case, as described by the two primary judges. It is difficult to reconcile it with 146 (2005) 43 MVR 381 at 405-406 [80]. 147 (2005) 43 MVR 381 at 405 [79]. 148 (1993) 177 CLR 378 at 395-396. Kirby the earlier passage in Bryson JA's reasons, in the course of explaining why his Honour rejected the respondents' arguments to the effect that the case was "untenable" and liable to termination on that ground149. By first concluding that the respondents had failed to show that the appellant's case was "untenable" (in the sense of lacking an arguable basis), Bryson JA undermined, in my respectful opinion, the subsequent expressed conclusion that all that the appellant had, on which to base his case at trial, were "scraps of information" on which it would be unfair to put the RTA and the Council to trial, so that the Court of Appeal was authorised, exceptionally, to order a permanent stay for abuse of process. The issues The following issues arise: The applicable limitation law issue: The appellant's cause of action arose in 1965. At that time, the limitation statute applicable in New South Wales was the Limitation Act 1623 (Imp) (21 Jac I c 16) ("the 1623 Act"). The provisions of the 1623 Act, concerning persons with a mental disability150, were particularly protective of the disabled person. Does the limitation regime provided in the 1623 Act still apply to the appellant's proceedings? Or are they governed by the supervening provisions concerning persons with such a disability, as set out in the Limitation Act 1969 (NSW) ("the 1969 Act")? Having regard to the applicable limitation statute, was the appellant still within time to bring his proceedings against the respondents, when he began them on 21 December 1994? The court rules and "inherent" jurisdiction issue: Having regard to the fact that the Supreme Court of New South Wales is "re-established" by s 23 of the Supreme Court Act 1970 (NSW), is it correct to refer to the unexpressed powers of the Supreme Court to terminate proceedings brought within the applicable limitations period, as "inherent" powers? Or are any such "powers", existing beyond those expressly stated in the Supreme Court Rules, or implied by the right and duty of a superior court, such as the Supreme Court, to protect and uphold the integrity of its process? Having regard to the position of the Supreme Court within the integrated Australian Judicature for which the Constitution provides151, are there any constitutional implications that inform the content of the "inherent" or "implied" powers of the Supreme Court in this respect? In 149 (2005) 43 MVR 381 at 385 [13]. 150 Section 7. 151 Constitution, Ch III, see esp ss 73 and 77(iii). Kirby the case of a State Supreme Court, is it correct to refer to its residual, non- statutory powers as "inherent"? Is this classification of supplementary jurisdiction and powers correct, given that "inherent" powers are traceable historically to the courts created out of Royal Prerogative, which no Australian court now is? Is this classification relevant to the content of the powers? The necessity of oppression issue: To the extent that the Supreme Court continues to enjoy "inherent" (or "implied") powers to provide a permanent stay of proceedings, are such powers available beyond those stated in legislation, where the party seeking their exercise can demonstrate that the continuation of the proceedings would result in a trial that would be unfair to it? Or, in order to secure such a stay, is it necessary for the applicant for such relief to demonstrate that its opponent has acted with deliberate or contumelious disregard to the rights of others by delaying the proceedings or has, in some other way, been guilty of oppressive conduct that would render it just, in the circumstances, to terminate or order a permanent stay of the proceedings? The relief and right of action issue: In considering the provision of relief, whether described as "inherent" or "implied", is it relevant to give weight to the right, ordinarily belonging to a person asserting a cause of action at law, to have access to the courts for the trial of that person's action? Did the Court of Appeal err in failing to give any, or any proper, attention to this right in the present proceedings? The relevance of the limitation law issue: Having regard to the applicable limitation statute, was it relevant, in exercising the "inherent" or "implied" powers of the Supreme Court, to have regard to the appellant's profound mental and physical disabilities and the provision for a long stop bar against the bringing of such proceedings and to any extinguishment of the right of action by the applicable limitations statute? The relief issue: Having regard to the resolution of the foregoing issues, what relief, if any, should be afforded to the appellant? If error is shown, should the orders of Hoeben J be restored? Should the Court of Appeal's orders be affirmed on the same or different grounds? Or should the proceedings be returned to the Court of Appeal to exercise its jurisdiction and powers afresh, according to correct principles? Kirby The applicable limitation statute Limitation statutes and disability: As noted in the joint reasons152, these proceedings were conducted below on the basis that the limitation statute applicable to them was the 1969 Act153. At the date of the appellant's accident, the 1623 Act applied. Under s 3 of that Act, a six year limitation period was provided for "all actions … upon the case". Relevantly, an exception applied in the case of "any person or persons that is or shall … be at the time of such cause of action given or accrued, fallen or came … non compos mentis". In these cases, "such person or persons shall be at liberty to bring the same actions, so as they take the same within such times as are before limited, after their coming to or being … of sane memory … as other persons having no such impediment should have done"154. It was accepted that, at the date of his accident and at all material times afterwards, the appellant was "non compos mentis" for the purposes of the 1623 Act. It followed that, so long as the 1623 Act continued to apply to the appellant's case, there was no limitation period within which the appellant was required to commence his proceedings, unless he ceased to be non compos By the operation of the 1969 Act, the 1623 Act was repealed in so far as it applied to New South Wales. By s 5 of the 1969 Act, rights accrued, pursuant to the operation of the 1623 Act, were preserved. The appellant did not argue that, following the passage of the 1969 Act, he was entitled to the preservation of the indefinite right to bring proceedings as provided by that Act. He accepted that, after 1 January 1971, the 1969 Act applied to his cause of action. He accepted that the 1969 Act had provided the relevant limitation provisions since that time. The 1969 Act long stop provision: At trial, all parties accepted or assumed that, within the 1969 Act, the appellant had a reasonably arguable case that he was a person under a disability. This meant that the ordinary limitation period then applicable to his proceedings, of six years running from the date on which the cause of action first accrued156, was suspended for the duration of his 152 Joint reasons at [28]-[29]. 153 See, esp, Newcastle City Council (2005) 43 MVR 381 at 383 [9]. 154 Section 7. 155 Prowse v McIntyre (1961) 111 CLR 264. 156 The 1969 Act, s 14(1)(b). Kirby disability157. A potential further extension of the limitation period of three years applied after the person "ceases to be under a disability"158. On the uncontested evidence, the appellant had a relevant mental disability and had not ceased to be under it. The provisions, extending the time within which a person under a disability might bring an action, founded on a tort, appear in Div 2 of Pt 3 of the 1969 Act. The first section in that Part (titled "Postponement of the bar") is a general provision appearing in Div 1. The section reads, relevantly: "51 Ultimate bar (1) Notwithstanding the provisions of this Part, an action on a cause of action for which a limitation period is fixed by or under Part 2 is not maintainable if brought after the expiration of a limitation period of thirty years running from the date from which the limitation period for that cause of action fixed by or under Part 2 runs." There is now an exemption from this ultimate bar in the case of discretionary extensions for latent injuries159. That potential extension has no present application. Quadriplegia, at least, is far from a latent condition. The appellant did not argue otherwise. The reference in s 51(1) to Pt 2 of the 1969 Act includes a reference to s 14 of that Act. This establishes the general limitation period with respect to a cause of action founded on tort (originally of six years, now three160). The 1969 Act applies: Until the proceedings in this Court, it was acknowledged by all parties that the 1969 Act, not the 1623 Act, applied to the appellant's cause of action161. In its primary terms, the 1969 Act preserved, until 1971, protection against extinguishment by the preceding Imperial statute in its application to New South Wales. After 1971, the running of the limitation period, fixed by the 1969 Act, was suspended for the duration of the appellant's continuing disability. However, such suspension was itself subject to the 157 The 1969 Act, s 52(1)(d). 158 The 1969 Act, s 52(1)(e)(i). 159 Section 51(2), inserted by the Limitation (Amendment) Act 1990 (NSW), s 3, Sched 1, cl 5. 160 The 1969 Act, s 50C. 161 Cf Blunden v The Commonwealth (2003) 218 CLR 330 at 347 [46], 360 [94]. Kirby ultimate bar fixed by s 51 of the 1969 Act. That section of the 1969 Act provided that the appellant's action was not maintainable if it was brought after 30 years running, in the appellant's case, from 21 August 1965, the date of his accident. In supplementary written submissions, received after the hearing of these appeals, the respondents attempted to resile from this understanding of the applicable limitation law. They now assert that the indefinite limitation period provided by the 1623 Act, applicable to a person non compos mentis, who had not recovered, continued to apply to the appellant because of his ongoing mental state. The new argument is substantially one of law. Presumably, it was provoked by the significance given before this Court to "long stop" provisions of the 1969 Act. I see no procedural impediment in this Court's considering it162. However, the argument should not be accepted. First thoughts are often best. By virtue of the 1969 Act and its transitional provisions, the appellant, after 1971, became subject to the ultimate bar of 30 years there provided. That provision was an important feature of the proposals of the New South Wales Law Reform Commission, upon whose recommendations the 1969 Act was based163. It was a feature of the law given much emphasis in the Minister's Second Reading Speech supporting the Bill that became the 1969 Act164. The interpretation to the contrary would undermine the achievement of one of the most important reformatory purposes of that Act. Of it, the Law Reform Commission had said165: "We think, however, that quite apart from questions of title to land, a statute of limitations ought not to allow an indefinite time for the bringing of actions even if the disabilities and other matters dealt with in … the Bill do exist. These disabilities and other grounds of postponement may well be outside the knowledge of the defendant and we think it right that, after a period of thirty years has elapsed, there should be no further postponement of the statutory bar on any ground." 162 Cf Coulton v Holcombe (1986) 162 CLR 1 at 7-8. 163 New South Wales Law Reform Commission, Limitation of Actions, Report No 3, 164 New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 26 March 1969 at 5152. 165 New South Wales Law Reform Commission, Limitation of Actions, Report No 3, Kirby The language of the 1969 Act gives effect to this purpose. I do not understand the joint reasons in this Court to conclude otherwise. The submission that the 1623 Act still provides the limitation law applicable to the appellant's proceedings should be rejected. The Supreme Court Rules and "inherent" or implied powers Inherent jurisdiction and powers: All of the judges who have considered this case, including in the joint reasons in this Court, have assumed the correctness of the invocation of a so-called "inherent" jurisdiction and powers of the Supreme Court166. I acknowledge that it has been common, including in this Court, to speak of such "inherent jurisdiction" or "inherent powers"167. In A J Bekhor & Co Ltd v Bilton168, it was recognised that such descriptions amounted to "an uncertain expression loosely used and signifying a discretionary power which may be developed to meet circumstances not known to 19th-century Judges". In Australia, the concept of "inherent jurisdiction" or "inherent powers" has been borrowed from the reasoning of English judges, traceable to earlier times in English courts originally created out of the royal prerogative. The use of such expressions in Australia has not been subjected to an analysis appropriate to a country whose courts are not established out of the prerogative but provided for, or envisaged in, the federal and State constitutions and established by or under legislation enacted by Australian parliaments. There is a common tendency for lawyers to prefer judicial elaborations of the law over analysis of applicable legislation. This is a tendency which this Court, in recent years, with a single voice, has endeavoured to correct169. This tendency is relevant to so-called "inherent jurisdiction", relied upon as the source of the orders to provide a permanent stay against the continuation of the appellant's proceedings. 166 See joint reasons at [5]-[6]. 167 See eg Walton (1993) 177 CLR 378 at 393; cf Mason, "The Inherent Jurisdiction of the Court", (1983) 57 Australian Law Journal 449; Dockray, "The Inherent Jurisdiction to Regulate Civil Proceedings", (1997) 113 Law Quarterly Review 120. 168 [1981] 1 Lloyd's Rep 491 at 507. 169 Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vict) (2001) 207 CLR 72 at 89 [46]; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 545 [63]; Allan v TransUrban City Link Ltd (2001) 208 CLR 167 at 184-185 [54]; The Commonwealth v Yarmirr (2001) 208 CLR 1 at 111-112 [249]; Weiss v The Queen (2005) 80 ALJR 444 at 447-448 [9], 452 [31]; 223 ALR 662 at 664, 671. Kirby Inherent and implied jurisdiction: One aspect of the neglect of the constitutional setting for the jurisdiction and powers of Australian courts170 is the failure to subject notions of "inherent jurisdiction" and "inherent power" to an appropriate Australian constitutional scrutiny. The parties did not undertake such a scrutiny in these proceedings. Because it was neither attempted, nor made subject to any notices necessary for a decision based on such an argument171, it is inappropriate to take the matter further in these appeals. However, the point should not be wholly ignored. If it is "inherent" jurisdiction or power that puts the appellant out of court, it is important to have some idea of the source and ambit of such a concept. All Australian courts are created by, or under, legislation. Whatever the position in the United Kingdom, the additional jurisdiction and powers of Australian courts may not, therefore, truly be described as "inherent". It may be more accurate to describe any supplementary jurisdiction or powers of such the courts, constitutional or legislative source. According to this approach, a reference to "inherent jurisdiction" or "inherent powers" is likely to mislead. It may give rise to exaggerated opinions as to the ambit of the propounded jurisdiction and powers. including superior courts, as "implied", implied that Support for this opinion, in the context of the Federal Court of Australia, was expressed by Bowen CJ in his reasons in Jackson v Sterling Industries Ltd. His Honour said172: "In relation to a statutory court such as the Federal Court it is wise to avoid the use of the words 'inherent jurisdiction'. Nevertheless a statutory court which is expressly given certain jurisdiction and powers must exercise that jurisdiction and those powers. In doing so it must be taken to be given by implication whatever jurisdiction or powers may be necessary for the exercise of those expressly conferred. The implied power for example to prevent abuse of its process, is similar to, if not identical with, inherent power." When that case reached this Court, these words were endorsed by Deane J173. Even in the absence of an express statutory grant of jurisdiction and 170 Constitution, s 73. See also s 74. 171 Judiciary Act 1903 (Cth), s 78B. 172 (1986) 12 FCR 267 at 272. 173 Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623-624. Kirby power to a court such as the Federal Court, Deane J was of the opinion that, simply because it was a court, it "would have possessed power to make such orders in relation to matters properly before it, as an incident of the general grant to it as a superior court of law and equity of the jurisdiction to deal with such matters"174. In short, the additional unexpressed powers are not inherent. They are implied in the relevant legislation. Similar opinions have been expressed in later decisions of this Court175. Usually, however, the distinction between "inherent" and "implied" powers has been noted but left unresolved176. Importance of the distinction: The distinction is not necessarily a trifling one. The notion of "inherent powers", in the case of courts of constitutional or statutory origin, involves a judicial assertion of authority to enlarge the ambit of the jurisdiction and powers of the court without expressly anchoring such enlargement in the text of that law. Given that the courts often impose coercive burdens on liberties and rights, it is arguably safer to derive the source for additional unexpressed jurisdiction and powers in the necessary implications from the written law rather than in a vague notion of inherent powers, found attractive to judges in particular cases. Because so-called "inherent jurisdiction" and "inherent powers" may sometimes be used to abrogate fundamental common law rights177, or to suggest departure from express statutory provisions178, it seems important to establish the true source of the propounded jurisdiction or power and to trace it back to the legislative source. In courts recognised by the Constitution and created by statute, the source of any such jurisdiction or power is, ultimately, the Constitution and the statute itself. In so far as the word "inherent" connotes a source existing in the royal prerogative or elsewhere, it appears to be inapplicable to the Australian constitutional setting. State Supreme Courts in Australia are sometimes treated as courts of unlimited jurisdiction. However, as this Court pointed out in Stack v Coast 174 (1987) 162 CLR 612 at 623. 175 See, eg, Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 422 [108]. 176 See eg CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 391; cf Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 at 16-17. 177 Reid v Howard (1995) 184 CLR 1 at 16. 178 Doyle v The Commonwealth (1985) 156 CLR 510 at 518. Kirby Securities (No 9) Pty Ltd179, in the Australian constitutional context, no court really enjoys unlimited jurisdiction or powers. The jurisdiction and powers of every Australian court are limited by that court's constitutional and statutory competence. In the case of the Supreme Court of New South Wales, its jurisdiction and powers were originally granted by the Third Charter of Justice for New South Wales, issued in 1823. However, that instrument was, in turn, supported by an Act of the Imperial Parliament180. Now, by s 22 of the Supreme Court Act 1970 (NSW), it is provided that the court "as formerly established as the superior court of record in New South Wales is hereby continued". The source of its continuance now appears to be that State law. Constitutionally speaking, the source appears to be neither an Imperial Act nor a royal charter. It is s 23 of the Supreme Court Act that provides that the court "shall have all jurisdiction which may be necessary for the administration of justice in New South Wales". In Tait v The Queen181, decided before the enactment of the Supreme Court Act, this Court found it unnecessary to determine whether the statutory grant of jurisdiction and power to a State Supreme Court was wider than that previously existing under the Charter of Justice. That may or may not be. But now the source lies in a law enacted by a State Parliament, itself a legislative body expressly provided for in the federal Constitution182. The source of that enactment can be traced, ultimately, to the will of the electors entitled to vote in New South Wales. It does not appear to lie in Imperial law, the royal prerogative or any other source. Any judicial expressions of "inherent" or "implied" powers of such a court must therefore be consistent with the new Supreme Court Act. It follows that, arguably, the source of the jurisdiction, and the "necessary" powers, of the Supreme Court of New South Wales is, after 1970, s 23 of the Supreme Court Act, other Acts and implications found there and not "inherent" jurisdiction and powers. 179 (1983) 154 CLR 261 at 275. 180 It was pursuant to the New South Wales Act 1823 (Imp) (4 Geo IV c 96) that Letters Patent dated 13 October 1823 were issued, to take effect from their promulgation in Sydney. This took place on 17 May 1824. Those Letters Patent are referred to as "The Charter of Justice". By that Charter, the Supreme Court of New South Wales was made a court of record (s 1) with a Chief Justice (s 2) who should keep the Seal of the Court (s 3). 181 (1962) 108 CLR 620. 182 Sections 9, 10, 15, 25, 29-31, 51(xxxvii) and (xxxviii), 107-108, 111 and 123. Kirby The difference need not be resolved: Concerns such as the foregoing are not determinative of the outcome of these appeals. I accept that the wide grant of jurisdiction provided to the Supreme Court by s 23 of the Supreme Court Act is adequate, of itself, to confer on that Court, jurisdiction and power (whether technically "inherent" or "implied") to terminate proceedings and to provide a permanent stay of proceedings183. I also accept that the provisions of the Supreme Court Rules do not state exhaustively the circumstances in which a judge of the Supreme Court might strike out proceedings, or permanently stay them, as an abuse of process. Whether the additional unarticulated jurisdiction and power is properly described as "implied" from the statutory grant of jurisdiction rather than "inherent" is not therefore an issue that must be decided in these appeals184. Deliberate misconduct is not essential to relief The appellant's argument: The appellant submitted that a claim, brought as the appellant's has been, within the time allowed under the applicable limitation statute, could not (whatever the circumstances) be struck out or permanently stayed as an abuse of process without proof of some oppressive or contumelious conduct on the part of the party bringing the action185. On this submission I agree in the conclusions stated in the joint reasons186. It is not necessary for a party seeking relief against what it claims is an abuse of process, to show misconduct of some kind on the part of the plaintiff. To the extent that this requirement is suggested by any dicta of the House of Lords in Birkett v James187, those dicta do not represent Australian law. 183 Cf Burton v Shire of Bairnsdale (1908) 7 CLR 76; Dey v Victorian Railways Commissioners (1949) 78 CLR 62. 184 Cf Youngstown Sheet & Tube Co v Sawyer 343 US 579 at 584-585 (1952) per 185 He relied on Herron v McGregor (1986) 6 NSWLR 246 at 253, 256 per McHugh JA. At 256 McHugh JA stated "[w]hile long delay in bringing proceedings by itself is not enough to render a complaint an abuse of process, the circumstances of this case make the delay in bringing proceedings so oppressive as to amount to an abuse of process." 186 Joint reasons at [69]-[70]. Kirby In Jackamarra v Krakouer188 I acknowledged that delay (as in the commencement or continuation of litigation), and the fact that such delay was "intentional or contumelious", were relevant considerations in judging whether the proceedings should be terminated189. In the context of identifying considerations that need to be taken into account in making such decisions, I referred to Birkett v James. Amongst other considerations that I mentioned in Jackamarra were whether any of the delay was caused by the litigant or its lawyers and "considerations personal to the party which might have affected its ability to safeguard its own interests"190. Each of the stated considerations is relevant to these appeals. It was agreed that neither the appellant nor his legal representative could be blamed for the delay once the present proceedings were commenced. The matters personal the appellant, specifically his mental and physical disabilities, are considerations relevant to the final judgment that has to be made. Misconduct not essential for a stay: The suggestion that the respondents had to prove misconduct of some kind on the appellant's part before they could secure relief against proceedings classified as an abuse of process should be rejected191. The considerations to be given weight are much more numerous. The preclusory theory of the power, propounded for the appellant, cannot be reconciled with the purposes of the power. The power to terminate or stay proceedings as an abuse of process does not exist simply to punish a party or its legal representatives who deliberately delay proceedings to the disadvantage of other parties. In the exceptional cases to which it applies, the power to stay exists to prevent the conduct, or further conduct, of proceedings that would be fundamentally unfair to another party, because, for example, of serious delay in the commencement, or continuation, of the proceedings. In some cases an order made under this power, or under analogous powers, will indeed be made to protect the parties proceeded against from the serious injustice involved in subjecting them to litigation in circumstances that render the proceedings grossly unfair. However, part at least of the reasons for the termination of such proceedings, or the provision of a permanent stay, on the ground of an abuse of process, is the self-regard of the court itself. At the one time, the court is protecting parties and defending the "temples of justice". This 188 (1998) 195 CLR 516 at 542-543 [66.7]. See also at 521 [7]. 189 In that case by failing to enter an appeal for hearing despite an extension of the period of time within which to do so. 190 (1998) 195 CLR 516 at 543 [66.7]. 191 Contra reasons of Callinan J at [232]. Kirby is inherent in the performance by the court of its jurisdiction and the exercise of its powers192. Thus, preclusion by misconduct is a consideration. But it is not the only consideration. Nor is it essential. Of its nature, the power exists for application in a wider range of circumstances. Furthermore, of its nature, the power may be invoked although a party is still within the applicable limitation period for maintaining its claim193. This must be so because, if an ultimate limitation bar has descended, no question would normally arise as to the power of the court to dismiss, or permanently stay, proceedings as an abuse of process. In such a case, the parties sued would usually be entitled to relief on limitation grounds (subject to any power to extend the limitation period in the circumstances of the case). By accepting that the court's power to dismiss proceedings, or to stay them permanently, in circumstances of misconduct, the appellant effectively accepted that the limitation statute did not afford an irreducible right to bring proceedings within the relevant limitation period. Once that concession was made (correctly in my view) the issue for decision shifts. It involves not the existence of a power to provide relief from proceedings that constitute an abuse of process. It concerns, instead, the content of that power and the relevance to it of a provision in limitation law and whether, in the present case, such provision was given proper weight. Mistaking the content of the power to terminate proceedings An issue in these appeals: I now reach the issues that are decisive for the outcome of these appeals. In its supplementary written submissions the RTA asserted that the remaining issue in the appeals was whether the Supreme Court enjoyed a "discretionary power to grant a permanent stay of proceedings where the action is not time-barred". It contended that the appellant did not advance a proposition that the exercise of discretion by the Court of Appeal had miscarried. The Council adopted, and supplemented, the RTA's arguments. These submissions do not represent a correct statement either of the ground of appeal before this Court or of the position that the appellant adopted in his arguments. 192 See Nudd v The Queen (2006) 80 ALJR 614 at 632-633 [84]; 225 ALR 161 at 184; Levinge v Director of Custodial Services (1987) 9 NSWLR 546 at 557; Jack Brabham Holdings Pty Ltd v Minister for Industry, Technology and Commerce (1988) 85 ALR 640 at 651. 193 Contra reasons of Callinan J at [220]. Kirby In his notices of appeal to this Court, the appellant contended that the Court of Appeal erred in law in "defining the circumstances in which a citizen can be deprived of his fundamental right to bring a case before a Court in a civil proceeding" where he has brought his case within a relevant period of limitation and bears no fault for any delay. This ground of appeal raises the relevance, if any, of the existence and content of the period of limitation (and the absence of any fault for such delay) where the proceedings have been brought within a relevant limitation period. Issues should not be narrowed: During oral argument, the appellant made it clear to this Court that this was one of the ways in which he advanced his argument194. No occasion arises for this Court to narrow the issues, properly raised in support of the appellant's appeals, falling as these issues do within the amended grounds of appeal filed on his behalf. Error in the Court of Appeal's reasons Instability of appellate reasoning: The Court of Appeal was exercising its powers in proceedings that had earlier been heard by Master Harrison, Bergin J and, ultimately, Hoeben J. The Court of Appeal considered (as has been explained)195 that no error appeared in Hoeben J's conclusion, based on the respondents' invocation of the jurisdiction and powers of the Supreme Court to stay the proceedings under Pt 13 r 5 of the Supreme Court Rules196. Its intervention was thus confined to the suggested error of Hoeben J in the exercise of the "inherent jurisdiction" of the Supreme Court (or implied powers as I should prefer to describe them). It follows that the question for this Court, as a court of error, is whether the Court of Appeal erred in considering that it was authorised to disturb the evaluative (sometimes called "discretionary") decision, reached by Hoeben J. As such, this Court is not simply involved in a consideration, as on a rehearing, of how it would exercise the applicable powers for itself, absent demonstration of error on the part of the Court of Appeal197. 194 [2006] HCATrans 004 at 1114-1125. 195 See above these reasons at [105]. 196 [2004] NSWSC 796 at [49]. 197 Liftronic Pty Ltd v Unver (2001) 75 ALJR 867 at 879 [65.1]; 179 ALR 321 at 336; Manley v Alexander (2005) 80 ALJR 413 at 416 [14]; 223 ALR 228 at 231; CSR Ltd v Della Maddalena (2006) 80 ALJR 458 at 464 [12]; 224 ALR 1 at 6. Kirby There is an obvious instability in the Court of Appeal's reasoning in so far as all of the judges there endorsed the conclusion that Hoeben J had been correct to refuse summary dismissal under Pt 13 r 5 on the basis that the case was not "so clearly untenable that it cannot possibly succeed"198. Those reasons later conclude that the trial had to be stopped because all that the appellant was relying upon at trial was "scraps of information" in order to establish the liability of the respondents199. If it were true, as Bryson JA concluded, that it was "impossible to inform the debate [between the parties] with any realistically useful information"200, it is impossible to sustain the conclusion that a "viable" or "not untenable" case had been demonstrated by the appellant which denied the respondents summary relief on that footing. This inconsistency is of particular concern when the very basis of Hoeben J's conclusion at first instance, was a rejection of the respondents' submissions that the appellant's case (including, by then, the affidavits of Messrs Lanham, Wynne and Alston), prevented the summary termination or stay of the proceedings as an abuse of process. Principally, it was those affidavits that convinced Hoeben J and the Court of Appeal that the respondents did "not meet the standard of certitude required for the exercise of this power" under Pt 13 r 5 to stay the proceedings201. Either the affidavits of Messrs Lanham, Wynne and Alston are mere "scraps of information" that render it "impossible to inform the debate with any realistically useful information" constituting "in practical terms nothing of utility to place in the balance against the [respondents'] claim for a permanent stay"202 or the affidavits and the other material tendered by the appellant constitute a not untenable case, so that the matter should proceed to trial. It is impossible to have it both ways. Need to correct erroneous reasoning: It is possible to imagine a proceeding in which, although a plaintiff established, by evidence, a not untenable case, the countervailing injustice to the defendant might be such as to render the trial so seriously unfair that it should be stayed permanently as an 198 (2005) 43 MVR 381 at 385 [13]. 199 (2005) 43 MVR 381 at 405 [79]. 200 (2005) 43 MVR 381 at 405 [79]. 201 (2005) 43 MVR 381 at 394 [48]. 202 (2005) 43 MVR 381 at 405 [79]. Kirby abuse of process. However, this is not the way the Court of Appeal explained its orders. Such a serious inconsistency in the reasoning supporting the orders of the Court of Appeal, cannot be allowed to stand. Especially so when its consequence is to put a person, such as the appellant, out of court, although he is within time to bring his proceedings under the applicable limitation law. This Court must correct the consequential orders of the Court of Appeal unless some other lawful foundation can be found to support them. Alternatively, this Court must return the proceedings to the Court of Appeal to exercise its powers afresh without this inconsistency. The relevance of the right of access to the courts Fundamental right of access: The reference, in the appellant's notices of appeal, to the deprivation of a citizen's "fundamental right to bring a case before a Court in a civil proceeding" is not well expressed. In Australia, access to courts (and tribunals) for the defence of legal rights, is not normally limited to "citizens"203. Nevertheless, I take the language of this ground of appeal to refer to the importance for any person with a requisite interest to have access to an applicable court. Such a person may complain, in a case such as this, that the summary termination of the right to have a court decide the case, on the basis of the entirety of the evidence and argument, denies that person a fundamental right. The common law has long been defensive of the right that all persons enjoy to have access to the courts and not to be denied such access save in the most exceptional of circumstances204. So much is inherent in the rule of law which is a foundation of Australia's legal system, implied in the Constitution. Thus, in Dey v Victorian Railways Commissioners205, Dixon J said: "A case must be very clear indeed to justify the summary intervention of the court … [O]nce it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, 203 There are some exceptions deriving from the content of substantive law. See, eg, Migration Act 1958 (Cth), s 48A. 204 Williams v Spautz (1992) 174 CLR 509 at 519; Old UGC Inc v Industrial Relations Commission of New South Wales [2006] HCA 24 at [52], [65]-[66]. 205 (1949) 78 CLR 62 at 91. See also Webster v Lampard (1993) 177 CLR 598 at 602. Kirby then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process." In General Steel Industries Inc v Commissioner for Railways (NSW)206, Barwick CJ, in a similar vein, affirmed that "great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal". His Honour said this whilst acknowledging that there are cases where a defendant "should be saved from the vexation of the continuance of useless and futile proceedings". These authorities have been applied repeatedly in this, and other, Australian courts. They are not stated in the modern language of universal human rights. However, they are directed to the same ends. The principles of the international law of human rights may now inform the content and application of Australian law207. The provision in Art 14 of the International Covenant on Civil and Political Rights ("ICCPR"), to which Australia is a party, providing a guarantee of the right to a fair trial, is the provision of that treaty most commonly invoked before the United Nations Human Rights Committee208. That article provides that "[a]ll persons shall be equal before the courts and tribunals. In the determination of … his rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law." To the extent that a party is deprived of the opportunity, at such a hearing, to present all available and relevant evidence and argument, in a substantial case that has been held not to be untenable, a question is presented as to whether the requirements of Art 14 of the ICCPR has been complied with. Simply because a case appears to be difficult to prove or has evidentiary weaknesses disclosed in a preliminary examination where summary relief is claimed, does not mean that a trial, in the normal way, would necessarily be unfair. The contrary is the case. Fair trial is fair to both sides: In Holt209, Priestley JA, in dissenting reasons, although in words that I regard as uncontroversial, said: 206 (1964) 112 CLR 125 at 130. 207 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42. 208 Joseph, Schultz and Castan, The International Covenant on Civil and Political Rights: Cases, Materials and Commentary, 2nd ed (2005) at 461. 209 (2000) 49 NSWLR 128 at 142 [79] (emphasis in original). Kirby "One thing seems to be clear; that is that the term ["fair trial"] is a relative one and must, in any particular case, mean a fair trial between the parties in the case in the circumstances of that particular case. Further, for a trial to be fair it need not be perfect or ideal. That degree of fairness is unattainable. Trials are constantly held in which for a variety of reasons not all relevant evidence is before the court. Time and chance will have their effect on evidence in any case, but it is not usually suggested that that effect necessarily prevents a fair trial." As Hoeben J pointed out in his reasons at first instance in this case, the seriously delayed trials of claims arising out of the Melbourne/Voyager collision210, anticipated by a contemporaneous decision of this Court211, did not prevent fair trials from taking place. In one such case, the trial took place 40 years after the collision212. In this case, the appellant's legal representative had discovered, and tendered, three independent witnesses, familiar with the road whose design, markings and surroundings lay at the heart of the appellant's In such claim, together with photographs, plans and other materials. circumstances, to stop the trial without a hearing on the merits is truly exceptional. It constitutes a rare and serious step. Especially is this so because of the dimensions of the claim; the importance of the proceedings for the appellant and his carers; the confirmed conclusion that, on the evidence, the appellant had a "not untenable" case; and the serious disabilities, mental and physical, that have, at all material times afflicted the appellant, explaining the delay in the earlier prosecution of his legal entitlements. It is true, as the joint reasons state213, that the Court of Appeal referred to the admonitions of caution in Cox214. In that decision, Dixon J placed emphasis on the fact that215: "A litigant is entitled to submit for determination according to the due course of procedure a claim which he believes he can establish, although its foundation may in fact be slender. It is only when to permit it to 210 [2004] NSWSC 796 at [44]. 211 Parker v The Commonwealth (1965) 112 CLR 295. See also The Commonwealth v Verwayen (1990) 170 CLR 394. 212 Wright v The Commonwealth [2005] VSC 200. 213 Joint reasons at [7]. 214 (1935) 52 CLR 713. 215 (1935) 52 CLR 713 at 720 (emphasis added); (2005) 43 MVR 381 at 404 [73]. Kirby proceed would amount to an abuse of jurisdiction, or would clearly inflict unnecessary injustice upon the opposite party that a suit should be stopped." The Court of Appeal also referred to similar remarks of Dixon J in Dey and of Barwick CJ in General Steel216. Fair trial takes account of disability: What is missing from the consideration of this general principle is an express recognition by the Court of Appeal of the special circumstance occasioned by the severe disabilities, mental and physical, under which the appellant laboured. From the earliest times of the Australian legal system, reflected in the provisions of the 1623 Act, mental disabilities have been treated as falling in a special case requiring adjustments to the law's ordinary approach to delays that take the proceedings outside the ordinary limitation period. Such disabilities have attracted special treatment from Parliament. This has been so although a measure of unfairness is inherent in the extended limitation period. Large numbers in the Australian community, as in societies everywhere, suffer from mental and physical disabilities which help to explain a delay in bringing their proceedings promptly. There is no reflection in the Court of Appeal's reasons of that consideration or of its significance for the appellant's delay, the needs that his mental impairment occasioned, the disadvantages he faced in invoking the courts and the consequence that these features of his case should be weighed before a decision was taken to terminate the proceedings on the basis of abbreviated evidence and without a trial of the merits. Whilst each of the judicial officers at first instance who considered the respondents' applications for a permanent stay217 referred to these considerations, there is no like attention to them by any of the learned judges of the Court of Appeal. Necessarily, a "fair trial" involves fairness to both sides. The respondents are well resourced public authorities who, Bergin J and Hoeben J concluded, had not tried hard enough to gather evidence relevant to their defence to the case that the appellant had pleaded. Only the appellant's camp had done The judges at first instance made several suggestions that had not apparently occurred to those representing the respondents. These involved lines 216 (2005) 43 MVR 381 at 394 [47]. 217 [2000] NSWSC 506 at [3] per Master Harrison; [2001] NSWSC 237 at [17], [25], [43]-[48] and [72] per Bergin J; [2004] NSWSC 796 at [16]-[26], [43]-[48] per Kirby of enquiry which the respondents had not pursued. The respondents' contention that Hoeben J had disregarded the complaint about identifying the respondents' insurers at risk at the relevant times, is also unconvincing. Even hard-copy indexes to the published decisions reveal that, in the 1960s, both of the respondents were frequent litigants in New South Wales courts. Such cases suggest that there would be court files, which would not have been destroyed but archived. By inference, such records would provide a fruitful source for tracking down the respondents' and opponents' solicitors at that time who could help identify the respondents' insurers. In any event, the inability of a party, otherwise liable in law, to establish its insurance because it has destroyed its own files at a time when it was still exposed to risk is, although a relevant consideration, not determinative of the rights of another party who, to the requisite standard, can prove his case at law. Fair trial upholds real access: The Court of Appeal's conclusion that a "fair trial" could not be had in the circumstances is flawed by the failure of that Court to give due attention to justice to the appellant, especially in the circumstances of his serious disabilities. This is yet another instance where an Australian court has shown itself inattentive to the requirements of justice for a mentally disabled person218. In this case, that person is an individual entitled to a guaranteed human right of real access to the courts for the trial of a contested claim. He is a citizen and he is a person entitled to have fairness, in a case of profound importance for his well-being, put into the balance when the final decision is taken on whether his case constitutes an abuse of process. These omissions on the part of the Court of Appeal alone warrant the setting aside of that Court's orders. The enactment of an ultimate time bar is relevant Relevance of the ultimate time bar: There is a further and connected reason for concluding that the Court of Appeal misunderstood, and therefore misapplied, the exceptional power of the Supreme Court to terminate the appellant's case before trial as an abuse of process. The Court of Appeal decided not only that the existence of the ultimate statutory limitation bar was not determinative of the rights of the parties (a correct decision) but also that it was immaterial because addressed to a different purpose219 (an incorrect decision). 218 Cf Purvis v New South Wales (2003) 217 CLR 92 at 104 [20]. See also Goggin and Newell, Disability in Australia: Exploring a Social Apartheid (2005), 17-22, 219 (2005) 43 MVR 381 at 405-406 [80]. Kirby The "inherent" powers of the Supreme Court revolve in the orbit of statutes220. The bulk of the law of a contemporary society is now made up of parliamentary law. A power sourced to the decisions of judges cannot be inconsistent with, or indifferent to, relevant statutory provisions. Even where legislation does not expressly govern the case, it may afford the context in which the common law, or any particular statutory provision, will be found. Although, therefore, I accept that proceedings brought within an applicable limitation period may, as a matter of jurisdiction and power, be stayed as an abuse of process I do not accept that an exceptional limitation period fixed by Parliament is irrelevant to the exercise of the power to terminate or stay proceedings permanently on the basis that a fair trial could not be had. In a case such as the present, where the relevant State Parliament has addressed its attention to two provisions that are specifically relevant to a case of this kind, it is material to take the enacted law into account in defining the ambit of the common law power to terminate or to stay221. The two relevant statutory provisions, appearing in the 1969 Act, are (1) the special provision suspending the operation of the ordinary limitation period where a person is "under a disability", for the "duration of the disability"222; and (2) the particular provision, notwithstanding such suspension, imposing an "ultimate bar", arising after "the expiration of a limitation period of thirty years"223. No conclusion about the content of the "inherent" or "implied" power of the Supreme Court to terminate or stay proceedings permanently for abuse of process could be adopted which ignored, or rejected, these provisions. They fix the outer limits of what Parliament has provided. In deciding whether a particular trial would be irremediably "unfair", it is material and necessary to take into account that Parliament has decided that up to 30 years may elapse but, in the ordinary case of a person under a disability during that time, the claim is not statute-barred but may be brought, tried and determined. 220 Steyn, "Dynamic Interpretation Amidst an Orgy of Statutes", (2004) 35 Ottawa Law Review 163. 221 Cf Gray v Motor Accident Commission (1998) 196 CLR 1 at 12-13 [33], 27 [83], 45-47 [128]-[130]; Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 61-62 [23], 89-90 [105]; Harriton v Stephens [2006] HCA 15 at [139]-[144]. 222 Section 52(1)(c) and (d). 223 Section 51(1). Kirby Inevitably, a claim brought, by a person under a disability, beyond the ordinary limitation period and up to 30 years later will impose disadvantages on the party sued. Inescapably, it will involve unfairness to some degree. Yet, in balancing fairness to the plaintiff and to the defendant, Parliament has concluded that, within the time fixed by the ultimate bar, the action is not statute-barred. The concern for the entitlements of persons under a mental disability is as old as the 1623 Act, and perhaps older224. That concern has been reflected in the law during the entire history of Australia. What is new is the introduction of an "ultimate bar" of 30 years by which Parliament has addressed the period beyond which a defendant, even in cases of a plaintiff with a disability, should not be further troubled225. To say that these provisions leave open the exceptional power to terminate or stay proceedings permanently for an abuse of process is one thing. But to treat the outer boundaries within which the proceedings may be brought as immaterial, is quite another. The Court of Appeal erred in so regarding the provisions of ss 51 and 52 of the 1969 Act. The approach adopted by the Court of Appeal reflects an attitude to the fairness of trials on causes of action, sued for by a person with a serious disability, that is inconsistent with that adopted by Parliament. At the least, the parliamentary prescription was one that should have been taken into account in deciding the provision of relief where all of the judges at first instance on legal and discretionary grounds had refused that relief. English cases on the limitations context: There are many passages in English cases that support this approach to the relevance of the outer boundaries fixed by Parliament in the Limitation Act 1975 (UK)226. It is, after all, an approach similar to the way in which, earlier, equity developed its response to delay in proceedings by analogy with statutes of limitations227. Apart from general observations, there are several judicial remarks specifically addressed to the position, as here, of a person under a disability bringing a belated claim, but within an exceptional limitation period. 224 Herron (1986) 6 NSWLR 246 at 253. 225 There are long stop provisions in the limitations statutes of other Australian States: see, eg, Limitation of Actions Act 1958 (Vic), s 5(4). 226 See, eg, Birkett [1978] AC 297 at 320; Tolley v Morris [1979] 1 WLR 592 at 599- 600; [1979] 2 All ER 561 at 568 per Lord Diplock. 227 Blunden (2003) 218 CLR 330 at 358 [85] citing Meagher, Gummow and Lehane, Equity: Doctrines and Remedies, 4th ed (2002) at 1015-1016 [34-075]. Kirby In Hogg v Hamilton and Northumberland Health Authority228, Purchas LJ, in the English Court of Appeal, cited with approval a passage from the reasons of the trial judge in that case, Brooke J. After acknowledging that a delayed claim made it difficult for a medical practitioner to defend himself, Brooke J pointed to the fact that the legislative provision, allowing a person under a disability to bring a claim "at any time, however unfair it may be to the people against whom the claim is made", was inherent in the parliamentary prescription229. Mann LJ remarked that it would be rare, where proceedings were instituted within an extended or unexpired limitation period, that they could be found to be abusive "even though there has been demonstrable prejudice to the defendant in consequence of delay"230. In another English case, Bull v Devon Area Health Authority231, involving a claim brought on behalf of an infant damaged at birth by negligence allegedly occurring some 17 years before the trial, Mustill LJ addressed the "double disability" of infancy and mental disability suffered by the plaintiff. He said232: "Parliament must … have decided that the public interests in requiring factual disputes to be litigated promptly is outweighed, in cases such as this, by the public interest in giving the disadvantaged a long time within which to sue. By making this choice the legislature has imposed heavy burdens on the parties and also on the trial judge. Heavy as they are, the law requires them to be assumed." In Headford v Bristol and District Health Authority233, another case was presented in which damage to an infant plaintiff had been followed by a delay of 28 years before the initiation of proceedings for negligence. The trial judge dismissed the action as an abuse of process. The English Court of Appeal acknowledged the existence of a power, exceptionally, to terminate proceedings that constitute an abuse of process. However, it concluded that the applicable provisions of the Limitation Act 1980 (UK)234 indicated that Parliament had 228 [1992] PIQR 387. 229 [1992] PIQR 387 at 400. 230 [1992] PIQR 387 at 406. 231 [1993] 4 Med LR 117. 232 [1993] 4 Med LR 117 at 139. 233 [1995] 6 Med LR 1. 234 Section 28(1). Kirby "expressly contemplated … that"235 proceedings might be brought very many years after the limitation bar applicable to the ordinary case. When evaluating the relevance of delay, for the exceptional, residual common law power to terminate proceedings as an abuse of process, a material consideration was the express provision by Parliament of an exceptional limitation period in the case of infants and persons with disabilities. Giving weight to the legislative context: I agree in this consistent approach in the line of English cases, decided by senior judges and supported by persuasive reasons. The importance of the suspension of the ordinary limitation period for disability and the imposition of an ultimate limitation bar in the limitation statute applicable to the appellant's claim is this. It indicates a parliamentary judgment that, at least in the ordinary case, brought within the period fixed by any ultimate bar, the great delay involved (whilst necessarily prejudicial to the defendants) is not to be taken without more, as resulting in an unfair trial. This is because, both in the 1623 Act, and in the 1969 Act, legislatures have recognised that certain persons are under a disability or other disadvantage through no fault of their own and it is proper in their cases to adopt a more tolerant rule. Erroneous disregard of the context: Whilst cases will arise where the defendant may be relieved of that burden, those cases will be rare and exceptional. The passage, under the 1969 Act, of up to 30 years from the accrual of the cause of action cannot amount, of itself, to a ground of impermissible unfairness. Particular, additional, features of the litigation may demonstrate that a trial would be incurably unfair and so should be terminated or permanently stayed. But such exceptional features take their content from the fact that, by statute, delays of up to 30 years have been judged by the New South Wales Parliament as tolerable, in the ordinary case. Conclusion: the Court of Appeal erred Because, in exercising its exceptional power to stay the appellant's proceedings permanently, the Court of Appeal erred in the respects identified in expressing the power and in applying it to the circumstances, the Court of Appeal erred. Its orders cannot stand. Upon this premise, this Court must either exercise the power for itself or remit the matter so that the power might be lawfully re- exercised below. 235 [1995] 6 Med LR 1 at 4. Kirby Formulation of relief and orders Re-exercise of the power to stay: Having regard to the great delay in these proceedings, this Court should exercise the power that miscarried in the Court of Appeal236. The relevant evidence is available for this purpose. Clearly, this is a case where a trial should be had as quickly as possible. Taking into account the conclusion of the Court of Appeal (with which I agree) that Hoeben J did not err in rejecting the application for summary relief under the Supreme Court Rules and in finding that the appellant's proceedings were "not untenable", the alternative invocation in this case of the "inherent" (or "implied") jurisdiction or power of the Supreme Court should be rejected. The appellant's proceedings, brought within the time available to a disabled person, should be tried in the ordinary way. Delay disadvantages the appellant as well as the respondents. Despite the newly discovered witnesses, their evidence, the aerial photograph and other evidence, the appellant may ultimately fail to establish his claims of negligence and nuisance. The onus of proving his case rests on him. Yet he is entitled to have those claims tried. They should not be disposed of on the basis of the abbreviated evidence and submissions in a summary proceeding such as this. Reinstating the primary judge's orders: The fairness of the trial, which the courts are obliged to protect, includes fairness to a profoundly disabled and catastrophically injured person such as the appellant. Like Hoeben J, I am unconvinced by the respondents' argument that a fair trial of the proceedings is impossible. In judging the unfairness to the respondents, I take into account, as a material consideration, that Parliament has judged, in the ordinary case of a person with such disabilities, that a claim brought within the ultimate bar of 30 years is not, for that reason only (or for reasons inherent in such a delay), to be treated as unfair. I accept the analysis of the available evidence contained in the reasons of Hoeben J. On that evidence, it was open to his Honour to reject the respondents' claims that the proceedings should be dismissed or permanently stayed. On the same evidence, and in the case of this appellant, I would reach precisely the same conclusion. I will not be a party to orders of this Court that impose on the appellant a third, exceptional, burden – the burden of injustice. Orders in the appeals: The appeals should be allowed with costs. The orders of the Court of Appeal of the Supreme Court of New South Wales should 236 Reasons of Callinan J at [236]; BHP Billiton v Schultz (2004) 221 CLR 400 at 468 Kirby be set aside. In place of those orders, the appeals to the Court of Appeal should be dismissed with costs. Callinan CALLINAN J. This appellant has had a most unfortunate life. The first of his many misfortunes was to be born mentally retarded. The second was to lose his mother when he was one year of age. The third was his separation from his siblings and his admission to a mental institution when he was 6 years old. Another, in 1965, was to be rendered quadriplegic in a motor accident when the vehicle that he was driving failed to take a bend in the road and overturned. The last was to have an action which he brought in the Supreme Court of New South Wales to recover damages in respect of his quadriplegia, brought within the limitation period, stayed by the Court of Appeal of New South Wales, on the basis that effluxion of time alone produced the consequence that the action could not be fairly tried. It is with that decision that this Court is concerned, and in respect of which it is required to decide whether the Supreme Court had power to stay the action permanently, and, if it did, whether the power was properly exercised. Facts It is unlikely that any of the courts which have so far been concerned with these proceedings has had placed before it all such relevant facts as might be available to a court actually conducting a trial for which the parties could be expected to have made full preparation. Some of the more important of the facts that were actually placed before the courts at first instance, are, surprisingly rather more detailed than might perhaps have been expected after the passage of so much time. The appellant was born in 1932. His parents were Greek migrants. His mother died in giving birth to a sibling in 1933. His father was unable to care for the children of whom there were three. English was not spoken at home. In 1938 the appellant was admitted to the Newcastle Mental Asylum where he remained for the next 18 years. There is reason to believe that he was dyslexic, and that it and the serious disadvantages that he suffered as a child, may have made him appear to be more mentally retarded than he was, although a test in December 1948 showed that his intelligence quotient was 69 only. His schooling was rudimentary: he can write in a fashion, but he has never learned to read. Even so, by age 22 he was able to work as a labourer in the Public Works Department, and in the first two years of his employment saved $10,000. Fullerton Street connects Newcastle and Williamtown. In 1965 it was partly sealed. It is possible that in that year it was under the control of the predecessor to the respondent Authority, the Commissioner for Main Roads, although the respondent Council also may have had some responsibility for it. Before 1965 there had been accidents causing fatalities on the road. In the early 1960s there were only three streetlights in the area where the appellant's vehicle left the roadway. They were not of such a kind as to provide much illumination. Mr Lanham, who is still alive, knew the area quite well and was an Alderman on the respondent Council from 1980. He pressed for improvements to the road Callinan and, in particular, for it to be straightened. His efforts resulted in a realignment which occurred in about 1985. Before the realignment, no signs had been erected on the road warning of the existence, the beginning, or the end of the deviation. There are aerial photographs in existence which show portions of the road as it was a few months after the appellant was injured on it. There is no reason to suppose that those photographs do not reasonably accurately represent the appearance of the road at the time of the accident. Official records still in the possession of the respondent Council describe the deviation in the road as a "dog leg". The same records, made in 1981, speak of the presence of saltbush at the dog leg, and the impairment of sight lines because of it and the curve. Trees also obstructed vision. By 1981 the primary responsibility at least for the road lay with the respondent Council. Official records also contain some sketches of the roadway indicating the nature of the path of the curve. The cost of the work when it was done is the subject of Council estimates. Mr Wynne, now a man of 68 years of age was living in Stockton, near where the accident occurred in the years leading up to 1965. His recollection of the topography is clear. He recalls that the appearances leading up to the relevant curve were deceptive because telegraph poles near to the road "continued on in a straight line whereas the road itself took a deviation to the left then went straight for a period and deviated again to the right. One then made a left hand turn to continue straight on down Fullerton Street ...". Mr Wynne also says that the remains of the bitumen road in its unaligned state can still be seen. Mr Wynne knew the appellant before he was injured and visited him in hospital after the accident. He actually went to the scene of the accident a few days after it and observed marks on the roadway which, it seems likely, were made by the appellant's vehicle. Mr Alston is another person who was familiar with the locality at the time of the accident and knew the appellant. He describes the configuration of the roadway as a "zig zag". He too has observed remnants of the unaligned tar surface and gutter in the vicinity. He says that the street lighting in 1965 was very poor. He believes that he did see the appellant's vehicle beside the roadway shortly after the accident. There is no police report of any investigation into the accident. Neither of the respondents has available to it very much information about the state of the roadway at the time. The respondent Authority, in an affidavit, makes these assertions: "The [Authority] has been irretrievably prejudiced by the [appellant's] delay in bringing these proceedings. Because of the [appellant's] delay the [Authority] has no means of ascertaining or investigating the: Callinan – road conditions (including the manner of the roadway's construction, camber, alignment, levels, roadmarking, signage, illumination and speed zoning) of Fullerton Street as at the date of the [appellant's] alleged accident; – circumstances in which the alleged accident occurred; – [appellant's] physical and mental condition at the time of, and in the years following, the alleged accident. The [Authority] has by reason of the [appellant's] delay been denied the opportunity to conduct an effective defence to the claim." It is unnecessary for me to go into the detail of those assertions but sufficient to point out that there is quite good evidence available, including hospital records and medical reports, of the appellant's physical and mental condition before, and in the years after he became quadriplegic. Furthermore, I am unable to accept that there would not be available objective evidence of relevant engineering standards and practices applicable to roads such as the one in question at the time of the accident. There has not been placed before the Court any sworn direct account of the accident by the appellant. Particulars provided by him refer to the consumption by him of a moderate amount of alcohol at a party shortly before the accident. It does seem that the roadway may have been resurfaced not long before the accident occurred: a photograph taken 36 days after the accident is available and would suggest this to be so. The appellant commenced his action on 21 December 1994, more than 29 years and a little less than 30 years after the accident. The nature of the claim The appellant alleged that the first and second respondents had the care, control and management of Fullerton Street and that the bend where the accident occurred was designed, constructed or maintained by one or other of the respondents. The substance of the appellant's claim against the respondents is negligence, in that as he was driving his car along Fullerton Street, Stockton he "came upon an unmarked and unposted bend in the road in the vicinity of Meredith Street" and ran off the road and into a depressed ditch and overturned. The following relevant particulars of negligence were provided. "6. On or about the 21st August 1965 the [appellant] was driving a motor vehicle along Fullerton Street, Stockton when the motor vehicle ran off the road and into a depressed ditch and overturned, Callinan when the [appellant's] vehicle came upon an unmarked and unposted bend in the road in the vicinity of Meredith Street and its northern approaches. The [appellant] was thereby injured. The said bend in the road was constructed and/or maintained and/or designed by the said Commissioner for Main Roads and/or the [Council]. The [appellant's] injuries were occasioned by the negligence of the said Commissioner for Main Roads and the [Council] and each of them. PARTICULARS OF NEGLIGENCE Constructing and/or maintaining a bend in the said road which was at a higher level of elevation to the surrounding terrain. Failing to warn of the existence of the said bend at its northern approaches or at all. Failing to place posts with reflectors in and at the approaches to the said bend. Constructing and/or maintaining the said bend where the adjacent grass camouflaged its existence. Failing to remove the said grass in the course of such construction and/or maintenance. Failing properly to illuminate the said bend. Failing to warn that the roadway was or had become unsafe to traverse at normal cruising speed. Failing to post any or any sufficient warning of the necessity to traverse the roadway at less than normal cruising speed. Failing to construct or design the roadway with adequate or proper camber, or to cause the said roadway to be so constructed or designed. Constructing and/or maintaining the roadway in such a condition that it was unsafe to traverse at normal cruising speed and/or causing permitting or allowing the roadway to be so constructed and/or maintained. Callinan Failing to warn of the inadequate or defective camber of the roadway or to rectify the same. Causing permitting or allowing the said roadway to come into or remain in public operation with the deficiencies hereinbefore particularised. Further and in the alternative the [appellant] claims that the said Commissioner for Main Roads and/or the [Council] wrongfully caused and/or permitted the said roadway to be dangerous in the respects referred to in the preceding paragraph and as hereinbefore particularised and thereby committed a nuisance on the roadway." Particulars were requested and the following were given: [Appellant] travelling along Fullerton Street at approximately 30 mph (45 mph speed limit) between 12 midnight and 1 am on way to catch Stockton ferry to return to the home of a couple in Newcastle where he was then living. (ii) Had consumed a few beers during course of evening. (iii) Driving a Ford van, similar to a PMG van which he had purchased second-hand from a caryard at Mayfield. (iv) Stockton Police had attended the accident scene and the hospital. It was raining at the time of the accident and traffic conditions were light. (vi) Fullerton Street was a bitumen road with a single carriageway in either direction. (vii) The [appellant] was travelling in the south bound side of the road and did not realise that there was a bend in the road 'due to the absence of proper marking, signage, lighting and reflectors until it was too late to take effective evasive action'." The following particulars were also given: "The accident occurred just north of the junction of Fullerton Street and Meredith Street. An S-bend existed at that point which the evidence on behalf of the [appellant] will suggest was known in the Stockton area as a black spot. The road has since been straightened and the hazard which gave rise to the [appellant's] catastrophic accident has thus been eliminated. If you could furnish us with a map of the Fullerton Street Callinan Meredith Street area in the condition which it then existed we shall mark the accident site upon it for you." Previous proceedings It is unnecessary for me to repeat any of the detail of the proceedings preceding the appeal to this Court as these are fully described in the joint reasons and the reasons of Kirby J. Similarly, it is unnecessary to define the principal issues with which this Court is concerned because these too are amply formulated in a way with which I would respectfully agree subject only to what I say below. Abuse of process The joint reasons point out that an abuse of process may take more than one form, and that a distinction needs to be drawn between malicious prosecution, collateral abuse of process, and other abuses of process. As is also pointed out in the joint reasons, at the very least, different emphases attend the exercise of an inherent power to stay civil and criminal proceedings. Although the focus of this appeal is upon abuses of the former kinds rather than abuses of criminal processes, something further should be said about the differences between them. The first is that considerable care should be exercised in seeking to apply to civil proceedings what was said by the majority of this Court in Williams v Spautz237. It should be firmly kept in mind that that case was about the laying of informations concerning a number of offences, including criminal conspiracy to defame and injure, without justification and by illegal means. In other words, the case was concerned with abuse of criminal process, and not all therefore of what was said by the majority can be readily or indiscriminately applied to abuses of civil process. Because the relevant proceedings constituting the abuse there were criminal proceedings no argument was directed to, and the Court did not have to consider, the obligations of legal advisers to prosecute very difficult, and initially at least, unpromising actions, or to mount defences which at first sight might appear to have little prospect of success, matters as to which Lord Esher MR said238: "[I]f [a] solicitor could not come to the certain and absolute opinion that the case was hopeless, it was his duty to inform his client of the risk he was running, and, having told him that and having advised him most 237 (1992) 174 CLR 509. 238 In re Cooke (1889) 5 TLR 407 at 408. Callinan strongly not to go on, if the client still insisted in going on the solicitor would be doing nothing dishonourable in taking his instructions." Two judges in Williams v Spautz, although in dissent, but whose observations are not relevantly affected by that fact, were very much alive to the distinction between civil and criminal abuse. Deane J said this of the former239: "Most civil proceedings are instituted in the hope that the defendant will settle before the action ever comes to trial or formal orders are made. Frequently, they are instituted for the predominant subjective purpose of obtaining an object which it would be beyond the power of the particular court to award in the particular proceedings. For example, the predominant subjective purpose of a plaintiff in a common law action for damages for wrongful dismissal may well be to obtain a settlement involving reinstatement in his or her former position under a contract for personal services of a type which a court would not enforce by specific performance or injunction. A plaintiff's predominant subjective purpose in suing at common law for damages for trespass to land may be to obtain a settlement in the form of undertakings about future conduct. A plaintiff's predominant subjective purpose in bringing proceedings for an injunction restraining infringement of copyright or breach of patent may be to obtain a settlement incorporating a licence agreement providing for the payment of future royalties. In all those cases, the institution and maintenance of proceedings and the use of them to pursue a form of redress which the particular court could not have granted if the proceedings had run their course are legitimate unless the proceedings themselves are not founded on a genuine grievance but are used as a "stalking-horse" for extortion240 or merely as an instrument for vexation and oppression." Gaudron J, the other judge who dissented, said this241: "But leaving that aside and without going to other cases in the area in which there has been held to be an abuse242, on my reading of the relevant cases there is no basis for characterizing a purpose as improper unless it involves a demand made without right or claim of right, or unless it entails 239 (1992) 174 CLR 509 at 543. 240 See Varawa v Howard Smith Co Ltd (1911) 13 CLR 35 at 91. 241 (1992) 174 CLR 509 at 555-556. 242 See, for example, In re a Debtor [1928] Ch 199; In re a Judgment Summons; Ex parte Henleys Ltd [1953] Ch 195. Callinan some consequence which is unrelated to or is not proportionate with the right, interest or wrong asserted in the proceedings or by the process which is said to have been abused. And, in my view, one or other of those features must be present or the purpose must itself be wrongful if a purpose is to be held an improper purpose justifying a stay." In recent times, pressures, unreasonable ones in my view, have been placed upon advocates, effectively to decide in advance of a hearing, whether there is a good cause of action, or a defence. Indeed in New South Wales, s 345 of the Legal Profession Act 2004 (NSW) relevantly provides: "Law practice not to act unless there are reasonable prospects of success (1) A law practice243 must not provide legal services on a claim or defence of a claim for damages unless a legal practitioner associate244 responsible for the provision of the services concerned reasonably believes on the basis of provable facts and a reasonably arguable view of the law that the claim or the defence (as appropriate) has reasonable prospects of success." The section then goes on to define the critical expressions found in sub-sec (1): "(2) A fact is provable only if the associate reasonably believes that the material then available to him or her provides a proper basis for alleging that fact. 243 "Law practice" is defined in s 4(1) of the Legal Profession Act as: "(a) an Australian legal practitioner who is a sole practitioner, or a law firm, or a multi-disciplinary partnership, or an incorporated legal practice, or a complying community legal centre." 244 Under s 7(2)(a) of the Act, a "legal practitioner associate" is an "associate" of a law practice who is an Australian legal practitioner. "Associate" is given an extensive definition in s 7(1) and includes, inter alia, a sole practitioner, a partner in a "law practice" and an employee of a "law practice". Callinan This Division applies despite any obligation that a law practice or a legal practitioner associate of the practice may have to act in accordance with the instructions or wishes of the client. (4) A claim has reasonable prospects of success if there are reasonable prospects of damages being recovered on the claim. A defence has reasonable prospects of success if there are reasonable prospects of the defence defeating the claim or leading to a reduction in the damages recovered on the claim." Section 347 is also relevant. It provides: "Restrictions on commencing proceedings without reasonable prospects of success The provision of legal services by a law practice without reasonable prospects of success does not constitute an offence but is capable of being unsatisfactory professional conduct or professional misconduct by a legal practitioner associate of the practice who is responsible for the provision of the service or by a principal of the practice. (2) A law practice cannot file court documentation on a claim or defence of a claim for damages unless a principal of the practice, or a legal practitioner associate responsible for the provision of the legal service concerned, certifies that there are reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law that the claim or the defence (as appropriate) has reasonable prospects of success. Court documentation on a claim or defence of a claim for damages is not to be accepted for lodgment unless accompanied by the certification required by this section. Rules of court may make provision for or with respect to the form of that certification." The breadth of these requirements is excessive, especially s 345(4) which requires, among other things, the taking of an effectively final view of the current law. Advocates are advocates, and judges are judges. The respective roles and obligations are not to be confused, particularly in an adversarial system. The New South Wales provisions go much further than the opinion of Lord Esher MR that I have quoted as to the nature of the obligation at common law. In Queensland the Uniform Civil Procedure Rules now allow judges, indeed encourage them to be much more robust in striking out worthless actions Callinan and defences245. Even this has its dangers but it does offer a somewhat better way to proceed in relation to causes that are not legally sustainable, or are genuinely abusive. It is a way that maintains the distinction between advocate and judge. The truth is that in recent times, the courts, especially this Court have not always altered the law only incrementally. On the strict application of the New South Wales rule, were it in force and applicable in the relevant jurisdiction at the time, it is hardly likely that the causes of action or defences raised in Lange v Australian Broadcasting Corporation246, Burnie Port Authority v General Jones Pty Ltd247, and Brodie v Singleton Shire Council248 about which more will be said later, would ever have been pleaded or raised, and the cases decided as they were. It is certainly hard to imagine how, in the setting of 1982 when Mabo v Queensland249 was commenced, the result for which the plaintiffs contended could have constituted a certifiable cause of action under the New South Wales rule. Until Brodie v Singleton Shire Council, it is equally unimaginable that an 245 "171 Striking out pleadings (1) This rule applies if a pleading or part of a pleading – discloses no reasonable cause of action or defence; or has a tendency to prejudice or delay the fair trial of the proceeding; or is unnecessary or scandalous; or is frivolous or vexatious; or is otherwise an abuse of the process of the court. (2) The court, at any stage of the proceeding, may strike out all or part of the pleading and order the costs of the application to be paid by a party calculated on the indemnity basis. (3) On the hearing of an application under subrule (2), the court is not limited to receiving evidence about the pleading." 246 (1997) 189 CLR 520. 247 (1994) 179 CLR 520. 248 (2001) 206 CLR 512. 249 Mabo v Queensland [No 2] (1992) 175 CLR 1. Callinan advocate could have certified, as required by s 347(2), that there were reasonable grounds for believing, on the basis of provable facts and a reasonably arguable view of the law, that the claim in non-feasance by a highway authority had reasonable prospects of success. How could any advocate have certified, before the High Court said so in David Securities Pty Ltd v Commonwealth Bank of Australia250 in 1992, that, contrary to hundreds of years of settled law, a mistake of law could give rise to a good cause of action in the same way as a mistake of fact? I took the view in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd251 that the time was ripe for the consideration at least of the recognition by the law of a cause of action for invasion of privacy. In view of the fact that my opinion was only a dissenting one252, it is difficult to see how an advocate in New South Wales could seek to bring this matter before the courts now even though the law is moving in that direction in the United Kingdom253. There has however been a civil case in Queensland where damages were awarded for invasion of privacy254. The truth is that the common law has often owed its development to, and has benefited from, the adventurousness and ingenuity of counsel. Statutes of limitation Statutes of limitation give effect to societal and commercial ends of high importance. It is true of course that it is highly desirable that persons who have been wronged not be deprived of a remedy. It is also important however, that there come a time, fixed with certainty, after which the threat of litigation be removed, and the person against whom it is threatened be permitted to carry on life or business without that threat or fear. In general, people who have been wronged should be obliged, not only in the interests of those whom they would 250 (1992) 175 CLR 353. 251 (2001) 208 CLR 199. 252 But see (2001) 208 CLR 199 at 225-226 [40]-[42] per Gleeson CJ. 253 The results may have been influenced by the European Convention on Human Rights, incorporated into the domestic law of the United Kingdom by the Human Rights Act 1998 (UK). See, for example, Douglas v Hello! Ltd [2001] QB 967; Douglas v Hello! Ltd (No 2) [2003] 1 All ER 1087; Douglas v Hello! Ltd (No 3) [2006] QB 125; HRH Prince of Wales v Associated Newspapers Ltd [2006] EWHC 254 Grosse v Purvis (2003) Aust Torts Reports ¶81-706. Other civil claims for invasion of privacy have been dismissed, see: Kalaba v Commonwealth [2004] FCA 763 and Giller v Procopets [2004] VSC 113. Callinan sue and, in most cases, themselves personally, but also of society itself, to bring and prosecute their actions with a reasonable degree of diligence. The consequences of delay are not only of impairment of the integrity of the trial itself, but also of obstruction to the orderly working of the courts. Not all people can however sue promptly. A number of these considerations are self-evidently competing ones. The statutes of limitations resolve these tensions in various ways: by specifying fixed periods for causes of action, by making special provision for persons under a disability, and, in modern times, by giving courts powers under fairly strict conditions to enlarge periods of limitation. Even in the absence of relevant statutes of limitation, the law, equity in particular, has recognised that there comes a time when, in relation to some civil wrongs or derelictions of duty, the wrongdoer should no longer be vexed with the possibility or actuality of legal proceedings. I am referring to the elaborate rules of laches and acquiescence devised by equity to deny in some circumstances, equitable relief. But as the joint judgment in this case recognises, it has never been part of the law of Australia that the equitable defences to which I have referred are available255 in common law cases. When therefore a legislature has enacted an express and clear period of limitation, it is not for the courts to subvert it, or to seek to qualify it, by the introduction of words embodying the concept that the specified period might be shortened or lengthened, in the discretion of the court according to whether the court thinks that a period is too long or too short. As I said in Agar v Hyde256: "Limitations statutes are enacted to put an end to uncertainty. They confer rights upon defendants and encourage the expeditious commencement of proceedings. Exceptions to enable time to be enlarged should not, in my opinion, be construed with any predisposition either way, that is, between strictness or liberality." Statutes of limitations seek to draw lines. Far too often, but sometimes with justification, courts are accused of blurring lines. In my view the line drawn at 30 years by the legislature here should be accepted and applied without qualification. 255 Joint reasons at [18] where the position in the United States of America is contrasted citing the discussion of "tolling doctrines" in Kuek v Victoria Legal Aid [1999] 2 VR 331 at 339-340 per Ormiston JA and of the equitable defences of laches and acquiescence in Teamsters & Employers Welfare Trust of Illinois v Gorman Bros Ready Mix 283 F 3d 877 at 881 (2002) per Judge Posner speaking for the Court. 256 (2000) 201 CLR 552 at 601-602 [131]. Callinan Nothing that I have said is affected by the New South Wales Supreme Court rule257 quoted in the joint reasons which provides, among other things, that the Court may, in relation to any claim for relief in proceedings, stay it either generally, or in a particular respect, as an abuse of the process of the Court. Having regard to the fact that the legislature has enacted limitations periods, and that other parts of the same rule refer to an absence of a reasonable cause of action, and the frivolousness or vexatiousness of the proceedings, and not effluxion of time within the limitation period, as criteria for the grant of a stay, I am unable to regard the rule as intended to apply to the sort of abuse of process which is said to arise here, that is as a result of the effluxion of time before the expiration of the limitations period. Nor could I regard an inherent jurisdiction or power of the Court to prevent abuses of its process, as extending to what is contended to be abuse here. Jurisdiction or power to stay Some observations should be made about the function of appellate courts in reviewing decisions at first instance either to grant or not to grant a stay. As the joint reasons point out258, in R v Carroll259 (although a criminal case) Gaudron and Gummow JJ, said that the use of the words "discretion" in this field of discourse indicates no more than that, although there may be some clear categories, "the circumstances in which proceedings will constitute an abuse of process cannot be exhaustively defined and, in some cases, minds may differ as to whether they do constitute an abuse". What may however be said with some confidence of discretionary exercises in this area, may be said in my opinion with equal force of discretionary exercises in other areas and generally. Appellate courts exercising their appellate powers under unqualified enactments as to those powers have tended to defer rather too much to the views and the discretionary judgment of the judge at first instance, in a somewhat similar way to the way that they have paid deference to the factual findings of trial judges at first instance260. Just as s 75A of the Supreme Court Act 1970 (NSW), the appeal provision, makes no distinction between appeals on factual and legal grounds, it says nothing about, and in no way suggests that appeals against discretionary decisions require different treatment from other appeals. It is easy to see why the decision of, for example, a trial judge who has heard all of the evidence in a 257 Pt 13 r 5 Supreme Court Rules. 258 Joint reasons at [7]. 259 (2002) 213 CLR 635 at 657 [73]. 260 Fox v Percy (2003) 214 CLR 118 at 126-128 [25], [27]-[29] per Gleeson CJ, Gummow and Kirby JJ, 163-166 [142], [145]-[146], [148] per Callinan J. Callinan criminal trial, should not have his or her discretionary sentence lightly overturned. To preside over a criminal trial undoubtedly gives to the trial judge insights as to the nature and gravity of the crime, and the criminality of the conduct of the convicted person, that an appellate court would rarely have. It is often overlooked that the remarks which are most often cited in Australia in appellate courts by those seeking to uphold a discretionary judgment were made in a criminal case and in relation to a sentence261. Too frequently there has been too ready a disposition on the part of appellate courts to adopt their Honours' statements in that case as if they were a canon applicable to all judgments, involving the exercise of discretion, particularly judgments in which the facts have been found, and in respect of which the discretion is to be exercised upon the basis of them, and not otherwise. In principle there is no reason why the views of a majority of appellate judges as to the exercise of the discretion in those, and perhaps other cases when judges are performing their unqualified appellate function, should not prevail over the discretionary view of a single judge. Judges need to be careful about erecting qualifications and barriers to their powers, whether out of expediency, judicial defensiveness, fear of the collapse of floodgates limiting the flow of appeals, or otherwise, if the relevant authorising statute makes no provision for them. By now, the courts of equity, which exercise many discretions, should long have shed any antipathy that they might have initially had to appeals against exercises of discretion stemming from the extraordinary nature of the unusual jurisdiction of the Court of Chancery founded on the prerogative, and exercisable by the King himself on advice from the Chancellor or others262. It is unnecessary to add to what I said in Fox v Percy about other appeals and with which an analogy can be drawn, including factual appeals in common law cases and to which I would adhere263. It follows from what I have said that I do not doubt that there was a jurisdiction or power available to the Court of Appeal in this case to take a different view from the Master and Judges at first instance who declined to grant the stay sought. And equally of course this Court also has the power to take a different view on any discretionary issue from the Court of Appeal. 261 House v The King (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and 262 Meagher, Heydon and Leeming, Meagher Gummow & Lehane's Equity: Doctrines and Remedies, 4th ed (2002) at 4 [1-020]; Spence, Equitable Jurisdiction of the Court of Chancery, (1846) vol 1 at 393-396. 263 Fox v Percy (2003) 214 CLR 118 at 163-164 [142], [145]. Callinan Disposition of the appeal It is not suggested in this case that the unfortunate appellant has in any way been blameworthy, or that the delays which have occurred since the institution of his action should be laid at his door. The respondents' case is first, simply that objectively a fair trial is not possible: that as the years have passed their means of defending the action have, and again without any fault on their part, been lost. It is for these reasons, and one other to which I will refer, that they say that the continuation of the case would represent an abuse of process. The other reason that they advance is, effectively, that the appellant's prospects of succeeding are ultimately hopeless anyway, and satisfy the stiff test stated by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW)264, and almost invariably applied in this country. It is with the latter that I will deal first. There is no doubt that there are many hurdles for this appellant to surmount in order to succeed in a trial. It is unnecessary to deal with the legal difficulties that may confront him with respect to the selection of the correct statute of limitations applicable to his case as the proceedings in the Supreme Court were all conducted on the basis that the Limitation Act 1969 (NSW) was the relevant statute, and because both respondents accepted for the purpose of these appeals that the appellant had a reasonably arguable case, that the long stop provision of 30 years under s 51(1) of the Limitation Act was the applicable provision265. The facts in this case are admittedly sparse. Any trial that may take place would be an imperfect one factually. But this must be so in many cases brought long after the event by persons under a disability. There are some records that are just as likely to have been destroyed after seven years as after 29 years. So too, there may be cases in which relatively recent recall, of say five years, may be no better than recall after many years, of events which, by their singularity, or their consequences, have unambiguously etched themselves on the minds of those who have witnessed them, or know of them. But whether this is so or not has certainly not been the concern of the legislature. Section 51(1) of the Limitation Act does not offer any distinction between cases in which witnesses are available and have good recall, and those in which there are no, or few witnesses, or ones whose memory is of little value. 264 (1964) 112 CLR 125 at 129-130. 265 See joint reasons at [29]. Subsequently the respondents filed written submissions resiling from this proposition. Without finally concluding against them on this issue, I am inclined to prefer the view of Kirby J that 30 years is the relevant period. I do not consider that this Court should decide differently before the case has been tried. Callinan In an adversarial system under the most ideal of circumstances so far as time limits are concerned, a court is often obliged to make decisions on incomplete facts. Parties are not bound to bring to the attention of the court facts which are detrimental to their cases. Sometimes, by reason of the absence, or sudden death of a witness or a witness' departure, or for any number of other reasons, key facts cannot be established. The courts have to do the best that they can on the material before them and, in doing so, may make allowances for the circumstances in which each of the parties finds himself or herself. As Gleeson CJ, Gummow and Callinan JJ said in Vetter v Lake Macquarie City Council266, a case in which there was a paucity of relevant material: "As long ago as 1774 Lord Mansfield said267 that all evidence is to be weighed according to the proof which it is in the power of one side to have produced and the power of the other to have contradicted." Perhaps one might have expected the appellant to have sworn an affidavit in the courts below stating in detail his recollection of the relevant events, and his recollection of the layout of the road upon which he came to grief. That he has not done so does not however give rise to any necessary inference against him that even he cannot speak to the matters central to the case which he has to prove. It should not be assumed that all of the relevant facts are in. The applications made here are applications only. They are not trials. Applicants take their chances when they make them. It is undesirable and inappropriate in my view that they be elevated to something in the nature of a full scale pre-trial trial. That this is so is reason for the adoption of the hard test that General Steel prescribes. From what is known of the case now, I am bound to say that it is, at this stage apparently, a slight one and that the appellant's prospects of proving negligence do not appear promising. But I have not had the benefit of hearing any of the evidence, and of conducting a trial, at which time, as I have said, circumstances may change. I do think however, as did Master Harrison268, that the respondents have been unable to make out the case for a stay upon the basis of the principles stated in General Steel which I am content to apply here. 266 (2001) 202 CLR 439 at 454 [36]. 267 Blatch v Archer (1774) 10 Cowp 63 at 65 [98 ER 969 at 970]. See also Weissensteiner v The Queen (1993) 178 CLR 217 at 226-227, per Mason CJ, 268 Batistatos v Roads and Traffic Authority of New South Wales [2000] NSWSC 506 Callinan There remains what was the respondents' principal argument, that objectively there is an abuse of process simply because of the effluxion of time within the limitations period. I would reject that argument. To accept it would be to subvert or qualify the explicit statutory language and to disturb the compromise which the Limitation Act, relevantly here s 51(1), reflects. I would accept the appellant's submission that in the absence of any relevant misconduct on his part there is no power to make the order for a stay that the Court of Appeal did. I would respectfully agree with Lord Diplock in Birkett v James that the appellant had a right to bring his action at the time that he brought it269. I agree with the decision and the reasoning of the House of Lords in that case in which it was held that the power of the court to dismiss an action for want of prosecution should be exercised only where the plaintiff's default has been intentional or contumelious or if there has been inordinate and inexcusable delay in the prosecution of proceedings instituted within time giving rise to a substantial risk that a fair trial would not be possible or of serious prejudice to the defendant, propositions which have been accepted and applied by various intermediate courts of appeal and judges at first instance in this country since Birkett v James270. I cannot accept that the fact that the holding of a fair trial because of effluxion of time within the limitation period has become very difficult, perhaps even impossible, can justify a stay. There must be many cases in which objectively a fair trial is impossible. A court may not know that this is so in a particular instance but will often be aware that what is taking place in a trial falls far short of the ideal. That cannot justify the stopping of the case by the court. There is, in this case, a particular aspect of unfairness which the common law tolerates as a matter of course. It arises out of the legal fiction that the current law is treated as if it has always been the law. Hence the decision of this Court in Brodie v Singleton Shire Council which (temporarily only in New South Wales) swept away the distinction between nonfeasance and misfeasance on the part of highway authorities may have improved, to the significant disadvantage 269 [1978] AC 297 at 320. 270 See Muto v Faul [1980] VR 26; De Nier v Beicht [1982] VR 331; Exell v Exell [1982] VR 842; Bruce Pie & Sons Pty Ltd v Mainwaring [1987] 1 Qd R 304; Williams v Zupps Motors Pty Ltd [1990] 2 Qd R 493; Flynn v Kailis Groote Eylandt Fisheries Pty Ltd (1992) 108 FLR 354; Mickelberg (1996) 90 A Crim R 126; Spitfire Nominees Pty Ltd v Ducco [1998] 1 VR 242; Bishopsgate Insurance Australia (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863; Velcrete Pty Ltd v Melsom [2000] WASCA 109; Hancock Family Memorial Foundation Ltd v Fieldhouse (2005) 30 WAR 398. Callinan of the respondents, the appellant's prospects of success on any trial. This may seem particularly unfair now that the New South Wales parliament has the old distinction between nonfeasance and substantially reintroduced misfeasance on the part of highway authorities, but not retrospectively so as to apply to this case271. Why, it may be asked, should such objective unfairness arising out of the actions of the court, be treated differently from unfairness resulting from the passage of time within the limitations period? No doubt some European lawyers and others would take the view that the adversarial system is not productive of fair trials generally, a view that I do not share but that I understand, just as I am by no means certain that an inquisitorial process will always produce a fair result. But this is beside the point. The legislature has spoken in unequivocal terms and it is the duty of the court to give effect to its words by allowing the appellant's action to proceed at this point. The High Court's discretion What I have said is sufficient to require that the appeal be allowed. I would add however that if, as is held in the joint reasons272, what was said by Lord Diplock in Birkett v James were to be rejected, I would be disposed to allow the appeal by revisiting the exercise of the discretion of the Court of Appeal, and by exercising the discretionary powers of this Court for myself. I have said earlier in these reasons that appellate courts defer too often to the factual findings and exercises of discretion of lower courts. With the greatest of respect, I would disagree with the sequence of reasoning which appears at the end of the joint reasons273, that because "[t]here was no error of principle in the 271 Civil Liability Act 2002 (NSW), s 45. 272 Joint reasons at [63]. 273 Joint reasons at [63]-[72]. Callinan decision of the Court of Appeal", the appeals should be dismissed. There would then remain the question whether this Court should exercise its discretion in the same way the Court of Appeal exercised its discretion274. As I have said, I am of a different opinion. Conclusion I would allow the appeals and join in the orders proposed by Kirby J. 274 See, generally, the comments of Lord Halsbury LC in Riekmann v Thierry (1896) 14 RPC 105 at 116, on the broad nature of the appellate jurisdiction. That case concerned revisiting a trial judge's finding of fact, but the principle seems just as relevant here. 238 HEYDON J. For the reasons given by Callinan J275, there is sufficient strength in the plaintiff's claims against the defendants to prevent the prosecution of those claims, even at this late stage, from being characterised as an abuse of process. On that basis I would allow the appeal and join in the orders proposed by Kirby J. In those circumstances it is unnecessary to decide whether or not a plaintiff has a right to sue within the longest available limitation period which is untrammelled by anything except blameworthy conduct on the part of that plaintiff, or to decide on the other matters of law debated in the majority reasons for judgment and those of Kirby J and Callinan J. |
HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT McPhillamy v The Queen [2018] HCA 52 Date of Order: 9 August 2018 Date of Publication of Reasons: 8 November 2018 ORDER Appeal allowed. Set aside the orders of the New South Wales Court of Criminal Appeal and, in lieu thereof, order: the appeal to that Court be allowed; and there be a new trial. On appeal from the Supreme Court of New South Wales Representation S J Odgers SC with S J Buchen for the appellant (instructed by Proctor & Associates) L A Babb SC with K N Shead SC and B K Baker for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS McPhillamy v The Queen Evidence – Criminal trial – Sexual offences – Tendency evidence – Admissibility – Where appellant acolyte and complainant altar boy – Where appellant alleged to have followed complainant into church's public bathroom and committed offences – Where evidence that appellant, while working as an assistant housemaster, sexually offended against homesick boarding students who sought out appellant in private bedroom led as tendency evidence – Where tendency expressed as appellant having sexual interest in young teenage boys under his supervision and to act on that interest – Where tendency evidence of acts occurring ten years before offences charged – Where no evidence other than complainant's evidence that appellant had offended again in ten year period – Where tendency evidence unchallenged in cross-examination – Whether tendency evidence possessed significant probative value. Words and phrases – "sexual interest", "significant probative value", "tendency evidence", "tendency expressed at a high level of generality", "tendency to act in a particular way", "tendency to have a particular state of mind". Evidence Act 1995 (NSW), ss 97, 101. KIEFEL CJ, BELL, KEANE AND NETTLE JJ. This appeal is concerned with the admissibility of the evidence of "B" and "C" of the appellant's acts of sexual misconduct with them, as tendency evidence, on his trial for sexual offences against "A". The admissibility of the evidence is governed by the provisions of Pt 3.6 of the Evidence Act 1995 (NSW). "B"'s and "C"'s evidence was unchallenged. The acts of which they complained occurred a decade before the alleged offending against "A", which offending was denied. The Court of Criminal Appeal of the Supreme Court of New South Wales (Harrison and R A Hulme JJ; Meagher JA dissenting) was divided on the question of whether "B"'s and "C"'s evidence had significant probative value1. By grant of special leave, the appellant appealed to this Court2. On 9 August 2018, at the conclusion of oral argument, the Court made orders allowing the appeal, setting aside the orders of the Court of Criminal Appeal and in lieu thereof allowing the appeal to that Court and directing a new trial. These are our reasons for joining in those orders. Procedural history and evidence In February 2015, the appellant was tried in the District Court of New South Wales (Judge King SC and a jury) on an indictment that charged him in six counts with sexual offences against "A". The offences were alleged to have occurred on two separate occasions between 1 November 1995 and 31 March 1996 in the public toilets of the St Michael and St John's Cathedral, Bathurst. At the time, "A" was an 11-year-old altar boy under the supervision of the appellant, an acolyte. "A" gave evidence that on a Saturday night before mass, the appellant had followed him into the toilet and masturbated in front of him3. He had encouraged "A" to masturbate and he had briefly touched "A"'s penis as he demonstrated how to masturbate4. The appellant had ejaculated. After this, the appellant and 1 Evidence Act, s 97(1)(b). [2018] HCATrans 073, 20 April 2018. 3 This conduct was charged as an aggravated act of indecency towards "A", a person under the age of 16 years, and under the appellant's authority: s 61O(1) of the Crimes Act 1900 (NSW). 4 This conduct was charged as an aggravated indecent assault, "A" being under the age of 16 years: s 61M(1) of the Crimes Act. Bell Nettle "A" left the toilet and the service commenced. The remaining offences occurred a few weeks later. On a Saturday night before mass, the appellant again followed "A" into the toilet, where he masturbated in front of him5, encouraged "A" to masturbate and commenced to manually stimulate "A"'s penis6. The appellant then said that he would show "A" "something even better" and he performed oral sex on "A". After this, the appellant required "A" to perform oral sex on him7. Shortly after commencing to do so, "A" began to gag and cry. The appellant comforted him and they left the toilet together. Later the appellant told "A" that he was "sorry that it had gone that far". "A" did not report these assaults to anyone. He said that the appellant had told him that he, "A", was gay and that he needed to be careful because "everybody would turn against me". "A" made his first complaint about these assaults in April 2010 when he approached the Professional Standards Office of the Catholic Church seeking compensation. In a signed complaint, "A" falsely stated that the appellant had anally penetrated him on the second occasion. "A" later agreed to accept $30,000 from the Church by way of compensation. The Professional Standards Office forwarded "A"'s complaint to the police. In November 2012 "A" made a statement to the police. In that statement, "A" volunteered that his earlier allegation of anal penetration was false. At the trial, "A" agreed in cross-examination that he had been aware that the appellant had been charged with sexual offences against boys at the time he made his complaint to the Professional Standards Office. "B" and "C" each gave evidence that he was a boarder at St Stanislaus' College, Bathurst ("the College") in 1985. Each had turned 13 in that year. At the time, the appellant was an assistant housemaster at the College. "B" said that on an occasion when he was homesick and upset he had gone to the appellant's bedroom. The appellant cuddled him and this progressed to him rubbing "B"'s genitals. On a second occasion, the appellant approached "B" as "B" stood naked by his locker after showering. The appellant "grabbed both my arse cheeks and 5 This conduct was charged as the commission of an aggravated act of indecency towards "A", a person under the age of 16 years, who was under the appellant's authority: s 61O(1) of the Crimes Act. 6 This conduct was charged as an aggravated indecent assault, "A" being under the age of 16 years: s 61M(1) of the Crimes Act. 7 This conduct was charged as two counts of aggravated sexual intercourse, "A" being above the age of 10 years and under the age of 16 years and under the appellant's authority: s 66C(2) of the Crimes Act. Bell Nettle tried to, you know, separate them so to speak". This did not last long because "B" "gave him a mouthful". "B" later received a caning for swearing at the appellant. "C" gave evidence of an occasion when he too had been homesick and upset and had visited the appellant in the appellant's room. The appellant massaged "C"'s shoulders and back. The massage progressed to the groin area and in the course of it, the appellant touched "C"'s genitals. On a subsequent occasion, the appellant massaged "C", who was again feeling homesick. On this occasion "C" fell asleep on the appellant's bed and woke to find the appellant kneeling beside him with his head near "C"'s groin. "C" felt a sensation of wetness around his penis. He got up and left the room. About a week later, the appellant apologised, saying that he had done the wrong thing and that he could be in a lot of trouble for it. In his interview with the police, the appellant denied "A"'s allegations. The appellant did not give evidence. His case was that the allegations had been made up in support of a fraudulent claim for compensation at a time when "A" knew that the appellant had been charged in relation to sexual misconduct involving boys at the College but when "A" was not aware of the details of the misconduct. The jury returned verdicts of guilty on each of the counts. Before the trial, the prosecution served written notice on the appellant of its intention to adduce tendency evidence from "B" and "C"8. The appellant objected to the admission of the evidence. The objection was dealt with at a voir dire hearing before the jury was empanelled. At that hearing and at the trial, the tendency on which the prosecution relied differed in material respects from the particulars of the tendency set out in the written notice. It is not known whether the trial judge's conclusion, that the evidence of "B" and "C" was admissible, was based on his assessment of the probative value of the tendency particularised in the notice or the probative value of the tendency identified by the prosecutor in the course of oral submissions. Despite announcing that he would give reasons for ruling that the tendency evidence was admissible, his Honour failed to do so. 8 Evidence Act, s 97(1)(a). Bell Nettle The use made of the tendency evidence at the trial Regardless of the reasons that informed the trial judge's decision to admit the tendency evidence, the determination of whether the trial miscarried in consequence of its admission is concerned with the use made of the evidence at the trial9. In closing submissions, the prosecutor acknowledged that "A" had made a false, serious allegation against the appellant at the time he sought compensation from the Catholic Church. The prosecutor invited the jury to consider that there was "significant other evidence" which, if accepted, put "A"'s testimony "in a wholly different light". The prosecutor continued: "Two other grown men, ['B'] and ['C'], have both given evidence in this trial that the [appellant] engaged in sexual activities with them. … [T]he Crown says their evidence was that the [appellant] used opportunities on separate occasions, when he was alone with each of them, to touch them sexually. The evidence of each of those people, ['B'] and ['C'], the evidence they gave here was never challenged on behalf of the [appellant], was it?" After reminding the jury of "B"'s and "C"'s evidence, the prosecutor made this submission: "The Crown says the evidence that you heard from ['B'] and ['C'] and ['A'] shows that the [appellant] had a sexual attraction or interest in young teenage males. He acted on it in his dealings with ['B'] and with ['C'] when he was alone with them. The Crown says he acted on it with ['A'], too, just like ['A'] told you. … ['B'] and ['C'] [were] never challenged as to the truth of what they said. The Crown says you have every reason to accept them as honest, reliable witnesses who told the truth about what [the appellant] did to them, and that you should act on their evidence when you are assessing the reliability of the complainant, ['A'], and what he had to say." Before "B" and "C" were called to give evidence, the trial judge directed the jury about the use that might be made of their evidence. His Honour instructed that: "The Crown will argue that the evidence of those two witnesses demonstrate that [the appellant] had a tendency to act in a particular way; 9 R v Bauer (a pseudonym) (2018) 92 ALJR 846 at 864 [61]; [2018] HCA 40. Bell Nettle that is, to by his conduct demonstrate a sexual interest in male children in their early teenage years who were under his supervision. If you find that [the appellant] had a sexual interest in male children in their early teenage years, who were under his supervision, and that he had such an interest in ['A'], it may indicate that the particular allegations are true." In the course of the summing-up, the trial judge instructed the jury in essentially the same terms with respect to the use that might be made of "B"'s and "C"'s evidence. The directions were not the subject of complaint, nor was the sufficiency of the trial judge's warning not to reason that, because the appellant may have committed a crime or been guilty of some misconduct, he was generally of bad character and for that reason was a person likely to have committed the offences with which he was charged. Tendency evidence The scheme of the Evidence Act with respect to the admission of tendency evidence about a defendant adduced by the prosecution in a criminal proceeding is explained in Hughes v The Queen10. Section 97(1) conditions the admission of evidence to prove that a person has or had a tendency to act in a particular way, or to have a particular state of mind, on the court's assessment that the evidence will, by itself or taken with other evidence adduced by the party seeking to adduce it, have "significant probative value". Section 101(2) provides that, in a criminal proceeding, tendency evidence about a defendant that is adduced by the prosecution cannot be used against the defendant unless the probative value of the evidence substantially outweighs any prejudicial effect the evidence may have on the defendant. The analyses in the Court of Criminal Appeal In their joint reasons, Harrison and R A Hulme JJ concluded that the tendency evidence strongly supported the prosecution case11. Their Honours said 10 (2017) 92 ALJR 52; 344 ALR 187; [2017] HCA 20. 11 McPhillamy v The Queen [2017] NSWCCA 130 at [128]. Bell Nettle the "overriding similarity" of that any differences between the circumstances in which the 1985 conduct occurred and the circumstances of the offences described by "A" did not detract the conduct on each occasion12. from Their Honours considered that it was open to the jury, applying its collective wisdom and common sense, to reason that a sexual interest in young teenage boys was unlikely to become attenuated over an interval of ten years13. Given the generality of the tendency on which the prosecution relied, Meagher JA, in dissent, did not consider that the suggested similarities in the conduct were determinative of the probative value of the evidence. His Honour reasoned that while the earlier conduct manifested a sexual interest in young teenage boys, it did not show the appellant's preparedness to act on that interest in the circumstances described by "A"14. It was not necessary for Meagher JA to deal with the appellant's submission that the prosecution was precluded from using the tendency evidence under s 101(2), given his conclusion that the evidence did not meet the threshold test under s 97(1)(b). His Honour stated that, had it been necessary, he would have rejected the appellant's submission that in addition to the prejudice that was likely to arise in any event, "B"'s and "C"'s evidence risked prejudice to the defence in "four additional respects". Those respects were that the evidence showed that the appellant: preyed on boarders who were vulnerable, alone and homesick; attempted to fellate "C" while "C" was asleep; would be regarded as responsible for the caning which "B" received for swearing at him; and was associated with the institutional sexual abuse said to have occurred at the College15. Had it been necessary to address this aspect of the appellant's submission, Meagher JA would not have found that these matters presented a risk of prejudice beyond "the prejudice that it is accepted was likely to arise in any event"16. The latter reference was to the risk that the jury might reason that the appellant is likely to have committed the offences against "A" because the 12 McPhillamy v The Queen [2017] NSWCCA 130 at [127]. 13 McPhillamy v The Queen [2017] NSWCCA 130 at [129]. 14 McPhillamy v The Queen [2017] NSWCCA 130 at [115]-[117]. 15 McPhillamy v The Queen [2017] NSWCCA 130 at [121]. 16 McPhillamy v The Queen [2017] NSWCCA 130 at [121]. Bell Nettle appellant is a sexual deviant, or that jurors might be so emotionally affected by the evidence as to disregard the appellant's case and the trial judge's directions to assess the evidence without prejudice, or that jurors might be disinclined to give the appellant the benefit of the doubt17. Harrison and R A Hulme JJ appear to have misapprehended Meagher JA's analysis of the prejudicial effect of the tendency evidence. Their Honours rejected the appellant's submissions on s 101(2) purportedly for the reasons given by Meagher JA18. This was a rejection of the four "additional" matters. In the result, the majority do not appear to have undertaken the task of identifying whether, as Meagher JA found, the tendency evidence carried a risk of prejudice of one or more of the kinds summarised above and, if it did present that risk, determining whether the evidence substantially outweighed it. the probative value of The submissions The appellant adopted Meagher JA's analysis, submitting that the evidence of "B" and "C" did not strongly support the existence of the asserted tendency in 1995-1996, nor did the asserted tendency – to act on his sexual interest in young teenage boys under his supervision – strongly support proof of a fact in issue. A focus of the appellant's submissions was the preclusion of the use of tendency evidence by the prosecution in a criminal proceeding unless its probative value substantially outweighs any prejudicial effect it may have on the defence case. The appellant submitted that there was a real danger that "B"'s and "C"'s evidence would be given disproportionate weight and that it would provoke an emotional response clouding the jury's assessment of whether the prosecution had discharged the onus of proof. The appellant maintained that the four additional matters should not have been rejected in assessing the prejudicial effect of the admission of "B"'s and "C"'s evidence. The respondent took issue with any suggestion that the tendency that it sought to prove was expressed at a high level of generality. It contended that the demonstrated tendency was of the appellant's sexual interest in a narrow class: young teenage boys aged between 11 and 13 who were under his supervision. The evidence was said to be strongly probative of the appellant's motive to 17 McPhillamy v The Queen [2017] NSWCCA 130 at [121] and at [82] quoting Sokolowskyj v The Queen (2014) 239 A Crim R 528 at 539 [48], [50] per 18 McPhillamy v The Queen [2017] NSWCCA 130 at [130]. Bell Nettle commit the offences. Proof of the tendency showed that the appellant had previously overcome any inhibitions and had acted on his sexual interest in young teenage boys. Absent the tendency evidence, the respondent submitted, the jury might have been troubled by the unlikelihood that a mature adult would follow a young teenage boy into a public toilet and sexually molest him. The respondent was critical of Meagher JA's conclusion that the "absence of sufficient similarity" between the tendency evidence and the charged acts deprived the tendency evidence of significant probative value19. The respondent submitted that in this respect his Honour's analysis is inconsistent with the majority reasons in Hughes. The respondent supported the Court of Criminal Appeal majority's analysis that a sexual interest in young teenage boys is unlikely to become attenuated over the space of ten years. In this respect, the respondent's argument called in aid the decision of the Court of Appeal of England and Wales in R v Cox20. The probative value of "B"'s and "C"'s evidence As explained in Hughes, assessment of the probative value of tendency evidence requires the court to determine the extent to which the evidence is capable of proving the tendency. Assuming the evidence has the capacity to do so, the court must then assess the extent to which proof of the tendency increases the likelihood of the commission of the offence21. The tendency may be to have a particular state of mind or to act in a particular way. A mature man's sexual interest in young teenage boys is a tendency to have a particular state of mind. The evidence of "B" and "C" was capable of establishing that the appellant had such an interest. In this Court, it was not disputed that it is an interest of a kind that is likely to be enduring. Proof of the appellant's sexual interest in young teenage boys may meet the basal test of relevance, but it is not capable of meeting the requirement of significant probative value for admission as tendency evidence. Generally, it is the tendency to act on the sexual interest that gives tendency evidence in sexual 19 Citing McPhillamy v The Queen [2017] NSWCCA 130 at [68], [116]-[117]. 20 [2007] EWCA Crim 3365. 21 Hughes v The Queen (2017) 92 ALJR 52 at 66 [41] per Kiefel CJ, Bell, Keane and Edelman JJ; 344 ALR 187 at 199. Bell Nettle cases its probative value. The tendency on which the prosecution relied was to act on the appellant's sexual interest in male children in their early teenage years who were under his supervision. The evidence demonstrating that tendency was confined to "B"'s and "C"'s evidence of events that occurred in 1985. As Meagher JA noted, there was no evidence that the asserted tendency had manifested itself in the decade prior to the commission of the alleged offending against "A". In Cox it was held that, at the accused's trial for the indecent assault of his pubescent babysitter, evidence of his conviction for the indecent assault of a pubescent girl some 20 years earlier was rightly admitted. Hughes LJ, giving the judgment of the Court, held that as a matter of ordinary common sense the fact that the accused had many years earlier demonstrated a sexual interest in a pubescent girl made it more likely that he had committed the offence with which The admissibility of the evidence of the conviction was governed by the provisions of the Criminal Justice Act 2003 (UK) relating to evidence of a defendant's bad character. The evidence was received under s 101(1)(d), which states that evidence of a defendant's bad character is admissible if it is relevant to an important matter in issue between the defendant and the prosecution. "[M]atters in issue between the defendant and the prosecution" include whether the defendant has a propensity to commit offences of the kind with which he or she is charged23. Such a propensity may be established by evidence of the defendant's conviction for an offence of that kind24. Cox was concerned with the relevance of the evidence of the earlier conviction. It may be accepted that the evidence that the appellant had acted on his sexual interest in young teenage boys on the occasions with "B" and "C" is relevant to proof that he committed the offences alleged by "A", but it is not admissible as tendency evidence unless it is capable of significantly bearing on proof of that fact. In the absence of evidence that the appellant had acted on his sexual interest in young teenage boys under his supervision in the decade following the incidents at the College, the inference that at the dates of the offences he possessed the tendency is weak. 22 R v Cox [2007] EWCA Crim 3365 at [29]. 23 Criminal Justice Act, s 103(1)(a). 24 Criminal Justice Act, s 103(2)(a). Bell Nettle Moreover, where, as here, the tendency evidence relates to sexual misconduct with a person or persons other than the complainant, it will usually be necessary to identify some feature of the other sexual misconduct and the alleged offending which serves to link the two together25. The suggested link in this case is the appellant's tendency to act on his sexual interest in young teenage boys who were under his supervision. The supervision exercised by the appellant as assistant housemaster in 1985 over vulnerable, homesick boys in his care has little in common with the supervision exercised in his role as acolyte over "A", an altar boy, when the two were at the Cathedral for services in 1995-1996. The evidence does not suggest that "A" was vulnerable in the way that "B" and "C" were vulnerable. The tendency to take advantage of young teenage boys who sought out the appellant in the privacy of his bedroom is to be contrasted with "A"'s account that the appellant followed him into a public toilet and molested him. "B"'s and "C"'s evidence established no more than that a decade before the subject events the appellant had sexually offended against each of them. Proof of that offending was not capable of affecting the assessment of the likelihood that the appellant committed the offences against "A" to a significant extent26. It rose no higher in effect than to insinuate that, because the appellant had sexually offended against "B" and "C" ten years before, in different circumstances, and without any evidence other than "A"'s allegations that he had offended again, he was the kind of person who was more likely to have committed the offences that "A" alleged. The tendency evidence did not meet the threshold requirement of s 97(1)(b) of the Evidence Act. This conclusion makes it unnecessary to address the submissions respecting s 101(2) of that Act. 25 Hughes v The Queen (2017) 92 ALJR 52 at 69 [64] per Kiefel CJ, Bell, Keane and Edelman JJ; 344 ALR 187 at 204; R v Bauer (a pseudonym) (2018) 92 ALJR 846 26 R v Bauer (a pseudonym) (2018) 92 ALJR 846 at 863 [58]. Edelman EDELMAN J. I agree with the reasons of Kiefel CJ, Bell, Keane and Nettle JJ for joining in the orders allowing the appeal at the conclusion of oral argument. The following are brief additional reasons why I joined in the orders. These reasons concern why the features of the appellant's alleged tendency conduct with other persons, "B" and "C", were not sufficiently "linked"27 to the alleged offending with the complainant, "A", for the tendency conduct to have significant probative value within s 97(1) of the Evidence Act 1995 (NSW). In Hughes v The Queen28, in the same context as this appeal, involving tendency evidence being led to establish the commission of the offence rather than the identity of the offender, the majority said: "The assessment of whether evidence has significant probative value in relation to each count involves consideration of two interrelated but separate matters. The first matter is the extent to which the evidence supports the tendency. The second matter is the extent to which the tendency makes more likely the facts making up the charged offence." As to the first matter – the extent to which the evidence supports the tendency – the jury were directed that the alleged tendency of the appellant was to act in a particular way that demonstrated "a sexual interest in male children in their early teenage years who were under his supervision". The evidence of "B" and "C" provided some support for the appellant having that tendency at the time of trial. It assisted to establish that the appellant had a state of mind involving a sexual interest in early teenage male children under his supervision and a willingness to act upon that state of mind. But that support was not strong. Unlike in Hughes, where the tendency evidence was also expressed in reasonably general terms, the evidence in this case was given only by two witnesses. Their evidence involved two incidents that occurred a decade before the date of the alleged offences against "A". As to the second matter – the extent to which the tendency makes more likely the facts making up the charged offence – the tendency was expressed at a high level of generality. The reference to supervision was as a matter of context: it was not alleged that the appellant had a tendency to abuse his authority over children in any particular way, such as taking advantage of the homesickness of "B" and "C", in order to facilitate acts of the nature of the alleged offending. Nor was it alleged that the appellant had a tendency to act impulsively with a risk of detection. Nor was it alleged that the acts, or their circumstances, bore any similarity to the alleged offences, other than as demonstrating a sexual interest in 27 R v Bauer (a pseudonym) (2018) 92 ALJR 846 at 863 [58]; [2018] HCA 40. 28 (2017) 92 ALJR 52 at 66 [41], see also at 69 [61], [64]; 344 ALR 187 at 199, see also at 204; [2017] HCA 20. Edelman early teenage boys. The tendency was described no more specifically than "acting" upon the appellant's sexual interest in early teenage male children under his supervision. In this Court, the respondent attempted to rectify the high level of generality at which the tendency was expressed by describing the tendency as follows: "[O]n a number of previous occasions, the appellant had fondled the genitals of young teenage boys and/ or engaged in acts of oral sex with them in circumstances where the appellant was in a position of authority and supervision over the boy, where there had been relatively little grooming and where there was a risk of detection (either by way of complaint from the boy in question, or as a result of a person walking in on the appellant when he was with the boy)." (footnote omitted) It is unnecessary to consider whether this more specific tendency arising from the appellant's alleged acts against "B" and "C", if proved, could have significant probative value for proof of the alleged offences against "A", a decade later. The appellant was not confronted with an alleged tendency with this degree of specificity. The weakness of the support in the evidence for the alleged tendency, combined with the weakness of the support that the tendency had for the alleged offences, had the effect that the evidence of "B" and "C" was not of significant probative value. |
HIGH COURT OF AUSTRALIA BEROWRA HOLDINGS PTY LTD APPELLANT AND RESPONDENT Berowra Holdings Pty Ltd v Gordon [2006] HCA 32 15 June 2006 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: B W Walker SC with P L Perry for the appellant (instructed by Lyons Barnett J E Sexton SC with P A Regattieri for the respondent (instructed by Peacocke Dickens & Price) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Berowra Holdings Pty Ltd v Gordon Workers' Compensation − Plaintiff did not comply with s 151C of the Workers Compensation Act 1987 (NSW) − Defendant did not take any point as to non-compliance until after it had made an offer of compromise pursuant to Pt 19A of the District Court Rules − Plaintiff accepted defendant's offer of compromise after the point as to non-compliance had been raised – Whether proceedings commenced by the plaintiff invalid or a nullity because of non-compliance with s 151C − Whether procedural steps taken by the parties under the District Court Rules invalid or nullities because of non-compliance with s 151C − Whether defendant entitled to an order that its offer of compromise be withdrawn − Whether the concept of waiver relevant. Statutory construction − Where statute imposed a restriction upon the commencement of court proceedings but made no provision for consequences of non-compliance − Construction of s 151C of Workers Compensation Act 1987 (NSW). Workers Compensation Act 1987 (NSW), Pt 5, s 151C. GLEESON CJ, GUMMOW, HAYNE, HEYDON AND CRENNAN JJ. Part 5 (ss 149-151AC) of the Workers Compensation Act 1987 (NSW) ("the 1987 Act") is headed "Common law remedies". Section 151 provides that "except to the extent that this Act otherwise expressly provides", it "does not affect any liability in respect of an injury to a worker that exists independently of this Act". However, s 151C stipulates a six months delay before the commencement of court proceedings against an employer for damages. The grounds of appeal for this appeal from the New South Wales Court of Appeal1 show that it turns upon an issue of construction of Pt 5 of the 1987 Act. This may be shortly stated: does the prohibition apparently imposed by s 151C deny legal effect both to proceedings for common law damages commenced in contravention of that prohibition and to all steps later taken by the parties under the relevant Rules of Court with respect to such proceedings? The appellant ("the employer") submits that the Court of Appeal erred and that, on its proper construction, s 151C(1) does have this result. Therefore, it is said, an action commenced by the respondent ("the worker") in the District Court, together with the employer's own offer of compromise made under the District Court Rules ("the Rules"), were null and void. The question of the construction of s 151C falls to be resolved in the light of two significant facts about which there was no controversy. First, the worker did commence an action in the District Court without complying with s 151C. Secondly, the employer did not take any point (in pleadings or otherwise) regarding failure to comply until the day before the matter was listed for hearing in the District Court some 18 months later. That day fell at a time when the employer's offer of compromise pursuant to Pt 19A of the Rules remained open. The employer contends that the second fact is irrelevant and that the first fact constitutes a complete answer to the case. The submissions by the employer should not be accepted. We turn to explain why this is so. 1 Gordon v Berowra Holdings Pty Ltd (2005) 62 NSWLR 427; see also Gordon v Berowra Holdings Pty Ltd [No 2] [2005] NSWCA 123. Crennan Section 151C On 23 November 2001, when the worker filed his statement of claim, s 151C provided: "(1) A person to whom compensation is payable under this Act is not entitled to commence court proceedings for damages in respect of the injury concerned against the employer liable to pay that compensation until 6 months have elapsed since notice of the injury was given to the employer. (2) Despite subsection (1), the person is entitled to commence court proceedings against the employer if either of the following occurs: the employer denies all liability in respect of the injury, the employer admits partial liability in respect of the injury but the person is dissatisfied with the extent to which liability is admitted." Section 151C(1), to which the arguments in this appeal are directed, has remained in its original form2. The word "damages" in s 151C is defined by s 149 of the 1987 Act to include "any form of monetary compensation" and "any amount paid under a 2 As a result of changes made by the Workers Compensation Legislation Further Amendment Act 2001 (NSW), Sched 1, Item 1.1[4], which Schedule commenced on 27 November 2001, s 151C(2)(a) was amended and s 151C(3) was added. These sub-sections now read: "(2) Despite subsection (1), the person is entitled to commence court proceedings against the employer if either of the following occurs: the employer wholly denies liability in respect of the injury, the employer admits partial liability in respect of the injury but the person is dissatisfied with the extent to which liability is admitted. (3) This section does not limit or otherwise affect the operation of Part 6 of Chapter 7 of the [Workplace Injury Management and Workers Compensation Act 1998 (NSW)]." (emphasis added) Crennan compromise or settlement of a claim for damages (whether or not legal proceedings have been instituted)". There are also a number of exclusions which are not presently relevant. There is no definition of "court" or "proceedings". On its face, s 151C(1) creates an imperfect obligation; the statute does not make express provision for the consequences of failure to comply with s 151C(1), so giving rise to the dispute in this appeal. "Nullity" and invalidity Some attention should be given at the outset to the result which the employer submits must attend the non-compliance by the worker with s 151C. It was said that such proceedings are "invalid" or a "nullity". In Minister for Immigration and Multicultural Affairs v Bhardwaj3, three members of this Court pointed out in the context of administrative decisions that such expressions are statements of conclusion which are not necessarily helpful in resolving the rights of parties. Dangers are equally present in the context of proceedings in, and acts and orders of, courts. In particular, the introduction into s 151C of concepts of "nullity" and "invaldity" is misleading because they tend to obscure the distinction between superior courts of record of general jurisdiction and courts of limited jurisdiction. That distinction has been the subject of comment in this Court4, although due regard is to be had to the constitutional context. In the case of the superior courts, acts in excess of jurisdiction cannot be characterised as invalid until quashed or set aside on appeal, whereas that is not necessarily true of the latter. Thus, in the majority judgment of Gaudron, Gummow and Callinan JJ in Pelechowski v Registrar, Court of Appeal (NSW)5, it was decided that, because (2002) 209 CLR 597 at 613 [46] per Gaudron and Gummow JJ, 643 [144]-[145] 4 Cameron v Cole (1944) 68 CLR 571 at 590-591 per Rich J, 598-599 per McTiernan J, 607 per Williams J; Re Macks; Ex parte Saint (2000) 204 CLR 158 at 184 [49] per Gaudron J, 235-236 [216] per Gummow J, 249 [257] per Kirby J, 274-275 [328] per Hayne and Callinan JJ. See also the comments of Lord Millett, delivering the judgment of the Privy Council, in Strachan v The Gleaner Co Ltd [2005] 1 WLR 3204 at 3211-3213. (1999) 198 CLR 435 at 445 [27]. Crennan an order made by an inferior court (in that case the New South Wales District Court) without power to do so was a "nullity", it could not found a proceeding for contempt. This situation was contrasted to that arising where an order was made within power but improperly, in which case, until set aside by a superior court, the order had to be obeyed6. That difference between courts of general jurisdiction and of limited jurisdiction to "court important because s 151C(1) refers generally proceedings", a term which is not susceptible of confinement to proceedings in any particular court and, as will be discussed below, jurisdiction in workers' claims are cognisable in a range of courts. In construing s 151C, this Court should not prefer a construction which would result in s 151C having differential application depending upon the court in which proceedings were commenced. There also is a very real difficulty in characterising proceedings as "invalid". The institution of an action or other proceeding is the exercise by the litigant of the freedom to invoke the jurisdiction of the judicial arm of government to determine a dispute. That step engages the procedural law appurtenant to the relevant court, which in modern times is found primarily in the Rules. Professor Jolowicz describes procedural law as creating choices or a sequence of choices in the sense that each procedural step taken by a litigant requires the other party or the court to take some action, so affecting the path which the proceedings take towards ultimate disposition7. This is the case even where a procedural rule is expressed in mandatory form; if the party to whom it is addressed chooses to disregard it, the normal outcome is that a choice accrues to the other party either to do nothing or to seek an appropriate order from the court. In the adversarial system of justice, choice rests primarily with the parties and it is generally the case that the court's power of decision or order is exercised upon the application of a party. Generally there is in law no restriction upon a person's right to start an action and to carry it to the point at which a choice is cast upon the defendant to make some response in order to avoid judgment in (1999) 198 CLR 435 at 445-446 [28]. 7 On Civil Procedure, (2000) at 68, 78. Crennan default. Once the procedural law has been engaged, all parties to the litigation are subject to it. None of the above denies the possibility of a defendant denying the plaintiff's right to invoke the jurisdiction of the court, for example where the plaintiff's right is conditional upon there being an action cognisable within that jurisdiction. However, the material point is that that denial must be made within the structure of the relevantly engaged procedural law, and not outside it. Accordingly, the defendant may challenge at an interlocutory level the strength of the plaintiff's alleged case by seeking to have a plaintiff's action struck out for failure to disclose a reasonable cause of action, or dismissed as incompetent. Alternatively, the defendant may have recourse to judicial review by a superior court, challenging the right of an inferior court to adjudicate the plaintiff's claim and seeking orders to prevent the inferior court continuing to hear the claim. However, the invocation of jurisdiction ordinarily enlivens the authority of the court in question at least in the first instance to decide whether it has jurisdiction8. Statutory scheme regulating common law rights As already remarked, s 151C is contained in Pt 5 of the 1987 Act. Part 5 was introduced in its present form by the Workers Compensation (Benefits) Amendment Act 1989 (NSW)9 which commenced on 1 February 1990 ("the 1989 Act"). Part 5 provides for what is loosely described as the restoration of a right to modified common law damages. This usage derives from the circumstance that, when first enacted, s 149 of the 1987 Act provided that a worker was "not entitled to recover damages, otherwise than under this Act" from the employer where workers' compensation was payable. Those words were repealed by the 1989 Act. This also introduced s 151 which "restored" the common law. The gist of s 151 is stated in the first paragraph of these reasons. The restoration effected by Pt 5 did not involve altering the common law source of the worker's cause of action against the employer by transforming that right into one with a statutory foundation. The right of the worker to sue the employer for damages in any court of competent jurisdiction remains a right sourced at common law, albeit with its enjoyment regulated by Pt 5. 8 Re Macks; Ex parte Saint (2000) 204 CLR 158. 9 Sched 1(1). Crennan Construction of the statute There is no doubt that s 151C imposes a form of restriction or bar upon the commencement of court proceedings, but the dispute concerns the effect of non-compliance. Resolution of that issue requires close attention to the words of the statute and the statutory scheme in general. For many centuries the courts have developed a well-known interpretative approach to construing certain statutory bars. In The Commonwealth v Mewett, Gummow and Kirby JJ said of a limitations statute10: "[A] statutory bar, at least in the case of a statute of limitations in the traditional form, does not go to the jurisdiction of the court to entertain the claim but to the remedy available and hence to the defences which may be pleaded. The cause of action has not been extinguished. Absent an appropriate plea, the matter of the statutory bar does not arise for the consideration of the court11. This is so at least where the limitation period is not annexed by statute to a right which it creates so as to be of the What was there being referred to was a law which barred the remedy for the plaintiff's cause of action without extinguishing the right. There are numerous examples of such statutory bars. The two with the longest pedigree are s 3 of the Statute of Limitations 1623 (Eng)13 applicable to personal actions ("all Actions ... shall be commenced ... within the Time ...") and s 4 of the Statute of Frauds 1677 10 (1997) 191 CLR 471 at 534-535. 11 The Commonwealth v Verwayen (1990) 170 CLR 394 at 473-474. 12 Australian Iron & Steel Ltd v Hoogland (1962) 108 CLR 471 at 488-489; Pedersen v Young (1964) 110 CLR 162 at 169; The Commonwealth v Verwayen (1990) 170 CLR 394 at 497-498; McKain v R W Miller & Co (SA) Pty Ltd (1991) 174 CLR 1 13 21 Jac I c 16. Crennan (Eng)14 ("no Action shall be brought ... unless ..."). Other examples were given in the decisions mentioned by Mason CJ in The Commonwealth v Verwayen15. In Dawkins v Lord Penrhyn16, Earl Cairns LC drew a distinction between those cases and the limitations statute applicable to real actions which resulted in the extinguishment of the title of the plaintiff to the property in question after the stipulated period of time. This distinction reflects the settled approach of courts to interpreting statutes of that kind in the adversarial system of litigation which obtains in common law jurisdictions. The New South Wales legislature must be taken to have been aware of this when enacting s 151C. Counsel for the employer urged upon this Court a construction of s 151C of the 1987 Act designed to establish that it was not a statutory bar to which that construction would apply. The construction pressed was one which would regard the worker's right as being subjected to a statutory moratorium which rendered that right incapable of exercise in a court before the expiration of that period of time. This amounted to a submission that the worker's common law right was impaired by s 151C to such a degree that, until the six months had elapsed, the worker had no right which could attract the processes of the court so as to be the subject of judicial adjudication. On the other hand, counsel for the worker sought to place s 151C within the field of discourse referred to earlier, submitting that the effect of the statute was not to strip away the worker's right, but merely to postpone or temporarily bar the remedy. What is the effect of s 151C? It may be said at the outset that the scheme contained in Pt 5 of the 1987 Act does not represent an instance of a statutorily created right which is subject to an inherent limitation or qualification going to the nature of the right of the kind referred to in the passage cited previously from Mewett17. The right is sourced in common law. The approach of the courts has consistently been to require very clear legislative intent before treating a statutory provision as taking away common law rights of a plaintiff, where there is an 14 29 Car II c 3. 15 (1990) 170 CLR 394 at 405. 16 (1878) 4 App Cas 51 at 58. 17 (1997) 191 CLR 471 at 534-535. Crennan alternative construction available18. If s 151C is properly to be regarded as analogous to the statutory bars referred to earlier in these reasons, this militates against the construction espoused by the employer. Statutory purpose In one sense, as Mason CJ noted in Verwayen19, all statutes give effect to some public policy. It may be accepted that the primary objective of s 151C is to encourage an injured worker to attempt in the first instance to satisfy his or her claim for damages by negotiation with the employer rather than by immediate recourse to litigation. However, the statute does not in terms oblige litigants to engage in any form of negotiation or settlement procedure during the six month period which s 151C envisages. Counsel for the employer sought to establish that the section was intended for the benefit of the public, in as much as it promotes non-litigated solutions for the benefit of the broader community. However, to describe the effect of a section concerned with litigation in this way is misleading. The public may well benefit and be intended to benefit from general compliance with s 151C, but that does not in any way lessen the benefit also received by the defendant in being freed from litigation for a stipulated period of time. The strategic advantage of such a provision in an adversarial system may be significant. As Mason CJ pointed out in Verwayen20, the critical question is whether that benefit is personal or private or whether it rests in the relevant sense upon considerations of State. The public benefit here is mediated through a benefit conferred on individual litigants, not (as will be seen below) through restricting the court's jurisdiction. Even if it be accepted that the provision evinces a wider policy, that does not warrant the conclusion that non-compliance inevitably results in invalidity. An essential ingredient in postulating that settlement negotiations or non-litigated solutions should take place during the six month period must be that there is something to compromise. This rather tells against a construction of s 151C 18 Sargood Bros v Commonwealth (1910) 11 CLR 258 at 279 per O'Connor J; Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at 341 per Mason ACJ, Wilson and Dawson JJ. 19 (1990) 170 CLR 394 at 405. 20 (1990) 170 CLR 394 at 405. Crennan which regards it as denying or severely impairing the plaintiff's rights. It may instead suggest that the statute postpones the remedy, as counsel for the worker contended. In this sense, the policy of the statute weakens rather than strengthens the construction favoured by the employer. Much was made by counsel for the employer of the submission that the statute prohibits the worker from commencing proceedings, and that to allow a construction which gives any legal effect to proceedings commenced in contravention of s 151C undermines that legislative prohibition. Once the role of procedural law is understood, there is no substance to that submission. The submission requires acceptance of the proposition that the New South Wales Parliament intended that potential invalidity should attend all steps taken in reliance upon proceedings wrongfully commenced, regardless of the procedural history and context of the litigation. To attribute such potentially indiscriminate consequences to non-compliance would be to confer upon the statute a character which its words do not readily bear and which is quite removed from facilitating non-litigated settlements. Jurisdiction Counsel for the employer expressly eschewed a "jurisdictional analysis" of s 151C, and conceded that in terms the section is not addressed as a command to the court but to the litigants. However, the question of statutory construction cannot easily be severed from that of jurisdiction because s 151C concerns the submission of contested rights to a court for curial adjudication in an adversarial system. This is to be distinguished from the situation in Project Blue Sky Inc v Australian Broadcasting Authority21. That case concerned breach of a statutory direction addressed to an administrative decision-maker which was a condition regulating the exercise of a statutory power. Project Blue Sky was not concerned with questions relating to the jurisdiction of courts. Where one is concerned with the impairment of a common law right of action, by a statute such as s 151C, in substance there is little difference between a characterisation that the plaintiff has no right capable of being submitted to a court for adjudication and one to the effect that the court has no jurisdiction to adjudicate the plaintiff's right. The substantive outcome of the construction preferred by the employer in so far as it denies efficacy to the engagement of the 21 (1998) 194 CLR 355. Crennan court processes in contravention of s 151C is to contract the jurisdiction of the courts. In this context the term "jurisdiction" must be understood in the second of the senses referred to in Lipohar v The Queen22: "'Jurisdiction' may be used (i) to describe the amenability of a defendant to the court's writ and the geographical reach of that writ, or (ii) rather differently, to identify the subject matter of those actions entertained by a particular court, or, finally (iii) to locate a particular territorial or 'law area'23 or 'law district'24." In the joint judgment of five members of this Court in Plaintiff S157/2002 v Commonwealth25, reference was made to a "basic rule" that a legislature does not intend to cut down the jurisdiction of the courts "save to the extent that the legislation in question expressly so states or necessarily implies". Earlier, in Parisienne Basket Shoes Pty Ltd v Whyte, Dixon J said26: "[I]f the legislature does make the jurisdiction of a court contingent upon the actual existence of a state of facts, as distinguished from the court's opinion or determination that the facts do exist, then the validity of the proceedings and orders must always remain an outstanding question until some other court or tribunal, possessing power to determine that question, decides that the requisite state of facts in truth existed and the proceedings of the court were valid. Conceding the abstract possibility of the legislature adopting such a course, nevertheless it produces so inconvenient a result that no enactment dealing with proceedings in any of 22 (1999) 200 CLR 485 at 517 [79] per Gaudron, Gummow and Hayne JJ. 23 An expression used by the Court in Laurie v Carroll (1958) 98 CLR 310 at 331, with respect to New South Wales and Victoria. See also Breavington v Godleman (1988) 169 CLR 41 at 77, 97, 107. 24 An expression used by Wilson and Gaudron JJ in Breavington v Godleman (1988) 169 CLR 41 at 87. 25 (2003) 211 CLR 476 at 505 [72]. See also Fish v Solution 6 Holdings Ltd [2006] HCA 22 at [33] per Gleeson CJ, Gummow, Hayne, Callinan and Crennan JJ. 26 (1938) 59 CLR 369 at 391 (with whom Evatt and McTiernan JJ agreed). Crennan the ordinary courts of justice should receive such an interpretation unless the intention is clearly expressed." It may not appear from originating process that six months have elapsed from receipt of notice by the employer of the injury. The employer's construction implicitly requires the court to undertake a jurisdictional inquiry in each case as to whether or not s 151C has been satisfied. That is not the usual function which a court (as distinct from an administrative body) performs when called upon to exercise judicial power in a matter which prima facie is within the jurisdiction of the court. That is the nature of this case, as explained above. Further, such an inquiry is likely to be complex, especially when regard is had to the terms of s 151C(2). Conclusion respecting s 151C Section 151C should not be read as if the entitlement of a plaintiff to commence court proceedings after the passage of six months from the giving to the employer of notice of the injury was a pre-condition to the jurisdiction conferred upon the court to determine claims for work injury damages. The considerations adverted to earlier in these reasons all point against the employer's construction of s 151C. The better view is that the provision does not inevitably result in the invalidity of proceedings commenced in contravention of it, either for want of the court's jurisdiction or because the court has no jurisdiction except to accede to a defendant's application (whenever brought) to set aside the proceedings and to do so without regard to the procedural history and the relevant Rules of Court. The construction advanced by counsel for the worker should be accepted. Section 151C does not extinguish rights or create new rights. Rather, it postpones the remedy for the common law right to initiate proceedings in a court of competent jurisdiction. The "right" which s 151C does confer is conferred upon the defendant employer and must be raised in accordance with the procedural rules appurtenant to the particular court. Proceedings commenced by a worker in contravention of s 151C engage the jurisdiction and procedural rules of the court in question. Such proceedings are vulnerable to an application by the defendant to strike out the initiating process or to move for summary dismissal, but they are not a "nullity". Once a plaintiff has commenced proceedings, s 151C must be understood in connection with the procedural structure for the conduct of litigation in that court, not in isolation from it. This is not to subjugate the statute to the Rules, but to Crennan recognise that the subject-matter with which the statute deals is "rights" in the context of actual or apprehended litigation, and to understand the function of the Rules of Court and procedural law in facilitating adjudication of disputed claims. The upshot is that the effect of non-compliance with s 151C will depend in each case upon the actions of the defendant in the context of the relevant Rules of Court. Where the defendant requires an order by the court for the defendant to give effect to a point as to s 151C, in exercising its discretion the court will take into account numerous factors. Not all of these (as Lord Griffiths recognised in Ketteman v Hansel Properties27) may be measured in economic terms. "Waiver" This conclusion does not depend upon the application of concepts such as "waiver", although submissions both in the Court of Appeal and in this Court sought to enlist them. To embark upon a consideration of what is involved in this case by considering whether there was a "waiver" by the employer of its "rights" would be unproductive. "Waiver" is a word which Cardozo J described as "misleading" on account of the many things for which it is made to stand28. It is one thing to speak of the waiver of a legal, equitable or statutory right or privilege. However, once it is appreciated that the court has jurisdiction and that its procedural rules have been engaged, concepts such as "waiver" (and acquiescence and estoppel) are confusing and imprecise. This was pointed out by Dawson J in Verwayen29 and Lord Browne-Wilkinson in Roebuck v Mungovin30. The conduct of pending proceedings by a party is relevant upon an application by that party for the exercise in its favour of a power of the court. The outcome of such an application depends not upon the exercise of the right of a litigant or upon its denial, but upon the exercise of a discretionary power given to the court. The decision of the court often will depend upon many different factors31. An outcome favourable to one party cannot be described adequately in 27 [1987] AC 189 at 220. 28 Beatty v Guggenheim Exploration Co 122 NE 378 at 381 (1919). 29 (1990) 170 CLR 394 at 456. 30 [1994] 2 AC 224 at 235-236. See also Giumelli v Giumelli (1999) 196 CLR 101 at 31 See Ketteman v Hansel Properties [1987] AC 189 at 220 per Lord Griffiths. Crennan terms of the waiver of the legal, equitable or statutory rights of the unsuccessful party. We turn now to consider the particular facts of the case. Procedural history On 23 November 2001, the worker filed a Statement of Claim in the Dubbo Registry of the District Court of New South Wales in respect of an injury alleged to have been suffered by him on 2 October 2001 in the course of his employment. Notice of that injury was given to the employer on 12 October 2001, thereby enlivening s 151C(1) of the 1987 Act. Had s 151C(1) been complied with, the worker should have commenced proceedings not before six months after that date, namely 12 April 2002. There is no doubt, however, that it was not complied with. It was suggested that, had the worker complied with s 151C, he would have fallen under a less beneficial regime for the assessment of damages owing to the commencement on 27 November 2001 of the Workers Compensation Legislation Further Amendment Act 2001 (NSW). This heavily amended Pt 5 and prevented recovery of damages unless the injury resulted in permanent impairment to the worker of at least 15 per cent (see s 151H). However there were no findings in the District Court or the Court of Appeal that this was the reason for the worker's course of conduct, and further conjecture on the subject is inappropriate. It is not in dispute that the employer did not take any point in relation to the non-compliance with s 151C until 20 May 2003 (the day before the matter was fixed for hearing in the District Court). Apparently the significance of s 151C was overlooked. Prior to 20 May 2003, the employer's solicitors had taken numerous steps in the proceedings without taking the s 151C point. A Notice of Grounds of Defence dated 21 March 2002, traversed the allegations made by the worker denying negligence and breach of statutory duty, but pleaded contributory negligence in the event that negligence was proven. By the time the employer became alive to the point, leave was required to amend the Notice of Grounds of Defence, under the Rules32; this was because more than four months had elapsed 32 Part 17 r 2(1) provided: "A party may, without leave, amend any pleading of his once at any time not more than 4 months after the filing of the statement of claim in the proceedings." Crennan since the Statement of Claim was filed. The matter had also proceeded through arbitration on 3 February 2003, resulting in an award in favour of the worker (the employer then applying for a re-hearing). It can be inferred that s 151C did not play any part at this stage of the proceedings. Critically, an offer of compromise had been made pursuant to Pt 19A r 1(1) of the Rules33. Because the offer was made within a regime established by the Rules, it acquired a significance which a settlement offer made under ordinary contractual principles34 would not have attracted. The offer was expressed to remain open for the ordained period of 28 days from the date of receipt35. This offer was made on 6 May 2003. The Rules provided that, in the ordinary course, the worker could accept the offer of compromise at any time before the earlier of the expiry date specified in the offer or the time when the judge commenced to give judgment or reasons for decision36. The Rules went on to state that, where an offer is accepted, a party to the compromise "may apply to the Court to enter judgment accordingly"37. The Rules also provided that the employer was not at liberty to withdraw the offer during that period "unless the Court otherwise orders"38. The Rules did not expressly provide for the criteria upon which the Court may make orders that an offer of compromise be withdrawn. However the material point is that, where a party has made an offer of compromise pursuant to the Rules (thereby attracting the potentially advantageous costs consequences provided by those Rules39), that party has no entitlement as of right to withdraw that offer. Rather, that party requires an indulgence of the Court, namely the favourable exercise of a judicial discretion. 33 These provisions were not materially different to those in the Uniform Civil Procedure Rules 2005 (NSW), Pt 20 Div 4. 34 See Harvey v Phillips (1956) 95 CLR 235. 35 Pt 19A r 3(3). 36 Pt 19A r 3(4). 37 Pt 19A r 3(7). 38 Pt 19A r 3(5). 39 Pt 39A r 25. Crennan At about 5.30 pm on 20 May 2003, the employer's legal representatives signalled to the worker's solicitors that they were instructed "to withdraw the employer's offer of compromise, to put on application to the Dubbo District Court in that regard, to seek an order that the proceedings were a nullity ab initio and to seek summary dismissal"40. The employer's solicitor served an unsealed copy of a Notice of Motion and supporting affidavit to that effect by facsimile later that evening. The worker's solicitors obtained instructions on the morning of 21 May 2003, and thereafter forwarded urgently to the employer's solicitors a document entitled Notice of Acceptance of Offer of Compromise by facsimile sent and received at 9.37 am and 9.43 am respectively. The position that then obtained under the Rules was that the worker had accepted an offer of compromise which was not capable of being withdrawn without the leave of the court. The worker had by this means put himself in the position where he could apply for judgment to be entered in his favour in the sum of the offer, in accordance with Pt 19A r 3(7) of the Rules. Such an application could fail only if the proceedings were a "nullity" as asserted by the employer, or if the employer obtained leave to withdraw the offer of compromise. In this Court, counsel for the employer did not contend otherwise. The litigation The employer's Notice of Motion came on before Sir Robert Woods ADCJ on 21 August 2003. The basis upon which the application was brought was unclear. On the one hand, the employer's solicitors had asserted the proceedings to be a "nullity ab initio". On the other hand, the notice of motion sought relief in the form of, first, an order granting leave to withdraw the offer of compromise and, secondly, dismissal of the proceedings. A further prayer for leave to file an amended notice of defence was added with leave of the Court on the hearing of the motion. It does not seem to have been appreciated by the employer that, if it was correct in its contention that the proceedings were a nullity ab initio, then the further prayers apart from leave to amend pleadings and leave to withdraw the offer of compromise were superfluous. The latter should have been framed in the alternative if the application for dismissal based upon "nullity" failed. 40 Gordon v Berowra Holdings Pty Ltd (2005) 62 NSWLR 427 at 430 per Mason P. Crennan The Acting District Court Judge concluded: "[T]he proceedings are a nullity, and everything done following the issue of these proceedings must be a nullity. Therefore these proceedings should be dismissed and the offer of compromise being part of the proceedings has no validity and can be withdrawn. For completeness therefore I grant leave to file an amended defence in the terms of the Amended Defence filed 10 June 2003. I grant leave for the [employer's] offer of compromise of 6 May 2003 to be withdrawn, and I order that the proceedings be dismissed." The foregoing passage reveals that the true basis for the formal order of the Court that the proceedings be dismissed was that they were a "nullity". It is unclear, given that conclusion, why the primary judge felt that the procedural orders needed to be made "for completeness". To the extent that his Honour did consider the discretionary applications, it is clear that the ground upon which his discretion was exercised was his conclusion as to "nullity". When regard is had to the proper construction of s 151C set out earlier in these reasons, it is apparent that the proceedings were not a "nullity". The Court of Appeal On appeal by the worker to the Court of Appeal, the leading judgment was given by Mason P (with whom Sheller and Beazley JJA agreed). Mason P correctly concluded that the proceedings were not a nullity41. However his Honour did so with a consideration of the submissions discussing "waiver", a term the use of which did not assist in a context such as this. Leaving that matter aside, an error of the kind considered in House v The King42 having been established, it fell to the Court of Appeal to re-exercise the primary judge's discretion with respect to the applications for leave to withdraw the offer of compromise and leave to amend the Notice of Grounds of Defence43. Mason P 41 (2005) 62 NSWLR 427 at 433. 42 (1936) 55 CLR 499. 43 Supreme Court Act 1970 (NSW), s 75A(10). 44 (2005) 62 NSWLR 427 at 437. Crennan "The offer of compromise made by the defendant on 6 May 2003 represented what it considered at the time to be a fair compromise of the litigation. The Rules gave the [worker] 28 days within which to consider acceptance, absent an order permitting withdrawal (cf r 3(5)). Nothing happened during the currency of the offer except the [employer] realising the application of s 151C to the particular case and signalling its intention to move the court for leave to withdraw the offer. At all material times the defence stood unamended, without invocation of s 151C." His Honour then refused the application for leave to amend and then the application for leave to withdraw the offer of compromise, in that order45. In so doing, Mason P referred to passages from Dawson J and Toohey J in Verwayen46, and it is clear that his Honour took the view that the s 151C point had been raised so late that an award of costs in favour of the worker would not be adequate to prevent injustice to him. Given that the defence stood unamended, there was no relevant basis on which the application to withdraw the offer of compromise should succeed. The appeal to this Court The employer did not attack the exercise of that discretion by the Court of Appeal. Its appeal to this Court was confined to the contention that the Court of Appeal erred in discerning error in the approach of the primary judge. It would follow that the Court of Appeal ought never to have reached the point of re-exercising the primary judge's discretion. Therefore, once characterising the proceedings and all steps taken under the Rules in consequence upon them as a "nullity", it follows that, subject to one further matter, the appeal to this Court should be dismissed. the primary judge erred is accepted that Illegality During the course of argument and in written submissions, it was suggested by counsel for the employer that the appeal raised issues of contractual 45 (2005) 62 NSWLR 427 at 437. 46 (1990) 170 CLR 394 at 456 per Dawson J, 464-465 per Toohey J. Crennan illegality of the kind considered by this Court in a number of authorities47. This was said to follow in so far as the offer of compromise was only made and maintained as open to acceptance by the worker under the Rules by reason of the worker's antecedent breach of s 151C. It is incorrect to analyse an offer of compromise made and accepted pursuant to the Rules in purely contractual terms. Nor, given the proper construction of s 151C, may the proceedings be classified as "illegal" in any accepted sense of that term. Orders The appeal should be dismissed with costs. 47 Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410; Nelson v Nelson (1995) 184 CLR 538; Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215. Kirby KIRBY J. This appeal from a judgment of the New South Wales Court of Appeal48 concerns s 151C(1) of the Workers Compensation Act 1987 (NSW) ("the Act"). That is a provision by which a person, entitled to compensation under the Act, "is not entitled to commence court proceedings" for damages before the elapse of a specified time. In breach of that provision, such proceedings were commenced in this case. For a lengthy period, no objection was raised. Nor was any application made to have the proceedings struck out. On the contrary, an offer to compromise the proceedings was made. That offer was purportedly accepted. The question in this appeal is whether the Court of Appeal erred in holding, notwithstanding s 151C(1) and non-compliance with its provisions, that a belated attempt to withdraw the offer of compromise should be refused and judgment should be entered in accordance with the acceptance of the compromise. The appeal raises questions concerning the meaning and purpose of the provision of the Act; the effect of non-compliance with its terms; and whether Rules of Court, requiring leave and restricting withdrawal of an offer of compromise, can have effect in the face of the public policy evident in s 151C. The facts Mr Rodney Gordon ("the plaintiff") was injured in the course of his employment with Berowra Holdings Pty Ltd ("the defendant"). The injury occurred on 2 October 2001. On 12 October 2001, a claim form, containing written notice of the injury, was given to the defendant. The defendant admitted liability for workers' compensation payments. It commenced paying compensation immediately. On 23 November 2001 the plaintiff commenced proceedings for damages in the District Court of New South Wales. He did so by filing a statement of claim. The proceedings were thus commenced before six months had elapsed from the giving of the notice of injury to the employer. The exact reason for the prompt commencement of proceedings was not established. The possibility that it had happened in an attempt to avoid the application to the proceedings of 48 Gordon v Berowra Holdings Pty Ltd (2005) 62 NSWLR 427; Gordon v Berowra Holdings Pty Ltd [No 2] [2005] NSWCA 123. Kirby further restrictive provisions, limiting access to common law damages49, was postulated by the Court of Appeal50. However, as neither party at any stage gave evidence concerning their state of mind at the relevant times, this issue was left unresolved. Materially, a defence, filed by the defendant on 23 March 2002, raised no point as to the non-compliance of the plaintiff's proceedings with s 151C(1) of the Act. To the contrary, the proceedings progressed in a way normal for a determination of such a claim brought within time. In February 2003, the proceedings went to arbitration in Dubbo. The arbitrator made an award in favour of the plaintiff51. The defendant sought a rehearing of the claim in the District Court. This was listed for trial before a judge of that Court in May 2003. A hearing date of 21 May 2003 was assigned52. In April 2003, the plaintiff made an offer of compromise to the defendant53. This was not accepted54. Then, on 6 May 2003, the defendant made an offer of compromise to the plaintiff. It was signed on its behalf by its solicitor. It stated55: "The Defendant offers to compromise this claim on the following terms: The Defendant to pay to the Plaintiff the sum of $50,000.00 plus costs as agreed or assessed; This offer remains open for 28 days from the date of receipt; This offer is made in accordance with Part 19A of the District Court Rules." 49 The Workers Compensation Legislation Further Amendment Act 2001 (NSW) substituted s 151H of the Act. The section commenced operation on 27 November 50 (2005) 62 NSWLR 427 at 430 [6]. 51 (2005) 62 NSWLR 427 at 430 [8]. 52 (2005) 62 NSWLR 427 at 430 [8]. 53 Pursuant to District Court Rules (NSW), Pt 19A ("the DCR"). 54 (2005) 62 NSWLR 427 at 430 [9]. 55 (2005) 62 NSWLR 427 at 430 [10]. Kirby At about 5.30 pm on 20 May 2003, the day before the hearing, counsel for the defendant telephoned the plaintiff's solicitor. He told him that he had instructions from the defendant to withdraw the offer of compromise; to apply to the court "in that regard"; and to seek an order that the proceedings "were a nullity ab initio and to seek summary dismissal"56. In terms, the defendant did not withdraw its offer. For the first time between the parties, reference was made to s 151C of the Act. Events then moved swiftly. On the following morning, 21 May 2003, the plaintiff gave instructions to his solicitor to accept the defendant's offer of compromise. At 9.37 am a letter notifying such acceptance was sent by facsimile to the defendant's solicitor. It was received immediately afterwards. The trial was abandoned as the parties manoeuvred to protect their respective positions. The defendant's solicitor, by letter, rejected the purported acceptance of the offer of compromise. She stated that the offer was not available for acceptance having regard to the notification on the previous evening and "our intention to seek the necessary leave from the District Court … to withdraw our Offer of Compromise"57. Later that day, a notice of motion was filed in the District Court. By this, the defendant sought leave to withdraw its offer of compromise, seeking as well an order that the proceedings be dismissed. On 4 June 2003, an amended defence, pleading contravention of s 151C of the Act, was purportedly filed. However, this was done without the consent of the plaintiff or leave of the Court and it was treated as ineffective. Such leave was eventually sought on 21 August 2003. The decisional history The various motions of the defendant for leave to withdraw its offer of compromise, for leave to file an amended defence and for summary dismissal of the proceedings came on for hearing in the District Court before Woods A-DCJ on 21 August 2003. The defendant argued that the plaintiff's proceedings were a nullity; that the steps purportedly taken in accordance with Pt 19A of the DCR were of no legal effect in light of s 151C(1) of the Act; and that, accordingly, relief should be granted to the defendant, as asked. The primary judge accepted the defendant's submission proceedings were "a nullity or void". He concluded58: that the 56 (2005) 62 NSWLR 427 at 430 [11]. 57 (2005) 62 NSWLR 427 at 431 [15]. 58 Reasons of Woods A-DCJ at 4. Kirby "[t]hese proceedings should be dismissed and the offer of compromise being part of the proceedings has no validity and can be withdrawn. For completeness … I grant leave to file an amended defence in the terms of the Amended Defence filed 10 June 2003. I grant leave for the defendant's offer of compromise of 6 May 2003 to be withdrawn, and I order that the proceedings be dismissed." Against these orders the plaintiff sought, and obtained, leave to appeal to the Court of Appeal. That Court (consisting of Mason P, with whom Sheller and Beazley JJA concurred) upheld the appeal. It set aside the orders of the primary judge. In their place59, the Court of Appeal directed the entry of judgment in favour of the plaintiff in the sum of $50,000 plus costs, being the amount of the defendant's offer of compromise which the plaintiff submitted, and the Court agreed, he had accepted. By special leave, the defendant now appeals to this Court against those orders. The appeal was heard concurrently with an appeal in Brighton Und Refern Plaster Pty Ltd (Under External Administration and/or Controller Appointed) v Boardman60. There is some overlap between the issues raised in the two appeals. It is convenient to set out the relevant legislation in these reasons. The Court of Appeal's decision in Mr Boardman's case61 was expressed as applying the conclusions reached in this case. The legislation Legislative background: Until 1987 in New South Wales, claims for damages by workers, entitled to benefits under workers' compensation law, were generally regulated by the common law62. However in 1987, Pt 5 of the Act (specifically, ss 149 and 150) abolished the "common law right" to recover damages from employers in respect of injuries for which the employers were liable to pay compensation under the Act. Those provisions remained in force 59 Invoking the powers of the Court of Appeal under the Supreme Court Act 1970 (NSW), s 75A(10) read with Pt 19A r 3(7) DCR. See (2005) 62 NSWLR 427 at 60 [2006] HCA 33. 61 [2005] NSWCA 167. 62 See Attileh v State Rail Authority (2005) 62 NSWLR 439 at 441 [6]-[7] per Mason P. As pointed out there, the entitlement to common law remedies against employers, fellow workers and others was abolished by the Act, s 149(1) (as originally enacted). Kirby until the amendment of the Act by the Workers Compensation (Benefits) Amendment Act 1989 (NSW) ("the 1989 Act"). As a result of the 1989 Act, a new Pt 5 was inserted into the Act. That Part, entitled "Common Law Remedies", repealed the original ss 149 and 150. Division 2 and Div 3 of Pt 5 restored the right to "common law damages" against such employers, although with certain modifications63. The result of this amendment was that the defendant's "right" was restored by statute. What was restored was the right to "common law damages". This is not therefore a case of a right based in, and defined by, legislation (such as entitlements under a workers' compensation statute). There the enacted law grants the rights and fixes the preconditions to recovery. Here the source of the right, once restored, was the common law64. The modifications introduced by statute included an obligation to elect between a claim for common law damages and a claim for lump sum compensation under the Act; the introduction of caps on damages for non-economic loss and on some forms of economic loss; the institution of thresholds before common law damages could be recovered; and the introduction of procedural requirements. Such procedural requirements included the one contained in s 151C, the subject of this appeal. Part 5 of the Act applied only to injuries suffered after 30 June 198765. It therefore applied to the plaintiff's case. Further modifications, imposing additional limitations on the award of damages, were later enacted, as by the introduction in 2001 of s 151H, earlier referred to66. The effect of these provisions is that separate regimes operate in respect of claims for damages for workplace injuries. The differentiation in entitlements turns on the date on which the injury occurred. In respect of injuries occurring before 30 June 1987, claims at common law are generally unrestricted. In respect of injuries occurring afterwards, the amended limitations in Pt 5 of the Act (including s 151C) apply. The stringent requirements of s 151H apply to limit the award of damages still further in proceedings commenced after 27 November 2001. The Act's provisions: The following provisions of the Act are relevant. They appear in Pt 5 Div 2: 63 cf Pye v Butterfield Cheese Factors Pty Ltd (1996) 39 NSWLR 425 at 429-430. 64 The Commonwealth v Mewett (1997) 191 CLR 471 at 534-535. 65 See the Act, s 151U and Sched 6, Pt 14, cl 1; cf Attileh (2005) 62 NSWLR 439 at 66 These reasons at [76]. Kirby Common law and other liability preserved This Act does not affect any liability in respect of an injury to a worker that exists independently of this Act, except to the extent that this Act otherwise expressly provides. 6-months delay before commencing of court proceedings against employer for damages (1) A person to whom compensation is payable under this Act is not entitled to commence court proceedings for damages in respect of the injury concerned against the employer liable to pay that compensation until 6 months have elapsed since notice of the injury was given to the employer. (2) Despite subsection (1), the person is entitled to commence court proceedings against the employer if either of the following occurs: the employer wholly denies liability in respect of the injury, the employer admits partial liability in respect of the injury but the person is dissatisfied with the extent to which liability is admitted. 151D Time limit for commencement of court proceedings against employer for damages (2) A person to whom compensation is payable under this Act is not entitled to commence court proceedings for damages in respect of the injury concerned against the employer liable to pay that compensation more than 3 years after the date on which the injury was received, except with the leave of the court in which the proceedings are to be taken. The Limitation Act 1969 does not apply to or in respect of court proceedings to which this section applies. This section does not apply to the commencement of court proceedings in respect of a claim within the meaning of Kirby Part 5 of the Motor Accidents Act 1988 or Chapter 5 of the Motor Accidents Compensation Act 1999." The foregoing provisions may be contrasted with provisions in Div 3 of Pt 5 of the Act, in which the stated requirements are addressed not to the person claiming damages, but (in various ways) to the court asked to award damages: "151F General regulation of court awards A court may not award damages to a person contrary to this Division. Only damages for past and future loss of earnings may be awarded The only damages that may be awarded are: damages for past economic loss due to loss of earnings, and damages for future economic loss due to the deprivation or impairment of earning capacity. This section does not apply to an award of damages in an action under the Compensation to Relatives Act No damages unless permanent impairment of at least 15% (1) No damages may be awarded unless the injury results in the death of the worker or in a degree of permanent impairment of the injured worker that is at least 15%. District Court Rules: Pursuant to the District Court Act 1973 (NSW), the DCR were made. These Rules have been amended from time to time. At the times relevant to the present proceedings, the DCR included Pt 19A, entitled "Offer of compromise"67. Relevantly, the following rules appeared in Pt 19A: "(1) Mode of making offer 67 The provisions of Part 19A of the DCR in force at the time of these proceedings were superseded by the Uniform Civil Procedure Rules 2005. Rules analogous to Pt 19A of the former District Court Rules are found in the new rules, Pt 20, Div 4, Kirby (1) An offer of compromise is made to a party under this Part by serving a notice of the offer on the party. (2) A notice of offer shall: be prepared in accordance with Part 47 rules 1-5, and bear a statement to the effect that the offer is made in accordance with this Part …" It will be remembered that par 3 of the defendant's offer of compromise stated that the offer was made in accordance with Pt 19A of the DCR. The relevant rules in that Part provide: "(3) Time for making or accepting offer (1) An offer may be made at any time before the time prescribed by subrule (8) in respect of the claim to which it relates. (3) An offer may be expressed to be limited as to the time it is open to be accepted but the time expressed shall not be less than 28 days after it is made. (4) An offeree may accept the offer by serving notice of acceptance on the offeror or before: the expiration of the time specified in accordance with subrule (3) or, if no time is specified, the expiration of 28 days after the offer is made, or the time prescribed by subrule (8) in respect of the claim to which the offer relates, whichever event is the sooner. (5) An offer shall not be withdrawn during the time it is open to be accepted, unless the Court otherwise orders. (6) An offer is open to be accepted within the period referred to in subrule (4) notwithstanding that during that period the party to whom the offer … is made makes an offer … to the party who made the first offer whether or not the second offer is made in accordance with this Part. Kirby (7) Where an offer is accepted under this rule, any party to the compromise may apply to the Court to enter judgment accordingly. The time prescribed for the purposes of subrules (1) and (4) (a) where the trial is before a jury – after the Judge begins to sum up to the jury, (b) where the action has been referred under section 63A the the Act for determination pursuant Arbitration (Civil Actions) Act 1983 – after the conclusion of the arbitration hearing, or in any other case – after the Judge gives his decision or begins to give his reasons for his decision on a judgment), (except an judgment whichever is the sooner." interlocutory Provision was made in Pt 19A of the DCR for the withdrawal of acceptance of an offer where the relevant sum was not paid in time or where the court gave leave to do so68. Where a party to an "accepted offer" failed to comply with its terms, unless the court "for special cause" otherwise ordered, the other party was entitled "as he may elect" to "such judgment or order as is appropriate to give effect to the terms of the accepted offer"; and "where the party in default is the defendant, an order that the defence be struck out, and … to judgment accordingly"69. Just as the Act has successively included significant modifications and amendments concerning the rights of workers entitled under the Act to pursue claims for "common law damages", so the DCR introduced, in Pt 19A, significant modifications to the "classical principles dealing with offer and acceptance"70. Most importantly, as the Court of Appeal remarked, in a proceeding to which Pt 19A of the DCR applied, an offer "may not be withdrawn unilaterally during the 28 days or more that it is expressed to remain open for acceptance"71. 68 DCR Pt 19A r 5. 69 DCR, Pt 19A r 8(1). 70 (2005) 62 NSWLR 427 at 431 [20]. 71 (2005) 62 NSWLR 427 at 431 [20]. Kirby The issues The following issues arise in the appeal: The nullity issue: Having regard to the terms of s 151C(1) of the Act, were the proceedings commenced by the plaintiff in non-compliance with that provision "a nullity", as found by the primary judge72? Did it follow that the offer of compromise, made before the non-compliance with s 151C(1) was relied on, had "no validity and can be withdrawn"73? Did the Court of Appeal err in rejecting the defendant's submission to the effect that the offer of compromise, and any acceptance of it, was invalid and in concluding that "no reason in public policy [requires that] a defendant should be prevented from waiving the right to insist on compliance" with s 151C(1)74? The offer withdrawal issue: If the District Court proceedings were not a nullity, did the Court of Appeal err in finding, notwithstanding non- compliance with s 151C(1), that the plaintiff might accept the defendant's offer of compromise irrespective of the notice of the defendant's intention to seek leave to withdraw the offer and to raise a defence based on s 151C(1) of the Act? Did the primary judge err in granting that leave? Or did the Court of Appeal err in holding that the leave should be refused and that, in the circumstances then applicable, the application for leave to withdraw the offer of compromise should likewise be refused75? The waiver and estoppel issue: Alternatively to (2), was it open to the Court of Appeal, in the light of the terms and purposes of s 151C(1) of the Act, to conclude that the defendant had waived reliance upon that provision or was otherwise precluded from doing so, at the time it first sought to rely on the provision, by reason of the principles of estoppel76? The judgment validity issue: In light of the resolution of the foregoing issues, did the Court of Appeal err in concluding that judgment should be 72 Reasons of Woods A-DCJ at 4. 73 Reasons of Woods A-DCJ at 4. 74 (2005) 62 NSWLR 427 at 435 [47]. 75 (2005) 62 NSWLR 427 at 437 [62]. 76 (2005) 62 NSWLR 427 at 436 [50]. Kirby entered in favour of the plaintiff in accordance with the defendant's offer of compromise that the plaintiff had accepted77? The finding of nullity: The conclusion that the proceedings in the District Court, commenced contrary to s 151C(1), were void and a nullity, rendering "everything done following the issue of these proceedings … a nullity"78 was central to the reasoning of the primary judge. It was on the basis of that conclusion that his Honour held that the offer of compromise and purported acceptance of it were also nullities and that the entire proceedings should be dismissed. The conclusion that the offer of compromise had "no validity" and could be withdrawn, together with the grant of leave for such withdrawal, the permission to file an amended defence and the order of dismissal, were all dependent upon that conclusion. So much is clear from the terms of the primary judge's reasons. They were based on his Honour's view that s 151C(1) of the Act was enacted as a statutory precondition to the valid commencement of proceedings and that it was designed to protect a facility for settlement negotiations outside the courts that reflected a public policy which the courts were obliged to uphold79. Treating the defendant's offer of compromise and the acceptance of that offer as something done by the parties in breach of the precondition established by Parliament, the primary judge concluded that such steps in the proceedings could not exist separately from the invalid proceedings themselves. They therefore fell with them, once the invalidity was exposed, as it had been, on the initiative of the defendant. The error of the finding: Ultimately, the consequences of s 151C(1) of the Act, in the events proved in the evidence, depend upon the purpose and application of the Act, derived from its language. For a number of reasons, the Court of Appeal was correct to reject the conclusion of the primary judge that non-compliance with s 151C(1) rendered all that followed in the proceedings null and void and of no effect. First, s 151C(1) does not use the language of nullity or voidness. It is, instead, expressed in terms of what a person to whom compensation is payable under the Act is entitled, or not entitled, to do. Unlike ss 151F, 151G and 151H, 77 (2005) 62 NSWLR 427 at 437-438 [63]-[64]. 78 Reasons of Woods A-DCJ at 4. 79 He referred to National Mutual Fire Insurance Co Ltd v The Commonwealth [1981] 1 NSWLR 400 and Howard v Bodington (1877) 2 PD 203 at 210 per Lord Penzance. Kirby it is not addressed to what the court may do in the award of damages. The Act does not state the consequences of breach of the non-entitlement expressed in s 151C(1). Deriving those consequences therefore depends on drawing, from the language and apparent purpose of the provision, outcomes which the Parliament has not stated. The duty imposed on a person by s 151C(1) is one of imperfect obligation80. Where Parliament has enacted a provision in language which holds back from attaching consequences of nullity and voidness to the acts of a person in breach, it requires a very strong indication elsewhere in the Act that this is Parliament's purpose, if the Court is to derive an implication that this is so. This is because of the drastic consequences that can follow conclusions of nullity and voidness in the law81. Secondly, an indication that a different consequence was envisaged by the Parliament appears in the fact that the subject matter of s 151C(1) of the Act is the commencement of court proceedings. In referring to non-entitlements, the Act does not use language appropriate to the denial of jurisdiction in the courts concerned or the withdrawal of jurisdiction earlier exercised. It is self-evidently a serious matter to suggest that a proceeding in a court, although apparently valid, is conducted without lawful jurisdiction, and is void and without effect. To impose such drastic consequences, so potentially disruptive to court proceedings, disconcerting to parties and misleading to the public that relies on the validity of such proceedings, the clearest language in the legislative prescription would be required. The language of s 151C(1) falls far short of requiring such an interpretation82. Thirdly, it is relevant that s 151C(1) of the Act is addressed, without differentiation, both to the District Court of New South Wales (where the plaintiff commenced his proceedings) and also to the Supreme Court of that State (where he might have done so). The Supreme Court is constitutionally 80 cf The Commonwealth v Mewett (1997) 191 CLR 471 at 550; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 53 [138]; Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 360 [70]; Truong v The Queen (2004) 78 ALJR 473 at 498 [140]; 205 ALR 72 at 106-107; Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366 at 420 [145]. 81 Gordon v Berowra Holdings Pty Ltd (2005) 62 NSWLR 427 at 434 [42]; cf Minister for Immigration & Multicultural Affairs v Bhardwaj (2002) 209 CLR 597. 82 For an example of an obligatory requirement, see Gordon v Berowra Holdings Pty Ltd (2005) 62 NSWLR 427 at 434 [41]-[42]. Kirby recognised83. It is a superior court of record whose orders are treated as valid until set aside by a court with the authority to do so84. In the face of the language of s 151C(1), which refers generally to "court proceedings", it is difficult to adopt a differential interpretation of the consequences of non-compliance in the case of proceedings in the District Court, as in the Supreme Court. Yet the Supreme Court is a superior court of general jurisdiction, whose orders are not invalid, even if made in excess of jurisdiction, until quashed or set aside on appeal85. This is a further reason for rejecting the inference of nullity and voidness of the proceedings. Fourthly, the particular provisions of s 151C(2) of the Act hypothesise that, at the very least, the court in which proceedings are commenced has jurisdiction to decide whether either of the events specified in that sub-section has occurred so as to entitle the person to commence the proceedings. Because exceptions are expressly allowed to the enacted non-entitlement to commence proceedings, it is clear that Parliament entrusted the courts in which proceedings are commenced to differentiate between cases where facts are established which would enliven the exceptions; and cases where they are not. Once this feature of the court's jurisdiction is recognised, the proposition that all proceedings brought in breach of s 151C(1) are null and void ab initio cannot be upheld86. Fifthly, it is also important to recognise that neither of the exceptions contemplated by s 151C(2) is such that it would necessarily, or at all, appear on the record of the court proceedings. Whilst a defence, filed after six months from the commencement of proceedings, might disclose an employer's denial of all liability, par (a) of s 151C(2) contemplates an earlier such denial which may have been made informally, orally or by letter, and not disclosed in the pleadings. Likewise, to establish that the employer has admitted partial liability but that the person "is dissatisfied with the extent to which liability is admitted" for the purposes of par (b) of s 151C(2), would require proof of facts typically external to the court record. In these circumstances, the provisions of s 151C(1) of the Act are not apt to the postulated consequence of voidness and nullity. The internal evidence of the section, read as a whole, contradicts such a conclusion. 83 Constitution, s 73(ii). 84 Supreme Court Act 1970 (NSW), Pt 2, Div 1, s 22; cf DJL v Central Authority (2000) 201 CLR 226 at 280-281 [140]-[141]; Moll v Butler (1985) 4 NSWLR 231 85 Re Macks; Ex parte Saint (2000) 204 CLR 158 at 184 [49], 235-236 [216] and 249 [257]; Ruddock v Taylor (2005) 79 ALJR 1534 at 1561-1562 [169]-[174]; 221 ALR 32 at 68-70. 86 cf Ruddy v Procurator Fiscal, Perth [2006] UKPC D2 [55]-[57] per Lord Carswell. Kirby Sixthly, where jurisdiction is vested in courts to resolve disputes between parties, it ordinarily follows that such courts enjoy the jurisdiction and powers to decide the relevant factual and legal issues incidental to the establishment of their jurisdiction87. To deprive a court of such entitlements is a serious thing88. To have that effect, legislation will not normally leave the outcome to inference but will spell it out in terms that are clearer than those of s 151C(1) of the Act. Seventhly, whilst it is true that "no Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act"89, where illegality and contrary public policy are propounded, and the rule is expressed in legislation, the obligation of a court is to derive the purpose and intended operation of the legislation from its language and apparent purpose90. In the present case, the purpose of s 151C(1) is to afford parties, potentially engaged in proceedings for damages in respect of workplace injuries, an opportunity to settle their disputes before proceedings are begun. The experience of the law has shown that, once proceedings are commenced (especially in comparatively small claims), the costs of the proceedings in relation to the recovery of the plaintiff become critical to the prospects of settlement. That is why s 151C(1) has removed the entitlement, which an injured person would otherwise enjoy, to commence court proceedings for damages immediately. However, as s 151C(2) indicates, there will be circumstances (as there stated) where it is clear that liability is wholly or partly denied and that an interval for settlement negotiations is likely to be unfruitful. Similarly, apart from the exceptions stated in s 151C(2), other circumstances may exist where a defendant does not wish to plead the disentitlement stated in s 151C(1). The reasons for this may be complex or simply reasons of convenience. The language of s 151C(1) is not stated in the imperative terms apt to forbid the parties, despite their own assessment of their interests and convenience, to 87 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 505 [72] and cases there cited. 88 See for instance, Brakespeare v The Northern Assurance Co Ltd (1959) 101 CLR 89 Holman v Johnson (1775) 1 Cowp 341 at 343; 98 ER 1120 at 1121. 90 See for instance, Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 427, 429, 430. Kirby proceed to litigation within a shorter time91. Doing so would not be such an "immoral or illegal act" as to attract a public policy reason for denying the parties the opportunity to choose their own litigious battleground. The court has no power, under s 151C(1) to extend time or to ignore a time default. But consistent with the long-standing interpretation of like provisions in limitation statutes, a party might elect not to raise the provisions of the section92. To deny a defendant the right to do this and to insist on intervention by the court (although the court will ordinarily be unaware of the date when "notice of the injury was given to the employer") is to impose a meaning on s 151C(1) that the language of the sub- section and settled authority contradicts93. Eighthly, when s 151C(1) was enacted to address court proceedings for damages, it was provided against the background of the character of such proceedings, as they are ordinarily conducted in the District Court of New South Wales, indeed in courts throughout this country. Such proceedings are typically conducted between disputing parties, commonly represented by qualified lawyers, who define the issues for trial and choose those issues which they select according to their view of the parties' own best interests94. It is for this reason that procedures are adopted to define the issues. In the District Court, those procedures envisage that it is for a defendant to plead its grounds of defence. Ordinarily, it is not for the Court to intervene to insist that grounds be litigated which the parties have not chosen to dispute. In the present case, it seems unlikely that the defendant, represented by an experienced solicitor, presumably retained by the defendant's insurer, was totally unaware of the procedural provisions of the Act, and specifically of s 151C(1). In these circumstances, given the way such proceedings are normally conducted (a fact of which Parliament would be taken to have been aware) it is impossible to accept an interpretation of s 151C(1) that postulates that proceedings which have commenced in a time short of the six months provided, forever carry a fatal "brand of invalidity on [their] forehead" that might render such proceedings void and their outcomes a nullity95. 91 Admiralty Commissioners v Valverda [1938] AC 173 at 185. 92 Hawkins v Clayton (1988) 164 CLR 539 at 560. 93 Whiteford v The Commonwealth (1995) 38 NSWLR 100 at 106, 114; The Commonwealth v Rhind (1966) 119 CLR 584; cf Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850. 94 Hawkins v Clayton (1988) 164 CLR 539 at 549. 95 Smith v East Elloe Rural District Council [1956] AC 736 at 769 per Lord Radcliffe. Kirby In the type of "proceedings" to which s 151C(1) of the Act was addressed, it was left to the parties, in the ordinary way, by their pleadings, to raise issues such as the application of s 151C(1), thereby presenting them to the court for resolution. This the defendant in the present case failed to do until virtually the last moment before the trial. Whatever the reason for that omission, nothing in s 151C(1) of the Act forbade the defendant from earlier omitting to raise the requirements of the sub-section in defence. Nothing imposed on the District Court an obligation, of its own initiative, to discover the omission and to insist that it be cured. Conclusion – the primary decision miscarried: The foregoing conclusions follow from an analysis of the meaning of s 151C(1) of the Act, derived from its language, its presumed purpose and its intended operation. It follows that the primary judge therefore erred in concluding that the proceedings commenced by the plaintiff outside the time stated in s 151C(1) were a nullity for non- compliance with an essential statutory precondition. It follows that the primary judge's conclusion that the offer of compromise, as part of the proceedings, was a nullity and on that ground had no valid operation, was also mistaken. The result of this analysis is that the reasoning of the primary judge was wrong and the exercise of his powers miscarried. The Court of Appeal was correct to so hold and, in consequence, to address for itself the decision which the District Court ought to have made on the defendant's motion for leave to file an amended defence, to withdraw the defendant's offer of compromise and to have the proceedings dismissed96. The applications for leave and judgment The approach to leave: It sometimes happens that parties, faced with the obligations of the trial, discover grounds of defence, not earlier noticed, and seek, belatedly, to amend their pleadings to raise such a defence for the first time. In The Commonwealth v Verwayen97, Dawson J explained what should happen where a statutory period of limitation upon the bringing of proceedings exists which had not earlier been pleaded. The first question for determination is whether the legislative provision in question "bars a remedy rather than extinguishes a cause of action"98. Statutes of limitation exist in both of these 96 (2005) 62 NSWLR 427 at 436 [49]-[55]. 97 (1990) 170 CLR 394 at 456. 98 Verwayen (1990) 170 CLR 394 at 456; see also John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 543 [98]. Kirby forms99. But where expressed in terms that only limit the bringing of the action, such provisions have "been long held to go, not to the jurisdiction of a court to entertain a claim, but to the remedy available and hence to the defences which may be pleaded"100. In the absence of a pleading, raising such a procedural bar, the statutory limitation question "does not arise for the consideration of the court"101. To be given effect, a limitation provision of this kind must be pleaded102. If it is not pleaded it is said to have been waived although, as Dawson J pointed out in Verwayen103, "the use of the term 'waiver' in this way exemplifies its imprecision. A waiver of this kind does not amount to an election and does not necessarily give rise to an estoppel." What, then, is to happen when a provision of the kind found in s 151C(1) of the Act is raised? If it is pleaded promptly, there is no question but that it must be given effect so as to uphold the express command of Parliament. So much was accepted by the Court of Appeal in the present case104. It concluded that, in such a case, where a defendant was faced with a clear breach of the requirements of s 151C of the Act, it might move on that basis for summary dismissal of the proceedings. A court would then have no power to excuse non- compliance or to grant leave for the proceedings to continue. Unless the case fell within the very limited exceptions provided in s 151C(2) of the Act, the terms of s 151C(1) would have to be given effect105. But what is to be done when a suggested non-compliance with s 151C(1) of the Act is not raised promptly but presented as an issue for the first time on the eve of the trial? The Court of Appeal considered that, in such a case, the defendant required leave to raise the point. Having regard to the particular circumstances, the Court of Appeal concluded that such leave should be refused, 99 For example, a difference introduced by the Limitation Act 1969 (NSW), s 63 was that many causes of action were "extinguished" at the expiry of the limitation period. See Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 at 182. 100 Verwayen (1990) 170 CLR 394 at 473 per Toohey J. 101 (1990) 170 CLR 394 at 473; cf The Commonwealth v Mewett (1997) 191 CLR 471 at 534-535; Ronex Properties Ltd v John Laing Constructions Ltd [1983] QB 398. 102 Verwayen (1990) 170 CLR 394 at 456 citing Re Burge; Gillard v Lawrenson 103 (1990) 173 CLR 394 at 456. 104 (2005) 62 NSWLR 427 at 433 [35]. 105 (2005) 62 NSWLR 427 at 433 [35], [37]; cf 433 [39], 434 [42]. Kirby as should the associated application for leave to withdraw the offer of compromise106. The defendant contested the Court of Appeal's approach to its belated applications. It argued that s 151C(1) of the Act, and the policy to which it gave effect, obliged the provision of relief, so as to uphold the purpose of the Parliament. In Verwayen107, Dawson J succinctly explained the approach proper to such circumstances: "A defendant who fails to plead a period of limitation may apply for leave to amend his defence to enable him to do so … The considerations which govern a decision to grant or refuse leave to amend are of a different kind from those which go to establish an estoppel. The rules of court have always provided that leave to amend pleadings may be given for the purpose of determining the real question in controversy between the parties … and an amendment should ordinarily be allowed if any harm arising from so doing can be compensated for by the imposition of terms upon the party asking for the amendment108 … The usual terms which are imposed are an order for costs or an adjournment. In granting leave to amend, a court is concerned with the raising of issues and not with their merits. Of course, an amendment which is futile because it is obviously bad in law will not be allowed. But it is no ground for refusing an amendment that it raises a claim or defence which ought not to succeed. That will be an issue upon trial. An amendment may, however, be refused because it is made at such a late stage that neither costs nor an adjournment can compensate the other side for the failure to raise the issue at an earlier stage." In support of this last proposition, Dawson J cited Ketteman v Hansel Properties Ltd109. In that case, the House of Lords had to consider an application for amendment, to plead a limitation defence, made at the stage of final addresses during the trial. Of such a grossly delayed plea, Lord Griffiths said110, in a passage cited with approval in Verwayen111: 106 (2005) 62 NSWLR 427 at 437 [62]. 107 (1990) 170 CLR 394 at 456. 108 Citing Shannon v Lee Chun (1912) 15 CLR 257; Tildesley v Harper (1878) 10 Ch D 393 at 396-397; Cropper v Smith (1884) 26 Ch D 700 at 710. 110 [1987] AC 189 at 219. 111 (1990) 170 CLR 394 at 457 per Dawson J. See also at 465 per Toohey J. Kirby "I have never in my experience at the Bar or on the Bench heard of an application to amend to plead a limitation defence during the course of the final speeches. Such an application would, in my view, inevitably have been rejected as far too late. A defence of limitation permits a defendant to raise a procedural bar which prevents the plaintiff from pursuing the action against him. It has nothing to do with the merits of the claim which may all lie with the plaintiff; but as a matter of public policy Parliament has provided that a defendant should have the opportunity to avoid meeting a stale claim. The choice lies with the defendant and if he wishes to avail himself of the statutory defence it must be pleaded. A defendant does not invariably wish to rely on a defence of limitation and may prefer to contest the issue on the merits. If, therefore, no plea of limitation is raised in the defence the plaintiff is entitled to assume that the defendant does not wish to rely upon a time bar but prefers the court to adjudicate on the issues raised in the dispute between the parties. If both parties on this assumption prepare their cases to contest the factual and legal issues arising in the dispute and they are litigated to the point of judgment, the issues will by this time have been fully investigated and a plea of limitation no longer serves its purpose as a procedural bar." In Verwayen, the defendant had applied to amend its defence to plead the limitation provision and had been granted such leave. The plaintiff then pleaded waiver or estoppel. The case proceeded to resolution on one or other of these grounds112. However, in Ketteman, as in the present case, the defendant raising the limitation point so belatedly had first to overcome a procedural barrier to having the point considered at all. This was presented by the necessity to secure leave to raise the point at such a late stage. The need for such leave obliged the court, asked to provide it, to consider all the circumstances of the case and to decide where the requirements of the law and the balance of justice lay. The parties' arguments: Keeping in mind the considerations referred to by Dawson J in Verwayen, can it be said that the Court of Appeal erred in this case in concluding that such leave should be refused? This question presents subordinate questions such as: Would a decision to refuse leave impermissibly elevate the power in the DCR to grant or refuse such leave so as to negate the command of Parliament in s 151C(1) of the Act? Would upholding a settlement achieved by accepting an unwithdrawn offer of compromise, after notice had been given of intended reliance on s 151C(1), amount to an impermissible gloss on the provisions of that sub-section? Should the leave be granted because the point had been raised before final judgment, indeed before trial? 112 Verwayen (1990) 170 CLR 394 at 463. As Dawson J pointed out, Deane J and he resolved the issues in that appeal on the basis of estoppel. Toohey and Gaudron JJ did so on the basis of waiver. Kirby The defendant emphasised that the policy reflected in s 151C(1) of the Act was addressed to something more important than the interests of the plaintiff and the defendant inter se in their particular case. It was addressed to the efficient management of personal injury litigation; the provision of a timetable designed to promote effective settlement negotiations; and the appropriate use of the courts in personal injury proceedings at common law. Such proceedings, it will be remembered, had earlier been abolished. They were only restored on conditions designed to reduce needless or unwarranted litigation. Such arguments constitute alternative ways of looking at the issues presented by cases of this kind. They can be viewed, on the one hand, as raising questions concerning legislation and ascertaining its intended operation in the given case. Alternatively, they can sometimes be viewed as raising questions as to the suggested illegality of invoking jurisdiction and the power of a court to enforce rights classified as illegal because of statutory provisions enacted to achieve an identified public policy of general application113. the construction of the applicable The defendant submitted that, even if the primary judge had been wrong in categorising the proceedings brought by the plaintiff (and the consequential offer of compromise made by the defendant) as null and void, he had been correct to allow the defendant the belated opportunity to raise its defence based on s 151C(1) of the Act and, in consequence of granting such leave, to dismiss the plaintiff's proceedings. Upon this argument, the plaintiff might be entitled to be protected as to his costs. But the issue having been raised, even at a late stage, it was properly placed before the District Court and correctly admitted so that the ultimate determination would involve the application of the law as enacted by the Parliament. It is true that in the present case, the s 151C point was not raised as belatedly as was the limitation defence described by Lord Griffiths in Ketteman. On the other hand, it was not signalled by the defendant until late on the afternoon on the day before the trial was listed for hearing. Moreover, it was not presented to the District Court for decision until the very day assigned for the hearing. Most especially, it was not so presented until after the defendant had made a formal offer of compromise, never expressly withdrawn, and declared to be made in accordance with Pt 19A of the DCR. Under that Part of the Rules, and in accordance with the terms of the offer made, it remained open for 28 days from the date of its receipt. It was thus open on the morning of trial when the 113 Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 413; Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 218-219, Kirby plaintiff purported to accept it. In accordance with Pt 19A r 3(5) DCR, it could not be withdrawn without an order of the District Court. By filing its notice of motion in the District Court, seeking leave to withdraw the offer of compromise which it had made, the defendant affirmed the making of its offer and its validity, until such leave was granted. No evidence was given by or for the defendant, or its solicitor, to explain the failure to plead the defence earlier. In particular, no evidence was offered to suggest that the defendant had acted under a misapprehension about the law or mistake about the facts concerning the application of s 151C of the Act. Certainly, there was no explicit evidence to suggest that, by his conduct, the plaintiff had contributed in any way to the defendant's state of mind114. The defendant objected to the Court of Appeal's reliance on the requirement in the DCR obliging it to secure leave to withdraw the offer of compromise. This, it was suggested, elevated court Rules, designed for the ordinary case and placing them above the proscription enacted by the Parliament for this exceptional case. As the defendant put it, neither the offer of compromise made under Pt 19A of the DCR, nor its purported acceptance, nor any common law contract between the parties, could oust the operation of s 151C(1) of the Act, with its public policy purposes, once that provision was pleaded and presented to the court for determination. The difficulty with these propositions is that they contradict the actual course which the defendant took. The defendant sought leave to file the belated amendment to its defence raising the s 151C point. Moreover, it sought leave, as contemplated by Pt 19A of the DCR, to withdraw its offer of compromise expressly made under that provision. Such leave having been sought, it was the duty of the District Court (and of the Court of Appeal) to grant or withhold such leave in accordance with the relevant considerations. Whilst those considerations necessarily included the policy reflected in s 151C(1), they also included considerations arising from the justice of the particular case. This was so, once it is acknowledged that the restriction on the commencement of proceedings did not destroy the plaintiff's cause of action; that a commencement of proceedings otherwise than in accordance with s 151C(1) of the Act did not render such proceedings null and void; and that, by its pleadings and its conduct, a defendant may be taken to have previously waived reliance on a defence based on s 151C(1) so as to make it unjust in some circumstances to grant leave. If leave were not granted, it would follow that the procedural threshold which the defendant was obliged to pass would remain as a barrier to the consideration and determination of the s 151C issue. As the Court of Appeal observed115: 114 (2005) 62 NSWLR 427 at 437 [59]. 115 (2005) 62 NSWLR 427 at 437 [61]. Kirby "The defendant had had well over a year, including the arbitration, to assess its prospects. The fact that it made the offer indicates its ability to do so." Conclusions, relief and order Operation of the DCR on the settlement: It will be apparent that this appeal is ultimately one that turns upon particular facts and the application to them of a procedural discretion afforded to judges of the District Court, by the DCR then applicable, and, on appeal, to the Court of Appeal. Once it is decided that non-compliance with s 151C(1) of the Act did not render the plaintiff's proceedings void or a nullity (as the primary judge thought) those proceedings were validly before the District Court until steps were taken, in accordance with that Court's Rules and practice, to permit a defence based on s 151C(1) to be raised. Before the application for leave for such a purpose was heard, or the leave granted, the plaintiff had accepted the defendant's offer of compromise, and done so within the time limit. The offer had never been expressly withdrawn (if that was legally possible) and was still available for acceptance until leave to withdraw it had been granted by the District Court. By the time the application for leave was before the District Court for consideration, the position of the parties had changed. On the face of things, the plaintiff had accepted the defendant's offer and his proceedings were thereupon settled in accordance with the acceptance of the offer and the application of the DCR. Contrary to the opinion of the primary judge, the provision of leave at that stage would not simply permit the defendant belatedly to withdraw its offer of compromise and to raise a defence under s 151C(1), thereby tendering that issue for trial. It would require the undoing of the completed compromise achieved between the parties by the plaintiff's acceptance of the defendant's offer within time. Once the primary judge's classification of the proceedings as void and a nullity is rejected, his view that the offer of compromise was also null and void must likewise be rejected. The offer was valid until withdrawn. Under the DCR, any such withdrawal required leave of the Court. And such leave was not given before the offer was accepted. The appellate refusal of leave: The only way that this reasoning could be defeated would be if the defendant was correct in its argument that a purpose, evident in s 151C(1) of the Act, would be defeated by giving primacy, in the circumstances, to the operation of the DCR, sustaining the consequence of the acceptance in time of the defendant's offer of compromise. The defendant advanced this argument by reference to what it said was the public policy evident Kirby on the face of s 151C(1) of the Act and the illegality involved in the premature commencement of proceedings, contrary to that sub-section. Neither of these arguments is convincing. The fundamental policy evident on the face of s 151C(1) is to promote early settlement of proceedings. Once it is accepted that s 151C(1) does not concern the jurisdiction of the court in which proceedings are commenced and that it is open to a party to refrain from relying on the provision, its essential purpose is revealed as one promoting settlement. Where a considered offer of compromise is made and accepted, that purpose is fulfilled. The provisions of s 151C(1), so understood, do not require the undoing of such a settlement. Nor are the provisions such as to demand orders that would have the effect of voiding the settlement on the grounds of illegality. Section 151C(1) is not expressed in language apt for such a drastic consequence. Normally, even a belated application to raise new defences will be allowed, on terms as to costs, where this would permit a court, before judgment, to decide a matter by the application of the relevant law116. However, court practice in respect of belated applications to plead limitation defences has not always been uniform. Thus, different practices arose in England in this regard as between the Court of Exchequer and the Court of Common Pleas, on the one hand, and the Court of King's Bench, on the other117. In every case where a belated application is made to raise such a defence, it is necessary for the court considering it to weigh all of the relevant considerations and to reach a conclusion that is lawful and just in all of the circumstances. In the present case, the primary judge failed to do this because of the erroneous view that he took that proceedings brought in contravention of s 151C(1) were a nullity and that all aspects of those proceedings were likewise null and void. It therefore fell to the Court of Appeal to reach its own conclusions on the applications for leave. The purpose and effect of s 151C(1) of the Act did not demand that leave be granted. It was open to the Court of Appeal in the circumstances to conclude that it should not be. That was the kind of decision, in the particular facts, that this Court would be slow to disturb118. Waiver and estoppel: In light of this conclusion it is unnecessary in this appeal to embark on an examination of the law of waiver and estoppel. As in the 116 Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 155, 172; cf Jackamarra v Krakouer (1998) 195 CLR 516 at 519-520 [4], 539-543 [66]. 117 See Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 at 182. 118 In the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318 at 323; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177-178. Kirby Court of Appeal, resolution can be reached by reference to the procedural requirements of the case, determined in the light of the particular facts. Nor, in light of this conclusion is it necessary to examine the separate entitlements (if any) of the plaintiff under what he says were the common law contractual consequences, apart from the DCR, of his acceptance of the offer of compromise whilst it was still open for acceptance. Once the DCR were engaged, a statutory regime governed the rights and entitlements of the parties in respect of the offer of compromise. The appeal to common law "rights" appears to be misconceived. However, it is unnecessary to consider this point further. It might be argued that the Court of Appeal failed to give explicit attention to the relevance to the disposition of s 151H of the Act, with its substantial threshold to the establishment of an entitlement in the plaintiff to damages against the defendant. But once the validity of the defendant's offer of compromise is accepted, until set aside, it must be assumed that such offer took into account any operation of s 151H in the circumstances. No evidence was tendered for the defendant that would have permitted the Court of Appeal to conclude otherwise. In the result, the conclusion reached by the Court of Appeal should stand. It has not been shown to be erroneous. The appeal should be dismissed with costs. |
HIGH COURT OF AUSTRALIA APPELLANT AND THE STATE OF WESTERN AUSTRALIA RESPONDENT [2018] HCA 7 14 March 2018 ORDER Appeal dismissed. On appeal from the Supreme Court of Western Australia Representation T A Game SC with P McQueen and G E L Huxley for the appellant (instructed by Lavan) A L Forrester SC with K C Cook for the respondent (instructed by Director of Public Prosecutions (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Appeal against conviction – Application of proviso – Where appellant indicted for attempting to possess prohibited drug with intent to sell or supply to another – Where police replaced prohibited drug with another substance – Where trial judge and counsel erroneously assumed s 11 of Misuse of Drugs Act 1981 (WA) applied deeming possession of quantity of drugs sufficient to prove possession for purpose of sale or supply to another – Where jury erroneously directed that proof of possession of substitute "drugs" would suffice to prove intention to sell or supply to another – Where intention not otherwise live issue at trial – Where sole issue at trial was appellant's possession of substitute "drugs" – Where prosecution concedes erroneous direction as to intention but contends "no substantial miscarriage of justice has occurred" – Whether "no substantial miscarriage of justice has occurred" – Whether misdirection precluded application of proviso. defect", Words and phrases – "deemed intent", "error of outcome", "error of process", "fundamental flawed", "inevitability of result", "intention", "loss of a fair or real chance of acquittal", "miscarriage of justice", "negative proposition", "proviso", "reasonable jury", "substantial miscarriage of justice", "this jury". "fundamentally "fundamental error", Criminal Appeals Act 2004 (WA), s 30. Misuse of Drugs Act 1981 (WA), ss 6(1)(a), 11, 33(1), 34. KIEFEL CJ, BELL, KEANE AND GORDON JJ. Introduction Section 6(1)(a) of the Misuse of Drugs Act 1981 (WA) ("the MDA") makes it an offence to be in possession of prohibited drugs with intent to sell or supply them to another. Section 11 of the MDA operates to deem a person who is in possession of a specified quantity of a prohibited drug, subject to proof to the contrary, to have it in possession with intent to sell or supply to another. In the case of methylamphetamine, a prohibited drug, the quantity which enlivens the operation of s 11 is two grams. In Krakouer v The Queen1 it was held that s 11 has no application on the prosecution of a charge of attempted possession of a prohibited drug. The appellant was tried in the District Court of Western Australia (Stevenson DCJ and a jury) on an indictment that charged him with attempting to supply a prohibited drug, methylamphetamine, with intent to sell or supply it to another2. This was a re-trial following an earlier successful conviction appeal3. It was the State's case that the appellant attempted to possess a consignment of 4.981 kg of methylamphetamine. Notwithstanding the decision in Krakouer, it appears that the judge, the prosecutor and senior and junior counsel for the defence all assumed that s 11 of the MDA applied to the trial of the charge of attempted possession. The jury was directed as to the s 11 presumption and instructed that in the event it was satisfied that the appellant was in possession of the "drugs", his intention to sell or supply them to another was proved beyond reasonable doubt. The appellant appealed against his conviction to the Court of Appeal of the Supreme Court of Western Australia (McLure P, Mazza and Mitchell JJA). The determination of the appeal was governed by s 30 of the Criminal Appeals Act 2004 (WA) ("the CAA"), which relevantly provides: "(2) Unless under subsection (3) the Court of Appeal allows the appeal, it must dismiss the appeal. (1998) 194 CLR 202; [1998] HCA 43. 2 Misuse of Drugs Act, ss 6(1)(a) and 33(1). 3 Kalbasi v Western Australia (2013) 235 A Crim R 541. Bell Gordon The Court of Appeal must allow the appeal if in its opinion – the verdict of guilty on which the conviction is based should be set aside because, having regard to the evidence, it is unreasonable or cannot be supported; or the conviction should be set aside because of a wrong decision on a question of law by the judge; or there was a miscarriage of justice. (4) Despite subsection (3), even if a ground of appeal might be decided in favour of the offender, the Court of Appeal may dismiss the appeal if it considers that no substantial miscarriage of justice has occurred." The provision closely mirrors the common form criminal appeal statute4 but adopts a contemporary style of drafting, which separates its component parts. The qualifier "actually" is omitted from the requirement that no substantial miscarriage of justice has occurred in sub-s (4) ("the proviso"). The omission is not suggested to be material to the appellant's argument. The State conceded that the direction concerning proof of intention was wrong. It submitted that the appeal should nonetheless be dismissed under s 30(4), contending that, in light of the conduct of the trial, the error did not occasion a substantial miscarriage of justice. In their joint reasons, Mazza and Mitchell JJA considered the application of the proviso by reference to whether the error was of "process" or "outcome": errors of the first kind not being susceptible to its engagement5. Their Honours rejected that the misdirection was an error of process6. This conclusion took into account the observations of the plurality in Krakouer7. Their Honours moved to a consideration of the "outcome" aspect of the proviso. They concluded that, in light possession appellant's proven nearly the 4 Criminal Appeal Act 1907 (UK), s 4(1). 5 Kalbasi v The State of Western Australia [2016] WASCA 144 at [179]. 6 Kalbasi v The State of Western Australia [2016] WASCA 144 at [213]. (1998) 194 CLR 202 at 215 [32] per Gaudron, Gummow, Kirby and Hayne JJ. Bell Gordon "methylamphetamine", his conviction for the offence of attempted possession with the intention of selling or supplying the drug to another was inevitable8. McLure P, in separate reasons, also concluded that the jury's finding that the appellant had attempted to possess such a large quantity of high purity drug made his conviction for the offence with which he was charged inevitable9. The appeal was dismissed. On 12 May 2017, Gageler, Nettle and Edelman JJ gave the appellant special leave to appeal on the sole ground that the Court of Appeal erred in finding that there was no substantial miscarriage of justice and in dismissing his appeal. Weiss v The Queen Before turning to the evidence and the course of the trial, it is convenient to deal with one aspect of the appellant's challenge which is directed to the application of Weiss v The Queen10. The appellant contends that a vice in the approach taken in the joint reasons is that Mazza and Mitchell JJA confined their analysis of errors of "process" to "fundamental" errors "go[ing] to the root of the proceedings"11 and, having determined that the misdirection was not an error of that kind, dismissed the appeal on satisfaction that guilt was proved beyond reasonable doubt without further examination of the nature and possible effect of the error. The appellant submits that either the approach misapplies the principles explained in Weiss or, if it does not, Weiss should be qualified or overruled. He argues that Weiss has left uncertain the principles that engage the proviso and that the uncertainty has not been resolved in more recent decisions of the Court12. The high point of the submission is the invitation to return to a test 8 Kalbasi v The State of Western Australia [2016] WASCA 144 at [214]. 9 Kalbasi v The State of Western Australia [2016] WASCA 144 at [30]. 10 (2005) 224 CLR 300; [2005] HCA 81. 11 Wilde v The Queen (1988) 164 CLR 365 at 373 per Brennan, Dawson and Toohey JJ; [1988] HCA 6. 12 Darkan v The Queen (2006) 227 CLR 373; [2006] HCA 34; Bounds v The Queen (2006) 80 ALJR 1380; 228 ALR 190; [2006] HCA 39; Cesan v The Queen (2008) 236 CLR 358; [2008] HCA 52; AK v Western Australia (2008) 232 CLR 438; [2008] HCA 8; Pollock v The Queen (2010) 242 CLR 233; [2010] HCA 35; Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92; [2012] HCA 14; Reeves v The Queen (2013) 88 ALJR 215 at 223-224 [50]-[51]; 304 ALR 251 at 261-262; [2013] (Footnote continues on next page) Bell Gordon for the determination of a substantial miscarriage of justice which asks whether the accused has lost a chance of acquittal fairly open13 or whether there has been some substantial departure from a trial according to law14. Weiss is a unanimous decision and the appellant's careful argument does not provide a principled reason to depart from it15. In light of the argument, it is as well to recall the notorious difficulties associated with the "lost chance of acquittal"16 formulation when applied as the criterion of a substantial miscarriage of justice17. Chief among these was the question of how the appellate court is to assess the lost chance. Courts were divided between the view that it was to be assessed from the standpoint of the jury at the trial ("this jury")18 and the view that it was to be assessed from the standpoint of the reasonable jury, properly instructed, and acting on admissible evidence (the "reasonable jury")19. HCA 57; Lindsay v The Queen (2015) 255 CLR 272; [2015] HCA 16; Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29; Castle v The Queen (2016) 259 CLR 449; [2016] HCA 46. 13 Mraz v The Queen (1955) 93 CLR 493 at 514 per Fullagar J; [1955] HCA 59. 14 Wilde v The Queen (1988) 164 CLR 365 at 373 per Brennan, Dawson and 15 John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438-439; [1989] HCA 5. 16 Mraz v The Queen (1955) 93 CLR 493 at 514 per Fullagar J. 17 Report of the Interdepartmental Committee on the Court of Criminal Appeal ("the Donovan Committee"), August 1965, Cmnd 2755 at 35-37; R v Gallagher [1998] 2 VR 671 at 676 per Brooking JA; Festa v The Queen (2001) 208 CLR 593 at 632; [2001] HCA 72; Thompson and Wollaston, Court of Appeal Criminal Division, (1969) at 123-125; Pattenden, English Criminal Appeals: 1844–1994, (1996) at 18 Woolmington v The Director of Public Prosecutions [1935] AC 462; R v Konstandopoulos [1998] 4 VR 381 at 391-392 per Callaway JA; R v McLachlan [1999] 2 VR 553 at 569-570 [51]-[53] per Callaway JA; R v Weiss (2004) 8 VR 388 at 399 [66] per Callaway JA. 19 R v Haddy [1944] KB 442; Driscoll v The Queen (1977) 137 CLR 517 at 524 per Barwick CJ; [1977] HCA 43; R v Storey (1978) 140 CLR 364 at 376-377 per Barwick CJ; [1978] HCA 39. Bell Gordon Assessment by reference to "this jury" was thought to give work to the proviso in a case in which the appeal succeeded under the third limb of the common form provision (that on any ground there was a miscarriage of justice (here s 30(3)(c)))20, whereas assessment by reference to the "reasonable jury" was thought not to21. In England the debate was ultimately resolved in favour of assessment from the standpoint of the "reasonable jury"22. As Professor Pattenden has observed, it was probably the only realistic approach to take given that the appellate court has no way of knowing what the particular jury might have thought had the trial been conducted properly23, whereas the "reasonable jury" test turned on the appellate court's own assessment of the facts24. As the Donovan Committee explained, the application of the "reasonable jury" test in practice had involved the appellate court coming to a conclusion of fact: whether the evidence established guilt beyond reasonable doubt25. The two approaches remained alive in the Australian jurisdictions and the difference in their application was the issue starkly raised in Weiss. It will be recalled that the Victorian Court of Appeal dismissed Weiss' appeal applying the "this jury" test while stating that the appeal would have been allowed had the test been the inevitability of conviction assessed from the standpoint of the "reasonable jury"26. The conclusion highlighted a perceived difficulty in determining, at least in the case of wrongly admitted evidence, that conviction by a hypothetical jury can ever be said to be "inevitable". 20 R v Weiss (2004) 8 VR 388 at 399 [66] per Callaway JA. 21 Festa v The Queen (2001) 208 CLR 593 at 605 [31] per McHugh J. 22 Stirland v Director of Public Prosecutions [1944] AC 315 at 321. 23 Pattenden, English Criminal Appeals: 1844–1994, (1996) at 183. 24 Festa v The Queen (2001) 208 CLR 593 at 631-632 [120]-[122]. See also at 629 [115] citing R v Storey (1978) 140 CLR 364 at 376; and at 630 [116] citing Driscoll v The Queen (1977) 137 CLR 517 at 524-525. 25 Report of the Interdepartmental Committee on the Court of Criminal Appeal, August 1965, Cmnd 2755 at 37 [166]. 26 R v Weiss (2004) 8 VR 388 at 400-401 [70]. Bell Gordon Weiss settled the debate in an analysis that is grounded in the text of the common form provision. The apparent tension between the command to allow an appeal where the court is of the opinion that there was a miscarriage of justice, subject to the proviso that it may dismiss the appeal if it considers that no substantial miscarriage of justice has occurred, is resolved by reference to history and legislative purpose. Consistently with the long tradition of the criminal law27, any irregularity or failure to strictly comply with the rules of procedure and evidence is a miscarriage of justice within the third limb of the common form provision (here s 30(3)(c)). The determination of whether, notwithstanding the error, there has been no substantial miscarriage of justice is committed to the appellate court. The appellate court's assessment does not turn on its estimate of the verdict that a hypothetical jury, whether "this jury" or a "reasonable jury", might have returned had the error not occurred28. The concepts of a "lost chance of acquittal" and its converse the "inevitability of conviction" do not serve as tests because the appellate court is not predicting the outcome of a hypothetical error-free trial, but is deciding whether, notwithstanding error, guilt was proved to the criminal standard on the admissible evidence at the trial that was had. The influence of an error on the deliberations of a jury can never be known. The stipulation of the negative proposition29 as a condition of the engagement of the proviso recognises that the conviction of a person whose guilt has not been proved, beyond reasonable doubt, on admissible evidence, will always be a substantial miscarriage of justice. On the other hand, the appellate court's satisfaction that guilt has been proved to the criminal standard on the admissible evidence will in many instances support the conclusion that there has been no substantial miscarriage of justice notwithstanding a wrong decision on a question of law (under the second limb, here s 30(3)(b)) or a miscarriage of justice (under the third limb, here s 30(3)(c))30. This is to recognise and give 27 Mraz v The Queen (1955) 93 CLR 493 at 514 per Fullagar J. 28 Weiss v The Queen (2005) 224 CLR 300 at 314 [35]. 29 Weiss v The Queen (2005) 224 CLR 300 at 317 [44]: "It cannot be said that no substantial miscarriage of justice has actually occurred unless the appellate court is persuaded that the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt of the offence on which the jury returned its verdict of guilty." 30 See, eg, Darkan v The Queen (2006) 227 CLR 373; Bounds v The Queen (2006) 80 ALJR 1380; 228 ALR 190. Bell Gordon effect to the evident purpose of the enactment of the proviso to do away with the formalism of the Exchequer rule31. In the course of argument in Weiss32, Gleeson CJ put the case in which inadmissible evidence is wrongly admitted to prove a fact against an accused who later gives evidence admitting the fact. His Honour identified that case as one where the proviso would be rightly applied even though it could not be said that a conviction was inevitable. Gleeson CJ's example is of a case in which the appellate court may readily conclude for itself from the record – including the admission and the jury's verdict of guilty – that guilt was proved beyond reasonable doubt. As Gleeson CJ said, in concluding his intervention in argument in Weiss: "I suggest that the appropriate test is the statutory test."33 Contrary to the appellant's submission, Weiss requires the appellate court to consider the nature and effect of the error in every case34. This is because some errors will prevent the appellate court from being able to assess whether guilt was proved to the criminal standard. These may include, but are not limited to, cases which turn on issues of contested credibility35, cases in which there has been a failure to leave a defence or partial defence for the jury's consideration36 and cases in which there has been a wrong direction on an element of liability in issue or on a defence or partial defence37. In such cases Weiss does not disavow the utility of the concepts of the lost chance of acquittal or inevitability of 31 The rule required a new trial in the case of every departure from a trial according to law. 32 (2005) 224 CLR 300 at 302. 33 Weiss v The Queen (2005) 224 CLR 300 at 302. 34 Weiss v The Queen (2005) 224 CLR 300 at 317 [44]; AK v Western Australia (2008) 232 CLR 438 at 455-456 [53]-[55] per Gummow and Hayne JJ. 35 Castle v The Queen (2016) 259 CLR 449. 36 Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92; Lindsay v The Queen (2015) 255 CLR 272. See also Filippou v The Queen (2015) 256 CLR 47. 37 Pollock v The Queen (2010) 242 CLR 233; and see Reeves v The Queen (2013) 88 ALJR 215 at 223-224 [50] per French CJ, Crennan, Bell and Keane JJ; 304 ALR Bell Gordon conviction38: regardless of the apparent strength of the prosecution case, the appellate court cannot be satisfied that guilt has been proved. Assessing the application of the proviso by reference to considerations of "process" and "outcome" may or may not be helpful provided always that the former takes into account the capacity of the error to deprive the appellate court of the ability to justly assess the latter39. The appellant's invitation to elaborate on the categories of case in which satisfaction of the negative condition will not suffice to enliven the proviso is to be resisted. It is not possible to describe the metes and bounds of those wrong decisions of law or failures of trial process that will occasion a substantial miscarriage of justice notwithstanding the cogency of proof of the accused's guilt40. As was established in Weiss, the fundamental question remains whether there has been a substantial miscarriage of justice. That question is not answered by trying to identify some classes of case in which the proviso can be or cannot be applied. Classifications of that kind are distracting and apt to mislead. For the reasons to be given, the misdirection at the appellant's trial was not an error of that kind, nor was it an error that denied the Court of Appeal the capacity to assess that his guilt of the offence with which he was charged was proved beyond reasonable doubt. The scheme of the MDA Relevantly, s 6(1)(a) of the MDA makes it an offence for a person to possess a prohibited drug with intent to sell or supply it to another. The offence is punishable by a fine not exceeding $100,000 or imprisonment for a term not exceeding 25 years, or both41. Section 6(2) makes the possession of a prohibited drug simpliciter an offence. A s 6(2) offence is punishable by a fine not exceeding $2,000 or imprisonment not exceeding two years, or both42. On the 38 Weiss v The Queen (2005) 224 CLR 300 at 315-316 [40]. 39 Nudd v The Queen (2006) 80 ALJR 614 at 618 [6] per Gleeson CJ; 225 ALR 161 at 163; [2006] HCA 9. 40 Weiss v The Queen (2005) 224 CLR 300 at 317 [45]; Cesan v The Queen (2008) 236 CLR 358 at 394 [126] per Hayne, Crennan and Kiefel JJ. 41 Misuse of Drugs Act, s 34(1)(a). 42 Misuse of Drugs Act, s 34(1)(e). Bell Gordon trial of a count under s 6(1) the jury may return a verdict for the simple s 6(2) offence if it is not satisfied that the accused's possession of the prohibited drug was accompanied by the requisite intention43. A person who attempts to commit an offence under the MDA is liable on conviction to the same penalty to which a person who commits the principal offence is liable44. A person has possession of prohibited drugs in circumstances that include the exercise of control or dominion over them45. The evidence On 12 November 2010, officers of the New South Wales Police Force, acting at the request of their Western Australian counterparts, executed a search warrant on a freight company's premises in Sydney. They were shown a cardboard box which had been received for consignment to Western Australia. The consignment note contained an instruction to call for collection "James Walker" on a mobile telephone number which ended with the numbers 731 ("the 731 number"). Inside the cardboard box were two padlocked plastic toolboxes each containing five plastic bags of methylamphetamine. The total quantity of methylamphetamine was 4.981 kg. The purity of the drug was 84% and was indicative that it was "from the point of manufacture". Expert evidence established that 4.981 kg of methylamphetamine was a highly valuable commodity. The contents of the plastic bags were replaced with rock salt and the cardboard box was reconstructed. A listening device was concealed inside the packaging. A man named Matthew Lothian attempted to collect the cardboard box from the freight company's premises in Perth on 15 November. He was told to return the following day. He did so. His car ran out of fuel on the way and he completed the journey to the freight company's premises by taxi. After collecting the cardboard box Lothian re-fuelled his car and returned to his home in Falstaff Crescent, Spearwood. As the result of his attendance at the freight company on 15 November, the police were maintaining surveillance on Lothian's movements. He entered the Falstaff Crescent premises with the cardboard box at about 3:16pm. At about 3:20pm, the appellant arrived at the premises by bicycle. 43 Misuse of Drugs Act, s 10. 44 Misuse of Drugs Act, s 33(1). 45 Misuse of Drugs Act, s 3(1) definition of "to possess". Bell Gordon The listening device recording was in evidence. It was of poor quality but three voices were audible on it. These belonged to Lothian; his girlfriend, Venetia Tilbrook; and the appellant. The cardboard box was opened after the appellant's arrival. Sounds consistent with its opening and with the padlocks on the toolboxes being cut were audible. So, too, was Lothian's account of having run out of fuel. Significantly, that account commenced with Lothian saying "when I first text ya, yeah, from there, mate, anyway, everything went to shit", suggesting on the prosecution case that he had made contact with the appellant shortly before collecting the consignment. At 3:36pm, Lothian left the house for a short period. At 3:38pm, Tilbrook left the house. At about 3:40pm the appellant asked Lothian for a pipe. About 10 minutes later, the appellant said "[d]on't move. I'll come back". At about 3:57pm the appellant left the premises. He rode his bicycle into the park located opposite the Falstaff Crescent premises. He appeared to make a telephone call. Police in an unmarked vehicle pursued him and called on him to stop. After a short pursuit he was apprehended. He did not have a mobile telephone on him. His attempt to flee after the police identified themselves was relied on as evincing his consciousness of guilt. At 4:00pm the police executed a search warrant at the Falstaff Crescent premises. Lothian was the only occupant. The opened cardboard box was in the lounge room and the open toolboxes were in the kitchen. One bag of rock salt, plastic clipseal bags and two broken padlocks were found in a beer carton, which was being used as a makeshift bin. The other nine bags of rock salt were on the bottom shelf of a kitchen cupboard. On the kitchen sink were mixing bowls, three sets of digital scales, a box of disposable gloves and two pairs of used disposable gloves. MSM, a substance used to cut methylamphetamine, was in a baking dish on the stove. A third pair of disposable gloves was found on the table in the hallway. The mixed DNA profile on the gloves found in the hallway matched the profiles of Lothian and Tilbrook and excluded the appellant as a contributor. The appellant was also excluded as a contributor to the DNA profile detected on one of the pairs of gloves in the kitchen. The mixed DNA profile on this pair of gloves matched the profiles of Lothian and Tilbrook. A mixed DNA profile on the inside of a glove from the other pair of gloves in the kitchen matched the appellant's DNA profile. Lothian and Tilbrook were excluded as contributors to the DNA found on this glove. The appellant told the police that he lived at an address in East Perth. A search warrant was executed on these premises. Despite the appellant's insistence that this was where he lived, when he was taken to the address the Bell Gordon appellant had to telephone somebody to let him in and identification belonging to other men was found in each bedroom. A white BlackBerry mobile telephone was found in a storeroom at the Falstaff Crescent premises. The mobile telephone had a PIN lock on it and the information could not be downloaded. Lothian had been seen using what appeared to be a white mobile telephone at the freight carrier's premises. Quantities of methylamphetamine said to belong to Lothian were found in the kitchen and the bedroom drawer of the Falstaff Crescent premises. Documents found at those premises established that Lothian had flown from Perth to Sydney on 11 November 2010. Documents seized from the appellant's residence in Applecross indicated that he had flown from Perth to Sydney on 3 November 2010, returning to Perth on 13 November 2010. A BlackBerry telephone charger was found in the search of the appellant's home but no BlackBerry telephone was located. Telephone records linked the appellant to the 731 number. The appellant did not give or call any evidence at the trial. The course of the trial The parties' cases The prosecution sought to establish that the appellant had attempted to possess the consignment of methylamphetamine contained in the cardboard box by circumstantial proof that he was exercising control over the "drugs" while he was present in the Falstaff Crescent premises. The prosecutor opened her case identifying proof of the appellant's attempt to possess the "drugs", "knowing" that they were prohibited drugs, as the "real issue". She invited the jury to find that the appellant and Lothian were adding MSM to the "drugs", with a view to distribution of the same, when the appellant realised after testing a sample that it was not what he was expecting. Shortly after this he instructed Lothian, "[d]on't move. I'll come back". Senior counsel for the appellant opened his case explaining that much of the evidence was not in dispute, and suggesting "[i]f there's one thing I ask you to remember, it's the word 'control'". He continued: "The prosecution have to prove control of it. … What the defence is saying is he wasn't in control. That's the dispute between the parties, and I won't seek to persuade you one way or another now, because you just haven't heard the evidence. But just keep your mind on that. The defence is saying he's not in control." Bell Gordon The focus of senior counsel's closing submission was that the appellant's presence in the Falstaff Crescent premises did not establish his control over the "drugs": "Mere presence isn't enough and you can't convict someone merely because they might have known some, perhaps quite a lot of what was going on. Mere presence isn't enough and mere knowledge isn't enough. What needs to be shown is control." Prominent to the determination of the appeal in the Court of Appeal and in this Court was the following submission put on the appellant's behalf ("the Nissan submission"): "If a person turns up somewhere where something bad is happening, you don't assume that they are bought into it completely. Take it out of criminal context for a second. You go down to your Nissan dealership, go in the door, and you look at the Nissans, and you say, 'Look, there's 10 beautiful – 10 Nissans that I like – I want. I'll get one for myself, and if I like it, I'll get one for my daughter if I like it'. You know. 'Show me the Nissans'. You don't control those Nissans just by looking at them. The State didn't prove what [the appellant] had in mind when he went down there. But what they certainly didn't prove is that he had any ownership, any control, knowledge, possession of those drugs before he got there." The discussion concerning the directions After the close of the prosecution case, and before the addresses, there was discussion concerning the directions to be given to the jury. Counsel were supplied with a copy of a "jury aide" which was later distributed to the jury. There was no objection to its contents. In material terms it provided as follows: "To prove the offence was committed by the accused at the time and place alleged the State must prove each of the following elements beyond reasonable doubt: Attempted possession of a prohibited drug with intent to sell or supply The offender was the accused (identity); The substance with which the charge is concerned is a prohibited drug; Bell Gordon The accused attempted to possess that prohibited drug; and The accused intended to sell or supply the prohibited drug, or any part of it, to another. 'to possess' - includes to control or have dominion over, and to have the order or disposition of, and inflections and derivatives of the verb 'to possess' have correlative meanings." The judge raised with defence counsel the question of the directions to be given on the element of intention: "[TRIAL JUDGE]: So what do we say about the fourth element? [DEFENCE COUNSEL]: Well, if my client is found to be in possession, as I've put – if he's in possession of it, he's not in possession of it – the inference would be that he's in possession of it, intending to sell or supply the prohibited drug, given the volume. If he's found to be in possession, there's no - - - [TRIAL JUDGE]: Can I tell the jury, [counsel], that I can go to presumptions, if you wish, but that there is no contest, there is no issue in this trial. If they are satisfied beyond reasonable doubt that your client was in possession in the legal sense of the drugs at the relevant time in the relevant place, then they need not concern themselves with element 4. There's no contest about that because your client doesn't seek to prove otherwise, given the deeming provision. The issue for the jury is to be found in relation to the third element. [DEFENCE COUNSEL]: Yes, that's correct, your Honour." The summing-up The jury was instructed, conformably with the "jury aide", that the offence contained four elements, the fourth of which required proof of the appellant's intention to sell or supply the prohibited drug, or part of it, to another. The jury was directed that each was a separate element and that, in respect of each element, it must be satisfied beyond reasonable doubt before a verdict of guilty could be returned. The directions concerning proof of possession in law were lengthy. The judge explained that possession may be established by proof of actual physical custody or by proof that the appellant exercised control and dominion over the Bell Gordon "intended drugs" to the exclusion of others, except those with whom he might have been acting jointly. In this connection, the jury was instructed that it is possible, in law, to possess something temporarily and for a limited purpose. His Honour illustrated the point saying: "[I]f I borrow a book from the local library, obviously I do not own the book but while I have taken it out of the library, it is under my control and is therefore in my possession. The notion of possession is wide enough to include the case of where I might lend that book to my best friend because they want to read it too." His Honour concluded the directions on proof of the element of possession by telling the jury that: "So members of the jury, with respect to possession, you must be satisfied that in the way I have described [the appellant] had some control over the drugs in [the Falstaff Crescent premises] at the relevant time even though Mr Lothian may also have had control or possession of the same drugs at the same time. You must be satisfied that the [appellant] knew that the drugs were in fact prohibited drugs in the way I have already directed you. You must be satisfied that he did something with respect to those drugs to indicate control over the drugs at the relevant point in time, and you must be satisfied that it was his intention in doing what he did to in fact have control or at least exercise control or dominion over the drugs at that point in time." Turning to proof of the fourth element, his Honour said this: "Very briefly, the law is that if you are found in possession of more than two grams of methylamphetamine then you are presumed to be in possession with intent to sell or supply it to another and the onus is on you to remove that presumption. There is no issue in this trial about the fourth element and as I've said it will not delay your deliberations. You must be satisfied beyond reasonable doubt about the fourth element. You do not need to concern yourself with where the drugs might have gone, how they might have got there, when they might have been moved or whatever. It's simply not relevant to your deliberations for the purpose of this trial. The fourth element is proved beyond reasonable doubt and you should give it a tick." Bell Gordon The appellant's first contention: the misdirection in the context of the directions on possession One way in which the appellant puts his case in this Court is to direct attention to the breadth of the directions on proof of the element of possession. He argues that the effect of the misdirection is to be assessed in the context of directions that the State was not required to prove that he knew the quantity or purity of the methylamphetamine and which did not suggest that the State must prove his possession of the whole of the substituted "drugs". He points to the trial judge's use of expressions such as "doing something with" in explaining the concept of control. He submits that the jury may have found he attempted to possess the drugs based on satisfaction that he was exercising control over some part of the substitute "drugs". In this connection, he also points to the direction that a person may possess a thing for a temporary, limited purpose, as in the example of borrowing a book from the library. The appellant's argument is that had his trial not been conducted on the understanding that the s 11 presumption was enlivened, it would have been necessary for the prosecution to exclude the reasonable possibility that he was in possession of a small quantity of the "drugs" as a sample with a view to purchase for his own use. He challenges the Court of Appeal's conclusion that it was open to reason from the verdict that he was proved to have been in possession of the whole of the "drugs" and to reason from this that his intention to sell or supply some 4.981 kg of methylamphetamine to another was established beyond reasonable doubt. In the alternative, by analogy with cases in which there has been a failure to leave a defence or partial defence, the appellant submits that, regardless of the apparent strength of the prosecution case, he has been deprived of the jury's consideration of a hypothesis consistent with innocence. The first way in which the argument is put requires reference to the appellant's unsuccessful challenge to the directions on possession in the Court of Appeal. His second ground of appeal in that Court contended that "the learned trial judge erred in his directions regarding possession". The appellant was refused special leave to challenge the Court of Appeal's rejection of this ground. The appellant submits that his argument does not canvass that refusal because in this Court he is not asserting legal error in the directions on possession. The submission is apt to downplay the nature of the error for which he contended in the Court of Appeal. That error was particularised by reference to the judge's use of the expressions "'dealing with', 'involved with' and 'doing [something] with' the drugs", all of which were said to be apt to mislead in that a person may deal with a drug in ways falling short of control. The argument referenced the judge's illustration of the possession of a library book and the on-lending of the book to a friend. It was submitted on the appellant's behalf that his counsel had invited the Bell Gordon jury's consideration of the possibility that the appellant may have possessed a small quantity of the "drug" for the purpose of sampling it with a view to perhaps buying some of it later46. The submission appears to have been based on the Nissan submission. The Court of Appeal rejected the challenge that the directions on possession were misleading. Their Honours were satisfied that, when read as a whole, the directions focussed on proof of the appellant's possession of the "intended drugs" and not some part of the whole. Their Honours also rejected that the appellant's case at trial had been advanced even faintly on the footing that he may have been in possession of a sample of the "drug" with a view to the purchase of a small quantity for his own use. As McLure P observed, the purpose and effect of the Nissan submission was that a person does not "control" a thing merely by being present and looking at the thing47. The appeal in this Court is confined to the determination of whether the Court of Appeal was wrong to dismiss the appeal under the proviso. The correctness of the Court of Appeal's assessment that the error did not occasion a substantial miscarriage of justice is to be determined upon acceptance of their Honours' rejection of the contention that the directions on possession were misleading. To the extent that the appellant's argument in this Court – that the directions on possession, while correct in law, were apt to mislead – differs from his challenge below, it must be rejected. The trial judge's illustration of the loan of a library book served to explain that possession is less than ownership and need not be exclusive. It is difficult to see how the direction was apt to mislead given the evidence and the conduct of the trial. There was nothing in the evidence to raise as a possibility that the appellant may have been inspecting the "drug" with a view to deciding whether or not to purchase some part of it. There was nothing in the evidence to suggest that the control over the "drug" exercised by the appellant differed in scope or purpose from that exercised by Lothian. Indeed, the relationship between the appellant and Lothian was, on the evidence, one in which the appellant gave, and Lothian accepted, directions relating to their activities. The case was fought on the sole basis that the appellant's involvement in dealing with the "drug" in the Falstaff Crescent premises was eloquent of his joint possession with Lothian of the whole. It is 46 Kalbasi v The State of Western Australia [2016] WASCA 144 at [182]. 47 Kalbasi v The State of Western Australia [2016] WASCA 144 at [28]. Bell Gordon simply wrong to argue, as the appellant does in this Court, that the trial judge's direction to the jury contemplated a finding of possession of only part of the "intended drug": in directing the jury "that the accused intended to sell or supply the prohibited drug or any part of it to another", the trial judge was referring to the element of intention to sell or supply. The appellant's second contention: the misdirection precluded the application of the proviso Krakouer As earlier explained, in the Court of Appeal the State conceded that the instruction as to the operation of the s 11 presumption was wrong in law. It relied on Krakouer for the submission that the error did not exclude the proper application of the proviso and it pointed to senior counsel's concession that if possession was proved there was no issue as to proof of intention. It is necessary to refer to Krakouer in some detail to explain the State's reliance on it and the appellant's response to that reliance. Krakouer and a man named Calder were charged with conspiring to possess a quantity of methylamphetamine with intent to sell or supply it to another and with the attempted possession of a quantity of methylamphetamine with that intention48. A car was consigned from Victoria to a depot in Western Australia. The police examined the car and found a cavity in each front door containing packages of methylamphetamine having a total weight of 5.3 kg. The police substituted flour for the drugs and replaced the packages in the door cavities along with a listening device. Calder collected the car from the depot and Krakouer followed him as he drove to their destination. Shortly after their arrival, the police raided the premises and arrested Krakouer and Calder. At the time one of the packages had been removed from the door cavity49. Krakouer did not give or call evidence at the trial50. The prosecution did not rely on s 11 of the MDA at Krakouer's trial. Nonetheless, the jury was instructed of the presumption that a person in possession of more than two grams of methylamphetamine is presumed to intend 48 Krakouer v The Queen (1998) 194 CLR 202 at 206 [2]. 49 Krakouer v The Queen (1998) 194 CLR 202 at 206-207 [3]-[6]. 50 Krakouer v The Queen (1998) 194 CLR 202 at 208 [9]. Bell Gordon to sell or supply it to another. The prosecutor and defence counsel each asked the judge to withdraw the direction but he declined to do so51. Krakouer was decided before Weiss. At the time, the determination of the appeal was subject to the common form provision then found in s 689(1) of the Criminal Code (WA). In their joint reasons, Gaudron, Gummow, Kirby and Hayne JJ rejected the contention that the misdirection involved a fundamental flaw of the kind discussed in Wilde v The Queen52. Their Honours were persuaded, however, that the misdirection did occasion a substantial miscarriage of justice in the circumstances of the case. This conclusion took into account the necessity for the prosecution to prove that the conspiratorial agreement encompassed the intention to sell or supply: foresight that another might sell or supply the drugs to others would not suffice to establish liability for conspiracy53. Significantly, in light of the issues in this appeal, their Honours considered that had the charge of attempt to possess methylamphetamine with intent to sell or supply stood alone, and had the jury been satisfied to the criminal standard that Krakouer had attempted to possess the drugs, it may have been possible to conclude that the evidence was consistent only with an attempt to possess with the requisite intention54. A further consideration which told against dismissal under the proviso was that the misdirection had not been considered unimportant by trial counsel. Their Honours cautioned that "[o]ther considerations may well have arisen if no exception had been taken at trial"55. Here the appellant adduced evidence in the Court of Appeal in answer to the State's submission that the misdirection had not occasioned a substantial miscarriage of justice in light of the conduct of the trial. Senior and junior counsel who appeared on the appellant's behalf at the trial deposed to having been unaware that s 11 of the MDA did not apply to a charge of attempting to possess prohibited drugs contrary to s 6(1)(a) of the MDA. In his affidavit, senior counsel stated: 51 Krakouer v The Queen (1998) 194 CLR 202 at 210 [14]. 52 Krakouer v The Queen (1998) 194 CLR 202 at 212 [23] citing (1988) 164 CLR 365 at 373 per Brennan, Dawson and Toohey JJ. 53 Krakouer v The Queen (1998) 194 CLR 202 at 215 [32], 216-217 [37]. 54 Krakouer v The Queen (1998) 194 CLR 202 at 215 [32]. 55 Krakouer v The Queen (1998) 194 CLR 202 at 216 [36]. Bell Gordon "I believe this was an oversight on my part. Had I recognised that section 11 did not apply to the charge, I believe I would not have acceded to the direction to the jury that intention was not in issue." The desirability of receiving evidence of counsel's reasons for forensic decisions does not appear to have been debated in the Court of Appeal and was not addressed in this Court56. The evidence is unchallenged. The appellant relies on it to distinguish his trial from the trial postulated by the plurality in Krakouer: at the appellant's trial the judge, the prosecutor and defence counsel all were acting under the same mistaken assumption. In the result, he submits that as a matter of substance, he was tried for the lesser, simple offence under s 6(2), which does not require proof of an intention to sell or supply the drugs possessed to another. He argues that the misdirection is an error of the kind in Handlen v The Queen57. Alternatively, he argues it is an error of the kind in Quartermaine v The Queen58. Handlen and Quartermaine In Handlen the accuseds' trial was conducted upon the common, mistaken, assumption that liability would be established on proof that each was a party to a joint criminal enterprise to import a commercial quantity of border-controlled drugs. At the date of the trial, however, the general principles of criminal responsibility for offences against Commonwealth law made no provision for liability as a participant in a joint criminal enterprise59. It was held that the intermediate appellate court erred in dismissing the accuseds' appeals against their convictions under the proviso. The holding took into account that the trial had been conducted on a basis for which the law did not allow, on evidence which should not have been adduced, and the verdicts did not establish that the jury must have been satisfied of the facts necessary to establish guilt60. 56 TKWJ v The Queen (2002) 212 CLR 124 at 128 [8] per Gleeson CJ; [2002] HCA 57 (2011) 245 CLR 282; [2011] HCA 51. 58 (1980) 143 CLR 595; [1980] HCA 29. 59 Handlen v The Queen (2011) 245 CLR 282 at 286 [1]-[2]. 60 Handlen v The Queen (2011) 245 CLR 282 at 298 [47]. Bell Gordon In Quartermaine the accused was charged with discharging a firearm with intent to kill a man named Wynne contrary to s 283(2) of the Criminal Code (WA). An element of liability for the offence required proof that the accused's act was of such a nature as to be likely to endanger human life. The trial judge omitted to direct the jury of this requirement61. Gibbs J, writing for the majority, observed that the jury must have found that the accused discharged the rifle, probably at Wynne, and that it was a short step to hold that in so doing he had done an act of such a nature as to be likely to endanger human life. Indeed, his Honour considered that there was much to be said for the view that the jury could not reasonably have made any other finding62. Nonetheless, his Honour reasoned that the jury had not been asked to consider whether the accused committed the offence with which he was charged: it had returned a verdict of guilty of a particular crime without having considered whether that crime was committed. His Honour held that the verdict could not be sustained by concluding that the jury would or should have returned the same verdict if it had considered the None of the factors which were critical to the decision in Handlen are present in this case. The appellant was tried for an attempt to commit an offence contrary to s 6(1)(a) of the MDA. The jury was correctly instructed of the four elements which together make up liability for that offence. The error was in instructing the jury of the s 11 presumption on the trial of a charge of attempted possession of prohibited drugs with intent to sell or supply to another. It is less clear the extent to which if at all the balance of the direction, including that the jury should give the fourth element a tick, involved legal error. The omission to direct on an element of liability as in Quartermaine, or a direction which effectively removes proof of an element from the jury's consideration, may not amount to legal error, much less occasion a substantial miscarriage of justice, if proof of the element was not a live issue in the trial64. 61 Quartermaine v The Queen (1980) 143 CLR 595 at 598-599. 62 Quartermaine v The Queen (1980) 143 CLR 595 at 600. 63 Quartermaine v The Queen (1980) 143 CLR 595 at 601. 64 R v Getachew (2012) 248 CLR 22 at 36 [35]-[36]; [2012] HCA 10; Huynh v The Queen (2013) 87 ALJR 434 at 441 [31]-[32]; 295 ALR 624 at 631-632; [2013] HCA 6 citing Alford v Magee (1952) 85 CLR 437 at 466; [1952] HCA 3; Reeves v The Queen (2013) 88 ALJR 215 at 224 [51] per French CJ, Crennan, Bell and Keane JJ; 304 ALR 251 at 262. Bell Gordon It may be accepted that in any case in which an appellate court concludes that an accused was "not in reality tried for the offences for which he was indicted"65 there will have been a substantial miscarriage of justice within the meaning of the proviso. And it may also be expected that in such a case there will be a contest as to whether that conclusion is appropriate: to say that an accused has not in reality been tried for the offence for which he or she has been indicted is a vivid way of expressing the conclusion that a misdirection as to the elements of an offence amounts to a substantial miscarriage of justice for the purposes of the proviso, but it does not aid the analysis of whether the error is of such gravity as to warrant that conclusion. A misdirection upon a matter of law is always contrary to law, and it is always a departure from the requirements of a fair trial according to law. But sometimes a misdirection on a matter of law will prevent the application of the proviso; and sometimes it will not. Krakouer was a case of a misdirection on a matter of law which reversed the onus of proof in relation to the intent with which the "drugs" were possessed, effectively requiring the jury to find that element established; and yet, were it not for other circumstances of the case, the proviso may have been applied66. The question is always whether there has been a substantial miscarriage of justice, and the resolution of that question depends on the particular misdirection and the context in which it occurred. In a trial where no issue arises as to proof of a particular element of the offence charged, and the accused through his or her counsel consents to the removal of that element from the jury's consideration, then it may be that no miscarriage of justice at all will have occurred because of that removal. Conclusion Senior counsel's evidence is that he would not have consented to a direction that intention was not in issue had he appreciated that s 11 of the MDA did not apply to a charge of attempted possession. Senior counsel did not say that he would have conducted the appellant's case differently in any other respect had he understood the correct position. It is to be observed that the conduct of the appellant's defence at his re-trial was not a tabula rasa: McLure P noted that at the first trial the appellant gave evidence that he went to the Falstaff Crescent 65 Cf Quartermaine v The Queen (1980) 143 CLR 595 at 601. 66 Krakouer v The Queen (1998) 194 CLR 202 at 212-213 [23]-[24] per Gaudron, Gummow, Kirby and Hayne JJ. Bell Gordon premises to purchase drugs for personal use67. McLure P, rightly, concluded that against this background the inference to be drawn is that a considered and justifiable forensic decision was made not to run a case that the appellant's conduct was consistent with an attempt to possess a small quantity of the drug for his own use. The forensic decision was to squarely focus the jury's attention on the capacity of the State's case to rise above admitted circumstances of suspicion and prove beyond reasonable doubt that the appellant was exercising control and dominion over the "drugs" during the 37 minutes that he spent inside Lothian's home. In the circumstances, it was not wrong for the Court of Appeal to reject the submission that the misdirection was an error of a kind that precluded the application of the proviso by analogy with Quartermaine or with cases in which there has been a failure to leave a defence for the jury's consideration. Their Honours were right to hold, consistently with the plurality's analysis in Krakouer, that the misdirection was not in any other respect an error of a kind which precludes the application of the proviso. There was no basis in the evidence or in the way the appellant's case was advanced which left open that he may have been in possession of some lesser part of the substitute "drugs" with a view to purchase for his own use. The sole issue in the way the trial was run was proof that the appellant was in possession of, in that he was exercising control (by himself or with Lothian and, perhaps, Tilbrook) over, the substitute "drugs" in the cardboard box. The Court of Appeal was correct to reason that proof beyond reasonable doubt that the appellant attempted to possess nearly 5 kg of 84% pure methylamphetamine compelled the conclusion that it was his intention to sell or supply it to another. And their Honours were correct to hold that the misdirection did not occasion a substantial miscarriage of justice. Order For these reasons there should be the following order: Appeal dismissed. 67 Kalbasi v The State of Western Australia [2016] WASCA 144 at [27]. In AK v Western Australia68, Gummow and Hayne JJ said: "When there has been a trial by jury, and an appellate court concludes that the trial judge made a wrong decision on a question of law or that there was some other miscarriage of justice, deciding whether there has been no substantial miscarriage of justice necessarily invites attention to whether the jury's verdict might have been different if the identified error had not occurred. That is why, if the appellate court is not persuaded beyond reasonable doubt of the appellant's guilt it cannot be said that there was no substantial miscarriage of justice." That explanation puts critical and far too readily misunderstood aspects of the reasoning in Weiss v The Queen69 in perspective. Against the background of the admonition in Weiss that "[n]o single universally applicable description of what constitutes 'no substantial miscarriage of justice' can be given"70, the explanation isolates and prioritises two considerations ordinarily bearing on the application of the proviso to a common form criminal appeal statute in the ordinary case of an appeal against conviction after a trial by jury. First, the explanation acknowledges that the ultimate question ordinarily to be addressed in the application of the proviso is whether the jury's verdict might have been different if the identified error had not occurred. That identification of the ultimate question stems from the foundational principle that "[i]n a trial by jury the jury is the constitutional tribunal for deciding issues of fact"71. The identification accords with the pre-Weiss explanation in Wilde v The Queen72 that "[u]nless it can be said that, had there been no blemish in the trial, an appropriately instructed jury, acting reasonably on the evidence properly before them and applying the correct onus and standard of proof, would inevitably have convicted the accused … the accused may have lost a fair chance of acquittal by the failure to afford him the trial to which he was entitled" and that "[t]he loss of such a chance of acquittal cannot be anything but a substantial miscarriage of justice". 68 (2008) 232 CLR 438 at 457 [59]; [2008] HCA 8. 69 (2005) 224 CLR 300; [2005] HCA 81. 70 (2005) 224 CLR 300 at 317 [44] (emphasis omitted). 71 Hocking v Bell (1945) 71 CLR 430 at 440; [1945] HCA 16. 72 (1988) 164 CLR 365 at 372; [1988] HCA 6. The same identification of the ultimate question is reflected in the post- Weiss observation in Filippou v The Queen73 that "[b]y 'substantial miscarriage of justice' what is meant is that the possibility cannot be excluded beyond reasonable doubt that the appellant has been denied a chance of acquittal which was fairly open to him or her or that there was some other departure from a trial according to law that warrants that description". Second, the explanation provides the context for and identifies the purpose of the "negative proposition", which according to Weiss "may safely be offered", that "[i]t cannot be said that no substantial miscarriage of justice has actually occurred unless the appellate court is persuaded that the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt of the offence on which the jury returned its verdict of guilty"74. The negative proposition does not point to some separate appellate inquiry to be pursued without reference to the verdict that has in fact been returned. The jury is at trial, and remains throughout the appellate process, the constitutional tribunal for deciding the criminal guilt of the accused. The negative proposition points instead to an appellate factual assessment to be made by reference to the totality of the record of the trial, mindful of "the 'natural limitations' that exist in the case of any appellate court proceeding wholly or substantially on the record"75 and taking into account such inferences of fact as might appropriately be drawn from the fact that the jury returned a verdict of guilty in the blemished trial which in fact occurred76. The reason that the appellate court makes its own factual assessment is not that the court substitutes for a reasonable and properly instructed jury as the arbiter of criminal guilt. The reason is that, in the same way as the appellate court is entitled and required to assume that ordinarily "a reasonable doubt experienced by the court is a doubt which a reasonable jury ought to have experienced" in determining whether a verdict of guilty was open77, the appellate court is entitled and required to 73 (2015) 256 CLR 47 at 55 [15]; [2015] HCA 29 (footnote omitted). 74 Weiss v The Queen (2005) 224 CLR 300 at 317 [44]. 75 Weiss v The Queen (2005) 224 CLR 300 at 316 [40], quoting Fox v Percy (2003) 214 CLR 118 at 125-126 [23]; [2003] HCA 22. 76 Weiss v The Queen (2005) 224 CLR 300 at 317 [43]. See also Cesan v The Queen (2008) 236 CLR 358 at 395 [128]-[129]; [2008] HCA 52; Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 104 [27]-[28]; [2012] HCA 14. 77 M v The Queen (1994) 181 CLR 487 at 494; [1994] HCA 63, cited in Weiss v The Queen (2005) 224 CLR 300 at 316 [41], fn 64. "assume that ordinarily if it thinks that the accused must be convicted, so would a reasonable jury" in determining whether a verdict of guilty was inevitable78. The negative proposition amounts to an acknowledgment that the appellate court's own persuasion of the appellant's guilt will often form a necessary step in the appellate court's reasoning if the appellate court is to reach the conclusion that the jury's verdict of guilty would not have been different had the identified error not occurred. The proposition proceeds on the understanding that the appellate court will often not be able to conclude that the appellant has not been denied a chance of acquittal fairly open other than through a process of reasoning which includes the appellate court's own persuasion of the appellant's guilt. My use of the word "often" is in deliberate contradistinction to "always". Despite the unqualified terms in which the negative proposition was formulated in Weiss, that proposition would contradict the admonition in that case and would itself become a source of error were that formulation ever to be "treated as a complete and sufficient paraphrase of the statute"79. Because "[i]t is the inevitability of conviction which will sometimes warrant the conclusion that there has not been a substantial miscarriage of justice"80, "demonstration that a chain of reasoning can be articulated that would require the verdict reached at trial does not always permit, let alone require, the conclusion that no substantial miscarriage of justice actually occurred"81. The appellate court's pursuit of its own chain of reasoning to its own conclusion of guilt, for that reason, cannot be treated as a sufficient condition for the statutory conclusion that no substantial miscarriage of justice has occurred. Nor, despite occasional post-Weiss statements which might be interpreted as so suggesting, can an appellate court's own persuasion of guilt always be a necessary condition for the conclusion that no substantial miscarriage of justice has occurred. That the appellate court's own persuasion of guilt will not in every case constitute a necessary step in reasoning to a conclusion that the jury's verdict would not have been different had the identified error not occurred must follow in practical terms from the premise of the reasoning in Weiss that the qualifier "substantial" was added to the phrase "miscarriage of justice" for the purpose of overcoming the inconvenience and undue technicality of the prior rule which had 78 Festa v The Queen (2001) 208 CLR 593 at 632 [123]; [2001] HCA 72, cited in Weiss v The Queen (2005) 224 CLR 300 at 316 [41], fn 64. 79 Gassy v The Queen (2008) 236 CLR 293 at 301 [18]; [2008] HCA 18. 80 Baini v The Queen (2012) 246 CLR 469 at 481 [33]; [2012] HCA 59. 81 Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 104 [29]. treated "any departure from trial according to law, regardless of the nature or importance of that departure" as a "miscarriage of justice"82. If any departure from a trial according to law would have the potential to be characterised as a miscarriage of justice, then to meet the mischief to which the addition of the qualifier is directed a threshold of materiality needs sensibly to be introduced into the analysis before any question of the appellate court's persuasion of guilt is reached. There will be cases in which the departure was plainly "innocuous" in that it could have "occasioned no real forensic disadvantage to the appellant"83. Where the appellate court considers that a wrong decision on a question of law or some other irregularity was material and where the appellate court goes on to consider whether the appellate court can itself be persuaded of guilt, however, what is important to recognise is that the appellate court is engaged throughout in a process of analysis directed to the same ultimate question of whether the identified error denied the appellant a chance of acquittal which was fairly open. The ultimate question remains throughout whether the appellate court can be satisfied that the jury's verdict of guilty would not have been different if the identified error had not occurred or, in other words, that the verdict of guilty was "inevitable" in the sense that, "assuming the error had not been made, the result was bound not to have been any different for the jury if acting reasonably on the evidence properly before them and applying the correct onus and standard of proof"84. The problem that I think has crept into the application of the proviso to the common form criminal appeal statute in Western Australia as a result of the decision of the Court of Appeal in Hughes v The State of Western Australia85 is that the Weiss negative proposition has been elevated to such a level that sight has been lost of that ultimate question. The Court of Appeal's own assessment that an accused was proved beyond reasonable doubt to be guilty of the offence on which the jury returned its verdict of guilty has come to be treated as determining that "no substantial miscarriage of justice has occurred" in the 82 Weiss v The Queen (2005) 224 CLR 300 at 308-309 [18]-[19] (emphasis in original). 83 Jones v The Queen (2009) 83 ALJR 671 at 678 [30], [33]; 254 ALR 626 at 634; [2009] HCA 17. Cf R v Matenga [2009] 3 NZLR 145 at 157 [30]; Lundy v The Queen [2014] 2 NZLR 273 at 291-292 [150]. 84 Lindsay v The Queen (2015) 255 CLR 272 at 302 [86]; [2015] HCA 16. See also Castle v The Queen (2016) 259 CLR 449 at 471-472 [64], 477 [81]; [2016] HCA 46; R v Dickman (2017) 91 ALJR 686 at 688 [4]-[5], 697 [63]; 344 ALR 474 at 476, 488; [2017] HCA 24. 85 (2015) 299 FLR 197. "outcome" of the trial, leaving only for further consideration a separate and distinct question of whether the error was nevertheless one of "process" sufficient in magnitude to warrant the description of a substantial miscarriage of justice86. Losing sight of the ultimate question to which the Court of Appeal's own persuasion of guilt was directed was, I think, the source of the problem in the present case. Having found that the trial judge made a wrong decision on a question of law in failing to direct the jury that the jury needed to be satisfied beyond reasonable doubt on the evidence adduced at trial that Mr Kalbasi intended to sell or supply what he believed to be a prohibited drug in order to return a verdict of guilty of the offence of attempting to possess the prohibited drug with intent to sell or supply it to another, and accepting the view of the majority in Krakouer v The Queen87 that the fact that there had been a misdirection about one element of the offence did not mean that the trial was so fundamentally flawed as in itself to amount to a substantial miscarriage of justice, the ultimate question which the Court of Appeal was required to address in the application of the proviso became whether it could be satisfied that the jury would have returned a verdict of guilty even if the proper direction had been given. For the purpose of addressing that ultimate question, the Court of Appeal was required to examine the whole of the record of the trial and was entitled to draw from the fact that the jury returned a verdict of guilty on the evidence that had been adduced such inferences as were available in light of the manner in which the prosecution and defence cases had been conducted and the directions that the jury had been given. Although the jury was not directed that it had to be satisfied that Mr Kalbasi had possession of the entire quantity, the all-or-nothing manner in which the prosecution and the defence had conducted their respective cases at trial entitled the Court of Appeal to infer from the jury's verdict that the jury was satisfied beyond reasonable doubt that Mr Kalbasi was in possession of the to be whole of nearly five kilograms of what Mr Kalbasi believed methylamphetamine. What I do not think that the Court of Appeal was entitled to do was to reason from the jury's satisfaction that Mr Kalbasi was in possession to be methylamphetamine to the conclusion that the jury acting reasonably on the evidence that had been adduced and applying the correct onus and standard of proof would inevitably also have been satisfied that Mr Kalbasi intended to sell or supply it to some other person. that obviously commercial quantity of what he believed 86 See Hughes v The State of Western Australia (2015) 299 FLR 197 at 208-209 [60]- 87 (1998) 194 CLR 202 at 212 [23]; [1998] HCA 43. The reason that I do not think that the Court of Appeal was entitled to reach that conclusion lies in the content of the instructions which the jury had been given as to the meaning of possession. The point is not that those instructions were wrong insofar as they addressed that other element of the offence. The point is that those instructions left the jury with a pathway of reasoning in relation to one element of the offence which allowed the jury to be satisfied that Mr Kalbasi was in possession of the obviously commercial quantity of what he believed to be methylamphetamine, which pathway of reasoning was inconsistent with the inevitability of the jury, if properly instructed in relation to the omitted element of the offence, also being satisfied that Mr Kalbasi intended to sell or supply it. the owner of what he believed What is significant in that respect is that the trial judge instructed the jury that possession was different from ownership and that the prosecution case was not the methylamphetamine. The trial judge instructed the jury that the prosecution case was limited to a case that Mr Kalbasi was in possession of what he believed to be the methylamphetamine only during the 37-minute period in which Mr Kalbasi remained at Mr Lothian's house at Falstaff Crescent, Spearwood. The prosecution case was that the possession was constituted by Mr Kalbasi then and there exercising control over the substance to the exclusion of everyone else except perhaps Mr Lothian, who may have jointly exercised control over it at the same place during the same period. to be What is even more significant in that respect is the nature of the control which the trial judge instructed the jury was sufficient to constitute possession during that 37-minute period. After explaining that a person can possess something without having physical custody of that thing, the trial judge explained: "Members of the jury, you can also possess something temporarily and even for a limited purpose. As I've said, you can possess something without owning it. For example, if I borrow a book from the local library, obviously I do not own the book but while I have taken it out of the library, it is under my control and is therefore in my possession. The notion of possession is wide enough to include the case of where I might lend that book to my best friend because they want to read it too. So the fact that I have taken the book out of the library and have given it to my best friend on the basis that I need to return it to the library is sufficient for me to say that my best friend also has possession of that book while he or she has it in their physical custody or control." The trial judge relevantly continued: "Members of the jury, as I've said, the possession need not be exclusive possession in the hands of only one person. It follows that one or more people can be in joint possession of a prohibited drug and I've given you an example of how my best friend is in possession of my library book in that regard. The question for you is whether or not you are satisfied beyond reasonable doubt that while the accused was in [the house at Falstaff Crescent, Spearwood], he exercised control and dominion over the intended drugs even though, and it's entirely a matter [for] you, it would appear that Mr Lothian was also in possession at the same time." Those directions left the jury with a pathway of reasoning which allowed the jury to be satisfied beyond reasonable doubt that Mr Kalbasi was in possession of the obviously commercial quantity of what he believed to be methylamphetamine simply on the basis that Mr Lothian permitted Mr Kalbasi to have joint control over it during the 37-minute period in which Mr Kalbasi remained at Mr Lothian's house, before which period Mr Kalbasi need have had no control over it and at the end of which period Mr Kalbasi may have relinquished control over it to Mr Lothian. And if the jury as so instructed was able to follow that pathway of reasoning in reaching the state of satisfaction as to possession which the jury must have reached, it does not follow from the jury's satisfaction that Mr Kalbasi was in possession of the substance that if the jury had also been properly instructed as to intention the jury acting reasonably on the evidence and applying the correct onus and standard of proof would also have been satisfied that Mr Kalbasi intended to sell or supply that substance. Indeed, had the jury embraced the library book analogy proffered by the trial judge to be satisfied of Mr Kalbasi's possession, it is difficult to see how the jury acting reasonably on the evidence and applying the correct onus and standard of proof could also have been satisfied that Mr Kalbasi intended to sell or supply what he believed to be the methylamphetamine. The possession involved in borrowing a book from a friend for a short period and in circumstances where the mutual expectation is that the book will be returned to the friend so that the friend can return it to the library is possession of a materially different character from the possession involved in holding a book with the intention of selling it to some other person. The two forms of possession are mutually exclusive. A person cannot possess a book with the intention of returning it to a friend so that the friend can do something else with it and at the same time possess the same book with the intention of selling it to someone else. The Court of Appeal's own satisfaction that the evidence adduced at the trial established beyond a reasonable doubt that Mr Kalbasi exercised control over the whole of what he believed to be the methylamphetamine with the intention to sell or supply it to another88, expressed in the context of considering the effect of the erroneous direction on the "outcome" of the trial, was insufficient to allow the Court of Appeal to be satisfied that the jury would have returned a verdict of guilty if the proper direction had been given. And contrary to the view which the Court of Appeal went on to express in the context of its separate consideration of the effect of the erroneous direction on the "process" of the trial89, once Mr Kalbasi was found to have possessed the obviously commercial quantity of what he believed to be methylamphetamine, it was not "inconceivable" that the jury could not have been satisfied beyond reasonable doubt that he possessed that substance with an intention to sell or supply it to another. Had the jury been properly instructed in relation to the omitted element of the offence, it would have been open to the jury not to have been so satisfied. The conviction was not inevitable. The Court of Appeal was wrong to conclude that no substantial miscarriage of justice occurred as a result of the trial judge's failure to direct the jury as to the need to be satisfied beyond reasonable doubt of Mr Kalbasi's intention to sell or supply what he believed to be methylamphetamine. The appeal should be allowed. 88 Kalbasi v The State of Western Australia [2016] WASCA 144 at [206]. 89 Kalbasi v The State of Western Australia [2016] WASCA 144 at [214]. Nettle NETTLE J. Following a retrial before a judge and jury in the District Court of Western Australia, the appellant ("Kalbasi") was convicted of one count of attempting to possess a prohibited drug (methylamphetamine) with intent to sell or supply it to another contrary to ss 6(1)(a) and 33(1) of the Misuse of Drugs Act 1981 (WA). The offence was one of attempting to possess with intent to sell or supply, rather than possession with intent to sell or supply, because, unknown to Kalbasi, the package containing the prohibited drug had been intercepted by police and replaced with rock salt before delivery. Kalbasi appealed against conviction to the Court of Appeal of the Supreme Court of Western Australia but his appeal was dismissed. By grant of special leave, he now appeals to this Court. The issue is whether the Court of Appeal erred in holding that, although the trial judge misdirected the jury as to the application of s 11 of the Misuse of Drugs Act, there was no substantial miscarriage of justice within the meaning of s 30(4) of the Criminal Appeals Act 2004 (WA). For the reasons which follow, the misdirection was productive of a substantial miscarriage of justice and the appeal should be allowed. Relevant statutory provisions Section 6(1)(a) of the Misuse of Drugs Act relevantly provides that a person who has in his or her possession a prohibited drug with intent to sell or supply it to another commits a crime. Section 11 of the Misuse of Drugs Act provides that, unless the contrary is proved, a person shall be deemed to have in his or her possession a prohibited drug with intent to sell or supply it to another if the person has in his or her possession a quantity of the prohibited drug which is not less than the quantity specified in Sched V in relation to the prohibited drug. In the case of methylamphetamine, the quantity specified in Sched V is two grams90. Section 34(1)(a) of the Misuse of Drugs Act provides that a person who is convicted of a crime under s 6(1) is liable to a fine not exceeding $100,000 or to imprisonment for a term not exceeding 25 years or both. Section 30(3) of the Criminal Appeals Act relevantly provides that the Court of Appeal must allow an appeal against conviction if in its opinion the conviction should be set aside because of a wrong decision on a question of law by the judge or if in its opinion there was a miscarriage of justice. Section 30(4) of the Criminal Appeals Act provides that, despite s 30(3), even if a ground of appeal might be decided in favour of the offender, the Court of Appeal may dismiss the appeal if it considers that no substantial miscarriage 90 Misuse of Drugs Act 1981 (WA), Sched V, item 82. Nettle of justice has occurred. Section 30(4) is the Western Australian statutory form of the common form proviso. The facts On 12 November 2010, police executed a search warrant at a freight company's premises in Sydney. Therein they located a cardboard box for consignment to the freight company's office in Perth, with a delivery instruction endorsed on the consignment note to call "James Walker" on telephone number 0403-717-731 ("the 731 number"). Inside the cardboard box were two padlocked yellow plastic toolboxes, each containing five sealed plastic bags of methylamphetamine. Subsequent analysis revealed that the total weight of the methylamphetamine was 4.981 kilograms with a purity of 84 percent and a potential street value of up to $5 million. On 14 November 2010, police took the cardboard box to Perth and replaced the packages of methylamphetamine with packages of rock salt. The box was then reconstructed with a listening device concealed inside it. On 15 November 2010, police observed one Matthew David Lothian ("Lothian") attempt to collect the cardboard box from the freight company's premises in Perth. By arrangement with police, the freight company told Lothian that he should return the following day. Police later followed Lothian and watched him enter a house in Falstaff Crescent, Spearwood ("the Falstaff Crescent premises"). They also observed him making two telephone calls from a public telephone box. On 16 November 2010, police observed Lothian driving a car towards the freight company's premises. On his way there, the car ran out of petrol and so he took a taxi for the remainder of the journey. He arrived at the freight company's premises by taxi at about 2:15 pm, and was there seen to be using a white mobile telephone. He took delivery of the cardboard box and placed it in the back of the taxi. From there, he travelled in the taxi to a petrol station, where he purchased a jerry can of fuel, and then back to the car to refuel it. At about 3:09 pm, Lothian arrived in the car at the Falstaff Crescent premises and, at around 3:16 pm, he was seen by undercover police carrying the cardboard box inside the premises. At approximately 3:20 pm, Kalbasi arrived at the Falstaff Crescent premises on a bicycle. About 18 minutes later, Lothian's girlfriend, Tilbrook, was seen leaving the premises, and, at the same time, Lothian was seen outside the premises for a short period of time. During that time, Kalbasi remained inside the premises alone. When Lothian and Kalbasi were inside the Falstaff Crescent premises, the listening device picked up sounds consistent with the cardboard box being opened and the locks on the toolboxes being cut. It also recorded Lothian recounting to Kalbasi how Lothian's car had run out of petrol and stopped about Nettle 50 metres short of "the servo". Lothian told Kalbasi that it had happened after Lothian first texted Kalbasi. After some time, at approximately 3:40 pm, Kalbasi asked Lothian for a pipe. About 10 minutes later, Kalbasi was heard to say to Lothian "Don't move. I'll come back". At approximately 3:57 pm, Kalbasi was seen leaving the Falstaff Crescent premises and riding his bicycle into a large park. He appeared to make a mobile telephone call. Two police officers in an unmarked police vehicle pursued him as he rode through the park. One of the officers said that Kalbasi looked in his direction, stopped pedalling for a second, and then continued to ride away. The other officer shouted out "Police, stop", but Kalbasi did not stop. As the police vehicle got closer to Kalbasi, the officer yelled out again "Police, stop", at which point Kalbasi fell off his bicycle. The police vehicle then collided with the bicycle and the officer yelled out for a third time "Police, stop". Kalbasi ran off with both police officers in pursuit and was eventually caught and arrested. At 4:00 pm, police entered the Falstaff Crescent premises. Lothian was alone inside the premises. The living room of the premises was in close proximity to the kitchen and it was possible to see the living room from the kitchen and vice versa. The opened cardboard box was in the living room and the opened toolboxes were in the kitchen. A pair of bolt cutters was close by. One bag of rock salt was found in a beer carton that was used as a makeshift bin. There were also plastic clip-seal bags and two broken padlocks in the box. The other nine bags of rock salt were found on the bottom shelf of a kitchen cupboard. The plastic outer wrapping of the 10 bags of rock salt was in the kitchen sink. There were four clean bowls, three sets of digital scales and a box of disposable gloves on the kitchen sink. A substance commonly used to cut methylamphetamine was in a baking dish on the stove. Police found two pairs of worn disposable gloves on the kitchen sink – in the case of one pair, one glove was inside the other – and a third pair on a table in the hallway. Each glove was subjected to DNA testing. A mixed DNA profile was detected on both of the gloves found in the hallway. It matched Tilbrook and Lothian, and Kalbasi could be excluded as a contributor. Likewise, a mixed DNA profile was detected on one of the pairs of gloves found on the kitchen sink. It matched Tilbrook and Lothian, and Kalbasi could be excluded as a contributor. The inside of one of the gloves of the other pair found on the kitchen sink yielded a mixed DNA profile, but the contributors could not be determined. The outside of that glove, however, yielded a mixed DNA profile, and it was 100 billion times more likely than not that Kalbasi was a contributor. Tilbrook and Lothian were excluded as contributors. The inside of the other glove of that pair also yielded a mixed DNA profile, and it was 100 billion times more likely than not that Kalbasi was one of the contributors. Tilbrook could not be excluded as a contributor, although it was likely that she was not one, and the testing was inconclusive with respect to Lothian. A mixed DNA profile was Nettle recovered from the outside of that glove but the number of contributors could not be determined. A white BlackBerry mobile telephone was found in a room used to store tools. It had a PIN lock that prevented the stored information from being downloaded but it appeared to be similar to the white mobile telephone that Lothian was seen using at the freight company's premises. Police also found documents at the Falstaff Crescent premises that showed that Lothian had flown from Perth to Sydney on 11 November 2010. On 18 November 2010, Kalbasi was released on bail. He was collected from Hakea Prison by one Tassone and taken to Kalbasi's home in Kintail Road, Applecross. Later that day, police executed a search warrant at those premises. Kalbasi, Tassone and a woman believed to be Kalbasi's wife were present. A number of mobile telephones and a BlackBerry mobile telephone charger were seized, although no BlackBerry mobile telephone was found. Travel documents found at the premises indicated that Kalbasi had flown from Perth to Sydney on 3 November 2010 and returned to Perth on 13 November 2010. Police examined the mobile telephones seized from Tilbrook and Tassone. Examination of Tilbrook's mobile telephone showed that there were three calls from the 731 number: two on 10 November 2010 and one on 17 November 2010. There was also a message received on 10 November 2010 saying "Hey mate, this is the number you can get me on". It was apparent that Lothian had used Tilbrook's mobile telephone. Examination of Tassone's mobile telephone showed that it included the contact details of Kalbasi and Kalbasi's wife and also a record of an incoming call from the 731 number on 9 November 2010. There was, too, a record of a text message between Tassone's mobile telephone and Kalbasi's wife's mobile telephone on 17 November 2010, the day after Kalbasi was arrested. Prosecution case at trial The prosecution's case at trial was that, during the period that Kalbasi was in the Falstaff Crescent premises on 16 November 2010, he attempted to possess the whole quantity of methylamphetamine in the cardboard box, either as sole possessor or jointly with, at least, Lothian. The case presented was largely circumstantial and comprised of evidence of the facts that have been referred to, the DNA evidence, and evidence of what was said to be consciousness of guilt by reason of Kalbasi's flight from police. The prosecution contended that the methylamphetamine found in the cardboard box in Sydney had been destined to go to Kalbasi or to a group of persons of whom Kalbasi was one. The prosecution argued that it was to be inferred from the evidence that Kalbasi and Lothian were to be methylamphetamine when Kalbasi sampled the substance with a pipe borrowed from Lothian and discovered that it was not what he had been expecting. Kalbasi the process of cutting what they believed Nettle then left the house in a hurry to go and sort out what he perceived to be a problem, with the intention of later returning. That was said to be evidenced by Kalbasi's instruction to Lothian "Don't move" followed by the statement "I'll come back". It was further contended that it was apparent that Kalbasi had fled from the police in the park after the police identified themselves as such and told Kalbasi to stop, because Kalbasi knew that he was guilty of attempting to possess the methylamphetamine and wanted to escape the consequences. Defence case at trial Kalbasi did not give or call evidence or advance a positive defence. His case was limited to putting the prosecution to proof. That included referring to evidence given by the prosecution's DNA expert as to the possibility of secondary transfer of DNA from a source to an object by way of an intermediary. Defence counsel submitted to the jury that, although Kalbasi was at the Falstaff Crescent premises, the jury could not be satisfied beyond reasonable doubt that he was involved in Lothian's possession of the "drug". The impugned direction As was earlier noticed, s 11 of the Misuse of Drugs Act provides that, for the purposes of s 6(1)(a), if a person has in his or her possession a quantity of a prohibited drug no less than the quantity specified in Sched V (in this case, two grams) the person shall be deemed to have the drug in his or her possession with intent to sell or supply it to another. The decision of this Court in Krakouer v The Queen91 established, however, that such a provision does not apply to an offence of attempting to possess a drug with intent to sell or supply it to another. Nonetheless, in this case, the prosecutor, defence counsel and the trial judge all proceeded upon the mistaken view that s 11 did apply. As a consequence of the error, the trial judge misdirected the jury with respect to the element of intent as follows: "I'm now going to deal with the fourth element upon the jury aid[e], that [Kalbasi] intended to sell or supply the prohibited drug or any part of it to another. Members of the jury, you can give that element a tick. It is not an issue for you in this trial. Very briefly, the law is that if you are found in possession of more than two grams of [methylamphetamine] then you are presumed to be in 91 (1998) 194 CLR 202 at 210-211 [17]-[18] per Gaudron, Gummow, Kirby and Hayne JJ, 221 [53]-[56] per McHugh J; [1998] HCA 43. See also Do v The State of Western Australia [2014] WASCA 218 at [28] per Mazza JA (McLure P and Hall J agreeing at [1], [103]). Nettle possession with intent to sell or supply it to another and the onus is on you to remove that presumption. There is no issue in this trial about the fourth element and as I've said it will not delay your deliberations. You must be satisfied beyond reasonable doubt about the fourth element. You do not need to concern yourself with where the drugs might have gone, how they might have got there, when they might have been moved or whatever. It's simply not relevant to your deliberations for the purpose of this trial. The fourth element is proved beyond reasonable doubt and you should give it a tick." The "jury aide" was a document handed to the jury to assist them in following the trial judge's oral directions. It was as follows: "JURY AIDE The elements outlined below are generic and you must consider the terms of the particular count on the indictment that you are considering. To prove the offence was committed by the accused at the time and place alleged the State must prove each of the following elements beyond reasonable doubt: Attempted possession of a prohibited drug with intent to sell or supply The offender was the accused (identity); The substance with which the charge is concerned is a prohibited drug; The accused attempted to possess that prohibited drug; and The accused intended to sell or supply the prohibited drug, or any part of it, to another. 'to possess' - includes to control or have dominion over, and to have the order or disposition of, and inflections and derivatives of the verb 'to possess' have correlative meanings." Proceedings before the Court of Appeal Kalbasi appealed to the Court of Appeal on six grounds, all but one of which were rejected92. Relevantly, ground 1 was that the trial judge misdirected 92 Kalbasi v The State of Western Australia [2016] WASCA 144. Nettle the jury as to the application of s 11 of the Misuse of Drugs Act. The Court of Appeal (McLure P, Mazza and Mitchell JJA) accepted93 that the direction was contrary to law but held that it was not productive of a substantial miscarriage of justice. McLure P reasoned that the sole live issue between the parties at trial was whether Kalbasi was in control of the intended drugs (jointly with Lothian)94, and "[I]t was no part of the defence case in opening (or thereafter) that [Kalbasi's] conduct in going to Lothian's house and his activities therein were consistent with an intention to purchase a small quantity of methylamphetamine for his own use, subject to satisfying himself (by testing or sampling) as to its quality." Her Honour concluded96: "[O]nce the jury found that [Kalbasi] was in possession of the intended drugs, a finding that he was in possession with an intention to sell or supply to another was, having regard to the very large quantity of high purity drugs, inevitable. I am satisfied that the jury verdict of guilty is correct, that the s 11 error and [Kalbasi's] concession [that s 11 applied] could and should have no effect on the verdict and that the retrial was fair in all respects. Accordingly, there has been no substantial miscarriage of justice." In a separate joint judgment, Mazza and Mitchell JJA reasoned differently but to the same conclusion. Their Honours began97 with the observation that Weiss v The Queen98 remains the leading authority on the proviso and that, as Weiss had been interpreted by the Court of Appeal in Hughes v The State of Western Australia99, it requires consideration of two aspects: "the outcome 93 See Kalbasi v WA [2016] WASCA 144 at [9]-[10], [30] per McLure P, [98], [217] per Mazza and Mitchell JJA. 94 Kalbasi v WA [2016] WASCA 144 at [15]. 95 Kalbasi v WA [2016] WASCA 144 at [27]. 96 Kalbasi v WA [2016] WASCA 144 at [30]. 97 Kalbasi v WA [2016] WASCA 144 at [179]. 98 (2005) 224 CLR 300; [2005] HCA 81. 99 (2015) 299 FLR 197 at 208 [61]. Nettle aspect" and "the process aspect". In Hughes, the outcome aspect was said to involve the appellate court deciding for itself on the basis of the whole of the record of the trial whether, apart from the error, the accused was proved guilty beyond reasonable doubt, and "whether the error ... would, or at least should, have had no significance in determining the verdict that was returned by the trial jury"100. The process aspect was said to direct attention to whether there had been such a departure from the prerequisites of a fair trial as to constitute a substantial miscarriage of justice101. Dealing first with the outcome aspect, Mazza and Mitchell JJA stated102 that, upon an examination of the whole of the evidence, they were "satisfied beyond reasonable doubt of [Kalbasi's] guilt of the offence with which he was charged". They summarised their conclusions in that regard thus103: "[I]n the 37 minutes that [Kalbasi] was in the premises at Falstaff Crescent, the cardboard box containing a very large and valuable consignment of 'drug' was opened, the bags were removed from the toolboxes, preparations were made to cut the drug, [Kalbasi] sampled it and, when he saw that there was a problem, he undertook to deal with it. ... We are satisfied that the evidence [of flight] established that [Kalbasi] did flee from [the police], and that he did so out of a consciousness of guilt for the offence with which he was charged. While it is the case that [Lothian], and perhaps [Tilbrook], exercised control over the drug, we are satisfied beyond reasonable doubt that [Kalbasi] also exercised control. We are further satisfied beyond reasonable doubt that he exercised control over the entire 4.981 kg of 'methylamphetamine' and not over some much smaller quantity consistent with a mere sample. Given the quantity and value of the drug, it is inconceivable that [Kalbasi] would possess them without an intention to sell or supply them to another." 100 (2015) 299 FLR 197 at 209 [64]-[65]. 101 (2015) 299 FLR 197 at 209 [67]-[68]. 102 Kalbasi v WA [2016] WASCA 144 at [206]. 103 Kalbasi v WA [2016] WASCA 144 at [203]-[204], [206]. Nettle Turning then to the process aspect, the plurality observed104 that, in contradistinction to Krakouer, in this case the charge of attempting to possess the drug with intent to sell or supply stood alone and the sole issue at trial was possession and, in particular, whether Kalbasi controlled the "drug" in the cardboard box. It followed, their Honours reasoned105, that, although the misdirection as to the application of s 11 was a misdirection as to an element of the offence charged, it was not analogous to a failure to leave a defence to the jury, and the trial was not flawed in such a way as to preclude the application of the proviso. Their Honours concluded106: "Once [Kalbasi] was found the 4.981 kg of 'methylamphetamine' it was inconceivable that the jury could not have been satisfied beyond reasonable doubt that [Kalbasi] possessed the substance with an intent to sell or supply it to another." to have possessed The parties' contentions Before this Court, Kalbasi contended that the Court of Appeal erred in its application of Weiss. Counsel for Kalbasi submitted that the central consideration in the application of the proviso is the nature of the error, misdirection or complaint in issue, and that the Court of Appeal erred by failing sufficiently to take the nature of the error into account. In particular, by dividing consideration of the application of the proviso into outcome and process aspects, and dealing with the outcome aspect separately, the plurality determined the outcome aspect solely on the basis that they were satisfied beyond reasonable doubt that Kalbasi was guilty. By so proceeding, the plurality failed to take into account that the misdirection denied Kalbasi procedural fairness or at least deprived him of the right of having a substantial part of his case decided by the jury, namely, the possibility that he may have attended the Falstaff Crescent premises merely to sample the "methylamphetamine" and so possessed no more than a small quantity of the substance for that limited purpose. Counsel for Kalbasi accepted that the trial judge's directions were adequate in relation to possession as such. But counsel contended that they were of such breadth that there could be no certainty as to what the jury may have concluded regarding the amount possessed or, therefore, as to whether the jury would have been satisfied of Kalbasi's intent to sell or supply it. 104 Kalbasi v WA [2016] WASCA 144 at [212]-[213]. 105 Kalbasi v WA [2016] WASCA 144 at [213]-[214]. 106 Kalbasi v WA [2016] WASCA 144 at [214]. Nettle In response, the State of Western Australia as respondent to the appeal contended that the plurality were correct in following the Hughes two-part approach to the application of the proviso and correct in their application of the proviso for the reasons which the plurality gave. The sole issue at trial was whether Kalbasi attempted to possess the whole of the quantity of the prohibited drug. It was not suggested that Kalbasi may have possessed some part of the "drug" and not the remainder. His defence was that he had not possessed any. Consistently with that being so, it was said that the effect of the trial judge's directions was that the jury were to consider whether they were satisfied beyond reasonable doubt that Kalbasi had control or dominion, and intended to have control or dominion, over the whole of the "drug". In those circumstances, the s 11 misdirection was irrelevant. It did not bear on the jury's consideration of whether or not Kalbasi had possessed the whole of the "drug". It went only to the question of whether he possessed the whole of the "drug" for the purposes of sale or supply to another. And, given the large quantity of "drug" involved, it was impossible to suppose that Kalbasi had possessed it for any purpose other than sale or supply to another. The meaning of Weiss Weiss laid down three fundamental propositions107. First, in applying the proviso, an appellate court must itself decide whether a substantial miscarriage of justice has occurred. Secondly, the task is not an exercise in speculation or prediction: it is an objective inquiry not materially different from other appellate tasks and it is to be performed with whatever are the advantages and disadvantages of deciding an appeal on the record of the trial. Thirdly, the standard of proof is proof beyond reasonable doubt. Those three fundamental propositions are well known and well understood. Weiss also provided a detailed explication of those three fundamental propositions which, however, it sometimes appears is not as well known or understood. For present purposes, it may be summarised thus: There is no single universally applicable description of what constitutes a substantial miscarriage of justice108. In each case, it is a necessary, but not a sufficient, condition of the application of the proviso that the appellate court be satisfied beyond reasonable doubt on the whole of the record that the 107 (2005) 224 CLR 300 at 315 [39]. 108 Weiss v The Queen (2005) 224 CLR 300 at 317 [44]. Nettle accused was proved guilty of the offence of which he or she was convicted109. The fact that a jury has returned a verdict of guilty is relevant, but it is necessary to keep in mind the burden and standard of proof110. References to inevitability of result or the loss of a fair or real chance of acquittal are useful in emphasising the high standard of proof of criminal guilt. They are also useful as pointers to the natural limitations that attach to proceeding wholly or substantially on the record111. There are cases where it is possible to conclude that the error made at trial would, or at least should, have had no significance in determining the verdict that was returned by the jury112. Equally, there are cases, perhaps many cases, where the natural limitations of proceeding wholly or substantially on the record require the appellate court to conclude that it cannot be satisfied that a substantial miscarriage of justice has not occurred113. There may also be cases where, although the appellate court is satisfied on the whole of the record that the accused has been proved guilty beyond reasonable doubt, it is not proper to dismiss the appeal114. Subsequent cases Decisions of this Court since Weiss have affirmed and elucidated those insights. For example, in AK v Western Australia115, Gummow and Hayne JJ observed that Weiss identified one circumstance in which the proviso cannot be 109 Weiss v The Queen (2005) 224 CLR 300 at 317 [44]. 110 Weiss v The Queen (2005) 224 CLR 300 at 317 [43]. 111 Weiss v The Queen (2005) 224 CLR 300 at 315-316 [40]. 112 Weiss v The Queen (2005) 224 CLR 300 at 317 [43]. 113 Weiss v The Queen (2005) 224 CLR 300 at 316 [41]. 114 Weiss v The Queen (2005) 224 CLR 300 at 317 [45]. 115 (2008) 232 CLR 438 at 455 [53]; [2008] HCA 8. Nettle engaged: where the appellate court is not persuaded that the evidence properly admitted at trial proved the accused guilty beyond reasonable doubt of the offence of which he or she was convicted. Their Honours emphasised that that negative proposition must not be treated as if it were a positive statement of what suffices to show that no substantial miscarriage of justice has occurred. Similarly, in Baiada Poultry Pty Ltd v The Queen116, the plurality made the point that what Weiss laid down was a negative proposition that the proviso cannot be engaged unless the appellate court is persuaded that the evidence properly admitted at trial established the guilt of the accused beyond reasonable doubt. It is not a sufficient condition of the application of the proviso. Hence, the fact that it is possible to articulate a chain of reasoning which would require the verdict reached at trial does not always permit, let alone require, the conclusion that no substantial miscarriage of justice occurred. In Pollock v The Queen117, the Court took up the point made in Weiss that references to the loss of a fair or real chance of acquittal are sometimes useful in emphasising the high standard of proof of criminal guilt and as pointers to the natural limitations that attach to proceeding wholly or substantially on the record. The Court resolved the appeal accordingly, in light of the way in which the parties had put their cases at trial, on the basis that "it [could not] be said that the misdirection did not deprive the appellant of a chance fairly open to him of being acquitted". In Castle v The Queen118, the Court rejected the application of the proviso in accordance with the recognition in Weiss that, in some cases, the natural limitations of proceeding on the record preclude a conclusion that guilt was proved beyond reasonable doubt. In Baini v The Queen119, the Court emphasised the significance that Weiss attributed to notions of inevitability of result and loss of a fair or real chance of acquittal in drawing attention to the high standard of proof of criminal guilt and as pointers to the natural limitations that attach to proceeding wholly or substantially on the record. As the majority said in Baini, to ask whether an error 116 (2012) 246 CLR 92 at 104 [29] per French CJ, Gummow, Hayne and Crennan JJ; [2012] HCA 14. 117 (2010) 242 CLR 233 at 252 [70]; [2010] HCA 35. 118 (2016) 259 CLR 449 at 473 [68] per Kiefel, Bell, Keane and Nettle JJ (Gageler J agreeing at 477 [82]); [2016] HCA 46. 119 (2012) 246 CLR 469 at 480-482 [30]-[35] per French CJ, Hayne, Crennan, Kiefel and Bell JJ, 493 [65]-[66] per Gageler J; [2012] HCA 59. Nettle "could have reasonably made a difference" or to ask whether an error or irregularity is "fundamental" is simply to ask in different language the statutory question which must be answered: whether there has been a "substantial miscarriage of justice"120. Another way to express the same question is to ask121: "[w]hether, having regard to the whole of the evidence at trial, the [appellate court] could conclude that the verdicts the jury returned ... were inevitable (because the jury could not have entertained a reasonable doubt)". By contrast, in Reeves v The Queen122, the Court reiterated the point made in Weiss that there are cases where, upon a consideration of the whole of the record, it is possible to conclude that the error made at trial would, or at least should, have had no significance in determining the verdict that was returned by the jury. Hence, where a legal error made at trial consists of a misdirection relating to an element of liability, the significance of the verdict is to be assessed in light of the capacity of the misdirection to have led the jury wrongly to reason to guilt. In Reeves, it was concluded123 that the misdirection could not, in that case, have distracted the jury from properly determining the one issue that was presented for consideration. More generally, since Weiss each of this Court's decisions regarding the proviso has confirmed and reinforced the essential significance of Weiss that there is no single universally applicable description of what constitutes a substantial miscarriage of justice. Counsel for Kalbasi submitted that some of the decisions of this Court since Weiss have significantly departed from the approach to the proviso dictated by Weiss – substituting pre-Weiss conceptions of whether it was open to a jury to acquit or whether conviction was inevitable – with the result that the present status of Weiss is unclear or at least not easy to reconcile with those subsequent decisions. 120 (2012) 246 CLR 469 at 482 [35]. 121 Baini v The Queen (2012) 246 CLR 469 at 484 [40]. 122 (2013) 88 ALJR 215 at 223-224 [50] per French CJ, Crennan, Bell and Keane JJ (Gageler J relevantly agreeing at 226 [63]); 304 ALR 251 at 261, 264; [2013] HCA 123 (2013) 88 ALJR 215 at 225 [58] per French CJ, Crennan, Bell and Keane JJ (Gageler J relevantly agreeing at 226 [63]); 304 ALR 251 at 263, 264. Nettle That submission should be rejected. Of course, Weiss must be applied in light of what this Court has said about it in subsequent decisions. But there has not been anything said in subsequent decisions that was not grounded in Weiss. By and large, where difficulties have arisen in the application of Weiss they have been the result of intermediate appellate courts mistreating the "negative proposition" that the proviso cannot be applied unless the appellate court is satisfied beyond reasonable doubt upon the whole of the record that an accused was proved guilty as if it were a positive, sufficient condition of the application of the proviso. The application of Weiss in light of subsequent cases As was held in Weiss124, it remains that the starting point for an appellate court's consideration of the application of the proviso is for the appellate court to undertake the task of deciding for itself upon the whole of the record whether the accused was proved guilty beyond reasonable doubt of the offence of which he or she was convicted. And as was stressed in Weiss, that requires the appellate court to undertake an objective consideration of the evidence in light of the issues presented at trial in order to determine whether the evidence adduced at trial did or did not establish guilt beyond reasonable doubt. It also remains that, in some cases, it will emerge as a result of that exercise that the error made at trial would, or at least should, have been of no significance in determining the verdict that was returned by the jury. In other cases, the natural limitations of proceeding wholly or substantially on the record will, or at least should, lead the appellate court to conclude that it cannot be satisfied that a substantial miscarriage of justice has not occurred. Hence, as was observed in Weiss, conceptions of inevitability of result and loss of a fair or real chance of acquittal are likely to assist in emphasising the high standard of proof of criminal guilt and pointing to the natural limitations that attach to an appellate court proceeding wholly or substantially on the record. Baini and Castle are recent examples. In Evans v The Queen125, Gummow and Hayne JJ characterised cases in the latter category as those in which the proviso cannot be engaged because the processes designed to allow the jury's fair assessment of the issues have not been followed at trial. In Evans, that was so because errors made by the trial judge undermined the accused's defence and, in an important respect, prevented the accused fully putting his defence126. Other examples have consisted of a trial 124 (2005) 224 CLR 300 at 316-317 [41], [43]-[44]. 125 (2007) 235 CLR 521 at 534 [42]; [2007] HCA 59. 126 (2007) 235 CLR 521 at 536 [51] per Gummow and Hayne JJ (Kirby J relevantly agreeing at 536 [54]). Nettle judge improperly foreclosing a jury's fair consideration of an available defence127; a trial judge failing to alert a jury as to an available defence128; a trial judge failing to sever an indictment129; and a trial judge failing sufficiently to direct a jury as to the need to be satisfied beyond reasonable doubt of an element of the offence charged130. Accordingly, as was emphasised in AK131 and Baiada132, where an error has been made at trial, the process of an appellate court deciding whether it is satisfied beyond reasonable doubt on the whole of the record that the accused was proved guilty of the offence charged must begin with the identification of the nature of the error133. Additionally, as was recognised in Weiss, there will also be cases where it emerges that, although the appellate court is satisfied that the accused was proved guilty beyond reasonable doubt, there has been such a departure from the requirements of a fair trial that it is not proper to dismiss the appeal. Weiss posited a denial of procedural fairness by way of example134. Cesan v The 127 See Pollock v The Queen (2010) 242 CLR 233 at 252 [70]; Lindsay v The Queen (2015) 255 CLR 272 at 276 [4] per French CJ, Kiefel, Bell and Keane JJ, 302 [87]- [88] per Nettle J; [2015] HCA 16. See and compare Filippou v The Queen (2015) 256 CLR 47 at 68 [60] per French CJ, Bell, Keane and Nettle JJ, 81-82 [99] per Gageler J; [2015] HCA 29. 128 See Quartermaine v The Queen (1980) 143 CLR 595 at 601-602 per Gibbs J (Stephen J and Murphy J agreeing at 602, 613); [1980] HCA 29; Gilbert v The Queen (2000) 201 CLR 414 at 422-423 [21] per Gleeson CJ and Gummow J, 439- 440 [93] per Callinan J (McHugh J and Hayne J dissenting at 424-425 [28], 430- 431 [49]); [2000] HCA 15; Gillard v The Queen (2003) 219 CLR 1 at 15 [29] per Gleeson CJ and Callinan J, 16 [34] per Gummow J, 33 [95]-[97] per Kirby J, 42 [134] per Hayne J; [2003] HCA 64. 129 See Baini v The Queen (2012) 246 CLR 469 at 483-484 [39]-[40] per French CJ, Hayne, Crennan, Kiefel and Bell JJ (Gageler J dissenting at 496-497 [78]). 130 See Quartermaine v The Queen (1980) 143 CLR 595 at 601-602 per Gibbs J (Stephen J and Murphy J agreeing at 602, 613); Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 107 [38]-[39] per French CJ, Gummow, Hayne and Crennan JJ, 115 [71] per Heydon J. 131 (2008) 232 CLR 438 at 452 [42] per Gummow and Hayne JJ. 132 (2012) 246 CLR 92 at 105 [30] per French CJ, Gummow, Hayne and Crennan JJ. 133 See and compare Carney v The Queen (2011) 217 A Crim R 201 at 223 [102]. 134 (2005) 224 CLR 300 at 317 [45]. Nettle Queen135 is a more recent example, where the departure from the requirements of a fair trial was a trial judge going to sleep on the job. In summary, the test is not whether the appellate court is satisfied that the evidence was sufficient to establish the accused's guilt beyond reasonable doubt, or whether there has been a fundamental departure from the requirements of a fair trial. It is whether there has been no substantial miscarriage of justice136. The appellate court's satisfaction of guilt beyond reasonable doubt is a necessary condition of the engagement of the proviso but, depending on the circumstances of a given case, it may not be open to an appellate court to be satisfied of guilt beyond reasonable doubt if the processes designed to allow the jury's fair assessment of the issues have not been followed137. The exercise is not, however, constrained by a rigid taxonomy or bright line distinctions. As was recognised in Weiss138, and emphasised in AK139 and Evans140, a failure to follow trial processes may preclude an appellate court being satisfied of guilt beyond reasonable doubt whether or not the failure is perceived as so extreme as to warrant description as a "serious breach of the presuppositions of the trial"141, as a "radical departure from the requirements of a fair trial"142, or as rendering the proceeding 135 (2008) 236 CLR 358 at 388-389 [97] per French CJ, 395 [127], [130] per Hayne, Crennan and Kiefel JJ (Gummow J and Heydon J agreeing at 391 [107], 396 [133]); [2008] HCA 52. 136 See and compare AK v Western Australia (2008) 232 CLR 438 at 452 [42], 457 [59] per Gummow and Hayne JJ. 137 See Weiss v The Queen (2005) 224 CLR 300 at 317 [44]-[45]. 138 (2005) 224 CLR 300 at 317-318 [45]-[46]. 139 (2008) 232 CLR 438 at 452 [42], 455-456 [54] per Gummow and Hayne JJ. 140 (2007) 235 CLR 521 at 533 [39] per Gummow and Hayne JJ. 141 See Weiss v The Queen (2005) 224 CLR 300 at 317 [46]. See and compare Darkan v The Queen (2006) 227 CLR 373 at 399 [84], 401-402 [94] per Gleeson CJ, Gummow, Heydon and Crennan JJ; [2006] HCA 34. 142 See Evans v The Queen (2007) 235 CLR 521 at 534 [42] per Gummow and Nettle "fundamentally flawed" and going to "the root of the proceedings"143. In each case it is a question of degree. As Gummow and Hayne JJ stated in Evans144: "The graver the departure from the requirements of a fair trial, the harder it is for an appellate court to conclude that guilt is established beyond reasonable doubt. It is harder because the relevant premise for the debate about the proviso's application is that the processes designed to allow a fair assessment of the issues have not been followed at trial." The application of the proviso in this case Kalbasi's criticism of the Hughes two-part approach to the application of the proviso is warranted. Although reflective of the reality that there are both outcome and process aspects involved in any determination of whether an error or other miscarriage has been productive of a substantial miscarriage of justice145, the two-part approach suggests that, unless the error or other miscarriage constitutes a "radical" or "fundamental" departure from the requirements of a fair trial, it is sufficient to engage the proviso that the appellate court is able to say on the basis of the record that the evidence was sufficient to prove the accused guilty beyond reasonable doubt. As has been seen, that is not the case. Further, as Kalbasi submitted, the problem with the way in which the plurality applied the Hughes two-part approach in this case is that it excluded consideration of the nature of the error from the determination of the outcome aspect of the analysis. Instead of starting with identification of the nature of the error and considering that as part of the outcome aspect of the exercise, the plurality moved straight to consideration of the evidence and concluded, on that basis alone, that they were satisfied beyond reasonable doubt of Kalbasi's guilt of the offence of which he was convicted. So to approach the task was in effect to make the same kind of error as was identified in AK146 and Baiada147. Admittedly, when the plurality turned to consider the process aspect of the exercise, their Honours referred to the nature of the error and undertook an 143 See Wilde v The Queen (1988) 164 CLR 365 at 373 per Brennan, Dawson and Toohey JJ; [1988] HCA 6. 144 (2007) 235 CLR 521 at 534 [42]. 145 See Nudd v The Queen (2006) 80 ALJR 614 at 617-618 [3], [5]-[6] per Gleeson CJ; 225 ALR 161 at 162-163; [2006] HCA 9. 146 (2008) 232 CLR 438 at 452 [42] per Gummow and Hayne JJ. 147 (2012) 246 CLR 92 at 104 [29] per French CJ, Gummow, Hayne and Crennan JJ. Nettle assessment of its significance. But because they confined the assessment to the process aspect of the exercise, they did not pause to consider whether the error was of such significance as to preclude them being satisfied of guilt beyond reasonable doubt. Instead, they reasoned that the error was not analogous to a failure to leave a defence to a jury – and hence that the trial was not fundamentally flawed in such a way as to preclude the application of the proviso – because148: "There was no arguable defence on the question of intention [to sell or supply]. Once [Kalbasi] was found to have possessed the 4.981 kg of 'methylamphetamine' it was inconceivable that the jury could not have been satisfied beyond reasonable doubt that [Kalbasi] possessed the substance with an intent to sell or supply it to another." Expressing the inquiry in terms of whether the trial was "flawed in such a way as to preclude the application of the proviso"149 did not assist. The question was whether the trial judge's error in failing properly to direct the jury as to an element of the offence charged meant that the processes designed to allow the jury's fair assessment of the issues had not been followed150. And as has been seen, depending upon circumstances, failure to follow process may preclude an appellate court being satisfied of guilt beyond reasonable doubt whether or not the failure is perceived as so extreme as to render the proceeding "fundamentally flawed". Comparison of the trial judge's error with a failure to leave a defence to the jury was also misplaced. The fundamental task of a trial judge is to ensure that the accused receives a fair trial according to law. It necessitates that the trial judge direct the jury according to law151. Here, the trial judge failed to do so. The error consisted of failing to bring home to the jury the need to be satisfied beyond reasonable doubt of the essential element of intent to sell or supply to 148 Kalbasi v WA [2016] WASCA 144 at [214]. 149 Kalbasi v WA [2016] WASCA 144 at [213]. 150 Cf Evans v The Queen (2007) 235 CLR 521 at 534 [43] per Gummow and 151 See generally Alford v Magee (1952) 85 CLR 437 at 466; [1952] HCA 3; Pemble v The Queen (1971) 124 CLR 107 at 117-118 per Barwick CJ; [1971] HCA 20; BRS v The Queen (1997) 191 CLR 275 at 306 per McHugh J; [1997] HCA 47; RPS v The Queen (2000) 199 CLR 620 at 637 [41] per Gaudron ACJ, Gummow, Kirby and Hayne JJ; [2000] HCA 3. Nettle another152, and, as such, it represented a serious departure from the processes designed to allow the jury's fair assessment of the issues153. Consequently, to assess the error in terms simply of whether it was analogous to failing to leave a defence to the jury, and then dismiss it as insignificant on the basis that there was no arguable defence, materially understated the extent to which the processes designed to allow the jury's fair assessment of the issues had not been followed. Granted, as the State submitted, a trial judge is not required to direct a jury on an element of an offence that is not in issue154, and, in one sense, the element of intent to sell or supply was not in issue in this case due to defence counsel's erroneous "concession" that the s 11 presumption applied. But here that is no answer. Counsel cannot concede a matter of law disadvantageous to the accused155, especially when the "concession" is the consequence of error156. Saying that a trial judge is required to direct a jury on only those elements of an offence that are in issue does not mean that defence counsel's mistaken view of 152 See and compare Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 105 [32] per French CJ, Gummow, Hayne and Crennan JJ. 153 See Quartermaine v The Queen (1980) 143 CLR 595 at 601-602 per Gibbs J (Stephen J and Murphy J agreeing at 602, 613); Handlen v The Queen (2011) 245 CLR 282 at 298 [47] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ (Heydon J dissenting at 306 [80]); [2011] HCA 51. 154 See Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 104 [28] per French CJ, Gummow, Hayne and Crennan JJ. See also Holland v The Queen (1993) 67 ALJR 946 at 951 per Mason CJ, Brennan, Deane and Toohey JJ; 117 ALR 193 at 200; [1993] HCA 43. 155 See Stokes & Difford (1990) 51 A Crim R 25 at 32 per Hunt J (Wood J and McInerney J agreeing at 45); BRS v The Queen (1997) 191 CLR 275 at 305 per McHugh J; KBT v The Queen (1997) 191 CLR 417 at 423-424 per Brennan CJ, Toohey, Gaudron and Gummow JJ, 431 per Kirby J; [1997] HCA 54; Fingleton v The Queen (2005) 227 CLR 166 at 198-199 [81]-[84] per McHugh J; [2005] HCA 156 See and compare Gilbert v The Queen (2000) 201 CLR 414 at 422-423 [21] per Gleeson CJ and Gummow J, 441-442 [102]-[103] per Callinan J; Handlen v The Queen (2011) 245 CLR 282 at 297-298 [45]-[47] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ. See also Re Knowles [1984] VR 751 at 770; TKWJ v The Queen (2002) 212 CLR 124 at 151-152 [84] per McHugh J; [2002] HCA 46. Nettle the law relieves the judge of his or her responsibility to direct the jury correctly157. Rather, as the plurality stated in KBT v The Queen158: "There are occasions when [the proviso] is properly applied where a point was not taken at the trial because, for example, it was not in issue or there was some forensic advantage to be gained by not raising it. In cases of that kind, [the proviso] is applied because, having regard to the defence case, the accused was not deprived of a chance of acquittal that was fairly open, that being the accepted test for the application of [the proviso]. [But], if the appellant was deprived of a chance of that kind, the fact that no complaint was made at trial is irrelevant." Of course, KBT preceded Weiss and, as was stated in Weiss, there is no single universally applicable description of what constitutes a substantial miscarriage of justice. But to repeat Weiss, references to inevitability of result and to the loss of a fair or real chance of acquittal are useful in emphasising the high standard of proof of criminal guilt and as pointers to the natural limitations that attach to proceeding wholly or substantially on the record. Accordingly, as the point was later amplified in AK159: "When there has been a trial by jury, and an appellate court concludes that the trial judge made a wrong decision on a question of law or that there was some other miscarriage of justice, deciding whether there has been no substantial miscarriage of justice necessarily invites attention to whether the jury's verdict might have been different if the identified error had not occurred." If a jury is not sufficiently directed as to the need to be satisfied beyond reasonable doubt of an essential element of the offence charged, the fact that the appellate court may consider that the evidence adduced at trial would have permitted the jury to be satisfied of guilt beyond reasonable doubt will not of itself suffice to engage the proviso. In such a case, the appellate court cannot be satisfied that the element was proved beyond reasonable doubt unless it appears 157 See and compare Andrews v The Queen (1968) 126 CLR 198 at 207-210; [1968] HCA 84; Quartermaine v The Queen (1980) 143 CLR 595 at 600-601 per Gibbs J (Stephen J and Murphy J agreeing at 602, 613). 158 (1997) 191 CLR 417 at 423-424 per Brennan CJ, Toohey, Gaudron and Gummow JJ. See and compare Simic v The Queen (1980) 144 CLR 319 at 330- 333; [1980] HCA 25. 159 (2008) 232 CLR 438 at 457 [59] per Gummow and Hayne JJ. Nettle that it would not have been open to the jury to conclude the contrary160. And, as was explained in Baiada, that is so because if it were open to the jury to conclude that the element was not proved beyond reasonable doubt, it was open to the jury to acquit161. The question here, therefore, is whether, if the jury had been properly directed as to the necessity to be satisfied beyond reasonable doubt that Kalbasi possessed the "drug" with intent to sell or supply it to another, it would have been open to the jury to acquit. As it appears, the Court of Appeal reasoned162 that, because the verdict signalled that the jury were satisfied beyond reasonable doubt that Kalbasi possessed 4.981 kilograms of "methylamphetamine", the jury could not rationally have resisted the conclusion that Kalbasi possessed that quantity of "drug" with intent to sell or supply it to another. So to reason, however, assumed too much about what the jury may have found to be the nature of Kalbasi's possession of the "drug". In point of fact, the jury were given broad-ranging directions as to various ways in which a person may possess a thing, and, although some of those were consistent with the possessor having the intention to sell or supply the thing to another, others were plainly inconsistent with the possessor having an intention of selling or supplying the thing to another. After explaining to the jury that the first aspect of the element of possession required the prosecution to prove that Kalbasi had knowledge that "the thing he was in possession of was a prohibited drug of some kind", the trial judge directed as follows: "The second aspect of possession is that [Kalbasi] must have had either actual physical custody of the drugs or what is referred to as control in the sense that [Kalbasi] can be said to have exercised control and dominion over the drugs to the exclusion of all other people, except those people with whom he might have been acting jointly. Members of the jury ... you do not need to own something to be in possession of it. You can possess something by physically holding it. You can also possess something without physically holding it or touching 160 Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 106 [35] per French CJ, Gummow, Hayne and Crennan JJ. 161 Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 106 [35] per French CJ, Gummow, Hayne and Crennan JJ. 162 Kalbasi v WA [2016] WASCA 144 at [30] per McLure P, [214] per Mazza and Nettle The concept of possession does not require that the object be in your hand or on your person, but it does require that you have either physical custody of it or that it be under your control either solely or jointly with others at the relevant time of the alleged possession. So a person can possess something without physically holding it or without having physical custody of it. An example of that could be when I come to work I park my car in the car bay, I take the keys with me upstairs, even though obviously I'm no longer with the vehicle. ... [Y]ou can also possess something temporarily and even for a limited purpose. As I've said, you can possess something without owning it. For example, if I borrow a book from the local library, obviously I do not own the book but while I have taken it out of the library, it is under my control and is therefore in my possession. The notion of possession is wide enough to include the case of where I might lend that book to my best friend because they want to read it too. So the fact that I have taken the book out of the library and have given it to my best friend on the basis that I need to return it to the library is sufficient for me to say that my best friend also has possession of that book while he or she has it in their physical custody or control. The issue is whether or not [Kalbasi] was in possession of the intended drugs by reason of his control or having done something to them while they were in [the Falstaff Crescent premises]. ... [T]he possession need not be exclusive possession in the hands of only one person. It follows that one or more people can be in joint possession of a prohibited drug and I've give[n] you an example of how my best friend is in possession of my library book in that regard. The third requirement for possession is that the State must prove that [Kalbasi] had the intention to exercise control or dominion over the intended drugs ... ... [A]wareness on its own of the existence of the intended drugs in [the Falstaff Crescent premises] is not sufficient ... Nettle ... [Y]ou must be satisfied that in the way I have described [Kalbasi] had some control over the drugs in [the Falstaff Crescent premises] at the relevant time even though [Lothian] may also have had control or possession of the same drugs at the same time. [Kalbasi] says that [Lothian] was in control of the intended drugs on his own at all times and that even though he was inside [Lothian's] place ... for about 37 minutes, he did not exercise any control over those drugs. In other words, he was not involved in doing anything with them." As was earlier noticed, Kalbasi makes no complaint about the adequacy of those directions as such. The prosecution did not invoke the extended definition of possession163. The case which Kalbasi had to meet at trial was limited to possession in its natural and ordinary sense, and, if there were a case to be made on the basis of the extended definition, it was never articulated. But, as was submitted on behalf of Kalbasi, because the jury were directed as they were, it is possible that they found that Kalbasi had possession of the "drug" on the basis of being satisfied of no more than that he had "done something" to the "drug" while he was in the Falstaff Crescent premises "for a limited purpose". More specifically, given that the evidence implied that the thing Kalbasi most likely did to the "drug" while he was in the Falstaff Crescent premises was assist Lothian in cutting it, and given the trial judge's direction that Kalbasi did not need to own the "drug" in order to possess it (coupled with the trial judge's borrowed library book example of what may amount to possession), it is possible that the jury convicted Kalbasi of attempted possession on the basis of being satisfied of no more than that Kalbasi assisted Lothian to cut a "drug" that belonged to Lothian or perhaps to a third person. It may be accepted that it would have been possible for Kalbasi to possess the "drug" by doing no more than lending a hand to Lothian in its cutting. But the question for the jury was not, or at least it should not have been, simply whether Kalbasi possessed the "drug". The question should have been whether Kalbasi possessed the "drug" with intent to sell or supply it to another. And the kind of possession of which the jury would need to have been satisfied in order to conclude beyond reasonable doubt that Kalbasi attempted to possess the drug with intent to sell or supply it to another would have been different from, and substantially more than, the kind of possession that may have sufficed to satisfy them of possession simpliciter. If the jury were satisfied of no more than that Kalbasi helped Lothian cut the "drug", the jury could not logically have been 163 See Misuse of Drugs Act, s 3(1) definition of "to possess". Nettle satisfied beyond reasonable doubt that Kalbasi possessed the "drug" with intent to sell or supply it to another. Furthermore, the problem is not just that the trial judge failed to direct the jury that they had to be satisfied beyond reasonable doubt that Kalbasi intended to sell or supply the drug to another, but also that the judge positively misdirected the jury that it was proved beyond reasonable doubt that Kalbasi did intend to sell or supply to another. As the judge put it: "I'm now going to deal with the fourth element upon the jury aid[e], that [Kalbasi] intended to sell or supply the prohibited drug or any part of it to another. Members of the jury, you can give that element a tick. It is not an issue for you in this trial. Very briefly, the law is that if you are found in possession of more than two grams of [methylamphetamine] then you are presumed to be in possession with intent to sell or supply it to another and the onus is on you to remove that presumption. There is no issue in this trial about the fourth element and as I've said it will not delay your deliberations. You must be satisfied beyond reasonable doubt about the fourth element. You do not need to concern yourself with where the drugs might have gone, how they might have got there, when they might have been moved or whatever. It's simply not relevant to your deliberations for the purpose of this trial. The fourth element is proved beyond reasonable doubt and you should give it a tick." So to misdirect the jury was adverse to Kalbasi's defence in at least two further ways. First, it positively implied that it was incumbent on Kalbasi to demonstrate that he did not have possession with intent to sell or supply – and, since he had called no evidence, thereby conveyed to the jury, in effect, that there was nothing which he could have said in opposition to the allegation that he had had possession of the "drug"164. Secondly, it misinformed the jury that it was proved beyond reasonable doubt that Kalbasi intended to sell or supply the drug to another, which of itself logically tended to imply that Kalbasi must have had possession of the "drug". The State contended that, even if that were so, there had been nothing to prevent defence counsel calling evidence or making submissions to the jury to the effect, for example, that if Kalbasi did have possession of any part of the "drug" it was not possession with intent to sell or supply it to another but 164 Compare RPS v The Queen (2000) 199 CLR 620 at 632-633 [26]-[28] per Gaudron ACJ, Gummow, Kirby and Hayne JJ; Dyers v The Queen (2002) 210 CLR 285 at 292 [9]-[10] per Gaudron and Hayne JJ; [2002] HCA 45. Nettle possession only for the limited purpose of sampling it with a view to purchasing part of it for personal consumption. It followed, in the State's submission, that it should not be accepted that the misdirection deprived Kalbasi of a defence that might otherwise have been open to him. The only issue was possession, and the quantity possessed was so great that the jury could not rationally have concluded anything other than that it was possession with intent to sell or supply to another. So much was made clear, it was submitted, by the obiter dictum observation in Krakouer165 that, if there had been only one offence of attempt to possess in issue in that case, the conviction might have been upheld despite the mistake as to the application of the s 11 presumption. Those contentions should also be rejected. Kalbasi was entitled to put the prosecution to proof not only as to whether he possessed the "drug" but also as to whether his possession of it was of a kind that implied beyond reasonable doubt that he possessed it with intent to sell or supply it to another. As has been explained, the fact that defence counsel, the prosecutor and the trial judge were mistaken as to the application of s 11 is beside the point. It was the trial judge's responsibility to ensure that Kalbasi received a fair trial according to law, and, accordingly, it was incumbent on the trial judge to direct the jury according to law. For the trial judge to direct the jury in effect that it was up to Kalbasi to rebut a presumption which "proved [intent to sell or supply the drug to another] beyond reasonable doubt" was contrary to law and constituted a serious departure from the requirements of a fair trial. It both reversed the burden of proof as to the essential element of intent to sell or supply to another and aided in undermining Kalbasi's argument that it was not proved beyond reasonable doubt that he had possession. That is not to say that, if the jury had been correctly directed, it would not have been open to them to be satisfied of Kalbasi's guilt. The large quantity of the drug in question and the other circumstances of the alleged offending represented a powerful circumstantial case of guilt. But, as was emphasised in AK166 and reiterated in Baiada167, demonstration that a chain of reasoning can be articulated that would require the verdict reached at trial does not always permit, let alone require, the conclusion that no substantial miscarriage of justice has occurred. It is not open to an appellate court to be satisfied that an accused was proved guilty beyond reasonable doubt if it was open to the jury to reach the contrary conclusion. And here, for the reasons already stated, if the jury had been properly directed, it would have been open to them to reach a contrary conclusion. 165 (1998) 194 CLR 202 at 215 [32] per Gaudron, Gummow, Kirby and Hayne JJ. 166 (2008) 232 CLR 438 at 457 [58] per Gummow and Hayne JJ. 167 (2012) 246 CLR 92 at 104 [29] per French CJ, Gummow, Hayne and Crennan JJ. Nettle Conclusion and orders In the result, the appeal should be allowed. The order of the Court of Appeal dismissing the appeal should be set aside. In its place, it should be ordered that the appeal to the Court of Appeal be allowed, the conviction the subject of the appeal be quashed, the sentence passed below be set aside, and a new trial be had. Edelman EDELMAN J. There will always be a "substantial miscarriage of justice"168 where a person is "not in reality tried for the offences for which he was indicted"169. That is what occurred in this case. As the respondent properly conceded, the trial judge removed from the jury's consideration an element of the offence. The remaining elements considered by the jury constituted a different offence. For the reasons below, I agree with the conclusion of Nettle J that the directions of the trial judge were contrary to law and constituted a serious departure from the requirements of a fair trial170. This is why the appeal should be allowed and orders made as proposed by Nettle J. The removal of an element of the offence from the jury As Nettle J explains, Mr Kalbasi was charged with an offence of attempted possession of a prohibited drug with intent to sell or supply contrary to ss 6(1)(a) and 33(1) of the Misuse of Drugs Act 1981 (WA). The trial judge directed the jury that there were four elements that had to be proved by the prosecution: the offender was the accused (identity); the substance with which the charge is concerned is a prohibited drug; the accused attempted to possess that prohibited drug; and the accused intended to sell or supply the prohibited drug, or any part of it, to another. The trial judge directed the jury, as a matter of law, that the fourth element – the intention to sell or supply – "is proved beyond reasonable doubt". The trial judge told the jury that "you should give it a tick". An element of the offence in s 6(1)(a) was therefore taken away from the jury. The reason why the trial judge chose to take that element away from the jury was that the trial judge erroneously said, and all counsel incorrectly assumed, that the onus lay upon Mr Kalbasi to "remove that presumption" of an intention to sell or supply. The trial judge therefore told the jury that since Mr Kalbasi had not raised the issue of a lack of intention to sell or supply it "must be satisfied [of that element] beyond reasonable doubt". 168 Criminal Appeals Act 2004 (WA), s 30(4). 169 Quartermaine v The Queen (1980) 143 CLR 595 at 601; [1980] HCA 29, quoting Andrews v The Queen (1968) 126 CLR 198 at 207; [1968] HCA 84. Edelman The effect of removing an element of the offence from the jury The trial judge's direction that an intention to sell or supply had been proved beyond reasonable doubt did not involve, in effect, telling the jury that it might be easily, or immediately, satisfied of an element of the offence because no evidence had been led about that element. That was the direction properly given in relation to the first element – identity – where the jury was told that there was no issue that the relevant person was Mr Kalbasi. Such directions are common, efficient, and proper. They reflect the manner in which the trial was run. The element of the offence remains for the jury to determine but the jury is encouraged not to waste any time discussing an element which is not in issue. The same is true of failures by a trial judge to direct on an element of an offence which is not in dispute. It will rarely, if ever, be a miscarriage of justice for a trial judge not to direct a jury about an element of an offence that is not in dispute in the trial171. Nor was the direction concerning the element of an intention to sell or supply a misdirection about the content or application of an element of an offence. An example of such a misdirection can be seen in Krakouer v The Queen172, where the misdirection reversed the onus of proof in relation to s 6(1)(a) of the Misuse of Drugs Act. The joint judgment of Gaudron, Gummow, Kirby and Hayne JJ, after giving the "most careful attention"173 to the proviso, concluded that the trial was not fundamentally flawed for this reason. Importantly, no matter how likely conviction might have been thought to be as a consequence of the reversal of the onus of proof, it remained a matter for the jury to decide. However, their Honours accepted that the line may be crossed where the misdirection had "depriv[ed] an accused person of the right to have some substantial part of his or her case decided by the jury"174. In contrast with the misdirection about onus of proof in Krakouer, the jury in this case was directed on two occasions in the summing up that a crucial element of the offence, to which the prosecution had been put to proof, had been proved beyond reasonable doubt. The jury was required to follow the judge's direction of law. Unlike Krakouer, the direction in this case was not merely reversing an onus and thereby substantially diminishing the accused's prospects 171 R v Getachew (2012) 248 CLR 22 at 36 [35]-[36]; [2012] HCA 10; Huynh v The Queen (2013) 87 ALJR 434 at 441 [31]-[32]; 295 ALR 624 at 631-632; [2013] HCA 6. 172 (1998) 194 CLR 202 at 212 [22]; [1998] HCA 43. 173 Krakouer v The Queen (1998) 194 CLR 202 at 212 [23]. 174 Krakouer v The Queen (1998) 194 CLR 202 at 212 [24]. Edelman of acquittal. In Krakouer the issue was still for the jury to decide. In contrast, the direction of law given to the jury in the present case denied Mr Kalbasi his right to have an element of the offence considered by the jury. As senior counsel for the respondent properly conceded in oral submissions in this Court, the direction of law to the jury about intention to sell or supply could be seen as taking that element of the offence away from the jury. The effect of the trial judge's direction was that the jury was directed to consider only whether Mr Kalbasi had committed the offence of attempting to possess a prohibited drug. That was not the offence provided by ss 6(1)(a) and 33(1), namely attempted possession of a prohibited drug with intent to sell or supply. It was, instead, the simple offence of attempted possession contrary to ss 6(2) and 33(1) of the Misuse of Drugs Act. Offences against s 6(1) and s 6(2) carry, unsurprisingly, markedly different maximum penalties175. A substantial miscarriage of justice and the "negative proposition" In 2005, in a unanimous judgment in Weiss v The Queen176, this Court considered the meaning of the proviso to the common form criminal appeal provision. Over more than a decade since Weiss, this Court has handed down many judgments concerning similar provisions. Not all of those decisions are easy to reconcile. One point is, however, clear. As this Court emphasised in Weiss177, there is "[n]o single universally applicable description of what constitutes 'no substantial miscarriage of justice'". A focus of Mr Kalbasi's submissions in this appeal was the "negative proposition" enunciated by this Court in Weiss that178: "[i]t cannot be said that no substantial miscarriage of justice has actually occurred unless the appellate court is persuaded that the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt of the offence on which the jury returned its verdict of guilty." This statement, expressed as a qualified double negative proposition, has sometimes been said to propose a test to be satisfied in every case before the proviso can be applied and a conclusion of substantial miscarriage of justice reached. But, as Mr Kalbasi submitted in this appeal, if the statement is expressed in those absolute terms then the statement cannot be correct. There are 175 Misuse of Drugs Act 1981 (WA), ss 34(1)(a), 34(1)(e). 176 (2005) 224 CLR 300; [2005] HCA 81. 177 (2005) 224 CLR 300 at 317 [44] (emphasis in original). 178 (2005) 224 CLR 300 at 317 [44]. Edelman two reasons why the negative proposition cannot be understood in absolute terms. First, as the Court recognised in Weiss179, the negative proposition is not always sufficient for the proviso to apply. It is well recognised that there are cases, although infrequent180, where an appellate court will conclude, without more, that an error in the trial process caused a substantial miscarriage of justice. Although there can be no fixed, predefined formula to describe these cases181, the category of such radical errors can be generally described as involving circumstances where there is a fundamental defect amounting to a serious breach of the presuppositions of the trial182. In Weiss183, the Court suggested that a denial of procedural fairness may be such an example. Although it has been common to speak of the proviso "not applying" in such circumstances, this does not mean that an appellate court ignores its statutory duty to consider whether a substantial miscarriage of justice has occurred. The point being made, instead, is that where such a fundamental defect occurs in the trial then that defect will be sufficient, in and of itself, for a conclusion that there has been a substantial miscarriage of justice. It will not matter whether the appellate court considers, from the record, that the accused is guilty beyond reasonable doubt. The same reasoning can be seen in relation to the usual proviso in appeals and applications for judicial review where an error of law "could not possibly have produced a different result"184. For instance, if there is a fundamental defect, such as where no required hearing is given on a relevant issue, it is not for the reviewing court "to attempt to provide the hearing that the [applicant or] appellant has not had, or to attempt to give any judgment such as might be thought to have been appropriate"185. Similarly, in 179 (2005) 224 CLR 300 at 317 [46]. 180 Green v The Queen (1997) 191 CLR 334 at 346-347; [1997] HCA 50. 181 AK v Western Australia (2008) 232 CLR 438 at 455-456 [54]; [2008] HCA 8; Cesan v The Queen (2008) 236 CLR 358 at 394 [126]; [2008] HCA 52. 182 Wilde v The Queen (1988) 164 CLR 365 at 373; [1988] HCA 6. 183 (2005) 224 CLR 300 at 317 [45]. 184 Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147; [1986] HCA 54; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 116-117 [80], 122 [104], 130-131 [131]-[132]; [2000] HCA 57. 185 DWN042 v Republic of Nauru (2017) 92 ALJR 146 at 151 [21]; [2017] HCA 56. Edelman Commonwealth Bank of Australia v Quade186, where the misconduct by a successful party involved the suppression of evidence but there was no real possibility of a different result, this Court said that it was "almost" inevitable that the appeal would be dismissed. The qualification, "almost", was a recognition that the interests of justice are not always served by utilitarian considerations of whether the error or wrongdoing could have made a difference187. Secondly, there are difficulties with treating the "negative proposition" as a necessary condition for the application of the proviso. As the Court recognised in Weiss188, circumstances might arise where an error, amounting to a basis to allow the appeal subject to the proviso, would "have had no significance in determining the verdict that was returned by the trial jury". In such circumstances an appellate court might conclude that there was no substantial miscarriage of justice even if the appellate court, without the advantage of seeing and hearing the witnesses, is unable to be persuaded from the entire record that the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt of the offence. The conclusion that there is no substantial miscarriage of justice in such cases cannot easily be reconciled with the negative proposition in Weiss being a necessary condition. An example that illustrates this difficulty in seeing the negative proposition as a necessary condition was given by Gleeson CJ during oral argument in Weiss189. That example was the situation in which inadmissible evidence is erroneously admitted to prove a fact but during the evidence of the accused that fact is admitted. In that example, there is an error of law or, in the words of the applicable Western Australian legislation in this case, "a wrong decision on a question of law by the judge"190. But if the proviso191 fell for consideration, there would be no substantial miscarriage of justice even if the appellate court might not be able to conclude from the record that the appellant is 186 (1991) 178 CLR 134 at 143; [1991] HCA 61. 187 See also Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 131 188 (2005) 224 CLR 300 at 317 [43]. See also Jones v The Queen (2009) 83 ALJR 671 at 678 [30]; 254 ALR 626 at 634; [2009] HCA 17; Reeves v The Queen (2013) 88 ALJR 215 at 223-224 [50], 225 [58], 226 [63]; 304 ALR 251 at 261, 263, 264; [2013] HCA 57. 189 (2005) 224 CLR 300 at 302. 190 Criminal Appeals Act 2004 (WA), s 30(3)(b). 191 Criminal Appeals Act 2004 (WA), s 30(4). Edelman guilty beyond reasonable doubt. In such a case, the negative proposition in Weiss cannot mean that the appellate court is itself satisfied of the guilt of the accused. It can only mean that the appellate court is satisfied that the verdict of guilt by the jury was unaffected by the error192. In other words, the appellate court considers that there is no substantial miscarriage of justice because conviction by the jury was inevitable193. There may be other circumstances where the negative proposition formulated in Weiss requires careful consideration. The negative proposition suggests that it must be "the appellate court" that is persuaded beyond reasonable doubt of the accused's guilt of the offence based on the evidence properly admitted at trial. As the respondent in this case accepted, it may be that a judge who would otherwise be in the majority of a divided appellate court could reason as follows: "I am persuaded beyond reasonable doubt of the guilt of the accused but I accept that others might reasonably not be so persuaded. I am thus satisfied that conviction was not inevitable." Ultimately, the ambiguities in the negative proposition should not detract from the basic question of whether there is a substantial miscarriage of justice. In the language of the cases after Weiss, other than in cases of fundamental error the focus for the existence of a substantial miscarriage of justice will commonly, although not always, be upon whether conviction was "inevitable"194 or whether the accused was deprived of a "chance fairly open to him of being acquitted"195. Conclusion: a substantial miscarriage of justice In Quartermaine v The Queen196, this Court held that there was a substantial miscarriage of justice although it might have been thought that conviction was inevitable. In Quartermaine, no element of the offence was 192 Weiss v The Queen (2005) 224 CLR 300 at 317 [43]. 193 See Lindsay v The Queen (2015) 255 CLR 272 at 301-302 [86]; [2015] HCA 16. 194 Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 106-107 [35]-[38]; [2012] HCA 14; Baini v The Queen (2012) 246 CLR 469 at 481-482 [33], 484 [40]; [2012] HCA 59; Lindsay v The Queen (2015) 255 CLR 272 at 276 [4], 301- 302 [86]; Castle v The Queen (2016) 259 CLR 449 at 472 [65], 477 [82]; [2016] HCA 46; R v Dickman (2017) 91 ALJR 686 at 688 [4]-[5], 697 [63]; 344 ALR 474 at 476, 488; [2017] HCA 24. 195 Pollock v The Queen (2010) 242 CLR 233 at 252 [70]; [2010] HCA 35. See also Filippou v The Queen (2015) 256 CLR 47 at 55 [15]; [2015] HCA 29. 196 (1980) 143 CLR 595. Edelman removed from the consideration of the jury but "the jury were not instructed as to the essential elements of the charge in fact laid"197. A fortiori, the withdrawal from the jury of an element of the offence in this case demonstrates a fundamental defect. This case also presents a stronger reason to find a substantial miscarriage of justice than Cesan v The Queen198, where the jury was seized of consideration of the offence but was distracted by the trial judge falling asleep at times during the trial. There will be many cases where an appellate judge's assessment of whether a substantial miscarriage of justice has occurred will require him or her to be persuaded from the entirety of the record that the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt of the offence on which the jury returned its verdict of guilty. However, this will not always be the case. In this case, the direction that removed the fourth element of the offence from the jury was a fundamental defect, amounting to a serious breach of the presuppositions of the trial199. This was a substantial miscarriage of justice. It is neither necessary, nor appropriate, in such a case for an appellate court to attempt to determine from the record whether the accused is guilty beyond reasonable doubt. To conclude otherwise would be to replace a trial by jury with a trial by appellate judges. 197 Quartermaine v The Queen (1980) 143 CLR 595 at 601, 602, 613. See also Andrews v The Queen (1968) 126 CLR 198. 198 (2008) 236 CLR 358. 199 Wilde v The Queen (1988) 164 CLR 365 at 373. |
HIGH COURT OF AUSTRALIA TRUSTEE FOR THE WESTART TRUST APPELLANT AND AMP CAPITAL PROPERTY NOMINEES LIMITED AS NOMINEE OF UNISUPER LIMITED IN ITS CAPACITY AS TRUSTEE OF THE COMPLYING SUPERANNUATION FUND KNOWN AS UNISUPER & ANOR RESPONDENTS Westfield Management Limited v AMP Capital Property Nominees Limited [2012] HCA 54 5 December 2012 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation B W Walker SC with J Potts and J Hewitt for the appellant (instructed by Speed and Stracey Lawyers) D F Jackson QC with M I Borsky and W A D Edwards for the respondents (instructed by Allens Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Westfield Management Limited v AMP Capital Property Nominees Limited Contract law – Interpretation – Unitholders' agreement prohibited sale of trust property without unitholders' prior written consent – Whether prohibition on sale without consent fettered unitholder's right to vote for extraordinary resolution to wind up managed investment scheme under s 601NB of the Corporations Act 2001 (Cth). Corporations law – Managed investment scheme – Trust registered as managed investment scheme under Ch 5C of the Corporations Act – Injunction obtained restraining majority unitholder from voting for extraordinary resolution to direct winding up of managed investment scheme under s 601NB of the Corporations Act without minority unitholder's consent – Minority unitholder alleged vote would contravene prohibition in unitholders' agreement – Whether unitholder's statutory right to vote under s 601NB can be fettered by contractual agreement. Words and phrases – "extraordinary resolution directing the responsible entity to wind up the scheme", "managed investment scheme", "wind up". Corporations Act 2001 (Cth), Ch 5C, s 601NB. FRENCH CJ, CRENNAN, KIEFEL AND BELL JJ. The KSC Trust ("the Trust") is a managed investment scheme which is registered under Ch 5C of the Corporations Act 2001 (Cth). AMP Capital Investors Limited ("AMPCI") (formerly AMP Henderson Global Investors Limited) is the responsible entity of the scheme and the trustee of the Trust, which was constituted under a trust deed dated 23 March 1994 ("the Trust Deed"). The appellant, Westfield Management Limited ("Westfield") (in its capacity as trustee for the Westart Trust), and the first respondent, AMP Capital Property Nominees Limited ("AMPCN") (as nominee of the second respondent, UniSuper Limited), are unitholders of the Trust and members of the registered scheme1. Westfield holds one-third of the units and AMPCN the remaining two-thirds. On 29 March 1994, the initial unitholders and the responsible entity entered into a Unitholders' and Joint Venture Agreement ("the Agreement"), which was varied on 30 October 20002. The focus of this appeal is upon the terms of the Agreement. On 10 August 2011, AMPCI as the responsible entity issued a notice of meeting of the unitholders of the Trust to consider a proposed extraordinary resolution directing the responsible entity to wind up the scheme. The notice followed a request made by AMPCN for the calling of that meeting. Section 601NB of the Corporations Act provides: "If members of a registered scheme want the scheme to be wound up, they may take action under Division 1 of Part 2G.4 for the calling of a members' meeting to consider and vote on an extraordinary resolution directing the responsible entity to wind up the scheme." A responsible entity is obliged to call and arrange to hold a meeting of the members of a scheme to consider and vote on a proposed extraordinary resolution at the request of, inter alia, members having at least five per cent of the votes that may be cast on the resolution3. For the resolution to pass, at least In these reasons the terms "unitholders" and "members" are used interchangeably. In 1994 and 2000, the unitholders were entities other than Westfield and AMPCN. When these companies later became unitholders, they both acceded to the terms of the Agreement by deeds dated 30 January 2008. 3 Corporations Act 2001 (Cth), s 252B(1). Crennan Bell 50 per cent of the members who are entitled to vote on the resolution must vote in favour of it4. AMPCN would be in a position to carry the resolution at such a meeting due to the size of its unitholding. The effect of the winding up of the scheme and subsequent termination of the Trust, pursuant to the Trust Deed (cl 17.5), is that its property would be sold. The sole property held by the Trust is the Karrinyup Shopping Centre in Perth, Western Australia ("the Property"5). Westfield sought and obtained an injunction from the Supreme Court of New South Wales, in terms preventing the respondents from voting for the extraordinary resolution notified, without the prior consent of Westfield to the sale of the Property6. Two key provisions of the Agreement that were identified by Westfield in connection with its application for an injunction are cll 10.1(a) and 16.2: [AMPCI], in its capacity as responsible entity of the KSC Trust, shall not sell the Property or any substantial part thereof, without the written consent of the Unitholders." "16.2 Each and all of the Unitholders mutually agree that they will so exercise their respective voting rights as unitholders under the Trust Deed so as to most fully and completely give effect to the intent and effect of the provisions of this deed." Westfield argued that the Agreement, properly construed, precludes a unilateral winding up of the Trust because this would result in a sale of the Property without the consent of all unitholders, contrary to cl 10.1(a). Clause 16.2, read in conjunction with cl 10.1(a), was said to operate to preclude a unitholder from voting for a winding up if it would cause a sale lacking that consent. 4 Corporations Act 2001, s 9 (par (b) of the definition of "extraordinary resolution"). 5 The Agreement, cl 30.1, also defines the "Property" to include the Karrinyup Shopping Centre. 6 Westfield Management Ltd v AMP Capital Nominees Ltd (2011) 255 FLR 1 at 27 Crennan Bell The primary judge, Ward J, held that an exercise by AMPCN of its voting rights in favour of the proposed extraordinary resolution would be a breach of cl 16.27. The Court of Appeal allowed an appeal from her Honour's decision. Meagher JA, with whom Giles and Campbell JJA concurred8, agreed with the primary judge that the terms of cl 10.1(a) do not prohibit a sale by the responsible entity of the Property in accordance with an obligation arising on a winding up of the scheme following a resolution of scheme members9. However, Meagher JA held that cl 16.2, read in conjunction with cl 10.1(a), did not prevent AMPCN from exercising its voting rights in favour of a resolution to wind up the Trust. Clause 16.2 requires only that effect be given to cl 10.1(a)10. The issues Westfield argues that the Court of Appeal fell into error in focusing upon cl 10.1(a) because to construe the "intent and effect of the provisions of [the Agreement]", to which unitholders are required to give effect under cl 16.2, requires consideration of the Agreement as a whole. The Agreement is said to reveal purposes which are opposed to the sale of the Property and to the exercise by members of the scheme of their voting rights under s 601NB where it has that result. The respondents, by notice of contention, contend that if that be the correct construction of the Agreement, then cl 16.2 is unenforceable as being inconsistent with Ch 5C of the Corporations Act, in particular, s 601NB. Chapter 5C – its history The Managed Investments Act 1998 (Cth) was enacted following a review by the Australian Law Reform Commission and the Companies and Securities Advisory Committee ("the Review") of the legal framework for prescribed 7 Westfield Management Ltd v AMP Capital Nominees Ltd (2011) 255 FLR 1 at 26 8 AMP Capital Property Nominees Ltd v Westfield Management Ltd [2011] NSWCA 9 AMP Capital Property Nominees Ltd v Westfield Management Ltd [2011] NSWCA 10 AMP Capital Property Nominees Ltd v Westfield Management Ltd [2011] NSWCA Crennan Bell interests and collective investment schemes11. The prescribed interest provisions were contained in the Companies Act 1981 (Cth)12 and were maintained in 1991 in the Corporations Law13. The background to the Review was the collapse or closure of many property trusts in the late 1980s, following a severe decline in commercial property values, which led to a loss of investor confidence14. Amongst the issues which the Review addressed were the protection of investors and the termination of investment schemes. The Review recommended that "[i]f a sufficient majority of investors wish to terminate a scheme, they should be able to do so" and that investors should be able to terminate a collective investment scheme for any reason15. It noted that under the law then current, only a trustee could convene a meeting at which investors could consider whether a scheme should be wound up and then only if one of three events had occurred16. It is not necessary to detail them. Further, a winding up required the approval of a court17. 11 Australian Law Reform Commission and Companies and Securities Advisory Committee, Collective Investments: Other People's Money, Report No 65, (1993). 12 Part IV, Div 6, applying in the Australian Capital Territory of its own force, and in the States and the Northern Territory by the Companies (New South Wales) Code, Companies (Victoria) Code, Companies (South Australia) Code, Companies (Queensland) Code, Companies (Western Australia) Code, Companies (Tasmania) Code and Companies (Northern Territory) Code. 13 Part 7.12, Div 5 of the Corporations Law, contained in s 82 of the Corporations Act 1989 (Cth). 14 Australian Law Reform Commission and Companies and Securities Advisory Committee, Collective Investments: Other People's Money, Report No 65, (1993), vol 1 at [1.5]. 15 Australian Law Reform Commission and Companies and Securities Advisory Committee, Collective Investments: Other People's Money, Report No 65, (1993), vol 1 at [8.5]. 16 Corporations Law, s 1074. 17 Australian Law Reform Commission and Companies and Securities Advisory Committee, Collective Investments: Other People's Money, Report No 65, (1993), vol 1 at [8.2]. Crennan Bell The Managed Investments Act repealed the pre-existing prescribed interest provisions and inserted Ch 5C into the Corporations Law. The abovementioned recommendation of the Review was taken up in s 601NB, which is now s 601NB of the Corporations Act. The section, it will be observed, does not require that a ground for winding up be shown by a scheme member who initiates the call for a meeting. It provides simply that a scheme may be wound up following the resolution of scheme members. Section 601GA(1)(d), in Ch 5C of the Corporations Act, provides that the constitution of a registered scheme must make adequate provision for winding up the scheme. By s 601NA, the constitution of a registered scheme may provide that it is to be wound up at a specified time or in specified circumstances or on the happening of a specified event, with the qualification that a provision which purports to provide that a scheme is to be wound up if a particular company ceases to be a responsible entity is of no effect. Two further provisions of Pt 5C.9 should be mentioned. Section 601NC provides that a responsible entity may, on notice to the members of the scheme and the Australian Securities and Investments Commission, take steps to wind up the scheme if it considers that the purpose of the scheme has been accomplished or cannot be accomplished. Section 601ND(1) provides that a court may direct a responsible entity to wind up a scheme if: (a) the court thinks it is just and equitable to make the order; or (b) execution or other process is issued on a judgment in favour of a scheme creditor and it is returned unsatisfied within a certain time. Circumstances which are comprehended by sub-s (1)(a) may include those where a scheme is being conducted in a manner oppressive to the interests of some unitholders, or where the scheme is not able to operate; whereas sub-s (1)(b) would apply in a case of potential insolvency. Section 601NB, it may further be observed, does not require the involvement of a court. The respondents contend that the right conferred by s 601NB is twofold: to have a meeting called to consider a resolution to wind up the scheme and then to vote on that resolution at the meeting. It is said that it is a statutory right conferred on all members of a registered scheme and that it ought to be regarded as one of a number of members' rights which the Corporations Act entrenches. The respondents point to the purpose of Ch 5C as protective of investors and to the further policy of s 601NB of facilitating the winding up of registered schemes by providing a simple and economical path to termination. The Agreement The recitals to the Agreement acknowledge that the Trust is a managed investment scheme under the Corporations Law. The purpose of the Agreement Crennan Bell is said to be to record the arrangements between the unitholders in relation to the Trust (cl 1.4). The Agreement constitutes the whole agreement between the parties (cl 1.5). In the event of any inconsistency between the Trust Deed and the Agreement, the latter is to prevail (cl 30.4). The Agreement makes provision for the transfer of units and restricts the sale, assignment, transfer, conveyance or other disposition of units in the Trust except as authorised by the three clauses which follow (cl 3). In particular, there is a limited class of approved transferees specified to whom a unitholder may transfer units as of right (cl 5.1). The Agreement provides rights of pre-emption to the other unitholders (cl 6.1). It requires that for any transfer to an outsider to be effective, the transferee must have agreed to assume all the obligations of the transferor under the Agreement and to have covenanted in writing with the other unitholders to that effect (cl 6.6(a)). Westfield relies upon such provisions, among others, as disclosing an objective intention, on the part of the unitholders, to regulate a closely held unit trust business structure, a proposition with which the Court of Appeal agreed18. A unitholders' committee is established under the Agreement (cl 7.1). It is required to conduct meetings in accordance with Sched 2 to the Agreement (cl 7.3), which provides, inter alia, that committee members are entitled to vote on any resolution considered by the committee. The percentage of the total vote required for the passing of a resolution depends upon the subject matter of the resolution. A valid resolution of the unitholders' committee is said to be binding on all unitholders (Sched 2, par 13). The responsible entity is obliged to act in accordance with resolutions of the committee (cl 7.5). the The unitholders' committee has responsibility of making determinations on substantive issues concerning the management of the Trust, including proposals and recommendations concerning the acquisition, disposal, management or development of the Property (cl 7.4). The "Property" is defined as the Karrinyup Shopping Centre, including any land subsequently acquired by the Trust and intended to be held and used as part of the Property from time to time. This was seen by the primary judge as supporting Westfield's submission 18 AMP Capital Property Nominees Ltd v Westfield Management Ltd [2011] NSWCA Crennan Bell that the purpose of the scheme was the acquisition and operation of the shopping centre19. Clause 9 is lengthy and deals with the redevelopment and refurbishment of the Property. It recognises that it may be difficult to determine in advance when it may be in the interests of unitholders to redevelop or refurbish the Property (cl 9.1). One of the circumstances in which the unitholders and the responsible entity are to consider the desirability of redevelopment or refurbishment is when the responsible entity forms the reasonable opinion that the Property has ceased to be economically advantageous. Westfield points to provisions such as this as suggesting an intention that the Trust continue for a lengthy period. Clause 10 is entitled "Sale of Property and acquisition of additional investments". Clause 10.1(a) is set out above20. It is directed to the responsible entity and prohibits it from selling the Property without the written consent of the unitholders. Clause 10.1(b) provides that on completion of the sale of the Property, or any remaining part of it, the responsible entity is to determine the Trust unless otherwise directed by the unitholders. Clause 10.2 is also directed to the responsible entity. It provides that the responsible entity shall not acquire any investments other than the Property, or for the short term investment of funds, without the written consent of the unitholders. Westfield referred in its submissions to aspects of cl 12, which deals with the consequences of the failure of a unitholder to subscribe for units when obliged by the terms of the Agreement to do so (cl 12.1(a)). In particular, cl 12.5 provides that the unitholders not in default may determine whether the Property should be sold (cl 12.5(a)(i)). If they do decide that the Property is to be sold, the responsible entity is then to determine the Trust (cl 12.5(b)(i)). Westfield identifies the power given to the innocent unitholders by cl 12.5 as something of an exception to the prohibition upon sale absent the written consent of all unitholders in cl 10.1(a) and in that sense, Westfield supports cl 10.1(a) as a general prohibition. Clause 13 of the Agreement provides for events of termination. It provides that unless the unitholders otherwise unanimously agree, the Agreement terminates on the earlier of: (a) the later of the date on which the Trust is 19 Westfield Management Ltd v AMP Capital Nominees Ltd (2011) 255 FLR 1 at 5 Crennan Bell terminated or the assets of the Trust are realised; (b) the date that a new deed is entered into in lieu of the Agreement; and (c) the date that any unitholder's group becomes the sole holder of all units issued in the Trust. For their part, the respondents refer to cl 18 of the Agreement, which, they say, makes it difficult to conclude that it was intended by the parties to the Agreement to exclude or control rights given by s 601NB. Clause 18 provides: "The rights, powers and remedies provided in this deed are cumulative with and not exclusive of the rights, powers or remedies provided by law independently of this deed." The construction of the Agreement Clause 16.2 in its terms obliges unitholders to exercise their voting rights in a way which would give effect "to the intent and effect of the provisions of [the Agreement]". The only provision of the Agreement identified by Westfield as directly referable to the voting rights sought to be exercised by AMPCN is cl 10.1(a), which Westfield construes as a general prohibition on sale, absent the consent of all unitholders. Westfield acknowledges that it must of necessity rely upon cl 10.1(a) to give context to the obligation in cl 16.2 and that it must, in effect, synthesise those provisions. But its argument on the appeal travels beyond cl 10.1(a). It looks to the broader scope of the Agreement in an attempt to find a purpose to which it may be said these provisions, and cl 10.1(a) in particular, are directed. However, Westfield eschews an approach which would imply a term in either provision obliging unitholders to vote against a sale, or a winding up which would result in a sale. Rather, its search is said to be, by a process of construction, for "the intent and effect" of the Agreement, which may further elucidate cl 10.1(a). Westfield submits that more is required than a consideration of the terms of cl 10.1(a) itself and that the Court of Appeal was wrong to focus attention upon that provision. The duty of a court in construing a written contract is to endeavour to discover the intention of the parties from its words and this requires consideration of the whole of the agreement between them21. 21 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109 per Gibbs J; [1973] HCA 36. Crennan Bell Clause 16.2, Westfield submits, is an express agreement by the unitholders that, in the exercise of their voting rights, they will act conformably with the commercial purpose of the Agreement. The commercial purpose of the Agreement, it submits, can readily be ascertained from its provisions. Westfield repeats its submission, made to the Court of Appeal, that the joint venture may be seen to provide for a closely held unit trust designed for the ownership and operation of a major retail centre. So much may be accepted. The Agreement contains provisions, referred to above, restricting the transfer of units, providing for rights of pre-emption and obliging any new unitholder to accept obligations arising under the terms of the Agreement. The Trust's only asset is the Property and the Agreement makes detailed provision for its management, control and operation, through the unitholders' committee. But, as the Court of Appeal observed, acceptance of these facts does not answer the question as to the construction of cll 10.1(a) and 16.2 and their operation in the situation of a proposed resolution under s 601NB22. The intention which Westfield strives to discover amongst the provisions of the Agreement is one that the Property be held, and the Trust endure, for a long time23. To this end it relies upon the abovementioned provisions by which a unitholder can realise an investment in the Trust, should it wish to do so. It says that it may be discerned that the intent and effect of the Agreement is that each unitholder will realise its investment in a way not destructive of the venture and not by the sale of the Property unless agreed to by all the unitholders. Westfield also points to the extensive provisions concerning the management and holding of the Property through the unitholders' committee and, in particular, to the provisions relating to the redevelopment and refurbishment of the Property at some time in the future, as indicating that it was intended that the Property be held for a long time. Provisions such as those in the Agreement may be taken to reflect an understanding that the Property might be held, and the Trust endure, for a lengthy 22 AMP Capital Property Nominees Ltd v Westfield Management Ltd [2011] NSWCA 23 A trust cannot continue indefinitely: Corporations Act 2001, s 1346. The Review's recommendation (Australian Law Reform Commission and Companies and Securities Advisory Committee, Collective Investments: Other People's Money, Report No 65, (1993), vol 1 at [8.3]) that the rule against perpetuities not apply to schemes was not taken up. Crennan Bell period. That may have been thought likely at the time the Agreement was drawn. In any event, it was prudent that provision be made for refurbishment and redevelopment in that eventuality. But it is a long step from that understanding to a conclusion that the unitholders intended to bind themselves to retain the Property and preserve the Trust for an indefinite period. Particularly is this so when the Agreement makes no mention of any restriction on the unitholders' rights to bring about a termination of the Trust. Westfield points out that the Agreement is silent as to what is to occur in the event of a sale. Had a sale of the Property been contemplated as a possibility, Westfield says, one would have expected to see provisions as to its timing, the terms of the appointment of a selling agent and the like. However, any such provisions would be mere machinery provisions. Their absence says nothing about the subject of sale, let alone anything about a restriction upon a unitholder's right to vote for the termination of the scheme, which would bring about a sale. Westfield also points to provisions of the Agreement which permit innocent unitholders to sell the Property when a unitholder is in default. As previously mentioned, Westfield sought to characterise this power to sell as an exception to cl 10.1(a), but that rather assumes as correct the construction of cl 10.1(a) for which Westfield contends, namely that it operates as a general prohibition on sale. Westfield submits that it may be seen from these provisions that the unitholders had given consideration to the circumstances in which any premature sale would be undertaken. But these provisions do not permit an inference that the property could only be sold as a result of the action of innocent unitholders in the event of default. They do not speak to the question of a sale following the termination of the scheme. More to the point, the Agreement does not contain any provision seeking to exclude or limit the statutory rights given by s 601NB or to in any way limit what unitholders may do in relation to the winding up of the scheme. Moreover, Westfield does not suggest that the Agreement operates to prevent unitholders from seeking a winding up of the Trust on other grounds, such as the just and equitable ground. Its argument is limited to the exercise by a unitholder of the statutory right to call a meeting for that purpose, which does not require that a ground for winding up be shown. Whether it is possible to bargain away these statutory rights, as Westfield contends, may presently be put to one side. Interpretation of a written agreement Crennan Bell may involve consideration of the background knowledge available to the parties at the time of the contract, which may include matters of law24 including relevant legislation25. Here it may be taken that the Agreement was drafted with the knowledge that the scheme was governed by the provisions of Ch 5C. Its recitals acknowledge that it is a scheme for the purposes of the Corporations Law. No provision of the Agreement can be seen to exclude the possibility of the scheme being brought to an end by the exercise of voting rights under s 601NB. To the contrary, cl 18 would appear to intend to preserve rights such as those given by s 601NB. Westfield accepts that cl 18 confirms as available to a unitholder the right given by s 601NB. However, it argues that cl 16.2 operates upon that right. In its submission, cl 16.2 does not deny the right to vote; rather, it binds a unitholder to vote in a particular way, which is to say against a winding up. Westfield points out that there is nothing in Ch 5C of the Corporations Act which says a scheme member cannot take its contractual obligations into account when casting a vote. If cl 16.2 operated in the way contended for by Westfield, a unitholder would be denied a right contemplated by s 601NB: to vote for the winding up of a scheme. It could hardly have been intended that a scheme member be denied the right to vote upon the resolution which it is able to put to a meeting of scheme members. It may be strictly correct that cl 16.2 does not purport to deny the right altogether, but it would restrict its operation so that it is effectively lost. The submission of Westfield, that Ch 5C does not contain an express provision prohibiting a scheme member from agreeing not to exercise a right provided by s 601NB, calls into question the purpose and policy of the Corporations Act in the provision of that right. It also raises the question whether the courts would enforce such a contractual provision in light of that purpose and policy. However, this appeal falls to be determined upon the construction of the Agreement. 24 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at 188 [11]; [2001] HCA 70. 25 Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at 255 [41], 261 [64]; [2005] HCA 10; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at 132 [32]; [2007] HCA 61. Crennan Bell Westfield's argument does not depend upon cl 16.2 alone. It depends, critically, upon the obligation in cl 16.2 attaching to the prohibition in cl 10.1(a) upon sale of the Property without the unitholders' consent. The insurmountable hurdle for Westfield is that cl 10.1(a) has no operation in the circumstances of this case. Westfield's argument proceeds upon the basis that cl 10.1(a) operates as a general prohibition upon the sale of the Property, absent the consent of all unitholders. In fact it does not. It is directed to the exercise by the responsible entity of its powers and it has regard to a sale during the currency of the Trust, as will be further explained. There is nothing to be gleaned from other provisions of the Agreement as suggesting that cl 10.1(a) has some other purpose. It has already been observed that cl 10 is not directed to the unitholders and any exercise by them of their rights26. It is not expressed in terms of a general prohibition, contrary to what Westfield argues. It is directed to the responsible entity and operates as a restraint upon the exercise of its powers. Clause 18.1 of the Trust Deed gives the responsible entity all the powers of a beneficial owner, which would include a power of sale. It is to such powers, it may be inferred, that cl 10 is directed. It is here that cl 30.4 of the Agreement27 may operate to give primacy to cl 10.1(a). The prohibition expressed in cl 10.1(a) is not, in any event, directed to a sale following a termination of a registered scheme. It is directed, as the Court of Appeal held28, to a sale of the Property during the continuance of the Trust and before it is wound up. That is evident from cl 10.1(b), which speaks of a termination of the Trust occurring after the sale of the Property. Consistently, the prohibition upon acquisition of other assets in cl 10.2 could only operate whilst the Trust continues. The prohibition in cl 10.1(a) and that in cl 10.2 are otiose in a situation where the Trust has been terminated. Clause 10.1(a), properly construed, does not apply to the situation which would arise where a resolution is passed by scheme members, at a meeting called under s 601NB, that the scheme be wound up. In the circumstances of this case, 27 Referred to at [16] of these reasons. 28 AMP Capital Property Nominees Ltd v Westfield Management Ltd [2011] NSWCA Crennan Bell such a resolution would mean the Property must be sold. Clause 10.1(a) does not purport to prohibit such a sale. Section 601NB and unenforceability On the view we have taken as to the construction of the Agreement, it is not necessary to answer the question whether the rights given by s 601NB may be bargained away, as Westfield contends. It was not necessary for the Court of Appeal to deal with that question, but it did so for completeness and it did so shortly29. The Court of Appeal expressed agreement with the primary judge that cl 16.2 is not unenforceable in light of s 601NB30. It is therefore necessary to say something about that matter. The fact that Ch 5C does not contain any express prohibition against a unitholder contracting not to exercise the right given by s 601NB31 does not conclude the question as to the enforceability of such an agreement between scheme members and a responsible entity. Windeyer J observed in Brooks v Burns Philp Trustee Co Ltd32 that a person upon whom a statute confers a right may waive or renounce his or her rights unless it would be contrary to the statute to do so. It will be contrary to the statute where the statute contains an express prohibition against "contracting out" of rights. In addition, the provisions of a statute, read as a whole, might be inconsistent with a power, on the part of a person, to forego statutory rights. It is the policy of the law that contractual arrangements will not be enforced where they operate to defeat or circumvent a statutory purpose or policy according to which statutory rights are conferred in the public interest, rather than for the benefit of an individual alone. The courts will treat such arrangements as ineffective or void, even in the absence of a 29 AMP Capital Property Nominees Ltd v Westfield Management Ltd [2011] NSWCA 30 AMP Capital Property Nominees Ltd v Westfield Management Ltd [2011] NSWCA 31 AMP Capital Property Nominees Ltd v Westfield Management Ltd [2011] NSWCA 32 (1969) 121 CLR 432 at 456; [1969] HCA 4. Crennan Bell breach of a norm of conduct or other requirement expressed or necessarily implicit in the statutory text33. The right given by s 601NB is clearly of benefit to each scheme member. It provides a direct, simple and inexpensive method of requiring a vote upon a member's resolution to wind up the scheme. There may be a number of reasons for which a member of a scheme may wish to terminate it and force a realisation of the assets in the scheme. But as has previously been mentioned, s 601NB does not require a ground to be identified34. The Court of Appeal35 and the primary judge36 considered it to be of some importance that cl 16.2, construed in the way for which Westfield contended, did not prevent access to another method of winding up, by the just and equitable ground provided by s 601ND(1)(a). However, such a procedure involves litigation, and is likely to be costly and perhaps protracted. It was clearly intended that an alternative to it be provided by s 601NB. The primary judge37 drew the distinction, which Westfield continues to press, between a scheme member's right to initiate a meeting and its right to vote at that meeting. The Court of Appeal agreed with this approach38. It is said that there is no restraint effected upon the former right and no denial of a right to vote, but only an obligation imposed to vote in a particular way. Such an 33 Caltex Oil (Aust) Pty Ltd v Best (1990) 170 CLR 516 at 522; [1990] HCA 53; Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 227; [1997] HCA 17; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at 179 [71]; [2008] HCA 3; Miller v Miller (2011) 242 CLR 446 at 457-458 [25]; [2011] HCA 9; Equuscorp Pty Ltd v Haxton (2012) 86 ALJR 296 at 305-306 [23]; 286 ALR 12 at 21-22; [2012] HCA 7. 35 AMP Capital Property Nominees Ltd v Westfield Management Ltd [2011] NSWCA 36 Westfield Management Ltd v AMP Capital Nominees Ltd (2011) 255 FLR 1 at 24 37 Westfield Management Ltd v AMP Capital Nominees Ltd (2011) 255 FLR 1 at 25 38 AMP Capital Property Nominees Ltd v Westfield Management Ltd [2011] NSWCA Crennan Bell approach treats the rights conferred by s 601NB as divisible but the section should not be viewed in that way. The right to have a meeting called and a resolution put to wind up the scheme is clearly intended to facilitate voting by the scheme member to initiate the winding up process on that resolution. In reality that right would be lost were the distinction contended for maintained. The respondents referred to the stated policy aim of the Review, to ensure adequate and effective protection for investors39, as relevant to discerning the purposes of Ch 5C of the Corporations Act. The Attorney-General's reference had noted the need to ensure that there was a proper legal framework for prescribed interests which provided an appropriate level of regulation to adequately and effectively protect the interests of investors40. As managed investment schemes comprise many different kinds of investors, ranging from small unsophisticated investors to large commercial entities, it may be taken that the recommendations in the Review were developed in order to cater for and protect the interests of them all. Some statutes may, by their nature and purpose, more readily suggest inconsistency with an individual's liberty to forego statutory rights. Some statutes which have a regulatory and protective purpose may fall into this category. There are a number of aspects to Ch 5C's regulation of managed investment schemes. It prescribes requirements for the content of the constitution of schemes; it imposes obligations upon responsible entities; and, importantly for present purposes, it grants rights to members which may be exercised in protection of their own interests as necessary. One such right given to scheme members is that under s 601NB, which allows a member to put the matter of termination to a vote of members at any time during the life of the scheme. It is true that the right is in the nature of a benefit to individual scheme members, but the evident intention of the legislature is that it is in the public interest that scheme members be provided this right. Section 601NB offers a 39 Australian Law Reform Commission and Companies and Securities Advisory Committee, Collective Investments: Other People's Money, Report No 65, (1993), vol 1 at [2.4]. 40 Australian Law Reform Commission and Companies and Securities Advisory Committee, Collective Investments: Other People's Money, Report No 65, (1993), vol 1 at xv. Crennan Bell means of terminating a scheme as part of the regulatory framework of Ch 5C and reflects a legislative policy that the means be available. The unitholders here adopted a managed investment scheme as the vehicle through which to pursue their commercial interests. Consequently, the scheme is subject to the legal framework provided by Ch 5C of the Corporations Act with all that it entails. Westfield's position is that, while the overall structure of a Ch 5C managed investment scheme suits the unitholders' commercial purposes, particular regulatory provisions do not. However, the selection of a managed investment scheme brings with it the very protections that, on Westfield's construction of the Agreement, the unitholders bargained away. An agreement between the members of a scheme and the responsible entity which purports to deprive members of the rights given by Ch 5C would be prejudicial to their interests and contrary to the protective purposes which inform the regulatory scheme of Ch 5C. In re Peveril Gold Mines Ltd41 may be considered pertinent to this case. There, the articles of association of a company purported to limit members' statutory rights. At that time, s 82 of the Companies Act 1862 (UK) gave members the right to present a petition for the winding up of the company. Byrne J, at first instance, observed that the articles could be regarded as a contract between the company and a prospective shareholder and that the company had no right to remove a safeguard provided by the Act as part of that contract42. In the Court of Appeal, Lindley MR said that registered limited companies are incorporated on certain conditions, including s 8243. Any article which, contrary to that section, limited the right of a contributory to petition for a winding up would be at variance with the statutory condition and invalid. Although the judgments do not refer, in terms, to the policy of the Act, it is evident that it was that to which the Court considered it was giving effect. Conclusion and orders The Agreement does not operate so as to prevent AMPCN voting in favour of a winding up of the scheme constituted by the Trust at a meeting called to consider a resolution to that effect. 42 In re Peveril Gold Mines Ltd [1898] 1 Ch 122 at 125-126. 43 In re Peveril Gold Mines Ltd [1898] 1 Ch 122 at 131. The appeal should be dismissed with costs. Crennan Bell HEYDON J. The Karrinyup Regional Shopping Centre is the principal asset of the KSC Trust. The KSC Trust is a unit trust. It is a managed investment scheme registered under Ch 5C of the Corporations Act 2001 (Cth) ("the Act"). AMP Capital Investors Ltd ("AMPCI") is the trustee of the KSC Trust, and the responsible entity of the scheme. One-third of the units in the KSC Trust are held by the appellant, Westfield Management Limited. Two-thirds are held by the first respondent, AMP Capital Property Nominees Limited, in its capacity as nominee of the second respondent, UniSuper Limited. The first respondent wants the unitholders to pass a resolution under s 601NB of the Act directing AMPCI, as the responsible entity, to wind up the scheme44. If the scheme were wound up, the Karrinyup Regional Shopping Centre would be sold and the proceeds would be distributed among the unitholders. The appellant opposes the resolution, and seeks to restrain the respondents from voting for it without the prior written consent of the appellant. The outcome of this appeal turns entirely on the terms of the Unitholders' and Joint Venture Agreement ("the Agreement"). AMPCI, the appellant and the respondents are bound by the Agreement. Clause 10.1 of the Agreement provides: [AMPCI], in its capacity as responsible entity of the KSC Trust, shall not sell the [Karrinyup Regional Shopping Centre] or any substantial part thereof, without the written consent of the Unitholders. (b) On completion of the sale of the [Karrinyup Regional Shopping Centre], or if part of the [Karrinyup Regional Shopping Centre] has already been sold, the completion of the sale of the remainder of the [Karrinyup Regional Shopping Centre], [AMPCI], in its capacity as responsible entity of the KSC Trust, shall thereupon determine the Trust unless otherwise directed by the Unitholders." Clause 10.2 of the Agreement provides: "[AMPCI], in its capacity as responsible entity of the KSC Trust, shall not without the written consent of the Unitholders acquire any investments other than the [Karrinyup Regional Shopping Centre] or for the short-term investment of liquid funds." Clause 16.2 of the Agreement provides: "Each and all of the Unitholders mutually agree that they will so exercise their respective voting rights as unitholders under the Trust Deed so as to 44 For s 601NB, see above at [3]. most fully and completely give effect to the intent and effect of the provisions of this deed." The central question is whether a unitholder who exercised voting rights under s 601NB of the Act would contravene cl 16.2 of the Agreement if that exercise would result in the sale of the Karrinyup Regional Shopping Centre without the written consent of all the unitholders. That result will flow because if the resolution passes, the Trust will be terminated. Pursuant to cl 17.5(b) of the Deed which governs the KSC Trust, AMPCI will be obliged to sell the Trust assets, namely the Karrinyup Regional Shopping Centre. The appellant argues that it would be a breach of cl 16.2 for the respondents to exercise their voting rights under s 601NB in the present circumstances. However, the argument fails. It fails because, as the respondents put it succinctly, it "gives [cl] 16.2 an operation which … can be derived, if it is to be derived at all, from no provision of the [A]greement other than [cl] 10.1(a), but it suffers from the difficulty that the present circumstances are ones where [cl] 10.1(a) has no operation." It requires AMPCI So far as the appellant's argument turns on cl 10.1(a), cl 16.2 requires only that the unitholders give effect to the "intent and effect" of cl 10.1(a) on its true construction. On that construction, cl 10.1(a) does not prohibit a sale of the Karrinyup Regional Shopping Centre once the KSC Trust has been terminated under the general law pursuant to s 601NB of the Act. Clause 10.1(a) applies to an attempted sale before that time. Clearly, cl 10.2 applies only to acquisitions of investments while the Trust is on foot, not after its termination. The same is true of cl 10.1(b). the Karrinyup Regional Shopping Centre has been sold. Hence it applies to a sale of the Karrinyup Regional Shopping Centre while the KSC Trust is on foot. The "sale", the completion of which is referred to in cl 10.1(b), is a "sale" within the meaning of cl 10.1(a). That is a "sale" with "the written consent of the Unitholders." A sale of that description can take place only before the KSC Trust is terminated. After termination, there are no unitholders. Hence, cl 10.1(a) only applies to a sale of the Karrinyup Regional Shopping Centre before the Trust Clause 10.1(a) does not apply to a sale of the comes to an end. Karrinyup Regional Shopping Centre after the unitholders, by majority, have resolved to vote in favour of directing the responsible entity to wind up the scheme pursuant to s 601NB of the Act. the Trust once to determine The appellant's other arguments did not depend on cl 10.1(a). One argument attempted to escape the inadequacy of cl 10.1(a) for the appellant's purpose by much vaguer appeals to the Agreement "as a composite or as a whole", and to the Agreement's "purpose", "intention", "objective" or "aim". But the appellant pointed to no language in the Agreement sufficiently specific to suit its ends. The appellant also argued that from the terms of the Agreement could be inferred an "expectation of the parties that [the Agreement would] endure for quite a long time." There were powers permitting it to endure. There may have been an expectation that it would endure. But there was no duty on the unitholders to ensure that it did endure for any specified time. And there was no duty on the unitholders to ensure that it endured despite s 601NB. The appellant then pointed out that the Agreement contained no provisions about how a sale of the Karrinyup Regional Shopping Centre would be conducted. The appellant argued that from this it could be inferred that the intent and effect of the Agreement was that this sale was not possible. However, the mode by which any sale was to be conducted was a minor matter beside the question of whether a sale could be conducted at all. The suggested inference cannot be drawn. Finally, the appellant pointed to detailed provisions in the Agreement permitting unitholders to realise their investments by selling their units to other unitholders or third parties, and to the absence of provisions referring to realisation by sale of the Karrinyup Regional Shopping Centre. But pre-emptive arrangements between unitholders have no necessary relevance to the question whether triggering a general law provision which may bring about a winding up is permissible. The appeal accordingly fails. The issues raised by the respondents' Notice of Contention do not arise. The appeal should be dismissed with costs. |
HIGH COURT OF AUSTRALIA APPELLANT AND FREDERICK CLARKSON BROOKER & ANOR RESPONDENTS Friend v Brooker [2009] HCA 21 28 May 2009 ORDER Appeal allowed. First respondent to pay the costs of the appellant. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales entered 25 June 2008 and, in lieu thereof, order that the appeal to that Court be dismissed with costs, including the costs of the application for recall of reasons. On appeal from the Supreme Court of New South Wales Representation C R C Newlinds SC with H S Packer and B R Kremer for the appellant (instructed by Bull, Son & Schmidt) B W Walker SC with M S White for the first respondent (instructed by Levitt Robinson Solicitors) No appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Friend v Brooker Equity – Doctrine of contribution – "Co-ordinate liability" – Appellant and respondent company directors – Respondent personally borrowed money which was on-lent to the company – Company ceased trading – Respondent sought funds from appellant to repay personal loan – Whether fiduciary relationship existed between the two – Whether co-ordinate liability existed so as to require equitable contribution from appellant. Words and phrases – "common design", "community of interest", "co-ordinate liability", "equitable contribution". FRENCH CJ, GUMMOW, HAYNE AND BELL JJ. This appeal is brought by Mr Friend from the decision of the New South Wales Court of Appeal (Mason P and McColl JA; Basten JA dissenting1) which allowed an appeal by the first respondent (Mr Brooker) and set aside the orders of the primary judge (Nicholas J) dismissing a suit in the Equity Division of the Supreme Court of New South Wales2. The appeal should be allowed and the orders of the primary judge restored. The appeal raises for consideration by this Court fundamental questions respecting the nature and scope of the equitable doctrine of contribution. These are precipitated by the decision of the Court of Appeal which proceeded from considerations first raised by the President in the course of argument and not advanced to the trial judge. The matter is further complicated by the circumstance that in various respects findings of fact were made or assumed by the Court of Appeal and in this Court the appellant vigorously challenged the procedure adopted by the Court of Appeal, in going beyond the findings made by Nicholas J when disposing of the quite different case presented at trial. However, it will be possible to decide the appeal in favour of the appellant even assuming many of the factual findings and assumptions of which the appellant complains. The equity suit The suit was tried upon the fifth amended statement of claim. Mr Brooker sought a declaration respecting the existence between May 1977 and January 1995 of a partnership or of an agreement (identified in his pleading as "the Joint Venture") between him and Mr Friend for them to carry on jointly the conduct of a building and construction business. Mr Brooker contended that the second respondent, Friend & Brooker Pty Ltd ("the Company"), had been the "corporate vehicle" for the conduct of the partnership or joint venture agreement. In his reasons for judgment, Nicholas J recorded that Mr Brooker also claimed that there had been a fiduciary relationship between the partners or joint venturers. Mr Brooker (hereafter "the respondent") sought an order for the taking of a full account of the partnership or the Joint Venture and recovery for loss suffered by him by reason of the alleged refusal of Mr Friend (hereafter "the [2006] NSWCA 385. [2005] NSWSC 395. Bell appellant") to make equal contribution to the repayment of his personal borrowings for the purpose of the business. Apparently for good measure, in par 24 of his pleading Mr Brooker alleged that Mr Friend had been unjustly enriched at his expense as a result of his being "materially benefited" to the extent of expenditure of those borrowings upon repayment of debts and payment of expenses of the Joint Venture or partnership and as a result of the failure of Mr Friend to make a contribution to or to account to Mr Brooker for his share of the benefit to the Joint Venture or partnership. The failure of the case respecting the existence of the Joint Venture or partnership made it unnecessary for Nicholas J to enter upon any issue of unjust enrichment raised by par 24. The joint reasons in Lumbers v W Cook Builders Pty Ltd (In Liq)3 contain two propositions which are relevant here. The first is that, in general, the bare fact of the conferral of some benefit upon another does not suffice to establish an obligation to repay the expenditure in providing that benefit4. The second proposition is that while the concept of unjust enrichment may provide a link between what otherwise appears to be a variety of distinct categories of liability, and it may assist, by the ordinary processes of legal reasoning, in the development of legal principle, the concept of unjust enrichment itself is not a principle which can be taken as a sufficient premise for direct application in a In this Court, Mr Brooker expressly disavowed any reliance upon a cause of action framed as a case of unjust enrichment. However, he did rely upon par 24 as supplying sufficient foundation for the application of the equitable doctrine of contribution in his favour by the Court of Appeal, and for the further formulation of that doctrine which he advanced in this Court in support of the outcome in the Court of Appeal. The Company ceased to trade in about July 1990 and was deregistered on 26 July 1996. It played no active part in the litigation. The Company may be taken to have been insolvent at least since the time it ceased to trade. (2008) 232 CLR 635; [2008] HCA 27. (2008) 232 CLR 635 at 663-664 [80]. See also the remarks of Lord Esher MR (then Brett MR) in Leigh v Dickeson (1884) 15 QBD 60 at 64-65. (2008) 232 CLR 635 at 665 [85]. Bell Mr Brooker's success in the Court of Appeal was based on the proposition that the dealings over some years between him and Mr Friend referable in particular to a certain loan transaction generated a right to contribution in his favour. The parties are in dispute in this Court, among other matters, as to whether the effect of the relief granted to Mr Brooker by the Court of Appeal is to disrupt what otherwise would be the established system for the insolvent administration of the Company, which the parties had jointly controlled. The facts As already noted, many matters of fact were still in dispute before this Court. Had Nicholas J ordered the account sought by Mr Brooker, various aspects of the dealings affecting the parties would have been for resolution on the taking of the full account. But, in the event, no such order was obtained from the trial judge. However, some basic facts were largely undisputed. In about May 1977, Mr Brooker and Mr Friend resigned from their employment as engineers with John Holland Constructions Pty Ltd, with the intention of establishing an engineering and construction business. The Company was incorporated on 18 July 1977. In 1979 the scope of the business of the Company was expanded to include the purchase and development of land. With respect to the incorporation of the Company, Nicholas J made an important finding respecting the subsistence thereafter of any partnership. He found: "What happened was that from the time of incorporation the partnership ceased, just as the parties intended. The effect of incorporation changed the basis upon which the business had been conducted since May 1977, not only with regard to third parties, but also as between themselves. Thereafter their relationship was as co-directors of the company, and the assets and liabilities associated with the business were the company's." Mr Brooker and Mr Friend were the directors of the Company and the shareholding was controlled equally by a complex of their respective family companies and trusts. The trial judge recorded that to finance the activities of the Company funds were obtained by loans from third parties to the Company and from time to time by separate personal borrowings from family and friends by Mr Brooker and Mr Friend; these funds then were lent to the Company and reflected in the loan accounts of the directors as unsecured loans. In this Court, Mr Brooker accepted that the loan accounts were not matched between the two Bell directors, but fluctuated from time to time depending upon which of them had been tapping available sources of funds. In January 1984 the Company entered into a contract with the Eurobodalla Shire Council ("the Council") for the construction of sewerage reticulation works at Narooma for a sum in excess of $2.5m. The contract reached practical completion in September 1985, but in April 1986 the Council rejected the Company's claim for payment of a sum of about $1m. This placed the Company in extreme financial difficulty and it was in these circumstances that further finance was obtained in circumstances disputed before the primary judge. It may be accepted for the purposes of these reasons that the indebtedness of the Company at this period comprised loans from Trade Credits Ltd, Mr and Mrs de Bakker, and Alcon Investments Pty Ltd; that the second and third loans were secured by mortgages over Brooker properties, and the first loan by mortgages over properties owned by Mr Friend and by Mr Brooker; and that the moneys advanced had been used for the purposes of the business of the Company. Nicholas J found that in November 1986, SMK Investments Pty Ltd ("SMK") acting by its director Mr Graham Peterson ("Mr Peterson") agreed to lend $350,000 to Mr Brooker "and/or his wife" ("the SMK loan"). Mr Peterson was a long-time friend of Mr Brooker. Mr Peterson gave evidence but unsurprisingly, given the scope of the suit as tried by Nicholas J, SMK was not joined as a party to the suit. Had it been a party, then when Mr Brooker made good in the Court of Appeal his claim to contribution by Mr Friend, its order could have provided, by appropriately crafted orders, for a discharge to Mr Friend by direct payment of his share to SMK6. The term of the SMK loan does not appear explicitly from the evidence. Interest on the SMK loan was fixed initially at 19.5% with a reduction to 18.5% for prompt payment and subsequently at 2% above the Westpac investment loan rate. Interest payments which were not made were capitalised. The loan was secured by a first mortgage over the Brooker family home at Mosman, owned by Mr Brooker's wife, and by a second mortgage over land at Artarmon jointly owned by Mr Brooker and his mother. The mortgage of the Mosman property was supported by a guarantee from Mr Brooker. 6 See Wolmershausen v Gullick [1893] 2 Ch 514 at 528-529; Andrews and Millet, Law of Guarantees, 5th ed (2008) at 493-494. Bell Mr Peterson's position in his evidence was that the rights of SMK to recovery of the loan were against Mr Brooker and not the Company or Mr Friend. In the course of his cross-examination, Mr Peterson responded to questions asking why he was not presently "going after" Mr Brooker to recover moneys due and owing but unpaid by saying that he was a friend of Mr Brooker and was not interested in throwing him out of his house. There appears to have been no submission, and no finding was made, that Mr Brooker had borrowed as trustee for himself and Mr Friend or that the indebtedness of the Company to Mr Brooker was held, as to any part, upon trust for himself and Mr Friend. The trial judge accepted evidence that Mr Friend had been told by Mr Brooker that the SMK loan had been proposed by Mr and Mrs Peterson and Mr Friend had responded "Well then, we should do it". There was no evidence that he knew of the interest rate or other terms of the loan. Nicholas J dealt with the paucity of evidence as follows7: "There is also no evidence that Mr Friend agreed to be jointly liable for, or to contribute to, the repayment of the SMK loan. It is difficult to accept that, if in truth he held the belief that Mr Friend was equally liable for this loan, Mr Brooker proceeded with the borrowing, and procured the securities from his wife and his mother, without first obtaining Mr Friend's acceptance of such liability. That there is no evidence that there was even discussion as to liability is remarkable having regard to the financial difficulties then facing the company, and the likelihood that it may have been unable to repay Mr Brooker the monies which he had on-lent to it. The absence of evidence as to these matters is, in my opinion, further indication that there was no agreement to the effect claimed in these proceedings. This doubt is reinforced by the delay until about October 1994 when Mr Brooker first claimed that Mr Friend was equally liable for the loan." On 8 November 1986, $20,000 was paid to Mr Brooker in advance of settlement of the loan. The balance of $330,000 appears to have been applied at settlement on 23 December 1986 towards the discharge of the indebtedness of the Company to the three parties mentioned above and to pay Mr Brooker $37,183.95. His evidence was that the latter sum was used by him to pay small unsecured debts and to reimburse him for other expenses of the business previously paid by him. All these moneys were treated in the accounts of the Company as having been lent to it by Mr Brooker. However, in this Court, [2005] NSWSC 395 at [75]. Bell Mr Friend did not accept that all the proceeds of the SMK loan had been applied to the benefit of the Company; the matter had not been pursued at trial because all such questions were to be left for the taking of the account were that remedy to be ordered. There was a protracted dispute with the Council which extended over many years and various sums were received by the Company from the Council. On 19 September 1994, pursuant to a Deed of Release the Council paid the Company the final sum of $900,000. Nicholas J found that Mr Friend and Mr Brooker then fell out over the application of that sum to repay the balance of the SMK loan and interest. Mr Brooker claimed that the SMK loan had been made jointly to him and to Mr Friend, and that Mr Friend also was liable to SMK. By December 1995 the total debt on the SMK loan was approximately $1.1m. Of that $750,000 was interest. Further disputes ensued over the years that followed concerning the state of the accounts of the Company and the loan accounts of Mr Brooker and Mr Friend. Mr Brooker contends that in all he has paid $575,000 to SMK from his own funds. However, between 24 August 1995 and 3 March 1998, Mr Brooker received from the Company an amount of $345,000, apparently by way of loan, which was used for his personal expenses and which he was not in a position to repay the Company. The trial The Supreme Court suit was commenced by Mr Brooker in 2000. The case went to trial in December 2004 and the suit was dismissed on 29 April 2005. The primary judge received affidavit and oral evidence from Mr Brooker and Mr Peterson. Mr Peterson deposed that at 8 November 2004 the amount outstanding on the SMK loan was $1,349,423.48. Affidavits by Mr Friend were not read and he gave no oral evidence. Counsel for Mr Friend emphasised in this Court that what would have been contested issues of fact were put aside in the presentation of his case at trial, on the understanding that they would be pressed only if and when Mr Brooker succeeded in obtaining the order for a full account. Nicholas J recorded that it was common ground that no partnership accounts had been kept. Nor, it may be added, was there any evidence of the filing of partnership income tax returns. His Honour also said8: [2005] NSWSC 395 at [74]. Bell "It seems to me that the parties, with the benefit of professional advice, incorporated their business because it was commercially advantageous to do so in that it protected the personal position of each. Mr Brooker impressed me as an experienced businessman well aware of what was required for the protection of his interests. It is reasonable to expect that there would have been some record of an agreement intended to operate outside the corporate structure whereby the parties preserved the risk of personal liability for the debts of each other where the proceeds were on-lent to the company. The absence of such evidence suggests that there was in fact no such agreement." The critical finding by the trial judge which led to the dismissal of the suit was as follows9: "In my judgment Mr Brooker has utterly failed to prove any agreement pursuant to which the existence of a fiduciary relationship with Mr Friend was established after the incorporation [of] the [Company]. I reject the submission made on his behalf that the relationship between the parties in the conduct of the business was that of a common law partnership, or a joint venture, or some other relationship which gave rise to an entitlement to an accounting from each other of all contributions by and payments to them to ascertain what, if anything each must pay to the other so that the ultimate loss of the business is shared equally between them." The appeal to the Court of Appeal Mason P concluded (with the apparent agreement of McColl JA10) that the trial judge had correctly held that Mr Friend was not jointly liable at law to SMK to repay the SMK loan, because (leaving aside the situation of the wife and mother of Mr Brooker) Mr Brooker was the only borrower11. The Court of Appeal unanimously rejected the claim for a general accounting spanning the period from 1977 onwards. That outcome appears to have been reached on the footing that the SMK loan was the only third party indebtedness which had arisen by reason of the activities of the Company and which remained outstanding. However, having regard to what was seen to be the [2005] NSWSC 395 at [79]. 10 [2006] NSWCA 385 at [163]. 11 [2006] NSWCA 385 at [6]. Bell course of conduct of the parties with respect to the SMK loan, by majority the Court of Appeal granted declaratory and consequential relief referable to the outstanding indebtedness on the SMK loan. The Court of Appeal declared that Mr Friend: "is required to contribute so as to equalise the burden borne by [Mr Brooker] since 1995 of [his] obligations under the borrowing of $350,000.00 from [SMK] made in 1986". The Court of Appeal also referred for determination by the Equity Division "the conditions under which it is just that [Mr Friend] should be ordered to pay to [SMK] the sum found to be due by him". This order was made notwithstanding the absence of SMK from the parties to the suit, as noted earlier in these reasons. For the reasons which follow, the appeal to this Court should be allowed. It is convenient first to say something more respecting the course of the litigation in the Court of Appeal. The reasons of the Court of Appeal The appeal was heard on 13 March 2006 and reasons for judgment were delivered on 20 December 2006. On 23 February 2007 Mr Friend moved the Court of Appeal to recall the whole of the reasons of Mason P and five paragraphs12 of the reasons of McColl JA. The motion was heard on 29 November 2007. On 7 May 2008 Mason P and McColl JA delivered reasons refusing that relief and Basten JA affirmed his original (and dissenting) reasons. After hearing further argument on 21 May 2008, on 29 May 2008 the Court of Appeal delivered reasons for the making of the orders supported by the majority13. The orders of the Court of Appeal were entered on 25 June 2008. Those orders included a stay of the implementation of the orders which remains in force pending the outcome of the present appeal by Mr Friend to this Court. At the hearing of the recall application, Mr Friend had submitted that the Court of Appeal should not have entertained submissions by Mr Brooker which singled out the SMK loan for specific relief, having regard to the pleadings and the conduct of the trial. The majority rejected that submission. Basten JA did not embark upon this controversy. 12 Pars 152, 155, 156, 162 and 163. 13 [2008] NSWCA 118. Bell Mason P said: "Issues in dispute are often refined as litigation progresses. Arguments are recast. Particular factual and legal propositions that once were in dispute become common ground. The obligation to afford procedural fairness requires the court to remain focussed upon the arguments put to it. To go beyond them will usually entail unfairness to one or both of the parties. But to refine and confine them is of the essence of an adversary system that includes an oral hearing. The proposal to restrict relief to the SMK transaction to the extent that moneys were outstanding by Mr Brooker was raised and addressed during the hearing of the appeal and in the supplementary submissions filed after judgment in the appeal was reserved." In his notice of appeal, Mr Brooker had pressed his case for the relief sought at trial, in particular, for the taking of a full account. His counsel (not counsel appearing in this Court) maintained that position in the Court of Appeal. The grounds of appeal were not amended. In written submissions filed after intervention by the bench during oral argument, counsel had gone no further than submitting: "If it were minded to do so, the Court could fashion relief directed at compensation relating only to the circumstances of the [SMK loan]." In his first set of reasons, Mason P saw the decisive issue as being whether the facts disclosed14: "a broader arrangement that, consistently with the formal structures and contracts, generated an obligation in conscience requiring [Mr Friend] to contribute towards exonerating [Mr Brooker] from the plight he finds himself in at the end of the venture". The President referred to the holding in Burke v LFOT Pty Ltd15 that to found a claim to contribution there must be a "common obligation", but also emphasised that "an equitable principle such as contribution is not confined by 14 [2006] NSWCA 385 at [27]. 15 (2002) 209 CLR 282; [2002] HCA 17. Bell legal structures" and that "the right of contribution rests upon matters of substance not form"16. Mason P appears to have seen the equity to contribute as the product of the circumstances that (i) the Company lacked the means to fund repayment of the SMK loan, (ii) the Company had applied the funds, borrowed from Mr Brooker, for the purposes of its business, in particular to meet indebtedness on the three third party loans, and (iii) Mr Friend had refused to contribute to any further payment by Mr Brooker of indebtedness on the SMK loan. In his dissenting reasons, Basten JA held that even if Mr Brooker and Mr Friend were to be treated as liable on equitable principles of contribution of the kind applicable to co-sureties, relief should be denied because of the absence over a long period of any imminent threat by SMK to recover from Mr Brooker. In this Court the appellant relies upon the reasons of Basten JA on this issue. It will be necessary to return to the subject later in these reasons. McColl JA supported the outcome favoured by Mason P. However, she considered that there had been a fiduciary obligation which required each director to meet an equal share of capital contributions. This was a fiduciary obligation with a positive rather than a proscriptive content. The respondent relies upon the reasons of McColl JA in submissions to this Court and it will be necessary to return to this aspect of the litigation. Something more now should be said respecting the doctrinal basis upon which the respondent supports the application by the Court of Appeal of the equitable doctrine of contribution. The equitable doctrine of contribution With a claim to contribution, as is the position generally with the intervention of equity to apply its doctrines or to afford its remedies, the plaintiff must show the presence of "an equity" founding the case for that intervention17. The "natural justice" in the provision of a remedy for contribution is the concern that the common exposure of the obligors (or "debtors") to the obligee (or 16 [2006] NSWCA 385 at [34]-[35]. 17 See The Commonwealth v Verwayen (1990) 170 CLR 394 at 434-435; [1990] HCA 39; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 216 [8], 233 [64], 259 [138]; [2001] HCA 63. Bell "creditor") and the equality of burden should not be disturbed or be defeated by the accident or chance that the creditor has selected or may select one or some rather than all for recovery18. Were equity not to intervene, then it would remain within the power of the creditor so to act as to cause one debtor to be relieved of a responsibility shared with another19. Equity follows the law in the sense that it does not seek to direct the manner of exercise of the rights of the creditor, but equity does make an adjustment between the debtors. Thus equity does not interfere with the action of the creditor but seeks to ensure the sharing of the burden between those subjected to it20. The equity to seek contribution arises because the exercise of the rights of the obligee or creditor ought not to disadvantage some of those bearing a common burden; the equity does not arise merely because all the obligors derive a benefit from a payment by one or more of them21. As explained in United States authority22, contribution is an attempt by equity to distribute equally, among those having a common obligation, the burden of performing it, so that without that common obligation there can be no claim for contribution. Hence the basic characteristics of the doctrine were identified, with reference to long established authority, in Burke as requiring contribution between parties sharing co-ordinate liabilities or a common obligation to make good the one loss, where the liabilities were of the same nature and to the same extent23. In that case, the purchaser, who had bought retail premises under a misrepresentation concerning the sitting tenants, recovered damages from the vendor for contravention of s 52 of the Trade Practices Act 1974 (Cth); the 18 Tombs v Roch (1846) 2 Coll 490 at 499 [63 ER 828 at 832]; Duncan Fox & Co v North and South Wales Bank (1880) 6 App Cas 1 at 12-14; Scholefield Goodman and Sons Ltd v Zyngier [1986] AC 562 at 570-571; Mahoney v McManus (1981) 180 CLR 370 at 387-388; [1981] HCA 54. 19 Story, Commentaries on Equity Jurisprudence, 3rd Eng ed (1920), §493. 20 Pomeroy's Equity Jurisprudence, 5th ed (1941), vol 2, §§406, 411. 21 Mahoney v McManus (1981) 180 CLR 370 at 387. 22 Nova Information Systems Inc v Greenwich Insurance Co 365 F 3d 996 at 1006 (2004); Corpus Juris Secundum (2007 ed), vol 18, "Contribution", §5. 23 (2002) 209 CLR 282 at 292-293 [15] per Gaudron A-CJ and Hayne J, 303 [50] per McHugh J, 332 [138] per Callinan J. Bell purchaser also had been negligently advised on the matter by its solicitor but the vendor failed to recover contribution from that solicitor. The liabilities were not of the same nature and extent. Further, McHugh J emphasised that to enable the vendor to diminish the consequences of its contravention of s 52, by obtaining contribution, would be contrary to the policy of the legislation24. It was said in Burke, with reference to authority, that the doctrine is "usually expressed" liabilities" or "common terms of "co-ordinate obligation"25. The terminology of "co-ordinate liabilities" is to be preferred to that of "common obligation", which it subsumes, as indicative of the class of circumstances in which the equity arises. No "common design" between the debtors is required before an equity for contribution may arise. Thus, it is no answer to a claim for contribution that co-ordinate liabilities which are of the same nature did not arise from the one instrument or at the same time or that those which arose later were incurred with knowledge of the earlier liabilities, or that different "causes of action" lay to enforce them26. Equitable contribution thus is to be contrasted with contribution sought by a common law claim for money paid by the plaintiff to the use of the defendant, where the plaintiff incurs, partly to the benefit and at the request of the defendant, a liability to pay money27. In the latter case, mutual relations of the parties are essential to obtain contribution28. There are significant distinctions between the bases of recovery in an equity suit and in an action at common law. The matter was explained by 24 (2002) 209 CLR 282 at 308-309 [66]; cf with respect to anti-trust litigation in the United States, Texas Industries Inc v Radcliff Materials Inc 451 US 630 (1981). 25 (2002) 209 CLR 282 at 292-293 [15]. 26 Street v Retravision (NSW) Pty Ltd (1995) 56 FCR 588 at 597. 27 See, for example, Batard v Hawes (1853) 2 El & Bl 287 at 296 [118 ER 775 at 778]; Leigh v Dickeson (1884) 15 QBD 60 at 64. 28 See Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635 at 666 [89], Bell Vaughan Williams LJ in Bonner v Tottenham and Edmonton Permanent Investment Building Society29 as follows30: "There is a common law principle of liability, and also a principle of liability in equity, and these two principles differ. The common law principle requires a common liability to be sued for that which the plaintiff had to pay, and an interest of the defendant in the payment in the sense that he gets the benefit of the payment, either entirely, as in the case of the assignee of a lease, or pro tanto, as in the case of a surety who has paid, and has his action for contribution against his co-surety. The principle in equity seems wide enough to include cases in which there is community of interest in the subject-matter to which the burden is attached, which has been enforced against the plaintiff alone, coupled with benefit to the defendant, even though there is no common liability to be sued." His Lordship explained the common law position by reference to the form of the action for money paid to the use of the defendant at his request, the defendant being under a personal liability to pay the money the plaintiff has paid for him. But what, in equity, is sufficient "community of interest" in the subject matter to which is attached a burden which is borne by the claimant for the benefit of the claimant and defendant? In Whitham v Bullock31, the English Court of Appeal referred to the above passage in Bonner when considering the situation where the lessee of land had assigned the lease as to part of the land to X and part to Y. The result was that the lessor could distrain against either X or Y for the whole of the rent but could sue to recover from each only the proportionate part of the rent. Was there an equity in X to recover contribution from Y where, under threat of distraint by the lessor by reason of the failure of Y to pay its proportion, X paid the whole of the rent? In giving an affirmative answer, Clauson LJ said that although X was not liable to be sued directly for all of the rent, the equity of X arose from payment under stress of legal process; having in its premises chattels of a value amply sufficient to satisfy a distress, X had saved the chattels by meeting Y's share of the rent. There was a sufficient "community of interest" in the two plots of the leased land; the attached common 30 [1899] 1 QB 161 at 174. See also the reasons of Bray CJ in Floreani Bros Pty Ltd v Woolscourers (SA) Pty Ltd (1976) 13 SASR 313 at 320-321. Bell burden of liability to distress for the whole of the rent had been shouldered by X to the relief of Y. What, however, is presently significant is that the community of interest had its source in the assignment of the lease as to part of the land to X and part to Y and that the attached common burden was imposed by the law respecting distraint. The equity in favour of X to recover the share of the rent from Y had arisen from the operation of the law upon their situation, not by some looser notion of economic interest which disregards or supersedes the legal framework within which the parties chose to have their dealings. In that sense it is true to say that here, as elsewhere, equity looks to substance and not merely to legal form when it fixes upon the legal situation of the parties and requires that the exercise of legal rights produce a result which conforms to equitable doctrine. But that is not to adopt the wider statement made in the present case by Mason P that the equitable doctrine of contribution "is not confined by legal structures"32. That view of the jurisdiction provides a framework of analysis at too high a level of abstraction, and risks a result discordant with accepted principle and the general coherence of the law33. In a case such as the present, to proceed in this way may too easily produce an outcome in a given case which is no more than an idiosyncratic exercise of discretion. So it is, as French J put it, that rights of contribution are not attracted to obligations "merely because they are owed to the same party and related to the same transaction or otherwise connected in time or circumstance"34. In Burke35 McHugh J referred to authority36 which indicated that the doctrine is not enlivened merely because the claimant's payment operates to the financial benefit or relief of the other party. 32 [2006] NSWCA 385 at [34]. 33 See Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635 at 661-663 34 Re La Rosa; Ex parte Norgard v Rodpat Nominees Pty Ltd (1991) 31 FCR 83 at 91. 35 (2002) 209 CLR 282 at 301-302 [44]-[46]. 36 Ruabon Steamship Co v London Assurance [1900] AC 6 at 12; Cockburn v GIO Finance Ltd (No 2) (2001) 51 NSWLR 624 at 633-641. See also the remarks of Brennan J in Mahoney v McManus (1981) 180 CLR 370 at 387. Bell The eighteenth century decision most frequently cited in cases dealing with contribution is that on the equity side of the Court of Exchequer in Dering v Earl of Winchelsea37. There, by way of illustration of the proposition that there need be no contract or privity between sureties, Eyre LCB referred to the "case of average of cargo" where the requirement to contribute was "the result of general justice from the equality of burthen and benefit"38. The burden, at least as then understood in maritime law39, lay in the exercise of the power and authority given by maritime law to the master of the ship for the protection and care of the cargo, a matter explained by Lord Stowell (then Sir William Scott) in The Gratitudine40. That authority, with many others, was cited by Gray J when delivering the decision of the Supreme Court of the United States in Ralli v Troop41. Judge Learned Hand later spoke of the sacrifice being made for the joint venture and directed by the person then in control of that venture42. Thus, and contrary to what was suggested in oral submissions for Mr Brooker, the law respecting general average was not prayed in aid in Dering in any fashion which provides an exception to the requirement of a common burden imposed by the law. The requirement of a common legal burden presents a major difficulty for any application of the doctrine of equitable contribution between the appellant and the respondent with respect to the liability of Mr Brooker on the loan to him 37 (1787) 1 Cox Eq Cas 318 [29 ER 1184]; White and Tudor's Leading Cases in Equity, 9th ed (1928), vol 2 at 488. 38 (1787) 1 Cox Eq Cas 318 at 322-323 [29 ER 1184 at 1186]. 39 In modern times, with improved communications, the general average act may be that of the shipowner: Australian Coastal Shipping Commission v Green [1971] 1 QB 456 at 480-481, 485, 486-487. But such cases apart, it is unsettled whether under the York-Antwerp Rules 1924 the general average act may be the act of a stranger to the adventure: Lowndes and Rudolf, The Law of General Average and the York-Antwerp Rules, 13th ed (2008) at 83-86. See also Marine Insurance Act 1909 (Cth), s 72. 40 (1801) 3 C Rob 240 at 257-258 [165 ER 450 at 456]. 41 157 US 386 at 397-398 (1895). 42 The Moran No 16 40 F 2d 466 at 468 (1930). Bell by SMK. In particular, SMK had not contracted with Mr Friend and Mr Brooker had not contracted with SMK as trustee for himself and Mr Friend. The respondent, Mr Brooker, seeks to outflank this obstacle and to support the outcome in the Court of Appeal by setting up a category of contribution based upon "common design". The appellant responds by denying the existence of such a category, and also by relying upon the evidence of Mr Peterson that having regard to Mr Brooker's financial straits he is not presently proposing to claim against him for payment of the SMK loan. No imminent threat? In McLean v Discount and Finance Ltd43 Starke J explained that at common law an action for contribution cannot be maintained in advance of actual payment of more than the just proportion of the principal obligation; on the other hand, equity acts quia timet where the apprehended over-payment appears sufficiently imminent. Starke J referred to In re Anderson-Berry44, in which Sargant LJ used the expression "clear threat" and opined that "the origin of quia timet may be an illustration of the rule that prevention is better than cure"45. That which is prevented in this way may be seen as the situation whereby the co-obligor's obligations are discharged in circumstances where the plaintiff is left with the chance that the action at law the plaintiff then brings against the co-obligor for money paid is unfruitful. But was there a "clear threat" posed by SMK? The appellant points to the evidence of Mr Peterson respecting his friendship with the respondent and his wish not to see him thrown out of his house. This, with the failure of the respondent to counter the effect of that direct evidence as to the attitude of SMK, is said to show error on the part of the majority of the Court of Appeal. The appellant draws support from the dissenting reasons of Basten JA that the respondent must fail for lack of evidence to support the existence of "a real possibility" that he would be required to pay and be able to pay more than one half of the moneys due and owing on the SMK loan but unpaid46. Basten JA referred to the discussion of supporting authorities respecting the quia timet 43 (1939) 64 CLR 312 at 341; [1939] HCA 38. 45 [1928] Ch 290 at 307. 46 [2006] NSWCA 385 at [202]. Bell jurisdiction by the New South Wales Court of Appeal in Harpley Nominees Pty It will never be possible to lay down exhaustively detailed criteria marking out the limits of the power of equity to act quia timet. However, were it not for recent decisions which appear to relax the strength of the requirement for imminent threat, the situation disclosed by the evidence of Mr Peterson in particular would support the conclusion reached by Basten JA. Some care is required here in distinguishing the relationship of surety and principal debtor and that between co-sureties. The surety who discharges the principal obligation is regarded as having paid money to the use of the principal debtor and may recover indemnity by means of an action against the principal debtor for money paid48. The principal debtor must indemnify and save harmless the guarantor. Such is the tenderness of equity for the surety that the surety may obtain an order directing the principal debtor to pay to the creditor a definite sum of money that has become payable, even though the creditor has made no demand for payment49. It is said to be unreasonable that such a cloud should hang over the surety50. In Stimpson v Smith51, reference was made in the English Court of Appeal to the view expressed in the Supreme Court of Queensland by Williams J in Moulton v Roberts52 that the principles developed respecting the exoneration of the surety by the principal debtor were "equally apposite" to the relations between co-sureties. In Stimpson v Smith53, Peter Gibson LJ accepted that it was 47 [2006] NSWCA 176. 48 Israel v Foreshore Properties Pty Ltd (In Liq) (1980) 54 ALJR 421 at 423-424; 30 ALR 631 at 636. 49 Holden v Black (1905) 2 CLR 768 at 782-783; [1905] HCA 40. 50 Ranelaugh (Earl) v Hayes (1683) 1 Vern 189 at 190 [23 ER 405 at 406]; Thomas v Nottingham Incorporated Football Club Ltd [1972] Ch 596 at 606; Abigroup Ltd v Abignano (1992) 39 FCR 74 at 81-82. 51 [1999] Ch 340 at 349-350, 352-353. 52 [1977] Qd R 135 at 138. 53 [1999] Ch 340 at 350. Bell enough that the creditor could enforce the guarantee for more than the surety's rateable share. On the other hand, in Woolmington v Bronze Lamp Restaurant Pty Ltd54, Needham J, whose opinion in such matters deserves great weight, said that as the authorities then stood, none had gone to the length of deciding that the plaintiff surety could maintain an equity suit for contribution without either having paid at least the amount due by the plaintiff under the guarantee or being under a liability by judgment to pay the full amount. However, Needham J was prepared to go so far as to make a declaration and order for contribution in favour of a surety who satisfied the court that he was willing able and prepared to pay at least his share of the principal debt55. In the case before him, this was not so and relief was refused. In his written submissions, the respondent relied upon Moulton v Roberts56 as authority for the proposition that it is sufficient for equity to grant quia timet relief that his liability to SMK is fixed, accrued and ascertainable albeit there is no immediate jeopardy or demand by SMK. Several points should be made here. The first is that the correctness for Australian law of Stimpson v Smith and Moulton v Roberts need not be decided in this appeal. There was common obligation in those authorities by reason of liability on a guarantee, but in the present case the only obligation to SMK, and the only exposure to action by it, was that of Mr Brooker. The second point is that in oral submissions Mr Brooker emphasised that while there was no common obligation of Mr Friend to SMK, the "common design" principle for which he contended attracted equitable intervention in his favour simply because of his risk of expense. But even making (without deciding) such an assumption in favour of Mr Brooker, for him to seek equity it would be necessary for him to do equity. This, consistently with the reasoning of Needham J in Woolmington v Bronze Lamp Restaurant Pty Ltd57, would require him, in seeking contribution, to have satisfied the trial judge that he was ready, willing and able to pay at least one half of the indebtedness to SMK. Given what 54 [1984] 2 NSWLR 242 at 245. 55 [1984] 2 NSWLR 242 at 245. 56 [1977] Qd R 135. 57 [1984] 2 NSWLR 242 at 245. Bell the trial judge identified as Mr Brooker's financial straits58, this probably could not be realistically attempted. These considerations make this appeal an inappropriate occasion to resolve any uncertainties in the case law respecting the scope of the quia timet power of courts of equity in contribution suits. The appeal should be disposed of on the broader ground urged by the appellant, the rejection of the alleged principle of "common design". "Common design" In his reasons Mason P referred to the judgment of Cooper J given in the Full Court of the Federal Court in Cummings v Lewis59. The case appears not to have been cited in oral argument or in the written submissions presented to the Court of Appeal. However, in this Court Mr Brooker relies upon the analysis of the authorities by Cooper J to support the relief he obtained in the Court of Appeal. This is said properly to obviate the need in the present case for exposure to a common legal obligation, by reliance upon "common design". In oral submissions counsel for Mr Brooker developed his written submissions apparently beyond what had been decided by the Court of Appeal, with a reformulation of what was identified as the "common design" principle for equitable contribution. This was said to be a distinct principle, where the equity is found not in the relationship of obligee and co-obligors, but simply in commonality of benefit from the operation of that design. The final formulation by counsel of the suggested principle was as follows: "Contribution will be enforced where the party seeking it has, by reason of and in reliance on a common design with the party from whom contribution is sought, undertaken a risk or expense which: (a) was undertaken with the knowledge and assent of that other party; (b) was undertaken in order to effectuate or facilitate the common purpose or benefit which was the object of their common design; 58 [2005] NSWSC 395 at [59]. 59 (1993) 41 FCR 559; Sheppard and Neaves JJ were the other members of the Full Court. Bell in light of the parties' relationship and the nature of their common design, could not fairly be expected to be borne as a burden alone by the party undertaking it; and there is no contract to the contrary." There are significant obstacles to the respondent making out such a case given the state of the evidence and the conduct of the trial. Paragraph (c) highlights the point. It was not open to the Court of Appeal, had it been invited to do so, and it is not open now to this Court, to attempt any finding as to whether Mr Brooker could not "fairly be expected" to bear alone the burden of the SMK loan, in the light of what is said to have been the relationship of the parties and their common design. Further, and as an additional ground of decision, the suggested principle is not the law of Australia. Cummings v Lewis It is convenient to begin with a consideration of the origin of the respondent's proposition in the decision of Cooper J to which the Court of Appeal referred and upon which the respondent relies. This will disclose an infirm foundation for what is now advanced in this Court. Cooper J concluded that it was not always essential that there was exposure to a common obligation or risk60; it would be sufficient61: "that the persons involved were all parties to a common design to achieve a common end and that in furtherance of the attainment of the common end one party has with the knowledge and concurrence of the others done an act which has resulted in that person incurring expense or suffering loss". Several things should be said immediately respecting that statement of principle. The first is that Cooper J held that the facts in Cummings failed to attract its application; the race horses in question had been purchased by Mr Cummings in his own right and the indebtedness to the sellers was not a burden undertaken by Mr Cummings for the benefit of Mr Cummings and those 60 (1993) 41 FCR 559 at 594. 61 (1993) 41 FCR 559 at 598. Bell defendant accountants who were to market syndicates for "tax effective" purposes. As Sheppard and Neaves JJ put it, there was no more than a "loose" arrangement under which Mr Cummings would acquire horses and two firms of accountants would prepare and market the tax schemes62. Their Honours concluded that the parties to that arrangement each brought a separate expertise and skill and said63: "These were to be combined for the benefit of each of the parties, not in the sense that each would share profits from a common enterprise or a common benefit such as a separate utilisation of a single product or service produced by the combined efforts of the two, but in the sense that each would, as a result of his interest in the project, take to his own business undertaking the advantages and benefits to which we have referred. On no basis does such an arrangement impose obligations on one party to contribute to the losses of the other." The second matter is that Cooper J saw the equitable doctrine as an application of the same underlying principle as that of general average contribution in maritime law. This was that he who enjoys the benefit ought also to bear the burden; the property of one co-adventurer to a maritime adventure had, in the necessitous circumstances that arose on the voyage, been sacrificed to preserve the property of the other co-adventurers64. However, as pointed out earlier in these reasons, that sacrifice was an exercise of the power and authority of the master, to which the co-adventurers were subjected by maritime law. There was in these cases common liability to compulsion of law. The third matter is that the authorities in equity on which Cooper J relied do not support a proposition of the width and generality which his Honour drew from them. The cases are Re Direct Birmingham, Oxford, Reading and Brighton Railway Co (Spottiswoode's Case)65; Ashhurst v Mason66 and Jackson v Dickinson67. 62 (1993) 41 FCR 559 at 562. 63 (1993) 41 FCR 559 at 563. 64 (1993) 41 FCR 559 at 593-594. 65 (1855) 6 De G M & G 345 [43 ER 1267]. 66 (1875) LR 20 Eq 225. Bell Spottiswoode's Case comes from the Railway Age, in a period before limited liability was established by the legislation leading up to the Companies Act 1862 (UK)68 and the distinctions between the corporate and partnership business structure were not yet clearly marked out. For example, in 1856 Lord Cranworth LC said of the solvent shareholders in the winding up of a joint stock company that they were bound to make up the sum due to creditors because of "the general rules of law [that] every partner is liable to the whole of the demands on the partnership"69. This was also at a time when equity was extending its reach into the law of corporations by the treatment of directors as "trustees"70, albeit this was before trustees in whom title was vested were clearly distinguished from fiduciaries generally71. The Joint Stock Companies Act 1844 (UK)72 provided for the provisional registration by the promoters of joint stock companies and for membership of managing committees to act in the formation of the companies (s 4). The project for the construction of the railway from Birmingham to Oxford and thence to Reading and Brighton collapsed before the attainment of complete registration under s 7 of the statute. Mr Spottiswoode was a member of the managing committee and an allottee of 20 shares. Deposits on 4295 shares had been paid and engineering and other expenses were incurred. Funds were provided by various members of the managing committee and applied to repay the deposits of the allottees. The company was wound up on 21 December 1849 under the new winding-up legislation and disputes arose as to the settlement of the list of contributors by the Master in Ordinary of the Court of Chancery. Section 3 of 68 25 & 26 Vict c 89. See, as to the attainment of limited liability, the account by Professor Gower in The Principles of Modern Company Law, 3rd ed (1969) at 69 Robinson's Executor's Case (1856) 6 De G M & G 572 at 587 [43 ER 1356 70 Exemplified by the discussion in Lindley on Partnership and Companies, 4th ed (1878), vol 1 at 758, 773-774. See also Federal Commissioner of Taxation v Linter Textiles Australia Ltd (In liq) (2005) 220 CLR 592 at 604 [25]; [2005] HCA 20; Mulkana Corporation NL (In liq) v Bank of New South Wales (1983) 8 ACLR 278 71 See Sealy, "Fiduciary Relationships", [1962] Cambridge Law Journal 69 at 70-72. 72 7 & 8 Vict c 110. Bell the Winding-up Act 1848 (UK)73 defined "contributory" for this purpose as including members of the company and "every other person liable to contribute to the Payment of any of the Debts, Liabilities, or Losses" of the company. The House of Lords ruled in 1852 that Mr Bright, who had been a committee member with Mr Spottiswoode, was not liable as a contributory within the meaning of the statute because he lacked the necessary active involvement in the conduct of the projected company74. The committees were not partnerships so that it could not be said on the ground of partnership that each member was bound by the acts of the others75. However, in 1855 Turner LJ (Knight Bruce LJ concurring) dismissed the motion by which Mr Spottiswoode sought to vary a report by the Master in respect of his liability as a contributory for calls made in the winding-up. Turner LJ treated the dispute as determined by the general principles of equity respecting contribution between co-directors. Each had to bear the burden of each other's acts so far as they acted together or adopted each other's acts. Mr Spottiswoode's activities answered that description76. The general proposition was that directors who entered into an ultra vires transaction were liable to indemnify the company against any loss caused by the breach of duty, and as between themselves, as Turner LJ put it, "they must bear equally the burthens consequent upon their acts"77. Turner LJ referred78 to Dering v Lord Winchelsea for the general proposition, which he said applied to directors of companies: 73 11 & 12 Vict c 45. 74 Bright v Hutton (1852) 3 HLC 341 [10 ER 133]. 75 This had been settled by the House of Lords in 1850 in Norris v Cottle (1850) 2 HLC 647 [9 ER 1238]. See Formoy, The Historical Foundations of Modern Company Law, (1923) at 83-86. 76 (1855) 6 De G M & G 345 at 372 [43 ER 1267 at 1277]. 77 (1855) 6 De G M & G 345 at 372 [43 ER 1267 at 1277]. 78 (1855) 6 De G M & G 345 at 371-372 [43 ER 1267 at 1277]. Bell "that where persons are joined together for one common end or purpose, they must bear equally the expenses incident to the attainment of that end or purpose". That general statement must be read with the earlier rejection by Lord Brougham of the submission made in Norris v Cottle79 that "a party joining others in an adventure or other concern, may become liable in equity to them, though not liable at law either to them or to third parties". Lord Brougham considered and dismissed as follows an illustration which counsel put of the application of that proposition80: "The case was ingeniously put in the argument here, of a joint or common adventure, as of a voyage in which one agrees to find the ship, another the cargo, and a third the stores, and the ship-owner recovers the price of the ship against the one who purchased it; then, it is said, the others are liable for their share, unless each furnished his quota to the common adventure, the one the stores, the other the cargo. If they are so liable in respect of the price recovered by the ship-owner, it can only be because they have made themselves liable to their companions by an express contract to pay unless they furnish their quota, or by an implied contract to the same effect, and thus they are legally liable for breach of that contract, or they may be compelled in equity to perform it." The next authority relied upon is Ashhurst v Mason81. The plaintiff obtained a decree that he and other directors of the English Assurance Company, then in liquidation, were jointly and severally liable to contribute to and make good calls made and to be made upon certain shares. Pursuant to an ultra vires board resolution by the directors, the shares had been purchased and placed in the names of the plaintiff and the manager Mr Leyland as trustees for the company. It was no answer to the claim by the plaintiff for contribution that the other directors, not being registered holders of the shares, could not themselves be liable on the calls. The successful argument by Mr Kay QC was that82: 79 (1850) 2 HLC 647 at 670 [9 ER 1238 at 1246]. 80 (1850) 2 HLC 647 at 672 [9 ER 1238 at 1247]. 81 (1875) LR 20 Eq 225. 82 (1875) LR 20 Eq 225 at 232. Bell "the right of contribution is not affected by the circumstance that these shares, for which they all became liable as trustees for the company, were, as a matter of convenience, transferred into the names of one of themselves (the Plaintiff), and Leyland as their servant or agent". (emphasis added) Bacon VC described the placement of the shares in the names of the plaintiff and Mr Leyland as the resort to a "piece of machinery"83. With that in mind, this case may be seen as an illustration of the disinclination of equity to prefer form to substance. However that may be, the case was treated by Lindley84 primarily as authority for different propositions. These were that the directors must bear the loss upon an ultra vires transaction, unless the company ratifies what has been done, and that one director will be entitled to contribution from the other directors with whose knowledge and consent he acted. The directors were assimilated to the position of trustees in respect of the ultra vires activity, in the sense explained above in dealing with Spottiswoode's Case. There remains Jackson v Dickinson85. The two trustees of a settlement made an unauthorised investment in partly paid shares in Cheque Bank, Limited. One of the trustees died and the bank recorded the shares in the sole name of the surviving trustee, the plaintiff. Thereafter the plaintiff paid a call on the shares and successfully sought from the estate of the deceased trustee contribution, not only in respect of the loss sustained to the trust fund by the fall in value of the unauthorised investment, but also in respect of the call. This case is taken as authority for the proposition that the death of a trustee does not exonerate his estate from making contribution in respect of breaches of duty in which that The reasoning of Swinfen Eady J may also have proceeded on the footing that the surviving trustee in whose name the shares were recorded held them not as the survivor of joint owners but as a tenant in common holding the title on 83 (1875) LR 20 Eq 225 at 233. 84 Lindley on Partnership and Companies, 4th ed (1878), vol 1 at 760, 773-774. 86 Underhill and Hayton, Law Relating to Trusts and Trustees, 16th ed (2003) at 940; Mitchell, The Law of Contribution and Reimbursement, (2003) at 261; Jacobs' Law of Trusts in Australia, 7th ed (2006) at 581; Goff and Jones, The Law of Restitution, 7th ed (2007) at 417. Bell trust for himself and the estate of the deceased trustee; if so, then in substance the call was a burden imposed on property in which both parties shared the beneficial ownership87. However the basis for the decision in Jackson be understood, the case does not support the respondent's case. The result is that the authorities relied upon do not provide any foundation for the decision of the Court of Appeal or for the refinement attempted by the respondent in this Court. The fiduciary duty McColl JA held that Mr Brooker and Mr Friend were subject to a fiduciary obligation "to be equally and personally liable to each other for losses flowing from personal borrowings"88. In this Court, the appellant correctly emphasises that such a formulation of fiduciary duty went beyond the imposition of proscriptive obligations, a limitation emphasised in decisions of this Court89. The respondent seeks to meet this apparent failure to observe the settled doctrine of fiduciary law in Australia by recasting the duty. This is not a duty to the Company as a director but a duty to Mr Brooker which is imposed upon Mr Friend and obliges him not to prefer his own interests to those of Mr Brooker in managing the disbursement of the funds of the Company to repay loans to the Company made possible by Mr Brooker's personal borrowing from third parties, including from SMK. This duty then is said to have been broken by Mr Friend preventing the funds of the Company from being used to reduce the burden of the borrowing by Mr Brooker. The appellant responds with the submission that this attempted reformulation was neither pleaded nor run at trial. 87 [1903] 1 Ch 947 at 951. His Lordship also remarked that there had been an express agreement between the trustees to contribute equally to any liability arising from the investment: [1903] 1 Ch 947 at 951. 88 [2006] NSWCA 385 at [154]. 89 Breen v Williams (1996) 186 CLR 71 at 113 per Gaudron and McHugh JJ. See also at 93-94 per Dawson and Toohey JJ, 135-137 per Gummow J; [1996] HCA 57, and see further Pilmer v Duke Group Ltd (In liq) (2001) 207 CLR 165 at 197-198 [74] per McHugh, Gummow, Hayne and Callinan JJ; [2001] HCA 31. Bell The appellant also submits that equity does not impose fiduciary duties between the parties to a deliberate commercial decision to adopt a corporate structure in which they would owe duties, but to the corporation and as directors. Why, it is asked, should equity intervene in such a fashion when the Company, by which Mr Brooker and Mr Friend carried on the business, failed and, in the result, their personal losses will not be in equal amounts? That submission is to be accepted. Conclusions The findings by the trial judge show that over many years Mr Friend and Mr Brooker each utilised their connections with family and friends to obtain loan funds then to be advanced to the Company. The moneys were advanced by these third parties to Mr Friend or Mr Brooker, as the case may be, then lent to the Company, and its indebtedness then appeared in the loan accounts of the directors. But Mr Friend, as appellant, submits that it was not an incident of this relationship that each of them bore in equity any personal responsibility to the other to carry half the burden of repayment of the loans to the other party. The appellant develops that submission by emphasising the significance of the selection by him and Mr Brooker of the corporate structure as the vehicle for their business enterprise. The appellant submits that the equitable doctrine of contribution should not be extended to outflank the consequences of the selection by the parties of the corporate structure. We agree. That selection brought with it the attendant legal doctrines of corporate personality and limited personal liability. Moreover, at the time of the incorporation of the Company, the Companies Act 1961 (NSW) was in force and this (and the successor legislation) provided for the breakdown of relations between the controllers of closely held companies by such provisions as those for winding up on the just and equitable ground under s 222(1)(h)90 and for oppression suits under s 18691. Further, the attempts by the respondent in this Court to enlist doctrines and remedies respecting contribution and fiduciary obligations seek to avoid the consequences of the undisturbed findings of fact and law by the trial judge. The appellant and the respondent were not, after the formation of the Company in 90 See Ebrahimi v Westbourne Galleries Ltd [1973] AC 360. 91 See In re Jermyn Street Turkish Baths Ltd [1970] 1 WLR 1195; [1970] 3 All ER 57. Bell 1977, in a relationship of partnership. Nor were their business dealings pursued pursuant to any agreement in the nature of a joint venture. To speak of a "common design" is to fix attention at a level of abstraction which is well above the endeavour of the parties to derive equal profit for their respective family shareholdings by the conduct of the business of the Company. On the case pleaded the trial judge held that there was no partnership between Mr Friend and Mr Brooker, no joint venture, and no other relationship which gave rise to an entitlement to an accounting between them92. Unless those findings were to be upset by the Court of Appeal that ought to have been the end of the litigation. Orders The appeal should be allowed and the costs of the appellant paid by the first respondent. The orders of the Court of Appeal entered 25 June 2008 should be set aside and in place thereof the appeal to that Court should be dismissed with costs, including the costs of the application to that Court for recall of reasons. 92 [2005] NSWSC 395 at [79]. HEYDON J. The orders proposed by French CJ, Gummow, Hayne and Bell JJ should be made for the reasons given by them in relation to the "common design" point93 and the "fiduciary duty" point94. But those orders should also be rested on an additional and independent ground of decision. It relates to an allegation of what the appellant called a denial of procedural fairness and Mason P called a "process irregularity". The allegation underlay the following ground in the notice of appeal: "The majority erred in holding that it was open to the Court of Appeal to make a declaration of liability for equitable contribution, or any final relief restricted to a single transaction involving the parties, given the way the first respondent conducted the trial and the appeal to the Court of Appeal." The expression "equitable contribution" in that ground refers to the "common design" doctrine which was relied on by the Court of Appeal majority, advocated by the respondent95 in this Court, but rejected by French CJ, Gummow, Hayne The appellant contended that reliance by the Court of Appeal majority on the "common design" doctrine was a denial of procedural fairness. The appellant said that the point had never been pleaded. He said it had not been argued before the trial judge. He said it had never appeared in the respondent's notice of appeal before the Court of Appeal. He said it had never been advanced in the respondent's submissions to that Court. For those reasons the appellant filed a notice of motion seeking recall of Mason P's reasons for judgment and of the paragraph in McColl JA's reasons for judgment in which she agreed with Mason P's discussion of the "common design" doctrine96. The Court of Appeal majority rejected that "procedural irregularity" complaint for reasons stated by Mason P and agreed in by McColl JA. All of the appellant's propositions were rejected. The Court of Appeal majority asserted that the matter was pleaded. It said the point was argued in written final address before the trial judge and was dealt with by the trial judge. It said that the point 93 At [63]-[83] and at [87]-[90]. 95 By "the respondent" is meant the first respondent, Mr Brooker, and by "the company" is meant the second respondent, Friend & Brooker Pty Ltd. The second respondent took no part in the proceedings: see [4] and [9] above. 96 The notice of motion also sought recall of some other paragraphs of her reasons for judgment, but that course was taken for reasons other than the "procedural irregularity" complaint. was in part the subject of the notice of appeal to the Court of Appeal. It said that after having "emerged" in an "even narrower focus", the point was "raised and addressed" during the hearing of the appeal and in supplementary written submissions filed after judgment was reserved97. Thus the Court of Appeal majority concluded that the proceedings before it had been conducted in a procedurally impeccable fashion. The submissions of the respondent in this Court defended that conclusion. Those of the appellant flatly denied it. There is some importance, not limited merely to this particular case, in examining whether the Court of Appeal's conclusion was correct. With respect, it was not. Pleading Allegations of material fact. The Court of Appeal majority responded to the appellant's complaint that the "common design" case had not been pleaded in this way. It pointed out that the fifth amended statement of claim was divided into five parts. The fourth, headed "Failure to Account", pleaded, in pars 13-24, various matters of fact relating to the SMK loan. The fifth set out the 15 orders sought. Mason P quoted 10 of the paragraphs – pars 13-15, 17-19 and 21-24 – headed "Failure to Account". Before doing so, he said: "It is necessary to set out the references to the SMK loan in the pleading. They show to my satisfaction that the SMK transaction was being singled out as an alternative free-standing claim that, if accepted, could result in relief falling short of a general accounting arising out of the entire 'joint venture' or 'partnership'. Paras 21 and 22 relate to the claim for a general accounting, but their terms are presently relevant because of the opening words of para 23 ('In the further alternative')." (emphasis in original) Paragraphs 23 and 24 of the fifth amended statement of claim alleged: In the further alternative, [the respondent] incurred liability to repay the SMK loans personally with the knowledge and consent of [the company and the appellant] for the purposes of the joint venture or partnership and disbursed the loan moneys to or for the benefit of the joint venture or partnership and thereby for the benefit of [the appellant]. To the extent that the SMK loans were expended by [the respondent] to repay debts and pay expenses on behalf of the joint venture and partnership, the SMK loans were expended on 97 See the passage quoted above at [30]. liabilities jointly owed by [the appellant and the respondent] as joint venturers or partners, or on items from which the Joint Venture or partnership, and therefore also [the appellant], has materially benefited, and for all of which [the appellant] has not recouped [the respondent], or made contribution to or accounted to [the respondent], for his share of the liability or benefit to the Joint Venture or partnership, as a result of which [the appellant] has been unjustly enriched at the expense of [the respondent]." The problem is that even if it is concluded (contrary to the facts) that the SMK transaction was singled out as an alternative free-standing claim capable of supporting a grant of relief short of a general accounting, the respondent did not plead any matters of fact which would suggest to the appellant that that claim and that relief rested on a case based on the "common design" doctrine. French CJ, Gummow, Hayne and Bell JJ have shown that there is in reality no "common design" doctrine. Of course the respondent was entitled to argue for its existence in the courts below (although he did not) and in this Court (as he did). But, even on the respondent's submission in this Court, at best the basis of support in authority for the doctrine can only be described as thin and sparse. Even if it existed, it must be regarded as little-known and little-understood. That was demonstrated by the numerous permutations which the respondent's attempts to state it in argument in this Court went through98. In those circumstances, a case based on it would have to be pleaded with some clarity and specificity if the appellant were not to be caught by surprise. The respondent submitted, and the appellant denied, each at considerable length, that par 24 pleaded a case based on the "common design" doctrine. It certainly does not. That conclusion does not call for elaborate demonstration. It is sufficient to make a simple comparison of par 24 with what Cooper J said in Cummings v Lewis99, with what the Court of Appeal majority, in reliance on that case, said100, and with the final form of the "common design" doctrine propounded by the respondent to this Court as his justification for the Court of Appeal majority conclusion on the matter101. 98 For the sake of clarity, it should be said that senior counsel for the respondent in this Court did not appear in the courts below, and senior counsel for the appellant in the Court of Appeal and in this Court did not appear at the trial. To note that fact is not to suggest any criticism either of them or of any other counsel who have appeared at any stage in the proceedings. 99 (1993) 41 FCR 559 at 598 (quoted at [68] above). 100 See [63] above. 101 See [64] above. That form had been preceded by different formulations in oral argument. Paragraph 24 does not allege all the material facts necessary to invoke the supposed doctrine102. Prayers for relief. Mason P also said: "Most of the prayers for relief were referable to the wider (ultimately unsuccessful) claim for a general accounting. However, paras 31, 32, 34 and 35 provided: '31. An order that the [appellant] pay to the [respondent] such amount as may be found due by the [appellant] to the [respondent]. 32. Damages or alternatively equitable compensation. 34. An order that the [appellant] pay restitution the [respondent]. 35. Such further and other orders and directions as may be appropriate.'" The answer to this point is that it is the joinder of issue on allegations of fact which creates triable issues. The four prayers for relief quoted by the Court of Appeal majority are entirely consistent with remedies to be granted after the general accounting had taken place. They do not point to the SMK loan as a "free-standing claim". And they certainly do not point to the SMK loan as raising a claim based on the "common design" doctrine. It follows that the appellant is correct in his contention that the point on which the Court of Appeal majority decided the case against him was not pleaded. But, although it is the better practice for the parties in litigation involving pleadings to ensure that the pleadings maintain consistency with the issues between the parties and are amended as those issues change, it is, of course, possible for the issues between the parties to widen beyond those articulated in pleadings. Did that happen in this case? 102 See [65] above. The structure of the trial the also referred emphasised"; "claim" was The respondent submitted to this Court that (a) a "claim for contribution was referred [to] in submissions at trial"; (b) a "claim for equitable compensation was the respondent's statement of issues; and (d) the appellant responded to it. These submissions may be disposed of as follows. Submission (a) is not correct. As to submission (b), no basis was advanced for the award of equitable compensation. And near the end of his final address at the trial, counsel for the respondent said that the distinction between an account and equitable compensation "may very well end up a distinction without a difference because at the end of the day, the exercise is the same." As to submission (c), the respondent's statement of issues did no more than raise the question whether he should receive from the appellant "any amount (and if so what amount) by way of restitution." No basis on which that amount might be ordered was assigned. As to submission (d), the appellant simply said: "Nothing gives rise to any claim for indemnity or equitable contribution." In addition to the four submissions made by the respondent, the Court of Appeal majority said: "Written submissions filed on behalf of [the respondent] at trial included claims referable to the SMK loan in isolation". A reference was given to pars 31-38 of the respondent's "Outline of Plaintiff's Submissions" used at the end of the trial. But those paragraphs said nothing about any "common design" point. They were directed to a contention that the SMK loan was made to the appellant and the respondent jointly. That contention was rejected by the trial judge, who found that the loan was made "to [the respondent] and/or his wife". The respondent did not complain about that finding in his notice of appeal to the Court of Appeal, and Mason P said that the finding was correct. There is a further answer to these points. Even if, contrary to what has just been said103, a "common design" case had been pleaded or raised, however obscurely, outside the pleadings, the way that the trial was conducted by the parties meant that the trial judge was under no obligation to deal with that "common design" case. Shortly before, and at the start of, the trial, the parties came to an agreement. It was reflected in correspondence, at a directions hearing, and in the opening address of counsel for the respondent. It had the approbation of the trial judge. They agreed that it would not be necessary to tender an expert's report, because the trial should be devoted to one topic – whether the respondent had made out a claim to have accounts taken. The parties further agreed that if the respondent made that claim out, the detailed factual investigation of the parties' dealings would take place before a Master. That position did not change during the trial. In closing address counsel for the 103 At [97]-[100] above. respondent adhered to the proposition that the relief sought was an order that there be a full accounting. that The statement by the Court of Appeal majority the respondent's written submissions at the trial included claims referable to the SMK loan in isolation is true to a limited extent. It is true to the extent that pars 31-38 of the respondent's "Outline of Plaintiff's Submissions" referred to above concluded in a claim in par 38 that "the ultimate liability for the repayment of the SMK loan and the interest thereon should be borne equally by [the appellant] and [the respondent]." That section, headed "The third SMK Investments loan", was the fourth section of the document. It followed three other sections headed "Acceptance of Mr Brooker's evidence", "The agreement to share losses" and "The fiduciary relationship". The fourth section was followed by a single paragraph, par 39, under the heading "CONCLUSION": "The only mechanism suitable for such 'equalization' of the loss is an order for the taking of accounts. It is submitted that the taking of accounts should be referred to a referee." The word "equalization" refers back to the words "should be borne equally" in par 38. The conclusion in par 39 referred to the totality of the arguments which had preceded it in the four sections of that document. Thus the respondent did not depart in his written submissions at the end of the trial from the position that he had adopted throughout it. That position had two aspects. One was that no claim for relief referable to any particular transaction was made any more than it had been made in the fifth amended statement of claim. The other aspect was that the only relief sought was the taking of accounts. In final address the respondent did refer to equitable compensation. But the respondent never asked the trial judge to make the kind of order, specific to the SMK loan, which the Court of Appeal made at the end of its third judgment. And he never urged the trial judge to identify and act on the "common design" doctrine. The trial judge and the "common design" doctrine The Court of Appeal majority quoted pars 75 and 76 of the trial judge's reasons for judgment104. According to the Court of Appeal majority, these paragraphs "addressed and rejected a claim that focussed upon a claim for contribution referable only to the SMK loan." Paragraph 75 commences with the statement that there was "no evidence that [the appellant] agreed to be jointly liable for, or to contribute to, the repayment of the SMK loan." That in part repeats and relates back to the trial 104 Paragraph 75 is quoted at [18] above. judge's earlier finding that the loan was not a loan jointly to the appellant and the respondent, but to the respondent and/or his wife. Paragraphs 75 and 76 appear just before the trial judge stated his conclusion in par 77 that when the company was incorporated the partnership between the parties ceased105. Paragraphs 75 and 76 appear at the end of a lengthy discussion by the trial judge of the significance of conversations between the appellant and the respondent before the incorporation of the company106. Paragraphs 75 and 76 were included as a response to the following oral submission advanced on behalf of the respondent and quoted by the trial judge: "[T]here is a basic agreement between these two men that whatever ultimately comes out of it, be [it] a gain, be it [a loss,] will ultimately end up equal in their pockets. If that weren't the case … one would imagine that neither of them would be prepared to borrow money off friends and close relatives and [in] large amounts, such as the 350 thousand, risk their own exposure, risk, in effect, their family's assets, unless each of them believed that the other would be equally liable to assist in compensating or in reimbursing those people." The reference to "350 thousand" was a reference to the SMK loan which was made in 1986 in an amount of $350,000. The principal of SMK Investments Pty Ltd, Mr Peterson, was an old friend of the respondent's. The oral submission was that the conduct of the parties in relation to the SMK loan pointed towards a shared belief that a particular type of agreement – a "Joint Venture or partnership" – existed between the appellant and the respondent. The fifth amended statement of claim alleged that the "Joint Venture or partnership" was "oral and was made" in 1977 and "also arises during a course of dealings" from 1977 to 1996. It was alleged to call for an overall sharing of gains and losses. The trial judge rejected the oral submission for a reason stated in the second sentence appearing in par 75: "It is difficult to accept that, if in truth he held the belief that [the appellant] was equally liable for this loan, [the respondent] proceeded with the borrowing, and procured the securities from his wife and his mother, without first obtaining [the appellant's] acceptance of such liability." A little later in par 75 the trial judge said: "The absence of evidence as to these matters is … further indication that there was no ['Joint Venture or partnership'] agreement". In the second last sentence of par 76, after dealing with the 105 Paragraph 77 is quoted at [12] above. See also the trial judge's finding in par 79, quoted at [24] above. 106 Paragraph 74 is quoted at [23] above. agreement between the appellant and the respondent that on 30 June 1993 their company should repay SMK $250,000 in partial repayment of the loan, the trial judge said: "There is no evidence that the issue of joint liability was raised. This occasion provides no support for the existence of the ['Joint Venture or partnership'] agreement." The position shortly stated then, contrary to the opinion of but with respect to the Court of Appeal majority, is that the trial judge could not be said to have "addressed and rejected a claim that focussed upon a claim for contribution referable only to the SMK loan." Rather, the trial judge was responding to a submission using the supposed events surrounding the making of the SMK loan in 1986 and its partial repayment in 1993 as evidence for the "Joint Venture or partnership". A fortiori, the trial judge did not address any claim referable only to the SMK loan which was based on the "common design" doctrine. There was in this respect a divergence between the Court of Appeal majority and the respondent's submissions in this Court. The Court of Appeal majority said that the trial judge dealt with a claim for contribution referable to the SMK loan. On the other hand, the respondent repeatedly submitted that the trial judge had "failed" to address the topic of contribution based on the common design doctrine. It is the respondent who is correct, in the sense that the trial judge did not deal with that subject. But the pejorative undertones in the word "failed" must be rejected. The trial judge is not to be criticised for not dealing with the "common design" doctrine, because the parties did not place that issue before him. Since the only pleading claimed to support the "common design" doctrine consisted of pars 23 and 24 of the fifth amended statement of claim, once the trial judge took the step of rejecting the allegation on which pars 23 and 24 rested, namely that there had been a "Joint Venture or partnership" – a step with which the Court of Appeal did not disagree – there was no basis on which the trial judge could have gone further. The respondent's notice of appeal before the Court of Appeal The Court of Appeal majority said that grounds 11 and 12 of the respondent's notice of appeal to the Court of Appeal were "referable to the SMK matter in isolation." Grounds 11 and 12 were as follows: "11. The trial Judge erred in paragraph [75] and following in finding that there was no evidence of any conversation between the parties in which the [appellant] agreed to accept liability for the SMK loan. 12. The trial Judge should have found that the unchallenged evidence was that the [respondent] had obtained the [appellant's] agreement to the SMK loan, and that the [appellant's] said agreement was on [the] basis that he would contribute equally to any loss personally incurred by the [respondent] by reason thereof." With respect, that is not the better reading of those grounds. The reference to "paragraph [75] and following" is a reference to pars 75-77. Paragraphs 75 and 76 were quoted by the Court of Appeal and have just been discussed107. In par 77, quoted above108, the trial judge stated his conclusion rejecting the allegations that a "Joint Venture or partnership" agreement existed. The passages to which the grounds of appeal are directed thus dealt with the evidence about the SMK loan as a possible source for a favourable finding about the "Joint Venture or partnership" agreement. The passages are not directed to the "SMK matter in isolation". And the two paragraphs of the notice of appeal were not directed to the "common design" point. That is so because the written submissions of the respondent in the Court of Appeal in support of those two grounds of appeal were directed to the quite distinct question of a fiduciary relationship between the parties. The hearing in the Court of Appeal In his written submissions filed before the hearing in the Court of Appeal the respondent did not argue for a "common design" doctrine of the kind eventually found by the Court of Appeal majority. Nor did he do so orally. That is why the Court of Appeal majority said only that the point "emerged", and was "raised and addressed", during the hearing of the appeal. Those words were carefully chosen. But were they accurate? In this Court the appellant submitted: "[I]t is true that a separate case based on the SMK loan was in play in the Court of Appeal. That proposition is true if you accept that a court determined to decide the case upon a basis that it is determined to decide the case [on], notwithstanding the ways the parties are conducting it, forces a party to adopt a case really against their wishes." The submission was that the Court of Appeal forced the respondent to adopt a case against his wishes. It continued by saying that counsel for the respondent "valiantly resisted accepting the invitation" of the Court of Appeal. It concluded with the contention that "perhaps understandably" counsel's will was overborne when "in the most lukewarm way" in a written submission put in after the conclusion of oral argument counsel embraced the Court of Appeal's point. The appellant's submission is correct. Counsel for the respondent before the Court of Appeal said that the SMK loan was an example of loans made to each of the appellant and the respondent, all of which the respondent wanted brought into account. A little later Mason P said: "Why didn't you propound a claim based on the events of November 1986 using the 1977 discussion as background which might have led to just concentrating just on the equities arising out of this one transaction [ie the SMK loan] which seems to have been rather unique." incidentally, a stand at odds with He did not say what the particulars of the claim might be, or what the specific equities were. Counsel for the respondent answered by repeating that while the SMK loan was the largest part of the respondent's claim, it was not the only part. On numerous occasions thereafter Mason P suggested that the respondent should claim specific relief limited to the SMK loan rather than a general accounting. This was, the Court of Appeal majority's statement in the second judgment that four of the prayers for relief in the fifth amended statement of claim related to that loan109. However, contrary to what the respondent submitted to this Court, an examination of the oral argument as transcribed reveals no reference to equitable contribution or the "common design" point. It also reveals that counsel for the respondent did not act on the judicial hints. While on one occasion a similar judicial hint was made to counsel for the appellant during his address to the Court of Appeal, it was not accompanied by any exposition of how contribution based on "common design" could be justified. At the close of oral argument counsel for the appellant was directed to put in a written submission about a piece of evidence, and counsel for the respondent was directed to reply to it. Both sides appear to have gone rather beyond the terms on which leave was granted. In the course of his supplementary submissions the appellant, perhaps scenting an impalpable danger which in due course materialised, stressed that the primary relief sought at trial was "a full account as to all … contributions and receipts" and submitted that: "having regard to the express way that the case was run below and the obvious forensic decisions which were made by the [appellant] in that regard, the [respondent] should not be allowed to seek or obtain alternative relief on appeal." In the course of the respondent's supplementary submissions, he stated: "If it were minded to do so, the Court could fashion relief directed at compensation relating only to the circumstances of the 1986 SMK 109 See above at [98]. Investments loan. Allegations specific to the SMK investments [sic] were made in paragraphs 23 and 24 of the fifth amended statement of claim." That submission said nothing about "equitable contribution" or the "common design" point. That submission did not indicate how the relief might be fashioned. Above all, that submission did not indicate on what grounds the relief was to be fashioned. In those circumstances, when, over nine months later110, the Court of Appeal came to deliver its first judgment, the appellant must have been surprised to read that in the second paragraph of his reasons for judgment Mason P said that the "claim ultimately pressed on behalf of the [respondent] was for contribution by [the appellant] with respect to all or part of the outstanding balance of the SMK loan". With respect, the respondent did not press any such claim. Instead counsel for the respondent was pressed to make some claim about the SMK loan. The basis on which he was to make that claim was not clarified. Nor was the basis on which he actually made it. The respondent submitted in this Court that the Court of Appeal majority was entitled to proceed as it did because: "an appellate court is not restricted in its ultimate conclusions by the formulations of the parties in argument and indeed has a responsibility to determine the law applicable to the case and cannot be precluded from doing so because a party fails to address a case open on the pleadings or raised in argument". The "common design" case was not open on the pleadings and was not raised in argument. Putting these considerations aside, is the submission sound? In support of it, the respondent cited two passages from Autodesk Inc v Dyason [No 2]111. They do not support it. In the first passage, Brennan J said112: 110 Cf Direct Birmingham, Oxford, Reading and Brighton Railway Co (Spottiswoode's Case) (1855) 6 De G M & G 345 at 364 [43 ER 1267 at 1274] (after less than three months' reservation, Turner LJ said: "This case has stood for judgment longer than has been usual with us"); Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246 at 310; Bishopsgate Investment Management Ltd (in liq) v Maxwell (No 2) [1994] 1 All ER 261 at 263; Goose v Wilson Sandford and Co [1998] TLR 85; R v Maxwell (1998) 217 ALR 452 at 462-463; Laminex (Australia) Pty Ltd v Smeeth [1999] NSWCA 462 (Mason P, Meagher and Beazley JJA); Boodhoo v Attorney General of Trinidad and Tobago [2004] 1 WLR 1689; Expectation Pty Ltd v PRD Realty Pty Ltd (2004) 140 FCR 17; Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273 at 283-287 [30]-[40]; Monie v Commonwealth of Australia (2005) 63 NSWLR 729. 111 (1993) 176 CLR 300; [1993] HCA 6. 112 (1993) 176 CLR 300 at 308 (footnotes omitted). "A court should not pronounce a judgment against a person on a ground which that person has not had an opportunity to argue. However, a sufficient opportunity to argue a ground is given when the ground is logically involved in a proposition that has been raised in the course of argument before the court or is to be considered by the court as an unconceded step in determining the validity of a conclusion for which one of the parties contends. Of course, the precise ground which a court or judge assigns for a decision will frequently be formulated in terms different from the terms of a submission by counsel but, provided the ground has arisen in one of the ways mentioned, the court or judge may properly proceed to judgment without requiring the case to be relisted for further argument and without inviting supplementary submissions to be made." The "common design" point was not logically involved in any proposition raised in the course of argument before the Court of Appeal. Nor was it an unconceded step in determining the validity of a conclusion for which the respondent contended: the respondent could scarcely be said to have contended for an order limited to the SMK loan, and the "common design" point was not an unconceded step, but an unknown one. In the other passage relied on113, Dawson J said nothing which would justify deciding the case against the appellant in reliance on the "common design" point without notice to the appellant that this might happen. The following words of Mason CJ and Brennan J in Pantorno v The Queen114 apply to this appeal: "When the parties to an adversarial proceeding agree on a proposition of law and conduct their cases on that basis, their agreement does not bind the trial judge. If the judge determines the law to be different, he may apply the law as he determines it to be, but he must inform the parties of the view he has formed when that is necessary to give them an opportunity to address new issues arising from the judge's departure from the proposition of law on which the case was conducted." Here the parties were in agreement that whatever propositions of law applied, they did not include the "common design" point: there is no reason to suppose that they or their advisers had adverted to it. Once the Court of Appeal majority perceived that it was material, the parties should have been informed before that perception was acted on. 113 (1993) 176 CLR 300 at 317. 114 (1989) 166 CLR 466 at 473; [1989] HCA 18. A more specific aspect of this point arises from the Court of Appeal majority's handling of authority. In the first judgment, while giving reasons for deciding the case as he did, Mason P discussed several authorities on contribution, and also referred to Cummings v Lewis115. That case was heavily relied on by the respondent in this Court, and so were the cases discussed in it. Cummings v Lewis was not, however, a case which the respondent relied on, either before the trial judge or in the Court of Appeal. And it was not a case which any member of the Court of Appeal drew to the attention of counsel either during or after argument. In Rahimtoola v Nizam of Hyderabad116 Viscount Simonds concluded his speech with these words: "My Lords, I must add that, since writing this opinion, I have had the privilege of reading the opinion which my noble and learned friend, Lord Denning, is about to deliver. It is right that I should say that I must not be taken as assenting to his views upon a number of questions and authorities in regard to which the House has not had the benefit of the arguments of counsel or of the judgment of the courts below." The other members of the House, apart from Lord Denning, associated themselves with those observations117. Lord Denning's speech concluded as follows118: "My Lords, I acknowledge that, in the course of this opinion, I have considered some questions and authorities which were not mentioned by counsel[119]. I am sure they gave all the help they could and I have only gone into it further because the law on this subject is of great consequence and, as applied at present, it is held by many to be unsatisfactory. I venture to think that if there is one place where it should be reconsidered on principle – without being tied to particular precedents of a period that is past – it is here in this House: and if there is one time for it to be done, it is now, when the opportunity offers, before the law gets any more 115 (1993) 41 FCR 559 at 593. 116 [1958] AC 379 at 398. 117 [1958] AC 379 at 404 per Lord Reid and 410 per Lord Cohen and Lord Somervell of Harrow. 118 [1958] AC 379 at 423-424. 119 One of the counsel concerned was Richard Wilberforce QC. enmeshed in its own net. This I have tried to do. Whatever the outcome, I hope I may say, as Holt CJ once did after he had done much research on his own: 'I have stirred these points, which wiser heads in time may settle.'120" What Lord Denning said did not deal with or excuse the "elementary error"121 of failing to draw the attention of the parties, particularly the losing party, to the basis on which the losing party was to lose. In days when the reservation of judgments was rarer than now, and when indeed it was quite common for judgments to be delivered immediately on the close of oral argument, courts commonly adhered to a practice of not referring in reasons for judgment to any point or authority not raised in argument. Non-adherence to that practice would run the risk of immediate and well-justified protest from the losing party. Some think the practice remains correct practice. Does it? Points are one thing. Authorities are perhaps another. The practice must be good for points, at least points which are decisive, or materially influential, in the outcome122. Any other system would institutionalise constant denials of natural justice. But the practice may be too extreme in relation to authorities. There may well be many occasions on which it is legitimate for a court to refer to authorities not relied on by the parties – for example, where the leading case in a line of authorities has been raised with the parties, but not others. However, the present appeal involved a doctrine – assuming, contrary to the actuality, that it existed – which was little-known and little-understood. It was propounded in this Court on the strength of one decision in the Full Federal Court relying on three relatively old and not well-known English cases. The obscurity of the supposed doctrine is revealed by the fact that its formulation and the meaning of the authorities said to expound it were questions debated in this Court for hours, and over many pages of written submissions. It was therefore incumbent on the Court of Appeal majority to draw the details of the doctrine, and the primary authority on which it supposedly rested, to the attention of the parties, either during the oral argument if the details of the doctrine and the authority were then present to their minds, or whenever they became present during the nine month period during which judgment was reserved. This duty was not complied with. The doctrine was used by the Court of Appeal majority to solve a problem narrower than, and distinct from, that propounded by the respondent during the appeal. The problem in question was not raised with counsel for the appellant at all. At best it could be said that only the most general 120 Coggs v Bernard (1703) 2 Ld Raym 909 at 920 [92 ER 107 at 114]. 121 Paterson, The Law Lords, (1982) at 39n. 122 See, for example, Spring v Guardian Assurance Plc [1995] 2 AC 296 at 316. of allusions to it were made in debate with counsel for the respondent. The making of those allusions was not, with respect, a compliance with the duty. |
HIGH COURT OF AUSTRALIA APPELLANT AND NSW CRIME COMMISSION & ORS RESPONDENTS Dalton v NSW Crime Commission [2006] HCA 17 10 May 2006 ORDER Appeal dismissed. Appellant to pay the costs of the NSW Crime Commission. On appeal from the Supreme Court of New South Wales Representation: J F Bleechmore for the appellant (instructed by Ellinghaus & Lindner) M G Sexton SC, Solicitor-General for the State of New South Wales with K M Richardson for the first and third respondents (instructed by Crown Solicitor for New South Wales) D M J Bennett QC, Solicitor-General of the Commonwealth with M J Leeming for the second respondent (instructed by Australian Government Solicitor) C J Kourakis QC, Solicitor-General for the State of South Australia with J-A Lake intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor's Office (SA)) M Sloss SC with C J Horan intervening on behalf of the Attorney-General for the State of Victoria (instructed by Victorian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Dalton v NSW Crime Commission Constitutional law (Cth) − Power with respect to service and execution throughout the Commonwealth of civil and criminal process − Summons served under State law upon person in another State to attend State commission of inquiry with investigative functions − Summons a "subpoena" for the purpose of the Service and Execution of Process Act 1992 (Cth) − "Civil and criminal process" − Whether "civil and criminal process" includes process relating to purely investigative functions of tribunals which are not in aid of an adjudicative function − Whether s 76 of the Service and Execution of Process Act 1992 (Cth) a valid exercise of Commonwealth legislative power. Constitutional law (Cth) – Power with respect to service and execution throughout the Commonwealth of civil and criminal process – Parties did not contend that such power is confined to process of the courts of the States – Whether the High Court can nevertheless consider whether such power is so confined – Paramountcy of the Constitution. Constitutional law (Cth) – Power with respect to service and execution throughout the Commonwealth of civil and criminal process – Whether such power is confined to process of the courts of the States – Whether increased potential for infringement of liberty associated with extending such power to process of State non-court bodies is a consideration supportive of narrower construction of such power – Proliferation of State non-court bodies that issue process – Relevance to constitutional meaning of changing features of modern government. Words and phrases − "civil and criminal process". Constitution, s 51(xxiv). Service and Execution of Process Act 1992 (Cth), Pt 4, ss 47-80. New South Wales Crime Commission Act 1985 (NSW), ss 18, 18AA, 35. GLEESON CJ, GUMMOW, HAYNE, CALLINAN, HEYDON AND CRENNAN JJ. This appeal from the New South Wales Court of Appeal1 turns upon the validity of s 76 of the Service and Execution of Process Act 1992 (Cth) ("the SEP Act"). This statute replaced the Service and Execution of Process Act 1901 (Cth) ("the 1901 Act")2. The SEP Act Section 76 of the SEP Act empowers the Supreme Courts of the States and Territories3 to grant leave to serve certain subpoenas outside the relevant State or Territory. The challenged provision appears in Pt 4 (ss 47-80). Part 4 is headed "Service of process of tribunals" and has four Divisions. Division 4 (ss 75-80) is headed "Service of subpoenas in the performance of investigative functions". Division 3 (ss 56-74) is headed "Service of subpoenas in the performance of adjudicative functions". Reference will be made later in these reasons to Div 3, but this appeal is centred upon Div 4. The term "subpoena" is relevantly defined in s 47 as meaning in Pt 4: "a process that requires a person to do one or both of the following: to give oral evidence before a tribunal; to produce a document or thing to a tribunal; but does not include a process that requires a person to produce a document in connection with discovery and inspection of documents." (emphasis added) 1 Dalton v New South Wales Crime Commission (2004) 62 NSWLR 77. 2 The 1901 Act was repealed by s 3 of the Service and Execution of Process (Transitional Provisions and Consequential Amendments) Act 1992 (Cth). 3 Section 5 of the SEP Act requires, with certain qualifications, each Territory to be regarded as a State. No question arises on this appeal with respect to the operation of the power conferred by s 122 of the Constitution to make laws for the government of the territories. Crennan The term "tribunal" is defined in s 3(1) as follows: "tribunal means: a person appointed by the Governor of a State, or by or under a law of a State; or a body established by or under a law of a State; and authorised by or under a law of the State to take evidence on oath or affirmation, but does not include: a court; or a person exercising a power conferred on the person as a judge, magistrate, coroner or officer of a court." (emphasis added) The term "court", as presently material, is defined in s 3(1) as meaning "a court of a State" and as including "an authority exercising the powers of such a court"; in turn, "authority" is defined as meaning "a judge, magistrate, coroner or officer of a court appointed or holding office under a law of a State". With that context in mind, it is convenient to return to the provisions in Div 4 for the service of subpoenas, including s 76. Subdivision A (ss 75-77) of Div 4 is headed "Service of subpoenas generally". Section 75 states that the subdivision applies to a subpoena that has been issued by a tribunal in connection with the performance of an investigative function by the tribunal and is addressed to a person who is not in prison, or who is in prison but need not attend before the tribunal for the purpose of complying with the subpoena. The expression "investigative function" as used in s 75 is defined in s 3(1) as meaning "the function of conducting an inquiry other than an inquiry conducted in connection with the performance of an adjudicative function". The expression "adjudicative function" is itself defined in s 3(1) as meaning, in relation to a tribunal: "the function of determining the rights or liabilities of a person in a proceeding in which there are 2 or more parties, including the function of making a determination: Crennan altering those rights or liabilities; or relating to any matters of a kind mentioned in section 48". Section 76, the critical provision for this appeal, reads: "(1) The Supreme Court of a State in which a subpoena is issued may, on application, give leave to serve the subpoena outside the State. The court may give leave only if it is satisfied that: the evidence likely to be given by the person to whom the subpoena is addressed, or a document or thing specified in the subpoena, is relevant to the performance by the tribunal of the investigative function concerned; and if the evidence, document or thing may constitute or contain evidence that relates to matters of state – it is in the public interest that the evidence be given or the document or thing be produced. In granting an application, the court: is to impose a condition that the subpoena not be served after a specified day; and (b) may impose other conditions." The Commission This litigation arises from the operations of the corporation constituted by s 5 of the New South Wales Crime Commission Act 1985 (NSW) ("the State Act") as the "New South Wales Crime Commission" ("the Commission"). The Commission "is to consist of" the Commissioner (appointed by the Governor) and any Assistant Commissioners that are appointed (ss 5(3), 5A, 5B). The Commission is empowered by s 13(1) of the State Act to hold hearings for the purposes of an investigation and by s 16(5) to take evidence on oath or affirmation. The Commission thus answers the definition of "tribunal" in the SEP Act, set out earlier in these reasons. The principal functions of the Commission are set out in s 6 of the State Act. They include investigation of matters relating to certain criminal activity, Crennan the assembling of evidence and the furnishing of reports relating to illegal drug trafficking and organised and other crime. Section 16(1) empowers a member of the Commission to summon a person to appear before it at a hearing to give evidence and to produce such documents or other things (if any) as are referred to in the summons. A person served with a summons to appear as a witness at a hearing before the Commission shall not, without reasonable excuse, fail to attend as required or to attend from day to day unless excused or released from further attendance (s 18(1)). Failure to attend may lead to the issue by the Commissioner of a warrant for the arrest of the witness (s 18AA(1)) and detention until released by order of the Commissioner (s 18AA(5)). The Supreme Court is empowered by s 18AC to review these decisions made under s 18AA(5). The Commission thus is an example, in corporate and permanent form, of the proposition that throughout Australia "general legislation [has] long existed arming commissions of inquiry with the power of compelling testimony". The words are those of Dixon J in McGuinness v Attorney-General (Vict)4. A striking instance is provided by the colonial legislation in Victoria. After amendment in 18725, ss 14 and 15 of The Statute of Evidence 1864 (Vic)6 empowered boards or commissions appointed by the Governor in Council to summon witnesses to attend, be sworn and give evidence, on pain of committing an offence by failing to do so7. The course of the litigation By notice under s 25 of the State Act dated 4 November 2003, the Management Committee of the Commission referred to the Commission for investigation circumstances implying and allegations that certain serious drug (1940) 63 CLR 73 at 99. 5 By 36 Vict No 443. 6 27 Vict No 197. 7 Provision to similar effect was later made by ss 12 and 13 of the Evidence Act 1890 (Vic) and, after federation, in more detailed form by Pt 1, Div 5 (ss 14-21) of the Evidence Act 1915 (Vic). Crennan offences and other offences had been committed. The investigation was conducted under the reference code named "Gymea IV". On 12 March 2004, the Commission summoned the appellant pursuant to s 16 of the State Act, requiring him to appear before it on 5 April 2004 to give evidence in relation to the Gymea investigation. The summons was a "subpoena" within the meaning of s 47 of the SEP Act, and also related to the performance by the Commission of an "investigative function" within the meaning of s 75 of the SEP Act, as set out earlier in these reasons. The result was that s 76 (if valid) was then engaged upon application by the Commission to the Supreme Court of New South Wales. On application of the Commission made to the Supreme Court on 17 March 2004, the Court granted leave for service of the subpoena issued on 12 March 2004. Leave was given to serve on the appellant whose address was shown in the order as an address in St Kilda East, Victoria. Service was effected in Melbourne on 22 March 2004 and the appellant made what was described as a conditional appearance at the Commission. Shortly thereafter, the appellant commenced against the Commission a proceeding in the Supreme Court from which the appeal to this Court derives. There was no dispute that the summons issued under s 16 of the State Act was a subpoena within the meaning of the definition in s 47 of the SEP Act which had been issued by "a tribunal in connection with the performance of an investigative function by the tribunal" as required by s 75 of the SEP Act. However, the relief sought by the summons filed on 16 April 2004 included an order setting aside the grant of leave under s 76 of the SEP Act on the ground that s 76 is "unconstitutional". The jurisdiction of the Supreme Court thus engaged was the federal jurisdiction conferred by a combination of s 30(a) and s 39 of the Judiciary Act 1903 (Cth), the matter being one arising under or involving interpretation of the Constitution. By order made by a judge of the Supreme Court, proceedings were remitted to the Court of Appeal to determine questions including the validity of s 76 of the SEP Act. The Attorneys-General of the Commonwealth and for New South Wales intervened in support of the validity of s 76. The Court of Appeal (Spigelman CJ and Wood CJ at CL; Mason P dissenting)8 held that the challenge 8 Dalton v New South Wales Crime Commission (2004) 62 NSWLR 77. Crennan to the validity of s 76 failed. It is from that dismissal of the appellant's proceeding in the Supreme Court that the appeal to this Court is brought. The Attorneys-General of the Commonwealth and for New South Wales are joined as second and third respondents to the appeal. The Attorneys-General for Victoria and South Australia intervened in support of the validity of the federal law. The interrelation between the State and federal statutes Before turning to the issues bearing more immediately upon the validity of s 76, something more should be said of the interrelation between the State and federal statutes. Section 35 of the State Act provides a regime for the service of documents for the purposes of that statute. On its face, the service for which s 35 provides is not limited to the taking of steps solely within New South Wales9. However, 9 Section 35 states: "(1) For the purposes of this Act, service of a document on a person may be effected: on a natural person: by delivering it to the person personally, or by leaving it at, or by sending it by pre-paid post to, the residential or business address of the person last known to the person serving the document, or on a body corporate – by leaving it at, or by sending it by pre-paid post to, the head office, a registered office or a principal office of the body corporate, or in any other way in which service could have been effected had this section not been enacted. (2) In addition to the means of service provided for under subsection (1), service of a document on a person (whether a natural person or a body corporate) may be effected by facsimile transmission or other electronic means notified by the person as being an available means of communication. (Footnote continues on next page) Crennan par (a) of s 8(4) of the SEP Act provides that that statute applies "to the exclusion of a law of a State ... with respect to ... the service or execution in another State of process of the relevant State that is process to which this Act applies". Hence the steps taken in this case relied upon the SEP Act rather than upon any efficacy in s 35 of the State Act to found service upon the appellant in Victoria. If the appellant were to succeed in the challenge to the validity of s 76 of the SEP Act, then a question would arise as to the reach of s 35 of the State Act. The Solicitors-General for New South Wales and the Commonwealth submitted that, upon its proper construction, there was nothing in the State Act to deny the efficacy of service of a summons outside New South Wales and elsewhere in Australia. In particular, the Solicitor-General of the Commonwealth emphasised a point made in Re Maritime Union of Australia; Ex parte CSL Pacific Shipping Inc10. This is that a body such as the Commission does not exercise judicial power, whereas, in accordance with traditional concepts, the assertion of curial jurisdiction in personal actions depends upon service of the initiating process in the jurisdiction11. The relief which the appellant seeks in this Court includes declarations that the notice issued by the Commission on 12 March 2004 "was not validly served" and that the appellant is not required to appear at the Commission in answer to it. No declaration could be made in terms of that width without entering upon the issue respecting s 35 of the State Act which has been noted above12. However, the primary declaratory relief sought by the appellant concerns the invalidity of s 76 of the SEP Act. The appellant fails to demonstrate that invalidity. Accordingly service was effective in accordance with the federal law (3) Service of a facsimile copy of a document in accordance with subsection (1) is taken to be service of the document for the purposes of that subsection." 10 (2003) 214 CLR 397 at 420-421 [59]-[61]. 11 Laurie v Carroll (1958) 98 CLR 310; Gosper v Sawyer (1985) 160 CLR 548. 12 Questions might also arise respecting the existence of a sufficient geographical nexus for the commission of offences under the State Act and the operation in that regard of the Crimes Act 1900 (NSW), s 10C. Crennan and no occasion further to consider s 35 of the State law is presented by this appeal. The provenance of s 51(xxiv) of the Constitution It is convenient to return to the question whether s 76 of the SEP Act is a law supported by par (xxiv) of s 51 of the Constitution. That paragraph reads: "the service and execution throughout the Commonwealth of the civil and criminal process and the judgments of the courts of the States". As was pointed out by Quick and Garran13, no provision corresponding to par (xxiv) is to be found in the Constitutions of the United States or of Canada. However, the provision did have a provenance in Australia and to this some attention first should be given. Of s 51(xxiv), it was said by the whole Court in Aston v Irvine14: "The nature of this power, as well as the prior history of the subject to which it relates, provides strong ground for interpreting it as enabling the federal legislature to regulate the manner in which officers of the law in one State should act with reference to the execution of the process of another State. It is a legislative power given to the central legislature for the very purpose of securing the enforcement of the civil and criminal process of each State in every other State. It is given to the central legislature because before federation it had been found that territorial limitations upon colonial power made the effective reciprocal action of the colonies in this field difficult, to the point of impossibility15. It is a power to be exercised in aid of the functions of the States and does not relate to what otherwise is a function of the Commonwealth. No doubt the words 'throughout the Commonwealth' include the Territories, at all events those 13 The Annotated Constitution of the Australian Commonwealth, (1901) at 614. 14 (1955) 92 CLR 353 at 364. 15 See, for example, Ray v M'Mackin (1875) 1 VLR (L) 274, and other cases cited in Quick & Garran, The Annotated Constitution of the Australian Commonwealth, Crennan within Australia, but that involves no material qualification of the statement." Later, in Ammann v Wegener16, Mason J remarked: "The difficulties which had existed in the Australian colonies in the nineteenth century affecting the service or execution in a colony of process issued in another colony lent some force to the notion that the law of a State may not have made adequate provision for the issue of a warrant in circumstances where a subpoena or summons issued in that State was served in another State and was not complied with. It was an established rule of construction that the process of a court did not run beyond its territorial jurisdiction17. And the courts of one colony might declare that a statute of another colony providing for an extra-territorial operation of its process was ultra vires on the ground that it exceeded the power to legislate for the good government of the colony18." Section 15 of The Federal Council of Australasia Act 1885 (Imp) ("the Federal Council Act")19 had given to the Council some legislative authority to deal with the difficulties caused by territorial limitations upon the powers of the colonial legislatures. Paragraphs (d), (e) and (f) of s 15 of the Federal Council Act stated: the service of civil process of the courts of any colony within Her Majesty's possessions in Australasia out of the jurisdiction of the colony in which it is issued: the enforcement of judgments of courts of law of any colony beyond the limits of the colony: 16 (1972) 129 CLR 415 at 443. 17 City Finance Co Ltd v Matthew Harvey & Co Ltd (1915) 21 CLR 55. 18 See Ray v M'Mackin (1875) 1 VLR (L) 274 and the judgments in R v Call; Ex parte Murphy (1881) 7 VLR (L) 113 [cf Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1; Australia Act 1986 (Cth), s 2(1)]. 19 48 and 49 Vict, c 60. Crennan the enforcement of criminal process beyond the limits of the colony in which it is issued, and the extradition of offenders (including deserters of wives and children, and deserters from the Imperial or Colonial naval or military forces". These powers were exercised and three statutes were in force at the commencement of the 1901 Act. Section 2 of the 1901 Act repealed The Australasian Civil Process Act 1886, The Australasian Judgments Act 1886 and The Australasian Testamentary Process Act 1897 ("the 1897 Act"). The first of these laws made provision for the service outside the colony of writs of summons issued out of the Supreme Court. The second provided for the enforcement of judgments recovered in a Supreme Court whereby any sum of money was made payable or the doing of or the forebearing to do any act was required or enjoined (s 2). The 1897 Act made provision for the enforcement by the Supreme Court of the first colony of orders made by the Supreme Court of the second colony for the production of testamentary instruments believed to be in the first colony and required to obtain probate or registration in the second colony. "The civil and criminal process" As will be apparent, pars (d) and (f) of s 15 of the Federal Council Act dealt separately with civil and criminal process. These two provisions were combined into the single par (xxiv) of s 51 of the Constitution. The reference therein to "process" in itself might have been understood as referring only to civil process; hence the phrase "civil and criminal" made it clear that the paragraph applied to all process. In that vein, Quick and Garran noted20: "Process includes the doing of something in a criminal court or proceeding, as well as in a civil court or proceeding. A summons from a judicial officer to appear and answer a criminal charge is a process. A warrant issued by a judicial officer, directing the arrest of a person on a criminal charge, is a process." for Counsel the Commonwealth Attorney-General supported the submissions by the New South Wales Attorney-General that the phrase "the civil and criminal process" is apt to refer to all species of "process" and that the words "civil and criminal" are not terms of qualification or limitation to the scope of 20 The Annotated Constitution of the Australian Commonwealth, (1901) at 617. Crennan s 51(xxiv). In particular, the Commonwealth emphasised that something less than a bright line divides the terms "civil" and "criminal". The point is illustrated by recent decisions of this Court dealing with exemplary damages in tort21, contempt of court22 and customs prosecutions23. It should be accepted that the words "civil and criminal" are used in s 51(xxiv) not as words of limitation but to embrace within the head of legislative power all that might properly answer the description "process". But what does that term embrace and, more importantly, is s 76 of the SEP Act a law with respect to the service of the process of the State of New South Wales? The ordinary meaning of "process" Schroeder JA said of the ordinary meaning of the term "process"24: "The word 'process' viewed as a legal term is a word of comprehensive signification. In its broadest sense it is equivalent to 'proceedings' or 'procedure' and may be said to embrace all the steps and proceedings in a case from its commencement to its conclusion. 'Process' may signify the means whereby a Court compels a compliance with its demands. Every writ is, of course, a process, and in its narrowest sense the term 'process' is limited to writs or writings issued from or out of a Court under the seal of the Court and returnable to the Court." But the term "process" was said by Schroeder JA "to extend to a formal writing issued under authority of law by an official having the authority to issue it as a means of enforcing a judgment of the Court"25. On the other hand, the exercise by a landlord of a common law power of distraint would not ordinarily be 21 Gray v Motor Accident Commission (1998) 196 CLR 1 at 7-8 [16]. 22 Witham v Holloway (1995) 183 CLR 525 at 534. 23 Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd (2003) 216 CLR 161 at 172-173 [29], 195 [107]. 24 Re Selkirk [1961] OR 391 at 397. 25 Re Selkirk [1961] OR 391 at 397. Crennan "process"26. It will be convenient to return to the term "process" after reference to the course of decision respecting s 51(xxiv). Ammann v Wegener27 One question of the construction of s 51(xxiv) of the Constitution which arose in this Court was whether the phrase "of the courts of the States" qualified both expressions "the judgments" and "the civil and criminal process", or merely the former. In Ammann, it was held that the words "of the courts" do not form part of the description of the subject-matter in the paragraph so far as it concerns the civil and criminal process; the term "process" is not governed by the words "of the courts", and it is sufficient that the process in question be that of a State. The occasion for the construction placed upon par (xxiv) was, as Gibbs J emphasised in Ammann28, provided by the proposition that a magistrate conducting a preliminary examination for the purpose of deciding whether a person charged on an indictable offence should be committed for trial performs a ministerial, not a judicial, function. However, later authority shows that this proposition should not be taken too far. In R v Murphy29, it was said in the joint judgment of six members of the Court: "The hearing of committal proceedings in respect of indictable offences by an inferior court is a function which is sui generis. Traditionally committal proceedings have been regarded as non-judicial on the ground that they do not result in a binding determination of rights. At the same time they have a distinctive judicial character because they are curial proceedings in which the magistrate or justices constituting the court is or are bound to act judicially and because they affect the interests of the person charged30." 26 Ex parte Birmingham and Staffordshire Gas Light Company (1871) LR 11 Eq 615 27 (1972) 129 CLR 415. 28 (1972) 129 CLR 415 at 435. 29 (1985) 158 CLR 596 at 616. 30 Sankey v Whitlam (1978) 142 CLR 1 at 83-84. Crennan It was this reasoning upon which the Court relied in Murphy for the conclusion that the federal law investing authority in the courts and magistrates of the States to commit for trial persons charged with offences against Commonwealth law was a law for investing a State court with jurisdiction in a "matter" arising under a law of the Commonwealth within the meaning of s 77(iii) of the Constitution. The entire "matter" comprised the commital proceedings and a subsequent trial31. The reasoning in Murphy to a degree was foreshadowed in several of the judgments in Ammann. Gibbs J said that32: "[a] summons issued by a justice for the purpose of securing the attendance of a witness at a committal proceeding is not only 'process' within the ordinary meaning of that expression, but is part of the criminal process of a State within par (xxiv), whether or not it can properly be described as the process of a court." "[I]n my view the summons is process of a court if it is issued by or out of a court and it commands the witness to appear and give evidence in proceedings in that court. In each case the witness summons was issued by a magistrate under s 12 and s 23 of the Justices Act [1921 (SA)] and required the witness to give evidence in the matter of an information laid in a court of summary jurisdiction. It was, accordingly, a process of that court." However, in Ammann, Gibbs J said34: "It might be thought that the words 'courts of the States' in s 51(xxiv) include all bodies which are courts according to the law of the States, whether or not those bodies exercise judicial power. However, it is not in my opinion necessary to decide whether a magistrate in South Australia 31 R v Murphy (1985) 158 CLR 596 at 617-618. 32 (1972) 129 CLR 415 at 438. 33 (1972) 129 CLR 415 at 442. 34 (1972) 129 CLR 415 at 436. Crennan when holding a preliminary examination for the purpose of deciding whether a person charged with an indictable offence should be committed for trial, or issuing a summons or warrant for the purpose of procuring the attendance of a witness at such a preliminary examination, can be described as one of 'the courts of the States' within s 51(xxiv) of the Constitution. It is therefore unnecessary to consider whether the words 'the courts of the States' in that paragraph refer only to tribunals exercising judicial powers, or whether the provisions of Pt V of the Justices Act show that a magistrate holding such preliminary examination or issuing such a summons or warrant is not a court according to the law of South Australia." This was unnecessary because35: "s 51(xxiv) enables laws to be made with respect to the service and execution of (1) the civil and criminal process of the States, and (2) the judgments of the courts of the States". Barwick CJ, McTiernan J, Menzies J, Walsh J, Stephen J and Mason J36 agreed with this construction of s 51(xxiv). The upshot of Ammann is what Wells J later called the "medial conclusion", that there may be "civil and criminal process" which is "of the States", although not "of the courts"37. In so far as the ordinary meaning of the term "process", discussed earlier in these reasons, is linked with litigation conducted in the courts, the Constitution speaks more broadly. It is with this consequence of Ammann that the appellant sought to cope in his submissions. The appellant's submissions The appellant does not challenge the holding in Ammann respecting the construction of s 51(xxiv). He does not assert that the process spoken of must be that of a court of a State; it is enough that the process is that of a State. 35 (1972) 129 CLR 415 at 436. 36 (1972) 129 CLR 415 at 422, 427, 429, 430, 439, 441 respectively. 37 Alliance Petroleum Australia NL v The Australian Gas Light Company (1983) 34 SASR 215 at 247. Crennan Accordingly, there is no question presented as to the meaning of the phrase "the courts of the States" in s 51(xxiv), and whether these courts have the same characteristics as "the courts ... of every State" and "any court of a State" spoken of in covering cl 5 and s 77(iii) of the Constitution. The appellant conceded that the summons issued by the Commission, if it qualified as civil or criminal process in the constitutional sense, was process of the State of New South Wales. The Commission was accepted as encompassed by the term "the State" within the meaning of s 51(xxiv)38. However, the appellant submitted, as he had in the New South Wales Court of Appeal, that the summons did not answer the description "the civil and criminal process". The constitutional expression was said to refer only to the process of bodies which determine disputes between persons, and the determination of the rights and liabilities thereof, or the enforcement of the criminal law by prosecution and trial; the circumstance that the laying of criminal charges is usually, albeit not always, preceded by an investigation does not render the investigative process of a body such as the Commission part of the criminal process. The appellant challenged what he described as the core of the reasoning of the majority in the Court of Appeal, the conclusion by Spigelman CJ39: "The words 'criminal process' are capable, in their natural and ordinary meaning, of extending to encompass compulsory powers to force attendance to give evidence in a criminal investigation by such a statutory authority. The context which suggests that the words should be read down is the reference to 'service and execution'. However, the force of that context in narrowing the interpretation is considerably attenuated by the fact, established by Ammann, that the words 'of the courts' do not qualify the words 'civil or criminal process'. These words are at large, albeit in 38 cf, with respect to the meaning of "a State" in s 75(iv) and s 114 of the Constitution, Crouch v Commissioner for Railways (Q) (1985) 159 CLR 22 at 32-33, 38-40; Deputy Commissioner of Taxation v State Bank (NSW) (1992) 174 CLR 219 at 229-233; SGH Ltd v Federal Commissioner of Taxation (2002) 210 CLR 51 at 66-68 [11]-[16], 79-80 [56]-[57], 102-103 [127]-[130]. 39 (2004) 62 NSWLR 77 at 80. Crennan the immediate context of 'service and execution'. No authority has been cited to the Court which would suggest that these words, in such a context, should be confined to the determination of legal disputes or the enforcement of laws." It will be apparent from the foregoing that in this Court, as in the Court of Appeal, the appellant approached the question of the validity of s 76 of the SEP Act as depending upon its characterisation as a law with respect to the service of the criminal process of the State of New South Wales. This assumed a dichotomy between "civil" and "criminal" process which required the assignment of any operation of s 76 to one category or the other before turning to assess the validity of s 76. That approach illustrates the error identified earlier in these reasons in treating the words "civil" and "criminal" as they appear in s 51(xxiv) as words of limitation or qualification, rather than of universal description. The correct approach is that urged by the respondents and interveners; this asks whether the conferral by s 76 of power to give leave to serve a subpoena outside the State is a law with respect to the service of the "process" of that State, in the constitutional sense of that term. Investigative and adjudicative functions The submissions for the appellant assumed a clear and decisive distinction, carried into s 51(xxiv), between investigative and adjudicative functions. The process with which s 76 is concerned, a subpoena answering the requirement in s 75 that it be issued by a tribunal in connection with the performance of an investigative function, cannot, the submissions continued, attract the support of par (xxiv) of s 51 of the Constitution. Part 4 of the SEP Act (ss 47-80) is so drawn as to distinguish between the exercise by tribunals of adjudicative functions and investigative functions. In particular, Div 3 (ss 56-74) provides for the service of subpoenas in the performance of adjudicative functions. That term is so defined (in s 3(1), set out earlier in these reasons) as to require the determination (which may be attended by the alteration) of the rights or liabilities of a person in a proceeding where there are two or more parties. The appellant does not dispute that, at the State level, where the exercise of the judicial power of the Commonwealth is not involved, such functions may be given to a tribunal. It was accepted in Alliance Crennan Petroleum Australia NL v The Australian Gas Light Company40 that arbitration for the resolution of legal disputes between parties is an example. It would follow that s 57 of the SEP Act, which provides for the grant of leave by a court of a State to serve a subpoena in aid of an adjudicative function, is supported by s 51(xxiv) of the Constitution. However, the appellant submits that s 76, because it relates to the investigative functions of tribunals, stands decisively apart from s 57 of the same statute. The proposition appears to accept that, whilst the process of courts is linked to the exercise of adjudicative functions and is plainly the subject for a law under s 51(xxiv) of the Constitution, so that there is an analogical extension in favour of the exercise of adjudicative functions by tribunals, the exercise by courts of investigative functions does not occasion or support the issue and service of process within the scope of s 51(xxiv). There is then no foundation for an analogical extension in respect of the investigative functions of tribunals. The appellant in this regard relied heavily upon a passage in the judgment of Barwick CJ in Ammann as authority that the phrase "the civil and criminal process" in s 51(xxiv) is confined to the determination of legal disputes or the enforcement of laws. Barwick CJ said41: "No more is involved, in my opinion, in the notion of the civil and criminal process to which par (xxiv) refers than a document which may be served or an order which may be executed in relation to proceedings for the establishment of legal rights or the enforcement of the criminal law." However, what is there said must be read in context. The Chief Justice was responding to an argument that the process spoken of in s 51(xxiv) is limited to that issued by a court or which initiates a legal proceeding. When read with that in mind, the passage in question does not give the present appellant the support he seeks to draw from it. The proposition denying the investigative functions of courts should not be accepted. From a time well before federation, the courts of the Australian colonies, like those in England and elsewhere in the Empire, exercised a range of 40 (1983) 34 SASR 215. 41 (1972) 129 CLR 415 at 423. Crennan administrative and investigative functions42. Provisions for the examination of judgment debtors, bankrupts, and officers of failed corporations are in point. In Cheney v Spooner43, this Court upheld the application of the 1901 Act to an order by the Supreme Court of New South Wales under ss 123 and 124 of the Companies Act 1899 (NSW) which gave leave to the liquidator of a company in voluntary liquidation to summons a number of persons to attend for examination by the Master in Equity. The equity jurisdiction of the Supreme Courts with respect to bills of discovery44 (or preliminary discovery in more recent parlance45) provides another instance of an investigative procedure. So also the courts of marine inquiry established in the Australian colonies46. Likewise the next of kin inquiry in an administration suit, conducted in New South Wales by the Master in Equity47. Further, the 1901 Act, as King CJ pointed out in Alliance Petroleum48, applied to subpoenas and summonses issued by Coroners. There is insufficient substance in the appellant's submission for its acceptance as limiting the scope of s 51(xxiv) of the Constitution. The validity of s 76 But what positive criteria apply to support the validity of s 76 of the SEP Act? In answering that question, it is not the occasion to attempt a definitive exposition of the reach of the constitutional head of power. Observations by 42 See generally the discussion by Dixon CJ and McTiernan J in R v Davison (1954) 90 CLR 353 at 368. 43 (1929) 41 CLR 532. 44 See Airservices Australia v Transfield Pty Ltd (1999) 92 FCR 200 at 203-206; affd (1999) 96 FCR 1 at 9-10. 45 See Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 10-12. 46 See Merchant Shipping Act 1894 (Imp), s 478; Marine Act 1890 (Vic), s 183; Navigation (Amendment) Act 1899 (NSW), s 10; R v Turner; Ex parte Marine Board of Hobart (1927) 39 CLR 411. 47 Mason and Weston, Precedents in Equity, (1915) at 198-199. 48 (1983) 34 SASR 215 at 236. Crennan Gummow, Hayne and Heydon JJ in Singh v Commonwealth49 are in point. Their "The questions about the construction of the Constitution, which fall for decision in this Court, require particular answers to particular questions arising in a live controversy between parties. The task of the Court is not to describe the metes and bounds of any particular constitutional provision; it is to quell a particular controversy by deciding whether, in the circumstances presented in the matter, the relevant constitutional provisions do or do not have the consequence for which a party contends." Three further points should be emphasised here. The first is that s 51(xxiv) is in that class of constitutional provisions, identified with examples by Gleeson CJ in Singh v Commonwealth51, which contains terms which are naturally understood and applied with reference to their legal meaning. The second is that what the courts regard as their process is not fixed but develops over time52. Examples are the development of the asset preservation order53 and the anti-suit injunction54. The third has been made earlier in these reasons. It is that the construction of s 51(xxiv) given in Ammann qualifies any ordinary meaning of "process" which links it to the conduct of litigation in the courts. However, whatever may be the metes and bounds of s 51(xxiv) after Ammann, the present appeal may be resolved on fairly narrow grounds. Is the "subpoena" defined in s 47 of the SEP Act sufficiently analogous, in the circumstances of this case, to the process in aid of the investigative functions exercised by the courts at the time of federation and, if need be, as since developed by the courts? 49 (2004) 78 ALJR 1383; 209 ALR 355. 50 (2004) 78 ALJR 1383 at 1417 [152]; 209 ALR 355 at 402. 51 (2004) 78 ALJR 1383 at 1386 [10]; 209 ALR 355 at 359. 52 cf with respect to bankruptcy and insolvency the remarks of Gibbs CJ in Storey v Lane (1981) 147 CLR 549 at 558. 53 Cardile v LED Builders Pty Ltd (1999) 198 CLR 380. 54 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345. Crennan The definition in s 47 of the SEP Act specifies a process which "requires" the giving of oral evidence or the production of a document or thing. The term "require" indicates not a duty of imperfect obligation, but a sanction imposed by law. The analogy with a writ of subpoena will readily be apparent. The processes of the Court of Chancery as they developed up to the introduction of the Judicature system provided for the procuring of the attendance of witnesses to give evidence before an examiner by the issue and service of a writ of subpoena with sanctions for default culminating in an order for committal to prison under warrant of the Lord Chancellor55. The subpoena the subject of the order under s 76 in this case had the incidents under the State Act described earlier in these reasons. These included the arrest and detention of the recalcitrant witness with provision for review by the Supreme Court under s 18AC of the State Act. The tribunal required by the definition of "subpoena" in s 47 of the SEP Act must be established by or under State law and be authorised to take evidence on oath or affirmation (s 3(1)). The Commission answers that description. The subpoena must be issued in connection with the performance of an "investigative function", which is the case here. Finally, s 76 conditions the service out of State upon leave by the Supreme Court of the State of issue. All of these matters, taken together, show that the scheme of Pt 4, Div 4 of the SEP Act, in which s 76 is found, provides for the service of what may fairly be described as process of the States, by analogy to court process as understood even at federation, and certainly as circumstances have developed since. It may be that some legislative scheme falling short of that in Pt 4, Div 4 would also be supported by s 51(xxiv). But upon that question the Court should not now enter. 55 Daniell, The Practice of the High Court of Chancery, 5th ed (1871), vol 1 at 799-805. The procedures of the common law courts had developed in a similar fashion: Lush's Practice of the Superior Courts of Law at Westminster, 3rd ed (1865), vol 1 at 524-534. Crennan Orders The appeal should be dismissed. The appellant should pay the costs of the Commission but not the costs of the Attorneys-General, whether as parties or interveners in this Court. Kirby KIRBY J. Pursuant to the Service and Execution of Process Act 1992 (Cth) ("the SEP Act")56, Mr Leigh Dalton ("the appellant") was served in the State of Victoria with a summons issued by the New South Wales Crime Commission ("the Commission"). The summons was issued under the New South Wales Crime Commission Act 1985 (NSW) ("the State Act"). It purported to require the appellant to appear as a witness at a hearing in New South Wales before the Commission. Pursuant to the State Act, a failure on the part of a person served to appear, and to attend until excused or released, would, in the absence of reasonable excuse, authorise the issue by the Commission of an arrest warrant57 and the detention of the person served until released by order of the Commission58. The appellant challenged the power of the Commission, whether under the State Act or pursuant to the federal SEP Act, to oblige him to appear before it for the purpose of giving evidence or producing the documents or other things referred to in the summons59. Principally, the appellant contended that the State Act could not of its own force impose such obligations, he being in Victoria. So far as the federal SEP Act purported to so require, the appellant submitted that it was beyond the law-making powers of the Federal Parliament. The constitutional challenge failed in the New South Wales Court of Appeal60. However, that Court divided. The validity of the SEP Act to render the Commission's summons effective in Victoria was upheld by Spigelman CJ (with whom Wood CJ at CL agreed). But Mason P dissented. He was of the view that the appellant was entitled to a declaration that the Commission's summons was not validly served on him because of a want of constitutional authority for the provisions of the SEP Act on which the Commission relied61. Doubtless because of the majority disposition and the course of the proceedings, the Court of Appeal did not proceed to consider whether the State Act, of its own force (or as applied by federal law in a court exercising federal 56 Section 76. 57 State Act, s 18AA(1). 58 State Act, s 18AA(5). 59 State Act, s 16(1). 60 Dalton v New South Wales Crime Commission (2004) 62 NSWLR 77. 61 The Commission relied on ss 76 and 77, read with the definition of "tribunal" and "investigative function" in s 3 and "subpoena" in s 47. Kirby jurisdiction62), was sufficient without the SEP Act to compel the appellant to comply with the summons and to proceed to New South Wales to appear before the Commission. By special leave, the appellant appeals to this Court against the judgment of the Court of Appeal. The appeal fails. The challenge to the constitutional validity of the federal SEP Act should be rejected. There is no need to consider questions as to the operation of the State Act, according to its own terms. The judgment of the Court of Appeal, reliant on the federal SEP Act, should be affirmed. The appellant must comply with the Commission's summons. The facts, legislation and constitutional provisions The facts: The facts were not in dispute. So far as they are relevant to this appeal, they are stated in the reasons of Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ ("the joint reasons")63. The appellant submits that the requirement, imposed on him by the terms of the Commission's summons (and the penalties for disobedience) constitute an infringement of his liberty. He seeks relief from them. Unless compelled by law, he is unwilling to submit to the investigatory processes of the Commission. It is a body created within the executive government of the State of New South Wales with large coercive powers from which he prefers to be free. Unless the summons served on him64 is valid, that is his right. The legislation: The relevant provisions of the SEP Act65, the State Act66 and earlier laws for the interjurisdictional service of process within Australia67, are also set out in the joint reasons. Mention is made there of the somewhat narrower language of the Service and Execution of Process Act 1901 (Cth) ("the 62 Under the Judiciary Act 1903 (Cth), ss 30(a), 39. 63 Joint reasons at [10]-[15]. 64 Pursuant to leave granted under the SEP Act by G R James J in the Supreme Court of New South Wales, ex parte on 17 March 2004. 65 Joint reasons at [2]-[5]. 66 Joint reasons at [6]-[8], [17] and n 9. 67 Especially the Australasian Civil Process Act 1886; the Australasian Judgments Act 1886 and the Australasian Testamentary Process Act 1897, all made under the Federal Council of Australasia Act 1885 (Imp). See joint reasons at [25]. See also Flaherty v Girgis (1987) 162 CLR 574 at 582. Kirby 1901 Act"). It contained the provisions in force when questions of constitutional validity arose in earlier decisions of this Court68. The provisions of the State Act are coercive. The principal stated objects of that Act are "to reduce the incidence of illegal drug trafficking" and "to reduce the incidence of organised and other crime"69. Proved involvement in either of those activities would potentially expose a person to criminal liability attracting, upon conviction, substantial punishment. Even if no offence inculpating the appellant himself were alleged, or established, participation in assembling evidence for use "in the prosecution of a person for a relevant offence arising out of any such matters"70, the review of an earlier police inquiry into matters relating to such criminal activity71 and other functions of the Commission could potentially involve him in risks and dangers. Perhaps because of this, and unlike the courts, by the State Act a hearing before the Commission is to be "held in private"72. Although a person giving evidence before the Commission "may be represented by a legal practitioner"73, the Commission has power to exclude legal representation in some circumstances74. The Commission also has large powers to control examination or cross-examination of witnesses75. It can suppress the publication of evidence, the contents of documents and other material facts76. A witness summoned to attend, or appearing before, the Commission at a hearing is not generally77 excused from answering any question, or producing any document or thing, on the ground that the answer or production might 68 The terms of s 16 of the 1901 Act are set out in the reasons of Mason P: Dalton (2004) 62 NSWLR 77 at 84 [31]. 69 State Act, s 3A. 70 State Act, s 6(1)(b). 71 State Act, s 6(1)(b1). 72 State Act, s 13(5). 73 State Act, s 13(4). 74 State Act, s 13B. 75 State Act, s 13(8). 76 State Act, s 13(9). 77 Cf State Act, s 18A. Kirby incriminate or tend to incriminate the witness, "or on any other ground of privilege, or on the ground of a duty of secrecy or other restriction on disclosure, or on any other ground"78. The answer made, or document or thing produced, by a witness at a hearing before the Commission is not ordinarily admissible in evidence against the person in any civil or criminal proceeding or in disciplinary proceedings79. Clearly, therefore, the procedures of the Commission amount to a departure from the principles of accusatory justice that ordinarily govern the conduct of criminal proceedings in this country. The "right to silence" and to put the prosecution to proof of serious criminal accusations that may be made against a person summoned (or the family or associates of that person) are severely modified by the State Act. That this is done in respect of matters within the legislative competence of the New South Wales Parliament is one thing. However, the appellant objects to the attempt to oblige him to leave Victoria and to proceed to New South Wales. He says that this has not been validly done by the State Act and, so far as the SEP Act purports to impose a federal legal obligation on him to do so, it exceeds the nominated heads of federal constitutional power. I have explained the features of the State Act so that the practical issues in the appeal will be sharpened. This is not simply a case of an administrative tribunal with modest functions or a fact-finding body assisting in policy development. This case involves coercion and potential self-incrimination in the official investigation of serious criminal offences. The appellant asked: if the Commission could be brought within the SEP Act as a "tribunal", could a State, by its laws, empower a police constable or other person or body to gather evidence of any crime against the laws of the State in a similar way and then to impose on persons anywhere in the Commonwealth a requirement to present before that person or body in another State to answer incriminating questions, so long as leave was granted under the SEP Act for that purpose? The constitutional context: The key provision of the Constitution invoked by the Commission, with the support of federal and State governmental interveners, to uphold the validity of the impugned provisions of the SEP Act was s 51(xxiv). Subject to the Constitution, that paragraph empowers the Federal Parliament to make laws with respect to: "The service and execution throughout the Commonwealth of the civil and criminal process and the judgments of the courts of the States." 78 State Act, s 18B(1). 79 State Act, s 18B(2). Although cf s 18B(3). Kirby Understandably, this provision is the focus of the joint reasons. However, I agree with Spigelman CJ in the Court of Appeal80 that it is necessary to read this head of power in the full context of the Constitution keeping in mind the features of the federal polity that the Constitution establishes. Specifically, it is relevant to have regard to two other provisions pertinent to interjurisdictional law and process within the federation. By s 51(xxv), the Federal Parliament has power to make laws with respect "The recognition throughout the Commonwealth of the laws, the public Acts and records, and the judicial proceedings of the States." Moreover, s 118 of the Constitution provides: "Full faith and credit shall be given, throughout the Commonwealth to the laws, the public Acts and records, and the judicial proceedings of every State." Also important are the provisions of Ch III of the Constitution establishing the integrated Judicature of the Commonwealth; the interrelationship between the State and federal courts in that Chapter through the appellate jurisdiction of this Court81; and the power afforded to the Federal Parliament to make laws investing any court of a State with federal jurisdiction82. The separation of the integrated courts from the executive government of the Commonwealth and the States is part of the basic constitutional structure and design83. Finally, the Commonwealth, in support of the validity of the SEP Act, placed reliance on the incidental powers of lawmaking under the Constitution to supplement the express powers vested in the Parliament84. This submission was not elaborated. In the end, the constitutional questions were significantly narrowed by the way in which they were presented. 80 (2004) 62 NSWLR 77 at 80 [10]. 81 Constitution, s 73(ii). 82 Constitution, s 77(iii). 83 Cf R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254; Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1; Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. 84 Especially Constitution, s 51(xxxix). Kirby The issues Three issues: Three constitutional issues are potentially presented by this appeal: The confinement to court process issue: Whether the federal SEP Act is invalid because the only provisions that it may make for service and execution throughout the Commonwealth of "civil and criminal process" is for the "process" of "the courts of the States" and hence not the "process" of a defined non-court "tribunal", such as the Commission. The criminal process issue: Assuming (as authority suggests85) that the "civil and criminal process" referred to in s 51(xxiv) of the Constitution is not confined to that of "the courts of the States", but is disjunctive and free-standing, is the "process" envisaged confined to documents executed "in relation to proceedings for the establishment of legal rights or the enforcement of the criminal law"86? If it is, the appellant argued that the purpose of the "process" in question, being the investigation of whether there are any relevant legal obligations requiring enforcement of the criminal law, a summons issued by the Commission is not the kind of "process" envisaged by the Constitution and hence, so far as the SEP Act purports to attach coercive requirements to the Commission's summons, it exceeds the nominated source of power. It is invalid. No incidental or other power can breathe life into it. The State law issue: If the foregoing issues are determined against the appellant, does the State Act, by its own terms, (without the need for leave under federal law for interstate service) validly apply to the appellant anywhere within Australia so as to oblige his attendance before the Commission? Is the State Act "picked up" and applied in federal jurisdiction? Or, if the SEP Act is in this regard invalid, is the State Act constitutionally capable, by its own force, of applying beyond the State of New South Wales to a person such as the appellant, having regard to the 85 Aston v Irvine (1955) 92 CLR 353 at 364; Ammann v Wegener (1972) 129 CLR 86 Ammann (1972) 129 CLR 415 at 423 per Barwick CJ. This was the view adopted by Mason P in the Court of Appeal: (2004) 62 NSWLR 77 at 86 [42]. Kirby principles governing the extra-territorial operation of State laws within the Commonwealth without any need for federal legislative support87? Resolution of the issues: There are, as I shall show, significant arguments, never satisfactorily resolved by this Court, for confining the power in s 51(xxiv) of the Constitution to "civil and criminal process … of the courts of the States". However, this is not the present doctrine of this Court. In his appeal, the appellant did not challenge the present doctrine88. The first issue should therefore be assumed against him. Once this step is taken, the attempt to confine the "criminal process … of the States" to process incidental to the establishment of legal rights and obligations, cannot succeed. Conventional principles governing constitutional interpretation argue against that course. The second issue must therefore also be decided against the appellant. The SEP Act is thus valid in its application to the appellant according to its terms. It follows that it is unnecessary to decide any contentions as to the meaning and validity of the State Act, operating of its own force outside the State of New South Wales89. The arguable confinement of the power to court process Duty to the Constitution: The duty of a judge of this Court, in deciding a matter brought before it, is to quell the controversy between the parties90. But the "quelling" must be done in accordance with law. Where the meaning and application of the Constitution is concerned, from which the judges of this Court derive their authority, there is an individual duty to the document91. That duty cannot be overridden or ignored because of the way parties choose to present their case92. Nor can past rulings or procedural restrictions93 impede this Court's 87 See, eg, Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1; Port MacDonnell Professional Fishermen's Assn Inc v South Australia (1989) 168 CLR 340; Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1. 88 [2006] HCATrans 006 at 134, 530. 89 Cf Flaherty (1987) 162 CLR 574 at 582. 90 Singh v The Commonwealth (2004) 78 ALJR 1383 at 1417 [152]; 209 ALR 355 at 402. See joint reasons at [47]. 91 See Shaw v Minister for Immigration & Multicultural Affairs (2003) 218 CLR 28 at 55-57 [76]-[80] and cases there cited. 92 Cf Roberts v Bass (2002) 212 CLR 1 at 54-55 [143]-[144]. Kirby faithful application of the Constitution. These statements do not mean that judges approach constitutional questions as if the law reports contain blank pages. The greatest of respect is paid to the decisions of the past. However, many cases show that fresh consideration of such decisions can sometimes lead to new approaches, including on constitutional questions94. As I have mentioned, the appellant did not argue that the "civil and criminal process" mentioned in s 51(xxiv) of the Constitution referred only to the "process … of the courts of the States". Indeed, the appellant disclaimed that argument95. He did so although, were it to succeed, it would have been fatal to the validity of the SEP Act in its application to the interstate service of a summons issued by a "tribunal" such as the Commission. Whatever arguments might be mustered to the effect that a magistrate conducting a preliminary hearing in an interstate police court is a "State court" for constitutional purposes96; that an interstate special magistrate conducting a preliminary examination in connection with a complaint that a defendant had committed an indictable offence is also a "court" for such purposes97; and further that an arbitration ordered under the Arbitration Act 1891 (SA) has sufficient resemblance to a curial arbitrator to be a "court" for such purposes98, such arguments could not succeed here. The Commission is not on any arguable basis a "court[] of the State[]". It is an authority of the executive government of the State. Sufficient has been revealed of its functions and powers to show that it does not, and is not intended to, operate as a "court". Certainly, for the purpose for which the summons was issued by the Commission to the appellant, in order to interrogate him, no court-like adjudicative function was contemplated. The purpose of the summons was investigatory. Whilst Australian courts, in 93 Evda Nominees Pty Ltd v Victoria (1984) 154 CLR 311 at 316. See also Allders International Pty Ltd v Commissioner of State Revenue (Vict) (1996) 186 CLR 630 at 673; Shaw (2003) 218 CLR 28 at 56 [77]. 94 See, eg, Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129; (1921) 29 CLR 406; cf Re Patterson; Ex parte Taylor (2001) 207 CLR 391 and Shaw (2003) 218 CLR 28 at 55-56 [76]-[78]. 95 [2006] HCATrans 006 at 134. 96 Aston (1955) 92 CLR 353 at 363. 97 Ammann (1972) 129 CLR 415 at 418. 98 Alliance Petroleum Australia NL v Australian Gas Light Company (1983) 34 SASR 215 at 236; cf at 244-245 per Zelling J, noted by Mason P (2004) 62 NSWLR 77 at 91 [73]. Kirby particular jurisdictions and in certain cases, sometimes perform investigatory functions, the broad-ranging investigation by the Commission with a view to identifying criminal liability and to commencing separate criminal proceedings is not a function of the "courts of the States" as contemplated by the Constitution. It follows that, even if past authority of this and other courts on the meaning of s 51(xxiv) of the Constitution could be distinguished on the facts or explained with other justifications, the present appeal presents the first of the above issues squarely, assuming that the Court should decide it. The Court's present authority: In its report Service and Execution of Process99, the Australian Law Reform Commission addressed the alternative approaches to the meaning of s 51(xxiv) in terms that were repeated by Mason P in the Court of Appeal100: "It is possible to construe the power in two ways. • Narrow view. This view would read the power as 'the civil and criminal process, and the judgments, of the courts of the States'. On this interpretation the power would be confined to court process alone. • Broad view. This view would read the power as 'the civil and criminal process, and the judgments of the courts, of the States'. On this view Parliament could legislate with respect to process that was not court related." In Aston, this Court appeared to prefer the broad meaning. In unanimous reasons, the Court said101: "The nature of this power, as well as the prior history of the subject to which it relates, provides strong ground for interpreting it as enabling the federal legislature to regulate the manner in which officers of the law in one State should act with reference to the execution of the process of another State. It is a legislative power given to the central legislature for the very purpose of securing the enforcement of the civil and criminal process of each State in every other State. It is given to the central 99 Report No 40, (1987) at 20 [38]. The Commission's report led to the enactment of the SEP Act replacing the 1901 Act. 100 (2004) 62 NSWLR 77 at 83 [28]. 101 (1955) 92 CLR 353 at 364 (citations omitted). Kirby legislature because before federation it had been found that territorial limitations upon colonial power made the effective reciprocal action of the colonies in this field difficult, to the point of impossibility." Later in the same reasons, this Court pointed out that102: "A justice of the peace is not a court and in at least one State he has no strictly judicial functions." On the other hand, the actual constitutional issues decided in Aston were not specific to the issue whether "the civil and criminal process" referred to in s 51(xxiv) of the Constitution was confined to that "of the courts of the States". The request in that case, for leave to enforce the proceedings commenced in South Australia, concerned an attempt to have the defendants appear before the Police Court in Adelaide. Such a court (or its equivalent) would almost certainly now be considered one of the "courts of the States" within the meaning of that phrase in s 51(xxiv), giving the words the broad interpretation proper to a constitutional provision. Two other issues argued in Aston concerned the supposed impermissibility of entrusting to State officers "part of the executive power of the Commonwealth"103 or invalidly conferring on State magistrates part of the judicial power of the Commonwealth104. Whether the remarks in Aston could be treated as obiter dicta or not, the later decision in Ammann105 contains a number of observations endorsing the broad view of the meaning of s 51(xxiv). Thus, Gibbs J said106: "[I]n s 51(xxiv), which empowers the Parliament to make laws with respect to 'the service and execution throughout the Commonwealth of the civil and criminal process and the judgments of the courts of the States', the word 'process' is not governed by the words 'of the courts'; those words refer only to 'judgments'. In other words, s 51(xxiv) enables laws to be made with respect to the service and execution of (1) the civil and criminal process of the States, and (2) the judgments of the courts of the States." 102 (1955) 92 CLR 353 at 365. 103 (1955) 92 CLR 353 at 364. 104 (1955) 92 CLR 353 at 365. 105 (1972) 129 CLR 415. 106 (1972) 129 CLR 415 at 436. Kirby In Ammann, Walsh J and Stephen J agreed in the reasons of Gibbs J and with the orders that he proposed. Somewhat similar opinions on the ambit of the power appear in the reasons of Menzies J107 and of Mason J108. Although he dissented in the result, Barwick CJ expressed a like view on the question whether the words "of the courts" in s 51(xxiv) formed part of the description of the subject matter "so far as it concerns the civil and criminal process". In Barwick CJ's view "[t]hose words … form part of the description of the other section of the subject-matter of the paragraph, namely, the judgments of the courts of the States."109 The result is that the reasoning in Ammann resists any reconfiguration of the operation of the closing phrase of s 51(xxiv) of the Constitution. No doubt, this explains why the appellant elected not to argue the opposite and proceeded directly to the second issue on which, he hoped, more promising prospects awaited him. Contrary arguments: Despite the present state of authority there are, as it seems to me, significant textual, contextual and other arguments against the Court's doctrine as it now appears to be established. First, the text, standing alone, suggests that the words "of the courts of the States", appearing at the end of the paragraph, govern both "the civil and criminal process" and "the judgments" stated earlier in the paragraph. There is no punctuation in the paragraph (as there is in s 51(xxv) and in s 118 of the Constitution) to indicate clearly that the closing phrase relates only to some words and not to others. The text itself lends support to a suggestion that "the courts of the States" is intended to govern the entirety of the preceding expression, namely "the civil and criminal process and the judgments". Both elements in that expression constitute the universe of the activities that the "courts of the States" are engaged in. Before any court determination, there is "civil and criminal process". After determination there are "the judgments" of the courts. Put together, therefore, the two expressions capture the totality of the formal activities of "the courts of the States" in respect of which "service and execution throughout the Commonwealth" might be required. Moreover, the repetition in the text of the definite article ("the") before each of "civil and criminal process" and "judgments" suggests that the closing phrase was intended to govern each of the separately identified curial activities. Such a result would not be unusual in a federal Constitution, conceived in the 107 (1972) 129 CLR 415 at 429. 108 (1972) 129 CLR 415 at 441. 109 (1972) 129 CLR 415 at 422. Kirby 1890s, aimed at curing the dual colonial problems of service and execution of "the civil and criminal process … of the courts" and service and execution of "the judgments of the courts". With respect, as a matter of text and apparent purpose, there is therefore much to be said for a view of the ambit of the power contrary to that preferred in Ammann. Secondly, the constitutional context lends support to this conclusion. If it had been intended to sever "the judgments of the courts of the States" from service and execution of "the civil and criminal process" of the States, it might have been expected that punctuation would have marked the severance, as did the comma placed before the closing phrase in s 51(xxv), respecting "judicial proceedings". In an economically stated and carefully drawn text, the differential absence of such punctuation supports a functional interpretation of s 51(xxiv). Unsurprisingly, that function is one concerned with all of the activities of "the courts of the States". They are the bodies, as such, apt to require "service and execution throughout the Commonwealth"110. This includes both "process" and "judgments". A similar argument of punctuation and arrangement can be drawn from the terms of s 118 of the Constitution. The provision for the service and execution of "the civil and criminal process", referred to in s 51(xxiv), would also seem more naturally to relate to the process "of the courts of the States". This is because Ch III of the Constitution is at pains to create an integrated Judicature and thus to evidence a federal constitutional concern with the operation throughout the Commonwealth (a borderless society for this purpose) of the State courts' processes and judgments. There is no equivalent provision in the Constitution for the integration of the formal processes of the non-court federal and State executive powers. At least this is so unless the moribund Interstate Commission, envisaged by s 101 of the Constitution, provides the means, but then as a federal body. Whilst, in the way the Commonwealth has developed, the grant of a federal legislative power to make laws for the service and execution of the civil and criminal process of the States outside the courts might be viewed by some as convenient, it does not fit naturally within the basic ideas of the Constitution legitimate federal envisaging governmental concern but separation of the "processes" of the executive governments, being the Commonwealth but maintaining their separate governmental identities and functions. the courts as a matter of the several "sovereignties" together united integration of 110 Coroners ordinarily have no power to determine the legal rights and liabilities of persons but certainly have "courts" and "process": Bird v Keep [1918] 2 KB 692 at Kirby Thirdly, an historical recollection adds further support for this view. As the joint reasons point out111, the colonial difficulty that preceded the adoption of the Constitution in terms of s 51(xxiv) produced the Federal Council of Australasia, established under the imperial statute of that name112. As appears from s 15 of that statute (cited in the joint reasons) there is no doubt that the mischief identified in that Council, which was also in the minds of those who later drafted and adopted the federal Constitution, concerned, and concerned only, the activities "of the courts", "of courts of law" and of "criminal process" which, at that time, meant only process in and of "the courts". Nothing in the statute establishing the Council or in the three Australasian statutes for service and execution of process made by the Council113, lends any historical support for a suggestion that the interstate enforcement of the "civil and criminal process" of an executive government was contemplated by the adoption of s 51(xxiv). On the contrary, placed in its historical setting, the language of s 51(xxiv) appears to be a tighter, briefer expression of the powers formerly belonging to the Federal Council. They were powers confined to the process "of the courts". Fourthly, whilst it must be conceded that the exposition of the majority reasons in Ammann supports the broad interpretation of s 51(xxiv), on one view the determination of the point was not essential to reach the Court's orders in that case. This is because, for constitutional purposes, the subpoena addressed to the applicants in Ammann was arguably part of the "criminal process … of [a] court[] of the State[]" of South Australia, namely of the Adelaide Magistrates' Court before which they were required to appear to give evidence in committal proceedings. Although, for some purposes, committal proceedings have been viewed as administrative, and not judicial, in character, for constitutional purposes it would be difficult, at least today, to describe the Adelaide Magistrates' Court, or its equivalent, in Ammann (any more than the Police Court in Aston) as other than a "court[] of the State[]" within s 51(xxiv)114. At various points in their reasons, both Barwick CJ115, Gibbs J116 and Mason J117 appear to acknowledge that the 111 Joint reasons at [25]. 112 Federal Council of Australasia Act 1885 (Imp), s 15(d), (e) and (f). 113 See above n 67. 114 R v Murphy (1985) 158 CLR 596 at 617-618. 115 (1972) 129 CLR 415 at 423. 116 (1972) 129 CLR 415 at 436. Kirby "process" in Ammann was that of the "courts of the State[]" issuing the subpoena. Yet if that were so, there was no need in Ammann (any more than earlier in Aston) to differentiate between "the civil and criminal process … of the States" and the "civil and criminal process … of the courts of the States". The facts of each case applied equally to either interpretation. Fifthly, the risks of enlarging the imposition on the liberty of individuals of obligatory interstate executive government "process", issued by inquisitorial bodies such as the Commission, arguably present greater dangers than the interstate service and execution of the "process and the judgments of the courts". This is because the courts in Australia are guaranteed a minimum degree of constitutional independence, either directly under Ch III of the Constitution, in the case of federal courts, or, in the case of State courts, under the principle upheld in Kable v Director of Public Prosecutions (NSW)118. Important safeguards for the rights of the individual normally lie in the process of courts. There is no similar constitutional guarantee in the case of the executive governments, their officers and agencies. As the State Act illustrates in the present case, the ambit of the powers of such executive agencies, and the manner of their functioning, may not be as attentive to individual rights as, traditionally, the "courts of the States" have been. Ordinarily, courts perform their functions in public; they are independent of external influence; they allow parties to be legally represented; and usually their dispositions are susceptible to appeal. These are not necessarily features of bodies within the executive government – federal, State or Territory. In recent years, the number and variety of State investigatory bodies have proliferated significantly119. Therefore, to contemplate a power in the Federal Parliament to provide for the service and execution of the "process" of so many such State bodies is, to say the least, to envisage a net of power, potentially diminishing freedoms, cast far beyond that previously provided and wholly beyond that envisaged when s 51(xxiv) of the Constitution was adopted120. 117 (1972) 129 CLR 415 at 441. 118 (1996) 189 CLR 51. 119 State crime investigation bodies exist in New South Wales (the State Act; Independent Commission Against Corruption Act 1988 (NSW), s 4(1); Judicial Officers Act 1986 (NSW), s 5(1)), Queensland (Crime and Misconduct Act 2001 (Q), s 5(1)), Victoria (Major Crime (Investigative Powers) Act 2004 (Vic)) and Western Australia (Corruption and Crime Commission Act 2003 (WA), s 8(1)). 120 Quick and Garran, The Annotated Constitution of the Australian Commonwealth (1901) at 617. See joint reasons at [26]. Kirby However, federation121. Royal Commissions and official Commissions of Inquiry existed in the several colonies of Australasia before the interjurisdictional enforcement of their "process" was not a cause of concern to explain the "innovative" power to permit interstate service and execution of process in such a case. Doubtless this is why Mason J in Ammann122 expressly reserved the question whether the power afforded by s 51(xxiv) extended to "the process of Royal Commissions and tribunals which are not courts in the strict sense". Such reservation would not strictly have been necessary if the "process" of non-courts was within the ambit of the power. Arguably, if all that was required was that the "process" be that "of the States", it was not necessary for Mason J to express the reservation as he did. Conclusion: an assumed construction: Having regard to the foregoing, it will be obvious that I have distinct reservations about the interpretation of s 51(xxiv) of the Constitution that this Court accepted in Aston and in Ammann. I acknowledge the need to adopt a broad approach to a grant of legislative powers appearing in the Constitution, such as in the paragraphs of ss 51 and 52123. Especially so where the purpose of the power is, as here, to provide facilitative procedures; to reduce uncertainties and inconvenience in the operations of the applicable organs of government within the nation; and to respond to the changing features of modern government124, which certainly now includes the proliferation of court-like functions sometimes akin to those of the courts126. However, the language of s 51(xxiv) tribunals125 exercising adjudicative 121 Harrison Moore, "Executive Commissions of Inquiry", (1913) 13 Columbia Law Review 500. See also McGuinness v Attorney-General (Vict) (1940) 63 CLR 73 at 101; Clough v Leahy (1904) 2 CLR 139 at 153; McClemens, "The Legal Position and Procedure Before a Royal Commissioner", (1961) 35 Australian Law Journal 271. Cf Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 at 52, 88. 122 (1972) 129 CLR 415 at 441. 123 Jumbunna Coal Mine, No Liability v Victorian Coal Miners' Association (1908) 6 CLR 309 at 367-368; Australian National Airways Pty Ltd v The Commonwealth (1945) 71 CLR 29 at 85; Ammann (1972) 129 CLR 415 at 422. 124 Grain Pool of Western Australia v Commonwealth (2000) 202 CLR 479 at 522-523 125 Cf Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 510-512. 126 Ammann (1972) 129 CLR 415 at 436, 442. Kirby demands that content be given to the expression "of the courts". The controlling effect of that expression must be determined accurately. Constitutional convenience does not erase the text or resolve the doubts to which it gives rise127. The provision must still be given its true meaning. In constitutional adjudication there is often need for stability and settled conclusions. Absent fresh insights, stability in constitutional interpretation is often desirable. Eventually, judicial hesitations may have to bend to majority wisdom. But it may overstate things to say, as O'Connor, Kennedy and Souter JJ did in Planned Parenthood of Southeastern Pennsylvania v Casey128 that "[t]he legitimacy of the Court would fade with the frequency of its vacillation"129. In this respect, Australians are more resilient and realistic in their understanding of the contestable character of much constitutional decision-making130. Because the appellant did not argue against the approach adopted in Aston and Ammann, this appeal substantially took the course of accepting that approach, particularly as expressed in the reasons of Gibbs J in Ammann131. This is not, therefore, a suitable occasion in which to give effect to a contrary opinion. Whatever reservations I may feel concerning the interpretation of s 51(xxiv) adopted before this case (and as to the necessity and operation of the remarks expressed having regard to the identity of the State "court[]" in each case issuing process for execution interstate132) the proper course is for me to accept the present doctrine, having voiced my doubts about it133. The present state of constitutional authority (and the convenience to governments of the constitutional result arrived at) may cement the present 127 Molot, "The Rise and Fall of Textualism", (2006) 106 Columbia Law Review 1 at 129 505 US 833 at 866 (1992). 130 Cf Posner, "Foreword: A Political Court", (2005) 119 Harvard Law Review 31 at 131 See above these reasons at [79]. 132 There is also a change from the 1901 Act, considered in Aston (1955) 92 CLR 353, and the SEP Act applicable to the present appeal. However, the differences of language do not appear to be material. 133 Shaw (2003) 218 CLR 28 at 55-57 [76]-[80]; Ruddock v Taylor (2005) 79 ALJR 1534 at 1563 [179]; 221 ALR 32 at 71. Kirby doctrine in place so that it passes into the unquestioned meaning of the Constitution134. On the other hand, it may be that a future misuse, or over-use, of interstate service and execution of State executive government process will encourage a fresh look at whether this was the correct meaning of s 51(xxiv) of the Constitution. Whatever happens in the future, I have expressed my reservations. The summons is "criminal process" within power The constitutional position reached: I have examined the operation of the closing words "the courts of the States" in s 51(xxiv) for a reason. Although the appellant did not advance an argument that those words governed the phrase "the civil and criminal process", effectively his concession is, in my view, fatal to his constitutional challenge. Once it is accepted that the power afforded to the Federal Parliament by the paragraph is to make laws with respect to "[t]he service and execution throughout the Commonwealth of the civil and criminal process … of the States" (and not "of the courts of the States") it is impossible for the appellant to succeed. This is because the removal of the reference to "the courts" removes the phrase that is essential, in my view, to erecting an argument that "the civil and criminal process" referred to is limited to the type of "civil and criminal process", involving the adjudication of rights and liabilities, such as is performed by "courts". Once this point is reached, it follows that the power extends to the "civil and criminal process … of the States", including as the States act through the executive government and its agencies (and perhaps also any such process of the parliaments of the States135). There is no apparent reason then to stamp the "civil and criminal process" referred to with a confining ambit. Indeed, when the controlling character "of the courts of the States" is taken away from the "civil and criminal process" referred to in s 51(xxiv), it is much less likely that such "process" would be incidental to the adjudication of rights and liabilities. Adjudication is normally a function of the courts, including in State jurisdiction. But, whereas in State jurisdiction, non-court tribunals, executive bodies and, occasionally, State parliaments and their committees, may sometimes affect, by adjudication, the rights and obligations of those coming before them, this is not a universal feature of non-court "process". It is quite common, indeed usual, for 134 Cf Lane, Commentary on the Australian Constitution, 2nd ed (1997) at 268. 135 Cf Constitution, s 107: Egan v Willis (1998) 195 CLR 424. See also R v Richards; Ex parte Fitzpatrick and Browne (1955) 92 CLR 157. Kirby tribunals and other bodies within the executive government of the States (and even sometimes for State parliaments and their committees) to engage in far- reaching inquiries. The decisions of such non-court bodies may be adjunct to the provision of evidence or other information upon which policies and proposed laws will be devised, or subordinate legislation made, by the executive. Or they may be incidental to legislation considered, or developed, by a State Parliament. Removal of the controlling element of "process" as ancillary to "the courts" subtracts the invariable feature of adjudication of rights and obligations that the appellant would now have this Court read into the power. If the alternative ("narrow") interpretation of the structure of the paragraph had been adopted, there would be great force in the appellant's submission. But, having abandoned that argument, the appellant's endeavour to draw the character he described out of nothing more than the words "the civil and criminal process" fails. Certainly, it fails in this case where the summons of the Commission clearly falls within the words "the criminal ... process ... of [a] State[]", being a "process" designed, amongst other things, to investigate "relevant criminal activity referred … for investigation" and to "assemble evidence [for] the prosecution of a person for a relevant offence" (including a "serious drug offence") as defined136 with a view to fulfilling the objects of the Act, namely to reduce the incidence of illegal drug trafficking and organised and other crime137. Accepting, then, that non-court "process" is included in the power afforded by s 51(xxiv), how could it be said that the summons issued in this case was otherwise than part of the "criminal process"? Past authority on "process": In an attempt to rescue his submissions, the appellant relied (as did Mason P in the Court of Appeal138) on a passage in the reasoning of Barwick CJ in Ammann139: "No more is involved, in my opinion, in the notion of the civil and criminal process to which par (xxiv) refers than a document which may be served or an order which may be executed in relation to proceedings for the establishment of legal rights or the enforcement of the criminal law." There are some hints of a similar approach in the reasons of Menzies J in that case when he said140: 136 State Act, s 6(1), by reference to the definition of "relevant offence" in s 3(1). 137 State Act, s 3A. 138 (2004) 62 NSWLR 77 at 86 [42]. 139 (1972) 129 CLR 415 at 423. Kirby "Its issue and execution is to make effective the civil or criminal process of a State to compel the attendance of witnesses required to give evidence at civil or criminal proceedings instituted in the State." However, once the reference to "of the courts" is attached solely to "the judgments" and is detached from "the civil and criminal process" there is no reason for reading the latter expression as limited to the court-like functions of "establishment of legal rights" or "the enforcement of the criminal law". Nor, with respect, once the interpretation in Ammann is accepted, can it easily be held that the "civil and criminal process … of the States" is confined "to process which formed an integral part of the established criminal procedure but which … could not properly be described as the process of a court"141. It would not be conventional to give such a facultative constitutional power a meaning limited by "established criminal procedure". The word "established" seems to have been used to emphasise that a witness summons to appear before a committal proceeding, after the laying of a criminal charge, was within the expression "criminal process" of the States, even if the proceedings themselves could not be classified as a "process of a court". Yet because "process … of the courts" was a meaning of s 51(xxiv) that this Court rejected in Ammann, the comparator was strictly irrelevant. All that this Court had to decide in that case was whether the summons answered to the constitutional description of "the civil [or] criminal process … of the courts of the States". Clearly it did, assuming that, for technical reasons, it might not have qualified as "criminal process … of [a] court[]" at that initial stage of the court's functions. The reasons of Mason J in Ammann142 make it clear, with respect, that it was unnecessary in that case to conclude the constitutional question of whether the postulated "process" did, or did not, have to answer to the description of a "process of a court". "[T]he summons is a process of a court if it is issued by or out of a court and it commands the witness to appear and give evidence in proceedings in that court. In each case the witness summons was issued by a magistrate under s 12 and s 23 of the Justices Act [1921 (SA)] and required the witness to give evidence in the matter of an information laid 140 Ammann (1972) 129 CLR 415 at 429. 141 Ammann (1972) 129 CLR 415 at 437 (emphasis added). It may be that, in context, Gibbs J was not suggesting such a limitation. 142 Ammann (1972) 129 CLR 415 at 442 (emphasis added). Kirby in a court of summary jurisdiction. It was, accordingly, a process of that court." The foregoing reasoning, and Mason J's subsequent reservations concerning the status of a summons of an interstate royal commission143, suggest that Ammann was not the right case in which to resolve the ambit of s 51(xxiv). If the process issuing body there was, in fact and law, one of "the courts of the States" it was unnecessary, in order to reach a conclusion on the validity of the application of the federal law to the summons, to decide what portion of the language of s 51(xxiv) the words "of the courts" qualified. But that did not stop the other members of the Court expressing a constitutional conclusion now deployed against the appellant. Once it is accepted, as the appellant did, that the phrase "of the courts" did not qualify "the civil and criminal process", the foundation for Barwick CJ's opinion that the "criminal process" referred to was one "for the establishment of legal rights or the enforcement of the criminal law" cannot be sustained. In Ammann, Barwick CJ was in dissent. Although, elsewhere in his reasons, his Honour endorsed the majority approach on the ambit of s 51(xxiv), the definition that he adopted for "criminal process … of the States" could only be accepted if the "criminal process" referred to in the grant of power was one limited to a "process … of the courts". There is no reason for reading such "process" in the confined way suggested, once the "criminal process" contemplated is not confined to that "of the courts" but extends to any "criminal process" of the executive government or (so far as such a power exists) of a State Parliament. It follows that there is no binding or persuasive authority of this Court to sustain the appellant's argument on the second issue. factors: Textual and contextual The appellant submitted that, notwithstanding the larger ambit of "process" consistent with Ammann, the word in the context of s 51(xxiv) of the Constitution was a technical legal word, invariably related to a proceeding before a court or tribunal, involving for that reason a process of adjudication or of the enforcement of the criminal law by the trial of offenders. A summons by the Commission therefore fell outside "criminal process", so conceived. In support of this submission, the appellant cited the definition of "process" in Wharton's Law Lexicon144, used by Gibbs J in Ammann, as follows145: 143 (1972) 129 CLR 415 at 441. 144 9th ed (1892). Kirby "It is largely taken for all the proceedings in any action or prosecution, real or personal, civil or criminal, from the beginning to the end; strictly, the summons by which one is cited into a court, because it is the beginning or principal part thereof, by which the rest is directed." Immediately after this citation, Gibbs J proceeded to reject any suggestion that "process" in s 51(xxiv) was confined to originating proceedings146. Moreover, his rejection of the necessity for the "process" to be process "of the courts of the States", as such, meant that he rejected the limitation of the expression to process ancillary to court proceedings. So the citation of Wharton is of limited assistance. The appellant then invoked the definition of "process" contained in Jowitt's Dictionary of English Law, cited in this case by Mason P147. This is very similar to Wharton's definition. It is defective for the same reasons. Butterworth's Australian Legal Dictionary defines "process" as "a document issued or filed with a court or tribunal in proceedings, which requires a person to attend before the court." That definition is broad enough to include the Commission's summons in this case, once "process" of non-courts is regarded as constitutionally permissible. Yet even that definition is then unduly narrow when a non-court State body is accepted as entitled to issue "process" that enlivens the constitutional power. So long as that can validly happen, the "process" involved will be that proper to the non-court issuing body. It is not necessarily confined to the functions traditional to court "process". There are dangers in using legal dictionaries to give meaning to the composite expression "civil and criminal process". Until comparatively recently, most such legal "process" was undoubtedly issued by courts. Therefore, so far as "process" of the kind requiring "service and execution throughout the Commonwealth" was concerned, it was typically that issued by courts and it related to the adjudicative work that courts normally perform. In recent times, but not only then, "process" that qualifies as "civil and criminal", has been entrusted to non-court bodies in the branches of government outside the courts. A common feature of "civil and criminal process" is that it requires attendance of a person before a body established by law relevant to the enforcement of the criminal law under the sanction of a penalty for disobedience. 145 Cited in Ammann (1972) 129 CLR 415 at 437. 146 (1972) 129 CLR 415 at 437-438. 147 (2004) 62 NSWLR 77 at 87 [49]. Kirby This is what the summons issued by the Commission to the appellant purports to Unless the Constitution is to be confined to the meaning of "civil and criminal process" at the time of federation, it is necessary to give meaning to the phrase by reference to its essential features, and functional purposes, rather than its historical or traditional characteristics148. The examination of the meaning of "process" in general dictionaries suggests that the essential features of "process" relate to "a systematic series of actions directed to some end" or "a continuous action, operation or series of changes taking place in a definite manner"149. Although the words "civil and criminal" import a curial connotation, general dictionaries include amongst legal meanings "the whole course of the proceedings in an action at law"150. In the context, this does not use "at law" in a technical sense but refers simply to proceedings having a legal character. Removal of the confinement of the "process" from necessary connection with the "courts" demands acceptance of the wider functions to which the "process" may be ancillary. Such "process" must still be capable of characterisation as "civil and criminal". It is not completely cut loose from its traditional legal characteristics. However, the notion of functions incidental only to the adjudication and determination of rights and obligations is not inherent in the word "process" for which s 51(xxiv) provides. The contrary conclusion could not be reconciled with the holding in Ammann accepted by the appellant. Constitutional words: Despite his acknowledgment that the phrase "civil and criminal process" in s 51(xxiv) of the Constitution represented constitutional words, the meaning of which was to be found in their "essential features"151, some of the appellant's submissions appeared to support a purely historical interpretation of the expression, assigning to it the meaning accepted when the Constitution was adopted in 1900 and in England before that. Thus, the appellant urged that "criminal process" was historically traced to the courts as "the Queen's courts" so that all power exercised in that respect was 148 See, eg, Ng v The Queen (2003) 217 CLR 521 at 526 [9]-[10], 532-534 [33]-[37]; Singh (2004) 78 ALJR 1383 at 1391 [27], 1396-1398 [51]-[58], 1434-1438 [244]- [266]; 209 ALR 355 at 366, 372-375, 426-431. 149 Macquarie Dictionary (Federation ed), (2001), vol 2 at 1514. 150 Macquarie Dictionary (Federation ed), (2001), vol 2 at 1514. 151 Ng (2003) 217 CLR 521 at 526 [9], 531-534 [29]-[37]; Brownlee v The Queen (2001) 207 CLR 278 at 298 [54], 321-327 [125]-[138]. Kirby "by, or by delegation from, the Crown"152. Such notions cannot confine, or control, the meaning of the Australian Constitution, written and accepted by Australians for their governance. Whilst historical considerations may certainly inform words and concepts in the Constitution, this Court has a duty to give meaning to the text, based on the words used, informed by history, guided by authority and applying any relevant constitutional interpretive principles. interpreting provisions of It is often useful to examine the Convention Debates and pre-federation However, such history considerations cannot control the meaning153. Necessarily, the Constitution is given meaning as an instrument of government the purpose of which is to operate for the ages. Inevitably, different generations read the text as an organic instrument154. They see meanings and applications which earlier generations, with their different experiences, did not see155. the Constitution. Changing "criminal process": The content of "criminal process" is a case in point. In 1900, that phrase would have conjured up significantly different notions for a reader of the Constitution than it does today. Apart from the wider range of executive (and possibly legislative) bodies that now play a part in aspects of what can broadly be described as "criminal process", the subject matter and content of what is "criminal" has greatly changed. Some of the change, but not all, has come about because of changing technology156. 152 Appellant's written submissions at [31] citing Plucknett, A Concise History of the Common Law, 5th ed (1956) at 80-81. 153 Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 553-554 [45]-[47]; Grain Pool (2000) 202 CLR 479 at 529-530 [126]-[129]. The capacity of legal process, as envisaged in the constitutional text, to expand beyond that applicable in 1900 was recognised in Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 154 Ammann (1972) 129 CLR 415 at 422. It necessarily envisages changed "processes" available in a State from time to time: see Alliance (1983) 34 SASR 215 at 250 per Wells J. 155 Cf Al-Kateb v Godwin (2004) 219 CLR 562 at 628 [187] citing Lawrence v Texas 539 US 558 at 576-577 (2003) per Kennedy J for the Court. 156 Smith, "Criminal Law: The Future", (2004) Criminal Law Review 971; Kirby, "The Future of Criminal Law", (1999) 23 Criminal Law Journal 263; Kirby, "Criminal Law Futurology", (2006) 1 International Journal of Punishment and Sentencing Kirby Cybercrime, biological crimes, crimes involving acts of terrorism, trans- border crimes and crimes involving a wide variety of narcotic drugs, as well as new means of proving criminal involvement and propensity, all suggest that new content will be given to the constitutional expression "criminal process" today, when compared with 1900. The constitutional text accepts such broader meanings. It responds to the changing ambit of the word "criminal" and the developing notion of "process" in s 51(xxiv). The power is not open-ended and wholly without boundaries. But the boundaries have expanded. They are not confined to those known to the founders in 1900157. To the extent that Ammann, and the present appeal, endorse an application of s 51(xxiv) of the Constitution to the "process" of executive (and possibly parliamentary) bodies outside the "courts of the States", and conjure up a "parade of horribles"158 with people oppressed by non-court summonses demanding their attendance before inquisitorial bodies in distant parts of the Commonwealth, the Constitution and federal law give three answers. Protection against misuse rests principally in the, admittedly imperfect, democratic and accountable features of the system of government created in the Constitution. The "process" involved, whilst not necessarily of a court of a State, must still answer to the requirement that it is of a "civil" or "criminal" character. The SEP Act requires judicial leave159 before the obligation of attendance is imposed by federal law. Conclusion: s 51(xxiv) applies: The summons issued by the Commission under s 15 of the State Act was certainly a "criminal process" within s 51(xxiv) of the Constitution. Essentially, it was a subpoena. This is a recognised, essential and well-established form of "civil and criminal process" as that phrase is understood in Australia160. Accepting (as the appellant did) that it did not have to be "process … of the courts", it was "process … of [a] State[]". It therefore validly enlivened the SEP Act. It authorised the grant of leave, providing for its service out of the State of New South Wales and in the State of Victoria. Once served, it bound the appellant to conform to its terms. It did so by the combination of the State Act, operating in federal jurisdiction by virtue of the 157 Jumbunna (1908) 6 CLR 309 at 367; Shaw (2003) 218 CLR 28 at 60 [90]. 158 Posner, "Foreword: A Political Court", (2005) 119 Harvard Law Review 31 at 96. 159 SEP Act, s 76. However, mandatory reports to Parliament on the number and proportion of refusals of judicial leave in such cases show how rarely they arise, suggesting the limited protection offered by such engagement of the judiciary in the executive's business: see Grollo v Palmer (1995) 184 CLR 348 at 365, 377, 382, 392; Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 8, 21, 43-44. 160 Carter, Subpoena Law and Practice in Australia (1996) at 3. Kirby Judiciary Act 1903 (Cth), together with the facultative provisions of the federal SEP Act. It follows that, on the postulate accepted by the appellant as to the meaning of s 51(xxiv) of the Constitution, endorsed by the decisions of this Court, the SEP Act was, in this respect, valid. The majority of the Court of Appeal were correct to so hold. The State law issue need not be considered In light of this conclusion, it is unnecessary to consider whether, standing alone (and having regard to current understandings of the extraterritorial operation of State statutes in Australia) the State Act was sufficient without federal support to impose on the appellant an enforceable legal obligation to comply with the Commission's summons. Amongst other things, that issue would raise the question whether, as the Commonwealth submitted, because of s 8(4), the SEP Act covered the relevant field of inter-State service of the specified process and thus enacted the entire law for such service of summonses issued by State investigative tribunals such as the Commission. Because it is unnecessary to decide the question, I will refrain from doing so. The foregoing reasoning is enough to sustain the order that I reach. But I propose that order mindful of an arguable constitutional flaw that the appellant elected not to argue. One day, I predict, it will return for fresh consideration. Order I agree in the orders proposed in the joint reasons. |
HIGH COURT OF AUSTRALIA Matter No S373/2006 WESTON ALUMINIUM PTY LIMITED APPLICANT AND ENVIRONMENT PROTECTION AUTHORITY & ANOR RESPONDENTS Matter No S211/2007 WESTON ALUMINIUM PTY LIMITED APPELLANT AND ALCOA AUSTRALIA ROLLED PRODUCTS PTY LIMITED RESPONDENT Weston Aluminium Pty Limited v Environment Protection Authority Weston Aluminium Pty Limited v Alcoa Australia Rolled Products Pty Limited [2007] HCA 50 8 November 2007 S373/2006 & S211/2007 In matter S373 of 2006 ORDER Special leave to appeal granted and the appeal be treated as instituted and heard instanter. Appeal allowed. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 4 October 2006 and, in their place, order that the matter be remitted to the Land and Environment Court of New South Wales for further consideration conformably with the reasons of this Court. The second respondent pay the appellant’s costs of the appeal to this Court, the appeal to the Court of Appeal of the Supreme Court of New South Wales and the application to the Land and Environment Court of New South Wales. In matter S211 of 2007 Appeal allowed with costs. Set aside order 3 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 4 October 2006 and remit the matter to that Court for further consideration conformably with the reasons of this Court. On appeal from the Supreme Court of New South Wales Representation B W Walker SC with P C Tomasetti for the applicant in S373/2006 and for the appellant in S211/2007 (instructed by Kanjian and Company) R J Ellicott QC with S A Duggan for the second respondent in S373/2006 and the respondent in S211/2007 (instructed by Holding Redlich) Submitting appearance for the first respondent in S373/2006 Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Weston Aluminium Pty Limited v Environment Protection Authority Weston Aluminium Pty Limited v Alcoa Australia Rolled Products Pty Limited Environment and planning – Interpretation of development consents – Alcoa obtained development consent under the Environmental Planning and Assessment Act 1979 (NSW) ("the EPA Act") for an aluminium remelting facility on its Yennora land – Whether that development consent permitted treatment at the Yennora facility of aluminium dross not generated on the Yennora land. Environment and planning – Statutory interpretation – Whether variation of an existing licence under the Protection of the Environment Operations Act 1997 (NSW) was valid where the variation permitted a land use that required but had not been granted development consent under the EPA Act. Words and phrases – "development consent", "controlled development". Environmental Planning and Assessment Act 1979 (NSW), ss 76A(1), 91, 123. Protection of the Environment Operations Act 1997 (NSW), ss 50, 58(2). GLEESON CJ, GUMMOW, HAYNE, HEYDON AND CRENNAN JJ. These related proceedings (one an appeal and the other an application for special leave to appeal) require consideration of a particular development consent issued under the Environmental Planning and Assessment Act 1979 (NSW) ("the EPA Act"). The critical question in each proceeding is what use of land did the development consent permit? Answering that question determines one proceeding and leads to the resolution of the other. Alcoa Australia Rolled Products Pty Limited ("Alcoa") occupies land at Yennora in New South Wales. That land ("the Yennora land") is now within the Holroyd Local Government Area and is subject to the Holroyd Local Environmental Plan 1991. Since about 1960, the Yennora land has been used for the manufacture of aluminium products. In 1996, Alcoa, in joint venture with another party, acquired the aluminium manufacture operations conducted at Yennora by Comalco Australia Pty Limited (or one of its associated companies). Alcoa acquired the interest of its joint venturer in 2003. Since the early 1960s aluminium cans and other aluminium scrap have been recycled on the Yennora land by melting the scrap and casting the recovered aluminium into blocks or billets. Melting aluminium scrap produces aluminium dross which, when used as a feedstock in a rotary furnace, allows recovery of more aluminium. Since the early 1960s, aluminium dross produced by the melting of scrap on the Yennora land has been used as a feedstock for rotary furnaces installed on the Yennora land. The dispute Aluminium dross is a by-product not only of melting aluminium cans or other aluminium scrap but also of aluminium smelting. Since about August 2002, Alcoa has brought aluminium dross from its smelting plant at Point Henry, Victoria, to the Yennora land and has used that dross ("imported dross") as a feedstock for the rotary furnaces installed on the Yennora land. Weston Aluminium Pty Limited ("Weston") brought proceedings in the Land and Environment Court of New South Wales alleging that the processing of imported dross on the Yennora land is a use of the premises for a purpose which requires development consent under s 76A of the EPA Act and that Alcoa does not have the necessary consent. Weston sought declarations and an injunction restraining Alcoa from processing imported dross on the Yennora land. Crennan The course of proceedings In 2004, Weston's application for declarations and an injunction was heard and determined by Lloyd J and it was held1 that Weston was entitled to relief of the kind it sought. For reasons that will soon appear, it is convenient to refer to these proceedings as Weston's "first proceedings". No orders granting relief were made then, or subsequently. Rather, Alcoa made application to the relevant consent authority under the EPA Act for authority to process imported dross on the Yennora land. The authority did not determine that application within the time prescribed by the EPA Act. Alcoa brought proceedings in the Land and Environment Court to challenge what, under s 82 of the EPA Act, was the deemed refusal of its application. These proceedings had not been heard or determined at the time of the oral argument of the present matters. In 2005, Weston, too, began further proceedings in the Land and Environment Court. These will be referred to as Weston's "second proceedings". By its second proceedings, Weston sought to challenge the validity of a variation made to a licence granted to Alcoa under the Protection of the Environment Operations Act 1997 (NSW) ("the PEO Act") permitting the processing of imported dross on the Yennora land. On 9 December 2005, Pain J dismissed2 Weston's second proceedings. Weston appealed to the Court of Appeal of New South Wales against the orders of Pain J made in its second proceedings. In answer to Weston's appeal, Alcoa sought and obtained leave to appeal out of time in respect of the earlier decision of Lloyd J in Weston's first proceedings. Weston did not oppose either the necessary extension of time or the grant of leave. Although no final orders had ever been made by Lloyd J, giving effect to the opinion expressed in the reasons his Honour had delivered in 2004, Alcoa's appeal to the Court of Appeal proceeded on the basis that Weston had been held to be entitled to declarations (and an injunction) of the kind it had sought. The Court of Appeal ordered3 that 1 Weston Aluminium Pty Ltd v Alcoa Australia Rolled Products Pty Ltd [2004] NSWLEC 551 at [43]. 2 Weston Aluminium Pty Ltd v Environment Protection Authority (No 2) (2005) 144 LGERA 7. 3 Alcoa Australia Rolled Products Pty Ltd v Weston Aluminium Pty Ltd (2006) 148 LGERA 439. Crennan Weston's first proceedings should be dismissed. The order dismissing Weston's second proceedings in the Land and Environment Court was not disturbed. Weston was ordered to pay Alcoa's costs, both in the Court of Appeal and below. By special leave, Weston now appeals to this Court against the orders of the Court of Appeal dealing with its first proceedings. Weston also seeks special leave to appeal with respect to its second proceedings. Weston contends that the outcome of the application for special leave depends upon the outcome of its appeal and little separate argument was directed to that application. It is convenient, in the first instance, to put aside the application for special leave and deal only with Weston's appeal. The resolution of that appeal depends entirely upon the meaning and effect of the development consent to which Alcoa points as authorising it to process imported dross on the Yennora land. It is, nonetheless, important to begin from an understanding of the relevant statutory framework. The statutory framework Weston's application in its first proceedings, for an injunction restraining Alcoa from processing imported dross on the Yennora land, was made under s 123(1) of the EPA Act4. The breach of the EPA Act relied on as founding that application was a breach of s 76A(1). At the time of the proceedings before Lloyd J, that sub-section provided that: "If an environmental planning that specified development may not be carried out except with development consent, a person must not carry the development out on land to which the provision applies unless: instrument provides such a consent has been obtained and is in force, and the development is carried out in accordance with the consent and the instrument." The development consent upon which Alcoa relied as authorising it to process imported dross on the Yennora land was granted in 1981 under the then applicable provisions of the EPA Act. Another, earlier, development consent to "Any person may bring proceedings in the Court for an order to remedy or restrain a breach of this Act, whether or not any right of that person has been or may be infringed by or as a consequence of that breach." Crennan which it will be necessary to refer was granted in 1980 under Pt XIIA of the Local Government Act 1919 (NSW) ("the LG Act"). Argument proceeded, in this Court and in the courts below, on the footing that if processing imported dross was not permitted by either of those consents, s 76A(1) was engaged and the use of the land to treat imported dross was prohibited. It is desirable to expose some of the propositions that underpinned this accepted basis of argument. First, Weston asserted, and Alcoa did not dispute, that the land which is in question was zoned under the Holroyd Local Environmental Plan 1991 as "4(a) (Industrial General Zone)". Subject to the EPA Act, land within that zone cannot be put to any purpose or use without development consent. Secondly, "development" is defined in s 4(1) of the EPA Act as meaning, among other things, "the use of land", "the erection of a building" and "the carrying out of a work". The use of land includes a reference to "a change of building use" (s 4(2)(a)); the erection of a building includes a reference to "the rebuilding of, the making of alterations to, or the enlargement or extension of, a building" (s 4(2)(b)); the carrying out of a work includes "the rebuilding of, the making of alterations to, or the enlargement or extension of, a work" (s 4(2)(c)). Thirdly, in 1981, s 91(1) of the EPA Act provided that a development application was to be determined by: the granting of consent to that application, either unconditionally or subject to conditions; or the refusing of consent to that application." A development consent thus hinged about the application made by the party seeking consent. It was the application that marked out the boundaries of the consent sought. The consenting authority responded to what was sought by granting or refusing consent and, if consent was granted, doing so either unconditionally or subject to conditions. Finally, in 1981, s 91(4) provided that: "A consent to a development application for the carrying out of development, being the erection of a building, shall be sufficient to authorise the use of the building when erected for the purpose for which it was erected where that purpose is specified in the development application." (emphasis added) Crennan The parties' arguments Alcoa submitted that "a development consent is to be construed liberally without confining a use to the precise methods of process or activity, including the nature of the raw materials and the location from where they are sourced". Alcoa submitted that approached on this basis, the 1981 development consent permitted it to process imported dross on the Yennora land. It contended that only by making impermissible use of material extraneous to the relevant consent (and documents incorporated in the consent by express reference or necessary implication) could there be discerned any limitation upon the source of dross dealt with on the land. The general approach to construction of development consents advocated by Alcoa was not disputed by Weston. It is an approach reflected in a number of decisions of the Court of Appeal of New South Wales to which reference was made5. Whether, as Alcoa submitted, reference may not be made when construing a consent to anything but the consent itself and any documents incorporated expressly or by necessary implication need not be examined. In particular, it is not necessary in this case to consider what reference may be made to the development application to which the consent responds. Weston submitted that the consent upon which Alcoa relied, construed by reference to the principles advocated by Alcoa, does not give Alcoa permission to use the Yennora land for processing imported dross. That submission should be accepted. The relevant development consents Although Alcoa contended that the development consent granted in 1981 was determinative of the issues argued in the appeal, it is as well to begin by considering the development consent granted in 1980 in relation to the Yennora land. (Several other consents had been relied on in Alcoa's points of defence in the Land and Environment Court as permitting operations on the Yennora land, but it is not necessary to examine any of those other consents.) 5 For example, Royal Agricultural Society of New South Wales v Sydney City Council (1987) 61 LGRA 305 at 310-311 per McHugh JA; North Sydney Municipal Council v Boyts Radio & Electrical Pty Ltd (1989) 16 NSWLR 50 at 59 per Kirby P; House of Peace Pty Ltd v Bankstown City Council (2000) 48 NSWLR Crennan In 1980, the Council of the Municipality of Holroyd, as responsible authority for the purposes of the LG Act, granted consent "for the erection of a Stage 1 of a can reclamation plant, consisting of 1 bag house, 1 rotary furnace, can reclamation and storage areas together with a can buy-back centre". The consent was subject to conditions. It related to "the land described as Lots 1, 3, 4, DP 533033; Lots 6A, 7, 8A, 9, 10A, DP 20170 bounded by Kiora Crescent, Norrie Street and Loftus Road". Clause 20 of the conditions provided that: "No consent is given or implied for any development other than Stage 1 works shown hatched on [an identified plan] and also the can buy-back centre shown on this plan. All other stages require the prior consent of Council." As was to be expected from the consent's description of what comprised "Stage 1 of a can reclamation plant" ("1 bag house, 1 rotary furnace, can reclamation and storage areas ...") the plan identified in cl 20 of the conditions showed an area of a building to be constructed on the land that was to be set aside for a rotary furnace. But what was permitted by the 1980 development consent was Stage 1 of a "can reclamation plant". And Alcoa did not contend that this development consent now authorises it to process imported dross. The 1981 development consent on which Alcoa relied granted consent "for an aluminium remelting facility generally in accordance with plans submitted to Council on 26th June 1981". Again, the grant was subject to conditions and it will be necessary to consider one of those conditions. It is important, however, to begin by identifying the relationship between this 1981 development consent and the 1980 consent. The 1981 consent was expressed to relate to "the land described as follows: Lot 23, DP 606744 on the south-western corner of Norrie Street and Loftus Road". The can reclamation operations, the subject of the 1980 development consent, were conducted on that land. Examination of the plans referred to in the 1981 consent shows that the proposed new "aluminium remelting facility" required the construction of new factory buildings to the west of buildings used for the can reclamation operations. Although the 1980 and 1981 consents related to the same land, the consents were for separate and different uses of the land. The latter consent did not supersede the earlier. But examination of the conditions of the 1981 consent shows an important, but limited, relationship between the two operations. Condition 19 of the 1981 consent required that disposal of liquid effluents and solid wastes be "strictly in conformity" with the details set out in two items Crennan of a specified Environmental Impact Statement. One of those items (entitled "Generation and Disposal of Solid Waste") dealt with, among other things, "dross formation" and "[d]ross handling". The dross to which the item referred was dross produced in the aluminium remelting processes to be conducted in the new facilities. The text of the item showed, as was the fact, that the new facilities were to replace existing remelting operations conducted elsewhere on the Yennora land but nothing now turns on that fact. The item proposed, and condition 19 of the 1981 consent required, that the dross produced in the aluminium remelting processes to be conducted in the new facilities be treated "in the adjacent rotary furnace complex". The "adjacent rotary furnace complex" was part of the can reclamation plant conducted under the 1980 consent. In its terms, then, the 1981 consent required the use of the rotary furnaces operated as part of the can reclamation plant to be used for treating dross generated in the aluminium remelting operations permitted by the 1981 consent. Once that relationship between the uses permitted by the 1980 and the 1981 development consents is understood, it is evident that the 1981 consent does not permit Alcoa's use of the land to process imported dross. The 1981 consent permits Alcoa to conduct an "aluminium remelting facility". Alcoa submitted that processing dross, by melting it in a rotary furnace, is a form of aluminium remelting, and that processing imported dross falls within the description of the relevant use of land as being for an "aluminium remelting facility". But the text of so much of the Environmental Impact Statement as is incorporated by reference in the 1981 development consent requires rejection of this submission. The relevant item of the Environmental Impact Statement referred to in condition 19 of the 1981 development consent shows that "[d]ross handling" is distinct from aluminium remelting. One of the consequences of operating an aluminium remelting facility is the generation of aluminium dross, a particular form of "[s]olid [w]aste". The 1981 consent both requires and permits that the dross which is generated by conducting the aluminium remelting facility should be treated in a particular way. The dross generated in the aluminium remelting facility is to be treated in the rotary furnaces which form part of Alcoa's can reclamation plant. But neither the 1980 consent permitting the operation of the can reclamation plant nor the 1981 consent permitting the operation of the aluminium remelting facility permits Alcoa to process imported dross in part of its can reclamation plant. Yet that is what it has been doing. Processing imported dross is not using the land as a can reclamation plant and it is not using the land as an aluminium remelting facility. It is a use of the Crennan land that is not permitted by the 1981 development consent and Alcoa did not contend it is permitted by any other development consent. The Court of Appeal erred in ordering that Weston's first proceedings be dismissed. It follows that Weston's appeal to this Court should be allowed with costs, and the order of the Court of Appeal dismissing Weston's first proceedings should be set aside. Two further matters must then be examined. First, what further orders should be made as a consequence of allowing Weston's appeal to this Court and setting aside the Court of Appeal's orders dismissing the first proceedings? Secondly, how should Weston's application for special leave be resolved? Consequential orders Because Lloyd J made no final orders disposing of the first proceedings, the parties to those proceedings have not had any opportunity to be heard about the precise terms in which declarations should be made or an injunction should be granted. Moreover, it may be that the form in which any orders of that kind should be made may now be affected by the outcome of the proceedings brought by Alcoa seeking the grant of a development consent permitting it to process imported dross. In those circumstances, the matter should be remitted to the Court of Appeal for its further consideration. Whether that Court deals with the matter, or remits it for further consideration to the Land and Environment Court, is for the Court of Appeal to decide. The application for special leave Weston submitted that, if its appeal in relation to its first proceedings succeeded, it followed that the licence issued under the PEO Act, which was the subject of Weston's second proceedings, was invalid and that Weston should have its costs of the second proceedings. Alcoa submitted that the validity of the licence issued under the PEO Act turned upon the proper construction of that Act and the effect of non-compliance with its provisions. The licence the subject of Weston's second proceedings was varied to permit Alcoa to process imported dross. The critical provision of the PEO Act is s 50. In the form it took at the time of the variation of the relevant licence, the section provided: Crennan "(1) Licensing of development controlled under EP&A Act This section applies to development that cannot be carried out without development consent under the Environmental Planning and Assessment Act 1979. This development is called controlled development in this section. Licence to be concurrent A licence that relates to controlled development must not be granted by the appropriate regulatory authority, unless development consent has been granted for the controlled development. However, this section does not prevent the consideration of a licence application by the appropriate regulatory authority before development consent is granted. Existing use Without limiting the above, this section does not apply to the extent that development consent is not necessary under the Environmental Planning and Assessment Act 1979 because of an existing use. (4) Definitions In this section: development has the same meaning as in the Environmental Planning and Assessment Act 1979. development consent means consent under Part 4 of Environmental Planning and Assessment Act 1979. the existing use has the same meaning as in Division 10 of Part 4 of the Environmental Planning and Assessment Act 1979." Alcoa submitted that the prohibition in s 50(2) against granting a licence does not extend to prohibiting variation of an existing licence. The PEO Act makes separate provision for the issue, transfer and variation of licences. Section 53 provides for making an application for issue of a licence. Section 54 deals with transfer of a licence. Section 58 permits variation of a licence. A variation includes attaching, substituting, omitting or amending a condition (s 58(2)). Crennan Although the making of these different provisions gives an evident textual basis for Alcoa's submission, the submission should be rejected. The hinge about which s 50(2) turns is "controlled development". Because "development" has the same meaning as in the EPA Act, it includes the use of land. Section 50(2) must therefore be understood as directed (among other things) to the grant of licences that regulate particular uses of land. Is the sub-section concerned only with new licences or is its prohibition wider? The better construction of the prohibition contained in s 50(2) is that its prohibition is directed not only to the grant of a new licence by "the appropriate regulatory authority" but also to any variation of an existing licence. That is, s 50(2) should be read as providing that the appropriate regulatory authority is prohibited from issuing any licence which regulates a particular use of land (whether by making an original grant or by varying an existing licence) unless development consent has been granted for that use. This construction of s 50(2) should be adopted because, as Basten JA, speaking for the Court of Appeal, said in the present matter6, "[a] contrary conclusion can readily be seen to give rise to anomalous results which would be entirely subversive of the legislative policy underlying the scheme" for which the PEO Act provides. For the reasons given earlier, when the appropriate regulatory authority (the first respondent to the application for special leave, the Environment Protection Authority) varied licence, Alcoa did not have the relevant development consent to use the Yennora land to process imported dross. Section 50(2) therefore prohibited the Authority granting that variation. It follows that the variation was invalid. At first instance, Pain J had concluded that s 50(2) did not prohibit the appropriate regulatory authority varying the relevant licence. For the reasons that have been given, her Honour erred in this conclusion. Contrary to the view taken in the Court of Appeal, the dismissal of Weston's second proceedings at first instance was not to be supported on other grounds and Alcoa did not contend to the contrary. Both Weston and Alcoa argued the application for special leave on the footing that the determinative issue, if leave were granted, was the question of construction of s 50(2). There should be a grant of special leave to appeal; Weston's appeal should be treated as instituted, heard instanter and allowed, and the orders of the Court (2006) 148 LGERA 439 at 459 [76]. Crennan of Appeal set aside. Weston should have its costs of its second proceedings, as against Alcoa, in this Court and both the Court of Appeal and the Land and Environment Court. Because the proceedings before Pain J in the Land and Environment Court were conducted in a manner analogous to the determination of separate questions, the matter should otherwise be remitted to the Land and Environment Court for further consideration conformably with the decision of this Court. |
HIGH COURT OF AUSTRALIA ANNIKA SMETHURST & ANOR PLAINTIFFS AND COMMISSIONER OF POLICE & ANOR DEFENDANTS Smethurst v Commissioner of Police [2020] HCA 14 Date of Hearing: 12 & 13 November 2019 Date of Judgment: 15 April 2020 ORDER The questions of law stated in the special case filed on 6 September 2019 be answered as follows: Is the search warrant issued on 3 June 2019 ("the Second Warrant") invalid on the ground that: it misstates the substance of s 79(3) of the Crimes Act 1914 (Cth), as it stood on 29 April 2018? Answer: Yes. it does not state the offence to which it relates with sufficient precision? Answer: Yes. s 79(3) of the Crimes Act, as it stood on 29 April 2018, was invalid on the ground that it infringed the implied freedom of political communication? Answer: Does not arise. Is the order issued on 31 May 2019 under s 3LA of the Crimes Act invalid on the ground that: at the time it was made, the Second Warrant was not in force? it was made in aid of a different warrant, namely the warrant issued on 31 May 2019 ("the First Warrant")? it did not specify the information or assistance required to be provided by the first plaintiff, with sufficient precision, or at all? it did not specify the computer or data storage device to which it related, with sufficient precision, or at all? Answer: Unnecessary to answer. (3) Was s 79(3) of the Crimes Act, as it stood on 29 April 2018, invalid on the ground that it infringed the implied freedom of political communication? Answer: Unnecessary to answer. If the answer to any or all of questions (1)–(3) is "yes", what relief, if any, should issue? Answer: There should be an order for certiorari quashing the search warrant issued on 3 June 2019. (5) Who should pay the costs of and incidental to this special case? Answer: The first defendant should pay the plaintiffs' costs of the special case. Representation S B Lloyd SC with P D Herzfeld and B Hancock for the plaintiffs (instructed by Ashurst Australia) S P Donaghue QC, Solicitor-General of the Commonwealth, with C L Lenehan SC and S Zeleznikow for the first defendant and for the Attorney-General of intervening (instructed by Australian Government Solicitor) the Commonwealth, C D Bleby SC, Solicitor-General for the State of South Australia, with K M Scott for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor's Office (SA)) K A Stern SC with D P Hume for the Australian Human Rights Commission, appearing as amicus curiae (instructed by Australian Human Rights Commission) Submitting appearance for the second defendant Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Smethurst v Commissioner of Police Police – Search warrants – Validity of warrant – Where police searched premises in reliance on warrant – Where police retained material copied from first plaintiff's mobile phone in reliance on warrant – Where warrant relied upon reasonable grounds for suspecting commission of Commonwealth offence – Where warrant purported to set out offence against s 79(3) of Crimes Act 1914 (Cth) – Whether warrant misstated substance of s 79(3) of Crimes Act – Whether warrant failed to state offence to which it related with sufficient precision. Injunctions – Mandatory injunction – Principles applicable – Where plaintiffs sought mandatory injunction requiring destruction or delivery up of material obtained under invalid warrant – Where plaintiffs sought injunction restraining police from making information available to prosecuting authorities – Whether statutory basis for injunction – Whether plaintiffs identified legal right to support injunction in auxiliary jurisdiction – Whether consequences of trespass provide basis for injunction – Whether s 75(v) of Constitution provides basis for injunction – Whether damages inadequate – Whether injunctive relief should be refused on discretionary grounds. Words and phrases – "adequacy of damages", "auxiliary jurisdiction", "basis for injunction", "certiorari", "computer or data storage device", "constitutional injunction", "constitutional remedies", "constitutional writs", "description of the offence", "discretionary considerations", "entry, search and seizure", "equity", "evidential material", "injunction", "injunctive relief", "juridical basis", "legal right or interest", "mandatory injunction", "misstatement", "mobile phone", "nature of the offence", "official secrets", "privacy", "relief", "remedy", "right to privacy", "search warrants", "statement of offence", "substance of the offence", "sufficient interest", "sufficient particularity", "sufficient precision", "trespass". Constitution, s 75(v). Australian Federal Police Act 1979 (Cth), s 8. Crimes Act 1914 (Cth), Pts IAA, VII; ss 3C, 3E, 3F, 3H, 3LA, 3ZQU, 79(3). Judiciary Act 1903 (Cth), s 32. KIEFEL CJ, BELL AND KEANE JJ. The first plaintiff, Ms Annika Smethurst, is a journalist. She is employed by the second plaintiff, Nationwide News Pty Ltd, which is the publisher of the Sunday Telegraph newspaper and a website. On 29 April 2018, the second plaintiff published articles in its newspaper and on its website of which the first plaintiff was the author. The three articles published in the newspaper were entitled: "We don't want Big Brother watching"; "Secret plan to spy on Aussies"; and "Spies told just keep looking elsewhere". Those articles published on the website were entitled: "Spying shock: Shades of Big Brother as cyber-security vision comes to light" and "We Don't Want Big Brother Watching". In general terms the articles informed the reader that amendments which were proposed to existing legislation would extend the powers of the Australian Signals Directorate ("the ASD") so as to enable it to covertly access data respecting not only foreigners but also Australian citizens. The articles contained expressions of concern and alarm. Two of the articles contained an image of the top part of a document entitled "MINISTERIAL SUBMISSION". Its subject matter was stated to be "ASD AS A STATUTORY AGENCY – FURTHER AMENDMENTS TO THE INTELLIGENCE SERVICES ACT 2001". The document bore the markings "SECRET AUSTEO COVERING TOP SECRET COMINT AUSTEO". The Second Warrant and the search Sometime after 30 April 2018 the Australian Federal Police ("the AFP") commenced an investigation into the publication of the articles. On 31 May 2019, in the course of that investigation, a member of the AFP obtained a warrant from a magistrate ("the First Warrant") to enter and search the residential premises occupied by the first plaintiff and to search her motor vehicle. On the same day the magistrate made an order under s 3LA of the Crimes Act 1914 (Cth) ("the s 3LA Order") directed to the first plaintiff, which required her to provide any reasonable and necessary information and assistance to enable a constable to access, copy and convert data held on a computer or data storage device into documentary form. Due to concerns held by the member of the AFP who was named as the executing officer in the First Warrant about whether it authorised a search of the specified vehicle if it was not at the first plaintiff's premises, further separate warrants were obtained on 3 June 2019. One warrant ("the Second Warrant") was directed to the premises and the other to the vehicle. The warrant respecting the vehicle has never been executed. The Second Warrant was in the same terms as the First Warrant so far as it concerned the search of the first plaintiff's residence. It was six pages in length. It stated that the magistrate was satisfied by information on oath that there were reasonable grounds for suspecting that there was, or would within the next Bell 48 hours be, at those premises "evidential material, as defined in the Crimes Act" which satisfied all of the three conditions which were set out in the warrant. The first condition was said to relate to the kinds of things that were the subject of the Second Warrant. It was stated broadly and included any notes, diaries, correspondence, emails and other forms of electronic messaging, minutes, reports, briefing documents, assessments, graphics, sketches or photographs, story pitch, planning logs, broadcast and online schedules, story boards, website content and USBs. The first condition also specified a document having the same title as the document the head of which appeared in two of the articles. It was described as a classified ASD document. The warrant was said to extend to both originals and copies of these things and to anything stored on a computer storage device or other storage device, together with any manual, instruction or password that assists to gain access to, interpret or decode any of those things. The second condition referred to the persons or entities to whom those things might relate. They included the first plaintiff, the Sunday Telegraph, "News Corp", the ASD, the Department of Home Affairs, the Department of Defence, a named individual and the webpage on which one of the two articles mentioned above was published. The third condition commenced by explaining the purpose of seeking the things relating to the persons identified. It was said to be "as to which there are reasonable grounds for suspecting that they will afford evidence as to the commission of the following indictable offence(s) against the laws of the Commonwealth". This statement then followed: "On the 29 April 2018, Annika Smethurst and the Sunday Telegraph communicated a document or article to a person, that was not in the interest of the Commonwealth, and permitted that person to have access to the document, contrary to section 79(3) of the Crimes Act 1914, Official Secrets. This offence was punishable by 2 years imprisonment." On 4 June 2019, members of the AFP searched the first plaintiff's residence relying upon the authority of the Second Warrant. When the AFP located the first plaintiff's mobile telephone, the first plaintiff was required to provide its passcode to enable access to information stored on it. The data from the mobile phone was copied onto the AFP's forensic laptop computer and the mobile phone was returned to the first plaintiff. Keyword searches were undertaken by the AFP on the copied data, intended to identify documents that fell within the conditions of the Second Warrant, and those documents were reviewed by the executing officer. At the completion of this process, the documents identified as falling within the conditions of the Second Warrant were copied onto a USB stick which the AFP officers had brought with them, and the USB stick was taken from the premises. Bell The information taken from the mobile phone was deleted from the AFP laptop before it was removed from the premises. No other property was taken from the premises. The first defendant, the Commissioner of Police, has undertaken that the AFP will not access or use any of the material obtained during the execution of the Second Warrant until the final determination of these proceedings. No criminal charges have been laid arising out of the AFP's investigation. It is not disputed that the AFP officers who conducted the search and required the first plaintiff to provide her mobile phone passcode believed that their actions were authorised by the Second Warrant and the s 3LA Order. If the Second Warrant is invalid for any of the reasons which are the subject of the first question of law in this special case it would follow, contrary to that belief, that the search conducted of the first plaintiff's premises was not authorised by law. The question which would then arise is what are the consequences of invalidity and more particularly what is to be done with the information now held by the AFP as a result of unlawful acts. The Crimes Act provisions The warrant provisions Section 3E of the Crimes Act appears in Div 2 ("Search warrants") of Pt IAA of that Act, which is entitled "Search, information gathering, arrest and related powers (other than powers under delayed notification search warrants)". It provides the basis upon which search warrants may be issued. Section 3E(1) states in relevant part: "An issuing officer[1] may issue a warrant to search premises if the officer is satisfied, by information on oath or affirmation, that there are reasonable grounds for suspecting that there is ... any evidential material at the premises." "Evidential material" is defined to include "a thing relevant to an indictable offence ... including such a thing in electronic form"2. A "thing relevant to an indictable [Commonwealth] offence" is defined to include "anything with respect to which an indictable offence against any law of the Commonwealth ... has been committed or is suspected, on reasonable grounds, to have been committed"; or "anything as 1 A term which includes a magistrate: see Crimes Act 1914 (Cth), s 3C(1). 2 Crimes Act 1914 (Cth), s 3C(1). Bell to which there are reasonable grounds for suspecting that it will afford evidence as to the commission of any such offence"3. Section 3E(5) relevantly provides: "If an issuing officer issues a warrant, the officer is to state in the warrant: the offence to which the warrant relates; and a description of the premises to which the warrant relates or the name or description of the person to whom it relates; and the kinds of evidential material that are to be searched for under the warrant". The principal issue concerning these requirements is whether the Second Warrant satisfies s 3E(5)(a). Section 3F(1) relevantly provides that a warrant that is in force in relation to premises authorises the executing officer or a constable assisting to enter the warrant premises4 and: to search the premises for the kinds of evidential material specified in the warrant, and to seize things of that kind found at the premises". A copy of the warrant must be made available to the occupier of the premises if they are present when the warrant is being executed5. Section 3LA(2) provides that a magistrate may make an order requiring a specified person to provide any information or assistance that is reasonable and necessary to allow a constable to access data on a computer or data storage device that is on warrant premises if the magistrate is satisfied of certain matters. 3 Crimes Act 1914 (Cth), s 3(1). 4 Crimes Act 1914 (Cth), s 3F(1)(a). 5 Crimes Act 1914 (Cth), s 3H(1). Bell The offence provisions Section 79(3) of the Crimes Act, which was referred to in the third condition of the Second Warrant, appeared in Pt VII of that Act, which was headed "Official secrets and unlawful soundings". Parts VI and VII of the Crimes Act, including s 79, were repealed on 29 December 2018 and replaced with provisions of the Criminal Code (Cth)6 which are in different terms. Section 79(3) in relevant part was in these terms: "If a person communicates a prescribed … document or article, or prescribed information, to a person, other than: a person to whom he or she is authorized to communicate it; or a person to whom it is, in the interest of the Commonwealth or a part of the Queen's dominions, his or her duty to communicate it; or permits a person, other than a person referred to in paragraph (a) or (b), to have access to it, he or she commits an offence. Penalty: Imprisonment for 2 years." To ascertain what is a prescribed document or article or prescribed information it is necessary to refer to s 79(1). Consideration later in these reasons of the operation of s 79(1), in light of its importance to s 79(3), requires reference to most of its text: "For the purposes of this section, a … document, or article is a prescribed … document or article in relation to a person, and information is prescribed information in relation to a person, if the person has it in his or her possession or control and: it has been made or obtained in contravention of this Part or in contravention of section 91.1 of the Criminal Code; it has been entrusted to the person by a Commonwealth officer or a person holding office under the Queen or he or she has made or obtained it owing to his or her position as a person: 6 National Security Legislation Amendment (Espionage and Foreign Interference) Act 2018 (Cth). Bell who is or has been a Commonwealth officer; (ii) who holds or has held office under the Queen; (iii) who holds or has held a contract made on behalf of the Queen or the Commonwealth; (iv) who is or has been employed by or under a person to whom a preceding subparagraph applies; or acting with the permission of a Minister; and, by reason of its nature or the circumstances under which it was entrusted to him or her or it was made or obtained by him or her or for any other reason, it is his or her duty to treat it as secret". The special case The plaintiffs filed an amended application for a constitutional or other writ in which they sought orders for: writs of certiorari quashing the Second Warrant and the s 3LA Order; a declaration that s 79(3), as it stood at 29 April 2018, was invalid; writs of mandamus or injunctions compelling the delivery up or the destruction of the material seized pursuant to the Second Warrant or the s 3LA Order; and writs of prohibition or injunctions restraining the first defendant from providing that material to prosecuting authorities. The parties subsequently agreed in stating questions of law for the opinion of the Full Court of this Court in a special case. Bell J ordered that those questions be referred for the consideration of the Full Court. The questions are: Is the Second Warrant invalid on the ground that: it misstates the substance of s 79(3) of the Crimes Act, as it stood on 29 April 2018? it does not state the offence to which it relates with sufficient precision? s 79(3) of the Crimes Act, as it stood on 29 April 2018, was invalid on the ground that it infringed the implied freedom of political communication? Is the s 3LA Order invalid on the ground that: at the time it was made, the Second Warrant was not in force? Bell it was made in aid of a different warrant, namely the First Warrant? it did not specify the information or assistance required to be provided by the First Plaintiff, with sufficient precision, or at all? it did not specify the computer or data storage device to which it related, with sufficient precision, or at all? (3) Was s 79(3) of the Crimes Act, as it stood on 29 April 2018, invalid on the ground that it infringed the implied freedom of political communication? If the answer to any or all of questions (1)–(3) is 'yes', what relief, if any, should issue? (5) Who should pay the costs of and incidental to this Special Case?" Questions 1(a) and 1(b) should be answered in the affirmative, for the reasons which follow. Not only did the Second Warrant not satisfy the statutory condition that it state the offence to which it relates, it substantially misstated an offence said to arise under s 79(3) of the Crimes Act. It is not necessary to answer the further questions save as to the relief to be given (Question 4) and costs (Question 5). A statement of the offence The requirement that the offence to which a warrant relates be stated in the warrant has its origins in the common law's refusal to countenance the issue of general warrants7 and its strictly confining any exception to the principle that a person's home is inviolable8. General warrants, as their name implies, contain no specification of the object of the search and purport to confer a free-ranging power of search. They were described in Wilkes v Wood9 as a discretionary power given to messengers to search "wherever their suspicions may chance to fall" and as 7 Wilkes v Wood (1763) Lofft 1 [98 ER 489]; Money v Leach (1765) 1 Black W 555 [96 ER 320]; Entick v Carrington (1765) 2 Wils KB 275 [95 ER 807]. 8 New South Wales v Corbett (2007) 230 CLR 606 at 632 [104]. (1763) Lofft 1 at 18 [98 ER 489 at 498]. Bell "totally subversive of the liberty of the subject". They were infamously used for the purposes of controlling the writing and printing of seditious and radical political works10. The power to search has always been regarded as an exceptional power, to be exercised only under certain justifying conditions11. One essential condition, found in statutes authorising the issue of warrants for search and seizure, both Commonwealth and State and Territory, is that the object of the search be specified by reference to a particular offence12. In George v Rockett13, the Court observed that in prescribing conditions governing the issue of search warrants the legislature has sought to balance the need for an effective criminal justice system against the need to protect the individual from arbitrary invasion of their privacy14. A person's interest in privacy is recognised in all modern bills of rights and it has achieved a status in international human rights law15. It may be accepted that the balance struck by the legislature to a greater extent favours the public interest in the investigation and prosecution of crimes. Nevertheless it remains a concern of the legislature, in enacting provisions authorising warrants for search and seizure, to provide a measure of protection to persons affected by a warrant. It does so in large part by ensuring that the object of the warrant is identified by reference to a particular offence and that the limits of the authority to search may thereby be discerned. The courts' insistence on strict 10 New South Wales v Corbett (2007) 230 CLR 606 at 629 [93], referring to Tronc, Crawford and Smith, Search and Seizure in Australia and New Zealand (1996) at 11 Feldman, The Law Relating to Entry, Search and Seizure (1986) at [1.03]. 12 General warrants are permitted in South Australia: see Summary Offences Act 1953 (SA), s 67. General warrants are permitted in Tasmania with respect to a search for stolen property: see Police Offences Act 1935 (Tas), s 60; but otherwise a search warrant is required to state the offence to which it relates: see Search Warrants Act 1997 (Tas), s 5(2)(a). (1990) 170 CLR 104 at 110. 14 See also New South Wales v Corbett (2007) 230 CLR 606 at 630 [96]. 15 Feldman, The Law Relating to Entry, Search and Seizure (1986) at [1.01]. Bell compliance with the statutory conditions for a warrant gives effect to this Provisions of the kind mentioned are found in Pt IAA of the Crimes Act, in its requirements that: there be reasonable grounds for suspecting that there is or will be on the premises to be searched material relevant to an offence (s 3E(1) read with s 3C(1)); and the warrant which issues under s 3E(1) state in it the particular offence to which it relates (s 3E(5)(a)). These conditions need only be shortly stated to appreciate the centrality of the identification of the offence in question to the scheme of authorisation of warrants. It is not disputed that unless these conditions are met a warrant purporting to be issued under s 3E(1) is not authorised and is not valid. The protective purpose to which these provisions are directed is achieved by ensuring that each of the issuing officer, the officer executing the warrant and the persons affected by the warrant understand what is the object of the search and the limits to it. The issuing officer obviously needs to appreciate the boundaries of the authorisation which is to be given. The executing officer and those affected by the warrant must likewise understand the object of the search and comprehend the limits to the scope of the search which has been authorised17. In each case this can only be achieved by the nature of the offence the object of the warrant being stated on the face of the warrant, in a way which is both intelligible and sufficient to convey what those concerned with or affected by the warrant need to understand18. It is not necessary that the warrant state the offence with the same precision and specificity as is required for an indictment. The purpose of a warrant is not to define the issues for trial19. The power to issue a search warrant is given in aid of criminal investigation as well as finding evidence which will be admissible at 16 George v Rockett (1990) 170 CLR 104 at 110-111; New South Wales v Corbett (2007) 230 CLR 606 at 628 [88]. 17 George v Rockett (1990) 170 CLR 104 at 118; New South Wales v Corbett (2007) 230 CLR 606 at 632 [104]; Williams v Keelty (2001) 111 FCR 175 at 206 [140]. 18 New South Wales v Corbett (2007) 230 CLR 606 at 632-633 [105]-[106]. 19 New South Wales v Corbett (2007) 230 CLR 606 at 629-630 [95], [97]; Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR Bell trial20. What emerges from the cases is a test of sufficiency to indicate the areas of the search. The test of sufficiency with respect to the statement of offence reflects the purpose of the condition, that persons executing and affected by the warrant understand what is being sought. If the object of the search is not identified the warrant becomes a general warrant. It follows logically from the underlying rationale of the condition that the offence be stated that the test of sufficient particularity is an objective one, which has regard to the content of the warrant. It can be no answer to a challenge to the validity of a warrant on the ground that it fails clearly to state the nature of the offence in question to say that the persons whose premises are to be searched have some ancillary information as to the offence to which the warrant is intended to relate21. What is sufficient to be conveyed about the offence in question in a given case may vary with the nature of the offence22. Some offences may be shortly described. That in question in New South Wales v Corbett23 furnishes an example. The statement of the offence of "Possession of Firearm, Firearms Act No 25/1989 Sect 5(a)" was held sufficiently to convey the nature of the offence in question for the purposes of s 5(1)(b) of the Search Warrants Act 1985 (NSW), which provided for the making of applications for a search warrant where there were reasonable grounds for believing that there was in or on any premises "a thing connected with a particular firearms offence". While the Court held that the transitional provisions in the successor Act to the repealed 1989 Act had the effect that the reference to s 5(a) of the repealed Act was to be read as a reference to the relevant provision of the successor Act (which was in materially identical terms), a majority also found that, in any event, the reference to the repealed Act was "mere surplusage" which did not detract from the statement of the nature of the offence in the warrant24. On the other hand, when a statute provides for the commission of a somewhat indeterminate number of offences, a general reference to a section may not be sufficient25. No verbal formula is possible, rather in each case it is necessary to 20 George v Rockett (1990) 170 CLR 104 at 119. 21 Wright v Queensland Police Service [2002] 2 Qd R 667 at 676 [31]-[32]. 22 Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR 523 at 543. (2007) 230 CLR 606. 24 New South Wales v Corbett (2007) 230 CLR 606 at 607 [1], 608 [3], 633 [107]. 25 See eg Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151. Bell apply the principle that the warrant should describe the nature of the offence so as to indicate the bounds of the search, and to assess the sufficiency of what is provided from the point of view of those reading it. The statement in the Second Warrant Ambiguity is evident upon a first reading of the statement in the third condition of the Second Warrant. It is not at all clear whether it is the document or article referred to which was, in some unspecified way, "not in the interest of the Commonwealth", or whether it was the communication of that document or article to a person that was contrary to the Commonwealth's interest. It is not clear to whom the document or article was said to have been communicated. In their submissions the first defendant and the Attorney-General of the Commonwealth intervening (who together, for convenience, shall be referred to as "the Commonwealth") said that the reference "communicated a document or article to a person" was a reference to the publication of the articles by the second plaintiff. But the word "article" as it appears in s 79(3) means no more than a thing the object of a search; it is not referable to an article being something written by a journalist or other commentator and published in the media. The reference in the statement of offence in the third condition to the communication of a thing to "a person" is not apt to convey the meaning suggested by the Commonwealth of any reader of the publication. What is tolerably clear from the statement of offence in the warrant is that an element, if not the critical element, to be considered in connection with the search to be undertaken is whether a document, an article or information is "not in the interest of the Commonwealth". A consideration of the terms of s 79(3) read with s 79(1) reveals that ambiguity is the least of the problems with respect to the statement of offence in the Second Warrant. The Second Warrant not only fails to identify any offence arising under s 79(3), it substantially misstates the nature of an offence arising under it. Section 79(3) does not contain the words "not in the interest of the Commonwealth". It does not bespeak any offence which involves a document or article or a communication of such which is "not in the interest of the Commonwealth". In general terms the circumstances giving rise to an offence under s 79(3) are the communication of a "prescribed" document or article or "prescribed" information. Two exceptions are stated with respect to the conduct giving rise to the offence. The exception that is relevant for present purposes is that stated in s 79(3)(b): where a person who communicates a prescribed document or article or prescribed information is under a duty to communicate it, because it is in the interest of the Commonwealth to do so, no offence is committed. The statement of offence in the Second Warrant has succeeded in stating as a key Bell element of the offence in question an aspect of an exception to the offence and, in the process, has misstated the operation of s 79(3). The other major problem with the Second Warrant is that s 79(3) does not, as the warrant asserts, refer to documents, articles or information more generally. It refers only to "prescribed" documents, articles or information. Section 79(3) appears in the suite of offences provided for in s 79(2) to (6) inclusive. Each of them, in general terms, concerns the communication, receipt or retention of, or failure to abide by a direction respecting, a prescribed document or article or prescribed information. The offence in s 79(3) does not hinge on the interests of the Commonwealth, as the statement in the warrant suggests. It hinges upon the documents, articles or information being prescribed within the meaning of s 79(1). There are a number of circumstances which may result in a document, an article or information being prescribed. It needs also to be recalled that a document, an article or information is not prescribed generally, as for example it might be if it simply referred to information which was classified as secret. In the terms of s 79(1), it is prescribed in relation to a particular person. Section 79(1) has been set out earlier in these reasons. In summary, s 79(1)(a) provides that a document, an article or information is prescribed if it has been made or obtained in contravention of Pt VII of the Crimes Act or in contravention of s 91.1 of the Criminal Code (which deals with defence secrets). Section 79(1)(b) relevantly requires, for the document, article or information to be prescribed, that it has been entrusted to the person by a Commonwealth officer, or that the person has made or obtained it owing to their position as a Commonwealth officer or through some other specified relationship with the Commonwealth. The circumstances in which it was entrusted to, or made or obtained by, the person must be such as to create a duty to treat it as secret. A document, an article or information is prescribed under s 79(1)(c) if it relates to a prohibited place or anything in a prohibited place and the person knows, or ought to know, that it should not be communicated to unauthorised persons. It may be observed from a closer reading of s 79(1) that a document, an article or information may be prescribed in relation to a person, thus opening the possibility of an offence under the following sub-sections of s 79 in a range of different circumstances. Moreover, there may be a combination of factors which result in the same document, article or information being prescribed in relation to more than one person. By way of example, a document, an article or information may be prescribed where person A has obtained it by reason of their position and gives it to person B. In addition to it being prescribed in relation to person A, it may be prescribed in relation to person B because it has been obtained (by person A) in contravention of Pt VII and is in person B's possession. Bell It is only where a document, an article or information is prescribed in relation to a person and is communicated to another, outside of the limited exceptions, that an offence under s 79(3) can be said to arise. And as the summary of s 79(1) and the example given above suggest, there are many possible scenarios and combinations which can arise under s 79(1) by which a document, an article or information comes to be prescribed. An offence under s 79(3) is not one which may be stated as pithily as that in question in New South Wales v Corbett26, referred to above. More to the point is the type of provision discussed in Australian Broadcasting Corporation v Cloran27, which allows for the possibility of a number of offences. Such a provision will require more by way of description of the particular offence and how it is said to arise. In the course of argument there was some discussion as to what would or would not satisfy the requirements of s 3E(5)(a) and what level of specificity of the offence or the offending conduct needs to be stated in a search warrant. Such considerations do not arise in a case such as this, where the particular offence, one of many possible offences, is not identified at all. The number of ways in which an offence under s 79(3) may arise is one reason why the Commonwealth's submission, that what was provided in the third condition of the Second Warrant was sufficient, cannot be accepted. The Commonwealth submitted that no more was necessary than to provide a reference to the plaintiffs to s 79(3) of the Crimes Act and to "Official secrets", which was the heading to s 79 and, it will be recalled, part of the heading to Pt VII. If more was necessary, the Commonwealth submitted, the reference to the articles published by the second plaintiff and their date and the matters set out with respect to the first and second conditions, including the ASD document identified in the first condition, provided sufficient guidance for the search. It may be accepted that regard may be had to other parts of the warrant to assist in an understanding of what is said in the third condition28. But it remains necessary that what is thereby conveyed to the ordinary reader be sufficiently specific to identify the nature of the particular offence. As Hely J said in Williams v Keelty29, the requirement that the offence to which the warrant relates be stated (2007) 230 CLR 606. (1984) 4 FCR 151 at 154. 28 Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151 at 154; Brewer v Castles (1984) 1 FCR 55 at 62. (2001) 111 FCR 175 at 206 [140]. Bell in the warrant is not satisfied by the provision of information falling short of such a statement but which might enable a person reading the warrant to deduce or infer what offence is intended. Nothing meaningful is conveyed about the particular offence which was intended as the object of the Second Warrant. Not only did the Second Warrant not state the nature of the offence to which the Second Warrant was said to relate, it succeeded in misstating it and thereby compounded the problem. Contrary to the submissions of the Commonwealth, it is not possible to ignore the words "that was not in the interest of the Commonwealth" and treat them as mere surplusage. In the way the warrant was drawn they gave the impression of being the key to what was said to be the offence the object of the warrant. Those reading the warrant were not only uninformed about any offence under s 79(3), they were misinformed that the offence stated concerned the provision of a document to another person which was somehow said not to be in the interest of the Commonwealth. It is not immediately apparent how the first plaintiff and the executing officer were to understand the boundaries of the search to be drawn by reference to this criterion. It made the authorisation for the search appear impossibly wide. It follows that the condition in s 3E(5)(a) of the Crimes Act was not complied with, with the result that the Second Warrant was invalid. The entry, search and seizure which occurred on 4 June 2019 were not authorised by that Act and were therefore unlawful. Relief As the Second Warrant is invalid it is liable to be quashed by an order for certiorari. The question then is whether the plaintiffs are entitled to the injunctive relief that they seek. It is convenient at the outset to record what the plaintiffs do not seek and the limited bases upon which their claims for injunctions are made. The plaintiffs eschew any claim for damages for trespass or other intentional tort. The relief which they seek is either a mandatory injunction requiring the destruction or delivery up of the information taken from the first plaintiff's mobile phone during the search and retained by the AFP, or an injunction restraining the first defendant from making that information available to the prosecuting authority. The plaintiffs do not seek an injunction in the exercise of the Court's exclusive equitable jurisdiction, which is to say an injunction in aid of an equitable right. They do not claim that the information on the AFP's USB stick which was taken from the first plaintiff's premises is confidential to them and thus of a kind which would found the grant of an injunction in that jurisdiction to "restrain the Bell publication of confidential information improperly or surreptitiously obtained"30. The information, they concede, could only be described as confidential in the sense that it is not readily accessible to anyone but the person who controls access to the phone. The plaintiffs frankly accept that they may have difficulty establishing a breach of confidential information without prejudicing themselves with respect to any possible criminal proceedings. The plaintiffs' principal claim to an injunction is based upon the Court's auxiliary jurisdiction in equity. This would ordinarily require that it be granted in aid of some legal right or interest or title to property. The plaintiffs make no claim to the property in the AFP's USB stick. They do not claim a right to privacy which is actionable for breach. They do not ask this Court to continue the debate, left open by Gummow and Hayne JJ in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd31, as to whether the courts should recognise such a tort. The plaintiffs nevertheless contend that an injunction should be granted to reverse or protect them from the effects of the trespass committed as a result of the Second Warrant being invalid. Those effects are that the information may be used to further the investigation as to whether offences against s 79(3) of the Crimes Act have been committed and, if charges are laid, as evidence of the commission of those offences. The plaintiffs' alternative argument relies upon the scheme of Pt IAA of the Crimes Act respecting search warrants and in particular the provisions of s 3ZQU. It is contended that a prohibition is to be found as implied in the provisions of Pt IAA, and that this has the effect that the AFP cannot disclose the information obtained and provides the basis for a negative injunction. Such an injunction may be sought by a person with a sufficient interest in the enforcement of the implied prohibition. It is convenient first to consider the argument based upon Pt IAA. A statutory basis for an injunction? The plaintiffs' argument begins with the propositions that when a statute confers a power to obtain information for a purpose, it impliedly prohibits the 30 Lord Ashburton v Pape [1913] 2 Ch 469 at 475. (2001) 208 CLR 199 at 258 [132]. Bell disclosure or use of that information for any other purpose32 and the prohibition may be enforced by an injunction33. Johns v Australian Securities Commission34 most clearly is authority for these propositions. The provisions of Pt IAA of the Crimes Act, the plaintiffs submit, form something of a code respecting search warrants. Nevertheless, it is s 3ZQU which is central to the plaintiffs' argument. Section 3ZQU appears in Div 4C of Pt IAA ("Using, sharing and returning things seized and documents produced") and is entitled "Purposes for which things and documents may be used and shared". Section 3ZQU(1) relevantly commences: "A constable or Commonwealth officer may use, or make available to another constable or Commonwealth officer to use, a thing seized under this Part ... for the purpose of any or all of the following if it is necessary to do so for that purpose". There are then listed, in paras (a) to (l), various purposes for which a constable or a Commonwealth officer may use things seized. They begin with "(a) preventing, investigating or prosecuting an offence", and conclude with "(l) the performance of the functions of the Australian Federal Police under section 8 of the Australian Federal Police Act 1979". Sub-sections (2) to (5) of s 3ZQU include a power to use things seized for the purpose of State and Territory laws and to make the things available to State and Territory law enforcement agencies. Section 3ZQU(4) provides that: "To avoid doubt, this section does not limit any other law of the Commonwealth that: requires or authorises the use of a document or other thing; or requires or authorises the making available … of a document or other thing." The plaintiffs point out that the Crimes Act confers a power to obtain material pursuant to a warrant and that s 3ZQU sets out the purposes for which that material may be used. In reliance on Johns, they submit that Pt IAA therefore 32 Citing Johns v Australian Securities Commission (1993) 178 CLR 408 at 424; Katsuno v The Queen (1999) 199 CLR 40 at 57 [24]. 33 Johns v Australian Securities Commission (1993) 178 CLR 408 at 427. (1993) 178 CLR 408. Bell impliedly prohibits the use of such information for any purposes other than those which the Act authorises. Johns concerned the exercise by the Australian Securities Commission ("the ASC") of a power to require certain persons to appear before it and be examined on oath. Another provision of the statute in question obliged the ASC to take all reasonable measures to protect information obtained in the exercise of its powers from unauthorised use or disclosure, but authorised the disclosure of such information where it would enable or assist the government or an agency of a State or Territory to perform a function or exercise a power. A delegate of the ASC authorised the disclosure of transcripts of an examination conducted by the ASC to a State Royal Commission. Brennan J explained35 that a statute which confers a power to obtain information defines, expressly or impliedly, the purpose for which the information obtained can be used. The person obtaining information in the exercise of such a statutory power is therefore under a duty, closely analogous to that imposed by equity, to treat the information obtained as confidential. The information obtained in exercise of the powers conferred by the statute may be used or disclosed for any purpose specified in the statute, but for no other purpose. The other case relied on by the plaintiffs, Katsuno v The Queen36, concerned provisions of the Juries Act 1967 (Vic) which authorised the provision to the Chief Commissioner of Police of the names of potential jurors in order that the Chief Commissioner could make inquiries as to whether any person was disqualified from serving as a juror and report the results to the sheriff. Other provisions emphasised the confidential nature of information obtained in the exercise of powers and under the Act. The Chief Commissioner had a practice of providing details of convictions and other information to the Director of Public Prosecutions in relation to those persons named on the panel from which a jury was to be struck. The practice was held to be unlawful. The scheme of the Act was held to give rise to a negative implication that no one but the sheriff was to receive the information obtained by the Chief Commissioner as a result of the inquiries made pursuant to the Act. Any other provision or use of the information was impliedly prohibited. The decisions in Johns and Katsuno have application where there arises a question of construction as to whether a statute authorises the use to which information has been or is intended to be put. The plaintiffs accept that the decisions stand for the proposition that information obtained in the exercise of a 35 Johns v Australian Securities Commission (1993) 178 CLR 408 at 424-425. (1999) 199 CLR 40. Bell statutory power for one purpose cannot be used for another, unauthorised purpose. No such question of construction arises in this case. The use to which the information taken from the first plaintiff's mobile phone is intended to be put is the further investigation of an offence under s 79(3). That use is expressly authorised by s 3ZQU(1)(a). The real issue raised by the plaintiffs concerns the source of authority to use the information where s 3ZQU(1) does not apply. The plaintiffs themselves point out that the sub-section specifies the uses to which material "seized under this Part" may be put. The reference to material "seized under this Part" is to material the seizure of which was actually authorised by the Part. It would follow that neither s 3ZQU(1) nor any other provision of Pt IAA of the Crimes Act authorises the use of material seized pursuant to an invalid warrant. It may be accepted that the words "seized under this Part" refer only to things that are taken lawfully in accordance with Pt IAA. Plaintiff S157/2002 v The Commonwealth37 concerned s 474(2) of the Migration Act 1958 (Cth), which defined a privative clause decision as a decision "of an administrative character made, proposed to be made, or required to be made … under this Act" other than decisions of certain specified kinds. Gaudron, McHugh, Gummow, Kirby and Hayne JJ explained that when regard was had to the phrase "under this Act", the words of the sub-section in question were not apt to refer to decisions purportedly made under the statute38. To be a decision made "under" the Act required that it be made under the authority of the statute. It may therefore be concluded that s 3ZQU(1) does not authorise the use of the information by the AFP for the purpose of an investigation, since the authority it gives is referable only to things seized under a warrant which satisfies the conditions of Pt IAA. But so to conclude does not foreclose the possibility that there is another, more general, source of power for that use. Section 3ZQU is not directed to the circumstance of an invalid warrant. The section was inserted in the Crimes Act to meet concerns about uncertainties as to (2003) 211 CLR 476. 38 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 505-506 [75]; see also Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 at Bell the uses for which seized material might be authorised. The Replacement Explanatory Memorandum to the Bill which inserted it39 explained40: "The current provisions in Part IAA do not specify how things seized under Part IAA can be used. As a result, there is uncertainty as to whether law enforcement agencies can use seized material for purposes other than those for which it was seized." The Replacement Explanatory Memorandum did not deny that there may be existing sources of authorisation for such uses. It said that its provisions41: "do not presuppose that these uses are not available currently, but puts the issue beyond doubt by providing a direct legislative basis [for the uses specified in s 3ZQU(1)]". Section 3ZQU(4), it will be recalled, provides that s 3ZQU does not affect the operation of any other Commonwealth law which authorises the use of a document or other thing. Section 3ZQU(1)(l) itself points to s 8 of the Australian Federal Police Act 1979 (Cth) as a source of the powers of the AFP. Section 8 of the Australian Federal Police Act specifies the functions of the AFP. They include the provision of police services in relation to the laws of the Commonwealth42. "Police services" is defined43 to include "services by way of the prevention of crime and the protection of persons from injury or death … whether arising from criminal acts or otherwise". The functions of the AFP also include "to do anything incidental or conducive to the performance of the … functions"44. The description of "police services" has been held to encompass associated activities 39 Crimes Legislation Amendment (Serious and Organised Crime) Bill (No 2) 2009. 40 Australia, Senate, Crimes Legislation Amendment (Serious and Organised Crime) Bill (No 2) 2009, Replacement Explanatory Memorandum at 71. 41 Australia, Senate, Crimes Legislation Amendment (Serious and Organised Crime) Bill (No 2) 2009, Replacement Explanatory Memorandum at 73. 42 Australian Federal Police Act 1979 (Cth), s 8(1)(b)(i). 43 Australian Federal Police Act 1979 (Cth), s 4(1). 44 Australian Federal Police Act 1979 (Cth), s 8(1)(c). Bell such as the investigation of complaints about the commission of crimes with a view to the identification of offenders45. The general power given by s 8 is not expressed to be subject to a restriction respecting the use of documents or information and the manner in which they were obtained. Any such restrictions are to be found elsewhere. But neither the common law nor statute law presumes that information unlawfully obtained may not be used in the investigation or prosecution of an offence. Bunning v Cross46 held that evidence is not on that account alone excluded as admissible evidence. The public interest in bringing persons to conviction is to be weighed against any perception that the courts may be seen to approve unlawful conduct47. The discretionary process by which this is achieved is now governed by s 138 of the Evidence Act 1995 (Cth). It would be to give decisive weight to the fact that the information was unlawfully obtained, contrary to the rationale of Bunning v Cross and s 138 of the Evidence Act, if the AFP was not able to retain the information for so long as it is required for the purposes of investigating and, if appropriate, prosecuting an offence or offences against Commonwealth law. The plaintiffs' argument that Pt IAA is the sole source of an authority to use the information taken and that it provides a basis for an injunction must be rejected. The consequences of trespass – a basis for injunction? It is well settled that conduct involving the search of premises and the seizure of property under an invalid warrant constitutes a trespass48. The trespass extends to goods on the premises the possession of which is subject to interference. But as earlier mentioned, the plaintiffs do not seek damages for the trespass. The principal relief that they seek is a mandatory injunction which would require the information held by the AFP to be destroyed or delivered up to the plaintiffs. 45 See Hinchcliffe v Commissioner of Australian Federal Police (2001) 118 FCR 308 at 319 [31]; O'Malley v Keelty, Australian Federal Police Commissioner [2004] FCA 1688 at [5]. (1978) 141 CLR 54 at 66. 47 Bunning v Cross (1978) 141 CLR 54 at 72. 48 Coco v The Queen (1994) 179 CLR 427 at 436, cited in New South Wales v Corbett (2007) 230 CLR 606 at 626 [81]. Bell The plaintiffs' argument for an injunction of this kind commences with a discussion of what would have occurred had they been able to apply for an injunction prior to the search being conducted and the trespass committed. They contend that the Court would have been in a position to grant a prohibitive injunction in its auxiliary equitable jurisdiction. It would not have been necessary for the plaintiffs to assert an entitlement to an injunction in the exclusive jurisdiction based on an equitable claim for breach of confidence. The threatened tort would have been sufficient to found an entitlement to the injunction. So much may be accepted. But it is also well settled that if a trespass is complete the courts will not interfere. They will only do so if the damage which has occurred is serious or the trespass is continuing in its effects49. The argument then proceeds to the proposition that equity does not abandon persons such as the plaintiffs because they were unable to obtain an interlocutory order. An injunction may be granted to restore the status quo as it existed prior to the trespass by the court making orders with respect to the consequences of the tort, which is to say the copying of the information from the mobile phone. Again, this is not said to depend upon the plaintiffs having proprietary rights or a claim to confidential information. Rather, it is said that equity will act in the auxiliary jurisdiction to restore the plaintiffs to the position in which they would have been had their legal rights not been infringed. The plaintiffs' argument appears to be premised on the notion that "equity will not suffer a wrong to be without a remedy", but the maxim has never meant that the courts of equity would invent a remedy solely because the plaintiff had suffered an injustice for which no remedy was available. A "wrong" refers to conduct which is recognised as being contrary to law. The maxim means no more than that the court would afford a remedy for the invasion of a subsisting legal or equitable right. To the extent that the plaintiffs may be understood to contend that a mandatory injunction may be granted where there is some ongoing effect from tortious conduct, the contention gains some support from Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia50. There Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ said51 that, in a conspiracy case, where 49 Kerr, A Treatise on the Law and Practice of Injunctions, 6th ed (1927) at 94-95. (1998) 195 CLR 1. 51 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 31 [33]. Bell the acts referable to the conspiracy have occurred and the tort is complete, ordinarily the plaintiff is limited to the recovery of pecuniary damages. But, their Honours said, there is no rule which prevents a court from granting a mandatory injunction where the damage caused by tortious conduct is ongoing and is "extreme, or at all events very serious"52. A mandatory injunction may issue to prevent the occurrence of further damage. It may be accepted in the present case that the use of the information obtained from the first plaintiff's mobile phone may have serious consequences for the plaintiffs, but that is not to say that the plaintiffs have suffered damage by reason of the information being taken or that its use, in the investigation of an offence, constitutes damage recognised by the law. In Patrick Stevedores, had the conspiracy been carried through to its completion, employees who were members of the respondent union would have lost their employment and found it difficult to obtain other work. Those consequences were described as "extremely serious"53 and it was said that damages would be "very large"54 or "enormous" and hence a factor relevant to the scope of relief available55. In cases of trespass what may constitute injury is somewhat wider than in some other torts. Injury in the nature of an affront to a plaintiff's dignity56 or the apprehension of harm may qualify as damage for the purpose of an award of damages. Even so, it is not possible to regard the prospect that one may be investigated for an offence as injury. And needless to say, public policy would not permit such a course. 52 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 31 [33], referring inter alia to Durell v Pritchard (1865) LR 1 Ch App 244 at 250 and Joyce, The Law of Injunctions (1872), vol 1 at 439. 53 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 31 [32]. 54 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 31 [32]. 55 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 32 [34]. 56 Sappideen and Vines (eds), Fleming's The Law of Torts, 10th ed (2011) at [9.10]; New South Wales v Ibbett (2006) 229 CLR 638. Bell It may also be accepted that an award of damages will not redress the consequence that the information taken as a result of the trespass may be used in aid of the investigation of one or both of the plaintiffs. At a number of points in their submissions the plaintiffs placed some weight upon damages being an inadequate remedy as supporting the grant of an injunction. The principle that a plaintiff does not obtain an injunction for actionable wrongs for which damages are the proper remedy is well established57. If damages are adequate a party "should be relegated to that remedy; only if damages are inadequate will an injunction lie"58. The principle is given effect as a rule, in the nature of a negative condition, for a grant of an injunction. It is a necessary, but not sufficient, condition for a grant. It cannot be elevated to an independently sufficient basis for an injunction, as the plaintiffs suggest. No doubt the plaintiffs' argument takes as its starting point the proposition that they would have been granted an interlocutory injunction prohibiting the trespass, had they been in a position to apply in time, because that has been said to be a requirement for a mandatory restorative injunction, one which reverses an act done by the defendant where damages are not an adequate remedy59. Examples given in the text to which the plaintiffs refer60 of cases where such an order has been made include those involving damage to property and other rights and breach of contract, where the order is akin to specific performance. But nowhere is it suggested that such an order will be made where the plaintiff has no legal right. And here the plaintiffs can point to none. It is well settled that for the grant of an injunction in equity's auxiliary jurisdiction, interlocutory or final, a plaintiff must have a legal right which the injunction will protect61. It is so well settled that arguments concerning it tend to focus upon what may or may not constitute such a right. By way of example, 57 London and Blackwall Railway Co v Cross (1886) 31 Ch D 354 at 369. 58 Heydon, Leeming and Turner, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, 5th ed (2015) at [21-040]. 59 Young, Croft and Smith, On Equity (2009) at [16.110]. 60 Young, Croft and Smith, On Equity (2009) at [16.110] (footnote 57). 61 Heydon, Leeming and Turner, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, 5th ed (2015) at [21-035]. Bell recently, in Glencore International AG v Federal Commissioner of Taxation62, the plaintiffs accepted that they needed to show that they had an actionable right, but they did not succeed in establishing that legal professional privilege qualified as such a right63. What was said by Young J in Lincoln Hunt Australia Pty Ltd v Willesee64 might appear to lend some support to the plaintiffs' argument that equity might grant an injunction respecting information even if no equity of confidence attached to it. In that case an injunction was sought to prevent the publication of a film taken by a trespasser in circumstances where the trespasser's conduct was egregious. His Honour considered that the circumstances in which the filming occurred, combined with evidence that the publication might affect the plaintiff's goodwill, required that serious consideration be given as to whether an injunction should be granted65. His Honour expressed the opinion that the courts have power to grant an injunction even though no confidentiality was involved, although he qualified that by saying that the court would only intervene "if the circumstances are such to make publication unconscionable"66. His Honour did not have to decide that question. Injunctive relief was denied in that case on the basis that an award of exemplary damages at trial would be an adequate remedy. At a factual level the circumstances of the present case are remote from those in Lincoln Hunt. There is nothing to suggest any untoward conduct on the part of the AFP officers who executed the Second Warrant. It is an agreed fact that they believed the warrant to be valid and the search and seizure therefore to be authorised. But these observations should not be taken as accepting the point of principle stated in Lincoln Hunt. The approach of Young J in Lincoln Hunt may be contrasted with that of the Full Court of the Supreme Court of Queensland in Coco v Shaw67. There the (2019) 93 ALJR 967; 372 ALR 126. 63 Glencore International AG v Federal Commissioner of Taxation (2019) 93 ALJR 967 at 969 [8], 970 [12]; 372 ALR 126 at 128, 129. (1986) 4 NSWLR 457. 65 Lincoln Hunt Australia Pty Ltd v Willesee (1986) 4 NSWLR 457 at 464. 66 Lincoln Hunt Australia Pty Ltd v Willesee (1986) 4 NSWLR 457 at 463. [1994] 1 Qd R 469. Bell primary judge had ordered the delivery up to the plaintiff of recordings which had been obtained through the use of an unauthorised listening device. McPherson SPJ observed68 that the fact that the conversation recorded was private did not make it confidential in the sense spoken of in equity. His Honour stated that the law does not protect conversations as such, whether private or otherwise, from disclosure. What it protects from disclosure is information which properly justifies and attracts judicial protection. Ryan J observed69 that if the entry for the purpose of putting the listening devices in place was unauthorised and therefore unlawful, that circumstance might provide a basis for the rejection of the evidence as a matter of discretion, in accordance with Bunning v Cross, but it would not warrant the making of the orders made by the primary judge. The respondent in Lenah Game Meats faced a similar difficulty to the plaintiffs in the present case. The respondent's claim to an injunction to prevent the publication of a film taken of processes in its abattoir in the course of a trespass was not based upon a claim to property or to the intellectual property in the film. It attempted, unsuccessfully, to establish an equitable right by analogy with confidential information. The respondent in Lenah Game Meats also relied upon what Young J had said in Lincoln Hunt, but it cannot be said that that case received any real measure of support from members of this Court. Gleeson CJ considered that a remedy could be provided only where the information obtained by the trespasser could be regarded as confidential70. Whether his Honour considered that that condition might be fulfilled if the activities filmed were sufficiently private may presently be put to one side71. So far as concerns what appears to be the basis given by Young J for injunctive relief, that the conduct of the defendant be unconscionable, Gleeson CJ concluded that "the circumstance that the information was tortiously obtained in the first place is not sufficient to make it unconscientious of a person 68 Coco v Shaw [1994] 1 Qd R 469 at 486. 69 Coco v Shaw [1994] 1 Qd R 469 at 493. 70 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 71 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR Bell into whose hands that information later comes to use it or publish it. The consequences of such a proposition are too large."72 In the view of Gummow and Hayne JJ73, the term "unconscientious", rather than "unconscionable", better indicates the areas in which equity intervenes to vindicate the requirements of good conscience, such as where it denies the enforcement of legal rights, sets aside transactions or holds a person estopped. The notion of unconscionable behaviour does not operate at large as the respondent had contended, their Honours observed. Gummow and Hayne JJ accepted that orders of the kind referred to in Lincoln Hunt and later cases74 might have been made on grounds other than unconscionability. Their Honours considered that a basis in principle might be found in the imposition of a constructive trust over the maker's rights under the Copyright Act 1968 (Cth) in favour of the plaintiff. However, that would only arise where the making of the film involved the invasion of the plaintiff's legal or equitable rights or a breach of confidence. In such a circumstance it might be inequitable or against good conscience for the maker to assert ownership against the plaintiff and to broadcast the film75. Nothing said in Lenah Game Meats detracts from the need for a plaintiff to identify a legal right as the subject of the court's protection by way of injunction in the auxiliary jurisdiction. Even accepting that the injunction remedy is still the subject of development by courts exercising equitable jurisdiction, as Gummow and Hayne JJ said, "[t]he basic proposition remains that where interlocutory injunctive relief is sought ... it is necessary to identify the legal ... or equitable 72 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 73 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 244-245 [98] (Gaudron J agreeing at 231 [58]), referring to The Commonwealth v Verwayen (1990) 170 CLR 394 at 444, 446. 74 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 246 [100], referring to Emcorp Pty Ltd v Australian Broadcasting Corporation [1988] 2 Qd R 169 and Rinsale Pty Ltd v Australian Broadcasting Corporation (1993) Aust Torts Reports ¶81-231. 75 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR Bell rights which are to be determined at trial"76. The plaintiffs can point to no authority which recognises their interest in not being investigated in relation to an offence as a right. An invasion of privacy? The real difficulty for the respondent in Lenah Game Meats, Gummow and Hayne JJ observed, was that it did not raise a recognised cause of action77. That is not to say that one might not be available with respect to an invasion of privacy, but the development of the law in that regard will benefit only natural persons, not companies such as the respondent in that case78. Their Honours went on to say that the debate about the tort of privacy should not be regarded as foreclosed79 including by the decision in Victoria Park Racing and Recreation Grounds Co Ltd v Taylor80. Their Honours were of course speaking of the development of the common law. A right of privacy has been recognised in only some jurisdictions in Australia in human rights legislation81. It has been observed by the Australian Law Reform Commission82 that there has been considerable opposition to reform in this area from the media and that some have expressed reluctance to create a statutory cause 76 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 77 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 78 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 79 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR (1937) 58 CLR 479. 81 Human Rights Act 2004 (ACT), s 12 and Charter of Human Rights and Responsibilities Act 2006 (Vic), s 13, both referred to in Australian Law Reform Commission, For Your Information: Australian Privacy Law and Practice, Report 108 (2008) at 2539; see also New South Wales Law Reform Commission, Invasion of Privacy, Consultation Paper 1 (2007) at 14 [1.31]. 82 Australian Law Reform Commission, For Your Information: Australian Privacy Law and Practice, Report 108 (2008) at 2556, 2558-2562. Bell of action when privacy protection could be left to the incremental development of the common law83. On the other hand, the legislature has acknowledged the need to protect persons from invasions of privacy when enacting statutes concerning search warrants, as has been observed earlier in these reasons84. What was said in Lenah Game Meats concerning the recognition by the common law of privacy as a possible right and a basis for relief post-dated decisions such as Lincoln Hunt and Coco v Shaw where the focus was upon equitable principles. It is noteworthy that in Lenah Game Meats Gleeson CJ considered that the question stated by Young J in Lincoln Hunt, as to whether the circumstances made publication unconscionable, could be answered in the affirmative "provided the activities filmed were private"85. There have been other recognitions of relief founded upon an invasion of privacy. Hart v Commissioner of Australian Federal Police86 relevantly concerned an invalid seizure by the AFP of material contained on tapes, cartridges and disks and the taking of copies from them. In dealing with an argument put by the AFP a Full Court of the Federal Court (French, Sackville and R D Nicholson JJ) said87: "The disk or other storage devices onto which information is downloaded … do not thereby become the property of the owner of the equipment from which the information was copied. But having been copied in consequence of an unauthorised invasion of privacy, the Court will, in such a case, award appropriate relief which may include the delivery up of the relevant storage devices to the owner or occupier of the premises." Without determining whether the common law of tort may recognise a tort of privacy, it cannot be said that there is no prospect of a remedy, at least for the first plaintiff. The plaintiffs do not seek to have that question determined. In argument they did, however, rely upon the information or material which was 83 Australian Law Reform Commission, For Your Information: Australian Privacy Law and Practice, Report 108 (2008) at 2555-2556 [74.81]-[74.82]; see also New South Wales Law Reform Commission, Invasion of Privacy, Report 120 (2009) at 84 See above at [24]. 85 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR (2002) 124 FCR 384. 87 Hart v Commissioner of Australian Federal Police (2002) 124 FCR 384 at 406 [88]. Bell taken as something which the first plaintiff sought "to keep private" and they relied upon the fact that the trespass was to her home and her personal mobile phone as "an invasion of her privacy". Section 75(v) According to the special case, this matter is brought in the original jurisdiction of this Court including as a matter "in which a writ of Mandamus or prohibition or an injunction is sought against an officer of the Commonwealth", as s 75(v) of the Constitution provides. In their submissions before and at the hearing the plaintiffs did not rely upon s 75(v) as expanding the power to grant an injunction. They did not suggest that the jurisdiction given by s 75(v) is to be exercised by the courts other than in accordance with the principles by which injunctions are usually granted by the courts, although obviously enough s 75(v) is concerned with conduct or decisions by persons having a particular status which may have public as well as private effects. Following the hearing of argument on the special case the Court invited further written submissions from the parties and intervenors as to whether the circumstance that officers of the AFP, acting in the purported execution of the Second Warrant, committed a trespass or acted in excess of statutory power provides a sufficient juridical basis for the issuing of an injunction under s 75(v) and whether that provision affects the discretionary arguments put by the parties. The latter subject will be dealt with later in these reasons. The plaintiffs by written submissions responded to the effect that, to the extent that a general law injunction is incapable of reversing the consequences of the tortious conduct in question, s 75(v) should not be regarded as so constrained. That is because, like the constitutional writ of prohibition, an injunction under s 75(v) is not limited to preventing consequences but extends to reversing consequences. The protective constitutional purpose of s 75(v), it is submitted, requires that relief be given where a Commonwealth officer has acted in excess of jurisdiction with "ongoing consequences" but where there is no threat of continued acts in excess of jurisdiction. The Commonwealth submits that s 75(v) does not put the plaintiffs in any stronger position with respect to the grant of an injunction. There is no general principle of the law which says that the court will grant an injunction to reverse the consequences of a tort. If there be any analogy between an injunction under s 75(v) and the remedy of prohibition, it is that prohibition, like an injunction, is not directed to the "consequences" of wrongful conduct, let alone to bringing about their "reversal". In the cases relied upon by the plaintiffs the remedy was said to have in fact issued on a much narrower basis, namely to ensure that the exercise of power made in excess of jurisdiction did not remain in force so as to impose Bell liabilities on an individual88, or to prevent further action based on a decision which had been quashed89. The constitutional purposes of s 75(v), it is submitted, do not require it to have some "wrong-reversal" capacity or operation. Nothing in the Convention Debates suggests that the injunction for which s 75(v) provides was to be given any extended reach90. The framers no doubt provided the equitable remedy of an injunction to address concerns that the basis for the writs of mandamus and prohibition might be too narrow91. The technicalities associated with prerogative writs rendered them inadequate in some respects92. Equitable relief might be available when a prerogative remedy is not93. The framers of the Constitution must be taken to have understood the bases upon which the three remedies provided by s 75(v) were given by the courts, even if the constitutional writs are not to be regarded as fixed by the general law94. At Federation, the injunction was used in England and the United States to restrain injury to the rights of a person by administrative decisions tainted by abuse of 88 R v Hibble; Ex parte Broken Hill Proprietary Co Ltd (1920) 28 CLR 456; likewise Jones v Owen (1848) 5 Dow & L 669 at 674. 89 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 117 [84]. 90 Citing, inter alia, Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1876-1878, 1883-1884. 91 Leeming, "Standing to seek injunctions against officers of the Commonwealth" (2006) 1 Journal of Equity 3 at 7, referring to Official Record of the Debates of the Australasian Federal Convention (Melbourne), 31 January 1898 at 320 (Barton). 92 Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 257 [25]; Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 144 [19], 157 [58]. 93 Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 94 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 92-93 [18]-[21], Bell power95. In this context an injunction may be understood as directed to an unlawful exercise of power96. It lies to prevent the implementation of invalid exercises of power97. But this says nothing about conduct in excess of power which is not continued. The fact that an officer of the Commonwealth has acted in excess of power may bring s 75(v) into focus but is not itself sufficient for the grant of an injunction. A critical question regarding the grant of that remedy relates to the effect that that conduct has had on the plaintiff and then whether there are discretionary considerations to be weighed. The distinction to be borne in mind is as between the jurisdiction to grant a remedy and the matters which inform the grant. Section 75(v) is an irremovable source of jurisdiction and power98. Its purposes are clear. It was included in the Constitution "to make it constitutionally certain that there would be a jurisdiction capable of restraining officers of the Commonwealth from exceeding Federal power"99. It is a means of assuring all that officers obey the law and neither exceed nor neglect any jurisdiction which the law confers on them100. These purposes do not speak to the operation of s 75(v) for which the plaintiffs contend. The remedy of injunction under s 75(v) remains essentially an equitable type of remedy. It may not be subject to the same limitations as are the constitutional writs but, as Gaudron J has observed101, "[i]n the field of public law, 95 Gummow, "The Scope of Section 75(v) of the Constitution: Why Injunction but No Certiorari?" (2014) 42 Federal Law Review 241 at 242. 96 Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 at 178-179, 204-205; see also Reynolds, "The Injunction in Section 75(v) of the Constitution" (2019) 30 Public Law Review 211 at 214. 97 Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146. 98 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476. 99 Bank of New South Wales v The Commonwealth ("the Bank Nationalisation Case") (1948) 76 CLR 1 at 363. 100 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 513-514 [104]. 101 Enfield City Corporation v Development Assessment Commission (2000) 199 CLR Bell equitable remedies are subject to the same considerations, including discretionary considerations, as apply in any other field". Discretionary considerations Even if the plaintiffs had been able clearly to identify a juridical basis for the injunctive relief sought, strong discretionary considerations, based on the policy of the law, would deny a grant. It has long been accepted that the courts will refuse to exercise their discretion to grant equitable relief when to do so would prevent the disclosure of criminality which it would, in all circumstances, be in the public interest to reveal102. Even injunctions which may be given in the exclusive jurisdiction of equity to protect an equitable right such as confidential information may be refused on this ground, for, as has often been said, there is "no confidence as to the disclosure of iniquity"103. The public interest in question is the same public interest that is recognised by the legislature in enacting statutes which authorise search warrants and which informs the view of the courts104 and the legislature105 as to whether evidence unlawfully obtained might nonetheless be admitted into evidence. The fact that documents or information have been obtained without lawful authorisation is not itself sufficient to foreclose their use. The public interest in the investigation and prosecution of crimes, or more generally the enforcement of the criminal law, has been considered by the courts in connection with orders where the police might have been liable to return material seized under warrant. In Malone v Metropolitan Police Commissioner106, the owner of bank notes seized by police acting under a search warrant sought their return. The police defended the claim on the ground that they were to be used as evidence in a prosecution. The original seizure had been valid but a reasonable time had passed since the seizure. The police would have been obliged to return 102 A v Hayden (1984) 156 CLR 532 at 544-545; see also at 559-560, 573-574. 103 Gartside v Outram (1856) 26 LJ Ch 113, quoted in A v Hayden (1984) 156 CLR 532 104 See Bunning v Cross (1978) 141 CLR 54. 105 See Evidence Act 1995 (Cth), s 138. Bell them had the court not held that they were entitled to retain the money until the conclusion of the criminal proceedings. Malone was referred to with approval by Deane, Dawson, Toohey and Gaudron JJ in Gollan v Nugent107, which also concerned articles seized by the police. In the circumstances of that case, it was not suggested that there was to be any prosecution of the plaintiffs for an offence and therefore no issue was raised as to whether the articles were required as evidence in any future trial. However, their Honours unequivocally stated that in the event that the articles were required in any prospective trial there would be a legitimate ground for retention of the articles by the police108. This statement reflects the practice which has been adopted in many cases involving things illegally seized. As Hill J observed in Puglisi v Australian Fisheries Management Authority109, the preponderance of opinion in relation to the exercise of discretion tends to be in favour of refusing to order the return of things, even when they have been illegally seized, if there are criminal proceedings pending in which the items may be used as evidence. It is not irrelevant to the exercise of the discretion in question that another discretion exists, that of a trial judge under s 138 of the Evidence Act, as to whether the information should be admitted into evidence. The considerations relevant to that discretion include the probative value and importance of the evidence in the proceeding, the gravity of the unlawful conduct, and whether the conduct was deliberate or reckless110. The existence of such a discretion would suggest that the prospective use of the information should not be foreclosed. The question then is whether the fact that no decision has been made whether to prosecute any person or offence under s 79(3) of the Crimes Act puts this case in a different category. Here it may be inferred that no decision can be made whilst the first defendant's undertaking, that the information seized will not be accessed or used by the AFP, is in force. But there is nothing hypothetical about the possibility of prosecution here. After all, it is the plaintiffs' own case that disclosure of the information held by the AFP exposes them to the risk of prosecution. The public interest in both the investigation and the prosecution of crime would not suggest as appropriate an order that the information be taken from 107 (1988) 166 CLR 18 at 43-44. 108 Gollan v Nugent (1988) 166 CLR 18 at 43-44. 109 (1997) 148 ALR 393 at 405. 110 Evidence Act 1995 (Cth), s 138(3). Bell the AFP and given to the plaintiffs. The prospect that criminal conduct may be disclosed is a sufficient reason to decline the relief sought. The question as to the validity of s 79(3) As mentioned earlier in these reasons, it is not necessary to consider the further question as to the validity of s 79(3) of the Crimes Act. There would be no utility in making a declaration of the kind sought because, since the events in question, that provision has been repealed. The plaintiffs nevertheless submitted that in the event that injunctive relief is refused, they would press for a declaration of the invalidity of s 79(3) as useful to them, in that it might result in the investigation and possibility of prosecution being brought to an end. The difficulty for the plaintiffs is that they have no interest in questions about s 79(3) which sets them apart from persons generally and is sufficient to give them standing. A party who seeks a declaration that a law is invalid must have a sufficient interest in having their legal position clarified. Unless and until they are charged with an offence under s 79(3), the plaintiffs have no more interest than anyone else in clarifying what the law is111. No analogy may be drawn with respect to the position of the plaintiffs in Croome v Tasmania112. There the law criminalised the plaintiffs' relationship with other people and affected their freedom of action. The plaintiffs pleaded that they had engaged in conduct which, if the impugned provisions of the Criminal Code (Tas) were operative, rendered them liable to prosecution, conviction and punishment113. The plaintiffs here understandably do not say that their past conduct has contravened s 79(3). Costs It follows from the Court having found the Second Warrant to be invalid that the plaintiffs have had substantial success in this matter. They should have their costs. 111 Kuczborski v Queensland (2014) 254 CLR 51 at 106 [175]-[176]. 112 (1997) 191 CLR 119. 113 Croome v Tasmania (1997) 191 CLR 119 at 127, 138-139. Bell Orders The questions of law stated for the opinion of the Full Court should be answered as follows: (a) Yes. (b) Yes. (c) Does not arise. (2) Unnecessary to answer. (3) Unnecessary to answer. There should be an order for certiorari quashing the search warrant issued on 3 June 2019. The first defendant should pay the plaintiffs' costs of the special case. 110 Section 75(v) of the Constitution confers original jurisdiction on the High Court in all matters in which a writ of mandamus or prohibition or an injunction is sought against an officer of the Commonwealth. As a conferral of jurisdiction, it is not to be construed "by making implications or imposing limitations which are not found in [its] express words"114. As a constitutional conferral of jurisdiction, it is to be construed "with all the generality which the words used admit"115 and to include all that is "necessary or proper to render it effective"116. Necessarily encompassed within it is therefore constitutional power117 to issue each of the "constitutional remedies"118 for which it provides: the "constitutional writs"119 and the "constitutional injunction"120. Underlying that conferral of jurisdiction and concomitant power are two traditional conceptions. Together they are aspects of the rule of law, which forms an assumption of the Constitution121. One is that the holder of a constitutional or statutory office cannot do anything in an official capacity except that which is authorised by the Constitution or by statute122. The other is that the holder of a 114 Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 115 R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225. 116 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 278. See Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 90-91 [14]. 117 Graham v Minister for Immigration and Border Protection (2017) 263 CLR 1 at 25 [42]-[43]; Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 118 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 107 [54]. 119 Bodruddaza v Minister for Immigration and Multicultural Affairs (2007) 228 CLR 120 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 21 [65]. 121 Graham v Minister for Immigration and Border Protection (2017) 263 CLR 1 at 24 [40] and Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 513 [103], each quoting Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193. 122 Graham v Minister for Immigration and Border Protection (2017) 263 CLR 1 at 24 [39]. See also R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at constitutional or statutory office is bound by the common law when doing anything in an official capacity except to the extent that non-compliance with the common law is specifically authorised or excused by statute123. The jurisdiction conferred by s 75(v) of the Constitution to issue a constitutional injunction against a constitutional or statutory officer of the Commonwealth can arise for exercise in two corresponding categories of matter. One is where the officer does or threatens to do something in an official capacity that is beyond constitutional or statutory authority. There an injunction can issue in the exercise of judicial discretion to vindicate the limitation on constitutional or statutory authority. The other is where the officer does or threatens to do something in an official capacity to infringe a common law right. There an injunction can issue in the exercise of judicial discretion to vindicate the common law right. The two categories are not mutually exclusive. Nor can they be taken necessarily to exhaust the jurisdiction124. Just as the exercise of power to issue a constitutional writ of mandamus or prohibition is informed without being confined by principles which historically informed the issue of a writ of mandamus or prohibition by a court administering the common law125, so the exercise of power to issue a constitutional injunction is informed without being confined by principles which historically informed the issue of an injunction by a court administering equity126. Noteworthy in that respect is that courts administering equity had by the end of the nineteenth century become accustomed to issuing injunctions against public officers and public authorities, where common law remedies were unavailable or inadequate to "meet the justice 188-189; R v Somerset County Council; Ex parte Fewings [1995] 1 All ER 513 at 524, affirmed in R v Somerset County Council; Ex parte Fewings [1995] 1 WLR 1037 at 1042; [1995] 3 All ER 20 at 25. 123 Coco v The Queen (1994) 179 CLR 427 at 435-436, citing amongst other cases Entick v Carrington (1765) 19 St Tr 1029. See also Clough v Leahy (1904) 2 CLR 139 at 155-156; A v Hayden (1984) 156 CLR 532 at 580. 124 cf Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 125 Re Grimshaw; Ex parte Australian Telephone and Phonogram Officers' Association (1986) 60 ALJR 588 at 594; 66 ALR 227 at 237; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 93 [24]. 126 Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 of the case"127, in categories which included tortious infringement of a common law or statutory right128 and want or excess of statutory authority129. The practical overlap and conceptual distinction between those categories had been noticed by text writers130, and came to be reflected in the formulation at the beginning of the twentieth century of the principle that a citizen would have standing to seek injunctive relief in equity against a public officer or a public authority where "suing upon an alleged private right" or where "suing in respect of an interference with a public right from which [the citizen] personally sustains special damage"131. The final mandatory injunction which Ms Smethurst seeks against the Commissioner of Police in the proceeding in which this special case arises is, of its nature, a constitutional injunction. That is because the proceeding is in the original jurisdiction of the High Court, because the Commissioner is an officer of the Commonwealth, as was each of the members of the Australian Federal Police ("the AFP") who performed the role of the executing officer or of a constable assisting in the purported execution of the search warrant at Ms Smethurst's home, and because the injunction is sought against the Commissioner in his official capacity. No distinction has been drawn between the Commissioner and other members of the AFP for the purpose of the proceeding and no point has been taken that the injunction sought against the Commissioner ought to have been sought 127 Attorney-General v Mid-Kent Railway Co and South-Eastern Railway Co (1867) LR 3 Ch App 100 at 103; Jeanneret v Hixson (1889) 11 NSWLR Eq 1 at 11. 128 eg Attorney-General v Council of the Borough of Birmingham (1858) 4 K & J 528 [70 ER 220]; Imperial Gas Light and Coke Co v Broadbent (1859) 7 HLC 600 [11 ER 239]; Attorney-General v Colney Hatch Lunatic Asylum (1868) LR 4 Ch App 146; Jeanneret v Hixson (1889) 11 NSWLR Eq 1 at 8-9, quoting Glossop v Heston and Isleworth Local Board (1879) 12 Ch D 102 at 111. 129 eg Frewin v Lewis (1838) 4 My & Cr 249 [41 ER 98]; Oldaker v Hunt (1854) 19 Beav 485 [52 ER 439]; Attorney-General v Bishop of Manchester (1867) LR 3 Eq 436; Attorney-General v Cockermouth Local Board (1874) LR 18 Eq 172; Attorney-General v Borough of North Sydney (1893) 14 NSWLR Eq 154. 130 eg Joyce, The Doctrines and Principles of the Law of Injunctions (1877) at 50-51, 296-297; High, A Treatise on the Law of Injunctions, 2nd ed (1880), vol II at 861 §1309; Kerr, A Treatise on the Law and Practice of Injunctions, 3rd ed (1888) at 131 Boyce v Paddington Borough Council [1903] 1 Ch 109 at 113. See Finn, "A Road Not Taken: The Boyce Plaintiff and Lord Cairns' Act – Part I" (1983) 57 Australian Law Journal 493 at 500. See also Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 256 [21]-[22], against some other member. The injunction sought against the Commissioner can therefore be treated as an injunction to bind all relevant members of the AFP. I agree with Kiefel CJ, Bell and Keane JJ for the reasons they give that the search warrant which the AFP purported to execute at Ms Smethurst's home did not comply with s 3E(5)(a) of the Crimes Act 1914 (Cth) and was for that reason invalid. The invalidity of the search warrant means that entry into Ms Smethurst's home by the AFP was not authorised by s 3F(1)(a), that the search which the AFP conducted there was not authorised by s 3F(1)(c), that the operation by the AFP of electronic equipment there to access data on her mobile phone was not authorised by s 3L(1), that the copying by the AFP there of data from her mobile phone onto a USB drive which was then taken from her home by the AFP was not authorised by s 3L(1A), and that the retention by the AFP of the data for the purpose mentioned in s 3ZQU(1)(a) of investigating or prosecuting an offence is not authorised by s 3L(1B). I also agree with Kiefel CJ, Bell and Keane JJ for the reasons they give that the lack of specific statutory authority for the AFP to do or have done each of those things does not mean that the current retention of the data is outside the statutory authority of the AFP. Retention of the data is within the capacity that the AFP must have to perform its function under s 8(1)(b)(i) of the Australian Federal Police Act 1979 (Cth) of providing "police services" in relation to laws of the Commonwealth. The discretion conferred on a court by s 138 of the Evidence Act 1995 (Cth) to admit evidence obtained "in contravention of an Australian law" in the prosecution of an offence against a law of the Commonwealth would make little sense unless a law enforcement agency such as the AFP has capacity to retain for the purpose of investigating and prosecuting such an offence material that it was not authorised by statute to obtain. Section 8(1)(b)(i) of the Australian Federal Police Act is sufficiently broad to provide the requisite source of that capacity. My disagreement with Kiefel CJ, Bell and Keane JJ is as to the relief that should issue in the exercise of the jurisdiction conferred by s 75(v) of the Constitution. I do not share their Honours' doubts as to the existence of a juridical basis for the final mandatory injunction which Ms Smethurst seeks, requiring the AFP to deliver up the USB drive on which the copied data is stored to enable that data to be deleted. And I disagree with their Honours' view that such an injunction should be refused in the exercise of discretion. Read in light of the principle of statutory construction that "[s]tatutory authority to engage in what otherwise would be tortious conduct must be clearly expressed in unmistakable and unambiguous language"132, s 8(1)(b)(i) of the Australian Federal Police Act is far too general to be interpreted as purporting to 132 Coco v The Queen (1994) 179 CLR 427 at 436. See also Board of Fire Commissioners of New South Wales v Ardouin (1961) 109 CLR 105 at 116. provide statutory immunity against an infringement of common law rights or against the remedial consequences of an infringement of common law rights. Mention was made in argument of the specific common law power of an officer of police to retain an item that may be evidence of an offence for the purpose of investigating and prosecuting the offence, existence of which can provide a common law answer to a common law action for its wrongful retention. Together with other common law powers of a police officer, that power can be accepted to be made applicable to a member of the AFP when performing functions in the Australian Capital Territory by operation of s 9(1)(b) of the Australian Federal Police Act. The common law power, however, has never been held to extend beyond retention of an item that police have obtained "without wrong on their part"133. Thus, a need on the part of police to retain personal property lawfully obtained for the purpose of investigating and prosecuting an offence can provide an answer to a common law action by the owner who wants it back134. But a need on the part of police to retain personal property unlawfully obtained for the purpose of investigating and prosecuting an offence can provide no answer to a common law action by the owner for its unlawful taking and retention135. Because the AFP did not obtain the copied data without wrong on its part, the common law power cannot avail the AFP here. What invalidity of the search warrant means is that, although the AFP is not acting beyond its statutory authority merely in retaining the data on the USB drive, the AFP had no statutory justification for the infringements of Ms Smethurst's common law rights that occurred in the purported execution of the search warrant to obtain the data and that the AFP has no statutory immunity from the common law consequences of those infringements. The infringements are incontrovertible. The unauthorised entry into her home was a trespass to her land. The handling of her mobile phone there, including the unauthorised operation of electronic equipment to access data on her mobile phone, was a trespass to her goods. For each of those trespasses, she has a common law cause of action against the AFP in respect of which she is entitled to damages at common law. In the theory of the common law, she is entitled to receive from the AFP compensatory damages in an amount which, so far as money could do, would restore her to the position she would have been in had those trespasses not been committed. 133 R v Lushington; Ex parte Otto [1894] 1 QB 420 at 423; Dixon v Stephens (unreported, Supreme Court of New South Wales, 2 September 1971). 134 cf Ghani v Jones [1970] 1 QB 693 at 708. 135 Levine v O'Keefe [1929] VLR 302; Levine v O'Keefe [1930] VLR 70. It is important to be clear about what the common law would be attempting to compensate for in awarding compensatory damages. The gist of a common law cause of action for trespass, whether to land or to goods, is "the wrong to the right to possession"136. At the heart of the common law right to possession is the common law right to control access by others and thereby to exclude others from access. In protecting the right to possession, the policy of the common law is to protect the right to exclude others which is bound up in possession137. The common law would accordingly be attempting to compensate Ms Smethurst for the AFP's infringement of her right to possession of her home and for the AFP's infringement of her right to possession of her mobile phone. Compensatory damages would seek to vindicate her interest in "maintaining the right to exclusive possession ... free from uninvited physical intrusion by strangers"138. To those compensatory damages, aggravated damages might well be added to take account of the "circumstances and manner of the wrongdoing" including the "affront" to her dignity and quiet enjoyment139. In circumstances where the AFP continues to hold a copy of the data downloaded by the AFP from Ms Smethurst's mobile phone through the commission of the trespasses, however, how can damages possibly be an adequate remedy? The essential characteristic of the information embedded in the data as it existed on the mobile phone before the commission of the trespasses was that access to the information was within her exclusive power to control by virtue of her possession of the mobile phone and its location in her home. The information embedded in the data is information to which she alone would continue to control access but for the AFP having trespassed against her. For so long as the information remains in the hands of the AFP, the direct effects of the infringement of her rights to possession of her home and of her mobile phone are serious and ongoing. There being no suggestion that the value of the information embedded in the data to her is wholly commercial, money alone cannot restore her to the position she would have been in had the trespasses not been committed. Had some into Ms Smethurst's home, hacked into her mobile phone, downloaded the same data and refused to give the data back, I cannot imagine that an application by her in technologically adept scoundrel forced his way 136 Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 227. See also New South Wales v Ibbett (2006) 229 CLR 638 at 646 [29]. 137 Plenty v Dillon (1991) 171 CLR 635 at 647, 654-655. 138 New South Wales v Ibbett (2006) 229 CLR 638 at 646 [29]. 139 New South Wales v Ibbett (2006) 229 CLR 638 at 646-647 [31]. the "auxiliary jurisdiction"140 of equity to aid the common law for an injunction to compel the scoundrel to return the data would be refused on the basis that the trespasses did not have an ongoing effect that was legally cognisable or on the basis that damages were an adequate remedy. But even if such a response could be imagined in a matter between citizen and citizen, the constitutional dimension of the trespasses here and the constitutional nature of the jurisdiction invoked cannot be ignored. There is nothing "auxiliary" about the jurisdiction conferred by s 75(v) of the Constitution, and there is every reason not to be reticent about its exercise. It is now more than 250 years since the celebrated judgment of Lord Camden in Entick v Carrington141 cemented the position at common law that the holder of a public office cannot invade private property for the purpose of investigating criminal activity without the authority of positive law. Lord Camden referred to the private papers unlawfully seized in that case as their owner's "dearest property". He said that "though the eye cannot by the laws of England be guilty of a trespass, yet where private papers are removed and carried away, the secret nature of those goods will be an aggravation of the trespass"142. In so saying he recognised a link between protection of personal property and protection of freedom of thought and political expression143. Of the judgment in Entick v Carrington, it has been said144: "The principles laid down in [it] affect the very essence of constitutional liberty and security. They ... apply to all invasions on the part of the government and its [officers] of the sanctity of a man's home and the privacies of life. It is not the breaking of his doors, and the rummaging of his drawers, that constitutes the essence of the offence; but it is the invasion of his indefeasible right of personal security, personal liberty and private property, where that right has never been forfeited by his conviction of some 140 Bankstown City Council v Alamdo Holdings Pty Ltd (2005) 223 CLR 660 at 141 (1765) 19 St Tr 1029. 142 (1765) 19 St Tr 1029 at 1066. See also Beardmore v Carrington (1764) 2 Wils KB 244 at 250 [95 ER 790 at 793-794]. 143 Amar, America's Unwritten Constitution: The Precedents and Principles We Live By (2012) at 128; Rowbottom, "Entick and Carrington, the Propaganda Wars and Liberty of the Press", in Tomkins and Scott (eds), Entick v Carrington: 250 Years of the Rule of Law (2015) 85. 144 Boyd v United States (1886) 116 US 616 at 630. public offence, – it is the invasion of this sacred right which underlies and constitutes the essence of Lord Camden's judgment." The principles of constitutional liberty and security carried forward from Entick v Carrington are part of our common law inheritance. We ignore them – or, worse, devalue them – at our peril. For those principles to have appropriate contemporary operation in Australia, their practical application must be adapted to the contemporary reality that digital technology has provided new means by which personal property can be a repository of privately held information as well as new means by which such information can be extracted through the invasion of that private property and afterwards retained and disseminated. More importantly, in an age in which invasions of common law rights can result in more than just common law remedies, talk of those principles must be backed up by a preparedness on the part of all courts "within the limits of their jurisdiction and consistent with their obligation to act judicially ... [to] provide whatever remedies are available and appropriate to ensure that those possessed of executive and administrative powers exercise them only in accordance with the laws which govern their exercise"145. The remedy of an injunction being constitutionally available within the original jurisdiction of the High Court, the appropriate remedy for the unauthorised invasion by an officer of the Commonwealth of a common law right of a citizen of Australia cannot be presumptively confined to the common law remedy of damages: "for if an owner of property is truly to have a 'strict' or 'fundamental' right not to be unlawfully invaded then this right must be supported by an effective sanction otherwise the term will be just meaningless rhetoric"146. In answer to an application by a citizen for a prohibitory injunction to restrain an unauthorised invasion of a common law right to property that is about to occur or is occurring, no officer of the Commonwealth should be heard to say "you can have your damages later". And in answer to an application by a citizen for a mandatory injunction to prevent the ongoing effect of an unauthorised invasion of such a common law right that has occurred, no officer of the Commonwealth should be heard to say "your damages are enough". The juridical basis for the final mandatory injunction sought by Ms Smethurst does not lie in her having an interest in preventing the copied data from being used by the AFP. In the absence of statutory immunity validly 145 Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 146 Samuel, "The Right Approach?" (1980) 96 Law Quarterly Review 12 at 14, quoted in part in Plenty v Dillon (1991) 171 CLR 635 at 655. conferred, no one has a legally cognisable interest in being protected from investigation for an offence147. The juridical basis for the injunction is also not dependent on the common law of Australia coming to recognise an independent cause of action for infringement of a distinct right of privacy. Unlike Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd148, where that question was explored and left open, this is not a case in which a remedy is sought against someone other than a trespasser. Nor is it a case like Coco v Shaw149, where the unauthorised use of a listening device to record a "private" but not "confidential" telephone conversation was not suggested to involve infringement of any right to possession. This is a case within the heartland of the tort of trespass. The juridical basis for the final mandatory injunction sought by Ms Smethurst lies in its issue within the discretion of the Court being constitutionally appropriate to restore Ms Smethurst to the position she would have been in had her common law rights to control access to her real and personal property not been invaded by the tortious conduct of the AFP in circumstances in which money alone cannot restore her to that position150. An injunction requiring delivery up of the USB drive on which the copied data is stored to enable that data to be deleted is relief of a kind which the Full Court of the Federal Court (French, Sackville and R D Nicholson JJ) in Hart v Commissioner of Australian Federal Police151 considered appropriate to be issued under the statutory equivalent of s 75(v) of the Constitution – s 39B of the Judiciary Act 1903 (Cth) – in a case where the AFP had copied data in circumstances unauthorised by an earlier form of s 3L of the Crimes Act. In my opinion, that view was correct. If an injunction of that nature is to be refused in the present proceeding, that refusal can occur only as a matter of discretion. The Solicitor-General of the the Commonwealth, who appeared the Commissioner and for for 147 A v Hayden (1984) 156 CLR 532. 148 (2001) 208 CLR 199 at 248-258 [105]-[132]. 149 [1994] 1 Qd R 469. 150 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 31 [33]. 151 (2002) 124 FCR 384 at 406 [88]. Attorney-General of the Commonwealth intervening, quite properly made no submission to the contrary. Beginning with the decision of Hope J in Marinko v Rames152, a series of decisions of single judges in State Supreme Courts153 and in the Federal Court154 have given consideration to the exercise of discretion to refuse mandatory injunctions requiring the return to owners of unlawfully seized property sought to be retained by police or other holders of public office for the purpose of investigating or prosecuting criminal offences. Beyond recognising the accuracy of the observation of Hope J that a mandatory injunction to remedy an official invasion of a proprietary right will sometimes appropriately be withheld by reference to non-proprietary considerations155, it would be unrewarding to review the correctness of each of those decisions, just as it would be imprudent even if it were possible to be categorical about the circumstances in which refusal of an injunction would be appropriate. Even so, two guiding principles can be stated with confidence. The first is that where a tortious infringement of a common law right has been committed by the holder of a public office in circumstances where damages are not an adequate remedy, the onus must lie on the holder of the public office to establish a sound basis for the discretionary refusal of the injunction156. The second is that the mere fact that the public officer can establish a want to retain personal property or 152 Unreported, Supreme Court of New South Wales, 13 August 1971. 153 Dixon v Stephens (unreported, Supreme Court of New South Wales, 2 September 1971); GH Photography Pty Ltd v McGarrigle [1974] 2 NSWLR 635; Rowell v Larter (1986) 6 NSWLR 21; Island Way Pty Ltd v Redmond [1990] 1 Qd R 431; Tye v Commissioner of Police (1995) 84 A Crim R 147; Ozzie Discount Software (Aust) Pty Ltd v Muling (1996) 86 A Crim R 387; Cassaniti v Croucher (1997) 37 ATR 269; Wright v Queensland Police Service [2002] 2 Qd R 667. 154 Parker v Churchill (1985) 9 FCR 316; Esso Australia Ltd v Curran (1989) 39 A Crim R 157; Challenge Plastics Pty Ltd v Collector of Customs (1993) 42 FCR 397; Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393; Caratti v Commissioner of the Australian Federal Police [No 2] [2016] FCA 1132; Caratti v Commissioner of the Australian Federal Police [No 3] [2016] FCA 1407. 155 Marinko v Rames (unreported, Supreme Court of New South Wales, 13 August 156 cf Parker v Churchill (1985) 9 FCR 316 at 332-333, referring to Trimboli v Onley [No 3] (1981) 56 FLR 321 at 337; Esso Australia Ltd v Curran (1989) 39 A Crim R 157 at 169-170; Island Way Pty Ltd v Redmond [1990] 1 Qd R 431 at 435-436. information obtained through the commission of the tort for the purpose of a criminal investigation must be insufficient to discharge that onus157. In the vindication of common law rights against unauthorised official invasion, considerations merely of convenience have no place158. If a statute prescribes means by which the holder of the public office can lawfully obtain personal property or can lawfully extract information from personal property for the purpose of a criminal investigation, it is fundamental to the maintenance of the rule of law that the public officer not be relieved from compliance with those statutory means by an exercise of judicial discretion. Where police can establish that personal property unlawfully obtained or information unlawfully extracted from personal property is proposed to be tendered in existing or imminent criminal proceedings, an ordinarily sufficient justification for the exercise of the discretion to refuse an injunction will lie in the undesirability of permitting civil process to interfere with the course of criminal proceedings159. To the extent that dicta in Gollan v Nugent160 might be read to suggest that refusal of an injunction would be justified where criminal proceedings are no more than prospective, I consider that the suggestion goes too far. Criminal proceedings will always be in prospect for so long as a criminal investigation remains on foot, and the mere fact that a criminal investigation remains on foot cannot be enough. Where police can establish that personal property unlawfully obtained or information unlawfully extracted from personal property is relevant to an offence that is the subject of an ongoing criminal investigation, a range of considerations might properly inform the exercise of the discretion to refuse an injunction. Any delay on the part of the plaintiff in seeking the injunction and any use made by police of the property or information in the meantime would be relevant. In the case of information, so would any dissemination to third parties that might already have occurred161. Any realistic risk that evidence of the crime under investigation 157 cf Ozzie Discount Software (Aust) Pty Ltd v Muling (1996) 86 A Crim R 387 at 158 Levine v O'Keefe [1930] VLR 70 at 72; Plenty v Dillon (1991) 171 CLR 635 at 654; Coco v The Queen (1994) 179 CLR 427 at 436. 159 Sankey v Whitlam (1978) 142 CLR 1 at 26; Yates v Wilson (1989) 168 CLR 338; Gedeon v Commissioner of New South Wales Crime Commission (2008) 236 CLR 120 at 133-134 [23]-[24]. cf Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393 at 405. 160 (1988) 166 CLR 18 at 43-44. 161 cf Johns v Australian Securities Commission (1993) 178 CLR 408 at 431. would be lost were the injunction to be issued must weigh heavily against issuing an injunction. That is not the situation here. No attempt has been made by the AFP in agreeing the facts of the special case to provide an evidentiary foundation for an inference that the copied data in fact provides evidence of the commission of any offence or in fact will be useful to the AFP in investigating the commission of any offence. The most that can be inferred is that the member of the AFP who copied the data onto the USB drive believed at the time of copying that some or all of the data was relevant to whatever offence the member understood was described by the garbled language of the third condition of the search warrant. The plaintiffs moved quickly for relief. The copied data has been quarantined and has not been used by the AFP or anyone else pending the outcome of the proceeding. Nor is there any basis for considering that such evidence of a crime as the information embedded in the data might possibly reveal would be at risk of being lost were an injunction to be issued. That is because the injunction can be framed in terms that would ensure that the data or some part of it could be lawfully seized. It would remain open to the AFP to seek to satisfy a magistrate or other issuing officer that there are reasonable grounds for suspecting that the data or some part of it is relevant to a Commonwealth offence. If the issuing officer were to be reasonably so satisfied on a correct understanding of the law, it would be open to the issuing officer to issue a warrant authorising a search of any premises at which the issuing officer was satisfied the USB drive would be located within the period of 72 hours after the issue of the warrant162. Such a warrant, if issued, would then be available to be executed by the AFP immediately upon complying with the injunction. There is nothing cute about framing the mandatory injunction in terms which would facilitate the execution of a valid warrant. The injunction would serve to remedy the infringements of Ms Smethurst's common law rights to possession that have occurred in the past without doing anything to impede the capacity of the AFP lawfully to exercise a power of search and seizure in the future. Otherwise agreeing with the answers proposed by Kiefel CJ, Bell and Keane JJ to each of the questions posed in the special case, I would therefore expand their Honours' proposed answer to question (4). To the writ of certiorari to quash the purported legal effect of the search warrant, I would add a mandatory constitutional injunction. The injunction would require the Commissioner to deliver up to Ms Smethurst the USB drive onto which the data was copied from her mobile phone and to provide such technical information or assistance as may be necessary 162 See s 3E(1) of the Crimes Act. to enable her to delete the data from the USB drive. If the USB drive is not seized at the time of delivery up in due execution of a valid search warrant, the deletion of the data from it would have to occur within a reasonable time of the delivery up. The USB drive would, of course, remain the property of the AFP; the injunction could provide no justification for Ms Smethurst retaining possession of it once the data had been deleted. Nettle 142 NETTLE J. I have had the advantage of reading in draft the plurality's reasons for judgment, and I agree with their Honours for the reasons they give163 that the Second Warrant was invalid and, consequently, that the search and seizure executed on 4 June 2019 was not authorised by Pt IAA of the Crimes Act 1914 (Cth) and was, therefore, unlawful. I also agree with their Honours that the plaintiffs should not be granted the injunctive relief they seek. But my reasons for that conclusion are in some respects different from the plurality's reasons. Jurisdiction and power At the outset, and throughout what follows, it is necessary to bear in mind the distinction, "made repeatedly by this Court", "between jurisdiction and power"164. In this matter, this Court has original jurisdiction on at least two bases165: first, and most obviously, because "an injunction is sought against an officer of the Commonwealth" within the meaning of s 75(v) of the Constitution166; and, secondly, because the plaintiffs' claim, by asserting an "immunity" derived from the Constitution167, raises a matter "arising under the Constitution" within the meaning of s 30(a) of the Judiciary Act 1903 (Cth), enacted pursuant to s 76(i) of the Constitution168. The Court's jurisdiction in cases where injunctive relief is sought pursuant to s 75(v) of the Constitution is not constrained by the principles of jurisdictional error that limit the issue of the constitutional writs of mandamus and prohibition169. But as the framers of the Constitution were aware, the injunction was "forged in 163 See reasons of Kiefel CJ, Bell and Keane JJ, especially at [31]-[35], [43]-[44]. 164 Lacey v Attorney-General (Qld) (2011) 242 CLR 573 at 593 [48] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ. 165 See also Naismith v McGovern (1953) 90 CLR 336 at 342 per Williams, Webb, Kitto and Taylor JJ; Maguire v Simpson (1977) 139 CLR 362 at 397-399 per Mason J, 166 Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 at 208 per Deane and Gaudron JJ. 167 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560 per Brennan CJ, Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ. 168 Felton v Mulligan (1971) 124 CLR 367 at 408 per Walsh J. 169 Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 at 162 [47] per Gummow, Hayne, Heydon and Crennan JJ. Nettle the realm of private law", and hence its availability in "the field of public law" depends primarily on whether statute authorises an actual or apprehended interference with private or public rights170. This fundamental attribute of the remedy is not lessened by the appellation "constitutional injunction"171. To say so is not to deny that the "central place" of this Court "in the Australian judicial system", as embodied in s 75(v) of the Constitution, informs the Court's power "to ensure the rule of law by granting relief against Commonwealth officers who act without ... power"172, and may, accordingly, justify an expansion of the Court's power to grant an injunction under s 75(v). But for the most part, and, for reasons to be explained, in this case, the Court's power to grant s 75(v) injunctive relief, like the Court's power to grant any other kind of injunctive relief, is defined by s 32 of the Judiciary Act. Section 32 of the Judiciary Act confers power on the Court to grant "all such remedies whatsoever as any of the parties ... are entitled to in respect of any legal or equitable claim properly brought forward by them respectively". The provision has an "affinity" with s 14 of the Judiciary Act 1789 (US) ("the All Writs Act")173, but its terms are derived from s 24(7) of the Supreme Court of Judicature Act 1873 (Eng) ("the 1873 Act")174. Section 24(7) of the 1873 Act embodied the "fundamental idea" of the Judicature Acts175 and included a specific power to grant injunctions176, which, perforce of s 25(8) of the 1873 Act, was exercisable "in all 170 Sykes, "The Injunction in Public Law" (1953) 2 University of Queensland Law Journal 114 at 114, 127. See also Spigelman, "The Equitable Origins of the Improper Purpose Ground", in Pearson, Harlow and Taggart (eds), Administrative Law in a Changing State (2008) 147 at 149-153. 171 See and compare Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 142 [165] per Hayne J. 172 Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at 465-466 [263] per Hayne J. 173 Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at 403 [56] per Gaudron and Gummow JJ, 467 [268]-[269] per Hayne J. 174 36 & 37 Vict c 66. See Plaintiff S297/2013 v Minister for Immigration and Border Protection (2015) 255 CLR 231 at 249 [44] fn 46 per French CJ, Hayne, Kiefel, Bell, Gageler and Keane JJ. See also Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 489 per Gibbs J. 175 McGowan v Middleton (1883) 11 QBD 464 at 468 per Brett MR. 176 See Wright v Redgrave (1879) 11 Ch D 24 at 32 per James LJ. Nettle cases in which it shall appear to the Court to be just or convenient that such Order should be made". Despite the apparent breadth of the provision, however, it has been held to extend only as far as the powers formerly exercised by courts of equity and later by courts of law pursuant to s 79 of the Common Law Procedure Act 1854 (Eng) ("the 1854 Act")177. The starting point in this matter is, therefore, that this Court's power under s 32 of the Judiciary Act to grant injunctive relief in the exercise of its original jurisdiction – whether under s 75(v) of the Constitution or otherwise – is defined by doctrines of equity as they have developed over time178, and by the settled construction of the 1854 Act empowering courts of law to grant injunctions in lieu of damages179. Basis for injunctive relief I agree with the plurality that "a thing seized under this Part" in s 3ZQU of the Crimes Act refers to a thing seized lawfully in accordance with Pt IAA of that Act180. Where, therefore, a thing has been so seized, s 3ZQU authorises the Commissioner to use it for the enumerated purposes and s 3ZQX authorises the Commissioner to detain it until it is no longer required for any such purpose or for "other judicial or administrative review proceedings" in which production of things seized may be "necessary ... as proof that they were properly seized under the warrant"181. Where, however, a thing is seized purportedly, but not lawfully, under Pt IAA of the Crimes Act, ss 3ZQU and 3ZQX of the Act have no application. In such a case, just as the unlawful execution of a warrant, including an otherwise 177 17 & 18 Vict c 125. See North London Railway Co v Great Northern Railway Co (1883) 11 QBD 30 at 36-37 per Brett LJ; Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428 at 454 per Dixon CJ (McTiernan J agreeing at 456-457); cf Beddow v Beddow (1878) 9 Ch D 89 at 93 per Jessel MR. 178 See Gummow, "The Scope of Section 75(v) of the Constitution: Why Injunction but No Certiorari?" (2014) 42 Federal Law Review 241 at 247-248, 249-250. 179 See Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at 79-81 [58]-[64] per Gummow and Hayne JJ, 122-123 [189]-[191], 124-129 [195]-[202] 180 See reasons of Kiefel CJ, Bell and Keane JJ at [59]. 181 Australia, Senate, Crimes Legislation Amendment (Serious and Organised Crime) Bill (No 2) 2009, Replacement Explanatory Memorandum at 80. Nettle apparently valid execution of an invalid warrant, may amount to trespass to land182, trespass to chattels, conversion and detinue183, so, too, may the retention and use of what has been unlawfully seized amount to a tort184, and, if the thing seized contains confidential or proprietary information, its retention and use may amount to a breach of confidence185 or infringement of copyright186. It would not be a defence to such a claim, whether at law or in equity or under statute, that the only use that was made of the thing was one that would have been lawful if the thing had been lawfully seized under Pt IAA. It follows that, if at trial it is determined that a seizure is unlawful, then, subject to it being established that damages are unavailable or would be an inadequate remedy to compensate for the Commissioner's further detention or use of a thing seized, final injunction may go to compel delivery up of the thing in question187, and, if the thing contains proprietary or confidential information, to compel the delivery up or destruction of copies188. Likewise, where a plaintiff has a prima facie case and the balance of convenience favours interlocutory relief, interlocutory injunction will go to restrain the use of the thing seized pending final 182 See Halliday v Nevill (1984) 155 CLR 1 at 10, 20 per Brennan J; Plenty v Dillon (1991) 171 CLR 635 at 639-640 per Mason CJ, Brennan and Toohey JJ, 647-648 per Gaudron and McHugh JJ; Kuru v New South Wales (2008) 236 CLR 1 at 14-15 [43] per Gleeson CJ, Gummow, Kirby and Hayne JJ. 183 See Willey v Synan (1937) 57 CLR 200 at 212 per Rich J; Gollan v Nugent (1988) 166 CLR 18 at 24-25 per Brennan J. 184 See Russell v Wilson (1923) 33 CLR 538 at 545-546 per Isaacs and Rich JJ. 185 See Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 230 [53]-[55] per Gleeson CJ, 247-248 [104] per Gummow and 186 But see Copyright Agency Ltd v New South Wales (2008) 233 CLR 279 at 287-289 [6]-[13] per Gleeson CJ, Gummow, Heydon, Crennan and Kiefel JJ. 187 See Gollan v Nugent (1988) 166 CLR 18 at 25-26 per Brennan J, 45 per Deane, Dawson, Toohey and Gaudron JJ. See generally Van Hecke, "Equitable Replevin" (1954) 33 North Carolina Law Review 57. 188 See Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 567 per Gummow J. See generally Forrai, "Confidential Information – A General Survey" (1971) 6 Sydney Law Review 382 at 391. Nettle determination of the claim189. But it needs to be borne steadily in mind that the availability of such injunctive relief is dependent on the nature of the thing seized. In the case of the unlawful seizure of tangible or intangible property, or confidential information, the continuing wrong with respect to the tangible or intangible property, or confidential information, may provide the juridical basis for the grant of injunctive relief to compel delivery up of the thing seized or the delivery up or destruction of copies. Where, however, as here, a plaintiff does not assert any tangible or intangible property in the information seized, and the information seized is not alleged to be confidential information, the situation is different. Presumably, for that reason, the plaintiffs rested the claim for injunctive relief on two alternative bases. (i) No implied prohibition The first was an "implication", said to arise from Pt IAA of the Crimes Act, that a thing "in fact" seized "pursuant to the processes of the Act ... can only be used in accordance with the Act", and, therefore, that if "it is seized unlawfully it cannot be used for any purpose". The argument was presented as based on "a sensible reading" or "a logical expansion" of Johns v Australian Securities Commission190 giving rise to "a public law right" enforceable by injunction at the suit of someone with "a sufficient interest in the matter". The argument should be rejected as ill-according with the legislative intention manifested by Pt IAA of the Crimes Act191. In Johns192, as in Katsuno v The Queen193, the legislation conferring power to obtain the information in question contained express provisions for confidentiality194. Statements in both 189 See Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153-154, 156 per Mason A-CJ. 190 (1993) 178 CLR 408. 191 See Work Health Authority v Outback Ballooning Pty Ltd (2019) 93 ALJR 212 at 229-230 [76]-[78] per Gageler J; 363 ALR 188 at 206-207. 192 (1993) 178 CLR 408 at 423, 428 per Brennan J, 435 per Dawson J, 452-453 per Toohey J, 458 per Gaudron J, 467-468 per McHugh J. 193 (1999) 199 CLR 40 at 56 [18], 57 [25] per Gaudron, Gummow and Callinan JJ, 86-87 [107]-[109] per Kirby J. 194 Australian Securities Commission Act 1989 (Cth), s 127(1) and Juries Act 1967 (Vic), s 21(2), respectively. Nettle cases may, nevertheless, be taken to support a principle of construction that a conferral of power to obtain information for particular purposes implies a prohibition against use for any other purpose195. Thus, where a thing is lawfully seized in accordance with Pt IAA, the express authorisation of its use for the purposes enumerated in s 3ZQU may be taken to imply a prohibition against the Commissioner using it for any other purpose. But, as has been emphasised, ss 3ZQU and 3ZQX have no application to a thing seized purportedly, but not lawfully, under Pt IAA. Needless to say, unless there is some other lawful basis for the seizure, officers of the Commonwealth – no less and no more than other members of the public196 – may be seen to have committed a legal wrong by the seizure and any subsequent use of the thing seized. But there is no basis in principle for, and there is nothing in the text of Pt IAA from which to infer, a legislative intention to prohibit the use of a thing seized merely because an officer has erroneously relied on that Part for its seizure. And, even if there were, there would then be questions (which do not arise here) as to who would have a sufficient right or interest to enforce the prohibition197. (ii) Restoration of the status quo ante The second asserted alternative basis for injunctive relief was said to be "to reverse the consequences of the tort" constituted of the unlawful search and seizure, including retention and use of copies of documents which would not amount per se to any interference with property or breach of confidence. That argument should also be rejected. 195 See and compare Johns (1993) 178 CLR 408 at 424 per Brennan J, 458, 462-463 per Gaudron J, 467 per McHugh J; Katsuno (1999) 199 CLR 40 at 50 [2] per Gleeson CJ, 56 [19]-[21], 57 [24]-[25] per Gaudron, Gummow and Callinan JJ, 65 [55] per McHugh J, 87-88 [110]-[112] per Kirby J. But see Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566 at 586-587 [54] per Gummow and Hayne JJ, observing that, "whilst 'rules' or principles of construction may offer reassurance, they are no substitute for consideration of the whole of the particular text, the construction of which is disputed, and of its subject, scope and purpose". 196 See A v Hayden (1984) 156 CLR 532 at 591 per Brennan J. 197 See and compare Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397 at 405 per Kitto J; Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 263 [39], 264 [42]-[43], 267 [49] per Gaudron, Gummow and Kirby JJ. Nettle The argument was largely based on Young J's observation in Lincoln Hunt Australia Pty Ltd v Willesee198 that a court of equity has "power to grant an injunction in the appropriate case to prevent publication of a videotape or photograph taken by a trespasser even though no confidentiality is involved", provided "the circumstances are such [as] to make publication unconscionable". But Young J's reference to "unconscionability" outside the contexts in which that term is traditionally applied199 was criticised in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd200. As was there observed, used as a compendious description of "any conduct which attracts the intervention of equity"201, the term may add little to analysis or, worse, conceal what Julius Stone described as "fact-value complexes"202. The limits of the court's power to grant injunctions are better expressed in terms of an actual or apprehended "invasion of the legal or equitable rights of the plaintiff"203 and the inadequacy of damages at law to compensate for such a wrong. Furthermore, in this matter, it is not so much the exact formulation of the principle as its application to the facts of the matter which gives rise to the problem. To date, there have been but few cases in which a mandatory injunction has been granted on the basis of a past wrong. As Joseph Story observed during the mid-nineteenth century204: 198 (1986) 4 NSWLR 457 at 463. 199 See, eg, Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 400 [14], 426 [123], 437 [152] per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ; Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 at 547 [29] per Kiefel J, 575 [148] per Gageler J, 611 [268] per Keane J, 631 [330], 634 [342] per Nettle J. 200 (2001) 208 CLR 199 at 218-219 [17], 227 [44]-[45] per Gleeson CJ, 244-246 [98]-[100] per Gummow and Hayne JJ. 201 Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd [No 2] (2000) 96 FCR 491 at 498 [14] per French J, quoted in Lenah Game Meats (2001) 208 CLR 199 at 245 [99] per Gummow and Hayne JJ. 202 Stone, Legal System and Lawyers' Reasonings (1964) at 264. 203 Lenah Game Meats (2001) 208 CLR 199 at 246 [102] per Gummow and Hayne JJ. 204 Story, Commentaries on Equity Jurisprudence, as Administered in England and America (1836), vol 2, §862 at 155 (footnote omitted). See also Isenberg v East India House Estate Co Ltd (1863) 3 De G J & S 263 at 272 per Lord Westbury LC Nettle "The object of this process [of injunction], which is most extensively used in Equity proceedings, is generally preventive, and protective, rather than restorative; though it is by no means confined to the former. It seeks to prevent a meditated wrong more often, than to redress an injury already done." Moreover, on those few occasions when the power to grant a restorative injunction has been exercised205, it has been with a caution which recognises both that an award of damages is ordinarily an adequate remedy to compensate for wrongs recognised at law and that the characteristic hardship of mandatory orders ordinarily weighs against such discretionary relief206. As the majority observed in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia207: "Where the acts contemplated by the conspirators have all occurred and the tort is complete, the remedy available to an injured plaintiff is ordinarily limited to the recovery of pecuniary damages208. But for over a century it has been established that 'there is no rule which prevents the court from granting a mandatory injunction where the injury sought to be restrained has been completed before the commencement of the action'209. Where the damage caused by tortious conduct is ongoing and is 'extreme, or at all events very serious', a mandatory injunction may issue compelling the wrongdoer to prevent the occurrence of further damage210." [46 ER 637 at 641]; Smith v Smith (1875) LR 20 Eq 500 at 504 per Jessel MR. But see Holdsworth, A History of English Law, vol 5, 3rd ed (1945) at 324-325. 205 See, eg, McManus v Cooke (1887) 35 Ch D 681 at 698 per Kay J; Esso Petroleum Co Ltd v Kingswood Motors (Addlestone) Ltd [1974] QB 142 at 156 per Bridge J. 206 See Redland Bricks Ltd v Morris [1970] AC 652 at 665 per Lord Upjohn; Charrington v Simons & Co Ltd [1970] 1 WLR 725 at 730 per Buckley J; [1970] 2 All ER 257 at 261. See also Glossop v Heston and Isleworth Local Board (1879) 12 Ch D 102, concerning mandatory injunction to enforce positive statutory duties. 207 (1998) 195 CLR 1 at 31 [33] per Brennan CJ, McHugh, Gummow, Kirby and 208 See Deere v Guest (1836) 1 My & Cr 516 [40 ER 473]. 209 Kerr, A Treatise on the Law and Practice of Injunctions, 3rd ed (1888) at 50. 210 Durrell v Pritchard (1865) LR 1 Ch App 244 at 250 per Turner LJ (Knight Bruce LJ agreeing at 252); McManus v Cooke (1887) 35 Ch D 681 at 698 per Kay J; Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798 at 810 per Nettle Admittedly, the potential application of the power to grant a restorative injunction in a case like the present was noticed in Lenah Game Meats. Although Gummow and Hayne JJ there concluded211 that an injunction should not go to restrain publication by the Australian Broadcasting Corporation of non- proprietary, non-confidential information unlawfully obtained by a trespass to land, their Honours stressed212 that it was not alleged that the Australian Broadcasting Corporation was a knowing participant in the trespass. By contrast, here the Commissioner was involved in the trespass constituted of the unlawful search and seizure by the officers who executed the Second Warrant. But it does not follow that the Commissioner's involvement, in that sense, is sufficient of itself to engage this Court's power under s 32 of the Judiciary Act to grant restorative injunctive relief in the exercise of its original jurisdiction. In a case like the present, questions as to the adequacy of damages and justifiable hardship require an assessment of the nature, gravity and contumacy of the trespass committed by the unlawful search and seizure and of the nature and extent of the damage that would be inflicted on the plaintiff if the Commissioner were not restrained. Thus, if this matter had involved a deliberate flouting of the law – as it would have if seizing officers had gone onto the first plaintiff's land and effected the seizure knowing, or recklessly indifferent as to whether, they had no lawful authority to do so – the public interest may have provided good reason to regard the official retention and use of the information as raising an equity for restorative injunction213. And that would have been so whether the proceedings were brought in this Court, to ensure the rule of law against officers of the Commonwealth, or in a State Supreme Court having the powers of the courts at Westminster214 against officials of the State. But where, as here, it is not suggested that the unlawfulness of the search and seizure was the result of anything other than an honest error made in the course of a bona fide attempt to comply with the provisions of Pt IAA of the Crimes Act (by reason of the misdescription of the suspected offence in the warrant), it is difficult to see that the unlawfulness of the Brightman J; [1974] 2 All ER 321 at 337; Joyce, The Law and Practice of Injunctions in Equity and at Common Law (1872), vol 1 at 439; Williams and Guthrie-Smith (eds), Daniell's Chancery Practice, 8th ed (1914), vol 2 at 1400. 211 Lenah Game Meats (2001) 208 CLR 199 at 248 [105], 258 [132], 259 [138]. 212 Lenah Game Meats (2001) 208 CLR 199 at 247-248 [104]; see also at 273-275 [174]-[180] per Kirby J, 318 [304] per Callinan J. 213 See and compare Attorney-General v Harris [1961] 1 QB 74 at 89, 92 per Sellers LJ, 94-95 per Pearce LJ (Devlin LJ agreeing at 96); Attorney-General v Greenfield [1962] SR (NSW) 393 at 395 per Myers J. 214 See [144]-[145] above. Nettle search and seizure, of itself, should be regarded as so obliquitous as to render continued detention and use of the information inequitable. Presumably for that reason, the principal consideration on which the plaintiffs relied was the nature and extent of the damage that would be inflicted if detention and use of the information were not enjoined. For the reasons which follow, however, that is not persuasive either. As was made plain in the course of argument, the Commissioner does not seek to use the information for any purpose other than purposes that, but for the invalidity of the Second Warrant, would be expressly authorised by Pt IAA of the Crimes Act. Consequently, as was also made plain in argument, the only potential damage that the first plaintiff faces is the possibility that, if the Commissioner uses the information as intended, it may lead to the first plaintiff being prosecuted for a criminal offence (the commission of which she denies) of the kind that was infelicitously described in the warrant. The claim for injunction thus confronts the difficulty that, generally speaking, injunction will not go to restrain publication of information where the consequence of restraint would be to prevent disclosure of criminality which, in all the circumstances, it would be in the public interest to reveal215. No doubt, it cannot yet be said, and it may not be, that the information will disclose criminality which it is in the public interest to reveal. So far, the Commissioner has been bound by undertaking – given shortly after the claim of unlawful seizure was first made – not to look at the information until the question of the lawfulness of the seizure is determined. But what can be said is that the information was seized because the executing officer considered that it related to the unlawful disclosure of secret information, which, if proved, would be a serious criminal offence of the kind inadequately described in the warrant, and that the Commissioner has offered to undertake – and, if needs be, can be enjoined to ensure – that the information is used only as if it had been seized lawfully under Pt IAA. Consequently, if, upon examination by the Commissioner, it appears to the Commissioner that the information does not assist in disclosing the commission of such an offence, the information will be returned to the first plaintiff as if it had been lawfully seized under Pt IAA, and no prejudice will have been caused to the first plaintiff. 215 See Weld-Blundell v Stephens [1919] 1 KB 520 at 528 per Bankes LJ; Howard v Odhams Press Ltd [1938] 1 KB 1 at 41-42 per Greene LJ (Greer LJ agreeing at 22); A v Hayden (1984) 156 CLR 532 at 544-546 per Gibbs CJ; Coco v Shaw [1994] 1 Qd R 469 at 499 per Ryan J. See also Sankey v Whitlam (1978) 142 CLR 1 at 21-22, 25-26, 43 per Gibbs A-CJ. Nettle On the other hand, if it is determined that there is to be a prosecution, a question may then arise as to the admissibility of the information into evidence. But, if so, that will be a question that falls to be determined by the trial judge in accordance with s 138 of the Evidence Act 1995 (Cth). Contrary to the way in which the grant of injunctive relief has been approached in some other cases of this kind216, the potential application of s 138 is not a relevant consideration for the purposes of determining whether to grant or withhold injunctive relief – not least, but not only, because there is as yet too little information to determine whether s 138 would be engaged. Conclusion In the result, I agree in the orders proposed by the plurality. 216 See, eg, Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393 at 405 per Hill J. 164 GORDON J. The question that divides the Court is what relief the Court should grant when it concludes that an officer of the Commonwealth acted in excess of power. In particular, what, if any, relief should the Court grant when an officer of the Commonwealth entered premises without a valid search warrant, copied data from the occupant's device to a laptop and then from the laptop to a USB drive, deleted the data from the laptop, and took away the USB drive? Can the Court grant an injunction requiring delivery up of the USB drive or destruction of the data taken? Can the Court grant that injunction only if continued retention of the USB drive or the data breaches some private right? The law would take a seriously wrong turn if this Court held that it could not grant an injunction to restore a plaintiff, so far as possible, to the position they would have been in had power not been exceeded without the plaintiff demonstrating that, in addition to the excess of power, a private right is also breached by retaining what was seized. To require demonstration of some further or additional private law wrong as the only basis on which injunction may go treats the excess of power as irrelevant and ignores the constitutional purpose of s 75(v) of the Constitution. The circumstances giving rise to this special case are set out in the reasons of Kiefel CJ, Bell and Keane JJ217. It is unnecessary to repeat them except to the extent necessary to explain these reasons. I agree with Kiefel CJ, Bell and Keane JJ that the search warrant in respect of Ms Smethurst's premises issued on 3 June 2019 ("the Second Warrant") was invalid. As a result of the invalidity of the Second Warrant, the entry, search and seizure purportedly pursuant to s 3F of the Crimes Act 1914 (Cth) were not authorised and were unlawful. Moreover, the separate taking218 of data by copying it from Ms Smethurst's mobile phone to a laptop, copying some of that data to a USB drive, deleting the copied data from the laptop, and then removing the USB drive from Ms Smethurst's premises, purportedly pursuant to the Second Warrant and s 3L(1A) of the Crimes Act, were not authorised and were unlawful. In addition to certiorari to quash the Second Warrant, an injunction should issue requiring the Commissioner of Police, on a particular date and at a particular time and place, to deliver up the USB drive to Ms Smethurst so as to allow the data to be deleted from it. That order would enable, if appropriate, the Australian Federal Police ("the AFP") to apply for a warrant under s 3E(1) of the Crimes Act and, if a valid warrant is obtained within 72 hours preceding the delivery up, that 217 Reasons of Kiefel CJ, Bell and Keane JJ at [1]-[10]. 218 Hart v Commissioner of Australian Federal Police (2002) 124 FCR 384 at 406 [87]. order would allow the AFP to access and copy afresh the whole or some part of the data under that valid warrant219. Relief Officers of the Commonwealth are subject to the law and must obey the law. Thus, there need to be effective remedies when they exceed their powers. And those remedies must be effective whether or not an individual has some separate private law claim giving rise to other remedies, remedies different in character and purpose from those available when an officer of the Commonwealth acts in excess of power. Section 75(v) of the Constitution Section 75(v) of the Constitution exists to make constitutionally certain that this Court has jurisdiction to restrain officers of the Commonwealth from exceeding federal power220. As Gaudron, McHugh, Gummow, Kirby and Hayne JJ said in Plaintiff S157/2002 v The Commonwealth, s 75(v) introduces into the Constitution "an entrenched minimum provision of judicial review"221 and "[t]he reservation to this Court by the Constitution of the jurisdiction in all matters in which the named constitutional writs or an injunction are sought against an officer of the Commonwealth is a means of assuring to all people affected that officers of the Commonwealth obey the law and neither exceed nor neglect any jurisdiction which the law confers on them"222. The "evident constitutional purpose" of s 75(v) is "that relief should be available to restrain excess of federal power and to enforce performance of federal public duties"223. 219 Under s 3E of the Crimes Act, an issuing officer of a search warrant must be satisfied that there are reasonable grounds for suspecting that there is, or there will be within the next 72 hours, evidential material at the premises. 220 See Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 363. 221 (2003) 211 CLR 476 at 513 [103]. 222 (2003) 211 CLR 476 at 513-514 [104] (emphasis added). See also Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 at 172 [87]; Graham v Minister for Immigration and Border Protection (2017) 263 CLR 1 at 46 [102]; Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at 457-458 [87]. 223 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 141 [162]. See also Bank of NSW (1948) 76 CLR 1 at 363. Prerogative or constitutional writs are sometimes inadequate as general remedies to compel the executive government and administrative bodies to operate within the limits of their powers224. Injunction may be required. The idea that certiorari, prohibition and mandamus may provide inadequate relief in matters of public law, and that some other form of relief may also be necessary, is not new225. As explained in Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd, the role of equity in light of the inadequacies of legal remedies, including prerogative remedies, is "to vindicate the public interest in the maintenance of due administration"226. Thus, where, as here, a statute imposes obligations but neither the statute nor prerogative relief provides the means, or adequate means, to enforce obligations or restrain unlawful activity, other forms of relief may also be engaged227. The injunction available under s 75(v) of the Constitution is one such form of relief. This is also consistent with the proper role of the Court in granting remedies, as explained by Gaudron J in Enfield City Corporation v Development Assessment Commission228: "Those exercising executive and administrative powers are as much subject to the law as those who are or may be affected by the exercise of those powers. It follows that, within the limits of their jurisdiction and consistent with their obligation to act judicially, the courts should provide whatever remedies are available and appropriate to ensure that those possessed of executive and administrative powers exercise them only in 224 Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 257 [24]-[25]; Abebe v The Commonwealth (1999) 197 CLR 510 at 551 [104]; Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 157-158 [58]. 225 Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 628 [97]. See also Abebe (1999) 197 CLR 226 Abebe (1999) 197 CLR 510 at 551 [104], quoting Bateman's Bay (1998) 194 CLR 227 Truth About Motorways (2000) 200 CLR 591 at 628 [97]. 228 (2000) 199 CLR 135 at 157 [56] (footnote omitted). accordance with the laws which govern their exercise. The rule of law requires no less." At the time of the drafting of s 75(v), Edmund Barton was of the view that the provision would ensure that "where it is proposed to put into operation against [a person] some process of the law, [that person], as a subject, having the right to have this process of law properly exercised, can obtain an injunction against its wrongful exercise"229. This was said to be consistent with "known principles of law"230, and the accuracy of that view is confirmed both by case law231 and by commentary232 in the period leading up to that time. That is, where a statutory body exceeds (or threatens to exceed) its statutory powers, an injunction can issue to restrain the unlawful action. Those materials are instructive when considering s 75(v) of the Constitution, though they do not control its meaning233. In the Convention Debates, Mr Barton also observed that s 75(v) "is applicable to those three special classes of cases in which public officers can be dealt with, and in which it is necessary that they should be dealt with, so that 229 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1884. 230 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1884. 231 Attorney-General v Aspinall (1837) 2 My & Cr 613 [40 ER 773]; Frewin v Lewis (1838) 4 My & Cr 249 [41 ER 98]; Attorney-General v Corporation of Norwich (1848) 16 Sim 225 [60 ER 860]; Attorney-General v Andrews (1850) 2 Mac & G 225 [42 ER 87]; Oldaker v Hunt (1854) 19 Beav 485 [52 ER 439]; Oldaker v Hunt (1855) 6 De G M & G 376 [43 ER 1279]; Tinkler v Board of Works for the Wandsworth District (1858) 2 De G & J 261 [44 ER 989]; Attorney-General v Great Northern Railway Co (1860) 1 Dr & Sm 154 [62 ER 337]; Attorney-General v Bishop of Manchester (1867) LR 3 Eq 436; Attorney-General v Mayor, &c, of Newcastle-upon-Tyne and North-Eastern Railway Co (1889) 23 QBD 492; Attorney-General v Borough of North Sydney (1893) 14 LR (NSW) Eq 154. See also Gummow, "The Scope of Section 75(v) of the Constitution: Why Injunction but No Certiorari?" (2014) 42 Federal Law Review 241 at 247-248. 232 Joyce, The Doctrines and Principles of the Law of Injunctions (1877) at 296; Kerr, A Treatise on the Law and Practice of Injunctions, 3rd ed (1888) at 568. 233 cf Aala (2000) 204 CLR 82 at 92-93 [18]-[23], 134-135 [141]-[142], 141-142 the High Court may exercise its function of protecting the subject against any violation of the Constitution, or of any law made under the Constitution"234. Those three special classes of case are directed at different ends: prohibition goes to prohibit actions in excess of power235; mandamus goes to compel performance of a duty236; and injunction serves a number of purposes. An injunction may go as an interim or interlocutory restraint or as a permanent order (restraining or mandatory). When it goes as an interim or interlocutory restraint, it goes because there is a threat to act, or an existing action, in excess of power and the plaintiff seeking the relief has standing to complain of the excess237. If it is necessary to address it in terms of rights or causes of action, the right is a right to seek relief against an officer of the Commonwealth who threatens to act in excess of power. An interim or interlocutory injunction goes to preserve the status quo238. At trial, the plaintiff might show that any exercise of the alleged power would in fact be beyond power and that a permanent injunction should go to restrain future exercise of that power. In other cases, the excess of power relied on might be capable of remedy in some other way and in that kind of case a permanent injunction would not go. But injunction can, and in an appropriate case will, go to prevent future acts in excess of power239. A mandatory injunction, long recognised by the law, will go where the defendant "is ordered to undo the wrong he has done, and give the [plaintiff] 234 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1885. On the purposes of s 75(v), see also at 1875, 1878-1879, 235 R v Connell; Ex parte The Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 429; Plaintiff S157/2002 (2003) 211 CLR 476 at 483 [5]. 236 Plaintiff S157/2002 (2003) 211 CLR 476 at 483 [5]; NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 470 at 483 237 See Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493 at 527-528, 542, 547-548; Onus v Alcoa of Australia Ltd (1981) 149 CLR 27 at 35-37; Shop Distributive and Allied Employees Association v Minister for Industrial Affairs (SA) (1995) 183 CLR 552 at 558. 238 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 218 [16], 233 [64], 296 [245]; Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at 82 [65]. 239 Cooney v Ku-ring-gai Corporation (1963) 114 CLR 582 at 605. complete relief by putting him in the position in which he was before the injury was committed"240. It took some time before a mandatory order was framed positively rather than negatively241 but, as the authorities recognise242, this was a question of drafting practice, not a matter of substance. That what might be described as a s 75(v) injunction may issue to ensure that officers of the Commonwealth obey the law is not new. In addition to the statements in Plaintiff S157/2002243, in Federal Commissioner of Taxation v Futuris Corporation Ltd it was observed that244: "principles of jurisdictional error control the constitutional writs but do not attend the remedy of injunction including that provided in s 75(v) ... The same is true of the other equitable remedy, the declaratory order. Nevertheless, the equitable remedies, which are available at the suit of a party with a sufficient interest, operate to declare invalidity and to restrain the implementation of invalid exercises of power." It is clear that the reference to "equitable remedies" in this context was intended to encompass an injunction pursuant to s 75(v), informed by equitable principles, to "restrain the implementation of invalid exercises of power"245. The question which arises is: when might an injunction issue where what has been done by an officer of the Commonwealth was done beyond power? The circumstances cannot be prescribed. What can be said is that, first, in considering an injunction issued under s 75(v) as a public law remedy, it would be an error to consider the circumstances in which that injunction may issue to be confined by equitable principles governing private law cases. In particular, it would be an error to proceed on any basis which assumed, as a governing 240 Seton, Forms of Judgments and Orders in the High Court of Justice and Court of Appeal, 7th ed (1912), vol 1 at 518; see also at 649. 241 See, eg, Earl of Mexborough v Bower (1843) 7 Beav 127 [49 ER 1011]; Kerr, A Treatise on the Law and Practice of Injunctions, 3rd ed (1888) at 48; cf Jackson v Normanby Brick Co [1899] 1 Ch 438. 242 Jackson [1899] 1 Ch 438; Seton, Forms of Judgments and Orders in the High Court of Justice and Court of Appeal, 7th ed (1912), vol 1 at 518. 243 (2003) 211 CLR 476 at 513-514 [104]. 244 (2008) 237 CLR 146 at 162 [47]-[48] (emphasis added; footnote omitted). 245 Futuris (2008) 237 CLR 146 at 162 [47]. principle, that an injunction will go only to protect a proprietary or other legal right advanced by a plaintiff246. As Gaudron J suggested in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd, "it may be that, in the case of some public wrongs, an injunction will issue notwithstanding that no equitable or legal right is infringed"247. The fact that an injunction as a public law remedy may issue in those circumstances reflects the particular importance of s 75(v) of the Constitution, which exists in order to address, among other things, an excess of power by an officer of the Commonwealth248. Second, "[g]iven that prohibition and mandamus are available only for jurisdictional error, it may be that injunctive relief is available on grounds that are wider than those that result in relief by way of prohibition and mandamus"249. Indeed, in Abebe v The Commonwealth, Gaudron J observed that the "jurisdiction under s 75(v) extends to matters in which an injunction is sought against an officer of the Commonwealth and it may be that the grounds upon which injunctive relief can be granted are not as circumscribed as those which determine the availability of prerogative relief"250. As her Honour said, in the context of s 75(v), "it may well be that an injunction will lie to prevent an officer of the Commonwealth from giving effect to an administrative decision based on error, even if that error is not Section 75(v) was included in the Constitution "to make it constitutionally certain that there would be a jurisdiction capable of restraining officers of the 246 Bateman's Bay (1998) 194 CLR 247 at 258 [27]. 247 (2001) 208 CLR 199 at 232 [60] fn 153, citing Bateman's Bay (1998) 194 CLR 247 248 Aala (2000) 204 CLR 82 at 141 [162]; Plaintiff S157/2002 (2003) 211 CLR 476 at 249 Plaintiff S157/2002 (2003) 211 CLR 476 at 508 [82] (footnote omitted). 250 (1999) 197 CLR 510 at 551 [103]. 251 Abebe (1999) 197 CLR 510 at 552 [105]. See also Muin v Refugee Review Tribunal (2002) 76 ALJR 966 at 977 [47]; 190 ALR 601 at 615. The scope of an injunction pursuant to s 75(v) has been described by reference to the concept of unlawfulness rather than jurisdictional error: see, eg, Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 at 204-205, quoted in Aala (2000) 204 CLR 82 at 92 [20]; Plaintiff S157/2002 (2003) 211 CLR 476 at 482-483 [5]; French, "The Interface between Equitable Principles and Public Law", paper delivered at the Society of Trust and Estate Practitioners, 29 October 2010 at 17. the consequences that follow for others from officers of Commonwealth from exceeding Federal power"252. Reference to injunction in s 75(v) is part of the constitutional means for achieving that purpose. The reference to injunction also makes it constitutionally certain that there is a jurisdiction to remedy the Commonwealth having exceeded federal power. It is the excess of power (that an officer of the Commonwealth has acted or threatens to act in excess of power), not any separately identified right, that warrants the grant of an injunction to remedy, so far as can be, the consequences brought about by that excess. That is, the availability of injunction, in cases of excess of federal power, is not confined by reference to practices or principles developed by the English courts of equity in relation to the grant of injunction. Indeed, "[a]ny automatic transposition of such principles runs the risk of denying the evident constitutional purpose that relief should be available to restrain excess of federal power and to enforce performance of federal public duties"253. As was explained in Re Refugee Review Tribunal; Ex parte Aala, the grounds for the issue of the constitutional writs of mandamus and prohibition were not frozen according to the practices that prevailed in 1900254. Likewise, the grounds for the issue of an injunction to remedy the consequences of acts done in excess of federal power were not frozen according to the practices that prevailed in 1900. Indeed, the constitutional setting in which s 75(v) appears makes it impossible to confine the availability of the remedies with which it deals to the practices adopted in relation to those remedies by other courts in other contexts, whether at the time of Federation or since255. Other courts developed the principles and practices they did in circumstances very different from those with which s 75(v) deals – cases of excess of federal power. Rather, both the constitutional purpose of s 75(v) and the provisions of Pt IV of the Judiciary Act 1903 (Cth) (especially ss 32 and 33 of the Judiciary Act256) point to this Court, in its original jurisdiction, having the power (and the duty) to grant all such remedies, in respect of a claim that federal power has been exceeded, as will not only prevent excess of federal power but will also, when federal power has been exceeded, restore the 252 Bank of NSW (1948) 76 CLR 1 at 363, quoted in Aala (2000) 204 CLR 82 at 138 [155]. See also Plaintiff S157/2002 (2003) 211 CLR 476 at 482-483 [5], 511-512 [98], 513-514 [103]-[104]; Graham (2017) 263 CLR 1 at 25 [42], 27 [48]. 253 Aala (2000) 204 CLR 82 at 141 [162]. 254 (2000) 204 CLR 82 at 141 [164]. 255 Aala (2000) 204 CLR 82 at 141 [164]. 256 See also Edwards v Santos Ltd (2011) 242 CLR 421. parties affected, so far as possible, to the position in which they would have been had power not been exceeded257. Thus, the search for some freestanding right or entitlement in this case to have the taken data destroyed is misconceived. Some separate or freestanding right or cause of action or entitlement is not required. Injunction goes (and has always gone) to undo the wrong that has been done and to give the plaintiff complete relief. Indeed, the search for a freestanding right makes an assumption which was rejected in Aala – that the availability of s 75(v) remedies is tied to practices or procedures that existed in some other (unspecified) courts before Federation258. It does that because it seems to seek some cause of action beyond the circumstances with which s 75(v) deals – excess of federal power. What the Bank of NSW v The Commonwealth259, Aala, Plaintiff S157/2002 and Graham v Minister for Immigration and Border Protection260 line of authority establishes is that s 75(v) is to be understood as achieving a particular constitutional purpose and that the availability and grant of the remedies referred to in s 75(v) are moulded by that purpose – prevention of, and remedy for, officers of the Commonwealth exceeding power or failing to perform a duty. Injunction in this case In the circumstances of this case, the executing officer, an officer of the Commonwealth261, acted in excess of the power to enter, search and seize in s 3F of the Crimes Act, and in excess of the separate power of "taking" in s 3L of the Crimes Act. Certiorari issues to quash the Second Warrant262. But neither the Crimes Act nor the issue of certiorari addresses the consequences of the unlawful conduct of the executing officer. It is the excess of power that founds the grant of injunction not to use what has been taken (and to destroy the copy of the data that was taken). No further or 257 Bank of NSW (1948) 76 CLR 1 at 363, quoted in Aala (2000) 204 CLR 82 at 138 [155]. See also Plaintiff S157/2002 (2003) 211 CLR 476 at 482-483 [5], 511-512 [98], 513-514 [103]-[104]; Graham (2017) 263 CLR 1 at 25 [42], 27 [48]. 258 Aala (2000) 204 CLR 82 at 141 [164]. 259 (1948) 76 CLR 1. 260 (2017) 263 CLR 1. 261 See, eg, Coward v Allen (1984) 52 ALR 320 at 325. 262 Reasons of Kiefel CJ, Bell and Keane JJ at [45]. additional right of action or equity need be shown. The fact that there is no ongoing trespass does not preclude the grant of an injunction. The executing officer acted in excess of power. That the executing officer did not act knowing that what was done was beyond power is irrelevant. And it cannot be assumed that what was seized reveals criminality when the warrant under which it was taken was invalid. Ms Smethurst has standing to complain about the excess of power. She has been specially harmed by in excess of power. the conduct done Accordingly, Ms Smethurst is to be put in the position she was in before she was subjected to that unlawful exercise of power. To look for some additional right of action is to ignore the constitutional conferral of jurisdiction on the Court to remedy excesses of power not only by the grant of the constitutional writs but also by injunction – injunction to restrain and mandatory injunction. Thus, an injunction under s 75(v) of the Constitution, in aid of certiorari, should issue against the Commissioner of Police263 to restore Ms Smethurst to the position she would have been in but for the officer of the Commonwealth acting unlawfully, in excess of power. The form of the injunction under s 75(v) of the Constitution should require the Commissioner of Police on a particular date and at a particular time and place to deliver up to Ms Smethurst the USB drive containing the data copied from Ms Smethurst's mobile phone264, so as to allow that data to be deleted. The form of the order is important. It does not prevent further lawful steps being taken by the AFP in an investigation265. A mandatory injunction in those terms would enable, if appropriate, the AFP to apply for a warrant under s 3E(1) of the Crimes Act and, if validly obtained, to access and copy the whole or some part of the data under a valid warrant able to be issued within 72 hours of the delivery up of the USB drive. Put in different terms, the AFP could seek a valid warrant to recover what the injunction would bind the Commissioner of Police to hand over on the designated date, at the designated time and place. The form of the order has legal and practical consequences: it permits the AFP to determine whether it will apply for a further warrant and, of course, that further warrant may well permit the search, seizure and taking of material that is 263 No distinction was drawn between the Commissioner of Police and the executing officer by the parties in this proceeding and there is no reason to doubt that the Commissioner would comply with an injunction. 264 cf the orders contemplated in Hart (2002) 124 FCR 384 at 406 [88]. 265 See Australian Federal Police Act 1979 (Cth), s 8. different from, or only part of, what was the subject of the unlawful search, seizure and taking which has already occurred in this case. The order does no more than require the AFP to comply with the law. It requires that, in order for the AFP to enter, search and seize and to access and copy data from Ms Smethurst's mobile phone, there be a valid warrant and that the warrant be executed according to the law. In the present case, the drafting of the search warrant was "the direct, or substantial indirect, source of all of the issues and problems"266. As the Full Court of the Federal Court of Australia said in Caratti v Commissioner of the Australian Federal Police, "[w]hen proper regard is had to the importance of the efficient, effective and fair obtaining and execution of search warrants, and the delay, fragmentation of the criminal investigation process, cost, time of the parties and the use of scarce court time when challenged, the obtaining of proper independent legal advice ... as to the terms of the search warrants sought to be obtained", including "from experienced solicitors with[in] the Office of the Commonwealth Director of Public Prosecutions", would improve both the process and the outcome267. Discretion Discretionary considerations are still relevant to considering whether there is any reason not to grant an injunction under s 75(v) of the Constitution. It is neither necessary nor appropriate to prescribe what those discretionary considerations might be in any future case. It will always be for the parties in a particular case to identify the discretionary considerations for and against the making of an order when the question arises. The identification of relevant considerations must be developed on a case-by-case basis. In the present case, there was no suggestion that the plaintiffs delayed in seeking relief. The form and timing of an order requiring delivery up of material, but which leaves open the possibility that the material will be seized or taken under a new and valid warrant, are not inconsistent with the Bunning v Cross268 line of 266 Caratti v Commissioner of the Australian Federal Police (2017) 257 FCR 166 at 224 [169]; see also at 222-225 [164]-[172]. 267 (2017) 257 FCR 166 at 225 [171]-[172] (emphasis in original). 268 (1978) 141 CLR 54. authority269 or s 138 of the Evidence Act 1995 (Cth)270. On the proper execution of a valid warrant, the use in a prosecution of anything lawfully seized or taken by the AFP falls to be considered on the grounds of relevance and admissibility in those proceedings. Moreover, the form and timing of such an order address any concern that return of the data on the USB drive would prevent disclosure of criminality271 and avoid the need to ascertain whether charges have been or are likely to be laid for the purposes of Bunning v Cross272. Caratti line of authority A line of authority273 developed in the intermediate courts sought to address what could permissibly be done with unlawfully seized material. One element of the approach set out in those authorities was that where a person's material had been unlawfully seized, that person had a "prima facie" right to have the seized material returned to them274. The second element was that the court had a "discretion" whether or not to return the unlawfully obtained material275, or to instead allow the police to retain the unlawfully obtained material276. The second 269 See, eg, Miller v Miller (1978) 141 CLR 269; Cleland v The Queen (1982) 151 CLR 1; Foster v The Queen (1993) 67 ALJR 550; 113 ALR 1; R v Swaffield (1998) 192 CLR 159; Nicholas v The Queen (1998) 193 CLR 173. 270 Each of Bunning v Cross and s 138 of the Evidence Act deals with the admission of evidence improperly or illegally obtained. 271 Sankey v Whitlam (1978) 142 CLR 1 at 25-26; A v Hayden (1984) 156 CLR 532 at 272 (1978) 141 CLR 54. 273 Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393; Cassaniti v Croucher (1997) 37 ATR 269; Wright v Queensland Police Service [2002] 2 Qd R 667; Caratti v Commissioner of the Australian Federal Police [No 2] [2016] FCA 1132; Caratti v Commissioner of the Australian Federal Police (2017) 257 FCR 166. 274 Puglisi (1997) 148 ALR 393 at 403; Cassaniti (1997) 37 ATR 269 at 280; Caratti [No 2] [2016] FCA 1132 at [468]. 275 Wright [2002] 2 Qd R 667 at 683-684 [57]; Caratti [No 2] [2016] FCA 1132 at 276 Cassaniti (1997) 37 ATR 269 at 280; Caratti [No 2] [2016] FCA 1132 at [456], element was premised on the potential for the unlawfully obtained material to be used as evidence in a criminal prosecution, subject to its admissibility in view of Bunning v Cross277 and s 138 of the Evidence Act278. The prima facie right and the discretion were treated as related: they were not always clearly distinguished and were often collectively referred to as "the discretion". The prima facie right of a person to have seized material returned to them was said to support the return of the unlawfully seized material, but that prima facie right had to be balanced against "the significant public interest in the administration of, and non-interference with, the investigation and prosecution of criminal offences and the administration of justice"279. Despite the language of a "prima facie right" on one hand and a discretion not to return on the other, the principle did not operate as a presumption in favour of the return of unlawfully seized items. Rather, it entailed a balancing exercise. Indeed, in Caratti v Commissioner of the Australian Federal Police [No 2], it was said that the prima facie right and the discretion "arise[] in any case where it is found that items were illegally seized"280. That assumption was most clearly expressed in Caratti [No 2], when Wigney J noted that "Mr Caratti did not seek writs of mandamus in relation to specific items ... which would have had the effect of requiring the Commissioner to return any specific items"281 and that "[t]he Commissioner did not appear to take issue with the fact that Mr Caratti's application did not seek any specific orders, or the issue of any writs, directed at any specific items"282. That line of authority is wrong and should not be followed. Trespass I have dealt already with the availability of an injunction under s 75(v) of the Constitution. However, if it were necessary in this case for Ms Smethurst to identify an infringement of a legal right or cause of action (other than that an officer 277 (1978) 141 CLR 54. See also Miller (1978) 141 CLR 269; Cleland (1982) 151 CLR 1; Foster (1993) 67 ALJR 550; 113 ALR 1; Swaffield (1998) 192 CLR 159; Nicholas (1998) 193 CLR 173. 278 Puglisi (1997) 148 ALR 393 at 405; Caratti [No 2] [2016] FCA 1132 at [478]. 279 Caratti [No 2] [2016] FCA 1132 at [468]. 280 [2016] FCA 1132 at [456]. 281 [2016] FCA 1132 at [439]. 282 [2016] FCA 1132 at [440]. of the Commonwealth exceeded their power) as a basis for an injunction to issue in equity, Ms Smethurst would have such a right. It has long been recognised that invasions of private property may only take place with positive legal authority283. The right in aid of which equity would act is the right not to suffer a trespass. It is not necessary to identify a further right or a continuing trespass284 for equity to intervene in aid of that right not to suffer a trespass, if equity is intervening, against the trespasser285, in order to address harm flowing from the trespass286. That is the case here, where copying data from Ms Smethurst's mobile phone and taking the copy of the data were only possible due to the trespass to her goods by the executing officer. Moreover, damages would not restore Ms Smethurst to the position she was in prior to the unlawful exercise of power because the AFP would continue to have a copy of data obtained from her mobile phone. Since damages are not an adequate remedy, equity would seek to restore the position of Ms Smethurst to that prior to the trespass, which extends to a consideration of the consequences of the trespass. In the current age, where information may be as valuable to individuals as property, the law cannot overlook the obtaining of data as a consequence of trespass that falls within the damage suffered as part of the trespass. It is not necessary to establish rights of property in the data itself to reach that conclusion. Nor, in circumstances where the point was not argued, is it necessary to consider whether the law should be developed in respect of privacy or confidentiality287. 283 Entick v Carrington (1765) 2 Wils KB 275 [95 ER 807]; Coco v The Queen (1994) 179 CLR 427. 284 cf Kerr, A Treatise on the Law and Practice of Injunctions, 6th ed (1927) at 94-95. 285 cf Lenah (2001) 208 CLR 199 at 229-230 [50]-[52], 235 [72], 247-248 [104]. 286 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 31-32 [33]. See, eg, Goodson v Richardson (1874) 9 Ch App 221; Woodhouse v Newry Navigation Co [1898] 1 IR 161; Seton, Forms of Judgments and Orders in the High Court of Justice and Court of Appeal, 7th ed (1912), vol 1 at 518; Council of the Shire of Hornsby v Danglade (1928) 29 SR (NSW) 118; Redland Bricks Ltd v Morris [1970] AC 652 at 665-666. 287 cf Lenah (2001) 208 CLR 199 at 257-258 [129]-[132], 277-279 [185]-[191]. Constitutional validity For the reasons given by Kiefel CJ, Bell and Keane JJ288, there is no need to consider the further question as to the constitutional validity of s 79(3) of the Crimes Act. Orders For those reasons, the questions of law stated for the opinion of the Full Court should be answered as follows: (a) Yes. (b) Yes. (c) Does not arise. (2) Unnecessary to answer. (3) Unnecessary to answer. (4) There should be an order: for certiorari quashing the search warrant issued on 3 June 2019; and that on a date, at a time and at a place agreed between the parties (or, in default of agreement, on a date, at a time and at a place fixed by a single Justice), the Commissioner of Police deliver up to Ms Smethurst the USB drive containing the data copied from Ms Smethurst's mobile phone on 4 June 2019 so as to allow the data to be deleted from the USB drive, and delete any other copies of that information held by, or within the control of, the Australian Federal Police. (5) The first defendant should pay the plaintiffs' costs of the special case. 288 Reasons of Kiefel CJ, Bell and Keane JJ at [105]-[107]. Edelman Introduction On 4 June 2019, the Australian Federal Police searched the residence of Ms Smethurst, a journalist who is employed by Nationwide News Pty Ltd, the publisher of the Sunday Telegraph. The police held a search warrant that had been issued by a Magistrate the previous day ("the second warrant"). On any view, the warrant was poorly expressed. However, it was clear that it relied upon acts by Ms Smethurst and the Sunday Telegraph on 29 April 2018 that were contrary to "section 79(3) of the Crimes Act 1914, Official Secrets". In the belief that the second warrant was valid, the Australian Federal Police took possession of Ms Smethurst's mobile phone. They demanded, and obtained, her passcode to unlock access to the mobile phone. After they copied the data from her mobile phone to a laptop, the executing officer reviewed documents returned from keyword searches of the data obtained, and selected the documents that he thought fell within the terms of the second warrant. Those documents were copied onto a Universal Serial Bus (USB) storage device. The USB storage device was kept by the Australian Federal Police and the mobile phone data which had been copied to the laptop was deleted from the laptop. The central issue in this special case is a challenge by Ms Smethurst and Nationwide News to the validity of the second warrant. The second warrant is challenged on the grounds: that it misstates the substance of s 79(3) of the Crimes Act 1914 (Cth), as that provision stood on 29 April 2018 (question 1(a)); that it does not state the offence to which it relates with sufficient precision (question 1(b)); and that s 79(3) of the Crimes Act, as it stood on 29 April 2018, was invalid on the ground that it infringed the implied freedom of political communication (question 1(c)). If the second warrant is invalid there is also a dispute about the consequential relief that should be granted, in particular whether this Court should issue a mandatory injunction requiring the return to Ms Smethurst of the information obtained by the Australian Federal Police (question 4). If question 1(a) is read literally, it appears directed only to the question of whether the content of the second warrant, when properly interpreted, correctly states the substance of s 79(3) of the Crimes Act. In apparent contrast, question 1(b), read literally, appears to be directed only to whether the second warrant states the substance of s 79(3) with sufficient precision. However, the plaintiffs, correctly, did not suggest that any error in the statement of an offence would invalidate a warrant. Their submissions concerning question 1(a) were essentially part of question 1(b): the warrant was expressed with such a lack of clarity that it was invalid. In order to reflect accurately the manner in which the special case was presented, and the legal issues involved, it is appropriate to reframe questions 1(a) and 1(b) as the following single question: is the second Edelman warrant invalid due to a failure to state the offence to which it relates with sufficient clarity? The second warrant was not invalid merely because it misstated the terms of the offence in s 79(3) of the Crimes Act. A misstatement will only cause a warrant to be invalid if it has the effect that the warrant does not have the minimum required degree of content. However, the effect of the misstatement in the second warrant, together with the lack of clarity in its expression, was that the second warrant lacked the clarity required to fulfil its basic purposes of adequately informing Ms Smethurst why the search was being conducted and providing the executing officer and those assisting in the execution of the warrant with reasonable guidance to decide which things came within the scope of the warrant. It was invalid for that reason. The remaining question is what relief, if any, Ms Smethurst is entitled to as a consequence of the finding that the second warrant was invalid. The usual basis for the grant of an injunction is to respond to threatened or continuing wrongful conduct. One submission supporting such a grant in this case might have been that the law should recognise a new or developed wrong that gives direct effect to a person's ability to maintain their privacy. But although senior counsel for the plaintiffs, a journalist and a media organisation, relied upon Ms Smethurst's privacy and the private nature of the information on her mobile phone, the plaintiffs eschewed any submission that the law of wrongdoing should be so developed. The plaintiffs relied instead upon privacy in an indirect manner. They argued that the mandatory injunction was required in order to reverse the consequential effect on Ms Smethurst's privacy of the tort of trespass to chattels that was committed by the Australian Federal Police. That submission should be accepted. Requirements for validity of a warrant Section 3E(5) of the Crimes Act requires a warrant to state, together with certain procedural details: the offence to which the warrant relates; a description of the premises to which the warrant relates or the name or description of the person to whom it relates; and the kinds of evidential material that are to be searched for under the warrant. These are minimum requirements imposed "to protect the individual from arbitrary invasions of ... privacy and property"289. They are rules that require a minimum level of clarity as well as a minimum level of content for the purposes of the warrant to be fulfilled. 289 George v Rockett (1990) 170 CLR 104 at 110. Edelman In light of the purpose of s 3E(5), a warrant must have both sufficient content and sufficient clarity as to (i) the offence(s), (ii) the place or person, and (iii) the kinds of material sought, in order to "ensur[e] the proper identification of the object of the search"290. Necessarily, since a search warrant will often precede a charge, the minimum degree of content is less than the particulars that would be required in an indictment. Nevertheless, it has been repeatedly stated for decades that the detail in the warrant must be of sufficient content and clarity to give reasonable guidance to the executing officer and those assisting in the execution of the warrant to decide if the things to be seized are within the scope of the warrant291 and to enable the person whose premises are subjected to the search to understand the basis for the search292. A determination of the content of a warrant is a matter of interpretation. The basic principles for interpretation of a warrant do not differ from those for interpretation of a statute, a written contract or a trust deed. Nor do they differ fundamentally from the manner in which a person interprets the words of a conversation or in a newspaper. In each case, the reader interprets from the words a meaning to be ascribed to the actual or notional speaker. The interpretative principles are essentially the tools of communicative language. When the statement in a warrant is interpreted, in some circumstances it will have sufficient content even if it provides only the section and subject matter of the offence. For instance, in Brewer v Castles293, the statement of one relevant offence was "[s]ection 86(1)(e) of the Crimes Act 1914 (Cth), to wit, conspiracy to defraud the Commonwealth". That statement was described by Pincus J in 290 New South Wales v Corbett (2007) 230 CLR 606 at 628 [88]. 291 Coward v Allen (1984) 52 ALR 320 at 332; Quartermaine v Netto (unreported, Federal Court of Australia, 14 December 1984) at 7-8; Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR 523 at 539; R v Gassy [No 3] (2005) 93 SASR 454 at 488 [100]; Caratti v Commissioner of the Australian Federal Police (2017) 257 FCR 166 at 180 [34], 182 [37]. 292 R v Tillett; Ex parte Newton (1969) 14 FLR 101 at 113; Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151 at 153; Quartermaine v Netto (unreported, Federal Court of Australia, 14 December 1984) at 6; Parker v Churchill (1986) 9 FCR 334 at 348; Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR 523 at 539, 542-543; R v Gassy [No 3] (2005) 93 SASR 454 at 488 [100]; New South Wales v Corbett (2007) 230 CLR 606 at 612 [22]; Caratti v Commissioner of the Australian Federal Police (2017) 257 FCR 166 293 (1984) 1 FCR 55 at 56. Edelman Beneficial Finance Corporation v Commissioner of Australian Federal Police294 as a "good example" of one of the wide statements of the nature of an offence in a warrant which have "survived attack". Indeed, provided that the correct offence can be identified as a matter of interpretation, a description can be valid even if an incorrect section number in the relevant statute is specified295. In other circumstances, however, such as where the terms of an offence are expressed at a high level of generality and capable of application to a wide variety of circumstances, the mere reference to the section and subject matter of the offence will not be sufficient296. For instance, in a search warrant for a many- storied building of a multinational company it would not be sufficient to state only that the offence is a contravention of the open-textured s 184 of the Corporations Act 2001 (Cth), "Good faith, use of position and use of information". Separate from a minimum requirement of content is the requirement of sufficient clarity upon which the plaintiffs relied. That requirement is not satisfied merely because the best interpretation of a warrant fulfils the content requirements. That interpretation must be able to be reached without considerable difficulty by the owner or occupier of the premises, and by those executing the warrant. The validity of the second warrant Several days before the issue of the second warrant a first warrant had been issued accompanied by an order under s 3LA of the Crimes Act ("the s 3LA order"). The s 3LA order required Ms Smethurst to give assistance to a constable to access, copy or convert data on a computer or data storage device. The first warrant was never executed because the executing officer had expressed concern that the first warrant might not permit a search of Ms Smethurst's vehicle at a location other than her residence. Since the search of Ms Smethurst's premises was undertaken upon the purported authority only of the second warrant it is unnecessary to consider the validity of the first warrant or the s 3LA order. Neither the first warrant, nor the s 3LA order issued in the Magistrate's discretion in respect of it, can rectify any deficiency in the later, invalid, second warrant. 294 (1991) 31 FCR 523 at 525. 295 Parker v Churchill (1986) 9 FCR 334 at 340; R v Gassy [No 3] (2005) 93 SASR 296 New South Wales v Corbett (2007) 230 CLR 606 at 631-632 [103]. See also Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 31 FCR 523 at 543. Edelman As it is the terms of the second warrant which are said to give rise to its invalidity, the question of validity is to be determined as at the time of the issue of the second warrant297. The second warrant is in a common form, containing three overlapping but cumulatively necessary conditions. The three conditions operate in a manner which may be expressed visually as a Venn diagram298, permitting various actions to be taken only when all three conditions are met299. The permitted actions include "to copy any data to which access has been obtained". The first condition concerns "the kinds of evidential material that are to be searched for under the warrant"300. It is extremely broadly stated in the second warrant and includes: "[c]orrespondence – internal and external"; "[m]inutes"; "[r]eports"; "[s]tory pitch"; "[w]ebsite content"; "[e]mails and other forms of electronic messaging"; "USB's"; and "[a]ssessments". It also includes a particular document described as "[c]lassified Australian Signals Directorate document/s titled 'ASD AS A STATUTORY AGENCY – FURTHER AMENDMENTS TO THE INTELLIGENCE SERVICES ACT 2001'". The second condition concerns the subject matter to which the kinds of evidential material specified in the first condition must relate. It lists eight categories: "Annika Claire Smethurst, born 6 September 1987"; "Cameron Jon Gill, born 24 July 1979"; "Sunday Telegraph"; "News Corp"; "Australian Signals Directorate"; "Department of Home Affairs"; "Department of Defence"; and a link to a webpage: "https://www.dailytelegraph.com.au/news/nsw/spying-shock- shades-of-big-brother-as-cybersecurity-vision-comes-to-light/news- story/bc02f35f23fa104b139160906f2ae709?memtype=anonymous". The third condition reads as follows: "And as to which there are reasonable grounds for suspecting that they will afford evidence as to the commission of the following indictable offence(s) against the laws of the Commonwealth: On the 29 April 2018, Annika Smethurst and the Sunday Telegraph communicated a document or article to a person, that was not in the interest of the Commonwealth, and permitted that person to have access to the 297 Williams v Keelty (2001) 111 FCR 175 at 211 [157]. 298 See Caratti v Commissioner of the Australian Federal Police (2017) 257 FCR 166 299 A ∩ B ∩ C. 300 Crimes Act 1914 (Cth), s 3E(5)(c). Edelman document, contrary to section 79(3) of the Crimes Act 1914, Official Secrets. This offence was punishable by 2 years imprisonment." Section 79(3), as it existed at the time of the second warrant, was a highly open-textured provision. If the warrant had merely referred to s 79(3) alongside the first condition and the name of the Sunday Telegraph then it would have effectively been an instruction to the executing officer, and information to Ms Smethurst, that the premises were to be searched for the numerous materials including notes, diaries, correspondence, and similar things. That would be close to a general warrant, which has long been held invalid301 as being "totally subversive of the liberty of the subject"302. However, when the description of the offence in the third condition is read in light of the second condition, the best interpretation of the second warrant, with considerable attention and thought, is that it directs the search to materials related to the article on the webpage described in the second condition. An important matter in interpreting the content of the third condition is the reference in the third condition to s 79(3) of the Crimes Act. Any reasonable reader of the second warrant would understand the reference to s 79(3) to be a statement of the relevant offence, with the first and second conditions, and the preceding words of the third condition, providing particular content to the open-textured language of that offence. At the time of the alleged commission of the offence, the offence in s 79(3) had two limbs. The first limb, relevantly, was the communication of a prescribed article to a person. The second limb was permitting a person to have access to a prescribed article, where there are a multitude of ways in which an article could be a prescribed article303. Section 79(3) recognised two exceptions that applied to each limb. Those exceptions were: (a) "a person to whom he or she is authorized to communicate it"; and (b) "a person to whom it is, in the interest of the Commonwealth or a part of the Queen's dominions, his or her duty to communicate it". The words of the third condition, although somewhat garbled, are therefore best interpreted as describing both limbs of the offence in s 79(3). The reference to communicating a "document or article" to a person is best interpreted as a reference to the first limb of s 79(3) and the reference to permitting "that person" to have access to the document is best understood as a reference to the second limb. 301 See Money v Leach (1765) 1 Black W 555 [96 ER 320]; Entick v Carrington (1765) 19 St Tr 1029. 302 Wilkes v Wood (1763) Lofft 1 at 18 [98 ER 489 at 498]. 303 Crimes Act, s 79(1) (as at 29 April 2018). Edelman The words "not in the interest of the Commonwealth" are best interpreted as excluding the second exception. If the cumulative requirements of the three conditions had been expressed in plain English and with a clear statement in the second warrant of "the offence to which the warrant relates" as required by s 3E(5)(a) of the Crimes Act, then the third condition could have read in terms as follows: "Any thing satisfying the first two conditions, which provides reasonable grounds for suspecting that it will afford evidence as to the commission of the following indictable offence against the laws of the Commonwealth, namely: An offence committed on 29 April 2018 by Annika Smethurst and the Sunday Telegraph, which consisted of the following conduct concerning information contained in the article in the webpage set out in condition two above: (i) communicating prescribed information to the public; and (ii) providing the public with access to prescribed information, in a manner that was contrary to section 79(3) of the Crimes Act 1914, Official Secrets." When the second warrant is interpreted with this meaning, as the Solicitor- General submitted it should be, it is not defective due to insufficiency of content as to offence, premises or person, or the kinds of evidentiary material for which the search is conducted. Ultimately, however, the plaintiffs' submission about invalidity did not concern the content of the second warrant. The plaintiffs' argument in questions 1(a) and 1(b) of the special case was essentially that the second warrant was invalid due to a lack of sufficient clarity. The third condition presents considerable difficulty for clarity of interpretation for three reasons. First, it is not clear that the prescribed document said to have been communicated is contained on the webpage described in the second condition. The third condition does not refer to the webpage at all, still less as containing the relevant "document or article" that is communicated. Indeed, the third condition initially refers to the communication of a "document or article" and then refers to permitting access to "the document". In other words, it initially appears to express a concern with a particular document rather than with the "information" in a document that is alleged to have been communicated by the article on the webpage. Secondly, the third condition refers to the communication of the document or article to "a person", singular, and permitting "that person", singular, to have access to the document. This suggests, contrary to the proper interpretation of the third condition, that the person to whom the relevant communication was made is not the general public (the relevant communication being made by means of the newspaper article contained on the webpage). Edelman the Thirdly, third condition contains numerous omissions and misstatements. It omits to say that the information communicated was prescribed information, whether in relation to a person or persons, or the basis upon which it was prescribed. It omits reference to the first exception to the offence in s 79(3). It misstates the second exception in s 79(3). And it assimilates the misstated second exception with the description of the offence. The requirement of clarity is not satisfied simply because a court, after careful consideration following the benefit of lengthy written and oral submissions by counsel who have themselves carefully considered the meaning of the third condition, is able to interpret the warrant in a way that provides sufficient content to the statement of the offence. A statement of an offence for the purposes of s 3E must have sufficient clarity that, without careful thought and consideration, it will inform the owner or occupier of a premises of the basis for the search and will reveal the nature and boundaries of the search to those executing the warrant. For the three reasons above, the second warrant did not achieve this minimum requirement. It was invalid. Questions 1(a) and 1(b) of the special case, reframed as a single question, ask whether the second warrant is invalid on the ground that it does not state the offence to which it relates with sufficient clarity. The answer is "Yes". The jurisdiction and power to order an injunction Question 4 of the special case asks what relief, if any, should issue if the second warrant was invalid. The relief sought by the plaintiffs includes an injunction compelling the Commissioner of Police to deliver up to the plaintiffs all material seized or otherwise obtained pursuant to the warrant or during its execution, together with all copies of such material. This matter falls within the original jurisdiction of this Court as a matter arising under s 76(i) of the Constitution and s 30(a) of the Judiciary Act 1903 (Cth), and also because remedies of writs of prohibition or mandamus and injunction are sought against an officer of the Commonwealth, taking the matter within s 75(v) of the Constitution. Within this Court's jurisdiction over the entirety of the matter it has powers including those under s 32 of the Judiciary Act to order an injunction as an equitable remedy "to protect a legal right"304. That section "concentrated" the "aggregation of power" by English courts which included the expanded principles concerning the availability of equitable injunctions provided that "pecuniary compensation would be inadequate protection"305. 304 R v Macfarlane; Ex parte O'Flanagan and O'Kelly (1923) 32 CLR 518 at 550. See also at 537-538. 305 R v Macfarlane; Ex parte O'Flanagan and O'Kelly (1923) 32 CLR 518 at 550. Edelman Subsequent to the first hearing of this matter, this Court sought submissions from the parties on issues including whether the principles concerning the exercise of power to order an injunction are different if the source of jurisdiction is s 75(v) of the Constitution. The plaintiffs submitted that the constitutional authority to order the injunction was unique and shaped by its proximity to writs of mandamus and prohibition so that the injunction could extend generally to instances of "reversing consequences", which was said to be the focus of a writ of prohibition. The plaintiffs walked a tightrope in making this submission because they also claimed that the proximity of the authority for the injunction remedy to the authority to order remedies of writs of mandamus and prohibition in s 75(v) did not constrain the content of the injunction to instances of jurisdictional error. The plaintiffs' submissions should not be accepted. Although s 75(iii) creates original jurisdiction in all matters in which the Commonwealth is a party, s 75(v) was designed to ensure, beyond the jurisdiction created by s 75(iii)306, the existence of original jurisdiction to respond to the exercise, or likely exercise, of ultra vires acts by officers of the Commonwealth or to respond to an officer of the Commonwealth acting wrongfully in the performance of a duty307. It assumed the existence of powers rather than creating new, undefined, powers against public officers governed by a new set of principles which would operate in parallel with equitable principles. Mr Symon, who described the provision as a "safeguard" at the 1898 Melbourne Convention308, said of s 75(v) that "[t]he provision merely throws within the ambit of the jurisdiction of the federal tribunal the right to determine the question"309. Mr Barton, who also insisted that the provision "does not confer any right"310, later added that the provision "does not give anybody a right to pursue in any way an 306 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1884. 307 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1879, 1881-1885 and see especially at 1875-1876, 1884. See also Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 363. 308 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1877. 309 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1878. 310 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1877. Edelman officer of the Commonwealth, except such right as arises out of the known principles of law"311. Unsurprisingly, it was common ground between the parties that s 75(v) confers jurisdiction, or authority, on this Court in matters in which an injunction is sought against an officer of the Commonwealth. It has been held that this "irremovable jurisdiction" cannot be abolished by legislation312. In a very limited sense, therefore, s 75(v) is also a guarantee of a source of power because ensuring the existence of jurisdiction, or authority, has been held to prevent the power within that jurisdiction being diminished to such a point as practically to amount to abolition of the jurisdiction313. But this does not change the nature of the power being exercised. Although there was, unsurprisingly, no direct suggestion in this case to the effect that s 75(v) confers a separate, unique, and substantive power to order an injunction, the plaintiffs came close to such an assumption by their submission that an injunction authorised by s 75(v) might operate upon some unique, undefined principles which permit orders to compel the general reversal of consequences of wrongdoing. It is usually the case that this Court will not embark upon consideration of constitutional matters that are not necessary for its decision. But it suffices here to say that the submission that s 75(v) involves a conferral of a separate source of substantive power, replacing the principles of what is "right or just" that underlie equitable injunctions with a vague and undefined content that has never been enunciated since Federation, is a very controversial proposition. Such a proposition has never been accepted by this Court. In the context of the writs of prohibition and mandamus in s 75(v), one member of this Court has rejected the suggestion that s 75(v) involves a positive conferral of a new 311 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1883-1884. See also Quick and Garran, The Annotated Constitution of the Australian Commonwealth (1901) at 784: "What is given by this section is jurisdiction merely, not a right of action." 312 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 513-514 [103]- 313 Graham v Minister for Immigration and Border Protection (2017) 263 CLR 1 at 25 Edelman constitutional power314 and others have suggested that s 75(v) "may not add to the jurisdiction conferred by s 75(iii)"315. The proposition that s 75(v) creates a new and independent source of power is contrary to the concept and essential meaning of "injunction" in s 75(v), which was an order requiring or prohibiting action, based on the developed and developing principles of what is "right, or just"316. It was not a mandate for a court to disregard any or all principles developed in favour of novel, and potentially idiosyncratic, notions of justice. Indeed, it is hard to understand what norms would govern such a new and independent source of power. Since the principles concerning equitable injunctions have developed by reference to principles of what is right or just, would new and independent principles permit injunctions based upon that which is not right or that which is unjust? Such reasoning might explain why the framers "clearly intended to tie the scope of the s 75(v) jurisdiction to the scope of the remedies listed therein"317. In summary, although the s 75(v) remedies must operate consistently with the constitutional context in which they appear, the authority to order an injunction referred to in s 75(v) was not a licence for a court to make any preferred order requiring an officer of the Commonwealth to act or refrain from acting, under the guise of asserted constitutional values. Rather, the developed, and developing, principles governing when it is right or just to issue the injunction in the "discretion" of the court were the means by which those open-ended concepts were, and would be, delimited. However, three points should be made about the scope of the power to issue an injunction as one of the remedies for which authority is conferred by s 75(v). First, there is a natural curiosity about the inclusion of the general equitable remedy of an injunction alongside two remedies concerned only with errors concerning jurisdiction318. But in light of one evident purpose of s 75(v) being to restrain Commonwealth officers from exceeding or abusing power, "injunction" 314 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 142 [166]. 315 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 92 [18]. 316 Dale et al, Daniell's Chancery Practice, 7th ed (1901), vol 2 at 1328. 317 Burton, "Why These Three? The Significance of the Selection of Remedies in Section 75(v) of the Australian Constitution" (2014) 42 Federal Law Review 253 at 318 Gummow, "The Scope of Section 75(v) of the Constitution: Why Injunction but No Certiorari?" (2014) 42 Federal Law Review 241 at 249-250. Edelman should not be interpreted in any confined way such as by limiting injunctions to instances of jurisdictional error319. The inclusion of injunction was "a deliberate decision to invoke equity's traditional role of supplementing deficiencies in the common law"320. Secondly, the "injunction" in s 75(v), like the writs of mandamus and prohibition321, is a legal term of art or technical legal expression. The use of that term of art tied the meaning of "injunction" to the type of order made in equity but did not freeze it from further development. Speaking of the boundaries of power arising from the terms of art in s 51(xviii)322, six members of this Court in Grain Pool of Western Australia v The Commonwealth323 emphasised the necessity to give sufficient "allowance for the dynamism which, even in 1900, was inherent in any understanding of the terms". As four members of this Court said in Re Refugee Review Tribunal; Ex parte Aala324, in 1900 the law concerning prerogative writs was in a state of development which should be accommodated, subject to the Constitution, in the development of the constitutional writs. The constitutional injunction is in the same position. In 1900, the equitable injunction was a developing remedy and that development could reasonably have been expected to continue325. 319 Abebe v The Commonwealth (1999) 197 CLR 510 at 552 [108]; Muin v Refugee Review Tribunal (2002) 76 ALJR 966 at 977 [47]; 190 ALR 601 at 615. See also Reynolds, "The Injunction in Section 75(v) of the Constitution" (2019) 30 Public Law Review 211; Leeming, Authority to Decide: The Law of Jurisdiction in Australia, 2nd ed (2020) at 248. 320 Leeming, Authority to Decide: The Law of Jurisdiction in Australia, 2nd ed (2020) 321 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 93 [24]. 322 Attorney-General for NSW v Brewery Employes Union of NSW (1908) 6 CLR 469 323 (2000) 202 CLR 479 at 496 [23]. See also at 518 [98]-[99]. 324 (2000) 204 CLR 82 at 97 [34] per Gaudron and Gummow JJ (Gleeson CJ agreeing at 89 [5]). See also at 141-142 [164]-[165] per Hayne J. 325 See, for instance, Ashburner, Principles of Equity (1902) at 461. See, now, Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 395 [30]; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 241 [90], citing Edelman Thirdly, even in 1901, the scope of an equitable injunction was not narrow. As I have explained, it extended to any case in which it was right or just to issue. The developed principles governing when it was right or just to issue the injunction in the "discretion" of the court extended to a wide variety of cases and they permitted a variety of categories of injunction. As to the categories of case in which the equitable injunction could be ordered, these included both the purported exercise of public power without authority and abuses of public power326. In the Convention Debates, Mr Barton quoted from a leading decision in the United States to the effect that when a "plain official duty" is "threatened to be violated by some positive official act, any person who will sustain personal injury thereby, for which adequate compensation cannot be had at law, may have an injunction to prevent it"327. Mr Barton and Dr Quick and Mr Garran also observed the analogy between mandamus and injunction328. As to the categories of injunction, the injunction could be either prohibitory (negative) or mandatory (positive). It was recognised that there was "no rule which prevents the Court from granting a mandatory injunction where the injury sought to be restrained has been completed"329 and that an injunction could issue if "the Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 326 Joyce, The Law and Practice of Injunctions in Equity and at Common Law (1872), vol 1 at 721, 729; Joyce, The Doctrines and Principles of the Law of Injunctions (1877) at 296-297; Gummow, "The Scope of Section 75(v) of the Constitution: Why Injunction but No Certiorari?" (2014) 42 Federal Law Review 241 at 247. See Attorney-General v Aspinall (1837) 2 My & Cr 613 [40 ER 773]. 327 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1875-1876, quoting Board of Liquidation v McComb (1875) 92 US 328 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1876, quoting Board of Liquidation v McComb (1875) 92 US 531 at 541; Quick and Garran, The Annotated Constitution of the Australian Commonwealth (1901) at 783. See Burton, "Why These Three? The Significance of the Selection of Remedies in Section 75(v) of the Australian Constitution" (2014) 42 Federal Law Review 253 at 271. 329 Joyce, The Law and Practice of Injunctions in Equity and at Common Law (1872), vol 1 at 439. See also Kerr, A Treatise on the Law and Practice of Injunctions, 3rd ed Edelman injury is of so serious or material a character that the restoring things to their former condition is the only remedy which will meet the requirements of the case"330. For these reasons, the mere fact that a source of authority for an injunction might be s 75(v) of the Constitution is not a basis for the exercise of the power to order an injunction to depart from those developing equitable principles by which a court exercises its "discretion" to order an injunction331. In particular, contrary to the plaintiffs' submissions, it is not permissible to resort to assertions of a generally unarticulated new principle such as a power to "reverse consequences" by the mere assertion that the violation of a plaintiff's property rights was committed by the State. No such principle was recognised in Entick v Carrington332, which involved neither an injunction nor the exercise of jurisdiction under s 75(v) of the Constitution. Indeed, the highfalutin language in that case might reflect an eighteenth century elevation of the right to property above other rights, which are at least as fundamental, such as bodily integrity or liberty. It would be remarkable if today the remedies for infringement of rights to property were somehow elevated to a privileged position over bodily integrity or liberty333. The right upon which the injunction is based An equitable wrong of misuse of private information The usual basis upon which an injunction is sought is to protect a right by preventing threatened or continuing wrongful conduct. Since the plaintiffs sought an injunction requiring delivery up of all the information copied from Ms Smethurst's mobile phone and all copies of that information, it would usually be necessary for the plaintiffs to demonstrate that the retention or use of the information was unlawful. 330 Kerr, A Treatise on the Law and Practice of Injunctions, 3rd ed (1888) at 49. 331 Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 157-158 [58]; Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 at 162 [48]. 332 (1765) 19 St Tr 1029 at 1066. 333 Compare Trobridge v Hardy (1955) 94 CLR 147 at 152. Edelman In Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd334, in the course of considering the existence of any rights to privacy for corporations, Gummow and Hayne JJ described Murphy J's earlier identification of an "unjustified invasion of privacy" as "one of the 'developing torts'". However, rather than searching for a wrong such as intrusion of privacy, which would be expressed at a high level of generality, their Honours suggested that the better course for development would be to "look to the development and adaptation of recognised forms of action to meet new situations and circumstances"335. Callinan J also pointed to the recognition in the United States that the general law of privacy there comprises "four distinct kinds of invasion of four different interests" including the intrusion into a plaintiff's private affairs and the "[a]ppropriation, for the defendant's advantage, of the plaintiff's name or likeness"336. In this special case, the plaintiffs' written submissions appeared to suggest a development of the rights of individuals in this manner. They relied upon the decision in Lincoln Hunt Australia Pty Ltd v Willesee337. In that case, an interlocutory injunction was sought to restrain the defendants from publication of video tape said to have been obtained in the course of a trespass on the property of the plaintiff. Young J refused the interlocutory injunction because damages were an adequate remedy for the plaintiff. However, his Honour accepted that even if the matters filmed were not confidential there was nevertheless a prima facie case for an injunction based upon the unconscionable nature of the alleged conduct338. Unpacking the conclusory nature, or expression of a result339, inherent in the adjective "unconscionable", his Honour referred to United States authorities 334 (2001) 208 CLR 199 at 248 [106], quoting Church of Scientology v Woodward (1982) 154 CLR 25 at 68. See also Callinan, "Privacy, Confidence, Celebrity and Spectacle" (2007) 7 Oxford University Commonwealth Law Journal 1. 335 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 336 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 325 [323], quoting Prosser, "Privacy" (1960) 48 California Law Review 383 337 (1986) 4 NSWLR 457. 338 Lincoln Hunt Australia Pty Ltd v Willesee (1986) 4 NSWLR 457 at 463-464. 339 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 409 [34]. See also Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 73 [43]. Edelman concerning the boundaries of liability for invasion of particular privacy interests340, and identified the private nature of the premises upon which the trespass occurred341. Whether or not the result in Lincoln Hunt Australia Pty Ltd v Willesee342 can be explained on another basis343, it appears that the underlying reasoning by which Young J recognised a prima facie case was essentially based upon an extension of the protection of confidential information to the protection of private information344, thus anticipating the incremental extension of existing causes of action as contemplated by Gummow and Hayne JJ in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd345. Indeed, apparently building upon such reasoning, senior counsel for the plaintiffs in this case described the purported execution of the second warrant as involving "sift[ing] through [Ms Smethurst's] private materials". However, at the brink of making such a submission for development of the law expressly, senior counsel for the plaintiffs eschewed any suggestion that the law of torts or equitable wrongdoing should be developed to further an underlying principle of privacy. In the absence of proper argument, therefore, the decision in Lincoln Hunt Australia Pty Ltd v Willesee346 and any development of the law 340 Ali v Playgirl Inc (1978) 447 F Supp 723; Ann-Margret v High Society Magazine Inc (1980) 498 F Supp 401. See American Law Institute, Restatement (Second) of the Law of Torts (1977), vol 3, §652C at 380-383 and compare Wacks, Privacy and Media Freedom (2013) at 165-166 with Gorman, "Publicity and Privacy Rights: Evening out the Playing Field for Celebrities and Private Citizens in the Modern Game of Mass Media" (2004) 53 DePaul Law Review 1247 at 1251-1261. 341 Lincoln Hunt Australia Pty Ltd v Willesee (1986) 4 NSWLR 457 at 463-464. 342 (1986) 4 NSWLR 457. 343 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 344 See also Giller v Procopets [2004] VSC 113 at [150]-[158] and, on appeal, Giller v Procopets (2008) 24 VR 1 at 102 [429]-[431], 106 [448]; Campbell v MGN Ltd [2004] 2 AC 457 at 464-465 [13]-[15], 473 [51]-[52]. Compare Coco v Shaw [1994] 1 Qd R 469 at 486. 345 (2001) 208 CLR 199. 346 (1986) 4 NSWLR 457. Edelman concerning confidential information to encompass the "intrusion"347 into a plaintiff's private affairs must be put to one side. The tort of trespass to goods All of the plaintiffs' eggs were ultimately placed in the basket of trespass to goods. Unfortunately, there was little focus upon why the protection of Ms Smethurst's property rights should permit an injunction to reverse the consequences of any infringement of those rights. With the emphasis in this special case on validity of the warrant and discretionary considerations for the order of an injunction, the parties made few submissions concerning whether, and why, the protection of a right to non-interference with property permits an order requiring reversal of the consequences of the trespass. By focusing upon the wrong, the parties took their eyes off the right348. The plaintiffs are correct that the Australian Federal Police committed the tort of trespass to goods. The tort of trespass to goods, like that of trespass to land, protects property from interference by any intended act: unless legally authorised, no person can set "foot upon my ground without my licence"349. Although the consent, licence or waiver of the owner is sometimes said to deny an element of the cause of action350, the better view is that the consent, licence or waiver operates as a justification for conduct that would otherwise be wrongful. Likewise, a statutory authorisation to interfere with the goods or land of another is also a justification. The Commissioner and the Attorney-General of the Commonwealth (intervening), correctly, did not assert that the Australian Federal Police had acted with the licence of Ms Smethurst. Whilst Ms Smethurst did not object to either the taking of her mobile phone or the copying of the information from her mobile phone (with the passcode that she provided), her implied consent was entirely conditional upon the validity of the second warrant, pursuant to which the police had purported to act in copying the information from Ms Smethurst's mobile phone. The invalidity of the second warrant means that there was a failure of the 347 PJS v News Group Newspapers Ltd [2016] AC 1081 at 1099 [29], 1100 [30], 1108 348 Compare Law Debenture Trust Corporation v Ural Caspian Oil Corporation Ltd [1995] Ch 152 at 166. 349 Entick v Carrington (1765) 19 St Tr 1029 at 1066, quoted in Plenty v Dillon (1991) 171 CLR 635 at 639. 350 See the discussion in Goudkamp, Tort Law Defences (2013) at 67. Edelman objective condition upon which Ms Smethurst's consent was based and hence there was no basis for any right of the police to copy the information351. The invalidity of the warrant also precludes any reliance upon the warrant as an authorisation352 or, more accurately, a justification353 for the police action without consent. A mandatory injunction to ameliorate the consequences of wrongdoing An injunction without continuing or anticipated unlawfulness Injunctions are generally ordered to protect rights or to restrain wrongs354. There are two bases upon which an injunction is commonly ordered. The first basis is to require or prevent some action in order to prevent the likely commission, recurrence or continuation of a public wrong. In the absence of a special individual interest, a civil action to vindicate a wrong to the public generally can be brought by the Attorney-General, either ex officio (from the office) or ex relatione (at the instance of another) through a relator proceeding355: "[i]t is the traditional duty of the Attorney-General to protect public rights and to complain of excesses of a power bestowed by law"356. The second basis is to require or prevent some action in order to prevent the likely commission, recurrence or continuation of a wrong 351 See Mumford v Whitney (1836) 15 Wend 380 at 385; Morton v Copeland (1855) 16 CB 517 at 533 [139 ER 861 at 868]; Freeman v Headley (1869) 4 Vroom 523 at 532; Chapman v Pendleton (1912) 82 A 1063 at 1067; Ashcraft v King (1991) 228 Cal App 3d 604 at 610, 614; American Law Institute, Restatement (Second) of the Law of Torts (1979), vol 4, §892A, Comment f at 368. 352 George v Rockett (1990) 170 CLR 104 at 110; Plenty v Dillon (1991) 171 CLR 635 at 639, 647; Coco v The Queen (1994) 179 CLR 427 at 435-436. 353 See Plenty v Dillon (1991) 171 CLR 635 at 647; Kuru v New South Wales (2008) 236 CLR 1 at 13-14 [38]-[39]. 354 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 355 Taylor v Attorney-General (Cth) (2019) 93 ALJR 1044 at 1067-1068 [103]-[105]; 372 ALR 581 at 608-609. See also Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 263 [39]; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 628-629 [97]-[98]. 356 Attorney-General (Vict) v The Commonwealth (1945) 71 CLR 237 at 272. Edelman to a private person. In such cases the injunction is usually sought by the person whose rights might be, or are being, infringed by the defendant. Whether the wrong is public or private, the injunction can be in a negative or prohibitory form or it can be in a positive or mandatory form. It has been held that a mandatory injunction cannot be obtained "by merely saying 'Timeo' [I fear]"357 and that there must be a "likelihood of a future apprehended wrong"358. What is far less usual, whether for private or public wrongs, is for a mandatory injunction to issue in order to ameliorate the consequences of a wrong rather than to prevent it occurring or continuing. As Story explained, an injunction "seeks to prevent a meditated wrong more often, than to redress an injury already done"359. A libertarian principle of the common law is that it is usually easier to justify ordering a wrongdoer to pay money to ameliorate the consequences of wrongdoing than to justify ordering a wrongdoer personally to act to ameliorate those consequences. The legal rules concerned with the legal response to the consequences of wrongdoing for which the wrongdoer is liable are usually rules concerned with the measure of damages. Damages interfere with the defendant's liberty only by requiring payment of money. These money awards can respond to the consequences of wrongdoing in various ways beyond compensating for losses. In appropriate cases restitution of a gain or an account and disgorgement of profits or exemplary damages might be ordered. By contrast with orders for payment, orders requiring a defendant personally to perform other acts, when omitting to act would be lawful, were described by Lord Westbury LC as delivering the defendant to the plaintiff, "bound hand and foot"360. Hence, other things being equal, it is often the case that "[a] permanent injunction will only issue to prohibit acts which the law categorises as unlawful"361. However, other things are not always equal. As five members of this Court said in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of 357 Attorney-General for the Dominion of Canada v Ritchie Contracting and Supply Co [1919] AC 999 at 1005. 358 Redland Bricks Ltd v Morris [1970] AC 652 at 666. 359 Story, Commentaries on Equity Jurisprudence, As Administered in England and America (1836), vol 2, §862 at 155. 360 Isenberg v The East India House Estate Company Ltd (1863) 3 De G J & S 263 at 273 [46 ER 637 at 641]. 361 Law Debenture Trust Corporation v Ural Caspian Oil Corporation Ltd [1995] Ch Edelman Australia362, it has been established for more than a century that in exceptional cases a mandatory injunction can be granted despite the completion of the "injury sought to be restrained". The joint judgment in that case cited a line of authorities affirming the power to grant a mandatory injunction, after completion of the wrong, in order to restrain the continuation of damage caused by the wrongdoing where that damage is ongoing and very serious363. The central rationale for a mandatory injunction in cases where there is no anticipated or continuing unlawful action is that the interference with the liberty of the defendant by ordering the defendant to take action where inaction would be lawful is justified by the extent of the inadequacy of damages to ameliorate the consequences of the wrongdoing. However, the greater the intrusion into a defendant's liberty arising from the injunction the more that the decision to make the order must be "attended with the greatest possible caution"364. A mandatory injunction is most easily justified where the consequences are ongoing and serious, the interference with the defendant's liberty is trivial and, compared with an injunction, damages are an inadequate means to "undo the consequences of a wrong"365. For instance, in McManus v Cooke366, a mandatory injunction was granted to require the defendant to take action involving what was described as the insignificant inconvenience of removing a skylight from which "it would be extremely difficult to estimate the damage" that the plaintiff would suffer367. The concerns of (i) inconvenience to, and interference with the liberty of, the defendant and (ii) adequacy of damages to the plaintiff are matters requiring 362 (1998) 195 CLR 1 at 31 [33], quoting Kerr, A Treatise on the Law and Practice of Injunctions, 3rd ed (1888) at 50. 363 See, eg, Durell v Pritchard (1865) LR 1 Ch App 244 at 250; McManus v Cooke (1887) 35 Ch D 681 at 698; Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798 at 810; [1974] 2 All ER 321 at 337. See also Smith v Smith (1875) LR 20 Eq 500 at 505. 364 Isenberg v The East India House Estate Company Ltd (1863) 3 De G J & S 263 at 272 [46 ER 637 at 641]. 365 Smith, Rights, Wrongs, and Injustices: The Structure of Remedial Law (2019) at 366 (1887) 35 Ch D 681. 367 (1887) 35 Ch D 681 at 698. Edelman caution before ordering a mandatory injunction which compels a defendant to act despite the lack of actual or anticipated unlawful conduct by the defendant. A simple, but powerful, example is where the police, without knowledge of the invalidity of a search warrant, take an ordinary saucer which contains the fingerprints of the perpetrator of a very serious offence368. Could it really be suggested that it is just to compel the police to return the saucer to the perpetrator of the offence, so that the perpetrator can destroy the evidence of their crime, rather than to require the police to pay any damages, possibly nominal, if the saucer is wrongfully retained for a period in order to be used for the purpose of prosecution? No rhetorical resort to the fundamental nature of the sanctity of property could justify such a result. injunction would be refused despite In the above example, the mandatory injunction would be refused on the grounds that the plaintiff has no interest that could not be satisfied by damages but the intrusion into the liberty of the defendant would have significant adverse consequences. The the continuing unlawfulness of the police retaining the saucer. The caution before interfering with the liberty of a defendant applies with even greater force where, as here, the injunction would compel a defendant to act when inaction would not otherwise be unlawful. However, there is nevertheless power in an appropriate case, where the interference with the liberty of the defendant is slight and the consequences of the wrongdoing to the plaintiff are significant, to order a mandatory injunction to reverse or ameliorate the consequences of a wrong even if the injunction would compel a defendant to act when inaction would not otherwise be unlawful. There is considerable authority that supports the existence of this power. An example is Esso Petroleum Co Ltd v Kingswood Motors (Addlestone) Ltd369. In that case, a defendant who was likely to have committed the tort of inducing a breach of contract by purchasing land that was used as a garage was ordered in interlocutory proceedings to transfer title to the land back to the vendor. The defendant had no legal duty to take the limited step of transferring title to the land back to the vendor, for whom the consequences of wrongdoing were significant. The primary judge, Bridge J, described the defendant as attempting to "get away with it subject only to a liability to pay damages"370 and asked, "what reason can there be in principle why the tortfeasor should not be ordered to undo 368 Adapted from Ghani v Jones [1970] 1 QB 693 at 708. 369 [1974] QB 142. See also Acrow (Automation) Ltd v Rex Chainbelt Inc [1971] 1 WLR 1676; [1971] 3 All ER 1175. 370 Esso Petroleum Co Ltd v Kingswood Motors (Addlestone) Ltd [1974] QB 142 at Edelman that which he has done?"371 Although the hearing in that case was interlocutory, it necessarily follows that the same remedy would have been available on a final basis372. The potential availability of a mandatory injunction to ameliorate the consequences of wrongdoing without an independent legal duty to perform that act is also supported by the existence of other orders which, while having the same goal, are sometimes given different descriptions. Sometimes orders requiring a defendant to act are described simply by the effect of the order. Sometimes they are described as a declaration of a constructive trust. Sometimes they are described as an order for delivery up of materials. As to examples of orders akin to a mandatory injunction to ameliorate the consequences of wrongdoing but which are described by their effect, courts and tribunals, acting under both specific373 and general374 powers, have made orders compelling a defendant to make an apology or a corrective statement, on the apparent premise that, in the circumstances of the case, interference with a defendant's lawful liberty to speak is seen as slight and the intangible consequences of the wrongdoing for which damages or another order would be inadequate are seen as significant375. Some of these orders for apologies or corrective statements 371 Esso Petroleum Co Ltd v Kingswood Motors (Addlestone) Ltd [1974] QB 142 at 372 See Council of the Shire of Hornsby v Danglade (1928) 29 SR (NSW) 118 at 124; Law Debenture Trust Corporation v Ural Caspian Oil Corporation Ltd [1995] Ch 373 Anti-Discrimination Act 1977 (NSW), s 108(2)(d); Anti-Discrimination Act 1991 (Qld), s 209(1)(e); Anti-Discrimination Act 1992 (NT), s 89(1); Anti-Discrimination Act 1998 (Tas), s 92(1). See also Trade Practices Act 1974 (Cth) (as at 17 December 2010), s 86C(2)(d), see earlier s 80A(1)(b), and see now Competition and Consumer Act 2010 (Cth), Sch 2, s 246(2)(d). 374 Equal Opportunity Act 1984 (SA), s 96(1)(c); Equal Opportunity Act 1984 (WA), s 127(b)(iii); Australian Human Rights Commission Act 1986 (Cth), s 46PO(4)(b); Human Rights Commission Act 2005 (ACT), s 53E(2)(b); Equal Opportunity Act 2010 (Vic), s 125(a)(iii). 375 See, for instance, White v Gollan (1990) EOC ¶92-303 at 78,068 [16]-[17]; Mungaloon v Stemron Pty Ltd (1991) EOC ¶92-345 at 78,408; De Simone v Bevacqua (1994) 7 VAR 246 at 273-274; Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd (1996) 35 IPR 635 at 640-641; Australian Competition and Consumer Commission v McCaskey (2000) 104 FCR 8 at 30 [60]- [62]; Burns v Radio 2UE Sydney Pty Ltd [No 2] [2005] NSWADT 24 at [28]-[30]; Edelman were made under general powers described as powers to order an injunction or powers to redress loss or damage376. An example of the use of a declaration of constructive trust to achieve the same goal of requiring a defendant to perform an act can be seen in Attorney- General for Hong Kong v Reid377. In that case, a corrupt Hong Kong prosecutor had used the proceeds of bribery to purchase freehold titles which were conveyed to him, his wife, and his solicitor. The Privy Council rejected an argument that the Crown was confined to a money remedy and held that the freehold titles were held on constructive trust for the Crown378. This recognition of a constructive trust over the freehold titles, property rights for which the common law has long accepted that money is an inadequate substitute, was merely an instrument to obtain a conveyance to the Crown of the freehold title. It was "akin to orders for conveyance"379. Such orders are made where money orders are not capable of doing full justice380. Another analogous order arises when a defendant is ordered to deliver up goods to the plaintiff. A court can order delivery up of the goods if a money award would not be adequate redress, such as where the goods are unique381 or where Australian Competition and Consumer Commission v Telstra Corporation Ltd (2007) ATPR ¶42-207 at 48,428 [4]. See also Carroll, "Apologies as a Legal Remedy" (2013) 35 Sydney Law Review 317. 376 Trade Practices Act 1974 (Cth) (as at 17 December 2010), ss 80, 87AAA(1) and see now Competition and Consumer Act 2010 (Cth), Sch 2, ss 232, 239(1). See Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 95 FCR 114 at 132-133 [45]-[49]; Eatock v Bolt (2011) 197 FCR 261 at 363 [455], 365-366 [465]-[468] read with Eatock v Bolt [No 2] (2011) 284 ALR 114 at 117-119 [14]-[23]. See also Moore v Canadian Newspapers Co (1989) 69 OR (2d) 262; TV3 Network Ltd v Eveready New Zealand Ltd [1993] 3 NZLR 435. 378 Attorney-General for Hong Kong v Reid [1994] 1 AC 324 at 331. 379 Giumelli v Giumelli (1999) 196 CLR 101 at 112 [5]. 380 See John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 at 45 [128]. Compare FHR European Ventures LLP v Cedar Capital Partners LLC 381 See, eg, Pusey v Pusey (1684) 1 Vern 273 [23 ER 465]; Duke of Somerset v Cookson (1735) 3 P Wms 390 [24 ER 1114]; Saville v Tankred (1748) 1 Ves Sen 101 [27 ER Edelman alternative goods are not immediately available and the goods are particularly needed by the plaintiff382. In these cases, there is little concern with the liberty of the defendant to use the goods owned by the plaintiff to the exclusion of the plaintiff. The governing principle is that the order is made to redress the consequences of the wrongdoing by "a complete remedy" in equity whenever "the remedy afforded by the ordinary courts is incomplete"383. Although the order for delivery up of goods is not, in form, an injunction384, it has the same basic aims and in a system of fused administration of law and equity could often be alternatively expressed as a mandatory injunction for delivery of the goods385. The cases concerning orders for delivery up of goods are often, but not always, cases where there is a continuing wrong due to the retention of a good over which the plaintiff has title. In Hart v Commissioner of Australian Federal Police386, the Full Court of the Federal Court of Australia held that copying by the police of electronic information was not authorised by s 3K of the Crimes Act as it stood at the time. The police had title to the devices upon which the information was held. Although only declaratory relief was sought and ordered, French, Sackville and R D Nicholson JJ said that in a case involving an "unauthorised invasion of privacy" appropriate relief may include orders for delivery up of the storage devices containing the copied information387. The inadequacy of damages and the liberty of the defendant in this case The inadequacy of damages is to be assessed from the perspective of Ms Smethurst only, and not the perspective of the Australian Federal Police. 918]; Fells v Read (1796) 3 Ves 70 [30 ER 899]; Lloyd v Loaring (1802) 6 Ves 773 [31 ER 1302]; Lowther v Lowther (1806) 13 Ves 95 [33 ER 230]. 382 Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581 at 589; Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591 at 598-599. 383 Mitford, A Treatise on the Pleadings in Suits in The Court of Chancery, by English Bill, 5th ed (1847) at 138-139; North v Great Northern Railway Co (1860) 2 Giff 64 at 68 [66 ER 28 at 30]. See also Dougan v Ley (1946) 71 CLR 142 at 151, 153; Burrows, Remedies for Torts, Breach of Contract, and Equitable Wrongs, 4th ed 384 Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591 at 596. 385 See Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581. 386 (2002) 124 FCR 384. 387 Hart v Commissioner of Australian Federal Police (2002) 124 FCR 384 at 406 [88]. Edelman From Ms Smethurst's perspective, the question is whether a damages award would be inadequate to ameliorate the consequences of the trespass by the Australian Federal Police. Contrary to Ms Smethurst's submission, the relevant consequence is not the possibility that she might be exposed to jeopardy due to any incriminating material on her mobile phone or the costs or distress associated with such exposure. Ms Smethurst pointed to no basis for any immunity from investigation by the Australian Federal Police and therefore no lawful interest in resisting investigation or exposure to jeopardy. However, independently of any development of the law concerning private information, Ms Smethurst does have an interest in resisting the potential dissemination of private information contained on her mobile phone which has not been lawfully obtained. In an appropriate case, the strength of that interest will establish that damages are inadequate. The question is whether this case is such an appropriate case. I have not found this question easy. The reasons of Nettle J388 concerning the limited use to which the Australian Federal Police are likely to put the information in the performance of their functions present a powerful case for a conclusion that damages would be adequate. Ultimately, however, I have concluded that Ms Smethurst's interest in privacy is sufficient to establish that damages would not be adequate. There was no dispute that the information obtained from Ms Smethurst's password-protected mobile phone was private information. If that information had been obtained lawfully, it would have been subject to the protections afforded by Pt IAA of the Crimes Act. Those protections, undoubtedly motivated by a concern for unspecified individual rights and freedoms389, which would encompass privacy, include: (i) in some circumstances providing the occupier of the premises, upon request, with a copy of the information as soon as practicable after the seizure390; (ii) restrictions upon using the information as a "thing seized under this Part" for particular purposes and only "if it is necessary to do so for that purpose"391; (iii) restrictions on sharing the information with a State, Territory, or 388 Reasons of Nettle J at [158]-[162]. 389 Australia, House of Representatives, Parliamentary Debates (Hansard), 17 November 1993 at 3031; Australia, House of Representatives, Crimes (Search Warrants and Powers of Arrest) Amendment Bill 1993, Explanatory Memorandum at 1. See also Australia, House of Representatives, Parliamentary Debates (Hansard), 1 February 1994 at 67, 74. 390 Crimes Act, s 3N. 391 Crimes Act, s 3ZQU(1). Edelman foreign agency392; and (iv) subject to limited exceptions, requirements to return the information when it is no longer required for purposes provided by statute or for judicial or administrative review proceedings393. I agree with Kiefel CJ, Bell and Keane JJ that those restrictions do not apply to information obtained by an unlawful warrant394. The consequence of the trespass, therefore, is that Ms Smethurst's private information is held by the Australian Federal Police without the privacy protection to which she would otherwise have been entitled. Further, in circumstances in which the second warrant was substantially lacking in clarity, the private information obtained might have gone well beyond the information to which the Australian Federal Police were lawfully entitled. An award of damages, unlike a mandatory injunction, would provide no privacy protection over information that should not have been obtained or even information that would otherwise have been obtained but which would have been subject to the privacy protections of the Crimes Act. In the likely absence of any pecuniary loss, damages would also be very difficult to calculate. The inadequacy of damages is a consideration in favour of an injunction only from the plaintiff's perspective. The perspective of the defendant must also be considered when assessing whether the defendant should be compelled to take action to reverse or ameliorate the consequences of a wrong where the defendant is not under a duty otherwise to perform the act. From the perspective of the Australian Federal Police, a mandatory injunction could involve a substantial interference with their liberty to act lawfully. Subject to the effect on the statutory powers of police of any development of common law or equitable principles concerning privacy, the Australian Federal Police are at liberty to disseminate private information about others in connection with their lawful investigation of Commonwealth offences395. The paucity of facts before this Court makes an overall assessment of the relative effect of a mandatory injunction upon each party particularly difficult. There are insufficient facts from which to draw any inference about the nature or quality of the private information copied from Ms Smethurst's mobile phone. Nor are there sufficient facts from which any inference can be drawn about the relevance of any of the private information copied from Ms Smethurst's mobile 392 Crimes Act, s 3ZQU(5). 393 Crimes Act, ss 3ZQX(1), 3ZQX(2). 394 Reasons of Kiefel CJ, Bell and Keane JJ at [58]-[65]. 395 Australian Federal Police Act 1979 (Cth), s 8(1)(b)(i). Edelman phone to the investigation of Commonwealth offences, particularly in light of the lack of clarity in the second warrant. Some of the formulations of the injunctive relief sought by the plaintiffs require a greater restriction of the liberty of the Commissioner than could be necessary to ameliorate the adverse consequences of the wrongdoing to Ms Smethurst. For instance, in circumstances where it is not known whether the private information is still possessed by Ms Smethurst, an injunction that required all copies of the private information to be destroyed could prevent the Australian Federal Police from ever lawfully obtaining that information, which might be required to investigate and prosecute crime. The Solicitor-General of the Commonwealth submitted that this Court might permit the Commissioner to retain and use the copied data on terms that restrict the Australian Federal Police to use of the information only according to the regime in the Crimes Act as if the information had been obtained lawfully. An injunction in these terms would protect the interest of Ms Smethurst in her privacy to the same extent as if no trespass had occurred and the warrant had been obtained lawfully. The injunction would constrain the liberty of the Australian Federal Police by restricting them to acting as if the information had been lawfully obtained. However, an injunction in these terms does not truly reverse the consequences of the unlawful action. Rather, it treats the unlawful action as though it were lawful. It should be no answer to a claim for delivery up from a person who unlawfully takes a valuable heirloom for that person to say that the owner would have given him the heirloom if he had asked for it. Further, the lack of clarity of the second warrant means that there is a real possibility that some of the information might never have been lawfully obtained even if the warrant had been clearly expressed. There is a further alternative which does not require treating the trespass as though it were lawful and which would also preserve the liberty of the Australian Federal Police to obtain the information, provided that it can be done lawfully. The appropriate form of such a mandatory injunction, which should be expressed as subject to any lawful warrant that would, in effect, permit the information to be obtained and retained by the Australian Federal Police, would be: "Upon 72 hours' notice from Ms Smethurst, and subject to the terms of any lawful warrant, the Commissioner of the Australian Federal Police deliver up to Ms Smethurst, at an agreed time and place, or in default of agreement at an address for service upon Nationwide News Pty Ltd, a Universal Serial Bus (USB) storage device containing the information copied from Ms Smethurst's mobile phone in an accessible form, and delete all other copies of that information held by, or within the control of, the Australian Federal Police." Edelman By expressing an injunction in this form, the order ameliorates the consequences of the trespass by intruding to the minimum degree possible upon the liberty of the Commissioner to act lawfully without treating the trespass as though it were lawful. By making the injunction subject to the terms of a lawful warrant the order also avoids the comic possibility of the simultaneous return of the information to Ms Smethurst on a USB storage device and seizure of that USB storage device pursuant to a valid warrant396. Naturally, and in any event, the Australian Federal Police would retain title to any USB storage device delivered to Ms Smethurst. Considerations external to the parties that inform the discretion to refuse the injunctive relief Even where an injunction would be warranted as necessary to do justice between the parties there remains a "discretion" to refuse the injunction. However, the cases have sometimes conflated the separate questions of (i) whether, as between the parties, a plaintiff would have a right that could support the injunction and (ii) whether the injunction should be refused for "discretionary" reasons. An example is the decision in A v Hayden397. In that case, the plaintiffs were members of the Australian Secret Intelligence Service whose identity was not known to the Chief Commissioner of Police but who were believed to have committed breaches of the criminal law. The plaintiffs sought an injunction to restrain the Chief Commissioner including on the ground that to do so would violate confidentiality terms in their contracts of employment with the Commonwealth. The injunction was refused. A simple reason for refusal might have been that there was no right upon which the injunction could be based because parties cannot, by agreement, confer upon themselves a right that the other will maintain the confidentiality of a crime, arguably other than a trivial misdemeanour398. At one point in his judgment Gibbs CJ appeared to favour that view, saying that the injunction would not issue because, quoting Wood VC, "there is no confidence as to the disclosure of iniquity"399. However, at another point Gibbs CJ said that the contract term was "not in itself invalid" but a "discretion" should be exercised to the Commonwealth from disclosing identity their 396 Compare Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 397 (1984) 156 CLR 532. 398 See A v Hayden (1984) 156 CLR 532 at 546, 574. 399 A v Hayden (1984) 156 CLR 532 at 545, quoting Gartside v Outram (1856) 26 LJ Ch Edelman deny the injunction400. Similarly, Mason J held that although the contract term was not void or unenforceable, the court could refuse a remedy on the ground of "public policy"401, citing the example of Beresford v Royal Insurance Co402. Yet, in that case, Lord Atkin, with whom Lords Thankerton and Russell of Killowen agreed, held that the effect of the "public policy" was that the "contract is in the circumstances unenforceable"403. For the reasons given in the previous section, as between the parties the plaintiffs were entitled to an injunction to reverse the consequences of the trespass committed. However, the Commissioner and the Attorney-General also relied upon the Court's discretion to refuse the injunction. The discretionary factors relied upon were reasons independent of the conduct of the parties. These independent reasons of discretion nevertheless involve the application of general principles404. If a court were to refuse an injunction for reasons other than those of general principle then, as Lindley LJ said of damages in lieu of an injunction, there would be a danger that the court could be turned into a "tribunal for legalizing wrongful acts"405. A common instance where an injunction is refused due to considerations of general principle beyond the justice between the parties is where the injunction would interfere with the rights of third parties406. Another is where it would interfere with a clear and compelling interest of the general public, such as where a need for public housing meant that, despite their construction being a result of a 400 A v Hayden (1984) 156 CLR 532 at 544-545. 401 A v Hayden (1984) 156 CLR 532 at 557. 403 Beresford v Royal Insurance Co [1938] AC 586 at 601. 404 Doherty v Allman (1878) 3 App Cas 709 at 724; Warman International Ltd v Dwyer (1995) 182 CLR 544 at 559. 405 Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 at 315, see also at 322-323. See also Lawrence v Fen Tigers Ltd [2014] AC 822 at 855 [121]. 406 See Wood v Sutcliffe (1851) 2 Sim (NS) 163 at 165-166 [61 ER 303 at 304]; Miller v Jackson [1977] QB 966 at 988; Spry, The Principles of Equitable Remedies, 5th ed (1997) at 402-403, quoted in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 42 [65]. See also now Spry, The Principles of Equitable Remedies, 9th ed (2014) at 416-417. See also John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 at 46 [129]. Edelman breach of a negative covenant, it would be "an unpardonable waste of much needed houses to direct that they now be pulled down"407. In this case, the reason effectively relied upon by the Commissioner and the Attorney-General is the "public interest in the administration of and non-interference with justice"408, which, more specifically, has been said to include a liberty for the police lawfully "to do whatever is necessary and reasonable to preserve the evidence of the crime"409. It was submitted by the Commissioner and the Attorney-General that, since unlawfully obtained evidence will not always be excluded under s 138 of the Evidence Act 1995 (Cth), the information "might still be admissible in the event that criminal proceedings are commenced", and hence that the public interest required that the police be able to retain and use it. In some cases it has been said or held to be a sufficient reason to refuse to make an order to return seized material that the material is to be tendered as part of an existing or reasonably certain prosecution410. These cases do not assist here for three reasons. First, in this case, no inference can be drawn that any prosecution will be brought, and no inference can be drawn that the material is relevant to any prosecution. Secondly, many of the cases involve claims for the return of lawfully seized material. Where material is lawfully seized, there is a common law power associated with the power to seize, which gives effect to the purpose of seizure, for the material to be retained for as long as it is reasonably required to achieve the purpose for which it has been seized411. Thirdly, and most fundamentally, in none of the cases was there any separate consideration of the two different issues described above which arise upon a claim for the return of seized material: (i) whether the plaintiff would have been 407 Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798 at 811; [1974] 2 All ER 321 at 337. 408 Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393 at 405. See also George v Rockett (1990) 170 CLR 104 at 110. 409 Ghani v Jones [1970] 1 QB 693 at 708. 410 Walker v West [1981] 2 NSWLR 570 at 584; Parker v Churchill (1985) 9 FCR 316 at 330-333; Rowell v Larter (1986) 6 NSWLR 21 at 32; Ozzie Discount Software (Aust) Pty Ltd v Muling (1996) 86 A Crim R 387 at 397; Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393 at 405; Caratti v Commissioner of the Australian Federal Police [No 2] [2016] FCA 1132 at [463]; Caratti v Commissioner of the Australian Federal Police (2017) 257 FCR 166 at 411 Ghani v Jones [1970] 1 QB 693 at 709. Edelman entitled to the return of the seized material as against the defendant, and (ii) whether discretion should nevertheless be exercised to refuse to order the return. For instance, in Malone v Metropolitan Police Commissioner412, the Court of Appeal of England and Wales refused to order the return of the banknotes lawfully seized from Mr Malone, on the basis that they were potentially material evidence at a pending criminal trial413. Due to the conclusion by the Court that it was lawful to retain the banknotes, there was no consideration of either (i) whether damages for the capital value or use value of the notes would be adequate for any period of unlawful retention of the banknotes, or, if not, (ii) whether a "discretion" should be exercised to refuse the return of the seized banknotes. These two issues are also not separated in the discussion of any return of the electronic equipment seized in the Caratti litigation414, or the money and jewellery in Walker v West415, or in the example given by Lord Denning MR of a saucer with the fingerprints of the great train robbers416. In each instance, it is strongly arguable that there would be no basis for an order for return of the material, as between the parties, thus rendering moot the issue of "discretion" based upon an asserted public interest in preserving the evidence of crime. I accept that the public interest in the administration of criminal justice could, particularly in circumstances of serious crime, allow the refusal of an order for the return of unlawfully seized material to which a plaintiff would otherwise have been entitled if the material is (i) reasonably likely to be admissible evidence to prove a crime and (ii) necessary to give that evidence effectively. In contrast, if there is no reasonable likelihood of criminal proceedings, or no reasonable likelihood that the material could be admissible, or if the evidence could be given effectively without the material, such as by identical copies of the material, then there could not be any sufficient public interest to justify denying a plaintiff the right that they would otherwise have to the return of the material. The onus of establishing that a plaintiff should be denied a right to the return of material for reasons of public interest rests upon the person asserting that public 413 Malone v Metropolitan Police Commissioner [1980] QB 49 at 70. See also Gollan v Nugent (1988) 166 CLR 18 at 43-44. 414 Caratti v Commissioner of the Australian Federal Police [No 2] [2016] FCA 1132 at [463]; Caratti v Commissioner of the Australian Federal Police (2017) 257 FCR 415 [1981] 2 NSWLR 570. 416 Ghani v Jones [1970] 1 QB 693 at 708. Edelman interest, here the Commissioner and the Attorney-General. A principle of public interest is not established by speculation. For instance, it would be in the public interest to refuse the return of seized goods to a plaintiff if it were known that the goods would necessarily be used in the commission of a crime. But it is not sufficient to speculate that the goods might be so used, even from evidence that the plaintiff intended to use the goods in the commission of a crime, because the plaintiff might repent of that intention417. The Commissioner's and the Attorney-General's assertion of a public interest that would justify the refusal of the mandatory injunction should not be accepted. It requires speculation upon speculation upon speculation. First, there is no basis from which any inference can be drawn that the information contained on the USB storage device held by the police contains evidence of any crime. Secondly, even if it could be assumed that there was information which established evidence of a crime, there is no basis from which it could be concluded that any criminal proceedings are reasonably likely. Thirdly, there is no basis to conclude that information establishing evidence of a crime was reasonably likely to be admissible in such proceedings. Fourthly, and again in the absence of any detail in the special case about the content of the information, there is no basis from which it can be concluded that the information was reasonably necessary to permit admissible evidence to be given effectively. Fifthly, as I have explained, an injunction in the form described at [270] above does not necessarily prevent the Commissioner from lawfully obtaining the information. Conclusion It was not in dispute that the plaintiffs had standing to challenge the constitutional validity of s 79(3) of the Crimes Act, upon which the second warrant was based. They relied upon the constitutional invalidity of s 79(3) as a basis to establish the invalidity of the second warrant, which depended upon the existence of an offence known to law. They also relied upon the constitutional invalidity of s 79(3) to negate the Commissioner's and the Attorney-General's assertion of a public interest in the retention of the information for a prosecution under s 79(3). However, since the basis for the plaintiffs' challenge to the validity of the second warrant was not limited to the constitutional invalidity of s 79(3), and since the plaintiffs have succeeded in their challenge to the validity of the second warrant and obtained a form of the relief that they sought, it is unnecessary to consider their case concerning the constitutional validity of s 79(3) of the Crimes Act. The questions stated in the special case, as reframed in these reasons, should be answered as follows: 417 Feret v Hill (1854) 15 CB 207 at 226 [139 ER 400 at 408]; Gollan v Nugent (1988) 166 CLR 18 at 45, 48. Edelman (1)(a)-(b) Yes. Unnecessary to answer. (2) Unnecessary to answer. (3) Unnecessary to answer. (4) Orders should be made: for certiorari to quash the search warrant issued on 3 June 2019; and that upon 72 hours' notice from Ms Smethurst, and subject to the terms of any lawful warrant, the Commissioner of Police deliver up to Ms Smethurst, at an agreed time and place, or in default of agreement at an address for service upon Nationwide News Pty Ltd, a Universal Serial Bus (USB) storage device containing the information copied from Ms Smethurst's mobile phone in an accessible form, and delete all other copies of that information held by, or within the control of, the Australian Federal Police. (5) The first defendant should pay the plaintiffs' costs of the special case. |
HIGH COURT OF AUSTRALIA TABCORP HOLDINGS LTD APPELLANT AND BOWEN INVESTMENTS PTY LTD RESPONDENT Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8 12 February 2009 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation N J Young QC with C C Macaulay SC and E W Woodward for the appellant (instructed by Mallesons Stephen Jaques) D M J Bennett QC with M J Colbran QC, I W D Upjohn and T D Best for the respondent (instructed by Scanlan Carroll Business Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Tabcorp Holdings Ltd v Bowen Investments Pty Ltd Contract – Damages – Lease – Tenant's covenant – Covenant not to make any substantial alteration to premises without consent – Appropriate measure of damages for tenant's breach. Contract – Damages – Lease – Principle in Robinson v Harman (1848) 1 Ex 850 [154 ER 363] – Whether costs of rectification available – Whether rectification must be reasonable – Relevance of commercial character of premises – Whether landlord entitled only to damages for diminution in value of reversion. Words and phrases – "costs of repair", "rectification costs". FRENCH CJ, GUMMOW, HEYDON, CRENNAN AND KIEFEL JJ. On Monday 14 July 1997, Mrs Maria Bergamin arrived at an office building at 5 Bowen Crescent, Melbourne. There she found that the foyer of the building had been badly damaged. A glass and stone partition, timber panelling and stone floor tiles had been removed. She was shocked and dismayed to see what remained of the floor stone work being jack hammered. A large bin was filled with the debris of the foyer. This destruction had been carried out by a tenant, Tabcorp Holdings Ltd ("the Tenant"), the appellant in this appeal. Why was Mrs Bergamin shocked and dismayed? She was a director of the respondent, Bowen Investments Pty Ltd ("the Landlord"), a company which owned the building. She had taken particular care over and interest in the construction of the foyer. It was of high quality. It was made of special materials – San Francisco Green granite, Canberra York Grey granite, and sequence-matched crown-cut American cherry. The construction of the foyer had been completed less than six months earlier. The Tenant had taken possession under a lease granted by the Landlord less than six months earlier. The lease contained a covenant, cl 2.13, forbidding the Tenant to alter the premises without the prior written approval of the Landlord. Mrs Bergamin had on Thursday 10 July 1997 arranged for the Tenant to be told that the Landlord did not consent to any alteration to the foyer. Mrs Bergamin had informed the Tenant in writing on Friday 11 July 1997 that the Landlord could not consent until the Tenant's proposed alterations were examined at a site meeting at 11am on Monday 14 July 1997. It was when Mrs Bergamin arrived at 10.45am on 14 July 1997 in order to attend that site meeting that she observed the destruction which had taken place and which was continuing to take place. The trial judge specifically found that the Tenant was well aware that written consent from the Landlord to do what the Tenant had done was needed, and that that consent did not exist. Mrs Bergamin protested about what had happened, but the Tenant continued to alter the foyer and substitute a new foyer until the process was complete on 31 August 1997. The trial judge's description of the Tenant's conduct as involving "contumelious disregard" for the Landlord's rights was not hyperbolic. Nor has it been challenged. The Landlord pursued claims against the Tenant in the Federal Court of Australia based on many causes of action. Most of them were rejected by the trial judge (Tracey J) for reasons with which the Landlord does not now cavil. The only claim which the trial judge upheld was a claim for common law Crennan damages in relation to two breaches by the Tenant of cl 2.13: the destruction of the old foyer up to 14 July 1997, and the construction of a new foyer up to 31 August 1997. He gave judgment for the Landlord in the sum of $34,820: most of that figure was made up of the difference between the value of the property with the old foyer and the value of the property with the new foyer constructed by the Tenant1. The Full Court of the Federal Court of Australia increased the judgment sum to $1.38m. That sum comprised $580,000 as the cost of restoring the foyer to its original condition and $800,000 for loss of rent while that restoration was taking place2. In this appeal the Tenant seeks restoration of the trial judge's figure. The appeal should be dismissed for the following reasons. The lease The lease was executed on 23 December 1996. It was for a term of 10 years commencing on 1 February 1997. An option to renew for five years until 2012 was exercised: the new lease began on 1 February 2006 and will expire on 31 January 2012. There is a further option to renew for five years until By cl 2.13, the Tenant covenanted: "Not without the written approval of the Landlord first obtained (which consent shall not be unreasonably withheld or delayed) to make or permit to be made any substantial alteration or addition to the Demised Premises". The Tenant also covenanted, by cl 2.10, to keep the premises in repair; by cl 2.11, to yield up the premises on the determination of the lease in good repair; and, by cl 2.12.4, to make good any breakage or damage. 1 Bowen Investments Pty Ltd v Tabcorp Holdings Ltd [2007] ANZ Conv R 297. 2 Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (2008) 166 FCR 494 at Crennan The trial judge The trial judge held that it would be appropriate to award damages for breach of cl 2.13 based on reinstatement costs only "in a relatively narrow range of cases where a tenant has so damaged or modified premises that they are unlettable at the conclusion [of] the lease"3. In this regard he referred to Joyner v Weeks4, a case not cited by the parties. He went on to say that normally, however, "reinstatement costs will not be awarded unless there exists some special interest in reinstatement arising from a radical change to the usage to which the property can be put following renovations by the tenant"5. He then accepted expert evidence to the effect that whether the lease was to end in 2012 or 2017, the Tenant's changes to the foyer would occasion very little diminution in the value of the building. Accordingly he awarded only $34,820 in damages6. The Full Court According to Rares J, the arguments of the Landlord in the Full Court "were radically different from those which the Court identified and upon which the [Landlord] ultimately succeeded."7 The majority of the Full Court (Finkelstein and Gordon JJ) held8: "There can be no meaningful distinction between a full repair covenant and clause 2.13, at least as regards the extent to which the clause prohibits 3 Bowen Investments Pty Ltd v Tabcorp Holdings Ltd [2007] ANZ Conv R 297 at 5 Bowen Investments Pty Ltd v Tabcorp Holdings Ltd [2007] ANZ Conv R 297 at 6 For reasons which the parties could not explain, he included $1,000 for nominal damages for breach of cl 2.13, but the Tenant told this Court that it took no issue about that component. 7 Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [11] (a judgment on costs). 8 Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (2008) 166 FCR 494 at Crennan alterations or additions without approval. This is because relevantly the obligations are the same. Accordingly damages for breach of clause 2.13 are to be assessed on the same basis as for breach of a repair covenant." They therefore saw as applicable authorities on repair covenants, of which they described cl 2.10 as an example. And they considered that the authorities on repair covenants held that the general rule for assessing damages for breach of a covenant by a lessee to deliver up the demised premises in repair is the cost of putting the premises into the state of repair required by the covenant. They described this rule as the rule in Joyner v Weeks. In examining whether the particular circumstances of the case should cause that "prima facie method" of calculating loss to be displaced, they said that but for a special condition in Heads of Agreement made on 15 May 2006, it would have been appropriate to take into account the fact of the renewal of the lease in 2007, the possibility that it might not end until 2017 and the lack of damage to the reversion, and thus uphold the trial judge's conclusion. But they said9: "[I]n this case the new lease and its consequences on possession must be left out of account because that is what the special condition requires. This means that damages must be assessed in an artificial environment – a notional world in which the lease expired by effluxion of time on 31 January 2007." Hence they held that the Tenant had failed to displace the "prima facie method". Thus the majority awarded damages of $1.38m, based on the cost of reinstatement approach. Rares J took a different approach. He said that cll 2.10-2.12 "ensured that if structural alterations were made in breach of cl 2.13, the tenant had to make good its unauthorised changes when the term came to an end."10 For that reason, and applying Joyner v Weeks, he held that the correct basis for damages was the cost of reinstatement, not diminution in value of the land, but he would have allowed the parties to address further on relief. 9 Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (2008) 166 FCR 494 at 502 10 Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (2008) 166 FCR 494 at 515 Crennan The Tenant's complaints The Tenant made numerous complaints about the reasoning of the Full Court. It is convenient to put them on one side for the moment, because there is one short ground on which the Full Court's orders are plainly to be supported. It was not a ground squarely relied upon below, but it was explicitly raised by members of the bench in this Court and evidence could not have been given at the trial which by any possibility could have prevented the point from succeeding. The role of cl 2.13 At trial, the Landlord's only claim for damages for breach of contract was based on an alleged breach of cl 2.13. Accordingly, damages are to be assessed on that basis. Clause 2.13 is an express negative covenant. It serves a function of considerable practical utility in relation to the Landlord's capacity to protect its legitimate interest in preserving the physical character of the premises leased. That function is: provided the Landlord learned of a threat to make a substantial alteration to the premises without its written consent, a speedy application could be made for an interlocutory negative injunction, an appeal could be made to the modern understanding of the principles classically stated by Lord Cairns LC in Doherty v Allman11, and the status quo could readily be preserved. The 11 (1878) 3 App Cas 709 at 720, where, speaking of negative covenants, he said: "If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such case the injunction does nothing more than give the sanction of the process of the Court to that which already is the contract between the parties. It is not then a question of the balance of convenience or inconvenience, or of the amount of damage or of injury – it is the specific performance, by the Court, of that negative bargain which the parties have made, with their eyes open, between themselves." Perhaps, as Dixon J suggested, Lord Cairns spoke too absolutely, and the position is rather that if "a clear legal duty is imposed by contract to refrain from some act, then, prima facie, an injunction should go to restrain the doing of that act": J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 at 299; [1931] HCA 15. Even so, it is certainly true that in such a case in normal circumstances, in both interlocutory and final hearings, the position of the plaintiff is much stronger than that of the defendant. Crennan clandestine conduct of the Tenant made it impossible for the Landlord to apply for an interlocutory negative injunction, but that does not detract from that aspect of cl 2.13 in assessing damages for its breach. Underlying the Tenant's submission that the appropriate measure of damages was the diminution in value of the reversion was an assumption that anyone who enters into a contract is at complete liberty to break it provided damages adequate to compensate the innocent party are paid. It is an assumption which at least one distinguished mind has shared12. It has been dignified as "the doctrine of efficient breach". It led, in the Landlord's submission, to an attempt "arrogantly [to] impose a form of 'economic rationalism'" on the unwilling Landlord. The assumption underlying the Tenant's submission takes no account of the existence of equitable remedies, like decrees of specific performance and injunction, which ensure or encourage the performance of contracts rather than the payment of damages for breach. It is an assumption which underrates the extent to which those remedies are available13. However, even if the assumption were correct it would not assist the Tenant. The Tenant's submission misunderstands the common law in relation to damages for breach of contract. The "ruling principle"14, confirmed in this Court on numerous occasions15, with respect to damages at common law for breach of contract is that stated by Parke B in Robinson v Harman16: "The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed." 12 Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530 at 574-575 [128]; [2004] HCA 56. 13 Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460 at 503-504; [1967] HCA 3. 14 Wertheim v Chicoutimi Pulp Company [1911] AC 301 at 307. 15 See for example Wenham v Ella (1972) 127 CLR 454 at 460 and 471; [1972] HCA 16 (1848) 1 Exch 850 at 855 [154 ER 363 at 365]. Crennan Oliver J was correct to say in Radford v De Froberville17 that the words "the same situation, with respect to damages, as if the contract had been performed" do not mean "as good a financial position as if the contract had been performed" (emphasis added). In some circumstances putting the innocent party into "the same situation … as if the contract had been performed" will coincide with placing the party into the same financial situation. Thus, in the case of the supply of defective goods, the prima facie measure of damages is the difference in value between the contract goods and the goods supplied. But as Staughton LJ explained in Ruxley Electronics Ltd v Forsyth18 such a measure of damages seeks only to reflect the financial consequences of a notional transaction whereby the buyer sells the defective goods on the market and purchases the contract goods. The buyer is thus placed in the "same situation … as if the contract had been performed", with the loss being the difference in market value. However, in cases where the contract is not for the sale of marketable commodities, selling the defective item and purchasing an item corresponding with the contract is not possible. In such cases, diminution in value damages will not restore the innocent party to the "same situation … as if the contract had been performed". In circumstances like the present, where the relevant covenant is in the form of cl 2.13, it is not the case that, in Oliver J's words19: "the disappointment of the plaintiff's hopes and expectations from the contract becomes a relevant consideration only so far as it is measurable either by some deterioration of the plaintiff's financial situation or by some failure to obtain an amelioration of his financial situation." To reason otherwise is to undermine a fundamental postulate inherent in cl 2.13. Similar thinking underlies a statement made by Dixon CJ, Webb and Taylor JJ in Bellgrove v Eldridge. A builder who had built a house which, in breach of contract, contained defective concrete and mortar, contended that the measure of damages was limited to diminution in value and did not extend to costs of rectification. Their Honours said20: 17 [1977] 1 WLR 1262 at 1273; [1978] 1 All ER 33 at 44. 18 [1994] 1 WLR 650 at 655; [1994] 3 All ER 801 at 806. 19 [1977] 1 WLR 1262 at 1273; [1978] 1 All ER 33 at 44. 20 (1954) 90 CLR 613 at 617 (emphasis in original); [1954] HCA 36. Crennan "In the present case, the respondent was entitled to have a building erected upon her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her. This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract." So here, the Landlord was contractually entitled to the preservation of the premises without alterations not consented to; its measure of damages is the loss sustained by the failure of the Tenant to perform that obligation; and that loss is the cost of restoring the premises to the condition in which they would have been if the obligation had not been breached21. The Tenant relied heavily on findings by the trial judge that the Landlord had erected and leased the building for commercial purposes and that it was an investment property. The Tenant contended that the Landlord had never run a case that it valued the foyer for its aesthetic qualities as distinct from its having "pulling power" as a "leasing tool", and it relied on the trial judge's implicit finding, based on the resolution of conflicting expert evidence, that the old foyer was no more effective as a leasing tool than the new foyer. The answer to these submissions was put thus by Oliver J in Radford v De Froberville22: "Now, it may be that, viewed objectively, it is not to the plaintiff's financial advantage to be supplied with the article or service which he has stipulated. It may be that another person might say that what the plaintiff has stipulated for will not serve his commercial interests so well as some 21 The Tenant relied on Espir v Basil Street Hotel Ltd [1936] 3 All ER 91, in which the Court of Appeal awarded damages against a subtenant who breached a covenant not to alter the premises without the lessor's consent, which were calculated on the basis of diminution in value, not cost of reinstatement. That ex tempore decision, however, did not take into account the considerations mentioned above. 22 [1977] 1 WLR 1262 at 1270; [1978] 1 All ER 33 at 42. Crennan other scheme or course of action. And that may be quite right. But that, surely, must be for the plaintiff to judge. Pacta sunt servanda. If he contracts for the supply of that which he thinks serves his interests – be they commercial, aesthetic or merely eccentric – then if that which is contracted for is not supplied by the other contracting party I do not see why, in principle, he should not be compensated by being provided with the cost of supplying it through someone else or in a different way, subject to the proviso, of course, that he is seeking compensation for a genuine loss and not merely using a technical breach to secure an uncovenanted profit." In Ruxley Electronics and Construction Ltd v Forsyth the latter half of the passage was quoted with approval by Lord Jauncey of Tullichettle23, and the passage was referred to with approval by Lord Mustill24. The Tenant stressed that in Bellgrove v Eldridge this Court pointed out that there was a qualification to the rule it stated in regard to damages recoverable by a building owner for the breach of a building contract. "The qualification … is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt."25 The example which the Court gave of unreasonableness was the following26: "No one would doubt that where pursuant to a building contract calling for the erection of a house with cement rendered external walls of second- hand bricks, the builder has constructed the walls of new bricks of first quality the owner would not be entitled to the cost of demolishing the walls and re-erecting them in second-hand bricks." That tends to indicate that the test of "unreasonableness" is only to be satisfied by fairly exceptional circumstances. The example given by the Court aligns closely with what Oliver J said in Radford v De Froberville, that is, that the diminution in value measure of damages will only apply where the innocent party is "merely using a technical breach to secure an uncovenanted profit." It is also important to 23 [1996] AC 344 at 358 (Lords Keith of Kinkel and Bridge of Harwick concurring). 24 [1996] AC 344 at 360 (Lords Keith of Kinkel and Bridge of Harwick concurring). 25 (1954) 90 CLR 613 at 618. 26 (1954) 90 CLR 613 at 618. Crennan note that the "reasonableness" exception was not found to exist in Bellgrove v Eldridge. Nothing in the reasoning in that case suggested that where the reasoning is applied to the present circumstances, the course which the Landlord proposed is unnecessary or unreasonable. As part of the same submission, the Tenant relied on Ruxley Electronics and Construction Ltd v Forsyth27. The House of Lords there held in a building case that where the expenditure necessary to rectify the defect in the building was out of all proportion to the benefit to be obtained the appropriate measure of damages was not the cost of reinstatement but the diminution in the value of the work occasioned by the breach, even if that would result in a nominal award. The House rejected a claim for £21,560 damages for reconstructing a swimming pool that was 1 foot 6 inches too shallow. The House saw the following matters as indicating that the cost of reconstruction was not recoverable28: "The trial judge made the following findings which are relevant to this appeal: (1) the pool as constructed was perfectly safe to dive into; (2) there was no evidence that the shortfall in depth had decreased the value of the pool; (3) the only practicable method of achieving a pool of the required depth would be to demolish the existing pool and reconstruct a new one at a cost of £21,560; (4) he was not satisfied that the respondent intended to build a new pool at such a cost; (5) in addition such cost would be wholly disproportionate to the disadvantage of having a pool of a depth of only 6 feet as opposed to 7 feet 6 inches and it would therefore be unreasonable to carry out the works; and (6) that the respondent was entitled to damages for loss of amenity in the sum of £2,500." Their Lordships quoted and referred to various passages in Bellgrove v Eldridge and Radford v De Froberville without dissent. Although they reversed the Court of Appeal, in which the leading judgment, that of Staughton LJ29, quoted various passages from Radford v De Froberville30, they did not disagree with what those cases said as a matter of principle, and seemed to consider that their decision was 28 [1996] AC 344 at 354-355 per Lord Jauncey of Tullichettle. 29 Ruxley Electronics and Construction Ltd v Forsyth [1994] 1 WLR 650; [1994] 3 All ER 801. 30 Including the last sentence of the one set out above at [16]. Crennan consistent with the principles stated by Oliver J. The result at which their Lordships arrived is on one view inconsistent with those principles, but for present purposes it is sufficient to say that the facts of Ruxley Electronics and Construction Ltd v Forsyth, which their Lordships evidently saw as quite exceptional, are plainly distinguishable from those of the present appeal. Further, the Landlord correctly submitted that the Tenant's submission misconstrued what this Court said in Bellgrove v Eldridge. The "qualification" referred to in the passage quoted above31 that the "work undertaken be necessary to produce conformity" meant, in that case, apt to conform with the plans and specifications which had not been conformed with. Applied to this case, the expression "necessary to produce conformity" means "apt to bring about conformity between the foyer as it would become after the damages had been spent in rebuilding it and the foyer as it was at the start of the lease". And the Landlord also correctly submitted that the requirement of reasonableness did not mean that any excess over the amount recoverable on a diminution in value was unreasonable. The Tenant's submissions rested on a loose principle of "reasonableness" which would radically undercut the bargain which the innocent party had contracted for and make it very difficult to determine in any particular case on what basis damages would be assessed. That principle should not be accepted. If the benefit of the covenant in cl 2.13 were to be secured to the Landlord, it is necessary that reinstatement damages be paid, and it is not unreasonable for the Landlord to insist on their payment. For these reasons the orders of the Full Court are upheld. It is thus not necessary either to set out, or to consider the merits of, the Tenant's complaints32, because those complaints do not touch upon the validity of these reasons. It is desirable, however, to note briefly three matters which arose in argument. The Landlord's case under Lord Cairns' Act Counsel for the Landlord contended that "the simplest and most direct way of getting to the correct result in this case" was to apply Lord Cairns' Act, ie 31 See [17]. 32 See [11] above. Crennan s 38 of the Supreme Court Act 1986 (Vic)33. On a benevolent reading of the Amended Application, the Landlord claimed a mandatory injunction and in the alternative damages in lieu of it. A form of the proposed injunction was handed to the trial judge: he made criticisms of the claim for an injunction in oral argument, but did not deal with the matter in his judgment. The Landlord's Notice of Appeal to the Full Court did not complain about that, but after some brief argument in the Full Court a form of orders was produced seeking a mandatory injunction in the form handed to the trial judge, and in the alternative damages on a reinstatement basis. That claim for an injunction was briefly rejected by the majority in the Full Court as involving "all manner of difficulty". However, no Lord Cairns' Act claim for damages was discussed. The Tenant submitted that this Court should not entertain a Lord Cairns' Act damages claim on the ground that it had been abandoned. While it may be true to say that the claim was put more clearly at some times than others, it was advanced on a number of occasions, and hence the submission is questionable: but it is desirable not to deal with it, or with the Landlord's invocation of Lord Cairns' Act, for the following reasons. First, the Landlord does not seek a more favourable result than that secured by the orders made by the Full Court: those orders are to be upheld for the reasons given above, and hence there is no point in investigating the position under Lord Cairns' Act as distinct from the position at common law. Secondly, the Tenant raised various questions of some significance about the availability of Lord Cairns' Act damages in the present circumstances as a matter of law: because they were not debated in this Court it is undesirable to say anything about them. Betterment discount? In theory, if the Landlord employs the damages (with interest earned) after the lease expires in 2012 or 2017 on rebuilding the foyer, it would be better off than it would have been if cl 2.13 had not been breached. If it had not been breached, the Landlord would have retaken possession of the foyer which had 33 That section provides: "If the Court has jurisdiction to entertain an application for an injunction or specific performance, it may award damages in addition to, or in substitution for, an injunction or specific performance." The Tenant submitted that s 38 applied by virtue of the Judiciary Act 1903 (Cth), Crennan been subjected to 15 or 20 years' wear and tear so that, as the trial judge found, the foyer would probably have to be refurbished. Had the Tenant requested a discount in the damages awarded against it to take account of this "betterment" problem, its application, if backed by appropriate evidence, may have had merit. But although the matter was raised by the Landlord below, the Tenant made no such application at any of the three levels of hearing: its position was that no reinstatement damages were awardable, and it did not contend that if any were awardable they should be discounted to allow for betterment. Accordingly nothing more need be said on the subject. Date of assessment of damages Any reinstatement of the foyer by the Landlord would not take place until 2012 or 2017. Sometimes when damages are awarded in relation to loss arising from the need to spend money in future or from the suffering of a future incapacity, they are awarded on the basis of an estimate as to the amount required at a future date, and discounted down to present value, leaving the plaintiff to invest the damages and employ the increased sum at a future date. A second approach is to assess damages for breach of covenant as at the date of breach. In that event it would be normal to order that the damages carry interest from the date of breach. In this case a third approach was adopted. The damages figures selected by the Full Court were based on the Landlord's claim. The precise quantum of that claim was uncontroversial once reinstatement was accepted as the basis. The claim does not appear to have been based on 1997 costs, but on costs around the time of the trial, partly 2004 costs and partly 2006 costs. In other cases there may be controversies in relation to the date of assessment34. But in the circumstances of this case, the potential difficulties can be put aside because the Tenant took no point about them in relation to the claim for damages at common law for breach of cl 2.13. Orders The appeal must be dismissed with costs. 34 For instances when damages are not assessed as at the date of breach, see Johnson v Perez (1988) 166 CLR 351 at 355-356, 367, 371 and 380; [1988] HCA 64 and Radford v De Froberville [1977] 1 WLR 1262 at 1285; [1978] 1 All ER 33 at 55- |
HIGH COURT OF AUSTRALIA SZBEL AND APPELLANT MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS & ANOR RESPONDENTS SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 15 December 2006 ORDER 1. Appeal allowed with costs. 2. Set aside the orders of the Federal Court of Australia made on 9 February 2006 and, in their place, order: appeal allowed with costs; and set aside the orders of the Federal Magistrates Court of Australia made on 23 February 2005 and, in their place, order: a writ of certiorari issue, directed to the second respondent, to quash the decision of the second respondent made on 27 June 2003; and a writ of mandamus issue, directed to the second respondent, requiring the second respondent to determine according to law the application made on 5 June 2001 by the appellant for review of the decision of the delegate of the first respondent to refuse to grant the appellant a protection visa. On appeal from the Federal Court of Australia Representation N J Williams SC with R S Francois for the appellant (instructed by Legal Aid Commission of New South Wales) S J Gageler SC with S B Lloyd for the first respondent (instructed by Clayton Utz) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs Immigration – Refugees – Protection visa decision – Procedural fairness – Appellant claimed he feared persecution on basis of his conversion to Christianity if returned to Iran – Delegate of the first respondent refused to grant appellant protection visa because not satisfied of the genuineness of appellant's conversion to Christianity – Review by Refugee Review Tribunal – Appellant invited by Tribunal to give evidence relating to the issues arising in relation to the decision under review – Appellant gave evidence addressed to the delegate's concern regarding the genuineness of his conversion to Christianity – Tribunal affirmed the delegate's decision not to grant a protection visa on the basis that appellant's claims were not credible – Whether Tribunal failed to notify the appellant adequately of the issues to which its reasoning processes were directed – Whether failure of Tribunal to ask the appellant to address issues that it considered might be important amounted to a denial of procedural fairness. Words and phrases – "issues arising in relation to the decision under review", "procedural fairness". Migration Act 1958 (Cth), ss 424, 424A, 425. GLEESON CJ, KIRBY, HAYNE, CALLINAN AND HEYDON JJ. In 2001 the appellant was employed as a seaman on a ship of the Islamic Republic of Iran Shipping Line. On 7 April 2001, he jumped ship in Port Kembla and 10 days later he applied for a protection visa1. A delegate of the respondent Minister refused2 to grant the appellant a protection visa. The appellant sought3 review of that decision by the Refugee Review Tribunal4. The appellant had made a statutory declaration setting out the facts upon which he relied in support of his application for a protection visa. In that declaration he described why he had jumped ship. He said he feared for his safety because the captain of his ship knew of his interest in the Christian religion. The Tribunal wrote to the appellant telling him that it was unable to make a decision in his favour on the information he had supplied, and invited him to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review5. The appellant took up this invitation and appeared before the Tribunal in February 2003. The Tribunal member began proceedings by telling the appellant that on reading all of the material, she was not able to be satisfied that the appellant qualified for a protection visa. The Tribunal member then asked the appellant questions that elicited from him the same description of events as he had given in his statutory declaration. At no stage did the Tribunal challenge what the appellant said, express any reaction to what he said, or invite him to amplify any of the three particular aspects of the account he had given in his statutory declaration, and repeated in his evidence, which the Tribunal later found to be "implausible". Rather, the first that the appellant knew of the suggestion that his account of events was implausible in these three respects was when the Tribunal published its decision. 1 Migration Act 1958 (Cth), s 36. (References are to the Act in the form it took at the time of the Tribunal's decision.) Kirby Hayne Callinan Did the courts below err in holding that the Tribunal had not denied the appellant procedural fairness? Before considering what are the relevant principles to be applied in deciding that issue, it is necessary to say more about the course of decision-making in this case that lies behind the appeal to this Court. The appellant's application for a protection visa On 17 April 2001, the appellant's then migration agent sent the appellant's Application for a Protection (Class XA) visa to the Minister's Department. The agent asked the case officer "to withhold from making a decision" on the matter, for three weeks, so that the appellant's "statement of claims" could be translated. The agent said that the appellant believed that "he has been persecuted by the Iranian authorities due to his religious faith and imputed political opinion". The statement of claims to which the agent had referred was submitted, in the form of a statutory declaration by the appellant, on 2 May 2001. In that statutory declaration the appellant spoke of being invited in 1996, by a Filipino seaman serving on the same ship as the appellant, to attend a Christian service while the ship was in port at Dubai. He said that over the next four years the ship would often dock in Dubai and that, when it did, he would return to the church he had first attended in 1996 and that, as well, he "made every effort to attend Christian churches in the [other] countries we stopped at". The appellant described a series of events in December 2000 when he was seen by some members of his ship's crew coming out of a Christian church in an Argentinian port, confronted by them, taken back to his ship, and there berated by the senior Iranian officer. He said he "was allowed to leave with a warning that if [he] displayed any interest in Christianity, it would lead to the termination of [his] employment". In his statutory declaration the appellant described the events preceding his jumping ship in Australia. The events described were said to have occurred between 15 February 2001 (when he left his ship in its home port in Iran to travel home for some weeks) and 7 April 2001 (when he jumped ship in Port Kembla). The description was set out in 10 paragraphs of the statutory declaration occupying about three pages of double spaced typescript. The description contained three elements of present importance. It is these three elements of the appellant's account which the Tribunal was later to find were implausible. First, he described returning to his home for medical Kirby Hayne Callinan treatment in February 2001, meeting four of his friends (whom he named) and telling them of what he had learned about Christianity: "I told them what I had read in the Bible, and that I had spent some time in Argentina with other Christians. I told them about the other churches I had visited in Brazil and South Africa. I wanted to tell them everything I had learned, and how different it all was to Islam." His friends "indicated that they were disturbed by what [he] was telling them". They urged him "to renounce this heresy, and to embrace Islam". A few days later he began to receive threatening telephone calls at home, accusing him of apostasy. The second element of present importance in the appellant's account was that, after he had returned to his ship on 9 March 2001, but some weeks after it had sailed on 11 March 2001, he was called before the captain. His statutory declaration continued: "The captain had heard about the rumours that were circulating in my home town. One of the other crew members had informed him of the ostracism that I had experienced there. Once I heard this, I knew that I was in a lot of trouble. The captain began by demanding to know why I continued to behave like a deviant, and whether the rumours were true. He asked me if I was a Christian. I denied that I was a Christian. But again, the captain did not believe me. He told me that as soon as the ship returned to Iran I would be dealt with accordingly. Until we returned to Iran I would continue with my duties, but I would be supervised at every moment." The appellant described his increasing fear for his safety, after this interview, as the anger of the Iranian crew grew. "They [the crew] could not understand why the captain did not lock me up on the ship. They considered me a criminal, and a disgrace." The third element of present importance in the appellant's account of events concerned his being allowed off the ship on 6 April 2001 to visit a doctor in Port Kembla. Of this the appellant said: "The constant psychological and mental harassment on board the ship had made me very sick. I was in constant pain. I sought permission to get medical attention, and I believe that the Captain only allowed this out of fear that I may die on board of the ship and therefore become his Kirby Hayne Callinan responsibility. I was granted permission to seek medical attention in Australia. I knew that I had to find a way off the ship: I was petrified that I would be dead by the time the ship returned to Iran. The harassment by the crew was getting worse, and I was completely at the mercy of the other crew members who considered me an apostate." The delegate's decision The delegate was not satisfied that the appellant was a person to whom Australia had protection obligations under the Refugees Convention6. The delegate concluded that he was not satisfied that the appellant "has a genuine commitment to Christianity". In his reasons, the delegate dealt directly with only one of the three elements of present importance in the appellant's account of events preceding his jumping ship. The delegate noted that the appellant had gone ashore in Port Kembla on 6 April 2001. He said that the appellant's "decision to return to the vessel on 6 April 2001 is not consistent with the actions of a person who feared being seriously mistreated or even killed by crew angered by his alleged interest in Christianity". The delegate made no mention, in his reasons, of the appellant's account of telling friends in his home town of his interest in Christianity or of the appellant's account of being called before the captain to explain this interest. The Tribunal review – a further statutory declaration In support of his application to the Tribunal, for review of the delegate's refusal to grant him a protection visa, the appellant supplied a further statutory declaration. Given the basis on which the delegate had refused the appellant's application, it is unsurprising that this second declaration by the appellant was directed wholly to demonstrating the appellant's commitment to Christianity. The Tribunal review – the appellant's oral evidence As noted earlier, the Tribunal member began her interview of the appellant by saying that, on the material that had been supplied, she was not able to be satisfied that the appellant qualified for a protection visa. The appellant 6 Convention relating to the Status of Refugees done at Geneva on 28 July 1951, [1954] ATS 5, as amended by the Protocol relating to the Status of Refugees done at New York on 31 January 1967, [1973] ATS 37. Kirby Hayne Callinan then gave evidence on affirmation and called some witnesses to give evidence about his commitment to Christianity. The Tribunal asked the appellant questions about various matters including his meeting in his home town with friends, what had happened when he was called before the captain on board ship, and his going ashore for medical treatment in Port Kembla. In substance, his answers repeated what he had said about those matters in his first statutory declaration, but he amplified those statements in two important respects. First, when asked how the captain had any idea of his interest in Christianity, the appellant said, "[o]ne of the guys on the ship was from my own town." Secondly, when asked about leaving the ship for medical treatment, he said, "I was sent to medical with someone accompanying me and then I was returned to the ship." If accepted, the first of these answers explained how it was that what was said in a conversation over coffee with friends, in a home town hundreds of kilometres from where the appellant's ship had berthed in Iran, came to the attention of the ship's captain. If the second of the answers was accepted, it explained why the appellant had returned to his ship when he was allowed ashore at Port Kembla. The Tribunal's reasons In its reasons, the Tribunal described the appellant's claims as including that he had "jumped ship because the Iranian authorities had come to know of his interest and involvement in the Christian religion and he was in fear of punishment". This claim was not accepted "because the Tribunal considers that this claim is not credible". What were said to be "key aspects" of the appellant's claim lacked credibility. Three separate aspects were identified. First, there was the basis upon which the captain came to believe that the appellant was involved in Christianity. This was said "to be so tenuous as to be implausible". The reasons continued: "The Tribunal considers it implausible that a personal conversation while the [appellant] is in port for ten days would attract the attention or interest of the Hezbollah and would become public knowledge such that a crew member from the same town had knowledge of it." Secondly, the Tribunal dealt with the appellant's description of his confrontation with the captain in the following way: Kirby Hayne Callinan "Further the Tribunal considers it implausible that the Captain of the ship would accuse the [appellant] of apostasy or even involvement in Christianity on the strength of comments from a crew member based on the [appellant's] personal conversations when in port, particularly given that the [appellant] on his own evidence had not spoken of or engaged in Christian activities on board the ship." Thirdly, the Tribunal said that it considered "that the [appellant's] freedom of movement when the ship was in dock belies the [appellant's] claim that the crew 'considered [him] a criminal' ... and the claim as stated in the hearing that the Captain was intending to hand him to the authorities when the ship returned to Iran". The Tribunal expressed the view that "if the Captain was intending to hand the [appellant] over to the authorities in Iran and had informed the [appellant] of his intention then more stringent measures would have been set in place in respect to the [appellant's] movement when the ship was in dock". Presumably, the Tribunal had in mind steps of the kind to which the appellant had referred when he spoke of the crew not understanding "why the captain did not lock me up on the ship". These three points, "[c]onsidered collectively", led the Tribunal "to reject the [appellant's] claim that the Captain of the ship was intending to hand the [appellant] over to the authorities of Iran on the ship's return to Iran because of the [appellant's] religious inclinations". It was on this basis that the Tribunal concluded that it did not accept that the appellant "was considered by the Iranian authorities to be an apostate or actively involved in Christianity prior to his arrival in Australia". The detailed exposure by the Tribunal of its reasoning processes was not criticised and represented in itself a praiseworthy method of fulfilling the duty to give reasons. The question is whether the issues to which those reasoning processes were directed had been adequately notified to the appellant. Proceedings in the courts below The appellant applied to the Federal Magistrates Court for relief under s 39B of the Judiciary Act 1903 (Cth). By his amended application he alleged, among other things, that the Tribunal had denied him procedural fairness by not putting to him "the critical factors upon which its decision was likely to turn". The particulars given of those factors referred to the three matters identified earlier in these reasons. The particulars described those matters in the following terms: Kirby Hayne Callinan it [the Tribunal] believed it was not possible for a personal conversation between friends in a small town to become known within 10 days to the Hezbollah or other town members; it believed an Iranian ship captain would not act on the word of another crew member about that personal conversation and accuse the [appellant] of apostasy; and it believed an Iranian ship captain would take more stringent measures with respect to the [appellant] if he intended to hand the [appellant] over to the authorities for questioning than those claimed by the [appellant]." The Federal Magistrate the appellant's application. In respect of the ground alleging want of procedural fairness, the Magistrate said that he was satisfied that the three particulars given by the appellant did "no more than articulate the Tribunal's reasoning processes by which it came to the conclusion that it did about the [appellant's] credit" and that, conformably with the decision of the Full Court of the Federal Court in Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd7, the Tribunal's reasoning processes need not be revealed to the appellant. It is not necessary to notice the reasons given for disposing of the other grounds for review that were advanced by the appellant. On appeal to the Federal Court of Australia, a single judge of that Court, Graham J, exercising the appellate jurisdiction of the Court, dismissed the appellant's appeal. Again, several grounds were advanced, but it is necessary to deal only with the ground alleging want of procedural fairness. Of that ground his Honour said8 that: "A decision-maker such as the Tribunal was obliged to advise a person such as the Appellant of any adverse conclusion which would not obviously be open on However, such a decision-maker would not be otherwise obliged to expose his or her mental processes or provisional views to comment before making the decision in question." the known material. (1994) 49 FCR 576. 8 SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 59 at [45]. Kirby Hayne Callinan Procedural fairness Counsel for the respondent Minister correctly submitted, at the outset of his argument of the appeal to this Court, that "what is required by procedural fairness is a fair hearing, not a fair outcome". As Brennan J said, in Attorney-General (NSW) v Quin9: "The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone." It is, therefore, not to the point to ask whether the Tribunal's factual conclusions were right. The relevant question is about the Tribunal's processes, not its actual decision. It has long been established that the statutory framework within which a decision-maker exercises statutory power is of critical importance when considering what procedural fairness requires. It is also clear that the particular content to be given to the requirement to accord procedural fairness will depend upon the facts and circumstances of the particular case. As Kitto J said in Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation10: "[T]he books are full of cases which illustrate both the impossibility of laying down a universally valid test by which to ascertain what may constitute such an opportunity ['to correct or contradict any relevant statement prejudicial infinite variety of circumstances that may exist, and the necessity of allowing full effect in every case to the particular statutory framework within which the proceeding takes place." (emphasis added) their view'11] the (1990) 170 CLR 1 at 35-36. 10 (1963) 113 CLR 475 at 503-504. 11 Local Government Board v Arlidge [1915] AC 120 at 133. Kirby Hayne Callinan In the present case, attention in argument, both in this Court and in the courts below, was directed more to the particular circumstances of the case than to the relevant statutory framework, but it is necessary to notice some aspects of that framework. Unless that is done, the argument proceeds at too high a level of abstraction and may proceed upon assumptions that are ill founded. First, the Migration Act 1958 (Cth) ("the Act") obliged12 the Tribunal to "invite the applicant to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review". The Tribunal was not bound to extend such an invitation to appear, if it considered that "it should decide the review in the applicant's favour on the basis of the material before it"13. Secondly, the Tribunal the Act empowered14 to seek additional information that it considered relevant, and obliged15 the Tribunal to give to an applicant particulars of certain information that the Tribunal considered would be the reason, or a part of the reason, for affirming the decision under review. That latter obligation did not apply16 to information "that is not specifically about the applicant or another person and is just about a class of persons of which the applicant or other person is a member". No submission was made on behalf of either the appellant or the Minister that the existence or content of the obligation to accord procedural fairness was directly affected by any provision of the Act. Rather, the argument proceeded, for the most part, by reference to what had been said by the Full Court of the Federal Court in Alphaone17. The Full Court (Northrop, Miles and French JJ) said18: 13 s 425(2)(a). 15 s 424A(1). 16 s 424A(3)(a). 17 (1994) 49 FCR 576. 18 (1994) 49 FCR 576 at 591-592. Kirby Hayne Callinan "Where the exercise of a statutory power attracts the requirement for procedural fairness, a person likely to be affected by the decision is entitled to put information and submissions to the decision-maker in support of an outcome that supports his or her interests. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decision-maker. It also extends to require the decision-maker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decision-maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decision-maker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question." (emphasis added) Particular attention was directed in argument in this Court, as it had been in the courts below, to the Tribunal's conclusion that the three identified elements of the appellant's story were not "plausible". Was that a conclusion "which would not obviously be open on the known material"? Or was it no more than a part of the "mental processes" by which the Tribunal arrived at its decision? Stated in this way, the argument seeks to elucidate the content of the requirements of procedural fairness by setting up a dichotomy. There are two reasons to exercise considerable care in approaching the problem in that way. First, it is far from clear that the two categories that are identified (conclusions not obviously open on the known material, and mental processes of decision-making) encompass all possible kinds of case that may fall for consideration. Secondly, there is a very real risk that focusing upon these two categories will distract attention from the fundamental principles that are engaged. In Alphaone the Full Court rightly said19: "It is a fundamental principle that where the rules of procedural fairness apply to a decision-making process, the party liable to be directly affected by the decision is to be given the opportunity of being heard. That would ordinarily require the party affected to be given the 19 (1994) 49 FCR 576 at 590-591. Kirby Hayne Callinan opportunity of ascertaining the relevant issues and to be informed of the nature and content of adverse material." (emphasis added) The Act defines the nature of the opportunity to be heard that is to be given to an applicant for review by the Tribunal. The applicant is to be invited "to give evidence and present arguments relating to the issues arising in relation to the decision under review"20. The reference to "the issues arising in relation to the decision under review" is important. Those issues will not be sufficiently identified in every case by describing them simply as whether the applicant is entitled to a protection visa. The statutory language "arising in relation to the decision under review" is more particular. The issues arising in relation to a decision under review are to be identified having regard not only to the fact that the Tribunal may exercise21 all the powers and discretions conferred by the Act on the original decision-maker (here, the Minister's delegate), but also to the fact that the Tribunal is to review that particular decision, for which the decision-maker will have given reasons. The Tribunal is not confined to whatever may have been the issues that the delegate considered. The issues that arise in relation to the decision are to be identified by the Tribunal. But if the Tribunal takes no step to identify some issue other than those that the delegate considered dispositive, and does not tell the applicant what that other issue is, the applicant is entitled to assume that the issues the delegate considered dispositive are "the issues arising in relation to the decision under review". That is why the point at which to begin the identification of issues arising in relation to the decision under review will usually be the reasons given for that decision. And unless some other additional issues are identified by the Tribunal (as they may be), it would ordinarily follow that, on review by the Tribunal, the issues arising in relation to the decision under review would be those which the original decision-maker identified as determinative against the applicant. It is also important to recognise that the invitation to an applicant to appear before the Tribunal to give evidence and make submissions is an invitation that need not be extended if the Tribunal considers that it should decide the review in the applicant's favour. Ordinarily then, as was the case here, the 20 s 425(1) (emphasis added). Kirby Hayne Callinan Tribunal will begin its interview of an applicant who has accepted the Tribunal's invitation to appear, knowing that it is not persuaded by the material already before it to decide the review in the applicant's favour. That lack of persuasion may be based on particular questions the Tribunal has about specific aspects of the material already before it; it may be based on nothing more particular than a general unease about the veracity of what is revealed in that material. But unless the Tribunal tells the applicant something different, the applicant would be entitled to assume that the reasons given by the delegate for refusing to grant the application will identify the issues that arise in relation to that decision. That this is the consequence of the statutory scheme can be illustrated by taking a simple example. Suppose (as was the case here) the delegate concludes that the applicant for a protection visa is a national of a particular country (here, Iran). Absent any warning to the contrary from the Tribunal, there would be no issue in the Tribunal about nationality that could be described as an issue arising in relation to the decision under review. If the Tribunal invited the applicant to appear, said nothing about any possible doubt about the applicant's nationality, and then decided the review on the basis that the applicant was not a national of the country claimed, there would not have been compliance with s 425(1); the applicant would not have been accorded procedural fairness. When it is said, in the present matter, that the appellant was not put on notice by the Tribunal that his account of certain events would be rejected as "implausible", and that this conclusion was "not obviously ... open on the known material", the focus of the contention must fall upon what was "obviously ... open" in the Tribunal's review. That can be identified only by having regard to "the issues arising in relation to the decision under review". It is those issues which will determine whether rejection of critical aspects of an applicant's account of events was "obviously ... open on the known material". If the issues on the review of the delegate's decision by the Tribunal are identified no more particularly than by the question "is the applicant entitled to a protection visa?", rejection of some, or all, aspects of his account of the past events said to found his fears of persecution would self-evidently be a conclusion open to the Tribunal. The conclusion would be open because every aspect of the applicant's claim would be in issue in the Tribunal's review of the delegate's decision. But if the issues are to be identified more particularly, other questions arise. Kirby Hayne Callinan More than once it has been said22 that the proceedings in the Tribunal are not adversarial but inquisitorial in their general character. There is no joinder of issues between parties, and it is for the applicant for a protection visa to establish the claims that are made. As the Tribunal recorded in its reasons in this matter, however, that does not mean that it is useful to speak in terms of onus of proof23. And although there is no joinder of issues, the Act assumes that issues can be identified as arising in relation to the decision under review. While those issues may extend to any and every aspect of an applicant's claim to a protection visa, they need not. If it had been intended that the Tribunal should consider afresh, in every case, all possible issues presented by an applicant's claim, it would not be apt for the Act to describe the Tribunal's task as conducting a "review", and it would not be apt to speak, as the Act does, of the issues that arise in relation to the decision under review. The appellant's complaint in the present matter can be expressed in different ways. It could be described as being that the Tribunal acted upon unstated assumptions about the nature of Iranian society, when it decided that three aspects of his account were implausible. So, to take one of the three critical issues, when the Tribunal concluded (as it did) that it was implausible that what was said in a conversation between friends over coffee would come to the attention of a fellow member of the appellant's crew and thus be conveyed to the ship's captain, the Tribunal assumed that matters of religious interest would not ordinarily be the subject of gossip in a town in such a way as to come to the attention of a fellow crew member. The appellant says that he had no notice that the validity or content of the cultural and other assumptions that underpinned his account were in issue. But closer examination reveals that the appellant's complaint is more deep-seated than a complaint about the making of unstated cultural assumptions. It is that he was not on notice that his account of how his ship's captain came to know of his interest in Christianity, and his account of the captain's reaction to that knowledge, were issues arising in relation to the decision under review. 22 Abebe v The Commonwealth (1999) 197 CLR 510 at 576 [187]; Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S154/2002 (2003) 77 ALJR 1909 at 1918 [57]; 201 ALR 437 at 450. 23 cf McDonald v Director-General of Social Security (1984) 1 FCR 354. Kirby Hayne Callinan The delegate had not based his decision on either of these aspects of the matter. Nothing in the delegate's reasons for decision indicated that these aspects of his account were in issue. And the Tribunal did not identify these aspects of his account as important issues. The Tribunal did not challenge what the appellant said. It did not say anything to him that would have revealed to him that these were live issues. Based on what the delegate had decided, the appellant would, and should, have understood the central and determinative question on the review to be the nature and extent of his Christian commitment. Nothing the Tribunal said or did added to the issues that arose on the review. Conclusion: entitlement to relief The Tribunal did not accord the appellant procedural fairness. The Tribunal did not give the appellant a sufficient opportunity to give evidence, or make submissions, about what turned out to be two of the three determinative issues arising in relation to the decision under review. That conclusion is decisive of the present appeal. It is as well, however, to say something more about the third aspect of the appellant's account which the Tribunal considered to be determinative. That was his being allowed ashore to obtain medical treatment before he jumped ship. The delegate had concluded that the appellant's returning to his ship was not consistent with the fear which the appellant said he then held for his safety. It followed that what were the circumstances surrounding the appellant's going ashore on this occasion was an issue arising on the review by the Tribunal. Three further general points should be made. First, there may well be cases, perhaps many cases, where either the delegate's decision, or the Tribunal's statements or questions during a hearing, sufficiently indicate to an applicant that everything he or she says in support of the application is in issue. That indication may be given in many ways. It is not necessary (and often would be inappropriate) for the Tribunal to put to an applicant, in so many words, that he or she is lying, that he or she may not be accepted as a witness of truth, or that he or she may be thought to be embellishing the account that is given of certain events. The proceedings are not adversarial and the Tribunal is not, and is not to adopt the position of, a contradictor. But where, as here, there are specific aspects of an applicant's account, that the Tribunal considers may be important to the decision and may be open to doubt, the Tribunal must at least ask the applicant to expand upon those aspects of the account and ask the applicant to explain why the account should be accepted. Kirby Hayne Callinan Secondly, as Lord Diplock said in F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry24: "the rules of natural justice do not require the decision maker to disclose what he is minded to decide so that the parties may have a further opportunity of criticising his mental processes before he reaches a final decision. If this were a rule of natural justice only the most talkative of judges would satisfy it and trial by jury would have to be abolished." Procedural fairness does not require the Tribunal to give an applicant a running commentary upon what it thinks about the evidence that is given. On the contrary, to adopt such a course would be likely to run a serious risk of conveying an impression of prejudgment. Finally, even if the issues that arise in relation to the decision under review are properly identified to the applicant, there may yet be cases which would yield to analysis in the terms identified by the Full Court of the Federal Court in Alphaone. It would neither be necessary nor appropriate to now foreclose that possibility. In the light of the conclusions reached it is not necessary to consider the larger issues debated in oral argument of the appeal about what, if any, guidance may be had from the course of decisions in the Second Circuit Court of Appeals in the United States concerning plausibility findings in refugee proceedings25. Determination of those issues would require close examination of the legislative and regulatory premises that underpin that course of decisions. However, nothing in the conclusions just stated would appear to be inconsistent with the general approach taken in those decisions. To the contrary, they would appear to conform to the principles we have expressed in the context of the Australian legislation. 24 [1975] AC 295 at 369. 25 See, for example, Ming Shi Xue v Board of Immigration Appeals 439 F 3d 111 (2006); Zhi Wei Pang v Bureau of Citizenship and Immigration Services 448 F 3d Kirby Hayne Callinan Orders For these reasons the appeal should be allowed with costs and the orders of Graham J made on 9 February 2006 set aside. In their place there should be orders that (a) the appeal to that Court is allowed with costs; and (b) the orders of the Federal Magistrates Court made on 23 February 2005 are set aside. In place of the orders of the Federal Magistrates Court there should be an order that a writ of certiorari issue to quash the decision of the Refugee Review Tribunal made on 27 June 2003 and an order that a writ of mandamus issue requiring the second respondent to determine according to law the application made on 5 June 2001 by the appellant for review of the decision of a delegate of the first respondent. |
HIGH COURT OF AUSTRALIA AJS AND THE QUEEN APPELLANT RESPONDENT AJS v The Queen [2007] HCA 27 13 June 2007 ORDER Appeal allowed. Set aside paragraph 4 of the orders of the Court of Appeal of the Supreme Court of Victoria made on 7 December 2005 and in its place order that: judgment and verdict of acquittal be entered in respect of the charge of incest contrary to s 44(1) of the Crimes Act 1958 (Vic); there be a new trial limited to the offence of taking part in an indecent act contrary to s 47(1) of the Crimes Act 1958 (Vic) with the person named in the presentment filed on 3 February 2004. On appeal from the Supreme Court of Victoria Representation C B Boyce with L C Carter for the appellant (instructed by Victoria Legal Aid) J D McArdle QC with C M Quinn for the respondent (instructed by Solicitor for Public Prosecutions (Vic)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS AJS v The Queen Criminal law – Verdicts – Statutory alternative verdicts – Appellant convicted by jury of one count of incest – Because of verdict on count of incest jury was not required to consider statutory alternative verdict of indecent act with a child aged under 16 – Court of Appeal quashed the conviction for insufficient evidence and ordered a new trial without specifying what charge or charges were to be tried – Whether the Court of Appeal should have entered a verdict of acquittal on the count of incest. Criminal law – Verdicts – Appellate jurisdiction – Whether the Court of Appeal's jurisdiction pursuant to s 568(2) of the Crimes Act 1958 (Vic) either to enter a verdict of acquittal or order a new trial should be read with the provisions of ss 421 and 425 regulating alternative verdicts. Criminal law – Verdicts – Whether entry of verdict of acquittal and order for new trial on lesser alternative count engage principles of estoppel or preclusion. Criminal law – Trials – Evidence – Whether, following an acquittal and order for a new trial on a lesser alternative count, the jury in the new trial should be informed about that earlier acquittal. Crimes Act 1958 (Vic), ss 421, 425 and 568(2). GLEESON CJ, HAYNE, HEYDON AND CRENNAN JJ. The appellant was convicted at his trial on a charge of incest, contrary to s 44(1) of the Crimes Act 1958 (Vic), in that he took part in an act of sexual penetration with a person whom he knew to be his lineal descendant. The presentment contained only the count of incest and alleged that the appellant had digitally penetrated the complainant. On the appellant's appeal against his conviction, the Court of Appeal held1 that "it was not open, on the evidence given by the complainant as to the issue of sexual penetration, for the jury reasonably to conclude beyond reasonable doubt that the [appellant] introduced his finger to any extent into the complainant's vagina". The Court ordered that the conviction should be quashed and there be a new trial. By special leave, the appellant now appeals to this Court. He contends that the Court of Appeal should have directed the entry of judgment and verdict of acquittal on the charge of incest. He does not dispute that it would then be open for him to be tried for an offence of committing an indecent act with a child under the age of 16, contrary to s 47(1) of the Crimes Act. Although not expressly charged in the presentment, that offence of committing an indecent act had been left for the consideration of the jury at the first trial, as a statutory alternative to the offence under s 44(1). That jury could have found him guilty of committing an indecent act, if they had not returned a verdict of guilty to the charge of incest. Neither before nor after the Court of Appeal made its orders did the appellant make any submission to that Court about the form of the orders to be made if his appeal succeeded. The consequence is that the Court of Appeal has not expressly considered the issues that now arise. It is for the appellant to formulate the precise orders which are sought in an appeal. If that is done, any controversy about the form of the orders can be identified, and arguments advanced that will assist the Court to resolve that controversy. If, after publication of reasons and pronouncement of orders, some issue emerges about the form of those orders, application should be made, before the order is perfected, to relist the matter for further argument about the form that the orders should take. These steps not having been taken in this matter, this Court must deal with the matter without the benefit of the Court of Appeal's consideration of the issues that have been debated. The Director of Public Prosecutions accepts that he should not prosecute the appellant again on the charge of incest which was the subject of the first trial 1 R v AJS (2005) 12 VR 563 at 571 [38]. Hayne Crennan and the appeal to the Court of Appeal. He has undertaken not to do so. He submits that, nonetheless, the Court of Appeal should not have directed the entry of judgment and verdict of acquittal on that count. This submission should be rejected. The charge of incest preferred against the appellant, having been prosecuted at trial and found by the Court of Appeal not to be sustainable, should be finally determined. The conclusion reached by the Court of Appeal required that that charge be determined by entry of judgment and verdict of acquittal. The order for a new trial should stand but, for the avoidance of doubt, it should be amended to provide that a new trial be had, limited to the offence of committing an indecent act contrary to s 47(1) of the Crimes Act. Directing the entry of judgment and verdict of acquittal would not engage principles of estoppel or preclusion that fall for consideration where there is a double prosecution of an accused, either in the one proceeding2 or in successive proceedings3. A new trial of the appellant, limited to a charge of committing an indecent act, would not be a second or subsequent prosecution. It would be the continuation of so much of the original prosecution as remained alive after the Court of Appeal's determination of the appeal. In particular, the entry of judgment and verdict of acquittal on the count of incest would not found a plea of autrefois acquit in answer to the statutory alternative offence, any more than a jury's verdict of not guilty to the count of incest, at the first trial, would have precluded the jury from going on to consider that alternative offence. It is convenient to treat the appeal as requiring consideration of three issues. They may be described as the significance of the availability of alternative verdicts at the first trial, the scope of the appellate jurisdiction of the Court of Appeal, and the consequences of an acquittal at a new trial of the alternative offence. Alternative verdicts Consideration of the present matter must begin by reference to those provisions of the Crimes Act allowing for the return of alternative verdicts. Section 421(2) provides that: "Where, on a person's trial on indictment or presentment for any offence except treason or murder, the jury find him not guilty of the offence 2 Pearce v The Queen (1998) 194 CLR 610. Island Maritime Ltd v Filipowski (2006) 226 CLR 328. Hayne Crennan specifically charged therein, but the allegations in the indictment or presentment amount to or include (expressly or by necessary implication) an allegation of another offence falling within the jurisdiction of the court of trial, the jury may find him guilty of that other offence." Sub-section (3) of that section provides that any allegation of an offence shall be taken as including an allegation of an attempt to commit that offence. Sub-section (4) permits the judge, if "the judge considers that in the interest of justice it is expedient for the judge to do so", to order that the guilt of the person charged of all or any of the other offences of which the person may by virtue of s 421 be found guilty, not be determined at the trial. It was not suggested that s 421(4) should have been engaged in this matter. Section 422 of the Crimes Act deals with the procedure that is to be followed where the facts proved on trial disclose an offence more serious than the offence that is charged. Again, those provisions are not engaged in the present matter. Specific provision is made for alternative verdicts for certain charges of sexual offences. Section 425(3) provides that: "If on the trial of a person charged with an offence against section 44 or 45(1) the jury are not satisfied that he or she is guilty of the offence charged or of an attempt to commit the offence charged but are satisfied that he or she is guilty of – assault with intent to commit the offence charged; or an offence against section 47(1) (indecent act with child under the age of 16); or an offence against section 18 (causing injury intentionally or recklessly) – the jury may acquit the accused of the offence charged and find him or her guilty of whichever of those offences they are satisfied that he or she is guilty and he or she is liable to punishment accordingly." Section 425(4) provides that the section "does not restrict the operation of section 421 or 422". It follows then, that at the appellant's trial, if the jury had not concluded that he should be found guilty of the offence of incest, contrary to s 44(1), the jury would have been obliged to return its verdict in respect of the statutory Hayne Crennan alternative of an offence against s 47(1) (indecent act with child under the age of The obligation to consider that alternative verdict would have arisen from the combined operation of ss 421 and 425. Section 425(3) was engaged because no order was made under s 421(4) that the appellant's guilt of the alternative offence not be determined at the trial of the offence of incest. And, although s 425(3) was the specific provision which regulated the availability of an alternative verdict in this case, it is important to recognise that this operation of s 425(3) was a particular species of the genus of cases regulated by s 421(2): cases in which "the allegations in the indictment or presentment amount to or include (expressly or by necessary implication) an allegation of another offence falling within the jurisdiction of the court of trial". The allegation of digital penetration of the lineal descendant of the appellant (a descendant who, at the time of the alleged offence was aged less than 16 years) necessarily included an allegation of committing an indecent act with the complainant. The appellate jurisdiction of the Court of Appeal It is next necessary to consider the provisions regulating the appellate jurisdiction of the Court of Appeal that were engaged in this matter. The Court of Appeal concluded that the verdict of the jury on the count of incest "should be set aside on the ground that it is unreasonable or cannot be supported having regard to the evidence"4. The Court's powers in that event are described in "Subject to the special provisions of this Part the Court of Appeal shall, if it allows an appeal against conviction, quash the conviction and either direct a judgment and verdict of acquittal to be entered or direct a new trial to be had." (emphasis added) Neither the appellant nor the respondent contended that any of the "special provisions" of Pt 6 of the Crimes Act was engaged. The respondent emphasised the disjunction between the alternatives of directing entry of judgment and verdict of acquittal, on the one hand, and directing a new trial, on the other. The respondent submitted that if the Court of Appeal allows an appeal against conviction and quashes that conviction, the Court must then choose between directing a judgment and verdict of acquittal, or 4 Crimes Act 1958 (Vic), s 568(1). Hayne Crennan directing a new trial. And, so the argument proceeded, that choice was to be made in respect of the particular charge the conviction for which was quashed. Thus, in the present case, it was said that having decided to quash the appellant's conviction for incest, the Court of Appeal was obliged to choose between directing a judgment and verdict of acquittal on the charge of incest, or directing that a new trial of that charge be had. There are several difficulties in the way of accepting this construction of the provision. First, the submission treats the conviction for a particular offence as the fulcrum about which the other elements of the provision turn. That conviction is said to be the only proper subject of the Court of Appeal's orders to quash, to direct entry of judgment and verdict of acquittal or to direct a new trial. This construction does not give due weight to the statutory context in which s 568(2) operates and its legislative predecessors5 operated. That context includes, and always has included, provisions permitting the return of alternative verdicts. The provisions for alternative verdicts made by the Victorian criminal legislation in force when the Criminal Appeal Act 1914 (Vic) was first enacted6 did not include a general provision cast in the terms now found in s 421(2), but provisions for verdicts on offences alternative to those "specifically charged"7 have always formed a part of the context within which the appellate provision for ordering a new trial has had to operate. In that context, it would be wrong to read the power to order a new trial as confined to ordering a new trial for the offence that was the subject of the appellant's conviction and subsequent quashing on appeal. The power to order a new trial extends to ordering a new trial for an offence for which the appellant could have been convicted at the first trial. And that is what this Court ordered in 5 The history of the provisions is traced in R v Wilson and Grimwade [1995] 1 VR 163 at 182. The provisions of s 568(1), (2) and (4) of the Crimes Act can be traced to s 4 of the Criminal Appeal Act 1907 (UK) but the provision in s 568(2) permitting the Court, as an alternative, to direct a new trial was an innovation added by s 4(2) of the Criminal Appeal Act 1914 (Vic). 6 Conveniently gathered together in the consolidating legislation of 1915: Crimes Act 1915 (Vic), ss 452-465. Hayne Crennan the Victorian case of Kelly v The King8 and the Full Court of the Supreme Court of Victoria ordered in R v Miller9. Secondly, the respondent's construction of the provision leads to an awkward, if not an absurd, result. The respondent accepted that when, as here, the conviction in question was quashed because it was not open to the jury to be persuaded beyond reasonable doubt of the accused's guilt of that offence, it would be an abuse of process for the prosecution to attempt again to secure the accused's conviction for that offence. It follows, if the respondent's construction of the provision were to be accepted, that to direct a new trial in circumstances like the present would be to direct an abuse of process, for the Court could only direct a new trial on the charge of incest. This is reason enough to reject the respondent's construction of the provision. Thirdly, if the construction advanced by the respondent is right, there would be no order or other judicial act of the Court of Appeal that would support the presentation of the accused person for trial on an indictment directly alleging a charge that was a statutory alternative to the offence the conviction for which the Court of Appeal quashed. The absence of such an order may then be said to have substantive consequences. In particular, filing a new presentment alleging the statutory alternative offence would, or at least may, then raise double jeopardy questions of the kind considered in Island Maritime Ltd v Filipowski10. The resolution of those questions would turn upon whether the further presentment was to be treated as constituting the institution of a second or fresh proceeding separate from the proceeding which, on the hypothesis advanced by the respondent, would have been brought to an end by the orders of the Court of Appeal quashing the conviction. Consequences of acquittal for incest at new trial on alternative count Argument was directed by both parties to what would follow from an order by the Court of Appeal directing that judgment and verdict of acquittal be entered on the count of incest preferred against the appellant. Much of the argument on this aspect of the matter proceeded by reference to general propositions articulated at a level of abstraction divorced from the particular (1923) 32 CLR 509. See also Callaghan v The Queen (1952) 87 CLR 115 at 125. [1951] VLR 346. 10 (2006) 226 CLR 328. Hayne Crennan circumstances of this case. Thus, reference was made to the incontrovertibility of a verdict of acquittal11 and to the necessity for a person who has been charged with and acquitted of an offence to have the full benefit of that acquittal12. And particular reference was made to the Court's decisions in Pearce v The Queen13 and Island Maritime14 concerning questions of double jeopardy. But the issues that now arise for consideration are more particular than the statements of general principle that have been mentioned, and differ in important respects from the questions of double jeopardy considered in Pearce and Island Maritime. The immediate question is what order a court of appeal should make in disposing of an appeal against conviction where the count charged was not made out and a lesser, statutory alternative offence has never been considered by a jury. No question of double jeopardy arises in the present matter. The proceedings commenced by the prosecution against the appellant were, as the Court of Appeal's orders recognised, only partly determined by that Court's disposition of the appeal. The second of the offences now under consideration (the offence of committing an indecent act) was a statutory alternative to the first. There has been and would be no double prosecution of the kind considered in Pearce. In Pearce, the prosecution sought and obtained convictions for two offences charged in the one indictment. Further, unlike Island Maritime, there would be no separate institution of a second prosecution. In this case the prosecution does not seek to institute new and different proceedings against the appellant after the final determination (against the prosecution) of earlier proceedings. The charge of incest preferred against the appellant has now been finally resolved in his favour. He is entitled to the entry of judgment and verdict of acquittal of that offence. But the other, lesser, statutory alternative offence of committing an indecent act put in issue by the presentment charging the appellant with incest has not been determined by the Court of Appeal and remains unresolved. In Murrell15, the Court of Criminal Appeal of New South Wales considered issues generally similar to those that arise in the present matter. In 11 Rogers v The Queen (1994) 181 CLR 251; Island Maritime (2006) 226 CLR 328. 12 R v Storey (1978) 140 CLR 364. 13 (1998) 194 CLR 610. 14 (2006) 226 CLR 328. 15 (2001) 123 A Crim R 54. Hayne Crennan Murrell, the Court concluded16 that a properly instructed jury would have to entertain a reasonable doubt about the appellant's guilt of murder. The Court quashed the appellant's conviction for murder but ordered a new trial generally. The Court considered whether to direct entry of a verdict of acquittal for murder and direct a new trial for manslaughter alone but declined to do so on the basis17 that "[i]t would be prudent to avoid any residual question of autrefois acquit arising". For the reasons given earlier, that course should not be followed in the present matter. No question of double jeopardy arises. Whether there may be said to be considerations peculiar to the law of homicide which would support the particular conclusions reached in Murrell was not examined in this appeal and need not be decided. The appellant submitted that it may be necessary to explain to the jury at his trial for the offence of committing an indecent act why he does not then stand charged with an offence of incest. The appellant suggested that this necessity would arise because the complainant will likely give evidence of digital penetration. If that evidence were to be given, it is not immediately apparent why the jury would have to be told anything about an offence of incest. But if, for whatever reason, either or both of the parties at a new trial sought to broach that subject, there appears to be no reason why the jury could not be told that the prosecution accepts that the evidence is not sufficient to establish any intentional penetration. There may be a more general problem, common in new trials, presented by a witness (in this case the complainant) giving an account in evidence that is said to differ from evidence given in the earlier proceeding. It was in this respect that the appellant submitted that principles established in cases like Storey18 and Rogers v The Queen19 would be engaged. The appellant submitted that, consistent with Storey and Rogers, it would be necessary to explain to the jury that, in considering the complainant's evidence, the appellant should have the "full benefit"20 of his acquittal of the charge of incest. 16 (2001) 123 A Crim R 54 at 62 [33]. 17 (2001) 123 A Crim R 54 at 64 [42]. 18 (1978) 140 CLR 364. 19 (1994) 181 CLR 251. 20 Storey (1978) 140 CLR 364 at 372 per Barwick CJ. Hayne Crennan When an accused person has been acquitted of a charge by verdict of a jury, it will not be possible to know why the jury reached its verdict. In those circumstances, the reference to the person having the "full benefit" of an acquittal may reflect the opacity of that verdict. But it is important to recognise that the references made to the "full benefit" of an acquittal are no more than a particular restatement of a more fundamental principle. That principle is that the verdict, as recorded in the court's record, is not to be controverted21. And where, as here, the reasons for quashing the conviction are known, the reasons for directing entry of judgment and verdict of acquittal are known. There would be a controverting of that record only if the jury were to be left in a position where in the course of considering whether the appellant had committed an indecent act they might consider whether there had been, or may have been, an act of digital penetration of the complainant. A concession by the prosecution that the evidence may not be understood by the jury as establishing that there had been that penetration, or in default of such a concession, a direction to that effect, would give the appellant the full benefit of the verdict to which he was and is now entitled in respect of the count of incest. While the exact content of directions to the jury must depend upon the way in which the real issues in the case emerge at trial, it is not immediately apparent why it would be necessary to explain to the jury the reason that the conclusion that there had been digital penetration is not open. If, as may be expected, the credit of the complainant is taxed with her earlier accounts of the events giving rise to the prosecution, that would be reason enough for the jury to be told that they must proceed on the footing that there was no digital penetration. Further explanation of why they must proceed on that basis would very probably not be necessary. In particular, to tell the jury of an earlier trial, conviction and successful appeal would, at first sight, appear to introduce unnecessary and distracting complexity to the trial of the offence of committing an indecent act. Further, it would seem unlikely that it would be necessary or desirable to permit any evidence to be led about the appellant's acquittal on the charge of incest. The critical point that would have to be made, if the complainant gave evidence of penetration, is that the jury may not conclude that penetration occurred. If reference were to be made to the appellant having been prosecuted for incest (and as earlier indicated, it is not apparent why that should be so) it 21 Pearce (1998) 194 CLR 610 at 627-628 [60]-[61] per Gummow J. Hayne Crennan would be necessary to tell the jury only that he had been acquitted of that offence and that they must accept that he did not digitally penetrate the complainant. Conclusion and Orders The appeal should be allowed. Paragraph 4 of the orders of the Court of Appeal of the Supreme Court of Victoria made on 7 December 2005 should be set aside and in its place there should be orders directing that judgment and verdict of acquittal be entered in respect of the charge of incest contrary to s 44(1) of the Crimes Act 1958 (Vic) and that a new trial be had, limited to the offence of taking part in an indecent act contrary to s 47(1) of the Crimes Act 1958 (Vic) with the person named in the presentment filed on 3 February 2004. Kirby KIRBY J. I agree in the orders proposed in the reasons of Gleeson CJ, Hayne, Heydon and Crennan JJ ("the joint reasons"). A present entitlement to acquittal of incest I agree with the reasons for those orders as set out in the analysis by their Honours of the provisions of the Crimes Act 1958 (Vic) under which the appellant was tried for the crime of incest; the powers of the Court of Appeal in disposing of the appellant's appeal to it; the appellant's entitlement to a direction for a judgment and verdict of acquittal on the charge of incest; and the availability to the prosecution of a new presentment against the appellant for the statutory alternative offence of "indecent act with a child under the age of 16"22. The last step, as the joint reasons have demonstrated, comes about by the combined operation of ss 425(3) and 47(1) of the Crimes Act, and s 568(1), taking into account the fact that the jury in the first trial never reached the alternative statutory offence, because of their verdict of guilty of incest which the Court of Appeal concluded was unreasonable and could not be supported having regard to the evidence. Upon reaching that conclusion, in my view, it was the appellant's right in law to have a verdict and judgment of acquittal directed by the Court of Appeal. Whatever consequences might follow, either for the appellant or for the prosecution, lie in the future. Strictly, they are not presented at this stage by any evidentiary facts. Further, there are three reasons of prudence why this Court should not, in my respectful view, decide or predict their disposition. Immateriality of possible future proceedings Uncertainty of a second trial: First, as this Court has said many times, the direction that a new trial be had (here on the statutory alternative charge left undecided by the first trial) is not a direction that a new indictment or presentment must be found by the prosecution23. That decision belongs to the Director of Public Prosecutions. The Court was told that the decision had not yet been made. In the present case, having regard to the repeated evidence of the complainant that digital penetration had occurred during the alleged offence and the decision of the Court of Appeal that a verdict of guilty of incest on that basis 22 Crimes Act, s 425(3). 23 cf MacKenzie v The Queen (1996) 190 CLR 348 at 376-377; Dyers v The Queen (2002) 210 CLR 285 at 297 [23], 317 [88], 331 [135]. Kirby was unreasonable and could not be supported, it is possible that the prosecution might accept the judgment and verdict of acquittal in the Court of Appeal as determinative of the complainant's real accusation. Retrials are a most significant burden for the accused, the complainant, witnesses, juries and the public. I would not regard it as inevitable that a proper exercise of the prosecutorial discretion in this case would result in a retrial. As I understood it, the respondent's real concern about the outcome, as argued before this Court, was addressed to questions of principle: the rights of prosecutors and accused persons generally; the dispositive powers of the Court of Appeal; and the obligations of that Court in these and analogous circumstances. All of these points are now set to rest by the compelling analysis of the joint reasons and by this Court's disposition. Avoiding hypothetical decisions: Secondly, experience teaches that it is ordinarily wise to withhold substantial comments on the consequences of future events for legal rights and duties. Those events (if they occur at all) have an unpleasant habit of following an unpredictable course, often quite different from that anticipated at an earlier time. From its earliest days to the present, this Court has been reluctant to proffer legal advice and predictions on the basis of hypothetical facts that have not yet arisen24. In part, this reluctance has grown out of the constitutional requirement for there to be a "matter" before the Court. There is no problem in that regard in the present proceeding. The appellant's appeal is such a "matter". In part, it has arisen because of the Court's usual unwillingness to expand the ambit of the "matter" by offering predictions about the outcome of arguments of double jeopardy, in any future trial of the appellant, in advance of any such trial and without the concrete circumstances, enlivened by evidence, said to give rise to the peril of double jeopardy forbidden by the earlier judgment of acquittal. As recent divided decisions of this Court show, this is a tricky area of the law. It contains many difficulties25. 24 The State of South Australia v The State of Victoria (1911) 12 CLR 667 at 674-675; In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 267; North Ganalanja Aboriginal Corporation v Queensland (1996) 185 CLR 595 at 623, cf 666-668; Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334 at 357 [49] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ. 25 Pearce v The Queen (1998) 194 CLR 610; Island Maritime Ltd v Filipowski (2006) 226 CLR 328. See also R v Carroll (2002) 213 CLR 635. Kirby The same is true of any direction that might be appropriate in any second trial concerning the "full benefit"26 of the acquittal of the charge of incest to which the appellant would then be entitled on the basis of the Court of Appeal's orders and reasons. I should prefer to deal with these issues, if and when they arise, in the light of the evidence at a second trial; the considered rulings on that evidence and directions given by a trial judge; the verdict of the second jury; and the consideration of the points, fully developed, by the intermediate appellate court. We have none of those ingredients before the Court in the present case. This Court should not offer what is effectively advice about eventualities that have not yet arisen, may never arise or may arise in entirely different and unpredictable ways. Specifically, if (as I believe) the appellant was entitled, as of legal right, to a direction by the Court of Appeal that a verdict and judgment of acquittal be entered, it is not material to that entitlement that it should be established that the consequent order presents no (or little) practical difficulty to the prosecution in proceeding against the appellant on the statutory alternative charge. That is as it may be. The verdict of acquittal was the appellant's legal entitlement. It does not follow, in my view, because ordering it would not create undue problems in a second trial, specifically problems for the prosecution in advancing a different, but related, charge27. Full benefit of the acquittal: Thirdly, there is a particular reason why this Court should withhold comment in the appellant's case on the meaning and content of the "full benefit" of the acquittal of the charge of incest ordered by the Court of Appeal. Consideration of that question has been raised in another appeal whose hearing followed this and which stands for judgment28. In that appeal, the issue is a live one and one of the questions argued before the Court. It arises because the appellant there was twice tried for offences bearing certain similarities. In the first trial he was acquitted in consequence of a jury's verdict of not guilty. In the second trial, the accused asked for directions from the trial 26 The phrase used by Barwick CJ in R v Storey (1978) 140 CLR 364 at 372; cf R v Wilkes (1948) 77 CLR 511 at 518; Garrett v The Queen (1977) 139 CLR 437; R v Young [1998] 1 VR 402 at 421-422. 27 In supplementary written submissions, filed by leave, the appellant argued that there was no possibility, if a second trial were had for the offence described in s 47(1) of the Crimes Act, of a successful plea in bar of autrefois acquit. However, the appellant correctly submitted: "Even if there is a possibility of a future plea in bar, the appellant maintains his submission that he was still entitled, as of right, to a judgment and verdict of acquittal on the count of incest." (original emphasis) 28 Washer v The Queen, reserved 27 April 2007. Kirby judge, relevant to the "benefit" that he claimed as a result of the first jury's verdict. He was denied such directions in a ruling upheld by the Court of Appeal of the Supreme Court of Western Australia29. These are concrete circumstances in which the issue of "full benefit" may be elaborated by this Court by reference to precise evidentiary facts. I therefore prefer to reserve my opinion on the point and to withhold it in the present proceedings where it is, in a sense, an issue twice removed. I appreciate that it is sometimes useful for intermediate courts, once an appeal is allowed, to offer observations for the assistance of a judge presiding at a retrial. Occasionally, similar remarks are also offered by this Court. I also realise that, in considering legal outcomes, it can sometimes be relevant to assess their viability by reference to their consequences. However, because this Court is a court of error, my own feeling is that such advice should be conserved to essential matters and avoided on issues that are, or may become, controversies because they affect the rights of parties and depend on the way any future trial develops. Orders With these reservations, but with full agreement otherwise in the joint reasons, down to their treatment of the consequences of acquittal at a new trial on the alternative count30, I concur in the orders proposed by the joint reasons. 29 Di Lena v Western Australia (2006) 165 A Crim R 482. 30 Joint reasons at [1]-[17]. |
HIGH COURT OF AUSTRALIA APPELLANTS AND W COOK BUILDERS PTY LTD (IN LIQUIDATION) RESPONDENT Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27 18 June 2008 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Supreme Court of South Australia made on 1 March 2007 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of South Australia Representation D F Jackson QC with M R Burnett for the appellants (instructed by Lynch Meyer Lawyers) G O'L Reynolds SC with R D Ross-Smith and B R Kremer for the respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Lumbers v W Cook Builders Pty Ltd (in liquidation) Quantum meruit – Services performed and subcontractors paid – Entitlement to compensation – Appellants entered into oral agreement with building company for construction of domestic dwelling – Respondent performed some of the construction work – Appellants did not request respondent perform any services or pay any subcontractors – Whether claim for quantum meruit or money paid available. Restitution – Unjust enrichment – Appellants accepted benefit of construction work performed by and at the expense of respondent – Claim that it would be unconscionable for appellants to retain benefit – Appellants made no direct request of respondent – Whether restitutionary claim available. Contract – Domestic building contracts – "Cost plus" oral agreement between building company and owners – Informal reorganisation within building company's corporate group – Benefit and burden of oral agreement informally assigned by building company to related company – No notice given to owners of reorganisation or assignment – Some subcontractors paid directly by owners – Acknowledgement by building company that owners had met all progress claims made and paid all monies due under the oral agreement – Whether related company can demand compensation from owners for difference between amounts paid by owners and amounts outlaid by related company together with margin for supervision and profit. Words and phrases – "expense", "free acceptance", "incontrovertible benefit", "unjust enrichment", "windfall". GLEESON CJ. In September or October 1993, W Cook & Sons Pty Ltd ("Sons") entered into an oral agreement with the appellants, Mr Matthew Lumbers and Mr Warwick Lumbers, to construct a house at North Haven, near Adelaide. Mr Matthew Lumbers owned the land and Mr Warwick Lumbers had an unregistered lease for life over the property. For present purposes, it is unnecessary to distinguish between Mr Matthew Lumbers and Mr Warwick Lumbers ("the Lumbers") as parties to the contract. The house was described by the primary judge as "quite distinctive". It ultimately cost more than $1 million to build. It was completed in May 1995. In circumstances that will be described below, most of the work required by the contract, which included the engagement of building subcontractors and supervision of their work, was performed, not by Sons, but by W Cook Builders Pty Ltd (in Liquidation) ("Builders"). This change in the identity of the builder occurred without the knowledge or approval of the Lumbers. Builders and Sons were members of the same corporate group, but their shareholders and directors were not identical, and at some stage, for reasons that were not made clear in the evidence, their interests diverged. The proceedings giving rise to this appeal arose out of claims by Builders to be remunerated for its services. The claims included claims for reimbursement of amounts paid to various subcontractors, and a fee for supervision. The Lumbers made progress payments to Sons, as requested, at intervals over the period from April 1994 to May 1995. Without the knowledge of the Lumbers, Sons paid those amounts to Builders. Builders claimed that a balance (ultimately found to be $261,715) remained due and unpaid. The making of the 1993 building contract by the Lumbers and Sons was asserted by Builders in its Statement of Claim, and was not denied. It was never suggested that there was a novation of the contract, or that the contract was terminated, either by the Lumbers or by Sons. The trial judge found that the payments made to Sons by the Lumbers did not cover the whole of the cost of the building work. The possibility that the Lumbers remain indebted to Sons is a matter upon which the Lumbers rely in resisting the claim made against them by Builders. In November 1999, more than a year after Builders went into liquidation, Builders demanded payment from the Lumbers of a certain amount. Builders also claimed the same amount from Sons. This appeal concerns only the claim against the Lumbers. As will appear, the adjudication of the claim in the South Australian courts was constrained by the course of the proceedings, and by the absence of the evidence of at least one key potential witness. Builders commenced an action in the District Court of South Australia, joining as defendants the Lumbers and Sons. It was alleged that the Lumbers, or alternatively Sons, were or was liable to Builders for "the contract price less the amount paid". That was a reference to the 1993 contract. It was alleged by Builders that, in addition to the contract between the Lumbers and Sons, there were "arrangements" between Sons and Builders, under which Builders would carry out the building work required by the Lumbers. It was not alleged that the Lumbers were parties to those "arrangements". The Statement of Claim alleged oral "proposals", made by Sons in early 1994, and said to have been accepted by Builders. The proposals are referred to in more detail below under the heading "Reorganisation". The Statement of Claim alleged that the "proposal and acceptance constituted a contract between [Sons] and [Builders]." It alleged that, under the contract, Builders became legally bound to Sons to take over responsibility for the construction work and, further, that Sons assigned to Builders the benefit of the 1993 building contract. As will appear, the primary judge accepted the first part of that allegation of the legal effect of what occurred, but not the second. The Statement of Claim went on to allege that the amount claimed was due by the Lumbers to Builders, or alternatively to Sons "to be held on trust for" Builders. The claims against the Lumbers were based on contractual assignment or, alternatively, "restitution/unjust enrichment". Before the action was fixed for hearing, Builders was ordered to provide security for Sons' costs. Such security was not provided. The action against Sons was stayed, although it appears from an observation of the trial judge that it could still be revived. He said it was "in a static condition". Hence, Sons was not an active party in the proceedings at trial or on appeal. The claim by Builders against Sons has never been litigated. Because of the stay order, something in the nature of an interpleader was not possible. Builders, at trial, pursued its action against the Lumbers separately from its claim against Sons. The trial judge described the effect of the stay order as follows: "The Orders were however conditioned so that Builders could not pursue any derivative claims ... Builders could therefore no longer claim that, if Sons were the correct plaintiff, Builders was beneficially entitled to any sum owed by the Lumbers to Sons. Nor could it argue that Sons was entitled to recover the balance outstanding on Builders behalf in the event of 'a legal black hole'." The claim against the Lumbers based on assignment was dismissed in the South Australian courts and is not now pursued. That leaves this Court to deal with the claim based on "restitution/unjust enrichment" in the context just described; a claim that failed at first instance but succeeded on appeal in the Full Court of the Supreme Court of South Australia. Before turning to the relevant principles it is necessary to say more about the facts, and the history of the litigation. The Cook group of companies In 1993, Sons was the main operating company of the Cook family, which had established a significant reputation in the building industry since about 1910. The respondent, Builders, was another in the Cook group of companies. At the time of the reorganisation referred to below, Builders was a dormant company. Mr Jeffrey Cook managed the practical side of the business of Sons, and later Builders, but had little or no involvement in the administration of either company. Mr David McAdam was a long-time employee of the Cook group. Mr McAdam's mother was married to Mr Jeffrey Cook's father. Though Mr McAdam and Mr Cook had known each other for 50 years, it appears that their relationship was, or became, strained. Mr McAdam was secretary of Sons and, until March 1994, a director of Builders. He had been responsible for financial management and contract administration of all of the companies in the Cook group since 1963. A partnership operating under the name of Portrush Traders employed all employees of the companies in the group. The evidence does not reveal the identity of the partners. After Builders ceased to be dormant, Builders and Sons shared common staff and administration and operated a common bank account. Mr McAdam entered into the respective company journals the sums to be allocated to each company. At the relevant times, the shareholders in Builders were members of Mr Jeffrey Cook's immediate family. Mr Jeffrey Cook was a director. After the reorganisation Mr McAdam resigned as a director of Builders. He continued as a director of Sons, which was then under his control. The building contract Negotiations for the construction of the house were conducted between Mr Warwick Lumbers and Mr McAdam. Much of the confusion, and many of the deficiencies in the evidence, in this case arose from the fact that neither party called Mr McAdam as a witness. He played a vital part in important events. The Lumbers chose Sons because of Sons' reputation and the Lumbers' desire for a "pedigree" for Mr McAdam. In his evidence, Mr Warwick Lumbers emphasised that, because of his frequent absences overseas, he wanted someone whom he could trust to assess and approve invoices. Part of the explanation for the informality of the contract was the trust of Mr Lumbers in Mr McAdam. Sons was a licensed builder. Builders was not. Mr Lumbers' evidence was that he would not have agreed to an unlicensed builder's undertaking the work because that would have put his insurance policy at risk. the house, and because of Mr Lumbers' confidence The building contract between the Lumbers and Sons was never reduced to writing. The trial judge found that Sons agreed to undertake the building work according to specifications and plans prepared by the Lumbers' architect. Some of the work was to be performed by Mr Warwick Lumbers himself. He held a restricted builders licence. His brother-in-law, an architect, designed the house. The trial judge said that "[t]he parties did not employ the traditional form of progress claims and payments, choosing instead, ad hoc, lump sum payments". Payments were to be made to Sons, which would, in turn, pay any subcontractors. No fixed price was agreed. However, it is not in dispute that the price payable to Sons included the cost charged for the work performed by Sons and by subcontractors and for the supply of materials. There was some disagreement about an additional charge for supervision and management. The amount of the supervision charge was not agreed, but the trial judge considered that 10% of the project costs was a reasonable fee. No invoices were ever rendered; telephone Mr Warwick Lumbers and state that he needed a certain sum of money, and Mr Lumbers paid that sum of money by cheque directed to Sons. The payments bore no direct relationship to actual expenditure in respect of the building work. the building work, Mr McAdam would throughout In its Statement of Claim, Builders made the following allegations concerning the contract between Sons and the Lumbers: "The express oral terms of the building contract included terms to the effect That [Sons] would perform certain building work ('the building work') on the land. That the building work would be in accordance with plans and specifications provided by [the Lumbers]. That [the Lumbers] could make variations to the plans and specifications from time to time. That there would not be a fixed price for the contract works, but rather the price payable by [the Lumbers] to [Sons] would consist the cost charged by sub-contractors for the performance of all components of the work; the cost charged for the supply of materials for the work; (iii) an additional charge of 10% of the above costs (including such costs incurred directly by [the Lumbers]) for the supervision of the building work and the management of the building contract by [Sons]. That [Sons] could submit invoices or demands to [the Lumbers] for progress payments at intervals to be determined by [Sons], which invoices or demands [the Lumbers] would be obliged to pay. The amount claimable in such invoices or demands was to be the amount paid or payable by [Sons] for sub-contract work and supply of materials, together with 10% for supervision and management by [Sons] … [Sons] could itself carry out work and supply materials for the building work, in which case it would be treated under the above terms as if it were a sub-contractor. The price claimable for the work or materials was to be a reasonable price." The term alleged in (e) reflected the relationship between Mr Lumbers and Mr McAdam. It was left to Sons (effectively Mr McAdam) to decide the timing and the amounts of the progress payments. This term was admitted in the Lumbers' Defence. In fact, save for the matter of the 10% supervision fee, which was in dispute, there was no issue on the pleadings as to the formation of the building contract between Sons and the Lumbers, or as to such of its terms as are presently material. That is the basis on which the case was conducted and decided in the South Australian courts, and it is the basis upon which the present appeal must be decided. The respondent sought, by notice of contention in this Court, to dispute for the first time the existence of the contract it alleged in its Statement of Claim. This should not be permitted. If the contract, which in a number of respects formed the basis of Builders' claims, and in particular its claim founded on assignment, had been disputed by Builders, then the argument could well have been met by calling further evidence. It appears that the principal ground upon which Builders now seeks to deny the existence of a contract is uncertainty. If that point had been taken at trial, it would have been necessary for trial counsel and the trial judge to deal more extensively with some matters of fact and building practice. It is too late to raise the point now1. Preparation of the site commenced in November 1993, and building work commenced in February 1994. Mr Jeffrey Cook was the supervisor, and was in control of the subcontractors who came on site. Reorganisation In February 1994, there was a reorganisation within the Cook group of companies, after which Sons' business was restricted to joinery and carpentry, and Builders undertook construction work. The reorganisation was informal. There was no evidence of directors' meetings or of any documentation setting out the respective roles of the two companies. The evidence was that the reorganisation was devised by Mr McAdam; Mr Jeffrey Cook had little detailed understanding of its purpose or basis. The same employees, including Mr Jeffrey Cook, continued with the building work after the reorganisation. The trial judge inferred that Portrush Traders continued to administer both Sons and Builders. Mr McAdam resigned as a director of Builders in March 1994. However, he continued to occupy an 1 See Water Board v Moustakas (1988) 180 CLR 491 at 497; [1988] HCA 12. office adjoining Mr Cook and maintained direct contact with Mr Warwick Lumbers. The Lumbers were not informed of the reorganisation and were unaware of the existence of Builders. At no relevant time was Builders a licensed builder. After the reorganisation, Builders, rather than Sons, performed the construction work, which, to a substantial extent, involved the engagement and supervision of subcontractors. On 1 March 1994, an invoice reflecting the cost of work done by Sons to the date of the reorganisation, prepared by Mr McAdam, was rendered by Sons to Builders, and entered in the journal of Builders, also by Mr McAdam. After the reorganisation, payments to subcontractors were debited to Builders' accounts, though the evidence did not reveal whether the payments were made from Cook group funds and then debited to Builders' accounts through journal entries, or whether they were made from separate accounts of Builders. Reference has already been made to the allegations in the Statement of Claim concerning a contract between Builders and Sons in February 1994. The "arrangements", said by Builders to have resulted in a contract, involved a proposal made by Mr McAdam on behalf of Sons which was accepted by Mr Jeffrey Cook on behalf of Builders. Builders alleged that it was unable to give full details of what was agreed between Mr McAdam and Mr Cook (thereby revealing what was confirmed in the evidence, that is to say, that Mr Jeffrey Cook did not understand completely what Mr McAdam was doing administratively). The Statement of Claim alleged that the terms were that "[a]s between [Sons] and [Builders], all future costs of the building work were to be charged to [Builders] rather than [Sons]", that Mr Jeffrey Cook would continue to supervise and manage the building work "on behalf of the builder" and that "[Builders] would be entitled to recover all amounts payable by [the Lumbers] in respect of the building work, including the additional charge of 10% for the supervision of the building work and management of the building contract." It was said to be a "legal effect" of the contract that Builders became contractually bound to Sons to carry out the building work and, further, that the benefit of the building contract, and future property in the price payable by the Lumbers to Sons, was assigned by Sons to Builders. There was no allegation that the Lumbers were parties to, or were aware of, this. In their Defence, the Lumbers said that they did not know and could not admit the facts alleged by Builders, but asserted that, if the facts were true, they were not disclosed to the Lumbers. The Lumbers occupied the house in December 1994, although, as noted above, construction was not completed until May 1995. Subject to specific defects, the value of which was agreed, the completed building was satisfactory to the Lumbers. Payments At the time of the reorganisation, no request had been made by Mr McAdam to the Lumbers for any payment. The Lumbers were first requested to pay money on 30 April 1994. Every payment made by the Lumbers was made by cheque payable to Sons. Save for a final amount paid in December 1997, the remainder of the payments were made between 30 April 1994 and 16 May 1995. These payments followed requests from Mr McAdam for round sums, rather than progress payments specifically related to costs incurred. The Lumbers paid all amounts that were requested by Sons. In 1999, Builders sent a notice to the Lumbers claiming that the difference between the amount recorded as incurred on the building project and the amount received from the Lumbers was $181,904. There was no explanation of why no part of that sum had been requested from the Lumbers earlier. Nothing was allocated in the books of Builders for the supervision fee until after the liquidation. Subsequent events On 26 May 1998, Builders was placed into voluntary administration. It went into liquidation on 22 June 1998. By letter dated 1 February 1999, Mr Malcolm Cook, a director of Sons, wrote to Mr Warwick Lumbers in the following terms: "Following a restructuring of the Company in 1994, Mr Jeffrey R Cook, a director of [Sons], took over all building & construction operations currently in progress, operating as [Builders] … and continued building operations until May 1998, when [Builders] went into liquidation. [Builders] operated as a separate entity, maintaining its own records in accordance with normal requirements, lodged taxation returns, & conducted its day-to-day business independently from [Sons]. All invoicing & receipts in relation to the [house at North Haven], (and all other building projects) were through the accounts system of [Builders]. We can not comment on any claims made by the liquidator of [Builders], however we do advise you that there are no outstanding amounts owing either by yourself, or any other person or entity, to [Sons] in relation to the construction of the above residence." The circumstances in which that letter was written do not appear from the evidence, and Mr Malcolm Cook, like Mr McAdam, did not testify. It appears that, at least by the time that letter was written, Sons and Builders were at arm's length, although whether they were yet in dispute is not clear. Mr Malcolm Cook's reasons for writing the letter were not explained. Because Sons was not an active party to the litigation, following the stay of proceedings against it, the legal effect of the letter as between Sons and the Lumbers was never tested. Whether, for example, if Sons had been found to have been liable to Builders, Sons would have had a claim against the Lumbers was never decided. On 8 November 1999, Builders served the Lumbers with a notice of demand for payment of $274,791, comprising the alleged deficiency of $181,904, together with a 10% supervision fee of $92,887. On 11 November 1999, Builders caused a workers' lien to be registered on the title to the property. Builders' claim was made some four years after the construction had been completed. Mr Warwick Lumbers suggested in his evidence that the claim might have been considered differently had he been provided with a bundle of invoices rather than a notice of demand. The decision of the primary judge Some features of the procedural context in which the matter came for hearing before Judge Beazley have been noted above. He remarked that "complexity has arisen from the casual basis upon which the parties have chosen to deal with each other, and indeed in the manner in which they have conducted the litigation." The fact that Sons took no part in the trial, that Mr McAdam did not give evidence, and that Mr Jeffrey Cook, although an experienced builder, was "able to give only scant evidence with respect to 'administration issues'" added to the difficulties. It may be remarked that the restitutionary principles on which the respondent relied were designed to overcome what otherwise would have been deficiencies in the law, but in the present case they appear to have been called in aid principally to overcome deficiencies in evidence and unusual aspects of procedure. there were questions of There were issues at trial, not presently relevant, concerning the amount of the claim; the subcontractors, allowances for defects, and the fee for supervision and management. The trial judge resolved most of those issues in favour of Builders, and quantified the claim at $261,715. total amount of payments There was also an issue, which was the subject of argument in the present appeal but which may be put to one side for the moment, arising out of the fact that Builders was unlicensed. Section 39 of the Builders Licensing Act 1986 (SA) ("the Builders Licensing Act") provided: "An unlicensed person who performs building work circumstances in which a licence is required under this Act shall not be entitled to recover any fee or other consideration in respect of the building work unless the Tribunal or any court hearing proceedings for recovery of the fee or consideration is satisfied that the person's failure to be licensed resulted from inadvertence only." For reasons that turned upon the evidence of Mr Jeffrey Cook, the primary judge found that Builders' failure to obtain a licence did not result from inadvertence. There is no challenge to that finding. The main issue was a dispute as to whether Builders was entitled to claim directly against the Lumbers. Referring to the conduct of Mr Jeffrey Cook after the reorganisation, the judge said: "He did not speak to Mr McAdam, Warwick Lumbers or [the architect] about the terms of the contract which he and his immediate family were apparently taking over in Builders. He did not raise the question of price despite the fact that all of the major variations took place after the re- organisation. He had no involvement in quantifying the amounts to be requested of the Lumbers, despite the large sums being debited to Builders' accounts for the work. I have already discussed the failure of Builders to obtain a licence. Jeffrey Cook did not request the Lumbers to make payments direct to Builders rather than Sons ... Finally when the building work was completed, Mr Cook appears to have made no attempt to quantify what was outstanding or seek payment from the Lumbers. It was only well after the liquidation of Builders that anyone put the Lumbers on notice that any sum was outstanding, and suggested a direct claim as an equitable assignee." The claim to be an equitable assignee of the 1993 building contract was in the forefront of the Builders' case at trial against the Lumbers. The claim was rejected by the primary judge, and by all three members of the Full Court. For reasons that will be apparent when considering the alternative restitutionary claim, and notwithstanding the form of the Statement of Claim, Builders was concerned to disavow a role as a subcontractor to Sons. The Lumbers, for their part, argued that there was a building contract between the Lumbers and Sons, which was never the subject either of novation or termination, and a subcontract between Sons and Builders. Whether the making of the subcontract, and the subsequent performance of the work by Builders, involved Sons in a breach of its contract with the Lumbers was immaterial. The Lumbers were unaware of any such breach, and never terminated their contract with Sons on account of it. They were not pursuing a claim for damages against Sons in that respect. The primary judge described the principal argument of Builders as being that it was an equitable assignee of the benefit of the agreement between the Lumbers and Sons, and that it was entitled to recover in an action in its own name against the Lumbers. He noted that the alleged assignment was not in writing and did not comply with the requirements of s 15 of the Law of Property Act 1936 (SA). In the light of the subsequent history of the litigation, it is possible to deal with this issue briefly. Judge Beazley rejected Builders' argument for two reasons. First, he was concerned about the high degree of personal confidence placed by the Lumbers in Sons when the original building contract was made. The identity of the builder was a matter of importance to Mr Warwick Lumbers. The substitution, without his consent, of another corporate entity, even one associated with the Cook group, as the recipient of the benefit of the contract would have made a significant difference to him. Builders was a company in which Mr McAdam had no personal interest. Mr Warwick Lumbers relied on being able to negotiate personally with Mr McAdam about matters such as defects and fees. The judge referred to Tolhurst v Associated Portland Cement Manufacturers (1900) Ltd2, and Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd3. Mr Lumbers, whose evidence the judge accepted, was adamant that he would not have agreed to such an assignment, and the judge considered there were good reasons for this. Secondly, the judge was unable to find, in the state of the evidence, that there was any intention on the part of Sons to assign the benefit of the contract to Builders or otherwise to effect any assignment as alleged in the Statement of Claim. Again, the absence of Mr McAdam was critical. The judge concluded that Builders performed its work on the project, not as an assignee of the benefit of the contract, but as a subcontractor to Sons. The allegations made by Builders in its Statement of Claim as to its contract with Sons are set out above. At trial, the Lumbers did not dispute that there was a contract between Sons and Builders, although they did not profess to know its terms, and challenged the assertion that its "legal effect" included an assignment of the benefit of the 1993 contract or the amount ultimately to be paid under that contract. The only direct evidence of the contract was Mr Jeffrey Cook's account of a conversation he had with Mr McAdam. Although his account was vague, he was clear about the fact that it was agreed that, after the "changeover", the building work (including the work presently in question) was to be done by Builders. The evidence of Mr Cook supported the allegations in the Statement of Claim except in one important respect, that is to say, the matter of the alleged assignment of rights from Sons to Builders. It was consistent with the evidence of Mr Cook that, as alleged in the Statement of Claim, Builders became contractually bound to Sons to perform future work and supervision on the building. As the primary judge said, once the allegation of an agreement as to assignment is rejected, it is appropriate to describe this as a subcontract. In the alternative, Builders argued that it was "entitled to fair and just compensation for the benefit or enrichment accepted by the Lumbers." The judge said (references omitted): "At all times there was extant an agreement between the Lumbers and Sons which covered the work said to have been undertaken by Builders. Insofar as a claim ought to have been made by Builders it ought to have been against Sons. Sons remained liable under the Contract with the Lumbers. It cannot be said that the Lumbers have an obligation to make restitution to Builders, irrespective of whether Builders was mistaken as to its position when allegedly constructing the house. There was of course no evidence at all as to the allegedly mistaken understanding of Builders. In my opinion Builders could not succeed against the Lumbers under this alternative claim." The decision of the Full Court The Full Court of the Supreme Court of South Australia, by majority (Sulan and Layton JJ, Vanstone J dissenting) upheld Builders' appeal4. All three members of the Full Court rejected Builders' case on assignment. The majority regarded the trial judge's conclusion that there was insufficient evidence to find the existence of an intention to assign as soundly based. They found it unnecessary to deal with the question whether the contract was of such a nature that assignment was not possible. Vanstone J pointed out that, under the building contract, it was for the builder to determine the payments that were to be made over the course of construction. She considered that it would have been inconsistent with the trust reposed in Mr McAdam by Mr Warwick Lumbers, which accounted for the informal and in some respects open-ended nature of the contract, to permit another party to stipulate the amount of those payments. She concluded that the contract was of a personal nature and incapable of assignment. The majority also decided that any claim by Builders to recover what they described as "contractual damages" would have been defeated by s 39 of the Builders Licensing Act. Vanstone J found it unnecessary to deal with this point. The majority said, however, that "[w]here an unlicensed person carries out building work, they may nevertheless bring an action in unjust enrichment in which damages will be calculated on a quantum meruit basis." They went on to 4 W Cook Builders Pty Ltd (in liq) v Lumbers (2007) 96 SASR 406. deal with the claim described by Builders in its Statement of Claim as "restitution/unjust enrichment". The majority commenced their reasoning by putting to one side the subsisting contractual relationship between Sons and the Lumbers. This was a rather important, and controversial, first step. They justified it on two grounds. First, they referred to the letter signed by Mr Malcolm Cook, in February 1999, in which Sons said that it had no claim against the Lumbers. They did not discuss the legal effect of the letter, or explain how it would operate to defeat a claim by Sons. They simply referred to its existence. As mentioned earlier, the evidence did not show how it came to be written. Nor did it show that the Lumbers altered their position or otherwise acted in reliance on the letter. No doubt they were pleased to have it, but that does not mean that it was of legal consequence. Secondly, the majority said that Sons did not perform its obligations under the contract. Presumably they meant by this that Sons, without the knowledge of the Lumbers, delegated the performance of its obligations to Builders. Again, it is not clear what was said to be the legal consequence of this as between Sons and the Lumbers. If the delegation constituted a breach of contract by Sons, then the Lumbers might have had a claim for damages against Sons, if they could show they suffered harm. The contract, however, was never terminated; the building was built, generally to the satisfaction of the Lumbers; and the majority did not express a conclusion as to whether the Lumbers were liable to Sons under the building contract and, if not, why not. Furthermore, the majority gave no express consideration to the question of Builders' rights against Sons. They appear to have regarded those as irrelevant. Understandably, the majority introduced their discussion of the subject of restitution by referring to the decision of this Court in Pavey & Matthews Pty Ltd v Paul5. That was a building case. There was only one contract, that is to say, a contract between an owner and a builder. Because the contract was not in writing, it was (by statute) unenforceable by the builder. The issue6 in that case was whether the builder, in bringing a quantum meruit claim, was attempting to do that which the statute prohibited, that is, attempting to enforce the contract. In answering that question in the negative, the Court explained that the nature of the builder's claim against the owner was restitutionary, not contractual. The general principles stated in the course of that explanation have been taken up in later decisions. The majority referred to some of those decisions. The present was not a case of the performance by Builders of services for the Lumbers at the request of the Lumbers; or of acquiescence in the provision of (1987) 162 CLR 221; [1987] HCA 5. (1987) 162 CLR 221 at 245. services by Builders knowing that the services were not being rendered gratuitously; or of the provision of services necessary for the protection of the Lumbers' property. The majority, however, identified the case as one "where the service conferred incontrovertible benefit on the defendant, and it would be unconscionable for the defendant to keep the benefit of the service with paying a reasonable sum for it"7. There are, they said, "three basic elements of unjust enrichment", subject to any available defence. The first is that the defendant must receive a benefit. The second is that the benefit must be received at the plaintiff's expense. The third is that it would be unconscionable for the defendant to retain the benefit. They discussed "incontrovertible benefit" and "free acceptance". As to the former, they said: "The first point that may be noted was that the services provided by Builders saved the Lumbers from an expense. A significant part of Builders' claim is for expenses that it incurred during the course of the construction, in addition to the part of Builders' claim relating to its own provision of services. These expenses were incurred on the Lumbers' behalf. However, even that portion of Builders' claim which pertains to the cost of the services it provided directly, can be characterised as saving the Lumbers from an expense. The Lumbers decided to construct a house, and expected to pay the full amount for its construction. The cost of the construction of the house, including the expenses incurred by Builders, and the cost of the services provided directly by Builders, was a cost that the Lumbers chose to incur. Builders, by incurring costs on their behalf and providing services, saved the Lumbers from an expense that they would otherwise have incurred. Secondly, we consider that having the house constructed was an incontrovertible benefit independently of the question whether this saved the Lumbers from an expense. The provision of a house in which to live, which also represented an improvement to the land, conferred a benefit which no reasonable person could deny. The Lumbers have had a house constructed to their specifications and are able to live in that house. The Lumbers have also had an improvement to their land which has a realisable value upon sale. It is also true that the Lumbers intended that the constructed house would have the 'pedigree' associated with having been constructed by Sons, a reputable and established firm. However, the fact that they did not cf Monks v Poynice Pty Ltd (1987) 8 NSWLR 662. receive the benefit of the 'pedigree' of the house does not render the benefits they did in fact receive any less valuable, given the matters referred to above." As to the latter, they said (references omitted): "In this case, Builders incurred actual expenses from which the Lumbers benefited. There was acceptance by the Lumbers of the services of subcontractors for which Builders incurred a cost. Furthermore, the services provided were with the knowledge of Lumbers. The Lumbers benefited. The benefit was conferred at the expense of Builders. The Lumbers agreed to the work being carried out. The Lumbers, by moving in and occupying the house, accepted the benefit. The Lumbers knew that the services were not being provided gratuitously, as they had made a request to Sons for the provision of the services, and had made arrangements for payment with David McAdam. The only factor which could be said to vitiate the free acceptance by the Lumbers is the fact that they were unaware that the work was being conducted by Builders rather than Sons. The fact that Warwick Lumbers said he would not have accepted the benefit if he had known Builders was doing the work, and because he relied on Sons' name and the fact that Sons was licensed and, therefore, insured is, in our view, ultimately not to the point. There has been no suggestion that there was any difference in the quality of the construction of the house as a consequence of its having been built by Builders rather than Sons. In this regard, it is relevant that Jeffrey Cook acted as the supervisor. Also, David McAdam acted as the administrator of the building work and was responsible for sourcing materials and labour in the same way, presumably, that he would have been had the project been on the books of Sons rather than Builders. There was no suggestion that the house would have been built differently, or to a higher standard, had Sons completed the project. Indeed, the evidence of the [Lumbers] was that externally, there was nothing to indicate that it was Builders that was building the house rather than Sons. The fact that the Lumbers were mistaken about who provided the benefit does not vitiate their acceptance of it. It should be noted that the conduct of Builders and Sons in failing to inform the Lumbers about their internal arrangements is not inconsequential. Builders is unable to recover the contractual sum to which Sons would have been entitled had it completed the work. Instead, Builders can recover solely on a quantum meruit basis, as identified above." The majority went on to find that it was clear that the provision of services, and the payments to subcontractors, were at Builders' expense and that it would be unconscionable for the Lumbers to retain the benefit without payment. Vanstone J, dissenting, said that there was no free acceptance of, or conferring of, any benefit. There was a contract between the Lumbers and Sons, and another contract between Sons and Builders. Builders' work on the Lumbers' project was performed under obligations owed by Builders to Sons. Its remedies lay under its contract with Sons. It had no additional or alternative restitutionary claim against the Lumbers. For the reasons that follow, the conclusion of Vanstone J is to be preferred. The restitutionary claim In considering Builders' restitutionary claim, the contractual relations between the Lumbers and Sons, and between Sons and Builders, cannot be put to one side as an inconvenient distraction. The original structure of the litigation has been described above. The circumstances that, by reason of a failure on the part of Builders to comply with an order for security for costs, Sons has taken no active part in the litigation, and that, by reason of the absence of any evidence from Mr McAdam, what went on between Sons and Builders is obscure, do not displace the necessity of identifying the contractual position. The case was conducted and decided in the South Australian courts on the basis that, as Builders alleged, there was a contract between the Lumbers and Sons. Builders claimed that there was an assignment to it by Sons of the benefit of that contract. That claim failed. The primary judge held that the work performed by Builders was performed pursuant to a further contract which was made between Sons and Builders; a contract that was entered into without the knowledge of the Lumbers. That finding was not reversed in the Full Court, although it is not clear how the majority accommodated it to their reasoning. It was adopted by Vanstone J. The finding should be accepted. No reason has been shown to doubt that it was correct. As the trial judge pointed out, once the possibility of assignment is rejected, and in the absence of any suggestion of novation, the characterisation of the "arrangements" between Sons and Builders as a contract is appropriate. Even if the conduct of Sons in making such a contract and thereby delegating the performance of its obligations amounted to a breach of its contract with the Lumbers, the contract between the Lumbers and Sons remained in force. There was, therefore, a head contract between the Lumbers and Sons, and a subcontract between Sons and Builders. So far as appears from the evidence, Builders had, and may still have, a viable claim against Sons. The claim was not defeated on the merits or otherwise in any relevant respect rendered worthless. Builders and Sons have their own separate creditors and members. The contractual arrangements that were made effected a certain allocation of risk; and there is no occasion to disturb or interfere with that allocation. On the contrary, there is every reason to respect it. There was no mistake or misunderstanding on the part of Builders. It was accepted on both sides in argument that in the ordinary case a building subcontractor does not have a restitutionary claim against a property owner, but must look for payment to the head contractor8. That was said to be subject to exceptions9, but the difficulty for Builders was to show that the case fell within any recognised exception or within general principles justifying a new exception. In Pan Ocean Shipping Co Ltd v Creditcorp Ltd10, Lord Goff of Chieveley said: "I am of course well aware that writers on the law of restitution have been exploring the possibility that, in exceptional circumstances, a plaintiff may have a claim in restitution when he has conferred a benefit on the defendant in the course of performing an obligation to a third party (see, eg, Goff and Jones on the Law of Restitution, 4th ed (1993), pp 55 et seq, and (for a particular example) Burrows on the Law of Restitution, (1993) pp 271-272). But, quite apart from the fact that the existence of a remedy in restitution in such circumstances must still be regarded as a matter of debate, it is always recognised that serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract." In some Australian jurisdictions, there has been legislation enacted to protect the interests of building subcontractors, but such protection is confined within a certain statutory framework11. The fact that such legislation exists should discourage, rather than encourage, attempts to extend the scope of restitutionary claims beyond the bounds set by legal principle12, especially where to do so would be to cut across or disturb contractual relationships and established allocation of risk. 8 Hampton v Glamorgan County Council [1917] AC 13. 9 See Restatement of the Law: Restitution and Unjust Enrichment, 3d, Tentative Draft No 3 (2004) at §29. 10 [1994] 1 WLR 161 at 166; [1994] 1 All ER 470 at 475. 11 eg Worker's Liens Act 1893 (SA); Subcontractors' Charges Act 1974 (Q). 12 cf Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 843; Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 62 [24]; [1999] HCA 67. To repeat, Builders' services were not performed at the request of the Lumbers, but pursuant to a contact between Sons and Builders. There was no acquiescence by the Lumbers in the provision of services by Builders. The Lumbers were unaware of the existence or role of Builders. As far as they were concerned, the services were being provided by Sons under the building contract. That was not provision of services for the protection of the Lumbers' property. The majority in the Full Court decided the case on the basis that Builders performed services that conferred an incontrovertible benefit on the Lumbers, and that it would be unconscionable for the Lumbers to keep the benefit of those services without paying a reasonable sum for them. In their application to the facts of the present case, each of the two elements in that proposition should be rejected. As to the concept of conferring of benefit, what was involved was the performance of building work on property owned by the Lumbers in circumstances where there was a building contract between the Lumbers and Sons obliging Sons to perform that work and the Lumbers to pay Sons for it, and a subcontract between Sons and Builders obliging Builders to perform the work and Sons to pay Builders. As it happens, there was no material difference between the total price to be paid under the contracts. However, the case for Builders can be tested by supposing that there had been such a difference. Furthermore, the unusual agreement as to progress payments made between the Lumbers and Sons, an agreement that was closely connected with the personal relationship between Mr Warwick Lumbers and Mr McAdam, highlights the significance of the 1993 contract as, from the point of view of the Lumbers, the source of their legal rights and obligations. In Steele v Tardiani13, which in one sense was a simpler case than the present because there was only one contact involved, Dixon J explained the problems of identifying, for the purpose of a quantum meruit claim not based on the contract, a "benefit" conferred on a building owner by the performance of work otherwise than in accordance with the contract. He accepted that, where building work is done outside the contract, and the benefit of the work is taken, there may arise an obligation to pay for the work. He went on to refer, however, to "the dilemma in which a building owner is placed". He quoted Collins LJ who said, in Sumpter v Hedges14: "Where, as in the case of work done on land, the circumstances are such as to give the defendant no option whether he will take the benefit of the work or not, then one must look to other facts than the mere taking the benefit of the work in order to ground the inference of a new contract ... 13 (1946) 72 CLR 386 at 402-403; [1946] HCA 21. 14 [1898] 1 QB 673 at 676. The mere fact that a defendant is in possession of what he cannot help keeping, or even has done work upon it, affords no ground for such an inference." The reference to an "inference of a new contract" may reflect an approach since overtaken by Pavey & Matthews Pty Ltd v Paul, but the problem involved in identifying a conferring or accepting of a benefit remains. The concept of "free acceptance" invoked by the majority in the Full Court, whatever its exact scope, is commonly related to a defendant who "did not take a reasonable opportunity open to him to reject the proffered services"15. That was not the situation of the Lumbers in the present case. Similarly, what was sought to be characterised as an "incontrovertible benefit" was that which Sons had undertaken to provide for the Lumbers and for which the Lumbers had agreed to pay Sons. If the principle relied upon by Builders extends to the claim by Builders against the Lumbers, it is difficult to see why it would not extend also to the work performed by the numerous subcontractors engaged by Sons and later by Builders. Much, perhaps most, of the physical construction work on the site was performed, and many of the physical materials brought to the site were supplied, by such subcontractors. Why Builders was in a different position from them vis-à-vis the Lumbers was not explained. In a broad colloquial sense, they were conferring benefits on the Lumbers, and the Lumbers were accepting those benefits, but that was not so in any legal sense. It was argued that the Lumbers had received a "windfall" and that it would be unconscionable of them to refuse to pay Builders for the work in question. This characterisation proceeds upon assumptions as to the respective rights and obligations of the Lumbers, Sons and Builders which, for reasons already stated, have not been justified. Insofar as the Lumbers have been relieved from liability to pay the full agreed price for the work done on their property it appears principally to be the consequence of Builders' failure to make or pursue a prompt claim against Sons, and Builders' failure to pursue its claim against Sons in the present proceedings. If that claim had been pursued, it may well have resulted in a claim by Sons against the Lumbers. Alternatively, it may be the consequence of the unexplained attitude of Sons in the letter written by Mr Malcolm Cook in early 1999. The procedural and evidentiary deficiencies in the case make it impossible to conclude that the conduct of the Lumbers in refusing to pay Builders is unconscionable. If they have been enriched, it is at the expense of Sons. If any party has been enriched at the expense of Builders, it is Sons. The restitutionary claim of Builders has not been made out. 15 cf Goff and Jones, The Law of Restitution, 7th ed (2007) at [1-019]. Builders Licensing Act In view of the conclusion reached above, it is unnecessary to consider the defence based on s 39 of this Act. Conclusion The appeal should be allowed. The orders of the Full Court of the Supreme Court of South Australia should be set aside and in their place it should be ordered that the appeal to that Court be dismissed with costs. The respondent should pay the costs of the appellants of the appeal to this Court. Crennan GUMMOW, HAYNE, CRENNAN AND KIEFEL JJ. Between about February 1994 and April or May 1995 a house was built in a suburb of Adelaide. The house was large, of unusual design, and expensive. The respondent, W Cook Builders Pty Ltd (In Liq) ("Builders") claims that the appellants – "the Lumbers" – have not paid all that should be paid for building the house. That claim was first made by the liquidator of Builders more than four years after the building work was completed. The first appellant, Mr Matthew Lumbers, owned the land on which the house was built. He granted his father, the second appellant, an unregistered lease of the property for life. It was the father, Mr Warwick Lumbers, who had most of the dealings about building the house, but for the most part it will not be necessary to distinguish between the appellants. The Lumbers say that they never had any dealings with Builders. They say their dealings were with a different company – W Cook & Sons Pty Ltd ("Sons") – and that they have paid Sons all that Sons has ever asked them to pay. The Lumbers first became aware of Builders, and of the claimed involvement of Builders in the matter, in August 1998, more than three years after the building work was completed. It is not, and never has been, disputed that the Lumbers agreed with Sons that Sons would build the house. Neither that agreement, nor any of the other agreements or arrangements to which it will be necessary to refer, was reduced to writing. The agreement the Lumbers made with Sons about building the house was constituted by conversations between Mr Warwick Lumbers and a Mr David McAdam. It is not, and never has been, disputed that Mr McAdam was then acting on behalf of Sons or that the conversations constituted an agreement for Sons to build the house according to the design and instructions of a named architect. No price was fixed for the work. It was agreed that Sons would be paid "cost plus". Yet it is Builders, not Sons, who now claims for the balance of the price of the work of building the house. These reasons will show that Builders' claim fails. Work was performed by subcontractors. But it should be indicated at once that this was not a case where by reason of supervening events, such as the insolvency of the head contractor, an unpaid subcontractor seeks to recover by direct action against the owner, whether under a "mechanics' lien" statute such as Crennan the Worker's Liens Act 1893 (SA) or under the general law16. Further, Builders made no claim under that statute as a subcontractor of Sons. Neither the issues that are to be decided in this appeal, nor the way in which those issues are decided, can be understood without first observing some features of the way in which the litigation developed. Builders' pleaded case Builders brought proceedings in the District Court of South Australia against not only the Lumbers but also Sons. By its pleading, Builders made claims in contract and in "Restitution/Unjust Enrichment". It made some other claims as well, including a claim to enforce a lien under the Worker's Liens Act as a "contractor"17, but it will not be necessary to examine those other claims. Builders alleged in its pleading that the Lumbers (or one of them) had made an oral building contract with Sons. Builders further alleged that, some months after the Lumbers had made their contract with Sons, Builders made an oral contract with Sons by which the benefit of Sons' contract with the Lumbers was assigned to Builders, and Builders was obliged (to Sons) to perform the work that had to be done under the Lumbers contract with Sons. Builders pleaded that, as a result of the agreement between the Lumbers and Sons, and the subsequent agreement between Builders and Sons, either the Lumbers were (or one of them was) liable to Builders on the basis that the building contract had been assigned to Builders or, if the building contract had not been assigned, the Lumbers were (or one of them was) liable to Sons. If the Lumbers' liability was to Sons, Builders alleged that Sons was liable to Builders for the amount owing under the building contract. 16 cf Hampton v Glamorgan County Council [1917] AC 13; Winterton Constructions Pty Ltd v Hambros Australia Ltd (1991) 101 ALR 363; Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161; [1994] 1 All ER 470; Watts, "Does a subcontractor have restitutionary rights against the employer?", (1995) Lloyd's Maritime and Commercial Law Quarterly 398. 17 Defined in s 2 of the Worker's Liens Act 1893 (SA) as "a person (not being a sub-contractor) contracting with or employed by another person to do work, or to procure work to be done, or to furnish materials in connection with work" (emphasis added). Crennan Builders pleaded claims in "Restitution/Unjust Enrichment" against the Lumbers and alternative claims against Sons. As against the Lumbers, Builders alleged that they received the benefit of the completed house "at the expense of" Builders (because it, Builders, had done the work) and alleged that "[i]t would be unconscionable, unconscientious and unjust" for the Lumbers "to accept such benefits without making payment of the full value of the construction work carried out on the land". Builders' claim in "Restitution/Unjust Enrichment" against Sons took generally the same form as the claim against the Lumbers. But on this branch of its claim, Builders alleged that the benefit which Sons had received was Sons' right to sue the Lumbers for the price of the work done, and Sons having met its contractual obligations to perform the building contract. Again, Builders alleged that this benefit was obtained at the expense of Builders because Builders did the work and paid for it, and it was said to be "unconscionable, unconscientious and unjust" for Sons to retain that benefit without making payment to Builders. The pleading, which was not settled by counsel, failed to specify with the necessary clarity the material facts upon which Builders relied to demonstrate that conclusion in law. The pleading was embarrassing in the technical sense of that term18. This deficiency in the pleading by Builders of its case has contributed to difficulties apparent at all subsequent stages in the litigation. The Lumbers' defences As noted earlier, the Lumbers admitted that they had made a building contract with Sons. They denied any knowledge of the alleged agreement or arrangement between Builders and Sons. The Lumbers alleged that Builders was not licensed under the Builders Licensing Act 1986 (SA) (in force at the time of building) or the Building Work Contractors Act 1995 (SA) (which later repealed and replaced the earlier Act) and that, by operation of one or other of those Acts, Builders was precluded from recovering "any fee or other consideration in respect of the building work"19 unless the failure to hold and maintain a licence was inadvertent, which the Lumbers alleged was not the case here. 18 Winterton Constructions (1991) 101 ALR 363 at 375-376. 19 Builders Licensing Act 1986 (SA), s 39; cf Building Work Contractors Act 1995 (SA), s 6(2) – "fee, other consideration or compensation under or in relation to a contract". Crennan The Lumbers counterclaimed for damages, for allegedly defective work, but the detail of that counterclaim need not be examined. Builders' case at trial Builders' case at trial was much affected by the fact that, before trial, Sons obtained an order requiring Builders to provide security for its costs. Builders did not provide that security and further proceedings by Builders against Sons were then stayed. The case that Builders prosecuted at trial was, therefore, radically different from the case which it had pleaded. The case which Builders had pleaded had made alternative claims against the Lumbers and Sons. The case which Builders prosecuted at trial made claims only against the Lumbers. At trial, the chief weight of argument on behalf of Builders was placed upon its contention that Builders and Sons had made a contract by which Sons assigned the benefit of its building contract with the Lumbers to Builders. The Lumbers denied any knowledge of the arrangements which it was alleged had been made between Builders and Sons; there was no evidence to the contrary. Builders' assignment argument failed and its claims against the Lumbers were dismissed. Builders' case in the Full Court On appeal to the Full Court of the Supreme Court of South Australia there was a marked shift in the way in which Builders put its case. Chief weight was then placed upon its restitution claim against the Lumbers. A majority of the Full Court (Sulan and Layton JJ; Vanstone J dissenting) held that the restitution claim should succeed20. The majority concluded that the Lumbers had received "an incontrovertible benefit"21 which the Lumbers had freely accepted22, that the benefit was received at Builders' expense23, and that it would be unconscionable for the Lumbers to retain the benefit without paying for it24. That Builders was not licensed under the Builders Licensing Act, and that the failure to hold a 20 W Cook Builders Pty Ltd (in liq) v Lumbers (2007) 96 SASR 406. 21 (2007) 96 SASR 406 at 422 [75]. 22 (2007) 96 SASR 406 at 423-424 [83]-[84]. 23 (2007) 96 SASR 406 at 424 [86]. 24 (2007) 96 SASR 406 at 426 [95]. Crennan licence was not inadvertent, was held25 not to preclude its recovering the sum it claimed from the Lumbers. Builders' appeal, therefore, was allowed. The judgment entered at trial in favour of the Lumbers was set aside and judgment entered for Builders. It is against those orders that the Lumbers now appeal to this Court. The appeal to this Court should be allowed, and orders made restoring the judgment entered at trial dismissing Builders' claims against the Lumbers. The framework for analysis The analysis undertaken by the majority in the Full Court proceeded from principles stated at a high level of abstraction. There were four elements in the framework of "benefit" (or "incontrovertible benefit"26), "acceptance" (or "free acceptance"27), "expense", and unconscionability. Obviously, much turns on what is meant by those terms and upon what are the features said to make retention of the "benefit" the analysis made by the Full Court: 25 (2007) 96 SASR 406 at 426 [99]-[100]. 26 The word "incontrovertible" has been used in this context to direct attention to whether what has been done results in an accretion to the defendant's wealth. As Beatson pointed out in Guest et al (eds), Chitty on Contracts ("Chitty"), 26th ed (1989), vol 1 at 1317 [2040]: "[i]n the case of the rendering of services as opposed to the payment of money, 'the identity and value of the resulting benefit to the recipient may be debatable' [BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 799]". 27 The word "free" has been used in this context to direct attention to whether the recipient of a benefit had an opportunity to accept or reject the benefit. Cf Munro v Butt (1858) 8 E & B 738 [120 ER 275]; Sumpter v Hedges [1898] 1 QB 673; Forman & Co Pty Ltd v The Ship "Liddesdale" [1900] AC 190. Writing in successive editions of Chitty, Beatson suggested that English law "appears hostile to claims for services rendered or work done in the absence of a contract (express or implied) between the parties [and that] [t]he mere receipt of a benefit, when the defendant had no real option to accept or reject it, does not justify a claim for quantum meruit" (footnotes omitted). See Chitty, 25th ed (1983), vol 1 at 1153 [2050], 26th ed (1989), vol 1 at 1408-1409 [2145], 27th ed (1994), vol 1 at 1490 [29-127], 28th ed (1999), vol 1 at 1564 [30-186]; cf 29th ed (2004), vol 1 at 1698 Crennan unconscionable. Adding words like "incontrovertible" and "free" to some of the terms emphasises the evident difficulties of definition. As is especially relevant here, much also turns on the particular facts and circumstances to which the terms are to be applied. None of the terms, "benefit", "acceptance" or "expense", can usefully be defined or applied without deciding whether attention is to be confined to the party who is identified as conferring the benefit and the recipient of that benefit, or account must be taken of the legal relationships that exist between one or other of those two parties and some third party or parties in relation to the events and transactions said to constitute conferring a "benefit", its "acceptance", or the incurrence of "expense". In the present case, the majority in the Full Court directed principal attention to the relationship which it was held should be found to exist between Builders and the Lumbers. The legal relationship between the Lumbers and Sons was put to one side. Two bases for taking that step were identified. First, it was said28 that Sons "did not perform its obligations" under its contract with the Lumbers. It was said29 to be "not to the point for the Lumbers to claim that they are not liable to Builders because they have a contract with Sons, if Sons did not perform their part of the contract". Secondly, emphasis was given to the fact that Sons had acknowledged30 that it has no claim against the Lumbers. The majority in the Full Court concluded31 that in these circumstances "to uphold a claim in restitution by Builders in no way interferes with the contractual relationship between Sons and the Lumbers". These reasons will demonstrate that the legal relationship between Sons and the Lumbers cannot be dismissed from consideration, whether on the bases assigned by the majority in the Full Court or otherwise. When proper account is taken of the rights and obligations that existed between Sons and the Lumbers under their contract, the analysis made by the majority in the Full Court is shown to be flawed. The Lumbers are not shown to have received a "benefit" at Builders' "expense" which it would be unconscionable for them to retain without payment. No less importantly, proper they "accepted", and which 28 (2007) 96 SASR 406 at 416 [45]. 29 (2007) 96 SASR 406 at 416 [47]. 30 (2007) 96 SASR 406 at 416 [45]. 31 (2007) 96 SASR 406 at 416 [45]. Crennan analysis of the legal relationships revealed by the evidence will illustrate the dangers inherent in "top-down reasoning"32. The application of a framework for analysis expressed only at the level of abstraction adopted in this case, by reference to "benefit", "expense" and "acceptance" coupled with considerations of unconscionability, creates a serious risk of producing a result that is discordant with accepted principle, thus creating a lack of coherence with other branches of the law33. There are two reasons of particular relevance to this case why that is so. They may be identified by reference to two questions which, although expressed separately, will later be seen to intersect in several ways. First, does applying the posited framework for analysis to the facts of the present case extend the availability of recovery beyond the circumstances in which a claim for work and labour done (or money paid) for and at the request of the defendant would be available? Secondly, and no less importantly, how is the result of applying this framework for analysis consistent with their contractual arrangements? relevant parties undertook by the obligations The doing of work, or payment of money, for and at the request of another, are archetypal cases in which it may be said that a person receives a "benefit" at the "expense" of another which the recipient "accepts" and which it would be unconscionable for the recipient to retain without payment. And as is well apparent from this Court's decision in Steele v Tardiani34, an essential step in considering a claim in quantum meruit (or money paid) is to ask whether and how that claim fits with any particular contract the parties have made. It is essential to consider how the claim fits with contracts the parties have made because, as Lord Goff of Chieveley rightly warned in Pan Ocean Shipping Co Ltd v Creditcorp Ltd35, "serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract". In a similar vein, in the Comments upon §29 of the 32 Roxborough v Rothmans of Pall Mall (2001) 208 CLR 516 at 544 [73] per Gummow J; [2001] HCA 68; McGinty v Western Australia (1996) 186 CLR 140 at 232 per McHugh J; [1995] HCA 46. 33 See Sullivan v Moody (2001) 207 CLR 562 at 580-581 [53]-[55] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ; [2001] HCA 59. 34 (1946) 72 CLR 386; [1946] HCA 21. 35 [1994] 1 WLR 161 at 166; [1994] 1 All ER 470 at 475. Crennan proposed Restatement, (3d), "Restitution and Unjust Enrichment"36, the Reporter says: "Even if restitution is the claimant's only recourse, a claim under this Section will be denied where the imposition of a liability in restitution would overturn an existing allocation of risk or limitation of liability previously established by contract." Likewise, it is essential to consider whether the facts of the present case yield to analysis as a claim for work and labour done, or money paid, because where one party (in this case, Builders) seeks recompense from another (here the Lumbers) for some service done or benefit conferred by the first party for or on the other, the bare fact of conferral of the benefit or provision of the service does not suffice to establish an entitlement to recovery. As Bowen LJ said in Falcke v Scottish Imperial Insurance Company37: "The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will." (emphasis added) The principle is not unqualified. Bowen LJ identified38 salvage in maritime law as one qualification. Other cases, including other cases of necessitous intervention, may now be seen as further qualifications to the principle but it is not necessary to examine in this case how extensive are those further qualifications or what is their content. For the purposes of this case the critical observations to make are first that Builders' restitutionary claim does not yield to analysis as a claim for work and labour done or money paid and secondly, that Builders' restitutionary claim, if allowed, would redistribute not only the risks but also the rights and obligations for which provision was made by the contract the Lumbers made with Sons. 36 Tentative Draft No 3, 22 March 2004. Section 29 deals with the topic of restitution in cases of "Self-Interested Intervention". 37 (1886) 34 Ch D 234 at 248. 38 (1886) 34 Ch D 234 at 248. Crennan A claim for work and labour done or money paid? At trial, Builders did not frame its claim against the Lumbers as a claim for work and labour done or money paid at the Lumbers' request. Builders, therefore, did not seek to prove that the Lumbers had ever asked Builders to do whatever Builders did in connection with building the Lumbers' house. And the evidence that was led at trial showed that the Lumbers had never asked Builders to do anything in connection with the Lumbers' house. On the hearing of the appeal to this Court, however, Builders submitted that acceptance of a benefit, without a request, would be sufficient, at least in this case, to found an action by Builders for work and labour done or money paid. Builders submitted that this conclusion was supported, if not required, by this Court's decision in Pavey & Matthews Pty Ltd v Paul39. That is not so. In Pavey & Matthews, a majority of this Court held40 that the right to recover on a quantum meruit does not depend on the existence of an implied contract but on a claim to restitution or one based on unjust enrichment. The concept of unjust enrichment was described41 by Deane J in Pavey & Matthews as constituting: "a unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case." It is important to recognise two points about Pavey & Matthews. First, there was no issue in that case about whether the plaintiff, a builder, had a claim for work and labour done and materials supplied. The issue in the case was whether that claim was defeated by a statutory provision42 analogous to s 4 of the Statute of Frauds 1677 (UK) ("no action shall be brought upon any agreement ... 39 (1987) 162 CLR 221; [1987] HCA 5. 40 (1987) 162 CLR 221 at 227 per Mason and Wilson JJ, 256-257 per Deane J. 41 (1987) 162 CLR 221 at 256-257. 42 Builders Licensing Act 1971 (NSW), s 45. Crennan unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorized"). In particular, the issue was whether the builder's action on a quantum meruit was a direct or indirect enforcement of the oral contract the parties had made. The majority in Pavey & Matthews held43 that because "the true foundation of the right to recover on a quantum meruit does not depend on the existence of an implied contract" the action was not "one by which the plaintiff seeks to enforce the oral contract". The second point to be noted is that unjust enrichment was identified as a legal concept unifying "a variety of distinct categories of case"44. It was not identified as a principle which can be taken as a sufficient premise for direct application in particular cases. Rather, as Deane J emphasised45 in Pavey & Matthews, it is necessary to proceed by "the ordinary processes of legal reasoning" and by reference to existing categories of cases in which an obligation to pay compensation has been imposed. "To identify the basis of such actions as restitution and not genuine agreement is not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate."46 On the contrary, what the recognition of the unifying concept does is to assist "in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case" (emphasis added)47. Builders' submission that acceptance of a benefit, without a request, suffices to found an action for work and labour done or money paid thus finds no direct support in Pavey & Matthews. That issue did not arise and was not decided in that case. Rather, the question to which Pavey & Matthews directs attention is whether the long-established and well-recognised category of cases constituted by claims for work and labour done or money paid at the request of another should be extended or developed in the manner for which Builders contended. And in that regard Builders emphasised what had been said by 43 (1987) 162 CLR 221 at 227 per Mason and Wilson JJ; see also at 256 per Deane J. 44 (1987) 162 CLR 221 at 257 per Deane J. 45 (1987) 162 CLR 221 at 257. 46 (1987) 162 CLR 221 at 256 per Deane J. 47 (1987) 162 CLR 221 at 257 per Deane J. Crennan Doyle CJ, for the Full Court of the Supreme Court of South Australia, in It is convenient to consider the decision in Angelopoulos by reference to Builders' submission that, subject to one immaterial qualification, all the nine factors identified49 by Doyle CJ in Angelopoulos as relevant to "acceptance" of a benefit, were present in this case. It is important, however, to preface that consideration by observing that although Builders' argument was directed immediately to demonstrating that "acceptance" of a benefit suffices to found an action for work and labour done or money paid, its arguments about the availability of an action for work and labour done or money paid were directed ultimately to the proposition that adopting the framework for analysis used by the majority in the Full Court in this case was not inconsistent with long-established principles governing actions for work and labour done or money paid. Adapting what was said by Doyle CJ in Angelopoulos to the facts of this case, the nine factors identified by Builders as supporting its claim were: the plaintiff (here, Builders) did not do the work gratuitously; Builders did not act "entirely at [its] own initiative"50 but at the implied request of the Lumbers; payment for doing the work was not subject to fulfilment of a subsequent condition; the work was not done "on a basis from which [Builders] chose to depart"51; the Lumbers benefited from what Builders did; the benefit was conferred at the expense of Builders; 48 (1995) 65 SASR 1. 49 (1995) 65 SASR 1 at 12-13. 50 (1995) 65 SASR 1 at 13. 51 (1995) 65 SASR 1 at 13. Crennan the Lumbers "approved of or agreed to"52 Builders carrying out the work it did; the circumstances were such that the Lumbers "must have known as ... reasonable [persons] that [Builders] expected to be remunerated for [its] services"53; and there is no particular circumstance (such as change of position) by virtue of which it would be unjust to require the Lumbers to remunerate Builders. It will be noted that the second of the matters identified was the making of an "implied request" by the Lumbers to Builders to do the work and to pay money. At once it should be pointed out that, if Builders did whatever work it did and paid whatever money it paid at the Lumbers' request, Builders' claim for a reasonable price for the work and for the money it paid would fall neatly within long-established principles. It would matter not at all whether the request was made expressly, or its making was to be implied from the actions of the parties in the circumstances of the case54. Builders would have an action for work and labour done or money paid for and at the request of the Lumbers. And if Builders did work or paid money at the Lumbers' request, it would also follow that it would be neither necessary nor appropriate to consider any of the other eight factors identified in Angelopoulos in deciding whether Builders could recover a fair price for the work it had done and the amount it had paid for and at the request of the Lumbers. To the extent that Angelopoulos is understood as requiring separate or additional consideration of those other factors, where a plaintiff seeks to recover a fair price for work done at the defendant's request, or the amount the plaintiff has paid for the defendant at the defendant's request, Angelopoulos is wrong and should not be followed. But in the end Builders did not submit that it could be found that the Lumbers had made any request directed to Builders. Rather, Builders' arguments 52 (1995) 65 SASR 1 at 13. 53 (1995) 65 SASR 1 at 13. 54 Birmingham and District Land Company v London and North Western Railway Company (1886) 34 Ch D 261 at 274 per Bowen LJ; Way v Latilla [1937] 3 All ER 759 at 765 per Lord Wright. Crennan proceeded from the premise that, in the present case, the Lumbers' request (or requests) for work to be done and money paid was (or were) directed to Sons and not to Builders. Although Builders thus accepted that, unlike Angelopoulos, it could not be said that the Lumbers made any request directed to Builders, this difference from Angelopoulos was said to be immaterial. The identity of the party to whom the request was directed was said to be of no moment because confusion about which company in a group of companies is party to a contract is a common occurrence in modern corporate life55. And although no case of mistake was run at trial, or on appeal to the Full Court, the possibility of confusion of identity between Sons and Builders was said by Builders to be reason enough to treat the fact of a request, regardless of the identity of the party to whom the request was directed, as the relevant consideration. The propositions just described take several steps that would require the closest consideration before they could be accepted. First, it may greatly be doubted that any sufficient foundation was laid in the evidence adduced or arguments advanced in the courts below for either an argument based in mistake about the identity of the party with whom the Lumbers dealt, or an argument based in some confusion of identity between Sons and Builders. Secondly, even if it were to be accepted that confusion about the identity of the relevant contracting parties can and sometimes does occur when a contract is made with one of a group of companies, the legal consequences of any such confusion have hitherto been determined by application of the law of contract and doctrines of mistake56. It is not necessary, however, to pursue these aspects of the matter further. Rather, it is important to recognise that, although expressed in different terms, Builders' argument that the identity of the party to whom the Lumbers directed their request to do work and pay money should be dismissed as irrelevant, was an argument that sought to treat the contract made between the Lumbers and Sons as irrelevant. And it will be recalled that it was a necessary element of the reasoning of the majority in the Full Court to put aside further consideration of the contract between Sons and Lumbers. It will further be recalled that the majority in the Full Court took that step on the bases, first, that Builders "did the work" and Sons 55 cf Qintex Australia Finance Ltd v Schroders Australia Ltd (1990) 3 ACSR 267 at 56 Qintex (1990) 3 ACSR 267 at 276-277. Crennan "did not perform its obligations" under its contract with the Lumbers, and secondly, that Sons acknowledged it had no claim against the Lumbers. Both bases for putting aside the contract between Sons and Lumbers are flawed. Builders did the work? The first proposition made by the majority in the Full Court was expressed in several different ways but each can be seen as a variant of a single compound proposition: that "Builders did the work, and Sons did not". To say that "Builders did the work, and Sons did not", elides a number of different ideas. Neither Builders nor Sons "did" any work. Each is a corporation. The work that was done in the construction of the house, whether it was done at the building site or in an office, was done by individuals. Before deciding which company "did" the work it would be necessary to identify for which company the relevant individuals were working. Here, as in so much else of the trial of this litigation, the evidence was exiguous and such evidence as was adduced was less than clear. On any view of the matter, Mr McAdam was an important participant in relevant events. He negotiated the original contract with the Lumbers. As noted earlier, there was no dispute that he did this on behalf of Sons. But Mr McAdam was also, so it seems, the originator of the idea that Builders should "take over" the work on the Lumbers' contract from Sons. And it was Mr McAdam who was said to have made the agreement or arrangement between Builders and Sons that Builders would "take over" the work, and it was he who then carried that agreement or arrangement into effect. But neither side in the present litigation called Mr McAdam to give evidence. Such little evidence as was given about the relationships between Builders and Sons was given by Mr Jeffrey Cook. Two aspects of those relationships require examination: first, the corporate relationship between the two entities and second, the agreement or arrangement made between them to effect a "changeover" of the company that was to be responsible for the construction of the Lumbers' house. The evidence led at trial suggested that, in 1993, Sons was, and for many years had been, the chief building company in a group of companies associated with several members of the Cook family who were third or subsequent generation descendants of the eponymous W Cook. The companies traced their history to about 1910. Crennan Mr Jeffrey Cook was a director of Sons up to at least 1993, the year before Sons made its contract with the Lumbers. At that time there were two shareholders of Sons: an investment company associated with Mr Jeffrey Cook and his family, and another investment company associated with another branch of the Cook family. The shareholding and directorate of Builders were said to differ from those of Sons, but no details of those differences were given in evidence. In 1993, Mr Jeffrey Cook "sat at the top of the apex for managing the building side of the business" of Sons. Sons also operated a joinery workshop and in 1993 Mr Jeffrey Cook managed that part of the business as well. Mr McAdam began working in the Cook businesses in 1959. He was appointed a director of Sons in 1964, the year in which it was incorporated. In 1993, he was responsible for the financial and contract administration of Sons. At the start of 1994, Mr McAdam proposed to Mr Jeffrey Cook "separating" the joinery business of Sons from its building business. Mr Cook agreed that this should be done, and agreed that, "after the changeover", building work would be done by Builders (then a company which did not operate in any way). This "changeover", Mr Cook said, was done by book entries and took effect from about April 1994. At trial he said that he understood the changeover "was going to be effective in relation to probably the separation and then the viability of keeping them [the joinery and the building businesses] separate to make them more financial". Mr Cook's evidence-in-chief was that the so-called "changeover" was effected "in the books". He said that Sons carried out the work on the Lumbers' house until the changeover, but that after the changeover "[i]n the books it was W. Cook Builders" (emphasis added). At the outset of the trial, counsel then appearing for the Lumbers indicated that there was no dispute that "the subcontractors were, in fact, paid by [Builders]". Given that it was not disputed that the Lumbers had paid some subcontractors directly, this statement of what was not disputed was expressed too widely. Nonetheless, the conventional basis upon which the litigation has been conducted at all stages is that Builders paid those subcontractors whom the Lumbers did not pay. The books in which entries were made to effect the "changeover" about which Mr Jeffrey Cook gave evidence were not tendered. No evidence was led to show what happened, if anything, about employment contracts or bank accounts. In particular, the trial judge was unable to say whether payments made to subcontractors after the changeover were made from a separate bank account of Builders or from what he described as "Cook Group funds, with the payments being debited through journal entries to the Builders accounts". As his Honour went on to say: Crennan "Externally ... nothing appeared to have changed. The same employees, including Mr Jeffrey Cook, continued with the building work. Mr McAdam continued to occupy an office adjoining that of Mr Cook, and maintained direct contact with Mr Warwick Lumbers. Neither Mr Jeffrey Cook nor Mr McAdam made any mention to the Lumbers or the architect Mr Fielder of the existence of Builders, or even the re-organisation." As noted earlier, Mr Warwick Lumbers paid directly some subcontractors who worked on the house. Otherwise, all payments made by the Lumbers were directed to Sons; none was directed to Builders. The payments the Lumbers made to Sons were made in response to oral requests by Mr McAdam. No written progress claims or invoices were said to have been prepared or sent to the Lumbers, whether on behalf of Sons or on behalf of Builders. There was a dispute at trial about what amount should be allowed for supervision of the work that was done. (The claim for supervision was the largest part of the claim that Builders made against the Lumbers.) The trial judge found that 10 per cent of cost was a fair allowance for supervision. This finding is not now challenged and the dispute about the quantum of this aspect of the claim may be put aside. But while the evidence at trial assumed that Mr Jeffrey Cook played an important part in supervising the construction of the house, no evidence was led of what he did, or of what were the arrangements pursuant to which he undertook that work. Who "did the work"? To say, in these circumstances, that Builders "did the work" obscures what were the legal relationships that brought about the result described. The end result described is as consistent with Builders having performed or procured performance of the work in satisfaction of an obligation it owed to Sons, as it is with Builders performing or procuring performance of the work in satisfaction of an obligation it understood that it owed to the Lumbers. And if Builders performed or procured performance of the work in satisfaction of an obligation it owed to Sons, Sons thereby procured the performance of the obligation it owed the Lumbers. Issues about the possible intersections between contractual arrangements, on the one hand between Builders and Sons, and on the other between the Lumbers and Sons, were not explored at trial. The evidence that was led at trial required the conclusion, however, that whatever may have been the legal effect of the arrangements which Mr McAdam had sought to effect between Builders Crennan and Sons, and whatever it was that Builders later did in performance of those arrangements, anything that Builders did in relation to the building of the Lumbers' house was done with the knowledge and assent of Sons. It is possible that the informality of the "changeover" arrangements which Mr McAdam made was such that it could not be said that Builders and Sons agreed upon terms to effect that "changeover" that were sufficiently certain to be enforceable as a contract between Builders and Sons. If that were so, it may not be apt to describe the relationship between those entities as a subcontract. It is also possible, however, that despite the informality of the arrangement, an enforceable agreement was reached that Builders would perform Sons' work under the Lumbers contract. Indeed, making such an agreement was an important element in the assignment case Builders had advanced at trial. It is only in this Court that Builders sought for the first time to advance a different case and argue (under cover of a notice of contention) that the arrangements between Builders and Sons were too uncertain to admit of enforcement. It is too late for Builders to advance such a case57. If the point had been taken at trial different evidence may well have been adduced. In any event, however, if no concluded agreement was made between Builders and Sons before work was done or money was paid, there is no doubt that, if the work was done by Builders it was done at Sons' request, or that, if Builders paid money, it did so at Sons' request. It follows that, if Builders did work or paid money, it had a claim against Sons for work done and money paid at Sons' request. That is, if Builders did work or paid money, Builders could look to Sons for payment for the work it did and the money it paid at the request of Sons in performance of the building works which Sons had agreed to perform under its contract with the Lumbers. However, if an enforceable contract were made then no action would lie for a quantum meruit while the contract remained on foot58. It also follows that, if Builders did work or paid money, Sons could point to that work or that payment by Builders as done or paid in performance of Sons' obligations to the Lumbers. Sons could do that because nothing in the evidence suggested that Sons could not engage persons other than its employees to build 57 Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12. 58 Matthes v Carter (1955) 55 SR (NSW) 357 at 364; Gino D'Allesandro Constructions Pty Ltd v Powis [1987] 2 Qd R 40 at 59. Crennan the Lumbers' house. Such evidence as was led at trial suggested that, in accordance with common building practice, both the Lumbers and Sons assumed that subcontractors would be engaged to perform the work. It follows that the compound premise for the conclusions reached by the majority in the Full Court, that "Builders did the work and Sons did not", obscured much more than it illuminated. To the extent that the proposition identifies who paid subcontractors or material suppliers, it is a proposition that is incomplete in relevant respects. It is incomplete because it does not identify what were the legal relationships that governed those payments. Further, to the extent that the proposition asserts that it was employees or subcontractors of Builders who worked at the site of the Lumbers' house, the proposition is again incomplete in a relevant respect. It is incomplete to the extent that it does not reflect the evidence led at trial that demonstrated that Sons procured Builders to do the work that Sons had contracted to perform. It procured that result either by making a contract with Builders to that effect or, if there was no contract, by asking that Builders do it. And contrary to the conclusion reached by the majority in the Full Court it follows that the evidence led at trial did not establish that Sons had "failed" to do the work its contract with the Lumbers required it to perform, or that Sons was otherwise in breach of its contract with the Lumbers in any relevant respect. For these reasons, the first of the two bases on which the majority in the Full Court put aside, as irrelevant, the legal relationship between the Lumbers and Sons (that Builders did the work and Sons did not) is shown to be wrong. What of the other basis relied on by the Full Court: Sons' disavowal of any claim against the Lumbers? Sons makes no claim? By a letter dated 1 February 1999, signed by Mr Malcolm J Cook as a director of Sons, Mr Warwick Lumbers was told that "there are no outstanding amounts owing either by yourself, or any other person or entity, to [Sons] in relation to the construction" of the Lumbers' house. Reference was made in that letter to "a restructuring of the Company [Sons] in 1994" and to Mr Jeffrey Cook taking over "all building & construction operations currently in progress, operating as [Builders] ... and [continuing] building operations until May 1998, when [Builders] went into liquidation". The letter said that "[a]ll invoicing & receipts in relation to [the Lumbers' house] (and all other building projects) were through the accounts system of [Builders]". The letter concluded by saying that "Mr Jeffrey Cook has had no input into this reply" and that he had "had no contact with [Sons] in relation to the day-to-day operations of the Company, since about May of 1998". Crennan No evidence was led at trial about how or why this letter was written. In particular, Mr Warwick Lumbers was not asked any question about how the letter came about. Be this as it may, it is plain from the letter's text that, at least in February 1999, Sons made no claim to any further payment in respect of the construction of the Lumbers' house. And there was no evidence led at trial that Sons had thereafter sought any further payment from the Lumbers. The majority in the Full Court treated the fact that Sons has made no claim for further payment from the Lumbers as bearing upon whether allowing a claim in restitution by Builders "interferes with the contractual relationship between Sons and the Lumbers"59. But the absence of any claim by Sons against the Lumbers does not, without more, say anything about the nature or the content of the contractual relationship between Sons and the Lumbers. And the absence of a claim by Sons does not demonstrate, as the majority in the Full Court assumed, that the Lumbers would obtain some "windfall" unless the Lumbers were found liable to Builders. It is necessary to say something more about both the relevance of the contractual relationship between Sons and the Lumbers and about the notion of "windfall". Because the two matters are related it will be convenient to begin by saying something about the notion of "windfall". An important element in the reasoning of the majority in the Full Court was that if the Lumbers were not held liable to Builders they would have obtained a house for which they had not paid enough. The amount paid was characterised as not "enough" by taking the amount that had been outlaid for subcontractors and materials, adding an amount for supervision and the agreed profit margin, and comparing that with the total payments made by the Lumbers. And because the total of outlays, supervision, and profit exceeded the total payments made, it was said that the Lumbers would receive a "benefit", a "gain" or a "windfall" if they were not found to be liable to Builders. The accuracy and the relevance of any such characterisation depends upon whether the Lumbers had performed their obligations under their contract with Sons. If the Lumbers have not fully performed their obligations under their contract with Sons, by not paying all that is due to Sons, it is evident that the Lumbers have not received any benefit, gain or windfall. They would remain liable to Sons. Questions of benefit, gain or windfall could arise only if Sons has 59 (2007) 96 SASR 406 at 416 [45]. Crennan no further claim against the Lumbers. Two possible bases for the conclusion that Sons has no further claim against Lumbers should be examined. If the Lumbers have paid all that they owe Sons under the agreement they made with Sons, it may then be possible to say that Sons made an improvident bargain. But whether that description of the bargain is apt is not now relevant. What is presently important would be the conclusion that the Lumbers have satisfied their obligations to Sons, not any commercial characterisation of the bargain. Yet as earlier explained, notions of "benefit", "gain" or "windfall" employed in this case do not depend upon an analysis of the legal obligations of the parties. They seek to invoke some broader economic analysis comparing the "worth" or "value" of the end product (determined by totalling the outlays made to construct the house) with the amount the Lumbers have paid. If, on the other hand, the Lumbers have not paid Sons all that Sons could lawfully demand under the agreement between the Lumbers and Sons, there may be some question about the legal effect of the letter written on behalf of Sons. If that letter were to be held to now stand in the way of Sons recovering amounts otherwise due under the agreement, the sending of the letter may again be described as improvident or commercially unwise. But again such a characterisation of the letter is not to the point. If the letter does provide an impediment to further recovery by Sons from the Lumbers, the Lumbers would have obtained, in effect, a sufficient discharge from Sons of their obligations. But no matter whether the Lumbers have paid all that they owe, or the letter written by Sons presents some legal obstacle to Sons' recovering further sums owed by the Lumbers, it is not right to describe the result as one in which the Lumbers have in any sense obtained a "windfall". The economic result arrived at follows either from the bargain that Sons made with them, or from the way in which Sons has subsequently dealt with that bargain. It is not a result that follows from anything that the Lumbers sought to have Builders do or refrain from doing. For these reasons, the second of the bases upon which the majority in the Full Court put aside from consideration the contractual obligations undertaken by the Lumbers and Sons is also flawed. The relevance of the contract between the Lumbers and Sons When account is taken of the contractual relationship between the Lumbers and Sons several observations may then be made. First, the Lumbers accepted no benefit at the expense of Builders which it would be unconscionable to retain. The Lumbers made a contract with Sons Crennan which either has been fully performed by both parties or has not. Sons made an arrangement or agreement with Builders which again has either been fully performed or it has not. If either the agreement between Sons and the Lumbers or the agreement or arrangement between Sons and Builders has not been fully performed (because all that is owed by one party to the other has not been paid) that is a matter between the parties to the relevant agreement. A failure of performance of either agreement is no reason to conclude that Builders should then have some claim against the Lumbers, parties with whom Builders has no contract. Because Builders had no dealings with the Lumbers, Builders has no claim against the Lumbers for the price of any work and labour Builders performed or for any money that Builders may have paid in relation to the construction. Builders has no such claim because it can point to no request by the Lumbers directed to Builders that Builders do any work it did or pay any money it did. Reference to whether the Lumbers "accepted" any work that Builders did or "accepted" the benefit of any money it paid is irrelevant. It is irrelevant because it distracts attention from the legal relationships between the three parties: the Lumbers, Sons and Builders. To now impose on the Lumbers an obligation to pay Builders would constitute a radical alteration of the bargains the parties struck and of the rights and obligations which each party thus assumed. There is no warrant for doing that. The second observation to be made is more general. It is that identification of the rights and obligations of the parties, in this as in any matter, requires close attention to the particular facts and circumstances of the case. Necessarily that requires close attention to what contractual or other obligations each owes to the other. Conclusion and Orders Builders claim in restitution against the Lumbers fails. It is then not necessary to consider the Lumbers' defence to that claim founded in the Builders Licensing Act or the Building Work Contractors Act. The appeal should be allowed with costs, the orders of the Full Court of the Supreme Court of South Australia set aside and in their place there should be orders that the appeal to that Court is dismissed with costs. |
HIGH COURT OF AUSTRALIA ICETV PTY LIMITED & ANOR APPELLANTS AND NINE NETWORK AUSTRALIA PTY LIMITED RESPONDENT IceTV Pty Limited v Nine Network Australia Pty Limited [2009] HCA 14 22 April 2009 ORDER Appeal allowed with costs. Set aside the order of the Full Court of the Federal Court of Australia made on 8 May 2008, as varied on 20 August 2008, and in place thereof order that the appeal to that Court be dismissed with costs. On appeal from the Federal Court of Australia Representation J M Ireland QC with S C G Burley SC and J S Cooke for the appellants (instructed by Bartier Perry) A J L Bannon SC with R Cobden SC and J M Hennessy for the respondent (instructed by Gilbert & Tobin) D K Catterns QC with A J Ryan and S M Rebikoff intervening as amicus curiae on behalf of Telstra Corporation Limited (instructed by Mallesons Stephen R J Webb SC intervening as amicus curiae on behalf of Australian Digital Alliance Limited (instructed by Baker & McKenzie) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS IceTV Pty Limited v Nine Network Australia Pty Limited Intellectual property – Copyright – Literary work – Compilation – Infringement – Production by employees of Nine Network Australia Pty Limited ("Nine") of weekly schedules of television programmes to be broadcast on television stations within Nine Network ("Weekly Schedules") – Information from Weekly Schedules used by third parties, with licence from Nine, to produce "Aggregated Guides" containing programme schedules for various television stations – Production by employees of IceTV Pty Limited of electronic programme guide for television using information from Aggregated Guides – Subsistence of copyright in each Weekly Schedule admitted – Alleged infringement of copyright by reproduction of substantial part of Weekly Schedules – Whether reproduction of "substantial part" – Quality of part reproduced – Originality – Information/expression dichotomy – Appropriation of "skill and labour" – Relevance of skill and labour devoted to programming decisions – Relevance of competing interests and policy considerations – Animus furandi. Intellectual property – Copyright – Literary work – Compilation – Subsistence – Need to identify author, and time of making or first publication, of work – Originality – Kind of skill and labour required – "Sweat of the brow" and "industrious collection" compared with "creativity". Intellectual property – Copyright – Literary work – Compilation – Subsistence – Weekly Schedules produced using computer database – Whether database also work in suit – Whether Weekly Schedules same work. and Words "animus phrases "information/expression dichotomy", "substantial part". furandi", "originality", "author", "skill "compilation", labour", and Copyright Act 1968 (Cth), ss 9(3), 10(1), 14(1), 21, 22, 29, 31, 32, 33, 34, 35, 36, Pt III Div 9, Pt III. Copyright Act 1911 (Imp), ss 1(1), 35(1). Copyright, Designs and Patents Act 1988 (UK), s 9(3). Copyright Act 1976, 17 USC §§101, 102. Copyright Act RSC 1985, ch C-42, s 2. FRENCH CJ, CRENNAN AND KIEFEL JJ. Introduction The respondent, Nine Network Australia Pty Limited ("Nine"), is engaged in the business of acquiring, distributing, selecting and scheduling programmes to be broadcast by various free-to-air television stations within the "Nine Network". The scheduling of programmes to be broadcast involves the use of a database on Nine's computer network ("the Nine Database"). Approximately two weeks prior to the commencement of each week of broadcasting, an employee of Nine supplies certain third parties known as "Aggregators" with a schedule of programmes to be broadcast on Nine Network stations in that week (a "Weekly Schedule"). Each Weekly Schedule is produced from the Nine Database. Each Weekly Schedule contains various elements, including particulars of the time and title of programmes to be broadcast ("time and title information"). The Aggregators use the Weekly Schedule, together with comparable material provided by other Australian television broadcasters and independently obtained material, to produce "Aggregated Guides", which are schedules of programmes to be broadcast on various television stations, for publication in various media. The first appellant, IceTV Pty Limited ("IceTV"), commenced trading in 2005. It is a wholly owned subsidiary of the second appellant, IceTV Holdings Limited ("IceTV Holdings"). They are not broadcasters. The primary business of IceTV is the provision, via the Internet, of a subscription-based electronic programme guide for television known as the "IceGuide". When downloaded onto certain devices, which are available for purchase by consumers in Australia, the IceGuide displays details of programmes scheduled to be broadcast by free-to-air television stations for the coming six to eight days, including stations in the Nine Network. Over the period relevant to this appeal, when preparing the information to be included in the IceGuide for a given day, employees of IceTV used information included in the IceGuide for a previous day1 and then compared this with published Aggregated Guides. Where there was a discrepancy as to the time and title information, the IceGuide was amended to reflect the Aggregated Guides in almost all cases. It is this use of the Aggregated Guides that is in issue in this appeal. 1 As to the creation of the original IceGuide schedules, see [19]. Crennan The proceedings This appeal arises out of proceedings brought by Nine in the Federal Court of Australia against IceTV and IceTV Holdings for infringement of copyright. Although Nine's case at trial was broader in several respects, relevantly to this appeal Nine alleged at trial, on appeal to a Full Court of the Federal Court of Australia ("the Full Court") and on the first day of hearing in this Court that: each Weekly Schedule was a "compilation" and therefore a "literary work", within the meaning of s 10(1) of the Copyright Act 1968 (Cth) ("the Act"); each was an "original" literary work, in which copyright subsisted, within the meaning of s 32 of the Act; Nine was the owner of that copyright; and IceTV infringed that copyright by taking part of the time and title information from the Aggregated Guides and including it in the IceGuide, as this constituted a reproduction (albeit an "indirect reproduction") in a material form of a "substantial part" of the copyright work, within the meaning of s 14(1)(b) of the Act. The claims involved alleged reproduction of time and title information week by week. Nine sought declaratory and injunctive relief against IceTV and IceTV Holdings, as well as damages or an account of profits and additional damages pursuant to s 115(4) of the Act. For their part, IceTV and IceTV Holdings accepted that copyright subsisted in each Weekly Schedule as an original literary work. However, they denied that IceTV had reproduced, in a material form, a substantial part of any Weekly Schedule in issue and denied that reproduction from any Aggregated Guide was a reproduction of any Weekly Schedule. Accordingly, both the primary judge (Bennett J)2 and the Full Court (Black CJ, Lindgren and Sackville JJ)3 dealt with this matter on the basis that the subsistence of copyright in the Weekly Schedules was admitted. The dispute was treated below as one to be resolved, first, by a determination of whether the time and title information which was reproduced constituted a "substantial part" of the Weekly Schedules and, secondly, by consideration of the "indirect reproduction" issue. Both the primary judge and the Full Court essentially approached the question of whether IceTV had reproduced a substantial part of any Weekly Schedule by identifying the "skill and labour" which was expended on creating the Weekly Schedules, then asking whether IceTV had "appropriated" Nine's skill and labour. The primary judge and the Full Court reached opposite 2 Nine Network Australia Pty Ltd v IceTV Pty Ltd (2007) 73 IPR 99 at 107 [31]. 3 Nine Network Australia Pty Ltd v IceTV Pty Ltd (2008) 168 FCR 14 at 15 [1], 29 Crennan conclusions on the point essentially because of different approaches to identifying the relevant skill and labour in question: the primary judge considered that skill and labour in making programming decisions was not relevant and that there was not a reproduction of a substantial part; the Full Court considered that this skill and labour was relevant and that there was a reproduction of a substantial part. There was a change in direction on the second day of hearing in this Court. Nine sought to recharacterise the relevant original literary works as the "Nine Database", a matter explained by Gummow, Hayne and Heydon JJ4. IceTV and IceTV Holdings contested that recharacterisation. We agree with Gummow, Hayne and Heydon JJ that the appeal should be allowed. In the light of the reasons which follow, it is unnecessary for us to consider the "indirect reproduction" issue. The facts and the relevant legislation have all been set out in the reasons of Gummow, Hayne and Heydon JJ. They do not need to be repeated here except as necessary to explain our reasons. Question The principal question raised by this appeal is whether Nine can obtain relief for copyright infringement arising from the reproduction of individual items of information, part of the time and title information, in respect of various programmes contained in the Weekly Schedules. If this question is answered affirmatively, this would effectively restrain IceTV from selling its products in the derivative or secondary market of weekly television guides without a licence or authorisation from Nine. The works in suit The Weekly Schedules. As noted above, the works in suit were identified, at first, as each of the Weekly Schedules over the relevant period in which it was said that copyright infringement occurred. There were two formats of the Weekly Schedule in evidence. The primary judge described the Weekly Schedule, in either format, as follows5: 4 See reasons of Gummow, Hayne and Heydon JJ at [141]-[142]. 5 Nine Network Australia Pty Ltd v IceTV Pty Ltd (2007) 73 IPR 99 at 107-108 [34]- [35]. See also reasons of Gummow, Hayne and Heydon JJ at [118]-[119]. Crennan "The weekly schedule contains the time and title information for a 7-day broadcast week. It gives program starting times, program titles and, where relevant, episode titles for each day. The weekly schedule also contains additional program information, including whether the program or episode is a repeat or live, format information (for example, 'WS' for widescreen and 'HD' for high definition), the classification (for example, 'PG' for parental guidance, 'M' for mature), consumer advice information (for example, 'Frequent Co[a]rse Language [L]') and program or episode synopses. The synopses have a literary element. The information included in the weekly schedule is set out in columns for each day … The first two columns comprise program time and title information. The third and fourth columns comprise additional program information. The fifth and final column contains the synopses. The arrangement of the weekly schedule is in a particular way: as a broadcast week from Sunday to Saturday under each 'day'; as a day, from 6 am to 5.59 am the next day; in tabular form; and in columns, with each column containing certain information as described above." The Nine Database. As detailed in the reasons of Gummow, Hayne and Heydon JJ6, on the second day of hearing in this Court, Nine submitted, for the first time, that the work in suit was the Nine Database (presumably from week to week) and that each Weekly Schedule was but a form of that work. It is difficult to accept this contention. As explained in the reasons of Gummow, Hayne and Heydon JJ7, associated with each timeslot in the Nine Database were pieces of information not associated with that timeslot in the Weekly Schedule, such as a catalogue code. Further, as explained by the primary judge8, other documents which differ substantially from the Weekly Schedule were also produced from the Nine Database. Assuming the Nine Database is a 8 Nine Network Australia Pty Ltd v IceTV Pty Ltd (2007) 73 IPR 99 at 105 [22]. Crennan compilation, it therefore appears to be a different compilation from the Weekly Schedule. No real argument was addressed on this point by counsel for Nine. It needs to be observed that in copyright cases, it is essential that the plaintiff identify precisely the work or works in which copyright is said to subsist and to have been infringed9. However, it is not necessary to resolve this issue, as in our view nothing turns in this appeal on the correctness of Nine's contention. It may be assumed that copyright subsisted in the Nine Database from week to week as an original literary work, it being a compilation. As it has been conceded by IceTV and IceTV Holdings that copyright subsisted in each Weekly Schedule, it is therefore not necessary, in this appeal, to consider the question of the subsistence of The allegedly infringing conduct The conduct alleged to infringe copyright arises in the following way. As noted above, subscribers to IceTV's services could program compatible devices to connect over the Internet to a database maintained by IceTV and download the latest version of the IceGuide for an upcoming six to eight-day period. The precise visual appearance of the IceGuide varied between devices and was not determined or influenced by IceTV or IceTV Holdings. Indeed, at the user's choice, the IceGuide could be displayed on a device in different visual formats containing different information. The initial information to be included in the IceGuide was generated by an employee of IceTV watching television over a period of time, obtaining information about programmes from the Internet and reviewing published Aggregated Guides. In this appeal, no complaint is made by Nine about this process. 9 See, albeit in a slightly different context, Tate v Fullbrook [1908] 1 KB 821 at 832- 833 per Farwell LJ: "The Act creates a monopoly, and in such a case there must be certainty in the subject-matter of such monopoly in order to avoid injustice to the rest of the world"; approved by the Privy Council in Green v Broadcasting Corporation of New Zealand [1989] 2 All ER 1056 at 1058 per Lord Bridge of Harwich. 10 Cf Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd (2002) 119 FCR Crennan Nine's complaint concerns the process by which each day's IceGuide schedule had been created since April 2005. In essence, an employee of IceTV would use an IceGuide schedule from a previous day, compare it to a number of Aggregated Guides and, in almost all cases where there was a difference as to the time and title information, amend the IceGuide schedule accordingly. It is alleged that this reproduction of time and title information, to be included in the IceGuide, constituted a reproduction of a substantial part of the Weekly Schedule (or the Nine Database) which was the source of the information. The alleged reproduction involved the use of the words, figures and symbols, and the chronological arrangement, in which the time and title information was expressed. Assuming copyright subsists in the Weekly Schedule (as admitted by IceTV and IceTV Holdings) and in the Nine Database, each Weekly Schedule (and each week's version of the Nine Database) is accepted by Nine in this Court to be a separate copyright work. If there were no reproduction of a substantial part from any of the individual works, the conclusion must be that there was no infringement of copyright in any of the works. The fact that there was "systematic copying" of time and title information over a period of time, from many of the individual works, does not alter that conclusion11. To the extent that there are nineteenth century cases to the contrary12, they should not be followed. It is sufficient for the purposes of discussing infringement in this appeal to focus on a single Weekly Schedule (or a single week's version of the Nine Database), as what is said will apply to all of them. 11 Newspaper Licensing Agency Ltd v Marks and Spencer plc [2001] Ch 257 at 269 [30] per Peter Gibson LJ: "I do not understand how in logic what is an insubstantial part of a work can when aggregated to another insubstantial part of another work become a substantial part of the combined work". See also Electronic Techniques (Anglia) Ltd v Critchley Components Ltd [1997] FSR 401 at 409-410 per Laddie J; PCR Ltd v Dow Jones Telerate Ltd [1998] FSR 170 at 183 per Lloyd J. Cf systematic or repeated copying from the one work: see, eg, Football League Ltd v Littlewoods Pools Ltd [1959] Ch 637 ("Littlewoods"). See further Garnett, Davies and Harbottle, Copinger and Skone James on Copyright, 15th ed (2005), vol 1 at 389-391 [7-29]. 12 See, eg, Trade Auxiliary Co v Middlesborough and District Tradesmen's Protection Association (1888) 40 Ch D 425; Cate v Devon and Exeter Constitutional Newspaper Co (1889) 40 Ch D 500. Crennan "Author" and "authorship" and the information/expression dichotomy The "author" of a literary work and the concept of "authorship" are central to the statutory protection given by copyright legislation, including the Act. Undoubtedly, the classical notion of an individual author was linked to the invention of printing and the technical possibilities thereafter for the production of texts otherwise than by collective efforts, such as those made in mediaeval monasteries. The technological developments of today throw up new challenges in relation to the paradigm of an individual author. A "work of joint authorship", as recognised under the Act, requires that the literary work in question "has been produced by the collaboration of two or more authors and in which the contribution of each author is not separate from the contribution of the other author or the contributions of the other authors"13. As in other cases where the facts resemble those under consideration here14, the Weekly Schedules (and the Nine Database) were the result of both a collaborative effort and an evolutionary process of development, involving in this instance both manpower and the use of computers. However, nothing in these reasons turns on any conclusion as to the precise identity of the author or authors of those works. In assessing the centrality of an author and authorship to the overall scheme of the Act, it is worth recollecting the longstanding theoretical underpinnings of copyright legislation. Copyright legislation strikes a balance of competing interests and competing policy considerations15. Relevantly, it is concerned with rewarding authors of original literary works with commercial benefits having regard to the fact that literary works in turn benefit the reading public. In both its title16 and opening recitals17, the Statute of Anne of 170918 echoed explicitly the emphasis on the practical or utilitarian importance that 13 Section 10(1). See Cala Homes (South) Ltd v Alfred McAlpine Homes East Ltd [1995] FSR 818 for the position in the United Kingdom. 14 See, eg, British Broadcasting Co v Wireless League Gazette Publishing Co [1926] Ch 433; Independent Television Publications Ltd v Time Out Ltd [1984] FSR 64. 15 See also Garnett, Davies and Harbottle, Copinger and Skone James on Copyright, 15th ed (2005), vol 1 at 14 [1-33], 27 [2-05]. 16 "An Act for the encouragement of learning, by vesting the copies of printed books in the authors or purchasers of such copies, during the times therein mentioned." Crennan certain seventeenth century philosophers attached to knowledge and its encouragement in the scheme of human progress19. The "social contract" envisaged by the Statute of Anne, and still underlying the present Act, was that an author could obtain a monopoly, limited in time, in return for making a work available to the reading public. Whilst judicial20 and academic21 writers may differ on the precise nature of the balance struck in copyright legislation in different places, there can be no doubt that copyright is given in respect of "the particular form of expression in which an author convey[s] ideas or information to the world"22. The particular form of expression here was the Weekly Schedule (or the Nine Database). The balance spoken of above is important in the present context 17 "Whereas printers, booksellers, and other persons have of late frequently taken the liberty of printing, reprinting, and publishing, or causing to be printed, reprinted, and published books, and other writings, without the consent of the authors or proprietors of such books and writings, to their very great detriment, and too often to the ruin of them and their families: For preventing therefore such practices for the future, and for the encouragement of learned men to compose and write useful books". 18 8 Anne c 19. 19 For example, Sir Francis Bacon (1561-1626) and John Locke (1632-1704). 20 See, eg, Feist Publications Inc v Rural Telephone Service Co Inc 499 US 340 (1991). In this case the Supreme Court of the United States leaned in favour of the social utility of copyright legislation. See also CCH Canadian Ltd v Law Society of Upper Canada [2004] 1 SCR 339. 21 See, eg, Ginsburg, "No 'Sweat'? Copyright and Other Protection of Works of Information after Feist v Rural Telephone", (1992) 92 Columbia Law Review 338; Deazley, "The Myth of Copyright at Common Law", (2003) 62 Cambridge Law Journal 106; Scassa, "Recalibrating Copyright Law?: A Comment on the Supreme Court of Canada's Decision in CCH Canadian Limited et al v Law Society of Upper Canada", (2004) 3 Canadian Journal of Law and Technology 89; Longdin, "Copyright Protection for Business Systems and Surveys: Disentangling Fact, Form and Function", (2005) 11 New Zealand Business Law Quarterly 161; Sims, "Copyright's Protection of Facts and Information", (2006) 12 New Zealand Business Law Quarterly 360. 22 Hollinrake v Truswell [1894] 3 Ch 420 at 424 per Lord Herschell LC. Crennan because, generally speaking, no copyright could be claimed in a programme title alone23 and the time at which a programme will be broadcast is a single item of quotidian information. Copyright does not protect facts or information24. Copyright protects the particular form of expression of the information, namely the words, figures and symbols in which the pieces of information are expressed25, and the selection and arrangement of that information26. That facts are not protected is a crucial part of the balancing of competing policy considerations in copyright legislation. The information/expression dichotomy, in copyright law, is rooted in considerations of social utility. Copyright, being an exception to the law's general abhorrence of 23 See the cases cited in Garnett, Davies and Harbottle, Copinger and Skone James on Copyright, 15th ed (2005), vol 1 at 61-62 [3-16]. See also Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273 at 277 per Lord Reid; [1964] 1 All ER 465 at 469 ("Ladbroke"). 24 See, eg, Blackie & Sons Ltd v The Lothian Book Publishing Co Pty Ltd (1921) 29 CLR 396 at 400 per Starke J; [1921] HCA 27; Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 at 497 per Latham CJ, 511 per Dixon J; [1937] HCA 45; Computer Edge Pty Ltd v Apple Computer Inc (1986) 161 CLR 171 at 181 per Gibbs CJ; [1986] HCA 19. See also Walter v Steinkopff [1892] 3 Ch 489; Chilton v Progress Printing and Publishing Co [1895] 2 Ch 29; Odhams Press Ltd v London and Provincial Sporting News Agency (1929) Ltd [1936] Ch 357 at 364 per Lord Wright MR; Littlewoods [1959] Ch 637 at 651- 652 per Upjohn J; Fraser v Evans [1969] 1 QB 349 at 362 per Lord Denning MR; Elanco Products Ltd v Mandops (Agrochemical Specialists) Ltd [1979] FSR 46 at 52 per Goff LJ; Sawkins v Hyperion Records Ltd [2005] 1 WLR 3281 at 3289 [29] per Mummery LJ; [2005] 3 All ER 636 at 642-643. 25 Computer Edge Pty Ltd v Apple Computer Inc (1986) 161 CLR 171 at 181 per Gibbs CJ; the definitions of "literary work" and "writing" in s 10(1) of the Act. 26 A feature of a work, such as the "selection" or "arrangement" of its components, is capable of constituting a part of the work which has been reproduced and which is substantial: Designers Guild Ltd v Russell Williams (Textiles) Ltd (t/as Washington DC) [2000] 1 WLR 2416 at 2422 per Lord Hoffmann; [2001] 1 All ER 700 at 706. See, eg, MacMillan & Co Ltd v K & J Cooper (1923) 93 LJPC 113 at 119 per Lord Atkinson (selection); Ladbroke [1964] 1 WLR 273 at 276-278 per Lord Reid, 282- 283 per Lord Evershed, 286, 288 per Lord Hodson, 289 per Lord Devlin, 292 per Lord Pearce; [1964] 1 All ER 465 at 469-470, 473, 475-476, 477, 478, 480 (arrangement). Crennan monopolies27, does not confer a monopoly on facts or information because to do so would impede the reading public's access to and use of facts and information. Copyright is not given to reward work distinct from the production of a particular These concepts are relevant to the determination, called for by the Act, of whether a part reproduced is a "substantial part" of a work in which copyright subsists. Substantial part So as to indicate that the time and title information alleged to have been reproduced did not form a large part of a Weekly Schedule, the primary judge referred to the copying of "slivers of information"29. However, in order to assess whether material copied is a substantial part of an original literary work, it is necessary to consider not only the extent of what is copied: the quality of what is 27 See, eg, Coke, 3 Inst at 181: "monopolies are against the ancient and fundamental laws of the realm". See generally Heydon, The Restraint of Trade Doctrine, 3rd ed 28 "[I]t is the product of the labour, skill and capital of one man which must not be appropriated by another, not the elements, the raw material … upon which the labour and skill and capital of the first have been expended": MacMillan & Co Ltd v K & J Cooper (1923) 93 LJPC 113 at 117-118 per Lord Atkinson. 29 Nine Network Australia Pty Ltd v IceTV Pty Ltd (2007) 73 IPR 99 at 143 [190], 144 30 Ladbroke [1964] 1 WLR 273 at 276 per Lord Reid, 288 per Lord Hodson, 293 per Lord Pearce; [1964] 1 All ER 465 at 469, 477, 481; S W Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466 at 474 per Gibbs CJ; [1985] HCA 59; Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 305 per Mason CJ (in dissent); [1993] HCA 6 ("Autodesk [No 2]"); Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1 at 32-33 [83]-[84] per Gleeson CJ, McHugh, Gummow and Hayne JJ; [1999] HCA 49 ("Data Access"). Quality is also critical for works other than literary works: see, eg, Designers Guild Ltd v Russell Williams (Textiles) Ltd (t/as Washington DC) [2000] 1 WLR 2416; [2001] 1 All ER 700 (artistic work); Hawkes & Son (London) Ltd v Paramount Film Service Ltd ("the Colonel Bogey Case") [1934] Ch 593 (musical work). Crennan This principle has a long provenance31 and it is particularly apposite when considering a compilation. Some compilations are no more than a selection or arrangement of facts or information already in the public domain. When the particular form of expression contains facts and information, it is not helpful to refer to "the rough practical test that what is worth copying is prima facie worth protecting"32. To take an example, facts are obviously worth copying for purposes such as a narrative work of history which depends on secondary sources33. It is equally unhelpful to refer to the "commercial value" of the information, because that directs attention to the information itself rather than to the particular form of expression. It is often said that questions of whether a substantial part has been copied are questions of fact and degree34. However, a factor critical to the assessment of the quality of what is copied is the "originality" of the part which is copied35. 31 The principle goes back to the nineteenth century: see, eg, Scott v Stanford (1867) LR 3 Eq 718 at 723, 724 per Page Wood VC; Bradbury v Hotten (1872) LR 8 Exch 1 at 7 per Pigott B; Trade Auxiliary Co v Middlesborough and District Tradesmen's Protection Association (1888) 40 Ch D 425 at 429 per Chitty J; Leslie v Young & Sons [1894] AC 335 at 341 per Lord Herschell LC; Cooper v Stephens [1895] 1 Ch 567 at 572 per Romer J. However, as the "substantial part" test was expressly introduced for the first time only with the passage of the Copyright Act 1911 (Imp), the actual focus of the nineteenth century cases was not on this point: see further Garnett, Davies and Harbottle, Copinger and Skone James on Copyright, 15th ed (2005), vol 1 at 383 [7-26]. 32 University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601 at 610 per Peterson J, discussed in Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273 at 281-282 [14]-[17] per McHugh ACJ, Gummow and Hayne JJ; [2004] HCA 14. See also Baigent v Random House Group Ltd (2007) 72 IPR 195 at 222 [97] per Lloyd LJ. Though Peterson J's statement was made in the context of his discussion of the subsistence of copyright, it has subsequently been applied as a test of substantiality in the context of infringement: see, eg, Ladbroke [1964] 1 WLR 273 at 279 per Lord Reid, 288 per Lord Hodson, 293-294 per Lord Pearce; [1964] 1 All ER 465 at 471, 477-478, 481. 33 For example, John Julius Norwich, A History of Venice, (1982). 34 See, eg, Ladbroke [1964] 1 WLR 273 at 283 per Lord Evershed; [1964] 1 All ER 35 Autodesk [No 2] (1993) 176 CLR 300 at 305 per Mason CJ (in dissent); Data Access (1999) 202 CLR 1 at 32-33 [83]-[84] per Gleeson CJ, McHugh, Gummow (Footnote continues on next page) Crennan Originality in the context of subsistence of copyright The requirement for copyright subsistence that a literary work be "original" was first introduced into the Copyright Act 1911 (Imp)36, although it had already been recognised at common law37. Originality for this purpose requires that the literary work in question originated with the author and that it was not merely copied from another work38. It is the author or joint authors who bring into existence the work protected by the Act. In that context, originality means that the creation (ie the production) of the work required some independent intellectual effort39, but neither literary merit40 nor novelty or inventiveness as required in patent law41. and Hayne JJ. See also Newspaper Licensing Agency Ltd v Marks & Spencer plc [2003] 1 AC 551 at 559-560 [19] per Lord Hoffmann. 36 Section 1(1), applied in Australia pursuant to the Copyright Act 1912 (Cth). Now see the Act, s 32(1). 37 Walter v Lane [1900] AC 539, discussed in Sands & McDougall Pty Ltd v Robinson (1917) 23 CLR 49; [1917] HCA 14. 38 Robinson v Sands & McDougall Pty Ltd (1916) 22 CLR 124 at 132-133 per Barton J; [1916] HCA 51; Sands & McDougall Pty Ltd v Robinson (1917) 23 CLR 49 at 52 per Isaacs J; Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 at 511 per Dixon J; Autodesk Inc v Dyason (1992) 173 CLR 330 at 347 per Dawson J; [1992] HCA 2; Data Access (1999) 202 CLR 1 at 16 [22], 41 [122] per Gleeson CJ, McHugh, Gummow and Hayne JJ. See also the classic statement in University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601 at 608-609 per Peterson J. This approach was recently confirmed by the English Court of Appeal in Sawkins v Hyperion Records Ltd [2005] 1 WLR 3281; [2005] 3 All ER 636. 39 Sands & McDougall Pty Ltd v Robinson (1917) 23 CLR 49 at 52 per Isaacs J. 40 Littlewoods [1959] Ch 637 at 651 per Upjohn J. 41 University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601 at 608-609 per Peterson J; Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 at 379 per Gummow J. Crennan There has been a long held assumption in copyright law that "authorship" and "original work" are correlatives42; the legislation does not impose double conditions43. Originality in the context of infringement In this appeal, the question of "originality" arises not in the context of subsistence, but in the context of infringement, in particular the determination of the quality of the part of the Weekly Schedules (or the Nine Database) alleged to have been reproduced. A Weekly Schedule (and the Nine Database) contains both "information" and "creative" material44. The material may have been confidential before being provided to the Aggregators or released to the public. For the purposes of copyright law, that confidentiality does not matter45. In terms of the distinction between information and creative material, the time and title information is information about Nine's intended future conduct. It is, however, contained within a whole, a collocation (ie the Weekly Schedule or the Nine Database), which also contains creative material such as the synopses of programmes to be broadcast. In Ladbroke (Football) Ltd v William Hill (Football) Ltd ("Ladbroke")46, Lord Pearce spoke of the situation where reproduction of an unoriginal part of an original whole will not be an infringement when he said: 42 Sands & McDougall Pty Ltd v Robinson (1917) 23 CLR 49 at 55 per Isaacs J. 43 University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601 at 44 A distinction between works intended to convey "information" and works of "literary enjoyment" is drawn in Hollinrake v Truswell [1894] 3 Ch 420 at 428 per Davey LJ. The distinction was referred to in Computer Edge Pty Ltd v Apple Computer Inc (1986) 161 CLR 171 at 182 per Gibbs CJ, 192 per Mason and Wilson JJ, 201 per Brennan J. 45 Littlewoods [1959] Ch 637 at 651-652 per Upjohn J. 46 [1964] 1 WLR 273 at 293; [1964] 1 All ER 465 at 481. The statement of Lord Pearce has been approved by this Court: Autodesk [No 2] (1993) 176 CLR 300 at 305 per Mason CJ (in dissent); Data Access (1999) 202 CLR 1 at 32-33 [83]-[84] per Gleeson CJ, McHugh, Gummow and Hayne JJ. Crennan "The reproduction of a part which by itself has no originality will not normally be a substantial part of the copyright and therefore will not be protected. For that which would not attract copyright except by reason of its collocation will, when robbed of that collocation, not be a substantial part of the copyright and therefore the courts will not hold its reproduction to be an infringement." (emphasis added) This means that where the part reproduced did not originate with the author, so that the author would not have copyright in the part standing alone, the part reproduced will not be a substantial part47. Here, however, the predetermination of future broadcasts was done by employees of Nine, at least some of whom may be the authors of the works in suit. For that reason, it cannot be said that the part reproduced did not originate with the author or authors of the works in suit. However, the fact that a part reproduced originates from the author (as here) does not, of itself, mean that it is necessarily a substantial part of the whole work48. Originality in the context of infringement has a broader aspect. The point was pursued in Autodesk v Dyason [No 2] ("Autodesk [No 2]")49 and Data Access Corporation v Powerflex Services Pty Ltd ("Data Access")50. In Autodesk [No 2], though the whole of a computer program originated from the author51, Mason CJ (in dissent) considered that reproducing part of the program containing data may not be reproduction of a substantial part because it52: "may conceivably be akin to the reproduction of the material simpliciter in a table or compilation or the reproduction of something that is itself largely unoriginal" (footnote omitted). 47 See, eg, Cambridge University Press v University Tutorial Press (1928) 45 RPC 335 at 343-344 per Maugham J; Warwick Film Productions Ltd v Eisinger [1969] 1 Ch 508 at 525ff, esp 533-534 per Plowman J. See also Baigent v Random House Group Ltd (2007) 72 IPR 195 at 230 [142] per Mummery LJ. 48 Data Access (1999) 202 CLR 1 at 31 [80] per Gleeson CJ, McHugh, Gummow and 49 (1993) 176 CLR 300. 50 (1999) 202 CLR 1. 51 Autodesk Inc v Dyason (1992) 173 CLR 330 at 347 per Dawson J. 52 Autodesk [No 2] (1993) 176 CLR 300 at 306. Crennan In Data Access, Gleeson CJ, McHugh, Gummow and Hayne JJ approved Mason CJ's view and said that, in the case of a computer program, "the originality of what was allegedly taken from a computer program must be assessed with respect to the originality with which it expresses [the] algorithmic or logical relationship [between the function desired to be performed by a device and the device] or part thereof"53 and its "inherent originality"54. Their Honours concluded that the "Reserved Words" under consideration, which were user inputs associated in the program with certain functions, were not a substantial part of the computer program. This was, first, because the Reserved Words were "irrelevant to the structure, choice of commands and combination and sequencing of the commands in source code"55. Secondly, since the Reserved Words consisted of ordinary English words suggestive of their function or words common in other computer languages (or combinations thereof), "they d[id] not possess sufficient originality as data to constitute a substantial part of the computer program"56. These cases direct attention to the degree of originality in the expression of the part of the work reproduced. The same point is made in the current edition of Copinger and Skone James on Copyright57: "[T]he more simple or lacking in substantial originality the copyright work, the greater the degree of taking will be needed before the substantial part test is satisfied." 53 Data Access (1999) 202 CLR 1 at 33 [85]. 54 Data Access (1999) 202 CLR 1 at 33-34 [87]. 55 Data Access (1999) 202 CLR 1 at 34 [88]. 56 Data Access (1999) 202 CLR 1 at 34 [92]. 57 Garnett, Davies and Harbottle, Copinger and Skone James on Copyright, 15th ed (2005), vol 1 at 385 [7-27(d)]; see also at 385 [7-27(c)]. See, eg, Kenrick & Co v Lawrence & Co (1890) 25 QBD 99 at 102-104, as explained in British Leyland Motor Corporation Ltd v Armstrong Patents Co Ltd (1984) 3 IPR 32 at 45 per Oliver LJ; Dixon Investments Pty Ltd v Hall (1990) 18 IPR 490 at 496 per Lockhart, Spender and Ryan JJ; Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd (1994) 29 IPR 25 at 38 per Jacob J; Designers Guild Ltd v Russell Williams (Textiles) Ltd (t/as Washington DC) [2000] 1 WLR 2416 at 2423 per Lord Hoffmann; [2001] 1 All ER 700 at 706. Crennan The Weekly Schedule (and the Nine Database) as a whole involves orderly arrangement of its various elements and the evidence showed choices were made about what programmes were included or excluded. As a whole, it is an original (ie not copied) collocation of both information and creative material. However, the expression of the time and title information, in respect of each programme, is not a form of expression which requires particular mental effort or exertion. The way in which the information can be conveyed is very limited58. Expressing a title of a programme to be broadcast merely requires knowledge of the title, generally bestowed by the producer of the programme rather than by a broadcaster of it. Expressing the time at which a programme is broadcast, for public consumption, can only practically be done in words or figures relating to a 12 or 24-hour time cycle for a day. The authors of the Weekly Schedule (or the Nine Database) had little, if any, choice in the particular form of expression adopted, as that expression was essentially dictated by the nature of the information. That expression lacks the requisite originality (in the sense explained) for the part to constitute a substantial part. Counsel for Nine sought to place importance upon the reproduction not only of time and title information in respect of each programme, but also of the chronological arrangement of the time and title information for various programmes. Whether a selection or arrangement of elements constitutes a substantial part of a work depends on the degree of originality of that selection or arrangement59. In this case, a chronological arrangement of times at which programmes will be broadcast is obvious and prosaic, and plainly lacks the requisite originality. These considerations lead to the conclusion that the part of the Weekly Schedule (or the Nine Database) alleged to have been reproduced was not a substantial part. Something must be said, then, of the relevance of "skill and labour" to this question and how it may lead to error. 58 See, eg, FAI Insurances Ltd v Advance Bank Australia Ltd (1986) 68 ALR 133 at 59 See, eg, Ravenscroft v Herbert [1980] RPC 193 at 204-205 per Brightman J. See also, albeit in the context of subsistence, the comments in MacMillan & Co Ltd v K & J Cooper (1923) 93 LJPC 113 at 117 per Lord Atkinson. Crennan Skill and labour in the context of subsistence Not every piece of printing or writing which conveys information will be subject to copyright. For a long time, and precisely because compilations often contain facts, it has been commonplace to enquire what skill and labour was required in the preparation of a compilation60. That question has arisen in the context of considering whether copyright subsists at all in a compilation as well as being relevant to a later inquiry as to the "quality" of any material taken from a copyrighted work. In Feist Publications Inc v Rural Telephone Service Co Inc61 the Supreme Court of the United States considered the compatibility of two propositions: first, that compilations of facts are generally copyrightable, and secondly, that facts were not copyrightable. This case involves the same tension between those two propositions. "Originality" was a constitutional requirement that was the source of Congress's power to "secur[e] for limited Times to Authors … the exclusive Right to their respective Writings"62. It was recognised, however, that copyright in a factual compilation is necessarily "thin"63 because the standard for originality should not be such that copyright owners have a monopoly on facts or information. Ultimately the decision turned in a significant degree on the view that "[t]he primary objective of copyright is not to reward the labor of authors, but '[t]o promote the Progress of Science and useful Arts.'"64 The exclusion of 60 See, eg, MacMillan & Co Ltd v K & J Cooper (1923) 93 LJPC 113 at 117-118, 121 per Lord Atkinson; G A Cramp & Sons Ltd v Frank Smythson Ltd [1944] AC 329 at 335 per Viscount Simon LC; Computer Edge Pty Ltd v Apple Computer Inc (1986) 161 CLR 171 at 182-183 per Gibbs CJ; Interlego AG v Tyco Industries Inc [1989] AC 217 at 260-261 per Lord Oliver of Aylmerton. 62 Feist Publications Inc v Rural Telephone Service Co Inc 499 US 340 at 346 (1991) per O'Connor J, quoting the Constitution of the United States of America, Art I, §8, 63 Feist Publications Inc v Rural Telephone Service Co Inc 499 US 340 at 349 (1991) 64 Feist Publications Inc v Rural Telephone Service Co Inc 499 US 340 at 349 (1991) per O'Connor J, quoting the Constitution of the United States of America, Art I, §8, Crennan ideas and information from copyright protection has been codified in the United States65. Much has been written about differing standards of originality in the context of the degree or kind of "skill and labour" said to be required before a work can be considered an "original" work in which copyright will subsist66. "Industrious collection" or "sweat of the brow", on the one hand, and "creativity", on the other, have been treated as antinomies in some sort of mutually exclusive relationship in the mental processes of an author or joint authors. They are, however, kindred aspects of a mental process which produces an object, a literary work, a particular form of expression which copyright protects. A complex compilation or a narrative history will almost certainly require considerable skill and labour, which involve both "industrious collection" and "creativity", in the sense of requiring original productive thought to produce the expression, including selection and arrangement, of the material67. It may be that too much has been made, in the context of subsistence, of the kind of skill and labour which must be expended by an author for a work to be an "original" work. The requirement of the Act is only that the work originates with an author or joint authors from some independent intellectual effort. Be that as it may, as noted previously, since the subsistence of copyright need not be considered in this appeal, the relevance of skill and labour to that inquiry need not be considered further. Skill and labour in the context of infringement In the context of infringement, in particular the determination of whether a part reproduced is a "substantial part", a matter often referred to is whether there 65 Copyright Act 1976 (US), §102(b), codified as 17 USC §102(b): "In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work." See Feist Publications Inc v Rural Telephone Service Co Inc 499 US 340 at 354- 356 (1991) per O'Connor J. 66 See the articles cited in footnote 21. 67 This does not mean creative in the literary sense, or novel or inventive. Crennan has been an "appropriation" of the author's skill and labour68. As already noted, both the primary judge and the Full Court adopted that approach in this case. However, it is always necessary to focus on the nature of the skill and labour, and in particular to ask whether it is directed to the originality of the particular form of expression69. Nine relied on British Broadcasting Co v Wireless League Gazette Publishing Co ("Wireless")70, Football League Ltd v Littlewoods Pools Ltd ("Littlewoods")71, Ladbroke72 and Independent Television Publications Ltd v Time Out Ltd ("Time Out")73 for the proposition that it does not matter if the skill and labour is directed to matters other than a particular form of expression for the purposes of assessing the substantiality of the part reproduced. However, in Wireless, there was no real analysis of the question of infringement, which appears to have been treated as bound up with a "fair dealing" defence abandoned by the defendant74. In Littlewoods, importance was attached to the reproduction of not only the information, but also its arrangement, 68 See, eg, Ladbroke [1964] 1 WLR 273 at 288 per Lord Hodson; [1964] 1 All ER 465 at 477; Designers Guild Ltd v Russell Williams (Textiles) Ltd (t/as Washington DC) [2000] 1 WLR 2416 at 2431 per Lord Scott of Foscote; [2001] 1 All ER 700 at 69 "The essence of literary copyright is proprietary protection (in the form of exclusive rights to do acts restricted by the copyright in the work) for a literary work in recognition of the investment of effort, time and skill in reducing it into material form, such as words, signs and symbols" (emphasis added): Baigent v Random House Group Ltd (2007) 72 IPR 195 at 230 [141] per Mummery LJ, see also at 232 [155]-[156] per Mummery LJ. See also Bowater Windows Ltd v Aspen Windows Ltd [1999] FSR 759 at 781-782 per Rimer J; Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] FSR 121 at 131 [20] per Morritt LJ; Garnett, Davies and Harbottle, Copinger and Skone James on Copyright, 15th ed (2005), vol 1 at 29 [2-06]. 72 [1964] 1 WLR 273; [1964] 1 All ER 465. 73 [1984] FSR 64. 74 [1926] Ch 433 at 443 per Astbury J. Crennan and to the fact that essentially the whole of the work in suit had been reproduced75. In Ladbroke, Lord Evershed expressly rested his decision as to infringement upon the aspects of expression of the betting coupon in question, not the skill and labour in deciding what bets to offer76. The other members of the House of Lords (except for Lord Devlin, who did not discuss infringement) relied on the aphorism, referred to above, that "what is worth copying is prima facie worth protecting"77; but it is significant that the reproduction was more extensive than in this case and included reproduction of aspects of arrangement. In Time Out, appropriation of skill and labour was not mentioned in the context of infringement. The focus was instead on the commercial value of the information alleged to have been reproduced from the broadcasting schedule in question, in that it concerned peak viewing times and omitted references to programmes which would be known by viewers to be broadcast at fixed times78. With respect, that focus was upon the information itself, rather than the particular form in which it was expressed. Rewarding skill and labour in respect of compilations without any real consideration of the productive effort directed to coming up with a particular form of expression of information can lead to error79. The error is of a kind which might enable copyright law to be employed to achieve anti-competitive behaviour of a sort not contemplated by the balance struck in the Act between the rights of authors and the entitlements of the reading public80. The Act mandates an inquiry into the substantiality of the part of the work which is reproduced. A critical question is the degree of originality of the particular form of expression of the part. Consideration of the skill and labour expended by the author of a work may assist in addressing that question: that the creation of a work required skill and labour may indicate that the particular form of expression adopted was 75 [1959] Ch 637 at 657 per Upjohn J. 76 [1964] 1 WLR 273 at 283-284; [1964] 1 All ER 465 at 473-474. 77 [1964] 1 WLR 273 at 279 per Lord Reid, 288 per Lord Hodson, 293-294 per Lord Pearce; [1964] 1 All ER 465 at 471, 477-478, 481. 78 [1984] FSR 64 at 73-74 per Whitford J. 79 See also Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 at 223 per Buckley LJ, quoted in S W Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466 at 483 per Wilson J, 494 per Deane J; Interlego AG v Tyco Industries Inc [1989] AC 217 at 265 per Lord Oliver. 80 Skybase Nominees Pty Ltd v Fortuity Pty Ltd (1996) 36 IPR 529 at 531 per Hill J. Crennan highly original. However, focussing on the "appropriation" of the author's skill and labour must not be allowed to distract from the inquiry mandated by the Act. To put aside the particular form of expression can cause difficulties, as evidenced by Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd81. It is not seriously in dispute that skill and labour was expended on producing the Weekly Schedules (and the Nine Database). The evidence disclosed considerable skill and labour involved in programming decisions. There was a contest about whether it mattered if some of the skill and labour expended was directed to business considerations82. Plainly, the skill and labour was highly relevant to matters such as advertising revenue. It is not difficult to understand that questions of the timing of particular broadcasts are crucial for advertising revenues. The fact that business considerations inform the decision to adopt a particular form of expression will not necessarily detract from the originality of that form of expression. However, the critical question is whether skill and labour was directed to the particular form of expression of the time and title information, including its chronological arrangement. The skill and labour devoted by Nine's employees to programming decisions was not directed to the originality of the particular form of expression of the time and title information. The level of skill and labour required to express the time and title information was minimal83. That is not surprising, given that, as explained above, the particular form of expression of the time and title information is essentially dictated by the nature of that information. Animus furandi In the light of these reasons, it is not necessary to consider the relevance of any animus furandi on the part of IceTV or IceTV Holdings84. 81 (2002) 119 FCR 491 at 547-554 [218]-[254] per Lindgren J, 600-601 [437]-[446] 82 Ladbroke [1964] 1 WLR 273 at 290 per Lord Devlin; [1964] 1 All ER 465 at 478- 83 See also Nine Network Australia Pty Ltd v IceTV Pty Ltd (2008) 168 FCR 14 at 41 [111] per Black CJ, Lindgren and Sackville JJ ("extremely modest"). 84 Reasons of Gummow, Hayne and Heydon JJ at [171]ff. Cf Baigent v Random House Group Ltd (2007) 72 IPR 195 at 222 [95]-[97] per Lloyd LJ; Garnett, (Footnote continues on next page) Crennan Conclusion Any reproduction of the time and title information in the IceGuide was not a reproduction of a substantial part of any of the Weekly Schedules (or the Nine Database). We agree with the orders proposed by Gummow, Hayne and Davies and Harbottle, Copinger and Skone James on Copyright, 15th ed (2005), vol 1 at 389 [7-28(d)]. GUMMOW, HAYNE AND HEYDON JJ. These reasons in favour of allowing the appeal are organised as follows: Introduction The construction of Pt III of the Act Compilations and "substantial part" The Spicer Committee The transition to digital television The IceGuide The litigation Authorship and material form The pleadings and the evidence The holdings of the primary judge and the Full Court Misappropriation of skill and labour "of Nine" The EU Database Directive The submissions on "substantial part" Treatment of "substantial part" by the Full Court "Prediction" of time and title information Conclusions Orders Introduction The commercial interest which has given rise to this appeal is the control sought by the respondent ("Nine") over the use of the programme schedules for television transmissions by its network ("the Nine Network"). The appellants (together "Ice") challenge the decision on 8 May 2008 of the Full Court of the Federal Court (Black CJ, Lindgren and Sackville JJ)85 that there has been reproduction of a "substantial part" of original literary works in which copyright subsisted under the Copyright Act 1968 (Cth) ("the Act"). These works were compilations represented by the television programme schedules for the Nine Network. The "substantial part" was the programme title, date and time of title broadcast, information"). title where relevant ("time and the episode including The primary judge (Bennett J) dismissed the action brought by Nine86 and so made no finding as to whether the second appellant ("Ice Holdings") was jointly liable for any infringement by the first appellant ("IceTV"). In a 85 Nine Network Australia Pty Ltd v IceTV Pty Ltd (2008) 168 FCR 14. 86 Nine Network Australia Pty Ltd v IceTV Pty Ltd (2007) 73 IPR 99. supplementary judgment87 delivered on 20 August 2008 the Full Court indicated that among the issues remitted to the primary judge was that of infringement by Ice Holdings. This Court granted leave to Telstra Corporation Limited and to Australian Digital Alliance Limited ("the Digital Alliance") to appear each as amicus curiae. Ice seeks the reinstatement of its success at first instance in the Federal Court. Bennett J held that there had been no reproduction of a substantial part of the compilations. For the reasons which follow, her Honour reached the correct result and her decision should not have been set aside in the Full Court. A critical passage in the reasoning of the Full Court appears under the heading "Principles"88. This includes two propositions as follows. The first is that "[t]he quality of what is taken must be assessed by reference to the interest protected by the copyright". The second is that "[i]n the case of a literary work, including a compilation, the quality relevant for the purpose of substantiality is the literary originality of what has been copied". Both propositions draw upon the speech of Lord Hoffmann in a case decided under the Copyright, Designs and Patents Act 1988 (UK) ("the 1988 UK Act"), Newspaper Licensing Agency Ltd v Marks & Spencer plc89, although, with respect to the first proposition, Lord Hoffmann relied90 upon what had been said by Sackville J in Nationwide News Pty Ltd v Copyright Agency Ltd91. Ice submits that, if an "interest analysis" be adopted, then the "interest" protected by the copyright in the Nine programme schedules lies in the particular form of their final expression rather than, as the Full Court indicated92, in large measure in antecedent or preparatory work to fix programming schedules. Ice contends inappropriate focus for determination of the issue of reproduction of a "substantial part" of the schedules. thus adopted an the Full Court that 87 Nine Network Australia Pty Ltd v IceTV Pty Ltd (No 2) [2008] FCAFC 154. 88 (2008) 168 FCR 14 at 36-37. 89 [2003] 1 AC 551 at 559-561. 90 [2003] 1 AC 551 at 561. 91 (1996) 65 FCR 399 at 418. 92 (2008) 168 FCR 14 at 37. It will be necessary to consider later in these reasons the correctness and utility of the two propositions drawn from Newspaper Licensing. At this stage it is sufficient to indicate that the criticism by Ice of the reasoning of the Full Court is well based and to turn to the relevant provisions of the Act. The construction of Pt III of the Act Part III (ss 31-83) of the Act provides for the subsistence of copyright in "works", including "literary works", which are "original". Copyright is "personal property" (s 196(1)). Subject to the provisions of s 196, copyright is transmissible by assignment, by will and by devolution by operation of law. Copyright in the case of a literary work includes the exclusive right to reproduce the work in a material form (s 31(1)(a)(i)). This is to be read as including reproduction of "a substantial part of the work" (s 14(1)(a)). Copyright in a literary work is infringed by a person who, not being the owner and not having the licence of the owner, does in Australia, or authorises the doing in Australia of, any act comprised in the copyright (s 36(1)). The term "literary work" includes a "compilation, expressed in words, figures or symbols" (s 10(1)). The statutory forerunner of the definition in the Act of "literary work" was found in s 35(1) of the Copyright Act 1911 (Imp) ("the 1911 Act"). This also included "compilations", but the 1911 Act descended no further into detail. On the other hand, the separate definition of "compilation" in §101 of the United States Copyright Act of 197693 speaks of: "a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship". The Congress enacted that provision to make it plain that the requirement of originality applies "with full force" to works "containing preexisting material"94. In Canada, a "compilation" is relevantly defined as "a work resulting from the selection or arrangement of literary ... works or of parts thereof" and as "a work resulting from the selection or arrangement of data"95. 93 17 USC, ch 1. 94 See Feist Publications, Inc v Rural Telephone Service Co, Inc 499 US 340 at 357 95 Copyright Act RSC 1985, ch C-42, s 2. The development of the law in the United States was much influenced by the judgment of Story J in Emerson v Davies96 and reference was made to it by Isaacs J in Sands & McDougall Pty Ltd v Robinson97. Story J, perhaps oddly to the modern reader, drew from analogies in patent law. He likened the inventor of a new combination of old integers to the author of a compilation drawn from existing works by the employment of research and skill, and the copyright infringer whose unauthorised taking was "substantial" to the patent infringer who took by "subterfuge" what later would be called the "pith and marrow" of the invention98. The present significance of Emerson lies not in an immediate analogy between contemporary copyright and patent law. Rather, the detailed reasons given by Story J direct attention to the competing interests involved in the conferral by intellectual property laws of rights of statutory monopoly, and the imprecision of criteria devised by legislatures to strike a balance between those competing interests. That imprecision is apparent not only in the terms "compilation" and "substantial part", but extends to what have been seen in the case law as the conceptual underpinnings of the protection by the Act of original literary, dramatic, musical and artistic works. The importance attached in the nineteenth century to the protection by injunction of legal rights, provided they were proprietary in nature99, encouraged the treatment by the courts of copyright as the reward for productive labour; hence the use in some of the cases of the agricultural metaphor of sowing and reaping. That metaphor also relieved the courts from the perceived hazards involved in adjudicating upon aesthetic qualities of literary and other works. (But there remained the difficulties associated with the expression "a work of artistic craftsmanship"100.) 96 8 Fed Cas 615 (1845). 97 (1917) 23 CLR 49 at 56; [1917] HCA 14. 98 See Commonwealth Industrial Gases Ltd v MWA Holdings Pty Ltd (1970) 180 CLR 160 at 167-168; [1970] HCA 38. 99 See, eg, Edelsten v Edelsten (1863) 1 De G J & S 185 at 199-200 [46 ER 72 at 78]. 100 Burge v Swarbrick (2007) 232 CLR 336; [2007] HCA 17. The agricultural metaphor is still encountered in the case law. For example, in Designers Guild Ltd v Russell Williams (Textiles) Ltd101 Lord Bingham of Cornhill said: "The law of copyright rests on a very clear principle: that anyone who by his or her own skill and labour creates an original work of whatever character shall, for a limited period, enjoy an exclusive right to copy that work. No one else may for a season reap what the copyright owner has sown." But, as Morritt LJ had emphasised when that litigation had been in the English Court of Appeal102: "the object of the law of copyright is to protect the product of the skill and labour of the maker not to confer on him a monopoly in the idea it may express". Further, Morritt LJ stressed, and, with respect, properly so, that this latter consideration is important when determining whether a "substantial part" of a work has been reproduced by a defendant. That consideration also is important in resisting the deceptive simplicity of the formula repeated by Lord Reid in Ladbroke (Football) Ltd v William Hill (Football) Ltd103 that "what is worth copying is prima facie worth protecting"104. However, as will appear later in these reasons, the rhetoric of "misappropriation" appears to have influenced the outcome in the Full Court105. A safer, if necessarily incomplete, guide when construing Pt III of the Act is the proposition that the purpose of a copyright law respecting original works is to balance the public interest in promoting the encouragement of "literary", "dramatic", "musical" and "artistic works", as defined, by providing a just reward 101 [2000] 1 WLR 2416 at 2418; [2001] 1 All ER 700 at 701. 102 Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] FSR 121 at 131. 103 [1964] 1 WLR 273 at 279; [1964] 1 All ER 465 at 471. 104 University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601 105 See [130]-[134]. for the creator, with the public interest in maintaining a robust public domain in which further works are produced106. Compilations and "substantial part" As in Australia the statutory texts in the United Kingdom with respect to the protection of a "compilation" are sparse. This led Diplock LJ to say107: "The derivation of 'compile' is from the Latin 'compilatio' or plunder, and, following the Shorter Oxford Dictionary, I should regard its natural meaning as being to gather together material from various sources, and a 'compilation' as a product of such an activity." (italics added) The 1911 Act was preceded by the Berne Convention for the Protection of Literary and Artistic Works of 1886 ("the Berne Convention"). One of the three "strong" and "urgent" reasons advanced to the House of Commons by the President of the Board of Trade108 for the adoption of the 1911 Act was the need to bring domestic law into harmony with recent changes to the Berne Convention109. Upon its revision in 1908110 the Berne Convention now spoke of affording protection to "collections of different works" (Art 2(2)) and, following further revision in 1948111: "[c]ollections of literary or artistic works such as encyclopaedias and anthologies which, by reason of the selection and arrangement of their contents, constitute intellectual creations". 106 See the remarks of McLachlin CJ in CCH Canadian Ltd v Law Society of Upper Canada [2004] 1 SCR 339 at 355-356. 107 William Hill (Football) Ltd v Ladbroke (Football) Ltd [1980] RPC 539 at 550. The case was decided in 1962. 108 Mr S C Buxton, later Earl Buxton. 109 United Kingdom, House of Commons, Parliamentary Debates, 5th series, vol 23, 7 April 1911 at 2587-2593. The other two reasons given were the need to replace some 22 statutes beginning in 1735, and to achieve uniformity throughout the Empire. 110 By the Berlin Act, Art 2(2). 111 By the Brussels Act, Art 2. This is now reflected in the terms of Art 2(5) of the Berne Convention. The phrase "intellectual creations" may be compared with the distinction drawn by Barton J in Robinson v Sands & McDougall Pty Ltd112 between the "intellectual work" and the "manual work" involved in compiling the map in dispute in that case. The emphasis in the Berne Convention on "selection and arrangement" is preserved in Art 10(2) of the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights, which provides: "Compilations of data or other material, whether in machine readable or other form, which by reason of the selection or arrangement of their contents constitute intellectual creations shall be protected as such. Such protection, which shall not extend to the data or material itself, shall be without prejudice to any copyright subsisting in the data or material itself." The United Kingdom authorities concerning compilations which preceded the 1911 Act113 had followed upon the enactment of the Copyright Act 1842 (Imp)114. In Leslie v Young & Sons115, the House of Lords accepted that information derived from timetables issued to the public by railway companies, and selected, condensed, and arranged "in a compilation or abstract involving independent labour", could be entitled to protection; a subsequent compiler of objects of information had to set about doing what the first compiler had done. The notion of substantial appropriation as sufficient to constitute infringement is found also in the pre-1911 case law116. It is illustrated by the statement of Lord Herschell LC in Leslie v Young & Sons117: 112 (1916) 22 CLR 124 at 129; [1916] HCA 51. 113 See Halsbury's Laws of England, 1st ed (1909), vol 8 at 145-146 [353]. 114 5 & 6 Vict, c 45. This defined (in s 2) "Copyright" as including "the sole and exclusive Liberty of printing or otherwise multiplying Copies" of any "Book"; and "Book" included "every Volume, Part or Division of a Volume, Pamphlet, Sheet of Letterpress, Sheet of Music, Map, Chart, or Plan separately published". 116 Bradbury v Hotten (1872) LR 8 Exch 1 at 7; Cooper v Stephens [1895] 1 Ch 567 117 [1894] AC 335 at 341. "The real truth is, that although it is not to be disputed that there may be copyright in a compilation or abstract involving independent labour, yet when you come to such a subject-matter as that with which we are dealing, it ought to be clearly established that, looking at these tables as a whole, there has been a substantial appropriation by the one party of the independent labour of the other, before any proceeding on the ground of copyright can be justified." The use by the Lord Chancellor of the phrases "such a subject-matter as that with which we are dealing", "clearly established", and "can be justified", set the stage for various submissions respecting the term "compilation" which were presented by Ice on this appeal and are considered later in these reasons. However, one further point concerning the provenance of the Act should be made immediately. The Spicer Committee The Act was introduced following the presentation of a report by a Committee ("the Spicer Committee") appointed by the Attorney-General of the Commonwealth118. With respect to the term "compilation" the Spicer Committee did not accept a submission that copyright should exist in the lists prepared by football bodies and showing the names of players and their identification numbers. In pars 483 and 484 of the Report, the Spicer Committee wrote119: "It is said that the sale of football publications is the means of adding to the revenue of football clubs and the prior publication of such lists by, for example, newspapers would deprive them of the major part of such revenue. We are unable to see how copyright can be conferred merely in respect of the name of a player associated with his football number. It has been held that copyright may exist in various compilations such as an alphabetical list of railway stations, a list of fox-hounds and hunting dogs and lists of stock exchange prices and football fixtures. In all these cases the question whether copyright exists depends to a large extent on the amount of labour, capital or skill expended in making the compilation. We think that the law in this regard should not be changed. 118 Copyright Law Review Committee, Report of the Committee Appointed by the Attorney-General of the Commonwealth to Consider what Alterations are Desirable in The Copyright Law of the Commonwealth, (1959) ("the Report"). It seems that the football clubs may have copyright in the lists they prepare as published in the various football publications120. Such copyright, however, does not prevent a person making his own list by attending a match. In the field of copyright there is not, in our view, any way to legislate against this. Indeed, no proposal on how this could be achieved was submitted to us. We, therefore, reject the submissions in this regard." This litigation is placed in a different commercial setting, where recent developments in technology are of considerable importance. But much of the area of legal debate is laid out in the above remarks by the Spicer Committee nearly 50 years ago. The transition to digital television The dispute between Nine and Ice arose against the background of change in the analogue television broadcasting system introduced in 1956. This change was given legislative force in amendments made to the Broadcasting Services Act 1992 (Cth) ("the Broadcasting Act") in 1998121 and concerns the mandatory transition from analogue to digital television. In the second reading speech on the Bill for the 1998 Amending Act, the Minister recorded what was said to be a commitment to ensuring that viewers be able to enjoy the benefits of digital "free to air" broadcasting. The Minister explained122: "The digital television era provides a quantum leap in television technology. Viewers will have the option of viewing high definition pictures of startling clarity and with CD quality surround sound ... Digital transmissions will enable a host of new information services, including interactive services, to be provided along with the main television programming. 120 See Football League Ltd v Littlewoods Pools Ltd [1959] Ch 637. 121 Television Broadcasting Services (Digital Conversion) Act 1998 (Cth) ("the 1998 Amending Act"). 122 Australia, House of Representatives, Parliamentary Debates (Hansard), 8 April Digital broadcasts will commence on 1 January 2001 metropolitan areas and from that date in regional areas such that all areas have digital services by 1 January 2004 ... Broadcasters will be required to simulcast the same programs in both the new digital channel and their current analog channel for a period of at least eight years from the commencement date." Members of the Nine Network operate free to air television stations, including TCN-9 Sydney, GTV-9 Melbourne, and QTQ-9 Brisbane. They hold commercial television broadcasting licences issued under the Broadcasting Act. Stations within the Nine Network are required to transmit their signal in analogue and digital format throughout the transition period. The transition continues to be subject to legislative refinement123. The advantages of digital television derive from the better quality of signal; signals broadcast in digital format comprise a single, high speed bit stream of information expressed in binary code and this is both less vulnerable to electrical interference, and more efficient, than the analogue signal. Receipt of the digital signal requires the fitting of analogue televisions with a signal converter (known as a "digital set top box") or use of a fully integrated digital television or digital television compatible personal computer. One significant advantage of the digital signal is that it facilitates better quality recordings of television programmes. New technologies such as "personal video recorders" ("PVRs") permit the making and storing for later viewing of near perfect reproductions of television programmes broadcast in digital signal. Recording and storage of programmes in digital format is also possible by use of digital television compatible personal computers, known as "Media Centres". Digital recording technology was first made available to pay television subscribers in Australia in February 2005 under the "Foxtel IQ" brand PVR. However, the application of the technology is not limited to pay television. Other brands of PVRs and Media Centres compatible with digital free to air television are available for purchase from various retailers. 123 See, eg, Broadcasting Services Amendment (Digital Television and Datacasting) Act 2000 (Cth). The IceGuide In April 2005 the first appellant, IceTV, introduced an "electronic program guide" ("EPG") for use in conjunction with digital recording devices and it was styled "the IceGuide". Its basic features appear in the prospectus issued by the second appellant, Ice Holdings, on 29 March 2006. This states: "IceGuide is [a] subscription based EPG available for the majority of the population who watch digital [f]ree-to-air TV in Australia ... IceGuide is typically used with compatible Media Centres or set-top-box based [PVRs] ... IceGuide liberates consumers from the programming schedules imposed on them by the [f]ree-to-air television networks. The [IceGuide] is an independently compiled list of all shows on television for the upcoming week, including episode descriptions and movie synopses. IceTV editorial staff write the descriptions appearing in IceGuide for the major stations. Descriptions for programming on ABC and SBS are provided direct to [IceTV]. With IceGuide, [s]ubscribers can schedule a week's viewing in advance, enabling them to watch their favourite shows at a time that most suits them. This concept of 'time-shifting' (ie watching shows when it suits you) frees consumers from network schedules. A 30 second skip facility available on many Media Centres and [PVRs] means that viewers can watch their chosen programme avoiding other unwanted content. Recording a programme with IceGuide is very easy with its 'point and click' design. Viewers simply use their remote control to move an on- screen cursor to their chosen programme and press 'record' … The programme will then be recorded to an internal hard drive, making tapes and complicated timer settings a thing of the past. A library of recorded programmes is created, which allows viewing at a later date." (emphasis added) The majority of the revenue of the Nine Network is currently derived from advertisements broadcast during television programmes. The commercial interest of Nine in the litigation was said by counsel to be directly related to the loss of revenue that might be occasioned by the "skipping" of advertisements. Reference also was made in submissions to the possibility of unauthorised distribution of recorded programmes on the internet. There is no allegation in the litigation that, by facilitation of the recording of television broadcasts and the skipping of advertisements, IceTV has contravened any provision of the Broadcasting Act or otherwise engaged in unlawful conduct. Nor is there any allegation that IceTV has infringed the copyright subsisting in any television broadcast (Pt IV of the Act) or television programme (Pt III of the Act)124. Rather, the dispute between Nine and Ice relates to that part of the prospectus which describes the IceGuide as an "independently compiled list of all shows on television for the upcoming week". Upon payment of a subscription fee125, a subscriber's PVR or Media Centre can be programmed regularly to connect to the internet and download the IceGuide. Once uploaded onto the subscriber's device, the IceGuide displays on the television or computer screen information regarding the television programmes proposed to be broadcast by free to air television stations, including stations within the Nine Network, for the coming six, seven or eight days. The IceGuide display format varies depending on the brand of device used, but may be illustrated sufficiently for present purposes by reference to the display appearing with use of a "Topfield" brand PVR in "single channel" format. This appears as follows: 124 See now s 111 of the Act and also Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273 at 287-288 [31]; [2004] HCA 14. 125 Subscription fees are approximately $3 per week, $13 per month, $39 per quarter or $146 per annum. Bennett J explained126 that the display includes: Channel number (9) and channel name (NINE DIGITAL). Current time, date and day of the week (10:06, 28/09/2006 (Thu)). The current program title (The Footy Show (AFL)) together with start and end times (23:30–02:00) and the date and day (28/09 (Thu)). Start and end times for the 5 programs scheduled to be broadcast directly after the program currently screening. A television inset ('picture-in-picture', or 'PIP') moving image of the program currently screening on the channel." 126 (2007) 73 IPR 99 at 122-123. Her Honour continued127: "Using the Topfield PVR's remote control, the user can scroll down the boxes containing the program titles or times. As the user continues to scroll, additional boxes, containing the program title and time of successive programs proposed to be broadcast, will appear. Underneath the 'PIP' inset is a separate blue text box containing the name of the program, sometimes an episode name (for example, Grand Final Show) and the synopses … The full synopsis can be viewed by selecting the program." Programmes may be selected for recording onto a hard drive within the PVR device by highlighting a particular programme on-screen and pressing a button on the remote control. Viewers are able to view a list of recorded programmes and retrieve those programmes for viewing by further use of the remote control. IceTV obtains the dates, times and titles of programmes proposed to be broadcast by the ABC and SBS from those stations for inclusion in the IceGuide. However, the approaches of IceTV towards other free to air networks for licences to obtain like information failed. In the result, for these stations, including the Nine Network, IceTV developed "templates" and software to facilitate what it calls "prediction" of the date, time and title of programmes proposed to be broadcast. The process of "prediction" will be further discussed later in these reasons128. It is founded on the proposition that the daily content of commercial broadcasters for a particular day in any given week is likely to be substantially replicated on the same day of the following week. However, IceTV checks its "predictions" against publicly available television programme guides. These have been identified as the "Aggregated Guides". They include the magazine TV Week and online services such as the website YourTV Guide ("the YourTV Guide"), and are prepared with the cooperation of Nine. Where a discrepancy appears in the time and title information as "predicted", the IceGuide generally is amended to reflect the Aggregated Guides. It is these acts, in particular, of "check and change" of time and title information that Nine seeks to prevent by reliance upon its rights under the copyright law. 127 (2007) 73 IPR 99 at 123. 128 See [172]-[184]. The Full Court held that Ice had used the time and title information of Nine, reproduced in the Aggregated Guides, as "an important resource" in producing the IceGuide and had thus reproduced a substantial part of Nine's copyright work129. The litigation Nine alleged infringement by IceTV of copyright subsisting in television programme schedules produced by Nine for each day and week since the commencement of its operations in 1956. Five acts of infringement by IceTV were propounded at the trial. Ice Holdings was said to be jointly liable for each act of infringement. The first act of infringement was identified in the reproduction by IceTV of a "substantial part" of Nine's programme schedules in the course of making and updating each IceGuide. The litigation was conducted on the footing that unless this allegation be made out, the application should be dismissed. The works in suit were identified in the amended statement of claim as "the Nine Program Schedules" and pleaded as original literary works in which copyright subsisted and was owned by Nine. By its amended defence, Ice denied infringement. However, Ice admitted Nine had prepared and distributed a "weekly television program guide" since 2001 and that each such guide was an original literary work by way of "compilation" within the meaning of the Act. This document was referred to in the reasons of the primary judge and the Full Court as "the Weekly Schedule" and was produced by Nine in "Excel" and "text" format. At trial and in the Full Court, it was accepted by Ice that copyright subsisted in each Weekly Schedule and was owned by Nine. However, there was debate in this Court as to the scope of that concession and, in particular, whether it extended to matters related to the nature of the copyright subsisting in the Weekly Schedule130. It is a matter of regret that the legal issues between Nine and Ice were crystallised only in the course of oral submissions in this Court. That makes it necessary to consider the pleadings, the evidence, the findings and the general conduct of the litigation at trial, and on the intermediate appeal, more closely than is usual in a final court of appeal. 129 (2008) 168 FCR 14 at 45. 130 cf (2008) 168 FCR 14 at 30. Authorship and material form Something should be said respecting two fundamental principles of copyright law and their treatment in the course of the litigation. The concession by Ice of the subsistence of copyright in the Weekly Schedule appears to have distracted attention from the necessary part these principles must play in any resolution of the dispute between the parties. The first principle concerns the significance of "authorship". The subject matter of the Act now extends well beyond the traditional categories of original works of authorship131, but the essential source of original works remains the activities of authors. While, by assignment or by other operation of law, a party other than the author may be owner of the copyright from time to time, original works emanate from authors132. So it was that in Victoria Park Racing and Recreation Grounds Co Ltd v Taylor133, Dixon J observed: "Perhaps from the facts a presumption arises that the plaintiff company is the owner of the copyright but, as corporations must enlist human agencies to compose literary, dramatic, musical and artistic works, it cannot found its title on authorship. No proof was offered that the author or authors was or were in the employment of the company under a contract of service and that the book was compiled or written in the course of such employment." Key provisions of Pt III of the Act fix on "the author". Examples include the requirement for the author of unpublished works to be a "qualified person"134 for copyright to subsist (s 32(1)), the fixing of copyright duration by reference to 131 Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193 at 199-200 [2]-[3]; [2005] HCA 58. 132 Sands & McDougall Pty Ltd v Robinson (1917) 23 CLR 49 at 53; Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1 at 16 [22]; [1999] HCA 49. See also Ginsburg, "The Concept of Authorship in Comparative Copyright Law", (2003) 52 DePaul Law Review 1063; Birnhack, "The Dead Sea Scrolls Case: Who is an Author?", (2001) 23 European Intellectual Property Review 128. 133 (1937) 58 CLR 479 at 510; [1937] HCA 45. 134 Defined by s 32(4) to include an Australian citizen or a person resident in Australia. the death of the author (s 33), and the conferral of copyright upon the author subject to the terms of employment or contractual arrangements under which the author labours (s 35). In the latter respect, s 35(6) relevantly provides: "Where a literary … work … is made by the author in pursuance of the terms of his or her employment by another person under a contract of service or apprenticeship, that other person is the owner of any copyright subsisting in the work by virtue of this Part." Like the Copyright Act 1956 (UK) ("the 1956 Act") in its original form, the Act does not define the term "author" beyond the statement that in relation to a photograph it is the person who took that photograph. As a result of changes made by the 1988 UK Act, in relation to a work "author" means the person "who creates it"; in the case of a "computer-generated" work this is taken to be "the person by whom the arrangements necessary for the creation of the work are undertaken"135. No such provision is made in the Australian statute, but the notion of "creation" conveys the earlier understanding of an "author" as "the person who brings the copyright work into existence in its material form"136. Where a literary work is brought into such existence by the efforts of more than one individual, it will be a question of fact and degree which one or more of them have expended sufficient effort of a literary nature to be considered an author of that work within the meaning of the Act. If the work be protected as a "compilation", the author or authors will be those who gather or organise the collection of material and who select, order or arrange its fixation in material form137. May there be joint authors of the one original work, rather than several authors each of a distinct work? While the Act speaks of "the author", the Act affords protection to works of joint authorship by force of Div 9 of Pt III (ss 78-83). The expression "work of joint authorship" means (s 10(1)): "a work that has been produced by the collaboration of two or more authors and in which the contribution of each author is not separate from the contribution of the other author or the contributions of the other authors". 135 1988 UK Act, s 9(3). 136 Laddie, Prescott and Vitoria, The Modern Law of Copyright, (1980) at 243 [6.6]. 137 Laddie, Prescott and Vitoria, The Modern Law of Copyright and Designs, 2nd ed (1995), vol 1 at 550 [11.11]. In the present case, the primary judge and the Full Court each recorded in their reasons that there was no dispute that "the authors" of the Weekly Schedule were "qualified persons". However, neither at trial nor in the Full Court was there any finding of the identity of those persons or any finding that the Weekly Schedule was a "work of joint authorship" within the meaning of the Act. The second principle is related to the first and concerns the requirement for the subsistence of copyright of "fixation" of the original work in a material form. It is well established that copyright does not subsist in a work unless and until the work takes some material form, so that protection138: "does not extend to the ideas or information contained in the work and a balance is struck between the interests of authors and those of society in free and open communication139". Section 32 lays down the requirement for identifying the original work of the author. This relevantly provides for copyright to subsist in unpublished works where the author was a qualified person "at the time when the work was made" (s 32(1)(a)) and for copyright to subsist in published works where the "first publication" took place in Australia (s 32(2)(c)). In the case of the former, the time of making means the first reduction to "writing" or "some other material form" (s 22(1)) while "publication" occurs by supply of reproductions of the work to the public (s 29(1)). Publication may be done anonymously (s 34) and special provision is made for the copyright duration in respect of such works (s 34(1)). However, this has no application if the identity of the author of the work is generally known or can be obtained by reasonable inquiry (s 34(2)). The definitions of "material form" and "writing" are (s 10(1)): "material form, in relation to a work or an adaptation of a work, includes any form (whether visible or not) of storage of the work or adaptation, or a substantial part of the work or adaptation, (whether or not the work or 138 Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273 at 294 139 Copinger and Skone James on Copyright, 14th ed (1999), vol 1 at 101 [3.74]. See also Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 67 [45]-[46]; [2000] HCA 12; Théberge v Galerie d'Art du Petit Champlain Inc [2002] 2 SCR 336 at 353-354, 397-398; Loughlan, "Copyright Law, Free Speech and Self-Fulfilment", (2002) 24 Sydney Law Review 427 at 428-431. adaptation, or a substantial part of the work or adaptation, can be reproduced). writing means a mode of representing or reproducing words, figures or symbols in a visible form ..." A generally expressed admission or concession by one party to an infringement action of subsistence of and title to copyright may not overcome the need for attention to these requirements when dealing with the issues immediately in dispute in that action. This litigation provides an example. The exclusive rights comprised in the copyright in an original work subsist by reason of the relevant fixation of the original work of the author in a material form. To proceed without identifying the work in suit and without informing the enquiry by identifying the author and the relevant time of making or first publication, may cause the formulation of the issues presented to the court to go awry. It may be noted that the presence or absence of evidence on these matters has been held significant in several of the leading authorities on compilations. These include G A Cramp & Sons Ltd v Frank Smythson Ltd140, where the original compiler of the 1933 diary was dead and there was a consequent lacuna in the case of the unsuccessful plaintiff, and Football League Ltd v Littlewoods Pools Ltd141, where evidence respecting the role of Mr Harold Sutcliffe in settling the league fixtures was given great weight by Upjohn J. In Robinson v Sands & McDougall Pty Ltd142, the primary judge (Barton J) said that the plaintiff and his witnesses had described "the whole course of preparation" of his map and gave details of that evidence. The pleadings and the evidence The amended statement of claim pleaded "subsistence and ownership" by Nine of copyright in three categories of "Nine Program Schedules". Each of these was said to be made, created and revised by unidentified qualified persons acting under a contract of service with Nine. "[O]ne or more" of the Nine Program Schedules was also said to have been "first published [anonymously] in Australia shortly prior to the date on which the applicable schedule commenced". 140 [1944] AC 329 at 336, 338. 141 [1959] Ch 637 at 646-649. 142 (1916) 22 CLR 124 at 128-129. The three categories of Nine Program Schedules were: (1) Nine Program Schedules consisting only of details of the dates, titles, and intended starting and finishing times for the transmission of the television programmes broadcast by TCN-9 Sydney and, for the most part, other stations in the Nine Network for each day and week (ie, the "time and title information", save for episode titles); (2) Nine Program Schedules consisting of time and title information, including episode titles, together with "additional program detail information" such as episode numbers, currency information (eg, whether a programme is a "repeat" ("Rpt"), "live", a "series return", or "all new"), programme format (eg, "Widescreen (WS)" or "High Definition (HD)"), closed captioning for the hearing impaired ("S"), classification information (eg, "C", "G", "PG", "M", "MA", "AV") and consumer advice (eg, "Some Violence [V]", "Sexual References [S]", "Adult Themes [A]", "Coarse Language [L]"); and (3) Nine Program Schedules consisting of (1) and (2) together with short descriptive information about individual television programmes, or "synopses". information the While the pleading did not distinguish the categories of Nine Program Schedules by identification of the relevant time of first making or first publication, the evidence showed a sequence of seven steps whereby information of the kind just described was progressively reduced into a variety of material forms in the period before each "broadcast week". A "broadcast week" commenced on a Sunday and ended on the following Saturday. The evidence established that Nine's Director of Programming, Mr Michael Healy, commenced the sequence and first wrote by hand the programme name (or an abbreviation) for programmes proposed to be broadcast during "prime time" (6:00 pm to 10:30 pm) into a notebook called the "Paper Programming Grid". Each page of the notebook represented a separate week of the year, divided into the seven days and half hour timeslots, and was populated by Mr Healy with programme and sometimes episode titles up to six to nine months in advance of broadcast. A pencil was used for this task, so that the time and title information so recorded could readily be revised as changes were made to the programme line-up for commercial reasons. Step two appeared the evidence of Program Executive Ms Penny Wieland. This involved her recording time and title information for programmes proposed to be broadcast in the daytime (6:00 am to 6:00 pm) and from off-peak (10:30 pm to 6:00 am) timeslots. Programme and sometimes episode titles and numbers were inserted by her into an Excel "spreadsheet" she maintained on her computer, again divided into weeks, days and timeslots and populated well in advance of broadcast. Ms Wieland also populated her spreadsheet with time and title information for prime time programmes, which she derived from discussions with Mr Healy or her own knowledge of Nine's programming. Step three occurred three to four weeks prior to each broadcast week and involved another Nine employee, Mr Heath Forrest. He transposed by hand the time and title information for that week from Mr Healy's grid and Ms Wieland's spreadsheet into a further paper document called "the Master Paper Grid". A separate Master Paper Grid was prepared by Mr Forrest for each broadcast week. He completed the grid by adding further episode titles and certain other "additional program detail information" such as currency information. However, other "additional program detail information", such as classification and consumer advice, does not appear to have been included in Mr Forrest's Master Paper Grid. Step four commenced once Mr Forrest had completed transposition of the information from the grid and the spreadsheet into the Master Paper Grid. This involved the commencement of manual entry by Mr Forrest of that information into a customised programme database located on Nine's computer network ("the Nine Database"). The evidence was largely silent as to the structure of the Nine Database or the manner of its operation. The evidence showed that, while these steps were taking place, other staff at Nine were responsible for collating other of the "additional program detail information" and the synopses. Mr Brian Feeney and Mr Richard Lyle of the Programming Department prepared classification information for programmes proposed to be broadcast in accordance with the Commercial Television Industry Code of Practice. Synopses were also drafted by Mr Justin Holman, Mr Forrest and occasionally Mr Healy, or obtained from Nine staff known as the "Genre Heads" and "Production Officers", or outside producers or distributors. The evidence did not reveal who was responsible for entering the classification and consumer information into the Nine Database, but did explain the entry by Mr Holman of the synopses. Steps five and six assumed particular importance in the development of Nine's argument in oral submissions in this Court143. 143 See [141]. The key actor in step five again was Mr Forrest. Upon completion of entry of all available information for the relevant broadcast week into the Nine Program Schedule, the evidence was that he "dumped" that information into the Nine Database thereby granting access to persons who worked outside the Programming Department but within, or in affiliation with, Nine. Those within Nine who were given this access could then view the proposed programme schedule on the internal computer network at Nine. Access allowed Nine's marketing, publicity and sales departments to plan their sales and marketing strategies. It also permitted stations other than TCN-9 Sydney, GTV-9 Melbourne and QTQ-9 Brisbane to access and amend the Nine Database to include local material or make changes for their individual stations. Step six, the penultimate step, occurred 17 to 14 days ahead of each broadcast week. It comprised the production of the document referred to by the primary judge and the Full Court in their reasons as the "Weekly Schedule". This was done by Mr Holman. He generated the Weekly Schedule from the Nine Database in both the "Excel" and "text" format and emailed that document to three third parties, identified as "the Aggregators". The information recorded in a material form in the Weekly Schedule appears from the first page of the "Excel" format disseminated to the publishers of the Aggregated Guides ("the Aggregators") for the broadcast week commencing Sunday, 11 June 2006144. This read: 144 It was not suggested that the "Excel" and "text" format of the Weekly Schedule were different as to form or content in any relevant respect. As can be seen, the five columns of the Weekly Schedule included time and title information (columns 1 and 2), additional programme information (columns 3 and 4), and the synopses (column 5). It is not readily apparent that any one or more of the items treated above as "title information" (column 2) would qualify as an original literary work by itself. The same must be so of the time information of column 1. The synopses in column 5 may have had that character, but they were not reproduced in the IceGuide. Before turning to the seventh and final step, attention should be given to the role of the Aggregators as recipients of the Weekly Schedule. The primary judge found that the purpose of the Weekly Schedule was to impart the totality of the information therein to the Aggregators. They were responsible for extracting and publishing in the Aggregated Guides the totality of the information in the Weekly Schedule alongside like information provided by other free to air television stations. The final step in the relevant sequence of evidence involved the revision of the time and title information after provision of the Weekly Schedule to the Aggregators. The evidence showed that the Weekly Schedule occasionally was issued to the Aggregators with timeslots marked "Details: TO BE ADVISED" and late changes to programming made for competitive and other reasons. Mr Healy explained: "I often deliberately keep certain program information back from inclusion in the Nine Database until the print deadline for TV Week magazine, which is ten days before the commencement of the particular week. I am likely to do this where Nine has scheduled a special event or the premiere of a new series or movie that we do not want our competitors to have early knowledge about." Responsibility for entering late changes in the Nine Database rested with Mr Forrest, who also informed the Aggregators of such late changes by the provision to them of memoranda identified in the litigation as "Late Change Notices". The holdings of the primary judge and the Full Court Upon the concession of Ice as to subsistence of copyright in the Weekly Schedule, the primary judge held that the relevant work in suit was each Weekly Schedule published by Nine since IceTV commenced its activities in 2004. Her Honour held that the Weekly Schedule was a "compilation" literary work which expressed the time and title information, the additional programme information and the synopses for each day of the relevant broadcast week. Each of the categories of information included in the Weekly Schedule was there for good commercial reason. Bennett J rejected the submission of Nine that distinct copyrights subsisted in mere components of the Weekly Schedule, such as the time and title information of the first two columns. As to infringement, the primary judge found that (i) IceTV never took the synopses and did not take the whole of the time and title information from the Aggregated Guides; (ii) IceTV had copied no more than "slivers" of time and title information from the Aggregated Guides in order to maintain and update the IceGuide; and (iii) the slivers in question did not bear substantial importance in relation to the originality of the Weekly Schedule as a whole. This led the primary judge to the conclusion that IceTV had not reproduced a substantial part of the Weekly Schedule, with the consequence that the alleged infringement was not established and the application was dismissed. It should be noted that the primary judge recorded that the case on infringement was founded on the assertion that IceTV had appropriated the "'skill and labour of authorship' of Nine" (emphasis added). Her Honour's findings in this respect were critical to the conclusion that there had been no reproduction of a "substantial part" of the Weekly Schedule. Bennett J explained that the relevant "skill and labour" of Nine included both the skill and labour of making decisions as to the selection and arrangement of programmes for broadcast in particular timeslots (referred to as the "preparatory" skill and labour) and the later "skill and labour" in drafting the synopses and selecting and arranging the time and title information, the additional programme information and the synopses in the form of the Weekly Schedule once the preparatory work was done. As to the former, the primary judge found that the preparatory "skill and labour" involved the consideration by Mr Healy and Ms Wieland of many factors, such as viewer preferences and trends, audience size and demographic appeal, contractual and regulatory obligations, competitor programming and ratings information. However, she also found that the primary purpose here was not to produce a literary work, but rather, to produce a programme line-up that would maximise viewers (and hence advertising revenue). The conclusion followed that the skill and labour in determining the programme line-up was not co-extensive with the skill and labour in creating the Weekly Schedule. IceTV was not a broadcaster and there was accordingly no relevant "appropriation" by it of the skill and labour of placing programmes. IceTV adopted its own form of presentation of the time and title information and drafted its own synopses and thus had not taken sufficient of "Nine's skill and labour" so as to have infringed by copying "slivers" of time and title information. In the Full Court, the findings by Bennett J as to the identity of the relevant works in suit went unchallenged. The primary issue was whether the copying by Ice of time and title information from publicly available Aggregated Guides constituted the reproduction of a substantial part of the Weekly Schedule. After setting out the "Principles" identified earlier in these reasons, the Full Court turned its attention to this issue under the heading "Assessing the Primary Judge's Views on Ice's Appropriation of Nine's Skill and Labour"145. It was in the assessment of this topic that a critical difference of opinion emerged in the reasoning of the Full Court. The Full Court explained146: "Ice, to the extent it reproduced time and title information from the Weekly Schedules, appropriated the skill and labour used by Nine to create the Weekly Schedules. Contrary to her Honour's conclusion, the skill and labour in selecting and arranging programming should not be regarded as separate and discrete from the extremely modest skill and labour involved in setting down on paper the programs already selected and presenting them in the form of the Weekly Schedules. The skill and labour expended by Nine were part of a single process leading to the creation of the copyright work as the written record of Nine's programming decisions and (emphasis added) the associated program information." Upon this basis, that the skill and labour invested in the programming decisions could not be separated from the skill and labour of creating the copyright work, the Full Court continued147: "Ice took, via the Aggregated Guides, precisely the pieces of information that reflected the exercise of skill and labour by Nine in determining the program for a particular day or other period … Ice's use of material derived from the time and title information – we would not use the expression 'slivers of information' – appropriated the most creative elements of the skill and labour utilised by Nine in creating the Weekly Schedules." (emphasis added) The Full Court concluded that the time and title information was the "centrepiece" of the Weekly Schedule and that by taking it Ice had reproduced a substantial part of the relevant Weekly Schedules. Accordingly, the appeal was allowed and the proceedings were remitted to the primary judge for hearing and determination consistently with the reasons of the Full Court. 145 (2008) 168 FCR 14 at 37. 146 (2008) 168 FCR 14 at 41. 147 (2008) 168 FCR 14 at 42. Misappropriation of skill and labour "of Nine" Before turning to the submissions presented in this Court, several points should immediately be made concerning the focus by the primary judge and the Full Court upon the skill and labour "of Nine" in their treatment of infringement. The first is to emphasise the dangers when applying the Act of adopting the rhetoric of "appropriation" of "skill and labour"148. A finding that one party has "appropriated" skill and labour, of itself, is not determinative of the issue of infringement of a copyright work. The Act does not provide for any general doctrine of "misappropriation"149 and does not afford protection to skill and labour alone. In the present case, the alleged infringement was identified in the reproduction of a substantial part of the relevant copyright "work" (ss 36(1), 31(1)(a)). To speak of the "appropriation" of "Nine's skill and labour", rather than attending to the relevant "original" work of the author or authors, was to take a fundamental departure from the text and structure of the Act. In particular, while s 35(6) might have produced the consequence that Nine was the relevant copyright owner after identification of the relevant "author" or "authors", notions of the "skill and labour" of Nine were irrelevant to the existence of its title to the copyright and to the assessment of "substantial part". The second point is that the conduct of the litigation in this manner reflected the decision in Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd150. That case decided that telephone directories were "original" works in which copyright subsisted because "Telstra had undertaken substantial labour and incurred substantial expense"151 in compiling and presenting the details of telephone subscribers in a particular region. Infringement was 148 Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273 at 281-282 [14]-[17]. See also Deazley, "Copyright in the House of Lords: Recent Cases, Judicial Reasoning and Academic Writing", (2004) 8 Intellectual Property Quarterly 121 at 134-135. 149 cf International News Service v Associated Press 248 US 215 (1918); Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156 CLR 414 at 440-442; [1984] HCA 73. 150 (2002) 119 FCR 491. 151 (2002) 119 FCR 491 at 599 per Sackville J (emphasis added); see also at 535 per identified in the appropriation of "the benefit of Telstra's substantial labour and expense"152. However, a reason to treat the decision in Desktop Marketing with particular care appears from the reasons of the trial judge. Finkelstein J had observed153: "There are literally hundreds of appropriately trained or qualified employees who make some contribution towards the production of a telephone directory. When the nature of the work they do is described, there arise three relevant questions to the subsistence of copyright: (a) Must a copyright work have an author? (b) Does a telephone directory have an author? (c) Is every employee who contributes to the final product a joint author of the directory? These are difficult questions for which there are no ready answers." Finkelstein J went on to explain that the parties had sought to elucidate none of those issues in the litigation, with the consequence that, as here, the relevant author or authors of the work in suit remained unidentified. The EU Database Directive In 1996 the Directive of the European Parliament and of the Council on the Legal Protection of Databases ("the Directive")154 was adopted by the European Union ("EU"). It is significant for the issues on the present appeal that the Australian legislation has no counterpart. Of the genesis of the Directive, Professor Cornish has written155: "At once excited and alarmed by the capacity of digitization to store massive files of information and of the internet to deliver it in individually 152 (2002) 119 FCR 491 at 535-536, 600. See also Nine Network Australia Pty Ltd v IceTV Pty Ltd (2008) 168 FCR 14 at 36. 153 Telstra Corporation Ltd v Desktop Marketing Systems Pty Ltd (2001) 181 ALR 154 Directive 96/9/EC of 11 March 1996, OJ No L77, 27 March 1996 at 20. 155 Cornish, Intellectual Property: Omnipresent, Distracting, Irrelevant?, (2004) at requested packages, the publishing industry, and, by its side, music and films, secured a Database Directive from the EU". Whilst "traditional copyright" respecting compilations was carefully confined and fixed upon the effort that went into the selection and arrangement in a compilation, the new right was "accorded directly to the investor in a database"156. The Directive defines "database" to mean "a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means"157. Chapter III of the Directive relevantly provides for the implementation of a "sui generis" right for the "maker" of a database who shows there has been a "substantial investment" in either the obtaining, verification or presentation of the contents of the database and for that right to extend to prevention of the extraction and/or re-utilisation of the whole or of a substantial part of the database158, subject to certain exceptions159 and lawful uses160. The Directive also provides in Ch II for Member States to afford protection to databases which, "by reason of the selection or arrangement of their contents, constitute the author's own intellectual creation"161 (emphasis added). However, the position of "the author" in Ch II may be contrasted with that of "the maker" in Ch III. In explanation of the latter, recital 39 states: "Whereas, in addition to aiming to protect the copyright in the original selection or arrangement of the contents of a database, this Directive seeks to safeguard the position of makers of databases against misappropriation of the results of the financial and professional investment made in obtaining and collection [of] the contents by protecting the whole or 156 Cornish, Intellectual Property: Omnipresent, Distracting, Irrelevant?, (2004) 157 Chapter I, Art 1(2). 158 Chapter III, Art 7(1). 159 Chapter III, Art 9. 160 Chapter III, Art 8. 161 Chapter II, Art 3(1). substantial parts of a database against certain acts by a user or competitor". In the absence of implementation of laws analogous to the kind described in the Directive, the matters now in issue cannot be resolved by concluding, as did the Full Court162, that Ice appropriated "the fruits of Nine's skill and labour". The submissions on "substantial part" In their submissions in this Court, each of Nine and Ice emphasised that the Court should look to the "originality" of the work as contributed by the author in determining whether there had been any reproduction by IceTV of a "substantial part". If that be done, Ice submitted that the relevant originality would be seen to lie not in the composition of the time and title information, but in the selection and arrangement of that information, the additional programme information and the synopses into the "Excel" and "text" format of the Weekly Schedule. As the course of oral argument progressed, there emerged between the parties fundamental differences as to the nature of the relevant "originality". The extent of these differences crystallised on the second day of the hearing when, apparently for the first time in the litigation, Nine sought to identify the work in suit as a single work "first made" upon the "dumping" of the Nine Programme Schedule into the Nine Database by Mr Forrest and "first published" upon the emailing of the Weekly Schedule in "Excel" and "text" format to the Aggregators. These have been described earlier in these reasons as "step five" and "step six"163. Counsel for Nine explained that the work: "was the work which was in material form made over a period of time but in final material form on the [Nine] [D]atabase. The [Weekly Schedule in 'Excel' and 'text' format] which were published [were] published by making it in another material form which was a piece of paper and sending it out. It did not become a different work. It was just another form of the same work." 162 (2008) 168 FCR 14 at 43. 163 See [116]-[117]. The authors of the work so propounded were said by counsel to be Mr Healy and Ms Wieland164 and their "original" work was identified in the judgment and skill required to create the sequence or relationship between the programme title and time of broadcast, as expressed in the time and title information. In putting the case this way, Nine emphasised that the synopsis and the additional programme information followed "automatically" from the decision to broadcast a particular programme at a particular time; the "key element" of the work was the selection of the programmes and their arrangement in particular time sequences relative to each other. This lay the ground for submissions that although IceTV had not "appropriated" the synopses and additional programme information, IceTV had taken a "substantial part" of the Weekly Schedule. Nine submitted that this analysis reflected the findings of the Full Court. But two points should be made here. The first point is that the proposition now advanced by Nine, that the work in suit was a single work reflected in the Nine Database, does not appear from the elliptical references to "the Nine Program Schedules" in the pleadings. As a consequence, issues of the kind to be described below were not agitated at any stage in the Federal Court. The second point is to emphasise the difficulties of adapting the provisions of Pt III of the Act to cases such as the present, where multiple works and authors might be identified and the requisite expression of "authorship" of each may be dictated by a specific commercial objective. The point is illustrated sufficiently by contrasting the provisions of the Act and the evidence with the proposition that "the work" was a single work represented in the Nine Database and "first published" upon dissemination to the Aggregators of the Weekly Schedule in "Excel" and "text" format. The combined effect of s 32(1), s 22 and the definition of "material form" is to provide for subsistence of copyright in an unpublished literary work at the time or period of first fixation in a material form by a qualified person, whether then "visible or not". Thus, copyright might subsist in the Nine Database as a 164 This was consistent with particulars supplied by Nine on 7 July 2006, which had stated: "Nine confirms that the authors of the Nine Program Schedules as published since April 2005 are Mr Michael Healy and Ms Penny Wieland, both of whom are Australian residents and have at all relevant times been employees of Nine." "compilation" upon the time of "dumping" by Mr Forrest, notwithstanding that the relevant expression of "words, figures or symbols" might then have been invisible to the human eye (s 10(1)). Further, the Act provided for "first publication" (s 32(2)(c)) to occur upon supply of a reproduction of "the work" to the public (s 29(1)), as might be done by dissemination to the Aggregators of the Weekly Schedule. However, the relevant reproduction for the purposes of first publication must be of the whole (s 29(2)) rather than merely a substantial part (cf s 14(1)). A work is taken to be reproduced if converted into or from a digital or other machine-readable form; any article embodying the work in such a form is to be taken to be a reproduction of the work (s 21(1A)). The evidence showed that the words, figures or symbols which comprised the Nine Database were not co-extensive with those which comprised the Weekly Schedule. For example, the evidence showed that each programme was allocated a short "Catalog" code (eg, "NODD01") and that Mr Forrest keyed these into the Nine Database prior to generation of the "Excel" and "text" format of the Weekly Schedule. The catalogue codes permitted the cross-referencing by Nine of the time and title information with its internal tape library in a further schedule called "the First and Final" schedule. This comprised a collocation of the catalogue codes, the time and title information and certain other information, and was also generated from the Nine Database for this purpose prior to each broadcast week. However, the catalogue codes had no utility to the Aggregators or the public and accordingly were omitted from the "Excel" and "text" format of the Weekly Schedule. The requirement in s 29(2) of the Act for publication by reproduction of the whole work is significant. The presence of catalogue codes in the Nine Database, but not the Weekly Schedule, points, when assessing infringement, against the former being the same compilation work as the latter. Further, assuming the Nine Database and the Weekly Schedule to be distinct literary works, questions inevitably arise as to whether the author of the latter would be identified with the author of the former and whether the requisite "originality" of each might differ in the assessment of infringement. In this respect, the absence of evidence of the structure and manner of operation of the Nine Database becomes significant. There was evidence that Mr Forrest and Mr Holman were each involved in transposing information into the Nine Database. However, the evidence did not indicate how the Nine Database operated to select, arrange and present that information into the "Excel" and "text" format of the Weekly Schedule (step six), or who was responsible for designing the Nine Database so as to achieve that function. Further, while the evidence described the giving of access to information in the Nine Database ("dumping") as enabling persons with this access to view or in some cases modify the proposed programme schedule (step five), there was no evidence about how the information in the Nine Database came to be assembled in the way it was when those persons viewed it or sought to modify it. Nor was there evidence about who it was who decided that information should be assembled in this way. The relevant issues which this situation presents are elucidated by Professor Davison in his work The Legal Protection of Databases165 as follows: "There is some argument that some databases do not have authors in the copyright sense. This argument is based on the proposition that electronic databases are arranged automatically by the computer program ... The operator may simply key in the data in an undiscriminating manner or insert data that are already in digital form, and the data may be organised by the computer program. There may be no originality associated with the selection of the data included in the database, particularly if the selection consists of all the available material relating to a particular topic. It could be further argued that, as the arrangement has occurred automatically as a consequence of the operation of the computer program that manipulates the data, the supposed author of the database has not in fact authored it." (citation omitted) The author goes on to explain that there are a number of possible responses to this problem, but that these166: "require some understanding of the process of creating and updating an electronic database. First, the actual creation and updating of a database is rarely as simple as indiscriminately keying new data into some form of digital storage ... A decision has to be made about defining the records and fields (or the rows and columns) that are to be contained within the database ... Even though the final result is produced by the 'work' of a computer in arranging the material in this way, human thought went into the scheme of the database and the conception of how the material would look to the external user ... The second response ... is based on the proposition that the authors of databases can claim authorship by virtue of having considered the possible outcomes of their input into the database. They have chosen the 166 Davison, The Legal Protection of Databases, (2003) at 22-23. software used in the database and therefore chosen the operations that it can carry out on the data included." (emphasis added) In the absence of evidence as to matters of this kind and of any provision in the Act akin to s 9 of the 1988 UK Act167, Ice submitted in its oral submissions in reply that the relevant author of the Weekly Schedule was unknown. We agree. It would follow from this that no finding could be made as to whether the Weekly Schedule was a work of joint authorship within the meaning of s 10(1) of the Act168. However, the appeal to this Court may be resolved without resolving issues of this nature. On the assumption favourable to Nine that the Weekly Schedule was "the same work" as the Nine Database, the Court should accept the submission by Ice that the originality of the compilation being the Weekly Schedule lay not in the provision of time and title information, but in the selection and presentation of together with additional programme information and synopses, to produce a composite whole. information that The reasons for accepting consideration of the reasons of the Full Court. that submission appear from further Treatment of "substantial part" by the Full Court The effect of s 14(1)(a) of the Act is that an infringement by reproduction of a work may result from the reproduction of "a substantial part of the work". The word "substantial" has been said to be "not only susceptible of ambiguity" but to be "a word calculated to conceal a lack of precision"169. However that may be, which of the various possible shades of meaning the word bears in a provision such as s 14 of the Act will be determined by the context170. With respect to s 14, that context includes the matters of development of copyright law to which reference has been made earlier in these reasons171. 167 See [98]. 168 The text of the definition of "work of joint authorship" is set out above at [100]. 169 Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union (1979) 42 FLR 331 at 348. 170 See Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at 266-267 [27]; [1999] HCA 48. The Full Court stated that a finding of substantiality depended much more on the quality than the quantity of that which had been copied. That starting point is in accordance with authority172. However, the "quality" relevant in the case of a literary work, including a compilation, was said to be "the literary originality of what has been copied"173. That quality was to be assessed by reference to "the interest protected by the copyright". The origin of these latter two propositions in Newspaper Licensing174 has been described earlier in these reasons175. Neither proposition is satisfactory and each is apt to mislead. The proposition that in a case such as the present one looks to the literary originality of what IceTV copied, rather than to the Weekly Schedule as a whole, in answering the question whether IceTV reproduced a substantial part of the Weekly Schedule, shifts consideration to an extraneous issue. This is whether what the primary judge called the "slivers" of information may themselves be classified as original literary works. The issue requiring the comparison between what was taken and the whole of the work in suit may be distorted by a meditation, inspired by Desktop Marketing176, upon the protection given by the Act against misappropriation of any investment of skill and labour by the author. In the present case, the temptation then is to classify the slivers each as original literary works. An important proposition may be overlooked. This is that the statutory requirement that the part of a work taken must be substantial assumes there may be some measure of legitimate appropriation of that investment. A collateral matter should be put to one side. The case law does disclose that special difficulty has been encountered in considering the relationship between the phrase "a substantial part" in s 14(1) of the Act and the definition in s 10(1) of that species of "literary work" which is a "computer program", being: "a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result". (emphasis added) 172 Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 305; [1993] HCA 6. 173 (2008) 168 FCR 14 at 37. 175 See [62]. 176 (2002) 119 FCR 491 at 535-536. The phrase emphasised suggests the importance of function, although this is usually encountered in patent and designs law, rather than in the "traditional" law of copyright respecting original literary works. It was in this context, of the infringement of computer programs, that in Data Access Corporation v Powerflex Services Pty Ltd177, Gleeson CJ, McHugh, Gummow and Hayne JJ disfavoured a "but for" analysis which treated as essential for the purposes of substantiality each of the many necessary integers in a computer program, so that the presence of any one of them indicated the taking of a substantial part; such an analysis was overly protective of the interests of the owners of the copyright in that species of literary work, and overlooked the need for some process of qualitative abstraction of the material features of the computer program in question in order to determine any issue of substantiality under s 14(1) of the Act. But the special considerations that are present in cases such as Data Access are not found here. Use of the term "functionality" in compilation cases is unhelpful. The proposition that the Court should look to "the interest" which the copyright protects invites processes of reasoning to which there applies the warning by Judge Learned Hand in Nichols v Universal Pictures Corporation178. This is to the effect that the more remote the level of abstraction of the "interest", the greater the risk of protecting the "ideas" of the author rather than their fixed expression. That risk appears to have been realised in the reasoning of the Full Court. The Full Court approached the issue of substantiality at too high a level of abstraction, and in doing so tipped the balance too far against the interest of viewers of digital free to air television in the dissemination by means of new technology of programme listings. The Full Court did so by treating the issue of substantiality as dominated by an "interest" in the protection of Nine against perceived competition by Ice. The Full Court emphasised the apparent commercial value of the time and title information in the conduct of the business of the Nine Network. On the one hand, the time and title information was a "central element of [Nine's] business as a television broadcaster" while the synopses and additional programme information were of little or no value, whether commercially or as a repository of 177 (1999) 202 CLR 1 at 30-34 [77]-[87]. 178 45 F 2d 119 at 121 (1930). programming information179. Moreover, Nine and Ice were "competitors in the sense that each was seeking to derive profit from the dissemination of the time and title information"180. The Act operates in the general legal milieu. Section 9(3) recognises this in specifying that the statute does not affect the operation of the law relating to breaches of confidence. No litigation alleging breach of confidence could successfully have protected the time and title information at any rate after it left the control of Nine and reached the Aggregators. None was attempted. To the contrary, the Digital Alliance submitted that this litigation was an attempt to use the copyright law to control the further dissemination of information after it had reached the public domain. The Act also may have to be read with Pt IV of the Trade Practices Act 1974 (Cth)181 and with any conditions from time to time imposed upon licensees under the Broadcasting Act. (It may be noted that provision now is made, by amendments to the Broadcasting Act in 2006182, for industry codes and industry standards respecting the provision of information for the purpose of compiling electronic programme guides183. Further, in the United Kingdom, s 176 of the Broadcasting Act 1990 (UK) imposes a duty to make available programme information to any publisher, subject to the settlement of terms of payment by the Copyright Tribunal184.) It is unnecessary to pursue any of these considerations here, save to make several points. First, evidence was not led to establish any relevant "market" in which Nine and Ice competed; nor did the evidence establish that the time and title information was of greater value (however assessed) in that market than the synopses or additional programme information. Secondly, any consideration of the objectives of competition law may favour the interests of Ice rather than 179 (2008) 168 FCR 14 at 40-41. 180 (2008) 168 FCR 14 at 39. 181 See, in particular, s 51(3) of that statute. 182 Broadcasting Legislation Amendment (Digital Television) Act 2006 (Cth). 183 Broadcasting Act, s 130K(3)(b). 184 See News Group Newspapers Ltd v Independent Television Publications Ltd [1993] RPC 173 at 179-180. Nine. The decision of the European Court of Justice in Radio Telefis Eireann and Independent Television Publications Ltd v Commission of the European Communities185 was that reliance upon copyright law to found the refusal of the appellants to provide programming schedules of Irish and British television to the publisher of a weekly television guide was an abuse of a dominant position within the sense of Art 86 of the Treaty of Rome. Thirdly, to speculate upon matters of commercial competition as indicative of the "interest" protected by the Act distracts attention from the closer consideration required to what is now the case based upon the significance of step five and step six in the processes leading to the production of the Weekly Schedule. The primary judge approached the issue of substantiality correctly when she stressed that the detailed and lengthy preparatory work involved in what are identified in these reasons as steps one through to four was directed to the conduct of the business of the Nine Network in broadcasting programmes which would attract viewers. Likewise the making of late programme changes, as There remained what the Full Court accepted was "the extremely modest skill and labour"187 in setting down the programmes already selected and in taking what may now be identified as steps five and six. If the Weekly Schedule be seen in that light, several propositions advanced by Ice should be accepted. First, it ought, in a case such as the present, and to reprise the theme of Lord Herschell LC in Leslie v Young & Sons188, to be clearly established by Nine that, looking at the Weekly Schedule as a whole, there has been a substantial reproduction in the particular use by IceTV of the Aggregated Guides to access the time and title information. Secondly, in assessing the quality of the time and title information, as components of the Weekly Schedule, baldly stated matters of fact or intention are inseparable from and co-extensive with their expression. It is difficult to discern the expression of thought in statements of which programmes will be broadcast and when this will occur. If the facts be divorced from the other elements constituting the compilation in suit, as is the case with the use by IceTV of the 185 [1995] FSR 530. 186 See [121]. 187 (2008) 168 FCR 14 at 41. 188 [1894] AC 335 at 341. time and title information, then it is difficult to treat the IceGuide as the reproduction of a substantial part of the Weekly Schedule in the qualitative sense required by the case law. Thirdly, it is important also to ask whether IceTV acted as it did in preparing the IceGuide with animus furandi, to take from the Aggregated Guides the time and title information to save itself from effort on its part189. This invites further attention to the business plan and methods adopted by Ice and to the matter of "predictions". "Prediction" of time and title information Nine relied upon the decision of Whitford J in Independent Television Publications Ltd v Time Out Ltd190. However, the publishers of Time Out had decided to "take a short cut"191 and there had been wholesale copying of dates, titles and times from the TV Times and the Radio Times published by the commercial and public broadcasters respectively192. Bennett J found that IceTV had proceeded in a very different manner. The objective of IceTV had been to start with "a clean sheet of paper" and develop an EPG without infringing third party intellectual property rights. IceTV obtained legal advice as to how this might be done and began by creating templates of the daily programming of the Sydney channels Nine, Ten and Seven ("the Sydney templates"). The author of the Sydney templates was IceTV's Content Manager, The Sydney templates included seven spreadsheets populated with time and title information and additional programme information for programmes broadcast by TCN-9 on each day of the broadcast week. Nine alleged at trial that this information had been copied from the publicly available guides. However, Bennett J found that Mr Rilett created the Sydney templates by watching television over a period of three weeks in August 2004 and recording the time and title of the programmes then broadcast; his evidence of that experience and 189 Milpurrurru v Indofurn Pty Ltd (1994) 54 FCR 240 at 260-261; Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2005) 225 ALR 57 190 [1984] FSR 64. 191 [1984] FSR 64 at 69. 192 [1984] FSR 64 at 67, 73. description of it as "torture" were found by her Honour to be compelling. The primary judge went on to find that Mr Rilett compared his templates with the publicly available guides in September 2004, noted a "slight variation" in the time and title information, and amended the Sydney templates accordingly. In this Court, the alleged copying of time and title information was identified not in the creation or amendment of the Sydney templates, but in the making and updating of successive IceGuides built upon those templates. This commenced in October 2004, when Mr Rilett transposed the information in the Sydney templates into a computer database maintained by IceTV ("the Ice Database") and began using IceTV's software to compile 24-hour guides for the commercial networks for each day of the calendar week, six days ahead of when the programmes were scheduled for broadcast. The findings of the primary judge and the evidence supported the identification of three tasks required to populate the IceGuide schedules with time and title information for the Sydney station, TCN-9. Task one was to cause IceTV's software to create a "starting template" populated with time and title information copied from a past IceGuide schedule for TCN-9 Sydney for the same day of a previous week. This was done by Mr Rilett or one of two other IceTV staff, Ms Suzanne Langford or Ms Samantha Tai. By way of example, the primary judge explained193: the IceGuide for TCN-9 Sydney for Saturday, 16 September 2006 as the source schedule to create an IceGuide for TCN-9 Sydney for Saturday, 23 September 2006. 'Predicting over' the source schedule using Ice[TV]'s software caused the starting template for 23 September 2006 to contain the same program listings information as the source schedule, save for date and episode information." This process was referred to within IceTV as "predicting it over" and relied on the assumption, noted earlier in these reasons, that the TCN-9 programming for any given day was likely to be substantially the same as it was on the same day of the previous week. While that assumption was made good for "strip programs" broadcast by TCN-9 in the same timeslots, 6:00 am to 7:00 pm, Mondays to Fridays, "predicting it over" could not accommodate movies, one-off programmes or other changes in programming from week to week. 193 (2007) 73 IPR 99 at 132. For that reason, task two was necessary. This was to check the time and title information in the starting template with at least three online published guides. In the event of the published guides indicating a variation in programming from the previous week, Mr Rilett, Ms Tai or Ms Langford typically amended the starting template to reflect the time and title information in the published guides. To illustrate the extent of amendments made, Bennett J found that it was necessary for Mr Rilett to amend the time and title information for 17 out of 31 timeslots in the starting template for TCN-9 for Saturday, 23 September 2006. However, the primary judge also found that fewer amendments were necessary for weekdays because of strip and series programmes. Thus, her Honour's reasons recorded the making of changes to programme title, time or episode for 13 out of 29 timeslots when creating an IceGuide schedule for TCN-9 for Monday, 2 October 2006. The nature of amendments made to the starting template was further illustrated by the setting out by the primary judge of each change made by Mr Rilett in creating the IceGuide schedule for TCN-9 for 23 September 2006. By way of example of five such changes, Mr Rilett194: changed the start time for Nightline from 12:25 am to 12:15 am to reflect the information in published guides; deleted the movie Lansky, which was scheduled to appear at 12:55 am in the IceGuide but was not in the published guides; added the movie The Inspectors at 12:45 am to the IceGuide, based on the information in the published guides; changed the start time in the IceGuide for the Late Show with David Letterman from 3:05 am the information in the published guides; to 2:35 am, based on added the program Entertainment Tonight to the IceGuide at 3:30 am, based on the information in the published guides". However, the evidence also showed that the time and title information was not universally amended to reflect the published guides. For example, in the course of making the amendments just described, Bennett J explained that Mr Rilett195: 194 (2007) 73 IPR 99 at 132. 195 (2007) 73 IPR 99 at 133. "ignored the published guides' indication that The Batman would be broadcast at 8:05 am, 8:40 am and 9:20 am and instead left the IceGuide starting template's indication that Classic Looney Tunes would be broadcast at these times. Mr Rilett disregarded the published guides as he determined that TCN-9 Sydney may not broadcast The Batman at that time by reason of the program not being suitably rated for viewing during children's hours". To amend the time and title information in the starting template, Bennett J found that IceTV staff searched the Ice Database for programmes or episode titles previously included in that database. This was done by causing IceTV's software to generate an on-screen list of available programme titles. Start times could be selected or amended using on-screen "drop-down boxes", while mouse-clicking buttons marked "Revise" or "Update Show" caused the software to insert new starting times or programme titles into the IceGuide schedule. Episode titles were similarly presented by IceTV's software in a list available to the operator and available for selection for inclusion in the IceGuide schedule. If, at the time of amendment of the starting template, the programme or episode had not been previously added to the Ice Database, it could be added using IceTV's software. The third and final task was to capture late changes to Nine's programming. The primary judge found that this was done by Ms Langford, who undertook a daily comparison of the time and title information in the IceGuide schedule with the listings in the YourTV Guide for the up-coming 60-hour period. Late changes were also inserted by Mr Rilett in response to information obtained from his review of a website styled Television Programming News and from messages posted by subscribers on an online forum maintained on IceTV's website. The evidence showed the same three tasks were performed to create IceGuide schedules for other stations in the Nine Network, subject to one variation in task one. This comprised the use of a different channel within the Nine Network as the source schedule. Thus, IceGuide schedules for GTV-9 in Melbourne were made by "predicting over" time and title information derived from the IceGuide schedule for TCN-9 for the same day. In the expectation that the same episodes would be shown by the various stations in the Nine Network, episode titles were retained by IceTV's software where the source schedule channel was different from the destination channel. The evidence included a chart prepared by Mr Rilett documenting the relevant "source schedule" for the various stations within the Nine Network. However, for each new schedule, it remained necessary to repeat task two and cross-check the time and title information with online, publicly available guides. One further point concerning the making and updating of the IceGuide should be noted. This concerns the source of the IceGuide synopses. Bennett J found that the synopses appearing in the IceGuide for the Nine Network were drafted by two IceTV staff, Ms Madeleine Doyle and Ms Kiriaki Orfanos. Reference books such as Halliwell's Film & Video Guide 2002 and websites were consulted for this purpose, but Ms Doyle and Ms Orfanos were not permitted to have regard to the published guides. The primary judge found that IceTV's synopses had a different commercial purpose from that of Nine, as evidenced by the use of humour or criticism. For example, the IceGuide synopsis for the Nine programme The Footy Show (AFL) on 28 September 2006 read: "From [t]he Rod Laver Arena comes this extra long torture session. Apologies for not bringing you the 'entertainment' line-up, it's not through lack of research. Unfortunately, the only way to have truly known was to be watching The Footy Show last week and frankly, not for love or money will the IceMan do that. So, those of you who enjoy the 'humour' and baffling ego inflation. Enjoy." Conclusions When the issue of substantiality is approached in the manner indicated in these reasons, it is apparent that the primary judge reached the correct result and that this should not have been disturbed. Ice also emphasised that the time and title information appearing in the Weekly Schedule was "decompiled" into the very different form of the Aggregated Guides, and that IceTV derived the time and title information through that medium, rather than directly from the Weekly Schedule. Given the above conclusion respecting the issue of substantiality, it is unnecessary to determine whether the fact of so-called "indirect copying" by IceTV prevented there being a "reproduction" of the Weekly Schedule. One final point should be made. This concerns the submission by the Digital Alliance that this Court consider the Full Court's decision in Desktop Marketing196 and, to the contrary of Desktop Marketing, affirm that there must be 196 (2002) 119 FCR 491. some "creative spark"197 or exercise of "skill and judgment"198 before a work is sufficiently "original" for the subsistence of copyright. It is by no means apparent that the law even before the 1911 Act was to any different effect to that for which the Digital Alliance contends. It may be that the reasoning in Desktop Marketing with respect to compilations is out of line with the understanding of copyright law over many years. These reasons explain the need to treat with some caution the emphasis in Desktop Marketing upon "labour and expense" per se and upon misappropriation. However, in the light of the admission of Ice that the Weekly Schedule was an original literary work, this is not an appropriate occasion to take any further the subject of originality in copyright works. Orders The appeal should be allowed with costs. The order of the Full Court made on 8 May 2008, as varied on 20 August 2008, should be set aside and, in place thereof, the appeal to that Court be dismissed with costs. 197 Feist Publications, Inc v Rural Telephone Service Co, Inc 499 US 340 at 345 198 CCH Canadian Ltd v Law Society of Upper Canada [2004] 1 SCR 339 at 352. |
HIGH COURT OF AUSTRALIA AND THE QUEEN APPELLANT RESPONDENT PM v The Queen [2007] HCA 49 8 November 2007 ORDER Appeal dismissed. On appeal from the Supreme Court of New South Wales Representation R F Sutherland SC for the appellant (instructed by Fox O'Brien) L M B Lamprati SC with N F Noman for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS PM v The Queen Criminal procedure – Crimes and offences by children – Jurisdiction – A child was charged with a "serious children's indictable offence" as well as lesser offences – The child's committal hearing was in the Children's Court of New South Wales, but the proceedings were remitted to the District Court because the Children's Court did not have jurisdiction to deal with the "serious children's indictable offence" – In the District Court the prosecutor did not proceed with the "serious children's indictable offence" – Whether the District Court was required to remit the proceedings back to the Children's Court for determination – Whether the District Court had jurisdiction to deal with charges against a child not involving a "serious children's indictable offence". Criminal procedure – Crimes and offences by children – Powers of the New South Wales Director of Public Prosecutions with respect to filing an indictment against a child. Words and phrases – "serious children's indictable offence". Criminal Procedure Act 1986 (NSW), s 8. Children (Criminal Proceedings) Act 1987 (NSW), ss 7, 8, 26, 28, 31, 44. GLEESON CJ, HAYNE, HEYDON AND CRENNAN JJ. The Children (Criminal Proceedings) Act 1987 (NSW) ("the CCP Act") makes special provision with respect to the conduct of criminal proceedings against children. The CCP Act differentiates between a "serious children's indictable offence" and other indictable offences. The Children's Court of New South Wales, constituted by the Children's Court Act 1987 (NSW), has jurisdiction1 to hear and determine proceedings in respect of any offence (whether indictable or otherwise) other than a serious children's indictable offence. It has jurisdiction2 to hear and determine committal proceedings in respect of any indictable offence, including a serious children's indictable offence. The CCP Act provides, as the conditions for the exercise of either species of its jurisdiction, that the offence is alleged to have been committed by a person who was a child when the offence was committed and who was under the age of 21 years when charged before the Children's Court with the offence. If a person is charged before the Children's Court with an offence (whether indictable or otherwise) other than a serious children's indictable offence, the proceedings for the offence are to be dealt with summarily3. If, as in the present matter, a child is charged with a serious children's indictable offence, committed for trial in the District Court of New South Wales, and the prosecutor chooses not to proceed on the charge of a serious children's indictable offence but a lesser, included, indictable offence, must the proceedings for that lesser offence return for hearing and determination by the Children's Court? Does the District Court have jurisdiction to hear and determine that lesser offence? The power given to the District Court to order remitter to the Children's Court of criminal proceedings against a child is contained in s 44 of the CCP Act. That power may be exercised only "[i]f a court before which a person is charged with an offence is satisfied that, because of any provision of [the CCP] Act, it did not or does not have jurisdiction to deal with the charge". There is no provision of the CCP Act which excludes or limits the jurisdiction of the District Court "in 1 Children (Criminal Proceedings) Act 1987 (NSW) ("the CCP Act"), s 28. 3 CCP Act, s 31(1). Hayne Crennan respect of all indictable offences" conferred by s 46(2)4 of the Criminal Procedure Act 1986 (NSW) ("the Criminal Procedure Act") in conjunction with s 166(1) of the District Court Act 1973 (NSW)5. The condition for exercising the power under s 44 of the CCP Act was not satisfied in the present matter. The District Court had jurisdiction to deal with the charges preferred against the appellant. Section 44 of the CCP Act not being validly engaged, no order for remitter should have been made. It was not suggested, either in this Court or in the courts below, that if the District Court had jurisdiction with respect to the charges preferred against the appellant, the further exercise of that jurisdiction should have been stayed. The proceedings below The appellant was born in December 1987. He was under 18 at the time of the events which gave rise to the present proceedings and was, therefore, a "child" as defined in s 3 of the CCP Act. On 18 September 2004, a court attendance notice was given to the appellant alleging that on 17 September 2004 he had had sexual intercourse with the complainant without her consent, and knowing that she was not consenting to the sexual intercourse, in circumstances of aggravation, namely, that at the time of the offence the complainant was a person aged under 16 years. At that time, s 61J(1) of the Crimes Act 1900 (NSW) provided that a person who has sexual intercourse with another person without the consent of that other, and in circumstances of aggravation, and who knows that the other person does not consent to the sexual intercourse, is liable to imprisonment for 20 years. The heading to the section described the offence as "[a]ggravated sexual assault". It is convenient to use that description. Sub-section (2) of s 61J specified seven circumstances of aggravation. One was that the alleged victim was under the age 4 That sub-section provides: "The District Court has jurisdiction in respect of all indictable offences, other than such offences as may be prescribed by the regulations for the purposes of this section." 5 That sub-section provides: "The Court has the criminal jurisdiction conferred or imposed on it by or under this Act, the Criminal Procedure Act 1986 and any other Act." Hayne Crennan of 16 years6. Another was that "at the time of, or immediately before or after, the commission of the offence, the alleged offender maliciously inflicts actual bodily harm on the alleged victim or any other person who is present or nearby"7. On 21 October 2004, a little over a month after the first court attendance notice, the appellant was given a further court attendance notice charging him not only with the offence specified in the first notice, but with a second count of aggravated sexual assault against the complainant in which the circumstance of aggravation alleged was that at the time of the offence he occasioned actual bodily harm to the complainant. The first charge laid against the appellant, in which the age of the complainant was alleged to be the aggravating circumstance, was not a serious children's indictable offence. The second charge, alleging the occasioning of actual bodily harm as an aggravating circumstance, was. The charges were brought on for hearing in the Bidura Children's Court at Glebe on 12 April 2005. The hearing was treated as a committal. Only one witness, a forensic biologist, gave oral evidence. Other evidence was tendered in written form. Counsel for the appellant told the magistrate that he had no submissions to make but counsel for the informant told the magistrate that "the DPP is seeking committal for trial" in relation only to the second offence charged (the offence alleging the occasioning of actual bodily harm as the aggravating circumstance). Counsel for the informant indicated that she wished to withdraw the first charge (the offence alleging the age of the complainant as the aggravating circumstance) and this was done. The magistrate, being of opinion "that on the evidence ... there is a reasonable prospect that a reasonable jury properly instructed would convict the [appellant] of an indictable offence", committed the appellant for trial at the District Court in Sydney. On 18 May 2005, as had been foreshadowed at the end of the committal, the Director of Public Prosecutions filed an indictment containing only one charge of aggravated sexual assault by the appellant upon the complainant. The circumstance of aggravation alleged was that at the time of the offence the appellant inflicted actual bodily harm on the complainant. (As noted earlier, this was a serious children's indictable offence.) Subsequently, on 14 March 2006, the Director of Public Prosecutions filed a fresh indictment containing three 6 Crimes Act 1900 (NSW), s 61J(2)(d). s 61J(2)(a). Hayne Crennan counts. The first count alleged the offence of aggravated sexual assault but specified, as the circumstance of aggravation, that the complainant was under the age of 16 years. (As noted earlier, this was not a serious children's indictable offence.) Two alternative counts were also charged: having sexual intercourse with the complainant, a child then aged between 14 and 16 years, contrary to s 66C(3) of the Crimes Act, and assaulting the complainant, at the same time committing an act of indecency on her, she being then under the age of 16, contrary to s 61N of the Crimes Act. Neither of the alternative counts alleged a serious children's indictable offence. There was no occasion in this appeal to consider what consequences for the first indictment followed from filing the second. The appeal to this Court proceeded on the footing that the Director required no leave8 to file the second indictment and that filing the second indictment "overtook" the first. On 14 March 2006, after the second indictment had been filed, the appellant was arraigned on that indictment, pleaded not guilty to all three counts, and a jury was empanelled. The complainant was called to give evidence. Just before the court adjourned for the day, the jury sent a note to the judge (McGuire DCJ) asking why the appellant was "being tried as an adult". On the following day, counsel for the appellant submitted that the proceedings should not continue in the District Court, but be remitted to the Children's Court, pursuant to s 44 of the CCP Act9. The primary judge held that the indictment was "defective in that it particularises conduct constituting an indictable offence and not a serious children's indictable offence". The primary judge concluded that because the Children's Court had not formed the opinion that the charges brought against the appellant "may not properly be disposed of in a summary manner"10 the District Court had no jurisdiction to deal with the charges contained in the indictment. Accordingly, the primary judge discharged 8 R v Harris (No 2) [1990] VR 305 at 306-307; Poole v The Queen [1961] AC 223; R v Lewis [1975] 2 NZLR 490; Starkie, A Treatise on Criminal Pleading, 2nd ed (1822), vol 1 at 299-300. 9 Section 44 of the CCP Act provided that: "If a court before which a person is charged with an offence is satisfied that, because of any provision of this Act, it did not or does not have jurisdiction to deal with the charge, it may remit the case to such other court as has jurisdiction to deal with the charge." 10 CCP Act, s 31(3)(b)(ii). Hayne Crennan the jury and made an order, under s 44 of the CCP Act, remitting the matter to the Children's Court for its determination. The Director of Public Prosecutions appealed to the Court of Criminal Appeal. By majority, that Court (Whealy and Latham JJ; Basten JA dissenting) allowed11 the appeal and set aside the order of McGuire DCJ remitting the matter to the Children's Court. By special leave the appellant appeals to this Court. In the Court of Criminal Appeal there was debate about whether the order made at first instance was to be understood as an order quashing the second indictment12. There was also some debate about whether the appeal instituted by the Director was properly brought under s 5C or s 5F of the Criminal Appeal Act 1912 (NSW). Neither of these issues arises directly in the appeal to this Court. The issues debated in this Court centred upon whether the order for remitter to the Children's Court should have been made. As noted earlier, the essential premise for making that order was, in the words of s 44 of the CCP Act, that the District Court "did not or does not have jurisdiction to deal with" the charges preferred in the indictment. And the ultimate proposition, to which the appellant's arguments both in this Court and in the courts below were directed, was a compound proposition. It was that the District Court had no jurisdiction to hear and determine the charges preferred against the appellant (each of which charged an indictable offence other than a serious children's indictable offence) because the appellant had not elected to "take his or her trial according to law"13 for those offences, and the Children's Court had not first decided that the proceedings on those charges may not properly be disposed of in the Children's Court in a summary manner. The reference in s 44 to a court being "satisfied that, because of any provision of [the CCP] Act, it did not or does not have jurisdiction to deal with the charge" must be read in the light of other provisions of the CCP Act. The most obvious circumstances in which s 44 will be engaged hinge about the age of the defendant. But s 44 may also be engaged because s 7 of the CCP Act applies. Section 7 of the CCP Act provides that: 11 Director of Public Prosecutions (NSW) v PM (2006) 67 NSWLR 46. 12 (2006) 67 NSWLR 46 at 61 [58] per Basten JA, 72 [113] per Latham J (Whealy J agreeing). 13 s 31(2)(b). Hayne Crennan "(1) Except as provided by this Act, a Local Court may not hear and determine criminal proceedings that the Children's Court has jurisdiction to hear and determine. The Drug Court may not hear or determine criminal proceedings that a Children's Court has jurisdiction to hear and determine." Evidently, then, s 44 may be engaged if criminal proceedings over which the Children's Court has jurisdiction are commenced in a Local Court or in the Drug Court. A Local Court or the Drug Court may not have jurisdiction to deal with a charge "because of" a provision of the CCP Act (s 7) and s 44 may thus be engaged. But s 7 of the CCP Act is important not only because it stands as an example of how and when s 44 may be engaged. It is important because neither s 7, nor any other provision of the CCP Act, expressly limits the jurisdiction of the District Court. The argument that the CCP Act should be read as limiting the jurisdiction of the District Court depended upon spelling out such a legislative intention from other provisions of the CCP Act which, in their terms, were directed only to the Children's Court or the conduct of proceedings in that Court. The argument was not made good. There are no cogent reasons14 to read the provisions of the CCP Act as impliedly and indirectly limiting the otherwise general conferral by the Criminal Procedure Act15 of jurisdiction on the District Court "in respect of all indictable offences". The relevant statutory provisions Much emphasis was given in argument, both in this Court and in the courts below, to s 31 of the CCP Act. That section regulates the hearing of charges in the Children's Court. It takes its place in the CCP Act in the context provided by the other provisions of the Act including, in particular, s 8 (concerning the commencement of criminal proceedings against a child), s 26 (concerning the application of Pt 3 of the CCP Act) and s 28 (concerning the jurisdiction of the Children's Court). Sections 26, 28 and 31 are all contained in Pt 3 of the CCP Act. Section 26(1) provides that that Part applies to the Children's Court and any 14 Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at 279 [17]; Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 421. Hayne Crennan criminal proceedings before the Children's Court, "notwithstanding any law or practice to the contrary". And s 26(2) provides that in the event of any inconsistency between Pt 3 and Pt 2 of the Act (ss 4-25) regulating "Criminal proceedings generally", Pt 3 is to prevail to the extent of the inconsistency. Section 28(1) (as noted earlier) prescribes the jurisdiction of the Children's Court. It provides: "The Children's Court has jurisdiction to hear and determine: proceedings in respect of any offence (whether indictable or otherwise) other than a serious children's indictable offence, and committal proceedings in respect of any indictable offence (including a serious children's indictable offence), if the offence is alleged to have been committed by a person: (c) who was a child when the offence was committed, and (d) who was under the age of 21 years when charged before the Children's Court with the offence." (Sub-section (2) qualifies the operation of s 28(1) in respect of traffic offences. It may be put aside from further consideration in this matter.) Section 31 provides: If a person is charged before the Children's Court with an offence (whether indictable or otherwise) other than a serious children's indictable offence, the proceedings for the offence shall be dealt with summarily. (2) Notwithstanding subsection (1): if a person is charged before the Children's Court with an indictable offence (other than an offence that is punishable summarily without the consent of the accused), and if the person informs the Children's Court (at any time during, or at the close of, the case for the prosecution) that the person wishes to take his or her trial according to law, the proceedings for the offence shall not be dealt with summarily but shall be dealt with in accordance with Divisions 2–4 (other than Hayne Crennan sections 60 and 61) of Part 2 of Chapter 3 of the Criminal Procedure Act 1986 in the same way as if a court attendance notice had been issued in accordance with that Act. (3) Notwithstanding subsection (1): if a person is charged before the Children's Court with an indictable offence, and if the Children's Court states that it is of the opinion, after all the evidence for the prosecution has been taken: that, having regard to all the evidence before the Children's Court, the evidence is capable of satisfying a jury beyond reasonable doubt that the person has committed an indictable offence, and that the charge may not properly be disposed of in a summary manner, the proceedings for the offence shall not be dealt with summarily but shall be dealt with in accordance with Divisions 2–4 (other than sections 60 and 61) of Part 2 of Chapter 3 of the Criminal Procedure Act 1986 in the same way as if a court attendance notice had been issued in accordance with that Act and as if the Children's Court had formed the opinion referred to in section 62 of that Act. If, in the circumstances referred to in subsection (3), the Children's Court commits a person for trial, the Children's Court shall forthwith furnish to the person a statement of the reasons for its decision to commit the person for trial instead of dealing with the matter summarily. (5) Notwithstanding subsection (1): if a person is charged before the Children's Court with an indictable offence, and if, at any stage of the proceedings, the person pleads guilty to the charge, and if the Children's Court states that it is of the opinion that, having regard to all the evidence before it, the charge may not properly be disposed of in a summary manner, Hayne Crennan the proceedings for the offence shall not be dealt with summarily but shall be dealt with in accordance with Division 5 of Part 2 of Chapter 3 of the Criminal Procedure Act 1986 as if the offence were a serious children's indictable offence in respect of which the person had pleaded guilty as referred to in that section." Ordinarily, then, if a person is charged before the Children's Court with an indictable offence that is not a serious children's indictable offence, and pleads not guilty, the proceedings are to be dealt with summarily in the Children's Court, unless one of two conditions is met. First, the accused person may elect "to take his or her trial according to law"16. Secondly, the accused person is to be committed for trial if (a) the Children's Court states that it is of the opinion, at the end of the prosecution case, that the evidence is capable of satisfying a jury beyond reasonable doubt that the person has committed an indictable offence and (b) the Children's Court is of the opinion that "the charge may not properly be disposed of in a summary manner"17. But as both the words of s 31 and the express provisions of s 26 make plain, the provisions of s 31 apply to the Children's Court and to any criminal proceedings before the Children's Court. In terms, the provisions of s 31 are not directed to any other court or to proceedings in any other court. It may readily be accepted that the CCP Act was intended to make special provision with respect to the conduct of criminal proceedings against children. It may likewise be accepted that the provisions it makes are intended to work for the benefit of those children who face criminal prosecution. But identifying the purposes of the CCP Act in this way does not demonstrate that the Act bears the construction urged by the appellant. While, in oral argument, the appellant placed chief emphasis upon s 31 of the CCP Act, the appellant also supported the reasoning of Basten JA in the Court of Criminal Appeal. It is convenient to examine these arguments by reference to his Honour's reasons. Basten JA concluded18 that all offences which are not serious children's indictable offences are to be dealt with summarily in the Children's Court unless 16 s 31(2)(b). 18 (2006) 67 NSWLR 46 at 53 [28]. Hayne Crennan the steps prescribed by s 31 of the CCP Act are engaged and, in accordance with that section, the accused person is committed for trial in another court. That conclusion depended, in part, upon the construction of s 8 of the CCP Act. Basten JA held19 that s 8 required the conclusion that proceedings against a child in respect of an offence which is not a serious children's indictable offence "should not be commenced otherwise than by a court attendance notice". It is necessary, then, to have regard to the relevant provisions of Pt 2 of the CCP Act and s 8 in particular. Section 8, at the times relevant to this matter, provided that: "(1) Criminal proceedings should not be commenced against a child otherwise than by way of court attendance notice. Subsection (1) does not apply: if the offence for which proceedings are being commenced consists of: a serious children's indictable offence, (iii) an indictable offence under Division 2 of Part 2 of the Drug Misuse and Trafficking Act 1985, or (whether an offence indictable or otherwise) prescribed by the regulations for the purposes of this paragraph, if, in the opinion of the person by whom the proceedings are commenced, there are reasonable grounds for believing that: the child is unlikely attendance notice, or to comply with a court the child is likely to commit further offences, if the proceedings were to be commenced by court attendance notice, or if, in the opinion of the person by whom the proceedings are commenced: 19 (2006) 67 NSWLR 46 at 52 [25]. Hayne Crennan the violent behaviour of the child, or the violent nature of the offence, indicates that the child should not be allowed to remain at liberty." Three separate points are to be made about s 8 and its application to the circumstances of the present case. First, criminal proceedings that are commenced against a child otherwise than by issuing a court attendance notice are not invalidly commenced if the qualifications to the application of s 8(1) provided in s 8(2) are not satisfied. The jurisdiction of the court in which those proceedings are commenced is not affected by the failure to begin the proceedings in accordance with s 8. Secondly, the criminal proceedings against the appellant that were maintained in the District Court by the filing of the second indictment had been commenced by way of court attendance notice. Thirdly, if, unlike this case, criminal proceedings against a child were instituted by filing an indictment in the District Court alleging indictable offences unrelated to any charges that had been laid in a court attendance notice and had been the subject of examination in prior committal proceedings in the Children's Court, there may be some question whether the prosecution of that indictment should be stayed20. But that would be a question about the exercise of jurisdiction, not whether the District Court had jurisdiction in respect of the offences. The resolution of any question about staying such proceedings would raise issues different from the issues of jurisdiction that must be considered in this case and it is not necessary to say any more about this third point. It is, however, desirable to amplify the first two points. Is compliance with s 8 "mandatory", in the sense that criminal proceedings commenced against a child otherwise than in accordance with the section are to be treated as not validly commenced21? The expression "should not be commenced ... otherwise", used in s 8(1), may be read as expressing only an exhortation, not a command. That is the more natural meaning of the words used. Sub-section (2) provides that s 8(1) "does not apply" if one of the various objective criteria stated in s 8(2)(a) is met, or if the person by whom the proceedings are commenced forms an opinion of a kind described in s 8(2)(b) or (c). These qualifications to the operation of s 8(1) may 20 Barton v The Queen (1980) 147 CLR 75. 21 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355. Hayne Crennan suggest that s 8(1) is to be read as a command, and not just as legislative encouragement for adopting one means of starting criminal proceedings rather than others. The history of s 8 of the CCP Act supports reading s 8(1) as hortative, not prescriptive. As originally enacted, s 8 provided that "[i]f criminal proceedings are taken against a child in respect of an offence, the proceedings shall be commenced by way of summons or citation unless ..." (emphasis added). The Children (Criminal Proceedings) Amendment Act 1987 (NSW) amended s 8(1) so that it provided that "[c]riminal proceedings should not be commenced against a child otherwise than by way of summons or attendance notice" and the Explanatory Note to the Bill described the amendment as "intended to encourage the use of attendance notices and summonses in preference to warrants" (emphasis added). The critical question, however, is what is the consequence of not instituting particular criminal proceedings by way of court attendance notices? Whether s 8(1) expresses a command, or merely an exhortation, no express provision is made by the CCP Act for any consequences that are to be attached to not acting in accordance with the section's provisions. In particular, nothing in the text or context of the CCP Act suggests that proceedings commenced against a child otherwise than by a court attendance notice are to be treated as not having been validly instituted22, if none of the qualifications provided by s 8(2) applies. Due weight must be given to s 4 of the CCP Act, and its provision that Pt 2 of the Act (which includes s 8) applies to any court that exercises criminal to any criminal proceedings before any such court jurisdiction and "notwithstanding any law or practice to the contrary". But s 4 is engaged in respect of the exercise of criminal jurisdiction and in respect of criminal proceedings before a court. In its terms, s 4 is not directed to the logically anterior question of what courts have jurisdiction over particular matters. Section 4 does not detract from the conclusions earlier expressed about the operation of s 8 and the validity of proceedings instituted otherwise than by a court attendance notice. The second point to make about the application of s 8 in this case is that the construction of the section urged by the appellant, and adopted by Basten JA, 22 Project Blue Sky Inc (1998) 194 CLR 355. Hayne Crennan treated the filing of the second indictment in the present matter as the commencement of criminal proceedings against the appellant that were separate and distinct from those that were commenced when either the first or the second court attendance notice was given to him. Even if, contrary to the view expressed earlier in these reasons, s 8(1) were to be construed as invalidating any commencement of criminal proceedings against a child otherwise than in the manner described by s 8(1) (as limited in its application by s 8(2)) the relevant criminal proceedings against this appellant were commenced by way of court attendance notice. All of the offences alleged in the second indictment preferred against the appellant were either expressly charged in the second court attendance notice or were lesser, included, offences of which the appellant could have been found guilty if the tribunal of fact was not satisfied of the appellant's guilt of the offence that was charged23. Arraigning the appellant in the District Court on the second indictment filed in that Court marked the start of his trial on the charges alleged in the indictment. In that limited sense, those particular criminal proceedings might be said to have been commenced by the filing of the second indictment. For the purposes of s 8(1), however, criminal proceedings against the appellant were commenced by way of court attendance notice. Section 8 of the CCP Act does not assist the appellant's argument. A second, and separate strand in the reasoning of Basten JA depended upon the construction of the opening words of s 31(1) of the CCP Act: "If a person is charged before the Children's Court ...". The appellant submitted that, as Basten JA had held24 in the Court of Criminal Appeal, "[i]f" should be read, in the context provided by the Act as a whole, as meaning "when" in the sense of "whenever". But even accepting that this is the preferable construction of the opening words of s 31(1), the critical point to observe is that the sub-section does not speak to courts other than the Children's Court. Reading s 31(1) as prescribing that, "when" or "whenever" a person is charged before the Children's Court, the charge is to be dealt with summarily does not require the conclusion of exclusivity of jurisdiction to which the appellant's argument was directed. That is, even so understood, s 31(1) does not demonstrate that s 28 of the CCP Act is to be read as conferring jurisdiction on the Children's Court that is exclusive of the jurisdiction of other courts. It does not demonstrate that the District Court has no jurisdiction to hear an indictable offence unless the steps contemplated by 23 Crimes Act, s 61Q. 24 (2006) 67 NSWLR 46 at 52 [24]. Hayne Crennan s 31(2) have first been taken in the Children's Court in relation to that particular offence. At first instance, and in the Court of Criminal Appeal, much of the argument proceeded by reference to the power of the Director of Public Prosecutions to file an ex officio indictment. Section 8 of the Criminal Procedure Act provides that: "(1) All offences shall be punishable by information (to be called an indictment) in the Supreme Court or the District Court, on behalf of the Crown, in the name of the Attorney General or the Director of Public Prosecutions. Such an indictment may be presented or filed whether or not the person to whom the indictment relates has been committed for trial in respect of an offence specified in the indictment. This section does not apply to offences that [are] required to be dealt with summarily. This section does not affect any law or practice that provides for an indictable offence to be dealt with summarily." Section 8(2), in particular, permits filing an ex officio indictment. In the Court of Criminal Appeal, Basten JA concluded25 that "by virtue of a combination of s 8 of the Criminal Procedure Act and s 8 and s 31 of the [CCP Act], the Director had no power in this case to file an ex officio indictment in relation to an offence other than a serious children's indictable offence". Asking a question about the Director's powers to file an ex officio indictment diverts attention from the statutory question presented by s 44 of the CCP Act. It was s 44 that founded the order made at first instance to remit the matter to the Children's Court and s 44 was engaged only if the District Court "did not or does not have jurisdiction to deal with the charge". Whether the Director had power to file an ex officio indictment may go to the validity of the second indictment that was filed in this matter but it does not, at least directly, identify whether the District Court had jurisdiction to deal with the charges laid in that indictment. Be this as it may, the conclusions reached in the Court of Criminal Appeal about the power to file an ex officio indictment depended 25 (2006) 67 NSWLR 46 at 53 [28]. Hayne Crennan entirely upon the resolution of the questions of construction of the CCP Act that have already been considered. No separate question of construction was identified. For the reasons already given, the relevant provisions of the CCP Act do not bear the construction for which the appellant contended. Those provisions do not require or permit some reading down of the otherwise general powers given to the Director by s 8 of the Criminal Procedure Act. It is, nonetheless, desirable to make two further points about the filing of the second indictment in this matter. It is very common, in criminal proceedings against adults, for the Director of Public Prosecutions to file an indictment that lays charges different from those that were before a magistrate considering whether to commit a person for trial. At a committal, the question for a magistrate26 is whether "having regard to all the evidence ... the evidence is capable of satisfying a reasonable jury, properly instructed, beyond reasonable doubt that the accused person has committed an indictable offence" (emphasis added). The question is not whether there is evidence capable of demonstrating, to the requisite standard, guilt of the offence that is then charged. Section 31(3) of the CCP Act prescribes when a child is to be committed to stand trial in the District Court or the Supreme Court. For present purposes, the provisions of s 31(3) are in substantially identical form to the provisions of the Criminal Procedure Act governing when an adult should be committed for trial. The question posed by s 31(3) of the CCP Act is whether the evidence is capable of satisfying a jury beyond reasonable doubt that the person has committed an indictable offence, not the offence that was then charged. If the charges laid in the indictment differ from those that were before a committing magistrate, a question may arise about whether the accused person should stand trial on those charges without there having been some further preliminary inquiry. Considerations of the kind dealt with in Barton v The Queen27 will bear upon the resolution of that question. But the fact that an indictment lays charges that differ from those that had been made in the court that committed an accused person for trial does not bear upon the jurisdiction of the court in which the indictment is filed. That question of jurisdiction, in the present case, turns upon whether, on its true construction, the CCP Act gives the Children's Court exclusive jurisdiction. It does not turn upon identifying the charges laid in the Children's Court or upon the course of events in the Children's 26 Criminal Procedure Act 1986 (NSW), s 63(1). 27 (1980) 147 CLR 75. Hayne Crennan Court. The CCP Act does not give the Children's Court exclusive jurisdiction over indictable offences that are not serious children's indictable offences. After the conclusion of oral argument the parties, by leave, filed submissions about the history of New South Wales legislation governing criminal proceedings against children. Nothing in that history casts light directly on the immediate question of construction that must be decided. The history demonstrates no more than that special provision has long been made to regulate criminal proceedings against children. The question that must be decided is what is the extent of that "special provision". The answer to that question depends upon the construction of the relevant provisions. For these reasons, s 44 of the CCP Act was not engaged. The District Court of New South Wales had jurisdiction to deal with the charges laid in the second indictment. Before disposing of the appeal, however, it is necessary to notice one other point which arose in the course of oral argument but which was not the subject of any ground of appeal in this Court. As noted earlier, counsel for the informant sought leave of the Children's Court to withdraw the charge which had been laid in both the first and the second court attendance notices given to the appellant, of aggravated sexual assault in which the circumstance of aggravation alleged was the age of the complainant. It is to be recalled that this offence was the principal count alleged in the second indictment heard in the District Court. In the Court of Criminal Appeal, Basten JA expressed28 the view that s 206 of the Criminal Procedure Act could properly have been engaged in the present matter with the consequence that further proceedings could not be brought for the offence alleged as the principal charge on the second indictment. The correctness of this view was not put in issue in the appeal to this Court. It is neither necessary nor desirable to express any conclusion about it. 28 (2006) 67 NSWLR 46 at 54 [30]. Hayne Crennan Order The appeal should be dismissed. Kirby KIRBY J. This appeal arises from a divided decision of the Court of Criminal Appeal of New South Wales concerning the unusual circumstances of the trial of the appellant, PM29. That trial commenced in the District Court of New South Wales, before McGuire DCJ and a jury. As appears from the joint reasons in this case30, the appeal concerns the jurisdiction of the District Court of New South Wales and of the Children's Court of New South Wales. It also concerns the powers of the New South Wales Director of Public Prosecutions ("the DPP") (and his or her delegates) to find indictments and to take proceedings in such courts in respect of criminal offences committed by children. The facts Initiation of the proceedings: The trial of the appellant arose out of criminal conduct alleged to have occurred in September 2004. At the time of the alleged offence, the appellant was aged 16 years and 9 months. He was therefore a "child" within the meaning of that term in the Children (Criminal Proceedings) Act 1987 (NSW) ("the CCP Act")31. The complainant was then a girl aged 14 years. The offence alleged was non-consensual sexual intercourse said to have occurred at a school that the two children attended. By the time the proceedings reached the District Court and the Court of Criminal Appeal, the appellant was 18 years of age32. Following a complaint to police, two separate charges were brought in the Children's Court. Each was initiated by the issuance of a court attendance notice33. The first charge, dated 18 September 2004, alleged an offence comprising a form of aggravated sexual assault under s 61J of the Crimes Act 1900 (NSW). The aggravating feature specified was that the alleged victim was under the age of 16 years34. For the purposes of the CCP Act, the offence 29 Director of Public Prosecutions (NSW) v PM (2006) 67 NSWLR 46. 30 See joint reasons at [6]-[29] setting out the relevant facts and applicable legislation. 31 See the CCP Act, s 3 (defining "child"). 32 (2006) 67 NSWLR 46 at 48 [3]. 33 See the CCP Act, s 3 (defining "court attendance notice"). 34 See Crimes Act 1900 (NSW), s 61J(2)(d). Kirby charged was not a "serious children's indictable offence"35. If it had been, a trial otherwise than in the Children's Court would have been required36. On 21 October 2004, a second court attendance notice was issued to the appellant in respect of a differently particularised offence under s 61J. It specified a serious circumstance of aggravation, namely, the malicious infliction of actual bodily harm on the alleged victim37. This offence fell within the definition of a "serious children's indictable offence". On 12 April 2005, a committal hearing commenced before the Children's Court. There, the DPP sought to withdraw the first charge. This course was permitted, and the Magistrate discharged the appellant with respect to that charge. So far as the second charge was concerned, the Magistrate committed the appellant to stand trial in the District Court. On 18 May 2005, the DPP filed a notice of readiness to proceed to trial in the District Court. Annexed to that notice was a draft indictment stating the offence intended to be tried. In effect, it was the same as the offence in respect of which the Magistrate had committed the appellant for trial. On 14 March 2006, the DPP presented an indictment in the District Court containing different charges. The first was in all relevant respects identical to the original charge laid in the Children's Court. Two additional charges, pleaded in the alternative, alleged offences which were not "serious children's indictable offences". The jury's question: Upon his arraignment in the District Court, the appellant pleaded not guilty to all charges. A jury were empanelled. The trial commenced in the normal way. However, at the end of the first day, McGuire DCJ notified counsel that he had: "received a note from the jury which is in the following terms. 'The accused committed the crime at age sixteen/seventeen, why is he being tried as an adult?'" McGuire DCJ called for submissions from counsel as to how he should answer the jury's question. 35 See the CCP Act, s 3. 36 See the CCP Act, s 28. 37 See Crimes Act 1900 (NSW), s 61J(2)(a). A defect in the drafting of the actual notice is not relevant for present purposes: see (2006) 67 NSWLR 46 at 49 [10], Kirby The question resulted in overnight research by counsel for both parties. For the first time, the appellant's counsel saw what he regarded as the significance of the fact that the first charge now being preferred in the indictment was distinct from the "serious children's indictable offence" in respect of which the appellant had been committed for trial in the District Court. In the result, he applied for an order remitting the matter to the Children's Court to be dealt with as a trial of a "child" in accordance with s 31 of the CCP Act. The judge's ruling: Following argument on the issue, McGuire DCJ acceded (over the opposition of the prosecutor) to the appellant's request. He said: "… [A] bill was found for a serious children's indictable offence … and an indictment was filed in the District Court. That gave the District Court jurisdiction in relation to the proceedings relating to this accused. Subsequently, the charge on the indictment filed in this Court was changed to a lesser charge, as is contained in the present indictment before the Court … which is not a serious children's indictable offence. It was submitted that as the matter is in the District Court, jurisdiction is not taken away by reason of the change in the charge which was reduced from the serious children's indictable offence to an indictable offence. Accordingly, the matter can and should proceed on the indictment currently before the Court. The learned Crown Prosecutor conceded that benefits which may have been available in the Children's Court have in effect been 'blocked off', to use his words. As the matter is now before this Court, this is where it should remain and where it should be determined. It appears to me that the indictment before this Court is defective in that it particularises conduct constituting an indictable offence and not a serious children's indictable offence. The indictable offence charged on the indictment could only have come to this Court pursuant to the procedures outlined in s 31 of the [CCP] Act. Accordingly, it appears to me that this Court has no jurisdiction to deal with the charges contained in the indictment. … I was informed that the DPP has given his sanction to the issue of an ex officio indictment. In effect, the DPP is apparently seeking to cure the current defective indictment by issuing an ex officio indictment. I can see no warrant for this course. If the DPP wishes to issue an ex officio indictment, that would involve a fresh proceeding and not merely an attempt to retrospectively cure the current defective indictment. I gravely doubt whether the DPP has the power to issue an ex officio indictment in relation to an indictable offence not being a serious Kirby children's procedures provided for in s 31 of the [CCP] Act." indictable offence. This would involve circumventing In consequence, McGuire DCJ discharged the jury. Pursuant to s 44 of the CCP Act, he remitted the matter to the Children's Court for determination of the charges now in issue. The DPP mounted a successful challenge to this ruling in the Court of Criminal Appeal, whereupon the appellant appealed to this Court. I have set out the above extract of the reasons of the experienced trial judge because it well encapsulates the problem with which he was confronted. It represents his immediate response to the problem that now falls to be resolved here. The appellant's submissions: In the Court of Criminal Appeal and in this Court, the appellant defended the approach of McGuire DCJ. In the court below, his submissions attracted the support of Basten JA. The case presented to us is by no means open and shut. For that reason, and out of respect for the differing opinions expressed below, I write separately, despite the fact that I reach the same conclusion as that expressed in the joint reasons. The appellant urges that McGuire DCJ's solution to the problem of jurisdiction is consonant with fulfilment of the purposes of the New South Wales Parliament in enacting the CCP Act. He submits that the opposite conclusion would permit the DPP to circumvent the CCP Act by the simple expedient of finding a new indictment, once before the District Court, for an offence other than a "serious children's indictable offence". This would procure the hearing of the offence in the District Court before a judge and jury. It would avoid the Children's Court and the significant substantive and procedural advantages that Court affords an accused "child". Obviously, this was the consideration that motivated the question from the jury who, by inference, were anxious about the fact that an offence relating to the conduct of schoolchildren would ordinarily (and more appropriately) be dealt with in the Children's Court rather than tried before judge and jury in the District Court as if the accused were already an adult. The appellant's basic submission was that it was the intention of Parliament that all offences alleged against a "child" (other than those defined as "serious children's indictable offences") would be dealt with summarily in the Children's Court, provided that that Court retained jurisdiction over the accused in the sense that he or she had not reached the age of 21. It is not disputed that the Children's Court retained jurisdiction over the appellant in that sense. Factors supporting remitter to the Children's Court A number of factors support the approach of McGuire DCJ. Most of them are set out in his ruling, which was admirably brief and to the point. Kirby Separate trial of children: The trial of children (even those accused of quite serious crimes) in a separate court under special conditions is not something novel. It represents a long established feature of criminal justice in New South Wales38, as in other Australian jurisdictions. The separate treatment of children has long had a dual purpose. First, it recognises the inappropriateness, except in the gravest of cases, of invoking the full range of adult criminal trial procedures and punishments where the offender is young, and typically inexperienced and immature. Secondly, it operates so as to prevent youthful offenders becoming associated with adults having extensive criminal histories, acknowledging that affording such offenders a second chance may divert them away from future criminal behaviour. The removal of accused children to a court such as the Children's Court is, therefore, both the mark of a civilised community and a reflection of that community's perception of its own self-interest in the treatment of young offenders. These are not trivial purposes. They reflect extremely important social policies. In interpreting the CCP Act, it is the duty of courts, including this Court, not to brush such objectives aside but to attempt to fulfil them so far as this is possible, given the legislative provisions. Diversion of a child accused: Introducing the Bill that became the CCP Act, the Minister called attention to a number of relevant "major proposals and legislative initiatives around Australia and overseas"39. He made mention of the "comprehensive child welfare the Australian Law Reform report" of Commission40 and special inquiries and reports in other Australian States and 38 See Juvenile Offenders Act 1850 (NSW). The 1850 Act was repealed under Sched 1 to the Criminal Law Amendment Act 1883 (NSW), which contained specific offences in respect of boys and youths (s 446). Part III of the Neglected Children and Juvenile Offenders Act 1905 (NSW) created a Children's Court with special powers and procedures. See also Child Welfare Act 1923 (NSW), Pt XI; Child Welfare Act 1939 (NSW), Pt III; Community Welfare Act 1982 (NSW), Pt IX. The last-mentioned Act was repealed under s 4 of the Miscellaneous Acts (Community Welfare) Repeal and Amendment Act 1987 (NSW) consequent upon the enactment of the Children's Court Act 1987 (NSW). At the same time the New South Wales Parliament enacted the Act under consideration in this appeal. 39 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 April 1987 at 10353. 40 Australian Law Reform Commission, Child Welfare, Report No 18, (1981). See in particular Ch 4 ("Young Offenders: Current Law and Practice") and Ch 5 ("Young Offenders: The Childrens Court"). Kirby Territories and in New Zealand. He described the CCP Act as introducing "significant modifications … reflect[ing] recent developments in the juvenile justice area"41. In particular, he said: "[T]he Government has decided that … police will be left with the function of deciding who will be prosecuted. Under the bill criminal proceedings will now be able to be commenced, where appropriate, by summons or citation. This reform has been welcomed by the police and the courts, as it provides an option to charge and bail. Another reform requires that the courts take steps to ensure that children brought before the court understand the proceedings, the allegations made against them, and the legal implications of those allegations." The Minister went on to describe special provisions in the CCP Act for moderated sentences and the destruction of records both of cases where the child is found not guilty and in other cases. He also referred to the purpose of the CCP Act to provide "greater protection against the undue prejudicial effect of the existence of such records and to actively promote rehabilitation"42. Self- evidently, the provisions of the CCP Act embody important legislative objectives. They ought not to be interpreted as subject to easy circumvention by public office-holders (such as the DPP). Upholding distinctive procedures: In earlier decisions, the Court of Criminal Appeal has itself recognised that the foregoing considerations support an approach that gives full force and effect to the provisions of the CCP Act protective of young accused offenders. In Stanton43, Gleeson CJ, with the concurrence of Wood and Grove JJ, observed44: "[T]he High Court emphasised in Jago45 [that] the community has a right to expect that persons charged for criminal offences are brought to trial. legislation which Equally, however, the [CCP] Act important 41 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 April 1987 at 10357. 42 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 April 1987 at 10357. 43 (1991) 52 A Crim R 164. 44 (1991) 52 A Crim R 164 at 168. 45 Jago v District Court (NSW) (1989) 168 CLR 23. Kirby establishes distinctive procedures and principles relevant to criminal proceedings against persons whose conduct falls within its purview, and it confers protections and benefits upon such persons which the court should safeguard. In the present case the procedures of that Act have been bypassed." It was pointed out in Stanton that the facts of the case were somewhat peculiar and that, in the circumstances, there had been no "deliberate attempt on the part of the prosecuting authorities to circumvent the relevant statutory provisions"46. Mr Stanton had been under the age of 18 at the time he was alleged to have committed seven offences which, although indictable, were not "serious children's indictable offences" for the purposes of the CCP Act. However, an eighth and more serious offence was alleged to have occurred in respect of the same complainant at a time when Mr Stanton was over 18 years of age, and hence outside the jurisdiction of the Children's Court. The various offences were said to have comprised a related course of conduct. Committal proceedings in respect of all counts had taken place together. In these circumstances, it was held to be appropriate for all of the charges to be tried together and necessarily elsewhere than in the Children's Court. The facts in Stanton may be contrasted with those of the present case. Here, initial proceedings in the Children's Court resulted in the committal of the appellant to stand trial in the District Court charged with a "serious children's indictable offence". The DPP then jettisoned the relevant charge. Instead, he presented an indictment for an offence which, prima facie, was one that the CCP Act contemplated would be dealt with in the Children's Court. It is arguable that this amounted to a "deliberate attempt on [his] part … to circumvent the relevant … provisions [of the CCP Act]" such as to distinguish this case from Stanton. At the least, it was said, the DPP's actions contravened the spirit of the legislation and the apparent purpose of Parliament in enacting s 31(1) of the CCP Act47. Harmonious reading of the DPP's powers: These considerations aside, the appellant submitted that the power of the DPP to present an ex officio indictment in the District Court must be construed harmoniously with the CCP Act. The appellant argued that the DPP's powers, expressed in broad and general language, should be read down so as to be subject to the intention of Parliament that, in the usual case, criminal allegations against children (other than in respect of "serious children's indictable offences") would be dealt with in the Children's Court. He submitted that that Court's jurisdiction ought not to be bypassed 46 (1991) 52 A Crim R 164 at 167. 47 Section 31(1) of the CCP Act is set out in the joint reasons at [23]. Kirby through the exercise of the broad discretion of the DPP to proceed on an ex officio indictment in the District Court or Supreme Court of New South Wales. Because the DPP is a public office-holder, it might be expected that he would act in accordance with the policies of Parliament, including that expressed in the less than absolutely mandatory terms of s 8(1) of the CCP Act. That sub- section provides that "[c]riminal proceedings should not be commenced against a child otherwise than by way of court attendance notice" (emphasis added). In adopting the course that he did, it was submitted, the DPP contradicted an important, and expressly stated, policy objective of Parliament. Because the result was to deprive the appellant of significant protections that would have been available to him in the Children's Court (but were not applicable in higher courts), it was argued that the better view was that the District Court lacked jurisdiction. This would mean that McGuire DCJ was correct to so conclude. Under s 44 of the CCP Act, the District Court could remit the case to the Children's Court where it should have continued in the first place. I have outlined what seem to be the main arguments supporting the appellant's position because I regard them as far from meritless. In the result, however, I have come to a conclusion adverse to the appellant's submissions. I have done so because of textual considerations and also countervailing reasons of legal principle and policy. The District Court had jurisdiction A non-mandatory obligation: Basten JA concluded that s 8(1) of the CCP Act precluded the filing of an ex officio indictment against a child (other than in respect of a "serious children's indictable offence") because that course would prevent criminal proceedings being commenced by court attendance notice48. However, this finding does not reflect the language and purpose of that sub- section. The sub-section is expressed, curiously, in terms of what "should" be done. It provides that "[c]riminal proceedings should not be commenced against a child otherwise than by way of court attendance notice" (emphasis added). The choice of this term does not appear to represent an accidental slip. Several verbs are used in the CCP Act, reflecting an apparently deliberate hierarchy of obligations. Thus, where a mandatory obligation is envisaged, the CCP Act uses the conventional verb "shall". For instance, s 6, which concerns "[p]rinciples 48 (2006) 67 NSWLR 46 at 52-53 [25]. Kirby relating to the exercise of criminal jurisdiction", dictates that a court, in exercising criminal jurisdiction with respect to children "shall have regard to [specified] principles" (emphasis added). Likewise, the verb "shall" is used in s 9(1), a provision requiring expedition of the hearing where a child is held in custody and has not been released on bail. In such a case, "the child shall be brought before the Children's Court as soon as practicable"49 (emphasis added). Where a significant obligation (but not one as strict as that which "shall" indicates) is intended, the CCP Act, in a number of places, uses the phrase "is to be". Thus, s 10(1)(a) provides that any person (other than a person specified) who is not directly interested in the proceeding "is to be" excluded from the place where the proceedings are being heard, unless the court otherwise directs50. A more imperative provision is s 11(4C), which provides that a court "is not to make an order" as specified unless satisfied of certain conditions. Section 11(4E) stipulates that where a court sentencing a person in respect of a "serious children's indictable offence" authorises the publication or broadcasting of the name of that person, it "must" indicate the making of the order to the person and make a record of its reasons for doing so. Where a discretion or evaluating power is conferred, the CCP Act quite frequently uses the verb "may"51 although, in particular contexts, when used in the negative ("may not"), it appears obvious that this verb also has a compulsory sense52. The point of this discussion of the language in the CCP Act is that the use of the verb "should" is distinctive, and hortatory rather than mandatory53. That interpretation is the only one that can be adopted when the CCP Act is read as a whole and when the contrast is observed between the use of the verb "should" in s 8(1) and the use elsewhere of other verbs of more imperative obligation. Addressing commencement of proceedings: Reading the CCP Act in this way confirms that the issue of a court attendance notice is not a mandatory or exclusive mode of commencing criminal proceedings against a child. It is, 49 See also the CCP Act, ss 12(3), 17, 18(1), 24; cf ss 11(4A), 12(2), 13(1), 14(1), 15(1), 25(2) ("shall not"). 50 The CCP Act, s 10(1)(a); cf s 15(3). 51 The CCP Act, ss 10(2), 19(1), 20(1) and 20(3). 52 The CCP Act, s 7(1) and 7(2). 53 See also joint reasons at [32]-[33]. Kirby rather, the recommended mode of commencement. Such an interpretation conforms to the explanatory note issued with a Bill that amended s 8(1) of the CCP Act soon after its commencement. That note stated54: "The proposed section is intended to encourage the use of attendance notices and summonses in preference to warrants." "Encourage" is a verb that falls short of giving rise to a legal requirement. Likewise, the Minister's Second Reading Speech in support of the amending Bill said55: "Section 8 of the [CCP] Act is to be amended to clarify the exercise of police discretion as to whether or not to commence proceedings by way of charge summons or use of attendance notices under the Justices Act 1902. Attendance notices will replace the use of citations, an informal system that at present leads to some confusion." For these and other reasons related to the structure of the CCP Act and the terms of the exceptions provided for in s 8(2), it is clear that the purpose of s 8(1) is to encourage the commencement of proceedings against children through court attendance notices and to avoid arrest wherever possible and appropriate. However, that aside, to give the CCP Act the operation urged on behalf of the appellant would be to divert attention from what it is that Parliament has said "should not" be done. The admonition in s 8(1) is addressed to the commencement of proceedings. Its terms do not render it applicable to proceedings that have already been commenced. Here, the proceedings were originally "commenced" against the appellant by way of court attendance notice in the Children's Court56. What subsequently happened when the proceedings were before the District Court was not therefore something which, on its face, engaged s 8(1) at all. Prosecutor's amendment powers: The reference to an ex officio indictment on the part of the DPP appears misleading57. The indictment found 54 Explanatory Note to the Children (Criminal Proceedings) Amendment Bill 1987 (NSW) at 2. 55 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 23 November 1987 at 17012. 56 See also joint reasons at [37]-[38]. 57 The power of Crown Prosecutors to find (on behalf of the DPP) a bill of indictment, whether or not there has been a committal in respect of the offence there stated, is contained in s 5(1)(b) of the Crown Prosecutors Act 1986 (NSW). Kirby against the appellant in the proceedings in the District Court was not an ex officio indictment in the sense that the proceedings were initiated ex officio. Rather, as noted above, the proceedings were initiated in the Children's Court by a court attendance notice. The appellant was committed by that Court for trial in the District Court after consideration of the prosecution evidence. The indictment filed in the District Court was then amended. Such amendment to the original indictment was made in the exercise of the broad powers afforded to the DPP to find a bill. Those powers exist whether or not there has been a committal in respect of a charge. Thus, s 7(2) of the Director of Public Prosecutions Act 1986 (NSW) provides that: "The Director has the same functions as the Attorney General in relation finding a bill of indictment in respect of an indictable offence, in circumstances where the person concerned has not been committed for trial." In the District Court, the prosecutor found the new bill by exercising the power granted under the Consolidated Instrument of Delegation signed by the DPP. Provided proper procedures are observed, there are strong reasons of legal principle and policy to uphold broad powers on the part of the DPP to find the indictment upon which a trial in respect of criminal charges will proceed, as is considered appropriate, lawful and just. Clear statutory language would be needed to restrict or diminish the necessarily broad powers afforded to the DPP in this respect. Such powers are expressed in wide terms not just for the benefit of prosecutors but also for the protection of accused persons, who should only be tried upon offences judged proper to the facts and circumstances as known to the prosecution at the time of the trial. In the context of the CCP Act as a whole, the "soft" obligation embodied in s 8(1) (addressed in any event to the commencement of proceedings) does not amount to an implied control or limitation on the wide discretion of the DPP to find the counts of the indictment appropriate to proceedings before a court with relevant jurisdiction. Upholding the jurisdiction of courts: The appellant's case also conflicts with another important legal principle governing the jurisdiction of a court such as the District Court. As Basten JA acknowledged (for another purpose), "[a]lthough not a superior court, the District Court is a court of record"58. No narrow view should be taken of the jurisdiction of the District Court in respect of 58 (2006) 67 NSWLR 46 at 62 [62] referring to District Court Act 1973 (NSW), s 8. Kirby proceedings commenced in a lawful manner before it. Here, the proceedings were lawfully before the District Court because of the earlier order of the Children's Court committing the appellant for trial in the District Court. The section of the CCP Act that McGuire DCJ relied upon to remit the case to the Children's Court (s 44) is conditioned on the requirement that the District Court "did not or does not have jurisdiction to deal with the charge". However, if the foregoing analysis is correct, the District Court did have such jurisdiction when the appellant was committed for trial in that Court. No provision of the CCP Act or any other law is expressed in the clear language that would be required to deprive the District Court of such jurisdiction, once engaged. It is a serious matter to conclude that a court is deprived of jurisdiction. At least potentially, that conclusion can have significant consequences for the validity of the orders made by that court without jurisdiction, resulting in great inconvenience in terms of the administration of justice. Want of jurisdiction, especially in a court of record, is not a conclusion to be arrived at lightly59. It cannot be derived on the basis of the equivocal, ambiguous and arguably inapplicable provisions invoked by the appellant here. Limited exclusive jurisdiction: The only exclusive jurisdiction that the CCP Act confers on the Children's Court relates to the exclusion of the jurisdiction of the Local Court and of the Drug Court. Under s 7, those courts are precluded from hearing proceedings over which the Children's Court has jurisdiction. In effect, the appellant's argument was that, although unexpressed, the same exclusion applies to the District Court and the Supreme Court. He contends that an indictable offence which the Children's Court has jurisdiction to hear and determine cannot as a matter of law be heard by the District Court or Supreme Court, unless the trial of that offence is referred into that other court by the Children's Court. Had it been the purpose of Parliament to provide such an exclusion (and in particular one addressed to the Supreme Court as the constitutional court of the State) it would have been expected that such exclusion would have been made explicit (in, for instance, s 7 of the CCP Act). Yet no such exclusion is stated60. In this context, the exclusion of the Local Court and the Drug Court can be 59 See Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 451- 60 See also joint reasons at [19]. Kirby explained on the basis that their powers and status are in general equivalent to those of the Children's Court, whereas the District Court and the Supreme Court are courts of larger jurisdiction and powers. Conclusions and remedy The conclusions of McGuire DCJ and of Basten JA are not without a certain attractiveness. Their Honours were endeavouring to give effect to the principle that, save in respect of "serious children's indictable offences", children charged with criminal offences in New South Wales should be tried in the Children's Court. It is possible that this is what Parliament had in mind when it enacted the CCP Act. It is arguable that its general policy in this regard should be observed. It may be suggested that the policy should have been respected by the DPP in circumstances such as the present, even if not strictly obligatory. There would have been ways whereby the DPP could have upheld that policy and avoided depriving the appellant of the significant benefits and protections of a trial in the Children's Court in accordance with the CCP Act. However, in the circumstances of this case, the questions as to whether the District Court lacked jurisdiction and whether the DPP lacked the power to reformulate the charge must be answered in the negative. It would not be difficult for Parliament to provide the District Court with a more ample power to remit proceedings to another court for reasons of convenience and justice to a child offender if it wished to do so. For example, s 44 of the CCP Act could be amended to afford a power of remitter in more general terms, and to address attention to such considerations. But while that section is expressed in terms of a criterion of lack of jurisdiction, it is not engaged in a case such as the present. Orders I therefore agree that the appeal should be dismissed. |
HIGH COURT OF AUSTRALIA DASREEF PTY LIMITED APPELLANT AND RESPONDENT Dasreef Pty Limited v Hawchar [2011] HCA 21 22 June 2011 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation D F Jackson QC with T G R Parker SC and D T Miller for the appellant (instructed by Moray & Agnew Solicitors) B M Toomey QC with F Tuscano and M A Kumar for the respondent (instructed by Slater & Gordon Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Dasreef Pty Limited v Hawchar Evidence – Admissibility – Opinion evidence – Section 79(1) of Evidence Act 1995 (NSW) provided that rule excluding evidence of opinion did not apply where "a person has specialised knowledge based on the person's training, study or experience" and person's opinion "wholly or substantially based on that knowledge" – Respondent sued appellant in Dust Diseases Tribunal of New South Wales – Respondent claimed he was negligently exposed to unsafe levels of silica while working for appellant – Witness gave evidence about approximate level of respirable silica to which respondent may have been exposed – Opinion treated as admissible to found calculation of numerical or quantitative level of exposure to respirable silica – Whether opinion admissible for that purpose – Requirements for admissibility. Procedure – Specialist tribunal – Dust Diseases Tribunal of New South Wales – Ability of judge constituting Tribunal to draw on experience as member of specialist tribunal when making findings of fact – Section 25 of Dust Diseases Tribunal Act 1989 (NSW) required Tribunal to apply rules of evidence – Section 25B provided exception subject to various requirements – Trial judge drew on "experience" that silicosis usually caused by very high levels of silica exposure in concluding that respondent's silicosis caused by exposure to silica – Section 25B neither invoked nor complied with – Whether trial judge entitled to draw on "experience" in making finding of fact. Procedure – Objection to admissibility of evidence – Evidence taken on voir dire – Trial judge did not rule on objection at conclusion of voir dire – Desirability of ruling on objection to admissibility as soon as possible. Words and phrases – "based on the person's training, study or experience", "basis rule", "opinion rule", "specialised knowledge", "specialist tribunal", "voir dire", "wholly or substantially based on that knowledge". Dust Diseases Tribunal Act 1989 (NSW), ss 25, 25B, 32. Evidence Act 1995 (NSW), ss 55(1), 76(1), 79(1). Dust Diseases Tribunal Rules (NSW), r 9. FRENCH CJ, GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ. Nawaf Hawchar, the respondent in this appeal, suffers from silicosis. He worked for the appellant ("Dasreef") as a labourer and then as a stonemason for a little over five and a half years between 1999 and 2005. Before he immigrated to Australia in 1996, Mr Hawchar had worked for about a year in a family stonemasonry business in Lebanon. From time to time between 2002 and 2005 he did some private stonemasonry work. In all those undertakings he was exposed to silica dust. In 2004, Mr Hawchar was diagnosed with scleroderma. In May 2006, he was diagnosed with early stage silicosis. In October 2007, he began proceedings against Dasreef in the Dust Diseases Tribunal of New South Wales claiming damages for personal injury: his contracting scleroderma and silicosis. His central allegation was that, while working for Dasreef, he had been exposed to unsafe levels of silica dust. He alleged breach of statutory duty, negligence and breach of contract. The evidence he called at the trial of the proceeding included opinion evidence from several witnesses, among them Dr Kenneth Basden, a chartered chemist, chartered professional engineer, and retired senior lecturer in the School of Chemical Engineering and Industrial Chemistry at the University of New South Wales. At the trial of the proceeding, the Tribunal (Judge Curtis) found1 that scleroderma is not a dust disease but that, by s 11(4) of the Dust Diseases Tribunal Act 1989 (NSW) ("the Dust Diseases Tribunal Act"), the Tribunal had jurisdiction to determine Mr Hawchar's claim for provisional damages and further damages on account of his contracting scleroderma as claims ancillary or related to the claims he brought in respect of silicosis. Nevertheless, Mr Hawchar sought and obtained an order, at trial, dismissing his claim for damages for scleroderma. Evidently he took this course in order to preserve entitlements he had under the Workers Compensation Act 1987 (NSW) in respect of his disease of scleroderma. It is not necessary, however, to explore this aspect of the matter any further. In respect of his claim for damages for contracting silicosis the Tribunal found Dasreef 20 in 23 parts responsible for Mr Hawchar's silicosis, the balance of responsibility resting with his work in Lebanon and the work he had done in Australia on his own account. The accuracy of this apportionment of 1 Nawaf Hawchar v Dasreef Pty Ltd [2009] NSWDDT 12. Crennan Bell responsibility was not in issue in the appeal to this Court. The Tribunal entered judgment for Mr Hawchar against Dasreef for damages in an amount of $131,130.43, together with an order pursuant to s 11A of the Dust Diseases Tribunal Act that an award of further damages may be made with respect to certain silica-related diseases. Dasreef appealed to the Court of Appeal of New South Wales against the whole of the orders made by the Dust Diseases Tribunal. The Court of Appeal (Allsop P, Basten and Campbell JJA) allowed2 Dasreef's appeal in relation to certain questions of costs, remitting those questions to the Tribunal for reconsideration, but otherwise dismissed Dasreef's appeal. When Mr Hawchar was working for Dasreef there was an applicable standard3 prescribing the maximum permitted exposure to respirable silica. The standard was expressed as a time weighted average (or "TWA") concentration of 0.2 mg/m3 of air to which a person was exposed over a 40 hour working week. The central question that Dasreef agitated in the Court of Appeal was whether the primary judge had "erred in admitting evidence of Dr Basden as to the numerical level of respirable silica dust in [Mr Hawchar's] breathing zone". Dasreef further alleged that the primary judge had "erred in relying on his 'experience' as a 'specialist tribunal'". The primary judge had said, in his reasons for judgment, that he could rely on that experience to conclude that Mr Hawchar's silicosis had been caused by exposure to silica dust. Dasreef advanced some other grounds of appeal but they need not be noticed. The Court of Appeal the admissibility of Dr Basden's evidence and also rejected5 Dasreef's challenge to the primary judge's ability to rely on his experience as a judge in a specialist court. rejected4 Dasreef's complaints about 2 Dasreef Pty Ltd v Hawchar [2010] NSWCA 154. 3 Occupational Health and Safety Regulation (NSW), cl 51(1), (2)(a). [2010] NSWCA 154 at [44] per Allsop P, Basten and Campbell JJA agreeing. [2010] NSWCA 154 at [52]-[54]. Crennan Bell These reasons will demonstrate that Dr Basden's evidence was not admissible to establish that Mr Hawchar's exposure to silica dust in the course of working for Dasreef was greater than the level prescribed as the maximum permissible level of exposure. To the extent to which Dr Basden expressed an opinion about the numerical or quantitative level (in the sense explained later in these reasons) of respirable silica dust to which Mr Hawchar was exposed in the course of working for Dasreef, his evidence was not "wholly or substantially based on" "specialised knowledge based on [his] training, study or experience"6. These reasons will further demonstrate that the Court of Appeal was wrong to conclude that the primary judge was "permitted", as he put it7, "to take into account my experience that this disease [silicosis] is usually caused by very high levels of silica exposure". But despite the wrongful reception of evidence and the primary judge's impermissible reliance on experience as a judge in a specialist court, the Court of Appeal should have dismissed Dasreef's appeal against the primary judge's findings that Dasreef was liable to Mr Hawchar for damages for negligently exposing him to dangerous levels of silica dust. The Court of Appeal should have reached that conclusion because there was no dispute, whether at trial, on appeal to the Court of Appeal, or in this Court, that Mr Hawchar suffers from silicosis or that silicosis is a disease caused only by exposure to silica dust. And there was uncontested evidence at trial from an expert pathologist (Professor Henderson) that, based on the period of latency of Mr Hawchar's disease, Mr Hawchar's exposure to silica had been intense and was attributable to a history of exposure to silica dust over a period of about six years beginning in To explain the bases for these conclusions, it is necessary to say something first about the course of proceedings in the Dust Diseases Tribunal, next the decision of the primary judge, and then the decision of the Court of Appeal. Against that background it will be necessary to examine s 79(1) of the Evidence Act 1995 (NSW) ("the Evidence Act"). Finally, it will be necessary to say something about the use by the Dust Diseases Tribunal of evidence given, and opinions formed, in cases other than the case under particular consideration. 6 Evidence Act 1995 (NSW) ("the Evidence Act"), s 79(1). [2009] NSWDDT 12 at [87]. Crennan Bell The trial – Dr Basden's report The solicitors for Mr Hawchar retained Dr Basden to provide a report addressing three questions: During the period of Mr Hawchar's employment by [Dasreef], was it reasonably foreseeable that an employee exposed to silica dust could suffer a silica-related injury? ii) What procedures could an employer have taken to materially reduce the risk of injury? iii) If the employer had carried out these steps as outlined in (ii) above to materially reduce the risk of injury, would [Mr Hawchar's] risk of injury have been minimized?" To assist Dr Basden in preparing his report, Mr Hawchar's solicitors gave Dr Basden a copy of the statement of claim and statement of particulars that had been filed in the matter, a photograph of a mask of the type worn by Mr Hawchar when at work, a photograph of Mr Hawchar wearing that mask, a photograph of Mr Hawchar demonstrating the use of a hand-held powered masonry cutting disc and a photograph of the Dasreef working premises. In the introduction to his written report, Dr Basden described the circumstances which he understood to lie behind the questions he had been asked. Although lengthy, it is desirable to set out the relevant section of the introduction in full. "Mr Hawchar is suffering from silicosis allegedly contracted through the inhalation of silica bearing dust, while in the employment of the defendant [Dasreef] between 21 October 1999 and May, 2005. During this period Mr Hawchar was employed as a stone worker who was involved in cutting and laying stone, usually sandstone. Depending on the nature of the job, Mr Hawchar on a daily basis spent from one hour to all day cutting stone, usually sandstone, and generally by power tools. This operation generated large quantities of airborne dust. this work, Mr Hawchar at all times wore a mask provided by his employer, but he alleges that dust penetrated these masks because of gaps between them and his face. While performing Mr Hawchar also alleges that about 20 to 30 times each year during the period of his employment he worked within a plastic enclosure or 'tent', Crennan Bell erected to minimize the spread of fugitive dust to neighbouring properties. One side of this enclosure or tent was fitted with an exhaust fan to remove the dust therefrom, but nevertheless Mr Hawchar claims that in spite of this the enclosure only served to concentrate the dust in his working / breathing zone. He further alleges that due to the increased concentration of dust he would have to take a break approximately every hour because of troubled breathing." The evidence given at trial did not accord in every respect with this description of the circumstances. In particular, the number of occasions on which Mr Hawchar worked within a plastic enclosure or "tent" was said to be fewer than the 20 to 30 times each year recorded by Dr Basden. For present purposes, however, nothing turns on these differences. In his report, Dr Basden identified two commonly adopted procedures which could have been employed, but were not, as means of reducing Mr Hawchar's exposure to dust: the "employment of wet cutting, in which a jet of water is directed to the junction between the cutting wheel and the stone being cut", and the "provision of an exhaust hood close to the source of the dust ... connected to an industrial sized 'vacuum cleaner' at its outlet end to capture the collected dust". Dr Basden also expressed the opinion with respect to the masks provided by Dasreef "that the types of respirator supplied to Mr Hawchar were totally inadequate by the criteria officially in force at the time concerned". He concluded that "if wet cutting associated with a quite portable suction ventilation system adjacent to the cutting site had been employed, along with the provision of an appropriate PAPR [powered air-purifying respirator] type of respirator, it is almost certain that Mr Hawchar would have suffered no injuries at all". This aspect of Dr Basden's evidence was not contradicted and showed what steps could have been taken to avoid the consequences of intense exposure to silica dust. In a section of his report entitled "selection of respiratory protection devices", Dr Basden wrote about the level of dust concentration generated in Mr Hawchar's breathing zone when he was using a cutting wheel. Again, although the relevant part of the section is lengthy, it is desirable to set it out. It read: "The actual dust concentrations generated in Mr Hawchar's breathing zone, which would be no more than 50 or 60 cm from the cutting wheel Crennan Bell (as indicated by the photograph supplied …), presumably were never measured with the appropriate instruments while work was in progress. However, it most certainly would not be from half to two ten-thousandths of a gram per cubic metre of air, but more realistically would be of the order of a thousand or more times these values or even approaching one gram, or thereabouts, per cubic metre. (Only once can I recall actually observing sandstone being dry-cut in the open air by portable powered angle grinders, at a monument being erected at the entrance to a country town in NSW. Each of the two operators was enveloped by dense clouds of highly visible fugitive dust, and neither was wearing a respirator of any type! In the case of Mr Hawchar, the defendant [Dasreef] found it necessary to erect a 'tent' fitted with an exhaust fan 'to attempt to minimize the dust pollution caused to neighbouring properties when the stone was being cut', which indicates the production of considerable quantities of visible dust). It should be noted that not all of the dust in the visible clouds being generated by the cutting wheels would be in the 'respirable' size range, which means an equivalent aerodynamic diameter (EAD) of below 4 µm. The actual clouds would consist of particles from about 20 or perhaps 30 µm downwards, as larger ones will settle rapidly by gravity and not remain in the airborne state. However, a considerable proportion of the size distribution of the suspension would be 4 µm and below, and hence would constitute the 'respirable' fraction of the dust cloud." (emphasis in original) Considerable attention was given, both at trial and on appeal to the Court of Appeal, to this passage from Dr Basden's report. Several observations may be made about it. First, Dr Basden did not, in this section of his report or elsewhere, attempt to offer any calculation of the levels of respirable silica dust to which Mr Hawchar had been exposed at work. He did offer the opinion that the dust concentrations generated in Mr Hawchar's breathing zone, when operating a cutting wheel as indicated in a particular photograph, "most certainly would not be from half to two ten-thousandths of a gram per cubic metre of air, but more realistically would be of the order of a thousand or more times these values or even approaching one gram, or thereabouts, per cubic metre". He related that to the respirable dust (that is, dust particles having an equivalent aerodynamic diameter of below 4 µm) by saying that "a considerable proportion of the size distribution of the suspension would be 4 µm and below, and hence would constitute the 'respirable' fraction of the dust cloud" (emphasis added). He did not, in his written report or elsewhere, identify what he meant by "a considerable proportion". Crennan Bell The trial – a voir dire but no ruling Counsel for Dasreef objected to the reception of any part of Dr Basden's report. The primary judge took evidence from Dr Basden as on a voir dire. Counsel for Dasreef cross-examined Dr Basden, at some length, with a view to demonstrating that Dr Basden did not profess to have expressed any opinion based on his specialised knowledge, experience, training or study about the amount of dust Mr Hawchar would have inhaled during his time with Dasreef. And Dr Basden agreed with a number of questions put to him by counsel for Dasreef to the general effect described. At the end of the voir dire the primary judge did not rule on the admissibility of Dr Basden's evidence. As a result, Mr Hawchar, as plaintiff, did not know what evidence led in support of his claim had been found by the primary judge to be admissible. And Dasreef, as defendant, did not know, before it decided what if any evidence it should call, what was the evidence that it had to meet. That result is unsatisfactory. As a general rule, trial judges confronted with an objection to admissibility of evidence should rule upon that objection as soon as possible. Often the ruling can and should be given immediately after the objection has been made and argued. If, for some pressing reason, that cannot be done, the ruling should ordinarily be given before the party who tenders the disputed evidence closes its case. That party will then know whether it must try to mend its hand, and opposite parties will know the evidence they must answer. It is only for very good reason that a trial judge should defer ruling on the admissibility of evidence until judgment. This was not such a case. Yet the primary judge did defer ruling on the disputed evidence in this matter until judgment. And because that is what the primary judge did, the evidence of Dr Basden was used for purposes for which it was not admissible and for which it may be doubted that Mr Hawchar had sought to tender it. The primary judge's use of the evidence In his reasons for judgment, the primary judge recorded that counsel for Dasreef had raised more than 70 objections to the expert evidence called on Mr Hawchar's behalf at trial. The primary judge said8 that "[r]ather than address the merit of each objection" he would recite the qualifications of each expert and attempt to summarise in each case the reasoning process of the expert. [2009] NSWDDT 12 at [59]. Crennan Bell The primary judge recorded9 that Dr Basden had admitted that "he could not express a numerical opinion about Mr Hawchar's exposure to respirable silica, that he could not express an opinion about the amount of dust that Mr Hawchar would have inhaled during his time with Dasreef and could not express a numerical opinion about the time-weighted average of Mr Hawchar's exposure to silica". The primary judge set out several questions and answers given by Dr Basden in the course of the voir dire. Read as a whole, however, the answers given by Dr Basden in the course of the voir dire show that the statements he had made in his written report and in the course of the voir dire, to the effect that the amount of respirable silica in Mr Hawchar's breathing zone would have been 500 or 1000 times greater than the permissible levels of exposure, provided, as Dr Basden put it, "only a ballpark to justify the reason I was recommending the protection factor of about a thousand for the use of a VAPR [sic PAPR] respirator. That was the purpose of it." Yet despite Dr Basden's estimates being proffered with this limited purpose, the primary judge sought to calculate the levels of silica dust to which Mr Hawchar had been exposed in the course of working for Dasreef. The primary judge said10 in his reasons for judgment: "A simple calculation may be made upon the basis of Mr Hayek's [a proprietor of Dasreef] evidence that a man engaged in cutting stone through the course of one day would use the angle grinder for approximately 30 to 40 minutes, and Dr Basden's opinion that during this time he would be exposed to dust concentrations at least 1000 times greater than the permissible limit of 0.2 mg/m3 ... Accepting for the moment that the P2 mask provided to Mr Hawchar fitted perfectly and provided a protection factor of 50, the concentration of respirable particles within the respirator when cutting was 1000 ÷ 50 x 0.2 mg/m3 = 4 mg/m3. The standard TWA of 0.2 mg/m3 permits the accumulation of 40 hours x 0.2 mg/m3 = 8 mg/m3. If a man is exposed for 30 minutes on each of five days to a concentration of 4 mg/m3 his cumulative weekly exposure is 2.5 hours x 4 mg/m3 = 10 mg/m3. The TWA of this exposure over 40 hours is [2009] NSWDDT 12 at [75]. 10 [2009] NSWDDT 12 at [82]-[83]. Crennan Bell then 10 mg/m3 ÷ 40 = 0.25 mg/m3. This exceeds the permissible limit. If he were exposed for 40 minutes each day his TWA rises to 0.33 mg/m3." It is to be observed that the calculation made by the primary judge took estimates given by a witness of the length of time "a man engaged in cutting stone" would use the angle grinder and coupled that with the proposition that it was "Dr Basden's opinion that during this time he would be exposed to dust concentrations at least 1000 times greater than the permissible limit" (emphasis added). The dangers of building estimate upon estimate to yield some apparently precise calculation of the time weighted average exposure to respirable silica are evident. Several premises necessarily underpin the use of those estimates in this way. Unless each of those premises has been exposed in the course of argument for consideration by the parties there are serious risks not only that the calculation pretends to an accuracy it does not have but also that the parties are not afforded procedural fairness. In the present case, however, there was a more deep-seated problem. Was there admissible evidence before the primary judge that during the whole of the time Mr Hawchar was using an angle grinder to cut stone in the course of working for Dasreef he was exposed to dust concentrations at least 1000 times greater than the permissible limit? In the passage from his reasons for judgment that has been set out, the primary judge implicitly answered that question in the affirmative. It was that question which was central to the first way in which Dasreef put its appeal to the Court of Appeal. Dasreef's appeal to the Court of Appeal Dasreef appealed to the Court of Appeal as of right. Section 32 of the Dust Diseases Tribunal Act provided, so far as now relevant, that: "(1) A party who is dissatisfied with a decision of the Tribunal in point of law or on a question as to the admission or rejection of evidence may appeal to the Supreme Court. The Supreme Court may, on the hearing of any appeal under this section, remit the matter to the Tribunal for determination by the Tribunal in accordance with any decision of the Supreme Court and may make such other order in relation to the appeal as the Supreme Court sees fit." Crennan Bell Having regard to what the primary judge had said in his reasons, argument in the Court of Appeal naturally proceeded11 on the footing that the critical question concerning the admissibility of Dr Basden's evidence was whether "he had the relevant expertise to proffer an opinion concerning the measurement of silica dust in the way he did". Having set out12 the passage from Dr Basden's written report that is set out earlier in these reasons, the Court of Appeal recorded13 that the cross-examination of Dr Basden had "revealed that his opinion was not based on a precise measurement or a view expressed with precision, but rather an estimate drawn from his experience". The Court of Appeal concluded14 that: "From the debate reflected in the evidence of Dr Basden, his reasons for coming to the opinion are clear: his experience and specialised knowledge allowed him to say that given that dusts have a consistent fraction of respirable content and that given Mr Hawchar was working in clouds of silica as the evidence revealed, an inexact estimate of the concentration of respirable silica dust was what he said it was – a thousand times the acceptable level of the standard." The Court of Appeal described15 the opinion as "contestable and inexact" but went on to say16 that "it was then for someone qualified as an expert to say that his estimate was worthless, or of little weight, or for some other reason unreliable" and that17 "[a] lack of reasoning did not make his opinion inadmissible". 11 [2010] NSWCA 154 at [36]. 12 [2010] NSWCA 154 at [40]. 13 [2010] NSWCA 154 at [41]. 14 [2010] NSWCA 154 at [42]. 15 [2010] NSWCA 154 at [43]. 16 [2010] NSWCA 154 at [43]. 17 [2010] NSWCA 154 at [44]. Crennan Bell On the second issue pressed by Dasreef – whether the primary judge was right to rely on experience he had gained in hearing evidence and deciding other cases in the Dust Diseases Tribunal – the Court of Appeal concluded18 that the primary judge had not acted illegitimately. The Court of Appeal treated19 the point as concluded by its earlier decisions in ICI Australia Operations Pty Ltd v Workcover Authority of New South Wales20 and JLT Scaffolding International Pty Ltd (in liq) v Silva21. As indicated at the outset of these reasons, consideration of the admissibility of Dr Basden's evidence directs attention to s 79(1) of the Evidence Act. The Evidence Act and opinion evidence Section 79(1) of the Evidence Act must be understood in its statutory context. Section 76(1) of the Evidence Act provides that "[e]vidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed". That exclusionary rule is referred to in the Evidence Act as "the opinion rule". Subsequent provisions of the Evidence Act provide a number of exceptions to the opinion rule. Section 79(1) provides that: "If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge." Section 76(1) expresses the opinion rule in a way which assumes that evidence of an opinion is tendered "to prove the existence of a fact". That manner of casting the rule does not, as might be supposed, elide whatever distinction can be drawn between "opinion" and "fact" or invoke the very difficult distinction which sometimes is drawn between questions of law and questions of fact. It does not confine an expert witness to expressing opinions 18 [2010] NSWCA 154 at [51]-[53]. 19 [2010] NSWCA 154 at [51]-[52]. 20 (2004) 60 NSWLR 18 at 62-65 [216]-[234] per McColl JA. 21 Unreported, 30 March 1994 at 12 per Kirby P. Crennan Bell about matters of "fact". Rather, the opinion rule is expressed as it is in order to direct attention to why the party tendering the evidence says it is relevant. More particularly, it directs attention to the finding which the tendering party will ask the tribunal of fact to make. In considering the operation of s 79(1) it is thus necessary to identify why the evidence is relevant: why it is "evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding"22. That requires identification of the fact in issue that the party tendering the evidence asserts the opinion proves or assists in proving. To be admissible under s 79(1) the evidence that is tendered must satisfy two criteria. The first is that the witness who gives the evidence "has specialised knowledge based on the person's training, study or experience"; the second is that the opinion expressed in evidence by the witness "is wholly or substantially based on that knowledge". The complaint which Dasreef made at trial, on appeal to the Court of Appeal and on appeal to this Court was that Dr Basden did not express an opinion about the numerical or quantitative level of exposure to respirable silica encountered by Mr Hawchar in working for Dasreef that was an opinion based on any specialised knowledge Dr Basden had that was based on his training, study or experience. The expression "numerical or quantitative level" requires explanation. It is used in these reasons in the sense of assigning a value capable of use in a calculation of the kind the primary judge made. In his written report Dr Basden spoke of the operator of an angle grinder being exposed to dust "of the order of a thousand or more times" the permissible levels. In one sense that was a numerical or quantitative assessment of the level of exposure to silica dust during the particular operation. But it was not, and was evidently not intended to be, an assessment which could form the foundation for a calculation of the time weighted average level of exposure of a particular worker. So much is evident from Dr Basden's use of the phrase "of the order of" as an expression of approximation. As explained earlier in these reasons, it may greatly be doubted that Dr Basden sought to express an opinion about the numerical or quantitative level of respirable silica to which Mr Hawchar had been exposed. On the voir dire he denied that this was what he was trying to do. Read as a whole, Dr Basden's 22 Evidence Act, s 55(1). Crennan Bell written report is better understood as offering an opinion about what measures could have been taken to prevent Mr Hawchar contracting silicosis if he was exposed to respirable silica at levels as much as 1000 times greater than permissible levels. And in Dr Basden's evidence on the voir dire, that was what he said he was doing. But as also explained earlier in these reasons, that was not how the primary judge or the Court of Appeal used Dr Basden's evidence. Both the primary judge and the Court of Appeal took his evidence as expressing an opinion about the numerical or quantitative level of exposure encountered by Mr Hawchar. That is, his evidence was taken as expressing an opinion that could found the calculations made by the primary judge of the time weighted average level of respirable silica to which Mr Hawchar had been exposed. If that opinion was expressed, was it an opinion based on specialised knowledge Dr Basden had that was based on his training, study or experience? In order for Dr Basden to proffer an admissible opinion about the numerical or quantitative level of Mr Hawchar's exposure to silica dust it would have been necessary for the party tendering his evidence to demonstrate first that Dr Basden had specialised knowledge based on his training, study or experience that permitted him to measure or estimate the amount of respirable silica to which a worker undertaking the relevant work would be exposed in the conditions in which the worker was undertaking the work. Secondly, it would have been necessary for the party tendering the evidence to demonstrate that the opinion which Dr Basden expressed about Mr Hawchar's exposure was wholly or substantially based on that knowledge. In this case, demonstration of those matters could come only from evidence given by Dr Basden. That is why, in HG v The Queen, Gleeson CJ pointed out that, "[b]y directing attention to whether an opinion is wholly or substantially based on specialised knowledge based on training, study or experience, [s 79] requires that the opinion is presented in a form which makes it possible to answer that question"23. It should be unnecessary, but it is nonetheless important, to emphasise that what was said by Gleeson CJ in HG (and later by Heydon JA in the Court of Appeal in Makita (Australia) Pty Ltd v Sprowles24) is to be read with one basic 23 (1999) 197 CLR 414 at 427 [39]; [1999] HCA 2. 24 (2001) 52 NSWLR 705 at 743-744 [85]. Crennan Bell proposition at the forefront of consideration. The admissibility of opinion evidence is to be determined by application of the requirements of the Evidence Act rather than by any attempt to parse and analyse particular statements in decided cases divorced from the context in which those statements were made. Accepting that to be so, it remains useful to record that it is ordinarily the case, as Heydon JA said in Makita25, that "the expert's evidence must explain how the field of 'specialised knowledge' in which the witness is expert by reason of 'training, study or experience', and on which the opinion is 'wholly or substantially based', applies to the facts assumed or observed so as to produce the opinion propounded". The way in which s 79(1) is drafted necessarily makes the description of these requirements very long. But that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily. That a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying "specialised knowledge" based on his or her "training, study or experience", being an opinion "wholly or substantially based" on that "specialised knowledge", will require little explicit articulation or amplification once the witness has described his or her qualifications and experience, and has identified the subject matter about which the opinion is proffered. But that was not this case. Dr Basden gave evidence of his training, study and experience. He did not give evidence asserting that his training, his study or his experience permitted him to provide anything more than what he called a "ballpark" figure estimating the amount of respirable silica dust to which a worker using an angle grinder would be exposed if that worker was using it in the manner depicted in the photograph of Mr Hawchar or a video recording Dr Basden was shown. Indeed, in his written report, Dr Basden had pointed out that he had seen the use of an angle grinder in this way only once before. And he gave no evidence that he had then, or on any other occasion, measured directly, or sought to calculate inferentially, the amount of respirable dust to which such an operator was or would be exposed. There was, in these circumstances, no footing on which the primary judge could conclude that a numerical or quantitative opinion expressed by Dr Basden 25 (2001) 52 NSWLR 705 at 744 [85]. Crennan Bell was wholly or substantially based on specialised knowledge based on training, study or experience. Contrary to submissions on behalf of Mr Hawchar, this analysis does not seek to introduce what has been called "the basis rule": a rule by which opinion evidence is to be excluded unless the factual bases upon which the opinion is proffered are established by other evidence. Whether that rule formed part of the common law of evidence need not be examined. It may be accepted that the Law Reform Commission's interim report on evidence26 denied the existence of such a common law rule and expressed the intention to refrain from including a basis rule in the legislation the Commission proposed and which was later enacted as the Evidence Act 1995 (Cth) and the Evidence Act 1995 (NSW). What has been called the basis rule is a rule directed to the facts of the particular case about which an expert is asked to proffer an opinion and the facts upon which the expert relies to form the opinion expressed. The point which is now made is a point about connecting the opinion expressed by a witness with the witness's specialised knowledge based on training, study or experience. A failure to demonstrate that an opinion expressed by a witness is based on the witness's specialised knowledge based on training, study or experience is a matter that goes to the admissibility of the evidence, not its weight. To observe, as the Court of Appeal did, that what Dr Basden said about the volume of respirable dust to which Mr Hawchar was exposed over time was "an estimate" that was "contestable and inexact" no doubt did direct attention to its worth and its weight. But more importantly, it directed attention to what exactly Dr Basden was saying in his evidence and to whether any numerical or quantitative assessment he proffered was admissible. And if, as the Court of Appeal observed27, his opinion on that matter lacked reasoning, the absence of reasoning pointed (in this case, inexorably) to the lack of any sufficient connection between a numerical or quantitative assessment or estimate and relevant specialised knowledge. 26 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 27 [2010] NSWCA 154 at [44]. Crennan Bell Dr Basden's evidence was not admissible to found the calculation made by the primary judge of the level of respirable dust to which Mr Hawchar was exposed. The "specialist" court Consideration of whether the primary judge could draw on evidence led in other cases "to take into account [his] experience that this disease [silicosis] is usually caused by very high levels of silica exposure"28 must begin with the relevant provisions of the Dust Diseases Tribunal Act. Section 25 of that Act provided that: "(1) Any evidence that would be admissible in proceedings in the Supreme Court is admissible in proceedings before the Tribunal. Except as otherwise provided by this Part or the rules, evidence is not admissible in proceedings before the Tribunal if it would not be admissible in those proceedings by virtue of subsection (1). (3) Historical evidence and general medical evidence concerning dust exposure and dust diseases which has been admitted in any proceedings before the Tribunal may, with the leave of the Tribunal, be received as evidence in any other proceedings before the Tribunal, whether or not the proceedings are between the same parties." It follows that, subject to whatever is specifically provided by other provisions of Pt 3 of the Act, or by the rules29, proceedings in the Tribunal are governed by the rules of evidence. Those rules do not permit the Tribunal to take into account, in deciding one case, evidence given in other cases between different parties or findings of fact made in other cases between different parties. Section 25B of the Dust Diseases Tribunal Act provides an important qualification to that general rule. That section provides: 28 [2009] NSWDDT 12 at [87]. 29 See Dust Diseases Tribunal Act 1989 (NSW), s 3(1). Crennan Bell Issues of a general nature determined in proceedings before the Tribunal (including proceedings on an appeal from the Tribunal) may not be relitigated or reargued in other proceedings before the Tribunal without the leave of the Tribunal, whether or not the proceedings are between the same parties. (1A) If an issue of a general nature already determined in proceedings before the Tribunal (the earlier proceedings) is the subject of other proceedings before the Tribunal (the later proceedings) and that issue is determined in the later proceedings on the basis of the determination of the issue in the earlier proceedings, the judgment of the Tribunal in the later proceedings must identify the issue and must identify that it is an issue of a general nature determined as referred to in this section. In deciding whether to grant leave for the purposes of subsection (1), the Tribunal is to have regard to: the availability of new evidence (whether or not previously available), and the manner in which the other proceedings referred to in that subsection were conducted, and such other matters as the Tribunal considers to be relevant. The rules may provide that subsection (1) does not apply in specified kinds of proceedings or in specified circumstances or (without limitation) in relation to specified kinds of issues. This section does not affect any other law relating to matters of which judicial notice can be taken or about which proof is not required." Rule 9(1) of the Dust Diseases Tribunal Rules (NSW) provides that "[a] party who intends to rely in any proceedings on the determination in other proceedings of an issue of a general nature ... must ... file and serve on all other parties notice of that intention". Rule 9(2) makes plain that, even if no party gave notice of intention to rely on the earlier determination of a general issue, the Tribunal may do so on its own motion. But, in such a case, s 25B(1A) obliges the Tribunal to identify the issue in its judgment and identify that the issue was an issue of a general nature determined as referred to in s 25B. Crennan Bell No party relied on s 25B as justifying the course taken by the primary judge in the present matter. The primary judge did not identify the issue of whether very high levels of silica exposure were the usual cause of silicosis as a general issue that had been determined in earlier proceedings. Whatever may be the position with respect to other tribunals, the statutory requirement that, subject to certain limited exceptions, none of which was engaged here, the Dust Diseases Tribunal apply the rules of evidence compels the conclusion that the primary judge erred when he said that he was permitted to take his experience into account in determining what caused Mr Hawchar's silicosis. To the extent to which earlier decisions of the Court of Appeal concerning the Dust Diseases Tribunal30 hold to the contrary, they should be overruled. Under the rules of evidence the primary judge was permitted to take account of matters not proved in evidence in this case only if they were matters of which judicial notice could be taken. It was not suggested that the causes of silicosis were matters for judicial notice. Conclusion and orders For these reasons, the Court of Appeal was wrong to conclude that the evidence of Dr Basden was admissible for the purposes for which that Court and the primary judge used it. Further, the Court of Appeal was wrong to conclude that the primary judge was entitled to take account of his experience as a member of a "specialist" court in determining what caused Mr Hawchar's silicosis. Those errors having been established, it by no means follows, however, that the Court of Appeal was bound to set aside the orders of the primary judge and remit the matter for rehearing. It will be recalled that s 32(2) of the Dust Diseases Tribunal Act provided that on the hearing of an appeal the Court of Appeal was empowered to "remit the matter to the Tribunal for determination by the Tribunal in accordance with any decision" of the Court but that the Court of Appeal was further empowered to "make such other order in relation to the appeal" as it saw fit. In the present case, where there was undisputed expert evidence that Mr Hawchar was suffering 30 For example, ICI Australia Operations Pty Ltd v Workcover Authority of New South Wales (2004) 60 NSWLR 18 at 64 [232]; GIO General Ltd v ABB Installation & Service Pty Ltd (2000) 19 NSWCCR 720 at 730 [34]. Crennan Bell silicosis, that the short latency of the disease suggested that Mr Hawchar's silica exposure had been intense and that the silicosis was to be attributed to a history of exposure to silica dust over a period of about six years beginning in 1999, coupled with the evidence of readily available means of avoiding injury, the Court of Appeal should have concluded that Dasreef's appeal against the finding that it was liable to Mr Hawchar be dismissed. This Court should now make the orders which the Court of Appeal should have made. That is to be achieved in this case by dismissing Dasreef's appeal to this Court, with costs. HEYDON J. This appeal primarily concerns reception of expert opinion evidence under the Evidence Act 1995 (NSW) ("the Act"). The Act has near-equivalents in some other jurisdictions31. The relevant statutory provisions The relevant provisions are as follows. Section 55(1) provides: "The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding." Section 56 provides: "(1) Except as otherwise provided by this Act, evidence that is relevant in a proceeding is admissible in the proceeding. Evidence that is not relevant in the proceeding is not admissible." Section 57(1) provides: "If the determination of the question whether evidence adduced by a party is relevant depends on the court making another finding (including a finding that the evidence is what the party claims it to be), the court may find that the evidence is relevant: if it is reasonably open to make that finding, or subject to further evidence being admitted at a later stage of the proceeding that will make it reasonably open to make that finding." Parts 3.2-3.11 then set out various exclusionary rules – exceptions to the s 56(1) rule that relevant evidence is admissible. Part 3.3 sets out exclusionary rules relating to opinion. Section 76(1) provides: "Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed." 31 The Evidence Act 1995 (Cth) operates in federal courts. The legislation also has equivalents in Tasmania (Evidence Act 2001), Norfolk Island (Evidence Act 2004) and Victoria (Evidence Act 2008). In the Australian Capital Territory the Evidence Act 1995 (Cth) will continue to apply until the Evidence Act 2011 (ACT) comes into force. Section 79(1) provides: "If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge." Section 80 provides: "Evidence of an opinion is not inadmissible only because it is about: a fact in issue or an ultimate issue, or a matter of common knowledge." Part 1 of the Dictionary to the Act defines "opinion rule" as meaning s 76. But the expression "opinion" is not defined. A meaning commonly given to it is "an inference drawn or to be drawn from observed and communicable data."32 This meaning will suffice for present purposes, although it must not be taken to suggest that the observation of data does not itself involve inference33, and sometimes expertise34. Section 135 provides: "The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might: be unfairly prejudicial to a party, or be misleading or confusing, or cause or result in undue waste of time." Section 136 provides: "The court may limit the use to be made of evidence if there is a danger that a particular use of the evidence might: 32 Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 5) (1996) 64 FCR 73 at 75 per Lindgren J. 33 Agfa-Gevaert AG v AB Dick Co 879 F 2d 1518 at 1523 (7th Cir 1989); Milam v State Farm Mutual Automobile Insurance Co 972 F 2d 166 at 170 (7th Cir 1992). 34 Hannes v Director of Public Prosecutions (Cth) (No 2) (2006) 205 FLR 217 at 288 be unfairly prejudicial to a party, or be misleading or confusing." Difficulties with expert opinion evidence The construction of s 79 is important for several reasons. First, for generations judges have complained about the partiality of expert opinion witnesses. In 1843 Lord Campbell35, in 1873 Sir George Jessel MR36, and in 1963 Walsh J37 lamented their "bias". Indeed many litigation lawyers can doubtless recall instances of experts who say one thing in one case and a contradictory thing in another, each time to the supposed advantage of the party paying them. In 1849 Lord Cottenham LC38 and in 1876 Sir George Jessel MR39 drew attention to the skewed manner in which experts are selected, as each side rummages through a group of experts until the most favourable one is found. In 1935 Lord Tomlin complained of the propensity of experts to offer opinions on matters which are questions for the court40 – or, as Lord Justice Auld said more recently, to give opinion evidence "masquerading as expert evidence on or very close to the factual decision that it is for the court to make."41 In 1986 Judge Posner complained of expert opinion which42: "was the testimony either of a crank or, what is more likely, of a man who is making a career out of testifying for plaintiffs in automobile accident cases in which a door may have opened; at the time of trial he was 35 The Tracy Peerage (1843) 10 Cl & F 154 at 191 [8 ER 700 at 715]. 36 Lord Abinger v Ashton (1873) LR 17 Eq 358 at 374. 37 Miller Steamship Co Pty Ltd v Overseas Tankship (UK) Ltd [1963] SR (NSW) 948 38 Re Dyce Sombre (1849) 1 Mac & G 116 at 128 [41 ER 1207 at 1212]. 39 Thorn v Worthing Skating Rink Co (1876) reported as a note to Plimpton v Spiller (1877) 6 Ch D 412 at 416. 40 British Celanese Ltd v Courtaulds Ltd (1935) 152 LT 537 at 543. 41 Review of the Criminal Courts of England and Wales: Report, (2001) at 574 [133]. 42 Chaulk v Volkswagen of America Inc 808 F 2d 639 at 644 (7th Cir 1986). The quotation is from Keegan v Minneapolis & St Louis RR 78 NW 965 at 966 (Minn involved in 10 such cases. His testimony illustrates the age-old problem of expert witnesses who are 'often the mere paid advocates or partisans of those who employ and pay them, as much so as the attorneys who conduct the suit. There is hardly anything, not palpably absurd on its face, that cannot now be proved by some so-called "experts."'" In 1994 he said43: "Many experts are willing for a generous (and sometimes for a modest) fee to bend their science in the direction from which their fee is coming. The constraints that the market in consultant services for lawyers places on this sort of behaviour are weak … The judicial constraints on tendentious expert testimony are inherently weak because judges (and even more so juries …) lack training or experience in the relevant fields of expert knowledge." Then there is the delay and expense caused by the disproportionate volume of expert evidence. Lord Woolf MR identified a troubling modern trend44. "A large litigation support industry, generating a multi-million pound fee income, has grown up among professions such as accountants, architects and others, and new professions have developed such as accident reconstruction and care experts. This goes against all principles of proportionality and access to justice. In my view, its most damaging effect is that it has created an ethos of what is acceptable which has in turn filtered down to smaller cases. Many potential litigants do not even start litigation because of the advice they are given about cost, and in my view this is as great a social ill as the actual cost of pursuing litigation." The tendency of experts to dominate proceedings creates numerous other perils for the integrity of the trial process. One is that experts, who ex hypothesi know much more about their fields of expertise than judges and juries do, and who know of that vast disparity, will take over the conduct of cases and exert excessive influence over their outcomes. Another is that experts, no doubt contemptuous, often justifiably, of the ignorance of the lawyers, will appoint themselves as advocates for the party calling them. Another is that experts render their evidence less than useful by giving it in a form conventional in their 43 Indianapolis Colts Inc v Metropolitan Baltimore Football Club Limited Partnership 34 F 3d 410 at 415 (7th Cir 1994). 44 Access to Justice: Final Report to the Lord Chancellor on the civil justice system in England and Wales, (1996) at 137 [2]. discipline but not conforming to the rules of evidence45. Another is the tendency of experts to drift into giving the courts reasons why they should accept or reject the evidence of lay witnesses on matters of primary fact46. Finally, and very importantly, there is increasing concern about the risk of injustice that may flow from unsatisfactory expert evidence47. The stricter the admissibility requirements for s 79 tenders, the greater the chance that evidence carrying that danger will be excluded. The admissibility issue The evidence was that the "actual dust concentrations generated in [the respondent's] breathing zone … most certainly would not be from half to two ten-thousandths of a gram [0.05 to 0.2mg] per cubic metre of air, but more realistically would be of the order of a thousand or more times these values or even approaching one gram, or thereabouts, per cubic metre" (emphasis in original). The trial judge used it as an integer in calculations leading to the conclusion that the time weighted average of the respondent's exposure to dust while working for the appellant, assuming he was exposed for 30 minutes on each of five days per week, was 0.25mg/m3, which exceeded the limit of 0.2mg/m3 in the relevant Australian standard. That was a pleaded particular of a breach of statutory duty going to breach of the appellant's duty of care to the respondent. But was that evidence admissible? The respondent's position The respondent submitted that the evidence was admissible, because there was no "basis rule" in s 79. The expression "basis rule" can be used in a variety of senses. By it the respondent referred to, but denied the existence of, three requirements. He summed them up as the need to prove "the facts, the 45 In The Commonwealth v Yarmirr (2001) 208 CLR 1 at 62 [84]; [2001] HCA 56 Gleeson CJ, Gaudron, Gummow and Hayne JJ said the practice of "mixing ... disparate elements" such as "evidence of historical and other facts, ... expert opinions ... and ... advocating the claimants' case" was "a practice which has obvious difficulties and dangers." 46 For American criticisms see Kaye, Bernstein and Mnookin, The New Wigmore: A Treatise on Evidence – Expert Evidence, 2nd ed (2011) at 8-34 [1.3]-[1.4.2]. 47 See, for example, Ligertwood and Edmond, Australian Evidence: A Principled Approach to the Common Law and the Uniform Acts, 5th ed (2010) at 615-617 [7.46]; Redmayne et al, "Forensic Science Evidence in Question", [2011] Criminal Law Review 347. assumptions and the reasoning which are the basis of the opinion." First, the respondent denied any requirement that the expert disclose the "facts" and "assumptions" on which the expert's opinion was founded. It is convenient to call that requirement the "assumption identification" rule. Secondly, the respondent denied any requirement that the "facts" and "assumptions" stated be proved before the evidence was admissible. This requirement is often called the "basis" rule, following the usage of the Australian Law Reform Commission ("the Commission")48. But it is convenient to refer to it below as the "proof of assumption" rule. Thirdly, the respondent denied any requirement that there be a statement of reasoning showing how the "facts" and "assumptions" related to the opinion stated so as to reveal that that opinion was based on the expert's expertise49. It is convenient to call this requirement the "statement of reasoning" rule. In short, the respondent submitted that the admissibility of expert opinion evidence tendered under s 79 required the establishment of a relevant field of expertise, required that the witness be expert in that field, and required the statement of opinion – but no more50. If evidence tendered met those requirements but had the dangers to which ss 135 and 136 applied, the position could be remedied by orders under those sections. The common law position is relevant to the construction of s 79. Common law in relation to assumption identification rule The authorities. There is no doubt that the assumption identification rule exists at common law. Expert evidence is inadmissible unless the facts on which the opinion is based are stated by the expert – by way of proof if the expert can admissibly prove them, otherwise as assumptions to be proved in other ways. Thus Dixon J said that the assumptions of fact on which an expert opinion rested had to be "adverted to by the witness."51 There is much authority for that 48 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 417 [750] ("ALRC 26"). 49 It is possible to state this requirement more elaborately. But the formulation set out in the text will suffice for the purposes of deciding this appeal. 50 He cited HG v The Queen (1999) 197 CLR 414 at 433 [63]; [1999] HCA 2. 51 Bugg v Day (1949) 79 CLR 442 at 462; [1949] HCA 59. See also at 456 per proposition in England52; New South Wales53; Queensland54; South Australia55; Western Australia56; the Australian Capital Territory57; the Northern Territory58; and the Federal Court of Australia59. It has the extrajudicial support of Function of the assumption identification rule. The rule facilitates the operation of the proof of assumption rule and other rules of admissibility. It helps to distinguish between what the expert has observed and what the expert has been told61; to ensure that the expert is basing the opinion only on relevant facts62; to ensure that experts do not pick and choose for themselves what aspects of the primary evidence they reject, what they accept, how they interpret it and what the court should find63; and to ascertain whether there is substantial 52 R v Turner [1975] QB 834 at 840; National Justice Compania Naviera SA v Prudential Assurance Co Ltd ("The Ikarian Reefer") [1993] 2 Lloyd's Rep 68 at 81. 53 Steffen v Ruban (1966) 84 WN (Pt 1) (NSW) 264 at 268-269. 54 R v Ping [2006] 2 Qd R 69 at 79 [43]. 55 R v Fowler (1985) 39 SASR 440 at 442; Hillier and Carney v Lucas (2000) 81 SASR 451 at 491-492 [311], [314], [317] and [321]; Flavel v South Australia (2008) 102 SASR 404 at 421 [67]. 56 Pollock v Wellington (1996) 15 WAR 1 at 4. 57 Forrester v Harris Farm Pty Ltd (1996) 129 FLR 431 at 438. 58 Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 162. 59 Trade Practices Commission v Arnotts Ltd (No 5) (1990) 21 FCR 324 at 327-330; Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313 at 349-353; Quick v Stoland Pty Ltd (1998) 87 FCR 371 at 373-374; Daniel v Western Australia (2000) 178 ALR 542 at 546 [16]; Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 at 357 [10]. 60 "Problems Relating to the Expert Witness in Personal Injury Cases", in Glass (ed), Seminars on Evidence, (1970) 139 at 145. 61 Steffen v Ruban (1966) 84 WN (Pt 1) (NSW) 264 at 268-269. 62 R v Turner [1975] QB 834 at 840. 63 R v Fowler (1985) 39 SASR 440 at 443; Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313 at 352; Hillier and Carney v Lucas (2000) 81 SASR 451 at 492 correspondence between the facts assumed and the evidence admitted to establish them64. Common law in relation to the proof of assumption rule The authorities. There is also no doubt that the proof of assumption rule exists at common law. An expert opinion is not admissible unless evidence has been, or will be, admitted, whether from the expert or from some other source, which is capable of supporting findings of fact which are sufficiently similar to the factual assumptions on which the opinion was stated to be based to render the opinion of value. There is authority for the rule in this Court65; in the Federal Court of Australia66; in New South Wales67; in Victoria68; in Queensland69; in 64 Hillier and Carney v Lucas (2000) 81 SASR 451 at 492 [321]. 65 Commissioner for Government Transport v Adamcik (1961) 106 CLR 292 at 298; [1961] HCA 43; Paric v John Holland (Constructions) Pty Ltd (1985) 59 ALJR 844 at 846; 62 ALR 85 at 87-88; [1985] HCA 58; Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388 at 433 [138]; [2001] HCA 69 (citing Ramsay v Watson (1961) 108 CLR 642 at 648-649; [1961] HCA 65). 66 Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313 at 350-351; Quick v Stoland Pty Ltd (1998) 87 FCR 371 at 373; Daniel v Western Australia (2000) 178 ALR 542 at 546 [16]. 67 King v Great Lakes Shire Council (1986) 58 LGRA 366 at 371; R v Perry (1990) 49 A Crim R 243 at 249; R v Hilder (1997) 97 A Crim R 70 at 79, n 15. 68 R v Haidley [1984] VR 229 at 234 and 250-251; R v Lee (1989) 42 A Crim R 393 at 400; R v Anderson (2000) 1 VR 1 at 25-26 [59]-[60]; R v Berry (2007) 17 VR 153 at 173-174 [69]; R v Marijancevic (2009) 22 VR 576 at 594 [74]. 69 R v Tonkin [1975] Qd R 1 at 17; R v Gardner [1980] Qd R 531 at 535; Bromley Investments Pty Ltd v Elkington (2002) 43 ACSR 584 at 593 [50]; R v Ping [2006] 2 Qd R 69 at 79 [43]. South Australia70; in Western Australia71; in the Australian Capital Territory72; in England73; in Scotland74; in New Zealand75; and in Canada76. The Victorian Court of Appeal (Ormiston, Vincent and Eames JJA), speaking of a proposition that an expert opinion without any evidentiary basis is inadmissible, said: "The situation requires no elaborate exposition of the legal principles nor is the extensive citation of authority required with respect to such a basic proposition."77 70 Sych and Sych v Hunter (1974) 8 SASR 118 at 119; R v Reiner (1974) 8 SASR 102 at 109-110; R v Bjordal (2005) 93 SASR 237 at 245 [27] and 247 [31]; Flavel v South Australia (2008) 102 SASR 404 at 421 [67]. 71 Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370 at 377 and 390; Pollock v Wellington (1996) 15 WAR 1 at 3; Koushappis v Western Australia (2007) 168 A Crim R 51 at 61-62 [47]-[50]; Director of Public Prosecutions (WA) v Mangolamara (2007) 169 A Crim R 379 at 403-404 [148] and 406 [162]; Woods v Director of Public Prosecutions (WA) (2008) 38 WAR 217 at 268 [230]-[231]. 72 Forrester v Harris Farm Pty Ltd (1996) 129 FLR 431 at 438. 73 R v Ahmed Din [1962] 1 WLR 680 at 686; [1962] 2 All ER 123 at 127; English Exporters (London) Ltd v Eldonwall Ltd [1973] Ch 415 at 421; R v Turner [1975] QB 834 at 840; R v MacKenney (1980) 72 Cr App R 78 at 81; R v Abadom [1983] 1 WLR 126 at 131; [1983] 1 All ER 364 at 368; R v Theodosi [1993] RTR 179 at 184; R v Jackson [1996] 2 Cr App R 420 at 422-423. 74 Russell v HM Advocate 1946 JC 37 at 44; Forrester v HM Advocate 1952 JC 28 at 35 and 36; Blagojevic v HM Advocate 1995 SLT 1189 at 1192. 75 Bevan Investments Ltd v Blackhall & Struthers (No 2) [1978] 2 NZLR 97 at 123. 76 R v Discon (1968) 67 DLR (2d) 619 at 624-625; R v Howard [1989] 1 SCR 1337 at 77 R v Ryan [2002] VSCA 176 at [9]. See also Samuels, "Problems Relating to the Expert Witness in Personal Injury Cases", in Glass (ed), Seminars on Evidence, ALRC 26. However, in ALRC 26, the Commission disagreed78: "It has been implied in some cases and asserted in some academic writing that there is a rule of evidence that for expert opinion testimony to be admissible it must have as its basis admitted evidence. The better view is that there is no such rule. Were it to exist, it would not be possible to have opinion evidence which had as a significant component the opinions or the statements of others. This would preclude the tendering of evidence whose value is dependent upon material not before the court and, therefore, difficult for it to assess. While this would have its advantages, it would fail in its inflexibility to take account of the normal means by which experts generally form their opinions – by means of reports of technicians and assistants, consultation with colleagues and reliance upon a host of extrinsic material and information that it would be an endless and unfruitful task with which to burden the courts."79 There is no common law rule that expert opinion evidence cannot be received unless there exists already "admitted" evidence. It suffices if it can be seen that the appropriate evidence will be admitted later. Statements suggesting the contrary80 stem from a time when it was commoner than it is now for a party not to call expert evidence until all the other evidence in that party's case had been called. Further, the Commission's criticism is undercut by one qualification to the proof of assumption rule. Under a common law exception to the hearsay rule, experts may give evidence of hearsay matters which go to demonstrate their expertise – what is said in the published or unpublished works they have read, what has been said to them in discussions they have had with colleagues, what 78 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 417 [750]. A cross-reference given to vol 2, App C at 179 [107] reveals that among the "academic writing" was Pattenden, "Expert Opinion Evidence Based on Hearsay", [1982] Criminal Law Review 85 at 88. ALRC 26 recommended the enactment of a Bill containing cll 66(1) and 68. Clause 66(1) corresponded with s 76, and cl 68 had similarities to s 79. The Final Report contained a clause closer to s 79, but it did not add to what ALRC 26 said about the common law rule: Australia, The Law Reform Commission, Evidence, Report No 38, (1987) at 82-84 79 In other places ALRC 26 was less definitive: Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 78-79 [161] and 198 80 For example, R v Haidley [1984] VR 229 at 234. impressions they have gained from their general experience81. In any event, the criticism goes more to the question whether the rule is satisfactory, not to the present question of whether it exists at common law. The respondent rightly accepted that the Commission was wrong to deny or doubt the existence of the proof of assumption rule. It is necessary to deal with the Commission's six reasons for denying the existence of the proof of assumption rule. Five can be dealt with briefly; the sixth calls for fuller discussion. Phipson's authorities. First, the Commission criticised a statement of the proof of assumption rule in the 12th edition of Phipson on Evidence by twice saying that it was "most dubious" whether the four cases cited supported it82. In fact they do83. The passage had appeared in the first 11 editions as well84. It has also appeared in the last five editions85. The appearance of the passage in so 81 Borowski v Quayle [1966] VR 382 at 386-387; English Exporters (London) Ltd v Eldonwall Ltd [1973] Ch 415 at 420; R v Abadom [1983] 1 WLR 126 at 129; [1983] 1 All ER 364 at 367. 82 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 78 [161], n 362; vol 2, App C at 179 [108], n 112, referring to Phipson on Evidence, 12th ed (1976) at [1209]. 83 The four cases are the Gardner Peerage case (see le Marchant, Report of the Proceedings of the House of Lords on the Claims to the Barony of Gardner at 77); Wright v Tatham (1838) 5 Cl & F 670 [7 ER 559]; Re Dyce Sombre (1849) 1 Mac & G 116 [41 ER 1207]; and R v Staunton, The Times, 26 September 1877. Two other cases referred to by Phipson, Thornton v The Royal Exchange Assurance Co (1790) Peake 37 [170 ER 70] and Beatty v Cullingworth, The Times, 17 November 1896, are also not against the rule. 84 1st ed (1892) at 261 (see also at 264); 2nd ed (1898) at 364 (see also at 367-368); 3rd ed (1902) at 345 (see also at 349); 4th ed (1907) at 361 (see also at 365); 5th ed (1911) at 369 (see also at 373-374); 6th ed (1921) at 391 (see also at 396-397); 7th ed (1930) at 379 (see also at 384-385); 8th ed (1942) at 385 (see also at 390); 9th ed (1952) at 408 (see also at 413); 10th ed (1963) at [1297] (see also at [1310]); 11th ed (1970) at [1297] (see also at [1308]-[1310]). 85 13th ed (1982) at [27-14] (see also at [27-56]); 14th ed (1990) at [32-14]; 15th ed (2000) at [37-16]; 16th ed (2005) at [33-16]; 17th ed (2010) at [33-18]. (In the later editions the passage has been adjusted to reflect statutory changes in English law in civil cases.) The first and fourth of the authorities were referred to in all editions, the second in all editions since the third, and the third in all editions since the sixth. many editions of Phipson, which has been in constant use among the profession for over a century in numerous common law jurisdictions, and has passed through the hands of many highly experienced editors and assistant editors, without recorded criticism from judges, barristers or other authors, is a significant pointer to the existence of the rule. Blackburn J. The second reason given by the Commission86 was that Milirrpum v Nabalco Pty Ltd87 was inconsistent with the rule. Yet in fact Blackburn J's reasoning was devoted to establishing that there was no need to prove the expertise of expert witnesses by evidence complying with conventional rules of admissibility. Obscure English cases? Thirdly, the Commission said that two English cases88 were unclear as to whether the rule existed89. This is an exaggeration. The cases do in truth support the rule. The United States position at common law. Fourthly, the Commission conceded that the basis rule "may well have been the common law position in the United States."90 There is actually no doubt about it91. Wigmore stated that in a hypothetical question put to an expert containing the factual assumptions on which the expert opinion is to be based, "the data to be assumed are those which it is expected or claimed by the party the jury will subsequently adopt as true"; and hence the question "must not include data which there is not a fair possibility of the jury accepting."92 A question which offends that prohibition is open to objection, and an opinion offered in answer to that question is inadmissible. 86 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 2, App C at 180 [108]. 87 (1971) 17 FLR 141 at 161-163. 88 R v Turner [1975] QB 834 at 840; R v MacKenney (1980) 72 Cr App R 78 at 81. 89 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 2, App C at 180-181 [108]. 90 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 2, App C at 179 [107]. 91 Cleary (ed), McCormick's Handbook of the Law of Evidence, 2nd ed (1972) at 33; Judge Learned Hand, "Historical and Practical Considerations Regarding Expert Testimony", (1901) 15 Harvard Law Review 40 at 53-54, n 2. 92 Wigmore, Evidence in Trials at Common Law, Chadbourn rev (1979), vol 2 at 947 [682] (emphasis in original). See also Kaye, Bernstein and Mnookin (eds), The (Footnote continues on next page) The Canadian position. Fifthly, the Commission relied on a Canadian case, Wilband v The Queen93. But on the present point that case was later Ramsay v Watson: the facts and the judgment. Sixthly, the Commission said that in Ramsay v Watson95: "the High Court took the view that the consequence of not proving the factual basis is that the opinion may be of 'little or no value' not that it would be inadmissible. No basis rule of admissibility [ie proof of assumption rule] was laid down by the High Court. It did state, however, that a trial judge can properly refuse to admit evidence of statements made to [the expert witness] on which he bases his opinion where it is apparent that other evidence to prove the truth of those statements will not be adduced."96 In Ramsay v Watson, Watson claimed that he had been made ill by reason of his employer's failure to protect him against injury from inhaling lead particles and lead oxide fumes. He succeeded before a jury at trial and before the Full Court of the Supreme Court of New South Wales. One ground advanced in the employer's appeal to the High Court concerned a government medical officer. He gave evidence that he had examined 21 other employees who had worked at that workplace and "observed" that they did not have symptoms of lead poisoning. The High Court (Dixon CJ, McTiernan, Kitto, Taylor and New Wigmore: A Treatise on Evidence – Expert Evidence, 2nd ed (2011) at 93 [1967] SCR 14 at 21. See Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 198 [363]. 94 R v Abbey [1982] 2 SCR 24 at 46; R v Lavallee [1990] 1 SCR 852 at 895-896 and 899-900. See generally Bryant, Lederman and Fuerst (eds), The Law of Evidence in Canada, 3rd ed (2009) at 834-849 [12.159]-[12.192]. See below at [112]-[115]. 95 (1961) 108 CLR 642 at 649. 96 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 2, App C at 180 [108] (footnote omitted). 97 Ramsay v Watson (1961) 108 CLR 642 at 646-647 (emphasis added). "Counsel for the defendant wanted him to go further. He sought to get from the witness not only what he had observed, but also what each of the men examined had told him about his state of health in the past. He apparently hoped to strengthen or complete the evidence of the witness that in his opinion those other men had not been affected by lead, or not affected to a serious degree, by proving that each when questioned had said that his health in the past had been good, and perhaps to elicit also other statements they had made. Counsel for the plaintiff objected on the ground that, if these matters were admissible, they could not be proved by hearsay and that the men themselves should be called." In particular, an objection was put to any question about what history each employee gave the medical officer. The High Court said that the history was not admissible as part of the res gestae, but continued98: "A sounder argument for admitting evidence of what the men had told the examining doctor might have been that it was part of the material on which he formed the opinion that he gave in evidence. When a physician's diagnosis or opinion concerning his patient's health or illness is receivable, he is ordinarily allowed to state the 'history' he got from the patient. … This, of course, is quite a different matter from the rule last discussed [ie the res gestae rule]. That, in cases where it applies, makes statements made to anyone concerning present symptoms and sensations admissible as evidence that those symptoms and sensations, in fact, existed. This makes all statements made to an expert witness admissible if they are the foundation, or part of the foundation, of the expert opinion to which he testifies; but, except they be admissible under the first rule [ie the res gestae rule], such statements are not evidence of the existence in fact of past sensations, experiences and symptoms of the patient. Hearsay evidence does not become admissible to prove facts because the person who proposes to give it is a physician." The High Court then made the statement on which the Commission relied99: "[I]f the man whom the physician examined refuses to confirm in the witness box what he said in the consulting room, then the physician's opinion may have little or no value, for part of the basis of it has gone." 98 Ramsay v Watson (1961) 108 CLR 642 at 648-649. 99 Ramsay v Watson (1961) 108 CLR 642 at 649 (emphasis added). The High Court continued100: "Each case depends on its own facts. In this case counsel for the defendant sought to get the examining doctor to recount things he had been told by those he examined. Yet he did not undertake to call them as witnesses. Indeed he made it clear that he did not intend to do so. His Honour in his summing-up told the jury that the medical evidence was that none of the twenty-one men had, when examined, exhibited any symptoms of lead poisoning. The appellant nevertheless complains, because it seems that the respondent's counsel had suggested to the jury that they might discount this evidence, as they did not know the past medical history of the men. This comment, the appellant suggests, could not have been made had the doctor been allowed to tell the jury what they had told him. His Honour, however, could properly refuse to admit evidence of this, it having been made apparent that the men would not be called." In Ramsay v Watson, the factual basis of the expert opinion was established by the witness's personal observation of the 21 employees. The rejected evidence was evidence of the histories given by way of supposed reinforcement, the need for which was later confirmed by the failure of the expert opinion to sway the jury. The High Court was thus not dealing with a case where the expert witness's opinion depended wholly on a factual basis which was not established. Its analysis is, with respect, instructive nonetheless. As yet uncalled evidence suffices. First, the High Court did not see it as a barrier to the admissibility of the evidence about the employees' histories that the employees had not given evidence of them before the expert witness entered the witness box. Subsequent evidence from the 21 employees of those histories would have sufficed. Ideally, expert evidence will always be called after the primary evidence tendered to prove the assumptions on which the expert evidence rests. That is because at that point it will be clearer what is truly in dispute factually, it will be easier to estimate what evidence may be accepted by the jury, and it will be easier to put hypothetical questions of a realistic kind to witnesses in answer to which they can state opinions based on the factual case proffered by the party calling them, and say how, if at all, their opinions would be modified if that case were not fully accepted or were rejected. But in practice it is frequently not possible or convenient to call the expert evidence at the end of the tendering party's case. Ramsay v Watson makes plain that expert opinion evidence is unaffected by the fact that the primary evidence has not yet been given to support the assumptions on which the opinion rests. The admissibility of the expert evidence can be secured by counsel undertaking to call the primary 100 Ramsay v Watson (1961) 108 CLR 642 at 649. evidence later. Hence the proof of assumption rule does not cramp the party calling the expert witness by imposing an impracticably rigid order of witnesses. A procedure conforming with Ramsay v Watson was explained thus by the Queensland Court of Appeal in R v Ping101: "Mr Jones was a properly qualified clinical psychologist. He was, relevantly, an expert whose opinion might be admitted into evidence. Before it could be accepted, however, the factual basis for the opinion had to be explained to the court. Mr Jones had to recount the facts on which he based his opinion. To do that he had to give in evidence the history he took from the complainant about his symptoms and what led up to them. Mr Jones's rehearsal of those facts would not prove them but once he had said what he understood the facts to be on which he formed his opinion that opinion could be provisionally admitted into evidence. If the facts were proved by someone who had knowledge of them, in this case the complainant, the opinion would be admitted unconditionally. [If] the facts were not proved the condition on which the admission depended would be unsatisfied and the opinion could not be acted on by the tribunal of fact." Procedural possibilities. A second important aspect of Ramsay v Watson is the High Court's refusal to enunciate any absolute rule about the precise impact of an absence of primary evidence on the admissibility of expert evidence based on it. "Each case depends on its own facts." There are innumerable ways in which there may be a disconformity between the facts assumed by the expert as the basis for the opinion, and the facts eventually accepted by the trier of fact. If the party tendering the expert opinion has called primary evidence which, if accepted, would correspond substantially with the factual basis assumed, but the trier of fact rejects the primary evidence, in whole or in part, the question is not one of admissibility, but only of weight. That is because questions of admissibility generally102 ought not to arise once the evidence is closed: by the time it is closed, all evidence that is to be considered by the trier of fact will have been admitted, and any other evidence tendered will have been rejected. "Parties should know, before addresses are taken, the final state of the evidence, whether the trial be by judge and jury or judge alone."103 Rulings on admissibility must 101 [2006] 2 Qd R 69 at 79 [43] per Chesterman J (Williams and Jerrard JJA concurring) (emphasis added). 102 There are exceptional and often unsatisfactory instances where evidence is admitted "subject to relevance", or subject to some specific objection, giving the judge power to reject evidence even after the close of both parties' cases. 103 Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 at 443 [77] per Gleeson CJ, Gaudron, Gummow and Hayne JJ; [2002] HCA 59. thus generally be made before the evidence closes. But that is only a minimum position. The superior practice requires rulings about the admissibility of the evidence tendered by one party to be made before that party's case is closed, so as to allow the opposing party, if the defendant, the opportunity to consider whether to make a no case submission, and to allow all opposing parties to consider whether evidence should be called and, if so, what. The traditional position is even more desirable: subject to the judge's entitlement to take a little time to consider difficult objections, "a party is entitled to have questions of admissibility determined as they arise"104. Only in that way can the opposing party know whether and how to cross-examine the tendering party's witnesses, and what documents to tender through them. Sometimes the tendering party will fail to ensure sufficient conformity between the assumed and the primary facts because the tendering party never intends to call evidence of the primary facts. Sometimes it will fail because while its tenders, if accepted, would go some distance towards establishing the primary facts, they do not go far enough, even if accepted, to establish their existence. When a party tendering the opinion of an expert contends that all the evidence of the primary facts that could be tendered has already been admitted, the court's task in deciding the admissibility of the opinion is relatively simple. It is to assess whether, assuming the evidence of the primary facts is accepted, it will lead to findings sufficiently similar to the factual assumptions on which the expert opinion was stated to be based to render it of value. That task is easier when carried out in the light of actual evidence as distinct from a perhaps imperfect prediction of what the evidence may turn out to be. If, on the other hand, the evidence of the primary facts already admitted, even if accepted, would not lead to the necessary findings, the admissibility of the expert evidence may depend on the giving of an undertaking by the tendering party to call another witness. It is good practice for counsel opposing tender of the opinion evidence to draw attention, at the time of tender, to any significant gap between the primary facts assumed by the expert and the evidence so far received in an attempt to establish those facts, and to seek rejection of the expert evidence unless an appropriate undertaking to fill the gap is offered. "Little or no value". What, then, is the meaning of the High Court's words: "[I]f the man whom the physician examined refuses to confirm in the witness box what he said in the consulting room, then the physician's opinion may have little or no value, for part of the basis of it has gone"? 104 International Harvester Co of Australia Pty Ltd v McCorkell [1962] Qd R 356 at Where a tendering party refuses in advance to give an undertaking to attempt to comply with a condition of admissibility, the court should reject the tender. When their Honours in Ramsay v Watson said that the trial judge "could properly refuse to admit evidence of [what the 21 employees told the doctor], it having been made apparent that the men would not be called", they were not referring to a discretion: the trial judge "could properly" refuse to admit the evidence because it is proper to reject inadmissible evidence. On the other hand, where an undertaking is given in advance that an attempt will be made to comply with a condition of admissibility, the court may choose to admit the evidence conditionally, ie provisionally, in the manner described in R v Ping105. What if that attempt is frustrated by the refusal or failure of the witness called in fulfilment of that undertaking to come up to proof? It may not be right to exclude it if there has been only a partial failure to fulfil the undertaking. But if, at the close of the tendering party's case, the party opposing the tender draws attention to the continuing gap between the primary facts assumed by the expert and the evidence called to prove them, and to the failure of the tendering party to fulfil the undertaking to close that gap, it may be the duty of the court to reject the evidence even if it has been conditionally admitted. That duty will exist if, to use the High Court's language, the missing "basis" which has left the gap is so great that the expert's opinion has "no value" – that is, no probative value – because in that event it cannot have any relevance and it is therefore inadmissible. If it has very "little" value, the same may be true. If it has some value, it may be relevant. But it may be at risk of exclusion in exercise of a discretion in criminal cases, and, if one exists in civil cases at common law, in civil cases too, to exclude evidence the probative value of which is outweighed by its prejudicial effect. It would be strange if opinion evidence which is inadmissible because the tendering party failed to offer an undertaking would become admissible where the tendering party did offer an undertaking to call the supporting evidence but did not fulfil it. In those circumstances a trial judge would be entitled to reverse an earlier ruling admitting the evidence in reliance on the undertaking. Conclusion about Ramsay v Watson. It is not true to say that Ramsay v Watson held that a failure to prove the assumed factual basis of an expert opinion goes only to weight, not admissibility. It is not true to say that no "basis rule of admissibility" was laid down. The Full Court of the Federal Court of Australia correctly cited Ramsay v Watson as holding106: "The proposition that an expert's 105 [2006] 2 Qd R 69 at 79 [43]: see above at [82]. 106 Eric Preston Pty Ltd v Euroz Securities Ltd (2011) 274 ALR 705 at 724 [171] per Jacobson, Foster and Barker JJ – a proposition true both at common law and in relation to s 79. opinion based upon certain assumptions which are not ultimately proved in evidence is irrelevant is a fundamental principle of the law". Irrelevant evidence is inadmissible. Function of the proof of assumption rule. The function of the proof of assumption rule is to highlight the irrelevance of expert opinion evidence resting on assumptions not backed by primary evidence. It is irrelevant because it stands in a void, unconnected with the issues thrown up by the evidence and the reasoning processes which the trier of fact may employ to resolve them107. If the expert's conclusion does not have some rational relationship with the facts proved, it is irrelevant. That is because in not tending to establish the conclusion asserted, it lacks probative capacity. Opinion evidence is a bridge between data in the form of primary evidence and a conclusion which cannot be reached without the application of expertise. The bridge cannot stand if the primary evidence end of it does not exist. The expert opinion is then only a misleading jumble, uselessly cluttering up the evidentiary scene. The statement of reasoning rule at common law The authorities. At common law there is no doubt that an expert opinion is inadmissible unless the expert states in chief the reasoning by which the expert conclusion arrived at flows from the facts proved or assumed by the expert so as to reveal that the opinion is based on the expert's expertise. The court does not have to be satisfied that the reasoning is correct: "the giving of correct expert evidence cannot be treated as a qualification necessary for giving expert evidence."108 But the reasoning must be stated. The opposing party is not to be left cross-examination109. find out about the expert's thinking time first the for Sir Owen Dixon, speaking extrajudicially, said: "courts cannot be expected to act upon opinions the basis of which is unexplained."110 In R v 107 Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313 at 351. 108 Commissioner for Government Transport v Adamcik (1961) 106 CLR 292 at 303 109 Lewis v The Queen (1987) 88 FLR 104 at 124. 110 "Science and Judicial Proceedings", in Jesting Pilate, (1965) 11 at 18, approved in Samuels v Flavel [1970] SASR 256 at 260. Just before that statement, Sir Owen said that one duty of the expert witness was "to give his own inferences and opinions and they proceed" (emphasis added). Immediately after the statement quoted in the text, Sir Owen said: the grounds upon which (Footnote continues on next page) Jenkins; Ex parte Morrison111 Fullagar J quoted that statement with approval, and added that expert scientific witnesses should be asked to "explain the basis of theory or experience" on which their conclusions rest112. On appeal Rich and Dixon JJ approved what Fullagar J had said113. The witness must explain the basis of theory or experience because the court is not limited to examining the conclusion or the expertise of the expert witness: it must look to the "substance of the opinion expressed."114 Since choosing between conflicting experts depends in part on "impressiveness and cogency of reasoning"115 their "processes of reasoning" must be identified116. In short, as the Victorian Court of Appeal (Winneke P, Charles and Chernov JJA) said in R v Juric117: "[T]he jury must be able to evaluate the strength of [expert opinion] evidence by reference to its factual or scientific basis. Whether it can properly do so is a matter initially for the judge in determining whether that evidence is admissible. … [T]he admissibility of [expert opinion] evidence must depend upon the judge's satisfaction that the jury can, on the basis of material put before them, properly and reasonably evaluate the "However valuable intuitive judgment founded upon experience may be in diagnosis and treatment, it requires the justification of reasoned explanation when its conclusions are controverted. Reasoned explanation requires care and forethought – qualities the presence of which is not always transparently visible in expert evidence." (emphasis added) It was certainly not visible in the challenged evidence in this case, whether given on the voir dire or as part of the trial – full as it was of obscurities, contradictions, and denials of matters necessary to its admissibility. 111 [1949] VLR 277 at 303. 112 Applied in Samuels v Flavel [1970] SASR 256 at 259-260; R v Haidley [1984] VR 229 at 234-235; R v J (1994) 75 A Crim R 522 at 531; R v Juric (2002) 4 VR 411 at 426 [19]; Police v Barber (2010) 108 SASR 520 at 539 [81]. 113 Morrison v Jenkins (1949) 80 CLR 626 at 637 and 641 respectively; [1949] HCA 114 Holtman v Sampson [1985] 2 Qd R 472 at 474. 115 Monroe Australia Pty Ltd v Campbell (1995) 65 SASR 16 at 27, quoting Sotiroulis v Kosac (1978) 80 LSJS 112 at 115. 116 Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313 at 349. 117 (2002) 4 VR 411 at 426 [18]. differing opinions expressed and make a responsible determination as to which of them is to be preferred." Function of the statement of reasoning rule. The rule protects cross-examiners by enabling them to go straight to the heart of any difference between the parties without the delay of preliminary reconnoitring. It also aids the court in a non-jury trial, because at the end of the trial it is the duty of the court to give reasons for its conclusions. And it aids jurors, because at the end of the trial they have the duty of assessing the rational force of expert evidence. If there is not some exposition of the expert's reasoning it will be impossible for the court to compose a judgment stating, and for the jurors to assemble, reasons for accepting or rejecting or qualifying the expert's conclusion. "The process of inference that leads to the [expert's] conclusions must be stated or revealed in a way that enables the conclusions to be tested and a judgment made about the reliability of them."118 As Lord Cooper, the Lord President, said in Davie v Magistrates of Edinburgh119: "The value of [expert opinion] evidence depends … above all upon the extent to which [the expert's] evidence carries conviction … [T]he defenders went so far as to maintain that we were bound to accept the conclusions of [an expert witness]. This view I must firmly reject as contrary to the principles in accordance with which expert opinion evidence is admitted. … [The] duty [of expert witnesses] is to furnish the Judge or jury with the necessary scientific criteria for testing the accuracy of their conclusions, so as to enable the Judge or jury to form their own independent judgment by the application of these criteria to the facts proved in evidence. … [T]he bare ipse dixit of a scientist, however eminent, upon the issue in controversy, will normally carry little weight, for it cannot be tested by cross-examination nor independently appraised, and the parties have invoked the decision of a judicial tribunal and not an oracular pronouncement by an expert." 118 Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370 at 390 per 119 1953 SC 34 at 39-40 (emphasis added). These passages have been much cited: for example Lysaght v Police [1965] NZLR 405 at 409; R v Robb (1991) 93 Cr App R 161 at 166; O'Kelly Holdings Pty Ltd v Dalrymple Holdings Pty Ltd (1993) 45 FCR 145 at 155; R v Gilfoyle [2001] 2 Cr App R 57 at 67 [24]; R v Luttrell [2004] 2 Cr App R 520 at 539 [36]. It is sometimes said that these words deal with weight only, not admissibility. But this is contradicted by the Lord President's use of the word "admitted". Section 79 and the assumption identification rule The respondent contended that the three common law rules just discussed were not taken up in s 79. The respondent relied on denials by Branson J that the first rule existed in relation to s 79 tenders. In Quick v Stoland Pty Ltd her Honour said that the Act did not contain a provision reflecting the common law rule that the admissibility of expert opinion depends upon "proper disclosure and proof of the factual basis of the opinion."120 The word "disclosure" is a reference to the first rule. The word "proof" is a reference to the second rule. In Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd121 she repeated her denial that the common law rule requiring "proper disclosure" had been adopted in the Act. In support she referred to the Commission's proposal to "refrain from including" the second rule in its draft Bill122. However, as Austin J correctly pointed out in Australian Securities and Investments Commission v Rich123, the Commission was not speaking of "disclosure" of the factual basis, only "proof" of it. that passage The respondent's riposte to Gleeson CJ. The respondent asserted that there was no reference in terms to the first rule in s 79. Gleeson CJ, however, rested the continued existence of the first rule on an implication from the terms of s 79. Gleeson CJ said124: "An expert whose opinion is sought to be tendered should differentiate between the assumed facts upon which the opinion is based, and the opinion in question. … [T]he provisions of s 79 will often have the practical effect of emphasising the need for attention to requirements of form. By directing attention to whether an opinion is wholly or substantially based on specialised knowledge based on training, study or 120 (1998) 87 FCR 371 at 373-374 (emphasis added). 121 (2002) 55 IPR 354 at 357 [10]. 122 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 123 (2005) 190 FLR 242 at 312 [295]. 124 HG v The Queen (1999) 197 CLR 414 at 427 [39] (footnote omitted). experience, the section requires that the opinion is presented in a form which makes it possible to answer that question." The respondent riposted by going so far as to submit that, even if it did not appear on the face of the opinion that it was based on specialised knowledge, the opinion was admissible. He also submitted, less ambitiously, that the requirement that the opinion be "wholly or substantially based" on the expert's "specialised knowledge based on the person's training, study or experience" was "susceptible of proof by a simple evidentiary statement." The respondent went on: "Proof that the requirement has been met can be given in the document required by rules in all the Australian Courts, or it can be given in evidence in chief or it can be given in cross examination or it can be decided … by a voire dire." Whether the opinion actually was wholly or substantially based on the light of witness's knowledge was a matter cross-examination. It was a matter that went only to whether the expert's opinion had sufficient weight to be accepted. Hence there was no need to state the assumed facts. investigated to be the The respondent's riposte is not correct. The requirement that the opinion be based wholly or substantially on specialised knowledge is an explicit precondition of admissibility. Like other preconditions under s 79, it is to be established by the party tendering the evidence. It is to be established in examination cross-examination or in non-evidentiary documents required by rules of court for other purposes. the voir dire), not in chief (during trial or on the The Full Court of the Federal Court of Australia has rightly rejected the respondent's riposte125. So has the Court of Appeal of the Supreme Court of New South Wales: it held that the links between the expert's training, study and experience and the opinion should be spelt out unless they are apparent from the nature of the specialised knowledge126. And in this Court, Gleeson CJ, in dealing with an expert whose opinion was not based on specialised knowledge but on "a combination of speculation, inference, personal and second-hand views as to the credibility of the complainant"127, said128: 125 Ocean Marine Mutual Insurance Association (Europe) OV v Jetopay Pty Ltd (2000) 120 FCR 146 at 151 [22]-[23]; Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 at 420 [107]. 126 Adler v Australian Securities and Investments Commission (2003) 179 FLR 1 at 127 HG v The Queen (1999) 197 CLR 414 at 428 [41]. 128 HG v The Queen (1999) 197 CLR 414 at 429 [44]. their specialised knowledge. "[I]t is important that the opinions of expert witnesses be confined, in accordance with s 79, to opinions which are wholly or substantially based 'opinions' (sometimes merely their own inference of fact), outside their field of specialised knowledge may invest those opinions with a spurious appearance of authority, and legitimate processes of fact-finding may be subverted." Experts who venture The authorities. Branson J's view that s 79 tenders need not comply with an assumption identification rule is not, apart from one passage in this Court129, specifically supported by the authorities in any jurisdiction130. Almost all courts in which the question has been considered have revealed disagreement with her 129 HG v The Queen (1999) 197 CLR 414 at 433 [63] per Gaudron J. 130 There is a suggestion by Weinberg and Dowsett JJ in Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 at 379 [87] that a failure to identify the relevant assumptions will not necessarily prevent the initial reception of the evidence, but it is vague and innominate. The suggestion was concurred in in Noetel and Quealey (2005) FLC ¶93-230 at 79,800 [106] by Bryant CJ and Boland J, who said that what Branson J and Weinberg and Dowsett JJ meant was: "[G]enerally questions of admissibility of expert evidence … should not be the prime determinant of the admissibility of that evidence, but rather the relevance of the evidence to the issue in dispute, the specialized skill and knowledge of the expert and whether the report is based on such skill and knowledge." The proposition that questions of admissibility should not be the prime determinant of admissibility is novel. In Daniel v Western Australia (2000) 178 ALR 542 at 546 [16] R D Nicholson J recorded Branson J's view, but the challenge to the evidence in that case did not depend on its validity, and the references to "factual basis" at 550 [30] suggest that his Honour thought it invalid. At 546 [16] it was said that Emmett J "relevantly agreed" with Branson J in Quick v Stoland Pty Ltd (1998) 87 FCR 371. It is true that at 379 he said he agreed with her Honour's analysis of the "scheme" of the legislation, but the extent to which he agreed with the detail of what she said is doubtful, not least because in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 the Full Court (Black CJ, Emmett and Middleton JJ) said that its failure to deal with a question about the possible need for evidence of assumed facts, which the primary judge had denied, on the ground that it had not been argued on appeal "should not necessarily be taken as endorsement of the correctness of the view adopted by the primary judge" (at 411 [58]). This does not suggest complete agreement with Branson J's views in Quick's case. Honour's view131. That does not mean that the omission of any assumption, however obvious or insignificant, results in exclusion of the opinion. In Harrington-Smith v Western Australia (No 2)132 Lindgren J stated: "perhaps it cannot be said that in all cases evidence of expert opinion will be inadmissible if an expert does not separately list all the factual assumptions underlying his or her report". For example, it has been said that the requirement that expert witnesses reveal all the assumptions on which they proceeded does not extend to basic assumptions about human nature, human anatomy, atmospheric conditions on earth, the working of a market economy, and obvious reasoning about the dating of information and the provenance of documents133. But these qualifications do not undercut the proposition that the articulation of all significant factual assumptions is a precondition to admissibility when expert evidence is tendered under s 79. Principle. That proposition is sound in principle. For the reasons given by Gleeson CJ, the proposition has textual support. A construction of s 79 as abolishing the common law rule should be rejected because silence about the factual assumptions being made would have very unsatisfactory consequences. First, the court may not be able to understand the opinion so as to decide what weight to accord it134. Secondly, the court will not be able to assess whether it 131 In this Court, see HG v The Queen (1999) 197 CLR 414 at 427 [39], 428 [41] and 453 [137]; Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388 at 433 [138]. In other courts, see, for example, Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 123 at [13]; Rhoden v Wingate (2002) 36 MVR 499 at 500 [2] and 517-518 [61]-[62]; Neowarra v Western Australia (No 1) (2003) 134 FCR 208 at 217-218 [23]-[24]; Australian Securities and Investments Commission v Vines (2003) 48 ACSR 291 at 301 [39]; James v Launceston City Council (2004) 13 Tas R 89 at 93 [10]; Australian Retailers Association v Reserve Bank of Australia (2005) 148 FCR 446 at 563 [448]; Australian Securities and Investments Commission v Rich (2005) 190 FLR 242 at 313 [302]; Hevi Lift (PNG) Ltd v Etherington (2005) 2 DDCR 271 at 293 [80]; BHP Billiton Iron Ore Pty Ltd v National Competition Council (2007) 162 FCR 234 at 273 [185]; Paino v Paino (2008) 40 Fam LR 96 at 112 [66]. 132 (2003) 130 FCR 424 at 429 [25]. 133 Australian Securities and Investments Commission v Rich (2005) 190 FLR 242 at 288 [186]-[187]. Further, the "facts" which are part of the material on which the witness's specialised knowledge is based lie outside the assumption identification rule: NutraSweet Australia Pty Ltd v Ajinomoto Co Inc (2005) 224 ALR 200 at 134 Australian Securities and Investments Commission v Rich (2005) 190 FLR 242 at corresponds with the facts which the court finds at the end of the trial135. Thirdly, the court will not be able to assess whether the opinion is one wholly or substantially based on the expert's knowledge136. Fourthly, there would be unacceptable difficulties for the cross-examiner, who should not have to perform, in the dark, particularly in relation to lengthy and complex expert opinion evidence, the "task of teasing out in cross-examination all the circumstances that the witness had in mind."137 Fifthly, the cross-examining party should not be left at a disadvantage in deciding whether and how to meet the evidence. Sixthly, the respondent's construction reduces the chance of the parties getting to grips, or at least getting to grips quickly. It would thus cause trials to become slower, more complicated and more costly. The respondent's submissions failed to refute these points. Section 79 and the proof of assumption rule The respondent's submissions. Is an opinion tendered under s 79 inadmissible unless there was evidence, admitted or to be admitted before the end of the tendering party's case138, capable of proving matters sufficiently similar to the assumptions to render the opinion of value? The correct answer is in the affirmative. The respondent answered in the negative. He relied on some remarks of Gaudron J in HG v The Queen139 and on various Federal Court authorities140. He accepted that if the expert's assumptions were wrong the 135 HG v The Queen (1999) 197 CLR 414 at 428 [41]; Harrington-Smith v Western Australia (No 2) (2003) 130 FCR 424 at 428-429 [25]; Australian Securities and Investments Commission v Rich (2005) 190 FLR 242 at 312 [297]. 136 HG v The Queen (1999) 197 CLR 414 at 427 [39]; Australian Securities and Investments Commission v Rich (2005) 190 FLR 242 at 313-314 [303]. 137 Australian Securities and Investments Commission v Vines (2003) 48 ACSR 291 at 301 [39] per Austin J; Australian Securities and Investments Commission v Rich (2005) 190 FLR 242 at 314 [304]. 138 Rhoden v Wingate (2002) 36 MVR 499 at 499-500 [1]-[2] and 517-519 [60]-[63]; Australian Securities and Investments Commission v Rich (2005) 218 ALR 764 at 139 (1999) 197 CLR 414 at 433 [63]. 140 Quick v Stoland Pty Ltd (1998) 87 FCR 371 at 373-374; Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 at 357 [10]; Neowarra v Western Australia (No 1) (2003) 134 FCR 208 at 215-218 [16]-[25] (citing Guide Dog Owners' & Friends' Association Inc v Guide Dog Association of New South Wales & ACT (1998) 154 ALR 527 at 531); Sampi v Western Australia [2005] FCA 777 at [798]-[799]. opinion based on them would have no relevance. He accepted that sometimes expert evidence might be provisionally admitted subject to relevance (ie depending on whether the assumptions were established). But he submitted that even when cross-examination and other forensic testing rendered evidence either worthless or much reduced in significance, it did not become inadmissible. The respondent relied on the absence of any words in s 79 retaining the common law rule and on the Commission's stated intention to "refrain from including a [proof of assumption] rule in the legislation"141. The authorities. Support for the respondent can be found not only in the Federal Court cases on which he relied, but in others142, and also in judgments of Dowd J143 and Walker CCJ144. On the other hand, other Federal Court cases 141 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 142 Jango v Northern Territory (No 4) (2004) 214 ALR 608 at 612 [19]; Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2006) 228 ALR 719 at 722 [7]; Gambro Pty Ltd v Fresenius Medical Care Australia Pty Ltd (2007) 245 ALR 15 at 27 [43]; Bodney v Bennell (2008) 167 FCR 84 at 107 [90]-[91]. 143 Director of Public Prosecutions (NSW) v Tong (2004) 151 A Crim R 296 at 144 Brown v Iontask Pty Ltd (2002) 24 NSWCCR 231 at 241 [62]; Hevi Lift (PNG) Ltd v Etherington (2005) 2 DDCR 271 at 280-281 [30]. The Court of Appeal did not accept Walker CCJ's views: see at 294 [84]. leave the question open145, or raise a doubt146. And, as noted above147, the Full Federal Court recently asserted roundly and rightly: "The proposition that an expert's opinion based upon certain assumptions which are not ultimately proved in evidence is irrelevant is a fundamental principle of the law"148. There are other cases which hold, say or assume that the respondent's contention is erroneous149. 145 In Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 at 411 [58] Black CJ, Emmett and Middleton JJ said their failure to address the question, which was not put in issue on the appeal, "should not necessarily be taken as endorsement of the correctness of the view adopted by the primary judge." At 420 [108] their Honours said: "If the opinion is based on … facts that are clearly not going to be proved, the opinion is likely to be valueless." Expert opinion evidence which can be seen at the moment of tender to be valueless is irrelevant: that is so despite the words "if it were accepted" in s 55(1) and despite s 57(1). It is therefore inadmissible. 146 BHP Billiton Iron Ore Pty Ltd v National Competition Council (2007) 162 FCR 234 at 273 [185]. Greenwood J, with whom Sundberg J concurred "generally", said that it "seems" that the "absence of proven foundation facts" does not affect admissibility, but "little or no weight will be given to such an opinion", and "the central point may simply be the question of admissibility, not weight". An opinion which can be seen at the time of tender to be of no weight is irrelevant and inadmissible. 147 See [89]. 148 Eric Preston Pty Ltd v Euroz Securities Ltd (2011) 274 ALR 705 at 724 [171] per Jacobson, Foster and Barker JJ. 149 In Velevski v The Queen (2002) 76 ALJR 402 at 411 [47]; 187 ALR 233 at 246; [2002] HCA 4, Gleeson CJ and Hayne J said that apart from facts of which an expert can give admissible evidence, the expert "witness can give evidence only by reference to facts which will have to be established otherwise." Among the others are Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 123 at [13]; R v P (2001) 53 NSWLR 664 at 681-682 [55]; Australian Securities and Investments Commission v Adler (No 1) (2001) 20 ACLC 222 at 225-226 [19]; TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333 at 359-360 [145]-[147]; Adler v Australian Securities and Investments Commission (2003) 179 FLR 1 at 136-138 [624]-[632]; Australian Securities and Investments Commission v Vines (2003) 48 ACSR 291 at 300-301 [35]-[36]; James v Launceston City Council (2004) 13 Tas R 89 at 93 [10]; Australian Securities and Investments Commission v Rich (2005) 218 ALR 764 at 786-794 [85]-[137]. The respondent relied on Guide Dog Owners' & Friends' Association Inc v Guide Dog Association of New South Wales & ACT150. But it is immaterial. It contains dicta about lay opinion evidence tendered under s 78. It does not deal with expert opinion evidence tendered under s 79. There is conceptually a radical distinction between s 78 and s 79. When witnesses speak, for example, of age, speed, weather or emotional state, while it may be desirable from the point of view of weight for them to indicate whatever identifiable and communicable perceptions of primary fact cause them to reach a conclusion, it is often hard for them to do so. Hence it can be "necessary", within the meaning of s 78 of the Act, that their rolled-up opinions, based on unidentifiable or incommunicable perceptions of primary fact, be received "to obtain an adequate account or understanding of [their] perception of the matter or event." A s 78 opinion often has utility despite not being supported by evidence of the "primary facts". To insist on proof of primary facts would in many instances nullify that utility. Instances where a s 79 opinion unsupported by evidence of the "primary facts" has utility are difficult to imagine and rare. Principle. The respondent, like the Federal Court cases on which he relied, placed determinative significance on what was said by the Commission in ALRC 26151. Section 34 of the Interpretation Act 1987 (NSW) and s 3(3) of the Act152 permit ALRC 26 to be taken into account in interpreting s 79 for the purposes listed in s 34(1). They are: to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision (taking into account 150 (1998) 154 ALR 527 at 531. 151 There are detailed references to or quotations from the passage quoted at [67] above in Quick v Stoland Pty Ltd (1998) 87 FCR 371 at 373-374, Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 at 357 [10] and Neowarra v Western Australia (No 1) (2003) 134 FCR 208 at 215-216 152 Section 3(3) provides: "Without limiting the effect of, and subject to, section 34 of the Interpretation Act 1987, material that may be used in the interpretation of a provision of this Act includes any relevant report of a Law Reform Commission the Commonwealth before the provision was enacted." laid before either House of the Parliament of ALRC 26 was tabled in the Parliament of the Commonwealth on 21 August 1985. its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule …), or to determine the meaning of the provision: if the provision is ambiguous or obscure, or if the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule …) leads to a result that is manifestly absurd or is unreasonable." For what purpose did the courts and the respondent refer to ALRC 26 – to confirm the ordinary meaning of s 79, or to determine the meaning of s 79 in view of its ambiguity or obscurity, or to determine its true meaning in view of the manifest absurdity or unreasonableness of the ordinary meaning? The cases relied on by the respondent do not say. Nor did the respondent. The ordinary meaning of s 79, taking into account its language, its context in the Act (including ss 55-57), the function of the Act (which is the efficient and rational regulation of trials from an evidentiary point of view), and the unreasonable results which a contrary construction would produce, is that it does not abolish the common law proof of assumption rule. Failure by the tendering party to comply with the proof of assumption rule makes the opinion evidence irrelevant. The court may find the opinion relevant, however, if the evidence already tendered of the primary facts, taken with further evidence to be admitted at a later stage, makes it reasonably open to make a finding that they exist: While the respondent submitted that the Commission was wrong to conclude that there is no proof of assumption rule at common law, he also submitted that it followed from the Commission's decision "to refrain from including a [proof of assumption] rule" in its draft Bill that the legislature had abolished that rule. The conclusion does not follow. The Commission's reasoning has misled both itself and some of its readers. A decision to refrain from including what was thought to be a rule which does not exist at common law does not demonstrate abolition of a rule which does in fact exist at common law. The Commission wrongly thought that there is no proof of assumption rule at common law. On that hypothesis, as the Commission correctly saw, the question was whether it should recommend that the legislature should enact one, and it decided not to make that recommendation. In fact there is a proof of assumption rule at common law, and the question for the Commission thus should have been whether to recommend that it be abolished by legislation. To abolish it by legislation would have called for specific language. The Commission's misapprehension of the common law, and hence of its task, has resulted in a failure to have enacted specific language ensuring that s 79 tenders need not comply with a proof of assumption rule. The respondent asked: "Does s 79 provide for the common law proof of assumption rule?" That was not the correct question. The correct question was: "Does s 79 abolish that rule?" The Act is far from being a complete code. It often deals with complex and important subjects, like expert evidence, in very general words. Sometimes the Act changes the previous law. Sometimes it repeats it. At many points it assumes the continuance of the common law. An example is the common law exception to the hearsay rule permitting experts to rely on the writings of others in the relevant area of expertise as a basis for their opinion153. Although s 79 says nothing about that rule, the Full Federal Court, correctly, did not approach the issue by asking whether s 79 provided for the permissible reliance of experts on other expert works, but simply held that nothing in s 79 has abolished it154. Similarly, s 79 does not in express terms state that experts must articulate the factual assumptions on which their opinions are based. But the vast bulk of authority holds that that principle applies in relation to tenders under s 79. Section 79 presents a significant contrast with s 80. Section 80 reflects the desire of the Commission to abolish what it saw as two unsatisfactory common law rules155. Acting on that desire, it recommended specific language eventually used by Parliament to abolish those rules. The Commission's misconception about the common law led it not to adopt that technique in relation to the proof of assumption rule. Inconvenience of proof of assumption construction? The authorities on which the respondent relied156 adopted the familiar technique which sees it as legitimate to favour one construction of legislation because of the disadvantages of others. Those authorities adopted an argument advanced by the Commission about the unsatisfactoriness of a proof of assumption rule. The argument was that the rule would eliminate much material from sources normally open to 153 See above at [69]. 154 Bodney v Bennell (2008) 167 FCR 84 at 108 [92]-[93]. 155 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 194 [354], 196-197 [359] and 412 [743]. See also Australia, The Law Reform Commission, Evidence, Report No 38, (1987) at 84 [151]. 156 See notes 139 and 140. experts in their professional lives. The Commission relied on a passage in Fauteux J's judgment in the Canadian case of Wilband v The Queen157. He said: "to form an opinion according to recognized normal psychiatric procedures, the psychiatrist must consider all possible sources of information, including second-hand source information, the reliability, accuracy and significance of which are within the recognized scope of his professional activities, skill and training to evaluate. Hence, while ultimately his conclusion may rest, in part, on second-hand source material, it is nonetheless an opinion formed according to recognized normal psychiatric procedures. … The value of a psychiatrist's opinion may be affected to the extent to which it may rest on second-hand source material; but that goes to the weight and not to the receivability in evidence of the opinion, which opinion is no evidence of the truth of the information but evidence of the opinion formed on the basis of that information." The Commission criticised any proof of assumption rule as requiring proof of the "reports of technicians and assistants, consultation with colleagues and reliance upon a host of extrinsic material and information". This "would be an endless and unfruitful task with which to burden the courts."158 Do the Commission's words refer to the sources of the witness's expertise in training and experience, in works of authority and research, in conversations with colleagues, and in all the witness's past dealings with problems similar to that involved in the litigation? If so, the proof of assumption rule does not render that material inadmissible. Do the Commission's words refer to dealings the expert has had with others, or contributions by others to the expert's report, in relation to his or her evidence about the problem involved in the litigation? If so, the proof of assumption rule does not prevent evidence being given, for example, of the calculations performed by the assistants to expert accountant witnesses, even though the assistants did not give evidence. 157 [1967] SCR 14 at 21. This was quoted in Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 198 [363], summarised by it at 417 [750], and quoted by Sundberg J in Neowarra v Western Australia (No 1) (2003) 134 FCR 208 at 216 [18]. 158 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at Do the Commission's words refer to the opinions of fellow experts about the case in issue, or the observations by fellow experts, professional persons who are not experts and other lay witnesses of primary facts to do with the case in issue? If so, it is clear that at common law the evidence is inadmissible159. G J Samuels put the following justification for rejecting: "subsidiary expert opinions [consisting] of reports of other experts, amounting to their unsworn findings or observations, those others not being called in the proceeding. In such cases, there will be no evidence of the truth of the material, nor of the competence of the authors to make the findings. This is a situation which often arises in the Courts where a doctor is asked to express an opinion based in part upon the reports of radiologists, or asked to express a conclusion based upon pathological reports or upon myelograms, ECG's and the like. It would seem that in no case could such material be used as a basis for a further opinion. That is on the assumption of course, that proof of it is not ultimately to be introduced. This would be so although the expert was to give his opinion not solely upon the reports of others but upon that material coupled with his own direct knowledge by examination."160 The Commission did not demonstrate why that was wrong. Its prediction that the proof of assumption rule would burden the courts with an "endless and unfruitful task" came strangely from a body which denied or doubted the existence at common law of the proof of assumption rule, and was therefore disabled from pointing to adverse experience. The rule has not in fact proved excessively burdensome. And it is easier for counsel and for triers of fact to deal with evidence in the open than with shadowy untendered material. Unnecessariness of proof of assumption rule? The other reasons given by the Commission for its proposal to refrain from including a proof of assumption rule in the draft legislation do not cast doubt on the reasonableness of a construction acknowledging its survival. One was put thus161: 159 R v Abadom [1983] 1 WLR 126; [1983] 1 All ER 364. Hence where scientific tests are run by assistants of an expert witness and the expert relies on those tests, the assistants must be called: R v Jackson [1996] 2 Cr App R 420 at 424. 160 "Problems Relating to the Expert Witness in Personal Injury Cases", in Glass (ed), Seminars on Evidence, (1970) 139 at 147. 161 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at "[I]n most cases the important facts on which the opinion is based will be established by other evidence. Parties are under strong tactical pressure to do so." On this reasoning, virtually no rules of evidence would be needed at all. It is reasoning at odds with the slackness and arrogance revealed in modern times in a great many expert reports. Capacity of proof of assumption rule to be insisted on oppressively? Another reason given by the Commission was162: "To place parties in a position where they can insist on proof of all the bases of the opinion, including that which is not contested, would introduce costly, time consuming and cumbersome procedures." What are the "costly, time consuming and cumbersome procedures" that the proof of assumption rule "would introduce"163? It has existed for centuries without any difficulties the Commission was able to point to. The Commission spoke of parties insisting on proof of "all the bases of the opinion, including that which is not contested"164. If part of the basis is not contested, ex hypothesi there is no need for proof of it, at least in civil cases, and a party cannot insist on proof of it. If it is contested in good faith, subject to the court's power to compel admissions, a party can insist on proof of it, and it is not unreasonable that a party should be able to do so. In the Federal Court of Australia it has been said that, if s 79 tenders depended on compliance with a proof of assumption rule, "the smooth running of trials involving expert evidence could be expected to be interrupted by the need to explore in detail, in the context of admissibility, matters more properly considered at the end of the trial in the context of the weight to be attributed to the evidence."165 These have been described as "practical difficulties" which 162 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 198 [363]. See also at 417 [750]. 163 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 198 [363] (emphasis added). 164 Australia, The Law Reform Commission, Evidence, Report No 26, (1985) vol 1 at 165 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 at 359 [16] per Branson J. "should not be underestimated."166 Those complaints overlook a key distinction. It is a distinction between the need for the party tendering an expert opinion to establish that the other evidence (tendered or yet to be tendered) taken at its highest is capable of supporting the expert's factual assumptions, on the one hand, and, on the other hand, the need for the tendering party to persuade the trier of fact to accept that the evidence tendered to support the factual assumptions actually does support them. And it is necessary to set against any practical difficulties caused by the proof of assumption rule a competing consideration. That is whether the reception of evidence which turns out to be useless because the assumptions on which it rests are unproven does not create countervailing difficulties – costs burdens, unduly long trials, the risk of misleading the trier of fact, and unnecessary appeals. Sufficiency of discretionary power of exclusion? The Commission argued that, while a proof of assumption rule would have advantages, any corresponding disadvantages which might flow from its absence could be overcome by a discretionary power of exclusion (now to be found in s 135). This technique eschews the primary technique of a rule of strict inadmissibility, and instead falls back on a weaker device. Expert evidence is expensive. For defendants in particular, it is necessary to know with reasonable certainty before the trial begins whether the expert evidence tendered by the moving party is admissible. If it is, it may be necessary to incur the expense of meeting it. If it is not, that expense can be avoided. To make the criterion of admissibility turn not on the satisfaction of a rule but on the invocation of a discretion is to abandon the search for reasonable predictability. Reliance on discretionary powers of exclusion to seek to secure the "advantages" of a proof of assumption rule which s 79 putatively did not introduce is inefficient. Abolition of proof of assumption rule removes a safeguard against useless expert evidence. To admit evidence of the primary facts that is of weak probative value is one thing. To admit expert evidence that is of weak probative value because the expert's assumptions about the primary facts are not supported by evidence capable of establishing those primary facts is another. Whether evidence of primary facts will in fact be accepted is often not a question that can be answered at the moment of tender. Usually it can only be answered after it has been considered in relation to all the other material evidence of primary facts. On the other hand, whether evidence of primary facts, taken at its highest, is capable of corresponding with the expert's assumptions is a question which can be answered at the moment of tender. An expert witness's high qualifications and impeccable intellectual processes will produce only useless evidence unless there is a link between the opinion and a version of the primary facts made 166 Australian Retailers Association v Reserve Bank of Australia (2005) 148 FCR 446 at 564 [451] per Weinberg J. possible by the evidence. A proof of assumption rule is a significant safeguard against the dangerous consequences of experts giving opinions which fail to mesh with the concrete factual controversies before the court. Procedural advantages of a proof of assumption rule. A construction of s 79 which does not require establishment at the time of tender that there either has been, or will be, evidence admitted capable of proving the assumed facts permits more expert opinion evidence to be received. It permits postponement of the difficulties by seeking to solve them as questions of weight at a later time – even as late as the end of the trial167. But increasing the amount of this type of evidence is not necessarily valuable. It may be unfair to the opposing party. It is indecisive. Its indecisiveness inflicts uncertainties on the parties. The additional evidence received may have a cloud over it for the rest of the trial. In contrast, a proof of assumption rule diminishes the risk of clouds. It encourages early and decisive rulings. Early and decisive rulings are important, both for the party opposing tender and for the tendering party. likely to have. From the point of view of the party opposing tender, it is vitally important to know what evidence is or is not in, and how much utility expert opinion That knowledge affects decisions about evidence cross-examining the witnesses called by the tendering party; decisions by defendants whether or not to submit that there is no case to answer; decisions whether or not to call particular categories of evidence; and, if rulings are delayed until after the close of the trial, decisions about what is to be said in address. A practice of deciding whether a proof of assumption rule has been complied with at the time when expert opinion evidence is tendered avoids a dilemma for cross-examiners. One horn of the dilemma is that to cross-examine a witness about expert evidence which may later be rejected or treated as useless carries the risk of giving it a foothold in the record which it lacked at the time of the tender. The other horn of the dilemma is that, if the opposing party avoids that danger by not cross-examining on the expert evidence, there is a risk that it will be accepted despite its feebleness. It is a dilemma which cross-examiners should not have to face. From the point of view of the tendering party, it is desirable that the admissibility of expert opinion evidence tendered by that party be clear by the moment when the case for that party closes. It is undesirable that expert opinion evidence admitted in that party's case should later be held – perhaps as late as the time of judgment – to be subject to such doubts about its weight that it lacks utility. It is undesirable that its admissibility be in suspense until a time after the 167 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 at 358 [14]. See also at 357 [9], 358-359 [15]-[16] and 379 [87]. tendering party's case has closed. If the admissibility of expert opinion evidence which is tendered and conditionally admitted is not finally ruled on until after the case for the tendering party is closed, and the evidence is then rejected, or its weight has become so questionable that it is useless, the tendering party may have lost an opportunity to repair the position before its case closed, either by calling further witnesses or tendering further documents, or by recalling witnesses who had already been in the box. The capacity of tendering parties who are the prosecution or the plaintiff to reopen their cases rests on a discretion in the court which may not be favourably exercised; their capacity to tender evidence in reply is constricted by fairly strict rules, particularly in criminal cases. Jury trials. There are yet further difficulties in relation to jury trials. If evidence is rejected when tendered, the jurors are not confused by it, for they will ordinarily be absent during the debate about the tender: s 189(4) of the Act. If circumstances change and evidence once rejected becomes admissible, it can be re-tendered successfully. Again there is no risk of jury confusion. However, considerable confusion can flow where, although opinion evidence is admitted conditionally, later it becomes apparent that the condition is not satisfied. The evidence must be removed from the record, otherwise there would be no The same difference between conditional and unconditional admission. problems arise where opinion evidence is admitted, not on any formal condition, but simply in the expectation that at some time after the tender of the opinion evidence, witnesses will be called to establish the factual assumptions on which the opinion was pronounced, but that expectation is disappointed. In either event the jury will have heard evidence which is inadmissible. Should it be struck out? Should it be withdrawn from the jury? Should the jury be directed that the issue to which the expert's evidence was directed no longer arises? Should the jury be told not to consider the expert's evidence? Should the jury be told to disregard the expert's evidence on the ground that the factual basis has not been proved168? All these courses are possible. Each course is less attractive than a regime having a proof of assumption rule and a practice of rejecting the tender until it has been satisfied. And what is to be done with any evidence that was called in relation to that conditionally admitted but inadmissible evidence, whether it was elicited by the cross-examination of the party opposing tender or tendered by that party in its own case? That problem is reduced if decisive rulings about compliance with a proof of assumption rule are made. 168 See Wigmore, Evidence in Trials at Common Law, Tillers rev (1983), vol 1 at 702-731 [14]-[14.1] and 847-855 [19]. Conclusion. A construction of s 79 which holds that there is no proof of assumption rule in relation to s 79 tenders is difficult to reconcile with the practical exigencies pursuant to which parties conduct their cases. It is necessary for trials to be conducted in a businesslike and efficient way. That is a matter of context pointing to the view that there is a proof of assumption rule with which those tendering expert opinion evidence must comply by reason of ss 55, 56 and 79 read against the background of the common law. Section 79 and the statement of reasoning rule In relation to s 79 tenders, need the expert's reasoning be disclosed? The appellant submitted that it does, and stressed it as the crucial thing adverse to admissibility in this case. In contrast, the respondent directed rather less attention to this rule than to the first two. Authority. There is ample authority supporting the view that it is not enough for evidence tendered under s 79 merely to state the expert's qualifications in a field of expertise and the conclusion. It is necessary to avoid the insidious risk that the trier of fact will simply accept the opinion without careful evaluation of the steps by which it was reached, and hence the evidence must state the criteria necessary to enable the trier of fact to evaluate that the expert's conclusions are valid169. The evidence must reveal the expert's reasoning – how the expert used expertise to reach the opinion stated170. It is not enough for evidence tendered under s 79 merely to state the expert's qualifications in a field of expertise and the conclusion. Admissibility does not depend on the reasoning being accepted as correct; that is a matter for consideration at the end of the trial. But admissibility does depend on the reasoning being stated. 169 Hannes v Director of Public Prosecutions (Cth) (No 2) (2006) 205 FLR 217 at 289 170 Ocean Marine Mutual Insurance Association (Europe) OV v Jetopay Pty Ltd (2000) 120 FCR 146 at 151 [23]; Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 123 at [13]; Harrington-Smith v Western Australia (No 2) (2003) 130 FCR 424 at 428 [21]; James v Launceston City Council (2004) 13 Tas R 89 at 93 [10]; Australian Securities and Investments Commission v Rich (2005) 190 FLR 242 at 314-316 [306]-[312]; Hevi Lift (PNG) Ltd v Etherington (2005) 2 DDCR 271 at 294 [84]; R v Tang (2006) 65 NSWLR 681 at 715 [153]-[154]; Rylands v The Queen (2008) 184 A Crim R 534 at 547-548 [84]; Nicola v Ideal Image Development Corporation Inc (2009) 261 ALR 1 at 8-9 [17]-[18]; Noza Holdings Pty Ltd v Commissioner of Taxation (2010) 273 ALR 621 at 625 [10] and 628 [23]. The Court of Appeal in this case did not deny the requirement: Dasreef Pty Ltd v Hawchar [2010] NSWCA 154 at [39]-[44]. Principle. In principle, that line of authority is correct. There is nothing in s 79 which suggests that the corresponding common law rule has been abolished. And the language of s 79 positively supports its continuance: without a statement of the expert's reasoning it is not possible to say whether the opinion is wholly or substantially based on the specialist knowledge claimed. The interdependence of the controverted requirements Although the respondent denied that the three requirements existed in relation to s 79 tenders, his submission was put as a single submission accepting that, if they existed, they comprised an interdependent and integrated regime. That was a negative perception, but a powerful one. Sir Owen Dixon, speaking extrajudicially, drew a distinction between an "intuitive judgment", which might be valuable in diagnosis and treatment, and "reasoned explanation" for it when its conclusions were controverted, as they usually will be in adversarial litigation171. The distinction is important. A reasoned explanation is vital for both a trial judge who has to write a judgment turning on the clash between competing opinions and a jury which has to employ reason in dealing with that clash. The contents of a reasoned explanation will depend on applying the specialised knowledge of a witness to the circumstances of the case. It will not be possible to appreciate the application of the specialised knowledge to the circumstances of the case without knowing what assumptions are being made by the witness about the circumstances of the case, most or all of which the witness will often not personally be able to prove. A reasoned explanation of the application of the specialised knowledge to the circumstances of the case will be useless unless the assumed facts involved in that reasoning are facts which, if the evidence is accepted, are capable of being proved by it. In short, the utility of receiving expert opinions rests in what the trier of fact can make of them. If the assumed facts are not stated, no reasoning process can be stated and the opinion will lack utility; if there is no evidence, called or to be called, capable of supporting the assumed facts, no reasoning process, even if stated, will have utility; and even if there are facts both assumed and capable of being supported by the evidence, they will lack utility if no reasoning process is stated. In each instance, a lack of utility results in irrelevance and inadmissibility. In view of the close interrelationships between the three common law requirements it would be strange if the first and third continued in relation to s 79 tenders, as is almost universally agreed, but not the second. 171 "Science and Judicial Proceedings", in Jesting Pilate, (1965) 11 at 18. The evidence was inadmissible The trial judge did not rule on the appellant's objection to admissibility before the end of the respondent's case. Indeed he never explicitly ruled on it at any stage, though his detailed discussion of and reliance on the particular witness's evidence indicated an implicit overruling of the objection. The trial judge erred in not ruling on the objection at the end of the voir dire, or, at the latest, at the end of the respondent's case. Putting that procedural error on one side, was the trial judge correct to overrule the objection? The witness had some training, study or experience which led him to have some specialised knowledge. He did not, however, explain what elements of his training, study or experience led him to possess specialised knowledge of a kind which enabled him to reach the conclusion that a cloud of silica dust liberated when cutting or grinding stone contained 200mg/m3 of respirable silica, or even as much as 1g/m3. He gave evidence of only one casual observation of an angle grinder in operation. He gave no evidence of ever having measured respirable silica dust. He gave no evidence of having measured dust concentrations, or the respirable fractions of those concentrations, arising from the type of work the respondent was doing. He did not explain how he had reasoned from his specialised knowledge, on the basis of lay descriptions of how the respondent worked and photographic records of how that type of work was done, to his estimate of the dust concentrations inhaled by the respondent. Accordingly the evidence was inadmissible. The "specialist" court The trial judge erred in relying on his experience as a "specialist tribunal" in other cases in order to conclude that silicosis is usually caused by very high levels of silica exposure. For one thing, the trial judge did not notify the parties in advance of his intention to rely on that experience even if it were otherwise open for him to do so172. This failure was a course which the respondent conceded in this Court was questionable. Further, it was not open to the trial judge to rely on that experience because the Dust Diseases Tribunal Act 1989 (NSW) did not permit him to take it into account. His experience was not "[h]istorical evidence and general 172 See, in another but related context, Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 511 [165]; [2002] HCA 9. medical evidence" (emphasis added) within the meaning of s 25(3) of that legislation. No "issue of a general nature" which had been the subject of an earlier "determination" was identified within the meaning of s 25B(1A). No consideration took place of the factors listed in s 25B(2) which are relevant to leave being granted to re-litigate or re-argue issues of a general nature determined in proceedings by the Tribunal pursuant to s 25B(1). Rule 9(1) of the Dust Diseases Tribunal Rules (NSW) requires a party intending to rely on a s 25B determination to give notice of that intention. No party gave notice. Rule 9(2) permits the Tribunal to rely on a s 25B determination on its own motion, but this did not permit the trial judge to sidestep the limits in, and safeguards surrounding, s 25B by relying on his own experience. The factual conclusion to which the trial judge's experience led him was not sufficiently notorious to permit the trial judge to take judicial notice of it pursuant to s 25B(4). The trial judge relied on JLT Scaffolding International Pty Ltd (in liq) v Silva173 to justify the course he took. The case does not permit that course. Kirby P said that a generalist appellate court like the Court of Appeal of the Supreme Court of New South Wales ought to exercise "a degree of care" in substituting its opinion on questions of medical causation and the aetiology of incapacity for that of a specialist tribunal like the Compensation Court of New South Wales174. That caveat is entirely distinct from what the trial judge did and does not justify it. In upholding the validity of the trial judge's approach, the Court of Appeal in this case relied, apart from the JLT case and Strinic v Singh175, which did no more than quote from the JLT case, on ICI Australia Operations Pty Ltd v WorkCover Authority of New South Wales176. That case does not support the trial judge's approach. The trial judge inferred from his experience that silicosis is usually caused by very high levels of silica exposure, and inferred from the fact that the respondent has silicosis, that the levels of silica exposure in his case were very high. That is, the trial judge relied on his experience to find that there had been a specific breach of duty, and that it had caused the respondent's condition. That is not the process which the Court of Appeal approved in the ICI case. The Court of Appeal in that case was looking to the use of experience in assessing what the ordinary risks of particular employment were – "the potential incidents 173 Unreported, New South Wales Court of Appeal, 30 March 1994 (Kirby P, Mahoney and Priestley JJA). 175 (2009) 74 NSWLR 419 at 430 [58]. 176 (2004) 60 NSWLR 18 at 62-65 [216]-[234]. of the worker's employment, not to its actual effect."177 The Court of Appeal was not approving the use of experience to decide whether there had been a specific breach of duty and what its causative effect in the particular case was. The Court of Appeal in the ICI case started with what Jordan CJ said in Tame v Commonwealth Collieries Pty Ltd178 in relation to the capacity of the Workers' Compensation Commission to take into account its general knowledge of silicosis to conclude "that the conditions of employment did not expose the worker to the ordinary risks of such employment but that the general evidence showed that they left him exposed to some risk of inhaling silica dust." The Court of Appeal then extended Jordan CJ's statement from the Workers' Compensation Commission to the Dust Diseases Tribunal. Similarly, in GIO General Ltd v ABB Installation & Service Pty Ltd179, a decision of the Court of Appeal relied on in the ICI case, the question was not one of causation in fact, but a statutory question about whether a worker had been exposed to the risk of contracting mesothelioma by working in an atmosphere in which asbestos fibres were actually present180. The appellant submitted: that in deciding "it is not necessary in the present case to decide whether [the Tame case] the former Workers' Compensation was correct Commission could rely upon its earlier experience in determining a question of the capacity of certain working conditions to give rise to the condition of silicosis. Nor is it necessary to decide whether [the ICI case] was correct in extending this line of authority to the Dust Diseases Tribunal in spite of the statutory differences between the Tribunal and the former Commission. It is sufficient to say that neither decision provides any support to the idea that a specific issue of breach of duty could be decided in such a way in the present case." That submission is correct. It follows that the authorities relied on by the Court of Appeal did not justify what the trial judge did. Whether they, and the authorities referred to in them, are correct need not be decided in this appeal, since neither party argued that they were not. 177 ICI Australia Operations Pty Ltd v WorkCover Authority of New South Wales (2004) 60 NSWLR 18 at 58 [190]; see also at 63 [221] and 64 [232]. 178 (1947) 47 SR (NSW) 269 at 272. 179 (2000) 19 NSWCCR 720. 180 (2000) 19 NSWCCR 720 at 724 [11], 730-731 [34] and 732 [38]. The Court of Appeal supported the trial judge by contending that he was saying no more than that his experience helped him to understand the evidence181. That contention was not defended by the respondent in this Court and is not sustainable as a matter of construction. Orders The appellant contended that if its arguments had the measure of success they have enjoyed to the extent set out above, the matter should be remitted to the Court of Appeal. The respondent contended that the appeal should be dismissed because the errors of the trial judge were harmless in the sense that the trial judge's conclusion could be supported for other reasons given by him. The reasons alone, however, are not clear enough to show the correctness of that course. That course might be correct in the light of the evidence that underlay some of the trial judge's reasons. However, this Court was not taken to the underlying evidence in sufficient detail to make it easy confidently to decide the issue: indeed it was taken to virtually none of that evidence. Accordingly the matter should be remitted to the Court of Appeal. 181 Dasreef Pty Ltd v Hawchar [2010] NSWCA 154 at [53]. |
HIGH COURT OF AUSTRALIA RHIANNON GRAY BY HER TUTOR KATHLEEN APPELLANT AND RESPONDENT Gray v Richards [2014] HCA 40 15 October 2014 ORDER Appeal allowed in part. Vary order 2 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 2 December 2013 by replacing the sum of $11,424,000 with the sum of $12,034,000. The respondent pay interest to the appellant on the sum of $539,000 at the rate prescribed by the Uniform Civil Procedure Rules 2005 (NSW) from 16 December 2011. The parties are to file written submissions within 14 days from the date of these orders in relation to costs both in this Court and in the courts below, such submissions to be limited to five pages. On appeal from the Supreme Court of New South Wales Representation A S Morrison SC with I J McGillicuddy for the appellant (instructed by Beilby Poulden Costello) P J Deakin QC with B A P Kelleher and K A James for the respondent (instructed by TL Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Gray v Richards Damages – Measure of damages in actions for tort – Appellant suffered brain damage as a result of respondent's negligence – Appellant incapable of managing own financial affairs – Administrator appointed to manage appellant's estate – Where requirement for management of funds arose as a direct result of respondent's negligence – Where administrator charged fees on all funds under management – Whether appellant entitled to recover costs associated with management of damages awarded for purpose of managing funds under management – Whether appellant entitled to recover costs associated with managing predicted future income of managed fund. Words and phrases – "damages", "discount rate", "fund management". Civil Procedure Act 2005 (NSW), ss 76, 77, 79. Motor Accidents Compensation Act 1999 (NSW), s 127. NSW Trustee and Guardian Act 2009 (NSW), s 41. FRENCH CJ, HAYNE, BELL, GAGELER AND KEANE JJ. In Todorovic v Waller1, Gibbs CJ and Wilson J summarised the principles which regulate the assessment of damages for personal injuries as follows: "In the first place, a plaintiff who has been injured by the negligence of the defendant should be awarded such a sum of money as will, as nearly as possible, put him in the same position as if he had not sustained the injuries. Secondly, damages for one cause of action must be recovered once and forever, and (in the absence of any statutory exception) must be awarded as a lump sum; the court cannot order a defendant to make periodic payments to the plaintiff. Thirdly, the court has no concern with the manner in which the plaintiff uses the sum awarded to him; the plaintiff is free to do what he likes with it. Fourthly, the burden lies on the plaintiff to prove the injury or loss for which he seeks damages." Generally speaking, the third of these principles operates so that a plaintiff does not recover damages for costs he or she might incur in managing a lump sum awarded by way of damages. That is because such costs are not regarded as a loss resulting from the plaintiff's injury. In Nominal Defendant v Gardikiotis2, Brennan CJ, Dawson, Toohey and Gaudron JJ said that: "it is contrary to common sense to speak of the accident causing a need for assistance in managing the fund constituted by [the] verdict moneys in circumstances where [the plaintiff's] intellectual abilities are not in any way impaired." To similar effect, McHugh J said3 that damages are not recoverable where: "the plaintiff seeks damages, not for expense necessarily incurred as the result of a disability caused by the defendant's negligence, but for an expense arising merely from the size of an award of damages and the exercise of a choice by the plaintiff as to how to invest those damages. The expense of exercising that choice is not the consequence of the plaintiff's injury." (1981) 150 CLR 402 at 412; [1981] HCA 72. (1996) 186 CLR 49 at 52; [1996] HCA 53. 3 Nominal Defendant v Gardikiotis (1996) 186 CLR 49 at 55. Hayne Bell The decisions of this Court in Nominal Defendant v Gardikiotis4 and Willett v Futcher5 refined this aspect of the operation of the third principle in Todorovic v Waller so that, in a case where a defendant's negligence has so impaired the plaintiff's intellectual capacity as to put the plaintiff in need of assistance in managing the lump sum awarded as damages, expense associated with obtaining that assistance is a compensable consequence of the plaintiff's injury. In such a case, "the liability for the [management expenses] is a loss flowing directly from the wrong and is recoverable as damages caused by the wrong"6; and, in accordance with the first and second of the principles stated in Todorovic v Waller, the inclusion of such a component in the lump sum award ensures that the plaintiff receives full restitution for the harm he or she has sustained. In this appeal, two questions arise out of this refinement of the operation of the third principle stated in Todorovic v Waller. The first question is whether an incapacitated plaintiff is entitled to recover costs associated with managing that component of damages which has been awarded to meet the cost of managing the lump sum recovered by way of damages. The second question is whether an incapacitated plaintiff is entitled to recover costs associated with managing the predicted future income of the managed fund. Both these questions were answered in the negative by the Court of Appeal. For the reasons which follow, the Court of Appeal erred in its answer to the first question, but was correct in its answer to the second question. Background The appellant was born on 31 August 1992. On 22 August 2003, she sustained a traumatic brain injury when a motor vehicle driven by the respondent collided with a motor vehicle in which she was a passenger. As a result of her injury, she has been left with a significant intellectual impairment and requires constant care. She has no prospects of future remunerative employment. (1996) 186 CLR 49 at 52, 54, 67. (2005) 221 CLR 627 at 643 [51]; [2005] HCA 47. 6 Campbell v Nangle (1985) 40 SASR 161 at 192, approved in Nominal Defendant v Gardikiotis (1996) 186 CLR 49 at 67. Hayne Bell On 19 July 2006, the appellant commenced proceedings (through her mother as tutor) in the District Court of New South Wales claiming that the respondent was liable in negligence for her loss. On 3 August 2011, those proceedings were compromised on terms which obliged the respondent to pay the appellant $10 million ("the compromise monies"), plus an amount of damages, to be assessed at a later date, to cover expenses associated with managing the compromise monies ("the fund management damages")7. Section 76 of the Civil Procedure Act 2005 (NSW) ("the CPA") requires that the compromise of proceedings involving a person under a legal incapacity must be approved by a court in order to be effective. The terms of the compromise were approved by the Supreme Court of New South Wales (Hoeben J)8. In that regard, the respondent conceded9 that his negligence had rendered incapable of managing her own affairs and acknowledged10 that the compromise monies and the fund management damages would, in due course, be paid to a fund manager in accordance with s 41 of the NSW Trustee and Guardian Act 2009 (NSW) ("the TGA") and ss 77 and 79 of the CPA. the appellant Although it is necessary, for the purposes of these reasons, to distinguish between the compromise monies and the fund management damages, that distinction is possible in this case only because the parties settled only part of their litigation. They agreed on the amount to be allowed for all heads of damages except one: the amount to be allowed because, by his negligence, the respondent had rendered the appellant unable ever to manage her own financial affairs. The parties agreed to leave that latter amount for judicial determination. It would be wrong, in these circumstances, to treat the compromise monies as if that amount was the whole of the damages which should be allowed to the appellant on account of the respondent's negligence. The compromise amount was not, and is not to be treated as if it were, the amount in which a verdict or judgment would have been entered for the appellant. 7 Gray v Richards (2011) 59 MVR 85 at 86 [2]. 8 Gray v Richards (2011) 59 MVR 85 at 86 [3]. 9 Gray v Richards (2011) 59 MVR 85 at 86 [5]. 10 Gray v Richards (2011) 59 MVR 85 at 86 [6]. Hayne Bell On 2 September 2011, the Supreme Court of New South Wales (White J) made orders, pursuant to s 41 of the TGA11, declaring the appellant incapable of managing her own affairs and appointing The Trust Company Limited ("the Trust Company"), rather than the NSW Trustee and Guardian ("the NSW Trustee"), as manager of her estate. White J also made an order, pursuant to s 77 of the CPA12, that the compromise monies, together with any fund management 11 Section 41 of the TGA provides, relevantly: If the Supreme Court is satisfied that a person is incapable of managing his or her affairs, the Court may: declare that the person is incapable of managing his or her affairs and order that the estate of the person be subject to management under this Act, and by order appoint a suitable person as manager of the estate of the person or commit the management of the estate of the person to the NSW Trustee." 12 Section 77 of the CPA provides, relevantly: This section applies to money recovered in any proceedings on behalf of ... a person under legal incapacity, pursuant to a compromise, settlement, judgment or order in any proceedings. ... the court may order that the whole or any part of such money not be paid into court but be paid instead to such person as the court may direct, including: if the person is a minor, to the NSW Trustee and Guardian, if the person is a protected person, to the manager of the protected person's estate." Hayne Bell damages, be paid to the Trust Company in its capacity as manager of the appellant's estate. The proceedings before the primary judge On 8 August 2011, McCallum J began the first of two hearings for the purpose of determining the quantum of the appellant's entitlement to fund management damages. Over the course of those hearings, four issues arose for determination by her Honour; only the two questions referred to above remain alive in this Court. As to the first of these questions, the respondent accepted that the component of the award for fund management damages would itself fall to be managed as part of the fund and would therefore attract its own management charges. Nevertheless, he contended that no allowance should be made for that. The first question was referred to below and in this Court as the "fund management on fund management" issue. That description was no doubt a convenient shorthand, but it tends to obscure the point now made by the appellant, namely that this expense is not an expense separate and distinct from other expenses covered by fund management damages, but is integral to the expense of fund management. In order to avoid this distraction, it is proposed to refer to this issue as "the fund management damages issue". The second question was whether the appellant was entitled to a component of the fund management damages to cover, not only the cost of managing the funds under management, but also the cost of managing the income predicted to be earned on, and reinvested as part of, the funds under management. This issue was referred to as the "fund management on fund income" issue. Decision of the primary judge The primary judge resolved both of these issues in favour of the appellant. In relation to the fund management damages issue, several matters were not in dispute. First, it was common ground that the Trust Company would charge the appellant fees for managing the fund, and that those fees would be calculated as a percentage of the total funds under management, ie, as a percentage of the compromise monies plus the fund management damages13. 13 Gray v Richards (2011) 59 MVR 85 at 87 [10]. Hayne Bell The appellant's tutor negotiated with the Trust Company in relation to the fund management charges it required in order to accept appointment as fund manager. Ultimately, the Trust Company and the appellant's tutor agreed upon fund management expenses made up of an ongoing Estate Management Fee and Investment Platform Fee of 0.550 per cent per annum calculated on the total of the funds under management. No issue arose as to whether this fee arrangement was contrary to any statutory provision regulating such fees. Secondly, it was common ground that the amount that would be paid to the Trust Company in respect of the compromise monies was only $9,929,000, being the settlement of $10 million less payment of a Centrelink charge, a Medicare charge and an amount already paid by the respondent to the appellant to provide for her care. Accordingly, the starting point for the calculation of fund management damages was agreed to be $9,929,00014. Finally, it was agreed for the purposes of calculating the fund management damages that the duration of the fund would be 66 or 67 years from the date of trial, representing the appellant's assumed life expectancy15. The primary judge explained16 the logic of the appellant's claim by reference to the following illustration: "[I]f the cost of managing a damages award of $10m over the relevant term were, for example, $2m (20% of the corpus), the total verdict would be $12m, to be received today and managed over time. A plaintiff under incapacity would have no better ability to manage the additional $2m than the initial $10m. It follows that the award of a component for fund management would itself give rise to future management expenses in the order of $400,000 (assuming fees charged on that amount at the same rate of 20%). The additional $400,000 in turn would cost a further $80,000 to manage, which would cost a further $16,000, and so on." 14 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,854 [10]; cf Gray v Richards (2011) 59 MVR 85 at 87 [11]. Before the primary judge the starting point was $9,934,000, but that figure had been reduced by agreement by the time the matter reached the Court of Appeal. 15 Gray v Richards (2011) 59 MVR 85 at 95 [53]. 16 Gray v Richards (2011) 59 MVR 85 at 88 [19]. Hayne Bell Her Honour accepted17 the logic of the appellant's claim formulated in this way on the basis that the expert evidence of an actuary resolved the theoretical problem of multiple iterations referred to by her Honour18. The primary judge upheld this aspect of the appellant's claim, reasoning19 that s 79 of the CPA, which provides relevantly that "money paid ... to the manager of a protected person's estate is to be held and applied by the manager as part of that estate", meant that the fund management component of the appellant's damages could not be seen as being "held by the manager beneficially on account of his future fees." It should be noted that the issue on which the parties were joined before the primary judge in respect of the quantum of fund management expenses was whether fund management expenses should be awarded at the rates charged by a private trustee, such as the Trust Company, or at the rates charged by the NSW Trustee20. In resolving that issue in favour of the appellant, the primary judge accepted the evidence of the appellant's tutor as to her preference for a manager other than the NSW Trustee, and found that "her decision in that respect was entirely reasonable."21 The respondent did not seek to challenge that finding of fact in the Court of Appeal or in this Court. This appeal, therefore, has proceeded on the unchallenged assumptions that a manager other than the NSW Trustee should have been appointed to manage the appellant's damages, and that the amount to be allowed for the fund management component of the appellant's damages should be assessed by reference to the fees charged by that manager. There is, therefore, no occasion to consider the validity of either of those assumptions, whether in this case or more generally. It is also to be noted that, before the primary judge, no evidence was adduced, and indeed no suggestion made, that another private fund manager could have been engaged at a lower rate of charge, or would have charged for its services otherwise than as a percentage of the total funds under management. 17 Gray v Richards (2011) 59 MVR 85 at 88 [18]. 18 Gray v Richards (2011) 59 MVR 85 at 90 [31]. 19 Gray v Richards (2011) 59 MVR 85 at 89 [24]. 20 Gray v Richards (No 2) [2011] NSWSC 1502 at [6]. 21 Gray v Richards (No 2) [2011] NSWSC 1502 at [73], [82]. Hayne Bell In relation to the fund management on fund income issue, the primary judge proceeded on the footing that the capacity of the fund to earn income was critical to its adequacy22. Her Honour accepted23 that income derived from the management of the fund and reinvested by the manager would itself become part of the managed fund and, accordingly, would incur its own fund management fees. Her Honour observed24 that: "if income earned by the fund is excluded from the calculation of fund management costs ... there will be a shortfall in the damages allowed on that account and there will be insufficient money to manage the [appellant's] damages." In order to avoid that anticipated shortfall, her Honour held that there should be an allowance for fund management on fund income25. In reaching that conclusion, her Honour regarded it as relevant26 that, pursuant to s 127 of the Motor Accidents Compensation Act 1999 (NSW) ("the MACA"), the discount rate applicable in the present case was five per cent. Section 127 of the MACA provides: "(1) Where an award of damages is to include compensation, assessed as a lump sum, in respect of damages for future economic loss which is referable to: deprivation or impairment of earning capacity, or loss of expectation of financial support, or the value of future services of a domestic nature or services relating to nursing and attendance, or 22 Gray v Richards (2011) 59 MVR 85 at 95 [54]. 23 Gray v Richards (2011) 59 MVR 85 at 95 [54]. 24 Gray v Richards (2011) 59 MVR 85 at 95 [54]. 25 Gray v Richards (2011) 59 MVR 85 at 95 [55]. 26 Gray v Richards (2011) 59 MVR 85 at 94 [48]. Hayne Bell a liability to incur expenditure in the future, the present value of the future economic loss is to be qualified by adopting the prescribed discount rate. The prescribed discount rate is: a discount rate of the percentage prescribed by the regulations, or if no percentage is so prescribed—a discount rate of 5%. Except as provided by this section, nothing in this section affects any other law relating to the discounting of sums awarded as damages." The primary judge observed27 that: "The discount represents the net earning capacity of the fund over time." Apparently on the footing that the discount rate in s 127 of the MACA reflected a statutory assumption as to the actual net earning capacity of the damages awarded to a plaintiff, her Honour held that an award of damages reflecting the cost of managing fund income was necessary to preserve the longevity of the fund28. In the upshot, the primary judge gave judgment for the appellant in the amount of $12,151,000, comprising $10 million in respect of the compromise monies, and $2,151,000 in respect of fund management damages. The parties are agreed that the sum of $656,000 reflects the appellant's success on both issues before this Court, while the sum of $539,000 reflects the appellant's success solely on the fund management damages issue. Decision of the Court of Appeal On 2 December 2013, the Court of Appeal of the New South Wales Supreme Court (Bathurst CJ, Beazley P, McColl, Basten and Meagher JJA) overturned the decision of the primary judge in respect of both issues29. In the 27 Gray v Richards (2011) 59 MVR 85 at 92 [41]. 28 Gray v Richards (2011) 59 MVR 85 at 97 [62]. 29 Richards v Gray (2013) Aust Torts Reports ¶82-153. Hayne Bell result, the appellant's damages in respect of fund management were reduced from It will be necessary to refer in some greater detail to the reasons of the Court of Appeal in due course but it is sufficient here to note that damages for the cost of managing the fund management component of the appellant's award were disallowed by reference to the third principle in Todorovic v Waller30. The component of damages for the cost of managing the fund's income was disallowed on the basis that s 127 of the MACA does not mandate either the maintenance of a five per cent net return over the life of the fund, or the making of necessary adjustments to the quantum of damages awarded to ensure that result. The appellant appealed to this Court pursuant to a grant of special leave by French CJ and Bell J on 16 May 2014. The fund management damages The appellant's principal contention was that the Court of Appeal's decision was a departure from the first principle stated in Todorovic v Waller. In particular, it was said that to disallow the components of damages in question is apt to produce a shortfall in the appellant's estate equal to the cost of the Trust Company having to manage the fund management component of her damages and the fund's income. The shortfall was said to be unavoidable having regard to the requirement in s 79 of the CPA that both fund management damages and fund income must be managed as part of the appellant's estate. The respondent's principal contention in response was that recovery of the costs associated with managing the fund management component of the appellant's damages and the income of the fund was precluded by s 127 of the MACA. It was also said that this outcome was warranted by the third principle in Todorovic v Waller. Bathurst CJ began31 his consideration of this issue by recognising that there is "a certain logic" in the approach of the primary judge. Nevertheless, his Honour applied the third principle in Todorovic v Waller, saying32 that "it does 30 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,875 [145]. 31 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,875 [144]. 32 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,875 [145]. Hayne Bell not seem ... appropriate" to extend the refinement of that principle, upheld in Willett v Futcher33, "to awarding a further amount to cover fees for managing that fund by the multiple iterations proposed." Bathurst CJ gave two broad reasons for that conclusion. First, "[t]he court is required … to provide what is a reasonable amount for the costs of managing the fund."34 The court would fail in that duty if it accepted the appellant's claim because it is: "open to … those representing [the appellant], to choose a fund manager with the approval of the court and to negotiate the terms on which the fund manager will be paid. The court should not … order additional amounts on the assumption that fees would also be paid on the amount set aside for fund management costs or indeed on the basis that in the particular case the chosen manager levies fees in such a way as to require the amount set aside for fund management to itself be managed."35 Basten JA was of a similar opinion, resolving this aspect of the case as "a policy question". His Honour concluded36 that: "[t]he liability of the [respondent] is not necessarily dictated by a particular means of calculating the cost of managing [the appellant's] award. In principle, the [appellant] should reasonably be required to offer the fund manager prepayment of fees by transferring the equivalent of a satellite fund, notionally set aside for that purpose, calculated by reference to the corpus of the main fund." The second reason given by Bathurst CJ for rejecting this aspect of the appellant's claim was that the calculation of the amount to cover the cost of managing fund management was unacceptably uncertain. It involved: "either speculation as to the performance of the fund in any given year, or assumptions as to the rate of dissipation of the fund management award 33 (2005) 221 CLR 627 at 643 [51]. 34 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,875 [146]. 35 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,875-66,876 [146]. 36 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,884 [200]. Hayne Bell which in all probability will bear little relation to reality. The uncertainty of speculation involved is even more apparent when the calculation is done in multiple iterations to produce the ultimate result. … To provide further funds would lead to the [appellant] being over-compensated. It was in this sense that Meagher JA in Rosniak (No 1)[37] used the expression 'double counting' in rejecting a claim of this nature."38 Basten JA did not accept that difficulty of calculation was a sound reason for rejecting the appellant's claim, pointing out39 that "[i]n practice the calculation can readily be undertaken". An unreasonable expense? One strand of the reasoning which informed this aspect of the Court of Appeal's decision was a concern that the arrangement approved by White J was unreasonable. As to this, the appellant contended that the concern of the Court of Appeal that the appellant could or should have negotiated more reasonable terms on which the fund was to be managed was without any evidentiary foundation, and, in any event, should have been (but was not) the subject of a plea by the respondent that the appellant had failed to mitigate her loss. In this Court, the respondent accepted that the appellant was entitled to recover damages for future outgoings, including the cost of managing the fund held for her benefit by the Trust Company; but did not accept that this cost was to be assessed by reference to the whole of the fund held for her. The respondent argued, relying on the fourth principle stated in Todorovic v Waller, that the appellant was required to prove the loss for which she sought damages, and had failed to discharge her burden of proof in this regard. Contrary to the view of Bathurst CJ40, the issue is not whether "[t]he court should … order additional amounts" in respect of fund management damages. The ascertainment of the cost of managing the fund management damages is not an exercise separate and distinct from assessing the present value of fund 37 Government Insurance Office (NSW) v Rosniak (1992) 27 NSWLR 665 at 698. 38 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,876 [147]. 39 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,884 [197]. 40 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,875-66,876 [146]. Hayne Bell management expenses as part of the appellant's future outgoings. The expenses in question are not incurred separately from the cost of fund management; they are an integral part of that cost. In Willett v Futcher, in accordance with the first of the Todorovic v Waller principles, Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ said41: "An administrator must be appointed. The administrator must invest that fund and act with reasonable diligence. It follows that the administrator will incur expenses in performing those tasks. The incurring of the expenses is a direct result of the defendant's negligence. The damages to be awarded are to be calculated as the amount that will place the plaintiff, so far as possible, in the position he or she would have been in had the tort not been committed." In addition, the question of reasonableness of fund management expenses is not at large as a matter of judicial discretion. The court does not make an open-ended judgment about the reasonableness of the fund management expense component of damages. The court is not concerned to regulate the market for the provision of fund management services. The court's concern is to ensure that the plaintiff's actual loss is compensated. There is, for example, no scope for the court to say that the amount is simply "too much" as a matter of intuition or impression if the plaintiff has no practical ability to bargain for a lesser charge. The real question is whether the management arrangement with the Trust Company was so unreasonable in its terms that it could not be regarded, as a matter of common sense, as a consequence of the appellant's injury. If the fund management expense component of an award reflects actual market conditions, and is not contrary to any statutory control, then it may be seen, as a matter of common sense, as an expense consequent upon the tortfeasor's wrong and, therefore, compensable. One can understand the concern which weighed with Bathurst CJ and Basten JA that, notwithstanding the requirement of s 79 of the CPA that the fund be held by the manager and applied as part of the protected estate, a reasonable accommodation must be made, as between the plaintiff and the manager, in relation to the management of the fund. It may be that where a reasonable arrangement is not made, the expense in question can fairly be seen, not as a loss consequential on the plaintiff's injury, but as a loss attributable to an 41 (2005) 221 CLR 627 at 643 [51]. Hayne Bell unreasonable bargain with the manager. But in the present case there was no issue as to whether the appointment of the Trust Company sanctioned by the order of White J was a reasonable response by the appellant (or those representing her) to the need to engage a manager of her estate; and there was no evidence that the Trust Company, in charging its management fees on the whole of the fund, was not acting in accordance with the practice of the market, or that its rates of charge were outside the market. Nor was there any suggestion that the Trust Company's charges were contrary to any statutory provision regulating such fees. The only ground on which the reasonableness of the management fees payable to the Trust Company in the Court of Appeal was the "gross disparity between the amounts charged by [it and the NSW Trustee]." It is noteworthy that the Court of Appeal did not uphold this ground. It is not apparent that it could have done so without also setting aside the primary judge's conclusion42 that: the respondent had challenged "having due regard to the orders made by White J, but also on the strength of the evidence before me, ... the tutor's choice of a private manager was entirely reasonable." As noted above, it was not suggested that the appellant's tutor's preference for the appointment of the Trust Company, rather than the NSW Trustee, to manage the appellant's fund was unreasonable. It may also be noted that the feasibility or reasonableness of the transfer of "the equivalent of a satellite fund" to the manager postulated by Basten JA43 was not litigated by the parties at first instance. As a result, there was no evidence as to whether such a transfer would be feasible in the market for fund management services. The respondent argued that s 127(1)(d) of the MACA supported the conclusion of the Court of Appeal on this issue because it requires an assessment to be made of the present value of the appellant's future outgoings, including that component of fund fund management expenses, separately management expenses which will be incurred because the fund includes fund management damages. That argument must be rejected. from 42 Gray v Richards (No 2) [2011] NSWSC 1502 at [82]. 43 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,884 [200]. Hayne Bell Section 127(1)(d) of the MACA affords no support to the decision of the Court of Appeal on this issue. Section 127(1)(d) recognises a plaintiff's entitlement to compensation for loss which is referable to a liability to incur expenditure in the future. It does not impose a limit upon that entitlement; nor does it contemplate a staged assessment of the present value of future outgoings which a plaintiff is obliged to incur by reason of his or her injuries. Rather, s 127(1)(d) invites an assessment of the present value of all future outgoings based on the evidence which establishes the likely expenditure in the future. The appellant's liability in that regard encompasses the whole of the expenses charged for the management of the appellant's fund pursuant to the appointment of the Trust Company rather than the NSW Trustee. Undue speculation The other strand in the Court of Appeal's reasoning was the concern that the "multiple iterations" proposed by the appellant would lead to unrealistic assessments. It is well settled that "the common law does not permit difficulties of estimating the loss in money to defeat an award of damages" by way of compensation for loss actually suffered44. The concern which weighed with Bathurst CJ45, that the calculation of the cost of managing damages awarded for fund management might theoretically involve multiple iterations, was dispelled for practical purposes by uncontested evidence presented at trial46. There is no element of "double counting" involved here. As noted above, fund management expenses are one component of the loss consequent upon the appellant's injury. 44 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 349; [1994] HCA 4. See also Fink v Fink (1946) 74 CLR 127 at 143; [1946] HCA 54; Todorovic v Waller (1981) 150 CLR 402 at 413. 45 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,876 [147]. 46 Gray v Richards (2011) 59 MVR 85 at 90 [31]. Hayne Bell Fund management on fund income In relation to the fund management on fund income issue, Bathurst CJ held47 that the primary judge had erred in concluding that the discount rate prescribed by s 127 of the MACA expressed a statutory assumption as to the net earnings rate of the damages awarded to the appellant. After reviewing earlier decisions of this Court48 involving the application of the discount rate, his "[T]he discount rate applied in respect of damages awarded is referable to the matters referred to in s 127(1)(a)-(d) of the [MACA] and was designed to take into account the effect of inflation and notional tax on income earned from the fund. Neither the [MACA] nor the cases to which I have referred lend support to the proposition that for all purposes a constant rate of diminution to the fund is to be assumed or that interest will be earned at a constant rate throughout the life of the fund, although these assumptions underpin the calculation of the discount rate." Bathurst CJ concluded50 that the appellant's claim with respect to the fund management on fund income issue should not be allowed. It is sufficient to note the principal reasons51 for that conclusion: "[T]he discount rate assumes a rate of return sufficient to provide the injured plaintiff with fair and just compensation for the claimed loss52. The return is assumed to take into account the costs of earning income which would include any fees payable as a consequence. ... 47 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,867 [103]. 48 Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 145 CLR 625; [1981] HCA 3; Todorovic v Waller (1981) 150 CLR 402; The Commonwealth v Blackwell (1987) 163 CLR 428; [1987] HCA 44. 49 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,869 [112]. 50 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,874 [138]. 51 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,874-66,875 [138]-[139]. 52 Nominal Defendant v Gardikiotis (1996) 186 CLR 49 at 60-61. Hayne Bell Even if the cost of earning the income was not taken into account for the discount rate set under s 127, there seems no basis to make an assumption as to the actual income earned for the purpose of the calculation and the court would inevitably be speculating as to what income would be derived from the fund from time to time." Basten JA agreed with Bathurst CJ that the primary judge had erred in holding that the discount rate prescribed by s 127 of the MACA expressed a statutory assumption about a maintainable net earnings rate53. In this Court, the appellant argued that the Court of Appeal erred in concluding that the potential costs of managing fund income were covered by the discount rate prescribed by s 127 of the MACA. In particular, it was said that Bathurst CJ erred in holding that the discount rate did not represent the net earnings rate of the fund. In that regard, the appellant invoked the observation made by Gibbs CJ and Wilson J in Todorovic v Waller54 which referred to "the assumption … that the income [of the fund] is earned at the discount rate". The appellant's challenge to the reasons of Bathurst CJ and Basten JA on this issue should not be accepted. The discount rate prescribed by s 127 of the MACA does not imply a statutory requirement that the fund should achieve a net future earnings rate of five per cent. Nor does it imply that the award of damages must be supplemented in order to sustain such an income, net of the expenses incurred in achieving it. Section 127 assumes, as does the second of the Todorovic v Waller principles, that the return from the fund takes into account the cost of generating that return. The discount rate does not assume that the fund will produce an annual net income at an equivalent rate or imply that a lump sum award must be adjusted to ensure that result. The discount rate is a conceptual tool deployed for the purpose of arriving at a lump sum reflecting the present value of future losses. In Nominal Defendant v Gardikiotis55, McHugh J explained: 53 Richards v Gray (2013) Aust Torts Reports ¶82-153 at 66,885 [203]-[206]. 54 (1981) 150 CLR 402 at 424. 55 (1996) 186 CLR 49 at 61. Hayne Bell "Use is made of a discount rate to assess the present value of future economic loss and expense because it is perceived to be the conceptual tool best suited to determine what is fair and reasonable compensation for that loss or expense. The discounting exercise is a hypothetical construct and does not attempt to reflect, anticipate or govern the future actions or intentions of the plaintiff. It simply attempts to determine what sum represents the present value of the anticipated losses or expenses of the plaintiff. When that sum is determined, then, subject to any allowance for the contingencies of life, the law will equate it with fair compensation for those losses or expenses, irrespective of what the plaintiff intends to do with that sum." (emphasis in original) The obiter observations by Gibbs CJ and Wilson J in Todorovic v Waller56 cannot sustain a different view. In Todorovic v Waller57, Gibbs CJ and Wilson J joined Stephen, Mason, Murphy, Aickin and Brennan JJ in a statement that: "where the plaintiff's injuries will make it necessary to expend in the future money to provide medical or other services … the present value of the future loss ought to be quantified by adopting a discount rate of 3 per cent in all cases, subject, of course, to any relevant statutory provisions. This rate is intended to make the appropriate allowance for inflation, for future changes in rates of wages generally or of prices, and for tax (either actual or notional) upon income from investment of the sum awarded. No further allowance should be made for these matters." This statement does not suggest that the cost of managing the income generated by the fund to ensure that it maintains a net income at a given rate is a compensable loss. Indeed, that suggestion would seem to be inconsistent with their Honours' comprehensive dismissal of any "further allowance". Further, it is distinctly inconsistent with the second of the Todorovic v Waller principles, which operates on the assumption that the capital and income of the lump sum damages awarded in respect of future economic loss will be exhausted at the end of the period over which that loss is expected to be incurred. And finally, the cost of managing the income generated by the fund is not an integral part of the appellant's loss consequent upon her injury. One could view that cost as an integral part of that loss only if one were to assume that the income of the fund 56 (1981) 150 CLR 402 at 424. 57 (1981) 150 CLR 402 at 409. Hayne Bell will, in fact, be reinvested in the fund and thereby swell the corpus under management. That assumption cannot be made, given that drawings from the fund may exceed its income. Further, that assumption should not be made, given that to do so would be contrary to the third of the Todorovic v Waller principles. the legislature as Section 127 of the MACA does not warrant a different view. Under s 127 the discount rate is now set at five per cent. That prescription reflects a judgment the appropriate discount rate, having regard comprehensively to inflation, changes in wages and prices, and imposts on the income of the fund. Such imposts include the costs of managing that income. Section 127 does not, either expressly or impliedly, invite the making of an assessment of damages calculated to maintain a net income from the fund of five per cent per annum. Conclusion and orders The appellant's challenge to the decision of the Court of Appeal on the first question should be upheld. Her challenge to the decision on the second question should be rejected. The appeal should be allowed in part so that fund management damages recovered by the appellant allow for the cost of managing the fund management component of the appellant's damages. The parties were largely agreed upon the orders to be made in that eventuality. In accordance with that agreement, the orders of the Court should be: Appeal allowed in part. Vary order 2 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 2 December 2013 by replacing the sum of $11,424,000 with the sum of $12,034,000. The respondent pay interest to the appellant on the sum of $539,000 at the rate prescribed by the Uniform Civil Procedure Rules 2005 (NSW) from 16 December 2011. The parties were not agreed as to the orders for costs in this Court or in the courts below. The parties should be given the opportunity to be heard on the question of costs both in this Court and in the courts below. To this end the parties are directed to make written submissions on these questions of costs within 14 days limited to five pages. |
HIGH COURT OF AUSTRALIA THE BOARD OF BENDIGO REGIONAL INSTITUTE OF TECHNICAL AND FURTHER EDUCATION APPELLANT AND GREGORY PAUL BARCLAY & ANOR RESPONDENTS Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32 7 September 2012 ORDER Appeal allowed. Orders 1, 2 and 3 of the orders of the Full Court of the Federal Court of Australia, made on 9 February 2011, be set aside, and in their place, order that the appeal to that Court be dismissed. Any question of the costs of the appeal be dealt with by consent order or by this Court on the papers as indicated in the reasons for judgment. On appeal from the Federal Court of Australia Representation J L Bourke SC with P M O'Grady for the appellant (instructed by Lander & Rogers Lawyers) R C Kenzie QC with M A Irving for the first and second respondents (instructed by Holding Redlich) T M Howe QC with S P Donaghue SC and L E Young intervening on behalf of the Minister for Tertiary Education, Skills, Jobs and Workplace Relations (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Board of Bendigo Regional Institute of Technical and Further Education v Barclay Industrial law (Cth) – General protections – Adverse action – Section 346 of Fair Work Act 2009 (Cth) prohibits employer from taking adverse action against employee because employee "is ... an officer or member of an industrial association" or "engages ... in industrial activity" – Section 361 creates presumption that adverse action taken for prohibited reason unless employer proves otherwise – First respondent was employee of appellant and officer of second respondent – Second respondent was industrial association – First respondent engaged in industrial activity – Chief Executive Officer of appellant took adverse action against first respondent – Chief Executive Officer gave evidence at trial that adverse action taken for innocent reasons and not for prohibited reasons – Trial judge accepted that evidence – Whether adverse action taken for prohibited reason. Words and phrases – "because", "substantial and operative factor". Fair Work Act 2009 (Cth), ss 342, 346, 360, 361. FRENCH CJ AND CRENNAN J. Section 346 of the Fair Work Act 2009 (Cth) ("the Fair Work Act") prohibits an employer from taking adverse action against an employee because that employee is an officer or member of an industrial association, or because that employee engages or proposes to engage in particular kinds of industrial activity. Under s 361 of the Fair Work Act, adverse action taken against an employee will be presumed to be action taken for a prohibited reason unless the employer responsible for taking the adverse action proves otherwise. Similar protections have existed in federal industrial relations legislation in Australia since the enactment of the Conciliation and Arbitration Act 1904 (Cth)1. The issue in the present appeal arises from a decision by the Chief Executive Officer of the Bendigo Regional Institute of Technical and Further Education ("BRIT"), Dr Louise Harvey, to suspend the first respondent, Mr Greg Barclay, from duty on full pay and to request him to show cause why he should not be subject to disciplinary action. The appellant is the statutory authority responsible for the operation of BRIT. Mr Barclay is an employee of BRIT, and is also the President of the BRIT Sub-Branch of the second respondent, the Australian Education Union ("the AEU"). The AEU is registered as an industrial association under the Fair Work (Registered Organisations) Act 2009 (Cth). Following Mr Barclay's suspension, the respondents applied to the Federal Court under s 539 of the Fair Work Act for a declaration that BRIT had contravened s 346 by impermissibly taking adverse action against Mr Barclay because, among other things, he was an officer of the AEU, and he had engaged in particular kinds of industrial activity. Orders were also sought for civil penalties2, compensation3 and interlocutory relief. In the Federal Court, the primary judge (Tracey J) dismissed the respondents' application4. His Honour accepted evidence given by Dr Harvey as to her reasons for suspending Mr Barclay, and was satisfied that she had acted for the reasons which she gave and had not acted for any reason prohibited by the 1 Originally the Commonwealth Conciliation and Arbitration Act 1904 (Cth), renamed the Conciliation and Arbitration Act 1904 (Cth) by the Conciliation and Arbitration Act 1950 (Cth), s 3. 2 Fair Work Act, s 546. 3 Fair Work Act, s 545(2)(b). 4 Barclay v Board of Bendigo Regional Institute of Technical and Further Education Crennan Fair Work Act5. A majority of the Full Court of the Federal Court (Gray and Bromberg JJ; Lander J dissenting) upheld the respondents' appeal from the primary judge's decision and remitted the matter to the primary judge for further consideration6. By special leave, the appellant now appeals to this Court to challenge the interpretation, and application, of the relevant provisions favoured by the majority in the Full Court. The Minister for Tertiary Education, Skills, Jobs and Workplace Relations intervened, by leave, in support of the respondents. The task of a court in a proceeding alleging a contravention of s 346 is to determine, on the balance of probabilities, why the employer took adverse action against the employee, and to ask whether it was for a prohibited reason or reasons which included a prohibited reason. This appeal was concerned with identifying the correct approach to that task. The respondents argued that the relevant provisions of the Fair Work Act require that such a proceeding should not be resolved in favour of a defendant employer unless the evidence in the proceeding objectively establishes that the employer's reason for taking adverse action was dissociated from any reason the respondents' prohibited by s 346. interpretation of the relevant provisions must be rejected and the appeal upheld. the reasons which follow, For Factual background The basic facts are not in contest. In January 2010, staff of BRIT were preparing for a re-accreditation audit to be conducted by the Victorian Registration and Qualifications Authority ("the VRQA"), the statutory authority responsible for the accreditation of providers of vocational education and training in Victoria. BRIT requires accreditation in relation to each of its courses in order to continue to offer those courses and confer relevant qualifications, and to receive funding for that purpose. Auditors from the VRQA were due to attend at BRIT on 16 and 17 February 2010, and staff of BRIT had been preparing documentation for the re-accreditation audit since mid-2009. Mr Barclay's present role as an employee of BRIT is "Team Leader – Teaching Excellence". As part of this role, Mr Barclay is part of a team responsible for ensuring that the courses provided by BRIT are accredited and retain accreditation. Mr Barclay reports to the "Manager – Teaching, Learning 5 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2010) 193 IR 251 at 264-265 [54]. 6 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212. Crennan and Quality", Mr Jamie Eckett. Mr Barclay is also the President of the BRIT Sub-Branch of the AEU. The BRIT Sub-Branch of the AEU consists of all AEU members employed by BRIT. The AEU does not reveal the names of its members to BRIT, although some BRIT employees do publicly identify themselves as AEU members. As part of his role as President of the BRIT Sub-Branch, Mr Barclay is responsible for advising, assisting and representing AEU members employed by BRIT to resolve concerns, issues and disputes through both formal and informal avenues. On four separate occasions between late 2009 and mid-January 2010, members of the AEU employed by BRIT approached Mr Barclay to raise concerns about inaccurate information being included in documentation prepared for the re-accreditation audit. On each occasion, Mr Barclay discussed these concerns with the member outside of his BRIT office. Each of the members indicated to Mr Barclay that they did not want him to take any formal action in relation to their concerns, and did not want him to disclose their name or detailed information about their concerns to BRIT. the issue of In early January 2010, Mr Barclay was present during a telephone conversation between Mr Eckett and another BRIT employee which included a discussion of documentation prepared for the re-accreditation audit. Following this telephone conversation, Mr Barclay and Mr Eckett continued to discuss this issue, and examples of such inaccurate information. At about the same time, in the course of his duties as Team Leader, Mr Barclay became aware of other inaccurate information contained in documentation prepared for the re-accreditation audit. information being inaccurate included On 29 January 2010, in his capacity as President of the BRIT Sub-Branch of the AEU, Mr Barclay sent the following email to all AEU members employed by BRIT: "Subject: AEU – A note of caution Hi all, The flurry of activity across the Institute to prepare for the upcoming reaccreditation audit is getting to the pointy end with the material having been sent off for the auditors to look through prior to the visit in February. It has been reported by several members that they have witnessed or been asked to be part of producing false and fraudulent documents for the audit. It is stating the obvious but, DO NOT AGREE TO BE PART OF ANY ATTEMPT TO CREATE [sic] DOCUMENTATION OR PARTICIPATE IN THESE TYPES OF ACTIVITIES. If you have felt pressured to participate in this kind of FRADULENT FALSE/ Crennan activity please (as have several members to date) contact the AEU and seek their support and advice. Greg Barclay President BRIT AEU Sub-Branch" Copies of this email were seen by senior managers at BRIT, including Mr Eckett. On 1 February 2010, Mr Eckett forwarded a copy of the email to Dr Harvey, accompanied by comments from other managers to the effect that the email had the potential to cause serious damage to BRIT's reputation. Mr Eckett told Dr Harvey that he had discussed the email with Mr Barclay earlier on 1 February 2010, and that Mr Barclay had declined to provide him with the names of the members referred to in the email as having witnessed or been asked to be part of producing false and fraudulent documents. Dr Harvey considered the email and the comments overnight and formed the view that Mr Barclay had contravened certain clauses of the Code of Conduct for Victorian Public Sector Employees. On 2 February 2010, Dr Harvey invited Mr Barclay to meet with her. Mr Barclay was accompanied at this meeting by an AEU representative. At the meeting, Dr Harvey handed Mr Barclay a letter in the following terms which asked him to show cause why he should not be subject to disciplinary action: "Re: Possible Serious Misconduct I refer to an email sent by you to many Bendigo TAFE staff on Friday, 29th January 2010 in which you alleged that serious inappropriate behaviour has occurred in that several staff members have been 'asked to be part of producing false and fraudulent documents for the audit' for Bendigo TAFE's re-accreditation. Your allegation raises the possibility that improper conduct has occurred which will require a full and thorough independent investigation. I am in the process of arranging for this to occur. You will be required to be interviewed by the investigator appointed. I will supply more information to you about that in the near future. However, the purpose of this letter is to ask that you show cause why you should not be subject to disciplinary action for serious misconduct in your role as Team Leader – Teaching Excellence. It appears to me that such disciplinary action may be warranted because of: the manner in which you have raised the allegation, via a broadly distributed email; Crennan your actions in not reporting the instances of alleged improper conduct directly to your manager or me to enable us to take appropriate action; and your refusal or failure to provide particulars of the allegations when asked to do so by your manager. In my preliminary view, this conduct is inconsistent with the behaviour expected of a public sector employee, a BRIT employee and a Team Leader in the Teaching, Learning & Quality Unit of this organisation. Additionally, I am of the view that because your accusation is vague and general, it doesn't demonstrate proper respect for your fellow employees and places the individuals concerned in the re-accreditation process under the shadow of suspicion with no right of reply or defence. I believe you have breached Clause 3.6, 3.9 and 6.1 of the Code of Conduct for Victorian Public Sector Employees. Clause 3.6 refers to public sector employees reporting to an appropriate authority any unethical behaviour. You did not report to your supervisor your knowledge of possible unethical behaviour and as yet have not provided proof of your allegation to your manager when asked to do so. Clause 3.9 refers to public sector employees behaving in a manner that does not bring themselves or the public sector into disrepute. The manner in which you have disseminated your allegations (whether or not they are well-founded) clearly threatens the reputation and probity of Bendigo TAFE. Finally, Clause 6.1 refers to public sector employees being fair, objective and courteous in their dealings with other public sector employees. By making generalised allegations, that could apply to anyone in the Institute involved in the re-accreditation process, you have cast a slur on your colleagues against which they cannot defend themselves. In line with Clause 3 of the BRIT Staff Discipline procedure, it is my decision to suspend you from duty on full pay until Friday, 19th February 2010. This period of time will provide you with the opportunity to formally respond to the charge of serious misconduct as outlined above. You should provide your response to the charges by no later than 12 noon on 17 February 2010. Until 19 February you are not to attend any of the Bendigo TAFE campuses and your electronic access account will be suspended." Mr Barclay was suspended on full pay, denied internet access through the BRIT computer system and prohibited from entering the BRIT premises until it was agreed between the parties at an interlocutory hearing before the primary judge on 12 February 2010 that Mr Barclay should return to work on a normal basis. Mr Barclay remains subject to the disciplinary proceedings referred to in Crennan the letter, which have been suspended pending the outcome of Mr Barclay's legal proceedings. Relevant provisions of the Fair Work Act Part 3-1 of the Fair Work Act provides for general protections in the workplace for industrial associations and their representatives. Division 4 of Pt 3-1 contains various provisions which protect the rights of officers and members of industrial associations to associate freely in the workplace and to be involved in lawful industrial activities. Section 336, in Div 1 of Pt 3-1, provides that the objects of Pt 3-1 include protecting "freedom of association". Section 342, in Div 3 of Pt 3-1, defines "adverse action" in considerable detail. It is not presently disputed that BRIT took "adverse action" against Mr Barclay within the meaning of s 3427. Section 346, in Div 4 of Pt 3-1, relevantly protects the rights claimed in the respondents' application: "A person must not take adverse action against another person because the other person: is ... an officer ... of an industrial association; or engages, or has at any time engaged ... in industrial activity within the meaning of paragraph 347(a) or (b); or ..." Section 347(b), also in Div 4, relevantly provides that a person "engages in industrial activity" if the person: "(iii) encourage[s], or participate[s] in, a lawful activity organised or promoted by an industrial association; or represent[s] or advance[s] the views, claims or interests of an industrial association; or ..." 7 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2010) 193 IR 251 at 263 [46]. Crennan The terms "lawful activity" and "unlawful activity" are not defined in the Fair Work Act. Sections 360 and 361, in Div 7 of Pt 3-1, make it easier than it otherwise would be for an employee to establish a contravention of the protective provisions in Pt 3-1, including s 346. Section 360 provides that, for the purposes of Pt 3-1, "a person takes action for a particular reason if the reasons for the action include that reason." Section 361(1), which casts a burden of proof on an employer to show that it did not take action for a prohibited reason, relevantly provides: in an application in relation to a contravention of this Part, it is alleged that a person took ... action for a particular reason ... ; and that action for taking contravention of this Part; that reason ... would constitute a it is presumed, in proceedings arising from the application, that the action was ... taken for that reason or with that intent, unless the person proves otherwise." Part 4-1 provides for civil remedies in respect of a contravention of s 346. The proceedings Before the primary judge, the case that s 346 had been contravened was founded on the close relationship between the reasons for Mr Barclay's dismissal and his role as an AEU officer: Mr Barclay had become aware of the AEU members' concerns in his capacity as an AEU officer; he had sent the email on 29 January 2010 in his capacity as an AEU officer; and he had only sent the email to AEU members. BRIT denied that it had taken adverse action against Mr Barclay for any impermissible reason and the decision-maker, Dr Harvey, gave sworn evidence to that effect. In her affidavit, Dr Harvey first explained the significance of the re-accreditation audit as follows: "A satisfactory Audit result is crucial for [BRIT] because failure to comply with VRQA's requirements could ultimately lead to [BRIT] losing its accreditation and hence its right to deliver education and training. Accordingly, the Audit is taken very seriously by [BRIT]." Dr Harvey then described her concerns after considering the contents of Mr Barclay's email: Crennan "I had a number of very serious concerns about the Email and Mr Barclay's related conduct. My concerns were that: the allegations of fraudulent conduct were made without any complaint or report of conduct of that kind being raised with me or any other member of senior management; the language used in the Email was bound to cause distress to members of staff, bring the reputation of [BRIT] into question and undermine staff confidence in the Audit process; and I was also concerned that Mr Barclay was employed in the Unit responsible for overseeing the preparation for the Audit process." Dr Harvey also gave evidence in her affidavit of her reasons for taking adverse action against Mr Barclay: "I considered the investigation into Mr Barclay's actions necessary because it appeared to me that he had failed to notify either me or his direct manager of very serious allegations, being allegations of fraudulent conduct in the workplace, which were material to the Audit process. Instead, he proceeded to cast aspersions and innuendo upon his colleagues by way of a widely circulated email. I regarded this as prima facie evidence of a breach of the Code of Conduct and his obligations as a [BRIT] employee. I made the decision to investigate Mr Barclay's conduct in sending the Email on the basis that he is an employee of [BRIT] who is required to adhere to policy and procedures that govern his employment, not because of his membership of or role in the AEU ... I made the decision to suspend Mr Barclay because I was of the view that the allegations against him were serious and I was concerned that if Mr Barclay was not suspended he might cause further damage to the reputation of [BRIT] and of the staff [of BRIT]." Dr Harvey stated that she would have taken the same action in similar circumstances against a person who was neither a member nor an officer of the AEU. Dr Harvey was cross-examined on her affidavit. In her oral evidence, Dr Harvey made it plain that she did not object to Mr Barclay raising the issue of fraud with AEU members, and that she had taken the adverse action against Mr Barclay because he had not raised such a serious issue with senior management. Dr Harvey agreed in her oral evidence that it was a legitimate Crennan activity for Mr Barclay to advise members of the AEU and to encourage AEU members to obtain advice from the AEU. It was not disputed before the primary judge that the AEU is an "industrial association" or that Mr Barclay is an "officer" of the AEU within the meaning of those terms in s 12 of the Fair Work Act. It was also common ground before the primary judge that Mr Barclay "had the right (and probably the duty) to discuss workplace issues of concern to members with those members and to advise them" and that Mr Barclay was "bound to respect confidences"8. "The task of the court, in a proceeding such as the present is, then, to determine why the employer took the adverse action against the employee. Was it for a prohibited reason or reasons which included that reason? In answering this question evidence from the decision-maker which explains why the adverse action was taken will be relevant. If it supports the view that the reason was innocent and that evidence is accepted the employer will have a good defence. If the evidence is not accepted the employer will have failed to displace the presumption that the adverse action was taken for a proscribed reason. If an employer, who is alleged to have contravened one of the provisions of Part 3-1 in which the word 'because' is to be found, adduces evidence which persuades the court that it acted solely for a reason other than one or more of the impermissible reasons identified in a particular protective provision, it will have made good its defence. Because of the reverse onus provision the employer will normally need to call evidence from the decision-maker to explain what actuated him or her to act to the employee's detriment ... That evidence can be tested in the light of established facts. The credibility of the decision-maker will be assessed by the court." The primary evidence10: judge stated his reasons for accepting Dr Harvey's 8 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2010) 193 IR 251 at 262 [42]. 9 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2010) 193 IR 251 at 260-261 [34]-[35]. 10 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2010) 193 IR 251 at 264-265 [54]. Crennan "When ... [Dr Harvey] was called on to explain her reasons for taking adverse action against Mr Barclay she provided convincing and credible explanations of why it was that she took the steps that she did. Dr Harvey said that she had been extremely concerned by the statement that false and fraudulent documentation had been prepared for the purposes of the audit. She wished to establish whether or not this had occurred and immediately instituted an inquiry to establish whether there was any foundation for the allegation. She adhered to her explanation ... for calling on Mr Barclay to show cause why he should not be disciplined for circulating the e-mail. She said that she had determined to exclude him from BRIT campuses and suspend his e-mail access because she did not want Mr Barclay on the premises while the auditors were there and because she did not want any other 'loose allegations' made inappropriately during the audit to the detriment of BRIT. She maintained her denials of having acted against Mr Barclay for any reason associated with his union membership, office or activities ... I accept her evidence. I am satisfied that she did not act for any proscribed reason. Rather, she acted for the reasons which she gave." The primary judge concluded that Dr Harvey had not taken adverse action against Mr Barclay for any reason associated with his position as an officer of the AEU or with his engagement in industrial activity, and that BRIT therefore had not contravened s 346 of the Fair Work Act11. In upholding an appeal from the decision of the primary judge, the majority in the Full Court said12: "The central question under s 346 is why was the aggrieved person treated as he or she was? If the aggrieved person was subjected to adverse action, was it 'because' the aggrieved person did or did not have the attributes, or had or had not engaged or proposed to engage in the industrial activities, specified by s 346 in conjunction with s 347? The determination of those questions involves characterisation of the reason or reasons of the person who took the adverse action. The state of mind or subjective intention of that person will be centrally relevant, but it is not decisive. What is required is a determination of what Mason J in Bowling [(1976) 51 ALJR 235 at 241; 12 ALR 605 at 617] ... called the 'real reason' for the conduct. The real reason for a person's conduct is not 11 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2010) 193 IR 251 at 265 [54], [59]. 12 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 221 [27]-[28]. Crennan necessarily the reason that the person asserts, even where the person genuinely believes he or she was motivated by that reason. The search is for what actuated the conduct of the person, not for what the person thinks he or she was actuated by. In that regard, the real reason may be conscious or unconscious, and where unconscious or not appreciated or understood, adverse action will not be excused simply because its perpetrator held a benevolent intent. It is not open to the decision-maker to choose to ignore the objective connection between the decision he or she is making and the attribute or activity in question." Their Honours later said13: "All of the relevant conduct in issue in this case involved Mr Barclay in his union capacity. None of it involved him in his capacity as an employee of BRIT." Their Honours held that Mr Barclay had engaged in industrial activity within the meaning of ss 347(b)(iii) (encouraging or participating in a lawful activity organised or promoted by an industrial association) and (v) (representing or advancing the views, claims or interests of an industrial association) of the Fair Work Act by: sending the email on 29 January 2010; encouraging members of the AEU to contact the AEU and seek support and advice; and retaining the confidences of AEU members who had approached him in his capacity as an officer of the AEU14. Their Honours treated Dr Harvey's sworn evidence about her reasons for taking adverse action as leaving uncontroverted the possibility that Dr Harvey had taken action for an unconscious reason or a reason which was not appreciated or understood by her which was prohibited. In essence, their Honours reasoned that, because the sending of the email on 29 January 2010 amounted to engagement in industrial activity, and because Dr Harvey's reasons for taking adverse action against Mr Barclay were "founded upon" the sending of the email, the reasons why Dr Harvey had taken adverse action against Mr Barclay "included the fact that he was an officer of the AEU and the fact that 13 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 233 [73]. 14 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 231 [63]-[64]. Crennan he had engaged in industrial activity."15 On this basis, their Honours held that BRIT had contravened both s 346(a) and s 346(b) of the Fair Work Act. In dissent, Lander J agreed with the reasoning of the primary judge. His Honour said that the word "because" in s 346 directs an investigation into the reason actuating the person who took the adverse action and that contravention of s 346(b) is not made out "by simply establishing that adverse action was taken whilst the union official was engaged in industrial activity."16 Submissions In challenging the decision of the majority below, the appellant contended that a contravention of s 346 requires a mental element – a contravention will be established if the subjective reason why the employer took the adverse action was because of the employee's position as an officer or member of an industrial association or because the employee was engaged in industrial activity. That construction was said to be supported by the text of s 346 construed by reference to ss 360 and 361, considerations of legislative history and various authorities concerning legislative predecessors to the current provisions. the respondents was The competing view advanced by that a contravention of s 346 is to be determined objectively – if adverse action is taken when an employee is an officer or member of an industrial association engaged in industrial activity covered by s 347, a contravention of s 346 is established if a reasonable observer would conclude that the employer had not demonstrated that the real reason for the adverse action was dissociated from the reasons prohibited by s 346. The respondents recognised that this involved "a large and liberal" interpretation of ss 346 and 347 which, it was said, was appropriate because those provisions are concerned with human rights and give effect to Australia's obligations under particular international instruments17. It was contended that the circumstance of Mr Barclay being an officer of an industrial association engaged 15 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 234 [78]. 16 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 257 [218], 258 [227]. 17 Freedom of Association and Protection of the Right to Organise Convention (1948), Arts 2, 11; Right to Organise and Collective Bargaining Convention (1949), Art 1; Worker's Representatives Convention (1971), Art 1; International Covenant on Economic, Social and Cultural Rights (1966), Art 8; International Covenant on Civil and Political Rights (1966), Art 22. Crennan in lawful industrial activity at the time the adverse action was taken was sufficient to bring Mr Barclay within the protective provisions. The correct approach The question of why an employer took adverse action against an employee is a question of fact arising from the operation of interdependent provisions of the Fair Work Act. These provisions must be construed together in accordance with the principles of statutory construction established by this Court, which must begin with a consideration of the text of the relevant provisions and may require consideration of the context including the general purpose and policy of the provisions18. Text Determining why a defendant employer took adverse action against an employee involves consideration of the decision-maker's "particular reason" for taking adverse action (s 361(1)), and consideration of the employee's position as an officer or member of an industrial association and engagement in industrial activity ("union position and activity") at the time the adverse action was taken (ss 342, 346(a), 346(b), 347 and 361(1)). Clearly a defendant employer interested in rebutting the statutory presumption in s 361 can be expected to rely in its defence on direct testimony of the decision-maker's reason for taking the adverse action. The majority in the Full Court correctly rejected an argument put by the respondents that the introduction of the statutory expression "because" into a legislative predecessor 18 As to which, see Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47] per Hayne, Heydon, Crennan and Kiefel JJ; [2009] HCA 41. See also CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 per Brennan CJ, Dawson, Toohey and Gummow JJ; [1997] HCA 2; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69] per McHugh, Gummow, Kirby and Hayne JJ; [1998] HCA 28. Crennan to s 34619, in place of the previous statutory expression "by reason of"20, rendered irrelevant the state of mind of the decision-maker21. There is no warrant to be derived from the text of the relevant provisions of the Fair Work Act for treating the statutory expression "because" in s 346, or the statutory presumption in s 361, as requiring only an objective enquiry into a defendant employer's reason, including any unconscious reason, for taking adverse action. The imposition of the statutory presumption in s 361, and the correlative onus on employers, naturally and ordinarily mean that direct evidence of a decision-maker as to state of mind, intent or purpose will bear upon the question of why adverse action was taken, although the central question remains "why was the adverse action taken?"22. This question is one of fact, which must be answered in the light of all the facts established in the proceeding. Generally, it will be extremely difficult to displace the statutory presumption in s 361 if no direct testimony is given by the decision-maker acting on behalf of the employer23. Direct evidence of the reason why a decision-maker took adverse action, which may include positive evidence that the action was not taken for a prohibited reason, may be unreliable because of other contradictory evidence given by the decision-maker24 or because other objective facts are proven which contradict the decision-maker's evidence. However, direct testimony from the decision-maker which is accepted as reliable is capable of discharging the burden upon an employer even though an employee 19 Industrial Relations Act 1988 (Cth) (as enacted), s 334. 20 The expression "by reason of" last appeared in the Conciliation and Arbitration Act 1904 (Cth) (as amended by the Conciliation and Arbitration Amendment Act 1984 (Cth)), s 5(1). 21 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 220 [25]. 22 Purvis v New South Wales (2003) 217 CLR 92 at 163 [236] per Gummow, Hayne and Heydon JJ; [2003] HCA 62. 23 See, for example, General Motors-Holden's Pty Ltd v Bowling (1976) 51 ALJR 235 at 241 per Mason J; 12 ALR 605 at 617. 24 See, for example, Pearce v W D Peacock & Co Ltd (1917) 23 CLR 199 at 208 per Isaacs J, 211 per Higgins J; [1917] HCA 28. Crennan may be an officer or member of an industrial association and engage in industrial activity25. Policy and purpose The provisions of the Fair Work Act containing the general protections for officers and members of industrial associations commenced operation on 1 July 2009. However, provisions analogous to s 346(a), prohibiting an employer from taking adverse action against an employee because he or she is an officer or member of an industrial association, have existed in federal industrial relations legislation in Australia since the enactment of the Conciliation and Arbitration Act 1904 (Cth). That Act, which initiated a federal system of conciliation and arbitration, was preceded by social and legislative developments in Australia and New Zealand26, Britain27, and Europe and North America28, which all reflected a 25 See, for example, Harrison v P & T Tube Mills Pty Ltd (2009) 188 IR 270 at 276 26 See Davison, Hirst and Macintyre, The Oxford Companion to Australian History, (1998) at 647-649; Mitchell, "State systems of conciliation and arbitration: the legal origins of the Australasian model", in Macintyre and Mitchell (eds), Foundations of Arbitration, (1989) 74 at 82-97; Australia, Committee of Review into Australian Industrial Relations, Australian Industrial Relations Law and Systems, (1985), vol 2 at 18-20; Australia, House of Representatives, Parliamentary Debates (Hansard), 22 March 1904 at 762-791; Australia, House of Representatives, Parliamentary Debates (Hansard), 30 July 1903 at 2858-2883. In 1890, Charles Kingston (acknowledged by Alfred Deakin as a major architect of the federal legislation) unsuccessfully introduced a Bill for an "Act to Encourage the Formation of Industrial Unions and Associations, and to Facilitate the Settlement of Industrial Disputes" into the South Australian Parliament. This was the earliest proposal for a compulsory system of conciliation and arbitration in Australia, the conceptual framework of which included the idea of incorporating trade unions into the process through a system of registration and regulation. Its form and content can be detected in subsequent legislation: the Industrial Conciliation and Arbitration Act 1894 (NZ), the Industrial Conciliation and Arbitration Act 1900 (WA), the Industrial Arbitration Act 1901 (NSW) and, to a lesser extent, in modified form in the Conciliation Act 1894 (SA). The marginal notes to the Conciliation and Arbitration Bill 1904 (Cth) record the derivation of various clauses of the Bill from sections of those four Acts, including the derivation of cl 9 (the predecessor to ss 346(a) and 361 of the Fair Work Act) from s 35 of the Industrial Arbitration Act 1901 (NSW). Crennan growing appreciation that, in industrialised countries, stable industrial relations and the settlement of industrial disputes were best secured through a system of collective bargaining between employees and employers. In his second reading speech in the House of Representatives on the Conciliation and Arbitration Bill 1904 (Cth), Alfred Deakin referred to experiences in Great Britain and the United States as a prelude to his explanation that an effective system of compulsory conciliation and arbitration, which the Bill was designed to achieve, necessitated a balance in the powers of the parties involved29. As originally enacted, s 9(1) of the Conciliation and Arbitration Act 1904 (Cth) made it a criminal offence for an employer to dismiss an employee from his employment "by reason merely of the fact that the employee [was] an officer or member of an organization or [was] entitled to the benefit of an industrial agreement or award." Reflecting an increase in the categories of conduct protected by legislation, prohibited reasons for taking adverse action have been expanded over the years as substantive provisions have been amended or reproduced in substitute legislation30. In particular, provisions analogous to 27 See Great Britain, Royal Commission on Labour, Fifth Report (1892); Conciliation Act 1896 (UK). The Conciliation Act 1896 (UK) was enacted following a recommendation made in Royal Commission's report. See further Brodie, A History of British Labour Law 1867-1945, (2003) at 1-62; Mitchell, "State systems of conciliation and arbitration: the legal origins of the Australasian model", in Macintyre and Mitchell (eds), Foundations of Arbitration, (1989) 74 at 76-80. 28 See Mitchell, "State systems of conciliation and arbitration: the legal origins of the Australasian model", in Macintyre and Mitchell (eds), Foundations of Arbitration, 29 Australia, House of Representatives, Parliamentary Debates (Hansard), 22 March 1904 at 763-765. See also Australia, House of Representatives, Parliamentary Debates (Hansard), 30 July 1903 at 2864, 2870. 30 See Conciliation and Arbitration Act 1904 (Cth) (as amended by the Commonwealth Conciliation and Arbitration Act 1909 (Cth)), s 9(1); Conciliation and Arbitration Act 1904 (Cth) (as amended by the Commonwealth Conciliation and Arbitration Act (No 2) 1914 (Cth)), ss 9(1)(a), (b) and (c); Conciliation and Arbitration Act 1904 (Cth) (as amended by the Commonwealth Conciliation and Arbitration Act 1920 (Cth)), s 9(1)(d); Conciliation and Arbitration Act 1904 (Cth) (as amended by the Commonwealth Conciliation and Arbitration Act 1947 (Cth)), s 9(1)(e) (at this stage, s 26 of the Commonwealth Conciliation and Arbitration Act 1947 (Cth) renumbered s 9 of the Conciliation and Arbitration Act 1904 (Cth) to s 5); Conciliation and Arbitration Act 1904 (Cth) (as amended by the Conciliation and Arbitration Act 1973 (Cth)), s 5(1)(f); Conciliation and Arbitration Act 1904 (Footnote continues on next page) Crennan s 346(b) (read with ss 347(b)(iii) and (v)), prohibiting an employer from taking adverse action against an employee in respect of lawful industrial activity, have existed since 197331. A statutory presumption and correlative onus of the kind now found in s 361 of the Fair Work Act can also be found in earlier provisions32. In his second reading speech on the Commonwealth Conciliation and Arbitration Bill (No 2) 1914 (Cth), the Attorney-General, Billy Hughes, identified the rationale for the statutory presumption in favour of the employee, and the placing of an onus on the employer, as being the need to remedy the ease with which an employer might avoid liability33. (Cth) (as amended by the Conciliation and Arbitration Act 1977 (Cth)), s 5(1)(aa); Conciliation and Arbitration Act 1904 (Cth) (as amended by the Conciliation and Arbitration Amendment Act 1981 (Cth)), ss 5(1)(ab) and (ac); Industrial Relations Act 1988 (Cth) (as enacted), s 334(1); Workplace Relations Act 1996 (Cth) (as enacted), ss 298K(1) and 298L(1); Workplace Relations Act 1996 (Cth) (as amended by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth)), ss 792(1) and 793(1). 31 See Conciliation and Arbitration Act 1904 (Cth) (as amended by the Conciliation and Arbitration Act 1973 (Cth)), s 5(1)(f); Industrial Relations Act 1988 (Cth) (as enacted), s 334(1)(j); Workplace Relations Act 1996 (Cth) (as enacted), ss 298K(1) and 298L(1)(n); Workplace Relations Act 1996 (Cth) (as amended by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth)), ss 792(1) and 32 See Conciliation and Arbitration Act 1904 (Cth) (as enacted), s 9(3); Conciliation and Arbitration Act 1904 (Cth) (as amended by the Commonwealth Conciliation and Arbitration Act 1909 (Cth)), s 9(3); Conciliation and Arbitration Act 1904 (Cth) (as amended by the Commonwealth Conciliation and Arbitration Act (No 2) 1914 (Cth)), s 9(4); Conciliation and Arbitration Act 1904 (Cth) (as amended by the Commonwealth Conciliation and Arbitration Act 1947 (Cth)), s 5(4); Conciliation and Arbitration Act 1904 (Cth) (as amended by the Conciliation and Arbitration Act 1977 (Cth)), s 5(4); Industrial Relations Act 1988 (Cth) (as enacted), s 334(6); Workplace Relations Act 1996 (Cth) (as enacted), s 298V; Workplace Relations Act 1996 (Cth) (as amended by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth)), s 809. 33 Australia, House of Representatives, Parliamentary Debates (Hansard), 13 November 1914 at 659: "Under the Act as it stands, in order to secure a conviction it is necessary to prove that an employé has been dismissed merely because he is a unionist. (Footnote continues on next page) Crennan The following description of a legislative predecessor to s 36134 given by Mason J in General Motors-Holden's Pty Ltd v Bowling35 remains pertinent36: "the plain purpose of the provision [is to throw] on to the defendant the onus of proving that which lies peculiarly within his own knowledge." Observations about the rationale for including s 361 in the Fair Work Act are consistent with the abovementioned descriptions of the evident purpose of its Since the enactment of the Workplace Relations Act 1996 (Cth), the general protections have been enforced through a civil penalty regime, which replaced the criminal offence regime that had been in place since 1904. It is a fact, and one of the most cheering evidences of the innate goodness of mankind, that convictions have been secured for this offence under the existing law. But for every one offender caught, ninety-nine go free. It is obvious that if a man wishes to dismiss an employé because he is a unionist, he may easily do so. An employer may discharge a man because he is a unionist, and say that he has dismissed him because he does not like his appearance. We are amending the principal Act so that the onus will rest on the employer, and that is quite compatible with the policy of the Act." As repealed and substituted by the Conciliation and Arbitration Act (No 2) 1914 (Cth), the onus in s 9(4) required a defendant employer "to prove that he was not actuated by the reason alleged in the charge." 34 Conciliation and Arbitration Act 1904 (Cth) (as amended by the Conciliation and Arbitration (Organizations) Act 1974 (Cth)), s 5(4). 35 (1976) 51 ALJR 235; 12 ALR 605 ("Bowling"). 36 (1976) 51 ALJR 235 at 241; 12 ALR 605 at 617 per Mason J. 37 Australia, House of Representatives, Fair Work Bill 2008, Explanatory Memorandum at 234 [1461]: "in the absence of such a [section], it would often be extremely difficult, if not impossible, for a complainant to establish that a person acted for an unlawful reason." Crennan Relevant authorities The decisions of this Court in Pearce v W D Peacock & Co Ltd38 and Bowling dealt with different legislative predecessors to ss 346 and 361 of the Fair In Pearce, an employee who was a member of an organisation registered under the Conciliation and Arbitration Act 1904 (Cth) was dismissed from his employment. A director of the defendant employer gave evidence that the employee was not dismissed "because of being in a union", but rather because he was dissatisfied with his wages and conditions40. A question arose as to whether the director's evidence was sufficient to satisfy the onus cast upon the employer. In deciding that the director's evidence was sufficient, the majority in Pearce recognised that mere declarations of an innocent reason or intent in taking adverse action may not satisfy the onus on an employer if contrary inferences are available on the facts41. In the minority, Isaacs and Higgins JJ decided that the director's evidence of his reasons for dismissing the employee did not satisfy the onus because other evidence given by the director had contradicted it. In considering this issue, Isaacs J recognised that it is not possible to "peer into [an employer's] mind"42. Equally, it is not possible in a curial process to plumb the depths of "[an employer's] unconscious"43. 38 (1917) 23 CLR 199 ("Pearce"). 39 Pearce concerned ss 9(1) and (4) of the Conciliation and Arbitration Act 1904 (Cth) which, at that stage, had last been amended by the Commonwealth Conciliation and Arbitration Act (No 2) 1914 (Cth). Bowling concerned the renumbered ss 5(1) and (4) of the Conciliation and Arbitration Act 1904 (Cth) which, at that stage, had last been amended by the Conciliation and Arbitration Act 1973 (Cth). 40 Pearce (1917) 23 CLR 199 at 202. 41 Pearce (1917) 23 CLR 199 at 203 per Barton ACJ (with whom Gavan Duffy and Rich JJ agreed). See, subsequently, Heidt v Chrysler Australia Ltd (1976) 13 ALR 365; Lewis v Qantas Airways Ltd (1981) 54 FLR 101. 42 Pearce (1917) 23 CLR 199 at 206. 43 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 221 [28] per Gray and Bromberg JJ. Crennan More generally, in Pearce, Isaacs J said of s 9(4) of the Conciliation and Arbitration Act 1904 (Cth) (the then applicable legislative predecessor to "The provision casting the onus on the defendant employer means that the fact that the dismissed employee was a member of an organization must not enter in any way into the reason of the defendant, if he desires exculpation." That interpretation was rejected in Bowling. In Bowling, an employee who was a shop steward was dismissed from his employment. The decision- makers, two directors of the employer, did not give evidence. In a short judgment concurring with Mason J, Gibbs J said45: "The onus of proving that the fact that the employee held the position was not a substantial and operative factor in the dismissal is to be discharged according to the balance of probabilities and is not to be made heavier by any presumption that if an employee who is dismissed for disruptive activities happens to be a shop steward the latter circumstance must have had something to do with his dismissal. If in the present case evidence had been given by the directors responsible that the employee was dismissed because he was guilty of misconduct or because his work was unsatisfactory, and that in dismissing him they were not influenced by the fact that he was a shop steward or indeed that he was dismissed in spite of the fact, and that evidence had been accepted, the onus would have been discharged." Mason J, with whom Stephen and Jacobs JJ also agreed, said of the interpretation adopted by Isaacs J in Pearce46: "The protection of trade unions and their representatives from discrimination and victimization by employers does not require an interpretation as extreme as that favoured by Isaacs J. It would unduly and unfairly circumstances where other employees would be dismissed and thereby confer on the union representative an advantage not enjoyed by other workers, to penalize a dismissal merely because the prohibited factor the dismissal of a union representative inhibit 44 Pearce (1917) 23 CLR 199 at 205. 45 Bowling (1976) 51 ALJR 235 at 239; 12 ALR 605 at 612. 46 Bowling (1976) 51 ALJR 235 at 241; 12 ALR 605 at 616. Crennan entered into the employer's reasons for dismissal though it was not a substantial and operative factor in those reasons." His Honour went on to say that the decision-makers in Bowling who failed to give direct evidence could hypothetically have said in evidence47: "'We dismissed him because he was a troublemaker, because he was deliberately disrupting production and setting a bad example and we did so without regard at all to his position as a shop steward'." Because no such evidence was given, his Honour found that the evidence in the case48: "left uncontroverted the possibility that the respondent's position as a shop steward was an influential, perhaps even a decisive, consideration in [the decision-makers'] minds." Despite the change to a civil penalty regime effected in 1996, s 361 does not differ in relevant respects from its legislative predecessors and Bowling remains authoritative in relation to a number of the arguments raised on the appeal. First, it is erroneous to treat the onus imposed on an employer by s 361 as being made heavier (or rendered impossible to discharge) because an employee affected by adverse action happens to be an officer of an industrial association. Further, the history of the relevant legislative provisions reveals no reason why the onus must now be different if adverse action is taken while an employee engages in industrial activity – like a person who happens to be an officer of an industrial association, a person who happens to be engaged in industrial activity should not have an advantage not enjoyed by other workers. Central to the respondents' argument on this appeal was the contrary and incorrect view that Mr Barclay's status as an officer of an industrial association engaged in lawful industrial activity at the time that Dr Harvey took adverse action against him meant that Mr Barclay's union position and activities were inextricably entwined with the adverse action, and that Mr Barclay was therefore immune, and protected, from the adverse action. If accepted, such a position would destroy the balance between employers and employees central to the operation of s 361, a balance which Parliament has chosen to maintain irrespective of the fact that the protection in s 346(b) has a shorter history than 47 Bowling (1976) 51 ALJR 235 at 241; 12 ALR 605 at 617. 48 Bowling (1976) 51 ALJR 235 at 242; 12 ALR 605 at 619. Crennan the protection in s 346(a). That balance, once the reflex of criminal sanctions in the legislation, now reflects the serious nature of the civil penalty regime. Speaking more generally, that balance is a specific example of the balance of which Alfred Deakin spoke as being necessary for an effective conciliation and arbitration system. Secondly, it is a related error to treat an employee's union position and activity as necessarily being a factor which must have something to do with adverse action, or which can never be dissociated from adverse action. It is a misunderstanding of, and contrary to, Bowling to require that the establishment of the reason for adverse action must be entirely dissociated from an employee's union position or activities. institutes an interpretation of the relevant provisions indistinguishable from that of Isaacs J in Pearce, which was rejected in Bowling. The onus of proving that an employee's union position and activity was not an operative factor in taking adverse action is to be discharged on the balance of probabilities in the light of all the established evidence. Such reasoning effectively Thirdly, it is appropriate for a decision-maker to give positive evidence comparing the position of the employee affected by the adverse action with that of an employee who has no union involvement. Finally, the international instruments referred to in passing by the respondents are consistent with the approach to the relevant provisions identified above. Conclusions In this case the primary judge adopted the correct approach to the relevant provisions. Dr Harvey gave evidence of her reason for taking adverse action against Mr Barclay and also gave positive evidence that this was not for a prohibited reason and that she would have taken the same action against a person circulating a similar email who was not an officer of the AEU. That evidence was accepted by the primary judge and his findings in that regard were not challenged before the Full Court49. The appellant discharged the burden cast upon it to show that the reason for the adverse action was not a prohibited reason, and that Mr Barclay's union position and activities were not operative factors in him being required to show cause. The appeal must be upheld and consequential orders made. 49 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 258 [226] per Lander J. Crennan Orders The orders of the Court should be: Appeal allowed. Orders 1, 2 and 3 of the orders of the Full Court of the Federal Court of Australia made on 9 February 2011 be set aside and, in their place, order that the appeal to that Court be dismissed. Any question of the costs of the appeal be dealt with by consent order or by this Court on the papers as indicated in the reasons for judgment of GUMMOW AND HAYNE JJ. The first respondent, Mr Barclay, is a senior teacher at the Bendigo Regional Institute of Technology and Further Education ("BRIT"), the Board of which is the appellant. Mr Barclay is also President of the BRIT Sub-Branch of the second respondent, the Australian Education Union ("the AEU"). The AEU is an organisation registered pursuant to legislative provisions now found in Ch 2 of the Fair Work (Registered Organisations) Act 2009 (Cth). On 2 February 2010, BRIT suspended Mr Barclay on full pay from his employment, suspended his internet access, excluded him from the BRIT premises and commenced disciplinary proceedings against him. (It later was agreed that Mr Barclay return to work on a normal basis, but he remains subject to pending disciplinary proceedings.) The action on 2 February 2010 followed an e-mail sent by Mr Barclay four days previously. The e-mail was headed "A note of caution" and warned employees of BRIT who were members of the AEU that they should "not agree to be part of any attempt to create false[/fraudulent] documentation" in preparation for an audit of BRIT to be conducted by the Victorian Registration and Qualifications Authority. In proceedings in the Federal Court, Mr Barclay and the AEU sought declaratory relief that the action by BRIT contravened s 346 of the Fair Work Act 2009 (Cth) ("the Act"). This provided that a person should not take adverse action against another "because" that other person: (a) was or was not an officer or member of an industrial association, or (b) engaged or proposed to engage in "industrial activity". They also sought orders for compensation under s 545(2)(b) of the Act and orders pursuant to s 546 for the imposition and recovery of penalties. Tracey J dismissed the application50. However, the Full Court (Gray and Bromberg JJ, Lander J dissenting)51 allowed an appeal by Mr Barclay and the AEU. The matter was remitted to the primary judge to determine the appropriate penalties to be imposed on BRIT for its contraventions of the Act. For the reasons which follow, in addition to those in the other joint reasons, with which we are in general agreement, the appeal by BRIT to this Court should be allowed and consequential orders made. 50 Barclay v The Board of Bendigo Regional Institute of Technical and Further Education (2010) 193 IR 251. 51 Barclay v The Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212. The provisions in s 346 of the Act, contraventions of which were alleged against BRIT, have a lengthy provenance in industrial law in Australia. An appreciation of the issues which arise in the present appeal is assisted by some reference to that legislative history, including several decisions upon the earlier legislation which informed the submissions on the appeal. Legislative history Section 346 of the Commonwealth the Act derived from s 9 of Conciliation and Arbitration Act 1904 (Cth) ("the 1904 Act"). As first enacted, s 9 of the 1904 Act provided: "(1) No employer shall dismiss any employee from his employment by reason merely of the fact that the employee is an officer or member of an organization or is entitled to the benefit of an industrial agreement or award. Penalty: Twenty pounds. (2) No proceeding for any contravention of this section shall be instituted without the leave of the President or the Registrar. In any proceeding for any contravention of this section, it shall lie upon the employer to show that any employee, proved to have been dismissed whilst an officer or member of an organization or entitled as aforesaid, was dismissed for some reason other than those mentioned in this section." Section 9 in this form was omitted by the Commonwealth Conciliation and Arbitration Act 1909 (Cth) and a substituted s 9 provided: "(1) No employer shall dismiss any employee from his employment or injure him in his employment by reason merely of the fact that the employee is an officer or member of an organization, or of an association that has applied to be registered as an organization or is entitled to the benefit of an industrial agreement or award. Penalty: Twenty pounds (2) No proceeding for any contravention of this section shall be instituted without the leave of the President or the Registrar. In any proceeding for any contravention of this section, it shall lie upon the employer to show that any employee, proved to have been dismissed or injured in his employment whilst an officer or member of an organization or such an association or whilst entitled as aforesaid, was dismissed or injured in his employment for some reason other than that mentioned in this section." (emphasis added) Whilst s 9 of the 1904 Act was the first federal provision of its kind, it was drawn from New South Wales legislation. In his second reading speech in the House of Representatives on the Bill for what became the 1904 Act, Alfred Deakin described the Industrial Arbitration Act 1901 (NSW) ("the New South Wales Act") as52: "the most advanced and complete piece of legislation of this kind which has yet found its way upon a statute-book". He went on to indicate that the Bill had been drafted with the provisions of the New South Wales Act in mind. This is apparent from the terms of s 35 of the New South Wales Act: "If an employer dismisses from his employment any employee by reason merely of the fact that the employee is a member of an industrial union, or is entitled to the benefit of an award, order, or agreement, such employer shall be liable to a penalty not exceeding twenty pounds for each employee so dismissed. In every case it shall lie on the employer to satisfy the court that such employee was so dismissed by reason of some facts other than those above mentioned in this section: Provided that no proceedings shall be begun under this section except by leave of the court." In his second reading speech in the Legislative Council on the Bill, for what became the New South Wales Act, the Attorney-General53, The Hon Bernhard Wise KC, made extended reference to industrial strife in the United States, adding: "We know that there is a black list in the United States, and one of the most potent instruments of the capitalists in the United States is that black list. A man who makes himself conspicuous as an advocate of the rights of the workmen is debarred from employment; though he may disguise himself, and change his name as he will, he is debarred from employment from one end of the Union to the other." 52 Australia, House of Representatives, Parliamentary Debates (Hansard), 30 July 53 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 2 October 1901 at 1841. Of the clause which became s 35 of the New South Wales Act, the Attorney-General said: "The clause would not operate harshly upon an employer who honestly dismisses a man for a genuine reason; but if the clause is to exist at all in the bill, it is absolutely useless, unless the burden of showing that the man was dismissed for some other reason than that of belonging to the union is cast upon the only man who knows the real reason, that is, the employer." The protections provided for by the Act in contemporary times serve purposes not dissimilar to its antecedents. In argument on this appeal reference was made to Pearce v W D Peacock & Co Ltd54. Pearce involved an unsuccessful appeal direct to this Court from the dismissal of the prosecution, in a Tasmanian Court of Petty Sessions, of an employer for an offence under s 9 of the 1904 Act55. The information had been laid by Mr Pearce, the general secretary of the union of which Mr Batchelor was a member. It alleged that the respondent employer had dismissed Mr Batchelor by reason of the circumstance that he was a member of the union which was an organisation registered under the 1904 Act. Mr Batchelor had been the only employee who was a member of the union. The employer had been served with a log of claims in Arbitration Court proceedings. Mr Batchelor refused to sign a paper proffered by the employer in which he would indicate his satisfaction with his working conditions and remuneration. If he had signed as requested, the result would have been to deprive the Arbitration Court of jurisdiction to include the employer in the award56. Mr Batchelor was dismissed after he refused to sign the paper. The employer argued that the dismissal had occurred because Mr Batchelor had expressed dissatisfaction with his job, and not for any reason connected to his union involvement. By majority (Barton ACJ, Gavan Duffy and Rich JJ, Isaacs and Higgins JJ dissenting), this Court held that there was evidence to support the view that the employer had not been actuated by the reason alleged in the information, and that it had been open to the Court of Petty Sessions to dismiss the union's information. 54 (1917) 23 CLR 199; [1917] HCA 28. 55 The legislation considered in Pearce was the Commonwealth Conciliation and Arbitration Act 1904-1915 (Cth); s 9 had remained unaffected by the subsequent legislative amendments. 56 As Isaacs J emphasised: (1917) 23 CLR 199 at 208-209. With respect to the operation of s 9, Barton ACJ said57: "No doubt, it is an inquiry in a large measure as to motive; and no doubt also, the motive is to be inferred from facts, and mere declarations as to the mental state that prompted the employer's action are entitled to little or no regard." Isaacs J was in dissent on the issue of whether, on appeal, the High Court had the power or duty to form its own reasons and conclusions on the evidence before the Magistrate. His Honour also went further regarding the interpretation of s 9 and concluded58: "[A]s I read that section, it is designed, among other things, to preserve organizations, so that the method selected by Parliament for settling disputes shall not be thwarted. The provision casting the onus on the defendant employer means that the fact that the dismissed employee was a member of an organization must not enter in any way into the reason of the defendant, if he desires exculpation. Otherwise he might add any other reason whatever to the membership of a union, and break down the whole structure of the Act, so far as he is concerned, as the defendant has, in fact, done in this case." (emphasis added) When read with s 10 of the 1904 Act, the protection applied both to employees and employers. Isaacs J continued59: "It is very material to remember that the Statute must be construed as a whole. It applies equally both to employers and employees. An employee's dissatisfaction is no more and no less independent of the industrial dispute in which it is expressed, where it is relied on to justify an employer in dismissing an employee, than where it is relied on to justify an employee for striking because of his dissatisfaction with existing conditions. Neither position is, in my opinion, justifiable in law, and both are to be condemned. When we consider the Act as speaking with equal force to both parties to a dispute, then a Court must, in arriving at its view of the meaning of the law, take into account the consideration that whatever is a legal justification in the one case is equally a legal justification in the other. To hold what is relied on here as a legal justification to be so in either case, and consequently in both cases, to my 57 (1917) 23 CLR 199 at 203. 58 (1917) 23 CLR 199 at 205. 59 (1917) 23 CLR 199 at 206. mind would mean reducing the law in all cases to a dead letter, and defeating the objects of the Act to the injury of the general community, which ought to be protected against both employers and employees taking the law into their own hands in disregard of the general welfare." the 1904 Act had undergone substantial amendment. Relevantly, through a process of renumbering, s 9 had become s 5 of the ("the 1976 Act")60. Conciliation and Arbitration Act 1904-1976 Section 5(1) was in the following terms: (Cth) "An employer shall not dismiss an employee, or injure him in his employment, or alter his position to his prejudice, by reason of the circumstance that the employee – is or has been, or proposes, or has at any time proposed, to become an officer, delegate or member of an organization, or of an association that has applied to be registered as an organization; or being an officer, delegate or member of an organization, has done, or proposes to do, an act or thing which is lawful for the purposes of furthering or protecting the the organization or its members, being an act or thing done within the limits of authority expressly conferred on him by the organization in accordance with the rules of the organization. interests of industrial Penalty: Four hundred dollars." Under the 1976 Act, the onus remained with the defendant employer to prove it was "not actuated" by the reason alleged in the charge61. Section 5 of the 1976 Act was considered by this Court in General Motors Holden Pty Ltd v Bowling62. By majority (Gibbs, Stephen, Mason and Jacobs JJ, Barwick CJ dissenting), the Court dismissed an appeal from the Industrial Court of Australia. The Industrial Court had convicted the appellant company of contravening s 5(1) in dismissing Mr Bowling. 60 Commonwealth Conciliation and Arbitration Act 1947 (Cth), s 26, and made in accordance with Sch 2. 61 Conciliation and Arbitration Act 1904-1976 (Cth), s 5(4). 62 (1976) 51 ALJR 235; 12 ALR 605. Mason J, with whom Stephen and Jacobs JJ agreed, began his analysis of s 5 by remarking that the section had "a legislative history which extends back to the turn of the century when the trade union was a more fragile institution than it is today and when it stood in need of a large measure of protection from employers"63. His Honour went on to say that64: "The protection of trade unions and their representatives from discrimination and victimization by employers does not require an interpretation as extreme as that favoured by Isaacs J [in Pearce]. It would unduly and unfairly inhibit the dismissal of a union representative in circumstances where other employees would be dismissed and thereby confer on the union representative an advantage not enjoyed by other workers, to penalize a dismissal merely because the prohibited factor entered into the employer's reasons for dismissal though it was not a substantial and operative factor in those reasons." Mason J preferred the construction that65: "[Section] 5(1) does not proscribe the circumstances which it lists as the sole or predominant reasons for dismissal. It is sufficient if the circumstance is a substantial and operative factor. And it does not cease to be such a factor because it is coupled with other circumstances or because regard is had to it in association with other circumstances not mentioned in the section." (emphasis added) With respect to the onus borne by the employer, Mason J stated66: "Section 5(4) imposed the onus on the [employer] of establishing affirmatively that it was not actuated by the reason alleged in the charge. The consequence was that the [employee], in order to succeed, was not bound to adduce evidence that the [employer] was actuated by that reason, a matter peculiarly within the knowledge of the [employer]. The [employee] was entitled to succeed if the evidence was consistent with the hypothesis that the [employer] was so actuated and that hypothesis was not displaced by the [employer]. To hold that, despite the subsection, there is some requirement that the prosecutor brings evidence of this fact 63 (1976) 51 ALJR 235 at 240; 12 ALR 605 at 616. 64 (1976) 51 ALJR 235 at 241; 12 ALR 605 at 616. 65 (1976) 51 ALJR 235 at 242; 12 ALR 605 at 619. 66 (1976) 51 ALJR 235 at 241; 12 ALR 605 at 617. is to make an implication which, in my view, is unwarranted and which is at variance with the plain purpose of the provision in throwing on to the [employer] the onus of proving that which lies peculiarly within his own knowledge." Turning to the facts of the case, Mason J held67: "Once it is said that the appellant dismissed [the respondent] because he was deliberately disrupting production and was setting a bad example it is not easy to say without more that this had nothing to do with his being a shop steward. Although the activities in question did not fall within his responsibilities as a shop steward his office gave him a status in the work force and a capacity to lead or influence other employees, a circumstance of which the appellant could not have been unaware. It would be mere surmise or speculation, unsupported by evidence, to suppose that the appellant's management, if concerned as to the bad example he was setting, divorced that consideration from the circumstance that he was a Gibbs J accepted the "substantial and operative factor" criterion adopted by Mason J, and added68: "The onus of proving that the fact that the employee held the position was not a substantial and operative factor in the dismissal is to be discharged according to the balance of probabilities and is not to be made heavier by any presumption that if an employee who is dismissed for disruptive activities happens to be a shop steward the latter circumstance must have had something to do with his dismissal. If in the present case evidence had been given by the directors responsible that the employee was dismissed because he was guilty of misconduct or because his work was unsatisfactory, and that in dismissing him they were not influenced by the fact that he was a shop steward or indeed that he was dismissed in spite of that fact, and that evidence had been accepted, the onus would have been discharged." (emphasis added) The construction of the legislation accepted in Bowling was subsequently applied by Morling J in Lewis v Qantas Airways Ltd69. This case concerned the dismissal of an employee, Mr Lewis, around the time of an industrial dispute 67 (1976) 51 ALJR 235 at 241; 12 ALR 605 at 617-618. 68 (1976) 51 ALJR 235 at 239; 12 ALR 605 at 612. 69 (1981) 54 FLR 101. which resulted in a twelve-day strike70. Mr Lewis was a delegate of the Transport Workers' Union of Australia. Another employee, Mr Macfarlane, was dismissed at the same time. The central question for determination was whether the fact that Mr Lewis was a union delegate constituted a "substantial and operative factor" which actuated his dismissal71. The case presented by Qantas was that the dismissal of Mr Lewis (and Mr Macfarlane) had been prompted by timekeeping mispractice with respect to the bundy card system utilised by Qantas to record time spent by employees at work. In holding that Qantas had not contravened s 5 of the 1976 Act in dismissing Mr Lewis, Morling J assessed the reliability and weight of the evidence adduced by both parties. His Honour made findings that Mr McLean, the dismissing officer, "bore no ill-will to the prosecutor", and that72: "It is significant that McLean did not single out the prosecutor for treatment different from that meted out to Macfarlane, who was not a union delegate and who had not taken any special part in the quarantine dispute. ... I am satisfied that neither Macfarlane nor the prosecutor was unfairly treated. If facts favourable to the prosecutor did not emerge at the interview, that failure was due entirely to his own refusal to say anything in his own defence." Morling J concluded that the evidence was sufficient to draw a reasonable inference that Mr Lewis had directly or indirectly requested Mr Macfarlane to "clock" his bundy card73. His Honour agreed with the statement by Northrop J in Hyde v Chrysler (Australia) Ltd74, that being a member, delegate or officer of a union organisation75: "'does not confer on that employee an immunity from dismissal by reason of the circumstance that he is a delegate of an organization'. ... The timekeeping offence for which the prosecutor was dismissed had no relation to his position as a union delegate or to the part which he had 70 (1981) 54 FLR 101 at 105. 71 (1981) 54 FLR 101 at 107. 72 (1981) 54 FLR 101 at 109. 73 (1981) 54 FLR 101 at 108-109. 74 (1977) 30 FLR 318 at 332. 75 (1981) 54 FLR 101 at 113. played in the industrial disputation with the company. His position as delegate gave him no immunity from dismissal for the offence." The Fair Work Act 2009 In 1988, s 5 of the 1976 Act was embodied in s 334 of the Industrial Relations Act 1988 (Cth) ("the IR Act"). This provision was then encapsulated first in ss 298K and 298L of the Workplace Relations Act 1996 (Cth) ("the WR Act") and then in ss 792 and 793 of the WR Act, as amended in 2006. The WR Act was repealed in 2009 and replaced by the Act. The critical provision, s 346, is contained in Ch 3, Pt 3-1, Div 4 of the Act under the chapeau "Industrial activities". Part 3-1 (ss 334-378) is headed "General Protections". The objectives of Pt 3-1 include protecting the freedom to elect to become a member of, be represented by and participate in the lawful industrial activities of industrial associations (s 336(b)). Division 3 of Pt 3-1 (ss 340-346) concerns the protection of "Workplace rights", Div 5 (ss 351-355) provides for "Other protections" and Div 7 (ss 360-364) provides "Ancillary rules". As will be seen, the interpretation of any of the provisions contained within Pt 3-1 requires an appreciation of the Part as a whole. Section 346 is in the following terms: "A person must not take adverse action against another person because the other person: is or is not, or was or was not, an officer or member of an industrial association; or engages, or has at any time engaged or proposed to engage, in industrial activity within the meaning of paragraph 347(a) or (b); does not engage, or has at any time not engaged or proposed to not engage, the meaning of industrial paragraphs 347(c) to (g). activity within Note: this section is a civil remedy provision (see Part 4-1)." (emphasis added) The Note refers to Pt 4-1 of Ch 4, which includes orders for compensation (s 545(2)(b)), and pecuniary penalty orders (s 546). A person "engages in industrial activity" under s 347 if the person: "(b) does, or does not: organise or promote a lawful activity for, or on behalf of, an industrial association; or (iii) encourage, or participate in, a lawful activity organised or promoted by an industrial association; or represent or advance the views, claims or interests of an industrial association". The term "industrial association" is used by the Act to replace the term "organizations" found in the earlier legislation. The term is defined in s 12 of the Act as: an association of employees or independent contractors, or both, or an association of employers, that is registered or recognised as such an association (however described) under a workplace law; or an association of employees, or independent contractors, or both (whether formed formally or informally), a purpose of which is the protection and promotion of their interests in matters concerning their employment, or their interests as independent contractors (as the case may be); or an association of employers a principal purpose of which is the protection and promotion of their interests in matters concerning employment and/or independent contractors; and includes: a branch of such an association; and an organisation; and a branch of an organisation." (emphasis added) The taking of "adverse action" is defined in s 342(1). Amongst other actions, adverse action is taken by an employer against an employee if the employer76: alters the position of the employee to the employee's prejudice; or discriminates between the employee and other employees of the employer." Finally, the term "officer" of an industrial association is defined in s 12 as: an official of the association; or a delegate or other representative of the association." Section 12 defines "official" as meaning: " a person who holds an office in, or is an employee of, the [industrial] association." The appellant concedes that the AEU is an "industrial association" and that Mr Barclay, as President of the BRIT AEU Sub-Branch, is an "officer" for the purposes of these proceedings. The application of s 346 turns on the term "because". This term is not defined. The term is not unique to s 346. It appears in s 340 (regarding workplace rights), s 351 (regarding discrimination), s 352 (regarding temporary absence in relation to illness or injury) and s 354 (regarding coverage by particular instruments, including provisions of the National Employment Standards). The use in s 346(b) of the term "because" in the expression "because the other person engages ... in industrial activity", invites attention to the reasons why the decision-maker so acted. Section 360 stipulates that, for the purposes of provisions including s 346, whilst there may be multiple reasons for a particular action "a person takes action for a particular reason if the reasons for the action include that reason". These provisions presented an issue of fact for decision by the primary judge. Reference was made in argument to Purvis v New South Wales77. That litigation concerned the application of the Disability Discrimination Act 1992 76 Fair Work Act 2009 (Cth), s 342, It 1. 77 (2003) 217 CLR 92; [2003] HCA 62. (Cth) to the suspension and expulsion of a disabled student from a State school. Section 5(1) used the expression "because of the disability". Gummow, Hayne and Heydon JJ emphasised that s 10 of the statute stated that if an act is done for two or more reasons, one of which is the disability of a person, even if it not be the dominant or a substantial reason for doing the act, the act is taken to be done for that reason78. This provision may be compared with s 360 of the Act just described. With respect to what became s 346 of the Act, paragraph 1458 of the Explanatory Memorandum to the Fair Work Bill 2008 stated: "Clause 360 provides that for the purposes of Part 3-1, a person takes action for a particular reason if the reasons for the action include that reason. The formulation of this clause embodies the language in existing section 792 which appears in Part 16 of the WR Act (Freedom of Association) and includes the related jurisprudence. This phrase has been interpreted to mean that the reason must be an operative or immediate reason for the action (see Maritime Union of Australia v CSL Australia Pty Limited79). The 'sole or dominant' reason test which applied to some protections in the WR Act does not apply in Part 3-1." (emphasis added) The phrase "operative or immediate reason" used in CSL is relevantly indistinguishable from the phrase "a substantial and operative factor" used by In light of the legislative history of s 346 and the intention of Parliament outlined above, the reasoning of Mason J in Bowling is to be applied to s 346. An employer contravenes s 346 if it can be said that engagement by the employee in an industrial activity comprised "a substantial and operative" reason, or reasons including the reason, for the employer's action and that this action constitutes an "adverse action" within the meaning of s 342. With respect to the onus of proof, the Act adopts the same position as that under the 1904 Act. Section 361 establishes the onus of proof under the chapeau "Reasons for action to be presumed unless proved otherwise". The provision is in the following terms: 78 (2003) 217 CLR 92 at 144-145 [169]. 79 (2002) 113 IR 326 at 342 [54]-[55]. in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and taking that action for that reason or with that intent would constitute a contravention of this Part; it is presumed, in proceedings arising from the application, that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise. Subsection (1) does not apply in relation to orders for an interim injunction." Consistent with the statement of Gibbs J in Bowling80, the Explanatory Memorandum to the Fair Work Bill 2008 states81: "subclause 361(1) provides that once a complainant has alleged that a person's actual or threatened action is motivated by a reason or intent that would contravene the relevant provision(s) of Part 3-1, that person [in this case, the employer] has to establish, on the balance of probabilities, that the conduct was not carried out unlawfully. This has been a long-standing feature of the freedom of association and unlawful termination protections and recognises that, in the absence of such a clause, it would often be extremely difficult, if not impossible, for a complainant to establish that a person acted for an unlawful reason." There is no issue of onus raised in these proceedings. At trial The respondents, then the applicants, submitted that in determining whether or not prejudicial action has been taken "because" of the status or activities of the victim, the subjective reason of the actor for taking the prejudicial action is wholly irrelevant. Rather the test was said to be "purely objective". This disjunction between "subjective" and "objective" reasons was to be productive of error in the Full Court. Alternatively, the respondents submitted 80 (1976) 51 ALJR 235 at 239; 12 ALR 605 at 612. 81 Australia, House of Representatives, Fair Work Bill 2008, Explanatory Memorandum at 234 [1461]. at trial that BRIT had not established that, on the balance of probabilities, it had not acted for a proscribed reason82. With respect to the operation of s 346, Tracey J held83: "It has never been the case that an employer was prevented, by federal industrial legislation, from taking prejudicial action against an employee who happened to be a union member or a union official: see for example Cuevas v Freeman Motors Ltd84. An employer could not, however, act to the detriment of an employee 'by reason of' or 'because' of the employee's union membership or associated activities. Over the past century the legislature has expanded progressively the number of prejudicial acts which are denied to an employer and the number of proscribed reasons which might actuate the taking of such prejudicial action. The central issue in this case is concerned with the provisions of the Act which determine whether a causal nexus exists between an employee's union membership and activities and any prejudicial action about which complaint is made." His Honour continued85, after considering what was decided in Bowling: "In all of the cases to which I was referred ... and others which I have examined, the court proceeded on the basis that evidence of the employer's subjective reasons for taking the impugned action was relevant in deciding whether the employer had taken the action because of the existence of one or more of the circumstances in which such action was impermissible." Dr Harvey, the Chief Executive Officer of BRIT, was the person responsible for the action taken against Mr Barclay. She gave evidence and was cross-examined at length. His Honour made the following findings regarding her evidence86: 82 (2010) 193 IR 251 at 258 [23]. 83 (2010) 193 IR 251 at 257 [19]. 84 (1975) 25 FLR 67 at 78-79. 85 (2010) 193 IR 251 at 259 [28]. 86 (2010) 193 IR 251 at 264-265 [54]. "When, however, [Dr Harvey] was called on to explain her reasons for taking adverse action against Mr Barclay she provided convincing and credible explanations of why it was that she took the steps that she did. ... She said that she had determined to exclude him from BRIT campuses and suspend his e-mail access because she did not want Mr Barclay on the premises while the auditors were there and because she did not want any other 'loose allegations' made inappropriately during the audit to the detriment of BRIT. She maintained her denials of having acted against Mr Barclay for any reason associated with his union membership, office or activities. ... I accept her evidence. I am satisfied that she did not act for any proscribed reason." The application was dismissed. The Full Court In dealing with the operation of the word "because" in s 346 on appeal to the Full Court of the Federal Court, the majority (Gray and Bromberg JJ) said87: "The central question under s 346 is why was the aggrieved person treated as he or she was? If the aggrieved person was subjected to adverse action, was it 'because' the aggrieved person did or did not have the attributes, or had or had not engaged or proposed to engage in the industrial activities, specified by s 346 in conjunction with s 347? So much is evident from the use of the word 'because'. It is also consonant with the objective and protective purposes of s 346." (emphasis added) "Objective facts, dependent on the determination of questions of mixed fact and law, have now been included in s 346 to a much greater extent than they were in the section's predecessors. Section 347 is replete with examples. For instance 'lawful activity' in (b)(ii) and (iii) and 'lawful request' in (b)(iv). Whether a person is or is not a member or officer of an industrial association is also a fact to be ascertained objectively by reference to a legal standard, usually the rules of the association." 87 (2011) 191 FCR 212 at 221 [27], [29]. 88 (2011) 191 FCR 212 at 222 [33]. Whilst accepting the view of the primary judge that the words "because" and "by reason of" are used interchangeably by the Act, Gray and Bromberg JJ took issue with the assessment of the employer's subjective state of mind in ascertaining the reasons relevant to the adverse action89: "The determination of those questions involves characterisation of the reason or reasons of the person who took the adverse action. The state of mind or subjective intention of that person will be centrally relevant, but it is not decisive. What is required is a determination of what Mason J in Bowling90 called the 'real reason' for the conduct. The real reason for a person's conduct is not necessarily the reason that the person asserts, even where the person genuinely believes he or she was motivated by that reason. The search is for what actuated the conduct of the person, not for what the person thinks he or she was actuated by. In that regard, the real reason may be conscious or unconscious, and where unconscious or not appreciated or understood, adverse action will not be excused simply because its perpetrator held a benevolent intent. It is not open to the decision-maker to choose to ignore the objective connection between the decision he or she is making and the attribute or activity in question." (emphasis added) Gray and Bromberg JJ concluded the primary judge erred by failing to require BRIT to establish the "real reason" for the treatment of Mr Barclay, rather than that by which Dr Harvey had thought she had been actuated91. Their Honours linked this notion of the "real reason" to what had been said in the passage set out above by reiterating that "the search required by s 346 is a search for what actuated the conduct of the person who took adverse action, not for what that person thinks he or she was actuated by"92. Further, the e-mail was sent by Mr Barclay in his capacity as an officer of the AEU and, even if it were to be accepted that the content of the e-mail may have been overstated, his failure was that of a union officer and not of an employee93. The dismissal therefore occurred for a proscribed reason in contravention of s 346. 89 (2011) 191 FCR 212 at 221 [28]. 90 (1976) 51 ALJR 235 at 241; 12 ALR 605 at 617. 91 (2011) 191 FCR 212 at 233 [73]-[74]. 92 (2011) 191 FCR 212 at 233 [74]. 93 (2011) 191 FCR 212 at 234 [78]. In his dissenting reasons, Lander J preferred the approach of the primary judge, namely, that when looking to identify the reasons "because" a decision was made, the question is to be answered "by reference to the subjective intention of the decision-maker"94. In this regard, whilst Mr Barclay may have been acting on behalf of the AEU when sending the e-mail, the adverse action taken by BRIT was not for this reason. The action was taken because "[Dr Harvey] was of the view that the allegation against [Mr Barclay] was serious, and [she] was concerned if Mr Barclay was not suspended he might cause further damage to the reputation of the (BRIT) and of the staff in the BRIT", as found by the primary judge95. These findings of fact had not been challenged before the Full Court96. The appeal to this Court Before this Court the appellant accepts that it took "adverse action" against the first respondent under s 342 of the Act. On the footing that s 346 applies, the primary issue for determination is whether or not the adverse action was made "because" of a reason proscribed by s 346. No party to the appeal seeks to agitate the findings of fact made by the primary judge. The Minister for Tertiary Education, Skills, Jobs and Workplace Relations ("the Minister") sought, and was granted, leave to intervene. The Minister largely supported the position taken by Mr Barclay and the AEU. The appellant submits that there are four questions to be dealt with in this appeal; and it is convenient to proceed in this fashion. The questions may be formulated as follows: Is the question of whether a person has taken adverse action because of a proscribed reason for the purpose of s 346 of the Act to be answered by an "objective" or "subjective" test? If a primary judge accepts evidence of an employer that a decision has been made for an innocent and non-proscribed reason, and such findings and the reasons for such findings are not challenged, is this a good answer to an alleged breach of s 346? 94 (2011) 191 FCR 212 at 256 [208]. 95 (2011) 191 FCR 212 at 258 [226]. 96 (2011) 191 FCR 212 at 257 [221]. If the answer to Question 1 is an "objective" test, did the majority of the Full Court nonetheless erroneously apply the test impermissibly narrowly? Did the findings of the primary judge only go toward the "conscious" state of mind of the decision-maker, leaving open to the Full Court the making of findings with respect to the "unconscious" state of mind of the decision-maker? Question 1 The appellant submits, in support of the approach taken by the primary judge, that in applying s 346 the court should favour the application of a "subjective" test, which is based on the history of the legislation and the intention of Parliament. It contends that, while "objective" considerations are relevant, they are not decisive in testing the reliability and weight of the evidence. The respondents submit, with support from the Minister, that (a) questions of subjectivity as opposed to objectivity serve only to misdirect the correct interpretation of s 346; rather, the relevant inquiry concerns that which the employer must establish to avoid a finding of contravention, and that (b) the ultimate issue becomes "whether the employer has discharged the onus of dissociating all the real reasons from each of the reasons proscribed by s 346". Submission (a) should be accepted. But while submission (b) correctly emphasises the importance of the onus placed upon the employer, it does not give proper effect to Bowling. With respect to submission (a), to engage upon an inquiry contrasting "objective" and "subjective" reasons is to adopt an illusory frame of reference. Such an inquiry into the "objective" reasons risks the substitution by the court of its view of the matter for the finding it must make upon an issue of fact. Here, that finding was made by Tracey J and it was an error of law to displace it in the way seen in the reasons of the Full Court majority. However, some attention should be paid here to a passage in the reasons of Lord Nicholls of Birkenhead in Chief Constable of West Yorkshire Police v Khan97, which was repeated by Baroness Hale of Richmond in Derbyshire v St Helens Metropolitan Borough Council98. Section 2(1) of the Race Relations Act 1976 (UK) defined "discrimination by victimisation" in terms which posited treatment of the person victimised "by reason that" this person had acted in any of the ways then set out in pars (a)-(d). 97 [2001] 1 WLR 1947 at 1954; [2001] 4 All ER 834 at 841. 98 [2007] 3 All ER 81 at 96. Lord Nicholls denied that the expression "by reason that" attracted notions of causation as understood when attaching a legal conclusion to a particular state of affairs99. Rather, as his Lordship said, "[t]he reason why a person acted as he did is a question of fact"; he also remarked that "[u]nlike causation, this is a subjective test"100. The particular difficulty is that Lord Nicholls spoke as he did in response to a question he framed as follows: "What, consciously or unconsciously, was his reason?" (emphasis added). The reference to unconscious reasoning presents a paradox apparent in the passage in the majority reasons in the Full Court set out above101. This reference is apt to confuse and mislead the finder of fact. It may be noted that in Derbyshire, Lord Bingham of Cornhill summarised Lord Nicholl's proposition in Khan as "[w]hat matters is the discriminator's subjective intention: what was he seeking to achieve by treating the alleged victim as he did?"102 This formulation has no reference to the unconscious. The relevant frame of reference in this case is a statutory provision in which neither the words "objective" nor "subjective" appear. There is an inherent risk of misguidance when seeking to imply tests or requirements in the application of a statutory provision absent some persuasive basis to do so. Nothing was put in argument, nor are there any decisions of this Court, to provide such a basis. Indeed, no direct challenge was made to what had been said by Mason J in Bowling. In determining an application under s 346 the Federal Court was to assess whether the engagement of an employee in an industrial activity was a "substantial and operative factor" as to constitute a "reason", potentially amongst many reasons, for adverse action to be taken against that employee. In assessing the evidence led to discharge the onus upon the employer under s 361(1), the reliability and weight of such evidence was to be balanced against evidence adduced by the employee and the overall facts and circumstances of each case; but it was the reasons of the decision-maker at the time the adverse action was taken which was the focus of the inquiry. 99 So also was Lord Scott of Foscote: [2001] 1 WLR 1947 at 1964; [2001] 4 All ER 834 at 850-851. 100 [2001] 1 WLR 1947 at 1954; [2001] 4 All ER 834 at 841. 102 [2007] 3 All ER 81 at 86. Whilst it is true to say, as do the respondents, that there is a distinction between discharging the onus of proof and establishing that the reason for taking adverse action was not a proscribed reason, there is nothing to suggest that the conclusions drawn by the primary judge, and the findings and reasons upon which these were based, did not take this into consideration. As Lander J concluded, if the reasons for the conclusions and the facts for which they were formulated are not challenged, then the contravention of s 346 cannot be made out103. This proposition should be accepted. To hold otherwise would be to endorse the view that the imposition of an onus of proof on the employer under s 361(1) creates an irrebuttable presumption at law in favour of the employee. Question 1 is to be answered: "Neither. The test is whether adverse action has been taken because of a proscribed reason." Question 2 In the joint reasons in Fox v Percy104, in a passage which has been applied since105, Gleeson CJ, Gummow and Kirby JJ said: "[An appellate court] must, of necessity, observe the 'natural limitations' that exist in the case of any appellate court proceeding wholly or substantially on the record106. These limitations include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses' credibility and of the 'feeling' of a case which an appellate court reading the transcript, cannot always fully share107." 103 (2011) 191 FCR 212 at 258 [226]. 104 (2003) 214 CLR 118 at 125-126 [23]; [2003] HCA 22. 105 Australian Securities and Investments Commission v Hellicar (2012) 86 ALJR 522 at 548 [130]; 286 ALR 501 at 534-535; [2012] HCA 17; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at 381 [76]; [2010] HCA 31. 106 Dearman v Dearman (1908) 7 CLR 549 at 561; [1908] HCA 84. See also Scott v Pauly (1917) 24 CLR 74 at 278-281; [1917] HCA 60. 107 Maynard v West Midlands Regional Health Authority [1984] 1 WLR 634 at 637; [1985] 1 All ER 635 at 637, per Lord Scarman, with reference to Joyce v Yeomans [1981] 1 WLR 549 at 556; [1981] 2 All ER 21 at 26. See also Chambers v Jobling (1986) 7 NSWLR 1 at 25. Further, absent any challenge to the findings of fact or reasons for the conclusions drawn by the primary judge, the decision that an employer has not acted for a proscribed reason in taking adverse action against an employee must stand. The findings by Tracey J in relation to the evidence of Dr Harvey established that the reasons for adverse action were not proscribed by s 346. Question 2 is to be answered "yes". Question 3 Applying what has been said with respect to Question 1, the Full Court erred in reassessing the reliability and weight of the evidence in this case. Such a course was not open to it. Question 4 Given the answers to the above three questions, there was no scope for the Full Court to make findings with respect to the "unconscious" state of mind of BRIT. Conclusion The appeal should be allowed and consequential orders made as proposed by the Chief Justice and Crennan J. These orders do not include a costs order with respect to the appeal to this Court. Section 26 of the Judiciary Act 1903 (Cth) states that this Court has jurisdiction to award costs in all matters brought before it. This appeal is a matter brought before the Court under s 73(ii) of the Constitution. On that basis the appeal would attract a costs order. However, s 570 of the Act provides that in "proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction under this Act", a party may be ordered by the court to pay costs incurred by another party to the proceedings only in certain circumstances, none of which is presently applicable. If it can be said that the right or duty in issue on the appeal to this Court from the Full Court of the Federal Court owes its existence not to s 73(ii) of the Constitution but to the Act, in which s 570 appears, then s 570 would appear to be engaged108. 108 See Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission (2001) 203 CLR 645 at 660 [41]-[44]; [2001] HCA 16. If the appellant seeks against the first and second respondents a costs order in respect of this appeal, and this is not resisted by those parties then a consent order may be filed. If the first and second respondents resist that course then: the appellant 10 September 2012, to file written submissions on or before the first and second respondents are to file written submissions on or before 12 September 2012, and any submissions by the appellant in reply are to be filed on or before 14 September 2012. The costs issue then will be determined by the Court on the papers. The trial Dr Louise Harvey was the appellant's Chief Executive Officer. Mr Greg Barclay, the first respondent, was an employee of the appellant. He was also an officer of the second respondent, a trade union. She suspended him from duty and took other measures against him. The question was whether she did this "because" he had engaged in industrial activity within the meaning of s 346 of the Fair Work Act 2009 (Cth) ("the Act"). The word "because" requires an investigation of Dr Harvey's reasons for her conduct. Section 360 provided that "a person takes action for a particular reason if the reasons for the action include that reason." The Explanatory Memorandum makes it clear that to satisfy s 360 the particular reason must be an "operative or immediate reason for the action"109. Under s 361 of the Act, it is presumed that action was taken for a prohibited reason, unless the employer proves otherwise. Examining whether a particular reason was an operative or immediate reason for an action calls for an inquiry into the mental processes of the person responsible for that action. Dr Harvey gave an account of her mental processes in an affidavit. The respondents' searching cross-examination of her is recorded over 70 pages of the trial transcript. The record of her re-examination extends over three pages of that transcript. The assessment of a witness's mental processes is an assessment of that witness's state of mind. It is pre-eminently a matter in which a trial judge has a considerable advantage over an appellate court. In the course of his great speech in Nocton v Lord Ashburton, Viscount Haldane LC said110: "it is only in exceptional circumstances that judges of appeal, who have not seen the witness in the box, ought to differ from the finding of fact of the judge who tried the case as to the state of mind of the witness." The trial judge possesses great learning in the present field. He has considerable experience of oral hearings. He said that Dr Harvey "provided convincing and credible explanations of why it was that she took the steps she did." He said that she "maintained her denials of having acted against Mr Barclay for any reason associated with his union membership, office or activities." He concluded: "I accept her evidence. I am satisfied that she did not act for any proscribed reason. Rather, she acted for the reasons which she gave."111 Of course, "mere 109 Australia, House of Representatives, Fair Work Bill 2008, Explanatory Memorandum at 234 [1458]. 110 [1914] AC 932 at 957. See also at 945 and 949. And see Clark Boyce v Mouat [1994] 1 AC 428 at 436-437. 111 (2010) 193 IR 251 at 257-258 [54]. declarations" by a witness as to his or her "mental state" may not be sufficient to discharge the appellant's burden of proof under s 361112. External circumstances could put into question the reliability or credibility of those declarations. But Dr Harvey's evidence did not consist only of "mere declarations". There was nothing to suggest that her evidence was incorrect. No challenge pressed to the trial judge's factual reasoning In the Full Court, the respondents did not attempt to demonstrate any error vitiating the trial judge's fact-finding process113. In this Court, the respondents filed a notice of contention asserting that the trial judge "failed to appreciate the weight or bearing of established circumstances, namely that the first respondent was acting as an officer and engaging in industrial activities". However, at the end of their counsel's address, that notice of contention was almost silently abandoned. In that way, the respondents also jettisoned a number of unsupported and pejorative remarks in their written submissions about the trial judge, for example, that his conclusion "beggars belief". Had the respondents seriously attempted to demonstrate any error vitiating the trial judge's fact-finding process, they would inevitably have failed. The Full Court majority's approach Why, then, did the majority in the Full Federal Court depart from the trial judge's conclusions? The majority gave two main reasons. "Conscious" and "unconscious" reasons. Their Honours drew a distinction between the "real reason for a person's conduct" and "the reason that the person asserts, even where the person genuinely believes he or she was motivated by that reason."114 Their Honours said that the "real reason" could be "unconscious"115. They said that "what actuated the conduct of the person who 112 Pearce v W D Peacock & Co Ltd (1917) 23 CLR 199 at 203 per Barton ACJ; [1917] HCA 28. 113 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 257 [221] and 258 [224] and [226]. 114 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 221 [28]. 115 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 221 [28]. took adverse action" could be different from "what that person thinks he or she was actuated by."116 In this Court, the respondents did not refer to this approach in their written submissions. This was despite the fact that the appellant had criticised it in its written submissions. The respondents referred to it in oral argument. But they did not long persist in any attempt to defend it. It is indefensible. Counsel for the respondents courteously, but scarcely enthusiastically, said of the Full Court majority's approach: "It might be said that that might be interesting, but it would be a little difficult to turn into a practical set of propositions in resolving a case. It might be so, but it might not be very helpful." The respondents made no attempt to turn the Full Court majority's approach into a practical set of propositions enabling them to gain victory in this case. To search for the "reason" for a voluntary action is to search for the reasoning actually employed by the person who acted. Nothing in the Act expressly suggests that the courts are to search for "unconscious" elements in the impugned reasoning of persons in Dr Harvey's position. No requirement for such search can be implied. This is so if only because it would create an impossible burden on employers accused of contravening s 346 of the Act to search the minds of the employees whose conduct is said to have caused the contravention. How could an employer ever prove that there was no unconscious reason of a prohibited kind? An employer's inquiries of the relevant employees would provoke, at best, nothing but hilarity. The employees might retort that while they could say what reasons they were conscious of, they could say nothing about those they were not conscious of. the respondents did not demonstrate Even if the Act did suggest that a search for "unconscious" elements was a there was any proper one, "unconscious" element in Dr Harvey's reasoning. Understandably, it did not occur to counsel for the respondents at trial to put any such proposition to Dr Harvey in cross-examination. It is true that the burden of proof was on the appellant at the trial. But at this appellate stage it is incumbent on critics of the trial judge's conclusion to point to an error underlying it. This the respondents did not convincingly do. There is no evidence whatever that supports the proposition that Dr Harvey "unconsciously" employed prohibited reasoning in taking action against Mr Barclay. that 116 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 233 [74]. A "logical" consequence of Mr Barclay's representative role. The second theme in the Full Court majority's reasoning was that the appellant had not met its onus of proof because all the conduct of Mr Barclay which led Dr Harvey to act "was … done for and on behalf of" the second respondent117. The respondents submitted that from this fact it "logically" followed that the appellant must fail. Contrary to that submission, that circumstance did not prevent the appellant meeting its onus of proof. Dr Harvey's mental state did not turn on whom Mr Barclay was acting for, but on what he did. The respondents' stance in this Court In this Court, the respondents contended that s 346 of the Act "is not confined to the subjective intent of the decision-maker". They argued: "The 'real reason' for the adverse action may comprise a multiplicity of reasons, some of them 'subjective' in the sense that they refer to an intention, belief or other state of mind of the actor and others of which are objective in the sense that they refer to extrinsically ascertainable facts which comprise the context in which the action was taken. However, the enquiry to ascertain the real reason or reasons is objective. The decision maker may or may not be in a position to give dispositive evidence of the real reasons for the adverse action". The respondent did not make it plain what precise meaning the words "objective enquiry" would have in this context. The language of the Act does not support the respondents' submission. The international instruments to which Australia is party and on which the respondents relied do not support it either. Nor do the authorities to which the respondents referred. One of those authorities, for example, was Mason J's judgment in General Motors-Holden's Pty Ltd v Bowling, with which Stephen and Jacobs JJ concurred. In that case, his Honour was considering the purpose of an earlier version of the Act. His Honour held that its purpose was to place on the defendant the onus of proving "that which lies peculiarly within his own knowledge" (emphasis added)118. Orders The appeal should be allowed and the orders proposed by other members of the Court should be made. 117 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 233 [73]. 118 (1976) 51 ALJR 235 at 241; 12 ALR 605 at 617. |
HIGH COURT OF AUSTRALIA Matter No M273/2003 GAS AND APPELLANT THE QUEEN RESPONDENT Matter No M275/2003 SJK AND APPELLANT THE QUEEN RESPONDENT GAS v The Queen; SJK v The Queen [2004] HCA 22 19 May 2004 M273/2003 and M275/2003 ORDER In each matter: Appeal dismissed. On appeal from the Supreme Court of Victoria Representation: I D Hill QC with L C Carter for the appellant in M273/2003 (instructed by Jones R Richter QC with T Kassimatis for the appellant in M275/2003 (instructed by Victoria Legal Aid) P A Coghlan QC with C M Quin for the respondent in both matters (instructed by the Solicitor for Public Prosecutions (Victoria)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS GAS v The Queen SJK v The Queen Criminal law – Sentencing – Prosecution granted leave to file new presentment charging manslaughter in place of murder against two accused – Counsel for prosecution informed trial judge of "plea agreement" whereby accused would plead guilty and prosecution would submit that sentencing should proceed on basis that each accused was an aider or abettor rather than principal offender – Prosecution appeal against sentence on ground of manifest inadequacy – Appeal succeeded on basis that insufficient weight given to objective gravity of killing and aggravating circumstances, and undue weight given to youth and rehabilitation prospects of offenders – Whether Court of Appeal erred in dealing with the appeal in a manner contrary to the "plea agreement" – Effect of admission involved in pleading guilty to unlawful and dangerous act manslaughter – Culpability of aider and abettor relative to that of principal offender. Criminal law – Sentencing – "Plea agreement" – Whether prosecution conduct of to "plea agreement" – Respective responsibilities of appeal was contrary prosecution, accused and trial judge with respect to "plea agreements" – Whether trial judge's responsibility to find and apply sentencing principles may be circumscribed by conduct of counsel – Whether appropriate that "plea agreement" should deal with issues of sentencing principle – Desirability of reducing "plea agreement" to writing – Discretion of appeal court in prosecution appeals against sentence to decline to intervene although error is shown in sentencing process. Words and phrases – "plea agreement", "aider and abettor". GLEESON CJ, GUMMOW, KIRBY, HAYNE AND HEYDON JJ. These appeals are against a decision of the Court of Appeal of Victoria1 (Phillips CJ, Chernov and Vincent JJA), which allowed prosecution appeals against sentences for manslaughter imposed by the primary judge (Bongiorno J)2, and fixed higher sentences. The sole ground of appeal to this Court is that the Court of Appeal erred in permitting the Director of Public Prosecutions to conduct his appeal in a manner said to be contrary to a "plea agreement" reached at first instance, and in dealing with the appeal in a manner contrary to such agreement. The facts The prosecution of the appellants, who were aged 16 and 15 respectively at the time of the event, arose out of the brutal killing of an elderly woman in the course of a robbery at her home. The victim was aged 73. She lived alone with her handicapped son, aged 47. The appellant SJK knew the son, and both appellants knew that the victim kept substantial amounts of cash at home in order to provide her son with money for shopping expeditions, which he enjoyed. They also knew that the doors of the house were often left open at night by the son. The victim was found dead on the morning of 16 October 2000. Her condition was described by the Court of Appeal as follows: "The cause of death was asphyxia by manual neck compression. Although he was unable to exclude the possibility that there was some element of smothering in the mechanism of death, the pathologist gave evidence ... that the main cause of death was one of strangulation. The pathologist noted multiple areas of blunt trauma to the head, chest, back and the anal and vaginal areas. He also noted trauma to the front, back and top of the skull. Each was a separate injury. The bruising to the head was more likely to be caused by a fist. The bruising around the laryngeal cartilage was consistent with squeezing. There was also bruising around the vaginal area which was consistent with pressing fingers. There was a symmetrical pattern of bruising over the anterior chest which was consistent with someone having knelt on the chest of the deceased. The 1 Director of Public Prosecutions v SJK; Director of Public Prosecutions v GAS [2002] VSCA 131. 2 R v SJK and GAS [2002] VSC 94. Kirby Hayne deceased also sustained three fractured ribs which would have required at least moderate to severe force to occur." The appellants were interviewed by the police. The appellant SJK admitted to having gone with GAS to the victim's house on the evening of 15 October for the purpose of stealing money. This was the second occasion on which they had done that. He said that, while he and GAS were in the victim's bedroom, she woke up, and GAS then attacked her and appeared to break her neck. The appellant GAS admitted that he had been with SJK on the night of 15 October, but denied that they had been at the victim's house. The pleas at trial The appellants were both charged with murder, and were committed to the Supreme Court of Victoria for trial. Each pleaded not guilty. On 24 July 2001, before a jury was empanelled, counsel for the prosecution informed the trial judge that there had been "some developments". He then informed the judge of the following matters. First, he said the prosecution would seek leave "to file over a new presentment". Secondly, he told the judge that this had been a "difficult forensic case" because there had been no plan to kill the deceased prior to the entry into the house, SJK had said it was GAS who did the killing, GAS had said that he wasn't there at all, and there were certain "difficult forensic problems". Thirdly, he said that the family of the victim were in court. Fourthly, he said, "it has been indicated to us that each accused will plead guilty to this presentment, and it has also been indicated to us that each accused, through their counsel, will not be urging upon your Honour, in terms of the sentencing process, that either is appropriate for a youth training centre". The judge granted leave to file the new presentment, which charged manslaughter in place of the earlier charges of murder. The appellants were re-arraigned and both pleaded guilty. It appears to have been the common understanding that sentencing would not occur on that day, and that the proceedings would need to be adjourned for evidence and submissions on sentence. Counsel for the prosecution said that he wished to indicate that the prosecution was unable to say, and would never be able to say, who killed the deceased. He went on: "Accordingly, the proper way for your Honour to sentence both the accused, in circumstances such as this, is to place it at the lowest common denominator, that is, they were each aiders and abettors, that is, the Crown cannot point to who was the principal offender". He said that authority for that proposition was to be found in a decision of the Victorian Court of Appeal in R v Bannon and Calder3. The judge enquired as to "the basis of the 3 Unreported, 21 September 1993 (Phillips CJ, Crockett and Vincent JJ). Kirby Hayne manslaughter", and counsel replied that it was "lack of intent, unlawful and dangerous act". Counsel said "it will be an unlawful and dangerous act manslaughter on the basis of the unusual circumstances of this case, that the Crown cannot prove or demonstrate to your Honour's satisfaction to the relevant standard who was the principal offender. Bannon's case is authority where the Crown cannot do that." He gave the judge the reference to Bannon and Calder and said that where someone was killed in those circumstances "the sentencing judge was perfectly at liberty to sentence them on the basis at the very least that they were aiders and abettors". There was some discussion about matters irrelevant to the present appeal. The proceedings were then adjourned. When the matter resumed on 11 October 2001, new counsel appeared. Counsel for the prosecution commenced by making a detailed statement, from the bar table, of the alleged facts and circumstances relating to the killing of the deceased, emphasising the nature and extent of her injuries, and the extreme violence inflicted upon her, but not suggesting that either one of the appellants was the person who had attacked and killed her. No objection was raised to this course, and the facts stated were apparently accepted by counsel for the appellants as both true and relevant. Counsel said that the circumstances in which the victim met her death represented "one of the worst nightmares of all elderly women in our community". He elaborated upon the age and vulnerability of the victim, the circumstances of her handicapped son, the taking advantage by the offenders of their knowledge of the household, the fact that on a previous night they had stolen money from the house, the planning of an entry at night to steal more money, and the details of the police interviews of the offenders. Counsel emphasised that both appellants had lied to the police in various ways. He then said: "In this case where the Crown is not able to prove to the requisite standard the precise role played by each of these accused, they, therefore, fall to be sentenced in accordance with the judgment of the Court of Criminal Appeal in R v Bannon and Calder … Each of the accused falls to be sentenced as an aider and abetter, not a principal in the first degree. Your Honour, as to sentence, the Crown submits as follows: That although this court must give weight to the fact that each accused is a youthful offender and thus rehabilitation must be given full weight, it must also be borne in mind that this death resulted from an extremely serious crime. The victim was an elderly vulnerable person who was attacked in her own home, a place where she had every right to feel safe from intruders. Kirby Hayne The accused, in the Crown's submission, made a cynical and deliberate use of the home [scil known] proclivities of her mentally handicapped son to leave the doors of the house unlocked. They entered her house in the dead of night knowing that she was at home and in her bed. They knew that she was a vulnerable elderly lady who had difficulty with mobility. They returned to the scene of a previously successful foray which resulted in them daringly stealing a handbag from the side of a bed while she slept. When she awoke the accused could have easily made good their escape but chose to stay while [the victim] was attacked in a way that was obviously dangerous in the relevant sense. In my submission, there is no doubt that after her death her bedroom was ransacked while she lay dead on the floor after being beaten and strangled. This conduct, in my submission, displays a callousness which does not augur well for the prospect of rehabilitation. Having regard to the circumstances of this crime, it is the Crown's submission that the aspects of general deterrence and of demonstrating community disapproval of this serious criminal conduct must be given considerable weight." It was not suggested to Bongiorno J that those submissions were contrary to any agreement that had previously been made, or that it was not open to the prosecution to press them. Victim impact statements were tendered. As to the nature of the manslaughter, counsel said that "both accused returned to the scene of their successful previous theft ... that this time instead of sleeping through their entry to the bedroom [the victim] woke and then instead of [the accused] running she was attacked and strangled to death". He said: "The Crown is not in a position to prove murderous intent, but the Crown says that the acts of placing the hands the neck and squeezing was without doubt a dangerous act". around Strangulation, he said, was the cause of death. He submitted that "the circumstances of this offence are so serious that the sentencing process involves a very serious disposition and that even giving full weight to the prospects of rehabilitation, this matter must be dealt with as a very serious example of the crime of manslaughter". According to the transcript, he said that detention in a youth training centre was not an appropriate possibility because that could only occur if the sentences were for no more than three years, and such sentences would involve "a terrible error". The transcript is probably inaccurate; counsel, we were told, probably said "appellable error". Kirby Hayne Counsel for the appellants then addressed. They emphasised the youth of their clients and other circumstances personal to the appellants upon which they called evidence in support of their submissions. They put arguments on the question of general and specific deterrence. Pre-sentence reports were tendered. Counsel for the prosecution then replied, addressing mainly the matter of deterrence. The proceedings were then adjourned. Nothing was said by any counsel on 11 October 2001 about any matter relevant to the ground of appeal in this Court other than what is referred to above. There was a further hearing on 25 February 2002 when the prosecution tendered evidence of certain conduct on the part of the appellants said to demonstrate lack of remorse. There was argument about the admissibility of the material. It is not relevant to the present appeal. The sentences On 3 April 2002, Bongiorno J sentenced each appellant to imprisonment for six years, and fixed four years as the period before the end of which the appellants were not to be eligible for parole. In his remarks on sentence, "Your plea of guilty to manslaughter means that each of you has now admitted that you killed [the victim] by an unlawful act which was dangerous. My inability to discern any distinction in the role played by each of you with the necessary degree of satisfaction in circumstances where there may or may not have been such a distinction means that for sentencing purposes you must each be treated as bearing the culpability of no more than that of an aider and abettor, each of the other. It is on this basis that you will be sentenced." (emphasis added) His Honour did not specifically refer to, or discuss the reasoning in, Bannon and Calder. However, he said that "current sentencing practices ... require that an aider and abettor should have imposed upon him or her a lesser penalty than that which would be imposed upon a principal offender". The appeals to the Court of Appeal The Director of Public Prosecutions appealed to the Court of Appeal against the sentence imposed on each accused. The sole ground of appeal in each Kirby Hayne case was that the head sentence and non-parole period were manifestly inadequate. In his written submissions, the Director drew attention to the principles governing prosecution appeals stated in R v Clarke4. Those principles are not in dispute. They were set out in the reasons of the Court of Appeal. In developing the submission that the sentences were manifestly inadequate, the written submissions emphasised the objective gravity of the homicide, describing this (consistently with what had been put to Bongiorno J) as "a very serious example of the crime of manslaughter" and listing as aggravating features the advantage that was taken of knowledge gained from the handicapped son, the knowledge that the victim and her son lived alone, the element of home invasion at night, and the vicious nature of the attack, which involved sexual assault. The need for general deterrence was stressed. It was argued that the trial judge had given undue weight to the youth of the offenders, and to the question of rehabilitation. The need for specific deterrence was also raised, with reference to the lack of remorse of the offenders. The written submissions concluded as follows: "17. On 24 July 01 both the respondents were arraigned on one count of manslaughter. At that time the prosecutor indicated to his Honour that the respondents were to be sentenced as aiders and abettors as the Crown was not in a position to point to who was the principal offender. Reliance was placed on R v Bannon and Calder ... 18. His Honour acknowledged that each of the respondents was to be sentenced as bearing the culpability of no more than that of an aider and abetter, each of the other ... 19. When called upon to sentence for unlawful and dangerous act manslaughter, where no specific intent is alleged, the distinction between an aider and abetter and a principal is not as significant as it might be for crimes of specific intent. In a manslaughter of this type, little if any disparity between principal and aider and abettor was justified, it is, in effect, a distinction without a difference. In essence, the distinction was drawn as indicating no more that [sic] the Crown was unable to establish who had actually caused the death. His Honour fell into error by allowing too great a reduction in sentence on the basis of aiding and abetting." Kirby Hayne It is par 19 that is fastened upon by the appellants for the purposes of their ground of appeal in this Court. It is, therefore, instructive to note how it was dealt with in the Court of Appeal. The written submissions to the Court of Appeal filed on behalf of GAS did not specifically address par 19 of the Director's submissions. The written submissions filed on behalf of SJK responded to that paragraph as follows: "34. The Crown ... requested the learned sentencing judge to sentence the respondents '... in accordance with the judgment of the Court of Criminal Appeal in R v Bannon and Calder. Each of the accused falls to be sentenced as an aider and abettor, not a principal in the first degree.' In paragraph 19 of the Outline of Appellant's Submissions, it is submitted, in effect, that in a case of this kind the distinction between aider and abettor and principal is not as significant as it might be for crimes of specific intent. The learned sentencing judge is said to have fallen into error by allowing too great a reduction on the basis that the respondents were to be sentenced as aiders and abettors. That submission is not connected to authority. The basis on which the Respondents [sic] was referred to twice by the learned Crown Prosecutor during the proceedings (24 July 2001 at page 19 and 11 October 2001 at page 12). At no stage in the proceedings did the Crown submit to the learned sentencing judge that the distinction between aiders and abettors and a principal was a 'distinction without a difference'. It was implicit in the submissions of Mr Hicks SC (24 July 2001 at page 19) that there is a difference: '... the Crown is unable to say, and never would be able to say, in this case who killed [the victim]. Accordingly, the proper way for your Honour to sentence both accused, in circumstances such as this, is to place it at the lowest common denominator, that is, they were aiders and abettors, that is, the Crown cannot point to who was the principal offender' [added emphasis in appellant's submission]. 37. The Crown having relied on the judgment of the Court of Criminal Appeal in R v Bannon and Calder, it is to be noted that in the Kirby Hayne course of … the part of the judgment dealing with sentence, the Court said5: 'We think that an aider and abettor in such circumstances should have imposed on him or her a lesser penalty than that imposed on the principal actor. Of course, if the role of each offender cannot be determined then it is proper that each receive the same punishment (assuming - as is this case - that there are no factors personal to the offender that require one to be dealt with differently from the other)'. In his reasons for sentence, the learned sentencing judge … notes that by Statute [Crimes Act 1958 (Vic) s 323] the respondent is liable to be punished as a principal offender. He also states the regard he has had to 'current sentencing practices', which can be assumed to include the passage from Bannon and Calder (above), requiring that 'an aider and abettor … should have imposed upon him or her a lesser penalty than that which would be imposed upon a principal offender'. His Honour states that he has taken account of that principle in the sentence. In our submission, no error is disclosed." We were not taken to any transcript, affidavit or admission establishing that the matter was taken any further in oral argument. It is to be noted that the Director's argument about the significance of Bannon and Calder, and the response of SJK, were treated as going to the merits of the contention that the sentences imposed by Bongiorno J were manifestly inadequate. It was not put to the Court of Appeal that it was not entitled, or obliged, to deal with the argument. Nor was it submitted to the Court of Appeal that, even if it considered the sentences to be manifestly inadequate, or that Bongiorno J had fallen into specific error in relation to his understanding of Bannon and Calder, it should nevertheless dismiss the prosecution appeals in the exercise of its discretion. That possibility was not adverted to in the reasons of the Court of Appeal, because no such possibility was raised in argument. In the reasons of the Court of Appeal, as has been mentioned, the general principles relevant to prosecution appeals against sentence were stated, quoting from R v Clarke6. One of those 5 R v Bannon and Calder, Victorian Court of Criminal Appeal, 21 September 1993 at [1996] 2 VR 520 at 522. Kirby Hayne principles was stated as follows: "An appellate court has an over-riding discretion which may lead it to decline to intervene, even if it comes to the conclusion that error has been shown in the original sentencing process. In this connection, the conduct of the Crown at the original sentencing proceedings may be a matter of significance". The Court of Appeal was aware of the existence of the discretion, but it was not invited in argument to consider exercising it, and it made no further reference to the topic. The Court of Appeal, for reasons explained in considerable detail, upheld all of the Director's submissions. The Court accepted that the sentences were manifestly inadequate, that insufficient weight had been given to the objective gravity of the killing and to the aggravating circumstances in which it occurred, and that undue weight had been given to the youth of the offenders and to what were regarded as their prospects of rehabilitation. Those were the substantial grounds upon which the Director's appeal was allowed and the re-sentencing proceeded. Aiding and abetting manslaughter The Court of Appeal was right to accept that this was an extremely serious case of manslaughter, occurring in circumstances of extreme aggravation. It was common ground that the appellants were to be sentenced on the basis that the manslaughter involved killing by an unlawful and dangerous act, and that the relevant act was that of strangulation. The circumstances in which that act occurred involved home invasion, robbery, and a brutal assault on an elderly and vulnerable victim. By their pleas of guilty, expressed to be upon the basis that each admitted only to aiding and abetting, each appellant, although denying that he himself strangled the victim, admitted to being present at the act causing the death of the victim, and to providing intentional assistance or encouragement to the strangler. In Giorgianni v The Queen7, Wilson, Deane and Dawson JJ, in a case concerning the elements of aiding and abetting manslaughter, said: "There are ... offences in which it is not possible to speak of recklessness as constituting a sufficient intent. Attempt is one and conspiracy is another. And we think the offences of aiding and abetting and counselling and procuring are others. Those offences require intentional participation in a crime by lending assistance or encouragement. ... The necessary intent is absent if the person alleged to be a secondary participant does not (1985) 156 CLR 473 at 506. Kirby Hayne know or believe that what he is assisting or encouraging is something which goes to make up the facts which constitute the commission of the relevant criminal offence. He need not recognize the criminal offence as such, but his participation must be intentionally aimed at the commission of the acts which constitute it." (emphasis added) There was, no doubt, an element of artificiality involved in sentencing each appellant on the basis that he aided and abetted the killer, in circumstances where one or the other must have been the killer. That, however, was the necessary consequence of the prosecution's decision to charge each appellant only with manslaughter in a situation where it could not prove that either of the two offenders strangled the victim, and neither admitted that he did it. But that to which each appellant was willing to admit was a very serious offence. Nowhere in his remarks on sentence did Bongiorno J spell out in detail the effect of the admissions necessarily involved in the pleas of guilty, in the circumstances of this case. When those admissions are examined in the light of what was said in Giorgianni, and attention is given to the nature of the unlawful and dangerous act causing death (strangulation), an act which occurred in the context of extremely aggravating circumstances, then it can be seen that the Court of Appeal was right to conclude that the sentences imposed at first instance were manifestly inadequate, and was justified in increasing the sentences as it did. The decision in Bannon and Calder The argument put in pars 17 to 19 of the Director's written submissions, and answered in pars 34 to 39 of the written submission filed on behalf of SJK, was dealt with by the Court of Appeal, but it was not central to its reasons for allowing the appeal. Those reasons were as stated above. Two of the members of the Court of Appeal in the present case had been parties to the judgment in Bannon and Calder. The Court of Appeal rejected the contention that Bannon and Calder stands for any principle that could justify the leniency of the sentences imposed by Bongiorno J. They were right to do so. What Bannon and Calder had in common with the present case was that two people were convicted of unlawful homicide (there, murder), circumstances where the evidence did not establish which of them killed the victims. Unlike the present appellants, they were both sentenced to the maximum term of imprisonment (life). The Court of Criminal Appeal said8: 8 R v Bannon and Calder, Victorian Court of Criminal Appeal, 21 September 1993 at Kirby Hayne "Nevertheless [the sentencing judge's] very inability to discern any distinction in the role played by each of the applicants in a case where admittedly there was a distinction must mean that for sentencing purposes each applicant had to be treated as bearing the culpability of no more than that of an aider and abettor. This proposition rests upon the premise, which we think in the circumstances of this case to be correct, that such culpability is less than that which would attach to a principal actor. But the judge manifestly did not so sentence the applicants since he imposed on both the maximum possible penalty, namely that of life imprisonment. On a view which the judge in effect said was open to be taken, one of the offenders with little or no cause for so doing gained possession of a knife and launched a homicidal attack ... We think that an aider and abettor in such circumstances should have imposed upon him or her a lesser penalty than that imposed upon the principal actor ... One had to get less than life imprisonment. It cannot be said which offender. Therefore both must receive such a lesser sentence." (emphasis added) Insofar as Bannon and Calder held that each of the present appellants was to be sentenced as an aider and abettor, that (subject to relevantly different subjective considerations) each should be given the same sentence, and that such sentence should be less than the maximum (here 20 years), it was not inconsistent with what was done either by Bongiorno J or by the Court of Appeal. However, as the Court of Appeal pointed out in the present case, it is not a universal principle that the culpability of an aider and abettor is less than that of a principal offender, and Bannon and Calder did not decide otherwise. A manipulative or dominant aider and abettor may be more culpable than a principal. And even when aiders and abettors are less culpable, the degree of difference will depend upon the circumstances of the particular case. The Court of Appeal said: "The combination of the two propositions, first that each of the offenders had to be sentenced as an aider and abettor and second, that accordingly a lesser penalty was attracted, put to the sentencing judge by the prosecutor may well have influenced his view as to the proper sentences to be imposed in the present case. Before this Court [counsel for the Director] did not attempt to support or justify the application of either of the two propositions." Kirby Hayne What counsel for the Director put to the Court of Appeal is set out in pars 17 to 19 of the Director's written submissions quoted above. The reference to "a lesser penalty" raises an obvious question: less than what, and by what margin? In Bannon and Calder the answer to the first part of the question was: less than the maximum. Here, both appellants were sentenced to much less than the maximum term of imprisonment, and speculation as to what either would have received had he been the principal offender is hardly fruitful. Having regard to the objective circumstances of the manslaughter, and the aiding and abetting, in the present case, the margin of difference could properly be regarded as relatively small. But the real question for the Court of Appeal, as the Court recognized, was the adequacy of the sentences that were imposed on the basis that the appellants were aiders and abettors. Speculation as to what one of them would have received as a principal offender was of marginal significance. In that respect, the Court of Appeal said: "It is likely, we think, that the learned judge gave too little weight to the gravity of the offences and too much weight to the aspect of rehabilitation of the youthful respondents." The Court of Appeal's reference to two propositions having been put to the sentencing judge, the second being that "a lesser penalty was attracted" by reason of the offenders having to be sentenced as aiders and abettors is not based on any express submission that was made by counsel for the prosecution, either on 24 July 2001 or on 11 October 2001. The transcripts of those occasions record no such submission. And what was claimed in par 36 of the written submissions filed on behalf of SJK in the Court of Appeal was that the proposition was implicit in the submissions made on 24 July 2001. There was no suggestion that the proposition was either expressed or implied in the submissions of counsel for the prosecution on 11 October 2001, when Bongiorno J was urged to treat the case as "a very serious example of the crime of manslaughter". Nor was it claimed, either before Bongiorno J or before the Court of Appeal, that there was some agreement which precluded the prosecution from making the submissions of law advanced in either forum. Principles affecting plea agreements It is in those circumstances that it is now argued that what was done by the prosecution, in the conduct of the appeal to the Court of Appeal, and by the Court of Appeal, was contrary to "the plea agreement reached with the defendants at trial". The only information about any suggested agreement is that which is set out above. In order to understand what might be involved in the concept of Kirby Hayne agreement, in those circumstances, it is necessary to have regard to certain fundamental principles. First, it is the prosecutor, alone, who has the responsibility of deciding the charges to be preferred against an accused person9. The judge has no role to play in that decision. There is no suggestion, in the present case, that the judge was in any way a party to the "plea agreement" referred to. The appellants, through their counsel, evidently indicated to the prosecutor that, if a charge of manslaughter were to be substituted for the charge of murder, they would plead guilty, and the prosecutor filed a new presentment on that understanding. However, the charging of the appellants was a matter for the prosecutor. Secondly, it is the accused person, alone, who must decide whether to plead guilty to the charge preferred. That decision must be made freely and, in this case, it was made with the benefit of legal advice. Once again, the judge is not, and in this case was not, involved in the decision. Such a decision is not made with any foreknowledge of the sentence that will be imposed. No doubt it will often be made in the light of professional advice as to what might reasonably be expected to happen, but that advice is the responsibility of the accused's legal representatives. Thirdly, it is for the sentencing judge, alone, to decide the sentence to be imposed10. For that purpose, the judge must find the relevant facts11. In the case of a plea of guilty, any facts beyond what is necessarily involved as an element of the offence must be proved by evidence, or admitted formally (as in an agreed statement of facts), or informally (as occurred in the present case by a statement of facts from the bar table which was not contradicted). There may be significant limitations as to a judge's capacity to find potentially relevant facts in a given case12. The present appeal provides an example. The limitation arose from the absence of evidence as to who killed the victim, and the absence of any admission from either appellant that his involvement was more than that of an aider and abettor. 9 Barton v The Queen (1980) 147 CLR 75 at 94-95; Maxwell v The Queen (1996) 184 CLR 501 at 534; Cheung v The Queen (2001) 209 CLR 1 at 22 [47]. 10 R v Olbrich (1999) 199 CLR 270. 11 Cheung v The Queen (2001) 209 CLR 1 at 9-11 [4]-[10]. 12 R v Olbrich (1999) 199 CLR 270 at 278 [15]. Kirby Hayne Fourthly, as a corollary to the third principle, there may be an understanding, between the prosecution and the defence, as to evidence that will be led, or admissions that will be made, but that does not bind the judge, except in the practical sense that the judge's capacity to find facts will be affected by the evidence and the admissions. In deciding the sentence, the judge must apply to the facts as found the relevant law and sentencing principles. It is for the judge, assisted by the submissions of counsel, to decide and apply the law. There may be an understanding between counsel as to the submissions of law that they will make, but that does not bind the judge in any sense. The judge's responsibility to find and apply the law is not circumscribed by the conduct of counsel. Fifthly, an erroneous submission of law may lead a judge into error and, if that occurs, the usual means of correcting the error is through the appeal process. It is the responsibility of the appeal court to apply the law. If a sentencing judge has been led into error by an erroneous legal submission by counsel, that may be a matter to be taken into account in the application of the statutory provisions and principles which govern the exercise of the appeal court's jurisdiction. The "plea agreement" alleged in the ground of appeal of each appellant in this Court was particularised as follows: that each appellant would plead guilty to manslaughter by an unlawful and dangerous act; that as the evidence did not permit the role of each appellant to be determined each appellant was to be sentenced at "the lowest common denominator" as an aider and abettor; and accordingly, each appellant should receive a lesser sentence than a principal (which was said to accord with Bannon and Calder); neither of the appellants would attribute blame to the other; and neither appellant would submit that a youth training centre sentence was appropriate. Nothing that occurred before Bongiorno J or the Court of Appeal was inconsistent with any aspect of that "agreement" (understood in the light of the Kirby Hayne fundamental principles stated above) except for what is said to have occurred in relation to (b)(ii). What actually occurred in that respect is set out above. The subject matter of (b)(ii) is a question of sentencing principle. It was not within the capacity of the parties to agree that each accused would receive a lesser sentence than a principal, whatever exactly that might mean. And what exactly it means is far from clear. At the most, if there were an agreement of the kind asserted, it would be a common understanding as to a submission of law that would be made to the sentencing judge. Moreover, it was a submission about the effect of a decision of the Court of Criminal Appeal which the judge would have to read and interpret for himself. The information available to this Court as to (b)(ii) has already been stated. It discloses no agreement of the kind alleged. As appears from the written submissions filed on behalf of SJK in the Court of Appeal, what was claimed was that it was "implicit in the submissions" of counsel for the prosecution on 24 July 2001 that there was necessarily a difference (of some unspecified degree) between what each accused should receive by way of sentence as an aider and abettor and the sentence he would receive if he had been a principal offender. The implication is said to arise from the reference by counsel on 24 July 2001 to Bannon and Calder. The substantive submissions on sentence were made on 11 October 2001. On that day, counsel for the prosecution, as has earlier been noted, submitted that the accused fell to be sentenced in accordance with Bannon and Calder, that is to say, as aiders and abettors, not as principals in the first degree. The prosecution has never resiled from the submission. The argument is as to what follows from it in the circumstances of this case. The substance of the complaint is that what was submitted to the Court of Appeal differed in a material respect from what was implicit in what was said on 24 July 2001. The written submissions to the Court of Appeal have already been set out. The complaint to this Court is that what was expressly submitted to the Court of Appeal on behalf of the Director on a matter of law is different from what was impliedly submitted to Bongiorno J on the same matter of law. The relevant matter is the significance which a sentencing judge, in the exercise of his or her discretion, is either entitled or bound to attach to the fact that an offender is an aider and abettor, not a principal in the first degree. The Court of Appeal said two things about that. First, the significance depends on the facts and circumstances of the particular case, and, although as a generalization it may be correct to say that aiders and abettors are less culpable than principal offenders, that is not an absolute rule, and even where there is a difference, it may not be substantial. Secondly, in the facts and circumstances of the present case, the Kirby Hayne difference was not sufficiently substantial to explain or justify the sentences that had been imposed at first instance. The matter was argued and decided in the Court of Appeal by addressing the merits of the proposition that, as aiders and abettors, the culpability of the appellants was of a relatively low order; low enough to explain the sentences that were imposed. That argument was considered and rejected by the Court of Appeal. No error in the reasoning of the Court of Appeal in that respect has been shown. The Court of Appeal concluded that the basic error made by Bongiorno J was that he gave too little weight to the objective circumstances of the killing, and too much weight to the subjective circumstances of the offenders. The agreement relied upon by the appellants The particular aspect of the alleged "plea agreement" upon which the appellants now found their argument related to a matter of law and sentencing principle, and was inherently vague and uncertain. It was an inappropriate subject for any kind of agreement between counsel. It related, in substance, to the significance for a sentencing judge's discretion of a circumstance that varies in importance from case to case. The significance was said to follow from some rather circumscribed judicial remarks in a decision of the Court of Criminal Appeal which the sentencing judge was obliged to consider and interpret for himself. If the appellants had any legitimate complaint about what occurred, and we do not consider that they did, the appropriate way to ventilate that complaint was to submit to the Court of Appeal that, in accordance with one of the principles stated in R v Clarke (and recognized in this Court by McHugh J in Everett v The Queen13), the Court should exercise a discretion to dismiss the appeal on the ground that the prosecution led the sentencing judge into a material and decisive error. It is not necessary for present purposes to examine the precise ambit of such a discretion, for two reasons. First, no such submission was made. If such a submission had been made, it may have been necessary to take evidence about the terms of the agreement from which counsel for the prosecution were said to have departed. The matter could hardly have been left in the vague condition reflected in what appears above. Secondly, consistently with the way the Court of Appeal decided the case, such an argument would not have succeeded. The Court of Appeal held that the manifest inadequacy of the 13 (1994) 181 CLR 295 at 307. Kirby Hayne sentences resulted from a failure to give sufficient weight to the objective circumstances, and an over-emphasis of the subjective circumstances. It was not some implied submission by counsel, on 24 July 2001, about the effect of Bannon and Calder, that accounted for the sentencing judge's error. It was his failure to appreciate, and give sufficient weight to, exactly what the appellants were admitting, in the circumstances of the case, by their pleas of guilty. If, as the appellants submitted, there was an agreement that the prosecutor would submit to Bongiorno J that Bannon and Calder required a particular kind of outcome, it was not suggested that the prosecutor's submissions to Bongiorno J departed from what had been agreed. Further, if there was an agreement of the kind alleged and, contrary to what is said above, it was an agreement to which some definite operation could be given as between the parties to it, neither its making nor its substance precluded the Director from appealing against the sentences imposed on the appellants on the ground that those sentences were manifestly inadequate. If, as the appellants submitted, the Director's submissions on the appeal to the Court of Appeal departed in some respect from what was agreed (and for the reasons given earlier that premise was not established) that departure did not affect the outcome of the Director's appeal to the Court of Appeal. General observations It is as well to add some general observations about the way in which the dealings between counsel for the prosecution and counsel for an accused person, on subjects which may later be said to have been relevant to the decision of the accused to plead guilty, should be recorded. In most cases it will be desirable to reduce to writing any agreement that is reached in such discussions. Sometimes, if there is a transcript of argument, it will be sufficient if an agreed statement is made in court and recorded in the transcript as an agreed statement of the position reached. In most cases, however, it will be better to record the agreement in writing and ensure that both prosecution and defence have a copy of that writing before it is acted upon. There may be cases where neither of these courses will be desirable, or, perhaps, possible, but it is to be expected that they would be rare. Although the recording of the agreement is most obviously necessary in cases where some agreement is reached about matters of fact that will be put to the court as agreed facts or circumstances bearing upon questions of sentence, the desirability of recording what is agreed is not confined to those cases. It extends to every substantial matter that is agreed between the parties on subjects which Kirby Hayne may later be said to have been relevant to the decision of an accused person to plead guilty. Recording what is agreed, in an agreed form of words, should reduce the scope for misunderstanding what is to be, or has been, agreed. It should serve to focus the minds of counsel, and the parties, upon the application of the three fundamental principles which are set out earlier in these reasons and describe the respective responsibilities of the prosecutor, the accused person and the sentencing judge. Most importantly, it enables counsel for both sides to be clear about the instructions to be obtained from their respective clients and the matters about which, and basis on which, counsel should tender advice to their respective clients. There should then be far less room for subsequent debate about the basis on which an accused person chose to enter a plea of guilty. Orders The appeals should be dismissed. |
HIGH COURT OF AUSTRALIA Matter No S215/2007 APPELLANT AND THE QUEEN Matter No S218/2007 RESPONDENT APPELLANT AND THE QUEEN RESPONDENT Blessington v The Queen [2007] HCA 51 8 November 2007 S215/2007 & S218/2007 ORDER In each matter, appeal dismissed. On appeal from the Supreme Court of New South Wales Representation T A Game SC with S E Pritchard and J K Taylor for the appellant in S215/2007 (instructed by Giddy & Crittenden) B W Walker SC with R W Burgess for the appellant in S218/2007 (instructed by Legal Aid Commission of NSW) M G Sexton SC, Solicitor-General for the State of New South Wales with A M Mitchelmore and J S Caldwell for the respondent and intervening on behalf of the Attorney-General for the State of New South Wales in both appeals (instructed by Crown Solicitor (NSW)) D M J Bennett QC, Solicitor-General of the Commonwealth with N L Sharp intervening on behalf of the Attorney-General of the Commonwealth in both appeals (instructed by Australian Government Solicitor) W Sofronoff QC, Solicitor-General of the State of Queensland with P J Davis SC intervening on behalf of the Attorney-General of the State of Queensland in both appeals (instructed by Crown Solicitor for the State of Queensland) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Blessington v The Queen Criminal law – Criminal appeals – Jurisdiction of Court of Criminal Appeal – The appellants were sentenced to life imprisonment and were subject to a non- release recommendation made by the sentencing judge – Whether the non-release recommendation was a "sentence" or "order" for the purposes of an appeal pursuant to s 5 of the Criminal Appeal Act 1912 (NSW). Courts – Judgments – Circumstances in which judgments may be reopened – Earlier order not perfected – Relevance of subsequent legislative changes – Whether Court of Criminal Appeal erred in refusing leave to reopen judgment. Words and Phrases – "non-release recommendation", "order", "reopen", "sentence". Crimes Act 1900 (NSW), ss 19, 442. Criminal Appeal Act 1912 (NSW), ss 3, 5, 6. Sentencing Act 1989 (NSW), s 13A. Crimes (Sentencing Procedure) Amendment (Existing Life Sentences) Act 2005 (NSW), Sched 1 Item 1. GUMMOW, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ. On 21 June 1990 at a joint trial upon indictment conducted in the Supreme Court of New South Wales before Newman J and a jury, Stephen Jamieson, Matthew Elliott and Bronson Blessington were found guilty and convicted of offences which included the murder on 8 September 1988 of Ms Janine Balding. At the time of the murder, Elliott was aged 16 and Blessington 14. Jamieson was aged 22. On 17 February 1992 the Supreme Court (Gleeson CJ, Hope AJA, Lee AJ), sitting as the Court of Criminal Appeal pursuant to s 3 of the Criminal Appeal Act 1912 (NSW) ("the Criminal Appeal Act"), pronounced orders dismissing appeals by Jamieson and Elliott against conviction, and granting leave to Elliott and Blessington to appeal against sentence but dismissing those appeals1 ("the 1992 decision"). The leading judgment was delivered by The sentences had been imposed by Newman J on 18 September 1990. The provisions of ss 19 and 442 of the Crimes Act 1900 (NSW) ("the Crimes Act"), as they then applied2, subjected Jamieson to a mandatory sentence of penal servitude for life, but, as juveniles, Elliott and Blessington might, at the discretion of the sentencing judge, be sentenced to a lesser term of imprisonment. The Court of Criminal Appeal held in the 1992 decision that the imposition by Newman J of life sentences upon Elliott and Blessington had been well within the range of that statutory discretion3. What are now before this Court, many years later, are appeals by Elliott and Blessington against orders of the Court of Criminal Appeal (Spigelman CJ, Howie J, Kirby J dissenting) pronounced on 22 September 20064 ("the 2006 decision"). These orders refused leave to pursue further proceedings in the Court of Criminal Appeal designed to achieve a result whereby the life sentences imposed by Newman J would be quashed and the appellants would be resentenced. Kirby J, who was in the minority, would have granted that relief (1992) 60 A Crim R 68. 2 Section 19 was repealed by the Crimes (Life Sentences) Amendment Act 1989 (NSW) with effect 12 January 1990, but, by operation of s 19A(5) of the Crimes Act, continued to apply in respect of proceedings instituted before that date. (1992) 60 A Crim R 68 at 80. (2006) 164 A Crim R 208. Crennan and resentenced Elliott and Blessington each to a term of 28 years imprisonment, with a non-parole period expiring on 8 September 2009. The starting point In assessing the submissions advanced by the appellants in this Court, it is important to isolate the appropriate starting point. In Ratten v The Queen5, Barwick CJ stressed the importance of the finality of the outcome of the trial of a criminal offence. The return by the jury of verdicts of guilty both established the guilt of the appellants and amounted to convictions6. Subject to the appellate system established by the Criminal Appeal Act, the exercise of judicial power with respect to the trials upon indictment of Elliott and Blessington was spent upon the subsequent imposition of the sentences upon them. The controversy represented by the indictment had been quelled and, allowing for any applicable statutory regime, the responsibility for the future of the appellants passed to the executive branch of the government of the State7. Something should be said here respecting the Criminal Appeal Act and the position of the Court of Criminal Appeal. Section 23 abolished writs of error and the powers and practice previously existing with respect to new trial motions in criminal cases. The scope of these remedies was recently considered in Weiss v The Queen8. It is well settled that it is the terms of the statutory grant of a right of appeal which determine its nature9. Of the system established by the Criminal Appeal Act, in Grierson v The King10, Dixon J noted that the Court of Criminal Appeal had no further authority beyond that found in the statute and continued: (1974) 131 CLR 510 at 517. See also Pearce v The Queen (1998) 194 CLR 610 at 626-629 [59]-[68]; R v Carroll (2002) 213 CLR 635; D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 17-18 [34]-[35]. 6 Griffiths v The Queen (1977) 137 CLR 293 at 301, 313, 334. 7 See the remarks of Wells J in R v O'Shea (1982) 31 SASR 129 at 145. (2005) 224 CLR 300 at 306-307 [13]-[14]. 9 CDJ v VAJ (1998) 197 CLR 172 at 196-197 [95]. 10 (1938) 60 CLR 431 at 435-436. Crennan "The [Criminal Appeal Act] is based upon the English Act of 1907. It does not give a general appellate power in criminal cases exercisable on grounds and by a procedure discoverable from independent sources. It defines the grounds, prescribes the procedure and states the duty of the court. The statute deals with criminal appeals rather as a right or benefit conferred on prisoners convicted of indictable offences and sets out the kind of convictions and sentences from which they may appeal and lays down the conditions on which they may appeal as of right and by leave and the procedure which they must observe. ... The determination of an appeal is evidently definitive, and a conviction unappealed is equally final. No considerations controlling or affecting the conclusion to be deduced from these provisions are supplied by analogous civil proceedings." It was held in Grierson that the Criminal Appeal Act does not confer jurisdiction to re-open an appeal which has been heard on the merits and finally determined11. However in Grierson Dixon J had contrasted12 the statutory powers of the executive exercisable notwithstanding dismissal of an appeal, under provisions such as those later considered by this Court in Ratten13 and Mallard v The How then has it come to pass that the 1992 decision, namely that there was no error by Newman J in the exercise of his authority under ss 19 and 442 of the Crimes Act with respect to the imposition of the life sentences upon the appellants, was called into question before that same court in the 2006 decision? Supervening circumstances The grounds of appeal to this Court are in like form and present two issues. These turn upon the two supervening circumstances which led to the 2006 decision against which the appeals are brought to this Court. The first circumstance is the use the appellants seek to make of the discovery that the orders made on 17 February 1992 by the Court of Criminal 11 See Postiglione v The Queen (1997) 189 CLR 295 at 300. 12 (1938) 60 CLR 431 at 437. 13 (1974) 131 CLR 510. 14 (2005) 224 CLR 125. Crennan Appeal have not been perfected. This is said to provide the scope for an application for leave to reopen the disposition of the initial appeals against the life sentences. The second circumstance is the effect now attributed by the appellants to the statement by Newman J in his sentencing remarks: "So grave is the nature of this case that I recommend that none of the prisoners in this matter should ever be released." The practice whereby sentencing judges made such recommendations was a response to the administrative system whereby grants were made by the Governor of licences (or "tickets of leave") to prisoners sentenced to penal servitude for life. In Baker v The Queen15, Gleeson CJ remarked that it was the knowledge of this administrative practice and procedure that gave rise to the making by sentencing judges of remarks such as those of Newman J. As Chief Justice of New South Wales, his Honour had expressed concerns about that practice, and did so in his judgment in the 1992 decision concerning the appeal by the present appellants16. Significantly, Gleeson CJ there remarked17: "There does not appear to have been any statutory basis for the making of the 'recommendation', nor, for that matter, does there seem to be any statutory basis for appealing against it." With the leave of the Court of Criminal Appeal, a person convicted on indictment may appeal to that Court against the sentence passed on conviction (s 5(1)(c) of the Criminal Appeal Act). The definition of "sentence" in s 2(1) has been amended from time to time, but has always fixed upon an "order made by the court of trial" and a sentence of imprisonment has been given as a prime example of such an order. The effect of the appellants' submissions is that any matter that "enforceably" affects the liability for punishment of a prisoner is a sentence or part of the sentence. 15 (2004) 223 CLR 513 at 520 [7]. 16 (1992) 60 A Crim R 68 at 80. 17 (1992) 60 A Crim R 68 at 80. Crennan On this branch of the appeal the appellants make two principal submissions. They first submit that (i) the recommendation made by Newman J had legal effect upon the punishment of the appellants and (ii) it could then have been the subject of an appeal against sentence. Secondly, the appellants submit that, in any event, the treatment of the recommendation by subsequent legislation has rendered it an "order made by the court of trial" within the definition of "sentence" in s 2 of the Criminal Appeal Act and that this may found fresh or further appeals against sentence, consequent upon a grant of leave to overcome the lapse of time. For the reasons that follow the appeals against the orders made in the 2006 decision should be dismissed. It is convenient to begin with the submissions attaching determinative significance to the sentencing remarks of the trial judge. The remarks on sentence As observed earlier in these reasons, the recommendation made by the trial judge was offered against the background of the administration of the "ticket of leave" system which then applied in New South Wales. The appellants submit that, by analogy to decisions respecting parole and probation orders made by sentencing judges under statutory authority, the recommendation by Newman J was "part of" the sentence for the purposes of the Criminal Appeal Act. But the analogy is a false one. Here, the recommendation was not an order made under statutory authority given to the sentencing judge. The same may be said of the appellants' reliance upon R v Carngham18. This Court there decided that an order by the sentencing judge, pursuant to s 20 of the Crimes Act 1914 (Cth), for release after part of the term of imprisonment had been served was a "sentence" against which the Attorney-General might appeal. With effect 12 January 1990, the Prisons Act 1952 (NSW) ("the Prisons Act") had been amended19 so as to constitute a Serious Offenders Review Board with functions including the revocation or variation of licences granted under the "ticket of leave" system. The ticket of leave system had been given a statutory basis by s 463 of the Crimes Act, but s 463 was repealed also with effect 18 (1978) 140 CLR 487. 19 By the Prisons (Serious Offenders Review Board) Amendment Act 1989 (NSW) ("the 1989 Prisons Act"). Crennan 12 January 199020. Also with effect 12 January 1990, s 13A of the Sentencing Act 1989 (NSW) ("the Sentencing Act") created21, in respect of a class which was to include the appellants, a new and distinct original jurisdiction in the Supreme Court. This empowered the Supreme Court, upon application made after service of eight years imprisonment, to determine, in respect of such life sentences, a minimum and an additional term for the sentence. Section 13A(9)(c) provided that the Supreme Court was to have regard, among other things, to: "any relevant comments made by the original sentencing court when imposing the sentence". The recommendation by the original sentencing court thus might play a part in the later exercise by the Supreme Court of the jurisdiction created by s 13A. However, the additional regime created by the Sentencing Act did not give to such a recommendation the character of an order by that Court against which an appeal against sentence would lie forthwith. Any legal consequence of the recommendation was postponed until such later time as an application might be made to the Supreme Court in the original jurisdiction created by s 13A of the Sentencing Act. The first submission in this branch of the appeal fails. The alternative submission respecting the effect of subsequent legislation also should be rejected. In the joint judgment in Baker22 an account was given of the legislative changes made in New South Wales following the repeal of s 463 of the Crimes Act and the introduction by the Sentencing Act of the system outlined above. Section 13A(2) of the Sentencing Act provided that "a person serving an existing life sentence may apply to the Supreme Court for the determination of a minimum term and an additional term for the sentence". After amendment made to the system by the Sentencing Legislation Further Amendment Act 1997 (NSW) ("the 1997 Act"), s 13A(3) imposed upon those serving existing life sentences a requirement of eligibility to make such an application. It denied eligibility until the person in question had served at least eight years of the sentence. 20 Also by the 1989 Prisons Act. 21 Section 13A was added by the Sentencing (Life Sentences) Amendment Act 1989 (NSW). 22 (2004) 223 CLR 513 at 528-530 [28]-[35]. Crennan As a result of changes made by the 1997 Act, an eligibility requirement of service of at least 20 years of the sentence was imposed upon those the subject of a "non-release recommendation" (s 13A(3)(b)). This expression was now defined in s 13A(1) as meaning: "a recommendation or observation, or an expression of opinion, by the original sentencing court that (or to the effect that) the person should never be released from imprisonment". When considering an application in such cases the Supreme Court, if it were to accede to the application, had to be satisfied that there existed "special reasons" to justify the making of a determination (s 13A(3A)). In Baker23, this selection by the 1997 Act of a "non-release recommendation" was characterised as the creation of a criterion as the "trigger" for a particular legislative consequence. The relevant consequence concerned satisfaction of the eligibility requirement for application to the Supreme Court for determination of a minimum term and an additional term. It is against that background that there falls to be considered the submission by the appellants that the remarks made by Newman J acquired with the enactment of the 1997 Act the character of an "order" within the definition of "sentence" in the Criminal Appeal Act. Of that submission, Spigelman CJ referred to the characterisation in Baker of the inclusion of non-release recommendations as a criterion for the operation of the 1997 Act. His Honour held that this was inconsistent with the proposition that the legal consequence of a non-release recommendation now could be said to arise from anything done "by" the court of trial within the meaning of the definition of "sentence" in s 2(1) of the Criminal Appeal Act. His Honour added that at the time Newman J made his recommendation it had no legal effect and that its subsequent legal effect was not something occasioned by anything done "by" the court of trial24. We agree. The same conclusion applies to the further change to the legislation made subsequently to the decision in Baker. Apparently for more abundant caution, it was provided by the Crimes (Sentencing Procedure) Amendment (Existing Life 23 (2004) 223 CLR 513 at 532 [43]. 24 (2006) 164 A Crim R 208 at 225. Crennan Sentences) Act 2005 (NSW) ("the 2005 Amendment")25 that the definition of existing life sentence: "includes any such recommendation, observation or expression of opinion that (before, on or after the date of assent to the [2005 Amendment]) has been quashed, set aside or called into question ..." The occasion for the more abundant caution may have been an appreciation that in the 1992 decision Gleeson CJ had spoken as follows of the remarks by "[E]specially where the offender is a young person, and there are so many different possibilities as to what might happen in the future, it is normally not appropriate for a sentencing judge to seek to anticipate decisions that might fall to be made by other persons, and in other proceedings, or under other legislation, over the ensuing decades. For that reason, I should indicate that I do not support the recommendation made by Newman J. This is not intended to be a recommendation by me that either appellant should be released at some time in the future. It is simply intended as an expression of my view that the making of any recommendation on that subject in these circumstances is not appropriate." The effect of the 2005 Amendment was to continue the adoption of non- release recommendations as a criterion for the operation of the amended Supreme Court review structure, notwithstanding curial disapproval or criticism of a particular recommendation. This did not have the consequence that the recommendation in question in this case had now acquired the character of an order by the court of trial. It follows that leave to pursue out of time a sentencing appeal under s 5(1)(c) of the Criminal Appeal Act with respect to the recommendation made by Newman J was correctly refused and on a fundamental basis. This is that the recommendation never was and did not subsequently acquire the character of an "order made by the court of trial", with the result that the Court of Criminal Appeal lacked jurisdiction to entertain the proposed appeal. 25 Sched 1 Item 1. Before the enactment of the 2005 Amendment the relevant provisions of the Sentencing Act had been repealed and re-enacted in the Crimes (Sentencing Procedure) Act 1999 (NSW) Sched 1. 26 (1992) 60 A Crim R 68 at 80. Crennan Reopening the appeal Several further points should first be made respecting the powers of the Court of Criminal Appeal, particularly with respect to the appeal against sentence after conviction upon indictment which is provided by s 5(1)(c) of the Criminal Appeal Act. The Criminal Appeal Rules ("the Rules") made particular provision for the notifying of results of appeals. Among other things, the Registrar was to notify the proper officer of the court of trial of any orders or directions made or given by the Court of Criminal Appeal in relation to an appeal (r 52), and the proper officer was to enter the particulars of such notification on the records of the court of trial (r 53). Usually a consideration of what was done to perfect the order with respect to the 1992 decision would begin with the course of official conduct provided for in the Rules. It is a basic proposition that27: "To prove an act has been done, it is admissible to prove any general course of business or office, whether public or private, according to which it would ordinarily have been done, there being a probability that the general course will be followed in the particular case." However, there was no challenge in this Court to the proposition that the order of the Court of Criminal Appeal with respect to the 1992 decision has not been perfected. In particular, in his reasons for judgment in the 2006 decision Spigelman CJ referred to authorities which establish that the perfection of the earlier order required entry on the indictment, and indicated that the indictment now had been inspected by the Court and that this disclosed that the orders made in 1992 had not been entered upon the indictment. The result was that the appellants had established jurisdiction to grant leave to reopen their appeal28. Nevertheless, leave was refused and this refusal the appellants challenge in this Court. 27 Heydon, Cross On Evidence, 7th Aust ed (2004) at [1130]. 28 (2006) 164 A Crim R 208 at 217. Crennan The statement in Grierson29 that the Criminal Appeal Act prescribes the procedures for exercise of the jurisdiction by the Court of Criminal Appeal calls for some elaboration. First, whilst lacking "inherent jurisdiction", a court exercising jurisdiction or powers conferred by statute enjoys, in addition, such powers as are incidental and necessary to the exercise of that jurisdiction and those powers30. Secondly, weight must be given to the provision expressly made by s 12(1) of the Criminal Appeal Act. This provides that, if it thinks it necessary or expedient in the interests of justice, the Court of Criminal Appeal may exercise in relation to its proceedings any powers which may for the time being be exercised by the Supreme Court on appeals or applications in civil matters. It is well settled that a superior court of record such as the Supreme Court has a power to "reopen" a proceeding until judgment in the case in question has been drawn up, passed and entered31. But by what criteria is that authority to be exercised? It is here that guidance is provided by remarks of Mason CJ in Autodesk Inc v Dyason (No 2)32. His Honour gave examples from jurisdictions in this country (including the New South Wales Court of Appeal) and the United Kingdom where the power to reopen had been exercised on grounds not limited to denial of a fair hearing33, but went on34: the Court has apparently proceeded according law and "What must emerge, in order to enliven the exercise of the jurisdiction, is some that misapprehension of this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to the facts or the relevant that 29 (1938) 60 CLR 431 at 436. 30 DJL v Central Authority (2000) 201 CLR 226 at 241 [25]. 31 DJL v Central Authority (2000) 201 CLR 226 at 244 [34]. 32 (1993) 176 CLR 300. 33 (1993) 176 CLR 300 at 302. 34 (1993) 176 CLR 300 at 303. Crennan provide a backdoor method by which unsuccessful litigants can seek to reargue their cases." The circumstance in Autodesk that Mason CJ dissented as to the outcome of the reopening application which was before this Court does not detract from his remarks. The question then becomes whether in the 1992 decision the Court of Criminal Appeal, when dismissing the appeals against sentence, proceeded according to some misapprehension of the facts or the relevant law and that this state of affairs is not to be attributed solely to the neglect or default of the appellants. The "relevant law" must include that which identifies the nature of the particular proceeding; here, the appellate and statutory jurisdiction exercised by the Court of Criminal Appeal on the appeals against sentence. In considering that matter, s 6(3) of the Criminal Appeal Act is important. It was only open to the Court of Criminal Appeal to quash the sentences were it of the opinion stipulated in that provision. This opinion is identified in s 6(3) as one "that some other sentence ... is warranted in law and should have been passed ...". In the 2006 decision, Spigelman CJ emphasised that the Court of Criminal Appeal is "a court of error"35. That characterisation of the appellate process invoked by the appeals against sentence served to distinguish it from what has been described as an appeal by way of rehearing. In Da Costa v Cockburn Salvage & Trading Pty Ltd36 Windeyer J described such an appeal as one where the appellate court considered for itself the issues determined by the trial judge on the effect of the evidence but applied the law as it was when the appeal was heard not as it was when the trial was conducted. The terms of s 6(3) of the Criminal Appeal Act indicate that the Court of Criminal Appeal is to look to the sentence that should have been passed having regard to what the law warranted. The better view is that the phrase "is warranted in law" which appears in s 6(3) assumes no change in the relevant law between the imposition of the sentence and the determination of the appeal 35 (2006) 164 A Crim R 208 at 223. 36 (1970) 124 CLR 192 at 208-209. See further as to the use of the term "by way of rehearing", Fleming v The Queen (1998) 197 CLR 250 at 259-260 [20]-[21]. Crennan against it. The provision in the Criminal Appeal Act with respect to the method and time for the making of appeals (s 10) establishes a system for the timely institution and prosecution of appeals. Section 6(3) is to be read in that context. Should delay occur between sentencing and the appeal determination it would be insufficient to found the necessary opinion spoken of in s 6(3) that there had been a change in the interval between sentence and appeal determination and that a different sentence should have been passed having regard to what the law had become by the time the appeal was determined. That distinction did not apply to the appeals dealt with in 1992, but it points to the answer to the temporal issue which does arise on the re-opening application. The essential question is whether, in the 2006 decision, the Court of Criminal Appeal erred in declining to reopen the 1992 appeal where it could not be said that the reasons for judgment then given had proceeded upon any misapprehension of the relevant law as it stood. The appellants seek to use subsequent legislative changes to achieve a result that the appeals be allowed on legal grounds which did not exist when the unperfected orders were pronounced It is true that in some areas of litigation even final and perfected orders may, on further application, be suspended to allow for supervening legislative change. An example is the suspension of the further operation of a final injunction granted to restrain breach of a statutory prohibition which the legislature since has removed37. But that is far from the present case. There are passages in the reasons of Spigelman CJ38 and Howie J39 in the 2006 decision where the refusal of leave to re-open appears to have been put on unusual grounds. The appellants particularly complain of the import of what was said. In expressing his conclusions for refusing both leave applications, and after referring to the enactment since 1992 of legislation "impinging" upon the 37 Permewan Wright Consolidated Pty Ltd v Attorney-General (NSW) (1978) 35 NSWLR 365. 38 (2006) 164 A Crim R 208 at 223-224. 39 (2006) 164 A Crim R 208 at 250. Crennan sentences which had been imposed by Newman J upon the appellants40, "Each of the two bases upon which each Applicant seeks leave, invites this Court to remove the basis upon which the Parliament has enacted constitutionally valid legislation. The invitation to act in this way would, in my opinion, constitute a failure to respect the right and powers of the Parliament to legislate. This Court should be slow to exercise a judicial discretion which has such an effect and should refuse to exercise a judicial discretion, as it has in substance been invited to do, for that purpose." The appellants correctly submit that it is emphatically the province of the judicial branch of government to apply the relevant law governing the case at hand. Here the basis for action was the scheme for appeals against sentence which was established by the Criminal Appeal Act in terms later construed in various judicial decisions. It would be no answer to what otherwise was a proper exercise of that statutory jurisdiction that the result would or might disfavour the policies which the legislature had sought to implement by other legislation. Matters could stand differently if that other legislation expressly or by implication amended or repealed the statutory basis for the jurisdiction of the Court of Criminal Appeal. But the New South Wales Solicitor-General, who appeared in this Court, disavowed any submission of that character. However, leave to reopen was properly refused, consistently with the statement of general principle by Mason CJ in Autodesk42. What must always be unknown to a sentencing judge and the Court of Criminal Appeal are the paths that may be taken with respect to any status quo by future legislation. The subsequent legislation affecting the position of the appellants did not create any miscarriage of justice by the 1992 decision which called for interception in the perfection of the orders which had then been pronounced. The circumstance that the lapse of time between 1992 and 2006 has seen much legislative activity affecting the service of the sentences imposed upon the 40 (2006) 164 A Crim R 208 at 223. 41 (2006) 164 A Crim R 208 at 224. 42 (1993) 176 CLR 300 at 303. Crennan appellants is striking and unusual. But the 1992 decision did not proceed upon any misapprehension of the relevant law. Other submissions Having granted leave to reopen the appeal in the 2006 decision, Kirby J considered a range of material, some of it available neither to the sentencing judge nor to the Court of Criminal Appeal in 1992. His Honour referred to various authorities in several Australian jurisdictions in which a range of opinion has been expressed respecting the admission on sentencing appeals of evidence of subsequent events. Given the outcome in this Court, it is unnecessary and inappropriate to enter upon that subject. In written submissions the appellants raised several questions said to arise under or to involve the interpretation of the Constitution. However, as oral argument progressed counsel indicated those questions would only arise on a particular contingency. This was that this Court granted leave to reopen the first sentencing appeal or to institute a second sentencing appeal, and then if the life sentences were left in place on re-sentencing (whether by this Court or on remittal to the Court of Criminal Appeal) and the non-release recommendation was quashed, set aside or called into question. It follows from the outcome in this Court that the contingency has not been satisfied and constitutional questions do not arise. Orders Appeals dismissed. |
HIGH COURT OF AUSTRALIA RE KIT WOOLLEY (MANAGER OF THE BAXTER IMMIGRATION DETENTION CENTRE) & ANOR RESPONDENTS EX PARTE: APPLICANTS M276/2003 BY THEIR NEXT FRIEND GS PROSECUTORS Re Woolley; Ex parte Applicants M276/2003 by their next friend GS [2004] HCA 49 7 October 2004 ORDER Application dismissed. Representation: G Griffith QC with C J Horan and C M Harris for the prosecutors (instructed by Vadarlis & Associates) D M J Bennett QC, Solicitor-General of the Commonwealth, with G R Kennett for the respondents and intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) B W Walker SC with J K Kirk intervening on behalf of the Human Rights and Equal Opportunity Commission (instructed by the Human Rights and Equal Opportunity Commission) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Re Woolley; Ex parte Applicants M276/2003 by their next friend GS Immigration – Detention – Migration Act 1958 (Cth) ("Migration Act"), ss 189 and 196 – Whether detention of children authorised by Migration Act – Whether children may request release from detention under Migration Act, s 198 – Whether detention valid if children unable to request release – Relevance of international jurisprudence and parens patriae jurisdiction. Constitutional law (Cth) – Judicial power of the Commonwealth – Immigration detention – Whether Migration Act, ss 189 and 196 validly require detention of children – Whether legislation reasonably capable of being seen as necessary for the purposes of reception, investigation, admission or deportation of aliens – Characterisation of detention as punitive or non-punitive. Words and phrases – "judicial power", "alien", "decision-making capacity", "community", "membership of the Australian community". Constitution, Ch III, s 51(xix), (xxvii). Migration Act 1958 (Cth), ss 5, 189, 196, 198, 252A, 252B. Facts and proceedings The applicants are four children, at the time of the proceedings aged 15, 13, 11 and seven respectively, of Afghani nationality, who were brought to Australia by their parents in 2001. Neither they nor their parents had permission to enter Australia. The members of the family were all treated as unlawful non- citizens within the meaning of that expression in the Migration Act 1958 (Cth) ("the Act"). Section 189 of the Act provides that if an officer knows or reasonably suspects that a person in the migration zone is an unlawful non- citizen, the officer must detain that person. Pursuant to that requirement, the applicants and their parents were taken into immigration detention. The issue in the case concerns the lawfulness of the detention of the applicants. Soon after the arrival of the family in Australia, the applicants' father applied for protection visas for himself and his family. A delegate of the second respondent refused the application. The Act makes provision for procedures of administrative review of such a decision, and for judicial review of administrative decisions. Such procedures, if they ultimately lead to an appeal to this Court, sometimes involve up to five levels of administrative and judicial decision-making. Years may pass while rights of review or appeal are pursued. The proceedings initiated by the applicants' father remain on foot. Their history to date is set out in the reasons of Callinan J. The applicants and their family were in Baxter Immigration Detention Centre at the time of the hearing of this matter. It is contended for the applicants that the provisions of the Act pursuant to which they are being detained, if and to the extent to which they apply to children, are invalid. The applicants seek, against the Manager of the Baxter Immigration Detention Centre, and the Minister for Immigration and Multicultural and Indigenous Affairs, orders for habeas corpus, prohibition and injunction. The legislation The period of the detention required by s 189 of the Act is prescribed by s 196, which must be read together with s 198. Section 198 is in Div 8 of Pt 2, which deals with "Removal of unlawful non-citizens". So far as presently relevant, it provides that, if an unlawful non-citizen detainee has made an application for a visa, the grant of the visa has been refused, and the application has been finally determined, then an officer must remove the non-citizen from Australia as soon as reasonably practicable (s 198(6)). There is also a requirement to remove as soon as reasonably practicable an unlawful non-citizen who asks the Minister, in writing, to be removed (s 198(1)). That additional requirement is relevant to an argument that will be considered below. Section 196, like s 189, is in Div 7 of Pt 2, dealing with "Detention of unlawful non-citizens". Section 196 relevantly provides that an unlawful non-citizen detained under s 189 must be kept in immigration detention until he or she is removed from Australia under s 198 or granted a visa. In brief, the provisions of the Act with which this case is concerned provide for mandatory detention, pending removal from Australia, of unlawful non-citizens. If an unlawful non-citizen applies for a visa, then he or she must be kept in immigration detention pending final determination of the application. If the final outcome is adverse to the non-citizen, he or she is to be removed from Australia as soon as reasonably practicable, and detained pending removal. If the outcome is the grant of a visa, detention comes to an end. The applicants and their family were being detained because the proceedings relating to the visa application made by the father are continuing. It is not suggested there is any problem of the kind considered in Al-Kateb v Godwin1. The meaning of the legislation The language of ss 189 and 196 does not distinguish between unlawful non-citizens who are above and those who are below the age of 18 years. Those who are below the age of 18 may range from infants of tender years, totally dependent upon their parents, to young people who have almost reached adulthood, and who may have arrived in this country, or who may be capable of living here, independently of their parents. In s 5 of the Act, "non-citizen" is defined as "a person who is not an Australian citizen". An "unlawful non- citizen" is "[a] non-citizen in the migration zone who is not a lawful non-citizen" (s 14). A lawful non-citizen is a non-citizen in the migration zone who holds a current visa (s 13). It is hardly likely that Parliament overlooked the fact that some of the persons covered by those definitions would be children. Human reproduction, and the existence of families, cannot have escaped notice. People who enter Australia without a visa sometimes bring children with them; and it is not unusual for people who originally held a visa, but whose visa has ceased to be effective, to be members of a family. The Convention on the Rights of the Child2, in its preamble, describes the family as "the fundamental group of society and the natural environment for the growth and well-being of all its members and particularly children". The potential impact of any system of immigration detention, mandatory or discretionary, upon families, as well as individuals, is (2004) 78 ALJR 1099; 208 ALR 124. 2 Opened for signature 20 November 1989, 1577 United Nations Treaty Series 3, ratified by Australia 17 December 1990. obvious. Conversely, some people who enter Australia as individuals, without permission, may be independent in a practical sense, even though under the age There is no doubt that the applicants, whether in or out of immigration detention, have the status of unlawful non-citizens. If, for some reason, the provisions of ss 189 and 196 did not apply to them, there would be a gap in the legislation in its application to an obvious and important group of non-citizens. Furthermore, the legislation would have a differential impact on family members. The parents, the primary carers, would be the subject of obligatory detention. Those under their care would be in a kind of legal limbo. In this respect, there is no ambiguity in s 189 or s 196. There is no basis in the text for reading the references to persons, or to unlawful non-citizens, as limited to persons who have attained the age of 18 years. Mandatory detention was introduced in 1992. The practical operation of a system of mandatory detention has consequences for families and children that, no doubt, are considered by some to be a reason to oppose the policy of the Act, but it is not for this Court to set out to frustrate the legislation on the basis of such opposition. It may be added that, given that the Act imposes mandatory detention, it is not self-evident that, by construing ss 189 and 196 as limited to adult non-citizens, the result would be a significant improvement in the position of unlawful non-citizens under the age of 18. They would still be unlawful non- citizens. Those who, in a practical sense, are incapable of living separately from their parents may find themselves in immigration detention in any event. Presumably, those who remained unlawful non-citizens at the relevant time would be placed in detention when they turned 18. Whatever the policy arguments against mandatory detention by reason of its effect on children, reading ss 189 and 196 as applying only to persons of 18 years and over hardly provides a satisfactory solution. The problem of the situation of families and children is inherent in immigration detention itself. Just as it is impossible to interpret ss 189 and 196 as applying only to persons over the age of 18 years, so also it is impossible to read them down in some manner requiring individual assessment of particular unlawful non-citizens, so that in some cases detention would be mandatory, and in others discretionary. The Human Rights and Equal Opportunity Commission, in its submissions to the Court, acknowledged as much. To do so would directly contradict the clear legislative intention. If the scheme of the legislation, expressed in unambiguous language, were to be considered inconsistent with Australia's international obligations under the Convention on the Rights of the Child, that would not justify a refusal by the Court to give effect to the legislation. Of course, if the statutory language were ambiguous, and if it were possible to give it a fair interpretation consistent with those obligations, different considerations would apply. But that is not the case. The substantial question to be considered is whether the Constitution provides an impediment to the valid operation of the Act according to its terms. Constitutional validity The Cambodian nationals In 1992, a number of Cambodian nationals, who had arrived in Australian territorial waters without an entry permit, and who had subsequently made unsuccessful visa applications on the basis that they were refugees, were in immigration detention. They were affected by the Migration Amendment Act 1992 (Cth), which came into operation on 6 May 1992. That Act provided for the compulsory detention in custody of certain non-citizens who had arrived in Australia without permission. immediately commenced proceedings in this Court challenging the constitutional validity of mandatory detention. Those proceedings were Chu Kheng Lim v Minister for Immigration3. One ground of challenge to the legislation, which is presently irrelevant, concerned its effect upon pending litigation. Another ground of challenge, of direct present relevance, was based upon the contention that mandatory immigration detention was a form of punishment by the Executive, and was contrary to Ch III of the Constitution, and to the separation of powers which is a structural feature of the Constitution. A similar contention forms the basis of the argument for the applicants in the present case. In its application to the wider system of mandatory detention, the contention was rejected. In the present case the contention is repeated in a narrower form, with reference to the operation of the legislation in relation to children. Although it was never made quite clear, presumably the contention is directed to the operation of the scheme in relation to all children. This is a point of some importance. As was noted earlier, if children include all persons under the age of 18, then the expression covers a rather diverse class. They might be treated conveniently as a single group for some purposes, but for the purpose of deciding whether a system of immigration detention is "punitive" (itself a problematic concept) they are quite disparate. The class would include an infant who could not reasonably be separated from a mother, whether in or out of immigration detention, and perhaps a 17-year-old who is herself a mother. It may be sufficient for the purposes of the applicants to argue that, if the system is punitive in relation to any children, then the very considerations that make it impossible to read down ss 189 and 196 result in invalidity of the entire system. If that were so, it may mean that the decision in Chu Kheng Lim was wrong, because an argument fatal to the validity of the legislation there in question had been overlooked. However, the idea that the legislation might operate punitively in relation to some children and not in relation to other children directs attention to the need to be clear about what is meant by punishment in this context. Furthermore, if the legislation is to be (1992) 176 CLR 1. characterised as punitive in its operation in relation to some people, and not in its operation in relation to others, it is hard to see that a dividing line constituted by the age of 18 years would be appropriate. That would ignore the position of the ill, or the elderly, or others who might suffer as much hardship as some of the young. In Chu Kheng Lim, Brennan, Deane and Dawson JJ wrote a joint judgment, with which Mason CJ agreed. The views of those four members of the Court reflect the principles for which the case stands as authority. Those principles are fatal to the argument of the applicants in the present case. The reasoning in the joint judgment followed a pattern which is significant. Relevantly, it began by construing the grant of power, in s 51(xix) of the Constitution, by which Parliament, subject to the Constitution (and therefore subject to Ch III) was given power to make laws with respect to naturalization and aliens. It was pointed out that Nolan v Minister for Immigration and Ethnic Affairs4 recognized that the effect of Australia's emergence as a fully independent nation with its own distinct citizenship was that the word "alien" in s 51(xix) had become synonymous with "non-citizen". (Nolan was later, temporarily, in disfavour5, but its authority has since been restored6.) It was then said that the legislative power with respect to aliens prima facie encompasses laws with respect to non-citizens, such as non-citizens who have no visa7. Those observations are of particular significance having regard to the present wording of the Act in relation to "unlawful non-citizens". Relating that to the legislation there before the Court, the joint judgment said that a law that required designated non-citizens to be kept in custody until they were either removed or given an entry permit was a law with respect to aliens8. The reference to the prima facie effect of s 51(xix) related to the qualification "subject to the Constitution", that is to say, subject to Ch III. The joint judgment then went on to consider Ch III. It stated a number of propositions which were all qualified by reference to the rights of Australian citizens. Subject to certain (or perhaps uncertain) qualifications, it was stated as a general proposition "that the power to order that a citizen be involuntarily (1988) 165 CLR 178. 5 Re Patterson; Ex parte Taylor (2001) 207 CLR 391. 6 Shaw v Minister for Immigration and Multicultural Affairs (2003) 78 ALJR 203; 203 ALR 143. 7 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 25. (1992) 176 CLR 1 at 26. confined in custody is, under the doctrine of the separation of judicial from executive and legislative powers enshrined in our Constitution, part of the judicial power of the Commonwealth entrusted exclusively to Ch III courts."9 This was because, subject to qualifications, "the involuntary detention of a citizen in custody by the State is penal or punitive in character and, under our system of government, exists only as an incident of the exclusively judicial function of adjudging and punishing criminal guilt."10 The proposition that, ordinarily, the involuntary detention of a citizen by the State is penal or punitive in character was not based upon the idea that all hardship or distress inflicted upon a citizen by the State constitutes a form of punishment, although colloquially that is how it may sometimes be described. Taxes are sometimes said, in political rhetoric, to be punitive. That is a loose use of the term. Punishment, in the sense of the inflicting of involuntary hardship or detriment by the State, is not an exclusively judicial function. On the other hand, the particular form of detriment constituted by the deprivation of liberty usually the (although not always) follows adjudgment of criminal guilt, and circumstances in which deprivation of liberty may be imposed upon a citizen by the State otherwise than by way of judicial punishment are limited. It is unnecessary, and perhaps undesirable, to seek an exhaustive definition of those circumstances. The joint judgment went on to demonstrate that mandatory detention of the kind there in question (which was not materially different from the kind presently in question) was not punishment but that, because of the legal characteristics of the persons upon whom it was imposed, and the purpose for which it was imposed, it bore a different character. The next step in the reasoning of Brennan, Deane and Dawson JJ was to deal with the exclusion, deportation and detention of aliens, that is, non- citizens11. The joint judgment pointed out that aliens, unlike citizens, are subject to a power of exclusion or expulsion which is an incident of sovereignty over territory. The supreme power in a State has the right to refuse to permit an alien to enter, either absolutely or subject to conditions, and to expel or deport. The status of alienage, which was shared by all those subject to the system of administrative detention in question, was a key element in identifying the legal character of the power to detain. The power to make laws with respect to aliens, which includes a power to expel or deport, also includes a power to restrain an alien in custody to the extent necessary to make the deportation effective12. It (1992) 176 CLR 1 at 28. 10 (1992) 176 CLR 1 at 27. 11 (1992) 176 CLR 1 at 29-32. 12 Koon Wing Lau v Calwell (1949) 80 CLR 533. extends to a power to detain an alien in custody for the purpose and as an incident of the executive power to receive, investigate, and determine an application by the alien to be permitted to enter or remain in Australia. Their Honours said13: "Such limited authority to detain an alien in custody can be conferred on the Executive without infringement of Ch III's exclusive vesting of the judicial power of the Commonwealth in the courts which it designates. The reason why that is so is that, to that limited extent, authority to detain in custody is neither punitive in nature nor part of the judicial power of the Commonwealth. When conferred upon the Executive, it takes its character from the executive powers to exclude, admit and deport of which it is an incident." (Footnote omitted) In a footnote to that passage, reference was made to cases in which it was said that the exclusion and deportation of an unwanted alien immigrant is not imposed as punishment for an offence but as a measure to prevent entry into the community of a person whom the State does not wish to accept as a member of the community14. Mason CJ, agreeing with Brennan, Deane and Dawson JJ said15: "I agree with their Honours that the legislative power conferred by s 51(xix) of the Constitution extends to conferring upon the Executive authority to detain an alien in custody for the purposes of expulsion or deportation and that such authority constitutes an incident of executive power. I also agree that authority to detain an alien in custody, when conferred in the context and for the purposes of executive powers to receive, investigate and determine an application by that alien for an entry permit and (after determination) to admit or deport, constitutes an incident of those executive powers and that such limited authority to detain an the Executive without alien contravening the investment of the judicial power of the Commonwealth in Ch III courts." in custody can be conferred upon 13 (1992) 176 CLR 1 at 32. 14 Ex parte Walsh and Johnson; In re Yates (1925) 37 CLR 36 at 60-61, 96; O'Keefe v Calwell (1949) 77 CLR 261 at 278; Koon Wing Lau v Calwell (1949) 80 CLR 533 15 (1992) 176 CLR 1 at 10. When Brennan, Deane and Dawson JJ went on to apply the principles they had stated to the particular statutory provisions under consideration they repeated that "the ... sections will be valid laws if the detention which they require and authorize is limited to what is reasonably capable of being seen as necessary for the purposes of deportation or necessary to enable an application for an entry permit to be made and considered."16 The following points of relevance to the present case emerge from the above. First, where legislation confers upon the Executive authority to detain an alien in custody, if the exercise of such authority is properly characterised as an incident of executive power, rather than as an exercise of judicial power, it is a law with respect to aliens, and does not offend Ch III or the principle of the separation of powers. Secondly, the capacity of the State (in the international law sense) to exclude and to deport aliens means that the character of a law authorizing detention of an alien may be different from the character of a law authorizing detention of a citizen. Deprivation of liberty, when applied to a citizen, is ordinarily a form of punishment incidental to the exercise of judicial power. Detention of an alien for the purpose of exclusion, dealing with an application for permission to enter, or removal bears a different aspect. Thirdly, if a law is reasonably capable of being seen as necessary for the purpose of exclusion, dealing with an application for permission to enter, or removal, then ordinarily it will be proper to regard it as having the character of an incident of the executive power to receive, investigate and determine an application for an entry permit and, after determination, to admit or deport. Fourthly, Brennan, Deane and Dawson JJ referred to detention that was "necessary to enable an application for an entry permit to be made and considered". Plainly they did not contemplate that it is essential for a person to be in custody in order to make an application for an entry permit, or that it is only possible for the Executive to consider such an application while the applicant is in custody. They were referring to the time necessarily involved in receiving, investigating and determining an application for an entry permit. In a particular case, that time may be brief, or, depending upon the procedures of review and appeal that are invoked, it may be substantial. If a non-citizen enters Australia without permission, then the power to exclude the non-citizen extends to a power to investigate and determine an application by the non-citizen for permission to remain, and to hold the non-citizen in detention for the time necessary to follow 16 (1992) 176 CLR 1 at 33. the required procedures of decision-making. The non-citizen is not being detained as a form of punishment, but as an incident of the process of deciding whether to give the non-citizen permission to enter the Australian community. Without such permission, the non-citizen has no legal right to enter the community, and a law providing for detention during the process of decision- making is not punitive in nature. It was not suggested in Chu Kheng Lim, and would be inconsistent with the decision in that case, that the validity of mandatory administrative detention of aliens seeking visas, pending resolution of the application process, depends upon evidence, case by case, that the applicant is likely to abscond, or upon the individual hardship involved in detention. The legislation under challenge in Chu Kheng Lim dealt with what are now called unlawful non-citizens, who had entered the country without permission, as a class. The power of exclusion was held to extend to keeping them separate from the community, in administrative detention, while their visa applications were being investigated and considered. The possibility of delays in tribunal or court proceedings was acknowledged in the joint judgment17. In the legislation there under consideration, there was a maximum period of detention following finalization of such proceedings. There is no such period in the present legislation. But, in this case, if there had been such a period, it would not yet have commenced to run. The context in which the power of detention was given, and the purpose for which it existed, was seen as definitive of its character as an incident of executive power. A vital aspect of that context was that it was given in relation to non-citizens, and that the exclusion of non-citizens is an aspect of territorial sovereignty. Nowhere was it suggested, in the reasoning of Brennan, Deane and Dawson JJ, or Mason CJ, or any member of the Court, that the power of detention conferred by the legislation in that case would take on a different character if, in its application to some particular detainees, or some class of detainees, it was capable of causing particular hardship. One of the most obvious features of the system of mandatory detention considered in Chu Kheng Lim, as of the system with which this case is concerned, is that it does not address the particular circumstances of individual detainees. That is the difference between mandatory and discretionary detention. If the possibility of the severity of the operation of mandatory detention in a particular case or class of case altered the character of the power of detention from an incident of executive power to extra- judicial and unconstitutional punishment, then the system of mandatory detention would have been found unconstitutional. Furthermore, it is impossible to identify the criterion by which severity of application would be measured. There 17 (1992) 176 CLR 1 at 33. is no reason why it would be limited to children, or to some children. Children might constitute a class whose members would include specially vulnerable people, but so would the elderly, the infirm, and perhaps others. It was not argued that Chu Kheng Lim was wrongly decided, and we were not invited to re-open that decision. An attempt was made to distinguish the case, but that attempt was unconvincing. It was pointed out that, in the joint judgment, some significance was placed upon a feature of the legislation, which remains in the Act in its present form, which permitted a detainee to bring an end to his or her detention by requiring removal from Australia if the detainee requested it18. That was regarded as bearing upon the character of the power. It was seen as part of the legislative context in which the power was conferred. Unlawful non-citizens are dealt with as a class, and, considered as a class, they have a power to bring their detention to an end by requesting removal. Nevertheless, it is argued, that is not a power available to some detainees. The legal incapacity of children was referred to. Two points may be made. First, not all persons under the age of 18 would lack the legal capacity to make an effective request for removal. In Gillick v West Norfolk AHA19, Lord Scarman pointed out that, subject to any statutory provision, "a minor's capacity to make his or her own decision depends upon the minor having sufficient understanding and intelligence to make the decision and is not to be determined by reference to any judicially fixed age limit." That principle was applied by this Court in Marion's Case20. Some children would have the legal capacity to make (independently of their parents) a request for removal from Australia, and others would not. Secondly, the character of the power conferred by ss 189 and 196 does not vary according to whether a particular unlawful non-citizen in detention has the legal capacity to request removal from Australia. The power takes its character from its legislative context, and it retains that character even if, in the circumstances of an individual case, one of a number of factors relevant to that general context does not apply. The special concern of the law for families and children, as evidenced by the Convention on the Rights of the Child and the parens patriae jurisdiction of courts, was invoked in argument. This is unquestionably an important consideration of legislative policy, but it does not lead to any legally relevant conclusion as to the meaning of the Act, or the character for constitutional purposes of immigration detention. 18 (1992) 176 CLR 1 at 34. 19 [1986] AC 112 at 188. 20 Secretary, Department of Health and Community Services v JWB and SMB (1992) 175 CLR 218. Conclusion The application should be dismissed. McHugh 33 McHUGH J. Two questions arise in this application for a writ of habeas corpus against the first respondent and, against the second respondent, a writ of prohibition or, alternatively, an injunction. First, do ss 189 and 196 of the Migration Act 1958 (Cth) ("the Act") apply to alien children in Australia pending the determination of whether they are entitled to visas under that Act? Second, if they do, are they invalid because they constitute a conferral of the judicial power of the Commonwealth otherwise than in accordance with Ch III of the Constitution? In my opinion, on their correct construction, ss 189 and 196 apply to alien children in Australia and they are valid enactments of the Parliament of the Commonwealth. Statement of facts The applicants are children who at the time of the hearing before this Court were aged 15, 13, 11 and seven years old. They are citizens of Afghanistan. They arrived with their parents in Australia in January 2001. Shortly after, officers of the Department of Immigration and Multicultural and Indigenous Affairs took all members of the family to an immigration detention centre at Woomera in South Australia. In February 2001, the applicants' father applied for a protection visa. He included the applicants in the application. The applicants were detained at Woomera until January 2003 when they were taken to the Baxter immigration detention facility in South Australia. After the hearing before this Court, the applicants were granted temporary protection visas and released from detention. The Commonwealth contends that the applicants were lawfully detained because of ss 189 and 196 of the Act. Legislative framework Division 7 of Pt 2 of the Act establishes the statutory scheme under which the applicants were detained. Section 189 both authorises and requires the detention of "unlawful non-citizens". Section 196 requires that an unlawful non- citizen detained under s 189 be kept in immigration detention until he or she is: removed from Australia under s 198 or s 199; or deported under s 200; or granted a visa. Section 5(1) of the Act defines "detain" to mean: take into immigration detention; or keep, or cause to be kept, in immigration detention". McHugh "Immigration detention" is defined in s 5(1) to mean, among other things: "(b) being held by, or on behalf of, an officer: in a detention centre established under this Act; or in a prison or remand centre of the Commonwealth, a State or a Territory; or in another place approved by the Minister in writing". Section 13 of the Act declares that a non-citizen in the "migration zone" (essentially, the States and Territories) who holds a visa that is in effect is a lawful non-citizen21. Section 14 deems any non-citizen who is in the migration zone who is not a "lawful non-citizen" to be an "unlawful non-citizen". By operation of ss 13 and 14, an "unlawful non-citizen" is a person who is in the migration zone who is not an Australian citizen22 and who does not hold a valid visa. Section 189(1) states: "If an officer knows or reasonably suspects that a person in the migration zone (other than an excised offshore place) is an unlawful non-citizen, the officer must detain the person." Section 196 provides: 21 A visa is a permission granted to a non-citizen by the Minister to travel to and enter Australia and/or to remain in Australia: s 29. 22 This Court held by majority in Shaw v Minister for Immigration and Multicultural Affairs that all non-citizens are aliens for the purposes of s 51(xix) of the Constitution: (2003) 78 ALJR 203; 203 ALR 143. Gleeson CJ, Gummow and Hayne JJ held that all persons who entered Australia after 26 January 1949, who were born out of Australia of parents who were not Australian citizens and who had not been naturalised were "aliens" for constitutional purposes: Shaw (2003) 78 ALJR 203 at 210 [32]; 203 ALR 143 at 151. In Singh v The Commonwealth, a majority of this Court held that for constitutional purposes the Parliament could treat as an alien any person born in Australia after 20 August 1986 if neither parent was, at the time of the person's birth, an Australian citizen or a permanent resident, and the person had not been ordinarily resident in Australia for 10 years since his or her date of birth: [2004] HCA 43. McHugh "(1) An unlawful non-citizen detained under section 189 must be kept in immigration detention until he or she is: removed from Australia under section 198 or 199; or deported under section 200; or granted a visa. To avoid doubt, subsection (1) does not prevent the release from immigration detention of a citizen or a lawful non-citizen. To avoid doubt, subsection (1) prevents the release, even by a court, of an unlawful non-citizen from detention (otherwise than for removal or deportation) unless the non-citizen has been granted a visa. Subject to paragraphs (1)(a), (b) and (c), if the person is detained as a result of the cancellation of his or her visa under section 501, the detention is to continue unless a court finally determines that the detention is unlawful, or that the person detained is not an unlawful non-citizen. (4A) Subject to paragraphs (1)(a), (b) and (c), if the person is detained pending his or her deportation under section 200, the detention is to continue unless a court finally determines that the detention is unlawful. To avoid doubt, subsection (4) or (4A) applies: (a) whether or not there is a real likelihood of the person detained being removed from Australia under section 198 or 199, or deported under section 200, in the reasonably foreseeable future; and (b) whether or not a visa decision relating to the person detained is, or may be, unlawful. (5A) Subsections (4) and (4A) do not affect by implication the continuation of the detention of a person to whom those subsections do not apply. This section has effect despite any other law. In this section: McHugh visa decision means a decision relating to a visa (including a decision not to grant the visa, to cancel the visa or not to reinstate the visa)." Section 198 of the Act requires an officer "as soon as reasonably practicable" to remove an unlawful non-citizen who requests removal or who has not applied for a visa or whose application for a visa has been refused and the application has been finally determined. Section 199 relevantly provides for the removal of a spouse or dependent child of an unlawful non-citizen at the request of the unlawful non-citizen, where the officer removes or is about to remove that unlawful non-citizen. Section 200 provides for the deportation of non-citizens who have been convicted of crimes or on security grounds. Aliens The applicants concede that they are aliens for the purpose of s 51(xix) of the Constitution, which provides that the Parliament of the Commonwealth may "make laws ... with respect to ... aliens". However, they claim that upon its true construction the Act does not authorise their detention pending the determination of their application for visas. If it does, they contend that the Act is invalid because the power conferred by s 51(xix) does not authorise such a law. Alternatively, they contend that if ss 189 and 196 are laws with respect to aliens, Ch III of the Constitution prevents the Parliament from enacting those sections. The power of the Federal Parliament to make laws with respect to aliens is, subject to the Constitution, limited only by the description of the subject matter23. Parliament can make laws imposing burdens on aliens that cannot be imposed on Australian citizens. If a law can be characterised as a law "with respect to ... aliens", it is constitutionally valid unless it infringes an express or implied prohibition of the Constitution. This Court has consistently recognised that the power to make laws with respect to aliens extends to authorising the Executive to detain an alien in custody to the extent necessary to make the deportation or expulsion of that alien effective24. In Chu Kheng Lim v Minister for Immigration, Brennan, Deane and Dawson JJ said that the power of the Executive to detain an alien in custody 23 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 64 per McHugh J. 24 Lim (1992) 176 CLR 1 at 30-31 per Brennan, Deane and Dawson JJ (Mason CJ agreeing), citing Koon Wing Lau v Calwell (1949) 80 CLR 533; Attorney-General (Canada) v Cain [1906] AC 542 at 546; Chu Shao Hung v The Queen (1953) 87 CLR 575 at 589 per Kitto J; Znaty v Minister for Immigration (1972) 126 CLR 1 at 9-10 per Walsh J. McHugh pending the determination of his or her application for entry is an incident of the Executive powers of detention for the purposes of removal or deportation25: "[T]he legislative power conferred by s 51(xix) of the Constitution encompasses the conferral upon the Executive of authority to detain (or to direct the detention of) an alien in custody for the purposes of expulsion or deportation. Such authority to detain an alien in custody, when conferred upon the Executive in the context and for the purposes of an executive power of deportation or expulsion, constitutes an incident of that executive power. By analogy, authority to detain an alien in custody, when conferred in the context and for the purposes of executive powers to receive, investigate and determine an application by that alien for an entry permit and (after determination) to admit or deport, constitutes an incident of those executive powers." (emphasis added) Similarly, in the same case, Mason CJ said26: "[T]he legislative power conferred by s 51(xix) of the Constitution extends to conferring upon the Executive authority to detain an alien in custody for the purposes of expulsion or deportation and ... such authority constitutes an incident of executive power. ... [The] authority to detain an alien in custody, when conferred in the context and for the purposes of executive powers to receive, investigate and determine an application by that alien for an entry permit and (after determination) to admit or deport, constitutes an incident of those executive powers". (emphasis added) The applicants assert that ss 189 and 196 do not apply to children who are aliens. However, nothing in those sections or the Act suggests that they are not intended to apply to alien children who are unlawful non-citizens. Nothing in the Act provides any ground for reading down the general terms of those sections to exclude children from their operation. Several provisions of the Act refer expressly to children, including children who have been detained. For example, ss 252A and 252B, which are concerned with the "strip search of a detainee", provide for the strip search of detained children. Under s 199, an unlawful non- citizen who is about to be removed may request the removal of a dependent child or children. The irresistible conclusion is that the Act is intended to apply to alien children, including children who are unlawful non-citizens. Sections 189 and 196 confirm what is apparent from the general terms of many provisions of the Act: children who are unlawful non-citizens are among those who must be detained in immigration detention. 25 (1992) 176 CLR 1 at 32. 26 Lim (1992) 176 CLR 1 at 10. McHugh The applicants' contention that the Act does not authorise the detention of children who are unlawful non-citizens cannot be sustained. The first question must be answered in the affirmative: the challenged provisions apply to alien children who are unlawful non-citizens. Judicial power The second question posed by the application is whether, though textually laws with respect to aliens, ss 189 and 196 of the Act are not laws "with respect to" the power conferred by s 51(xix) because they infringe the requirements of Ch III of the Constitution. This question raises for determination the central issue in this case, namely, whether, by enacting ss 189 and 196 of the Act and directing members of the Executive to detain unlawful non-citizens, the Parliament has impermissibly exercised, or has impermissibly authorised the Executive to exercise, the judicial power of the Commonwealth. Section 71 of the Constitution, the first section in Ch III, confers the judicial power of the Commonwealth on this Court, courts created by the Parliament of the Commonwealth and courts invested with federal jurisdiction under s 77 of the Constitution. Section 1, the first section in Ch I of the Constitution, confers the legislative power of the Commonwealth on the Federal Parliament. Section 61, the first section in Ch II of the Constitution, confers the executive power of the Commonwealth on the Queen. It declares that the executive power is exercisable by the Governor-General as the Queen's representative and extends to the execution and maintenance of the Constitution and of the laws of the Commonwealth. This Court and the Privy Council have long held that these sections and this arrangement of Chs I, II and III of the Constitution prescribe the doctrine of the separation of legislative, executive and judicial powers as a constitutional requirement27. In Lim, Brennan, Deane and "The Constitution is structured upon, and incorporates, the doctrine of the separation of judicial from executive and legislative powers. Chapter III gives effect to that doctrine in so far as the vesting of judicial power is concerned. Its provisions constitute 'an exhaustive statement of the manner in which the judicial power of the Commonwealth is or may be vested ... No part of the judicial power can be conferred in virtue of 27 See R v Kirby; Ex parte Boilermakers' Society of Australia ("the Boilermakers' Case") (1956) 94 CLR 254; Attorney-General (Cth) v The Queen (1957) 95 CLR 28 (1992) 176 CLR 1 at 26-27, citing Boilermakers' Case (1956) 94 CLR 254 at 270 per Dixon CJ, McTiernan, Fullagar and Kitto JJ. McHugh any other authority or otherwise than in accordance with the provisions of Ch III'. Thus, it is well settled that the grants of legislative power contained in s 51 of the Constitution, which are expressly 'subject to' the provisions of the Constitution as a whole, do not permit the conferral upon any organ of the Executive Government of any part of the judicial power of the Commonwealth." (footnote omitted) Under the doctrine of the separation of powers, federal judicial power is exercisable only by the judiciary. Consequently, neither the legislature nor the Executive may exercise the judicial power of the Commonwealth29. The doctrine is subject to a number of exceptions, which include the power of a military tribunal to punish for breach of military discipline and the power of the Federal Parliament to punish for contempt30. The power of the Parliament to hear and determine charges of contempt of Parliament and to punish contemnors is an exception that is more apparent than real. That power is directly authorised by s 49 of the Constitution. Moreover31: "[T]hroughout the course of English history there has been a tendency to regard those powers as not strictly judicial but as belonging to the legislature, rather as something essential or, at any rate, proper for its protection." The investing of judicial power in military tribunals is, however, a true exception that can be explained only on historical grounds. Judicial power is difficult to define: it resists a definition that is both exhaustive and exclusive32. As I pointed out in Lim33: 29 A law that purports to confer judicial power on a person or body other than a Ch III court is invalid. For example, the imposition of punishment for breaches of the law is an exclusively judicial power. An attempt to confer such power on the Executive would be invalid as an infringement of Ch III. See Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 355 per Griffith CJ; Boilermakers' Case (1956) 94 CLR 254 at 270 per Dixon CJ, McTiernan, Fullagar and Kitto JJ. 30 See Lim (1992) 176 CLR 1 at 28 per Brennan, Deane and Dawson JJ. 31 R v Richards; Ex parte Fitzpatrick and Browne (1955) 92 CLR 157 at 167. 32 See my consideration of judicial attempts to define judicial power in Lim (1992) 176 CLR 1 at 66-67. 33 (1992) 176 CLR 1 at 67. McHugh "The line between judicial power and executive power in particular is very blurred. Prescriptively separating the three powers has proved impossible. The classification of the exercise of a power as legislative, executive or judicial frequently depends upon a value judgment as to whether the particular power, having regard to the circumstances which call for its exercise, falls into one category rather than another. The application of analytical tests and descriptions does not always determine the correct classification. Historical practice plays an important, sometimes decisive, part in determining whether the exercise of a particular power is legislative, executive or judicial in character." (footnote omitted) Four Justices of this Court observed in Brandy v Human Rights and Equal Opportunity Commission34 that, in attempting to define judicial power: is not every binding and authoritative decision made "It is traditional to start with the definition advanced by Griffith CJ in Huddart, Parker & Co Pty Ltd v Moorehead35 in which he spoke of the concept of judicial power in terms of the binding and authoritative decision of controversies between subjects or between subjects and the Crown made by a tribunal which is called upon to take action. However, the determination of a dispute which constitutes the exercise of judicial power. A legislative or administrative decision may answer that description. Another important element which distinguishes a judicial decision is that it determines existing rights and duties and does so according to law. That is to say, it does so by the application of a pre-existing standard rather than by the formulation of policy or the exercise of an administrative discretion." Characterisation of the power to detain A proceeding that requires the determination of the guilt or innocence of a person and the imposition of punishment following such a determination is a traditional exercise of judicial power. Such a proceeding determines a controversy between the Crown and a subject by reference to "rights or obligations arising from the operation of law upon past events or conduct."36 In their joint judgment in Lim, Brennan, Deane and Dawson JJ recognised that the adjudgment and punishment of criminal guilt under a law of the 34 (1995) 183 CLR 245 at 267-268 per Deane, Dawson, Gaudron and McHugh JJ. 35 (1909) 8 CLR 330 at 357. 36 R v Gallagher; Ex parte Aberdare Collieries Pty Ltd (1963) 37 ALJR 40 at 43 per McHugh Commonwealth is not only a function which has become essentially and exclusively judicial in character, but also that it is the most important function that is entrusted to Ch III courts. Their Honours said37: "The most important of [the functions which have become established as essentially and exclusively judicial in character] is the adjudgment and punishment of criminal guilt under a law of the Commonwealth. That function appertains exclusively to and 'could not be excluded from' the judicial power of the Commonwealth. That being so, Ch III of the Constitution precludes the enactment, in purported pursuance of any of the sub-sections of s 51 of the Constitution, of any law purporting to vest any part of that function in the Commonwealth Executive." (footnotes omitted) Their Honours also acknowledged38 that the question whether a law of the Commonwealth purports to confer the function of the adjudgment and punishment of criminal guilt is a question of substance and not mere form. Accordingly, they said39 that it would be beyond the legislative power of the Parliament to invest the Executive with an arbitrary power to detain citizens in custody notwithstanding that the power was conferred in terms which sought to divorce such detention in custody from both punishment and criminal guilt. Their Honours justified this premise on the basis that40: "[P]utting to one side the exceptional cases ..., the involuntary detention of a citizen in custody by the State is penal or punitive in character and, under our system of government, exists only as an incident of the exclusively judicial function of adjudging and punishing criminal guilt." From this premise, their Honours drew the conclusion that, apart from some exceptional cases, there exists, for citizens, "at least in times of peace, a constitutional immunity from being imprisoned by Commonwealth authority except pursuant to an order by a court in the exercise of the judicial power of the Commonwealth."41 37 Lim (1992) 176 CLR 1 at 27. 38 Lim (1992) 176 CLR 1 at 27. 39 Lim (1992) 176 CLR 1 at 27. 40 Lim (1992) 176 CLR 1 at 27. 41 Lim (1992) 176 CLR 1 at 28-29 (emphasis added). McHugh With great respect, the reason given by their Honours does not support their premise. If no more appears, a law which authorises the Executive to detain a person should be classified as "penal or punitive in character" and a breach of the separation of powers doctrine. But it is going too far to say that, subject to specified exceptions, detention by the Executive is always penal or punitive and can only be achieved as the result of the exercise of judicial power. Accordingly, their Honours' conclusion that in times of peace, citizens enjoy a constitutional immunity from being imprisoned by Commonwealth authority except under an order by a court in the exercise of the judicial power of the Commonwealth cannot stand. Whether detention is penal or punitive must depend on all the circumstances of the case. Logically, the fact that courts punish persons by making orders for detention by the Executive cannot lead to the conclusion – subject to exceptions or otherwise – that detention by the Executive is necessarily penal or punitive. In Lim, Brennan, Deane and Dawson JJ identified as exceptions to the "constitutional immunity" detention in custody without bail pending the determination of a criminal charge and detention because of infectious disease or mental illness42. Detention imposed in these cases has never been and could not be characterised as punitive or penal. Their Honours also recognised cases of contempt of Parliament and imprisonment by military tribunals as exceptions to the rule that only courts could order detention by the Executive43. And their Honours expressly held that detention pending the investigation and determination of an application for a visa is not an exercise of the "judicial power of the Commonwealth"44. Although their Honours found it unnecessary to consider the issue, where the nation is at war even a citizen may be detained by the Executive, acting under Parliamentary authority, if, in the opinion of the Executive, the citizen is disloyal or acts in any manner prejudicial to the safety or defence of the Commonwealth45. Moreover, from time to time, even courts make orders for the detention of persons by the Executive that cannot possibly be characterised as penal or punitive. An order committing a person to an institution after acquittal of a criminal charge on the ground of insanity or mental illness is a notable example. Another example is an order committing a person to be detained without bail pending trial. At different times, courts have 42 (1992) 176 CLR 1 at 28. 43 Lim (1992) 176 CLR 1 at 28. 44 Lim (1992) 176 CLR 1 at 32. 45 Lloyd v Wallach (1915) 20 CLR 299; Ex parte Walsh [1942] ALR 359; Little v The Commonwealth (1947) 75 CLR 94. See also Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1111-1112 [55]-[61] per McHugh J; 208 ALR 124 at 139-140. McHugh also been given power to order the detention of persons who were adjudged mentally ill46 or who were debtors47. In Lim, Gaudron J said that she was48: "not presently persuaded circumstances involving no breach of the criminal law and travelling beyond presently accepted categories is necessarily and inevitably offensive to Ch III." legislation authorizing detention that Her Honour expressed herself even more strongly in Kruger v The Commonwealth49. She said50 that "it is not possible to say that, subject to clear exceptions, the power to authorise detention in custody is necessarily and exclusively judicial power." In Al-Kateb v Godwin51, Hayne J, with whose judgment Heydon J agreed on this point, referred to the judgment of Gaudron J in Kruger and was clearly of the same opinion as her Honour. In my opinion, the statement of her Honour in Kruger was correct and the dictum of Brennan, Deane and Dawson JJ in Lim to the contrary should not be followed. That persons are ordinarily detained by the Executive only as the result of an order made in judicial proceedings is by itself an indication that a law that authorises detention without a judicial order is, as a matter of substance, punitive in nature. However, the object for which the law authorises or requires the detention of a person is an even stronger indication of whether the detention is penal or punitive in nature. If no more appears than that the law authorises or requires detention, the correct inference to be drawn from its enactment is likely to be that, for some unidentified reason, the legislature wishes to punish or penalise those liable to detention without the safeguards of a judicial hearing. It would nevertheless be a rare case where nothing more appears to throw light on whether the law is punitive or penal in nature. The terms of the law, the 46 See, eg, Williamson v Brown (1914) 18 CLR 433. 47 See, eg, R v Wallace; Ex parte O'Keefe [1918] VLR 285; Newmarch v Atkinson (1918) 25 CLR 381; Commissioner for Motor Transport v Train (1972) 127 CLR 396; Storey v Lane (1981) 147 CLR 549. 48 (1992) 176 CLR 1 at 55. 49 (1997) 190 CLR 1. 50 Kruger (1997) 190 CLR 1 at 110. 51 (2004) 78 ALJR 1099 at 1146-1149 [257]-[269] per Hayne J, 1155 [303] per Heydon J; 208 ALR 124 at 188-191, 200. McHugh surrounding circumstances, the mischief at which the law is aimed and sometimes the parliamentary debates preceding its enactment will indicate the purpose or purposes of the law. As Callinan J made plain in Al-Kateb52, it is the purpose of the law that authorises detention that is the "yardstick" for determining whether the law is punitive in nature. Hence, the issue of whether the law is punitive or non-punitive in nature must ultimately be determined by the law's purpose, not an a priori proposition that detention by the Executive other than by judicial order is, subject to recognised or clear exceptions, always punitive or penal in nature. Indeed, leaving aside the cases of punishment for contempt of Parliament or breach of military law, the so-called exceptions to the "constitutional immunity" rule can be explained only by the fact that the purpose of the detention in those "exceptional" cases is not punitive or penal in nature. The most obvious example of a non-punitive law that authorises detention is one enacted solely for a protective purpose. Thus, detention may be necessary to protect the detainee (as in the case of mental illness), to protect others (as in the case of infectious disease) or to protect the community (as in the case of those suspected of being disloyal during wartime). A power will not be regarded as purely protective, however, if one of its principal objects or purposes is punitive. The dividing line between a law whose purpose is protective and one whose purpose is punitive is often difficult to draw. This is particularly so where a protective law has acknowledged consequences that, standing alone, would make the law punitive in nature. Protective laws, for example, may also have some deterrent aspect which the legislature intended. However, the law will not be characterised as punitive in nature unless deterrence is one of the principal objects of the law and the detention can be regarded as punishment to deter others. Deterrence that is an intended consequence of an otherwise protective law will not make the law punitive in nature unless the deterrent aspect itself is intended to be punitive. Accordingly, it cannot be said that detention by the Executive in circumstances involving no breach of the criminal law is necessarily penal or punitive in nature, and therefore involves an exercise of judicial power. Nor does it follow that at least in times of peace, citizens enjoy a constitutional immunity from being imprisoned by Commonwealth authority except under an order made by a court in the exercise of the judicial power of the Commonwealth. Rather, it is necessary to characterise the law that authorises or requires detention and to consider all the circumstances of the case. In particular, the purpose of a law that authorises or requires the detention of a person by the Executive is determinative. If the purpose of such a law is purely protective, detention by the Executive under that law will not be regarded as penal or punitive in nature. 52 (2004) 78 ALJR 1099 at 1153 [294]; 208 ALR 124 at 198. McHugh The scope of Commonwealth legislative power with respect to the detention of aliens The foregoing discussion has assumed that, but for Ch III of the Constitution, a federal law that authorises the Executive to detain a person without a judicial order would be a valid law. In many – probably most – cases of federal laws that authorise Executive detention without a judicial order, however, a Ch III question does not arise. That is because most heads of federal legislative power do not authorise the making of such laws. The Federal Parliament has no general power to make laws with respect to imprisonment or detention. Furthermore, with the exception of the powers relating to naturalisation and aliens, race, marriage, divorce, bankruptcy and the influx of criminals, the subject matters with respect to which the Parliament may make laws do not intrinsically refer to human beings. Consequently, in most cases, a federal law that authorises or requires detention without a judicial order can be supported only if the detention is incidental to the subject matter of the grant of federal legislative power. Given the doctrines of the separation of powers and the rule of law and the decisions in Australian Communist Party v The Commonwealth53 and Nationwide News Pty Ltd v Wills54, justifying such laws as being incidental to a s 51 grant of power will prove difficult. The defence and quarantine powers are probably exceptions. As a result, most heads of federal legislative power do not seem expansive enough to justify a law that authorises or requires detention divorced from a breach of law. In Kruger, Gaudron J said, correctly in my opinion, that the immunity from involuntary detention does not derive from Ch III, but rather that55: "subject to certain exceptions, a law authorising detention in custody, divorced from any breach of the law, is not a law on a topic with respect to which s 51 confers legislative power. The defence power may be an exception to that proposition. And the proposition does not extend to laws with respect to quarantine or laws with respect to aliens and the influx of criminals. It may be that an exception should also be acknowledged with respect to the race power." (footnotes omitted) The applicants acknowledge that the aliens power in s 51(xix) extends to the making of laws that authorise the Executive to detain an alien for the purposes of excluding, admitting or removing that alien. However, the applicants argue that this power is subject to certain limits implied by the separation of judicial power from legislative and executive power. They contend 53 (1951) 83 CLR 1. 54 (1992) 177 CLR 1. 55 (1997) 190 CLR 1 at 111. McHugh that, if a law authorises detention by the Executive beyond that which is reasonably capable of being regarded as necessary to effect the purposes of exclusion, admission or removal of an alien56 or to enable an application for an entry permit to be made and considered57, the law is punitive and therefore unconstitutional. In Lim, five Justices of this Court expressed the view that the power to detain aliens, although authorised by s 51(xix) of the Constitution, is not at large. They held that, despite the scope of the aliens power, the detention of aliens must comply with the limitations imposed by Ch III. Brennan, Deane and Dawson JJ said58: "Such limited authority to detain an alien in custody can be conferred on the Executive without infringement of Ch III's exclusive vesting of the judicial power of the Commonwealth in the courts which it designates. The reason why that is so is that, to that limited extent, authority to detain in custody is neither punitive in nature nor part of the judicial power of the Commonwealth. When conferred upon the Executive, it takes its character from the executive powers to exclude, admit and deport of which it is an incident." (footnote omitted) "[S]uch limited authority to detain an alien in custody can be conferred upon the Executive without contravening the investment of the judicial power of the Commonwealth in Ch III courts." I said60: "Although detention under a law of the Parliament is ordinarily characterized as punitive in character, it cannot be so characterized if the purpose of the imprisonment is to achieve some legitimate non-punitive object. Thus, imprisonment while awaiting trial on a criminal charge is not punitive in nature because the purpose of the imprisonment is to ensure that the accused person will come before the courts to be dealt with 56 Lim (1992) 176 CLR 1 at 65-66 per McHugh J. 57 Lim (1992) 176 CLR 1 at 33 per Brennan, Deane and Dawson JJ. 58 Lim (1992) 176 CLR 1 at 32. 59 Lim (1992) 176 CLR 1 at 10. 60 Lim (1992) 176 CLR 1 at 71. McHugh according to law. Similarly, imprisonment of a person who is the subject of a deportation order is not ordinarily punitive in nature because the purpose of the imprisonment is to ensure that the deportee is excluded from the community pending his or her removal from the country61. Likewise, the lawful imprisonment of an alien while that person's application for entry is being determined is not punitive in character because the purpose of the imprisonment is to prevent the alien from entering into the community until the determination is made. But if imprisonment goes beyond what is reasonably necessary to achieve the non-punitive object, it will be regarded as punitive in character." The test for assessing the validity of legislation authorising Executive detention of aliens What, then, is the appropriate test or principle for determining whether a law of the Parliament infringes Ch III of the Constitution when it authorises the Executive to detain an alien – or for that matter a citizen – without an order made in the exercise of judicial power? The applicants contend that the test for assessing the validity of a law that authorises the Executive to detain an alien requires a two-stage process: identify a legitimate non-punitive objective to which the law is directed; and if such an objective can be identified, determine whether the law that authorises detention is "reasonably necessary" or "reasonably capable of being seen as necessary" or "appropriate and adapted" to achieve that purpose or objective. They argue that this test involves considerations of proportionality. Dicta in cases such as Lim and Kruger suggested that the test for validity was whether the impugned provisions are "reasonably necessary" for or "reasonably capable of being seen as necessary" for the achievement of a non- punitive purpose. In Lim, Brennan, Deane and Dawson JJ held that a law that authorises the detention of an alien is valid62: 61 Ex parte Walsh and Johnson; In re Yates (1925) 37 CLR 36; Shaughnessy v United States ex rel Mezei 345 US 206 (1953); Jean v Nelson 727 F 2d 957 (1984). 62 (1992) 176 CLR 1 at 33. Although Mason CJ agreed with Brennan, Deane and Dawson JJ with respect to the scope of legislative power, his Honour did not identify an applicable test. McHugh "if the detention which [the law] require[s] and authorize[s] is limited to what is reasonably capable of being seen as necessary for the purposes of deportation or necessary to enable an application for an entry permit to be made and considered." (emphasis added) I applied a "reasonably necessary" test, finding that "if imprisonment goes beyond what is reasonably necessary to achieve the non-punitive object, it will be regarded as punitive in character."63 As I have indicated, Gaudron J thought that the validity of a detention law did not depend on Ch III but on whether it could be characterised as a law with respect to a s 51 power. In that context, her Honour applied a form of an "appropriate and adapted" test, saying64: "[A] law imposing special obligations or special disabilities on aliens, whether generally or otherwise, which are unconnected with their entitlement to remain in Australia and which are not appropriate and adapted to regulating entry or facilitating departure as and when required, is not, in my view, a valid law under s 51(xix) of the Constitution." (emphasis added) In Kruger, when considering the Executive's power of detention generally, Gummow J used the "reasonably capable of being seen as necessary" test in the "The question whether a power to detain persons or to take them into custody is to be characterised as punitive in nature, so as to attract the operation of Ch III, depends upon whether those activities are reasonably capable of being seen as necessary for a legitimate non-punitive objective66." (emphasis added) His Honour held that the executive power to detain was not punitive in nature if it was "reasonably capable of being seen as necessary for a legitimate non- punitive objective", adding that the categories of non-punitive, involuntary 63 Lim (1992) 176 CLR 1 at 71 (emphasis added). 64 Lim (1992) 176 CLR 1 at 57. 65 (1997) 190 CLR 1 at 162. 66 Lim (1992) 176 CLR 1 at 33 per Brennan, Deane and Dawson JJ, 46 per Toohey J, 58 per Gaudron J, 65, 71 per McHugh J. 67 Kruger (1997) 190 CLR 1 at 162. McHugh None of the other Justices who considered the point in Kruger used the "reasonably capable of being seen as necessary" test68. Until the decison of the Court in Al-Kateb, the weight of judicial dicta, therefore, favoured the "reasonably capable of being seen as necessary" test. In Al-Kateb, the Court had to determine whether ss 189 and 196 of the Act infringed Ch III of the Constitution by requiring the continued detention of an alien who could not be deported in the reasonably foreseeable future. A majority of Justices held that, although the sections required the detention of Mr Al-Kateb until he could be deported, they were valid because they had the non-punitive purposes of facilitating his deportation and segregating him from the Australian community69. None of the Justices in the majority in that case applied the "reasonably capable of being seen as necessary" test as the determinative test for ascertaining whether the purpose of the detention was punitive. I said that "[a]s long as the purpose of the detention is to make the alien available for deportation or to prevent the alien from entering Australia or the Australian community, the detention is non-punitive."70 Because the purpose of the provisions authorising detention was to prevent Mr Al-Kateb from entering the Australian community until he could be deported, they did not infringe Ch III of the Constitution. Hayne J also agreed that ss 189 and 196 did not infringe Ch III. Central to his Honour's reasoning was that "nothing about the decision making that must precede detention ... bespeaks an exercise of the judicial power." 71 His Honour "[T]o ask whether the law is limited to what is reasonably capable of being seen as necessary for particular purposes may be thought to be a test more apposite to the identification of whether the law is a law with respect to aliens or with respect to immigration." 68 Dawson J considered whether the actions in that case "may legitimately be seen as non-punitive": Kruger (1997) 190 CLR 1 at 62, McHugh J agreeing at 141-142. Toohey J did not express a test. Gaudron J repeated the view she expressed in Lim: 69 Al-Kateb (2004) 78 ALJR 1099 at 1110 [49] per McHugh J, 1148 [268] per Hayne J, 1152 [289] per Callinan J, 1155 [303] per Heydon J; 208 ALR 124 at 137, 70 Al-Kateb (2004) 78 ALJR 1099 at 1109 [45]; 208 ALR 124 at 136 (emphasis added). 71 Al-Kateb (2004) 78 ALJR 1099 at 1146 [254]; 208 ALR 124 at 188. 72 Al-Kateb (2004) 78 ALJR 1099 at 1146 [253]; 208 ALR 124 at 187-188. McHugh Furthermore, his Honour said that he would not identify the relevant power in quite so confined a manner as is implicit in the joint reasons in Lim73. Hayne J pointed out that the "aliens" and "immigration" powers extend to preventing aliens from entering or remaining in Australia74. On that hypothesis, they "extend to permitting exclusion from the Australian community – by prevention of entry, by removal from Australia, and by segregation from the community by detention in the meantime."75 His Honour went on to say76: "That is why I do not consider that the Ch III question which is said now to arise can be answered by asking whether the law in question is 'appropriate and adapted' or 'reasonably necessary' or 'reasonably capable of being seen as necessary' to the purpose of processing and removal of an unlawful non-citizen." His Honour found that ss 189 and 196 did not impose punishment because77: "Only if it is said that there is an immunity from detention does it become right to equate detention with punishment that can validly be exacted only in exercise of the judicial power. Once it is accepted, as it was by all members of the Court in Chu Kheng Lim, that there can be detention of unlawful non-citizens for some purposes, the argument from the existence of an immunity must accept that the immunity is not unqualified. The argument must then turn to the identification of those qualifications. That must be done by reference to the purpose of the detention. Neither the bare fact of detention nor the effluxion of some predetermined period of time in detention is said to suffice to engage Ch III. And because the purposes must be gleaned from the content of the heads of power which support the law, it is critical to recognise that those heads of power would support a law directed to excluding a non-citizen from the Australian community, by preventing entry to Australia or, after entry, by segregating that person from the community." Heydon J agreed with this part of his Honour's judgment78. 73 Al-Kateb (2004) 78 ALJR 1099 at 1146 [255]; 208 ALR 124 at 188. 74 Al-Kateb (2004) 78 ALJR 1099 at 1146 [255]; 208 ALR 124 at 188. 75 Al-Kateb (2004) 78 ALJR 1099 at 1146 [255] per Hayne J; 208 ALR 124 at 188 (original emphasis). 76 Al-Kateb (2004) 78 ALJR 1099 at 1146 [256]; 208 ALR 124 at 188. 77 Al-Kateb (2004) 78 ALJR 1099 at 1148 [267]; 208 ALR 124 at 190. McHugh Callinan J referred to the joint judgment in Lim79. But nothing in his Honour's judgment suggests that he took the view that the validity of a law that authorises detention depends on whether the law is "reasonably capable of being seen as necessary" to achieve a legitimate non-punitive end. His Honour said80: "In their joint judgment in Lim, Brennan, Deane and Dawson JJ acknowledged the breadth of the aliens power as well as the lawfulness of detention for purposes other than punitive ones. In particular it was accepted there that the Parliament might make laws reasonably capable of being seen as necessary for the purposes of deportation. The yardstick, and with respect rightly so, was 'purpose', the existence, that is the continuing existence of the relevant purpose of deportation." (footnotes omitted) This statement and other passages in his Honour's judgment81 indicate that, like Hayne J and Heydon J and myself, he saw the validity of the detention authorised by ss 189 and 196 as depending simply on whether its purpose was to impose punishment on the detainee. The reasoning in Al-Kateb is therefore inconsistent with the applicants' argument that the issue of punitive purpose must be determined by reference to whether the law itself is "reasonably necessary" for or "reasonably capable of being seen as necessary" for the achievement of a non-punitive purpose. A law that authorises detention will not offend the separation of powers doctrine as long as its purpose is non-punitive. As I indicated in Lim82: "[T]he lawful imprisonment of an alien while that person's application for entry is being determined is not punitive in character because the purpose of the imprisonment is to prevent the alien from entering into the community until the determination is made. But if imprisonment goes beyond what is reasonably necessary to achieve the non-punitive object, it will be regarded as punitive in character." 78 Al-Kateb (2004) 78 ALJR 1099 at 1155 [303]; 208 ALR 124 at 200. 79 Al-Kateb (2004) 78 ALJR 1099 at 1152-1153 [286]-[287], [290], [294]; 208 ALR 80 Al-Kateb (2004) 78 ALJR 1099 at 1153 [294]; 208 ALR 124 at 174. 81 See, eg, Al-Kateb (2004) 78 ALJR 1099 at 1152-1154 [290]-[291], [295]; 208 ALR 82 (1992) 176 CLR 1 at 71. McHugh Thus, if a law that authorises the imprisonment of an asylum seeker also has the purpose of keeping the detainee in solitary confinement without justification or otherwise has a purpose of subjecting the detainee to cruel and unusual punishment, it would go beyond what was necessary to achieve its non- punitive object. It would have a punitive purpose. It would go beyond what is necessary to prevent the detainee from entering the Australian community while his or her application for a visa is being determined. As questions of proportionality do not arise in the Ch III context, tests such as whether the impugned law is "reasonably necessary" for or "reasonably capable of being seen as necessary" for the achievement of a non-punitive purpose have no application when assessing whether the law infringes Ch III. Proportionality Once it is accepted that the test of punitive purpose is not whether the law is "reasonably necessary" for or "reasonably capable of being seen as necessary" for the achievement of a non-punitive purpose, questions of proportionality do not arise. Proportionality may often be an appropriate concept where there is a constitutional limitation on legislative power, for example, the implied constitutional In Cunliffe v The Commonwealth and Leask v The Commonwealth, Brennan CJ held that proportionality is restricted by a constitutional limitation84. His Honour described the concept of proportionality freedom of political communication83. is relevant where legislative power "a condition of, if not a synonym for, the criterion of 'appropriate and adapted' which is employed to ascertain whether the means adopted by a law achieve a validating purpose or object, that is to say, a purpose or object that is reasonably connected to a head of power." In Leask, Dawson and Toohey JJ also accepted that proportionality is relevant where a legislative power is subject to a constitutional limitation86. Thus, when 83 Cunliffe v The Commonwealth (1994) 182 CLR 272 at 296-298 per Mason CJ, 323-325 per Brennan J, 350-357 per Dawson J; Leask v The Commonwealth (1996) 187 CLR 579 at 593-595 per Brennan CJ, 606 per Dawson J, 614 per Toohey J. Dawson and Gummow JJ in Leask admitted to having some difficulties with the abovementioned passage of Mason CJ's judgment in Cunliffe: (1996) 187 CLR 579 at 603-605 per Dawson J, 624 per Gummow J. 84 Cunliffe (1994) 182 CLR 272 at 323-325 per Brennan J; Leask (1996) 187 CLR 579 at 593-595 per Brennan CJ. 85 Cunliffe (1994) 182 CLR 272 at 321. 86 (1996) 187 CLR 579 at 606 per Dawson J, 614 per Toohey J. McHugh assessing the validity of a law where the relevant head of legislative power is subject the proportionality of the means adopted by the law to achieve the object of the law87. to a constitutional the Court may limitation, inquire into In such cases, the question for resolution is whether a law that directly or in effect conflicts with the constitutional limitation is nevertheless valid because its operation is proportionate to some legitimate end compatible with the limitation. The separation of judicial power and the prohibition on the legislature conferring judicial power on any body other than a Ch III court are constitutional limitations on legislative power. But questions of proportionality cannot arise in the context of Ch III. A law that confers judicial power on a person or body that is not authorised by or otherwise infringes Ch III cannot be saved by asserting that its operation is proportionate to an object that is compatible with Ch III. The judicial power of the Commonwealth can be exercised only by courts that conform with the requirements of Ch III. It cannot be invested in non-judicial tribunals even if such investiture would be a reasonable and appropriate or proportionate means of achieving an end that is compatible with Ch III. Purpose of the ss 189 and 196 detention regime The respondents contend that the detention regime authorised by ss 189 and 196 serves several legitimate non-punitive purposes: The regime has the purpose of excluding unlawful non-citizens from the community (for the purposes of investigating and determining visa applications). Detention in these circumstances is "for the purposes of executive powers to receive, investigate and determine an application by that alien for an entry permit and (after determination) to admit or deport"88. The purpose of the imprisonment of an alien while that person's application for entry is being determined "is to prevent the alien from entering into the community until the determination is made."89 87 Cunliffe (1994) 182 CLR 272 at 324-325 per Brennan J. 88 Lim (1992) 176 CLR 1 at 32 per Brennan, Deane and Dawson JJ. 89 Lim (1992) 176 CLR 1 at 71 per McHugh J (emphasis added). McHugh As a sovereign nation, Australia has the capacity to decide which aliens shall become members of the community90. As a corollary, the Commonwealth is entitled (under the aliens power) to determine that people who have not been accepted for entry into Australia should not be allowed to live in the Australian community (and become absorbed into the community) pending the grant or refusal of permission to enter. The regime has the purpose of ensuring that unlawful non-citizens are available for prompt location and removal from Australia if their applications are unsuccessful. The need promptly to be able to locate and remove an unlawful non-citizen arises because in some instances there is only a short window of opportunity for the removal of that person. The Act certainly has these purposes or objects. However, that is not conclusive. If ss 189 and 196 have or either of them has a punitive purpose as well as a non-punitive purpose, those sections or that section will almost certainly infringe Ch III. A law may infringe that Chapter even if the punitive or penal sanction is not imposed for breach of the law or the existence of the fact or reason for the punishment is not transparent. If the purpose of the law is to punish or penalise the detainee without identifying the fact, reason or thing which gives rise to the punishment or penalty, then, as a matter of substance it gives rise to the strong inference that it is a disguised exercise of judicial power. Chapter III looks to the substance of the matter and cannot be evaded by formal cloaks. If an Act has a punitive purpose but the reason for the punishment cannot be identified, it should ordinarily be regarded as an exercise of judicial power. It should be seen as imposing a punishment or penalty because of who the person punished or penalised is or what that person has done. On that hypothesis, it is an exercise of judicial power in the classical sense of the term. Nevertheless, it is important to recognise the distinction for Ch III purposes between purpose and effect. This distinction is a matter of substance, not form. It is not enough that the effect of the law is no different from the infliction of punishment. If the effect of the law is not readily distinguishable from the effect of inflicting punishment, a rebuttable inference will arise that the purpose of the law is to inflict punishment. But, in determining whether a law authorises or requires 90 See, eg, Robtelmes v Brenan (1906) 4 CLR 395 at 400, 404 per Griffith CJ, 415 per Barton J; Pochi v Macphee (1982) 151 CLR 101 at 106 per Gibbs CJ; Lim (1992) 176 CLR 1 at 29 per Brennan, Deane and Dawson JJ; Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 170 [21] per Gleeson CJ, 192-193 [110]-[111] per Gummow J, cf 217-218 [200] per Kirby J, 229 [229] per Callinan J. McHugh punishment to be inflicted in breach of Ch III of the Constitution, it is the purpose of the law that is decisive. The applicants contend that the detention provisions do indeed have a punitive purpose. They claim that the regime is punitive because it is indefinite. There is no fixed or definite time when the detention comes to an end. There is no prescribed maximum period of detention. The claim of the applicants is supported by two writers, who argue that the provisions of the Act do not have the legitimate objectives of facilitating the consideration and determination of entry applications because the Act imposes no time limit on the processing of visa applications and permits detention to continue notwithstanding any suspension in the processing of applications91. The applicants contend that the provisions of the Act that allow detainees to request voluntary removal do not prevent the characterisation of the impugned provisions as arbitrary, in light of the principles of non-refoulement under the Convention relating to the Status of Refugees92 and at customary international law. The applicants argue that, so far as children are concerned, the detention regime is punitive because infant children may not have the competence to request removal from Australia. In addition, the applicants contend that the regime is punitive because the Act does not confer any discretionary power (whether administrative or judicial) to release an unlawful non-citizen whose detention is required by s 196. The two writers also contend that the detention provisions are punitive because the option to end detention voluntarily is illusory93. The writers observe that in many cases unlawful non-citizens cannot be returned to their country of origin94. 91 Dunn and Howard, "Reaching Behind Iron Bars: Challenges to the Detention of Asylum Seekers", (2003) 4 The Drawing Board: An Australian Review of Public Affairs 45 at 51, 56, 62. 92 Opened for signature 28 July 1951, 189 UNTS 150 (entered into force 22 April 1954) ("the Refugees Convention"). 93 Dunn and Howard, "Reaching Behind Iron Bars: Challenges to the Detention of Asylum Seekers", (2003) 4 The Drawing Board: An Australian Review of Public Affairs 45 at 61-62. 94 Dunn and Howard, "Reaching Behind Iron Bars: Challenges to the Detention of Asylum Seekers", (2003) 4 The Drawing Board: An Australian Review of Public Affairs 45 at 60-61. McHugh Some of these arguments can be easily dismissed. The issue of judicial power is not determined by asking whether the option to end detention is illusory or whether the provisions that authorise detention can be characterised as arbitrary. At best, such matters are indications that the detention is punitive. But they are not decisive. It is the purpose of the provisions which is decisive. Indefinite detention The Act contains no time limit on the processing of visa applications. There is also no fixed or definite time when detention must come to an end. Hence, there is no prescribed maximum period of detention. In Minister for Immigration and Multicultural and Indigenous Affairs v Al Masri95, the Full Federal Court (Black CJ, Sundberg and Weinberg JJ) held that the continued detention of an unlawful non-citizen was unlawful in circumstances where that person had requested removal, but there was no real likelihood or prospect of that person's removal in the reasonably foreseeable future. However, that decision was overruled by this Court's decision in Al-Kateb. In Lim, Brennan, Deane and Dawson JJ regarded the prescribed maximum time limit on detention for which the Act then provided as one element that rendered the Executive's powers of detention under the Act reasonably capable of being seen as necessary for the purpose of making and considering entry applications96. However, in light of the surrounding circumstances, the Court did not regard this element as determinative97. Indeed, I thought that the length of detention in light of the administrative burden on the Department to investigate and determine entry applications was relevant. I said that, while the detention might be "inordinately long" in that case, this did not make it punitive98. No doubt cases may also arise where the connection between the alleged purpose of detention and the length of detention becomes so tenuous that it is not possible to find that the purpose of the detention is to enable visa applications to be processed pending the grant of a visa. If the law in question has such a tenuous connection, the proper inference will ordinarily be that its purpose is punitive. The fact that the law may also have a non-punitive purpose will not save it from invalidity. 95 (2003) 126 FCR 54. 96 (1992) 176 CLR 1 at 34. 97 Lim (1992) 176 CLR 1 at 34 per Brennan, Deane and Dawson JJ, 58 per Gaudron J, 98 Lim (1992) 176 CLR 1 at 71-72. McHugh In my opinion, it is only a half-truth to say that the provisions of the Act authorise indefinite detention. The regime requires detention to end on the occurrence of any of the following events: the non-citizen is granted a visa; the non-citizen requests removal; the non-citizen does not apply for a visa; or the non-citizen's visa application fails and the application is "finally determined". When any of the second, third or fourth events occurs, the non-citizen must be removed from Australia as soon as reasonably practicable. Thus, although the date when the detention of any particular detainee will end cannot be predicted when the detention commences, the Act specifies the conditions upon which such detention must end. As the Full Federal Court found in Luu v Minister for Immigration and Multicultural Affairs99 and quoted with approval in NAMU of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs100, the fact of continued detention "does not, of itself, indicate anything about the respondent's purpose ... in retaining [the appellant] in immigration detention". In upholding the validity of s 196(1) in NAMU101, the Court effectively endorsed the comments of Beaumont ACJ at first instance, who found that s 196102: "should not, by virtue of its language, construed in context, be interpreted as a provision imposing punishment or having any other penal aspect. … [I]t is a law which provides for the custody or detention of an alien pending the processing of a visa application or deportation. As such, it is a valid law of the Commonwealth." Emmett J in NAGA v Minister for Immigration and Multicultural and Indigenous Affairs103 considered the constitutionality of ss 196 and 198. 99 (2002) 127 FCR 24 at 48. 100 (2002) 124 FCR 589 at 597. 101 (2002) 124 FCR 589 at 597. 102 NAMU of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 907 at [18]. 103 [2003] FCA 224. McHugh His Honour read s 196 with s 198 and concluded that s 196(1) "does not provide for indefinite detention, in the sense of detention unconstrained by any purpose."104 This was because the events upon which detention is to terminate105: "can still occur at some time in the future, albeit that the occurrence might be in the remote future. The position might be different if circumstances arose such that none of the events referred to in s 196(1) could ever occur. In those circumstances, if the true construction of s 196(1) was to authorise continued detention even after the events became impossible of occurrence, there may be some constitutional invalidity." NAMU and NAGA were decided before the Full Federal Court handed down its decision in Al Masri. In so far as there is conflict between these decisions and Al Masri on this point, this Court's decision in Al-Kateb indicates that the approach in the two earlier decisions is the correct one. Nevertheless, even in Al Masri, the Full Federal Court observed that the absence of a specific time limit on the detention of unlawful non-citizens was "perhaps not critical" in relation to the constitutional validity of the regime106. It is true that the Act does not specify any time limits in respect of the various steps involved in processing a visa application. But I see no difficulty in construing the Act as requiring those steps to be processed within a "reasonable time", as the United States Supreme Court did in Zadvydas v Davis107 (in the different context of detention pending removal). In cases where the Minister or a delegate or an officer or a tribunal fails to comply with the implied obligation to carry out a particular step within a reasonable time, the remedies afforded by s 75(v) of the Constitution are open to the detainee. The lack of a prescribed maximum period of detention does not affect the characterisation of the scheme. The impugned provisions permit detainees to request removal. The fact that detainees may request removal is important to, if not determinative of, a conclusion that the detention authorised by the provisions is not punitive. Like Beaumont ACJ in NAMU108, I think that s 196 "should not, by virtue of its language, construed in context, be interpreted as a provision imposing 104 NAGA [2003] FCA 224 at [54]. 105 NAGA [2003] FCA 224 at [59] per Emmett J. 106 (2003) 126 FCR 54 at 73. 108 [2002] FCA 907 at [18]. McHugh punishment or having any other penal aspect." When the Act is read as a whole, the object of ss 189 and 196 is to detain unlawful non-citizens in immigration detention so as to prevent them from entering the Australian community until one of the conditions specified in s 196 is satisfied. Children lack the capacity to request removal The applicants contend that the detention prescribed by ss 189 and 196 is punitive in the case of children because a child may not have the capacity to bring about the end of his or her detention by requesting removal from Australia. In Lim, the Court regarded the ability of a detainee to bring about the end of his or her detention by requesting removal to be a critical element with respect to the constitutionality of the detention regime109. One issue for determination, therefore, is whether the age of a detainee is a relevant constitutional fact for the purposes of determining the constitutionality of ss 189 and 196. The respondents contend that, in determining the constitutionality of ss 189 and 196, regard should only be had to the purpose of those provisions, and not to their effect. On this approach, the issue of constitutional validity does not depend on circumstances that are personal to a particular applicant, as these matters are not constitutional facts to be taken into account in determining the validity of the impugned provisions110. Childhood is one such circumstance. As the Full Federal Court in NAMU observed, any punitive purpose is discovered from the legislative structure of the regime for detention, rather than from the consequences of the detention on individual detainees111. Section 196(1) generally serves the non-punitive purpose of ensuring that the unlawful non-citizens can be supervised and controlled pending determination of their applications for entry112. Once that is accepted, such a legitimate purpose is not displaced by the fact that children may be among the unlawful non-citizens detained under that provision. In Lim, one of the 109 (1992) 176 CLR 1 at 33-34 per Brennan, Deane and Dawson JJ, 72 per McHugh J. 110 See NAMU [2002] FCA 907 at [12] per Beaumont ACJ; aff'd on appeal in NAMU (2002) 124 FCR 589. The Full Court in NAMU considered only the effects of immigration detention on the mental health of the detained children: (2002) 124 FCR 589 at 597. The Court was not asked to consider whether the fact that an infant child may not have the capacity to bring about the end of his or her detention by requesting removal from Australia would operate to render unconstitutional ss 189 and 196. 111 (2002) 124 FCR 589 at 597. 112 NAMU (2002) 124 FCR 589 at 597. McHugh 36 plaintiffs was an infant child. The Court did not treat the child differently from the adult plaintiffs. Brennan, Deane and Dawson JJ noted that no separate argument was advanced in relation to the child or his status113. The Court did not consider whether the fact that an infant child may lack the requisite capacity to request removal would operate to render the detention punitive and thus unconstitutional. The applicants argue that s 196 is punitive in relation to children because of the special status and vulnerability of children, and the duties of protection owed by the Crown. The applicants contend that: detention extends far beyond what is necessary to verify identity, perform health and other checks, and to ensure that the child is available for removal should an obligation to remove arise; detention of children is not reasonably necessary in order to enable the determination of their or their parents' visa applications; detention is not for the welfare or protection of children, unlike in Kruger, as detention is likely to have a significant adverse psychological and physical impact on a child's development and well-being; and children may not have the legal or practical capacity to request their own removal. However, as I have indicated, detention serves the legitimate purposes of enabling unlawful non-citizens to be located at any time, and preventing such persons from entering or disappearing into the Australian community pending the determination of their entry applications. The parens patriae jurisdiction of the courts cannot be invoked to read down the legislative direction that children who are unlawful non-citizens must be detained in immigration custody. The infancy of the present applicants can be a relevant constitutional fact for the purposes of assessing the validity of the impugned provisions if such a fact indicates that the purpose of the Act is to require their detention so as to punish them or their parents. However, nothing in the Act or in the surrounding circumstances indicates that the purpose of detaining children is punitive. Although infant children may lack the capacity to request removal, this lack of capacity is not itself sufficient to render the detention authorised by ss 189 and 196 punitive and therefore unconstitutional. Legal capacity is usually determined on the basis of the ability of the individual to understand the nature and consequences of a particular 113 Lim (1992) 176 CLR 1 at 15. McHugh situation. Children are presumed to be incompetent at birth and gradually to acquire legal competence for various purposes at different stages of their development until they reach the age of majority (18), in which case they are presumed to have full legal capacity. The capacity of the child varies according to the gravity of the particular matter and the maturity and understanding of that child. Parents in their capacity as guardians of an infant child have the power under the common law to make decisions on behalf of the child, provided that the child does not have the competence to make the decision114. Thus, where a child lacks capacity, the ordinary rules of the common law authorise the parent or guardian of the child to act on the child's behalf115. Parental authority diminishes as the child's legal competence emerges. The parent's authority is at an end when the child has sufficient intellectual and emotional maturity to make an informed choice116. Thus, for the purposes of making immigration decisions, where the child lacks the capacity to make a decision, the discretion is vested in the parents or legal guardian of that infant child117. The Act and the Migration Regulations 1994 (Cth)118: "do not provide a cohesive and comprehensive scheme which makes clear the position of children and infants ... to apply for protection visas in their own right or be added to an application of a parent and the position of the child at the various stages of administrative decision-making and review". Nevertheless, in Lim, the Court did not treat the infant plaintiff any differently from the adult plaintiffs, and appeared to accept that the infant's parents were 114 Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 235-236 per Mason CJ, Dawson, Toohey and Gaudron JJ, 278 per Brennan J, 289, 293-294 per Deane J, 315 per McHugh J. 115 Marion's Case (1992) 175 CLR 218 at 237-238 per Mason CJ, Dawson, Toohey 116 Marion's Case (1992) 175 CLR 218 at 237-239 per Mason CJ, Dawson, Toohey and Gaudron JJ, 293-294 per Deane J, 316 per McHugh J. 117 See Chen Shi Hai v Minister for Immigration and Multicultural Affairs (2000) 201 CLR 293. 118 Jaffari v Minister for Immigration and Multicultural Affairs (2001) 113 FCR 10 at 15 per French J, citing Al Raied v Minister for Immigration and Multicultural Affairs [2001] FCA 313 at [39]. McHugh entitled to bring the claim on the child's behalf. In addition, as Gummow J points out in his judgment119, this Court has accepted that parents of infant unlawful non-citizens may exercise immigration decisions on behalf of the infant. Accordingly, the impugned provisions do not authorise "punitive" detention simply because an infant child may lack the capacity to request removal. If the child lacks capacity, the child's parents or guardian may make such a request on the child's behalf120. Infant children as a class do not pose a flight risk or security danger to the community. Young children are not generally capable of disappearing into the community by themselves and would also be unlikely to pose a security danger to the community121. Indeed, in its report on children in immigration detention, the Human Rights and Equal Opportunity Commission accepted evidence that families with children are the least likely to be a flight or security risk122. The Commission found that123: "As genuine applicants have less incentive to abscond, it would seem that unauthorised arrival children are less likely to disappear. Thus the justification for the detention of all unauthorised arrival children on the grounds that they will not otherwise be available for processing is unconvincing." But these factors do not mean that ss 189 and 196 cannot validly apply to children. Even though the likelihood that unauthorised arrival children will abscond or pose a security danger to the community may be very low, it is nonetheless possible that such children may abscond. As Gummow J points out 119 At [155], citing Chen Shi Hai (2000) 201 CLR 293; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicants S134/2002 (2003) 211 CLR 441 at 456-457 [28]-[31] per Gleeson CJ, McHugh, Gummow, Hayne 120 It is unnecessary for the purposes of this application to consider the situation of unaccompanied minors. 121 Human Rights and Equal Opportunity Commission, A Last Resort? National Inquiry into Children in Immigration Detention, (2004) at 882-883. 122 Human Rights and Equal Opportunity Commission, A Last Resort? National Inquiry into Children in Immigration Detention, (2004) at 882, citing Milbur Consulting, Improving Outcomes and Reducing Costs for Asylum Seekers, Report commissioned by Justice for Asylum Seekers, (2003). 123 Human Rights and Equal Opportunity Commission, A Last Resort? National Inquiry into Children in Immigration Detention, (2004) at 882-883. McHugh in his judgment124, someone else may attempt to conceal such children and they may be difficult to locate because their appearance changes more rapidly than an adult's and they have fewer ties to a place than adults. It may be easier to give a child a "new" identity than it is to give a new identity to an adult because a child generally leaves fewer documented traces of his or her identity than most adults. Although it may be accepted that children who are unlawful non-citizens do not pose a flight risk and are not a danger to the community, the Parliament, acting constitutionally, is entitled to prevent any unlawful non-citizen, including a child, from entering the Australian community while that person continues to have that status. That the Parliament might have achieved its object in other ways does not establish that the purpose of the Act is punitive. Nor do the facts that children are not a flight risk or a danger to the community establish that the purpose of the Act is to punish them or their parents. International jurisprudence on the detention of asylum seekers and aliens The applicants rely on the Convention on the Rights of the Child125 to support their submissions that the detention of infant unlawful non-citizens authorised by ss 189 and 196 of the Act is punitive and therefore infringes Ch III of the Constitution. The treatment of child asylum seekers and refugees is the subject of a number of international conventions to which Australia is a party, including the Refugees Convention, the International Covenant on Civil and Political Rights126 and the Convention on the Rights of the Child. In addition, there is an increasing body of international jurisprudence on the human rights obligations of states in relation to the situation of asylum seekers in detention127. 125 Opened for signature 20 November 1989 [1991] ATS 4 (entered into force 2 September 1990; entered into force for Australia 16 January 1991). 126 Opened for signature 19 December 1966, 999 UNTS 171 (entered into force 23 March 1976; entered into force for Australia 13 November 1980) ("the ICCPR"). 127 See, eg, Executive Committee, United Nations High Commissioner for Refugees, Detention of Refugees and Asylum-Seekers, No 44, (XXXVII) (1986); Executive Committee, United Nations High Commissioner for Refugees, Conclusion on International Protection, No 85, (1998); United Nations High Commissioner for Refugees, Revised Guidelines on Applicable Criteria and Standards Relating to the Detention of Asylum Seekers, (1999); United Nations Economic and Social Council, Commission on Human Rights, Civil and Political Rights, Including Questions of: Torture and Detention, Report of the Working Group on Arbitrary Detention, UN Doc E/CN4/2000/4, (1999) Annex 2; (Footnote continues on next page) (XLIX) McHugh This body of international jurisprudence favours the argument that the mandatory detention of infant asylum seekers is arbitrary. As a result, Australia's mandatory detention regime has been the subject of widespread criticism both domestically128 and internationally129, on the grounds that the regime is in breach of international conventions and customary international law130. The United Nations Human Rights Committee has found the regime (at the time of the decision in Lim) to be arbitrary within the meaning of Art 9 of the ICCPR. In A v Australia131, the Committee found that the detention of the author, one of the plaintiffs in Lim, was arbitrary within the meaning of Art 9(1) of the ICCPR and was also in breach of Art 9(4) of the ICCPR for the reasons that the detention authorised by the Act was indefinite, prolonged, not open to review and not proportionate to the end being sought. In Bakhtiyari v Australia132, the Committee found that the detention of Mrs Bakhtiyari and her children (until the release of the children by interim order of the Family Court of Australia) constituted violations of Arts 9(1) and (4) and 24(1) of the ICCPR. In addition, the Committee found that the removal of Goodwin-Gill, "Article 31 of the 1951 Convention Relating to the Status of Refugees: Non-penalization, Detention, and Protection", in Feller, Türk and Nicholson (eds), Refugee Protection in International Law: UNHCR's Global Consultations on International Protection, (2003) 185. 128 See Human Rights and Equal Opportunity Commission, Those Who've Come Across the Seas: Detention of Unauthorised Arrivals, (1998); Ozdowski, A Report on Visits to Immigration Detention Facilities by the Human Rights Commissioner 2001, (2002); Human Rights and Equal Opportunity Commission, A Last Resort? National Inquiry into Children in Immigration Detention, (2004). 129 United Nations, Human Rights and Immigration Detention: Report of Justice P N Bhagwati, Regional Advisor for Asia and the Pacific of the United Nations High Commissioner for Human Rights: Mission to Australia 24 May to 2 June 2002, (2002). 130 North and Decle, "Courts and Immigration Detention: 'Once a Jolly Swagman Camped by a Billabong'", (2002) 10 Australian Journal of Administrative Law 5 at 24. See also Human Rights and Equal Opportunity Commission, A Last Resort? National Inquiry into Children in Immigration Detention, (2004) at 214, 849-855. 131 United Nations Human Rights Committee, UNHCR Communication No 560/1993, CCPR/C/59/D/560/1993, 3 April 1997 at [9.4]-[9.5]. 132 United Nations Human Rights Committee, UNHCR Communication No 1069/2002, CCPR/C/79/D/1069/2002, 29 October 2003. McHugh Mrs Bakhtiyari and her children without awaiting final determination of separate proceedings brought by Mr Bakhtiyari would constitute a violation of Arts 17(1) and 23(1) of the ICCPR. In particular, the Committee found that the "extended period" of detention of the children for two years and eight months was not justified, and that Australia failed to demonstrate133: "that other, less intrusive, measures could not have achieved the same end of compliance with the State party's immigration policies by, for example, imposition of reporting obligations, sureties or other conditions which would take into account the family's particular circumstances." After observing that the Act did not allow for judicial review of the justification for the detention of Mrs Bakhtiyari and her children in substantive terms, the Committee concluded that the unavailability of judicial review to challenge a detention that was, or had become, contrary to Art 9(1) of the ICCPR constituted a violation of Art 9(4)134. On the other hand, the Committee considered that the ability of a court to order a child's release if it is considered in the child's best interests to do so135 is sufficient review of the substantive justification for detention to satisfy the requirements of Art 9(4) of the ICCPR136. 133 Bakhtiyari v Australia, United Nations Human Rights Committee, UNHCR Communication No 1069/2002, CCPR/C/79/D/1069/2002, 29 October 2003 at 134 Bakhtiyari v Australia, United Nations Human Rights Committee, UNHCR Communication No 1069/2002, CCPR/C/79/D/1069/2002, 29 October 2003 at [9.4]. The three findings of the Committee in relation to the length of detention, the absence of alternatives to detention and the unavailability of "substantive" judicial review to challenge detention are consistent with its decision in C v Australia, United Nations Human Rights Committee, UNHCR Communication No 900/1999, CCPR/C/76/D/900/1999, 28 October 2002 at [8.2]-[8.3], [9]. 135 In this context the Committee considered that under Art 24(1) of the ICCPR, the principle that in all decisions affecting a child, its best interests shall be a primary consideration, forms an integral part of every child's right to such measures of protection as required by his or her status as a minor, on the part of his or her family, society and the State: Bakhtiyari v Australia, United Nations Human Rights CCPR/C/79/D/1069/2002, 29 October 2003 at [9.7]. Communication Committee, UNHCR 136 Bakhtiyari v Australia, United Nations Human Rights Committee, UNHCR Communication No 1069/2002, CCPR/C/79/D/1069/2002, 29 October 2003 at McHugh Immigration laws in Canada, the United States, the United Kingdom and New Zealand permit the detention of non-citizens under the Immigration and Refugee Protection Act, RSC 2001, c 27, the Immigration and Nationality Act, 8 USC (1988), the Immigration Act 1971 (UK) and the Nationality, Immigration and Asylum Act 2002 (UK) and the Immigration Act 1987 (NZ) respectively. These detention regimes do not appear to provide for mandatory detention. The Canadian and New Zealand regimes deal expressly with the detention of minors. In Canada, detention of a foreign national is permissible under the Immigration and Refugee Protection Act in order to check identity or where there are reasonable grounds to believe that the person is inadmissible, poses a danger to the public or constitutes a flight risk137. The detaining officer has a discretion to release the person if the reasons for detention no longer exist138. The Canadian Act provides for regular administrative review of detention (at least every 30 days)139. Continued detention is permissible only if the person is a danger to the public or a flight risk, the Minister is inquiring into a reasonable suspicion that the person is inadmissible on security grounds or for violating human or international rights, or that the Minister is making reasonable efforts to establish the person's identity140. The Immigration and Refugee Protection Regulations, SOR/2002-227 contain a list of factors that must be taken into account when assessing whether a person is a danger to the public, a flight risk or the person's identity has not been established, and before a decision is made whether to release that person from detention141. The Immigration and Refugee Protection Act and the Immigration and Refugee Protection Regulations provide that the detention of foreign national minors is "a measure of last resort"142 which may occur only after the best interests of the child and the following considerations are taken into account143: the availability of alternative arrangements with local child-care agencies or child protection services for the care and protection of the minor children; 137 Section 55(2). 138 Immigration and Refugee Protection Act, s 56. 139 Section 57. 140 Immigration and Refugee Protection Act, s 58. 141 Part 14. 142 Immigration and Refugee Protection Act, s 60. 143 Immigration and Refugee Protection Regulations, reg 249. McHugh the anticipated length of detention; the risk of continued control by the human smugglers or traffickers who brought the children to Canada; the type of detention facility envisaged and the conditions of detention; the availability of accommodation that allows for the segregation of the minor children from adult detainees who are not the parent of or the adult legally responsible for the detained minor children; and the availability of services in the detention facility, including education, counselling and recreation." Section 128 of the Immigration Act 1987 (NZ) permits the detention of non-citizens on arrival in New Zealand, while s 60 of that Act permits the detention of non-citizens after a removal order has been served on them. In the case of minors, s 141D of the Act requires that the minor be given the opportunity to express his or her views on the matter (whether personally or through a responsible adult), and that due weight be given to those views, having regard to the age and level of maturity and understanding of the minor. In the United States, the detention regime for aliens (including alien minors) has not been held to be unconstitutional144. However, United States courts have found that the continued detention of an alien may be unlawful in a number of circumstances, for example, where an alien is detained for eight years145 and where an alien subject to a deportation order is detained indefinitely without reasonable prospects of removal146. 144 See, eg, Reno v Flores 507 US 292 (1993). 145 Barrera-Echavarria v Rison 21 F 3d 314 at 317 per Browning and Noonan JJ 146 See, eg, Zadvydas 533 US 678 (2001). In Zadvydas, the Supreme Court construed legislation that authorised the further detention of an alien who was the subject of a removal order, but whose removal had not been secured within the prescribed 90 day removal period, in circumstances where no other country would accept that alien. The issue before the Court was whether the statute authorised the Attorney General to detain indefinitely such an alien. The Supreme Court held that such an alien cannot be detained indefinitely without a realistic prospect of another country accepting that alien, except in instances where release would harm the national security or the safety of the community. The Court construed the statute, read in light of the Fifth Amendment, as containing a "reasonable time" limitation. The post-removal- (Footnote continues on next page) the constitutional demands of the due process clause of McHugh The decisions of the United Nations Human Rights Committee in A v Australia, C v Australia147 and Bakhtiyari v Australia, the deliberations of the United Nations Working Group on Arbitrary Detention148 and the detention regimes in the United States, Canada, the United Kingdom and New Zealand indicate that a regime which authorises the mandatory detention of unlawful non- citizens may be arbitrary notwithstanding that the regime may allow for the detainee to request removal at any time. They suggest that something more is required if the regime is not to be found to breach the Refugees Convention, the ICCPR or the Convention on the Rights of the Child, or to be otherwise contrary to international law. Something more may include periodic judicial review of the need for detention, some kind of defined period of detention and the absence of less restrictive means of achieving the purpose served by detention of unlawful non-citizens. However, the issue in this Court is not whether the detention of the present applicants is arbitrary according to international jurisprudence, whether it constitutes a breach of various Conventions to which Australia is a party or whether it is contrary to the practice of other states. It is whether Parliament has the purpose of punishing children who are detainees so that, for the purpose of the Constitution, the Parliament has exercised or authorised the Executive to exercise the judicial power of the Commonwealth. On that very different issue, the international jurisprudence and the practice of other states do not assist. That is because the purpose of ss 189 and 196 is a protective purpose – to prevent unlawful non-citizens, the Australian community until one of the conditions in s 196(1) is satisfied. If that is the purpose of the provisions, as I think it is, the Parliament has not exercised, nor authorised the Executive to exercise, the judicial power of the Commonwealth. including children, from entering period detention statute implicitly limited the detention of an alien to a period "reasonably necessary to bring about that alien's removal from the United States": at 689. This period was subject to judicial review: at 699. The statute did not, therefore, permit indefinite detention: at 682-689. 147 United Nations Human Rights Committee, UNHCR Communication No 900/1999, CCPR/C/76/D/900/1990, 28 October 2002. 148 United Nations Economic and Social Council, Commission on Human Rights, Civil and Political Rights, Including Questions of: Torture and Detention, Report of the Working Group on Arbitrary Detention, UN Doc E/CN4/2000/4, (1999) Annex 2. In its Deliberation No 5, the Working Group proposes a number of principles concerning the detention of asylum seekers, including Principle 7, which requires that detention should be for a defined period "set by law" and "may in no case be unlimited or of excessive length": at Annex 2, 30. McHugh Whether or not Australia may be in breach of its international obligations cannot affect that constitutional question. For the reasons that I have given, ss 189 and 196 are valid enactments and apply to children who are unlawful non-citizens. Order The application must be dismissed. 118 GUMMOW J. The question posed by this application in the original jurisdiction for prohibition, habeas corpus and injunctive relief is whether ss 189 and 196 of the Migration Act 1958 (Cth) ("the Act"), which require the detention of "unlawful non-citizens", are invalid insofar as, upon their proper construction, they require the detention of "unlawful non-citizens" who are children. By "children", the parties mean those under the age of 18 years. The question of the lawfulness of their detention has two elements. The first concerns statutory construction; the second, assuming a construction adverse to the applicants, concerns validity. The applicants are children and nationals of Afghanistan. They are unlawful non-citizens and at the institution and hearing of this application were detained in South Australia at the Baxter Immigration Detention Facility ("Baxter"). The proceeding is brought by their father acting as next friend. The first respondent is the manager of Baxter, and the second respondent is the Minister for Immigration and Multicultural and Indigenous Affairs ("the Minister"). ("the The Human Rights and Equal Opportunity Commission Commission") sought, and was granted, leave to intervene in these proceedings by way of oral and written submissions. The Commission referred the Court to a number of articles and reports by other bodies dealing with the mental health effects of long-term immigration detention on children. These studies were based on psychological assessments of children in immigration detention in Australia. They give some support to the Commission's submission that immigration detention poses a risk to the health and welfare of children, even where, or perhaps particularly where, they are detained with distressed adults, including their parents. However, the bulk of this material is anecdotal in nature, has not been tested and is not specific to the situation of the individual applicants. The applicants seek an order absolute for a writ of habeas corpus against the first respondent. Against the second respondent, the Minister, they seek an order absolute for a writ of prohibition or an injunction prohibiting or restraining the Minister from detaining the applicants in immigration detention. By order of a Justice, this application was referred for consideration on motion by the Full Court. In order to avoid any dispute as to whether the children were competent to seek the relevant orders themselves, the children's father, GS, was added as an alternative prosecutor. At the time of the hearing, the applicants were aged seven, 11, 13 and 15 years respectively. They arrived in Australia on 15 January 2001 with their elder brother and parents. The elder brother is over 18 years of age and is not one of the applicants. No family member held a valid visa to travel to, enter or remain in Australia, and each of them was thereby an "unlawful non-citizen" within the meaning of s 14 of the Act. Upon arrival in Australia, the applicants and the other members of their family were detained in immigration detention; first, at the Woomera Immigration Reception and Processing Centre, and later at Baxter. The applicants' father lodged an application for a protection visa on 21 February 2001. That application included the applicants as dependants. On 20 April 2001, the Minister's delegate refused the application by the applicants' father. That decision has subsequently been the subject of a series of proceedings in the Refugee Review Tribunal, the Federal Magistrates Court and the Federal Court. It is sufficient for present purposes to note that the applicants' father has instituted an appeal in the Federal Court against a decision of the Federal Magistrates Court. The decision in Lim The submissions for each side referred extensively to Chu Kheng Lim v Minister for Immigration149. The plaintiffs in Lim were Cambodian nationals who had arrived in Australia without visas, and who had been detained in custody since their arrival150. One of the plaintiffs was an infant child who had been born after his mother's arrival in Australia. However, no separate argument was advanced in Lim relating to children or to their status151. It should not be assumed that Lim addresses the specific question now before the Court. The detention regime The provisions of the Act at issue in this case are the same provisions that were considered in Al-Kateb v Godwin152 and Minister for Immigration and Multicultural and Indigenous Affairs v Al Khafaji153. Judgment in those matters had been reserved before the hearing of this case. The relevant provisions are set out in Pt 2 Div 7 of the Act (ss 188-197). The legislation is similar to that considered in Lim, with some differences discussed below. Section 189(1) provides: 149 (1992) 176 CLR 1. 150 (1992) 176 CLR 1 at 15. 151 (1992) 176 CLR 1 at 15. 152 (2004) 78 ALJR 1099; 208 ALR 124. 153 (2004) 78 ALJR 1156; 208 ALR 201. "If an officer knows or reasonably suspects that a person in the migration zone (other than an excised offshore place) is an unlawful non-citizen, the officer must detain the person." The other sub-sections of s 189 apply in similar terms to unlawful non-citizens seeking to enter the migration zone (sub-s (2)), and to unlawful non-citizens who are either in, or seeking to enter, an "excised offshore place" (sub-ss (3) and (4)). The period of detention authorised by s 189 is stipulated by s 196. The critical provisions are sub-ss (1)-(3), which state: "(1) An unlawful non-citizen detained under section 189 must be kept in immigration detention until he or she is: removed from Australia under section 198 or 199; or deported under section 200; or granted a visa. To avoid doubt, subsection (1) does not prevent the release from immigration detention of a citizen or a lawful non-citizen. To avoid doubt, subsection (1) prevents the release, even by a court, of an unlawful non-citizen from detention (otherwise than for removal or deportation) unless the non-citizen has been granted a visa." The balance of s 196 reads: "(4) Subject to paragraphs (1)(a), (b) and (c), if the person is detained as a result of the cancellation of his or her visa under section 501, the detention is to continue unless a court finally determines that the detention is unlawful, or that the person detained is not an unlawful non-citizen. (4A) Subject to paragraphs (1)(a), (b) and (c), if the person is detained pending his or her deportation under section 200, the detention is to continue unless a court finally determines that the detention is unlawful. To avoid doubt, subsection (4) or (4A) applies: (a) whether or not there is a real likelihood of the person detained being removed from Australia under section 198 or 199, or deported under section 200, in the reasonably foreseeable future; and (b) whether or not a visa decision relating to the person detained is, or may be, unlawful. (5A) Subsections (4) and (4A) do not affect by implication the continuation of the detention of a person to whom those subsections do not apply. This section has effect despite any other law. In this section: visa decision means a decision relating to a visa (including a decision not to grant the visa, to cancel the visa or not to reinstate the visa)." As was the case in Al-Kateb, the applicants in this case are neither detained as a result of a visa cancellation under s 501, nor are they being detained pending deportation under s 200. As a result, sub-ss (4)-(5A) have no operation with respect to the applicants. Detention of children – statutory construction and validity That the detention regime is intended to apply to children is clear from other provisions in the Act. Section 252A(1) states: "A strip search of a detainee… may be conducted by an authorised officer, without warrant, to find out whether there is hidden on the detainee, in his or her clothing or in a thing in his or her possession a weapon, or other thing, capable of being used: to inflict bodily injury; or to help the detainee, or any other detainee, to escape from immigration detention." A "detainee" is defined as a "person detained" in immigration detention (s 5(1)). That some "detainees" will be children is clear from s 252A(3) which relevantly provides: "A strip search of a detainee may be conducted by an authorised officer only if: the strip search is authorised as follows: if the detainee is at least 18 – the Secretary, or an SES Band 3 employee the Department authorises the strip search because he or she is satisfied that there are reasonable grounds for those suspicions; if the detainee is at least 10 but under 18 – a magistrate orders the strip search because he or she is satisfied that there are reasonable grounds for those suspicions." (emphasis added) Similarly, s 252B(1)(g) requires the attendance of a child's parent or guardian, or a person capable of representing the child's interests, where a strip search is conducted of a person between the ages of 10 and 18. These sections, while not expanding the definition of "detainee" in s 5(1), demonstrate that the legislature contemplated that the detention regime authorised by the Act would provide for the detention of children. The applicants' case thus cannot succeed upon the first ground urged, namely the proper construction of the Act. That brings one to the second ground, invalidity, and to the applicability of Lim. It will be recalled that, in the event, the validity of the legislation challenged in Lim was upheld, although there was detailed consideration of criteria the application of which to legislation otherwise expressed might lead to invalidity. The applicants submit that the present legislation is of that different character and so is invalid. In particular, they submit that it violates the constitutional norm because it extends what is reasonably capable of being seen as necessary to facilitate the reception, investigation, admission or expulsion of aliens154. The applicants advance two bases upon which this case may be distinguished from the legislation upheld in Lim. First, they submit that, unlike that legislation, the present legislation which authorises their detention is not subject to any maximum time limit and thereby authorises indefinite detention. Secondly, they submit that their detention involves a greater constraint on liberty than that considered in Lim because some children will lack the capacity to choose to end their detention by requesting removal from Australia. The combined effect of these considerations is said to be that the applicants' detention is invalid because it exceeds what is reasonably capable of being seen as necessary to facilitate the reception, investigation, admission or expulsion of aliens. The consequence, the applicants contend, is that the legislation is invalid for the considerations detailed in Lim. That contention by the applicants, were it otherwise to be made good, is not foreclosed by the holdings in Al-Kateb and Al Khafaji. 154 See Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1126 [140]; 208 ALR 124 at 160. Indefinite detention? Turning to the first of these claims, the applicants submit that the legislation considered in Lim was materially different to that here before the Court because the Act no longer stipulates a maximum limit on the period of detention. At the time Lim was decided, the Act included s 54Q which effectively limited the maximum period of detention to 273 days from the date of the detainee's entry application. However, this limitation was qualified, and time did not run during the period in which court or tribunal proceedings relating to a detainee's application had been commenced but not yet finalised (s 54Q(3)). This qualification was significant because it meant that detainees could be detained for periods in excess of 273 days where their claims were the subject of judicial or administrative review proceedings. Indeed, even if the present legislation contained an equivalent to s 54Q, time would not yet have commenced to run for the purposes of the section in respect of the applicants. In their joint judgment in Lim, Brennan, Deane and Dawson JJ, with whom Gaudron J agreed on this point155, indicated that the time limitation imposed by s 54Q was a factor in ensuring that the administrative detention provisions were constitutional156: "In the context of [a] power of a designated person to bring his or her detention in custody under Div 4B to an end at any time, the time limitations imposed by other provisions of the Division suffice, in our view, to preclude a conclusion that the powers of detention which are conferred upon the Executive exceed what is reasonably capable of being seen as necessary for the purposes of deportation or for the making and consideration of an entry application." The applicants rely on this statement to argue that, absent such time limitations, the mandatory detention regime considered in Lim would have been invalid as it would have effectively provided for indefinite detention. Given the reasoning I adopted in Al-Kateb and Al Khafaji and to which I adhere, that submission is to be rejected. Section 189 does not authorise indefinite detention; the period of detention under s 196 is limited to that during which removal under s 198 is "reasonably practicable". Thus, the Act does not authorise the continuing detention of an unlawful non-citizen where that person has requested removal under s 198(1) and where such removal is unlikely as a 155 (1992) 176 CLR 1 at 58. 156 (1992) 176 CLR 1 at 34. matter of reasonable practicability157. It is therefore not correct that the Act contains no temporal limitations on the duration of detention. Indeed, in some cases, the limit imposed by what is reasonably practicable may be significantly shorter than the limit imposed by s 54Q as it stood at the time Lim was decided. Exclusion from the "Australian community" Were a contrary view to that above be taken on the matter of construction, then serious questions respecting validity could have arisen. In Al-Kateb, I referred to the use of the term "Australian community" in constitutional discourse, particularly with respect to the aliens power. However, something more needs to be said. The legal system has adopted various criteria as sufficient connecting factors for the attachment both by the general law and by statute of rights and obligations. The connecting factors include domicile (notably in family and succession laws and to determine matters of status), residence (both in the Constitution itself (ss 34(i), 75(iv), 117) and in revenue laws), personal presence (particularly for the criminal law), and citizenship and nationality (particularly in migration laws and for some matters of status). The notion of "membership of the community" has multiple references and lacks the legal specificity of the above connecting factors. To speak then of "exclusion" from a "community" therefore also involves multiple references. The reference to "exclusion" may also be an Orwellian euphemism. The term "community" has a special history in constitutional, social and political discourse. At the time of the establishment of the Constitution, and at the most general level, the term "community" might be used as a concept said by Griffith CJ in Potter v Minahan158 to be "anterior" to the doctrines of nationality and domicile, being "an elementary part of the concept of human society, namely, the division of human beings into communities". More specifically, a community might be those persons in a particular area of territory bound by a common legal system. This is at the root of the term "the common law". Covering cl 5 of the Constitution reads in part: "This Act, and all laws made by the Parliament of the Commonwealth under the Constitution, shall be binding on the courts, judges, and people 157 Al-Kateb v Godwin (2004) 78 ALJR 1099; 208 ALR 124. 158 (1908) 7 CLR 277 at 288-289. of every State and of every part of the Commonwealth, notwithstanding anything in the laws of any State". The "people" referred to are bound into a new community by their common subjection to the operation of the Constitution and laws made by the Parliament. That community and those "people" cannot, for example, have been confined to those (probably no more than half the adult population) who were the electors then spoken of in the Constitution. Nor can the term have excluded those non-enemy aliens resident in Australia159. Nor those segregated from the population at large by their incarceration. On the other hand, the new community did not extend to all those in Australia who were British subjects. Thus, the protection of s 117 of the Constitution was limited to those subjects of the Queen who were residents. Moreover, the immigration power might be used to restrict entry of certain British subjects, denying them the opportunity of becoming residents. As Evatt J was later to acknowledge160, one of the main purposes behind the introduction of the dictation test161 was "to enable the Executive to exclude British subjects of Asiatic race". The new community, as the Court put it in Attorney-General for the Commonwealth v Ah Sheung162, was not defined by an Australian nationality as distinguished from a British nationality. Given the then state of Imperial affairs, it would, in Griffith CJ's expression163, have been a "novel doctrine" if a form of what might be called de facto Australian citizenship had been adopted. Had the common law rules as to domicile been called into service, the result would have been counter-productive. Some racially undesirable persons with a close connection to Australia might have qualified for admission, whilst those of British descent but an Australian domicile of origin might lose their connection by acquiring another domicile of choice or of dependence 164. 159 Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 197 [124]. 160 R v Davey; Ex parte Freer (1936) 56 CLR 381 at 387. 161 Prescribed by s 3 of the Immigration Restriction Act 1901 (Cth). 162 (1906) 4 CLR (Pt 1) 949. 163 (1906) 4 CLR (Pt 1) 949 at 951. 164 See Potter v Minahan (1908) 7 CLR 277. However, the term "immigration" in s 51(xxvii) was, as mentioned above, construed as supporting laws restricting the entry even of British subjects. That construction was advanced, particularly by O'Connor J, by reference to the term "community" as employed in the rhetoric of Imperial relations to describe the consequences of the development of representative and responsible government throughout the Empire. Membership of such a "community" was an acceptable alternative to the construction of a distinct nationality. In Robtelmes v Brenan165, O'Connor J said that "one of the most important attributes of self-government" was "the right to determine who shall and who shall not become members of the community". In the same vein, O'Connor J spoke in Potter v Minahan166 of the subdivision of the British Empire into "many communities, some of them endowed by Imperial Statute with wide powers of self government". In his address to the first meeting of the Imperial Conference of 1911, Prime Minister Asquith said167 that a special and dominating characteristic of the British Empire was the inclusion of "communities" which had attained complete self-government. Thereafter, Art 1 of the Articles of Agreement for a Treaty between Great Britain and Ireland, dated 6 December 1921, specified the "constitutional status" of the Irish Free State "in the Community of Nations known as the British Empire"168. Hence, the statement by Gleeson CJ, Gummow and Hayne JJ in Shaw v Minister for Immigration and Multicultural Affairs169: "The development of the 'autonomous Communities' recognised by the Imperial Conference of 1926170 proceeded by steps and over periods which had different consequences for the reading of various provisions of the Constitution." One of those consequences, as Shaw itself demonstrated, is that the occasion has well passed for reliance upon the notion of self-governing 165 (1906) 4 CLR (Pt 1) 395 at 417. 166 (1908) 7 CLR 277 at 305. 167 Keith (ed), Speeches and Documents on British Colonial Policy 1763-1917, (1961), Pt 2 at 242. 168 Irish Free State Constitution Act 1922 (Imp), Sched 2. 169 (2003) 78 ALJR 203 at 208 [24]; 203 ALR 143 at 149. 170 Harrison Moore, "The Crown as Corporation", (1904) 20 Law Quarterly Review communities within the British Empire as a criterion to construe the reach of the immigration power. In the events that have happened since 1901, the distinct Australian nationality, seen as an impossibility by the Court in Ah Sheung, has come into existence. Here is a political idea whose time has come and gone. Still less is it sound constitutional doctrine to construe the aliens power by reference to notions of "protection" of the "Australian community" by excluding aliens from "membership" of that community. It is true that the notion of absorption into the Australian community has been used in established constitutional discourse. This has been to set the outer limits of the immigration power. However, that "very vague conception"171 has no part to play by its translation to a conceptually (and textually) distinct head of legislative power. Alienage is a status which cannot be changed by "absorption". The Pacific Islands labourer, whose deportation (by judicial process under s 8(1) of the Pacific Islands Labourers Act 1901 (Cth)) was appealed to this Court in Robtelmes, appears172 to have worked in Queensland for at least five years and he may be said to have become part of the community. But he retained his alien status. Aliens and Ch III A law imposing disabilities upon aliens, including their segregation from other persons at large in Australia, will be a law with respect to aliens. But such a law will be valid only if it survives its subjection by the opening words of s 51 to the other provisions of the Constitution, particularly Ch III. Lim is authority at least for the proposition that, putting the defence power to one side, a law cannot be upheld under the aliens power if it provides for the segregation by incarceration of aliens, without their commission of any offence requiring adjudication, and for a purpose which, in the conclusive opinion of the executive branch, is sufficiently connected with the entry, investigation, admission and deportation of aliens. Still less can the purpose of the incarceration, which is identified in such a law and determined in each case by the opinion of the Executive, be unconnected with any of the above matters and rather be concerned solely with the prevention of aliens becoming "de facto citizens" or members of the "Australian community". 171 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 444-445 [160]. 172 See (1906) 4 CLR (Pt 1) 395 at 396. Conclusions contrary to those expressed above would be at odds with two aspects of basic constitutional doctrine. The first concerns the constraint placed by Ch III upon the reach of the aliens power; the second the allocation by the Constitution to the judicial power of the determination of disputes concerning the operation of that constraint upon a particular law173. Decision-making incapacity It is convenient to turn now to the second basis upon which the applicants seek to distinguish their detention from that considered in Lim. Even if on its proper construction the legislation does not authorise indefinite detention, the applicants rely upon the consideration that children, unlike adults, may lack the capacity to end their detention by requesting return to their country of origin. Under s 198(1) of the Act, an officer must, as soon as reasonably practicable, remove an unlawful non-citizen who has asked the Minister for such removal in writing. The submission is that, applying the ordinary principles relating to the capacity of children discussed in Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case)174, a child who lacks sufficient understanding or intelligence to understand fully the consequences of a request under s 198(1) will be incapable of making such a request. The applicants contend that this constitutes a relevant distinction between the detention under the Act of adults and that of children. The detention of adults was said to be "three-walled" detention only, as there were no barriers to returning to the country of origin. By contrast, it was argued that the incapacity of children to request removal under s 198(1) acts as a "fourth wall" that locks them into detention. These submissions involve a gloss on the true state of the applicants' position and should be rejected. If a child lacks capacity to request removal under s 198(1), the ordinary rules of common law would authorise the parent or guardian of the child to make such a request on the child's behalf175. While it is true that the child cannot, as a matter of personal choice, request removal, the discretion or power to request removal still exists and is vested in the parent or guardian. The so-called "fourth wall" of the child's detention is controlled by the decision of the parent or guardian. 173 Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1126 [140], 1127 [146], 1127-1128 [149]; 208 ALR 124 at 160, 161, 162. 174 (1992) 175 CLR 218. 175 Marion's Case (1992) 175 CLR 218 at 239. What is meant here by the expression "lacks capacity"? In Marion's Case176, it was held that the capacity of a child who is not yet aged 18 years to give informed consent to acts which require consent as a condition of their legality does not depend upon any fixed age rule; capacity turns upon the attainment of the child of sufficient understanding and intelligence to understand fully what is proposed. In this way, pending the attainment of legal majority, the legal capacity of a particular child will vary according to the gravity of the particular matter and the maturity and understanding of that child. These principles are to be applied to the making of requests for removal under s 198(1). There is nothing unusual in the circumstance that in many instances the discretion to exercise immigration decisions in relation to infant children will be vested in their parents. So much is clear from Chen Shi Hai v Minister for Immigration and Multicultural Affairs177. In that case, the appellant was a three and half year old Chinese national who was born while his parents were in immigration detention in Australia. The appellant's parents made an application for a protection visa on his behalf under s 36(2) of the Act on the grounds that he was a "refugee" as that term is defined in the Convention relating to the Status of Refugees178 ("the Convention"). The appellant could only bring himself within the Convention definition of "refugee" if he could demonstrate that he was a person who "owing to well-founded fear of being persecuted for reasons of … membership of a particular social group … is outside the country of his nationality and … owing to such fear, is unwilling to avail himself of the protection of that country"179. While it was clear that, by reason of his infancy, the appellant, himself, was unlikely to have the fear necessary to bring him within the Convention, Gleeson CJ, Gaudron, Gummow and Hayne JJ observed that it was "accepted" that "his parents' fears on his behalf [were] sufficient"180. This "imputed 'fear'"181 may be seen as sufficient only if it is first accepted that parents ordinarily have authority to make immigration decisions for their children where those children lack capacity to make such decisions themselves. 176 (1992) 175 CLR 218 at 237-238, 293, 315. 177 (2000) 201 CLR 293. 178 Done at Geneva on 28 July 1951 as amended by the Protocol relating to the Status of Refugees done at New York on 31 January 1967. 179 (2000) 201 CLR 293 at 296-297 [3]. 180 (2000) 201 CLR 293 at 297 [4]; See also at 318 [75] per Kirby J. 181 (2000) 201 CLR 293 at 318 [75]. This is evident also from the decision of this Court in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicants S134/2002182. That case concerned the application by a mother for a protection visa in respect of both herself and her five children. The mother claimed that she was a refugee for the purposes of the Convention and was therefore entitled to a protection visa under s 36(2) of the Act (as it then stood). However, the children's claim to protection visas proceeded on a different basis. Their claim relied upon Regulations made under the Act which authorised the Minister to grant protection visas to members of "the same family unit" as a person who had made specific claims under the Convention and who had been granted a protection visa183. While the Court noted that the children's putative entitlement to a visa was of a different nature to, and distinct from, that asserted by the mother, there was no suggestion that the mother was not competent to raise the children's claim on their behalf184. Rather, the Court implicitly accepted that, in addition to her own claim under s 36(2), the mother could seek to enforce the children's alleged right to a protection visa where those children lacked capacity to seek enforcement themselves. It should be added that the subjection of a child to the control of his or her parent or guardian generally has not been seen as depriving that child of liberty. The starting point is the proposition that, at common law, a right of a parent or parents to custody of children who had not reached the age of discretion (14 for boys and 16 for girls)185 incorporates a "right to possession" of the child which includes the right to exercise physical control over that child186. The nature of this "right" was explained by Sachs LJ in Hewer v Bryant187: "[A]mong the various meanings of the word 'custody' there are two in common use in relation to infants which are relevant and need to be carefully distinguished. One is wide – the word being used in practice as almost equivalent of guardianship: the other is limited and refers to the power physically to control the infant's movements. 182 (2003) 211 CLR 441. 183 This is now provided for in s 36(2)(b). 184 (2003) 211 CLR 441 at 456-457 [28]. 185 Hewer v Bryant [1970] 1 QB 357 at 372. 186 See Eekelaar, "What are Parental Rights?", (1973) 89 Law Quarterly Review 210 at 214-218; Cretney and Masson, Principles of Family Law, 6th ed (1997) at 580. 187 [1970] 1 QB 357 at 372. In its limited meaning it has that connotation of an ability to restrict the liberty of the person concerned … This power of physical control over an infant by a father in his own right qua guardian by nature … was and is recognised at common law; but that strict power (which may be termed his 'personal power') in practice ceases upon the infant reaching the years of discretion." (original emphasis) In this way, the law contemplates that the control of a parent or guardian over a child will necessarily incorporate a restriction to some degree of the liberty of that child. Notwithstanding this, the common law generally has assumed that a child who is within the control of his or her parents or guardian is at liberty within the sense of the authorities concerned with habeas corpus. In R v Maria Clarke188, the surviving parent (the mother) obtained habeas corpus to deliver a 10 year old child, against the wishes of the child, from a particular school where she was being raised as an Anglican so that she might be raised as a Roman Catholic. Lord Campbell CJ observed that189: "[A] child under guardianship for nurture … is supposed to be unlawfully imprisoned when unlawfully detained from the custody of the guardian; and when delivered to him the child is supposed to be set at liberty". His Lordship went on to give an example which was counter-factual190: "[S]uppose that a Protestant mother, guardian for nurture of a daughter seven years of age, sends her to a boarding school professing to be a Protestant seminary; in a short time she finds that attempts have been successfully made by teachers there to convert the girl to the Roman Catholic faith; the girl refuses to come home … Are we to examine [the girl], and, finding her of quick parts and professing to be a sincere convert to the Roman Catholic faith, to tell her that, in spite of the wishes of her mother, she is at liberty to return to the school where she has been converted[?] Such a doctrine seems wholly inconsistent with parental authority". In more recent times, the animating principle in Chancery, the paramount importance of the best interests of the child, has suffused much of the legal 188 (1857) 7 El & Bl 186 [119 ER 1217]. 189 (1857) 7 El & Bl 186 at 193-194 [119 ER 1217 at 1220]. 190 (1857) 7 El & Bl 186 at 195 [119 ER 1217 at 1220] system191. (However, McLachlin CJ recently emphasised in KLB v British Columbia192 that, while the "best interests" of the child forms a guiding objective in family law, this does not provide a legal or justiciable standard for assigning liability in negligence or for breach of fiduciary duty.) Parental rights now are seen as deriving from parental duty, so that they exist for the protection of the person and property of the child, and they diminish as the child matures193. Nevertheless, leaving aside situations of abuse and neglect and any appropriate statutory regimes, the principle that children will not be taken to have been deprived of their liberty merely because they are within the control of their parent or guardian remains correct. This being so, where, in accordance with the principles discussed above with reference to Marion's Case, a power or discretion to request removal under s 198(1) of the Act in respect of a child rests with the parent or guardian, that child is not to any greater extent deprived of his or her liberty than is a person of majority who is able personally to exercise that power or discretion. This aspect of the applicants' case also fails. Nothing here needs be said about the scope of the Immigration (Guardianship of Children) Act 1946 (Cth) and the position of children below the age of capacity whose guardian is said to be the Minister under the provisions of that statute194. Special status of children One further matter requires consideration. The applicants and the Commission submit that domestic and international law have long recognised that children enjoy a "special status" and have "distinctive interests and vulnerabilities". This is said to distinguish children from the general population, so that a non-curial detention regime that provides for their detention must take account of their unique status or else it will fail the criteria stated in Lim and be invalid. Numerous examples were provided in submissions to demonstrate the 191 See, in particular, the Family Law Act 1975 (Cth), Pt VII, Div 10 (ss 68D-68M), which is headed "The best interests of children and the representation of children". 192 [2003] 2 SCR 403 at 431. McLachlin CJ delivered the judgment of herself, Gonthier, Iacobucci, Major, Bastarache, Binnie, LeBel and Deschamps JJ. 193 Marion's Case (1992) 175 CLR 218 at 237-238. 194 cf Odhiambo v Minister for Immigration and Multicultural Affairs (2002) 122 FCR 29 at 46-48; X v Minister for Immigration and Multicultural Affairs (1999) 92 FCR 524 at 537-538. See also WACB v Minister for Immigration and Multicultural and Indigenous Affairs [2004] HCA 50 at [41]-[42]. various ways in which in the past the law has treated children in a special fashion. These included laws relating to capacity, criminal responsibility, the operation of limitation periods and the nature of the parens patriae jurisdiction. It was not suggested that the obligation to consider the special status of children arises by implication from this legal history but rather that the obligation is "self- evident" once the peculiar status of children is recognised. This submission wrongly fixes upon the nature of the person detained, absent a consideration of the purpose for which detention is authorised. If it could be shown that the detention regime authorised by the Act applies to a class of persons, significant in number, in relation to whom detention is not "reasonably capable of being seen as necessary"195 to achieve the relevant purpose, there may arise a question of invalidity of the legislation with respect to that class of persons. That is not to say that the Parliament must ensure that detention is reasonably capable of being seen as necessary in each individual case. Rather, a question of validity may arise where the class of persons detained is significantly over-inclusive because it authorises the detention of many more people than is reasonably capable of being seen as necessary. Nevertheless, as a class, alien children do possess characteristics that make their detention reasonably necessary for the purposes of reception, investigation, admission or deportation. While it is true to say of a young child that he or she cannot, of his or her own volition, disappear into the community, such children may be easier to conceal than would be an adult. In general, children may have less ties to a particular place or occupation than adults, and be without financial or business obligations. As they mature, their appearance may change more rapidly than that of adults. As a result, an alien child who is not detained may well vanish into the body of the population and thereby not readily be available for deportation. The detention of alien children is reasonably capable of being seen as necessary for the purposes of reception, investigation, admission and deportation. Once it is accepted that administrative detention of alien children is reasonably capable of being seen as necessary for a permitted purpose, the circumstance that such detention may have serious or injurious effects on those children does not necessarily constrain the scope of the aliens power. The effects of detention will be relevant only to the extent that they are indicative of the purpose for which detention is authorised. This reflects the approach taken by the Supreme Court of the United States where a facially non-discriminatory law is alleged to discriminate on racial grounds in contravention of the Equal Protection clause of the Fourteenth 195 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 33. Amendment196. The cases establish that the circumstance that a law has significant discriminatory impacts may assist in establishing that such a purpose exists but that the discriminatory effects of a statute themselves are not a sufficient basis for impugning a law in the absence of some impermissible purpose. Professor Chemerinksy notes197: "Cases such as Washington v Davis[198], Mobile v Bolden[199], and McCleskey v Kemp[200] clearly establish that proof of a discriminatory impact is not sufficient to prove an equal protection violation; there also must be proof of a discriminatory purpose. It should be noted that civil rights statutes can, and often do, allow violations to be proved based on discriminatory impact without evidence of a discriminatory purpose. For example, Title VII of the 1964 Civil Rights Act allows employment discrimination to be established by proof of discriminatory impact, and the 1982 Amendments to the Voting Rights Act of 1965 permit proof of discriminatory impact, to establish a violation of that law. But the Court has said that under the Constitution, proof of discriminatory impact is insufficient, by itself, to establish a denial of equal protection." (footnotes omitted) In general, the evidence the United States cases require of the complainant must be "evidence specific to his own case"201. Similarly, it may be that, if it could be demonstrated that a federal law authorised or mandated detention of those individuals seeking their release from what in their case were harsh, inhumane and degrading conditions, this would indicate that the purpose of that detention went beyond the range of purposes that are permissible, consistently with Ch III. Nevertheless, the criterion of validity would remain the purpose for which the detention is authorised, not its effect on the individual. No case of the kind just indicated has been advanced here. 196 This reads: "[N]or [shall any State] deny to any person within its jurisdiction the equal protection of the laws". 197 Constitutional Law: Principles and Policies, 2nd ed (2002) at 684. 201 McCleskey v Kemp 481 US 279 at 292 (1987). Parens patriae jurisdiction The parens patriae jurisdiction, as developed in England by the Court of Chancery, was referred to in the submissions for the applicants as an example of the special fashion in which the law has treated children. However, the applicants did not take that reference further. They did not contend that a federal law otherwise within the legislative competence of the Commonwealth was constrained by any inhibition perceived in Ch III from authorising an outcome in the exercise of federal jurisdiction which differed from that which would have obtained in Chancery. The upshot is that there is no occasion here to enter upon that issue. This silence, however, is not to be taken as offering any encouragement to such an argument. Order The application should be dismissed. Kirby 170 KIRBY J. This case involves the Migration Act 1958 (Cth) ("the Act"). It concerns the validity of the detention of the four applicants under ss 189 and 196 of the Act. The applicants are nationals of Afghanistan. They are children between the ages of 7 and 15 years. They entered Australia in January 2001 with their elder sibling, accompanied by their parents. None of the members of the family had a valid visa to travel to, enter or remain in, Australia. For the purposes of the Australian Constitution, they were "aliens"202. For the purposes of the Act, they were "unlawful non-citizens" in Australia203. In accordance with the Act, the applicants were detained in immigration detention upon their entry into Australia's "migration zone"204. Given the width of the power to make laws with respect to "aliens" and other related matters205, conferred on the Australian Parliament by the Constitution, at first impression, the sections of the Act providing for the detention of the applicants appear to be constitutionally unassailable, so far as Australia's municipal law is concerned. Under the Constitution, all valid laws made by the Australian Parliament are binding "on the courts, judges, and people of every State and of every part of the Commonwealth"206. For an Australian court, a refusal to apply, and to give effect to, provisions of a valid federal act is not an available option. Fundamental to the Australian Constitution is respect for the rule of law207. If the law is clear and constitutionally valid, it is the duty of Australian courts to apply its terms. This is so whatever judges or others may think about the content and 202 Constitution, s 51(xix) ("naturalization and aliens"). See Pochi v Macphee (1982) 151 CLR 101 at 109-110; Singh v The Commonwealth [2004] HCA 43 at [190], 203 On 5 July 2004, after the hearing of this matter, each applicant was granted a temporary protection visa. Consequently, they are now "lawful non-citizens". See the Act, ss 5(1), 13, 14. 204 The Act, ss 189, 196. Due to the grant of the temporary protection visas, the applicants are no longer in detention. 205 Constitution, s 51(xxvii) ("immigration and emigration"); s 51(xxxix) ("matters incidental"). See eg Singh [2004] HCA 43 at [4], [46]-[47], [194], [256]. 206 Constitution, covering cl 5. 207 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193 per Dixon J. See Dicey, Introduction to the Study of the Law of the Constitution, 10th ed (1959) at 202. Kirby effect of the law. Under our constitutional arrangements, changes to the content of such laws normally depend upon the political process, particularly the regular election of representatives to legislatures of Australia: federal, State and Territory. The complaint of the applicants concerning the prolonged detention of "unlawful non-citizens" who are children like themselves, restrained for long periods in immigration detention centres, has been the subject of substantial expert and political debate and much commentary within Australia208. It is in these ways that such issues are normally resolved, if at all, in the Australian Commonwealth209. Properly, the applicants accepted that it was no part of the function of this Court to decide whether the power to detain persons like them was actually, or in fact, necessary to achieve the stated purpose. On the other hand, the applicants also asserted, correctly, that the decision by the Australian Parliament that detention was appropriate or necessary to achieve an available national policy was not the end of the matter. It remains for this Court to decide, in the light of the Constitution and the evidence, whether, in the particular case, the statute permits detention of the kind proved in the evidence and, if it does, whether it is valid as falling within a constitutional grant of legislative power, undiminished by any limitations and implications expressed or implied in the Constitution. The facts, legislation and issues The background to the arrival of the applicants in Australia from Afghanistan with their parents is explained in other reasons210. The history of the litigation by which the applicants' father pursued a claim on his own behalf, and on behalf of the applicants, their elder sibling and their mother, is also set out there211. It concerned rights, allegedly enjoyed by the applicants, pursued on their behalf during their infancy by their father. The applicants were granted temporary protection visas in July 2004. They are no longer in detention. 208 See, for example, Crock, "'You have to be stronger than razor wire': Legal issues relating to the detention of Refugees and asylum seekers", (2002) 10 Australian Journal of Administrative Law 33; Nicholas, "Protecting refugees: alternatives to a policy of mandatory detention", (2002) 8 Australian Journal of Human Rights 69. 209 See Durham Holdings Pty Ltd v New South Wales (2001) 205 CLR 399 at 432 [77]; Building Construction Employees and Builders' Labourers Federation of NSW v Minister for Industrial Relations (1986) 7 NSWLR 372 at 404-406. 210 Reasons of Gummow J at [119], [122], reasons of Callinan J at [230]. 211 Reasons of Callinan J at [233]-[236]. Kirby A little more than three years passed after the father first applied for protection visas, and until the applicants were released from detention. Three years is a long time for those, especially children, who are physically detained. Such detention would necessarily take a toll on all members of the applicants' family, but especially on the children212. The majority of facts relevant to this application were agreed between the parties. The Minister contested the relevance of certain evidence, referred to by the applicants, concerning the conditions at the relevant immigration detention centres. The Minister also contested a submission for the applicants that immigration detention was "likely to have a significant adverse psychological and physical impact on a child's development and well-being". This was not therefore an agreed fact before this Court. However, whilst it is true that the consequences of such detention would depend upon features individual to a particular child and his or her family, as well as the precise residential, educational and environmental conditions provided, it is inescapable that the lengthy detention of a child, necessarily in a state of personal development, impinges adversely on the physical, intellectual and emotional advancement of the child to some degree. No doubt this is why international and regional statements of human rights contain specific limitations upon such detention. It is therefore no more than common sense, applied to the agreed facts, that allows this Court to infer the deleterious impact of detention – and especially prolonged detention – on the applicants. Nevertheless, the duration of such detention is neither permanent nor indefinite. It has a clear and discoverable terminus213. Relevantly, this is either the grant of visas or removal or deportation from Australia, in accordance with the Act214. In practical terms, the terminus would be reached when: 212 See, for example, Silove et al, "Risk of Retraumatisation of Asylum-Seekers in Australia", (1993) 27 Australian and New Zealand Journal of Psychiatry 606 at 609-610; Sultan and O'Sullivan, "Psychological disturbances in asylum seekers held in long term detention: a participant-observer account", (2001) 175 Medical Journal of Australia 593; Mares et al, "Seeking refuge, losing hope: parents and children in immigration detention", (2002) 10 Australian Psychiatry 91; Zwi et al, "A child in detention: dilemmas faced by health professionals", (2003) 179 Medical Journal of Australia 319; McEntee, "The Failure of Domestic and the Harmful Effects of Australian International Mechanisms Immigration Detention", (2003) 12 Pacific Rim Law & Policy Journal 263 at 267- to Redress 213 See the reasons of Gummow J at [134]. 214 The Act, s 196(1). See reasons of Callinan J at [249]. See also s 198. Kirby • The litigation was successful, resulting in reconsideration of the application and the grant of visas to the applicants; • The Minister, exceptionally, provided visas in the applicants' case215; • The applicants requested immediate voluntary removal to Afghanistan216; or • The applicants were removed from Australia involuntarily after the final expiry of all of their rights to challenge the rejection of the application on their behalf for refugee status217. The Australian Constitution, unlike most others, contains no general Bill of Rights to which persons such as the applicants may appeal in order to support a challenge to the validity of the provisions of the Act imposing mandatory requirements for the detention of children218. However, the Constitution, in granting to the Parliament the heads of legislative power to make laws with respect to "aliens" (and other matters) expressly subjects such grants of power to the other provisions of the Constitution219. This includes the provisions of Ch III. That Chapter contains the sections of the Constitution providing for the integrated judicature of the nation. No lawmaking powers enjoyed by the Parliament may be exercised in a way that is inconsistent with, or repugnant to, the role and functions of that independent judicature. So far as federal laws are concerned (such as the Act) no provision will be valid that purports to confer on a body that is not a federal court any part of the judicial power of the Commonwealth220. 215 The Minister has the power to grant bridging visas in certain circumstances. See the Act, ss 72-76 and Migration Regulations 1994 (Cth), reg 2.20. There is no suggestion or evidence that such visas are generally granted to children. 216 The Act, s 198(1). 217 This is explained in the reasons of Callinan J at [249]. 218 eg see Canadian Foundation for Children, Youth and the Law v Canada (Attorney General) [2004] SCC 4 at [10] applying the provisions of the Canadian Charter of Rights and Freedoms, Constitution Act 1982 (Can). 219 See the opening words of the Constitution, s 51: "The Parliament shall, subject to this Constitution, have power to make laws … with respect to …" (emphasis added). 220 See Constitution, s 71; R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 270. Kirby Chapter III and the validity of ss 189 and 196 of the Act It was from this foundation of constitutional principle that the applicants argued their primary constitutional objection to the provisions of ss 189 and 196 of the Act under which the officers of the Commonwealth who had detained them derived their powers to do so. They submitted that the very length of the detentions in their cases, as children, transformed the quality of their loss of liberty from administrative detention into punishment. This Court has repeatedly held that the imposition of punishment is a judicial function, not an administrative one. In the case of federal laws such as the Act, punishment is reserved to the exercise of the judicial power of the Commonwealth. It is thus incapable of being exercised without judicial authority by officials of the Executive Government, such as those who had detained the applicants221. Detention to uphold a legislative policy to control the entry of aliens into Australia is one of the exceptions to the normal enjoyment to liberty that has been treated by this Court as compatible with the implication of the Constitution that Executive derogation from liberty is ordinarily regarded as punitive and thus as part of the judicial function which, when exercised under federal law, is reserved to the courts222. I support the interpretation of the Constitution as expressed in Chu Kheng Lim v Minister for Immigration223. It has been affirmed by this Court. The present case is not an occasion to reconsider what was said there and I would certainly not decline to follow it224. On the face of things, therefore, at least up to the time they were released, unless there was some exceptional feature to the detention of the applicants, it fell within a recognised category of administrative detention which this Court has 221 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 33-34; Kruger v The Commonwealth (1997) 190 CLR 1 at 110-111 per Gaudron J (diss). 222 Lim (1992) 176 CLR 1 at 28. See Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 170 [21], 192-193 [110], see further at 217-218 [200], 229 [229]. The other exceptions include remand pending trial; involuntary detention for mental illness or infectious disease; punishment by Parliament of contempt; and by military tribunals for breach of military discipline. The categories are not closed: Kruger (1997) 190 CLR 1 at 162. 223 (1992) 176 CLR 1 at 19. 224 See reasons of McHugh J at [59]. Kirby upheld as compatible with Ch III. Moreover, this Court has done so repeatedly. It has done so in the case of children, as well as of adults225. The determination of the character of a federal law, judged by the criterion of whether it is punitive or not, cannot rest on the purpose of the law alone; still less its asserted purpose. It always remains for a court to decide, in case of a contest, whether the character of the law is one that prescribes conduct that is, or may become, punitive. In making that assessment, a court will have regard not only to the claimed or apparent purposes of the law but also the objective effects of the law and its practical operation226. The applicants contended that the special feature that converted their detention into punishment was its prolonged duration; their status as children; and their incapacity as such (separately from their parents) to elect for removal that would terminate immediately the "punishment" they were suffering. I accept that in some cases of proved harsh conditions (unsanitary, violent, inhumane or unhealthy), or inordinately prolonged duration, the conversion of conduct from a classification as "detention" to classification as "punishment" might be upheld. In such a case, questions would arise as to whether the deprivation of liberty described in the evidence answered to the conditions authorised by the Act227. Alternatively, the question would be presented as to whether, because the detention had become punitive, it could any longer be sustained in constitutional terms on the basis of administrative, as distinct from judicial, authority. It is evident that Parliament contemplated the precise conditions in which the applicant children were held, when it enacted the provisions of the Act obliging a universal policy of detention of "unlawful non-citizens" with application to children as well as adults228. 225 See eg Chen Shi Hai v Minister for Immigration and Multicultural Affairs (2000) 201 CLR 293 at 318-320 [75]-[81]; Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 78 ALJR 737; 206 ALR 130. 226 See Cole v Whitfield (1988) 165 CLR 360 at 407-409. 227 Behrooz v Secretary of the Department of Immigration and Multicultural and Indigenous Affairs (2004) 78 ALJR 1056 at 1068 [62], 1077-1078 [116], 1078- 1079 [120]-[124]; 208 ALR 271 at 285, 299, 300-301. See also B (2004) 78 ALJR 737 at 769 [174]; 206 ALR 130 at 173-174. 228 For the position in Canada, the United States, the United Kingdom and New Zealand, see reasons of McHugh J at [110]-[113]. For the position in Europe, see McAdam, "Asylum Seekers: Australia and Europe − worlds apart", (2003) 28 (Footnote continues on next page) Kirby In Minister for Immigration and Multicultural and Indigenous Affairs v B229, I traced the series of parliamentary and other official reports by which, over the past decade, the Australian Parliament has been made aware of official concerns about the requirements of mandatory detention of unlawful arrivals in general, and the detention of vulnerable people, such as children and unaccompanied minors, in particular. Notwithstanding these reports, and several recommendations for alteration of the system of mandatory detention, including in the case of children, the system has been maintained unchanged. The Act has not been amended in any relevant respect. On the contrary, the procedures have been continued despite an intervening change of federal government and considerable public debate on the subject. It cannot be said that the policy, including as it relates to the detention of children, is the result of oversight, ignorance, inattention or mistake. It is the product of a deliberate decision of successive governments and the Australian Parliament, enacted and maintained in force under the broad scope of the "aliens" power granted by the Constitution. The evidence to which I have referred230, going to the negative impacts of detention upon children, is of a general nature. It does not relate to these particular applicants. An argument based upon detention as "inhumane" (and therefore as "punishment") must be proved by reference to the impact on, and consequences for, the particular parties. Without in any way minimising the complaints of the applicants as to the conditions of their former detention and its duration and its effect on their intellectual, social and emotional development as children, the evidence presented in the proceedings, because of its limitations, falls short of sustaining the legal foundation upon which this Court was invited to intervene on this basis. In these circumstances, and in the conditions proved in the limited evidence received in this case as to the nature and effects of the applicants' former immigration detention, there is no sufficient foundation for the Court's intervention on the basis that the applicants' detention exceeded the Act or offended Ch III of the Constitution. Alternative Law Journal 193. An important point of differentiation, referred to in Australian official reports as justifying the policy of mandatory detention in Australia, is the absence of an obligation in Australia to possess, and to present, on official demand, a universal document of identity. 229 (2004) 78 ALJR 737 at 766-768 [160]-[169]; 206 ALR 130 at 170-173. 230 See above, fn 212. Kirby The parens patriae claim The applicants also appealed to what they said were the parens patriae powers of this Court, exercising its original jurisdiction under the Constitution. The Royal Courts of England, and equivalent courts of general jurisdiction in Australia, have been accepted as partaking of the parens patriae powers and obligations of the Crown in relation to children231. However, any such powers, deriving as they originally do from the royal prerogative or the common law, are subject to being overridden by inconsistent provisions in valid legislation. Unless the parens patriae powers, propounded for the applicants, could be rooted in the Constitution itself, the answer to the invocation of such powers in these proceedings (like the answer to the invocation of the child welfare provisions of the Family Law Act 1975 (Cth)232, in a case of children in immigration detention) is that such powers are excluded by the express provisions, and comprehensive scheme, of the Act. That Act is specific, particular and clear so far as its requirement for universal mandatory detention is concerned, including in relation to children. Such requirements prevail over any otherwise existing general powers enjoyed by federal courts, including this Court, whether under jurisdiction of the parens patriae kind or welfare jurisdiction under the Family Law Act233. The particularity of the law obliging detention, including the detention of children, ousts the generality of other laws, written and unwritten, for the welfare of children234. In every relevant respect, the provisions of the Act are clear. Assuming, therefore, without deciding, that this Court partakes, in some respect, of the traditional parens patriae powers of the Crown, implied from the Court's creation by the Constitution as a "court" or from the general definition of its 231 Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 242-243, referring to Hewer v Bryant [1970] 1 QB 357 at 372. See also E (Mrs) v Eve [1986] 2 SCR 388 at 407-417 per 232 See Marion's Case (1992) 175 CLR 218 at 255-263. See also B (2004) 78 ALJR 737 at 762 [136], 769 [176]-[177]; 206 ALR 130 at 164, 174. 233 Minister for the Interior v Neyens (1964) 113 CLR 411 at 419, 422-425; Carseldine v Director of Department of Children's Services (1974) 133 CLR 345 at 348, 351-353, 362-363, 365-366; Johnson v Director-General of Social Welfare (Vict) (1976) 135 CLR 92 at 97-98. 234 B (2004) 78 ALJR 737 at 769 [176]-[177]; 206 ALR 130 at 174. Kirby powers in the Constitution and in legislation235, any such jurisdiction is excluded by clear and valid laws to the contrary. In this respect, the Act is clear and valid. Accordingly, upon the assumption that such a jurisdiction exists, the applicants' appeal to a parens patriae jurisdiction fails. Statutory construction and human rights Statutory construction: This leaves only the issue of whether, upon the assumption that the Act is constitutionally valid, this Court might read the Act so as to exclude the applicants – treating them as unexpressed exceptions to the operation of the mandatory detention provisions. The hypothesis of this argument is the general principle of Australian law that statutes are read so as not to offend international law236, and not to derogate from fundamental rights237, unless the words of the statute are clear. This argument also fails. Having regard to the language of the Act, there is no foothold for a contention differentiating between adults and children the application of the policy of mandatory detention expressed in the Act. The definition of "non-citizen" in the Act is simply "a person who is not an Australian citizen"238. An "unlawful" non-citizen is a non-citizen who does not hold a valid visa239. A "detainee" is a "person detained"240. A child is necessarily a "person". 235 eg the Constitution, ss 71, 72, 73, 75, 76, 77 and Judiciary Act 1903 (Cth), ss 30, 236 Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 363-364 per O'Connor J; Lim (1992) 176 CLR 1 at 38 per Brennan, Deane and Dawson JJ; Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 287-288 per Mason CJ and Deane J; Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 384 [97] per Gummow and Hayne JJ; Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 492 [29] per Gleeson CJ; Behrooz (2004) 78 ALJR 1056 at 1079-1080 [125]-[129]; 208 ALR 271 at 301-303; Al- Kateb v Godwin (2004) 78 ALJR 1099 at 1128 [150]; 208 ALR 124 at 162-163; Minister for Immigration and Multicultural and Indigenous Affairs v Al Khafaji (2004) 78 ALJR 1156 at 1161-1162 [27]-[28]; 208 ALR 201 at 207-208; Coleman v Power [2004] HCA 39 at [240]. 237 The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11], 562-563 [43], 578 [93]- [94], 591-592 [132]; Attorney-General (WA) v Marquet (2003) 78 ALJR 105 at 133 [160]; 202 ALR 233 at 271; Coleman [2004] HCA 39 at [185], [225], [250]-[251]. 238 The Act, s 5(1). 239 The Act, s 14(1), read with s 13(1). Kirby If, as in the applicants' case, the children are not Australian citizens, they are "non-citizens", as defined by the Act. Until they received their visas, they were "unlawful" non-citizens. And until that time, in accordance with s 189(1) of the Act, if in the Australian "migration zone" (as they were) children such as the applicants were required to be detained under the Act by specified officers. True, there are differentiated provisions in the Act relating to adults and children241. However, those provisions do not apply to this case. They merely underline the universality of the application of other provisions of the Act requiring compulsory detention, including in the case of children. If it is suggested that this Court should infer that, had the Parliament intended to apply a policy of mandatory detention to children, whilst their parents' claims to relevant visas were being processed, it would have said so expressly in the Act, an answer is readily available. In this case, the Parliament has had the issue called to its notice by repeated parliamentary and official reports242. In those reports, special concern was addressed to undesirable features, in law and fact, of the prolonged detention of children243. Such reports notwithstanding, the Act has remained unchanged. In the light of this history and on the face of the public record of the Parliament, the suggestion that there has been some oversight, mistake or a failure to consider the immigration detention of children in Australia is fanciful. Detention is the deliberate policy of the Australian Parliament, repeatedly affirmed244. In default of a constitutional basis for invalidating it, it is the duty of 240 The Act, s 5(1). 241 See, for example, the Act, ss 10, 78, 83, 84, 86, 199, 205, 211. See also ss 252A and 252B of the Act, explained by Gummow J at [129]. See also McHugh J at 242 See above at [188]. 243 See eg Australian Parliament, Joint Standing Committee on Migration (Senator McKiernan, Chairman), Asylum, Border Control and Detention, February 1994 ("Detention Report 1994"); Australia, Human Rights and Equal Opportunity Commission, Those who've come across the seas: Detention of unauthorised arrivals, (1998); Australian Parliament, Joint Standing Committee on Migration (Mrs Gallus, Chair), Not the Hilton: Immigration Detention Centres: Inspection Report, September 2000. See B (2004) 78 ALJR 737 at 766-768 [160]-[169]; 206 ALR 130 at 170-173. 244 See B (2004) 78 ALJR 737 at 766-768 [160]-[169]; 206 ALR 130 at 170-173. Kirby this Court to give effect to the Act, whatever views might be urged about the wisdom, humanity and justice of that policy245. Human rights requirements: International human rights treaties to which Australia is a party contain provisions relevant to the detention of children. Such provisions apply to conditions of restraint such as "immigration detention". The requirements of such treaties were considered in B246. The most specific and important of such provisions appears in Art 37 of the United Nations Convention on the Rights of the Child247 ("UNCROC"). More general provisions are contained in Arts 2.1, 3.1, 3.2, 7.1, 9.1, 18.1 and 19 of the International Covenant on Civil and Political Rights248 ("ICCPR"). Australia has signed the First Optional Protocol to the ICCPR249. Pursuant to the accession to that treaty, a communication was taken to the United Nations Human Rights Committee ("UNHRC"), complaining that the provisions of the Act, specifically as they relate to children, contravene the obligations accepted by Australia under international law in consequence of its ratification of the ICCPR. The UNHRC upheld that complaint. It did so over the contrary arguments made on behalf of Australia250. Other international bodies have also criticised Australia in respect of the provisions of the Act obliging universal mandatory 245 Insurance Commission of Western Australia v Container Handlers Pty Ltd (2004) 78 ALJR 821 at 843 [115]; 206 ALR 335 at 365. 246 (2004) 78 ALJR 737 at 763-764 [144]-[146]; 206 ALR 130 at 166-167. 247 Done at New York on 20 November 1989, [1991] Australian Treaty Series No 4. See discussion in the reasons of McHugh J at [107]-[109], [114]. 248 Done at New York on 19 December 1966, [1980] Australian Treaty Series No 23. 249 Done at New York on 19 December 1966, [1991] Australian Treaty Series No 39. 250 Bakhtiyari v Australia, Human Rights Committee Communication No 1069/2002 (2003). See B (2004) 78 ALJR 737 at 764-765 [147]-[151]; 206 ALR 130 at 251 United Nations, Committee on the Rights of the Child, "Concluding observations of the Committee on the Rights of the Child: Australia", (1997) at [20]; United Nations, Commission on Human Rights, "Civil and Political Rights, Including the Question of Torture and Detention: Report of the Working Group on Arbitrary Detention on its visit to Australia (Addendum)", (2002) at [28]-[35]; Bhagwati, "Report of Justice PN Bhagwati, Regional Advisor for Asia and the Pacific of the United Nations High Commissioner for Human Rights: Mission to Australia 24 (Footnote continues on next page) Kirby However that may be, assuming that there is a breach of international law established by the failure of the Act, and the administration of the Act, to comply with the treaties binding Australia252, such a breach does not, as such, affect the validity of the provisions of the Act or the duty of this Court to give effect to those provisions as part of a valid law of this nation. In construing any ambiguities in such law, it is legitimate for a court to interpret the law, so far as its international obligations253. However, where, as here, the law is relevantly clear and valid (and is the result of a deliberately devised and deliberately maintained policy of the Parliament) a national court, such as this, is bound to give it effect according to its terms. It has no authority to do otherwise254. to avoid departures from Australia's language permits, Differences from other cases: It remains only to say that this case differs materially from two other cases in which I recently favoured orders upholding the challenges of persons in immigration detention against decisions reached in courts below. In Behrooz v Secretary of the Department of Immigration and Multicultural and Indigenous Affairs255, the issue was essentially one concerned with the practice and procedure of the courts. It involved a question whether a detainee enjoyed the right, in law, to attempt to establish a "defence" to a prosecution brought against him under s 197A of the Act for escape from "immigration detention". It was my view that the courts, ruling on the "defence", had erred in denying the detainee the opportunity to adduce evidence as to the extreme conditions of his "detention". My opinion was that such evidence might, if proved, result in a conclusion that the detainee's place of restraint fell outside May to 2 June 2002: Human Rights and Immigration Detention in Australia", 252 Concern about a possible breach of international law was raised by the federal Attorney-General's Department and recorded in: Detention Report 1994 at 111 [4.18], 115 [4.36], 117 [4.41]. The majority report recommended consideration of release from detention, having regard to "special need based on age" and "Australia's international obligations": at xv [11]. No legislative amendment has followed this recommendation. 253 Plaintiff S157/2002 (2003) 211 CLR 476 at 492 [29] per Gleeson CJ; Coleman [2004] HCA 39 at [225], [240] and authorities cited in fn 230. 254 Young v Registrar, Court of Appeal [No 3] (1993) 32 NSWLR 262 at 272-274; Re Kavanagh's Application (2003) 78 ALJR 305 at 308 [13]; 204 ALR 1 at 5. 255 (2004) 78 ALJR 1056; 208 ALR 271. Kirby the provisions for "immigration detention" appearing in the Act or extended beyond the constitutional powers of the Parliament. The issue decided in Behrooz was thus quite different from that raised in the present case. I would have given exactly the same response if any attempt had been made to prevent the applicants from adducing evidence in these proceedings to show that the extreme conditions of their "detention" as children took their detention outside the character of the "immigration detention" for which the Act provided or which the Constitution supported. There was no such interference in this case. Indeed, the relevant facts were agreed between the parties, but deleting at the Minister's insistence the propounded fact as to the deleterious effects of the detention on these children. No attempt was made to prove that fact otherwise. At all events, my opinion in Behrooz was a minority one. As Callinan J points out256, the reasoning of the majority in that appeal supports the Minister's argument that the "detention" of the applicants in this case is valid and lawful. In Al-Kateb v Godwin257, a different issue arose concerning a stateless person. In that case, I agreed in the reasons of Gummow J that, in its terms, the Act258 did not apply. Gleeson CJ reached a similar conclusion259. Upon the evidence, it was the view of these members of the Court that it was impossible to return the detained person, at the exhaustion of local remedies, to his country of nationality. He had no such country. The case therefore attracted the rule expressed long ago by Coke CJ in the maxim: cessante ratione legis cessat ipse lex260. Such reasoning would extend to a person who requested to be removed from Australia where there was no real prospect of that person being removed in the reasonably foreseeable future261. 256 Reasons of Callinan J at [260]-[264]. 257 (2004) 78 ALJR 1099; 208 ALR 124. 258 The Act, ss 196 and 198. 259 See reasons of Gleeson CJ in Al-Kateb (2004) 78 ALJR 1099 at 1102 [3], 1105- 1106 [21]-[23]; 208 ALR 124 at 126, 130-131. 260 (The rationale of a legal rule no longer being applicable, that rule itself no longer applies). See Zadvydas v Davis 533 US 678 at 699 (2001), where Breyer J, for the Court, cites 1 Coke Institutes 70b. See further Al-Kateb (2004) 78 ALJR 1099 at 1127 [145]; 208 ALR 124 at 161. 261 See Minister for Immigration and Multicultural and Indigenous Affairs v Al Khafaji (2004) 78 ALJR 1156 at 1160-1161 [16]-[22] per Gummow J, 1161 [25]- [26] of my reasons; 208 ALR 201 at 205-207, 207. Kirby In the present case, the applicants are not stateless persons. Nor, before they were granted temporary protection visas, did they request to be removed in circumstances where that removal had no real prospect of being effected. They are nationals of Afghanistan. There may well be practical difficulties in returning them, involuntarily, to that country262. However, such practical difficulties quite often present in the compulsory return to the country of nationality of persons who have failed to secure refugee status in Australia. The Al-Kateb exception may apply where there is a complete breakdown of law in the person's country of nationality, so that it is a state of nationality in name only. At one stage, not so long ago, that may have been the case in Afghanistan. For all this Court knows, evidence might establish that it has become the case again. However, the evidence in the present case does not show that it is so at this time. A number of persons in the position of the applicants and their parents, have been returned voluntarily to Afghanistan. This has happened under the scheme agreed between Australia and that country263. It was therefore impossible to develop the principle in Al-Kateb, by analogy, to apply it to persons in the applicants' situation. No argument was advanced in this case that, under the Immigration (Guardianship of Children) Act 1946 (Cth), s 6, the Minister's statutory status as "guardian" of every non-citizen child who arrives in Australia, imposed on the Minister fiduciary obligations to act in respect of the applicants in the manner conventionally required by law of an infant's legal guardian264. On the face of things, the status of statutory guardian would appear to impose duties of individual decision-making giving explicit attention to the special needs of each particular child. Such a duty might be specially applicable to a Minister of the Commonwealth as "guardian", given the ancient functions of the Crown, as predecessor to the Minister, as parens patriae in respect of vulnerable children. The issue of the reconciliation of the Act and the foregoing provisions of the 1946 Act has been raised in argument in another appeal265. Because no 262 See reasons of Callinan J at [239]-[242]. 263 See reasons of Callinan J at [240]. 264 See eg Hylton v Hylton (1754) 2 Ves Sen 547 [28 ER 349]; Bainbrigge v Browne (1881) 18 Ch D 188; Lamotte v Lamotte (1942) 42 SR NSW 99; In re Pauling's Settlement Trusts [1964] Ch 303. 265 WACB v The Minister for Immigration and Multicultural and Indigenous Affairs [2004] HCA 50. Kirby evidentiary basis was established in the present case for consideration of this point in the present proceedings, it must be ignored. Conclusions and order It follows that, before they were granted visas authorising their release, the applicants were lawfully detained in immigration detention under the Act. The Act, in so providing, is valid under the powers afforded to the Parliament by the Constitution to make laws with respect to "aliens". There are other relevant heads of constitutional power, and it is unnecessary to elaborate them. In the evidence available to this Court, there was no offence in the applicants' detention to the implications in Ch III reserving "punishment", as provided under federal law, to the order of a court. Immigration detention for migration control is a recognised exception to the restriction to the valid orders of courts of official involuntary deprivation of liberty. Any parens patriae jurisdiction which this Court enjoys, as an implication from its status as a court or otherwise, is subject to clear and valid provisions of the Act. The provisions of the Act that required the detention of the applicants until they were granted visas are clear and valid under Australian law. There is no scope for implying a derogation for children, either under assumptions of the common law or of the Australian Constitution or so as to avoid inconsistency with any obligations accepted by Australia under international law. The scheme of universal mandatory detention is a deliberately chosen, and repeatedly reaffirmed, decision of the Australian Parliament, acting within its constitutional powers. As such, it is the duty of this Court to uphold it. At least it must do so in the circumstances proved by the evidence in this case. No other decision of this Court suggests that another course is available. On the contrary, recent authority of this Court repeatedly confirms the lawfulness and validity of the applicants' detention. It does so notwithstanding the extended duration of the detention, the status of the respondents as children, the arguable breach of international obligations and the unfortunate consequences that I would be prepared to assume such prolonged detention of children occasions. I therefore agree that the application must be dismissed. Hayne 215 HAYNE J. The applicants are four children aged 15, 13, 11 and 7 years old respectively. On 15 January 2001, they arrived in Australia with their parents and an older brother. None of the applicants, and no other member of the family, had a valid visa permitting travel to, entry to, or remaining in Australia. Each of the applicants is a national of Afghanistan. On arrival in Australia, the applicants (and the other members of their family) were taken into immigration detention. They remained in immigration detention until after this matter was heard. In February 2001, the applicants' father applied for protection visas for himself and for other members of his family. That application was refused. Subsequent applications for review of that decision have not led to the grant of protection visas, but processes of appeal against the failure of those review proceedings have not yet been exhausted. The applicants contend that their detention is unlawful. They contend that ss 189 and 196 of the Migration Act 1958 (Cth) ("the Act"), in so far as they authorise the detention of children in immigration detention, are invalid. The text of those sections is set out in the reasons of other members of the Court. The applicants applied for an order nisi calling on the first respondent, who is the Manager of the Immigration Detention Centre where they were being held, and on the Minister for Immigration and Multicultural and Indigenous Affairs to show cause why habeas corpus should not issue and prohibition or injunction not go to prevent the Minister taking any steps to detain or continue to detain them. Upon that application coming on they were directed266 to make the application to a Full Court. It is that application which now falls for determination. It should be dismissed. Sections 189 and 196 of the Act, in so far as they authorise and require the detention of the applicants in immigration detention, are valid. The issues which arise in this matter are closely connected with, and in substantial respects are identical to, issues considered by the Court in Al-Kateb v Godwin267 and Minister for Immigration and Multicultural and Indigenous 266 Pursuant to O 55 r 2 of the High Court Rules. 267 (2004) 78 ALJR 1099; 208 ALR 124. 268 (2004) 78 ALJR 1156; 208 ALR 201. Hayne In the present matter, emphasis was given to the fact that the applicants are children. It was said that "[t]he prolonged and indefinite detention of children until removal or grant of a visa (in so far as it is purportedly authorised by ss 189 and 196 [of the Act]) is punitive in nature". Children, the applicants submitted, have always been recognised by the common law and by the courts of equity as having a "special position" and "have long been treated as being in a position of vulnerability". In addition, so the argument continued, the special status of children is recognised in numerous treaties, most notably the Convention on the Rights of the Child, 1989, the International Covenant on Civil and Political Rights, 1996, and the International Covenant on Economic, Social and Cultural Rights, 1966. These considerations do not lead to the conclusion that the impugned provisions are invalid in so far as they authorise and require the detention of the applicants in immigration detention. As I said in Al-Kateb269, the aliens and immigration powers (ss 51(xix) and (xxvii)) give power to the Parliament to make laws with respect to the exclusion of persons from Australia and the Australian community. In that operation, the laws do not infringe the limitations on power which follow from the separation of judicial power from the executive and legislative powers. Further270, immigration detention is not detention for an offence but it excludes the person who has entered Australia from the community which he or she sought to enter. It excludes that person from the community by segregating him or her from it though, of course, while segregated that person is not beyond that community's law. He or she is subject to and has the benefit of applicable federal, State or Territory laws, written and unwritten. The reference to exclusion from the "Australian community" is intended as a description of the consequence of the law in question, not an invocation of references to the separate communities that evolved in the British Empire during the later part of the 19th and early part of the 20th centuries. Nor does it seek to invoke the concept of absorption into the community that has developed in connection with the immigration power. Rather, it is used to describe the consequences visited by the Act upon aliens who do not have permission to enter and remain in Australia. The Act requires that such persons be detained in immigration detention. The consequence of that detention is that they are excluded from the community they have sought to enter and it is their status of alienage which provides the critical connection with constitutional power, not the description of the consequences flowing from the legislation whose validity is impugned. 269 (2004) 78 ALJR 1099 at 1144-1145 [247]; 208 ALR 124 at 185-186. 270 Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1148 [266]; 208 ALR 124 at 190. Hayne As I sought to explain in Al-Kateb271, there is nothing about the decision-making that must precede detention which bespeaks an exercise of judicial power. If an officer knows or reasonably suspects that a person in the migration zone (other than an excised offshore place) is an unlawful non-citizen, the officer must detain the person272. But continued detention does not depend upon the holding of that suspicion. Continued detention under s 196 is predicated upon the person being an unlawful non-citizen. It does not depend upon the formation of any opinion of the Executive. In particular, it does not depend upon the formation of any opinion of the Executive about whether detention is necessary or desirable whether for purposes of investigation or any other purpose. That judgment has been made by the legislature. The Act provides that the detention of an unlawful non-citizen must continue until the detainee is removed or deported or granted a visa273 and removal must occur "as soon as reasonably practicable"274 after the occurrence of events which the Act identifies. The applicants' contentions, which emphasised their status according to Australian domestic law as persons not of full age and capacity, were ultimately directed to characterising the impugned sections as "punitive in nature". (Whether some or all of the applicants would have that status according to the law of their domicile was not explored in evidence or in argument.) Both the undoubted "vulnerability" of children and the attribution, by the law or international instruments, of a special status or position to children were said to lead to, or reinforce, the conclusion that the sections are punitive. Thus, it was said that "by reason of their special position and vulnerability, any law that purports administratively to deprive children of their liberty for anything but the most strictly limited time will be punitive in character" (emphasis added). In part, the argument proceeded from a premise that children of the applicants' ages could not choose, for themselves, whether to ask to be returned to the country of their nationality. This meant, so the argument proceeded, that they could not choose to bring their detention to an end by asking to be removed under s 198(1) of the Act. Even accepting that the applicants are too young to make a choice about returning to their country of nationality, the corollary would be that the decision to attempt to stay or to return would be a decision for their parents or guardians. The parents or guardians could, therefore, bring the detention to an end. If the children cannot do so, that is not significant in 271 (2004) 78 ALJR 1099 at 1146 [254]; 208 ALR 124 at 188. Hayne deciding whether the impugned provisions are invalid. Rather, attention must be directed to the applicants' central contention that the impugned provisions are punitive. My reasons in Al-Kateb sought to demonstrate275 that the line between detention which, because it is "penal or punitive in character"276, can be imposed only in the exercise of the judicial power, and detention which is not of that character, is difficult to draw277. For present purposes, it is important to recognise that Chu Kheng Lim v Minister for Immigration278 decided that mandatory detention of unlawful non-citizens can validly be provided without contravention of Ch III. It follows that unlawful non-citizens have no unqualified immunity from detention and attention must then be focused upon the purpose of the detention. Once it is accepted, as I do, that the aliens and immigration powers support a law directed to excluding a non-citizen from the Australian community (by segregating that person from the community) the effluxion of time, whether judged alone or in the light of the vulnerability of those who are detained, will not itself demonstrate that the purpose of detention has passed from exclusion by segregation to punishment. For these reasons, and the reasons I gave in Al-Kateb, the challenge to the validity of ss 189 and 196 of the Act fails. The application should be dismissed. 275 (2004) 78 ALJR 1099 at 1146-1147 [252]-[262]; 208 ALR 124 at 187-189. 276 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 27 per Brennan, 277 cf Kruger v The Commonwealth (1997) 190 CLR 1 at 109-110 per Gaudron J. 278 (1992) 176 CLR 1. Callinan CALLINAN J. The applicants are children who, at the time of hearing, were living at the Baxter Immigration Detention Facility ("Baxter") with both of their parents. They were subsequently granted temporary protection visas on 5 July 2004 and released from detention. The issues which they seek to raise in these proceedings which are brought by their father as next friend are whether ss 189 and 196 of the Migration Act 1958 (Cth) ("the Act"), under which they are detained, are valid in so far as those provisions relate to them as children. Facts and previous proceedings The applicants, aged 15, 13, 11 and 7 years respectively, are Afghan nationals. Their parents and they entered Australia unlawfully279 on 15 January 2001. Upon their arrival they were detained pursuant to ss 189 and 196 of the Act. The family was first detained at the Woomera Immigration Reception and Processing Centre. On 2 January 2003 they were transferred to Baxter. The first respondent is the manager of Baxter. The second respondent is the Minister for Immigration and Multicultural and Indigenous Affairs. The relief sought is a writ of habeas corpus directed to the first respondent requiring the applicants' release from immigration detention, and a writ of prohibition, or alternatively an injunction, prohibiting or restraining the second respondent from detaining or continuing to detain the applicants. The applicants' family has, since their arrival in Australia, been involved in several proceedings designed to secure for its members Australian residence. On 21 February 2001 the applicants' father applied for a protection visa on behalf of the family. The application was refused on 20 April 2001 by a delegate of the second respondent. Review of the delegate's decision was sought, and on 23 July 2001 the decision was affirmed by the Refugee Review Tribunal. The applicants' father applied to the Federal Court for judicial review of the Tribunal's decision on 14 August 2001. On 8 February 2002, the Federal Court made orders by consent setting aside the Tribunal's decision and remitting the matter for reconsideration. On 28 June 2002, the Tribunal again affirmed the delegate's decision to refuse to grant protection visas to the applicants' family. The applicants' father applied to the Federal Magistrates Court for judicial review of the Tribunal's June 2002 decision. The application was dismissed by 279 The applicants' parents did not hold visas on entry to Australia (s 42 of the Act) and have not become entitled to remain in Australia as refugees holding protection visas (s 36 of the Act). Callinan Driver FM on 20 September 2002. An appeal against the magistrate's decision was commenced in the Federal Court. On 14 February 2003 Mansfield J allowed the appeal and remitted the matter for re-hearing by Driver FM. On 28 May 2003, Driver FM again dismissed the application for review. The applicants' father has appealed against that decision to the Federal Court. The appeal is pending. On 16 May 2002, a Memorandum of Understanding was entered into between Australia and the Afghan Interim Government. The Understanding provides a framework for the return of those Afghan citizens to Afghanistan who seek voluntary repatriation. On 3 June 2003 the applicants' family was invited by the second respondent to return to Afghanistan pursuant to the Understanding. The invitation included an offer of financial assistance of as much as $10,000, counselling, assistance in obtaining passports, arrangement of air travel to Kabul, reception upon arrival, accommodation in Kabul for up to a week if required, assistance with transport from Kabul to other destinations within Afghanistan, the provision of vocational training in Kabul, and accommodation there for the duration of training if required. Afghans in immigration detention may voluntarily return to Afghanistan at any time. The second respondent will pay all costs associated with their return, including transportation, travel documents, and the cost of transport of personal effects. By 29 October 2003, 60 persons had been repatriated to Afghanistan from Australia under the Understanding. Removal from Australia to Afghanistan was effected within 56 days of a person's signification of willingness to return. It is the second respondent's expectation that in the event of the family's agreeing to return to Afghanistan, removal could be effected within about 30 days of the provision of travel documents from the Embassy of Afghanistan. The time for the provision of these documents would depend on the family's cooperation in providing information to assist the relevant authorities in Afghanistan to establish their identity. There is currently no agreement between the governments of Australia and Afghanistan for the involuntary return of Afghan nationals to Afghanistan. If the applicants' father's appeal fails, and if he continues to resist the second respondent's offer of repatriation to Afghanistan, and no agreement be made with Afghanistan for the involuntary return of Afghans whose applications for the status of refugees have failed, the applicants will continue to be detained until such time as other arrangements can be made for their removal elsewhere from Australia. There is no suggestion here that the second respondent would in Callinan these circumstances detain the family otherwise than for their deportation when that can be effected. Because the applicants' submissions claim that the detention is punitive, not only because of its uncertainty as to duration but also by its very nature, including its particular nature here, something needs to be said with respect to the actual circumstances of the detention, the evidence as to which is uncontradicted and which I will quote: "The ... children attended school whilst the family were located at the Woomera [detention centre], initially on-site and from November 2001, at the vacant premises of St Michael's school in the township of Woomera. Following the family's relocation to Baxter, the ... children commenced school at the Baxter Education Centre within Baxter on 28 January 2003. At the time, the ... children attended the school on-site at Baxter, the school employed an equivalent of six full time teachers. The school also employed one educational coordinator and two recreational/activities officers fulltime, as well as a teacher of dance, drama and music. Baxter's education centre makes provision for a kindergarten, as well as primary and secondary education to children resident in the facility. Education ... is delivered by qualified teaching staff contracted through East Gippsland College of TAFE and is well resourced with books, stationery and computers. Children are taught in English appropriate to their individual levels and follow the South Australian curriculum. Children aged from six to seven years attend Junior School from 9am to 3pm. Children aged between 8 and 12 attend primary school from 9.00am to 3.15pm, and High School is available for children aged between 12 and 18 from 9am to 3.15pm. Special education programmes are also available at Baxter, including Information Technology Certificates 1, 2 and 3. In addition to the school curriculum, during the normal school term there is an activity program operating seven days per week including ball sports, pottery and games. The [second respondent's] policy is that all children should be given the opportunity to participate in an external school environment subject to satisfaction of three requirements regarding health, education level (so that their educational levels in English are taken into account) Callinan and behaviour. To this end the [second respondent] is working with both the state education authorities and on site staff at Baxter to achieve this outcome. It is also the [second respondent's] policy that the children who attend these schools are to participate fully in the extra-curricular activities offered by the school such as after-school sport and school camps. On 31 March 2003, [two of the applicants] commenced at Willsden Primary School in Baxter township, with [another of the children] commencing at that school on 16 May 2003. On 16 September 2003, [one of the children] commenced at the Seaview Campus of Port Augusta Secondary School." Relevant legislative provisions It is convenient at this point to set out the relevant provisions of the Act. Section 4 should be noted first: "Object of Act The object of this Act is to regulate, in the national interest, the coming into, and presence in, Australia of non-citizens. To advance its object, this Act provides for visas permitting non- citizens to enter or remain in Australia and the Parliament intends that this Act be the only source of the right of non-citizens to so enter or remain. To advance its object, this Act requires persons, whether citizens or non-citizens, entering Australia to identify themselves so that the Commonwealth government can know who are the non-citizens so entering. To advance its object, this Act provides for the removal or deportation from Australia of non-citizens whose presence in Australia is not permitted by this Act." Section 5 defines what it means to "detain" a person: "detain means: take into immigration detention; or keep, or cause to be kept, in immigration detention; The same section defines "immigration detention" as follows: Callinan "immigration detention means: being held by, or on behalf of, an officer: in a detention centre established under this Act; or in another place approved by the Minister in writing; Section 176 refers to detention, but not to detention under Div 7 of the Act and therefore need not be set out. Section 182, which refers to periods of detention, has no application to these applicants. Section 189 in Div 7 of the Act is expressed in mandatory language: "Detention of unlawful non-citizens If an officer knows or reasonably suspects that a person in the migration zone (other than an excised offshore place) is an unlawful non-citizen, the officer must detain the person. If an officer reasonably suspects that a person in Australia but outside the migration zone: is seeking to enter the migration zone (other than an excised offshore place); and (b) would, if in the migration zone, be an unlawful non-citizen; the officer must detain the person. If an officer knows or reasonably suspects that a person in an excised offshore place is an unlawful non-citizen, the officer may detain the person. If an officer reasonably suspects that a person in Australia but outside the migration zone: is seeking to enter an excised offshore place; and (b) would, if in the migration zone, be an unlawful non-citizen; Callinan the officer may detain the person. In subsections (3) and (4) and any other provisions of this Act that relate to those subsections, officer means an officer within the meaning of section 5, and includes a member of the Australian Defence Force." Section 196 is as follows: "Duration of detention (1) An unlawful non-citizen detained under section 189 must be kept in immigration detention until he or she is: removed from Australia under section 198 or 199; or deported under section 200; or granted a visa. To avoid doubt, subsection (1) does not prevent the release from immigration detention of a citizen or a lawful non-citizen. To avoid doubt, subsection (1) prevents the release, even by a court, of an unlawful non-citizen from detention (otherwise than for removal or deportation) unless the non-citizen has been granted a visa. Subject to paragraphs (1)(a), (b) and (c), if the person is detained as a result of the cancellation of his or her visa under section 501, the detention is to continue unless a court finally determines that the detention is unlawful, or that the person detained is not an unlawful non-citizen. (4A) Subject to paragraphs (1)(a), (b) and (c), if the person is detained pending his or her deportation under section 200, the detention is to continue unless a court finally determines that the detention is unlawful. To avoid doubt, subsection (4) or (4A) applies: (a) whether or not there is a real likelihood of the person detained being removed from Australia under section 198 or 199, or deported under section 200, in the reasonably foreseeable future; and (b) whether or not a visa decision relating to the person detained is, or may be, unlawful. Callinan (5A) Subsections (4) and (4A) do not affect by implication the continuation of the detention of a person to whom those subsections do not apply. This section has effect despite any other law. In this section: visa decision means a decision relating to a visa (including a decision not to grant the visa, to cancel the visa or not to reinstate the visa)." Section 198 is comprehensively expressed and provides for the mandatory removal of unlawful non-citizens, a statutory appellation applicable to the applicants, "as soon as reasonably practicable". It need not be set out here. The applicants' argument The applicants put their argument in different ways. First, it was said that the Commonwealth Parliament has no power to enact a law that provides for the prolonged administrative detention of alien children: that in particular, indefiniteness as to its duration is of itself plainly punitive. In the result, ss 189 and 196 of the Act or any other sections of it purporting to authorise the detention of the applicants are invalid. A number of arguments are urged in support of the proposition that the Commonwealth lacks legislative power to detain alien children indefinitely: that detention of children in any circumstances is not reasonably capable of being seen as necessary for the purposes of processing, deportation or removal of unlawful non-citizens; that such detention is not an incident of the executive power to exclude, admit and deport, or remove them; and, that, because the detention is punitive in nature, it is an impermissible exercise by the executive of the judicial power of the Commonwealth. The detention was said to be punitive not only because it inhibited the applicants' freedom, but also because it was not reasonably necessary to achieve, or was not reasonably adapted to the removal of the applicants especially as they were only children. The applicants' sought to invoke a parens patriae jurisdiction exercisable by the Court as a Commonwealth Court. The special vulnerabilities of children were repeatedly pressed as reasons why the prolonged detention of children should be seen as punitive. The fact that a child may not have the capacity to bring about the end of his or her detention, by requesting removal from Australia, also gives a child's detention a punitive complexion. The applicants' special vulnerabilities of children, failed unfortunately to deal adequately with the hard and inescapable reality that their vulnerability could well be greater if they were to be separated from their parents, a result which the applicants' application submission, although dwelling on the Callinan invites. Nor did the applicants' submissions grapple with another practical reality, that children's lives are constrained by their parents' wishes and control over them: indeed it was this very circumstance that brought the applicants to this country as aliens who have been unable to establish an entitlement to the status of refugees to whom obligations of protection are owed; and further, that now the applicants' father could bring their detention to an end by accepting the second respondent's offer of repatriation280. The respondents' arguments The respondents and the Attorney-General of the Commonwealth as intervener, argued that the proper approach is to ask whether the impugned provisions provide for detention as punishment in fact, or for some legitimate non-punitive purpose. It was accepted that if the former were the case, the relevant provisions would be seen as purporting to confer a judicial power on the executive arm of government, and are likely to be invalid. If the latter be the case however, the provisions do not purport to confer judicial power, and will therefore be valid provided they are supported by a Constitutional head of power. A test of that kind is consistent with the reasoning and decisions of this Court in Immigration281 and Kruger v The Chu Kheng Lim v Minister Commonwealth282. for The respondents submitted that the relevant provisions of the Act clearly serve the legitimate non-punitive purpose of facilitating the orderly determination of visa applications, and the removal of persons who are denied visas from Australia. The respondents argued that there is no relevant distinction between children who are unlawful non-citizens and adults who are unlawful non-citizens. The test remains, of the purpose for which the detention is effected. A purpose will be a valid purpose if the relevant provisions are reasonably capable of being seen as necessary for a non-punitive constitutional purpose, here, of regulating the entry and presence of aliens, and immigration under s 51(xix) and (xxvii) of the Constitution. The fact that the applicants are children has nothing to do with these questions. If relevant at all, it could only go to the wisdom and desirability of the provisions which are not questions for this Court. 280 In Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 33-34 Brennan, Deane and Dawson JJ thought it relevant that a person could under the legislation there terminate detention by seeking repatriation. 281 (1992) 176 CLR 1. 282 (1997) 190 CLR 1. Callinan The respondents also contended that the argument that a child may not be able to bring about an end to his or her detention does not assist the applicants. In any event, older children may well have the capacity to understand the nature and consequences of their actions and be able to request removal. The truth is that many, indeed most children have little say over events concerning them as they are within the control of their parents. As to the suggestion that the parens patriae jurisdiction of the Court may apply to the applicants, it was submitted by the respondents that the jurisdiction has always been subject to legislative interventions and argument: if ss 189 and 196 of the Act are provisions which the community think unpalatable, then their reversal or re-adjustment is for the Parliament and not the courts. The Act here provides a clear indication of Parliament's intention with regard to unlawful non-citizens, including children, and the exercise of whatever parens patriae jurisdiction exists or remains in the Court should not interfere with the implementation of that intention. The validity of ss 189 and 196 of the Act There is no doubt that the detention to which these applicants are subject, despite the measures undertaken by the second respondent with respect to their education and otherwise, involves some significant restraints on their freedom. Its character for constitutional purposes however, is not to be determined by reference simply to that. The relevant question is whether the restraint as mandated or authorized by the governing legislation is reasonably capable of being seen as necessary for a valid non-punitive purpose, here of removing aliens who have no right to reside in Australia, from the country. So far as adults are concerned, that question has recently been affirmatively answered by this Court in Behrooz v Secretary of the Department of Immigration and Multicultural and Indigenous Affairs283, and any distinction between adults and children in these circumstances is not easy to discern. But first some general principles should be restated. Detention for purposes other than punitive ones has traditionally been constitutionally acceptable. Chu Kheng Lim v Minister for Immigration284, which is relied upon by the applicants, acknowledges that, as does, more recently, Al- Kateb v Godwin285. Examples are arrest and detention pending trial, detention of 283 (2004) 78 ALJR 1056; 208 ALR 271. 284 (1992) 176 CLR 1. 285 (2004) 78 ALJR 1099; 208 ALR 124. Callinan the mentally ill or infectiously diseased, and for the welfare and protection of persons endangered for various reasons. Detention of aliens, certainly for the purpose of determining rights of entry into, or arranging deportation from, Australia, equally falls within an exception traditionally and rightly recognised as being detention otherwise than of a punitive kind286. As I pointed out in Al-Kateb287, it would only be if the respondents formally and unequivocally abandoned that purpose that the detention could be regarded as being no longer for that purpose. And as to that, here it should be kept in mind that the status of these applicants as aliens or refugees remains to be finally determined because that depends on the outcome of an appeal instituted by their father. It may even be therefore, that the correct view is that the time for the effecting of the purpose has not yet arrived, let alone reached anything like a point of possible abandonment, actual or inferable. Does it make a relevant legal difference that the applicants are children? The answer, as I have foreshadowed, is "no". The purpose of the detention remains the deciding factor. Arguments to the contrary dissolve ultimately into questions about the wisdom of the policy behind the detention of children, or perhaps the nature of it. These are difficult questions involving matters of social, humanitarian and migration policy and are ones to which the courts cannot provide the answers. As I noted in Al-Kateb288, for reasons which need not be fully restated, it may be that detention for some other purpose under the aliens or indeed the immigration power would be constitutionally permissible. It may be the case that detention for the purpose, not only of preventing aliens from entering the general community, working, or otherwise enjoying the benefits that Australian citizens enjoy, but also for the purpose in the case of children, of detaining them so as not to fragment an alien family before removal, is constitutionally acceptable. Alien children have legal rights just as do alien adults289. But those rights, so far as removal from this country and detention for that purpose is concerned, are no different from the rights of adults which are governed by those sections of the Act to which I have referred, including ss 189 and 196. 286 cf Kruger v The Commonwealth (1997) 190 CLR 1 at 110-111 per Gaudron J. 287 (2004) 78 ALJR 1099 at 1153 [291]; 208 ALR 124 at 196-197. 288 (2004) 78 ALJR 1099 at 1153 [291]; 208 ALR 124 at 196-197. 289 See Behrooz v Secretary of the Department of Immigration and Multicultural and Indigenous Affairs (2004) 78 ALJR 1056 at 1097 [219]; 208 ALR 271 at 326. Callinan The applicants' contention that the potential term of their detention and the fact that they may lack the capacity to bring it to an end takes their detention outside what may be regarded as a non-punitive purpose must also be rejected. The issue of a child's capacity to act, even if it were relevant, would only be determinable on a case by case basis. The level of capacity of the child can however have no relevance to the question whether detention can be characterized as punitive. Recognition of a parent's practical right to make decisions on behalf of a child or otherwise has nothing to say about the purpose of detaining unlawful non-citizen children. Some further observations about the applicants' argument as to the invocation of the court's parens patriae jurisdiction should be made. It is open to question whether the Commonwealth or its courts, in particular this one, have a parens patriae jurisdiction, except in the case of children of a marriage290, or perhaps as an incident of, or because of a relationship with another head of Commonwealth power such as, for example, external affairs. For present purposes let me however assume such a jurisdiction. The applicants did not submit that the Parliament lacks all power to enact provisions for the administrative detention of non-citizen children, but rather that by reason of their special position and vulnerability, any law that purports administratively to deprive children of their liberty for anything but the most strictly limited time will be punitive in character, and will offend exclusivity of the exercise by the courts of judicial power derived from Ch III of the Constitution. Accordingly, it was put, any legislative scheme for the detention of children must give due recognition to their special status and vulnerability. If the applicants' submission were correct, it would mean that the court would have a supervisory power over, for example, the details of the conditions and duration of detention of minors for quarantine purposes pursuant to s 51(ix) of the Constitution enabling it to order their release because, in its opinion, the conditions do not in some way pay proper deference to the special status and vulnerability of children. I cannot accept that there is any Constitutional justification for the contention that a parens patriae the limit Commonwealth. The content of the jurisdiction has conventionally always been seen as capable of legislative control291. legislative power of jurisdiction may the 290 See Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 78 ALJR 737 at 776 [215]; 206 ALR 130 at 184. 291 Minister for the Interior v Neyens (1964) 113 CLR 411; cf Carseldine v Director of Department of Children's Services (1974) 133 CLR 345; Johnson v Director- General of Social Welfare (Vict) (1976) 135 CLR 92. Callinan The nature and details of that content are for Parliament not the courts. Sections 189 and 196 of the Act are valid in their application to the applicants. Their detention, being as it is, for the purpose of their removal from Australia is not unlawful. The application should be refused. 270 HEYDON J. Subject to reserving any decision about whether s 196 of the Migration Act 1958 (Cth) should be interpreted in a manner consistent with treaties to which Australia is a party but which have not been incorporated into Australian law by statutory enactment, I agree with the reasons stated by Hayne J for his conclusion that the continued detention of the applicants is not unlawful and for the orders he proposes. |
HIGH COURT OF AUSTRALIA AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION APPELLANT AND RESPONDENT Australian Securities and Investments Commission v Kobelt [2019] HCA 18 12 June 2019 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation S P Donaghue QC, Solicitor-General of the Commonwealth, and K E Clark with P P Thiagarajan for the appellant (instructed by Australian Securities and Investments Commission) T J North QC and H M Heuzenroeder for the respondent (instructed by Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Australian Securities and Investments Commission v Kobelt Trade practices – Consumer protection – Unconscionable conduct – Where s 12CB(1) of Australian Securities and Investments Commission Act 2001 (Cth) relevantly prohibited "unconscionable" conduct in trade or commerce in connection with supply or possible supply of financial services – Where respondent provided "book-up" credit to Anangu customers of general store – Where book-up credit allowed deferral of whole or part of payment for goods subject to respondent retaining customer's debit card and personal identification number – Where respondent used debit card to withdraw whole or nearly whole of wages or Centrelink payments shortly after credited to prevent customers having practical opportunity to access monies – Where respondent applied part of withdrawn funds to reduce customer's indebtedness and made remainder available for provision of future goods and services – Where respondent's record- keeping inadequate and often illegible – Where customers vulnerable due to remoteness, limitations on education, impoverishment and low levels of financial literacy – Where book-up system "tied" Anangu customers to general store – Where customers had understanding of basic elements of book-up system – Where withdrawals authorised by customers – Where customers generally supportive of book-up and respondent's business – Where book-up protected customers from cultural practices requiring sharing of resources with certain categories of kin – Where book-up ameliorated effects of "boom and bust" cycle of expenditure and allowed purchase of food between pay days – Whether respondent's conduct unconscionable within meaning of s 12CB(1) of Act. sharing", "dishonesty", "exploitation", Words and phrases – "agency", "book-up", "credit", "cultural practices", "demand literacy", "humbugging", "inequality of bargaining power", "legitimate interests", "moral obloquy", "passive acceptance", "power imbalance", "special disadvantage", "standard of conscience", "system or pattern of conduct", "transparency or accountability", "unconscientious conduct", "unconscionable conduct", "undue influence", "unfair", "unjust", "unwritten law", "victimisation", "voluntary", "vulnerability". "financial Australian Securities and Investments Commission Act 2001 (Cth), ss 12CA, 12CB, 12CC. KIEFEL CJ AND BELL J. Introduction Residents of some Aboriginal communities located in rural and remote Australia have been accustomed to obtaining credit from storekeepers under arrangements known as "book-up". Under these arrangements, the customer may be required to give the storekeeper the debit card ("keycard") linked to the bank account to which the customer's wages or Centrelink payments are credited, and to disclose the personal identification number ("PIN") for the keycard. The storekeeper is authorised to withdraw funds from the customer's account in reduction of the customer's debt and in return for the supply of goods over the interval between the customer's "pay days". Book-up credit appears to have developed in association with the extension of social security entitlements to Aboriginal Australians in the late 1950s. Initially, arrangements might have been made for the recipient's social security cheque to be posted to a nominated store in the expectation that it would be cashed in the store and the proceeds applied to the purchase of goods from the store over the course of the succeeding fortnight. The change to the supply of the customer's keycard and PIN is suggested to have come about as the result of changes in the way Centrelink payments and other periodic payments are made. In 2002, the Australian Securities and Investments Commission ("ASIC") commissioned a report on problems associated with book-up credit ("the Renouf report"). The author observed that, in the absence of alternative appropriate financial services, book-up is often the only means for Aboriginal consumers to obtain access to credit. Book-up credit was described in the Renouf report as "a convenient way of managing money over a fortnightly or weekly payment cycle for consumers who lack financial management skills or are affected by cultural pressure to immediately share resources when they are available". The issue presented by the appeal is whether the supply of credit to the residents of remote communities in the Anangu Pitjantjatjara Yankunytjatjara Lands ("the APY Lands"), under the book-up system maintained by the respondent, Mr Kobelt, contravened the proscription of unconscionable conduct fixed by s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"). Bell Sections 12CB and 12CC of the ASIC Act In the form in which it was in force from 1 January 2012 to 25 October 20181, s 12CB relevantly provided: "(1) A person must not, in trade or commerce, in connection with: the supply or possible supply of financial services to a person (other than a listed public company); or the acquisition or possible acquisition of financial services from a person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable. For the purpose of determining whether a person has contravened subsection (1): the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section. It is the intention of the Parliament that: this section is not limited by the unwritten law of the States and Territories relating to unconscionable conduct; and this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and 1 The provision was further amended with effect from 26 October 2018 by the Treasury Laws Amendment (Australian Consumer Law Review) Act 2018 (Cth), Sch 2 items 1-2 by omitting the words "(other than a listed public company)" from s 12CB(1)(a)-(b) and omitting s 12CB(5). Bell in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of: the terms of the contract; and the manner in which and the extent to which the contract is carried out; and is not limited to consideration of the circumstances relating to formation of the contract." Section 12CC(1) contains a non-exhaustive statement of matters to which the court may have regard for the purpose of determining whether a person has contravened s 12CB in connection with the supply, or possible supply, of financial services. Relevantly, these include: the relative strengths of the bargaining positions of the supplier and the service recipient; and (b) whether, as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and (c) whether the service recipient was able to understand any documents relating to the supply or possible supply of the financial services; and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the service recipient or a person acting on behalf of the service recipient by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the financial services; and the amount for which, and the circumstances under which, the service recipient could have acquired identical or equivalent financial services from a person other than the supplier; and if there is a contract between the supplier and the service recipient for the supply of the financial services: Bell the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the service recipient; and the terms and conditions of the contract; and (iii) the conduct of the supplier and the service recipient in complying with the terms and conditions of the contract; and the extent to which the supplier and the service recipient acted in good faith." Procedural history ASIC brought proceedings in the Federal Court of Australia (White J) against Mr Kobelt alleging contraventions of s 29(1) of the National Consumer Credit Protection Act 2009 (Cth) ("the NCCP Act") and s 12CB of the ASIC Act in connection with his supply of credit under the book-up system. Section 29(1) of the NCCP Act, which came into operation on 1 July 2011, proscribes engagement in a "credit activity" without a licence. Mr Kobelt did not hold a licence permitting him to engage in credit activity. The primary judge found that, from 1 July 2011 until at least April 2014, Mr Kobelt contravened s 29(1) of the NCCP Act in the provision of credit to purchasers of second-hand motor vehicles. The breach of s 29(1) of the NCCP Act is not relied upon in support of ASIC's unconscionability case. It is common ground that Mr Kobelt's supply of credit to Anangu purchasers of second-hand motor vehicles and other goods was conduct in trade or commerce and that it was engaged in in connection with the supply of "financial services". The issue is whether Mr Kobelt's conduct in connection with the supply of credit under his book-up system was, in all the circumstances, "unconscionable". Prior to amendments which came into effect on 1 January 2012, there was no counterpart to s 12CB(4)(b). Nonetheless, it is accepted that, before the introduction of that provision, a system or pattern of conduct by a trader could constitute unconscionable conduct without the necessity to identify the circumstances of, or the effect upon, any particular consumer (a "system case")2. ASIC pleaded a system case by reference to the supply of book-up credit to 117 2 Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132 at 140-141 [33] per Tamberlin, Finn and Conti JJ. Bell of Mr Kobelt's Anangu customers. ASIC also pleaded a case that Mr Kobelt's to four nominated Anangu customers was supply of book-up credit unconscionable. In closing submissions, ASIC did not seek findings against Mr Kobelt in connection with the supply of credit to the four nominated customers. It confined its case to the system case. The primary judge found that Mr Kobelt's conduct in connection with the supply of credit under the book-up system was unconscionable: Mr Kobelt had chosen to maintain a system which, while it provided some benefits to his Anangu customers, took advantage of their poverty and lack of financial literacy to tie them to dependence on his store3. His Honour declared that Mr Kobelt, by his conduct in providing credit under the book-up system at least since 1 June 2008, had contravened s 12CB of the ASIC Act4. Mr Kobelt was ordered to pay the Commonwealth a pecuniary penalty5 in the sum of $100,000. The Full Court Mr Kobelt appealed against the primary judge's orders to the Full Court of the Federal Court of Australia (Besanko, Gilmour and Wigney JJ). The appeal was allowed in part, and the Full Court set aside the primary judge's orders arising from the finding of unconscionable conduct. In their joint reasons, Besanko and Gilmour JJ accepted that Mr Kobelt's Anangu customers' poverty and lack of financial literacy made them vulnerable in their dealings with Mr Kobelt6. Their Honours were not persuaded, however, that Mr Kobelt's conduct in supplying credit on his book-up terms was unconscionable7. The conclusion took into account the primary judge's findings that Mr Kobelt's Anangu customers had a basic understanding of the book-up system, voluntarily entered into book-up credit contracts with Mr Kobelt and understood that they could frustrate the agreement either by cancelling their keycard or by directing 3 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 4 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 5 ASIC Act, s 12GBA. 6 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 7 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 Bell that future payments be credited to a different bank account8. The conclusion also took into account the primary judge's finding that Mr Kobelt acted without dishonesty and with a degree of good faith and that ASIC did not submit, and the primary judge did not find, that Mr Kobelt exerted undue influence on his Anangu customers to enter into book-up credit contracts with him9. Wigney J agreed with their Honours' analysis and, in separate reasons, his Honour additionally held that the primary judge had given insufficient consideration to anthropological evidence of the cultural practices of the Anangu, which differentiate them from mainstream Australian society, and which serve to explain why Anangu customers chose to engage in book-up arrangements with On 17 August 2018, Gageler, Nettle and Edelman JJ granted ASIC special leave to appeal from that part of the Full Court's judgment and orders respecting the claimed contravention of s 12CB(1) of the ASIC Act. As a condition of the grant of special leave, ASIC undertook that it would not seek its costs of the application or the appeal. The appeal is brought on three grounds which variously challenge the weight given by the Full Court to the factors that bear on the evaluative judgment of whether conduct in connection with the supply of credit is rightly characterised as unconscionable. The term "unconscionable" is not defined in the ASIC Act and is to be understood as bearing its ordinary meaning. The proscription in s 12CB(1) is of conduct in connection with the supply of financial services that objectively answers the description of being against conscience. The values that inform the standard of conscience fixed by s 12CB(1) include those identified by Allsop CJ in Paciocco v Australia and New Zealand Banking Group Ltd: certainty in commercial transactions, honesty, the absence of trickery or sharp practice, fairness when dealing with customers, the faithful performance of bargains and promises freely made, and: "the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to 8 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 9 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 10 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 Bell respond for their protection, especially from those who would victimise, predate or take advantage"11. It is the application of the last-mentioned value with which the appeal is concerned. In Kakavas v Crown Melbourne Ltd12 and Thorne v Kennedy13 it was said that a conclusion of unconscionable conduct requires not only that the innocent party be subject to special disadvantage, but that the other party must also unconscientiously take advantage of that special disadvantage. This has variously been described as requiring victimisation, unconscientious conduct or exploitation14. ASIC's central submission, underlying each of its grounds, is that: "[T]he factors that made Mr Kobelt's customers vulnerable and that therefore led them to be willing to voluntarily enter into the book-up arrangement, contrary to their interests, were wrongly treated by the Full Court as excusing what would otherwise have been unconscionable conduct anywhere else in modern Australian society." The submission takes as a given that entry into book-up credit arrangements with Mr Kobelt was objectively contrary to the interests of his Anangu customers. It is a submission that accords with the primary judge's analysis that15: "The freedom of the Anangu to make decisions concerning their own lives must of course be respected. However, regard must be had to the limited education, disadvantages, and limited financial literacy of the Book-up customers generally, to which I referred earlier. These placed them in a particularly disadvantageous position relative to Mr Kobelt and diminish the significance which can be attached to the voluntariness of their conduct. Accordingly, the Anangu customers' own subjective views are not conclusive of the conscionability of Mr Kobelt's conduct." 11 (2015) 236 FCR 199 at 274 [296]. 12 (2013) 250 CLR 392 at 427 [124]; [2013] HCA 25. 13 (2017) 91 ALJR 1260 at 1272 [38]; 350 ALR 1 at 13; [2017] HCA 49. 14 Thorne v Kennedy (2017) 91 ALJR 1260 at 1272 [38]; 350 ALR 1 at 13. 15 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at Bell The alternative analysis, favoured by the Full Court, is encapsulated by Wigney J's observation that it is not that Mr Kobelt's book-up system took advantage of his Anangu customers' vulnerability but rather that Mr Kobelt, like the proprietors of other establishments in remote communities who provide book-up credit, was fulfilling a demand. The observation takes into account factors that are the subject of challenge in each of ASIC's grounds of appeal: acting with a degree of good faith; absence of undue influence or dishonesty; and the customers' satisfaction with the terms of book-up credit16. As will appear, determinative of the absence of unconscientious advantage obtained by Mr Kobelt from the supply of credit to his Anangu customers under his book-up system. The Full Court did not err in holding that Mr Kobelt's conduct did not contravene s 12CB(1) of the ASIC Act and it follows that the appeal must be dismissed. It is necessary to refer in some detail to the evidence and the primary judge's findings to explain why that is so. the appeal Mr Kobelt's book-up system Mr Kobelt has had limited education and has lived in a remote community for significant parts of his working life. From the mid-1980s, he operated a general store in Mintabie, South Australia, under the name "Nobbys Mintabie General Store" ("Nobbys"). Mintabie is situated in the far north of South Australia, approximately 1,100 km from Adelaide in an area excised by lease to the Government of South Australia from the APY Lands. A range of goods including food, groceries, fuel and second-hand cars was sold at Nobbys. Almost all of Mr Kobelt's customers were Anangu persons who resided predominantly in two remote communities, Mimili and Indulkana, north-west of Mintabie in the APY Lands. These customers were characterised by their poverty and their low levels of literacy and numeracy which, relevantly, meant that they lacked "financial literacy". Mr Kobelt supplied credit to his Anangu customers under a book-up system by which payment for goods was deferred in whole or in part subject to the customer supplying Mr Kobelt with the keycard and PIN linked to the account into which the customer's wages or Centrelink payments were credited. Generally, Mr Kobelt retained possession of the keycard until the debt was repaid, although on occasions Mr Kobelt returned a customer's keycard notwithstanding that the debt had not been repaid. This might happen if the customer was travelling away from the APY Lands. On such occasions, the customer returned the keycard to Nobbys on his or her return. There were two 16 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 Bell other stores in Mintabie and at least one of these stores provided credit to Anangu customers under a book-up scheme that did not materially differ from that provided by Mr Kobelt. Mr Kobelt, or members of his family who assisted in the running of Nobbys, used the keycard and PIN to access the customer's account and to withdraw the whole or nearly the whole of the available funds ("the withdrawal conduct"). The majority of withdrawals were made early in the morning, before or shortly after Nobbys opened, on the day funds were credited to the account. Withdrawals were made promptly to prevent the customer having any practical opportunity to access the monies in the account by internet or telephone banking. Mr Kobelt did not know the amount in a customer's account and the process of withdrawing funds was one of trial and error. There were occasions when funds had been withdrawn in excess of a limitation placed on Mr Kobelt's authority. Customers were not required to complete any form of application to obtain book-up credit and additional credit was available under the book-up system without further formality. The withdrawal of funds from Mr Kobelt's customers' accounts was authorised and was subject to an informal understanding that part of the funds would be applied in reduction of the customer's debt and part was in exchange for the provision of future goods and services. Mr Kobelt applied at least 50 per cent of the funds withdrawn from his customers' accounts to reduce their indebtedness to Nobbys. Mr Kobelt said that the remaining 50 per cent of his customers' funds was available for the customer's use. Mr Kobelt did not apply the customers' "entitlement" to 50 per cent of the funds in a literal way; 50 per cent served Mr Kobelt as a guideline for the maximum amount available to the customer's use ("the book-down"). Mr Kobelt exercised control over the amount of the book-down, limiting his customers to amounts of $100, $150 or $200 to ensure that they would have "something" at the end of the week. Mr Kobelt's discretionary control over his book-up customers extended on occasions to the refusal to allow the customer to buy sweets or chips. The primary judge accepted Mr Kobelt's evidence that he had never refused to supply food to a customer from whose account he had withdrawn all the money. Generally, such customers were limited to the purchase of milk, bread and meat. Anangu customers had to travel a considerable distance to shop at Nobbys. Mr Kobelt issued purchase orders which enabled his book-up customers to purchase goods, or to obtain cash, at other stores. Purchase orders were transmitted by Mr Kobelt to nominated stores and were issued in amounts ranging from $20 to $500. The customer was able to purchase goods, or obtain cash, at the nominated store and Mr Kobelt settled with the store owner. Mr Kobelt charged customers a fee of $5 or $10 for the issue of a purchase order. The fee was less than the fee charged by Australia Post for its express money Bell order service. Mr Kobelt also provided customers with cash advances under the book-up system. At least some customers who were given a cash advance paid a fee for the service. Most of the book-up credit provided by Mr Kobelt to his Anangu customers was made in connection with the sale of second-hand motor vehicles. The sale of these vehicles formed a significant part of Mr Kobelt's business. The vehicles sold at Nobbys often had been driven in excess of 200,000 km and were not subject to any statutory warranty of repair. In some instances, purchasers paid for a vehicle in cash. In these instances, the purchase price was discounted by around $1,000. More commonly, Anangu customers paid a deposit of between $440 and $3,500 and the balance of the purchase price was repaid under the book-up system. Mr Kobelt maintained that he did not impose any credit charge on goods sold to his Anangu customers. The primary judge rejected Mr Kobelt's evidence in this respect in relation to the sale of second-hand motor vehicles. His Honour found that cash-paying customers were able to purchase a Nobbys vehicle at a price around $1,000 less than the stated price. In truth, his Honour found that book-up customers purchasing second-hand vehicles at Nobbys, for an average price of $5,600, were paying an expensive credit charge. His Honour's conclusion that Mr Kobelt's conduct was unconscionable took into account the fact that the credit charge had not been made explicit to his book-up customers17. The evidence did not establish whether car dealers in Alice Springs and Port Augusta, with whom Mr Kobelt compared the prices for his cars, and whom he regarded as his competitors, sold cars to Anangu persons on credit. The majority of Mr Kobelt's Anangu book-up customers did not own assets which could be pledged as security for a loan. The primary judge recognised that it would have been difficult for Mr Kobelt's Anangu customers to obtain loans from commercial lenders. His Honour acknowledged that an advantage of Mr Kobelt's book-up system was that it provided a relatively simple means by which Anangu persons could obtain credit that would not otherwise be available Mr Kobelt knew most of his Anangu customers and he was aware of their financial circumstances. He did not make inquiries about his Anangu customers' capacity to repay the balance of the purchase price of a second-hand car or other 17 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 18 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at Bell consumer good before entering into book-up credit arrangements with the customer. Over a period of ten years, Mr Kobelt had only refused to extend book-up credit to about 12 to 15 customers. He had a total customer base of 600 Anangu persons, of whom about 200 visited his store each week. Mr Kobelt's Anangu customers had the capacity to frustrate their book-up credit contracts by cancelling their keycard or by arranging for their Centrelink payments, or wages, to be credited to a different account. Some customers had done so. In those cases, with one exception, Mr Kobelt had chosen not to pursue any avenues of debt recovery. He appreciated that it was not in his commercial or reputational interest to do so. Mr Kobelt had an unsophisticated approach to many matters, which was manifest in his book-up arrangements. His record-keeping was rudimentary. Such records as he kept of book-up transactions were illegible or only barely legible. Entries were so cramped and chaotic that it was difficult to understand fully the state of the running accounts of the 117 book-up customers at any given time. Customers were not given any record of withdrawals or account statements. There was no evidence that any customer had asked to examine Mr Kobelt's records of book-up transactions. Had such an inquiry been made, the customer would have had considerable difficulty understanding the entries and no means of checking their accuracy. There was no suggestion, however, that Mr Kobelt maintained his records dishonestly, nor was it part of ASIC's system case that the withdrawal of funds from customers' accounts was not authorised. And Mr Kobelt's Anangu customers had a basic understanding of his book-up credit system. The anthropological evidence systems)", observing ASIC adduced evidence from Dr Martin, an anthropologist, who at ASIC's request visited Mimili and Indulkana and interviewed a number of Mr Kobelt's Anangu customers. In his report, Dr Martin explained the "intersection between the distinctive Anangu society and culture of the APY Lands, and the wider Australian society and its culture and institutions (including the legal and financial "varying degrees of incommensurability" between Anangu values and practices and those of the wider Australian society. Dr Martin stated that the Anangu have adapted their values and practices to accommodate those of the market economy through the personalisation of financial transactions, that is, Anangu consumers prefer to conduct financial transactions through the use of brokers, such as storekeepers. The face-to-face contact involved in the supply of book-up credit, as distinct from reliance on paperwork, was perceived by Dr Martin's Anangu interviewees as consistent with Anangu customs. there are that Bell As Dr Martin explained the phenomenon, Anangu customers entrusted Mr Kobelt with their keycards to enable them to exercise "agency" in the sense of the capacity to act and to exercise choice in what was perceived to be the individual's own interests. Several interviewees reported "that they supported book-up in general and were positively disposed to Nobby's Credit Facility in particular". Dr Martin got no sense that any of the individuals whom he interviewed "felt that the terms on which Nobby's provided credit to them were unjust, unfair, or unreasonable". Dr Martin explained that motor vehicles have come to be central to social, ceremonial and economic life among Aboriginal communities in the APY Lands; they provide access to country necessary for hunting and gathering, visiting kin in other communities, increased shopping opportunities away from communities, attending sporting fixtures, attending medical appointments and, importantly, participation in initiation and funerals. Anangu interviewees told Dr Martin that book-up was the only means by which they could purchase a vehicle. Apart from enabling impoverished Anangu customers to acquire second- hand motor vehicles and other consumer goods on credit, the anthropological evidence pointed to book-up credit as having two particular advantages in light of Anangu culture and practices. Dr Martin explained that it is common for the Aboriginal residents of remote communities to spend money as it becomes available without regard to the medium- to long-term consequences of the expenditure (the "boom and bust cycle"). The primary judge acknowledged that the limitation that Mr Kobelt placed on the amount which the customer could expend by way of book-down had a beneficial effect in ameliorating the boom and bust cycle. Dr Martin also explained that an embedded social obligation of the Anangu requires that they share their resources with specific categories of kin ("humbugging" or "demand sharing"). The obligation is a foundational principle of Anangu life: the giver has a responsibility to share and the recipient the right to share, even to the point of demanding a share. The primary judge found that money is the subject of demand sharing and Anangu persons who are believed to have access to money may be importuned to the extent of being bullied and exploited to share it. In this respect his Honour referred to the account of a financial counsellor, Mr Stauner19: "Humbug [is an] ongoing problem in communities across the APY Lands, this is where family members or friends pressure other members of the 19 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at Bell community for cash, food, use of their car or telephone without considering the feelings of the other party. [T]his is also mostly done in the family group where younger members of the family pressure the older members". Mr Stauner had witnessed residents of the APY Lands being subject to immediate demands to share cash withdrawn from an ATM. The Mimili storekeeper also gave evidence of witnessing behaviour of this description. According to the storekeeper the practice was common and was not confined to the kin of the resident making the withdrawal. The primary judge acknowledged that Mr Kobelt's book-up system may confer an incidental benefit on Anangu customers by relieving the pressure of demand sharing. Nonetheless, his Honour considered that any such advantage should not be overstated20. Although all six Anangu witnesses gave evidence of sharing their money with others and of using it to buy goods which were shared with others, none gave evidence of feeling pressured or overborne or of being bullied. Only one witness gave evidence that the desire to avoid demand sharing was the reason for engaging in book-up credit21. Other Anangu witnesses acknowledged that they had felt an obligation to share and that one of the reasons that they liked shopping at Nobbys was that they could do so away from the gaze of others. Nonetheless, his Honour considered that this evidence fell short of a statement that the reason for engaging in book-up credit was to avoid demand sharing. A further reason for discounting the significance of demand sharing as an advantage of the book-up system was the primary judge's view that Mr Kobelt's conduct in depriving his customers of access to their own funds increased the likelihood that the customers themselves would engage in a form of demand sharing with those who still had access to funds22. His Honour noted the availability of financial counselling to Anangu residents of Mimili and Indulkana through the MoneyMob service23. In the circumstances, the finding was that the 20 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 21 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 22 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 23 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at Bell avoidance of improvident spending did not justify the withdrawal conduct under Mr Kobelt's book-up arrangements. Save for two witnesses who had particular grievances, the primary judge found that Mr Kobelt's Anangu customers considered that he had treated them well and they were well-disposed towards him. It was evident that they appreciated the ability to buy food in between their pay days24. His Honour accepted that many of Mr Kobelt's Anangu book-up customers were satisfied with the book-up arrangement. This was evidenced, among other things, by the fact that several customers had entered into book-up credit arrangements with Mr Kobelt on more than one occasion, returning to Nobbys to hand over their keycards and PINs25. The primary judge approached the determination upon an acceptance that "[t]here are undoubtedly features of the Book-up system which several of the Book-up customers find attractive"26 and "[w]hether rightly or wrongly and whether well informed or not, each [Anangu witness] must have considered [book-up credit] appropriate to their needs"27. The primary judge's finding of unconscionability took into account evidence of an occasion when, as the result of the failure of the Commonwealth Bank's computer system, Mr Kobelt had been able to withdraw sums from his customers' accounts which were well in excess of the available balance in those accounts28. While this incident ("the CBA glitch") did not form part of the book- up system, his Honour considered that it was difficult to avoid the conclusion 24 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 25 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 26 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 27 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 28 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at Bell that Mr Kobelt had "on this occasion prey[ed] on the customers with CBA accounts to his own advantage"29. informed the primary The principal consideration which judge's conclusion was that there was no necessity for Mr Kobelt to withdraw the whole of the customer's funds in order to protect Mr Kobelt's legitimate interests30. The primary judge identified a number of alternative means by which Mr Kobelt might have protected his legitimate interests while permitting his Anangu customers to purchase goods from Nobbys on credit. His Honour accepted that these alternative arrangements may not have been available in all cases, or, even if available, may not have been satisfactory in all cases. Nonetheless, they served to indicate that the book-up system operated by Mr Kobelt went well beyond that which was necessary for the protection of his own legitimate interests31. His Honour found that Mr Kobelt acted with "a degree of good faith" in his dealings with his Anangu customers. However, this did not mean that Mr Kobelt acted in an "altruistic or disinterested way"32. His Honour observed that Mr Kobelt was at all times pursuing his own interests, and that he had done so even when the pursuit of those interests was to the detriment of his customers33. While there were aspects of Mr Kobelt's conduct which could be regarded as benevolent, those aspects were, in his Honour's estimate, incidents of arrangements that he put in place for the benefit of his business. His Honour observed that the book-up system operated to tie customers to Nobbys, which conferred on Mr Kobelt a significant commercial advantage34. His Honour characterised the tying effect of Mr Kobelt's book-up credit as 29 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 30 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 31 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 32 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 33 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 34 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at Bell constituting a form of exploitation and predation35. While the supply of credit under Mr Kobelt's book-up system could be seen as a benevolent form of paternalism, it prolonged his Anangu customers' dependence on his exercise of discretionary control over their lives36. The Full Court In overturning the primary judge's finding of unconscionability, the Full Court took into account that Mr Kobelt's book-up system was not out of the ordinary in relation to the supply of credit to Indigenous communities: at least one of the two other stores in Mintabie supplied book-up credit to Anangu customers. Their Honours considered that the advantages of the book-up system in alleviating demand sharing and the effects of the boom and bust cycle, while difficult to weigh and quantify, were "undoubtedly present"37. They also considered that Mr Kobelt did not exercise any form of undue influence over his book-up customers or make dishonest use of their keycards, and that while his record-keeping was chaotic, there was no suggestion that his records were maintained dishonestly38. Significantly, despite the customers' low levels of financial literacy, their Honours noted the finding that the customers understood the basic elements of the book-up system including the withdrawal conduct and that they voluntarily entered into book-up credit contracts39. Their Honours found that there was no basis for the primary judge's finding that Mr Kobelt engaged in predatory or exploitative conduct in connection with the supply of credit under the book-up system40. 35 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 36 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 37 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 735 [262] per Besanko and Gilmour JJ, and see Wigney J's concurring judgment 38 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 735 [263]-[264] per Besanko and Gilmour JJ. 39 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 735 [265]-[266] per Besanko and Gilmour JJ. 40 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 735-736 [267]-[268] per Besanko and Gilmour JJ. Bell The conduct of the appeal The conclusion that a supplier of a financial service has engaged in conduct that contravenes the statutory norm of conscience fixed by s 12CB(1) of the ASIC Act is an evaluative judgment. Nonetheless, it is a judgment that is either right or wrong. It was the duty of the Full Court to conduct a "real review" of the evidence and the primary judge's reasons for judgment41. Their Honours were unanimous in concluding that the primary judge erred in finding that Mr Kobelt's conduct in the supply of credit under his book-up system was unconscionable. That conclusion is challenged on three grounds. Before turning to those grounds, there should be reference to three features of the proceedings that are not the subject of ASIC's appeal. The first feature is that ASIC's case, below and in this Court, is that unconscionable conduct involves "the existence of a special [dis]advantage of which someone takes ... [u]nconscientious advantage"42 and that Mr Kobelt's conduct in supplying credit under his book-up system took unconscientious advantage of the vulnerability of his Anangu customers. In the circumstances, the appeal does not provide the occasion to consider any suggestion that statutory unconscionability no longer requires consideration of (i) special disadvantage, or (ii) any taking advantage of that special disadvantage43. Moreover, ASIC made no submission that courts have adopted an unduly restrictive interpretation of the term "unconscionable" contrary to the evident intention of the legislature. The Court was not taken to the legislative history or other extrinsic materials to make good such a suggestion. That is, perhaps, unsurprising since, if the legislative intention were to fix a standard for the supply of financial services in trade or commerce lower than that of conduct that answers the description of being against conscience, it is to be expected that the draftsperson would have employed another term. Among other values, that of certainty in the conduct of commercial transactions is reflected in the legislative choice to fix the standard of conscience in s 12CB(1)44. Any consideration of "lowering the bar" from that standard 41 Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 at 686 [43]; 331 ALR 550 at 558; [2016] HCA 22, citing Fox v Percy (2003) 214 CLR 118 at 126-127 [25] per Gleeson CJ, Gummow and Kirby JJ; [2003] HCA 22. 42 [2018] HCATrans 252 at 1940-1945. 43 [295] per Edelman J. 44 Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 at 274-275 [296]-[298] per Allsop CJ. Bell should only be undertaken in a case in which the proposition is squarely raised and argued. The second feature of the proceedings concerns the significance of the finding that the credit provided by Mr Kobelt on the purchase of second-hand vehicles was of a "very expensive kind"45. ASIC's pleaded case in connection with the credit charge imposed by Mr Kobelt on the purchase of second-hand motor vehicles was with respect to the alleged contravention of s 29(1) of the NCCP Act. Mr Kobelt's appeal against the primary judge's orders respecting the contravention of s 29(1) was dismissed and special leave to cross-appeal from that dismissal was refused. ASIC did not particularise the credit charge on the purchase of second- hand vehicles in its pleaded case of unconscionable conduct. Nonetheless, Besanko and Gilmour JJ considered that the amount of the credit charge had been an issue at the trial. The conduct of Mr Kobelt's defence had made it one: Mr Kobelt sought to establish that the terms on which he offered credit were better than the terms which his customers could obtain from traditional financial institutions46. On the hearing in this Court, ASIC acknowledged that the primary judge's finding was that the credit charge on the purchase of a motor vehicle was objectively expensive, not that it was more expensive than credit available from another credit provider. ASIC accepted that, divorced from the fact that it was undisclosed, the finding of the expensive credit charge had "limited" significance to its unconscionability case. As Besanko and Gilmour JJ observed, the lack of disclosure of the high credit charge was not the gravamen of ASIC's unconscionable conduct case. And as their Honours also observed, "[t]here may be an argument here that it is also relevant that [the Anangu customers] were receiving the motor vehicles at or below market value"47. ASIC's acknowledgment of the limited significance of the expensive credit charge on the purchase of second-hand vehicles to its system case of unconscionable conduct was appropriate. The system case was concerned with the provision of credit under the book-up system. Credit under the book-up system was available for the purchase of second-hand vehicles, food, fuel, 45 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 46 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 47 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 Bell general groceries and other services48. The essential features of the book-up system which were said to make the provision of credit unconscionable were the withdrawal conduct and the tendency of the withdrawal conduct to tie customers to dependence on Nobbys. The third feature of the proceedings is that the primary judge made no findings with respect to Mr Kobelt's conduct in relation to the supply of credit to the four customers identified as A, B, C and D, who were the subjects of the case which ASIC did not press49. The grounds of appeal Against this background, we now turn to the grounds on which the appeal is brought: The Full Court failed to give "due weight" to the special disadvantage or vulnerability of Mr Kobelt's Anangu customers and gave "undue or disproportionate weight" to the customers' basic understanding of the book-up system, voluntary entry into the book-up contracts, ability to terminate the contracts (albeit by acting in breach of them), and "agency" or freedom of contract. The Full Court erred in overturning the primary judge's findings that Mr Kobelt engaged in predation or exploitation; in failing to give "any or due weight" to evidence of Mr Kobelt's "irregular conduct" which, while not part of the "system", was indicative of "undue or predation disproportionate weight" to the finding that Mr Kobelt acted "with 'a degree of good faith' and not dishonestly or fraudulently". exploitation; in giving and and The Full Court gave "undue or disproportionate weight" to the incidental benefits or advantages of the book-up system arising from historical and cultural norms and practices of the Anangu community, and did not attach "any or due weight" to the primary judge's findings that these historical and cultural norms and practices contributed to or demonstrated the special disadvantage of some of Mr Kobelt's customers. 48 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 49 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at Bell The legal error that is said to underlie ASIC's first ground is the Full Court's asserted failure to distinguish the principles of undue influence from those of unconscionability under the general law. The argument directs attention to their differing focus: undue influence being concerned with the quality of the consent of the weaker party and unconscionability being concerned with the conduct of the stronger party in taking advantage of the vulnerability of the weaker party. ASIC submits that, while the exertion of undue influence bears on the determination of unconscionability, the absence of undue influence is entirely neutral and the Full Court was wrong to take it into account. ASIC refers to Australian Competition and Consumer Commission v Lux Distributors Pty Ltd50 as illustrative of the correct approach. The Full Court of the Federal Court of Australia found that Lux Distributors Pty Ltd ("Lux") engaged in conduct in connection with promotion and supply of vacuum cleaners to three elderly customers that was, in all the circumstances, unconscionable contrary to s 51AB of the Trade Practices Act 1974 (Cth) and s 21 of the Australian Consumer Law. This was so notwithstanding the customers' voluntary entry into the sale contracts. The normative standard applied in Lux was that of "honest and fair conduct free of deception"51. Notably, Lux's sales strategy employed a deceptive ruse to gain access to the customer's home and, once entry was gained, a selling technique that was designed to create a sense of Recognition that the supplier of a financial service may engage in conduct that is unconscionable, notwithstanding the recipient's voluntary entry into the contract for the supply of the service53, does not make the absence of the exertion of undue influence an irrelevant consideration. Section 12CC(1)(d) invites the court to consider "whether any undue influence or pressure was exerted on, or any unfair tactics were used against" the recipient of the financial service (emphasis added) as one of the factors to be weighed in determining whether, in all the circumstances, the supplier's conduct is unconscionable. The absence of the exertion of undue influence, pressure or unfair tactics bears on the assessment of whether the commercial advantage obtained by the supplier in connection with the supply of the financial service is an unconscientious advantage. 50 (2013) ATPR ¶42-447. 51 Australian Competition and Consumer Commission v Lux Distributors Pty Ltd (2013) ATPR ¶42-447 at 43,467 [41]. 52 Australian Competition and Consumer Commission v Lux Distributors Pty Ltd (2013) ATPR ¶42-447 at 43,465 [27], 43,467 [39], 43,468 [44]. 53 Thorne v Kennedy (2017) 91 ALJR 1260 at 1272 [40]; 350 ALR 1 at 14. Bell For the same reasons, ASIC's challenge in its second ground to the weight given by the Full Court to the finding that Mr Kobelt did not act dishonestly must be rejected. ASIC argues that, to the extent that notions of moral tainting or obloquy54 "suggest[] a need for dishonesty or something more than the taking advantage of the special disadvantage" of the recipient, they are unhelpful in applying the statutory standard of unconscionability in the ASIC Act and cognate legislation. The submission does not go anywhere. It may be accepted that conduct in the supply of a financial service may be unconscionable in circumstances in which the supplier's conduct does not involve dishonesty. This is not to say that the absence of dishonesty, or other moral taint, is not a material consideration in determining whether, objectively, the supplier's conduct involves such a departure from accepted community standards in the supply of the financial service as to warrant the characterisation that it is unconscionable55. The Full Court made clear that it approached the determination upon a view that consideration of moral obloquy had a role to play but was not a substitute for the statutory words56. Their Honours correctly took into account the findings that Mr Kobelt acted with a degree of good faith and not dishonestly as among the circumstances to which it was necessary to have regard in determining whether his conduct fell below the statutory norm of conscience. On the hearing, ASIC did not press that part of its second ground that contends that the Full Court erred in overturning the primary judge's findings of exploitation and predation. The argument now put is that a supplier may fall below the standard of conscionability fixed by s 12CB(1) without engaging in predatory or exploitative conduct. The primary judge's findings in these respects are said to "really … mean nothing much more than taking advantage of the disadvantage". There is no warrant for treating the primary judge's reasons in these respects as mere surplusage. They were findings which informed his Honour's conclusion that Mr Kobelt took unconscientious advantage of the vulnerability of his Anangu customers and were consistent with what had been said in Kakavas and Thorne v Kennedy, referred to earlier in these reasons. 54 Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 at 583 [121], 584 [124] per Spigelman CJ; Australian Competition and Consumer Commission v Lux Distributors Pty Ltd (2013) ATPR ¶42-447 at 43,467 [41], 43,470 [61] per Allsop CJ, Jacobson and Gordon JJ. 55 Ipstar Australia Pty Ltd v APS Satellite Pty Ltd (2018) 356 ALR 440 at 477 [195] 56 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 724 [193] per Besanko and Gilmour JJ, 741 [296] per Wigney J. Bell ASIC's central submission is that the Full Court failed to take into account that conduct may be unconscionable if the innocent party is subject to a "special disadvantage 'which seriously affects the ability … to make a judgment as to [the innocent party's] own best interests'". The submission is developed in support of the third ground of appeal and focuses on Wigney J's analysis. In ASIC's submission, his Honour was wrong to approach the determination upon a view that "[w]hat the wider Australian society and its culture and institutions might regard as disadvantageous and unfair might be regarded by an Anangu person as in fact advantageous and reasonable"57. The vice in the conclusion, on ASIC's argument, is that it fails to recognise that the Anangu customers' special disadvantage seriously affected their ability to make a judgment as to their own best interests58. The Anangu customers' lack of financial literacy and choice to enter into book-up credit with Mr Kobelt, in ASIC's submission, result in the maintenance of a system that would be unacceptable in mainstream Australian society. The submission assumes that, if Mr Kobelt's Anangu customers had not been wanting in financial literacy, they would not have chosen to obtain credit under the book-up system. Implicit in Besanko and Gilmour JJ's analysis, and explicit in Wigney J's analysis, is that the evidence does not support that conclusion. According to Dr Martin, it was clear "that there is widespread use of book-up, that there is support for this amongst many" members of the community, and: "that book-up is seen by many Anangu as enabling them to access cash, food and other necessities when they are in the bust segment of the boom and bust cycle, or away from their home community, and also to circumvent the difficulties in saving for larger capital expenditures on valued consumer goods (most particularly motor vehicles)". Book-up credit provided Mr Kobelt's customers with the ability to purchase goods, including motor vehicles, notwithstanding their low incomes and lack of assets with which to secure a loan. While the primary judge canvassed a number of alternative ways in which Anangu customers might have obtained credit, his Honour did not find that the alternatives would serve in all cases. Not 57 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 58 Thorne v Kennedy (2017) 91 ALJR 1260 at 1272 [38]; 350 ALR 1 at 13, citing Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462; [1983] HCA 14. Bell only were alternative forms of credit not necessarily available but, as Wigney J noted, some of the suggested alternatives might not have suited the Anangu. They may have preferred to enter into a book-up contract because it did not require the customer to deal with bureaucracy or to fill out paperwork and because they liked to deal with Mr Kobelt as a trusted broker59. It is a large submission that the provision of book-up credit on terms which suited Mr Kobelt's adult Anangu customers and which enabled them to purchase a consumer good which they valued highly is to be characterised as objectively against their interests. The Full Court's finding was that book-up credit suited Mr Kobelt's Anangu customers for reasons that stemmed from cultural practices and norms and not from their position of special disadvantage. ASIC's challenge to the weight that the Full Court gave to the advantages of book-up credit is principally directed to the evidence of demand sharing. ASIC embraces the primary judge's view that this advantage should not be overstated. The circumstance that only one of the six Anangu witnesses identified the avoidance of demand sharing as a reason for entering into book-up credit arrangements is not to deny that book-up credit was supported by Mr Kobelt's Anangu customers because, among other matters, it relieved them of the pressure of demand sharing. Dr Martin commented on the reluctance of his Anangu interviewees to disclose personal views about the "institution" of book-up. He considered it reasonable to infer that within the "Anangu polity" a consensual public account of book-up was to be accorded primacy rather than individual views. It was Dr Martin's opinion that60: "By leaving their keycards with the storekeeper, Aboriginal people can avoid the all-pervasive 'humbugging' for cash from relations, particularly on those days when wages or pensions are known to be deposited electronically into accounts, and they may also accumulate savings." The opinion is in line with the Renouf report, which also identified the avoidance of demand sharing as a benefit of book-up credit. It was open to the Full Court to place weight on the avoidance of demand sharing, together with ameliorating the effects of the boom and bust cycle of expenditure, as advantages 59 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 60 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 Bell of book-up credit which were not the product of the Anangu customers' special disadvantage. While, as the Full Court acknowledged, the CBA glitch and some instances of other irregular conduct may not have reflected well on Mr Kobelt, their Honours were right to put these instances to one side in considering whether Mr Kobelt's conduct in supplying credit under his book-up system contravened s 12CB(1). Stripped of the findings of predatory and exploitative conduct, ASIC's case relies upon the primary judge's assessment that Mr Kobelt's conduct in withdrawing all of the funds in book-up customers' accounts involved the imposition of a condition that was not reasonably necessary for the protection of his legitimate interests. The primary judge acknowledged that it suited some customers to have Mr Kobelt take the whole of the available balance from their accounts, that some customers may have requested him to do so, that it may have helped customers to deal with humbugging, and that it may have reduced customers' transaction fees. However, his Honour observed that none of these bore on the reasonable necessity to withdraw the funds for the protection of Mr Kobelt's own interests. Section 12CC(1)(b) invites the court to have regard to: "whether, as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier". The primary judge's finding was that61: "I am satisfied, however, that [alternative systems] serve to indicate that Mr Kobelt's requirement that he obtain possession of customers' key cards and PINs and that he be permitted (absent a contrary instruction from a customer) to withdraw the whole of the available balance in the customer's account from time to time, went well beyond what was reasonably necessary for the protection of his own legitimate interests." (emphasis added) The finding was not that Anangu customers were required, as a result of Mr Kobelt's conduct, to comply with a condition that Mr Kobelt withdraw the whole of the available balance in the customer's account. The finding was that, under Mr Kobelt's book-up system, credit was supplied on terms which included authorisation to withdraw the whole of the available balance in the customer's 61 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at Bell account unless the customer placed a limit on the authorisation. In any event, the conclusion of unconscionability requires consideration of the supplier's conduct in all of the circumstances62. Again, the finding that it suited many of his Anangu customers for Mr Kobelt to withdraw all of their funds, for reasons unconnected with the customers' want of financial literacy, bears directly on whether his conduct in supplying book-up credit contravened the statutory norm. Mr Kobelt was not required to act in an altruistic or disinterested way in his dealings with his customers. Nor was Mr Kobelt required to devise an alternative, superior form of book-up credit. The statutory proscription is on engaging in unconscionable conduct. The difficulty with ASIC's system case of statutory unconscionability lies in identifying any advantage that Mr Kobelt obtained from the supply of book-up credit that can fairly be said to be against conscience. The only advantage that the primary judge identified was that book-up credit tied Mr Kobelt's customers to dependence on Nobbys. His Honour suggested that had the book-up system not created this dependence, Mr Kobelt's Anangu customers might well have chosen to shop at community stores in the APY Lands or in Marla. Even if true, this would not support a conclusion that the supply of credit on Mr Kobelt's book-up terms took unconscientious advantage of his Anangu customers' vulnerability. And, as Wigney J noted, Dr Martin's evidence was that Anangu residents of Mimili and Indulkana viewed shopping at Mintabie as an exercise of "agency" because there was a wider choice available at the Mintabie stores, prices were cheaper and travel was not viewed as a disincentive for most Anangu. Indeed, travel could be seen as advantageous because it entailed visiting "country" and was a "highly social occasion". There was no evidence that Mr Kobelt's customers considered that they had been exploited because they had had to return to Nobbys. Contrary to the tenor of ASIC's submission, the Full Court's conclusion that Mr Kobelt's conduct was not unconscionable does not posit a different, lower standard of conscionable conduct in the supply of credit to Anangu consumers than applies to the supply of credit to consumers in mainstream Australian society. It is a conclusion that takes into account, correctly, all of the circumstances63 including the evidence of the cultural norms and practices of the Anangu residents of the APY Lands. Acceptance of this evidence is against the 62 Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 at 586 [185], 587 [188] per Gageler J, 620 [294] per Keane J; [2016] HCA 28. 63 ASIC Act, s 12CB(1). Bell premise of ASIC's central submission, that the supply of book-up credit was objectively contrary to the interests of Mr Kobelt's Anangu customers. The basic elements of Mr Kobelt's book-up system were understood by Mr Kobelt's Anangu customers, and those who chose to enter into book-up credit contracts with him appear to have done so because it enabled them to purchase goods which they valued and which otherwise they may not have been able to acquire. The terms on which book-up credit was supplied were perceived by the Anangu customers to be appropriate. This perception was not the product of the Anangu customers' lack of financial literacy: it reflected aspects of Anangu culture that are not found in mainstream Australian society. Book-up credit has a long history in rural and remote Indigenous communities. In this context, Mr Kobelt's supply of book-up credit was not out of the ordinary. No feature of Mr Kobelt's conduct in the supply of book-up credit to his Anangu customers exploited or otherwise took advantage of the customer's lack of education and financial acumen. While Mr Kobelt's book-up credit system was open to abuse, Mr Kobelt did not abuse it. In the circumstances, the Full Court was right to hold that Mr Kobelt's conduct in connection with the supply of credit to his Anangu customers was not unconscionable. Order For these reasons, there should be the following order: Appeal dismissed with costs. "Unconscionable" is an obscure English word which centuries of use by courts administering equity have transformed into a legal term of art. In Australia, the central concern of a court administering equity in identifying conduct as unconscionable has long been understood to be to relieve against a stronger party to a transaction exploiting some special disadvantage which has operated to impair the ability of a weaker party to form a judgment as to his or her interests64. Section 12CA of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act") gives statutory expression to that equitable conception of unconscionable conduct. The section's prohibition against engaging in conduct in relation to financial services that is "unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories" operates to impose an additional statutory sanction on conduct that is unconscionable in equity65. Suggestions that its reference to conduct that is unconscionable within the meaning of the unwritten law imports some more expansive and less precise denotation66 are contradicted by extrinsic material explaining the precise choice of statutory language67 and have been properly refuted68. 64 Blomley v Ryan (1956) 99 CLR 362 at 392, 405; [1956] HCA 81; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462; [1983] HCA 14; Bridgewater v Leahy (1998) 194 CLR 457 at 470 [39]-[40], 478-479 [74]-[76]; [1998] HCA 66; Thorne v Kennedy (2017) 91 ALJR 1260 at 1272 [38]; 350 ALR 1 at 13; [2017] HCA 49. 65 See Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 62 [5]-[6], 71-72 [40], 73-74 [44]-[46]; [2003] HCA 18; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 397 [2]; [2013] HCA 25; Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 66 eg, Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2002) 117 FCR 301 at 316-319 [43]-[50]. 67 Australia, House of Representatives, Trade Practices Legislation Amendment Bill [41]-[44]; Australia, House of 1992, Explanatory Memorandum at 8-9 Representatives, Parliamentary Debates (Hansard), 3 November 1992 at 2408. 68 Hampton v BHP Billiton Minerals Pty Ltd [No 2] [2012] WASC 285 at [190]; Razdan v Westpac Banking Corporation [2014] NSWCA 126 at [150], citing GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd (2001) 117 FCR 23 at Section 12CB of the ASIC Act does something more. The section's prohibition against engaging in conduct in connection with the supply or possible supply of financial services "that is, in all the circumstances, unconscionable" is expressed to be "not limited by the unwritten law of the States and Territories relating to unconscionable conduct"69. Those words make clear that the statutory conception of unconscionable conduct is unconfined to conduct that is remediable on that basis by a court exercising jurisdiction in equity. Furthermore, determination by a court exercising jurisdiction in a matter arising under the section of whether conduct is, in all the circumstances, unconscionable is required by s 12CC to be informed by the numerous considerations specified in that section, each of which has the potential to bear positively or negatively on the characterisation of conduct as conduct that is or is not unconscionable, and each of which must be taken into account if and to the extent that it is applicable in all the circumstances70. taking Exactly what s 12CB does might be seen in different ways. The section might, on the one hand, be seen to confer statutory authority on a court exercising jurisdiction in a matter arising under it to develop the equitable conception of unconscionable conduct into account a range of considerations that are broader than those traditionally taken into account by courts administering equity and that include the considerations specifically identified in s 12CC. The section might, on the other hand, be seen to prescribe a normative standard of conduct, which standard a court exercising jurisdiction in a matter arising under it is required to recognise and to administer having regard to considerations which include those identified in s 12CC. Both perspectives on the operation of the section can be found, sometimes intertwined, in the case law71. Examination of the legislative history and pre-history of s 12CB, much of which Edelman J helpfully refers to in his reasons for judgment, yields no real indication of a legislative intention to adopt one view in preference to the other. The difference between the perspectives is diminished when it is recognised that the Commonwealth Parliament can be taken to have understood that "[a]ny standard or criterion will have a penumbra of uncertainty under which the deciding authority will have room to manoeuvre – an area of choice and of discretion; an area where some aspect of policy will inevitably intrude", that "[t]he degree of vagueness or discretion will be affected by what is conceived to 69 Section 12CB(1), (4)(a) of the ASIC Act. 70 Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 at 587 [188]-[189], 620 [294]; [2016] HCA 28. 71 eg, Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132 at 140 [30]; Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 at 266-267 [262]-[263]. be the object of the law and by judicial techniques and precedents" and that, "[g]iven a broad standard, the technique of judicial interpretation is to give it content and more detailed meaning on a case to case basis"72. The distinction between a judicially developed standard and a statutory standard developed judicially can in practice be a fine one. The difference in perspective nevertheless bears on how a court exercising jurisdiction in a matter arising under s 12CB goes about determining whether impugned conduct is, in all the circumstances, unconscionable. For reasons which will become apparent, I consider that identification of the correct perspective bears materially on the resolution of this appeal. The correct perspective, in my opinion, is that unambiguously adopted by the Full Court of the Federal Court in relation to materially identical provisions73 in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd74. The correct perspective is that s 12CB operates to prescribe a normative standard of conduct which the section itself marks out and makes applicable in connection with the supply or possible supply of financial services. The function of a court exercising jurisdiction in a matter arising under the section is to recognise and administer that normative standard of conduct. The court needs to administer that standard in the totality of the circumstances taking account of each of the considerations identified in s 12CC if and to the extent that those considerations are applicable in the circumstances. The Commonwealth Parliament's appropriation the terminology of courts administering equity in the expression of the normative standard which the section prescribes serves to signify the gravity of the conduct necessary to be found by a court in order to be satisfied of a breach of that standard. "Unconscionability", as has been long and well understood, "is not a slight matter, and behaviour is only unconscionable where there is some real and substantial ground based on conscience for preventing a person from relying on what are, in terms of the general law, that person's legal rights"75. in s 12CB of 72 Thomas v Mowbray (2007) 233 CLR 307 at 351 [91]; [2007] HCA 33, quoting Zines, The High Court and the Constitution, 4th ed (1997) at 195. 73 Section 51AB of the Trade Practices Act 1974 (Cth) and s 21 of the Australian Consumer Law, Sch 2 to the Competition and Consumer Act 2010 (Cth). 74 (2013) ATPR ¶42-447 at 43,463 [23], 43,467 [41]. 75 Burt v Australia & New Zealand Banking Group Ltd (1994) ATPR (Digest) Parliament's appropriation of that terminology in s 12CB shorn of the constraints of the unwritten law is indicative of an intention that conduct of the requisite gravity need not be found only in a fact-pattern which fits within the equitable paradigm of a stronger party to a transaction exploiting some special disadvantage which operates to impair the ability of a weaker party to form a judgment as to his or her best interests. The requirement to administer the standard in the totality of the circumstances taking account of the considerations identified in s 12CC is a further indication that the standard has potential application within a range of factual scenarios not all of which would be recognised in equity as giving rise to relief on the basis of unconscionable conduct. For example, whereas undue influence constitutes a distinct (albeit often overlapping) ground for relief in equity76, under s 12CC(1)(d) the presence or absence of undue influence is one, and only one, of the considerations to be taken into account in determining whether conduct is or is not unconscionable. Important to the resolution of this appeal, in my opinion, is that what Parliament's appropriation of the terminology of equity in the expression of the normative standard in s 12CB does not do is to authorise a court exercising jurisdiction in a matter arising under that section to dilute the gravity of the equitable conception of unconscionable conduct so as to produce a form of equity-lite. The appropriation of the terminology of equity does not allow a court to adopt a process of reasoning which starts with the equitable conception of unconscionable conduct, involving exploitation of a special disadvantage, and then uses considerations identified in s 12CC to water down the court's assessment of what amounts to a special disadvantage or to allow the court to arrive more easily at an assessment that conduct amounts to exploitation. In Paciocco v Australia & New Zealand Banking Group Ltd, I referred to unconscionable conduct within the meaning of s 12CB as requiring "a 'high level of moral obloquy' on the part of the person said to have acted unconscionably"77. "Moral obloquy" is arcane terminology. Without unpacking what a high level that arcane of moral obloquy means in a contemporary context, using terminology does nothing to elucidate the normative standard embedded in the section. The terminology also has the potential to be misleading to the extent that it might be taken to suggest a requirement for conscious wrongdoing. My 76 Thorne v Kennedy (2017) 91 ALJR 1260 at 1272 [40]; 350 ALR 1 at 14. 77 (2016) 258 CLR 525 at 587 [188], quoting Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 at 583 [121]. adoption of it has been criticised judicially78 and academically79. The criticism is justified. I regret having mentioned it. What I meant to convey by the reference was that conduct proscribed by the section as unconscionable is conduct that is so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience. To that view of the statutory standard I adhere. The judgment required of a court exercising jurisdiction in a matter arising under s 12CB is a heavy one. For a court to pronounce conduct unconscionable is for the court to denounce that conduct as offensive to a conscience informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within contemporary Australian society. Those values are not entirely confined to, or entirely removed from, the values which historically informed courts administering equity in the development of the unwritten law of unconscionable conduct80. They include respect for the dignity and autonomy and equality of individuals. They include respect for the cultural diversity of communities. The challenge in the present appeal is to bring such a judgment to bear on a system of conduct which occurred consensually, over a considerable period without more than occasional complaint or expression of dissatisfaction81, and at what is described in the anthropological evidence as an "intersection" between the distinctive culture of the Anangu people of the Anangu Pitjantjatjara Yankunytjatjara Lands and the culture of wider Australian society. "An intersection of systems", as was put in that evidence, "necessarily raises the possibility of varying degrees of the values, understandings and practices of those systems in that intersection, as well as varying forms of accommodation and adaptation by the Aboriginal people concerned"82. incommensurability of 78 eg, Ipstar Australia Pty Ltd v APS Satellite Pty Ltd (2018) 356 ALR 440 at 477 79 eg, Baxt, "Continuing 'Furore' Over Moral Obloquy and Unconscionability" (2017) 91 Australian Law Journal 809 at 809-810. 80 Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 at 81 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 82 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 The difficulty of that challenge was present in my mind at the time of participating in the grant of special leave to appeal from the judgment of the Full Court of the Federal Court. I considered it then to be a factor which weighed against special leave to appeal being granted. Hard cases test and sometimes strain legal principle. They do not always lend themselves to elucidation of legal principle in a way that can be predicted to provide precedential guidance of the systemic usefulness generally to be expected from a decision of an ultimate court of appeal. Special leave to appeal having been granted, it is unsatisfactory but unsurprising to me that the Court should find itself closely divided on the resolution of the appeal. Insofar as they formed part of the "unconscionable system" case pursued by the Australian Securities and Investments Commission ("ASIC") at trial, the details of the "book-up" system provided by Mr Kobelt to Anangu customers, largely from Mimili and Indulkana, at his general store in Mintabie are set out in the reasons for judgment of Kiefel CJ and Bell J. In evaluating Mr Kobelt's book-up system against the standard which s 12CB prescribes for all conduct occurring anywhere in Australia in connection with the supply or possible supply of financial services, it can immediately be accepted that there are applicable considerations amongst those identified in s 12CC which point in both directions. that Pointing towards a conclusion the book-up system was unconscionable are that Mr Kobelt's bargaining power was stronger than that of his Anangu customers83, that he treated his Anangu customers differently from his non-indigenous customers84, and that there were other means by which he might have protected his legitimate interests as a seller of motor vehicles and other goods on credit to his Anangu customers which were less restrictive to his Anangu customers' freedom of action85. Leaving aside theoretical alternatives to a system of book-up such as arranging for periodic repayments of indebtedness to be made from customers' accounts by way of direct debit, it can in particular be accepted that protection of his own interests as a creditor created no practical need for Mr Kobelt to withdraw all, or almost all, of the funds paid into his Anangu customers' accounts immediately upon those funds being paid in given his understanding that 50 per cent of the amounts paid into his Anangu 83 Section 12CC(1)(a) of the ASIC Act. See Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [507]-[515]. 84 Section 12CC(1)(f) of the ASIC Act. See Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [552]-[553]. 85 Section 12CC(1)(b) of the ASIC Act. See Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [517]-[538], [616]. customers' accounts would remain available for their own use86. His informal method of bookkeeping can be accepted to be one which would have made it difficult for his Anangu customers to keep track of their current state of indebtedness had they been minded to do so87. To the considerations pointing towards a conclusion that the book-up system was unconscionable can be added that the credit charge for the purchase of motor vehicles that Mr Kobelt imposed was found by the primary judge to have been very expensive when compared with commercial lending rates for unsecured loans88 (although ASIC did not plead as part of its unconscionable system case, and the primary judge did not find, that the Anangu customers could have acquired identical or equivalent credit from another provider at a lesser charge89) and that the same credit charge was found by the primary judge not to have been disclosed by Mr Kobelt90 (although ASIC did not plead as part of its unconscionable system case, and the primary judge did not find, that the non- disclosure was unreasonable91). Considerations identified in s 12CC which point against a conclusion that the book-up system was unconscionable include the lack of any contention on the part of ASIC that Mr Kobelt exerted undue influence or undue pressure over his Anangu customers92. They include that, although Mr Kobelt did not act altruistically, he did not act systematically in bad faith93. Despite being rigid in requiring his Anangu customers to provide their debit cards and personal identification numbers, he was generally willing to negotiate the amount to be 86 See Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 87 Section 12CC(1)(c) of the ASIC Act. See Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [541]-[546]. 88 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 89 cf s 12CC(1)(e) of the ASIC Act. 90 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 91 cf s 12CC(1)(i) of the ASIC Act. 92 Section 12CC(1)(d) of the ASIC Act. See Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [547]. 93 Section 12CC(1)(l) of the ASIC Act. See Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [557]-[559]. withdrawn from an individual customer's account and to return a customer's card temporarily should the customer wish to travel94. The competing considerations having been noted, it should also be noted that, quite properly, neither ASIC nor Mr Kobelt has ever contended that the judgment required to be made for the purpose of s 12CB can be arrived at through a mere balancing of the applicable considerations identified in s 12CC. Throughout the course of the litigation, ASIC has consistently placed weight on the impoverishment and lack of financial sophistication of the Anangu people. Mr Kobelt has consistently placed weight on his own lack of sophistication, on the simplicity of his book-up system, on the fact that his book-up system met a demand on the part of the Anangu people, and on the fact that a similar book-up system was provided by at least one of the two other general stores in Mintabie. A significant difference between the parties has been as to whether it is meaningful to say that Mr Kobelt's Anangu customers exercised freedom of choice in continuing to deal with him and, if so, as to the weight to be accorded to their freedom of choice. A central component of the unconscionable system case as pleaded by ASIC against Mr Kobelt was that the system left his Anangu customers with little or no funds in their bank accounts at the beginning of each payment cycle with the consequence that the customers had no option but to ask him for additional credit, which he provided at his discretion on condition that they increase their existing indebtedness to him, thereby "creating and continuing a relationship of dependency between the customers and Mr Kobelt". The pleaded system, in short, was a system which had the practical effect of locking Mr Kobelt's Anangu customers into a cycle of perpetual indebtedness to him. Had ASIC's pleaded case been made out in those stark terms at trial, there would have been little difficulty concluding that the book-up system was unconscionable. There would have been no need to attempt to explain the operation of the system in terms of Mr Kobelt taking advantage of his Anangu customers' disadvantage. The seriousness of the consequences for those customers would have been enough to take Mr Kobelt's conduct in implementing the system so far outside societal norms of acceptable commercial behaviour as to warrant its condemnation as offensive to conscience. The primary judge went a long way towards accepting ASIC's pleaded case in finding the book-up system to have had the effect that his Anangu customers became "tied" to Mr Kobelt for the provision of necessities of life and 94 Section 12CC(1)(j) of the ASIC Act. See Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [454], [554]-[556]. in going on to characterise Mr Kobelt's conduct in administering the system as "a form of exploitation" primarily for that reason95. Whilst not contradicting the primary judge's finding that there was some tying effect, the Full Court appropriately pointed out that the strength of the tying effect had to be evaluated in the context of other findings96. Anangu customers did, on occasion, pay off their debts to Mr Kobelt and bring their relationship to an end97. For so long as they maintained their relationship with Mr Kobelt, they were not restricted to buying only from him in that they were generally able to obtain purchase orders and cash advances from him to enable them to purchase goods at other stores including in Mintabie although not in Mimili and Indulkana98. More importantly, Anangu customers could, and on occasion did, sever their relationship with Mr Kobelt by such simple expedients as not returning their debit cards after travelling, cancelling their debit cards, or redirecting their periodic payments into other accounts99. There is little point inquiring whether adoption of any of those expedients might have placed a customer in breach of a contractual commitment to Mr Kobelt. The system did not readily lend itself to analysis in terms of strict contractual rights. Mr Kobelt did not consider it in his commercial interests to attempt to enforce contractual rights against his Anangu customers100 and there is no suggestion that his Anangu customers thought of their relationship in strict contractual terms. The point is that each of those methods by which a customer might sever his or her relationship with Mr Kobelt was tolerated within the system as it operated in practice. Once it is accepted that the continuation of the relationship between Mr Kobelt and his Anangu customers was not the involuntary consequence of the 95 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 96 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 97 See Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 98 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 99 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 100 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at operation of the book-up system but a matter of choice on the part of those customers, a central component of the unconscionable system case as pleaded by ASIC falls away. ASIC argues, however, that it is wrong to place much weight on that choice. Using language drawn from the description of unconscionable conduct in equity to characterise the relevant effect of the applicable considerations identified in s 12CC – and focussing in particular on the consideration that the control which his book-up system gave Mr Kobelt over funds paid into his Anangu customers' accounts went beyond what was necessary to protect his legitimate business interests as a creditor – ASIC argues that Mr Kobelt's book-up system still involved exploitation of his Anangu customers' vulnerability. It is at this point that I think ASIC's argument dilutes the gravity of the equitable conception of unconscionable conduct carried over into the normative standard of conduct prescribed by s 12CB and fails in the application of that normative standard adequately to accommodate societal norms of acceptable commercial behaviour to the peculiar circumstances of the case. Important to appreciate is why the vast majority of the Anangu customers, who were found by the primary judge to have had a rudimentary but adequate understanding of the basic operation of the book-up system101, chose to maintain their relationship with Mr Kobelt and to continue to participate in that system. The explanation is revealed in the anthropological evidence as supported by the testimony of those of the 117 Anangu customers who gave evidence. The anthropological evidence explained the preference of the Anangu people to "personalise" financial transactions by incorporating outsiders as "brokers" in order to better access goods and services those outsiders can provide102. Three of the six Anangu customers who gave evidence spoke of the advantage Mr Kobelt's book-up system offered to them and their families of having access to food and groceries between pay days103. The anthropological evidence explained more broadly that trusting Mr Kobelt to take immediate control of funds paid into their bank accounts and then negotiating with him when they needed access to those funds allowed his Anangu customers to smooth out the "boom and bust" cycle of household expenditure which would otherwise have resulted in them experiencing a chronic shortage of money for the necessities of 101 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 102 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [30], [389]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 743-744 [308]-[310]. 103 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at life towards the end of each fortnightly pay cycle104 and as well allowed them to manage customary obligations to share their resources with their relatives105. Having access to the book-up system for the purchase of motor vehicles allowed them to finance the purchase of the consumer items which they valued highly106. To say, as does ASIC, that the cultural considerations which fed into Mr Kobelt's Anangu customers' choice to maintain their relationship with Mr Kobelt and to continue to participate in his book-up system were amongst the very factors which made those customers vulnerable and that the operation of Mr Kobelt's book-up system "would be patently unacceptable conduct elsewhere in modern Australian society" fails, in my opinion, to afford to the Anangu people the respect that is due to them within contemporary Australian society. Those of the Anangu people who chose to maintain their relationship with Mr Kobelt and to continue to participate in his book-up system evidently considered that continued participation in the book-up system suited the interests of them and their families having regard to their own preferences and distinctive cultural practices. The evidence does not provide a sufficient basis for me to be satisfied that the Federal Court was, or that this Court is, in a position to question the choice made by Mr Kobelt's Anangu customers, much less to question the ability of those customers to make it. The result is that I cannot characterise Mr Kobelt's provision of his book-up system to his Anangu customers as involving exploitation of those customers' vulnerability and that I cannot, on that basis or any other basis that has been argued, conclude that Mr Kobelt's provision of that system was conduct so offensive to the norms of wider Australian society as to warrant its condemnation as unconscionable. The unanimous conclusion of the Full Court of the Federal Court that Mr Kobelt's book-up system was not demonstrated on the case presented at trial by ASIC to have been unconscionable was, in my opinion, correct. ASIC's appeal must be dismissed with costs. 104 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 105 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at 106 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at Appendix One [41]. 113 KEANE J. I agree with Kiefel CJ and Bell J that the appeal should be dismissed. I gratefully adopt the summary by their Honours of the issues presented to this Court. In particular, I agree with their Honours that the appellant's case in this Court was not conducted on the basis that either the expensive credit charge for the supply of second-hand motor vehicles, or the non-disclosure of that charge, was integral to its complaint that the book-up system was unconscionable. The case presented by the appellant in this Court was that the book-up system was unconscionable whether it was used to fund the supply of groceries or fuel or second-hand motor vehicles. In addition, I adopt the summary by Kiefel CJ and Bell J of the statutory provisions material to the appeal, the findings of the courts below, and the contentions of the parties. Further, I adopt their Honours' analysis of the evidence of Dr Martin in relation to the advantages of the book-up system to the respondent's customers. I wish to state my own reasons for concluding that the respondent has not been shown to have contravened s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"). In my respectful opinion, the appeal should be dismissed for the reason that it has not been established that, upon "a scrutiny of the exact relations established between the parties"107, the respondent engaged in conduct which can properly be characterised as unconscionable. In particular, the appellant's case did not establish that the respondent exploited his customers' socio-economic vulnerability in order to extract financial advantage from them108. Taking the appellant's case at its highest, it might be said that the respondent's customers were rendered more vulnerable to exploitation by the book-up system than might otherwise have been the case. To say that, however, is distinctly not to say that the respondent actually took advantage of that increased vulnerability, or even acted with predatory intent with a view to doing Section 12CB Insofar as the trial judge found that the respondent was at all relevant times aware of, and pursued, his own interests109, it must be borne in mind that the purpose of s 12CB of the ASIC Act is to regulate commerce. The pursuit by 107 Jenyns v Public Curator (Q) (1953) 90 CLR 113 at 118; [1953] HCA 2. 108 cf Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 426-427 [122]-[124]; [2013] HCA 25. 109 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at those engaged in commerce of their own advantage is an omnipresent feature of legitimate commerce. A trader does not, generally speaking, stand in a fiduciary relationship with his or her customers, and good conscience does not require a trader to act in the interests of others110. To say that the respondent was pursuing his own commercial interests with a view to profit is to state the obvious, but also to say very little as to whether he engaged in unconscionable conduct. In particular, it does not assist in discerning whether the conduct in question exhibits those features which distinguish unconscionable conduct from the legitimate pursuit of self-interest. The use of the word "unconscionable" in s 12CB – rather than terms such as "unjust", "unfair" or "unreasonable" which are familiar in consumer protection legislation111 – reflects a deliberate legislative choice to proscribe a particular type of conduct. In its ordinary meaning, the term "unconscionable" requires an element of exploitation. The term imports the "high level of moral obloquy"112 associated with the victimisation of the vulnerable. As five members of this Court observed recently in Thorne v Kennedy113, a finding of unconscionable conduct requires the unconscientious taking advantage of a special disadvantage, 'victimisation'114, which has 'unconscientious conduct'115, or 'exploitation'116". And in Kakavas v Crown "been variously described as requiring 110 Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 64 [11]; [2003] HCA 18. 111 See, eg, National Consumer Credit Protection Act 2009 (Cth), Sch 1 s 76; ASIC Act, s 12BF. 112 Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 at 587 [188]; [2016] HCA 28, citing Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 at 583 [121]. See also Earl of Chesterfield v Janssen (1751) 2 Ves Sen 125 at 155-156 [28 ER 82 at 100]; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462, 467; [1983] HCA 14; Louth v Diprose (1992) 175 CLR 621 at 638; [1992] HCA 61; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 400-401 [17]-[18], 439-440 [161]. 113 (2017) 91 ALJR 1260 at 1272 [38]; 350 ALR 1 at 13; [2017] HCA 49. 114 Hart v O'Connor [1985] AC 1000 at 1028; Louth v Diprose (1992) 175 CLR 621 at 638; Bridgewater v Leahy (1998) 194 CLR 457 at 479 [76]; [1998] HCA 66; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 401 [18], 402 [22], 115 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 461 per Mason J, 474 per Deane J; Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 64 [15]. Melbourne Ltd, this Court unanimously confirmed that "[h]eedlessness of, or indifference to, the best interests of the other party is not sufficient" to establish the "predatory state of mind" that must be shown117. The legislative choice of "unconscionability" as the key statutory concept, rather than less morally freighted terms such as "unjust", "unfair" or "unreasonable", confirms that the moral obloquy involved in the exploitation or victimisation that is characteristic of unconscionable conduct118 is also required for a finding of unconscionability under s 12CB. Section 12CB(4)(a) of the ASIC Act does not require a contrary conclusion. The direction in s 12CB(4)(a) means that the application of s 12CB(1) is not limited to conduct that has been held to be "unconscionable" under the general law, but it does not operate to give the term "unconscionable" a meaning different from its ordinary meaning. Adherence to the ordinary meaning of the term "unconscionable" is appropriate for two reasons rooted in the nature of the judicial function. First, the courts must give effect to what Parliament has enacted119. Here, it must be acknowledged that the Parliament has deliberately chosen to use this expression as the focus of attention, and not a more open-textured or morally neutral expression that would be less certain in its scope. And secondly, the appellant did not propound a meaning for "unconscionable" different from its ordinary meaning; and so the respondent had no occasion or opportunity to meet such a contention. 116 Louth v Diprose (1992) 175 CLR 621 at 626; Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 63 [9], 64 [14]; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 439-440 117 (2013) 250 CLR 392 at 439 [161]. 118 Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 425 [118]; Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 at 587 [188], 119 Northern Territory v Collins (2008) 235 CLR 619 at 642 [99]; [2008] HCA 49; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47]; [2009] HCA 41; Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 264-265 [31]; [2010] HCA 23; Momcilovic v The Queen (2011) 245 CLR 1 at 133-134 [315]; [2011] HCA 34; Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378 at 389-390 [25]; [2012] HCA 56; Kline v Official Secretary to the Governor-General (2013) 249 CLR 645 at 659 [32]; [2013] HCA 52; North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 649-650 [229]; [2015] HCA 41. In addition, the circumstance that s 12CB is to be applied by way of a multi-factorial judgment informed by the considerations listed in s 12CC does not suggest that the evaluative judgment ultimately to be made as to unconscionability is morally neutral120. The approach contemplated by s 12CC to the determination of "unconscionability" for the purposes of s 12CB is consistent with the settled approach of a court of equity, which takes a "more comprehensive view, and looks to every connected circumstance that ought to influence its determination upon the real justice of the case"121. The ultimate issue under the statute is whether the conduct in question is rightly to be characterised as unconscionable. In determining that issue, s 12CB calls for a judgment as to whether the impugned conduct exhibits the level of moral obloquy associated with predatory conduct. Next, it is necessary to observe that sub-s (4)(b) of s 12CB does not mean that it is not an essential characteristic of unconscionable conduct within the meaning of the statute that it involve a calculated taking advantage of a weakness or vulnerability on the part of victims of the conduct in order to obtain for the stronger party a benefit not otherwise obtainable. Under the general law, the absence of such a calculated taking advantage means that the conduct in question cannot be said to be exploitative122. Sub-section (4)(b), in dispensing with the need for proof of disadvantage to any particular individual, allows a system of conduct or pattern of behaviour to be found to be unconscionable within the meaning of the statute even though the extent of the disadvantage cannot be quantified in the case of any individual. Understood in this way, sub-s (4)(b) is consistent with the requirement implicit in the notion of unconscionability that the impugned conduct effect a disadvantage upon its victims. The declaration in sub-s (4)(b) is a manifestation of Parliament's intention that the purpose of s 12CB is to establish a statutory norm of conduct, rather than simply to provide an avenue of relief for victims of individual transactions123. The same intention is evident in the framing of s 12CB as a prohibition breach of which can lead to the imposition of a pecuniary penalty payable to the 120 Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 at 121 The "Juliana" (1822) 2 Dods 504 at 521 [165 ER 1560 at 1567]; Jenyns v Public Curator (Q) (1953) 90 CLR 113 at 119; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 426-427 [122]-[124]. 122 Louth v Diprose (1992) 175 CLR 621 at 632; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 426-427 [124]. 123 See Australia, House of Representatives, Competition and Consumer Legislation Amendment Bill 2011, Explanatory Memorandum at 21 [2.21]. Commonwealth124, and in the power conferred on the Australian Securities and Investments Commission to take civil action to recover such a pecuniary penalty independently of the victim of any alleged contravention of s 12CB125. The presence of sub-s (4)(b) does not mean, however, that the actual or prospective disadvantage to the victims of systematic conduct said to be unconscionable is irrelevant to the evaluative exercise required by s 12CB. Significantly in this regard, s 12CC(1)(e) expressly contemplates that, for the purpose of determining whether a supplier of financial services has contravened s 12CB, the court may have regard to "the amount for which, and the circumstances under which, the service recipient could have acquired identical or equivalent financial services from a person other than the supplier". Attention is thereby directed to the prospective financial disadvantage to the customer. Accordingly, although the absence of proof that actual disadvantage has been suffered by an individual consumer or individual consumers may not be a fatal deficit in a case alleging a contravention of s 12CB, the circumstance that it is not apparent that a consumer could have acquired identical or equivalent financial services from a person other than the supplier on terms more advantageous to the recipient points to the conclusion that the supplier has not contravened s 12CB. The deficits in the appellant's case In several respects, the appellant's case fell short of demonstrating that the respondent exploited his customers' vulnerability with a view to his securing pecuniary advantage at their expense. While the "tying effect" of the book-up system may have made customers more dependent on the respondent or vulnerable to exploitation by him, that vulnerability was not itself an exploitation for pecuniary advantage. While it may be accepted that the respondent's customers were vulnerable to exploitation, the appellant failed to show either that the respondent sought to exploit that vulnerability by victimising his customers for his financial advantage, or that he actually inflicted financial disadvantage on them. In particular, it was not shown that the respondent's withdrawals under the book-up system were intended to benefit him to the disadvantage of his customers. Further, it was not shown that this conduct was apt to extract from the respondent's customers a benefit that might otherwise have enured, somehow, to them. Ordinarily, of course, in the circumstances that obtain elsewhere in Australia, a customer may be able to turn unused funds to his or her financial 124 ASIC Act, s 12GBA. 125 ASIC Act, s 12GBC. advantage by loan or investment, but in the unusual circumstances of the present case it was not apparent that the respondent's customers were disposed to turn their unused funds to their pecuniary advantage. On the other hand, using the respondent as a banker as well as a supplier of goods allowed customers to avoid the practice of demand sharing or "humbugging". This positive advantage of the respondent's book-up system to his customers cannot be ignored. To say that the respondent's requirement of the surrender of a customer's card and PIN is a requirement that might not be made elsewhere in Australia as a term of the supply of goods on credit is to observe that "elsewhere" in Australia the circumstances of the market would make insistence upon that term impossible to sustain. In the present case, however, it was a characteristic feature of the demand side of the highly unusual market in which the respondent operated as a supplier that his requirement was acceptable to customers because of the peculiarities of that market. The respondent was not responsible for those peculiarities. In particular, the respondent was not responsible for the possibility that the book-up system as operated by him, including in particular the withdrawal conduct, proved to be acceptable to his customers because of the appreciation on their part that the absence of ready funds was of benefit to them in assisting them to extricate themselves from the unwelcome burdens of demand sharing. As to the suggestion that the book-up system facilitated the extraction of an excessive price for motor vehicles sold by the respondent to his customers, it was not shown that any customer who purchased a motor vehicle from the respondent could have obtained a better deal from another supplier, but was prevented from seeking such a deal by the circumstance that the customer was "tied" to the respondent and chose, for that reason, to deal with him rather than another supplier. Nor was it shown that had the book-up system not been used, the respondent's customers could or would have obtained more favourable terms for the supply of motor vehicles by the respondent. That there was no demonstrated nexus between the book-up system, and the withdrawal conduct in particular, and the high price of motor vehicles supplied by the respondent is no technical quibble: so far as purchases of motor vehicles by individual customers are concerned, the "tying effect" of the respondent's book-up system was very limited. It consisted only of the distinctly modest leverage afforded by the amount of the "unused" funds in each withdrawal by the respondent. In addition, if one looks beyond individual transactions to the broader socio-economic context, there was good reason why the respondent would not seek to exploit his customers' vulnerability by attempting to turn the tying effect of the book-up system to his advantage at the expense of his customers. The appellant's case of inequality of bargaining power between the respondent as supplier and his customers failed to come to grips with the existence of the countervailing market power of customers inherent in their numbers and social solidarity, as well as the existence of competing suppliers. The countervailing power exercisable by customers meant that they were able collectively to "punish" the respondent if he sought to insist on predatory terms. For all the lack of financial sophistication of the respondent's customers, there is no reason to think that they lacked awareness of the power which, if exercised, could inflict serious damage on the respondent's business. In terms of the probabilities of human behaviour, it is difficult to accept that the respondent would intentionally court the risk of such punishment. The absence of any finding that he did so is hardly surprising. NettleJ 130 NETTLE AND GORDON JJ. Mintabie is a community in the far north of South Australia, about 1,100 km north of Adelaide. It is in an area excised by lease to the Government of South Australia the Anangu Pitjantjatjara Yankunytjatjara Lands ("the APY Lands"). Several Indigenous communities live in the APY Lands to the north or northwest of Mintabie. Two communities − Mimili and Indulkana − are located 165 km and 116 km by the main road from Mintabie respectively. There are no banks, credit unions or like institutions in or immediately adjacent to the APY Lands, meaning credit is not readily available to the residents of the APY Lands ("the Anangu"). from From the mid-1980s until 2018, the respondent, Lindsay Kobelt, ran a general store at Mintabie under the name "Nobbys Mintabie General Store" ("Nobbys"), with the assistance of his partner, his son and some employees126. Nobbys sold a range of goods including food, groceries, general goods, fuel and second-hand cars. As part of his business, Mr Kobelt provided credit facilities to customers, including by way of an informal system called "book-up". The supply of cars and provision of book-up were closely linked: most of the book-up that was provided related to the sale of second-hand cars and most customers bought their cars through book-up. The primary judge found that it was likely Mr Kobelt had begun offering book-up as a means of attracting and retaining customers as the population in Mintabie declined. The appellant ("ASIC") brought proceedings in the Federal Court of Australia against Mr Kobelt alleging that his book-up system contravened s 29(1) of the National Consumer Credit Protection Act 2009 (Cth) ("the NCCP Act") and was unconscionable contrary to s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act")127. ASIC was successful before the primary judge on both grounds. The primary judge held that, between 1 July 2011 and 31 October 2012 in respect of 92 customers, and continuing until at least April 2014, Mr Kobelt contravened s 29(1) of the NCCP Act by engaging in credit activity within the meaning of s 6(1) of the NCCP Act when selling cars by way of book-up without holding a licence to engage in that credit activity128. 126 The primary judge found that at all material times Mr Kobelt's partner and son were acting within the scope of their actual or apparent authority, meaning that their knowledge, states of mind and conduct could be attributed to Mr Kobelt. 127 ASIC also pleaded, but subsequently abandoned, a secondary case of unconscionability against Mr Kobelt: a case directed to specific customers. 128 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at NettleJ The primary judge also held that Mr Kobelt contravened s 12CB(1) of the ASIC Act in that, since at least 1 June 2008 and continuing until at least July 2015, in connection with the supply of financial services to customers of Nobbys, Mr Kobelt engaged, in trade or commerce, in a system of conduct or pattern of behaviour within the meaning of s 12CB(4)(b) of the ASIC Act which was unconscionable within the meaning of s 12CB(1)(a) of the ASIC Act129. Mr Kobelt appealed to the Full Court of the Federal Court. It was common ground that Mr Kobelt did not hold a licence authorising him to engage in "credit activity" as defined in the NCCP Act. The Full Court, like the primary judge, found Mr Kobelt had contravened s 29(1) of the NCCP Act for conduct engaged in between 1 July 2011 and 31 October 2012130. However, the Full Court allowed Mr Kobelt's appeal in relation to s 12CB of the ASIC Act, holding that Mr Kobelt's book-up system was not unconscionable. Besanko and Gilmour JJ reasoned that, although Mr Kobelt's customers were vulnerable because they had "very limited or no net assets, had very limited net income", "had low levels of financial literacy" and lived in "remote and impoverished communities"131, Mr Kobelt's book-up system was not unconscionable because the customers "understood the book-up arrangements and voluntarily entered into them" and the customers knew they could bring the arrangements to an end and some did132. Besanko and Gilmour JJ accepted that the effect of Mr Kobelt's conduct was to tie his customers to him, and that effect was advantageous to him, but said that there were also advantages to his customers133. Wigney J considered that the primary judge's conclusion that Mr Kobelt's book-up system was unconscionable was infected by one or other of two errors: a failure to give sufficient weight to Anangu culture and practices; and having regard to, or giving excessive weight to, what his Honour described as "un-pleaded or non-systems considerations"134. 129 ASIC v Kobelt [2016] FCA 1327 at [9], [627]. 130 Kobelt v Australian Securities and Investments Commission ("Kobelt (FC)") (2018) 352 ALR 689 at 697-698 [43], 724 [194], 726 [205], 741 [296]. 131 Kobelt (FC) (2018) 352 ALR 689 at 702 [67]; see also at 736 [268]. 132 Kobelt (FC) (2018) 352 ALR 689 at 736 [268]-[269]. 133 Kobelt (FC) (2018) 352 ALR 689 at 736 [268]. 134 Kobelt (FC) (2018) 352 ALR 689 at 749 [343]. NettleJ On appeal to this Court, the sole issue135 was whether Mr Kobelt's book-up system was unconscionable contrary to s 12CB of the ASIC Act. In all the circumstances, Mr Kobelt's book-up system was unconscionable. The parties, at trial and on appeal both in the Full Court and in this Court, pointed to competing considerations which they submitted bore upon whether the system of conduct or pattern of behaviour Mr Kobelt engaged in was unconscionable. All of those considerations are relevant, but it will be convenient to group them under a number of different categories: vulnerability; taking advantage; and the effect of the arrangements. Before turning to those considerations, it is necessary to begin with the ASIC Act. Section 12CB of the ASIC Act Division 2 of Pt 2 of the ASIC Act is concerned with unconscionable conduct and consumer protection in relation to financial services. Subdivision C of Div 2 contains two prohibitions. Section 12CA(1) prohibits a person, in trade or commerce, from engaging in conduct in relation to financial services if the conduct is "unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories"136. The prohibition in s 12CA does not apply to conduct that is prohibited by s 12CB137. Section 12CB(1) prohibits persons from engaging in conduct that "is, in all the circumstances, unconscionable" in connection with, relevantly, the supply of financial services in trade or commerce138. Although s 12CB(1) was amended with effect from 1 January 2012139, the amendments were not material to the issues in this appeal. 135 Mr Kobelt's application for special leave to cross-appeal to challenge the finding that he had contravened s 29(1) of the NCCP Act was refused during the hearing of the appeal. 136 See Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 71-74 [38]-[46]; [2003] HCA 18. 137 See ASIC Act, s 12CA(2). 138 ASIC Act, s 12CB(1)(a). 139 See Competition and Consumer Legislation Amendment Act 2011 (Cth), item 3 in the table at s 2 and Sch 2. NettleJ From 1 January 2012, s 12CB relevantly provided: "(1) A person must not, in trade or commerce, in connection with: the supply or possible supply of financial services to a person (other than a listed public company); or the acquisition or possible acquisition of financial services from a person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable. For the purpose of determining whether a person has contravened subsection (1): the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and the court may have regard or circumstances existing, before the commencement of this section. to conduct engaged It is the intention of the Parliament that: this section is not limited by the unwritten law of the States and Territories relating to unconscionable conduct; and this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of: the terms of the contract; and the manner in which and the extent to which the contract is carried out; and is not limited to consideration of the circumstances relating to formation of the contract." NettleJ Section 12CB(4)(b) makes it clear that the prohibition can apply to "a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour"140. A "system" connotes an internal method of working; a "pattern" connotes the external observation of events141. "Unconscionable" is not defined in the ASIC Act and s 12CB is "not limited by" the unwritten law of the States and Territories relating to unconscionable conduct142. As will be explained, the non-exhaustive list of factors set out in s 12CC necessarily implies that the statutory conception of unconscionability is more broad-ranging than that of the unwritten law. Nevertheless, the unwritten law has a significant part to play in ascribing meaning to the term "unconscionable" under s 12CB(1)143. Unwritten law The equitable doctrine of unconscionable conduct "looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so"144. The "abiding rationale" of the doctrine is to "ensure that it is fair, just and reasonable for the stronger party to retain the benefit of the impugned transaction"145. 140 Section 12CB(4)(b), in its present form, has been in effect since 1 January 2012. However, even prior to that express provision under the ASIC Act, s 12CB was taken to apply in the same way: see Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132 at 140 [30], 142-143 [43]-[44], cited in Kobelt (FC) (2018) 352 ALR 689 at 721 [179]-[183]. 141 See Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 362 ALR 66 at 87 [104]. 142 ASIC Act, s 12CB(4)(a). 143 Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 at 144 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 474; [1983] HCA 14. 145 Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 425 [118]; [2013] HCA NettleJ Relief under the doctrine of unconscionable conduct requires that the innocent party was subject to a special disadvantage in dealing with the other party146 when the transaction was entered into, "which seriously affect[ed] the ability of the innocent party to make a judgment as to [their] own best interests"147; and that the other party unconscientiously took advantage of that special disadvantage. The existence of those circumstances at the time of the transaction is what "affect[s] the conscience" of the stronger party and renders the enforcement of the transaction, or the taking of the benefit, "unconscientious" or "unconscionable"148. It is not possible to identify exhaustively what amounts to a special disadvantage149. However, the essence of the relevant weakness is that it "seriously affects" the innocent party's ability to safeguard their own interests150. Relevant matters may include, but are not limited to, "poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary"151; as well as "illness, ignorance, inexperience, impaired faculties, financial need or other circumstances" that affect the innocent or weaker party's 146 Wilton v Farnworth (1948) 76 CLR 646 at 655; [1948] HCA 20; Blomley v Ryan (1956) 99 CLR 362 at 385, 405, 415, 428; [1956] HCA 81; Amadio (1983) 151 CLR 447 at 461, 467, 474; Louth v Diprose (1992) 175 CLR 621 at 637; [1992] HCA 61; Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 407 [26]; [1998] HCA 48; Bridgewater v Leahy (1998) 194 CLR 457 at 478-479 [75]; [1998] HCA 66; C G Berbatis Holdings (2003) 214 CLR 51 at 80-81 [68]; Kakavas (2013) 250 CLR 392 at 424-425 [117]-[118]; Thorne v Kennedy (2017) 91 ALJR 1260 at 1272 [38], 1284 [110]; 350 ALR 1 at 13, 30; [2017] HCA 49. 147 Amadio (1983) 151 CLR 447 at 462. 148 Thorne (2017) 91 ALJR 1260 at 1284 [110]; 350 ALR 1 at 30, quoting Jenyns v Public Curator (Q) (1953) 90 CLR 113 at 118; [1953] HCA 2. 149 Amadio (1983) 151 CLR 447 at 474; Louth (1992) 175 CLR 621 at 637; C G Berbatis Holdings (2003) 214 CLR 51 at 92 [99]; Thorne (2017) 91 ALJR 1260 at 1285 [113]; 350 ALR 1 at 30-31. 150 Thorne (2017) 91 ALJR 1260 at 1285 [113]; 350 ALR 1 at 31, quoting Kakavas (2013) 250 CLR 392 at 425 [118]. See also C G Berbatis Holdings (2003) 214 CLR 51 at 64 [12], citing Blomley (1956) 99 CLR 362 at 392 and Amadio (1983) 151 CLR 447 at 476-477. 151 Blomley (1956) 99 CLR 362 at 405. NettleJ ability to protect their own interests152. It is not sufficient that the matters give rise only to an inequality of bargaining power153. A party will have unconscientiously taken advantage of an innocent party when the former knew or ought to have known of the existence and effect of the special disadvantage154; or, put another way, when the special disadvantage was sufficiently evident at the time of the transaction to make it unconscientious to procure or accept the assent of the innocent party155. Unconscionable conduct does not require a finding of dishonesty156. However, it is not merely concerned with what is "fair" or "just"157. Unconscionable conduct can include the passive acceptance of a benefit in unconscionable circumstances158. And unconscionable conduct can be found even where the innocent party is a willing participant, the question is how that willingness or intention to participate was produced159. 152 Blomley (1956) 99 CLR 362 at 415, quoted in Amadio (1983) 151 CLR 447 at 459 and Thorne (2017) 91 ALJR 1260 at 1285 [113]; 350 ALR 1 at 30-31. 153 Amadio (1983) 151 CLR 447 at 462. 154 Thorne (2017) 91 ALJR 1260 at 1272 [38]; 350 ALR 1 at 13, citing Amadio (1983) 151 CLR 447 at 462. 155 Thorne (2017) 91 ALJR 1260 at 1285 [114]; 350 ALR 1 at 31. See also Blomley (1956) 99 CLR 362 at 428; Amadio (1983) 151 CLR 447 at 474; Louth (1992) 175 CLR 621 at 637; Kakavas (2013) 250 CLR 392 at 427 [124], 439 [158]. 156 See, eg, Amadio (1983) 151 CLR 447 at 478; Bridgewater (1998) 194 CLR 457 at 157 See Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 at 158 Hart v O'Connor [1985] AC 1000 at 1024, quoted in Bridgewater (1998) 194 CLR 457 at 479 [76]; see also at 493 [122]. 159 Bridgewater (1998) 194 CLR 457 at 491 [118], quoting Huguenin v Baseley (1807) 14 Ves Jun 273 at 299-300 [33 ER 526 at 536]. NettleJ As this Court has recognised and restated a number of times, invocation of equitable doctrines, including unconscionable conduct160: "calls for a precise examination of the particular facts, a scrutiny of the exact relations established between the parties and a consideration of the mental capacities, processes and idiosyncrasies of the [weaker party]. Such cases do not depend upon legal categories susceptible of clear definition and giving rise to definite issues of fact readily formulated the which, when found, automatically determine disposition. ... [']A court of equity takes a more comprehensive view, and looks to every connected circumstance that ought to influence its determination upon the real justice of the case'." the validity of Here, the issue of special disadvantage must be considered as part of the broader question: whether Mr Kobelt's book-up system took advantage of an inability on the part of some of his customers to make worthwhile decisions in their own interests, which inability was sufficiently evident to Mr Kobelt, or should have been, to render his system exploitative161. It is sometimes said that unconscionable conduct entails "moral obloquy" or a "high level of moral obloquy"162. So to describe unconscionable conduct, however, reveals the requisite character of unconscionability. Such descriptors are better seen as emphatic expressions of conclusion rather than expressions of applicable standards. little of The doctrine of unconscionability was recently criticised by the Court of Appeal of Singapore for its vagueness and generality163. The Court applied a distinction between "broad" and "narrow" unconscionability in an effort to 160 Jenyns (1953) 90 CLR 113 at 118-119, quoting The "Juliana" (1822) 2 Dods 504 at 521 [165 ER 1560 at 1567] (citation omitted). See also Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 325 [23]; [2003] HCA 57; Kakavas (2013) 250 CLR 392 at 426 [122]-[123]; Thorne (2017) 91 ALJR 1260 at 1273 [43]; 350 ALR 1 at 14-15. 161 See Kakavas (2013) 250 CLR 392 at 426-427 [124], citing Louth (1992) 175 CLR 162 Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 at 587 [188]; [2016] HCA 28, quoting World Best (2005) 63 NSWLR 557 at 583 163 See BOM v BOK [2018] SGCA 83 at [121]-[125]. NettleJ address this issue164. The utility of such distinctions, however, is questionable. Certainly, in any given case, a conclusion as to what is, or is not, against conscience may be contestable: so much is inevitable given that the standard is based on a broad expression of values and norms165. However, efforts to address the "indeterminacy"166 of the doctrine by way of further distillations, categorisations or definitions may risk "disappointment, ... a sense of futility, and ... the likelihood of error"167. This is because evaluating whether conduct is unconscionable "is not a process of deductive reasoning predicated upon the presence or absence of fixed elements or fixed rules"168. Instead, at least in the Australian statutory context, what is involved is an evaluation of business behaviour (conduct in trade or commerce) in light of the values and norms recognised by the statute169. The problem of indeterminacy is addressed by close attention to the statute and the values derived from it, as well as from the unwritten law170. Non-exhaustive list of factors Section 12CB(1) requires that the court have regard to "all the circumstances"171 in determining whether conduct is unconscionable. But the ASIC Act also gives "express guidance as to the norms and values that are relevant its practical application"172. That express guidance is found in the non-exhaustive list of the meaning of unconscionability and inform 164 BOM [2018] SGCA 83 at [140]-[142]. 165 Paciocco (2015) 236 FCR 199 at 276 [304]. 166 Commonwealth Bank of Australia v Kojic (2016) 249 FCR 421 at 436 [58]. 167 Paciocco (2015) 236 FCR 199 at 276 [304]. 168 Paciocco (2015) 236 FCR 199 at 276 [304]. 169 Paciocco (2015) 236 FCR 199 at 276 [304]. 170 Kojic (2016) 249 FCR 421 at 436 [58]. 171 See Paciocco (2016) 258 CLR 525 at 587 [188], 620 [294]. See also Jenyns (1953) 90 CLR 113 at 118-119, quoted in Kakavas (2013) 250 CLR 392 at 426 [122] and Thorne (2017) 91 ALJR 1260 at 1273 [43]; 350 ALR 1 at 14-15. 172 Paciocco (2015) 236 FCR 199 at 270 [279]; see also at 276 [306]; Australian Competition and Consumer Commission v Lux Distributors Pty Ltd (2013) ATPR NettleJ factors set out in s 12CC, which assists in setting a framework for the values that lie behind the notion of conscience identified in s 12CB173. The factors relevantly include174: the relative strengths of the bargaining positions of the supplier and the service recipient; and (b) whether, as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and (c) whether the service recipient was able to understand any documents relating to the supply or possible supply of the financial services; and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the service recipient or a person acting on behalf of the service recipient by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the financial services; and the amount for which, and the circumstances under which, the service recipient could have acquired identical or equivalent financial services from a person other than the supplier; and the extent to which the supplier's conduct towards the service recipient was consistent with the supplier's conduct in similar transactions between the supplier and other like service recipients; and the extent to which the supplier unreasonably failed to disclose to the service recipient: any intended conduct of the supplier that might affect the interests of the service recipient; and 173 Paciocco (2015) 236 FCR 199 at 272 [285], 276 [304]; Kojic (2016) 249 FCR 421 174 ASIC Act, s 12CC(1). NettleJ any risks to the service recipient arising from the supplier's intended conduct (being risks that the supplier should have foreseen would not be apparent to the service recipient); and if there is a contract between the supplier and the service recipient for the supply of the financial services: the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the service recipient; and the terms and conditions of the contract; and (iii) the conduct of the supplier and the service recipient in complying with the terms and conditions of the contract; and any conduct that the supplier or the service recipient engaged their commercial relationship, after they entered into the contract; and in connection with (k) without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the service recipient for the supply of the financial services; and the extent to which the supplier and the service recipient acted in good faith." No one factor (or select group of factors) is primary or determinative. It is, therefore, not appropriate to select particular factors upon which to focus175. All the relevant factors must be taken into account176. Voluntariness At the heart of this appeal is what is said to be a tension between the voluntariness of the customers' entry into the transactions and perceived advantages of the system on the one hand; and their vulnerability and the conduct of Mr Kobelt on the other. 175 Paciocco (2016) 258 CLR 525 at 587 [189], 620 [294]. 176 See Paciocco (2016) 258 CLR 525 at 587 [188], 620 [294]. See also Jenyns (1953) 90 CLR 113 at 118-119, quoted in Kakavas (2013) 250 CLR 392 at 426 [122] and Thorne (2017) 91 ALJR 1260 at 1273 [43]; 350 ALR 1 at 14-15. NettleJ It is important to appreciate, therefore, that considerations of voluntariness need to be assessed in the context of the system of conduct in issue. Conduct can be unconscionable even where the innocent party is a willing participant; the question is how that willingness or intention was produced177. An innocent party may be capable of making an independent or rational judgment about an advantage in an otherwise bad bargain. However, an advantage, and the capacity of the innocent party to identify that advantage and make a rational choice, cannot operate to transform what is, in all the circumstances, an exploitative arrangement. Nor can the existence of that advantage absolve from liability the stronger party who unconscientiously takes advantage of the weaker party. To contend otherwise in this case is to use the limited choices available to Mr Kobelt's customers in relation to cars and credit to excuse a system which tied those customers to Nobbys and placed them in a position of dependence in relation to Mr Kobelt. Of course, to be able to purchase a car is better than to have no car; to have access to credit is preferable to having no access to credit. But these propositions say nothing about the terms on which the car and credit are provided. Voluntariness must be judged against other relevant matters: the power imbalance between the parties; the relative lack of choice available to Mr Kobelt's customers; the fact that customers had a limited understanding of the terms of the arrangement; the lack of transparency of the terms and conditions of the arrangement; and, importantly, Mr Kobelt's exploitative conduct. Many of those matters arose from Mr Kobelt's particular conduct, rather than any particular characteristic of his customers. They arose because Mr Kobelt chose to set up his system of book-up in the way that he did. Contrary to the view of Wigney J in the Full Court, and notwithstanding that some customers expressed positive views about Nobbys, it is not paternalistic to assess the vulnerability of Mr Kobelt's customers and whether that vulnerability was exploited. It is not paternalistic to take into account that the view of a vulnerable party of a transaction will be shaped by context and circumstance. Equally, it is not paternalistic to look at the transaction and the position of the parties objectively. It is to do no more than engage with the criteria of unconscionability. Moreover, so to conclude does not ignore that there are perceived to be cultural benefits of book-up generally, in that it can, in some circumstances, address "boom and bust" expenditure and "demand sharing" obligations. 177 Bridgewater (1998) 194 CLR 457 at 491 [118], quoting Huguenin (1807) 14 Ves Jun 273 at 299-300 [33 ER 526 at 536]. NettleJ Because the focus of s 12CB(1) is on the conduct of the supplier of financial services, those cultural benefits, even if they were being addressed by Mr Kobelt's system, do not relieve a finding of unconscionability with respect to his particular system. Instead, s 12CB(1) requires the supplier to set up a system, a book-up system, that is not unconscionable. The contention that Mr Kobelt's book-up system is "better than nothing" is not good enough. Mr Kobelt's system could, and should, have been better. There were alternative ways to access those benefits without exploitation. Voluntariness of entry into the arrangements, and the perceived advantages of the system, do not prevent Mr Kobelt's conduct from being unconscionable. Before considering the relevant factors in detail, it is necessary to say something more about the facts. Facts Mr Kobelt's book-up system "Book-up" is a term used to describe various informal systems of credit available in many rural and regional towns around Australia. A form of book-up was available at least at one of the two other stores in Mintabie. to his Anangu customers. Mr Kobelt also extended credit Mr Kobelt's book-up system provided credit facilities to customers of Nobbys. All but one of the customers to whom Mr Kobelt provided book-up were Indigenous. Book-up was the only means by which Mr Kobelt provided credit non-Indigenous customers but on different terms to the book-up facility. Specifically, he did not require non-Indigenous customers to provide security and he allowed them until the end of the week in which the credit was provided to pay his account, or sometimes until the end of the following week. At trial, 117 recipients of book-up services were identified as part of ASIC's case against Mr Kobelt under the ASIC Act. All 117 customers were Indigenous residents of the APY Lands. Between July 2011 and October 2012, Mr Kobelt sold 105 second-hand cars to 92 customers under the book-up system. Vulnerability The communities in which Mr Kobelt's customers lived were remote. The majority of his customers were impoverished. They had no or limited net assets, and only limited net income. While some had employment of some kind at some time, at least half were dependent on Centrelink benefits as their principal source of income. Less than half of the 117 customers were able to read and the reading ability of those who could read was compromised. More than half of Mr Kobelt's customers could not "add up". The majority of the customers had low levels of financial literacy and lacked the NettleJ competence of most Australians in the wider community to make informed decisions concerning the use of financial services. They lacked understanding of the basis upon which debit cards (known as "key cards") and personal identification numbers ("PINs") are issued and of the steps customers should take in their own self-interest. The 117 customers were vulnerable, with that vulnerability "arising from a combination of factors: the remoteness of their communities; the limitations on their education; their impoverishment; and the limitations on their financial literacy"178. The Full Court referred to some countervailing considerations: in particular, voluntariness, the customers' knowledge and cultural matters. It can be accepted that all 117 customers had "an understanding of the basic elements of the [b]ook-up system"179. They understood that they could purchase a vehicle or other goods from Nobbys on credit; that the credit arrangement involved them paying later for the vehicle or goods by providing Mr Kobelt with their key card and PIN and authorising him to use it to withdraw money from their bank account as it became available; and that the disadvantage arising from the customers not having access to money for the necessities of life could be addressed by Mr Kobelt advancing further credit. The 117 customers had an awareness of the above aspects of the system at the time they entered into the book-up arrangement and chose voluntarily to do so. Entering into the arrangements was their choice. Each of the Anangu witnesses from whom evidence was led at trial consented to Mr Kobelt making withdrawals from their account using their key card and PIN. Evidence at trial showed that many Indigenous people in remote communities spend improvidently, a pattern or cycle known as "boom and bust" expenditure. A boom and bust cycle mirrors the deposit of income, such as from employment or welfare payments, into bank accounts. Money is spent as it becomes available, without consideration of long-term consequences of such expenditure. A significant number of Mr Kobelt's book-up customers were affected in this way. Evidence at trial also highlighted the practice of "demand sharing". This term refers to an Anangu social obligation requiring sharing of resources with specific categories of kin, under which the the medium- 178 ASIC v Kobelt [2016] FCA 1327 at [620]. See also Kobelt (FC) (2018) 352 ALR 179 ASIC v Kobelt [2016] FCA 1327 at [543]. See also Kobelt (FC) (2018) 352 ALR NettleJ giver has a responsibility to share and the recipient the right to share. This cultural practice can give rise to bullying or exploitation. However, there was very little evidence that Mr Kobelt's customers chose to enter into the book- up system to avoid demand sharing. Mr Kobelt's actions − taking advantage When a customer approached Mr Kobelt for book-up, Mr Kobelt would require very little information from them. If he did not know them, he would ask their name and where they lived. He would ask all customers wishing to use his book-up system what income they received and the day on which it was paid into the account to which Mr Kobelt would be given access. He would make his assessment by reference to that information. He did not ask customers to complete any application form. He did not enquire whether they had any other debts, liabilities or commitments. He was indifferent as to whether his customers could afford the commitment they were undertaking, having regard to their financial position more generally. Until the end of 2010, the arrangements were wholly verbal. From January 2011, Mr Kobelt asked customers to provide a signed authority which stated only: "I [name of customer] give Lindsay permission to take money from my Key Card [number of card]". One hundred and fifty-one customers gave permission in this way, although there were 21 instances where the authority was not signed by the customer, and two instances of customers signing without any authority written above. To receive book-up, Mr Kobelt required that customers provide him with a key card linked to the bank account into which their income was paid, as well as their PIN. Mr Kobelt generally retained customers' key cards until their debt was paid in full. Mr Kobelt would put each key card in its own resealable plastic bag. He would stick a piece of masking tape to the outside of the bag on which he would write the customer's name, their PIN and, in most cases, details of when payments would be made into the account. Apart from writing on the masking tape (and, commencing in January 2011, obtaining a written authority), Mr Kobelt did not otherwise record in writing the terms and conditions on which he provided book-up. Customers could frustrate the book-up arrangements by cancelling their key cards or having their income paid into a different account. From time to time, some customers did so. But while Mr Kobelt generally did not take enforcement action against these customers, he accepted that this was because it was not in his commercial or reputational interest to do so. The primary judge found that to frustrate the arrangements would require customers to "act in NettleJ breach of their agreement with Mr Kobelt, that is, to act in a way which was dishonourable, if not dishonest"180. Sale of second-hand cars Most of Mr Kobelt's book-up related to the sale of second-hand cars. The arrangements were generally as follows. Mr Kobelt and the customer would enter into a written contract for sale of the second-hand car. The contracts were in the form prescribed by the Second-hand Vehicle Dealers Regulations 1995 (SA). None of the contracts in evidence referred to book-up or the fact that the sales were by credit. In most cases, the cars had already been driven more than 200,000 km. This meant the statutory duty to repair defects under s 23 of the Second-hand Vehicle Dealers Act 1995 (SA) did not apply. Two Anangu witnesses gave evidence at trial that the second-hand vehicles sold by Mr Kobelt broke down within a relatively short period of time, requiring them to return to Nobbys and purchase another car from Mr Kobelt. This happened on more than one occasion. The primary judge observed that, on the road between Mimili and Indulkana, there were numerous cars on the side of the road, which appeared to be broken down, abandoned or derelict. Many of the vehicles seemed to be of the kind sold by Nobbys. the vehicles was as Mr Kobelt's method of pricing follows. When Mr Kobelt offered a vehicle for sale, he attached to the vehicle the form containing the details required by statute, including the price at which the vehicle may be purchased ("the list price"). He calculated the list price by adding together the price he paid for the vehicle, any transport cost and the cost of any significant repair work, then doubling that sum. He then compared that figure to competitor prices for similar vehicles, and sometimes adjusted the figure so it was a little less than the competitor price. Until at least April 2014, Mr Kobelt's practice was to sell vehicles at a reduced price for customers who could pay the purchase price in full in cash at the time of purchase, and the list price to those to whom he provided book-up. The primary judge rejected Mr Kobelt's evidence that he had not differentiated the price in this way for four years, taking the view that Mr Kobelt was seeking – contrary to other evidence before the Court181 – to establish falsely that the price differential practice had ceased several years earlier182 and finding, with respect 180 ASIC v Kobelt [2016] FCA 1327 at [513]. 181 See generally ASIC v Kobelt [2016] FCA 1327 at [154]-[172]. 182 ASIC v Kobelt [2016] FCA 1327 at [155]. NettleJ to the submission that Mr Kobelt's oral evidence could be attributed to a faulty memory, that it was "implausible that this is a matter about which Mr Kobelt could have been honestly mistaken"183. Nearly all of the 105 sales of vehicles using book-up were made to the Anangu and the prices ranged between $2,500 and $7,800. The average and median prices were $5,600 and $5,800 respectively. The price differential between cash and book-up sales was usually at least $1,000 per vehicle and sometimes more. The price differential was a charge for the provision of credit184. The primary judge considered that, in most cases, it was probable that the book-up customers were not aware of this charge, let alone the amount of the charge. Withdrawal conduct Mr Kobelt or his son would generally withdraw the whole, or nearly the whole, of the funds available in a customer's account, usually on the day, or shortly afterwards, that the funds were paid in by the employer or Centrelink ("the Withdrawal Conduct"). Mr Kobelt or his son would often make the withdrawals very early in the day or between midnight and 1 am. They did this to prevent customers being able to access their funds by other means. Mr Kobelt and his son regarded themselves as being in "competition" with many of the customers as to who could make withdrawals first. Mr Kobelt's approach was to continue withdrawing amounts incrementally until the attempted withdrawal was unsuccessful due to insufficient funds. Between 1 July 2010 and 30 November 2012, Mr Kobelt withdrew a total of just under $1 million ($984,147.90) from the accounts of 85 customers to whom he had provided book-up for the purchase of second-hand cars. There was no objective justification for Mr Kobelt withdrawing, in most cases, all of the available funds in the customers' accounts. In some instances, he withdrew amounts which exceeded those which the customer had authorised – sometimes as a result of Mr Kobelt failing to realise a customer's debt had already been paid – and in other cases made withdrawals more frequently than had been authorised. 183 ASIC v Kobelt [2016] FCA 1327 at [169]. 184 See ASIC v Kobelt [2016] FCA 1327 at [196]; see also at [123], [171], [199]; Kobelt (FC) (2018) 352 ALR 689 at 725-726 [202]-[205]. See also s 11 of the National Credit Code in Sch 1 to the NCCP Act. NettleJ On 14 December 2010, there was a "glitch" in one of the Commonwealth Bank of Australia's systems ("the CBA glitch"), one consequence of which was that withdrawals and transfers from CBA debit accounts were approved, even though the withdrawals and transfers exceeded the available balance in the customers' accounts. Mr Kobelt took advantage of the CBA glitch to withdraw $56,944 from his customers' CBA accounts, even though he had no authority to do so (at least with respect to a significant proportion of that amount). As the primary judge found, Mr Kobelt must have appreciated at the time that this amount was much more than normal and could not have thought that his customers had authorised him to make these extra withdrawals. The CBA glitch resulted in overdrafts to some customers' accounts. These extra withdrawals revealed that Mr Kobelt's attitude was to transfer to himself whatever funds were available in a customer's account at any one time. Book-down Without access to their key card or their funds, customers had no means of acquiring groceries and the other necessities of life. To address this, Mr Kobelt would supply goods to customers by way of further book-up (sometimes called "book-down"). Mr Kobelt allowed, at his discretion, customers to use some of the amount he had withdrawn and transferred into his own account to purchase groceries at Nobbys, to obtain cash, or to make a purchase at another community store in the APY Lands through a "purchase order" sent from Nobbys. He applied the balance towards the debt owed to him. Mr Kobelt generally limited the credit allowed for book-down to 50 per cent of the amount he had most recently withdrawn. The book-down arrangement was not recorded in writing and in most cases Mr Kobelt did not expressly agree with customers that they were "entitled" to 50 per cent: more often than not he told them only that they could have a "little bit" or only "some" groceries. And although customers were nominally "entitled" to that 50 per cent, Mr Kobelt would not generally allow them to access the whole amount, instead limiting access to $100, $150 or $200 at a time. The primary judge referred to Mr Kobelt's justification that he limited access to ensure that his customers would have "something" at the end of the week, but his Honour made no such finding. Mr Kobelt did not maintain any record showing the balance available to each customer by reason of the 50 per cent he said would be available. Customers with a significant book-up debt were generally permitted to buy milk, bread and meat with book-down but not items like sweets and chips. In that way, NettleJ Mr Kobelt controlled the expenditure of his book-up customers. As a result, with few exceptions, customers had to travel to Nobbys to access their money and acquire groceries. Mr Kobelt sometimes allowed customers to use book-down to purchase bus tickets to travel away from the APY Lands. He generally arranged these purchases because he had a 1300 number to Greyhound, the bus company. If Mr Kobelt allowed a customer to make a cash advance, he applied either a small, fixed charge or, in some instances, a charge of 10 per cent of the amount of the cash advance. If Mr Kobelt sent off a "purchase order" to another store, he charged $5 or $10185. Through his "purchase order" system, Mr Kobelt would send a store in the APY Lands a purchase order which named the customer, the amount of credit authorised and often the nature of the authorised purchase – for example, "goods" or "cash". The recipient store would then allow the customer to purchase food or would issue cash in the amount stated. Mr Kobelt's fee of $5 or $10 for each purchase order was cheaper than the comparable express money order service provided by Australia Post. Several stores in the APY Lands did not agree to purchase order arrangements with Mr Kobelt. Customers' access to bus tickets, cash advances and purchase orders was at Mr Kobelt's discretion. In some situations, Mr Kobelt's exercise of that discretion, and thus control, was arbitrary: for example, in one case Mr Kobelt allowed book-up for a customer to buy a bus ticket to Adelaide but, a short time later, he refused funds for the customer to buy a return ticket to the APY Lands because Mr Kobelt thought that the customer had had enough book-down. Record keeping Mr Kobelt made "inadequate and often illegible" records of the book-up transactions186 and Mr Kobelt had "little or no insight" into the importance of providing (or even being able to provide if requested) a true and proper account to his customers187. Mr Kobelt provided no written record of his withdrawals to customers. He kept printed EFTPOS records of withdrawals in the plastic bag containing the 185 See [2018] HCATrans 252 at lines 945-947. 186 ASIC v Kobelt [2016] FCA 1327 at [544]. 187 ASIC v Kobelt [2016] FCA 1327 at [484]. NettleJ key card but discarded them once the bag became too full (usually after two or three months). Until 2014, the records were kept in a rudimentary form of running account. The entries were handwritten, in abbreviated form, into unused diaries – although the entries bore no correlation to the dates printed in those diaries. The entries were made in a "cramped and somewhat chaotic manner"188 and often over printed portions of the diaries, making it difficult to understand the state of a customer's account at any given time. Further, Mr Kobelt did not record in the diaries the balance owed by the customer after each transaction but would calculate it from time to time. In 2014, Mr Kobelt commenced keeping his records in the form of ledger cards. Even then, it was unrealistic for customers to have understood, or checked the accuracy of, Mr Kobelt's records, had they wished to do so. For customers who had not purchased a car but who used book-up for food and groceries only, Mr Kobelt did not keep records of the transactions in the diaries; he only kept printed EFTPOS records in the plastic bag containing the key card. Fees and charges of the book-up system The book-up system was said to be "fee free and interest free"189, except for the provision of credit in relation to the sale and purchase of second-hand cars, purchase orders and cash advances. For the purchase of second-hand cars, to which most of Mr Kobelt's book-up related, the primary judge concluded that the credit provided by Mr Kobelt was "of a very expensive kind"190. That conclusion has been criticised as unfounded. But to the contrary, it was sustained by the primary judge's following findings of fact. There was no evidence of the actual effective interest rates charged by Mr Kobelt. However, for illustration, the primary judge made a hypothetical calculation: assuming a $4,000 vehicle purchase and a $1,000 charge (that is, the usual price differential191), with the aggregate of $5,000 being repaid by regular monthly 188 ASIC v Kobelt [2016] FCA 1327 at [69]. 189 Kobelt (FC) (2018) 352 ALR 689 at 733-734 [257(2)]. 190 ASIC v Kobelt [2016] FCA 1327 at [492]; see also at [618]. 191 See [179] above. NettleJ instalments over a 12, 18 or 24 month period, the effective annual interest rates would be 43.4 per cent, 29.5 per cent or 22.4 per cent respectively. By way of comparison, according to forensic accounting evidence led at trial, a commercial lender would have charged interest on a variable unsecured personal loan in the range of 14 to 15.2 per cent. Mr Kobelt's rate for book-up on vehicles was therefore significantly in excess of the rates for personal loans. The primary judge also considered expert evidence on the effective interest rate paid by four particular Anangu customers on their aggregate purchase of nine vehicles. The total interest (for all customers on the nine vehicles) using personal loan rates would have been $2,886.14. By comparison, the minimum total price differential that would have been charged by Mr Kobelt was $9,000 (that is, $1,000 per vehicle multiplied by nine vehicles). The plurality in the Full Court upheld the primary judge's finding that the credit charges for second-hand cars were "very expensive"192. Mr Kobelt's position throughout the trial was that he did not charge interest or impose any charge for the provision of book-up. Consistently with that position, he did not disclose to his customers the existence of any charge. His counsel submitted at trial, in reliance on the expert evidence of Mr Paul Jorgensen, a forensic accountant, that Mr Kobelt's "interest free terms were better institutions"193. than customers could obtain But, as already explained, both the fact that certain credit attracted some kind of charge (in relation to the cars, purchase orders and the provision of cash) and the relative expense of certain of those charges were accepted by the primary judge. And those findings were not overturned on appeal. traditional finance from Finally, there were charges for the purchase of the second-hand cars, and, expensive or otherwise, they were not disclosed to Mr Kobelt's customers. The fact that much of the credit supplied to Mr Kobelt's customers through book-up came at a substantial undisclosed charge cannot be ignored in assessing whether Mr Kobelt's conduct in connection with the supply of credit under his book-up system was, in all the circumstances, unconscionable. That is so even though ASIC did not attempt to prove that the cars were sold at a price above their market value. The problem was, and remains, the existence of the undisclosed credit charge. That conclusion is not altered by the fact that ASIC did not plead the expensiveness of credit as a particular of unconscionable 192 See Kobelt (FC) (2018) 352 ALR 689 at 713 [138], 726 [207], 729 [226]-[227] per Besanko and Gilmour JJ; cf at 754 [364]-[365] per Wigney J. 193 ASIC v Kobelt [2016] FCA 1327 at [493]. NettleJ conduct. As the plurality held in the Full Court, the cost of the credit was an issue at trial194. Effect of the arrangements − tying conduct Mr Kobelt's system "tied" book-up customers to Nobbys. The primary judge found that this "tying" effect was a form of "exploitation"195 and that this, combined with Mr Kobelt's requirement that he have access to the whole of customers' incomes, was a form of "predation"196. The Full Court overturned these conclusions197. By its notice of appeal, ASIC contended that the Full Court erred in overturning the findings of the primary judge that Mr Kobelt had engaged the appeal, the words "predation" or although counsel "exploitation" meant no more than taking advantage of disadvantage, ASIC did not abandon the contention that the primary judge's findings on predation and exploitation (or that Mr Kobelt had "taken advantage") should be restored. Those findings should be restored. in predation or exploitation. for ASIC contended At the hearing of that The system deprived customers of independent means of obtaining the necessities of life. It prevented them from shopping in their own communities. It created a prolonged dependence on Mr Kobelt's exercise of discretion. By making his customers dependent on a favourable exercise of his goodwill, Mr Kobelt placed them in a position of vulnerability, separate to and different from the vulnerability which existed at the time they entered into the book-up arrangement. The primary judge was right to describe the system as constituting "exploitation" and "predation". The primary the characteristics of his customers on the basis that it must have been obvious from the interactions he had with them. that Mr Kobelt knew of judge was satisfied 194 See Kobelt (FC) (2018) 352 ALR 689 at 727 [208]-[210]. 195 ASIC v Kobelt [2016] FCA 1327 at [606]; see also at [620]. 196 ASIC v Kobelt [2016] FCA 1327 at [609]. 197 See Kobelt (FC) (2018) 352 ALR 689 at 735-736 [267]-[268], 756-757 NettleJ ASIC did not contend that Mr Kobelt had adopted forms of undue influence or exerted undue pressure. The primary judge therefore made no finding to that effect. Despite the illegibility of Mr Kobelt's records, it was not found that he maintained his records dishonestly, or used the key cards and PINs dishonestly. The primary judge said that Mr Kobelt acted with a degree of good faith, but at all times pursued his own interests, even when that was to the detriment of his customers. The primary judge found as a fact that some of the withdrawals from the customers' accounts were not authorised. Advantages to customers? In the Full Court, the plurality found that the primary judge had given insufficient weight to, among other things, the advantages to Nobbys' customers in alleviating the disadvantages associated with demand sharing and boom and bust expenditure. Unsurprisingly, in this Court, Mr Kobelt relied upon that finding, and the evidence said to support that finding, in seeking to demonstrate the advantages to customers of his book-up system. Dr David Martin, a social anthropologist, was retained by ASIC and gave evidence at the trial. Dr Martin was described by the primary judge as having a deep understanding of remote Aboriginal people's relationship with money and financial transactions, including an understanding about "particular mechanisms by which Aboriginal people typically seek to structure and personalise relationships with outsiders in order to access goods and services which they value"198. The primary judge described Dr Martin's evidence as "generally helpful and reliable"199. However, it is necessary to understand Dr Martin's evidence including the relevant findings made about it by the primary judge and the Full Court. He was retained to provide an opinion concerning certain of Nobbys' Anangu customers in relation to ASIC's (ultimately abandoned) secondary case directed to specific customers rather than the book-up system generally, as well as "any other Aboriginal customers of Nobbys with whom [he spoke] as part of [his] field trip"200. Dr Martin was instructed to assume that for the majority of Nobbys' Anangu book-up customers: periodic payments into their accounts were those customers' only source of income; use of a key card was the primary or 198 ASIC v Kobelt [2016] FCA 1327 at [389]. 199 ASIC v Kobelt [2016] FCA 1327 at [416]. 200 ASIC v Kobelt [2016] FCA 1327 at [391]. NettleJ exclusive means by which the customers accessed their account; and the customer was a resident of a remote community, in the APY Lands, and had very limited or no assets and very little income. the to complain about terms of book-up and Dr Martin's initial instructions were to report on, among other things, any facts or circumstances affecting customers' ability or willingness to question or negotiate terms. Those instructions were later expanded to address an additional question, namely, "[w]hat, if any, social or cultural matters affect the ability or willingness of Aboriginal residents of the APY Lands"201 – that is, persons of the APY Lands generally, not those who identified as Nobbys customers – to understand the nature, terms, advantages and disadvantages of credit arrangements generally and of the specific arrangement provided by Nobbys; question or negotiate the terms of transactions (including credit arrangements) with traders; and complain about the terms of such transactions? Dr Martin conducted three field trips to the APY Lands, during which he spoke to a total of 23 Indigenous residents in Mimili and those Given that Dr Martin was never asked to express an opinion specifically with respect to the 117 customers the subject of ASIC's primary case (that is, directed to the book-up system generally), the primary judge considered that care had to be taken before accepting characterisations of the 117 customers that depended upon inferences drawn from characteristics of the Anangu population generally. Indeed, Dr Martin accepted in cross-examination, and in his report, that it was not reasonable to impute to all of Mr Kobelt's customers all of the characteristics which he had been asked to assume. The primary judge referred to Dr Martin's description at trial of demand sharing as part of the "foundational principles of reciprocity, exchange and sharing within a hunter gatherer society". Dr Martin considered, however, that while it might be reasonable to come to the view that leaving key cards at Nobbys was part of a strategy to avoid demand sharing, Dr Martin had "no firm evidence to come to that view"202. In the result, the primary judge found that there was "very little evidence from the Anangu customers themselves that they handed over their key cards and PINs to Mr Kobelt in order to achieve … these outcomes. … [W]ith one exception, none [of the Anangu witnesses] said that it was the desire to avoid this kind of sharing which was the reason they engaged in [b]ook-up or that they shopped at Nobbys"203. Mr Kobelt's challenges to the 201 ASIC v Kobelt [2016] FCA 1327 at [392]. 202 ASIC v Kobelt [2016] FCA 1327 at [578]. 203 ASIC v Kobelt [2016] FCA 1327 at [582]. NettleJ primary judge's findings in respect of avoidance of demand sharing, and the extent to which the primary judge had considered Dr Martin's evidence in respect of this issue, were dismissed by the plurality in the Full Court. The plurality were right to do so. As was explained in Thorne v Kennedy204, where a transaction is sought to be impugned by the operation of vitiating factors such as, relevantly, unconscionable conduct, it is necessary for a primary judge to conduct a close consideration of the facts; and it is equally necessary for an appellate court to assess any challenge to the primary judge's conclusions in light of the advantages enjoyed by that judge. That is because an assessment of whether unconscionable conduct has been established calls for a precise examination of the particular facts, and the exact relations established between the parties205. The advantage of a primary judge in seeing the parties and estimating their characters and capacities is "immeasurable"206. Moreover, this appeal is concerned with Mr Kobelt's book-up system, not all book-up systems or even the generalised conception of book-up systems described by Dr Martin. It is concerned with the 117 recipients of book-up services identified as part of ASIC's case against Mr Kobelt, not all Anangu people or all Aboriginal people living in remote areas. In particular, there was very little evidence that those 117 customers chose to enter into the book-up system to avoid demand sharing. Therefore, this Court should be slow to go beyond the primary judge's findings of fact, which were upheld on appeal, and conclude, inferring from general information pertaining to the Anangu or remote Aboriginal people, that Mr Kobelt's customers entered into the book-up arrangements for cultural reasons and not due to their position of special disadvantage. The primary judge's factual findings dictate otherwise: due to their vulnerability, the 117 customers had little other choice. Alternatives to Mr Kobelt's book-up system The primary judge found that Mr Kobelt's book-up system went beyond what was reasonably necessary to protect his legitimate interests in two fundamental ways: by requiring that customers hand over key cards and PINs and by withdrawing the whole, or nearly the whole, of the available balance in the customer's account on each payday. 204 (2017) 91 ALJR 1260 at 1272-1273 [41]; 350 ALR 1 at 14. 205 Thorne (2017) 91 ALJR 1260 at 1273 [43]; 350 ALR 1 at 14-15, quoting Jenyns (1953) 90 CLR 113 at 118-119. 206 Wilton (1948) 76 CLR 646 at 654, cited in Louth (1992) 175 CLR 621 at 633. NettleJ The primary judge identified other arrangements that Mr Kobelt could have used, which made the provision of key cards and PINs not reasonably necessary to protect his legitimate interests207. First, Mr Kobelt could have applied to be a "Participant" in the Commonwealth Government's "Centrepay" system. Once a supplier has been accepted as a Participant, Centrelink recipients may authorise Centrelink to pay part of their benefits to that Participant. The Centrepay facility is generally directed to essential services and only a selection of "additional services". Mr Kobelt said at trial that he would take up this option if it were offered to him, despite earlier difficulties he had encountered when he had enquired about participating in Centrepay. That said, doubts were expressed by the primary judge and by Wigney J as to whether the Centrepay facility would encompass the purchase of used cars, although Nobbys as a supplier of food and groceries might have been eligible for acceptance as a Participant. Second, Mr Kobelt could have agreed on a direct debit arrangement with the purchasers of his cars. Mr Kobelt agreed that this system could work well if the customers could organise it. Third, for customers who lived nearby, Mr Kobelt accepted that he could have retained possession of the customers' key cards but not their PINs. He could have handed the key card back to the customer when they came to Nobbys, with the expectation that they would do so on or shortly after each payday to effect a transfer to Nobbys in reduction of their debt. Fourth, Mr Kobelt could have arranged deductions from customers' wages to pay off their debt. In addition, to mitigate the disadvantages of boom and bust expenditure, some book-up customers could request that Centrelink make pension payments weekly, rather than fortnightly. There was no suggestion that such a facility would not also have been available to those book-up customers who were recipients of Centrelink benefits. Wigney J in the Full Court questioned whether some of these alternatives were in fact reasonably available or feasible. In his Honour's view, the primary judge's analysis of these various alternatives tended to ignore evidence that suggested that the Anangu may have preferred Mr Kobelt's book-up system to the alternatives because it involved the personalisation of the financial transaction. It is true that the primary judge made limited reference to the 207 While this point was not pleaded by ASIC as a particular of unconscionable conduct, the plurality in the Full Court held that it did not need to be pleaded. NettleJ personalisation of financial transactions, referring only to that concept in describing the expertise of Dr Martin. However, two further matters should be observed about this aspect of Dr Martin's evidence. Dr Martin's evidence was that there was a tendency for Indigenous APY Lands residents to personalise financial transactions by conducting financial transactions through "brokers" such as storekeepers to better access goods and services. This tendency was based on inferences Dr Martin drew from the assumptions set out in his instructions together with his observations and interviews. The limitations on the extent to which Dr Martin's evidence can be used to establish that the Anangu generally and Mr Kobelt's customers specifically had such a tendency are self-evident. Further, there is nothing to suggest that the alternatives outlined above would result in any reduction, let alone any great reduction, in the personalisation of the transaction. It is plain that each retains some relationship with a local storekeeper including, specifically, that the credit is provided by a person known to the customer; it is simply the method by which book-up or another form of credit – each necessarily personal – is provided that is different. In addition to the alternative arrangements identified by the primary judge, it is plain that another real alternative was and remains an appropriately functioning form of book-up. The characteristics of such a system are readily identifiable: an assessment of whether customers needed the credit facility and could afford the repayments; the disclosure of all fees and charges to customers; no retention as "security" of a customer's key card, let alone their PIN; the transfer of an agreed amount or proportion of weekly or fortnightly income, rather than the whole of a customer's income; legible and consistent records of the original credit advanced, the payments made, and a running total of the balance outstanding, imposing a discipline to keep these records up to date; and a system where the customers were not "tied" to the credit provider for the provision of other goods and services. Finally, the Withdrawal Conduct208 is itself illustrative of the problems. That conduct revealed that Mr Kobelt worked actively to avoid some customers having access to the 50 per cent of the income which should have been available to them and that those customers were not content with having 50 per cent of their income available only at Mr Kobelt's discretion and only through his store or purchase orders. That conduct further supports the conclusion that the customers would not necessarily have chosen Mr Kobelt's book-up system if the fact of alternatives was explained and made available. 208 See [180]-[184] above. NettleJ Alternatives were available. There is nothing to suggest that these alternatives would not have worked and, in fact, in relation to some of them, Mr Kobelt agreed that they could work well. Mr Kobelt's book-up system was unconscionable Mr Kobelt accepted that statutory unconscionability was capable of applying to a system of conduct or pattern of behaviour and that his provision of credit to the 117 customers was conduct "in trade or commerce" and was conduct in connection with individuals. Therefore, the sole issue was and remains whether Mr Kobelt, in the implementation and provision of his book-up system, engaged in a system of conduct or pattern of behaviour that was "unconscionable" contrary to s 12CB(1) of the ASIC Act. For the reasons that follow, the answer is "yes". the supply of "financial services" ASIC advanced three grounds in respect of the Full Court's finding to the contrary. Those grounds related to the special disadvantage of Mr Kobelt's customers, the predatory and exploitative nature of Mr Kobelt's conduct, and the weight to be given to purported advantages arising from the book-up system in relation to the practices of demand sharing and boom and bust expenditure. Each identifies a matter central to the assessment of unconscionability in the circumstances of isolation. Accordingly, the issues raised by ASIC will be addressed in the context of assessing Mr Kobelt's conduct against the non-exhaustive list of factors in s 12CC. this case but none can be viewed The Court's focus must primarily be on the nature of the conduct by the stronger party209. First, s 12CB(4)(b) extends s 12CB(1) unconscionable conduct to a "system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged". It follows from the fact that a specific person need not be identified that special disadvantage of an prohibition210. individual Indeed, Parliament's intention in this respect was explained in the following terms211: component necessary not the 209 See Australia, House of Representatives, Competition and Consumer Legislation Amendment Bill 2011, Explanatory Memorandum at 22 [2.24]. 210 See Australia, House of Representatives, Competition and Consumer Legislation Amendment Bill 2011, Explanatory Memorandum at 22 [2.23]. 211 Australia, House of Representatives, Competition and Consumer Legislation Amendment Bill 2011, Explanatory Memorandum at 21 [2.21]. NettleJ "[T]he focus of the provisions is on conduct that may be said to offend against good conscience; it is not specifically on the characteristics of any possible 'victim' of the conduct (though these may be relevant to the assessment of the conduct)." (emphasis in original) is concerned with That focus on the conduct of the stronger party reflects the difference between the equitable doctrines of unconscionable conduct and undue influence. The former unconscientiously taking advantage of the weaker party. The latter is concerned with the quality of the consent or assent of the weaker party212. That distinction is also reflected in ss 12CB(1) and 12CC(1), where the prohibition in s 12CB(1) is against unconscionable conduct and "any undue influence or pressure ... or any unfair tactics" is only one of several factors to be taken into account if relevant213. the stronger party the conduct of The assessment of whether conduct is unconscionable within the meaning of s 12CB involves the evaluation of facts by reference to the values and norms recognised by the statute, and thus, as it has been said, a normative standard of conscience which is permeated with accepted and acceptable community standards214. It is by reference to those generally accepted standards and community values that each matter must be judged. Vulnerability or special disadvantage Vulnerability or special disadvantage may arise from matters including "poverty or need of any kind ... [and] illiteracy or lack of education"215. Mr Kobelt's customers were vulnerable or at a special disadvantage216. Their vulnerability existed because of the remoteness of their communities, the limitations on their education, their impoverishment, and the limitations on their financial literacy – not as a result of Anangu cultural practices. Both the primary 212 Thorne (2017) 91 ALJR 1260 at 1281 [86]; 350 ALR 1 at 25 and the authorities cited therein. 213 ASIC Act, s 12CC(1)(d). 214 Lux Distributors Pty Ltd (2013) ATPR ¶42-447 at 43,463 [23], cited in Paciocco (2015) 236 FCR 199 at 275 [298]. 215 Blomley (1956) 99 CLR 362 at 405, quoted in Amadio (1983) 151 CLR 447 at 474 and Kakavas (2013) 250 CLR 392 at 425 [117]. See also Thorne (2017) 91 ALJR 1260 at 1285 [113]; 350 ALR 1 at 30-31. 216 See [165]-[171] above. NettleJ judge and the Full Court accepted that Mr Kobelt's customers were vulnerable217 and there was no dispute that Mr Kobelt knew of his customers' special disadvantage218. Indeed, as the primary judge noted, the ready willingness of Mr Kobelt's customers to hand over their key cards and their PINs seems to reflect a lack of understanding of the precautions which they should take in their own self-interest219. As Wigney J observed, the Anangu plainly had a different conception of, and different attitude towards, their key cards and they trusted Mr Kobelt. But that observation, and that trust, do not provide an answer, or defence, to the fact that, in all the circumstances, Mr Kobelt's book-up system was unconscionable contrary to s 12CB of the ASIC Act. Instead, the fact that the Anangu had a different conception of, and different attitude towards, their key cards and that they trusted Mr Kobelt is part of the factual matrix which identifies, and explains, their vulnerability and the voluntariness of their entry into the book-up system as well as the significance of the other relevant factors listed in s 12CC(1), which are addressed next. Mr Kobelt unconscientiously took advantage of his customers' vulnerability The Full Court found that Mr Kobelt had not taken advantage of his customers' vulnerability because the customers understood the basic elements of the Withdrawal Conduct220; Mr Kobelt's book-up voluntarily entered into the book-up arrangements221; had the ability to terminate the contracts222; and had agency, which must be respected223, and their freedom of contract should not be impeded. including system, 217 ASIC v Kobelt [2016] FCA 1327 at [620]; Kobelt (FC) (2018) 352 ALR 689 at 702 218 See [208] above. 219 ASIC v Kobelt [2016] FCA 1327 at [620]. 220 See [169]-[170] and [180]-[184] above; Kobelt (FC) (2018) 352 ALR 689 at 735 221 Kobelt (FC) (2018) 352 ALR 689 at 735 [266], 752 [355]. 222 Kobelt (FC) (2018) 352 ALR 689 at 736 [268]. 223 Kobelt (FC) (2018) 352 ALR 689 at 743-744 [309]-[310], 750 [348], 751-752 NettleJ There are a number of errors in that analysis. Vulnerable persons may be unable to protect their own interests. If a person, unable to protect their own interests, voluntarily enters into a transaction, this does no more than remove the conduct from it being the subject of relief on the ground of undue influence where the elements, and methods of proof, are quite different224. It is because it is a transaction that is voluntarily entered into by someone under a special disadvantage that unconscionability, including statutory unconscionability, developed, in order to ensure that persons who are vulnerable and unable to protect their own interests are not the victim of conduct by a stronger party in unconscientiously taking advantage of that vulnerability. And that is what Mr Kobelt's book-up system did. The unconscionability of Mr Kobelt's conduct was that the 117 customers were at such a special disadvantage relative to Mr Kobelt so as to be unable to make a decision in their own interests, and Mr Kobelt, knowing or in circumstances where he ought to have known of their incapacity to make a decision in their own interests, took advantage of that disadvantage to get them to agree to his terms. It is irrelevant that some of the customers might have regarded the requirements of Mr Kobelt's system as not unreasonable or considered that it alleviated pressures of demand sharing. The requirements of the system were unreasonable, regardless of any effects on demand sharing. Even if some of his the customers were so 117 customers might have disadvantaged by their education, their impoverishment and the limitations on their financial illiteracy, as well as the limited available alternatives, as to be in a position where they could not demand a superior system. thought otherwise, the limitations on remoteness, their Power imbalance: s 12CC(1)(a), (e) and (j)(i) Mr Kobelt held all the power in the relationship. His Anangu customers were vulnerable and unable to protect their own interests. They were limited in their ability to acquire credit on the same terms, or at all, anywhere in reasonable proximity to the APY Lands, meaning that Nobbys had a near-monopoly on the provision of credit. Further, Mr Kobelt did not provide credit to the Anangu on any other terms except book-up; and he was not flexible in relation to the requirement that customers provide their key card and PIN or in relation to certain other terms on which he provided credit225. 224 See Thorne (2017) 91 ALJR 1260 at 1281 [86]; 350 ALR 1 at 25. 225 cf Kobelt (FC) (2018) 352 ALR 689 at 755 [367]-[368]. NettleJ The fact that there was no indication that the customers wished to bargain with Mr Kobelt is unsurprising. That is often the position with vulnerable persons: they do not know of potential alternatives and often, even if they are aware of such alternatives, lack the ability to negotiate. Moreover, s 12CC(1)(a) requires consideration of the "relative strengths of the bargaining positions" of the relevant parties. It is concerned with the existence of the power imbalance, not the wishes of the weaker party. As against that, the ability of customers to frustrate the arrangements should be given little, if any, weight. The primary judge found that to frustrate the arrangements would require customers to "act in breach of their agreement with Mr Kobelt, that is, to act in a way which was dishonourable, if not dishonest"226. Mr Kobelt did not challenge this finding before the Full Court. That reinforced the power imbalance. And, no less importantly, it would be wrong to conclude that the theoretical ability of the weaker party to frustrate the wrongful conduct of the stronger party could ameliorate the wrongful conduct of that stronger party. That is the antithesis of unconscionability. As has been observed, unequal bargaining power on its own is not sufficient to establish unconscionability227. But it provides the context in which the remaining factors are to be assessed. (ii) Circumstances of entry: s 12CC(1)(c), (i) and (j)(i) The circumstances in which Mr Kobelt's Anangu customers entered into the book-up arrangements were characterised not only by a power imbalance, but also by a lack of transparency and lack of proper understanding of the arrangements, resulting in an inability of Mr Kobelt's customers to hold him to account. When customers entered into the arrangements, Mr Kobelt failed to document and disclose properly, or at all, the terms and conditions of the arrangement, the amount and frequency of the withdrawals, the amount of the debt or charges or the price differential for the purchase of the second-hand cars228. As the primary judge found, Mr Kobelt's customers would not have been able to understand his inadequate and often illegible records229. 226 ASIC v Kobelt [2016] FCA 1327 at [513]. 227 See Amadio (1983) 151 CLR 447 at 462. 228 See [172]-[173], [175], [179], [188]-[189], [194]-[197] and [202]-[203] above. 229 ASIC v Kobelt [2016] FCA 1327 at [544], [546]. NettleJ Wigney J considered that these facts and matters did not deserve any significant weight for two reasons: (1) there was a cultural preference for Anangu customers to deal with business matters "face-to-face [rather] than be provided with a sheath [sic] of documents"230; and (2) there was no evidence that any customer had sought an account of the transactions231. That analysis is incomplete: it interprets s 12CC(1)(c) too narrowly. The problem was that there was no transparency or accountability under Mr Kobelt's system. Mr Kobelt's "face-to-face" interactions did not enable customers to have a proper understanding of the terms of the book-up arrangement. When customers entered into the book-up arrangement they had only an understanding of the "basic elements" of the arrangement. That meant that the customers did not have a clear understanding of exactly how much Mr Kobelt would withdraw; how often and at what time of day he would withdraw; where their funds would be kept; whether and through what mechanism they were entitled to access their funds; how much they could access at a given time and to what uses it could be put; the fact that book-up for second- hand cars attracted a charge; and the fact that there were alternatives. Put simply, Mr Kobelt's book-up system was characterised by a complete lack of transparency and accountability. A cultural preference for oral communication does not justify exploitation or taking advantage of people without their knowledge or in the absence of full disclosure. Instead, the preference for oral communication demands that the credit provider provide the financial service in a manner which addresses that preference. (iii) Mr Kobelt's book-up system and its implementation: s 12CC(1)(d), (j)(ii)-(iv) and (l) Mr Kobelt's book-up system, and his implementation of it, allowed Mr Kobelt to engage in wrongful conduct to obtain a financial benefit to the detriment of his customers. The primary judge said that Mr Kobelt acted with a degree of good faith, although that statement was qualified with the statement that Mr Kobelt pursued his own interests at all times, even when that pursuit was to the detriment of his customers. What the unchallenged factual findings established was that Mr Kobelt's book-up system enabled him to abuse his position of power to the detriment of his customers. 230 Kobelt (FC) (2018) 352 ALR 689 at 747 [330]. 231 Kobelt (FC) (2018) 352 ALR 689 at 753 [359]. NettleJ As has been explained: the circumstances of entry232; requiring customers to hand over their key card and PIN233; Mr Kobelt withdrawing the whole, or nearly the whole, of the available funds by trial and error and deliberately before customers could access their funds by other means234; there being no objective justification for withdrawing all or most of the available funds as soon as they were deposited; Mr Kobelt controlling how much of their funds that his customers could access and what they could spend those funds on235; and there being no transparency (meaning that Mr Kobelt's customers could not hold Mr Kobelt to account236), compel that conclusion. The conclusion is reinforced by the ways Mr Kobelt carried out the arrangements, not always complying with the terms of his arrangement, and making the withdrawals causing overdrafts in connection with the CBA glitch237. Contrary requires consideration of the post-contractual conduct of the parties. the Full Court's conclusion238, s 12CC(1)(j)(iv) (iv) Tying Mr Kobelt's book-up system tied his customers to Nobbys239. It created a prolonged dependence on Mr Kobelt's exercise of discretion. It placed them in an ongoing and increased position of vulnerability. Mr Kobelt exercised a high degree of control over his customers' funds and expenditure by precluding access 232 See Mr Kobelt's book-up system at [163]-[164], Vulnerability at [165]-[171], Mr Kobelt's actions − the taking advantage at arrangements − tying conduct at [205]-[207] and Mr Kobelt's knowledge at [208]-[210] above. [172]-[204], Effect of 233 See [173] above. 234 See [180]-[184] above. 235 See [185]-[193] above. 236 See [205]-[207] above. [194]-[197], [202]-[203] and 237 See Mr Kobelt's actions − taking advantage at [172]-[204], Effect of the arrangements − tying conduct at [205]-[207] and Mr Kobelt's knowledge at [208]- [210] above. See in particular at [182]-[184] above. 238 cf Kobelt (FC) (2018) 352 ALR 689 at 729 [222], 754 [362]. 239 See [172]-[193], [205]-[207] above. NettleJ to their funds, preventing them from being able to access the necessities of life and making them dependent on his discretion. "Tying", in various forms, has been the subject of restriction and condemnation for over a century in Australia240, the United Kingdom241 and the United States242. That condemnation, for the most part, arose because the parties 240 See Australian Industries Preservation Act 1906 (Cth), s 4; Australian Industries Preservation Act 1909 (Cth), s 5, inserting s 7A into the Australian Industries Preservation Act 1906; Attorney-General of the Commonwealth v Adelaide Steamship Co Ltd (1913) 18 CLR 30 at 32-39; [1913] AC 781 at 794-801; Heron v Port Huon Fruitgrowers' Co-operative Association Ltd (1922) 30 CLR 315 at 323- 327; [1922] HCA 20; Peters American Delicacy Co Ltd v Patricia's Chocolates and Candies Pty Ltd (1947) 77 CLR 574 at 583, 589-591; [1947] HCA 62; Buckley v Tutty (1971) 125 CLR 353 at 373, 375-377; [1971] HCA 71; Queensland Co-operative Milling Association v Pamag Pty Ltd (1973) 133 CLR 260 at 263-264; [1973] HCA 24; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 293-294; [1973] HCA 40; Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126 at 138-139 [24]-[27]; [2001] HCA 45. See also Trade Practices Act 1974 (Cth), s 47 and Competition and Consumer Act 2010 (Cth), Sch 1, s 47; Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd [No 2] (2008) 170 FCR 16. 241 On restraints of trade, see Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co [1894] AC 535 at 552; McEllistrim v Ballymacelligott Co-operative Agricultural and Dairy Society [1919] AC 548 at 571-572; Petrofina (Gt Britain) Ltd v Martin [1966] Ch 146 at 165-166, 173, 177, 180; Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269. The "Truck Acts" in the United Kingdom also prohibited a form of tying: see, eg, Truck Act 1831 (1 & 2 Gul IV c 37); Truck Amendment Act 1887 (50 & 51 Vict c 46); Truck Act 1896 (59 & 60 Vict c 44); Truck Act 1940 (UK); Bristow v City Petroleum Ltd [1987] 1 WLR 529 at 532; [1987] 2 All ER 45 at 47-48. 242 See Sherman Act of 1890, 15 USC §1; Clayton Act of 1914, 15 USC §14; Federal Trade Commission Act of 1914, 15 USC §45; United Shoe Machinery Corporation v United States (1922) 258 US 451 at 457; International Business Machines Corp v United States (1936) 298 US 131 at 135-136; International Salt Co Inc v United States (1947) 332 US 392 at 395-396; United States v Paramount Pictures Inc (1948) 334 US 131 at 156-159; Northern Pacific Railway Co v United States (1958) 356 US 1 at 5-6; Jefferson Parish Hospital District No 2 v Hyde (1984) 466 US 2 at 12-15; cf Illinois Tool Works Inc v Independent Ink Inc (2006) 547 US 28 NettleJ did not bargain from a "position of equality"243 or because the covenant that tied the purchaser to acquire the seller's products was unreasonable or contrary to the public interest244. Moreover, the sale of second-hand cars using book-up was itself exploitation245. Although he refused to acknowledge the price differential at trial, Mr Kobelt required purchasers of cars on book-up to pay significantly more than purchasers with cash246. The sale of second-hand cars meant customers were caught in a vicious circle of indebtedness to Mr Kobelt and then, once locked into the book-up arrangement, customers had limited options to regain control of their funds247. Their potential options were a cash advance, at Mr Kobelt's discretion and sometimes at a fee of ten per cent, or to request a purchase order, again at Mr Kobelt's discretion, at a cost of $5 or $10 and, even then, several stores in the APY Lands would not accept Mr Kobelt's purchase orders248. The lack of suggestion of dishonesty on the part of Mr Kobelt does not prevent Mr Kobelt's book-up system being unconscionable. Dishonesty is not required for a finding of unconscionable conduct in equity249. And statutory unconscionability under the ASIC Act is intended to be broader than the 243 Amoco (1973) 133 CLR 288 at 317; see also at 294. See also Queensland Co-operative (1973) 133 CLR 260 at 264, 268, 276; Paramount Pictures Inc (1948) 334 US 131 at 162. 244 See, eg, Buckley (1971) 125 CLR 353 at 376-378; Queensland Co-operative (1973) 133 CLR 260 at 263-264, 267-269, 275; Amoco (1973) 133 CLR 288 at 295-296, 305-307, 315-316; Peters (WA) (2001) 205 CLR 126 at 139 [27]. 245 See Mr Kobelt's book-up system at [163]-[164], Vulnerability at [165]-[171], Mr Kobelt's actions – taking advantage at [172]-[204] and Effect of the arrangements – tying conduct at [205]-[207] above. 246 See [175]-[179] above. 247 See Mr Kobelt's actions – taking advantage at [172]-[204] and Effect of the arrangements – tying conduct at [205]-[207] above. 248 See [185]-[193] above. 249 See fn 156 and accompanying text. NettleJ unwritten law250. Dishonesty is not required for a finding of unconscionability under s 12CB(1)251. Unconscionable conduct in equity can include the passive acceptance of a benefit in unconscionable circumstances252. Mr Kobelt's conduct went beyond that − he engaged in an active system of conduct that, even if approached without dishonest motives or with a "degree of good faith", had the effect of being exploitative and unfair. The requirement is still "victimisation or exploitation" by a stronger party of a more vulnerable party253. And that was the problem with Mr Kobelt's book-up system. (v) Values, norms and practices the system to be surprising, As Wigney J recognised in the Full Court, the terms, nature and circumstances of Mr Kobelt's book-up system bespoke unconscionability and "[m]any, if not most, members of the broader Australian community would if not probably find some aspects of extraordinary"254. That understates the position. Putting to one side that the majority of Mr Kobelt's customers were financially illiterate Anangu living in a remote, harsh and impoverished part of northern South Australia, in what other circumstances would a small-scale consumer credit provider require, let alone expect, a borrower's assent to terms that, as security for relatively modest advances, the borrower hand over the right to receive the whole of the borrower's meagre monthly income, with not less than half of it to be applied in reduction of the loan; the borrower confer on the credit provider an untrammelled discretion as to how much, if any, of the other half should be made available to the borrower for the purchase of life's necessities; and the borrower be tied to purchasing all such necessities from the credit provider at the credit provider's prices, or else pay the credit provider for the privilege of a "purchase order"? 250 See ASIC Act, s 12CB(4)(a) and Australia, House of Representatives, Competition and Consumer Legislation Amendment Bill 2011, Explanatory Memorandum at 21 251 See Paciocco (2015) 236 FCR 199 at 266 [262]. 252 Bridgewater (1998) 194 CLR 457 at 479 [76], quoting Hart [1985] AC 1000 at 1024; see also at 493 [122]. 253 Kakavas (2013) 250 CLR 392 at 439-440 [161]. 254 Kobelt (FC) (2018) 352 ALR 689 at 758 [383]. NettleJ Where else and with what other customer would it be regarded as acceptable that the terms of the arrangement go entirely undocumented; that the credit provider not be required to, and not, render invoices, receipts or reconciliations; and that the credit provider not maintain financial accounts sufficient even for two experienced accountants, who gave evidence at trial, to determine how much had been advanced and how much had been paid? Surely, anywhere else with any other customer, such an arrangement would be regarded as unconscionable. It is no answer to say that the customers were Anangu people. It is no answer to say that the customers agreed. The plurality in the Full Court considered that it was enough that the customers understood the basic elements of the system and entered into it voluntarily and, either serendipitously or otherwise, derived from it the benefits of alleviating the boom and bust expenditure cycle and the burdens of demand sharing. Wigney J added, in effect, that it was not unconscionable to impose those terms of credit on the customers because of the differences between "the values, norms and practices of the Anangu people who comprised Mr Kobelt's book-up customers"255 and the norms and practices of "the wider Australian society and its culture and institutions"256. It does not alleviate That reasoning should be rejected. the unconscionability of Mr Kobelt's book-up system that his customers were so disadvantaged as to regard Mr Kobelt's offering as acceptable. As the primary judge held, it was the fact that the customers were so significantly disadvantaged, and that Mr Kobelt knew or should have known it to be so, that rendered his conduct unconscionable. Nor is it to the point that the customers may have entered into the scheme voluntarily and without undue influence. Mr Kobelt's book-up system was unconscionable because it took advantage of the customers' vulnerability and special disadvantage. No doubt, Mr Kobelt was in business to make a profit and it cannot reasonably be expected of him that he should have acted as if he were a charity. It is also apparent that there were other traders in the area who provided book-up credit on similar terms and that, apart from book-up, such other forms of credit as were available to the Anangu were limited. It may be, too, that the Anangu liked to go shopping in Mintabie and preferred dealing face-to-face with people like Mr Kobelt to attempting to arrange credit with mainstream credit providers. And it may also be that participating in book-up gave some customers a degree of control over boom and bust expenditure patterns and an excuse to avoid demand sharing requests. But none of that renders Mr Kobelt's conduct any the less unconscionable. 255 Kobelt (FC) (2018) 352 ALR 689 at 758 [383]. 256 Kobelt (FC) (2018) 352 ALR 689 at 747 [329]. NettleJ The freedom to make a profit is not a licence to act unconscionably. Nor is an oligopoly of the kind in which Mr Kobelt participated. And the fact that other traders may have behaved in the same unconscionable manner does not excuse it. (vi) Mr Kobelt's book-up system was not reasonably necessary to protect his legitimate interests: s 12CC(1)(b) This issue has been addressed. Book-up is not itself unconscionable. The problems were with Mr Kobelt's book-up system and its particular features. Mr Kobelt's system was not reasonably necessary to protect his legitimate interests − there were alternatives257. It may be that, in circumstances of the kind which existed in Paciocco v Australia & New Zealand Banking Group Ltd, s 12CB(1) would not be enlivened merely by reason of the content of a condition of a consumer credit contract258. But, even then, it would depend on the circumstances of each case whether the consumer was at a relevant disadvantage to the credit provider and in particular whether the credit provider, by stipulating for a particular condition of the credit contract, should be seen to have taken unconscientious advantage of that consumer. Here, for the reasons already given, there can be no doubt that the Anangu were at a material, relevant disadvantage to Mr Kobelt and that Mr Kobelt took unconscientious advantage of them by stipulating for the conditions he did notwithstanding that other, less onerous requirements would have been adequate to protect his legitimate interests. Here, there can be no doubt that s 12CC(1)(b) is applicable and to a significant degree informs the engagement of s 12CB(1). Conclusion and orders Mr Kobelt's system of conduct was unconscionable contrary to s 12CB(1) of the ASIC Act. The orders should be: Appeal allowed with no order as to costs. Set aside orders 2, 3, 4 and 5 of the Full Court of the Federal Court of Australia made on 20 February 2018 and, in their place, order that: the appeal be dismissed; and each party bear their own costs. 257 See [219]-[229] above. 258 (2016) 258 CLR 525 at 586 [185]-[186]. Edelman Introduction A shopkeeper develops a "system" of credit. He applies it only to impoverished and often illiterate and innumerate Aboriginal customers. He gives those customers Hobson's choice – no matter how badly they need credit, they can either "choose" that system or "choose" no credit at all. His system has, at its core, the sale of cars on credit at up to three times the market rate for unsecured credit. But the effective interest rate is concealed from the customers. The customers are also required to provide the shopkeeper with their bank card and Personal Identification Number ("PIN"). The shopkeeper promises to use the card and PIN to withdraw only half of the customer's income for repayment of takes more for repayment. the car purchase, although he sometimes The shopkeeper almost invariably withdraws the other half of the income, which he deposits in his own bank account; he denies the customers access to that other half of "their money" except to purchase goods from him or for limited cash withdrawals or purchase orders. The customers are unable to know the state of the running account, or even the amount of "their money" in the shopkeeper's account, because he does not give them access to any of his very rudimentary records. the concept of a small brown bird The legal issue underlying this appeal concerns the meaning and application of the statutory concept of "unconscionability". Professor Birks once compared the utility of the concept of unconscionability to a lawyer with the to an ornithologist259. utility of In Commonwealth Bank of Australia v Kojic260, I suggested that this concern would be ameliorated as analogies and comparisons emerged by application of the principles and values underlying the statute261. Although conscience has no single, objective moral voltage, the moral baseline required by the courts would emerge by incremental development in the long run through "very slow degrees and by very short steps"262, and through the process of methodological reductionism. 259 Birks, "Equity in the Modern Law: An Exercise in Taxonomy" (1996) 26 University of Western Australia Law Review 1 at 16. See also Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 409 [34]; [1998] HCA 48. 260 (2016) 249 FCR 421 at 442-443 [86]-[87]. 261 See Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 262 Stack v New York, N H & H R Co (1900) 58 NE 686 at 687. Edelman Unfortunately, "[i]n the long run we are all dead"263. In the meantime, against the background of repeated attempts by Parliament to liberalise the rigour of moral disapprobation which courts have required for the statutory prohibition of unconscionable conduct, but even without it, I dissent from the conclusion of the majority of this Court. In my view, the conduct in this case falls squarely within the statutory description of "unconscionable" in s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"). For the reasons that follow, in addition to those of Nettle and Gordon JJ, with which I agree, I would allow the appeal. Mr Kobelt's system of credit provision, when considered as the case was pleaded and run, was unconscionable. I agree with the conclusions and orders of Nettle and Gordon JJ. Mr Kobelt's system The system pleaded by the Australian Securities and Investments Commission ("ASIC") as being unconscionable was "a system of conduct or pattern of behaviour ... incidents of which are particularised [by reference to the circumstances of five customers pleaded as typical of 117 customers in the group]". The pleaded circumstances of those customers involved all of the matters described in the introduction above, save for (i) the extent of the interest charge on the used car purchases, (ii) the discriminatory operation of the system, and (iii) the state of Mr Kobelt's record keeping. However, as Besanko and Gilmour JJ in the Full Court of the Federal Court of Australia observed, apart from the discriminatory operation of the system these matters were run as part of the case at trial264. As for the discriminatory operation of the system, Besanko and Gilmour JJ said that they were "disposed to think" that this needed to be pleaded but their Honours did not conclude that the primary judge erred by insignificant relying upon consideration"265. it was a "relatively it because, they said, The centrality of the sale of used cars to Mr Kobelt's system of credit is clear from Mr Kobelt's evidence, quoted by the primary judge in the course of describing how "Book-up" operated266: 263 Keynes, A Tract on Monetary Reform (1923) at 80. 264 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 265 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 266 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 Edelman What I'm enquiring about is what arrangement did you come to with Aboriginal customers for payment for those cars if they wanted to Book-up the purchase price of the cars? I would ask for a deposit and half their – I would ask them what their income was, when they got paid. I would say, well, I want half the money for payment, and the rest you can – other half you can have yourself, food and cash. The other 50 percent for food or cash. How is that to be accessed by the Aboriginal customer? Either purchase order or they come into the store. So the entirety of the money in their account would come to you, and you would make the 50 percent available back? Most of the times. They would ask me sometimes to leave X amount in their key card if they were going to Port Augusta or Alice Springs, which I would do. His Honour: Is the position that, right from the start when you were agreeing to Book-up of a car, you would agree with the customer that you would take pretty well the whole of what was in their account but say to them that 50 percent of that would be used to reduce the debt on the car and the other 50 percent would be available to them? Yes, available to them. Yes, and I would take – and I would take – if they told me to take all the money out, I would take it out. If they told me to leave some, I would leave some." This description of how Book-up operated was later qualified by the primary judge's conclusions that customers were not always entitled to access the 50 per cent of the total amount that was not used to reduce their debt but was nevertheless withdrawn from their account and deposited into Mr Kobelt's account267. 267 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [59]-[60]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 693-694 [15]-[16]. Edelman Mr Kobelt's system in more detail At trial, ASIC submitted that Mr Kobelt had adopted a system for the provision of credit that was unconscionable. It was alleged that Mr Kobelt had unconscionably provided credit to at least 117 customers under this system between at least 1 June 2008 and July 2015268. The system was pleaded by particular reference to the circumstances of five customers (two of whom were married). On this appeal, ASIC focused upon six elements of the system: (i) the requirement for customers to provide their debit card and PIN to Mr Kobelt; (ii) Mr Kobelt's withdrawal conduct; (iii) the record keeping, or lack thereof, by Mr Kobelt; (iv) the expensive credit charged by Mr Kobelt; (v) the tying of customers to Mr Kobelt; and (vi) Mr Kobelt's knowledge of the above elements and his taking advantage of the customers. To these elements can be added the application of the system, in its entirety, only to Aboriginal customers269. Mr Kobelt ran a general store at Mintabie, in the far north of the South Australia approximately 1,100 km north of Adelaide, within Anangu Pitjantjatjara Yankunytjatjara Lands ("the APY Lands")270. The majority of Mr Kobelt's customers lived in two remote Aboriginal communities in the APY Lands to the northwest of Mintabie, Mimili and Indulkana, located approximately 165 km and 116 km by the main road from Mr Kobelt's general store271. Some of his customers lived in communities which were much further distant than Mimili and Indulkana272. Mr Kobelt's system, in its entirety, was applied only to these Aboriginal customers273. Mr Kobelt knew that his 268 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [9], [211]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 700-701 [60], 702 [66], 748 [337]. 269 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [236], compare at [71]. 270 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 271 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [21], [72]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 702 [70]. 272 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 273 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [71], [552]-[553]; compare Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 727 [211], 754-755 [366]. Edelman customers were vulnerable; he knew that more than half of his customers could not read, and he knew that many had no assets, limited income and a low level of financial literacy274. Mr Kobelt's system required his credit customers to provide him with their debit card linked to the bank account into which their wages or Centrelink payments were made, and their PIN275. Every time they received income he would withdraw all, or nearly all, of their money, including any Centrelink welfare payments made to them276. Mr Kobelt's system involved rudimentary record keeping. The records that he did keep were inadequate, often illegible, and chaotic277. Neither the printed records of the withdrawals, nor any form of periodic account statement, were given to his customers278. The system also created a vulnerability of customers to unauthorised withdrawals. Mr Kobelt would sometimes withdraw more from the customer's account than was owed to him, reimbursing later when he realised the error279. On one day, when a glitch in the cash transfer system at the Commonwealth Bank of Australia permitted withdrawals exceeding the balance of debit accounts, Mr Kobelt withdrew 274 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [289], [419], [423], [424]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 730 [232]. 275 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [28]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 693 [13], 748 [337]. 276 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [29]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 693-694 [15], 740 [291]. 277 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [69], [544]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 728 [218]-[219], compare at 753 [358]. 278 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 279 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [63], [557]; compare Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 729 [222], 735 [259], 754 [362]. Edelman $56,944 from his customers' accounts knowing that he did not have authority to make those withdrawals, which were much more than normal280. At the core of Mr Kobelt's system of credit was the sale of used cars for amounts ranging from $2,500 to $7,800281. As ASIC pleaded, and as the primary judge decided282, during one window of a little over a year283, within the seven year period of the system, Mr Kobelt sold one or more cars to 92 of the 117 customers. Mr Kobelt sold used cars that seemed to be of the same kind, and may have been the same, as the numerous cars that were broken down and abandoned by the side of the road to the nearest towns284. The credit charges for the car sales were not disclosed to the customers285. They were hidden in a price difference between cash and credit sales. The credit charge was "very expensive"286. The usual credit charge, if repaid by 12 monthly instalments on a $4,000 vehicle, gives an effective interest rate of more than 43%, significantly more than the commercial lending rates for unsecured personal loans of 280 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [92]-[97]; compare Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 729 [222], 736 [267], 755 [369]-[370], 758-759 [385]. 281 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 282 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [24]-[25], [116]-[117]. See also Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 693 [12]. 283 From 1 July 2011 to 31 October 2012. 284 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 285 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [496]; compare Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 736 [267]. 286 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [492]-[493]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 727 [210], 729 [226], compare at 754 [363]-[365]. 287 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [485], [489], [491]; compare Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 754 [364]-[365]. Edelman The reason the car sales on credit were at the core of Mr Kobelt's system of credit was that the cost of purchasing a car would often exceed the customer's financial means. As Mr Kobelt explained in his evidence, his system of credit involved him taking half of the customer's regular income as repayments of that debt288. However, the other half of money withdrawn from the customer's bank account was also kept by Mr Kobelt in his bank account. In order for a customer to gain access to the other half kept in Mr Kobelt's account, the customer would have to return to Mr Kobelt's store to obtain a cash advance or a purchase order for another store, or to purchase food or groceries from Mr Kobelt289. Both Mr Kobelt at trial, and counsel in this Court, described the half of the customer's money that had not been agreed for repayment of the purchase price of the car as "their money"290. But it was not treated by Mr Kobelt as their money in any real sense. It was held, undifferentiated, as Mr Kobelt's own funds. Mr Kobelt refused them permission to make some purchases, limiting some customers with a significant debt to buying milk, bread and meat and refusing the purchase of other items like sweets and chips291. He refused them permission to access the whole of the amount at any one time292. More often than not, he told them that "they could [only] have 'a little bit', or even only that they could have 'some' food or groceries"293. 288 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [30]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 693-694 [15]. 289 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [31]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 694 [15]. 290 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 291 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 292 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [56]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 695 [28]. 293 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [60]. See also Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 694 [16]. Edelman Although some complaints had been received and there were indications of dissatisfaction by some customers294, there was no evidence of general complaints by Mr Kobelt's customers. There was even evidence that some customers found features of the system attractive295, although it was not suggested that those features would have been absent from another system of credit without the many disadvantages of Mr Kobelt's system. Although for some, perhaps many, Mr Kobelt's system of credit was better than no credit at all, nevertheless his Anangu customers, unlike other customers, were offered no other alternative296. And the manner in which the system was implemented, which was pleaded as part of the system itself, was appalling. The approach to unconscionability required by s 12CB of the ASIC Act The meaning of the proscription against unconscionable conduct in s 12CB of the ASIC Act cannot be understood other than against its background in equitable doctrine and the repeated responses by parliaments to that equitable doctrine. The history of equity's proscription against unconscionable bargains has not been one in which "unconscionable" has had a single, unitary application. A conscience is the moral force that acts upon an individual with knowledge. There is no monolithic moral force to conscience. In the "most common case"297 of unconscionable conduct in equity in the nineteenth century, the Court of Chancery treated as "unconscionable" any bargain that was not fair or reasonable. transactions entered by expectant heirs or That circumstance reversioners concerning their future or reversionary interests. The transaction would be set aside unless the other party could prove that the transaction was fair and reasonable298. It did not matter that the expectant heir seeking to obtain involved 294 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 295 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [591]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 745 [319], 752 [354]-[355]. 296 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [34]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 297 Fry v Lane (1888) 40 Ch D 312 at 321. 298 The Earl of Portmore v Taylor (1831) 4 Sim 182 at 209 [58 ER 69 at 79]; Bromley v Smith (1859) 26 Beav 644 at 662, 665 [53 ER 1047 at 1054, 1055]; Tottenham v Green (1863) 32 LJ Ch 201 at 205; Earl of Aylesford v Morris (1873) LR 8 Ch App 484 at 490-491; O'Rorke v Bolingbroke (1877) 2 App Cas 814 at 833; Langdon v (Footnote continues on next page) Edelman income by a mortgage of a future or reversionary interest was of mature age299 and "perfectly understood the nature and extent of the transaction"300. There would be a taking of an "unfair advantage"301, or a breach of "the rule of reasonableness"302, if any substantial undervalue, sometimes described as a "hard bargain"303, could be proved. The same approach, requiring fairness and reasonableness to be proved by the other party, was taken to transactions entered without independent legal advice by the poor and "imperfect[ly] educat[ed]"304, or the poor and illiquid305, or the elderly306. The liberal approach of equity to characterising as "unconscionable" bargains in this area led to the United Kingdom Parliament's intervention with the Sales of Reversions Act 1867 (UK) (31 & 32 Vict c 4)307, subsequently adopted in each Australian colony or State308, which provided that "[n]o Purchase, made bonâ fide and without Fraud or unfair Dealing, of any Reuss (1883) 4 LR (NSW) Eq 28 at 31; Fry v Lane (1888) 40 Ch D 312 at 320-321; Rae v Joyce (1892) 29 LR Ir 500 at 509. 299 Davis v The Duke of Marlborough (1819) 2 Swans 108 at 143 [36 ER 555 at 566]; Bromley v Smith (1859) 26 Beav 644 at 664-665 [53 ER 1047 at 1055]; Langdon v Reuss (1883) 4 LR (NSW) Eq 28 at 31. 300 Bromley v Smith (1859) 26 Beav 644 at 665 [53 ER 1047 at 1055]; Langdon v Reuss (1883) 4 LR (NSW) Eq 28 at 31. 301 Middleton v Brown (1878) 47 LJ Ch 411 at 413. 302 Beynon v Cook (1875) LR 10 Ch App 389 at 391. 303 Beynon v Cook (1875) LR 10 Ch App 389 at 391; Middleton v Brown (1878) 47 LJ Ch 411 at 413; Rae v Joyce (1892) 29 LR Ir 500 at 509-510. 304 Fry v Lane (1888) 40 Ch D 312 at 321, citing Evans v Llewellin (1787) 1 Cox 333 [29 ER 1191] and Haygarth v Wearing (1871) LR 12 Eq 320. 305 Wood v Abrey (1818) 3 Madd 417 at 423-424 [56 ER 558 at 560-561]. 306 Baker v Monk (1864) 33 Beav 419 at 422-423 [55 ER 430 at 431]. 307 See Beynon v Cook (1875) LR 10 Ch App 389 at 392-393; Sinclair v Elderton (1900) 21 LR (NSW) Eq 21 at 23-24. 308 Sales of Reversions Act 1879 (SA), ss 1, 2, 3; Sales of Reversions Law Amendment Act 1884 (NSW), ss 1, 2, 3; Real Property Act 1914 (Vic), s 7; Conveyancing and Law of Property Act 1935 (Tas), s 3(11); Property Law Act 1969 (WA), s 92; Property Law Act 1974 (Qld), s 230. Edelman Reversionary Interest in Real or Personal Estate shall hereafter be opened or set aside merely on the Ground of Undervalue". That legislation did not alter the meaning of "unconscionability" in equity, but it precluded a conclusion of unconscionable conduct "merely on the ground of undervalue"309. Nevertheless, by the mid-twentieth century, the equitable bar had risen significantly. By the mid-twentieth century, the conscience of equity hardened so that mere "unfairness" or "unreasonableness" was not sufficient in any of the various categories. Claimants had to be subject to some "special" disadvantage – a disadvantage that must seriously affect their ability to make a judgment about their own interests310. Moreover, there had to be a "taking of advantage" of that special disadvantage311. Although that taking of advantage did not, and does not, require that the victim suffer any "loss or detriment"312, it required much more than mere unreasonableness, being variously described in Australia as requiring "victimisation" or "exploitation"313. In England, in addition to these descriptions the courts also described equity as requiring conduct that is "morally reprehensible"314 or conduct that "shocks the conscience of the court"315. With some exceptions in application316, these various epithets established a high bar 309 See Earl of Aylesford v Morris (1873) LR 8 Ch App 484 at 490; O'Rorke v Bolingbroke (1877) 2 App Cas 814 at 833. 310 Blomley v Ryan (1956) 99 CLR 362 at 415; [1956] HCA 81; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462; [1983] HCA 14; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 425 [118]; [2013] HCA 25; Thorne v Kennedy (2017) 91 ALJR 1260 at 1272 [38]; 350 ALR 1 at 13; [2017] HCA 49. 311 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 425 [118]; Thorne v Kennedy (2017) 91 ALJR 1260 at 1272 [38]; 350 ALR 1 at 13. 312 Blomley v Ryan (1956) 99 CLR 362 at 405. 313 See Thorne v Kennedy (2017) 91 ALJR 1260 at 1272 [38]; 350 ALR 1 at 13 and the authorities cited there. 314 Boustany v Pigott (1993) 69 P & CR 298 at 303; Credit Lyonnais Bank Nederland NV v Burch [1997] 1 All ER 144 at 153; Portman Building Society v Dusangh (2000) 80 P & CR D20 at D21-D22; Multiservice Bookbinding Ltd v Marden [1979] Ch 84 at 110. 315 Credit Lyonnais Bank Nederland NV v Burch [1997] 1 All ER 144 at 152. See also Portman Building Society v Dusangh (2000) 80 P & CR D20 at D21-D22. 316 See Bridgewater v Leahy (1998) 194 CLR 457 at 493 [123], compare at 471 [42]; [1998] HCA 66. Edelman for the vitiation of transactions in twentieth century equity on the ground of unconscionable conduct. that initial legislation, The initial legislation317 in Australia that prohibited unconscionable conduct in consumer transactions was intended to be reasonably similar to the equitable rule, although it included within its scope the equitable doctrine of undue influence. As stated by the Attorney-General in the Second Reading Speech318 for the provision was based upon a recommendation from a Green Paper319, which in turn recommended adoption of the Swanson Committee's recommendation for a statutory proscription based upon the "familiar concept to Australian law" of the equitable doctrine of unconscionable conduct320. The Explanatory Memorandum to the initial legislation referred to the exposition of the equitable doctrine of unconscionable conduct in this Court's decision in Commercial Bank of Australia Ltd v Amadio321 and said that the new provision would "at least" include conduct that would fall within that equitable proscription against unconscionable conduct as well as the equitable doctrine of undue influence322. The statutory proscription against unconscionable conduct was applied also to business transactions in 1993323 by the introduction of s 51AA of the Trade Practices Act 1974 (Cth), which prohibited corporations from engaging in conduct that was "unconscionable within the meaning of the unwritten law". The reference to "unwritten law" was to the equitable doctrine of unconscionable 317 Section 52A of the Trade Practices Act 1974 (Cth), inserted by the Trade Practices Revision Act 1986 (Cth), s 22. 318 Australia, House of Representatives, Parliamentary Debates (Hansard), 19 March 1986 at 1627. 319 Evans, Cohen and Willis, The Trade Practices Act: Proposals for Change (1984) 320 Trade Practices Act Review Committee, Report to The Minister for Business and Consumer Affairs (1976) at 67 [9.60]. 321 (1983) 151 CLR 447. 322 Australia, House of Representatives, Trade Practices Revision Bill 1986, Explanatory Memorandum at 22-23 [82]-[84]. 323 Inserted by the Trade Practices Legislation Amendment Act 1992 (Cth), s 9 and commenced operation on 21 January 1993. Edelman conduct324. There was, then, a gap between business transactions, which were covered by the legislative implementation of the equitable doctrine in s 51AA, and consumer transactions, which were covered by the initial proscription, now renumbered s 51AB325, which was modelled on the equitable doctrine but could potentially go further326. An example of a case involving a business transaction brought under s 51AA of the Trade Practices Act is the decision of this Court in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd ("Berbatis")327. In that case, lessees were in negotiations with the lessors for a renewal of their lease, which was nearing the end of its term. The lessors knew that the lessees needed a renewal in order to sell their business. The lessees contracted with a purchaser to sell the business for $65,500 subject to assignment of their lease. But the lessors refused to assign the lease unless the assignment contained a term discharging them from legal claims and consenting to the dismissal of proceedings against them, to which the lessees were parties, and which were ultimately successful. The lessees agreed to the terms but continued to take part in the proceedings against the lessors. The Australian Competition and Consumer Commission alleged that, amongst other claims, the term of the assignment of lease that required the lessees' withdrawal from the legal proceedings was unconscionable. By a majority, Kirby J dissenting, this Court held that the term was not unconscionable because the lessees were not subject to any special disadvantage328. Prior to the commencement of the Berbatis litigation, a Standing Committee of the House of Representatives recommended the enactment of "a significantly strengthened provision to deal with the general problem of unfair conduct" in the form of proscription against corporations engaging in conduct 324 Australia, House of Representatives, Trade Practices Legislation Amendment Bill 1992, Explanatory Memorandum at 8 [41], 9 [44]. See also Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 71-72 [40]; [2003] HCA 18. 325 Trade Practices Legislation Amendment Act 1992 (Cth), s 8. 326 Australia, House of Representatives, Trade Practices Legislation Amendment Bill 1992, Explanatory Memorandum at 9 [47]. 327 (2003) 214 CLR 51. 328 (2003) 214 CLR 51 at 64-65 [15], 77 [56], 115-116 [185], compare at 97-98 Edelman that is "unfair"329. The recommendations of the Standing Committee were adopted, although the new provision did not replace "unconscionable" with "unfair". Instead, the new s 51AC of the Trade Practices Act330 created a "mirror for small business consumers ... [of] the legal rights available to consumers in section 51AB, and incorporate[d] a range of additional matters"331. That range of additional matters included six new matters, on top of the five matters replicated from s 51AB, in the non-exhaustive list of matters to which the court could have regard. In the Second Reading Speech for the Bill that introduced the new s 51AC of the Trade Practices Act, the Minister said that s 51AC was intended to "extend the common law doctrine of unconscionability expressed in the existing section 51AA"332. Similarly, the Explanatory Memorandum said that it was "envisaged that [s 51AC] would prohibit [undue influence and unconscionable conduct as understood in equity] but would, in addition, extend to other conduct that is, in all the circumstances, unconscionable"333. Despite the intention for s 51AC to extend beyond the reach of the existing legislative proscription implementing the equitable proscription, one concern expressed during debate was that the failure to change the language from "unconscionable" to "unfair" would result in a harsher test than that which was recommended334. The Minister explained that the words "unconscionable conduct" were chosen for "greater certainty", so that the scope of s 51AC would 329 Australia, House of Representatives, Standing Committee on Industry, Science and Technology, Finding a balance: towards fair trading in Australia (1997) at 11 [1.42], 181 [6.73] (Recommendation 6.1). 330 Inserted by the Trade Practices Amendment (Fair Trading) Act 1998 (Cth), Sch 2, item 2. 331 Australia, House of Representatives, Parliamentary Debates (Hansard), 30 September 1997 at 8800. 332 Australia, House of Representatives, Parliamentary Debates (Hansard), 30 September 1997 at 8800. 333 Australia, House of Representatives, Trade Practices Amendment (Fair Trading) Bill 1997, Explanatory Memorandum at 22. 334 Australia, Senate, Parliamentary Debates (Hansard), 1 April 1998 at 1705-1706. See also Australia, House of Representatives, Standing Committee on Industry, Science and Technology, Finding a balance: towards fair trading in Australia Edelman be extended beyond the equitable proscription by "build[ing] on the existing body of case law"335. The new s 51AC was described as adding an "exocet missile" to the defensive armoury of small businesses336. Some commentators observed that after the enactment of s 51AC the result in Berbatis may very well have been different337. But in the decade after the introduction of s 51AC on 1 July 1998, the reality of the application of s 51AC by the courts fell far short of these expectations of Parliament and academic commentators. By 2008, the Senate Standing Committee on Economics reported that it was "in no doubt that section 51AC of the Trade Practices Act has fallen short of its legislative intent"338. The Standing Committee observed as follows339: "[T]he fact there have only been two successful findings under section 51AC over the past decade primarily reflects the courts' narrow interpretation of this section, rather than any great adjustment in business behaviour. There are simply too many allegations where the actions of retail landlords and franchisors appear unethical, and yet there is no legal redress because it is not unconscionable under the legal definition of unconscionable." The Standing Committee noted that s 51AC was "not working effectively because the courts are not interpreting the section as broadly as was the 335 Australia, House of Representatives, Parliamentary Debates (Hansard), 30 September 1997 at 8800-8801. 336 Brown, "The Impact of Section 51AC of the Trade Practices Act 1974 (Cth) on Commercial Certainty" (2004) 28 Melbourne University Law Review 589 at 598-599, citing Duncan and Christensen, "Section 51AC of the Trade Practices Act 1974: An 'Exocet' in Retail Leasing" (1999) 27 Australian Business Law Review 337 Webb, "Fayre play for commercial landlords and tenants – Lessons for Lawyers" (2001) 9 Australian Property Law Journal 99 at 109; Dean, "ACCC v Berbatis Holdings (2003) 197 ALR 153" (2004) 26 Sydney Law Review 255 at 269. 338 Australia, Senate, Standing Committee on Economics, The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (2008) at 43 [5.54]. 339 Australia, Senate, Standing Committee on Economics, The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (2008) at 31 [5.4]. Edelman legislative intent"340, and the "current interpretation of section 51AC sets the bar too high"341. The Standing Committee asked "how can the bar be lowered?"342 the word "unconscionable" with "unfair", It again considered replacing recognising the "appeal of this proposal" and acknowledging that this may be a "simpler and more efficient amendment to the section" than some other proposals343. However, the Standing Committee was concerned about the effect that this would have on the "architecture of statute" and the "uncertainty and confusion" that it would cause among courts and parties to litigation344. Instead of changing the language of "unconscionable" to "unfair", the Standing Committee recommended an alternative way for the bar to be lowered. It suggested "clarify[ing] for section 51AC is broader than the special disadvantage doctrine"345 by amending s 51AC to provide "that the prohibited conduct in the supply and acquisition of goods or services relates to the terms or progress of a contract"346. that unconscionable conduct the courts The Standing Committee's recommendation was implemented by the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 340 Australia, Senate, Standing Committee on Economics, The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (2008) at 9 [3.1]. 341 Australia, Senate, Standing Committee on Economics, The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (2008) at 32 [5.6]. 342 Australia, Senate, Standing Committee on Economics, The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (2008) at 32 [5.7]. 343 Australia, Senate, Standing Committee on Economics, The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (2008) at 12 [3.12], 35 [5.18]. 344 Australia, Senate, Standing Committee on Economics, The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (2008) at 35 [5.18]. 345 Australia, Senate, Standing Committee on Economics, The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (2008) at 35 [5.20]. 346 Australia, Senate, Standing Committee on Economics, The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (2008) at 36 [5.21] (Recommendation 1). Edelman (Cth)347, which also made equivalent changes to the cognate provision in the ASIC Act348. New factors were added, including permitting courts to consider the terms of the contract and the conduct of the supplier in complying with those terms349. The final relevant amendments occurred on 1 January 2012350. This was after the beginning, but before the end, of the period in respect of which the conduct relevant to this appeal occurred. However, it was not suggested at trial or on appeal to either the Full Court or to this Court that this timing was of any consequence. Those amendments followed the report of an expert panel that recommended the introduction of "interpretative principles" to recognise that the statutory proscriptions against unconscionable conduct go "beyond the scope of the equitable and common law doctrines of unconscionability, and are not confined by them"351. The expert panel also recommended harmonising or the business and consumer unconscionability proscriptions352. unifying Those recommendations were adopted353. In the Second Reading Speech for the Bill introducing the amendments, the Minister stated354: "Courts have tended to stick closely to the traditional equitable concept when applying the statutory prohibitions in sections 51AB and 51AC of the Trade Practices Act and sections 12CB and 12CC of the ASIC Act. 347 Australia, House of Representatives, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, Explanatory Memorandum at 42 [4.10]-[4.11]. 348 Australia, House of Representatives, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, Explanatory Memorandum at 54 [4.56]. 349 See Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth), Sch 1, item 1. 350 Competition and Consumer Legislation Amendment Act 2011 (Cth), Sch 2, item 4. 351 Horrigan, Lieberman and Steinwall, Strengthening statutory unconscionable conduct and the Franchising Code of Conduct (2010) at ix [2.4], 40 [2.4]. 352 Horrigan, Lieberman and Steinwall, Strengthening statutory unconscionable conduct and the Franchising Code of Conduct (2010) at x [2.8], 41 [2.8]. 353 Australia, House of Representatives, Competition and Consumer Legislation Amendment Bill 2010, Explanatory Memorandum at 19 [2.7]. 354 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 May 2010 at 4361-4362. Edelman For example, the common law required victims of unconscionable conduct to establish that they were at a 'special disadvantage' through factors like infirmity, age or a difficulty understanding English, before a court would recognise that unconscionable conduct had occurred. The present statutory prohibitions on unconscionable conduct sought to remove limitations such as these on the ability of people to seek redress when subjected to unconscionable conduct. The bill amends the law to make it clear that the prohibition is not limited to the equitable or common-law doctrines of unconscionable conduct. The courts should not limit the application of the provisions by reference to ancient common-law doctrines that are not part of the statute book." Other interpretive principles were inserted to make clear that the proscription can apply to a system of conduct or a pattern of behaviour and a specific person with a special disadvantage need not be identified355, and that unconscionable conduct "can extend beyond the formation of the contract to both its terms and the way in which it is carried out"356. The Minister said that the introduction of these interpretive principles "will ensure that the courts will have a clear message about the way in which parliament intends the law to apply"357. Professor Paterson compared the amended provision with the equitable doctrine and observed that it seemed unlikely that courts applying the statute would "insist on a requirement of a predatory state of mind by the stronger party"358. 355 Australia, House of Representatives, Competition and Consumer Legislation Amendment Bill 2010, Explanatory Memorandum at 24 [2.20]-[2.23]. See also Australia, House of Representatives, Parliamentary Debates (Hansard), 27 May 2010 at 4361. 356 Australia, House of Representatives, Competition and Consumer Legislation Amendment Bill 2010, Explanatory Memorandum at 25 [2.24]. See also Australia, House of Representatives, Parliamentary Debates (Hansard), 27 May 2010 357 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 May 2010 at 4359. 358 Paterson, "Unconscionable bargains in equity and under statute" (2015) 9 Journal of Equity 188 at 209. Edelman The same changes were replicated in the unconscionable conduct provisions in the ASIC Act359. The cognate provision in the ASIC Act in connection with the supply of financial services in trade or commerce is s 12CB(1), which is set out in full in other judgments. This legislative history clearly demonstrates that although Parliament's proscriptions against unconscionable conduct initially built upon the equitable foundations of that concept, over the last two decades Parliament has repeatedly amended the statutory proscription against unconscionable conduct in continued efforts to require courts to take a less restrictive approach shorn from either of the equitable preconditions imposed in the twentieth century, by which equity had raised the required bar of moral disapprobation. In particular, statutory unconscionability permits consideration of, but no requires, (i) special disadvantage, or (ii) any taking advantage of that special disadvantage. Like other open-textured criteria, such as "unfair" or "unjust", there is no clear baseline moral standard for what constitutes "unconscionable" conduct within s 12CB of the ASIC Act. Nevertheless, the history of development of that statutory proscription demonstrates a clear legislative intention that the bar over which conduct will be unconscionable must be lower than that developed in equity even if the bar might not have been lowered to the "unreasonableness" and "unfairness" assessments in the various categories in nineteenth century equity. longer Mr Kobelt's system was unconscionable Although ASIC's case was pursued only as an allegation of a "system"360 of unconscionable conduct within the broad legislative proscription, the system was pleaded and argued by reference to the circumstances of a number of test for representative customers. unconscionable conduct, Mr Kobelt's conduct in relation to any of the six Anangu customers called as witnesses by ASIC should have been sufficient for a finding that his contracts with them were unconscionable in equity. the stricter equitable Even under One example is the married couple, AH and AW361. They had few assets and limited education. AH received a Centrelink pension, which since 2013 has been a Disability Support Pension. AW received a Newstart Allowance. AH could not identify his bank statements when shown them and could not add 359 Competition and Consumer Legislation Amendment Act 2011 (Cth), Sch 2, item 1. See Australia, House of Representatives, Competition and Consumer Legislation Amendment Bill 2010, Explanatory Memorandum at 25 [2.25]. 360 ASIC Act, s 12CB(4)(b). 361 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 Edelman the numbers in them. AW had difficulty understanding her bank statements and had not heard of anything called a "bank loan". She did not know of any way of buying a car other than by Book-up. When AH was asked why he gave Mr Kobelt his bank card for the Book-up system he replied "I don't know but because of food. Because I didn't have no food." AH did not know what Mr Kobelt was going to do with AH's bank card and PIN. AH and AW used Book-up to purchase four cars in 18 months for amounts ranging from $4,000 to $8,000. AW explained that when "the car broke down, we get another car, and another car". The credit charged by Mr Kobelt on the $4,000 car, if repaid with principal over a 12 month period, would have amounted to an effective interest rate of 43%, significantly in excess of unsecured personal loan rates of 14-15.2% adduced in evidence362. The evidence from the other customers is no better. One customer, Customer B363, had no assets and only limited education, and gave evidence with the aid of an interpreter. Together with his wife, he purchased seven cars in a little over two years. He was not told by Mr Kobelt how much money would be taken from his account or when he would have his bank card returned. He stopped shopping at a general store in Mimili because Mr Kobelt had his bank card. Another customer, Ms Pearson364, who purchased four cars in four years, was too scared to ask Mr Kobelt to withdraw more than $150 or $200 from her own account for her own use because "that was the only limit I was allowed for". Another customer, Mr Brumby365, who bought 12 cars from Mr Kobelt over five years and was described in Mr Kobelt's rudimentary records as "slut", was denied funds from his bank account to purchase return bus tickets in what the primary judge described as "an illustration of the control which [Mr Kobelt] could exercise over his Book-up customers"366. 362 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 363 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 364 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 365 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 366 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 Edelman Mr Kobelt's system of credit was, for some customers, better than nothing. Customer D, for example, gave evidence that prior to the Book-up system of credit there were times when he went hungry between pension days367. Mr Kobelt's offer of credit, including Book-up, without more would not have been unconscionable if it had been offered on terms that were consistent with good conscience, clearly explained as one of a number of possible alternatives, and implemented fairly and transparently. It could have the benefit, like other, better, systems of credit such as regular direct debits, of smoothing the fluctuations of expenditure between receipts of income368. There could also be cultural benefits, such as avoiding a cultural practice and social obligation of "demand sharing" of resources amongst kin369, although as the primary judge and the Full Court emphasised, there was very little evidence to support the conclusion that any customer entered the Book-up arrangements in order to avoid demand sharing370. However, the Full Court was wrong to conclude that Mr Kobelt's system of credit was not unconscionable because it had some of these advantages, and was understood by his customers, "chosen" by them and entered into voluntarily371. The most basic error in this reasoning is that the choice of Mr Kobelt's system of credit by the Anangu customers was no real choice at all – Mr Kobelt offered them no other alternative. This reasoning also ignores many of the circumstances of the system of credit that were pleaded and argued before the primary judge. What was unconscionable was not the mere fact that Book-up was offered, and voluntarily accepted, but the manner in which the system of credit was offered and administered. The manner of offer, and the process of administration, of the system of credit underlie many of the non-exhaustive factors enunciated in s 12CC(1) of the ASIC Act. Without attention to those 367 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 368 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [569]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 735 [262], 742 [302], 751 [349]. 369 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [585], [617]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 735 [262], 742 [302], 751 [349]. 370 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [582]-[583]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 715-716 [152], 732-733 [250]-[251], compare at 751 [352]. 371 Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 Edelman factors the assessment of unconscionability becomes a high-level instinctive reaction that the legislation seeks to avoid. Further still, there is a danger that without close attention to the non-exhaustive factors the assessment will become a high-level instinctive reaction informed by the "high bar" imposed by the twentieth century rigour attached to the meaning of unconscionability in equity. The most relevant factors are as follows. First, there was the extreme difference in bargaining position between the customers and Mr Kobelt (s 12CC(1)(a)). Many of his customers were impoverished, illiterate and innumerate. They had little other opportunity to obtain credit. Secondly, the conditions imposed by Mr Kobelt were not reasonably necessary for the protection of his business interests (s 12CC(1)(b)). There were reasonable alternatives such as direct debit, deductions from wages, direct payments from Centrelink, or possession of bank cards without PINs372. Thirdly, basic understanding of the credit transaction was impossible because the rates of interest were concealed within the price differential for cars purchased on credit as opposed to purchased with cash, so that, even with high levels of literacy and numeracy, effective interest rates could not be calculated. Furthermore, customers had no access to records of their debts in order to understand the ongoing system of credit and even those records that were kept were rudimentary (s 12CC(1)(c)). Fourthly, the effective rates of interest, potentially up to 43% for a car sold for $4,000 with repayments taken over 12 months, were, as the primary judge concluded, "very expensive" and were far above market rates for unsecured lending (ss 12CC(1)(e), 12CC(1)(j)(ii)). Fifthly, Mr Kobelt discriminated between his customers (s 12CC(1)(f)). The Book-up system was the only form of credit that was offered to Aboriginal customers, although other forms of credit were offered to non-Aboriginal customers. No other form of credit could be negotiated by Aboriginal customers (s 12CC(1)(j)(i)). Sixthly, the undisclosed risks of supplying Mr Kobelt with the customer's bank card and PIN included the possibility of unauthorised withdrawals, including withdrawals with a lack of good faith such as the occasion when Mr Kobelt withdrew $56,944 from his customers' accounts knowing that he did 372 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 Investments at [525]-[539]; compare Kobelt v Australian Securities and Commission (2018) 352 ALR 689 at 752 [354]. Edelman not have authority to make withdrawals of those amounts (ss 12CC(1)(i)(i), 12CC(1)(j)(iv)). Seventhly, to a significant degree the system of credit had the effect of tying Mr Kobelt's customers to make purchases from him (s 12CC(1)(b)). Those tied purchases were subject to the discretion of Mr Kobelt, who restricted the goods which the customers could purchase and the amount of money that they could withdraw from funds that were not used to discharge their debts to him. Although there was no allegation that Mr Kobelt had exerted undue influence (s 12CC(1)(d)), and although there was no suggestion of dishonest use of the bank cards and PINs or that the records were maintained dishonestly (s 12CC(1)(j)(iv)), when all the elements of Mr Kobelt's system of credit are considered together, as s 12CB requires for a case pleaded and run this way, they point overwhelmingly to a conclusion of unconscionability. Conclusion Despite Parliament's repeated attempts to liberalise the application by the courts of statutory proscriptions against unconscionable conduct, and despite recognition at all stages of this litigation that the statutory concept of unconscionability in s 12CB(1) of the ASIC Act is broader than the concept in equity373, there was not a close focus in this litigation upon the consequences of the difference between a "narrow" and a "broad" application of the concept of unconscionability374. The result in this case, from which I dissent, is based upon a narrow application of the concept. For some, a broad interpretation is not precluded by the linguistic connotations of "unconscionable" because "there is a close association of ideas between the terms unreasonableness, lack of good faith, and unconscionability"375. For others, the linguistic connotation of "unconscionable" carries a force well beyond that of unreasonableness or unfairness so that the use of the term "unconscionable" might continue stubbornly to resist any attempt by Parliament to decouple the statutory proscription from its modern, restrictive equitable conception. If so, any lowering of the bar towards the nineteenth century equitable meaning 373 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [216]; compare Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 724 [192]-[193]. 374 Berbatis (2003) 214 CLR 51 at 79 [65]. 375 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 265. See also Paterson, "Unconscionable bargains in equity and under statute" (2015) 9 Journal of Equity 188 at 212-213. Edelman synonymous with "unfairness" or "injustice" may only be possible "unconscionable" is replaced with "unjust"376 or "unfair"377. However, in my opinion, even if the narrow view of unconscionability were applied to ASIC's "system" case, the appeal should be allowed. The primary judge was correct to conclude that Mr Kobelt's system of advancing and administering credit was unconscionable. One might ask how it was possible that Mr Kobelt was only able to impose and implement upon the pleaded 117 customers the extraordinarily harsh conditions of his single system of credit. It is difficult, perhaps impossible, to escape the conclusion that this was only possible because his customers lived in remote communities, were highly vulnerable, and accepted the conditions and implementation because, as appalling as those conditions were, the system was better than no credit at all. On the broad view of "unconscionability" this conclusion should be inescapable. Almost every one of the indicia of unconscionability in s 12CC points to the system being unconscionable. Even if there were evidence, which there was not378, to support a conclusion that the Anangu customers "chose" the system of credit for cultural reasons, the conclusion of unconscionability cannot be avoided by pointing to this so-called "choice" between Mr Kobelt's system of credit and no credit at all. If a Hobson's choice, such as that by the Anangu of Mr Kobelt's system of credit, were a significant factor militating against a system being unconscionable then this could amount to a licence to a monopolist to impose, on a "take it or leave it" basis, extortionate terms and conditions on those in need of a service. It is hard to imagine that this could have been the intention of Parliament. As the Solicitor-General of the Commonwealth rightly said in oral submissions, in what is probably a significant understatement, the system of credit adopted by Mr Kobelt is one that would be unacceptable in mainstream Australian society. It is made less acceptable, not more acceptable, because it was the only form of credit offered, and thus accepted, in remote communities of highly vulnerable persons in need of credit. 376 Compare Contracts Review Act 1980 (NSW). 377 Compare Consumer Rights Act 2015 (UK). And see Paterson and Brody, "'Safety Net' Consumer Protection: Using Prohibitions on Unfair and Unconscionable Conduct to Respond to Predatory Business Models" (2015) 38 Journal of Consumer Policy 331 at 353. 378 Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [582]-[585]; Kobelt v Australian Securities and Investments Commission (2018) 352 ALR 689 at 732 [243]-[244]. |
HIGH COURT OF AUSTRALIA Matter No S111/2002 AND APPELLANT PTY LIMITED RESPONDENT Matter No S112/2002 AND APPELLANT PTY LIMITED RESPONDENT Matter No S113/2002 AND APPELLANT PTY LIMITED RESPONDENT Gifford v Strang Patrick Stevedoring Pty Ltd [2003] HCA 33 18 June 2003 S111/2002, S112/2002 and S113/2002 ORDER IN EACH MATTER 1. Appeal allowed. Set aside the orders of the New South Wales Court of Appeal dated 14 June 2001 and, in lieu thereof, order that: (a) appeal to the Court of Appeal is allowed; the orders of the District Court of New South Wales dated 24 August 1999 are set aside; and the matter be remitted to the District Court for determination of all outstanding issues. The respondent to pay the costs of the appellant in this Court and in the Court of Appeal. 4. Costs of each party in the District Court to abide the outcome of proceedings in that Court. On appeal from the Supreme Court of New South Wales Representation: B J Gross QC with D E Baran for the appellants (instructed by G H Healey & Co with Graeme R Jensen & Co) J D Hislop QC with T F McKenzie for the respondent (instructed by Gillis Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Gifford v Strang Patrick Stevedoring Pty Ltd Torts – Negligence – Psychiatric injury – Employee killed in workplace accident – Whether employer owed duty of care to children of deceased employee – Whether reasonable care required to guard against the risk of psychiatric injury – Whether duty existed at common law – Whether the existence of duty was negated by s 4(1)(b) of Law Reform (Miscellaneous Provisions) Act 1944 (NSW). Law Reform (Miscellaneous Provisions) Act 1944 (NSW), s 4(1)(b). Workers Compensation Act 1987 (NSW), s 151P. GLEESON CJ. These three appeals, which were heard together, arise out of claims for damages for negligently inflicted psychiatric injury brought by the children of a man who was killed in an accident at work. The issue is whether the man's employer owed a duty of care to the children. The respondent to each appeal, a stevedoring company, employed the late Mr Barry Gifford, who was crushed to death by a forklift vehicle. Negligence on the part of the driver of the vehicle, who was also an employee of the respondent, and on the part of the respondent itself, was alleged, and was admitted. At the time, the appellants were aged 19, 17 and 14 respectively. They did not witness the accident. They were all informed of what had occurred later on the same day. The appellants claim to have suffered psychiatric injury in consequence of learning of what had happened to their father. This aspect of their claims has not yet been determined. A similar claim by the mother of the appellants failed upon the ground that she had suffered no psychiatric injury, but had merely been affected by normal grief of a kind that did not give rise to an entitlement to damages. Her appeal against that decision was dismissed1. In the District Court of New South Wales, the claims of the appellants were dismissed upon the ground that, by reason of s 4(1)(b) of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW) ("the Act"), the respondent was under no liability for the "nervous shock" allegedly suffered by the appellants, because their father had not been killed, injured, or put in peril within their sight or hearing2. The New South Wales Court of Appeal (Handley and Hodgson JJA, Ipp AJA) considered that the respondent's reliance upon s 4(1)(b) was misplaced. However the Court of Appeal reached the same ultimate conclusion as the primary judge upon the ground that, because the appellants had merely been told about the incident, and did not directly perceive either the event that resulted in the death of their father or its aftermath, then there was no duty of care at common law.3 Since the decision of the Court of Appeal, this Court has held, in Tame v New South Wales and Annetts v Australian Stations Pty Ltd4, that direct perception of an incident or its aftermath is not in all cases a necessary aspect of 1 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606. 2 At the time to which these appeals relate, s 4(1)(b) was in force. It has subsequently been overtaken by the Civil Liability (Personal Responsibility) Act 2002 (NSW), s 32, but that provision is presently irrelevant. 3 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at 617. (2002) 76 ALJR 1348; 191 ALR 449. a claim for damages for negligently inflicted psychiatric injury. Accordingly, it will be necessary to reconsider the claims of the appellants in the light of that decision. If it is concluded that the Court of Appeal was in error in deciding that the respondent owed no duty of care to the appellants at common law, it will then be necessary to deal with the respondent's Notice of Contention, which seeks to support the dismissal of the appeals upon the ground favoured by the trial judge, that is to say, s 4(1)(b) of the Act. In that connection, the appellants rely upon an argument, rejected both at first instance and in the Court of Appeal, to the effect that the operation of s 4(1)(b) of the Act is displaced by s 151P of the Workers Compensation Act 1987 (NSW) ("the Workers Compensation Act"). In the event that the appellants succeed, the matter will have to be remitted to the District Court for the determination of the outstanding issues, including the issue that was fatal to the claim of the appellants' mother. The common law duty of care The Court of Appeal decided against the appellants on the ground that there can be no liability at common law for damages for mental injury to a person who is told about an horrific accident or injury to a loved one but does not actually perceive the incident or its aftermath5. That proposition is inconsistent with the reasoning of this Court in Tame and Annetts, and cannot stand with the actual decision in Annetts6. It does not follow, however, that the circumstance that the appellants were not present when their father suffered his fatal injury, and did not observe its aftermath, is irrelevant to the question whether the respondent owed them, as well as their father, a duty to take reasonable care to prevent injury of the kind they allegedly suffered. For the reasons I gave in Tame and Annetts, I consider that the central issue is whether it was reasonable to require the respondent to have in contemplation the risk of psychiatric injury to the appellants, and to take reasonable care to guard against such injury7. Relevant to that issue is the burden that would be placed upon those in the position of the respondent by requiring them to anticipate and guard against harm of the kind allegedly suffered by the appellants. (2001) 51 NSWLR 606 at 616-618 per Hodgson JA; Handley JA agreeing at 608; Ipp AJA agreeing at 623. (2002) 76 ALJR 1348 at 1353 [18], 1357 [51], 1380-1381 [187]-[191], 1386-1387 [214]-[216], 1388-1389 [225], 1395 [256], 1398 [271]-[272], 1415 [366]; 191 ALR (2002) 76 ALJR 1348 at 1351-1352 [9]-[10], 1353 [18]; 191 ALR 449 at 453-454, As the facts in Tame illustrated so vividly, just as it would place an unreasonable burden upon human activity to require people to anticipate and guard against all kinds of foreseeable financial harm to others that might be a consequence of their acts or omissions, so also it would be unreasonable to require people to anticipate and guard against all kinds of foreseeable psychiatric injury to others that might be a consequence of their acts or omissions. In the case of Mrs Tame, her personal susceptibility raised an additional problem of foreseeability. However, just as advances in medical knowledge have made us aware of the variety of circumstances in which emotional disturbance can trigger, or develop into, recognisable psychiatric injury, so they also make us aware of the implications, for freedom of action and personal security, of subjecting people to a legal requirement to anticipate and guard against any risk to others of psychiatric injury so long as it is not far-fetched or fanciful. In the context of a question of duty of care, reasonable foreseeability involves more than mere predictability. And advances in the predictability of harm to others, whether in the form of economic loss, or psychiatric injury, or in some other form, do not necessarily result in a co-extensive expansion of the legal obligations imposed on those whose conduct might be a cause of such harm. The limiting consideration is reasonableness, which requires that account be taken both of interests of plaintiffs and of burdens on defendants. Rejection of a "control mechanism", such as the need for direct perception of an incident or its aftermath, originally devised as a means of giving practical content to that consideration, does not involve rejection of the consideration itself. In its capacity as an employer, the respondent was under a duty of care towards the father of the appellants. The question is whether, additionally, it was under a duty of care which required it to have in contemplation psychiatric injury to the children of its employee, and to guard against such injury. The relationship of parent and child is important in two respects. First, it goes to the foreseeability of injury. That a child of the age of the various appellants might suffer psychiatric injury in consequence of learning, on the day, of a terrible and fatal injury to his or her father, is not beyond the "common experience of mankind"8. (The fact that all three of the victim's children are said to have suffered psychiatric injury might give rise to some questions for the experts on a new trial, but is not presently relevant). Secondly, it bears upon the reasonableness of recognising a duty on the part of the respondent. If it is reasonable to require any person to have in contemplation the risk of psychiatric injury to another, then it is reasonable to require an employer to have in contemplation the children of an employee. cf Chester v Waverley Corporation (1939) 62 CLR 1 at 10 per Latham CJ. In Jaensch v Coffey9, Gibbs CJ said: "Where the relationship between the person killed or physically injured and the person who suffers nervous shock is close and intimate, not only is there the requisite proximity in that respect, but it is readily defensible on grounds of policy to allow recovery." Not all children have a close and intimate relationship with their parents; and it may be that, even when parents are killed in sudden and tragic circumstances, most grieving children do not suffer psychiatric injury. However, as a class, children form an obvious category of people who might be expected to be at risk of the kind of injury in question. Where there is a class of person, such as children, who are recognised, by the law, and by society, as being ordinarily in a relationship of natural love and affection with another class, their parents, then it is not unreasonable to require that an employer of a person in the second class, whose acts or omissions place an employee at risk of physical injury, should also have in contemplation the risk of consequent psychiatric injury to a member of the first class. Subject to the matter next to be considered, I would conclude that the respondent owed a duty of care to the appellants. Section 4(1)(b) Section 4 of the Act is set out in the reasons for judgment of Callinan J. The legislative history is described in an article written by Mr D Butler and published in 1996 in the Torts Law Journal10. The provision was a response by the New South Wales legislature to the decision of this Court in Chester v Waverley Corporation11. In considering the nature of that response, it is important to note some features of the existing state of the common law, as exemplified in Chester. In Chester, the majority ruled against the claim of a mother who suffered "nervous shock" following the drowning of her child in a trench excavated by the local council and left unguarded. The mother did not witness the drowning, but participated in a search for the child, and was present when the child's body was recovered. Evatt J, in dissent, considered that the case fell within the principles relating to search and rescue, and that the council's duty of care to the mother was owed because, although she was not at the scene of the accident when the child was drowned, she came there soon afterwards in search of the child and might have (1984) 155 CLR 549 at 555. 10 Butler, "Nervous shock at common law", (1996) 4 Torts Law Journal 120. 11 (1939) 62 CLR 1. been a participant in a possible rescue12. As Deane J pointed out in Jaensch v Coffey13, in terms of modern law, the conclusion of Evatt J is to be preferred to that of the majority. However, the reasoning of Evatt J was put on a limited basis, and his analysis in terms of primary and secondary liabilities was criticised by Professor Fleming14 in the first edition of his work on the law of torts. While the reasoning of all the members of the Court in Chester has since been overtaken by developments in the common law of Australia, that of Evatt J demonstrates a point that is significant in considering the legislative purpose behind s 4 of the Act. Section 4 deals with psychiatric injury to members of the family of a victim. Section 3 provides that in an action for injury caused after the commencement of the Act, "the plaintiff shall not be debarred from recovering damages merely because the injury complained of arose wholly or in part from mental or nervous shock". Section 4 goes on to provide that the liability of any person in respect of injury caused by the act, neglect or default by which any other person is killed, injured or put in peril, shall "extend to include liability" for injury arising from mental or nervous shock sustained by family members in certain circumstances. In the case of a parent, or husband or wife, of the victim, it is not stipulated that the victim must be killed, injured or put in peril in the sight or hearing of the plaintiff. In the case of other family members, there is such a stipulation. The expression "member of the family" is defined (s 4(4)). Relevantly, it includes children. Hence, if s 4(1)(b) were definitive of the potential liability of the respondent to the appellants, the appellants would fail, because the father was not killed, injured or put in peril within their sight or hearing. As the reasoning of Evatt J in Chester shows, s 4 does not cover the entire range of persons who, as the common law stood in 1944, might have sued for "nervous shock". In particular, it does not cover rescuers who are not family members. The English decision of Chadwick v British Railways Board15, in 1967, which concerned nervous shock suffered by a man who had participated in emergency services following a collision between two railway trains, did not represent a development in the common law. The principles upon which it was decided were the same as those which Evatt J said should have been applied in Chester16. If s 4 of the Act amounted to a definitive statement of the 12 (1939) 62 CLR 1 at 37-39. 13 (1984) 155 CLR 549 at 591. 14 Fleming, The Law of Torts, (1957) at 180. 15 [1967] 1 WLR 912; [1967] 2 All ER 945. 16 See also Haynes v Harwood [1935] 1 KB 146. circumstances in which a claim for mental or nervous shock of the kind referred to in s 3 might succeed, then it did not "extend" the liability of defendants; in certain respects it narrowed that liability, even by reference to the state of the common law in 1944. In Coates v Government Insurance Office of New South Wales17, on the view I took of other issues in the case, it was unnecessary (and therefore, I thought, inappropriate) for me to decide whether s 4(1)(b) operated to limit rights that would otherwise have been given by the common law. It appeared to me then, and appears to me now, that the question is whether the statute evinces an intention that it is to be definitive of rights and liabilities in the case of all claims for damages for nervous shock, or whether the statute is to be regarded as supplementary to, and not derogating from, the rights of persons at common law18. In Coates, Kirby P, who found it necessary to decide the point, preferred the second construction. The same view was taken by Mason P in FAI General Insurance Co Ltd v Lucre19, and by the Court of Appeal in this case. In the present case, Hodgson JA, with whom Handley JA and Ipp AJA agreed, pointed out that s 4 does not expressly state that there shall be no liability in respect of mental or nervous shock sustained by persons other than the immediate victim, unless the conditions laid down by the section are satisfied. That is correct, and significant. Hodgson JA went on to say20: "One other consideration which persuades me that the common law is not displaced is that s 4 starts with a breach of duty of care to one person, and then extends liability for that breach to include a liability to certain other persons: it does not provide that there is any duty of care to those other persons. In so far as the common law provides for liability to persons other than the immediate victim, it does so by means of a duty of care owed directly to those persons, rather than a liability built upon a breach of duty to the primary victim." The second sentence is accurate, but the explanation of the form of s 4, referred to in the first sentence, might possibly be found in the view of the common law taken by Evatt J in Chester, which was rather different from the 17 (1995) 36 NSWLR 1. 18 See Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477 at 505-506 per Mason CJ and Toohey J. 19 (2000) 50 NSWLR 261 at 263-264. 20 (2001) 51 NSWLR 606 at 615. modern view. Indeed, that was the basis of Professor Fleming's criticism of the reasoning of Evatt J noted earlier21. Whether or not it owes its origin to an outmoded or unorthodox view of the common law as involving primary and secondary liability, the scheme of s 4, including the expression "shall extend to include liability" of a certain kind in certain circumstances, is difficult to reconcile with a legislative intention comprehensively to define liability. Furthermore, the legislative history shows that, although s 4 represented a parliamentary compromise as to the desirable extent of reform, it was intended to confer, rather than take away, rights. The Court of Appeal was right to conclude that s 4 of the Act does not have the effect of excluding the liability of the respondent to the appellants if such liability otherwise exists at common law. As to the argument, advanced on behalf of the appellants, to the effect that s 151P of the Workers Compensation Act, in cases such as the present, displaces s 4, I agree with what has been said by Gummow and Kirby JJ. Conclusion The appeals should be allowed. I agree with the consequential orders proposed by Gummow and Kirby JJ. 21 Above at [15]. McHugh 26 McHUGH J. Section 4 of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW)22 enacted that a member of the family of a person killed by the negligence of another may bring an action for nervous shock23 if the person was killed "within the sight or hearing of such member of the family." The children of an employee claim that they suffered nervous shock when they were told that their father had been killed at work. His death was caused by the negligence of his employer. The children were not present when he was killed, nor did they see his dead body. They learnt of his death some hours after it occurred. Accordingly, they cannot bring an action under s 4. But does s 4 abolish the common law right of a family member to bring an action for nervous shock suffered as the result of the wrongful death of the relative? If not, did the employer's duty to take reasonable care for the safety of their father during the course of his employment include a separate duty to the children to protect them from suffering nervous shock by reason of a breach of the duty owed to their father? These are the principal issues in these appeals from a decision of the Court of Appeal of New South Wales holding that the common law action is not abolished, but that the employer owed no such duty to the children. In my opinion, the Court of Appeal was correct in holding that the Law Reform (Miscellaneous Provisions) Act does not abolish the common law right of a family member to bring an action for nervous shock. But it erred in holding that the employer owed no duty to the children. An employer owes a duty to take care to protect from psychiatric harm all those persons that it knows or ought to know are in a close and loving relationship with its employee. It is not a condition of that duty that such persons should be present when the employee suffers harm or that they should see the injury to the employee. That is the logical consequence of the reasoning in Tame v New South Wales24 – a decision of this Court delivered after the decision of the Court of Appeal in the present case. An issue also arises in these appeals as to whether s 151P of the Workers Compensation Act 1987 (NSW) provides an independent cause of action for nervous shock. In my opinion, it does not do so. 22 Sections 3 and 4 of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW) were repealed by the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW) and have now been replaced by Pt 3 of the Civil Liability Act 2002 (NSW). 23 "Nervous shock" is an outdated term that nowadays is taken to mean a recognisable psychiatric injury. 24 (2002) 76 ALJR 1348; 191 ALR 449. McHugh Statement of the case The District Court Darren Gifford, Kelly Gifford and Matthew Gifford sued Strang Patrick Stevedoring Pty Ltd ("Strang") in the District Court of New South Wales for damages for nervous shock suffered when they were told of the death of their father as a result of a workplace accident. Strang admitted that its negligence caused the death of their father, however the District Court dismissed their actions25. Naughton DCJ, who heard the actions, held that in New South Wales s 4(1)(b) of the Law Reform (Miscellaneous Provisions) Act covered the field of nervous shock actions, and that it replaced the common law action with a statutory cause of action. Accordingly, his Honour held that, as the deceased was not killed, injured or put in peril within the sight or hearing of any of the children, s 4(1)(b) prevented them from recovering damages for nervous shock. His Honour made no finding as to whether any of the children had suffered nervous shock26. The Court of Appeal The Court of Appeal (Handley and Hodgson JJA and Ipp AJA27) dismissed appeals by the children28. Their Honours held that s 4(1)(b) of the Law Reform (Miscellaneous Provisions) Act did not cover the field of nervous shock and did not affect a person's right to bring an action for nervous shock at common law. But they held that the common law actions must fail. They 25 Gifford v Strang Patrick Stevedoring Pty Limited unreported, District Court of New South Wales, 24 August 1999. 26 The wife of the deceased also claimed damages for nervous shock. Naughton DCJ dismissed her action on the basis that she had not suffered any demonstrable psychological or psychiatric illness caused by mental reaction to news of the deceased's accidental death. Subsequently, the Court of Appeal affirmed this finding [Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at 621 [66]]. This Court rejected her application for special leave to appeal to this Court. 27 Handley JA and Ipp AJA agreed with Hodgson JA on all issues except for his Honour's discussion of s 4(1)(a) of the Law Reform (Miscellaneous Provisions) Act on which their Honours chose not to express an opinion and which is not relevant for the purposes of this appeal. 28 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606. McHugh applied the reasoning in cases decided before Tame29. Those decisions severely restricted the grounds upon which an action for nervous shock could be brought at common law. They held that a person was not entitled to damages if no more appeared than that a person had suffered psychiatric injury on being told of the death of, or injury to, a loved one. To bring such an action, the defendant must have breached its duty to the loved one and the plaintiff must have seen the incident or been present at its immediate aftermath30. The material facts Strang employed Mr Barry Gifford as a wharf labourer and wharf clerk. On 14 June 1990, he was killed by what the trial judge described as an "horrific" accident when a large forklift vehicle reversed over him, crushing him to death immediately. Soon after the accident, Mrs Kristine Gifford, his estranged wife, was informed that he had been killed. Darren Gifford, Kelly Gifford and Matthew Gifford are Barry and Kristine Gifford's children. They learnt of their father's death later that same day. At the time they were aged 19, 17 and 14. While the children did not live with the deceased, they maintained a close and loving relationship with him. Their father visited them almost daily. The children claim that they were shocked and distressed at the news. None of them saw the deceased's body after the accident; they were apparently discouraged from doing so because of the horrific injuries that he suffered. Section 4 of the Law Reform (Miscellaneous Provisions) Act Strang has filed a notice of contention that seeks to support the decision of the Court of Appeal by contending that in New South Wales s 4 of the Law Reform (Miscellaneous Provisions) Act has abolished a family member's right to bring a common law action for nervous shock. The notice contends that, so far as family members are concerned, actions for nervous shock can be brought only in accordance with the conditions specified in s 4. If this contention were upheld, questions of common law duty would be irrelevant. In my opinion, both the wording of s 4 and its history demonstrate that the section does not exhaust the rights of a family member to bring an action for nervous shock resulting from the death or injury of a relative. Section 4 confers rights; it does not abolish them. The right of action that it confers on parents and spouses is superior to the right that it confers on other family members. But nothing in the section or its history suggests that the right of either group to bring 29 (2002) 76 ALJR 1348; 191 ALR 449. 30 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at 616-617 McHugh an action for nervous shock is confined to the statutory right that s 4 confers. Section 4 relevantly provides: "(1) The liability of any person in respect of injury caused after the commencement of this Act by an act, neglect or default by which any other person is killed, injured or put in peril, shall extend to include liability for injury arising wholly or in part from mental or nervous shock sustained by: a parent or the husband or wife of the person so killed, injured or put in peril; or any other member of the family of the person so killed, injured or put in peril where such person was killed, injured or put in peril within the sight or hearing of such member of the family." Section 4 was a statutory response to the decision of this Court in Chester v Waverley Corporation31 and the decision of the House of Lords in Bourhill v Young32. In Chester, this Court held that no action for nervous shock could be brought by a mother who had suffered shock after seeing the dead body of her missing son in a trench under the control of the council. In Bourhill, the House of Lords denied a right of action to a woman who suffered nervous shock after hearing a motor cyclist collide with a motor vehicle. At the time she was unloading a basket from a platform on the other side of a nearby stationary tram. In the Second Reading Speech on the Law Reform (Miscellaneous Provisions) Bill in the Legislative Council, the Minister for Justice said33 that s 4 was "a statutory extension of liability to meet the position created by the decision in [Bourhill] v Young … It creates no new substantive right of action." When s 4 was enacted, it was seen as a beneficial provision that expanded the ability of close family members to recover for nervous shock. It was a legislative response to the perceived inadequacies in the common law, as then understood, to provide compensation to family members for nervous shock suffered as the result of injury to their relatives34. It removed the need for a family member to show the existence of a duty to the family member or that 31 (1939) 62 CLR 1. 33 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 8 November 1944 at 830. 34 See Jaensch v Coffey (1984) 155 CLR 549 at 601-602 per Deane J. McHugh psychiatric injury to that person was reasonably foreseeable. The Minister said35 that the bill would "provide a considerable advance on the present law". Nothing in s 4 or its history supports Strang's submission that the section was intended to operate to the exclusion of the common law and cover the field in relation to claims for nervous shock by family members. There is a presumption – admittedly weak these days – that a statute is not intended to alter or abolish common law rights unless the statute evinces a clear intention to do so36. In Malika Holdings Pty Ltd v Stretton37, however, I warned of the need for caution in applying this presumption: nowadays legislatures regularly enact laws that infringe the common law rights of individuals. The presumption of non-interference is strong when the right is a fundamental right of our legal system; it is weak when the right is merely one to take or not take a particular course of action. Courts should not cut down the natural and ordinary meaning of legislation evincing an intention to interfere with these lesser rights by relying on a presumption that the legislature did not intend to interfere with them. Given the frequency with which legislatures now abolish or amend "ordinary" common law rights, the "presumption" of non-interference with those rights is inconsistent with modern experience and borders on fiction. If the presumption still exists in such cases, its effect must be so negligible that it can only have weight when all other factors are evenly balanced. The right to bring an action for psychiatric injury is an ordinary legal right. It is not a fundamental right of our society or legal system similar to the right to have a fair trial or to have a criminal charge proved beyond a reasonable doubt. Nor is the presumption against interfering with ordinary common law rights of the same strength as the presumption that laws do not operate retrospectively. Whether or not the Law Reform (Miscellaneous Provisions) Act excludes the common law has to be determined by construing the legislation in its natural and ordinary meaning, having regard to its context and the purpose of 35 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 5 December 1944 at 1491. 36 Potter v Minahan (1908) 7 CLR 277 at 304. See also Sargood Bros v The Commonwealth (1910) 11 CLR 258 at 279 per O'Connor J; Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at 341 per Mason ACJ, Wilson and Dawson JJ; Bropho v Western Australia (1990) 171 CLR 1 at 18 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ and myself; Coco v The Queen (1994) 179 CLR 427 at 437-438 per Mason CJ, Brennan and Gaudron JJ and myself. 37 (2001) 204 CLR 290 at 298-299 [28]-[30]. McHugh the enactment. The context and purpose of a law includes the history of the enactment and the state of the law when it was enacted38. Section 4(1) says that liability in respect of a negligently inflicted injury shall "extend to include" liability for nervous shock. The words "extend to include" indicate that the New South Wales legislature sought to alter the common law in that State, as understood at the time, for the benefit of certain family members. The words of s 4(1), and in particular the words "extend to include", indicate that the section expanded the scope of the common law so far as family members were concerned, but otherwise maintained the existence of a common law action for nervous shock for those persons. There is not a word in the Law Reform (Miscellaneous Provisions) Act that suggests that its purpose was to abolish generally the common law right to bring an action for damages for nervous shock. Nothing in the legislation itself or the Second Reading Speech indicates that the legislature intended that only those family members included in the definition in s 4(5) of the Law Reform (Miscellaneous Provisions) Act could bring an action for nervous shock. The fact that the legislature did not seek to exclude the common law is evident from a statement in the Second Reading Speech where the Minister said that s 4 would not affect the liability of newspaper publications who would continue to be governed by the common law39. Against that background, it would be surprising if s 4 had the purpose – sub silentio – of abolishing the common law rights of the family members of an injured or deceased person and confining their rights to those conferred by the section. This is particularly so, given that the evident purpose of the legislation was to give family members rights of action denied to other persons who suffer nervous shock as the result of the careless conduct of wrongdoers. Because the present issue has not previously arisen for determination, judicial utterances concerning the issue have been limited. But on two occasions, members of this Court have expressed the view that s 4 was an extension and not an abolition of the common law right to bring an action for nervous shock. In Scala v Mammolitti40, Taylor J said that, although s 4 extended the field in which persons standing in a special relationship to a person killed, injured or put in peril 38 Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at 341 per Mason ACJ, Wilson and Dawson JJ; Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290 at 299 [30]. 39 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 8 November 1944 at 830. 40 (1965) 114 CLR 153 at 159-160, Barwick CJ and Windeyer J agreeing. McHugh might recover for nervous shock, "it otherwise leaves the earlier law untouched." In Mount Isa Mines Ltd v Pusey41, Windeyer J said that New South Wales had modified the common law by enacting the Law Reform (Miscellaneous Provisions) Act and that the common law concerning nervous shock continued to develop. Statements in the New South Wales Supreme Court are also consistent with the view that s 4 does not exclude the operation of the common law in New South Wales. In Anderson v Liddy42, Jordan CJ referred to s 4 as extending "in certain respects the common law liability of wrongdoers" in relation to nervous shock. His Honour referred to actions by family members brought under s 4 as "special cases". In Coates v Government Insurance Office of New South Wales43, Kirby P held that s 4(1) does not exhaustively define the rights of persons to recover for nervous shock. His Honour said that, on its proper construction, the section provided a right for certain persons to bring proceedings for nervous shock in addition to common law rights that remained unaffected. Clark JA tentatively agreed with Kirby P on this issue44. Similarly in FAI General Insurance Co Ltd v Lucre45, Mason P, with whose judgment Meagher and Giles JJA agreed, said that the "section does not purport to restrict the continuing development of the common law of Australia". Accordingly, it was not the purpose of s 4 of the Law Reform (Miscellaneous Provisions) Act to abolish the rights of the persons identified in that section to bring common law actions for nervous shock suffered as the result of harm to, or the putting in peril of, a relative. Nor is the position changed because in 1944 lawyers and the legislature of New South Wales understood the common law to be more restricted than this Court has now declared it to be. Is s 151P of the Workers Compensation Act an independent source of rights? Counsel for the children submitted the Workers Compensation Act should be given a purposive construction – one providing an independent right to sue for nervous shock – even though it is expressed in the negative language of restriction, rather than the positive language of entitlement. that s 151P of 41 (1970) 125 CLR 383 at 408. 42 (1949) 49 SR(NSW) 320 at 323. 43 (1995) 36 NSWLR 1 at 7-8. 44 (1995) 36 NSWLR 1 at 22. 45 (2000) 50 NSWLR 261 at 263-264. McHugh Section 151P is in Pt 5 of the Act which is entitled "Common law remedies". Relevantly, Pt 5 provides: Common law and other liability preserved This Act does not affect any liability in respect of an injury to a worker that exists independently of this Act, except to the extent that this Act otherwise expressly provides. 151E Application – modified common law damages This Division applies to an award of damages in respect of: an injury to a worker, or the death of a worker resulting from or caused by an injury, being an injury caused by the negligence or other tort of the worker's employer. 151P Damages for psychological or psychiatric injury No damages for psychological or psychiatric injury are to be awarded in respect of an injury except in favour of: the injured worker, or a parent, spouse, brother, sister or child of the injured or deceased person who, as a consequence of the injury to the injured person or the death of the deceased person, has suffered a demonstrable psychological or psychiatric illness and not merely a normal emotional or cultural grief reaction." The Court of Appeal correctly concluded that s 151P was a limitation on awards of damages rather than the source of an independent right to damages. The relevant parts of the legislation assume the existence of rights of action for nervous shock arising out of workplace injuries and confine the right to claim damages in such actions to injured workers and their immediate family members. The heading "Common law remedies" in the relevant part of the Workers Compensation Act reflects this fact, as does the heading "Modified common law damages" in Div 3 which contains s 151P. Thus, s 151P does not give plaintiffs a right to recover damages. On the contrary, it takes away the right to recover McHugh damages in an action for nervous shock for workplace injuries but makes an exception in favour of injured workers and members of their close families. The common law action for nervous shock The Court of Appeal held that the children could not maintain a common law claim for damages for nervous shock because they did not see the accident that caused their father's death or its aftermath. Hodgson JA said46 "authority is strongly against the view that there can be liability at common law for damages for mental injury to a person who is told about even an horrific accident or injury to a loved one but does not at any time actually perceive the incident or its aftermath." However, this Court held in Tame47 that the common law does not limit liability for nervous shock to injuries brought about by a sudden shock in circumstances where the plaintiff has directly perceived a distressing event or its immediate aftermath. Accordingly, the Court of Appeal erred in dismissing the claim on the ground that the children were not present at the accident or its aftermath. The question then is, whether the relevant principles of the law of negligence required a finding that the respondent owed the children a duty of care to prevent psychiatric injury. That depends on whether the children were "neighbours" in Lord Atkin's sense of that term48. Were they so closely and directly affected by Strang's relationship with their father that Strang ought reasonably to have had them in contemplation when it directed its mind to the risk of injury to which it was exposing their father? That Strang negligently caused the death of their father is conceded. So it is unnecessary in this case to determine whether a risk of physical harm to the father existed and, if so, whether it could reasonably be disregarded. It is necessary, however, to determine whether exposing the father to that risk gave rise to a risk that the children would suffer nervous shock and whether that risk to the children could reasonably be disregarded49. 46 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at 616 [40]. 47 (2002) 76 ALJR 1348 at 1353 [18] per Gleeson CJ, 1357 [51], 1360 [66] per Gaudron J, 1380-1381 [189], 1386 [213], 1386 [214], 1388-1389 [225] per Gummow and Kirby JJ, 1397 [267] per Hayne J; 191 ALR 449 at 456, 461-462, 465, 494, 502, 505 and 517. 48 Donoghue v Stevenson [1932] AC 562 at 580. 49 Tame v New South Wales (2002) 76 ALJR 1348 at 1367 [108]; 191 ALR 449 at McHugh The answer to these questions lies in the nature of the relationship between the children and their father. The collective experience of the common law judiciary is that those who have a close and loving relationship with a person who is killed or injured often suffer psychiatric injury on learning of the injury or death, or on observing the suffering of that person. Actions for nervous shock by such persons are common. So common and so widely known is the phenomenon that a wrongdoer must be taken to have it in mind when contemplating a course of action affecting others. Accordingly, for the purpose of a nervous shock action, the neighbour of a wrongdoer in Lord Atkin's sense includes all those who have a close and loving relationship with the person harmed. They are among the persons who are likely to be so closely and directly affected by the wrongdoer's conduct that that person ought reasonably to have them in mind when considering if it is exposing the victim to a risk of harm. In Alcock v Chief Constable of South Yorkshire Police, Lord Keith of Kinkel pointed out50: "The kinds of relationship which may involve close ties of love and affection are numerous, and it is the existence of such ties which leads to mental disturbance when the loved one suffers a catastrophe. They may be present in family relationships or those of close friendship … It is common knowledge that such ties exist, and reasonably foreseeable that those bound by them may in certain circumstances be at real risk of psychiatric illness if the loved one is injured or put in peril. The closeness of the tie would, however, require to be proved by a plaintiff, though no doubt being capable of being presumed in appropriate cases." It is the closeness and affection of the relationship – rather than the legal status of the relationship – which is relevant in determining whether a duty is owed to the person suffering psychiatric harm. The relationship between two friends who have lived together for many years may be closer and more loving than that of two siblings. There is no policy justification for preventing a claim for nervous shock by a person who is not a family member but who has a close and loving relationship with the person harmed or put in peril. In a claim for nervous shock at common law, the reasonable foresight of the defendant extends to all those with whom the victim has or had a close and loving relationship. Whether such a relationship exists in a particular case will often be a matter for evidence although, as Lord Keith pointed out in the above passage, in some cases the nature of the relationship may be such that it may be presumed. Among such relationships are those of parent and child. As s 4 of the Law Reform (Miscellaneous Provisions) Act recognises, the children of a person who is killed, injured or put in peril are especially likely to suffer nervous shock upon 50 [1992] 1 AC 310 at 397. See also at 403 per Lord Ackner, 415-416 per Lord Oliver of Aylmerton, 422 per Lord Jauncey of Tullichettle. McHugh learning that their parent has suffered harm. Ordinarily, the love and affection between a parent and child is such that there is a real risk that the child may suffer mental injury on being informed of the harm to, or of observing the suffering of, the parent. The ordinary relationship between parent and child is so close and loving that a wrongdoer cannot reasonably disregard the risk that the child will suffer mental injury on being informed that his or her parent has been harmed or put in peril as a result of the wrongdoer's negligence. Despite this possibility, however, so commonly are Nor can the wrongdoer reasonably disregard some other close and loving relationships. Husband and wife, sibling and sibling, de facto partners and engaged couples, for example, almost invariably have close and loving relationships. No doubt the parties to such relationships may sometimes be estranged. these relationships close and loving that a wrongdoer must always have such persons in mind as neighbours in Lord Atkin's sense whenever the person harmed is a neighbour in that sense. To require persons in such relationships to prove the closeness and loving nature of the relationship would be a waste of curial resources in the vast majority of cases. The administration of justice is better served by a fixed rule that persons in such relationships are "neighbours" for the purposes of the law of nervous shock and the defendant must always have them in mind. Similarly, the wrongdoer must always have in mind any person who can establish a close and loving relationship with the person harmed. Although a close and loving relationship with the person harmed brings a person within the neighbour concept, it is not a necessary condition of that concept. In some cases, a relationship, short of being close and loving, may give rise to a duty to avoid inflicting psychiatric harm. A person is a neighbour in Lord Atkin's sense if he or she is one of those persons who "are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected"51. If the defendant ought reasonably foresee that its conduct may affect persons who have a relationship with the primary victim, a duty will arise in respect of those persons. The test is, would a reasonable person in the defendant's position, who knew or ought to know of that particular relationship, consider that the third party was so closely and directly affected by the conduct that it was reasonable to have that person in contemplation as being affected by that conduct? In other cases, an association with the primary victim or being in their presence may be sufficient to give rise to a duty to take reasonable care to protect a person from suffering psychiatric harm. This will often be the case where the person suffering psychiatric harm saw or heard the harm-causing incident or its aftermath. As members of this Court pointed out in Tame, in determining 51 Donoghue v Stevenson [1932] AC 562 at 580 (emphasis added). McHugh whether the psychiatric injury suffered was reasonably foreseeable, relevant considerations may include whether the person who suffers that injury directly perceived the distressing incident or its immediate aftermath or suffered a sudden shock. If so, a duty to take care may exist even though the primary victim and the person suffering psychiatric harm had no pre-existing relationship. In Tame52, Gleeson CJ said that such matters are relevant where the nature of the relationship is not that of parent and a child. They are relevant because they go to the issue whether it was reasonable to require the defendant to have in contemplation injury of the kind suffered by the plaintiff and to take steps to guard against such injury. Gaudron J53 said that, absent circumstances giving rise to a sudden shock, the risk of psychiatric injury will not be reasonably foreseeable in many cases. Gummow and Kirby JJ said54: "Distance in time and space from a distressing phenomenon, and means of communication or acquisition of knowledge concerning that phenomenon, may be relevant to assessing reasonable foreseeability, causation and remoteness of damage in a common law action for negligently inflicted psychiatric illness. But they are not themselves decisive of liability." The employer owed a duty of care to the children In the present case, the relationship between the children and their father made them a neighbour of Strang for duty purposes, and Strang owed the father a duty of care to provide a safe place of employment. The father was killed in the course of his employment by reason of the negligence of Strang. A reasonable employer in the position of Strang was bound to have in mind that any harm caused to its employee carried the risk that it would cause psychiatric harm to any children that he might have when they learned of his death. Because that is so, Strang owed a duty to the children to take reasonable care in its relationship with their father to protect them from psychiatric harm. And the admission that Strang negligently caused the death of their father means that Strang breached its duty to the children. However, the trial judge made no finding as to whether any of the children suffered a recognisable psychiatric injury upon being told of their father's death. Accordingly, it is not possible to enter verdicts in favour of the children. The proceedings must be remitted to the District Court for further hearing. 52 (2002) 76 ALJR 1348 at 1353 [18]; 191 ALR 449 at 456. 53 (2002) 76 ALJR 1348 at 1360 [66]; 191 ALR 449 at 465. 54 (2002) 76 ALJR 1348 at 1388 [225]; 191 ALR 449 at 505. McHugh Orders The appeals should be allowed. The orders of the Court of Appeal should be set aside. In place thereof, it should be ordered that the appeals to that Court be allowed, that the orders of the District Court be set aside and the matters be remitted to that Court for further hearing. The respondent should pay the costs in this Court and in the Court of Appeal. The costs in the District Court should follow the outcome of the further hearing. Kirby GUMMOW AND KIRBY JJ. These three appeals against a decision of the New South Wales Court of Appeal (Handley and Hodgson JJA, Ipp A-JA)55 concern the liability of an employer for "nervous shock" allegedly suffered by the children of an employee upon learning that their father had been killed in the course of his employment. On 14 June 1990, the appellants' father, Mr Barry Gifford was killed in a forklift accident which occurred during the course of his employment by Strang Patrick Stevedoring Pty Limited ("the respondent"), as a wharf labourer and container location clerk at Darling Harbour in Sydney. The appellants, who were then aged 19, 17 and 14 respectively, were informed of their father's death at their home in Woolloomooloo later that day. They were shocked and distressed at the news. None of the appellants saw the deceased's body after the accident; it appears they were discouraged from doing so because of its damaged condition. The appellants and their mother, the deceased's widow, Mrs Kristine Gifford, each commenced proceedings against the respondent in the Supreme Court of New South Wales seeking damages in negligence for "nervous shock". Each action was, by order of that Court, transferred to the District Court and each was heard on 11 May 1998 as a civil arbitration under the Arbitration (Civil Actions) Act 1983 (NSW) ("the Arbitration Act"). Section 18 of that statute provided, in certain circumstances, for the District Court, upon application by a person aggrieved by the arbitral award, to order a rehearing of the action as if the action had never been referred to arbitration. Upon applications made under s 18 of the Arbitration Act, the District Court (Naughton DCJ) conducted a rehearing of each action, uninformed as to the content of the arbitrator's award in each case. On 24 August 1999, the District Court gave judgment for the respondent in each proceeding. The appellants and their mother each appealed unsuccessfully to the Court of Appeal. The leading judgment was delivered by Hodgson JA. Special leave to appeal to this Court was granted to the appellants but refused to Mrs Gifford. The Court of Appeal upheld the trial judge's finding that, although Mr Gifford's death caused Mrs Gifford to experience shock, distress and an extended grief reaction, it did not cause her to develop a recognisable psychiatric illness. In this country, emotional distress or grief not amounting to a recognisable psychiatric illness does not found a common law action in negligence56. 55 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606. 56 Tame v New South Wales (2002) 76 ALJR 1348 at 1356 [44], 1381-1382 [193], 1400 [285]; 191 ALR 449 at 460, 495-496, 522. Kirby Mrs Gifford also brought a claim on behalf of the three children under the Compensation to Relatives Act 1897 (NSW) ("the Compensation to Relatives Act"), the respondent having admitted that its negligence caused the death of the deceased. The claim was heard by Naughton DCJ together with the negligence actions but was the subject of a separate judgment, from which no appeal was brought. Section 4(1) of the Compensation to Relatives Act provides for the recovery, by specified relatives of a person killed by a wrongful act, neglect or default, of damages "proportioned to the injury resulting from such death to the parties respectively for whom and for whose benefit such action is brought". As the recent discussion in De Sales v Ingrilli57 indicates, there is a long history of judicial interpretation of similar language in cognate legislation and its antecedents which restricts the damages recoverable in such actions to pecuniary loss and forbids any consideration of mental suffering or loss of society. The District Court In the negligence actions, Naughton DCJ made no findings as to whether the appellants suffered a recognisable psychiatric illness consequent upon being informed of the death of their father. One result is that, even if the appellants otherwise are successful in this Court, their actions must be returned to the District Court for determination of outstanding issues. Naughton DCJ entered verdicts for the respondent because he decided that in any event s 4(1)(b) of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW) ("the 1944 Act") operated to exclude the children's common law claims to damages for "nervous shock"; the deceased was not killed, injured or put in peril within the sight or hearing of any of the children. Section 4(1) states: "The liability of any person in respect of injury caused after the commencement of this Act by an act, neglect or default by which any other person is killed, injured or put in peril, shall extend to include liability for injury arising wholly or in part from mental or nervous shock sustained by: a parent or the husband or wife of the person so killed, injured or put in peril; or any other member of the family of the person so killed, injured or put in peril where such person was killed, injured or put in peril within the sight or hearing of such member of the family." 57 (2002) 77 ALJR 99 at 109-111 [54]-[58], 122 [119]; 193 ALR 130 at 143-144, 160. Kirby "Member of the family" is defined in s 4(5) to mean "the husband, wife, parent, child, brother, sister, half-brother or half-sister of the person in relation to whom the expression is used"; "child" is defined to include "son, daughter, grandson, granddaughter, stepson, stepdaughter and any person to whom another stands in loco parentis". In the course of his reasons, Naughton DCJ referred also to Pt 5 (ss 149- 151AC) of the Workers Compensation Act 1987 (NSW) ("the Workers Compensation Act"), which is headed "Common law remedies". In particular, his Honour rejected a submission, put by counsel for the appellants, respecting s 151P of that statute. This provides: "No damages for psychological or psychiatric injury are to be awarded in respect of an injury except in favour of: the injured worker, or a parent, spouse, brother, sister or child of the injured or deceased person who, as a consequence of the injury to the injured person or the death of the deceased person, has suffered a demonstrable psychological or psychiatric illness and not merely a normal emotional or cultural grief reaction." Section 151P does not assist the appellants by conferring a private right of action for breach of statutory duty58. Rather, the appellants submitted that s 151P excludes what otherwise would be any application to them of s 4(1)(b) of the 1944 Act. The Court of Appeal The Court of Appeal agreed with the trial judge's conclusion that s 151P of the Workers Compensation Act does not displace the operation of s 4(1)(b) of the 1944 Act59. However, their Honours disagreed with the primary judge as to the effect of s 4(1)(b). The Court of Appeal held that that provision does not exclude any liability that may otherwise exist at common law60. 58 Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397 at 405; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 459-461. 59 (2001) 51 NSWLR 606 at 608, 614, 623. 60 (2001) 51 NSWLR 606 at 608, 615, 623. Kirby The Court of Appeal nonetheless held that the appellants could not recover; this was because no liability was said to arise at common law for damages for mental injury to a person who is told about an horrific injury to a loved one but does not actually perceive the incident or its aftermath61. In this Court Tame v New South Wales and Annetts v Australian Stations Pty Ltd62, which were heard and decided by this Court after judgment was delivered by the Court of Appeal in the present case, determined that liability in negligence for "nervous shock" does not depend upon satisfaction of an absolute requirement that a plaintiff "directly perceive" the relevant distressing incident or its "immediate aftermath". The lack of direct perception by the appellants of the death of their father is not itself fatal to their action in negligence for "nervous shock". It follows that the Court of Appeal erred in dismissing the appeals on that basis. The identification of that error, however, does not establish that the respondent owed the appellants a duty to take reasonable care to avoid causing them psychiatric harm. A consequence of the rejection of an absolute requirement of "direct perception" is the need for consideration in the particular case of the ordinary principles of the law of negligence in accordance with which a duty of care either is established or denied. This reflects the process of reasoning which followed in Brodie v Singleton Shire Council63 from the removal from the corpus of the common law of the "immunity" of "highway authorities"; the removal of that restriction provided occasion for what otherwise would have been the ordinary operation of the elements of the tort of negligence. A duty of care in cases involving psychiatric injury is not defeated at the outset by the absence of "direct perception"; but it does not follow that a duty arises in all circumstances to which the control mechanism previously has been said to attach. Indeed, it would be quite wrong to take it from Tame and Annetts that reasonable foreseeability of mental harm is the only condition of the existence of a duty of care64. This aspect of the present appeals is considered further below under the heading "Duty of care". 61 (2001) 51 NSWLR 606 at 608, 616-617, 623. 62 (2002) 76 ALJR 1348 at 1353 [18], 1357 [51], 1380-1381 [189], 1388-1389 [225]; 191 ALR 449 at 456, 461-462, 494, 505. 63 (2001) 206 CLR 512 at 539-540 [54]-[55], 604 [238]-[239]. 64 cf Review of the Law of Negligence, Final Report, September 2002, §9.13. Kirby By its Amended Notice of Contention, the respondent submits that the decision of the Court of Appeal should be affirmed on the basis that the trial judge was correct to conclude that s 4(1)(b) of the 1944 Act operated to prevent the appellants' claim for damages for "nervous shock". If accepted, that contention would foreclose any occasion for the application to the present case of the ordinary principles governing the existence of a common law duty of care. The respondent further submits that, even if s 4(1)(b) does not have the effect for which it contends, no duty of care arose in the present circumstances. The respondent points in particular to the significance to the finding of a duty of care in Annetts of the reliance by Mr and Mrs Annetts on the assurances given by the respondent in that case as to the care that would be taken in its employment of their adolescent son on its isolated cattle station; an antecedent relationship therefore existed between Mr and Mrs Annetts and their son's employer65. It is said that the respondent in the present case provided no similar assurances upon which the appellants relied respecting their father's safety from harm during the course of his employment. Section 4(1) of the 1944 Act The terms of s 4(1) are set out earlier in these reasons. Legislation in the same terms has been enacted in the Australian Capital Territory and the Northern Territory66. It is to be noted at the outset that, as indicated by s 12 of the Interpretation Act 1987 (NSW), the reference in s 4(1) of the 1944 Act to a person being "killed, injured or put in peril" is taken to be a reference to a "matter or thing" occurring in New South Wales. The respondent's Amended Notice of Contention thus raises directly a question concerning the construction of s 4 which Windeyer J in Mount Isa Mines Ltd v Pusey67 found unnecessary to resolve and which could not have arisen in Annetts even if the law of New South Wales otherwise had applied as the lex loci delicti (the law of the place of the wrong) in that case. The injury and death of the respondent's co-worker in Pusey occurred in Queensland; the imperilment and death of the appellants' son in Annetts occurred in Western Australia. 65 (2002) 76 ALJR 1348 at 1355-1356 [37], 1373 [144], 1391 [239], 1403 [ 302]- [303], 1415 [366]; 191 ALR 449 at 459, 483-484, 508-509, 525-526, 541-542. 66 Law Reform (Miscellaneous Provisions) Act 1955 (ACT), s 24(1); Law Reform (Miscellaneous Provisions) Act 1956 (NT), s 25(1). 67 (1970) 125 CLR 383 at 408. Kirby Section 4(1) of the 1944 Act confers or contemplates a cause of action on the part of each of the persons described in par (a) and, in the circumstances specified, on the part of each of those described in par (b) against a person who, by an act, neglect or default causes the death, injury or imperilment of another. As the decision of this Court in Scala v Mammolitti68 indicates, the cause of action is not dependent upon proof of the existence of liability in that person to the person killed, injured or put in peril. In Scala, Kitto J summarised the effect of s 4(1) as follows69: "It lays down a general rule of liability as an addition to existing rules of liability, implying, of course, that the act, neglect or default was wrongful because in breach of a duty that was owed to the person killed, injured or put in peril, whether the duty arose from 'neighbourhood', from contract, or from statute." His Honour continued that the provision extended "the range of the claims to the possibility of which the general principles of the law" exposed a defendant in respect of injury caused by conduct of the specified character70. A new ground thus was added to the grounds already existing upon which damages could be recovered against the defendant in respect of injury caused by the wrongful act, neglect or omission; to recover was correspondingly enlarged and the common law "alter[ed]" to that extent71. Taylor J said that the sub-section operated "to extend the field in which persons standing in a special relationship to a person killed, injured or put in peril may recover for nervous or mental shock"72. the category of persons entitled An understanding of the nature of the alteration or extension which s 4(1) effected, and the mischief it was intended to remedy, is assisted by reference to the historical context of its enactment73. A construction that would promote the 68 (1965) 114 CLR 153. 69 (1965) 114 CLR 153 at 157. 70 (1965) 114 CLR 153 at 157. 71 (1965) 114 CLR 153 at 157-158. 72 (1965) 114 CLR 153 at 159. 73 See, eg, the approach adopted by Latham CJ in Woolworths Ltd v Crotty (1942) 66 CLR 603 at 612-619. Kirby statutory purpose or object thus disclosed is to be preferred to a construction that would not promote that purpose or object74. On 5 August 1942, the House of Lords in Bourhill v Young75 held that the defendant motorcyclist owed no duty of care to avoid causing "nervous shock" to the plaintiff, who heard (but did not see) a collision caused by the defendant's negligence. The plaintiff was not herself in danger of physical impact, nor related to such person, nor within the defendant's line of vision at the time of the accident. The House of Lords therefore held that the plaintiff was not in the area of potential danger which the defendant reasonably should have had in view76. In the course of their speeches, Lord Thankerton, Lord Wright and Lord Porter77 each doubted the correctness of the earlier decision of the English Court of Appeal in Owens v Liverpool Corporation78. The Court of Appeal had upheld an appeal against the dismissal of an action by four family mourners at a funeral for distress caused by witnessing a collision between a negligently driven tramcar and the hearse; the incident had involved no apprehension, or sight, or sound of physical injury to a human being. In his second reading speech on the Bill for what became the 1944 Act, the responsible Minister told the Legislative Council of the Parliament of New South Wales on 8 November 1944 that cl 4 of the Bill was "a statutory extension of liability to meet the position created by the decision in [Bourhill] v Young"79. Implicit in this was the understanding that the House of Lords decision stated the common law for New South Wales as much as for the United Kingdom80. The Minister referred81 also to the decision of this Court in Chester v Waverley 74 Interpretation Act 1987 (NSW), s 33, rendered applicable by the combined operation of s 5(1) and s 5(3). 76 [1943] AC 92 at 99, 102, 105, 111, 119. 77 [1943] AC 92 at 100, 110 and 116 respectively. 79 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 8 November 1944 at 830. 80 cf Parker v The Queen (1963) 111 CLR 610 at 632-633. 81 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 8 November 1944 at 830-831. Kirby Corporation82 and indicated that the Bill was intended to provide for plaintiffs in the position of Mrs Chester. The majority in Chester had held that a local council was not liable for the "nervous shock" Mrs Chester sustained upon seeing her deceased child's body recovered from a water-filled trench left inadequately protected by the council. Clause 4 as it stood at the time of the second reading speech drew no distinction between a parent or spouse of a person killed, injured or put in peril and any other family member. At that point in its evolution, cl 4(1) provided: "The liability of any person in respect of injury caused after the commencement of this Act by an act, neglect or default by which any other person is killed, injured or put in peril, shall extend to include liability for injury arising wholly or in part from mental or nervous shock sustained by any member of the family of the person so killed, injured or put in peril." (emphasis added) This sub-clause subsequently was amended on 5 December 1944 to bring it into the form in which it now appears in the 1944 Act83. The amendment introduced a distinction between a parent or spouse of a person killed, injured or put in peril and any other family member. In respect of the latter, the amended clause provided that the liability of a defendant would "extend to include" liability for "nervous shock" sustained by a relevant family member where the initial victim "was killed, injured or put in peril within the sight or hearing of such member of the family". The parliamentary record discloses that the amendment embodied a compromise between the interests of family members who sustain "nervous shock" and the community which ultimately would bear the obligation that any extension of liability was thought to entail84. The compromise was said to be85 that, in order to recover under the statute, "farther removed relatives" would be subject to the additional requirement, not imposed on a parent or spouse, of proving that the relevant death, injury or imperilment occurred within their sight 82 (1939) 62 CLR 1. 83 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 5 December 1944 at 1489, 1491. 84 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 5 December 1944 at 1490. 85 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 5 December 1944 at 1490. Kirby or hearing. However, one result of the amendment, not specifically adverted to by the Minister, was that, whilst the parent who sustained "nervous shock" upon learning of the death, injury or imperilment of a child occurring otherwise than within the parent's sight or hearing would be entitled to recover under the provision, the child who suffered "nervous shock" upon learning of (but not witnessing) the death, injury or imperilment of a parent would not, by force of the 1944 Act, be so entitled. The amendment of cl 4(1) thus curtailed or restricted the extension of liability which originally had been proposed; the ordinary meaning of the provision as enacted nonetheless was to extend rather than to restrict liability86. The declaration in s 4(1) that the liability there referred to "shall extend to include" liability for injury arising from "nervous shock" sustained in the circumstances specified in pars (a) and (b) is not to be read as though it contained the unexpressed qualification that liability was to extend only so far and no further. The adoption by the Parliament of New South Wales in 1944 of a particular understanding of the common law as it then existed does not itself control the further development of the common law of Australia. In Environment Protection Authority v Caltex Refining Co Pty Ltd, Mason CJ and Toohey J observed that87: "[t]he circumstance that Parliament (or a drafter) assumed that the antecedent law differed from the law as the Court finds it to be is not a reason for the Court refusing to give effect to its view of the law." Moreover, a statutory extension of, and attempt to remedy a perceived deficiency in, the common law is not readily to be construed as restricting further development in common law principle as new deficiencies are disclosed. The mischief at which s 4(1) was directed was the apparent rigidity, or incomplete development, in the common law which was seen as unjustly disfavouring the position of plaintiff family members in "nervous shock" actions. Remedial legislation of this nature is not to be construed as frustrating the further development of common law principle and any corresponding expansion of common law rights which that development may involve. Some analogy is provided by the requirement of legislation for clear terms to abolish or modify 86 Anderson v Liddy (1949) 49 SR (NSW) 320 at 323; Coates v GIO of NSW (1995) 36 NSWLR 1 at 7-8, 22. 87 (1993) 178 CLR 477 at 505-506. Kirby fundamental common law principles or rights or to depart from the general system of law88. It is apparent from this Court's decision in Annetts, if it was not apparent before, that a defendant in an appropriate case may be liable in negligence for a recognisable psychiatric illness sustained by a plaintiff upon the death, injury or imperilment of a family member killed, injured or imperilled otherwise than within the plaintiff's sight or hearing. The common law of Australia as now understood has to that extent superseded the assumption as to the reach of the common law (then generally seen as the English common law declared by the House of Lords and Privy Council) upon which s 4(1)(b) of the 1944 Act was framed89. Although great assistance continues to be derived by this Court from the learning and reasoning of United Kingdom courts, the precedents of other legal systems, save for those of the Privy Council in Australian appeals, are not binding. They are now useful only to the degree of the persuasiveness of their reasoning90. The provision in s 4(1)(b), expressed in the language of extension rather than restriction, neither inhibits that advancement nor displaces what otherwise would be its application in New South Wales. Section 4(1) expands the scope of a liability as formerly perceived, but it does not purport prospectively to fix its outer bounds. Esso Australia Resources Ltd v Federal Commissioner of Taxation91 indicates that the common law may in some instances proceed by analogy with what legislatures previously have determined to be the appropriate balance between competing interests in the relevant field. The respondent relies upon s 4(1) of the 1944 Act as an illustration of the converse process; that legislative development may have proceeded by way of extension of the common law, but, it is said, it thereby also foreclosed further development of the common law. That submission respecting the 1944 Act should not be accepted. 88 Potter v Minahan (1908) 7 CLR 277 at 304; Bropho v Western Australia (1990) 171 CLR 1 at 18; Coco v The Queen (1994) 179 CLR 427 at 437; R v Carroll (2002) 77 ALJR 157 at 170-171 [81]; 194 ALR 1 at 20. 89 cf Skelton v Collins (1966) 115 CLR 94 at 104, 112-113, 123-124, 133-134, 90 Cook v Cook (1986) 162 CLR 376 at 390. 91 (1999) 201 CLR 49 at 60-63 [19]-[28]; cf at 86 [97]. See also Gray v Motor Accident Commission (1998) 196 CLR 1 at 12-13 [33], 27 [83], 45-47 [128]-[130], referring to Lamb v Cotogno (1987) 164 CLR 1 at 11. Kirby Section 4(1)(b) is not an answer to any action which the appellants may otherwise be entitled to bring. Duty of care In order to make good their cause of action in negligence, the appellants first must identify a duty owed to them by the respondent which is distinct from any obligation which subsisted between the respondent and their father. For the reasons that follow, a duty of that kind emerges by application of the ordinary principles of the law of negligence. The respective positions of the child of an employee and his or her employer may readily be seen to attract the "neighbourhood" principle encapsulated by Lord Atkin in Donoghue v Stevenson. From the point of view of the employer, children of an employee are "persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question"92. Several considerations here combine to enliven what Stephen J in Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" identified93, with reference to the speech of Lord Atkin in Donoghue v Stevenson94, as a broad principle underlying liability in negligence, being the "general public sentiment" that, in the case at bar, there has been wrongdoing for which, in justice, the offender must pay. The considerations here include: (i) the advancement by the labour of an employee of the employer's commercial interests; (ii) the employee's exposure to risk of death by carelessness on the part of the employer; and (iii) the reasonable foreseeability of psychiatric injury to children of an employee in the event of the employee's death. Psychiatric injury to children of the employee is a consequence which the respondent, judged by the standard of the reasonable person, ought to have foreseen95. 92 [1932] AC 562 at 580. 93 (1976) 136 CLR 529 at 575. See also Tame v New South Wales (2002) 76 ALJR 1393 [250]; 191 ALR 449 at 453-454, 460-461, 474-475, 493, 511-512. 94 [1932] AC 562 at 580. 95 See Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (The Wagon Mound) [1961] AC 388 at 423. Kirby Moreover, in attempting to define the scope of liability in negligence, it is useful to identify those interests which are sufficient to attract the protection of the law in any given field96. It was said in Tame that the interest which the law seeks to protect in actions such as the present is more narrowly defined than the interest in "peace of mind" which has been held in the United States to warrant legal protection97. Australian law seeks to protect, in an appropriate case, the plaintiff's freedom from serious mental harm which manifests itself in a recognisable psychiatric illness. More specifically, the law has long placed particular value on the protection of the young from serious harm. The parens patriae jurisdiction referred to in Marion's Case98 provides one illustration. The entitlement of parents of a child to be heard in child welfare proceedings concerning a child provides another illustration99. Further, through the imposition of obligations and the conferral of rights, both the general law and contemporary statute law have treated the relationship of parent and child as a primary means by which to secure the public interest in the nurturing of the young100. It was not disputed in Annetts that, if the ordinary principles of negligence otherwise applied, the relationship of parent and child would be sufficient to import a duty of care on the part of the respondent to avoid causing psychiatric illness to the appellants as a consequence of the wrongful death of their child. In Hancock v Nominal Defendant101, the Queensland Court of Appeal dismissed an appeal against an award of damages for psychiatric illness sustained by the respondent upon learning of the death of his adult son caused by the negligent driving of the appellant. Although the appellants here did not claim to have relied upon any specific assurances by the respondent as to their father's safety from harm, the relationship between the parties to this litigation otherwise shares important characteristics with the relationship at issue in Annetts102. The appellants here 96 Perre v Apand Pty Ltd (1999) 198 CLR 180 at 251 [191]. 97 (2002) 76 ALJR 1348 at 1377-1378 [171]-[175]; 191 ALR 449 at 489-490. 98 Secretary, Department of Health and Community Services v JWB and SMB (1992) 175 CLR 218 at 258-259. 99 J v Lieschke (1987) 162 CLR 447 at 462, 463-464; cf In re Gault 387 US 1 (1967). 100 cf Russell v Russell (1976) 134 CLR 495 at 549. 101 [2002] 1 Qd R 578. 102 (2002) 76 ALJR 1348 at 1391 [240]-[241]; 191 ALR 449 at 509. Kirby had no way of protecting themselves against the risk of psychiatric harm which eventuated. The respondent controlled the conditions under which Mr Gifford worked and held a significant, perhaps exclusive, degree of control over the risk of harm to him and the risk of consequent psychiatric harm to the appellants. The respondent's control over the risk of harm was, in a legal and practical sense, direct rather than remote103. Moreover, there is no inconsistency between the existence of a duty of care to the appellants and the legitimate pursuit by the respondent of its business interests104. The respondent's duty of care to the appellants to exercise reasonable care to avoid causing them psychiatric injury as a consequence of their father's death in the course of his employment would be, at most, co-extensive with the tortious and express or implied contractual duties that it owed Mr Gifford directly as his employer. The law requires an employer in the position of the respondent so to order its affairs as to avoid causing injury or death to its employees. In Hawkins v Clayton105, Gaudron J observed that, in attempting to ascertain the existence of a duty of care to avoid causing economic loss, "somewhat different" factors may arise where "the act or omission complained of amounts to an interference with or impairment of an existing right which is known or ought to be known to the person whose acts or omissions are called into question" than where the loss "is occasioned without infringement or impairment of an otherwise recognized right". We agree with that statement. By analogical extension, the common law will more readily impose a duty of care to avoid causing psychiatric harm to the child of an initial victim where the conduct of the defendant which is sought to be impugned constituted an infringement of otherwise recognised rights in the initial victim. The respondent owed the appellants a duty of care to take reasonable care to avoid causing them a recognisable psychiatric illness as a consequence of their father's death in the course of his employment. Especially in circumstances where negligence by the respondent to the father is admitted, it is clearly arguable that the respondent breached these separate duties of care it owed to the appellants. 103 cf Agar v Hyde (2000) 201 CLR 552 at 562 [16], 564 [21], 581-582 [81]-[83]; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 558-559 [102]. 104 cf Bryan v Maloney (1995) 182 CLR 609 at 623-624; Perre v Apand Pty Ltd (1999) 198 CLR 180 at 235 [147]. 105 (1988) 164 CLR 539 at 594. See also Perre v Apand Pty Ltd (1999) 198 CLR 180 Kirby Section 151P of the Workers Compensation Act It may be added that s 151P of the Workers Compensation Act, the text of which has been reproduced earlier in these reasons, does not operate upon the common law to produce any different result. The provision precludes the recovery of damages for psychological or psychiatric injury except in the circumstances specified in pars (a) and (b) thereof. Paragraph (b) relevantly permits the award of damages in favour of a child of an injured or deceased worker who, as a consequence of the injury or death, has suffered a demonstrable psychological or psychiatric illness and not merely a normal emotional or cultural grief reaction. It may thus be said that the New South Wales legislature has specifically turned its mind to the issue that arises in the present appeals and has accepted that damages may be awarded to the child of a deceased employee who, as a consequence of the death, has suffered a "demonstrable psychological or psychiatric illness". The appellants claim that they have suffered such an illness. There is an arguable evidentiary foundation for that claim. It should therefore be determined, in each case, at trial. The other State legislatures appear not to have passed legislation in equivalent terms to s 151P of the Workers Compensation Act. There is therefore lacking that consistent pattern of State legislation which may in an appropriate case, and in the manner indicated in Esso Australia Resources Ltd v Federal Commissioner of Taxation106, influence by analogy the development of the common law. It is sufficient here to say that s 151P of the Workers Compensation Act envisages rather than denies the existence of a duty of care on the part of the respondent to take reasonable care to avoid causing the appellants a recognisable psychiatric illness. Orders Each appeal should be allowed. The orders of the Court of Appeal dated 14 June 2001 should be set aside. In their place it should be ordered that each appeal to that Court be allowed, that the orders of the District Court dated 24 August 1999 be set aside, and that each matter be remitted to that Court for determination of the outstanding issues. The respondent in this Court should pay the costs of the appellants in this Court and in the Court of Appeal. The costs of each party in the District Court are to abide the outcome of the proceedings in that Court. 106 (1999) 201 CLR 49 at 60-63 [19]-[28]. Hayne HAYNE J. I agree that, for the reasons given by Gummow and Kirby JJ, s 4(1)(b) of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW)107 should not be construed as confining a defendant's liability to a child for damages for injury "arising wholly or in part from mental or nervous shock", allegedly suffered as a result of the killing, injuring or putting in peril of that child's parent, to cases where the parent was killed, injured or put in peril "within the sight or hearing" of the child. The question which then arises in these appeals is whether the respondent owed the appellants a duty to take reasonable care to avoid inflicting psychiatric injury on them. The Court of Appeal of New South Wales held that the appellants could not recover for psychiatric injury allegedly suffered as a result of their hearing that their father had been run over and killed at work, because they did not perceive the incident or its aftermath108. In Tame v New South Wales and Annetts v Australian Stations Pty Ltd109 (judgment in which was given after the Court of Appeal's decision in the present matters), this Court held that the lack of direct perception of a traumatic incident is not fatal to a claim for damages for psychiatric injury110. It follows that the Court of Appeal erred. It may readily be accepted that an employer may reasonably foresee that, if an employee is killed or seriously injured at work, others who have close ties of affection for the employee may suffer psychiatric injury on learning of the death or injury. Reasonable foreseeability of psychiatric injury is a necessary condition for finding a duty of care to avoid injury of that kind, but it alone is not a sufficient condition. In Tame and Annetts, the Court held that some forms of control mechanism, which it has been suggested should be applied to limit recovery for psychiatric injury, should not be adopted. "Normal fortitude" was 107 Sections 3 and 4 of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW) (Personal have now been the Civil Liability Amendment Responsibility) Act 2002 (NSW) but that repeal does not affect this case. repealed by 108 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at 608 [1] per Handley JA, 617 [44]-[45] per Hodgson JA, 623 [76] per Ipp AJA. 109 (2002) 76 ALJR 1348; 191 ALR 449. 110 Tame v New South Wales; Annetts v Australian Stations Pty Ltd (2002) 76 ALJR 1348 at 1353 [18] per Gleeson CJ, 1357-1358 [51]-[52] per Gaudron J, 1388-1389 [221]-[222], [225] per Gummow and Kirby JJ, 1395 [257], 1397 [266]-[267] per Hayne J, 1413-1415 [360]-[361], [365]-[366] per Callinan J; 191 ALR 449 at 456, Hayne held not to be a precondition to liability111. "Sudden shock" was held not to be a necessary requirement for such a claim112. "Direct perception" was, as I have said, also rejected. The rejection of these tests may, or may not, be consistent with developing other control mechanisms in the future. For my own part, I remain of the view113 that if psychiatric injury extends to all the conditions which psychiatric medicine would classify as a form of "psychiatric injury", it will be necessary to develop one or more control devices in substitution for those which have now been rejected. It may be that the control mechanisms which are developed will emerge from further developments in the law of negligence and, in particular, consideration of the place to be given to the duty of care as a prerequisite of liability114. Control mechanisms developed in this way may have wider applications than just cases of psychiatric injury. But it may also be that, as knowledge about the causes of psychiatric injury and the effects of traumatic events increases, control mechanisms based on that knowledge may become evident and could be applied to claims for damages for psychiatric injury. Following Tame and Annetts, however, I consider that I am now bound to conclude that an employer owes a duty to take reasonable care to avoid psychiatric injury to an employee's children. (It may be that the duty is wider than that but it is not necessary, in this case, to decide whether it is.) The employer owes that duty of care to those family members because not only is it foreseeable that they may suffer psychiatric injury on learning of the employee's accidental death or serious injury at work, the relationships between employer and employee and between employee and children are so close as to require the conclusion that the duty is owed. I consider that this follows from the Court's holding in Annetts that an employer owes a duty of care to the parents of an employee who is a minor. I recognise that there are some differences between Annetts and the present cases. In the present cases, there is not that element, found in Annetts, of parents entrusting the welfare of their child to an employer. 111 (2002) 76 ALJR 1348 at 1353 [16] per Gleeson CJ, 1359 [61]-[62] per Gaudron J, 1382-1384 [197], [199]-[203] per Gummow and Kirby JJ; 191 ALR 449 at 112 (2002) 76 ALJR 1348 at 1353 [18] per Gleeson CJ, 1357-1358 [51]-[52] per Gaudron J, 1388 [221]-[222] per Gummow and Kirby JJ, 1397 [266]-[267] per Hayne J; 191 ALR 449 at 456, 461-462, 504-505, 516-517. 113 Tame and Annetts (2002) 76 ALJR 1348 at 1400-1402 [285]-[294]; 191 ALR 449 114 Tame and Annetts (2002) 76 ALJR 1348 at 1393 [249]; 191 ALR 449 at 511. Hayne Further, it might be said that there may be differences between the reaction that a child may have to the untimely death of a parent and the reaction that a parent may have to the death of a child. But for present purposes such differences are not material. The pre-existing relationships between the three parties – employee, employer and children – coupled with reasonable foresight of the particular kind of harm suffered, require the conclusion that a duty to take reasonable care to avoid psychiatric injury is owed by the employer to the employee's children. At the time of their father's death the appellants did not live with him. Two of the appellants were then in the workforce, and the oldest of the three, Darren, was an adult. The deceased had maintained a close and loving relationship with his children. The conclusion that the respondent owed the appellants a duty to take reasonable care to avoid causing them psychiatric injury follows from the combination of two matters. First, the respondent, as employer of the appellants' father, controlled the work which he did, and how, and where, he did it. Because, as employer, it controlled those matters, the respondent was bound to take reasonable care, and ensure that reasonable care was taken, to avoid harm to the employee115. Secondly, the employer can reasonably foresee that children of the employee may suffer psychiatric injury if the employee is killed or seriously injured at work. If, as was held in Annetts, the employer owes that duty to the parents of an infant employee, there is no sound basis for concluding that the same kind of duty is not owed to the infant children of the employee. Nor is there any sound basis for concluding that the duty extends only to the infant children and not to the oldest child, Darren, who was 19 at the time of the accident. The fact that the father lived apart from his children does not require or permit a different conclusion. Whether the respondent breached the duty it owed to the appellants has not yet been determined. The respondent's admission that it breached its duty of care to the appellants' father may well be thought to have an important bearing on that issue. Nor has it been determined whether, as a result of the respondent's negligence, the appellants suffered psychiatric injury as distinct from emotional distress. Those issues will have to be determined. I agree with Gummow and Kirby JJ that, for the reasons they give, s 151P of the Workers Compensation Act 1987 (NSW) requires no different conclusion. I agree in the orders their Honours propose. 115 Kondis v State Transport Authority (1984) 154 CLR 672 at 687-688 per Mason J. Callinan CALLINAN J. These appeals raise questions with respect to the interaction between state (New South Wales) ameliorative legislation, the contemporary operation of which has since been outstripped by developments in the common law of Australia, and that common law. Facts Barry Gifford was employed by the respondent stevedoring company at Darling Harbour in Sydney, New South Wales. On 14 June 1990 he was married to, but separated from Kristine Gifford ("Mrs Gifford"), who was then 43 years old. She was permanently employed by the South Sydney Council and had entered into a relationship with another man. There were three children of the marriage: a son, Darren Gifford ("Darren") aged 19; a daughter, Kelly Gifford ("Kelly") aged 17; and a younger son, Matthew Gifford ("Matthew") a schoolboy of 14 years ("the appellants"). From the time of his separation from Mrs Gifford in 1984 to the time of his death in 1990, Mr Gifford and his three children were in a close and loving relationship. He regularly visited his former residence where the appellants lived and engaged in various activities with them. His relationship with Mrs Gifford was without rancour. On 14 June 1990 Mr Gifford, in the course of his employment, was walking along a wharf when a negligently operated, heavy forklift truck reversed over him. He was crushed to death immediately. The accident was an horrific one. Mrs Gifford was very soon informed of the death. Later, but on the same day, the appellants were told of it by friends of the family. Neither the appellants nor Mrs Gifford saw Mr Gifford's corpse. Proceedings at first instance Mrs Gifford brought proceedings against the respondent under the Compensation to Relatives Act (1897) (NSW) on behalf of the appellants. She and they also sued for damages for nervous shock. After some arbitration proceedings (of no relevance to this appeal) the actions were heard together in the District Court of New South Wales (Naughton DCJ) in July and August 1999. His Honour gave judgment on 24 August 1999 in favour of the respondent in the actions for nervous shock, and a separate judgment, with which this Court is not concerned, in the action under the Compensation to Relatives Act. Nor is the Court concerned with the judgment against Mrs Gifford in favour of the respondent on her claim for damages for nervous shock. Because of the view that his Honour took of the Callinan effect of relevant legislation he did not make findings with respect to causation, and the nature and extent of any damage suffered by the appellants. His Honour held, after reviewing a number of cases, that the appellants could not recover damages for nervous shock because s 4 of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW) ("the Act")116 displaced the common law by substituting a statutory test which they were unable to satisfy, it being clear that the "deceased was not killed, injured or put in peril within the sight or hearing of any of the children". The appeal to the Court of Appeal The appellants appealed to the Court of Appeal of New South Wales (Hodgson and Handley JJA and Ipp AJA)117. Hodgson JA found that Naughton DCJ had erred in holding that s 4 of the Act excluded any liability at common law that might otherwise have existed, arising out of a duty of care owed to persons other than the immediate victims of negligent acts118. Handley JA and Ipp AJA relevantly agreed with Hodgson JA with respect to the operation of s 4 of the Act119. The Court of Appeal nonetheless dismissed the appellants' appeals on the basis that a necessary element of a claim for nervous shock was absent, of direct visual perception of the event, or perhaps its immediate aftermath120. Hodgson JA made these remarks121: "It is not possible to compensate everyone who is injured, and the law must draw lines. It should be kept in mind that the civil standard of proof on the balance of probabilities necessarily means that damages may sometimes be awarded for injuries which did not occur or have been exaggerated, and/or against persons whose actions did not cause them. It is difficult enough for courts to resolve conflicting evidence in relation to 116 Sections 3 and 4 of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW) were repealed by the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW) but that repeal does not affect this case. 117 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606. 118 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at 615. 119 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at 608 per Handley JA, 623 per Ipp AJA. 120 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at 622-623. 121 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at 617. Callinan claimed physical injuries, and harder still to do so in relation to claimed mental injuries to persons actually perceiving a horrific event. It is or would be much harder again to resolve conflicting evidence in relation to mental injuries claimed to arise from merely hearing about horrific events. Floodgates arguments are often criticised, but there are limits to the compensation that the community can afford to pay, particularly in relation to claimed injuries the existence and causation of which are so difficult to determine with assurance. In my opinion, it is reasonable to maintain the line that has been drawn in the cases. There may be some room for development in relation to what amounts to perception of an incident, just as there has been some development so as to include perception of the close aftermath of an incident and not merely perception of the incident itself. Some cases have required direct unaided perception; but there may be a question as to how far liability extends, for example, where sound is amplified or events are seen by those present portrayed live on a large television screen, and so on. It is not necessary to consider that question in this case." The Court of Appeal was pressed by the appellants with an argument that ss 151, 151E, 151F, and particularly 151P of the Workers Compensation Act 1987 (NSW) ("the Compensation Act") re-established the right to a common law action, effectively therefore conferred an independent cause of action, and prescribed all of the relevant criteria for it in circumstances of the kind which existed here. The argument was rejected on the basis that s 151P operates as a limiting mechanism and not so as to provide a new and distinct statutory cause of action122. The appeal to this Court In this Court the appellants contend that at common law direct visual perception of a relevant event or its immediate aftermath is not necessary. They argue that statements made by this Court in Tame v New South Wales; Annetts v Australian Stations Pty Ltd123 which were decided after the decision of the Court of Appeal in this case make that clear. In substance that submission is correct. 122 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at 614 per Hodgson JA. 123 (2002) 76 ALJR 1348 at 1353 [17]-[18], 1355 [36] per Gleeson CJ, 1357-1358 [51]-[52], 1360 [65] per Gaudron J, 1388-1391 [221], [225], [236], [238] per Gummow and Kirby JJ, 1414-1415 [365], [366] per Callinan J; 191 ALR 449 at Callinan In Tame I attempted to state some bright line rules distilled from the cases and elsewhere for the prosecution of what, for convenience and other reasons, I there called, and I would continue to call claims for damages for nervous shock, as does s 4 of the Act itself. In doing so I sought to identify and define the classes of persons in cases of nervous shock capable of being so closely and directly affected by a tortfeasor's negligence that the tortfeasor ought reasonably to have had them in contemplation in acting or omitting to act in the way in which he or she did, within the classic formulation of Lord Atkin in Donoghue v Stevenson124. I said125: improvements "In my opinion, the reasons for judicial caution in cases of nervous shock remain valid, as do the principles formulated by the courts in this country to give effect to that caution. The principles may need to be the professional refined as new situations, and understanding, diagnosis and identification of psychiatric illness occur. Those principles are currently in summary these. There must have occurred a shocking event. The claimant must have actually witnessed it, or observed its immediate aftermath or have had the fact of it communicated to him or her, as soon as reasonably practicable, and before he or she has or should reasonably have reached a settled state of mind about it. The communicator will not be liable unless he or she had the intention to cause psychiatric injury, and was not otherwise legally liable for the shocking event. A person making the communication in the performance of a legal or moral duty will not be liable for making the communication. The event must be such as to be likely to cause psychiatric injury to a person of normal fortitude. The likelihood of psychiatric injury to a person of normal fortitude must be foreseeable. There need to exist special or close relationships between the tortfeasor, the claimant and the primary victim. Those relationships may exist between employer and employee and co-employees and relationships of the kind here in which an assurance was sought, and given, and dependence and reliance accordingly ensued. Other relationships may give rise to liability in future cases. A true psychiatric injury directly attributable to the nervous shock must have been suffered." Subject to some qualifications I do not understand a majority of the other members of the Court to have stated a, or any very different view from the one that I did as to the various criteria. A particular qualification relates to "normal 124 [1932] AC 562 at 580. 125 (2002) 76 ALJR 1348 at 1415 [366]; 191 ALR 449 at 541-542. Callinan fortitude" which only McHugh J126 and I127 thought to be an indispensable element of a cause of action for nervous shock. None of the other members of the Court however thought absence of normal fortitude irrelevant128. The balance of their opinion was that it could be of significance on the issue of foreseeability. No clear consensus emerged however as to how "perception" was to be defined or treated, or as to the classes of persons to whom a tortfeasor should be regarded as owing a duty of care not to cause nervous shock129 because no doubt the unique features of Tame made it unnecessary to decide those matters conclusively. Subject therefore to the qualifications to which I have referred I would adhere in this case to what I said in Tame. There was evidence here which might possibly, arguably, if accepted, be capable of satisfying both the common law as I understand it to be, and s 151P of the Compensation Act, to ground a cause of action for nervous shock. Accordingly, if the appellants are able to maintain the decision of the Court of Appeal as to the effect of the Act, or to make out a case with respect to the meaning of s 151P of the Compensation Act which was unsuccessful in that Court, they will succeed on this appeal, and a new trial will be necessary to determine both liability and damages. I deal first with the construction of ss 151, 151E, 151F and 151P of the Compensation Act which provide as follows: "151 Common law and other liability preserved This Act does not affect any liability in respect of an injury to a worker that exists independently of this Act, except to the extent that this Act otherwise expressly provides. 126 (2002) 76 ALJR 1348 at 1360-1361 [71], 1367-1369 [109]-[119]; 191 ALR 449 at 127 (2002) 76 ALJR 1348 at 1415 [366]; 191 ALR 449 at 541. 128 (2002) 76 ALJR 1348 at 1353 [16], 1355-1356 [29], [38] per Gleeson CJ, 1356 [45], 1359-1360 [59]-[65] per Gaudron J, 1380-1381 [187], [189], 1382-1384 [197]-[203] per Gummow and Kirby JJ, 1393-1394 [251], [253] per Hayne J; 191 ALR 449 at 455-456, 458-460, 463-465, 494, 497-499, 512-513. 129 See however Gummow and Kirby JJ at (2002) 76 ALJR 1348 at 1380 [186]; 191 ALR 449 at 493-494 who referred to the special relationships needed to found a negligent misstatement case as providing an imperfect analogy with relationships between tortfeasors and sufferers of nervous shock. Callinan 151E Application - modified common law damages This Division applies to an award of damages in respect of: an injury to a worker, or the death of a worker resulting from or caused by an injury, being an injury caused by the negligence or other tort of the worker's employer. This Division does not apply to an award of damages to which Part 6 of the Motor Accidents Act 1988 or Chapter 5 of the Motor Accidents Compensation Act 1999 applies. This Division applies to an award of damages in respect of an injury caused by the negligence or other tort of the worker's employer even though the damages are recovered in an action for breach of contract or in any other action. Subsection (3) is enacted for the avoidance of doubt and has effect in respect of actions brought before as well as after the commencement of that subsection. 151F General regulation of court awards A court may not award damages to a person contrary to this Division. 151P Damages for psychological or psychiatric injury No damages for psychological or psychiatric injury are to be awarded in respect of an injury except in favour of: the injured worker, or a parent, spouse, brother, sister or child of the injured or deceased person who, as a consequence of the injury to the injured person or the death of the deceased person, has suffered a demonstrable psychological or psychiatric illness and not merely a normal emotional or cultural grief reaction." As the Court of Appeal held, s 151P does not make provision for a separate and independent cause of action, or provide that damages will be Callinan awarded whenever the circumstances and relationships to which it refers exist: it means that no damages may be awarded unless at least those circumstances and relationships exist in the case of a claim arising out of an injury to or the death of a worker. Nor does the section operate to make s 4(1)(b) of the Act inapplicable to the appellants. This follows from the language of s 151 which affirms the common law except to the extent otherwise provided, and the clear words of s 151P itself, particularly the introductory negative words, "No damages … are to be awarded … except in favour of …". The next question is whether s 4 of the Act operates to limit the common law and to deny its incremental advance with respect to claims for damages for nervous shock. It provides as follows: Extension of liability in certain cases The liability of any person in respect of injury caused after the commencement of this Act by an act, neglect or default by which any other person is killed, injured or put in peril, shall extend to include liability for injury arising wholly or in part from mental or nervous shock sustained by: a parent or the spouse of the person so killed, injured or put in peril; or any other member of the family of the person so killed, injured or put in peril where such person was killed, injured or put in peril within the sight or hearing of such member of the family. (2) Where an action is brought by a member of the family of any person so killed, injured or put in peril in respect of liability for injury arising wholly or in part from mental or nervous shock sustained by the plaintiff as aforesaid and claims have been made against or are apprehended by the defendant at the suit of other members of the family of such person in respect of liability arising by operation of subsection (1) out of the same act, neglect or default the defendant may apply to the Court in which the action is brought and that Court may thereupon stay any proceedings pending at the suit of any such other member of the family arising out of the same act, neglect or default and may proceed in such manner and subject to such regulations as to making members of the family of such person parties to the action as to who is to have the carriage of the action and as to the exclusion of any member of the family who does not come in within a certain time as the Court thinks just. Callinan (3) Where any application under subsection (2) is made the action shall be for the benefit of such members of the family of the person so killed, injured or put in peril as are joined by the Court as plaintiffs pursuant to such application and the Court may give such damages as it may think proportioned to the injury resulting to the persons joined as plaintiffs respectively, and the amounts so recovered after deducting the costs not recovered from the defendant shall be divided amongst the persons joined as plaintiffs in such shares as the Court finds and directs. (3A) Where any case to which subsection (3) applies is tried by a judge sitting with a jury, the jury shall find the shares of damages and the judge shall direct in accordance with the finding. (4) Any action in respect of a liability arising by operation of subsection (1) shall be taken in the Supreme Court or the District Court. In this section: 'Member of the family' means the spouse, parent, child, brother, sister, half-brother or half-sister of the person in relation to whom the expression is used. includes father, mother, grandfather, grandmother, 'Parent' stepfather, stepmother and any person standing in loco parentis to another. 'Child' includes son, daughter, grandson, granddaughter, stepson, stepdaughter and any person to whom another stands in loco parentis. 'Spouse' means: a husband or wife, or the other party to a de facto relationship within the meaning of the Property (Relationships) Act 1984, but where more than one person would so qualify as a spouse, means only the last person so to qualify." It is right, as the respondent submits, that the section was enacted in response to, and some five years after the decision of this Court in Chester v Waverley Corporation130 in order to replace the common law by legislation extending the 130 (1939) 62 CLR 1. Callinan right to claim damages for nervous shock. As will appear, the emphasis is, in my opinion, appropriately upon the word "extending". The primary judge gave several reasons why he thought that s 4 of the Act operated to preclude claims by the appellants: In my opinion it follows from the plain and ordinary meaning of the words in the statute. It seems that four High Court Justices, in obiter dicta ... are of the same opinion131. To construe s 4(1)(b) as Kirby P has done132 would mean that it has no function to perform at all. If s 4(1)(a) continues to have a function so too should s 4(1)(b). If the law as laid down in s 4(1)(b) is to be altered it is for Parliament to do so, not the Courts by a process of construction which seems to deny the provision its plain ordinary meaning and any operation at all. There was a policy justification for enacting s 4(1)(b) so as to restrict the rights of family members other than spouses and parents in claims for damages for 'nervous shock'. The cause of action for 'nervous shock' is potentially a 'flood gates' one opening the doors of the Courts to a multitude of such claims. Psychiatric illness often depends on subjective opinion and is potentially a disease of indeterminate reference and all the more so in 1944 when the provision was enacted. As a 'quid pro quo' for allowing family members to be compensated for 'nervous shock' without having to prove reasonable foreseeability of the particular type of damage alleged the legislature apparently considered that for family members more remote than spouses and parents actual presence at, or within hearing of the accident site, should be required as a condition of recovering damages. In other words, the provision seems to have been a legislative compromise in circumstances where compromise was considered reasonable. The prospect of 131 Scala v Mammolitti (1965) 114 CLR 153 at 159-160 per Taylor J; Mt Isa Mines Ltd v Pusey (1970) 125 CLR 383 at 407-408 per Windeyer J; Jaensch v Coffey (1984) 155 CLR 549 at 556-557 per Murphy J and at 602, 611 per Deane J. 132 See also Alcock v Chief Constable of South Yorkshire Police [1992] 1 AC 310 at 404 per Lord Ackner. Callinan increased road user and work place insurance premiums if there was not some type of perceived curtailment of claims for psychiatric illness provides a policy reason for making it harder for more remote family members than spouse or parent to recover damages. If there is ambiguity in the provision, and in my opinion there is not, then a purposive construction is proper and, having regard to (6) above, I consider that such a construction should be given. That would result, in my opinion, in restricting the claims of family members who are more remote than spouse or parent to cases where the death, injury or peril occurred within the sight or hearing of the plaintiff as referred to in s 4(1)(b). Children in general terms have more potential to form fresh relationships and forget mental trauma than do existing parents or spouses. At least that was probably so in 1944." Hodgson JA (with whom Handley JA and Ipp AJA agreed) in reaching a different conclusion from the trial judge said this of s 4 of the Act133: "In my opinion, s 4 of the [Act] does not have the effect of excluding any liability at common law that may otherwise exist, arising out of a duty of care owed to persons other than the immediate victims of negligent acts. What s 4 says, in effect, is that where a person by negligence has caused the death, injury or peril of another person, the former person is liable for injury from mental or nervous shock sustained by certain other defined classes of people. It does not expressly say that there should be no liability in respect of mental or nervous shock sustained by persons other than the immediate victim, unless the conditions laid down by that section are satisfied. I do not think any of the statements relied on by the trial judge support a different view, except possibly the statement by Taylor J that this legislative provision substituted a statutory test for the common law test. However, I do not think that was a carefully chosen expression, intended to convey that the common law position was displaced. Furthermore, in addition to the view expressed by Kirby P in Coates, there has recently been a further decision by this Court supporting the view that the common law is not excluded: see FAI General Insurance Co Ltd v Lucre134. One other consideration which persuades me that the common law is not displaced is that s 4 starts with a breach of duty of care to one 133 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at 615. 134 (2000) 50 NSWLR 261 at 263-264 per Mason P. Callinan person, and then extends liability for that breach to include a liability to certain other persons: it does not provide that there is any duty of care to those other persons. In so far as the common law provides for liability to persons other than the immediate victim, it does so by means of a duty of care owed directly to those persons, rather than a liability built upon a breach of duty to the primary victim." In Coates to which both the primary judge and Hodgson JA referred, Kirby P (dissenting) had earlier said135: "In my view, s 4(1)(b) of the Act does not exhaustively define the right of persons to recover for nervous shock. The section is not expressed in a way apt to have that consequence: Anderson v Liddy136. The phrase 'shall extend to include' implies the continued existence of a right which is additional to other rights which remain unaffected. The history of the statute, being designed, in part, to overcome Chester v Waverley [Corporation]137, is not supportive of the suggestion of an exclusive definition of entitlements to damages for nervous shock. The procedural arrangements originally provided by the Act deny the legislative purpose of abolishing common law rights. Those rights remained as they were, and as they were later to develop. It is an established doctrine in the interpretation of statutes that legislation should not be construed to take away common law rights except by clear terms." The reasoning and conclusion of Naughton DCJ are not lightly to be dismissed. Section 4 of the Act was enacted 59 years ago. It made much more than an incremental change to the law. That the legislature intervened shows that it thought this then a fitting area of the law for legislative rather than judicial development. It is hardly to the point that the legislature might not have foreseen that the common law in relation to nervous shock would change as it has done. And despite that the common law of Australia in this area had developed, the legislature of New South Wales had enacted no relevant changes to s 4 of the Act at the time of the commencement of this action. It did not do so, for example, when either Scala v Mammolitti138 (a New South Wales case) or Mount Isa Mines Ltd v Pusey139 (a Queensland case) were decided, each decision extending the 135 (1995) 36 NSWLR 1 at 7-8. 136 (1949) 49 SR(NSW) 320 at 323. 137 (1939) 62 CLR 1. 138 (1965) 114 CLR 153. 139 (1970) 125 CLR 383. Callinan liability of defendants and both widely regarded at the time of their pronouncement as doing so, even though a special relationship of employer and employee existed in the latter. It would have been a simple matter for the legislature of New South Wales to have enacted at any time during the 38 years since the first of those cases was decided, explicit provisions to bring the law in New South Wales expressly into step with, or to enable it to keep step with the common law, or to restrict, or limit relevant rights as it did in 1989 by enacting s 151P of the Compensation Act. It is not presently relevant to consider the legislative changes made by the Parliament of New South Wales in 2002. There is a difficulty yet to be resolved and not adverted to by the courts below, or the parties in this Court, which arises when either a significant change in the common law is effected by a decision of a court, or, as here, where the decision may have the effect of holding that an enactment extending, and therefore apparently relevantly defining the rights to which it refers, has not finally defined those rights. The difficulty arises because the common law as stated, certainly as stated by this Court is, by a legal fiction, to be regarded as having always been the law, when in practice and truth the law has been different up to the moment of the pronouncement of this Court's decision. One consequence is that actions mounted, and defences pleaded upon the basis of the law as it was previously understood will become worthless. Another is that affairs which have been arranged on the basis of the prior understanding of the law, have to be, if they can be, rearranged, or may be set at nought. Lord Browne-Wilkinson drew attention to these matters in Kleinwort Benson Ltd v Lincoln City Council140. I said that they provided reason for caution in judicial activism in Esso Australia Resources Ltd v Federal Commissioner of Taxation141. Unfortunately, the law so far has found no way constitutionally to enable courts to prevent or ameliorate the problem by, for example, treating a landmark decision as applying prospectively only, or as having no precedential relevance to actions pending or not yet statute barred. And nor, regrettably, have legislatures generally chosen to intervene to cure potential injustices so arising. To hold that the law now extends beyond what it was when s 4 of the Act was enacted, is to hold that this extension is now and has for some indefinite period in the past, been the law. How this may affect claims earlier not pursued but still not statute barred, and insurance and re-insurance effected by insurers the Court has no means of knowing. The difficulty does not arise however if on its proper construction the relevant enactment can be seen to be truly ambulatory, that is, as speaking for the common law as it develops. These matters indicate a need for caution in reaching the decision that the appellants seek in this appeal. 140 [1999] 2 AC 349 at 357-364. 141 (1999) 201 CLR 49 at 104-105 [164]. Callinan It is therefore a very serious question whether s 4 of the Act may be regarded as having been encircled, indeed outstripped even, by the common law. In short, should the Court now treat this territory relevantly as the province of the common law? Nonetheless, but not without some considerable hesitation I have formed the opinion that the legislature did not, by enacting s 4 of the Act, intend to bring to a standstill the development and application of the common law with respect to claims for nervous shock. It intended to right what was seen in 1944 to be a serious deficiency in the common law. Significantly the legislature did not enact "extend to, and be confined until further amendment to …". It deliberately chose the words "extend to" and relevantly no others. It thereby recognized the existence at common law – there was no other source for it – of a "liability … for … mental or nervous shock", and its enactment of s 151P of the Compensation Act in 1989 serves as an indication that in one, and one instance only, it wished and decided to effect a restrictive alteration to the common law as it had developed and was developing. Section 4 of the Act is to be read as ambulatory, as applying the common law as it is from time to time subject only to such other enactments as may operate to vary it. The appeals should be allowed with costs. The respondent should pay the appellants' costs of the appeals to the Court of Appeal. The cases should be remitted to the District Court for decision according to law. The costs of the proceedings in the District Court (both the trials so far and in the future) should abide the result in the District Court. |
HIGH COURT OF AUSTRALIA NORTHERN TERRITORY OF AUSTRALIA APPELLANT AND SOULEYMANE SANGARE RESPONDENT Northern Territory v Sangare [2019] HCA 25 14 August 2019 ORDER Appeal allowed. The respondent pay the appellant's costs of and incidental to the proceedings in the Supreme Court of the Northern Territory and the Court of Appeal of the Northern Territory. The respondent pay the appellant's costs of the appeal to this Court. On appeal from the Supreme Court of the Northern Territory Representation S L Brownhill SC, Solicitor-General for the Northern Territory, with L S Peattie for the appellant (instructed by Solicitor for the Northern Territory) Submitting appearance for the respondent M A Crawley SC with M J M Littlejohn appearing as amicus curiae (instructed by Miles Crawley, SC) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Northern Territory v Sangare Practice and procedure – Costs – Where respondent commenced defamation proceedings against appellant – Where appellant wholly successful on appeal and at first instance – Where appellant sought order that respondent pay its costs – Where Court of Appeal made no order as to costs because respondent's impecuniosity would likely render order futile – Whether appellant entitled to order for costs – Whether impecuniosity of unsuccessful party can alone justify decision to deny successful party its costs. Words and phrases – "award", "costs", "discretion as to costs", "futility", "impecuniosity", "indemnity", "litigant-in-person", "litigation", "matters relating to costs", "successful party", "unmeritorious litigation", "unsuccessful party". Northern Territory Supreme Court Act 1961 (Cth), s 18. Supreme Court Act 1979 (NT), ss 14(1), 55(1), 71. Supreme Court Rules 1987 (NT), r 63.03. KIEFEL CJ, BELL, GAGELER, KEANE AND NETTLE JJ. At issue in this appeal is whether, in the exercise of the judicial discretion as to costs at the conclusion of litigation, the impecuniosity of the unsuccessful party is a consideration that, without more, may justify a decision to deny the successful party its costs. The Court of Appeal of the Supreme Court of the Northern Territory resolved this issue in the affirmative, in favour of the respondent. The appellant submitted that the Court of Appeal erred in principle in treating the respondent's impecuniosity, without more, as sufficient reason to deny the appellant an order for its costs of the litigation, in which it had been wholly successful, so that the Court of Appeal's exercise of the discretion as to costs miscarried1. The appellant also submitted that it was not open to the Court of Appeal to refuse to award the appellant its costs on the ground that such an order would be futile. The appellant's submissions should be accepted. Accordingly, the appeal to this Court must be allowed. Background The respondent is a citizen of Guinea who arrived in Australia in May 2011 under a Belgian passport belonging to his brother. He applied for a protection (Class XA) visa under the Migration Act 1958 (Cth) in June 2011. His application was refused by a delegate of the Minister for Immigration and Citizenship, and that decision was affirmed by the Refugee Review Tribunal on 22 October 20122. Between 20 June and 28 August 2014, the respondent was employed on a temporary basis as a civil engineer with the Northern Territory Department of Infrastructure ("the Department"). On 28 August 2014, the Department offered the respondent a permanent position on the footing that it would sponsor him under a skilled migration scheme run by the Commonwealth Government. As part of that scheme the respondent was required to apply for and obtain the 1 House v The King (1936) 55 CLR 499 at 505; [1936] HCA 40. 2 Sangare v Northern Territory [2018] NTCA 10 at [4]. 3 Sangare v Northern Territory [2018] NTCA 10 at [5]. Bell Nettle In November 2014, the respondent was advised by the Commonwealth Government that his application for a temporary work visa was invalid because he had previously been refused a protection visa. The respondent sought expressions of support for his visa application from the Minister of the Department. The Minister, in turn, requested that officers of the Department brief him in relation to the respondent's request4. The Chief Executive of the Department provided the Minister with a briefing note. The respondent alleged that the briefing note contained material defamatory of him, and instituted proceedings against the appellant for damages. In particular, the respondent complained that the briefing note contained material fabricated by the Department to make it appear that the respondent had provided false and misleading information in relation to his immigration status, and to make it appear that the respondent was a dishonest person and of bad character5. The proceedings The respondent commenced proceedings in the Local Court of the Northern Territory against the appellant. He sought damages in the sum of $5 million. Because of the amount of damages claimed by the respondent, the proceeding was transferred to the Supreme Court of the Northern Territory6. On 6 February 2018, the trial judge, Grant CJ, dismissed the respondent's action7. His Honour found that the publication attracted protection from liability under s 27 of the Defamation Act 2006 (NT) and the general law defence of qualified privilege8. His Honour indicated that he would hear the parties as to costs9, but the respondent filed a notice of appeal before that could occur. As a result, no order as to the costs of the trial was made by the trial judge. 4 Sangare v Northern Territory [2018] NTCA 10 at [6]-[7]. 5 Sangare v Northern Territory [2018] NTCA 10 at [7]-[8]. 6 See Local Court Act 2015 (NT), ss 12 and 13(1)(b). 7 Sangare v Northern Territory [2018] NTSC 5. 8 Sangare v Northern Territory [2018] NTSC 5 at [124]. 9 Sangare v Northern Territory [2018] NTSC 5 at [126]. Bell Nettle The respondent's appeal to the Court of Appeal (Southwood, Kelly and Blokland JJ) was unsuccessful10. On that basis, the appellant sought an order that the respondent pay its costs. That order was refused for reasons that will be discussed in due course. The respondent did not contest the appellant's application for special leave to appeal to this Court, and did not participate in the appeal beyond filing a submitting appearance. In consequence, an amicus curiae was appointed to assist this Court ("the amicus"). At the hearing in this Court, Mr Crawley SC appeared with Mr Littlejohn of counsel as amicus to make submissions in support of the order made by the Court of Appeal. The power to award costs The power of the Court of Appeal to award costs is a creature of statute11. The Solicitor-General for the Northern Territory, in response to a suggestion by the amicus that a statutory power to award costs was lacking, helpfully explained the statutory basis of the power of the Court of Appeal in relation to costs. The Supreme Court of the Northern Territory was established by s 10 of the Supreme Court Act 1979 (NT). It replaced the Supreme Court of the Northern Territory previously established by the Northern Territory Supreme Court Act 1961 (Cth) ("the Commonwealth Act"). The Supreme Court, by virtue of s 51(2) of the Supreme Court Act, is known as the Court of Appeal of the Northern Territory of Australia when exercising appellate jurisdiction. By virtue of s 55(1) of the Supreme Court Act, the Court of Appeal may exercise every "power, jurisdiction and authority" of the Supreme Court under any law in force in the Northern Territory. Section 14(1)(c) of the Supreme Court Act confers on the Supreme Court "such jurisdiction ... as was, immediately before the commencement of this Act, 10 Sangare v Northern Territory [2018] NTCA 10. An application by the respondent for special leave to appeal to this Court from that decision was dismissed on 5 December 2018: see Sangare v Northern Territory [2018] HCASL 386. 11 Latoudis v Casey (1990) 170 CLR 534 at 557; [1990] HCA 59; Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 182-183; [1992] HCA 28; Cachia v Hanes (1994) 179 CLR 403 at 410; [1994] HCA 14; Oshlack v Richmond River Council (1998) 193 CLR 72 at 85-86 [33]-[34], 120 [134]; [1998] HCA 11; Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52 at 64 [30]-[31]; [2007] HCA 56. Bell Nettle vested in or conferred on the former Supreme Court". As to the "former Supreme Court"12, s 18(1) of the Commonwealth Act provided relevantly that "[t]he Supreme Court or a Judge has jurisdiction to award costs in all matters brought before the Court". Section 18(2) provided relevantly that "[s]ubject to Rules of Court ... the costs of and incidental to all proceedings in the Supreme Court ... are in the discretion of the Court or Judge". In addition, it may be noted that the Supreme Court Rules 1987 (NT) are made under s 71 of the Supreme Court Act, which provides that "[e]xcept as provided by this Act or by any other law in force in the Territory, the practice and procedure of the Court shall be as provided by the Rules". "Practice and procedure" is defined in s 9(1) of that Act to include "matters relating to costs". Finally, r 63.03 of the Supreme Court Rules relevantly provides: "(1) Subject to these Rules and any other law in force in the Territory, the costs of a proceeding are in the discretion of the Court." The reasons of the Court of Appeal The Court of Appeal accepted that the appellant in this Court (the respondent in the Court of Appeal) had been "wholly successful" on appeal and at trial, and that the appeal was "without merit" and "doomed to fail"13. Their Honours acknowledged that14: "Customarily, in circumstances such as this the Court will make an order for costs on the basis that costs should follow the event. However, the legislative intention is plainly to confer on courts and judges an unfettered discretion as to costs and a construction of a rule of court which practically negates the statutory provision is not lightly to be adopted. Nonetheless, the discretion must be exercised judicially." 12 Section 9(1) of the Supreme Court Act defines "former Supreme Court" to mean "the Supreme Court of the Northern Territory of Australia as established by law immediately before the commencement of this Act". 13 Sangare v Northern Territory [2018] NTCA 10 at [44]. 14 Sangare v Northern Territory [2018] NTCA 10 at [46] (footnote omitted). Bell Nettle Having acknowledged the manner in which the discretion is "customarily" exercised, their Honours went on to say15: "In this case the relevant factors are as follows: The respondent has been wholly successful and has been brought to court not once but twice. The purpose of an award of costs is not to punish the unsuccessful party but to compensate the successful party. The appellant is most unlikely to be able to pay any costs that are awarded against him." "The respondent is most unlikely to be compensated even if an award of costs was made in its favour. In the circumstances, it seems to us that the Court should not make a futile order or orders as to costs." The Court of Appeal then concluded17: "Both as to the costs below and the costs of the appeal the Court makes no order as to costs." It is apparent from the reasons of the Court of Appeal that the sole consideration which led their Honours to depart from the "customary" rule that costs follow the event, and to make no order as to costs of both the trial and the appeal, was the circumstance that the order which it would otherwise have made was likely to be futile because of the respondent's impecuniosity. The appeal to this Court As noted at the outset of these reasons, the appellant argued that the discretion of the Court of Appeal miscarried in point of principle. It also argued 15 Sangare v Northern Territory [2018] NTCA 10 at [47] (footnote omitted). 16 Sangare v Northern Territory [2018] NTCA 10 at [48]. 17 Sangare v Northern Territory [2018] NTCA 10 at [48]. Bell Nettle that if the futility of an order for costs were a relevant consideration, the Court of Appeal erred in two respects in reaching the conclusion that the order would be futile. First, the Court made its determination without any evidence of the respondent's present or future capacity to pay the appellant's costs. Secondly, the Court did not indicate to the appellant that it intended to decide the question of costs by reference to the respondent's financial circumstances and did not invite submissions from the appellant in response to what the respondent had said about his employment or the perceived futility of making an order. Because the appellant's primary submission must be accepted, it is unnecessary to deal with this alternative submission or with the submissions advanced by the amicus in response to it. In this Court, the amicus submitted that although impecuniosity is not of itself a sufficient reason to deprive a successful party of its costs, it may be sufficient when combined with other factors. It was said that there should be no inflexible rule that a party's financial position is always irrelevant, and that it would be wrong to place a fetter on the exercise of the costs discretion. The submission of the amicus in relation to the fettering of the costs discretion will be addressed in due course, but it may be said immediately that it is apparent from the reasons of the Court of Appeal that the respondent's impecuniosity was treated, without more, as a sufficient reason to deprive the appellant of its costs of the litigation in which it had been successful. The discretion as to costs It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation18. While the width of the discretion "cannot be narrowed by a legal rule devised by the court to control its exercise"19, the formulation of principles according to which the discretion should be exercised does not "constitute a fetter upon the discretion not intended by the legislature"20. Rather, 18 Donald Campbell & Co v Pollak [1927] AC 732 at 811-812; Latoudis v Casey (1990) 170 CLR 534 at 539-540, 557, 561-562, 569; Oshlack v Richmond River Council (1998) 193 CLR 72 at 96 [65], 120-121 [134]. 19 Norbis v Norbis (1986) 161 CLR 513 at 537; [1986] HCA 17. See also at 533. 20 Latoudis v Casey (1990) 170 CLR 534 at 541-542, see also at 558-559; Oshlack v Richmond River Council (1998) 193 CLR 72 at 96 [65], 121 [134]. Bell Nettle the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the A guiding principle by reference to which the discretion is to be exercised – indeed, "one of the most, if not the most, important" principle – is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party22. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action23. But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of the discretion in its favour24. There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the "just resolution of the real issues in civil proceedings with minimum delay and expense"25, that might have been taken into account to justify refusing the appellant an order for its costs. 21 Norbis v Norbis (1986) 161 CLR 513 at 519; Latoudis v Casey (1990) 170 CLR 534 at 541-542, see also at 558; Oshlack v Richmond River Council (1998) 193 CLR 72 at 96 [65], 121 [134]. 22 Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [No 2] [1953] 1 WLR 1481 at 1484; [1953] 2 All ER 1588 at 1590. See also Harold v Smith (1860) 5 H & N 381 at 385 [157 ER 1229 at 1231]; Oshlack v Richmond River Council (1998) 193 CLR 72 at 96-97 [66]-[67], see also at 86 [35], 120-121 [134]. 23 See, eg, Bostock v Ramsey Urban District Council [1900] 2 QB 616 at 622, 625, 627; Ritter v Godfrey [1920] 2 KB 47 at 53, 60, 66; Scottish Gympie Gold Mines Ltd v Carroll [1902] St R Qd 311 at 315-316; Stewart v Moore [1921] St R Qd 182 at 190; Redden v Chapman (1949) 50 SR (NSW) 24 at 25. 24 Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874; Oshlack v Richmond River Council (1998) 193 CLR 72 at 97-98 [69]. 25 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 210 [90]; [2009] HCA 27. See Supreme Court Rules, r 1.10. Bell Nettle Impecuniosity Prior to the decision of the Court of Appeal in this case, the proposition that the impecuniosity of an unsuccessful party, without more, is not a sufficient reason for depriving a successful party of its costs had been accepted in every other Australian jurisdiction26. On 10 April 2019, the day before the hearing of the appeal in this Court, the Court of Appeal of the Northern Territory (Southwood J, Riley and Graham A-JJ) decided JB v Northern Territory [No 2]27. The Court noted that the Court of Appeal's decision in the present case is inconsistent with the authorities referred to above, and declined to follow it28. In Board of Examiners v XY29, Chernov JA, with whom Neave JA agreed, identified difficulties of practice and principle that beset the approach of the Court of Appeal in the present case. As a practical matter, difficulties arise in determining the level of impecuniosity at which it would become a relevant consideration. There would also be substantial practical difficulties in determining, after the conclusion of the litigation, the unsuccessful party's financial standing. In point of principle, it is basic justice that a successful party should be compensated for expenses it has incurred because it has been obliged to litigate by the unsuccessful party. That consideration of basic justice does not lose its compelling force simply because the successful party happens to be wealthy: the successful party, whether rich or poor, did not ask to be subjected to the expense of unmeritorious litigation. The statutory power to order costs affords the successful party necessary protection against unmeritorious litigation; 26 See, eg, Hollier v Australian Maritime Safety Authority [No 2] [1998] FCA 975 at 3; Yilan v Minister for Immigration and Multicultural Affairs [1999] FCA 1212 at [5]; Scott v Secretary, Department of Social Security [No 2] [2000] FCA 1450 at [4], cf at [8]; Board of Examiners v XY (2006) 25 VAR 193 at 206-209 [31]-[43]; Edwards v Stocks [No 2] (2009) 17 Tas R 454 at 460-461 [12]; Marlow v Walsh [No 2] [2009] TASSC 40 at [23]; Smolarek v Roper [2009] WASCA 124 (S) at [11]; Sochorova v The Commonwealth [2012] QCA 152 at [17]; Sassoon v Rose [2013] NSWCA 220 at [10]; Chapple v Wilcox (2014) 87 NSWLR 646 at 652 [24]; Machado v Underwood [No 2] [2016] SASCFC 123 at [45]; GJ v AS [No 4] [2017] ACTCA 7 at [102]. 27 [2019] NTCA 3. 28 JB v Northern Territory [No 2] [2019] NTCA 3 at [15]. 29 (2006) 25 VAR 193 at 206-207 [33]-[34]. Bell Nettle and unmeritorious litigation is no less unmeritorious because it is pursued by a person who is poor or who is a litigant-in-person. The circumstance that the appellant is a public authority is likewise irrelevant. As McHugh J said in Oshlack v Richmond River Council30: "The law judges persons by their conduct not their identity. In the exercise of the costs discretion, all persons are entitled to be treated equally and in accordance with traditional principle. The fact that a successful [party] is a public authority should not make a court less inclined to award costs in its favour. Gone are the days when one could sensibly speak of a public authority having 'available to them almost unlimited public funds.'31" McHugh J dissented in the result in Oshlack, but those observations were not contrary to the reasoning of the majority in that case. The amicus submitted that orders for costs are intended to be compensatory, not punitive. As a general proposition, so much must be accepted32. The amicus went on to submit that the respondent's impecuniosity was a consequence of his being unemployed and that this followed the publication of the defamatory matter in respect of which the respondent brought these proceedings. It was then argued that the effect of a costs order in these circumstances would not be compensatory, but punitive. This submission cannot be accepted. The very point decided by the Court of Appeal was that the respondent's action was not justified in law. In these circumstances, there can be nothing punitive in an order that the appellant be compensated for having been unsuccessfully sued. No conduct on the part of the appellant in the course of the litigation caused or contributed in any way to the respondent's impecuniosity. 30 (1998) 193 CLR 72 at 107 [92]. 31 Kent v Cavanagh (1973) 1 ACTR 43 at 55. 32 Latoudis v Casey (1990) 170 CLR 534 at 543, 562-563, 567; Oshlack v Richmond River Council (1998) 193 CLR 72 at 75 [1], 89 [44], 97 [67], 102 [80], Bell Nettle Whether a party is rich or poor has, generally speaking, no relevant connection with the litigation33. It may be said, by way of qualification to that general proposition, that a party's financial position may be relevant to the extent that it may inform the structure of a costs order. For example, impecuniosity may justify providing for the payment of costs over time in order to avoid inflicting unnecessary hardship while at the same time improving the likelihood of compliance with the order. That said, any such qualification was not invoked in the present case. For the sake of completeness, it may be observed that in Oshlack this Court, by majority (Gaudron, Gummow and Kirby JJ, Brennan CJ and McHugh J dissenting), set aside the decision of the Court of Appeal of the Supreme Court of New South Wales and restored the decision of the Land and Environment Court of New South Wales that there be no order as to costs in respect of the appellant's unsuccessful challenge to the local authority's consent to a development application. The majority in this Court held that it was open to the Land and Environment Court to conclude that the litigation was motivated by a desire to ensure obedience to environmental law and to preserve the habitat of endangered fauna, and that there was, objectively speaking, a "'public interest' in the outcome of the litigation"34. It could also be said in favour of the order made by the Land and Environment Court that it was not unfair to require the local authority to bear its own costs of litigation where it had an interest in resolving uncertainty attending the valid exercise of its powers, and wide standing provisions facilitated the bringing of such litigation. None of these considerations can be said to be relevant in this case. The litigation here was brought to vindicate the respondent's private interest in his reputation by the recovery of damages. Futility It was erroneous for the Court of Appeal to decline to make the order sought because it perceived that the award would be futile. The making of an order for costs is no occasion to invoke the concern of the Court of Chancery that 33 Hollier v Australian Maritime Safety Authority [No 2] [1998] FCA 975 at 3; Scott v Secretary, Department of Social Security [No 2] [2000] FCA 1450 at [4]; Board of Examiners v XY (2006) 25 VAR 193 at 207-208 [35], 209 [41]; Dal Pont, Law of Costs, 4th ed (2018) at [8.30]. 34 (1998) 193 CLR 72 at 80-81 [20], 91 [49], 126-127 [143]-[144]. Bell Nettle equity not act in vain35. That concern is a consideration attending the exercise of the discretion to grant equitable remedies36. In stark contrast, the courts do not regard the impecuniosity of a defendant wrongdoer as a reason for declining to order the payment of damages found to be due to an injured plaintiff. Likewise, the favourable exercise of the statutory power to award costs is not the grant of an equitable remedy in respect of which a likely failure of compliance is a relevant consideration. In any event, as a matter of authority, the courts have consistently rejected the suggestion that a costs order should not be made against an impecunious party because it would be futile to do so37. The circumstance that a person may not presently, or even foreseeably, be able to meet an order for costs has not been regarded as a reason to regard the creation of the debt as an exercise in futility. The very existence of the debt created by the order is a benefit to a creditor. The successful party is better off with the benefit of the order than without it. It simply cannot be assumed that the respondent will never have the means to pay the debt in whole or in part or that it might not otherwise be turned to valuable account by the appellant38. Conclusion and orders The respondent's impecuniosity was the only reason identified by the Court of Appeal for depriving the appellant of its costs. That consideration was not relevant to the proper exercise of the Court's discretion as to costs. The Court of Appeal's decision cannot be supported as an exception to the general principle 35 See, eg, Benson v Benson (1710) 1 P Wms 130 at 131 [24 ER 324 at 325]; New Brunswick etc Co v Muggeridge (1859) 4 Drew 686 at 699 [62 ER 263 at 268]. 36 For example, specific performance of an agreement to execute a partnership deed will not be ordered where the partnership to be constituted by the deed might lawfully be dissolved forthwith by the defendant: see Hercy v Birch (1804) 9 Ves Jun 357 at 360 [32 ER 640 at 641]. 37 See Selliah v Minister for Immigration and Multicultural Affairs [1998] FCA 469 at 4; MZARS v Minister for Immigration and Border Protection [2017] FCA 177 at [36]-[37]; Graham v Minister for Immigration and Border Protection [No 2] [2018] FCA 1116 at [16]-[17]. 38 Tozier v Hawkins (1885) 15 QBD 680; The Commonwealth v Mewett (1997) 191 CLR 471 at 535; [1997] HCA 29. Bell Nettle that a wholly successful party should be entitled to an order for costs. It follows that the appeal must be allowed. The appeal should be allowed. The respondent should pay the appellant's costs of and incidental to the proceedings in the Supreme Court of the Northern Territory at first instance and in the Court of Appeal. The respondent should pay the appellant's costs of the appeal to this Court. |
HIGH COURT OF AUSTRALIA MINISTER FOR IMMIGRATION AND CITIZENSHIP APPELLANT AND XIUJUAN LI & ANOR RESPONDENTS Minister for Immigration and Citizenship v Li [2013] HCA 18 8 May 2013 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation J T Gleeson SC, Acting Solicitor-General of the Commonwealth with G R Kennett SC and A L Wheatley for the appellant (instructed by Clayton Utz Lawyers) L Boccabella with W J Markwell for the first respondent (instructed by AJ Torbey & Associates) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration and Citizenship v Li Immigration – Migration Review Tribunal – Review of decisions – Visa applicant sought review by Migration Review Tribunal ("Tribunal") of decision of Minister's delegate to refuse skilled residence visa – Section 363(1)(b) of Migration Act 1958 (Cth) gives Tribunal power to adjourn review of decision – Visa applicant requested Tribunal adjourn review until the outcome of a review of her skills assessment was finalised – Whether Tribunal's refusal to adjourn was unreasonable or plainly unjust. Words and phrases – "fair and just", "fair, just, economical, informal and quick", "jurisdictional error", "unreasonable or plainly unjust", "unreasonableness", "Wednesbury unreasonableness". Constitution, s 75(v). Migration Act 1958 (Cth), ss 349(1), 353, 357A, 360(1), 363(1)(b). Introduction For the purpose of exercising its function of reviewing certain visa refusal decisions under the Migration Act 1958 (Cth) ("the Act"), the Migration Review Tribunal ("the MRT") is given a variety of powers and discretions. One such power is to adjourn the review1. In this case, the MRT made a decision, on 25 January 2010, adverse to the first respondent, who had been training and obtaining work experience as a cook and had been refused a Skilled–Independent Overseas Student (Residence) (Class DD) visa. As was known to the MRT when it made its decision, the first respondent was awaiting the outcome of a requested review by Trades Recognition Australia ("TRA") of the first respondent's unsuccessful application to that authority for a skills assessment. A favourable skills assessment was a necessary condition of the grant of the kind of visa which she sought. The MRT did not accede to a request from the first respondent's migration agent to defer its determination pending TRA's decision. The case has a history dating back to the initial application for a visa on 10 February 2007. The decision of the MRT was quashed by the Federal Magistrates Court2 ("the FMC") on 31 August 2011 by an order in the nature of certiorari and the matter remitted to the MRT by an order in the nature of mandamus. An appeal from the decision of the FMC was dismissed by the Full Court of the Federal Court on 24 May 20123. The Minister for Immigration and Citizenship ("the Minister") now appeals, by special leave4, to this Court on the basis that, contrary to the conclusions of the FMC and of the Full Court, the MRT did not act unreasonably in making its decision and did not fail to apply such requirements of procedural fairness as were imposed on it by the Act. For the reasons that follow the appeal should be dismissed. The procedural history The events leading to this appeal are discussed in detail in the reasons for judgment of the plurality5. Salient features of that procedural history are: 1 Act, s 363(1)(b). 2 Li v Minister for Immigration and Citizenship [2011] FMCA 625. 3 Minister for Immigration and Citizenship v Li (2012) 202 FCR 387. 4 Granted on 16 November 2012 (French CJ and Heydon J). See [2012] HCATrans 5 Reasons for judgment of Hayne, Kiefel and Bell JJ at [33]–[45]. The first respondent applied for a Skilled–Independent Overseas Student (Residence) (Class DD) visa on 10 February 2007 which required satisfaction of a "time of decision criterion" set out in cl 880.230(1) of Sched 2 to the Migration Regulations 1994 (Cth) ("the Regulations"), namely that: "A relevant assessing authority has assessed the skills of the applicant as suitable for his or her nominated skilled occupation, and no evidence has become available that the information given or used as part of the assessment of the applicant's skills is false or misleading in a material particular." The application was supported by a skills assessment made on 8 January 2007 by TRA, a relevant assessing authority. The assessment was found to be based on false information submitted to TRA by the first respondent's former migration agent and on 13 January 2009 the Minister's delegate refused the application for a visa. The first respondent, through a new migration agent, applied to the MRT for review of the delegate's decision on 30 January 2009. The migration agent submitted a fresh application to TRA for a new skills assessment on 4 November 2009. The MRT convened a hearing for 18 December 2009 and on 21 December 2009 wrote to the first respondent inviting comment upon allegedly untruthful answers given to departmental officers in connection with her initial application. It required a response by 18 January 2010, but advised the first respondent that she could seek an extension of time. On 18 January 2010, the first respondent's migration agent replied to the MRT's letter of 21 December 2009 and advised that the application for a second skills assessment had been unsuccessful. The migration agent pointed out "two fundamental errors" in TRA's assessment and said that the first respondent had applied to TRA for review of its adverse decision. The migration agent requested the MRT to "forbear from making any final decision regarding her review application until the outcome of her skills assessment application is finalised." He undertook to keep the MRT informed of the progress of the application. On 25 January 2010, without waiting for advice of the outcome of the migration agent's representations to TRA, the MRT affirmed the delegate's decision6. It acknowledged the agent's last letter. It did not explain its decision to proceed to a determination beyond saying7: "The Tribunal considers that the applicant has been provided with enough opportunities to present her case and is not prepared to delay any further and in any event, considers that clause 880.230 necessarily covers each and every relevant assessing authority's assessment." The FMC and Federal Court decisions The first respondent applied to the FMC for judicial review of the MRT decision primarily on the ground that the MRT had failed to accord her procedural fairness when it refused to defer making its decision until after the outcome of her agent's request for a review by TRA of her skills assessment8. However, the Federal Magistrate hearing the application decided it in favour of the first respondent on the basis that "the Tribunal's decision to proceed in [the] circumstances rendered it unreasonable such as to constitute unreasonableness in the Wednesbury Corporation sense."9 In their joint judgment dismissing the Minister's appeal to the Full Court of the Federal Court, Greenwood and Logan JJ correctly described the review function conferred on the MRT as its "core function" and said10: "The MRT is given power to adjourn proceedings from time to time ... An unreasonable refusal of an adjournment of the proceeding will not just deny a meaningful appearance to an applicant. It will mean that the MRT has not discharged its core statutory function of reviewing the decision. This failure constitutes jurisdictional error for the purposes of s 75(v) of the Constitution." (emphasis in original) Their Honours also concluded that an unreasonable refusal of an adjournment would mean that the MRT had not conducted its review function in a way which was "fair", that being a requirement of ss 353 and 357A(3) of the Act11. In so [2010] MRTA 151. [2010] MRTA 151 at [35]. [2011] FMCA 625 at [24]. [2011] FMCA 625 at [49], referring to Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. 10 (2012) 202 FCR 387 at 395 [29]. 11 (2012) 202 FCR 387 at 395 [30]. concluding, they invoked observations in Minister for Immigration and Citizenship v SZGUR12 referring to s 353 as imposing a "requirement" on the MRT13. As appears later in these reasons, their Honours seem to have taken more from that observation than it conveyed. Their Honours observed correctly that the migration agent's letter to the MRT of 18 January 2010 disclosed every reason to conclude that the second skills assessment was adverse because of error on the part of TRA14. They held that "there was no countervailing consideration on the basis of which it might be concluded that the refusal to adjourn was one reasonably open to the MRT."15 Collier J held that the MRT had failed properly to consider the first respondent's application for an adjournment and that that failure constituted a failure to give her a proper hearing within the meaning of s 360 of the Act16. Her Honour, however, did not agree that issues relevant to the adjournment could be linked to Wednesbury unreasonableness17. The grounds of appeal The Minister asserted in his notice of appeal that the plurality in the Full Court had erred in holding that ss 353 and 357A(3) of the Act imposed statutory requirements capable of supporting substantive grounds of review for jurisdictional error or defined the "core function" of the MRT in such a way as to include procedural requirements additional to those imposed by Div 5 of Pt 5 of the Act. The Minister also attacked the finding that principles of procedural fairness arising under the general law applied in addition to the express statutory requirements imposed on the MRT. The Minister challenged the findings of the Full Court that the relevant standard of procedural fairness had not been met in 12 (2011) 241 CLR 594; [2011] HCA 1. 13 (2011) 241 CLR 594 at 601 [19] per French CJ and Kiefel J. 14 (2012) 202 FCR 387 at 397 [37]. 15 (2012) 202 FCR 387 at 397 [38]. It was not disputed that the Regulations would not have prevented the MRT from having regard to a successful second skills assessment and it was conceded by the Minister in this Court that provided an application for a skills assessment had been lodged at the time of application it was not necessary that it be that application which was successful for the purposes of 16 (2012) 202 FCR 387 at 413 [107]. 17 (2012) 202 FCR 387 at 414 [109]. the circumstances and that the MRT's refusal of an adjournment was a decision that no reasonable tribunal could have made. The grounds of appeal direct attention to the nature of the functions conferred by the Act on the MRT. The functions and powers of the MRT The MRT is established by Pt 6 of the Act18. Part 5 of the Act provides for "review" by the MRT of a range of decisions under the Act defined as "MRT-reviewable decisions"19. They include decisions of the kind in issue in this case—that is, a decision to refuse to grant a non-citizen in the migration zone, who has made an application while in the migration zone, a visa of a kind that can be granted while the non-citizen is in the migration zone20. that Section 348 provides if an application for review of an MRT-reviewable decision is properly made "the Tribunal must review the decision."21 It may, for the purposes of the review, "exercise all the powers and discretions that are conferred by this Act on the person who made the decision."22 It is well established that the reviews that both the MRT and the Refugee Review Tribunal ("the RRT") undertake (both tribunals operating under similar legislative schemes) are non-adversarial and that they involve no contradictor nor the joinder of any issue23. The review function of the tribunals created by the Act is sometimes called "inquisitorial"24. That designation is a characterisation of their function which distinguishes it from adversarial proceedings25. The word 18 Act, s 394. 19 Act, s 338. 20 Act, s 338(2)(a), (b). 21 Act, s 348(1). 22 Act, s 349(1). 23 Muin v Refugee Review Tribunal (2002) 76 ALJR 966 at 969 [7] per Gleeson CJ, 985 [98] per McHugh J, 1001 [208] per Kirby J, 1008 [246] per Hayne J; 190 ALR 601 at 604, 625, 648, 658; [2002] HCA 30. 24 Minister for Immigration and Citizenship v SZKTI (2009) 238 CLR 489 at 499 [27]; [2009] HCA 30. See also Re Refugee Review Tribunal; Ex parte H (2001) 75 ALJR 982 at 990 [29] per Gleeson CJ, Gaudron and Gummow JJ; 179 ALR 425 at 435; [2001] HCA 28. 25 Minister for Immigration and Citizenship v SZIAI (2009) 83 ALJR 1123 at 1127 [18]; 259 ALR 429 at 434; [2009] HCA 39. "review" "has no settled pre-determined meaning; it takes its meaning from the context in which it appears."26 As appears from the nature of the powers conferred on these tribunals, the review each must undertake involves a fresh consideration of the application which led to the decision under review. The review must be based on the evidence and arguments placed before the tribunal and any other relevant information which the tribunal itself obtains. Each tribunal must identify for itself the issues that arise in the application before it. It is not confined to the issues considered by the delegate27. There are similarities to the kind of review provided by the Administrative Appeals Tribunal ("the AAT"), described by Brennan J in Bushell v Repatriation Commission28 as: "an administrative decision-maker, under a duty to arrive at the correct or preferable decision in the case before it according to the material before As for the AAT, so too for the MRT and the RRT, the onus of proof relevant in judicial fact-finding has no part to play in administrative proceedings29. There being no party to a review adverse to the applicant, no question of prejudice to a party other than the applicant can arise when the applicant asks the MRT to adjourn a review to enable additional information to be provided to the MRT. Nor can there be any prejudice to the tribunal although it is entitled to have regard to legislative objectives including timeliness in its processes. Division 4 of Pt 5 of the Act is entitled "Exercise of Tribunal's powers". It commences with s 353, which provides: "(1) The Tribunal shall, in carrying out its functions under this Act, pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick. The Tribunal, in reviewing a decision: is not bound by technicalities, legal forms or rules of evidence; and 26 Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 261 per Mason CJ, Brennan and Toohey JJ; [1995] HCA 10. 27 SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 at 163 [35]; [2006] HCA 63. 28 (1992) 175 CLR 408 at 425; [1992] HCA 47. 29 (1992) 175 CLR 408 at 425. shall act according to substantial justice and the merits of the case." The objective set out in s 353(1) is replicated, in relation to the administration of the MRT, in s 397(2)(a), which defines one of the responsibilities of the Principal Member of the tribunal as "monitoring the operations of the Tribunal to ensure that those operations are as fair, just, economical, informal and quick as practicable". Section 420 of the Act gives the same legislative directions to the RRT as s 353 gives to the MRT. The direction in subs (1) of each provision is, as was said in SZGUR, a "requirement imposed on the Tribunal, in the discharge of its core function"30. That requirement is formulated in terms of broad legislative objectives which are, to some degree, "inconsistent as between themselves."31 They are not expressed in terms or in a context which would support a claim of jurisdictional error based on the non-observance of any of them. That view is well supported by observations about s 420 in the judgments of this Court in Minister for Immigration and Multicultural Affairs v Eshetu32. There was a focus in that case on the interaction between s 420 and the limited grounds for judicial review of Migration Act decisions in the Federal Court which were enumerated in s 476 as it then stood. Nevertheless, it was the broad facultative language of s 420 that supported the conclusion that it did not give rise to grounds for judicial review based on a failure to comply with its exhortations. Gleeson CJ and McHugh J described its function as "intended to be facultative, not restrictive" and "to free tribunals, at least to some degree, from constraints otherwise applicable to courts of law, and regarded as inappropriate to tribunals."33 Gaudron and Kirby JJ described s 420 as determining the general nature of review proceedings and held that there was no basis for concluding that it operated to mandate specific procedures to be observed by the RRT or the method by which it was to reach its decision34. Gummow J agreed with what Lindgren J had said, particularly about s 420(1), in Sun Zhan Qui v Minister for 30 (2011) 241 CLR 594 at 601 [19] per French CJ and Kiefel J. 31 Sun Zhan Qui v Minister for Immigration and Ethnic Affairs [1997] FCA 324 per Lindgren J, quoted by Gummow J in Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 643 [109]; [1999] HCA 21. 32 (1999) 197 CLR 611. 33 (1999) 197 CLR 611 at 628 [49]. 34 (1999) 197 CLR 611 at 635 [77]. Immigration and Ethnic Affairs35. Lindgren J pointed to the difficulty of invoking a failure to comply with s 420(1) as a ground of non-performance of a requisite procedure for the purposes of s 476 of the Act. Although his analysis was based upon the interaction with s 476, it threw up the general difficulty of invoking s 420(1) and similarly s 353(1) as giving rise to grounds for judicial review. A complaint about alleged non-compliance with s 420(1) might require consideration of the RRT's staff and financial resources and its internal organisations and practices. His Honour said36: "A mere conclusion that a mechanism of review in its operation in a particular case did not satisfy one or more of the epithets in [s] 420(1), would not necessarily establish that the [Tribunal] had not been pursuing the specified objective." The requirements of s 353(2) are in the same terms as those applied to the RRT by s 420(2) of the Act. The language is familiar. Its ancestry dates back to statutory directions to Courts of Requests in the 17th century to make such orders "as they shall find to stand with equity and good conscience"37. That statutory formula evolved and was applied to tribunals in Australia both before and after Federation. An early example was the statute re-establishing the Court of Requests in the Colony of New South Wales in 184238, which became the Small Debts Court, and was required to decide matters "in a summary way, and according to equity and good conscience"39. The rolled-up direction to "act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms" was considered by the Court of Appeal of New South Wales in Qantas Airways Ltd v Gubbins40. As pointed out by Gleeson CJ and Handley JA in that case, the collocation has no fixed legal meaning independent of the statutory context in 35 [1997] FCA 324 cited in Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 643 [109]. 36 (1999) 197 CLR 611 at 643 [109] per Gummow J, quoting Lindgren J in Sun Zhan Qui v Minister for Immigration and Ethnic Affairs [1997] FCA 324. 37 3 Jac 1 c 15 (1605). 38 6 Vict No 15. 39 Small Debts Recovery Act 1912 (NSW), s 7(1). See generally Beale, "Equity and Good Conscience", (1937) 10 Australian Law Journal 349. 40 (1992) 28 NSWLR 26 at 29–31 per Gleeson CJ and Handley JA, 41–42 per Kirby P. which it is found41. So too, s 353(2) is to be understood in its statutory context. That context makes clear that it cannot operate to allow the MRT to act other than according to the law set out in the Act in the exercise of its function of review, including the exercise of the powers and discretions conferred upon it in aid of that function. The MRT is not excused from compliance with the criteria of lawfulness, fairness and rationality that lie at the heart of administrative justice albeit their content is found in the provisions of the Act and the corresponding regulations and, subject to the Act and those regulations, the common law. Section 353(2) shares with s 353(1) a facultative rather than restrictive purpose42. The two paragraphs of s 353(2) "describe the general nature of review proceedings and require the Tribunal to operate as an administrative body with flexible procedures and not as a body with technical rules of the kind that have sometimes been adopted by quasi-judicial tribunals."43 Its facultative character was illustrated in Minister for Immigration and Multicultural Affairs v Bhardwaj44. Gleeson CJ observed that s 353 allowed a precursor tribunal, the Immigration Review Tribunal, to reopen its own decision when it learned that the decision was based upon an administrative error45. Section 353(2) does not import substantive common law requirements of procedural fairness. Nothing said in SZGUR supports such a conclusion. To the extent that the Full Court of the Federal Court treated the direction in s 353 as giving rise to grounds for judicial review, it was in error. A fortiori, no substantive operation applicable to individual review proceedings is to be attributed to s 397(2)(a) of the Act. On the other hand, nothing in s 353 is adverse to the application of the requirements of procedural fairness in the exercise of the MRT's functions. A limiting definition of their application in certain respects is to be found in s 357A. It is necessary now to consider the operation of that provision in relation to procedural fairness and whether in this case procedural fairness was denied. 41 (1992) 28 NSWLR 26 at 30. 42 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 628 [49] per Gleeson CJ and McHugh J. 43 (1999) 197 CLR 611 at 635 [75] per Gaudron and Kirby JJ. 44 (2002) 209 CLR 597; [2002] HCA 11. 45 (2002) 209 CLR 597 at 605–606 [14]. Procedural fairness in the MRT Division 5 of Pt 5, which deals with the conduct of reviews by the MRT, includes s 357A, which provides: "Exhaustive statement of natural justice hearing rule This Division is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with. Sections 375, 375A and 376 and Division 8A, in so far as they relate to this Division, are taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters they deal with. In applying this Division, the Tribunal must act in a way that is fair and just." Division 5 also requires the MRT to invite the applicant for review to appear before it and to present arguments relating to the issues arising in relation to the decision under review46. The MRT is empowered, for the purpose of a review of a decision, to do a number of things including seek "any information that it considers relevant"47, "take evidence on oath or affirmation"48 and "adjourn the review from time to time"49. What are the "matters" with which Div 5 of Pt 5 of the Act deals? In Saeed v Minister for Immigration and Citizenship50 the plurality held to be "plainly correct" the approach that the words "the matters it deals with" in s 357A(1) require a search to be made of Div 5 for a provision "dealing with" a relevant "matter"51. Division 5 of Pt 5 deals with the submission by an applicant 46 Act, s 360(1). 47 Act, s 359(1). 48 Act, s 363(1)(a). 49 Act, s 363(1)(b). 50 (2010) 241 CLR 252; [2010] HCA 23. 51 (2010) 241 CLR 252 at 266 [37]–[39], approving the approach favoured by Lindgren J in NAQF v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 130 FCR 456 at 475 [83]. of "a written statement in relation to any matter of fact" and "written arguments ... arising in relation to the decision under review."52 Division 5 does not deal with the matter of an application by an applicant for an adjournment in order to provide additional material or, as in this case, the provision of a third party assessment the existence of which is a criterion for the grant of the visa. The common law hearing rule of procedural fairness applies to the process for making a decision to grant or refuse an adjournment in such cases and informs its legal consequences where a person is said to have been deprived by a refusal of a reasonable opportunity for a hearing. The decision of this Court in Bhardwaj pre-dated the enactment of s 357A for RRT proceedings 53. and s 422B, which makes similar provision Nevertheless, having regard to the proper construction of those provisions, the observation in the judgment of Gaudron and Gummow JJ that "a failure to accede to a reasonable request for an adjournment can constitute procedural unfairness"54 remains apposite to the proceedings of the MRT and the RRT. In written submissions filed on his behalf the Minister accepted that circumstances could be envisaged in which a refusal by the MRT to delay or adjourn its processes might result in a failure to provide procedural fairness55. The Minister submitted, however, that the present case was not really about procedural fairness at all. The request for a deferral of the MRT decision was made by the first respondent "in the hope that the passage of further time would see her meet the criterion which presently she did not meet." The failure by the MRT to accede to her request to defer its decision did not deny her a proper hearing. An application for review by the MRT may require the presentation by the applicant of material demonstrating compliance with a criterion to be satisfied at the time of the MRT's decision. The relevant criterion may involve evidence of a fact in existence. That fact may be, as in this case, the formation by a third party of an opinion or assessment on a matter of fact. It requires a fine distinction to accept that procedural fairness applies to a request for an opportunity to obtain 52 Act, s 358. Other provisions of Div 5 deal with requests by the MRT for the provision of information (see s 359), and for comments or responses by an applicant to information that could be a reason for affirming the decision (see s 359A). 53 Migration Legislation Amendment (Procedural Fairness) Act 2002 (Cth), Sched 1, Items 5, 6; Migration Amendment (Review Provisions) Act 2007 (Cth), Sched 1, Items 1, 17. 54 (2002) 209 CLR 597 at 611 [40]. 55 See also Applicant NAHF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 128 FCR 359 at 366 [36] per Hely J. evidence of a fact and to reject its application to a request for an opportunity to obtain a statutory assessment as to the existence of a fact. A reasonable opportunity to present an applicant's case with respect to a time of decision criterion will extend to the opportunity to obtain evidence of the necessary fact or to obtain the necessary opinion or assessment. The Minister's submission drew a distinction which might be thought antithetical to the legislative direction and facultative purpose of s 353 and indeed that of s 357A(3). The MRT's approach in this case, which does not appear to have been that distinction, was captured succinctly, and apparently informed by exhaustively, by the words "the applicant has been provided with enough opportunities to present her case". It made no reference to the probability that the first respondent would be able, within a reasonable time, to secure the requisite skills assessment. The Minister submitted, against a straw-person argument not put, that there is no general obligation upon the MRT to adjourn a decision because the applicant for review "considers" that the passage of time will allow a visa criterion to be met. That was not this case. There was good reason to expect that the criterion would be met. The MRT denied the first respondent what would have been, in the circumstances, a reasonable opportunity to acquire the TRA skills assessment which was essential to her success. The first respondent's migration agent had shown the MRT that there was a proper basis for expecting a favourable outcome in response to his request for a review by TRA. That was borne out by the event56. There was no practical countervailing consideration disclosed in the MRT's reasons for refusing to defer its decision. The first respondent was denied procedural fairness and that denial constituted jurisdictional error. The refusal by the MRT to defer its decision was held by Greenwood and Logan JJ in the Full Court to be "unreasonable" amounting to a failure to discharge the "core statutory function of reviewing the decision."57 The question of the "unreasonableness" of the MRT's decision not to adjourn the review was agitated, independently of the question of its asserted failure to accord procedural fairness to the first respondent. This aspect of the case raises the question whether the decision of the MRT was unreasonable in the sense used by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation58, that is to say so unreasonable that no reasonable tribunal could have made it. In approaching that question it is necessary to keep in mind the distinction between a decision-maker finding a jurisdictional fact and a decision- maker exercising a discretion. The distinction was made by Gummow A-CJ and 56 A successful assessment was provided by TRA on 12 April 2010. 57 (2012) 202 FCR 387 at 395 [29]. Kiefel J in Minister for Immigration and Citizenship v SZMDS59 when, referring to so-called "Wednesbury unreasonableness" their Honours said60: "The concern here is with abuse of power in the exercise of discretion, again on the assumption that the occasion for the exercise of discretion had arisen upon the existence of any necessary jurisdictional facts. Confusion of thought, with apprehension of intrusive interference with administrative decisions by judicial review will be avoided if the distinction between jurisdictional fact and other facts then taken into account in discretionary decision making is kept in view." (footnotes omitted) Bearing that distinction in mind, it is appropriate to turn to the general question whether the MRT's decision not to defer its determination was so unreasonable as to constitute jurisdictional error. Reasonableness Every statutory discretion, however broad, is constrained by law. As Dixon J said in Shrimpton v The Commonwealth61: "[C]omplete freedom from legal control, is a quality which cannot ... be given under our Constitution to a discretion, if, as would be the case, it is capable of being exercised for purposes, or given an operation, which would or might go outside the power from which the law or regulation conferring the discretion derives its force." Every statutory discretion is confined by the subject matter, scope and purpose of the legislation under which it is conferred62. Where the discretion is conferred on 59 (2010) 240 CLR 611; [2010] HCA 16. 60 (2010) 240 CLR 611 at 624 [39]. 61 (1945) 69 CLR 613 at 629–630; [1945] HCA 4. 62 Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505 per Dixon J; [1947] HCA 21; R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49; [1979] HCA 62; FAI Insurances Ltd v Winneke (1982) 151 CLR 342 at 368 per Mason J; [1982] HCA 26; O'Sullivan v Farrer (1989) 168 CLR 210 at 216 per Mason CJ, Brennan, Dawson and Gaudron JJ; [1989] HCA 61; Oshlack v Richmond River Council (1998) 193 CLR 72 at 84 [31] per Gaudron and Gummow JJ; [1998] HCA 11. a judicial or administrative officer without definition of the grounds upon which it is to be exercised then63: "the real object of the legislature in such cases is to leave scope for the judicial or other officer who is investigating the facts and considering the general purpose of the enactment to give effect to his view of the justice of the case." That view, however, must be reached by a process of reasoning. Every discretion has to be exercised, as Kitto J put it in R v Anderson; Ex parte Ipec-Air Pty Ltd64, according to "the rules of reason"65. His Honour, paraphrasing Sharp v Wakefield66, said67: "a discretion allowed by statute to the holder of an office is intended to be exercised according to the rules of reason and justice, not according to private opinion; according to law, and not humour, and within those limits within which an honest man, competent to discharge the duties of his office, ought to confine himself". Mason J in FAI Insurances Ltd v Winneke68 quoted Kitto J and linked his words to the general rule "that the extent of ... discretionary power is to be ascertained by reference to the scope and purpose of the statutory enactment". As Professor Galligan wrote in 1986 in Discretionary Powers: A Legal Study of Official Discretion, the requirement that officials exercising discretion comply with the canons of rationality means, inter alia, that their decisions must be reached by reasoning which is intelligible and reasonable and directed towards and related intelligibly to the purposes of the power. Those canons also attract requirements of impartiality and "a certain continuity and consistency in making 63 Klein v Domus Pty Ltd (1963) 109 CLR 467 at 473 per Dixon CJ, McTiernan and Windeyer JJ agreeing at 473–474; [1963] HCA 54. 64 (1965) 113 CLR 177; [1965] HCA 27. 65 (1965) 113 CLR 177 at 189. 66 [1891] AC 173 at 179. 67 (1965) 113 CLR 177 at 189. 68 (1982) 151 CLR 342 at 368. decisions."69 They were reflected in the powers of the English Court of Chancery to control public bodies "if they proceed to exercise their powers in an unreasonable manner; whether induced to do so from improper motives or from error of judgment."70 They were acknowledged in the earliest years of this Court71. The rationality required by "the rules of reason" is an essential element of lawfulness in decision-making. A decision made for a purpose not authorised by statute, or by reference to considerations irrelevant to the statutory purpose or beyond its scope, or in disregard of mandatory relevant considerations, is beyond power. It falls outside the framework of rationality provided by the statute. To that framework, defined by the subject matter, scope and purpose of the statute conferring the discretion, there may be added specific requirements of a procedural or substantive character. They may be express statutory conditions or, in the case of the requirements of procedural fairness, implied conditions72. Vitiating unreasonableness may be characterised in more than one way susceptible of judicial review. A decision affected by actual bias may lead to a discretion being exercised for an improper purpose or by reference to irrelevant considerations. A failure to accord, to a person to be affected by a decision, a reasonable opportunity to be heard may contravene a statutory requirement to accord such a hearing. It may also have the consequence that relevant material which the decision-maker is bound to take into account is not taken into account. In Wednesbury Corporation, Lord Greene MR observed that the word "unreasonable" in administrative law was used to encompass failure by a decision-maker law, consideration of mandatory relevant matters and exclusion from consideration of irrelevant matters73: to obey rules requiring proper application of the "If he does not obey those rules, he may truly be said, and often is said, to be acting 'unreasonably'." 69 Galligan, Discretionary Powers: A Legal Study of Official Discretion, (1986) at 70 Vernon v Vestry of St James, Westminster (1880) 49 LJ Ch 130 at 136. 71 Local Board of Health of Perth v Maley (1904) 1 CLR 702 at 712 per Griffith CJ, Barton and O'Connor JJ agreeing at 716; [1904] HCA 28. 72 Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 258–259 [11]–[13] per French CJ, Gummow, Hayne, Crennan and Kiefel JJ. 73 [1948] 1 KB 223 at 229. That kind of unreasonableness may be taken to encompass unreasonableness from which an undisclosed underlying error may be inferred74. Beyond unreasonableness expressive of particular error however, it is possible to say, as Lord Greene MR said, that although a decision-maker has kept within the four corners of the matters it ought to consider "they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it."75 In such a case the court may interfere. That limiting case can be derived from the framework of rationality imposed by the statute. As explained by Lord Greene MR, it reflects a limitation imputed to the legislature on the basis of which courts can say that parliament never intended to authorise that kind of decision. After all the requirements of administrative justice have been met in the process and reasoning leading to the point of decision in the exercise of a discretion, there is generally an area of decisional freedom. Within that area reasonable minds may reach different conclusions about the correct or preferable decision. However, the freedom thus left by the statute cannot be construed as attracting a legislative sanction to be arbitrary or capricious or to abandon common sense. implied A connection between vitiating unreasonableness and an legislative intention was made by Brennan CJ in Kruger v The Commonwealth76: "[W]hen a discretionary power is statutorily conferred on a repository, the power must be exercised reasonably, for the legislature is taken to intend that the discretion be so exercised." (footnote omitted) In similar vein, Gaudron J said in Abebe v The Commonwealth77, in a passage quoted by Crennan and Bell JJ in SZMDS78: "[I]t is difficult to see why, if a statute which confers a decision-making power is silent on the topic of reasonableness, that statute should not be construed so that it is an essential condition of the exercise of that power 74 Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360 per Dixon J; [1949] HCA 26. 75 [1948] 1 KB 223 at 234. 76 (1997) 190 CLR 1 at 36; [1997] HCA 27. See also Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 650 [126] per Gummow J. 77 (1999) 197 CLR 510 at 554 [116]; [1999] HCA 14. 78 (2010) 240 CLR 611 at 645 [123]. that it be exercised reasonably, at least in the sense that it not be exercised in a way that no reasonable person could exercise it." The requirement of reasonableness is not a vehicle for challenging a decision on the basis that the decision-maker has given insufficient or excessive consideration to some matters or has made an evaluative judgment with which a court disagrees even though that judgment is rationally open to the decision- maker. Gleeson CJ and McHugh J made the point in Eshetu that the characterisation of somebody's reasoning as illogical or unreasonable, as an emphatic way of expressing disagreement with it, "may have no particular legal consequence."79 As Professor Galligan wrote80: "The general point is that the canons of rational action constitute constraints on discretionary decisions, but they are in the nature of threshold constraints above which there remains room for official judgment and choice both as to substantive and procedural matters. In other words, within the bounds of such constraints, different modes of decision-making may be employed." A distinction may arguably be drawn between rationality and reasonableness on the basis that not every rational decision is reasonable81. It is not necessary for present purposes to undertake a general consideration of that distinction which might be thought to invite a kind of proportionality analysis to bridge a propounded gap between the two concepts82. that as it may, a disproportionate exercise of an administrative discretion, taking a sledgehammer to crack a nut83, may be characterised as irrational and also as unreasonable simply on the basis that it exceeds what, on any view, is necessary for the purpose it serves. That approach is an application of the principles discussed 79 (1999) 197 CLR 611 at 626 [40]. 80 Galligan, Discretionary Powers: A Legal Study of Official Discretion, (1986) at 81 Airo-Farulla, "Reasonableness, rationality and proportionality", in Groves and Lee (eds), Australian Administrative Law: Fundamentals, Principles and Doctrines, 82 For an analogous application of reasonable proportionality as a criterion for the validity of delegated legislation see Attorney-General (SA) v Corporation of the City of Adelaide (2013) 87 ALJR 289; 295 ALR 197; [2013] HCA 3. 83 Airo-Farulla, "Reasonableness, rationality and proportionality", in Groves and Lee (eds), Australian Administrative Law: Fundamentals, Principles and Doctrines, above and within the limitations they would impose on curial review of administrative discretions. The decision of the MRT to proceed to its determination was not, on the face of it, informed by any consideration other than the asserted sufficiency of the opportunities provided to the first respondent to put her case. The MRT did not in terms or by implication accept or reject the substance of the reasons for a deferment put to it by the first respondent's migration agent. It did not suggest that the first respondent's request for a deferment was due to any fault on her part or on the part of her migration agent. It did not suggest that its decision was based on any balancing of the legislative objectives set out in s 353. Its decision was fatal to the first respondent's application. There was in the circumstances, including the already long history of the matter, an arbitrariness about the decision, which rendered it unreasonable in the limiting sense explained above. Conclusion For the preceding reasons the appeal should be dismissed with costs. HAYNE, KIEFEL AND BELL JJ. On 10 February 2007, the first respondent, Ms Xiujuan Li, applied for a Skilled – Independent Overseas Student (Residence) (Class DD) visa84. The relevant criterion for such a visa is that a "relevant assessing authority has assessed the skills of the applicant as suitable for his or her nominated skilled occupation, and no evidence has become available that the information given … is false or misleading in a material particular"85. By the date of her application, Ms Li had obtained a skills assessment from a relevant assessing authority, Trades Recognition Australia ("TRA"). A delegate of the Minister refused Ms Li's application86 on the basis that some of the information she had provided was not genuine. Ms Li lodged an application for review of that decision with the Migration Review Tribunal ("the Tribunal") on 30 January 2009. It is the review conducted by the Tribunal which is in issue on this appeal. TRA relied upon details of Ms Li's employment as a cook, which were provided to support the assessment of her relevant skills. She later admitted to the Minister's delegate that she had not in fact been employed at one restaurant which was specified in the information provided to TRA. However, she claimed that her former migration agent had provided that information without her knowledge. This was the background to the delegate's decision. On 21 September 2009, the Tribunal sent a letter to Ms Li in which the false information was identified as a possible reason for affirming the delegate's decision. Her comment upon the false information was invited87. In response, the migration agent now appointed by Ms Li confirmed the admissions Ms Li had made to the delegate but advised the Tribunal that since the date of her application, Ms Li had accumulated further work experience as a cook. The migration agent said that Ms Li was awaiting the decision of TRA with respect to her application for a fresh assessment of her skills, which, if successful, would enable the Tribunal to find that the skills assessment criterion was met. The Tribunal convened a hearing on 18 December 2009. Much of the questioning of Ms Li by the Tribunal concerned the earlier misrepresentation of her work experience and the reasons why she had given evasive answers to officers of the Department of Immigration and Citizenship when asked about it. 84 Migration Regulations 1994 (Cth), Sched 1, item 1128CA, Sched 2, Subclass 880. 85 Migration Regulations 1994, Sched 2, cl 880.230. 86 Pursuant to the Migration Act 1958 (Cth), s 65. 87 As required by the Migration Act 1958, s 359A. It also appears that the Tribunal discussed the possible provision of a second skills assessment by TRA, referable to Ms Li's later employment, with her migration agent, but it left the question of whether it would consider that assessment undecided. Ms Li's migration agent was invited by the Tribunal to address it further upon the matter. Following the hearing, the Tribunal sent a further letter to Ms Li dated 21 December 2009 inviting her comments on the answers she had given to departmental officers, which were relevant to evidence she gave at the Tribunal hearing and to her admission that part of her employment history given to TRA was false. The false information was once again identified as a possible reason for affirming the delegate's decision. The Tribunal's letter advised that Ms Li's response should be received by no later than 18 January 2010, but the letter noted that if Ms Li requested an extension of time, the request would be carefully considered. Ms Li's migration agent replied within the timeframe specified. In his letter, the migration agent advised the Tribunal that the second skills assessment by TRA had been received, but that it was not favourable. However, he contended that TRA had made two fundamental errors in the assessment: it had not taken into account Ms Li's experience at one place of employment; and it had failed to follow its own procedures in contacting referees to verify the employment details Ms Li had provided. The migration agent advised the Tribunal that Ms Li had applied to TRA for a review of its assessment and conveyed her confidence that it would be successful. (While this proved to be correct, it is not relevant to a consideration of the Tribunal's decision.) The migration agent went on to say: "Because of the unforeseen error by TRA incorrectly assessing her skills assessment application … I am instructed to request (subject to the Tribunal accepting my below submissions regarding the ability to substitute a new skills assessment) that the Tribunal forbear from making any final decision regarding her review application until the outcome of her skills assessment application is finalised. I will keep the Tribunal informed as to the progress of that application." At the conclusion of his letter, the migration agent submitted that the purpose of the criterion88 is to prevent the grant of a permanent residence visa on false grounds. He emphasised that Ms Li no longer relied upon the first skills assessment, which was affected by fraud. The second skills assessment, "when 88 Migration Regulations 1994, Sched 2, cl 880.224. finalised", would satisfy the criterion. At an earlier point in his letter, the migration agent had identified the time at which the Tribunal would make its decision as the time when the Tribunal needed to consider whether Ms Li's skills assessment was based on information which was false in a material particular. The Tribunal did not accede to the request that it delay the making of its decision and proceeded to do so on 25 January 2010. Although it accepted that there was no legislative restriction upon it receiving a second skills assessment, the Tribunal noted that none had been provided by that date. The Tribunal said that it "considers that the applicant has been provided with enough opportunities to present her case and is not prepared to delay any further". It found the first skills assessment to be affected by fraud and, therefore, Ms Li did not meet the criterion. The Tribunal concluded that it had "no alternative but to affirm the decision under review". The decisions below Ms Li was successful in her application for review of the Tribunal's decision by the Federal Magistrates Court (Burnett FM)89 and on the Minister's appeal to a Full Court of the Federal Court (Greenwood, Collier and Logan JJ)90. Burnett FM considered that the migration agent's letter displayed good reason why the skills assessment of TRA was wrong. It did not appear to Burnett FM that the Tribunal had evaluated the agent's contentions. The Tribunal could have inferred that Ms Li was not attempting to deliberately delay a decision in her case. The review of the TRA assessment was the only outstanding matter. Whilst the decision of the Tribunal was of great significance to Ms Li, delay would not adversely affect the Commonwealth. In these circumstances, his Honour held that the Tribunal's decision to proceed was unreasonable "in the Wednesbury Corporation sense"91 and constituted an improper exercise of its power which went to its jurisdiction92. 89 Li v Minister for Immigration and Citizenship [2011] FMCA 625. 90 Minister for Immigration and Citizenship v Li (2012) 202 FCR 387. 91 Li v Minister for Immigration and Citizenship [2011] FMCA 625 at [49], in reference to Associated Provincial Picture Houses Ltd v Wednesbury Corporation 92 Li v Minister for Immigration and Citizenship [2011] FMCA 625 at [49]. The Full Court directed its attention to the provisions of the Migration Act 1958 (Cth) concerning the procedures for review by the Tribunal. Section 353 appears in Div 4 of Pt 5 of the Act and provides: "Tribunal's way of operating The Tribunal shall, in carrying out its functions under this Act, pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick. The Tribunal, in reviewing a decision: is not bound by technicalities, legal forms or rules of evidence; and shall act according to substantial justice and the merits of the case." Division 5 of Pt 5 provides for steps which may be taken in connection with a review by the Tribunal. Section 357A appears in Div 5 and in relevant part provides: "Exhaustive statement of natural justice hearing rule This Division is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with. In applying this Division, the Tribunal must act in a way that is fair and just." Particular provisions of Div 5, which were referred to in argument on this appeal, are ss 360(1) and 363(1)(b): "360 Tribunal must invite applicant to appear The Tribunal must invite the applicant to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review. 363 Powers of the Tribunal etc For the purpose of the review of a decision, the Tribunal may: adjourn the review from time to time". Greenwood and Logan JJ considered that the Tribunal was obliged to meet the requirement of s 353 that its review mechanism be fair and to act in a way which is "fair and just" pursuant to s 357A(3). These prescriptions were, in their Honours' view, more than aspirational statements and were akin to the requirements of procedural fairness93, which were not met in the present case94. Their Honours also agreed with the approach of Burnett FM, finding that there was no countervailing consideration upon which it might be concluded that the refusal to adjourn was reasonably open to the Tribunal95. The Tribunal's unreasonable exercise of the discretion given by s 363(1)(b) meant that it had not conducted the review as required by the Migration Act 96. Collier J rested her decision on s 360, holding that the Tribunal's failure to give proper consideration to the request for an adjournment amounted to a failure by the Tribunal to give Ms Li a reasonable opportunity to give evidence and present argument within the The issues on the appeal The decision of the Tribunal, to affirm the decision of the delegate, was made under s 349(2)(a) of the Migration Act. The jurisdiction of the Federal 93 Minister for Immigration and Citizenship v Li (2012) 202 FCR 387 at 395 [28]. 94 Minister for Immigration and Citizenship v Li (2012) 202 FCR 387 at 395 [27], 397 95 Minister for Immigration and Citizenship v Li (2012) 202 FCR 387 at 397 [36]- 96 Minister for Immigration and Citizenship v Li (2012) 202 FCR 387 at 396-397 97 Minister for Immigration and Citizenship v Li (2012) 202 FCR 387 at 413 [102]. Magistrates Court98 to review such a decision arises under s 476(1), which equates that jurisdiction with the jurisdiction given to this Court under s 75(v) of the Constitution. The remedies provided by s 75(v) are available only for jurisdictional error99. It is not enough for jurisdictional error, the Minister submits, that some procedural discretion has miscarried. The latter assertion understates the importance and extent of the questions surrounding the discretion under consideration. The question which arose for the Tribunal was whether its review ought to be adjourned in order to afford Ms Li the opportunity to put forward the second skills assessment once TRA's review of it was completed. The Tribunal is given the power and discretion to determine that question by s 363(1)(b). The Minister accepts that the discretion is not at large and that it must be exercised according to law. The law requires that its exercise be reasonable. How that legal standard may be tested will be discussed later in these reasons. For present purposes, it may be noted that the Minister contends that the Tribunal's decision to refuse the adjournment cannot be said to be unreasonable, but the standard of unreasonableness to which the Minister refers is limited to what is called "Wednesbury unreasonableness", which is to say "a decision … so unreasonable that no reasonable authority could ever have come to it"100. A denial of procedural fairness may result in a decision made in excess of jurisdiction to which s 75(v) of the Constitution will respond101. A failure to accede to a reasonable request for an adjournment can constitute procedural unfairness102. The Minister submits that, to the extent that procedural fairness might have called for the Tribunal's decision to be delayed in the circumstances of this case, s 357A(1) leaves no room for those principles to apply. Division 5 98 On 12 April 2013, the Federal Magistrates Court of Australia was renamed the Federal Circuit Court of Australia: Federal Circuit Court of Australia Legislation Amendment Act 2012 (Cth). 99 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 508 [83]; [2003] HCA 2. 100 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 101 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 91 [17]; [2000] HCA 57. 102 Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 611 [40]; [2002] HCA 11. provides the content of procedural fairness which is to apply to the conduct of a review by the Tribunal. The Minister further submits that ss 353 and 357A(3), properly understood, do not contain substantive requirements regarding the conduct of a review, breach of which amounts to an error going to jurisdiction. The reference in s 353 to a review mechanism that is "fair" and "just" is to general objectives, not to an enforceable duty. Fairness and justice, in the context of s 357A(3), is a procedural, rather than substantive, concept. Even if the particular exercise of a procedural power could be challenged by reference to s 357A(3), the Minister submits that there would remain the question whether it was intended that the ultimate decision on the review was to be vitiated. A failure to comply with a procedural requirement does not always result in invalidity103. It is convenient to deal first with the operation of ss 353 and 357A. Sections 353 and 357A The Minister submits that s 353 cannot be the source of any duty enforceable by the constitutional writs for which s 75(v) of the Constitution provides. Section 353 may commence with the imperative "shall", but what follows, according to the Minister's submission, are statements of goals rather than any identified action required to be undertaken. The adjectives "fair, just, economical, informal and quick" are apt to apply to objectives but not to enforceable requirements, not the least because each pulls the Tribunal in a different direction. It is contended that provisions of this kind do not detract from, but nor do they add to, such obligations, limits or powers as arise from the language of the statute. The Minister's argument is supported by the reasoning in Minister for Immigration and Multicultural Affairs v Eshetu104, which concerned an analogue provision to s 353: s 420 of the Migration Act as it then stood. At that time, s 476(2)(b) provided that an application to the Federal Court for review of a decision of the Refugee Review Tribunal could not be made on the ground that the decision involved an exercise of power that was so unreasonable that no reasonable person could have so exercised the power. Gleeson CJ and McHugh J described s 420 as an inadequate foundation for an attempt to overcome the 103 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390-391 [93]; [1998] HCA 28. 104 (1999) 197 CLR 611; [1999] HCA 21. provisions of s 476(2)105. Their Honours observed that provisions such as s 420 are intended to be facultative, not restrictive. Their purpose is to free tribunals, to an extent, from constraints which apply to courts. Their Honours106, and Gummow J107, agreed with what Lindgren J had said in Sun Zhan Qui v Minister for Immigration and Ethnic Affairs108 respecting the relationship between ss 420 and 476. Lindgren J found it difficult to accept that the legislature intended to provide a ground of review where a mechanism of review in its application to a particular case, although "fair" and "just", was not "economical", "informal" and "quick". Gummow J endorsed Lindgren J's observation that the difficulty, if not the practical impossibility, of proving a failure to pursue a specific objective would suggest that s 420 could not have been intended to provide a ground of review109. It was also observed in Eshetu110 that s 420 must be understood in its statutory context. The same may be said of s 353. As mentioned, it appears in Pt 5, Div 4, which is entitled "Exercise of Tribunal's powers", and the section itself is headed "Tribunal's way of operating". Section 353 is followed by provisions dealing with the constitution of the Tribunal for the purpose of the exercise of its powers. But it is Div 5 which deals with how the Tribunal is to conduct a review. Section 357A has a different statutory context. It appears at the commencement of Div 5, which is headed "Conduct of review". The language of s 357A is general. The sections which follow it detail certain entitlements which an applicant for review is to have and certain steps which are to be taken by the Tribunal leading up to and during a hearing. By way of example, an applicant for review is entitled to provide the Tribunal with written statements as to facts 105 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 106 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 107 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 108 [1997] FCA 324. 109 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 110 (1999) 197 CLR 611 at 628 [50] per Gleeson CJ and McHugh J. to certain and written legal arguments111. The Tribunal may seek additional information112 and in some cases may be bound to do so. Where it does so by giving a written invitation to a person to give additional information, or where it invites an applicant's comment on or response information, particular requirements attach to the giving of the invitation113. By s 360(1), the Tribunal is obliged to invite an applicant to appear before it "to give evidence and present arguments relating to the issues arising in relation to the decision under review". An applicant may request that the Tribunal call a witness or obtain written material114 and is generally entitled to have access to written material that is before the Tribunal115. The Tribunal is given certain powers by s 363 for "the purpose of the review of a decision" including to require investigations or medical examinations to be conducted116, to summon persons to appear before it117 and, of course, by s 363(1)(b), to adjourn the review from time to time. The terms of s 357A(1) would appear to leave no room for the implication of the requirements of procedural fairness beyond what is already provided in Div 5. What then is to be understood by the requirement in s 357A(3), expressed in obligatory terms, that in "applying this Division, the Tribunal must act in a way that is fair and just"? If s 357A(1) is to be taken as exhaustive of the requirements of procedural fairness which attach to a review, does s 357A(3) nevertheless say that the Tribunal, in fulfilling those requirements and in exercising its powers, is to do so in a way which is fair and just? 111 Migration Act 1958, s 358(1). 112 Migration Act 1958, s 359. 113 Migration Act 1958, s 359B. 114 Migration Act 1958, ss 361, 362. 115 Migration Act 1958, s 362A. 116 Migration Act 1958, s 363(1)(d). 117 Migration Act 1958, s 363(3)(a). In Minister for Immigration and Citizenship v SZMOK118, a Full Court of the Federal Court considered an analogue to s 357A119, which appeared in what was Div 4 of Pt 7 of the Migration Act. Applied to s 357A, the reasoning120 is that s 357A(3) cannot be taken as intended to qualify or cut down the express statement in s 357A(1). However, Div 5 provides no indication as to how the procedural powers contained in it are to be exercised. Section 357A(3) may be taken to address that omission. The Full Court considered that s 357A(3) may have been intended to restore concepts of fairness and justice to the exercise of the procedural powers for which the Division provides. On this approach, it was said that "fairness" and "justice" may usefully be compared with the content of those words in the expressions "procedural fairness" and "natural justice"121. In drawing this conclusion, the Full Court in SZMOK was not equating the requirement of s 357A(3) to act in a way that is fair and just in the conduct of the review with the obligation to afford procedural fairness or natural justice. The Full Court said122 that some other requirement of fairness is to be implied, but clearly thought that that requirement bore the hallmarks of the obligation of procedural fairness at common law. The reconciliation effected by the Full Court suggests that it considered that a breach of the requirements of s 357A(3) may not have the same consequences as a breach of the common law obligation. The Full Court did not, however, consider the role of s 75(v) of the Constitution. It is firmly established that the denial of procedural fairness by an officer of the Commonwealth may result in a decision made in excess of jurisdiction, for which prohibition will go under s 75(v)123. In any event, what is fair and just is not to be ascertained by reading s 357A(3) alone, but by reading it as it applies to the actions of the Tribunal in 118 (2009) 257 ALR 427 per Emmett, Kenny and Jacobson JJ. 119 Migration Act 1958, s 422B. 120 Minister for Immigration and Citizenship v SZMOK (2009) 257 ALR 427 at 432 121 Minister for Immigration and Citizenship v SZMOK (2009) 257 ALR 427 at 432 122 Minister for Immigration and Citizenship v SZMOK (2009) 257 ALR 427 at 432 123 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 89 [5], 91 [17], the conduct of a review. The act of the Tribunal in question may involve a step taken in satisfaction of a duty imposed by Div 5. The act may be the exercise of a discretion, as in the present case. What is fair and just in relation to the particular act may be discerned, to an extent, from the purpose of the provision which requires that the act be done or which gives the discretionary power to the Tribunal to perform the act, as well as from the purpose of surrounding provisions and Div 5 as a whole. A consideration of the purpose for which a duty is imposed, or a power granted, may connect an unfair action with a substantive obligation on the part of the Tribunal. Thus, whilst the characterisation of an act as unfair may not itself have consequences for the ultimate decision on the review, there may be other consequences which flow from that act. The duty cast on the Tribunal by s 360(1), to invite an applicant for review to appear before it, furnishes an example. Section 360(1) and its purpose are central to Div 5 and the conduct of the review for which the Division provides. The purpose of s 360(1) is not difficult to discern. It is to provide an applicant with the opportunity to present evidence and argument relating to the issues arising in connection with the decision under review. The sub-section contemplates that such a hearing will be had before the Tribunal makes its decision. The Tribunal's duty therefore extends further than merely issuing an invitation to an applicant to appear. Section 360(1) requires that the invitation be meaningful, in the sense that it must provide the applicant for review with a real chance to present his or her case. Scheduling a hearing on a date which, to the Tribunal's knowledge, would not permit the applicant to have sufficiently recovered from an incapacity to attend would not fulfil the duty imposed by s 360(1). The invitation would be an empty gesture124 and any decision made following the hearing would be liable to be set aside. Not only would the conduct of the Tribunal, judged by the standard set by s 357A(3), be regarded as unfair, but, relevantly, other consequences would follow because the action of the Tribunal would also amount to a failure or refusal to comply with a statutory duty in the conduct of its review. The decision could not stand and the Tribunal would be required to consider it afresh after complying with that duty. It is not necessary to determine what s 357A(3) requires and what may be the consequence of a breach of that provision. Even if s 357A(3) by itself has no 124 Applicant NAHF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 128 FCR 359 at 366 [36] per Hely J. consequence for the ultimate decision of the Tribunal, to affirm the delegate's decision, it might nevertheless be concluded that the purpose of s 360(1) was not met. Without Ms Li being provided an opportunity to present her further evidence, it might be concluded that the hearing contemplated did not take place. It is not necessary to determine the appeal on this basis, since there is a more direct route to its resolution, by reference to s 363(1)(b) and a requirement of the law. An unreasonable exercise of discretion? Because s 363(1)(b) contains a statutory discretionary power, the standard to be applied to the exercise of that power is not derived only from s 357A(3), but also from a presumption of the law. The legislature is taken to intend that a discretionary power, statutorily conferred, will be exercised reasonably125. A standard of reasonableness in the exercise of a discretionary power given by statute had been required by the law long before the first statement of "Wednesbury unreasonableness" in Associated Provincial Picture Houses Ltd v Wednesbury Corporation126. In Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002127, McHugh and Gummow JJ instanced the 1891 decision of Sharp v Wakefield128. In Re Refugee Review Tribunal; Ex parte Aala129, Gaudron and Gummow JJ said that the requirement of reasonableness represents the development of legal thought which began before federation and accommodates s 75(v) to that development. In Sharp v Wakefield, it was said that when something is to be done within the discretion of an authority, it is to be done according to the rules of reason and justice. That is what is meant by "according to law". It is to be legal and regular, 125 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 36; [1990] HCA 21; Kruger v The Commonwealth (1997) 190 CLR 1 at 36; [1997] HCA 27; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 650 [126]; Minister for Immigration and Citizenship v SZIAI (2009) 83 ALJR 1123 at 1127 [15]; 259 ALR 429 at 433; [2009] HCA 39. 127 (2003) 77 ALJR 1165 at 1178 [67]-[68]; 198 ALR 59 at 75; [2003] HCA 30. 129 (2000) 204 CLR 82 at 100-101 [40], referring to Kruger v The Commonwealth (1997) 190 CLR 1 at 36. not arbitrary, vague and fanciful. The discretion must be "exercised within the limit, to which an honest man competent to the discharge of his office ought to confine himself"130. It is pointed out in Wade and Forsyth131 that the legal conception of discretion dates from at least the 16th century. In Sharp v Wakefield132, Lord Halsbury LC had referred to Rooke's Case133 of 1598, in which it was stated that the discretion of commissioners of sewers "ought to be limited and bound with the rule of reason and law". This approach does not deny that there is an area within which a decision- maker has a genuinely free discretion. That area resides within the bounds of legal reasonableness134. The courts are conscious of not exceeding their supervisory role by undertaking a review of the merits of an exercise of discretionary power135. Properly applied, a standard of legal reasonableness does not involve substituting a court's view as to how a discretion should be exercised for that of a decision-maker. Accepting that the standard of reasonableness is not applied in this way does not, however, explain how it is to be applied and how it is to be tested. In Klein v Domus Pty Ltd136, Dixon CJ said that where discretions are ill- defined (as commonly they are) it is necessary to look to the scope and purpose of the statute conferring the discretionary power and its real object. The ordinary approach to statutory construction, reiterated in Project Blue Sky Inc v Australian Broadcasting Authority137, requires nothing less. The legal standard of reasonableness must be the standard indicated by the true construction of the statute. It is necessary to construe the statute because the question to which the 130 Sharp v Wakefield [1891] AC 173 at 179. 131 Wade and Forsyth, Administrative Law, 10th ed (2009) at 293-294. 132 [1891] AC 173 at 179. 133 (1598) 5 Co Rep 99b at 100a [77 ER 209 at 210]. 134 Wade and Forsyth, Administrative Law, 10th ed (2009) at 302. 135 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 36-37. 136 (1963) 109 CLR 467 at 473; [1963] HCA 54. 137 (1998) 194 CLR 355. standard of reasonableness is addressed is whether the statutory power has been Lord Greene MR's oft-quoted formulation of unreasonableness in Wednesbury139 has been criticised for "circularity and vagueness", as have subsequent attempts to clarify it140. However, as has been noted, Wednesbury is not the starting point for the standard of reasonableness, nor should it be considered the end point. The legal standard of unreasonableness should not be considered as limited to what is in effect an irrational, if not bizarre, decision − which is to say one that is so unreasonable that no reasonable person could have arrived at it – nor should Lord Greene MR be taken to have limited unreasonableness in this way in his judgment in Wednesbury. This aspect of his Lordship's judgment may more sensibly be taken to recognise that an inference of unreasonableness may in some cases be objectively drawn even where a particular error in reasoning cannot be identified. This is recognised by the principles governing the review of a judicial discretion, which, it may be observed, were settled in Australia by House v The King141, before Wednesbury was decided. And the same principles evidently informed what was said by Dixon J about review of an administrative decision in Avon Downs Pty Ltd v Federal Commissioner of Taxation142, which was decided less than two years after Wednesbury, at a time when it was the practice of the High Court to follow decisions of the Court of Appeal in England which appeared to have settled the law in a particular area143. In Wednesbury, Lord Greene MR discussed the various grounds upon His Lordship which an exercise of statutory power may be abused. foreshadowed defining those grounds under a single head of unreasonableness, stating that it was "perhaps a little bit confusing to find a series of grounds set 138 Wade and Forsyth, Administrative Law, 10th ed (2009) at 296. 139 [1948] 1 KB 223 at 230. 140 See Fares Rural Meat and Livestock Co Pty Ltd v Australian Meat and Live-stock Corporation (1990) 96 ALR 153 at 166 per Gummow J, referring to Allars, Introduction to Australian Administrative Law, (1990) at 187 [5.52]. 141 (1936) 55 CLR 499; [1936] HCA 40. 142 (1949) 78 CLR 353 at 360; [1949] HCA 26. 143 Wright v Wright (1948) 77 CLR 191 at 210; [1948] HCA 33; Commissioner of Stamp Duties (NSW) v Pearse (1953) 89 CLR 51 at 63-64; [1954] AC 91 at 112. out. Bad faith, dishonesty … unreasonableness, attention given to extraneous circumstances, disregard of public policy" were all relevant to the question of whether a statutory discretion was exercised reasonably144. The test proposed by Lord Russell of Killowen CJ in Kruse v Johnson145, a case which is cited chiefly in relation to the unreasonableness of the exercise of delegated law-making power146, may avoid some of the circularity identified in the Wednesbury formulation. Lord Russell considered147 that unreasonableness was found where delegated laws were: "partial and unequal in their operation as between different classes; if they were manifestly unjust; if they disclosed bad faith; [or] if they involved such oppressive or gratuitous interference with the rights of those subject to them as could find no justification in the minds of reasonable men". In Secretary of State for Education and Science v Tameside Metropolitan Borough Council148, Lord Diplock opined that unreasonableness would be shown where "no sensible authority acting with due appreciation of its responsibilities" would have so decided. This reflects the requirement of the law that a decision- maker understand his or her statutory powers and obligations. It is evident in the more specific errors, going to jurisdiction, which the law recognises and to which Lord Greene MR referred in Wednesbury149, such as misdirecting oneself as to the operation of the statute, taking into account irrelevant considerations or failing to take into account relevant considerations. The more specific errors in decision-making, to which the courts often refer150, may also be seen as encompassed by unreasonableness. This may be 144 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 146 See Allars, Introduction to Australian Administrative Law, (1990) at 186-187 147 Kruse v Johnson [1898] 2 QB 91 at 99-100. 148 [1977] AC 1014 at 1064. 149 [1948] 1 KB 223 at 228. 150 And see Administrative Decisions (Judicial Review) Act 1977 (Cth), s 5(2). consistent with the observations of Lord Greene MR, that some decisions may be considered unreasonable in more than one sense and that "all these things run into one another"151. Further, in Minister for Aboriginal Affairs v Peko-Wallsend Ltd152, Mason J considered that the preferred ground for setting aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to an irrelevant factor of no importance, is that the decision is "manifestly unreasonable". Whether a decision-maker be regarded, by reference to the scope and purpose of the statute, as having committed a particular error in reasoning, given disproportionate weight to some factor or reasoned illogically or irrationally, the final conclusion will in each case be that the decision-maker has been unreasonable in a legal sense. In Fares Rural Meat and Livestock Co Pty Ltd v Australian Meat and Live-stock Corporation153, reference was made to an analysis of three paradigm cases of unreasonableness which were thought to be consistent with a view of Lord Greene MR's "doctrine", as based on the law as to the misuse of fiduciary powers. The third paradigm involved the application of a proportionality analysis by reference to the scope of the power. In the present case, regard might be had to the scope and purpose of the power to adjourn in s 363(1)(b), as connected to the purpose of s 360(1)154. With that in mind, consideration could be given to whether the Tribunal gave excessive weight – more than was reasonably necessary – to the fact that Ms Li had had an opportunity to present her case. So understood, an obviously disproportionate response is one path by which a conclusion of unreasonableness may be reached. However, the submissions in this case do not draw upon such an analysis. 151 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 152 (1986) 162 CLR 24 at 41, Gibbs CJ and Dawson J agreeing at 30, 71; [1986] HCA 153 (1990) 96 ALR 153 at 167-168, referring to Allars, Introduction to Australian Administrative Law, (1990) at 188-191 [5.54]-[5.57]. 154 See [60] above. In Peko-Wallsend155, Mason J, having observed there was considerable diversity in the application by the courts of the test of manifest unreasonableness, suggested that "guidance may be found in the close analogy between judicial review of administrative action and appellate review of a judicial discretion". House v The King156 holds that it is not enough that an appellate court would have taken a different course. What must be evident is that some error has been made in exercising the discretion, such as where a judge acts on a wrong principle or takes irrelevant matters into consideration. The analogy with the approach taken in an administrative law context is apparent. that As to the inferences that may be drawn by an appellate court, it was said in House v The King157 that an appellate court may infer that in some way there has been a failure properly to exercise the discretion "if upon the facts [the result] is unreasonable or plainly unjust". The same reasoning might apply to the review of the exercise of a statutory discretion, where unreasonableness is an inference drawn from the facts and from the matters falling for consideration in the exercise of the statutory power. Even where some reasons have been provided, as is the case here, it may nevertheless not be possible for a court to comprehend how the decision was arrived at. Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification. The Tribunal's exercise of discretion The starting point is that the Tribunal, for the purposes of reviewing the delegate's decision, exercises all the powers and discretions of the Minister158. Further, and as the Minister concedes, in making a decision neither the delegate nor the Tribunal is confined to the material which was initially provided to support satisfaction of the relevant visa criteria. Those criteria are expressed to be satisfied at the time of the decision159. If a further skills assessment is completed by TRA before the Tribunal makes its decision, the Tribunal may 155 (1986) 162 CLR 24 at 41-42, referring, inter alia, to Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230 and Parramatta City Council v Pestell (1972) 128 CLR 305 at 328; [1972] HCA 59. 156 (1936) 55 CLR 499 at 504-505. 157 (1936) 55 CLR 499 at 505. 158 Migration Act 1958, s 349(1). 159 Migration Regulations 1994, Sched 2, Subdiv 880.22. have regard to it. It is difficult to conceive of a circumstance where the Tribunal must not do so. The Minister submits that the Tribunal may have considered that it had little by way of discretion left to apply, because all of the steps necessary to the conduct of the review had been taken and procedural fairness was provided for in the taking of each step. That submission implies that, so long as the express requirements of Div 5 are complied with and, relevantly, an invitation has been extended to an applicant for review by the Tribunal to attend a hearing and that hearing has been held, nothing further can be required of the Tribunal. The submission misapprehends the nature and purpose of the discretionary power to adjourn and the requirement of reasonableness which attaches to it. The discussion of the forthcoming second skills assessment during the hearing on 18 December 2009, and the subsequent request for an adjournment of the Tribunal's review while TRA reviewed the second skills assessment, must have conveyed to the Tribunal that Ms Li did not consider that she had presented her case. In deciding whether to adjourn, that was what the Tribunal had to consider in the context of the statutory purpose of s 360, but it does not appear that it did The decision to refuse the adjournment request was explained by the Tribunal on the bases that: (a) Ms Li had been provided with enough opportunities to present her case; and (b) the Tribunal was not prepared to delay the matter any further. The reference to delay was not further explained by the Tribunal. The only significant delay would appear to be attributable to the Tribunal, which took some nine months to contact Ms Li after the lodgement of her application. In any event, what pressing need for a conclusion of the review was the Tribunal adverting to, a need which would have to be weighed against the object of s 360? The position of the Tribunal cannot be equated with that of a party to litigation who may be prejudiced by the delay of another160. It may be accepted that the Tribunal is to act with some efficiency, as is stated in s 353(1) of the Migration Act, but such a consideration would again have to be weighed against the countervailing consideration of the purpose of s 360 and Div 5. The Minister appears to translate the Tribunal's reference to Ms Li having had sufficient opportunity as "enough is enough" and submits that if the Tribunal could not so determine, it would be required to hear, in effect, a series of applications which could be unending. This submission should be understood in 160 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27. the context that the criteria for the visa in question may be fulfilled at any time up to the point of decision. It cannot be suggested that the Tribunal is under an obligation to afford every opportunity to an applicant for review to present his or her best possible case and to improve upon the evidence. Of course it may decide, in an appropriate case, that "enough is enough", but it is not apparent how that conclusion was reached in the present case, having regard to the facts and to the statutory purpose to which the discretion to adjourn is directed. The purpose of s 360(1) has already been referred to. It is to provide an applicant for review the opportunity to present evidence and arguments "relating to the issues arising in relation to the decision under review". The question which remained in issue when the Tribunal made its decision was the satisfaction of a visa criterion by a complying skills assessment. Although the Tribunal could not be expected to assume that the second skills assessment, when reviewed, would favour Ms Li, it did not suggest that there was no prospect of the second skills assessment being obtained, or that the outcome could not be known, in the near future. In these circumstances it is not apparent why the Tribunal decided, abruptly, to conclude the review. There remains the possibility that the previous conduct of Ms Li influenced the Tribunal. It had continued to question her about the false information associated with her application despite her repeated admissions and the advice that the case she wished to put forward did not depend upon that information. If her prior conduct was influential, the Tribunal took into account an irrelevant consideration for the reason that Ms Li's conduct per se was not relevant to the visa criteria. The concern of the criteria is with the information relied upon to satisfy them, a point Ms Li's migration agent attempted to make to the Tribunal. The Tribunal's error might be identified as giving too much weight to the fact that Ms Li had had some opportunity to present evidence and argument and insufficient weight to her need to present further evidence. It would not appear that the Tribunal had regard to the purposes for which the statutory discretion in s 363(1)(b) is provided in arriving at its decision. It is not possible to say which of these errors was made, but the result itself bespeaks error. In the circumstances of this case, it could not have been decided that the review should be brought to an end if all relevant and no irrelevant considerations were taken into account and regard was had to the scope and purpose of the statute. Because error must be inferred, it follows that the Tribunal did not discharge its function (of deciding whether to adjourn the review) according to law 161. The Tribunal did not conduct the review in the manner required by the Migration Act and consequently acted beyond its jurisdiction. Conclusion The Minister's submission, that an act of the Tribunal in the conduct of its review which is unfair or unjust has no consequences for its ultimate decision, is not to the point. Whatever be the consequence of a breach of s 357A(3), a matter which it is not necessary to determine, it cannot be said that the Migration Act evinces an intention that the requirement of the law that the discretionary power in s 363(1)(b) be exercised reasonably not apply. That presumption of law is not rebutted. The Tribunal's decision to affirm the delegate's decision cannot stand. The appeal should be dismissed with costs. 161 Klein v Domus Pty Ltd (1963) 109 CLR 467 at 473. Reasonableness as a statutory implication Brennan CJ cited Associated Provincial Picture Houses Ltd v Wednesbury Corporation162 for the proposition that "when a discretionary power is statutorily conferred on a repository, the power must be exercised reasonably, for the legislature is taken to intend that the discretion be so exercised"163. He explained the application of "Wednesbury unreasonableness" as a court acting on the "implied intention of the legislature that a [statutory] power be exercised reasonably" to hold invalid "a purported exercise of the power which is so unreasonable that no reasonable repository of the power could have taken the impugned decision or action"164. That explanation accords with references in earlier High Court decisions to reasonableness as a condition of the exercise of a discretionary power165. It has been approved in more recent decisions166. It is an explanation that is well- understood by legislatures and courts alike and that has "stood the test of time"167. It explains the nature and scope of Wednesbury unreasonableness in Australia. 162 [1948] 1 KB 223 at 234. 163 Kruger v The Commonwealth (1997) 190 CLR 1 at 36; [1997] HCA 27. 164 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 36; [1990] HCA 21. 165 Shrimpton v The Commonwealth (1945) 69 CLR 613 at 620; [1945] HCA 4; Parramatta City Council v Pestell (1972) 128 CLR 305 at 327; [1972] HCA 59; Commissioner for Prices and Consumer Affairs (SA) v Charles Moore (Aust) Ltd (1977) 139 CLR 449 at 466; [1977] HCA 38; Bread Manufacturers of NSW v Evans (1981) 180 CLR 404 at 420; [1981] HCA 69; Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 41-42; [1986] HCA 40. 166 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 649 [124], 650 [126]; [1999] HCA 21; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 100-101 [40]; [2000] HCA 57; Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611 at 645 [123]; [2010] HCA 16, quoting Abebe v The Commonwealth (1999) 197 CLR 510 at 554 [116]; [1999] HCA 14. 167 Cf Sales, "Rationality, proportionality and the development of the law", (2013) 129 Law Quarterly Review 223 at 234. Implication of reasonableness as a condition of the exercise of a discretionary power conferred by statute is no different from implication of reasonableness as a condition of an opinion or state of satisfaction required by statute as a prerequisite to an exercise of a statutory power or performance of a statutory duty168. Each is a manifestation of the general and deeply rooted common law principle of construction that such decision-making authority as is conferred by statute must be exercised according to law and to reason within limits set by the subject-matter, scope and purposes of the statute169. The implied condition of reasonableness is not confined to why a statutory decision is made; it extends to how a statutory decision is made170: "Just as a power is exercised in an improper manner if it is, upon the material before the decision-maker, a decision to which no reasonable person could come, so it is exercised in an improper manner if the decision-maker makes his or her decision in a manner so devoid of plausible justification that no reasonable person could have taken that course." Like procedural fairness, to which it is closely linked171, reasonableness is not implied as a condition of validity if inconsistent with the terms in which a power or duty is conferred or imposed or if otherwise inconsistent with the nature or statutory context of that power or duty172. The common law principle of construction by reference to which reasonableness is implied does not exclude 168 R v Connell; Ex parte The Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 432; [1944] HCA 42; Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 150 [34]; [2000] HCA 5. 169 Sharp v Wakefield [1891] AC 173 at 179, cited in R v Connell; Ex parte The Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 431 and in Shrimpton v The Commonwealth (1945) 69 CLR 613 at 620. See generally R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at 189; [1965] HCA 27; Murphyores Incorporated Pty Ltd v The Commonwealth (1976) 136 CLR 1 at 17-18; [1976] HCA 20; Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at 529 [62]; [2001] HCA 17. 170 Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 290; [1995] HCA 20. 171 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 367; [1990] HCA 33; Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 36-37. 172 Cf Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 86 ALJR 1019; 290 ALR 616; [2012] HCA 31. implication of a different or more particular condition of an exercise of a particular statutory discretionary power or of the performance of a particular statutory duty. The principle rather establishes a condition of reasonableness as a default position. Absent an affirmative basis for its exclusion or modification, a condition of reasonableness is presumed. Reasonableness and the Migration Review Tribunal Part 5 of the Migration Act 1958 (Cth) ("the Act"), governing review of decisions by the Migration Review Tribunal ("the MRT"), is to be construed in light of that presumed condition of reasonableness. Part 5 provides for what is properly described as "an inquisitorial, merits-based review by an independent tribunal" and for "procedures of some solemnity"173. Division 3 imposes an overriding duty on the MRT to "review the decision"174: that is, "to arrive at the correct or preferable decision in the case before it according to the material before it"175. Division 5 imposes procedural duties and confers procedural powers, including a power expressed in terms that, "[f]or the purpose of the review of a decision", the MRT "may" "adjourn the review from time to time"176. Nothing in Pt 5, or elsewhere in the Act, excludes the implication that the MRT is to act reasonably as a condition of the performance of its overriding duty to review a decision. Nor does anything exclude the implication that the MRT is to act reasonably as a condition of the performance of its procedural duties and of the exercise of its procedural powers. The implication of reasonableness is, rather, strengthened by the inclusion of express requirements that the MRT "shall, in carrying out its functions … pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick" and "in reviewing a decision … shall act according to substantial justice and the merits of the case"177, and that, in applying Div 5 of Pt 5, the MRT "must act in a way that is fair and just"178. 173 Applicant NAFF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 221 CLR 1 at 8 [22]; [2004] HCA 62. 174 Section 348(1). 175 Bushell v Repatriation Commission (1992) 175 CLR 408 at 425; [1992] HCA 47. 176 Section 363(1)(b). 177 Section 353. 178 Section 357A(3). The express requirements for the MRT to "pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick" and to "act according to substantial justice and the merits of the case" have been held not to result in invalidity merely because a conclusion can be drawn by a court that some action the MRT has taken does not objectively comply with one or more of the statutory expressions in which the requirement is couched179. The requirement for the MRT to "act in a way that is fair and just" is of a similar nature180. Both are couched in language that is broad and that is best seen to be exhortatory or aspirational. They "really describe the grounds upon which a more or less discretionary judgment must be formed" by the MRT181. Their combined effect is to require that the MRT, in performing its duty to review a decision, seek to act: in a way that is "fair and just"; in pursuit of the objective of providing a mechanism of review that is "fair, just, economical, informal and quick"; and according to "substantial justice and the merits of the case"182. Their "mere erroneous application" does not amount to a failure by the MRT to comply with a requirement essential to the valid performance of its duty to review a decision; but their "neglect" does183. Neglect in the relevant sense need not be the product of bad faith; it can be the product of unreasonableness. The MRT does not fail to perform its statutory duty to review a decision merely because the manner of its performance of a procedural duty or its exercise or non-exercise of a procedural power might be assessed in the result not to measure up to one or more of the requisite statutory exhortations or aspirations. The MRT does fail to perform its statutory duty to review a decision where: (i) the manner of its performance of a procedural duty, or of its exercise or non- exercise of a procedural power, is so unreasonable that no reasonable tribunal heeding those exhortations or adhering to those aspirations could have done what 179 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 628 [49], 642-644 [108]-[109], 664-668 [176]-[179], approving Sun Zhan Qui v Minister for Immigration and Ethnic Affairs [1997] FCA 324. 180 Minister for Immigration and Citizenship v SZMOK (2009) 257 ALR 427 at 432 181 R v War Pensions Entitlement Appeal Tribunal; Ex parte Bott (1933) 50 CLR 228 at 243; [1933] HCA 30. 182 Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 601- 602 [19]; [2011] HCA 1. 183 R v War Pensions Entitlement Appeal Tribunal; Ex parte Bott (1933) 50 CLR 228 the MRT in fact did; and (ii) that unreasonableness, or neglect, on the part of the MRT is shown to be material to the outcome of the review that the MRT has undertaken in fact. The legislative declaration that Div 5 of Pt 5 "is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with"184 gives added significance to the implied requirement for the MRT to act reasonably in the performance of its procedural duties and in the exercise or non-exercise of its procedural powers. The significance is that the implied statutory requirement for the performance of those duties and the exercise of those powers always to be reasonable results in the division providing a measure of procedural fairness sufficient to meet the statutory description of it as a statement of the requirements of the natural justice hearing rule. However, the requirement for the MRT to act reasonably is not exhausted in every case where an applicant before the MRT is given a reasonable opportunity to give evidence, provide information and present arguments in relation to the decision under review. Reasonableness can require more. Thus, while it has been held that the MRT has no general duty to make inquiries185, it has been accepted that "a failure to make an obvious inquiry about a critical fact, the existence of which is easily ascertained, could, in some circumstances, supply a sufficient link to the outcome to constitute a failure to review"186. The touchstone is reasonableness in the performance of the duty to review187. The Minister for Immigration and Citizenship ("the Minister") is correct to submit that the MRT has no general duty to adjourn a review because a review applicant believes that the passage of time will allow a visa criterion to be met. But a failure to adjourn to allow a visa criterion to be met can, in some circumstances, be so unreasonable as to constitute a failure to review. The permissive terms in which the power to adjourn is conferred on the MRT make clear that the power itself carries no duty on the MRT to consider 184 Section 357A(1). 185 Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 602 186 Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 603 [23], quoting Minister for Immigration and Citizenship v SZIAI (2009) 83 ALJR 1123 at 1129 [25]; 259 ALR 429 at 436; [2009] HCA 39. 187 Minister for Immigration and Citizenship v SZIAI (2009) 83 ALJR 1123 at 1128 [20]-[21]; 259 ALR 429 at 434-435. See also Enichem Anic Srl v Anti-Dumping Authority (1992) 39 FCR 458 at 469. its exercise188. The overriding duty of the MRT to review a decision may nevertheless require the MRT, acting reasonably, to consider exercise of the power in a particular case189. The duty of the MRT to review a decision is to be performed within what, in all the circumstances, is a reasonable time190. The power of the MRT to adjourn is in aid of the performance of that duty. The MRT fails to comply with a requirement essential to the valid performance of its duty to review a particular decision if it fails to consider the exercise of its power to adjourn that review in circumstances where no reasonable tribunal could fail to do so. The MRT fails to comply with requirements essential to the valid performance of that duty and to the valid exercise of that power where, having considered the exercise of that power, the MRT fails to exercise that power so as to adjourn the review in circumstances where no reasonable tribunal could fail to adjourn the review. If an unreasonable failure to adjourn is material to the outcome, such decision as the MRT goes on in fact to make on the review is invalid. The MRT's "ostensible determination" of the review by making the decision "is not a real performance of the duty imposed by law upon [it]"191. In the exercise of jurisdiction under s 75(v) of the Constitution or equivalent jurisdiction defined by statute under s 77(i) of the Constitution, a court in such a case can order mandamus to compel performance by the MRT of its unperformed duty to review and, as an ancillary order, the court can by certiorari set aside the purported legal effect of the decision the MRT made in fact. 188 Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 603 189 Cf Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 88; [1994] HCA 61 (applying Julius v Lord Bishop of Oxford (1880) 5 App Cas 214 at 222-223 and Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 at 1033-1034) and Murphyores Incorporated Pty Ltd v The Commonwealth (1976) 136 CLR 1 at 17-18 (applying R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at 189). 190 Koon Wing Lau v Calwell (1949) 80 CLR 533 at 573-574; [1949] HCA 65; Re O'Reilly; Ex parte Australena Investments Pty Ltd (1983) 58 ALJR 36 at 36; 50 ALR 577 at 578; Repatriation Commission v Morris (1997) 79 FCR 455 at 461. 191 R v War Pensions Entitlement Appeal Tribunal; Ex parte Bott (1933) 50 CLR 228 Judging unreasonableness "It is, of course, true that, as a measure in fact of time, space, quantity and conduct, reasonableness is a concept deeply rooted in the common law: and so, in such cases, is the power of a court to say whether a particular decision of that fact is or is not within the bounds of reason"192. Review by a court of the reasonableness of a decision made by another repository of power "is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process" but also with "whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law"193. The label "Wednesbury unreasonableness" indicates "the special standard of unreasonableness which has become the criterion for judicial review of administrative discretion"194. Expression of the Wednesbury unreasonableness standard in terms of an action or decision that no reasonable repository of power could have taken "attempts, albeit imperfectly, to convey the point that judges should not lightly interfere with official decisions on this ground"195. Potential for legitimate disagreement in the judicial application of the standard of Wednesbury unreasonableness is inevitable, as it would be in the judicial application of any other standard196: "A formula for judicial review of administrative action may afford grounds for certitude but cannot assure certainty of application. Some scope for judicial discretion in applying the formula can be avoided only by falsifying the actual process of judging or by using the formula as an instrument of futile casuistry. It cannot be too often repeated that judges are not automata. The ultimate reliance for the fair operation of any standard is a judiciary of high competence and character and the constant play of an informed professional critique upon its work." 192 Giris Pty Ltd v Federal Commissioner of Taxation (1969) 119 CLR 365 at 383- 384; [1969] HCA 5. 193 Dunsmuir v New Brunswick [2008] 1 SCR 190 at 220-221 [47]. 194 Wade and Forsyth, Administrative Law, 10th ed (2009) at 295-296. 195 Woolf, Jowell and Le Sueur, De Smith's Judicial Review, 6th ed (2007) at [11-018]. See also Cane and McDonald, Principles of Administrative Law: Legal Regulation of Governance, 2nd ed (2012) at 168. 196 Universal Camera Corp v National Labor Relations Board 340 US 474 at 488-489 Judicial determination of Wednesbury unreasonableness is constrained by two principal considerations. One is the stringency of the test that a purported exercise of power is so unreasonable that no reasonable repository of the power could have so exercised the power. The other is the practical difficulty of a court being satisfied that the test is met where the repository is an administrator and the exercise of the power is legitimately informed by considerations of policy. The conception underlying the stringency of the test as applicable in Australia is captured by the observation made 50 years ago that197: "This Court has in many and diverse connexions dealt with discretions which are given by legislation to bodies, sometimes judicial, sometimes administrative, without defining the grounds on which the discretion is to be exercised … We have invariably said that wherever the legislature has given a discretion of that kind you must look at the scope and purpose of the provision and at what is its real object. If it appears that the dominating, actuating reason for the decision is outside the scope of the purpose of the enactment, that vitiates the supposed exercise of the discretion. But within that very general statement of the purpose of the enactment, the real object of the legislature in such cases is to leave scope for the judicial or other officer who is investigating the facts and considering the general purpose of the enactment to give effect to his view of the justice of the case." The same observation lends force to the suggestion that, for the purpose of applying the test, "guidance may be found in the close analogy between judicial review of administrative action and appellate review of a judicial discretion"198. There is, in particular, a close analogy with the settled principle that an appellate court will review the exercise of a judicial discretion "if upon the facts it is unreasonable or plainly unjust"199, or if "failure to give adequate weight to relevant considerations really amounts to a failure to exercise the discretion actually entrusted to the court"200. It is therefore fair to say that "[i]f a 197 Klein v Domus Pty Ltd (1963) 109 CLR 467 at 473; [1963] HCA 54, quoted in Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1178 [69]; 198 ALR 59 at 75-76; [2003] HCA 198 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 42. 199 House v The King (1936) 55 CLR 499 at 505; [1936] HCA 40. See Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1178 [68]; 198 ALR 59 at 75. 200 Lovell v Lovell (1950) 81 CLR 513 at 519; [1950] HCA 52, citing Sharp v Wakefield [1891] AC 173 at 179. discretionary power is exercised in a way in which a reasonable repository of the power might exercise it, the exercise of the power is supported by the statute which confers it, whether the discretion is judicial or administrative in nature"201. It has nevertheless been observed that "in practice the comparative familiarity of an appellate court with judicial discretions and the usual confines of a judicial discretion make the appellate court more sensitive to an unreasonable exercise of discretion and more confident of its ability to detect error in its exercise"202. That is because it is "harder to be satisfied that an administrative body has acted unreasonably, particularly when the administrative discretion is wide in its scope or is affected by policies of which the court has no experience"203. Similar observations have been made as to the inability of a court "effectively" to review a state of satisfaction forming a pre-condition to an exercise of a statutory power or performance of a statutory duty "where the matter of which the [repository] is required to be satisfied is a matter of opinion or policy or taste"204. There is no such practical difficulty in a court applying the test of Wednesbury unreasonableness to a refusal by the MRT to adjourn a review. The aspirations required to inform the performance of the MRT's duty to review – sufficiently captured in the repeated statutory references to what is fair and just – are aspirations at the core of the judicial function. The MRT is to some degree free from "constraints otherwise applicable to courts of law"205, and a court must be careful not to "draw too closely upon analogies in the conduct and determination of civil litigation"206. But a refusal by the MRT to adjourn a review will rarely, if ever, be legitimately affected by policies of which the court has no experience. 201 Norbis v Norbis (1986) 161 CLR 513 at 540; [1986] HCA 17. 202 Norbis v Norbis (1986) 161 CLR 513 at 540-541. 203 Norbis v Norbis (1986) 161 CLR 513 at 541. 204 Buck v Bavone (1976) 135 CLR 110 at 118-119; [1976] HCA 24, quoted in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 276; [1996] HCA 6. 205 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 206 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 Yet the stringency of the test remains. Judicial determination of Wednesbury unreasonableness in Australia has in practice been rare. Nothing in these reasons should be taken as encouragement to greater frequency. This is a rare case. Unreasonableness in this case The decision of the delegate under review by the MRT was a decision to refuse Ms Li a visa. The decision was based on the delegate's lack of satisfaction that Ms Li met criteria for the grant of a visa. The criteria required, at the time of decision, both that "[a] relevant assessing authority has assessed the skills of the applicant as suitable for his or her nominated skilled occupation", and that "no evidence has become available that the information given or used as part of the assessment of the applicant's skills is false or misleading in a material particular"207. Ms Li's nominated skilled occupation was that of "cook". Trades Recognition Australia ("TRA"), a relevant assessing authority, had assessed her skills to be suitable for that occupation. TRA did so applying a standard criterion of suitability that an applicant worked more than 900 hours in that occupation. However, evidence before the delegate showed that information used by TRA to make the assessment was false: a letter of reference to the effect that Ms Li had worked as a cook for a particular employer for more than 900 hours was not genuine. In correspondence with the Minister's department, and before the MRT, Ms Li admitted that the letter of reference was not genuine. She explained that the letter was given to TRA by her former migration agent without her knowledge or consent. She nevertheless sought to satisfy the MRT that the criterion was satisfied at the time of the decision on review by obtaining a second assessment from TRA based on genuine letters of reference from two other employers for whom she had in combination by then in fact worked the requisite 900 hours as a cook. The problem Ms Li encountered was that TRA decided during the course of the review by the MRT to refuse her application for a second skills assessment, apparently for reasons that one of the two letters of reference on which Ms Li relied did not set out in detail her duties as a cook and was signed on behalf of that employer by a person who did not state his or her position. Ms Li's new migration agent promptly informed the MRT of the problem. The migration agent submitted to the MRT that TRA was in error for reasons he detailed. He explained that Ms Li had applied for review of TRA's decision and 207 Clause 880.230(1) of Sched 2 to Migration Regulations 1994 (Cth). that she was relying for that purpose on new reference letters from the same two employers supported by taxation statements and payroll summaries. The migration agent asked the MRT to "forbear from making any final decision" on the review "until the outcome of her skills assessment application is finalised". The MRT did not accede to that request. The MRT gave its decision a week later. The MRT stated in its reasons for decision that it had regard to the migration agent's submission that the decision of TRA "has been affected by errors and is the subject of review" but that it considered that Ms Li "has been provided with enough opportunities to present her case and is not prepared to delay any further"208. In holding the MRT's refusal to adjourn the review to be "unreasonable in the Wednesbury Corporation sense"209, Burnett FM said210: "Ultimately what appears absent in the [MRT's] decision in this instance is a consideration of the relative merits of the competing interests. [Ms Li's] agent informed the [MRT] of the outcome of the second skills assessment when he received it and of [Ms Li's] concerns about its efficacy. [Ms Li's] agent set out in detail why the decision was in error. On a plain reading of [Ms Li's] agent's letter there appeared good reason to be cautious of the assessing authority's original decision. [Ms Li's] detailed explanation of the reasons why the decision was wrong ought to have put the [MRT] on notice that this was not merely a stalling tactic on the part of [Ms Li]. That matter was the only item outstanding in what otherwise ought to have been a successful application. When considered together with the significance of the impact of that wrong decision, I consider the [MRT's] decision to proceed in these circumstances rendered it unreasonable such as to constitute it unreasonableness in the Wednesbury Corporation sense. That is to say it constituted an improper exercise of the power and it went to the very jurisdiction." On appeal to the Full Court of the Federal Court, Greenwood and Logan JJ found that analysis to be "unremarkable", pointing out that there was in 208 0900645 [2010] MRTA 151 at [35]. 209 Li v Minister for Immigration and Citizenship [2011] FMCA 625 at [25], [49], 210 [2011] FMCA 625 at [49]. the circumstances "no countervailing consideration on the basis of which it might be concluded that the refusal to adjourn was one reasonably open to the MRT"211. It is difficult to disagree. Ms Li had been in Australia for some years. The review by the MRT had been on foot for nearly a year without any delay on her part. What she sought was an adjournment of the review for a highly specific purpose clearly articulated by her migration agent: to await the outcome of the review she had already sought of TRA's second skills assessment, which she contended to have been erroneous for reasons the migration agent explained to the MRT. Those reasons were, as the Minister concedes, "coherent on their face and might well have justified an expectation that a favourable skills assessment would be obtained". Indeed, the evidence before Burnett FM showed that a favourable skills assessment did in fact eventuate, three months later212. Nothing in the MRT's reasons for decision suggests that the MRT took a different view of Ms Li's prospects and there was no reason to infer that the MRT considered that the adjournment would be likely to have been unduly protracted. The MRT identified no consideration weighing in favour of an immediate decision on the review and none is suggested by the Minister. The Minister argues that Ms Li was "entitled to expect a decision according to law, but not further indulgence in putting off the day of reckoning". Ms Li was certainly entitled to expect a decision according to law. She was also entitled to expect a decision according to reason. She was entitled to expect the MRT to be reasonable. No reasonable tribunal, seeking to act in a way that is fair and just, and according to substantial justice and the merits of the case, would have refused the adjournment. Conclusion The appeal should be dismissed. 211 Minister for Immigration and Citizenship v Li (2012) 202 FCR 387 at 397 [34], 212 [2011] FMCA 625 at [28]. |
HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Hamra v The Queen [2017] HCA 38 13 September 2017 ORDER Appeal dismissed. On appeal from the Supreme Court of South Australia Representation M E Shaw QC with B J Doyle for the appellant (instructed by Woods & Co Lawyers) C D Bleby SC, Solicitor-General for the State of South Australia with F J McDonald for the respondent (instructed by Director of Public Prosecutions (SA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Hamra v The Queen Criminal law – Offence of "[p]ersistent sexual exploitation of a child" – Criminal Law Consolidation Act 1935 (SA), s 50 – Where offence requires prosecution to prove two or more acts of sexual exploitation – Whether generalised nature of complainant's evidence meant that not possible to identify two or more acts of sexual exploitation – Whether no case to answer. Criminal law – Permission to appeal – Where orders made included granting application for permission to appeal – Whether majority of Court of Criminal Appeal failed to consider question of permission to appeal. Words and phrases – "acts of sexual exploitation", "distinct occasion", "distinct transaction", "double jeopardy", "extended unanimity", "no case to answer", to appeal", "persistent sexual "particularity", "particulars", "permission exploitation of a child". Criminal Law Consolidation Act 1935 (SA), s 50. KIEFEL CJ, BELL, KEANE, NETTLE AND EDELMAN JJ. Introduction The appellant was charged with an offence of persistent sexual exploitation of a child contrary to s 50(1) of the Criminal Law Consolidation Act 1935 (SA). Section 50 creates an offence where an adult person, "over a period of not less than 3 days, commits more than 1 act of sexual exploitation of a particular child under the prescribed age". Sections 50(2) and 50(4) provide that the act of sexual exploitation must be an act in relation to the child of a kind that could be the subject of a charge of a sexual offence, although it is not required to be properly particularised other than as to the period during which the acts of sexual exploitation allegedly occurred and the alleged conduct comprising the acts of sexual exploitation. At the conclusion of the prosecution case in the South Australian District Court, the trial judge (who heard the case without a jury) heard, and subsequently accepted, a no case submission. The trial judge held that the highly generalised nature of the complainant's evidence meant that it was not possible to identify two or more proved sexual offences within s 50(1). The Full Court of the Supreme Court of South Australia, sitting as the Court of Criminal Appeal, allowed an appeal and remitted the matter for retrial. By special leave, the appellant relies upon two grounds of appeal. The first is that the Court of Criminal Appeal erred by concluding that there was a case to answer. The second is that the Court of Criminal Appeal erred by failing to address the appellant's submission that permission to appeal should not be granted having regard to considerations including double jeopardy. For the reasons that follow, the Court of Criminal Appeal did not err in either respect. The appeal must be dismissed. The charge The appellant was prosecuted under s 50(1) of the Criminal Law Consolidation Act with one count of persistent sexual exploitation of a child, "B", who was under the prescribed age of 17 years. The Information was as follows: "Statement of Offence Persistent Sexual Exploitation of a Child. (Section 50(1) of the Criminal Law Consolidation Act, 1935). Bell Nettle Edelman Particulars of Offence [The appellant] between the 30th day of October 1977 and the 1st day of November 1982 at Morphett Vale, and another place, committed more than one act of sexual exploitation of [B] a child under the prescribed age. It is further alleged that the acts of sexual exploitation performed by [the appellant] upon [B] were, touching [B's] genitals, placing his penis between [B's] bottom, causing [B] to touch his penis and performing fellatio upon [B]." The significance of 1 November 1982 is that it was the date when B turned 17 years old. Section 50 of the Criminal Law Consolidation Act Section 50 of the Criminal Law Consolidation Act creates an offence of "persistent sexual exploitation of a child". It relevantly provides as follows: "(1) An adult person who, over a period of not less than 3 days, commits more than 1 act of sexual exploitation of a particular child under the prescribed age is guilty of an offence. Maximum penalty: Imprisonment for life. For the purposes of this section, a person commits an act of sexual exploitation of a child if the person commits an act in relation to the child of a kind that could, if it were able to be properly particularised, be the subject of a charge of a sexual offence. at any time when an act of sexual exploitation of a child was allegedly committed the child was at least 16 years of age; and the defendant proves that he or she believed on reasonable grounds that the child was of or over the prescribed age at that time, the act of sexual exploitation is not to be regarded for the purposes of an offence against this section. Bell Nettle Edelman (4) Despite any other Act or rule of law, the following provisions apply in relation to the charging of a person on an information for an offence against this section: subject to this subsection, the information must allege with sufficient particularity— the period during which exploitation allegedly occurred; and the acts of sexual the alleged conduct comprising the acts of sexual exploitation; the information must allege a course of conduct consisting of acts of sexual exploitation but need not— allege particulars of each act with the degree of particularity that would be required if the act were charged as an offence under a different section of this Act; or identify particular acts of sexual exploitation or the occasions on which, places at which or order in which acts of sexual exploitation occurred; the person may, on the same information, be charged with other offences, provided that any sexual offence allegedly committed by the person— in relation to the child who is allegedly the subject of the offence against this section; and during the period during which the person is alleged to have committed the offence against this section, must be charged in the alternative. (5) A person who has been tried and convicted or acquitted on a charge of persistent sexual exploitation of a child may not be convicted of a sexual offence against the same child alleged to have been committed during the period during which the person was alleged to have committed the offence of persistent sexual exploitation of the child. Bell Nettle Edelman In this section— prescribed age, in relation to a child, means— in the case of a person who is in a position of authority in relation to the child—18 years; in any other case—17 years; sexual offence means— an offence against Division 11 (other than sections 59 and 61) or sections 63B, 66, 69 or 72; or an attempt to commit, or assault with intent to commit, any of those offences; or a substantially similar offence against a previous enactment. The evidence at trial The appellant was tried by judge alone. The evidence at trial was given by the complainant, B, and the complainant's parents. The focus before the trial judge, and on the appeals, was upon B's evidence. Although there were some inconsistencies between his evidence and the evidence of his mother concerning the rooms in which B slept and when, the primary judge treated this as a matter which was irrelevant to the no case submission but noted that it would be relevant to the ultimate verdict if the case had progressed that far1. At the time of trial B was 50 years old. B's evidence was that he and his two brothers grew up and lived with their mother and father at their three bedroom home in Morphett Vale. For a couple of years before B's grandmother moved into a nursing home she also lived with the family. B said that he thought that this was until he turned 12 or 13 or possibly 14. While his grandmother lived with the family the sleeping arrangements were as follows: the parents 1 R v Hamra (No 2) [2016] SADC 8 at [12]. Bell Nettle Edelman slept in bedroom one; the grandmother slept in bedroom two; and B and his two brothers slept in bedroom three. After his grandmother moved out, B slept in bedroom two for about three years, while he was in high school, before moving back into bedroom three when he was "roughly 16" or possibly 17. B said that he first met the appellant at a surprise birthday party for his mother when B was around 11 years old. The appellant, who was a school teacher, subsequently visited B's home regularly as a friend to B's parents and to assist B's brother with his school work. B gave evidence that the appellant's sexual abuse of him ceased after he was "probably 17, nearly 18" and after he had obtained his driver's licence at 16 years of age. B's evidence of sexual offences can broadly be described in four groups. First, B gave evidence of the first occasions on which the appellant touched B's genitals. B said that the touching first occurred when he was "probably about 12, maybe 13". At that time, B was sleeping in bedroom three. His brothers, who shared bedroom three with him at that time, were in bed sleeping. The appellant would sometimes sleep over at B's family house. Sometimes the appellant would sleep on the lounge and on other occasions he would sleep in bedroom three between the boys' beds. The appellant had, on previous nights, got into B's bed, although there had been no contact with B's genitals. The first occasion when there was contact with B's genitals was in bedroom three when the appellant got into B's bed and touched B's genitals over his pyjamas. "[F]urther down the track" the appellant started touching B's genitals inside his pyjamas. Secondly, B described how the touching became more frequent when he moved to bedroom two. He later said that he was 13, and possibly 14, when he moved into bedroom two, which was after his grandmother had moved out. B explained that while he was in bedroom two, the appellant would sleep over on the lounge nearly every weekend because "he was like part of the family". The incidents progressed from the appellant touching B under his pyjamas to mutual fondling and ejaculation. B described how he was always asleep in bedroom two before the appellant entered. When B was in bedroom two, the appellant touched B's genitals every time he stayed over. Thirdly, B gave evidence of sexual abuse that occurred every night during a period of 10 to 14 days when his parents left Australia to holiday in Fiji. B said the acts were the "same as every other time except there was twice that he actually put my penis in his mouth". Those were the only occasions when fellatio occurred and B described those occasions in some detail. B said that he Bell Nettle Edelman thought that the incidents would have occurred in 1981 because he was 15, turning 16, at the time. Fourthly, B gave evidence of occasions when he stayed at the house of the appellant's parents in Kurralta Park. The appellant drove him to the Kurralta Park house and he stayed there overnight several times. On a couple of those occasions the appellant caused mutual touching of his and B's genitals until ejaculation. Again, B described the manner of these incidents in detail. The decisions below At the conclusion of the prosecution case, counsel for the appellant made a no case to answer submission. The trial judge accepted the submission and delivered a verdict of not guilty. His Honour found that B's evidence, taken at its highest, was highly generalised and non-specific as to times and dates. The trial judge held that B had been unable to relate any incident to any particular occasion, circumstance or event beyond "what typically or routinely or generally occurred" so that it was impossible to identify two or more of the requisite acts2. The prosecution appealed to the Full Court of the Supreme Court of South Australia sitting as the Court of Criminal Appeal. The Court of Criminal Appeal held, and there is now no dispute, that the Crown had the power to appeal from an acquittal in a trial by a judge alone3. The central issue concerned the construction and application of s 50 of the Criminal Law Consolidation Act. In the Court of Criminal Appeal the majority – Kourakis CJ, with whom Kelly, Nicholson and Lovell JJ agreed – held that the primary judge erred in directing himself that B's evidence was not capable of proving the commission of two or more acts of sexual exploitation over a period of three days or more. The Chief Justice held that s 50 did not require evidence which allowed the occasion of each act of sexual exploitation to be identified in such a way that it was distinguished from other acts of sexual exploitation4. He concluded that B's evidence concerning the conduct in bedroom two and bedroom three, as well as the incidents while B's parents were in Fiji, if believed, was capable of proving 2 R v Hamra (No 2) [2016] SADC 8 at [27]. 3 R v Hamra (2016) 126 SASR 374 at 380-383 [18]-[29]. 4 R v Hamra (2016) 126 SASR 374 at 389 [47]. Bell Nettle Edelman the commission of two or more acts of sexual exploitation5. The application for permission to appeal was granted; the appeal was allowed and the verdict of acquittal quashed; and the case was remitted for a new trial, with the decision left to the District Court as to whether the new trial would be before the same judge or a different judge of the District Court6. Peek J agreed with the majority that the trial judge erred in finding that there was no case to answer7. However, his Honour would have ordered that the matter be remitted back only to the trial judge "with a direction to further hear and determine the case according to law"8. He reached this conclusion in the course of considering the submission by the appellant that permission to appeal should not be granted having regard to considerations of double jeopardy and the alleged weakness of the case against the appellant9. The operation of s 50 of the Criminal Law Consolidation Act The essence of the appellant's submission concerning the construction of s 50 of the Criminal Law Consolidation Act is that s 50 does not ameliorate the requirement that the State must prove, and therefore that the evidence must be capable of particularising, a "distinct occasion" or "distinct transaction" constituting each alleged sexual offence. The appellant referred to passages from the reasons of Dixon J in Johnson v Miller10, that an accused is "entitled to be apprised not only of the legal nature of the offence with which he is charged but also of the particular act, matter or thing alleged as the foundation of the charge". Consistently with these reasons, the appellant submitted that it was necessary that each "occurrence or transaction, the subject of the charge ... be identified and distinguished from other occurrences or transactions alleged to have occurred"11. 5 R v Hamra (2016) 126 SASR 374 at 390 [52]. 6 R v Hamra (2016) 126 SASR 374 at 393 [66]. 7 R v Hamra (2016) 126 SASR 374 at 407 [112]. 8 R v Hamra (2016) 126 SASR 374 at 413 [132], [134]. 9 R v Hamra (2016) 126 SASR 374 at 409-411 [117]-[121]. 10 (1937) 59 CLR 467 at 489; [1937] HCA 77. 11 Johnson v Miller (1937) 59 CLR 467 at 490. Bell Nettle Edelman The appellant also referred to the judgment in that case of Evatt J, who said that it is "of the very essence of the administration of criminal justice that a defendant should, at the very outset of the trial, know what is the specific offence which is being alleged against him"12. The appellant relied upon the application of these principles by this Court in S v The Queen13. In that case, S was convicted of three counts of carnal knowledge of his daughter. Each count had charged one act of carnal knowledge on a date unknown. The three counts specified separate periods of 12 months within which each offence was alleged to have occurred. The complainant gave evidence of two acts of sexual intercourse but there was no evidence to link those acts to any of the periods. She also gave evidence that sexual intercourse occurred "every couple of months for a year" during a two year period before she left home at 17. A majority of the Court allowed the appeal. Gaudron and McHugh JJ relied upon Johnson v Miller and said14: "The evidence of a number of offences said to have been repeated at two- monthly intervals over a period of one year (which period might fall anywhere within a period of almost three years) had the same practical effect that was noted by Evatt J in relation to the course proposed in Johnson v Miller. Effectively, the applicant was required to defend himself in respect of each occasion when an offence might have been committed. Additionally, by reason that the offences were neither particularized nor identified, the accused was effectively denied an opportunity to test the credit of the complainant by reference to surrounding circumstances such as would exist if the acts charged had been identified in relation to some more precise time or by reference to some other event or surrounding circumstance." (emphasis in original) The common law principle upon which the appellant relied, which requires the prosecution to be able to identify from the evidence the particular occurrences or transactions which are the subject of the charge, is not based merely upon a concern with forensic prejudice to an accused person. It is based also upon ensuring certainty of the verdict including enabling a plea of autrefois 12 Johnson v Miller (1937) 59 CLR 467 at 497. 13 (1989) 168 CLR 266; [1989] HCA 66. 14 S v The Queen (1989) 168 CLR 266 at 286. Bell Nettle Edelman convict or autrefois acquit15, ensuring jury unanimity16, and ensuring that the court knows the offence for which the person is to be punished17. The decision in S v The Queen predated the introduction of s 50 of the Criminal Law Consolidation Act. However, the appellant submitted that the same principles applied to s 50(1) of the Criminal Law Consolidation Act. In order to consider the extent to which that common law principle survived the introduction of s 50, it is necessary to say something about the legislative history of s 50. The progenitor of s 50 was a new provision, s 74, that was inserted in 1994 into the Criminal Law Consolidation Act18. Section 74(1) provided for an offence of "persistent sexual abuse of a child". By s 74(2) that offence consisted of "a course of conduct involving the commission of a sexual offence against a child on at least three separate occasions (whether the offence is of the same nature on each occasion or differs from occasion to occasion)". Section 74(5) required that the jury "be satisfied beyond reasonable doubt that the evidence establishes at least three separate incidents, falling on separate days" in the relevant period and that the jury "be agreed on the material facts of three such incidents in which the defendant committed a sexual offence of a nature described in the charge (although they need not be agreed about the dates of the incidents, or the order in which they occurred)". In 1993, in the Second Reading Speech in the Legislative Council, where this provision was introduced, the then Attorney-General described the decision in S v The Queen and addressed the difficulties confronting the prosecution in historical, persistent child sexual abuse cases19. The legislation was later re- 15 S v The Queen (1989) 168 CLR 266 at 276 per Dawson J, 284 per Gaudron and 16 S v The Queen (1989) 168 CLR 266 at 276 per Dawson J, 287 per Gaudron and 17 S v The Queen (1989) 168 CLR 266 at 284 per Gaudron and McHugh JJ. 18 By the Criminal Law Consolidation (Child Sexual Abuse) Amendment Act 1994 19 South Australia, Legislative Council, Parliamentary Debates (Hansard), 13 October 1993 at 546-547. Bell Nettle Edelman introduced by the following government20. In the House of Assembly, the Deputy Premier's Second Reading Explanation was near identical to the 1993 Second Reading Speech. He too described the facts and decision in S v The "The decision of the High Court poses great difficulty in charging defendants where the allegations involve a long period of multiple offending. In some cases, like S, the child – or the adult recalling events which took place when he or she was a child – cannot specify particular dates or occasions when the offence is alleged to have taken place. The result is that defendants are being acquitted even where juries clearly indicate that they accept the evidence that abuse took place at some time. Legislation has been introduced in all Australian jurisdictions except the Northern Territory to deal with this problem. The Directors of Public Prosecutions in all jurisdictions have agreed that such legislation is necessary. In late 1993, the South Australian Director of Public Prosecutions had requested that legislation be introduced as a matter of urgency, and the former Government did so, just before the election. While the various models differ in detail, the essence of the legislation in other jurisdictions is, in general, the creation of a new offence of having a sexual relationship with a child or, as is proposed here, persistent sexual abuse of a child. That offence is proved by proving that the defendant commits a sexual offence against a child on three or more separate occasions. The effect is that it is not necessary to specify the dates, or in any other way to particularise the circumstances, of the alleged acts. The Bill follows these models. It is a necessary reform to the way in which the criminal law copes with these particularly difficult cases." 20 South Australia, Legislative Council, Parliamentary Debates (Hansard), 9 March 1994 at 188; South Australia, Legislative Council, Parliamentary Debates (Hansard), 20 April 1994 at 536. 21 South Australia, House of Assembly, Parliamentary Debates (Hansard), 4 May Bell Nettle Edelman The new provision, s 74, did not dispense with the common law requirement for particulars of the three or more offences other than, in s 74(4), to provide that the charge (i) need not state the dates on which the sexual offences were committed, (ii) need not state the order in which the offences were committed, and (iii) need not differentiate the circumstances of commission of each offence. In 2008, s 74 of the Criminal Law Consolidation Act was replaced by the present s 5022. In the Second Reading Speech of the Criminal Law Consolidation (Rape and Sexual Offences) Amendment Bill 2007 (SA), which introduced s 50, the then Attorney-General described the purpose of the proposed section as "The current offence of persistent sexual abuse was enacted to overcome problems such as those identified by the High Court in the case of S v the Queen and by the South Australian Court of Criminal Appeal in R v S. In that case multiple offences against the same child were charged as having occurred between two specified dates, each one being part of an alleged continuous course of conduct. Because the evidence given of the alleged course of conduct was not sufficiently related to the particular charges, in that the child could not identify particular occasions and link them with particular counts, an appeal against conviction was allowed and an acquittal entered. The offence of persistent sexual abuse is rarely charged because it fails to overcome the very problem of particularity that it tried to remedy. Children are still unable to identify precisely each separate incident of abuse that is required to prove the offence. The new offence has the same aim as the current offence: to punish the persistent sexual abuse of a child, and not just the sexual acts that can be identified with enough particularity to be charged as specific offences in themselves. 22 By the Criminal Law Consolidation (Rape and Sexual Offences) Amendment Act 23 South Australia, House of Assembly, Parliamentary Debates (Hansard), 25 October 2007 at 1473-1474. Bell Nettle Edelman Often, children who have [been] subjected to long-term sexual abuse can remember in some detail when the abuse started and when it ended, so that the first and last alleged acts are often capable of being charged as specific offences, but can't remember the detail of when and where each of the many intervening acts occurred enough to distinguish each one from the other. That is why all these acts cannot be charged as specific offences, and why, when convicted of only the acts that can be so charged, the law fails to recognise or punish the full extent of the abuse. The current offence aims to overcome this but has not worked. The Bill proposes to replace the current offence with a new one of persistent sexual exploitation of a child. The new offence focusses on acts of sexual exploitation that comprise a course of conduct (persistent sexual exploitation) rather than a series of separately particularised offences. Under the Bill, an act of sexual exploitation is an act of a kind that could, if it were able to be properly particularised, be the subject of a charge of a specific sexual offence." The offence of persistent sexual abuse in s 50 has the same underlying purpose as s 74, which preceded it. It was designed as a response to decisions such as S v The Queen to create a new, but single, offence that focused upon acts of sexual exploitation. However, the language of s 50 departed from s 74, most notably in that only two or more acts were required rather than three or more. The basic difficulty for the appellant's submission is the plain terms of s 50(4). That sub-section outlines the required particularity of an information charging a person with an offence under s 50(1). It modifies the common law by providing that although the information must allege a course of conduct consisting of acts of sexual exploitation it need not "identify particular acts of sexual exploitation or the occasions on which, places at which or order in which acts of sexual exploitation occurred" (s 50(4)(b)(ii)). The sub-section requires the jury to find the same two or more acts committed over a period of three or more days in order for the accused to be convicted but, provided that two or more distinct acts can be identified, it does not require the occasions of those acts to be particularised other than as to the period of the acts and the conduct constituting the acts. In this respect, s 50(4)(b)(ii) has the same effect as its predecessor provision, which, in s 74(4), did not require particulars to "differentiate the circumstances of commission of each offence". An example which illustrates this point is evidence of a complainant that an act of sexual exploitation was committed every day over a two week period. Bell Nettle Edelman The appellant submitted that such evidence would be insufficient because, even if the jury (or judge in a trial by judge alone) were to conclude that those acts had occurred in that way, this would invite "deductive reasoning", "rather than identifying an occasion and determining what is the evidence to prove that occasion". In other words, it is impermissible to use logic to deduce from the occurrence of acts of sexual exploitation every day for two weeks that two or more acts must have occurred over a period of "not less than 3 days". The submission cannot be accepted. Neither the common law nor s 50 of the Criminal Law Consolidation Act precludes a judge or jury from deducing a conclusion by simple and obvious logic, provided, of course, that the members of the jury reach the conclusion as to the same two or more acts unanimously, or by a statutory majority where a majority verdict is permitted24. The application of s 50 to the facts The issue before the trial judge raised by the no case to answer submission was "not whether on the evidence as it stands [the appellant] ought to be convicted, but whether on the evidence as it stands he could lawfully be convicted"25 (emphasis in original). In other words26: "if there is evidence (even if tenuous or inherently weak or vague) which can be taken into account by the jury in its deliberations and that evidence is capable of supporting a verdict of guilty, the matter must be left to the jury for its decision. Or, to put the matter in more usual terms, a verdict of not guilty may be directed only if there is a defect in the evidence such that, taken at its highest, it will not sustain a verdict of guilty." The evidence of B, taken at its highest, demonstrates that there was a case to answer. The fourth category of alleged acts, concerning the incidents at the house of the appellant's parents in Kurralta Park, can be put to one side. The respondent conceded that there was nothing to link B's evidence about those incidents to a period when B was under 17 years old. The issue, therefore, was whether B's evidence was capable of being believed in respect of each of the alleged acts of sexual exploitation in the first, second, and third categories. 24 Juries Act 1927 (SA), s 57(1). 25 May v O'Sullivan (1955) 92 CLR 654 at 658; [1955] HCA 38. 26 Doney v The Queen (1990) 171 CLR 207 at 214-215; [1990] HCA 51. Bell Nettle Edelman It is convenient to commence with the first and second categories of B's evidence, which concerned alleged offending in bedroom three and then bedroom two. The appellant submitted that there was no case to answer in relation to those categories for the following reasons: (i) the bedroom three allegations could not have occurred when B was 12 or 13 because B's family only met the appellant after he finished his teaching studies in 1978, and B turned 14 on 1 November 1979; (ii) the allegations concerned undifferentiated offending and were therefore incapable of constituting the s 50 offence; and (iii) taking the evidence at its highest, it was not open to conclude beyond reasonable doubt that any of the bedroom two allegations occurred before B turned 17. Each of these submissions should be rejected. As to (i), the timing of the appellant's commencement of teaching in 1979 did not preclude him meeting B's family, and the occurrence of the alleged offending in bedroom three, before B turned 14 on 1 November 1979. But even if it did, the alleged acts would still constitute an offence if B was 14 rather than As to (ii), this submission is based on an incorrect understanding of s 50. As explained above, the Crown was not required to provide particulars, or prove the s 50 offence, in a way that differentiated the circumstances of each act of sexual exploitation. It was open to conclude that there were two or more acts of sexual exploitation committed if, for instance, the judge concluded beyond reasonable doubt that the appellant committed the bedroom two acts of sexual exploitation every time he stayed over, which was nearly every weekend for months, and possibly years, from when B was 13 or possibly 14. As to (iii), there was a case to answer that B was under the age of 17 when the offending in bedroom three, and then bedroom two, occurred. B's evidence was that he moved from bedroom three to bedroom two when he was 13 or possibly 14. His evidence was that while he was in bedroom two, the appellant would sleep over on the lounge nearly every weekend and he said that the appellant touched B's genitals every time he stayed over. Although B's mother's evidence conflicted with B's evidence about which room B slept in, her evidence supported the conclusion that B was under the age of 17 when his grandmother moved out of bedroom two. This was the time when B said that he moved into bedroom two. B's mother's evidence was that B's grandmother passed away in January 1982 and that she had been in the nursing home for three to four years, which would be from January 1978 or January 1979. On this evidence, therefore, B's grandmother moved to the nursing home, and B moved bedrooms, when B was 12 or 13. Bell Nettle Edelman The appellant's submission concerning the third category of B's evidence, namely the acts which took place while his parents were in Fiji, also cannot be accepted. The appellant's submission was that it could not be excluded beyond reasonable doubt that B had turned 17. The date when B turned 17 was 1 November 1982. B's evidence was that he thought that the incidents would have occurred in 1981 when he was about 15, turning 16. Although, in cross-examination, he accepted that the date could have been 1982, he said that he had placed the date at 1981, and his age at 15, because after his parents had holidayed in Fiji, his parents took him on a subsequent trip to Fiji when he was 17, and before he left school. B also said that he was still sleeping in bedroom two at the time his parents holidayed in Fiji. His evidence had been that he moved from bedroom two back to bedroom three when he was "roughly 16" although he accepted in cross-examination that with the passage of time it was possible that he was 17 when he moved from bedroom two. B's evidence that the acts while his parents were in Fiji took place before he turned 17 on 1 November 1982 was also supported by evidence from his mother. Her evidence, based upon passport dates, was that when she went to Fiji without the children her mother was still alive. As noted above, her mother passed away in January 1982. B's mother also gave evidence that the subsequent trip to Fiji when the children were taken was in the September school holidays on children's fares, which she presumed meant that B was under 16. B finished school in 1983. Even on the subsequent trip, if it occurred in September 1982, B would not have been 17. Taken at its highest, the evidence of B and his mother plainly permitted the conclusion beyond reasonable doubt that B had not turned 17 at the time his parents took their trip to Fiji. This ground of appeal must be dismissed. The grant of permission to appeal by the Court of Criminal Appeal The appellant's second ground of appeal was that the Court of Criminal Appeal erred by failing to address the appellant's submission that permission to appeal should not be granted. It is an error of law to fail to consider, and decide, an application for leave to appeal before allowing an appeal27. The appellant submitted that, apart from the observation by Kourakis CJ that permission to 27 Malvaso v The Queen (1989) 168 CLR 227; [1989] HCA 58. Bell Nettle Edelman appeal was sought28, there was an absence of reasons on the question of permission by the majority of the Court of Criminal Appeal. The appellant pointed specifically to the absence of any consideration of double jeopardy issues. From the absence of reasons on the question of permission, it was said, the conclusion should be drawn that the majority of the Court of Criminal Appeal had failed to consider, expressly or by implication, the question of permission to appeal. The appellant submitted that this Court, in considering that question afresh, should find that permission should have been refused. Although Kourakis CJ did not expressly give reasons for why permission to appeal should be granted, or advert to considerations such as double jeopardy, when his Honour's reasons are considered in context it is apparent that the issue was considered and decided. His reasons began by explaining that the Director of Public Prosecutions sought permission to appeal29. The orders made included granting the application for permission to appeal. Kourakis CJ also addressed the possibility of the intermediate position, adopted by Peek J, that permission to appeal should be granted on the basis that the matter be remitted to the trial judge for further hearing according to law. That position was intermediate in the sense that it did not involve adopting the position of the Crown that there should be a retrial de novo before a different judge, nor did it involve adopting the position of Mr Hamra that permission to appeal should not be granted. Kourakis CJ gave reasons explaining why there was no power to make an order to resume the completed trial in which the order for acquittal was wrongly made30. The most fundamental reason why permission to appeal was granted is revealed from the circumstances of the case and the conclusion reached. The Court of Criminal Appeal acceded to a request from the Director of Public Prosecutions for a coram of five judges to hear the application for permission to appeal, on the basis that the application would involve a challenge to the recent decision in R v Johnson31. Before the Court of Criminal Appeal, that decision was challenged by the Director. It was relied upon by Mr Hamra as the respondent. In his reasons for decision, Kourakis CJ made various observations 28 R v Hamra (2016) 126 SASR 374 at 377 [2]. 29 R v Hamra (2016) 126 SASR 374 at 377 [2]. 30 R v Hamra (2016) 126 SASR 374 at 390-393 [54]-[66]. 31 [2015] SASCFC 170. Bell Nettle Edelman explaining, and confining, that decision32. The approach taken by the trial judge, in reliance upon R v Johnson, was found to have been in error33. The conclusion of the majority was that in a trial by judge alone the judge had made an error of law on an important matter concerning the nature of the offence. Although Kourakis CJ did not discuss in his reasons the consideration that an order for a retrial would involve jeopardy to Mr Hamra, in the sense of being subjected to the power of the State in relation to the same subject matter on more than one occasion, it is not necessary in every case to refer to every factor which has weight in a discretionary decision. What is sufficient in each case does not depend upon any rigid formula and will be informed by all the circumstances of the case, including the submissions that were made34. In this case, the Court of Criminal Appeal did not err by failing expressly to refer to considerations of jeopardy as a factor weighing against the consideration of whether to grant permission to correct an error of law. The notice of contention The respondent filed a notice of contention which alleged that the Court of Criminal Appeal erred in failing to find that R v Johnson35 was wrongly decided. It is strictly unnecessary to consider the notice of contention in light of the conclusion we have reached that the appeal must be dismissed. However, several points should be made about the issues raised in the notice of contention. Despite its terms, the notice of contention was not, it seems, concerned with the correctness of the result in R v Johnson. The respondent did not descend into a detailed consideration of the facts of that case or the application of the legal principles to those facts. The respondent's submissions about R v Johnson were confined to the failure by the Court of Criminal Appeal in this case expressly to reject a statement of principle in R v Johnson by Peek J36, with 32 R v Hamra (2016) 126 SASR 374 at 389-390 [47]-[50]. 33 R v Hamra (2016) 126 SASR 374 at 387-388 [43]. 34 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 270, 272-273 per Mahoney JA. 35 [2015] SASCFC 170. 36 R v Johnson [2015] SASCFC 170 at [111]. Bell Nettle Edelman whom Sulan and Stanley JJ agreed37. That statement of principle was that the requirement of jury unanimity as to each of the two or more acts of sexual "there must be a minimum amount of evidence adduced by the prosecution to enable jurors in the jury room to delineate two offences (at least) and to agree that those two offences were committed." (emphasis in original) On its terms, that statement of principle is correct. Section 50(1), read with s 50(2), plainly requires the jury to identify two or more acts, over a period of three days or more, which could be charged as sexual offences. However, as Kourakis CJ correctly observed in the Court of Criminal Appeal in this case, s 50 does not always require evidence which allows acts of sexual exploitation to be delineated by reference to differentiating circumstances39. Of course, as the text of s 50(1) prevents a jury from convicting without agreement upon two or more acts of sexual exploitation, this requires the jury to identify the two or more acts separately. However, the particular, unique circumstances of each separate occasion need not always be identified in order for a conclusion to be reached that two or more separate acts occurred, separated by three days or more. In this case, for example, there was a case to answer by reference to B's evidence even if all of the separate, individual acts alleged in each category could not be delineated by particular, different circumstances. The relevant question before the Court of Criminal Appeal in R v Johnson was whether the verdict of the jury was unreasonable. The decision of the Court of Criminal Appeal turned upon the factual question of whether the evidence proved that two or more acts of sexual exploitation occurred over the prescribed period of time. As we have explained, that required consideration of the evidence in that case, which was not the subject of submissions in this Court. However, some of the reasoning of Peek J in R v Johnson appeared to suggest, as a proposition of law, that it is impossible to convict an accused person if the evidence did not identify two particular acts of sexual exploitation which could be delineated from many other acts of sexual exploitation by reference to 37 R v Johnson [2015] SASCFC 170 at [1]. 38 R v Johnson [2015] SASCFC 170 at [111]. 39 R v Hamra (2016) 126 SASR 374 at 389 [47]. Bell Nettle Edelman particular circumstances40. Put another way, to use expressions of Sulan and Stanley JJ, it seemed to be suggested that an accused person could never be convicted unless the complainant were able to identify two or more particular acts of sexual exploitation with a "degree of specificity" so as to differentiate them from other such acts41. To the extent that those propositions suggest that some greater degree of particularity is required beyond that which sufficiently identifies two or more particular acts within s 50(1), separated by three days or longer, those propositions are incorrect. To adapt the example given earlier in these reasons, it would be sufficient if the jury (or judge in a trial by judge alone) were to accept that acts which could be the subject of a charge of a sexual offence occurred every night, or every weekend, over a period of two months without any further differentiation of the particular occasions of the offending. Conclusion The appeal must be dismissed. 40 R v Johnson [2015] SASCFC 170 at [114]. 41 R v Johnson [2015] SASCFC 170 at [9]. |
HIGH COURT OF AUSTRALIA STATE OF NSW AND APPELLANT GREGORY WAYNE KABLE RESPONDENT State of NSW v Kable [2013] HCA 26 5 June 2013 ORDER Appeal allowed. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 8 August 2012 and, in their place, order that the appeal to that Court be dismissed with costs. The appellant pay the respondent's costs of the application for special leave to appeal and of the appeal to this Court. On appeal from the Supreme Court of New South Wales Representation M G Sexton SC, Solicitor-General for the State of New South Wales and M J Leeming SC with J E Davidson for the appellant (instructed by Crown Solicitor (NSW)) P W Bates with P G White for the respondent (instructed by Armstrong Legal) Interveners J T Gleeson SC, Solicitor-General of A M Mitchelmore for intervening (instructed by Australian Government Solicitor) the Attorney-General of the Commonwealth with the Commonwealth, W Sofronoff QC, Solicitor-General of the State of Queensland with G J D del Villar for the Attorney-General of the State of Queensland, intervening (instructed by Crown Law (Qld)) S G E McLeish SC, Solicitor-General for the State of Victoria with R J Orr for the Attorney-General for the State of Victoria, intervening (instructed by Victorian Government Solicitor) G R Donaldson SC, Solicitor-General for the State of Western Australia with K H Glancy for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS State of NSW v Kable Constitutional law – Judicial power – Respondent detained pursuant to order of Supreme Court of New South Wales made under Community Protection Act 1994 (NSW) ("CP Act") – CP Act subsequently held invalid – Respondent sought damages for false imprisonment – Whether order of Supreme Court valid until set aside – Whether order of Supreme Court judicial order. Torts – False imprisonment – Defences – Lawful authority – Respondent held under order of Supreme Court subsequently set aside – Whether officers of appellant could rely on order made under invalid legislation as lawful authority. Words and phrases – "judicial order", "lawful authority", "superior court of record", "void ab initio", "void or voidable". Constitution, ss 76, 77. Community Protection Act 1994 (NSW), s 9. FRENCH CJ, HAYNE, CRENNAN, KIEFEL, BELL AND KEANE JJ. The issue A State Act empowered the State's Supreme Court to order the preventive detention of Gregory Wayne Kable if satisfied that otherwise he would probably commit a serious act of violence. The Supreme Court ordered Mr Kable's detention for six months. After the six months had elapsed, the detention order was set aside on appeal to this Court and the State Act held invalid. Did the detention order provide lawful authority for Mr Kable's detention? Procedural history The Community Protection Act 1994 (NSW) ("the CP Act") provided for "the preventive detention (by order of the Supreme Court [of New South Wales] made on the application of the Director of Public Prosecutions) of Gregory Wayne Kable"1. On 23 February 1995, on the application of the Director of Public Prosecutions, Levine J made an order pursuant to s 9 of the CP Act that Mr Kable be detained in custody for a period of six months. Mr Kable appealed against this order to the Court of Appeal but his appeal was dismissed2. By special leave, Mr Kable appealed to this Court. After the grant of special leave, but before the appeal to this Court was heard, the six month period fixed by the order of Levine J expired and Mr Kable was released from detention. In September 1996, this Court held3 that the CP Act was invalid. This Court allowed Mr Kable's appeal, set aside the order which the Court of Appeal had made, and, in its place, ordered that the appeal to that Court be allowed with costs, the order of Levine J be set aside and, in its place, order that the application of the Director of Public Prosecutions be dismissed with costs. It will be convenient to refer to this decision as Kable (No 1). 2 Kable v Director of Public Prosecutions (1995) 36 NSWLR 374. 3 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51; [1996] HCA 24. Hayne Crennan Bell After this Court decided Kable (No 1), Mr Kable commenced proceedings in the Supreme Court of New South Wales, claiming damages for false imprisonment. Initially the proceedings were brought against the State of New South Wales ("the State"). Later, the Director of Public Prosecutions ("the DPP") was joined as a defendant. Ultimately three causes of action were pleaded: abuse of process, malicious prosecution and false imprisonment. Before the action was tried, the DPP was dismissed from the proceedings by consent. The primary judge (Hoeben J) determined4 a number of issues as preliminary questions. Those issues were decided against Mr Kable and judgment entered for the State. In particular, the primary judge rejected5 Mr Kable's argument that the detention order made by Levine J was a nullity when made and held that the order was valid until it was set aside. Mr Kable appealed to the Court of Appeal. That Court (Allsop P, Basten, Campbell and Meagher JJA and McClellan CJ at CL) allowed6 the appeal in part. The Court of Appeal held that the primary judge had been right to dismiss Mr Kable's claims for collateral abuse of process and malicious prosecution but that Mr Kable should have judgment against the State for damages to be assessed on his claim for false imprisonment. All members of the Court of Appeal held7 that the order of Levine J was no answer to Mr Kable's claim for false imprisonment. Allsop P held8 that the reasons given by this Court in Kable (No 1) required the conclusion that, in making the detention order, "the Supreme Court was not exercising judicial power or authority and was not acting, institutionally, as a superior court but was acting, effectively, in an executive function (beyond 4 Kable v New South Wales (2010) 203 A Crim R 66. (2010) 203 A Crim R 66 at 85 [101]. 6 Kable v New South Wales (2012) 293 ALR 719. (2012) 293 ALR 719 at 727 [21], 735 [57], 737 [63] per Allsop P (Campbell and Meagher JJA and McClellan CJ at CL agreeing), 757-758 [153] per Basten JA. (2012) 293 ALR 719 at 722 [3]. See also at 725 [17]. Hayne Crennan Bell that which is permissibly ancillary to the exercise of judicial power), as an instrument of the executive". Basten JA also held that the detention order made by Levine J "did not constitute a judicial order"9 and that "[a]ny contrary conclusion would contradict the findings"10 of this Court in Kable (No 1). Basten JA noted11 that, because constitutional questions had been raised in the proceedings before Levine J, the Supreme Court had exercised federal jurisdiction, but concluded12 that the detention order was none the less "an invalid non-judicial order". By special leave, the State appealed to this Court against the orders made by the Court of Appeal. The Attorneys-General of the Commonwealth, Queensland, Victoria and Western Australia intervened in support of the State's appeal. These reasons will show that the detention order made by Levine J provided lawful authority for Mr Kable's detention and that the State's appeal should be allowed. The competing arguments The central question in the appeal to this Court was whether the order made by Levine J, until it was set aside, had provided lawful authority for Mr Kable's detention. There was (and could be) no dispute that the Supreme Court of New South Wales is a "superior court of record"13. There was (and could be) no dispute that the CP Act was invalid. On its face, the detention order was made by the Supreme Court in the exercise of a jurisdiction given to it by a New South Wales Act. The order was expressed to require Mr Kable's detention in the manner and for the time specified. In the course of deciding whether to (2012) 293 ALR 719 at 757 [152]. 10 (2012) 293 ALR 719 at 757 [153]. 11 (2012) 293 ALR 719 at 757 [152]. 12 (2012) 293 ALR 719 at 758 [153]. 13 Supreme Court Act 1970 (NSW), s 22. Hayne Crennan Bell grant the order sought, Levine J had been asked to hold that the CP Act was constitutionally invalid but had rejected that submission. The State, and the interveners, submitted that the order made by Levine J was made by a superior court of record and accordingly was effective until it was set aside. Because the order was not set aside until after Mr Kable's release from detention, it followed, so the State submitted, that the order provided lawful authority for Mr Kable's detention. By contrast, Mr Kable submitted that the bases on which this Court held the CP Act invalid required not only the conclusion that the CP Act was invalid, but also the conclusion that the Supreme Court could not make (and had not made) a "judicial" order requiring his detention. He submitted that it followed that the principle requiring that effect be given to an order of a superior court until it was set aside was not engaged. Either the order made by Levine J was "void ab initio" or, when set aside by order of this Court, the order was "annulled ab initio". On either footing, the argument continued, the order provided no lawful authority for Mr Kable's detention. Kable (No 1) Consideration of the competing arguments must begin by identifying what was decided in Kable (No 1). The legislative powers of each of the State Parliaments are necessarily14 subject to the federal Constitution. The CP Act was held to be beyond the legislative power of the New South Wales Parliament because its enactment was contrary to the requirements of Ch III of the Constitution. The exercise of the jurisdiction which the CP Act purported to give to the Supreme Court was held15 to be incompatible with the institutional integrity of the Supreme Court. The incompatibility with institutional integrity which was identified in Kable (No 1) lay in the Supreme Court being required to act as a court in the performance of a function identified as not being a function for the judicial branch of government. The majority in Kable (No 1) described the function which the CP Act required the Supreme Court to undertake in several different 14 Constitution, s 106. 15 Kable (No 1) (1996) 189 CLR 51 at 98 per Toohey J, 106-108 per Gaudron J, 122, 124 per McHugh J, 132-134 per Gummow J. Hayne Crennan Bell ways. All of those descriptions emphasised that the function which the CP Act required the Court to fulfil was not judicial. So, for example, Gaudron J said16 that the power given by the CP Act "is not a power that is properly characterised as a judicial function, notwithstanding that it is purportedly conferred on a court and its exercise is conditioned in terms usually associated with the judicial process" and that "except to the extent that the [CP] Act attempts to dress them up as legal proceedings ... they do not in any way partake of the nature of legal proceedings"17. But these and other similar statements made in the reasons of the majority in Kable (No 1) proceeded from the premise that the CP Act required the Supreme Court to act as a court in performing the function prescribed by the CP Act. As Gummow J later said, in Fardon v Attorney-General (Qld)18, the "legislative plan" of the CP Act was "to conscript the Supreme Court of New South Wales to procure the imprisonment of [Mr Kable] by a process which departed in serious respects from the usual judicial process". It is, therefore, to misstate the effect of the decision in Kable (No 1) to hold, as the Court of Appeal did19, that in exercising power under the CP Act, "the Supreme Court was not exercising judicial power or authority and was not acting, institutionally, as a superior court". The majority in Kable (No 1) held that the CP Act was invalid because it required the Supreme Court to exercise judicial power and act institutionally as a court, but to perform a task that was inconsistent with the maintenance (which Ch III of the Constitution requires) of the Supreme Court's institutional integrity. Two further aspects of the proceedings which culminated in this Court's decision in Kable (No 1) should be noted. Those proceedings were conducted on the premises, first, that the proceedings at first instance and in the Court of Appeal engaged the judicial power of the Commonwealth, and second that the order made by the Court of Appeal (and the order made by Levine J) engaged this Court's appellate jurisdiction conferred by s 73 of the Constitution. That the proceedings before Levine J and in the Court of Appeal engaged federal 16 (1996) 189 CLR 51 at 107. 17 (1996) 189 CLR 51 at 106. 18 (2004) 223 CLR 575 at 617 [100]; [2004] HCA 46. 19 (2012) 293 ALR 719 at 722 [3] per Allsop P (Campbell and Meagher JJA and McClellan CJ at CL agreeing). Hayne Crennan Bell jurisdiction (at least to the extent the proceedings were a matter arising under the Constitution or involving its interpretation20) is not open to doubt21. And it is equally beyond doubt that the orders of the Court of Appeal, dismissing Mr Kable's appeal to that Court, were within this Court's appellate jurisdiction as a particular example of a species of the genus "all judgments, decrees, orders, and sentences ... of the Supreme Court of any State"22. It is then to be observed that in Kable (No 1) this Court ordered that, in place of the order made by the Court of Appeal, the appeal to that Court was allowed and the order of Levine J was set aside, as distinct from quashed, or declared invalid. That is, the order of Levine J was treated in this Court's orders in a manner consistent with it having been valid until set aside. "Void" or "voidable"? Mr Kable submitted that the detention order of Levine J was void or was later avoided ab initio. In support of these submissions, he pointed to statements made in this Court23 (referring to earlier English decisions24) distinguishing between what is "void" or "voidable" and what is an "irregularity" or a "nullity". It is necessary to exercise great care in using words like "void", "voidable", "irregularity" and "nullity" in connection with the issues that arise in this matter. Each word was used in Mr Kable's argument in this appeal to state a conclusion about the legal effect of the order of Levine J. More often than not, each word was used in a way which expressly or impliedly sought to convey a meaning identified by its opposition to another word (void versus voidable, nullity versus irregularity). Used in that way, each of the words, void, voidable, nullity and irregularity, suggests that the whole of the relevant universe can be 20 Constitution, s 76(i). 21 See, for example, Kable (No 1) (1996) 189 CLR 51 at 96 per Toohey J, 114 per McHugh J, 136 per Gummow J. 22 Constitution, s 73(ii). 23 Posner v Collector for Inter-State Destitute Persons (Vict) (1946) 74 CLR 461 at 469 per Latham CJ, 476 per Starke J, 489-490 per Williams J; [1946] HCA 50. 24 For example, Craig v Kanssen [1943] KB 256; Marsh v Marsh [1945] AC 271. Hayne Crennan Bell divided between two realms whose borders are sharply defined and completely closed. None is used in a way which admits (or readily appears to admit) of the possibility that the legal effect to be given to an act affected by some want of power may require a more elaborate description which takes account not only of who may complain about the want of power, but also of what remedy may be given in response to the complaint. The difficulties associated with using words like "void" and "voidable" in connection with administrative actions have long been recognised25. Writing in 1967, H W R Wade said26 that: "[T]here is no such thing as voidness in an absolute sense, for the whole question is, void against whom? It makes no sense to speak of an act being void unless there is some person to whom the law gives a remedy. If and when that remedy is taken away, what was void must be treated as valid, being now by law unchallengeable. It is fallacious to suppose that an act can be effective in law only if it has always had some element of validity from the beginning. However destitute of legitimacy at its birth, it is legitimated when the law refuses to assist anyone who wants to bastardise it. What cannot be disputed has to be accepted." Although directed to administrative actions, these statements may find some reflection in connection with the acts of courts and judges. If a curial decision cannot be disputed, it must be accepted. To the extent to which the orders of a superior court are valid until set aside, there seems little point in attempting to classify those orders as void or voidable. But it is not necessary to pursue those analogies to their conclusion. It is enough to notice that the legal system provides (and must provide27) the rules which govern what legal effect is to be given to the decisions of, and the orders made by, courts. And, as later explained, those rules are more complex than the central proposition which underpinned Mr Kable's arguments: that want of jurisdiction for constitutional 25 See, for example, Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 612-613 [45]-[46], 646-647 [152]-[154]; [2002] HCA 11; Calvin v Carr [1980] AC 574 at 589-590. 26 "Unlawful Administrative Action: Void or Voidable?", (1967) 83 Law Quarterly Review 499 at 512. 27 Kelsen, General Theory of Law and State, (1945) at 160. Hayne Crennan Bell reasons necessarily entails the complete invalidity for all purposes of whatever is done in purported exercise of that jurisdiction. One further point should be made about the asserted distinction between proceedings that are "irregular" and those that are "null and void" or a "nullity". This distinction has sometimes been made28 in connection with applying rules of court which provide for the consequences of non-compliance with the rules, and in that context speak of setting aside proceedings "as irregular" or "for irregularity"29. The distinction has been made in determining whether and when complaint could be made about a departure from procedural requirements. That is not the question which arises in this matter. There can be no direct application of that kind of distinction to the present matter. A judicial order? The point at which analysis must begin in this matter is, as the parties' submissions recognised, with the order that was made for Mr Kable's detention. Was that an order to which effect was to be given unless or until it was set aside? Mr Kable submitted that the order was of no effect because it was not a "judicial order". The premise for the submission was that the CP Act did not validly authorise the making of the detention order because the power which the CP Act sought to give to the Supreme Court was not a form of judicial power. And, at first sight, the submission that the detention order was not a "judicial order" may be thought to invoke consideration of the principles governing what is judicial power. It is important, however, to recognise the nature of the distinction being drawn in the submission that the detention order was not a "judicial order". The positive proposition which underpinned the submission was that, although made by a judge of the Supreme Court, the detention order was an exercise of administrative power by the Court. Thus, the distinction upon which the submission depended fastened upon how the power which the CP Act purported to give to the Supreme Court was exercised, not upon whether the power was given validly to the Supreme Court. 28 See, for example, Craig v Kanssen [1943] KB 256. 29 See, for example, Rules of the Supreme Court 1883 (Eng), O 70, rr 1 and 2; Anlaby v Praetorius (1888) 20 QBD 764. Hayne Crennan Bell In Love v Attorney-General (NSW)30, this Court examined whether a warrant issued by a judge of the Supreme Court of New South Wales, pursuant to a State Act, was issued in exercise of judicial power. This Court concluded31 that, although the power to issue warrants was conferred upon the Supreme Court rather than the several judges of that Court, "the exercise of the power is essentially administrative in nature". The judge who issued a warrant was under a duty to act judicially, but this Court concluded32 that: "the issue of the warrant ... is not a 'judicial act in the same sense as is an adjudication to determine the rights of parties', to use the words of Windeyer J in [Electronic Rentals Pty Ltd v Anderson]33. It is not an order inter partes from which a party whose conversations may be overheard has a right of appeal. To adapt the language used in Hilton v Wells34, under [the State Act] a judge makes no order and nothing that he or she does is enforced as an order of the court." Accordingly, a warrant issued under the State Act was "an instrument made pursuant to a circumscribed statutory authority"35, and its effect depended entirely upon the State Act36. By contrast with the warrant considered in Love, the order made by Levine J was more than an authority granted on the application of a person seeking authority and without notice to the person against whom the authority would be exercised. The order made by Levine J was the result of an adjudication determining the rights of Mr Kable and the order both authorised and required his detention for a fixed term. The order was made following 30 (1990) 169 CLR 307; [1990] HCA 4. 31 (1990) 169 CLR 307 at 321. 32 (1990) 169 CLR 307 at 321-322. 33 (1971) 124 CLR 27 at 39; [1971] HCA 13. 34 (1985) 157 CLR 57 at 73; [1985] HCA 16. 35 (1990) 169 CLR 307 at 323. 36 (1990) 169 CLR 307 at 322. Hayne Crennan Bell proceedings which were conducted inter partes. Subject to some exceptions37, the rules of evidence applied. Witnesses were examined and cross-examined and the opposing parties made submissions. The order was enforced as a court order. Mr Kable could38 and did appeal against the order. All of these features of the proceedings and the order that was made disposing of the proceedings point to the order being made by a judge of the Supreme Court in his judicial capacity. None suggests that the order was, like the issue of the warrant considered in Love, "a step in the administrative process and ... thus an administrative function"39. The order made by Levine J was a judicial order. The order of a superior court of record As has already been noticed, there was and could be no dispute that the Supreme Court of New South Wales was and is a "superior court of record". It is necessary, however, to approach what meaning is conveyed by that expression with some fundamental principles at the forefront of consideration. First, and foremost, there can be no unthinking transplantation to Australia of what has been said in English cases40 about the consequences of a court being established as a "superior court of record". The constitutional context is altogether different. Due regard must be paid to those differences. Second, there is no Australian court with unlimited jurisdiction41. Hence, although it is sometimes suggested42 that, in England, the prerogative writs of 37 CP Act, s 17(1) and (3). 38 CP Act, s 25. 39 (1990) 169 CLR 307 at 322. 40 Re Macks; Ex parte Saint (2000) 204 CLR 158 at 275 [329]; [2000] HCA 62. 41 Attorney-General of Queensland v Wilkinson (1958) 100 CLR 422 at 431; [1958] HCA 21; R v Gray; Ex parte Marsh (1985) 157 CLR 351 at 393-394; [1985] HCA 67; Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 630; [1987] HCA 23; PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2012) 86 ALJR 1071 at 1075 [16]; 290 ALR 681 at 685; [2012] HCA 33. Hayne Crennan Bell mandamus, prohibition and certiorari were not available to provide relief against a judgment or orders of a judge of a superior court, that suggestion, even if accurate, could have no direct or immediate application in Australia. Third, all courts, whether superior or inferior, have the authority to decide whether a claim that is made in the court is within its jurisdiction43. That power can be described as a court having jurisdiction to decide its own jurisdiction. But because there is no Australian court with unlimited jurisdiction, a decision that a court does, or does not, have authority to decide a particular claim will be subject to review and correction. Sometimes that will be by the grant of prohibition or certiorari44; sometimes, as exemplified by Kable (No 1), it will be by the process of appeal, and ultimately by appeal to this Court. And if it is said that a superior court is presumed to act within its jurisdiction, that is best understood as a statement about the effect that is to be given to its orders unless or until they are set aside. It is now firmly established45 by the decisions of this Court that the orders of a federal court which is established as a superior court of record are valid until set aside, even if the orders are made in excess of jurisdiction (whether on constitutional grounds or for reasons of some statutory limitation on jurisdiction). It was not submitted that any of these decisions should be reopened and there 42 Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at 437 [165]; [2002] HCA 16. But see, for example, James v South Western Railway Co (1872) LR 7 Ex 287 at 290; Ex parte Marsh (1985) 157 CLR 351 at 387; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 95-97 [30]-[34]; [2000] HCA 57. 43 Grassby v The Queen (1989) 168 CLR 1 at 16; [1989] HCA 45; Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 451 [50]; [1999] HCA 19. 44 See, for example, Craig v South Australia (1995) 184 CLR 163; [1995] HCA 58. 45 Cameron v Cole (1944) 68 CLR 571 at 590, 598, 606-607; [1944] HCA 5; DMW v CGW (1982) 151 CLR 491 at 501-505, 507; [1982] HCA 73; R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 at 193-194, 222-223; [1984] HCA 82; Ex parte Marsh (1985) 157 CLR 351 at 374-375; Re Macks (2000) 204 CLR 158 at 177-178 Hayne Crennan Bell would be powerful reasons not to disturb such a long-established stream of authority. Nor was it submitted that these principles did not apply equally to the judicial orders of a State Supreme Court. Rather, as already noted, the principles were said not to apply because the order made by Levine J was not a judicial order. And, for the reasons already given, that submission must be rejected. The roots of the doctrine, that the orders of a superior court of record are valid until set aside even if made in excess of jurisdiction, lie in the nature of judicial power. First, any court must decide whether it has authority to decide the claim that is made to it. And, as Gaudron J said46 in Re Macks; Ex parte Saint: "In establishing the Federal Court as a 'superior court of record', the Parliament has, at the very least, validly authorised that Court to make a binding determination on the question whether or not it has jurisdiction in a matter, subject only to the parties' right to appeal or to seek relief pursuant to s 75(v) of the Constitution." (emphasis added) Second, giving the orders of a court created by the Parliament these characteristics is within legislative power, either as incidental to the power to create the court47 or as an exercise of the legislative powers given by ss 76 and 7748 of the Constitution. And giving these characteristics to the orders of a court by designating it to be a superior court of record reflects the distinction between the exercise of judicial power (by the final quelling of controversies according to law) and the exercise of executive power (subject to law). As Gummow J said49 in Re Macks: "That does not mean that the stream [of judicial power] has risen above its source. Rather, it is to recognise the relationship between Chs II and III of the Constitution and the reach of s 51(xxxix) in conjunction with ss 71 and 46 (2000) 204 CLR 158 at 185 [53]. 47 (2000) 204 CLR 158 at 235-236 [216] per Gummow J. 48 (2000) 204 CLR 158 at 279 [344] per Hayne and Callinan JJ. 49 (2000) 204 CLR 158 at 236 [216]. Hayne Crennan Bell Contrary to the view expressed50 by Basten JA in the Court of Appeal, and supported by Mr Kable in argument in this Court, these conclusions present no "logical conundrum". Nor do these conclusions require consideration of whether "where a judicial function and an incompatible non-judicial function are purportedly exercised in one proceeding, the incompatible non-judicial function is not thereby incorporated into a single exercise of federal jurisdiction"51. The conundrum identified by Basten JA was expressed52 as being that the law on which the effect of the judicial order depended gave it "an effect extending beyond the constitutional limits of that jurisdiction". But, as has been explained, the effect which is given to the order made beyond jurisdiction comes not from the law which purported to confer the relevant jurisdiction but from the status or nature of the court making the order (as a superior court of record). The effect which is given to the order is for only so long as it remains in force. Once set aside on appeal, the order is spent. There is then no occasion to attempt to divide the exercise of jurisdiction by Levine J in the manner considered by Basten JA. The division suggested53 was between the (valid) exercise of jurisdiction conferred by s 39(2) of the Judiciary Act 1903 (Cth) to hear and determine the question about the validity of the CP Act (as a question arising under the Constitution or involving its interpretation) and the (invalid) exercise of jurisdiction to decide whether to make an order under the CP Act. There being no occasion to consider this division, it is neither necessary nor desirable to examine whether the proceedings conducted by Levine J constituted the hearing and determination of one or more than one "matter", or what may have been the boundaries of the relevant matter or matters. More fundamental considerations The conclusions reached in these reasons about the effect of the order made by Levine J accord with fundamental considerations about the operation of 50 (2012) 293 ALR 719 at 755 [145], 756 [149]. 51 (2012) 293 ALR 719 at 757 [151]. 52 (2012) 293 ALR 719 at 755 [145]. 53 (2012) 293 ALR 719 at 757 [151]. Hayne Crennan Bell any developed legal system. There must come a point in any developed legal system where decisions made in the exercise of judicial power are given effect despite the particular decision later being set aside or reversed. That point may be marked in a number of ways. One way in which it is marked, in Australian law, is by treating the orders of a superior court of record as valid until set aside. Were this not so, the exercise of judicial power could yield no adjudication of rights and liabilities to which immediate effect could be given. An order made by a superior court of record would have no more than provisional effect until either the time for appeal or review had elapsed or final appeal or review had occurred. Both the individuals affected by the order, and in this case the Executive, would be required to decide whether to obey the order made by a court which required steps to be taken to the detriment of another. The individuals affected by the order, and here the Executive, would have to choose whether to disobey the order (and run the risk of contempt of court or some other coercive process) or incur tortious liability to the person whose rights and liabilities are affected by the order. In this case, if the detention order made by Levine J was not effective until set aside, those apparently bound by the order were obliged to disobey it, lest they be held responsible for false imprisonment. On Mr Kable's argument, the order was without legal effect and should not have been obeyed. The decision to disobey the order would have required both the individual gaoler and the Executive Government of New South Wales to predict whether this Court would accept what were then novel constitutional arguments. More fundamentally, as the legal philosopher Hans Kelsen wrote54, "[a] status where everybody is authorized to declare every norm, that is to say, everything which presents itself as a norm, as nul, is almost a status of anarchy". Finally, it will be recalled that Mr Kable submitted that the effect of this Court's orders in Kable (No 1) was to render the order of Levine J void ab initio. This Court did not declare the order made by Levine J to be void. As a judicial order of a superior court of record, the order of Levine J was valid until set aside. It was not "void ab initio". 54 General Theory of Law and State, (1945) at 160. Hayne Crennan Bell Questions not reached These conclusions make it unnecessary to consider whether, as the State submitted, the common law provides protection from tortious liability by the defence of legal justification to those who execute an order of a court that is valid on its face. Further, because Mr Kable was detained pursuant to an order that had not been set aside during the period of detention, and remained valid during that time, it is also unnecessary to examine whether, as Mr Kable contended, the Court of Appeal should have held that the State was "directly liable in false imprisonment to [Mr Kable], in addition to being vicariously liable for that tort". Conclusion and orders For these reasons the appeal should be allowed, the orders of the Court of Appeal set aside and in their place there should be orders that the appeal to that Court is dismissed with costs. In accordance with the terms on which special leave to appeal to this Court was granted, the State should pay Mr Kable's costs of the application for special leave to appeal and of the appeal to this Court. Introduction On 23 February 1995, Levine J in the Supreme Court of New South Wales made an order that: "Gregory Wayne Kable be detained in custody for a period of six months commencing 23 February 1995 and expiring 22 August 1995 pursuant to s 9 of the Community Protection Act 1994." The joint reasons for judgment conclude that the order so made provided lawful authority for the State of New South Wales to detain Mr Kable in custody between 23 February 1995 and 22 August 1995. That conclusion is reached notwithstanding the subsequent setting aside of the order by the High Court, on appeal from the Court of Appeal of the Supreme Court of New South Wales, in Kable v Director of Public Prosecutions (NSW) ("Kable (No 1)")55, on the ground that the Community Protection Act 1994 (NSW) ("the CP Act") was invalid because the purported conferral by the CP Act of jurisdiction on the Supreme Court of New South Wales to make an order of that kind was incompatible with Ch III of the Constitution. I agree with that conclusion and join in the orders proposed. Precepts Chapter III of the Constitution is framed against certain precepts, both as to the nature of judicial power and as to the essential and permitted characteristics of courts as institutions administering or capable of administering judicial power. The nature of judicial power is that, as a general rule, its exercise is directed to the resolution of a question as to a legal right or a legal obligation between defined persons or classes of persons so as to produce, by a final judicial order, "a new charter by reference to which that question is in future to be decided as between those persons or classes of persons"56. Its "unique and essential function … is the quelling of … controversies by ascertainment of the facts, by application of the law and by exercise, where appropriate, of judicial 55 (1996) 189 CLR 51; [1996] HCA 24. 56 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 355 [45]; [1999] HCA 9, quoting R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 374; [1970] HCA 8. discretion"57. Its "hallmark" is "the making of binding declarations of rights and obligations arising from the operation of the law upon past events or conduct"58. Within the framework of the Australian Constitution, there has never been any doubt that application of the law to produce a final judicial order in the exercise of judicial power can permit and require the making of a judicial determination of the constitutional validity or invalidity of a statute. That principle, and its application to the determination by a court of the constitutional invalidity of a statute purporting to confer jurisdiction or power on the court itself, was established 100 years before the establishment of the High Court, in Marbury v Madison59. The principle as so established "in our system … is accepted as axiomatic, modified in varying degree in various cases (but never excluded) by the respect which the judicial organ must accord to opinions of the legislative and executive organs"60. Within the framework of the Australian Constitution, and consistently with the justification for that principle stated in Marbury v Madison61, there has never been any doubt that a purported law that is determined in the exercise of judicial power to be invalid, as beyond legislative power or as infringing an express or implied constitutional prohibition, is no law at all and is therefore of no legal force. The notion that a law may be invalid only prospectively from the time of the making of a judicial order has been firmly rejected on the basis that "it would be a perversion of judicial power to maintain in force that which is acknowledged not to be the law"62. A judicial determination of validity or invalidity is a determination of what the law applicable to the rights or duties of the persons or classes of persons in controversy is or is not – not of what the law is to be. The settled position is captured in the explanation given by Latham CJ in South Australia v The Commonwealth63. After pointing out that "[c]ommon 57 Harrington v Lowe (1996) 190 CLR 311 at 325; [1996] HCA 8, quoting Fencott v Muller (1983) 152 CLR 570 at 608; [1983] HCA 12. 58 Ha v New South Wales (1997) 189 CLR 465 at 503-504; [1997] HCA 34. 60 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 262-263; [1951] HCA 5. 61 5 US 137 at 177 (1803). 62 Ha v New South Wales (1997) 189 CLR 465 at 504. 63 (1942) 65 CLR 373; [1942] HCA 14. expressions, such as: 'The courts have declared a statute invalid,' sometimes lead to misunderstanding", he said64: "A pretended law made in excess of power is not and never has been a law at all. Anybody in the country is entitled to disregard it. Naturally he will feel safer if he has a decision of a court in his favour – but such a decision is not an element which produces invalidity in any law. The law is not valid until a court pronounces against it – and thereafter invalid. If it is beyond power it is invalid ab initio." Yet a purported but invalid law, like a thing done in the purported but invalid exercise of a power conferred by law, remains at all times a thing in fact. That is so whether or not it has been judicially determined to be invalid. The thing is, as is sometimes said, a "nullity" in the sense that it lacks the legal force it purports to have. But the thing is not a nullity in the sense that it has no existence at all or that it is incapable of having legal consequences65. The factual existence of the thing might be the foundation of rights or duties that arise by force of another, valid, law. The factual existence of the thing might have led to the taking of some other action in fact. The action so taken might then have consequences for the creation or extinguishment or alteration of legal rights or legal obligations, which consequences do not depend on the legal force of the thing itself. For example, money might be paid in the purported discharge of an invalid statutory obligation that money irrecoverable66, or the exercise of a statutory power might in some circumstances be authorised by statute, even if the repository of the power acted in the mistaken belief that some other, purported but invalid exercise of power is valid67. in circumstances which make One of the ways in which the existence in fact of a purported but invalid law, or the existence in fact of a thing done invalidly in the purported exercise of a power conferred by law, might lead to the taking of action in fact is that the 64 (1942) 65 CLR 373 at 408. See Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 at 653 [58]; [2000] HCA 33; Haskins v The Commonwealth (2011) 244 CLR 22 at 41-42 [45]; [2011] HCA 28. 65 Forsyth, "'The Metaphysic of Nullity': Invalidity, Conceptual Reasoning and the Rule of Law", in Forsyth and Hare (eds), The Golden Metwand and the Crooked Cord, (1998) 141, especially at 147-148. 66 See eg Werrin v The Commonwealth (1938) 59 CLR 150; [1938] HCA 3 and South Australian Cold Stores Ltd v Electricity Trust of South Australia (1957) 98 CLR 65; [1957] HCA 69 as explained in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 372-374; [1992] HCA 48. 67 See eg Ruddock v Taylor (2005) 222 CLR 612; [2005] HCA 48. purported law or other thing might be relied on to found an action in a court which results in the making of a judicial order. Where that occurs, the judicial order will have independent legal force as a judicial order. That is illustrated by Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan68, where convictions by a magistrate for offences under regulations were sustained notwithstanding the subsequent disallowance of those regulations with retrospective effect. Having held that "after a regulation has been disallowed, no one is liable to conviction for an offence committed while it was in force" in that "[h]is liability ceases when the law is revoked that imposed it", Dixon J explained69: "But if he has already been convicted, then because his liability has merged in the conviction, it no longer depends upon the law under which it arose, and it does not lapse with the revocation of the law. The conviction has become the source of his liability for his offence, and the conviction continues in force because its operation does not depend upon the law creating the offence, but upon the authority belonging to a judgment or sentence of a competent Court." Within the framework of the Australian Constitution, the authority belonging to a judicial order of a court varies between categories of courts. A distinction is drawn between superior courts and inferior courts. The Supreme Courts of the States, to which reference is made in s 73 of the Constitution, were at federation and necessarily remain superior courts70. The High Court, referred to in s 71 as the "Federal Supreme Court", is inherently a superior court. Other State courts as may be invested with federal jurisdiction under s 77(iii) of the Constitution can be created by State Parliaments (subject to State Constitutions) as either superior courts or inferior courts, just as other federal courts can be created by the Commonwealth Parliament under s 71 of the Constitution as either superior courts or inferior courts. A judicial order of any court, whether superior or inferior, is valid and effective if it is made within jurisdiction. Any judicial order, whether of a superior court or an inferior court and whether made within or without jurisdiction, is a judgment, decree, order or sentence from which an appeal may lie to the High Court under s 73 of the Constitution and, where such an appeal lies, a judicial order made without jurisdiction may be set aside by the High 68 (1931) 46 CLR 73; [1931] HCA 34. 69 (1931) 46 CLR 73 at 106. See also R v Unger [1977] 2 NSWLR 990 at 995-996. 70 Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 580-581 [96]-[98]; [2010] HCA 1. Court in determining the appeal71. Any judicial order made in excess of jurisdiction by a federal court, whether the court be created as a superior court or an inferior court, may be set aside by a writ of certiorari issued under s 32 of the Judiciary Act 1903 (Cth) in the exercise of the original jurisdiction of the High Court conferred by s 75 or under s 76 of the Constitution72. There is, however, a critical distinction between a superior court and an inferior court concerning the authority belonging to a judicial order that is made without jurisdiction. A judicial order of an inferior court made without jurisdiction has no legal force as an order of that court. One consequence is that failure to obey the order cannot be a contempt of court73. Another is that the order may be challenged collaterally in a subsequent proceeding in which reliance is sought to be placed on it. Where there is doubt about whether a judicial order of an inferior court is made within jurisdiction, the validity of the order "must always remain an outstanding question" unless and until that question is authoritatively determined by some other court in the exercise of judicial power within its own jurisdiction74. In contrast75: "It is settled by the highest authority that the decision of a superior court, even if in excess of jurisdiction, is at the worst voidable, and is valid unless and until it is set aside". The constitutional robustness of the principle that a judicial order of a superior court made without jurisdiction has legal force as an order of that court unless and until it is set aside is illustrated by Re Macks; Ex parte Saint76. There the principle was applied to judicial orders of the Federal Court of Australia which had been made in fact, but in the exercise of jurisdiction only purportedly conferred by Commonwealth and State statutes held to be invalid as infringing Ch III of the Constitution77. The legal force of those orders, unless and until set 71 Ah Yick v Lehmert (1905) 2 CLR 593 at 601; [1905] HCA 22. 72 Edwards v Santos Ltd (2011) 242 CLR 421; [2011] HCA 8. 73 Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 445 [27], 453 [55], 456-457 [71]; [1999] HCA 19. 74 Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 at 391; [1938] HCA 7. See also Posner v Collector for Inter-State Destitute Persons (Vict) (1946) 74 CLR 461 at 483; [1946] HCA 50. 75 Cameron v Cole (1944) 68 CLR 571 at 590; [1944] HCA 5. 76 (2000) 204 CLR 158; [2000] HCA 62. 77 See Re Wakim; Ex parte McNally (1999) 198 CLR 511; [1999] HCA 27. aside, was held to derive not from the constitutionally impermissible purported conferral of jurisdiction by the Commonwealth Parliament or by State the Parliaments but from Commonwealth Parliament on the Federal Court of the status of a superior court78. the constitutionally permissible conferral by The capacity of a superior court, conformably with Ch III of the Constitution, to make a judicial order that is valid unless and until it is set aside in the purported exercise of a jurisdiction purportedly conferred by a statute itself invalid because it infringes Ch III of the Constitution might at first glance seem anomalous. The justification for that capacity lies ultimately in the unique and essential function constitutionally reposed by Ch III in courts: that of rendering final resolutions of controversies about legal rights and legal obligations. The nature of that function makes some degree of self-reference in its performance inevitable. That is because a question about the validity or invalidity of a statute purporting to confer jurisdiction on a court is itself a question that can be resolved to finality only in the exercise of judicial power. The making of a final judicial order in the purported exercise of a jurisdiction conferred by statute ordinarily involves an explicit or implicit determination by the court making that order that the court has jurisdiction to determine a dispute about a legal right or a legal obligation between the persons or classes of persons who are parties to proceedings in which the jurisdiction is invoked or who are represented by those parties. The making of such a final judicial order therefore ordinarily involves, explicitly or implicitly, a resolution of the question of jurisdiction as between those persons or classes of persons. Extension of the capacity of a superior court to determine a question about its own jurisdiction to the determination of a question about the validity or invalidity of a statute purporting to confer jurisdiction on that court is therefore consistent with the finality which it is the function of the judicial power to provide. When a judicial order of a superior court explicitly or implicitly resolves a question of the validity or invalidity of a statute purporting to confer jurisdiction on that court, the finality of that order and the finality of that resolution are incidents of the nature of that court as a repository of judicial power. The same capacity, with the same justification, has been held to inhere in courts created by Congress under Art III of the United States Constitution, which 78 Re Macks; Ex parte Saint (2000) 204 CLR 158 at 177 [19]-[22], 185-186 [53], 214-215 [148]-[150], 235-237 [214]-[220], 248-249 [256]. See also DMW v CGW (1982) 151 CLR 491 at 507; [1982] HCA 73. are "inferior courts" only in the sense that they are subordinate to the Supreme Court of the United States79. The Supreme Court has held that a judgment of such a court entered without jurisdiction, while open to direct review, cannot be challenged collaterally, "[w]hatever the contention as to jurisdiction may be, whether it is that the boundaries of a valid statute have been transgressed, or that the statute itself is invalid"80. The Supreme Court earlier explained81: "A court does not have the power, by judicial fiat, to extend its jurisdiction over matters beyond the scope of the authority granted to it by its creators. There must be admitted, however, a power to interpret the language of the jurisdictional instrument and its application to an issue before the court … Every court in rendering a judgment, tacitly, if not expressly, determines its jurisdiction over the parties and the subject matter. An erroneous affirmative conclusion as to the jurisdiction does not in any proper sense enlarge the jurisdiction of the court until passed upon by the court of last resort, and even then the jurisdiction becomes enlarged only from the necessity of having a judicial determination of the jurisdiction over the subject matter." (footnotes omitted) The Supreme Court added82: "Courts to determine the rights of parties are an integral part of our system of government. It is just as important that there should be a place to end as that there should be a place to begin litigation. After a party has his day in court, with opportunity to present his evidence and his view of the law, a collateral attack upon the decision as to jurisdiction there rendered merely retries the issue previously determined. There is no reason to expect that the second decision will be more satisfactory than the first." 79 Kempe's Lessee v Kennedy 9 US 173 at 185 (1809). 80 Chicot County Drainage District v Baxter State Bank 308 US 371 at 377 (1940), quoted with approval in Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 at 659 [74]. See also Re Macks; Ex parte Saint (2000) 204 CLR 158 at 237-239 81 Stoll v Gottlieb 305 US 165 at 171-172 (1938). 82 305 US 165 at 172 (1938). The same theme was later taken up by Frankfurter J83. He said84: "Every act of government may be challenged by an appeal to law, as finally pronounced by this Court. Even this Court has the last say only for a time. Being composed of fallible men, it may err. But revision of its errors must be by orderly process of law." "No one, no matter how exalted his public office or how righteous his private motive, can be judge in his own case. That is what courts are for. And no judicial determination than a controversy that calls into question the power of a court to decide. Controversies over 'jurisdiction' are … hardly fit for final determination by the self-interest of a party." is more peculiarly fit for type of controversy The persuasive force of those observations is not undermined by the more recent adoption for a time in some judgments of the Supreme Court of the United States of an approach to prospective overruling rejected in Australia86. Problem The Court of Appeal did not disregard those precepts in the present case: it rather encountered a particular problem in seeking to apply them. The CP Act purported to confer power on the Supreme Court to make a "preventive detention order", being an order "that a specified person be detained in prison for a specified period", on application by the New South Wales Director of Public Prosecutions ("the DPP") if satisfied on reasonable grounds that specified criteria were met87. Proceedings under the CP Act were proceedings between the DPP and the person against whom the preventive detention order was sought, to be commenced by summons in accordance with rules of court88, 83 United States v United Mine Workers of America 330 US 258 (1947). 84 330 US 258 at 308 (1947). 85 330 US 258 at 308-309 (1947). 86 See Hart and Wechsler's The Federal Courts and The Federal System, 6th ed (2009) at 54, footnote 3. 87 Sections 5(1), 8. 88 Section 16. and to be conducted in accordance with the law (including the rules of evidence) relating to civil proceedings89. The CP Act purported to provide that the jurisdiction of the Supreme Court under the CP Act "is exercisable by a single Judge"90, and that "[a]n appeal to the Court of Appeal lies from any determination of the [Supreme] Court to make, or to refuse to make, a preventive detention order"91, such an appeal able to be "on a question of law, a question of fact or a question of mixed law and fact"92. The appeal was "by way of rehearing"93, the Court of Appeal having the powers and duties of Levine J94. The CP Act purported to provide that a preventive detention order was "sufficient authority for the person against whom it is made to be held in custody in accordance with the terms of the order"95. It purported to provide for that person to be "taken to be a prisoner" for the purposes of the Prisons Act 1952 (NSW)96. It purported to add97: "No action lies against any person (including the State) for or in respect of any act or omission done or omitted by the person so long as it was done or omitted in good faith for the purposes of, or in connection with the administration or execution of, this Act." Those provisions of the CP Act, purporting to confer power and jurisdiction on the Supreme Court, purporting to attach statutory consequences to a preventive detention order, and purporting to confer immunity from civil action taken in good faith in the execution of the CP Act, were all held in Kable (No 1) to be invalid98. 89 Section 14. See also ss 15 and 17. 90 Section 24. 91 Section 25(1). 92 Section 25(2). 93 Section 75A(1) and (5) of the Supreme Court Act 1970 (NSW). 94 Section 75A(6) of the Supreme Court Act 1970 (NSW). 95 Section 19. 96 Section 22(1). 97 Section 28. 98 (1996) 189 CLR 51 at 99, 108, 124, 144. The Court of Appeal in the present case recognised that the order made by Levine J on 23 February 1995, if it was a judicial order, nevertheless provided an independent source of lawful authority for the State of New South Wales to have detained Mr Kable in custody in the same way as a sentence imposed by a superior court is sufficient authority for its execution99. The problem was that the Court of Appeal considered itself bound by the reasons for judgment in Kable (No 1) to hold that the order made by Levine J could not have been made in the exercise of judicial power and was therefore not a judicial order100. As put by Allsop P, "[i]t would be in the teeth of the majority's views" in Kable (No 1) to describe the order as a judicial order "or the act of making [it] judicial, in any relevant sense of judicial capacity" 101. As put by Basten JA, it was "not open" to the Court of Appeal "to conclude that the detention order was otherwise than an invalid non-judicial order"102. The Court of Appeal correctly recognised that a purported exercise of non-judicial power by a superior court, like any other purported exercise of a non-judicial power, lacks legal force if made without jurisdiction103. Taking the view that it did of Kable (No 1), the Court of Appeal considered itself bound to hold that to be this case. Resolution There are certainly passages in the reasons for judgment of members of the majority in Kable (No 1) which strongly support the view taken by the Court of Appeal of the holding in that case104. However, what was said in that case must be interpreted in the context of what was done in that case. The appellate jurisdiction of the High Court under s 73 of the Constitution is limited to the hearing and determination of an appeal from a decision made in 99 cf Day v The Queen (1984) 153 CLR 475 at 479; [1984] HCA 3. 100 Kable v New South Wales (2012) 293 ALR 719 at 723-727 [6]-[21], 754-758 101 (2012) 293 ALR 719 at 725 [17]. 102 (2012) 293 ALR 719 at 758 [153]. 103 Love v Attorney-General (NSW) (1990) 169 CLR 307; [1990] HCA 4; Ousley v The Queen (1997) 192 CLR 69; [1997] HCA 49. 104 (1996) 189 CLR 51 at 98, 106-108, 122. the exercise of judicial power105. Kable (No 1) came to the High Court as an appeal under s 73 of the Constitution from an order of the Court of Appeal dismissing an appeal from the order of Levine J. That "bespeaks an exercise of judicial power" by the Court of Appeal106. The High Court in determining the appeal in Kable (No 1) was limited to standing in the position of the Court of Appeal at the time when the Court of Appeal dismissed the appeal to it from the order of Levine J and making such order as the Court of Appeal could and should have made in the exercise of such judicial power as was exercisable by the Court of Appeal in the appeal to it from the order of Levine J107. What the High Court did in Kable (No 1), having allowed the appeal to it and having set aside the order of the Court of Appeal dismissing the appeal from the order of Levine J, was: allow the appeal to the Court of Appeal, set aside the order of Levine J and in its place order that the application by the DPP be dismissed108. The High Court could have set aside the order of Levine J and ordered that the application by the DPP for a preventive detention order be dismissed only in the exercise of judicial power. What is more important for present purposes is that the High Court could have done so only on the basis that the Court of Appeal could and should have made those orders also in the exercise of judicial power. The Court of Appeal has capacity to entertain an appeal by way of rehearing from a person or body exercising administrative power 109. However, there is no basis for considering the nature of the power exercisable by the Court of Appeal on the appeal to it from the order of Levine J to have been different from the nature of the power exercised by Levine J in making that order. Both Levine J and the Court of Appeal were exercising power purportedly conferred 105 Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 299, 312; [1991] HCA 53; Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at 38 [63]; [2002] HCA 27. 106 Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 312. 107 Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 109; Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 312; Keramianakis v Regional Publishers Pty Ltd (2009) 237 CLR 268 at 281-282 [38]-[39]; [2009] HCA 18. 108 (1996) 189 CLR 51 at 144-145. 109 Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue (NSW) (2011) 245 CLR 446 at 453 [16]; [2011] HCA 41. on the Supreme Court by the CP Act. The power as so conferred on the Supreme Court was in each case to be exercised only in proceedings between parties in which incidents of civil process were required to be observed. What the High Court did in Kable (No 1) is therefore consistent with the jurisdiction to make a preventive detention order, purportedly conferred on the Supreme Court by the CP Act, being judicial in character, albeit having features which made the conferral of that jurisdiction incompatible with Ch III of the Constitution. Four particular aspects of the reasoning of Gummow J, one of the majority in Kable (No 1), are of particular significance in that light. The first is his description of the CP Act as performing the "double function" of imposing substantive liabilities and conferring on the Supreme Court jurisdiction with respect to those substantive liabilities110. The second is his description of the submission he accepted as being that "the jurisdiction conferred by the [CP] Act upon the Supreme Court is of such an extraordinary nature as to be incompatible with the exercise by that institution of federal jurisdiction"111. The third is his acknowledgement that "if a State court be invested with … a non-judicial power, no exercise of that power can found an appeal to this Court" because "this Court has no power to make a non-judicial order in place of any non-judicial order which the State court ought to have made at first instance"112. The fourth aspect of the reasoning of Gummow J that is of present significance is his observation that the raising of a question as to the validity of the CP Act in the proceeding before Levine J had the effect of bringing the whole of the matter in issue in that proceeding and in the Court of Appeal within the federal jurisdiction of the Supreme Court conferred under s 77(iii) of the Constitution by s 39(2) of the Judiciary Act113. As Basten JA pointed out in the Court of Appeal in the present case, a single proceeding in a Supreme Court might conceivably involve discrete questions as to the exercise of judicial power and as to the exercise of non-judicial power with the consequence that the former might be encompassed within a matter within federal jurisdiction while the latter could not114. However, that is not the way in which the proceeding before 110 (1996) 189 CLR 51 at 130, citing R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 165-166; [1945] HCA 50. 111 (1996) 189 CLR 51 at 132. 112 (1996) 189 CLR 51 at 142-143. 113 (1996) 189 CLR 51 at 136. 114 (2012) 293 ALR 719 at 757 [151], citing Felton v Mulligan (1971) 124 CLR 367 at 373; [1971] HCA 39. Levine J and the Court of Appeal was analysed in Kable (No 1). It was said that "the jurisdiction exercised by the Supreme Court was wholly federal"115. The better view of Kable (No 1) is that there was a single matter before the Supreme Court constituted by the disputed entitlement of the DPP to a preventive detention order under the CP Act. That matter encompassed but was not confined to whether the Supreme Court had jurisdiction and whether the CP Act was invalid as incompatible with Ch III of the Constitution. The matter extended to whether the preventive detention order applied for by the DPP, if it could be made, should be made. The order made by Levine J, upheld in the Court of Appeal, resolved the whole of that matter in the exercise of judicial power within federal jurisdiction. The order was "an adjudication to determine the rights of parties"116. The order made by Levine J in the purported exercise of jurisdiction invalidly conferred on the Supreme Court by the CP Act was therefore a judicial order. 115 (1996) 189 CLR 51 at 136. 116 Electronic Rentals Pty Ltd v Anderson (1971) 124 CLR 27 at 39; [1971] HCA 13, quoted in Love v Attorney-General (NSW) (1990) 169 CLR 307 at 321-322. |
HIGH COURT OF AUSTRALIA PLAINTIFF M96A/2016 & ANOR PLAINTIFFS AND COMMONWEALTH OF AUSTRALIA & ANOR DEFENDANTS Plaintiff M96A/2016 v Commonwealth of Australia [2017] HCA 16 3 May 2017 ORDER The demurrer be allowed. The proceeding be dismissed. The plaintiffs pay the defendants' costs. Representation C J Horan QC with F I Gordon for the plaintiffs (instructed by Victoria Legal Aid) S P Donaghue QC, Solicitor-General of the Commonwealth with P D Herzfeld for the defendants (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Plaintiff M96A/2016 v Commonwealth of Australia Migration – Unlawful non-citizens – Power to detain – Where plaintiffs unauthorised maritime arrivals – Where plaintiffs brought to Australia from regional processing country for temporary purpose of medical treatment – Where plaintiffs detained under ss 189 and 196 of Migration Act 1958 (Cth) until removal from Australia – Whether ss 189 and 196 validly authorise detention while in Australia for temporary purpose – Whether plaintiffs detained for lawful purpose – Whether duration of detention capable of objective determination. Words and phrases – "detention of non-citizen", "duration of detention", "opinion, satisfaction or belief of officer", "purpose of detention", "temporary purpose", "transitory person", "unauthorised maritime arrival", "unlawful non-citizen". Constitution, s 51(xix). Migration Act 1958 (Cth), ss 189, 196, 198, 198AD, 198AH, 198B. KIEFEL CJ, BELL, KEANE, NETTLE, GORDON AND EDELMAN JJ. The issue on this demurrer is the validity of ss 189 and 196 of the Migration Act 1958 (Cth) ("the Act") to the extent that those provisions purport to authorise the detention of a non-citizen who is brought to Australia for a temporary purpose from a place such as a regional processing country. Those sections are part of a suite of provisions in the Act, including provisions inserted in 20021 and 20122, which is relied upon by the defendants as a source of authority to detain the plaintiffs for the period that they are temporarily in Australia for medical treatment, having been brought to Australia from the Republic of Nauru. The plaintiffs' case is confined in a number of respects. They do not challenge the lawfulness of their detention when they arrived in Australia at Christmas Island. They do not challenge the lawfulness of their removal from Australia to Nauru or the regional processing arrangements3. They do not challenge the lawfulness of the power in the Act by which they were brought back to Australia for the temporary purpose of medical treatment. Nor do they challenge the provisions of the Act which empower officials to remove them from Australia when they no longer need to be in Australia for that temporary purpose. The plaintiffs' challenge is limited to their claim that there is no basis for their detention whilst they are temporarily in Australia. They say that if a non-citizen is brought to Australia for a temporary purpose under the Act, then the non-citizen cannot be detained in Australia because the purported power to do so under ss 189 and 196 of the Act is an invalid exercise by the Executive of the judicial power of the Commonwealth. That submission must be rejected. The pleaded claim The pleaded claim of the plaintiffs is as follows. The plaintiffs, a mother and her daughter, are Iranian citizens. On 7 August 2013, they arrived in Australia at Christmas Island. In February 2014, the plaintiffs were taken to Nauru, where they were detained with the other members of their family. They 1 Migration Legislation Amendment (Transitional Movement) Act 2002 (Cth). 2 Migration Legislation Amendment (Regional Processing and Other Measures) Act 2012 (Cth). 3 Plaintiff S156/2013 v Minister for Immigration and Border Protection (2014) 254 CLR 28; [2014] HCA 22; Plaintiff M68/2015 v Minister for Immigration and Border Protection (2016) 257 CLR 42; [2016] HCA 1. Bell Nettle Gordon Edelman claimed to be owed protection obligations under the Convention relating to the Status of Refugees4. On 1 November 2014, the plaintiffs were brought to Australia from Nauru. Both were brought to Australia for the purposes of medical treatment. The second plaintiff was also brought to Australia to accompany her daughter. They were not told that they would be held in a detention facility in Australia, or for how long they would remain in Australia. The plaintiffs were initially detained in Darwin, and then transferred to the Melbourne Immigration Transit Accommodation in Victoria on 10 November 2014. On 16 December 2016, the plaintiffs were released from detention at the Melbourne Immigration Transit Accommodation, after the Minister made a residence determination, under s 197AB of the Act, permitting them to reside at a specified place subject to conditions. A residence determination can be made in relation to a person who is detained, or required or permitted to be detained, under s 189 of the Act. No submissions were made about the effect of a residence determination generally, or its effect on the detention of the plaintiffs. The plaintiffs accepted in oral argument that they did not challenge the residence determination other than to challenge its precondition, being the validity of s 189 of the Act. It is unnecessary5 on this demurrer to descend into the particulars containing the evidence of the medical conditions, or the medical treatment, of each plaintiff whilst they are in Australia. It suffices to consider the demurrer on the pleaded basis that the plaintiffs (i) have needed to be in Australia since they arrived for the purposes for which they were brought; (ii) have not had any right to make an application for a visa while they have been in Australia; and (iii) have not, at any time, been the subject of any ministerial consideration as to whether they should be permitted to make a valid application for a visa. The plaintiffs challenged their detention in Australia on two grounds. First, they submitted that ss 189 and 196 of the Act cannot support their detention whilst in Australia because detention pursuant to those sections is not necessary, 4 Convention relating to the Status of Refugees (1951) as amended by the Protocol relating to the Status of Refugees (1967). 5 South Australia v The Commonwealth (1962) 108 CLR 130 at 142; [1962] HCA 10; Levy v Victoria (1997) 189 CLR 579 at 597, 649; [1997] HCA 31. Bell Nettle Gordon Edelman nor reasonably capable of being seen as necessary, for any legitimate non- punitive purpose for which the Executive may be validly authorised to detain a non-citizen. Secondly, they submitted that the duration of their detention in Australia has not been capable of objective determination by a court at any material time. It is necessary to set out the scheme of the Act in relation to persons in the position of the plaintiffs before addressing each of these submissions. The operation of the Act upon the plaintiffs It is unnecessary in this case to conduct an exhaustive examination of the provisions of the Act. The operation of many of the provisions of the Act has been considered in other cases in this Court6. The provisions of the Act which are of particular relevance to this case are those which are concerned with the plaintiffs as "transitory persons". When the plaintiffs arrived at Christmas Island, they were classified as "unauthorised maritime arrivals", as defined in s 5AA of the Act. This was because they entered Australia by sea at an "excised offshore place" (within the meaning in s 5(1), which includes Christmas Island), they were "unlawful non- citizens" (within the meaning in s 14, read with s 13), and they were not "excluded maritime arrivals" (within the meaning in s 5AA(3)). Divisions 7 and 8 of Pt 2 of the Act comprise, respectively, ss 188 to 197AG and ss 197C to 199. It is the provisions of those two Divisions which have governed the manner of treatment of the plaintiffs. The two Divisions are respectively entitled "Detention of unlawful non-citizens" and "Removal of unlawful non-citizens etc". When the plaintiffs arrived at Christmas Island, they were detained under s 189(3) of the Act. That sub-section provides, subject to exceptions which are not presently relevant, that an officer (as defined) must detain a person who is in an excised offshore place if the officer knows or reasonably suspects that the person is an unlawful non-citizen. Section 198AD(2) of the Act then provides that an officer must, as soon as reasonably practicable, take an unauthorised 6 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319; [2010] HCA 41; Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219; [2014] HCA 34. Bell Nettle Gordon Edelman maritime arrival to whom the section applies from Australia to a regional processing country. Since the plaintiffs were classified as "unauthorised maritime arrivals" they were taken to Nauru, which is a regional processing country. Section 198B of the Act provides that an officer may, for a temporary purpose, bring a transitory person to Australia from a country or place outside Australia. The plaintiffs fell within the definition of "transitory person" in s 5(1) because they were people who had been taken to a regional processing country under s 198AD. Examples of the "exceptional situations" where a temporary purpose might lead to a transitory person being brought to Australia were given in the Revised Explanatory Memorandum to the legislation which introduced s 198B of the Act7. Those examples were8: medical treatment for a condition which cannot be adequately treated in the place where the person has been taken; trials at which the person is to provide evidence in the prosecution of people smugglers; or transit through Australia to a country of origin or to a third country. In this case the temporary purpose was medical treatment. The power to bring a transitory person to Australia for a temporary purpose under s 198B is an exception to the prohibition upon a non-citizen travelling to Australia "without a visa that is in effect": s 42(1), (2A)(ca). Unless the Minister determined otherwise, if the plaintiffs made an application for a visa while in Australia, that application would not be valid: s 46B(1)-(2). Division 8 of Pt 2 of the Act creates a regime for removal of persons from Australia. Two of the central provisions in this regime which are relevant to transitory persons are ss 198AD and 198. Section 198AD(2) provides that an officer "must, as soon as reasonably practicable, take an unauthorised maritime arrival to whom this section applies from Australia to a regional processing country". Section 198(1) provides that an officer must remove an unlawful non- citizen as soon as reasonably practicable when that person "asks the Minister, in writing, to be so removed". These two provisions do not have concurrent operation because s 198AD applies to unauthorised maritime arrivals, and s 198(11) provides that s 198 does not apply to an unauthorised maritime arrival 7 Migration Legislation Amendment (Transitional Movement) Act 2002 (Cth). 8 Australia, Senate, Migration Legislation Amendment (Transitional Movement) Bill 2002, Revised Explanatory Memorandum at 2. Bell Nettle Gordon Edelman to whom s 198AD applies. In other words, the provisions of s 198 will only apply where s 198AD does not apply. Section 198AD of the Act applies, with various qualifications, to unauthorised maritime arrivals who are detained under s 189. Section 198AH lists requirements that must be satisfied before s 198AD will apply to a transitory person. The requirements include that the transitory person (i) is an unauthorised maritime arrival who has been brought to Australia from a regional processing country under s 198B for a temporary purpose (s 198AH(1A)(a)); (ii) is detained under s 189 (s 198AH(1A)(b)); and (iii) no longer needs to be in Australia for the temporary purpose the purpose has been achieved) (s 198AH(1A)(c)). (whether or not Section 198 will apply to a person who is an unlawful non-citizen within s 198 but not to an "unauthorised maritime arrival" within s 198AD. The category of unlawful non-citizens is broader than unauthorised maritime arrivals because, by ss 13 and 14 of the Act, an unlawful non-citizen is any non-citizen in the migration zone who does not hold a visa. However, as the plaintiffs were unauthorised maritime arrivals, the provisions of s 198 only apply to them where s 198AD does not apply. One circumstance where s 198AD will not apply is where a transitory person still needs to be in Australia for a temporary purpose. While that need to be in Australia is present, as it is for the plaintiffs on their pleaded case, s 198AD will not apply and the operation of s 198 is not excluded by s 198(11). Hence, while a person needs to be in Australia for a temporary purpose, the person can nevertheless request to be removed from Australia under s 198(1) of the Act. Contrary to the plaintiffs' submissions, there is nothing illogical about a construction which permits a person who is taken to Australia for a temporary purpose such as consensual medical treatment to request removal from Australia. As to the scope of s 198(1), and in circumstances where it does not affect the ultimate conclusion in this case, it is sufficient to proceed on the basis of the defendants' submission that s 198(1), properly construed by reference to its consensual character, would not permit removal of an unlawful non-citizen to a place contrary to his or her wishes. Apart from where a transitory person needs to be in Australia, there are other circumstances in which s 198AD will not apply. In broad terms, these include where there is no regional processing country (s 198AF); where a regional processing country has advised an officer in writing that the country will not accept the unauthorised maritime arrival (s 198AG); or where the Minister determines that s 198AD does not apply (s 198AE). Bell Nettle Gordon Edelman In every circumstance where s 198AD does not apply and where an unlawful non-citizen is brought to Australia for a temporary purpose, s 198(1A) imposes an obligation upon an officer to "remove the person as soon as reasonably practicable after the person no longer needs to be in Australia for [the temporary] purpose (whether or not the purpose has been achieved)". The combination of ss 198(1A) and 198AD(2) means that any transitory person who is brought to Australia for a temporary purpose must be removed as soon as reasonably practicable after the person no longer needs to be in Australia for that purpose (whether or not the purpose has been achieved). As we explain below, the Act has the effect that the person will be kept in immigration detention whilst in Australia (s 189). That immigration detention must continue until the time of the removal commencement of acts involving the process of removal from Australia to a regional processing country under s 198AD(3) (s 196(1)(aa)). (s 196(1)(a)), or until from Australia under s 198(1A) The validity of ss 189 and 196 of the Act in relation to transitory persons Section 189(1) creates an obligation upon an officer to detain a person who is in the migration zone if the officer knows or reasonably suspects that the person is an unlawful non-citizen. Section 196(1) provides that an unlawful non- citizen must be kept in immigration detention until the happening of one of four events: (i) removal from Australia under s 198 or s 199; (ii) an officer beginning the s 198AD(3) process for removal to a regional processing country; (iii) deportation under s 200; or (iv) the grant of a visa. In the case of a transitory person, therefore, the detention must continue until: (i) removal under s 198 (the first event); (ii) the beginning of the process of removal to a regional processing country under s 198AD (the second event); or (iii) the making by the Minister of a determination under s 46B(2), allowing an application for a visa, which is then made and granted. In the case of each of the first or second event, under ss 198 and 198AD, it is a condition that removal must occur as soon as reasonably practicable after the person no longer needs to be in Australia for the temporary purpose. Bell Nettle Gordon Edelman As has been reiterated on a number of occasions in this Court9, the majority in Chu Kheng Lim v Minister for Immigration10 said that laws with respect to aliens within s 51(xix) of the Constitution, which authorise or require the Executive to detain non-citizens in custody, will not contravene Ch III of the Constitution if, and only if, "the detention which they require and authorize is limited to what is reasonably capable of being seen as necessary for the purposes of deportation or necessary to enable an application for an entry permit to be made and considered"11. This requires two matters to be considered. First, it requires the purpose of the detention to be identified12. Secondly, it requires consideration of the time necessarily involved in the particular case to deport the non-citizen or to receive, investigate, consider, and determine an application for permission to remain in Australia13. The plaintiffs submitted that ss 189 and 196 of the Act were invalid for two reasons, corresponding to limits upon each of these considerations. The purpose of detention of transitory persons brought to Australia under s 198B As the plaintiffs accepted in oral submissions, the purpose of immigration detention is assessed objectively by reference to all of the circumstances. In Plaintiff S4/2014 v Minister for Immigration and Border Protection14, this Court said that "detention under and for the purposes of the Act is limited by the purposes for which the detention is being effected". The Court added that the 9 Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1 at 11 [14], 13-14 [21]; [2004] HCA 49; Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 369 [138]; [2013] HCA 53; Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 231 [26]. 10 (1992) 176 CLR 1; [1992] HCA 64. 11 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 33. 12 Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 231 [26]. 13 Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 369-370 [139]. 14 (2014) 253 CLR 219 at 231 [26]. Bell Nettle Gordon Edelman only lawful purposes of detention of non-citizens are: (i) removal from Australia; (ii) receiving, investigating, and determining an application for a visa permitting the alien to enter and remain in Australia; or (iii) determining whether to permit a valid application for a visa. It is sufficient to resolve this case on this basis, and unnecessary to address two further submissions made by the defendants. One of those submissions was that the list of permissible purposes of executive detention of non-citizens within Ch III of the Constitution is not closed and might extend beyond the three purposes identified above. The other was that the relevant distinction to be employed in order to determine whether a law authorising or requiring the Executive to detain non-citizens in custody is consistent with Ch III of the Constitution is a distinction between punitive and non-punitive purposes or, perhaps more accurately, between the purposes of punishment and other purposes. The plaintiffs submitted that their detention in Australia was not for any of the three purposes identified above, each of which is connected with the executive power to permit non-citizens to enter and remain in Australia. They also submitted, correctly, that they have no right to make an application for a visa whilst they are in Australia. Hence, they submitted, they cannot be detained for purposes (ii) or (iii). They also submitted that while they need to be in Australia for the temporary purpose, their detention cannot be said to be for the purpose of removal from Australia (purpose (i)). Instead, they submitted, the purpose of their detention was the temporary purpose for which they were brought to Australia. The plaintiffs' submission that their detention is for an impermissible purpose must be rejected. The temporary purpose for which a transitory person needs to be in Australia is not the same as the purpose for which that person is detained. It is unnecessary to determine whether the temporary purpose under the Act is a subjective purpose of the officers or whether it is a purpose which is objectively ascertained from the circumstances. In either case, that temporary purpose is different from the purpose of detention. One circumstance which can illustrate the difference between the purpose of bringing a transitory person to Australia and the purpose of detention is where a transitory person is brought to Australia for medical treatment. The purpose of detention is not for medical treatment. Detention might even be antithetical to the medical treatment for which the person is brought to Australia. Another way to highlight the difference between the temporary purpose of bringing the transitory person to Australia and the purpose of detention is to Bell Nettle Gordon Edelman recognise that the duration of the detention is not coterminous with the fulfilment of the purpose of bringing the person to Australia. A transitory person might be brought to Australia for medical treatment with equipment that is not available in the regional processing country. If that equipment later becomes available in the regional processing country then the person no longer needs to be in Australia for the temporary purpose. Section 198AH(1A)(c) then enlivens the operation of s 198AD. If no exception applies then s 198AD(2) requires an officer to take the person from Australia to the regional processing country as soon as reasonably practicable. The effect of s 196(1)(aa) is that the detention will come to an end when that process of removal begins under s 198AD(3) even if the purpose for which the person came to Australia (here, medical treatment) has not been fulfilled. Another instance where fulfilment of the purpose of coming to Australia might not coincide with the duration of the detention is if the person makes a request of the Minister, under s 198(1), to be removed from Australia. There is then a duty for that person to be removed irrespective of whether the purpose for which the person came to Australia has been fulfilled. The purposes which the Act contemplates for the temporary detention in Australia of a transitory person are, therefore, different from the temporary purposes for which a person can be brought to Australia. The purposes of the temporary detention are the same purposes, and governed by some of the same provisions (ss 189 and 196), as all other instances involving unlawful non- citizens under s 189. In this case, where the plaintiffs have not made an application for a visa and cannot do so while they are in Australia, the purpose for which the plaintiffs are detained during their medical treatment is the purpose of subsequent removal from Australia. That removal can occur in a number of circumstances, including as soon as reasonably practicable after they no longer need to be in Australia for the medical treatment (s 198(1A) or s 198AD(2)), or as soon as reasonably practicable after asking the Minister, in writing, to be removed (s 198(1)). Contrary to the submission of the plaintiffs, there is no contradiction between, on the one hand, a purpose of removal from Australia when preconditions are met (such as the desinence of a need to be in Australia) and, on the other hand, an immediate, but limited, privilege to remain in Australia. A comparison might be made with the detention in Australia of an unauthorised maritime arrival, who is precluded from applying for a visa by s 46A(1) of the Act, but whose detention is permitted subject to steps being taken to determine whether the person should nevertheless be permitted to apply for a visa by the Bell Nettle Gordon Edelman Minister exercising a power under s 46A(2)15. The purpose of potential removal is nevertheless one of the purposes of detention in this instance. While the Minister is considering the exercise of that power, the detention is for the purposes of determining whether to permit a valid application for a visa and, after the decision is made, either for removal or for the processing of the permitted application16. The duration of detention of transitory persons The second basis upon which the plaintiffs submitted that ss 189 and 196 of the Act were invalid exercises by the Executive of the judicial power of the Commonwealth was that the sections permitted the detention of transitory persons for a time which was incapable of being objectively determined. The plaintiffs relied upon various passages from decisions in this Court in support of their submission17, including Plaintiff S4/2014 v Minister for Immigration and Border Protection18, where this Court said: "The duration of any form of detention, and thus its lawfulness, must be capable of being determined at any time and from time to time. Otherwise, the lawfulness of the detention could not be determined and enforced19 by the courts, and, ultimately, by this Court." The plaintiffs submitted that the period of detention of transitory persons brought to Australia under s 198B is governed only by the question whether and when the person "no longer needs to be in Australia" for the relevant purpose and that this invalidated the detention. This was said to be for two reasons: first, 15 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 338 [25]. 16 Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 232 [27]. 17 Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 232 [29]; North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 612 [99]; [2015] HCA 41; Plaintiff M68/2015 v Minister for Immigration and Border Protection (2016) 257 CLR 42 at 111 [184]. 18 (2014) 253 CLR 219 at 232 [29]. 19 Crowley's Case (1818) 2 Swans 1 at 61 [36 ER 514 at 531]. Bell Nettle Gordon Edelman because the period of time for detention is not readily capable of objective determination by a court at any time, and from time to time; and secondly, because the temporal limits are not connected with the limited permissible purposes of administrative detention such that the power to detain is not unconstrained. The first of these two alleged reasons for invalidity misunderstands the requirement that the duration of any form of detention must be capable of being determined at any time, and from time to time. The requirement, reinforced by the reference in Plaintiff S4/2014 v Minister for Immigration and Border Protection to the remarks of the Lord Chancellor in Crowley's Case about the need for the writ of habeas corpus ad subjiciendum, is that there must be objectively determinable criteria for detention. In other words, Parliament cannot avoid judicial scrutiny of the legality of detention by criteria which are too vague to be capable of objective determination. This would include an attempt to make the length of detention at any time dependent upon the unconstrained, and unascertainable, opinion of the Executive20. The duration of the detention of transitory persons who are detained under s 189 of the Act is able to be objectively determined at any time, and from time to time. At any time it can be concluded that detention in Australia will conclude if any of the various preconditions explained above are met. One precondition is that detention in Australia will come to an end under s 198(1) as soon as reasonably practicable after the transitory person asks the Minister, in writing, to be removed from Australia. Another precondition is that the person no longer needs to be in Australia for the temporary purpose. This precondition arises from the operation of either s 198(1A), or s 198AD(2) read with s 198AH(1A)(c). As we have explained, it is unnecessary to determine whether the criterion by which this precondition is to be assessed is whether the need still objectively exists or whether an officer has formed a genuine opinion that the person no longer needs to be in Australia for the temporary purpose. The plaintiffs did not submit that there would be any difference to validity based upon which construction was correct. The second reason why the plaintiffs alleged that the duration of detention led to invalidity was also based upon a misconception. The plaintiffs' submission 20 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 258; [1951] HCA 5. Bell Nettle Gordon Edelman that the temporal limits of detention are not connected with the limited permissible purposes of administrative detention assumed that the purpose of administrative detention in Australia was for medical treatment. Alternatively, the submission assumed that if the purpose of administrative detention was for removal it would be unlawful for the duration of detention to be predicated not on the effectuation of removal itself, but on an apparently unrelated factum: the need to be in Australia for the medical treatment. As we have explained above, the detention was for the purpose of removal from Australia when preconditions are met, including where there is no longer a need for the transitory person to be in Australia for the temporary purpose. The detention does not become an exercise of judicial power merely because the precondition, and hence the period of detention, is determined by matters beyond the control of the Executive. This will frequently be the case where, for instance, questions arise as to whether it is reasonably practicable to remove a person from Australia21. Orders The demurrer should be allowed and the proceeding must therefore be dismissed. The plaintiffs should pay the costs of the defendants. 21 Al-Kateb v Godwin (2004) 219 CLR 562 at 637-640 [221]-[232]; [2004] HCA 37; Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 367 [130], 384 [204]-[205]. I agree that the demurrer must be allowed and, accordingly, that the proceeding must be dismissed with costs. Section 198B of the Act, the validity of which is not in issue, limits the power to bring a transitory person to Australia to doing so for a purpose which can be identified and characterised at the time of exercise of the power as a temporary purpose. The purpose so identified and so characterised at the time of the exercise of the power to bring a transitory person to Australia thereafter governs the period within which the transitory person is able to remain in Australia before an officer becomes obliged to perform the duty imposed by s 198(1A), or in the case of a transitory person covered by s 198AH(1A) by s 198AD(2), to remove the person as soon as reasonably practicable. Section 198(1A), and s 198AD(2) where it applies by operation of s 198AH(1), are unequivocal as to the circumstances in which that duty to remove is triggered. The duty is triggered once the transitory person "no longer needs to be in Australia for that purpose (whether or not the purpose has been achieved)". The answer to the question which arises under s 198(1A), and under s 198AH(1A) where it applies, of whether the transitory person any longer needs to be in Australia for the temporary purpose for which the person was brought to Australia, does not depend, expressly or by implication, on the opinion, satisfaction or belief of any officer. I reject the argument of the defendants that answering of the question is committed by the terms of ss 198(1A) and 198AH(1A) to the evaluative judgment of an officer, subject perhaps to the "general principle of law … that a discretion allowed by statute to the holder of an office is intended to be exercised according to the rules of reason and justice, not according to private opinion; according to law, and not humour, and within those limits within which an honest man, competent to discharge the duties of his office, ought to confine himself"22. The question of whether the duty to remove is triggered is in that respect separate from, and anterior to, the question of what is required of an officer to remove the person from Australia as soon as reasonably practicable in the performance of the duty once triggered23. Established drafting techniques are available to be used to make the holding of a particular state of mind by the repository a precondition to the 22 R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at 189; [1965] HCA 27, citing Sharp v Wakefield [1891] AC 173 at 179. 23 See M38/2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 131 FCR 146 at 166 [67]. performance of a duty or to the exercise of a power24. Techniques of that kind are used throughout the Act. They are not universally observed. But their availability cannot be assumed to have been overlooked by the parliamentary drafters, especially those who framed s 198AH(1A) for insertion into the Act in the aftermath of Plaintiff M70/2011 v Minister for Immigration and Citizenship25. Those available techniques have been eschewed in s 198(1A) and in s 198AH(1A) in favour of casting the precondition to the performance of the duty to remove in manifestly objective terms. The objectivity apparent in the statutory expression in s 198(1A) of the criterion for the triggering of the duty imposed by s 198(1A), and in s 198AH(1A) for the triggering of the duty imposed by s 198AD(2), is reinforced by the manner in which ss 198 and 198AD are expressed to interrelate. Section 198AH(1) relevantly states that s 198AD "applies" to a transitory person if the person is "covered" by s 198AH(1A). Section 198(11) states that s 198, including s 198(1A), "does not apply" to a person to whom s 198AD "applies". A person is either covered by s 198AH(1A) or is not. Section 198AD either applies to a person or does not. Section 198(1A) applies to a person if s 198AD(2) does not. Neither of the duties imposed by s 198(1A) or by s 198AD(2) is imposed on a particular officer. Whether one or other of those duties applies to a transitory person who has been brought to Australia under s 198B must be capable of discernment independently of the state of mind of a particular officer. Whether a transitory person who has been brought to Australia under s 198B for a temporary purpose any longer needs to be in Australia for that temporary purpose, so as to trigger the obligation imposed on an officer by s 198(1A) or by s 198AD(2) to remove the person from Australia, is thus an objective question. That is to say, the question is one which in the event of dispute falls to be answered by a court. When ss 198(1A) and 198AH(1A) are so construed, the duty to detain imposed on an officer by ss 189 and 196(1)(a) and (aa) in their application to a transitory person brought to Australia under s 198B can readily be seen to meet both of the two conditions of validity on the absence of which the plaintiffs rely to found their argument that their detention is punitive. 24 Cf Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1175 [54]; 198 ALR 59 at 71; [2003] HCA 30, citing Bankstown Municipal Council v Fripp (1919) 26 CLR 385 at 403; [1919] HCA 41. 25 (2011) 244 CLR 144; [2011] HCA 32. As to the first, the duration of the detention is limited to that reasonably necessary to effectuate a purpose which is identified in the Act. The purpose is removal under s 198(1A) or s 198AD(2) once the temporary purpose identified at the time of the person being brought to Australia under s 198B no longer exists. As to the second, the duration of the detention is capable of objective determination by a court at any time and from time to time. From the moment of the commencement of the detention under s 189, duration of the detention is made by s 196(1)(a) and (aa) to depend on performance of the duty to remove imposed by s 198(1A) or by s 198AD(2). Whether or not the duty to remove has been triggered from time to time turns under s 198(1A) or s 198AH(1A) on the objective question of whether the temporary purpose identified at the time of the person being brought to Australia under s 198B any longer exists. That is the question which, in the event of dispute, arises for the determination of a court. Whether the second condition of validity would have been met had ss 198(1A) and 198AH(1A) made the duty of an officer to remove dependent on the opinion, satisfaction or belief of that or some other officer is an issue which it is unnecessary to determine. The argument of the plaintiffs did not engage with the argument of the defendants on that issue. On what I consider to be the proper construction of ss 198(1A) and 198AH(1A), the issue does not arise. |
HIGH COURT OF AUSTRALIA MINISTER FOR IMMIGRATION AND BORDER PROTECTION APPELLANT AND SZVFW & ORS RESPONDENTS Minister for Immigration and Border Protection v SZVFW [2018] HCA 30 8 August 2018 ORDER Appeal allowed. The order made in paragraph 1 of the order of the Full Court of the Federal Court of Australia dated 2 March 2017 be set aside and, in its place, order that: the appeal be allowed; and the order of the Federal Circuit Court of Australia dated 19 August 2016 be set aside and, in its place, order that the application be dismissed. The appellant pay the first and second respondents' costs of this appeal. On appeal from the Federal Court of Australia Representation N J Williams SC with P D Herzfeld and M T Sherman for the appellant (instructed by Sparke Helmore Lawyers) K A Stern SC with L Andelman for the first and second respondents (instructed by Kinslor Prince Lawyers) Submitting appearance for the third respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration and Border Protection v SZVFW Migration – Refugee Review Tribunal – Review of decisions – Where first and second respondents sought review by Refugee Review Tribunal ("Tribunal") of decision of delegate of appellant to refuse applications for protection visas – Where respondents failed to respond to invitations from Tribunal to appear or provide submissions – Where s 426A(1) of Migration Act 1958 (Cth) empowered Tribunal to proceed to make decision on review without taking further action to allow or enable respondents to appear – Where Tribunal made decision to proceed under s 426A(1) – Whether Tribunal's decision to proceed in absence of respondents was legally unreasonable. Appeal – Rehearing – Where primary judge held decision of Tribunal was legally unreasonable – Where Full Court of Federal Court dismissed appeal from primary judge's decision, holding that appellant was required to demonstrate error in reasoning of primary judge akin to that required in appeals from discretionary judgments – Whether principles stated in House v The King (1936) 55 CLR 499 apply to appeal from decision on judicial review that administrative decision is legally unreasonable. Words and phrases – "appeal by way of rehearing", "appealable error", "discretionary", "discretionary decision", "discretionary power", "evaluative approach", "evaluative judgment", "evaluative process", "legally unreasonable", "standard of appellate review", "unreasonable". Migration Act 1958 (Cth), ss 425, 425A, 426A, 441A, 441C, 476. KIEFEL CJ. The facts of this case and the statutory provisions relevant to it are set out in the reasons of Nettle and Gordon JJ. I agree with their Honours that this appeal from the Full Court of the Federal Court of Australia should be allowed and with the other orders that their Honours propose. The first and second respondents' ("the respondents") applications for Protection (Class XA) visas were rejected by the Minister's delegate. The respondents sought review of that decision by the Refugee Review Tribunal, but they did not respond to invitations from the Tribunal to appear before it, in order to give evidence and present arguments. Where an applicant has been invited to appear before the Tribunal for those purposes as s 425 of the Migration Act 1958 (Cth) ("the Migration Act") requires, in the manner for which s 425A provides, and fails to so appear, s 426A(1) permits the Tribunal to proceed to make a decision on the review without taking any further action to allow or to enable the applicant for review to appear before it. The Tribunal is not bound to take that course. Section 426A(2) provides that the Tribunal is not prevented by the section from rescheduling the hearing or from delaying its decision on the review in order to enable the applicant for review to appear before it. The statutory power given by s 426A is in the nature of a discretion, one which involves a decision by the Tribunal as to the course which it will take. Like any statutory discretionary power, it is subject to the presumption of the law that the legislature intends the power to be exercised reasonably1. Section 426A is to be construed accordingly. In its reasons the Tribunal recorded that the respondents had been invited to respond on two occasions, on the first to provide submissions or other written material, and on the second to appear before it for the purposes mentioned above. On the first occasion they neither responded nor sought to make contact with the Tribunal. It observed that the respondents had likewise not attended an interview before the delegate's decision was made, although they had been invited to do so. The second letter from the Tribunal, inviting the respondents to appear, contained advice that if they did not attend the scheduled hearing the Tribunal might proceed to make its decision without further reference to them. It provoked no response. Expressing itself satisfied that the invitation had been sent to the respondents' last known address, the Tribunal decided to make its decision on the review. That decision was adverse to the respondents. 1 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 362 [63]; [2013] HCA 18. The primary judge in the Federal Circuit Court (Judge Barnes) concluded that the Tribunal's decision was legally unreasonable2. Her Honour reasoned that the Tribunal could not have been satisfied that the letter inviting the respondents to attend the hearing had been received by them; the attendance of the respondents at the hearing was important to them; and the Tribunal could have attempted some further communication with them without difficulty. In these circumstances the Tribunal should have taken some other action before proceeding to make its decision on the review. The first aspect of the primary judge's reasoning directs attention to the preconditions to the exercise of the power given by s 426A rather than to the decision which results and whether it may be said to be unreasonable. The reasons overlook that it is the intention of the scheme of the Migration Act that the Tribunal be permitted to consider the exercise of its powers under s 426A if those preconditions are met. In this case those preconditions were met. The invitation required by s 425 was given by one of the methods specified in s 441A, as s 425A requires. Moreover, s 441C has the effect that a person is deemed to have received a document given by one of the methods so specified. There was nothing before the Tribunal to suggest to the contrary of that state of affairs. It was entitled to proceed to consider the exercise of its powers under s 426A. It is difficult to see how it might be concluded that the decision that the Tribunal then made – not to make further contact with the respondents and adjourn its hearing for that purpose – was unreasonable. To the contrary, it was perfectly explicable given the history of the respondents' non-responsiveness. It is to be inferred that a conclusion that it was unreasonable must involve some misapprehension of what legal standard of unreasonableness. is comprehended by the In the joint judgment in Minister for Immigration and Citizenship v Li3 it was explained that a decision made in the exercise of a statutory power is unreasonable in a legal sense when it lacks an evident and intelligible justification. That may be so where a decision is one which no reasonable person could have arrived at4, although an inference of unreasonableness is not to be 2 SZVFW v Minister for Immigration and Border Protection (2016) 311 FLR 459 at (2013) 249 CLR 332 at 367 [76]. 4 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230. drawn only where a decision appears to be irrational5. None of these descriptions could be applied to the Tribunal's decision in the present case. Statements such as that made in the Wednesbury case6, that a decision may be regarded as unreasonable if no reasonable person could have made it, may not provide the means by which a conclusion of unreasonableness may be arrived at in every case. But it serves to highlight the fact that the test for unreasonableness is necessarily stringent7. And that is because the courts will not lightly interfere with the exercise of a statutory power involving an area of discretion. The question is where that area lies. In Minister for Immigration and Citizenship v Li8 reference was made to what had been said in Klein v Domus Pty Ltd9 regarding the need to look to the purpose of the statute conferring the discretionary power. Where it appears that the dominating, actuating reason for the decision is outside the scope of that purpose, the discretion has not been exercised lawfully. But this is not to deny that within the sphere of the statutory purpose there is scope for a decision-maker to give effect to the power according to his or her view of the justice of a case, without interference by the courts. The Migration Act10 requires the Tribunal, in carrying out its functions, to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick. In reviewing a decision the Tribunal is required to act according to substantial justice and the merits of the case11. Clearly enough s 426A is directed to the aims of efficiency contained within these objectives, although it is not to be exercised in a way which would be contrary to the others. Consistently with what has earlier been discussed, it is to be understood that the Tribunal has a degree of latitude in determining what is fair and just in a given case. 5 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 364 [68]. 6 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230. 7 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 376 [108]. (2013) 249 CLR 332 at 363-364 [67], 376 [109]. (1963) 109 CLR 467 at 473; [1963] HCA 54. 10 Migration Act 1958 (Cth), s 420(1). 11 Migration Act 1958 (Cth), s 420(2)(b). In Minister for Immigration and Citizenship v Li, it was accepted that the Migration Review Tribunal is to act in an efficient manner12. This did not explain why that Tribunal decided abruptly to conclude the review when the applicant had requested time to allow the outcome of a relevant assessment, one which might favour the review of her application, to be known. It was not obvious how the Tribunal had reached its decision not to exercise its discretionary power to adjourn the hearing, but it was to be inferred that some error in reasoning had led to what was plainly an unjustifiable and unreasonable decision. In this case the basis for the Tribunal's decision is apparent. The decision is plainly justified by reference to it. The crux of the primary judge's reasoning concerning the exercise of the power given by s 426A appears to be that the Tribunal should have exercised it in the respondents' favour because, in a practical sense, it could have done so. This analysis fails to identify an unreasonable decision in the sense explained above. The requirement to be implied in a provision such as s 426A, that a decision-maker act reasonably, does not require the decision to be one which is advantageous to the person who is the subject of it. The primary judge's reasoning implies an obligation on the part of the Tribunal which would apply in most, if not all, cases where there had been no response to the invitation to attend. No such obligation is to be found as expressed or to be implied in the statute. The fact that the Tribunal could contact the respondents is but a factor which it could take into account in deciding whether to proceed to make its decision on the evidence before it. On the Minister's appeal to the Full Court of the Federal Court (Griffiths, Kerr and Farrell JJ), the Court focused on the nature of the appeal to it from the decision of the primary judge rather than the substance of her Honour's decision. It was necessary, their Honours considered, that it be shown that the primary judge had made an error in the process of evaluating whether the Tribunal's decision was unreasonable13. The approach to be taken was said to be analogous to what is necessary in appeals from discretionary judgments14. The question for the Full Court was whether the Tribunal's decision was legally unreasonable and whether the primary judge's reasoning in this regard was correct. It was necessary for it to decide these questions for itself rather than 12 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 368 [80]. 13 Minister for Immigration and Border Protection v SZVFW (2017) 248 FCR 1 at 13- 14 Minister for Immigration and Border Protection v SZVFW (2017) 248 FCR 1 at 14- to defer to what the primary judge had held and require the Minister to identify some error in her Honour's reasoning. No question of the application of the principles stated in House v The King15 arises in cases of this kind, for the reasons given by Nettle and Gordon JJ16. 15 (1936) 55 CLR 499; [1936] HCA 40. GAGELER J. The question of public importance in this appeal is as to the standard of appellate review applicable to a challenge on an appeal by way of rehearing to a conclusion of a primary judge that an administrative decision- maker exceeded decision-making authority by making an unreasonable decision. Resolution of that question turns on two subsidiary questions: the first as to the nature of an appeal by way of rehearing, the second as to the nature of a legally unreasonable decision. Existing authority answers both of those subsidiary questions in ways which will need to be explained. The answers together provide the answer to the ultimate question. The answer is that the appellate court must reach its own conclusion as to whether the administrative decision was unreasonable. That is to say, the appellate court must determine not whether the conclusion of the primary judge was open but whether the conclusion of the primary judge was, in the opinion of the appellate court, the right conclusion. The circumstances which give rise to this appeal The judgment from which this appeal is brought by special leave is a judgment of the Full Court of the Federal Court17 in an appeal by way of rehearing18 under s 24 of the Federal Court of Australia Act 1976 (Cth). The appeal to the Full Court was from final orders made by a judge of the Federal Circuit Court19. The primary judge had made those orders in the exercise of the original jurisdiction conferred on the Federal Circuit Court by s 476 of the Migration Act 1958 (Cth). The original jurisdiction conferred by that section is expressed to be "the same original jurisdiction in relation to migration decisions as the High Court has under paragraph 75(v) of the Constitution". The migration decision in relation to which the Federal Circuit Court had exercised that jurisdiction to make the orders under appeal to the Full Court was a decision of the Refugee Review Tribunal which had affirmed under s 415(2)(a) of the Migration Act a decision of a delegate of the Minister for Immigration and Border Protection to refuse to grant protection visas to the first and second respondents to the present appeal, who are husband and wife. The Tribunal had made that decision after choosing, in the exercise of the procedural power conferred by s 426A of the Migration Act, to proceed to make a decision under s 415 without further notice to the respondents in circumstances where they had 17 Minister for Immigration and Border Protection v SZVFW (2017) 248 FCR 1. 18 Western Australia v Ward (2002) 213 CLR 1 at 86-87 [68]-[71]; [2002] HCA 28, overruling Duralla Pty Ltd v Plant (1984) 2 FCR 342 and Petreski v Cargill (1987) 18 FCR 68. 19 SZVFW v Minister for Immigration and Border Protection (2016) 311 FLR 459. failed to respond to an invitation from the Tribunal to give evidence and present arguments at a hearing. In the Federal Circuit Court, the primary judge had concluded that the Tribunal's choice to proceed to make the decision without taking any further action to allow or enable the respondents to appear before it was unreasonable and that the Tribunal had for that reason exceeded its decision-making authority in affirming the decision of the delegate. The primary judge had given effect to that conclusion by making an order in the nature of certiorari setting aside the Tribunal's decision and an order in the nature of mandamus compelling the Tribunal to redetermine the respondents' application for review of the delegate's decision according to law. On appeal to the Full Court, the Minister challenged the primary judge's conclusion of unreasonableness. The Minister's sole ground of appeal was expressed in terms that "[t]he primary judge erred in concluding that it was legally unreasonable for the [Tribunal] to make a decision on the review before it without taking any further action to allow or enable the [respondents] to appear before it". The Minister's written and oral submissions in the appeal did nothing to narrow that ground. Analogising from what it described as "well-known authorities which emphasise the need for caution by an appellate court which is asked to disturb the outcome of a discretionary judgment, where evaluative issues are also necessarily involved", the Full Court approached its task of determining the appeal by asking whether the primary judge's conclusion of unreasonableness was attended by "appealable error" in the sense applicable to determination of an appeal from a judgment founded on an exercise of discretion20. The Full Court treated that standard of appellate review as applicable on the basis that the primary judge's conclusion of unreasonableness "was largely an evaluative one"21. Applying that deferential standard of appellate review, the Full Court found that reasons advanced by the Minister in argument before it for considering that the Tribunal's choice to proceed to make the decision was not unreasonable were insufficient to demonstrate the requisite appealable error on the part of the primary judge. For that reason, the Full Court dismissed the appeal. Had the Full Court applied the correct standard of appellate review, the Full Court would have examined the evidence contained in the record of the proceeding in the Federal Circuit Court which gave rise to the orders under 20 (2017) 248 FCR 1 at 14 [45], 15-17 [49]-[55]. 21 (2017) 248 FCR 1 at 15 [46]. appeal to form its own conclusion as to whether the choice of the Tribunal to proceed to make the decision was unreasonable. The Full Court would have given respectful consideration to the reasons given by the primary judge for reaching the conclusion under appeal in the process of forming its own conclusion. But the Full Court would have given effect to its own conclusion if its own conclusion differed from that of the primary judge. The conclusion which the Full Court should have reached on the evidence contained in the appellate record was that the choice of the Tribunal was not unreasonable, with the consequence that the contrary conclusion of the primary judge was erroneous. That was so whether or not the conclusion of the primary judge was reached on a correct understanding of legal principle and on an available view of the facts. The Full Court should have allowed the appeal, should have set aside the orders of the primary judge and in place of those orders should have dismissed the application for judicial review. The nature of an appeal by way of rehearing The need for appealable error As appeals are creatures of statutes, incidents of appeals can vary from statute to statute. To describe a particular appeal as an appeal by way of rehearing can accordingly be to fail to identify all of the statutory incidents of that appeal22. More than a century of case law expounding the ordinary incidents of an appeal by way of rehearing from a final judgment of a judge sitting without a jury nevertheless allows those ordinary incidents to be identified with relative precision. The answer to the first of the subsidiary questions involved in this appeal is to be found in those ordinary incidents. Like an appeal in the strict sense, of which an appeal to the High Court under s 73 of the Constitution is the prime example, an appeal by way of rehearing is a procedure under which the appellate court is permitted and, unless the appellate court dismisses the appeal or remits the matter for rehearing, required to "give the judgment which in its opinion ought to have been given in the first instance"23. And like an appeal in the strict sense, an appeal by way of rehearing is a procedure for the correction of error24. "[T]he existence of an 22 Dwyer v Calco Timbers Pty Ltd (2008) 234 CLR 124 at 128-129 [2]; [2008] HCA 23 Fox v Percy (2003) 214 CLR 118 at 125 [23]; [2003] HCA 22, quoting Dearman v Dearman (1908) 7 CLR 549 at 561; [1908] HCA 84. 24 Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 109; [1931] HCA 34, quoting Attorney-General v Sillem (1864) 10 HLC 704 at 724 [11 ER 1200 at 1209]. error, whether of law or fact, on the part of the court at first instance is an indispensable condition of a successful appeal."25 For practical purposes, the difference between correction of error on an appeal in the strict sense and correction of error on an appeal by way of rehearing lies in the temporal perspective that the appellate court is required to adopt in examining the correctness of the judgment under appeal. An appellate court determining an appeal in the strict sense is required to determine the correctness of the judgment under appeal at the time that judgment was given: in an appeal from a final judgment of a judge sitting without a jury, the correctness of the judgment is to be determined on the evidence adduced at the trial26 and on the law as it then stood27. An appellate court determining an appeal by way of rehearing, in contrast, is required to determine the correctness of the judgment under appeal in retrospect: in an appeal from a final judgment of a judge sitting without a jury, the correctness of the judgment is to be determined on the evidence adduced at the trial supplemented by any further evidence that the appellate court may allow to be adduced on the appeal28, and on the law as it stands when the appellate court gives judgment on the appeal29. To the extent necessary to address the ground or grounds on which an appellant claims that a judgment under appeal is erroneous, an appellate court in an appeal (whether in the strict sense or by way of rehearing) from a final judgment of a judge sitting without a jury "is obliged to conduct a real review of the trial and ... of [the] judge's reasons"30. The appellate court "cannot excuse 25 Norbis v Norbis (1986) 161 CLR 513 at 519; [1986] HCA 17. See also CDJ v VAJ (1998) 197 CLR 172 at 201-202 [111]; [1998] HCA 67; Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203-204 [14]; [2000] HCA 47. 26 Mickelberg v The Queen (1989) 167 CLR 259; [1989] HCA 35; Eastman v The Queen (2000) 203 CLR 1; [2000] HCA 29. 27 Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 106-108, 110-111. 28 CDJ v VAJ (1998) 197 CLR 172 at 201-202 [111]; Allesch v Maunz (2000) 203 CLR 172 at 180-181 [22]-[23]; [2000] HCA 40. 29 Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 106-108; Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 at 567 [29]. 30 Fox v Percy (2003) 214 CLR 118 at 126-127 [25]. itself from the task of weighing conflicting evidence and drawing its own inferences and conclusions"31. Performing its obligation to conduct a "real review", the appellate court "must, of necessity, observe the 'natural limitations' that exist in the case of any appellate court proceeding wholly or substantially on the record"32. Limitations of that nature can include: "those occasioned by the resolution of any conflicts at trial about witness credibility based on factors such as the demeanour or impression of witnesses; any disadvantages that may derive from considerations not adequately reflected in the recorded transcript of the trial; and matters arising from the advantages that a primary judge may enjoy in the opportunity to consider, and reflect upon, the entirety of the evidence as it is received at trial and to draw conclusions from that evidence, viewed as a whole"33. The appellate court needs to be conscious that "[n]o judicial reasons can ever state all of the pertinent factors; nor can they express every feature of the evidence that causes a decision-maker to prefer one factual conclusion over another"34. The more prominently limitations of that nature feature in a particular appeal, the more difficult it will be for the appellate court to be satisfied that the primary judge was in error35. Natural limitations on an appellate court's ability to be satisfied of error on the part of a primary judge inhering in the need for the appellate court to proceed on the record play no part in this appeal. They have little impact in practice on the determination of an appeal from a judgment given in a proceeding for judicial review of administrative action. Ordinarily36, as here, the trial of a judicial review proceeding will have been conducted wholly or substantially by reference to documentary and affidavit evidence which an appellate court is in as good a position to evaluate as was the primary judge. 31 Dearman v Dearman (1908) 7 CLR 549 at 564, partly quoted in Fox v Percy (2003) 214 CLR 118 at 127 [25]. 32 Fox v Percy (2003) 214 CLR 118 at 125-126 [23], quoting Dearman v Dearman (1908) 7 CLR 549 at 561. 33 CSR Ltd v Della Maddalena (2006) 80 ALJR 458 at 465 [17]; 224 ALR 1 at 7; [2006] HCA 1. 34 Fox v Percy (2003) 214 CLR 118 at 132 [41] (footnote omitted). 35 Eg S W Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466 at 478; [1985] HCA 59. 36 Eg Cabal v United Mexican States (2001) 108 FCR 311 at 362 [223]. The two standards of appellate review Whilst the conception of error is integral to the conception of an appeal, what amounts to "appealable error" in a judgment cannot be understood without reference to a standard of appellate review. Subject to constitutional limitations, a standard of appellate review amounts to a legislative or common law allocation of decision-making authority between the trial court and the appellate court37. In relation to an appeal from a final judgment of a primary judge sitting without a jury, essentially two standards of appellate review have come to be recognised in Australia. The present case provides no occasion to consider the "added restraint" and "particular caution" which an appellate court should exercise in reviewing a judgment on a matter of practice and procedure38. If and to the extent that the judgment under appeal turned on the exercise of what can be characterised as a "discretion" committed to the court of which the primary judge was a member, the long-settled understanding is that members of an appellate court cannot substitute on appeal a judgment which turns on their own exercise of discretion "merely because they would themselves have exercised the original discretion, had it attached to them, in a different way"39. For appealable error in the exercise of judicial discretion to be established, the appellate court must be satisfied that what was done by the primary judge in the judgment under appeal amounted "to a failure to exercise the discretion actually entrusted to the court"40. The classic statement in House v The King41 of the standard of appellate review applicable to the exercise of a judicial discretion reflects that understanding: 37 Edwards and Elliott, Federal Standards of Review, 3rd ed (2018) at 4-5. 38 Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 176-177; [1981] HCA 39, citing In re the Will of F B Gilbert (dec'd) (1946) 46 SR (NSW) 318 at 323. See also Hogan v Australian Crime Commission (2010) 240 CLR 651 at 665 [34]; [2010] HCA 21. 39 Lovell v Lovell (1950) 81 CLR 513 at 519; [1950] HCA 52, quoting Charles Osenton & Co v Johnston [1942] AC 130 at 138. 40 Lovell v Lovell (1950) 81 CLR 513 at 519, citing Sharp v Wakefield [1891] AC 173 41 (1936) 55 CLR 499 at 504-505; [1936] HCA 40. "It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance." For a period during the 1960s and 1970s (before the introduction in 1984 of the current comprehensive requirement for special leave as a precondition to an appeal under s 73 of the Constitution42), some Justices of the High Court expressed support for importing similar considerations into appellate review of an evaluative conclusion reached by a primary judge when applying imprecisely defined legal criteria to findings of primary fact, even where the appellate court's ability to apply those criteria to those findings of primary fact so as to form its own opinion as to the correctness of the primary judge's conclusions was unimpeded by any limitation inherent in proceeding on the record43. In an appeal from a judgment of a judge sitting without a jury in a common law negligence case where there was no challenge to the judge's findings of primary fact, for example, some Justices would have refrained from finding error in the primary judge's conclusion that conduct failed to measure up to "the conduct of a hypothetical reasonable man in the circumstances" unless convinced that the primary judge had overlooked some relevant primary fact or unless convinced that the conclusion was "clearly wrong" in the sense that "no rational interpretation of the facts" would sustain it44. That approach of "judicial restraint"45 in undertaking appellate review of evaluative conclusions reached by primary judges in the application of broad 42 Judiciary Amendment Act (No 2) 1984 (Cth). 43 Eg Whiteley Muir and Zwanenberg Ltd v Kerr (1966) 39 ALJR 505 at 506; Da Costa v Cockburn Salvage & Trading Pty Ltd (1970) 124 CLR 192 at 199, 213- 214; [1970] HCA 43; Edwards v Noble (1971) 125 CLR 296 at 303-304, 312-313; [1971] HCA 54; Hicks v Roberts (1977) 16 ALR 466 at 469; Livingstone v Halvorsen (1978) 53 ALJR 50 at 52; 22 ALR 213 at 217. 44 Da Costa v Cockburn Salvage & Trading Pty Ltd (1970) 124 CLR 192 at 213-214. 45 Cf Cashman v Kinnear [1973] 2 NSWLR 495 at 500. legal standards to findings of primary fact was by no means aberrant. There are comparable jurisdictions in which comparable approaches are the norm46. The approach, however, never commanded the assent of a majority of the High Court. It was firmly rejected – "despatched"47 – by the majority in Warren v Coombes48. Rejecting the approach of appellate restraint and reaffirming the approach more commonly taken in Australian and English case law of treating correctness as the general standard of appellate review, the majority in Warren v Coombes stated49: "Shortly expressed, the established principles are, we think, that in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it." In language significant for its studied generality, the majority in Warren v Coombes went on to state50: "The duty of the appellate court is to decide the case – the facts as well as the law – for itself. In so doing it must recognize the advantages enjoyed by the judge who conducted the trial. But if the judges of appeal consider that in the circumstances the trial judge was in no better position to decide the particular question than they are themselves, or if, after giving full weight to his decision, they consider that it was wrong, they must discharge their duty and give effect to their own judgment." 46 Eg Pullman-Standard v Swint 456 US 273 at 290-293 (1982); United States v McConney 728 F 2d 1195 at 1199-1204 (1984); Housen v Nikolaisen [2002] 2 SCR 47 State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306 at 326 [83]; 160 ALR 588 at 614; [1999] HCA 3. 48 (1979) 142 CLR 531; [1979] HCA 9. 49 (1979) 142 CLR 531 at 551. 50 (1979) 142 CLR 531 at 552. Defending the correctness standard against the criticism that it opens a final judgment to a multiplicity of judicial opinions none of which is more likely to be better than the first51, the majority explained52: "The fact that judges differ often and markedly as to what would in particular circumstances be expected of a reasonable man seems to us in itself to be a reason why no narrow view should be taken of the appellate function. The resolution of these questions by courts of appeal should lead ultimately not to uncertainty but to consistency and predictability, besides being more likely to result in the attainment of justice in individual cases." The most carefully crafted of judicial explications of legal principle can still be over-read. Within months of Warren v Coombes being decided, the High Court was confronted in Gronow v Gronow53 with the submission that it was "now for an appellate court to substitute its own exercise of discretion for that of the primary judge in every appeal against the exercise of a discretionary judgment". The submission was rejected. Warren v Coombes had not been concerned with the "question which arises on an appeal from an exercise of a discretionary judgment", it was emphasised, and nothing in the majority judgment lent "any support to the notion that their Honours intended to discard, or to depart from, the settled principles of law which govern such a case"54. The line of demarcation between conclusions of a primary judge which attract the deferential standard of appellate review applicable to an exercise of judicial discretion articulated in House v The King and conclusions of a primary judge which attract the more general correctness standard of appellate review rearticulated in Warren v Coombes was in due course squarely addressed in Norbis v Norbis55. The House v The King standard was there held to apply to appellate review of an order made by a judge in the exercise of a statutory power conferred on the Family Court to "make such order as it thinks fit altering the interests of the parties" in matrimonial property56. Mason and Deane JJ, with 51 Cf Gray v Turnbull (1870) LR 2 HL Sc & Div 53 at 54. 52 (1979) 142 CLR 531 at 552. 53 (1979) 144 CLR 513 at 525; [1979] HCA 63. 54 (1979) 144 CLR 513 at 526. See also at 534. 55 (1986) 161 CLR 513. 56 Section 79 of the Family Law Act 1975 (Cth). whom Brennan J agreed57, explained that making the order involved an exercise of "discretion" in the sense in which that term had been deployed in House v The King because application of the statutory criterion called for "value judgments in respect of which there is room for reasonable differences of opinion, no particular opinion being uniquely right"58. The holding in Norbis v Norbis, and their Honours' explanation of the reason for it, accorded with earlier decisions which had applied the House v The King standard to appellate review of evaluative conclusions in respect of which the applicable legal criteria permitted of some latitude of choice or margin of appreciation such as to admit of a range of legally permissible outcomes. Conclusions as to "just and equitable" apportionment of responsibility between tortfeasors under contribution legislation59, as to assessment of general damages at common law60, as to the valuation of property61, and as to the best interests of the child under child welfare legislation62 furnish examples. Their Honours in Norbis v Norbis went on to explain that the line of demarcation which they identified stemmed from the fundamental conception of an appeal as a process for the correction of error: "[i]f the questions involved lend themselves to differences of opinion which, within a given range, are legitimate and reasonable answers to the questions, it would be wrong to allow a court of appeal to set aside a judgment at first instance merely because there exists just such a difference of opinion between the judges on appeal and the judge at first instance"63. Norbis v Norbis was not departed from in Singer v Berghouse64, where the House v The King standard was held to be applicable on appellate review of an opinion formed by a primary judge, as a precondition to the exercise of discretion 57 (1986) 161 CLR 513 at 536. 58 (1986) 161 CLR 513 at 517-518. 59 Eg Pennington v Norris (1956) 96 CLR 10 at 15-16; [1956] HCA 26; Podrebersek v Australian Iron and Steel Pty Ltd (1985) 59 ALJR 492 at 493-494; 59 ALR 529 at 532; [1985] HCA 34. 60 Eg Miller v Jennings (1954) 92 CLR 190 at 196; [1954] HCA 65. 61 Eg Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336 at 381; [1981] HCA 4. 62 Eg Mace v Murray (1955) 92 CLR 370 at 378; [1955] HCA 2. 63 (1986) 161 CLR 513 at 518. 64 (1994) 181 CLR 201; [1994] HCA 40. to make a maintenance order in testator's family maintenance proceedings, as to whether an applicant for the order had been left with "inadequate" provision for his or her "proper maintenance, education and advancement in life"65. Explaining that holding, the majority expressed agreement with the statement that "[u]nless appellate courts show restraint in disturbing the evaluative determinations of primary decision-makers they will inevitably invite appeals to a different evaluation which, objectively speaking, may be no better than the first"66. To describe a second evaluative determination as "no better than the first" is necessarily to postulate that both determinations are legally permissible. the outcome Warren v Coombes itself illustrates that it is not sufficient to justify departure from the correctness standard of appellate review that a conclusion of a primary judge has been arrived at by a process of reasoning which can be characterised as evaluative. In Warren v Coombes, the conclusion of the primary judge to which the general standard was held to be applicable was a conclusion that the defendant had not failed to exercise reasonable care. The point is further in Australian Competition and Consumer illustrated by Commission v C G Berbatis Holdings Pty Ltd67. There the conclusion of the primary judge which was the subject of appellate challenge was that certain conduct in which a corporation was found to have engaged answered the statutory description of "conduct that is unconscionable"68. A submission to the effect that the evaluative character of that conclusion triggered application of the standard of appellate review applicable to an exercise of judicial discretion was unanimously rejected: implicitly by three members of the High Court, and explicitly by the other two. Callinan J, with whom Kirby J specifically agreed on this point69, suggested that "every judgment of a trial judge requires an evaluation of facts" and pointed out that "[a]n evaluation of facts found is precisely one of the exercises which an appellate court is obliged, when an unrestricted right of appeal is available, to undertake"70. Like a common law duty of care, a statutory prohibition on conduct that is unconscionable posits a standard of conduct which, on proven facts, a person obliged to meet that standard either has met or has not. 65 Section 9(2) of the Family Provision Act 1982 (NSW). 66 (1994) 181 CLR 201 at 212, quoting Golosky v Golosky unreported, Court of Appeal of the Supreme Court of New South Wales, 5 October 1993 at 8. 67 (2003) 214 CLR 51; [2003] HCA 18. 68 Section 51AA(1) of the Trade Practices Act 1974 (Cth). 69 (2003) 214 CLR 51 at 86, footnote 114. 70 (2003) 214 CLR 51 at 111 [167]. The Norbis v Norbis explanation of when the standard of appellate review applicable to an exercise of judicial discretion is attracted and when it is not was reiterated in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission71. In the context of restating the ordinary incidents of an appeal by way of rehearing, and with reference to House v The King, it was reiterated that "discretion" in the sense applicable to appellate review of an exercise of judicial discretion refers to a decision-making process in which "the decision-maker is allowed some latitude as to the choice of the decision to be made"72. The course of High Court authority since Warren v Coombes has accordingly proceeded on a consistent understanding of how the line of demarcation is to be drawn between those of a primary judge's conclusions which attract the correctness standard of appellate review reaffirmed in that case and those which attract the deferential standard applicable to appellate review of an exercise of judicial discretion. Without excluding the potential for other considerations to affect the standard of appellate review in a particular category of case, the understanding provides a principled basis for making at least the principal distinction. The line is not drawn by reference to whether the primary judge's process of reasoning to reach a conclusion can be characterised as evaluative or is on a topic on which judicial minds might reasonably differ. The line is drawn by reference to whether the legal criterion applied or purportedly applied by the primary judge to reach the conclusion demands a unique outcome, in which case the correctness standard applies, or tolerates a range of outcomes, in which case the House v The King standard applies. The resultant line is not bright; but it is tolerably clear and workable. That understanding has in the past been acknowledged and applied to guide appellate review in the Full Court of the Federal Court73. There is no reason to depart from it now. The nature of a legally unreasonable decision Having expounded the general and, in its application to the determination of a claim for relief under or by reference to s 75(v) of the Constitution, exhaustive proposition that "[t]he duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law 71 (2000) 203 CLR 194. 72 (2000) 203 CLR 194 at 205 [19]. 73 Eg Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at 436 which determines the limits and governs the exercise of the repository's power", Brennan J in Attorney-General (NSW) v Quin74 immediately explained how "'Wednesbury unreasonableness' (the nomenclature comes from Associated Provincial Picture Houses Ltd v Wednesbury Corporation75)" was consistent with that proposition: "[a]cting on the implied intention of the legislature that a power be exercised reasonably, the court holds invalid a purported exercise of the power which is so unreasonable that no reasonable repository of the power could have taken the impugned decision or action"76. His Honour called in aid the exposition of Professor Wade to the effect that, "[w]ithin the bounds of legal reasonableness", the repository has "genuinely free discretion"; "[i]f it passes those bounds, [the repository] acts ultra vires"77. Expression of the standard of legal reasonableness in terms of the minimum to be expected of any "reasonable repository of the power" in the circumstances of the impugned decision or action has the benefit of emphasising both the "extremely confined"78 scope and context-specific operation of the limitation it imposes. That is not to say that the standard might not be appropriately expressed in another form of words. Whatever room might remain for argument about the most appropriate expression of the standard of legal reasonableness, however, the nature of legal unreasonableness should be taken to be settled by the explanation of it in Quin. The requirement that a statutory power be exercised within the bounds of reasonableness is an implied condition of the statutory conferral of the power. The implication arises through operation of a common law presumption of statutory interpretation that a statutory power is conferred on condition that the power can be exercised only within those bounds. The presumption prevails to condition the exercise of the power on the repository complying with the standard of legal reasonableness absent statutory indication that the repository must meet some higher standard (an example of which is where the repository is restricted to exercising the power only on reasonable grounds79) or will 74 (1990) 170 CLR 1 at 35-36; [1990] HCA 21. 76 (1990) 170 CLR 1 at 36. 77 (1990) 170 CLR 1 at 36, quoting Wade, Administrative Law, 6th ed (1988) at 407. 78 (1990) 170 CLR 1 at 36. 79 Eg George v Rockett (1990) 170 CLR 104 at 116; [1990] HCA 26; McKinnon v Secretary, Department of Treasury (2006) 228 CLR 423 at 429 [10]; [2006] HCA 45; Prior v Mole (2017) 91 ALJR 441 at 445 [4], 449-450 [24]-[27], 457 [73], 460- 461 [97]-[100]; 343 ALR 1 at 5, 10-11, 21, 26; [2017] HCA 10. sufficiently comply with the statute by meeting some lower standard (an example of which is where the statute requires no more than that the repository exercise the power in good faith and for a purpose permitted by the statute80). Where the presumption prevails so as to condition the exercise of the power on the repository complying with the standard of legal reasonableness, a decision made or action taken in purported exercise of a statutory power in breach of the standard of legal reasonableness is a decision or action which lies beyond the scope of the authority conferred by the power. The question of whether or not a decision made or action taken in purported exercise of a statutory power is legally unreasonable is accordingly a question directed to whether or not the decision or action is within the scope of the statutory authority conferred on the repository. Being a question as to the limits of statutory authority, it is a question in respect of which our constitutional system demands of the judicial branch of government the ability to give a unique answer. Whilst "there has never been a pervasive notion that limited government mandated an all-encompassing judicial duty to supply all of the relevant meaning of statutes", the constitutional entrenchment of judicial power in courts of competent jurisdiction leaves no room for doubt that "the judicial duty is to ensure that [an] administrative agency stays within the zone of discretion committed to it by its organic act"81. What follows from the constitutional commitment of that duty to the judiciary is that a court, having jurisdiction to determine a claim for constitutional writs or other relief on the basis of an allegation that a decision which has been made in fact was beyond statutory authority because of unreasonableness in the purported exercise of the power to make that decision, or in the purported exercise of some other power in the statutory procedure which led to the making of the decision, has no option but to determine in the exercise of its own jurisdiction whether the impugned decision is unreasonable, or is materially affected by unreasonableness. The nature of the determination to be made means that the court can have no latitude of choice: on the evidence adduced at trial, the determination of the primary judge can only be that the 80 Eg Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 504-506; [1947] HCA 21; K-Generation Pty Ltd v Liquor Licensing Court (2009) 237 CLR 501 at 523 [59]; [2009] HCA 4; CPCF v Minister for Immigration and Border Protection (2015) 255 CLR 514 at 620 [360]; [2015] HCA 1. 81 Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 153 [43]; [2000] HCA 5, quoting Monaghan, "Marbury and the Administrative State", (1983) 83 Columbia Law Review 1 at 33. alleged want or excess of statutory authority has been established or has not been established. From the perspective of an appellate court engaged in an appeal by way of rehearing from the determination of a primary judge, the primary judge's conclusion can only be either right or wrong. To the extent put in issue by the ground or grounds of appeal, the appellate court has no option but to decide for itself whether it is one or the other. Were that not so, the legal limits which the repository of the statutory power is statutorily obliged to observe would risk being blurred in the outworking of the judicial process designed to ensure their observance. Nothing in the more recent expositions of principle by the High Court in Minister for Immigration and Citizenship v Li82, or by the Full Court of the Federal Court in Minister for Immigration and Border Protection v Singh83 or Minister for Immigration and Border Protection v Stretton84, is inconsistent with that explanation of the nature of legal unreasonableness and its consequences for appellate review of a primary judge's conclusion that legal unreasonableness has or has not been established. References in Li85, as in Quin86, to legal unreasonableness as an "abuse of power" cannot be read as treating a judicial conclusion of unreasonableness as admitting of a margin of appreciation of the kind involved in a judicial conclusion of "abuse of process"87. Except to the extent specifically permitted by statute88, a judge undertaking judicial review of administrative action would depart from performance of the judicial function and impermissibly enter the zone of discretion committed to the administrator were the judge to be drawn into forming his or her own conclusion as to whether the administrator had exercised 82 (2013) 249 CLR 332; [2013] HCA 18. 83 (2014) 231 FCR 437. 84 (2016) 237 FCR 1. 85 (2013) 249 CLR 332 at 348 [22], 364 [67] and [69]. 86 (1990) 170 CLR 1 at 36. 87 Cf Walton v Gardiner (1993) 177 CLR 378 at 398-399; [1993] HCA 77; R v Carroll (2002) 213 CLR 635 at 657 [73]; [2002] HCA 55; Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 264 [7]; [2006] HCA 27. 88 Eg s 5(2)(j) of the Administrative Decisions (Judicial Review) Act 1977 (Cth). power in a manner which, though lawful, might be characterised as an abuse89. So much was recognised in the joint judgment in Li in the statements that "courts are conscious of not exceeding their supervisory role by undertaking a review of the merits of an exercise of discretionary power" and that "[p]roperly applied, a standard of legal reasonableness does not involve substituting a court's view as to how a discretion should be exercised for that of a decision-maker"90. References in Stretton to a conclusion that a decision is legally unreasonable being "evaluative" and to the task being "not definitional, but one of characterisation" were usefully directed to emphasising that determination of whether a purported exercise of a statutory power is so unreasonable that no reasonable repository of the power could have so exercised the power is informed not only by "the terms, scope and policy of the statute" but also by "fundamental values" anchored in the common law tradition91. Reasonableness is itself a traditional conception of the common law – a translation of "the human into the legal"92. Reasonableness is not exhausted by rationality; it is inherently sensitive to context; it cannot be reduced to a formulary. In the discernment of unreasonableness, "[t]here are no talismanic words that can avoid the process of Of present importance is that those references in Stretton were not directed to denying the character of a judicial determination of legal unreasonableness as a determination "as to whether the decision bespeaks an exercise of power beyond its source"94. That question does not admit of a range of legally permissible outcomes. Stretton recognised that, "[w]hile judicial decision about that question might be contestable, there can only, legally, be one correct answer", from which it followed that "[t]he proper framework" for an appeal by way of rehearing from a conclusion of a primary judge that an administrative decision-maker exceeded decision-making authority by making an unreasonable decision was "not ... the review of the exercise of a judicial 89 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 23 [72]; [2003] HCA 6. 90 (2013) 249 CLR 332 at 363 [66]. 91 (2016) 237 FCR 1 at 5-6 [9]-[11]. 92 Allsop, "The Law as an Expression of the Whole Personality", [2017] (Summer) Bar News 25 at 31. 93 Cf Universal Camera Corp v National Labor Relations Board 340 US 474 at 489 94 (2016) 237 FCR 1 at 5 [9]. discretion or of an evaluative judgment of like character"95. In so doing, Stretton foreshadowed the resolution of the principal question in the present appeal. The Tribunal's choice was not unreasonable The question as to the standard of appellate review having been resolved, the question which remains for determination in the appeal from the Full Court of the Federal Court is whether the Federal Circuit Court was wrong to conclude that the Tribunal's purported exercise of power was unreasonable. The decision of the Tribunal in respect of which relief was claimed in the Federal Circuit Court, as has been noted, was a decision under s 415(2)(a) of the Migration Act affirming a decision of a delegate of the Minister to refuse to grant protection visas to the respondents. The respondents claimed in their application to the Federal Circuit Court that the decision was beyond power by reason that the prior purported exercise of the procedural power conferred by s 426A was beyond power because it was unreasonable. Section 426A(1) provides that, if two preconditions are met, "the Tribunal may make a decision on the review without taking any further action to allow or enable the applicant to appear before it". The first precondition is that the applicant for review "is invited under section 425 to appear before the Tribunal". The second is that the applicant "does not appear before the Tribunal on the day on which, or at the time and place at which, the applicant is scheduled to appear". Section 426A(2) makes clear that the power conferred by s 426A(1) is discretionary by spelling out that the section "does not prevent the Tribunal from rescheduling the applicant's appearance before it, or from delaying its decision on the review in order to enable the applicant's appearance before it as rescheduled". Before the Federal Circuit Court, an issue emerged as to whether the first precondition to the exercise of the discretionary power had been met. The issue concerned the fate of a letter which the Tribunal had written inviting the respondents to appear before the Tribunal and give evidence on the scheduled hearing date. The letter had been addressed to the respondents at their residential address in the Sydney suburb of Roselands, which the respondents had provided to the Tribunal in their application for review of the delegate's decision as their address for service. The issue concerned whether evidence adduced by the Minister was sufficient to demonstrate that the letter had in fact been dispatched by prepaid post from the registry of the Tribunal. Dispatch of the letter by those means needed to have occurred if there was to have been service under s 441A(4) resulting in deemed receipt under s 441C(4), both of which were necessary in order for the respondents to have been invited under s 425 to appear before the 95 (2016) 237 FCR 1 at 9 [25]. Tribunal. The primary judge proceeded on the implicit finding that the letter had been dispatched, with the result that the precondition had been met. The Full Court gave expression to the same finding96, which the respondents have not challenged by notice of contention. There was no dispute that the second of the preconditions to the exercise of the power had been met. The respondents failed to attend the Tribunal hearing. Their originating application to the Federal Circuit Court asserted that they had not been in Sydney at the time and did not receive any letter about the hearing date. There is, and was before the Federal Circuit Court and the Full Court, no dispute that the power conferred by s 426A is conditioned by the requirement that it be exercised reasonably. There is, and was, also no dispute that the choice the Tribunal made in purported exercise of the power conferred by s 426A was material to the decision which the Tribunal went on purportedly to make under s 415(2)(a) such as to result in the invalidity of that decision if the choice was unreasonable. The issue was solely as to the reasonableness of the choice. The Tribunal was under no obligation to give reasons for the choice that it made in purported exercise of the power conferred by s 426A. But in fact it did give reasons. The record of the Tribunal's decision to affirm the decision of the delegate contained the following explanation: "The delegate's decision record, which the applicant provided to the Tribunal with his review application, indicates that the applicant was invited to attend a Department interview but did not attend or otherwise contact the Department. While the applicants sought this Tribunal's review in respect of the delegate's decision, he did not provide the Tribunal with any further documentation in support of his claims for Australia's protection. By letter dated 15 August 2014 the Tribunal invited the applicants to appear before it on 10 September 2014 to give evidence and present arguments. That letter was sent to the applicants' last identified address for correspondence and noted that if the applicants did not attend the scheduled hearing the Tribunal may make a decision without taking any further action to allow or enable them to appear. The applicants did not respond to that invitation or make any contact with the Tribunal in respect of their scheduled appearance or the review application more generally. Based on the evidence before it the Tribunal finds that the hearing invitation was sent to the last address for service provided in connection with the review and in the circumstances, pursuant to section 426A of the 96 (2017) 248 FCR 1 at 5 [14]. Act, the Tribunal has decided to make its decision on the review without taking any further action to enable the applicants to appear before it." The primary judge pointed out that the decision on the review was of immense significance to the respondents, that the time between the invitation and the scheduled hearing was relatively short, that the Tribunal had nothing before it to indicate that its letter of invitation had in fact come to the attention of the respondents, and that the Tribunal did not follow up the respondents in the absence of a response to its letter of invitation despite them having given an email address and telephone number in the application for review of the delegate's decision. Neither individually nor in combination, however, do those factors take the Tribunal's choice to make a decision without further notice to the respondents beyond the bounds of reasonableness. The Tribunal is exhorted to "pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick"97, to "act according to substantial justice and the merits of the case"98, and in applying Div 4 of Pt 7, within which ss 425 and 426A are located, to "act in a way that is fair and just"99. Because Div 4 "is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with"100, the Tribunal acting fairly and justly is entitled to regard an applicant to whom it is satisfied that an invitation complying with s 425 has been sent as having had adequate notice of his or her opportunity to appear before the Tribunal when considering exercising the discretion under s 426A(1) in the event of non-appearance. Where the Tribunal is satisfied that the statutory procedure contemplated by s 425 for inviting the applicant for review to appear before it has been followed and where the applicant without explanation fails to appear, the Tribunal being mindful of the exhortations to be fair and just but also to be economical and quick would ordinarily act reasonably in deciding in the exercise of the discretion under s 426A(1) to proceed to make a decision on the merits of the application for review without making any further attempt to make contact with the applicant. Ordinarily, it could not later be said on judicial review that 97 Section 420(1) of the Migration Act. 98 Section 420(2)(b) of the Migration Act. 99 Section 422B(3) of the Migration Act. 100 Section 422B(1) of the Migration Act. "no sensible [Tribunal] acting with due appreciation of its responsibilities"101 could have taken that course. Nothing before the Tribunal took the respondents' application for review into the realm of the extraordinary. To the contrary, the respondents' failure to respond to the earlier invitation from the Minister's Department and their failure to provide the Tribunal with any further documentation in support of their claims for protection, both of which considerations were expressly taken into account by the Tribunal, suggested that a further attempt by the Tribunal to make contact with them would be unlikely to elicit a response. The Tribunal did not act unreasonably in choosing to make the decision without taking any further action to allow or enable the respondents to appear before it. The primary judge's conclusion that the Tribunal did act unreasonably in so doing was wrong. The Full Court should have so decided. Orders The appropriate orders are as proposed by Nettle and Gordon JJ. 101 Cf Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 365 [71], quoting Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1977] AC 1014 at 1064. NettleJ NETTLE AND GORDON JJ. This appeal concerns judicial review of an the Refugee Review Tribunal administrative discretion exercised by ("the Tribunal")102. The discretion was found in s 426A of the Migration Act 1958 (Cth), which relevantly provided103 that if an applicant for review of an "RRT-reviewable decision"104 (in this appeal, a decision to refuse to grant a protection visa105) is invited under s 425 of the Act to appear before the Tribunal, and does not appear before the Tribunal on the day on which the applicant is scheduled to appear, the Tribunal may make a decision on the review without taking any further action to enable the applicant to appear before it106. SZVFW and his wife, the first and second respondents, were refused protection visas by a delegate of the appellant, the Minister for Immigration and Border Protection. They applied to the Tribunal for a review of the delegate's decision. SZVFW and his wife did not appear before the Tribunal on the day of their review hearing. The Tribunal proceeded under s 426A of the Act to make a decision on their review application and affirmed the decision under review to refuse the protection visas. SZVFW and his wife then sought judicial review of the Tribunal's decision. The primary judge determined that the decision of the Tribunal to proceed in the absence of SZVFW and his wife was legally unreasonable. The Minister appealed to the Full Court of the Federal Court of Australia. The Full Court dismissed the appeal, holding that the Minister had to identify error in the reasoning of the primary judge in a manner broadly analogous to that required to be established in appeals from discretionary judgments107. 102 At the relevant time, the Refugee Review Tribunal. Now, the Administrative Appeals Tribunal. 103 Section 426A has subsequently been amended, with effect from 18 April 2015: see s 2 of, and item 26 of Sched 4 to, the Migration Amendment (Protection and Other Measures) Act 2015 (Cth). The relevant version of the Act is as at 12 September 2014, when the Tribunal made its determination. 104 s 411 of the Act. 105 s 411(1)(c) of the Act. 106 s 426A(1) of the Act. 107 Minister for Immigration and Border Protection v SZVFW (2017) 248 FCR 1 at NettleJ Both the approach adopted by, and the decision of, the Full Court were incorrect. The only question for the Full Court (and for this Court on appeal) was whether the Tribunal's exercise of power under s 426A was beyond power because it was legally unreasonable108. There is only one answer to that question: "yes" or "no". In this appeal, the answer is "no": the Tribunal's decision was not legally unreasonable. The appeal should be allowed. These reasons will address the nature of the court's task on review where it has been alleged that a decision is legally unreasonable, as well as the relevant standard of legal reasonableness, and then consider the particular facts and circumstances of this appeal. Nature of the court's task The task of the court, where it has been alleged that a decision is legally unreasonable, is to ask whether the exercise of power by the decision-maker was beyond power because it was legally unreasonable109. That task requires the court to assess the quality of the administrative decision by reference to the statutory source of the power exercised in making the decision and, thus, assess whether the decision was lawful, having regard to the scope, purpose and objects of the statutory source of the power110. Parliament is taken to intend that a statutory power will be exercised reasonably by a decision-maker111. The question with which the legal standard of reasonableness is concerned is whether, in relation to the particular decision in issue, the statutory power, properly construed, has been abused by the decision-maker or, put in different terms, the decision is beyond power112. That question is critical to an understanding of the task for a court on review. 108 See Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 351-352 [30], 367-369 [77]-[85], 378-380 [114]-[124]; [2013] HCA 18. 109 Li (2013) 249 CLR 332 at 351-352 [30], 367-369 [77]-[85], 378-380 [114]-[124]. 110 Li (2013) 249 CLR 332 at 363-364 [67], 370-371 [90], 376 [109] citing Klein v Domus Pty Ltd (1963) 109 CLR 467 at 473; see also at 473-474; [1963] HCA 54. 111 Li (2013) 249 CLR 332 at 350 [26], 351 [29], 362 [63], 370 [88]. 112 Li (2013) 249 CLR 332 at 363-364 [67]; see also at 370-371 [90], 371 [92], NettleJ How that abuse of statutory power manifests itself is not closed or limited by particular categories of conduct, process or outcome. The abuse of statutory power is not limited to a decision affected by specific errors which bring about an improper exercise of power because, for example, the decision-maker took into account an irrelevant consideration or failed to take into account a relevant consideration; or exercised the power in bad faith, or for a purpose other than a purpose for which it was conferred; or exercised the power in such a way that the result of the exercise of power is uncertain113. Nor is the abuse of statutory power limited to a decision which may be described as "manifestly unreasonable"114, or to what might be described as an irrational, if not bizarre, decision that is so unreasonable that no reasonable person could have arrived at it115. A conclusion of legal unreasonableness may be outcome focused – where, for instance, there is no "evident and intelligible justification" for the decision116. As Gageler J explained in Minister for Immigration and Citizenship v Li, "[r]eview by a court of the reasonableness of a decision made by another repository of power 'is concerned mostly with the existence of the transparency and decision-making process' but also with 'whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law'"117. intelligibility within justification, Indeed, grievous error may result if a court on review had to identify a particular error to found its conclusion of unreasonableness. If the court approached the assessment in this way, at least one important part of the lens for assessing legal unreasonableness would be removed: namely, error identified by observing that the result is so unreasonable that it could not have been reached if proper reasoning had been applied in the exercise of the statutory power in the particular circumstances. In that situation, the court is not undertaking merits review of an exercise of a discretionary power by a decision-maker118. 113 Li (2013) 249 CLR 332 at 365-366 [72]. 114 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 41; [1986] HCA 40. 115 See Li (2013) 249 CLR 332 at 364 [68], 375 [105]. 116 Li (2013) 249 CLR 332 at 367 [76]; see also at 373 [98], 375 [105]. 117 (2013) 249 CLR 332 at 375 [105] quoting Dunsmuir v New Brunswick [2008] 1 SCR 190 at 220-221 [47]. 118 See, eg, Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35-36; [1990] HCA 21. NettleJ Rather, the court is asking whether the decision-maker's purported exercise of power was beyond power because it was legally unreasonable. Moreover, legal unreasonableness is invariably fact dependent and requires a careful evaluation of the evidence. That is, assessment of whether a decision was beyond power because it was legally unreasonable depends on the application of the relevant principles to the particular factual circumstances of the case, rather than by way of an analysis of factual similarities or differences between individual cases. Where reasons are provided, they will be a focal point for that assessment. It would be a rare case to find that the exercise of a discretionary power was unreasonable where the reasons demonstrated a justification for that exercise of power. On review, a conclusion by a primary judge that a decision-maker has exercised a power in a manner which is unreasonable does not depend upon the exercise of any discretion by the primary judge. It may involve an evaluative process. But labelling the task of a primary judge as "evaluative" does not entitle an appeal court to determine, for example, that the purported exercise of power by the decision-maker was valid because it was not legally unreasonable but then, nonetheless, go on to conclude that it was open to the primary judge to reach the opposite view. In Li119 it was observed that, in determining the standard of legal reasonableness, an analogy between judicial review of administrative action and appellate review of judicial discretion is apparent. While the plurality had regard to House v The King120, the plurality's observations were not directed to the proposition, and do not state, that a House v The King error must be established in the context of judicial review of administrative decisions. Rather, the analogy drawn by reference to House v The King was that, in the same way that an appeal court does not interfere with a lower court's exercise of a judicial discretion just because the court might have exercised the discretion in a different way, similarly, in a judicial review context, a court should not interfere with an administrator's exercise of a discretion just because the court would have exercised the discretion in a different way. The analogy drawn in Li did not go on to state that the principles applicable to appellate review of judicial discretion also apply in relation to judicial review of administrative action. It did not provide any support for the contention that an evaluative approach by a primary judge on an application for 119 (2013) 249 CLR 332 at 366 [75], 376-377 [110] citing Peko-Wallsend (1986) 162 CLR 24 at 41-42. 120 (1936) 55 CLR 499; [1936] HCA 40. NettleJ judicial review is to be treated as analogous to an exercise of judicial discretion. In the case of judicial review of administrative action, a discretion given to an administrative decision-maker is not transferred to, or picked up by, the primary judge; nor is the primary judge's review of the administrative decision the exercise of a discretion. Standard of legal reasonableness The standard of reasonableness is derived from the applicable statute but also from the general law. First, there is a legal presumption that a discretionary power, statutorily conferred, must be exercised reasonably in the legal sense of that word121. That is, when something the decision-maker, it is to be done according to the rule of reason and justice; it is to be done according to law122. to be done within the discretion of Second, in this appeal, the applicable statutory power was to be found in s 426A of the Act, which, at the relevant time, provided: If the applicant: is invited under section 425 to appear before the Tribunal; and does not appear before the Tribunal on the day on which, or at the time and place at which, the applicant is scheduled to appear; the Tribunal may make a decision on the review without taking any further action to allow or enable the applicant to appear before it. This section does not prevent the Tribunal from rescheduling the applicant's appearance before it, or from delaying its decision on the review in order to enable the applicant's appearance before it as rescheduled." (emphasis added) There was no express list of factors which the Tribunal was required to take into account in making its decision on the review without taking any further action to allow or enable an applicant to appear before it. However, the power was not 121 Li (2013) 249 CLR 332 at 351 [29], 362 [63], 370-371 [88]-[92]. 122 Li (2013) 249 CLR 332 at 363 [65], 370-371 [90]. NettleJ without limitation. The scope and purpose of the Act provided limits123 on the exercise of the Tribunal's power under s 426A. Further, s 425 of the Act imposed requirements that the Tribunal must invite the applicant to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review124, unless, relevantly, the Tribunal considers that it should decide the review in the applicant's favour, on the material before it125. Pursuant to s 425A, if an applicant is invited to appear before the Tribunal, the Tribunal must give the applicant notice of the day on which, and the time and place at which, the applicant is scheduled to appear126, and that notice must be given by one of the methods specified in s 441A127, unless the applicant is in immigration detention (in which case, alternative methods are prescribed)128. The notice methods specified in s 441A included: by hand129; by hand to a person at the applicant's last residential or business address130; by prepaid post or other prepaid means131; transmission by fax, email or other electronic means132; or by giving documents to a carer of a minor133. If the Tribunal complies with the requirements of s 441A, the applicant is taken to have received the document under s 441C. Relevantly, s 441C(4) provided that if the Tribunal gives a document to a person by the method in 123 See Li (2013) 249 CLR 332 at 363-364 [67], 370-371 [90], 376 [109] citing Klein (1963) 109 CLR 467 at 473; see also at 473-474. 124 s 425(1) of the Act. 125 s 425(2) of the Act. 126 s 425A(1) of the Act. 127 s 425A(2)(a) of the Act. 128 s 425A(2)(b) of the Act. 129 s 441A(2) of the Act. 130 s 441A(3) of the Act. 131 s 441A(4) of the Act. 132 s 441A(5) of the Act. 133 s 441A(6) of the Act. NettleJ s 441A(4) (which involves dispatching the document by prepaid post or other prepaid means), the person is taken to have received the document after the expiry of a prescribed time period. Third, the Tribunal's statutory task, as revealed by a consideration of the Act as a whole and, in particular, the provisions of Pt 7 (including those to which reference has been made), is to arrive at the correct or preferable decision in the case before it, according to the material before it134. Fourth, the range of powers, discretions and obligations granted to the Tribunal by Pt 7 of the Act, and the way in which the statute conditions them, contains an exhaustive statement of the rules of natural justice in relation to the "matters" that Part deals with135. Fifth, Parliament has conferred on the Tribunal the necessary flexibility to ensure that the Tribunal can fully perform its statutory task. Indeed, the discretion in s 426A itself provides flexibility so that the Tribunal's statutory task can be performed. Put in different terms, the legislative scheme of the Act concerning review of decisions in Pt 7 is not one that requires the exercise of power, or the performance of obligations, where conferred on the Tribunal, on a once only basis. The nature of the subject matter of the review and the manner of the exercise of the review may, on occasion, mean that the power may be exercised and the function or duty must be performed from time to time, as occasion requires, in order to arrive at the correct or preferable decision in the case before the Tribunal according to the material before it136. But, of course, the exercise of the discretion in s 426A does not require the Tribunal to postpone or refrain from making a decision on a review every time an applicant suggests they wish to provide further information, cannot meet a deadline, or fails to appear. The discretion in s 426A recognises that the exercise of the discretion in a given case will be affected by the subject matter of the particular review, the course the review has taken, the Tribunal's approach throughout the review, the applicant's situation and conduct throughout the review and the other surrounding circumstances. That is, there is an area within which the 134 Li (2013) 249 CLR 332 at 341-342 [10], 371-372 [93]. 135 Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 266 [35]; [2010] HCA 23. 136 Li (2013) 249 CLR 332 at 341-342 [10], 371-372 [93]. NettleJ decision-maker has a genuinely free discretion which resides within the bounds of legal reasonableness137. It is against that important framework that the particular review the subject of this appeal must be considered. Facts On 3 December 2013, SZVFW and his wife applied for Protection (Class XA) visas. The application gave as SZVFW and his wife's residential and postal address an address in Roselands, New South Wales. SZVFW did not agree and Border Protection ("the Department") communicating with him by fax, email or other electronic means. He did provide a mobile number. Both SZVFW and his wife undertook to inform the Department if they intended to change their address for more than 14 days while their application was being considered. the Department of Immigration By a letter dated 18 December 2013, the Department acknowledged the application had been lodged and sought further information from SZVFW and his wife. That letter was addressed to the Roselands address. By a letter dated 3 March 2014, the Department invited SZVFW to an interview with a delegate of the Minister on 26 March 2014, and also invited SZVFW to provide any additional supporting documents. Again, the letter was addressed to the Roselands address. The letter stated, among other things, that "[i]f you do not attend the interview your application may be decided on the information already provided to us". On 25 March 2014, a Mandarin-speaking departmental officer contacted SZVFW to tell him that his interview required rescheduling. The next day, on 26 March 2014, a Mandarin-speaking departmental officer contacted SZVFW to tell him that his interview was to be held at 11.00am on 9 April 2014. Neither SZVFW nor his wife attended the scheduled interview or provided any further supporting documents. By a letter dated 16 April 2014, the Department advised SZVFW and his wife that their application had been refused. The letter was addressed to the Roselands address. On 12 May 2014, SZVFW and his wife lodged an application for review by the Tribunal ("the Review Application"). The Review Application specified the Roselands address as the address to which correspondence was to be sent. 137 Li (2013) 249 CLR 332 at 363 [65]-[66]. NettleJ The Review Application also contained a mobile number and an email address for SZVFW. By a letter dated 12 May 2014, the Tribunal acknowledged receipt of the Review Application and invited SZVFW and his wife to provide material or written arguments as soon as possible. The letter was addressed to the Roselands address. Neither SZVFW nor his wife responded to the invitation. By a letter dated 15 August 2014, the Tribunal invited SZVFW and his wife to appear before it on 10 September 2014 ("the Invitation Letter"). The Invitation Letter was addressed to the Roselands address. It was sent by ordinary post, not registered post. The Invitation Letter stated, among other things, that "[i]f you do not attend the scheduled hearing, the Tribunal may make a decision without taking any further action to allow or enable you to appear before it". Neither SZVFW nor his wife contacted the Tribunal or attended the hearing. The Tribunal exercised the power conferred on it by s 426A(1) of the Act, as it then stood, to make a decision on the Review Application without taking any further action to allow or enable SZVFW and his wife to appear before it. The Tribunal affirmed the decision under review. By a letter dated 15 September 2014, SZVFW and his wife were informed of the Tribunal's decision. The letter was addressed to the Roselands address. SZVFW and his wife sought judicial review of the Tribunal's decision in the Federal Circuit Court. Decisions below In order to explain how the Full Court fell into error, it is necessary to trace the reasoning of the primary judge and then the reasoning of the Full Court. Federal Circuit Court The primary judge accepted that there was no obligation on the Tribunal, in every case where there has been a failure to respond to an invitation to appear, to search records and find other ways of communicating with the applicant. The primary judge expressed concern as to whether she could be satisfied that the Invitation Letter was dispatched within three working days of the date of the letter, so as to come within the method prescribed by s 441A(4) of the Act and thereby satisfy s 426A(1)(a), but held that it was unnecessary to resolve that issue. In effect, according to her Honour, it was enough that the Tribunal was not able, on the evidence before it, to satisfy itself that SZVFW and his wife had been formally advised of the hearing, or that SZVFW and his wife were, in a practical sense, aware of the hearing date and time. NettleJ Her Honour considered that the Invitation Letter was of great significance because SZVFW and his wife had applied for protection visas and their attendance at the hearing could have made a difference to the outcome of the review. Her Honour considered that the Tribunal easily could have identified another avenue of communicating with SZVFW and his wife because the Review Application included a mobile number and an email address. But there was no evidence of attempted, subsequent email or telephone communication with SZVFW and his wife. The primary judge further noted that the matter had been before the Tribunal for a relatively short period of time, there was not a lengthy period during which SZVFW and his wife did "nothing", they were not represented by a migration agent or solicitor, and the Invitation Letter was the first invitation sent to them. In that sense, the absence of a pattern of communication between the Tribunal and SZVFW and his wife was not determinative. The primary judge concluded that, even assuming that the Invitation Letter was dispatched within the prescribed period (such that the Invitation Letter complied with ss 425, 425A and 426A(1)), the Tribunal's decision to make a decision on the Review Application without taking any further action to allow or enable SZVFW and his wife to appear before it was legally unreasonable. Full Court The Full Court stated that it was not its task to "step into the shoes of the primary judge" and determine for itself whether the Tribunal's exercise of the discretion under s 426A was unreasonable in the legal sense138. Instead, "to succeed in the appeal" the Full Court required the Minister to "establish an appealable error on the part of the primary judge, whether that error be of fact or law"139. According to the Full Court, the primary judge's finding that the Tribunal's decision under s 426A was unreasonable "was fundamentally a decision which turned on her Honour's evaluative judgment"140 and which "necessarily involved the primary judge determining what weight she should give to individual relevant circumstances"141. 138 SZVFW (2017) 248 FCR 1 at 14 [43]. 139 SZVFW (2017) 248 FCR 1 at 14 [43]. 140 SZVFW (2017) 248 FCR 1 at 14 [44]. 141 SZVFW (2017) 248 FCR 1 at 14 [44]. NettleJ It followed, in the view of the Full Court, that it was for the Minister to persuade the Full Court that the primary judge's evaluation of the legal unreasonableness ground involved an error akin to that required to be established in appeals from discretionary judgments142. Adopting that approach, the Full Court deferred to the weight attributed by the primary judge and concluded that no error had been identified in the primary judge's reasons. The approach adopted by the Full Court led it into error. The Full Court had to examine the administrative decision of the Tribunal to determine whether the primary judge was correct to conclude that the administrative decision was legally unreasonable. Contrary to the conclusion reached by the primary judge (and the Full Court), the administrative decision of the Tribunal was not legally unreasonable. Tribunal's decision was not legally unreasonable The Tribunal found, based on the evidence before it, that the Invitation Letter was sent to the last address for correspondence provided in connection with the review. On review, that finding was not challenged. That finding provided the basis to establish that the requirements of s 441A, and in particular s 441A(4), were satisfied. Although the Tribunal did not expressly refer to s 441C(4), the effect of that provision is to deem SZVFW and his wife to have received the Invitation Letter if it was dispatched by prepaid post or by other prepaid means. The significance of compliance with s 441A(4) was that the deeming effect of s 441C(4) was engaged and ss 425 and 425A were satisfied. The Tribunal was then permitted to engage s 426A and make a decision on the review without taking any further action to allow an applicant to appear before it. And that is what the Tribunal did in this case. The primary judge's analysis paid no regard to the fact that s 441C had been satisfied, the place of that presumption in the statutory scheme, or the fact that there was no attempt to rebut that statutory presumption. Granted, as the primary judge put it, s 425 of the Act imposed an obligation on the Tribunal to give SZVFW and his wife a "meaningful opportunity" to appear and present evidence and arguments in support of the Review Application. But the Tribunal did not deny them that opportunity. Moreover, the primary judge paid no regard to the lack of interaction of SZVFW and his wife with the delegate of the Minister when they did not attend to be interviewed by the delegate, where there could be no suggestion that they 142 SZVFW (2017) 248 FCR 1 at 13-15 [40]-[47], especially at 14-15 [45]-[47]. NettleJ had not received a written invitation to attend that interview and even after being contacted by telephone. That is, there was no suggestion that the failure of SZVFW and his wife to attend the hearing before the Tribunal was unexpected or remarkable. Finally, although the primary judge was correct to identify that the Invitation Letter was of great importance to SZVFW and his wife, the primary judge paid no regard to the fact that the hearing before the delegate was equally, if not more, important and SZVFW and his wife did not attend that hearing. The fact that SZVFW and his wife did not attend before the delegate provided a further basis for the Tribunal to proceed to determine the application. The approach and position of SZVFW and his wife did not change before the Tribunal. Their failure to provide further information when invited by the Tribunal, or to attend the hearing, was consistent with their conduct before the delegate. That conduct did not improve or detract from the position of SZVFW and his wife that had existed at the time of the delegate's decision. The exercise of the statutory decision-making power by the Tribunal was not beyond power. Having regard to the statutory source of the power exercised in making the decision, the subject matter of the particular review, the course the review had taken, the Tribunal's approach throughout the review, the situation and conduct of SZVFW and his wife throughout the review and the other surrounding circumstances, the exercise of the power was not unreasonable. Conclusion and orders For those reasons, the Tribunal's decision to make a decision on the Review Application without taking any further action to enable SZVFW and his wife to appear before it was not legally unreasonable. The appeal should be allowed. Paragraph 1 of the order of the Full Court of the Federal Court of Australia dated 2 March 2017 should be set aside and, in its place, it should be ordered that: the appeal be allowed; and the order of the Federal Circuit Court of Australia dated 19 August 2016 be set aside and, in its place, order that the application be dismissed. The Minister is to pay the first and second respondents' costs of this appeal. Edelman Introduction Speaking in the context of the adjudication of questions of construction of legislation, Aronson, Groves and Weeks observe that "[o]ne of the assumptions underlying Marshall CJ's judgment in Marbury v Madison remains to this day, namely, that to every question of law, there can be only one right answer"143. On judicial review of, or appeal from, a decision concerning the construction of legislation, a contract, a will, or a trust, no latitude is given to a primary decision maker even where the primary decision was one about which opinions might reasonably differ. "As to construction, there is always one and only one true meaning to be given to fully expressed words."144 However, there are other categories of case, also where the primary decision is one about which opinions might differ, but where, other legal errors aside, review is limited to, or an appeal is constrained to, decisions outside a permissible range. On judicial review of administrative action, the legality of an otherwise lawful decision disclosing no error of law is generally assessed for reasonableness rather than for correctness. On appeals from decisions commonly described as "discretionary", judicial restraint is also required even if the appellate judge would have reached a different decision. For instance, in criminal law, the classic example is that a sentence will not usually be overturned merely because the appellate judge would have made a different order145. In civil law, the classic example concerns an assessment of general damages for personal injury146. This appeal concerns the nature of judicial restraint in these two categories. The Refugee Review Tribunal had affirmed a decision of a delegate of the Minister to refuse to grant protection visas to the first and second respondents. The Federal Circuit Court of Australia held that the Tribunal acted beyond power on the ground of unreasonableness. On appeal, the Full Court of the Federal Court of Australia effectively held that judicial restraint should be exercised because the decision of the Federal Circuit Court was "largely an 143 Aronson, Groves and Weeks, Judicial Review of Administrative Action and Government Liability, 6th ed (2017) at 202 [4.80] (footnote omitted). 144 Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 at 78; [1925] HCA 145 House v The King (1936) 55 CLR 499 at 504-505; [1936] HCA 40. 146 Miller v Jennings (1954) 92 CLR 190 at 196; [1954] HCA 65. Edelman evaluative one"147 and comparable to circumstances where a "discretionary" decision is made. The first issue on this appeal concerns the nature of judicial review for legal unreasonableness. For the reasons below, the Federal Circuit Court erred in concluding that the decision of the Tribunal should be set aside on the ground of unreasonableness. The second issue concerns the circumstances in which judicial restraint should be exercised on an appeal. The Full Court should not have exercised judicial restraint on the appeal from the Federal Circuit Court. This appeal should be allowed. Judicial review for unreasonableness The basis for judicial review on the ground of unreasonableness The reasonableness constraint that usually applies to the exercise by an administrator of statutory power is generally based upon a statutory implication148. Where the statutory implication imposes a duty of reasonableness as a condition of decision making, violation of that duty means that the decision will have been made beyond power and therefore unlawfully. This appeal, and the discussion that follows, is concerned only with unreasonableness as an independent ground of is not concerned with unreasonableness as a description of those other grounds of judicial review concerned with specific errors in decision making, such as "[b]ad faith, dishonesty ... attention given to extraneous circumstances, [and] disregard of public policy"149. judicial review. The implication of reasonableness is not unique to statutes. When a legal power is conferred by an instrument, it is often implied that the legal power will be exercised reasonably. For instance, at least where reasons are given, courts 147 Minister for Immigration and Border Protection v SZVFW (2017) 248 FCR 1 at 15 148 Kruger v The Commonwealth (1997) 190 CLR 1 at 36; [1997] HCA 27; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 650 [126]; [1999] HCA 21; Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 351 [29]; [2013] HCA 18. 149 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 365 [69], quoting Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 229. Edelman will examine the exercise of general powers in trust deeds150 or will trusts151 to determine whether the decision could reasonably have been reached by the trustee. Even in contract, where powers are usually expected to be exercised with self-interest, a contractual clause that empowers one party to act to the detriment of another has sometimes been construed to require the power holder to reach the decision reasonably152 or, in more detail, "reasonably and with fair dealing having regard to the interests of the parties (which will, inevitably, at times conflict) and to the provisions, aims and purposes of the contract, objectively ascertained"153. In every case the terms of the statute or instrument, in their context, determine whether the implication is required. The precise content of the implied duty of reasonableness will also depend on the circumstances. In England it has been said that the terms and context of a contract might impliedly proscribe "a decision to which no reasonable person having the relevant discretion could have subscribed"154. Similarly, when a trustee has an implied duty to act reasonably in the exercise of a power of 150 In re Beloved Wilkes's Charity (1851) 3 Mac & G 440 at 448 [42 ER 330 at 333- 334]; Metropolitan Gas Co v Federal Commissioner of Taxation (1932) 47 CLR 621 at 633; [1932] HCA 58; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 441-442. 151 Tempest v Lord Camoys (1882) 21 Ch D 571 at 580, see also at 578. See also Cox v Archer (1964) 110 CLR 1 at 7; [1964] HCA 18; Lutheran Church of Australia South Australia District Inc v Farmers' Co-operative Executors and Trustees Ltd (1970) 121 CLR 628 at 639; [1970] HCA 12. 152 Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) (2015) 329 ALR 1 at 161-163 153 Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 at 273 [288], citing Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; Hughes Bros Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91; Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349; Burger King Corporation v Hungry Jack's Pty Ltd (2001) 69 NSWLR 558 and United Group Rail Services Ltd v Rail Corporation New South Wales (2009) 74 NSWLR 618. 154 Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (No 2) [2001] 2 All ER (Comm) 299 at 323 [64]; Braganza v BP Shipping Ltd [2015] 1 WLR 1661 at 1672 [28], see also at 1677 [53], 1688 [103]; [2015] 4 All ER 639 at 650, see also at 654- Edelman appointment, perhaps in cases other than those where reasons are provided155, it may sometimes be that the duty of reasonableness obliges the trustee not to act perversely156 or in a manner in which "no reasonable trustee ... could possibly act"157. Ultimately, however, the assessment of reasonableness will be undertaken in light of a construction of the instrument as a whole, and influenced by expressions such as "their sole and absolute discretion"158 in the empowering provision. Like other legal instruments, statutes often confer powers upon a decision maker without any express condition as to the manner in which those powers must be exercised. To the question: "how should the power be exercised?" the implication will not usually be: "in any way that the decision maker desires". Rather, it will usually be implied that the power should be exercised reasonably. As for the content of the duty of reasonableness, following the classic exposition by Lord Greene MR159, the content of the implication of reasonableness as an independent ground of judicial review has often been expressed in this Court in terms similar to those which ask whether a decision is "so unreasonable that no reasonable repository of the power could have taken the impugned decision or action"160. In Canada, in a distinction now abandoned161, this high standard of 155 See, eg, In re Beloved Wilkes's Charity (1851) 3 Mac & G 440 at 448 [42 ER 330 at 333-334]; In re Londonderry's Settlement [1964] Ch 918 at 928-929; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 441-442. 156 In re Lofthouse, an Infant (1885) 29 Ch D 921 at 930. 157 Dundee General Hospitals Board of Management v Walker [1952] 1 All ER 896 at 907, see also at 901, 905. 158 See, eg, Dundee General Hospitals Board of Management v Walker [1952] 1 All ER 896 at 898. 159 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 160 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 36; [1990] HCA 21. See also Buck v Bavone (1976) 135 CLR 110 at 118; [1976] HCA 24; Abebe v The Commonwealth (1999) 197 CLR 510 at 554 [115]-[116]; [1999] HCA 14; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 654 [136]; Minister for Immigration and Citizenship v SZIAI (2009) 83 ALJR 1123 at 1128 [20]; 259 ALR 429 at 434; [2009] HCA 39; Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611 at 645 [122]-[123]; [2010] HCA 16. 161 Dunsmuir v New Brunswick [2008] 1 SCR 190 at 213 [32], 214-218 [34]-[41]; Canada (Canadian Human Rights Commission) v Canada (Attorney General) [2011] 3 SCR 471 at 482 [15]. Edelman unreasonableness was once described as "patent" unreasonableness in contrast with "unreasonableness simpliciter"162. Although Lord Cooke of Thorndon presciently observed nearly two decades ago163, and a majority of this Court more recently said164, that the legal standard of reasonableness is not necessarily limited to patent unreasonableness, it is not helpful to attempt to divide unreasonableness into predetermined species. Rather, the precise content of an implication of reasonableness, where it is implied, will be based upon the context, including the scope, purpose, and real object of the statute165. An important matter of context in relation to the statutory implication is the legal tradition in which many statutes conferring administrative powers have been enacted. A strong part of that tradition has been the common description of unreasonableness in the terms of "patent" unreasonableness. One reason for this description may be that the consequence of a finding of unreasonableness is that the decision by the body entrusted by Parliament will be beyond power and unlawful. The strong terms of the common description of unreasonableness may be based upon an assumption that Parliament did not manifest an intention that such a conclusion be lightly reached. To reiterate, this is not to suggest that there are two, or more, tests of unreasonableness. There is only one, but its content is assessed in light of the terms, scope, purpose, and object of the statute, as Allsop CJ eloquently said in Minister for Immigration and Border Protection v Stretton166. 162 Canadian Union of Public Employees Local 963 v New Brunswick Liquor Corporation [1979] 2 SCR 227 at 237; Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748 at 777-779 [57]-[60]; Pushpanathan v Canada (Minister of Citizenship and Immigration) [1998] 1 SCR 982 at 1005 [27]. See also Allan, "Common Law Reason and the Limits of Judicial Deference", in Dyzenhaus (ed), The Unity of Public Law, (2004) 289 at 297, speaking of the "specious sub-divisions – super-Wednesbury and sub-Wednesbury". 163 R v Chief Constable of Sussex, Ex parte International Trader's Ferry Ltd [1999] 2 AC 418 at 452. 164 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 364 [68], see also at 375 [105]. 165 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 364 [67], citing Klein v Domus Pty Ltd (1963) 109 CLR 467 at 473; [1963] HCA 54. 166 (2016) 237 FCR 1 at 5 [9]. Edelman The unreasonableness conclusion of the Federal Circuit Court The first respondent and his wife, the second respondent ("the respondents"), applied to the Tribunal for review of a decision of a delegate of the Minister, who had refused their original applications for Protection (Class XA) visas. The respondents did not attend the Tribunal hearing. At the relevant time, if an applicant for review were invited (under s 425 of the Migration Act 1958 (Cth), with the notice required under s 425A) to appear before the Tribunal and did not appear at the designated time and place, s 426A(1) of the Migration Act empowered the Tribunal to make a decision on the review "without taking any further action to allow or enable the applicant to appear before it". There was no dispute in this Court that the respondents had been invited, in compliance with the requirements of the Migration Act, to appear before the Tribunal. They did not appear at the designated time and place. The Tribunal proceeded to hear the matter in the absence of the respondents. The reasons that the Tribunal gave for doing so were essentially threefold: (i) the respondents had been invited to appear before the Tribunal by a letter that was sent to their last identified address for correspondence; (ii) in the letter sent to the respondents the Tribunal had said that, if the respondents did not attend the scheduled hearing, the Tribunal may make a decision without taking any further action to allow or enable them to appear; and (iii) the respondents had not made any contact with the Tribunal, including to provide any further documentation, in respect of their scheduled appearance or the review application more generally. The respondents sought review of the Tribunal's decision. The Federal Circuit Court held that the Tribunal had acted unreasonably when it proceeded under s 426A of the Migration Act in the absence of the respondents to consider, and refuse, their applications for protection visas. The primary judge relied upon a number of matters in reaching her conclusion that the decision was unreasonable: (i) the lack of evidence before the Tribunal that the letter was delivered by ordinary post167; (ii) the relatively short period of time between the sending of the invitation and the hearing168; (iii) the significance of the hearing to the respondents169; and (iv) the lack of "follow-up" by the Tribunal in the absence 167 SZVFW v Minister for Immigration and Border Protection (2016) 311 FLR 459 at 168 (2016) 311 FLR 459 at 473 [77]. 169 (2016) 311 FLR 459 at 473 [79]. Edelman of a response from the respondents, despite the Tribunal having the respondents' email address and a telephone number170. in determining whether The matters relied upon by the primary judge do not, even in combination, establish legal unreasonableness. In particular, two matters of statutory context require a highly demanding approach legal unreasonableness exists in the exercise of the power under s 426A(1), which is in Div 4 of Pt 7 of the Migration Act. First, there was the objective of review of protection visa decisions under Pt 7, expressed in s 420(1) as providing a mechanism that is "fair, just, economical, informal and quick". Secondly, and in relation to "fairness and justice", s 422B(1) provided that "[Div 4] is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with" and, as Nettle and Gordon JJ observe, the effect of s 441C(4) was to deem the respondents to have received the invitation to the hearing. The decision by the Tribunal, for the reasons it gave, was not legally unreasonable. Three further reasons, additional to those given by the Tribunal, are also relevant. First, in the original applications by the respondents to the Minister, they undertook to inform the Department if they intended to change their address for more than 14 days while their applications were being considered. No change of address was provided. It was reasonable for the Tribunal to draw the inference that the respondents were still accessing mail at that address. Secondly, the letter from the Department refusing the respondents' original applications was sent to their nominated address. Thirdly, prior to the decision of the delegate, the respondents had not attended a scheduled interview with the Department, despite apparently being made aware of the interview by letters sent to their nominated address and a telephone call rescheduling the interview. It would have been reasonable to infer that a rescheduled hearing before the Tribunal might have been futile. Judicial restraint on appeals The second issue on this appeal is whether the principles of judicial restraint could preclude an appellate court from substituting its own view on whether the Tribunal's decision was unreasonable if the appellate court considered that the answer given by the primary judge was open in the circumstances. 170 (2016) 311 FLR 459 at 474 [80]. Edelman Judicial restraint, deference, and discretionary decisions The concept I describe in these reasons (and have described previously171) as "judicial restraint" is one for which different labels are sometimes used. One label commonly used is the review of a "discretionary decision". Another is the review of a decision where "deference" is afforded to the primary decision maker. Although labels in this area "ought not to fetter our substantive thinking"172, the use of some labels can lead to confusion, as it did in this case. The label "discretionary", when used in relation to a decision that is the subject of judicial restraint, was said by Gleeson CJ, Gaudron and Hayne JJ in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission173 to describe a situation in which "'no one [consideration] and no combination of [considerations] is necessarily determinative of the result'. Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made". Similarly, in Norbis v Norbis174, Mason and Deane JJ spoke of a discretionary decision as one involving "value judgments in respect of which there is room for reasonable differences of opinion". In addition to cases involving these "discretionary" decisions, there are other, similar circumstances where judicial restraint is exercised by extension from these cases. In Miller v Jennings175, Dixon CJ and Kitto J exercised judicial restraint in the assessment of general damages, saying that "there is generally so much room for individual choice so that the assessment of damages is more like an exercise of discretion than an ordinary act of decision". More controversially, four members of this Court in Batistatos v Roads and Traffic Authority (NSW)176 might be taken as suggesting that the duty177 of a court to exercise its power to prevent an abuse of process is subject to appellate judicial restraint for the same reasons. A similar approach was thought by the Full Court to apply in this case. 171 The Pilbara Infrastructure Pty Ltd v Economic Regulation Authority [2014] WASC 172 Steyn, "Deference: a Tangled Story", [2005] Public Law 346 at 350. 173 (2000) 203 CLR 194 at 205 [19]; [2000] HCA 47, quoting Jago v District Court (NSW) (1989) 168 CLR 23 at 76; [1989] HCA 46. 174 (1986) 161 CLR 513 at 518; [1986] HCA 17. 175 (1954) 92 CLR 190 at 196. 176 (2006) 226 CLR 256 at 264 [7]; [2006] HCA 27. Cf at 321-322 [223], 326 [238]. 177 Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536. Edelman The Full Court said that an appellate court will approach its consideration of a primary judge's assessment of the unreasonableness of the Tribunal's decision by "broad analogy" with "helpful guidance ... from well-known authorities which emphasise the need for caution by an appellate court which is asked to disturb the outcome of a discretionary judgment"178. The expression "discretion" is commonly used and unobjectionable. But, to avoid confusion, it must be used with care. There are two reasons for this. First, "discretion" can be a slippery term that is used in law in a number of different ways179. Even in the particular sense described above – a situation where no one consideration is determinative of the result – the label could be attached to almost any circumstance where legal standards impose duties upon a decision maker but the decision maker is required to evaluate different, competing considerations. Not all of those circumstances require the exercise of judicial restraint when reviewing the decision of the primary decision maker. In other words, although the notion of "discretion" is associated with "room for individual choice", there is a danger that it will be thought that a decision concerning an evaluative, and uncertain, legal issue is one that should be subject to judicial restraint upon review. This danger is exemplified by the approach of the Full Court in this case. Secondly, some categories of decision that were once discretionary are still described as such, although they are no longer the subject of any real judicial restraint. For instance, the historical foundation of much equitable doctrine lay in the notion of a discretionary application of conscience180. This Court has said of equitable remedies that "the interference of a court of equity is a matter of mere discretion"181. Yet, it is well recognised that legal rules now govern the equitable "discretion" to award specific performance182, to grant 178 (2017) 248 FCR 1 at 14 [45]. 179 Norbis v Norbis (1986) 161 CLR 513 at 518; Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 204 [19]. 180 See Ramsay Health Care Australia Pty Ltd v Compton (2017) 91 ALJR 803 at 820- 821 [99]-[100]; 345 ALR 534 at 555; [2017] HCA 28. 181 Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 at 114; [1995] HCA 14, quoting Story and Perry, Commentaries on Equity Jurisprudence, as Administered in England and America, 12th ed (1877), vol 1 at 677 §693. 182 Pakenham Upper Fruit Co Ltd v Crosby (1924) 35 CLR 386 at 401; [1924] HCA 55; J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 at 297-298, 314; [1931] HCA 15. Edelman injunctions183, or to award an account of profits184. No judicial restraint is exercised by appellate courts in considering whether there has been compliance with those rules. the decision as one where "deference" In other jurisdictions, the language of discretion as a description of circumstances in which judicial restraint is exercised is often replaced by the describing primary decision maker. For instance, in the House of Lords in R v Director of Public Prosecutions; Ex parte Kebilene185, Lord Hope of Craighead said that some categories of case created an area "within which the judiciary will defer, on democratic grounds, to the considered opinion of the elected body or person". And in the Supreme Court of Canada in Dr Q v College of Physicians and Surgeons of British Columbia186, McLachlin CJ, writing for the Court, said that a reviewing judge's task was "to review the decision with the appropriate degree of curial deference". But the label "deference" has been deprecated in Australia187. It has historical188, unfortunate connotations of is afforded 183 Pakenham Upper Fruit Co Ltd v Crosby (1924) 35 CLR 386 at 400-401; J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 at 298-299, 307. 184 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 559; [1995] HCA 18. 185 [2000] 2 AC 326 at 381. See, further, R v Lambert [2002] QB 1112 at 1124 [16]; Brown v Stott (Procurator Fiscal, Dunfermline) [2003] 1 AC 681 at 710-711; R (L) v Commissioner of Police of the Metropolis [2010] 1 AC 410 at 440 [74]; R (GC) v Commissioner of Police of the Metropolis [2011] 1 WLR 1230 at 1244 [43]; [2011] 3 All ER 859 at 876; R (Nicklinson) v Ministry of Justice [2015] AC 657 at 783 [78], 870 [348]; R (Lord Carlile of Berriew) v Secretary of State for the Home Department [2015] AC 945 at 965 [22], 971 [33], 1007 [150], 1015 [180]. 186 [2003] 1 SCR 226 at 234 [16]. See also Dunsmuir v New Brunswick [2008] 1 SCR 190 at 226 [62], 255 [135]; Smith v Alliance Pipeline Ltd [2011] 1 SCR 160 at 172- 173 [24]-[25], 187 [78], 188-200 [80]-[106]; Nor-Man Regional Health Authority Inc v Manitoba Association of Health Care Professionals [2011] 3 SCR 616; Rogers Communications Inc v Society of Composers, Authors and Music Publishers of Canada [2012] 2 SCR 283; Agraira v Canada (Public Safety and Emergency Preparedness) [2013] 2 SCR 559; Mouvement laïque québécois v Saguenay (City) [2015] 2 SCR 3; Commission scolaire de Laval v Syndicat de l'enseignement de la région de Laval [2016] 1 SCR 29; Quebec (Attorney General) v Guérin [2017] 2 SCR 3 at 24 [41]. 187 Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 153 [44]; [2000] HCA 5. 188 Hamburger, Is Administrative Law Unlawful?, (2014) at 285, 299. Edelman servility189. Where judicial restraint is exercised, the appellate or reviewing court is not deferring to the primary decision maker in the sense of submission to the "source" or "pedigree" of the decision190. Rather, the court is recognising that in cases where judicial restraint is required, then within a range of possible, usually reasonable, decisions made in the proper way191, the court is required not to interfere with the primary decision. When judicial restraint is required Sometimes the reason for judicial restraint is said to be that "there is room for reasonable differences of opinion, no particular opinion being uniquely right"192. This explanation might be said to confuse uncertainty with indeterminacy193 but, in any event, it cannot be sufficient because otherwise it could mean that restraint could be exercised even when reviewing decisions about the legal meaning of legislation or decisions about the common law. Although there is often room for reasonable differences of opinion in those cases which "consist of reasoned thinking supporting one view or the other", and although judges sometimes avoid the language of correctness, saying that they "adopt, accept, or prefer one argument to the other"194, there is no judicial restraint exercised in Australia when reviewing a primary decision concerning the legal meaning of a legislative provision or the common law195. Where the source of the power and grounds of review is statutory, then any requirement for judicial restraint should be implied from, or based upon, the terms of the statute. For instance, the judicial restraint required on review of the quantum of an award of contribution between tortfeasors arises where the 189 R (ProLife Alliance) v British Broadcasting Corporation [2004] 1 AC 185 at 240 190 Allan, "Common Law Reason and the Limits of Judicial Deference", in Dyzenhaus (ed), The Unity of Public Law, (2004) 289 at 291. 191 House v The King (1936) 55 CLR 499 at 505. 192 Norbis v Norbis (1986) 161 CLR 513 at 518. 193 Dworkin, Justice for Hedgehogs, (2011) at 90-96. Cf Raz, "Legal Principles and the Limits of Law", (1972) 81 Yale Law Journal 823 at 843-848. 194 Northwood Inc v British Columbia (Forest Practices Board) (2001) 86 BCLR (3d) 215 at 229 [36]. See also Wurridjal v The Commonwealth (2009) 237 CLR 309 at 353 [71]; [2009] HCA 2. 195 Cf Chevron USA Inc v Natural Resources Defense Council Inc 467 US 837 (1984). Edelman relevant statute creating that power "intends to give a very wide discretion to the judge or jury entrusted with the original task", and from the breadth of that discretion it is inferred that "[m]uch latitude must be allowed to the original tribunal"196. On the other hand, as the appellant observed in written submissions, a statutory provision that proscribes "conduct that is unconscionable, within the meaning of the unwritten law"197, is, like the doctrine of unconscionability in equity upon which it is based, not one that requires judicial restraint198, at least to the extent that the evaluative exercise is not affected by the natural limitations of the appellate judge199. One significant indication of a manifested legislative intention that judicial restraint should be exercised upon review is the breadth of the decision making power afforded to the primary decision maker. In Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission200, Gleeson CJ, Gaudron and Hayne JJ focused upon the statutory breadth of the decision making power, saying: "The latitude may be considerable as, for example, where the relevant considerations are confined only by the subject matter and object of the legislation which confers the discretion. On the other hand, it may be quite narrow where, for example, the decision-maker is required to make a particular decision if he or she forms a particular opinion or value judgment." Their Honours characterised as "discretionary decisions" requiring judicial restraint those involving (i) the satisfaction or otherwise of the decision maker that industrial action being pursued was a threat for the purposes of s 170MW(3) of the then Workplace Relations Act 1996 (Cth), and (ii) whether the bargaining period should be terminated201. 196 Pennington v Norris (1956) 96 CLR 10 at 15-16; [1956] HCA 26. 197 Competition and Consumer Act 2010 (Cth), Sched 2, s 20, cf ss 21, 22. 198 Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 111 [167]; [2003] HCA 18. 199 See Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 434-435 [144]; [2013] HCA 25; Thorne v Kennedy (2017) 91 ALJR 1260 at 1272-1273 [41]-[43]; 350 ALR 1 at 14-15; [2017] HCA 49. 200 (2000) 203 CLR 194 at 205 [19] (footnote omitted). 201 (2000) 203 CLR 194 at 205 [20]. Edelman The breadth of a statutory decision making power is not conclusive of a manifested statutory intention that judicial restraint should be exercised upon review of the decision. All matters of statutory context are relevant. Those matters include the nature of the rights in issue and the manner in which they have historically been adjudicated, the extent to which the subject matter of the decision is concerned with matters of general public interest rather than merely individual rights and interests, and the expertise of the primary decision maker in the area of adjudication. Further, where the review is by way of an appeal, the nature of any restraint upon the judge will depend upon whether, on the proper construction of the legislation conferring the right of appeal, the appeal is by way of a hearing de novo, an appeal in the strict sense, or an appeal by way of rehearing. I agree with the section of Gageler J's reasons headed "The need for appealable error", concerning the difference between correction of error on an appeal in the strict sense and correction of error on an appeal by way of rehearing, and the natural limitations that can sometimes constrain an appellate judge reaching a conclusion that the primary decision maker erred202. No judicial restraint in an appeal concerning an unreasonableness finding judge the primary The power of to make a finding of legal unreasonableness derived from s 476 of the Migration Act. That section provided the Federal Circuit Court with the same original jurisdiction that this Court has under s 75(v) of the Constitution, subject to exceptions that are not presently relevant. As I have explained, the primary judge's judicial review for legal unreasonableness involved both a question of law and the application of that law. Like questions of construction of legislation, contracts, wills, or trusts, it was a question about which it is readily acknowledged in this country that there can only be one right answer and an appeal from the decision is concerned with its correctness203. It contrasts with questions such as the sentence to be imposed for a crime or the general damages to be awarded for personal injury where the uncertainty of result is a significant factor, sometimes described as a circumstance where there is no right answer, which requires judicial restraint on an appeal from the decision. 203 Cf Groia v Law Society of Upper Canada, 2018 SCC 27 at [46]; Canada (Canadian Human Rights Commission) v Canada (Attorney General), 2018 SCC 31 at [27], [73]; Law Society of British Columbia v Trinity Western University, 2018 SCC 32 at [158], [253]; Trinity Western University v Law Society of Upper Canada, 2018 SCC 33 at [50]. Edelman The assessment of legal unreasonableness was also a legal question concerned with the boundaries of the authority of the Tribunal204. Although there may be uncertainty in some, perhaps many, cases involving decisions of legal unreasonableness, and although the assessment of legal unreasonableness involves value judgments upon which it might be said that reasonable minds could differ, our constitutional tradition has never been to exercise judicial restraint in relation to appeals or judicial review of this category of question. If it were constitutionally permissible, there would need to be clear words in legislation, or a strong foundation for an inference, before an appellate court would depart from that tradition. There is no foundation for such an inference in the Migration Act. Conclusion The appeal should be allowed and orders made in the terms proposed by 204 Canada (Canadian Human Rights Commission) v Canada (Attorney General), 2018 SCC 31 at [111]. |
HIGH COURT OF AUSTRALIA LEICHHARDT MUNICIPAL COUNCIL APPELLANT AND RESPONDENT Leichhardt Municipal Council v Montgomery [2007] HCA 6 27 February 2007 ORDER Appeal allowed; Set aside so much of paragraph 1 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 8 December 2005 as dismissed the appeal to that Court; Remit the matter to the Court of Appeal of the Supreme Court of New South Wales for further hearing; and The appellant to pay the respondent's costs of the appeal to this Court. On appeal from the Supreme Court of New South Wales Representation P R Garling SC with R S Sheldon for the appellant (instructed by Phillips Fox) G T W Miller QC with A R Reoch for the respondent (instructed by Teakle Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Leichhardt Municipal Council v Montgomery Torts – Negligence – Duty of care – Roads authority – Independent contractor employed by roads authority to perform work on public road – Work not extra- hazardous – Independent contractor performed work negligently – Road user injured – Whether roads authority owed road user a non-delegable duty of care – Common features of relationships attracting non-delegable duties of care in common law of Australia – Whether existence of non-delegable duty of care consistent with Brodie v Singleton Shire Council (2005) 206 CLR 512 – Whether exception to general rule that a party is not liable for the negligence of an independent contractor. Statutes – Interpretation – Roads Act 1993 (NSW) – Nature of powers given to roads authority – Power of roads authority to carry out road work – Right of member of the public to pass along public road – Whether statutory scheme evinced an intention that roads authority owed road user a non-delegable duty of care – Whether statutory scheme inconsistent with existence of a non-delegable duty – Significance of statute for applicable rule of the common law. Words and phrases – "non-delegable duty of care", "highway rule", "non-feasance rule". Roads Act 1993 (NSW), ss 5, 7, 71, 145, 146. GLEESON CJ. The appellant Council was the roads authority, within the meaning of the Roads Act 1993 (NSW), for Parramatta Road, Leichhardt. That road is one of Australia's oldest and busiest public highways, and passes through densely populated suburbs of Sydney. On both sides of the road there are footpaths which, by definition, are part of the road for the purposes of the Roads Act. The Roads Act vested the road in the appellant. Section 71 conferred upon the appellant a power to carry out work on the road. The appellant engaged a contractor, Roan Constructions Pty Limited (Roan Constructions), to perform work on the footpath. There is nothing unusual about that. Local councils commonly use their own staff for routine road maintenance, but they also commonly engage outside contractors to undertake substantial road works. The work on the footpath was in progress in April 2001. It was being carried out between 7.30 pm and 5.30 am on four nights per week. No doubt the restricted hours were intended to accommodate, as far as possible, the heavy pedestrian traffic. Part of the specifications for the work provided for artificial grass or carpet to be placed over the top of the disturbed area to provide clean access to commercial properties. On an evening in April 2001, the respondent, Mr Montgomery, was walking along part of the footpath on which Roan Constructions had been working. He walked across some carpet that had been laid by Roan Constructions' employees. The trial judge found that the carpet had been placed carelessly over a telecommunications pit which had a broken cover. The respondent fell into the pit and suffered personal injuries. On the trial judge's finding about the conduct of Roan Constructions' employees, that company was clearly liable to the respondent. The respondent had sued both Roan Constructions and the appellant. The claim against Roan Constructions was compromised before hearing, and the case proceeded against the appellant. This appeal is concerned with the question of the appellant's liability to the respondent. The primary judge found the appellant liable. She assessed damages at an amount in excess of that for which the claim against Roan Constructions had been compromised, and adjusted the damages to allow for the amount received from Roan Constructions. The respondent, in his case against the appellant, set out to establish fault on the part of officers of the appellant. Such alleged fault was not the subject of any finding by the primary judge or, later, by the Court of Appeal. Both courts accepted the respondent's alternative submission, which was recorded by the primary judge as being "that the council owed to the plaintiff a non delegable duty of care, notwithstanding the fact that the footpath reconstruction works ... were being carried out by a contractor ... Roan Constructions Pty Ltd". In the Court of Appeal, there was an unsuccessful challenge to the finding that employees of Roan Constructions had negligently covered the pit with carpet at a time when the pit cover was broken. That issue is not the subject of this appeal. The Court of Appeal agreed with the primary judge that, there having been negligence on the part of Roan Constructions' employees, the appellant Council was liable without any need for the respondent to show fault on the part of Council officers. Following a line of English authority1, and earlier decisions of the New South Wales Court of Appeal2, Hodgson JA, with whom Mason P and McColl JA agreed, said: "[W]here a road authority engages a contractor to do work on a road used by the public, such as to involve risk to the public unless reasonable care is exercised, the road authority has a duty to ensure reasonable care is exercised; and the road authority will be liable if the contractor does not take reasonable care. However, the road authority will not be liable for casual or collateral acts of negligence by the contractor." A conclusion that, in given circumstances, a defendant who is sued in negligence owed a duty going beyond a duty to exercise reasonable care to avoid injury (or injury of a certain kind) to a plaintiff, and extending to a duty to ensure that reasonable care to avoid injury to the plaintiff was exercised, is commonly described as a conclusion that a defendant was under a non-delegable duty of care to a plaintiff. It is a proposition of law concerning the nature or content of the duty of care3. A duty of this nature involves what Mason J described in Kondis v State Transport Authority4 as "a special responsibility or duty to see that care is taken". Such a duty enables a plaintiff to outflank the general principle that a defendant is not vicariously responsible for the negligence of an independent contractor. The present case provides an example. No one doubted that, if causative negligence on the part of Council employees had been established, the Council would have been liable. No one doubted that the finding of causative negligence on the part of Roan Constructions' employees meant that Roan Constructions was liable. However, there being no suggestion of any fault in the choice of Roan Constructions as a contractor, if it had not been for the special duty held (as a matter of law) to exist, the appellant would not have been liable for an injury caused only by the negligence of Roan Constructions' employees. 1 Hardaker v Idle District Council [1896] 1 QB 335; Penny v Wimbledon Urban District Council [1899] 2 QB 72; Holliday v National Telephone Company [1899] 2 QB 392; Salsbury v Woodland [1970] 1 QB 324; Rowe v Herman [1997] 1 WLR 2 Roads & Traffic Authority v Scroop (1998) 28 MVR 233; Roads & Traffic Authority (NSW) v Fletcher (2001) 33 MVR 215. cf Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 585 [106]. (1984) 154 CLR 672 at 687. The appellant submits that the primary judge, and the Court of Appeal, erred in law in holding that the appellant was under a special responsibility or duty of the kind described above, and that the appellant's duty was the ordinary duty, that is to say, a duty to take reasonable care to prevent physical injury to the respondent. That duty may have embraced such matters as the terms of any necessary approvals or instructions in relation to the work, undertaking any necessary supervision, warning pedestrians and other road users of hazards, and like matters. There were allegations of failure on the part of the appellant, through its officers, to take reasonable care in relation to some such matters, but those allegations were left unresolved. If the appellant is correct in its argument about the nature of the duty it owed to the respondent it will be necessary for the matter to be remitted for further consideration on that basis. In considering the question of non-delegable duties of care it is convenient to put to one side other questions of law that may arise concerning the nature, or content, of a duty of care. Such questions might arise because of the kind of injury suffered by the plaintiff, or the circumstances of that injury, or the relationship between the parties, or the responsibilities of the defendant. For example, in Graham Barclay Oysters Pty Ltd v Ryan5 actions were brought against a grower of oysters, a distributor of oysters, a local council and the State. As against the grower and the distributor, it was a product liability case. The defendants, who produced and supplied oysters, owed a duty to take reasonable care to avoid injury to consumers. The issue was one of breach; an issue of fact. As against the council and the State, however, the issue was one of law. What would it have meant to say that the State of New South Wales owed a duty to take reasonable care to avoid injury to consumers of oysters? If a duty were formulated in that fashion, what would be the issues of fact to be decided on the question of breach? If there were a trial by jury, what matters would a judge direct a jury to consider? In a broadly political sense, it is plausible to assert that a government owes a duty to take care of its citizens, but when it comes to formulating a duty for the purposes of a claim for negligence, a duty expressed at that level of abstraction would lack practical content. In any action in negligence, a proposition about a duty of care must be capable of being expressed in a manner that would enable a judge to direct a jury how to set about deciding whether there had been a breach. This is not difficult in well established areas such as litigation arising out of industrial accidents, motor vehicle accidents, occupiers' liability or professional negligence. It may be otherwise, however, in cases which lie at the boundaries of the law of negligence. There, the separation of issues of law (affecting duty) from issues of fact (affecting breach) may be more problematic. (In this context I include among issues of fact questions of normative judgment that often affect decisions about reasonableness). The decreasing use of juries in many Australian jurisdictions tends to obscure (2002) 211 CLR 540. distinctions between questions of duty and questions of breach. Questions that would need to be kept separate at a jury trial may merge, or at least overlap, in the reasoning of a judge sitting alone. In this appeal, however, it is clear that we are concerned only with a question of law, that is, the nature of the duty of care owed by the appellant to the respondent. In practice, the difference between a duty to take reasonable care and a duty to ensure that reasonable care is taken matters where it is not an act or omission of the defendant, or of someone for whose fault the defendant is vicariously responsible, that has caused harm to the plaintiff, but the act or omission of some third party, for whose fault the defendant would not ordinarily be vicariously responsible. If a negligent act or omission is that of a defendant, or a person for whose fault the defendant is vicariously responsible (such as an employee), no problem arises. Again, if the nature of a defendant's responsibility is such that it can be discharged lawfully or properly only by the defendant personally, an attempted delegation would be irrelevant. Some responsibilities are non-delegable in the sense that it is of their essence that they be performed by a particular person, perhaps because of trust or confidence reposed in that person. In some cases, a duty to take care involves a duty to act personally. That kind of non-delegability should not be confused with a case where the engagement of a third party to perform a certain function is consistent with the exercise of reasonable care by a defendant, but the defendant's legal duty is not merely to exercise reasonable care but also (if a third party is engaged) to ensure that reasonable care is taken. In such a case, the third party's failure to take care will result in breach of the defendant's duty. The legal consequence is that the circumstance that the third party is an independent contractor does not enable the defendant to avoid liability. It is because of its practical effect of outflanking the general rule that a defendant is not vicariously responsible for the fault of an independent contractor that the identification of this special responsibility or duty is important. In the exercise of statutory functions, non-delegability of the first kind (strict non-delegability) would arise, for example, where a power or duty was conferred in terms, or in a context, such that it had to be performed or exercised personally by the repository of the power or duty or, if the repository were a corporation or other legal entity, by that corporation or entity. Non-delegability of the second kind would arise where there was nothing to prevent the engagement of a third party to perform the function, but it appeared from the terms of the statute that the legislature intended the repository of the power or duty to have a responsibility for ensuring the exercise of reasonable care even if a third party were engaged to perform the function. That would involve a question of statutory construction. In Brodie v Singleton Shire Council6, I attached importance to the consideration that the so-called non-feasance rule of immunity of highway authorities was itself a rule of statutory construction, governing the approach by which courts decided whether a statute conferring a power, or imposing a duty, to maintain or repair public roads creates, or denies, or is consistent or inconsistent with, civil liability to an injured road user. That was in a dissenting judgment, but the relationship between statute and common law in this area of public liability is undeniable. This Court held that the non-feasance rule is no longer part of the common law of Australia. It did not, however, doubt the relevance of statute in determining the existence and nature of a roads authority's duty of care to road users. After Brodie, State legislatures reinstated the distinction between misfeasance and non-feasance, while modifying the pre-existing law. For example, in New South Wales (the State with which Brodie was concerned) the Civil Liability Act 2002 (NSW) by s 45 enacted what the Act described as a "special non-feasance protection for roads authorities". A roads authority is not liable for harm arising from failure to carry out road work unless it had actual knowledge of the particular risk the materialisation of which resulted in the harm. The potential liability of roads authorities to road users, with its implications for government revenues, is a matter of obvious legislative concern. The appellant submits that the reasoning of the majority in Brodie has undermined fatally the authorities on which the respondent relied successfully in the present case. In considering whether that is so, the powers and responsibilities conferred on the appellant under the Roads Act require examination. There is nothing in the Roads Act which makes this a case of what I have called strict non-delegability. Section 71 provides that a roads authority "may carry out road work on any public road for which it is the roads authority". This takes the form of a discretionary power. Having regard to the well-known practice of the engagement by public authorities of independent contractors it would have been surprising to find in the Roads Act any express or implied statutory requirement that roads authorities undertake road construction and maintenance only through their own employees. In practice, such a requirement would be absurd. There is nothing in the Act to that effect. It will be necessary to return to the statute in considering the broader concept of non-delegability. Before doing so, however, it is convenient to say something about the special duty of care postulated, and its past application to roads authorities. (2001) 206 CLR 512 at 533 [33]. In Kondis v State Transport Authority7, Mason J, after describing the various circumstances in which the law imposed a special, non-delegable, duty of care, explained the rationale as follows: "The element in the relationship between the parties which generates a special responsibility or duty to see that care is taken may be found in one or more of several circumstances. The hospital undertakes the care, supervision and control of patients who are in special need of care. The school authority undertakes like special responsibilities in relation to the children whom it accepts into its care. If the invitor be subject to a special duty, it is because he assumes a particular responsibility in relation to the safety of his premises and the safety of his invitee by inviting him to enter them. And in Meyers v Easton the undertaking of the landlord to renew the roof of the house was seen as impliedly carrying with it an undertaking to exercise reasonable care to prevent damage to the tenant's property. In these situations the special duty arises because the person on whom it is imposed has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised. As we have seen, the personal duty which has been recognized in the other cases which I have discussed, such as Dalton v Angus, may rest on rather different foundations which have no relevance for the present case." The reference to Dalton v Angus8 is significant. In that case, Lord Blackburn had said that "a person causing something to be done, the doing of which casts on him a duty, cannot escape from the responsibility attaching on him of seeing that duty performed by delegating it to a contractor"9. Mason J said that it was impossible to regard that statement as having general application to the ordinary case in which a duty of care is owed, and explained Dalton v Angus as a case of nuisance where a landowner and a contractor were held liable for the actions of a sub-contractor in carrying out excavations which caused subsidence on adjoining land10. Mason J's view that cases like Dalton v Angus rested on rather different foundations from those of the cases of non-delegable (1984) 154 CLR 672 at 687. It is noteworthy, although presently irrelevant, that Mason J's references to the liability of an invitor preceded Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479. (1881) 6 App Cas 740. (1881) 6 App Cas 740 at 829. 10 (1984) 154 CLR 672 at 682. duty referred to earlier in the paragraph ties in with what has been said in England about the responsibility of roads authorities in the area for which they were generally regarded as liable, that is, misfeasance. In Salsbury v Woodland11, Widgery LJ referring to "dangers created in a highway" said: "There are a number of cases on this branch of the law, a good example of which is Holliday v National Telephone Co ... These, on analysis, will all be found to be cases where work was being done in a highway and was work of a character which would have been a nuisance unless authorised by statute. It will be found in all these cases that the statutory powers under which the employer commissioned the work were statutory powers which left upon the employer a duty to see that due care was taken in the carrying out of the work, for the protection of those who passed on the highway. In accordance with principle, an employer subject to such a direct and personal duty cannot excuse himself, if things go wrong, merely because the direct cause of the injury was the act of the independent contractor." Holliday v National Telephone Company12 was a case about work undertaken by a telephone company laying telephone wires on a street. The Lord Chancellor, Lord Halsbury said13: "There was here an interference with a public highway, which would have been unlawful but for the fact that it was authorized by the proper authority. The telephone company so authorized to interfere with a public highway are, in my opinion, bound, whether they do the work themselves or by a contractor, to take care that the public lawfully using the highway are protected against any act of negligence by a person acting for them in the execution of the works." That passage, it may be noted, refers to an obligation "to take care". Salsbury v Woodland and Holliday v National Telephone Company were among the English authorities cited by Hodgson JA in the Court of Appeal in this case. He also referred to Hardaker v Idle District Council14, which concerned a 11 [1970] 1 QB 324 at 338. 13 [1899] 2 QB 392 at 398-399. district council constructing a sewer under statutory powers, and damaging a nearby house, and Penny v Wimbledon Urban District Council15, which concerned a district council repairing a highway. In the former case, Dalton v Angus was applied16. In the latter case, the former case was followed17. That this line of authority continues to apply in England appears from what was said in 1997 by Simon Brown LJ (with whom Morritt LJ and Sir Brian Neill agreed) in Rowe v Herman18. His Lordship cited the observations of Widgery LJ in Salsbury v Woodland set out above. Evidently, the statutory abolition in the United Kingdom of the non-feasance rule was regarded as irrelevant to this issue. We are not here concerned with the non-delegable duty that arises from the conduct of extra-hazardous activities. When, in Burnie Port Authority v General Jones Pty Ltd19, this Court decided that the rule in Rylands v Fletcher should be treated as subsumed in the ordinary law of negligence, part of the justification advanced for that decision was the protection afforded, within the law of negligence, by the concept of non-delegable duty20. Road works could in some circumstances involve an extra-hazardous activity, but that is not this case. The possibility of a special duty of care falling upon roads authorities extending beyond a duty to take reasonable care to a duty to see that reasonable care is taken, is accepted in North America21. In Lewis v British Columbia22, in 1997, the Supreme Court of Canada held that the statutory powers exercised by the British Columbia Ministry of Transportation and Highways, which employed an independent contractor to remove dangerous rocks beside a highway, were such that the Ministry was under a duty to ensure that its independent contractor took reasonable care. The Supreme Court attached importance to a statutory provision that not only placed the contractor's work under the Ministry's control, 16 [1896] 1 QB 335 at 345. 17 [1899] 2 QB 72 at 77. 18 [1997] 1 WLR 1390 at 1393. 19 (1994) 179 CLR 520. 20 (1994) 179 CLR 520 at 550-554. 21 Prosser and Keeton on the Law of Torts, 5th ed (1984) at 511; Restatement of Torts, 2d, vol 2, Ch 15, Topic 2: "Harm Caused by Negligence of a Carefully Selected Independent Contractor" at 394 (1965). 22 [1997] 3 SCR 1145. but also required the Ministry to direct the work23. This provision was interpreted to mean that the Ministry was required to conform "to a statutory duty to personally direct [the] works", a duty imposed in the interests of public safety. At the centre of this problem there is a question of statutory construction. The common law should define the duty of care to which a roads authority is subject by reference to the nature of the statutory powers given to the authority, and the legislative intendment discernible from the terms in which those powers are granted, considered in the light of the purposes for which they are conferred. The first object of the Roads Act, stated in s 3, is to set out the rights of members of the public to pass along public roads. The first substantive provision of the Act is s 5, which provides that a member of the public is entitled as of right to pass along a public road whether on foot, in a vehicle or otherwise. Roads authorities are provided for by s 7. They are to have the functions conferred on them by the Act. Part 6 of the Act deals with road works. These may be carried out by roads authorities. Roads authorities are required, in certain circumstances, to obtain approval for works from the Roads and Traffic Authority. By definition, road work includes any kind of work, building or structure (such as, for example, a roadway, footway, bridge or tunnel) that is constructed or installed on or in the vicinity of a road for the purpose of facilitating the use of the road as a road. Section 71 empowers a roads authority to carry out road work. Since such work will commonly affect the public right declared by s 5, this provision authorises what otherwise may be a nuisance. Roads authorities may construct tunnels or bridges (s 78). These, of course, may be major works, and often are undertaken by independent contractors who would be expected to apply extensive resources and expertise, including expertise that would not be available to a local council. In the present case we are concerned with a fairly basic form of construction, but operations within the purview of the Act include some which require a high level of technical skill. Section 145 vests a public road in a local government area in fee simple in the appropriate roads authority. Section 146 provides that the dedication of land as a public road does not constitute the owner of the road as an occupier of land. It is consistent with that statutory scheme to conclude that there is a duty in a roads authority to take reasonable care to prevent physical injury to a person such as the respondent from the carrying out of road works. It is also consistent with the statutory scheme to conclude that, if an independent contractor is engaged to perform such works, the roads authority remains under a "personal" duty to take reasonable care to prevent such injury, and that such duty is not discharged merely by exercising care in the selection of the contractor. Reasonable care on the part of the roads authority may well involve a certain 23 [1997] 3 SCR 1145 at 1161 [25]. level of scrutiny of the contractor's plans and supervision of the contractor's activities. It is a different thing to say that the legislation imposes, or is consistent with the imposition, of a duty to ensure that no employee of the independent contractor act carelessly. This raises a more general question concerning non-delegable duties. A "special" responsibility or duty to "see" or "ensure" that reasonable care is taken by an independent contractor, and the contractor's employees, goes beyond a duty to act reasonably in exercising prudent oversight of what the contractor does. In many circumstances, it is a duty that could not be fulfilled. How can a hospital ensure that a surgeon is never careless? If the answer is that it cannot, what does the law mean when it speaks of a duty to ensure that care is taken? It may mean something different. It may mean that there should be an exception to the general rule that a defendant is not vicariously responsible for the negligence of an independent contractor. The present case illustrates the artificiality of attributing to the appellant a duty to ensure that care was taken. The failure to take care consisted in a workman, in the employment of Roan Constructions, placing a carpet over a telecommunications pit that had a defective cover, in circumstances where the workman should have noticed the defect. Thus a trap was created and the respondent fell into it. To speak of a local council having a duty to ensure that such an apparently low-level and singular act of carelessness does not occur is implausible. It is one thing to find fault on the part of council officers where there has been a failure to exercise reasonable care in supervising the work of a contractor, or in approving a contractor's plans and system of work. It is another thing to attribute to the council a legal duty of care which obliges the council to do the impossible: to ensure that no employee of the contractor behaves carelessly. The problem is even more acute if the source of this duty of care is said to be found in statute. One of the things that is special about this duty is that it is a duty to do the impossible. That is unlikely to have been intended by the legislature. If the law were frankly to acknowledge that what is involved is not a breach by the defendant of a special kind of duty, but an imposition upon a defendant of a special kind of vicarious responsibility, a different problem would have to be faced. It would be necessary to identify and justify the exceptions to the general rule that a defendant is not vicariously responsible for the negligence of an independent contractor, and to provide a means by which other exceptions may be identified when they arise. That, in turn, would require an explanation of the general rule so as to account for the circumstances in which it yields to exceptions. It may be difficult to justify those circumstances in terms of fixed categories. Within those categories there may be individual cases some of which may be thought to merit making them an exception and others of which may not. In the passage in Kondis quoted above, Mason J indicated that the personal, special duty recognised in the Dalton v Angus line of cases, which includes the highway cases, may rest on foundations rather different from the foundations of the cases he had discussed earlier. In Salsbury v Woodland, Widgery LJ said such cases rest on considerations of nuisance and statutory construction. In Brodie, the majority in this Court24 said that the liability of highway authorities should now be treated as covered by the modern law of negligence, into which public nuisance has been absorbed25. They formulated a duty of care, to apply in cases of non-feasance as well as misfeasance, being a duty to take reasonable care that the exercise of or failure to exercise the powers by such authorities does not create a foreseeable risk of harm to road users26. We are here concerned with a case of misfeasance. The later statutory reinstatement of a measure of protection for non-feasance is irrelevant. For reasons already explained, I do not take Brodie to deny the importance of statutory construction. The formulation of the duty of care given in Brodie, in its application to cases of misfeasance, and to a case where a roads authority has exercised its powers by engaging an independent contractor, is consistent with what I have already indicated is the construction I would place upon the Roads Act. It is not a special duty to ensure anything; certainly not a duty to ensure that no worker behaves carelessly. It is a duty to exercise reasonable care. It is not discharged merely by engaging a reputable contractor. The exercise of reasonable care for the protection of road users, in a case where an independent contractor is engaged, may be affected by the nature of the work involved and the resources respectively available to the roads authority and the contractor. What is required of a local council which engages a major construction company to build a bridge or tunnel may differ from what is required of another council in different circumstances. The content of a requirement of reasonable care adapts to circumstances, unlike the content of a requirement to ensure that care is taken. As was mentioned earlier, in this case there is an unresolved issue about an alleged failure by the appellant's officers to exercise reasonable care. The concept of a non-delegable duty, elaborated as a duty to ensure that care is taken, may have a useful, if not entirely admirable, role in some cases involving the tort of negligence. We are concerned only with roads authorities. We are concerned particularly with the Roads Act, and the powers and responsibilities it confers. The appellant had a duty to take reasonable care, a duty that was not discharged merely by engaging the services of Roan Constructions. It did not have a duty to ensure that the employees of Roan Constructions did not behave carelessly. The basis upon which the case was 24 Gaudron, McHugh and Gummow JJ, with whom Kirby J agreed. 25 (2001) 206 CLR 512 at 564-570 [116]-[129]. 26 (2001) 206 CLR 512 at 577 [150]. decided against the appellant at first instance and in the Court of Appeal was incorrect. The appeal should be allowed. I agree with the consequential orders Kirby KIRBY J. The issue in this appeal is whether the New South Wales Court of Appeal27 erred in refusing to set aside a judgment of the District Court of that State28. By that judgment, the primary judge (Quirk DCJ) upheld the entitlement of Mr Leslie Montgomery ("the respondent") to recover damages for personal injury from the appellant, Leichhardt Municipal Council ("the Council"). The respondent's cause of action against the Council was pleaded solely in negligence. His recovery was based on his contention that the Council owed him a "non-delegable duty of care". That contention was based on a line of authority in the Court of Appeal concerning the ambit of the duty owed by roads authorities to users of a road, beginning with that Court's earlier decision in Roads and Traffic Authority v Scroop29. In that decision, the District Court held that a roads authority, causing or permitting operations on a public road, owed a non-delegable duty of care to road users, including for any negligent act or omission of an independent contractor. The holding in Scroop has been followed in several cases30. In applying the holding to the respondent's claim, the primary judge conformed to legal authority that was binding on her. The main purpose of this appeal is to afford this Court the opportunity to consider the correctness of the Scroop line of cases. That task is not an easy one. The law governing non-delegable duties of care has been described as a "mess"31, comprising "a random group of cases"32 giving rise to a basis of liability that is "remarkably under-theorised"33. The instances in which a non-delegable duty has 27 Leichhardt Municipal Council v Montgomery [2005] NSWCA 432. 28 Montgomery v Leichhardt Municipal Council, unreported, 1 December 2004 per 29 (1998) 28 MVR 233. 30 Roads and Traffic Authority (NSW) v Fletcher (2001) 33 MVR 215; Roads and Traffic Authority (NSW) v Palmer (2003) 38 MVR 82; Ainger v Coffs Harbour City Council [2005] NSWCA 424; Coombes v Roads and Traffic Authority (NSW) [2006] NSWCA 229. 31 Murphy, "The Liability Bases of Common Law Non-Delegable Duties – A Reply to Christian Witting", (2007) 30(1) University of New South Wales Law Journal (forthcoming) (hereafter Murphy, "Liability Bases"). 32 Deakin, Johnston and Markesinis, Markesinis and Deakin's Tort Law, 5th ed (2003) at 597, fn 372. 33 Murphy, "Liability Bases". Kirby been upheld have been variously labelled "an inexplicable rag-bag of cases"34 comprising an erroneous feature of the "über tort of negligence"35 and an "embarrassing coda" to judicial and scholarly writings on the scope of vicarious liability for wrongs done by others36. Judges have been taken to task for their reluctance, or incapacity, to express a clear theory to account for the nature and ambit of non-delegable duties of care37. The whole field has been assailed as one involving serious defects38, containing numerous "aberrations"39 that have plunged this area of the law of tort into "juridical darkness" and "conceptual uncertainty"40. Courts of high authority have been accused of coming to the right result for the wrong reasons; or the wrong result despite adopting the right reasons41. Special leave was granted in this appeal, in the hope of clarifying the underlying rationale of tort liability for non-delegable duties beyond the somewhat Delphic endeavours offered by this Court in the past, notably by Mason J in Kondis v State Transport Authority42. 34 Stevens, "Non-Delegable Duties and Vicarious Liability", in Neyers, Chamberlain and Pitel (eds), Emerging Issues in Tort Law, (forthcoming) (hereafter Stevens, "Non-Delegable Duties"). 35 Stevens, "Non-Delegable Duties". 36 Stevens, "Non-Delegable Duties". See also McIvor, "The Use and Abuse of the Doctrine of Vicarious Liability", (2006) 35 Common Law World Review 268 at 37 Murphy, "Juridical Foundations of Common Law Non-Delegable Duties", in Neyers, Chamberlain and Pitel (eds), Emerging Issues in Tort Law, (forthcoming) (hereafter Murphy, "Juridical"). 38 Murphy, "Juridical". 39 Murphy, "Juridical". 40 Murphy, "Juridical". 41 Stevens, "Non-Delegable Duties". 42 (1984) 154 CLR 672 at 687. The passage is set out in the reasons of Gleeson CJ at Kirby Ordinarily, a person is not liable in law for the wrongs done by that person's independent contractors, as distinct from employees43. This principle has been repeatedly upheld by this Court44, including in a case where the independent contractor was, on one view, a "representative agent"45 or part of the "organisation"46 of the principal47. Clearly, to render one person liable in law for wrongs done by another (or to impose direct and personal liability upon that other) something exceptional is required, either as a matter of established legal authority or on the basis of demonstrated legal principle or policy48. So far, although this Court has accepted that certain relationships give rise to a non-delegable duty of care, it has not recognised the relationship of roads authority and road user as one which does so. This Court is not bound to do so, either by the Scroop line of cases in Australia, challenged in this appeal, or by the collection of English authority to which Scroop, and its Australian successors, purport to give effect. In order to decide the present appeal, it is therefore necessary to determine the correctness of Scroop and the local cases that have followed it. To do this, we must decide whether that line of decisions fits comfortably into the body of relevant Australian statute and common law. To assist that decision, much attention was paid, in the argument of this appeal, to the suggested reasons of principle that support the imposition of non-delegable duties of care, as a class. If there is no conceptual unity to the recognised instances of non-delegable duties in tort, repeated observations in this Court suggest that the presently recognised categories should not be expanded49. These observations would afford a reason for declining to extend the categories to the relationship of roads authority and road user. 43 Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 26, 35. 44 Scott v Davis (2000) 204 CLR 333; Hollis v Vabu Pty Ltd (2001) 207 CLR 21; New South Wales v Lepore (2003) 212 CLR 511 at 580 [196]; Sweeney v Boylan Nominees Pty Ltd (t/as Quirks Refrigeration) (2006) 80 ALJR 900; 227 ALR 46. 45 cf Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41. 46 This was Denning LJ's test. See eg Stevenson Jordan and Harrison Ltd v Macdonald and Evans [1952] 1 TLR 101 at 111. 47 Sweeney (2006) 80 ALJR 900 at 913 [61]; 227 ALR 46 at 61-62. 48 Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 252-254; Northern Territory v Mengel (1995) 185 CLR 307 at 347. 49 Reasons of Callinan J at [168] fn 240. Kirby In my view, the liability of a roads authority to road users does not fit appropriately into the kinds of relationships that have so far been accepted in Australia as giving rise to a non-delegable duty of care. In so far as there are common features of those categories, they are not enlivened by the relationship illustrated by the present case. The appeal must therefore be allowed. The facts, legislation and common ground The facts: The relevant facts are now undisputed. The details are set out in the other reasons50. On Saturday evening, 7 April 2001, the respondent, walking three abreast with friends on a busy footpath in Leichhardt, an inner suburb of Sydney, fell into a telecommunications pit whose broken cover had been hidden from view by a carpet placed over it by employees of Roan Constructions Pty Limited ("Roan"). Roan had been engaged by the Council as a contractor to perform work on the footpath. By its employees, Roan did that work negligently. Roan was thus directly liable for such negligence to the respondent. The respondent sued Roan for damages for negligence. He settled that claim for $50,000 inclusive of costs51. However, the respondent's statement of claim had named both Roan and the Council as defendants. Following the settlement with Roan, the primary judge proceeded to hear and determine the respondent's claim in negligence against the Council. That claim was framed in the alternative. It was based on the Council's liability for its own negligence, which was alleged to have caused, or contributed towards, the respondent's injury. It was also based on the Council's suggested non-delegable duty of care for the negligent acts of Roan in repairing the footpath. The primary judge found in favour of the respondent on the latter basis. It followed that she did not have to decide the former, alternative, claim. The primary judge adjusted the judgment entered against the Council to allow for the notional net recovery against Roan pursuant to the settlement, so as to prevent double compensation for Why did the respondent settle against Roan, given that the active agency of the negligence for which he was suing was the conduct of Roan's employee in placing a carpet over a defective covering of a pit situated on a busy suburban 50 Reasons of Gleeson CJ at [1]-[7]; reasons of Hayne J at [130]-[135]; reasons of 51 Leichhardt Municipal Council v Montgomery [2005] NSWCA 432 at [5]. 52 Montgomery v Leichhardt Municipal Council, unreported, 1 December 2004 at 30 per Quirk DCJ. Kirby footpath? Given the seriousness of the respondent's injuries (found to justify a judgment for more than five times that of the settlement with Roan) why did the respondent compromise his claim against the contractor? It was not, presumably, because he wanted to have his legal entitlements considered by this Court, and to assist in the clarification of the law of non-delegable duties in Australia. Nor, by inference was it because Roan was uninsured. The specification for the paving contract between the Council and Roan was in evidence. In a conventional provision, that contract expressly required: "The contractor must carry Public Liability insurance with a minimum cover of Ten Million Dollars ($10,000,000)." The contract also contained a provision that inferentially gave rise to the placement of the carpet by Roan's employees, although in a way that was unintended: "Access is to be maintained to shopfronts/residences at all times. All commercial properties are to have artificial grass or carpet over the top of the road base to provide clean access." The mysteries of the negotiations that led to the relatively modest settlement between the respondent and Roan are, of course, unknown. The only clues that are offered appear in the published reasons of the primary judge dealing with an aspect of costs53. According to those reasons, the settlement against Roan occurred shortly before an arbitration of the matter was heard in which the respondent's claim against the Council was unsuccessful, resulting in the hearing in the District Court. The primary judge noted that54: "[A]s with all cases involving slips and falls on Council footpaths or roads, or indeed most Occupier cases, a large element of risk is involved, particularly as the state of the law has developed over the past few years." Inferentially, this observation included a reference to the decision of this Court in Brodie v Singleton Shire Council and Ghantous v Hawkesbury City Council (together, "Brodie")55, the latter adverse to a claim by a pedestrian against a local authority concerning the condition of a suburban footpath. Whatever the reasons, the practical result of the settlement with Roan was that 53 Montgomery v Leichhardt Municipal Council, unreported, 16 December 2004 at 2 per Quirk DCJ. 54 Montgomery v Leichhardt Municipal Council, unreported, 16 December 2004 at 3 per Quirk DCJ. 55 (2001) 206 CLR 512 at 581-583 [163]-[168], 605-607 [244]-[248]. Kirby the respondent was confined in the litigation to his legal entitlements against the Council. In the District Court, the Council was refused a belated application to join Roan in the proceedings as a cross-defendant56. All of the plaintiff's eggs were therefore in the basket labelled Scroop. But the problem with Scroop was the novelty of the legal principle which it endorsed and the attempt it afforded, against repeated decisions of this Court, to bring home liability to the Council in a case where the causative agent of the negligence relied on was not an employee of the Council but an independent contractor, Roan. Truly, if the respondent's action against the Council could succeed, it would afford the respondent a means of "outflanking the general rule" of the common law in Australia that a principal is not liable for wrongs done to a third party by an independent contractor57. The legislation: Two Acts of the New South Wales Parliament need to be considered. The first is the Act, which deals with roads in the State. The relevant provisions of that Act are set out in other reasons58. Reference must also be made to the Civil Liability Act 2002 (NSW) now affording a special non-feasance protection to roads authorities59. However, the latter provision has no direct application to the present case because it was enacted in 2002, after the respondent's injuries occurred. Nor does it alter, retrospectively or at all, the doctrinal shift in the liability of highway and roads authorities for negligence, expressed by this Court in Brodie for the whole of Australia. In so far as the content of the common law is concerned, the Civil Liability Act does not affect the issues to be decided in this appeal. In this instance, the roads authority in question (the Council) had not failed to carry out road work or to consider doing so. On the contrary, the Council had decided to perform such work to the relevant portion of the "road" (the Leichhardt footpath) and had engaged Roan as its contractor to carry out such work. This was not therefore a case of "non-feasance", whether under the former common law or under provisions such as those in the new enactment. On any view, the old classification is immaterial. 56 Montgomery v Leichhardt Municipal Council, unreported, 16 December 2004 at 3 per Quirk DCJ. 57 cf reasons of Gleeson CJ at [9]. See also Dalton v Angus (1881) 6 AC 740. 58 See reasons of Callinan J at [171]-[173], referring to the Act, ss 3, 5, 6, 71, 145 and 59 See reasons of Callinan J at [174]-[177]. Common ground: By the time these proceedings reached this Court, there Kirby was much common ground between the parties. Thus, it was agreed that: The Council was a "roads authority" for the purposes of the Roads Act 1993 (NSW) ("the Act"), in which the relevant "road", including the portion of footpath in question, was vested in the Council by virtue of the Act. An earlier contest, suggesting that the Roads and Traffic Authority of New South Wales was the relevant "roads authority", fell away. It need not be explored; The plaintiff was injured in the course of exercising a right, expressed in s 5(1) of the Act, entitling him "as of right, to pass along a public road … on foot"; The case was not concerned with issues that may sometimes be presented by involvement of a party in extra-hazardous activities. The works undertaken by the Council and by Roan could not be so classified. That issue can likewise be put to one side60; . An original dispute, also litigated in the Court of Appeal, concerning the state of the lid over the pit in the footpath when the carpet was laid over it, was not pursued further. Thus, carelessness of the employees of Roan could no longer be disputed because the placement of a carpet over such a defective lid constituted a clear act of negligence on Roan's part; There was no suggestion in the evidence that, simply by its choice of Roan as a contractor, the Council was itself negligent. Roan was an apparently reputable and competent independent contractor and nothing in the evidence suggested otherwise; and Both parties accepted the change in the expression of the common law with respect to the liability of highway and roads authorities stated by this Court in Brodie61). Neither argued for a return to the former common law rule differentiating between liability of such authorities for "misfeasance" and "non-feasance". In any event, this was not a case where a roads authority had done nothing. The Council had embarked on a project to upgrade the relevant stretch of a public road, namely, the footpath. It had engaged Roan as a contractor to perform the work. In the event, that work was performed negligently, in a way that caused the respondent's injuries. the 60 cf reasons of Gleeson CJ at [18]. 61 (2001) 206 CLR 512. Kirby This narrowing of the factual issues allows this Court to address the legal issue thus presented. In the given circumstances, is the Council liable in law for the acts and omissions on the part of Roan and its employees? Does such liability exist on the basis that the Council owes a non-delegable duty of care to the respondent by reason of the relationship between a public roads authority and a road user? Defining the bases of liability Five potential bases of liability: Potentially, five bases of liability are presented for determining whether, in accordance with the applicable law, the Council owed a duty of care to the respondent which it breached, resulting in his injuries. They are: Statutory liability of the Council: There is no provision in the Act, whether in express language or by necessary implication, that would warrant a conclusion that, in circumstances such as the present, the Council was rendered liable to the respondent by statute. It is true that, in its objects, the Act contemplates the conferral of functions on roads authorities such as the Council, including in carrying out road work62. Moreover, the Act vests a relevant "road" in an authority such as the Council, in fee simple63. However, these provisions do not impose any identified legal liability on the authority, as the road owner, beyond that of merely being "a person having the care, control and management of the road"64. The power to carry out road work provided by the Act65 is no more than that. It affords the authority to perform what, in the case of a public road, would otherwise constitute a nuisance at common law. However, it does not expressly state any particular standard of performance to be observed by the Council, its employees or contractors. No doubt, in accordance with ordinary principles, the conferral by the Act of the power to "carry out road work" would imply the grant of all privileges, discretions and capacities reasonably necessary to discharge that purpose. However, the respondent did submit that the grant of the power requires or implies perfection, or any like standard, in the carrying out of the work envisaged. At most, the grant of power implied that the roads authority in question would carry out the road work in a way that 62 The Act, s 3(f). 63 The Act, s 145. 64 The Act, s 146(1)(a). 65 The Act, s 71. Kirby was reasonable for such an authority acting within the statutory grant: fairly, reasonably and not arbitrarily. One such way to do this, common in Australia, is by the use of the authority's employees. Another is by the engagement of independent contractors, including highly specialised contractors with skills for particular work which a roads authority does not itself have, and would not reasonably be expected to possess, amongst its own employees. It is not unknown in other countries for the legislature to enact provisions imposing particular standards of care on roads authorities for the performance of designated road works. Thus, in England, by s 41 of the Highways Act 1980 (UK), Parliament imposed on a designated highway authority an express duty to maintain the highway. It is a defence to a claim for damages for a failure to maintain the highway in accordance with this provision for the highway authority to show that it took such care as, in all the circumstances, was reasonably required to ensure that the highway was not dangerous to traffic66. That defence, in turn, is not established merely by proving that the highway authority arranged for an apparently competent person to carry out or supervise the work67. A like duty of care has been read into Canadian highway legislation68. However the Act applicable to the Council's operations in New South Wales falls far short of affording a statutory basis for imposing an affirmative duty on the Council to ensure that road work is carried out without causing injury to persons such as the respondent. A statutory basis for liability in the Council is therefore unavailable. (2) Organisational liability: A second possible basis for holding the Council liable for injury occasioned to a pedestrian by road works on a road within its designated responsibility would be to revive Lord Denning's attempt to explain the ambit of vicarious liability in terms of responsibility for persons working for and within the organisation of the defendant's business69. In his reasons in Kondis, Murphy J sought to rationalise the instances of non-delegable duty, identified in that case, by reference to 66 Highways Act 1980 (UK), s 58. See Stevens, "Non-Delegable Duties". 67 Highways Act 1980 (UK), s 58(2). 68 Lewis (Guardian ad litem of) v British Columbia [1997] 3 SCR 1145, considering Ministry of Transportation and Highways Act RSBC 1979 c 280, ss 14, 48. See also City of Vancouver v McPhalen (1911) 45 SCR 194 and reasons of Gleeson CJ 69 Bank voor Handel en Scheepvaart NV v Slatford [1953] 1 QB 248 at 295. Kirby what he called "the developing organization test". He thought that this was a conceptualisation that would "provide another basis of liability"70. However, so far, despite the imperfections of the conventional doctrinal underpinnings of vicarious liability, the organisation test has not gathered many supporters in Australia. Indeed, in Stevens v Brodribb Sawmilling Co Pty Ltd71, this Court appears to have rejected it. As in other recent cases72, this notion of liability was not revived by the parties to the present appeal, it can likewise be ignored. Representative agent liability: Nor did the respondent make any attempt to propound a basis for the vicarious liability of the Council for the torts of Roan and its employees on the footing of a "broader doctrine" of vicarious liability, such as McHugh J repeatedly expressed in this Court, including in Hollis v Vabu Pty Ltd73. In the light of the negative response to this suggestion, evident in the joint reasons in this Court in Sweeney v Boylan Nominees Pty Ltd (t/as Quirks Refrigeration)74, the failure of the this appeal was respondent understandable. One day, this Court may return to McHugh J's observation in Hollis that "[i]f the law of vicarious liability is to remain relevant in the contemporary world, it needs to be developed and applied in a way that will accommodate the changing nature of employment relationships"75. The great expansion in recent years of the use by public authorities of contractors, and the "out-sourcing" to agents in the place of employees, suggests the possible need to reconceptualise the foundations of vicarious liability. But the present is not the case in which to do so76. to advance such an argument Causative negligence of the Council: The fourth way in which the liability of the Council to the respondent could be enlivened would be to prove that the respondent's injuries were directly caused, or materially contributed to, by the acts or omissions of the Council itself or those of its 70 (1984) 154 CLR 672 at 690. See also Bazley v Curry [1999] 2 SCR 534 at 548-549 71 (1986) 160 CLR 16 at 22-29, 35-36. 72 eg Sweeney (2006) 80 ALJR 900 at 913 [61]; 227 ALR 46 at 61-62. 73 (2001) 207 CLR 21 at 60-61 [101]-[102] per McHugh J. 74 (2006) 80 ALJR 900; 227 ALR 46. 75 (2001) 207 CLR 21 at 54 [85]. See also at 50 [72]. 76 cf Sweeney (2006) 80 ALJR 900 at 920 [104]-[105]; 227 ALR 46 at 71. Kirby own employees. Such a claim was made in the respondent's pleadings. It was also the subject of written submissions, and of a notice of contention, in the Court of Appeal77. The respondent defensively revived that issue in this Court. Although the Council contested the availability of the submission, I am satisfied that it was raised below. Having regard to the bases on which the primary judge and the Court of Appeal decided the respondent's entitlements, the liability of the Council for its own negligence did not have to be determined. Various ways in which such liability might have been argued were canvassed in the parties' submissions. Certainly, an officer of the Council made a number of inspections of the work being performed by Roan. Whether Roan's operations should have been roped off by the Council to prevent pedestrian access; whether such isolation would have been compatible with the need to retain customer access to the adjoining businesses; whether the Council's designated system of laying down carpet was likely to occasion the damage that arose; or whether some other system of placing boards over the disrupted footpath should have been implemented by the Council itself, are all questions that have never been decided. Because it cannot be said that the direct liability of the Council on this footing is bound to fail, or that such arguments are futile, it is just, as the other reasons in this Court conclude, to remit the proceedings, if necessary, for determination of this as yet undecided aspect of the respondent's case. However, the exploration of all of the foregoing issues would be unnecessary if the respondent could maintain the exceptional basis upon which he succeeded at trial and in the Court of Appeal. Non-delegable duty liability: The respondent's success below was based on the conclusion, derived from Scroop, that the Council owed him a duty of care in the performance of road work on a public road rendering the Council liable if a contractor such as Roan did not take reasonable care, save where the injury to the road user was occasioned by some "casual or collateral acts of negligence by the contractor"78. The qualification by reference to "casual or collateral acts of negligence by the contractor" was derived by Hodgson JA from the reasons of the English Court of Appeal in Penny v Wimbledon Urban Council79. In that case, the roads authority's 77 Reasons of Callinan J at [165], [169]. 78 Leichhardt Municipal Council v Montgomery [2005] NSWCA 432 at [23] per Hodgson JA; Mason P concurring at [1], McColl JA concurring at [37]. 79 [1899] 2 QB 72 at 76. Kirby contractor had negligently left a heap of soil on the road, unlighted and unprotected, causing injury to a person who walked along the road after dark. The Council there was held liable and the exception inapplicable. By inference, the same conclusion was reached, by analogy, in the present case80. Basis of the decisions below: Having concluded that the respondent was entitled to recover against the Council on the basis of its non-delegable duty of care, and that the Scroop line of authority was applicable and accurately expressed the Australian common law, it was unnecessary for the Court of Appeal, any more than for the primary judge, to explore any other foundation for the Council's liability. Thus, the primary issue in this appeal is the correctness of that conclusion and the legal principle to which it gives effect. The issues It is convenient to subdivide the issue thus presented by this appeal by reference to a number of sub-issues that can be expressed in the form of three questions: The statutory consistency issue: Is the suggested liability of the Council on the basis of a non-delegable duty of care consistent with the statutory provisions governing the duties and liabilities of the Council in the performance of road work on a road used by the public? The highway liability issue: Is the suggested liability of the Council consistent with the restatement by this Court of the general liability of highway authorities at common law, as explained in this Court's decision in Brodie? The non-delegable duty issue: Is the suggested liability of the Council otherwise consistent with Australian authority on the liability of parties for non-delegable duties? Alternatively, is it consistent with an extension of that authority warranted by past decisions concerning other relationships together with applicable arguments of legal principle and policy? A fourth issue of causation was argued by the Council. However, that issue would only arise for decision if the respondent were to secure favourable answers to each of the previously stated questions. 80 [2005] NSWCA 432 at [28]. Kirby The issue is not resolved by the statute The primacy of statutory law: Where, as in this case, the legislature has enacted a law that is relevant, in any way, to the power and duty of the propounded defendant, a public authority, it is essential to begin the search for any duty of care owed by that defendant under the common law by examining the language and purpose of the statute. Where public law has been enacted, it necessarily enjoys priority over common law rules. No principle of the common law could be accepted by this Court that was in conflict, or inconsistent, with enacted law. That is self-evident. But it is very common for the arguments of parties, and the analysis of courts, to overlook the correct starting point for the elucidation of the governing rule81. Where the legislature has spoken, the applicable law is expressed in the text of its enactment. In the present case, that means the Act. I therefore agree with Gleeson CJ that, in a particular case, the common law defines "the duty of care to which a roads authority is subject by reference to the nature of the statutory powers given to the authority"82. No statement of common law liability of such an authority could be expressed that was incompatible, or inconsistent, with the language of the Act or its intended operation. The relevant silence of the statute: The Act does not contain any express provisions stating a particular standard of care that is to be attained by a roads authority, such as the Council, in the performance of road works necessary to maintain and repair a public road (including a footpath). Still less does the Act impose on a roads authority an express duty to perform particular road works in an identified manner or to ensure that employees, contractors or agents attain particular standards. Given that a roads authority is, by definition, an artificial person which can only act through human agents, it may be inferred that the statutory empowerment of a local government authority, such as the Council, to perform road works, was intended to be fulfilled by human beings such as employees, contractors or other agents. Nothing in the Act is inconsistent with that postulate. Certainly, the Act does not forbid the use of non-employee contractors or agents. Nor does it specify the qualifications of such contractors or agents, or, where they exist, of their employees. Upon all of these matters, the Act is silent. No 81 Central Bayside General Practice Association Ltd v Commissioner of State Revenue (2006) 80 ALJR 1509 at 1527 [77]-[82]; 229 ALR 1 at 21-22, citing Brodie (2001) 206 CLR 512 at 602 [231]. 82 Reasons of Gleeson CJ at [20]; cf Brodie (2001) 206 CLR 512 at 602 [231]-[232]. Kirby particular standards may be implied, of necessity, from the silence of the Act or from its express provisions. It is a fair comment for the Council to argue that, had it been the purpose of the New South Wales legislature to impose particular standards on the performance of road works by a roads authority (such as the Council) it might have been expected that this would have been stated in the Act83. There are such provisions in overseas statutes. However, they are not part of the legislation applicable to the Council84. Had it been the legislature's purpose to provide for the attainment of particular standards, and to affix liability on an authority where such standards had not been attained, the legislature could have enacted such provisions. After all, the imposition of such standards, and the enforcement of such liability against a roads authority, would have clear economic implications for the raising of revenue from the public. Upon such subjects, the Act is silent. It contents itself with dealing with the roads authority's power to perform road works which might otherwise, by the common law, constitute an actionable public nuisance. In Brodie85 the highway and roads authorities relied upon statutory provisions the terms of which were far more explicit than those under consideration in these proceedings. Those provisions were said to express a parliamentary acceptance of the immunity for non-feasance previously accepted as part of the common law86. However, in the majority's conclusions in Brodie, the relevant statutory provisions were held not to prevent the restatement of the common law so as to abolish the erstwhile immunity of such authorities and to subsume their liabilities within the general principles of the law of negligence. The present is an even stronger case. Here, the scope of the legislation is limited to the power of roads authorities, such as the Council, to perform road works. The legislation has wholly omitted reference to the consequences for civil liability of a case where the statutory power has been exercised, not by the Council itself, nor by its employees, but by a contractor and its employees, in a way which has been held negligent. Thus, the Act has not conferred an express immunity from liability on the Council (an issue in Brodie). Yet neither has it 83 cf reasons of Gleeson CJ at [23]. 84 See above these reasons at [50(1)]. See also at [46]. 85 (2001) 206 CLR 512. 86 See Brodie (2001) 206 CLR 512 at 570-571 [130], 598 [222], including s 32(1A) of the Main Roads Act 1924 (NSW), as amended by s 2 of the Main Roads and Local Government (Amendment) Act 1957 (NSW). Kirby imposed liability on the Council to ensure that contractors perform road works without negligently causing damage to third parties (an issue in these proceedings). In both circumstances, by inference, Parliament has left it to the common law to develop and express the extent of any legal liability of the roads authority in a case such as the present. Whilst, for these reasons, the absence of express provisions in the Act, imposing a non-delegable duty on a roads authority such as the Council, for which the respondent contended, tends to militate against the existence of such a duty in this case, as part of the common law, the statute is not decisive. It applies in one State only, whereas the common law must be stated for the whole of Australia. Moreover, the silence of the Act is compatible with a parliamentary purpose to leave issues concerning the liability of roads authorities, such as the Council, to be decided in accordance with general principles of the common law of tort, applicable throughout the nation. Statute does not forbid a duty: It follows that the issue as to whether a non-delegable duty at common law exists in the Council is not decided by the terms of the Act. Nor, by its provisions, does the Act forbid the operation of a non-delegable duty, if that duty is otherwise required by the application of common law principles. The issue is not resolved by the reasoning in Brodie Suggested inconsistency with Brodie: An important part of the Council's argument before this Court comprised an attack on the Court of Appeal's decision in Scroop and the other cases that have endorsed the imposition of a non- delegable duty of care upon road and highway authorities. Part of this attack invoked repeated indications by members of this Court of the need for special care in enlarging the relationships to which a non- delegable duty of care will apply87. However, because such cases have not hitherto involved the liability of roads authorities, they do not squarely address the issue now presented for decision. The Council nonetheless argued that this Court's decision in Brodie, and the way in which the majority in that case reasoned, was fundamentally inconsistent with the proposition now advanced by the respondent. The Council pointed out that the Court of Appeal's decision in Scroop preceded Brodie by 87 See eg Scott v Davis (2000) 204 CLR 333 at 416-417 [248] per Gummow J. See also Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 333 per Brennan CJ, 345-346 per Dawson J, 403 of my own reasons; cf 351 per Toohey J, Kirby three years. It submitted that the Scroop line of authority was fundamentally inconsistent with the decision of the majority in Brodie, which, it said, was designed to subsume the liability of roads and highway authorities within the general law of negligence – by inference removing not only exceptional immunities (as expressed in the former highway rule) but also exceptional liability (as contained in the non-delegable duty principle propounded by the respondent). In particular, the Council latched on to the following passage in the joint reasons in Brodie of Gaudron, McHugh and Gummow JJ88: "The duty which arises under the common law of Australia may now be considered. Authorities having statutory powers of the nature of those conferred by the [Local Government] Act upon the present respondents to design or construct roads, or carry out works or repairs upon them, are obliged to take reasonable care that their exercise of or failure to exercise those powers does not create a foreseeable risk of harm to a class of persons (road users) which includes the plaintiff. Where the state of a roadway, whether from design, construction, works or non- repair, poses a risk to that class of persons, then, to discharge its duty of care, an authority with power to remedy the risk is obliged to take reasonable steps by the exercise of its powers within a reasonable time to address the risk. If the risk be unknown to the authority or latent and only discoverable by inspection, then to discharge its duty of care an authority having power to inspect is obliged to take reasonable steps to ascertain the existence of latent dangers which might reasonably be suspected to exist." In my reasons in Brodie89 I agreed with the joint reasons that the former immunity conferred on highway and roads authorities by the common law, as expressed in such earlier decisions as Buckle v Bayswater Road Board90 and Gorringe v Transport Commission (Tas)91, should no longer be followed. I went 88 (2001) 206 CLR 512 at 577 [150]. 89 (2001) 206 CLR 512 at 604 [238]. 90 (1936) 57 CLR 259. 91 (1950) 80 CLR 351. 92 (2001) 206 CLR 512 at 604 [239] (footnote omitted). Kirby "These conclusions leave the liability of the respondents to be determined by the ordinary principles of negligence law as applied to a statutory authority with relevant duties and powers." Subsuming within negligence: It is a fair comment93 that the apparent intention of the majority in Brodie, expressed in the foregoing passages, was to treat the special position of past judicial authority as anomalous and to absorb the anomaly in "the principles of ordinary negligence" as the Court had earlier done94 with the former common law rule of liability in Rylands v Fletcher95. I can therefore understand the argument that the re-expression of the law in Brodie, read together with later decisions of this Court96, gives little support to the submission for the respondent that Brodie had not only abolished the long-time immunity previously thought to attach to highway and roads authorities in Australia but had laid the ground for the substitution of an additional, enhanced liability in the form of a non-delegable duty for the negligent performance of road works by an independent contractor. The holding in Brodie: Nevertheless, if Brodie is correctly analysed, it does not, in my opinion, say anything about the issues now before this Court. The reasons given in that appeal, and the record of argument, contain no specific mention of non-delegable duties. It is a fundamental mistake to assume that a court, which has not been asked to address an issue, has tackled and decided it sub silentio, when addressing another issue that has been fully presented97. In Brodie, the issue before this Court was the measure of any legal immunity afforded to roads and highway authorities by the non-feasance immunity rule. It is that rule which the majority reasons tackled, analysed and overruled. Accordingly, as a matter of binding authority, that is what Brodie stands for. At least as a matter of legal reasoning, the removal by Brodie of the particular immunity leaves it open to the courts, declaring the common law, to uphold the imposition of a non-delegable duty, if it were otherwise applicable to the relationship of roads authority and road user, by analogy with other relationships in which a non-delegable duty has been upheld. 93 Reasons of Gleeson CJ at [26]; reasons of Hayne J at [148]-[150]. 94 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 556. 95 (1866) LR 1 Ex 265; affd (1868) LR 3 HL 330. 96 eg Scott v Davis (2000) 204 CLR 333; New South Wales v Lepore (2003) 212 CLR 97 New South Wales v The Commonwealth (2006) 81 ALJR 34 at 144 [489]; 231 ALR Kirby Certainly, one scholar advances the proposition that the breach of a non- delegable duty is a separate and independent tort of strict liability98. According to this view, such liability constitutes a tort with its own elements, capable of being distinguished from negligence liability in a number of ways. If such a view of the ambit of a non-delegable duty of care were adopted, it would indeed be difficult to reconcile the recognition of such a duty in the case of roads authorities, in the face of the conclusion in Brodie, that the applicable liability should be expressed in terms of the general principles of the law of negligence. However, the majority view that has so far been taken concerning the features and scope of a non-delegable duty in tort has been a different one99. In effect, the prevailing view in Australia has rationalised such duties as comprising "something other than a discrete tort"100: "… [W]hile the courts may not always have said exactly what they think a non-delegable duty is; they have at least been consistent in refraining from any claim that it is a freestanding tort. … [N]on-delegable duties have in common only the fact that they are all premised upon an affirmative duty arising out of an assumed responsibility … and that their necessary juridical connections end there." According to this approach to non-delegable duties, which I accept, they exist as "sub-species" within particular torts. They may thus be seen as special instances in which, in the given circumstances, "liability is truly strict while in others it is, at least theoretically, fault-based"101. Brodie is not determinative: On this footing, the determination in Brodie that the former immunity of roads and highway authorities should be abolished leaves open the argument that the substitution of the general common law, to express the liability of such authorities, might import a non-delegable duty of care in particular relationships. By inference, once the liability of the authorities is assigned to the generality of the common law, all of the principles of the common law that are not inconsistent with any provision of the law enacted, will be given effect. And this will include a principle supporting the existence of non-delegable duties of care in particular relationships. 98 See eg Witting, "Breach of the Non-Delegable Duty: Defending Limited Strict Liability in Tort", (2006) 29(3) University of New South Wales Law Journal 33. 99 Murphy, "Liability Bases". 100 Murphy, "Liability Bases" (emphasis in original). Kirby It follows that, whilst such a rapid move from legal immunity to the acceptance of non-delegable duties would seem an unlikely one for the common law to take102, there is no necessary inconsistency with the proposition, at least as a matter of logic. Of course, it is one thing to hold that a roads authority, such as the Council, might in principle owe a non-delegable duty of care to a person such as the respondent, notwithstanding the provisions of the Act and the decision of this Court in Brodie. It is quite another to conclude that this outcome represents the correct or preferable conclusion on the state of the common law in a case such as the present. This is the decisive issue in the appeal. The basis for a roads authority's non-delegable duty A long line of decisions: The foundation for the respondent's argument that the Council was liable in negligence for the defects in the footpath that caused the respondent's injuries was a long line of decisional authority in England. This was said to sustain the holding of the Court of Appeal in Scroop, which was followed in the present case. The relevant authorities are explained and described in other reasons103. The authorities appear to have attracted some support in Canada104, although the position there has been complicated by the imposition on the roads authority of affirmative statutory obligations105. In his influential attempt in Kondis106 to describe, categorise and explain the common elements of the non-delegable duties of care accepted by Australian law, Mason J did not expressly include the relationship of roads authority and road user. Nevertheless, he did acknowledge the existence of relationships resting on different foundations. Specifically, Mason J mentioned Dalton v Angus107. That is one of the cases on which the respondent relied in these proceedings to support the proposition that a non-delegable duty of care arises in 102 cf Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 399-400; Jones v Bartlett (2000) 205 CLR 166 at 239 [249]. 103 Reasons of Gleeson CJ at [13]-[18]; reasons of Hayne J at [143]-[148]; reasons of 104 Lewis (Guardian ad litem of) v British Columbia [1997] 3 SCR 1145, cited in reasons of Gleeson CJ at [19]. 105 Lewis (Guardian ad litem of) v British Columbia [1997] 3 SCR 1145 at 1161 [25]. 106 (1984) 154 CLR 672 at 687. 107 (1881) 6 AC 740. See Kondis (1984) 154 CLR 672 at 687. See also Bower v Peate (1876) 1 QB 321 at 326-327, in reasons of Hayne J at [143]. Kirby the case of road works where "a person causing something to be done, the doing of which casts on him a duty, cannot escape from the responsibility attaching on him of seeing that duty performed by delegating it to a contractor"108. Legal texts and encyclopaedias published in England in the decades before the attempt was made in Donoghue v Stevenson to provide a universal conceptualisation of the tort of negligence109, certainly appear to have treated Dalton v Angus as upholding the direct liability on the part of a roads authority for work done on the road, even by an independent contractor110. Once this category of direct liability appeared in the case-books, and was endorsed by the textbooks, it seems to have gained acceptance in later English decisions. Such decisions have stretched from the latter part of the nineteenth century111 to much more recent times112. Because of the generally unquestioning acceptance of English judicial authority, during the nineteenth and most of the twentieth century, the leading Australian text on the law of torts, in successive editions, described the exceptional liability of roads authorities for the torts committed by their independent contractors as expressing the applicable law113. Right up to the last (ninth) edition of his text, The Law of Torts114, the late Professor John Fleming, by reference to the English case law, described the cases in which "non-delegable duties" had been recognised. 108 Dalton v Angus (1881) 6 AC 740 at 829 per Lord Blackburn. See reasons of 109 [1932] AC 562 at 580-581 per Lord Atkin. An earlier attempt had been made by Brett MR in Heaven v Pender (1883) 11 QB 503 at 509. See Burnie Port Authority (1994) 179 CLR 520 at 541-542. 110 See reasons of Hayne J at [145], citing Charlesworth, Liability for Dangerous Things (1922) at 5 and reasons of Callinan J at [178], citing Halsbury's Laws of England, 2nd ed, vol 16 at 337 [456]. 111 eg Holliday v National Telephone Company [1899] 2 QB 392 at 398; Penny v Wimbledon Urban District Council [1899] 2 QB 72. 112 eg Salsbury v Woodland [1970] 1 QB 324 at 338; Rowe v Herman [1997] 1 WLR 1390 at 1393. See reasons of Gleeson CJ at [15]-[17]; reasons of Callinan J at 113 Fleming, The Law of Torts, 1st ed (1957) at 383; Fleming, The Law of Torts, 3rd ed (1965) at 361; Fleming, The Law of Torts, 9th ed (1998) at 436-437. 114 Fleming, The Law of Torts, 9th ed (1998) at 435. Kirby Fleming included what he called "… instances of strict liability, such as those relating to … providing lateral support for adjacent land, and the near-strict duty to maintain premises abutting the highway in sound repair …"115. For the first of these instances, he cited Dalton v Angus, and for the second, Tarry v Ashton116. Nevertheless, the categories of road maintenance and repair appear in a compilation described by Fleming as "controversial" and "perplexing" because of "the apparent absence of any coherent theory to explain when, and why, a particular duty should be so classified" and "whether the resulting uncertainty and complexity of the law is matched by any corresponding advantages"117. Fleming was inclined to view the so-called "non-delegable duties" as a "fictitious guise" for vicarious liability118 and to attribute "[t]he very reason for importing strict liability [to] a special concern to ensure safety or else compensation"119. Without doubt Fleming's treatment of the subject displays his dissatisfaction with the performance of the courts on this topic. He noted the fact that "Australian courts have lately become more sensitive [to the harsh outcomes] and reluctant to follow English and American precedents unreservedly"120. Other writers have criticised the statements (sometimes repeated in this Court, including by me) that "[l]iability on the basis of non-delegable duties has … been described as a 'disguised form of vicarious liability'"121. Such writers have castigated judges who fail "to keep separate the issues of whether there is vicarious liability or the breach of non-delegable duty". They accuse such judges of introducing incoherence into both concepts122. Certainly, non-delegable duties are personal to the duty-holder. They are not derivative, as from a duty which the law imposes on the principal for the acts or omissions of an employee, contractor or agent. To this extent Fleming's critical explanation of some of the categories of non-delegable duties of care is a justifiable one. 115 Fleming, The Law of Torts, 9th ed (1998) at 435. 117 Fleming, The Law of Torts, 9th ed (1998) at 434. 118 Fleming, The Law of Torts, 9th ed (1998) at 434. 119 Fleming, The Law of Torts, 9th ed (1998) at 435. 120 Fleming, The Law of Torts, 9th ed (1998) at 434. 121 New South Wales v Lepore (2003) 212 CLR 511 at 608 [290] citing Fleming, The Law of Torts, 9th ed (1998) at 434. See also at 599 [257] per Gummow and 122 Stevens, "Non-Delegable Duties". See also Murphy, "Juridical". Kirby The respondent latched on to this criticism. He urged that this Court should adhere to the long-standing body of decisional authority. He pointed to the line of cases in England and to the emerging principle that roads authorities had imposed on them, at common law, a non-delegable and direct duty for the reasonable safety of the roadway and its users. The respondent submitted that, unless Parliament, in clear language, were to abolish that principle, protective of persons such as himself123, this Court should give effect to it. In doing so, it would do no more than uphold a legal duty described in the respected English text, Salmond on Torts124, as "well established at common law". The respondent relied on the fact that the English authority had been accepted in a more recent, but equally consistent, line of Australian authority in the New South Wales Court of Appeal, beginning with Scroop125. According to the respondent, the mere fact that, in Kondis126, Mason J had not listed the roads authority and road user relationship as one in which a non-delegable duty exists, was immaterial. His Honour was not purporting to state the applicable categories exhaustively, but to illustrate those that had already been recognised, and to suggest elements of a coherent theory. Thus, from first to last, the chief foundation for the respondent's arguments was the state of legal authority recognised in the textbooks, derived from English judicial decisions over the course of a hundred years, and applied more recently in New South Wales. Suggested statutory coherence: Although the Act does not, as such, impose any particular duty of care upon users of a public road, owed by a roads authority such as the Council (still less a non-delegable duty and/or strict liability for the acts and omissions of independent contractors) the respondent submitted that the Act was entirely consistent with the acceptance of the common law principle of non-delegable duty on the part of a roads authority. 123 Bropho v Western Australia (1990) 171 CLR 1 at 18; Coco v The Queen (1994) 179 CLR 427 at 437; Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 492 [30]; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11], 562-563 124 21st ed (1996) at 464, citing Palles CB's survey of authority in Clements v Tyrone County Council [1905] 2 IR 415, 542. 125 (1998) 28 MVR 233. 126 (1984) 154 CLR 672 at 687. Kirby If, at common law, disturbance of the condition of a public road, even for maintenance or repair, would amount to an actionable public nuisance, it was the Act, in permitting the roads authority to "carry out road work on any public road … under its control", that exempted the Council, as a roads authority, from what would otherwise have been its liability at common law127. It was the Act that affirmed the pedestrian's entitlement as a "member of the public" to pass upon a public road, such as a footpath, "as of right"128. It was also the Act that vested the relevant road in an authority such as the Council129, bringing with that vesting such duties as belong to "a person having the care, control and management of the road"130. By this statutory route, the lawfulness of the disturbance of the public road by any other person (such as Roan) was ultimately derived from the exemption from common law liability for nuisance, afforded by Parliament. Parliament did not expressly exempt independent contractors of the Council from liability for a public nuisance. In such circumstances, so the respondent argued, in so far as the Council made use of an independent contractor, the scheme of the legislation envisaged the ongoing liability of the Council to a road user. To the extent that the Council used anyone other than its own employees to perform road works, it did not obtain protection from the Act. It was thus exposed to a liability at common law that preceded and survived the Act, namely, a non-delegable duty that the Council did not discharge merely by engaging an apparently reputable and competent independent contractor. Considerations of policy: In New South Wales v Lepore131, I suggested that: "When a final court is called upon to respond to a new problem … it is inevitable that, as in the past, the common law will give an answer exhibiting a mixture of principle and pragmatism. … In any re-expression of the common law in Australia, it is normal now132 to have regard to 127 The Act, s 71. 128 The Act, s 5(1). 129 The Act, s 145. 130 The Act, s 146(1)(a). 131 (2003) 212 CLR 511 at 611-612 [300]. 132 Contrast Rootes v Shelton (1967) 116 CLR 383 at 386-387 per Kitto J. Kirby considerations of legal principle and policy, as well as any relevant legal authority133." I proposed that this approach was "all the more relevant" where the focus was upon the imposition of legal liability for the acts of others, a category of liability which the law, at least in the context of vicarious liability, has always been accepted as being based on considerations of legal policy134. The respondent emphasised the role of this Court in giving effect to established principles of the common law; the suggested injustice of altering those principles with retrospective operation affecting him; and the desirability of leaving any such alteration to the legislature, possibly assisted by a law reform body with the capacity to consult widely and to weigh social, economic and like factors135. Various other policy arguments have been advanced in cases involving non-delegable duties. The following are relevant to the relationship of roads authority and road user. The ordinary road user (including a pedestrian, such as the respondent) will be unaware of the internal arrangements by which a roads authority, such as the Council, engages employees or independent contractors to perform road works that present risks to such users136. The roads authority is the body in the superior position to ensure that care is taken in the performance of such road works. Moreover, the authority is in a position to secure a contractual indemnity. It is entitled to sue for a statutory indemnity for any tortious wrongs done by a contractor. It is entitled to (and in this case, did) insist on the procurement of public liability insurance indemnity by contractors such as Roan. The view is therefore open that such internal management arrangements should not be a burden on road users injured as a result of carelessness in the performance of the 133 Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 252; Northern Territory v Mengel (1995) 185 CLR 307 at 352; cf Feldthusen, "Vicarious Liability for Sexual Abuse", (2001) 9 Tort Law Review 173 at 178. 134 Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 37-38 [33]-[35]; Lister v Hesley Hall Ltd [2002] 1 AC 215 at 243-244 [65]-[66]. 135 The respondent relied in this respect on State Government Insurance Commission v Trigwell (1979) 142 CLR 617 at 663 and Dow Jones & Co v Gutnick (2002) 210 CLR 575 at 614-615 [75]-[77]. See also Sweeney (2006) 80 ALJR 900 at 921 [108]-[111]; 227 ALR 46 at 72-73. 136 The dangers for plaintiffs in this connection may be illustrated by Sweeney (2006) 80 ALJR 900 at 921-922 [114]-[117]; 227 ALR 46 at 73-74. Kirby road works. Recognition of a non-delegable duty on the part of the roads authority would leave it to that authority, in its own proceedings, to pursue its rights against its own contractors whilst ensuring that the injured road user was fully compensated for actionable wrongs involving lawful use of the road. As illustrated by the circumstances of the cases in which a non-delegable duty on the part of the roads authority has been upheld, the risks to road users, in modern conditions, can be quite substantial. Contractors may not, in fact, be insured or adequately insured. Recognition of a non-delegable duty of care would have the merit of enhancing the likelihood that an innocent victim of someone's carelessness (such as the respondent) could recover from a solvent defendant137. Although this supposed justification for non-delegable duties in the law has been questioned and doubted138, most roads authorities, at least in Australia, will be public authorities, potentially providing a "deep pocket" from which the negligently injured road user can recover. These circumstances will leave it to the roads authority, in its own proceedings, to claim any entitlement that it might have to contractual or other indemnity from a more immediate wrong-doer that is to blame for the defects in the road that caused injury to the road user. Conclusion: an arguable point: I have taken the trouble to explain the arguments for the non-delegable duty of care for which the respondent contended because they are obviously not meritless. The application of English case law might sustain his arguments. The Court of Appeal's approach in Scroop, and in the cases which followed, is not without force. In recent times, including in respect of the liability of road and highway authorities, legislators have enacted provisions139 designed to diminish protections otherwise afforded by the common law to injured persons, such as the respondent. As well, courts, including this Court, have cut back the recovery of other plaintiffs in ways that have reversed the trend even of recent authority140. In such circumstances, it is tempting to accept the respondent's arguments and to affirm Scroop and its progeny as stating 137 cf McKendrick, "Vicarious Liability and Independent Contractors – A Re-examination", (1990) 53 Modern Law Review 770 at 772-774; Feldthusen, "Vicarious Liability for Sexual Torts" in Mullany and Linden (eds), Torts Tomorrow: A Tribute to John Fleming, (1998) at 221. 139 See eg Civil Liability Act 2002 (NSW), s 45, set out in the reasons of Callinan J at 140 eg Neindorf v Junkovic (2006) 80 ALJR 341 at 359-360 [84]-[85]; 222 ALR 631 at 653; Sweeney (2006) 80 ALJR 900 at 919 [100]; 227 ALR 46 at 70. Kirby the law of Australia. Ultimately, however, I have reached the contrary conclusion. I must therefore explain why. A non-delegable duty is not established The defects in the authority: The defects of the decisional authority upon which the respondent relied, both in England and in the Australian cases decided since Scroop, are explained in other reasons141. Essentially, the cases accept a principle of non-delegability in a factual context where the relationship between the parties is far from uniform, and in which the use of independent contractors by the roads authority is normal and of long standing, at least in Australia. The use of non-employee contractors has greatly expanded in Australia in recent times, due to the privatisation of many activities formerly performed by governments and their agencies, and the resulting "out-sourcing" of functions to independent contractors that operate for their own profit. The general rule is that the principal is not liable for the wrongs done by an independent contractor or its employees. It is not easy to see why an exception should be specifically carved out allowing the person injured to recover from a roads authority in addition to the normal rights that the person enjoys against the independent contractor posited as the effective cause of the wrong. In particular, it is difficult to see why the general policy of the law that the economic cost of the wrong should be borne by the legal entity immediately responsible for it should not be enforced in this case given the strong reasons of economic principle and social policy that lie behind that rule. Once the early English decisions on the direct and personal liability of the roads authority were delivered, they were simply followed in kindred cases bearing factual similarities. Before Donoghue v Stevenson, that is basically the way in which tort liability, when framed in negligence, was determined. To discover whether liability existed at law, it was necessary to look for a case on the given relationship (or judicial authority bearing some similarity). In this sense, as a matter of legal technique, the late nineteenth century decisions on the liability of roads authorities in England should cause no surprise. They grew out of particular decisions. The English authorities also responded to factual circumstances significantly different from those applicable to the activities of roads authorities in Australia. In England, public roads of various kinds had existed, in many forms, since Anglo-Saxon and Roman times. In Australia, from colonial times, the the building and maintenance of public roads were substantially 141 Reasons of Gleeson CJ at [14]; reasons of Hayne J at [146]-[149]; reasons of Kirby responsibility of government. This difference in the "circumstances and assumptions upon which" previous common law doctrine in respect of road works depended, in England and Australia respectively142, was one of the chief considerations in Brodie that led to the re-expression of the common law highway rule in Australia. As well, the statutory context, including the enactment of State Acts, such as the Act in question in this case, and other federal legislation143, was held in Brodie to144: "… bear out Professor Fleming's point145 that the assumption by central governments of significant financial responsibility for road construction and maintenance has deprived of some of its force the argument that the 'immunity' always is necessary because all local authorities require it for the protection of the pockets of their ratepayers". The typical village and county responsibilities for road works in England, reflected in the late nineteenth century cases cited by the respondent, produced a legal environment that was quite different from that which generally obtained in Australia in relation to the repair and maintenance of roads. This Court has not hitherto recognised an exceptional non-delegable duty of care owed by roads authorities to road users, as expressed in the English cases. Whilst the omission of that category of relationships from those accepted as giving rise to non-delegable duties, stated in the reasons of Mason J in Kondis146, is not determinative of the central issue in this appeal, it is not insignificant. When Kondis was decided in 1984, the relationship of roads authority and road user was not one that had been universally recognised in Australia as giving rise to a non-delegable duty of care. The issue remained to be decided by Australian courts according to the principles of the Australian common law. However, so far as this Court was concerned, it was still left as an open question. In earlier times, when this Court's judgments were subject to appeal to the judicial authority was usually Privy Council, conformity with English 142 Brodie (2001) 206 CLR 512 at 543 [65]. 143 eg National Roads Act 1974 (Cth); States Grants (Roads) Act 1977 (Cth); and Roads Grants Act 1981 (Cth). 144 Brodie (2001) 206 CLR 512 at 543 [65] per Gaudron, McHugh and Gummow JJ. 145 The Law of Torts, 9th ed (1998) at 485. 146 (1984) 154 CLR 672 at 687. Kirby unquestioned. Today, a higher standard of adherence to legal principle is applied. Whilst respect is still shown for English authority, when that authority is questioned, as it has been in this appeal, this Court's duty is to satisfy itself that the propounded authority expresses the common law of Australia. The fulfilment of that duty requires consideration of questions which were often ignored by Australian courts in the nineteenth and twentieth centuries because of the then the Privy Council, amenability of Australian decisions overwhelmingly constituted by English judges applying English authority147. to appeal The authority is exceptional: On the face of things, the line of English authority, copied in New South Wales in Scroop and in subsequent cases up to the present, amounts to an exception to the general principle of tort liability recognised by the common law of Australia. Thus, it departs: From the "deep-rooted"148 notion that persons should not ordinarily be liable to others in tort without fault of some kind on their own part; From the general principle that where the causative agent of the acts or omissions occasioning damage is an independent contractor, the party suffering damage must normally establish its claim against that contractor and cannot look to the principal to recover its damage149; From the common features of the particular relationships in which a party has been held liable for the acts and defaults of an independent contractor, on the basis of a non-delegable duty of care. Such cases are exceptional. They exist in well-established categories that are recognised by the law. So far, in Australia, the relationship of roads authority and road user has not been one of those well recognised categories; and From the general trend of contemporary tort law, to limit exceptional categories, and to reject new ones except on the basis of a clear analogy to a recognised class and then only for compelling reasons of legal principle and policy150. Moreover, as Callinan J has pointed out151, the propounded 147 An example may be seen in Central Bayside General Practice Association Ltd v Commissioner of State Revenue (2006) 80 ALJR 1509 at 1531-1532 [104]-[109]; 229 ALR 1 at 28-29. 148 Atiyah, Vicarious Liability in the Law of Torts, (1967) at 12. 149 See Sweeney (2006) 80 ALJR 900 at 903-904 [12], 918 [92]; 227 ALR 46 at 49-50, 150 Jones v Bartlett (2000) 205 CLR 166 at 239 [249]. 151 Reasons of Callinan J at [179]. Kirby category in this case constitutes not only an exception to the general rule of tort liability but one which is itself subject to an indeterminate qualification in the case of casual or collateral acts of negligence, and one which would introduce a source of costly litigation akin to that which this Court's majority decision in Brodie was designed to terminate. When these considerations of legal principle are given weight, they do not sustain the suggested inclusion of the relationship of roads authority and road user amongst the limited categories recognised by the Australian common law as giving rise to a non-delegable duty to the road user on the part of a roads authority. Statute and common law: Whilst the applicable provisions of the Act and the decision on the "highway rule", which this Court expressed in Brodie, do not decide the present case, they certainly afford a legal context that is unfavourable to the proposition accepted by the Court of Appeal and urged by the respondent. The Act is silent on the precise duty owed by a roads authority, such as the Council, to a pedestrian, such as the respondent. But nothing in the Act suggests an adoption of strict obligations such as a non-delegable duty would import. By providing that a roads authority, such as the Council, should have the "care, control and management of the road"152, the Act plainly envisages that the Council might discharge its responsibilities by the use both of employees and independent contractors. Had it been envisaged that the Council would, exceptionally, be liable in law for acts done or omitted to be done by an independent contractor, the financial implications of such liability would (one might expect) have suggested the need for a specific statutory provision to that effect. In this sense, the absence of such a provision, whilst not decisive, undoubtedly tells against the imposition of such an exceptional liability by techniques of the common law. Likewise, to accept a non-delegable duty on the part of a roads authority, where, until recently, the "highway rule" afforded it a large immunity, postulates an effective enlargement of its legal liability to a dramatic extent. This enlargement appears all the more radical because of the substantial immunity that previously obtained under the common law, and which has now been largely restored in New South Wales by legislation153. 152 The Act, s 146(1)(a). 153 Civil Liability Act 2002 (NSW), s 45. As previously stated, the section does not apply to the present case. See above these reasons at [46]. Kirby So far as the pre-existing law of public nuisance is concerned, it is worth noting that the respondent only sued in negligence. Whilst it is true that this was also a feature of some of the English cases relied on by the respondent154, nuisance is ordinarily a tort of strict liability. But different considerations arguably arise where the claimant confines the proceedings to an action in negligence. The supposition of a non-delegable duty does not alter the content of the tort sued for, nor does it substitute a different and free-standing tort. It does no more than to affirm the imposition of personal liability on the duty-holder, which cannot be discharged, as otherwise it would, by selecting an apparently reputable and competent contractor155. A non-analogous category: But what of the respondent's submission that the relationship of roads authority and road user is analogous to the categories of relationship involving non-delegable duties, already acknowledged by the common law of Australia? Those relationships are employer/employee156; hospital/patient157; school authority/pupil158; and occupier/contractual entrant in circumstances involving extra-hazardous activities159. In the nature of a coherent legal doctrine, it would be surprising if this odd collection of particular instances represented the entire class of relationships in which a non-delegable duty existed at common law160. Judges and scholars have therefore undertaken a search for the common elements that link the various categories and give guidance when an attempt is made to add another relationship to the non-delegable duties that are recognised. Why, for instance, did the 154 eg Penny v Wimbledon Urban District Council [1899] 2 QB 72 and Salsbury v Woodland [1970] 1 QB 324. 155 Lepore (2003) 212 CLR 511 at 608-609 [291]-[292]. 156 Stevens (1986) 160 CLR 16 at 44. 157 Gold v Essex County Council [1942] 2 KB 293 at 304; Cassidy v Ministry of Health [1951] 2 KB 343 at 363; Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542; Ellis v Wallsend District Hospital (1989) 17 NSWLR 553. 158 The Commonwealth v Introvigne (1982) 150 CLR 258 at 269-273, 274-275. 159 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 550-554, 556-557; cf Stevens (1986) 160 CLR 16 at 29-30. 160 Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 395; Swanton, "Non-Delegable Duties: Liability for the Negligence of Independent Contractors", (1991) 4 Journal of Contract Law 183 at 183-184. Kirby relationship of landlord/tenant ultimately fail to join the select categories161? Would the relationship of prisoner/prison authority qualify162? Why are some relationships recognised and not others? Amongst the suggested criteria for the acceptance of a non-delegable duty, some have proved recurrent. One of these has been the importance of assuring compensation for the innocent victim of a wrong from a defendant who is assumed to be able to pay adequate damages if they are awarded163. However, as Mr John Murphy has pointed out, this is an inadequate and unsatisfying rationale for the principle of non-delegable duties164. As illustrated by the present case, the arrangements now typically instituted between principals and independent contractors include the requirement to demonstrate the procurement of adequate insurance. In any case, many independent contractors are in at least as good a position to meet a verdict for their own wrongs (and those of their employees) as the principal may be. Without convincing economic data, it would be difficult for this Court to draw any inferences as to the overall danger to plaintiffs of leaving liability to fall on the independent contractors engaged by roads authorities to perform road maintenance and repairs. In the typical case, as here, it would appear that both the roads authority and the contractor would normally be in an equal position to meet any verdict. Nor is deterrence, sometimes also advanced as a ground for imposing a non-delegable duty upon the principal, a persuasive reason165. If the criminal law could not operate as a deterrent in a case such as Lepore, there is obvious force in the comment of Gummow and Hayne JJ that the imposition of a non-delegable duty in tort will hold little deterrent value166. Furthermore, to shift the economic cost of negligent acts and omissions from the independent contractor with primary responsibility, to a roads authority, liable because of a legal fiction of non-delegability, has the potential to impede the deterrence of the person whose conduct is most in need of influence. 161 Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 399-404; Jones v Bartlett (2000) 205 CLR 166 at 221 [191]-[193], 237-238 [244], 250 [284]. 162 cf New South Wales v Bujdoso (2005) 80 ALJR 236 at 244-245 [44]-[47]; 222 ALR 663 at 672-674. The point did not need to be decided in that case. 163 cf Limpus v London General Omnibus Co (1862) 1 H & C 526 at 539 [158 ER 993 at 998] per Willes J. 164 Murphy, "Juridical". 165 Lepore (2003) 212 CLR 511 at 534 [36]. 166 (2003) 212 CLR 511 at 587-588 [219]. Kirby I therefore agree with the conclusion expressed by Mr John Murphy167 that "any general theory of non-delegable duty … cannot sensibly be founded on arguments about deterrence or deep pockets, and any such thinking ought to be rejected". In Kondis168, as earlier in The Commonwealth v Introvigne169, Mason J contented himself by saying that "the law has, for various reasons imposed a special duty on persons in certain situations to take particular precautions for the safety of others". (The duty was later extended to the property of other persons). However, the explanation given for the non-delegable relationship was very general - no more than the existence of "some element" that "makes it appropriate" to impose on the defendant a duty to ensure that the safety of the person and property of others is observed - a duty not discharged merely by securing a competent contractor. This elusive "element in the relationship" suggests the need for close attention to the common characteristics of those categories that the common law has so far accepted in Australia as giving rise to non-delegable duties. What is it that the employee in the workplace, the patient in the hospital, the pupil in the school premises and the occupier/contractual entrant on premises where extra- hazardous activities are carried out, have in common? There are obvious dangers here in elevating historical categories into a genus that is no more than a retrospective rationalisation. However, the categories that I have mentioned are recognised not only in Australia but also in many Commonwealth countries. They continue to attract the support of final appellate courts. Amongst the proposed explanations, and justifications, for the exceptional imposition of a non-delegable duty, two stand out. In the words of Mr John Murphy170: "These are: first, that the defendant's enterprise carried with it a substantial risk … and secondly, that the defendant assumed a particular responsibility towards the claimant. … [T]hese justifications seemed to emerge quite independently of one another in the classic non-delegable duty cases. Accordingly, they tend to create the impression that they are alternative theoretical bases for the imposition of such a duty. … [H]owever, I shall contend that both features can in fact be collapsed into 167 Murphy, "Juridical" (emphasis in original; footnote deleted). 168 (1984) 154 CLR 672 at 687. 169 (1982) 150 CLR 258 at 271. 170 Murphy, "Juridical". Kirby one central concern: the assumption of responsibility. … [T]he creation of a substantial risk carries with it a necessary assumption (or imputation) of responsibility, and that they therefore represent not rival bases for non-delegable duties, but rather two different stages of the inquiry (risk creation preceding the assumption of responsibility)." As Mr John Murphy points out, many of the decisions in this field, including in this Court171 and in the House of Lords172 recognise the special vulnerability of persons in the particular class that includes the claimant and hence the increased enterprise risk that is necessary to meet an exceptional "risk", "danger" or "peril". Gaudron J captured this consideration in her Honour's reasons in Lepore173: "[C]ertain relationships have been identified as giving rise to duties which have been described as 'non-delegable' or 'personal' … The relationships [all involve] … a person being so placed in relation to another as 'to assume a particular responsibility for [that other person's] safety' because of the latter's 'special dependence or vulnerability'". Gaudron J went on to suggest that the feature of the "relationship between the parties"174 that singled out instances where a non-delegable duty applied is the existence of clear affirmative duties to control either a dangerous person or a dangerous thing and to protect the claimant's person, property or legal affairs as a result. Normally, the common law does not impose affirmative duties to act in relation to another person. But it does so in the context of particular relationships. Where such a relationship exists it is exceptional. The duty imposed is then non-delegable. As Gaudron J said in Lepore175: "There is another feature of the duty arising out of the particular relationships that have been identified as giving rise to a non-delegable duty of care which should be stressed. It is that the relevant duty can be 171 He refers to Lepore (2003) 212 CLR 511 at 534 [36], 560 [129], 581-582 [199], 621 [327]. See Murphy, "Juridical". 172 Lister v Hesley Hall Ltd [2002] 1 AC 215 at 250 [83] per Lord Millett. See 173 Lepore (2003) 212 CLR 511 at 551 [100] (footnotes omitted). 174 Lepore (2003) 212 CLR 511 at 552-553 [104]. 175 Lepore (2003) 212 CLR 511 at 552-553 [104]. Kirby expressed positively and not merely in terms of a duty to refrain from doing something that involves a foreseeable risk of injury … Once the relevant duty is stated in those terms it is readily understandable that the duty should be described as non-delegable." In his analysis, Mr John Murphy concludes that this is the elusive element in the relationship between the parties that, in the language of Kondis, "makes it appropriate to impose on the defendant a duty to ensure that reasonable care and skill is taken for the safety of the persons [or property] to whom the duty is owed"176. Policy and conclusions: When this criterion is applied to the relationship now propounded as one involving a non-delegable duty of care, as I consider that it should be, there are many reasons why roads authorities and road users are not to be so classified. It is true that there is often a significant dependence of road users on roads authorities. However, there is not such a relationship as involves the kind of particular vulnerability and special dependence that exists in the categories of relationship where non-delegability has been accepted. The dependence that exists in this relationship does not rise to the level of particular vulnerability or special dependence evident such as hospital/patient, employer/employee and school authority/pupil. relationships Moreover, the circumstances of mishaps and casual acts of negligence in carrying out maintenance and repair of public roads are virtually infinite in variety and potential triviality and seriousness as highways, roads, lanes and footpaths are different from one another. Employees, patients, pupils (and possibly prisoners in relation to prison authorities) substantially constitute closed, identifiable categories. Their members are known or ultimately ascertainable in advance. The duties owed to them are personal because of their particularly high degree of dependence and vulnerability. The relationship itself, and the work that it entails, often involves those party to it to extra-hazardous risks. This is why such relationships commonly constitute exceptions to the "no-duty-to-act rule"177. On the other hand, users of roads are normally unknown and unknowable to roads authorities. They do not represent a closed category. Their identities and number are not typically known in advance. They comprise pedestrians, 176 (1984) 154 CLR 672 at 687. 177 Murphy, "Juridical", citing Deakin, Johnston and Markesinis, Markesinis and Deakin's Tort Law, 5th ed (2003) at 247. Kirby truck and car drivers, motor cyclists, bicyclists, scooter-riders, skate-board users, runners, walkers and a great variety of other persons. Their individual needs are infinite in their variety. In such circumstances, to recognise a non-delegable duty in respect of them, would be extremely burdensome and costly. It would be such that the duty could not readily be met by reasonably adapted preventive measures. The present case can be taken as an instance in point. If the true cause of the respondent's fall into the carpet covered pit in the footpath was (as was found) the carelessness of an employee of Roan in placing the carpet over the obviously defective lid of the pit, how, by the adoption of reasonable care, could the Council possibly have discharged the supposed direct liability under a non-delegable duty? It could not feasibly have been present at all times that Roan and its employees were working on the site, without destroying the essential value of the relationship between the Council and Roan, viz that of principal and independent contractor. It could not have anticipated every minor and unpredictable act of carelessness on the part of any of Roan's employees without effectively, or actually, performing the work itself, using its own employees. It could not have taken over the control and performance of the work by Roan without interfering with Roan's legitimate entitlement to direct its own employees and the way they worked. In many cases (although not in this) the independent contractor will have been engaged by the roads authority precisely because it enjoys technical expertise or a special capacity which would make the interference of the roads authority completely inappropriate – at least as a general rule. To render the Council directly liable, notwithstanding the acts and omissions of Roan and its employees, would therefore be unreasonable, given that the essential purpose of engaging Roan as an independent contractor was to delegate that responsibility to Roan under conditions that rendered Roan liable in law for its own acts and omissions and ensured that it could meet its liability by procuring appropriate insurance. These conclusions of legal policy reinforce the opinion reached after analysis of legal authority and legal principle. The relationship of roads authority and road user is not one that attracts a non- delegable duty of care. The Court of Appeal therefore erred in these proceedings in concluding otherwise. To the extent that English authority suggested the contrary conclusion, it should not have been followed. That authority does not represent the common law of Australia. The line of decisions in the Court of Appeal, beginning with Scroop178, should be overruled. The judgment of the District Court in favour of the respondent should be set aside. 178 (1998) 28 MVR 233. Kirby Orders I agree in the orders proposed by Hayne J. Hayne 130 HAYNE J. Towards the end of 2000 Leichhardt Municipal Council ("the Council") engaged Roan Constructions Pty Ltd ("Roan") to reconstruct the footpath, and install a traffic barrier, beside part of Parramatta Road. The work was to be done at night, between the hours of 7.30 pm and 5.30 am, Sunday to Thursday. The specification for the work required Roan to maintain access to shops and houses abutting the footpath, and to provide clean access to all commercial properties abutting the work area, by laying artificial grass or carpet over the top of the road base. On Saturday, 7 April 2001, the respondent, Mr Montgomery, in company with others, walked along the footpath on which Roan had been working during the previous week. Carpet had been laid on the ground. Mr Montgomery walked closest to the shop fronts. As he walked, the carpet suddenly gave way under his feet, and his leg went into a Telstra pit. The cover of the pit, over which the carpet had been laid, was found to have been broken before the carpet was laid over it. Mr Montgomery injured his knee. Mr Montgomery sued Roan and the Council, in the District Court of New South Wales, for damages for personal injury. He compromised his claim against Roan but proceeded against the Council, alleging that the Council had itself been negligent. At all stages the litigation has been conducted on the basis that Mr Montgomery alleged that the Council either had itself failed to act with reasonable care, or had failed to ensure that its contractor, Roan, acted with reasonable care. This second way of putting the case, described in argument as an allegation of a non-delegable duty, was not articulated with stark clarity in the amended statement of claim filed in the District Court, but nothing was said to turn on this. At trial, Mr Montgomery obtained judgment against the Council for $264,450.75, with costs. The trial judge held that the Council owed Mr Montgomery a non-delegable duty of care, and that that duty had been breached. The Council appealed to the Court of Appeal of New South Wales. It alleged that the primary judge had erred in holding that the Council owed Mr Montgomery a non-delegable duty of care. It further alleged that the primary judge should not have found, as she did, that the lid covering the pit into which Mr Montgomery fell had been broken before carpet was laid over it. Finally, the Council challenged the amount of damages awarded to Mr Montgomery. The Council's appeal was dismissed179. The Court of Appeal held, conformably with 179 Leichhardt Municipal Council v Montgomery [2005] NSWCA 432. Hayne earlier decisions of that Court180, that the Council owed road users a non-delegable duty of care. It was not necessary for the Court of Appeal to consider whether Mr Montgomery could rely upon a notice of contention that the judgment in his favour should be supported on the basis that the Council had itself failed to exercise reasonable care. By special leave, the Council now appeals to this Court on grounds confined to whether the Council owed a non-delegable duty of care. The question of fact about the state of the pit lid when carpet was laid over it, and the question of assessment of damages, are not in issue in this Court. As a condition for granting leave, the Council agreed to pay the costs of the appeal to this Court in any event, and not to disturb the costs orders made in Mr Montgomery's favour. The Court of Appeal should have held that the Council did not owe Mr Montgomery a non-delegable duty of care. The decisions of that Court holding to the contrary181 should be overruled. Whether Mr Montgomery may rely upon his notice of contention in the Court of Appeal, and if he may, whether the judgment of the primary judge may be supported on the bases alleged in that notice, are questions which the Court of Appeal has not considered. The appeal to this Court should be allowed, the orders of the Court of Appeal (apart from its costs orders) should be set aside, and the matter remitted to that Court for consideration of the questions concerning reliance on the notice of contention and, if necessary, the consequential issues that would then arise. Any consideration of what duty the Council owed road users must begin with the relevant statutory provisions, particularly with certain provisions of the Roads Act 1993 (NSW) as that Act stood at the time of the events giving rise to Mr Montgomery's claim. It is essential to begin at this point lest sight be lost of the fact that the action brought against the Council is an action brought against a statutory body whose functions and powers are to be found in the relevant legislation. At the time of the events giving rise to this litigation, the Council of a local government area, subject to some presently irrelevant exceptions, was "the roads authority" for all public roads within its area182 and had such functions 180 Roads and Traffic Authority v Scroop (1998) 28 MVR 233; Roads and Traffic Authority of New South Wales v Fletcher (2001) 33 MVR 215; Roads and Traffic Authority of New South Wales v Palmer (2003) 38 MVR 82 and Ainger v Coffs Harbour City Council [2005] NSWCA 424. 181 Including Scroop (1998) 28 MVR 233; Fletcher (2001) 33 MVR 215; Palmer (2003) 38 MVR 82 and Ainger [2005] NSWCA 424. 182 Roads Act 1993 (NSW), s 7(4). Hayne as were conferred on it by the Roads Act or by any other Act or law183. Parramatta Road is a public road. A "road" includes what the Roads Act then, and now, describes as the "footway" – a term defined184 as "that part of a road as is set aside or formed as a path or way for pedestrian traffic (whether or not it may also be used by bicycle traffic)". It follows that Mr Montgomery suffered his injury on a public road. Section 5(1) of the Roads Act provided that: "[a] member of the public is entitled, as of right, to pass along a public road (whether on foot, in a vehicle or otherwise) and to drive stock or other animals along the public road". It was expressly provided185 that the right conferred by s 5(1) did not derogate from any right of passage conferred by the common law, but the sub-section went on to say that "those [common law] rights are subject to such restrictions as are imposed by or under this or any other Act or law". It was not contended that there was any restriction relevant to the present matter. Mr Montgomery was injured in the course of his exercising his right to pass along a public road. The Roads Act provided that public roads within a local government area (other than freeways and Crown roads) were vested in fee simple in the appropriate roads authority186. The nature of the ownership of public roads for which the Act thus provided was amplified by s 146 of the Act. In particular, s 146(1) provided that: "Except as otherwise provided by this Act, the dedication of land as a public road: does not impose any liability on the owner of the road that the owner would not have if the owner were merely a person having the care, control and management of the road, and does not constitute the owner of the road as an occupier of the land". 184 s 4 and Dictionary. Hayne Part 6 of the Act (ss 71-90) regulated the carrying out of road work. Section 71 provided that: "[a] roads authority may carry out road work on any public road for which it is the roads authority and on any other land under its control". The form and content of these provisions of the Roads Act about ownership of roads, and about road work, may be properly understood only if account is taken of those historical features of the common law concerning the liability of highway authorities that were traced in detail in Brodie v Singleton Shire Council; Ghantous v Hawkesbury City Council187. (It is convenient to use the expression "highway authority" to embrace all bodies that are responsible for the construction or maintenance of public roads, and to use the statutory expression, "roads authority", to apply to the particular highway authorities with which the Roads Act deals.) Two of these matters of history are of particular importance to the proper understanding of those provisions of the Roads Act to which reference has been made. First, the common law duty to maintain highways in a parish was based in nuisance not negligence188. Secondly, although the analogy between the position of a highway authority and that of ownership or occupation of private land had been disavowed by Dixon J in Buckle v Bayswater Road Board189, subsequent developments in the law of negligence of public authorities, with respect to structures other than highways190, may have suggested the drawing of such an analogy in the case of roads or highway authorities. Thus, s 71 of the Roads Act may be understood as empowering a roads authority to do what would otherwise constitute an actionable nuisance. And s 146(1)(a) and (d) of the Roads Act may be understood as denying the imposition on a roads authority of the duties of an occupier of land. The proposition that a highway authority owes road users a non-delegable duty of care invites close attention to the nature and content of the "duty" postulated. When it is observed that the "duty" is a duty to ensure a particular result (that an independent contractor engaged by the highway authority to perform work on the road, perform that work with reasonable care) it is apparent 187 (2001) 206 CLR 512 at 547-577 [74]-[149] per Gaudron, McHugh and Gummow JJ, 588-591 [193]-[202] per Kirby J. 188 Brodie v Singleton Shire Council; Ghantous v Hawkesbury City Council (2001) 206 CLR 512 at 564 [117]. 189 (1936) 57 CLR 259 at 280-281. 190 Aiken v Kingborough Corporation (1939) 62 CLR 179 at 206-207. See also Romeo v Conservation Commission (NT) (1998) 192 CLR 431; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1. Hayne that the postulated duty is both a form of strict liability and a form of vicarious liability. That is, the contention that a highway authority owes a road user a non-delegable duty of care is no more than a different expression of the proposition that the highway authority is to be vicariously liable for the negligence of its independent contractors. On examination, however, it will be seen that not only does a proposition framed in terms of "non-delegable duty" have no sound doctrinal foundation, it is a proposition which cannot stand with the restatement of the common law of negligence in its application to highway authorities made by this Court in the Brodie and Ghantous cases. As noted earlier, the liability of highway authorities was originally rooted in the law of public nuisance. Interference with the safe enjoyment of a public right of way over a highway might constitute a public nuisance191. And it was in the context of one particular aspect of the law of nuisance (namely, that aspect of the law of private as distinct from public nuisance which concerned the rights of support from adjoining land) that two unduly influential generalisations were uttered. First, in 1876, Cockburn CJ said192 that: "a man who orders a work to be executed, from which, in the natural course of things, injurious consequences to his neighbour must be expected to arise, unless means are adopted by which such consequences may be prevented, is bound to see to the doing of that which is necessary to prevent the mischief, and cannot relieve himself of his responsibility by employing someone else – whether it be the contractor employed to do the work from which the danger arises or some independent person – to do what is necessary to prevent the act he has ordered to be done from becoming wrongful. There is an obvious difference between committing work to a contractor to be executed from which, if properly done, no injurious consequences can arise, and handing over to him work to be done from which mischievous consequences will arise unless preventive measures are adopted. While it may be just to hold the party authorizing the work in the former case exempt from liability for injury, resulting from negligence which he had no reason to anticipate, there is, on the other hand, good ground for holding him liable for injury caused by an act certain to be attended with injurious consequences if such consequences are not in fact prevented, no matter through whose default the omission to take the necessary measures for such prevention may arise." (emphasis added) 191 Hargrave v Goldman (1963) 110 CLR 40 at 59. 192 Bower v Peate (1876) 1 QBD 321 at 326-327. Hayne The second generalisation was that of Lord Blackburn in Dalton v Angus193 that: "Ever since Quarman v Burnett194 it has been considered settled law that one employing another is not liable for his collateral negligence unless the relation of master and servant existed between them. So that a person employing a contractor to do work is not liable for the negligence of that contractor or his servants. On the other hand, a person causing something to be done, the doing of which casts on him a duty, cannot escape from the responsibility attaching on him of seeing that duty performed by delegating it to a contractor. He may bargain with the contractor that he shall perform the duty and stipulate for an indemnity from him if it is not performed, but he cannot thereby relieve himself from liability to those injured by the failure to perform it". (emphasis added) On their face, these statements that a person cannot "escape" from responsibility by "delegating" responsibility to a contractor or by "employing someone else" are propositions that deny a central tenet of the law that has developed about vicarious liability – that a person may be liable for the negligence of an employee but, at least generally, will not be liable for the negligence of an independent contractor. By the second decade of the twentieth century, before Donoghue v Stevenson had been decided, Lord Blackburn's dictum in Dalton v Angus had come to be understood as supporting the proposition that "[i]f something dangerous is done on the highway, the person ordering it to be done is liable whether he does it himself or employs an independent contractor"195. And two of the three cases cited by Lord Blackburn as supporting the proposition196 that delegation of a task "the doing of which casts on [the person delegating it] a duty, cannot escape from the responsibility attaching on him of seeing that duty performed" were, or were analogous to, highway cases: Hole v Sittingbourne and Sheerness Railway Company197 (construction of a bridge obstructing navigable waters) and Tarry v Ashton198 (lamp projecting over a footpath not properly repaired). 193 (1881) LR 6 App Cas 740 at 829. 194 (1840) 6 M & W 499 [151 ER 509]. 195 Charlesworth, Liability for Dangerous Things, (1922) at 52. 196 Dalton v Angus (1881) 6 App Cas 740 at 829. 197 (1861) 6 H & N 488 [158 ER 201]. 198 (1876) 1 QBD 314. Hayne But the rule enunciated by Lord Blackburn was seen in the 1920s as but one aspect of a wider set of rules governing liability for dangerous things. Dangerous things were then classified199 as things dangerous in themselves (which engaged the rule in Rylands v Fletcher200), things dangerous by reason of their position (namely, dangers in the highway), and things dangerous because defective (dangerous premises and dangerous chattels). The first of these categories (things dangerous in themselves) engaged what was expressly stated as a form of strict liability: the rule in Rylands v Fletcher. But the second and third categories engaged the notions spoken of by Lord Blackburn in Dalton v Angus: notions of "non-delegable duties". Professor Glanville Williams rightly said201 of these notions that they left "the law fundamentally incomprehensible". He continued202: "Almost the greatest danger that can be created on the highway is to drive an automobile along it; yet there is no vicarious liability for the negligence of a contractor in his manner of driving. Were it otherwise, a person who posted a letter would be liable for the negligent driving of the Post Office employee who is carrying the letter; and the passengers on a bus would be vicariously liable for their driver. Thus the rule relating to dangers on the highway must be arbitrarily limited to dangers of some degree of permanence. (But even if the bus or Post Office van were habitually driven with improper brakes there would be no vicarious liability of this kind.)" And although the highway cases might be explained on the basis that there is vicarious liability for independent contractors in all cases of nuisance203, actions against highway authorities came to be framed in negligence. As the line between negligence and nuisance was blurred, the proposition that there is vicarious liability for independent contractors in cases of nuisance became 199 Charlesworth, Liability for Dangerous Things, (1922) at 5. 200 (1866) LR 1 Ex 265; (1868) LR 3 HL 330. 201 "Liability for Independent Contractors", (1956) Cambridge Law Journal 180 at 202 "Liability for Independent Contractors", (1956) Cambridge Law Journal 180 at 203 cf Matania v National Provincial Bank Ltd [1936] 2 All ER 633; Spicer v Smee [1946] 1 All ER 489. Hayne entangled with a distinction drawn between "casual" or "collateral" negligence, and negligence in what the contractor was employed to do204. In addition to noticing the consequences for the law of nuisance, later translated into the law of negligence, attached to the statements of Cockburn CJ in Bower v Peate and Lord Blackburn in Dalton v Angus, it is important to notice one other important feature of the law of nuisance. As Denning LJ pointed out in Southport Corporation v Esso Petroleum Co Ltd205: "In an action for a public nuisance, once the nuisance is proved and the defendant is shown to have caused it, then the legal burden is shifted on to the defendant to justify or excuse himself. If he fails to do so, he is held liable, whereas in an action for negligence the legal burden in most cases remains throughout on the plaintiff." These considerations of burden of proof, or the two generalisations earlier identified, may, perhaps, go some way to explaining the change identified in the joint reasons the mid-nineteenth century, in which plaintiffs framed actions for personal injuries caused by an obstruction in the highway as an action for public nuisance rather than as an action on the case for negligence. in Brodie and Ghantous206, which had occurred by Be this as it may, the liability of a highway authority to a road user who suffered injury as a result of the condition of the road was wholly founded in that complex of rules, described as "the highway rule", which formed part of the common law of Australia until this Court restated the common law in the Brodie and Ghantous cases. In Brodie and Ghantous, the common law rule under which a highway authority was liable for misfeasance, but not for non-feasance, which underpinned this Court's decisions in Buckle v Bayswater Road Board207 and Gorringe v The Transport Commission (Tas)208, was discarded. In Brodie and Ghantous the Court held209 that the test for determining a highway authority's 204 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 575 per 205 [1954] 2 QB 182 at 197 (reversed on other grounds Esso Petroleum Co Ltd v Southport Corporation [1956] AC 218). 206 (2001) 206 CLR 512 at 567 [122]. 207 (1936) 57 CLR 259. 208 (1950) 80 CLR 357. 209 (2001) 206 CLR 512 at 572-577 [134]-[149] per Gaudron, McHugh and Gummow JJ, 604 [239] per Kirby J. Hayne liability was not whether the case was one of misfeasance rather than non-feasance, it was the ordinary test of liability in negligence. legislative Subsequent the evident intervention, with intention of reinstating an immunity for highway authorities for non-feasance210 is not to be understood as negating the fundamental doctrinal shift effected by the Court's decision in the Brodie and Ghantous cases. Further, it should be noted that it was not contended that the particular legislative provision effecting reinstatement of the non-feasance rule with respect to roads authorities had any direct application in the present matter. It is therefore not necessary to consider any question about the meaning or effect of that statutory provision. But there is a further aspect of the decision in Brodie and Ghantous that is of critical importance. The Court held211 that the time had come "to treat public nuisance, in its application to the highway cases, 'as absorbed by the principles of ordinary negligence'212." It follows that if any principle of non-delegable duty is now to be applied to highway authorities, it must now find its roots elsewhere than in the law of public nuisance. No doubt it was with this in mind that much of the argument in the present appeal focused upon what was said about non-delegable duties of care in Kondis v State Transport Authority213, a case concerning the non-delegable duty of care owed by an employer to employees. In Kondis, Mason J, who delivered the leading judgment, explained214 the adoption of a rule, that an employer's duty of care to employees was a "personal" or "non-delegable" duty, was founded in the exclusive responsibility that an employer has for the safety of the appliances, the premises and the system of work to which the employer subjects an employee, and in the fact that the employee has no choice but to accept and rely on the employer's provision and judgment in relation to those matters. As Mason J said215: 210 Civil Liability Act 2002 (NSW), s 45; see also Road Management Act 2004 (Vic), s 102; Civil Liability Act 1936 (SA), s 42; Civil Liability Act 2003 (Q), s 37; Civil Liability Act 2002 (WA), s 5Z; Civil Liability Act 2002 (Tas), s 42. 211 (2001) 206 CLR 512 at 570 [129]. 212 Burnie Port Authority (1994) 179 CLR 520 at 556. 213 (1984) 154 CLR 672. 214 (1984) 154 CLR 672 at 687-688. 215 (1984) 154 CLR 672 at 688. Hayne "The consequence is that in these relevant respects the employee's safety is in the hands of the employer; it is his responsibility. The employee can reasonably expect therefore that reasonable care and skill will be taken. In the case of the employer there is no unfairness in imposing on him a non-delegable duty; it is reasonable that he should bear liability for the negligence of his independent contractors in devising a safe system of work." Whether similar considerations can be seen to be in play in two other examples of non-delegable duty given by Mason J in Kondis216, namely, the duty owed by a hospital to its patients and the duty owed by a school authority to pupils attending the school, need not be decided. It may be noted, however, that in the case of both the hospital and the school, the party that owes the duty has control of the circumstances to which the beneficiary of the duty is exposed, and the beneficiary of the duty, in the one case because of infirmity and in the other because of age, is unable to assert any independent control over the way in which he or she is treated217. But as Gummow J noted in Scott v Davis218, the criteria identified may explain at least some cases where a non-delegable duty has been held to exist, and thus be "historically descriptive", but it is greatly to be doubted that such criteria are "normatively predictive". Further, it may also be noted that Mason J gave a third example of non-delegable duty in Kondis – the liability owed by an occupier of land to those who were then classified as invitees. Classification of entrants, as invitees, licensees or trespassers, has since been discarded as a consideration relevant to the definition of the content of the duty of care owed by an occupier of land to entrants to the land219. Whether, or in what circumstances, this particular form of non-delegable duty survives this re-expression of the occupier's duty of care to entrants are questions that do not arise directly in the present matter. Nor do similar questions about the nature or extent of duties owed by hospitals to patients or by school authorities to pupils arise. It is sufficient to notice that decisions of this Court after Kondis, in particular Scott v Davis220 and New South Wales v Lepore221, point out the many difficulties that lie behind adopting 216 (1984) 154 CLR 672 at 685-686. 217 cf Burnie Port Authority (1994) 179 CLR 520 at 550-551 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ. 218 (2000) 204 CLR 333 at 416-417 [248]. 219 Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479. 220 (2000) 204 CLR 333. 221 (2003) 212 CLR 511. Hayne principles cast in terms of non-delegable duties. Not least of these difficulties is that a non-delegable duty is a form of strict liability and Burnie Port Authority v General Jones Pty Ltd, in its treatment of the rule in Rylands v Fletcher, shows the disfavour with which strict liability is now viewed222. It was decided in Brodie and Ghantous that a highway authority owes a road user a duty of care and that the principles of negligence are to be applied, not principles of public nuisance. It is necessary to consider whether the rules developed before that re-expression of the common law, which may be understood as having had the same effect as imposing a non-delegable duty, should now be reformulated as such a non-delegable duty. First, the doctrinal roots of non-delegable duties are anything but deep or well established. Professor Glanville Williams went so far as to say223 that imposition of non-delegable duties represents the reaching of a desired result "by devious reasoning and the fictitious use of language". Whether that particular form of criticism is merited, it is clear that the doctrine was introduced to cases concerning the liability of an employer in order to avoid the mischief of the doctrine of common employment. Though cast in terms of "duty" the principle is one of strict liability for the conduct of another. It is, therefore, nothing but an exception to ordinary rules of vicarious liability. It may readily be accepted that vicarious liability is itself a doctrine, or series of doctrines, lacking any single unifying and principled explanation224. But whatever deficiencies there are in the law relating to vicarious liability, the identification of certain duties (said to be duties of care) as "non-delegable duties" serves only to add to those difficulties. That should not be done where there is no sound doctrinal basis for the notion, and there is no pressing practical reason for doing so. There is no reason for adding the liability of a highway authority to road users to an otherwise limited number of cases where a non-delegable duty has been held to be owed. If a highway authority acts without reasonable care, absent particular statutory provision to the contrary, it will be liable to the road user who is injured as a result. If the highway authority acts with reasonable care in appointing and supervising the work of an independent contractor, but that 222 Scott v Davis (2000) 204 CLR 333 at 417-418 [250]. 223 Glanville Williams, "Liability for Independent Contractors", (1956) Cambridge Law Journal 180 at 190. 224 Hollis v Vabu Pty Ltd (2001) 207 CLR 21; New South Wales v Lepore (2003) 212 CLR 511. Hayne contractor is negligent, the contractor will ordinarily be liable (as Roan was here) to the road user who suffers injury in consequence. Those who undertake contracts to execute road works will ordinarily not be small enterprises: road work is usually large and expensive. But whether in a particular case the work concerned is large or small, and whether the contractor that undertakes the work is a large or small enterprise, there is no basis for concluding that particular and different rules about vicarious liability should be applied to a highway authority which contracts for the performance of road work from the generally applicable rules of vicarious liability. To apply a special rule to highway authorities performing such work would be to reinstate a part of that complex of rules called "the highway rule" that the Court discarded in Brodie and Ghantous. And it would do that despite the rule having no sufficient foundation and being unable any longer to command intellectual assent. That step should not be taken. The appeal should be allowed. So much of the orders of the Court of Appeal of New South Wales made on 8 December 2005 as dismissed the appeal to that Court should be set aside and the matter remitted to the Court of Appeal. Consistent with the terms on which special leave to appeal was granted, the Council should pay the respondent's costs of the appeal to this Court. Callinan CALLINAN J. The question in this appeal is whether a local government authority of New South Wales owes a non-delegable duty of care to road users, here, to pedestrians on footpaths. Facts The appellant is the local authority for the municipality of Leichhardt ("the Council"). Parramatta Road is a major road passing through the municipality. There are shops facing on to the footpaths forming part of the road225. There was telephonic equipment underneath the footpath accessible by a pit covered by a removable lid close to the frontage of the shops. In the course of excavating the footpath, a contractor, Roan Constructions Pty Ltd ("Roan"), removed the cover, in all probability broke it, replaced it in its broken state and covered it and an adjoining section of the footpath with carpet. In doing so Roan created what used to be called in law a concealed trap226 giving rise to a high duty of care on the part of the person responsible for it. Such contractual documents in respect of Roan's work as found their way into evidence required Roan to maintain reasonable pedestrian access to the shops facing the footpath, and, to that end, to place carpet or synthetic grass over the footpath until the work was completed. Roan was initially to restrict its work to daylight hours on Mondays to Fridays, and on Saturday mornings. These hours were subsequently altered but no work was done on Saturday nights. The specifications for the work also required that Roan effect public liability insurance of $10,000,000. On a Saturday night in 2001, the respondent, and two others were walking along the footpath to an hotel to celebrate his birthday. They walked abreast, the respondent closest to the shops. In consequence, he walked on the carpet covering the broken lid and injured himself by falling into the pit. The respondent sued the appellant and Roan in the District Court of New South Wales in negligence. In his statement of claim he made no separate allegations against Roan and the appellant. Those that he did make were made with some generality, for example, of a failure, by both, to take adequate precautions for his safety, and of exposing him to a risk of injury which could have been "avoided by the exercise of reasonable care". The respondent's claim 225 See the definition of "footway" in the dictionary for the Act. 226 See the definition of "trap" in Latham v Johnson [1913] 1 KB 398 at 415 per Hamilton LJ. See also Bird v Holbrook (1828) 4 Bing 628 at 641-642 per Best CJ, at 643-644 per Park J, at 645 per Burrough J [130 ER 911 at 916, 917, 917-918]; Lipman v Clendinnen (1932) 46 CLR 550 at 556, 568 per Dixon J; Commissioner for Railways (NSW) v Cardy (1960) 104 CLR 274 at 281-282, 286-287 per Dixon CJ, 300 per Fullagar J, 302 per Menzies J, 327 per Windeyer J. Callinan against Roan was settled for $50,000. The matter then proceeded to trial against the appellant. The principal basis of the respondent's claim was that the appellant owed him a non-delegable duty of care, and was therefore liable to him, notwithstanding that the works were carried out, and the danger created by Roan, its independent contractor. The trial judge (Quirk DCJ) accepted the respondent's contention to that effect, held that the appellant had failed to discharge its duty, and awarded damages in excess of $200,000 after bringing into account the sum of $50,000 payable by Roan. The case at trial had been conducted upon the further basis that the liabilities of Roan and the appellant were several as well as joint. The appeal to the New South Wales Court of Appeal The appellant appealed to the Court of Appeal of the Supreme Court of New South Wales on several grounds. The only one of present relevance is that the trial judge erred in holding that the appellant owed the respondent a non- delegable duty of care. Rejecting that ground, the Court of Appeal (Mason P, Hodgson and McColl JJA) unanimously dismissed the appeal. It was accordingly not necessary for it to deal with the question whether the appellant had failed to discharge any other duty of care that it might independently and separately have owed to the respondent227. Hodgson JA, who wrote the leading judgment, affirmed that the appellant owed a non-delegable duty of care to the respondent, and had failed to discharge that duty. It is understandable that the Court of Appeal on the state of the authorities as they then stood should so conclude. Its decision followed earlier authority of that Court of which Roads and Traffic Authority (NSW) v Scroop228 is an example229. There, a motor vehicle accident had occurred as a result of road works negligently carried out by an independent contractor. Fitzgerald AJA, with whom Handley and Beazley JJA agreed, said in that case230: "[The Road and Traffic Authority's ("RTA")] argument that it had delegated its duty of care to road users to [the independent contractor] was 227 As to the approach of courts to different issues see Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55 at [172] per Callinan J. 228 (1998) 28 MVR 233. 229 See also Roads and Traffic Authority of New South Wales v Fletcher (2001) 33 MVR 215; Roads and Traffic Authority of New South Wales v Palmer (2003) 38 MVR 82 and Ainger v Coffs Harbour City Council [2005] NSWCA 424. 230 (1998) 28 MVR 233 at 237-238. Callinan founded on an article published in 1991231. However, there is an extensive body of English case law against RTA on this point232. A conclusion that a highway authority causing or permitting operations on the highway has a non-delegable duty of care to highway users also seems to me required by recent pronouncements of the High Court233." In discussing the principle that "a highway authority causing or permitting operations on a highway"234 owes a non-delegable duty of care to highway users Hodgson JA also referred to a body of English authority235. His Honour then turned to the judgment of Mason J in Kondis v State Transport Authority236, acknowledging that while "[t]he circumstance of a road authority undertaking work on a highway was not specifically mentioned in Mason J's analysis ... that circumstance could be considered as within the general principle"237 laid down in this passage238: "The element in the relationship between the parties which generates a special responsibility or duty to see that care is taken may be found in one or more of several circumstances. The hospital undertakes the care, supervision and control of patients who are in special need of care. The school authority undertakes like special responsibilities in relation to the children whom it accepts into its care. If the invitor be 231 Swanton, Non-delegable Duties: Liability for the Negligence of Independent Contractors (1991) 4 Journal of Contract Law 183. 232 See, eg the cases referred to in Fleming on Torts, 9th ed, (1998) at 437; Clerk and Lindsell on Torts, 16th ed, (1989) at 231; Salmond and Heuston on the Law of Torts, 20th ed, (1992) at 475. 233 See, eg Kondis v State Transit Authority (1984) 154 CLR 672; Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 550; Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313. 234 Leichhardt Municipal Council v Montgomery [2005] NSWCA 432 at [22]. 235 Hardaker v Idle District Council [1896] 1 QB 335; Penny v Wimbledon Urban District Council [1899] 2 QB 72; Holliday v National Telephone Co [1899] 2 QB 392; Salisbury v Woodland [1970] 1 QB 324 and Rowe v Herman [1977] 1 WLR 236 (1984) 154 CLR 672. 237 Leichhardt Municipal Council v Montgomery [2005] NSWCA 432 at [24]. 238 (1984) 154 CLR 672 at 687. Callinan subject to a special duty, it is because he assumes a particular responsibility in relation to the safety of his premises and the safety of his invitee by inviting him to enter them. And in Meyers v Easton the undertaking of the landlord to renew the roof of the house was seen as impliedly carrying with it an undertaking to exercise reasonable care to prevent damage to the tenant's property. In these situations the special duty arises because the person on whom it is imposed has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised." Counsel for the appellant in the Court of Appeal had submitted that his Honour's approach was inconsistent with the recent reformulation of the common law duty of highway authorities to highway users, of this Court in Brodie v Singleton Shire Council239, and the caution offered subsequently to Kondis, by other judges of this Court against any extension of the categories of non- delegable duties240. Hodgson JA dealt with that submission in this way241: "I do not think Brodie stands against this approach. The general duty of road authorities is to take reasonable care; but in the particular circumstance where the road authority undertakes work involving risk to road users, a circumstance not considered in Brodie, that general duty is overlaid by the more extensive duty that arises because of the risk created by the undertaking of those works. In my opinion, until the High Court says otherwise, this Court should follow Scroop, Fletcher, Palmer and Ainger, and apply that principle." As to a submission in this Court by the appellant that the respondent did not earlier raise any question of independent or other liability of the appellant, it is sufficient to say that although the former was certainly not at the forefront of the respondent's case, it was open on the general allegations of negligence pleaded by him, which were not, as they might perhaps have been, the subject of a request for particulars by the appellant. It was, in any event, an issue with which the written submissions of the respondent had dealt at the trial, and had at least touched upon in his notice of contention filed in the Court of Appeal. 239 (2001) 206 CLR 512. 240 See, eg, Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 394-404 per Kirby J; Scott v Davis (2000) 204 CLR 333 at 456-458 [352]-[353] per Callinan J; Jones v Bartlett (2000) 205 CLR 166 at 239 [249] per Kirby J, 250-252 241 Leichhardt Municipal Council v Montgomery [2005] NSWCA 432 at [26]. Callinan The appeal to this Court The appellant makes these submissions in this Court. First, it submits that the Court of Appeal erred in holding that the duty of care owed to the respondent by the appellant was a non-delegable one. Secondly, it contends that the Court of Appeal ought to have held that the duty of care owed by the appellant was a duty to take reasonable care to ensure that the exercise of its statutory powers did not create a foreseeable risk of harm to the respondent as a road user. And, thirdly, it submits that the Court of Appeal erred in holding that there was breach of any duty that the appellant may have owed to the respondent. The common law of negligence applicable to this case is by no means unaffected by the legislation governing the obligations and rights of road authorities and road users. It is necessary therefore to have regard to the Roads Act 1993 (NSW) ("the Act"). Both ss 5 and 6 of it represent slight qualifications of the common law which requires that the public, and occupiers of abutting properties be allowed egress to and from, and passage along public thoroughfares242: Right of passage along public road by members of the public (1) A member of the public is entitled, as of right, to pass along a public road (whether on foot, in a vehicle or otherwise) and to drive stock or other animals along the public road. (1A) The right conferred by this section extends to the right of passage of members of the public in a light rail or other railway vehicle. The right conferred by this section does not derogate from any right of passage that is conferred by the common law, but those rights are subject to such restrictions as are imposed by or under this or any other Act or law. For example, those rights are subject to such restrictions as are imposed: by or under the road transport legislation within the meaning of the Road Transport (General) Act 1999, or by or under section 72 of the Crown Lands Act 1989 (Cultivation of enclosed roads). 242 See Dabbs v Seaman (1925) 36 CLR 538. See also the discussion in Butt, Land Law, 5th ed (2006) at 440 [1645], 782-783 [2093]. Callinan Right of access to public road by owners of adjoining land The owner of land adjoining a public road is entitled, as of right, to access (whether on foot, in a vehicle or otherwise) across the boundary between the land and the public road. The right conferred by this section does not derogate from any right of access that is conferred by the common law, but those rights are subject to such restrictions as are imposed by or under this or any other Act or law." That there should be rights of passage also appears from the objects of the Act stated in s 3: Objects of Act The objects of this Act are: to set out the rights of members of the public to pass along public roads, and to set out the rights of persons who own land adjoining a public road to have access to the public road, and to establish the procedures for the opening and closing of a public road, and to provide for the classification of roads, and to provide for the declaration of the RTA and other public authorities as roads authorities for both classified and unclassified roads, and to confer certain functions (in particular, the function of carrying out road work) on the RTA and on other roads authorities, and to provide for the distribution of the functions conferred by this Act between the RTA and other roads authorities, and to regulate the carrying out of various activities on public roads." Section 145 of the Act vests a relevant road in fee simple in an authority such as the appellant. Section 146(1) provides that the dedication of a public road does not of itself impose liability upon the authority: Callinan "146 Nature of ownership of public roads Except as otherwise provided by this Act, the dedication of land as a public road: does not impose any liability on the owner of the road that the owner would not have if the owner were merely a person having the care, control and management of the road Section 71 should be noticed: "71 Powers of roads authority with respect to road work A roads authority may carry out road work on any public road for which it is the roads authority and on any other land under its control." Before Brodie, it was well settled that a highway or a road authority was not, at common law, liable for acts of non-feasance as opposed to misfeasance. Despite some reasonable, but far from destructive criticisms of the distinction between these, it had sound underpinnings, both pragmatic and intellectual: pragmatic in that it obviated the need for any searching and expensive juridical inquiry into the finances and priorities of an authority in performing its public functions; and pragmatic and intellectual in preserving a separation between the political activities of raising and spending taxes, and the purely judicial work of the courts. It was not surprising therefore that after Brodie, which swept away the distinction, various States and relevantly here, New South Wales, largely restored it by provisions which also, in part at least, met the most pervasive criticism of it, that the distinction was not always an easy one to make. The provisions in question appear in s 45 of the Civil Liability Act 2002 (NSW) which provides as follows: "45 Special non-feasance protection for roads authorities (1) A roads authority is not liable in proceedings for civil liability to which this Part applies for harm arising from a failure of the authority to carry out road work, or to consider carrying out road work, unless at the time of the alleged failure the authority had actual knowledge of the particular risk the materialisation of which resulted in the harm. This section does not operate: to create a duty of care in respect of a risk merely because a roads authority has actual knowledge of the risk, or Callinan to affect any standard of care that would otherwise be applicable in respect of a risk. In this section: the construction, erection, 'carry out road work' means carry out any activity in connection installation, maintenance, with inspection, repair, removal or replacement of a road work within the meaning of the Roads Act 1993. 'roads authority' has the same meaning as in the Roads Act 1993." There can be no question that had the appellant been undertaking the work itself, the breaking of the lid, its replacement, and concealment by carpet, would have constituted misfeasance. It is also clear that the appellant did not, indeed it could only have done so in certain circumstances, and on certain conditions, give Roan any exclusive use, occupation and control of the footpath243. Whilst it is true that since Australian Safeway Stores Pty Ltd v Zaluzna244 the law of negligence in relation to occupiers has been altered245 by the abolition of the imposition of a special duty upon them, rights and obligations of occupation, and therefore also of control, remain circumstances relevant to the existence and content of their duties of care. This case is, because the relevant events occurred before the insertion of s 45 into the Civil Liability Act, governed by the common law, save of course to the extent that it may already have been modified or influenced by statute. That common law, despite the long historical understanding to the contrary, now is as reformulated in Brodie. The particular relevant aspects of statute law capable of affecting that common law here are the provisions to which I have referred concerning the power of the appellant to do road works (s 71), the control, and the occupation that the appellant had (ss 3, 5, 6, 145 and 146), and was obliged to maintain, at least partially, during the works on the footpath. These are matters to which I will return. The principle which the Court of Appeal applied here certainly does appear to have been well accepted, although, as will appear, has shifting 243 See, for example, Pt 4 of the Act which prescribes procedures for the closure of public roads. 244 (1987) 162 CLR 479. 245 See the discussion of the occupiers' liability cases culminating in Zaluzna in Balkin and Davis, Law of Torts, 3rd ed, (2004) at 242-250 [7.37]-[7.40]. Callinan foundations. In the second edition of Halsbury's Laws of England this statement appears246: "An authority which employs a contractor to carry out work involving interference with a highway does not thereby absolve itself of its duty towards other persons. Although not responsible for his negligence or that of his servants, so long as such negligence is merely 'casual' or 'collateral,' the authority is responsible if the contractor fails to do or to get done what it is its duty to do or to get done, ie, to take the necessary precautions to protect the public from the danger which its operations entail. Thus, where a contractor is employed to repair a road, or to lay a sewer therein, the highway authority will not be liable if one of his men negligently leaves a tool lying on the highway, but it will be if the road is improperly made up, or the trench is improperly filled in, or a gas main is broken by negligent excavation, or heaps of excavated soil are left unguarded on the highway, for the excavation and safe handling of such soil is an essential part of the work to be done." (footnotes omitted) The principle is open, I think, to a similar, even stronger, criticism than the ones to which the distinction between misfeasance and non-feasance was subjected. It is that the identification of what should be regarded as merely casual or collateral is an exceedingly difficult one to make. In his reasons for judgment the Chief Justice describes the creation here of the concealed trap as an "apparently low-level and singular act of carelessness"247, an equally apt description of which would be, to use the language of Halsbury, a "merely 'casual' or 'collateral'" act of negligence. That the distinction is an uncertain one, and further, that some of the cases said to ground the principle can be explained on other bases will be apparent from an examination of several of the cases which I will undertake shortly. But before doing that I would point out that the fact that this Court was prepared to sweep away in Brodie the distinction at common law between misfeasance and non-feasance, and in Zaluzna, the exceptional duty owed by occupiers, provides reason for a similar initiative to reformulate the law with respect to road authorities to render any distinction between casual and collateral, or non-casual and non-collateral, no longer decisive. For that reason and for the reasons which follow, a road or highway authority, an expression still apt to describe a Council responsible for road works should be taken not to owe to road users a non-delegable duty of care. 246 Halsbury's Laws of England, 2nd ed, vol 16 at 337 [456]. 247 Reasons of Gleeson CJ at [23]. Callinan I turn now to some of the English cases on the topic. The principle of non-delegability was referred to by Cockburn CJ in Bower v Peate248: "The answer to the defendant's contention may, however, as it appears to us, be placed on a broader ground, namely, that a man who orders a work to be executed, from which, in the natural course of things, injurious consequences to his neighbour must be expected to arise, unless means are adopted by which such consequences may be prevented, is bound to see to the doing of that which is necessary to prevent the mischief, and cannot relieve himself of his responsibility by employing some one else - whether it be the contractor employed to do the work from which the danger arises or some independent person - to do what is necessary to prevent the act he has ordered to be done from becoming wrongful." In Hardaker v Idle District Council249, A L Smith LJ, after quoting that passage, said that it "should be noted that in Hughes v Percival250 Lord Blackburn doubted whether that duty was not too broadly stated"251. One matter that is important to notice however is that in Bower v Peate, Cockburn CJ stated the principal as applying to injurious consequences in the natural course of things which must be expected to arise, thereby suggesting something in the nature of an hazardous or extra-hazardous activity to which a special rule already applied. Indeed, another case, which is also said to lend support to the principle, Black v Christchurch Finance Co252, was one of escape of fire, that is, again, an event which the law had historically regarded as one in respect of which special duties are owed. The same view might well be taken of the activity in question in Hardaker which involved work in the close vicinity of a main in which potentially explosive gas was stored and transmitted. Another authority cited in Halsbury, Pendlebury v Greenhalgh253, does not advance the matter. There, Lord Cairns LC, with whom Lord Coleridge CJ, 248 [1876] 1 QB 321 at 326. Cockburn CJ delivered the judgment of the Court (Cockburn CJ, Mellor and Field JJ). 250 (1883) 8 App Cas 443. 251 [1896] 1 QB 335 at 347. Callinan Bramwell B and Brett J agreed, regarded it as important that the defendant, who was the surveyor of highways appointed by the vestry of a parish, himself superintended and coordinated, on behalf of the committee, the different works upon a highway. The work was of a complex kind and consisted of four components. The materials were to be supplied by the vestry. No contract was let for the fencing and lighting of the work, and the duty to undertake those remained in the defendant. At the conclusion of his judgment, Lord Cairns LC was careful to emphasize that he was not laying down any general rule, and that the case turned entirely upon its own circumstances254. That reasoning does not suggest that a highway authority should be under any non-delegable duty of care as a highway authority. Nor is it immediately apparent why the negligence of the contractor for which the defendant was held responsible in Pickard v Smith255 should not have been regarded as merely casual or collateral. Notwithstanding the special features of the cases which I have so far discussed, and other relevant cases, it does seem that in time a hard principle, subject to the uncertain exception referred to in Halsbury, of non-delegability evolved. In Penny v Wimbledon Urban Council Bruce J said this256: "It was contended by Lord Coleridge, who argued the case for the plaintiff, that, even if [the defendant] was to be regarded as an independent contractor, still, upon the principle of Hardaker v Idle District Council, the District Council in this case was liable. In that case of the Idle District Council the works which were being executed were being executed by the contractor of the Local Board pursuant to the powers of the same section of the Public Health Act 1875, s 150, as applied in the present case, and I find it difficult to draw a distinction between the two cases. Pickard v Smith is another case that closely resembles the present. In that case the defendant was the lessee of refreshment-rooms and a coal-cellar, and there was an opening for putting coals into the coal-cellar on the arrival platform at a railway station. The defendant employed a coal merchant to put coals into the cellar, and the coal merchant's servants, while putting coals into the cellar, left the hole insufficiently guarded. The plaintiff, whilst passing in the usual way out of the station, fell into the coal-cellar and was injured. It was held that the defendant was liable. The principle of the decision, I think, is this, that when a person employs a contractor to do work in a place where the 254 [1875] 1 QB 36 at 41. 255 (1861) 10 CB (NS) 470 [142 ER 535]. See the summary of Pickard in the extract of Penny v Wimbledon below. 256 [1898] 2 QB 212 at 217-218. Callinan public are in the habit of passing, which work will, unless precautions are taken, cause danger to the public, an obligation is thrown upon the person who orders the work to be done to see that the necessary precautions are taken, and that, if the necessary precautions are not taken, he cannot escape liability by seeking to throw the blame on the contractor. Pickard v Smith is an authority for the proposition that no sound distinction in this respect can be drawn between the case of a public highway and a road which may be, and to the knowledge of the wrongdoer probably will in fact be, used by persons lawfully entitled so to do. The District Council employed the contractor to do work upon the surface of a road, which they knew was being used by the public, and they must have known that the works which were to be executed would cause some obstruction to the traffic, and some danger, unless means were taken to give due warning to the public. The duty of affording protection to the public was in the circumstances incurred by the District Council, and the District Council could not avoid the obligation of that duty by entering into a contract with [the defendant]." (footnotes omitted) Examples of cases having special features but nonetheless said to support the principle of non-delegability can be multiplied. In Holliday v National Telephone Co257 the defendant engaged a plumber to connect tubes in a trench designed to hold telephone wires. The trench was excavated in a pavement. The connection was to be made with lead and solder to the satisfaction of the defendant's foreman. The plumber dipped a benzoline lamp into a cauldron of melted solder which was placed over a fire on the footway unprotected by any screen or tent. A safety valve on the lamp was defective. It exploded. The plaintiff, who was passing by, was splashed with molten solder. Not surprisingly the defendant company was held liable. That liability did not need to depend upon the failure to exercise a non-delegable duty. The defendant was obviously in breach of duty for two other reasons: it was actually participating in doing the work by its foreman who was supervising it, and by another of its employees who was actually physically assisting the plumber; and, again, the materials and tools being used were self evidentially dangerous. Enough has been said, I think, to question whether there has ever been an entirely sound basis for a principle of non-delegability, or a principle of non- delegability as far reaching as, or of the kind, to which Halsbury, and some of the cases referred to and upon which the Court of Appeal relied here and earlier. In any event, recent authority of this Court leans strongly against non- delegability and absolute liability in tort cases. Northern Sandblasting Pty Ltd v Callinan Harris258, which might suggest otherwise, has almost certainly been at least impliedly overruled by Jones v Bartlett259, and Soblusky v Egan260, which appeared to impose, by means of a special and oppressive form of vicarious liability, non-delegability in substance, has at least to be doubted as a result of the reasoning of this Court in Scott v Davis261. In Burnie Port Authority v General Jones Pty Ltd262 five members of this Court spoke of the emergence, subsequent to Rylands v Fletcher263, "of a coherent law of negligence to dominate the territory of tortious liability for unintentional injury to the person or property of another"264. Although their Honours went on to hold that the Authority there owed a non-delegable duty, they stressed that any special rule relating to the liability of an occupier for the escape of fire from its premises, had been absorbed into, and qualified by more general rules or principles265. I have already pointed out that Brodie also swept away old principles of liability of highway authorities. The unanimous judgment of this Court in Sullivan v Moody speaks of the necessity for coherence in the law266. All of this is to suggest that this Court should scrutinise with great care, and generally reject the imposition of non-delegable duties, unless there are very special categories warranting an exception, as to which nothing further need be said here. On any view this case does not fall within a necessary exception. 258 (1997) 188 CLR 313. 259 (2000) 205 CLR 166. 260 (1960) 103 CLR 215. 261 (2000) 204 CLR 333. 262 (1994) 179 CLR 520. 263 (1868) LR 3 HL 330. 264 (1994) 179 CLR 520 at 544 per Mason CJ, Deane, Dawson, Toohey and 265 (1994) 179 CLR 520 at 534. 266 (2001) 207 CLR 562 at 580 [50] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan Even though the majority in Brodie disapproved statements of principle in relation to non-feasance and misfeasance by his Honour, the following proposition stated by Dixon J in Buckle v Bayswater Road Board holds true267: "Because the road is under its control, it necessarily has an opportunity denied to others for causing obstructions and dangers in highways. But when it does so, the road authority is liable, not, I think, under any special measure of duty which belongs to it, but upon ordinary principles." The appellant was empowered under the Act, but not obliged, to undertake road works. It was not inappropriate that it engage contractors to repair the footpath on Parramatta Road. The appellant did not thereby bring itself under any non-delegable obligation of care to the respondent. Whether however, it failed to discharge some other duty remains to be considered. I would accordingly join in the orders proposed by Justice Hayne. 267 (1936) 57 CLR 259 at 283. Crennan CRENNAN J. The appeal should be allowed. I have nothing to add to the reasons of Gleeson CJ and Hayne J, with which I agree. I agree with the consequential orders proposed by them. |
HIGH COURT OF AUSTRALIA PGA AND THE QUEEN APPELLANT RESPONDENT PGA v The Queen [2012] HCA 21 30 May 2012 ORDER Appeal dismissed. On appeal from the Supreme Court of South Australia Representation D M J Bennett QC with P F Muscat SC and A L Tokley for the appellant (instructed by Legal Services Commission (SA)) M G Hinton QC, Solicitor-General for the State of South Australia with K G Lesses for the respondent and intervening on behalf of the Attorney-General for the State of South Australia (instructed by Director of Public Prosecutions S J Gageler SC, Solicitor-General of the Commonwealth with G A Hill intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) J D McKenna SC with G J D del Villar intervening on behalf of the Attorney- General of the State of Queensland (instructed by Crown Law (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS PGA v The Queen Criminal law – Rape – Husband's immunity from prosecution for rape of wife – Presumption of consent to intercourse by wife in marriage – Appellant charged in 2010 with two counts of rape contrary to s 48 of Criminal Law Consolidation Act 1935 (SA) – Alleged rapes committed in 1963 against then spouse – Legislative amendments enabled institution of proceedings despite lapse of time – Elements of offence of rape in 1963 supplied by common law – Whether in 1963 common law of Australia presumed consent by wife in marriage. Precedent – Judicial method – Development of common law – Whether presumption of consent by wife in marriage was part of common law of Australia – Whether statement of common law in R v L (1991) 174 CLR 379 applied to events alleged to have occurred in 1963. Words and phrases – "common law", "marital exemption", "marital immunity", "presumption of consent", "rape", "retrospective application". Criminal Law Consolidation Act 1935 (SA), s 48. Matrimonial Causes Act 1857 (UK) (20 & 21 Vict c 85). FRENCH CJ, GUMMOW, HAYNE, CRENNAN AND KIEFEL JJ. The appellant and his wife, the complainant, were lawfully married in South Australia on 1 September 1962. At the relevant times in 1963 they remained lawfully married and were cohabiting in South Australia as husband and wife at the house of her parents; there were in force no legal orders or undertakings of any kind which affected their matrimonial relationship. The charges On 5 July 2010, by information of the Director of Public Prosecutions of South Australia, the appellant was charged for trial in the District Court of South Australia with two counts of carnal knowledge, with four counts of assault occasioning actual bodily harm and, what is immediately relevant for this appeal, with two counts of rape (counts 3 and 5) contrary to s 48 of the Criminal Law Consolidation Act 1935 (SA) ("the CLC Act"). The particulars of count 3 were that between 22 March 1963 and 25 March 1963, at Largs Bay in South Australia, the appellant had vaginal sexual intercourse with his wife without her consent. The particulars of count 5 were that on or about 14 April 1963, also at Largs Bay, the appellant had vaginal sexual intercourse with his wife without her consent. The issue before the Court is whether the appellant is correct in his contention that, as a matter of the common law, upon their marriage in 1962 his wife had given her consent to sexual intercourse and thereafter could not retract her consent, at least while they remained lawfully married, with the result that he could not be guilty of raping her as charged by counts 3 and 5. The proposition of law upon which the appellant relies has its source in a statement in extra-judicial writings of Sir Matthew Hale, Chief Justice of the Court of King's Bench (1671-1676), which were first published in 1736 as The History of the Pleas of the Crown. The statement by Hale is more fully set out later in these reasons1, but is encapsulated in the bald proposition that a husband cannot be guilty of a rape he commits upon his wife. It was repeated in East's work A Treatise of the Pleas of the Crown, published in 18032; by Chitty in his A Practical Treatise on the Criminal Law, published in 18163; and by Russell in A 2 Volume 1, Ch 10, §8. 3 Volume 3 at 811. Crennan Treatise on Crimes and Misdemeanors, the first edition of which was published in 18194. In each case the proposition was further repeated in later 19th century editions. What, however, was lacking in all these standard texts was any statement and analysis of reasoning which might have supported the statement by Hale and its continued acceptance. Given this state of affairs, it is perhaps not surprising that the Canadian Criminal Code of 1892 (s 266) and the Criminal Code of Queensland of 1899 (s 347), in defining the crime of rape, included the phrase "not his wife"5. The provisions in the Queensland Code, and those of Western Australia and Tasmania, were to be amended in 1989, 1985 and 1987 respectively6. The attempted abstraction and statement of doctrine in provisions of a code by means of propositions which do not represent generalised deductions from particular instances in the case law occasions difficulty when the common law later is shown to be to different effect7. Justice Holmes, in his essay "Codes, and the Arrangement of the Law"8, wrote: "New cases will arise which will elude the most carefully constructed formula. The common law, proceeding, as we have pointed out, by a series of successive approximations – by a continual reconciliation of cases – is prepared for this, and simply modifies the form of its rule. But what will the court do with a code? If the code is truly law, the court is confined to a verbal construction of the rule as expressed, and must decide the case wrong. If the court, on the other hand, is at liberty to decide ex 4 Volume 1, Bk 2, Ch 6, §1. 5 By 1984 over 40 of the United States retained statute laws conferring some form of marital exemption for rape: People v Liberta 474 NE 2d 567 at 572-573 (1984). However, in that case the New York provision was held invalid as denying the the United States equal protection required by Constitution. the 14th Amendment 6 See R v L (1991) 174 CLR 379 at 402; [1991] HCA 48. 7 See Murray v The Queen (2002) 211 CLR 193 at 206-207 [40]; [2002] HCA 26; Director of Public Prosecutions (NT) v WJI (2004) 219 CLR 43 at 53-54 [30]-[31]; [2004] HCA 47. (1870) 5 American Law Review 1, reprinted in Novick (ed), The Collected Works of Justice Holmes, (1995), vol 1, 212 at 213. Crennan ratione legis, – that is, if it may take into account that the code is only intended to declare the judicial rule, and has done so defectively, and may then go on and supply the defect, – the code is not law, but a mere text-book recommended by the government as containing all at present known on the subject." Indeed, in 1888, among the 13 judges sitting in the Court for Crown Cases Reserved, on the case stated in R v Clarence9 with respect to charges of "unlawfully and maliciously inflicting grievous bodily harm" and "assault occasioning actual bodily harm", contrary to s 20 and s 47 respectively of the Offences against the Person Act 1861 (UK)10 ("the 1861 UK Act"), differing views had been expressed as to whether the consent of the wife to intercourse with her husband had been vitiated by his failure to disclose to her that he was suffering from a contagious venereal disease. Thereafter, in the annotation to s 48 of the 1861 UK Act which appeared in Halsbury's Statutes of England, published in 192911, it was said: "It is said that a husband cannot be guilty of rape upon his wife as a principal in the first degree". (emphasis added) The 28th edition of Archbold's Pleading, Evidence & Practice in Criminal Cases, published in 1931, four years before the enactment of the CLC Act, cited Hale for the proposition expressed as: "It is a general proposition that a husband cannot be guilty of a rape upon his wife ... but it would seem that the proposition does not necessarily extend to every possible case"12. In the intervening period there appears to have been no reported case in England in which a husband had been prosecuted for the rape of his wife during their (1888) 22 QBD 23. 10 24 & 25 Vict c 100. 11 Volume 4 at 615. 13 See R v R [1992] 1 AC 599 at 614. Crennan As it stood in 1963, s 48 of the CLC Act stated: "Any person convicted of rape shall be guilty of felony, and liable to be imprisoned for life, and may be whipped." It is accepted that the elements of the offence of rape identified in s 48 were supplied by the common law. Section 4 of the CLC Act had wholly repealed The Criminal Law Consolidation Act 1876 (SA). As amended by s 13 and the Schedule to the Criminal Law Amendment Act 1925 (SA), s 60 of the 1876 statute had read: "Whosoever shall be convicted of the crime of rape shall be guilty of felony, and, being convicted thereof, shall be liable to be imprisoned for life, with hard labor, and may be whipped."14 The scheme of the legislation in South Australia, in its various forms, was to classify the offence of rape as a felony and to specify the range of punishments upon conviction. This followed the pattern in s 48 of the 1861 UK Act. The legislative emphasis upon the classification of the crime and the punishments which might be inflicted, leaving the elements of the crime itself to the common law, reflected past fluctuations in the statute law. Shortly after the enactment of the 1861 UK Act, there appeared in the 5th edition (1877) of Russell's work, A Treatise on Crimes and Misdemeanors15, the following: "This offence formerly was, for many years, justly visited with capital punishment; but it does not appear to have been regarded as equally heinous at all periods of our Constitution. Anciently, indeed, it appears to have been treated as a felony, and, consequently, punishable with death; but this was afterwards thought too hard; and, in its stead, another severe but not capital punishment was inflicted by William the Conqueror, namely, castration and loss of eyes, which continued till after Bracton wrote, in the reign of Henry III. The punishment for rape was still further mitigated, in the reign of Edward I, by the statute of Westm 1, c 13, which reduced the offence to a trespass, and subjected the party to 14 The Criminal Law Amendment Act 1925 (SA) omitted the words "or any term not less than four years". 15 Volume 1 at 858 (footnote omitted). Crennan two years' imprisonment, and a fine at the King's will. This lenity, however, is said to have been productive of terrible consequences; and it was, therefore, found necessary, in about ten years afterwards, and in the same reign, again to make the offence of forcible rape a felony, by the statute of Westm 2, c 34. The punishment was still further enhanced by the 18 Eliz c 7, s 1." The lapse of time Something should be said respecting the legal significance of the length of time between the alleged conduct in 1963 and the institution of proceedings in 2010. As the CLC Act stood in 1963, it included s 76a16. The effect of s 76a was that in respect of offences, including an offence against s 48, no information was to be laid more than three years after the commission of the offence. Section 76a was repealed by the Criminal Law Consolidation Act Amendment Act 1985 (SA). However, in R v Pinder17 it was held that the repeal of s 76a did not authorise the laying of an information which would deprive a person of immunity already acquired before the repeal of s 76a. The response of the legislature was to reverse the effect of this decision by the enactment of s 72A of the CLC Act by the Criminal Law Consolidation (Abolition of Time Limit for Prosecution of Certain Sexual Offences) Amendment Act 2003 (SA). The result was that a person, such as the appellant, who had acquired immunity by reason of the operation of the repealed s 76a had lost that immunity and could now be prosecuted. Changes have been made to the elements of the offence of rape, beginning with the Criminal Law Consolidation Act Amendment Act 1976 (SA), but it has not been submitted that these changes to the elements of the offence apply retrospectively. The permanent stay application On 6 July 2010 Herriman DCJ gave reasons for dismissing an application by the appellant for a permanent stay of proceedings. His Honour's reasons included the following passage: 16 This had been added by the Criminal Law Consolidation Act Amendment Act 1952 17 (1989) 155 LSJS 65. Crennan "The complainant's evidence is that in 1960 and 1961, when she was 15 or 16, the accused was in a relationship with her and she says that at that time they were living in her parents' house, albeit that he slept in a separate room. They were ultimately married in September 1962, when she was 17, but she says that before that age she had sexual intercourse with him on two occasions. Those two occasions represent counts 1 and 2 on the information. The parties then lived as husband and wife in her parents' house until mid-1963, when they went to their own premises. They separated in The complainant says that on two occasions, in March and April 1963, which she relates to times immediately before and soon after the birth of their first child, the accused had forcible sexual intercourse with her against her will. She says that she did not, at any time during the marriage, complain of carnal knowledge or, indeed, of that forced sexual intercourse. The time for laying of any such charges was then within three years of the act, so that the time for laying a complaint with respect to the carnal knowledge counts expired in about 1964 and, with respect to rape, in about 1966. Those time limits were not abolished until the year 2003. More importantly, there was, and, indeed, there remains, a real question as to whether in 1963 an offence of rape in marriage, as it is commonly called, was then part of the common law of this State." His Honour went on to stay the trial pending the statement for the Full Court of the Supreme Court of South Australia of a case under s 350(2)(b) of the CLC Act. This dealt with the argument of the appellant that at the time of the alleged offences in 1963, he could not, as a matter of law, have committed the crime of rape upon his wife. What was said in 1991 by four of the five members of this Court in R v L18 has been treated by the parties in the present litigation at least as having the result that by 1991 it was no longer the common law in Australia that by 18 (1991) 174 CLR 379 at 390 per Mason CJ, Deane and Toohey JJ, 405 per Crennan marriage a wife gave irrevocable consent to sexual intercourse with her husband. Herriman DCJ saw the outstanding issue for determination as being "was the offence of rape by one lawful spouse of another ... an offence known to the law of South Australia as at 1963?". A question to this effect was stated for consideration by the Full Court19. The Court (Doyle CJ and White J; Gray J dissenting) ordered that the question be answered as follows: "The defendant is liable at law to be found guilty of the offences of rape charged in count 3 and count 5 of the Information, notwithstanding that at the time of the alleged offence he was married to the alleged victim and was cohabiting with her, the marriage giving rise to no presumption of consent on her part to intercourse with her husband, and giving rise to no irrebuttable presumption to that effect." Gray J was of the contrary opinion and would have answered the question in the negative and applied the presumption of irrevocable consent. The appeal to this Court By special leave the appellant appeals to this Court seeking an order setting aside the answer given by Doyle CJ and White J. By Notice of Contention the respondent submits that, regardless of what follows from the decision in R v L20, the answer by Doyle CJ and White J, the majority in the Full Court, is to be supported on the basis that: (a) "the supposed marital exemption to the offence of rape ... was never part of the common law of Australia"; or (b) "if it ever was part of the common law of Australia, it ceased to be so as at the date of the commission of the offences in this matter". For the reasons which follow, if the "marital exemption" ever was part of the common law of Australia, it had ceased to be so by the time of the enactment in 1935 of s 48 of the CLC Act and thus before the date of the commission of the alleged offences charged as count 3 and count 5. It follows that the appeal must be dismissed. That conclusion does not involve any retrospective variation or modification by this Court of a settled rule of the common law. At the time of 19 (2010) 109 SASR 1. The Full Court sat as the Court of Criminal Appeal: see Lipohar v The Queen (1999) 200 CLR 485 at 504 [41]; [1999] HCA 65. 20 (1991) 174 CLR 379. Crennan the commission of the alleged offence the common law rule for which the appellant contends did not exist. The term "the common law" The references above to "the common law" and "the common law of Australia" require further analysis before consideration of the immediate issue concerning the crime of rape upon which this appeal turns. In his contribution under the heading "common law" in The New Oxford Companion to Law21, Professor A W B Simpson distinguishes five senses in which that term is used. The primary sense is that body of non-statutory law which was common throughout the realm and so applicable to all, rather than local or personal in its application. An example of such local or personal laws is the customary mining laws which had applied in various localities in England22. The second sense of the term is institutional, to identify the body of law administered in England by the three royal courts of justice, the King's Bench, Common Pleas and Exchequer, until the third quarter of the 19th century. The third sense is a corollary of the second, the expression "the common law" differentiating the law administered by those courts from the principles of equity administered in the Court of Chancery (and, one should add, from the law applied in the ecclesiastical courts until 1857 and the law applied in courts of admiralty). In that regard, Sir George Jessel MR emphasised in In re Hallett's Estate23 that, while the rules of the common law were "supposed to have been established from time immemorial", those of equity had been invented, altered, improved, and refined by the Chancellors from time to time, and he instanced "the separate use of [ie trust for] a married woman". With the development since the second half of the 19th century of appellate structures governing all species of primary decisions, judicial reasoning has tended not to invoke time immemorial and rather to follow the course which had been taken by the Chancellors in expounding legal principle. 21 Cane and Conaghan (eds), The New Oxford Companion to Law, (2008) at 164-166. 22 See TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576 at 587 [30]-[31]; [2010] HCA 49. 23 (1879) 13 Ch D 696 at 710. Crennan The fourth and fifth senses of "common law" identified by Professor Simpson are as follows: "The term 'common law' came, in a fourth sense, to have the connotation of law based on cases, or law evolved through adjudication in particular cases, as opposed to law derived from the analysis and exposition of authoritative texts. Indeed sometimes 'common law' is more or less synonymous with the expression 'case law'. Since the common law was developed by the judges, interacting with barristers engaged in litigation, the expression 'common law' came, in a related fifth sense, to mean law made by judges." This draws attention to a difficulty in the appellant's reliance in this case upon a principle of the common law based upon a statement in a text published in 1736, many years after the death of the author, without citation of prior authority and lacking subsequent exposition in cases where it has been repeated. In that regard, observations by six members of the Court in the Native Title Act Case24 are significant. Their Honours noted that the term "common law" might be understood not only as a body of law created and defined by the courts in the past, but also as a body of law the content of which, having been declared by the courts at a particular time, might be developed thereafter and be declared to be different. Writing at the time of the establishment of this Court, and when he was Professor of Law at the University of Adelaide, Sir John Salmond said25: "The statement that a precedent gains in authority with age must be read subject to an important qualification. Up to a certain point a human being grows in strength as he grows in age; but this is true only within narrow limits. So with the authority of judicial decisions. A moderate 24 Western Australia v The Commonwealth (1995) 183 CLR 373 at 484-486; [1995] HCA 47. 25 Salmond, "The Theory of Judicial Precedents", (1900) 16 Law Quarterly Review 376 at 383. See also Holmes, "Codes, and the Arrangement of the Law", (1870) 5 American Law Review 1, reprinted in Novick (ed), The Collected Works of Justice Holmes, (1995), vol 1, 212 at 212-213. Crennan lapse of time will give added vigour to a precedent, but after a still longer time the opposite effect may be produced, not indeed directly, but indirectly through the accidental conflict of the ancient and perhaps partially forgotten principle with later decisions. Without having been expressly overruled or intentionally departed from, it may become in course of time no longer really consistent with the course of judicial decision. In this way the tooth of time will eat away an ancient precedent, and gradually deprive it of all authority and validity. The law becomes animated by a different spirit and assumes a different course, and the older decisions become obsolete and inoperative." The term "the common law of Australia" Finally, in his treatment of "common law", Professor Simpson refers to the expansion of British imperial power and the creation of "a common law world". The common law was received in the Province of South Australia with effect 19 February 1836, but despite the differing dates of the reception of the common law in the Australian colonies, the common law was not disintegrated into six separate bodies of law; further, what was received included the method of the common law, which in Australia involved judicial determination of particular parts of the English common law which were inapplicable to local conditions26. The "common law" which was received did not include the jurisdiction with respect to matrimonial causes (including suits for declarations of nullity of marriage, judicial separation (a mensa et thoro) and restitution of conjugal rights) which in England was exercised by the ecclesiastical courts. This exclusion appears to have been a deliberate decision by the Imperial authorities27. Further, unlike the situation in England, in the Australian colonies there was to be no 26 Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 at 466-467; [1995] HCA 44; Lipohar v The Queen (1999) 200 CLR 485 at 508-509 [54]-[55]; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 557-558 [99]-[101], 559-560 [104], 588-589 [193]-[196]; [2001] HCA 29; R v Gardener and Yeurs (1829) NSW Sel Cas (Dowling) 108; Ex parte The Rev George King (1861) 2 Legge 1307; Campbell v Kerr (1886) 12 VLR 384. 27 Castles, An Australian Legal History, (1982) at 140-142; Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 242. Crennan established religion28. The Anglican church was expressly enjoined from exercising any authority or jurisdiction in matrimonial causes29. The result was that the jurisdiction with respect to matrimonial causes, as well as divorce, which has been exercised by the colonial and State courts always has been derived from local statute law, not received "common law". Further, in Skelton v Collins30, Windeyer J said of the reception in the Australian colonies of the doctrines and principles of the common law: "To suppose that this was a body of rules waiting always to be declared and applied may be for some people satisfying as an abstract theory. But it is simply not true in fact. It overlooks the creative element in the work of courts. It would mean for example, that the principle of Donoghue v Stevenson31, decided in the House of Lords in 1932 by a majority of three to two, became law in Sydney Cove on 26th January 1788 or was in 1828 made part of the law of New South Wales by 9 Geo IV c 83, s 25. In a system based, as ours is, on case law and precedent there is both an inductive and a deductive element in judicial reasoning, especially in a court of final appeal for a particular realm or territory." Inductive and deductive reasoning This creative element of both inductive and deductive reasoning in the work of the courts in Australia includes the taking of such steps as those identified by Sir Owen Dixon in his address "Concerning Judicial Method"32. In his words, these are: (i) extending "the application of accepted principles to new 28 Wylde v Attorney-General (NSW) (at the Relation of Ashelford) (1948) 78 CLR 224 at 257, 275-276, 285-286, 298; [1948] HCA 39; Scandrett v Dowling (1992) 27 NSWLR 483 at 534-541; Shaw, The Story of Australia, (1955) at 98-100. 29 Wylde v Attorney-General (NSW) (at the Relation of Ashelford) (1948) 78 CLR 224 at 284-285; Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 242. 30 (1966) 115 CLR 94 at 134; [1966] HCA 14. 32 (1956) 29 Australian Law Journal 468 at 472. Crennan cases"; (ii) reasoning "from the more fundamental of settled legal principles to new conclusions"; and (iii) deciding "that a category is not closed against unforseen instances which in reason might be subsumed thereunder". To these steps may be added one which is determinative of the present appeal. It is that where the reason or "foundation"33 of a rule of the common law depends upon another rule which, by reason of statutory intervention or a shift in the case law, is no longer maintained, the first rule has become no more than a legal fiction and is not to be maintained. An example is provided by a division of opinion in Brown v Holloway34 and Edwards v Porter35 respectively between this Court and the House of Lords, as to the consequences of the Married Women's Property Act 1882 (UK) ("the 1882 UK Act") and its Queensland counterpart36. Of those cases, it was said in Thompson v Australian Capital Television Pty Ltd37: "The issue [in Edwards v Porter] concerned the effect of the provision in [the 1882 UK Act] that married women were to be capable of suing or being sued as if each were a feme sole, the immediate issue being whether a husband remained liable at common law with his wife for a tort committed by her during joint coverture. In this Court it had previously been decided by Griffith CJ, O'Connor and Isaacs JJ that the liability of the husband was gone38. At common law the wife had been liable for her own torts but there was no way in which that liability could be enforced save by an action against her in which her spouse was joined as a party. The joinder of the husband was necessary only because the liability of the wife could not be made effective without his joinder as a party. The 33 See the statement by Lord Penzance in Holmes v Simmons (1868) LR 1 P & D 523 34 (1909) 10 CLR 89; [1909] HCA 79. 36 Married Women's Property Act 1890 (Q). 37 (1996) 186 CLR 574 at 614-615; [1996] HCA 38. See also at 584-585, 591. 38 Brown v Holloway (1909) 10 CLR 89. Crennan legislation39 removed that procedural disability and therefore the reason which had rendered the husband a necessary party. In Edwards v Porter, without consideration of the reasoning of this Court in Brown v Holloway, their Lordships divided 3:2 in favour of a decision that, notwithstanding the legislation, the husband remained liable to suit with his wife for her torts40. One of the minority, Viscount Cave 'The whole reason and justification for joining a husband in an action against his wife for her post-nuptial tort has therefore disappeared; and it would seem to follow, upon the principle "cessante ratione cessat lex," that he is no longer a necessary or proper party to such an action.'" It is with this reasoning in mind that there is to be understood the earlier statement by Dawson J in R v L42 that: "whatever may have been the position in the past, the institution of marriage in its present form provides no foundation for a presumption which has the effect of denying that consent to intercourse in marriage can, expressly or impliedly, be withdrawn. There being no longer any foundation for the presumption, it becomes nothing more than a fiction which forms no part of the common law." 39 In Brown v Holloway, the Married Women's Property Act 1890 (Q). [See also Married Women's Property Act 1883 (Tas), Married Women's Property Act 1883-4 (SA), Married Women's Property Act 1884 (Vic), Married Women's Property Act 1892 (WA), Married Women's Property Act 1893 (NSW).] 40 Later, in Ford v Ford (1947) 73 CLR 524 at 528; [1947] HCA 7, Latham CJ expressed the opinion that, in accordance with the then prevailing doctrine in Piro v W Foster & Co Ltd (1943) 68 CLR 313; [1943] HCA 32, this Court would follow the House of Lords at the expense of its own earlier decision. In any event, legislation in all States and Territories ensured that married status has no effect on the rights and liabilities of a woman in tort: Balkin and Davis, Law of Torts, 2nd ed (1996) at 836. 41 Edwards v Porter [1925] AC 1 at 10. 42 (1991) 174 CLR 379 at 405. Crennan That statement points the way to the resolution of this appeal. The common law crime of rape The point should first be made that, the issue of irrevocable consent by a wife apart, the common law with respect to the crime of rape did not remain static. Sir Edward Coke in The First Part of the Institutes of the Laws of England early in the 17th century wrote43: "'Rape.' Raptus is, when a man hath carnall knowledge of a woman by force and against her will." In 1957 in their joint reasons in Papadimitropoulos v The Queen44, Dixon CJ, McTiernan, Webb, Kitto and Taylor JJ referred to Australian decisions given in 1915, 1919 and 1947 when stating: "The modern history of the crime of rape shows a tendency to extend the application of the constituent elements of the offence. The 'violenter et felonice rapuit' of the old Latin indictment is now satisfied although there be no use of force: R v Bourke45. The 'contra voluntatem suam' requires only a negative absence of consent; (as to the need of the man's being aware of the absence of consent, see R v Lambert 46). The 'violenter et felonice carnaliter cognovit' is established if there has been some degree of penetration although slight, and no more force has been used than is required to effect it: R v Bourke47; R v Burles48." 43 (1628), Section 190. 44 (1957) 98 CLR 249 at 255; [1957] HCA 74. 45 [1915] VLR 289. 46 [1919] VLR 205 at 213. 47 [1915] VLR 289. 48 [1947] VLR 392. Crennan Their Honours added49: "To return to the central point; rape is carnal knowledge of a woman without her consent: carnal knowledge is the physical fact of penetration; it is the consent to that which is in question; such a consent demands a perception as to what is about to take place, as to the identity of the man and the character of what he is doing. But once the consent is comprehending and actual the inducing causes cannot destroy its reality and leave the man guilty of rape." The reference in Papadimitropoulos to "[t]he modern history of the crime of rape" may be seen as foreshadowing two points with respect to the development of the common law made by Dixon CJ shortly thereafter. In Commissioner for Railways (NSW) v Scott50 Dixon CJ spoke of the gradual growth of the legal system by proceeding by reasoning from accepted notions about remedies and rights to the evolution of rules "to govern new or changed situations to which an ever developing social order gives rise"; he went on to observe that "[t]he resources of the law for superseding or avoiding the obsolescent have for the most part proved sufficient". It is upon that sufficiency that the respondent relies in this appeal. The statement by Hale What now follows in these reasons emphasises that some care is required when visiting what Professor Glanville Williams described as "the museum of the English criminal law"51. The relevant passage in The History of the Pleas of the Crown appears in Ch 58, headed "Concerning felonies by act of parliament, and first concerning rape". The importance of statutory intervention in this respect may be seen from the passage from Russell's treatise set out earlier in these reasons52. 49 (1957) 98 CLR 249 at 261. 50 (1959) 102 CLR 392 at 399-400; [1959] HCA 29. 51 Williams, "The Legal Unity of Husband and Wife", (1947) 10 Modern Law Review Crennan Hale referred to the statement by Bracton that it was a good exception to an appeal (ie formal accusation) of rape that the parties were living in amicable concubinage, adding "and the reason was, because that unlawful cohabitation carried a presumption in law, that it was not against her will". Hale went on to say: "But this is no exception at this day[. I]t may be an evidence of an assent, but it is not necessary that it should be so, for the woman may forsake that unlawful course of life." (emphasis added) This is followed by the critical statement: "But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." (emphasis added) Several points may be made immediately. First, it is apparent from Hale's treatment of Bracton's view in the 13th century of concubinage that he did not regard what had been said in past times as necessarily expressing the common law "at this day" four centuries later. Secondly, Hale gave, as the reason for the proposition that a husband cannot be guilty of a rape upon his wife, the nature in law of the matrimonial relationship. But, in that regard, it was well settled that marriage was constituted by the present consent of the parties expressed under such circumstances as the law required, but without the requirement for consummation to complete the marriage53. Further, as explained later in these reasons54, the ecclesiastical courts did not enforce any duty of sexual intercourse between husband and wife. Thirdly, Hale did not explain the character in law of the proposition respecting rape in marriage, whether it stated an element of the offence, a defence, or an immunity. Nor did Hale refer to any prior cases which might be 53 Dalrymple v Dalrymple (1811) 2 Hag Con 54 at 62-63 [161 ER 665 at 668-669]; R v Millis (1844) 10 Cl & F 534 at 719 [8 ER 844 at 913]. Crennan said to illustrate and support the proposition. From the immediately preceding treatment by Hale of Bracton it is apparent that the proposition is more than a bar to the reception of evidence by the wife or a statement of her absolute testimonial incompetence in this respect. This is further apparent from what immediately follows in Hale's text. This is a treatment of what had been decided at the trial of Lord Audley before the House of Lords in 163155 as follows: "A the husband of B intends to prostitute her to a rape by C against her will, and C accordingly doth ravish her, A being present, and assisting to this rape: in this case these points were resolved, 1. That this was a rape in C notwithstanding the husband assisted in it, for tho in marriage she hath given up her body to her husband, she is not to be by him prostituted to another. 2. That the husband being present, aiding and assisting, is also guilty as a principal in rape, and therefore, altho the wife cannot have an appeal of rape against her husband, yet he is indictable for it at the king's suit as a principal. 3. That in this case the wife may be a witness against her husband, and accordingly she was admitted, and A and C were both executed." It should be added that in the 19th century, it was held in the Supreme Judicial Court of Massachusetts56 that there should be no arrest of judgment on the ground that the indictment had not alleged that the complainant was not the wife of any of those charged with raping her. The relevant passage from Hale had been cited, but Bigelow J responded57: "Such an averment has never been deemed essential in indictments for rape, either in this country or in England. The precedents contain no such allegation. See authorities before cited. A husband may be guilty at common law as principal in the second degree of a rape on his wife by assisting another man to commit a rape upon her; Lord Audley's case, 3 Howell's State Trials, 401; and under our statutes he would be liable to be punished in the same manner as the principal felon. Rev Sts c 133, §1. An indictment charging him as principal would therefore be valid. 55 The Trial of Lord Audley (1631) 3 St Tr 401. 56 Commonwealth v Fogerty 74 Mass 489 (1857). 57 74 Mass 489 at 491 (1857). Crennan Of course, it would always be competent for a party indicted to show, in defence of a charge of rape alleged to be actually committed by himself, that the woman on whom it was charged to have been committed was his wife. But it is not necessary to negative the fact in the indictment." Thus it will be seen that whatever its character in law, Hale's proposition was not framed in absolute terms, given his treatment of Lord Audley's Case. But what is important for the present appeal is further consideration of the reason given by Hale, which was based in an understanding of the law of matrimonial status in the second half of the 17th century when he wrote. Matrimonial status and its incidents in England In the period in which Hale wrote, and until the significant legislative changes in the course of the 19th century, each of the three jurisdictions in England represented by the courts of common law, the courts of equity and the ecclesiastical courts, had distinct roles in matters affecting matrimonial status58. The law applied in the common law courts had absorbed much canon law learning and it defined basic concepts such as legitimacy, procedural rights at law between spouses, and the duties and responsibilities of husbands, including their rights and duties in respect of the contracts and torts of their wives. Marriage had important consequences in property law, for establishing and securing inheritance of legal estates in land. In such contexts a court of common law would determine whether there had been a marriage. The common law also provided forms of action such as breach of promise to marry, criminal conversation by adulterers and seduction of daughters. As already observed59 by reference to the statement of Sir George Jessel MR in In re Hallett's Estate60, equity intervened in a notable fashion by means of the trust to reserve separate property for a wife after her marriage. In his lecture entitled "Of Husband and Wife", Chancellor Kent, after referring to the incompetency at common law of a married woman to deal with her property 58 See the discussion by Professor Cornish in The Oxford History of the Laws of England, (2010), vol 13 at 724-726. 60 (1879) 13 Ch D 696 at 710. Crennan as a feme sole61, went on to contrast the position in equity and described the procedural consequences as follows62: "The wife being enabled in equity to act upon property in the hands of her trustees, she is treated in that court as having interests and obligations distinct from those of her husband. She may institute a suit, by her next friend, against him, and she may obtain an order to defend separately suits against her; and when compelled to sue her husband in equity, the court may order him to make her a reasonable allowance in money to carry on the suit." The provision in the 1882 UK Act and in the corresponding colonial married women's property legislation63 that a married woman was capable of acquiring, holding and disposing of any real or personal property as her separate property, as if she were a feme sole, "without the intervention of any trustee", represented a triumph in statutory form of the principles of equity64. However, it was not until 1862, with the decision of Lord Westbury LC in Hunt v Hunt65, that the Court of Chancery enforced a negative covenant in a deed of separation not to sue in the ecclesiastical courts (or after 1857 in the Divorce Court) for restitution of conjugal rights. Ecclesiastical courts in England had limited powers to order separation of spouses but could not order the dissolution of marriage. This required a statute. Hale wrote in a period in which Parliamentary intervention was beginning. In 1669 a private Act was granted to Lord de Roos, and in 1692 to the Duke of Norfolk; only five such divorces were granted before 1714, but between 1800 and 1850 there were 9066. (Divorce by private Act of the legislature was to be 61 Kent, Commentaries on American Law, (1827), vol 2, 109 at 136. 62 Kent, Commentaries on American Law, (1827), vol 2, 109 at 137. 63 See fn 39. 64 Yerkey v Jones (1939) 63 CLR 649 at 675-676; [1939] HCA 3. 65 (1862) 4 De G F & J 221 [45 ER 1168]; see also Fielding v Fielding [1921] NZLR 66 Sir Francis Jeune, "Divorce", Encyclopaedia Britannica, 10th ed (1902), vol 27, Crennan attempted in 1853 in New South Wales, but the Instructions issued to colonial governors required that any Bill dealing with divorce be reserved for the Queen's pleasure67 and the Royal Assent was only given to the Bill after some delay68.) However, it should be noted that in Scotland since the 16th century, provision had been made for judicial grant of divorce on grounds of adultery of either spouse or malicious desertion for at least four years69. Given the significant settlement of Scots immigrants in the Australian colonies, this element of their inheritance should not be overlooked in understanding the development of Australian institutions70. In 1891, the English Court of Appeal held that habeas corpus would issue to free a wife confined by her husband in his house in order to enforce restitution of conjugal rights71. In R v L72 Brennan J said: "The ecclesiastical courts made decrees for the restitution of conjugal rights but the decree commanded a general resumption of cohabitation and did not purport to compel a spouse to do or abstain from doing particular acts in performance of a connubial obligation73. The legal significance of connubial obligations was to be found in the making of decrees based on breaches of those obligations. Breaches were established only by proof of conduct that was a gross infringement of a connubial right or by proof of a 67 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 68 Bennett, A History of the Supreme Court of New South Wales, (1974) at 144-145. 69 Walker, A Legal History of Scotland, (2001), vol 6 at 658, 661. 70 See generally, McPherson, "Scots Law in the Colonies", [1995] Juridical Review 191. 71 R v Jackson [1891] 1 QB 671. 72 (1991) 174 CLR 379 at 393. 73 Hunt v Hunt (1943) 62 WN (NSW) 129. Crennan continuous failure to perform a connubial obligation in satisfaction of the corresponding connubial right of the other spouse. The courts exercising jurisdiction in matrimonial causes recognized the mutual rights of husband and wife relating to sexual intercourse and, in granting or withholding their decrees, ascertained whether either party had wilfully and persistently refused to accord the right of sexual intercourse to the other party. From the days of the ecclesiastical courts, however, it was accepted that no mandatory order to compel sexual intercourse would be made." In 1933, when describing the nature and incidents of a decree for restitution of conjugal rights under the jurisdiction conferred by Pt III (ss 6-11) of the Matrimonial Causes Act 1899 (NSW), Dixon J observed in Bartlett v Bartlett74 that, so long as this remedy was retained, it must be treated as a process imposing an obligation, the performance or non-performance of which is ascertainable, and he added75: "On the one hand, it is clear that the obligation requires cohabitation, a physical dwelling together. On the other hand, it is clear that it does not require the resumption of sexual intercourse. It cannot, in fact, and in principle ought not to be understood as attempting to, control motives, feelings, emotions, sentiment or states of mind. Its operation must be limited to overt acts and conduct. ... Perhaps, all that can be said is that the decree of restitution requires the spouse against whom it is directed again to dwell with the other spouse in outward acceptance of the relationship, to act as if they were husband and wife maintaining a matrimonial home and to commence no course of conduct intended to cause a separation." Evatt J set out76 a passage from the reasons of Salmond J in Fielding v Fielding77 in which, with reference to the jurisdiction conferred by s 7 of the Divorce and Matrimonial Causes Act 1908 (NZ) for the issue of decrees for restitution of conjugal rights, Salmond J had said: 74 (1933) 50 CLR 3 at 15-16; [1933] HCA 53. 75 (1933) 50 CLR 3 at 16. 76 (1933) 50 CLR 3 at 18. 77 [1921] NZLR 1069 at 1071. Crennan "The Ecclesiastical Courts [in England] never professed or attempted by means of decrees for restitution of conjugal rights, and imprisonment for disobedience to such decrees, to enforce any duty of sexual intercourse between husband and wife. The basis of such a decree was the wrongful refusal of matrimonial cohabitation. The duty enforced was merely the duty of husband and wife to live together under the same roof in the normal relationship of husband and wife, but without reference to the question of intercourse." The divorce legislation The passage of the Matrimonial Causes Act 1857 (UK)78 ("the 1857 UK Act") later was described by Dicey as "a triumph of individualistic liberalism and of common justice"79. But it was the culmination of many years of agitation. Of the delay, Professor Cornish writes80: "It is less easy to explain why, given the long availability of judicial divorce in Scotland and its spread to other Protestant countries, the step did not come earlier. Jeremy Bentham, for instance, had been an advocate of fully consensual divorce, but subject to time delays for reflection and a bar on the re-marriage of a guilty party." (footnote omitted) The 1857 UK Act terminated the jurisdiction of the ecclesiastical courts in matrimonial matters (s 2) and vested that jurisdiction in the new Court for Divorce and Matrimonial Causes (s 6), but the Court was to act on the principles and rules which had been applied by the ecclesiastical courts (s 22). A decree dissolving marriage might be pronounced on a petition by the husband alleging adultery by the wife, and on a wife's petition, alleging adultery coupled with desertion for at least two years and without reasonable excuse, or alleging adultery with aggravated circumstances including "such Cruelty as without Adultery would have entitled her to a Divorce à Mensâ et Thoro" (ss 27 and 31). 78 20 & 21 Vict c 85. 79 Lectures on the Relation between Law and Public Opinion in England during the Nineteenth Century, 2nd ed (1914) at 347. 80 The Oxford History of the Laws of England, (2010), vol 13 at 781. Crennan In 1858 the Secretary of State for the Colonies conveyed to all colonial governors and legislatures the wish of the Imperial Government that steps be taken to introduce, "as nearly as the circumstances of the Colony will admit", the provisions of the 1857 UK Act81. The colonies acted accordingly, but at different paces: Matrimonial Causes Act 1858 (SA), Matrimonial Causes Act 1860 (Tas), Matrimonial Causes Act 1861 (Vic), Matrimonial Causes Act 1863 (WA), Matrimonial Causes Act 1865 (Q), Matrimonial Causes Act 1873 (NSW). This legislation did not need to abolish in the colonies the non-existent jurisdiction of ecclesiastical courts. Rather, it conferred jurisdiction in matrimonial causes on the Supreme Courts. The differential treatment in the 1857 UK Act between the grounds of divorce available to husbands and wives was carried into the initial colonial legislation. But there followed attempts by New South Wales and Victoria to assimilate and expand the grounds for divorce; the Governor's Instructions required these Bills to be reserved for the Royal Assent on advice of the Imperial Government and, initially, in circumstances of considerable controversy in the colonies, the Royal Pressure for reform of legislation respecting divorce was, however, maintained, particularly in the more populous colonies of New South Wales and Victoria83, and eventually succeeded. In Victoria The Divorce Act 1889 provided extended grounds for divorce84. Advocates of the women's movement in New South Wales were able to press for further liberalisation of the laws, despite the opposition of the churches85. The Divorce Amendment and Extension Act 1892 81 The Despatch by Lord Stanley to the Governor of New South Wales for presentation to both Houses of the Parliament is reproduced in Votes and Proceedings of the Parliament of New South Wales 1859-1860, vol 4 at 1169. 82 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 83 See the account given by Finlay, To Have But Not to Hold, (2005), Ch 3. 84 Which included adultery, desertion for a period of three years and upwards, habitual drunkenness, habitual cruelty to a wife, conviction for attempt to murder a wife, conviction for having assaulted a wife with intent to cause grievous bodily harm, or repeated assaults on a wife: The Divorce Act 1889 (Vic), s 11. 85 Grimshaw et al, Creating a Nation, (1994) at 172. Crennan (NSW) was expressed in terms similar to those of the Victorian Act. The extended grounds gave colonial women greater access to divorce than their contemporaries in the United Kingdom. Conclusions What was the immediate significance of these 19th century legislative measures for the continued vitality of the reasoning upon which Hale in the 17th century had based his proposition respecting "rape in marriage"? In answering that question it is convenient first to repeat what was said by the Supreme Court of New Jersey in State v Smith86 as follows: "We believe that Hale's statements concerning the common law of spousal rape derived from the nature of marriage at a particular time in history. Hale stated the rule in terms of an implied matrimonial consent to intercourse which the wife could not retract. This reasoning may have been persuasive during Hale's time, when marriages were effectively permanent, ending only by death or an act of Parliament87. Since the matrimonial vow itself was not retractable, Hale may have believed that neither was the implied consent to conjugal rights. Consequently, he stated the rule in absolute terms, as if it were applicable without exception to all marriage relationships. In the years since Hale's formulation of the rule, attitudes towards the permanency of marriage have changed and divorce has become far easier to obtain. The rule, formulated under vastly different conditions, need not prevail when those conditions have changed." To that may be added the statement in that case88: "If a wife can exercise a legal right to separate from her husband and eventually terminate the marriage 'contract', may she not also revoke a 'term' of that contract, namely, consent to intercourse?" 86 426 A 2d 38 at 42 (1981). 87 Clark, The Law of Domestic Relations in the United States, (1968) at 280-282. 88 426 A 2d 38 at 44 (1981). Crennan In similar vein is the statement made from the New South Wales Supreme Court bench by Sir William Windeyer in 1886, in which he regretted that while the State regarded marriage as a civil contract and in this case the contract had been destroyed by the husband "having done his best to degrade you", by reason of the then limited grounds of divorce then available to her in New South Wales, she had no redress89. Insofar as Hale's proposition respecting the nature of the matrimonial contract was derived from an understanding of the principles applied by the ecclesiastical courts, the following may be said. First, as Lord Brougham observed in R v Millis90: "[Marriage] was always deemed to be a contract executed without any part performance; so that the maxim was undisputed, and it was peremptory, 'Consensus, non concubitus, facit nuptias vel matrimonium.'" Secondly, with respect to the exercise of their jurisdiction in suits for restitution of conjugal rights, the ecclesiastical courts did not accept that the exercise of the mutual rights of spouses was to be an occasion of abuse and degradation. The following further remarks of Brennan J in R v L91 are in point: "To acknowledge a connubial obligation not to refuse sexual intercourse wilfully and persistently is to acknowledge that the giving of consent to acts of sexual intercourse is necessary to perform the obligation. It would have been inconsistent with such an obligation to hold that, on marriage, a wife's general consent to acts of sexual intercourse has been given once and for all. If no further consent was required on the part of a wife, how could there be a wilful and persistent refusal of sexual intercourse by her? The ecclesiastical courts never embraced the notion of a general consent to sexual intercourse given once and for all on marriage by either spouse." Thirdly, and in any event, in the Australian colonies jurisdiction with respect to matrimonial causes was not part of the general inheritance of the Supreme 89 Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 248. 90 (1844) 10 Cl & F 534 at 719 [8 ER 844 at 913]. 91 (1991) 174 CLR 379 at 396. Crennan Courts. They received such jurisdiction only by local statute in the second half of the 19th century. That legislation, as interpreted in the period before the enactment of the CLC Act in 1935, did not require, for compliance with a decree for restitution of conjugal rights, more than matrimonial cohabitation; in particular the duty of matrimonial intercourse was one of imperfect legal obligation because it could not be compelled by curial decree92. Finally, although Hale did not expressly rely upon it, his proposition respecting irrevocable consent could not have retained support from any common law concept that the wife had no legal personality distinct from that of her husband. This was never wholly accepted by the Court of Chancery, given the development there of the trust. The references earlier in these reasons to the significance of the married women's property legislation93 indicate that, by statute, the attitudes of the equity jurisdiction were given effect in the latter part of the 19th century to a significant degree throughout the legal system in England and the Australian colonies. To that may be added the significance of the conferral by the Commonwealth Franchise Act 1902 (Cth) of the universal adult franchise94. It has been said that the gaining of suffrage for women in South Australia in 1894 was critical to the national suffrage movement95. At the turn of the 20th century, suffragists in England were looking to what had been achieved in Australia96. An English suffragist, Dame Millicent Garrett Fawcett, writing in 1911 when women in England had not yet been granted suffrage, observed that97: 92 Bartlett v Bartlett (1933) 50 CLR 3 at 12, 15, 18. 94 See Roach v Electoral Commissioner (2007) 233 CLR 162 at 195-196 [70]-[71]; [2007] HCA 43. 95 Oldfield, Woman Suffrage in Australia, (1992) at 213 (Western Australia followed in 1899 through the passage of the Constitution Acts Amendment Act 1899 (WA)). 96 See for example Zimmern, Women's Suffrage in Many Lands, (1909) at 160; Fawcett, Women's Suffrage: A Short History of a Great Movement, (1911) at 59. 97 Fawcett, Women's Suffrage: A Short History of a Great Movement, (1911) at 59. Crennan "In the Commonwealth of Australia almost the first Act of the first Parliament was the enfranchisement of women. The national feeling of Australia had been stimulated and the sense of national responsibility deepened by the events which led to the Federation of the Independent States of the Australian Continent." By 1930 Isaacs J was able to say that98: "women are admitted to the capacity of commercial and professional life in most of its branches, that they are received on equal terms with men as voters and legislators, that they act judicially, can hold property, may sue and be sued alone". By the time of the enactment in 1935 of the CLC Act, if not earlier (a matter which it is unnecessary to decide here), in Australia local statute law had removed any basis for continued acceptance of Hale's proposition as part of the English common law received in the Australian colonies. Thus, at all times relevant to this appeal, and contrary to Hale's proposition, at common law a husband could be guilty of a rape committed by him upon his lawful wife. Lawful marriage to a complainant provided neither a defence to, nor an immunity from, a prosecution for rape. To reach that conclusion it is unnecessary to rely in general terms upon judicial perceptions today of changes in social circumstances and attitudes which had occurred in this country by 1935, even if it were an appropriate exercise of legal technique to do so. The conclusion follows from the changes made by the statute law, as then interpreted by the courts, including this Court, before the enactment of the CLC Act. Order The appeal should be dismissed. 98 Wright v Cedzich (1930) 43 CLR 493 at 505; [1930] HCA 4. HEYDON J. The events giving rise to this appeal allegedly took place in 1963. At that time it was universally thought in Australia that a husband could not be convicted of having sexual intercourse with his wife without her consent save where a court order operated or where there were other exceptional circumstances. This immunity from conviction was thought to exist because Sir Matthew Hale, who died in 1676, had asserted its existence in The History of the Pleas of the Crown, published in 1736. The reason he assigned was that on marriage wives irrevocably consented to sexual intercourse with their husbands99. Below the immunity will be called "the immunity" or "Hale's proposition". By what warrant did the State of South Australia seek in 2010 to prosecute the appellant for allegedly having sexual intercourse with his wife without her consent more than 47 years earlier? A sufficient answer to that question would be: "It had none, for the reasons that Bell J powerfully states." However, in deference to the arguments put by South Australia, a fuller answer should be given. One matter must be put aside, though the appellant may wish to rely on it at a later stage in these proceedings. This appeal is not directly concerned with any oppressiveness that results from the delay in prosecution. But that tardiness does support the appellant's submission that in 1963 there was no crime of rape for which he could be charged. One primary explanation which South Australia gave to the District Court for its delay was that the immunity created considerable doubt as to whether the appellant was liable for rape. Yet prosecutors have to demonstrate with clarity that the crimes they charge exist. South Australia tells the District Court that the appellant's liability was thought doubtful. It tells this Court that it is certain. South Australia's stance in the District Court is inconsistent with its dogmatic and absolute submissions in this Court. The first of its submissions in this Court was that the immunity never existed100. The second, alternative, submission was that even if the immunity had existed at one time, it had ceased to exist at some indeterminate time before South Australia put only those two submissions. It did not put a third submission – that even if the immunity existed and even if it had not ceased to exist up to now, it should be abolished now. That was a course which the 99 See below at [172]. 100 The first submission is discussed below at [71]-[113]. 101 The second submission is discussed below at [114]-[161]. English courts took in 1991102. It is a course which would raise issues different in some respects from those discussed below. South Australia's first submission: the detailed contentions South Australia's first submission was that it had never been the law, in England or in Australia, that a husband was immune from prosecution for having sexual intercourse with his wife without her consent. The Commonwealth supported that submission. It was based on a number of contentions. The first group of contentions centred on the following points. Hale's work was published 60 years after he died. The relevant part had not been revised before his death. Hale had not supported his statement with any reference to authority. Standing alone his proposition would not constitute the common law. At best it reflected "his view of a custom in 17th century England." As Blackstone asserted, "judicial decisions are the principal and most authoritative evidence, that can be given, of the existence of such a custom as shall form a part of the common law."103 A second group of contentions concerned ecclesiastical law. In the ecclesiastical courts there was no support for Hale's proposition. In ecclesiastical law each spouse had a right to sexual intercourse, but it was only to be exercised reasonably and by consent. This undermined the foundation of Hale's proposition. It revealed him to be mistaken in thinking that the wife's consent was irrevocable. It caused his proposition to be affected by "frailty". South Australia then turned to the history of Hale's proposition after he had enunciated it. It relied on Lord Lowry's very extreme statement that "Hale's doctrine had not been given the stamp of legislative, judicial, governmental and academic recognition."104 So far as "academic recognition" was concerned, South Australia submitted that the only statement of support for the immunity in absolute terms was that of Hale, and that there was no support for it in Blackstone. So far as "judicial … recognition" was concerned, South Australia submitted that Hale's proposition "was never authoritatively declared as part of the common law in Australia." It also submitted that no case had Hale's 102 R v R [1992] 1 AC 599. 103 Commentaries on the Laws of England, (1765), bk 1 at 69. 104 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. proposition as its ratio decidendi. There were only dicta and assumptions that the proposition existed. In some of the cases stating the dicta or resting on the assumptions Hale's proposition was cut down. There were also dicta to the contrary. Hale's proposition was further said to be inconsistent with some authorities. South Australia did not advance detailed submissions about any lack of "legislative" and "governmental" recognition. Perhaps it is hard to say much in support of negative propositions. However, there is a lot to be said against those two. Finally, South Australia submitted that the immunity was completely outdated and offensive to human dignity. It is convenient to deal with South Australia's first submission under the following headings. Defects in Hale's statement of the immunity It is immaterial that Hale's work was published 60 years after his death, that the reference to the immunity appears in a part of it which Hale had not revised, and that he stated no elaborate reasons justifying the immunity. Hale's work is capable of being an accurate account of the law of his day despite these things. There is no reason to suppose that, had he revised the relevant part of his work, he would have considered it desirable to change it. South Australia is not alone in complaining about Hale's failure to cite authorities105. But it is anachronistic to do so. The modern approach to precedent was only struggling to be born in Hale's day106. Hale himself said107: "the decision of courts of justice, though by virtue of the laws of this realm they do bind, as a law between the parties thereto, as to the particular case in question, till reversed by error or attaint; yet they do not 105 Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 878-883. The first maker of this criticism appears to have been Field J in R v Clarence (1888) 22 QBD 23 at 57. 106 Williams, "Early-modern judges and the practice of precedent", in Brand and Getzler (eds), Judges and Judging in the History of the Common Law and Civil Law: From Antiquity to Modern Times, (2012) 51. 107 The History of the Common Law of England, 6th ed (1820) at 89-90 (emphasis in original). make a law, properly so called; – for that only the king and parliament can do; yet they have a great weight and authority in expounding, declaring, and publishing what the law of this kingdom is; especially when such decisions hold a consonancy and congruity with resolutions and decisions of former times. And though such decisions are less than a law, yet they are a greater evidence thereof than the opinion of any private persons, AS SUCH, whatsoever". Hale's work often does not contain the dense citation of authorities characteristic of modern books. Indeed, many parts of it refer to only a few authorities. That is so of the passages in which he discusses the crime of rape. Hale did not cite direct authority for the immunity, or for his justification of the immunity. Whether there were in fact "authorities" of any kind to be cited on the present point is a matter which a 21st century court cannot easily deal with. It would need the assistance of close research into the question by modern legal historians with high expertise108. Subject to that matter, Hale did point out that there was authority for other propositions that he asserted. Those propositions were not inconsistent with the immunity. To some extent they supported it109. In view of Hale's high reputation for research into the criminal litigation of his day110, it seems likely that in practice husbands were not prosecuted for raping their wives, so that there were no authorities to cite. Even nowadays, a proposition can be correct though no precedent supports it. Ethical and tactical considerations prevent counsel from arguing what they perceive to be the unarguable. There are some propositions which seem too clear to the profession to be contradicted by argument. Propositions of that kind are widely accepted as good law. Subject to the research difficulties referred to in the previous paragraph, a lack of support from earlier authors such as Coke is, as Bell J explains, not significant and does not reveal Hale to be wrong111. Windeyer J once said: "an accepted rule of law is not to be overthrown by showing that history would not support it"112. None of the defects which 108 Australian Crime Commission v Stoddart (2011) 86 ALJR 66 at 81 [70]; 282 ALR 620 at 637; [2011] HCA 47. 109 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 153-156. See also below at [208]. 110 See below at [209]. 111 See below at [200]. 112 Commissioner for Railways (NSW) v Scott (1959) 102 CLR 392 at 447; [1959] HCA 29. supposedly existed in Hale's statement of the immunity prevented it from being an accepted rule of law. Hale and ecclesiastical law South Australia's appeal to ecclesiastical law encounters two difficulties. The first is that while the civil law of marriage was a matter for the ecclesiastical courts, the criminal law was a matter for the common law courts. Thinking in the ecclesiastical courts does not necessarily vitiate an account of the criminal law as administered in the common law courts. The second difficulty is that ecclesiastical law in the 17th century is another field not to be entered without expert assistance. In R v L113 Brennan J wrote at some length about ecclesiastical law. But the sources to which he referred were largely modern. None were contemporary with or earlier than Hale. Lord Lane CJ in R v R114 and Mason CJ, Deane and Toohey JJ in R v L115 pointed out that in Popkin v Popkin116 Sir William Scott (later Lord Stowell) stated: "The husband has a right to the person of his wife, but not if her health is endangered." Mason CJ, Deane and Toohey JJ commented that this showed that "even in the ecclesiastical courts, the obligation to consent to intercourse was not asserted in unqualified terms." If so, it also shows that Hale's proposition was not completely wrong. On the other hand, Brennan J did not think that Sir William Scott's statement showed that a husband had "a right to the person of his wife" without consent117. The submissions of the parties in this appeal did not take the matter further than Brennan J's researches took it. The parties did not cite any expert material throwing light on ecclesiastical law in or before Hale's time. For that reason, it is imprudent to examine it. 113 (1991) 174 CLR 379 at 391-402; [1991] HCA 48. 114 [1992] 1 AC 599 at 604. 115 (1991) 174 CLR 379 at 389. 116 (1794) 1 Hagg Ecc 765n [162 ER 745 at 747]. 117 R v L (1991) 174 CLR 379 at 398. Post-Hale writers South Australia submits that there is no statement of support for Hale's proposition except Hale himself, and that Hale's proposition has received no "academic recognition". That submission is extremely ambitious. It is also utterly incorrect. It is true that Hale's proposition is neither confirmed nor denied by Blackstone or Hawkins. Blackstone was writing at a considerable level of generality about much wider issues than those Hale wrote about. Whether or not it is right to describe Hawkins as "a somewhat second-rate institutional writer"118, it was not open to him to take up Hale's proposition in the first edition of his treatise. It appeared in 1716. Hale's work was not published until 1736. South Australia echoes the Crown's complaint to the House of Lords in R v R119 that the first writer to refer to the immunity after Hale was East in 1803. That is, however, less than 70 years after History of the Pleas of the Crown was published in 1736. In truth, Hale has enjoyed a great reputation. Lord Denning called him "the great Chief Justice Sir Matthew Hale"120. Hale's proposition garnered massive support from professional writers after 1803, and, as academic like too. lawyers emerged, Glanville Williams121, Smith and Hogan122 and Cross and Jones123 acknowledged the correctness of Hale's proposition. Like others who have attacked courts that relied on Hale's proposition124, South Australia failed to grapple with this uncomfortable point. Leading modern writers them from 118 Seaborne Davies, "The House of Lords and the Criminal Law", (1961) 6 Journal of the Society of Public Teachers of Law 104 at 110. 119 [1992] 1 AC 599 at 614. 120 Sykes v Director of Public Prosecutions [1962] AC 528 at 558. 121 Textbook of Criminal Law, 2nd ed (1983) at 236; "The problem of domestic rape", (1991) 141 New Law Journal 205 and 246. 122 Criminal Law, 6th ed (1988) at 430-432 (and all earlier editions). 123 Card (ed), Cross and Jones: Introduction to Criminal Law, 9th ed (1980) at 177 [9.2] (and all earlier editions). 124 For example, Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 One source of law is "informed professional opinion"125. Where there is little authority on a question of law, the opinions of specialist writers, particularly their concurrent opinions, are very important in revealing, and indeed in establishing, the law. That is particularly true of books written by practitioners. But it has force in relation to well-respected academic writers as well126. As Lord Reid said: "Communis error facit jus may seem a paradox but it is a fact."127 Owen J put the matter with trenchant simplicity in relation to the first edition of Archbold in 1822. It said128: "A husband … cannot be guilty of a rape upon his wife." Owen J said129: "It seems to me that the consequences of that statement is this: if he was right, then practitioners would follow what he said. Equally, however, if he was wrong, practitioners would follow what he said." Hale's proposition in the courts South Australia relied on Lord Lowry's statement that Hale's proposition had not been "given the stamp of … judicial … recognition."130 South Australia greatly exaggerated the extent to which the authorities cast doubt on the immunity before 1991, when the House of Lords decided it should be abolished131, and four members of this Court said that it had ceased to represent the law132. An illustration is provided by South Australia's submission in relation to R v Clarence: 125 Jones v Secretary of State for Social Services [1972] AC 944 at 1026 per Lord Simon of Glaisdale. 126 Australian Crime Commission v Stoddart (2011) 86 ALJR 66 at 84-98 [90]-[138]; 282 ALR 620 at 641-660. 127 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 25. 128 Archbold, A Summary of the Law Relative to Pleading and Evidence in Criminal Cases, (1822) at 259. 129 R v R – (rape: marital exemption) [1991] 1 All ER 747 at 748. 130 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 131 R v R [1992] 1 AC 599. 132 R v L (1991) 174 CLR 379 at 390 and 405. "The exemption was first the subject of judicial comment in R v Clarence.133 In R v Clarence, seven of the thirteen judges declined to comment on the issue;134 of the six judges who did, two of them reiterated and confirmed the marital rape proposition,135 three of them questioned or qualified it,136 and another briefly adverted to it without engaging in it.137 The comments of the judges in R v Clarence were obiter dicta, however, taken as a whole they indicate that even as at 1888 there existed no settled view." It is true that the few things said about Hale's proposition in R v Clarence were dicta. The submission is otherwise very misleading. It suggests that only A L Smith J and Pollock B favoured Hale's proposition. In fact the position is as follows. Stephen J supported Hale's proposition138. The following seven judges concurred: A L Smith J139, Mathew J140, Grantham J141, Manisty J142, Wills J146, Huddleston B143, Pollock B144 and Lord Coleridge CJ145. 133 (1888) 22 QBD 23. 134 Lord Coleridge CJ, Huddleston B, Grantham, Manisty and Mathew JJ (quashing the conviction); Charles and Day JJ (dissenting because upholding the conviction). 135 A L Smith J and Pollock B (quashing the conviction). 136 Wills J (quashing the conviction) and Hawkins and Field JJ (dissenting because upholding the conviction). 137 Stephen J (quashing the conviction). 138 R v Clarence (1888) 22 QBD 23 at 46. 139 R v Clarence (1888) 22 QBD 23 at 37. 140 R v Clarence (1888) 22 QBD 23 at 38. 141 R v Clarence (1888) 22 QBD 23 at 46. 142 R v Clarence (1888) 22 QBD 23 at 55. 143 R v Clarence (1888) 22 QBD 23 at 56. 144 R v Clarence (1888) 22 QBD 23 at 61-62 and 63-64. 145 R v Clarence (1888) 22 QBD 23 at 66. 146 R v Clarence (1888) 22 QBD 23 at 33. Hawkins J147 and Field J148 each stated or left open the possibility that in some circumstances a husband could be convicted of raping his wife. But at least the latter two judges plainly thought that Hale's proposition was correct in some circumstances. Day J concurred with Hawkins J149. Charles J concurred with Field J150. its operation South Australia correctly submitted that English trial judges assumed that Hale's proposition was correct, but qualified in special circumstances. Examples of special circumstances included where there was a court non-cohabitation order151, or a decree nisi of divorce had effectively terminated the marriage152, or the husband had given an undertaking to the court not to molest the wife153, or there was an injunction restraining the husband from molesting or having sexual intercourse with the wife154, or there was an injunction and a deed of separation (even though the injunction had expired)155. The outer limit of these exceptions was unilateral withdrawal from cohabitation coupled with a clear indication that the wife's consent to sexual intercourse was On one view, each of the courts that reached these decisions was attempting to achieve justice by tailoring the absolute nature of Hale's proposition to the circumstances before it. Even if the wife could be said to have 147 R v Clarence (1888) 22 QBD 23 at 51. 148 R v Clarence (1888) 22 QBD 23 at 57-58. 149 R v Clarence (1888) 22 QBD 23 at 55. 150 R v Clarence (1888) 22 QBD 23 at 61. 151 R v Clarke [1949] 2 All ER 448. The judge was Byrne J, of whom Owen J said in R v R – (rape: marital exemption) [1991] 1 All ER 747 at 749: "Those who appeared before him will know that he was a judge of the highest repute. As a criminal lawyer, there were not many to excel him in his day." In R v Miller [1954] 2 QB 282 at 289 Lynskey J concurred with R v Clarke. 152 R v O'Brien [1974] 3 All ER 663. 153 R v Steele (1976) 65 Cr App R 22. 154 R v Steele (1976) 65 Cr App R 22 at 25; R v McMinn [1982] VR 53. 155 R v Roberts [1986] Crim LR 188. 156 R v R – (rape: marital exemption) [1991] 1 All ER 747 at 754. given consent by marriage, in those cases it had been withdrawn as a matter of practical reality either because the wife had successfully invoked court process or because the spouses had reached a formal agreement negating consent. Another view is that these cases travel down a road "potholed with ever greater illogicalities"; produce "a gaggle of technical and anomalous distinctions" and "absurdity"; and lack any "relationship to the real world."157 But even if this latter view is correct, it is adverse to South Australia's position. The cases show the enduring toughness of Hale's proposition in legal thought. To destroy Hale's proposition might eliminate formal anomalies and technicalities. But it was a course which many judges found unattractive. Instead they turned their minds to devising narrow exceptions. In two of the cases just referred to, the correctness of Hale's proposition, in the absence of special circumstances, was specifically acknowledged by quotation158. In another, Hale's proposition was thought to be correct at common law though not necessarily satisfactory159. And in R v Miller160, where the prosecution failed to prove any special circumstance and could point to no more than the wife having petitioned for divorce, Hale's proposition was applied. R v Miller renders false South Australia's submission that "no binding precedent can be found where [Hale's] principle represented the ratio decidendi." Contrary to that submission, R v Miller was an "authoritative declaration of the common law on the matter." R v Miller also demonstrates that McGarvie J was wrong to say in R v McMinn161: "There does not seem to have been any recent case in which it was considered whether [Hale's proposition] remains part of the common law." R v Miller was a binding precedent in England until 1991. A second case which applied Hale's proposition is R v J – (rape: marital exemption)162. There are numerous cases, including Australian cases, in which courts have assumed Hale's proposition to be correct at common law163. One is R v 157 Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 880-882. 158 R v Clarke [1949] 2 All ER 448 at 448; R v Steele (1976) 65 Cr App R 22 at 24. 159 R v McMinn [1982] VR 53 at 55, 57-59 and 61. 160 [1954] 2 QB 282, criticised by Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 882-883. 161 [1982] VR 53 at 61. 162 [1991] 1 All ER 759. 163 R v Brown (1975) 10 SASR 139 at 141 and 153; R v Cogan [1976] QB 217 at 223; R v Wozniak (1977) 16 SASR 67 at 71; R v Sherrin (No 2) (1979) 21 SASR 250 at 252; R v C (1981) 3 A Crim R 146 at 148-150; R v Caswell [1984] Crim LR 111; (Footnote continues on next page) Kowalski164, in which the English Court of Appeal described Hale's proposition as "clear, well-settled and ancient law". Another is R v Bellchambers165, in which Neasey and Everett JJ said that Hale's proposition "still expresses the common it as "archaic, unjust and they criticised discriminatory"166. A third is Brennan J's statement in R v L167: law", even though "Irrespective of the validity of Hale's reason for declaring that a husband could not be guilty as a principal in the first degree of rape of his wife, it appears that a substantive rule of the common law was established by his declaration." That statement followed more than 10 pages denouncing Hale's reasoning. Thus these last two cases, too, reveal the enduring toughness of Hale's proposition in legal thought. South Australia proffered three authorities that, in its submission, reveal that contrary to Hale's proposition, there was no irrebuttable presumption that on marriage the wife irrevocably consented to sexual intercourse with her husband. In R v Lister168, it was held that while it was lawful for a husband to restrain his wife's liberty where she was making "an undue use" of it, either by "squandering away the husband's estate, or going into lewd company", he could not do so where he had entered into a deed of separation with his wife. In R v Jackson169, the English Court of Appeal held that where a wife refused to live with her husband, he was not entitled to deprive her of liberty by kidnapping her and confining her to his house, even though he had obtained a decree for restitution R v Henry unreported, 14 March 1990 per Auld J: see R v J – (rape: marital exemption) [1991] 1 All ER 759 at 762-763 and Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 97-108; R v Shaw [1991] Crim LR 301; Question of Law Reserved on Acquittal (No 1 of 1993) (1993) 59 SASR 214 at 164 (1987) 86 Cr App R 339 at 341. 165 (1982) 7 A Crim R 463 at 465. 166 (1982) 7 A Crim R 463 at 466. 167 (1991) 174 CLR 379 at 402. 168 (1721) 1 Strange 478 [93 ER 645 at 646]. of conjugal rights. In R v Reid170, that Court held that matrimonial status conferred no immunity on a husband who kidnapped his wife. These cases do not support South Australia's submission. They do not proceed on the basis that on marriage there was a presumption that the wife consented to having her liberty restrained and that she could rebut that presumption by withdrawing her consent. Indeed, in R v Reid171 the Court said of the doctrine in R v Miller that it was "impossible to stretch that doctrine to the extent of saying that on marriage a wife impliedly consents to being taken away by her husband using force or threats of force from the place where she is living." Accordingly, these cases are not inconsistent with Hale's proposition. In 1991, the English Court of Appeal and the House of Lords overturned Hale's proposition172. But it is notable that they did not accept the Crown's submission that "Hale's statement was never the law"173. The rulings of those Courts had retrospective consequences. But they did not hold that Hale's proposition had never been the law. They did not hold that the judgments which had decided, said or assumed that it was correct were wrong at the time they were handed down. Lord Lane CJ said in the Court of Appeal that Hale's proposition had been "accepted as an enduring principle of the common law."174 And the House of Lords altered the law because social conditions had changed quite recently. Hale's proposition was seen as reflecting the society of his day, and its rejection was seen as reflecting the different form which modern society had recently taken175. On that reasoning, Hale's proposition was good law in South Australia in 1963 – a matter relevant to rejection of South Australia's second submission176. 171 [1973] QB 299 at 302. 172 R v R [1992] 1 AC 599. 173 R v R [1992] 1 AC 599 at 602. 174 R v R [1992] 1 AC 599 at 604. 175 R v R [1992] 1 AC 599 at 616. 176 See below at [121]-[161]. Governmental recognition South Australia also relied on Lord Lowry's statement that Hale's proposition "had not been given the stamp of … governmental … recognition."177 That submission too must be rejected. Hale's proposition has received indirect governmental recognition – by the Executive – in two ways. One form of governmental recognition took place in a report of the Criminal Law and Penal Methods Reform Committee of South Australia published in 1976. That report acknowledged that Hale's proposition represented the common law178. It recommended that the immunity be abolished where the event charged took place while the parties were living separately179. There are several other reports before and after the South Australian report also resting on the view that Hale's proposition represented the common law180. Another form of governmental recognition has taken place. Not only in South Australia but in many other places, the authorities did not prosecute charges against husbands accused of raping their wives. This Court was not told of any prosecutions having been brought in England between Hale's time and 1949. In the second half of the 20th century, as exceptions developed to Hale's proposition, there were attempts to prosecute husbands, not for non-consensual 177 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 178 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 13 [6.2]: see below at [174]. 179 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 15 [6.2.1]. 180 For example, Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 17-18 [2.56]-[2.57]; Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 9-12 [2.8]-[2.10]; American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 271-275, 341-346 and American Law Institute, Model Penal Code: Official Draft and Explanatory Notes, (1985), §213.1(1). The greatest example of this kind, which is not modern but does come from a time when, according to South Australia, legislative changes were being made which would mean that Hale's proposition "crumbled to dust", is the Royal Commission commenting on Stephen's Draft Code: see below at [219]. Sir Rupert Cross thought that Stephen had "one of the highest places" among the makers of English criminal law: "The Making of English Criminal Law: (6) Sir James Fitzjames Stephen", [1978] Criminal Law Review 652 at 661. sexual intercourse with their wives, but for crimes committed in connection with that conduct, such as assault or false imprisonment. So far as these crimes were distinct from sexual intercourse without consent, the prosecutions rested on sound legal thinking, though they were at peril of failing if there were difficulties in establishing that the husband's conduct had gone beyond sexual intercourse without consent181. What the prosecution assumes about the law is not decisive as to what the law is. But it is some guide to the thinking of experienced criminal lawyers. That thinking can be highly persuasive as to what the law is. Legislative recognition Finally, South Australia relied on Lord Lowry's statement that Hale's proposition "had not been given the stamp of legislative … recognition."182 That submission must also be rejected. Some forms of "legislative recognition" are of limited materiality. A statute expressly adopting Hale's proposition in South Australia would have superseded the common law. A statute expressly adopting it outside South Australia would have had slight relevance only to what the common law was in South Australia. Statutes rejecting it would have had little relevance to the position at common law unless they reflected a consistent legislative view of what the public interest demanded183. But there is South Australian legislation recognising Hale's proposition in the sense that it did not interfere with it when there was an occasion to do so. The South Australian Parliament did not adopt the recommendation of the Criminal Law and Penal Methods Reform Committee of South Australia to abolish the immunity when husband and wife were living separately. Instead two provisions relevant to the common law were enacted. First, s 73(3) of the Criminal Law Consolidation Act 1935 (SA) was introduced, removing any presumption that consent to sexual intercourse flowed from marriage. Secondly, s 73(5) was introduced: it prevented a spouse from being convicted not only of rape but also of indecent assault, attempted rape or indecent assault, and assault with intent to commit rape or indecent assault, unless the alleged offence was accompanied by various forms of aggravated conduct184. In substance it 181 See, for example, R v Henry unreported, 14 March 1990 per Auld J, set out in Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 97-108. 182 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 183 Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 61-63 [23]-[28]; [1999] HCA 67. 184 See below at [175]. overlapped with the common law position precluding convictions of husbands for the conduct of sexual intercourse with their wives without consent. Thus the South Australian Parliament assumed that the immunity existed at common law, and left it in existence. It appears to have gone further in creating an immunity without any common law counterpart for non-aggravated forms of the crimes other than rape to which s 73(5) referred. That state of affairs continued until "Legislative recognition" in places other than South Australia assuming that the immunity existed at common law is relevant to the content of South Australian law – particularly Australian legislation, since there is a single common law in Australia. There are three points to be made. First, in the Code States (Queensland, Tasmania and Western Australia), the definition of rape excluded sexual intercourse by a husband with his wife. The relevant statutes assumed the correctness of Hale's proposition186. Secondly, the numerous changes in State and Territory legislation in the 1970s and 1980s indicated an assumption by each legislature (and by each Executive, which had a large measure of control over what draft legislation was introduced) that Hale's proposition was sound at common law. If not, it would not have been necessary to abolish or qualify it187. Thirdly, Canadian188 and New Zealand189 legislation assumed the correctness of Hale's proposition. An anachronistic and offensive proposition? There are no doubt many criticisms to be made of Hale's proposition if it is to be applied in the circumstances of 2012. But these criticisms do not show that his proposition was necessarily anachronistic or offensive in 17th century circumstances. That would depend on historical analysis which the parties' submissions did not perform. The criticisms therefore do not demonstrate that Hale's proposition was wrong from the outset. They are, however, appropriate arguments to consider when deciding whether Hale's proposition ought to be abandoned. It is a question which legislatures answered affirmatively from the 1980s on. It is not a question which South Australia places before this Court. Whether they are appropriate arguments to consider when deciding whether 185 See below at [176]. 186 See below at [176] n 298. 187 See below at [176]. See also Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26 at 35. 188 See below at [221]. 189 See below at [233]. Hale's proposition dropped out of the law at some point before 1963 is a question which relates to South Australia's second submission. South Australia's first submission rejected It was inherent in South Australia's first submission that all the writers, all the judges, all the government officials, all the law reformers, all the public servants advising Ministers, all the prosecution authorities and all the legislatures who wrote or acted on the assumption that Hale's proposition was the law were wrong. South Australia explicitly adopted a statement to this effect in the Full Court of the Supreme Court of South Australia190. I flatly disagree. South Australia's second submission On the assumption that Hale's proposition was correct for some time after he stated it, South Australia put various contentions denying its applicability in South Australia contended that before 1963 the law had changed so as to nullify Hale's proposition, even though no case had stated this before 1991. This is an unusual invocation of the judicial process. South Australia's contention is different from a contention that this Court should now declare Hale's proposition to be wrong, and do so with effect retrospective to 1963. This latter course presents in an overt form the considerable difficulties which cluster around the making of retrospective changes to the criminal law. South Australia did not choose to tackle these difficulties head on. It did not suggest that this Court should now change the law. Rather, it submitted that the dicta of four Justices in R v L191 recognised that Hale's proposition had ceased to be the law at some time before 1991. South Australia submitted that this time was a time before 1963. In fact, nothing in R v L suggests that the demise of Hale's proposition took place at any specific time before 1991, such as 1963. South Australia's thesis that R v L bound the Full Court of the Supreme Court of South Australia to reach this conclusion must be rejected. South Australia relied on the following arguments as indications that Hale's proposition had ceased to be the law before 1963. South Australia submitted that in R v Jackson192 the denial of the husband's right to use physical coercion on his wife suggested that the immunity 190 R v P, GA (2010) 109 SASR 1 at 9 [43]. 191 (1991) 174 CLR 379 at 390 and 405. 192 [1891] 1 QB 671: see above at [101]. had disappeared from the law. But it does not follow that a husband lost the immunity where he had not employed physical coercion against his wife. South Australia also submitted that Hale's proposition was based on the doctrine of coverture – that the legal status of a wife is assimilated with that of her husband. And it submitted that by the turn of the 20th century the law had come to acknowledge the rights of married women as independent of their husbands' rights. In effect, it submitted that so many inroads had been made on the doctrine of coverture that it could no longer support Hale's proposition. This submission has the drawback that Hale did not base his proposition on the doctrine of coverture. However, the developments on which South Australia relied could be used, and to a degree were used, to support an argument that by the mid-20th century the rights and privileges of married women in Australia were inconsistent with any theory that on marriage wives gave their husbands irrevocable consent to sexual intercourse. South Australia advanced detailed submissions on the capacity of wives, gained by statute, to own property, to sue and be sued, to vote, to have custody of children, and to compel payment of and be compelled to pay child maintenance. It also relied on the termination by statute of discrimination between husbands and wives in relation to the grounds of divorce. In that way South Australia advances an argument for permitting the appellant to be prosecuted now for conduct which allegedly occurred in 1963. Whether it should be accepted depends on four matters. One is whether in fact the changes in the rights and privileges of wives by 1963 were, to use the words of South Australia's written submissions, "entirely inconsistent with the principle that a wife gave irrevocable consent to sexual intercourse with her husband upon marriage." A second concerns the need for certainty in the criminal law. A third concerns whether South Australia's argument could, in a practical sense, work a retrospective change in criminal law. A fourth is whether the task being undertaken is appropriate for the courts as distinct from the legislature. It is convenient to deal with these points in order. Is there inconsistency between the modern rights and privileges of wives and the immunity of husbands for rape? Bell J gives convincing reasons for answering this question in the negative193. Some ideas which tend to render Hale's proposition anachronistic can be discerned in 19th and early 20th century legislation. But the crucial triggers that would push Hale's proposition into disfavour arose in the 1970s. Before that decade there had been some questioning by lawyers of the stated 193 See below at [224]-[248]. justification for Hale's proposition. In that decade questioning began to grow about whether the proposition should be abolished by the legislature. The questioning grew as public concern about the law of rape in general and marital rape in particular began to rise. Law reform agencies began to examine numerous problems in detail. Legislative changes of different kinds were introduced. One trigger was the controversial decision in R v Morgan194 that a mistaken but honest belief that the victim had consented to intercourse was a defence to a rape charge, whether or not that belief was reasonable. R v Morgan was decided on 30 April 1975, seven months before the then Attorney-General for the State of South Australia requested the Criminal Law and Penal Methods Reform Committee of South Australia to report on the law relating to rape and other sexual offences. It was the very first topic the Committee dealt with195. Another trigger concerned whether warnings about the desirability of finding corroboration for the evidence of those complaining that they had been raped rested on unsatisfactory stereotyping. Another trigger was discontent about the rules relating to the cross-examination of complainants about their sexual histories. There were many other issues about which debates began to widen and intensify in those years. The immunity was only one of them. Further, the reasons underlying the legislation which has altered the status of wives over the last 150 years are not necessarily inconsistent with the immunity. To describe Hale's proposition as creating a presumption which no longer has any foundation, and as a fiction not forming part of the common law196, overlooks the fact that a common law rule can rest on a fiction, particularly when the rule in question develops a new and non-fictitious basis. As Lord Sumner observed197: "an established rule does not become questionable merely because different conjectural justifications of it have been offered, or because none is forthcoming that is not fanciful." A fortiori, an established rule does not become questionable merely because a justification which appealed to the minds of lawyers more than 300 years ago has ceased to have appeal now. In Australia, the controversy has been resolved. The resolution lies in abolition of the immunity. Abolition came by degrees. It also came from legislatures. In England, on the other hand, the first decision to abolish the immunity was made by a judge – Simon Brown J, in 1990198. Rougier J, sitting alone, at once refused 195 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 2-8 [2]. 196 R v L (1991) 174 CLR 379 at 405. 197 Admiralty Commissioners v SS Amerika [1917] AC 38 at 56. 198 R v C – (rape: marital exemption) [1991] 1 All ER 755. This was a controversial decision. to follow it199. Then the immunity was abolished by the Court of Appeal and the House of Lords in R v R in 1991. The House of Lords decision has been supported on the ground that Hale's proposition was one which "nobody defended on the merits."200 That, however, is not true201. It is true to say, though, that R v R was based, as Lord Lowry later said, "on a very widely accepted modern view of marital rape"202. But the fact that an idea is very widely accepted does not mean that an inference from it automatically becomes a rule of law. The fact that a rule of law is disliked does not mean that it has ceased to be the law. The fact that a rule of law favourable to the accused is disliked does not mean that the courts rather than the legislature should abolish it. Indeed, after the English courts abolished the immunity, Parliament did as well203, once the matter had been considered by the Law Commission204. And the fact that very many people have disliked a rule of law favourable to the accused for a long time does not mean that it has ceased to be the law at some time in the past. The Permanent Court of International Justice said, in a somewhat different context, in Consistency of Certain Danzig 199 R v J – (rape: marital exemption) [1991] 1 All ER 759. 200 Spencer, "Criminal Law", in Blom-Cooper, Dickson and Drewry (eds), The Judicial House of Lords 1876-2009, (2009) 594 at 604. 201 See Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 258-259; Howard, Australian Criminal Law, (1965) at 146; Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 14 [6.2]; American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 345; Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 21 [2.69]. As late as 15 February 1991, just before the Court of Appeal decision of 14 March 1991 and the House of Lords decision of 23 October 1991 abolishing the immunity, Glanville Williams contended in "The problem of domestic rape", (1991) 141 New Law Journal 205 and 246, that husbands who had non-consensual intercourse with their wives should not be guilty of rape, but should be liable to prosecution for a new statutory crime. 202 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 203 Criminal Justice and Public Order Act 1994 (UK), s 142, inserting a new s 1 of the Sexual Offences Act 1956 (UK). 204 Law Commission, Criminal Law: Rape within Marriage, Law Com No 205, Legislative Decrees with the Constitution of the Free City205, "[s]ound popular feeling is a very elusive standard." And mere popular feeling, however widespread, is a very unsafe standard to apply in relation to claims that common law rules have fallen into desuetude. Professor Robertson has contrasted R v R with C (A Minor) v Director of Public Prosecutions, in which the House of Lords declined to alter the common law rule that there is a rebuttable presumption that a child aged between 10 and 14 is doli incapax206. He correctly noted that the speeches in R v R contained "almost no argument", only "a bald statement"207. He argued that R v R rested on "the assumption, though it is an untested one, that there is wide consensus in the general public on the question of marital rape."208 He also argued that Lord Lowry's attempt to reconcile a change in the criminal law in R v R with a decision not to change it in C (A Minor) v Director of Public Prosecutions was "specious"209. He said210: "The abolition of the rule on rape, though occasioned by a rape where the man and wife were separated, would in fact apply inside an ongoing marriage. It is sociologically extremely unlikely that this view would command anything like as much support amongst the mass public as would a rule that allowed the conviction of thirteen-year-old auto-thieves. The fact that there had been several cases where judges had attempted to convict husbands for rape is on par with the attempt by the Divisional Court to change the doli incapax rule, where there was extensive quotation from judges who had wanted to but were dutiful to precedent. What is true is that liberal elite opinion was uniform in the rape context, and largely missing in the criminal capacity case. Asked how to square the two results, one Law Lord who had been a member of the bench in C but not in R v R threw his hands in the air and admitted he could not imagine how they squared it. Another though, who had heard C, indicated that his 205 Advisory Opinion, (1935) PCIJ (Ser A/B) No 65 at 53 per Sir Cecil Hurst (President), Judge Guerrero (Vice-President) and Judges Rolin-Jaequemyns, Fromageot, de Bustamante, Altamira, Urrutia, van Eysinga and Wang. 207 Judicial Discretion in the House of Lords, (1998) at 119. 208 Judicial Discretion in the House of Lords, (1998) at 120. 209 Judicial Discretion in the House of Lords, (1998) at 121. 210 Judicial Discretion in the House of Lords, (1998) at 121. decision was prompted by a desire to force the Government's hand and make it legislate." (emphasis in original) The task of assessing public opinion, or even the full range of legal opinion, whether now or in the past, is not an enterprise that is easy for courts to carry out. "The court does not, and cannot, carry out investigations or enquiries with a view to ascertaining whether particular common law rules … command popular assent."211 The question is not whether the view which the House of Lords stated in R v R about the general public's opinion is correct. The point is that if the general public's opinion is a relevant criterion, it is a criterion for the legislature to consider, not the courts212. Certainty in the criminal law Those who seek to foster the rule of law prize certainty. Ordinarily, certainty in the common law is assisted by the doctrine of precedent. Normally, a common law rule is supported by authorities. If an intermediate or ultimate appellate court decides to change the rule, it overrules the authorities and its decision creates a new binding authority. South Australia's submission is not that Hale's proposition be rejected, so that this Court's decision would be a new binding authority with retrospective effect. Instead South Australia submits that at some time which is not clearly specified, Hale's proposition ceased to be the law. At some time in the past that which had a solid existence is said to have dissolved into nothingness. In State Government Insurance Commission v Trigwell213, Gibbs J said: "Although the rules of the common law develop as conditions change, a settled rule is not abrogated because the conditions in which it was formulated no longer exist. It is now fashionable to criticize the rule in Searle v Wallbank[214] as anachronistic, inconsistent with principle and unsuitable to modern conditions, but it is by no means obvious that it would be a reasonable and just course simply to abolish the rule. The 211 State Government Insurance Commission v Trigwell (1979) 142 CLR 617 at 633 per Mason J; [1979] HCA 40. 212 See below at [128]-[129] and [146]-[150] for other arguments favouring legislative change in the criminal law over judicial change. 213 (1979) 142 CLR 617 at 627. See also Mason J at 633 (otherwise than in "a simple or clear case"). question whether the rule should be altered, and if so how, is clearly one for the legislatures concerned rather than for the courts." A fortiori, it does not follow from anachronism that a rule simply dissolves without any court ruling at the time it dissolved, leaving its dissolution to be detected by a court many years or decades later. To the extent that they may be changed retrospectively, uncertainty is inherent in common law rules. But the standard technique is to make the change in a particular case. It is announced as having happened at the time of that case. Even though it operates retrospectively, that retrospective operation tends to affect only quite recent conduct. That was so in R v R and other cases following it: the conduct charged took place only a short time before the law changed. At least in non-criminal fields, if the change is the result of altering "the law's direction of travel by a few degrees" as distinct from setting "it off in a different direction"215, no great harm may follow. Assuming it is permissible for the courts to change the substantive criminal law, R v R is an example of the standard technique. It relied on quite recent changes in the status of married women. It did not purport to announce that a change had taken place many years ago, by reason of changes in status even earlier. South Australia's urging of the latter course engenders much more uncertainty. It invites Bentham's reproach216: "Nebuchadnezzar put men to death for not finding a meaning for his dreams: but the dreams were at least dreamt first, and duly notified. English judges put men to death very coolly for not having been able to interpret their dreams, and that before they were so much as dreamt." Retrospective change in the criminal law and the appropriate institutions to effectuate it South Australia's arguments involve a retrospective change in the criminal law. Indeed, they willingly embrace it. They involve the proposition that conduct no-one saw as attracting criminal liability in 1963 in fact attracted that liability because an historical investigation in 2010-2012 is said to reveal that changes in legal and social conditions at some unspecified time before 1963 caused the conduct to become criminal. And this proposition involves a very serious crime. Rape in 1963 was punishable by life imprisonment and whipping217. 215 Bingham, "The Rule of Law", (2007) 66 Cambridge Law Journal 67 at 71. 216 Bowring (ed), The Works of Jeremy Bentham, (1843), vol IV at 315. 217 See below at [170]. The law's aversion to the judicial creation of crimes. In those circumstances, though it may be trite to do so, it is desirable to recall the law's aversion to the judicial creation or extension of crimes. In the early 17th century Bacon put the central difficulty in a retroactive criminal law thus in Aphorism 8 of his treatise De Augmentis218: "Certainty is so essential to law, that law cannot even be just without it. 'For if the trumpet give an uncertain sound, who shall prepare himself to the battle?'219 So if the law give an uncertain sound, who shall prepare to obey it? It ought therefore to warn before it strikes." And Aphorism 39 read in part220: "Let there be no authority to shed blood; nor let sentence be pronounced in any court upon capital cases, except according to a known and certain law. … Nor should a man be deprived of his life, who did not first know that he was risking it." Hobbes stated in 1651221: "harm inflicted for a fact done before there was a law that forbade it, is not punishment, but an act of hostility: for before the law, there is no transgression of the law". Hence, said Hobbes in 1681222: "A Law is the Command of him, or them that have the Soveraign Power, given to those that be his or their Subjects, declaring Publickly, and plainly what every of them may do, and what they must forbear to do." "The citizen must be able to ascertain beforehand how he stands with regard to the criminal law; otherwise to punish him for breach of that law is purposeless cruelty. Punishment in all its forms is a loss of rights or advantages consequent on a breach of law. When it loses this quality it 218 Spedding, Ellis and Heath (eds), The Works of Francis Bacon, (1877), vol V at 90. 219 1 Corinth. xiv. 8. 220 Spedding, Ellis and Heath (eds), The Works of Francis Bacon, (1877), vol V at 95. 221 Leviathan, reprinted by George Routledge and Sons, 2nd ed (1886) at 143. 222 A Dialogue Between a Philosopher and a Student of the Common Laws of England, Cropsey (ed) (1971) at 71. 223 Criminal Law: The General Part, 2nd ed (1961) at 575. degenerates into an arbitrary act of violence that can produce nothing but bad social effects." Stephen J stated in R v Price224: "the great leading rule of criminal law is that nothing is a crime unless it is plainly forbidden by law." Hence Hayek saw it as crucial to the rule of law that "the coercive power of the state … be used only in cases defined in advance by the law and in such a way that it can be foreseen how it will be used."225 Finally, as Harris said, retroactivity in criminal law is "pointless … because of the brutal absurdity of today commanding someone to do something yesterday."226 South Australia submitted, however, that the change it favoured "does not create a new offence, it merely removes a protection, arguably, formerly held by husbands." It submitted that there was no inhibition against judicial legislation which fell short of creating a new offence. South Australia relied on the following statement by the English Court of Appeal in R v R about the judicial abolition of the immunity227: "The remaining and no less difficult question is whether … this is an area where the court should step aside to leave the matter to the Parliamentary process. This is not the creation of a new offence, it is the removal of a common law fiction which has become anachronistic and offensive and we consider that it is our duty having reached that conclusion to act upon it." With respect to both South Australia and the English Court of Appeal, this is captious. The substantive effect of South Australia's argument is to expose persons to a risk of criminal prosecution for conduct which was not believed to be criminal at the time it was carried out. That is true even though South Australia sees this reasoning as doing nothing more pernicious than removing an anachronistic and offensive fiction. Sir John Smith said, correctly, "it is not clear that there is a difference in principle" between the judicial creation of a new 224 (1884) 12 QBD 247 at 256. 225 The Road to Serfdom, (1944) at 62. See generally Juratowitch, Retroactivity and the Common Law, (2008) at 43-65, 127-138 and 183-197. 226 Harris, Legal Philosophies, 2nd ed (1997) at 146. 227 R v R [1992] 1 AC 599 at 611 per Lord Lane CJ, Sir Stephen Brown P, Watkins, offence in Shaw v Director of Public Prosecutions228 and the judicial abolition of the immunity229. Zecevic v Director of Public Prosecutions (Vict). South Australia also relied on the following statement of Deane J (dissenting) in Zecevic v Director of Public Prosecutions (Vict)230: "There may be circumstances in which an ultimate appellate court is justified in overruling a previous decision of its own with the consequence that what had previously been accepted as a defence to a charge of murder is no longer, and never was, such a defence". This was a somewhat selective quotation. There are three reasons why it does not support South Australia's case. First, Deane J gave as an illustration the case of R v Shivpuri. In that case the House of Lords departed from earlier authority in order to state the true construction of a statute231. That is a very different matter from changing the common law. There are more difficulties in courts continuing to apply an erroneous construction of a statute than continuing to apply the received common law. The courts are masters of the common law, but servants of statutes. Further, the case in question was a special one. The change in construction did not cut down any "liberty" the accused had enjoyed. On the earlier and rejected construction, the accused was free to attempt to commit a crime if circumstances unknown to him made it impossible to do so. On the later and favoured construction, an attempt to commit the crime in those circumstances was criminal. The freedom arising under the earlier construction was a strange type of freedom. It was not a freedom which persons in the accused's position could be said to have been able to rely on: the relevant circumstances were unknown to them. Thus, as Juratowitch says232: "The absence of sensible reliance or liberty considerations in the case meant that the prohibition on criminal retroactivity was, without 228 [1962] AC 220: see below at [144]-[152]. 229 Commentary on R v C [1991] Crim LR 60 at 63. See also Sir John Smith's commentary on R v R [1991] Crim LR 475 at 478. 230 (1987) 162 CLR 645 at 677; [1987] HCA 26. 232 Retroactivity and the Common Law, (2008) at 195. diminishing the strength of that prohibition in general, eminently susceptible to being justifiably overcome in Shivpuri." Secondly, Deane J gave very detailed reasons for not applying his tentative observation to the case before him in Zecevic v Director of Public Prosecutions (Vict). They do not support South Australia's argument. Thirdly, Deane J made it plain that the undesirability of retroactive changes in criminal law adverse to the accused applies as much to abolishing defences as it does to creating new offences. Thus he said233: "It is simply wrong that an accused may be adjudged not guilty or guilty of murder according to the chance of whether his trial is completed before or after this Court has abolished a defence which, under the law which the Court itself had definitively settled at the time the offence was committed, reduced the offence from murder to manslaughter." He called this "a macabre lottery". The macabre character of the lottery is heightened in this case. Those who have caused the prosecution to be brought have allowed 47 years to pass before charging the appellant. Another problem with South Australia's argument is that it invites retrospective judicial legislation which collides with legal structures created by parliamentary legislation. Thus Brennan J, the only Justice in R v L not to state that Hale's proposition had ceased to exist, succinctly and correctly said234: "a mere judicial repeal of the [exception] would extend the liability for conviction of the crime of rape to cases which would be excluded from liability for conviction by s 73(5) of the Criminal Law Consolidation Act."235 Brennan J's point was that s 73(5) permitted convictions for rape in the aggravated circumstances stated in the sub-section, but otherwise preserved the common law "exception" from liability. To "repeal" the common law "exception" would expose husbands to a greater risk of prosecution for acts carried out before s 73(5) was enacted in 1976 than after it. Section 73(5) did not apply retrospectively. The greater exposure of husbands to risk of prosecution would depart significantly from the legislative scheme. It would mean that in 233 (1987) 162 CLR 645 at 677-678 (citation omitted). 234 R v L (1991) 174 CLR 379 at 402. The text has "section" instead of "exception", but this is an error. 235 See below at [175]. 1976 Parliament narrowed the scope of a husband's liability for sexual offences committed against his wife, rather than expanded it. And yet the seeming function of the legislation was to expand liability, not narrow it. Professional attitudes in 1963-1965. The retrospectivity involved in South Australia's arguments is highlighted by considering the following question. What would actually have happened if, instead of the appellant being charged with rape in 2010, he had been charged immediately after the second of the alleged offences had occurred in April 1963? the law "the is what judge says Lord Reid said: Mr Justice Holmes, as is well known, remarked that the bad man "does want to know what the Massachusetts or English courts are likely to do in fact. I am much of his mind. The prophecies of what the courts will do in fact, and nothing more pretentious, are what I mean by the law."237 No doubt it is often unrealistic to assume that people take account of the criminal law in deciding what conduct to engage in238. It is probably particularly unrealistic in relation to violent sexual crimes. However, people should be able to know, by recourse to a competent lawyer, what the legal consequences of a proposed course of action are before embarking on it239. What would a bad man in South Australia have learned if he had asked for a prophecy as to what the South Australian courts, and this Court, would be likely to say in the years 1963 to 1965, for example, if he had been charged in April 1963 with raping his wife in March and April and he had challenged the validity of the indictment or appealed against a conviction? There were at that time seven judges in the Supreme Court of South Australia. The Chief Justice was Sir Mellis Napier, in his 40th year of service on that Court. The senior puisne judge was Sir Herbert Mayo, in his 22nd year of service. Next in seniority came Sir Reginald Roderic St Clair Chamberlain: universally known as "Joe", he did not share the impulsiveness or the radicalism 236 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 22. 237 Holmes, "The Path of the Law", (1897) 10 Harvard Law Review 457 at 461. 238 Rodger, "A Time for Everything under the Law: Some Reflections on Retrospectivity", (2005) 121 Law Quarterly Review 57 at 68. Cf Williams, Criminal Law: The General Part, 2nd ed (1961) at 601-603. 239 See Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591 at 638; Fothergill v Monarch Airlines Ltd [1981] AC 251 at 279; and R v Rimmington [2006] 1 AC 459 at 480-482 [33]. of his namesake. The other judges were Justices Millhouse, Travers, Hogarth and Bright. This Court comprised Chief Justice Dixon and Justices McTiernan, Kitto, Taylor, Menzies, Windeyer and Owen. It is hard to see where a majority of two was to be found in the Supreme Court of South Australia in favour of the view that Hale's proposition never was, or had ceased to be, the law in South Australia. It is equally hard to see where a majority of three or four in favour of that view was to be found in this Court. Indeed, it is hard to find even one vote for that proposition. This is not simply a crass piece of legal "realism". It does not rest on the personal idiosyncrasies of the individual judges. The probabilities were strongly against either majority because of the particular ideas of the time. They were universal ideas among the Australian judiciary. To overturn Hale's proposition, or to deny that it ever had been the law, or to hold that it had earlier dissolved into nothingness, was to widen the criminal law. It was a legal commonplace in the middle of the 20th century that it was wrong for judges "to declare new offences": that "should be the business of the legislature." So spoke Lord Goddard CJ, Sellers and Havers JJ in 1953, in R v Newland240. They also stated that it was wrong for241: "the judges to declare new crimes and enable them to hold anything which they considered prejudicial to the community to be a misdemeanor. However beneficial that might have been in days when Parliament met seldom or at least only at long intervals it surely is now the province of the legislature and not of the judiciary to create new criminal offences." And in Director of Public Prosecutions v Withers, in 1974, Lord Simon of Glaisdale said242 that it was an "undoubted [principle] of law" that "it is not open to the courts nowadays either to create new offences or so to widen existing offences as to make punishable conduct of a type hitherto not subject to punishment". The same view would prevent any judicial widening of so extremely serious a crime as rape. That view was well-entrenched among judges, practising lawyers and academic lawyers. Contemporary reaction to two surprising decisions of the House of Lords in 1960 and 1961 demonstrates how well-entrenched it was. Director of Public Prosecutions v Smith. The first was a murder case, Director of Public Prosecutions v Smith. The trial judge (Donovan J) directed a 240 [1954] 1 QB 158 at 165. 241 [1954] 1 QB 158 at 167. 242 [1975] AC 842 at 863. jury that if the accused, in doing what he did, must as a reasonable man have contemplated that serious harm was likely to occur to the victim, he was guilty of murder – whether or not the accused actually had that contemplation. The Court of Criminal Appeal (Byrne, Sachs and Winn JJ) allowed Smith's appeal and substituted for the verdict of capital murder a verdict of manslaughter. On 28 July 1960, the House of Lords (Viscount Kilmuir LC, Lords Goddard, Tucker, Denning and Parker of Waddington) allowed a prosecution appeal and restored the conviction for capital murder. Viscount Kilmuir LC said that an accused person who was accountable for his actions and who carried out an unlawful and voluntary act was guilty of murder if the ordinary reasonable man would, in all the circumstances of the case, have contemplated grievous bodily harm as the natural and probable result of that act243. Shaw v Director of Public Prosecutions. The second case was decided on 4 May 1961. The House of Lords (Viscount Simonds, Lords Tucker, Morris of Borth-y-Gest and Hodson; Lord Reid dissenting) held in Shaw v Director of Public Prosecutions that the courts could create new crimes. Viscount Simonds said that the courts had: "a residual power, where no statute has yet intervened to supersede the common law, to superintend those offences which are prejudicial to the public welfare. Such occasions will be rare, for Parliament has not been slow to legislate when attention has been sufficiently aroused. But gaps remain and will always remain since no one can foresee every way in which the wickedness of man may disrupt the order of society."244 Lord Reid, whose reputation, still high, was extremely high in the early 1960s, dissented. He quoted with approval the second passage from R v Newland set out above245. He said246: "the courts cannot now create a new offence". Contemporary reactions to Shaw v Director of Public Prosecutions. Shaw v Director of Public Prosecutions attracted heavy criticism247. Probably for that 243 [1961] AC 290 at 327. 244 [1962] AC 220 at 268. 245 [1962] AC 220 at 274-275. 246 [1962] AC 220 at 276. 247 For example, Hall Williams, "The Ladies' Directory and Criminal Conspiracy: The Judge as Custos Morum", (1961) 24 Modern Law Review 626; Smith, "Commentary", [1961] Criminal Law Review 470; Seaborne Davies, "The House of Lords and the Criminal Law", (1961) 6 Journal of the Society of Public Teachers (Footnote continues on next page) reason, the principle it enunciated has since been narrowed 248. The modern English view corresponds with Lord Reid's. Thus Lord Bingham of Cornhill said249: "there now exists no power in the courts to create new criminal offences". An example of the contemporary reaction to Shaw v Director of Public Prosecutions is what P J Fitzgerald, a prominent Anglo-Irish criminal lawyer, wrote in 1962250: "Few cases in recent years have been quite so disturbing as this. The resuscitation of the judicial power to create crimes runs counter to two cardinal principles of free and democratic government." Fitzgerald put the first as follows251: "[T]he idea of the rule of law … is based on the demand that the citizen should be ruled by laws and not by the whims of men. In the sphere of criminal law this idea has become crystallized as … a principle according to which only breaches of existing criminal law should be punishable. The justification of this principle, which has been adopted as an actual rule in some legal systems, though not in the English legal system, is that the citizen should be able to know beforehand what conduct is permitted and what forbidden; for only in this way can he order his affairs with certainty and avoid coming into conflict with the law. It is this demand for certainty with regard to the provisions of the criminal law that militates against retrospective criminal legislation. When Parliament creates a new crime, it almost invariably legislates for the future only. This, however, is just what the courts cannot do. Our legal system is such that a court can of Law 104; Turpin, "Criminal Law – Conspiracy to Corrupt Public Morals", [1961] Cambridge Law Journal 144. 248 Director of Public Prosecutions v Bhagwan [1972] AC 60 at 80; Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions [1973] AC 435; Director of Public Prosecutions v Withers [1975] AC 842. 249 R v Jones (Margaret) [2007] 1 AC 136 at 161-162 [28]; see also at 171 [61] per Lord Hoffmann and 179-180 [102] per Lord Mance. 250 Criminal Law and Punishment, (1962) at 9. 251 Criminal Law and Punishment, (1962) at 9-10. The passage from Bentham to which Fitzgerald refers is from "Truth versus Ashhurst", in Bowring (ed), The Works of Jeremy Bentham, (1843), vol V at 235. It is conveniently set out in R v Rimmington [2006] 1 AC 459 at 480 [33]. only decide a point of law which arises in some actual case before the court, and consequently the court's decision always relates back to the facts of this case, facts which of course precede the decision. If, therefore, a court manufactures a new crime, it thereby determines after the event that the defendant's conduct, which at the time of commission was not prohibited by law, is a criminal offence. To countenance this type of retrospective criminal legislation means that certainty and consequently freedom are at an end. Bentham long ago pointed out that when the judges make law like this, they are treating the citizen as a man treats his dog, hitting him every time he does something to which the master takes exception. Animals and young children can only be trained in this way. Sane and adult members of a free society, however, are entitled to demand first to be told what conduct is forbidden so that they may choose whether or not to keep within the law." Fitzgerald put the second objection to "the creation of new offences by the courts" thus252: "Even suppose that a court could decide that the kind of act which the defendant had done would in future, though not in the instant case, constitute a crime, there is still the objection that this type of proceeding is not consonant with democratic government. If Parliament creates a new crime, the citizens whose liberty is thereby restricted have the consolation that this was done by their elected representatives whom they chose to perform this sort of activity, and whom in due course they may re-elect or reject. The judges, on the other hand, are appointed by the Crown, virtually irremovable and in practice accountable to no one. That such a body should have the power to decree that certain acts shall constitute crimes is totally incompatible with the notion of democracy." In similar vein, Lord Reid said that judicial legislation should be avoided when "public opinion is sharply divided on any question"253. The development of the criminal law raises questions which often sharply divide public opinion. Lord Reid employed arguments similar to those of Fitzgerald in Shaw v Director of Public Prosecutions254. And twice in R v Newland255, the Court of 252 Criminal Law and Punishment, (1962) at 10. 253 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 23. See also Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions [1973] AC 435 at 489. 254 [1962] AC 220 at 275. 255 [1954] 1 QB 158 at 165 and 167. Criminal Appeal referred to Sir James Fitzjames Stephen's statement of related arguments 70 years earlier256: "it is hardly probable that any attempt would be made to exercise [a power of declaring new offences] at the present day; and any such attempt would be received with great opposition, and would place the bench in an invidious position. … In times when legislation was scanty, [that power was] necessary. That the law in its earlier stages should be developed by judicial decisions from a few vague generalities was natural and inevitable. But a new state of things has come into existence. On the one hand, the courts have done their work; they have developed the law. On the other hand, parliament is regular in its sittings and active in its labours; and if the protection of society requires the enactment of additional penal laws, parliament will soon supply them. If parliament is not disposed to provide punishments for acts which are upon any ground objectionable or dangerous, the presumption is that they belong to that class of misconduct which it is not desirable to punish. Besides, there is every reason to believe that the criminal law is, and for a considerable time has been, sufficiently developed to provide all the protection for the public peace and for the property and persons of individuals which they are likely to require under almost any circumstances which can be imagined; and this is an additional reason why its further development ought to be left in the hands of parliament." Lord Diplock used similar reasoning in Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions257 to advocate a retreat from Shaw v Director of Public Prosecutions. The views of a scholar who received his legal education in Adelaide shortly before the appellant allegedly committed the conduct charged are representative of how lawyers thought at that time and in that place258: "the administration, or working-out, of the criminal law's prohibitions is permeated by rules and principles of procedural fairness ('due process of law') and substantive fairness (desert, proportionality), which very substantially modify the pursuit of the goal of eliminating or diminishing the undesired forms of conduct: such principles as nulla poena sine lege 256 A History of the Criminal Law of England, (1883), vol III at 359-360. 257 [1973] AC 435 at 473-474. See also Lord Simon of Glaisdale at 489. 258 Finnis, Natural Law and Natural Rights, (1980) at 261-262. (and rather precise leges, at that), and the principles which outlaw retroactive proscription of conduct (at the known cost of letting some dubious characters slip through the net), and restrain the process of investigation, interrogation, and trial (even at the expense of that terror which a Lenin knows is necessary for attaining definite social goals)." (emphasis in original) Ideas of this kind, though perhaps less congenial to the mentalities of recent decades, were very familiar to Australian judges in the early 1960s. They universally assented to those ideas. Contemporary reactions to Director of Public Prosecutions v Smith. Director of Public Prosecutions v Smith, too, attracted immediate criticism. In Australia it was rightly seen as an extension of the law of murder. Shortly before his death, Sir Wilfred Fullagar, then a Justice of this Court, entered Sir Owen Dixon's chambers and observed: "Well, Dixon, they're hanging men for manslaughter in England now."259 The doctrine stated in Director of Public Prosecutions v Smith was soon abolished by statute in England260. Glanville Williams called it "the most criticised judgment ever to be delivered by an English court."261 Lord Reid called it a "disaster"262. Dixon CJ, in his 35th year on the High Court and nearing the end of his eighth decade, levelled the most damaging criticism of all at it in Parker v The Queen. Judgment was delivered on 24 May 1963. That was at or shortly before the time the present appellant could have had the question of his immunity from prosecution for allegedly raping his wife in March and April 1963 considered by the courts, had the complainant, the police, the prosecuting authorities, and the courts moved expeditiously. Dixon CJ delivered a dissenting judgment. But it concluded with a passage263 with which all other members of the Court (Taylor, Menzies, Windeyer and Owen JJ) agreed264. In reading that passage, it must be remembered that up to 1963 it had been the High Court's 259 Ayres, Owen Dixon, (2003) at 276. 260 Criminal Justice Act 1967, s 8. 261 Textbook of Criminal Law, 2nd ed (1983) at 81. See also Williams, "Constructive Malice Revived", (1960) 23 Modern Law Review 605. 262 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 29. 263 (1963) 111 CLR 610 at 632; [1963] HCA 14. 264 (1963) 111 CLR 610 at 633. practice to follow decisions of the House of Lords265. It had also been the Court's practice to pay great respect to the decisions of the English Court of Appeal266, and decisions of English High Court judges. That was so even though no appeal lay from any Australian court to those Courts. "In Stapleton v The Queen267 we said: 'The introduction of the maxim or statement that a man is presumed to intend the reasonable consequences of his act is seldom helpful and always dangerous'268. That was some years before the decision in Director of Public Prosecutions v Smith269, which seems only too unfortunately to confirm the observation. I say too unfortunately for I think it forces a critical situation in our (Dominion) relation to the judicial authority as precedents of decisions in England. Hitherto I have thought that we ought to follow decisions of the House of Lords, at the expense of our own opinions and cases decided here, but having carefully studied Smith's Case270 I think that we cannot adhere to that view or policy. There are propositions laid down in the judgment which I believe to be misconceived and wrong. They are fundamental and they are propositions which I could never bring myself to accept." Dixon CJ then said that Smith's case "should not be used as authority in Australia at all." Those were terrible words. They were brooding, sombre and unusually passionate. In them the aged Chief Justice revealed that at the end of his career he had plumbed the depths of an intolerable nightmare. His reaction shows the Court being provoked by a retrospective judicial expansion of criminal liability in England into a determination to preserve crucial common law principles in Australia, not applaud or foster their destruction. This Court had changed its own rules of stare decisis in order to preserve Australian law. Those rules are 265 Piro v W Foster & Co Ltd (1943) 68 CLR 313 at 320; [1943] HCA 32. See also Wright v Wright (1948) 77 CLR 191 at 210; [1948] HCA 33. There Dixon J said that diversity was "an evil", and that the "avoidance [of diversity] is more desirable than a preservation here of what we regard as sounder principle." 266 Waghorn v Waghorn (1942) 65 CLR 289 at 292; [1942] HCA 1. 267 (1952) 86 CLR 358; [1952] HCA 56. 268 (1952) 86 CLR 358 at 365. fundamental to the judicial method. The change was very substantial. Though the High Court continued to be bound by Privy Council decisions, on most points of law there was much more authority from the House of Lords and the English Court of Appeal than the Privy Council. For those reasons Parker v The Queen astonished the Australian legal profession. But its repudiation of the thinking underlying Director of Public Prosecutions v Smith accorded with the ideas of the Australian legal profession. What would the courts have done in 1963-1965? Had the appellant been charged with rape in April 1963, the immediate background to any claim by him of immunity from prosecution would have included the following elements. There was a continuing furore in which Lord Reid's dissent in Shaw v Director of Public Prosecutions was receiving overwhelming favour. There had been an explicit repudiation of English authority for the first time in Australian history271 in part because of its retrospective expansion of criminal liability. There was universal acceptance in the Australian judiciary of conceptions of the kind stated by Stephen, Lord Reid and Fitzgerald. They were conceptions ultimately rooted in the common understanding of the rule of law272. Recourse to the principal English works on criminal law which were available in 1963273 or soon to be published274 would have revealed that Hale's proposition as reflected in recent authorities was stated as the law. The same was true of Australian works 271 However, there had been a premonitory sign in Commissioner for Railways (NSW) v Cardy (1960) 104 CLR 274 at 285; [1960] HCA 45. 272 See Finnis, Natural Law and Natural Rights, (1980) at 270 (proposition (i)). 273 Fitzwalter Butler and Garsia (eds), Archbold: Pleading, Evidence & Practice in Criminal Cases, 35th ed (1962) at 1150 [2880]; Halsbury's Laws of England, 3rd ed (1955), vol 10 at 746 [1437]; Sturge (ed), Stephen's Digest of the Criminal Law (Indictable Offences), 9th ed (1950) at 263 (which includes the footnote Stephen had amended in the 4th ed (1887), the last he published in his lifetime): see below at [218]; Turner (ed), Russell on Crime, 11th ed (1958), vol 1 at 791; Turner (ed), Kenny's Outlines of Criminal Law, 18th ed (1962) at 192; Cross and Jones, An Introduction to Criminal Law, 4th ed (1959) at 76 and 160; Palmer and Palmer (eds), Harris's Criminal Law, 20th ed (1960) at 244. 274 Cross and Jones, An Introduction to Criminal Law, 5th ed (1964) at 79; Smith and Hogan, Criminal Law, (1965) at 290-292. available in 1963275 or shortly thereafter276. This Court was not taken to any works stating that Hale's proposition was not the law. The leading English and Australian academic lawyers specialising in criminal law – Professor Glanville Williams, Sir Rupert Cross, Sir John Smith, Professor Hogan, Professor Howard, Professor Brett, Professor Waller and Professor Morris – were agreed that the immunity existed. No Australian case denied Hale's proposition. A handful of English cases had qualified it, but only to a small degree277. Against that background, four questions arise. What prospect was there that the South Australian courts or the High Court would accede to an attempt by South Australia to effect a judicial extension, retrospectively, of criminal liability? What prospect was there that they would rule that the immunity had never existed? What prospect was there that they would accede to a submission that though the immunity had existed for a long time, it had disappeared some decades earlier? What prospect was there that they would accede to a submission that though the immunity had existed up to 1963, it should be abolished (necessarily with retrospective effect)? To each of those four questions the answer must be: "None". That answer is supported by the fact that once they came to consider the problem, neither the Australian nor the English courts wavered, until 1991, from the view asserted and assumed until then that Hale's proposition was substantially correct278. is necessary, with respect, emphatically to reject the statement that "in 1963, a respectable challenge to Sir Matthew Hale's opinion could have been mounted."279 To believe that is to believe that history can be rewritten in complete defiance of all contemporary evidence. It contradicts the reasoning of the House of Lords in R v R280. Foreseeability. South Australia did not rely on an argument which appealed to the European Court of Human Rights. But it is convenient to mention it. That Court held that the United Kingdom was not in contravention of 275 Weigall and McKay (eds), Hamilton and Addison: Criminal Law and Procedure, 6th ed (1956) at 88; Bourke, Sonenberg and Blomme, Criminal Law, (1959) at 43. See also Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247. 276 Brett and Waller, Cases and Materials in Criminal Law, 2nd ed (1965) at 300; Howard, Australian Criminal Law, (1965) at 145-147. 277 See above at [97]-[98]. 278 See above at [94]-[100]. 279 R v P, GA (2010) 109 SASR 1 at 13 [66] per Doyle CJ. 280 [1992] 1 AC 599: see above at [103]. Art 7 of the European Convention on Human Rights by reason of the decision in R v R because the abolition of the immunity was reasonably foreseeable281. This is a highly questionable justification for retrospective judicial change in the criminal law. But even if it is an arguable justification, it cannot apply here. It may be one thing to hold that it was reasonably foreseeable in 1990 that the immunity might be abolished in 1991. But in 1963 it was not reasonably foreseeable that if the matter came to court there would be an immediate abolition of the immunity by judicial means282. The significance of R v L. South Australia submitted that statements in R v L supported its second submission283. But it accepted that they were unnecessary to the decision in that case, and hence were dicta only. They were dicta about an aspect of the common law – a presumed incapacity to withdraw consent – which had been abolished by statute in every Australian jurisdiction. Further, they were dicta which said only that Hale's proposition was not in 1991 part of the common law of Australia. They said nothing in terms about what the position was in 1963. For the Court in this appeal the question is whether, as a matter of ratio decidendi, not obiter dicta, South Australia's second submission should be recognised as correct. An annihilatingly powerful reason for not recognising it is that it criminalises conduct which, if it took place, was lawful at the time it took place. Conclusion on South Australia's second submission. A decision by the legislature of South Australia after 1963 to enact a law retrospectively providing that the immunity was abolished with effect from a date before 1963 would have been subject to criticism from many quarters. That would have been significant, not because the critics would have been numerous, but because their criticisms would have been most trenchant284. South Australia's submission that the same result is to be achieved by a judicial decision to that effect is open to even greater criticism. The position of the judiciary in this respect is not superior to that of the legislature. For those reasons South Australia's second submission must be rejected. 281 SW v United Kingdom (1995) 21 EHRR 363 at 402 [43/41]. 282 Cf R v C [2004] 1 WLR 2098; [2004] 3 All ER 1, dealing with conduct in 1970 – a case exemplifying to a very marked degree the fallacy known to personal injury lawyers of finding foreseeability solely on the basis of hindsight. 283 (1991) 174 CLR 379 at 390 per Mason CJ, Deane and Toohey JJ and 405 per 284 See Walker, The Rule of Law, (1988) at 315-324. Issues which need not be resolved The appellant contended that a common law rule should be created by this Court to the effect that when there is a judicial change to the common law it only operates prospectively, not retrospectively. This would involve overruling prior authority285. That contention would only become a live issue if the common law as stated by Hale were held to have changed in the past (as South Australia submitted) or were to be changed now (as South Australia did not submit). It is not correct to arrive at either holding. Hence the need to consider the contention does not arise. Orders The appeal should be allowed. For the answer to the question of law given by the majority in the Full Court of the Supreme Court of South Australia there should be substituted the answer: "No". 285 Ha v New South Wales (1997) 189 CLR 465 at 503-504; [1997] HCA 34. Bell BELL J. In 2010, an Information was filed in the District Court of South Australia, charging the appellant with offences including two counts of rape. The complainant in each count was his then wife, GP, with whom he was living at the time. The offences of rape are alleged to have occurred in March and April 1963. It cannot be sensibly suggested that the appellant would have been prosecuted for those offences, had the allegations come to the attention of the authorities in 1963. This is because at that time it was understood that the crime of rape could not be committed by a husband against his wife with whom he was living ("the immunity"). A husband was amenable under the criminal law for any other offence of violence committed against his wife. The imposition of criminal liability on a person for an act or omission to which criminal liability did not attach at the date the act was done or omitted to be done is contrary to fundamental principle286. It is said that the prosecution of the appellant today for his conduct in 1963 does not offend that principle because the immunity has never formed part of the common law of Australia or, if it did, it had ceased to do so sometime before 1963. The first of these alternatives rests on demonstrating either the absence of an authoritative source for the immunity or that in R v L287 this Court declared the common law in terms that denied its existence. For the reasons that follow, neither of those propositions should be accepted. Nor should this Court now hold that, on some date before 1963, a settled rule of the common law affecting liability for a serious criminal offence ceased to exist. Procedural history The appellant was due to stand trial in the District Court of South Australia (Herriman DCJ) on 5 July 2010. On 29 June 2010, he applied to quash the counts in the Information charging him with rape contrary to s 48 of the Criminal Law Consolidation Act 1935 (SA) ("the CLC Act"). Herriman DCJ stated a case reserving a question of law for the determination of the Full Court of the Supreme Court of South Australia288. His Honour set out the following facts: each count charged an act of non-consensual penile-vaginal sexual intercourse with GP; GP and the appellant were married and cohabiting as husband and wife at the date of each alleged offence; and no legal orders or undertakings of any kind affected the marital relationship on those dates. The question of law that his Honour reserved is: 286 Nullum crimen sine lege; nulla poena sine lege (no crime or punishment without law). See Dicey, Introduction to the Study of the Law of the Constitution, 10th ed 287 (1991) 174 CLR 379; [1991] HCA 48. 288 CLC Act, s 350(2)(b). Bell "Was the offence of rape by one lawful spouse of another, in the circumstances as outlined above, an offence known to the law of South Australia as at 1963?" The Full Court, by majority (Doyle CJ and White J, Gray J dissenting), answered the question289 in this way290: "The defendant is liable at law to be found guilty of the offences of rape charged in count 3 and count 5 of the information, notwithstanding that at the time of the alleged offence he was married to the alleged victim and was cohabiting with her, the marriage giving rise to no presumption of consent on her part to intercourse with her husband, and giving rise to no irrebuttable presumption to that effect." By special leave, the appellant appeals to this Court against the answer given by the majority in the Full Court. The law of rape in South Australia Before turning to the Full Court's reasons, some reference should be made to the history of the law governing liability for rape in South Australia and to the decision in R v L. In 1963, the punishment for the offence of rape was provided by s 48 of the CLC Act: "Any person convicted of rape shall be guilty of felony, and liable to be imprisoned for life, and may be whipped." The elements of the offence of rape were supplied by the common law. The understanding that a husband could not be guilty as a principal in the first degree of the rape of his wife is traced to the statement of Sir Matthew Hale in The History of the Pleas of the Crown291: 289 Doyle CJ (White J concurring) restated the question as "whether Mr P can, as a matter of law, properly be convicted of count 3 and count 5 in the circumstances outlined": R v P, GA (2010) 109 SASR 1 at 4 [6]. 290 R v P, GA (2010) 109 SASR 1 at 19 [93] per Doyle CJ, 45 [174] per White J. 291 (1736), vol 1, c 58 at 629. Bell "But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." There does not appear to have been a single case in which a husband had been prosecuted for the rape of his wife with whom he was living in any common law jurisdiction at the date of the conduct with which the appellant is charged. By that date, as will appear, the justification for the immunity may have come to rest more upon the notion that the criminal law ought not to intrude into the marital bedroom, than upon the fiction of the wife's irrevocable consent. By the 1970s, the idea that there could be any justification for conferring immunity on a husband for the rape of his wife was the subject of critical academic attention and pressure for reform of the law292. South Australia was the first of the Australian jurisdictions to respond to the call for reform of the law of rape. In December 1975, the Attorney-General appointed a Committee of persons distinguished for their knowledge of the criminal law to report on the law relating to sexual offences293. The Committee was chaired by Justice Roma Mitchell of the Supreme Court of South Australia. The Committee submitted its Report to the Attorney-General in March 1976294. The Report contained a summary of the law stating that a husband could not be 292 The Women's Electoral Lobby was formed in 1972. See s 2 of its "Draft Bill and Other Recommendations on Sexual Offences (Superseding Draft Bill of August 1977; plus addenda of July 1978)", in Scutt (ed), Rape Law Reform, (1980) 265 at 268. See also Scutt, "Consent in Rape: The Problem of the Marriage Contract", (1977) 3 Monash University Law Review 255; Buddin, "Revision of Sexual Offences Legislation: A Code for New South Wales?", (1977) 2 University of New South Wales Law Journal 117 at 128-130; Sallmann and Chappell, Rape Law Reform in South Australia: A Study of the Background to the Reforms of 1975 and 1976 and of their Subsequent Impact, Adelaide Law Review Research Paper No 3, (1982) at v, 1-4, 10, 19-23. See, further, LeGrand, "Rape and Rape Laws: Sexism in Society and Law", (1973) 61 California Law Review 919; Brownmiller, Against Our Will: Men, Women and Rape, (1975); Geis, "Lord Hale, Witches, and Rape", (1978) 5 British Journal of Law and Society 26. 293 The other members of the Committee were Professor Howard, Hearn Professor of Law at Melbourne University and the author of the leading text on the criminal law in Australia, and Mr David Biles, the Assistant Director (Research) at the Australian Institute of Criminology. Mr Warren Brent Fisse, then Reader in Law at the University of Adelaide, was engaged as a consultant to the Committee. 294 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976). Bell guilty as a principal in the first degree of the rape of his wife. The Committee noted judicial development of the law in England allowing an exception to the immunity in the case of a wife who had obtained an order for separation relieving her from the obligation to cohabit with her husband295. It recommended that the immunity should be confined such that a husband should be liable to conviction for the rape of his wife whenever the act constituting the rape was committed while the two were living apart and not under the same roof296. Following receipt of the Committee's Report, the South Australian Parliament amended the CLC Act297 by introducing s 48(1), which stated the elements of the offence of rape, and s 73, which relevantly provided: "(3) No person shall, by reason only of the fact that he is married to some other person, be presumed to have consented to sexual intercourse with that other person. (5) Notwithstanding the foregoing provisions of this section, a person shall not be convicted of rape or indecent assault upon his spouse, or an attempt to commit, or assault with intent to commit, rape or indecent assault upon his spouse (except as an accessory) unless the alleged offence consisted of, was preceded or accompanied by, or was associated with – assault occasioning actual bodily harm, or threat of such an assault, upon the spouse; an act of gross indecency, or threat of such an act, against the spouse; 295 In R v Clarke [1949] 2 All ER 448, Byrne J held that, although as a general proposition of law a husband could not be guilty of rape of his wife, there was an exception where the wife was living separately and with the protection of a court order. The exception was recognised but did not apply in the circumstances in R v Miller [1954] 2 QB 282 (see fn 339 below) and it was extended in R v O'Brien [1974] 3 All ER 663. See Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 296 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 15 [6.2.1]. 297 Criminal Law Consolidation Act Amendment Act 1976 (SA). Bell an act calculated seriously and substantially to humiliate the spouse, or threat of such an act; or threat of the commission of a criminal act against any person." In the period following the South Australian reforms, the parliaments of each of the States and Territories enacted legislation with the evident intention of modifying or abolishing the immunity. This process of reform was completed by December 1991, when R v L was decided. In the Code States, this was achieved by removing the words "not his wife" from the definition of the offence298. In the Northern Territory, it was achieved by enacting the Criminal Code (NT) in terms that did not limit rape to an offence outside marriage299. In the Australian Capital Territory and New South Wales, it was done by enacting that the fact of marriage was no bar to conviction for the offence300. In Victoria and South Australia, any presumption of spousal consent to sexual intercourse on marriage was, in terms, abolished301. South Australia was alone in providing a limited immunity for 298 The Acts Amendment (Sexual Assaults) Act 1985 (WA) repealed s 325 of the Criminal Code (WA) and introduced s 324D, which provided that "[a]ny person who sexually penetrates another person without the consent of that person is guilty of a crime". The Criminal Code Amendment (Sexual Offences) Act 1987 (Tas) substituted a new s 185(1) of the Criminal Code (Tas), providing that "[a]ny person who has sexual intercourse with another person without that person's consent is guilty of a crime". The Criminal Code, Evidence Act and other Acts Amendment Act 1989 (Q) repealed s 347 of the Criminal Code (Q) and substituted a provision defining rape as "carnal knowledge of a female without her consent". 299 Criminal Code Act 1983 (NT), incorporating the Criminal Code (NT), s 192(1). 300 The Crimes (Sexual Assault) Amendment Act 1981 (NSW) inserted s 61A(4) into the Crimes Act 1900 (NSW), which provided that the fact that a person is married to a person on whom an offence of sexual assault is alleged to have been committed is no bar to conviction for that offence. The Crimes (Amendment) Ordinance (No 5) 1985 (ACT) inserted s 92R into the Crimes Act 1900 (NSW), as it applied to the ACT, which provided that the fact that a person is married to a person upon whom an offence of sexual intercourse without consent contrary to s 92D is alleged to have been committed shall be no bar to the conviction of the first-mentioned person for the offence. 301 In Victoria, the Crimes (Amendment) Act 1985 (Vic) substituted for s 62(2) of the Crimes Act 1958 (Vic) a new sub-section providing that the existence of a marriage does not constitute, or raise any presumption of, consent by a person to a sexual penetration or indecent assault by another person. Bell husbands in the case of non-aggravated offences. Further amendments introduced into the CLC Act in 1992 removed this partial immunity302. In R v L, the validity of s 73(3) of the CLC Act was challenged on the ground of inconsistency with Commonwealth law. The claimed inconsistency was with s 114(2) of the Family Law Act 1975 (Cth), which conferred power on the Family Court of Australia to make an order relieving a party to a marriage from any obligation to perform marital services or to render conjugal rights. The Court held that there was no direct or indirect inconsistency between the State and Commonwealth laws303. Resolution of the issue presented in R v L did not require consideration of proof of the offence of rape under the common law. Among the submissions advanced on L's behalf was that s 114(2) of the Commonwealth statute preserved the common law inability of a wife to withhold her consent to sexual intercourse with her husband. In their joint reasons, Mason CJ, Deane and Toohey JJ said that, "if it was ever the common law that by marriage a wife gave irrevocable consent to sexual intercourse by her husband, it is no longer the common law"304. This statement was prominent in the respondent's submissions before the Full Court and on this appeal. The Full Court Doyle CJ, writing for the majority in the Full Court, answered the reserved question on the footing that it was likely that Hale's statement of the immunity would have been accepted as a correct statement of the common law of Australia in 1963305. Nonetheless, his Honour said the Full Court should apply the considered statement of this Court that any presumption of irrevocable consent to sexual intercourse no longer formed part of the common law306. His Honour encapsulated the operation of the declaratory theory of the common law in the following statement307: 302 Criminal Law Consolidation (Rape) Amendment Act 1992 (SA). 303 R v L (1991) 174 CLR 379 at 385. 304 R v L (1991) 174 CLR 379 at 390. 305 R v P, GA (2010) 109 SASR 1 at 13 [66]. 306 R v P, GA (2010) 109 SASR 1 at 4 [8], 17 [82]. 307 R v P, GA (2010) 109 SASR 1 at 4 [9]. Bell "Mr P is charged with offences against the then s 48 of the [CLC Act]. In 1963 the elements of that offence were determined by the common law. Today, those elements are determined by the common law as stated by the majority in R v L." Gray J dissented. His Honour considered that the majority in R v L had not declared the common law with respect to liability for rape308. He reviewed the history and concluded that the appellant could not have been convicted of the rape of GP in 1963309. His Honour would have answered the reserved question in the negative310. Developments in Scotland and England Before returning to the decision in R v L, reference should be made to judicial development of the law relating to the immunity in Scotland and England. In S v HM Advocate311, an accused was indicted in the High Court of Justiciary in Scotland for the rape of his wife, with whom he was cohabiting. He challenged the count, contending that no crime known to the law of Scotland had been committed. The motion was dismissed and the dismissal upheld on appeal. Lord Justice-General Emslie, giving the judgment of the Court, noted that there was no authority holding that a cohabiting husband could be convicted of the rape of his wife312. His Lordship considered the state of English law to be sufficiently summarised in Glanville Williams' Textbook of Criminal Law313: 308 R v P, GA (2010) 109 SASR 1 at 36 [146], 37 [148]. The reference to the majority in the context is to the joint reasons of Mason CJ, Deane and Toohey JJ and the 309 R v P, GA (2010) 109 SASR 1 at 29 [132]. 310 R v P, GA (2010) 109 SASR 1 at 45 [173]. 311 1989 SLT 469. 312 S v HM Advocate 1989 SLT 469 at 471. There had been cases in Scotland following Clarke (see fn 295 above) that allowed the conviction of a man for the rape of his wife where they were separated: HM Advocate v Duffy 1983 SLT 7; HM Advocate v Paxton 1985 SLT 96. 313 S v HM Advocate 1989 SLT 469 at 472, citing Williams, Textbook of Criminal Law, 2nd ed (1983) at 236. Bell "A husband is legally incapable of perpetrating rape upon his wife unless the parties are judicially separated, or (probably) separated by consent, or unless the court has issued an injunction forbidding the husband to interfere with his wife, or the husband has given an undertaking to the court in order to avoid the issue of the injunction." Lord Emslie referred with approval to Glanville Williams' views on the justification for the immunity314: "The reason traditionally given for the general rule is the totally unconvincing one that the wife's consent is given on marriage, and she cannot revoke it. It would be an understatement to say that this authentic example of male chauvinism fails to accord with current opinion as to the rights of husbands." The immunity in the law of Scotland was traced to the unequivocal statement of it by Baron Hume315, which, in turn, drew on Hale. The Court accepted that Hume's statement of the law may have been correct in the 18th and early 19th centuries. However, the application of the rule in the late 20th century depended on the reasons justifying it and it was said that irrevocable consent, "if it ever was a good reason, no longer applies today"316. In 1985, in R v Roberts, the Criminal Division of the Court of Appeal of England and Wales said317: "In our judgment the law is now quite plain on this topic [marital rape]. The status of marriage involves that the woman has given her consent to her husband having intercourse with her during the subsistence of the marriage. She cannot unilaterally withdraw it." 314 S v HM Advocate 1989 SLT 469 at 473-474, citing Williams, Textbook of Criminal Law, 2nd ed (1983) at 237. 315 S v HM Advocate 1989 SLT 469 at 472, citing Hume, Commentaries on the Law of Scotland Respecting Crimes, (1797), vol 1, and subsequent editions published in 1819 and 1829, and the fourth edition edited by Bell in 1844. Also cited were Burnett, Criminal Law of Scotland, (1811) and Macdonald, A Practical Treatise on the Criminal Law of Scotland, 5th ed (1948) at 119. 316 S v HM Advocate 1989 SLT 469 at 473. 317 [1986] Crim LR 188, (Transcript: Marten Walsh Cherer). Bell The decision in Roberts followed Steele318 and allowed that a husband might be convicted of the rape of his wife in circumstances in which he and she had, by mutual agreement or court order, effectively put an end to the wife's fictional consent. The enactment of s 1(1)(a) of the Sexual Offences (Amendment) Act 1976 (UK), which defined rape in terms incorporating the expression "unlawful sexual intercourse", led to conflicting decisions at the trial court level319 as to the ability to judicially develop further exceptions to the immunity. The perceived difficulty was occasioned by the recognition that the word "unlawful" in this context had always been understood to refer to sexual intercourse outside marriage320. The Court of Appeal addressed this controversy in R v R321. The accused had been convicted of the attempted rape of his wife committed on an occasion in 1989 when the two were living separately. The wife had informed the accused of her intention to petition for divorce but had not commenced proceedings before the date of the offence. Lord Lane CJ, giving the judgment of the Court, said322: "It seems to us that where the common law rule no longer even remotely represents what is the true position of a wife in present day society, the duty of the court is to take steps to alter the rule if it can legitimately do so in the light of any relevant Parliamentary enactment." It was held that the word "unlawful" in the definition was surplusage. "We take the view that the time has now arrived when the law should declare that a rapist remains a rapist subject to the criminal law, irrespective of his relationship with his victim." 318 (1976) 65 Cr App R 22. 319 R v R [1991] 1 All ER 747; R v C [1991] 1 All ER 755; R v J [1991] 1 All ER 759. 320 R v Chapman [1959] 1 QB 100 at 105. 321 R v R [1992] 1 AC 599. 322 R v R [1992] 1 AC 599 at 610. 323 R v R [1992] 1 AC 599 at 611. Bell The House of Lords affirmed the decision. Lord Keith of Kinkel (with whom the other members of the House agreed) observed324: "It may be taken that [Hale's dictum] was generally regarded as an accurate statement of the common law of England. The common law is, however, capable of evolving in the light of changing social, economic and cultural developments. Hale's proposition reflected the state of affairs in these respects at the time it was enunciated. Since then the status of women, and particularly of married women, has changed out of all recognition in various ways which are very familiar and upon which it is unnecessary to go into detail." The European Court of Human Rights dismissed an application in respect of the decision in R v R325, holding that the accused's conviction did not violate Art 7(1) of the European Convention on Human Rights326. The decision had continued a perceptible line of authority dismantling the immunity327 and the development of the law "had reached a stage where judicial recognition of the absence of immunity had become a reasonably foreseeable development of the law"328. The courts in S v HM Advocate and R v R declared the common law of Scotland, England and Wales, taking into account changes in the conditions of 324 R v R [1992] 1 AC 599 at 616. 325 SW v United Kingdom (1995) 21 EHRR 363. 326 Article 7 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1950) provides: "1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed. 2. This article shall not prejudice the trial and punishment of any person for any act or omission which, at the time when it was committed, was criminal according to the general principles of law recognised by civilised nations." 327 SW v United Kingdom (1995) 21 EHRR 363 at 402. 328 SW v United Kingdom (1995) 21 EHRR 363 at 402. Bell society. In this respect, Lord Keith adopted the following statement from S v HM Advocate329: "By the second half of the 20th century, however, the status of women, and the status of a married woman, in our law have changed quite dramatically." The decisions in S v HM Advocate and R v R necessarily operated with retrospective effect. In each case, the conduct giving rise to the charge was alleged to have occurred not long before the date of the decision. That was important to the reasoning of the European Court of Human Rights in dismissing the application in R v R. One issue raised by this appeal that was not present in S v HM Advocate or R v R concerns the imposition of criminal liability in consequence of developing the law to take account of changed social conditions, for conduct that may have occurred before those changes took place. Prospective overruling and R v L the The Attorneys-General for South Australia, Queensland and Commonwealth intervened to address a constitutional issue raised by the appellant's third ground of appeal. This ground asserts that, if the common law was capable of further development following the 1976 amendments to the CLC Act, it should only be developed on a prospective basis. The submission was argued by reference to the decision of the House of Lords in In re Spectrum Plus Ltd (in liquidation)330. It was said in that case that the flexibility inherent in the English legal system permits the prospective overruling of a previous decision in a case in which it would otherwise produce gravely unfair and disruptive consequences for past transactions or events331. However, it has been held that a constitutional limitation on the exercise of judicial power does not permit this Court flexibility of that kind332. In their joint reasons in R v L, Mason CJ, Deane and Toohey JJ discussed the content of conjugal rights in the law of marriage, rejecting the submission that the doctrine imposes a continuing obligation on the part of a spouse to 329 R v R [1992] 1 AC 599 at 617, citing S v HM Advocate 1989 SLT 469 at 473. 331 In re Spectrum Plus Ltd (in liquidation) [2005] 2 AC 680 at 699 [40] per Lord Nicholls of Birkenhead. 332 Ha v New South Wales (1997) 189 CLR 465 at 504 per Brennan CJ, McHugh, Gummow and Kirby JJ; [1997] HCA 34. Bell to sexual intercourse as a legal consequence of marriage333. consent Their Honours noted Lord Lane CJ's statement in R v R that "there can be little doubt that what [Hale] wrote was an accurate expression of the common law as it then stood"334. They went on to say335: "Without endeavouring to resolve the development of the common law in this regard, it is appropriate for this Court to reject the existence of such a rule as now part of the common law of Australia. … The notion is out of keeping also with recent changes in the criminal law of this country made by statute, which draw no distinction between a wife and other women in defining the offence of rape. It is unnecessary for the Court to do more than to say that, if it was ever the common law that by marriage a wife gave irrevocable consent to sexual intercourse by her husband, it is no longer the common law." (emphasis added; citations omitted) It was unnecessary for the Court to "resolve the development of the common law" because, as their Honours observed, the law had been changed by statute. There was no jurisdiction in Australia in which a presumption of spousal consent to sexual intercourse had any bearing on a person's liability for rape336. The answer to the question of law reserved by Herriman DCJ requires consideration of an issue that was not addressed by the joint reasons or the reasons of Dawson J in R v L, which is the liability under the common law of a cohabiting husband for the rape of his wife. Did the immunity form part of the received common law? The laws and statutes of England applicable to the Province of South Australia were received on 19 February 1836. The relevant history and principles are explained by Mason J in State Government Insurance Commission v Trigwell337. It is not in question that, if Hale's statement of the immunity was a 333 R v L (1991) 174 CLR 379 at 387. 334 R v L (1991) 174 CLR 379 at 389, citing R v R [1992] 1 AC 599 at 603-604. 335 R v L (1991) 174 CLR 379 at 389-390. 336 See above at [176]. 337 (1979) 142 CLR 617 at 634-635; [1979] HCA 40. As explained, s 3 of Act No 9 of 1872 (SA) re-enacted s 1 of Ordinance No 2 of 1843 (SA). Section 3 of the 1872 Act declared that: "In all questions as to the applicability of any laws or statutes of England to the Province of South Australia, the said Province shall be deemed to (Footnote continues on next page) Bell rule of the common law in 1836, it was part of the laws of England received in South Australia338. In light of the history leading to the enactment of s 73(3) and (5) of the CLC Act, there can be little doubt that the common law of Australia was understood as embodying a rule that a husband was not amenable to conviction for the rape of his wife. It is also evident that, by 1976, the justification for that immunity was not perceived to depend upon the concept of irrevocable consent that presumption while maintaining the immunity save for offences committed in circumstances of aggravation. the Parliament of South Australia abolished intercourse, since As will appear, the Parliament of South Australia was not alone in acting upon acceptance that a husband was immune under the common law for the rape of his wife. Nonetheless, it is said that, correctly understood, the common law has never conferred the immunity. This is because Hale did not cite any authority for it and there is no binding judicial decision confirming its existence339. These criticisms will be addressed in turn. have been established on the twenty-eighth day of December, one thousand eight hundred and thirty-six." A modified version of this declaration was enacted in s 48 of the Acts Interpretation Act 1915 (SA). That section was repealed by s 26 of the Acts Interpretation Act Amendment Act 1983 (SA), with the effect that the date of settlement of the Province of South Australia is now taken to be 19 February 1836, on which date letters patent were issued defining its borders. See Lipohar v The Queen (1999) 200 CLR 485 at 508 [54]; [1999] HCA 65, citing South Australia v Victoria (1911) 12 CLR 667 at 676-677; [1911] HCA 17. 338 See R v Brown (1975) 10 SASR 139 at 153; R v Wozniak and Pendry (1977) 16 SASR 67 at 71; Question of Law (No 1 of 1993) (1993) 59 SASR 214 at 230; Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 13 [6.2]. 339 The only decision turning directly on the immunity appears to be R v Miller [1954] 2 QB 282. In that case, the accused was tried for the rape of his wife. The prosecution was brought after the decision in Clarke (see fn 295 above). The Crown relied on the evidence that the wife had been living separately at the time of the incident and had petitioned for divorce. Lynskey J held that the presentation of the petition for dissolution of the marriage did not have any effect in law upon the existing marriage and, accordingly, that the accused had no case to answer on the count charging rape: at 290. Bell An authoritative statement of the law of rape before Hale? It would be foolish to attempt to state the elements of liability for the offence of rape in the period before Hale. Holdsworth gives an account of the development of the offence in general terms, observing that Bracton would have confined the offence to violent intercourse with a virgin340. At the time of the writings attributed to Glanvill, rape was a plea of the Crown, which could be prosecuted by private appeal or on the presentation of the jury341. It appears that, in the early period, most prosecutions were by private appeal and that an appeal could be compromised by the marriage of the victim to her assailant342. There is evidence that, before the time of Hale, it was a good defence to an appeal of rape to say that the woman was one's concubine343. Holdsworth saw the essentials of the offence of rape as having been defined sometime after the Statute of Westminster II c 34, which made all rapes punishable as felonies344. The statute was passed in 1285 in the reign of Edward I. The only authority cited in Holdsworth for the statement of the essentials of the offence is Hale345. The explanation for this gap of some 400 340 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316, citing Bracton f 148. The most severe punishment, it seems, was reserved for the rape of a virgin, but elsewhere Bracton refers to punishment for the forcible ravishment of various categories of women: Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 414-415. 341 Hall (ed), The treatise on the laws and customs of the realm of England commonly called Glanvill, (1965) at 3, 175-176; Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. 342 Hall (ed), The treatise on the laws and customs of the realm of England commonly called Glanvill, (1965) at 176; Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 417-418; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212; Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. 343 Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 416; Dalton, The Country Justice, (1690), c 160 at 392; Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 41 at 108. 344 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. The Statute of Westminster II c 34 and its predecessor, the Statute of Westminster I c 13, also dealing with the punishment for rape, were both repealed by the Offences against the Person Act 1828 (UK) (9 Geo 4 c 31). 345 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. Bell years may lie in Professor Baker's account of the development of the criminal law. In the period up to the mid-16th century, the common law comprised the "common learning" found, not only in the yearbooks, but in the oral tradition of the Inns of Court346. It was the latter that shaped the criminal law. Few criminal cases were decided in the courts at Westminster and only a small number of criminal cases "trickled into the year books"347. Much of the record of the criminal law is found in the notes made by readers348 and these, it would seem, contain little discussion of rape349. Professor Baker says that the most visible result of the body of experience of the courts disposing of criminal cases is to be found in the treatises of Crompton, Dalton and Hale, all of whom drew heavily on rulings made at gaol deliveries350. It was their selection, rather than the rulings at large, which he suggests influenced the future development of the law351. The authority of the Pleas of the Crown Hale's statement was of a negative condition of liability for rape. This circumstance tends to explain the absence of prosecutions of husbands for the offence. Consideration of whether Hale's statement of the immunity came to acquire the status of a rule of law (if it was not one in 1736) requires some account of the standing of the Pleas of the Crown among common lawyers. Sir Matthew Hale held office as Chief Baron of the Exchequer and Chief Justice of the King's Bench successively in the years 1660 to 1676. He died in 1676, leaving instructions in his will prohibiting the publication of any work 346 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 486. See also at 469: "[I]t was the settled learning of the inns of court, referred to in the 1490s as the 'old learning of the court', or the 'common learning in moots'. Common learning, by its nature, did not require chapter and verse to support it. It was what the whole system of exercises was implicitly calculated to transmit, to test, and to teach" (citations omitted). 347 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 471. 348 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 529. 349 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 562. In fn 92, Baker notes that the Statute of Westminster II c 34 was glossed "very briefly". 350 Baker, "The Refinement of English Criminal Jurisprudence, 1500-1848", in The Legal Profession and the Common Law: Historical Essays, (1986) 303 at 313. 351 Baker, "The Refinement of English Criminal Jurisprudence, 1500-1848", in The Legal Profession and the Common Law: Historical Essays, (1986) 303 at 313. Bell other than that which he had permitted to be published in his lifetime. At the time of his death, he was writing the Pleas of the Crown, which he had planned as a work in three volumes352. Only the first volume was completed. Four years after his death, the House of Commons ordered that it be printed. However, it was not until 1736 that the first edition appeared under the editorship of Sollom Emlyn, barrister of Lincoln's Inn. Sir William Blackstone acknowledged his debt to Hale353 and drew on the Pleas of the Crown in his account of felonies in the Commentaries. Sir James Fitzjames Stephen accorded the composition of the Pleas of the Crown an important place in the evolution of the criminal law in the 17th century354. It was, in his estimate, a work "of the highest authority", demonstrating both "a depth of thought and a comprehensiveness of design" that put it in "quite a different category" from Coke's Institutes355. Important principles of criminal responsibility were hardly noticed before Hale356. Stephen saw the definition of many crimes as settled in the period that separates Coke from Blackstone, and Hale and Foster as having contributed more than any other writers to that development357. Maitland said of Hale that "none had a wider or deeper knowledge of the materials; he was perhaps the last great English lawyer who habitually studied records; he studied them pen in hand and to good purpose". He was, in Maitland's estimate, "the most eminent lawyer and judge of his time"358. Holdsworth accounted Hale "the greatest historian of English law before 352 Yale, Hale as a Legal Historian, (1976) at 8; Holdsworth, "Sir Matthew Hale", (1923) 39 Law Quarterly Review 402 at 419. The second volume was intended to deal with non-capital crimes and the third with franchises and liberties. 353 Blackstone, An Analysis of the Laws of England, 3rd ed (1758) at vii. 354 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 211. 355 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 211. Stephen was not uncritical in his treatment of the Pleas of the Crown. He described the weight of technical detail in the chapters dealing with procedure as almost unreadable except by a very determined student: at 212. 356 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 212. 357 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 219. 358 Maitland, "The Materials for English Legal History", in Fisher (ed), The Collected Papers of Frederic William Maitland, (1911), vol 2, 1 at 5. Bell Maitland"359. He considered the Pleas of the Crown to have been left in the best state of any of Hale's works that had not been published at the date of his death360. Holdsworth, like Stephen, regarded the treatise highly361: "It was a branch of the law which could not then be adequately described without a very complete knowledge of the history of the law; and, partly because it contained very ancient ideas and rules, partly because it had been added to and in many details modified by a variety of statutes, it greatly needed systematic Coke and Crompton had summarized it, in a somewhat unsystematic form. Hale, because he was both a competent historian, a competent jurist, and a competent lawyer did the work which they endeavoured to do infinitely better. Ever since its first publication it has been a book of the highest authority." (citations omitted) treatment. Holdsworth saw Coke as standing midway between the medieval and the modern law, and Hale as "the first of our great modern common lawyers"362. The analysis of the offence in the Pleas of the Crown Hale described the offence of rape as "the carnal knowledge of any woman above the age of ten years against her will, and of a woman-child under the age of ten years with or against her will"363. Hale acknowledged Coke for this statement364, but proceeded to a much more detailed analysis of proof of the offence. He discussed additional elements (any degree of penetration was sufficient and it was not necessary to prove emission of semen); accessorial liability for the offence; liability in the case of infants under 14 years; liability in the case of consenting females under 12 years; and consent obtained by threat of 359 Holdsworth, "Sir Matthew Hale", (1923) 39 Law Quarterly Review 402 at 402. 360 (1923) 39 Law Quarterly Review 402 at 419-420. 361 (1923) 39 Law Quarterly Review 402 at 420. 362 (1923) 39 Law Quarterly Review 402 at 425. 363 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. 364 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. The fourth edition of the Third Part of Coke's Institutes, published in 1669, in fact described the offence of rape as "the unlawfull and carnal knowledge and abuse of any woman above the age of ten years against her will, or of a woman-child under the age of ten years with her will, or against her will" (emphasis added): The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 11 at 60. Bell violence, among other matters. He also gave a deal of attention to the older law concerning appeals of rape, including the concubinage exception365. The account of the husband's immunity follows discussion of the latter. The relevant passage is set out below366: "It appears by Bracton ubi supra, that in an appeal of rape it was a good exception, quod ante diem & annum contentas in appello habuit eam ut concubinam & amicam, & inde ponit se super patriam, and the reason was, because that unlawful cohabitation carried a presumption in law, that it was not against her will. But this is no exception at this day, it may be an evidence of an assent, but it is not necessary that it should be so, for the woman may forsake that unlawful course of life. But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." Writing of the criticism that Hale had conjured up the immunity without authority, one commentator has observed that it might be thought incongruous that the law allowed an exception in the case of de facto relationships (for which there is clear evidence before Hale's time) but not de jure relationships367. The writer suggests that Hale lacked authority, not for the existence of the immunity, but for confining it to marriage368. It should be noticed that Hale said the concubinage exception was no longer good law because of the recognition that a 365 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. 366 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628-629. 367 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 154, citing Dalton, Countrey Justice, (1619) at 256; R v Lord Audley (1631) 3 St Tr 401 368 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 155. Professor Lanham identifies two extra-judicial supports for the existence of the immunity in Hale's time. Hale referred to Isabel Butler v William Pull, introducing the case by explaining that if A forces B to marry him and then has carnal knowledge of her against her will, he cannot be found guilty of rape during the subsistence of the voidable marriage; and Statute 6 R 2 stat 1 c 6, giving a husband a right of appeal where his wife had consented to a rape by a third party after the fact. Bell woman may forsake her unlawful way of life. This was stated by way of contrast to sexual intercourse within marriage, which was seen as lawful369. Hale had a commanding knowledge of the work of the courts administering criminal justice370. It may safely be taken that husbands were not prosecuted for rape of their wives in the period before the publication of his treatise. Given the subordinate status of married women under the law, this may not surprise371. Among the few benefits that the law conferred on the married woman was to immunise her from prosecution for a crime committed by her in her husband's presence372. The presumption of the law was that she was bound to obey her husband's command. This is not an idea that readily accommodates the prosecution of the husband for an act of non-consensual sexual intercourse with his wife. Hale is the source for locating the immunity in contract. It is a rationale that is consistent with Blackstone's treatment of the relations between husband and wife at law. The latter's celebrated account of the nature and effect of 369 See extract from Coke at fn 364 above. Similarly, Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 41 at 108 described rape, relevantly, as an offence "in having unlawful and carnal Knowledge of a Woman" (emphasis added). 370 See Yale, Hale as a Legal Historian, (1976) for an account of Hale's record-searching and collecting from 1630, and his extensive knowledge of King's 371 Williams, "The Legal Unity of Husband and Wife", (1947) 10 Modern Law Review 16 at 29; Easteal, "Rape in marriage: Has the licence lapsed?", in Easteal (ed), Balancing the Scales: Rape, Law Reform and Australian Culture, (1998) 107 at 372 Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 1 at 2; Hale, The History of the Pleas of the Crown, (1736), vol 1, c 7 at 44-48; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 2 at 29; J W C Turner, Russell on Crime, 12th ed (1964), vol 1 at 94-95. The presumption did not extend to treason or murder: Hale, The History of the Pleas of the Crown, (1736), vol 1, c 7 at 45. It has been abolished in all Australian jurisdictions: Crimes Act 1900 (NSW), Sched 3, cl 4(1) (originally s 407A(1)); Criminal Code (Q), s 32 (omitted in 1997); CLC Act, s 328A; Criminal Code (Tas), s 20(2); Crimes Act 1958 (Vic), s 336(1); Criminal Code (WA), s 32 (omitted in 2003); Crimes Act 1900 (ACT), s 289. It is not included in the defence of duress in the Criminal Code (NT), s 40. However, an affirmative defence of marital coercion has been retained in South Australia and Victoria: CLC Act, s 328A; Crimes Act 1958 (Vic), s 336. Bell coverture373 was prefaced by the statement: "[o]ur law considers marriage in no other light than as a civil contract"374. While "[t]he holiness of the matrimonial state" (emphasis in original) was a matter for the ecclesiastical courts, Blackstone emphasised that the temporal courts treated marriage like all other contracts, asking whether the parties were willing and able to contract375. It is an analysis which has been seen as a civilised advance on the medieval concept of the husband's natural and God-given power over his wife376. Professor Stretton suggests that, for Blackstone, the fundamental point was that married women consented to their modified legal status by their agreement to marriage377: "It was therefore the logic of contract that justified married women's particular treatment at law. However, it was a narrow concept of consent that ended abruptly at the church door, with no room for renegotiation during marriage and virtually no effective ability to escape the legal effects of marriage through separation or divorce." Blackstone's treatment of rape was largely taken from Hale378. He did not refer to the immunity, but it is evident that Hale's statement of it was not controversial. Blackstone drew attention to those occasions on which Hale's account of the law departed from the views of other writers. In Blackstone's analysis of the offence of rape, there was one such occasion. He noted that Hale considered that carnal knowledge of a girl aged under 12 years was rape regardless of consent, but that the law had in general been held only to extend to the carnal knowledge of a girl aged under 10 years379. 373 "By marriage, the husband and wife are one person in law: that is, the very being or legal existence of the woman is suspended during the marriage, or at least is incorporated and consolidated into that of the husband: under whose wing, protection, and cover, she performs every thing": Commentaries on the Laws of England, (1765), bk 1, c 15 at 430 (emphasis in original). 374 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 375 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 376 Stretton, "Coverture and Unity of Person in Blackstone's Commentaries", in Prest (ed), Blackstone and his Commentaries, (2009) 111 at 120-121. 377 Stretton, "Coverture and Unity of Person in Blackstone's Commentaries", in Prest (ed), Blackstone and his Commentaries, (2009) 111 at 123, citing Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 378 Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 211-215. 379 Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212. Bell The operation of the immunity Hale's statement of the law may be analysed in either of two ways. First, that the offence comprises two elements: (i) carnal knowledge of a female (involving some degree of penetration); (ii) without her consent. On this analysis the immunity arises by the operation of an irrebuttable presumption of law. The alternative analysis is that the first element of the offence requires proof of the "unlawful" carnal knowledge of a female and that "unlawful" in this context means outside marriage380. The latter view accords with the treatment of the offence by text-writers, including Coke and Hawkins writing before the publication of Hale's treatise381. It is the analysis adopted by the Supreme Court of South Australia in those cases in which consideration has been given to the question. Bray CJ, discussing the elements of the offence in R v Brown382, considered that they were as stated in the 37th edition of Archbold: "Rape consists in having unlawful sexual intercourse with a woman without her consent by force, fear or fraud"383. The word "unlawful" was thought by Bray CJ to exclude intercourse between spouses384. Wells J appears to have been of the same view385. King CJ in R v Sherrin (No 2) also considered proof of the unlawfulness of the act of intercourse to have undoubtedly been an element of the offence at common law386. The resolution of the reserved question does not turn on whether the rule of law traced to Hale requires proof of the unlawfulness of the intercourse as an element, or is an irrebuttable presumption of consent. The latter, while "disguised in the language of adjective rules"387, is in truth a substantive rule of 380 R v Chapman [1959] 1 QB 100. 381 See fnn 364 and 369 above. 382 (1975) 10 SASR 139. 383 Butler and Garsia, Archbold: Pleading, Evidence & Practice in Criminal Cases, 37th ed (1969) at [2872], citing East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 434 and Hale, The History of the Pleas of the Crown, (1736), vol 1 at 627 et seq (emphasis added). 384 R v Brown (1975) 10 SASR 139 at 141. 385 R v Brown (1975) 10 SASR 139 at 153. 386 (1979) 21 SASR 250 at 252. 387 J W C Turner, Kenny's Outlines of Criminal Law, 19th ed (1966) at 455 [490]. Bell law. A husband could not be convicted as principal in the first degree for the rape of his wife on either analysis. At issue is the existence of the immunity, not whether the reason given for it is flawed or has, over time, ceased to provide a principled basis for it. A number of common law rules of liability for criminal offences have their origins in discredited ideas. The definition of the offence of murder stated by Coke388, and thereafter accepted as an authoritative statement of the elements of the offence389, required that the death of the deceased take place within a year and a day of the act causing death. The reason for the rule is suggested to be the limitations of medieval medical knowledge390. If that is the reason, it must be said that the rule survived long after its justification ceased. The rule has since been abolished by statute391. In the same category is the presumption that a boy under 14 years of age is physically incapable of sexual intercourse. This, too, is traced to the statement of the law in the Pleas of the Crown392. The presumption is patently absurd. Nonetheless, it was accepted as a rule of law precluding the 388 Coke, The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 7 at 389 Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 31 at 79; Hale, The History of the Pleas of the Crown, (1736), vol 1, c 33 at 426; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 14 at 197-198; East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 214, 343; Halsbury's Laws of England, 2nd ed, vol 9 at 428. See also R v Dyson [1908] 2 KB 454; R v Evans & Gardiner (No 2) [1976] VR 523. 390 Coke, The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 7 at 53. See also Rogers v Tennessee 532 US 451 at 463 (2001); Fisse (ed), Howard's Criminal Law, 5th ed (1990) at 31; Waller and Williams, Criminal Law, 11th ed 391 Crimes Act 1900 (NSW), s 17A; CLC Act, s 18; Crimes Act 1958 (Vic), s 9AA; Crimes Act 1900 (ACT), s 11. The rule has been removed in the Code States: Penalties and Sentences Act 1992 (Q) (as enacted), s 207, Schedule, item 7 under the heading "Criminal Code"; Criminal Code Amendment (Year and a Day Rule Repeal) Act 1993 (Tas); Criminal Law Amendment Act 1991 (WA), s 6. It never formed part of the Criminal Code (NT). 392 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 630 (mispaginated in the original as 730): "An infant under the age of fourteen years is presumed by law unable to commit a rape, and therefore it seems cannot be guilty of it, and tho in other felonies malitia supplet aetatem in some cases as hath been shewn, yet it seems as to this fact the law presumes him impotent, as well as wanting discretion." Bell conviction of boys for rape393 until it was abolished by statute394. It was sufficient for Lord Coleridge CJ in R v Waite to observe that the rule had been "clearly laid down by Lord Hale" and, on that authority, judges had "refused to receive evidence to shew that a particular prisoner was in fact capable of committing the offence"395. Hale's statement of the immunity was taken as an authoritative statement of the law by all the leading text-writers396. 393 See, eg, R v Eldershaw (1828) 3 Car & P 396 [172 ER 472]; R v Waite [1892] 2 QB 600; R v Williams [1893] 1 QB 320. See also Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212; Roscoe, A Digest of the Law of Evidence in Criminal Cases, 2nd ed (1840) at 797; Williams, Criminal Law: The General Part, 2nd ed (1961) at 821. 394 Crimes Act 1900 (NSW), s 61S (originally s 61A(2)); CLC Act, s 73(2); Crimes Act 1958 (Vic), s 62(1); Crimes Act 1900 (ACT), s 68; Sexual Offences Act 1993 (UK), s 1. The presumption has been removed in the Code States: Criminal Code, Evidence Act and other Acts Amendment Act 1989 (Q), s 9; Criminal Code Amendment (Sexual Offences) Act 1987 (Tas), s 5; Acts Amendment (Sexual Assaults) Act 1985 (WA), s 4. It never formed part of the Criminal Code (NT). 395 R v Waite [1892] 2 QB 600 at 601. See also R v Young [1923] SASR 35; R v Packer [1932] VLR 225. 396 East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 446; Burnett, A Treatise on Various Branches of the Criminal Law of Scotland, (1811) at 102; Chitty, A Practical Treatise on the Criminal Law, (1816), vol 3 at 811; Russell, A Treatise on Crimes and Misdemeanors, (1819), vol 1, bk 3, c 6 at 802; Archbold, A Summary of the Law Relative to Pleading and Evidence in Criminal Cases, (1822) at 259; Alison, Principles of the Criminal Law of Scotland, (1832) at 215; Roscoe, A Digest of the Law of Evidence in Criminal Cases, (1835) at 708; Hume, Commentaries on the Law of Scotland, Respecting Crimes, (1844), vol 1, c 7 at 306; Macdonald, A Practical Treatise on the Criminal Law of Scotland, (1867) at 194; Stephen, A Digest of the Criminal Law (Crimes and Punishments), 4th ed (1887), c 29 at 194; Halsbury, The Laws of England, 1st ed, vol 9, par 1236; Sturge, Stephen's Digest of the Criminal Law (Indictable Offences), 9th ed (1950) at 263; Halsbury's Laws of England, 3rd ed, vol 10, par 1437; Butler and Garsia, Archbold: Pleading, Evidence & Practice in Criminal Cases, 35th ed (1962) at 1150; J W C Turner, Russell on Crime, 12th ed (1964), vol 1 at 708; Howard, Australian Criminal Law, (1965) at 135, 145-147. Bell R v Clarence The first judicial consideration of the immunity was in R v Clarence397. A bench of 13 judges was constituted to consider the question of whether the transmission of gonorrhoea by husband to wife in an act of consensual sexual intercourse could amount to the malicious infliction of grievous bodily harm. Wills, Field and Hawkins JJ each left open that circumstances may exist in which a husband could be liable for the rape of his wife. Wills J doubted that "between married persons rape is impossible"398. Field J thought that there may be cases in which a husband could be convicted of a crime arising out of forcibly imposing sexual intercourse on his wife; he did not say whether for rape or some other offence399. Hawkins J accepted that, by the marriage contract, a wife confers on her husband "an irrevocable privilege to have sexual intercourse with her during such time as the ordinary relations created by such contract subsist between them" and that a husband could not be convicted of a rape committed by him upon the person of his wife400. However, a husband was not at liberty to endanger his wife's health and cause her grievous bodily harm by the exercise of "the marital privilege" at a time when he was suffering from venereal disease and when the natural consequence of sexual intercourse would be the communication of that disease to her401. He explained the principles in this way402: "Rape consists in a man having sexual intercourse with a woman without her consent, and the marital privilege being equivalent to consent given once for all at the time of marriage, it follows that the mere act of sexual communion is lawful; but there is a wide difference between a simple act of communion which is lawful, and an act of communion combined with infectious contagion endangering health and causing harm, which is unlawful. … The wife submits to her husband's embraces because at the time of marriage she gave him an irrevocable right to her person. The intercourse which takes place between husband and wife after marriage is not by virtue of any special consent on her part, but is mere submission to an 397 (1888) 22 QBD 23. 398 R v Clarence (1888) 22 QBD 23 at 33. 399 R v Clarence (1888) 22 QBD 23 at 57. 400 R v Clarence (1888) 22 QBD 23 at 51. 401 R v Clarence (1888) 22 QBD 23 at 51. 402 R v Clarence (1888) 22 QBD 23 at 51, 54. Bell obligation imposed upon her by law. Consent is immaterial." (emphasis in original) Pollock B said403: "The husband's connection with his wife is not only lawful, but it is in accordance with the ordinary condition of married life. It is done in pursuance of the marital contract and of the status which was created by marriage, and the wife as to the connection itself is in a different position from any other woman, for she has no right or power to refuse her consent." Consideration of the immunity in Clarence appears to have been prompted by a submission based on a footnote in Stephen's Digest of the Criminal Law. The law in the first edition of the Digest was stated, relevantly, in this way404: "Rape is the act of having carnal knowledge of a woman without her conscious permission ... Provided that: – (1) A husband [it is said] cannot commit rape upon his wife by carnally knowing her himself, but he may do so if he aids another person to have carnal knowledge of her." The footnote relevantly said405: "Hale's reason is that the wife's consent at marriage is irrevocable. Surely, however, the consent is confined to the decent and proper use of marital rights. If a man used violence to his wife under circumstances in which decency or her own health or safety required or justified her in refusing her consent, I think he might be convicted of rape, notwithstanding Lord Hale's dictum. He gives no authority for it, but makes the remark only by way of introduction to the qualification contained in the latter part of clause (1), for which Lord Castlehaven's Case (3 St Tr 402) is an authority." 403 R v Clarence (1888) 22 QBD 23 at 63-64. 404 Stephen, A Digest of the Criminal Law (Crimes and Punishments), (1877), c 29 at 405 Stephen, A Digest of the Criminal Law (Crimes and Punishments), (1877), c 29 at Bell Stephen J gave the leading judgment in Clarence406. He used the occasion to draw attention to the alteration of the footnote, removing the suggestion that a man might in certain circumstances be indicted for the rape of his wife, in the most recent edition of his text407. Stephen was a great master of the criminal law408. An account of his draft criminal code and the subsequent Commission appointed to report upon it is contained in the joint reasons in Darkan v The Queen409. To the extent that the Draft Code appended to the Report of the Commissioners differed from Stephen's original draft, the differences were noted in the Report. The provisions dealing with offences against the person were said to correspond (as did the provisions in Stephen's original draft) with the Offences against the Person Act 1861 (UK)410, "supplemented by a reduction to writing of the common law doctrines and definitions"411. The Offences against the Person Act 1861 (UK) prescribed the punishment for rape but left the definition of the offence to the common law. It is apparent that the definition of rape in the Draft Code was understood by its authors412 to be a statement of the common law. Relevantly, the offence was defined as "the act of a man having carnal knowledge without her consent of a female who is not his wife"413. The Criminal Code Indictable Offences Bill 1878 (UK), on which the Commissioners' draft was based, and which defined rape in the same terms, had been circulated to the Judges, Chairmen and Deputy Chairmen of Quarter Sessions, Recorders and "many members of the bar and 406 A L Smith, Mathew and Grantham JJ, Huddleston B and Lord Coleridge CJ concurred. 407 R v Clarence (1888) 22 QBD 23 at 46. See Stephen, A Digest of the Criminal Law (Crimes and Punishments), 4th ed (1887), c 29 at 194 fn 4. 408 Radzinowicz, Sir James Fitzjames Stephen, 1829-1894, Selden Society Lecture, 409 (2006) 227 CLR 373 at 385-386 [33]-[36]; [2006] HCA 34. 410 24 & 25 Vict c 100, s 48. 411 Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 22. 412 Lord Blackburn, Mr Justice Barry, Lord-Justice Lush and Sir James Fitzjames Stephen. 413 Section 207 of the Draft Code, Appendix to the Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 107. Bell other gentlemen having practical experience in the administration of the criminal law"414 in England and Ireland with the invitation to comment on it. The absence of any suggestion in the Commissioners' Report that the offence of rape was to be modified under the Code is eloquent of the acceptance by those engaged in the administration of the criminal law in England and Ireland at the time that the offence could not be committed by a husband against his wife415. Sir Samuel Griffith drew on the English Draft Code in preparing his draft criminal code for Queensland416. In the latter, the offence of rape was defined, relevantly, as the "carnal knowledge of a woman, not his wife"417. The marginal notes reveal that Sir Samuel Griffith considered this definition to be a statement of the common law. In Canada, before the enactment of the Criminal Code in 1892, the offence of rape, while punishable as a felony under legislation modelled on the Offences against the Person Act 1861 (UK), depended upon the common law for its elements of proof. It is apparent that the understanding in that jurisdiction was that the offence could not be committed by a husband against his wife418. The Criminal Code defined rape as involving the "carnal knowledge of a woman who is not his wife"419. It does not appear that this was thought to involve any departure from the existing law. The absence of binding decision The absence of a binding decision does not mean that a rule stated in authoritative texts and accepted and acted upon by the legal profession over many years may not acquire status as law. The point is made by Sir John Smith 414 Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 5. 415 See Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 25. 416 Griffith, Draft of a Code of Criminal Law, (1897) at iv. 417 Griffith, Draft of a Code of Criminal Law, (1897), s 353 at 135. 418 Taschereau, The Criminal Statute Law of the Dominion of Canada, 2nd ed (1888) 419 Criminal Code 1892 (Can), s 266. Bell in his commentary on R v C420, by reference to Foakes v Beer421. In the latter case, the House of Lords held itself bound to follow a rule stated by Coke to have been laid down in Pinnel's Case422 in 1602, although their Lordships disliked it and there was no decision in which it had been applied. As the Earl of Selborne LC put it423: "The doctrine itself, as laid down by Sir Edward Coke, may have been criticised, as questionable in principle, by some persons whose opinions are entitled to respect, but it has never been judicially overruled; on the contrary I think it has always, since the sixteenth century, been accepted as law. If so, I cannot think that your Lordships would do right, if you were now to reverse, as erroneous, a judgment of the Court of Appeal, proceeding upon a doctrine which has been accepted as part of the law of England for 280 years." Brennan J, the only Justice in R v L to consider proof of the offence of rape under the common law, considered the elements to have been fixed by Hale's statement of them424. The evidence in favour of that conclusion is compelling. Has the immunity ceased to exist? It was submitted that legal and social changes to the status of married women had produced the result that the immunity had ceased to be a rule of law on a date before the subject events. There were differing views about when that change to the law occurred, a circumstance which tends to highlight a difficulty with accepting the underlying premise. The respondent and the Attorney- General for South Australia contended that the foundation for the immunity had "crumbled to dust" as at the "early to mid twentieth century". The Attorney- General of circumstances had occurred "by the end of the 19th century". Reference was made to the enactment of the Married Women's Property Acts; the amendment of matrimonial causes statutes removing the "double-standard" relating to adultery as a ground for dissolution of marriage; and, more generally, the extension of the the Commonwealth contended the relevant change that 420 [1991] Crim LR 62. 421 (1884) 9 App Cas 605. 422 (1602) 5 Co Rep 117a [77 ER 237]. 423 Foakes v Beer (1884) 9 App Cas 605 at 612. See also at 622-623 per Lord Blackburn, 623-624 per Lord Watson, 629-630 per Lord FitzGerald. 424 R v L (1991) 174 CLR 379 at 399. Bell franchise to women, as combining to produce a state of affairs that was inconsistent with the continued existence of the immunity. These submissions were maintained in the face of a good deal of evidence to the contrary. The one case relied on to support the submissions was R v Jackson425. In that case, Lord Halsbury LC rejected the proposition that the relation of husband and wife gave the husband "complete dominion over the wife's person"426. The holding that an order for restitution of conjugal rights did not confer on the husband a right to imprison his wife is a tenuous basis for concluding that the husband was now amenable to prosecution for having sexual intercourse with his wife without her consent. In the first edition of Halsbury, published in 1909, almost 20 years after the decision in Jackson, the law was stated as being that "[a] man cannot be guilty as a principal in the first degree of a rape upon his wife, for the wife is unable to retract the consent to cohabitation which is a part of the contract of In Tasmania, the Married Women's Property Act was enacted in 1882. Women had been granted the franchise for both federal and State parliamentary elections by 1904428. The Matrimonial Causes Act 1860 (Tas) was amended in 1919 to remove the double-standard with respect to adultery429. Nonetheless, when the Parliament enacted the Criminal Code for Tasmania in 1924, a quarter of a century after the enactment of the Queensland Criminal Code, the crime of 426 [1891] 1 QB 671 at 679. 427 Halsbury, The Laws of England, 1st ed, vol 9, par 1236. The second edition, under the editorship of Viscount Hailsham, published in 1933, stated the law in the same terms: vol 9, par 815. It was not until after Clarke (see fn 295 above), which provided a limited exception to the immunity in the case of a wife living separately under the protection of a court order, that the third edition, under the editorship of Viscount Simons, published in 1955, stated the rule in qualified terms: "[a] man cannot, as a general rule, be guilty as a principal in the first degree of a rape upon his wife" (vol 10, par 1437). 428 Commonwealth Franchise Act 1902 (Cth); Constitution Amendment Act 1903 (Tas). 429 Matrimonial Causes Amendment Act 1919 (Tas) (Royal Assent proclaimed on 17 May 1920). Bell rape was defined in the same way as under the latter430. The significant changes in the legal status of married women which had occurred by 1924 do not appear to have been viewed at the time as inconsistent with the immunity. In the same year, the House of Lords delivered judgment in G v G431. That was an appeal from the dismissal of an application for a decree of nullity of marriage brought by a husband on the ground of his wife's impotency. The appellant and his wife were married in 1913 and the evidence of their relations spanned the period from that date to 1921. The wife had evinced an hysterical reluctance to engage in sexual intercourse. The question for the court was whether this psychological obstacle to consummation amounted to incapacity, as distinct from the mere wilful refusal of conjugal rights. The court below had doubted that the husband's repeated attempts at intercourse had exhibited "a sufficient virility"432. It was in this context that Lord Dunedin observed433: "It is indeed permissible to wish that some gentle violence had been employed; if there had been it would either have resulted in success or would have precipitated a crisis so decided as to have made our task a comparatively easy one." His Lordship considered the husband's account "as to why he did not use a little more force than he did" to have been an acceptable explanation434 and the appeal was allowed. The speeches in G v G speak to another age. The decision in that case is closer to the date of the acts charged against the appellant than was the hearing of this appeal. More than a decade after the events giving rise to this appeal, in 1975, Lawton LJ, giving the judgment of the English Court of Appeal in R v Cogan, proceeded upon acceptance that it was a legal impossibility for a man to rape his wife during cohabitation435. The accused bore accessorial liability for the rape of his wife by another. In the following year, Geoffrey Lane LJ extended the exception to the immunity to allow the conviction of a husband for the rape of his 430 Criminal Code (Tas), s 185 (as enacted). Relevantly, rape was defined as involving "carnal knowledge of a female not his wife". 432 G v G [1924] AC 349 at 357. 433 G v G [1924] AC 349 at 357. 434 G v G [1924] AC 349 at 358. 435 R v Cogan [1976] QB 217 at 223. Bell wife where he had given an undertaking not to molest her436. Of present significance is his Lordship's view that, "[a]s a general principle, there is no doubt that a husband cannot be guilty of rape upon his wife"437. The undertaking given in lieu of an injunction operated in that case to eliminate the wife's matrimonial consent to intercourse. A convenient account of the law in England as it was understood in December 1983 is contained in the Report of the Criminal Law Revision Committee, which had been asked to review the law relating to, and penalties for, sexual offences438: "In defining rape the Sexual Offences (Amendment) Act 1976 uses the term 'unlawful sexual intercourse'. What is 'unlawful' is left to the common law. The general rule is that sexual intercourse is 'unlawful' if it occurs outside marriage. Sexual intercourse between husband and wife is not 'unlawful' except in a fairly narrow class of cases, which can be broadly described as cases where the parties have separated and their separation has been acknowledged by a court." The existence of the immunity was also accepted in decisions of Australian courts delivered after 1963. Reference has been made earlier in these reasons to decisions of the South Australian Supreme Court439. In New South Wales, Victoria and Tasmania, the English line of authority allowing an exception to the immunity in the case of a wife living separately and under the protection of a court order was adopted440. In R v McMinn, Starke ACJ observed441: "There can be no doubt that for centuries the law in England (and in Australia) has been that a man cannot rape his wife. That this principle of law is out of tune with modern thinking has been recognized in Victoria 436 Steele (1976) 65 Cr App R 22. 437 Steele (1976) 65 Cr App R 22 at 24. 438 Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 17-18 [2.57]. 439 See above at [212]. 440 C (1981) 3 A Crim R 146; R v McMinn [1982] VR 53; Bellchambers (1982) 7 A Crim R 463. 441 [1982] VR 53 at 55. Bell by the Crimes (Sexual Offences) Act 1980 and there are similar Acts in other States." In New Zealand, a statute enacted in 1961 provided that no man could be convicted of rape of his wife unless, at the time of the intercourse, there was in force a decree nisi of divorce or nullity and the parties had not resumed cohabitation, or there was in force a decree of judicial separation or a separation order442. An amendment to the statute in 1981 maintained the immunity, save in cases where the husband and wife were living separately443. This restricted immunity was not removed until 1986444. The Model Penal Code, first published by the American Law Institute in 1962, relevantly provided that "[a] male who has sexual intercourse with a female not his wife is guilty of rape"445. In the revised commentary, published in 1980, this "traditional limitation" of the offence was maintained446. The proposition that by the mid-20th century or earlier the immunity had fallen into desuetude as the result of changes in the conditions of society is without support. In this country, as in other common law countries, the continued existence of the immunity does not appear to have been seen as inconsistent with the recognition of the equal status of married women. There is the curious spectacle in this appeal of the respondent and the Attorney-General for South Australia contending that the maintenance of the immunity by the mid- 20th century was inconsistent with the rights and privileges of married women, notwithstanding that as late as 1976 the Parliament of South Australia chose to preserve it447. 442 Crimes Act 1961 (NZ), s 128(3). 443 Family Proceedings Act 1980 (NZ), First Schedule. 444 Crimes Amendment Act (No 3) 1985 (NZ), s 2. 445 American Law Institute, Model Penal Code: Official Draft and Explanatory Notes, 446 American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 271-275, 341-346. The Comment notes that the rule existed at common law, prevailed at the time the Model Penal Code was drafted and "has been continued in most revised penal laws": at 341. 447 The original Bill introduced into Parliament, which purported to abolish the immunity completely, was rejected by the House of Assembly: Sallmann and Chappell, Rape Law Reform in South Australia: A Study of the Background to the Reforms of 1975 and 1976 and of their Subsequent Impact, Adelaide Law Review Research Paper No 3, (1982) at 20-21, 30-31. Bell By the mid-20th century, the notion that the immunity depended on the wife's irrevocable consent to intercourse may no longer have been seen as the justification for it. However, this is not to accept that the immunity had "crumbled to dust". The contemporary evidence suggests that the immunity was a recognised and accepted feature of the law of rape, albeit that the rationale supporting it may have changed. In 1954, Norval Morris and A L Turner, both then senior lecturers in law at the University of Melbourne, writing of the law respecting marital rape, were critical of irrevocable consent as the justification for the immunity448. They went on to discuss the "special position" of a married couple in law and in fact and to say449: "Intercourse then is a privilege at least and perhaps a right and a duty inherent in the matrimonial state, accepted as such by husband and wife. In the vast majority of cases the enjoyment of this privilege will simply represent the fulfilment of the natural desires of the parties and in these cases there will be no problem of refusal. There will however be some cases where, the adjustment of the parties not being so happy, the wife may consistently repel her husband's advances. If the wife is adamant in her refusal the husband must choose between letting his wife's will prevail, thus wrecking the marriage, and acting without her consent. It would be intolerable if he were to be conditioned in his course of action by the threat of criminal proceedings for rape." The leading Australian text on the criminal law published in 1965 praised the decision in R v Clarke450, which allowed an exception to the immunity; however, the author went on to observe451: "[A] husband should not walk in the shadow of the law of rape in trying to regulate his sexual relationships with his wife. If a marriage runs into difficulty, the criminal law should not give to either party to the marriage 448 Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 258. 449 Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 259. 450 [1949] 2 All ER 448. See fn 295 above. 451 Howard, Australian Criminal Law, (1965) at 146. Bell the power to visit more misery upon the other than is unavoidable in the nature of things." The Mitchell Committee explained its reasons for proposing to confine the immunity in this way452: "The view that the consent to sexual intercourse given upon marriage cannot be revoked during the subsistence of the marriage is not in accord with modern thinking. In this community today it is anachronistic to suggest that a wife is bound to submit to intercourse with her husband whenever he wishes it irrespective of her own wishes. Nevertheless it is only in exceptional circumstances that the criminal law should invade the bedroom. To allow a prosecution for rape by a husband upon his wife with whom he is cohabiting might put a dangerous weapon into the hands of the vindictive wife and an additional strain upon the matrimonial relationship. The wife who is subjected to force in the husband's pursuit of sexual intercourse needs, in the first instance, the protection of the family law to enable her to leave her husband and live in peace apart from him, and not the protection of the criminal law. If she has already left him and is living apart from him and not under the same roof when he forces her to have sexual intercourse with him without her consent, then we can see no reason why he should not be liable to prosecution for rape." (emphasis added) The views expressed by the Mitchell Committee were in line with those expressed by the authors of the revised commentaries to the US Model Penal Code in 1980453 and by the English Criminal Law Revision Committee in 452 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 14 [6.2]. 453 American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 345: "The problem with abandoning the immunity ... is that the law of rape, if applied to spouses, would thrust the prospect of criminal sanctions into the ongoing process of adjustment in the marital relationship." 454 Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 21 [2.69]. Explaining the majority view, which was not to remove the immunity, the Committee said: "Some of us consider that the criminal law should keep out of marital relationships between cohabiting partners – especially the marriage bed – except where injury arises, when there are other offences which can be charged." Bell In R v C, the English Court of Appeal set out the advice that an imagined solicitor might have given a husband who inquired as to the legality of marital rape in 1970455. This was in the context of a submission respecting the foreseeability of further development of the law in light of decisions which had allowed exceptions to the immunity. The Commonwealth Attorney-General submitted that the hypothesised advice applied with equal force in this case. The determination of the issue raised by this appeal does not depend upon consideration of foreseeability of change to the law. Nonetheless, the opinions of the academic lawyers and the members of law reform committees set out above may suggest that the solicitor in R v C was a man in advance of his times. There is a more fundamental difficulty with the submission that the Court should hold that a substantive rule of law affecting liability for a serious criminal offence has simply disappeared because of a perception that changed conditions of society no longer provided a justification for it. The powerful reasons against an ultimate court of appeal varying or modifying a settled rule or principle of the common law456 apply with particular force to a variation or modification which has the effect of extending criminal liability. It is for the parliament to determine that a rule of exemption from criminal liability is no longer suited to the needs of the community. The respondent and the Attorney-General for South Australia submitted that it is the responsibility of this Court to modify the law to avoid the "unjust" operation of a rule of immunity respecting criminal liability457. The submission is singular, given that there is no jurisdiction in Australia in which the common law governs a husband's liability for the rape of his wife. No occasion arises to modify the law to make it "an effective instrument of doing justice according to contemporary standards in contemporary conditions"458. The law of marital rape in each Australian jurisdiction has been brought into line with contemporary 455 R v C [2004] 1 WLR 2098 at 2103-2104 [19]; [2004] 3 All ER 1 at 6-7. 456 State Government Insurance Commission v Trigwell (1979) 142 CLR 617 at 633 per Mason J (Stephen and Aickin JJ agreeing); Zecevic v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 664 per Wilson, Dawson and Toohey JJ, 677-678 per Deane J; [1987] HCA 26; Lamb v Cotogno (1987) 164 CLR 1 at 11 per Mason CJ, Brennan, Deane, Dawson and Gaudron JJ; [1987] HCA 457 The respondent's Notice of Contention asserts that, "if [the immunity] ever was part of the common law of Australia, it ceased to be so as at the date of the commission of the offences in this matter". 458 O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 267 per Brennan J; [1991] HCA 14. Bell standards. Any statement of the common law respecting the liability of a husband for the rape of his wife with whom he was living could only apply to offences alleged to have been committed before the enactment of the statutory reforms. The declaration of the law for which the respondent contends carries with it that the parliaments of the States and Territories legislated over the course of the last century459 upon a wrong understanding of the law. That understanding was reflected in the Code States in the way in which the offence of rape was defined. In those States, the position remains that a husband is not liable to be convicted for the rape of his wife before the date on which the words "not his wife" were removed from the Criminal Code. In the jurisdictions which preserved the common law, the declaration would make it possible to reach back beyond the date on which statutory reforms were effected and attach liability to conduct occurring not less than a quarter of a century ago. In South Australia, it would be possible to successfully prosecute a man for the rape of his wife in the years up to 1976. In the more recent past, the same man would enjoy an immunity for the same conduct460. That is because the 1976 amendments enacted by the South Australian Parliament with the evident intention of limiting the immunity would now be seen to have conferred it. The fact that the parliaments of every Australian jurisdiction enacted legislation upon the understanding that the immunity was a rule of the common law provides some evidence that it was; and is a good reason for this Court not to now declare it to be otherwise. The rule of law holds that a person may be punished for a breach of the law and for nothing else461. It is abhorrent to impose criminal liability on a person for an act or omission which, at the time it was done or omitted to be done, did not subject the person to criminal punishment. Underlying the principle is the idea that the law should be known and accessible, so that those who are subject to it may conduct themselves with a view to avoiding criminal punishment if they choose462. However, its application does not turn on consideration of whether a person might be expected to have acted differently had he or she known that the proposed conduct was prohibited. Deane J's 459 In the case of Queensland, since 1899. 460 The immunity conferred by s 73(5) of the CLC Act was in force between 9 December 1976 and 16 April 1992. 461 See fn 286 above. See also Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 609-611 per Deane J, 687-688 per Toohey J; [1991] HCA 32; Williams, Criminal Law: The General Part, 2nd ed (1961) at 575-576. 462 Blackstone, Commentaries on the Laws of England, (1765), bk 1 at 45-46. Bell dissenting reasons in Zecevic v Director of Public Prosecutions (Vict) explain why that is so463: "The vice of such a retrospective abolition of a defence to a charge of murder lies not in the prospect of injustice to some imaginary killer who has killed on the basis that his crime will be reduced from murder to manslaughter in the event that he was found to have been acting excessively in self-defence. It lies in the fundamental injustice of inequality under the law which is unavoidable when the administration of the criminal law is reduced to a macabre lottery by what the late Professor Stone described as flagrant violation of the 'well-established judicial policies of the criminal law in favorem libertatis, and against ex post facto punishment'464." The departure from the statement of the elements of self-defence in Viro v The Queen465, sanctioned by the majority in Zecevic, was undertaken in circumstances in which it was considered unlikely to occasion injustice and in which it was acknowledged that the endeavour to state the "defence" by reference to the onus had proved unworkable466. Nothing in the judgments in Zecevic affords support for the acceptance of the respondent's contention that this Court should restate the common law with the effect of extending criminal liability to a class of persons previously exempt from that liability. The common law was demeaning to women in its provision of the immunity. It is no answer to that recognition to permit the conviction of the appellant for an act for which he was not liable to criminal punishment at the date of its commission. For these reasons I would allow the appeal, set aside the answer to the question of law given by the majority in the Full Court and, in lieu thereof, answer that question "no". 463 (1987) 162 CLR 645 at 677-678. 464 Precedent and Law, (1985) at 190. 465 (1978) 141 CLR 88 at 146-147; [1978] HCA 9. 466 Zecevic v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 664 per Wilson, Dawson and Toohey JJ. Bell |
HIGH COURT OF AUSTRALIA IN THE MATTER OF QUESTIONS REFERRED TO THE COURT OF DISPUTED RETURNS PURSUANT TO SECTION 376 OF THE COMMONWEALTH ELECTORAL ACT 1918 (CTH) CONCERNING MR ROBERT JOHN DAY AO Re Day [No 2] [2017] HCA 14 5 April 2017 ORDER The questions referred to the Court of Disputed Returns by the President of the Senate in his letter dated 8 November 2016, as amended by orders made by French CJ on 21 November 2016, be answered as follows: Question (a) Whether, by reason of s 44(v) of the Constitution, there is a vacancy in the representation of South Australia in the Senate for the place for which Robert John Day AO was returned? Answer Yes, there is a vacancy in the representation of South Australia in the Senate for the place for which Robert John Day AO was returned, by reason of s 44(v) of the Constitution. Question (b) If the answer to Question (a) is "yes", by what means and in what manner that vacancy should be filled? Answer The vacancy should be filled by applying the provisions of s 273(27) of the Commonwealth Electoral Act 1918 (Cth) by analogy by filling the vacancy by a special count of the ballot papers. Question (c) Whether, by reason of s 44(v) of the Constitution, Mr Day was at any time incapable of sitting as a senator prior to the dissolution of the 44th Parliament and, if so, on what date he became so incapable? Answer Mr Day was incapable of sitting as a senator, by reason of s 44(v) of the Constitution, on and after 26 February 2016, being a date prior to the dissolution of the 44th Parliament. Question (d) What directions and other orders, if any, should the Court make in order to hear and finally dispose of this reference? Answer A single Justice should make any further directions and orders necessary to finally dispose of this reference. Question (e) What, if any, orders should be made as to the costs of these proceedings? Answer The Commonwealth should pay Mr Day's and Ms McEwen's costs of the proceedings, save for costs excluded by an order of a Justice of the Court. Representation A S Bell SC with D P Hume appearing on behalf of Mr Robert Day AO (instructed by Griffins Lawyers) S P Donaghue QC, Solicitor-General of the Commonwealth and N J Williams SC with C L Lenehan and B K Lim appearing on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) J K Kirk SC with S Gory appearing on behalf of Ms Anne McEwen (instructed by SBA Law) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Re Day [No 2] Constitutional law – Parliamentary elections (Cth) – Senate – Reference to Court of Disputed Returns – Where person elected and re-elected as senator – Where person stood to gain financially from Commonwealth paying rent under lease of person's electorate office – Where person's bank account nominated by lessor as bank account for payment of rent by Commonwealth – Where payment of rent reduced person's contingent liability as guarantor under loan facilities – Where person had prospect of receiving distribution of rent proceeds as beneficiary of discretionary trust – Whether person had indirect pecuniary interest in lease agreement with Commonwealth – Whether person incapable of being chosen or of sitting as senator under s 44(v) of Constitution – Whether vacancy should be filled by special count of ballot papers – Whether special count would distort voters' real intentions. Words and phrases – "distortion of the voters' real intentions", "expectation of pecuniary benefit", "incapable of being chosen", "indirect pecuniary interest", "special count", "true legal intent of the voters". Constitution, s 44(v). Commonwealth Electoral Act 1918 (Cth), ss 168(1), 272(2), 273(27), 360, 376. Parliamentary Entitlements Act 1990 (Cth), s 4(1), Item 7 of Pt 1 of Sched 1. KIEFEL CJ, BELL AND EDELMAN JJ. On 9 May 2016, the 44th Parliament was dissolved. A federal election was held, and Mr Robert John Day AO was declared elected on 4 August 2016 as a senator for South Australia. On 8 November 2016, the President of the Senate wrote to the Principal Registrar of this Court advising that the Senate had resolved that certain questions respecting a vacancy in the representation of South Australia in the Senate for the place for which Mr Day was returned should be referred to the Court of Disputed Returns. The questions are as follows: "(a) whether, by reason of s 44(v) of the Constitution, or for any other reason, there is a vacancy in the representation of South Australia in the Senate for the place for which Robert John Day was returned; if the answer to Question (a) is 'yes', by what means and in what manner that vacancy should be filled; (c) whether, by reason of s 44(v) of the Constitution, or for any other reason, Mr Day was at any time incapable of sitting as a Senator prior to the dissolution of the 44th Parliament and, if so, on what date he became so incapable; (d) what directions and other orders, if any, should the Court make in order to hear and finally dispose of this reference; and (e) what, if any, orders should be made as to the costs of these proceedings." Section 44(v) of the Constitution The Constitution, by s 44(v), provides that any person who: "(v) has any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth otherwise than as a member and in common with the other members of an incorporated company consisting of more than twenty-five persons; shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives." Section 46 provides for the payment of a penalty by a person declared to be incapable of sitting as a senator or as a member of the House of Representatives for every day on which he so sits. Bell Edelman Background to the questions referred The salient features of the facts which give rise to the questions referred may be stated shortly. The events in question concern a lease entered into between Fullarton Investments Pty Ltd ("Fullarton Investments"), the registered proprietor of premises at 77 Fullarton Road, Kent Town in South Australia ("the Fullarton Road property"), and the Commonwealth. Part of those premises was used by Mr Day as his electorate office after he was elected to the Senate for the first time, following the 2013 federal election. His term as a senator for South Australia commenced on 1 July 2014. He occupied an office in those premises from April 2015. At the time Mr Day was first elected, the Fullarton Road property was owned by B & B Day Pty Ltd ("B & B Day") as trustee of the Day Family Trust. Certain members of the Day family, including Mr Day and his wife, were beneficiaries of that trust. Until the day before commencing his term as a senator, Mr Day was the sole director and shareholder of B & B Day. At all relevant times there was a loan facility provided by a bank to B & B Day to a limit of $1,600,000, which was secured by a mortgage over the Fullarton Road property and by a guarantee and indemnity given by Mr Day and his wife with respect to the performance by B & B Day of its obligations under the loan facility. On 24 April 2014, Fullarton Investments purchased the Fullarton Road property for $2,100,000 from B & B Day. B & B Day was said to have provided vendor finance to Fullarton Investments, although no consideration appears to have passed between those parties. The sole director of Fullarton Investments at this time was Mrs Debra Smith, the wife of Mr Day's business associate. Fullarton Investments was the trustee of the Fullarton Road Trust, of which the Day Family Trust was a beneficiary. One of the benefits provided to members of Parliament1 is office accommodation in the electorate, together with necessary equipment and facilities. A lease of the Fullarton Road office was entered into between Fullarton Investments, as lessor, and the Commonwealth, represented by the Ministerial and Parliamentary Services Division, Corporate and Parliamentary Services Group of the Department of Finance, as lessee. The lease was entered into on 1 December 2015; it had a commencement date of 1 July 2015, was for a 1 Parliamentary Entitlements Act 1990 (Cth), s 4(1), Sched 1 Pt 1 item 7. Bell Edelman term of five years and contained an option to renew. The rent payable was $66,540 per annum, together with GST. Fullarton Investments was entitled, pursuant to the lease, to direct the Commonwealth to pay rent to any person. On 26 February 2016, it nominated "Fullarton Nominees" and directed payment to a bank account. Fullarton Nominees was a business name owned by Mr Day and the bank account was his. In fact, the Commonwealth did not pay the monies under the lease. Mr Day's executive assistant sent two tax invoices on behalf of Fullarton Investments on 22 March 2016 claiming rent. The bank account to which those arrears were to be paid was once again nominated as that of Fullarton Nominees. Mr Day's nomination for the 2016 federal election was declared on 10 June 2016 and on 4 August 2016 he was declared elected to the Senate. Parliament was opened on 30 August 2016. On 13 October 2016, the Commonwealth gave notice of rescission of the lease. This followed earlier correspondence from the Department of Finance in which concerns were expressed that Mr Day continued to have a financial interest in the property. Mr Day resigned from the Senate on 1 November 2016. The issue In order to answer the questions referred, it is necessary to resolve the issue which arises by reason of s 44(v), that is, whether Mr Day at any relevant time had a "direct or indirect pecuniary interest" in an agreement, namely, the lease. There is no dispute that the lease was an agreement with the Public Service of the Commonwealth. Mr Day was not a party to the lease and therefore did not have a direct interest in it as such, but he was the owner of the bank account nominated as the recipient of the rental monies. It is quite difficult to comprehend that this does not amount to an interest in the lease agreement of a monetary kind. It is not difficult to infer from other facts2 that Mr Day brought the nomination about and that it was his purpose to apply the monies to the loan facility with respect to the Fullarton Road property. These matters may be put to one side. It is sufficient for the resolution of the questions referred to the Court to focus upon the fact that he was to receive the rental monies payable under the lease. The question whether Mr Day had an interest of the kind referred to in s 44(v) requires that provision to be construed in the context of the Constitution 2 Re Day (2017) 91 ALJR 262 at 287-288 [124]; [2017] HCA 2. Bell Edelman as a whole. In In re Webster3, the only decision of this Court concerning s 44(v), Barwick CJ approached the construction of s 44(v) by reference to its perceived purpose. Its object or purpose was taken to be the same as that of a provision of the House of Commons (Disqualification) Act 1782 (UK)4 ("the 1782 Act") which, his Honour said5, was the "precise progenitor" of s 44(v). The purpose of the 1782 Act was well accepted. It was to secure the freedom and independence of Parliament from the Crown. It is submitted for Mr Day that the decision in Webster should be followed. The consequence of that would be that there could be no disqualification, for there is no reason to consider that the Commonwealth could exert any influence on Mr Day's parliamentary affairs by anything it could do in relation to the lease. The Attorney-General of the Commonwealth and Ms McEwen, who the Court ordered could be heard on the reference, argue that the purpose of s 44(v) differs from that of the 1782 Act. It is to prevent persons in the position of a member of Parliament from taking advantage of his or her position in order to obtain a financial advantage and to prevent a conflict between that person's duty as a member and his or her own interests arising. The Commonwealth submits that the reasoning in Webster is wrong and should not be followed. These submissions direct attention to the historical background to the drafting of s 44(v) before consideration is given to the reasoning in that case. The 1782 Act and the colonial Constitutions Section 1 of the 1782 Act provided that: "any person who shall, directly or indirectly, himself, or by any person whatsoever in trust for him, or for his use or benefit, or on his account, undertake, execute, hold, or enjoy, in the whole or in part, any contract, agreement, or commission, made or entered into with ... [the Crown] ... for or on account of the publick service ... shall be incapable of being elected, or of sitting or voting as a member of the house of commons, during the time that he shall execute, hold, or enjoy, any such contract, agreement, or (1975) 132 CLR 270; [1975] HCA 22. 4 22 Geo III c 45. In re Webster (1975) 132 CLR 270 at 278. Bell Edelman commission, or any part or share thereof, or any benefit or emolument arising from the same." The purpose of the provision reflected the times, when Parliament sought to be free of the influence of the Crown. The preamble to the Act stated its purpose to be "[f]or further securing the freedom and independence of parliament". The 1782 Act remained in force until 1957. Its purpose has never been in doubt. In In re Samuel6 it was said that the mischief it guarded against was the sapping of the freedom and independence of Parliament. In Thompson v Pearce7, the question arising from the 1782 Act was identified as being "[w]hat influence then does this contract give the government over him in the House of Commons?" Likewise, in Royse v Birley8, it was held that the 1782 Act was intended to prevent the exercise of control over a man who has a contract under which he is to derive some future benefit from dealing with the government. The Constitutions of the colonies of New South Wales, Victoria and Queensland9 contained provisions to similar effect to that of the 1782 Act. The decision of the Privy Council in Miles v McIlwraith10 was concerned with s 6 of the Constitution Act 1867 (Q)11. Mr McIlwraith was a member of the Legislative Assembly and the owner of a ship. An agent for the ship concluded a charter party for the use of the ship by the government, contrary to Mr McIlwraith's instructions. It was held12 that Mr McIlwraith was not disqualified, since the government could not have held him bound to the agreement. Inferentially, no control could have been exercised over him. [1913] AC 514 at 524. (1819) 1 Brod & B 25 at 35 [129 ER 632 at 636]. (1869) LR 4 CP 296 at 311-312. 9 Constitution Act 1855 (NSW), s 28; Constitution Act 1855 (Vic), s 25; Constitution Act 1867 (Q), s 6; see also Contractors in Parliament Act 1869-70 (SA) (33 Vict No 19), s 1. 10 (1883) 8 App Cas 120. 11 31 Vict No 38. 12 Miles v McIlwraith (1883) 8 App Cas 120 at 134. Bell Edelman Standing Rules and Orders Because the purpose of the 1782 Act was to secure the freedom and independence of members of Parliament from the Crown, it was not read as directed to the possibility that a member of Parliament could take advantage of his or her position or that a conflict between that person's duty as a member and that person's personal financial interests might arise. This is not to say that the possibility of a conflict between a parliamentarian's private interests and his or her public duty was not foreseen. An unwritten rule of the House of Commons, which is said to have predated the 1782 Act by at least 170 years, was13 to the effect that: "no Member who has a direct pecuniary interest in a question shall be allowed to vote on it". The possibility of such a conflict was a concern to some colonial Parliaments. This is evidenced by certain Standing Rules and Orders which were adopted before Federation14. The disqualification of a member of Parliament from voting was expressed in the same terms as the unwritten rule in the House of Commons. A member was not entitled to vote in a division upon a question in which "he has a direct pecuniary interest". In his commentary on the Webster case J D Hammond observed15 that the unwritten rule was the progenitor of such Standing Orders and continued: 13 Hammond, "Pecuniary Interest of Parliamentarians: A Comment on the Webster Case", (1976) 3 Monash University Law Review 91 at 98. 14 New South Wales, Legislative Assembly, Standing Rules and Orders of the Legislative Assembly of New South Wales (1894), No 187; Victoria, Legislative Assembly, Standing Rules and Orders of the Legislative Assembly of Victoria relating to Public Business (1888), No 121; South Australia, House of Assembly, Practice, Procedure and Usage of the House of Assembly of the Province of South Australia (1885), No 200; New South Wales, Legislative Council, Standing Rules and Orders and Sessional Orders of the Legislative Council (1895), No 126; Victoria, Legislative Council, Standing Orders of the Legislative Council of Victoria (1895), No 154; Western Australia, Legislative Council, Standing Rules and Orders of the Legislative Council relating to Public Business (1891), No 174. 15 Hammond, "Pecuniary Interest of Parliamentarians: A Comment on the Webster Case", (1976) 3 Monash University Law Review 91 at 98. Bell Edelman "[i]t is most unlikely that the Order was brought in to protect the Parliament from the Crown. Clearly it had another purpose, and this purpose was extensively discussed in the 'UK Report of the Select Committee on Members of Parliament (Personal Interest) 1896'." Similar provision was made following Federation. In 1901 the House of Representatives temporarily adopted "Standing Orders relative to Public Business"16. One such Standing Order contained a disentitlement in similar terms, save that the "direct pecuniary interest" there referred to was expressed to be one "not held in common with the rest of the subjects of the Crown"17. A further exception was that the Standing Order did not apply to motions or bills involving questions of public policy18. Local government statutes Prior to Federation the colonies enacted legislation which prohibited councillors of local authorities or municipal corporations from voting on, or participating in discussions of, a matter in which the councillor had, directly or indirectly, any "pecuniary interest"19. These words appeared in the final draft of the clause that became s 44(v). In Ford v Andrews20, Isaacs J observed that legislation of this kind had been common in England. The object of such legislation had been identified by 16 Australia, House of Representatives, Standing Orders relative to Public Business 17 Australia, House of Representatives, Standing Orders relative to Public Business (1901), No 296. The Standing Order was adopted on a permanent basis in 1950: see House of Representatives Standing Committee on Procedure, A History of the Procedure Committee on its 20th Anniversary, (2005) at 13-14 [3.16]-[3.18]. 18 See, eg, Australia, Senate, Standing Orders of the Senate (1903), No 280, which prohibited a senator from sitting on a Select Committee when the senator was "personally interested in the inquiry" before the Committee. The present Standing Orders prohibit sitting where there is a conflict of interest in relation to the inquiry of the Committee: Australia, Senate, Standing Orders, standing order 27(5). 19 See Boroughs Statute 1869 (Vic) (Act No 359), s 122; Local Government Act 1874 (Vic) (Act No 506), s 152; Local Government Act 1890 (Vic) (Act No 1112), s 173; Local Government Act 1878 (Q) (42 Vict No 8), s 135. 20 (1916) 21 CLR 317 at 329; [1916] HCA 29. Bell Edelman the English Court of Appeal in Nutton v Wilson21 as being to prevent members of local authorities from being exposed to temptation and to prevent a conflict between their interests and duties arising. The purpose of the legislation in the Australian colonies was understood in this way22. The Convention Debates It would not seem an unwarranted assumption that provisions of the kind mentioned above, directed to a potential conflict of interest of parliamentarians and councillors, were known to participants in the Convention Debates on the clause that became s 44(v), particularly lawyers such as Mr Isaacs and Mr Barton. The clause was debated in Adelaide23 and Sydney24 in April and September 1897, respectively. It was passed in Melbourne in March 189825. It is correct to observe, as Barwick CJ did26 in Webster, that the progenitor of s 44(v) is the 1782 Act, but it is not correct, with respect, to say that it is the "precise progenitor" of s 44(v). The first draft of the clause which became s 44(v) was clearly drawn from the 1782 Act, which, it will be recalled, had been adopted by the Constitution Acts of the colonies, but by the time s 44(v) was passed it had undergone a substantial change in its terminology, as will be evident from a comparison of the two. In fact, little of the clause from the 1782 Act remained. The most obvious change from the 1782 Act, it may be observed, is the introduction of the notion of a "pecuniary interest" in an agreement, which may be an "indirect" pecuniary interest. The focus of s 44(v) is on the personal interest of the member of Parliament. The 1782 Act was more concerned with the fact of the agreement with the Crown, rather than the interest that the member 21 (1889) 22 QBD 744 at 747 per Lord Esher MR, 748 per Lindley LJ. 22 Attorney-General v Emerald Hill (1873) 4 AJR 135 at 136. 23 Official Report of the Australasian National Convention Debates, (Adelaide), 15-21 April 1897. 24 Official Record of the Debates of the Australasian Federal Convention, (Sydney), 21 September 1897. 25 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 7 March 1898. 26 (1975) 132 CLR 270 at 278. Bell Edelman had in it. It referred to the member "holding" or "enjoying" a contract or agreement. Consistently with this observation, no mention is made in the 1782 Act of the position of a member as a shareholder in a company. Section 44(v), however, created an exception to disqualification where the member's interest is a shareholding in a company which has more than 25 members, thereby implying that a shareholding in a smaller company will be an interest which has the consequence of disqualification. These changes reflect discussions in the Convention Debates in Adelaide and Sydney. The discussions were not just about the influence which the Crown, or the Executive Government, could exert over contractors who were members of Parliament. On the topic of whether the disqualification should extend to professional men, including barristers, as well as contractors, there was certainly discussion about the possibility of corruption by the Executive Government giving contracts or briefs to such persons27. But, in the course of the debate, reference was made more generally to the need to separate the personal interests of a parliamentarian from the exercise of his public duties28. The freedom spoken of was not just from the executive, but from a person's own business interests, so that that person could more effectively represent others29. The other topic of note concerned the potential use, by members of Parliament, of companies to cloak a transaction30. That discussion was directed to what became the exception to s 44(v). These discussions confirm that the focus was upon a person's private dealings as the subject of the disqualification, rather than those of the Executive Government. The reference to a "pecuniary interest" was inserted in the clause which became s 44(v) after these debates. The words first appeared at the following 27 Official Report of the Australasian National Convention Debates, (Adelaide), 15 April 1897 at 737; 21 April 1897 at 1034, 1036. 28 Official Report of the Australasian National Convention Debates, (Adelaide), 21 April 1897 at 1037-1038 (Mr Isaacs). 29 Official Report of the Australasian National Convention Debates, (Adelaide), 21 April 1897 at 1038 (Mr Reid). 30 Official Report of the Australasian National Convention Debates, (Adelaide), 15 April 1897 at 737; 21 April 1897 at 1039; Official Record of the Debates of the Australasian Federal Convention, (Sydney), 21 September 1897 at 1023-1025. Bell Edelman Convention Debates in Melbourne, when the provision was passed without Senator Webster was a shareholder in a company in which there were eight other shareholders. He was managing director, secretary and manager of the company and received a salary in the latter capacity. The company supplied timber under agreements with two Commonwealth departments. There was no question that the agreements were with the Public Service of the Commonwealth. Barwick CJ, sitting alone as the Court of Disputed Returns, held32 that the senator was not disqualified from sitting by reason of s 44(v). His Honour considered33 that it was difficult to see that a shareholder could be said to have a pecuniary interest in the agreements for supply. An agreement for the sale of goods merely on request from time to time was not an "agreement" within s 44(v). We do not think that we are overstating his Honour's approach to the construction of s 44(v) in saying that the purpose he identified for the provision dominated the construction which he gave to it and significantly limited its operation. He identified34 the purpose as being the same as that of the 1782 Act. His Honour did not compare the terms of the two provisions. When regard is had to the terms of s 44(v), it is obvious that it is also concerned with the interest that a parliamentarian might have in agreements with the Commonwealth. A conclusion that s 44(v) has some purpose wider than the protection of the freedom and independence of parliamentarians from the influence of the Crown is inescapable. That wider purpose can only be the prevention of financial gain which may give rise to a conflict of duty and interest. 31 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 7 March 1898 at 1942. 32 In re Webster (1975) 132 CLR 270 at 288. 33 In re Webster (1975) 132 CLR 270 at 287-288. 34 In re Webster (1975) 132 CLR 270 at 278. Bell Edelman The Convention Debates identify that as the subject to which the clause which became s 44(v) was addressed. This is a proper use of those records35. At the time Webster was decided, the use to which the Convention Debates could be put was limited by decisions of this Court36 which preceded Cole v Whitfield37. Barwick CJ nevertheless referred to them, or at least to that part of the debates which took place in Adelaide concerning the possibility of fraud being exercised by the use, by parliamentarians, of a private company. His Honour did refer to the exception created in s 44(v), but did not draw the inference that shareholders of companies where there were fewer than 25 shareholders38 could be said to have an indirect pecuniary interest in agreements between the company and the Commonwealth. His Honour appears to have approached the position of shareholders from the perspective of the common law, which is to say that they could not be said to have any legal or equitable interest in the assets of the company. Barwick CJ did not refer the debate concerning whether the disqualification should extend to the interests of professional men, nor to the choice of the adjective "pecuniary" to identify the interests in question. His Honour did not refer to the subject to which these discussions were addressed more broadly, namely, the possibility of a conflict between personal interests and public duty arising. These factors tell against the purpose of s 44(v) being limited to that of the 1782 Act. 35 Cole v Whitfield (1988) 165 CLR 360 at 385; [1988] HCA 18; Port MacDonnell Professional Fishermen's Association Inc v South Australia (1989) 168 CLR 340 at 376-377; [1989] HCA 49; New South Wales v The Commonwealth (1990) 169 CLR 482 at 501; [1990] HCA 2; Singh v The Commonwealth (2004) 222 CLR 322 at 337-338 [21]-[22]; [2004] HCA 43; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 106 [298]; [2009] HCA 23. 36 Attorney-General (Cth); Ex rel McKinlay v The Commonwealth (1975) 135 CLR 1 at 17, 47; [1975] HCA 53; Attorney-General (Cth) v T & G Mutual Life Society Ltd (1978) 144 CLR 161 at 187; [1978] HCA 24; Attorney-General (Vict); Ex rel Black v The Commonwealth (1981) 146 CLR 559 at 577, 603; [1981] HCA 2. 37 (1988) 165 CLR 360. 38 At the time of the Convention Debates this was the maximum number of shareholders for a proprietary company in Victoria: see Companies Act 1896 (Vic) (Act No 1482), s 2; see also Official Record of the Debates of the Australasian Federal Convention, (Sydney), 21 September 1897 at 1023. Bell Edelman His Honour was evidently aware of local government and other legislation which, it will be recalled, used some of the very language employed in s 44(v). However, his Honour considered39 that there was no real analogy between s 44(v) and those provisions. His Honour's reasoning also had regard to what he saw as the purpose of s 44(v). His Honour said40 that the purpose of s 44(v) was the independence of Parliament, whereas the object of disqualifying local councillors was the prevention of conflict of duty and interest. Barwick CJ sat in Webster as the Court of Disputed Returns. His Honour was not sitting in a separate court of that name, but as the High Court exercising the additional jurisdiction given to it by the Commonwealth Electoral Act 1918-1973 (Cth)41. That jurisdiction could be exercised by a single Justice42, whose decision was not subject to appeal43. It is a feature of the proceedings in Webster that no Justice of the Court other than Barwick CJ sat to hear the matter. Whilst some matters in the Court of Disputed Returns are from time to time heard by a single Justice, they usually do not involve important questions relating to provisions of the Constitution. Nevertheless it is submitted for Mr Day that the fact that the decision in Webster was made by a single Justice is irrelevant to the principles to be applied as to whether it should not be followed. Accepting, for present purposes, that the usual principles governing when this Court should depart from its previous decisions44 do apply, there is none which stands in the way of a reconsideration of what was decided in Webster. 39 In re Webster (1975) 132 CLR 270 at 278. 40 In re Webster (1975) 132 CLR 270 at 278-279. 41 Sue v Hill (1999) 199 CLR 462 at 480-481 [28]-[30], 519 [142]-[143]; [1999] HCA 30. 42 Commonwealth Electoral Act 1918-1973 (Cth), s 184(3), the predecessor provision to s 354(6) of the Commonwealth Electoral Act 1918 (Cth). 43 Commonwealth Electoral Act 1918-1973 (Cth), s 195; now s 368 of the Commonwealth Electoral Act 1918 (Cth). 44 John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438; [1989] HCA 5. Bell Edelman True it is that the decision has stood for some time, but it is not to be inferred that it has been acted upon in such a way as to prevent reconsideration. The narrow operation given to s 44(v) in Webster no doubt explains why no proceedings have been brought with respect to potential disqualifying interests since the decision in that case. There is the consideration that persons may have ordered their affairs on the basis of that decision, and may have to act promptly to regularise them. In any event the decision is of a special kind, involving as it does constitutional provisions respecting Parliament and its members. If the construction adopted in Webster is affected by error, it should not be allowed to stand. It is not obvious to us why the fact that the decision was a judgment of only one member of the Court is not relevant to the question of whether it should be reviewed. It is accepted that a difference in the reasons of the majority in an earlier decision is a factor relevant to whether a decision should be reviewed45. That principle implies that less force is to be attributed to a decision where no single line of reasoning commands the assent of a sufficient number of the Justices of the Court. It would not seem unreasonable then to take account of the fact that in Webster there may well have been differing opinions held, had the Court been constituted by more than one Justice. To these observations it may be added that Webster does not rest on a principle carefully worked out in a significant succession of cases46. It is not likely to have had attributed to it the status of the "last word" on s 44(v). For these reasons the reasoning in Webster should be reconsidered. It follows from what has already been said in these reasons that s 44(v) has a wider purpose than that given to it by Barwick CJ in Webster. Its object is to ensure not only that the Public Service of the Commonwealth is not in a position to exercise undue influence over members of Parliament through the medium of agreements; but also that members of Parliament will not seek to benefit by such agreements or to put themselves in a position where their duty to the people they represent and their own personal interests may conflict. Recalling that s 44(v) should be construed in the context of the Constitution as a whole, it may also be observed that this wider purpose is consistent with s 44(iv) of the Constitution. That provision provides that a person who "holds any office of profit under the Crown" or "any pension payable during the pleasure of the Crown" is incapable of being chosen as a member of Parliament. 45 John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438. 46 John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438. Bell Edelman A construction of s 44(v) which proceeds from an understanding that parliamentarians have a duty as a representative of others to act in the public interest is consistent with the place of that provision in its wider constitutional context. The representative parliamentary democracy, for which the Constitution provides, informs an understanding of specific provisions47 such as s 44(v) and assists in determining the content of that duty, which includes an obligation to act according to good conscience, uninfluenced by other considerations, especially personal financial considerations48. In R v Boston49, Isaacs and Rich JJ spoke of a parliamentarian having a "single-mindedness for the community". the welfare of More recently, it has been said50 that Parliament has important functions to question and criticise government on behalf of the people and to secure accountability of government activity. This is not a new idea51. There can be no doubt that if personal financial interests were to intrude, the exercise of those obligations would be rendered difficult or even ineffective. In our view, Webster proceeded upon a wrong view of the place of s 44(v) in the Constitution and of the purpose of that provision, and did not give effect to its terms. It should not be followed. Mr Day's submission, following Webster52, that s 44(v) applies only where "through the possibility of financial gain by the existence or the performance of the agreement, that person could conceivably be influenced by the Crown in relation to Parliamentary affairs" cannot be accepted. It is necessary then to consider the terms of s 44(v) and the extent of its operation, consistently with its wider purpose. 47 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 211; [1992] HCA 45. 48 Wilkinson v Osborne (1915) 21 CLR 89 at 98-99; [1915] HCA 92. 49 (1923) 33 CLR 386 at 400; [1923] HCA 59. 50 Egan v Willis (1998) 195 CLR 424 at 451 [42], 453 [45]-[46]; [1998] HCA 71. 51 Horne v Barber (1920) 27 CLR 494 at 500; [1920] HCA 33. 52 (1975) 132 CLR 270 at 280. Bell Edelman Section 44(v), its construction and width of application The Attorney-General of the Commonwealth submits that s 44(v) should apply when "objectively, there is a real risk that a person could be influenced, or be perceived to be influenced, in relation to parliamentary affairs by a direct or indirect financial interest". Mr Day submits that the Commonwealth overextends the application of s 44(v) by a test based upon perceptions. Even if the mischief to which it is directed is the avoidance of actual or perceived conflicts of interest, it is submitted, this does not justify reading words into the provision. That submission should be accepted. Section 44(v) applies according to its terms. It is submitted for Mr Day that the word "interest" represents something concrete, something more than a mere expectancy. It is not disputed that a "pecuniary interest" is an interest "sounding in money or money's worth"53. This concession detracts from the suggestion, implicit in the submission, that the interest referred to in s 44(v) is a legal interest. Clearly it is not. An indirect pecuniary interest looks to the "practical effect"54 of the agreement in question on a person's pecuniary interests. Mr Day's other argument with respect to the terms of s 44(v) focuses upon the words "in any agreement". It is put that these words narrow what is encompassed by the pecuniary interest referred to in the provision. He submits that there cannot be a pecuniary interest in an agreement just because a person stands to gain from it or may obtain a benefit out of it. The Constitution, by s 44(v), does not refer to an expectation of money gained or lost. It refers to a person who has an interest in an agreement, not a person being "interested in an agreement". Mr Day relies on two cases in support of this argument – Norton v Taylor55 and Ford v Andrews56 – despite the fact that the legislation with which they were concerned referred to a councillor being "interested in any agreement". They are nevertheless said to be instructive, presumably of what is not caught by s 44(v). 53 Webb v The Queen (1994) 181 CLR 41 at 75; [1994] HCA 30. 54 Crump v New South Wales (2012) 247 CLR 1 at 26 [60]; [2012] HCA 20. 55 (1905) 2 CLR 291; [1905] HCA 8. 56 (1916) 21 CLR 317. Bell Edelman Norton v Taylor concerned s 24 of the Sydney Corporation Act 1902 (NSW), which rendered a person holding a civic office liable to a penalty where that person becomes "knowingly engaged or interested in any contract, agreement, or employment" with the local authority. Ford v Andrews concerned s 70 of the Local Government Act 1906 (NSW), which disqualified an alderman if he is "interested ... in any contract, agreement, or employment" with the local authority. Both provisions excepted a person's interest as a shareholder from their operation. The defendant in Norton v Taylor was a councillor and a member of a firm of timber merchants which supplied timber to a manufacturer, whose tender had been accepted by the council. The Supreme Court of New South Wales held that he was not, by reason of the supply, "interested" in the manufacturer's contract and this Court refused special leave to appeal from that decision. This would seem unsurprising. Apart from the fact of supply, there is no connection between the councillor's interests and the manufacturer's contract. The result would be the same if s 44(v) was applied to the facts of that case. The mere supply of goods, without more, to a person having an agreement with the Public Service could not be said to give rise to an indirect pecuniary interest of the supplier in that agreement, not the least because no financial benefit accrues to the supplier from that agreement, but rather from the contract of supply. It may be otherwise where an interest in the agreement with the Commonwealth could be traced to the supplier, for example because of a relationship between the supplier and the party to the agreement with the Commonwealth, or because the supplier receives, indirectly, some financial benefit from that agreement. None of these factors were present in Norton v Clearly enough, the mischief addressed by s 44(v) is not to be avoided by devices such as the interposition of a company or other entity between a person who is a parliamentarian who stands to gain, or lose, from the agreement and the Commonwealth. The words "indirect pecuniary interest in [an] agreement" were no doubt chosen with that potential for avoidance in mind, as the Convention Debates confirm. Beneficiaries of a discretionary trust, which benefits from, or via its trustee is party to, an agreement to which s 44(v) refers, may be considered to have an indirect pecuniary interest in an agreement. In argument for Ms McEwen it was put that the fact that beneficiaries of such a trust do not have a proprietary interest in trust assets does not answer the question whether they Bell Edelman have a pecuniary interest in them and therefore in contracts entered into on behalf of the trust. In Ebner v Official Trustee in Bankruptcy57, in the context of the bias rule, it was suggested that a trial judge who is a beneficiary of a discretionary trust that holds shares in a bank that funds the proceedings before him is capable of having a relevant pecuniary interest58. This view of a discretionary trust is consistent with the inference to be drawn from the exception to s 44(v), that shareholders in a company may be regarded as having a pecuniary interest in its contracts. In Ford v Andrews, the appellant was the alderman and mayor of a council and a director of a company which supplied bricks to it. It does not appear that the mayor was a shareholder, which, in any event, was an exception to the disqualification under the statute. The alleged interest was said to arise from an article in the company's Articles of Association, which authorised the directors to give a direction that a commission be payable to any director or that a share in profits be paid. Griffith CJ rejected59 the argument on the basis that the mayor had only a "mere possibility of a future interest", analogous to the interest of a person in the property of his next of kin. However, his Honour appears to have thought that the interest might arise if a director had a duty concerning the supply of the bricks, but held60 the mayor did not. Barton J agreed61. It would appear that the duty which Griffith CJ had in mind was a duty which could give rise to a conflict of interest. Isaacs J, in dissent, took a much broader view of the application of the provision in question, but it is to be recalled that it referred to a person being "interested in" any agreement. Mr Day sought to support his proposition, that it cannot be every benefit which gives rise to an indirect pecuniary interest in an agreement, by reference to hypothetical situations. One example he gave was where a husband and wife are jointly liable for mortgage repayments on their home and the wife works for the Commonwealth Public Service. The husband will benefit in a financial sense from her salary being applied to repayment of the mortgage. Does this give him 57 (2000) 205 CLR 337; [2000] HCA 63. 58 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 357 [55]. 59 Ford v Andrews (1916) 21 CLR 317 at 320. 60 Ford v Andrews (1916) 21 CLR 317 at 321-323. 61 Ford v Andrews (1916) 21 CLR 317 at 324-325. Bell Edelman an indirect pecuniary interest in her employment agreement within the meaning of s 44(v) if he is a parliamentarian? It does not seem to us that a benefit of this kind could be said to give rise to an indirect interest of the husband in the wife's employment agreement with the Public Service. Whilst a person does not need to be a party to an agreement to have an interest in it, the requirement that the interest be "in" an agreement implies some personal connection to it, albeit indirect. The mischief to which the provision is addressed has this connotation. It looks to the personal financial circumstances of a parliamentarian and the possibility of a conflict of duty and interest. It is also submitted for Mr Day that the facts of his case are closely analogous to those in Hobler v Jones62. It is difficult to see that this is so, as will shortly be explained. The legislative provision there in question certainly was not comparable with s 44(v). Section 6 of the Constitution Act 1867 (Q) was in the terms of the 1782 Act. It provided that a person who shall, directly or indirectly, undertake, execute, hold or enjoy any contract or agreement for or on account of the Public Service shall be incapable of being elected or of sitting or voting as a member of the Legislative Assembly. The defendant, a member of that Assembly, was said to be disqualified because he held two leases of land selections from the Crown. An issue concerning whether the member could be regarded as disqualified, having regard to the purposes of s 6, was raised but not reached. The view which was taken by the judge at first instance, and by the Full Court, was that the leases were not contracts of the kind which were the concern of s 6. As Stanley J, in the Full Court, appeared to accept63, they were merely ordinary leases in the terms and conditions and in the form required by legislation. This is how the government ordinarily deals with persons. A similar understanding may be said to inform the Standing Orders referred to earlier in these reasons64, which excepted pecuniary interests "held in common with the rest of the subjects of the Crown" from interests which could prevent a parliamentarian from voting. There can be no relevant interest if the agreement in question is one ordinarily made between government and a citizen. 62 [1959] Qd R 609. 63 Hobler v Jones [1959] Qd R 609 at 619-620. 64 Australia, House of Representatives, Standing Orders relative to Public Business Bell Edelman Were this otherwise, every day-to-day dealing which a citizen has with government could result in the disqualification of a citizen who happens to be a parliamentarian. The facts of Hobler v Jones65 are in any event far removed from Mr Day's circumstances. It may be unremarkable that the Commonwealth leases premises from their owner for the purpose of providing office accommodation to a senator, but the payment of rent, by direction, to that senator is not. Mr Day submits that s 44(v) should be narrowly construed because, where it applies, s 46 of the Constitution provides for penal consequences. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue66, it was said that the fact that a provision is penal in nature is part of its context and is therefore relevant to the task of construing it in accordance with established principles. In Webster, Barwick CJ said67 that a strict construction should be given to s 44(v) for this reason. In Sykes v Cleary68, Deane J agreed with that approach. However, the construction of s 44(v) does not involve a choice between a narrow or a broad approach which are both available when regard is had to its purpose. Barwick CJ's approach was informed by his view of the purpose of s 44(v), which, as explained, was unduly narrow. To give s 44(v) a limited operation, when it is accepted that it is intended to operate more widely, would be to deny its true purpose. Moreover there is much to be said for the view that the provision has a special status, because it is protective of matters which are fundamental the Constitution, namely representative and responsible government in a democracy. So understood there can be no warrant for limiting its operation because of the consequences which might follow for a person who is disqualified. Mr Day also argues that s 44(v) takes its place in a suite of provisions (ss 44, 45 and 46) which prescribe the qualifications of a Commonwealth parliamentarian and the consequences of sitting when disqualified. The Constitution gives the Parliament a broad power to determine those qualifications and that power should not be unduly constrained by an expansive judicial 65 [1959] Qd R 609. 66 (2009) 239 CLR 27 at 49 [57]; [2009] HCA 41. 67 (1975) 132 CLR 270 at 279. 68 (1992) 176 CLR 77 at 116; [1992] HCA 60. Bell Edelman interpretation of s 44. The more expansive the interpretation, the less scope there is for the Parliament to exercise its express constitutional powers. The Attorney-General correctly points out that the legislative power of the Parliament to prescribe the qualifications of parliamentarians (ss 16, 34 and 51(xxxvi)) is expressly "subject to this Constitution". It is therefore subject to s 44, which itself confines the scope of s 51(xxxvi). The existence of a power to prescribe qualifications provides no reason to prefer a narrow construction of the disqualification provisions of s 44. No narrow view of the operation of s 44(v) can be said to be warranted by its terms, read consistently with its purpose. The submissions for Mr Day read s 44(v) so as to require him to be akin to a party to the lease before he could be said to have an interest in it. This gives no effect to the word "indirect" or to the inferences to be drawn from the exception to s 44(v) about the types of interest which are within its purview. It follows that on and from 26 February 2016, when the direction for the payment of rent to Mr Day was given, s 44(v) operated to disqualify Mr Day from sitting as a senator because he had an interest of a pecuniary nature in the lease. As a result, a vacancy arises in the representation of South Australia in the Senate. How the vacancy should be filled In In re Wood69, it was held that the provisions of s 273(27) of the Commonwealth Electoral Act 1918 (Cth) ("the Electoral Act") may be applied by analogy in circumstances such as this in order to ascertain the true intention of the voters, consistently with the Constitution and the Electoral Act. That is to say, the vacancy resulting from a person being disqualified may be dealt with in the same way as applies where a deceased candidate's name appears on the ballot paper in a Senate election. Section 273(27) provides that a vote indicated on the ballot paper opposite the name of a deceased candidate shall be counted to the candidate next in the order of the voter's preference and the numbers indicating subsequent preferences shall be taken to be altered accordingly. Ms McEwen was listed fourth of the candidates in the Australian Labor Party group on the ballot paper. The three listed above her were elected. At the last count she was the only other candidate, apart from Mr Day, who had not been excluded from the count. However, this does not mean that Ms McEwen's submission should be accepted to the effect that the other candidate for Family 69 (1988) 167 CLR 145 at 166; [1988] HCA 22. Bell Edelman First would obtain an unfair advantage, and voter intentions would be distorted, if Family First above the line votes were counted for that other candidate. Contrary to that submission, a special count which deprived the above the line Family First voters of their vote would distort voter intentions. The Family First group on the ballot paper consisted of Mr Day and one other candidate. It is argued for Ms McEwen that because Mr Day could not be chosen as a senator, there was no valid group of Family First candidates. Section 168(1) of the Electoral Act requires a group to comprise two or more members. The votes cast above the line for Family First must therefore be disregarded. A similar argument was put in Wood and rejected70. The result of such an argument would be that no effect would be given to the votes given to the other candidate. However, as was pointed out71 in Wood, a vote is valid "except to the extent that the want of qualification makes the particular indication of preference a nullity". The true intention of voters should be given effect so long as it is consistent with the Constitution and the Electoral Act72. Here there is no impediment to giving effect to those intentions. Costs The Attorney-General agreed to an order that the Commonwealth pay Mr Day's costs, but opposed an order in favour of Ms McEwen. Ms McEwen was deemed to be a party to these proceedings and was the moving party on an application heard by Gordon J at which evidence of facts relating to Mr Day's dealings, in addition to those which had been agreed between the parties, was considered. The findings made73 by her Honour were referred to by the parties in their submissions. Ms McEwen made submissions to Questions (a) and (c) which were not in all respects identical with those of the Commonwealth. She was the only contradictor with respect to Question (b). In these circumstances the Commonwealth should also pay her costs of the proceedings. 70 (1988) 167 CLR 145 at 174-175. 71 (1988) 167 CLR 145 at 166. 72 Re Culleton (No 2) (2017) 91 ALJR 311 at 319 [43]; [2017] HCA 4. 73 Re Day (2017) 91 ALJR 262. Bell Edelman Answers to the questions referred The questions referred by the Senate to this Court should be answered as follows: There is a vacancy in the representation of South Australia in the Senate for the place for which Robert John Day AO was returned, by reason of s 44(v) of the Constitution. The vacancy should be filled by applying the provisions of s 273(27) of the Commonwealth Electoral Act 1918 (Cth) by analogy by filling the vacancy by a special count of the ballot papers. (c) Mr Day was incapable of sitting as a senator, by reason of s 44(v) of the Constitution, on and after 26 February 2016, being a date prior to the dissolution of the 44th Parliament. (d) A single Justice should make any further directions and orders necessary to finally dispose of this reference. The Commonwealth should pay Mr Day's and Ms McEwen's costs of the proceedings, save for costs excluded by an order of a Justice of the Court. GAGELER J. The High Court expressed the opinion in Brown v West74 that "[t]here is much to be said for the view that the Parliament alone may make provision for benefits having a pecuniary value which accrue to its members in virtue of their office and which are not mere facilities for the functioning of the Parliament". The Court then set out s 48 of the Constitution, which states that "[u]ntil the Parliament otherwise provides" each senator and each member of the House of Representatives shall receive an "allowance" of a specified annual monetary amount, and continued75: "The effect of this section ... depends on the meaning attributed to 'allowance' and the width of the power conferred on the Parliament alone 'otherwise' to provide. ... Apart from the possible operation of s 48, it may be that our Constitution provides such a separation of powers as would preclude any exercise of the executive power which takes the form of the discretionary conferring of benefits having a pecuniary value on individual members of the Parliament, not being mere facilities for the functioning of Parliament." Soon after Brown v West, the Parliament – in the exercise of its power under s 51(xxxvi) of the Constitution (to make laws with respect to a matter within the scope of s 48) or in the exercise of its power under s 51(xxxix) of the Constitution (to make laws with respect to a matter incidental to the power vested by the Constitution in the Parliament), it now matters not which – enacted the Parliamentary Entitlements Act 1990 (Cth). the Parliamentary Entitlements Act, senators and members of the House of Representatives are "entitled to" specified "benefits"76, the costs of which are to be paid out of the Consolidated Revenue Fund77. One of those benefits is "[o]ffice accommodation in the electorate, together with equipment and facilities necessary to operate the office, as approved by the Minister"78. Under During his term as an elected senator for South Australia, Mr Day accordingly had a statutory entitlement to be provided at public expense with office accommodation in South Australia, together with equipment and facilities necessary to operate that office, as approved by the Minister for Finance as the Minister administering the Parliamentary Entitlements Act. Procuring office 74 (1990) 169 CLR 195 at 201; [1990] HCA 7. 75 (1990) 169 CLR 195 at 201-202. 76 Section 4. 77 Section 11. 78 Sched 1, Pt 1, Item 7. premises to provide him with that statutory entitlement was the reason why the Commonwealth of Australia (represented by the Ministerial and Parliamentary the Services Division, Corporate and Parliamentary Services Group of Department of Finance), in the exercise of non-statutory executive capacity, entered into the lease from Fullarton Investments of the Fullarton Road property for a term of five years for a permitted use identified in the lease as "Office the Accommodation and Communication Facility". Commonwealth to pay rent in monthly instalments into such account as was from time to time to be notified to it by Fullarton Investments. lease obliged The On the facts sufficiently recounted in the reasons for judgment of other members of the Court, at the time of the Commonwealth entering into the lease with Fullarton Investments, Mr Day stood to gain financially from the Commonwealth performing its obligation to pay rent under the lease. He stood to gain in one or more of three distinct ways, none of which was apparent on the face of the lease and none of which was known to the Minister for Finance or officers within the Department of Finance. First, Mr Day was in truth the holder of the bank account labelled "Fullarton Nominees", which Fullarton Investments had already notified the Commonwealth was the account into which the Commonwealth was to pay the rent under the lease. The rent to be paid by the Commonwealth was in that way to go directly to Mr Day. Second, Mr Day was a guarantor of a loan facility provided by NAB to B & B Day and other companies with which Mr Day was associated. Fullarton Investments was indebted to B & B Day for the price of its purchase of the Fullarton Road property from B & B Day, and Fullarton Investments had no source of revenue to pay that debt other than the rent to be paid by the Commonwealth. Payment of rent by the Commonwealth would facilitate repayment by Fullarton Investments of its debt to B & B Day, which would in turn facilitate repayment by B & B Day of its indebtedness to NAB. Payment of rent would in that way have the prospect in practical effect of reducing the extent of Mr Day's contingent liability to NAB. Third, Mr Day was a beneficiary of the Day Family Trust, a discretionary trust of which B & B Day was trustee. The Day Family Trust was in turn a beneficiary of the Fullarton Road Trust, a discretionary trust of which Fullarton Investments was trustee. Fullarton Investments held the Fullarton Road property, and the proceeds of the lease, on trust for the Fullarton Road Trust, of which the Day Family Trust was a beneficiary. Mr Day in that way had the prospect of receiving, through the sequential exercise of discretions on the parts of Fullarton Investments and B & B Day, a distribution of the whole or some part of such funds as Fullarton Investments as trustee of the Fullarton Road Trust might receive from rent paid to it under the lease. There was nothing remote or unlikely about the funds generated from the rent to be paid by the Commonwealth in the performance of its obligation under the lease flowing through Fullarton Investments to B & B Day, either as loan repayments or as trust distributions, to the ultimate financial benefit of Mr Day. The genesis of the entire elaborate structure, according to the uncontested findings made by Gordon J, was Mr Day having sought from his accountants "advice on establishing an entity in which the Fullarton Road property could be housed so that he could avail himself of the rental allowance provided by the government" and his accountants advising him in response that the Fullarton Road Trust under the arrangements put in place "would simply hold the Fullarton Road property and collect rent on a regular basis, and the rent would then pass back to the Day Family Trust so there would be no profit or loss in the new trust"79. My view is that the financial benefit which Mr Day stood to obtain in each of those three ways from the Commonwealth performing its obligations to pay rent under the lease constituted an "indirect pecuniary interest" which Mr Day had in the lease within the meaning of s 44(v) of the Constitution, with the consequences that his seat in the Senate became vacant at the time the Commonwealth entered into the lease with Fullarton Investments and that he was in law incapable of being chosen at the subsequent general election for the place for which he was in fact returned as elected. As to what flows from that, I have no disagreement with the reasoning and conclusions of other members of the Court concerning the means and manner in which the resulting vacancy in the representation of South Australia in the Senate should be filled. As to the precise manner in which the questions referred by the Senate to this Court sitting as the Court of Disputed Returns should be answered, I am content with the answers formulated by the plurality, save that my answer to question (c) would state 1 December 2015 as the date on which Mr Day became incapable of sitting as a senator. What follows is my reasoning on the central issue of the meaning and application of s 44(v) of the Constitution. Like the other grounds of disqualification set out in s 44 of the Constitution, that set out in s 44(v) has automatic and draconian consequences. A person who is subject to disqualification is, by force of s 44, incapable of being chosen or of sitting as a senator or member of the House of Representatives. By force of s 45(i), if the person is a senator or member when the disqualification takes effect, "his place shall thereupon become vacant". By force of legislation enacted by the Parliament under s 51(xxxvi) with respect to the matter for which 79 Re Day (2017) 91 ALJR 262 at 280 [93]; [2017] HCA 2. provision is made in s 46, the person is liable to pay to any person who sues for it pecuniary penalty for each day on which he sits while disqualified80. impacts Disqualification under s 44 the persons disqualified and on the electors whom they have been elected to represent or whom they seek to be elected to represent. In Sykes v Cleary81, Deane J pointed out that "[w]hat s 44 does is to impose an overriding disqualification of any person who comes within its terms regardless of whether the Parliament thinks (or seeks to enact), in the context of contemporary circumstances and standards, that that disqualification is unjustified". His Honour said: irreversibly on "Such an overriding disqualification provision should, in my view, be construed as depriving a citizen of the democratic right to seek to participate directly in the deliberations and decisions of the national Parliament only to the extent that its words clearly and unambiguously require." I agree with that view, which I do not think to be contradicted by the holding of the majority in Sykes v Cleary. Its blunt and limiting effect on democratic participation tells in favour of an interpretation which gives the disqualification set out in s 44(v) the greatest certainty of operation that is consistent with its language and purpose. Senators and members of the House of Representatives should know where they stand. They, and their electors, are entitled to expect tolerably clear and workable standards by which to gauge the constitutional propriety of their affairs. The interpretation of s 44(v) adopted in In re Webster82, confining its operation to an agreement "for a substantial period of time ... under which the Crown could conceivably influence the contractor in relation to parliamentary affairs by the very existence of the agreement, or by something done or refrained from being done in relation to the contract or to its subject matter", is unsatisfactory. That is not only because the Webster interpretation is founded on too narrow a view of the purpose of the disqualification, as to which I agree with and have nothing to add to the various expositions by other members of the the Court. interpretation adopts a criterion for the operation of the disqualification that is vague and unduly evaluative and that involves a gloss on the constitutional language. is also unsatisfactory because interpretation 80 Common Informers (Parliamentary Disqualifications) Act 1975 (Cth), s 3. 81 (1992) 176 CLR 77 at 121; [1992] HCA 60. 82 (1975) 132 CLR 270 at 280; [1975] HCA 22. The interpretation now advanced by the Attorney-General of the Commonwealth is that s 44(v) "is engaged at least when: objectively, there is a real risk that a person could be influenced, or be perceived to be influenced, in relation to parliamentary affairs by a direct or indirect financial interest, in the sense of an expectation of a monetary gain or loss, arising from the existence, performance, or breach of an agreement with the executive government of the Commonwealth". That interpretation has the virtue of attempting to align the disqualification to the wider constitutional purpose of removing the possibility of conflict or the appearance of conflict between advancement of a person's interests and that person's duty as a senator or member of the House of Representatives. But the Attorney-General's interpretation has its own shortcomings. Even more than the Webster interpretation, it adopts a criterion for the operation of the disqualification that is vague and evaluative. And not unlike the Webster interpretation, it involves a significant gloss on the constitutional language. The extent of the disqualification and the purpose of the disqualification are run too much together. The latter properly informs the former, but should not take its place. interest the Public Service of in any agreement with Much of the anxiety that has attended attempted exposition of s 44(v) in the past has stemmed from reading its reference to "any direct or indirect pecuniary the Commonwealth" as equivalent to "any direct or indirect pecuniary interest in any agreement with the Executive Government of the Commonwealth". The interpretation advanced by the Attorney-General of the Commonwealth is not unique in implicitly adopting that reading. The concern has been to achieve an interpretation that excludes from the disqualifying effect of s 44(v) a pecuniary interest that a senator or member might reasonably be expected to be able to have in routine or otherwise patently benign agreements with the Executive Government of the Commonwealth. Those agreements might include a postal note issued by the Postmaster-General's Department under the Post and Telegraph Act 1901 (Cth), a bond issued by the Treasury under the Commonwealth Inscribed Stock Act 1911 (Cth), or an agreement as to the amount of compensation constituting just terms following the compulsory acquisition of land under the Lands Acquisition Act 1989 (Cth)83. That anxiety is substantially alleviated and each of those potentially troubling examples is accommodated when "any agreement with the Public 83 Eg Australia, Senate Standing Committee on Constitutional and Legal Affairs, The Constitutional Qualifications of Members of Parliament, (1981) at 79 [7.15]- [7.16]; Australia, Final Report of the Constitutional Commission, (1988), vol 1 at 303 [4.878]; see also Evans, "Pecuniary Interests of Members of Parliament under the Australian Constitution", (1975) 49 Australian Law Journal 464 at 474-475. Service of the Commonwealth" is read, as Keane J suggests and as I agree with him that it should be, as having no application to an agreement entered into by the Executive Government of the Commonwealth in the execution of a law of general application enacted by the Parliament. The reference in s 44(v) of the Constitution to the "Public Service of the Commonwealth" is to be contrasted in that respect with the obviously broader references in s 44(iv) to "the Crown" and in s 45(iii) to "the Commonwealth". The "Public Service of the Commonwealth" is most naturally read as referring to those whom s 67 of the Constitution describes as "other officers of the Executive Government of the Commonwealth" within what s 64 of the Constitution describes as "such departments of State of the Commonwealth as the Governor- General in Council may establish". The expression "Public Service of the Commonwealth" can be seen to be used in s 44(v) in the same sense in which it is used in s 84 of the Constitution in conjunction with the cognate expression "the public service of a State". Complementing ss 52(ii) and 69 of the Constitution, s 84 provides that "[w]hen any department of the public service of a State becomes transferred to the Commonwealth, all officers of the department shall become subject to the control of the Executive Government of the Commonwealth" and goes on to provide, amongst other things, that "[a]ny officer who is, at the establishment of the Commonwealth, in the public service of a State, and who is ... transferred to the public service of the Commonwealth, shall have the same rights as if he had been an officer of a department transferred to the Commonwealth and were retained in the service of the Commonwealth". The Public Service of the Commonwealth is, of course, not a legal entity. An agreement with the Public Service of the Commonwealth can only be an agreement to which the relevant party is the Commonwealth. But not every agreement with the Commonwealth can properly be characterised as an agreement with the Public Service of the Commonwealth. This case does not call for an examination of the outer limits of the class of agreements with the Commonwealth properly characterised as agreements with the Public Service of the Commonwealth. Outside its limits, as I have said, in my view lie agreements entered into in the execution of Commonwealth laws of general application. At its core lie agreements for the procurement of services or property negotiated and entered into for or on behalf of the Commonwealth in the exercise of non-statutory executive authority by officers of the Executive Government of the Commonwealth within a Commonwealth department. The lease lay squarely within that core. To address a particular argument made, in terrorem, by senior counsel for Mr Day, I would regard employment under the Public Service Act 1999 (Cth), the effect of which is to bring persons so employed within the Public Service of the Commonwealth, as outside the class of agreements with the Public Service of the Commonwealth to which s 44(v) refers. Were a senator or member of the House of Representatives to become so employed, his seat would become vacant. But that would be either through the operation of s 45(i) by reference to the disqualification in s 44(iv) of a person who "holds any office of profit under the Crown"84 or through the operation of s 45(iii), which effects a vacancy where a senator or member "directly or indirectly takes or agrees to take any fee or honorarium for services rendered to the Commonwealth". Section 44(v) would not be engaged. Were the spouse of a senator or member of the House of Representatives with whom he or she is jointly liable for mortgage payments on the family home to engage in such employment, none of those provisions would be engaged. Once that narrow but textual and contextual reading of "any agreement with the Public Service of the Commonwealth" is adopted, there is no reason why s 44(v)'s reference to "any direct or indirect pecuniary interest" in such an agreement should be given a more restrictive interpretation than that given to materially identical language directed to a materially identical purpose by Gavan Duffy J when he said in Ford v Andrews85: "A man is directly interested in a contract if he is a party to it, he is indirectly interested if he has the expectation of a benefit dependent on the performance of the contract; but in either case the interest must be in the contract, that is to say, the relation between the interest and the contract must be immediate and not merely connected by a mediate chain of possibilities." The notion of an indirect interest in a contract being an expectation of a benefit dependent on performance of the contract is consistent with the view of s 44(v) implicit in advice given by Robert Garran as Secretary of the Attorney- General's Department to the Secretary of the Postmaster-General's Department in 190286. To the question "whether members of the Commonwealth Parliament are legally qualified to act as sureties for mail contractors", Garran had answered: "The position of surety for the performance of a Government contract probably would involve at least an indirect pecuniary interest in the 84 Sykes v Cleary (1992) 176 CLR 77 at 95-96. 85 (1916) 21 CLR 317 at 335; [1916] HCA 29. 86 Garran, "Whether May Be Surety for Contractor to Commonwealth: Whether Seat Would Be Vacated: Whether Would Amount to Pecuniary Interest in Agreement with Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 1901-14, (1981) 149. contract within the meaning of the section – seeing that the surety may in certain events be required either to take over the contract or pay the damages." In my opinion, the formulation by Gavan Duffy J in Ford v Andrews captures the essence of s 44(v)'s reference to "any direct or indirect pecuniary interest" in an agreement with the Public Service of the Commonwealth. I would not presume to improve on it. I do no more than add two observations concerning its application to s 44(v). The first observation is that for a benefit dependent on the performance of the agreement to amount to a pecuniary interest the benefit must, by definition, be pecuniary: it must be, or be capable of sounding in, money or money's worth. And it must obviously be more than trivial. The expectation that a senator or member of the House of Representatives has of receiving such a benefit dependent on the performance of an agreement with the Public Service of the Commonwealth might be an expectation of making a monetary gain as a result of the performance or non-performance of the agreement. Alternatively, it might be an expectation of avoiding a monetary loss as a result of the performance or non- performance of the agreement. The express exception in s 44(v) for a pecuniary interest which a person has "as a member and in common with the other members of an incorporated company consisting of more than twenty-five persons" indicates that there is no reason why a pecuniary interest within the scope of the provision might not be constituted by an expectation of an increase or decrease in the value of an asset (such as a shareholding) or by an expectation of receipt or non-receipt of a payment the making of which depends on the exercise of an independent discretion (such as a dividend). The exception cannot simply be explained away as reflecting a failure to assimilate the holding in Salomon v Salomon & Co87 that an incorporated company is distinct from its members. The statement in Webster that "a person who is no more than a shareholder in a company does not, by reason of that circumstance alone, have a pecuniary interest in any agreement the company may have"88 is correct insofar as it refers to a direct pecuniary interest. The statement would be incorrect were it taken to exclude the possibility of a person who is no more than a shareholder in a company having an indirect pecuniary interest in an agreement into which the company has entered resulting either from the effect of the agreement on the value of the person's shareholding or from its effect on the person's expectation of the receipt of dividends. In that respect, I do not think it possible to draw any meaningful distinction between an 88 (1975) 132 CLR 270 at 287. expected receipt of dividends by a shareholder of an incorporated company and an expected receipt of a distribution by the beneficiary of a trust. The Convention Debates make quite clear that an indirect pecuniary interest was specifically contemplated to include a beneficial interest89. The second observation is that whether a senator or member of the House of Representatives has an expectation of such a benefit that is immediate or real as distinct from mediate or remote must be determined objectively by reference to the practical consequences of performance or non-performance of the agreement. To use language drawn from Webster, the concern cannot be with "bare theoretical possibilities unrelated to the practical affairs of business and departmental life"90. The intention of the senator or member cannot be determinative but must be relevant. The fact that the rent had been directed to be paid into Mr Day's bank account meant without more that he had an objective expectation of receiving a monetary benefit from the payment of rent. That was an indirect pecuniary interest. Finding it is sufficient to resolve Mr Day's status in order to answer the questions referred by the Senate. Ordinarily, I think it better to refrain from venturing further into uncharted constitutional territory than is necessary to produce a result in the case at hand. Here, I think that there are countervailing considerations. The other two ways in which Mr Day had the potential to benefit from the Commonwealth performing its obligation to pay rent under the lease were raised by the facts and were the subject of full argument. The importance I place on achieving certainty in the operation of s 44(v) of the Constitution leads me to think that there is utility in expressing conclusions with respect to them. Mr Day's intention in setting up the contractual and trust relationships between Fullarton Investments and B & B Day is highly probative of the way in which those relationships could objectively be expected to have worked to benefit him in practice. Quite apart from the direction as to the payment of rent, the structure he put in place resulted in Mr Day having an expectation of benefiting in money or money's worth from the Commonwealth performing its obligation to pay rent under the lease through him obtaining either, or both, a reduction in the extent of his contingent liability to NAB or a distribution from B & B Day as trustee of the Day Family Trust. 89 Official Record of the Debates of the Australasian Federal Convention, (Sydney), 21 September 1897 at 1022-1027. 90 (1975) 132 CLR 270 at 286. Senior counsel for Mr Day placed emphasis on the potential beneficiaries set out in the trust deed of the Day Family Trust extending to include, in the discretion of the trustee, "any charitable, educational, benevolent, sporting or religious institution person or persons". True it is that none of the potential beneficiaries could be said to have a beneficial interest in any trust property and that each of the potential beneficiaries could be said to have a "mere expectancy or hope" of receiving a distribution91. But few could be said to have an objective expectation. Inclusion of such a broad range of entities within the class of potential beneficiaries is not uncommon in a trust deed for a discretionary family trust, just as inclusion of a very broad range of objects was once not uncommon in memoranda of association of incorporated companies: "the little man starting a grocery business usually combined groceries with power to bridge the mighty Zambesi"92. The theoretical legal possibility that others might benefit has no bearing on the practical commercial likelihood that Mr Day would benefit. The operation of s 44(v) of the Constitution is concerned with the latter, not the former. 91 Cf Kennon v Spry (2008) 238 CLR 366 at 417 [160]; [2008] HCA 56. 92 Re Introductions Ltd [1969] 1 All ER 887 at 888. 119 KEANE J. Section 44(v) of the Constitution relevantly provides: "Any person who: has any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth otherwise than as a member and in common with the other members of an incorporated company consisting of more than twenty-five persons; shall be incapable of being chosen or of sitting as a senator". By letter dated 8 November 2016 to the Chief Executive and Principal Registrar of the High Court of Australia, the President of the Senate informed this Court of a resolution of the Senate referring to the Court, sitting as the Court of Disputed Returns93, the following questions: "(a) whether, by reason of s 44(v) of the Constitution, or for any other reason[94], there is a vacancy in the representation of South Australia in the Senate for the place for which Robert John Day was returned; if the answer to Question (a) is 'yes', by what means and in what manner that vacancy should be filled; (c) whether, by reason of s 44(v) of the Constitution, or for any other reason, Mr Day was at any time incapable of sitting as a Senator prior to the dissolution of the 44th Parliament and, if so, on what date he became so incapable; (d) what directions and other orders, if any, should the Court make in order to hear and finally dispose of this reference; and (e) what, if any, orders should be made as to the costs of these proceedings." 93 Constitution, s 47; Commonwealth Electoral Act 1918 (Cth), ss 376, 377. 94 On 21 November 2016, French CJ ordered that: "In the absence of any contrary contention, questions (a) and (c) of the questions referred by the Senate ... shall be read as referring to s 44(v) of the Constitution only and not any other reason for the vacancy referred to in those paragraphs". There has been no contrary contention. Questions (a) and (c) are concerned, in particular, with whether Mr Day was incapable of being chosen, or of sitting, as a Senator by reason of his having a direct or indirect pecuniary interest in a lease of part of 77 Fullarton Road, Kent Town, in South Australia ("77 Fullarton Road") to the Commonwealth. The Attorney-General of the Commonwealth contended that Mr Day was incapable of being chosen or sitting as a Senator from no later than 1 December 2015, by which time he had an indirect pecuniary interest in the lease of part of 77 Fullarton Road, contrary to s 44(v) of the Constitution. Upon the referral of the questions to this Court, French CJ directed that each of Mr Day, Ms Anne McEwen and the Commonwealth be heard on the hearing of the reference, and be deemed to be a party to the reference pursuant to s 378 of the Commonwealth Electoral Act 1918 (Cth) ("the Electoral Act"). Ms McEwen was an unsuccessful candidate at the 2016 federal election for the Australian Labor Party. Ms McEwen was defeated by Mr Day in the counting of votes for the 12th Senate seat to be filled for South Australia at that election. the Attorney-General of Consideration of the questions posed for determination must begin with an account of the facts which bear upon that determination. Mr Day and the 44th and 45th Parliaments At the 2013 federal election, Mr Day was elected to serve in the Senate of the 44th Parliament of the Commonwealth representing the State of South Australia. Mr Day's term as a Senator began on 1 July 2014. On 9 May 2016, the 44th Parliament was dissolved by a simultaneous dissolution of both the Senate and the House of Representatives. On 16 May 2016, the Governor of South Australia issued writs for the election of 12 Senators for the State of South Australia at the double dissolution general election to be held on 2 July 2016. On 2 June 2016, Mr Day, in his capacity as the registered officer of the Family First party, submitted to the Australian Electoral Commission ("the AEC") a nomination for Senators in the form of Form CC in Sched 1 to the Electoral Act. By the form submitted by Mr Day: Mr Day was nominated as a candidate for the Senate in South Australia; Ms Lucy Gichuhi was nominated as a candidate for the Senate in South Australia; Mr Day and Ms Gichuhi jointly requested that their names be grouped together on the ballot paper, with Mr Day's name appearing above Ms Gichuhi's; Mr Day, in his capacity as registered officer of Family First, endorsed Mr Day and Ms Gichuhi and requested that Family First's registered name appear next to their names on the ballot and next to their group square above the line. The nominations of Mr Day and Ms Gichuhi, their joint request to be grouped on the ballot, and Family First's request that its name be printed next to their names and group, were accepted by the AEC. The AEC printed a square for the Family First group above the line on the ballot paper for the election. On 4 August 2016, following the election held on 2 July, the Acting Australian Electoral Officer for the State of South Australia certified and returned Mr Day as elected, in the 12th place, to the Senate of the 45th Parliament. The 45th Parliament opened on 30 August 2016. Mr Day resigned as Senator by letter to the President of the Senate, pursuant to s 19 of the Constitution, on 1 November 2016. 77 Fullarton Road The primary facts relating to Mr Day's association with the lease of a portion of 77 Fullarton Road to the Commonwealth were established by the materials accompanying the reference to this Court; by agreement between the parties; and by further findings made by Gordon J after a hearing for that purpose conducted in January 201795. These primary facts are not in dispute. At issue is whether, in light of these facts, Mr Day had from 1 December 2015, as the Attorney-General contended, an indirect pecuniary interest in the lease of a portion of 77 Fullarton Road to the Commonwealth. B & B Day Pty Ltd ("B & B Day") was the registered proprietor of 77 Fullarton Road from September 2011 until 11 November 2014. B & B Day held 77 Fullarton Road as trustee of the Day Family Trust, a discretionary trust. B & B Day was, and remains, the trustee of the Day Family Trust. Until 30 June 2014, Mr Day was the sole director and shareholder of B & B Day; after 30 June 2014, Mr Day's wife, Bronwyn Esther Day, was the sole appointed director and shareholder. Mr and Mrs Day, and members of their family, were, and remain, beneficiaries of the Day Family Trust. Mr Day was, and remains, the appointor of the Day Family Trust. On 2 January 2014, the National Australia Bank ("NAB") approved a loan facility in favour of B & B Day to a limit of $1.6 million, with interest, for a term of five years. The security for the loan included a registered mortgage by B & B Day in favour of NAB over 77 Fullarton Road. In addition, Mr and Mrs Day gave a guarantee and indemnity for $2 million for the performance by B & B Day of its obligations under the facility. 95 Re Day (2017) 91 ALJR 262; [2017] HCA 2. (Cth)96 Upon Mr Day's election to the Senate in 2013, he was entitled under the Parliamentary Entitlements Act 1990 the Commonwealth with an electorate office. Generally speaking, an incoming Senator is expected to occupy the premises vacated by his or her predecessor in the Senate. Mr Day made representations to the Department of Finance to the effect that he did not wish to occupy the electorate office of his predecessor, Senator Donald Farrell, at 19 Gilles Street in the Adelaide CBD, and asked whether the Commonwealth would take a lease of a portion of 77 Fullarton Road for use by Mr Day as his electorate office. to be provided by From late 2013, Mr Day believed that the Commonwealth would be unwilling to take a lease of part of 77 Fullarton Road while he, or an entity he owned, was the owner of the freehold. Mr Day arranged for the incorporation of Fullarton Investments Pty Ltd ("Fullarton Investments") upon advice from his accountant, Mr Vic Rasera, for the purpose of acquiring 77 Fullarton Road from B & B Day. From no later than 16 December 2013, there was an arrangement between B & B Day, as trustee of the Day Family Trust, and Fullarton Investments, as trustee of the Fullarton Road Trust, that Fullarton Investments would collect rent paid by the Commonwealth and pass it back to the Day Family Trust. Fullarton Investments was incorporated on 16 December 2013. Mr Day is not, and has never been, a shareholder or a director of Fullarton Investments. Mrs Debra Smith, the wife of a long-time business associate of Mr Day, agreed to become the sole shareholder and director of Fullarton Investments. Subsequently, Mr Colin Steinert became the sole shareholder; he held his shares beneficially. On the same day that Fullarton Investments was incorporated, a discretionary trust was established, known as the Fullarton Road Trust, with Fullarton Investments as the trustee and the Day Family Trust as one of the beneficiaries. On 24 April 2014, Fullarton Investments, as trustee of the Fullarton Road Trust, agreed to purchase 77 Fullarton Road from B & B Day for $2.1 million; but no money changed hands. The sale by B & B Day to Fullarton Investments was facilitated by a vendor finance agreement whereby B & B Day lent to Fullarton Investments the purchase price of $2.1 million. By email dated 5 May 2014, Mr Day advised the Department of Finance that the new owner of 77 Fullarton Road was Fullarton Investments. A memorandum of transfer of the property at 77 Fullarton Road, executed by B & B Day in favour of Fullarton Investments on 4 September 2014, was registered on 11 November 2014. On that date, NAB discharged the mortgage 96 See s 4(1) and Item 7 of Pt 1 of Sched 1. granted by B & B Day over the property and a new mortgage was registered over the property, showing Fullarton Investments as the mortgagor. Under the terms of the loan facility in favour of B & B Day, B & B Day remained liable to make repayments to NAB. On 9 October 2014, Senator Michael Ronaldson, on behalf of the Department of Finance, wrote to Mr Day acknowledging that Mr Day had agreed to undertake works for the re-configuration of the proposed electorate office at his own expense. Mr Day was advised that, subject to certain terms, the Department was prepared to agree to the establishment of Mr Day's electorate office within the premises at 77 Fullarton Road. Those terms included that there be a rent free period until such time as the lease on the 19 Gilles Street premises expired, or those premises were able to be sub-let. On 15 October 2014, Mr Day wrote back accepting the terms of the proposed lease. From April 2015, Mr Day used parts of the premises at 77 Fullarton Road as his electorate office. A sum in the order of $200,000 was spent on works carried out on the property. A substantial portion of that expenditure occurred following the transfer of the property to Fullarton Investments and was met by B & B Day. All outgoings in relation to the property were paid by Mr Day, B & B Day, or other entities who were tenants of the property prior to the sale to Fullarton Investments. On 29 December 2015, Mr Day wrote to the Minister for Finance requesting that the Department pay rent for 77 Fullarton Road as from 1 July 2015. The letter stated that Mr Day had "spent nearly $200,000 getting [77 Fullarton Road] up to standard" and had "been paying rent out of [his] salary since moving into [77 Fullarton Road] early this year". The Commonwealth entered into an agreement with Fullarton Investments to lease 77 Fullarton Road for use as Mr Day's electorate office by a memorandum of lease executed on 1 December 2015, with a commencement date of 1 July 2015 ("the Lease"). The Lease gave the Commonwealth an option to renew for a term of six years. The Lease provided for annual rent of $66,540 plus GST, to be paid monthly by the Commonwealth to "the account nominated by" Fullarton Investments. the Lease On 12 June 2015, before took effect, Mr Day, as "representative" of Fullarton Investments, had sent to the Department of Finance a completed "Vendor Information" form which recorded Mr Day as the relevant contact and nominated a bank account in the name of "Fullarton Nominees" for the receipt of rent. Fullarton Nominees is a business name owned by Mr Day. Mr Day was the owner of that bank account. After the Lease was executed, on 26 February 2016, Ms Joy Montgomery, on behalf of Fullarton Investments, sent to the Department of Finance a rental form directing the Department to pay the rent under the Lease to Fullarton Nominees. Ms Montgomery was Mr Day's executive assistant. It was this direction which was effective for the purposes of the nomination contemplated by the Lease. One may observe that the control which Mr Day was in a position to exercise over rent paid by the Commonwealth into the bank account of Fullarton Nominees from 26 February 2016 was consistent with the arrangement between B & B Day and Fullarton Investments that the rent paid by the Commonwealth to Fullarton Investments would be passed back to B & B Day. With that observation, one may now turn to consider whether Mr Day's ability to deal with the rent paid by the Commonwealth in order to give effect to that arrangement was sufficient to give him an indirect pecuniary interest in the Lease, so as to engage the disqualifying effect of s 44(v) of the Constitution. The scope of s 44(v) The parties' contentions Mr Day argued that because s 44(v) disqualifies the affected person from serving in Parliament and exposes him or her to a financial "penalty" for sitting when disqualified97, it should be given a narrow construction98. Mr Day argued that the mischief at which s 44(v) is directed is the making of contracts that place a person "under the influence of the Crown in relation to Parliamentary activities" or that enable the Crown to "'sap' the freedom and independence of Parliament"99. In adopting that approach, Mr Day relied on the purpose of s 44(v) identified by Barwick CJ in In re Webster, namely the "protection of the independence of the parliament"100. In reliance on Webster, Mr Day argued that s 44(v) is engaged only where there is an agreement under which a legislator "could conceivably be influenced by the Crown in relation to Parliamentary affairs"101. Mr Day essayed the 97 See Constitution, s 46. The operation of this provision has been modified by the Common Informers (Parliamentary subsequent in s 3 of Disqualifications) Act 1975 (Cth). The penalty is $200 per day. legislation 98 See Fletcher v Lord Sondes (1826) 3 Bing 501 at 580-581 [130 ER 606 at 637]. 99 In re Webster (1975) 132 CLR 270 at 288; [1975] HCA 22. 100 Webster (1975) 132 CLR 270 at 279. 101 Webster (1975) 132 CLR 270 at 280. argument that, because the officers of the executive government with whom he dealt were unaware of his connection with the Lease, there was no possibility that the executive government might seek to use it to influence his decisions as a Senator. Finally, Mr Day argued that an interpretation of s 44(v) unconfined by the purpose identified by Barwick CJ in Webster would catch transactions by parliamentarians that the framers of the Constitution could not possibly have contemplated, such as a Senator taking a loan from the Commonwealth Bank. Mr Day contended that the decision in Webster was determinative of Questions (a) and (c) in his favour. It was submitted that the decision of Barwick CJ has the same authority as a decision of the full court of this Court given that Barwick CJ was sitting as the Court of Disputed Returns. It was said that this Court should be slow to accept an invitation to depart from the approach adopted by Barwick CJ except "with great caution and for strong reasons"102. The Attorney-General acknowledged that this Court should not depart lightly from Webster, but submitted that the decision to depart from that authority requires an "evaluation of factors which may weigh for and against overruling"103. In this regard, it was said to be relevant that Webster is a decision of a single judge; does not rest on a principle carefully worked out in a significant succession of cases104; and rests on a narrow construction that does not cohere with the purpose or history of s 44(v). On behalf of the Attorney-General, it was said that s 44(v) is addressed, in part at least, to ensuring faithful service by members of the legislature; not only by eliminating the influence of the executive government upon parliamentarians, but also by ensuring that the representatives are not tempted to attend to their own interests rather than to the interests of those whom they represent. The Attorney-General argued that the test for the operation of s 44(v) is whether there is a real risk that an interest in an agreement could give rise to prohibited forms of influence, or the perception thereof. The Attorney-General argued that there need be no inquiry into whether the interest would in fact influence the discharge of the person's duties as a parliamentarian105. While an 102 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 554; [1997] HCA 25. 103 Wurridjal v The Commonwealth (2009) 237 CLR 309 at 352 [70]; [2009] HCA 2. 104 See John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438-439; [1989] HCA 5. 105 Cf Webster (1975) 132 CLR 270 at 280, 287-288. evaluation is required in each case, the test is an objective one as to the potential to influence a parliamentarian106. It was said on behalf of the Attorney-General that a risk of being influenced in the exercise of public duties will not arise where the person's expected monetary gain or loss is too remote or insubstantial. Similarly, so it was said, s 44(v) will not be engaged by routine transactions where there is no real risk of a parliamentarian being, or being perceived to be, influenced. It was said that s 44(v) sets a threshold that is low enough not to impose a rigid standard that would defeat the constitutional object, yet high enough to exclude the absurdities that may arise on a literal construction. Ms McEwen argued that a person has a pecuniary interest in an agreement for the purposes of s 44(v) if that person stands to gain (or lose) financially from the existence or performance of the agreement107. Ms McEwen did not accept that there must be a real risk that the person could be influenced, or perceived to be influenced, in relation to parliamentary affairs before s 44(v) is engaged. Ms McEwen argued that the correct approach is to apply the language of the provision, without a separate assessment of whether the purpose of the provision is satisfied. It was said that s 44(v) assumes that when its terms are contravened there will be a risk of influence by the executive, or a risk of potential conflict – there is no additional requirement that there in fact be a real (objective) risk of influence or conflict. There is considerable force in Ms McEwen's submission on this point. The Attorney-General's proposal of a test based on an evaluative judgment of whether, in the circumstances of any particular case, a risk of influence arises is an invitation to apply an impressionistic approach rather than the constitutional text. Further, the Attorney-General's exclusion of "routine transactions" from the disqualifying effect of s 44(v) offers no guidance derived from the constitutional text itself. In considering the rival arguments advanced by the parties, it is necessary to address first the reliance placed by Mr Day on Webster. In Webster108, Senator James Webster was a shareholder in J J Webster Pty Ltd ("the Webster Company"), a company founded by his grandfather which 106 See Ford v Andrews (1916) 21 CLR 317 at 322, 324; [1916] HCA 29. 107 See Webster (1975) 132 CLR 270 at 280. 108 (1975) 132 CLR 270. carried on business in Victoria as a timber, hardware and plumbing merchant. From time to time, the Webster Company tendered, sometimes successfully, for the supply of material for the use of the Postmaster-General's Department and the Department of Housing and Construction. Senator Webster was the Webster Company's managing director, secretary and manager. The Webster Company had nine shareholders. The Senate referred to this Court, sitting as the Court of Disputed Returns, questions as to whether Senator Webster was or had become incapable of being chosen, or of sitting, as a Senator. Notwithstanding that the case raised questions as to the operation of a provision of the Constitution on which no previous decision of the Court shed any light, Barwick CJ decided to hear the case alone. His Honour answered the questions posed for determination favourably to Barwick CJ took a narrow view of the scope of s 44(v), interpreting it as applying only to an agreement: "under which the Crown could conceivably influence the contractor in relation to parliamentary affairs by the very existence of the agreement, or by something done or refrained from being done in relation to the contract or to its subject matter"109. In my respectful opinion, this central element of the reasoning in Webster, upon which Mr Day relied, cannot be supported. It reflects a view of the scope of the disqualification which is narrower than the text conveys as a matter of its ordinary meaning, and is based on an understanding of the purpose of the provision which is narrower than that indicated by an examination of the Debates of the Australasian Federal Convention of 1897-1898 ("the Convention Debates")110. Barwick CJ proceeded upon the view that s 44(v) served the same purpose as the House of Commons (Disqualification) Act 1782 (UK) ("the 1782 Act"), which disqualified from Parliament any person who: "shall, directly or indirectly … for his use or benefit … undertake, execute, hold, or enjoy … any contract, agreement, or commission, made or entered into with [the Crown] … for or on account of the publick 109 Webster (1975) 132 CLR 270 at 280. 110 The Convention Debates took place in three sessions: first session, Adelaide, 22 March to 5 May 1897; second session, Sydney, 2 to 24 September 1897; third session, Melbourne, 20 January to 17 March 1898. service … during the time that he shall execute, hold, or enjoy, any such contract, agreement, or commission". There is something to be said for the view that the purpose of the 1782 Act was not limited exclusively to "[t]he protection of the independence of the parliament"111. In this regard, it should be noted that, during the debate on the Bill for the 1782 Act, Edmund Burke observed that "individuals ... had an option either to retain their political rights, and sit in parliament; or their professional and commercial rights by pursuing their trade, and supplying government as usual", adding that it "was strict justice to the public, for parliament to separate two sorts of rights, when they were found to be incompatible: ... a good member of parliament could not be a contractor"112. Burke's observations support the notion that a parliamentarian should be beyond the reach of considerations of financial self-interest in the exercise of his or her office. In addition, the distinction which Barwick CJ perceived between the protection of the independence of parliamentarians from the influence of the executive government, and the prevention of conflict between the interests and duties of parliamentarians, is hardly a bright line. So much was acknowledged by Barwick CJ in Webster113 itself. A parliamentarian who is induced to yield to the influence of the executive by an expectation of pecuniary gain held out by the executive affords but one example, albeit an important example, of the preference for personal financial interest over parliamentary duty. But even if it be accepted that the 1782 Act was directed exclusively at the mischief identified by Barwick CJ, the language in which s 44(v) is cast is sufficiently different from the 1782 Act as to suggest that it was not addressing only that mischief, but a broader concern as to the conflict between interest and duty, of which the possibility of yielding to blandishments provided by the executive government (for example, to support it on a motion of no confidence) is but one manifestation. Textual considerations Barwick CJ identified s 1 of the 1782 Act as the "precise progenitor" of s 44(v)114; but the 1782 Act disqualified only those persons who "undertake, 111 Webster (1975) 132 CLR 270 at 279. 112 House of Commons, 12 April 1782: see The Parliamentary History of England, (1814), vol 22 at 1334-1335. 113 (1975) 132 CLR 270 at 279. 114 Webster (1975) 132 CLR 270 at 278. execute, hold, or enjoy" an agreement with the Crown. Section 44(v) expressly extends the disqualification to those with a "pecuniary" interest, "direct or indirect", in an "agreement" with the Public Service of the Commonwealth. The express extension of s 44(v) to pecuniary interests indirectly held in an agreement necessarily means that a disqualifying agreement need not be one to which a parliamentarian is a party. In such a case, the executive government may be entirely unaware, as was the case here, of the possibility of exercising influence over the parliamentarian. This would suggest that the purpose of the disqualification is not limited to preventing executive influence upon a parliamentarian, but extends to preventing the influence of a member's private financial interests upon the discharge of his or her parliamentary functions. The reference to having a pecuniary interest in an agreement appeared for the first time at the 1898 Melbourne Convention in the fourth and final draft of the provision. In Webster115, Barwick CJ held that the purpose served by s 44(v) "has no real analogy in the purpose sought to be achieved by disqualification provisions under local government and comparable legislation … [which is] to prevent a possible conflict of interest and duty". But disqualification from elective office because of a "pecuniary interest in any agreement" with local government had long been used in local government legislation to remove "[t]he manifest possibility of a conflict between duty and interest"116. The language in the final draft of what became s 44(v) departed from the language of the 1782 Act in several other respects117. The disqualification of a person who holds "any agreement for or on account of the public service of the Commonwealth"118 was altered to become a disqualification which depended upon the agreement being made, not for the public service of the Commonwealth – as an abstract purpose – but "with the Public Service of the Commonwealth", that is, with officers of the administrative organ of the government. The contrast with s 44(iv) of the Constitution is instructive. Section 44(iv) disqualifies from Parliament the holder of "any office of profit under the Crown, or any pension payable during the pleasure of the Crown out of any of the revenues of the Commonwealth". Significantly, s 44(v) is focused upon 115 (1975) 132 CLR 270 at 278. 116 Attorney-General v Emerald Hill (1873) 4 AJR 135 at 136. 117 Hammond, "Pecuniary Interest of Parliamentarians: A Comment on the Webster Case", (1976) 3 Monash University Law Review 91 at 94-98. 118 Official Report of the National Australasian Convention Debates, (Adelaide), 15 April 1897 at 736. agreements "with the Public Service of the Commonwealth", that is, with officers of the administration who might or might not be within the scope of "the Crown". Insofar as s 44(v) is apt to be engaged by an agreement with an officer of the administration other than a Minister of the Crown, it might be thought that the concern animating s 44(v) is not that the Crown might exert influence on the parliamentarian, but rather that the parliamentarian might seek to exert a corrupting influence on officers of the administration with whom he or she comes into contact. A provision such as s 44(v) might be thought to be especially necessary in a constitutional structure in which the executive government is, unlike the executive government under the Constitution of the United States of America, dependent for its survival upon the support of the legislature. In addition, a broader understanding of the scope of s 44(v) than that applied in Webster is supported by the express exclusion from the reach of the disqualification of those pecuniary interests derived from membership of companies consisting of more than 25 persons. The express exclusion from disqualification is a further textual indication that the purpose of the disqualification is not confined to limiting the influence of the executive government over those contracted to it. Apart from these textual considerations, reference to the Convention Debates shows that s 44(v) was not directed solely at a concern to keep members of Parliament from "being in the pay of the Government"119 or "to prevent the Government of the day from buying the services and support of members of Parliament"120. The Convention Debates Barwick CJ adopted his narrow view of the scope of s 44(v) with only limited recourse to the Convention Debates121. More comprehensive reference to the Convention Debates than was undertaken by his Honour suggests that s 44(v) was directed at an apprehended conflict between the disinterested performance of a parliamentarian's public duty and the possibility of enhancement of his or her financial interests by arrangements with officers of the executive government. Some of the leading lights among the framers made this concern clear during the course of the Convention Debates. 119 Official Report of the National Australasian Convention Debates, (Adelaide), 21 April 1897 at 1035. 120 Official Report of the National Australasian Convention Debates, (Adelaide), 21 April 1897 at 1036. 121 Webster (1975) 132 CLR 270 at 279. In Adelaide in April 1897, Mr Isaac Isaacs said122: "We should be careful to do all that is possible to separate the personal interests of a public man from the exercise of his public duty … The public are interested in seeing and ensuring, so far as it is possible to ensure it, that no member of Parliament shall for his own personal profit allow his judgment to be warped in the slightest when he is called upon to decide on questions of public moment." This concern was echoed by Mr George Reid, who said123: "[A]s a matter of principle, the more free a man who represents the people is from transactions with the Government the better it is for himself and for his public usefulness." Mr Edmund Barton considered the mischief at which the measure that became s 44(v) was directed to be the possibility of "carrying out a fraud upon the public"124. In Sydney in September 1897, Sir John Downer said125: "I think it inexpedient to allow members of parliament to have any contractual relations which might suggest to any one that their position might be impure." On this occasion, Mr Isaacs was even more explicit: "The object of the clause is to prevent individuals making a personal profit out of their public positions"126. 122 Official Report of the National Australasian Convention Debates, (Adelaide), 21 April 1897 at 1037-1038. 123 Official Report of the National Australasian Convention Debates, (Adelaide), 21 April 1897 at 1038. 124 Official Report of the National Australasian Convention Debates, (Adelaide), 15 April 1897 at 737. 125 Official Record of the Debates of the Australasian Federal Convention, (Sydney), 21 September 1897 at 1025. 126 Official Record of the Debates of the Australasian Federal Convention, (Sydney), 21 September 1897 at 1023. Subsequently, in The King v Boston127, Isaacs J (as Mr Isaacs had become) the views of the following statement, echoing Edmund Burke cited earlier: "The fundamental obligation of a member in relation to the Parliament of which he is a constituent unit still subsists as essentially as at any period of our history. That fundamental obligation … is the duty to serve and, in serving, to act with fidelity and with a single-mindedness for the welfare of the community." (emphasis in original) A strict construction In Webster, Barwick CJ described s 44(v) as a "vestigial" part of the Constitution which should receive a strict construction128. The concern that parliamentary office should not be, or be seen to be, a source of personal gain for members of Parliament was familiar to the framers of our Constitution from the great public debate that preceded the adoption of the Constitution of the United States. At that time, there was strong opposition to the proposal, ultimately adopted, that members of Congress should receive a salary. The opposition to salaries for congressmen reflected the view that public service as a member of the federal legislature should be entirely disinterested. The view which ultimately prevailed balanced that purist view against the egalitarian consideration that if Congress were not to be the exclusive preserve of the wealthy, it would be necessary for those serving in the legislature to receive remuneration for that service129. Our Constitution, by s 48, makes express provision for the payment of a salary to members of Parliament. That salary may be altered by the Parliament. In this way, s 48 acknowledges that, in order to achieve a broad representation of all sections of the people, including those whose only means of support is their own personal exertion, the strict standards of personal disinterest championed by Edmund Burke and Isaac Isaacs might legitimately be compromised to the extent that a member has an interest in his or her parliamentary salary. But there are limits to the compromise. 127 (1923) 33 CLR 386 at 400; [1923] HCA 59. See also Cunningham v The Commonwealth (2016) 90 ALJR 1138 at 1166-1167 [173]; 335 ALR 363 at 399-400; [2016] HCA 39. 128 Webster (1975) 132 CLR 270 at 278-279. 129 Amar, America's Constitution: A Biography, (2005) at 16, 58, 72-74, 151, In this regard, s 44(v) affords an irreducible minimum of protection against the possibility that the personal pecuniary interests of parliamentarians might be allowed to compete with the interests of the people they represent, and so "cynically turn public debate into a cloak for bartering away the public interest"130. Section 44(v) serves to ensure that the conscientious discharge of a parliamentarian's duties is not affected by considerations of pecuniary benefit which might be made available to members of the legislative branch of government by reason of their position by officers of the executive government. In this regard, in Brown v West131, Mason CJ, Brennan, Deane, Dawson and "There is much to be said for the view that the Parliament alone may make provision for benefits having a pecuniary value which accrue to its members in virtue of their office and which are not mere facilities for the functioning of the Parliament." It is to do a disservice to the abiding importance of the constitutional balance between the constitutional values of social equality and parliamentary integrity to describe the protection afforded by s 44(v) to the latter as a "vestigial" provision to be strictly confined in its operation. A "direct or indirect pecuniary interest in any agreement" The parties' contentions Mr Day accepted that the Lease, being an executory contract, was an "agreement" for the purposes of s 44(v). Mr Day did not dispute that the Lease was with the Public Service of the Commonwealth. Mr Day submitted that he did not have a direct or indirect pecuniary interest in the Lease. He argued that only a legally enforceable interest is within the contemplation of s 44(v). Mr Day also argued that, consistently with the purpose of s 44(v) for which he contended, an interest will not be a "pecuniary interest" in an agreement unless "through the possibility of financial gain by the existence or the performance of the agreement, [the] person could conceivably be influenced by the Crown in relation to Parliamentary affairs"132. 130 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 159; [1992] HCA 45. 131 (1990) 169 CLR 195 at 201; [1990] HCA 7. 132 Webster (1975) 132 CLR 270 at 280. Mr Day argued that, even if he were a party to the Lease, or a shareholder of a party to the Lease, his interest could not be understood as apt to compromise his independence vis-à-vis the executive government because there is no suggestion that, at any material time, any officer of the executive government knew that Mr Day had any direct or indirect interest in the Lease. It may be said immediately that, by this argument, Mr Day seeks to make a virtue of necessity. Mr Day knew the executive government wished him to use premises that had been used as an electorate office by Senator Farrell and, more importantly, he understood that it would not be willing to provide financial support for his use of the premises at 77 Fullarton Road while he held an interest in them. If the officers of the executive government with whom Mr Day dealt had known of his expectation of the receipt of rent from the Lease, then his discussions with those officers could have appeared as a case of a cross-bench Senator seeking private accommodation from an executive government which was in need of cross-bench support for its legislative program. That would have appeared as a glaring example of the kind of dealing between a parliamentarian and an officer of the executive government that s 44(v) was designed to prevent. Mr Day's case that he had no pecuniary interest is not made more attractive because his self-interested dealing was masked by the trust structure he caused to be set up. Mr Day also argued that the interest must be "in the agreement"; and that having such an interest is narrower than having a pecuniary interest "as a result of an agreement", or "flowing from an agreement", or "arising out of" an agreement. Mr Day argued that the mere possibility that Fullarton Investments might receive moneys under the Lease and then exercise its discretion as trustee to pay amounts to B & B Day, which might, in turn, exercise its discretion as trustee to pay amounts to Mr Day, could not establish that Mr Day had even an indirect interest in the Lease. Ms McEwen argued that a pecuniary interest, in a context like s 44(v), is one that "sound[s] in money or money's worth"133. It was submitted on her behalf that, in this context, the meaning of "pecuniary interest" is the same as "financial interest". In Amadio Pty Ltd v Henderson134, the Full Court of the Federal Court of Australia held that a "financial interest" is such "that it can give rise to an expectation, which is not too remote, of a 'gain or loss of money'"135. Ms McEwen also argued that, while the beneficiaries of a discretionary trust are generally dependent on the exercise of the power given to the trustee to distribute 133 Webb v The Queen (1994) 181 CLR 41 at 75 fn 33; [1994] HCA 30. 134 (1998) 81 FCR 149. 135 Amadio Pty Ltd v Henderson (1998) 81 FCR 149 at 276. income or capital to the beneficiaries136, a beneficiary of a discretionary family trust has, at least, an indirect pecuniary interest in a contract over the trust assets. Mr Day's pecuniary interest that only a legally enforceable Mr Day's submission contemplated by s 44(v) must be rejected. Section 44(v) is concerned with "pecuniary interests", not with rights enforceable in the courts. In this regard, it is inconceivable that s 44(v) would not be engaged by an agreement by an officer of the executive government to provide payments to a parliamentarian, in return for support in the Parliament, simply because both parties to the agreement were content that their arrangement should not be a contract enforceable in the courts. Such an agreement would be a most serious (and obvious) example of what is targeted by s 44(v). interest Accordingly, it is not necessary in this case to resolve any question as to whether the corporate and trust structures established by Mr Day were apt to avoid the disqualifying effect of s 44(v). An expectation of a gain or loss of money generated by a promise may exist without a legally enforceable entitlement to payment of money. Given the constitutional context, it is enough that the person's pockets were or might be affected137. The term "indirect" indicates that, here, regard may be had "to practical as well as legal effect"138, so that a person has at least an "indirect" interest of a pecuniary nature in an agreement if the agreement is such that it can give rise to an expectation of a monetary gain or loss if it is performed. A person who has an expectation of a benefit dependent on the performance of an agreement is naturally said to be indirectly interested in the agreement139. As was said in Ford v Andrews140, such a person is "'interested' if he [or she] is not 'disinterested' in a pecuniary or proprietary sense". In Ford v Andrews, this Court was concerned with s 70(j) of the Local Government Act 1906 (NSW), which relevantly provided that a person is disqualified from the office of alderman if: 136 Federal Commissioner of Taxation v Vegners (1989) 90 ALR 547 at 551-552. 137 Brown v Director of Public Prosecutions [1956] 2 QB 369 at 378; Rands v Oldroyd [1959] 1 QB 204 at 214. 138 Crump v New South Wales (2012) 247 CLR 1 at 26 [60]; [2012] HCA 20. 139 Ford v Andrews (1916) 21 CLR 317 at 335. 140 (1916) 21 CLR 317 at 330. "he is directly or indirectly … engaged or interested (other than as a shareholder in an incorporated company … consisting of more than twenty members) in any contract, agreement, or employment with, by, or on behalf of the council". "A man is directly interested in a contract if he is a party to it, he is indirectly interested if he has the expectation of a benefit dependent on the performance of the contract". Mr Day had a pecuniary interest in the Lease from no later than 26 February 2016. It is unnecessary to determine whether Mr Day's position as a beneficiary of the Day Family Trust, either on its own or in combination with his position as guarantor of B & B Day's financial obligations, was a sufficient indirect interest for the purposes of s 44(v). That Mr Day hoped for a pecuniary benefit from the Lease is undeniable, given the directions that the rent be paid into the bank account of Fullarton Nominees, which was owned by him. The direction of 26 February 2016 meant that the Lease would, in fact, put money into Mr Day's pocket. From that date he had an expectation of a benefit dependent on the performance of the Lease by the Commonwealth. That was so even though the discretions available to Fullarton Investments and B & B Day might not have been exercised to bring these receipts to account as distributions to Mr Day. Mr Day's control over the rental payments when received would mean that he could use them, as was intended, to repay the loan to NAB. It is not to the point that Mr Day's legal entitlement might not have been established by resolutions of the trustees. Mr Day, as a practical matter, had the spending of the rental money, and so he had a pecuniary interest in the Lease. And that would be so as a matter of fact whether or not the records of the trusts acknowledged that practical reality. At this point, one may return to note that Mr Day put forward a number of examples of cases that would be caught by what was said to be the "overly expansive reading of s 44(v)" urged by Ms McEwen and the Attorney-General of the Commonwealth. Mr Day offered as examples the case of a parliamentarian or potential parliamentarian: who subscribes for a government bond; (ii) who is a creditor of a person who is owed money under an agreement with the Commonwealth, or otherwise has an agreement with the Commonwealth; and 141 (1916) 21 CLR 317 at 335. (iii) whose spouse is a senior public servant who is remunerated pursuant to a contract with the Commonwealth in circumstances where the spouse's income benefits the parliamentarian, eg, through the reduction of a mortgage for which both are jointly and severally liable. the provision of a benefit by Mr Day mustered other examples, but it is sufficient to say that in each the case the example depended upon Commonwealth which might enure to the benefit of the parliamentarian. The first point to be made here is that the possibility that there may be difficulty in discerning the outer limits of the operation of the constitutional disqualification is not a reason to decline to apply it to a case which is plainly within its scope; and this is such a case. Secondly, Mr Day's examples invite the response that s 44(v) is not concerned with the myriad of benefits generally provided by the Commonwealth to its citizens. Mr Day's examples exaggerate the reach of s 44(v) because they fail to pay due attention to the limitations inherent in its text. The examples offered by Mr Day all assume that an agreement under which the Commonwealth is the source of an expected benefit is sufficient to engage the disqualifying effect of s 44(v). But, in the context in which s 44(v) appears, the circumstance that the Commonwealth is the source of the benefit is not sufficient to engage the incapacitating effect of s 44(v). That effect will be engaged only if the agreement is made with "the Public Service of the Commonwealth". An agreement with the Commonwealth (for the creation of the which Commonwealth (to which s 44(iv) expressly refers) made under a law of the Commonwealth of general application is not within the letter of s 44(v). the Constitution provides) or with in right of the Crown The disqualifying interest contemplated by s 44(v) is a pecuniary interest generated by an agreement made with the Public Service of the Commonwealth. Of course, while the Commonwealth will inevitably be the ultimate source of the benefit under such an agreement, it is the circumstance that the source of the benefit is in an agreement made with the Public Service of the Commonwealth which engages the disqualifying effect of the provision. It is only a pecuniary interest in such an agreement that is within the purview of s 44(v). Pecuniary benefits available generally to members of the Australian community are not within the Commonwealth is the ultimate source of the benefit. Given the purpose that informs s 44(v), there is no reason to expand its disqualifying effect to any person who might obtain a pecuniary benefit conferred by the Commonwealth which is available generally to the community. Such a benefit does not fall within the spirit of s 44(v)142. the mischief at which s 44(v) is directed merely because 142 Cf Hobler v Jones [1959] Qd R 609 at 620. Acceptance of this limitation might be thought to obviate the concern as to an unduly expansive operation of s 44(v), but it is not possible to come to a concluded view on this point. The Attorney-General of the Commonwealth was not disposed to support such an approach, and so it was not the subject of argument by the parties. In any event, as noted already, it is unnecessary to reach a concluded view upon the outer limits of the disqualifying operation of s 44(v) because in the present case Mr Day's interest falls squarely within its scope. Question (b) – filling the vacancy The parties' contentions Mr Day submitted that if he were not capable of being chosen for the Senate, a special count would be the appropriate manner in which to fill the vacancy, with votes above the line in favour of Family First, and those below the line in favour of Mr Day, being allocated to Ms Gichuhi. The Attorney-General agreed with Mr Day's proposal, submitting that a special count of this kind would not result in a distortion of the voters' real intentions, and so should be preferred to a fresh election, which would occasion significant cost and inconvenience. Ms McEwen submitted that if Mr Day were found to have been incapable of being chosen as a Senator, the vacancy should be filled by a special count of the ballots cast at the election, disregarding the votes cast above the line for the Family First group and those below the line in favour of Mr Day. Ms McEwen argued that the presence of Mr Day on the ballot paper as the first of two candidates for the Family First group distorted the vote for that party and those votes cannot be reasonably attributed to the second candidate. Ms McEwen argued that, as there were only two candidates in Mr Day's group (the minimum number under s 168 of the Electoral Act), in the event he were found to be incapable of being chosen, there was no valid group entitled to be placed above the line on the ballot paper. In addition, Ms McEwen argued that it could not be said that it is "highly probable, if not virtually certain"143 that, had Mr Day not been on the ballot, Family First or Ms Gichuhi would have received the same number of votes. The Attorney-General argued in response that there is no sufficient factual foundation to support the submission that Mr Day's presence on the ballot "distorted" the vote; and that no sufficient reason is shown by Ms McEwen for disregarding the preferences of a significant number of voters144. 143 Cf Sykes v Cleary (1992) 176 CLR 77 at 102; [1992] HCA 60. 144 24,817 voters. A special count The Court has the power to "declare any candidate duly elected who was not returned as elected" pursuant to s 360(1)(vi) of the Electoral Act. That power carries with it an incidental power to order a special count145. In accordance with the principles stated in In re Wood146 and followed in Sue v Hill147, a special count may be ordered to fill a vacancy occasioned by the return of a candidate who was subject to disqualification under s 44, to be filled by giving effect to "the true result of the polling – that is to say, the true legal intent of the voters so far as it is consistent with the Constitution and the [Electoral] Act"148. There is, of course, no suggestion here that the presence of Mr Day's name on the ballot paper falsified the declared choice of the people of South Australia for any of the other 11 candidates who were declared to be elected. The circumstance that Mr Day was not eligible to be chosen as a Senator means that a vote for him was without effect149. That having been said, the circumstance that Mr Day was not eligible to be chosen as a Senator did not invalidate the ballot in which his name appeared. As was said by this Court in Wood150, "an election is not avoided if an unqualified candidate stands" because "[i]f it were otherwise, the nomination of unqualified candidates would play havoc with the electoral process". It is true that s 168(1) of the Electoral Act requires that there be two or more eligible members of a group to allow a request to be made to the Electoral Officer to print the group's square above the line on the ballot papers; but the circumstance that one member is not eligible to be chosen does not have the invalidating effect for which Ms McEwen contends. Nothing in s 168 or the associated provisions of the Electoral Act purports to suggest that the presence on the ballot of a candidate, later found to be disqualified, as part of a 145 In re Wood (1988) 167 CLR 145 at 172; [1988] HCA 22. See also s 379 of the Electoral Act. 146 (1988) 167 CLR 145. 147 (1999) 199 CLR 462; [1999] HCA 30. 148 Wood (1988) 167 CLR 145 at 166. See also Sykes v Cleary (1992) 176 CLR 77 at 102; Free v Kelly (1996) 185 CLR 296 at 302-304; [1996] HCA 42. 149 Wood (1988) 167 CLR 145 at 166. 150 (1988) 167 CLR 145 at 167. multi-person group invalidates the ballot151. Indeed, by virtue of s 272(2) of the Electoral Act, votes above the line are expressly deemed to have been marked below the line152. Ms McEwen has not demonstrated that the special count proposed by the Attorney-General and Mr Day would result in a distortion of the voters' real intentions rather than provide a reflection of the true legal intent of the voters so far as it is consistent with the Constitution and the Electoral Act. Indeed, Ms McEwen's contention that the votes cast for Family First should be disregarded would, if accepted, constitute a most serious distortion of the real intentions of many thousands of voters, by depriving those votes of all effect. In this regard, Mr Day received a total of 72,392 votes. Mr Day received 5,495 first preference personal votes below the line, and there were 24,817 first preference above the line votes for the Family First group. The remaining votes received by Mr Day were from second or later preferences, whether below or above the line. Ms McEwen's suggestion, that voters who cast above the line votes for Family First may not have intended that their votes should flow to the next individual nominee of the Family First group in the event that Mr Day was incapable of being elected, rests upon the assumption that those voters did not understand the effect of casting their vote above the line for Family First. That assumption proceeds upon a view of the intelligence of one's fellow citizens which is inconsistent with the assumption as to the intelligence of the electorate that underpins the provisions of the Electoral Act, and, indeed, the very idea of democracy. Costs On behalf of the Attorney-General, the Court was informed that the Commonwealth agreed to submit to an order that it pay Mr Day's costs of these proceedings. It was submitted that no other order for costs should be made. On behalf of Ms McEwen, it was argued that an order for costs should be made in her favour. In this regard, Ms McEwen invoked the power conferred on the Court of Disputed Returns by s 360(4) of the Electoral Act "to order costs to be paid by the Commonwealth where the Court considers it appropriate to do so". 151 Wood (1988) 167 CLR 145 at 167, 174-175. 152 Day v Australian Electoral Officer (SA) (2016) 90 ALJR 639 at 647-648 [31]; 331 ALR 386 at 396-397; [2016] HCA 20. In Nile v Wood153, Deane and Toohey JJ explained that the power conferred by s 360(4): "is not constricted by reference to the principles controlling the making of an order for costs inter partes … [but] should be exercised when considerations of what is fair and just support, on balance, an order indemnifying a party against costs". In the present case, there can be no suggestion that Ms McEwen's participation in these proceedings was unreasonable: Ms McEwen had a real interest in the outcome of the proceedings, as was recognised by the order deeming her to be a party. Ms McEwen's participation in the hearing in this Court was of real assistance to the Court in its consideration of the relatively novel question of the construction of s 44(v) of the Constitution. In addition, Ms McEwen's participation provided a contradictor in relation to Question (b). Finally, it could not be said that her participation in the hearing before this Court prolonged the hearing in any substantial way. In these circumstances, it is appropriate that an order be made that, subject to any other order made by a judge of this Court, the Commonwealth pay Ms McEwen's costs of the proceedings. Orders The questions referred to this Court should be answered as follows: (a) Whether, by reason of s 44(v) of the Constitution, or for any other reason, there is a vacancy in the representation of South Australia in the Senate for the place for which Robert John Day was returned; Answer: Yes. If the answer to Question (a) is "yes", by what means and in what manner that vacancy should be filled; Answer: The vacancy should be filled by a special count of the ballot papers. Any directions necessary to give effect to the conduct of the special count should be made by a single Justice. (c) Whether, by reason of s 44(v) of the Constitution, or for any other reason, Mr Day was at any time incapable of sitting as a Senator prior to the dissolution of the 44th Parliament and, if so, on what date he became so incapable; 153 (1988) 167 CLR 133 at 143; [1988] HCA 30. Answer: Yes. Mr Day was incapable of sitting as a Senator from 26 February 2016. (d) What directions and other orders, if any, should the Court make in order to hear and finally dispose of this reference; Answer: Unnecessary to answer. (e) What, if any, orders should be made as to the costs of these proceedings. Answer: The Commonwealth should pay Mr Day's and Ms McEwen's costs of the proceedings, save for any costs excluded by an order of a Justice of the Court. NettleJ 218 NETTLE AND GORDON JJ. Mr Robert John Day AO commenced his term as a senator for the State of South Australia on 1 July 2014 in the 44th Parliament of the Commonwealth. On 9 May 2016, the 44th Parliament was dissolved by a simultaneous dissolution of both the Senate and the House of Representatives. After the ensuing general election, Mr Day was declared on 4 August 2016 as elected to the Senate as a senator for South Australia. He resigned as a senator for South Australia on 1 November 2016. Section 44 of the Constitution, headed "Disqualification" and found in Pt IV of Ch I of the Constitution, includes s 44(v), which relevantly provides that any person who: "(v) has any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth otherwise than as a member and in common with the other members of an incorporated company consisting of more than twenty-five persons; shall be incapable of being chosen or of sitting as a senator …" (emphasis added) On 7 November 2016, the Senate resolved that certain questions about a vacancy in the representation of South Australia in the Senate, for the place for which Mr Day was returned, should be referred to the Court of Disputed Returns ("the Court") pursuant to s 376 of the Commonwealth Electoral Act 1918 (Cth) ("the Electoral Act"). Substantial materials were attached to the letter ("the Reference") referring the following questions to the Court: "(a) whether, by reason of s 44(v) of the Constitution, … there is a vacancy in the representation of South Australia in the Senate for the place for which [Mr Day] was returned; if the answer to Question (a) is 'yes', by what means and in what manner that vacancy should be filled; (c) whether, by reason of s 44(v) of the Constitution, … Mr Day was at any time incapable of sitting as a Senator prior to the dissolution of the 44th Parliament and, if so, on what date he became so incapable; (d) what directions and other orders, if any, should the Court make in order to hear and finally dispose of [the Reference]; and NettleJ (e) what, if any, orders should be made as to the costs of these proceedings." Questions (a) and (c) concern an allegation that Mr Day had, at least, an indirect pecuniary interest in a lease agreement between Fullarton Investments Pty Ltd ("Fullarton Investments"), the owner of his electorate office premises at 77 Fullarton Road, Kent Town, South Australia ("the Fullarton Road Property"), as lessor, and the Commonwealth, represented by a Division within the Department of Finance, as lessee, and that that interest was of a kind prohibited by s 44(v) of the Constitution. If the answer to Question (a) is that there is a vacancy, then two further questions arise. Question (c) asks whether Mr Day became incapable of sitting as a senator prior to the dissolution of the 44th Parliament and, if so, on what date. Question (b) asks "by what means and in what manner that vacancy should be filled". Those questions should be answered as follows: By reason of s 44(v) of the Constitution, there is a vacancy in the representation of South Australia in the Senate for the place for which Mr Day was returned. The vacancy should be filled by a special count of the ballot papers. Any directions necessary to give effect to the conduct of the special count should be made by a single Justice. By reason of s 44(v) of the Constitution, Mr Day was incapable of sitting as a senator on and after 1 December 2015, being a date prior to the dissolution of the 44th Parliament. After identifying the parties and summarising the relevant facts, these reasons address the proper construction of s 44(v) of the Constitution and its application to Mr Day, before turning to the manner in which the vacancy is to be filled. Questions (d) (other orders) and (e) (costs) are then addressed. Parties Each of Mr Day and the Attorney-General of the Commonwealth sought to be heard on the hearing of the Reference and was deemed to be a party to the Reference pursuant to s 378 of the Electoral Act. Each was represented at the hearing of the Reference. Ms Anne McEwen also sought to be heard on the hearing of the Reference and was deemed to be a party to the Reference. She asserted that she had "a real and distinct interest in whether or not Mr Day was validly elected to the Senate and, if he was not, what method should be adopted to identify the person elected to the twelfth spot for South Australia". NettleJ The foundation for Ms McEwen's assertion was that she was the fourth of six listed candidates in the Australian Labor Party group on the ballot paper for the election of senators for South Australia. The three Australian Labor Party candidates listed above Ms McEwen were elected. On the 457th count for the representation of South Australia in the Senate, being the final count, Mr Day was the 12th and final candidate elected. At that last count, Ms McEwen was the only candidate, other than Mr Day, who had not been excluded from the count. Facts There were three sources of facts: the materials contained in the Reference, additional facts and documents the parties agreed should be evidence on the hearing of the Reference and additional factual findings made after a two day trial154. The following summary of the facts relevant to the determination of the Reference is drawn from those sources. The Fullarton Road Property was owned by B & B Day Pty Ltd ("B & B Day"). B & B Day is the trustee of the Day Family Trust, a discretionary trust. Mr Day and his wife, Mrs Bronwyn Day, are among the beneficiaries of the Day Family Trust. Mr Day was the sole director and sole shareholder of B & B Day until 30 June 2014, when he was replaced by Mrs Day. Mr Day was and remained the appointor of the Day Family Trust. Fullarton Investments was incorporated on 16 December 2013 for the express purpose of purchasing the Fullarton Road Property from B & B Day. Fullarton Investments is the trustee of the Fullarton Road Trust, a discretionary trust established by deed on the same day that Fullarton Investments was incorporated. The Day Family Trust is a beneficiary of the Fullarton Road Trust. On 24 April 2014, Fullarton Investments purchased the Fullarton Road Property from B & B Day, for a recorded purchase price of $2.1 million. A memorandum of transfer of the Fullarton Road Property was executed on 4 September 2014 by Mr Day, purportedly as sole director and sole secretary of B & B Day, and a Mrs Debra Smith, as sole director and sole secretary of Fullarton Investments. When Mr Day executed the memorandum of transfer, he was neither a director nor a secretary of B & B Day. Mrs Smith was the wife of Mr John Smith, a friend and a business partner of Mr Day until at least late 2013. The memorandum of transfer of the Fullarton Road Property from B & B Day to Fullarton Investments was registered on 11 November 2014. The cash consideration of $2.1 million was not then and has not since been paid by Fullarton Investments to B & B Day. B & B Day or Mr Day paid the stamp 154 Re Day (2017) 91 ALJR 262; [2017] HCA 2 ("the Factual Judgment"). NettleJ duty on the transfer of the Fullarton Road Property from B & B Day to Fullarton Investments (in the amount of $109,330), the fee on the registration of the transfer (in the amount of $15,319.50) and the conveyancers' professional fees, for a total of $125,549.19. Fullarton Investments was and remains indebted to B & B Day for the purchase price. Fullarton Investments holds the Fullarton Road Property as trustee of the Fullarton Road Trust. From April 2015, Mr Day used portions of the Fullarton Road Property as his electorate office. The Commonwealth, represented by the Ministerial and Parliamentary Services Division, Corporate and Parliamentary Services Group of the Department of Finance, entered into a lease with Fullarton Investments for the purpose of Mr Day using those parts of the Fullarton Road Property as his electorate office. The lease was executed on 1 December 2015, with a commencement date of 1 July 2015. Mr Day approved the terms of the lease. Under the lease, Fullarton Investments was entitled to direct the Commonwealth to pay rent to any person. On 12 June 2015, Fullarton Investments had submitted a completed "Vendor Information" form to the Commonwealth's leasing manager. Under the heading "Bank Account Details", Fullarton Investments nominated "Fullarton Nominees", a business name owned by Mr Day, as the name of the relevant bank account. Mr Day owned that bank account. Under the heading "Contact Information", the form recorded "[Mr] Day" as the contact name together with a phone number and an email address, being "[email protected]". The form was signed by Mr Day as "Representative" of Fullarton Investments. Mr Day also signed the covering letter, which was on "Fullarton" letterhead. On 26 February 2016, Ms Joy Montgomery (Mr Day's executive assistant whilst he was a senator) provided the Department of Finance with a rental form directing the Commonwealth to pay the rent to "Fullarton Nominees" and giving the banking details for the account held in that name, which, as noted earlier, Mr Day owned. No rent under the lease was, or ever has been, paid by the Commonwealth. On the day on which the memorandum of transfer of the Fullarton Road Property was registered, 11 November 2014, a mortgage previously granted by B & B Day to the National Australia Bank ("NAB") over the Fullarton Road Property, as security for a loan facility approved on 2 January 2014, was discharged, and a new mortgage was registered in favour of NAB showing Fullarton Investments as the mortgagor. B & B Day remained liable to make payments to NAB under the 2 January 2014 facility. Mr and Mrs Day had given a personal guarantee and indemnity for up to $2 million for the performance by B & B Day of its obligations under the 2 January 2014 facility. NettleJ Following the transfer of the Fullarton Road Property to Fullarton Investments, the Fullarton Road Property continued to be used as security for loans made by NAB to companies associated with Mr Day and in respect of which Mr Day had provided a personal guarantee and indemnity. The terms of one of the guarantees and indemnities given by Mr Day were before the Court. Under cl 6.2 of that guarantee and indemnity, Mr Day agreed that, if the debtor (a company that Mr Day admitted was associated with him) did not pay an amount when due (up to an amount of $21.5 million), he would pay that amount when NAB demanded it. From the time of a demand, NAB could enforce that right against Mr Day155. It was not submitted, and there was no evidence to suggest, that the guarantee and indemnity was discharged by any of the transactions described. Mr Day admitted that, since the transfer of the Fullarton Road Property to Fullarton Investments, all outgoings in relation to the property have been paid by him, the Home Australia Group, the Family First Party, B & B Day and the Bert Kelly Research Centre. In the event that the Commonwealth did not pay rent to Fullarton Investments, that company had no other significant source of revenue from which to pay the purchase price of the Fullarton Road Property to B & B Day or to make payments to NAB. Funds would have had to come from other sources, including, if need be, from Mr Day as a guarantor of loans made by NAB. The various steps and transactions that have just been outlined were taken for the purpose of removing the Fullarton Road Property from Day family members and any entity in which Mr Day had an interest, and for the related purpose of "housing" the Fullarton Road Property in an entity so that Mr Day could "avail himself" of the Commonwealth rental allowance. In fact, the benefit provided by the Commonwealth is office accommodation156, not an allowance for rent. Those various steps and transactions had as their genesis an email sent by one of Mr Day's advisors to Mrs Smith (copied to Mr Day) on 2 December 2013, which was in the following terms157: 155 See Re Taylor; Ex parte Century 21 Real Estate Corporation (1995) 130 ALR 723 at 725-726; O'Donovan and Phillips, Modern Contract of Guarantee, 4th ed (looseleaf) at [10.1710]; Andrews and Millett, Law of Guarantees, 7th ed (2015) at 156 See Item 7 of Pt 1 of Sched 1 to the Parliamentary Entitlements Act 1990 (Cth). 157 Re Day (2017) 91 ALJR 262 at 280 [92]. NettleJ "[Mr Day] has sought advice on establishing an entity in which the Senate Office on Fullarton Road can be housed so as to be able to avail himself of the rental allowance provided by the government. I propose incorporating a new company with [Mrs Smith] as sole director and shareholder, to act as trustee for a discretionary trust. This removes the property from Day family members and any entity in which [Mr Day] has an interest, and by having [Mrs Smith] as sole director, puts further distance between the Trust and [Mr Day's] business interests and [business] partner of nearly 40 years. The trust will simply hold the [Fullarton Road Property] and collect rent on a regular basis. That rent will then pass back to the Day Family Trust so there will be no profit nor loss in the new trust." However, as the Factual Judgment records158, although the steps in fact taken and transactions in fact entered into were directed at those two related purposes, many of the steps taken in connection with carrying those purposes into effect were not consistent with detailed planning or careful implementation. The documents were not always consistent one with the other. Moreover, Mr Day made a statement to the Department of Finance in which he said, in effect, that he had sold the property to Fullarton Investments and that he had retained the funding to secure the purchase of the Fullarton Road Property. Mr Day's statement of what he had done was legally inaccurate. Of course, he would not be the first person who held an inaccurate belief of that kind. But that inaccurate belief caused further inconsistencies in the documentation. For example, the original idea described by the advisor was for the rent from the Commonwealth to "pass back" to the Day Family Trust. How that was to occur was not specified. In the end, as has been seen, Fullarton Investments requested that the rent be paid directly into a bank account owned by Mr Day and not to B & B Day or the Day Family Trust. The questions in the Reference must be answered having regard to the steps that were taken and the transactions that were made. Section 44(v) Section 44(v) of the Constitution is set out above. It relevantly provides that a person will be incapable of being chosen or of sitting as a senator if: (1) there is an agreement with the Public Service of the Commonwealth; and (2) the person has a direct or indirect pecuniary interest in that agreement that 158 Re Day (2017) 91 ALJR 262 at 272 [35], 284 [112]. NettleJ arises otherwise than as a member and in common with the other members of an incorporated company consisting of more than 25 persons. Section 44(v) must be interpreted not only according to the ordinary meaning of its text but also in light of its place in the structure of the Constitution and its history159, recognising that the Constitution is "intended to apply to the varying conditions which the development of our community must involve"160. It is necessary to look at each element of s 44(v). Agreement with the Public Service of the Commonwealth The common position of all the parties is that the lease between Fullarton Investments and the Commonwealth161 was an "agreement" with the Public Service of the Commonwealth for the purposes of s 44(v). The parties, however, adopted different approaches as to what constitutes an "agreement" within the meaning of s 44(v) generally. As will become evident, it is unnecessary to resolve that issue in this Reference. Direct or indirect pecuniary interest The text of s 44(v) refers to, and requires, a direct or indirect pecuniary interest. Although the concept of an "interest" can be vague and uncertain162, it will take its meaning from its context. A "pecuniary interest" within the meaning of s 44(v) should be understood as an "interest sounding in money or money's worth"163. The direct or indirect interest must be pecuniary in the sense that, through the possibility of a not 159 McGinty v Western Australia (1996) 186 CLR 140 at 230-231; [1996] HCA 48. 160 McGinty (1996) 186 CLR 140 at 231 quoting Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 368; [1908] HCA 95. 161 Represented by a Division within a Group of the Department of Finance, which is a department of State of the Commonwealth established under s 64 of the Constitution. 162 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 357 [54]; [2000] HCA 63. 163 Webb v The Queen (1994) 181 CLR 41 at 75 fn 33; [1994] HCA 30. NettleJ insubstantial164 financial gain or loss by the existence, performance or breach of the agreement with the Public Service of the Commonwealth, that person could conceivably be influenced in the exercise of their functions, powers and privileges, or in the performance of their duties, as a member of Parliament; because the person could conceivably be influenced by the potential conduct of the executive in performing or not performing the agreement or because that person could conceivably prefer their private interests over their public duty. A "financial gain or loss" is not to be equated with the receipt of money. It is sufficient if the person's "pockets … might be affected"165. As the Attorney-General submitted, it is sufficient if the interest affects what the person has to pay out, or if it affects the financial reward that the person is likely to receive, whether in the form of money, other consideration, or relief from making a financial outlay. Nor is there any requirement that the interest be legal or equitable or legally enforceable. The requirement that the direct or indirect pecuniary interest be in the agreement is an important and necessary check on s 44(v). For the purposes of s 44(v), the person need not be a party to the relevant agreement, but the direct or indirect interest must be a pecuniary interest in the agreement. And "the disqualifying interest [in the agreement] must be one in existence at the critical time, and not merely a possibility of acquiring an interest"166. As Gavan Duffy J said in Ford v Andrews167: "A man is directly interested in a contract if he is a party to it, he is indirectly interested if he has the expectation of a benefit dependent on the performance of the contract; but in either case the interest must be in the contract, that is to say, the relation between the interest and the contract must be immediate and not merely connected by a mediate chain of possibilities." Adopting and adapting the words of Gavan Duffy J, whether a person has a pecuniary interest (direct or indirect) "in [an] agreement" may be answered by 164 The law cares not about trifling matters: see, eg, Shipton, Anderson & Co v Weil Brothers & Co [1912] 1 KB 574. 165 See, eg, Brown v Director of Public Prosecutions [1956] 2 QB 369 at 378 cited in Rands v Oldroyd [1959] 1 QB 204 at 213-214. 166 Ford v Andrews (1916) 21 CLR 317 at 325; see also at 320-321, 335; [1916] HCA 167 (1916) 21 CLR 317 at 335. NettleJ asking: does the person's identified right or benefit (which does not have to be legal or equitable or legally enforceable) make that person necessarily interested in the agreement within the meaning of s 44(v)? Put another way, is the relation between the pecuniary interest (direct or indirect) and the agreement immediate or merely connected by a chain of possibilities? An example is illustrative of the point. The partner of a parliamentarian is engaged as an employee of the Commonwealth168. The benefit that the parliamentarian obtains as a result of the partner's income might be thought to give rise to an indirect pecuniary interest in the partner's contract. Does that indirect interest make the parliamentarian necessarily interested in the partner's contract within the meaning of s 44(v)? The answer is "no". The relation between the indirect interest and the contract is not immediate but connected by "a mediate chain of possibilities". By contrast, consider the case of a parliamentarian who enters into a non- binding consultancy arrangement with an information technology company whereby, in return for the parliamentarian advising the company on its dealings with government, the company will pay the parliamentarian an amount equal to five per cent of the profits it derives from each information technology contract with the public service into which it enters over the next three years. Plainly, the benefit in the form of the profit share that the parliamentarian derives from each such contract would be an indirect pecuniary interest and it would be an immediate pecuniary interest in each such contract, despite not being legally enforceable. The nature and extent of the indirect pecuniary interest to which s 44(v) attaches, as well as the fact that the person's identified right or benefit does not have to be legal or equitable or legally enforceable, are reinforced by the proviso in s 44(v). That proviso expressly excludes from the reach of s 44(v) the interest of a shareholder in a company with more than 25169 shareholders where that person's interest is in common with the other shareholders. The proviso reinforces that the interest of a shareholder in a corporation that enters into an agreement with the Public Service of the Commonwealth may, at least potentially, constitute an "indirect pecuniary interest" in that agreement. But, as has been seen, that is not the question for the purposes of s 44(v). The question 168 s 22 of the Public Service Act 1999 (Cth). 169 In 1896, 25 was the maximum number of shareholders for a proprietary company in Victoria: s 2 of the Companies Act 1896 (Vic). See also Official Record of the Debates of the Australasian Federal Convention, (Sydney), 21 September 1897 at NettleJ is whether, because of that interest in that agreement, that person could conceivably be influenced in the exercise of their functions, powers and privileges, or in the performance of their duties, as a member of Parliament. Five other matters should be noted about the test just propounded. First, it is both unnecessary and inappropriate to determine the outer boundaries of what is a "pecuniary interest in any agreement" for the purposes of s 44(v). History tells us that the nature and the form of a person's dealings are not limited by experience but by imagination. In particular, whether, as the Attorney-General submitted, "agreement" is not limited to "contract" but means "any agreement, arrangement or understanding", or whether "agreement" includes both executory and certain executed contracts, cannot and should not be determined in this Reference. Each case will depend on its own facts. What can be stated is that s 44(v) does not extend to an "agreement with the Public Service of the Commonwealth" in which a person has an "interest" unless, by reason of the existence, performance or breach of that agreement, that person could conceivably be influenced by the potential conduct of the executive in performing or not performing the agreement or that person could conceivably prefer their private interests over their public duty. Second, in In re Webster170, Barwick CJ described the relevant sphere of influence as being "in relation to Parliamentary affairs"171. In the context of s 44(v), that sphere of influence is now better understood as being in the exercise of a person's functions, powers and privileges, and in the performance of their duties, as a member of Parliament. Third, it might be thought that the first identified influence (by the executive) is encompassed in the second (preferring private interests over public duty). The separation of the two recognises that s 44(v) is concerned with more than one species of influence – influence by the executive over the parliamentarian and, independently of the executive, the parliamentarian preferring their own private interests over their public duty. Fourth, the test described above differs from that proposed by the Attorney-General in argument; namely whether "there is a real risk that a person could be influenced, or be perceived to be influenced, in relation to parliamentary affairs by a direct or indirect financial interest" (emphasis added). The test propounded in these reasons is put on the basis of "conceivable influence". That test is not evaluative or impressionistic. It is a test that looks at possibilities. 170 (1975) 132 CLR 270; [1975] HCA 22. 171 (1975) 132 CLR 270 at 280, 286. NettleJ It does not depend upon some assessment of external perceptions. It does not deal with perceptions because, unlike the apprehended bias cases172, s 44(v) does not permit an analysis of influence limited to a specific date or a specific subject matter. Section 44(v) was included in the Constitution to prevent both influence by the executive over the parliamentarian and, independently of the executive, the parliamentarian preferring their own private interests over their public duty. Although "the disqualifying interest [in the agreement] must be one in existence at the critical time, and not merely a possibility of acquiring an interest"173, the manner and the circumstances in which the influence could conceivably occur are not known. The question is whether the direct or indirect pecuniary interest in the agreement could conceivably influence the person. As will later be seen, it builds on the test propounded in Webster but recognises, contrary to Webster, that the purpose of s 44(v) is not confined to protecting parliamentarians from being influenced by the executive. Fifth, the test described confines the disqualifying effect of s 44(v) by reference to its purposes. But that confinement does not depend upon giving some narrow or limited operation to the notion of "the Public Service of the Commonwealth" that would exclude agreements specifically authorised by statute. As will later be explained, the lease in this case was made to provide a benefit that s 4(1) of the Parliamentary Entitlements Act 1990 (Cth) required the Commonwealth to provide to Mr Day. No useful distinction can now be drawn between agreements made with "the Public Service of the Commonwealth" and agreements made with either the Commonwealth or the Crown in right of the Commonwealth. As s 56(1) of the Judiciary Act 1903 (Cth) recognises, legally enforceable agreements are enforced against The Commonwealth174, the executive government of the Commonwealth is not a legal person. The right and duty bearing entity relevantly called into existence by the Constitution was and is the Commonwealth175. As was pointed out the Commonwealth. 172 See, eg, Ebner (2000) 205 CLR 337; Isbester v Knox City Council (2015) 255 CLR 135; [2015] HCA 20. 173 Ford (1916) 21 CLR 317 at 325; see also at 320-321, 335. 174 (2012) 248 CLR 156 at 184 [21], 237 [154]; [2012] HCA 23. 175 See also Public Service Act 1999 (Cth). NettleJ And, as demonstrated in Sue v Hill176, references to the Crown or the Crown in right of the Commonwealth may impede accurate analysis in this field of discourse. Any agreement, arrangement or understanding made in the course of Commonwealth government business will ordinarily be negotiated by one or more members of the Public Service of the Commonwealth. In that sense, the agreement will be made with the Public Service of the Commonwealth. It is in these circumstances now not possible to treat the phrase "any agreement with the Public Service of the Commonwealth" as limited in operation by seeking to draw the distinction earlier mentioned – between an agreement made with the Public Service on the one hand and an agreement made with the Commonwealth or the Crown in right of the Commonwealth on the other. The supposed distinction is without practical or legal content. Construction consistent with constitutional structure and history The construction of s 44(v) adopted in these reasons is consistent with the place of s 44(v) in the structure of the Constitution and with its history177. Section 44(v) is located in Ch I of the Constitution, which provides for a system of representative government178: a system that vests the legislative power of the Commonwealth in a Parliament179 and gives the people of the Commonwealth control over the composition of the Parliament180. In that system of representative government, the elected representatives exercise sovereign power on behalf of the Australian people181. Parliamentarians "are not only chosen by the people but exercise their legislative and executive powers as representatives of the people"182. The fundamental obligation of a member of Parliament is "the duty to serve and, in serving, to act with fidelity and with a single-mindedness for the welfare of the community"183 (emphasis in original). 176 (1999) 199 CLR 462 at 497-503 [83]-[94]; [1999] HCA 30. 177 McGinty (1996) 186 CLR 140 at 230. 178 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 229; [1992] HCA 45. 179 s 1 of the Constitution. 180 See, eg, ss 7, 13, 24, 28, 32 and 41 of the Constitution. 181 ACTV (1992) 177 CLR 106 at 138. 182 ACTV (1992) 177 CLR 106 at 138. 183 R v Boston (1923) 33 CLR 386 at 400; [1923] HCA 59. NettleJ And, in the exercise of their powers, parliamentarians are necessarily accountable to the people for what they do184. Moreover, the construction adopted is consistent with s 45(iii) of the Constitution, which operates to vacate the place in Parliament of a senator or member of the House of Representatives who "directly or indirectly takes or agrees to take any fee or honorarium for services rendered to the Commonwealth, or for services rendered in the Parliament to any person or State". What would become s 44(v) was the subject of debate in the sessions of the Constitutional Conventions. At the Adelaide session of the Constitutional Convention in 1897, in the course of a debate about cl 46, which would later form the basis of s 44(v), Isaac Isaacs said that "[w]e should be careful to do all that is possible to separate the personal interests of a public man from the exercise of his public duty"185, and that the "public are interested in seeing and ensuring, so far as it is possible to ensure it, that no member of Parliament shall for his own personal profit allow his judgment to be warped in the slightest when he is called upon to decide on questions of public moment"186. The drafters of the Constitution thus recognised that s 44(v) was directed at ensuring the separation of the personal interests of a parliamentarian from the performance of their public duties. As the debates at the Constitutional Convention in Sydney in 1897 record, the drafters were concerned with ensuring that what was to become s 44(v) guarded against individuals making a personal profit out of their public positions, and that that profit should also not be achieved indirectly187. Barwick CJ considered the scope and meaning of s 44(v) in Webster188. Some aspects of the decision should be noted. 184 ACTV (1992) 177 CLR 106 at 138. 185 Official Report of the National Australasian Convention Debates, (Adelaide), 21 April 1897 at 1037. 186 Official Report of the National Australasian Convention Debates, (Adelaide), 21 April 1897 at 1038. 187 Official Record of the Debates of the Australasian Federal Convention, (Sydney), 21 September 1897 at 1023-1024. 188 (1975) 132 CLR 270. NettleJ First, identified in construing s 44(v), Barwick CJ the "precise progenitor"189 of s 44(v) as s 1 of the House of Commons (Disqualification) Act 1782 (UK)190. That is not accurate. Barwick CJ observed that the 1782 Act was a result of times when Parliament was establishing its independence of the Crown and it was thought that there was a real likelihood of a person with whom the government had a contract being influenced by the Crown191. Quoting English authorities, Barwick CJ noted that the 1782 Act was an Act that guarded against the mischief of "sapping [Parliament's] freedom and independence by members being admitted to profitable contracts"192, and that it "refers to the case of a man having a contract under which he is to derive some future benefit from dealing with the government, in respect of which they might control him; as, for instance, by directing their officers not to look too closely to the sort of goods he sent in, or the like"193. Although Barwick CJ correctly analysed the 1782 Act, it was not the "precise progenitor" of s 44(v). The wording of the 1782 Act was initially adopted by the drafters. But the provision underwent a series of changes as a result of the Constitutional Conventions194. A comparison of s 44(v) with s 1 of the 1782 Act shows that the most obvious difference is the inclusion of the words "pecuniary interest", which had previously been used in Australia in local government or related legislation195. In the context of local government legislation, as early as 1873, it was said that the existence of a "manifest possibility of a conflict between duty and interest" was enough to give rise to a direct or indirect pecuniary interest196. A distinction between the existence of a disqualifying interest and the possibility 189 (1975) 132 CLR 270 at 278. 190 22 Geo III c 45. 191 (1975) 132 CLR 270 at 278. 192 (1975) 132 CLR 270 at 278 quoting In re Samuel [1913] AC 514 at 524. 193 (1975) 132 CLR 270 at 278 quoting Royse v Birley (1869) LR 4 CP 296 at 194 See Hammond, "Pecuniary Interest of Parliamentarians: A Comment on the Webster Case", (1976) 3 Monash University Law Review 91 at 95-100. 195 See Hammond, "Pecuniary Interest of Parliamentarians: A Comment on the Webster Case", (1976) 3 Monash University Law Review 91 at 93-94, 98. See, eg, s 173 of the Local Government Act 1890 (Vic). 196 Attorney-General v Mayor of Emerald Hill (1873) 4 AJR 135 at 136. NettleJ of a conflict existed and remains. The disqualifying interest must be one in existence at the critical time, and not merely a possibility of acquiring an interest197. Recognising that s 44(v) was part of the Constitution and had to be enforced, Barwick CJ considered that, in its construction and application, the purpose it sought to attain had always to be kept in mind198. But because Barwick CJ mistakenly thought that the "precise progenitor" was the 1782 Act, his Honour wrongly rejected any analogy with the disqualification provisions under local government legislation199 and, consistent with the practice at the time200, he did not address the Convention Debates in any detail. The purpose that Barwick CJ said s 44(v) sought to attain was too narrow201. Contrary to his Honour's view, it was not limited to interests that might expose a parliamentarian to "influence[] by the Crown in relation to Parliamentary affairs"202. It extends to interests that may affect how a parliamentarian performs his or her public duties. Second, Barwick CJ considered that, because disqualification under s 44(v) of the Constitution had "penal consequences", the provision should receive a strict construction203. We disagree. The Constitution does provide, in s 46, for penal consequences to attach if a person disqualified under s 44(v) sits in Parliament. However, the question of whether the person is "incapable of being chosen or of sitting as a senator" will depend, at least initially, on the various paragraphs of s 44, not s 46. Not only may s 46 never be reached, it operates "[u]ntil the Parliament otherwise provides", as Parliament did in s 3 of the Common Informers (Parliamentary Disqualifications) Act 1975 (Cth). And, in any event, as the Attorney-General submitted, by reference to the reasons 197 Ford (1916) 21 CLR 317 at 320-321, 325, 335. 198 (1975) 132 CLR 270 at 278. 199 (1975) 132 CLR 270 at 278. 200 See Cole v Whitfield (1988) 165 CLR 360 at 385; [1988] HCA 18. 201 (1975) 132 CLR 270 at 280. 202 (1975) 132 CLR 270 at 280; see also at 286, 288. 203 (1975) 132 CLR 270 at 279. See also Sykes v Cleary (1992) 176 CLR 77 at 116; [1992] HCA 60. NettleJ of Gibbs J in Beckwith v The Queen204, the supposed rule of construction about penal consequences is a rule of last resort. Questions (a) and (c) – Mr Day's indirect pecuniary interest in the lease Mr Day had an indirect pecuniary interest in the lease between Fullarton Investments and the Commonwealth, which disqualified him from being chosen or from sitting as a senator, and which arose no later than 1 December 2015, when the lease was executed. By the existence, performance or breach of the lease, Mr Day was exposed to the possibility of a not insubstantial financial gain or loss. That possibility arose in a number of ways. First, pursuant to the terms of the lease, which Mr Day approved, the bank account into which the rent was to be paid by the Commonwealth was a bank account owned by Mr Day in the name of "Fullarton Nominees". He was to directly receive the rent from the Commonwealth. Second, as Mr Day admitted, the Fullarton Road Property was used as security for loan facilities provided by NAB to companies associated with Mr Day. Mr Day had provided a guarantee and indemnity in relation to those facilities205. In the event that the Commonwealth did not pay rent under the lease, Fullarton Investments had no other substantial source of revenue from which to pay the purchase price of the Fullarton Road Property to B & B Day or to make payments to NAB. Funds would have had to come from other sources, including, if need be, from Mr Day as guarantor. Mr Day's identified right in or benefit from the lease (the rent) made him necessarily interested in the lease within the meaning of s 44(v). The relation between the interest (the rent) and the lease was immediate; they were not merely connected by a chain of possibilities. As a result of that identified right or benefit, Mr Day could conceivably have been influenced in the exercise of his functions, powers and privileges, or in the performance of his duties, as a member of Parliament; because he could conceivably have been influenced by the potential conduct of the executive in performing or not performing the lease or because he could conceivably have preferred his private interests over his public duty. 204 (1976) 135 CLR 569 at 576; [1976] HCA 55. 205 See [238] above. NettleJ influence by As seen earlier, s 44(v) is concerned with more than one species of the parliamentarian and, the executive over influence – independently of the executive, the parliamentarian preferring their own private interests over their public duty. Here, the "provision" of the lease, and the possibility of Mr Day being exposed to a not insubstantial financial gain or loss arising from its existence, performance or breach, could conceivably have influenced him in the exercise of his functions, powers and privileges, or in the performance of his duties, as a member of Parliament. In politics, those species of influence have been and remain relevant for all members of Parliament, whether they are independent, sitting on the cross-bench or a member of any political party (regardless of size), where on occasion each and every vote may be necessary for legislation to be enacted. To take just one example, s 4(1) of the Parliamentary Entitlements Act 1990 (Cth) provides members of both Houses of Parliament with specified "benefits". One of the "benefits" is "[o]ffice accommodation in the electorate, together with equipment and facilities necessary to operate the office, as approved by the Minister"206. Any proposed amendment that would affect that "benefit" could have placed Mr Day in a position where he would have been required "to separate the personal interests of a public man from the exercise of his public duty"207. He was "on both sides of the record". That is what s 44(v) seeks to prevent. The scenario described is a clear example of what falls within the ambit of s 44(v). There may well be others. Mr Day was disqualified from being chosen or of sitting as a senator no later than 1 December 2015, being the date when the lease was executed. The conclusion that Mr Day was disqualified follows from the steps that were taken and the transactions that were in fact entered into in relation to the Fullarton Road Property. That conclusion is not denied – indeed it is reinforced – if regard is had to the purpose of the arrangement that was made, as recorded in the email sent by Mr Day's advisor on 2 December 2013208. As the email records, Mr Day had sought advice on establishing an entity in which the Fullarton Road Property could be housed so that he could "avail 206 See Item 7 of Pt 1 of Sched 1 to the Parliamentary Entitlements Act 1990 (Cth). 207 Official Report of the National Australasian Convention Debates, (Adelaide), 21 April 1897 at 1037. 208 See [242] above. NettleJ himself" of The arrangement put in place was one where209: rental allowance provided by the the Commonwealth. Fullarton Investments was established (with Mrs Smith as sole director and shareholder) to act as trustee of a discretionary trust and to "house" the Fullarton Road Property so that Mr Day was "able to avail himself of the rental allowance provided by the government"; by reason of "housing" the Fullarton Road Property in Fullarton Investments, the Fullarton Road Property was removed from Day family members and any entity in which Mr Day had a direct interest, and further distance was put "between the [Fullarton Road Trust] and [Mr Day's] business interests and [business] partner of nearly 40 years"; and the Fullarton Road Trust would simply hold the Fullarton Road Property, collect rent on a regular basis and then "pass back" the rent to the Day Family Trust so that there would be no profit or loss in the Fullarton Road Trust. If, consistent with that arrangement, and contrary to the steps in fact taken and transactions in fact entered into, the rent was "passed back" to the Day Family Trust rather than directly to Mr Day, Mr Day would have had a disqualifying indirect pecuniary interest in the lease for the purposes of s 44(v). There was and remained the possibility of a not insubstantial financial gain or loss for Mr Day by the existence, performance or breach of the lease with the Commonwealth. That not insubstantial financial gain or loss, giving rise to the indirect pecuniary interest, would have arisen because, as Mr Day admitted, the Fullarton Road Property was used as security for facilities provided by NAB to companies associated with him. Mr Day had provided a guarantee and indemnity in relation to those facilities210. In the event that the Commonwealth did not pay rent to Fullarton Investments, it had no other substantial source of revenue from which to pay the purchase price of the Fullarton Road Property to B & B Day or to make payments to NAB. The funds would have had to come from other sources, including, if need be, from Mr Day as guarantor. That possibility of a not insubstantial financial gain or loss for Mr Day arising from the existence, performance or breach of the lease with the Public Service of the Commonwealth would have made him necessarily interested in the 209 Re Day (2017) 91 ALJR 262 at 280 [93]. 210 See [238] above. NettleJ lease within the meaning of s 44(v). The relation between the indirect pecuniary interest (the rent) and the lease was immediate. They were not merely connected by a chain of possibilities. On the facts in this matter, that the rent (if it were paid by the Commonwealth) would not have been paid directly to Mr Day does not mean that Mr Day's interest would not have been a disqualifying interest for the purposes of s 44(v). Why? Because of the possibility of Mr Day's not insubstantial financial gain or loss arising from the existence, performance or breach of the lease, Mr Day could conceivably have been influenced in the exercise of his functions, powers and privileges, or in the performance of his duties, as a member of Parliament; because he could conceivably have been influenced by the potential conduct of the executive in performing or not performing the lease or because he could have preferred his private interests over his public duty. Answers to Questions (a) and (c) The answer to Question (a) is that, by reason of s 44(v) of the Constitution, there is a vacancy in the representation of South Australia in the Senate for the place for which Mr Day was returned. The answer to Question (c) is that, by reason of s 44(v) of the Constitution, Mr Day was incapable of sitting as a senator on and after 1 December 2015, being a date prior to the dissolution of the 44th Parliament. Question (b) – How the vacancy should be filled The conclusion that Mr Day was incapable of sitting as a senator from at least 1 December 2015, and was therefore incapable of being chosen as a senator at the 2016 election, raises the question as to the order that should be made to fill the resulting vacancy in the Senate for South Australia. Section 360(1)(vi) of the Electoral Act authorises the Court to declare any candidate duly elected who was not returned as elected211. Incidental to that power is the power to order a special count212. The principles applicable to deciding by what means a vacancy is to be filled were established in In re Wood213. There it was said that a want of 211 See In re Wood (1988) 167 CLR 145 at 172; [1988] HCA 22. See also s 379 of the Electoral Act. 212 Wood (1988) 167 CLR 145 at 172. 213 (1988) 167 CLR 145. NettleJ qualification makes the particular indication of preference for the unqualified candidate a nullity; the unqualified candidate is to be treated as though they were deceased214. The provision to be applied by analogy in those circumstances is s 273(27) of the Electoral Act, being the provision that applies when a deceased candidate's name is on the ballot paper in a Senate election215. Section 273(27) relevantly provides that a vote indicated on a ballot paper opposite the name of a deceased candidate shall be counted to the candidate next in the order of the voter's preference, and the numbers indicating subsequent preferences shall be deemed to be altered accordingly. There is no dispute that this approach is appropriate for any votes cast for Mr Day below the line. However, Ms McEwen submitted that the votes cast above the line for the group of candidates (including Mr Day) endorsed by the Family First party should be disregarded on the basis that there is no "valid group". Section 168(1) of the Electoral Act relevantly provides that "[t]wo or more candidates for election to the Senate may make a joint request" for their names to be grouped in the ballot papers. Such a request must be in writing, signed by the candidates and given to the Electoral Officer with the nomination or nominations of the candidates216. Where such a request has been made, the names of the candidates "shall be printed in groups on the ballot papers in accordance with the requests" and a square must be printed above the dividing line and above the squares printed opposite the names of the candidates in the group217. Ms McEwen submitted that, because Mr Day was incapable of being chosen as a senator, his group (ie, Family First) only consisted of one eligible member – being less than the minimum permitted by s 168(1) – and thus there was no valid group or group request permitting the Electoral Officer to print Family First's square above the line. As Ms McEwen acknowledged, a similar argument was considered and rejected by Mason CJ in Wood218. Ms McEwen submitted that Wood should be 214 Wood (1988) 167 CLR 145 at 166. 215 Wood (1988) 167 CLR 145 at 166. 216 s 168(2) of the Electoral Act. 217 See s 210(1)(a) and (f)(ii) of the Electoral Act. 218 (1988) 167 CLR 145 at 174. NettleJ distinguished for three reasons. Before addressing each of those reasons, it is important to note that none properly grapples with s 272(2) of the Electoral Act. As was explained in Day v Australian Electoral Officer (SA), "[t]he effect of a number written in a square printed on the ballot paper above the line is a vote for the group of candidates appearing below the line in the order in which they appear, in accordance with the group's position in the elector's order of preferences, above the line"219. In that way, there is no substantive difference between a vote above the line and a vote below the line for the purposes of the Electoral Act. Votes above the line are deemed to have been marked below the line by s 272(2). There is then no reason to treat those votes any differently for the purpose of the procedure described in s 273(27). followed and not should be It is against that background that Ms McEwen's contentions that Wood should be distinguished considered. First, Ms McEwen submitted that Wood should be distinguished because the "group voting ticket" is no longer a feature of the Electoral Act. It is true that, as a result of the changes to the Electoral Act, different consequences would follow if a vote in a square above the line were to be disregarded. Previously, a ballot paper marked above the line meant that the ballot paper was deemed to have been marked in accordance with the relevant group voting ticket220, meaning that, if the mark above the line were disregarded, no preferences would be distributed at all. In contrast, under the present system, only those votes that would otherwise flow to the other candidate for Family First by the operation of s 272(2) in conjunction with the procedure described in s 273(27) would be disregarded. That the proportion of preferences that might not be distributed if the above the line votes for Family First were ignored is now smaller than it would have been under the group voting system provides no reason to simply ignore the 24,817 votes cast for Family First above the line. Ms McEwen's contention also ignores the possibility that some of those people who voted above the line for Family First did not place a number in any other square above the line221, meaning that it is possible that, like in Wood, their vote would be totally disregarded. 219 (2016) 90 ALJR 639 at 648 [31]; 331 ALR 386 at 397; [2016] HCA 20. 220 See s 272 of the Electoral Act (see also ss 211 and 239) as it stood before the commencement of the Commonwealth Electoral Amendment Act 2016 (Cth); Day v AEO (SA) (2016) 90 ALJR 639 at 645 [21]-[22], 646 [25]-[26]; 331 ALR 386 at 221 Such a vote is not informal: s 269(1) of the Electoral Act; Day v AEO (SA) (2016) 90 ALJR 639 at 648 [34]; 331 ALR 386 at 397. NettleJ Contrary to Ms McEwen's submissions, it is not possible, and it would not be right, to take account of only so much of the electors' expressions of preference as would lead to the result that all preferences cast for the group of candidates endorsed by Family First are to be ignored. Only the election of Mr Day miscarried, so only a primary or preferential vote for him must be disregarded222. Second, in relation to Wood, Ms McEwen took issue with Mason CJ's reliance on the proposition that Mr Wood's name "was properly on the ballot-paper"223. That was the conclusion of the Full Court in Wood, which held224: "An unqualified candidate who has been duly nominated, that is, one whose nomination complies with the formal requirements of [the Electoral Act], is a candidate whose name is properly included on the ballot paper." Ms McEwen, in effect, challenged that conclusion, seeking to rely on s 172 of the Electoral Act (concerning the powers of the Electoral Officer to refuse a nomination in the case of non-compliance with certain provisions of the Electoral Act). But that provision existed at the time of Wood and has not since been relevantly amended. Moreover, Ms McEwen's submissions are contrary to the conclusion in Wood that the Electoral Officer has no general power to refuse a nomination in due form225. No reason was given for why that aspect of Wood should not be followed. The ballot paper was not informal226. Votes are valid except to the extent that the want of qualification makes the particular indication of preference a nullity227. There is no reason for disregarding the other indications of the voter's preference228. There is no suggestion that the presence of Mr Day's name on the 222 See Wood (1988) 167 CLR 145 at 174. 223 (1988) 167 CLR 145 at 174. 224 (1988) 167 CLR 145 at 165. 225 (1988) 167 CLR 145 at 167. 226 Wood (1988) 167 CLR 145 at 165, 174. 227 Wood (1988) 167 CLR 145 at 166; Sykes v Cleary (1992) 176 CLR 77 at 101. 228 Wood (1988) 167 CLR 145 at 165-166; Sykes v Cleary (1992) 176 CLR 77 at 101. NettleJ ballot paper has "falsified the declared choice of the people" of the State of South Australia for any of the other 11 candidates who were declared to be elected229. Third, in relation to Wood, Ms McEwen contended that the Court's approach to determining the means by and manner in which the vacancy should be filled has evolved since Wood. She pointed to Sykes v Cleary230 and Free v Kelly231. Those cases do not assist. They concerned the materially different form of elections for The Attorney-General nevertheless accepted that a special count would not be ordered if the special count would "result in a distortion of the voters' real intentions". the House of Representatives. In this Reference, the votes cast in favour of Family First, of which Mr Day was an endorsed candidate, should be counted in favour of the next candidate in the group, in accordance with s 272(2) and the procedure described in s 273(27) of the Electoral Act. There is nothing to suggest that the votes cast above the line in favour of Family First were not intended to flow to the next individual nominee of that party in the event that Mr Day was not capable of being elected. 81.87 per cent of the first preference votes received by Mr Day were votes cast above the line for Family First. Once the operation of s 272(2) is taken into account, as was the position in Re Culleton (No 2), "[t]here is no reason to suppose that a special count would 'result in a distortion of the voters' real intentions', rather than a reflection of 'the true legal intent of the voters so far as it is consistent with the Constitution and [the Electoral Act]'"232. Question (d) – Other orders and directions to dispose of the Reference Question (d) should be referred to a single Justice to answer. 229 Wood (1988) 167 CLR 145 at 167; Re Culleton (No 2) (2017) 91 ALJR 311 at 319 [43]; [2017] HCA 4. 230 (1992) 176 CLR 77. 231 (1996) 185 CLR 296; [1996] HCA 42. 232 (2017) 91 ALJR 311 at 319 [43] (footnote omitted). NettleJ Question (e) – Costs Section 360(1)(ix) of the Electoral Act gives the Court power to award costs, which includes the power to order costs to be paid by the Commonwealth where the Court considers it appropriate to do so233. that to submit to an order The Attorney-General agreed the Commonwealth pay Mr Day's costs of the Reference on a party-party basis. But the Attorney-General submitted that Ms McEwen should bear her own costs of the trial conducted on 23 and 24 January 2017 and of the hearing of the Reference before the Full Court. The Attorney-General accepted that additional facts emerged as a result of Ms McEwen's presence at the trial of facts but contended that she mounted a wide factual case that largely failed. There is some force in that contention. However, Ms McEwen was a party to the proceedings and her participation at the trial of facts did result in some additional factual findings being made. At the hearing of the Reference before the Full Court, some of those additional factual findings were relied upon by all the parties. Moreover, before the Full Court, Ms McEwen was the only contradictor in relation to Question (b). Accordingly, in this case, it is appropriate that Mr Day and Ms McEwen's costs of the proceedings be paid by the Commonwealth, save for costs excluded from this order by an order of a Justice. 233 s 360(4) of the Electoral Act. See also Nile v Wood (1988) 167 CLR 133 at 143; [1988] HCA 30. |
HIGH COURT OF AUSTRALIA Matter No B43/2018 PLAINTIFF AND COMMONWEALTH OF AUSTRALIA DEFENDANT Matter No B64/2018 PLAINTIFF AND COMMONWEALTH OF AUSTRALIA DEFENDANT Love v Commonwealth of Australia Thoms v Commonwealth of Australia [2020] HCA 3 Date of Hearing: 8 May 2019 & 5 December 2019 Date of Judgment: 11 February 2020 B43/2018 & B64/2018 ORDER Matter No B43/2018 The questions stated in the special case for the opinion of the Full Court are answered as follows: Is the plaintiff an "alien" within the meaning of s 51(xix) of the Constitution? Answer: The majority considers that Aboriginal Australians (understood according to the tripartite test in Mabo v Queensland [No 2] (1992) 175 CLR 1 at 70) are not within the reach of the "aliens" power conferred by s 51(xix) of the Constitution. The majority is unable, however, to agree as to whether the plaintiff is an Aboriginal Australian on the facts stated in the special case and, therefore, is unable to answer this question. Who should pay the costs of this special case? Answer: The defendant. Matter No B64/2018 The questions stated in the special case for the opinion of the Full Court are answered as follows: Is the plaintiff an "alien" within the meaning of s 51(xix) of the Constitution? Answer: Aboriginal Australians (understood according to the tripartite test in Mabo v Queensland [No 2] (1992) 175 CLR 1 at 70) are not within the reach of the "aliens" power conferred by s 51(xix) of the Constitution. The plaintiff is an Aboriginal Australian and, therefore, the answer is "No". Who should pay the costs of this special case? Answer: The defendant. Representation S J Keim SC with K E Slack and A J Hartnett for the plaintiff in each matter (instructed by Maurice Blackburn Lawyers) S P Donaghue QC, Solicitor-General of the Commonwealth, with N M Wood and J D Watson for the defendant in both matters (instructed by Australian Government Solicitor) P G Willis SC with T B Goodwin for the Attorney-General for the State of Victoria, intervening in both matters (instructed by Victorian Government Solicitor) at the hearing on 5 December 2019 Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Love v Commonwealth of Australia Thoms v Commonwealth of Australia Constitutional law (Cth) – Powers of Commonwealth Parliament – Power to make laws with respect to naturalisation and aliens – Meaning of "aliens" – Where plaintiffs foreign citizens, born outside Australia, who did not acquire Australian citizenship – Where plaintiffs biological descendants of indigenous peoples – Where plaintiffs' visas cancelled under s 501(3A) of Migration Act 1958 (Cth) – Whether statutory citizenship and constitutional alienage co-terminous – Whether an Aboriginal Australian (defined according to tripartite test in Mabo v Queensland [No 2] (1992) 175 CLR 1) can be "alien" within meaning of s 51(xix) of Constitution – Whether s 51(xix) supports application of ss 14, 189 and 198 of Migration Act to plaintiffs – Whether plaintiffs satisfy tripartite test. Words and phrases – "Aboriginal Australian", "alienage", "aliens", "allegiance", "body politic", "citizen", "connection to country", "essential meaning", "foreign citizen", "indicia of alienage", "nationality", "non-alien", "non-alienage", "non- citizen", "obligation of protection", "political community", "polity", "sovereignty", "spiritual connection", "subject", "territory", "traditional laws and customs", "tripartite test", "unlawful non-citizen". Constitution, s 51(xix), (xxvii). Australian Citizenship Act 2007 (Cth), ss 12, 13, 14, 15, 16. Migration Act 1958 (Cth), ss 5, 14, 189, 196, 198, 200, 501. KIEFEL CJ. These two special cases raise questions concerning s 51(xix) of the Constitution, which provides that the Commonwealth Parliament has power to make laws "for the peace, order, and good government of the Commonwealth with respect to: ... naturalization and aliens". The plaintiffs argue that the power should be read so as not to apply to a person who is not a citizen of Australia, who is a citizen of a foreign country and is not naturalised as an Australian citizen, but who is an Aboriginal person. That is to say, the plaintiffs contend that s 51(xix) is subject to an unexpressed limitation or exception. Each of the plaintiffs was born outside Australia – Mr Love in Papua New Guinea and Mr Thoms in New Zealand. They are citizens of those countries. They have both lived in Australia for substantial periods as holders of visas which permitted their residence but which were subject to revocation. They did not seek to become Australian citizens. Their visas were cancelled by a delegate of the Minister for Home Affairs under s 501(3A) of the Migration Act 1958 (Cth), the relevant effect of which is to require the Minister to cancel a person's visa if the person has been convicted of an offence for which a sentence of imprisonment of 12 months or more is provided1. Upon cancellation of their visas the plaintiffs became unlawful non-citizens2 and liable to be removed from Australia. The Migration Act and the Australian Citizenship Act 2007 (Cth) ("the Citizenship Act") are enacted under s 51(xix)3. The plaintiffs do not challenge the provisions of those statutes. They do not contend that the criteria stated in the Citizenship Act for Australian citizenship and the inference to be drawn from those criteria respecting the status of alien is not within the power given by s 51(xix). They contend that they are outside the purview of those statutes and s 51(xix) because they have a special status as a "non-citizen, non-alien". They say that they have that status because although they are non-citizens they cannot be aliens because they are Aboriginal persons. Mr Thoms identifies, and is accepted by other Gunggari People, as a member of the Gunggari People. He is a common law holder of native title which has been recognised by determinations made by the Federal Court of Australia4. Mr Love identifies as a descendant of the Kamilaroi group and is recognised as such by one Elder of that group. 1 Migration Act 1958 (Cth), s 501(6)(a), s 501(7)(c). 2 Migration Act 1958 (Cth), ss 13, 14. See, eg, Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 443 [156] per Gummow and Hayne JJ; Pochi v Macphee (1982) 151 CLR 101. 4 Kearns on behalf of the Gunggari People #2 v Queensland [2012] FCA 651; Foster on behalf of the Gunggari People #3 v Queensland [2014] FCA 1318. The question of law The question of law stated for the opinion of this Court in these special cases is whether each of the plaintiffs is an "alien" within the meaning of s 51(xix). The question as framed is apt to mislead as to the role of this Court. It is not for this Court to determine whether persons having the characteristics of the plaintiffs are aliens. Such an approach would involve matters of values and policy. It would usurp the role of the Parliament. The question is perhaps best understood to be directed to whether it is open to the Commonwealth Parliament to treat persons having the characteristics of the plaintiffs as non-citizens for the purposes of the Migration Act. Section 51(xix) Section 51(xix) gives the Commonwealth Parliament power to choose the criteria for alienage5. It gives the Parliament the power to provide the means by which that status is altered, which is to say by naturalisation. It gives the Parliament power to determine the conditions upon which a non-citizen may become a citizen and to attribute to any person who lacks the qualifications for citizenship the status of alien6. It is now regarded as settled that it is for the Parliament, relying on s 51(xix), to create and define the concept of Australian citizenship and its antonym, alienage7. At Federation it was well recognised that an attribute of an independent sovereign State was to decide who were aliens and whether they should become members of the community8. It was a view held by international jurists of the time 5 Koroitamana v The Commonwealth (2006) 227 CLR 31 at 38 [11] per Gleeson CJ Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 35 [2] per Gleeson CJ, Gummow and Hayne JJ. 7 Koroitamana v The Commonwealth (2006) 227 CLR 31 at 46 [48] per Gummow, Hayne and Crennan JJ, citing Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 173 [31], 180 [58], 188-189 [90], 192 [108]- [109], 215-216 [193]-[194], 219-220 [210]-[211], 229 [229]; see also Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 35 [2] per Gleeson CJ, Gummow and Hayne JJ. 8 Robtelmes v Brenan (1906) 4 CLR 395 at 400-401 per Griffith CJ. and was followed by the courts of the United Kingdom9. At Federation there were two leading theories about the status of subject or citizen and how it was to be determined. On one view that status was acquired by descent; on the other it was acquired by reference to a person's place of birth. The latter reflected the view of the common law, earlier expressed in Calvin's Case10, but which had been modified by statute in the United Kingdom. But by s 51(xix) it was to be left to the Commonwealth Parliament to deal with the subject matter of aliens11. Following Federation it was open to the Commonwealth Parliament to choose one or more of the common law approaches, or variations of them, so long as what was chosen could be said truly to answer the description of "alien"12. In Pochi v Macphee13, Gibbs CJ acknowledged that, necessarily, there must be a limit to Parliament's powers to determine who comes within the definition of an "alien". The limit to which his Honour referred was that Parliament could not expand the power under s 51(xix) by defining as aliens persons who could not possibly answer the description of an "alien" in the ordinary understanding of that word. No question of that kind14 arises in these special cases. The plaintiffs do not suggest that the criteria stated in the Citizenship Act are beyond the power of the Parliament. Rather, they argue that neither that statute nor s 51(xix) applies to a person who is a non-citizen, a citizen of a foreign country and an Aboriginal person. Section 51(xix) is not expressed to be subject to any prohibition, limitation or exception respecting Aboriginal persons. The task of this Court, in interpreting a provision of the Constitution, is to expound its text and where necessary to ascertain what is implied in it. Needless to say, questions of constitutional 9 Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 170 [21] per Gleeson CJ. (1608) 7 Co Rep 1a [77 ER 377]. 11 Singh v The Commonwealth (2004) 222 CLR 322 at 340-341 [30] per Gleeson CJ, 413-414 [251]-[252] per Kirby J. 12 Koroitamana v The Commonwealth (2006) 227 CLR 31 at 49 [62] per Kirby J. (1982) 151 CLR 101 at 109. 14 See Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 258 per interpretation cannot depend on what the Court perceives to be a desirable policy15 regarding the subject of who should be aliens or the desirability of Aboriginal non- citizens continuing to reside in Australia. The point presently to be made is that in the absence of a relevant constitutional prohibition or exception, express or implied, it is not a proper function of a court to limit the method of exercise of legislative power16. The question then is whether the plaintiffs can point to an implication by the accepted methods of constitutional interpretation. The Citizenship Act and the Australian body politic From the time of British settlement the legal status of Aboriginal persons in Australia – as subjects of the Crown – has not been different from other Australians. In Mabo v Queensland [No 2]17, it was explained that at settlement all persons present in Australia became subjects of the British Crown on the inception of the common law. With the enactment of the Nationality and Citizenship Act 1948 (Cth)18 British subjects became citizens of Australia. It has been observed19 that another effect of Australia becoming a fully independent sovereign nation, with its own brand of citizenship, was that the word "alien" became synonymous with non-citizen. Neither the Citizenship Act nor the Migration Act defines the term "alien". The Citizenship Act does specify the criteria for citizenship and it may be taken that Parliament attributes the status of alien to a person who does not have those characteristics. The preamble to the Citizenship Act states that "Australian citizenship represents full and formal membership of the community of the Commonwealth of Australia" and is a "common bond" involving reciprocal rights 15 Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 143-144 per 16 Adelaide Company of Jehovah's Witnesses Inc v The Commonwealth (1943) 67 CLR 116 at 133-134 per Latham CJ. (1992) 175 CLR 1 at 37-38 per Brennan J, with whom Mason CJ and McHugh J agreed, 80 per Deane and Gaudron JJ, 182 per Toohey J. 18 Later renamed the Australian Citizenship Act 1948 (Cth). 19 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 25 per Brennan, Deane and Dawson JJ, referring to Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178. and obligations. The community there referred to may be understood to be the "people" referred to in the Constitution20. Under the Citizenship Act a person is automatically an Australian citizen if born in Australia and one or both parents of the person are Australian citizens or permanent residents at that time21. There are other ways in which a person may acquire citizenship automatically. A person may also acquire citizenship by application to the Minister22. One basis for such an application is citizenship by descent, where a person is born outside Australia and one or both of the parents of the person are Australian citizens23. Citizenship by descent is not automatically conferred. The preamble to the Citizenship Act goes on to state that the Parliament recognises that persons conferred with Australian citizenship will have the reciprocal rights and obligations as citizens after pledging loyalty to Australia and its people and after pledging to uphold and obey the laws of Australia. The reciprocal obligations of loyalty or allegiance24 on the part of a citizen and the protection given by the Crown in right of Australia to its citizens are somewhat abstract in that their content is not clear25. It may be expected that Australia will continue to provide protection to its citizens, or nationals, when 20 See Constitution, preamble, s 24. 21 Australian Citizenship Act 2007 (Cth), ss 2A, 4(1), 12. 22 Australian Citizenship Act 2007 (Cth), s 16. 23 Australian Citizenship Act 2007 (Cth), s 16(2). 24 Joyce v Director of Public Prosecutions [1946] AC 347. 25 Singh v The Commonwealth (2004) 222 CLR 322 at 387-388 [165]-[166] per Gummow, Hayne and Heydon JJ. abroad26. Within Australian territory all persons, citizens and non-enemy aliens alike, have the protection of the law27. The preamble to the Citizenship Act makes plain, if it were necessary, the importance of the power given to the Commonwealth Parliament respecting citizenship, alienage and naturalisation. It is by this means that Parliament determines who is to be part of the body politic and who is not to be. It is a serious matter to deny a power which is fundamental to the structure of the Constitution and the governance of Australia. The basis for an implication having this effect must be pellucidly clear. Cases concerning alienage In the past four decades there have been a number of challenges to the provisions of the Citizenship Act, and its predecessors, and the Migration Act concerning the status of a non-citizen or alien. In each of those cases the non- citizen sought to identify a characteristic pertaining to them which placed them outside the reach of the statute. But as was said by Gummow, Hayne and Heydon JJ in Singh v The Commonwealth28, the status of alien is not defined by pointing to what is said to take a person outside the reach of Parliament's prescription, rather it depends upon what it is that gives the person that status. The preamble to the Citizenship Act identifies an important feature of the relationship between citizen and State. It is the loyalty owed by a citizen to the State. The decision in Singh highlights the importance of loyalty, or allegiance29, to the question of alienage. But it has also been held to be within the power of the Parliament to treat as an alien a stateless person who owes no such allegiance to the State30. It may be sufficient that the person has the characteristics of being born 26 Minister for Immigration and Multicultural Affairs v Respondents S152/2003 (2004) 222 CLR 1 at 8 [19], 23-24 [63]; Singh v The Commonwealth (2004) 222 CLR 322 at 387-388 [166] per Gummow, Hayne and Heydon JJ. 27 Bradley v The Commonwealth (1973) 128 CLR 557 at 582-583 per Barwick CJ and Gibbs J; Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 197-199 [125]-[130] per Gummow J. (2004) 222 CLR 322 at 398 [200]. 29 See Joyce v Director of Public Prosecutions [1946] AC 347. 30 Koroitamana v The Commonwealth (2006) 227 CLR 31. in Australia but to foreign nationals, when the statute requires that one or both of the parents be Australian citizens or permanent residents of Australia. There have been a number of cases in which it has been argued, unsuccessfully, that a person's strong connection to Australia and its community takes a non-citizen out of the operation of the statute. In Pochi, the plaintiff was an alien immigrant who had not been naturalised. Like the plaintiffs, he was facing deportation after being convicted of a serious offence. He argued that his long residency in Australia and absorption into the Australian community took him outside the statutory meaning of "alien". In Shaw v Minister for Immigration and Multicultural Affairs31, the plaintiff pointed to his connection with Australia gained through his personal history. In Singh and in Koroitamana v The Commonwealth32, the plaintiffs sought to rely on the fact that they were born in Australia. But birth in Australia will not exclude a person from the reach of statutory-mandated alienage. That status now applies even to a British subject who has not been naturalised. A long connection with Australia and its community will not deprive a person of that status33. In Nolan v Minister for Immigration and Ethnic Affairs34 it was observed that, as a matter of etymology, "alien" means belonging to another place. This is not a reference to a person's feelings of connection, however strong. It is not a reference to perceptions, to how a person might be understood by others to have a connection to a country. Rather it describes a person's lack of formal legal relationship with the community or body politic of the country with which they contend to have a connection. In the United States the meaning attributed to "alien" has been said to be "one born out of the United States, who has not since been naturalized under the constitution and laws"35. In the present case the plaintiffs were born outside Australia, are citizens of foreign sovereign countries and have not been naturalised under the Citizenship Act or its predecessor. They are not part of the community of the Commonwealth of Australia and do not have the relationship with the Crown in right of Australia (2003) 218 CLR 28. (2006) 227 CLR 31. 33 Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162; Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 43 [31] per Gleeson CJ, Gummow and Hayne JJ, 87 [190] per Heydon J. (1988) 165 CLR 178 at 183. 35 Milne v Huber (1843) 17 Fed Cas 403 at 406. that a member of that community has. In Re Minister for Immigration and Multicultural Affairs; Ex parte Te36, Gleeson CJ said "there are many people who entered Australia as aliens, who have lived here for long periods and have become absorbed into the community ... Whether by design, or simply as the result of neglect, they remain aliens." Subject to consideration of the plaintiffs' argument as to the relevance of their aboriginality to s 51(xix), on the current state of authority it must be held to be within the power of the Commonwealth Parliament to treat them as aliens. The plaintiffs' essential contention The plaintiffs do not challenge these decisions. They seek to distinguish their circumstances from the plaintiffs in those cases by reference to the special connection which they, as Aboriginal persons, have to Australia. The plaintiffs' submissions have been subject to extensive elaboration. Their essential contention is that it may be seen by reference to Mabo [No 2] and following cases that the common law of Australia recognises the unique connection which Aboriginal people have with land and waters in Australia. The plaintiffs contend that that connection is so strong that the common law must be taken to have recognised that Aboriginal persons "belong" to the land. This recognition is inconsistent with the treatment of Aboriginal persons as strangers or foreigners to Australia. The status of alien provided for in s 51(xix) therefore cannot be applied to them, it is submitted. Aboriginal persons The cases relied on by the plaintiffs refer to the connection to particular land by distinct groups of Aboriginal persons by reference to their laws and customs respecting that land37. The common law has never recognised, as the plaintiffs' argument at some points suggests, that Aboriginal persons as a whole comprise a singular society or group for the purposes of native title or that the connection spoken of extends beyond the traditional lands of the groups in question. The plaintiffs' submissions do accept that in order to determine whether a person comes within the special category of "non-citizen, non-alien", on account of the person's aboriginality, some test would be necessary. The plaintiffs initially (2002) 212 CLR 162 at 172 [27]. 37 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 70 per Brennan J, with whom Mason CJ and McHugh J agreed. adopted the three-part test propounded by Brennan J in Mabo [No 2]38, which accords with definitions earlier proposed by Commonwealth departments39, and later sought to adopt a test which they described as "analogous" to the three-part test. Under that test, aboriginality depends upon biological descent and upon recognition of the person's membership of the group with which the person identifies. In that latter regard, Brennan J said that membership of the group depends upon recognition by the Elders or other persons having traditional authority amongst those people40. It is not to be assumed that all persons of Aboriginal descent will be in a position to prove recognition by the group in question. Some native title cases bear this out. The evidence relating to Mr Love points to this difficulty. The agreed facts of the special case concerning Mr Love do not go so far as to establish that acceptance by one Elder of the Kamilaroi group is sufficient according to the laws of that group. No concession has been made by the Commonwealth in this regard. Matters of proof may be put to one side. There is a more fundamental difficulty which arises from the plaintiffs' argument. It is that the legal status of a person as a "non-citizen, non-alien" would follow from a determination by the Elders, or other persons having traditional authority amongst a particular group, that the person was a member of that group. To accept this effect would be to attribute to the group the kind of sovereignty which was implicitly rejected by Mabo [No 2]41 – by reason of the fact of British sovereignty and the possibility that native title might be extinguished – and expressly rejected in subsequent cases42. Nor is it to be assumed that all Aboriginal persons will be able to establish the requisite existing connection to particular land and waters as the common law 38 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 70. 39 Gardiner-Garden, Defining Aboriginality in Australia (2003) at 4; see also The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 274 40 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 70. 41 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 57-60, 63 per Brennan J, with whom Mason CJ and McHugh J agreed. 42 Coe v The Commonwealth (1993) 68 ALJR 110 at 115 per Mason CJ; 118 ALR 193 at 200; Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422 at 443- 444 [44] per Gleeson CJ, Gummow and Hayne JJ. requires. Yorta Yorta Aboriginal Community v Victoria43 is a case in point. To meet these difficulties the plaintiffs contended, and Victoria intervening in support of the plaintiffs agreed, that it may be sufficient for the purposes of the test that an Aboriginal person be descended from a person who was accepted as a member of an Aboriginal group at the time of acquisition of sovereignty by the British Crown. This contention marks a significant divergence from the common law recognition of native title upon which the plaintiffs rely. Connection at common law Mabo [No 2] held that the common law recognises a form of native title to land and waters which has survived the acquisition of sovereignty by the British Crown. At the inception of the common law its protection was extended to the holders of a common law native title, which was a burden on the Crown's radical title44. Native title is liable to extinguishment, but when it is not extinguished it, and the persons who are entitled to it, is ascertained by reference to the traditional laws and customs respecting that land. It is by this means that it may be said that members of an Aboriginal group have a connection to the land and waters which supports the existence of native title. The incidents of native title, which is to say that which may be enjoyed by those persons with respect to the land, are also ascertained by reference to those laws and customs45. The nature of the connection to land and waters ascertained by reference to traditional laws and customs has been further explained in cases subsequent to Mabo [No 2]. It has been described as being not only material or physical, but also spiritual and cultural46. It may be accepted that the connection spoken of in these cases is special, unique even. Its importance at a personal and community level to the members of an Aboriginal group cannot be denied. And it is an essential requirement of proof (2002) 214 CLR 422. 44 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 57-58 per Brennan J, with whom Mason CJ and McHugh J agreed. 45 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 70 per Brennan J, with whom Mason CJ and McHugh J agreed. 46 Yanner v Eaton (1999) 201 CLR 351 at 373 [38] per Gleeson CJ, Gaudron, Kirby and Hayne JJ; Western Australia v Ward (2002) 213 CLR 1 at 64-65 [14] per Gleeson CJ, Gaudron, Gummow and Hayne JJ; Northern Territory v Griffiths (2019) 93 ALJR 327 at 341 [23] per Kiefel CJ, Bell, Keane, Nettle and Gordon JJ; 364 ALR 208 at 219. of native title. But it also has its limits, both geographical and as to the area of the law to which it is relevant. Neither its unique nature nor its importance can alter or extend the concept of connection so as to apply beyond those limits. In a geographical sense the connection which is the concern of the common law of native title is limited to the particular land and waters which are the subject of traditional laws and customs of the Aboriginal group in question. Brennan J made this plain in Mabo [No 2]47. The connection spoken of cannot be to the territory of the whole of Australia. A connection with any lands beyond those to which a group's traditional laws and customs relate is inconsistent with the concept of native title. Closer to the heart of the plaintiffs' case is the erroneous assumption that the connection to land necessary for recognition by the common law of native title may be used in an entirely different area of the law, to answer questions of a constitutional kind about the relationship between an Aboriginal group and its members and the Australian body politic. Its use for such a purpose is wrong as a matter of law and of logic. The error is compounded by the fact that race is irrelevant to the questions of citizenship and membership of the Australian body politic48. Because the cases accept that the connection spoken of is spiritual and cultural, it may be said that the common law accepts that members of an Aboriginal group may feel a sense of "belonging" to the land in question and that others may perceive them to "belong" to the land. But that is not the "belonging" spoken of in the constitutional sense. In the constitutional context it refers to a characteristic which a citizen has with respect to the sovereign State of which they are a citizen and which an alien does not. A citizen may be said to belong to their country. A non-citizen or alien does not belong. An alien belongs to the sovereign State of which they are a citizen. In the constitutional context "belonging" refers to the formal legal relationship between a person and the community or body politic in question. In Australia it is apt to describe the connection between a citizen and the body politic. It reflects a conclusion reached about that relationship rather than a premise upon which the relationship may be founded. 47 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 70. 48 Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 366 [40] per Gaudron J. Aboriginal laws and customs Native title is not regarded as a creation of the common law, although Mabo [No 2] might be seen as correcting the prior refusal of the common law to recognise it. It was observed in Fejo v Northern Territory49 that native title is not an institution of the common law. It has its origins in the traditional laws and customs of indigenous peoples. The common law takes those traditional laws and customs to evidence the connection to land and waters which is necessary for the existence and recognition of native title. The plaintiffs' submissions treat the common law as going further. They contend that, by accepting traditional laws and customs as the foundation for native title, the common law must be taken to accept that a decision made pursuant to them as to membership of the group has some recognised legal effect, including with respect to questions of alienage. The other aspect of the plaintiffs' argument which relies upon the common law's acceptance or recognition of traditional laws and customs points to a characteristic of alienage. An alien, it is said, is a person to whom the Crown does not owe permanent protection. The common law, by its recognition of traditional laws and customs, must be taken to accept an obligation of protection of the persons subject to, and who create and maintain, them. The argument then follows that a member of an Aboriginal group cannot be an alien. These arguments are based upon a wrong premise. It is not the traditional laws and customs which are recognised by the common law. It is native title (namely, the interests and rights possessed under the traditional laws and customs50) which is the subject of recognition by the common law, and to which the common law will give effect. The common law cannot be said by extension to accept or recognise traditional laws and customs as having force or effect in Australia. They are not part of the domestic law. To suggest that traditional laws may be determinative of the legal status of a person in relation to the Australian polity is to attribute sovereignty to Aboriginal groups contrary to Mabo [No 2] and later cases, as has earlier been explained51. (1998) 195 CLR 96 at 128 [46] per Gleeson CJ, Gaudron, McHugh, Gummow, 50 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 57 per Brennan J, with whom Mason CJ and McHugh J agreed. 51 See [25] above. The common law's protection is not given to the traditional laws and customs upon which native title is based. It is extended to native title and the holders of native title52. The common law's concern with respect to traditional laws and customs is as to the evidence they may furnish of the requisite connection to land and waters and no more. A constitutional implication? This is not the first occasion on which a non-citizen has argued for the acceptance of a special constitutional category of non-citizen, non-alien. The category was for a short time accepted by this Court, in Re Patterson; Ex parte Taylor53. That decision was disapproved in Shaw. It must be said that in neither case were arguments of the kind here advanced presented. If there is to be understood to be a special constitutional category of persons to whom s 51(xix) does not apply, it must be by way of exception to that provision. The plaintiffs do not point to anything in the text or context of s 51(xix) or any other provision to found an implication of this kind. As Brennan CJ explained in McGinty v Western Australia54: "Implications are not devised by the judiciary; they exist in the text and structure of the Constitution and are revealed or uncovered by judicial exegesis. No implication can be drawn from the Constitution which is not based on the actual terms of the Constitution, or on its structure." If the implication for which the plaintiffs must contend is said to rest upon existing common law principle it would be necessary to consider whether, as the plaintiffs' argument implies, the common law trumps or controls the Constitution. It would require consideration of the relationship between the common law and the Constitution of which Sir Owen Dixon spoke55 when he said that constitutional questions "should be considered and resolved in the context of the whole law, of which the common law ... forms not the least essential part". It would be necessary 52 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 57-58 per Brennan J, with whom Mason CJ and McHugh J agreed. (2001) 207 CLR 391 at 413 [52] per Gaudron J, 437 [136] per McHugh J, 493-494 [308] per Kirby J, 518 [377] per Callinan J. (1996) 186 CLR 140 at 168 (footnotes omitted), quoted in Kruger v The Commonwealth (1997) 190 CLR 1 at 152 per Gummow J. 55 Dixon, "The Common Law as an Ultimate Constitutional Foundation" (1957) 31 Australian Law Journal 240 at 245. to consider whether his Honour intended to convey more than the proposition that the common law provides the context by reference to which a constitutional question is to be decided but that the question is not determined only by reference to the common law56. Regard might also be had to the view expressed by Mason CJ, Toohey and Gaudron JJ in Theophanous v Herald & Weekly Times Ltd57 when, after referring to the statement of Sir Owen Dixon, their Honours said that it may be understood that the common law "set[s] the scene in which the Constitution operates", but that if a doctrine of the common law is at variance with the Constitution, the common law must yield. These views point up the difficulty for the plaintiffs in reading s 51(xix) by reference to what is said to be common law principle. In reality the plaintiffs' arguments do not rest upon existing common law principle. They are far removed from what was said in Mabo [No 2] and later native title cases. The plaintiffs must contend for the application of a new principle. This new principle cannot be said to be a development of the common law. If it were, the plaintiffs would have to explain how it could be applied in the face of the terms of s 51(xix), given that the common law cannot be developed The new principle or rule for which the plaintiffs contend is not articulated by them but may be expressed as: that persons of Australian Aboriginal descent who have, or whose ancestors had, some connection with land in Australia are to be permitted to be physically present and not be subject to removal from Australia. So understood, the rule is of the nature of a right which would inhere in the person regardless of the person's status as a non-citizen and as a citizen of a foreign sovereign State and regardless of their lack of relationship with the body politic of the Commonwealth of Australia. It is this principle or rule which would found the necessary implication in s 51(xix) which excludes persons such as the plaintiffs from its operation. If it was not already obvious from the arguments put for the plaintiffs, the identification of a rule of this kind points up an issue of race. The plaintiffs do not refer to s 51(xxvi) of the Constitution, by which the Commonwealth Parliament is expressly conferred power with respect to the people of any race for whom it is deemed necessary to make special laws. The Constitution makes no other relevant provision on the topic, which may be thought to render an implication involving 56 See Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 126-127 per Mason CJ, Toohey and Gaudron JJ. (1994) 182 CLR 104 at 126. 58 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 566 per Brennan CJ, Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ. race in s 51(xix) problematic. Moreover the express conferral of this power on the Parliament does not suggest that its subject is appropriate to the judicial function. The plaintiffs' argument in connection to this rule cannot be said to be supported by assumptions about some underlying, but unexpressed, view upon which Mabo [No 2] and following cases proceeded concerning Aboriginal persons and the protection which the common law shall afford them. These cases were not concerned with any such question. Mabo [No 2] may have been a landmark decision but it did not provide a philosophical basis by which such questions might be answered. It and the cases which follow explain what is native title. They hold that it will be recognised when the necessary facts are present. But they do not speak more broadly. What is the source of this proposed new principle if it is not the common law of native title? Clearly enough it is of such a nature that it may not be altered either by statute or by the Constitution. Because it is immutable it might be understood to bear the characteristics of a higher principle of which natural law might conceive59. But such conceptions are generally not regarded as consistent with constitutional theory60. And they are regarded by some as antithetical to the judicial function since they involve an appeal to the personal philosophy or preferences of judges61. Answers In each of the proceedings I would answer Question 1 as follows: the plaintiff does not have the status of an Australian citizen according to legislation validly enacted under s 51(xix) of the Constitution. Accordingly each plaintiff is an alien within the meaning of s 51(xix). So far as concerns Question 2, in each case the plaintiff should pay the costs of the special case. 59 See Singh v The Commonwealth (2004) 222 CLR 322 at 388-389 [170], 390 [174] per Gummow, Hayne and Heydon JJ. 60 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 73 per Dawson J; Building Construction Employees & Builders' Labourers Federation (NSW) v Minister for Industrial Relations (1986) 7 NSWLR 372 at 403-405 per Kirby P. 61 Zines, "A Judicially Created Bill of Rights?" (1994) 16 Sydney Law Review 166 at Bell BELL J. The question of law, the facts and the applicable legislation in each special case are set out in the reasons of other members of the Court and need not be repeated, save to the extent that it is necessary to explain my reasons. In the Commonwealth's submission, whether the plaintiffs are Aboriginal Australians is irrelevant to the determination of whether they are persons within the reach of the "aliens" power under s 51(xix) of the Constitution. In the event the Commonwealth is wrong in this respect, it makes no submission on whether either plaintiff is an Aboriginal Australian. For the reasons to be given, I answer the question of law upon acceptance that the plaintiff in each case is an Aboriginal Australian who was born overseas and is not an Australian citizen. Section 51(xix) of the Constitution confers power on the Commonwealth Parliament to make laws with respect to "naturalization and aliens". The question of law in each special case turns on the meaning of "aliens" in this provision. In Pochi v Macphee Gibbs CJ stated62: "[T]he Parliament cannot, simply by giving its own definition of 'alien', expand the power under s 51(xix) to include persons who could not possibly answer the description of 'aliens' in the ordinary understanding of the word." The issue in these special cases is whether, as the plaintiffs assert, Aboriginal Australians are persons who cannot possibly answer the description of "aliens" in the ordinary understanding of the word. The plaintiffs and the Commonwealth are at one in acknowledging that at Federation Aboriginal Australians were not aliens. The Commonwealth submits that this is because in 1901 Aboriginal Australians were persons who were born in Australia and by virtue of that circumstance were subjects of the Queen. The plaintiffs do not contest that this is one reason why, at Federation, Aboriginal Australians were not aliens. A more fundamental reason, in their submission, is the unique connection that Aboriginal Australians have to the land and waters of Australia; a connection which at least since Mabo v Queensland [No 2]63 has been recognised by the Australian body politic. The Commonwealth relies on a line of unchallenged authority, commencing with Nolan v Minister for Immigration and Ethnic Affairs, holding that since Australia's emergence as a fully independent sovereign nation with its own distinct (1982) 151 CLR 101 at 109 (Mason J agreeing at 112, Wilson J agreeing at 116). (1992) 175 CLR 1. Bell citizenship, alien in s 51(xix) has come to be synonymous with "non-citizen"64. As subsequently explained in Shaw v Minister for Immigration and Multicultural Affairs, the power conferred by s 51(xix) supports legislation determining those to whom the status of alien is to be attributed65. The legislation that presently performs this function is the Australian Citizenship Act 2007 (Cth) ("the Citizenship Act"), which exhaustively provides the circumstances in which a person has the status of an Australian citizen. Neither plaintiff acquired that status at the time of his birth because each was born outside Australia. It follows, in the Commonwealth's submission, that absent challenge to the Citizenship Act, the plaintiffs' case must fail. The Commonwealth advanced an alternative argument, based on the analysis in the joint reasons of Gummow, Hayne and Heydon JJ in Singh v The Commonwealth, that the defining characteristic of alienage is the owing of allegiance to a foreign power66. Whether a person possesses some other characteristic, such as having been born to an Australian parent, or having other deep ties to Australia, is, on this analysis, immaterial. That is because, as the joint reasons put it67: "The central characteristic of that status is, and always has been, owing obligations (allegiance) to a sovereign power other than the sovereign power in question (here Australia). That definition of the status of alienage focuses on what it is that gives a person the status: owing obligations to another sovereign power. It does not seek to define the status, as the plaintiff sought to submit, by pointing to what is said to take a person outside its reach." Mr Love was born in Papua New Guinea and is a citizen of that country and Mr Thoms was born in New Zealand and is a citizen of that country. The Commonwealth submitted that absent a challenge to Singh, the plaintiffs' case must also fail. The plaintiff in Singh was born in Australia and had remained in Australia continuously since her birth. Her parents were citizens of India. She challenged the validity of s 10 of the Australian Citizenship Act 1948 (Cth), the predecessor to the (1988) 165 CLR 178 at 183-184 per Mason CJ, Wilson, Brennan, Deane, Dawson (2003) 218 CLR 28 at 35 [2]. (2004) 222 CLR 322 at 398 [200]. (2004) 222 CLR 322 at 398 [200]. Bell Citizenship Act, insofar as it purported to deny Australian citizenship to any person born in Australia who had not attained the age of ten years. Her case was conducted on the footing that an essential characteristic of a constitutional alien is that he or she was born outside Australia68, because a person born within Australia would not have been an alien at Federation, under the common law69. Building on the analyses in Nolan70 and Shaw71, the joint reasons rejected Tania Singh's "one-sided understanding of the [aliens] power"72, because it failed to accommodate the change in Australia's relationship to the United Kingdom since Federation. In this context, their Honours said that the "central characteristic" of the status of alien is owing obligations to a sovereign power other than Australia73. Tania Singh had acquired Indian citizenship at birth and thus she owed allegiance to a foreign sovereign power. The possession of this characteristic sufficed to resolve the case stated in Singh74. As the joint reasons in Singh made clear, their Honours were not seeking to describe the metes and bounds of the constitutional expression "aliens"; the circumstances presented by Tania Singh were such that s 51(xix) did, or did not, have the consequence for which she contended75. they were determining whether The joint reasons of Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Ame approved the statement in Singh that the defining characteristic of alienage is the owing of allegiance to a foreign sovereign power76. By reason of the changes brought about by the Papua New Guinea Independence Act 1975 (Cth) and the Constitution of the Independent State of Papua New Guinea, Amos Ame was a person who owed allegiance to Papua New Guinea, and (2004) 222 CLR 322 at 332 [11] per Gleeson CJ. (2004) 222 CLR 322 at 398 [199] per Gummow, Hayne and Heydon JJ. (1988) 165 CLR 178. (2003) 218 CLR 28. (2004) 222 CLR 322 at 398 [198] per Gummow, Hayne and Heydon JJ. (2004) 222 CLR 322 at 398 [200] per Gummow, Hayne and Heydon JJ. (2004) 222 CLR 322 at 383 [154] per Gummow, Hayne and Heydon JJ. (2004) 222 CLR 322 at 383 [152] per Gummow, Hayne and Heydon JJ. (2005) 222 CLR 439 at 458 [35]. Bell was no longer a citizen of Australia. These circumstances were determinative of Mr Ame's status as an alien. Nonetheless, as Koroitamana v The Commonwealth77 makes plain, none of the Justices in the majority in Singh are to be understood as holding that allegiance to a foreign power is the determinative characteristic of the status of alienage. Neither of the appellants in Koroitamana owed allegiance to a foreign sovereign power. Each appellant was born in Australia and had remained in Australia continuously from birth. The appellants' parents were citizens of a foreign country. As Gleeson CJ and Heydon J explained the position in their joint reasons78: "Once one rejects the notion that birth in Australia ... necessarily results in membership of the Australian community, then it is a short step to the conclusion that it is open to Parliament to decide that a child born in Australia of parents who are foreign nationals is not automatically entitled to such membership. It cannot be said of such a person that he or she could not possibly answer the description of alien." (emphasis added) On the hearing, the Commonwealth acknowledged the tension between reading statements in Singh and Ame as holding that there is a defining characteristic of the status of alienage, and the line of authority commencing with Nolan holding that it is open to Parliament to determine the characteristics of that status. The Commonwealth submitted that the joint reasons in Singh and Ame are to be understood as responding to the argument that the plaintiff in each special case was a person outside the reach of the aliens power. The Commonwealth's ultimate position was that there is no defining characteristic of alienage, rather there are "available characteristics for the Parliament to choose and some unavailable characteristics". The Commonwealth's case is encapsulated in the joint reasons of Gleeson CJ, Gummow and Hayne JJ in Shaw79: "The power conferred by s 51(xix) supports legislation determining those to whom is attributed the status of alien; the Parliament may make laws which impose upon those having this status burdens, obligations and disqualifications which the Parliament could not impose upon other persons. On the other hand, by a law with respect to naturalisation, the Parliament may remove that status, absolutely or upon conditions. In this (2006) 227 CLR 31. (2006) 227 CLR 31 at 38-39 [14]. (2003) 218 CLR 28 at 35 [2]. Bell way, citizenship may be seen as the obverse of the status of alienage." (footnote omitted) Nolan rejected the notion that a person may have the status of "non-alien" and "non-citizen", and although temporarily in disfavour following Re Patterson; Ex parte Taylor80, its authority was restored by the majority in Shaw. Nolan, Shaw and the decisions following them were made in the course of the working out of the reach of the aliens power in light of Australia's changed relationship with the United Kingdom. While at Federation there could have been no doubt that a British subject was not an alien81, Nolan held that the application of the constitutional term "aliens" had changed, reflecting Australia's emergence as an independent nation82. It was a change that required recognition of the divisibility of the Crown such that Therrance Nolan, a citizen of the United Kingdom and subject of the Queen who had lived in Australia continuously between 1967 and 1985, was within the scope of the aliens power83. The joint reasons noted that etymologically the term "alien" is traced through old French to the Latin "alienus", and has the meaning of "belonging to another person or place"84. Gleeson CJ observed, in Re Minister for Immigration and Multicultural Affairs; Ex parte Te, that it is through the power conferred by s 51(xix) that the Parliament decides who will be admitted to membership of the Australian body politic85. His Honour noted that the power is not unqualified, but found that it extended to denying membership to the prosecutors in Te, who were born in Cambodia and Vietnam respectively, entered Australia as aliens and had not become Australian citizens86. (2001) 207 CLR 391. 81 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 183 per Mason CJ, Wilson, Brennan, Deane, Dawson and Toohey JJ. (1988) 165 CLR 178 at 184 per Mason CJ, Wilson, Brennan, Deane, Dawson and (1988) 165 CLR 178 at 184 per Mason CJ, Wilson, Brennan, Deane, Dawson and (1988) 165 CLR 178 at 183 per Mason CJ, Wilson, Brennan, Deane, Dawson and Toohey JJ; see also at 189 per Gaudron J. (2002) 212 CLR 162 at 175 [39]. (2002) 212 CLR 162 at 170 [18]. Bell However, no decision of this Court has addressed the question of whether the aliens power extends to the exclusion of an Aboriginal Australian from the Australian body politic. Acceptance that the aliens power supports legislation defining the circumstances in which a person will be treated as an alien is subject to the qualification that Parliament cannot by defining "alien" or "citizen" expand the power conferred by s 51(xix)87. Recognition that, in some circumstances, an attempt by the Parliament to ascribe the status of alien to a person would be beyond power allows of the possibility that a person may not hold Australian citizenship and yet not be an alien. In the course of argument, when pressed, the Commonwealth submitted that a person born in Australia to two Australian parents who has not renounced his or her citizenship of Australia might be outside the reach of the power. In the Commonwealth's submission, acknowledgement of the limit on legislative power is not to the point: the Parliament cannot be said to have come near the outer boundaries of the power in choosing to treat persons who are born outside Australia, and who have not been granted Australian citizenship, as aliens. The Commonwealth submits that the vice in the plaintiffs' invocation of their Aboriginality to take them outside the aliens power is that it places a race-based limitation on legislative power. Correctly understood, it is said, the plaintiffs are within the reach of the aliens power because each was born outside Australia; they stand in no different position to any person born to an Australian parent outside Australia. The Commonwealth points out that at all times it has been open to the plaintiffs to apply to the Minister to become Australian citizens88, and that neither has done so. It may be, as the Commonwealth submits, that recognition of dual citizenship is largely reflective of the legislative choice to treat foreign citizens as capable of being Australian citizens. It does not follow that possession of foreign citizenship necessarily brings a person within the scope of the aliens power. Whether it is open to Parliament to treat as an alien a person born in Australia to Australian parents, by reason that the law of a foreign country confers citizenship on the person by descent, is a large question. The language of s 51(xix) is to be 87 Pochi v Macphee (1982) 151 CLR 101 at 109 per Gibbs CJ (Mason J agreeing at 112, Wilson J agreeing at 116); Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 172 [26] per Gleeson CJ; Singh v The Commonwealth (2004) 222 CLR 322 at 329 [4] per Gleeson CJ, 375 [124] per McHugh J, 382-383 [151] per Gummow, Hayne and Heydon JJ. 88 Citizenship Act, s 16. Bell distinguished in this respect from that of s 44(i) of the Constitution. The circumstance that each plaintiff, an Aboriginal Australian, is a citizen of the country of his birth cannot be determinative of his status as a constitutional alien. Following the hearing of the special cases, the Court wrote to the parties inviting submissions on whether members of an Aboriginal society have such a strong claim to the protection of the Crown that they may be said to owe permanent allegiance to the Crown. In response to the invitation, the Commonwealth filed a s 78B Notice in each special case89. Following receipt of those Notices, the Attorney-General for the State of Victoria ("Victoria") intervened in support of the plaintiffs. In Victoria's submission, Aboriginal persons who are members of an Aboriginal society are not within the reach of the "aliens" power in s 51(xix) by reason of the "recognised mutual and unique relationship between members of Aboriginal societies and the land and waters of Australia". The Commonwealth submits that Victoria's contention involves a radical reconceptualisation of "the law of alien status", in that it postulates that non-alien status may arise from a connection between persons and land. Such a postulate is said to be inconsistent with "the fundamental basis of the law of alien status", which basis is the connection between persons and the sovereign or body politic. The importance of Singh to the plaintiffs' and Victoria's argument is the holding that at Federation the constitutional term "aliens" did not possess a fixed, immutable meaning ascertained by reference to the common law90. The joint reasons explained that any understanding of the term "aliens" at Federation must take account of the existence of different and competing views as to how aliens were to be identified91. The analysis was developed in Ame in the joint reasons of Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ. Their Honours said that changes in the national and international context in which s 51(xix) is to be applied may have an important bearing upon its practical operation92. The decisions in Sue v Hill and Shaw and Singh were each instanced as illustrative of 89 Judiciary Act 1903 (Cth), s 78B. (2004) 222 CLR 322 at 384 [157] per Gummow, Hayne and Heydon JJ. (2004) 222 CLR 322 at 393 [183] per Gummow, Hayne and Heydon JJ. (2005) 222 CLR 439 at 458-459 [35]. Bell the ways in which those changes in national and international circumstances may affect the application of terms such as "foreign" and "alien"93. The plaintiffs' and Victoria's argument relies on Mabo [No 2], not because it acknowledged a change in national circumstances, but rather because it recognised that at the time of European settlement there existed antecedent rights and interests in the land and waters of Australia possessed by the indigenous inhabitants sourced in traditional law and customs and alienable only by that body of law and custom94. The recognition, as subsequent decisions have explained, was of a connection that Aboriginal Australians have with "country" that is essentially spiritual95. As the plurality observed in Western Australia v Ward, there are difficulties in describing the connection between a community of Aboriginal Australians and their traditional land in terms of the language of "rights and interests" familiar to the common lawyer96. To observe that the capacity of an alien to hold proprietary interests in land has no bearing on his or her status as an alien fails to address the core of the plaintiffs' argument. Their argument does not depend on the holding of native title rights and interests. In many instances those rights and interests have been extinguished. The plaintiffs' and Victoria's argument depends upon the incongruity of the recognition by the common law of Australia of the unique connection between Aboriginal Australians and their traditional lands, with finding that an Aboriginal Australian can be described as an alien within the ordinary meaning of that word. Other common law nations that have indigenous populations do not appear to have been confronted with the issue here raised. Amongst other things, this may reflect differences in the relations between the sovereign power and the indigenous population97. The affirmation of existing Aboriginal rights under the Canadian (2005) 222 CLR 439 at 459 [35], citing Sue v Hill (1999) 199 CLR 462, Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 and Singh v The Commonwealth (2004) 222 CLR 322. (1992) 175 CLR 1 at 57-59 per Brennan J (Mason CJ and McHugh J agreeing at 95 Western Australia v Ward (2002) 213 CLR 1 at 64 [14] per Gleeson CJ, Gaudron, Gummow and Hayne JJ; Northern Territory v Griffiths (2019) 93 ALJR 327 at 341 [23] per Kiefel CJ, Bell, Keane, Nettle and Gordon JJ; 364 ALR 208 at 219. (2002) 213 CLR 1 at 65 [14] per Gleeson CJ, Gaudron, Gummow and Hayne JJ. 97 Elk v Wilkins (1884) 112 US 94. Bell Constitution98 was described as "limit[ing] the exercise of governmental powers which may be inherent as a sovereign state"99, in a case bearing some semblance to the present one. Canada's choice to fetter the power to control which non- citizens may remain in Canada foreclosed consideration, in that case, of whether the power conferred on the Parliament of Canada with respect to "naturalization and aliens"100 supports the exclusion of an Aboriginal Canadian from the community. The Commonwealth's concern, that to hold that its legislative power does not extend to treating an Aboriginal Australian as an alien is to identify a race- based limitation on power, is overstated. It is not offensive, in the context of contemporary international understanding, to recognise the cultural and spiritual dimensions of the distinctive connection between indigenous peoples and their traditional lands101, and in light of that recognition to hold that the exercise of the sovereign power of this nation does not extend to the exclusion of the indigenous inhabitants from the Australian community. The conclusion is not to deny that an attribute of every sovereign state is the power to decide whether an alien is admitted to membership of the community and to expel an alien whom it chooses not to suffer to remain102. As Gleeson CJ observed in Te, the exercise of the power is vital to the welfare, security and integrity of the nation103. The position of Aboriginal Australians, however, is sui generis. Notwithstanding the amplitude of the power conferred by s 51(xix) it does not extend to treating an Aboriginal Australian as an alien because, despite the circumstance of birth in another country, an Aboriginal Australian cannot be said to belong to another place104. 98 Constitution Act 1982 (Can), s 35(1). 99 Watt v Liebelt [1999] 2 FC 455 at 457 [3]. 100 Constitution Act 1867 (Can), s 91(25). 101 United Nations Declaration on the Rights of Indigenous Peoples, GA Res 61/295, UN Doc A/RES/61/295 (2 October 2007, adopted 13 September 2007); see also R v Van der Peet [1996] 2 SCR 507 at 534 [17]-[19], 538 [30]. 102 Robtelmes v Brenan (1906) 4 CLR 395 at 400 per Griffith CJ. 103 (2002) 212 CLR 162 at 171 [24]. 104 cf Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 183. Bell Whether a person is an Aboriginal Australian is a question of fact. In the Tasmanian Dam Case, Deane J proposed the meaning of the term "Australian Aboriginal" as "a person of Aboriginal descent, albeit mixed, who identifies himself as such and who is recognized by the Aboriginal community as an Aboriginal"105. This was in the context of s 8(2)(b) of the World Heritage Properties Conservation Act 1983 (Cth), which referred to Aboriginal sites having particular significance to "the people of the Aboriginal race". His Honour inclined to the view that the reference was to the Australian Aboriginal people generally rather than to any particular racial sub-group106. In their written submissions, the plaintiffs relied on Brennan J's formulation in Mabo [No 2] for the meaning of "Aboriginal" Australian: "[m]embership of the indigenous people depends on biological descent from the indigenous people and on mutual recognition of a particular person's membership by that person and by the elders or other persons enjoying traditional authority among those people"107. On the hearing, the Solicitor-General was asked if the Commonwealth accepted that each plaintiff met the tripartite test in Mabo [No 2]. The Solicitor- General responded that the Commonwealth did not "affirmatively advance a submission against that proposition". In response to the Court's invitation to clarify its position on the question of whether both plaintiffs meet the tripartite test formulated by Brennan J in Mabo [No 2], the Commonwealth maintained its preference not to take a position on the state of the agreed facts. In each case, the plaintiff claims entitlement to the relief sought in his writ of summons by reason of the fact that he is an Aboriginal person. The parties agreed to state a single question of law for the opinion of the Full Court in each case, namely, "[i]s the Plaintiff an 'alien' within the meaning of s 51(xix) of the Constitution?" If the Commonwealth did not accept that Mr Love is an Aboriginal person there was no utility in agreeing to state a question for the opinion of the Full Court which assumes that he is such a person. If the Commonwealth did not accept Mr Love's pleaded case, that he is a member of the Aboriginal race of Australia, the appropriate course was for the proceeding to have been remitted to the Federal Court of Australia for the facts to be found. The agreed facts are that Mr Love's paternal great-grandfather, Frank Wetherall, was born in Queensland and was descended in significant part from people who inhabited Australia immediately prior to European settlement, as was his paternal great-grandmother, Maggie Alford. Mr Love identifies as a descendant 105 The Commonwealth v Tasmania (1983) 158 CLR 1 at 274. 106 (1983) 158 CLR 1 at 274. 107 (1992) 175 CLR 1 at 70. Bell of the Kamilaroi tribe and is recognised as such a descendant by Janice Margaret Weatherall, an elder of the Kamilaroi tribe. In light of the agreed facts and the Commonwealth's position respecting the conduct of the litigation, the question of law reserved in Mr Love's special case is answered upon acceptance that Mr Love is an Aboriginal Australian within the tripartite Mabo [No 2] test. That test was framed with respect to native title to land. Deane J's test expressed his Honour's understanding of the conventional meaning of the term "Australian Aboriginal"108. That understanding appears to accord with the Commonwealth's working definition applied in connection with the provision of special benefits to Aboriginal persons and with respect to the enactment of special laws affecting Aboriginal persons109. The special cases do not raise consideration of the circumstances, if any, in which a person who is not within the Mabo [No 2] test may nonetheless establish that he or she is an Aboriginal Australian110. I am authorised by the other members of the majority to say that although we express our reasoning differently, we agree that Aboriginal Australians (understood according to the tripartite test in Mabo [No 2]) are not within the reach of the "aliens" power conferred by s 51(xix) of the Constitution. The difference with respect to Mr Love is a difference about proof, not principle. For these reasons, I answer question 1 in each special case "no" and question 2 in each special case "the defendant". 108 The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 109 See Constitutional Section, Department of Aboriginal Affairs, Report on a Review of the Administration of the Working Definition of Aboriginal and Torres Strait Islander (1981) at 9; Gardiner-Garden, Defining Aboriginality in Australia, Department of the Parliamentary Library, Current Issues Brief No 10 2002-03 110 See Attorney-General (Cth) v Queensland (1990) 25 FCR 125 at 126-127 per Jenkinson J, 132 per Spender J, 147-148 per French J; Gibbs v Capewell (1995) 54 FCR 503 at 506, 511-512 per Drummond J; Re Watson [No 2] [2001] TASSC 105 at [7] per Cox CJ; Eatock v Bolt (2011) 197 FCR 261 at 304-305 [188]-[189] per Bromberg J; Hands v Minister for Immigration and Border Protection (2018) 364 ALR 423 at 435-436 [50]-[51] per Allsop CJ (Markovic and Steward JJ agreeing at 436 [54], [55]). Nature of the aliens power The subject-matter of the legislative power with respect to "naturalization and aliens" conferred on the Parliament of the Commonwealth by s 51(xix) of the Constitution is framed in terms that are identical to the subject-matter of a legislative power declared to be exclusive to the Parliament of Canada by s 91(25) of the British North America Act 1867 (Imp) (30 & 31 Vict c 3). The subject-matter comprises persons of a legal status – "aliens" – together with the process by which that legal status can be changed – "naturalisation". The Privy Council recognised in 1902 that the legislative power of the Parliament of Canada under s 91(25) of the British North America Act is a power to "determine what shall constitute either the one or the other"111. The High Court ultimately recognised in 2002 that s 51(xix) of the Constitution encompasses legislative power of the same nature: to determine who is and who is not to have the legal status of alienage112. The Court then also recognised that the legislative power goes further than its Canadian counterpart in that the power permits as well specification of the legal consequences of that legal status113. What is meant by a legal status in this or any other context is clear114: "A person may be said to have a status in law when he belongs to a class of persons who, by reason only of their membership of that class, have rights or duties, capacities or incapacities, specified by law which do not exist in the case of persons not included in the class and which, in most cases at least, could not be created by any agreement of such persons. An alien, for example, as distinct from a subject of the Crown, a married person as distinct from an unmarried person, a bankrupt as distinct from other 111 Cunningham v Tomey Homma [1903] AC 151 at 156. See also Morgan v Attorney- General for Prince Edward Island (1975) 55 DLR (3d) 527 at 531-532. 112 Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 170-172 [21]-[26], 219-220 [209]-[210]. See also Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 35 [2], 87 [190]. 113 Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 185 [80], 194 [114]; Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 35 [2], 87 [190]. See also Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 56-57. 114 Ford v Ford (1947) 73 CLR 524 at 529. persons generally, are all persons who have a particular status. The mere fact that an alien is an alien means that he is subject to certain disabilities and disqualifications in law. A husband because he is a husband owes special duties to his wife which he owes to no other person and cannot owe, merely as a matter of law, to any other person. A bankrupt, simply because he is a bankrupt, cannot deal with his property in the same manner as other persons. These consequences follow as a matter of law from the fact of membership of a particular class of persons." To the extent that s 51(xix) of the Constitution confers legislative power to determine the existence and consequences of a legal status, it resembles the legislative powers conferred by s 51(xvii) (with respect to "bankruptcy"), s 51(xviii) (with respect to "copyrights, patents ... and trade marks") and s 51(xxi) (with respect to "marriage"). Unlike the power conferred by s 51(vii) (with respect to "lighthouses"), the example of which is often seized upon for the purpose of expounding constitutional principle115, the subject-matter of none of those powers is a thing the existence of which falls to be ascertained as a constitutional fact independently of the application of positive law. Each refers instead to a "recognized topic of juristic classification"116. The topic of juristic classification to which each refers has an ineluctable fluidity in that the law on that topic was in a process of legislative development before and after 1900 and in that each is itself a source of legislative authority to modify or replace the pre-existing law on that topic117. The subject-matter of none is expressed in terms that can be said to have an "established and immutable legal meaning"118. The scope of none can be "ascertained by merely analytical and a priori reasoning from the abstract meaning of words"119. Each takes its place within "an instrument of government meant to 115 eg, Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 258. 116 Attorney-General (Vict) v The Commonwealth ("the Marriage Act Case") (1962) 107 CLR 529 at 578; The Commonwealth v Australian Capital Territory (2013) 250 CLR 441 at 455 [14]. 117 Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 500- 501 [40]-[41]; The Commonwealth v Australian Capital Territory (2013) 250 CLR 118 Koroitamana v The Commonwealth (2006) 227 CLR 31 at 37 [9]. 119 Marriage Act Case (1962) 107 CLR 529 at 576; The Commonwealth v Australian Capital Territory (2013) 250 CLR 441 at 455 [15]. endure and conferring powers expressed in general propositions wide enough to be capable of flexible application to changing circumstances"120. References in the context of s 51(xix) of the Constitution to the principle in Australian Communist Party v The Commonwealth ("the Communist Party Case")121, and to the inability of the Parliament "simply by giving its own definition" of "alien" to "expand the power ... to include persons who could not possibly answer the description of 'aliens'"122, must be understood in that light. Expressed at the appropriate level of generality, the applicable principle is that courts do, and legislatures do not, exercise the constitutional function of finally determining whether or not legislation is within power123. Application of that principle requires that "[w]hen any enactment is challenged on the ground that it is outside the power over a particular subject, a decision whether or not that is so must ultimately depend upon what exactly is the effect of the enactment upon that subject"124. Applied to the subject-matter of s 51(xix), what that means is that the content of the power to determine alienage and the existence or non-existence of a connection between the power and a particular law purporting to lay down criteria for determining who has the status of an alien or a non-alien must and can only be determined judicially. That is all it means. No room is left by s 51(xix) for application of the more specific principle, on which the outcome in the Communist Party Case turned, that it is the duty of a court in a constitutional case "to be satisfied of every fact the existence of which is necessary in law to provide a constitutional basis for the legislation"125. That more specific principle has no application because the nature of the legislative power to determine who has and who does not have the legal status of alienage is wholly inconsistent with the notion that a person's status as an alien or non-alien falls to be determined independently of the exercise of the power as a question of constitutional fact. The status of a person as an alien or non-alien can (and where 120 Australian National Airways Pty Ltd v The Commonwealth (1945) 71 CLR 29 at 81. 121 (1951) 83 CLR 1. 122 Pochi v Macphee (1982) 151 CLR 101 at 109; Singh v The Commonwealth (2004) 222 CLR 322 at 329 [4], 383 [151]; Koroitamana v The Commonwealth (2006) 227 CLR 31 at 38 [12], 54-55 [81]. 123 Communist Party Case (1951) 83 CLR 1 at 262-263, citing Marbury v Madison 124 Marriage Act Case (1962) 107 CLR 529 at 578. 125 (1951) 83 CLR 1 at 222. put in issue in appropriately constituted legal proceedings must) be judicially ascertained. But that status can be judicially ascertained only through the application of positive law, enactment of which inheres in the legislative power itself. Failure to recognise that the nature of the power conferred by s 51(xix) is inconsistent with a person's status as an alien or non-alien falling to be determined as a question of constitutional fact was a problem which attended the notion, taken up for a time in the case law126, only to be implicitly discarded127, that an "essential characteristic" of the legal status of alienage was to be found in the owing of "allegiance" to a foreign sovereign. That was not the only problem. Quite apart from being in tension with the nature of the legislative power with respect to aliens being to determine who has and who does not have the legal status of alienage, the notion was in tension with the power being a "plenary legislative power" conferred on an "autonomous government"128. The tension arose from the circumstance that owing allegiance to a foreign sovereign turns at least primarily on the content of foreign law129. Those problems aside, the notion was stripped of utility as a criterion of constitutional demarcation once the postulated essential characteristic of the legal status of alienage was accepted to extend beyond owing allegiance to a foreign sovereign to include in the alternative owing no allegiance at all. The additional problem exposed by that development was one of logic. For so long as the status of alienage is conceived of as importing an absence of allegiance to the sovereign (about which I will have more to say), the essential characteristic of alienage as so extended became so broad that anyone determined to be an alien through the application of any criterion would fall within one category or the other simply by reason of being an alien. The legal consequence of being an alien no matter what criterion is used to distinguish an alien from a non-alien cannot without circularity supply the criterion for distinguishing an alien from a non-alien. 126 Singh v The Commonwealth (2004) 222 CLR 322 at 383 [154], 395 [190], 398 [200]; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Ame (2005) 222 CLR 439 at 458-459 [35]. 127 Koroitamana v The Commonwealth (2006) 227 CLR 31 at 38 [11], 46 [48]-[49]. 128 Polites v The Commonwealth (1945) 70 CLR 60 at 78; Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 384-385 [98]. 129 Sykes v Cleary (1992) 176 CLR 77 at 105-107, 109, 135. Scope of the aliens power How then is the scope of the legislative power conferred by s 51(xix) to determine the legal status of alienage to be determined? The requisite frame of reference is the body politic of the Commonwealth of Australia, which is described in the preamble to the Commonwealth of Australia Constitution Act 1900 (Imp) as having been created through the agreement of "the people" of the former Australian colonies "to unite in one indissoluble Federal Commonwealth under the Crown", the Parliament of which is required by the Constitution to consist of the Queen and of a Senate and a House of Representatives respectively comprised of senators and members "directly chosen by the people"130 in the exercise of a common franchise determined by the Parliament itself131, and the Executive Government of which is required by the Constitution to be responsible to the Parliament132. Whilst the Commonwealth of Australia was at the time of its creation yet another colony within an Empire, the grant to its Parliament of legislative power to determine the legal status of alienage, no less than the grant to its Parliament of legislative power with respect to external affairs133, "was a clear recognition, not merely that, by uniting, the people of Australia were moving towards nationhood, but that it was the Commonwealth which would in due course become the nation state, internationally recognized as such and independent"134. The usage and practice of independent nation states had been from at least the middle of the nineteenth century135, and remains to the present, each to draw a distinction under its municipal law between those persons who are formally admitted to membership of the community that constitutes the body politic of the nation state and those persons who are not. The former category of persons, as recognised in the terminology of s 44(i) of the Constitution, has long been referred to from the perspective of the nation state as either "subjects" or "citizens", or more 130 Sections 1, 7 and 24 of the Constitution. 131 Sections 8, 30 and 51(xxxvi) of the Constitution. 132 Sections 61 and 64 of the Constitution. 133 Section 51(xxix) of the Constitution. 134 New South Wales v The Commonwealth ("the Seas and Submerged Lands Case") (1975) 135 CLR 337 at 373. 135 See Minor v Happersett (1874) 88 US 162 at 165-166. generically as "nationals". It is persons within the latter category who have long been referred to from the same perspective as "aliens"136. The usage and practice is reflected in the following explanation of the legal status of alienage, given by Gaudron J in the context of expounding the meaning of "alien" in s 51(xix), which I am content to adopt137: "An alien (from the Latin alienus – belonging to another) is, in essence, a person who is not a member of the community which constitutes the body politic of the nation state from whose perspective the question of alien status is to be determined. For most purposes it is convenient to identify an alien by reference to the want or absence of the criterion which determines membership of that community. Thus, where membership of a community depends on citizenship, alien status corresponds with non- citizenship; in the case of a community whose membership is conditional upon allegiance to a monarch, the status of alien corresponds with the absence of that allegiance." The power conferred on the Parliament of the Commonwealth by s 51(xix) to determine the legal status of alienage was a power which from the outset enabled the Parliament to bring a measure of precision to the identification of those to whom the Constitution refers as "the people", by laying down criteria for determining with specificity which persons were and which persons were not to have the legal status of members of the body politic of the Commonwealth of Australia138. Upon the basis of that membership, certain common law rights and duties would automatically become applicable (most fundamentally, the right to enter and remain in Australia139), as would the constitutional right not to be subjected to discrimination under the law of any State on the basis of residence in any other 136 See, generally, Koessler, "'Subject,' 'Citizen,' 'National,' and 'Permanent Allegiance'" (1946) 56 Yale Law Journal 58. 137 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 189. 138 cf Hwang v The Commonwealth (2005) 80 ALJR 125 at 128 [10]; 222 ALR 83 at 139 See Air Caledonie International v The Commonwealth (1988) 165 CLR 462 at 469; cf Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 25-26. See also Potter v Minahan (1908) 7 CLR 277 at 304-305; Musgrove v Chun Teeong Toy [1891] AC 272 at 282-283. State140. And upon the basis of that membership, other civil and political rights and duties were capable of being conferred – most fundamentally, the right and duty to vote at elections of senators and members of the House of Representatives and at referenda for the alteration of the Constitution141. The capacity of the Commonwealth Parliament to exercise the legislative power conferred by s 51(xix) was initially constrained by the continuing application to Australia of Imperial legislation operating by paramount force and by the political reality of Empire reflected in the prevailing doctrine of the unity of the Imperial Crown. Indeed, for some time, it was inaccurate to speak of an "Australian nationality" as distinct from a "British nationality"142, which equated to the status of a "British subject". The status of a British subject for some time fell to be ascertained by reference to the common law as modified by Imperial legislation143 and as supplemented by local legislation providing for local naturalisation144. With the retreat of Empire, the emergence of Australia as an independent nation in world affairs and the unshackling of Commonwealth legislative competence from Imperial oversight through the enactment of the Statute of Westminster Adoption Act 1942 (Cth), s 51(xix) provided ample power for Australia to respond to the invitation contained in the resolution of the Imperial Conference of 1937 that, together with other former British colonies which had by then become recognised as "autonomous Communities"145 within what had by then become known as the Commonwealth of Nations, it determine "which persons have with it that definite connexion ... which would enable it to recognize them as members of its community"146. The resolution's reference to "members of its 140 Section 117 of the Constitution. See also Street v Queensland Bar Association (1989) 168 CLR 461 at 525, 541, 554. 141 Sections 8, 30, 51(xxxvi) and 128 of the Constitution. 142 Attorney-General for the Commonwealth v Ah Sheung (1906) 4 CLR 949 at 951. 143 The Naturalization Act 1870 (Imp) (33 & 34 Vict c 14). 144 Naturalization Act 1903 (Cth). 145 Great Britain, Imperial Conference 1926: Summary of Proceedings, Cmd 2768 at 10 (emphasis omitted). See Kirmani v Captain Cook Cruises Pty Ltd [No 1] (1985) 159 CLR 351 at 363, 373-374, 398-399, 422. 146 Great Britain, Imperial Conference 1937: Summary of Proceedings, Cmd 5482 at community" was intended to have the "rather technical meaning" of denoting a person that a former colony had "decided to regard as 'belonging' to it, for the purposes of civil and political rights and duties, immigration, deportation, diplomatic representation, or the exercise of extra-territorial jurisdiction"147. In the same year, 1937, Australia ratified the Convention on Certain Questions Relating to the Conflict of Nationality Laws148, Art 1 of which recognised that "[i]t is for each State to determine under its own law who are its nationals". By 1937, the common law status of a British subject had already been replaced in Australia with the statutory status of a British subject149. The sequence of legislative development afterwards saw the supplementation in 1949150 and ultimate displacement in 1987151 of the statutory status of a British subject with the statutory status of an Australian citizen152. The result was that it could be said to have been recognised by 1988 "that the effect of Australia's emergence as a fully independent sovereign nation with its own distinctive citizenship was that the word 'alien' in s 51(xix) of the Constitution had become synonymous with 'non- citizen'"153. Reflecting the contemporary significance of the status of an Australian citizen, legislation providing for the determination of the status of an Australian 147 Great Britain, Imperial Conference 1937: Summary of Proceedings, Cmd 5482 at 148 [1930] 179 LNTS 89. 149 Sections 5 and 6 of the Nationality Act 1920 (Cth), which implemented the "common code" of the British Nationality and Status of Aliens Act 1914 (UK). 150 Part III of the Nationality and Citizenship Act 1948 (Cth), which commenced on 26 January 1949. 151 Australian Citizenship Amendment Act 1984 (Cth), which relevantly commenced on 1 May 1987. 152 See Brazil, "Australian Nationality and Immigration", in Ryan (ed), International Law in Australia, 2nd ed (1984) 210 at 210-223. 153 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 25, referring to Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178. citizen enacted under s 51(xix) recites154, and since 1994 has similarly recited155, that Australian citizenship "represents full and formal membership of the community of the Commonwealth of Australia" and "is a common bond, involving reciprocal rights and obligations, uniting all Australians, while respecting their diversity". A person on whom the status of an Australian citizen is conferred by a process of naturalisation pledges "loyalty to Australia and its people"156. As to the constitutionally permitted scope of the legislative choice conferred on the Commonwealth Parliament by s 51(xix) to prescribe criteria for the determination of who is to have from birth the status of an Australian citizen as distinct from non-citizen or alien, it must now be taken as settled that the Parliament is entitled at least to choose between the principal options recognised as having vied for acceptance as indicia of nationality in the second half of the nineteenth century, being the place of birth (jus soli) or the nationality of one or more parents (jus sanguinis)157, or to choose some combination of the two158. That does not mean that the Parliament's choice within those parameters is entirely unconstrained. Having regard to the role of Australian citizenship as determining membership of the body politic of the Commonwealth of Australia, it is at least arguable that any exclusion from citizenship of a person who is or would be qualified to be an Australian citizen by reference to criteria of general application would need to be supported by "substantial reasons"159. And having regard to the specific and qualified nature of the power160 conferred by s 51(xxvi) 154 Preamble to the Australian Citizenship Act 2007 (Cth). 155 Section 3 of the Australian Citizenship Amendment Act 1993 (Cth). 156 Sections 26 and 27 of and Sch 1 to the Australian Citizenship Act 2007 (Cth). 157 See Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance (1869) at viii. 158 Singh v The Commonwealth (2004) 222 CLR 322 at 340-341 [30], 395 [190], 414 [252]; Koroitamana v The Commonwealth (2006) 227 CLR 31 at 37 [9], 49 [62]. 159 cf McGinty v Western Australia (1996) 186 CLR 140 at 166-167, 170; Roach v Electoral Commissioner (2007) 233 CLR 162 at 174 [7], 176-177 [12], 182 [23], 198-200 [83]-[86]; Rowe v Electoral Commissioner (2010) 243 CLR 1 at 19-21 160 cf Bourke v State Bank of New South Wales (1990) 170 CLR 276 at 289. as amended since 1967161 to make laws with respect to "the people of any race for whom it is deemed necessary to make special laws", it is at least arguable that an exclusion based on race would be impermissible162. There is no need for present purposes to explore those potential limitations. Indigeneity and alienage Australian courts before163 and after164 Mabo v Queensland [No 2] ("Mabo")165, as well as in the reasoning in Mabo itself166, have consistently rejected the existence of Aboriginal or Torres Strait Islander sovereignty. That rejection has meant that, unlike the "Indian Tribes" recognised in the Constitution of the United States167, Aboriginal and Torres Strait Islander societies have never been treated constitutionally as "distinct political societies" or as "domestic dependent nations"168 the members of which have owed "immediate allegiance to their several tribes"169. The consequence has been that members of Aboriginal and Torres Strait Islander societies have never been understood to fall outside the standard common law or statutory rules that have from time to time governed the distinction between a British subject or Australian citizen, on the one hand, and an alien, on the other hand. Against that background, it has never been thought necessary to enact legislation along the lines of the Indian Citizenship Act 1924 (US), specifically conferring the status of subjects or citizens on members of indigenous societies. 161 Constitution Alteration (Aboriginals) 1967 (Cth). 162 Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 365-366 [40]. 163 R v Murrell (1836) 1 Legge 72 at 73; R v Wedge [1976] 1 NSWLR 581; Coe v The Commonwealth (1979) 53 ALJR 403 at 408, 409-410, 412; 24 ALR 118 at 128-129, 164 Coe v The Commonwealth (1993) 68 ALJR 110 at 114-115; 118 ALR 193 at 199- 200; Walker v New South Wales (1994) 182 CLR 45 at 48-49. 165 (1992) 175 CLR 1. 166 (1992) 175 CLR 1 at 15, 31-32, 69, 78-79, 122, 179-180. 167 Article I, s 8. 168 Cherokee Nation v Georgia (1831) 30 US 1 at 17. 169 Elk v Wilkins (1884) 112 US 94 at 99. Nor has it been thought necessary to enact declaratory legislation along the lines of the Native Rights Act 1865 (NZ)170, deeming indigenous persons born or to be born within Australia to have such a status. Until the displacement of the common law by statute early in the twentieth century, two distinct rules of the common law operated in temporal sequence to confer the status of a British subject on the indigenous inhabitants of Australia. The first, applicable at the time of acquisition of sovereignty over territory, was that by which every inhabitant of that territory alive at that time immediately became a British subject171. The second, applicable from the time of acquisition of sovereignty over territory, was that by which every person born within that territory became a British subject from birth simply by reason of their place of birth172. Each common law rule was subject to exceptions, but neither drew any distinction based on race or indigeneity. Application of the second of those common law rules produced the result, in the language used by Sir Kenneth Bailey as Solicitor-General of the Commonwealth in an opinion provided to the House of Representatives Select Committee on Voting Rights of Aborigines in 1961, that "antecedently to the establishment of the Commonwealth aboriginal natives of Australia, like other persons born within Her Majesty's dominions and allegiance were ... natural-born subjects of Her Majesty"173. Taking account of statutory developments to that date, the Solicitor-General went on to advise that "aboriginal natives of Australia, like other persons born in Australia" after 1949 had the statutory status of Australian citizens and, "by virtue of that citizenship", also had the statutory status of British subjects. Professor Geoffrey Sawer advised to the same effect in an opinion provided to the same Committee in the same year that "every aboriginal native of Australia born in Australia after 1829 (by which date the whole of the continent was part of the dominions of the Crown) became a British subject by birth; his race was irrelevant, and there were no other circumstances capable of qualifying the 170 Section 2. 171 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 38, 182; Campbell v Hall (1774) 1 Cowp 204 at 208 [98 ER 1045 at 1047]. 172 Singh v The Commonwealth (2004) 222 CLR 322 at 389 [172]. 173 Australia, House of Representatives, Report from the Select Committee on Voting Rights of Aborigines (1961) at 48 [16] (Appendix VIII). allegiance"174. Sir Garfield Barwick, when Attorney-General of the Commonwealth, had advised to materially identical effect in 1959175. Illustrating the perceived irrelevance of race to the loss as well as the acquisition of the status of British subject, Sir Robert Garran as Solicitor-General of the Commonwealth had advised in 1925 that it was perfectly possible for an Aboriginal woman to become an alien by reason of marriage176. Before and after federation, in the vestigial language of feudalism taken to be descriptive of the formal legal relationship between a British subject and the "Crown"177, Aboriginal and Torres Strait Islander Australians were accordingly understood to have owed "allegiance" to the Crown and to have been entitled, at least in theory, to the "protection" of the Crown in exactly the same way and to exactly the same extent that other Australians were understood to have owed allegiance to the Crown and to have been entitled to the protection of the Crown. By federation, the Crown to which such allegiance was owed was understood to be the monarch "in his politic, and not in his personal capacity" and the full feudal dimensions of what might once have been meant by the "protection" of the Crown had been lost in the mists of time178. To the extent that the "protection" of the Crown might have been thought to involve a positive duty on the part of the Crown to exercise prerogative power physically to protect a British subject, any such duty of the Crown to provide that protection to a British subject was understood to be one of "imperfect obligation"179. 174 "National Status of Aborigines in Western Australia", in Australia, House of Representatives, Report from the Select Committee on Voting Rights of Aborigines (1961) 37 at 37 (Appendix III). 175 Letter from Attorney-General Sir Garfield Barwick to Paul Hasluck, Minister for Territories, 16 July 1959, in Chesterman and Galligan (eds), Defining Australian Citizenship: Selected Documents (1999) 35 at 35-36. 176 See Chesterman and Galligan, Citizens Without Rights (1997) at 109. 177 Calvin's Case (1608) 7 Co Rep 1a at 5a-5b [77 ER 377 at 382-383]; Blackstone, Commentaries on the Laws of England (1765), bk 1, ch 10 at 357-358; Salmond, "Citizenship and Allegiance" (1902) 18 Law Quarterly Review 49. 178 In re Stepney Election Petition; Isaacson v Durant (1886) 17 QBD 54 at 65-66. See Williams, "The Correlation of Allegiance and Protection" (1948) 10 Cambridge Law Journal 54 at 58-73. 179 Attorney-General v Tomline (1880) 14 Ch D 58 at 66. To the extent that the "protection" of the Crown involved recognition of an entitlement to the equal protection of the law as administered by courts, however, there was no doubt that the protection of the common law and of applicable statute law was the entitlement of every British subject. But it was equally the entitlement of every "friendly alien" (being an alien other than an "enemy alien" possessing a nationality of a foreign state at war with the Crown who entered any part of the dominions of the Crown so as thereby to owe "temporary allegiance" to the Crown)180. "Under the common law of Australia and subject to qualification in the case of an enemy alien in time of war, an alien who is within this country, whether lawfully or unlawfully, is not an outlaw."181 Hence, it could be said in the High Court in 1973 to have been "clear" that "an alien, other than an enemy alien, is, while resident in this country, entitled to the protection which the law affords to British subjects"182. Perhaps debatable is whether the terminology of "allegiance" and reciprocal "protection" remains appropriate to describe the bond between an Australian citizen and the Commonwealth of Australia that is inherent in the legal status of Australian citizenship. Quite apart from the obscurity of the content of "allegiance" and "protection"183, the description is problematic to the extent that reciprocity might imply conditionality. The reality is that "in modern states the obligations of the national to the nation are unconditional, rather than contingent upon the state's compliance with corresponding duties"184. For the sake of the historical record, it is as well to affirm that Aboriginal and Torres Strait Islander Australians and non-Aboriginal or Torres Strait Islander Australians alike became at federation members of the body politic of the 180 Singh v The Commonwealth (2004) 222 CLR 322 at 388 [168]. See also Bradley v The Commonwealth (1973) 128 CLR 557 at 582; Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 521. See Salmond, "Citizenship and Allegiance" (1902) 18 Law Quarterly Review 49 at 50; Finnis, "Nationality, Alienage and Constitutional Principle" (2007) 123 Law Quarterly Review 417 at 418-419. 181 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 19 (footnotes omitted). 182 Bradley v The Commonwealth (1973) 128 CLR 557 at 582. 183 cf Singh v The Commonwealth (2004) 222 CLR 322 at 387 [165]-[166]. See also Parry et al (eds), Encyclopaedic Dictionary of International Law (1986) at 16-17, "allegiance". 184 Koessler, "'Subject,' 'Citizen,' 'National,' and 'Permanent Allegiance'" (1946) 56 Yale Law Journal 58 at 68. Commonwealth of Australia. They did so by virtue of their common status as British subjects born within the territorial limits of the Australian colonies, each of which was then a dominion of the Crown. Although s 127 of the Constitution, until its repeal in 1967185, required that "aboriginal natives" not be counted in "reckoning the numbers of the people" of the Commonwealth, the better view of that section is that it governed nothing more than the working out of numbers186. Exclusion from the franchise of "aboriginal native[s] of Australia" (other than those who were by virtue of s 41 of the Constitution entitled to vote) in 1902187 was appropriately described by Senator R E O'Connor in the legislative process by which it occurred as a "monstrous thing"188. Until that exclusion was removed in 1962189, its existence was a gross legislative denial of political rights to persons who, before, after and throughout their period of exclusion from the franchise, formed part of "the people" of the Commonwealth. Articulation of the plaintiffs' argument The plaintiffs do not complain that any criterion laid down by the Parliament for the determination of Australian citizenship operates invalidly to exclude them from membership of the body politic of the Commonwealth of Australia. They disclaim an attack on the validity of the Australian Citizenship Act 2007 (Cth) and do not seek to argue that they are citizens. Citizenship is said by them to be no more than a statutory status, directed to the conferral of certain rights and duties associated with being Australian, which status cannot bear upon the antecedent constitutional question of whether they are or are not aliens. Their argument is that, as persons of Aboriginal or Torres Strait Islander descent who identify with and are acknowledged as members of Aboriginal or Torres Strait Islander communities, they fall within the unique constitutional category of "non-citizen non-aliens". Recognition of that constitutional category would have the effect of placing beyond legislative power the enactment of criteria directed to the question of their alienage or non-alienage, regardless of whether the 185 Section 3 of the Constitution Alteration (Aboriginals) 1967 (Cth). 186 Sawer, "Grant of Franchise to Aborigines by the Commonwealth", in Australia, House of Representatives, Report from the Select Committee on Voting Rights of Aborigines (1961) 38 at 38-39 (Appendix IV). cf Hwang v The Commonwealth (2005) 80 ALJR 125 at 129-130 [16]-[17]; 222 ALR 83 at 88-89. 187 Section 4 of the Commonwealth Franchise Act 1902 (Cth). 188 Australia, Senate, Parliamentary Debates (Hansard), 10 April 1902 at 11584. 189 Commonwealth Electoral Act 1962 (Cth). status of non-alienage is citizenship or any another nomenclature Parliament might choose to adopt. The plaintiffs acknowledge that their argument is novel. They say that its novelty is part of its strength. In all of the legal analysis that has until now been undertaken of indigeneity and alienage, and in all of the cases on s 51(xix) of the Constitution, the argument has never been considered and therefore it has never been rejected. How then do the plaintiffs put their argument? Their argument as ultimately articulated with the support of the Attorney-General for Victoria seems to have three main variations. All have a common starting point. The common starting point is the belated recognition by the common law of Australia in Mabo of the existence, at the time of the acquisition of Imperial sovereignty over the land and waters of Australia, of Aboriginal and Torres Strait Islander societies which observed long-standing traditional laws and customs by which those societies both maintained a spiritual and cultural connection with land and determined their own membership. The first variation of the argument relies on what has since Mabo been described as the "necessary pre-requisite"190 to its recognition of native title at common law. The necessary pre-requisite is the continuation in contemporary Australia of the observance by Aboriginal and Torres Strait Islander societies of their traditional laws and customs. The plaintiffs point to Mabo's recognition of those continuing traditional laws and customs as means through which those societies continue to maintain a spiritual and cultural connection with land and their own membership. They emphasise Mabo's continue acknowledgement of "[m]embership of the indigenous people" depending "on biological descent from the indigenous people and on mutual recognition of a particular person's membership by that person and by the elders or other persons enjoying traditional authority among those people"191. to determine The plaintiffs argue that the common law's recognition of the continuing existence of self-determining indigenous societies maintaining a spiritual and cultural connection with land within Australia through observance of traditional laws and customs is inconsistent with the treatment of members of those societies as strangers to that land or as foreigners to Australia. That is because the common law has now recognised that members of self-determining indigenous societies maintaining a spiritual and cultural connection with land in a very real sense 190 Fejo v Northern Territory (1998) 195 CLR 96 at 128 [46] (emphasis omitted); The Commonwealth v Yarmirr (2001) 208 CLR 1 at 37 [10]. 191 (1992) 175 CLR 1 at 70. "belong" to that land. Their belonging is so deep and so enduring that it has transcended the acquisition of Imperial sovereignty and has transcended the establishment by the Constitution of the nation state of the Commonwealth of Australia. The coming into being in comparatively recent time of the nation state of the Commonwealth of Australia has meant that "a proper understanding of the juridical relationship between land, commonwealth and humans who live on the land ... ('aboriginal' asserting priority in relationship to land) is a question of constitutional law: a primary question of citizenship in the Australian Commonwealth"192. Acknowledging the common law to be a source of "juristic authority" for the Constitution193, and taking into account the inherent connection that must exist between the territory of any nation state and the people of that nation state194 as reflected in the Constitution's use of the word "Commonwealth" to describe both the political community of the nation state which it constitutes and the territory occupied by that community, members of self-determining indigenous societies now recognised by the common law to "belong" to land within what is now the territory of the Commonwealth of Australia must in turn be recognised by the Constitution to "belong" to the political community of the nation state of the Commonwealth of Australia within which their land is situated. Contemporary application of the understanding that the constitutional reference to "aliens" is to persons who are not members of the political community that constitutes the body politic of the nation state of the Commonwealth of Australia must adjust to that ancient but only newly appreciated reality. The foregoing exposition might not reflect in every particular the way the plaintiffs put the first version of their argument. To the extent that it does not, I proffer it as my understanding of the strongest way that version of the argument can be put. Faced with the example of the Yorta Yorta Aboriginal community having been found not to constitute a continuation from the acquisition of Imperial sovereignty of a society observing traditional laws and customs195, and mindful of the position of Mr Love, in respect of whom the special case provides no basis for 192 Detmold, The Australian Commonwealth: A Fundamental Analysis of its Constitution (1985) at 48. 193 Dixon, "The Common Law as an Ultimate Constitutional Foundation", in Crennan and Gummow (eds), Jesting Pilate, 3rd ed (2019) at 203. 194 cf Art 1 of the Montevideo Convention on the Rights and Duties of States. 195 Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422. inferring anything about observance of traditional laws and customs by the community with which he identifies, the plaintiffs proffer other variations of the argument. Neither of the other variations relies on the continuing existence of indigenous societies observing traditional laws and customs. Formulation and presentation of those other versions of the plaintiffs' argument is made necessary by the historical fact acknowledged in Mabo that indigenous persons "were dispossessed of their land parcel by parcel" in a process of dispossession which "underwrote the development of the nation"196. That dispossession produced spiritual and cultural losses to indigenous persons which have been "permanent and intergenerational"197. The consequence of the losses wrought by dispossession remaining unaddressed is that "Aboriginal peoples and Torres Strait Islanders have become, as a group, the most disadvantaged in Australian society"198. The body politic of the Commonwealth of Australia is uniquely responsible for that consequence, and it is uniquely placed to redress that consequence. The second variation postulates as sufficient for a person to "belong" to the land, and hence to be one of or to be uniquely connected with "the people" of Australia, that the person identifies with and is acknowledged to be a member of an existing community that is comprised of descendants of persons who were members of indigenous societies at the time of the acquisition of Imperial sovereignty. The third variation postulates the sufficiency merely of the person being descended from a person who was a member of an indigenous society at the time of the acquisition of Imperial sovereignty. On either of these latter variations of the plaintiffs' argument, proof, through the continual practice of traditional laws and customs, of current spiritual and cultural connection with land is unnecessary. Indigeneity without more entails a connection with land within Australia which is indelible for so long as indigeneity is not renounced. The intergenerational legacy of dispossession sustains a connection with the body politic of the Commonwealth of Australia that is sufficient to demand membership of the body politic. If not sufficient to demand its membership, then the responsibility of the body politic for the intergenerational legacy of dispossession is at least sufficient to preclude it from disowning those whom it has dispossessed. 196 (1992) 175 CLR 1 at 69. 197 Northern Territory v Griffiths (2019) 93 ALJR 327 at 380 [230]; 364 ALR 208 at 198 Preamble to the Native Title Act 1993 (Cth). Here again I am conscious that my exposition of the alternative versions of the argument might not reflect the detail of how the plaintiffs chose to couch it. Here again I proffer the exposition as my understanding of the strongest way the argument can be put. Insofar as the plaintiffs treat membership of an indigenous society as exhaustive of the question of whether they are non-aliens, the first two variations of the argument come perilously close to an assertion of Aboriginal and Torres Strait Islander sovereignty, albeit that the argument is deployed to assert not independence from, but an indelible connection with, the polity of the Commonwealth of Australia. The third variation of the argument would constitutionalise a form of nationality by descent (jus sanguinis), which was unknown to the common law though it may have parallels in some other legal systems. Understandably, the plaintiffs eschew encapsulation of their argument in racial terminology. Yet it is apparent that each version of their argument seeks to introduce into s 51(xix) of the Constitution a distinction that is based on "race" as that term appears in s 51(xxvi)199, on which the Commonwealth Parliament has relied since its amendment in 1967 to enact a range of legislation for the benefit of Aboriginal or Torres Strait Islander people including the Native Title Act 1993 (Cth). One way or another, what the plaintiffs seek to achieve through a process of constitutional interpretation or constitutional implication is the functional equivalent of an exclusion from s 51(xix) comparable to the express parenthetical exclusion from s 51(xxvi) which was deleted by constitutional amendment in 1967. They seek, in effect, to read s 51(xix) as if it concluded, after the word "aliens", with the parenthetical exclusion "(other than [members of] the aboriginal race)". Rejection of the plaintiffs' argument Though I recognise the magnitude of the change wrought by the holding in Mabo to the common law of Australia, to Australian legal thinking more generally, and to Australian national sentiment, and though I am not unmoved by growing appreciation of the depth of cultural connection to country and of the extent of historical dispossession of Aboriginal and Torres Strait Islander peoples, I am unable to accept the plaintiffs' argument in any of its variations. Morally and emotionally engaging as the plaintiffs' argument is, the argument is not legally sustainable. The common law antecedents of the Constitution provide no basis for extrapolating from common law recognition of a cultural or spiritual connection with land and waters within the territory of the 199 Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 461-462, quoting The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 273-274. Commonwealth to arrive at constitutionally mandated membership of or connection with the Commonwealth. The considerations which informed the common law development in Mabo cannot be transformed by any conventional process of constitutional interpretation or implication into a constitutional limitation on legislative power. the political community of The Constitution uses the word "Commonwealth" to describe both the "territorial community" of the Commonwealth of Australia and the "territory occupied by that community". The Constitution does so using the same word in these two quite distinct "senses" that are "close[]" but "several", making it "peculiarly important to distinguish them"200. Membership of or exclusion from the political community of the Commonwealth of Australia is a topic of vital national importance, which the Commonwealth Parliament has since 1901 had specific power to address under s 51(xix) of the Constitution. Recognition and protection of the connection of Aboriginal and Torres Strait Islander peoples with land and waters within the territory of the Commonwealth of Australia is another topic of vital national importance, which the Commonwealth Parliament has since 1967 had specific power to address under s 51(xxvi) of the Constitution. Each topic raises issues which, within our current constitutional structure, and subject to the constraints which that constitutional structure currently imposes, fall to be resolved by the Commonwealth Parliament in the outworking of the political processes for which the Constitution makes elaborate provision. To the extent those issues might intersect, the existence and consequences of the intersection fall to be addressed by the Commonwealth Parliament in the outworking of those political processes. Judicial intervention on the basis for which the plaintiffs contend is not constitutionally justified. Section 51(xix) of the Constitution is to be construed "with all the generality which the words used admit"201 to confer power on the Commonwealth Parliament to create and maintain a clear-cut dichotomy between those who are by force of statute aliens and those who are by force of statute non-aliens because they are citizens. Section 51(xix) is not to be read as admitting of the existence of a further category of non-aliens who are non-aliens by force of the Constitution itself, whose status is for that reason and to that extent off-limits to the Parliament, and who are consigned to inhabit a constitutional netherworld in which they are neither citizens, who are full and formal members of the body politic of the Commonwealth of 200 R v Sharkey (1949) 79 CLR 121 at 153, quoting Moore, The Constitution of The Commonwealth of Australia, 2nd ed (1910) at 73. 201 R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225-226. Australia, nor aliens, who are not full and formal members of the body politic of the Commonwealth of Australia. For reasons I have sought to make clear in explaining the nature of the power conferred by s 51(xix) of the Constitution as a power to determine who has and who does not have the legal status of alienage, I cannot countenance the existence of a constitutional category of "non-citizen non-aliens" any more than I could countenance the existence of a category of "constitutional citizens". That is so irrespective of the basis on which persons within such a category might be determined. Not to be forgotten is that we have been down a similar path before: between 2001202 and 2003203, when the notion was entertained that British citizens who migrated to Australia between 1948 and either 1986 or 1987 and who settled here as permanent residents without becoming Australian citizens were somehow not "aliens". It was a constitutional cul-de-sac. Nor can I be party to a process of constitutional interpretation or constitutional implication which would result in the inference of a race-based constitutional limitation on legislative power. My objection is one of principle to the judicial creation of any race-based constitutional distinction irrespective of how benign the particular distinction contended for might seem. Creativity of that nature and in that degree is not within the scope of the acknowledged judicial function of ensuring that the structure of government, democratically endorsed through the adoption and amendment of the Constitution, is accommodated to the "changeful necessities and circumstances of generation after generation" as "the nation lives, grows, and expands"204. It is supra-constitutional innovation. The limits of judicial competence are reinforced by the limits of judicial process. The hearing of the special cases in these proceedings has been conducted at a time when a national conversation is occurring about the appropriateness of amending the Constitution to include an Aboriginal and Torres Strait Islander "Voice" to the Commonwealth Parliament. Noticeably absent from the viewpoints represented at the hearing has been the viewpoint of any Aboriginal or Torres Strait Islander body representing any of the more than 700,000 citizens of Australia who identify as Aboriginal or Torres Strait Islander. On the basis of the case as presented, I cannot presume that the political and societal ramifications of translating a communal, spiritual connection with the land and waters within the 202 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 408-409 [35]-[39], 411-412 203 Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28. 204 Australia, House of Representatives, Parliamentary Debates (Hansard), 18 March territorial limits of the Commonwealth of Australia into a legislatively ineradicable individual connection with the polity of the Commonwealth of Australia are able to be judicially appreciated. Unlike, for example, the legislative powers of the Parliament of Canada205, the legislative powers of the Parliament of the Commonwealth have not to date been constrained by the insertion of a constitutional guarantee of "aboriginal ... rights"206. If the scope of one or more of those legislative powers is now to be limited so as to result in constitutionally mandated differential treatment of some or all Aboriginal and Torres Strait Islander people, then the Constitution should be amended to produce that result by referendum, just as the Constitution was amended in 1967 to increase the scope of the legislative power of the Parliament of the Commonwealth to enact such special laws as the Parliament might deem necessary with respect to Aboriginal and Torres Strait Islander people. Important to be remembered in the interpretation and application of the Constitution is that it was framed as a practical instrument of government. Consequences for practical governance cannot be ignored. To concede capacity to decide who is and who is not an alien from the perspective of the body politic of the Commonwealth of Australia to a traditional Aboriginal or Torres Strait Islander society or to a contemporary Aboriginal or Torres Strait Islander community, or to any other discrete segment of the people of Australia, would be to concede to a non-constitutional non-representative non-legally-accountable sub-national group a constitutional capacity greater than that conferred on any State Parliament. Yet that would be the practical effect of acceptance of either of the first and second variations of the plaintiffs' argument. Acceptance of any variation of the plaintiffs' argument would have the practical effect of depriving the Commonwealth Parliament of an aspect of its power to enact legislation under s 51(xix) of the Constitution which has effect for purposes both of national law and of international law. It would inject an element of indeterminacy into the administration of the legal status of alienage in respect of which Australia's interests as a nation state, domestically and internationally, demand that the legal criteria for determining the legal status be clearly identified, publicly proclaimed and officially and consistently administered, and that the legal status of individuals be unambiguous at and from the time of birth. The potential impact on maintenance of an orderly national immigration program cannot be predicted on the basis of the material contained in the special cases but should not be underestimated. The Migration Act 1958 (Cth) has since 205 cf Watt v Liebelt [1999] 2 FC 455. 206 See s 35 of the Constitution Act 1982 (Can). 1984 relied on s 51(xix) of the Constitution. As amended since 1994, it has required all persons who are not Australian citizens to hold valid visas in order to enter and remain in Australia. Immunisation from its operation of an indeterminate number of persons who are not Australian citizens but who have familial connections with indigenous societies or communities within the mainland of Australia or on the islands of the Torres Strait would not be trivial. Findings made by Finn J in 2010 in the course of determining native title in the Torres Strait as to "numerous interactions over generations between Islanders and coastal Papuans"207 are sufficient to indicate that such trans-national family connections are not the product only of recent social mobility. The complications and uncertainties which acceptance of the plaintiffs' argument would create for the maintenance of an orderly national immigration program under the Migration Act might perhaps be addressed by the Commonwealth Parliament reverting to the approach of relying on the power conferred by s 51(xxvii) to make laws with respect to "immigration and emigration". Alternatively, the Commonwealth Parliament might consider itself obliged to address them through racially targeted legislation enacted under s 51(xxvi) of the Constitution. On a correct understanding of the scope of the power conferred by s 51(xix), neither is a course which the Commonwealth Parliament ought to be driven to take. Disposition I would answer the principal question for determination in each special case to the following effect: by reason of not having the status of an Australian citizen according to criteria of general application prescribed by legislation validly enacted under s 51(xix) of the Constitution, the plaintiff is an alien within the meaning of that provision. 207 Akiba v Queensland [No 3] (2010) 204 FCR 1 at 243 [999]. 142 KEANE J. Mr Daniel Love is the plaintiff in Matter No B43 of 2018 ("the Love proceeding"); Mr Brendan Thoms is the plaintiff in Matter No B64 of 2018 ("the Thoms proceeding"). Neither of the plaintiffs is an Australian citizen; and neither holds a current visa. Sections 189 and 198 of the Migration Act 1958 (Cth) provide that a person who is not an Australian citizen and who does not hold a visa is required to be detained and then removed from Australia. Section 51(xix) of the Constitution empowers the Commonwealth Parliament to make laws with respect to "naturalization and aliens". All parties are agreed that the plaintiffs are not subject to ss 189 and 198 of the Migration Act if they are outside the scope of the naturalisation and aliens power in s 51(xix) of the Constitution, pursuant to which, ss 189 and 198 of the Migration Act were enacted. On that basis, the question of law stated for the opinion of the Full Court in these special cases is whether each of the plaintiffs is an "alien" within the meaning of s 51(xix). The plaintiffs argue that because each of them is of Aboriginal descent, and each identifies as a member of a particular Aboriginal group, and is said to be recognised as such by one or more elders of that group, he cannot be an "alien" within the naturalisation and aliens power. The plaintiffs' argument should be rejected, and the question of law in the special cases should be answered: Yes. Neither plaintiff was born in Australia. Each plaintiff is a citizen of a foreign country. Neither plaintiff has been naturalised as an Australian citizen, although that course was open to him. By reason of these circumstances, each plaintiff is within s 51(xix). The circumstance that each plaintiff is of Aboriginal descent does not take him outside the scope of s 51(xix). Section 51(xix) cannot be read as if it distinguished between persons of Aboriginal descent on the one hand and persons descended from other races on the other, so that the former are excluded from its scope. Each plaintiff is within the scope of s 51(xix) no less than any other child who is born abroad of an Australian parent and does not apply for Australian citizenship. In order to explain my reasons for these conclusions, I propose first to summarise the facts that gave rise to these cases and then to discuss the arguments agitated on behalf of the plaintiffs. The facts The relevant facts may be stated shortly. Mr Love Mr Love was born on 25 June 1979 in the Independent State of Papua New Guinea ("PNG") and acquired the status of a PNG citizen at that time208. His father was an Australian citizen by birth and his mother was a citizen of PNG. Mr Love's father was born in Port Moresby but was an Australian citizen by reason that, at the time of his birth, "Australia" was defined to include the Territory of Papua209. Mr Love was not entitled to Australian citizenship by descent. That was because at the time of his birth, a person born outside of Australia and out of wedlock could acquire such citizenship only if the person's mother was either an Australian citizen or a British subject ordinarily resident in Australia or New Guinea210. Mr Love travelled back and forth between Australia and PNG in the period November 1981 to October 1985; he was granted a permanent residency visa for Australia in December 1984, at the age of five. He has resided in Australia continuously since October 1985. He has held visas, including the permanent residency visa, which entitled him to reside in Australia but which were liable to cancellation. Unlike his sibling, Mr Love did not seek and did not acquire the status of an Australian citizen. On 25 May 2018, Mr Love was convicted of an offence of assault occasioning bodily harm contrary to s 339 of the Criminal Code (Qld) and was sentenced to 12 months' imprisonment. His visa was subsequently cancelled by a delegate of the Minister for Home Affairs ("the Minister") under s 501(3A) of the Migration Act, which requires the Minister to cancel a visa which has been granted to a person if satisfied that the person does not pass the character test. A person cannot pass that test if the person has a substantial criminal record211, which is defined to include a sentence of 12 months' imprisonment or more212. 208 Constitution of the Independent State of Papua New Guinea, s 66(1). 209 Nationality and Citizenship Act 1948 (Cth), ss 5(1), 10(1). This Act was subsequently renamed the Australian Citizenship Act 1948 (Cth). 210 Australian Citizenship Act 1948, s 11(1)(b). 211 Migration Act, s 501(6)(a). 212 Migration Act, s 501(7)(c). Mr Love was taken into immigration detention on suspicion of being an unlawful non-citizen213. An unlawful non-citizen is required to be removed from Australia as soon as reasonably practicable214. An unlawful non-citizen is a non-citizen who is in Australia who does not hold a visa that is in effect215. The cancellation of Mr Love's visa was subsequently revoked and he was released from immigration detention. The Commonwealth nevertheless contends that he has the legal status of an alien who is liable to be removed from Australia. Mr Love is descended from persons who inhabited Australia prior to European settlement. He identifies as a member of the Kamilaroi group and is recognised as such by one elder of that group. Mr Thoms Mr Thoms was born on 16 October 1988 in New Zealand and acquired the status of a New Zealand citizen at birth216. His father was at this time a New Zealand citizen. Mr Thoms' mother is an Australian citizen by birth, which entitled Mr Thoms to acquire Australian citizenship217. He has never sought to acquire that status. Mr Thoms first came to Australia in December 1988. He has resided permanently in Australia since November 1994, when he was granted a Special Category Visa. He travelled from Australia to New Zealand on a temporary basis in 1997-1998 and 2002-2003. He has not departed Australia since January 2003. Mr Thoms identifies as a member of the Gunggari People and is accepted as such by other members of the Gunggari People. He is a common law holder of native title which has been recognised by determinations of native title made by the Federal Court of Australia218. 213 Migration Act, s 189. 214 Migration Act, s 198. 215 Migration Act, ss 13, 14. 216 Citizenship Act 1977 (NZ), s 6(1). 217 Australian Citizenship Act 1948, s 10B. 218 Kearns on behalf of the Gunggari People #2 v Queensland [2012] FCA 651; Foster on behalf of the Gunggari People #3 v Queensland [2014] FCA 1318. On 17 September 2018, Mr Thoms was convicted of an offence of assault occasioning bodily harm – domestic violence offence, contrary to s 339(1) of the Criminal Code (Qld)219, and was sentenced to 18 months' imprisonment. He commenced court-ordered parole on 28 September 2018; but he was taken into immigration detention on the same day, where he remains, as his visa was cancelled by a delegate of the Minister under s 501(3A) of the Migration Act. From subjects to citizens At Federation, no subject of the British Crown was an alien within any part of the British Empire220. Aboriginal persons, like all other British subjects then living in Australia, were not aliens: they had become subjects of the Crown upon the reception of English common law at the first British settlement221. Aboriginal persons living in Australia at or after British settlement were, like others present or born here, subject to English law as the law of the land. In Mabo v Queensland [No 2], Brennan J, with whom Mason CJ and McHugh J agreed, said that "the law of England was not merely the personal law of the English colonists; it became the law of the land, protecting and binding colonists and indigenous inhabitants alike and equally"222. To say that Aboriginal persons, or persons identifying as such, were not "aliens" for the purposes of the naturalisation and aliens power at Federation because they were British subjects is not relevantly to differentiate them or their descendants from other British subjects living in Australia at that time or their individual descendants. Aboriginal persons in Australia were not subjects of the Crown with a special claim to the protection of the Crown that differentiated them from other inhabitants of the continent; nor were they subject to some special obligation to the Crown as a reciprocal of such "special protection". Aboriginal inhabitants of the Australian continent became subjects of the British Crown by reason of the fact of settlement; they did not become subjects of the British Crown 219 Section 47(9) of the Justices Act 1886 (Qld) provides that "[a] complaint for an offence may state the offence is also a domestic violence offence". 220 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 183. 221 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 37-38, 80, 182. See, also, In re Ho (1975) 10 SASR 250 at 253. 222 (1992) 175 CLR 1 at 37. See, also, at 34, 36, 38, 182; Coe v The Commonwealth (1979) 53 ALJR 403 at 408; 24 ALR 118 at 129; Campbell v Hall (1774) 1 Cowp 204 at 208 per Lord Mansfield, delivering the reasons of the Court [98 ER 1045 at because they were indigenous to the continent. They became subject to English law because they were, like European and other settlers, inhabitants of the continent of which English law was the law of the land. Australians are no longer British subjects. After World War II, the Nationality and Citizenship Act 1948 (Cth) established a separate Australian citizenship. Thereafter223: "The fact that a person who was born neither in Australia nor of Australian parents and who had not become a citizen of this country was a British subject or a subject of the Queen by reason of his birth in another country could no longer be seen as having the effect, so far as this country is concerned, of precluding his classification as an 'alien'." Since Australia's emergence as an independent sovereign nation with its own distinct citizenship, the word "alien" has, speaking generally, become synonymous with "non-citizen"224. That is so even though it has been said that the concepts are not perfectly overlapping225. So in contemporary parlance, it is natural to speak of members of the Australian body politic as "citizens"; similarly, it is an ordinary and natural use of language to speak of a person who is not an Australian citizen, but is a citizen of another country, as an "alien". The naturalisation and aliens power extends to the making of laws that determine who is to be treated as a citizen of the Commonwealth of Australia, who will be treated as having the status of alienage, and "what the status of alienage, or non-citizenship, will entail"226. The requirements of citizenship are currently found in the Australian Citizenship Act 2007 (Cth). The plaintiffs do not challenge the validity of that Act or the proposition that they have not been naturalised as citizens under that Act. 223 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 184. 224 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 183-184; Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 25; Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 61 [95]; Singh v The Commonwealth (2004) 222 CLR 322 at 329 [4], 374 [122], 400 [205]. 225 cf Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 412 [50]-[51], 421 [91], 437 [136], 493-494 [308], 496 [313], 518 [376]-[378]. But see Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 45 [39], 87 [190]. 226 Koroitamana v The Commonwealth (2006) 227 CLR 31 at 38 [11]. Aliens and citizens Section 51(xix) of the Commonwealth Parliament to "create and define the concept of Australian citizenship"227, to select or adopt the criteria for citizenship or alienage228, and to attribute to any person who lacks the qualifications for citizenship "the status of alien"229. the Constitution empowers At Federation, the major legal systems of the world applied different approaches to the concept of alienage and the correlative concept of citizenship. The two principal theories were citizenship acquired by descent or by place of birth. The latter reflected the common law view earlier expressed in Calvin's Case230, but it had been modified by statute. An understanding of what "alien" meant at Federation must therefore take account of these different views and the legislative responses to these views that occurred during the nineteenth century across the major legal systems of the world231. What was clear at Federation was that it was an attribute of the sovereignty of an independent State to decide who were aliens and whether they should or should not become members of the community232. Given this background, it is not difficult to accept that alienage was a matter seen as appropriate to be dealt with by Parliament233. As Kirby J explained in Koroitamana v The Commonwealth234: "The reasons for the rejection of the constitutional idea of nationality as a birthright were differently expressed in the several reasons in Singh. However, basically, they reflected the recognition by all members of the majority, that, at the time the Constitution was written and thereafter, two 227 Koroitamana v The Commonwealth (2006) 227 CLR 31 at 46 [48]. 228 Koroitamana v The Commonwealth (2006) 227 CLR 31 at 37 [9], 46 [50], 49 [62]. 229 Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 230 (1608) 7 Co Rep 1a [77 ER 377]. 231 Singh v The Commonwealth (2004) 222 CLR 322 at 340-341 [30], 384 [157], 232 Robtelmes v Brenan (1906) 4 CLR 395 at 400, 404, cited in Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 170 [21]. 233 Singh v The Commonwealth (2004) 222 CLR 322 at 341 [30], 414 [251]-[252]. 234 (2006) 227 CLR 31 at 49 [62] (footnote omitted). criteria for nationality by birth existed in the world – ius soli and ius sanguinis. In that circumstance, consistent with the accepted norms for the construction of the Australian Constitution, notions of alienage and of nationality could adapt, as Parliament provided, by reference to one, both or a mixture of these competing approaches, so long as the persons designated as 'aliens' truly answered that description in accordance with the judgment of this Court." Of course, as was noted by Kirby J, the power given by s 51(xix) has limits in that the Commonwealth Parliament cannot, simply by inventing its own peculiar definition of "alien", expand the power under s 51(xix) to include persons who could not possibly answer the description of "aliens" in the ordinary understanding of the word235. But the existence of outer limits does not deny that the power conferred on Parliament is "wide"236, and that it must be construed "with all the generality which the words used admit"237. In Singh v The Commonwealth, Gummow, Hayne and Heydon JJ held that "a central characteristic of the status of 'alien' is, and always has been, owing obligations to a sovereign power other than the sovereign power in question"238. Their Honours explained that "owing obligations to a sovereign power other than Australia is the central characteristic of what is meant by 'aliens'"239. This explanation was confirmed by six members of the Court in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Ame240. In Singh, Gummow, Hayne and Heydon JJ concluded241: "the meaning of 'aliens' was conveniently described in the joint reasons of six members of the Court in Nolan v Minister for Immigration and Ethnic 235 Pochi v Macphee (1982) 151 CLR 101 at 109. 236 Hwang v The Commonwealth (2005) 80 ALJR 125 at 130 [18]; 222 ALR 83 at 89; Koroitamana v The Commonwealth (2006) 227 CLR 31 at 38 [11]. 237 Singh v The Commonwealth (2004) 222 CLR 322 at 384 [155], citing R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225. 238 (2004) 222 CLR 322 at 383 [154]. See, also, at 398 [200]. 239 (2004) 222 CLR 322 at 399 [201]. 240 (2005) 222 CLR 439 at 458 [35]. 241 (2004) 222 CLR 322 at 400 [205]. Affairs242 where it was said that 'alien' '[u]sed as a descriptive word to describe a person's lack of relationship with a country ... means, as a matter of ordinary language, "nothing more than a citizen or subject of a foreign state"243'." These statements of Gummow, Hayne and Heydon JJ in Singh were not doubted in Koroitamana244; as Gleeson CJ and Heydon J pointed out in the latter case, "foreign allegiance [is] the clearest example" of the characteristic that brings a person within "the ordinary understanding of the word 'alien'"245. It was accepted in that case that statelessness is also "a relevant characteristic rendering [persons] objects of the exercise of the aliens power"246. The statements of Gummow, Hayne and Heydon JJ in Singh are reconcilable with the decision in Koroitamana on the basis that, in each case, it was open to the Parliament to treat as an alien a person who holds an allegiance to a foreign power inconsistent with the grounds of allegiance prescribed by Australian law or who holds no allegiance to Australia under those grounds. Alienage and foreign allegiance In Sykes v Cleary, Brennan J explained that issues of foreign citizenship are "ordinarily determined by reference to the municipal law of the foreign power"247, but that law cannot deny the power of the Parliament to provide differently. Accordingly, the Parliament may provide for dual citizenship where it thinks fit to do so. The legal status of an alien in Australian law is now derived from the statutory description of citizenship. It reflects the ordinary meaning of "alien" as a person who is not a citizen of Australia but is a citizen of a foreign State. It is for Parliament, relying on s 51(xix), to create and define the concept of Australian 242 (1988) 165 CLR 178 at 183. 243 Milne v Huber (1843) 17 Fed Cas 403 at 406. 244 (2006) 227 CLR 31 at 37 [9], 41 [28]. 245 (2006) 227 CLR 31 at 38 [13]. 246 (2006) 227 CLR 31 at 42 [31]. 247 (1992) 176 CLR 77 at 112, citing R v Burgess; Ex parte Henry (1936) 55 CLR 608 citizenship and its antonym alienage248. So understood, the fact that a person who is not a citizen of Australia also has some other characteristic (such as having been born to an Australian parent, or having deep personal ties or a strong emotional attachment to Australia) cannot alter that status created by law249. Each of the plaintiffs is a citizen of a foreign country. It was submitted on their behalf that neither of them owes, and has ever owed, allegiance to a foreign power. In this regard, it was said that each of them departed his country of birth as a young child and has permanently resided in Australia since he was an infant. It was said that neither of them had, as children, the capacity to form an allegiance to a foreign sovereign power. Furthermore, it was said that each plaintiff's permanent presence in Australia, close relationships with other Australians (including becoming the parent of Australian citizens), and identification as an Aboriginal person, all indicate that his allegiance is to the Australian body politic. This submission is untenable. Whether a person owes allegiance to a foreign country does not depend on his or her mental state or capacity to choose allegiance. "Allegiance" to a foreign country is a legal duty that arises by reason of an individual's legal status as a "subject" or "citizen" under foreign law250 – that status may arise independently of the choice of the individual. The plaintiffs' submission is directly contrary to the decision in Singh, where this Court was concerned with a six-year-old girl who was a citizen of India but was born in Australia of Indian parents. In rejecting the claim that the child was not an Indian citizen, the Court attributed no significance to her status as a minor and lack of capacity to make her own choices about her allegiance. It is an agreed fact that each plaintiff is a citizen of a foreign country; accordingly, the plaintiffs' submission can succeed only if Singh were to be overruled. The plaintiffs did not invite the Court to take that course. Section 51(xix) and Aboriginality Events that, under Australian law, may affect the relationship between an individual and the Australian body politic may equally affect the relationship 248 Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 172 [26]; Koroitamana v The Commonwealth (2006) 227 CLR 31 at 46 [48]. 249 Singh v The Commonwealth (2004) 222 CLR 322 at 398 [200]; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Ame (2005) 222 CLR 439 at 458 [35]. 250 See, eg, Sykes v Cleary (1992) 176 CLR 77 at 109-110; Re Canavan (2017) 91 ALJR 1209 at 1216 [26]; 349 ALR 534 at 541. between a member of an Aboriginal group and the Australian body politic. An individual who identifies as a member of an Aboriginal group and is recognised as such by other members of that group, but who was born overseas and is a citizen of a foreign country, falls, like any other person who is a citizen of a foreign power, within the scope of the naturalisation and aliens power. That each plaintiff was born overseas and is a citizen of a foreign country who has not been naturalised as a citizen of Australia is itself sufficient to bring him within the power of the Commonwealth Parliament to treat him as an alien; just as it is open to the Parliament to treat any other person possessing these characteristics as an alien. Alienage or citizenship is a status created by law. That status is a relationship between an individual and the sovereign nation251. It is not a relationship between an ethnic group and the nation. Nor is it a relationship between an individual and an ethnic group. Australian law does not recognise an entitlement to membership of the Australian body politic independently of the satisfaction of the ordinary legal requirements and qualifications for Australian citizenship252. In this regard, membership of a particular race does not afford an entitlement to membership of the Australian body politic under the Constitution or any Act of Parliament. Considerations of race are irrelevant to the requirements for membership of the Australian body politic. As Gaudron J said in Kartinyeri v The Commonwealth: "[R]ace is simply irrelevant ... to the question of continued membership of the Australian body politic."253 There is no support in the text or structure of the Constitution for the contention that there is a special class within the people of the Commonwealth who, by virtue of their biological descent and self-identification as members of a particular racial group, enjoy a constitutionally privileged political relationship with the Australian body politic. A strong moral case can be made for special recognition of Aboriginal people in the Constitution because of their special place as the first inhabitants of the continent and the historical injustices suffered by them. Indeed, the case for special recognition is the subject of public debate at the present time254. The point is that the debate about constitutional recognition is 251 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 466 [225]. 252 Pochi v Macphee (1982) 151 CLR 101 at 111; Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 179-180 [56]-[58], 253 (1998) 195 CLR 337 at 366 [40]. 254 Gleeson, "Recognition in Keeping with the Constitution" (2019) 93 Australian Law Journal 929. necessary precisely because the Constitution, in its current terms, does not have that effect. It may be noted that the Constitution originally provided by s 127 that: "In reckoning the numbers of the people of the Commonwealth, or of a State or other part of the Commonwealth, aboriginal natives shall not be counted." Section 127 was repealed by the Constitution Alteration (Aboriginals) 1967 (Cth). This Act also removed from s 51(xxvi) of the Constitution the words "other than the aboriginal race in any State"255. The removal of these discriminations against people of the Aboriginal race brought about a state of affairs in which Aboriginal people were no longer singled out by the Constitution itself as persons who stand separately and apart from the other people of the Commonwealth. One cannot read s 51(xix) of the Constitution as if it provided that the Commonwealth Parliament may make laws with respect to "naturalization and aliens, save in respect of members of the Aboriginal race". Such a reading is not required to make sense of the constitutional text; indeed, it does no little violence to that text. And to adopt race as a basis for differentiating between members of the people of the Commonwealth in terms of the application of laws is not a course that commends itself in terms of the exercise of judicial power given that justice is to be administered equally to all256. In The Commonwealth v Tasmania (The Tasmanian Dam Case), Deane J adopted the observation by Professor Sawer257 that "the architects of the Constitution paid no attention at all to the position of the Aboriginal people of Australia"258. While the truth of that observation is lamentable and a remedy for that neglect long overdue, it is distinctly unconvincing, and bitterly ironic in the light of Professor Sawer's observation, to attribute to the Constitution, and s 51(xix) in particular, an intention to accord persons of Aboriginal descent a special position of privilege over other persons in a similar position. True it is that s 51(xxvi) of the Constitution contemplates that the Commonwealth Parliament 255 Section 51(xxvi) now provides that "[t]he Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to ... the people of any race for whom it is deemed necessary to make special laws". 256 Tuckiar v The King (1934) 52 CLR 335. 257 Sawer, "The Australian Constitution and the Australian Aborigine" (1966) 2 Federal Law Review 17 at 17. 258 (1983) 158 CLR 1 at 272. may make special laws for the people of a particular race, but the express conferral of that power on Parliament tends, if anything, to confirm that the Constitution itself does not create or recognise persons of Aboriginal descent as a special privileged group among those who constitute the people of the Commonwealth. Aboriginal connection with lands and waters in Australia The plaintiffs submitted that persons of Aboriginal descent who identify, and are recognised, as members of an Aboriginal group are not capable of being treated as aliens by the Commonwealth Parliament wherever they happen to have been born, and whether or not they are citizens of a foreign country, because of their special connection to Australia. The plaintiffs argued that Aboriginal persons do not meet the description of aliens because they are a permanent part of the Australian community, having inhabited Australia for some 50,000 years prior to European settlement. The plaintiffs said that a construction of the naturalisation and aliens power that includes Aboriginal persons does not cohere with the unique historical status of Aboriginal persons as the first inhabitants of Australia. It was said that an Aboriginal person's descent, self-identification, and community acceptance, are so closely connected with being "Australian" as to take him or her beyond the reach of the naturalisation and aliens power. The plaintiffs relied upon a three-part test for determining whether a person meets the description of "Aboriginal person", under which a person is an Aboriginal person if: the person is a member of the Aboriginal race; the person identifies as an Aboriginal person; and (iii) the person is accepted by other members of the Aboriginal community as an Aboriginal person. It was said that both Mr Love and Mr Thoms meet the requirements of this three-part test. It may be noted that there is reason to doubt that the last requirement is met in the case of Mr Love. The agreed facts disclose that whilst Mr Thoms is recognised by the Gunggari People, Mr Love is recognised by only one identified elder of the Kamilaroi group, and it is not apparent that such recognition conformed to the traditional customs and laws of that group. In any event, the plaintiffs' argument cannot be accepted. It involves fundamental legal errors. In The Tasmanian Dam Case, Deane J, speaking of provisions of the World Heritage Properties Conservation Act 1983 (Cth) ("the World Heritage Act") which were said to be supported by s 51(xxvi) of the Constitution as special laws for the people of the Aboriginal race, said259: "By 'Australian Aboriginal' I mean, in accordance with what I understand to be the conventional meaning of that term, a person of Aboriginal descent, albeit mixed, who identifies himself as such and who is recognized by the Aboriginal community as an Aboriginal." The provisions of the World Heritage Act with which Deane J was concerned related to the protection and conservation of identified property "of particular significance to the people of the Aboriginal race"260. The description by Deane J of "Australian Aboriginal" was put forward to give context to the operation of the World Heritage Act. It is important to appreciate that it was not propounded as a test of membership of the body politic of the Commonwealth of Australia. The plaintiffs' submission relies upon the reasons of Brennan J (with whom Mason CJ and McHugh J agreed) in Mabo [No 2], where, in discussion of the qualifications necessary for membership of an indigenous people, his Honour said261: "Native title to particular land (whether classified by the common law as proprietary, usufructuary or otherwise), its incidents and the persons entitled thereto are ascertained according to the laws and customs of the indigenous people who, by those laws and customs, have a connexion with the land. It is immaterial that the laws and customs have undergone some change since the Crown acquired sovereignty provided the general nature of the connexion between the indigenous people and the land remains. Membership of the indigenous people depends on biological descent from the indigenous people and on mutual recognition of a particular person's membership by that person and by the elders or other persons enjoying traditional authority among those people." In this passage, Brennan J was concerned to explain the basis on which an individual indigenous person may come to share in the communal rights of a particular indigenous group to a particular territory. Brennan J was plainly not 259 (1983) 158 CLR 1 at 274. 260 (1983) 158 CLR 1 at 273. 261 (1992) 175 CLR 1 at 70. seeking to describe the political relationship between an individual indigenous person and the body politic, being the Commonwealth of Australia, much less the relationship between all indigenous people collectively and the body politic. It is true, of course, that a polity has a territorial dimension262; but that dimension does not determine the character of the polity or the legal basis of the relationship between the polity and its people. These matters are determined by the laws of the State, not some supra-national or natural law. So, for example, between June 1789 and the present day the territory of France has been affected by the annexation by Germany of Alsace and Lorraine on two occasions, by German occupation during World War II, and by the post-War loss of Algeria as part of Metropolitan France. In that time, the French State was constituted as two monarchies, two empires, five republics and the Vichy regime during World War II. The people of France were, during this time, variously subjects and citizens; and whether they were one or the other depended on the legal regime established by the State. The point is that the basis of the relationship between a sovereign State and its people is a function of political and legal considerations. The relationship between the individual and the polity that confers the status of membership of the polity is created by the law of the sovereign nation. It is marked with formalities that make manifest its attainment and loss. The relationship described by Brennan J in Mabo [No 2] is between a particular indigenous community and particular traditional lands and waters. That relationship is not one of formal legal status between an individual and a sovereign power; it is a spiritual and cultural connection that is focused upon particular lands and waters. This connection does not extend to all the lands and waters under Australian sovereignty. In particular, it does not confer rights to enter upon or reside in the traditional lands of other indigenous groups; much less does it confer rights to enter and reside in any part of the territory of the Commonwealth of Australia. The plaintiffs' argument confuses the body politic that was brought into existence at Federation with lands and waters, parts of which were occupied by particular Aboriginal groups long before that body politic came into being. The plaintiffs' argument also confuses the spiritual connection of an indigenous person to particular lands and waters with a connection to the body politic that is inconsistent with alienage. In this regard, the plaintiffs' submission is fatally imprecise. If, as is the case here, one is speaking of the body politic being the Commonwealth of Australia, the "Australian community" is not 50,000 years old: the Australian community, the Commonwealth of Australia, was established only at Federation. 262 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 48. The adoption of the three-part test proposed by the plaintiffs as a basis for negativing the status of alienage would mean that whether Parliament could treat an individual as an "alien" would necessarily depend on the choices or views of the individuals concerned. These choices and views might vary over time, and whether a person could be said to be immune from the status of alienage would be left in a state of uncertainty because individuals might bring themselves in and out of the scope of the power upon a change in their self-identification or in the attitude towards them of other members of their group, or in the membership of those entitled to speak for the group. Informality and uncertainty of this kind generate conceptual and practical difficulties. At the conceptual level, these difficulties are inconsistent with the understanding that alienage and its opposites are necessarily matters of status established formally and objectively by law. More importantly, to suggest that members of Aboriginal groups have authority to make choices that bind the Commonwealth of Australia is to attribute to those persons a measure of political sovereignty. To assert that the ordinary application of laws made pursuant to s 51(xix) of the Constitution to foreign citizens born outside Australia such as the plaintiffs is displaced as a result of recognition by members of the Aboriginal group from which they claim descent, is to assert an exercise of political sovereignty by those persons. It will be necessary to say something more about this. At the practical level, adoption of the plaintiffs' argument would replace the easy formality of a passport with a complex inquiry in every case where a person of Aboriginal descent who is a non-citizen seeks to enter or leave Australia. Native title and political sovereignty Political sovereignty is not an incident of native title. Indeed, the recognition of native title in Mabo [No 2] proceeded squarely on the footing that sovereignty reposes elsewhere than in the holders of native title, and that native title remains vulnerable to the exercise of sovereign power263. The assertion of a claim to sovereignty has been rejected on the few occasions on which it has been articulated. Thus, in Coe v The Commonwealth, 263 (1992) 175 CLR 1 at 43-45, 58-60, 63. 264 (1993) 68 ALJR 110 at 115; 118 ALR 193 at 200. See, also, Walker v New South Wales (1994) 182 CLR 45 at 50. "Mabo [No 2] is entirely at odds with the notion that sovereignty adverse to the Crown resides in the Aboriginal people of Australia. The decision is equally at odds with the notion that there resides in the Aboriginal people a limited kind of sovereignty embraced in the notion that they are 'a domestic dependent nation'." Similarly, in Yorta Yorta Aboriginal Community v Victoria265, Gleeson CJ, Gummow and Hayne JJ said: "[W]hat the assertion of sovereignty by the British Crown necessarily entailed was that there could thereafter be no parallel law-making system in the territory over which it asserted sovereignty. To hold otherwise would be to deny the acquisition of sovereignty and ... that is not permissible." In Mabo [No 2]266, Brennan J expressly acknowledged "the Crown's acquisition of sovereignty", and that the dispossession of indigenous groups from their traditional lands and the extinction of native title were attributable to the exercise of the "paramount power" of the sovereign. Native title operates through recognition by the common law or by statute: it does not operate by the force of an Aboriginal group's laws and customs. The common law's recognition of customary native title does not entail the recognition of an Aboriginal community's laws. Drawing upon the reasons of Brennan J in Mabo [No 2]267, Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ in Fejo v Northern Territory268 and Gleeson CJ, Gaudron, Gummow and Hayne JJ in The Commonwealth v Yarmirr269 said: "The underlying existence of the traditional laws and customs is a necessary pre-requisite for native title but their existence is not a sufficient basis for recognising native title" (emphasis in original). This is because, as Brennan J said in Mabo [No 2], upon the Crown acquiring sovereignty over the territory of Australia, Aboriginal persons were 265 (2002) 214 CLR 422 at 443-444 [44]. 266 (1992) 175 CLR 1 at 57-58. 267 (1992) 175 CLR 1 at 58. 268 (1998) 195 CLR 96 at 128 [46]. 269 (2001) 208 CLR 1 at 37 [10]. thereafter "entitled to such rights and privileges and subject to such liabilities as the common law and applicable statutes provided"270. To the same effect, in Wik Peoples v Queensland, Kirby J said271: "The theory accepted by this Court in Mabo [No 2] was not that the native title of indigenous Australians was enforceable of its own power or by legal techniques akin to the recognition of foreign law. It was that such title was enforceable in Australian courts because the common law in Australia said so272." It is important to be clear that in Mabo [No 2] it was recognised that under the common law of Australia, absent the inconsistent exercise of sovereign power, the radical title of the Crown to land was subject to the customary rights and interests of Aboriginal groups273. It was not suggested in Mabo [No 2], and has not been held since, that laws and customs of Aboriginal groups are recognised as part of the law of the realm, much less as altering the operation of that law. A new basis for native title? In the course of argument it was suggested that the three-part test for native title was but a particular expression of a more general underlying conception of Aboriginality. Under that more general conception, it was suggested, was a concept of one group of indigenous inhabitants of the continent at the time of British settlement comprising various sub-groups of indigenous inhabitants whose laws and customs provide the foundation for native title claims by those sub-groups. This more general conception has not been articulated, much less upheld, in any of the cases concerned with native title, whether in Mabo [No 2] or since. The native title cases after Mabo [No 2] were concerned with claims by particular Aboriginal groups whose claims depended upon their particular 270 (1992) 175 CLR 1 at 38. 271 (1996) 187 CLR 1 at 237-238. 272 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 59, 61. 273 Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 439, citing Mabo v Queensland [No 2] (1992) 175 CLR 1 at 64, 110-111. connection with particular areas of lands and waters274. In cases involving a claim to exclusive possession by an Aboriginal group of particular lands and waters, a successful claim by one group of native title claimants involves the exclusion of all others, including other Aboriginal persons, from the claimed lands and waters. Members of all other Aboriginal groups would be excluded from the lands and waters of the successful group of claimants. That circumstance is difficult to square with the underlying unity of common customary connection with the continental land mass asserted in argument. It is also difficult to square the new theory of a general underlying basis for native title with the decision of this Court in Yorta Yorta275, where the inability of the claimants to establish their particular ongoing connection with the claimed land in accordance with the laws and customs of their group was fatal to their claim for native title, even though a general connection based on biological descent was readily apparent. There is no suggestion in the decided cases that an Aboriginal group has claimed authority under traditional laws and customs to speak in respect of lands and waters other than those to which the group is traditionally connected. Nor is there any suggestion in these special cases that such a claim is made or that such a claim accords with the laws and customs of any Aboriginal group, much less of all Aboriginal groups. Nor is there any suggestion in the decided cases or in the agreed facts in the special cases that members of any Aboriginal groups inhabiting Australia at British settlement claimed an overarching right under traditional laws and customs over all the lands of the continent. If such a right had been claimed as a matter of Aboriginal customary law, it is difficult to see how it would not have been extinguished by the passage of laws of general application276. So, for example, in The Commonwealth v Yarmirr277, this Court held that customary laws conferring rights of exclusive possession of particular areas of sea and seabed could not be given legal effect because they were inconsistent with common law public rights of fishing and navigation. It has already been noted that traditional Aboriginal laws and customs did not survive settlement as "a parallel law-making system" in any of the territory over which British sovereignty was asserted. A fortiori, Aboriginal laws and 274 Compare The Commonwealth v Yarmirr (2001) 208 CLR 1; Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; Akiba v The Commonwealth (2013) 250 CLR 209. 275 (2002) 214 CLR 422. 276 Walker v New South Wales (1994) 182 CLR 45 at 50. 277 (2001) 208 CLR 1 at 50-51 [46]-[48], 60-61 [76], 99 [204]. customs do not operate to displace, impair or alter the ordinary operation of the laws made by the Parliament. Finally, to the extent that it is said that a general connection of all persons of Aboriginal descent to all parts of the continent underlies the basis on which native title has been recognised to this point, it must be accepted that this broader connection is one based squarely on biological membership of the Aboriginal race. It is open to the Parliament to adopt that criterion as the basis for laws made under s 51(xxvi) of the Constitution, but it is, to say the least, doubtful whether the adoption of such a discrimen is open to the Court as a matter of the exercise of judicial power. Mr Thoms In the Thoms proceeding, specific reliance was placed on the circumstance that Mr Thoms is a holder of common law native title rights. It was submitted that the exercise of those rights necessarily requires permission to be present on the relevant lands and waters. It was said that a determination that a person is an "alien" has the effect of rendering that person's right to continued presence in Australia subject to withdrawal by the executive. It was said that the capacity of the executive to exercise that power, in respect of an Aboriginal person who is the holder of native title rights, is unsatisfactory and wholly inconsistent with that person's ability to enjoy or exercise those rights. Accordingly, so it was said, the Court should prefer a construction of "alien" that does not include an Aboriginal person with a judicially recognised common law native title claim over particular lands and waters. This contention cannot be accepted: it confuses rights of property with rights of citizenship. An alien may own land in Australia, if the law permits it, but it does not follow that the alien is relieved of the need for a visa to enter Australia because entry into Australia is necessary to facilitate enjoyment of his or her property. A French citizen who owns land in Australia is not immune against the operation of ss 189 and 198 of the Migration Act because entry into Australia is necessary to enable her to enjoy her property here. To say this is in no way to disparage the significance of the spiritual connection of Aboriginal persons with their traditional lands and waters. It is simply to make the point that the political connection with the Australian polity in respect of which the Parliament may provide under s 51(xix) of the Constitution is radically different from the spiritual connection of native title holders with their traditional lands and waters. A native title holder who is also a citizen of a foreign country may continue to enjoy rights as a native title holder even though he or she may require a visa to enter Australia in order to enjoy those rights. Once again, the argument for the plaintiffs confuses the physical and spiritual connection of Aboriginal persons with particular lands and waters within the territory of Australia with the political and legal connection to the polity, being the Commonwealth of Australia, involved in Australian citizenship, or, previously, allegiance as a British subject. The spiritual and cultural connection that particular groups of Aboriginal persons have to particular lands and waters within the territory of the Commonwealth of Australia cannot be equated with the political and legal connection with the sovereign nation that is the antonym of alienage. The right of a member of a particular Aboriginal group to enjoy his or her rights in respect of particular lands and waters cannot be equated with, and is not even remotely analogous to, the right of every individual who is a member of the Australian body politic to enter and reside in any part of the territory of the Commonwealth of Australia. Permanent allegiance? The plaintiffs adopted an argument to the effect that persons of the Aboriginal race owe a permanent allegiance to the Crown as the reciprocal of an obligation of special protection owed by the Crown to the indigenous people of the continent. This argument has no support in authority. The notion that there is a special duty on the part of the Crown to protect Aboriginal persons bears some similarity to the suggestion advanced in Mabo [No 2] that the Crown owes a fiduciary obligation to Aboriginal people. Of the Justices who decided Mabo [No 2], only Toohey J accepted that suggestion278. But Toohey J considered that the fiduciary duty arose "out of the power of the Crown to extinguish traditional title"279 (emphasis in original). None of the judgments in Mabo [No 2] affords support for the kind of reciprocal relationship urged by the plaintiffs. To argue that persons of Aboriginal descent owe permanent allegiance to the Crown could be said necessarily to imply that they cannot make a legally effective choice to forgo their allegiance to the Crown in right of the Commonwealth. The plaintiffs' counsel were disposed to argue that persons of Aboriginal descent may repudiate their permanent allegiance to the Crown, but it was not explained how this repudiation might lawfully be effected. If one takes seriously the notion of "permanent allegiance", it is difficult to see how persons of Aboriginal descent can unilaterally free themselves from that allegiance. One can readily understand that the plaintiffs would grasp at any straw that may save them from what they might understandably perceive as a harsh overreaction by the executive government to their circumstances; but the absence of a cogent explanation as to how permanent allegiance may lawfully be repudiated invites the query whether other persons of Aboriginal descent not confronted with 278 (1992) 175 CLR 1 at 200-205. 279 (1992) 175 CLR 1 at 203. the same immediate difficulties would so blithely embrace the rank paternalism that suffuses this argument. In this regard, the special privilege offered to persons of Aboriginal descent by the reciprocal arrangement urged by the plaintiffs does not come without cost. To accept the argument would be to accept limitations on the freedom of persons of Aboriginal descent to pursue their destiny as individuals. The autonomy of such persons would be constrained in a way that does not affect people who are not of Aboriginal descent. That the autonomy of persons of Aboriginal descent should be limited in this way is not consistent with fundamental notions of equality before the law. In addition, the argument based on permanent allegiance advanced by the plaintiffs lacks coherence. For the plaintiffs, it was argued that they might lawfully abandon their allegiance to the Crown in right of the Commonwealth of Australia, but the polity could not sever its relationship with them. As was said in Singh280 by Gummow, Hayne and Heydon JJ, "[t]hat one-sided understanding of the power [in s 51(xix)] sits uncomfortably with any notion of allegiance that is bilateral". Conclusion and orders In the Love proceeding, the questions posed for determination by the Full Court should be answered as follows: Is Mr Love an "alien" within the meaning of s 51(xix) of the Constitution? Answer: Yes. (b) Who should pay the costs of the special case? Answer: Mr Love. In the Thoms proceeding, the questions posed for determination by the Full Court should be answered as follows: Is Mr Thoms an "alien" within the meaning of s 51(xix) of the Constitution? Answer: Yes. (b) Who should pay the costs of the special case? Answer: Mr Thoms. 280 (2004) 222 CLR 322 at 398 [198]. Nettle 221 NETTLE J. The questions presented for determination by these two special cases are: (1) whether either of the plaintiffs is an "alien" within the meaning of s 51(xix) of the Constitution; and (2) who should pay the costs of the special cases. For the reasons which follow, the questions should be answered: (1) in the case of the plaintiff Mr Love: unable to determine; and, in the case of the plaintiff Mr Thoms: no; and (2) the respondent. The facts Mr Love The plaintiff Daniel Alexander Love was born on 25 June 1979 in the Independent State of Papua New Guinea ("PNG") and became a PNG citizen by birth under s 66(1) of the Constitution of the Independent State of Papua New Guinea ("the PNG Constitution"). He is not an Australian citizen under the Australian Citizenship Act 2007 (Cth), but he identifies as a descendant of the Kamilaroi tribe of Aboriginal people, and he is recognised as such by an elder of that tribe. Between 9 November 1981 and October 1985, Mr Love travelled with his parents back and forth between PNG and Australia, and, on 25 December 1984, at the age of five years, he took up permanent residence in Australia with his parents pursuant to a permanent residency visa which, since 1 September 1994, has taken effect as a class BF transitional (permanent) visa281. Following a visit to PNG between 8 February and 18 October 1985, he has resided continuously in Australia. Mr Love has family connections to Australia and PNG. His paternal great- grandfather was descended in significant part from Aboriginal inhabitants of Australia before European settlement, was born in Queensland in 1902, and died and was buried in Queensland in 1973. Mr Love's paternal great-grandmother was also descended in significant part from Aboriginal inhabitants of Australia before European settlement, was born in Queensland during the last decade of the nineteenth century, and died and was buried in Queensland in 1970. Mr Love's paternal grandfather was born in Queensland in 1922 and, in 1940, enlisted for service with the Australian Military Forces. He served during, and immediately after, World War II in the Middle East, the Territory of New Guinea, and the Territory of Papua. Following his discharge from service in 1946, he remained in the Territory of Papua, where, in 1948, he married Mr Love's paternal grandmother. She had been born in 1922 in the Territory of Papua, then 281 See Migration Act 1958 (Cth), s 31(1); Migration Reform (Transitional Provisions) Regulations (Cth) (SR 1994 No 261); Migration Regulations 1994 (Cth), regs 1.06(b)(i), 2.01(1)(b)(i). Nettle under the authority of the Commonwealth282. Together, they had seven children. In 1961, Mr Love's paternal grandmother was certified as an Australian citizen pursuant to ss 5(1), 10(1) and 25(1)(a) of the Nationality and Citizenship Act 1948 (Cth), later known as the Citizenship Act 1948 (Cth)283 and then as the Australian Citizenship Act 1948 (Cth)284, and, in 1965, she was authorised to enter Australia for permanent residence with six of her children. Between 1966 and 1980, she visited Australia intermittently. In April 1980, she and Mr Love's paternal grandfather entered Australia, and thereafter she resided here permanently until her death in 2012, after the death of Mr Love's paternal grandfather in Queensland Mr Love's father was born in 1954 in the Territory of Papua and became an Australian citizen at birth, pursuant to ss 5(1) and 10(1) of the Nationality and Citizenship Act 1948. In 1964, he came to Australia, where he attended primary school in Brisbane and later, for two years, high school in Sydney. In 1970, he returned to the Territory of Papua where he completed grade 10. In 1984, he married Mr Love's mother, who was born in 1952 in Rabaul in the Territory of New Guinea, which was then being governed in an administrative union with the Territory of Papua285. Together, they had two children: Mr Love and his sister. At the time of Mr Love's birth, his mother was a citizen of PNG. On 25 December 1984, Mr Love's father and mother entered Australia with their two children. They returned to PNG on 8 February 1985, but, on 18 October 1985, they came back to Australia and thereafter remained here. In 2008, Mr Love's father sought and received a certificate of Australian citizenship. Mr Love's sister was born in PNG in 1976 and became a PNG citizen at birth pursuant to s 66(1) of the PNG Constitution. On 25 December 1984, she was granted an Australian permanent residency visa, and, in 2009, she became an Australian citizen by application pursuant to s 16 of the Australian Citizenship Act 282 Papua Act 1905 (Cth), s 5. See Strachan v The Commonwealth (1906) 4 CLR 455 at 461-463 per Griffith CJ, 464-465 per O'Connor J; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Ame (2005) 222 CLR 439 at 446-447 [5] per Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ. 283 Citizenship Act 1969 (Cth), s 1(3). 284 Australian Citizenship Act 1973 (Cth), s 1(3). 285 Papua and New Guinea Act 1949 (Cth), ss 8, 9. See Fishwick v Cleland (1960) 106 CLR 186 at 194-198 per Dixon CJ, McTiernan, Fullagar, Kitto, Menzies and Windeyer JJ; Ame (2005) 222 CLR 439 at 447 [5] per Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ. Nettle Mr Love's former wife, who is the mother of Mr Love's five children, is an Australian citizen who was born in Brisbane in 1982; and each of Mr Love's five children is an Australian citizen. On 25 May 2018, Mr Love was sentenced for an offence against s 339 of the Criminal Code (Qld) – assault occasioning bodily harm – to 12 months' imprisonment. As a result, on 6 August 2018, a delegate of the Minister for Home Affairs ("the Minister") cancelled Mr Love's visa pursuant to s 501(3A) of the Migration Act 1958 (Cth), and, on 10 August 2018, Mr Love was taken into immigration detention. On 27 September 2018, a delegate of the Minister revoked the decision to cancel Mr Love's visa, pursuant s 501CA(4) of the Migration Act, and Mr Love was released from immigration detention. Mr Thoms The plaintiff Brendan Craig Thoms was born in New Zealand on 16 October 1988 and became a New Zealand citizen by birth. At the time of his birth, Mr Thoms was entitled to acquire Australian citizenship under s 10B of the Australian Citizenship Act 1948 but did not do so. He first came to Australia on 19 December 1988 on a special category visa, and, since 23 November 1994, he has resided permanently in Australia. He travelled between Australia and New Zealand between 1997 and 1998 and again between 2002 and 2003, but he has not departed from Australia since 8 January 2003. Although not an Australian citizen, Mr Thoms identifies, and is accepted by members of the Gunggari People, as a member of the Gunggari People. He is also a common law holder of native title in respect of land and waters the subject of Gunggari People claims that were recognised by the Federal Court of Australia in 2012 and 2014286 ("the native title determinations"). Mr Thoms has family connections to Australia and New Zealand. His maternal great-great-grandmother was born between 1872 and 1885 Queensland. Through her mother, who was described in 1938 as an "FB [presumably, full-blood] Kunggari" woman, she was descended in significant part from Aboriginal inhabitants of Australia before European settlement. Mr Thoms' maternal great-grandmother was born in 1905 or 1906 in Queensland. In 1926, she married Mr Thoms' maternal great-grandfather, and together they had ten children. They both died in Queensland: he in 1964, and she in 1983. Mr Thoms' maternal grandmother was born at Toowoomba in 1937. In 1957, she married Mr Thoms' maternal grandfather, and together they had eight children. She has resided permanently in Australia for the whole of her life, and she identifies, and is accepted by members of the Gunggari People, as a member 286 Kearns on behalf of the Gunggari People #2 v Queensland [2012] FCA 651; Foster on behalf of the Gunggari People #3 v Queensland [2014] FCA 1318. Nettle of the Gunggari People. She is also a common law holder of native title recognised by the native title determinations. Mr Thoms' maternal grandfather was born in Queensland in 1933, and he resided permanently in Australia until his death in Mr Thoms' mother was born in Queensland in 1962. In 1986, she travelled to New Zealand, where she appears to have met Mr Thoms' father. He had been born in New Zealand in 1959 and become a New Zealand citizen at birth pursuant to s 6 of the British Nationality and New Zealand Citizenship Act 1948 (NZ). In 1988, they travelled to Queensland, where they were married, and then returned to New Zealand in 1989. Thereafter, until 1994, they lived primarily in New Zealand, albeit travelling from time to time between New Zealand and Australia. They had three children: Mr Thoms, his brother, and his sister. On 23 November 1994, Mr Thoms' mother sent Mr Thoms to live with his father, who had relocated to Queensland, and, in December 1994, she travelled with Mr Thoms' brother to join them in Queensland. Since then, she has resided permanently in Australia. She identifies, and is accepted by members of the Gunggari People, as a member of the Gunggari People, and she, too, is a common law holder of native title recognised by the native title determinations. Mr Thoms' father has resided permanently in Australia since September 1994 and became an Australian citizen in 2009. Mr Thoms' brother was born in New Zealand in 1991 and became a New Zealand citizen at birth pursuant to s 6(1)(a) of the Citizenship Act 1977 (NZ). He has permanently resided in Australia since 1994, and he, too, is a common law holder of native title recognised by the native title determinations. Mr Thoms' sister was born in Queensland in 1995 and is an Australian citizen. She also identifies, and is accepted by members of the Gunggari People, as a member of the Gunggari People and is a common law holder of native title recognised by the native title determinations. Mr Thoms' former partner, who is the mother of his son and only child, was born in Queensland and is an Australian citizen. Mr Thoms' son was born in Queensland in 2013 and is an Australian citizen. He, too, is a common law holder of native title recognised by the native title determinations. On 17 September 2018, Mr Thoms was sentenced for an offence against s 339(1) of the Criminal Code (Qld) – assault occasioning bodily harm (domestic violence)287 – to 18 months' imprisonment. He commenced court-ordered parole on 28 September 2018. On 27 September 2018, the Minister cancelled his visa pursuant to s 501(3A) of the Migration Act, and, the next day, he was taken into immigration detention, where, so far as appears from the agreed facts, he remains. 287 See Justices Act 1886 (Qld), s 47(9). Nettle Relevant statutory provisions Section 51(xix) of the Constitution empowers the Commonwealth Parliament to make laws with respect to "naturalization and aliens". The word "aliens" is not, however, defined in the Constitution. Rather, the wide power conferred by s 51(xix)288, construed with all the generality that its terms permit289, has been held to include the power to determine who shall be treated as an alien290. That power may be exercised by creating and defining a concept of Australian citizenship291 and attaching incidents of alienage to persons who are not "Australian citizens"292. But it is subject to the limitation recognised in Pochi v Macphee293: that the Parliament may not determine to treat as an alien a person 288 Koroitamana v The Commonwealth (2006) 227 CLR 31 at 38 [11] per Gleeson CJ 289 Singh v The Commonwealth (2004) 222 CLR 322 at 384 [155] per Gummow, Hayne and Heydon JJ, quoting R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225 per Dixon CJ, Kitto, Taylor, Menzies, Windeyer and Owen JJ. 290 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 400-401 [7] per Gleeson CJ; Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 171 [24], 173 [31] per Gleeson CJ, 180 [58] per Gaudron J, 188 [89] per McHugh J, 192 [109]-[110] per Gummow J, 220 [210] per Hayne J, 228 [227] per Callinan J; Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 35 [2] per Gleeson CJ, Gummow and Hayne JJ; Singh (2004) 222 CLR 322 at 329 [4] per Gleeson CJ, 396-397 [193], 397-398 [197] per Gummow, Hayne and Heydon JJ; Koroitamana (2006) 227 CLR 31 at 37 [9] per Gleeson CJ and Heydon J, 46 [48] per Gummow, Hayne and Crennan JJ. 291 Te (2002) 212 CLR 162 at 171 [24], 173 [31] per Gleeson CJ; Singh (2004) 222 CLR 322 at 329 [4] per Gleeson CJ. See also Pochi v Macphee (1982) 151 CLR 101 at 108-109 per Gibbs CJ (Mason and Wilson JJ agreeing at 112, 116); Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 184-186 per Mason CJ, Wilson, Brennan, Deane, Dawson and Toohey JJ, 189-190 per Gaudron J; Shaw (2003) 218 CLR 28 at 35 [3], 38 [16]-[17], 40 [21]-[22] per Gleeson CJ, Gummow and Hayne JJ. 292 See Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 29-32 per Brennan, Deane and Dawson JJ. 293 (1982) 151 CLR 101 at 109 per Gibbs CJ (Mason and Wilson JJ agreeing at 112, 116). See Singh (2004) 222 CLR 322 at 329 [4] per Gleeson CJ, 382-383 [151]-[152] per Gummow, Hayne and Heydon JJ. Nettle who could not possibly answer the description of "alien" according to the ordinary understanding of the word. Pursuant to s 51(xix) and (xxvii) of the Constitution, the Parliament has enacted the Australian Citizenship Act 2007 and the Migration Act. Relevantly, the former prescribes those persons who are automatically Australian citizens and the several ways in which a person who is not an Australian citizen may become one. Subject to exceptions that are not presently to the point, the persons who are automatically Australian citizens include anyone born in Australia to a parent who is an Australian citizen or permanent resident at the time of the birth (s 12(1)(a)); anyone who is born in Australia and remains permanently resident in Australia for the next ten years (s 12(1)(b)); anyone adopted under the law of an Australian State or Territory by a person who at the time of the adoption is an Australian citizen, if the person adopted is present in Australia as a permanent resident at that time (s 13); a child found abandoned in Australia, until and unless the contrary is proved (s 14); and anyone in a class of persons determined to be Australian citizens upon a territory becoming part of Australia (s 15). The persons who are not automatically Australian citizens but who may apply to become Australian citizens relevantly include anyone born outside Australia on or after 26 January 1949 who has at least one parent who was an Australian citizen by birth at the time of the person's birth, and, in the case of foreign nationals and stateless persons, if the Minister is satisfied that the person is of good character at the time the Minister decides the application (s 16(2)). If a person is eligible to become an Australian citizen, the Minister must approve the application unless the Minister is not satisfied of the identity of the person or a national security exception applies (s 17). Under the Migration Act, a person who is not an Australian citizen is a "non- citizen" (s 5(1)), and a non-citizen whose visa is cancelled while in the migration zone (in effect, Australian territory and resource and sea installations) becomes an "unlawful non-citizen" unless immediately after the cancellation the person holds another visa that is in effect (s 14(1)). If an "officer" (which includes duly authorised Department officers and police) knows or suspects that a person in the migration zone (other than an excised offshore place) is an unlawful non-citizen, the officer must detain the person (s 189(1)). And an unlawful non-citizen so detained must be kept in detention until one of a number of possible things occur (s 196(1)). One possibility is that the person will be removed from Australia (s 198) or deported (s 200). Under the Migration Act, the Minister may cancel a visa granted to a person, and thus render the person an unlawful non-citizen, if the Minister reasonably suspects that the person does not pass the "character test" and the person does not satisfy the Minister that he or she passes the character test (s 501(2)). For this purpose, a person does not pass the character test if, relevantly, "the person has a substantial criminal record" (s 501(6)(a)), which is the case if, relevantly, "the Nettle person has been sentenced to a term of imprisonment of 12 months or more" (s 501(7)(c)). It is not disputed that, by reason of the sentences of imprisonment imposed on each of the plaintiffs, each plaintiff does not pass the character test. The question restated In light of those facts and the relevant statutory provisions that have been set out, the principal question for decision may now more conveniently and more precisely be restated as being whether it is within the legislative competence of the Parliament under s 51(xix) of the Constitution to treat either plaintiff as an "unlawful non-citizen" (within the meaning of s 14(1) of the Migration Act), and thus to detain and possibly to deport him under ss 189, 196 and 200 of the Migration Act. The plaintiffs' contentions Each plaintiff contended that it is not within the legislative competence of the Parliament to do so. Referring to the fact that Aboriginal people first inhabited Australia at least 40,000 years before Australia was settled by Great Britain294, that Aboriginal people have lived in Australia continuously ever since, and that Aboriginal people have a consequent, unique spiritual connection to land and waters in Australia295, each plaintiff argued that a person of Australian Aboriginal descent who identifies as a member of an Australian Aboriginal community, and is accepted as such by one or more members of an Australian Aboriginal community, is so essentially "Australian" (as that concept is ordinarily understood) that such a person cannot possibly answer the description of "alien" in the ordinary sense of that word, and therefore cannot be treated as an unlawful non-citizen liable to deportation on that basis. In the case of Mr Thoms, it was further contended that such a liability to deportation would be inconsistent with his ability to enjoy and exercise his rights as a common law native title holder, which requires that he have access to the land and waters the subject of title, and that this Court should prefer a construction of s 51(xix) which denies the Parliament legislative power so to provide. Counsel for the plaintiffs emphasised, however, that proof of native title was not essential to the conclusion that the Parliament cannot treat persons of Aboriginal descent who identify and are accepted as members of Aboriginal communities as "aliens" under s 51(xix). In support of that submission, counsel contended that, even where native 294 See Gerhardy v Brown (1985) 159 CLR 70 at 149 per Deane J. See also Clarkson et al, "Human Occupation of Northern Australia by 65,000 Years Ago" (2017) 547 Nature 306. 295 See Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 167 per Blackburn J. Nettle title has been extinguished, the ancestral tie between the land and Aboriginal persons remains. Alienage As has been observed296, s 51(xix) of the Constitution is to be construed with all the generality that its terms allow, and thus Parliament's power to legislate with respect to "aliens" is necessarily wide. According to the established authority of this Court, the Parliament, acting within power, may create and define the status of Australian citizenship, and subject persons who are not Australian citizens to liabilities of alienage, such as deportation. But the Parliament may not thereby treat as an alien a person who could not possibly answer the description of "alien" in the ordinary understanding of the word. Accordingly, as Gummow, Hayne and Heydon JJ indicated in Singh v The Commonwealth297, the fact that Parliament may have classified a person as an unlawful non-citizen liable to deportation, and so, in effect, as an alien, "presents the constitutional question" of whether, in so providing, the Parliament has acted within power; "it does not provide an answer". The term "alien" refers to a status in the eye of the law that is rooted in notions of sovereignty298. The ordinary understanding of the term is thus informed by centuries of legal history and political theory299. In Singh, Gummow, Hayne and Heydon JJ stated300, by reference to these sources, that the "central characteristic" of the status of alienage "is, and always has been, owing obligations (allegiance) to a sovereign power other than the sovereign power in question (here Australia)". That requires some explanation. In common law systems, alienage was and remains about the want of a permanent allegiance to the sovereign in question301. Under feudal law after the Conquest, such allegiance was founded upon an express oath of liege fealty by a 296 See [236] above. 297 (2004) 222 CLR 322 at 383 [153]. 298 Te (2002) 212 CLR 162 at 170 [21] per Gleeson CJ, 192 [109], 196 [122] per 299 Shaw (2003) 218 CLR 28 at 36-37 [10]-[12] per Gleeson CJ, Gummow and 300 (2004) 222 CLR 322 at 398 [200]. 301 Calvin's Case (1608) 7 Co Rep 1a at 4b-5b [77 ER 377 at 382-383]. See Salmond, "Citizenship and Allegiance" (1902) 18 Law Quarterly Review 49 at 50-51. Nettle tenant to the King as paramount lord302. As the common law became permeated with "the idea of land as the sign and sacrament of all relations between ruler and subject"303, allegiance to the King of England came to be implied from the mere fact of birth on English soil (except to parents who were foreign diplomats or during hostile occupation)304. In Calvin's Case, the Justices of the King's Bench and Common Pleas, Lord Chancellor and Barons of the Exchequer concluded305, by reference to the law of nature, that this right of the soil (jus soli) extended to those born in a territory after it was acquired personally by the King (postnati). Thus, it transpired that anyone born in the King's dominions archetypically owed permanent allegiance to, and was therefore a subject of, His Majesty. By contrast, anyone born abroad archetypically did not owe such allegiance, and – because variants of the jus soli were recognised in continental Europe before the Code Napoléon recognised citizenship by blood (jus sanguinis)306 – he or she could be regarded as belonging to another (alienus)307. Neither foreign birth, however, nor foreign allegiance was a universal criterion of the absence of permanent allegiance which constituted the legal status 302 Leges Henrici Primi, Downer ed (1972), c 43 at 153 pl 6; Bracton on the Laws and Customs of England, Woodbine ed, Thorne tr (1968), vol 2 at 230, 232; Britton, Nichols tr (1901), bk 1, ch 30 at 152 pl 11. See Pollock and Maitland, The History of English Law Before the Time of Edward I, 2nd ed (1898), vol 1 at 298-301. 303 O'Rahilly, "Allegiance and the Crown" (1922) 11 Studies: An Irish Quarterly Review 169 at 171, citing Blackstone, Commentaries on the Laws of England (1765), bk 1, ch 10 at 355. 304 Calvin's Case (1608) 7 Co Rep 1a at 10a, 18a-18b [77 ER 377 at 389, 399]. See Cockburn, Nationality: Or the Law Relating to Subjects and Aliens (1869) at 7; Dunham, "Doctrines of Allegiance in Late Medieval English Law" (1951) 26 New York University Law Review 41 at 43. 305 (1608) 7 Co Rep 1a at 14a-14b [77 ER 377 at 394]. See Parry, Nationality and Citizenship Laws of The Commonwealth and of The Republic of Ireland (1957) at 40-43; Price, "Natural Law and Birthright Citizenship in Calvin's Case (1608)" (1997) 9 Yale Journal of Law and the Humanities 73 at 105-106. 306 See Sahlins, Unnaturally French: Foreign Citizens in the Old Regime and After 307 Calvin's Case (1608) 7 Co Rep 1a at 16a-16b [77 ER 377 at 396]. Nettle of alienage308. At the dawn of the fourteenth century, with the growth of navigation for commerce and war, Parliament declared that a person born overseas to natural- born subjects could inherit. In turn, that was taken to imply subjecthood309. With the emergence of the British Empire, that status of subjecthood was extended at common law to anyone resident in a territory at the time of its acquisition by conquest or cession (antenati) (at least absent contrary election)310. Later, statutes prompted by other changes in national sentiment attached significance to a person's protestant faith311, birth to a natural-born father (unless attainted of treason or in the actual service of a foreign sovereign)312, and marriage to a natural-born subject313. Still later, although the common law had long tolerated subjects owing allegiance to foreign sovereigns on the basis that allegiance to the King of England was paramount314, the Naturalization Act 1870 (UK) provided for deemed renunciation of allegiance by naturalisation in a foreign state315. 308 See Ross, "English Nationality Law: Soli or Sanguinis?" [1972] Grotian Society Papers 1. 309 Statute De Natis Ultra Mare 1350 (25 Edw III Stat 1). See Pollock and Maitland, The History of English Law Before the Time of Edward I, 2nd ed (1898), vol 1 at 459; Dunham, "Doctrines of Allegiance in Late Medieval English Law" (1951) 26 New York University Law Review 41 at 45-46, 50; Kim, Aliens in Medieval Law: The Origins of Modern Citizenship (2000) at 151-163. 310 See fnn 381-384 below. See also Jones, British Nationality Law and Practice (1947) at 40-56; Black, "The Constitution of Empire: The Case for the Colonists" (1976) 124 University of Pennsylvania Law Review 1157 at 1204-1206. 311 Foreign Protestants Naturalization Act 1708 (7 Ann c 5), repealed by 10 Ann c 9. See also 4 & 5 Ann c 16. 312 British Nationality Act 1730 (4 Geo II c 21); British Nationality Act 1772 (13 313 Aliens Act 1844 (UK) (7 & 8 Vict c 66), s 16. 314 Bracton on the Laws and Customs of England, Woodbine ed, Thorne tr (1968), vol 4 at 329. See Salmond, "Citizenship and Allegiance" (1902) 18 Law Quarterly Review 49 at 56; Dunham, "Doctrines of Allegiance in Late Medieval English Law" (1951) 26 New York University Law Review 41 at 63-71; Spiro, "Dual Nationality and the Meaning of Citizenship" (1997) 46 Emory Law Journal 1411 at 1419-1424. 315 33 & 34 Vict c 14, s 6. Nettle In the decades leading up to Federation, judicial statements in England316, the United States317, Canada318 and the Australian colonies319 confirmed that the essence of alienage was the want of permanent allegiance to the sovereign, albeit as a political institution rather than a natural person. Unlike a subject of the Crown or citizen of a republic, who owed permanent allegiance to that sovereign, an alien from a friendly state owed only a local allegiance while resident in the sovereign's territories320. The recognised incidents of the allegiance, whether permanent or local, included prescriptive jurisdiction in international law321 and liability for treason in domestic law322. Correlative to that allegiance was the protection owed 316 Udny v Udny (1869) LR 1 Sc & Div 441 at 457 per Lord Westbury; In re Stepney Election Petition; Isaacson v Durant (1886) 17 QBD 54 at 59 per Lord Coleridge CJ for the Court. See also Dicey, A Digest of the Law of England with Reference to the Conflict of Laws (1896) at 173, 175, 196. 317 Carlisle v United States (1872) 83 US 147 at 154 per Field J for the Court; United States v Wong Kim Ark (1898) 169 US 649 at 663 per Gray J for the Court. See also Bigelow (ed), Story's Commentaries on the Constitution of the United States, 5th ed (1891), vol 2 at 499-500 §1700. 318 R v McMahon (1866) 26 UCR 195 at 201 per Draper CJ for the Court; In re Criminal Code Sections Relating to Bigamy (1897) 27 SCR 461 at 474-475 per Strong CJ, 489 per Girouard J. See also Howell, Naturalization and Nationality in Canada; Expatriation and Repatriation of British Subjects (1884) at 5-7. 319 Holt v Abbott (1851) 1 Legge 695 at 697 per Stephen CJ for the Court; R v Ross (1854) 2 Legge 857 at 862, 864 per Stephen CJ for the Court; Ex parte Lo Pak (1888) 9 LR (NSW) L 221 at 246-247 per Windeyer J; Toy v Musgrove (1888) 14 VLR 349 at 371 per Higinbotham CJ, 399 per Kerferd J, 436 per Wrenfordsley J. See also Piggott, Nationality: Including Naturalization and English Law on the High Seas and Beyond the Realm (1907) at 219. 320 See, eg, R v Francis; Ex parte Markwald [1918] 1 KB 617 at 624 per A T Lawrence J; Markwald v Attorney-General [1920] 1 Ch 348 at 363-364 per Lord Sterndale MR. 321 See Bennett (ed), Story's Commentaries on the Conflict of Laws, 7th ed (1872) at 21-23 §§21-22; The Case of the SS "Lotus" (1927) PCIJ Ser A No 10 at 92-93 per Judge Moore. 322 McMahon (1866) 26 UCR 195 at 200-201 per Draper CJ for the Court; cf De Jager v Attorney-General of Natal [1907] AC 326 at 328 per Lord Loreburn LC for the Board; Carlisle (1872) 83 US 147 at 154-155 per Field J for the Court. See also Nettle the sovereign, also either permanently or trahit subjectionem, et subjectio protectionem"323. The incidents of that permanent protection included the right of the state to take diplomatic action in international law on behalf of the subject or citizen wherever resident324 and the denial of the "act of state" defence to actions in tort in domestic law325. locally: "protectio At Federation, "the people" of the several colonies "agreed to unite in one indissoluble Federal Commonwealth under the Crown of the United Kingdom of Great Britain and Ireland, and under the Constitution"326. Consistently with the history described above, the ordinary understanding of alienage – and thus the connotation of the word "aliens" in s 51(xix) of that Constitution327 – then depended on the want of a permanent allegiance to and protection by the sovereign of that Commonwealth, formerly regarded as an undivided Crown but now identified as the Crown in right of Australia328. As should be apparent, to speak of Joyce v Director of Public Prosecutions [1946] AC 347 at 365 per Lord Jowitt LC (Lord Macmillan, Lord Wright and Lord Simonds agreeing at 373, 374). 323 Calvin's Case (1608) 7 Co Rep 1a at 5a [77 ER 377 at 382]. See Lauterpacht, "Allegiance, Diplomatic Protection and Criminal Jurisdiction over Aliens" (1947) 9 Cambridge Law Journal 330; Glanville Williams, "The Correlation of Allegiance and Protection" (1948) 10 Cambridge Law Journal 54. 324 See Hurst, "Nationality of Claims" (1926) 7 British Year Book of International Law 163; Sinclair, "Nationality of Claims: British Practice" (1950) 27 British Year Book of International Law 125. 325 Walker v Baird [1892] AC 491 at 497 per Lord Herschell for the Board; cf Johnstone v Pedlar [1921] 2 AC 262 at 272-273 per Viscount Finlay, 276 per Viscount Cave, 284 per Lord Atkinson, 290-291 per Lord Sumner, 296 per Lord Phillimore. See also Zachariassen v The Commonwealth (1917) 24 CLR 166 at 183 per Barton, Isaacs and Rich JJ; E C S Wade, "Act of State in English Law: Its Relations with International Law" (1934) 15 British Year Book of International Law 98. 326 Constitution, preamble. See Victoria v The Commonwealth (1971) 122 CLR 353 at 370 per Barwick CJ; Sue v Hill (1999) 199 CLR 462 at 497 [81], 502 [93] per Gleeson CJ, Gummow and Hayne JJ. 327 See Ex parte Professional Engineers' Association (1959) 107 CLR 208 at 267 per 328 See Pochi (1982) 151 CLR 101 at 109-111 per Gibbs CJ (Mason J and Wilson J agreeing at 112, 116); Nolan (1988) 165 CLR 178 at 183-184 per Mason CJ, Wilson, Brennan, Deane, Dawson and Toohey JJ, 191 per Gaudron J; Sue v Hill (1999) 199 Nettle "permanent" allegiance to and protection by the sovereign is not to suggest that those relations are incapable of being dissolved, but only to recognise their special scope and content relative to the "local" relations between sovereign and resident alien. Contrary to the Commonwealth's submissions, this Court did not hold in Singh that the correlative obligations of permanent protection and allegiance have ceased to define the constitutional connotation of alienage. Rather, on this point, the plurality in Singh merely recognised329 that the content of those obligations must be "spelled out", because the mere duty to obey, and right to claim under, Australian law are inherent in the local allegiance and protection owed by and to an alien for so long as he or she is within Australia. Certainly, the indicia of permanent allegiance and protection have always been inherently contestable330. Thus, as Gleeson CJ observed in Singh331, "questions of nationality, allegiance and alienage were matters on which there were changing and developing policies" at the time of Federation. It was for that reason that Parliament was given power to select the relevant indicia and determine their priority. That power has been exercised, since 1948, by defining the statutory concept of Australian citizenship and, since 1984, by attaching liabilities of alienage to unlawful non-citizens. "In this way", as Gleeson CJ, Gummow and Hayne JJ observed in Shaw v Minister for Immigration and Multicultural Affairs332, "citizenship may be seen as the obverse of the status of alienage". But once it is accepted, as it must be, that the aliens power is not entirely untrammelled, it necessarily follows that some individuals would not be aliens even if denied Australian citizenship by statute. Given the conception explained above, that must be because they have so strong a claim to the permanent protection of – and thus so plainly owe permanent allegiance to – the Crown in right of Australia that their classification as aliens lies beyond the ambit of the ordinary understanding of the word. And that remains so notwithstanding CLR 462 at 503 [96] per Gleeson CJ, Gummow and Hayne JJ; Shaw (2003) 218 CLR 28 at 39-42 [20]-[27] per Gleeson CJ, Gummow and Hayne JJ. 329 (2004) 222 CLR 322 at 387 [165]-[166] per Gummow, Hayne and Heydon JJ. See also Te (2002) 212 CLR 162 at 198 [126], 198-199 [129] per Gummow J. 330 See Koessler, "'Subject', 'Citizen', 'National', and 'Permanent Allegiance'" (1946) 56 Yale Law Journal 58. 331 (2004) 222 CLR 322 at 341 [30]. 332 (2003) 218 CLR 28 at 35 [2]. Nettle statements like that quoted above from Shaw333, drawing a dichotomy between "citizen" and "alien" for the purpose of demonstrating the contemporary insignificance of permanent allegiance to the Crown in right of the United Kingdom. Nothing in those statements suggests that the limit on the aliens power recognised in Pochi no longer applies. As to the application of that limit, history teaches that what lies beyond the ambit of the ordinary understanding of the word "aliens" cannot be determined by mechanical identification of necessary and sufficient conditions from pre- Federation decisions and statutes. So to reason would impermissibly fix the denotation of a word which, to adopt and adapt the statement of Frankfurter J in Baumgartner v United States334, connotes "nothing less than the bonds that tie [Australians] together in devotion to a common fealty". Rather, as the plurality in Singh concluded335, the determination requires analysis of the circumstances presented by a live controversy in light of historical developments, including in customary international law. Singh established336 that birth in Australia was not of itself sufficient to exclude a person from the class of aliens even by 1900. English developments culminating in the Naturalization Act 1870 had foreclosed an argument based on English law as stated in Calvin's Case; and, if the significance of birthplace to status had become "a matter appropriate to be dealt with by legislation"337, the significance of parentage had always been so. Hence, as a general proposition, there is no difficulty in describing a child who is born outside Australia and who is a citizen of a foreign country as an "alien" within the ordinary understanding of that word – even if one of his or her parents is an Australian citizen. Generally speaking, Parliament has power under s 51(xix) of the Constitution to provide, as it has done, that such a person is and will remain a non-citizen, and so liable to treatment as an alien, unless and until that person is granted Australian citizenship under s 16 of the Australian Citizenship Act 2007. 333 See also Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1 at 11-12 [15] per Gleeson CJ; Koroitamana (2006) 227 CLR 31 at 38 [11] per Gleeson CJ 334 (1944) 322 US 665 at 673. 335 (2004) 222 CLR 322 at 383 [152], 393 [183] per Gummow, Hayne and Heydon JJ. 336 (2004) 222 CLR 322 at 341 [30] per Gleeson CJ, 395 [190] per Gummow, Hayne 337 Singh (2004) 222 CLR 322 at 341 [30] per Gleeson CJ. Nettle The question remains, however, whether Aboriginal descent, self- identification as a member of an Aboriginal community and acceptance by such a community as one of its members constitute such a relationship with the Crown in right of Australia as to put a person beyond the reach of that legislative power. Race By and large, the Parliament's power under s 51(xix) of the Constitution cannot be limited, or required to be exercised, by reference to racial characteristics. At the level of principle, race has no bearing on the capacity of a person to owe permanent allegiance to, or be owed protection by, the sovereign. As Gaudron J observed in Kartinyeri v The Commonwealth338: "race is simply irrelevant to the existence or exercise of rights associated with citizenship. So, too, it is irrelevant to the question of continued membership of the Australian body politic." And in terms of history and precedent, the familiar indicia of alienage are oblivious of race as that concept is now understood. Racial politics may have informed support amongst some present at the Convention Debates for the insertion of s 51(xix), (xxvi) and (xxvii) of the Constitution. But as Gleeson CJ noted in Singh339, "what the record shows about the subjective beliefs or intentions of some [such] people may be interesting but, of itself, is not a relevant fact" in the construction of s 51(xix). That Parliament has power under s 51(xxvi) to make laws with respect to "the people of any race for whom it is deemed necessary to make special laws" – which, as a result of the 1967 amendment, extends to peoples of the Aboriginal race340 – and power under s 51(xxvii) with respect to "immigration and emigration", says nothing as to the ordinary understanding of the word "aliens" in 1901 or at present. Nor can it justify reading down or requiring the exercise of the distinct power with respect to "aliens" conferred by s 51(xix)341. 338 (1998) 195 CLR 337 at 366 [40]. 339 (2004) 222 CLR 322 at 337 [21]. 340 See Kartinyeri (1998) 195 CLR 337 at 362-363 [31]-[32] per Gaudron J, 381-383 [90]-[94] per Gummow and Hayne JJ. 341 See New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 127 [219]-[220] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ. Nettle Connections Generally speaking, too, alienage also has nothing to do with a person's experience or perception of being connected to the Australian territory, community or polity. As Gleeson CJ stated in Re Minister for Immigration and Multicultural Affairs; Ex parte Te342: "there are many people who entered Australia as aliens, who have lived here for long periods and have become absorbed into the community, whose activity of immigration has long since ceased, but who have never sought formal membership of the community. ... Whether by design, or simply as the result of neglect, they remain aliens." Nor does it have anything to do with an actual or perceived absence of connection to another country. As Hayne J held in Te343: "The status of alien is not lost or altered by the fact that the person in question may have lived in Australia for a long time, or may have cut all the ties which once existed with the body politic of the place where that person was born or with the country of which he or she was formerly a subject or citizen." The reasons underlying these conclusions were explained by Gummow J in the same case344, by reference to the following statement of Sir Hersch Lauterpacht345: "The alien resident in a foreign country continues to owe allegiance to the sovereign of his own State. That allegiance expresses itself in his continued subjection to the laws of his own country – though, more often than not, the home State considers it convenient to limit its claims to jurisdiction with regard to the acts of its nationals when abroad. But, while continuing to be bound by allegiance to his own State, the alien becomes subject to another allegiance – that concomitant with the protection of the law which shelters him. There is nothing technical or mercenary about that reciprocity of 342 (2002) 212 CLR 162 at 172 [27]. 343 (2002) 212 CLR 162 at 219 [210]. 344 Te (2002) 212 CLR 162 at 198-199 [129]. 345 Lauterpacht, "Allegiance, Diplomatic Protection and Criminal Jurisdiction over Aliens" (1947) 9 Cambridge Law Journal 330 at 335 (emphasis added), referring to Nettle allegiance and protection. That reciprocity is a formal relation only in the sense that it is of no legal relevance whether there is at any given moment an equivalence of duty and benefit, of allegiance and protection, of an actual disposition to fidelity and actual capacity to afford protection." As that passage makes plain, questions of alienage cannot depend on a person's actual or anticipated allegiance to or protection by the sovereign346 – not least because the application of any such criterion to every individual would be wholly impracticable. Whether a person's classification as an alien lies beyond the ambit of the ordinary understanding of that word has to depend on the person's possession of characteristics which so connect him or her to the sovereign as necessarily to give rise to reciprocal obligations of protection and allegiance347. The point is illustrated by this Court's recent decision in Falzon v Minister for Immigration and Border Protection348. The man in question – a non-citizen of Maltese extraction – had come to Australia when only three years of age and thereafter remained here for more than 60 years before the Minister determined to revoke his visa. All of his kin had either been born here or come here years before and remained here ever since. As a result of living almost all of his life in Australia, and of all of his kin being here, the man was deeply connected to the Australian community and without any sense of connection to any other country. On any view, Mr Falzon had been "absorbed" into the community and might thus have felt permanent allegiance to, and expected permanent protection from, the Crown in right of Australia. Nevertheless, consistently with this Court's previous determinations that absorption is not a characteristic which denies the status of alienage349, it was accepted350 that he was an alien and held351 that he was liable to be removed from Australia on that basis. 346 cf Joyce [1946] AC 347 at 365-366 per Lord Jowitt LC (Lord Macmillan, Lord Wright and Lord Simonds agreeing at 373, 374). 347 See and compare Nottebohm Case (Second Phase) [1955] ICJR 4 at 23. 348 (2018) 262 CLR 333. 349 See especially Pochi (1982) 151 CLR 101 at 111 per Gibbs CJ (Mason J and Wilson J agreeing at 112, 116). 350 Falzon (2018) 262 CLR 333 at 335 per Lloyd SC (arguendo). 351 Falzon (2018) 262 CLR 333 at 345-346 [37]-[40] per Kiefel CJ, Bell, Keane and Edelman JJ, 355-356 [82] per Gageler and Gordon JJ, 358 [92] per Nettle J. Nettle Aboriginality Different considerations apply, however, to the status of a person of Aboriginal descent who identifies as a member of an Aboriginal society and is accepted as such by the elders or other persons enjoying traditional authority among those people under laws and customs deriving from before the Crown acquired sovereignty over the territory of Australia. True it is, as the Commonwealth contended, that cases such as Singh appear to imply that such a person could be classified as an alien where he or she was born abroad or is a foreign citizen. But, intuitively, that conclusion appears at odds with the growing recognition of Aboriginal peoples as "the original inhabitants of Australia"352 and the ubiquity of Australian dual citizens. It is therefore necessary "to stop to inquire"353 and, applying the "received technique", to re-examine the essentials of alienage and the nature of an Aboriginal person's relationship to the Australian polity, to ascertain "whether in truth, upon a correct analysis of the situation"354, the objectionable conclusion inevitably follows from a logical application of the principle to the circumstances. And, for the reasons to be explained, upon re-examination of the elements of alienage and Aboriginality, it can be seen that it does not so follow. Under English constitutional law, the Crown has long enjoyed prerogative power to extend its sovereignty to territories not previously claimed355. As Gibbs J recognised in New South Wales v The Commonwealth ("the Seas and Submerged Lands Case")356, such an "acquisition of territory by a sovereign state for the first time is an act of state which cannot be challenged, controlled or interfered with by the courts of that state". And, as Brennan J later explained in Mabo v Queensland 352 Bropho v Western Australia (1990) 171 CLR 1 at 12 per Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ; Northern Territory v Griffiths (2019) 93 ALJR 327 at 346 [62] per Kiefel CJ, Bell, Keane, Nettle and Gordon JJ; 364 ALR 208 at 353 Dixon, "Jesting Pilate", in Crennan and Gummow (eds), Jesting Pilate, And Other Papers and Addresses, 3rd ed (2019) 74 at 77. 354 Dixon, "Concerning Judicial Method", in Crennan and Gummow (eds), Jesting Pilate, And Other Papers and Addresses, 3rd ed (2019) 112 at 119, 123. 355 Post Office v Estuary Radio Ltd [1968] 2 QB 740 at 753 per Diplock LJ. See Hale, The Prerogatives of the King, Yale ed (1976) at 129. 356 (1975) 135 CLR 337 at 388. See also Wacando v The Commonwealth (1981) 148 CLR 1 at 11 per Gibbs CJ, 21 per Mason J. Nettle [No 2]357, this basal doctrine of Anglo-Australian constitutional law operates to "preclude[] any contest between the executive and the judicial branches of government as to whether a territory is or is not within the Crown's Dominions". Relevantly, that entails that the Crown's acquisition of sovereignty over the territory of Australia from 1788358 cannot be called into question in this or any other Australian municipal court359. But, by contrast, the consequences of the acquisition of sovereignty in and for municipal law are justiciable, and are to be determined by common law doctrines earlier grounded in the law of nature360 and now developed in step with customary international law361. According to one such doctrine, as espoused in Blackstone's day, territories governed by a sovereign could be acquired only by conquest or cession, and thereafter remained subject to the body of law earlier in force until alteration by the acquiring sovereign362. On the other hand, territories which were not governed by a sovereign before the Crown acquired sovereignty could be acquired by settlement and thereupon receive English law, both statutory and unenacted363, so far as applicable to the situation of the settlers and condition of the infant colony364. 357 (1992) 175 CLR 1 at 31 (Mason CJ and McHugh J agreeing at 15). 358 See Evatt, "The Acquisition of Territory in Australia and New Zealand" [1968] Grotian Society Papers 16 at 26-36. 359 See also Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422 at 441 [37] per Gleeson CJ, Gummow and Hayne JJ. 360 Calvin's Case (1608) 7 Co Rep 1a at 17b [77 ER 377 at 397-398]. 361 Mabo [No 2] (1992) 175 CLR 1 at 32, 41-42 per Brennan J (Mason CJ and McHugh J agreeing at 15). 362 See Calvin's Case (1608) 7 Co Rep 1a at 17b-18a [77 ER 377 at 397-398]. But see Campbell v Hall (1774) Lofft 655 at 741 per Lord Mansfield [98 ER 848 at 896], rejecting the "absurd exception" for territories under "infidel" laws. 363 But see McPherson, "How Equity Reached the Colonies" (2005) 5 Queensland University of Technology Law and Justice Journal 102. 364 Blankard v Galdy (1693) 2 Salk 411 at 411 per Holt CJ for the Court [91 ER 356 at 357]; Anonymous (1722) 2 P Wms 73 per Jekyll MR for the Privy Council [24 ER 646]. See West, "Opinion on the Admiralty Jurisdiction, in the Plantations" (1720) in Chalmers, Opinions of Eminent Lawyers, on Various Points of English Jurisprudence, Chiefly Concerning the Colonies, Fisheries, and Commerce, of Nettle But the application of that doctrine to the territory of the Australian colonies has given rise to "some difficulties"365, which have been attributed to an "incongruity between legal characterisation and historical reality"366, or between "theory [and] our present knowledge and appreciation of the facts"367. At, and in the century after, the acquisition of sovereignty, imperial legislation368, judicial decisions369, colonial instruments370 and professional opinion371 proceeded on the basis that the territory of the Australian colonies was not acquired from an existing sovereign by conquest or cession but rather was Great Britain (1814), vol 2, 200 at 209; Blackstone, Commentaries on the Laws of England (1765), bk 1 at 104-105, 1766 supp at ii. 365 Mabo [No 2] (1992) 175 CLR 1 at 33 per Brennan J (Mason CJ and McHugh J agreeing at 15). 366 Sharwood, "Aboriginal Land Rights – The Long Shadow of the Eighteenth Century" (1981) 14 Proceedings of the Medico-Legal Society of Victoria 93 at 93. 367 Mabo [No 2] (1992) 175 CLR 1 at 38 per Brennan J (Mason CJ and McHugh J agreeing at 15). 368 New South Wales Act 1787 (27 Geo III c 2), s 1; New South Wales Act 1823 (4 Geo IV c 96), ss 2, 3, 4, 6; Australian Courts Act 1828 (9 Geo IV c 83), s 24. 369 Macdonald v Levy (1833) 1 Legge 39 at 44-45 per Burton J, 52-53 per Forbes CJ, 61-62 per Dowling J; Fenton v Hampton (1858) 11 Moo PC 347 at 393 per Pollock LCB for the Privy Council [14 ER 727 at 744]; Cooper v Stuart (1889) 14 App Cas 286 at 291 per Lord Watson for the Privy Council. 370 Ordinance No 2 of 1843 (SA), s 1. 371 "Messrs Shepherd and Gifford to Earl Bathurst" (1819) in Historical Records of Australia ("HRA") (1922), ser 4, vol 1, 330 at 330; J Stephen, "Validity of Statute, 20 George II, c 19 in the Colony" (1822) in HRA (1922), ser 4, vol 1, 412 at 414. Nettle settled and thus received English law (even if not immediately372). In the result, it is not now open to this Court to doubt that conclusion373. Yet, although English law was conceived of as having been carried by the settlers with them as their "birthright", that "invisible and inescapable cargo ... fell from their shoulders and attached itself to the soil on which they stood"374, and it became, at least in theory, "the law of the land, protecting and binding colonists and indigenous inhabitants alike and equally"375. Thus, the early Governors of New South Wales were instructed to punish crimes against Aboriginal people376, and Governor Hunter reported, with reference to the trial of five settlers for the murder of Aboriginal persons before the Court of Criminal Jurisdiction in 1799, that "the natives of this country were to be held as a people now under the protection of His Majesty's Government"377. The same Court also tried Aboriginal persons charged 372 See and compare Evatt, "The Legal Foundations of New South Wales" (1938) 11 Australian Law Journal 409 at 415, 420-421; Castles, "The Reception and Status of English Law in Australia" (1963) 2 Adelaide Law Review 1 at 2-5; McPherson, The Reception of English Law Abroad (2007) at 18-20, 115-116. 373 Coe v The Commonwealth (1979) 53 ALJR 403 at 408 per Gibbs J (Aickin J agreeing at 412); 24 ALR 118 at 129, 138; Mabo [No 2] (1992) 175 CLR 1 at 26, 36 per Brennan J (Mason CJ and McHugh J agreeing at 15), 78-79 per Deane and 374 R T E Latham, "The Law and the Commonwealth", in Hancock, Survey of British Commonwealth Affairs: Volume I, Problems of Nationality 1918-1936 (1937) 510 375 Mabo [No 2] (1992) 175 CLR 1 at 37 per Brennan J (Mason CJ and McHugh J agreeing at 15). See Waugh, "Settlement", in Saunders and Stone (eds), The Oxford Handbook of the Australian Constitution (2018) 56 at 64-73. 376 "Governor Phillip's Instructions" (1787) in HRA (1914), ser 1, vol 1, 9 at 13-14; "Governor Hunter's Instructions" (1794) in HRA (1914), ser 1, vol 1, 520 at 522; "Governor King's Instructions" (1802) in HRA (1915), ser 1, vol 3, 391 at 393; "Instructions to Governor Bligh" (1805) in HRA (1916), ser 1, vol 6, 8 at 10; "Governor Macquarie's Instructions" (1809) in HRA (1916), ser 1, vol 7, 190 at 192; "Instructions to Sir Thomas Brisbane" (1821) in HRA (1917), ser 1, vol 10, 596 at 377 "Governor Hunter to The Duke of Portland" (1800) in HRA (1914), ser 1, vol 2, 401 at 402. But see "Governor King to Lord Hobart" (1802) in HRA (1915), ser 1, vol 3, 581 at 592. See also R v Lowe [1827] NSWKR 4. Nettle with crimes against settlers378, and, after initial doubts379, its successor, the Supreme Court of New South Wales, exercised jurisdiction over crimes committed between Aboriginal persons; significantly on the basis that this was necessary to provide "sanctuary to them"380. Furthermore, as Brennan J noticed in Mabo [No 2]381, if "the subjects of a conquered territory382 and of a ceded territory383 became British subjects384, a fortiori the subjects of a settled territory must have acquired that status", since, ex hypothesi, they could not have owed allegiance to any other sovereign. Accordingly, as this Court has confirmed on several occasions385, Aboriginal persons undoubtedly remain subject to, and protected by, the system of law in Australia. 378 R v Mow-watty [1816] NSWKR 2; R v Hatherly and Jackie [1822] NSWKR 10. 379 R v Ballard or Barrett (1829) NSW Sel Cas (Dowling) 2 at 4 per Dowling J. 380 R v Murrell (1836) 1 Legge 72 at 73 per Burton J (emphasis added). See Kercher, "R v Ballard, R v Murrell and R v Bonjon" (1998) 3 Australian Indigenous Law Reporter 410. 381 (1992) 175 CLR 1 at 38 fn 93 (emphasis added). 382 Calvin's Case (1608) 7 Co Rep 1a at 6a [77 ER 377 at 384]; Campbell v Hall (1774) Lofft 655 at 741 per Lord Mansfield [98 ER 848 at 895]. 383 Donegani v Donegani (1835) 3 Kn 63 at 85 per Shadwell V-C for the Privy Council [12 ER 571 at 580]. 384 Lyons Corporation v East India Co (1836) 1 Moo PC 175 at 286-287 per Lord Brougham for the Privy Council [12 ER 782 at 823]; 1 Moo Ind App 175 at 286-287 [18 ER 66 at 108-109]. 385 Coe (1979) 53 ALJR 403 at 408 per Gibbs J; 24 ALR 118 at 129; Coe v The Commonwealth (1993) 68 ALJR 110 at 115 per Mason CJ; 118 ALR 193 at 200; Walker v New South Wales (1994) 182 CLR 45 at 48-50 per Mason CJ. See also R v Wedge [1976] 1 NSWLR 581 at 585 per Rath J. Nettle In Mabo [No 2], this Court determined386 that the common law in Australia recognises, and in truth has always recognised387, rights and interests in land and waters possessed under laws acknowledged, and customs observed, by Aboriginal peoples since before the Crown's acquisition of sovereignty. The common law of real property received upon the Crown's acquisition of sovereignty in Australia accommodated these traditional laws and customs, subject to extinguishment by inconsistent grant, by employing the concept of radical title: that native title was held of the Crown, which retained a power of extinguishment388. Logically anterior to, however, and more fundamental than the common law's recognition of rights and interests arising under traditional laws and customs is the common law's recognition of the Aboriginal societies from which those laws and customs organically emerged. As Gleeson CJ, Gummow and Hayne JJ explained in Yorta Yorta Aboriginal Community v Victoria389: "Laws and customs do not exist in a vacuum. They are, in Professor Julius Stone's words, 'socially derivative and non-autonomous'390. As Professor Honoré has pointed out391, it is axiomatic that 'all laws are laws of a society or group'. Or as was said earlier, in Paton's Jurisprudence392, 'law is but a result of all the forces that go to make society'. Law and custom arise out of and, in important respects, go to define a particular society. In 386 (1992) 175 CLR 1 at 15 per Mason CJ and McHugh J, 57, 69-70 per Brennan J, 109-110 per Deane and Gaudron JJ, 187 per Toohey J. See also Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 452-453 per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ. 387 Yorta Yorta (2002) 214 CLR 422 at 453-454 [77] per Gleeson CJ, Gummow and Hayne JJ, 490 [180] per Callinan J. See Giannarelli v Wraith (1988) 165 CLR 543 at 584-586 per Brennan J. See also Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 358-359 per Lord Browne-Wilkinson, 377-379 per Lord Goff of Chieveley. 388 See The Commonwealth v Yarmirr (2001) 208 CLR 1 at 51 [47]-[49] per Gleeson CJ, Gaudron, Gummow and Hayne JJ. 389 (2002) 214 CLR 422 at 445 [49]. 390 Stone, The Province and Function of Law (1946) at 649. 391 Honoré, "Groups, Laws, and Obedience", in Simpson (ed), Oxford Essays in Jurisprudence (Second Series) (1973) 1 at 2. 392 Paton, A Text-book of Jurisprudence (1946) at 34. Nettle this context, 'society' is to be understood as a body of persons united in and by its acknowledgment and observance of a body of law and customs". Hence, as that passage conveys, under the common law of Australia, an Aboriginal society retains an identifiable existence so long as its members are "continuously united in their acknowledgement of laws and observance of customs" deriving from before the Crown's acquisition of sovereignty, and such may be inferred from "subsidiary facts" of a social, cultural, linguistic, political or Axiomatically, a person cannot be a member of an Aboriginal society continuously united in the acknowledgment of its laws and customs unless he or she is resident in Australia. Nor can a person be a member of such an Aboriginal society unless he or she is accepted as such by other members of the society according to the traditional laws and customs of the society deriving from before the Crown's acquisition of sovereignty over the Australian territory. Thus, for present purposes, the most significant of the traditional laws and customs of an Aboriginal society are those which allocate authority to elders and other persons to decide questions of membership. Acceptance by persons having that authority, together with descent (an objective criterion long familiar to the common law of status) and self-identification (a protection of individual autonomy), constitutes membership of an Aboriginal society394: a status recognised at the "intersection of traditional laws and customs with the common law"395. That status is necessarily inconsistent with alienage. Logically, it cannot be that the common law in force immediately before Federation acknowledged the authority of elders and other persons to determine membership of an Aboriginal society and yet at the same time subjected members of that society to a liability to deportation. Permanent exclusion from the territory of Australia would have abrogated the common law's acknowledgment of traditional laws and prevented the observance of traditional laws and customs by persons excluded (and, depending on their positions in society, also by others). To classify any member of such an Aboriginal society as an alien would have been to recognise that the Crown 393 Sampi v Western Australia (2010) 266 ALR 537 at 560 [77] per North and Mansfield JJ. See Bartlett, Native Title in Australia, 3rd ed (2015) at 913 [32.11]. 394 The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 274 per Deane J; Mabo [No 2] (1992) 175 CLR 1 at 61, 70 per Brennan J (Mason CJ and McHugh J agreeing at 15); Yorta Yorta (2002) 214 CLR 422 at 442 [40], 445 [49] fn 94. See Sampi (2010) 266 ALR 537 at 552 [45] per North and Mansfield JJ. 395 Fejo v Northern Territory (1998) 195 CLR 96 at 128 [46] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; Yorta Yorta (2002) 214 CLR 422 at 439-440 [31] per Gleeson CJ, Gummow and Hayne JJ. Nettle had power to tear the organic whole of the society asunder, which would have been the very antithesis of the common law's recognition of that society's laws and customs as a foundation for rights and interests enforced under Australian law. Consistently, therefore, with its recognition of Aboriginal societies as the source and sanctuary of traditional laws and customs, the common law must be taken always to have comprehended the unique obligation of protection owed by the Crown to those societies and to each member in his or her capacity as such. True it is, as the Commonwealth contended, that the Crown's unique obligation of protection to those societies and to each member in his or her capacity as such has not hitherto been seen as placing those members beyond the bounds of alienage as that term is ordinarily understood. But that is to say no more than that the question has not previously arisen for determination. True it is, too, as the Commonwealth submitted, that "often" the "main" differences between the permanent protection owed to a citizen and the local protection owed to a resident alien arise while each is overseas, where only the former enjoys what Kelsen termed396 a "more concrete right", "to diplomatic protection by the organs of his own State against foreign States". As that submission – and the plurality in Singh397 – acknowledged, however, the indicia and consequences of permanent protection are not confined to the realm of international law. For, whereas an Australian citizen's right "to enter the country is not qualified by any law imposing a need to obtain a licence or 'clearance' from the Executive"398, "the vulnerability of the alien to exclusion or deportation" itself "flows from both the common law and the provisions of the Constitution"399. And as has been indicated400, this domestic liability of aliens to deportation may, in turn, properly inform the ambit of the ordinary understanding of alienage. In any event, reference to sources of international law does not gainsay the recognition of a unique obligation of permanent protection to indigenous 396 Kelsen, General Theory of Law and State, Wedberg tr (1945) at 237. But see Singh (2004) 222 CLR 322 at 387 [166] per Gummow, Hayne and Heydon JJ; cf [248] above. 397 (2004) 222 CLR 322 at 387-388 [166] per Gummow, Hayne and Heydon JJ. 398 Air Caledonie International v The Commonwealth (1988) 165 CLR 462 at 469 per Mason CJ, Wilson, Brennan, Deane, Dawson, Toohey and Gaudron JJ. 399 Chu Kheng Lim (1992) 176 CLR 1 at 29 per Brennan, Deane and Dawson JJ. 400 See [248]-[253], [271]-[272] above. Nettle peoples401. Since at least402 the writings of the sixteenth century "Spanish school" – whose critiques of the Conquista have been identified as the fons et origo of international law403 – jurists have asserted natural rights of indigenous peoples "wisely ordered by excellent laws, religion, and custom" as against European colonisers404. Although such ideas had fallen out of favour by 1901, positivist rationales for colonisation were also founded upon obligations to indigenous peoples405, such as that undertaken by the signatories of the General Act of the Berlin Conference (1885) "to watch over the preservation of the native tribes, and to care for the improvement of the conditions of their moral and material well- being"406. And, although more recently formulated terms of self- 401 See Mabo [No 2] (1992) 175 CLR 1 at 83-84 per Deane and Gaudron JJ. 402 But see Pope Paul III, Sublimis Deus (1537). 403 See Scott, The Spanish Origin of International Law (1934), ch 14; Stone, Human Law and Human Justice (1965) at 61. 404 Las Casas, In Defense of the Indians, Poole ed (1992) at 42-43; cf Vitoria, De Indis et de Jure Belli Relectiones, Nys ed, Bate tr (1917) at 127-129. See also Grotius, The Rights of War and Peace, in Three Books, Morrice tr (1738), bk 2, ch 22, §§9-10 at 478; Vattel, The Law of Nations; or, Principles of the Law of Nature, Applied to the Conduct and Affairs of Nations and Sovereigns, Chitty ed (1834), bk 2, ch 7, §97 at 171. See generally Marks, "Indigenous Peoples in International Law: The Significance of Francisco de Vitoria and Bartolome de las Casas" (1991) 13 Australian Year Book of International Law 1; Cavallar, "Vitoria, Grotius, Pufendorf, Wolff and Vattel: Accomplices of European Colonialism and Exploitation or True Cosmopolitans?" (2008) 10 Journal of the History of International Law 181. 405 See especially Westlake, Chapters on the Principles of International Law (1894) at 406 Art 6. See Lindley, The Acquisition and Government of Backward Territory in International Law (1926) at 324-326; cf South West Africa Cases (Second Phase) [1966] ICJR 6 at 34-35 [51]-[54]. Nettle determination407, the capacity to represent and obligations to protect indigenous peoples continue to be proclaimed in and by international instruments408. To acknowledge such post-Federation developments does not require acceptance of a view that the connotation of constitutional terms may evolve by reference to international laws emerging since Federation: a notion which has, in the past, been repudiated as amounting in effect to the rewriting of the Constitution409. It goes no further than this Court did in recognising that at least since 1948 "subjects" and "aliens" in the Constitution have denoted persons with a status in relation to the Crown in right of Australia, rather than the United Kingdom410. But it may be observed that, not long ago, in a matter also affected by profound socio-political imperatives not conceived of at the time of Federation, this Court did not hesitate to observe that "terms like 'originalism' or 'original intent' ... obscure much more than they illuminate", and to recognise that the breadth of a "topic of juristic classification" may be informed by consideration of "comparative law"411. Such considerations need not be pursued further, however, because, in this matter, domestic considerations dictate the proper conclusion. Underlying the Crown's unique obligation of protection to Australian Aboriginal societies and their members as such is the undoubted historical connection between Aboriginal societies and the territory of Australia which they occupied at the time of the Crown's acquisition of sovereignty. As is now understood, central to the traditional laws and customs of Aboriginal communities was, and is, an essentially spiritual 407 See Western Sahara (Advisory Opinion) [1975] ICJR 12 at 31-35 [54]-[64]; Brownlie, "The Rights of Peoples in Modern International Law", in Crawford (ed), The Rights of Peoples (1988) 1; Anaya, Indigenous Peoples in International Law, 2nd ed (2004), pt 2. 408 See, eg, Declaration on the Granting of Independence to Colonial Countries and Peoples (adopted by GA Res 1514 (XV) of 14 December 1960); United Nations Declaration on the Rights of Indigenous Peoples (adopted by GA Res 61/295 of 13 September 2007). 409 See the authorities collected in Roach v Electoral Commissioner (2007) 233 CLR 162 at 225 [181] fn 181 per Heydon J. 410 See [249] above. 411 The Commonwealth v Australian Capital Territory (2013) 250 CLR 441 at 455 [14], 459 [22] per French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ, quoting Attorney-General (Vict) v The Commonwealth ("the Marriage Act Case") (1962) 107 CLR 529 at 578 per Windeyer J. Nettle connection with "country", including a responsibility to live in the tracks of ancestral spirits and to care for land and waters to be handed on to future generations412. Ignorance of those connections, and of their potential significance at common law, justified the early dispossession of Aboriginal peoples in the decades after 1788413. But by the mid-nineteenth century, James Dredge, the Assistant Protector of Aborigines at Port Phillip, could acknowledge414 that those connections were "sacredly recognised from one generation to another" and that, within the "boundaries of their own country, as they proudly speak, they feel a degree of security and pleasure which they can find nowhere else". And even that was a profound understatement of the position, which Michael Dodson has since explained415 thus: "Everything about Aboriginal society is inextricably interwoven with, and connected to, the land. Culture is the land, the land and spirituality of Aboriginal people, our cultural beliefs or reason for existence is the land. You take that away and you take away our reason for existence. ... Removed from our lands, we are literally removed from ourselves." A connection of that kind runs deeper than the accident of birth in the territory or immediate parentage. Being a matter of history and continuing social fact, an Aboriginal society's connection to country is not dependent on the identification of any legal title in respect of particular land or waters within the territory416. The protection to which it gives rise cannot be cast off by an exercise of the Crown's power to extinguish 412 See Milirrpum (1971) 17 FLR 141 at 167 per Blackburn J; Western Australia v Ward (2002) 213 CLR 1 at 64-65 [14] per Gleeson CJ, Gaudron, Gummow and Hayne JJ; Griffiths (2019) 93 ALJR 327 at 375 [198], 377 [206], 379 [223] per Kiefel CJ, Bell, Keane, Nettle and Gordon JJ; 364 ALR 208 at 265-266, 267-268, 271. 413 Mabo [No 2] (1992) 175 CLR 1 at 106-107 per Deane and Gaudron JJ. 414 R Dredge, "'An Awful Silence Reigns': James Dredge at the Goulburn River" (1998) 61 La Trobe Journal 17 at 25 (emphasis in original). 415 Dodson, "Land Rights and Social Justice", in Yunupingu (ed), Our Land Is Our Life: Land Rights – Past, Present and Future (1997) 39 at 41. 416 See and compare Yanner v Eaton (1999) 201 CLR 351 at 373 [38] per Gleeson CJ, Gaudron, Kirby and Hayne JJ. Nettle native title417. So much was acknowledged as early as 1837, when Lord Glenelg, the Secretary of State for War and the Colonies, instructed418 Sir Richard Bourke, the Governor of New South Wales, as follows: "all the natives inhabiting those Territories must be considered as Subjects of the Queen, and as within HM's Allegiance. To regard them as Aliens with whom a War can exist, and against whom HM's Troops may exercise belligerent right, is to deny that protection to which they derive the highest possible claim from the Sovereignty which has been assumed over the whole of their Ancient Possessions." So long as an Aboriginal society which enjoyed a spiritual connection to country before the Crown's acquisition of sovereignty has, since that acquisition of sovereignty, remained continuously united in and by its acknowledgment and observance of laws and customs deriving from before the Crown's acquisition of sovereignty over the territory, including the laws and customs which allocate authority to elders and other persons to decide questions of membership of the society, the unique obligation of protection owed by the Crown to the society and each of its members in his or her capacity as such will persist. Equally, for the reasons earlier stated, it is implicit in the common law's recognition of the status of membership of such an Aboriginal society, and the obligation of permanent protection owed by the Crown in right of Australia that it entails, that those who are recognised as having the status of membership of an Aboriginal society eo ipso owe permanent allegiance of which the recognised incidents include prescriptive jurisdiction in international law and liability for treason in domestic law. Otherwise, they would not be within the Crown's protection. Subject, therefore, to questions of renunciation, which do not arise here, and so for present purposes need not be considered, each resident member of a relevant Aboriginal society in his or her capacity as such owes to the Crown an obligation of permanent allegiance in the sense described. So to conclude does not mean that a resident non-citizen member of such an Aboriginal society is to be accounted an Australian citizen or other than a "non- citizen" as that term is defined419. Citizenship is a statutory concept which it is 417 See and compare Ward (2002) 213 CLR 1 at 67 [21] per Gleeson CJ, Gaudron, 418 "Lord Glenelg to Sir Richard Bourke" (1837) in HRA (1923), ser 1, vol 19, 47 at 48 (emphasis added). 419 See [239] above. Nettle within the legislative competence of Parliament to prescribe420. Furthermore, it may be that, where a resident non-citizen member of an Aboriginal society has given up residence in Australia, and thus severed his or her relationship with that society, he or she thereafter has no more right to return to this country than any other non-citizen. That, too, is a question which, for present purposes, need not be decided. It is sufficient for the disposition of this matter that the Crown in right of Australia owes an obligation of permanent protection to a resident non-citizen of Aboriginal descent who identifies as a member of an Aboriginal society and is recognised as such according to laws and customs continuously observed since before the Crown's acquisition of sovereignty, and that the obligation of permanent protection extends to not casting that person out of Australia as if he or she were an alien. It was contended by the Commonwealth that it might often prove difficult to establish that an Aboriginal society has maintained continuity in the observance of its traditional laws and customs since the Crown's acquisition of sovereignty over the Australian territory. No doubt, that is so. But difficulty of proof is not a legitimate basis to hold that a resident member of an Aboriginal society can be regarded as an alien in the ordinary sense of the term. It means only that some persons asserting that status may fail to establish their claims. There is nothing new about disputed questions of fact in claims made by non-citizens that they have an entitlement to remain in this country. It was also contended by the Commonwealth that to recognise that a resident member of an Aboriginal society is not an alien would be productive of "invidious consequences" because there would be two classes of resident non- citizen persons of Aboriginal descent: those identifying and accepted as members of an Aboriginal society according to traditional laws and customs continuously observed since before the Crown's acquisition of sovereignty; and those who are not. That is unfortunate, but equally no basis to deny the Crown's obligation of permanent protection to resident members of Aboriginal societies. If Parliament regards it as "invidious" that a federal law differentiates between those two classes of Aboriginal Australians, it is well within the competence of the Parliament to ensure that the latter class is treated like the former. Finally, it is to be observed that, as the obligation of protection of Aboriginal societies is a product of the common law, it is conceivable that it could be abrogated by statute. If that were to occur, it may be, although for the present it need not be decided, that there would no longer be an adequate basis to regard resident non-citizen members of Aboriginal societies differently from other non- citizens. But, as has been seen421, abrogation of native title would not be sufficient 420 See [244] above. 421 See [268], [277] above. Nettle to have that effect. It would at least require unambiguously clear provision with the effect that, notwithstanding the common law of Australia, and perhaps the Racial Discrimination Act 1975 (Cth), the Crown shall not owe the obligation of permanent protection to Aboriginal societies or their members as such. That is not necessarily to say, however, that the enactment of such a provision would be within the ambit of Commonwealth legislative power. It follows from what has been said that to classify a resident non-citizen of Aboriginal descent who identifies and is accepted as a member of an Aboriginal society according to traditional laws and customs continuously observed since before the Crown's acquisition of sovereignty as an alien is to treat as an "alien" a person who is incapable of answering that description in the ordinary sense of the word; and, therefore, that to impose the liabilities of alienage on a member of such an Aboriginal society is beyond the legislative competence of the Parliament under s 51(xix) of the Constitution. It follows in turn that, since the Migration Act imposes the liabilities of an alien on unlawful non-citizens, it is beyond the legislative competence of the Parliament under s 51(xix) of the Constitution to treat a member of such an Aboriginal society as an unlawful non-citizen, and that s 14(1) of the Migration Act must be read down accordingly under s 15A of the Acts Interpretation Act 1901 (Cth). Conclusion As was stated at the outset of these reasons, although each of the plaintiffs was born abroad and is a non-citizen, each has long resided in Australia, each is of Aboriginal descent, each identifies as a member of an Aboriginal community, and each has been recognised as a member of an Aboriginal community. In the case of Mr Thoms, the Commonwealth did not dispute that, because he is a native title holder, the Aboriginal community of which he is a member must be an Aboriginal society whose laws and customs have relevantly maintained a continuous existence and vitality since the Crown's acquisition of sovereignty. In the case of Mr Love, however, although it was agreed that an elder of the Kamilaroi tribe had recognised him as a descendant of that tribe, the Commonwealth did not concede that he had been recognised by "elders or others having traditional authority", that is, authority under laws and customs observed since before the Crown's acquisition of sovereignty. On those facts, Mr Thoms is incapable of answering the description of "alien" in the ordinary sense of that word, and, therefore, cannot be treated as an unlawful non-citizen within the meaning of s 14(1) of the Migration Act. In the case of Mr Love, it will be necessary for the Federal Court of Australia to find the relevant facts and, on that basis, to determine the matter according to law. 289 GORDON J. The fundamental premise from which the decision in Mabo v Queensland [No 2]422 proceeds – the deeper truth – is that the Indigenous peoples of Australia are the first peoples of this country, and the connection between the Indigenous peoples of Australia and the land and waters that now make up the territory of Australia was not severed or extinguished by European "settlement"423. That connection is spiritual or metaphysical424: "[t]here is an unquestioned scheme of things in which the spirit ancestors, the people of the clan, particular land and everything that exists on and in it, are organic parts of one indissoluble whole"425. And the connection that persisted, and continues to persist, is a connection determined according to Indigenous laws acknowledged, and the traditional customs observed, by the Indigenous peoples426. As Brennan J said in Mabo [No 2], membership of an Indigenous people of Australia depends on "biological descent from the indigenous people and on mutual recognition of a particular person's membership by that person and by the elders or other persons enjoying traditional authority among those people"427. 422 (1992) 175 CLR 1. 423 Mabo [No 2] (1992) 175 CLR 1 at 15, 51-52, 57-58, 61, 68-70, 100, 184; Wik Peoples v Queensland (1996) 187 CLR 1 at 180, 206-207; Fejo v Northern Territory (1998) 195 CLR 96 at 128 [46]; Yanner v Eaton (1999) 201 CLR 351 at 373 [38]; The Commonwealth v Yarmirr (2001) 208 CLR 1 at 37 [10]; Western Australia v Ward (2002) 213 CLR 1 at 64-65 [14], 85-86 [64]; Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422 at 439-440 [31], 441 [38], 445 [49]; Northern Territory v Griffiths (2019) 93 ALJR 327 at 341 [23], 351 [84], [206], 378 [217], 379 [223], 380 [230], 382 [240]; 364 ALR 208 at 219, 233, 238, 424 Griffiths (2019) 93 ALJR 327 at 375 [199]; 364 ALR 208 at 266. 425 Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 167, quoted in Ward (2002) 213 CLR 1 at 64 [14], in turn quoted in Griffiths (2019) 93 ALJR 327 at 368 [153]; 364 ALR 208 at 255. See also R v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 at 358. 426 Yorta Yorta (2002) 214 CLR 422 at 441 [37]-[38]; Ward (2002) 213 CLR 1 at 64-65 [14]; Griffiths (2019) 93 ALJR 327 at 340-341 [22]-[23]; 364 ALR 208 at 427 (1992) 175 CLR 1 at 70. The plaintiffs are Aboriginal Australians by biological descent, self-identification and recognition by an elder or elders enjoying traditional authority. Each was born outside Australia. Neither has the statutory status of citizenship. Under the law of the place where each was born, each owes obligations to a sovereign power other than Australia. The plaintiffs had their visas cancelled under s 501(3A) of the Migration Act 1958 (Cth) because they were each convicted of a criminal offence and sentenced to a term of imprisonment of 12 months or more428. If the plaintiffs are aliens, and thus within the reach of the legislative power in s 51(xix) of the Constitution, ss 189 and 198 of the Migration Act, which provide for detention of unlawful non-citizens and their removal from Australia, are constitutionally valid in their application to them. If the plaintiffs are not aliens, then those provisions must be read down so as not to apply to them. Are the plaintiffs aliens within the meaning of s 51(xix) of the Constitution? They are not. The specific question before the Court – whether Aboriginal Australians, born overseas, without the statutory status of Australian citizenship and owing foreign allegiance, are aliens within the meaning of s 51(xix) – has not arisen before. No previous Australian court has considered that question. There is no binding authority. Whether either plaintiff is an alien is a constitutional question, not a statutory question. As was pointed out in Singh v The Commonwealth429, it is important not to distract attention from the constitutional term "aliens" by using statutory or other expressions like "Australian citizens", "nationals" or "subjects" as if those words are antonyms for the constitutional term. They are not. Likewise, it is not right to use constitutional phrases like "people of the Commonwealth" or "a subject of the Queen" as antonyms, or the text of s 44(i) of the Constitution as a synonym, for the constitutional term430. It is, therefore, best to refer to a person who is not an alien as a "non-alien"431. 428 The decision to cancel Mr Love's visa was subsequently revoked and he was released from immigration detention. Mr Thoms remains in immigration detention. 429 (2004) 222 CLR 322 at 382 [149]-[150]. 430 Singh (2004) 222 CLR 322 at 382 [149]. 431 See Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 189, 191-193, 195; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 295, 374; Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 36 [8], 56 [78], 57 [79], 58 [83], 63 [99], 65 [103], 68 [114], 79 [157]; Singh (2004) The constitutional term "aliens" conveys otherness, being an "outsider", foreignness. The constitutional term "aliens" does not apply to Aboriginal Australians, the original inhabitants of the country. An Aboriginal Australian is not an "outsider" to Australia. European settlement did not abolish traditional laws and customs, which establish and regulate the connection between Indigenous peoples and land and waters. Assertion of sovereignty did not sever that connection. Nor did Federation, or any event after Federation, render Aboriginal Australians aliens. As later events confirmed, at Federation many Indigenous peoples retained their connection with land and waters; they retained rights in respect of the land and waters and they remained subject to obligations under traditional laws and customs with respect to the land and waters. Failure to recognise that Aboriginal Australians retain their connection with land and waters would distort the concept of alienage by ignoring the content, nature and depth of that connection432. It would fail to recognise the first peoples of this country. It would fly in the face of decisions of this Court that recognise that connection and give it legal consequences befitting its significance. And yet that is what is sought to be done here to Mr Love and Mr Thoms, two Aboriginal Australians: to ignore their Aboriginality because they were born overseas, do not have Australian citizenship and owe foreign allegiance. These reasons will consider the meaning of "aliens" under s 51(xix) of the Constitution and whether, as the Commonwealth submitted, that meaning is determined by the statutory concept of citizenship, birthplace or the owing of allegiance to a foreign power. These reasons will then address the position of Aboriginal Australians as uniquely connected with this country, and not falling within the concept of alien at any time since settlement. Finally, these reasons consider whether each plaintiff is an alien. Section 51(xix) "Aliens" is a constitutional term. The question in these cases is one of Commonwealth legislative power. And for present purposes, only the head of 222 CLR 322 at 380 [139], 382 [149], 387 [165]-[166], 397 [195], 408 [234], 410 [238], 417 [265], 432 [315]; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Ame (2005) 222 CLR 439 at 454 [22], 458 [34], 482 432 Griffiths (2019) 93 ALJR 327 at 335 [2], 351 [84], 355 [98], 369-370 [165], 373 [187], 376 [204], 377 [206], 378 [217], 379 [223]; 364 ALR 208 at 212, 233, power with respect to the subject of "aliens" under s 51(xix) is of relevance, not that with respect to "naturalization", also under s 51(xix)433. "Non-citizen" is not a synonym for alien. Foreign allegiance is not synonymous with alienage. The question is not only whether a person has a characteristic like non-citizenship or foreign citizenship. Nor is birthplace alone necessarily determinative of alienage. As was said in Singh434, the word "aliens" did not have a fixed legal meaning at the time of Federation – in particular, legislative changes had removed it from the meaning that it held at common law at the time of Calvin's Case435. But the meaning that it did have was, and remains, anchored in the concept of "belong[ing] to another"436. The word "alien" is derived from the Latin "alienus", whose definitions include "[o]f, belonging to, or affecting others", "[u]nconnected" and "[o]f another country, foreign"437. It describes a person's "lack of relationship with a country"438 (emphasis added). These concepts were, and remain, intrinsic to the constitutional word "aliens"439. With this understanding of the meaning of "aliens", it is necessary to address the relationship between it and other concepts that have relevance to alienage while not being determinative of it – citizenship, birthplace and foreign allegiance – before the exercise of Commonwealth legislative power. to consider alienage and turning 433 "[N]aturalization" (naturalisation and denaturalisation); "aliens" refers to a legal status (alienage): Singh (2004) 222 CLR to a process in s 51(xix) refers 434 (2004) 222 CLR 322 at 395 [190]. 435 (1608) 7 Co Rep 1a [77 ER 377]. 436 Singh (2004) 222 CLR 322 at 395 [190]. 437 Oxford Latin Dictionary (1982) at 97, meanings 1a, 3a and 4a. 438 Nolan (1988) 165 CLR 178 at 183, quoted in Singh (2004) 222 CLR 322 at 400 439 Singh (2004) 222 CLR 322 at 395 [190]. Alienage and citizenship Non-citizenship does not equate, in all cases, with alienage. It may be that, in most cases, someone who does not hold Australian citizenship is within the reach of the aliens power in s 51(xix) of the Constitution. It is settled that merely living in Australia for a long period does not convert someone from an alien to a non-alien, if they have not taken the step of acquiring citizenship440. But the synonymy of the concepts of alien and non-citizen in most cases should not distract attention from the fact that the overlap is less than complete. Indeed, it cannot be complete. Despite the discussions at the Convention Debates, the Constitution ultimately did not include a concept of "citizen"441. Citizenship is a purely statutory concept. As has been observed, statutory concepts cannot control constitutional concepts. The Court, therefore, does not defer to Parliament's opinion to determine the scope of a constitutional concept like "aliens"442. Put in different terms, a statutory concept cannot, in all cases, be the obverse of a constitutional concept. As Gaudron J stated in Chu Kheng Lim v Minister for Immigration443, Australian citizenship is: "not a concept which is constitutionally necessary, which is immutable or which has some immutable core element ensuring its lasting relevance for constitutional purposes. Because citizenship is a concept of the kind indicated, it cannot control the meaning of 'alien' in s 51(xix) of the Constitution." 440 See Shaw (2003) 218 CLR 28. 441 See generally Official Record of the Debates of the Australasian Federal Convention (Melbourne), 2 March 1898. As Mr Edmund Barton (as he then was) put it, "'[c]itizens' is an undefined term, and is not known to the Constitution": Official Record of the Debates of the Australasian Federal Convention (Melbourne), 3 March 1898 at 1786. 442 See Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 258. See also Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 179 [53]; Shaw (2003) 218 CLR 28 at 61 [94]. 443 (1992) 176 CLR 1 at 54 (footnote omitted). There was no statutory concept of Australian "citizenship" before its introduction in 1948444. Any equating of the concepts of non-citizen and alien would thus fail to account for the period from Federation to the passing of the Nationality and Citizenship Act 1948 (Cth). Although the case law may reflect a dispute as to when British subjects became aliens – 1949 or 1986 – there was a period of at least 48 years445 in which there was no statutory concept of Australian citizenship. Yet during that same period, the aliens power in s 51(xix) of the Constitution had meaning446. In fact, the Nationality and Citizenship Act cannot itself be seen as some transformative event. As enacted, that Act did not, even on its own terms, equate alienage and non-citizenship. It defined an "alien"447 as "a person who is not a British subject, an Irish citizen or a protected person". Alienage was not anchored to, or determined by, the concept of citizenship. Indeed, the status of a British subject continued. A person who was an Australian citizen was a "British subject"448. Conversely, citizens of other countries, specifically the United Kingdom and its colonies, Canada, New Zealand, the Union of South Africa, Newfoundland, India, Pakistan, Southern Rhodesia and Ceylon, had the option of citizenship in Australia by registration, rather than naturalisation449. Citizenship did not then determine who was an alien and who was not an alien. Although the Nationality and Citizenship Act was an important event in lessening Australia's ties with the United Kingdom, and thus with other British 444 See Nationality and Citizenship Act 1948 (Cth), which commenced in 1949, later renamed the Australian Citizenship Act 1948 (Cth). 445 In Re Patterson; Ex parte Taylor (2001) 207 CLR 391, it was held by a 4-3 majority that a British citizen who came to Australia in 1966 was not subject to the aliens power. In Shaw (2003) 218 CLR 28, a differently composed 4-3 majority held that a British citizen who came to Australia in 1974 was so subject. The minority held that only British citizens arriving after 3 March 1986, being the date of coming into force of the Australia Act 1986 (Cth) and the Australia Act 1986 (UK), were aliens: Shaw (2003) 218 CLR 28 at 48 [51], 66-67 [109]-[111], 84-85 [177]. 446 See, eg, Robtelmes v Brenan (1906) 4 CLR 395. 447 Nationality and Citizenship Act (as enacted), s 5(1). 448 Nationality and Citizenship Act (as enacted), s 7(1). 449 Nationality and Citizenship Act (as enacted), ss 7(2) and 12(2). subjects450, it was not an event that had any bearing on the ties between Aboriginal Australians and the country. That Act said, and says, nothing about Aboriginal itself, Australians. The statutory question of citizenship does not, decide whether the plaintiffs, as Aboriginal Australians, are aliens within the meaning of the constitutional term. The fact that citizenship does not, in all circumstances, determine alienage is reflected, in two respects, in Pochi v Macphee451 in the judgment of Gibbs CJ, with whom Mason and Wilson JJ agreed. First, his Honour said that Parliament can "treat as an alien any person who was born outside Australia, whose parents were not Australians, and who has not been naturalized as an Australian"452 – a less than complete alignment of the concepts of citizenship and alienage. That passage was quoted with approval in Nolan v Minister for Immigration and Ethnic Affairs453. It was on the basis of Nolan that later cases have emphasised the importance of citizenship in determining whether someone is an alien454, yet it is clear that the underlying dicta never completely equated the two. Second, Gibbs CJ in Pochi also identified the limits of any reliance on a statutory concept in determining alienage455 – in a way that was echoed years later in Singh456 – by observing that "the Parliament cannot, simply by giving its own definition of 'alien', expand the power under s 51(xix) to include persons who could not possibly answer the description of 'aliens' in the ordinary understanding of the word". What was said in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Ame457 does not detract from this point. That case concerned a Territory that was becoming an independent State. What had been 450 See Nolan (1988) 165 CLR 178 at 185-186. 451 (1982) 151 CLR 101. 452 Pochi (1982) 151 CLR 101 at 109-110. 453 (1988) 165 CLR 178 at 185. 454 See, eg, Lim (1992) 176 CLR 1 at 25; Shaw (2003) 218 CLR 28 at 35 [2], 46-47 [47], 455 (1982) 151 CLR 101 at 109. 456 (2004) 222 CLR 322 at 382-383 [151]-[153]. 457 (2005) 222 CLR 439 at 458-459 [34]-[35]. given by statute under the Territories power in s 122 of the Constitution could be taken away by statute. Thus, statements about the importance of citizenship are to be understood as laying down a guiding principle, not an absolute rule. As Toohey J explained in Cunliffe v The Commonwealth458, referring to Nolan, "an alien can generally be defined as a person born out of Australia of parents who were not Australian citizens and who has not been naturalized under Australian law or a person who has ceased to be a citizen by an act or process of denaturalization" (emphasis added). Or, as Gleeson CJ and Heydon J explained in Koroitamana v The Commonwealth459, "[w]ithin the limits of the concept of 'alien' in s 51(xix), it is for Parliament to decide who will be treated as having the status of alienage, who will be treated as citizens, and what the status of alienage, or non-citizenship, will entail" (emphasis added). Indeed, any general proposition about the constitutional importance of the statutory concept of citizenship is qualified by the very limits that Gibbs CJ identified in Pochi460. None of this is to accept the submission of Victoria, intervening, that Aboriginality is equivalent to citizenship. Alienage and birthplace It is several centuries too late to treat birthplace as determinative of alienage. Although historically birthplace determined alienage at common law461, that position had been modified by statute well before Federation462, including in the eighteenth century463. As Singh makes plain, birthplace is not the controlling consideration; a person born in Australia can nonetheless be an alien464. 458 (1994) 182 CLR 272 at 374-375. 459 (2006) 227 CLR 31 at 38 [11]. 460 (1982) 151 CLR 101 at 109. See also Singh (2004) 222 CLR 322 at 329 [4]. 461 See Calvin's Case (1608) 7 Co Rep 1a [77 ER 377]. 462 Singh (2004) 222 CLR 322 at 395 [190]. 463 See, eg, British Nationality Act 1730 (4 Geo 2 c 21); British Nationality Act 1772 (13 Geo 3 c 21). 464 (2004) 222 CLR 322. The significance of birthplace, in the case of Aboriginal Australians, is also doubtful as a matter of history. Aboriginal Australians were regarded as British subjects following settlement465. And those Aboriginal Australians who were considered subjects of the Crown were not limited to those who were born in the territory after its acquisition. Status as a British subject extended to all inhabitants. As Governor Hindmarsh proclaimed in South Australia in 1836, the Crown had extended "the same protection to the native population as to the rest of His Majesty's subjects"466, not merely those born at a particular time. That was in accordance with established principle467. The same was true of later territorial acquisitions. Indigenous communities in the Torres Strait and elsewhere were not isolated from other communities living closer to and under the control of what, at Federation, was British New Guinea. British New Guinea was not accepted by the Commonwealth as a Territory until the enactment of the Papua Act 1905 (Cth)468. The Murray Islands were not annexed by Queensland until 1879469. Before annexation, the Murray Islands were not part of Her Majesty's dominions470. It cannot be concluded that some of the persons associated with these islands, but not others, were non-aliens at Federation. Alienage and foreign allegiance Foreign allegiance or citizenship may be an important factor relevant to alienage in many cases471. But it, too, cannot be determinative of the scope of the power in s 51(xix). If the position were otherwise, stateless people would be outside the power and this Court has held that not to be the case472. Any attempt to 465 Mabo [No 2] (1992) 175 CLR 1 at 38. 466 Quoted in Bennett and Castles (eds), A Source Book of Australian Legal History: Source Materials from the Eighteenth to the Twentieth Centuries (1979) at 258. 467 See Campbell v Hall (1774) 1 Cowp 204 [98 ER 1045]. 468 See Papua Act, s 5. The United Kingdom had previously annexed British New Guinea in 1884: Griffin, Nelson and Firth, Papua New Guinea: A Political History 469 Mabo [No 2] (1992) 175 CLR 1 at 20-21. 470 Mabo [No 2] (1992) 175 CLR 1 at 19. 471 See Singh (2004) 222 CLR 322 at 398 [200], 400 [205]. 472 Singh (2004) 222 CLR 322 at 395 [190]. See Koroitamana (2006) 227 CLR 31. delineate alienage exclusively by reference to foreign allegiance or citizenship therefore falls at the first hurdle it encounters. No less importantly, it is not the case, contrary to the Commonwealth's submissions, that foreign citizenship, even if held alongside Australian citizenship, is sufficient in itself to bring a person within the scope of the aliens power. Whether an individual has the rights, privileges and obligations of a subject or citizen of a foreign power is a matter that will be determined according to the law of that foreign power. If a foreign power's conferral of such rights and privileges or imposition of obligations on a person were enough to bring the person within the aliens power, dual citizens would, for that fact alone, be within that power. Observing that a "non-alien" can be a "dual citizen" who has dual rights, privileges and obligations is not inconsistent. A person can be a subject or citizen of a foreign power, or be entitled to the rights and privileges of a subject or citizen of a foreign power, and not be an alien473. Were it otherwise, a potentially very large portion of Australian citizens would be subject to the aliens power. Indeed, had the framers of the Constitution intended to make "aliens" in s 51(xix) a test of foreign allegiance, they could have used the language employed in s 44(i), which identifies any person who "is under any acknowledgment of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or a citizen of a foreign power". But they did not do so474. Moreover, it would be problematic for a constitutional head of power to turn exclusively on foreign law, or for the scope of a constitutional head of power to be determined by application of foreign law. Determining the scope of a constitutional head of power exclusively on the basis of foreign law is no less problematic than allowing citizenship, as an Australian statutory concept, to define the parameters of a constitutional head of power. In contrast, s 44(i) of the Constitution, which expressly invokes the concept of foreign allegiance, is not a head of legislative power. Contrary to the submissions of the Commonwealth, Singh is not authority for the proposition that holding foreign citizenship, without more, is sufficient to bring a person within the scope of the aliens power. Singh decided that a non-citizen (who was not an Aboriginal Australian) born in Australia who held foreign citizenship was an alien. As a matter of precedent, Singh says nothing about 473 cf Singh (2004) 222 CLR 322 at 400 [205]. 474 See Official Record of the Debates of the Australasian Federal Convention (Sydney), 21 September 1897 at 1012-1013. whether an Australian citizen who also holds foreign citizenship (a dual citizen) is an alien or whether a non-citizen who is an Aboriginal Australian is an alien. the "central characteristic" of alienage, or even It is true that Gummow, Hayne and Heydon JJ referred in Singh to foreign allegiance as the "central characteristic" of alienage475, a description which was later invoked, in slightly different wording, in Ame476. But to say that foreign its allegiance "defining characteristic", is only to identify the importance of such allegiance, which may have been particularly evident on the facts of Singh. It is not the same as what the Commonwealth asserts: that foreign allegiance is in every case determinative, such that a vast portion of the Australian population are able to be treated by the Parliament as "aliens" within s 51(xix), irrespective of whether they also hold Australian citizenship or, as in this case, whether they are Aboriginal Australians. And that submission should not be accepted. It is contrary to authority and principle and it is impractical. Alienage and Commonwealth power The Commonwealth Parliament has not purported to define alienage for constitutional purposes. The parties and the intervener did not submit that it had legislated to the effect that particular classes of persons were aliens. In particular, it has not legislated to the effect that persons in the position of the plaintiffs, Aboriginal Australians born overseas and without Australian citizenship, are aliens. It has not addressed itself to the unique position of Aboriginal Australians. Thus, the question of whether, or to what extent, the Parliament has power to make a law that persons who are non-aliens shall be aliens need not be decided here because the Parliament has made no law with respect to the alien or non-alien status of Aboriginal Australians. Neither the Australian Citizenship Act 2007 (Cth) or its predecessor, nor the Migration Act, is to be read as having that operation or effect and no party or the intervener in this case suggested to the contrary. But is also unclear whether, as a constitutional matter, the Parliament could enact such a definition477. That is unsurprising. As was said above, the scope of the word "aliens" under s 51(xix) of the Constitution is a 475 (2004) 222 CLR 322 at 398 [200]. 476 (2005) 222 CLR 439 at 458 [35]. 477 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 512-513 [101]-[103]; Crawford, "The Entrenched Minimum Provision of Judicial Review and the Limits of 'Law'" (2017) 45 Federal Law Review 569. question of Commonwealth legislative power. It determines those to whom the constitutional power extends. One aspect of the "aliens" power, or perhaps more accurately the "naturalization" power also contained in s 51(xix), as well as of the immigration power in s 51(xxvii), is the power to define a concept of citizenship. As Gleeson CJ wrote in Singh478: "Parliament, under paras (xix) and (xxvii) of s 51, has the power to determine the legal basis by reference to which Australia deals with matters of nationality and immigration, to create and define the concept of Australian citizenship, to prescribe the conditions on which such citizenship may be acquired and lost, and to link citizenship with the right of abode." But, although important, this power to define, for some purposes, who are members of the Australian community does not constitute a power to define the scope of the aliens power under s 51(xix). Indeed, Gleeson CJ went on to expound the limits of the passage just quoted479: "The qualification is that Parliament cannot, simply by giving its own definition of 'alien', expand the power under s 51(xix) to include persons who could not possibly answer the description of 'aliens' in the Constitution. Within the class of persons who could answer that description, Parliament can determine to whom it will be applied, and with what consequences. Alienage is a status, and, subject to the qualification just mentioned, Parliament can decide who will be treated as having that status for the purposes of Australian law and, subject to any other relevant constitutional constraints, what that status will entail. Everyone agrees that the term 'aliens' does not mean whatever Parliament wants it to mean. Equally clearly, it does not mean whatever a court, or a judge, wants it to mean." This qualification is important: Parliament cannot determine the breadth of its own power. And, as a matter of power, enactments pursuant to the aliens power, including those that purport to define its scope, cannot apply to someone who is not, constitutionally speaking, an alien. To suggest that Parliament has the power, under the aliens power, to define alienage status, risks circularity – it presupposes, 478 (2004) 222 CLR 322 at 329 [4] (footnote omitted), citing Te (2002) 212 CLR 162 at 173 [31]. See also Hwang v The Commonwealth (2005) 80 ALJR 125 at 128 [10]; 222 ALR 83 at 86-87. 479 Singh (2004) 222 CLR 322 at 329 [4]-[5] (footnote omitted). as the basis for validity of the law, that the people to whom the law applies are aliens within the constitutional meaning. It remains the task of this Court to assess the validity of any exercise of legislative power under the Constitution, including under the aliens power in s 51(xix). There is no constitutional head of power that relinquishes to Parliament the responsibility of determining the scope of that power. As Marshall CJ said in Marbury v Madison480 – in words that have been described as "axiomatic" in Australian law481 – "[i]t is emphatically the province and duty of the judicial department to say what the law is". Fullagar J explained this principle in Australian Communist Party v The Commonwealth482: "The validity of a law or of an administrative act done under a law cannot be made to depend on the opinion of the law-maker, or the person who is to do the act, that the law or the consequence of the act is within the constitutional power upon which the law in question itself depends for its validity. A power to make laws with respect to lighthouses does not authorize the making of a law with respect to anything which is, in the opinion of the law-maker, a lighthouse." Thus, as was said in Singh by Gummow, Hayne and Heydon JJ, in relation to Fullagar J's dictum483: "a power to make laws with respect to aliens does not authorise the making of a law with respect to any person who, in the opinion of the Parliament, is an alien. That Parliament has made a law which a party or intervener asserts to be a law with respect to aliens presents the constitutional question for resolution; it does not provide an answer." (emphasis added) 480 (1803) 5 US 137 at 177. 481 Australian Communist Party (1951) 83 CLR 1 at 262-263; Harris v Caladine (1991) 172 CLR 84 at 134-135; The Commonwealth v Mewett (1997) 191 CLR 471 at 547; Attorney-General (WA) v Marquet (2003) 217 CLR 545 at 570 [66]; Singh (2004) 222 CLR 322 at 330 [7]; Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2007) 232 CLR 1 at 48 [101]. 482 (1951) 83 CLR 1 at 258. 483 (2004) 222 CLR 322 at 383 [153]. It is the Court's role to resolve that constitutional question – the constitutional validity of legislation. The task is substantive, not merely formal. The Court does not defer to Parliament's understanding of the meaning of a constitutional term. Just as Parliament cannot call anything it likes a lighthouse, a trade mark484 or a marriage485, it cannot call any person it likes an alien. Assessing the position of Aboriginal Australians under the aliens power should not, in this context, be viewed as creating an "exception" or a limiting "implication". The question remains the scope or extent of the aliens power in s 51(xix) of the Constitution, and whether it supports the exercise of legislative power in particular circumstances – namely, the circumstances of Aboriginal Australians in the position of the plaintiffs. Conclusion Contrary to the assumption that ran throughout the argument of the Commonwealth, whether either or both of the plaintiffs can lawfully be removed from Australia does not turn only on the operation of the Australian Citizenship Act or the Migration Act. Nor does it turn only on the vagaries of foreign citizenship laws. The determinative point in these cases is constitutional rather than statutory. Whether either plaintiff is an alien or a non-alien is fundamentally a question of otherness. As Gummow, Hayne and Heydon JJ said in Singh486, that more fundamental question is not answered by deciding whether either plaintiff meets the statutory description of "Australian citizen". As will be shown, Aboriginal Australians occupy a unique or sui generis position in this country, such that they are not aliens. And, because the determinative question is constitutional, not statutory, no assistance can be drawn from the Racial Discrimination Act 1975 (Cth) as it can and must be understood in connection with the application of the Native Title Act 1993 (Cth)487. Neither of those Acts (nor any other Act of the Parliament) determines the proper construction of the Constitution. 484 Attorney-General for NSW v Brewery Employes Union of NSW (1908) 6 CLR 469 485 The Commonwealth v Australian Capital Territory (2013) 250 CLR 441 at 461 [33]. 486 (2004) 222 CLR 322 at 382-383 [150]-[153]. 487 See Ward (2002) 213 CLR 1 at 96-112 [98]-[140]. Aboriginal Australians Aboriginal Australians are not outsiders or foreigners – they are the descendants of the first peoples of this country, the original inhabitants, and they are recognised as such. None of the events of settlement, Federation or the advent of citizenship in the period since Federation have displaced the unique position of Aboriginal Australians. European settlement Aboriginal Australians have a long history in and with "country". Deane J estimated the period of Indigenous settlement as "at least" 40 millennia before the arrival of the British settlers488. However, the period of Indigenous settlement is likely to be tens of thousands of years longer489. From the time of European settlement, the Crown has progressively asserted sovereignty over the land and waters that together now make up the territory of Australia. As Brennan J observed in Mabo [No 2], "Aboriginal peoples have been substantially dispossessed of their traditional lands"490 by the Crown. It was the dispossession of Aboriginal Australians, starting in 1788 and expanding this nation491. "parcel by parcel", Whether there has been an acquisition of territory by the Crown is not justiciable, but the consequences of acquisition are justiciable492. Specifically, the connection of Aboriginal Australians with country was not severed by European settlement in the late eighteenth and early nineteenth centuries. The assertion of sovereignty by the British Crown over the land left Aboriginal Australians' connection with the land and waters intact493. the development of that underwrote 488 Gerhardy v Brown (1985) 159 CLR 70 at 149. 489 See Turney et al, "Early Human Occupation at Devil's Lair, Southwestern Australia 50,000 Years Ago" (2001) 55 Quaternary Research 3; Clarkson et al, "Human occupation of northern Australia by 65,000 years ago" (2017) 547 Nature 306; Griffiths, Deep Time Dreaming: Uncovering Ancient Australia (2018), ch 5. 490 (1992) 175 CLR 1 at 68. 491 Mabo [No 2] (1992) 175 CLR 1 at 69. 492 Mabo [No 2] (1992) 175 CLR 1 at 32. 493 See fn 423 above. This connection with land and waters survived settlement. Settlement and Crown radical title did not extinguish that connection, one legal consequence of the connection being recognised by native title494. What we call "native title" takes its content from the traditional laws acknowledged, and the traditional customs observed, by the Indigenous inhabitants495. Native title is both more than, and different from, what common lawyers identify as property rights. And who has the necessary and sufficient connection with land or waters can be determined only in accordance with, and by reference to, traditional laws and customs496. That is not a new problem497. Mabo [No 2] recognised the continued subsistence of native title rights and interests after European settlement. It acknowledged the fragility of those rights and interests and their susceptibility to extinguishment. The subsequent enactment of the Native Title Act and the many cases that have been brought about the nature and extent of native title rights and interests in respect of particular parts of this country should not obscure, as was stated earlier, the deeper truth recognised by Mabo [No 2]: that the Indigenous peoples of Australia are the first peoples of this country, and that the connection between the Indigenous peoples of Australia and the land and waters that now make up the territory of Australia was not severed or extinguished by European settlement498. That connection is not a species of what European law understands as ownership or possession499. It is a connection with land where the land "owns" the 494 Mabo [No 2] (1992) 175 CLR 1 at 51-52. 495 Mabo [No 2] (1992) 175 CLR 1 at 58. 496 Fejo (1998) 195 CLR 96 at 128 [46]; Yarmirr (2001) 208 CLR 1 at 37 [9], 51 [48]-[49]; Ward (2002) 213 CLR 1 at 102 [113], quoting Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 437; Yorta Yorta (2002) 214 CLR 422 at 441-447 [37]-[56]. 497 cf Mabo [No 2] (1992) 175 CLR 1; Yorta Yorta (2002) 214 CLR 422. 498 See fn 423 above. See also Hill, "Blackfellas and Whitefellas: Aboriginal Land Rights, The Mabo Decision, and the Meaning of Land" (1995) 17 Human Rights Quarterly 303; Russell, Recognizing Aboriginal Title: The Mabo Case and Indigenous Resistance to English-Settler Colonialism (2005), ch 8; Perry and Lloyd (eds), Australian Native Title Law, 2nd ed (2018) at [ch1.40]-[ch1.70]. 499 Yarmirr (2001) 208 CLR 1 at 37-39 [11]-[16]; Ward (2002) 213 CLR 1 at 64-65 [14], 93 [88], [90]; Griffiths (2019) 93 ALJR 327 at 368 [153]; 364 ALR 208 at 255. people and the people are responsible for the land500; a two-way connection rather than the one-way connection common lawyers identify as rights with respect to or over an article of property. It is that two-way connectedness that the law has tried to capture by speaking of spiritual connection501. It is wrong to see the connection to land and waters through the eyes of the common lawyer as a one-way connection. Federation The connection of Aboriginal Australians with land and waters was not severed by Federation and the formation of the Commonwealth. Nothing in the Constitution purports to sever Aboriginal Australians' connection with the land or waters. And nothing in the Convention Debates purported to treat Aboriginal Australians as aliens or within the reach of the aliens power. Otherness, or being from outside, was the focus in the Convention Debates when discussing the aliens power. As Mr O'Connor said502: "It appears to me quite clear, as regards the right of any person from the outside to become a member of the Commonwealth, that the power to regulate immigration and emigration, and the power to deal with aliens, give the right to define who shall be citizens, as coming from the outside world. Now, in regard to the citizens of the states – that is, those who are here already, apart from these laws – every citizen of a state having certain political rights is entitled to all the rights of citizenship in the Commonwealth, necessarily without a definition at all." (emphasis added) Indeed, discussions of "aliens" in the Convention Debates were generally directed at supposedly "foreign" peoples, such as those originating from East Asia and India503. Nothing in the Debates contemplated that Aboriginal Australians – 500 Behrendt and Kelly, Resolving Indigenous Disputes (2008) at 89; Watson, Aboriginal Peoples, Colonialism and International Law: Raw Law (2015) at 31. 501 Yanner (1999) 201 CLR 351 at 373 [38]; Ward (2002) 213 CLR 1 at 64-65 [14]; Griffiths (2019) 93 ALJR 327 at 341 [23]; 364 ALR 208 at 219. 502 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 2 March 1898 at 1754; see also at 1756. 503 See, eg, Official Report of the National Australasian Convention Debates (Sydney), 3 April 1891 at 689, 702-703; Official Record of the Debates of the Australasian Federal Convention (Melbourne), 27 January 1898 at 228-230, 234-235, 242; Official Record of the Debates of the Australasian Federal Convention (Melbourne), 28 January 1898 at 248, 252; Official Record of the Debates of the Australasian peoples who came from the land and waters that now make up Australia – would be within that power. At Federation, many, perhaps most, Indigenous people in Australia would have been born in Australia. And many would have traced their ancestry through Indigenous ancestors. But those Indigenous people who, at Federation, were non-aliens were not limited to persons having both characteristics of being born in Australia and having only Indigenous ancestors. the events of the Stolen Generations would later show, Indigenous societies in Australia have long included, and accommodated as members of their community, persons who were not born of parents who each traced their ancestry entirely through Indigenous ancestors. Indeed, the whole premise for the programs that created the Stolen Generations (so flawed as they were) was to remove children who would otherwise have taken their place in the Indigenous communities from which they were taken504. Sovereignty and territory The sovereignty of the Commonwealth is asserted over territory, territory to which the common law recognises that Aboriginal Australians have a unique connection505. And what the common law then acknowledged about Aboriginal Australians is relevant to interpreting the scope of s 51(xix) because the common law may inform the understanding of constitutional concepts506. The issue is what follows from the continued two-way connection of Aboriginal Australians with land and waters that Mabo [No 2] held could and did survive the assertion of sovereignty. To speak of a polity or body politic, which in the case of Australia is a nation-state, or the sovereignty exercised by that polity, without considering its Federal Convention (Melbourne), 2 March 1898 at 1763; Official Record of the Debates of the Australasian Federal Convention (Melbourne), 3 March 1898 at 504 See generally Human Rights and Equal Opportunity Commission, Bringing them home: Report of the National Inquiry into the Separation of Aboriginal and Torres Strait Islander Children from Their Families (1997). 505 See fn 423 above. 506 In re Foreman & Sons Pty Ltd; Uther v Federal Commissioner of Taxation (1947) 74 CLR 508 at 521; Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 457. territorial dimension is to overlook one of the essential requirements of a polity and of sovereignty507. The Commonwealth of Australia is a "territorial community"508. Although forms of extraterritorial authority are possible509, Australian sovereignty is tied essentially to the territory of Australia. As Brennan J said in Mabo [No 2], "a sovereign enjoys supreme legal authority in and over a territory"510 (emphasis added). Sovereignty entails, as Jacobs J said in New South Wales v The Commonwealth ("the Seas and Submerged Lands Case"), "a power and right, recognized or effectively asserted in respect of a defined part of the globe, to govern in respect of that part to the exclusion of nations or states or peoples occupying other parts of the globe"511 (emphasis added). It cannot be divorced from that territory. The connection recognised by Australian law between Aboriginal Australians and the land and waters of this country therefore cannot be dismissed as irrelevant to membership of the present polity of the Commonwealth of Australia, a polity established on the same land and waters. To assert sovereignty over land or waters where the connection of Aboriginal Australians has not been severed512 requires that those connected to the land or waters in that way are not classified as aliens, or as "other" or foreign to the land or waters of the polity. Recognition of that connection in the further context of s 51(xix) of the Constitution does not "fracture a skeletal principle of our legal system"513. On the contrary, to ignore or refuse that recognition would render the determination of the constitutional question incomplete. Federation created the Commonwealth of Australia, a polity that "sprang from the brain of its begetters armed and of full stature"514. But that polity was 507 Montevideo Convention on the Rights and Duties of States (1933), Art 1(b); Crawford, Brownlie's Principles of Public International Law, 9th ed (2019) at 508 R v Sharkey (1949) 79 CLR 121 at 153. 509 XYZ v The Commonwealth (2006) 227 CLR 532 at 536 [5]. 510 (1992) 175 CLR 1 at 48. 511 (1975) 135 CLR 337 at 479. 512 See fn 423 above. 513 Mabo [No 2] (1992) 175 CLR 1 at 43. 514 Uther (1947) 74 CLR 508 at 530. asserted and established territorially – on the same territory, with the same people, that existed prior to the formation of the Commonwealth. It was not formed out of nothing. And it did not wipe the slate clean of tens of thousands of years of history. It is necessary to say something further about the foundations of Australian sovereignty. Until Federation, "sovereignty" in the (expanding) Australian colonies was the sovereignty of the British Crown. The adoption of the federal compact by referendum and the passing of the Commonwealth of Australia Constitution Act 1900 (Imp) at Federation made it sensible to speak of legal sovereignty resting with the Parliament at Westminster, or the British Crown, but popular sovereignty resting with the people of Australia515. And so much was inferentially recognised by Quick and Garran when they dedicated their work on the Constitution "To the People of Australia"516. The continued application of the Colonial Laws Validity Act 1865 (Imp) (28 & 29 Vict c 63) may have permitted a conclusion that the colonies (and later, the States, as distinct from the Commonwealth) were to some extent subject to the continued possibility of the exercise of power by the Parliament at Westminster. The Statute of Westminster 1931 (UK), adopted by the Commonwealth Parliament in 1942517, probably marked the end of that possibility518. To that (limited) extent, there may have been continuing utility in distinguishing between legal and political sovereignty in Australia up to (and perhaps for some years after) 1942. But no matter whether that is so, at least since the Australia Acts519 (and almost certainly for some time before that) it has been recognised that sovereign power resides in the people in the sense that the powers of government belong to and are derived from the people520. 515 See Finn, "A Sovereign People, A Public Trust", in Finn (ed), Essays on Law and Government – Volume 1: Principles and Values (1995) 1 at 2-3. 516 Quick and Garran, The Annotated Constitution of the Australian Commonwealth (1901) at v. 517 Statute of Westminster Adoption Act 1942 (Cth). 518 Sharkey (1949) 79 CLR 121 at 149 per Dixon J; cf at 136 per Latham CJ. 519 Australia Act 1986 (Cth); Australia Act 1986 (UK). 520 University of Wollongong v Metwally (1984) 158 CLR 447 at 476-477; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 72; Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 137. The roots of Federation in popular sovereignty (and the dominant force of that idea today as the legitimating force of the Constitution) are consistent with the conclusion that the "people of Australia" necessarily includes Indigenous peoples. That few Indigenous people were eligible to vote, or in fact voted, in the Federation referenda is irrelevant. The franchise was then limited. The Australian Electoral Commission records that521: "Only South Australian and Western Australian women voted in the referendums. Indigenous Australians, Asians, Africans and Pacific Islanders were not allowed to vote in Queensland or Western Australia unless they owned property. In several colonies poor people in receipt of public assistance could not vote and Tasmania required certain property qualifications." Exclusion of some Indigenous people from the vote was no more (or less) significant than the exclusion of many women. Voting in the referenda was not compulsory. A majority of voters voted in favour of Federation but they did not constitute a majority of the population. The referendum results underpinned the union of the people of Australia in the Federation. Those who were united necessarily included those whom the Constitution, until 1967522, referred to as "[t]he people of … the aboriginal race in any State"523 or "aboriginal natives"524. They were part of the people of the five colonies referred to in the preamble to the Commonwealth of Australia Constitution Act 1900 (Imp); they were part of the people of the six colonies referred to in s 3 of that Act which, by proclamation, were "united in a Federal 521 Australian Electoral Commission, Federation and the People's Vote 1897-1903 Fact Sheet 1, <https://www.aec.gov.au/about_aec/Publications/Fact_Sheets/fact_sheets/fact1.pdf available 522 Constitution Alteration (Aboriginals) 1967 (Cth). See generally Attwood and Markus, The 1967 Referendum: Race, Power and the Australian Constitution, 2nd ed (2007). 523 Constitution, s 51(xxvi) (as enacted). 524 Constitution, s 127 (as enacted). Commonwealth under the name of the Commonwealth of Australia"525. They were, and they are, part of the "people of Australia". Recognition of Indigenous peoples as a part of the "people of Australia" is directly contrary to accepting any notion of Indigenous sovereignty persisting after the assertion of sovereignty by the British Crown. Recognition of Indigenous peoples as part of the "people of Australia" denies that Indigenous peoples retained, or can now maintain, a sovereignty that is distinct or separate from any other part of the "people"526. One of the central pillars of Mabo [No 2] is that the assertion of sovereignty brought with it the common law and that, consistent with the legally unchallengeable fact of sovereignty, the common law can and does recognise that Indigenous peoples can and do possess certain rights and duties that are not possessed by, and cannot be possessed by, the non-Indigenous peoples of Australia. Those who have these rights and duties are determined by Indigenous laws and customs. They include rights and duties with respect to land and waters within the territory of Australia. Those to whom Indigenous laws and customs give those rights and duties with respect to land and waters within the territory of Australia are, and must be recognised as being, part of the "people of Australia" and not aliens. Since Federation Nothing since Federation has turned Aboriginal Australians into aliens. The Nationality and Citizenship Act did not do so; it did not address Aboriginal Australians527. Similarly, the commencement of the Australia Acts said nothing about, and certainly did not diminish, the connection of Aboriginal Australians with Australia. On the minority approach in Shaw v Minister for Immigration and Multicultural Affairs, the Australia Acts severed the connection between the United Kingdom and Australia such that citizens of the United Kingdom who thereafter migrated to Australia did so as aliens528. The passage of those Acts 525 See also Commonwealth of Australia Constitution Act 1900 (Imp), s 6. 526 Finn, "A Sovereign People, A Public Trust", in Finn (ed), Essays on Law and Government – Volume 1: Principles and Values (1995) 1 at 5. See also Coe v The Commonwealth (1993) 68 ALJR 110; 118 ALR 193. 527 See [306]-[308] above. 528 (2003) 218 CLR 28 at 48 [51], 66-67 [109]-[110], 84-85 [177]. relevantly did no more than confirm Australia's independence from the United Kingdom. In the nearly 120 years since Federation, awareness, understanding and acknowledgement of the connection between Aboriginal Australians and this country have increased. By contrast, the significance of the notion of "British subject" in Australia has diminished529. Over the same period, the franchise was extended to Aboriginal Australians530; a referendum on 27 May 1967 amended the Constitution to remove discriminatory references to Aboriginal Australians531; laws and customs, and the Aboriginal Australians have a connection with country and that connection gave rise to rights and interests in land and waters through native title, first judicially, then statutorily532. These developments are not consistent with Aboriginal Australians becoming aliens in that period. that, according recognised their law Before dealing further with the legal concept of Aboriginality, it is desirable to draw together some important elements of what has been said. Native title is a significant acknowledgement of the position of Indigenous peoples that took place long after Federation. Native title recognises that, according to their laws and customs, Aboriginal Australians have a connection with country and have rights and interests in land and waters533. But those laws and customs are not limited to rights and interests. They entail obligations consistent with Aboriginal Australians being custodians of the land and waters534. It is connection with land and waters that is unique to Aboriginal Australians. As history has shown, that connection is not simply a matter of what 529 cf Re Patterson (2001) 207 CLR 391; Shaw (2003) 218 CLR 28; Nationality and Citizenship Act (as enacted); Australia Act 1986 (Cth). 530 At the federal level, see Commonwealth Electoral Act 1962 (Cth). The last State to extend the franchise to Aboriginal Australians was Queensland, in 1965: Elections Acts Amendment Act of 1965 (Qld). 531 See The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 272-273; Constitution Alteration (Aboriginals) 1967 (Cth). 532 Mabo [No 2] (1992) 175 CLR 1; Native Title Act, ss 3, 4(1), 10, 223. 533 Yorta Yorta (2002) 214 CLR 422 at 440-441 [33]-[35]. 534 See Mabo [No 2] (1992) 175 CLR 1 at 99; Ward (2002) 213 CLR 1 at 64-65 [14], 93 [88], [90]; Griffiths (2019) 93 ALJR 327 at 368 [153]; 364 ALR 208 at 255. the common law would classify as property535. It is a connection which existed and persisted before and beyond settlement, before and beyond the assertion of sovereignty and before and beyond Federation. It is older and deeper than the Constitution. And the connection with land and waters that is unique to Aboriginal Australians does not exist in a vacuum536. It was not and is not uniform537. It was not and is not static; cultures change and evolve538. And because the spiritual or religious is translated into the legal539, the integrated view of the connection of Aboriginal Australians to land and waters is fragmented. But the tendency to think only in terms of native title rights and interests must be curbed. Native title is one legal consequence flowing from common law recognition of the connection between Aboriginal Australians and the land and waters that now make up Australia. That Aboriginal Australians are not "aliens" within the meaning of that constitutional term in s 51(xix) is another. Just as dispossession of traditional land and waters does not strip Aboriginal Australians of their rights and interests540, it does not strip them of their connection with land and waters. Indeed, the Native Title Act provides that extinguishment of native title rights and interests does not strip Aboriginal Australians of their connection with land and waters and provides, so far as possible, compensation for loss where "the consequences of acts can be incremental and cumulative", recognising that "the people, the ancestral spirits, the land and everything on it are 535 See [341] above. 536 Yorta Yorta (2002) 214 CLR 422 at 445-446 [49]-[50]. 537 Mabo [No 2] (1992) 175 CLR 1 at 58; Ward (2002) 213 CLR 1 at 95 [95]; Yorta Yorta (2002) 214 CLR 422 at 444 [46], 455 [83], 456-457 [89]-[90]. 538 Mabo [No 2] (1992) 175 CLR 1 at 61, 70, 110, 192; Yarmirr (2001) 208 CLR 1 at 132 [295]; Yorta Yorta (2002) 214 CLR 422 at 444 [46], 455 [83], 463-464 [114]. See also Macdonald and Bauman, "Concepts, hegemony, and analysis: (eds), Unsettling native Unsettling Anthropology: The Demands of Native Title on Worn Concepts and Changing Lives (2011) 1 at 2; Australian Law Reform Commission, Connection to Country: Review of the Native Title Act 1993 (Cth), Report No 126 (2015), ch 5; Perry and Lloyd (eds), Australian Native Title Law, 2nd ed (2018) at [ch1.190]. title anthropology", 539 Ward (2002) 213 CLR 1 at 65 [14]. See also Yarmirr (2001) 208 CLR 1 at 37-38 540 Griffiths (2019) 93 ALJR 327 at 377 [206], 379 [223]; 364 ALR 208 at 267, 271. 'organic parts of one indissoluble whole'"541. Similarly, "[i]t is immaterial that the laws and customs have undergone some change since the Crown acquired sovereignty provided the general nature of the connexion between the indigenous people and the land remains"542 and has not been substantially interrupted543. Legal concept of Aboriginality As was said at the outset of these reasons, membership of an Indigenous people was explained, in Mabo [No 2]544, by reference to biological descent, self-identification and recognition by an elder or elders enjoying traditional authority: "Membership of [an] indigenous people depends on biological descent from the indigenous people and on mutual recognition of a particular person's membership by that person and by the elders or other persons enjoying traditional authority among those people." Although social concepts of Aboriginality may differ or be broader, the issue here is the legal concept545. Each part of the legal concept is significant and necessary – biological descent, self-identification and recognition by an elder or elders enjoying traditional authority. As was recognised in Mabo [No 2]546, biological descent, self-identification and recognition may raise contests which may have to be settled by community consensus or in some other manner prescribed by custom, or by a court acting on evidence which lacks specificity. And they have been547. But the fact that such 541 Griffiths (2019) 93 ALJR 327 at 377 [206]; 364 ALR 208 at 267. 542 Mabo [No 2] (1992) 175 CLR 1 at 70. See also Yarmirr (2001) 208 CLR 1 at 132 [295]; Yorta Yorta (2002) 214 CLR 422 at 444 [46], 455 [83], 463-464 [114]. 543 Yorta Yorta (2002) 214 CLR 422 at 456 [87]. 544 (1992) 175 CLR 1 at 70. 545 cf Eatock v Bolt (2011) 197 FCR 261 at 304-305 [188]-[189]. 546 (1992) 175 CLR 1 at 51-52, 62, 70. 547 See, eg, Yorta Yorta (2002) 214 CLR 422; Griffiths (2019) 93 ALJR 327; 364 ALR 208. For difficulties with identifying members of claim groups, see, eg, Davidson v Fesl [2005] FCAFC 183; Aplin on behalf of the Waanyi Peoples v Queensland [2010] FCA 625 at [226]-[267]; Violet Carr and Others on Behalf of the Wellington Valley Wiradjuri People v Premier of New South Wales [2013] FCA 200; Weribone contests have arisen does not and cannot detract from the fact that the legal concept of Aboriginality, at its core, recognises that there is a unique group of Australians, Aboriginal Australians, who are descendants of the original inhabitants of this country and who identify as such and are accepted as such. It is not necessary, in this case, to chart the outer limits of the concept548. Nor is the aliens power rendered too uncertain, or unworkable, by this recognition. The power with respect to immigration and emigration under s 51(xxvii) of the Constitution operates in the same way: it is a power that cannot apply to those who are absorbed into the Australian community, because they are no longer immigrants549. The validity of an exercise of power under s 51(xxvii) depends on the circumstances of those in respect of whom it is exercised, yet there is no suggestion that s 51(xxvii) is thereby uncertain or unworkable. It is necessary to say something further about biological descent, self-identification and recognition. The inquiry is not just a question of descent. That is, it is not simply a question of what the Constitution calls "race". But to the extent that race is relevant as an aspect of Aboriginality, it is not a concept unknown to the Constitution. Indeed, "race" is itself a constitutional term because of the head of power in s 51(xxvi) of the Constitution, as amended following the 1967 referendum, which provides for Parliament to make laws with respect to "the people of any race for whom it is deemed necessary to make special laws". The Constitution does not prohibit special treatment of a race – something that might be conceivable in response to, for example, historical considerations or current disadvantage. To the contrary, the power in s 51(xxvi) expressly contemplates special laws for particular races. That power has been exercised in on behalf of the Mandandanji People v Queensland [2013] FCA 255; Banjima People v Western Australia [No 2] (2013) 305 ALR 1. 548 The Tasmanian Dam Case (1983) 158 CLR 1 at 274. 549 Ex parte Walsh and Johnson; In re Yates (1925) 37 CLR 36 at 62-65; O'Keefe v Calwell (1949) 77 CLR 261 at 277; R v Forbes; Ex parte Kwok Kwan Lee (1971) 124 CLR 168 at 172-173; R v Director-General of Social Welfare (Vict); Ex parte Henry (1975) 133 CLR 369 at 373-374, 382. ways intended to benefit Aboriginal and other Indigenous people550. As a former Chief Justice of this Court has explained in an extrajudicial context551: "Under the Constitution, the Parliament may make special laws concerning the people of any race which, in practice, means Indigenous people ... [T]he Constitution empowers the Federal Parliament to make special laws about Indigenous people. That is an important power that has been exercised on several occasions; sometimes controversially. ... It has been suggested that it is divisive to treat Indigenous people in a special way. The division between Indigenous people and others in this land was made in 1788. It was not made by the Indigenous people. The race power in the Constitution is now used in practice to make special laws for them." Nor is determining who is an Aboriginal Australian just a question of self-identification – do I feel like or identify as an Aboriginal Australian552? There is a third and necessary limb – recognition by an Indigenous community. That third limb entails not just community acceptance, but recognition by the elders or other persons enjoying traditional authority. That does not mean, of course, that it is not possible for an Aboriginal Australian to renounce their connection with Australia. Each case will, like every other case concerning renunciation, be assessed on its facts consistent with established principle. That possibility of renunciation is a complete answer to the Commonwealth's contention that, if Aboriginal Australians born overseas who do not hold Australian citizenship and, by birth overseas, owe obligations to a foreign power are not aliens under Australian constitutional law, then Aboriginality might constitute a disability under foreign law. Conclusion Aboriginal Australians have a unique connection to this country; it is not just ancestry or place of birth or even both. It is a connection with the land or waters under Indigenous laws and customs which is recognised under Australian law. The Australian Citizenship Act has not removed or modified that connection. Nor has the Parliament removed or modified that connection by other legislation. 550 cf Gleeson, "Recognition in Keeping with the Constitution" (2019) 93 Australian Law Journal 929 at 935. See, eg, Native Title Act Case (1995) 183 CLR 373. 551 Gleeson, "Recognition in Keeping with the Constitution" (2019) 93 Australian Law Journal 929 at 936. 552 cf Re Roberts (2017) 91 ALJR 1018 at 1032-1033 [110]; 347 ALR 600 at 619. Whether the Parliament could remove or modify that connection need not be decided. It is a connection to this country that means that Aboriginal Australians are not foreigners within the constitutional concept of alien under s 51(xix). And it is a connection which means that even if an Aboriginal Australian's birth is not registered and as a result no citizenship is recorded, or an Aboriginal Australian is born overseas without obtaining Australian citizenship, they are not susceptible to legislation made pursuant to the aliens power or detention and deportation under such legislation. The plaintiffs are not aliens Mr Thoms Mr Thoms was born on 16 October 1988 in New Zealand. He became a New Zealand citizen upon birth. At the time of his birth, he was entitled to acquire Australian citizenship under s 10B of the Australian Citizenship Act 1948 (Cth) (as it then stood) because he was a person born outside Australia and his mother was an Australian citizen who had been born in Australia. Mr Thoms first arrived in Australia on 19 December 1988, aged two months. He has resided in Australia since 23 November 1994, when he was granted a Special Category visa. He is not an Australian citizen. He temporarily travelled between Australia and New Zealand on 25 December 1997, 19 January 1998, 23 December 2002 and 8 January 2003. He has not departed Australia since 8 January 2003. Mr Thoms was convicted of an offence against s 339(1)553 of the Criminal to 18 months' Code (Qld) and, on 17 September 2018, was sentenced imprisonment. On 27 September 2018, his visa was cancelled by a delegate of the Minister for Home Affairs under s 501(3A) of the Migration Act. On 28 September 2018, he commenced parole but, on that day, he was taken into immigration detention, where he remains. His maternal great-great-grandmother is recorded in the 1938 field notes of anthropologist Norman Tindale as being "Sarah Brennan on Moonie River", a child of Mick Brennan and a "Kunggari" (or Gunggari) woman. Mr Thoms' maternal great-great-grandmother was, through her mother, descended in 553 While the special case also refers to s 47(9) of the Criminal Code (Qld), the correct reference is s 47(9) of the Justices Act 1886 (Qld). significant part from people who inhabited Australia immediately prior to European settlement. Mr Thoms identifies, and is accepted by other Gunggari People, as a member of the Gunggari People and is a common law holder of native title recognised by the determinations of native title made by the Federal Court of Australia on 22 June 2012554 and 5 December 2014555. The same is true for his maternal grandmother and mother. Mr Love Mr Love was born on 25 June 1979 in Papua New Guinea ("PNG") and, at the time of his birth, became a citizen of PNG. He is not an Australian citizen. His paternal great-grandparents were descended in significant part from people who inhabited Australia immediately prior to European settlement. His paternal grandfather, Douglas Francis Love, was born in Queensland, enlisted for the Australian Military Forces in 1940 and served on continuous Full Time War Service from 15 May 1940 to 4 February 1946, including 660 days of active service in Australia and 1,145 days of active service overseas including in the Middle East and in what were then the Territories of New Guinea and of Papua. After discharge from the Australian Military Forces, he remained in what was then known as the Territory of Papua. Mr Love's father was born in the Territory of Papua and, upon birth, became an Australian citizen by reason of s 10(1) of the Nationality and Citizenship Act (as it then stood), having been born in "Australia", as defined in s 5(1) of that Act to include the Territory of Papua. Mr Love's mother was, at the time of Mr Love's birth, a citizen of PNG. Mr Love moved permanently to Australia on 25 December 1984, at age five, and has held a permanent residency visa since then; since 1 September 1994 this has been in the form of a BF Transitional (Permanent) visa. He has only departed Australia once, in 1985, to visit PNG. Mr Love was convicted of an offence against s 339 of the Criminal Code (Qld) and, on 25 May 2018, was sentenced to 12 months' imprisonment. A delegate of the Minister for Home Affairs cancelled Mr Love's visa under s 501(3A) of the Migration Act. On 10 August 2018, he was taken into immigration detention. On 27 September 2018, the decision to cancel his visa was 554 Kearns on behalf of the Gunggari People #2 v Queensland [2012] FCA 651. 555 Foster on behalf of the Gunggari People #3 v Queensland [2014] FCA 1318. revoked under s 501CA(4) of the Migration Act by a delegate of the Minister and he was released from immigration detention. Mr Love identifies as a descendant of the Kamilaroi tribe and is recognised as a descendant of the Kamilaroi tribe by Janice Margaret Weatherall, an elder of the Kamilaroi tribe. Conclusion on the status of the plaintiffs Mr Thoms is an Aboriginal Australian who has taken no step to renounce his connection with Australia. Mr Thoms identifies, and is accepted by other Gunggari People, as a member of the Gunggari People and is a common law holder of native title recognised by determinations of native title made by the Federal Court556. The position of Mr Love is more complex. The Commonwealth did not seek to challenge the status of Mr Love as an Aboriginal Australian. As a result, it is not necessary to determine whether the fact that Mr Love identifies as a descendant of the Kamilaroi tribe and is recognised as a descendant of the Kamilaroi tribe by an elder of that tribe557 is sufficient. The matter having been argued as it was, it is not appropriate to treat the cases differently. Children take the consequences of the actions of their parents. But the fact that both Mr Love and Mr Thoms can be said to suffer the consequence of a parent failing to take a step to obtain a statutory status – or, for that matter, their failure to take that step themselves – is not determinative of their alienage in the constitutional sense558. That is because, in this case, each plaintiff is an Aboriginal Australian, not an alien. Conclusion For those reasons, neither plaintiff is within the reach of the legislative power in s 51(xix) of the Constitution. Accordingly, ss 189 and 198 of the Migration Act must be read down so as not to apply to the plaintiffs. In each special case, the answer to question 1 should be "No" and the answer to question 2 should be "The defendant". 556 See [380] above. 557 See [386] above. 558 See Singh (2004) 222 CLR 322 at 382 [150]. Edelman Introduction The central question in each of these special cases is whether an Aboriginal person, identifying and accepted by their community as such, with a genealogy tied to the Australian land for tens of thousands of years, is an "alien" in Australia within the application of s 51(xix) of the Constitution. The "most important difference"559 between aliens and non-aliens is the liability of aliens to exclusion from the Australian community and deportation from Australia without the ability to return. Throughout history, the lives of dispossessed and exiled persons and their descendants have been sustained, and their identities shaped, by the hope of returning to their places of belonging. The identity of Aboriginal people, whether citizens or non-citizens, is shaped by a fundamental spiritual and cultural sense of belonging to Australia. It is that identity which constitutes them as members of the Australian political community. At Federation that identity limited the reach of the aliens power in s 51(xix) of the Constitution, preventing the fragmentation of the political community and the stripping of that Aboriginal identity. It would be bizarre if the evolved application of the aliens power could do so today. At Federation, the essential meaning of an alien, as a foreigner to a political community, was understood and applied in racial terms. Persons who were described as members of the Asiatic or Indian races were considered to be aliens on arrival in Australia, even if they were also British citizens. Yet Aboriginal people were not considered to be aliens. The Aboriginal inhabitants of Australia had community, societies and ties to the land, now recognised as a "connection to country"560, that established them as belonging to Australia and therefore to its political community. Whatever the other manners in which they were treated, as Willis J said in a different context in 1841 Aboriginal people were not "considered as Foreigners in a Kingdom which is their own"561. To adapt the remarks of 559 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 29. 560 Northern Territory v Griffiths (2019) 93 ALJR 327 at 371 [176]; 364 ALR 208 at 260. See also R v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 at 357-358; Mabo v Queensland [No 2] (1992) 175 CLR 1 at 70; Western Australia v Ward (2002) 213 CLR 1 at 64 [14], 247 [580]. 561 R v Bonjon [1841] NSWSupC 92. See Kercher, "R v Ballard, R v Murrell and R v Bonjon" (1998) 3 Australian Indigenous Law Reporter 410 at 425. Edelman Lord Brougham, delivering the advice of the Privy Council in 1837562, to have concluded at Federation that an Aboriginal person was an alien would be "almost as inconsistent with common sense as it would have been to hold the English inhabitants aliens under James I". The application of the essential meaning of an alien as a foreigner to the Australian political community evolved in the post-Federation jurisprudence of this Court away from an application which focused heavily upon conceptions of race, as then understood. However, unlike the approach to the immigration power, it was not sufficient to give rise to non-alienage under the evolved application for a person to have been integrated into the community, although it has been suggested that in a modern nation state defined by territory this might have been a "satisfying rationale"563. Instead, since citizenship is a clear marker of membership of the Australian political community, the evolved application generally asked whether the person was a citizen of the polity. On this evolved application, the Commonwealth Parliament has great latitude to shape the constituent membership of, and alienage from, what is now the Australian political community. It does so by defining who is a citizen. However, the essential meaning of a constitutional term should not be confused with its common application. It is an error of principle to define "alien" not as a foreigner to the Australian political community but instead, at a level of greater specificity, as depending upon the requirements that exist from time to time for statutory citizenship. A definition at that level of greater specificity would give "alien" an essential meaning that fluctuated, evolving with changes to citizenship laws enacted by the British Parliament around the time of Federation and which would have been expected to evolve further. To tie the essential meaning of "alien" to the transient concept of whatever the Commonwealth Parliament chooses it to be would also contradict the repeated denials by this Court that the Commonwealth Parliament has power to deem people to be aliens if they could not possibly answer the description of "aliens" in the ordinary understanding of the word. The antonym of an alien to the community of the body politic cannot be a "citizen". It is a "belonger"564 to the political community. 562 Mayor of Lyons v East India Co (1837) 1 Moo PC 175 at 287 [12 ER 782 at 823]. See also the discussion in Parry, Nationality and Citizenship Laws of The Commonwealth and of The Republic of Ireland (1957) at 72-73. 563 Wishart, "Allegiance and Citizenship as Concepts in Constitutional Law" (1986) 15 Melbourne University Law Review 662 at 706. 564 See, for example, R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs [2001] QB 1067 at 1099 [43]. See also Jones, "Colonial to Postcolonial Edelman The Solicitor-General of the Commonwealth accepted at the first hearing of these special cases that the purported denial by Parliament of statutory citizenship to a child born in Australia to two parents who were citizens of Australia could not make the child an alien, even if the child (and presumably also a parent) were a foreign citizen although only due to a foreign law that conferred "foreign citizenship across generations for people who were not continuing to reside in or be born in the foreign country". The essence of this submission was repeated by the Solicitor-General of the Commonwealth at the second hearing of this matter. No party, or the intervener, disputed it. No member of this Court questioned it. The submission is entirely correct. It recognises that the Commonwealth Parliament does not have an unlimited ability to recite itself into a constitutional head of power ("aliens") by legislation with respect to a closely related but distinct subject matter ("citizens"). The submission does not confuse the essential meaning of alien with the common application of the concept to statutory citizens. And it is consistent with the application of the essential meaning of an alien as a person who does not belong to the Australian political community since the child is, without more, tied to the Australian political community by bonds of birth and parentage that the Commonwealth Parliament cannot legislate to sever by a denial of citizenship. The child is beyond the scope of the aliens power in s 51(xix) of the Constitution. No Australian court has ever considered whether Aboriginal people or, by parity of reasoning although not the focus of these cases, Torres Strait Islanders are also beyond the scope of the aliens power. Since settlement, Aboriginal people have been inseparably tied to the land of Australia generally, and thus to the political community of Australia, with metaphysical bonds that are far stronger than those forged by the happenstance of birth on Australian land or the nationality of parentage. When the post-Federation application of membership of the political community moved away from issues of race, this did not strip non-citizen Aboriginal people of their status as belongers to the Australian political community by denying their identity and thus permitting an approach that would treat them as doomed "to an institutional status of permanent inferiority"565. Instead, legal events following Federation reduced the scope for discrimination without destruction of the one thing that is essential to real community: difference. The legal recognition of the powerful ties between Aboriginal people and Australian land would not have been possible if the membership of a political Indian Ocean Ethics: Interventions: International Journal of Postcolonial Studies 212 at 220-221, referring to Magna Carta, ch 29. 'Belongers', 1668-2008" 565 Goldsmith, Allegiance (1971) at 24. Edelman community involved a lockstep of such stifling homogeneity as could make Aboriginal people aliens within the meaning of s 51(xix) of the Constitution. The issue in these special cases arises because Mr Love and Mr Thoms are non-citizens. Following the sentencing of Mr Love and Mr Thoms in 2018 for offences against the Criminal Code (Qld), a delegate of the Minister for Home Affairs cancelled their visas566. Each plaintiff was taken into immigration detention, purportedly under s 189 of the Migration Act 1958 (Cth), on suspicion of being an unlawful non-citizen567 with the potential consequence of removal from Australia568. Mr Thoms remains immigration detention. Mr Love was subsequently released from immigration detention and the decision to cancel his visa was revoked. However, the validity of the initial decision to cancel Mr Love's visa is a relevant issue in proceedings brought by Mr Love that allege false imprisonment by the Commonwealth. The Commonwealth relies upon the aliens power in s 51(xix) of the Constitution to support the validity of the Migration Act in its application to Mr Love and to Mr Thoms. But an Aboriginal person cannot be an alien to Australia. Aboriginal people belong to Australia and are essential members of the "community which constitutes the body politic of the nation state"569. Insofar as the Migration Act purports to apply to Aboriginal people of Australia, such as Mr Love and Mr Thoms, as aliens, it must be disapplied570. The essential meaning of alien at the time of Federation The essential meaning of alien To accept that the application of "alien" can change over time does not mean that the word has no essential meaning. The Constitution is not merely a jumble of letters capable of being given entirely new essential content at different times like alphabet soup. The essential meaning, or "prime essential", is the "limit ... fixed 566 Migration Act 1958 (Cth), s 501(3A). 567 Migration Act 1958 (Cth), s 14. 568 Migration Act 1958 (Cth), ss 196, 198(2B). 569 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 189. 570 Acts Interpretation Act 1901 (Cth), s 15A. See Pochi v Macphee (1982) 151 CLR 101 at 110, 113; Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 494 [310]. Edelman beyond legislative control"571. Putting to one side the effect of precedent, the essential meaning of the words of the Constitution, which instantiates their purpose, cannot change. However, although the Constitution was intended to be enduring it was also intended to be flexible. The essential meaning is usually intended to apply to new circumstances and in different ways as time passes. The scope for that application will depend upon the level of generality at which essential meaning is intended to be characterised. It is therefore vital that essential meaning be characterised at the proper level of generality. The identification of the essential meaning of a constitutional term at the proper level of generality can sometimes be a difficult exercise. The generality of the words themselves might afford some indication of the level of abstraction that was intended. As Dixon CJ observed, "the fewer the words in which the subject matter of a constitutional power is expressed the more extensive sometimes may be the field laid open to a generous interpretation"572. However, the abstract meaning of words is only one indicator of the level of generality of essential meaning. In the context of the head of power in s 51(xxi) of the Constitution, concerning the "recognized topic of juristic classification" of "marriage"573, Windeyer J said in Attorney-General (Vict) v The Commonwealth574 that the scope of constitutional powers is "not to be ascertained by merely analytical and a priori reasoning from the abstract meaning of words". His Honour continued, saying that the interpretation is also "affected by established usages of legal language". To this can be added that interpretation is controlled by the established purpose of the provision; and it is affected by the established context in which the words appeared, particularly where established uses of legal language were in flux at Federation. In The Commonwealth v Australian Capital Territory575, this Court approved the approach of Windeyer J but expressly recognised the danger of relying too heavily upon established uses of legal language at Federation where that usage was in flux. This Court rejected the characterisation of "marriage" advanced by Quick and Garran at a level of specificity, based on established usages 571 Australian Boot Trade Employes' Federation v Whybrow & Co (1910) 11 CLR 311 at 335; see also at 339-340. 572 Attorney-General (Vict) v The Commonwealth (1962) 107 CLR 529 at 539-540. 573 Attorney-General (Vict) v The Commonwealth (1962) 107 CLR 529 at 578. 574 (1962) 107 CLR 529 at 576. 575 (2013) 250 CLR 441. Edelman of legal language in 1900, that included within the "essence"576 of its meaning a union between a man and a woman. After referring to the "long and tangled development" of the social institution of marriage, including substantial changes in the latter half of the nineteenth century before Federation577, this Court held that "marriage" in s 51(xxi) had an essential meaning at a higher level of abstraction as a "consensual union formed between natural persons in accordance with legally prescribed requirements", an essential meaning that recognised a union that the law "intended to endure and be terminable only in accordance with law" as well as "a union to which the law accords a status affecting and defining mutual rights and obligations"578. Although "marriage" in s 51(xxi) was characterised at a higher level of generality than the prevailing legal usage, this Court was not suggesting that its essential meaning included anything that Parliament declares to be a marriage. It would not extend, for example, to a union of corporations. "Marriage", as a topic of juristic classification, states a "subject[] for legislation, not [a peg] on which the Federal Parliament may hang legislation"579. So too with "aliens" in s 51(xix)580. "Aliens" is not a peg on which the Commonwealth Parliament may hang any legislation concerning citizens according to its own definition. If the essential meaning of alien were to be characterised at a low level of generality, such as by reference to established common law rules underlying the recognition of citizenship and allegiance, then it would have fixed in place norms that were continually evolving, particularly around the time of Federation. Those norms had a long history of evolution at common law and by statute, particularly from the start of the seventeenth century in Calvin's Case581. That common law 576 The Commonwealth v Australian Capital Territory (2013) 250 CLR 441 at 454-455 [12]. See Quick and Garran, The Annotated Constitution of the Australian Commonwealth (1901) at 608-609. 577 The Commonwealth v Australian Capital Territory (2013) 250 CLR 441 at 456-457 578 The Commonwealth v Australian Capital Territory (2013) 250 CLR 441 at 461 [33]. 579 Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 415, quoted in Ex parte Walsh and Johnson; In re Yates (1925) 37 CLR 36 at 117. See also Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 212-213; Attorney- General (Vict) v The Commonwealth (1962) 107 CLR 529 at 549, 578. 580 Singh v The Commonwealth (2004) 222 CLR 322 at 383 [153]. See also at 343 [37] and Pochi v Macphee (1982) 151 CLR 101 at 109. 581 (1608) 7 Co Rep 1a [77 ER 377]. Edelman history was discussed in detail by McHugh J in Singh v The Commonwealth582 from feudalism through the restatement in Calvin's Case, the union of the thrones of England and Scotland, the loss of the United States colonies, the development of international law in the nineteenth century, and the Royal Commission into naturalisation and allegiance established In Singh v The Commonwealth583, McHugh J relied upon that history to characterise the essential meaning of an alien in s 51(xix) of the Constitution at a low level of generality as a person who did not owe permanent allegiance to the Crown, such allegiance arising by the location of birth subject to three exceptions. That was a minority view. In Singh v The Commonwealth, a majority of this Court characterised the essential meaning of an alien at a higher level of generality. As Gleeson CJ observed, the difficulty with characterising the meaning of alien at a low level of generality in an instrument of government that was intended to endure was that "questions of nationality, allegiance and alienage were matters on which there were changing and developing policies"584. In a joint judgment, Gummow, Hayne and Heydon JJ also referred to the numerous legislative interventions on the subject of aliens which had left "one feature about the use of the word that was constant"585. That feature, at Federation as it is now, is "wholly unambiguous and clearly understood by all, lawyers and laymen alike"586. The feature, which has been repeatedly reiterated in this Court587, is that "alien" in its commonly understood etymology, from "Latin alienus through Old French", means "belonging to another person or place". With this "broad"588 characterisation of the essential meaning of "alien", the majority held that Ms Singh was an alien within the meaning of s 51(xix) of the Constitution. She was not an Australian citizen. And although she 582 (2004) 222 CLR 322 at 351-366 [59]-[100]. 583 (2004) 222 CLR 322 at 343 [38]. 584 Singh v The Commonwealth (2004) 222 CLR 322 at 341 [30]. 585 Singh v The Commonwealth (2004) 222 CLR 322 at 395 [190]. 586 Taylor v United States (1907) 152 Fed Rep 1 at 4. 587 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 183, 189; Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 428 [114]; Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 185 [81], 205 [159]; Singh v The Commonwealth (2004) 222 CLR 322 at 351 [59], 395 588 Taylor v United States (1907) 152 Fed Rep 1 at 4. Edelman had been born in Australia, her parents were both of Indian nationality and she had taken Indian citizenship at birth. Gleeson CJ, expressing agreement with Gummow, Hayne and Heydon JJ, said that despite Ms Singh's birth in Australia, "there was in 1900 no established legal requirement that she be excluded from the class of aliens"589. The application of the essential meaning of alien at Federation The most basic power over an alien is the power of exclusion and expulsion: "[t]he right to exclude or to expel all aliens, or any class of aliens, absolutely or upon certain conditions, in war or in peace, [is] an inherent and inalienable right of every sovereign and independent nation"590. In the period leading up to Federation the essential meaning of "alien", a foreigner to a political community, was thought to apply in racial terms, driven by a concern for a power to expel. Section 15(i) of the Federal Council of Australasia Act 1885 (Imp)591 gave legislative authority to the Federal Council of Australasia in relation to various matters including the "naturalisation of aliens", a conferral of power that presaged s 51(xix) of the Constitution. After reference from the legislatures of the colonies of Victoria and Queensland, the Federal Council of Australasia passed The Australasian Naturalisation Act 1897592, concerning the "naturalisation of aliens of European descent". Section 3 of that Act defined a person of European descent as "any person who by lineage belongs exclusively to any of the European races". The slight change to the wording chosen for the aliens power in the Constitution, "naturalization and aliens", was important for the recognition of a general power with respect to aliens that was not limited to naturalisation593. 589 Singh v The Commonwealth (2004) 222 CLR 322 at 341 [30]. 590 Fong Yue Ting v United States (1893) 149 US 698 at 711, quoted in Robtelmes v Brenan (1906) 4 CLR 395 at 413. See also Ah Yin v Christie (1907) 4 CLR 1428 at 1431, 1433; Ferrando v Pearce (1918) 25 CLR 241 at 270; Pochi v Macphee (1982) 151 CLR 101 at 106. 591 48 & 49 Vict c 60. 592 60 Vict No 1. 593 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 222; Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 64. See also Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 460; Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 378 [81]; Plaintiff M68/2015 v Minister for Immigration and Border Protection (2016) 257 CLR 42 at Edelman However, this did not affect the racial lens through which the meaning of the word "alien" was thought to apply. As Dr Prince explains, in an apparently unpublished doctoral thesis from the Australian National University594, at the Constitutional Conventions the debate over the aliens power in s 51(xix) was closely associated with issues concerning the race power in s 51(xxvi) of the Constitution. In discussion of the race power, the delegates to the 1898 Convention also spoke interchangeably of "foreign races"595, "alien races"596, "Asiatic alien"597 and "aliens"598. The application of the aliens power and the race power was generally understood to be complementary. The aliens power and the immigration power in s 51(xxvii) included a concern with the conditions of admission to Australia of those who were considered as members of foreign races. The race power was concerned with the treatment of the people considered to be members of those foreign races "who are in the Commonwealth [of Australia]"599 even if they were granted citizenship. Mr Symon spoke of the admission of "the coloured races – those whom we describe as aliens – to the full advantage of the citizenship of Australia"600. Sir Samuel Griffith said of the race power that "[t]he intention of the clause is that if any state by any means gets a number of an alien race into its 594 Prince, Aliens in their Own Land (2015). 595 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 27 January 1898 at 229; 2 March 1898 at 1752. 596 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 27 January 1898 at 231; 28 January 1898 at 246; 2 March 1898 at 1758; 3 March 1898 at 1791; 17 March 1898 at 2506. 597 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 3 March 1898 at 1782. 598 See Official Record of the Debates of the Australasian Federal Convention (Melbourne), 27 January 1898; 2 March 1898; 3 March 1898. 599 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 27 January 1898 at 228-229. 600 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 28 January 1898 at 249. Edelman population, the matter shall not be dealt with by the state, but the commonwealth will take the matter into its own hands"601. The generally understood application of the aliens power as concerned with those people considered to be from foreign races, rather than foreign citizens, was also apparent from the view that 150 million British citizens living in India were considered to be aliens602. Although, in Potter v Minahan603, Isaacs J referred to "the right unrestricted at common law of all British subjects wherever born outside Australia to enter the Commonwealth", the application of the aliens power was seen as a means of applying a disability to those considered to be members of foreign races holding British citizenship. In the context of debate about a proposed citizenship power, which was ultimately rejected, Mr Kingston said604: "It would be simply monstrous that those who are born in England should in any way be subjected to the slightest disabilities … but, on the other hand, we must not forget that there are other native-born British subjects whom we are far from desiring to see come here in any considerable numbers. For instance, I may refer to Hong Kong Chinamen." Similar statements were made in relation to the provision that became s 117 of the Constitution, where references were made to "alien races"605 and to the "power of excluding Chinese, Lascars, or Hindoos who happened to be British 601 Official Report of the National Australasian Convention Debates (Sydney), 3 April 602 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 3 March 1898 at 1791, speaking of "people of alien races" as "in India some 150,000,000 British subjects". See also Official Record of the Debates of the Australasian Federal Convention (Melbourne), 27 January 1898 at 237, speaking of the "alien population" of "British subjects coming from Hindostan"; United Kingdom, Report of the Royal Commission on Alien Immigration (1903) [Cd 1741] 603 (1908) 7 CLR 277 at 310. 604 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 2 March 1898 at 1760. 605 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 3 March 1898 at 1791. See also Official Record of the Debates of the Australasian Federal Convention (Sydney), 13 September 1897 at 453. Edelman subjects"606, and concerns were expressed that "simply because a man was born under British rule in India, China, or elsewhere, therefore, of necessity, on arriving in one of these colonies, he could claim citizenship of the Commonwealth"607. Consistently with the application of the meaning of "alien" in the Convention debates based on what was then understood as "racial" distinctions, the race power, s 51(xxvi), also applied the meaning of "the people of any race" to people of any "alien race", namely "races" outside the Australian political community. Those "alien races" might have been British citizens of India or Hong Kong. They need not have been migrants and "they could well be born in Australia"608. Even with racial application, alien was not applied to persons described as members of the Aboriginal race In its literal terms, the race power could have applied to all "races" since, as Professor Sawer observed, there is difficulty in seeing why the race power should not be "applicable to the majority 'race' – every person, say, of 'Caucasian origin'"609. It was effectively the concept of political community, which included Aboriginal people, that limited the application of the race power to "alien races". Hence, even without an express exclusion from the meaning, Aboriginal people would probably not have been within the application of the race power. The express exclusion of them from the meaning of s 51(xxvi) was thus, unsurprisingly, not the subject of debate: "it was simply taken for granted that they should be excluded"610. There was, however, no need, even for clarity, for the same exclusion from the meaning of s 51(xix), which did not mention race. Aboriginal people simply did not fall within the application of "alien", a foreigner to the political community. 606 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 3 March 1898 at 1788. 607 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 3 March 1898 at 1790. 608 Sawer, "The Australian Constitution and the Australian Aborigine" (1966) 2 Federal Law Review 17 at 23. 609 Sawer, "The Australian Constitution and the Australian Aborigine" (1966) 2 Federal Law Review 17 at 23 (emphasis in original). 610 Sawer, "The Australian Constitution and the Australian Aborigine" (1966) 2 Federal Law Review 17 at 18. Edelman Upon settlement of Australia all Aboriginal people became British subjects611. From that time, as Professor Sawer said, "every aboriginal native of Australia born in Australia ... became a British subject by birth; his race was irrelevant, and there were no other circumstances capable of qualifying the allegiance"612. But, as I have explained, merely having British citizenship would not have prevented Aboriginal people of Australia from being characterised as aliens on the race-based application of "alienage" at the time of Federation. Nor, according to the decision of the majority in Singh v The Commonwealth613, would birth in Australia have been sufficient to prevent an Aboriginal person from being characterised as an alien. Instead, the reason Aboriginal people were not aliens was that they were members of the political community. In 1903, the Commonwealth Parliament enacted the Naturalization Act 1903 (Cth), which provided, in s 5, for the power of a Commonwealth resident, not being a British subject, to apply for a certificate of naturalisation. However, a person who was "an aboriginal native of Asia, Africa, or the Islands of the Pacific" was expressly excluded from the class of persons permitted to apply for a certificate614. No such exception was provided in relation to the Aboriginal people of Australia. There was no exception because they were members of the political community, albeit with fewer rights than others in the community. In 1901, s 127 of the Constitution provided that "[i]n reckoning the numbers of the people of the Commonwealth, or of a State or other part of the Commonwealth, aboriginal natives shall not be counted". Mr Barton said that the reason for this clause was that in counting the whole population of a State "it would not be considered fair to include the aborigines"615. The fairness to which he referred may have been a reference to the unreliable counts of the Aboriginal 611 Salmond, "Citizenship and Allegiance" (1902) 18 Law Quarterly Review 49 at 55, citing Campbell v Hall (1774) 1 Cowp 204 at 208 [98 ER 1045 at 1047]; Jones, British Nationality Law and Practice (1947) at 40-41, 41 fn 1. 612 Sawer, "National Status of Aborigines in Western Australia", in Australia, House of Representatives, Report from the Select Committee on Voting Rights of Aborigines (1961), Pt 1 at 37. 613 (2004) 222 CLR 322. 614 Naturalization Act 1903 (Cth), s 5. 615 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 8 February 1898 at 713. Edelman population and gross underestimates of their probable numbers then available616. In contrast with this treatment of Aboriginal people, the Convention rejected a proposed amendment by the Legislative Councils of New South Wales and Tasmania to exclude also from the count "aliens not naturalized"617. The premise of the inclusion of aliens but the exclusion of Aboriginal people is another indication that Aboriginal people were not considered aliens despite the racial terms for application of the meaning of "alien"618. The different treatment of Aboriginal people within the political community was generally thought to be a matter for local laws. In contrast with Canada, where, separately from the power over "Naturalization and aliens" in s 91(25) of the British North America Act 1867 (Imp)619, there existed in s 91(24) a power over "Indians, and lands reserved for the Indians", the treatment of Aboriginal people in other colonies was not considered to be a matter for the central authority. Following conflict between Aboriginal people and settlers, in 1837 in Great Britain the Parliamentary Select Committee on Aborigines expressed a strong view that powers concerning Aboriginal people be vested in the executive rather than the legislature. The Committee reported that620: "The protection of the Aborigines should be considered as a duty peculiarly belonging and appropriate to the executive government, as administered either in this country or by the governors of the respective colonies. ... In the formation of any new colonial constitution, or in the amendment of any which now exist, we think that the initiative of all enactments affecting the Aborigines should be vested in the officer administering the government; that no such law should take effect until it 616 Sawer, "The Australian Constitution and the Australian Aborigine" (1966) 2 Federal Law Review 17 at 18, citing Australia, Royal Commission on the Constitution of the Commonwealth, Minutes of Evidence (1929), Pt 3 at 488. 617 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 8 February 1898 at 713. 618 See also Official Record of the Debates of the Australasian Federal Convention (Melbourne), 8 February 1898 at 713-714, Messrs Barton and Isaacs referring to the provision that became s 25 of the Constitution. 619 30 & 31 Vict c 3. Now entitled Constitution Act 1867 (Can), see Constitution Act 1982 (Can), s 53 read with Sch item 1. 620 Great Britain, House of Commons, Report of the Parliamentary Select Committee on Aboriginal Tribes, (British Settlements) (1837) at 117. Edelman had been expressly sanctioned by the Queen, except in cases of evident and extreme emergency". In 1929, a majority of the Royal Commission recommended against amending s 51(xxvi) of the Constitution on the basis that the States were still better placed than the Commonwealth to legislate in relation to Aboriginal people621. The evolved application of the essential meaning of alien Although the application of membership of a political community was seen by the founding fathers through a racial lens, after Federation it was not always applied in that way, although it has been persuasively argued by Dr Prince that some early cases implicitly applied criteria based upon racial perceptions622. The removal of the racial lens for application of the essential meaning of alien as a foreigner to the political community avoids the problematic characterisations of "race" in s 51(xix) that still permeate s 51(xxvi). However, no single test has been accepted for the application of alienage under s 51(xix). Importantly, neither of two possible tests of application has been accepted as conclusive of non-alienage: (i) absorption into the Australian community; or (ii) statutory citizenship and the associated allegiance to the sovereign of Australia. The first has not been held to be sufficient. The second is not necessary. Absorption into the political community is not sufficient One approach to membership of the Australian political community might have been to treat the aliens power in the same way that the immigration power in s 51(xxvii) of the Constitution had come to be treated. In Potter v Minahan623, Isaacs J, in dissent on this point, adopted a test for the immigration power which considered: "[t]he ultimate fact to be reached as a test whether a given person is an immigrant or not is whether he is or is not at that time a constituent part of the community known as the Australian people. 621 Australia, Report of the Royal Commission on the Constitution (1929) at 270. 622 Prince, Aliens in their Own Land (2015) at 199-208, referring particularly to Robtelmes v Brenan (1906) 4 CLR 395. 623 (1908) 7 CLR 277 at 308. Edelman Nationality and domicil are not the tests; they are evidentiary facts of more or less weight in the circumstances, but they are not the ultimate or decisive considerations." That approach was later adopted624 and applied to determine that people could not be deported from Australia under this power if, having entered Australia with the intention to settle, they "have become members of the Australian community"625. Since "[t]he right to deport is the complement of the right to exclude"626, an approach to the aliens power which focused upon whether a person had become integrated into the Australian political community might have had the merit of this symmetrical treatment of the immigration and aliens powers. In relation to British subjects who migrated to Australia prior to 1987, Kirby J said of the absorption rule that he could "see no reason of principle why a less protective rule should be applied"627. Such an approach, as a conclusive test of alienage, was rejected by this Court in Pochi v Macphee628. Gibbs CJ, with whom Mason and Wilson JJ agreed, thought that the argument was "impossible to maintain". The integration approach was rejected because, as Gibbs CJ considered, it would amount to an impermissible conferral of citizenship by naturalisation without an Act of Parliament629. However, it does not appear to have been argued in Pochi v Macphee that a constitutional non-alien is a different concept from a naturalised citizen or that constitutional concepts operate upon a different plane from legislative ones. The description of a person as a constitutional non-alien means only that the person is beyond the reach of the Commonwealth power over aliens. It does not mean that the person has become naturalised and entitled to all the privileges that citizenship brings. 624 O'Keefe v Calwell (1949) 77 CLR 261 at 277; Koon Wing Lau v Calwell (1949) 80 CLR 533 at 561; R v Director-General of Social Welfare (Vict); Ex parte Henry (1975) 133 CLR 369 at 372, 373-374, 376-377, 379-381, 385, 388. 625 Ex parte Walsh and Johnson; In re Yates (1925) 37 CLR 36 at 65; see also at 117, 626 Robtelmes v Brenan (1906) 4 CLR 395 at 415. 627 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 492 [303]. 628 (1982) 151 CLR 101 at 111. See also Cunliffe v The Commonwealth (1994) 182 CLR 272 at 295. 629 Pochi v Macphee (1982) 151 CLR 101 at 111. Edelman A different reason for rejecting the absorption approach was given by Gummow and Hayne JJ, in dissent on this point, in Re Patterson; Ex parte Taylor630: the concept of integration is not easy to apply and would turn details of the lives of individuals into "constitutional facts". However, the immigration power has been applied for many decades in this manner without great difficulty and it may be that legislation could create a workable general test that could operate as an easy discrimen in most cases. In any event, as Gleeson CJ, Gummow and Hayne JJ, with whom Heydon J agreed, said in Shaw v Minister for Immigration and Multicultural Affairs631, the ordinary understanding of the term "alien" is one that "must have regard to the circumstances and conditions applicable to the individual in question". A further explanation given by Gleeson CJ and McHugh J in separate judgments in Re Minister for Immigration and Multicultural Affairs; Ex parte Te632 was that, unlike a person's status as an immigrant, once a person is determined to be an alien then the loss of that status is a matter for the Commonwealth Parliament. But, with respect, that explanation depends upon the reason that the person is an alien in the first place. If, as Gaudron J thought in the same case, the reason is a criterion of birth outside of Australia then there would be substantial differences from the immigration power633. But birth outside Australia was rejected as the test for alienage in Singh v The Commonwealth634. In contrast, if the criterion for being an alien were a lack of membership of the Australian political community then absorption into the community might indeed change that status. It is not necessary to consider further whether a single test for non-alienage could be developed based upon absorption into the political community. That would be a large step for this Court to take. The plaintiffs did not seek leave to reopen Pochi v Macphee635. Their submissions were more cautious. The plaintiffs, with the support of submissions from the State of Victoria intervening, relied upon the facts of the absorption into the Australian community of Mr Love and Mr Thoms merely as matters to be considered alongside the plaintiffs' identity as 630 (2001) 207 CLR 391 at 473 [247]. 631 (2003) 218 CLR 28 at 36 [9]; see also at 87 [190]. 632 (2002) 212 CLR 162 at 172 [26], 188 [90]. 633 Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 634 (2004) 222 CLR 322 at 341 [30], 399 [203]. 635 (1982) 151 CLR 101. Edelman Aboriginal people of Australia rather than as a single determinative test. That approach is consistent with the approach of Kirby and Callinan JJ in Re Minister for Immigration and Multicultural Affairs; Ex parte Te636, who, in separate judgments, whilst not adopting an absorption test as a conclusive criterion for loss of alien status, expressed doubts whether the aliens power would necessarily extend to non-citizens who were "very long term residents of Australia". Statutory citizenship is not the exclusive test for membership of the political community The application of statutory citizenship as the exclusive test for the essential meaning of an alien as a member of the political community involves errors in both fundamental dimensions of constitutional law: authority and principle. Authority has not applied statutory citizenship as a test for non-alienage In Nolan v Minister for Immigration and Ethnic Affairs637, a majority of six members of this Court held that a citizen of the United Kingdom who came to Australia in 1967, but who was not naturalised, was an alien. The majority upheld the validity and application of s 12 of the Migration Act, which permitted the deportation of Mr Nolan. The majority was careful to note that the definition of "alien" in the Australian Citizenship Act 1948 (Cth) did not confine either "the meaning or [the] denotation of the word in s 51(xix) of the Constitution"638. In dissent in the result in Nolan v Minister for Immigration and Ethnic Affairs, but not inconsistently with the general approach of the majority on this point, Gaudron J also spoke of citizenship only as a criterion of application "for most purposes" of determining the membership of a political community. Her Honour said639: "An alien (from the Latin alienus – belonging to another) is, in essence, a person who is not a member of the community which constitutes the body politic of the nation state from whose perspective the question of alien status is to be determined. For most purposes it is convenient to identify an alien by reference to the want or absence of the criterion which determines membership of that community. Thus, where membership of a 636 (2002) 212 CLR 162 at 229 [229]; see also at 217-218 [200]-[201]. 637 (1988) 165 CLR 178. 638 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 186. 639 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 189. Edelman community depends on citizenship, alien status corresponds with non- citizenship; in the case of a community whose membership is conditional upon allegiance to a monarch, the status of alien corresponds with the absence of that allegiance. At least this is so where the criterion for membership of the community remains constant." In Re Patterson; Ex parte Taylor640, a majority of this Court overruled Nolan v Minister for Immigration and Ethnic Affairs. Mr Taylor, a citizen of the United Kingdom who had been "completely absorbed into the Australian community"641, was held not to be an alien within the aliens power. The majority comprised Gaudron J, who had dissented in Nolan v Minister for Immigration and Ethnic Affairs, as well as McHugh, Kirby and Callinan JJ. Gaudron J reiterated that the application of alienage does not merely require an absence of citizenship or foreign citizenship, stating that a person who would have been disqualified from election under s 44(i) of the Constitution "is not necessarily excluded from membership of the Australian community by reason of his or her being a citizen of a foreign power"642. Kirby J also described as a "basic flaw"643 the treatment of alien and non-citizen as synonymous. In Shaw v Minister for Immigration and Multicultural Affairs644, a majority of this Court departed from the different strands of reasoning of each of the judges in the majority in Re Patterson; Ex parte Taylor concerning United Kingdom citizens. The approach of the majority in Nolan v Minister for Immigration and Ethnic Affairs was reinstated. It was held that a citizen of the United Kingdom who arrived in Australia in 1974 was an alien. Again, however, the majority was careful not to conflate the concepts of non-citizen and alien. Gleeson CJ, Gummow and Hayne JJ said that the ordinary understanding of the term "alien" is one that in its application "must have regard to the circumstances and conditions applicable to the individual in question"645. The fourth member of the majority, Heydon J, 640 (2001) 207 CLR 391. 641 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 407 [31]. 642 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 407 [34]. 643 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 491 [300]. See also Singh v The Commonwealth (2004) 222 CLR 322 at 382 [149]-[150]. 644 (2003) 218 CLR 28. 645 Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at Edelman questioned the assumption that from 1 January 1901 all British citizens were not aliens646. There are, however, statements of some members of this Court in Shaw v Minister for Immigration and Multicultural Affairs and later cases that "citizenship may be seen as the obverse of the status of alienage"647 or that alien "means, as a matter of ordinary language, 'nothing more than a citizen or subject of a foreign state'"648 or that Parliament can treat as an alien "a person born in Australia with a foreign citizenship derived from that of the parents of that person"649. Three points should be made about these statements. First, these passages, whilst appearing to be absolute statements, must be understood against the background of the authority described above. Secondly, the statements must be understood against the undisputed authority, discussed below, that the Commonwealth Parliament cannot treat as alien, by excluding from citizenship, those persons who could not possibly answer the description of "aliens" in the ordinary understanding of the word. In other words, the application of the essential meaning of a constitutional word must remain consistent with that essential meaning. Thirdly, and in any event, it is plain beyond peradventure that their Honours were not, in any of those passages, seeking to answer the question whether Aboriginal non-citizens could be aliens. Authority has not applied allegiance as a test for non-alienage As Quick and Garran observe, in the middle ages allegiance and subjection were "then the test of membership of a political community"650. An allegiance is "the obligation of fidelity and obedience which the individual owes to the government under which he lives, or to his sovereign in return for the protection 646 Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 647 Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 648 Singh v The Commonwealth (2004) 222 CLR 322 at 400 [205], quoting Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 183. 649 Koroitamana v The Commonwealth (2006) 227 CLR 31 at 41 [28]. 650 Quick and Garran, The Annotated Constitution of the Australian Commonwealth Edelman he receives"651. The difference between citizenship and allegiance is "largely, but not entirely, a terminological one"652: all citizens owe allegiance but a non-citizen, such as resident aliens or temporary visa holders, might also owe a temporary or local allegiance653. There may be difficulty with the use of allegiance or the lack of it even as one factor in a test for non-alienage. Allegiance is a consequence of an event such as citizenship rather than a test for membership of a political community. Allegiance, etymologically from ligare (to tie), is the consequence of an event that leads to "as it were a tying together of minds, just as a ligament is a connection of limbs and joints"654. As Wishart has observed, the existence of allegiance "does not answer the questions of when is a person a member and why does that person owe political obligations"655. This reasoning is not inconsistent with the description of allegiance in the joint judgment in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Ame656 as a "defining characteristic" of alienage or the description of allegiance by Gummow, Hayne and Heydon JJ in Singh v The Commonwealth as a "central characteristic"657 of alienage. The use of "characteristic" as a descriptor is telling. A central characteristic of an elephant might be its tusks, but the presence or absence of tusks is not a conclusive basis for classification by any competent naturalist. Allegiance to the local sovereign cannot be a test for membership of a political community because even resident aliens can owe local allegiance; indeed 651 Carlisle v United States (1872) 83 US 147 at 154, quoted in Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 196 652 Jones, British Nationality Law and Practice (1947) at 3. 653 Johnstone v Pedlar [1921] 2 AC 262 at 297. See also Jones, British Nationality Law and Practice (1947) at 3. 654 Sheppard (ed), The Selected Writings and Speeches of Sir Edward Coke (2003), vol 1 at 175, fn 29. 655 Wishart, "Allegiance and Citizenship as Concepts in Constitutional Law" (1986) 15 Melbourne University Law Review 662 at 706. 656 (2005) 222 CLR 439 at 458 [35]. 657 Singh v The Commonwealth (2004) 222 CLR 322 at 383 [154], 398 [200], 399 [201]. Edelman the obligation of allegiance can sometimes even persist after deportation658. As Gleeson CJ, Gummow and Hayne JJ said in Shaw v Minister for Immigration and Multicultural Affairs659: "[a]llegiance and alienage are not mutually exclusive". Indeed, it has been said that the concept of allegiance was, by the enactment of the Nationality and Citizenship Act 1948 (Cth), "altogether swept away, together with all other rules of the common law respecting nationality"660. Moreover, owing a foreign allegiance is not sufficient for alienage because an Australian citizen who becomes a dual citizen is not an alien, at least while the person remains an Australian citizen. Although, in Singh v The Commonwealth661, Gummow, Hayne and Heydon JJ said that "'aliens' included those who owed allegiance to another sovereign power", their Honours could not have meant that every person who owes allegiance to another sovereign power is, without more, an alien within s 51(xix). A lack of foreign allegiance is also not sufficient for a person to be characterised as a non-alien. A characteristic of an alien includes those "who, having no nationality, owed no allegiance to any sovereign power"662. In Koroitamana v The Commonwealth663, two children who were born in Australia were held to be aliens within the meaning of s 51(xix) even though they had not been registered as Fijian citizens and therefore owed no foreign allegiance. In that case, Gummow, Hayne and Crennan JJ spoke of the Fijian nationality of the children's parents as a "relevant characteristic"664. 658 Joyce v Director of Public Prosecutions [1946] AC 347 at 366-368. 659 (2003) 218 CLR 28 at 42-43 [29], citing Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 173 [29]. See also Joyce v Director of Public Prosecutions [1946] AC 347. 660 Parry, Nationality and Citizenship Laws of The Commonwealth and of The Republic of Ireland (1957) at 92. See Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 661 (2004) 222 CLR 322 at 395 [190]. 662 Singh v The Commonwealth (2004) 222 CLR 322 at 395 [190]. 663 (2006) 227 CLR 31. 664 Koroitamana v The Commonwealth (2006) 227 CLR 31 at 46 [50]. Edelman Statutory citizenship is not the test for non-alienage as a matter of principle Although a statutory citizen will be a member of the political community, and will therefore not be an alien, there are four reasons of principle why statutory citizenship cannot be the test for non-alienage. First, in a passage later described as plainly correct665, Gibbs CJ, with whom Mason and Wilson JJ agreed, said in Pochi v Macphee666 that "Parliament cannot, simply by giving its own definition of 'alien', expand the power under s 51(xix) to include persons who could not possibly answer the description of 'aliens' in the ordinary understanding of the word". This proposition has been repeatedly iterated in this Court667. The proposition means that the power of the Commonwealth Parliament to confer or deny citizenship is not co-extensive with a power to confer or deny non-alienage. Parliament "cannot enlarge its powers by calling a matter with which it is not competent to deal by the name of something else which is within its competence"668. Indeed, the power to make laws in relation to citizens derives, at least in part669, from the aliens power670. The scope of the aliens power could not itself be conclusively determined by those citizenship laws that it empowers the Parliament to make. The class of "alien" must be determined "not by a boundary line without, but by a central point within"671. 665 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 469-470 [238]. 666 (1982) 151 CLR 101 at 109. 667 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 435-436 [132], 469-470 [238], 490 [297], 492 [303]; Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 36 [9]; Singh v The Commonwealth (2004) 222 CLR 322 at 329 [4]-[5], 382-383 [151]; Koroitamana v The Commonwealth (2006) 227 CLR 31 at 54-55 [81]. 668 Attorney-General for NSW v Brewery Employes Union of NSW (1908) 6 CLR 469 669 Hwang v The Commonwealth (2005) 80 ALJR 125 at 128 [10]; 222 ALR 83 at 86- 87. See also Singh v The Commonwealth (2004) 222 CLR 322 at 374-375 [124]. 670 Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 671 Attorney-General for NSW v Brewery Employes Union of NSW (1908) 6 CLR 469 Edelman Secondly, treating citizen as the antonym of alien introduces further uncertainty due to the lack of a clear meaning of "citizen". A constitutional alien is a binary concept: a person is either an alien or not. But citizenship might involve a spectrum of rights. Professor Rubenstein has treated citizenship as "the collection of rights, duties and opportunities for participation that define the extent of socio- political membership within a community"672. Indeed, at the Constitutional Convention in 1898, the delegates rejected cl 110, as it had been proposed to be amended by Dr Quick, which concerned the rights and privileges of citizenship673. A primary reason for the rejection may have been racist concerns674. But another was uncertainty about the concept of Commonwealth citizenship675. As Mr Kingston said, there was a need for citizenship to be "defined in the Constitution, or else we ought to give power to the Federal Parliament to define it"676. Mr O'Connor later said that Dr Quick had not explained what would be meant by citizenship677: "Does he mean only the political rights which you give to every inhabitant of a state who is qualified to vote, or does he go beyond that ... and describe every person who is under the protection of your laws as a citizen? The citizens, the persons under the protection of your laws, are not the only persons who are entitled to take part in your elections or in your government, but every person who resides in your community has a right to the protection of your laws and to the protection of the laws of all the states, and has the right of access to your courts." Thirdly, the ordinary concepts of citizenship and consequential allegiance are not antonyms of alien. Although Dicey treated the categories of citizen and 672 Rubenstein, Australian Citizenship Law in Context (2002) at 4 (emphasis added and footnote omitted). 673 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 3 March 1898 at 1788, 1797. 674 See Williams, "Race, Citizenship and the Formation of the Australian Constitution: Andrew Inglis Clark and the '14th Amendment'" (1996) 42 Australian Journal of Politics and History 10. 675 Compare Constitution, s 44(i). 676 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 8 February 1898 at 677. See also Dr Quick on 2 March 1898 at 1751. 677 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 2 March 1898 at 1761. Edelman alien as exhaustive678, this feat could only be accomplished by forcing square pegs into round holes. For example, a denizen is not an alien679. A denizen is neither a citizen nor an alien. Denizenship, created by letters patent, is "in a kind of middle state between a natural-born subject and an alien, and partakes of both of them"680. The same might be true of the inhabitants of some British mandated territories, trust territories, protected states and Special Administrative Regions681. Fourthly, there is grave danger in what Professor Bickel described as the "symmetrical thinking" of treating citizenship as the exclusive tie between the government and the governed in a political community, and hence treating citizenship as the sole test for non-alienage682. The Constitution did not create a concept of local citizenship. It refers instead in s 24 to the "people of the Commonwealth"683 and, in the preamble, to the "people" who ultimately did "unite in one indissoluble Federal Commonwealth"684. The danger of shifting from the language of the "people of the Commonwealth" to the language of the "citizens of the Commonwealth" is that, as Professor Bickel observed, it "has always been easier, it always will be easier, to think of someone as a noncitizen than to decide that he is a non-person, which is the point of the Dredd Scott case"685. Whatever might have been the reasons for the treatment of Aboriginal people as non-persons 678 Dicey, A Digest of the Law of England with reference to the Conflict of Laws (1896) 679 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 472 [243], citing Halsbury's Laws of England, 1st ed, vol 1, paras 686-687. 680 Henriques, The Law of Aliens and Naturalization (1906) at 17. See also Blackstone, Commentaries on the Laws of England (1765), bk 1, ch 10 at 362. 681 In re Ho (1975) 10 SASR 250 at 252-253, referring to British Nationality Act 1948 (UK), s 32 and Australian Citizenship Act 1948 (Cth), ss 5(1), 5(3A). See also R v The Earl of Crewe; Ex parte Sekgome [1910] 2 KB 576 at 620. Compare Grossman, "Nationality and the Unrecognised State" (2001) 50 International and Comparative Law Quarterly 849 at 858, fn 59; Jones, British Nationality Law and Practice (1947) 682 Bickel, The Morality of Consent (1975) at 53. 683 See Hwang v The Commonwealth (2005) 80 ALJR 125 at 128-129 [11]; 222 ALR 83 at 87. See also Singh v The Commonwealth (2004) 222 CLR 322 at 382 [149]. 684 See Constitution, preamble. 685 Bickel, The Morality of Consent (1975) at 53. Edelman for the purposes of s 127 of the Constitution, the effect of that repealed provision should not be generalised by using the less overt language of statutory citizenship to treat Aboriginal non-citizens as though they were non-persons, cast out from the political community of the "people of the Commonwealth" to which they had belonged since its establishment at Federation. The constitutional meaning of an alien, as a "foreigner" to the Australian political community, was, and therefore remains, the essential meaning of alien in s 51(xix) of the Constitution. The antonym of an alien in s 51(xix) is not a statutory citizen. It is a person who is a belonger to the Australian political community. Nevertheless, as explained below, a person who is a statutory citizen will belong to the Australian political community. This is because that community is powerfully shaped by citizenship laws. Citizenship laws and the political community A political community is not a thing that exists in space. It is a metaphysical construct that describes a group of people who belong to a defined place or territory, here the land of the Australian state, and who are to be regulated as such belongers. A political community of an independent body politic therefore includes the intertwined dimensions of territory, permanent population, and government686. Since legislation is one of the defining formal acts of a political community687, it is natural that legislation should shape the membership of the political community. It does so by establishing norms from which a person's membership of the Australian political community can be determined. Thus, although it cannot directly control the constitutional meaning of an alien, Commonwealth legislation is a central, but not exclusive, source of the norm from which a political community is determined. The same is true of judicially created norms, which can be closely related to statutory developments688, including by interpretation of statutory provisions or by influence of common law norms, such as ius soli or ius sanguinis, on the development of legislation. In instances of both judicial and statutory norms, the legal and political considerations of political community have always been heavily influenced by metaphysical ties to physical territory. For instance, the common law and legislative concept of ius soli is concerned with citizenship based upon birth in a physical territory. 686 See Montevideo Convention on the Rights and Duties of States (1933), Art 1. 687 Dworkin, Sovereign Virtue: The Theory and Practice of Equality (2000) at 228. 688 Vella v Commissioner of Police (NSW) (2019) 93 ALJR 1236 at 1259 [86]. Edelman The most significant legislative power to shape the membership of the political community is the power to determine the citizenship of the polity. In Potter v Minahan689, Griffith CJ said that "every human being (unless outlawed) is a member of some community, and is entitled to regard the part of the earth occupied by that community as a place to which he may resort when he thinks fit". Laws that determine the conditions of citizenship affect the membership of the community because they involve an explicit statement of an "absolute and unqualified right" that "a citizen cannot be either deported or denied reentry"690. By shaping the content of the political community in this way, citizenship legislation is therefore a cogent source from which outsiders or foreigners to the political community can be identified. Over the decades, the fluctuating definition of a citizen has also caused fluctuating norms that govern the application of the power in s 51(xix) of the Constitution to make laws with respect to aliens. Putting to one side citizenship by naturalisation or registration, which might also be seen as shaping norms concerning integration into the Australian community, the Nationality and Citizenship Act provided that Australian citizenship was acquired: (i) by birth in Australia ("citizenship by birth")691; (ii) upon the registration of their birth, by a person whose father was an Australian citizen or, if the person was born out of wedlock, a person whose mother was an Australian citizen or British subject ordinarily resident in Australia or New Guinea ("citizenship by descent")692; or (iii) upon declaration by the Governor-General, by the people in a territory that is incorporated within Australia, "by reason of their connexion with that territory"693 ("citizenship by incorporation of territory"). Over the next 36 years, the Nationality and Citizenship Act was amended to provide, among other things: (i) that citizenship by descent could be acquired through married parents if either the mother or father was an Australian citizen694; (ii) for the presumed citizenship of children found abandoned in Australia unless 689 (1908) 7 CLR 277 at 289. 690 United States v Valentine (1968) 288 F Supp 957 at 980. 691 Nationality and Citizenship Act 1948 (Cth) (as made), s 10(1); see also s 25(1)(a). 692 Nationality and Citizenship Act 1948 (Cth) (as made), s 11(1); see also s 25(3), (5). 693 Nationality and Citizenship Act 1948 (Cth) (as made), s 33. 694 Citizenship Act 1969 (Cth), s 7. Edelman and until the contrary was proved695; (iii) for the avoidance of statelessness, that a person born in Australia who had never been a citizen of any country could apply for and was to be granted citizenship696; (iv) for citizenship to be acquired by a person adopted by an Australian citizen, provided that person was, at the time of adoption, a permanent resident697; (v) for the removal of distinctions between people born within or outside of marriage for the purpose of citizenship by descent698; (vi) for citizenship by descent, a requirement that, if the relevant parent is themselves a citizen by descent, they had been lawfully present in Australia for at least two years at any time prior to seeking to register the child as a citizen699; and (vii) for the conferral of citizenship by descent on the children of women who met the requirements of the transitional provisions in s 25(1)(a)-(c) of the Nationality and Citizenship Act700. In 2007, the Australian Citizenship Act 1948 (Cth), as the Nationality and Citizenship Act had by then become, was repealed701. The Australian Citizenship Act 2007 (Cth), which was passed in its place, retains the core concepts of citizenship by birth702, by adoption703, by abandonment in Australia704, by incorporation of territory705, and by descent706, as 695 Citizenship Act 1969 (Cth), s 5(d). 696 Australian Citizenship Act 1973 (Cth), s 12. 697 Australian Citizenship Amendment Act 1984 (Cth), s 10. 698 Australian Citizenship Amendment Act 1984 (Cth), s 10. 699 Australian Citizenship Amendment Act 1984 (Cth), s 10. 700 See Nationality and Citizenship Act 1948 (Cth) (as made), s 25(3). 701 Australian Citizenship (Transitionals and Consequentials) Act 2007 (Cth), Sch 1 item 42. 702 Australian Citizenship Act 2007 (Cth), s 12. 703 Australian Citizenship Act 2007 (Cth), ss 13, 19C. 704 Australian Citizenship Act 2007 (Cth), s 14. 705 Australian Citizenship Act 2007 (Cth), s 15. 706 Australian Citizenship Act 2007 (Cth), s 16. Edelman well as secondary concepts like the power to grant citizenship to prevent statelessness707, among others. Despite the fluctuation, two central matters that have remained among the norms of political community have been the traditional factors of place of birth (ius soli) and citizenship of a parent or parents (ius sanguinis). At Federation, English and United States common law placed most emphasis on the place of birth708. But many nations of Continental Europe, including France and Prussia, focused more heavily upon descent709. In 1862, Dr von Bar argued that "by the laws of all nations", nationality was "closely dependent on descent"710. This rule was, Dr von Bar said, the "correct canon, since nationality is in its essence dependent on descent"711. As explained in the introduction to these reasons, the Solicitor-General of the Commonwealth submitted that one limit to legislative power to alter the content of political community lay in the combination of the central norms of birth and descent. Apparently drawing upon, and making more extreme, an example from Gaudron J712, the Solicitor-General of the Commonwealth accepted that a person could never be an alien if the person satisfied the tests of ius soli and ius sanguinis by birth in Australia to two parents who were solely Australian citizens and the person had not renounced their allegiance. No explanation was given for why the combination of birth and descent was, or should be, the only indelible 707 Australian Citizenship Act 2007 (Cth), s 21(8). 708 Calvin's Case (1608) 7 Co Rep 1a at 18a [77 ER 377 at 398-399]; Blackstone, Commentaries on the Laws of England (1765), bk 1, ch 10 at 361-362. See also Parry, Nationality and Citizenship Laws of The Commonwealth and of The Republic of Ireland (1957) at 34. 709 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance (1869) at viii; Cockburn, Nationality: or the Law Relating to Subjects and Aliens (1869) at 187. 710 von Bar, Das Internationale Privat- und Strafrecht (1862) at 92 §31. See von Bar, International Law: Private and Criminal, tr Gillespie (1883) at 99 §31. 711 von Bar, Das Internationale Privat- und Strafrecht (1862) at 92 §31. See von Bar, International Law: Private and Criminal, tr Gillespie (1883) at 99-100 §31. 712 Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 179 [54], requiring birth in Australia and the Australian citizenship of one parent. Edelman example of membership of the political community that is beyond legislative power with respect to aliens. The reason that the combination of birth and descent is a norm of political community that is indelible subject only to renunciation is that these factors evince fundamental norms of attachment to country. Of the two factors, the common law placed great emphasis upon the birth of a child in the country as establishing the necessary attachment to country. But the emphasis of the common law upon birth rather than parentage was sometimes doubted. In 1869, the Lord Chief Justice of England wrote extra-judicially that, "in the vast majority of instances", a child left to their own choice between nationality based on parentage or place of birth would choose the former. He continued713: "And the reason is obvious. Personal attachments are stronger than local ones. The place of birth is an accident; the associations connected with it are fleeting and uncertain; while the domestic ties and the relations of family and kindred are powerful and enduring. ... The impression thus produced in early youth remains, and strengthening with advancing years develops itself into the national attachment which we designate by the term of patriotism. Descent, therefore, affords the true rule for determining nationality." The Lord Chief Justice acknowledged, however, that there was "general agreement" as to two related exceptions to nationality based on parentage which also illustrate the centrality of attachment to country: (i) where the child was raised in a country in which their parents had become domiciled but which was different from the country of the parents' nationality; and (ii) where for two generations the ancestors of a person have been domiciled in a foreign country714. Indigenous persons and the Australian political community Indigenous non-citizens, with their powerful personal attachment to land, fall within the same intermediate region of "non-citizen, non-alien" as denizens and other protected persons. As Professor Volpp observed of the members of the "Indian Tribes", described in Art I, s 8, cl 3 of the United States Constitution, "key concepts" such as "citizen" and "alien" cannot "address the actual relationship 713 Cockburn, Nationality: or the Law Relating to Subjects and Aliens (1869) at 187- 714 Cockburn, Nationality: or the Law Relating to Subjects and Aliens (1869) at 188- Edelman between the nation-state and indigenous peoples. [American] Indians have been considered citizen and alien, as well as neither citizen nor alien"715. The legal position of American Indians cannot be directly compared with Aboriginal and Torres Strait Islander people of Australia. Even before the uniform grant of their United States citizenship in 1924716, American Indians were expressly given legal recognition as "distinct, independent, political communities, retaining their original natural rights, as the undisputed possessors of the soil"717 when they "live together as a distinct community, under their own laws, usages and customs"718. Nevertheless, the basic difficulty involved in characterising American Indians as aliens is the same as that for Aboriginal people of Australia: "[w]e call an alien a foreigner, because he is not of the country in which we reside"719. Professor McHugh has observed that in Australia, unlike New Zealand and North America, "both law and practice revealed scant, indeed a virtually non- existent, recognition of the reality of Aboriginal political organization, so blind were the settlers to it"720. Yet, despite the limited understanding and recognition of Aboriginal society at Federation, the Aboriginal people in Australia were not regarded as aliens to the political community. It would be an astonishing result if, on the one hand, Aboriginal people were a necessary part of the "people of Australia" and the Australian political community in 1901 despite the exclusionary nineteenth century racial application of the aliens power and despite the scant recognition of the reality of Aboriginal community ties to Australia, and yet, on the other hand, Aboriginal people were to fall outside the same political community upon a more sophisticated, inclusive concept of community that has been shaped by legislative and judicial developments following the recognition of the realities of Aboriginal society and the effect upon it of the acts of Parliament and the executive. 715 Volpp, "The Indigenous as Alien" (2015) 5 UC Irvine Law Review 289 at 293. 716 Indian Citizenship Act, c 233, 43 Stat 253 (1924). 717 Worcester v Georgia (1832) 31 US 515 at 559. 718 Cherokee Nation v Georgia (1831) 30 US 1 at 60. See also Worcester v Georgia 719 Cherokee Nation v Georgia (1831) 30 US 1 at 56 (emphasis added). 720 McHugh, Aboriginal Societies and the Common Law (2004) at 191. Edelman Significant legislative and judicial developments since Federation have been premised upon recognition of Aboriginal community in Australia. As Brennan J said in Mabo v Queensland [No 2]721, "it is imperative in today's world that the common law should neither be nor be seen to be frozen in an age of racial discrimination". There, the law developed to recognise the reality that the indigenous inhabitants of Australia lived in societies in accordance with laws and customs that required the recognition of their entitlements to land. The powerful spiritual and cultural connection that Aboriginal people have with the land – the "religious relationship"722 – is, by definition, a powerful spiritual and cultural connection with the defined territory of Australia. Just as the attachment to country that arises from citizenship of parents and birth in the defined territory can be an underlying basis for membership of political community independent of citizenship legislation, so too are the powerful spiritual and cultural connections between Aboriginal people and the defined territory of Australia. Native title rights and interests require a continuing connection with particular land723. However, underlying that particular connection is the general spiritual and cultural connection that Aboriginal people have had with the land of Australia for tens of thousands of years724. In other words, underlying a connection to any particular land is a general, "fundamental truth ... an unquestioned scheme of things in which the spirit ancestors, the people of the clan, particular land and everything that exists on and in it, are organic parts of one indissoluble whole"725. Sometimes events, including the cessation of the existence of a particular Aboriginal society, cause the loss of native title rights to land726. But the loss of those rights to, and the relationship with, particular land, or even the effluxion of particular Aboriginal societies, does not extinguish the powerful spiritual and cultural connections Aboriginal people have generally with the lands of 721 (1992) 175 CLR 1 at 41-42. 722 Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 167. 723 Western Australia v Ward (2002) 213 CLR 1 at 72 [32], 85 [64]; Native Title Act 1993 (Cth), s 223(1). 724 Gerhardy v Brown (1985) 159 CLR 70 at 149. 725 Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 167. See also R v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 at 356-357; Western Australia v Ward (2002) 213 CLR 1 at 64 [14]; Northern Territory v Griffiths (2019) 93 ALJR 327 at 368 [153]; 364 ALR 208 at 255. 726 Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422 at 446 [53]. Edelman Australia727. Those connections are inextricably part of Aboriginal identity as members of the broader community of the first people of the Australian land generally. The very words "Aboriginal" and "indigenous", ab origine or "from the beginning", enunciate a historical, and original, connection with the land of Australia generally. The sense of identity that ties Aboriginal people to Australia is an underlying fundamental truth that cannot be altered or deemed not to exist by legislation in the same way that changing legislative definitions of citizenship cannot alter the fundamental truth underlying identity that is shaped by the core combined norms that metaphorically tie a child to Australia by birth and parentage. Legislative developments since Federation have expanded the rights and treatment of Aboriginal people towards equality with other members of the Australian political community, including by the enactment of the Racial Discrimination Act 1975 (Cth). The same expansion occurred in relation to the federal franchise. Shortly after Federation, s 4 of the Commonwealth Franchise Act 1902 (Cth) excluded Aboriginal people of Australia and various other nations from the federal franchise, unless entitled to vote under State laws as preserved by s 41 of the Constitution728. Further exceptions to the exclusion were introduced, including for Aboriginal people of Australia who were entitled to vote under State laws, without resort to s 41 of the Constitution, or who were or had been members of the Defence Force729. In 1962, s 2 of the Commonwealth Electoral Act 1962 (Cth) gave all Aboriginal people the right to enrol and, by removal of an exemption730, in 1984 they had the duty to enrol731. The Commonwealth effectively submitted that this movement towards equality before the law requires Aboriginal non-citizens to be stripped of their membership of the Australian political community in order to ensure that they are treated equally with other, non-Aboriginal non-citizens. In other words, the expansion of Aboriginal rights has assimilated Aboriginal people within a unitary, homogenous political community that is defined almost entirely by legislative norms of citizenship. This view reflects a human inclination toward homogeneity 727 Northern Territory v Griffiths (2019) 93 ALJR 327 at 377 [206], 379 [223]; 364 ALR 208 at 267-268, 271. 728 See also Commonwealth Electoral Act 1918 (Cth), s 39(5); Commonwealth Electoral Act 1925 (Cth), s 2. 729 Commonwealth Electoral Act 1949 (Cth), s 3(b); Commonwealth Electoral Act 1961 (Cth), s 4. 730 Commonwealth Electoral Act 1962 (Cth), s 3. 731 Commonwealth Electoral Legislation Amendment Act 1983 (Cth), s 28(j). Edelman which Hume described as the "narrowness of soul" which makes people prefer that which is more proximate over that which is more remote732. It also misunderstands the concept of equality before the law. To treat differences as though they were alike is not equality. It is a denial of community. Any tolerant view of community must recognise that community is based upon difference. As Professor Detmold has written733: "Suppose I see only green and you see only red. Do we have community in this simple matter of our example? No, because I live in a green world and you live in a red one – two worlds, not a common (communal) world. But when we recognise each other's difference then and only then is there a common world as the foundation of a community between us ... For one of us to impose their view on the other (in our example, one of us insisting that it is the other who is colour-blind) is a denial of respect for the other, and therefore a denial of our community." In any event, the expansion of Aboriginal rights by Commonwealth legislation does not require an identical treatment of Aboriginal and non- Aboriginal people in the shaping of the political community. In the Native Title Act 1993 (Cth), the Commonwealth Parliament recited that "[t]he people whose descendants are now known as Aboriginal peoples and Torres Strait Islanders were the inhabitants of Australia before European settlement. They have been progressively dispossessed of their lands."734 Our legal system would involve a hopeless and incoherent contradiction if it were simultaneously: (i) to recognise and implement this recitation; and (ii) to conclude that those same descendants, identifying and recognised as such, have now become foreigners to the Australian political community. Absurd consequences? The Solicitor-General of the Commonwealth submitted that a consequence of treating Aboriginal persons as beyond the reach of the aliens power was that a 60 year old foreign citizen who had lived overseas all of their life could move to Australia and, by being accepted into an Aboriginal community, lose their status as an alien. It might be doubted that there are significant numbers of foreign sexagenarians awaiting their acceptance as indigenous by Aboriginal communities 732 Hume, A Treatise of Human Nature, ed Selby-Bigge (1896), bk 3 at 537. 733 Detmold, "Law and Difference: Reflections on Mabo's Case", in Essays on the Mabo Decision (1993) 39 at 39. 734 Native Title Act 1993 (Cth), preamble. Edelman in Australia. This is the type of "exercise in imagination"735, "extreme example"736, "absurd possibility"737 or "distorting possibility"738 about which this Court has repeatedly warned in constitutional interpretation739, including in relation to the aliens power740. The interpretation of s 51(xix) of the Constitution is also not assisted by the submission that Aboriginal people who moved overseas and whose families lived overseas for multiple generations might claim to be non-aliens. Again, it might be seriously doubted whether there are significant numbers of Aboriginal people who have lived overseas for generations, maintaining mutual recognition and Aboriginal identity. A final submission by the Commonwealth was that the consequence of treating Aboriginality as a status of non-alienage is that the power of the Commonwealth Parliament to legislate would depend upon the "choices or views of individuals". The immediate answer to this submission is that a determination of the application of the concept of "alien" remains a matter for the courts even if one factor to be taken into account is the views of individuals. The same point can be made about s 51(xxvi) of the Constitution. It might be doubted whether the application today of the difficult concept of "race" could be confined to matters of physical characteristics or genetics without any role for the views of individuals. In any event, there is no basis for the underlying assumption that the application of constitutional concepts is fixed in time so that Aboriginal identity in the Constitution, whether for the purposes of s 51(xix) or s 51(xxvi), could only be determined by physical characteristics or genetics. Further, unless "alien" means whatever the Commonwealth Parliament says that it means, the power of the Commonwealth Parliament to legislate will always depend upon exogenous 735 Western Australia v The Commonwealth (1975) 134 CLR 201 at 271. 736 Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 380 [87]; Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 43 [32]. 737 Western Australia v The Commonwealth (1975) 134 CLR 201 at 275. 738 Western Australia v The Commonwealth (1975) 134 CLR 201 at 275; Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 381 [88]; Egan v Willis (1998) 195 CLR 424 at 505 [160]; Singh v The Commonwealth (2004) 222 CLR 322 at 384 [155]; XYZ v The Commonwealth (2006) 227 CLR 532 at 549 [39]. 739 See Wainohu v New South Wales (2011) 243 CLR 181 at 240 [151]. 740 Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at Edelman matters such as the choices or views of individuals. A child born in Australia to parents who are solely Australian citizens is only outside the scope of s 51(xix) due to the choices of the child's parents, including their choices to apply for and obtain Australian citizenship before the birth of their child, in some cases, and to give birth in Australia. Mr Love and Mr Thoms In Mabo v Queensland [No 2]741, Brennan J said that "[m]embership of the indigenous people depends on biological descent from the indigenous people and on mutual recognition of a particular person's membership by that person and by the elders or other persons enjoying traditional authority among those people". This tripartite test was neither new nor novel. It was similar to the approach taken in s 4(1) of the Aboriginal Land Rights Act 1983 (NSW) and the approach of Deane J in The Commonwealth v Tasmania (The Tasmanian Dam Case)742. The tripartite test was applied in Mabo [No 2] as a means to identify those members of a particular sub-group of indigenous people who enjoy continuing connection with particular land. It can be usefully applied in this case. However, it is not set in stone, particularly as an approach to determining Aboriginality as the basis for those fundamental ties of political community in Australia which are not dependent upon membership of a particular sub-group743. Although Mr Love is a citizen of Papua New Guinea, having been born there in 1979 after independence of that country from Australia in 1975, his identity as an Aboriginal man is based upon: (i) his paternal great-grandparents, who were descended "in significant part from people who inhabited Australia immediately prior to European settlement"; (ii) his self-identification as a descendant of the Kamilaroi tribe; and (iii) his recognition as such a descendant by an elder of that tribe. Although Mr Thoms is a citizen of New Zealand, having been born there in 1988, the parties agree that he is an Aboriginal man. He identifies, and is accepted by other Gunggari People, as a member of the Gunggari People. As a Gunggari man he is a holder of native title. The native title determinations that recognised the rights of the Gunggari People quoted from a report that said744: 741 (1992) 175 CLR 1 at 70. 742 (1983) 158 CLR 1 at 274. 743 See The Tasmanian Dam Case (1983) 158 CLR 1 at 274. 744 Kearns on behalf of the Gunggari People #2 v Queensland [2012] FCA 651 at [22]; Foster on behalf of the Gunggari People #4 v Queensland [2019] FCA 1402 at Edelman "Despite the odds, determined efforts on the part of the Gunggari to maintain knowledge of country, of kin and countrymen, and of Gunggari law and custom – both on country and at a remove – ensured the survival of Gunggari society. Present Gunggari society may be seen as substantially continuous with that existing at presovereignty." As to whether Mr Love and Mr Thoms meet the tripartite test for recognition as members of an Aboriginal community, it is unnecessary to descend to the detail of any inferences that can be drawn from the agreed facts. At one point in oral submissions, the Solicitor-General of the Commonwealth accepted that Mr Love and Mr Thoms were Aboriginal, properly adding that the Commonwealth was "conscious of the historical difficulties that have attended questions of definition in relation to Aboriginal persons" and saying that the case had therefore been approached at a higher level of principle. The Commonwealth's position was clarified in a written response to the Senior Registrar of this Court after the first hearing in which it was explained that "the Commonwealth prefers not to take a position on the state of the agreed facts". In short, the Commonwealth has never disputed that the agreed facts might be sufficient for the plaintiffs' asserted conclusion that both men are Aboriginal. The process of agreeing the facts of a special case to be presented to this Court takes place against the background of the issues understood to be in dispute. A plaintiff needs to introduce sufficient facts to satisfy the Court, but that sufficiency can be shaped by the matters in dispute. The position in relation to Mr Thoms is plain. It is an agreed fact that Mr Thoms is an Aboriginal man. As for Mr Love, the lack of any dispute about the sufficiency of recognition of him as a member of an Aboriginal community means that there has been no contest against which to consider issues that might surround the application of the tripartite test, including: (i) whether the tripartite test, developed in the context of native title, and involving issues of recognition by sub-groups of Aboriginal people, should be adapted in the context of application of provisions such as s 51(xix) or s 51(xxvi); (ii) whether the limbs of the tripartite test are each part of a continuum from weakness to strength; and (iii) whether the limbs are interrelated so that a weaker factual basis in one limb could be compensated for by a stronger factual basis in others745. In the absence of any contest on this point, and in circumstances in which there is force in each of the three propositions above and in which it is plainly open to treat Mr Love as Aboriginal, the assumption upon which the agreed facts proceeded, namely that Mr Love is Aboriginal, should be accepted. [20]. See also Foster on behalf of the Gunggari People #3 v Queensland [2014] FCA 745 See, for instance, Gibbs v Capewell (1995) 54 FCR 503 at 512; Shaw v Wolf (1998) 83 FCR 113 at 119. Edelman As mentioned earlier in these reasons, each plaintiff also relied upon numerous facts whose relevance was to show the integration of each plaintiff into the Australian community. For instance, in relation to Mr Love these facts include: his paternal grandfather served with Australian military forces; his father was born an Australian citizen in the Territory of Papua; his mother lived in Australia for 19 years until she died; he arrived in Australia 34 years ago with his parents and has lived in Australia continuously since then on either a permanent residency visa or a BF transitional (permanent) visa; he was married to an Australian citizen; and he has five children, who are Australian citizens. In relation to Mr Thoms the facts include: his maternal great-grandparents and grandparents were born in Australia and lived their lives in Australia (his grandmother continues to live in Australia); his mother was born in Australia, married his father, a New Zealand national, and has resided permanently in Australia with his father since 1994; his father became an Australian citizen in 2009; and Mr Thoms himself has resided in Australia since 1994, as, it seems, has his brother, and, since their respective dates of birth, his sister (an Australian citizen) and his child (also an Australian citizen). Ultimately, it is unnecessary to consider the effect of the absorption of Mr Love and Mr Thoms into the Australian community upon the application of norms of political community. As I have explained, although absorption into the community might be a relevant factor, the course of authority in this Court denies that it is sufficient. The sufficiency of the plaintiffs' identity as Aboriginal people makes it unnecessary to explore this issue further. It is also unnecessary to consider the circumstances in which an Aboriginal person might become an alien. It is possible for a person who is a non-alien to become an alien. In relation to non-Aboriginal people, one obvious manner in which this can occur is by renunciation of citizenship. So too, the renunciation of Aboriginal identity by a non-citizen might transform the status of that person from non-alien to alien. Other circumstances need not be considered because they do not arise here. The Commonwealth did not suggest that Mr Love or Mr Thoms had engaged in any conduct, or was the subject of any circumstance including de- identification or non-recognition from his Aboriginal community, that could alter his status from non-alien to alien. Conclusion A premise of the submissions of all parties and the intervener to these special cases, consistently with the same premise in previous cases in this Court746, 746 See also Singh v The Commonwealth (2004) 222 CLR 322 at 327. Edelman solidly based upon repeated statements in this Court747, is that the constitutional concept of an alien is not co-terminous with any persons whom the Commonwealth Parliament chooses to make statutory citizens. That long-standing assumption is correct. Political community is not a concept that is wholly a creature of legislation. For example, a child born in Australia to two parents who have only Australian citizenship is not an alien. The metaphysical ties between that child and the Australian polity, by birth on Australian land and parentage, are such that the child is a non-alien, whether or not they are a statutory citizen. The same must also be true of an Aboriginal child whose genealogy and identity includes a spiritual connection forged over tens of thousands of years between person and Australian This conclusion could only be avoided by denying its premise, so that the children in both scenarios are capable of being aliens according to the definition of citizen chosen by the Commonwealth Parliament. That approach would be contrary to the essential meaning of s 51(xix), which is not tied to the state of legislation. It would deny the long-standing existence of a category of persons who are non-citizens and non-aliens. It would effectively allow the Commonwealth Parliament to recite itself into power. To the extent that such an approach might be said to be based upon a concern for equality within the political community, it would involve a misunderstanding of both equality and community. And, by denying the unquestioned premise and authority upon which every party and the intervener proceeded in these special cases, it would deny Aboriginal people the essence of their identity without giving any party or the intervener, or any of the population of more than half a million Aboriginal or Torres Strait Islander people or their representative bodies, the opportunity to be heard on the point. I would answer the questions in each special case as follows: Question: Is the plaintiff an "alien" within the meaning of s 51(xix) of the Constitution? Answer: Question: Who should pay the costs of the special case? 747 Pochi v Macphee (1982) 151 CLR 101 at 109; Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 435-436 [132], 469-470 [238], 490 [297], 491-492 [303]; Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 36 [9]; Singh v The Commonwealth (2004) 222 CLR 322 at 329 [4]-[5], 382-383 [151]; Koroitamana v The Commonwealth (2006) 227 CLR 31 at 54-55 [81]. 748 Western Sahara (Advisory Opinion) [1975] ICJR 12 at 85. See also Mabo v Queensland [No 2] (1992) 175 CLR 1 at 41. Edelman Answer: The defendant. |
HIGH COURT OF AUSTRALIA AND THE QUEEN APPELLANT RESPONDENT Adams v The Queen [2008] HCA 15 23 April 2008 ORDER Appeal dismissed. On appeal from the Supreme Court of Victoria Representation L C Carter with C B Boyce for the appellant (instructed by Leanne Warren & Associates) W J Abraham QC with R R Davis for the respondent (instructed by Director of Public Prosecutions (Cth)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Adams v The Queen Criminal law – Sentencing – Federal offences – Appellant convicted of possessing a "commercial quantity" of the narcotic MDMA (ecstasy) – Customs Act 1901 (Cth) fixed the commercial quantities of certain narcotics and imposed maximum penalties that did not distinguish between the narcotics – Whether appellant should have been sentenced on the basis that MDMA was less harmful than heroin. Practice and procedure – Appellant did not demonstrate factual assertion that MDMA was less harmful than heroin – Whether controversy "moot" or "academic". Words and phrases – "commercial quantity", "moot", "trafficable quantity". Customs Act 1901 (Cth), ss 233B, 235. GLEESON CJ, HAYNE, CRENNAN AND KIEFEL JJ. Following a trial by jury in the County Court of Victoria, the appellant was convicted of possessing, on 9 January 2004, prohibited imports contrary to s 233B of the Customs Act 1901 (Cth) ("the Customs Act"). The prohibited imports in question were 19.927 kilograms of a mixture that contained 8.916 kilograms of MDMA, commonly known as ecstasy. The appellant, a United States citizen temporarily in Australia, had been charged following the interception by the authorities of containers shipped to Australia from overseas. The Customs Act adopted (and the Criminal Code (Cth) as amended since the relevant time adopts) a quantity-based penalty regime, fixing "trafficable" and "commercial" quantities of certain drugs, distinguishing between those drugs in setting such trafficable and commercial quantities, but otherwise making no distinction between them in terms of maximum penalties. Under s 235 of the Customs Act, offences involving a trafficable quantity of narcotic goods carry a maximum penalty of imprisonment for 25 years and/or a fine not exceeding $500,000, and offences involving a commercial quantity of such goods carry a maximum penalty of imprisonment for life and/or a fine not exceeding $750,0001. For example, the trafficable quantity of cocaine was 2 grams; that of heroin was 2 grams; that of MDMA was 0.5 grams. The commercial quantity of cocaine was 2 kilograms; that of heroin was 1.5 kilograms; that of MDMA was 0.5 kilograms. This legislative approach, which recognises the financial rewards available from dealing in illicit drugs, thus differentiates between various narcotic substances in designating the trafficable and commercial quantities, but applies the same penalty regime to the quantities so designated2. It may be contrasted with legislation in New Zealand3 and Canada4, which grades drugs according to a legislative perception of their harmfulness, and prescribes penalties based on harmfulness rather than quantities. (The Court was informed 1 The amounts are as set out in the respondent's written submissions. The legislation is expressed in terms of penalty units, the value of which changes from time to time. 2 See Zeccola (1983) 11 A Crim R 192. An example of a similar State-based penalty regime is the Victorian legislation considered in R v Pidoto and O'Dea (2006) 14 3 Misuse of Drugs Act 1975 (NZ). 4 Controlled Drugs and Substances Act 1996 (Can). Hayne Crennan that in each of those jurisdictions MDMA falls within the most serious class of drugs.) Because of the limited nature of the issue raised in this appeal, the circumstances of the importation in which the appellant was involved, and his personal background, are presently irrelevant. It is sufficient to say that, as appears from the above figures, the quantity of MDMA in the appellant's possession substantially exceeded the amount required for a commercial quantity. The appellant was sentenced to imprisonment for nine years from the date of sentence (having been in custody for 260 days), and was made eligible for parole after seven years. The argument for the appellant is based on the second sentence of the following paragraph in the trial judge's remarks on sentence: "The serious nature of your offending is indicated by the maximum penalty of life imprisonment that has been prescribed by the legislature. In general terms the courts equate ecstasy, in terms of sentencing, as being similar to heroin. Your role in relation to this very large quantity of drugs was a significant one. Your reward was to be more than the free holiday trip [from the United States of America] that you referred to in evidence. The deterrence of you and more importantly, of others who might be tempted to be involved in the drug trade, is the primary sentencing consideration." The second sentence was an observation that, generally speaking, importing or possessing ecstasy is taken as seriously for sentencing purposes as importing or possessing heroin. Since the maximum penalty prescribed by the life Customs Act for possessing a commercial quantity of both was imprisonment, and since the appellant possessed many times the commercial quantity of MDMA, the observation, in the context of the present case, was unexceptionable. Yet the appellant contends that it represented a serious error. The appellant sought unsuccessfully to persuade the Court of Appeal of Victoria5, and seeks to persuade this Court, that he should have been sentenced, and should now be re-sentenced, in the words of his counsel, "on the basis that the narcotic he was found in possession of on 9 January 2004, MDMA, or ecstasy, is less harmful to users and to society than heroin." 5 R v Adams [2007] VSCA 37. Hayne Crennan That proposition invites deconstruction. As a matter of law, the appellant was to be sentenced in accordance with the provisions of the Customs Act referred to above, and of the Crimes Act 1914 (Cth), Pt IB, especially s 16A. When invited to identify the aspect of s 16A that was directly relevant to his argument, counsel referred to s 16A(2)(a), which requires the sentencing judge to take account of the nature and circumstances of the offence. It was, of course, common ground that in a given case s 16A(2)(e) will require a judge to take account of the injury, loss or damage resulting from an offence, but, in this case, which involved an interception of a drug importation before any of the product reached consumers, there was no such injury or damage. The most obvious feature of the nature and circumstances of the case of present relevance is that the prohibited drug was MDMA, and that the appellant was in possession of the quantity mentioned above. The relationship of that quantity to the commercial quantity was a matter of mathematical calculation. The appellant, however, argued for a further refinement based upon the fact that the drug was not heroin. The appellant's entire argument is based on the factual assertion that "MDMA ... is less harmful to users and to society than heroin." The quantities in contemplation for the purposes of that comparison are unspecified. How much MDMA is being compared with how much heroin? Other aspects of the meaning of the proposition are equally unclear. Harm to users and society is a protean concept. Counsel had understandable difficulty explaining exactly what the proposition means, let alone demonstrating, by evidence available to the sentencing judge or matters of which a court could take judicial notice, that it was true. What kinds of user, and what kinds of harm to society, are under consideration? The social evils of trading in illicit drugs extend far beyond the physical consequences to individual consumers. As the Victorian Court of Appeal pointed out in R v Pidoto and O'Dea6, "questions arise as to whether the perniciousness of a substance is to be assessed by reference to the potential consequences of its ingestion for the user, or its effect upon the user's behaviour and social interactions, or the overall social and economic costs to the community." Furthermore, in relation to some of these matters, scientific knowledge changes, and opinions differ, over time. Generalisations which seek to differentiate between the evils of the illegal trade in heroin and MDMA are to be approached with caution, and in the present case are not sustained by evidence, or material of which judicial notice can be taken. (2006) 14 VR 269 at 282 [59]. Hayne Crennan An equally serious difficulty for the appellant's argument is in seeking to reconcile it with the scheme of the Customs Act in relation to penalties. In fixing the trafficable and commercial quantities of heroin and MDMA respectively, and applying the same maximum penalties to the quantities so fixed, Parliament has made its own judgment as to an appropriate penal response to involvement in the trade in illicit drugs. The idea that sentencing judges, in the application of that quantity-based system, should apply a judicially constructed harm-based gradation of penalties (quite apart from the difficulty of establishing a suitable factual foundation for such an approach) cuts across the legislative scheme. This problem was recognised by the Court of Criminal Appeal of New South Wales in R v Poon7. A similar problem in relation to Victorian legislation underlay the decision in Pidoto and O'Dea noted above. Of course, the fixing of a maximum penalty is not the end of the matter, as was emphasised in Ibbs v The Queen8. But there is nothing in the Customs Act, or the evidence, or the demonstrated state of available knowledge or opinion, which requires or permits a court to sentence on the basis that possessing a commercial quantity of MDMA is in some way less anti-social than possessing a commercial quantity of heroin. Furthermore, the sentencing judge's primary consideration was deterrence. That is not said to involve error. Why there should be a difference in that respect between heroin and MDMA was not explained. The appellant has failed to demonstrate either a legal or a factual foundation for the contention that he should have been sentenced on the basis that MDMA is less harmful than heroin. The appeal should be dismissed. (2003) 56 NSWLR 284 at 286 [3]-[5] and 293-295 [34]-[43]. (1987) 163 CLR 447; [1987] HCA 46. HEYDON J. The appellant contended that he had been sentenced on a wrong basis, namely, that MDMA was not less harmful than heroin. The appellant's primary arguments were arguments of statutory construction but he accepted that they were bound up with a factual proposition – that MDMA is "less harmful ... than heroin". Even if the difficulties analysed in the joint judgment in relation to the meaning of that factual proposition9 are put aside, the appellant did not demonstrate that the factual proposition was in any sense true. He did not point to any evidence before the sentencing judge suggesting that the factual proposition was true. He did not identify any evidence as to its truth which he was in a position to call before the court having the responsibility of re-sentencing him. He relied upon a statement by the Supreme Court of the Australian Capital Territory10 that there was "no justification on the evidence ... for treating MDMA as being more harmful than cannabis", but that was a tentative statement of what the evidence before that Court did not establish, as opposed to what it did establish, and it was not directed to a comparison between MDMA and heroin. He also relied on a statement by the Western Australian Court of Criminal Appeal that MDMA was "less serious than LSD, cocaine or heroin"11. That statement was based on evidence given by an expert before the sentencing judge in that case, and on information set out in literature provided by the Crown on the hearing of the application for leave to appeal against sentence. The evidence was not described, although the submissions of counsel based on the literature, assuming it to have been admissible, were quoted. A finding of fact by one court does not bind another in unrelated proceedings. It does not appear open to take judicial notice of the proposition stated by the Western Australian Court of Criminal Appeal: it was made nearly 20 years ago, and the field is likely to be one in which, unfortunately, human experience has become much more extensive, although not necessarily decisive. Hence it is not a proposition of which judicial notice could be taken, at least without further inquiry. That is equally true of cases which the appellant submitted showed the courts resisting acceptance of the contrary of the appellant's proposition. The appellant also relied on the contention that while judicial notice had been taken of the harmfulness of heroin, there were no equivalent instances of judicial notice being taken about the harmfulness of MDMA. This is not a legitimate mode of reasoning, in the absence of demonstration (which did not take place) that the courts taking judicial notice about heroin had in mind a comparison with MDMA; even if that had been demonstrated, this reasoning from silence would be highly questionable. 10 R v Crocker (1992) 107 FLR 63 at 68. 11 R v Robertson (1989) 44 A Crim R 224 at 230. It follows that the appellant did not demonstrate either that MDMA was "less harmful than heroin", or that there was any chance that the re-sentencing court would accept that proposition. The appellant was thus not able to show that if the appeal were allowed there would be any difference in the appellant's sentence. Counsel for the appellant put forward learned and forceful submissions; but that is not enough to make the controversy about them anything other than moot and academic. The appellant's argument invited the Court to answer a question which was hypothetical only. It solicited an advisory opinion. The appellant has no interest in the outcome of his construction arguments, because he will not gain any advantage from their success beyond "righting a wrong, upholding a principle or winning a contest"12 and he will suffer no disadvantage from their failure beyond, perhaps, "a sense of grievance"13. The appellant raised a controversy, but he failed to allege "such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of largely depends for illumination"14. Without that sharpening, it is inappropriate to seek to resolve the issues of statutory construction raised by the appellant. The appellant's contentions on those issues are irrelevant to the outcome, since even if the contentions were successful, they could not assist him unless he had some prospect of pointing to material which might support the factual proposition he relied on. He did not demonstrate that there was any prospect of that kind. issues upon which the court so In those circumstances the grant of special leave should be revoked. 12 If MDMA is not "less harmful ... than heroin", the order of the sentencing judge did the appellant no wrong and contravened no sentencing principle. 13 Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493 at 14 Baker v Carr 369 US 186 at 204 (1962), approved in Robinson v Western Australian Museum (1977) 138 CLR 283 at 344-345 per Murphy J; [1977] HCA 46, Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493 at 530 per Gibbs J and Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 318 per Brennan J; [1991] HCA 53. |
HIGH COURT OF AUSTRALIA NAIS & ORS AND APPELLANTS MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS & ANOR RESPONDENTS NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 77 14 December 2005 ORDER The Refugee Review Tribunal be added as the second respondent. Appeal allowed. The Minister pay the appellants' costs. Set aside the orders of the Full Court of the Federal Court made on 11 February 2004 and in their place order: the Refugee Review Tribunal be added as the second respondent; appeal allowed; the Minister pay the appellants' costs; set aside the orders of Hely J made in the Federal Court on 15 April 2003 and in their place, order that: the Refugee Review Tribunal be added as the second respondent; (ii) a writ of certiorari issue directed to the Refugee Review Tribunal, quashing its decision made on 20 December 2002 in matter N97/16702; (iii) a writ of prohibition issue directed to the Minister, prohibiting the Minister from giving effect to the Refugee Review Tribunal's decision made on 20 December 2002 in matter (iv) a writ of mandamus issue directed to the Refugee Review Tribunal, requiring it to determine according to law the application for review of the decision of the delegate of the Minister dated 27 May 1997 in matter N97/002078; the Minister pay the appellants' costs of the application under s 39B of the Judiciary Act 1903 (Cth). On appeal from the Federal Court of Australia Representation: C T Barry QC with B M Zipser for the appellants (instructed by Campbelltown City Lawyers) S J Gageler SC with G R Kennett for the first respondent (instructed by Australian Government Solicitor) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS NAIS v Minister for Immigration and Multicultural and Indigenous Affairs Immigration – Refugee Review Tribunal – Substantial delay between first Tribunal hearing and Tribunal decision – Whether delay resulted in real and substantial risk of prejudice to appellants – Whether prejudice to appellants can be inferred – Whether delay by administrative tribunal constitutes denial of procedural fairness or failure to conduct review as required by law – Whether decision of administrative tribunal may be set aside following substantial delay – Effect of delay on question of assessing appellants' demeanour – Calculation of the period of delay. Immigration – Refugee Review Tribunal – Migration Act 1958 (Cth), s 420 provides for an objective of administrative review that is "fair, just, economical, informal and quick" – Relevance of s 420 to complaint of delay – Special considerations relevant to delay in asylum cases. Administrative law – Jurisdictional error – Whether denial of procedural fairness – Significance of delay – Grounds for judicial review – Whether delay affected the Refugee Review Tribunal's capacity to make a proper assessment of demeanour – Whether there was a real and substantial risk that the Tribunal's capacity to assess the appellants was impaired. Administrative law – Judicial review – Assessment of fairness of procedures followed by administrative decision-maker – Substantial delay between first Tribunal hearing and Tribunal decision – Limited role of courts performing judicial review – Relevance of general notions of fairness and justice – Relevance of authority on delay in context of appeals against judicial determinations – Importance of contextual factors in assessing complaint of delay. Administrative law – Jurisdictional error – Substantial delay between first Tribunal hearing and Tribunal decision – Appropriate remedy where denial of procedural fairness due to substantial delay – Failure by appellants to seek mandamus – Whether relief should be refused on discretionary grounds. Words and phrases – "delay", "jurisdictional error", "procedural fairness". Migration Act 1958 (Cth), ss 420, 425(1), 430. GLEESON CJ. The issue in this appeal is whether a decision of the Refugee Review Tribunal ("the Tribunal"), which upheld a finding by a delegate of the first respondent that the appellants were not persons to whom Australia has protection obligations, and that they were not entitled to protection visas under the Migration Act 1958 (Cth) ("the Act"), involved jurisdictional error in the form of denial of procedural fairness. The unfairness is said to have resulted from what was described by Hely J, in the Federal Court at first instance, as "extraordinary delay". The application to the Tribunal to review the delegate's decision was made on 5 June 1997. The Tribunal held oral hearings on 6 May 1998 and 19 December 2001. The Tribunal's decision was handed down on 14 January 2003. That bare recital of events involves some over-simplification. During some of the above intervals there were communications between the Tribunal and representatives of the appellants, and it appears that the Tribunal took a deal of time to obtain "country information" relevant to the claims made by the appellants. It appears from the Tribunal's reasons that it found difficulty in evaluating the central claim of well- founded fear of persecution arising from the circumstances of the mixed marriage between the first and second appellants. The details of the claims made by the appellants are set out in the reasons of Callinan and Heydon JJ, and it is unnecessary to repeat them. There is no dispute that the delay on the part of the Tribunal was inordinate. There is nothing in the reasons of the Tribunal that seeks to explain or justify the delay. Nor is there anything in those reasons that recognises any possible effect of delay on the decision-making process, or seeks to explain how any possible problem resulting from the delay might have been taken into account or overcome. The reasons are expressed in a form that appears to treat the time involved in the Tribunal process as immaterial to the adjudicative function. The Full Court of the Federal Court divided on the issue with which we are concerned1. The majority (Hill J and Marshall J) found no jurisdictional error. Finkelstein J dissented. As will appear, I agree with the reasoning and conclusion of Finkelstein J. It is, however, important to note that there was no disagreement in the Federal Court, and there was no dispute in this Court, on the principles to be applied. The disagreement concerned the application of those principles to the particular, unusual, case. Undue delay in decision-making, whether by courts or administrative bodies, is always to be deplored. However, that comfortable generalisation does 1 NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 134 FCR 85. little to advance the task of legal analysis when it becomes necessary to examine the consequences of delay. The circumstances in which delay, of itself, will vitiate proceedings, or a decision, are rare. Of course, statutes of limitation impose a legislative direction that certain delays will bar proceedings; and analogous consequences may flow from the application of equitable principles. There is, however, nothing in the Act that prescribes a time limit for decisions of the Tribunal, and this Court has no power to determine some such limit2. A court may have power to relieve against oppressive conduct of a complainant, or a prosecutor, and delay may be a factor in the oppression3. In such circumstances, the ground for relief is the oppression, not the delay. A court of appeal, reviewing a decision of a primary judge, may conclude that delay in giving judgment has contributed to error, or made a decision unsafe. Again, the ground of appellate intervention is the error, or the infirmity of the decision, not the delay itself4. Where delay gives rise to a ground of supervisory or appellate intervention, the remedy must be tailored to the circumstances and justice of the case. In adversarial litigation, for example, neither party may be at fault, and it may be unnecessary and unjust to visit the successful party with all the consequences that flow from having to start again. Remedies available where delay has caused problems may be discretionary. (In the present case, counsel for the first respondent disclaimed any reliance upon a discretionary argument.) In some cases, mandamus may be an available remedy for dilatory behaviour, and failure to seek mandamus could constitute a discretionary reason to deny later relief. The context in which delay occurs will affect any legal consequences that may flow. In this case, the Federal Court was not sitting as a court of appeal, considering whether there were material factual errors in the reasoning of the Tribunal, and deciding whether to uphold or set aside the Tribunal's decision by reference the administration of civil or criminal justice. Here the focus was upon alleged jurisdictional error, specifically in the form of denial of procedural fairness, in administrative decision-making. the principles which guide appellate intervention (Human Rights Commission)5, Bastarache J, speaking for the majority, said it was "accepted that the principles In Blencoe v British Columbia 2 See Blencoe v British Columbia (Human Rights Commission) [2000] 2 SCR 307 at eg Walton v Gardiner (1993) 177 CLR 378. 4 See Monie v Commonwealth of Australia [2005] NSWCA 25, and the authorities there collected. [2000] 2 SCR 307 at 367 [102]. of natural justice and the duty of fairness include the right to a fair hearing and that undue delay in the processing of an administrative proceeding that impairs the fairness of the hearing can be remedied". There may be some circumstances in which delay has had a direct and demonstrable effect on the outcome of administrative proceedings. Bastarache J gave examples. On the other hand (and this was the point of departure between Hill J and Finkelstein J in the Full Court of the Federal Court), there may be cases where it is difficult, or even impossible, to know the consequences of delay. The problem has been discussed, in a different context, in connection with appellate scrutiny of findings of fact by trial judges where it is argued that delay has resulted either in specific error or in an unsafe outcome6. In the present context, which is not one of appellate scrutiny, but of judicial review of an administrative decision for jurisdictional error, the question is one of fairness of procedure. What is said to be unfair is that the Tribunal made demeanour-based findings against the appellants in circumstances where four and a half years elapsed between the observation of the demeanour and the making of the findings. Finkelstein J pointed out that the second hearing, of 19 December 2001, was convened for only a limited purpose, and commented that, had it not been for the second hearing, it was doubtful if the Tribunal member who made the decision would have recognised the appellants if he had seen them again in late 2002 or early 2003. Some of the findings of the Tribunal adverse to the credit of the appellants were based, not on demeanour, but on their own admissions. That people who claim to fear for their lives admit to having told lies in an attempt to advance their claims for protection does not necessarily destroy their credibility. It might simply demonstrate their fear. On the other hand, there were a number of examples of findings by the Tribunal, adverse to the appellants, that turned on an assessment of their credibility in circumstances that must have been influenced by the Tribunal's observation of their demeanour. Evidence that was not inherently improbable, or contradicted by objective facts, was rejected as "implausible". The fact that the third appellant (then aged 12) "displayed no signs of trauma or concern" in her evidence at the second hearing (more than a year before the decision) was treated as indicating that her account of an attack, in which her mother intervened, was fabricated. Because the Tribunal's reasons ignored the question of the time that had elapsed between the taking of evidence and the final assessment of that evidence, it can never be known how that assessment was in fact affected by the delay. What must be kept in mind is that the question concerns the fairness of the procedure that was followed. It was an inquisitorial procedure that, in the circumstances of this case, depended to a significant extent upon the Tribunal's eg Hadid v Redpath (2001) 35 MVR 152; Expectation Pty Ltd v PRD Realty Pty Ltd (2004) 140 FCR 17. assessment of the sincerity and reliability of the appellants. That is one of the reasons why they were entitled to, and were given, a "hearing". An important purpose of the hearing was to enable the Tribunal to do just what it ultimately did, that is, make a judgment about whether the appellants were worthy of belief. Appropriately, effort was directed to a search for independent verification of the claims they were making, and objective justification of the fears they were expressing. Yet ultimately the procedure directed attention to the Tribunal's assessment of them as witnesses in their own cause. A procedure that depends significantly upon the Tribunal's assessment of individuals may become an unfair procedure if, by reason of some default on the part of the Tribunal, there is a real and substantial risk that the Tribunal's capacity to make such an assessment is impaired. In a case of failure to give a hearing when a hearing is required, the person complaining of denial of procedural fairness does not have to demonstrate that, if heard, he or she would have been believed. The loss of an opportunity is what makes the case of unfairness. The appellants in this case do not have to demonstrate that the Tribunal's assessment of them probably would have been more favourable if made reasonably promptly. What they have to demonstrate is that the procedure was flawed; and flawed in a manner that was likely to affect the Tribunal's capacity to make a proper assessment of their sincerity and reliability. The procedures required by the Act were designed to give the appellants a reasonable opportunity to state their claims and to have those claims competently evaluated. If the Tribunal, by its unreasonable delay, created a real and substantial risk that its own capacity for competent evaluation was diminished, it is not fair that the appellants should bear that risk. The delay on the part of the Tribunal in the present case was so extreme that, in the absence of any countervailing considerations advanced in the reasons of the Tribunal, it should be inferred that there was a real and substantial risk that the Tribunal's capacity to assess the appellants was impaired. That being so, the appellants did not have a fair hearing of their claims by the Tribunal. The fact that the impairment resulted from the default of the Tribunal is important. Many events, outside the control and influence of the Tribunal, might occur to make it more difficult to evaluate the claims of an applicant. That does not make the procedure unfair. On the other hand, when the Tribunal, exercising the control over its own procedures given to it by the Act, without explanation or justification, and without any fault of an applicant for review, draws out those procedures to such an extent that its capacity to discharge its statutory obligations is likely to be materially diminished, and there is nothing in the Tribunal's reasons to displace that likelihood, then a case of procedural unfairness arises. I would allow the appeal and set aside the orders of the Full Court of the Federal Court. In place of those orders, it should be ordered that the orders of Hely J be set aside, the decision of the Tribunal be quashed, and the matter remitted to the Tribunal for further consideration. The first respondent should pay the costs of the appeal to this Court, and of the appeal to the Full Court of the Federal Court, and of the proceedings before Hely J. GUMMOW J. This appeal from the Full Court of the Federal Court (Hill and Marshall JJ; Finkelstein J dissenting)7 concerns the application of the principles of jurisdictional error in the operation of s 75(v) of the Constitution to set aside administrative decisions made after a period of delay. The nature of judicial review It is of the first importance for this appeal to recall several well-settled principles in this field. The first is that maladministration is not to be confused with the illegality which founds judicial review8. The second is that the adoption of the paradigm of judicial processes of decision-making at trial and on appeal is rarely helpful because it is apt to blur the constitutionally entrenched distinctions between judicial and executive power. These fundamental principles inform Brennan J in Attorney-General (NSW) v Quin9: the following statement by "The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone." The course of decision-making which gives rise to this appeal may suggest shortcomings in the administration of the relevant legislation and thereby found an apprehension as to the merits of the outcome which was finally reached and its adverse impact upon the interests of the appellants. However, further remarks of Brennan J in Quin are apposite here. His Honour said10: 7 NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 134 FCR 85. 8 McMurtrie, "The Waiting Game – the Parliamentary Commissioner's Response to Delay in Administrative Procedures", (1997) Public Law 159. (1990) 170 CLR 1 at 35-36. This passage was adopted by Brennan CJ, Toohey, McHugh and Gummow JJ in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272. See also the judgment of Gleeson CJ, Gummow, Kirby and Hayne JJ in Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 152-154 [43]-[44]. 10 (1990) 170 CLR 1 at 36. "[T]he scope of judicial review must be defined not in terms of the protection of individual interests but in terms of the extent of power and the legality of its exercise. In Australia, the modern development and expansion of the law of judicial review of administrative action have been achieved by an increasingly sophisticated exposition of implied limitations on the extent or the exercise of statutory power, but those limitations are not calculated to secure judicial scrutiny of the merits of a particular case." I should add that with respect to the fundamental principles just mentioned, and their application to the present appeal, I agree with what is said by Hayne J, particularly in the last four paragraphs of his Honour's reasons. Delay in administration The range of powers conferred by various laws of the Commonwealth upon its officers varies greatly. So does the institutional framework for the exercise of those powers. This litigation concerns delay in administrative decision-making at a second level, by way of review by a statutory tribunal of decisions of delegates of a Minister. The procedural arrangements for such a tribunal, including (as in this case) the giving of written reasons, may be far more elaborate than those for decision-making at other levels in public administration. Observations by LeBel J in the Supreme Court of Canada in Blencoe v British Columbia (Human Rights Commission)11 may usefully be repeated here. LeBel J observed that there are different kinds of delay and that not all administrative bodies are the same. Delay in deciding an individual case may relate to the special complexity of the subject-matter as well as to the inattention of the decision-maker. The former may encompass necessary delay. Further, the diversity of the powers, mandates and structures of administrative bodies makes it inappropriate to apply particular standards from one context to the other. Among the sources of delay in administrative decision-making which have been identified in the United States are the presence of a large workload, the complexity of issues entrusted to administrative decision-makers, inadequate funding and staffing and legislatively required time-consuming procedures12. It may be said to be a responsibility of the executive and legislative branches of government to the public at large to alleviate such sources of delay. It is another 11 [2000] 2 SCR 307 at 392-393. The outcome in Blencoe was an unsuccessful attempt by Mr Blencoe to stay the hearing by the Commission of complaints made against him more than two years earlier. 12 Pierce, Administrative Law Treatise, 4th ed (2002), vol 2, §12.2. matter to enlist the judicial branch to require an outcome or to set aside a delayed outcome and remand for redetermination. Even in a system where there is constitutionally mandated "due process", such as the United States, the most effective remedies for administrative delay have been said to lie in the political rather than the judicial process13. Article 6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms ("the ECHR") entitles "everyone ... to a fair and public hearing within a reasonable time" in the determination of "civil rights and obligations", as well as of any criminal charge. In Dyer v Watson14, Lord Bingham of Cornhill considered the Strasbourg case law15 applying the ECHR to a range of matters, including delayed determinations of civil rights and obligations by administrative bodies. Lord Bingham concluded16 that "[t]he threshold of proving a breach of the reasonable time requirement is a high one, not easily crossed"17. Several points respecting the present appeal should be made immediately. The first is that the complaint made by the appellants is not to compel the making of a delayed decision, but to set aside a decision made adversely to their interests. Secondly, this is not a case turning upon the statutory grounds for "merits" review or for judicial review found respectively in the Administrative Appeals Tribunal Act 1975 (Cth) and the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"). The appellants' case turns upon the constitutional conception of jurisdictional error. Thirdly, as is indicated in the analysis by Brennan J in Walton v Gardiner18, in that setting of Ch III of the Constitution, administrative and judicial decision-making, and accompanying review and appellate processes, are distinct, not analogous. Accordingly, no further assistance is to be derived by importing into the body of authority upon s 75(v) of the Constitution notions of judicial review for "abuse of process" indicated by delayed decision-making on the part of officers 13 Pierce, Administrative Law Treatise, 4th ed (2002), vol 2, §12.4. 14 [2004] 1 AC 379 at 394-400. 15 Including König v Federal Republic of Germany (1978) 2 EHRR 170. 16 [2004] 1 AC 379 at 402. 17 See, further, Bailey, "Due Process Rights", in Feldman (ed), English Public Law, 18 (1993) 177 CLR 378 at 409-411. of the Commonwealth. In R v Chief Constable of the Merseyside Police; Ex parte Calveley, May LJ said19: "Unnecessary delay in legal and analogous proceedings, such as the disciplinary ones in the instant case, is of course to be deplored, but it does occur and, in the absence of mala fides, should not tempt one to resort to judicial review where no real abuse or breach of natural justice can be shown." (emphasis added) As indicated above, in Australia the analogy is inapt. There is a body of case law dealing with the significance to be attributed to delay in the handling by the courts of their business20. However, as Hill J pointed out in the Full Court21, in these cases appellate courts intervene to order a new trial on the ground that the appellant has not had a fair trial. That ground of appellate intervention is to be distinguished from the ground of jurisdictional error as understood in administrative law. An administrative body has not exercised judicial power. As emphasised earlier in these reasons, on judicial review the court is not concerned with the merits or correctness of the administrative decision. With respect to the English legal structure, the distinction was elaborated by Lord Brightman in Chief Constable of the North Wales Police v Evans22. The distinction cannot be of less significance in Australia, given our constitutional structure23. Questions of the consequences in law of delay in public and judicial administration take various forms. The delay here was in the administration by the Refugee Review Tribunal ("the RRT") of its statutory powers, functions and duties. No question arises of remedies which may be available in private law for delay in the exercise of statutory authority. There is thus no occasion here to consider the application in Australia of the reasoning of the House of Lords in Calveley v Chief Constable of the 19 [1986] QB 424 at 439. 20 See, in particular, Hadid v Redpath (2001) 35 MVR 152; Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273. 21 (2004) 134 FCR 85 at 87-88. 22 [1982] 1 WLR 1155 at 1174-1175; [1982] 3 All ER 141 at 155. 23 See Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 23 [72], 24-25 [75]-[77]. Merseyside Police24. The appellants were police officers who in June 1981 were concerned in the arrest of persons later acquitted in December 1981. Formal notices of complaints against the appellants required by the governing legislation were not given by the Chief Constable until two years later. The appellants were dismissed from the police force in 1984 but, on judicial review, the English Court of Appeal quashed that dismissal decision for the irremediable delay in giving notice of the complaints against them25. The House of Lords affirmed the striking out of later proceedings against the Chief Constable for breach of statutory duty, misfeasance in public office and in negligence. No duty of care had arisen, there was no allegation of malice in the exercise of the powers of the Chief Constable, and no action lay for breach of statutory duty. As to the last matter, Lord Bridge of Harwich remarked26: "If ... the delay in giving notice under regulation 7 coupled with other factors causes irremediable prejudice to the officer in disciplinary proceedings which result in his conviction of an offence against the discipline code, he has his remedy by way of judicial review to quash that conviction and nullify its consequences. The proposition that the legislature should have intended to give a cause of action in contemplation of the remoter economic consequences of any delay in giving notice under regulation 7 is really too fanciful to call for serious consideration." The facts The appellants are husband and wife and their daughter. They are citizens of Bangladesh. The husband and wife were born in 1960 and 1959 respectively. They married in 1984 and their daughter was born in 1989. The appellants arrived in Australia on 3 August 1996 on visitor visas issued at Dhaka for a period to expire on 3 February 1997. On 28 January 1997, applications were made for protection visas under the Migration Act 1958 (Cth) ("the Act"). The husband is a Muslim and the wife is a Roman Catholic. Their daughter has been baptised in the faith of her mother. The parents claimed that on a number of occasions when they were living in Bangladesh they were harassed and attacked because they were parties to a "mixed marriage". 25 R v Chief Constable of the Merseyside Police, Ex parte Calveley [1986] QB 424. 26 [1989] AC 1228 at 1237. On 27 May 1997, a delegate of the Minister, the first respondent, refused the grant of protection visas and, on 5 June 1997, the appellants applied to the second respondent, the RRT, for review of that decision. The RRT was obliged by s 414 of the Act to exercise its review jurisdiction and by s 430 to prepare a written statement setting out its decision, reasons and findings on material questions of fact and referring to the material on which those findings were based. Years passed and, by decision and reasons for decision handed down on 14 January 2003, the RRT affirmed the decision not to grant protection visas. The litigation that ensued has turned upon the question whether, in the circumstances of the case, involving the delay of more than five years between the application to the RRT and its decision, that decision is tainted by jurisdictional error. The litigation An application was brought in the Federal Court under s 39B of the Judiciary Act 1903 (Cth) ("the Judiciary Act") which has its source in s 75(v) and s 77(i) of the Constitution27. The application claimed among other relief orders in the nature of certiorari, prohibition and mandamus, and was dismissed by Hely J on 15 April 200328. An appeal to the Full Court was dismissed. By their amended notice of appeal in the Full Court, the appellants asserted that the decision of the RRT was beyond power (and thus outside the protection of s 474 of the Act29) because the RRT had not bona fide exercised its power, had denied the appellants procedural fairness, and otherwise had not validly exercised its power pursuant to Pt 7 of the Act. Delay itself was not advanced as productive of jurisdictional error; rather, it was treated in the appellants' case as indicative of one or more of the established heads of jurisdictional error. 27 Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 28 NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 333. 29 See Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 where it is explained that s 474 was inserted with effect from 2 October 2001 (well before the decision of the RRT with which this appeal is concerned) by the Migration Legislation Amendment (Judicial Review) Act 2001 (Cth). This repealed the whole of Pt 8, including the review provision in s 476 which had been considered in Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323. The statutory framework The appellants stressed the importance of a consideration of the statutory framework for the decision-making by the RRT which is provided by Pt 7 of the Act (ss 410-473). In particular, attention was directed to the objectives stated in s 420. Section 420 states: [The RRT], in carrying out its functions under this Act, is to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick. [The RRT], in reviewing a decision: is not bound by technicalities, legal forms or rules of evidence; and (b) must act according to substantial justice and the merits of the case." However, s 420 does not delimit boundaries of jurisdiction. In Minister for Immigration and Multicultural Affairs v Eshetu, Gleeson CJ and McHugh J said of s 420 and similar provisions30: "They are intended to be facultative, not restrictive. Their purpose is to free tribunals, at least to some degree, from constraints otherwise applicable to courts of law, and regarded as inappropriate to tribunals." Other judgments in Eshetu construed s 420 in the same way31. In the face of the decision in Eshetu, it would be wrong (and the appellants did not advocate this) to fix upon the word "fair" in s 420(1) as marking a legislatively imposed criterion for the exercise of jurisdiction by the RRT, and then to reason that a decision made after delay is not "fair" and thus is infected with jurisdictional error. 30 (1999) 197 CLR 611 at 628 [49]. 31 (1999) 197 CLR 611 at 642-644 [108]-[109] per Gummow J, 659 [158] per Hayne J, 668 [179] per Callinan J. The appellants also referred to s 42532. In certain circumstances, including those of this case, s 425(1) obliged the RRT to "give the applicant an opportunity to appear before it to give evidence". Counsel for the Minister accepted that it is implicit in the reference in s 425 to a hearing where evidence may be given that the challenge to the decision under review by the RRT be given a proper, genuine and realistic consideration in the decision to be subsequently made by the RRT. However, counsel further submitted that the decision and reasons for decision handed down on 14 January 2003 satisfied that criterion. In addition, counsel correctly denied that there was to be drawn from s 425 some additional implication as to timing, a failure of observance of which produced jurisdictional error. Challenges before delayed decision It is necessary to distinguish between complaints of delay which are made before the decision in question has been reached and those which are made after. It is well settled that in the first category an order in the nature of mandamus may be made to require the exercise of jurisdiction. An example is the issue of mandamus in R v Secretary of State for the Home Department; Ex parte Phansopkar33. There, the Home Secretary had adopted a rule of practice that applications for certificates of patriality would be considered only in countries of origin (where there were considerable delays in dealing with those applications) rather than in the United Kingdom. With respect to complaint made before a delayed decision is reached, ss 7(1) and 16(3) of the ADJR Act are special provisions respecting unreasonable delays in decision-making. In the United States, §706(1) of the Administrative Procedure Act34 empowers a reviewing court to "compel agency action unlawfully withheld or unreasonably delayed" and the time agencies take to make decisions has been treated as "governed by a 'rule of reason'"35. The operation of the ADJR Act is illustrated by Wei v Minister for Immigration, Local Government and Ethnic Affairs36. In that case, Neaves J ordered that 32 In what follows in these reasons, reference is made to s 425 in its form before it was repealed and a new s 425 substituted by the Migration Legislation Amendment Act (No 1) 1998 (Cth). 34 USC, Title 5. 35 Telecommunications Research and Action Center v Federal Communications Commission 750 F 2d 70 at 80 (1984); see also Pierce, Administrative Law Treatise, 4th ed (2002), vol 2, §12.3. 36 (1991) 29 FCR 455 at 479. decisions upon applications for the grant on special humanitarian grounds of permanent residence status to certain citizens of the People's Republic of China be made within eight weeks of the order of the Federal Court. However, it is not contended that the ADJR Act has any application to the regime established by Pt 7 of the Act, even to decisions which are not privative clause decisions protected by s 47437. Challenge after decision The appellants complain not of a delay in making a decision not yet reached, but of a delay in making a decision which has been reached. Counsel for the Minister, in oral submissions, described the delay of the RRT in this case as regrettable and inordinate, but as not giving rise to jurisdictional error. Counsel submitted that delay without more does not constitute jurisdictional error, nor does it give rise to a presumption of error. The proper remedy had been mandamus to compel exercise of the jurisdiction of the RRT and the making of the decision, and was not to set aside the decision, once made, for jurisdictional error. These submissions oversimplify the scope of mandamus. With respect to mandamus, there are two species of failure to act or to decide: actual failure and constructive failure. Delay may be such as to show that there has been an abdication or abandonment of the statutory function to proceed in the matter38. Further, there will be a constructive failure to exercise jurisdiction where a decision has been given but what purports to be the performance of a duty to decide is vitiated because the decision-maker misconceived its role, misunderstood the nature of its jurisdiction (including the nature of the opinion which it was to form), or failed to apply itself to the questions which the relevant statute prescribed39. Contrary to what was suggested by the submissions for the Minister, from the delay in the particular circumstances of a given case, there may be inferred one or more of the failures just listed. No general form of words will encapsulate all the circumstances in which delay may operate in this way. 37 cf Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 511 [97]. 38 Engineers' and Managers' Association v Advisory, Conciliation and Arbitration Service [1980] 1 WLR 302 at 308, 310, 318 (HL); [1980] 1 All ER 896 at 901, 39 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 208-209 [31]. See also Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 398 [1], 419-420 [82], 420 [87], 453 [189]. Something should be said upon the jurisdictional error which follows from a failure to accord procedural fairness. The appellants submitted that it was "manifest" that there had not been a fair hearing by the RRT of their applications where the decision on the issues concerning the subjective element of the Convention definition of "refugee" was made four and a half years after the giving of evidence on those issues. In response, the Minister correctly submitted that the rules of natural justice are not necessarily breached by excessive delay; the question, rather, is whether delay has denied an interested party a proper opportunity to present its case. From the above consideration of the scope of mandamus, and of the requirements of procedural fairness, the ultimate issues on this appeal appear. There are two issues. They are (a) whether the delay of which the appellants complain denied them the proper opportunity to present their case and (b) whether there is to be inferred from the circumstances of their case a constructive failure to exercise jurisdiction. The giving of answers requires further consideration of those circumstances. Conclusions As already mentioned, the relevant applications for protection visas were lodged on 28 January 1997 and were refused by a delegate of the Minister on 27 May in that year. The application for review of the decision of the delegate was lodged with the RRT on 5 June 1997 and letters in support were sent by the solicitors for the first appellant on 7 October 1997. On 15 April 1998, the RRT wrote to the first appellant providing him with an opportunity to give oral evidence on 6 May 1998. There followed a tribunal hearing on that date where the appellants appeared, together with their representative. A further written submission from the representative of the appellants was received by the RRT on 9 June 1998. The next significant development occurred more than three years later. On 18 December 2001, the solicitors for the first appellant provided to the RRT documents relating to the third appellant and also requested a "reasonable time" to make further written submissions. A further oral hearing was held on 19 December 2001. Evidence was given by the second and third appellants and by a family friend. Written submissions were lodged on 15 March 2002. It was not until more than nine months later, on 14 January 2003, that the RRT handed down its decision and reasons for decision. The RRT noted that it is well established by decisions including those in Chan v Minister for Immigration and Ethnic Affairs40 and Minister for Immigration and Ethnic Affairs v Guo41, that there are two elements involved in the determination of the Convention question as to the existence of a well-founded fear of persecution. One is subjective and the other objective. The subjective element is whether the claimant to refugee status has a fear of persecution; the objective element is whether that fear is well founded. The RRT made a finding, as to the first two appellants, that as husband and wife they did not face a "real chance" of harm amounting to persecution for reasons of their status as a couple in a mixed faith marriage; the result was that any fears they claimed to hold in that regard were not well founded. As to the third appellant, their daughter, the RRT found that she did not face a "real chance" of harm amounting to persecution were she to return to Bangladesh in the reasonably foreseeable future. Given the conclusions reached by the RRT respecting the objective element in the Convention definition, there was no necessity to make any findings as to the "subjective" element. However, the Minister properly concedes that the conclusion of the RRT that the appellants did not face a "real chance" of persecution depended in part on the rejection of some of their claims about harm they had suffered in Bangladesh. These claims had been explored in the evidence of the first and second appellants at the first of the two hearings, namely that conducted on 6 May 1998. Two of these claims were abandoned by the appellants in the circumstances described as follows by the RRT. As to the first, the RRT said: "At the Tribunal hearing both Applicants, husband and wife, maintained an account of a village committee undertaking a serious action against the husband by placing a necklace of shoes around his neck and parading him around the village and beating him. I had interviewed both Applicants separately and they both provided the same account in that regard. As they had also provided accounts of other situations which were not consistent I queried the credibility of those accounts. 40 (1989) 169 CLR 379. 41 (1997) 191 CLR 559. Following a brief adjournment the Applicants resiled from the claims in regard to the necklace of shoes and the beating and said that instead they had been forced to leave the village. Accordingly, by their own account the original claim was fabricated and since the accounts were consistent when both Applicants were separated at the hearing it leads me to find that they colluded in this fabrication." The second claim concerned an alleged attempt on the life of the first appellant. As to this the RRT said: "This claim was first raised by the husband at the Tribunal hearing, and when the wife gave evidence she made no reference to this claimed incident at all, even when asked specifically in regard to knife attacks in the vicinity of the house. Following the adjournment at the first hearing the Applicant, the husband, resiled from this claim. Once again this demonstrates the intention of the Applicant to fabricate to provide an account to support his claim to have been targeted because of his mixed religion marriage. I find that he has done so because he is aware that the facts as they are would not provide a basis for a claim to be in need of and deserving protection." The above emphasises the importance of the point made by Marshall J that the findings by the RRT of collusion and fabrication between and by the husband and wife did not turn upon any question involving their demeanour42. With respect to the third appellant, their daughter, the situation differed. The RRT considered a claim that there had been an incident in which she was confronted on the way to church and a knife had been held to her throat. The RRT said: "At the Tribunal hearing the Applicant daughter, gave evidence in the presence of the parents and the representative and none made any comment on her statement. In regard to this claimed attack I checked several times to see if she felt comfortable talking about it and she said she did. She displayed no signs of trauma or concern." (emphasis added) However, the evidence of the daughter was given at the second hearing which, while about a year before the apparent completion of the RRT's reasons, was more proximate to the outcome than the first hearing in 1998. 42 (2004) 134 FCR 85 at 94. It is common ground that the proceedings before the RRT were recorded. Hill J rightly emphasised that an interval of 12 months between the hearing of oral evidence and the giving of a decision is a lengthy one. Hill J went on to refer to the dissenting reasons of Finkelstein J, saying43: "As Finkelstein J has pointed out it may well be that unless the Tribunal member had made notes of his initial views of credibility these initial views may well have been lost in the time which passed from the hearing of evidence to the delivery of reasons. On the other hand it may well be the case, I do not know, that the Tribunal member did keep notes, or was able to recall from a reading of the transcript or from listening to a tape recording of the proceedings the views he held at the time. That does not seem to me to be so improbable as to be able to be rejected. Certainly the Court knows nothing about any notes which the Tribunal member kept at the time nor whether the Tribunal member listened to a recording of the proceedings. The Court is, however, well aware that all proceedings of the Tribunal are taped and reading a transcript of proceedings even up to a year later could easily bring back to mind the reactions which the Tribunal member had when originally hearing the evidence." It may be accepted, as authority in this Court requires44, that: "once a breach of natural justice is proved, a court should refuse relief only when it is confident that the breach could not have affected the outcome". (emphasis added) However, as indicated earlier in these reasons, excessive delay of itself does not prove a breach of the rules of natural justice. The question is whether it is to be inferred that the delay in the particular proceeding has denied to an interested party the opportunity to present its case. The concluding passage in Hill J's reasons should be adopted as indicating the appropriate outcome on the appeal to this Court. His Honour said45: 43 (2004) 134 FCR 85 at 90-91. 44 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 122 [104] per McHugh J. See also at 88-89 [3]-[4] per Gleeson CJ, 116-117 [80]-[81] per Gaudron and Gummow JJ, 130-131 [131] per Kirby J, 144 [172] per Hayne J, 153-155 [210]-[211] per Callinan J. 45 (2004) 134 FCR 85 at 91. "The problem I have is that there is nothing which requires me to reach one conclusion in preference to another as to what consequences were likely to have flowed from the delay which occurred. For my part I do not think that it is a necessary inference just from the delay itself that the Tribunal member was unable as a result of that delay to fulfil his function of reviewing the decision of the respondent Minister or to be fair to the appellants." Orders The appeal should be dismissed with costs. Kirby KIRBY J. This appeal comes from a divided decision of the Full Court of the Federal Court of Australia46. It concerns the consequences of extended delay for the validity of a decision of the Refugee Review Tribunal ("the Tribunal") established by the Migration Act 1958 (Cth) ("the Act")47. Like the Full Court, this Court is divided. However, the application of the applicable principles of law to the largely uncontested facts of the case requires that the appeal be allowed. Not every decision-maker, in a court or tribunal, can be as swift as Sir William Page Wood VC or as accurate as Sir George Jessel MR or as scintillating as Hamilton J (later Lord Sumner) in the delivery of ex tempore reasons at the conclusion of the hearing. The habits of those judges (to whom I could add some Australian decision-makers of like capacity) are described by Heydon JA in Hadid v Redpath48. Nor is the immediate delivery of decisions always possible or even desirable49. However, where (as here) the delay is extensive, it invites vigilance on the part of a court with responsibilities for an appellate decision or judicial review. Whilst different considerations apply to delay in a court subject to appeal and in a tribunal subject only to judicial review, there are, unsurprisingly, common principles. Ultimately, in either case, if the court, on appeal or review, concludes that the delayed decision is unsafe or involves material unfairness or injustice to the losing party, an affront to the common hypothesis of decision- making is established. That affront cannot be allowed to stand50. Appropriate relief will then be granted, as it must be in this case. 46 NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 134 FCR 85 at 90-91 [18]-[19] per Hill J, 94 [39] per Marshall J (Finkelstein J dissenting). 47 The Act, s 457. 48 (2001) 35 MVR 152 at 162 [46]-[48] (NSWCA). 49 As Heydon JA pointed out by reference to Kitto, "Why Write Judgments?", (1992) 66 Australian Law Journal 787 at 792: see (2001) 35 MVR 152 at 163-164 [51]. 50 Boodhoo v Attorney General of Trinidad and Tobago [2004] 1 WLR 1689 at 1694 [11]. Their Lordships, at 1696 [14], approved the remark of Lord Diplock in Maharaj v Attorney-General of Trinidad and Tobago (No 2) [1979] AC 385 at 399: "The fundamental human right is not to a legal system that is infallible but to one that is fair." In this respect, they upheld the approach of de la Bastide CJ in the Court of Appeal of Trinidad and Tobago. Kirby The facts and the legislation The facts: The detailed facts are set out in other reasons51. So far as the issue of delay is concerned, the important facts are undisputed. The appellants arrived in Australia in August 1996. In January 1997 the adult appellants applied for protection visas on their own behalf and for their daughter, claiming to be refugees within the Refugees Convention and Protocol, given effect by the Act52. In May 1997 their application was refused by a delegate of the Minister. Promptly, they applied to the Tribunal for a review of that decision. In April 1998 the appellants were invited to give evidence in support of their claims at a hearing before the Tribunal. There then followed a first hearing in May 1998 after which a delay of three years and five months ensued without decision or further communication with the appellants. A second hearing was then fixed for 19 December 2001. Unchastened by the previous delays, a still further interval of twelve months followed before, on 20 December 2002, notification was given that the decision of the Tribunal would be handed down on 14 January 2003. So indeed it was, a few months short of the sixth anniversary of the first application by the appellants to the Tribunal. It was adverse to the appellants' claims. As appears from other reasons, the appellants' claims were not particularly complicated, either in law or fact. They concerned a "mixed marriage" between nationals of Bangladesh: the husband being a Muslim and the wife a Christian (Roman Catholic). The difficulty presented by apostasy for persons born and raised as Muslims is quite a common issue in refugee claims. It has arisen in this Court53. As appears from the reasons of the Tribunal, when it ultimately rejected the appellants' claims, they lost their case (in the words of Finkelstein J, the dissentient in the Full Court) "because their evidence was not believed"54. As to some of the unbelieved evidence, the Tribunal had heard of the abandonment of 51 Reasons of Gleeson CJ at [2]; reasons of Gummow J at [26]-[31]; reasons of Callinan and Heydon JJ at [141]-[151]. 52 The Act, s 36. 53 eg Applicant NABD of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 79 ALJR 1142; 216 ALR 1. See also Germov and Motta, Refugee Law in Australia, (2003) at 270, 277, 280 and the cases there cited. 54 (2004) 134 FCR 85 at 100 [63]. Kirby two specific claims which the adult appellants conceded they had invented to bolster their case. However, as Gummow and Hayne JJ pointed out in Abebe v The Commonwealth55, falsehoods and embroidery of such claims do not of themselves justify a conclusion that all aspects of an applicant's case are false. It remains for the Tribunal to consider any evidence that is not discredited or disbelieved. In the appellants' case, that meant considering the other claims concerning their assertion of a fear of persecution by reason of their respective religions and by reason of the fact that, in their daughter's case, she had been baptised into the Christian religion and had not followed the religion of her father and of the majority of the population in Bangladesh, namely Islam. In essence, the appellants' claims on this score were rejected on credibility grounds56. Even the young daughter (the third appellant) was disbelieved in respect of an incident which she claimed had occurred on the way to church where she was to be baptised57. The assessment of the truthfulness of the appellants as witnesses was not the only foundation for the ultimately adverse decision of the Tribunal. But, clearly, it was a most significant consideration. The general unwillingness of courts, conducting an appeal or judicial review, to go behind findings as to the credibility of parties or witnesses is a well-known feature of all litigation where a determination is challenged after a first instance decision58. This fact reposes a great responsibility upon primary decision-makers. Respect for their decisions comes at a price. That price is the reasonably prompt determination of contested questions of credibility whilst memories of impression are fresh and true reasons can be given for preferring some, and rejecting other, evidence. 55 (1999) 197 CLR 510 at 577-578 [191]; cf Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at 1619-1620 [119]-[121]; 200 ALR 447 at 477-478. See also Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka (2001) 206 CLR 128 at 139-140 [32]-[34], 159 [94]. 56 See extracts from the decision of the Tribunal in the reasons of Callinan and 57 See extracts from the decision of the Tribunal in the reasons of Callinan and 58 In appeals, see eg Fox v Percy (2003) 214 CLR 118 at 127 [26] and cases there cited. In cases of judicial review, see eg Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 88-89 [4], 124-128 [111]-[121], 130-131 [131]. Kirby The legislation: The Tribunal is not a court of law. It is an administrative body established by the Federal Parliament. It has statutory functions to review, by a generally inquisitorial procedure, contested decisions made by a delegate of the Minister. There is no appeal from the Tribunal to the Federal Court on the factual merits of its decisions. Still less is there such an appeal on the merits to this Court59. Instead, the appellants' application to the Federal Court, challenging the unfavourable decision of the Tribunal, was brought pursuant to the Judiciary Act 1903 (Cth), s 39B60. The application sought the classic relief of judicial review, namely the issue of writs of certiorari, prohibition and mandamus. The proceedings thus presented issues to the Federal Court concerned with the validity of the decision of the Tribunal and (as it has been put) whether "jurisdictional error" had been shown such as would authorise relief of the kind described61. By decisions of this Court, jurisdictional error amounts to a failure of the decision-maker to fulfil the essential requirements of the decision-making process established by law. Where a relevant failure to comply with the basic requirements of procedural fairness (natural justice) is shown, jurisdictional error exists. This is either because62 the common law requirements of procedural fairness are ordinarily to be taken as grafted onto the operations of a statutory decision-maker, such as the Tribunal, or because it is inferred that such requirements are implicit in the conduct of a tribunal established by the Parliament, absent clear provisions to the contrary63. Where a decision does not 59 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 36; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355-356; Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 597-598. 60 Which, as Gummow J points out, finds its source in the Constitution, ss 77(i) and 75(v). See reasons of Gummow J at [32]. 61 See Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 419 [82], 453 [189], 505 [339]-[340]; Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 614-617 [51]-[60]; cf at 631-633 [103]-[109]. 62 The two explanations are elaborated in Kioa v West (1985) 159 CLR 550 at 584, 614-615; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 83 [89] per Gaudron J. 63 See Quin (1990) 170 CLR 1 at 35; Walton v Gardiner (1993) 177 CLR 378 at 408. But see Kioa v West (1985) 159 CLR 550 at 584; South Australia v O'Shea (1987) 163 CLR 378 at 386; Quin (1990) 170 CLR 1 at 57-58; Haoucher v Minister for Immigration and Ethnic Affairs (1990) 169 CLR 648 at 652. Kirby conform to the fundamental hypotheses of the legislation, as by a material departure from the requirements of procedural fairness, the law treats the resulting outcome as fatally flawed. In short, it is not a "decision" at all within the statutory grant64. It is infected by "jurisdictional error". Differences sometimes exist over the borderline between valid but imperfect decisions made within jurisdiction and invalid "decisions" affected by such an error and thus outside jurisdiction. However, by the authority of this Court, the distinction exists both for the constitutional writs65 and for their statutory derivatives and elaborations in the Judiciary Act, such as those that the appellants invoked in this case. It follows that the starting point for considering this appeal is the legislative scheme of the Act, which established the Tribunal and made provision for the discharge of its functions. Conforming to the template of a provision common in federal legislation, the Tribunal is obliged, in making a decision on review, to prepare a written statement that66: sets out the decision of the Tribunal on the review; and sets out the reasons for the decision; and sets out the findings on any material questions of fact; and refers to the evidence or any other material on which the findings of fact were based." Self-evidently, these provisions impose on the Tribunal a process of decision- making in which the Parliament envisaged that the Tribunal's disposition will disclose reasons, findings and references to the evidence that are material to the issues for decision and determinative of its outcome. Additionally, the Act, by s 420, provides that the Tribunal must carry out its functions pursuing the objective of providing a mechanism of review "that is fair, just, economical, informal and quick"67. This provision is an indication of 64 Miah (2001) 206 CLR 57 at 74-75 [51]-[54], 81-83 [80]-[86], 102-103 [148]; Bhardwaj (2002) 209 CLR 597 at 605 [13], 614-615 [51]; Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 506-507 [76]-[78]. 65 Constitution, s 75(v). 66 The Act, s 430. 67 The Act, s 420(1). Kirby the nature of the Tribunal, and its procedures, that the Parliament had in mind in establishing it. To say the least, the carrying out of the functions of the Tribunal in the present case fell far short of fulfilling the legislative objective of a mechanism of review that was quick. Moreover, because the Tribunal's decision ultimately turned on questions involving the assessment of the credibility of the appellants which had to be judged by the Tribunal member months, and even years, after the appellants had appeared to give oral evidence, the carrying out of the Tribunal's functions in this case was neither fair nor just. The legislative aspiration of speed in decision-making expressed in s 420 would not, of itself, give rise to a remedy for jurisdictional error in the case of default. However, the aspiration of fairness and justice in the discharge of the functions of the Tribunal is of a different order. Absent fairness and justice in the performance of its functions and procedures, a question arises as to whether the resulting "decision", "reasons", "findings" and "refer[ence] to the evidence" are such as to comply with the legislation that governed the Tribunal. If not, the conclusion expressed, although apparently a "decision", is flawed. It is invalid as involving jurisdictional error for want of procedural fairness. At the least, because of the applicability to the decisions of the Tribunal of the rules of procedural fairness, a default in compliance with such rules gives rise to a remedy. The "decision" is susceptible to correction by the remedies invoked by the appellants in the Federal Court. The issues On the basis of the arguments of the parties, the following issues arise for decision by this Court: The invalidating delay issue: Whether the uncontested delays that occurred in the disposition of the appellants' application to the Tribunal were material and, if so, whether such delays constituted jurisdictional error, prima facie entitling the appellants to relief and thus requiring correction of the orders of the Federal Court; The suggested justification issues: Whether, if the delays appear to sustain a grant of relief, intervention should be withheld on the basis that (a) the impact of delay in the present case may (for all the Court knows) have been cured by notes made by the Tribunal member or by his listening again to the recording of the hearing68; (b) the provision of relief involves an impermissible entry by the Court into the merits of the case, forbidden in proceedings by way of judicial review69; or (c) the remedies for 68 (2004) 134 FCR 85 at 90-91 [18]. 69 See reasons of Gummow J at [21]; reasons of Hayne J at [135]. Kirby prolonged delay in administrative decision-making of the present kind should be left to the political branches of government having regard to cost and other implications70; and The discretionary issues: Whether, if the foregoing issues are resolved against the Minister, relief should nonetheless be refused to the appellants either (a) because their proper remedy for the delay in decision-making was the earlier commencement of proceedings for relief in the nature of mandamus which they failed to initiate; or (b) because the ultimate decision arrived at by the Tribunal, despite the delay, was convincing for the reasons which the Tribunal gave, thereby rendering a rehearing of the appellants' claim a futile exercise. The invalidating effect of delay Significance of delay: Two hundred years ago, Lord Eldon explained his delay of twenty years in delivering reasons for a decision by reference to the need he had felt to give the question thorough consideration71. Since his Lordship's time, courts throughout the common law world, and beyond, have adopted a more timely standard not only in respect of judicial decisions but (as I shall show) in respect of the decisions of administrative tribunals72. As numerous authorities attest, the issue presented by the complaint of delay is rarely, if ever, about the delay itself. The issue is ordinarily about the effect of the delay upon the decision that is impugned. As Mummery LJ pointed out in Bangs v Connex South Eastern Ltd73, what is a reasonable time for the provision of a decision: "depends on all the circumstances of the particular case: the nature of the tribunal, its jurisdiction, constitution and procedures, the subject matter of the case, its factual and legal complexity and difficulty, the conduct of the tribunal and of the parties and any other special features of the situation in which delay has occurred. 70 Reasons of Gummow J at [19]. 71 Radnor (Earl of) v Shafto (1805) 11 Ves Jun 448 at 453 [32 ER 1160 at 1162]: "Having had doubts upon this Will for twenty years, there can be no use in taking more time to consider it." 72 Goose v Wilson Sandford & Co [1998] EWCA Civ 245 at [112]. 73 [2005] 2 All ER 316 at 318 [2]-[3]. His Lordship was referring to the requirements of the European Convention for the Protection of Human Rights and Fundamental Freedoms, Art 6(1). Kirby The likely effects of delayed decision-making, which can be serious, are relevant in determining what is a reasonable time." A similar point was made in the Supreme Court of Canada by Bastarache J in a case involving delay on the part of an administrative body that was alleged to have lost its jurisdiction in the matter because of its unreasonable delay in processing complaints74. The Supreme Court concluded that delay per se did not occasion an abuse of process. However, proof of unacceptable delay that caused relevant prejudice could taint the proceedings75: "The determination of whether a delay has become inordinate depends on the nature of the case and its complexity, the facts and issues, the purpose and nature of the proceedings, whether the respondent contributed to the delay or waived the delay, and other circumstances of the case. … [It] is not based on the length of the delay alone, but on contextual factors, including the nature of the various rights at stake in the proceedings, in the attempt to determine whether the community's sense of fairness would be offended by the delay." A like approach to the significance of delay has been adopted by the European Court of Human Rights in giving meaning to Art 6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms76. That provision, which draws no distinction between courts and administrative tribunals, has been interpreted as requiring that all stages of legal proceedings before such bodies must be resolved within a reasonable time77. What is reasonable has been held to depend on "the complexity of the case, the conduct of the applicant and of the relevant authorities and what was at stake for the applicant in the dispute"78. 74 Blencoe v British Columbia (Human Rights Commission) [2000] 2 SCR 307. 75 [2000] 2 SCR 307 at 376-377 [122]. 76 Article 6(1) provides: "In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law" (emphasis added); cf International Covenant on Civil and Political Rights, Art 14.1, which provides for equality before courts and tribunals and determination of rights and obligations in a fair and public hearing. 77 Silva Pontes v Portugal (1994) 18 EHRR 156 at 162-163 [33]-[36]. See also Hornsby v Greece (1997) 24 EHRR 250 at 268 [40]. 78 Frydlender v France (2001) 31 EHRR 52 at 1165 [43]. Kirby In Dyer v Watson79, referred to by Gummow J in his reasons80, Lord Bingham of Cornhill states that "if the period which has elapsed is one which, on its face ... gives ground for real concern"81 the court, considering the legal consequences of delay, must inquire into the particular facts and circumstances of the case in order to decide whether the "reasonable time" requirement in Art 6(1) of the European Convention has been breached. Applying this rule, their Lordships held that a delay of twenty months between the date perjury charges were laid and the date set down for the trial did not meet the "high" threshold, whereas a case involving charges laid against a minor, where the period of delay was 27 months between charge and trial, did so. The special considerations relevant to a child accused led to this conclusion. Here there are special considerations relevant to refugee applicants. Lord Bingham went on to observe that, once an elapsed period "on its face ... gives ground for real concern ... a marked lack of expedition [on the part of the relevant authorities], if unjustified, will point towards a breach of the reasonable time requirement"82. In the present case, the delay of almost five years is clearly one which "on its face ... gives cause for concern". It would therefore meet even the "high threshold" test mentioned in Dyer v Watson. As explained in that case, when inordinate delay is established, closer analysis of the circumstances of the case and of the effect of the delay is then required. That is the approach that I favour. When taken in this case, it confirms, and casts no doubt upon, the appellants' claim to relief. Occasionally, distinctions are drawn between delay whilst awaiting a hearing and delay in the delivery of a decision83. Pre-hearing delay may amount to abuse of process, by analogy to the law expressed in decisions of this Court84. However, there is no authority for the proposition that post-hearing delay by the decision-maker constitutes an abuse of process. For remedies against such defaults, reliance must be had on other legal categories for relief, such as non- compliance with statutory presuppositions or denial of procedural fairness. 80 Reasons of Gummow J at [20]. 81 [2004] 1 AC 379 at 402 [52]. 82 [2004] 1 AC 379 at 402-403 [52], [55]. 83 See eg Country Leathers Manufacturing Ltd v Graham (2003) 239 Sask R 209 at 84 eg Jago v District Court (NSW) (1989) 168 CLR 23 at 31, 56; Walton v Gardiner (1993) 177 CLR 378 at 392-394. See also Herron v McGregor (1986) 6 NSWLR Kirby One of the reasons why delay in reaching and providing a decision may not, of itself, entitle a party to relief is the recognition of the infinite variety of cases and the differing powers and capacities of those who decide them. In Krivoshev v Royal Society for the Prevention of Cruelty to Animals Inc85, Giles JA pointed out that an assumption that the passage of ten months is destructive of recollection and understanding where a delay of (say) two months is not, "may not be justified". Decision-makers could not be "rated according to retentive capacity and application to the evidence and issues"86. Courts hearing appeals or applications for judicial review normally cannot estimate such personal variations. Ordinarily, they are confined to the record and to an assessment of the consequences of delay in the particular case, judged by an objective standard. Relevance of delay: The significance of delay, depending as it does on the issues for decision, necessitates examination of the matter actually decided. If this involved no more than the construction of a written document, the interpretation of a statutory provision applied to agreed facts or other like questions, undue delay, whilst regrettable, might not affect the acceptability or validity of what has been done. The court conducting the appeal or judicial review could judge that matter for itself. Where, however, the matter for decision involves an assessment of the truthfulness of a party or important witnesses, the differentiation of truth and falsehood, delay, especially protracted delay, in the provision of a reasoned decision may cast doubt on the validity of that decision. Commonly, this is explained by reference to the need to ensure that "the trier of fact can recall the testimony and the demeanor of the witnesses as well as the dynamics of the trial"87. the resolution of competing versions of the facts and In a particular case, more may be at stake than distinguishing between the credibility of parties and other witnesses. Thus, in litigation involving detailed and complex evidence, protracted delay in the provision of a reasoned decision 85 [2005] NSWCA 76. 86 [2005] NSWCA 76 at [124]. See also Monie v Commonwealth [2005] NSWCA 25 at [3]. But see the comments of Hunt AJA at [45] with whom Bryson JA agreed at 87 Tunnage v Bostic 641 So 2d 499 at 500 (Fla App 4 Dist 1994). See also In re New York, Susquehanna and Western Railroad Company 136 A 2d 408 at 413 (SCNJ 1957); Helfand v Division of Housing and Community Renewal 696 NYS 2d 630 at 632-633 (Sup 1999); In re Adoption of Rhona 784 NE 2d 22 at 29 (Mass App Ct Kirby may undermine acceptance by the parties and the community that the decision- maker has given careful consideration to all of the evidence, viewed in its context, and remembered its detail when finally putting the decision on paper88. Even appellate judges, like myself, who are cautious about the significance of demeanour in the assessment of truth-telling89, willingly accord to primary decision-makers significant advantages derived considering all of the evidence, perceiving its parts in relation to the whole and reflecting upon it all, as it is adduced90. Such advantages, together with those which demeanour is conventionally held to accord to primary decision-makers, are lost, or significantly reduced, by protracted delay in providing a reasoned decision. function from their In addition to these considerations, there is another factor that is repeatedly mentioned in authority concerned with judicial delay. It is equally applicable to decision-making by members of quasi-judicial tribunals, such as the Tribunal. Extensive delay may sometimes tempt (or appear to tempt) the decision-maker to take the path of easy resolution. In Expectation Pty Ltd v PRD Realty Pty Ltd91, the Full Court of the Federal Court, in an appeal against delayed judicial reasons, explained the problem in terms of the increasing pressure which prolonged delay occasions to publish a decision. That pressure will bear upon the decision-maker as time passes, leading to the possibility that92: "[t]hat pressure could well unconsciously affect the process of decision- making and the process of giving reasons for decision. The decision that is easiest to make and express will have great psychological attraction." 88 cf Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273 at 282-287 [26]-[40]. In a case of serious delay and complex evidence a suspicion may arise that the decision-maker was unable, in the end, to grapple adequately with the issues. 89 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306 at 327-330 [87]-[88]; 160 ALR 588 at 615-618; Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at 1614-1616 [90]-[100], 1627 [164]; 200 ALR 447 at 470-473, 488; Galea v Galea (1990) 19 NSWLR 263 at 265-267. 90 Jones v The Queen (1997) 191 CLR 439 at 467; Lend Lease Development Pty Ltd v Zemlicka (1985) 3 NSWLR 207 at 209-210. 91 (2004) 140 FCR 17. See also Hadid v Redpath (2001) 35 MVR 152 at 159-160 92 (2004) 140 FCR 17 at 33 [74]. Kirby These comments are addressed to a human propensity. They are not confined by the legal character of the body in which the propensity may be manifested. Where there is a possibility that the foregoing might have occurred, it is incumbent on a court, reviewing the impugned decision in an appeal or on judicial review, to approach its task with vigilance93. Where the decision-maker reaches a decision in reliance upon considerations of the credibility of parties or witnesses, significant delay undermines the acceptability of such assessments. Where there is lengthy delay in the provision of a reasoned decision, whether by a judge or a tribunal, it may not be enough for the decision-maker simply to announce conclusions on credibility. It may then be necessary to say why the evidence of a witness is believed or disbelieved, in effect to demonstrate that any countervailing evidence has not been forgotten or overlooked. That it has not been would, in a timely provision of the decision, more readily be assumed94. Administrative delay: There are important differences between the role of an appellate court disposing of an appeal against a judicial determination, and the reasons that support it, and the function of judicial review of the decision and reasons of an administrative tribunal. Most especially, courts engaged in judicial review are not concerned, as such, with the factual merits of the impugned decision whereas, depending on the contested issues and the enabling legislation, an appeal may involve a reconsideration of the factual as well as the legal merits of the case95. Nevertheless, there is an obvious intersection between the process of appeal and judicial review, so far as each is concerned with questions of the fairness and justice of the process by which the impugned decision has been reached. In both procedures, the court is obliged to ensure compliance with the fundamental principles of fairness and justice96. It must uphold a standard of decision-making that enjoys, and deserves, the confidence of the parties, the community and knowledgeable observers. In one sense, the invalidating effect of delay in the provision of reasoned decisions will be more obvious in the case of administrative decision-makers, 93 cf Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at 1617 [105]-[106]; 200 ALR 94 Expectation Pty Ltd v PRD Realty Pty Ltd (2004) 140 FCR 17 at 33 [72]. 95 Fox v Percy (2003) 214 CLR 118 at 126-127 [24]-[26]; cf at 163 [143]. 96 A recent appeal in which a denial of procedural fairness was at the forefront of submissions was Waterways Authority v Fitzgibbon (2005) 79 ALJR 1816 at 1824 Kirby such as the Tribunal, than in the case of judges and courts. Typically, judges are required to decide more complex controversies. These often necessitate more detailed reasoning. They commonly oblige a lengthier time for reflection, analysis and exposition of the reasons. Moreover, judges are members of a trained profession to whom are conventionally ascribed capacities of analysis and discipline in decision-making superior to those possessed by, or expected of, most members constituting statutory tribunals97. It is the nature of the work of most judges that it usually involves greater variety than is typically the case of administrative bodies, such as the Tribunal. A special danger of delay in the case of a tribunal, such as that in question here, is the risk of confusion between the facts of similar applications and elision between impressions about the reliability and truthfulness of witnesses in one case compared with another having common factual and legal features. It is a commonplace of decision-making that the peculiarities of individual cases may be erased from the memory by later similar cases. In a sense, this is a protective device of the mind. However, it is one destructive of easy recall of an individual case, particularly where it has similarities to many others and was heard much earlier. It is therefore incorrect to suggest that the general principles expressed by appellate courts in relation to the effects of delay upon judicial decision-making have no relevance to the consequences of delay for judicial review of decisions of administrative tribunals98. Care must be observed, it is true, in proceedings of the latter kind, so as to avoid review on the factual merits. But, in so far as identical considerations of law are invoked, they invite a like analysis. Thus, judicial review, as much as appellate reconsideration, may address a party's complaint that the outcome of the impugned process is flawed because it has offended the assumptions of the legislation and specifically the requirements of procedural fairness (natural justice) and the obligation belonging to tribunals, as much as courts, to perform their functions in ways that are manifestly fair and just99. 97 cf Krivoshev [2005] NSWCA 76 at [123]-[124] per Giles JA. 98 See eg Campbell v Hamlet [2005] 3 All ER 1116 at 1123-1124 [27]-[31]; Barker v Home Office [2002] UKEAT 804_01_0808; Olwa v North Glasgow University Hospitals NHS Trust [2004] UKEAT 0067_02_2203; Uphill v Colas Ltd [2004] UKEAT 0323_04_0912. 99 R v Sussex Justices; Ex parte McCarthy [1924] 1 KB 256 at 259. See Johnson v Johnson (2000) 201 CLR 488 at 502 [42]. "Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice": Re Minister for (Footnote continues on next page) Kirby The foregoing, which follows as a matter of legal principle, is confirmed by countless decisions in other jurisdictions of the common law where relief has been provided in proceedings for judicial review directed to tribunals and other administrative decision-makers. In the United Kingdom, the general principles concerning delayed judgments have been applied to tribunals that issue decisions as much as to courts100. Specifically, the standard introduced into United Kingdom law by the Human Rights Act 1998 (UK) has been applied to administrative tribunals as well as to courts101. Lest it be said that the pure stream of administrative law in the United Kingdom has lately become contaminated by extraneous notions of European law, a glance at decisions in other common law jurisdictions shows similar developments. I have already mentioned Blencoe v British Columbia (Human Rights Commission)102 and Country Leathers Manufacturing Ltd v Graham103 in Canada, to which might be added Martineau v Matsqui Institution Disciplinary Board104 where Dickson J approached the complaint about delay on the part of a tribunal by asking the question "Did the tribunal on the facts of the particular case act fairly toward the person claiming to be aggrieved?". His Lordship suggested that this was the "underlying question" posed for courts dealing with the complaints about non-compliance by administrative obligations of natural justice and fair procedures. tribunals with The decision in Martineau was unaffected by the Charter. In the United States of America, significant delay in the provision of decisions with adequate reasons may present constitutional issues of due process105. However, when Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 14 [37] per Gleeson CJ. 100 eg University of Southampton's Applications [2005] RPC 11 at 225-226 [7] per 101 eg Bangs v Connex South Eastern Ltd [2005] 2 All ER 316 (a case of delay of more than one year from the hearing of a complaint of race discrimination to the decision of the Employment Appeal Tribunal); cf Porter v Magill [2002] 2 AC 357 at 396, 425-426 (CA); 480 [57], 496-498 [108]-[114] (HL). 102 [2000] 2 SCR 307. 103 (2003) 239 Sask R 209. 104 [1980] 1 SCR 602 at 631. 105 Porter v Estate of Spates 693 So 2d 88 (Fla App 1 Dist 1997). Kirby examined, the case law refers to considerations similar to those identified above. The separation of each of the three branches of government in the United States has produced a doctrine of deference to administrative decision-making that has never been accepted in Australia or other Commonwealth countries106. The authorities on US administrative law, referred to by Gummow J in his reasons107, have to be read with this caveat in mind. In Australia, at least in respect of officers of the Commonwealth, we embarked in a constitutional direction different from that of deference to administrators108. It is one that affords to the courts the jurisdiction and power to ensure compliance with the law by federal office-holders, including, relevantly, members of the Tribunal109. This is a distinctive feature of our constitutional arrangements. It is reflected in the provisions of the Judiciary Act. This Court should not in any way diminish it. Where significant delay is shown in the determination of proceedings before an administrative tribunal, there is no reason of principle for the adoption of a lesser standard of justice and fairness from that applied to like complaints about judicial decisions. In point of legal principle and policy, there is every reason for applying similar principles, at least where the administrative decision- maker is a quasi-judicial body, like the Tribunal, dealing with issues of great importance to the persons before it and to the community and doing so in accordance with procedures required by statute, as elaborated by the common law, that have to be fair and just. Where there is excessive delay110, and the demonstration of errors that may "even possibly [be] attributable to the delay", the court considering that complaint will set the decision aside where it concludes that the decision is unsafe and that "to allow it to stand would be unfair to the complainant"111. 106 See eg Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 153-155 [44]-[47]; cf Aronson, Dyer and Groves, Judicial Review of Administrative Action, 3rd ed (2004) at 214. 107 Reasons of Gummow J at [19]. 108 In the Constitution, s 75(v). 109 Plaintiff S157/2002 (2003) 211 CLR 476 at 506-507 [76]-[78]. 110 In Cobham v Frett [2001] 1 WLR 1775 at 1783, which was an appeal from the Court of Appeal of the British Virgin Islands, the Privy Council held that a court delay of "12 months would normally justify that description". 111 Cobham [2001] 1 WLR 1775 at 1783-1784 per Lord Scott of Foscote. There are resonances in this test of "fairness" in the judicial scrutiny of prosecution conduct in a criminal trial: see Mallard v The Queen [2005] HCA 68 at [74], [83]. Kirby Delay in asylum cases: Of special relevance to the present case is the fact that the delay complained of occurred in a tribunal which, quite apart from the statutory injunctions contained in s 420 of the Act, of its very nature needs to decide applications promptly in order to fulfil its statutory purposes. In the past, this Court has referred to the vulnerability of many of the persons who are applicants before the Tribunal112. Not infrequently, they are desperate. Sometimes they are subject to prolonged detention with the serious consequences that this involves for themselves and their families, anxiety about the future and concern about life itself if they are returned to the country of their nationality. Such considerations have caused the Immigration Appeal Tribunal in the United Kingdom to draw attention to the particularly serious outcome of delay in cases of contested claims to refugee status. In SB (Sufficiency of Protection – Mafia) Albania113, that tribunal was concerned with a case involving a five month delay from the completion of the hearing to the issue of its determination. In the event, the appeal was dismissed. However, the tribunal identified the standard which, it considered, should apply to such decisions, by virtue of their very character and purpose114: "[I]n asylum appeals a delay of three months between the hearing and preparation of the determination is unacceptable. The nature of the issues raised particularly in an asylum appeal are such that undue delay causes unnecessary worry and prejudice to a deserving claimant and equally it is not in the public interest where the claimant is undeserving. Asylum, immigration and human rights appeals should be determined with as little delay as possible ideally on the day or at least within days of the hearing. It should only be in exceptional cases that any further delay is justifiable." There is no reason why a different, and lesser, standard should be applied in Australia where there are considerably fewer applications for refugee status than in the United Kingdom and where, unlike that country, mandatory detention is commonly required of applicants who have no bridging or other visa115. When the standard of three months, or even five months, or indeed of a year is applied to the present case, the true significance of the serious delay that occurred can be seen in a stark light. 112 Abebe v The Commonwealth (1999) 197 CLR 510 at 577-578 [191]. 113 UKIAT [2003] 00028. 114 UKIAT [2003] 00028 at [16]. 115 Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 219 CLR 365; Al-Kateb v Godwin (2004) 219 CLR 562. Kirby Conclusion: invalidating delay: The result of this analysis is that prima facie the delay that happened before the Tribunal, in the provision of its reasoned decision in this case, was materially excessive. On the face of things, it deprived the appellants of a "decision" of the type required by the Act116. It rendered suspect the reasons, findings and references to the evidence contained in the Tribunal's "decision". The "decision" was not reached by a process that was procedurally fair and just to the appellants. By reason of the delay, the "decision" was presumptively flawed by jurisdictional error. Allowing that the entire delay between the original application to the Tribunal and the ultimate decision must be adjusted by reference to the interval between the relevant hearing and the decision, the delay remained nearly five years. This is because the principal evidence given by the appellants was given at the first hearing in May 1998. The hypothesis of the Minister's case is that the Tribunal could remember, assess and evaluate that evidence, for the credibility findings that it made four years and seven months later. I support the analysis and conclusion on this point of Callinan and Heydon JJ117. Administrative injustice and jurisdictional error The statutory postulate of decision-making: It is true that this Court, and other courts engaged in judicial review of administrative action, have no general jurisdiction to "cure administrative injustice or error"118. However, where complainants bring their claim within the established categories of jurisdictional error, relief will prima facie be available. Here, the relevant error complained of is a departure from the postulate of decision-making in the Act and specifically breach of procedural fairness. The requirement that a decision-maker provide affected persons an opportunity to present their case before making a decision carries with it a correlative obligation on the decision-maker's part to adopt 116 A failure to conform to the basic requirements of procedural fairness (natural justice) deprives the decision of "privative clause" status: Plaintiff S157/2002 (2003) 211 CLR 476 at 508 [83]; Minister for Immigration and Multicultural and Indigenous Affairs v SGLB (2004) 78 ALJR 992 at 1001 [49]; 207 ALR 12 at 23- 24; SAAP v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 79 ALJR 1009 at 1026 [79], 1028 [93]-[94], 1036 [149]; 215 ALR 162 at 117 Reasons of Callinan and Heydon JJ at [168]-[170]. 118 Quin (1990) 170 CLR 1 at 35-36, cited by Gummow J at [15]. See also reasons of Kirby procedures that permit the decision-maker to consider fairly the case so presented. Finkelstein J put it this way119: "A corollary of the basic right to make representations is that the representations should be taken into account120. What is the point of giving someone a right to be heard unless, in arriving at the decision, the decision-maker considers the evidence and has regard to the manner in which it is given." As observed by Callinan and Heydon JJ, one way in which a decision- maker can breach this requirement is if the decision-maker is infected with bias121. This is because bias prevents the decision-maker from fairly considering the case before it. By analogy, the delay in this case impaired the Tribunal's capacity to assess the case presented by the appellants, and in particular the Tribunal's capacity to make a proper assessment of the appellants' credibility. As such the requirements of procedural fairness applicable to the Tribunal were not fulfilled122. Remedying a substantial risk of unfairness: I also agree with Gleeson CJ that, in order to make good a claim of unfairness, it is sufficient to establish that there was a substantial risk123 that the Tribunal's capacity to assess fairly the appellants' evidence, and to carry out its decision-making functions conferred by the Act, was impaired by the procedures adopted by the Tribunal. I do not agree with the opinion of Hayne J that the appellants must demonstrate that the risk that the Tribunal did not fairly assess their evidence actually eventuated124. Such an approach falls into the very error that it seeks to avoid because it necessarily involves an impermissible review of the merits of the decision. The concern of a court, in exercising its power of judicial review and evaluating the complaint of unfairness, is with the procedure followed by the Tribunal. The concern is not, as such, with the decision ultimately reached. For this reason, whether or not the Tribunal was in fact disabled from assessing the appellants' evidence, or whether 119 (2004) 134 FCR 85 at 100 [62]. 120 Wiseman v Borneman [1971] AC 297 at 315. 121 Reasons of Callinan and Heydon JJ at [172]. 122 Reasons of Callinan and Heydon JJ at [172]. 123 See reasons of Gleeson CJ at [10]; cf Finkelstein J in the Full Court: (2004) 134 FCR 85 at 99 [61]. 124 Reasons of Hayne J at [136]. Kirby or not the ultimate outcome was in fact affected, is not determinative125. It can reasonably be inferred from the serious delay in this case that there was a real risk that the Tribunal's capacity to assess the appellants' evidence was impaired. As such, the decision was flawed for want of procedural fairness. Nor do I believe much assistance can be derived from the distinction between a "review of the exercise of executive power" (said to fall within the permissible scope of judicial review) and "a review of the merits of the way in which that power had been exercised" (said to fall outside such a scope)126. Where judicial review is sought on the grounds of breach of the requirements of procedural fairness, it is precisely the merit of the way the decision-making power was carried out that is at issue. If that power is exercised in a manner that is unfair, within the authorities on procedural fairness, the decision may be invalidated by jurisdictional error for that reason127. The provision of relief is then within the discretion of the court conducting the judicial review. The suggested justifications fail Use of notes and recordings: In the Full Court, Hill J speculated on the possibility that the Tribunal member might have corrected or repaired the problem of delay by reviewing notes that he had taken at the time of the hearing concerning his impression of witnesses or by listening to the recording of the original hearing so as to recapture the impressions of that time128. This passage in Hill J's reasons is cited, apparently with approval, by Gummow J129. I cannot agree. Re-reading transcript years after oral evidence is given and even listening to sound-recorded evidence (assuming that this occurred) cannot substitute for contemporaneous experience and evaluation. The Tribunal, which well knew of the delay in this case, made no reference to using contemporaneous notes or taking the postulated precautions. Ironically, its only reference to delay was to condemn the appellants, with all the disadvantages which they faced, for 125 Similarly, where a decision is challenged for want of an opportunity to be heard, the affected person does not need to demonstrate that, if heard, he or she would have been believed: see reasons of Gleeson CJ at [10]. 126 Reasons of Hayne J at [135]. 127 Plaintiff S157/2002 (2003) 211 CLR 476 at 494 [37]. 128 (2004) 134 FCR 85 at 90-91 [17]-[18]. A passage is cited in the reasons of Callinan and Heydon JJ at [153]. 129 Reasons of Gummow J at [54]. Kirby delaying a mere five months after their arrival in Australia (and whilst their visitors' visas were still valid) before making their claim for refugee status130. I would answer the suggested justification, or exculpation, for the Tribunal's delay in the compelling words used by Heydon JA in Hadid v Redpath131. There, a similar postulate was advanced. If "the Tribunal" is substituted for "the trial judge" and "the appellants" for "the plaintiff", Heydon JA's words apply exactly to the circumstances of this case132: "[N]o favourable assumptions could be made, and it was up to the trial judge to put beyond question any suggestion that he or she had lost an understanding of the issues. Something should be said about how the possible effects of delay on the judicial process have been overcome. Some explanation should be given as to how the trial judge had recorded or recaptured impressions formed of witnesses at the time they testified. A judge might, for example, say 'I have a perfect recollection of all the 'I have contemporaneous notes of my characters in the trial' or impressions'. … [T]he trial judge made no statements of the kind just indicated, and no assumption in her favour that she had retained any relevant impressions could be made." Of course, if a trial judge or tribunal member made such statements, they would not necessarily be accepted at face value. The delay between the hearing and decision in Hadid was twelve months. Here, the operative delay was very much longer. Entry into the merits: Nor do I accept that the conclusion that I favour, together with Gleeson CJ, Callinan and Heydon JJ, involves an impermissible shift from the proper province of judicial review to an appeal-like consideration of the issues before the Tribunal on their factual merits133. A line of demarcation exists134. However, there are necessarily points of intersection between the two procedures. Proof of a "breach of natural justice" is one instance. For such proof, it is not necessary in Australia to establish mala fides on the part of the 130 The passage of the Tribunal's decision appears in the reasons of Callinan and 131 (2001) 35 MVR 152. 132 (2001) 35 MVR 152 at 159-160 [34]; cf Cobham [2001] 1 WLR 1775 at 1783 133 Reasons of Gummow J at [21], [23]; reasons of Hayne J at [135]. 134 Walton v Gardiner (1993) 177 CLR 378 at 407-409. Kirby administrator. To the extent that the authority cited by Gummow J suggests otherwise135, it does not represent the law of this country. Politics and cost: Nor do I agree with the suggestion that, because a decision in a particular case of gross delay might involve consequences for other cases, and hence demand the expenditure of funds by the Executive Government, such decisions are "political", such that they must be left entirely to the Executive and to Parliament136. A great many decisions of this Court, declaring the law, have economic consequences, whether for government or for corporations and individuals. Sometimes the consequences are very large and costly. But where the law so requires, this Court has not, in the past, withheld relief for that reason alone. In Dietrich v The Queen137, the dissentients made remarks similar to those contained in the reasons of Gummow J in this case. Although the decision in that appeal138 had far greater potential economic consequences, this Court concluded that the law required that the rule be stated, as it was. How much less applicable is the notion of withholding relief in the present case? The delay here was extraordinary. The case is exceptional. Provision of relief to the appellants immediately affects only their hearing. And in so far as it may contain suggestions of a wider principle, applicable to other cases of refugee claims, it is material to remember the observations of the Immigration Appeal Tribunal in the United Kingdom about the special need for quick determination of cases of this kind139, just as the Australian Federal Parliament has itself envisaged140. None of the foregoing suggested justifications for the decision of the Full Court is persuasive. However, the provision of relief of the kind that the 135 See May LJ in R v Chief Constable of the Merseyside Police; Ex parte Calveley [1986] QB 424 at 439, cited by Gummow J at [22]. 136 Reasons of Gummow J at [19]. 137 (1992) 177 CLR 292 at 323, 350. 138 Effectively requiring provision of counsel at trial, at public expense, to represent a person not otherwise able to afford legal representation to defend a serious criminal charge. 139 See SB (Sufficiency of Protection – Mafia) Albania UKIAT [2003] 00028 at [16]. See also König v Federal Republic of Germany (1978) 2 EHRR 170 at 197 [99]. 140 The Act, s 420(1). Kirby appellants have sought is discretionary141. Given that this Court, unlike the Full Federal Court, must now exercise the discretion, are there reasons for refusing relief to the appellants on that ground? The discretionary arguments fail The mandamus argument: In her written submissions, the Minister submitted that relief should be refused because, in effect, the appellants stood by and took advantage of the Tribunal's delay, or waived any complaint about that delay. Instead, it was suggested, if they had been truly aggrieved by the Tribunal's delay, they ought to have sought relief in the nature of mandamus to require the Tribunal to exercise its jurisdiction142. This submission was ultimately disclaimed during oral argument143. However, it is referred to in some of the other reasons144. I will therefore express my views on it. I do not doubt that the relief of a writ of mandamus might have been sought. After even part of the delay that existed in this case, such relief would doubtless have been granted145. However, if the realities of the appellants' situation are considered (as distinct from theoretical arguments) it appears unrealistic to expect them to initiate such court proceedings. They were not in immigration detention in Australia. They had no real incentive to seek relief. They would have been entitled to draw an inference from the extended delay that their case was not being considered unfavourably. Otherwise, an early adverse decision would have been made. By inference, their access to legal advice would depend upon pro bono assistance of lawyers or help from their community, which would be limited and shared with many others. In any case, the issue presented by the appellants' submissions is one that concerns the public law and the standards of administrative justice in this country. It could not seriously be contended that the appellants personally would have been aware of the legal principles governing delay in administrative decision-making and the explanations which courts have given concerning the disadvantages that delay presents to the proper disposition of decisions by administrative tribunals. The mandamus argument fails. 141 Aala (2000) 204 CLR 82 at 89 [5], 106 [51]-[52], 136 [145], 144 [172]. 142 See eg reasons of Gummow J at [40]. 143 [2005] HCATrans 651 at 843-846. 144 See reasons of Gleeson CJ at [5]; reasons of Gummow J at [40]-[42]. 145 See R v Secretary of State for the Home Department; Ex parte Phansopkar [1976] QB 606, cited by Gummow J at [38]. Kirby The futility argument: The Minister suggested that a further reason for refusing relief was that, when analysed, the reasons of the Tribunal, although greatly delayed, were careful and compelling. For this reason, it was argued, there was no operative jurisdictional error. Implicit in this submission was the suggestion that a rehearing before the Tribunal would be doomed to fail. I accept that some of the country evidence collected by the Tribunal in its reasons for decision is persuasive. If maintained and believed, it might persuade the Tribunal, acting with proper speed, to reject the appellants' claim. However, that claim was not rejected by the Tribunal solely on the basis of such evidence. Substantially, it was rejected because the appellants were not believed. In effect, the Tribunal did not believe that the appellants had a relevant "fear" as required by the Act and the Refugees Convention, still less that the "fear" was "well founded". In so far as these conclusions rested upon assessments of the credibility of the appellants, in the circumstances of such gross delay, they were flawed, for the reasons that I have stated. It is not for this Court to assess the merits and likely outcome of a proper hearing of the appellants' application before the Tribunal. To assume that function is, with respect, to fall into the very error that the differentiation between judicial review and merits review forbids146. Where jurisdictional error is shown, this Court does not second-guess the decision of the body authorised by law to make the relevant determination147. It performs its function by identifying the relevant error, quashing the decision that is affected by it and requiring that the matter be reheard, freed from the error so identified. In the present case, fairness and justice to the appellants requires the provision of such relief. Such relief will also have the merit of upholding the proper discharge by the Tribunal of its important functions in the manner provided by the Parliament and in accordance with the assumptions inherent in the statutory provisions. It will also state the standards of administrative justice to be observed. Orders I agree in the orders proposed by Gleeson CJ. 146 cf reasons of Gummow J at [21]. 147 Roncevich v Repatriation Commission (2005) 79 ALJR 1366 at 1384-1385 [97]- [104]; 218 ALR 733 at 757-759. Hayne 126 HAYNE J. The disposition of this matter must begin from the recognition that it concerns the exercise of statutory powers and obligations by the Executive Government. It therefore invokes principles of judicial review of administrative action, not principles of appellate review of a curial decision. In particular, the matter arises out of a review by the Refugee Review Tribunal ("the Tribunal"). That body was established by the Migration Act 1958 (Cth) ("the Act") to review certain decisions made by the Executive, including decisions that a non-citizen is not a refugee148, and for that purpose to exercise149 all the powers and discretions conferred by the Act on the respondent Minister to grant or refuse to grant a protection visa150. The particular complaint made by the appellants, though variously expressed, was that the Tribunal took so long between first receiving oral evidence from the appellants (on 6 May 1998) and deciding the review (on 20 December 2002) that the Tribunal either denied the appellants procedural fairness or otherwise failed to conduct "a real review as required" by the Act. The limits of the role of the courts on judicial review of administrative action are well established. "The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power."151 The merits of administrative action, here the merits of the decision made by the Tribunal, "to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone"152. Reduced to its essentials the appellants' argument was: The Tribunal decided not to accept parts of the appellants' evidence about events they said had happened. 148 Migration Act 1958 (Cth), ss 411(1), 414. The Act was amended many times over the period between the appellants first applying to the Tribunal for review and the Tribunal deciding that review. Nothing now turns on any of those amendments. It is convenient to refer to the Act in the form it took at the time the applicants sought review – 5 June 1997 – even though some of the subsequent amendments applied to the uncompleted review. 151 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35-36 per Brennan J. 152 Quin (1990) 170 CLR 1 at 36 per Brennan J. Hayne The decision to accept or reject oral testimony about past events depends, at least in part, upon whether the decision-maker believes the person giving the evidence. Impressions of the witness and the way in which the witness gave evidence (the witness's "demeanour") can and should be taken into account in deciding whether to accept the evidence, but that must be done at or soon after the time the evidence is given, because impressions fade and assessments of demeanour become increasingly unreliable as time passes. The appellants "had a right to have their evidence properly evaluated and this included an assessment of the manner in which they gave their evidence" because justice must not only be done, it must be seen to be done153. The invocation of the well-known aphorism about the appearance of justice reveals that the appellants' argument, at its last step, depended upon equating processes of judicial review of administrative action with appellate review of curial decision-making. The applicable principles are radically distinct and cannot be equated. To point to the fact, as the appellants did, that the Tribunal did not accept evidence that they had given several years before the Tribunal decided the review is relevant and important only to the extent to which it sheds light upon whether the Tribunal failed to exercise its powers and perform its functions according to law. The Act required the Tribunal to invite the applicants for review (the appellants) to appear before the Tribunal to give evidence154. This and other aspects of the statutory specification of the Tribunal's duty and power to conduct the review were to be read as conditioned upon the Tribunal's observance of the requirements of procedural fairness155. The Act's requirement that the Tribunal 153 R v Sussex Justices; Ex parte McCarthy [1924] 1 KB 256 at 259. 155 Kioa v West (1985) 159 CLR 550 at 615 per Brennan J; Quin (1990) 170 CLR 1 at 40 per Brennan J; Annetts v McCann (1990) 170 CLR 596 at 598-600 per Mason CJ, Deane and McHugh JJ, 604-605 per Brennan J; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 591 per Brennan J; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 99-100 [38]-[39] per Gaudron and Gummow JJ; see also at 89 [5] per Gleeson CJ, 131 [132] per Kirby J, 142-143 [168] per Hayne J; Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 at [10]. Hayne invite applicants for review to appear to give evidence, even if considered in isolation from the requirements of procedural fairness, would readily yield the conclusion that any evidence thus given was to be received in a manner that would permit the Tribunal to take that evidence, fairly assessed, into account in deciding the review. And that aspect of the requirements of procedural fairness that obliges a decision-maker, like the Tribunal, to give persons affected by a decision that is to be made an opportunity to be heard would serve only to reinforce that conclusion. The appellants did not complain that there had been no opportunity to be heard in such a way that the evidence they gave could be used by the Tribunal in making its decision. Rather, the appellants' complaint was that there had been such delay between the giving of the evidence and the making of the decision that the Tribunal either did not properly assess the evidence they had given or could not have made a proper assessment of that evidence. The difference between the two propositions is real and radical. The former proposition (that the Tribunal did not properly assess the evidence the appellants gave) is a proposition that would be apposite to an appeal. It is not apposite to an application for judicial review. On an appeal from the decision of a court, the trial judge's delay in deciding disputed questions of fact may found a conclusion that the fact-finding process miscarried. Especially is that so if the delay is measured not in weeks, but in months. But the question presented by the appellants' application for relief under s 39B of the Judiciary Act 1903 (Cth) was whether jurisdictional error was demonstrated. In particular, was there shown to have been a want of procedural fairness or some other failure to comply with the law limiting and governing the exercise of the Tribunal's power? In that regard, the second proposition advanced by the appellants (that the Tribunal could not have made a proper assessment of their evidence) requires further elaboration and examination. In particular, it is a proposition that gives relevant content to the requirements of procedural fairness by requiring that an opportunity be given to the appellants to be heard by receiving their oral evidence in such a way that the evidence could fairly be assessed and then used by the Tribunal in reaching its decision. It is convenient for present purposes to assume that to be so and not to pause to consider how such an articulation of the requirements of procedural fairness would accommodate, or be accommodated to, the provisions of the Act156 that authorised a Tribunal member to authorise another person to take evidence for the purpose of a review. It is convenient to make that assumption because there was, and could be, no evidence about how the Tribunal made its decision beyond what appeared in the statement of its Hayne reasons. That being so, it is not possible to say when or how the Tribunal made the assessment it did of the evidence the appellants had given and it cannot be said that the Tribunal did not receive the evidence they gave in such a way that their evidence could fairly be assessed. It follows that it was not demonstrated that there was a breach of "the law which determines the limits and governs the exercise of the repository's power"157. The appeal should be dismissed. A majority of the Court reaches the opposite conclusion. It is said that the circumstances of the matter are unusual and that the Tribunal is an unusual body performing functions in ways that are similar to the way in which courts proceed. That may be so, but the Tribunal is not a court and what the appellant sought was judicial review of the exercise of executive power, not a review of the merits of the way in which that power had been exercised. It is also said that there was a risk that the Tribunal's capacity to evaluate the appellants' evidence (or its capacity otherwise to discharge its obligations) was impaired. But the appellants did not demonstrate (and it is not said that they demonstrated) that this risk had come to pass. The principles of judicial review that are to be applied in this matter are, and must be, principles of general application governing the exercise of judicial power under s 75(v) of the Constitution in marking the boundaries to, and enforcing, the application of executive power under statute. No special principles can be devised to apply only to the judicial review of decisions of the Tribunal, or some subset of those decisions identified as exceptional, unusual, or rare. Nor is there any principle of judicial review that operates by allocating the risks of maladministration or fixes the outcome according only to whether terms like "default", or "unreasonable", can be attached to what has occurred. The principles to be applied are more precise. In this case, they required the identification of jurisdictional error and none was demonstrated. The appellants' contention that the Tribunal had failed to conduct "a real review as required" by the Act was no more than an emphatic statement of their proposition about procedural fairness. It was not a proposition seeking to articulate some limit on the Tribunal's exercise of power in addition to the statutory requirement to give the appellants an opportunity to give evidence and the requirements of procedural fairness. It raised no issue different from those considered above. The appeal should be dismissed and the consequential orders proposed by Gummow J should be made. 157 Quin (1990) 170 CLR 1 at 35-36 per Brennan J. Issue The question in this appeal is whether an extraordinarily prolonged delay by the Refugee Review Tribunal in determining the appellants' applications for protection visas under the Migration Act 1958 (Cth) ("the Act") gave rise to an abuse of process such as to render the decision of the Tribunal refusing them invalid. Facts The appellants, a man, his wife and their daughter, are Bangladeshi citizens. They arrived in Australia on 3 August 1996 and lodged applications for protection visas on 28 January 1997. The adult appellants claimed that they had a well-founded fear of persecution in Bangladesh because their marriage was a mixed one, the husband being a Muslim, and his wife Catholic. The claim on behalf of the third appellant is of fear of persecution as the child of a mixed marriage. By letter dated 27 May 1997, the husband was notified by the delegate of the first respondent that his application, and that of his wife and daughter, had been refused. The appellants applied to the second respondent, the Tribunal, for a review of that refusal on 5 June 1997. They provided letters in support of their application. On 15 April 1998, the Tribunal sent a notice to the appellants inviting them to attend a hearing at the Tribunal to give evidence in support of their application. The hearing was fixed for 6 May 1998. The first appellant sought to have Ms Elizabeth Rozario, author of one of the letters supporting his application, give evidence by telephone from Bangladesh. The application was refused in writing on 1 May 1998, on the basis that the appellants had already had an opportunity to obtain evidence, and that, in any event, the Tribunal would be prepared to receive evidence by facsimile. At the hearing before the Tribunal (Mr Roger Fordham), the adult appellants gave oral evidence in support of their claims. On 9 June 1998, the second appellant sent a written submission to the Tribunal in support of their claims. Apart from the notification by the appellants of a change of address to the Tribunal in November 2000, there was no further communication between them for three years and five months, that is, until 30 November 2001, when the Tribunal invited the appellants to attend a further hearing on 19 December 2001. On 18 December 2001, the appellants' legal adviser, who had only recently come to act for the appellants, provided a deal of written material to the Tribunal and sought leave to make further written submissions within a reasonable time after 7 January 2002 because he would not be available until that date. The appellants did however attend the further hearing which took place on 19 December 2001 and gave evidence at it. On 5 February 2002, the Tribunal provided the appellants' legal advisers with a transcript of the expert and other country evidence that it had by then taken, some of which, and some of the appellants' responses to it, came to be summarized by the Tribunal in its subsequent reasons for decision delivered nearly a year later. "At the continuation of the Tribunal hearing on 19 December 2001 the Applicants appeared with a new representative who had recently taken on the matter. The Applicants said that the only slight change which had occurred was that the Applicant, husband, had remained a nominal Muslim but socialised with the Catholic community as both wife and daughter are Catholics. I put to the Applicants that the Tribunal had undertaken investigations after the first date of hearing and had independent material before it concerning mixed marriages in Bangladesh. Information from the Australian High Commission advised [that as of 27 May 1999]: 'A. There are no official statistics available on the incidence of mixed marriages in Bangladesh. Marriages are registered at the district level and not recorded centrally. B. While marriages between people from different religious groups is not an issue we focus on when monitoring the media, in the two years and four months of my posting I do not recall any media reports on this issue. The senior political/economic les officer, who has worked at the mission for five years and before that was a senior newspaper journalist, cannot recall any reports on problems arising from mixed religious marriages in over 10 years. Press reports of problems in marriage usually focus on violence against women from within the family and violence against women (particularly acid throwing) by disgruntled suitors. C. The best known mixed marriage in Bangladesh is between two leading dramatic artists. He is a Hindu and a leading playwright, actor, television newscaster and commentator on cultural affairs. She is from a prominent Muslim family and is a leading actor. They married in the early 1970s and neither has changed religion. D. We are not aware of public comment on this issue from religious leaders. We contacted the director general of the Islamic foundation, Maulana Abdul Awal, who said that Muslims may marry non-Muslims, but unless the non-Muslim converts to Islam the marriage will not be recognised under Shariah law. He did not indicate there was any antagonism to Muslims marrying non- Muslims. We have been informed by Hindus that modern Hinduism enables non-Hindus to convert. If the Hindu family accepts the non-Hindu party to a marriage as a Hindu, so will the community. Marriages between people from different religions are specifically recognised in Bangladeshi law under the special marriage act no 3 of 1872 and such marriages are readily accepted in Bangladesh. One of the locally engaged staff of this mission is in a mixed marriage (Hindu/Muslim) and we are aware of others. Mixed marriages can present problems, but the mix is not restricted to religion. Sunni/Shia, rich/poor, educated/uneducated marriages can encounter resistance, but this resistance begins in the family. If the family accepts a marriage, so will the community. Such resistance is much more likely to be encountered at the village level than in cities and towns, where mixed marriages are more frequent. The 10 DFAT locally engaged clerical staff at this mission include a Hindu, a Christian and a Buddhist. The issue of mixed marriages was discussed with them informally. None of them were aware of any problems resulting from mixed religion marriages Bangladesh. While Bangladesh has its religious extremists, the majority of Bangladeshi Muslims practice a tolerant form of Islam. At the last general election in June 1996 the leading Islamic party won one per cent of the seats in parliament. There is some resistance to proselytising Christianity that seeks to convert Muslims, but this is unrelated to marriage. We are not aware of anyone suffering discrimination or disadvantage as a result of a mixed religion marriage. In addition to the sources mentioned above, we spoke with a female barrister who specialises in civil law in one of the country's leading chambers.' Advice from a Muslim sect (Ahmadi) [as] of 18/02/98 was that 'It is highly discrimination as a result of marriage to an Ahmadi.' that a Sunni Muslim would be subjected improbable I put to the Applicants that this was relevant as Ahmadis are considered to be people who are not Muslims by mainstream Muslims in Bangladesh. I further put to the Applicants that the Tribunal had interviewed three people concerning the situation of mixed marriages in Bangladesh. These people were Mr Gamma, a former president of the Bangladeshi community in New South Wales, Dr Mukajee, an expert on Bengal and the issues in that regard and Dr Rosario a sociologist who was herself Bangladeshi. At those interviews Mr Gamma stated that he, as a Muslim was married to a Christian lady and when they married he was ostracised by the Bangladeshis. However, when asked how he became president of the Bangladeshi community he stated that he was elected to this position in an open election and that they were aware of his marriage to a Christian. I put to the Applicants that this could lead me to conclude that Bangladeshis were not overly concerned with the concept of mixed marriage or they would not have elected a person in such a marriage to the position of president. The second person, Dr Mukajee stated that he had never been to Bangladesh and got his information in regard to mixed marriages from the media. I put to the Applicants that the Tribunal had been unable to find any reference to mixed marriages in the media and the Australian High Commission had not been able to either. Dr Santi Rozario gave evidence to the effect that people, particularly in rural communities could be ostracised by the community and that in Bangladesh people needed the community to be able to network, find employment and have social support and if this was withdrawn the consequences could be very serious. I asked the Applicants if they wished to say anything about this material. The Applicant, the husband, said that he was mentally upset at the time and did not want to comment ... The Applicant wife said that although mixed marriages may not affect everyone but the family she had married into had caused problems. She said that when they were living in her husband's village her husband's family had tried to coerce her into converting to Islam and they had later tried to convert her daughter. She said that since she was in Bangladesh so she was unable to comment on the situation from direct knowledge but she had been told by a friend that a fundamentalist Muslim had been asking about her family and whether or not they were planning to return to Bangladesh. I asked if she [the daughter] was aware of anyone who was not friendly towards her and she said that there was an uncle on her father's side. I asked what had happened the last time she had met him. She said she was at school and he had come and said he was taking her to her home but instead he took her to his own home. I asked if she had visited her uncle with her parents and she said she had and that he had visited their home. She said she had seen him a couple of times. I asked what had happened at his home and she said that he had shown her some books and was trying to teach her. I asked if he was friendly when he was doing this and she said that he was. I asked if there was anything bad which had happened to her while she was living in Bangladesh and she said that there had been an incident when she was going to church with her mother she said that there were about five men who stopped them and one of them held a knife to her throat. I asked how she was able to get away from this situation and she said that her mother had said to just continue and go into the church. I asked this Applicant if she felt comfortable talking about this situation and she said that she did. I said that from her description it appeared that her mother had been able to control the situation by just telling her to go on with what she was doing, going to church, and the men did not offer any resistance. She said that was the case but said she couldn't recall this clearly. I turned to the adviser and asked if he had any questions he wished to address to the Applicant. He pointed out that documents had been provided showing that the child had undergone certain Catholic rites and was a practising Catholic." Ten months later, by letter dated 20 December 2002, the first appellant was notified that the decision would be given on 14 January 2003. By letter dated 14 January 2003, the first appellant was advised that "[t]he Tribunal has decided that you are not entitled to a protection visa." In its reasons for decision, the Tribunal gave an account in detail of what the appellants had said and claimed at the first oral hearing. That first account recorded admissions by the husband that certain claims made by himself and his wife were fabricated. The Tribunal suggested to the wife that this indicated that there had been collusion. She denied this, but did not explain how there had not been collusion. There was accordingly a foundation for some, at least, of the adverse credit and factual findings made by the Tribunal. The Tribunal made these findings of fact: "1. The Applicants are in a mixed religion marriage, the husband being Muslim and the wife and daughter being Christian. 2. Neither the wife's nor the husband's family accepted the marriage and they began to live apart from their families in 1984. 3. Both husband and wife have shown themselves to be resourceful and to find employment both overseas and in Bangladesh and be independent of family support. 4. They have been married since 1984. 5. Mixed religion marriages are recognised by the state of Bangladesh. 6. The Applicant, wife, was victim of an act of violence and she suffered a miscarriage following that incident. 7. A murder of an unrelated person occurred in the vicinity of the family home in Dhaka. The Situation Regarding Mixed Religion Marriages in Bangladesh. I find that the state recognises mixed religion marriages and does not condone or sanction discrimination of those marriages. I accept the information from the Catholic priest advising that the church also recognises those unions after counselling. I have been unable to find any reference to particular people in Bangladesh suffering adversely as a consequence of being involved in a marriage between people of different faiths. I accept the advice from the Australian High Commission to the effect that they have never come across any adverse reports in this regard although they monitor the media. Given the presence of the High Commission, the reporting of groups such as Amnesty International and other human rights groups I am of the view that if there were problems in this regard they would have been reported. I also accept the advice of Dr Santi Rozario to the effect that such a union could, in certain circumstances result in a couple being ostracised and bereft of communal or familial support, particularly in the case of people from rural areas. This will depend on the individual circumstances of each case and whether or not there is any significant harm will be a matter of fact and degree. In summary I find that the state recognises marriages of mixed faiths, it does not sanction persecution of people in such relationships. Any harm a person may face for reasons of marriage to a person of another faith will depend on the particular circumstances and demands of the family or community and whether or not they are dependent on the support from those people. Do the Wife and Husband Face a Prospective Real Chance of Harm amounting to Persecution? From the correspondence they have provided I find they have a group of supportive friends in Bangladesh and support through the Catholic church there. Even if, as is claimed, the husband's brother does not support the union and has tried to convert or instruct his niece to Islam I find that the Applicants' accounts of this show that he has not used any influence to do so and when they have objected or removed their daughter from him he has not taken any action or force to take control. I accept that the husband has become alienated from his parents but, this has not affected his right to live separately, to remain married to his wife or to find employment of his choice. When considered as a whole I find that the Applicants [husband and wife] have not suffered harm amounting to persecution for reasons of their marriage in Bangladesh in the past. I have considered the situation as it was when they were living in Bangladesh and find they did not suffer harm amounting to persecution in that time and find no reason to consider they would be at greater risk should they return now or in the reasonably foreseeable future. This being the case, I find the husband and wife do not face a 'real chance' of harm amounting to persecution for reasons of their status as a couple in a mixed faith marriage and that any fears they claim to hold in that regard are not well founded." The adverse view that the Tribunal formed of the husband appears most clearly from these passages in the decision: "He has also claimed that he left Bangladesh as a consequence of a fear of harm. He has worked with foreigners and in foreign cultures for a number of years and had the confidence to inform his former employer that he feared harm to his daughter and that they had faced serious problems in Bangladesh. If this is accepted then I am of the view that he would have made every effort to apply for refugee status and to find out how to do so as soon as possible after arriving in Australia. Although the Applicant (husband) claimed his former employer was ill at that time I do not accept that this, alone, would have deterred him from making arrangements to lodge a claim through other means if he genuinely feared for his well being and that of his family. He did, however, not apply for almost five months after arriving. I find this is inconsistent with his claims to have held such fear that he could not return to Bangladesh. As discussed below I find that the core elements of his claim are fabricated and accordingly I find that his reasons for applying for residency in Australia are other than Convention related ones. Following a brief adjournment the Applicants resiled from the claims in regard to the necklace of shoes and the beating and said that instead they had been forced to leave the village. Accordingly, by their own account the original claim was fabricated and since the accounts were consistent when both Applicants were separated at the hearing it leads me to find that they colluded in this fabrication. If, however, the rest of the account was credible this would not, of itself, be enough to conclude that the account lacked credibility to the extent that the claim to fear persecution could be discounted. However, as discussed below I do not accept the other core claims in regard to Convention persecution and thus find that this is one instance of a series of fabrications and concoctions to provide a basis for a refugee claim. Following the adjournment at the first hearing the Applicant, the husband, resiled from this claim [of being the victim of an attempted stabbing, first raised at the first hearing]." A similarly adverse view was formed of the daughter's evidence: The Claimed attack on the Daughter The Applicants [husband and wife and daughter] all claimed that there was an incident in which the daughter was confronted on her way to church and had a knife held to her throat. At the Tribunal hearing the Applicant daughter, gave evidence in the presence of the parents and the representative and none made any comment on her statement. In regard to this claimed attack I checked several times to see if she felt comfortable talking about it and she said she did. She displayed no signs of trauma or concern. She said that as far as her memory served her she moved away from the claimed attack with no further consequences. She claimed that her mother had said to her just keep walking and that she did so. I find it implausible that an attacker would take the drastic actions, claimed by the Applicants, to prevent a child from being baptised only to let the child walk away and take no further action. Since the claim was that she was going to church and, at the hearing that she was going to be baptised, I am of the view that one of the two priests who claim to know the family personally and who wrote in support of the case would have referred to the claimed attack if it had genuinely occurred." As to the daughter, although the Tribunal accepted that she may have been unsettled by the various changes of circumstances and location to which she had been subjected, it could not regard her as having a well-founded fear of persecution for a Convention reason. The appellants applied to the Federal Court for judicial review of the Tribunal's decision. On 15 April 2003, the Court (Hely J) dismissed the application. The Full Court of the Federal Court The appellants appealed unsuccessfully to the Full Court of the Federal Court (Hill J and Marshall J, Finkelstein J dissenting)158. Hill J was of the view that the delay was not so inordinate as to lead to the conclusion that the Tribunal member more likely than not could not recall some or all of the evidence or the submissions that had been put to him. His Honour listed the reasons for his conclusion as follows159: "It seems to me that the relevant time period to consider in determining whether a delay was so excessive as to give rise to either jurisdictional error is not the time from the institution of the application to the Tribunal for review (that occurred on 5 June 1997) but rather the time which elapsed from the conclusion of the proceedings (which may be either the conclusion of the evidence or the conclusion of the hearing) and 158 NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 134 FCR 85. 159 (2004) 134 FCR 85 at 90-91 [17]-[18]. the giving by the Tribunal of its reasons. It will be recalled that evidence was heard in what may be called two tranches. That is to say that after oral evidence was heard initially on 6 May 1998, the Tribunal held a further oral hearing on 19 December 2001. That second oral hearing was followed by written submissions the last of which was lodged with the Tribunal on 15 March 2002. The Tribunal's reasons were prepared on 20 December 2002 – nine months after final submissions and just over 12 months from the last hearing of oral evidence. Nine months, or for that matter 12 months are very long times indeed. As Finkelstein J has pointed out it may well be that unless the Tribunal member had made notes of his initial views of credibility these initial views may well have been lost in the time which passed from the hearing of evidence to the delivery of reasons. On the other hand it may well be the case, I do not know, that the Tribunal member did keep notes, or was able to recall from a reading of the transcript or from listening to a tape recording of the proceedings the views he held at the time. That does not seem to me to be so improbable as to be able to be rejected. Certainly the Court knows nothing about any notes which the Tribunal member kept at the time nor whether the Tribunal member listened to a recording of the proceedings. The Court is, however, well aware that all proceedings of the Tribunal are taped and reading a transcript of proceedings even up to a year later could easily bring back to mind the reactions which the Tribunal member had when originally hearing the evidence." "In my view, whilst it is undesirable that an application before the RRT take such an inordinate time to determine, there is no denial of procedural fairness in the RRT's decision occasioned by the relevant member's delay in coming to the decision. Further, in this matter, it appears that the delay was partly attributable to the RRT making inquiries from independent experts concerning the appellants' claims regarding inter-religious marriage in Bangladesh. Additionally, the reasons for decision were published only nine months after the receipt of the last set of written submissions from the appellants. The above circumstances do not demonstrate any lack of bona fides in the RRT in the exercise of its power. ... It cannot be said that the RRT did not make an honest or genuine attempt to perform its task." 160 (2004) 134 FCR 85 at 93-94 [35]-[36]. "As a matter of principle ... I am of opinion that if it can be shown that there is a real and substantial risk that an administrative decision- maker has either forgotten important evidence or is unable properly to resolve disputed questions of fact because he cannot recall the witnesses' demeanour his decision is flawed in two respects. In the first place it is the duty of the Tribunal to determine the truth of asserted facts, analyse the law applicable to those facts and determine the case in accordance with the law as interpreted and applied to the facts. If the Tribunal purports to undertake this task without regard to important evidence because it has been forgotten or seeks to resolve difficult questions of fact without taking into account the demeanour of witnesses when that demeanour is important then it is not carrying out its proper function. Indeed, for the Tribunal to proceed in these circumstances would be for it to act in abuse of its power. The appellants lost their case before the Tribunal because their evidence was not believed. The Tribunal was only entitled to reject their evidence after giving full consideration to what was said and the manner in which it was said, if necessary in light of other relevant facts known to the Tribunal. To succeed on the appeal the appellants must show that there is a real and substantial risk that the Tribunal has either forgotten much of the evidence that was led so many years ago or that it can no longer adequately and fairly assess the veracity of the witnesses who gave that evidence. It is impossible for the appellants to make out the first point. The evidence was transcribed. A reading of the Tribunal's reasons, in particular those parts of the reasons which record the appellants' claims, suggests that it took most of its summary of the evidence from the transcript. On one view, it may be said that in its reasons the Tribunal did little more than summarise the transcript. The appellants' demeanour stands in a different light. The transcript discloses nothing about demeanour. Hence the Tribunal must rely on its memory and any notes that may have been taken. It is common enough for decision-makers to make notes recording their impression of witnesses. That may have happened here. But if notes were taken, their content was not sufficient for the Tribunal, at least before it conducted its inquiry after the first hearing, to find against the appellants on credit. In this connection, it is the first hearing which is the critical hearing because 161 (2004) 134 FCR 85 at 99-100 [61]-[64]. most of the appellants' evidence was given on that occasion. Moreover, it was this evidence with which the Tribunal was principally concerned in its reasons, basing its findings on the appellants' credibility with particular reference to that evidence." The appeal to this Court The appellants' argument The appellants accept that whether delay has vitiated an administrative decision such as this one depends upon the statutory framework under which the decision is to be made; the nature of the issues that the decision-maker is required to determine in discharging the statutory function; and the effect of the delay on the fairness of the process by which those issues are to be determined. Those propositions are correct if it is also understood that regard to the statutory framework under which the decision is to be made includes the scope, objects and purposes of the relevant enactment or enactments. The appellants, adopting in substance what Finkelstein J said in the Full Court of the Federal Court, submit that the effect of the delay was that the Tribunal could not possibly properly assess and comment fairly on the appellants' demeanour by the time that it came to make its decision. They contend that a subjective assessment of "fear" was a critical function that the Tribunal was required to perform in determining whether the appellants had a well-founded fear of persecution for a Convention reason, and that such an inquiry necessarily involved an assessment of the appellants' demeanour. The appellants also submit that the relevant period for determining whether the delay vitiated the decision was not just the period from the date on which the Tribunal ultimately reserved its decision until it delivered the decision. They contend that the delay to be considered was the delay between the time when the appellants gave their evidence about "fear" (6 May 1998) and when the decision was made rejecting their evidence (20 December 2002). The first respondent's argument The first respondent does not challenge the proposition apparently accepted by the Full Court of the Federal Court, that excessive delay may lead to jurisdictional error if it is "more probable than not that there has been a miscarriage of justice."162 We interpolate that such a formulation of jurisdictional error may be inapt and too far-reaching for a description of a flawed 162 (2004) 134 FCR 85 at 90 [15] per Hill J; see also at 94 [37] per Marshall J. administrative decision. Erroneous findings of fact may produce a grave miscarriage of justice, but still not constitute jurisdictional error. The first respondent submits that the Tribunal's delay in delivering its reasons did not however affect its assessment of the evidence before it. The Tribunal's conclusion that the appellants did not face a real fear of persecution depended in part on the rejection of some of their claims about harm that they had suffered in Bangladesh, claims which were explored in the first hearing. Two of them had been expressly abandoned and conceded to be fabricated. Other claims rejected by the Tribunal included that the appellants had been forced to leave their village; that the husband had been attacked in 1989; and that the daughter had been confronted on the way to church and a knife held to her throat. In rejecting these claims, the Tribunal was required to evaluate the evidence adduced by the appellants. The first respondent contends that the Tribunal's assessment of the evidence, and therefore its decision to reject the appellants' claims, was not compromised by the delay. Disposition of the appeal Sometimes the pressures of work on administrators and courts can be very great. The sufficiency of the resources and the number of people to do the work depend upon the funds which governments are prepared to expend on them. Not all people have the same capacity for efficient and expeditious work, including decisiveness itself, as others. Care accordingly needs to be taken before condemning what may, in some cases, at first sight appear to be cases of inordinate delay. Nonetheless, nothing, apart from bias or unfairness, is more likely to bring public administration and the law into disrepute than inexplicable prolonged delay in the disposition of matters. Delay of that kind immediately and inevitably raises questions. How earnest was the consideration given to the matter? Did the maker of the decision truly apply his or her mind to it? Did he or she find it too hard? Was the decision-maker distracted? Was the decision in the end made out of desperation, or a realization that it had at last to be given, regardless of its correctness or otherwise? All of these questions can be asked but not satisfactorily answered in this case. That they cannot does not mean that the decision of the Tribunal can on that account alone be set aside. But it does mean that a reviewing court should scrutinize the decision, if not with a disposition against it, at the very least, with scepticism, especially if, as the decision in this case does, it depends in any way at all upon the assessment of competing claims of fact and credit, and impressions based on demeanour. Once the Tribunal received the appellants' application for review of the delegate's decision on 5 June 1997, the Tribunal's duty was to "review the decision": s 414(1) of the Act. The performance of the Tribunal's functions in carrying out that duty is the subject of s 420 of the Act. It provided: "(1) The Tribunal, in carrying out its functions under this Act, is to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick. The Tribunal, in reviewing a decision: is not bound by technicalities, legal forms or rules of evidence; and (b) must act according to substantial justice and the merits of the case." The only sort of error which the Federal Court and this Court may correct in a matter of this kind is jurisdictional error163. A failure to make a quick decision would not, in the context of the Act overall, of itself constitute jurisdictional error164. However, the presence of s 420 in the Act provides an indication of the scope and objects of the Act, and it is a section to which some regard may be had in deciding whether an excessively prolonged decision is one that can be said to have been made fairly. Further, the invitation extended on 15 April 1998 by the Tribunal to the appellants to appear before it was an invitation extended pursuant to the duty created by s 425(1) of the Act requiring the Tribunal to "give the applicant an opportunity to appear before it to give evidence". The process in which the Tribunal engages is administrative in the sense that it does not exercise the judicial power of the Commonwealth. The process is inquisitorial, not adversarial: s 424 of the Act. The process in which the Tribunal engages lacks other elements of judicial adjudication, for example the calling of oral evidence is a matter for the Tribunal, not for applicants (s 426) and the hearings are in private (s 429). But the process has nonetheless much in common with the process of fact-finding after hearing evidence called and tested by adversaries characteristic of trials. Like trials conducted before courts, the 163 The application for judicial review of the Tribunal's decision in this case sought orders of certiorari, prohibition and mandamus pursuant to s 39B of the Judiciary Act 1903 (Cth) on grounds of jurisdictional error. Since the challenge was to jurisdiction, s 474 of the Act did not have the effect of rendering the decision immune to challenge: Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 164 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 628 [49] per Gleeson CJ and McHugh J, 635 [77] per Gaudron and Kirby JJ and 667-668 [178]-[179] per Callinan J. process is dealing with issues which are fundamentally important – here, both for applicants and for the first respondent. Like courts, the Tribunal is dealing with issues which ought to be decided without undue delay. Like trials conducted before courts, the review must conclude with the announcement by the Tribunal of a decision, including the giving of reasons for that decision, the setting out of findings on factual questions, and reference to the evidence or other material on which the findings were based: s 430(1). Like trials, the hearings conducted by the Tribunal are to be "fair" and "just", according to s 420; and while other language in s 420 is intended to free the Tribunal from constraints applicable to courts, the conferment of freedom in those respects is not to undercut fairness or justice. In large measure the achievement of fairness and justice depends on fact- finding which aspires to as much accuracy as is reasonable in the difficult conditions in which the Tribunal must work – difficult because both applicants and Tribunal can be constrained by considerable practical difficulties in discovering material information. It is plain from modern litigious experience that delays before hearings, during hearings or after hearings, are radically inimical to fairness and justice. Some members of this Court, for example, have accepted that in some circumstances, delay in commencing and prosecuting a criminal charge may be so unfairly prolonged as to warrant the granting of a permanent stay on the ground that to proceed would constitute an abuse of process165. Neither the appellants nor the first respondent cited any cases in which excessive delay has been accepted as a basis for a review of an administrative decision. In oral argument, reference was however made to a case of delay in New South Wales166 in which error was discernible by the Court of Appeal in the findings of facts made by the primary judge, and the insufficiency of his reasons. It approved167 a line of cases stemming from Goose v Wilson Sandford & Co168, a decision of the English Court of Appeal. Mummery LLJ took the view that a decision involving disputed questions of fact reserved for 20 months could not stand. Peter Gibson LJ in delivering the judgment of the Court said: "[T]he judge's tardiness in completing his judicial task denied justice to the winning party during the period of delay and also undermined the 165 Jago v District Court (NSW) (1989) 168 CLR 23 at 26-30 per Mason CJ and 58 per 166 Monie v Commonwealth of Australia [2005] NSWCA 25. 167 [2005] NSWCA 25 at [43] per Hunt AJA, Bryson JA concurring. 168 (1998) 142 SJLB 92. loser's confidence in the correctness of the decision. Compelling parties to await judgment for an indefinitely extended period prolonged the stress caused by litigation and weakened public confidence in the whole judicial process. Because of the delay it was incumbent on their Lordships to look with especial care at the findings of fact challenged. In ordinary circumstances where there was a conflict of evidence a judge who had heard and seen the witnesses had an advantage denied to an appellate court, which was likely to prove decisive on appeal unless it could be shown that he failed to use or misused his advantage. The very fact of the delay in itself weakened the judge's advantage and that consideration had to be taken into account when reviewing material which was before the judge. In a complex case it was not uncommon for a judge to form an initial impression of the likely result at the end of the evidence, but when he came to study the evidence and the submissions with greater care, he would then go back to consider the effect witnesses had on him when they gave their evidence about matters which were now troubling him. At a distance of 20 months the judge had denied himself the opportunity of making that further check in any meaningful way. There would be a substantial miscarriage of justice by allowing the judge's decision to stand and it was not possible to rectify that miscarriage without a retrial." We agree that delay of itself may undermine the basis for a judgment that requires the weighing of claims and facts. The first respondent here did not suggest, nor could she convincingly have suggested, that delay of itself may not be a highly relevant consideration in determining whether the process before the Tribunal was fairly conducted, even though the Tribunal was not a court. In our opinion it is not possible to say that the Tribunal's decision, depending so much as it did, on the credibility of the appellants who gave oral evidence, was made fairly. Their application for review was lodged on 5 June 1997. The decision was delivered more than five and a half years later, on 14 January 2003, and after two sessions of intervening oral evidence separated by a period of about three and a half years. This was not a matter in which the Tribunal merely had to weigh up oral evidence against written evidence. It had to weigh up oral evidence given on one occasion with oral evidence given three and a half years later, as well as the further written material that had come to hand. That is not an exercise that can satisfactorily and fairly be carried out over widely separated serial proceedings. The outcome of the appellants' application for review of the decision not to grant them protection visas did depend in part at least on demeanour and credibility. The appellants undertook the task of persuading the Tribunal that they did hold well-founded fears of persecution. That in respect of some of the abuses they claimed to have suffered, they admitted fabrication, or were unable to deny collusion, provides no answer to their entitlement to have their other claims and their applications assessed in a comprehensive, unattenuated and not excessively delayed process. Unlike the majority in the Full Court of the Federal Court we are unable to regard the possibility, indeed, even the likelihood if that be the case, of the consultation of contemporaneous notes and tape recordings of the proceedings, as a satisfactory substitute for the observation and formation of impressions of persons in the flesh, and the timely personal commitment of these to paper as part of the process of making a decision in the light of the materials supplied to the Tribunal and all the arguments advanced to it. It is right, as Finkelstein J in dissent said in effect, that what appears to be a summary only, without analysis, of the transcript erodes confidence in the findings of fact of the Tribunal. Demeanour was clearly of some relevance here. One example suffices to make the point. The Tribunal purported to be influenced by the daughter's failure to display signs of trauma or concern while recounting the threats she said were made to her on her way to church, and her parents' reaction to her recounting of the incident. This is a matter of some subtlety. To delay committing to paper a recollection of this evidence until a long time afterwards runs a real risk of failing to recapture and give effect to that subtlety. The first respondent accepted that s 414 created, by implication, a duty to conduct the review and arrive at a decision within a reasonable time. The first respondent also accepted that s 425(1), by implication, refers to a hearing where the evidence given is to be given proper, genuine and realistic consideration in the decision subsequently to be made. The first respondent, on the other hand, contended that breach of the duty to decide within a reasonable time attracted only the possibility of correction by mandamus and did not amount to jurisdictional error; that no implication as to timing could be drawn out of s 425, because the topic had been dealt with in s 420; and that since s 420 was facultative, not restrictive, failure to comply with the time stipulation was not jurisdictional error either. The first respondent also submitted that the principles of natural justice – the duty to act fairly – were breached by delay only where "the delay has denied an interested party a proper opportunity to present his or her case." The answer to these arguments is that unfairness can spring not only from a denial of an opportunity to present a case, but from denial of an opportunity to consider it. Failure by the Tribunal to consider a case can arise not only from obstruction by the Tribunal of its presentation but also from self-disablement by the Tribunal from giving consideration to that presentation by permitting bias to affect its mind: either way the case is prevented from having a fair impact on the Tribunal's mind. Another way in which the Tribunal can disable itself from giving consideration to the presentation of a case arises where it permits so much time to pass that it can no longer assess the evidence offered. That is what happened here. The first respondent contended that the appellants could not succeed in the absence of findings that "delay by the Tribunal actually resulted in a material failure to analyse the oral evidence of the Appellants." That finding ought to be made because it can be inferred from the delay that, in the absence of contrary evidence, the Tribunal had deprived itself of its capacity to do so, and there is no contrary evidence. The circumstances of this case are specific to the Refugee Review Tribunal. This is in our opinion a very exceptional case. The facts, it is to be hoped, are extraordinary. It is one in which the Court is bound to hold that the proceedings have not been fairly conducted, by reason of the delays, both from beginning to end, and between each episode in them. We cannot accept that the only relevant delay is that which occurred between the second oral hearing and the giving of the decision. This is so because the decision was concerned with demeanour on two occasions, long separated in time, and each requiring to be related and compared to the other, and weighed with a considerable volume of written evidence. At one point the first respondent appeared to be advancing as a discretionary ground for the refusal by this Court of relief to the appellants on the ground of the Tribunal's delay, the fact that the appellants delayed in seeking, and in fact never sought, an order of mandamus compelling the Tribunal to do its duty. However, in oral argument it was made plain that the contention was not pressed and hence it need not be considered. The appeal must be allowed. We would make the following orders. The appeal to this Court is allowed. The orders of the Full Court of the Federal Court made on 11 February 2004 and of Hely J made on 15 April 2003 are set aside and in lieu thereof it is ordered that the decision of the Refugee Review Tribunal made on 20 December 2002 and handed down on 14 January 2003 be set aside and the matters be remitted to the Refugee Review Tribunal for determination. The first respondent must pay the appellants' costs of the appeal to this Court and the proceedings at first instance in the Federal Court and on appeal to the Full Court of the Federal Court. |
HIGH COURT OF AUSTRALIA COMMISSIONER OF TAXATION APPELLANT AND RESPONDENTS Commissioner of Taxation v Carter [2022] HCA 10 Date of Hearing: 9 November 2021 Date of Judgment: 6 April 2022 ORDER Appeal allowed. Set aside orders 1 and 2 made by the Full Court of the Federal Court of Australia on 10 September 2020 and, in their place, order that the appeal be dismissed. On appeal from the Federal Court of Australia Representation M J O'Meara SC with D P Hume for the appellant (instructed by Australian Government Solicitor) B W Walker SC with J L Evans QC and D R Lewis for the respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v Carter Income Tax (Cth) – Trusts – Where s 97(1) of Income Tax Assessment Act 1936 (Cth) provides that where beneficiary of trust estate not under any legal disability is presently entitled to share of income of trust estate, assessable income of beneficiary shall include so much of that share of net income of trust estate as is attributable to period when beneficiary was resident – Where trust deed provided that, if trustee made no effective determination to pay, apply, set aside or accumulate any part of trust income in given accounting period, income held on trust for specified beneficiaries – Where trustee failed to pay, apply, set aside or accumulate income in income year – Where share of trust income in income year held on trust for beneficiaries – Where Commissioner of Taxation assessed each beneficiary on basis that beneficiaries "presently entitled" to share of income within meaning of s 97(1) – Where beneficiaries subsequently disclaimed interest in share of income – Whether present entitlement under s 97(1) determined immediately prior to end of income year – Whether disclaimers operated retrospectively so as to disapply s 97(1) in respect of income year. Words and phrases – "default distribution", "disclaimer", "end of the year of income", "presently entitled", "presumption of assent", "retrospectively disapply", "right to demand and receive payment", "trust estate", "vested in interest and vested in possession". Income Tax Assessment Act 1936 (Cth), ss 95A, 96, 97, 98, 99, 99A. GAGELER, GORDON, STEWARD AND GLEESON JJ. This appeal concerns Div 6 of Pt III of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"), headed "Trust income". The primary provision in Div 6, s 961, states: "Except as provided in this Act, a trustee shall not be liable as trustee to pay income tax upon the income of the trust estate". Section 96 reflects that, in Div 6, the basic income tax treatment of the net income of a trust estate is to assess the beneficiaries on a share of the net income of the trust estate based on their present entitlement to a share of the income of the trust estate2. The trust is the mere conduit through which the beneficiaries under the trust receive income and are assessed3. That basic income tax treatment, from the perspective of the beneficiary, is addressed in s 97(1), which relevantly states: "Subject to Division 6D, where a beneficiary of a trust estate who is not under any legal disability is presently entitled to a share of the income of the trust estate: the assessable income of the beneficiary shall include: so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia ..." (emphasis added) A criterion on which s 97(1) operates is that a beneficiary "is presently entitled to a share of the income of the trust estate" (emphasis added). For the purposes of that sub-section, a beneficiary is presently entitled to a share of the income of a trust estate "if, but only if: (a) the beneficiary has an interest in the income which is both vested in interest and vested in possession; and (b) the beneficiary has a present legal right to demand and receive payment of the income, See Federal Commissioner of Taxation v Bamford (2010) 240 CLR 481 at 502 [22]. 1936 Act, s 95AAA. 3 Bamford (2010) 240 CLR 481 at 502 [20], quoting Ford, "Income and Estate Taxation Affecting Trusts" (1958) 1 Melbourne University Law Review 419 at 420. whether or not the precise entitlement can be ascertained before the end of the relevant year of income and whether or not the trustee has the funds available for immediate payment"4. The issue in this appeal is one of timing. Specifically, is a beneficiary's present entitlement under s 97(1) – the present legal right to demand and receive payment of a share of the income of a trust estate – to be determined immediately prior to the end of a year of income by reference to the legal relationships then in existence, or can events after the end of the year of income, which may affect or alter those legal relationships, be considered? That issue arises in the following circumstances. The Whitby Trust was settled on 27 July 2005. Mr Allen Bruce Caratti and his daughter Alisha were joint Guardians. The power to appoint income, contained in cl 3.1 of the Trust Deed for the Whitby Trust, provided that: "At any time before the expiration of any Accounting Period, the Trustee may, with respect to all or any part of the net income of the Trust Fund for that Accounting Period, determine: to pay, apply or set aside all or any part of the income to or for any one or more of the Beneficiaries living or existing at the time of the determination; or to accumulate all or any part of the income." "Accounting Period" was relevantly defined as each period of 12 months ending on 30 June. In the Accounting Period ended 30 June 2014, the income year in issue in this appeal, the Trustee failed to appoint or accumulate any of the income of the Trust Fund. Clause 3.7 of the Trust Deed then provided for the default distribution of income if the Trustee failed to make a determination under cl 3.1. Clause 3.7 stated: "If in relation to any Accounting Period, the Trustee has made no effective determination pursuant to the preceding provisions of this clause in respect to any part of the income of that Accounting Period immediately prior to 4 Harmer v Federal Commissioner of Taxation (1991) 173 CLR 264 at 271, quoted in Bamford (2010) 240 CLR 481 at 505 [37]. the end of the last day of that Accounting Period, then the Trustee shall hold that income in trust successively for the persons who are living or existing on the last day of that Accounting Period and who are successively described in clauses 4.1 to 4.5 (inclusive) as though that last day of the relevant Accounting Period were the Vesting Day." (emphasis added) As is self-evident, the purpose and effect of the default distribution clause was to ensure that in each Accounting Period the whole of the income of the Whitby Trust was distributed, if not otherwise dealt with. No income remained with the Trustee. Clause 3.7 operated "immediately prior to the end of the last day of [the] Accounting Period" and distributed all of the income of the Whitby Trust successively to the persons identified in cll 4.1 to 4.5. Clause 4 relevantly provided: "As from the Vesting Day, the Trustee shall hold the Trust Fund: in trust for such one or more of the General Beneficiaries for such interests and in such proportions and for one to the exclusion of the others as the Trustee may subject to clause 16 appoint by deed before the Vesting Day and the appointment may be either revocable or irrevocable (but if revocable shall be revocable only until the end of the day preceding the Vesting Day when it shall become irrevocable); in default of appointment and subject to any partial appointment under the preceding paragraph, in trust for such of the Primary Beneficiaries as shall be living at the Vesting Day as tenants in common in equal shares BUT if any Primary Beneficiary dies before the Vesting Day leaving issue living at the Vesting Day, that issue shall take as tenants in common in equal shares per stirpes the share which the deceased Primary Beneficiary would have received had he or she survived to the Vesting Day ..." (emphasis added) The Trustee having failed to appoint or accumulate the income of the Whitby Trust in the 2014 income year, the income of the Trust was distributed to the Primary Beneficiaries of the Trust, who were Mr Caratti's children – Natalie, Alisha, Nicole, Christina and Benjamin5. As a result, consistently with cl 4.2, one-fifth of the income of the Trust was distributed to each of Mr Caratti's children. Thus, the combined operation of cll 3.1, 3.7 and 4.2 was such that "immediately 5 Natalie, Alisha and Nicole are the respondents in this appeal. prior to the end of the last day" of the 2014 income year, one-fifth of the income of the Whitby Trust was held on trust for each of Mr Caratti's children. On 27 October 2015, the Commissioner of Taxation ("the Commissioner") issued an amended assessment to each respondent for the 2014 income year which included as assessable income one-fifth of the income of the Whitby Trust on the basis that the respondents were "presently entitled" to that income within the meaning of s 97(1) ("the 2014 Assessments"). On 3 and 4 November 2015, the respondents executed deeds of disclaimer in respect of their default distributions under cl 3.7 for the 2014 income year. Those disclaimers were ineffective. On 30 September 2016, the respondents executed further disclaimers ("the Third Disclaimers") disclaiming any and all right title and interest conferred by the Trust Deed to any income and, without limiting the generality of that disclaimer, disclaiming any and all right title and interest conferred by cl 3.7 of the Trust Deed. The respondents objected to the 2014 Assessments, contending, among other grounds, that each had validly disclaimed the relevant cl 3.7 distribution by the Third Disclaimers. The Administrative Appeals Tribunal held that the Third Disclaimers were ineffective because they were made after the respondents, with knowledge, had failed to disclaim and had accepted the gifts. The respondents appealed to the Federal Court of Australia on a question of law against, among other things, the Tribunal's finding that the Third Disclaimers were ineffective. By notice of contention, the Commissioner relevantly contended that the Third Disclaimers, even if effective at general law, did not retrospectively disapply s 97(1) of the 1936 Act. The Full Court of the Federal Court held that the Third Disclaimers were effective and dismissed the Commissioner's notice of contention. Relevantly, the Full Court held that there was nothing in s 97(1) of the 1936 Act to indicate that a beneficiary's liability was to be determined once and for all at the end of the income year by reference to the legal relationships then in existence. The Commissioner appealed to this Court on the sole ground that the Full Court erred in finding that the Third Disclaimers operated retrospectively so as to disapply s 97(1) in respect of the 2014 income year. Gordon Steward Gleeson The appeal turns on the proper construction of Div 6 of Pt III of the 1936 Act and, in particular, s 97(1)6. The basic income tax treatment of the net income of a trust estate under Div 6 has been stated above – to assess the beneficiaries on a share of the net income of the trust estate based on their present entitlement to a share of the income of the trust estate. Consistently with that stated object, s 97(1) provides that, where a beneficiary "is presently entitled to a share of the income of the trust estate", the "assessable income"7 of the beneficiary shall include, relevantly, so much of that share of the "net income"8 of the trust estate as is attributable to a period when the beneficiary was a resident. The phrase "is presently entitled to a share of the income of the trust estate" in s 97(1) is expressed in the present tense9. It is directed to the position existing immediately before the end of the income year for the stated purpose of identifying the beneficiaries who are to be assessed with the income of the trust – namely, those beneficiaries of the trust who, as well as having an interest in the income of the trust which is vested both in interest and in possession10, have a present legal right to demand and receive payment of the income. 6 Bamford (2010) 240 CLR 481 at 501 [17]. See, eg, Harmer (1991) 173 CLR 264 at 271. See also Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Ltd (2017) 106 ATR 151 at 172-173 [103]-[108]. 1936 Act, s 6(1) definition of "assessable income", incorporating definition of "assessable income" in Income Tax Assessment Act 1997 (Cth) ("the 1997 Act"), s 995-1(1), which provides that "assessable income" has the meaning given by ss 6-5, 6-10, 6-15, 17-10 and 17-30 of the 1997 Act. Relevantly, s 6-5(2) provides that, in the case of an Australian resident, assessable income includes "ordinary income … derived directly or indirectly from all sources … during the income year" (emphasis added). 1936 Act, s 95(1) definition of "net income". cf Smeaton Grange (2017) 106 ATR 151 at 179 [136]. 10 See Dwight v Commissioner of Taxation (1992) 37 FCR 178 at 192, citing Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490 at 496, 501. See also Gartside v Inland Revenue Commissioners [1968] AC 553 at 607. In some cases, the two limbs of "presently entitled" recognised in Federal Commissioner of Taxation v Bamford11 will overlap12. For present purposes, the relevant criterion in s 97(1) is the present legal right of the beneficiary to demand and receive payment of a share of the distributable income of a trust estate. The criterion for liability looks to the right to receive an amount of distributable income, not the receipt13. That position is expressly reinforced in s 95A(1) – enacted in response to the decision of this Court in Union-Fidelity Trustee Co of Australia Ltd v Federal Commissioner of Taxation14 – which makes clear that a present entitlement of a beneficiary under s 97(1) does not depend upon receipt of the income. Section 95A(1) was enacted to ensure that a present entitlement retains its character as such even if the income has been "paid to, or applied for the benefit of, the beneficiary". Indeed, there may be a right to demand payment even though the trustee does not have funds available to pay it15. The fact that s 97(1) is directed to identifying the legal right of the beneficiary immediately prior to the end of the year of income is important. In relation to each trust estate, once the beneficiaries with those rights are identified, it permits the balance of s 97(1) to operate and, consistently with the stated purpose of Div 6, provides for those beneficiaries to be assessed on a share of the net income of the trust estate based on their present entitlement to a share of the income of the trust estate. As this Court recognised in Bamford, the beneficiaries may be presently entitled immediately before the end of the income year "whether or not the precise entitlement can be ascertained before the (2010) 240 CLR 481 at 505 [37]. 12 cf Taylor v Federal Commissioner of Taxation (1970) 119 CLR 444 at 451-452. 13 Federal Commissioner of Taxation v Whiting (1943) 68 CLR 199 at 215-216, 219; Tindal v Federal Commissioner of Taxation (1946) 72 CLR 608 at 618; see also 1936 Act, s 95A. (1969) 119 CLR 177 at 182. See Commissioner of Taxation v Harmer (1990) 24 FCR 237 at 248-249; Hart v Federal Commissioner of Taxation (2018) 261 FCR 15 Bamford (2010) 240 CLR 481 at 505 [37], quoting Harmer (1991) 173 CLR 264 end of the relevant year of income and whether or not the trustee has the funds available for immediate payment"16. Put in different terms, the taxation liability of the beneficiaries is determined by ascertaining the proportion of the distributable income of the trust estate to which each beneficiary is presently entitled at that point in time – just prior to midnight at the end of the year of income – and then applying that proportion to the "net income of the trust estate". That has practical significance. The stepped process in s 97(1) identifies the beneficiaries who are to be assessed at the end of the income year, permits the "net income of the trust estate" to be determined for that income year in the usual way and then enables the quantum of tax payable by the beneficiary to be calculated and subsequently assessed17. The other relevant criteria in s 97(1) – that a beneficiary is not under any legal disability and is a resident – reinforce the conclusion that a beneficiary's present entitlement is determined immediately before the end of the income year. Those criteria, ascertained during and at the end of the income year, are conditions or circumstances which cannot be altered by facts and matters subsequent to the relevant income year. Moreover, ss 98, 99 and 99A also operate by reference to facts, events and legal relationships in existence at the end of the income year18, which cannot be altered after the end of the income year. The respondents' contention that the phrase "is presently entitled" should be construed to mean "really is" presently entitled (emphasis added) for that income year, such that, for "a reasonable period" after the end of the income year, later events could subsequently disentitle a beneficiary who was presently entitled immediately before the end of the income year, is rejected. The respondents' construction is contrary to the text of s 97(1) and the object and purpose of Div 6 identified above. It would give rise to uncertainty in the identification of the beneficiaries presently entitled to a share of the income of a trust estate and the subsequent assessment of those beneficiaries. On the respondents' construction, (2010) 240 CLR 481 at 505 [37], quoting Harmer (1991) 173 CLR 264 at 271. Income Tax Act 1986 (Cth), ss 5 and 7. See Bamford (2010) 240 CLR 481 at 507-508 [45], quoting Zeta Force Pty Ltd v Commissioner of Taxation (1998) 84 FCR 70 18 The same approach applies for the purposes of taxing the net income of a partnership under Div 5 of Pt III of the 1936 Act: Federal Commissioner of Taxation v Galland (1986) 162 CLR 408 at 414-415, 418-419, 422, 424. whether a beneficiary was presently entitled to a share of the income of a trust estate may not be resolved for a substantial period of time and, in some cases, such as the present, for years19. The uncertainties that would arise, and which would apply with equal force to the Commissioner, trustees, beneficiaries and perhaps even settlors, would also not be fair, convenient or efficient20. For those reasons, the question of the "present entitlement" of a beneficiary to income of a trust must be tested and examined "at the close of the taxation year"21, not some reasonable period of time after the end of the taxation year. This Court recognised in Bamford22 that in competing constructions of Div 6 examples can readily be given of apparent unfairness in the resulting administration of the legislation. Thus, in addressing the fact that a beneficiary might ultimately not receive the trust income to which they were entitled, the Court in Bamford23 recognised that any such insufficiency arises because the beneficiary's tax liability under s 97(1) is determined by reference to the "net income" of the trust estate, not the distributable income. Similarly, here, the construction which has been adopted means that a beneficiary might be presently entitled at the end of an income year but be unaware of it. That unfairness arises because Div 6, and s 97(1) in particular, is drafted to tax a beneficiary by reference to present entitlement, not receipt24. Presumption of assent Given the construction of s 97(1) which has been adopted, it is unnecessary to address the content and effect of the Third Disclaimers. Whether or not they 19 cf Smeaton Grange (2017) 106 ATR 151 at 157 [22]. 20 cf Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 4th ed (1850), bk v, ch ii at 371-372. 21 Union-Fidelity (1969) 119 CLR 177 at 182; see also 183. (2010) 240 CLR 481 at 500 [17]. (2010) 240 CLR 481 at 507-508 [45], quoting Zeta Force (1998) 84 FCR 70 24 Bamford (2010) 240 CLR 481 at 505 [37], quoting Harmer (1991) 173 CLR 264 were effective to vary the rights and obligations of the Trustee and the respondents, they were not effective to "retrospectively expunge[]"25 the rights of the Commissioner against the respondents which were in existence at midnight on 30 June 2014 and which gave rise to the 2014 Assessments26. It is appropriate, however, to address and reject the respondents' contention that they were not presently entitled to the income within the meaning of s 97(1) because the presumption of assent – that the donee (the beneficiary) assents to a gift – is an evidentiary presumption or inference that may be rebutted and that the Third Disclaimers were evidence of the rebuttal. The respondents' contention was that, when the "evidentiary presumption" is rebutted, the result is that "one of the elements necessary for an effective gift is, and at all times has been, missing". There is a distinction between legal and evidentiary presumptions. In Masson v Parsons27, six members of the Court said: "A presumption of fact, or evidentiary presumption, is a traditional inference, based on logic and common sense, which a tribunal of fact ordinarily draws from basic facts, particularly circumstantial evidence. By contrast, a presumption of law is a legal rule that gives additional force to some basic facts in the proof of the presumed fact, by permitting or requiring an inference from the former to the latter. If a presumption of the latter kind is rebuttable and so merely facilitates proof of the presumed fact, it is properly to be conceived of as a rule of law 'relating to evidence'". (emphasis in original) The presumption of assent – that when there is a transfer of property to a person, the donee assents even before they know of the transfer – is a "strong 25 Smeaton Grange (2017) 106 ATR 151 at 181 [146]. 26 See Federal Commissioner of Taxation v H (2010) 188 FCR 440 at 448 [39]. (2019) 266 CLR 554 at 575-576 [32] (footnotes omitted). See also R v Falconer (1990) 171 CLR 30 at 83; Weissensteiner v The Queen (1993) 178 CLR 217 at 242-243; Phipson on Evidence, 19th ed (2018) at 172 [6-19]; Cross on Evidence, 13th Aust ed (2021) at 383-384 [7255]-[7260]. presumption of law"28. Recognising that a gift "requires the assent of both minds"29 and that the subject matter of a gift can vest in a donee before the donee actually assents30, the law supplies that assent based "on fundamental attributes of human 32. That presumption takes nature"31. It "presumes a donee's assent until disclaimer"9 F a basic fact – a transfer of property – and gives additional force to that basic fact by supplying the assent to the transfer of that property. It is not an evidentiary presumption in the sense of an inference drawn from basic facts. It is a presumption of law, and Div 6 – and, in particular, the criterion of "is presently entitled" in s 97(1) – is consistent with, and operates on, the presumption of law of assent. On the facts in this appeal, that presumption applied immediately before the end of the 2014 income year to the operation at law of cl 3.7 of the Trust Deed. The argument made by the respondents about assent is met by the presumption of law described in Matthews v Matthews33. The premise of the respondents' argument, that assent to distribution is necessary, was not disputed by the Commissioner. Argument proceeding as it did, this is not the case to examine whether any wider questions arise about distributions or disclaimers. 28 Matthews v Matthews (1913) 17 CLR 8 at 44; see also 20, 43. 29 Hill v Wilson (1873) LR 8 Ch App 888 at 896, quoted in Matthews (1913) 17 CLR 30 Federal Commissioner of Taxation v Cornell (1946) 73 CLR 394 at 401-402. See also Thompson v Leach (1690) 2 Vent 198 at 202-203 [86 ER 391 at 393-394]; Siggers v Evans (1855) 5 El & Bl 367 at 382 [119 ER 518 at 524]; Standing v Bowring (1885) 31 Ch D 282 at 290; London and County Banking Co Ltd v London and River Plate Bank Ltd (1888) 21 QBD 535 at 541; Mallott v Wilson [1903] 2 Ch 494 at 502; Matthews (1913) 17 CLR 8 at 20; Federal Commissioner of Taxation v Taylor (1929) 42 CLR 80 at 86; Vegners v Federal Commissioner of Taxation (1991) 21 ATR 1347 at 1349. 31 Matthews (1913) 17 CLR 8 at 44. 32 Crago, "Principles of Disclaimer of Gifts" (1999) 28 University of Western Australia Law Review 65 at 65. See also Thompson (1690) 2 Vent 198 at 206 [86 ER 391 at 396]; Townson v Tickell (1819) 3 B & A 31 at 38, 39 [106 ER 575 at 577, 578]; Petrie v Bury (1824) 3 B & C 353 at 355 [107 ER 764 at 765]; Cornell (1946) 73 CLR 394 at 401. (1913) 17 CLR 8 at 44; see also 20, 43. Conclusions and orders The appeal should be allowed. Orders 1 and 2 of the Full Court of the Federal Court of 10 September 2020 should be set aside and, in their place, it be ordered that the appeal is dismissed. Edelman Two connected issues I have had the considerable benefit of reading the joint reasons of Gageler, Gordon, Steward and Gleeson JJ. I agree entirely with their reasons concerning the interpretation of "is presently entitled" in s 97(1) of the Income Tax Assessment Act 1936 (Cth)34. A "present entitlement" to a share of the income of the trust estate in s 97(1) is an entitlement at the "present" time of the determination, being the end of the relevant financial year, whether or not that entitlement is later the subject of defeasance by a disclaimer. The resolution of this issue of interpretation is logically anterior, although necessarily connected, to the issues raised by the parties concerning the content and effect of the Third Disclaimers. The interpretation adopted by the joint reasons answers the issue of how a disclaimer operates under s 97(1). But the submissions of the parties concerning the operation of the Third Disclaimers, including the references in those submissions to "presumptions" and "assent", cannot be addressed without dealing with an error in an assumption of the parties about the operation of disclaimers in equity. That assumption was made by the parties in this Court as well as in the Full Court of the Federal Court of Australia and in the Administrative Appeals Tribunal. The assumption of the parties was that the creation or increase in value of equitable rights is incomplete until affirmed by the beneficiary. That is, until affirmed, a declaration of trust, or an event increasing the value of the subject matter of a trust, would be inchoate, resting only upon a "presumed" assent by the beneficiary. This assumption was applied to the operation of the default distribution clause in the Trust Deed for the Whitby Trust, where income from the Trust was "distributed" in the sense that it was held on a separate trust for the Primary Beneficiaries. Thus, the parties assumed that the validity of the creation of the separate trust, or (if the separate trust already existed) the validity of the increase in the value of the subject matter of any existing trust for the Primary Beneficiaries, depended upon a "presumption", in each case, that the Primary Beneficiaries had assented to that creation or increase. The assumption that there is a "presumption" of assent in such circumstances was thought to be supported by the notion that a disclaimer operates to rebut a "presumption" of assent. In making the assumption in his submissions, 34 See reasons of Gageler, Gordon, Steward and Gleeson JJ at [1]-[26]. Edelman the Commissioner of Taxation drew from remarks in cases concerning gifts of common law rights35 and made the following submission in this Court: "the key conclusions are these. A disclaimer operates to refute the legal presumption of assent to a gift. It thereby operates to prevent the perfection of the transfer of title contemplated by the gift." The assumption is based upon two faulty premises. The first premise is that there is a role for the assent of a beneficiary in the creation of a trust or the increase in the value of equitable rights. The second premise is that a "gift" of common law rights operates according to the same principles as a "gift" of rights in equity. The flaws in these premises aside, there are also serious difficulties even with the concept of a "presumption" of donee assent as a universal principle at common law. None of these faulty premises or difficulties is required by the doctrine of disclaimer, the effect of which will depend upon the reason that it is being invoked. Assent of a beneficiary is unnecessary for the creation of a trust or increase in the value of equitable rights As to the first faulty premise, the assent of a beneficiary is irrelevant to the creation of equitable rights by an unconditional declaration of trust. A fortiori, the assent of a beneficiary is irrelevant to the notional allocation of income, increasing the value of equitable rights of a beneficiary, under a default distribution clause such as cl 3.7 of the Trust Deed for the Whitby Trust. Assent need not be proved by any evidence nor by any "presumption": a "declaration of trust would be fully effective even though it did not come to the notice of the beneficiary"36. Indeed, neither a declaration of trust nor the increase in value of an entitlement under the trust requires the existence of a beneficiary. Trusts can be validly declared for charitable purposes or in favour of unborn persons37. It would be a nonsense to speak of the assent of a charitable purpose or the assent of an unborn child either to the creation of a trust or to the increase in the value of rights under a trust. The irrelevance of the assent of a beneficiary to the formation of a perfect trust was the subject of the decision of the House of Lords in Lady Naas v 35 See, eg, In re Parsons; Parsons v Attorney-General [1943] Ch 12; In re Stratton's Disclaimer [1958] Ch 42. 36 Rose v Rose (1986) 7 NSWLR 679 at 686. 37 Mansell v Mansell (1732) 2 P Wms 678 at 679-680 [24 ER 913 at 914]; Savage v Taylor (1736) Cas temp Talbot 234 at 239 [25 ER 753 at 755]. See also Heydon and Leeming, Jacobs' Law of Trusts in Australia, 8th ed (2016) at 4 [1-07]. Edelman Westminster Bank Ltd38. That case concerned a trust settlement in favour of Lady Naas and an infant. The settlement was contained in a deed of covenant which provided for execution by the settlor, by the respondent bank as trustee, and by Lady Naas. The settlor and the bank executed the deed but, following delays, Lady Naas did not execute it. Lord Wright said that the "crucial issue" was whether the beneficial interest had vested "immediately on execution" of the deed without execution or any other action by Lady Naas39. The House of Lords unanimously held that a trust had been perfectly constituted upon execution by the settlor. Lord Russell of Killowen (with whom Lord Romer agreed) rejected the approach taken by Scott and Clauson LJJ in the Court of Appeal as one that erroneously appeared "to have dealt with the matter as if it lay in contract and was governed by the rules as to offer and acceptance"40. Lord Wright also rejected the notion that the covenant containing a trust settlement "was to be construed as a consensual document requiring for its operation that [Lady Naas] should concur in it by executing it"41. His Lordship added that the deed had not been expressed to be conditional and that "the declaration of trust [was] absolute and unconditional in terms"42. A trust is not the equivalent of a common law gift The second faulty premise underlying the assumption about the role of assent in the creation of a trust or the increase in the value of equitable rights echoes the view, derived from a mistaken understanding of the writing of Sir Arthur Underhill43, that "a trust [is] the equitable equivalent of a common-law gift"44. That premise ignores a fundamental difference between common law property rights and equitable rights under a trust. A gift at common law, such as a gift of a chattel, [1940] AC 366. See also Mirzikinian v Tom & Bill Waterhouse Pty Ltd [2009] NSWCA 296 at [51]. [1940] AC 366 at 398. [1940] AC 366 at 389. [1940] AC 366 at 402. [1940] AC 366 at 403. 43 Lewin on Trusts, 20th ed (2020), vol 1 at 7 [1-005]. See Underhill, A Practical and Concise Manual of the Law Relating to Private Trusts and Trustees, 3rd ed (1888) 44 Lewin on Trusts, 20th ed (2020), vol 1 at 7 [1-005]. Edelman will involve a transfer of rights. But a declaration of trust involves a creation of equitable rights and obligations, not a transfer of rights45: "it is fundamental that the creation of a trust involves the creation of new equitable obligations, which are 'annexed to the trust property' or 'engrafted' or 'impressed upon it'"46. As Maitland explained more than a century ago, it is because the creation of equitable rights does not involve the transfer of any property rights that the law of trusts does not contradict basic principles of the common law of property47. Thus, as Professor Hyland observed of the difference between a gift of common law rights and the creation of equitable rights, under the general law the creation of equitable rights can occur "by a gratuitous declaration of trust without delivery, deed, writing, notice to the donee, or acceptance"48. Even at common law, a "presumption" of assent is problematic There would be further problems with the assumption of the parties – that a declaration of trust or the increase in value of equitable rights under a trust is incomplete without the assent of the beneficiary – even if a gift of common law rights were to be equated with the creation, or increase in value, of equitable rights. It is true that many common law cases have spoken of a "presumption" of assent by a donee to a gift of common law rights49. But there is no sense in treating a gift 45 Commissioner of State Revenue (WA) v Rojoda Pty Ltd (2020) 268 CLR 281 at 315 46 Commissioner of State Revenue (WA) v Rojoda Pty Ltd (2020) 268 CLR 281 at 307 [44], citing Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 243 [38]; Federal Commissioner of Taxation v Linter Textiles Australia Ltd (In liq) (2005) 220 CLR 592 at 606 [30]; DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510 at 519; on appeal (1982) 149 CLR 431 at 474; Re Transphere Pty Ltd (1986) 5 NSWLR 309 at 311. 47 Maitland, Equity: also The Forms of Action at Common Law (1909) at 17-18; Maitland, Equity: A Course of Lectures, 2nd ed (1936) at 17. 48 Hyland, Gifts: A Study in Comparative Law (2009) at 454. 49 Thompson v Leach (1690) 2 Ventris 198 at 202, 207-208 [86 ER 391 at 393-394, 396-397]; Siggers v Evans (1855) 5 El & Bl 367 at 380 [119 ER 518 at 523]; Hill v Wilson (1873) LR 8 Ch App 888 at 896; London and County Banking Co v London and River Plate Bank (1888) 21 QBD 535 at 541-542; Matthews v Matthews (1913) 17 CLR 8 at 31, 43-44. Edelman of common law rights as subject to any "presumption" of assent, whether the "presumption" is described loosely as one of "fact" or described as one of "law"50. Some of the leading cases attempt to justify the "presumption" as founded on a standardised inference that the donee has assented to the gift. In this sense the "presumption ... arises where common experience is that the existence of one fact means that another fact also exists"51. Hence, the "presumption" has been said to be "founded on human nature", based upon an expectation that "in all probability" a gift would attract assent52. It has thus also been said that "the assent of a person to that which is obviously for [their] benefit may be inferred on slighter evidence than would be required to show that [they] assented to something, eg, a contract, which may be to [their] prejudice"53. One problem with this reasoning is the combination of the premise of subjectivity of donee assent and the assumption that a gift of common law rights "requires the assent of both minds to make a gift as it does to make a contract"54. Although it would be coherent to draw a standardised inference founded on human nature that persons subjectively assent to gifts for their benefit, the objective theory of contract law, which is now "in command of the field"55, means that a binding contract does not depend upon the subjective assent of either party, and it is anachronistic to speak of a "presumption" of intention56. 50 See Thayer, A Preliminary Treatise on Evidence at the Common Law (1898) at 339; Wigmore, A Treatise on the System of Evidence in Trials at Common Law (1905), vol 4 at 3533 §2491. 51 Thorne v Kennedy (2017) 263 CLR 85 at 101 [34], citing Calverley v Green (1984) 155 CLR 242 at 264. 52 London and County Banking Co v London and River Plate Bank (1888) 21 QBD 53 Matthews v Matthews (1913) 17 CLR 8 at 20. See also Townson v Tickell (1819) 3 B & Ald 31 [106 ER 575]. 54 Matthews v Matthews (1913) 17 CLR 8 at 20, quoting Hill v Wilson (1873) LR 8 Ch App 888 at 896. 55 Taylor v Johnson (1983) 151 CLR 422 at 429, cited in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179-180 [41]. 56 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 106 Edelman This problem cannot be resolved by shifting the "presumed fact" from one of the subjective assent of the donee to one of the objective or outward manifestations of assent by the donee. Why would it be presumed that a donee, who might not even know of the gift of common law rights, has acted in a manner which shows assent to the gift? And the underlying inference of fact, which must be rebuttable, would mean that a donor could revoke a gift by objectively demonstrating a change of mind before any act of objective assent by the donee. That is not the law57. Indeed, it could create serious disruptions in the financial system if deposits into the account of a donee were to be subject to reversal by the donor at any time before the donee manifested assent to the receipt. Perhaps most fundamentally, there is no rationale for any "presumed fact", still less for any rule of law that "facilitates proof of the presumed fact"58. The rationale for a "presumption" may have arisen from a mistaken59 belief that title at common law could not pass without the assent of the donee60, with the language of "presumption" as a shorthand for the legal rule that a donee "must be taken to give an implied assent"61. But that legal rule of deemed assent was a fiction, as can be seen by its operation even when it was known that the donee had no knowledge of the gift62, and even when it was known that the donee accepted the gift only as a loan63. Since it is now recognised that title can pass without assent of the donee, the "presumption" of implied assent is a fiction without any purpose at common law. There would be no basis to extend the "presumption" to equity, even if an analogy between common law and equitable rights could be drawn. The operation of a disclaimer depends on the reason it is invoked The short point for the purposes of this appeal is that, at least in relation to equitable rights, issues of disclaimer are separate and distinct from the creation of, 57 Standing v Bowring (1885) 31 Ch D 282. 58 Masson v Parsons (2019) 266 CLR 554 at 575-576 [32]. 59 See Siggers v Evans (1855) 5 El & Bl 367 at 380 [119 ER 518 at 523]; Standing v Bowring (1885) 31 Ch D 282 at 288, 290. 60 Butler and Baker's Case (1591) 3 Co Rep 25a at 26b, fn E [76 ER 684 at 688]. 61 Townson v Tickell (1819) 3 B & Ald 31 at 37 [106 ER 575 at 577]. 62 London and County Banking Co v London and River Plate Bank (1888) 21 QBD 63 Dewar v Dewar [1975] 1 WLR 1532 at 1538; [1975] 2 All ER 728 at 733. Edelman or increase in the value of, a beneficiary's rights or entitlements in relation to the subject matter of a trust. Although the unilateral vesting of equitable rights and entitlements can occur without a beneficiary's assent, such unilateral vesting can often be unwound by a later disclaimer by a beneficiary. As Lord Wright said in Lady Naas v Westminster Bank Ltd64: "The declaration of trust by the settlor depended not on the other party's consent any more than on mutual consideration. It depended on the act of the settlor in executing the settlement. The beneficiary might, it is true, disclaim, but her acceptance was immaterial except perhaps as ruling out disclaimer." At general law, the effect of a disclaimer is generally retrospective, thus preserving the important principle of liberty that rights or liabilities are not generally to be conferred or imposed upon a person independently of that person's actions. But when considering questions about the retrospective effect of a disclaimer, whether of rights at common law or in equity, it is always necessary to appreciate why the question is being asked. In this case, where the question as to the effect of a disclaimer is being asked for the purpose of defeating the operation of a vested and "present entitlement" under s 97(1), the question is answered by the interpretation of that provision. Conclusion The appeal should be allowed and orders made as proposed in the joint reasons. [1940] AC 366 at 403. |
HIGH COURT OF AUSTRALIA KOOMPAHTOO LOCAL ABORIGINAL LAND COUNCIL & ANOR APPELLANTS AND SANPINE PTY LIMITED & ANOR RESPONDENTS Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] HCA 61 13 December 2007 ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 2 November 2006 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of New South Wales Representation B A J Coles QC with G A Sirtes for the appellants (instructed by Bartier Perry Solicitors) T S Hale SC with A M Mitchelmore for the first respondent (instructed by Solari Legal) No appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited Contract – Repudiation – First respondent was held by the trial judge to have grossly departed from the terms of a contract with the first appellant – First appellant purported to accept a repudiation of that contract – Difference between renunciation of a contract, where a party evinces an inability or unwillingness to render substantial performance of a contract, and repudiation, in the form of a breach justifying termination – Classification of contractual terms for the purpose of determining the consequences of a breach – Whether case was one of breach of a condition or sufficiently serious breach of an intermediate term – Whether breach went to root of contract – Relevance of adequacy of damages as a remedy – Relevance of failure to complain of breaches. Contract – Termination for breach – Governing principles – Whether class of intermediate or innominate terms should be recognised. Words and phrases – "repudiation", "renunciation", "condition", "intermediate term". GLEESON CJ, GUMMOW, HEYDON AND CRENNAN JJ. This litigation arises from the termination, or purported termination, of a joint venture agreement for the commercial development of land. On 14 July 1997, the first appellant, Koompahtoo Local Aboriginal Land Council ("Koompahtoo"), and the first respondent, Sanpine Pty Limited ("Sanpine"), entered into a joint venture agreement ("the Agreement") for the development and sale of a large area of land near Morisset, north of Sydney. The land had become vested in Koompahtoo as a result of claims made under the Aboriginal Land Rights Act 1983 (NSW). The development project, which was to be self-funded, was the first such project to be undertaken in New South Wales by a Local Aboriginal Land Council. Koompahtoo contributed the land. Sanpine, which had no other business, was the manager of the project. Each party had a 50% interest in the joint venture. Sanpine was also entitled to receive a management fee equal to 25% of the total project costs. The Agreement provided that it did not give rise to a partnership. Although attempts were made to obtain the approval of the relevant authorities, including necessary rezoning of the land, and although liabilities in excess of $2 million were incurred on the security of mortgages over the land, the project, which was controversial within the Koompahtoo community, which involved sensitive environmental issues, and which evidently was unattractive to financiers, never proceeded even to the initial stage of obtaining rezoning of the land. In April 2002, a caveat was placed on the title to the land, which had the practical effect of impeding the prospects of further funding. In June 2002, the New South Wales Aboriginal Land Council ("NSWALC") appointed an investigator of Koompahtoo. On 25 February 2003, the second appellant, Mr Lawler, was appointed as administrator of Koompahtoo. On 10 April 2003, a mortgagee went into possession of the land. From February 2003 until December 2003, the administrator made attempts to obtain from Sanpine information as to the financial position of the joint venture. Proper books of account and financial records of the joint venture had never been kept by Sanpine. On 12 December 2003, the administrator, on behalf of Koompahtoo, terminated the Agreement. Sanpine commenced proceedings in the Supreme Court of New South Wales, seeking a declaration that the termination was invalid and that the Agreement was still on foot. There is other, presently irrelevant, litigation concerning the land. Campbell J, at first instance, formulated a preliminary question as follows: "Whether, on the proper construction of the agreement entitled 'Morisset Joint Venture Agreement' between [Sanpine] and [Koompahtoo], dated 14 July 1997, as amended by the 'Morisset Joint Venture Supplemental Crennan Agreement' dated 17 October 2000 ('Agreement'), and in the events which have happened, the Agreement was validly terminated by [Koompahtoo] by its letter to [Sanpine] dated 12 December 2003." Campbell J answered that question in the affirmative and dismissed Sanpine's proceedings1. The Court of Appeal of the Supreme Court of New South Wales, by majority (Giles and Tobias JJA, Bryson JA dissenting), allowed an appeal by Sanpine2. The basis of Campbell J's decision was that there had been "gross and repeated" departures by Sanpine from its obligations under the Agreement, including a "total failure to adhere to the accounting obligations", and that, having regard to the nature of the Agreement and the consequences of the breaches, the breaches were "sufficiently serious" to give Koompahtoo a right to terminate. For the reasons that follow, the conclusion of Campbell J was correct. The Agreement Clause 1.1 of the Agreement defined "Development" to mean the rezoning of the joint venture site by the relevant local government authority to permit residential development, the application for and obtaining of approvals for its subdivision, the carrying out of subdivision and other works required to prepare the residential lots for sale, the registration of the plan of subdivision, the marketing and sale of the lots, and incidental matters. Clauses 2.2 and 2.3 of the Agreement provided: "2.2 Objects The objects and extent of the Joint Venture are: to undertake the Development; to determine the scope of the Development; to carry out the design of the Development; 1 Sanpine Pty Ltd v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 2 Sanpine Pty Ltd v Koompahtoo Local Aboriginal Land Council [2006] NSWCA Crennan to apply for and obtain consents, approvals and authorisations from the Council and all other relevant statutory and regulatory authorities for the Development to the extent that this has not been done prior to the date of this Agreement; to arrange funding for the Development at the most commercially advantageous terms; to engage all such architects, town planners, valuers, environmental experts, engineers, excavators, civil works contractors, builders, tradesmen, consultants, real estate agents and all other relevant persons that may be necessary to carry out the Development in the most economic, efficient, workmanlike and professional manner; to carry out the Development to the best commercial the shortest the Venturers and within advantage of practicable time; to identify and procure purchasers for the Residential Lots; to sell the Residential Lots upon commercial terms and at not less than market value … on the terms and subject to the conditions provided for in this Agreement; to do all such things as shall be incidental or conducive to the attainment of the foregoing but only as shall be determined by the Management Committee. 2.3 Achievement of Objects The Venturers agree and acknowledge that they will take all steps and do all things necessary to achieve the objects of the Joint Venture on arms' length terms and to the commercial advantage of the Joint Venture …" As noted above, Koompahtoo and Sanpine each held a 50% interest in the joint venture. While liabilities incurred in relation to the development were to be borne by the parties in proportion to their percentage interests, cl 13.1(c) limited the liability of Koompahtoo to recourse against the land to be developed. Clause 13.3(a) further recorded that Koompahtoo's the parties' obligation to contribute to the joint venture be limited to making the land available and not extend to making any cash payment to fund the development. intention Crennan Sanpine's obligation to contribute to the joint venture was also limited, under cl 13.3(b), to providing expertise as development manager and, in its discretion, limited funding to enable preliminary negotiations to take place. The consequence of these provisions was that the development was to be funded by external finance. Clause 13.5 provided that each joint venturer would be solely responsible for, and pay, project costs incurred by that joint venturer before the date of the Agreement. As noted above, under cl 6.1 of the Agreement, Sanpine was appointed as the manager of the development. Clause 6.2 provided: "6.2 Obligations of Sanpine Sanpine agrees to: co-ordinate the overall Development; seek funding for the Development from recognised, reputable and experienced project financiers including preparation of all applications, information memorandums and supporting documents required and negotiating the finance facility offered by a project financier which the Management Committee agrees to accept; engage bookkeeping and accounting services for the Joint Venture and the Development and maintain all records and documents of the Joint Venture to the extent that the Management Committee does not require the records or documents for the purposes of the Works and prepare tax returns for the Joint Venture if tax returns are required to be lodged; formulation of a Development Program showing the manner in which Sanpine expects the Development to proceed including a timetable for the completion of each of the stages of the Development and the envisaged cost to complete each of the stages of the Development; Crennan regular updating of the Development Program to take account of events or circumstances which affect the progress of completion of the Development; The term "Development Program" was defined, in cl 1.1, to mean the program setting out each of the stages of the development and their estimated timetable and cost, prepared by Sanpine in accordance with cl 6.2(i), and updated in accordance with cl 6.2(j). Clause 6.3 provided that, except where control or determination of an aspect of the development was reserved to the Management Committee, Sanpine was entitled to act within the parameters of the joint venture without specific instructions from the Management Committee. The Agreement provided, in cl 7.1, for the appointment of a Project Manager nominated by Sanpine but did not set out the Project Manager's powers or obligations, save by providing, in cl 10.1(e) and (h), that the Project Manager was subject to the "overall supervisory control and authority" of the Management Committee. Clause 10.1 of the Agreement provided: "10.1 Formation of Management Committee financial The Venturers shall form a Management Committee to manage the affairs of the Joint Venture and to consider and make decisions in relation to all aspects of the Development including, without limitation, [A]boriginal culture and [A]boriginal employment issues. The Management Committee shall have the authority and power to act on behalf of the Venturers in relation to all matters with respect to the Joint Venture except as otherwise provided for in this Agreement. Without limiting the generality of the foregoing the Management Committee shall have the following functions: issues and approval of the Approved Development Program and Approved Budget; preparation of the Annual Accounts; appointment of the Auditors; approval of financing for the Development in accordance with clause 11; Crennan approval of the Project Manager and any replacement Project Manager; overall supervisory control and authority over the activities of the Project Manager; whenever it has been agreed by the Management Committee to sell a Residential Lot, Koompahtoo shall sign all documents necessary to effect such sale, including without limitation the sale of land contract, the transfer and any discharge of mortgage, or procure a duly appointed attorney to sign such documents on behalf of Koompahtoo." Under cl 10.2, the Management Committee was to comprise four representatives from each of Sanpine and Koompahtoo unless the parties agreed otherwise. Clause 11.1 provided that the Management Committee was to determine the manner in which the development was to be financed by a project financier. Clause 11.2 required all funds advanced by a project financier to be deposited in a joint venture account and used solely for the purposes of the development, subject to any special arrangement for the advance of project finance funds approved by the Management Committee. Under cl 16.6, the Management Committee was to prepare annual accounts of the joint venture, which cl 16.7 required to be audited by auditors appointed by the Management Committee under cl 17. No auditors were ever appointed. All activities of the joint venture were, pursuant to cl 12.1 of the Agreement, to be carried out pursuant to approved development programs and approved budgets. Clause 12.2 obliged Sanpine, as development manager, to prepare and submit to the Management Committee for its approval a development program and cost and revenue budget for the development within 90 days of the date of the Agreement and biannually thereafter. Clause 13.2 obliged Sanpine to make monthly reports to the Management Committee showing the expenditure of the joint venture and the progress of the development. Clause 16.1 provided for the establishment of a bank account, as soon as possible following the date of the Agreement, into which funds concerning the development were to be deposited under cl 16.3. Funds advanced by third parties were also to be deposited in the joint venture account, under cl 11.2 and cl 16.3, unless the Management Committee approved otherwise. While cl 16.1 obliged the joint venturers to establish the bank account, the definition of the term "Joint Venture Account" in cl 1.1 described it as the account "to be established by Sanpine pursuant to clause 16.1." Clause 16.4 Crennan provided that payments were only to be made from the joint venture account in accordance with the approved development plan and approved budget and payment guidelines previously approved by the Management Committee. Clause 16.5(a) provided: "16.5 Maintenance of Books Sanpine shall ensure that proper Books are kept so as to permit the affairs of the Joint Venture to be duly assessed. Financial records comprised in the Books shall be kept in accordance with generally accepted accounting principles and in such a manner as enables the Venturers to extract from the Books any information in relation to the affairs of the Joint Venture as that Venturer may reasonably require from time to time." Clause 23 included the following: "23. COVENANTS BY VENTURERS 23.1 General Covenant Each Venturer must be just and faithful to the other Venturer and at all times properly and fully give to the other all information and truthful explanations on all matters relating to the Development and the Development Assets and afford every assistance in its power in carrying out the Development. 23.2 Consultation The Venturers shall consult together regularly in connection with the Joint Venture. 23.3 Reporting Each Venturer shall regularly report to the other Venturer in connection with the Joint Venture. Each Venturer shall promptly inform the other Venturer of all material information concerning the Joint Venture. Each Venturer shall promptly comply with any reasonable request for information concerning the Joint Venture which it may receive from the other Venturer." Clause 19 of the Agreement provided a mechanism by which, in the event of a breach of the Agreement that was not remedied within 30 days of written Crennan notice from the party not in breach, the party not in breach would obtain the right to purchase the interest in the joint venture of the party in breach. Clause 20 provided that the joint venture would continue until completion of the development unless terminated sooner, by mutual agreement in writing. Clause 25.4 of the Agreement provided that waiver of any breach or provision of the Agreement had to be in writing and that failure to exercise any right or remedy was not a waiver. Clause 25.6 provided that the rights, powers, authorities, discretions and remedies arising out of or under the Agreement did not exclude any other right, power, authority, discretion or remedy. Clause 26 provided for compulsory alternative dispute resolution before court proceedings or arbitration proceedings could be commenced in relation to any dispute arising from the Agreement. However, it was not contended that cl 26 was relevant to the issues in this Court. Before Campbell J, Sanpine argued that cl 20, read together with cl 19, had the consequence that there was no common law right to terminate the Agreement, and that the Agreement itself contained a complete statement of the circumstances in which it could be brought to an end. Campbell J, applying what was said by this Court in Concut Pty Ltd v Worrell3, rejected that argument, which does not seem to have been repeated in the Court of Appeal, and was not pressed in this Court. The joint venture between July 1997 and December 2003 together with two adjoining parcels of Koompahtoo's land near Morisset, which was the land in folio 556/729949 ("Lot 556") land, comprised approximately 885 ha. The development contemplated by the Agreement of 14 July 1997 was to cover about 109 ha of that land. A supplemental agreement of 17 October 2000 increased the area of the proposed development to about 162 ha. The site proposed for development was mostly zoned rural. A small part was zoned for public recreation, and another small part was zoned to permit coal mining. Consequently, rezoning by the Lake Macquarie City Council ("LMCC") was required. Furthermore, the consent of NSWALC to changes of use of land vested in a Local Aboriginal Land Council and to a sale or mortgage of such land was required. The finance for the development (including the costs associated with the application for rezoning, which included environmental assessment) was to be raised by borrowing on the security of Lot 556. Many financiers who were approached for funding refused because of concern about the possibility of (2000) 75 ALJR 312 at 317 [23]; 176 ALR 693 at 699-700. Crennan having to exercise a power of sale against the land of an Aboriginal Land Council. In October 1998, a lender agreed to provide finance secured by a mortgage over the whole of Lot 556. The land was valued, as currently zoned, at $1.3 million. The lender agreed to provide $780,000 (60% of valuation) for all costs associated with pre-approval (of rezoning) work and funds up to 60% of the value of the land after development approval had been obtained from LMCC. Four persons associated with Sanpine gave personal guarantees in a total amount Sanpine has never carried on any business other than entering into and carrying on (to the extent to which that occurred) the joint venture. All its assets are held by it on the trusts of the Sanpine Unit Trust. Campbell J was unable, from the evidence called by Sanpine, to make clear findings about the corporate structure of Sanpine, but the persons principally involved, directly or indirectly, were identified. They, or companies associated with them, agreed to provide consultancy and other services to Sanpine. In March 2001, it was found necessary to raise further finance. A loan of $1.65 million was obtained, for the purpose of paying out the original lender and covering further expenses. As part of this re-financing, Lot 556 was transferred from Koompahtoo to the second respondent, KLALC Property & Investment Pty Limited, a company controlled by persons associated with Koompahtoo. The second respondent executed a mortgage over Lot 556 in favour of the new lender. It is unnecessary to describe in detail the investigation and reports that were made for the purpose of pursuing the necessary approvals to permit rezoning and development. Campbell J said: "The rezoning still has not been achieved, and the town planning evidence ... is that considerable time, work and expense will still be required to enable rezoning to be achieved, if it is ever achieved. The whole of Lot 556 remains subject to a registered mortgage ... which the mortgagee claims secured a debt of at least $2.36m as at 30 June 2004. The validity of that mortgage is in contest in other proceedings, and nothing I say in this judgment should be taken as prejudging the question of the validity of that mortgage. If the mortgage is valid, the amount secured under it would inevitably have increased after 30 June 2004 by the addition of interest at a default rate, and perhaps by the addition of enforcement expenses." Crennan The mortgagee went into possession of Lot 556 on 10 April 2003, and remains in possession. Mr Lawler, upon being appointed administrator of Koompahtoo on 25 February 2003, set about seeking to obtain information and documents to enable him to understand the financial position of the joint venture and, specifically, how the money borrowed from the original, and then the later, financier had been applied. These efforts were pursued between February and December 2003 and, it should be added, were further pursued in the course of the On 12 December 2003, Mr Lawler wrote to Sanpine in the following terms: "Without any admission that [Koompahtoo] is bound by the joint venture agreement dated 14 July 1997 ('the joint venture'), it is [Koompahtoo's] position that Sanpine Pty Limited has repudiated that arrangement by breaching the joint venture in at least the following ways (which breaches remain unremedied), thus evincing an intention not to be bound by it: Failing to ensure that proper books of account have been kept; Failing to provide or update proper development programs; Failing committee; to provide half yearly reports the management Failing to arrange sufficient funding for the development; Failing to co-ordinate and manage the development properly, efficiently, adequately or impartially or otherwise in accordance with its obligations; and Failing to co-ordinate and manage the development so as to achieve the objects of the joint venture within a reasonable ti[m]e or at a reasonable cost. [Koompahtoo] accepts that repudiation. It will not be proceeding with any joint venture in relation to the land with Sanpine Pty Limited and reserves its right to damages." It is the validity of that purported termination that is in question. It should be added that Campbell J accepted evidence that, at a meeting in May 2003, Mr Lawler had expressed the opinion that the Agreement was unfair to Koompahtoo, that it unduly favoured Sanpine, and that he would do all he could to get out of the Agreement. However, Campbell J found no lack of good faith on the part of Crennan Mr Lawler or Koompahtoo in exercising a right to terminate in December 2003. No such finding was made by the Court of Appeal, and no argument based on want of good faith, or unconscionability, in the exercise of a power of termination has been put to this Court. The primary judge's findings of breach Campbell J accepted that Koompahtoo carried the onus of establishing its right to terminate the Agreement and, in that connection, of establishing the breaches on which it relied and the effect of those breaches. He categorised Koompahtoo's allegations of breach as follows: Sanpine's obligations concerning rezoning. Document production and maintenance. Banking and spending of money. Failures to maintain proper books. Subject to one qualification, Campbell J rejected Koompahtoo's complaints in relation to category 1. It is sufficient to deal with his reasoning briefly, for it did not form the basis of his ultimate decision, and is not challenged in this Court. In substance, it was alleged that Sanpine failed to comply with its express obligation under the Agreement to pursue the project to the best commercial advantage of the venturers and its implied obligation to advance the development diligently and promptly. Campbell J examined in detail the history of the efforts to pursue rezoning and development approval in what was a sensitive and difficult legal, administrative and (in the broadest sense) political context. Part of that context was dissension within the local Aboriginal community about the merits of the entire project. Another part was the need to undertake, or arrange for, studies relevant to various environmental issues. Save for a finding that there was an unexplained and unjustified delay of five months in relation to one particular survey, Campbell J declined to find breach by Sanpine of the obligations in question. He did not think it right to blame Sanpine for the failure to achieve rezoning by the time of the letter of termination. On the other hand, Campbell J found substantial breaches by Sanpine of the obligations in categories 2, 3 and 4. Not long after the administrator was appointed, Lot 556 (which included part of, but was not limited to, the land Koompahtoo had agreed to contribute to the joint venture) was in the possession of a mortgagee who claimed to be owed $2.3 million. When the administrator set out to find where the money had gone to, there were no meaningful joint venture accounts, and the records of Sanpine did not explain or justify significant amounts claimed by Sanpine to be expenses chargeable to the joint venture. Crennan As to the breaches in category 2, cl 6.2(i) and cl 6.2(j) of the Agreement obliged Sanpine to prepare a development program and to update it regularly. Clause 12.2 required Sanpine to prepare and submit a development program and a cost and revenue budget within a certain time and to bring such information up to date at specified intervals. Clause 13.2 required monthly reports containing certain information. No such documents were prepared. However, Campbell J accepted evidence of the Project Manager that he was in constant communication with the members of the Management Committee and that he presented them with "cash flow projections". Campbell J held that this was something to be taken into account in assessing the seriousness of Sanpine's breaches of its obligations under cll 6.2(i), 6.2(j), 12.2 and 13.2. Sanpine argued that, by reasons of waiver or estoppel, Koompahtoo could not complain of these breaches. The basis of the argument was that no member of the Management Committee asked for any further or different documents from Sanpine. Campbell J found that there was no representation by the Koompahtoo representatives on the Management Committee that the provisions of the Agreement concerning development programs and monthly reports would not be insisted upon, and no reliance by Sanpine on anything that the Koompahtoo representatives did, or failed to do, concerning its non-performance of its obligations. It is convenient at this point to say something further about the Management Committee, and Sanpine's unsuccessful reliance on waiver and estoppel. In the Court of Appeal, Sanpine did not dispute Campbell J's findings of breach. The Court of Appeal did not find waiver or estoppel (which were not pressed in this Court). Nevertheless, the majority in the Court of Appeal accepted that the conduct of the Management Committee served to "explain or ameliorate" Sanpine's failure to adhere to the Agreement. The recitals to the Agreement recorded that Koompahtoo was about to become the owner of the joint venture site, and that Sanpine had the expertise to assist Koompahtoo in the development of the site. As a Local Aboriginal Land Council, Koompahtoo was subject to legislative requirements relating to its custodianship of property and funds, and matters of accounts and audit. The relevant legislation was examined in detail by Campbell J, and formed part of the context in which he considered the Agreement and the conduct of the parties. What the Agreement described as Koompahtoo's contribution to the joint venture (cl 5) was to make available the land. What the Agreement described as the role of Sanpine (cl 6) included co-ordinating the development, engaging necessary professional services, seeking funding, engaging accounting services for the joint venture and maintaining all records and documents. The four representatives of Sanpine on the Management Committee included Mr Steer, who was an Crennan accountant, and Ms Moloney. Ms Moloney was the domestic partner of Mr Scott, the Project Manager, who normally attended meetings of the Management Committee as her alternate. The representatives of Koompahtoo the Chairman of Koompahtoo, and Mr Griffen, included Mr Smith, At trial, and on appeal, Sanpine maintained that the Koompahtoo representatives on the Management Committee must have known the general nature of the irregularities of which the administrator later complained, and were in some respects complicit in them. In that assessment, however, much depends on what such knowledge is said to have involved. It is one thing to say that the Koompahtoo representatives on the Management Committee never complained about Sanpine's failure to observe the requirements of the Agreement as to administrative and accounting procedures. It is another thing to say that they understood the nature and extent of such failure, especially when one purpose of the requirements was to keep them fully informed. As to the breaches in category 3, cl 16 required the opening of a joint venture bank account and the depositing to the credit of that account of funds received concerning the development. An example of such funds received was the money borrowed on the security of Lot 556. Such funds were not dealt with in that way. They were deposited to the credit of a bank account of Sanpine. A joint venture account was opened, with authorised signatures from both sides of the joint venture, but it was operated as what was described as a "sweep account". Whenever a debit was to be made to that account, enough money to cover the debit would be transferred to it, on the day the debit was due to be made, from the Sanpine account. The balance at the close of any day was nil. The amounts which were paid into, and debited to, that account were insignificant. The account was closed on 13 December 2000. Substantial payments went through the Sanpine account only. There were, therefore, regular, and indeed systematic, breaches of cl 16. The significance of the breaches of cl 16 was, in part, related to payments out of the Sanpine account in February 1999, following receipt of the first loan, to persons and companies associated with Sanpine, of substantial sums claimed to be in reimbursement of expenses incurred on behalf of the joint venture. At least some of those expenses were said to have been incurred during the year ended 30 June 1998. Although there was what the judge described as "[s]ome rudimentary documentation vouching some of the expenses", it was not possible, at trial, to account for some of the substantial amounts involved. Campbell J described as "particularly problematic" a payment of $183,314.48 to the wife of one of the controllers of Sanpine. The payment was never satisfactorily Crennan explained, there were no records to support it, and Campbell J considered that it was likely that the amount involved was not an expense of the joint venture. Again, Sanpine relied, unsuccessfully, on waiver or estoppel. Campbell J did not accept that the Koompahtoo representatives on the Management Committee knew about the Sanpine account as well as the joint venture account, or knew that the payments to persons and companies associated with Sanpine in February 1999 had been made. He made a specific finding that the sum of $183,000 was misapplied. He was unable to make any positive findings about a number of other substantial amounts. As to the breaches in category 4, cl 16.5 has been set out above. It obliged Sanpine to ensure that proper books were kept so as to permit the affairs of the joint venture to be duly assessed. The words "so as to permit the affairs of the Joint Venture to be duly assessed" are not merely an explanation of the reason for the requirement to keep proper books. They are part of the substance of the obligation, which was an obligation to keep such books as would permit the affairs of the joint venture to be duly assessed. A practical measure of Sanpine's compliance with cl 16.5 came when Mr Lawler, having been appointed administrator of Koompahtoo, endeavoured to assess the affairs of the joint venture. Campbell J examined his communications with Sanpine during 2003. There were no separate sets of accounts relating to the joint venture; no ledger, journal or cashbook. Mr Lawler was shown draft financial statements (balance sheet and profit and loss account) for the year ended 30 June 1999. No finalised set of accounts for that year was ever produced to him, or to the court. The draft accounts, so Campbell J held, were not only manifestly inadequate, they were wrong. No accounts were ever drawn up for any prior year. Accounts for financial years after 30 June 1999 were prepared in draft form and made available in court for the first time. They did not record or reflect any expenditure. They also were found to be wrong. There were no accounts or financial statements of the joint venture which recorded or reflected the expenditure, over the years, of more than $2.3 million. Mr Lawler's requests for financial information were met by Sanpine with what Campbell J described as "evasion and prevarication". Campbell J described the "total failure to keep books of original entry for the Joint Venture, on the basis of which annual accounts could be drawn up and audited each year", as "a gross departure from the terms of [the Agreement]". This was not a finding of some technical breach as, for instance, keeping accounts in the wrong place. Sanpine sought to justify its conduct by relying on a resolution of the Management Committee, of 9 June 1999, which referred to Crennan dissension about the joint venture, and to the expense of audit. The minutes recorded: "After much discussion it was agreed by all members of the committee that because of the expense of the audit and the fact that at present the expenses of the JV are being incurred by Sanpine Pty Limited on behalf of the Joint Venture, that the audit of these expenses could be deferred until the rezoning. The meeting resolved to defer the appointment of an auditor of the Joint Venture until the rezoning." As to that, Campbell J said : that "I accept that, on 9 June 1999, faced with the prospect of dissension within Koompahtoo, all the members of the Management Committee reached a consensus that they would not have an audit of the Joint Venture until after the rezoning was complete, and that it would be Sanpine that would incur the expenses until the rezoning was complete. This consensus was one example of a repeated theme in the operations of the Management Committee over subsequent years, namely, the Management Committee were united in wishing the Joint Venture to go ahead, and if necessary would achieve that objective by keeping details of the operation of the Joint Venture away from the members of Koompahtoo, NSWALC, or anyone else who might create problems. I do not conclude, however, that the discussion on 9 June was one which involved the Koompahtoo representatives on the Management Committee agreeing that it would be money which had been raised on the security of Koompahtoo's land which would be expended by Sanpine. The resolution is quite consistent with Sanpine deciding (as the Joint Venture Agreement contemplated might possibly happen, and as had actually happened before February 1999) that it would use money raised from sources other than Koompahtoo's land to pay those expenses. The resolution of 9 June 1999 is not one which, in terms, authorises a departure from the requirements of the Joint Venture Agreement that proper accounts be kept for the Joint Venture. Nor, on any reading, does it have anything to do with [Sanpine's] failure to maintain accounts for the Joint Venture for nearly two years before 9 June 1999. Nor does it authorise any particular expenditure which has been made in the past." Campbell J went on to consider, and accept, additional grounds advanced in answer to Sanpine's reliance on the resolution of 9 June 1999. It is unnecessary, in view of the issues as they have emerged before this Court, to go into these matters. There are legislative requirements in the Aboriginal Land Rights Act, relating to accounts and audit, that were reflected in the relevant Crennan provisions of the Agreement. The Koompahtoo representatives had no legal capacity to dispense with compliance with those requirements. Nor did they have any actual or ostensible authority to agree on behalf of Koompahtoo to non- compliance with the requirements of the statute or the Agreement. Furthermore, Campbell J considered the adequacy of the documentation for the expenditure of joint venture funds on an assumption, in favour of Sanpine, that the books and records of Sanpine itself could be treated, for practical purposes, as sources of such documentation. Referring to the detail of some specific examples, which involved substantial sums, he concluded that there were no adequate records of Sanpine to explain or justify the expenditure. Legal principles as to termination for breach to [the] Campbell J recorded that, in their arguments at trial, "both parties gave only passing attention the circumstances in which the common law recognises a right in one party to terminate a contract. Nevertheless, having regard to the issues as they have developed from the reasons of Campbell J and the Court of Appeal, it is necessary to state certain legal principles relevant to the action taken by the administrator. taxonomies" developed to classify In its letter of termination, Koompahtoo claimed that the conduct of Sanpine amounted to repudiatory breach of contract. The term repudiation is used in different senses4. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations5. It may be termed renunciation6. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a 4 Heyman v Darwins Ltd [1942] AC 356 at 378; Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625-626. 5 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 634 per Mason CJ. 6 Heyman v Darwins Ltd [1942] AC 356 at 397. Crennan whole or of a fundamental obligation under it7. (In this case, we are not concerned with the issues that arise where the alleged repudiation takes the form of asserting an erroneous interpretation of the contract. Nor are we concerned with questions of inability as distinct from unwillingness.) Secondly, it may refer to any breach of contract which justifies termination by the other party8. It will be necessary to return to the matter of classifying such breaches. Campbell J said this was the sense in which he would use the word "repudiation" in his reasons. There may be cases where a failure to perform, even if not a breach of an essential term (as to which more will be said), manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements9. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words. In the past, some judges have used the word "repudiation" to mean termination, applying it, not to the conduct of the party in default, but to the conduct of the party relying upon such default10. It would be better if this were avoided. Leaving to one side remedies of injunction to restrain breaches of contract, or specific performance to enforce contractual obligations, the ordinary remedy for breach of contract is an award of damages. Termination of a contract in response to breach, where permitted, may alter substantially the allocation of risk accepted by the parties. The consequences of termination for the parties may be affected by external circumstances such as market fluctuations11. At the same time, there are cases in which damages are not an adequate remedy, and it would 7 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 8 See Carter, Breach of Contract, 2nd ed (1991) at 217. eg Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 at 304-305; Associated Newspapers Ltd v Bancks (1951) 83 CLR 322. 10 eg Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 at 11 See Treitel, Remedies for Breach of Contract, (1988) at 350. Crennan be irrational and unjust to bind one party to an ongoing contractual relationship notwithstanding the other's default. The appellants say that binding Koompahtoo to a long-term joint venture with Sanpine is such a case. This, however, is not a suit for the dissolution of a partnership, and it is the law of contract that is to be applied. For present purposes, there are two relevant circumstances in which a breach of contract by one party may entitle the other to terminate. The first is where the obligation with which there has been failure to comply has been agreed by the contracting parties to be essential. Such an obligation is sometimes described as a condition. In Australian law, a well-known exposition was that of Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd12 who, in comparing conditions and warranties, employed language reflected in many statutory provisions. The widespread statutory adoption of the distinction between conditions and warranties, or essential and inessential terms, is an established part of the background against which the common law has developed. The Chief Justice of New South Wales said (references omitted): "In considering the legal consequences flowing from a breach of contract, it is necessary to remember that (i) the breach may extend to all or to some only of the promises of the defaulting party, (ii) the promises broken may be important or unimportant, (iii) the breach of any particular promise may be substantial or trivial, (iv) the breach may occur or be discovered (a) when the innocent party has not yet performed any or some of the promises on his part, or after he has performed them all, and (b) when the innocent party has received no performance from the defaulting party, or has received performance in whole or in part; and to remember also that the resultant rights of the innocent party and the nature of the remedies available to him may depend upon some or all of these matters. The nature of the promise broken is one of the most important of the matters. If it is a condition that is broken, ie, an essential promise, the innocent party, when he becomes aware of the breach, has ordinarily the right at his option either to treat himself as discharged from the contract and to recover damages for loss of the contract, or else to keep the contract on foot and recover damages for the particular breach. If it is a warranty that is broken, ie, a non-essential promise, only the latter 12 (1938) 38 SR (NSW) 632 at 641-642. Crennan alternative is available to the innocent party: in that case he cannot of course obtain damages for loss of the contract. The question whether a term in a contract is a condition or a warranty, ie, an essential or a non-essential promise, depends upon the intention of the parties as appearing in or from the contract. The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor. If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight. If he contracted in reliance upon a substantial performance of the promise, any substantial breach will ordinarily justify a discharge. In some cases it is expressly provided that a particular promise is essential to the contract, eg, by a stipulation that it is the basis or of the essence of the contract; but in the absence of express provision the question is one of construction for the Court, when once the terms of contract have been ascertained. In general, Courts of common law have been more ready than Courts of Equity to regard promises as essential. This is in part due to the fact that Courts of common law are in the main concerned with ordinary commercial contracts in which it is common to find provisions which are intended to be strictly and literally performed. It is now provided by s 13 of the Conveyancing Act, 1919 (taken from the Judicature Act, 1873, 36 and 37 Victoria, Chap 66, s 25(7)) that stipulations in contracts, as to time or otherwise, which would not before the commencement of the Act have been deemed to be or to have become of the essence of such contracts in a Court of Equity shall receive in all Courts the same construction and effect as they would have heretofore received in such Court. This serves to make equitable law strictness, so far as is consistent with apparent intention, in fields where equity and common law overlap; but it does not affect the principle that effect must be given to the apparent intention of the parties as disclosed in the contract." liberality of construction supersede common What Jordan CJ said as to substantial performance, and substantial breach, is now to be read in the light of later developments in the law. What is of immediate significance is his reference to the question he was addressing as one of construction of the contract. It is the common intention of the parties, expressed in the language of their contract, understood in the context of the Crennan relationship established by that contract and (in a case such as the present) the commercial purpose it served, that determines whether a term is "essential", so that any breach will justify termination. The second relevant circumstance is where there has been a sufficiently serious breach of a non-essential term. In Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd13, the English Court of Appeal was concerned with a stipulation as to seaworthiness in a charterparty. Breaches of such a stipulation could vary widely in importance. They could be trivial or serious. The Court of Appeal held that to the accepted distinction between "conditions" and "warranties", that is, between stipulations that were in their nature essential and others, there must be added a distinction, operative within the class of non- essential obligations, between breaches that are significantly serious to justify termination and other breaches. This was a recognition that, although as a matter of construction of a contract it may not be the case that any breach of a given term will entitle the other party to terminate, some breaches of such a term may do so. Diplock LJ said14 that the question whether a breach by one party relieves the other of further performance of his obligations cannot always be answered by treating a contractual undertaking as either a "condition" or a "warranty". Of some stipulations "all that can be predicated is that some breaches will and others will not give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and the legal consequences of a breach of such an undertaking, unless provided for expressly in the contract, depend upon the nature of the event to which the breach gives rise". In this way Diplock LJ set the policy of the law favouring certainty of outcome through the classification of terms as conditions against that which encourages contractual performance and favours restriction of the right to terminate to cases where breach occasions serious prejudice. As it is put in the eleventh edition of Treitel15: "[T]he policy of leaning in favour of classifying stipulations as intermediate terms can be said to promote the interests of justice by 14 [1962] 2 QB 26 at 69-70. 15 Treitel, The Law of Contract, 11th ed (2003) at 797; see also 12th ed (2007) at 890. Crennan preventing the injured party from rescinding on grounds that are technical or unmeritorious." Perhaps the adoption of other taxonomies for contractual stipulations might achieve similar outcomes. However, Hongkong Fir was decided in 1961 and has long since passed into the mainstream law of contract as understood and practised in Australia16. It may be true that this Court has yet to accept Hongkong Fir as an essential element in the grounds for decision in any particular case. However, in Ankar Pty Ltd v National Westminster Finance (Australia) Ltd17, Mason ACJ, Wilson, Brennan and Dawson JJ referred to Hongkong Fir with evident approval and said that the concept of the intermediate and innominate term brings a greater flexibility to the law of contract. With that in mind, it was entirely appropriate for Campbell J to proceed with an analysis of the facts in which Hongkong Fir was applied18. The practical utility of a classification which includes intermediate terms, and the consequent greater flexibility of which the Court spoke in Ankar, appears from several consequences. First, the interests of justice are promoted by limiting rights to rescind to instances of serious and substantial breaches of 16 For example, in Shevill v Builders Licensing Board (1982) 149 CLR 620 at 626 Gibbs CJ assumed its correctness in a judgment with which Murphy and Brennan JJ agreed. In Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 31 Mason J assumed its correctness in a judgment with which Wilson, Deane and Dawson JJ concurred. Other cases in which it has been assumed to be correct include: Trans-Pacific Insurance Co (Australia) Ltd v Grand Union Insurance Co Ltd (1989) 18 NSWLR 675 at 702-703 per Giles J; Amann Aviation Pty Ltd v Commonwealth (1990) 22 FCR 527 at 532 per Davies J, 542 per Sheppard J, 553-554 per Burchett J; Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689 at 697 per Kirby P, 703 per Samuels JA, 717- 718 per Waddell AJA; Bates v Omareef Pty Ltd unreported, Federal Court of Australia, 16 October 1997; Nelson v Bellamy (2000) 10 BPR 19,011 at 19,723 [81] per Simos J; Wallace-Smith v Thiess Infraco (Swanston) Pty Ltd (2005) 218 ALR 1 at 64-65 [299] per Allsop J. It has been applied in New Zealand: Holmes v Burgess [1975] 2 NZLR 311 at 318-320. 17 (1987) 162 CLR 549 at 562. 18 See Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 81 ALJR 1107 at 1139- 1140 [134], 1147-1148 [177]-[179]; 236 ALR 209 at 251-252, 262-263. Crennan contract. Secondly, a just outcome is facilitated in cases where the breach is of a term which is inessential. As will appear later in these reasons, we rest our decision in the appeal not upon the ground of breach of an essential obligation, but upon application of the doctrine respecting intermediate terms. We add that recognition that, at the time a contract is entered into, it may not be possible to say that any breach of a particular term will entitle the other party to terminate, but that some breaches of the term may be serious enough to have that consequence, was taken up in Ankar19. Breaches of this kind are sometimes described as "going to the root of the contract"20, a conclusory description that takes account of the nature of the contract and the relationship it creates, the nature of the term, the kind and degree of the breach, and the consequences of the breach for the other party. Since the corollary of a conclusion that there is no right of termination is likely to be that the party not in default is left to rely upon a right to damages, the adequacy of damages as a remedy may be a material factor in deciding whether the breach goes to the root of the contract21. A judgment that a breach of a term goes to the root of a contract, being, to use the language of Buckley LJ in Decro-Wall International SA v Practitioners in Marketing Ltd22, "such as to deprive the injured party of a substantial part of the benefit to which he is entitled under the contract", rests primarily upon a the construction of consequences of the breach and the fairness of holding an injured party to the contract and leaving him to his remedy in damages. These, however, are matters to be considered after construing the agreement the parties have made. A judgment as to the seriousness of the breach, and the adequacy of damages as a remedy, is made after considering the benefit to which the injured party is entitled under the contract. Buckley LJ attached the contract. importance 19 (1987) 162 CLR 549 at 561-562. 20 For various synonyms used see Treitel, Remedies for Breach of Contract, (1988) at 21 Carter, Breach of Contract, 2nd ed (1991) at 199-200. 22 [1971] 1 WLR 361 at 380; [1971] 2 All ER 216 at 232. Crennan A question as to contractual intention, considered in the light of the language of the contract, the circumstances in which the parties have contracted and their common contemplation as to future performance, is different from a question as to the intention evinced by one of the parties at the time of breach, such as arises in cases of alleged renunciation. That difference is exemplified by the way in which the majority in the Court of Appeal dealt with the decision of the primary judge in this case. The primary judge's conclusions Since there was disagreement about the basis upon which Campbell J decided the case, it is desirable not to paraphrase his reasons but to quote (omitting references to the numbering of earlier paragraphs) what he said under the heading "Repudiation – Application to Facts": "I record that the [appellants] have submitted that various of the obligations which they have found were breached were essential terms of the contract, and hence that termination of the contract was justified regardless of the seriousness of the particular breaches. I will not pause to examine that argument. Rather, I shall assume, without deciding, that all the terms which have been breached in the present case are intermediate terms. Delay of the order of five months in appointing Umwelt. To recapitulate, I have found that the following breaches have occurred: Breach of the obligation in Clause 6.2(i) to prepare a Development Program. Breach of the obligation in Clause 6.2(j) to regularly update the Development Program. Breach, on fourteen occasions over seven years, of the obligation under Clause 12.2 to prepare and submit a Development Program and a cost and revenue budget. Breach of the obligation under Clause 13.2 to prepare a Monthly Report, containing the information listed in Clause 13.2. This breach occurred every month that the Joint Venture Agreement was on foot. Even if one regards the period from and including March 1999 to January 2003 as the more important part of that time, it involves breaches on forty six occasions. Crennan Breach of its obligation under Clause 16.1(a) to open the Joint Venture Account as soon as possible following the date of the Joint Venture Agreement. Breach of the obligation in Clause 16.3 to pay money into the Joint Venture Account. Breach of Clause 16.4, concerning manner of application of funds withdrawn from Joint Venture monies. Failure to maintain proper books and records. No waiver or estoppel is effective to take away the significance which these breaches have. They are breaches which extend over the entire period during which the Joint Venture operated. The Joint Venture Agreement was one which set out a clear and coherent set of procedures to be followed for the administration of the Joint Venture. The Agreement is one which, if carried through according to its letter, would have imposed upon the joint venturers the discipline of considering, each month, the type of information contained in the Monthly Reports, and of receiving and giving consideration at regular intervals to projections which involved the entire Development (not just part of the rezoning stage of it). It would have resulted in all the money which was raised on the security of Koompahtoo's land or otherwise for the purposes of the Joint Venture being paid into the Joint Venture Account, and only drawn on for proper purposes, and by a procedure which checked actual expenditure against expenditure which had been predicted to be required. All the expenditure would be from the Joint Venture Account, which had representatives of both Venturers as signatories. There would be full documentary records of the expenditure of the money, and accounts kept, giving considerable detail, and in a form fit for auditing. The departures from this way of running the joint venture have been gross and repeated. The total failure to adhere to the accounting obligations, ever since the Joint Venture began, is alone sufficient to amount to a repudiation. Even accepting that some information was given to the Koompahtoo representatives on the Management Committee relating to the Joint Venture (although verbally, and of a type and with a frequency which it is now not possible to ascertain) there is still an extremely serious departure from the obligations imposed by the Agreement. Even if (contrary to my view) the resolution of the Management Committee of 27 March was effective to dispense, thenceforth, with any obligation on Crennan the plaintiff to provide Monthly Reports the remaining and continuing breaches were sufficient to amount to a repudiation. The unexplained delay of five months in appointing Umwelt, at a time when all parties must have known that significant monthly costs continued to be running up for fees to Bronzewing and Mr Smith's company, and Mr Smith's vehicle, and for interest on borrowings, only makes the repudiation worse." It has already been noted that Campbell J defined "repudiation", for the purpose of his reasons, as "conduct by a contracting party which, as a matter of common law, entitles the other contracting party to terminate the contract." He distinguished between "essential terms" and "intermediate terms" (an expression commonly used to describe stipulations of the kind considered in Hongkong Fir), and then expressed his conclusions by reference to the latter. He said nothing about renunciation. He made no finding about the intention evinced by Sanpine. Whether his ultimate conclusion was right or wrong, it is apparent that he decided the case upon the basis of the seriousness of the breaches of contract found to have occurred. Yet this is not how his reasoning was understood by the majority in the Court of Appeal. The decision of the Court of Appeal The reasons of the majority in the Court of Appeal were given by Giles JA, with whom Tobias JA agreed. Giles JA expressed doubt as to whether Campbell J had decided the case on the basis of "termination for sufficiently serious breach of intermediate terms" or "termination because Sanpine had shown a repudiatory intention." As already explained, the former is the better view of Campbell J's reasoning. Giles JA, however, took the latter view which he supported by reference to the letter of termination of 12 December 2003. The letter included an assertion that Sanpine's breaches evinced an intention not to be bound by the Agreement. In truth, the letter was plainly intended to cover all possible legal grounds of termination, as would be expected. It was not a pleading. Evidently drafted by a lawyer using belt and braces, it claimed that Sanpine had repudiated the contract by breach, thereby evincing an intention not to be bound. Koompahtoo, in argument in this Court, relied upon renunciation, breach of essential terms and sufficiently serious breach of intermediate terms. Although Giles JA appears to have mistaken the substance of Campbell J's reasons, and devoted most of his own reasons to a consideration of the ground of renunciation, he later dealt, briefly, with the arguments based on serious breaches of intermediate terms or breaches of essential terms. It will be necessary to return to what he said on those topics. Crennan There being no challenge to Campbell J's findings that breaches had occurred, Giles JA treated the central question as whether Sanpine, by its conduct, evinced an intention to perform the Agreement only in a manner that suited it and in no other way. He treated the case as one of alleged unwillingness, not inability. The focus thus became the intention of Sanpine, or, more accurately, what a reasonable person in the position of Koompahtoo would have taken to be the intention of Sanpine. There was no wholesale renunciation by Sanpine of its obligations; it persisted in its endeavours to obtain rezoning. Accordingly, Giles JA said, to be a case of repudiation in the sense of evincing an intention not to be bound, the case had to fall within what was described by Mason CJ, in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd23, as "evincing an intention to carry out a contract only if and when it suits the party to do so" (emphasis in original). This required an evaluation of the conduct of Sanpine in all the circumstances, and those circumstances included the conduct of Koompahtoo. The breaches, Giles JA accepted, were not excused by waiver or estoppel (although why that was accepted was not considered at any length), but "the reasonable person in the position of Koompahtoo would take into account, in evaluating Sanpine's breaches as repudiatory or otherwise, the extent (if any) to which Koompahtoo had been complicit or acquiescent in the departures from the Agreement and their continuance." Giles JA noted that there was no complaint at the time about failure to adhere to the Agreement. As to the handling of funds, he said that this was evidently regarded by all concerned as sufficient and acceptable, and that it must have been obvious that there was no approved budget, no joint venture account and no compliance with the financial requirements of the Agreement. The failure to maintain proper books and records, Giles JA said, was in a rather different position, but, nevertheless, the adequacy of Sanpine's accounting was not questioned at the time, and apparently it suited the Koompahtoo representatives on the Management Committee to limit dissemination of information within the Aboriginal community. Thus, Giles JA said, he was unable to agree with the conclusion he attributed to Campbell J, that is to say, that Sanpine evinced an intention to carry out the Agreement only if and when it suited Sanpine to do so. Campbell J had not expressed such a conclusion, but Giles JA evidently regarded it as implicit. Giles JA, under the rubric of renunciation, also dealt with an attempt by Koompahtoo to rely on Sanpine's conduct between May and December 2003, and particularly what the trial judge found to be evasion and prevarication when 23 (1989) 166 CLR 623 at 634. Crennan Mr Lawler attempted to obtain financial information about the joint venture. He declined leave to file a notice of contention seeking to uphold Campbell J's decision on this new ground. The attempt has not been repeated in this Court. Next, Giles JA considered whether the breaches were of essential terms. He decided they were not, saying (reference omitted): "The agreement was an agreement for a joint venture to undertake the Development. Its central objective was the development and sale of part of Koompahtoo's land. The terms presently in question, concerned with development programs and monthly reporting, banking and spending of money and maintaining proper books, regulated the manner of working to that central objective. Each could be breached in an immaterial way or without significant consequences to the joint venture. While not determinative, this indicated that they were not essential terms." Finally, as to whether there had been termination for sufficiently serious breaches of intermediate terms, Giles JA noted the principles stated in Hongkong Fir and Ankar and concluded: "Without repetition, what I have already said in these reasons causes me to conclude that circumstances [to] justify a finding of a sufficiently serious breach to found termination on the basis of breach of an intermediate term of the Agreement have not been demonstrated." No doubt Giles JA dealt with the topic in such a summary fashion because he had already found that this was not the basis on which Campbell J had decided the case, and he was referring to the matter only for completeness. Bryson JA, who dissented, said: "I comment that observance of obligations relating to the Development Program, Monthly Reports, opening and dealing with the Joint Venture Account and maintaining proper books and records had importance for Koompahtoo which went far beyond informing and satisfying the minds of current office-holders of Koompahtoo. What happens in a complex development project extending over many years should be clearly known and clearly recorded for reasons relating to Koompahtoo's interests the importance of which will present themselves from time to time in many contexts over many years, including taxation contexts and as in this case in litigation. It was always certain that there would be changes of office- holders, and what was known to office-holders in the past, but was not recorded, is lost to later office-holders, and to other persons (exemplified Crennan by the Administrator) who do not participate in the informal arrangements and exchanges of information. Plainly Campbell J accorded a very high value to compliance with these obligations: I regard this as fully justified. The deficiency to Koompahtoo's contractual entitlement was very great, and very important. No legitimate commercial venture can flourish without observing ordinary reasonable practices for handling money, banking it, keeping records and being able to account. Acquiescence by office-holders of Koompahtoo in departures from contractual provisions indicates how great was Koompahtoo's need of Sanpine's expertise and contractual compliance: their acquiescence was not a contractual variation, and it cannot be an excuse." The justification of the termination In this Court, Sanpine has not attempted to contend that the case is one of waiver or estoppel, or that there was a relevant variation of the Agreement, or that Sanpine's breaches of the Agreement are covered by a doctrine of forbearance24. The legal significance of the conduct of the Koompahtoo representatives on the Management Committee, in not complaining about Sanpine's failure to adhere to the requirements of the Agreement, and in acquiescing in some aspects of the failure, is said to be, as held by Giles JA, that it is a circumstance which tends against a finding that Sanpine evinced an intention to perform the Agreement only in a manner that suited it and in no other way. Because the relevant form of repudiation was said to be renunciation, which made a conclusion as to Sanpine's evinced intention the focal point of the inquiry, the circumstance that in some respects and to some extent Sanpine's conduct was acquiesced in by the Management Committee assumed a factual significance that became conclusive. The qualifying reference to some respects, and some extent, is important. The nature of Sanpine's breaches was such that, even at trial, it was difficult, if not impossible, to know their full extent. The breaches deprived the Koompahtoo representatives of the capacity to make an informed decision as to the consequences for Koompahtoo of what was going on. The observations of Bryson JA are in point. Koompahtoo was not well served by its representatives on the Management Committee, but the obligations that were breached were undertaken for its protection, and in a number of respects were required by the legislation under which it was established. 24 cf Phipps, "Resurrecting the Doctrine of Common Law Forbearance", (2007) 123 Law Quarterly Review 286. Crennan The approach of Campbell J was correct. The focus of attention should be the contract, and the nature and seriousness of the breaches. There being, at this stage, no concern with waiver, estoppel, variation or forbearance, the intention that is relevant is the common intention of the parties, at the time of the contract, as to the importance of the relevant terms and as to the consequences of failure to comply with those terms. This is a question of construction of the contract to be decided in the light of its commercial purpose and the business relationship it established. The contract established a joint venture for a land development project of considerable size and complexity, to be carried out over a number of years. Koompahtoo brought to the joint venture its land. Sanpine brought its management and financial expertise. Sanpine's obligations as to dealing with joint venture funds (which were borrowed on the security of Koompahtoo's land) and maintaining proper books and accounts were of importance, not only to working out the ultimate result of the joint venture when the land had been developed and sold, but also to enabling the parties (and a person such as the administrator) to know material facts, and to make decisions and judgments informed by that knowledge. The inability of Sanpine to inform the administrator, or even the trial judge, of the true financial position of the joint venture, and to produce informative joint venture accounts, exemplifies the point. It was not within the contemplation of the contract that it should have been necessary for Koompahtoo, at any time, to have engaged in extensive legal process in order to find out what had become of the money borrowed on the security of its land, or to assess the financial state of the joint venture. Although Campbell J was prepared to make the contrary assumption, there is much to be said for the view that the obligation contained in the first sentence of cl 16.5(a) was essential. Sanpine was to ensure that proper Books (a defined term) were kept so as to permit the affairs of the joint venture to be duly assessed. "Books" was defined, in cl 1.1, to mean the accounting, financial and other documents and records of the joint venture. The purpose of par (a), and, in particular, the first sentence, is emphasised by par (b) of cl 16.5, which entitled each venturer to inspect the books at any time and receive such information and explanations as that venturer might require. Enabling the affairs of the joint venture to be duly assessed involved assessment with reasonable facility and within a reasonable time. Campbell J held, and it was accepted in the Court of Appeal, that there was a breach of cl 16.5(a). Giles JA said, and Campbell J was willing to assume, that a breach of cl 16.5(a) could be trivial. The clause, however, contains more than one obligation. An obligation to keep books and records in accordance with generally accepted accounting standards might be contravened in an immaterial way, and one would not attribute to the parties a common intention that any breach of such an obligation would justify termination. What, however, of the first sentence of par (a)? On its true construction, it required Sanpine to ensure that it kept such books and accounts Crennan as would permit the affairs of the joint venture to be assessed with reasonable facility and within a reasonable time. It is difficult to resist a conclusion that such an obligation was essential. The ability to make an assessment of the affairs of the joint venture, at all times from the commencement of the Agreement, was vital. Koompahtoo was providing the land to be developed. It was subject to legislative control of the use that could be made lawfully of its assets. It was subject to regulatory scrutiny. Decisions as to borrowing upon the security of its land, and undertaking commitments for the future, required a capacity to assess, at any time, and from time to time, the affairs of the venture. In one sense, the breaches of cl 16.5 may have been so obvious, and so numerous, as to distract attention from the consideration that, within cl 16.5(a), there was an obligation of basic importance. The clearest evidence of breach of that obligation was what occurred when Mr Lawler was appointed administrator. He was unable to assess the affairs of the joint venture. Plainly, Sanpine was unable to provide him (and was later unable to provide the trial judge) with proper joint venture books and accounts that would permit such assessment. It is no answer to say that, given sufficient time, and with sufficient effort, it might have been possible to reconstruct, from such records as had been kept within Sanpine, an approximation of accounts which would reveal the financial position of the joint venture. The purpose of cl 16.5 went beyond enabling approximate assessment of the financial position of the joint venture after a prolonged inquiry or litigation. However, we do not rest our decision upon the ground of breach of an essential obligation. Even if one were to accept that all of the contractual obligations with which Sanpine failed to comply were inessential in that, on the true construction of the contract, not every breach would justify termination and that the obligations were intermediate terms in the sense earlier discussed, nevertheless, as Campbell J and Bryson JA held, the breaches of Sanpine were in a number of respects gross, and their consequences were serious. Once again, the experience of the administrator following his appointment, and the unsuccessful attempts at the hearing before Campbell J to explain the use of all the funds borrowed on the security of Koompahtoo's land, demonstrate that the breaches found by Campbell J, and in particular the breaches of cl 16.5, went to the root of the contract. As a matter of construction of the contract, it ought to be accepted that breaches of that order deprived Koompahtoo of a substantial part of the benefit for which it contracted. Such breaches justified termination. On that ground, we would uphold the decision of the primary judge. We would make one further observation. The corollary of the reasoning of the majority in the Court of Appeal is that Koompahtoo ought to be left to its remedy in damages. Nowhere was it explained how one would measure the Crennan damages suffered by a joint venturer in consequence of inability to assess the financial position of the joint venture. Conclusion The appeal should be allowed with costs. The orders of the Court of Appeal made on 2 November 2006 should be set aside and, in their place, it should be ordered that the appeal to that Court be dismissed with costs. Kirby KIRBY J. The principle that parties should ordinarily fulfil their contractual obligations not only underpins the law of contract, but comprises a basic assumption on which our society and its economy and well-being depend. It would be destructive of that assumption if one of the parties to an agreement could terminate it with relative ease. It is for that reason that strong grounds are needed to support unilateral termination of a contract. As Professor Kevin Gray said recently, "[w]ithout something resembling rules of property and contract, the daily competition for the goods of life would readily descend into an orgy of seizure and violence"25. In these proceedings, Campbell J in the Supreme Court of New South Wales26 concluded (determining a separated question) that sufficient grounds had been demonstrated in law to vindicate the unilateral termination of the agreement in question. The consequence followed that the claim of the first respondent for a declaration that the termination had been invalid (so that the agreement was still on foot) was dismissed. By majority, an appeal against that determination was upheld by the Court of Appeal of New South Wales27. By special leave, an appeal has now been brought to this Court. The appellants seek restoration of Campbell J's orders. I agree with the other members of this Court that the appeal must be allowed. In part, I agree in the reasons of Gleeson CJ, Gummow, Heydon and Crennan JJ ("the joint reasons"). Most cases of this kind turn upon detailed examination of the relevant facts. In this case, those facts supported the conclusion reached at trial. The Court of Appeal erred in giving effect to the contrary conclusion. Nevertheless, it is important to elucidate the governing principles of the common law that are relevant to this decision. As Campbell J noted28, differences of opinion over those principles have emerged amongst leading scholars, in particular as to the taxonomy by which the principles should be expressed and applied. The expression of such principles has an importance that transcends the individual dispute. The rules affect not just this appeal, but 25 Gray, "There's no place like home!", (2007) 11 Journal of South Pacific Law 73 at 26 Sanpine Pty Ltd v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 27 Sanpine Pty Ltd v Koompahtoo Local Aboriginal Land Council [2006] NSWCA 28 [2005] NSWSC 365 at [362]-[364]. Kirby innumerable other cases, most of which will never come before a court. Doctrine matters. Where it is relevant to do so, this Court should contribute to the clarification of legal principles. That is how individual decisions that reach this Court advance the expression of the common law of Australia. Respectfully, I prefer a statement of the common law rules different from that adopted in the joint reasons. However, the difference has no ultimate consequence for the outcome of the appeal. The appeal must be allowed. The orders of Campbell J should be restored. The facts and legislation The facts: The factual background is summarised in the joint reasons29, which set out relevant provisions of the agreement between Koompahtoo Local Aboriginal Land Council ("Koompahtoo"), the first appellant, and Sanpine Pty Limited ("Sanpine"), the first respondent ("the Agreement"). The joint reasons also reproduce the separated question in issue in the appeal30. I need not repeat these details. The legislation: This is not a case where legislation determines the legal rights and obligations of the parties31. The only relevant legislation is the Aboriginal Land Rights Act 1983 (NSW) ("the Act"), pursuant to which Koompahtoo was incorporated32 and acquired the land at issue in these proceedings33. The Act imposed certain obligations on Koompahtoo, in particular as to the use of the subject land and of funds belonging to it34. Whether the parties knew of them or not, those obligations were part of the contextual matrix within which the Agreement was made and was intended to operate35. They are therefore relevant to the resolution of the appeal. 29 Joint reasons at [1]-[25]. See also [2005] NSWSC 365 at [2]-[164]; [2006] NSWCA 291 at [1]-[93]. 30 Joint reasons at [4] referring to [2005] NSWSC 365 at [186]. 31 Thus the Contracts Review Act 1980 (NSW) is inapplicable and no relief was claimed under the Trade Practices Act 1974 (Cth) or the Fair Trading Act 1987 (NSW). 32 See the Act, ss 5(1), 6(1). 33 Joint reasons at [2]. 34 See eg the Act, ss 31, 32. See also rr 26, 27 and 32 of the Model rules contained in Sched 1 to the Aboriginal Land Rights Regulation 1996 (NSW). 35 cf joint reasons at [69]. Kirby The decisional history Decision at first instance: The conclusions of Campbell J are set out in the joint reasons36. In brief, his Honour found that certain breaches of the Agreement on the part of Sanpine had been established. He then put aside whether the obligations breached comprised "essential terms of the contract"37. He assumed, without deciding, that all of the terms that had been breached were "intermediate terms"38. He concluded that Sanpine's breaches of those terms were so "gross and repeated", and amounted to such a "serious departure from [Sanpine's] obligations [under] the Agreement", as to be "sufficient to amount to a repudiation"39. Thus, Koompahtoo's purported termination had been valid. Sanpine's proceedings were dismissed. Decision in the Court of Appeal: In the Court of Appeal, Giles JA (with whom Tobias JA agreed) concluded that, although there was some doubt as to the precise basis of Campbell J's decision, his Honour had based his conclusion on a finding that Sanpine had evinced an intention to repudiate (or renounce) its contractual obligations40. I agree with the joint reasons that this view was mistaken41. It is true that, having stated that he would assume (and proceed on the basis) that "all the terms which have been breached … are intermediate terms"42, Campbell J slipped into the language of "repudiation" in the course of his closing remarks43. However, as the joint reasons point out44, Campbell J defined the word "repudiation" in a particular way for the purposes of his reasons. He made it plain that he was using the term as an overarching description of all of the varieties of conduct giving rise to a right to terminate a 36 Joint reasons at [57]. 37 [2005] NSWSC 365 at [368]. 38 [2005] NSWSC 365 at [368]. 39 [2005] NSWSC 365 at [372]. 40 [2006] NSWCA 291 at [98]-[99]. 41 Joint reasons at [58]. 42 [2005] NSWSC 365 at [368]. 43 [2005] NSWSC 365 at [372]-[373]. 44 See joint reasons at [44], [58]. Kirby contract45. It is therefore necessary to read Campbell J's reasons in light of the generic definition that he adopted. His Honour's conclusion was referable to the actual breaches of the Agreement that he found had been established. Giles JA also addressed Koompahtoo's contention that the terms Sanpine had breached had been "essential"46. However, his Honour did not consider that the relevant terms bore that character. He invoked the test expressed in the reasons of Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd47 and concluded that48: "The test … requires assessment at the time the Agreement was entered into. … I do not think it should be determined that Koompahtoo would not have entered into the Agreement unless assured of strict and literal performance of the terms found by the trial judge to have been breached; they were therefore not essential terms." Giles JA then acknowledged that it was arguable that Campbell J had "[come] to his decision on the basis of termination for sufficiently serious breach of intermediate terms", notwithstanding that Koompahtoo had not sought to uphold Campbell J's decision on that footing49. He pointed out that, in Ankar Pty Ltd v National Westminster Finance (Australia) Ltd50, Mason ACJ, Wilson, Brennan and Dawson JJ had expressed apparent approval for the introduction into the applicable legal taxonomy in Australian law of the "intermediate or innominate term"51, which had originated in the reasons of Diplock LJ in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd52. Giles JA remarked that the observations of this Court in Ankar, favourable to the principle in Hongkong Fir, had been obiter dicta because the judges 45 See [2005] NSWSC 365 at [360]. 46 See [2006] NSWCA 291 at [155]-[159]. 47 (1938) 38 SR (NSW) 632 at 641-642. See joint reasons at [47]. 48 [2006] NSWCA 291 at [170]. 49 [2006] NSWCA 291 at [173]. 50 (1987) 162 CLR 549 at 561-562; cf Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 at 998 per Lord Wilberforce; [1976] 3 All ER 570 at 576-577. 51 [2006] NSWCA 291 at [175]-[176]. 52 [1962] 2 QB 26 at 71-72. Kirby concerned had held that the relevant clauses of the contract in question were "conditions", and thus "essential term[s]"53. It followed that the conclusions reached in the joint reasons in Ankar did not depend upon the existence of a class of "intermediate terms" to sustain them. Nevertheless, Giles JA accepted that the remarks in the joint reasons in Ankar54: "have been regarded … as endorsing for Australian jurisprudence the classification of a term as less than an essential term breach of which of itself entitles the other party to terminate the contract, but more than a warranty breach of which only gives an entitlement to damages". After quoting an extended passage from Carter on Contract55, Giles JA concluded that the factual circumstances could not sustain a finding of "a sufficiently serious breach" of an "intermediate term" to found termination of the Agreement56. He thus found error in both the reasoning and the conclusion of Campbell J. This became the majority conclusion in the Court of Appeal. Bryson JA, in dissent, supported the determination of Campbell J for reasons encapsulated in a passage extracted in the joint reasons57. He emphasised that detailed attention to the facts was required in the circumstances58. On this footing, he concluded that he should defer to, and uphold, the decision of Campbell J. He noted that "[t]he deficiency in Koompahtoo's contractual entitlement was very great, and very important"59. He found that the conclusion that Sanpine had "repudiated" the Agreement had been open to Campbell J. It evinced, in his view, no appealable error60. 53 [2006] NSWCA 291 at [176]. 54 [2006] NSWCA 291 at [176] citing Honner v Ashton (1979) 1 BPR 9478 at 9490- 9491 per Mahoney JA and Shevill v Builders Licensing Board (1982) 149 CLR 620 at 626 per Gibbs CJ. 55 Carter, Carter on Contract, vol 2 at 86,221-86,222 [34-160] cited [2006] NSWCA 56 [2006] NSWCA 291 at [178]. 57 Joint reasons at [66]. 58 [2006] NSWCA 291 at [183]. 59 [2006] NSWCA 291 at [185]. 60 [2006] NSWCA 291 at [186]. Kirby The issues As noted in the joint reasons, various matters which were (or might have been) the subject of dispute between the parties were not in contention by the time the appeal reached this Court61. In particular, Sanpine did not dispute the findings of Campbell J as to breach62. Rather, it contended that the breaches found below did not amount to a repudiation by Sanpine of its obligations under the Agreement or otherwise warrant a conclusion that Koompahtoo was entitled to terminate the Agreement for breach. It follows that, from first to last, the issue in this Court has concerned Sanpine's failure to observe the Agreement and the legal consequences that flow from its defaults. This narrowing of the issues means that it is not possible to gloss over the governing rules or their classification at law. The taxonomical issue is not here a matter of obiter dicta, as it was in Ankar. Here, it is essential to identify and state the rules and elucidate the manner of their application in order to decide whether error occurred at trial or in the Court of Appeal. This appeal thus presents two essential questions requiring resolution: 1. What are the principles of the common law of Australia governing the entitlement to terminate a contract for repudiation or other breach? How are those principles to be applied in the circumstances of the present case, and with what outcome? The governing legal principles Competing taxonomies: Because the common law develops from hundreds of judicial decisions, sometimes over long periods of time, it is often the case that the conceptual framework that affords structure to a group of related legal principles is at first imperfect and unclear. It falls to judges and scholars to attempt to derive rules that are coherent, practical, just, and (so far as is possible) conformable with past decisions. Campbell J, referring to leading Australian texts on contract law, identified two basic but different taxonomies as to the right to terminate a contract at common law. The first was drawn from Professor John Carter's text 61 See eg joint reasons at [17], [25], [67]. 62 Joint reasons at [31]. Kirby Breach of Contract63, and the second from Dr N C Seddon and Associate Professor M P Ellinghaus's eighth Australian edition of Cheshire and Fifoot's Law of Contract64. Both taxonomies arrange the decisional law into a tripartite scheme of classification. Both recognise that a right to terminate will arise in respect either of a breach of an "essential" term or "repudiation" (in the sense of conduct manifesting that one of the parties is unable or unwilling to perform). It is over the character of the third class of circumstances authorising termination that the taxonomies diverge65. Professor Carter postulates that a right to terminate exists at common law in respect of "a sufficiently serious breach of an intermediate term". Dr Seddon and Associate Professor Ellinghaus, on the other hand, state that a right to terminate will arise in respect of a "[b]reach causing substantial loss of benefit", that is, a "breach consisting of a failure to perform which has the effect of depriving the injured party of the substantial benefit of the contract". Campbell J noted that neither of the parties to the proceedings had paid much attention to these competing theories for the classification of the principles emerging from the cases. Instead, they had "focussed attention on specific judgments of the High Court of the last twenty five years"66. Campbell J therefore proceeded to do likewise. From the point of view of a trial judge that was an understandable course of action. However, taking that course diverted Campbell J from the attempt to rationalise and clarify the relevant legal principles according to the rules of law binding on him. It led his Honour, instead, into an invocation of judicial dicta. Such an approach is not conducive to the clear and consistent application of the law to cases that arise for judicial decision. Unless clear principles are derived from the cases, it is inevitable that overlapping categories will be confused and that new facts, as they arise, will be assigned to incorrect categories. In the result, decisions may be founded upon legal error, or their basis will be unclear and their foundation uncertain. 63 Carter, Breach of Contract, 2nd ed (1991) at 60 [308] cited [2005] NSWSC 365 at 64 Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract, 8th Aust ed (2002) at 927 [21.10] cited [2005] NSWSC 365 at [364]. See also Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract, 9th Aust ed (2008) at 1012-1013 [21.11]. 65 cf Esanda Finance Corporation Ltd v Plessnig (1989) 166 CLR 131 at 143 per 66 [2005] NSWSC 365 at [365]. Kirby Campbell J purported to deal with the terms of the Agreement which he found Sanpine had breached not as "essential" but as "intermediate" terms67. This conclusion, and the confusion it occasioned in the Court of Appeal, requires that something should be said by this Court about the problematic nature of such categories. It requires me to draw attention to two matters on which I would depart from the approach adopted in the joint reasons. Essential and non-essential terms: Professor Jane Swanton, writing in 1981, commented that a point had then been reached in the evolution of the English law of contracts where it might have been expected that the common law would have abandoned the distinction between conditions and warranties68. It is, after all, a distinction often difficult to draw in practice. It occasions litigation. It is often circular, in the sense that "conditions" or "essential terms" are, in the usual case, judged to be such because the drastic consequences that flow from their breach are considered to warrant termination in all of the circumstances. When this conclusion is reached it is the drastic consequences that emerge as the important criterion for relief. The description of the character of the term that is breached is no more than a consequential label. The categories thus represent a classic instance of consequential or circular reasoning69. Notwithstanding these difficulties, the law has persisted with the distinction. It has become well entrenched. I am prepared to accept that it is useful to maintain the rule that some contractual terms, limited in number, are so critical to particular contracts that their breach will give rise to an automatic right to terminate. I accept that such terms can be identified and characterised a priori as "essential". I would not disagree that whether or not a term is to be so characterised is a question to be determined with reference to the actual content of the contract, viewed in the context of the entire commercial relationship between the parties70. With respect, however, I have reservations that the reasoning of Jordan CJ in Tramways Advertising71 supplies the relevant test. This is so notwithstanding 67 See joint reasons at [58]. 68 Swanton, "Discharge of Contracts for Breach", (1981) 13 Melbourne University Law Review 69 at 70. 69 Waddams, The Law of Contracts, 5th ed (2005) at 424. 70 cf joint reasons at [48]. 71 See joint reasons at [47] where the relevant passage is set out. Kirby its adoption in other cases72. In DTR Nominees Pty Ltd v Mona Homes Pty Ltd, "This 'test' is so vague that I would not describe it as a test. It diverts attention from the real question which is whether the non- performance means substantial failure the contractual obligations. The inquiry into the motivation for entry into the contract is not the real point. Numerous purchasers may enter into similar contracts with widely different motives. What does it matter if [the 'innocent' party] would have entered the contract even if the terms were as [the party alleged to be in breach] claimed them to be?" to perform As a matter of logic and principle, there is much force in this criticism. It is difficult to see how reference to the "common intention" of the parties at the time of contract formation advances the decision in a case such as the present74. It is an artificial criterion in that it demands the drawing of inferences as to the parties' reactions to contingencies that in fact might (and usually would) never have been anticipated. It also affords scope for the importation of subjective considerations in a manner inconsistent with the modern general approach to the formation of contracts75. In my view, it is preferable to place the "test" on a different footing and to inquire into the objective significance of breach of the term in question for the parties in all the circumstances76. I would favour that approach. If it is adopted, it is difficult to see what purpose purporting to conduct a retrospective investigation of the "common intention" of the parties serves. The court creates an objective postulate. It applies it to the facts. There is then no need to resort to the fiction that Tramways Advertising introduces. 72 Associated Newspapers Ltd v Bancks (1951) 83 CLR 322 at 337; DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 430-431; Shevill (1982) 149 CLR 620 at 627, 636; Ankar (1987) 162 CLR 549 at 556. 73 (1978) 138 CLR 423 at 436. 74 cf joint reasons at [48]. 75 Placer Development Ltd v The Commonwealth (1969) 121 CLR 353 at 367; Taylor v Johnson (1983) 151 CLR 422 at 428-429; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40]; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2005) 218 CLR 471 at 483 [34]; cf Mason and Gageler, "The Contract", in Finn (ed), Essays on Contract, (1987) 1 at 3-10; Mason, "Themes and tensions underlying the law of contract", in Lindell (ed), The Mason Papers, (2007) 296 at 299. 76 cf joint reasons at [68]. Kirby The actual consequences of a default that has occurred in fact ought not to be taken into account in determining whether or not the term of the contract that is breached is "essential" in character. If the position were otherwise, the purpose of maintaining a separate a priori class of "essential" terms would be defeated. It would be impossible to distinguish between an "essential" term and a "non-essential" term in respect of which serious breach could be said to "go to the root" of the contract. Intermediate or innominate terms: The persistence of the law with the distinction between essential and non-essential terms necessarily gave rise to serious risks of practical injustice. It was this realisation that led to the invention of so-called "intermediate" or "innominate" terms. It was Diplock LJ who inserted this new class of contractual terms somewhere between "conditions" and "warranties". He did so in Hongkong Fir77. The concept was further developed in Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos)78. It became entrenched in a number of decisions of English courts and judges that followed. At the time of these developments, it was, for the most part, normal for Australian courts to follow English decisions affecting basic doctrines of the common law without serious question. Thus, the "intermediate" or "innominate" term entered into the discourse of this Court without any real consideration of its conceptual soundness or practical usefulness. However, despite occasional approval of taxonomies that incorporated the classification, this Court has not until this appeal given it unequivocal endorsement in a decision for which such recognition comprised part of the ratio decidendi of the case79. It might have been "assumed" to be correct80; but that was the way of earlier times. In the present case, the joint reasons defend the so-called "intermediate" term derived from Hongkong Fir. Moreover, it is made explicit that the conclusion in the joint reasons depends upon the reception of that concept into law81. 77 [1962] 2 QB 26 at 71-72; cf at 64 per Upjohn LJ. 79 Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract, 9th Aust ed (2008) at 1032 [21.22]; see also above at [86]. 80 Joint reasons at [50]. 81 See joint reasons at [70]. Kirby The joint reasons suggest that an "intermediate" term will have been breached where default in respect of a non-essential term is so significant as to go "to the root of the contract", a very imprecise and apparently self-justifying notion82. Whether a breach goes "to the root of the contract" is said to depend upon "the nature of the contract and the relationship it creates, the nature of the term, the kind and degree of the breach, and the consequences of the breach" as well as whether or not damages would provide appropriate relief in the circumstances83. Of paramount importance is the "construction of the contract" itself84. Respectfully, I disagree with this approach. If the classification of a contractual term as "intermediate" is nothing more than a function of ex post facto evaluation of the seriousness of the breach in all of the circumstances then the label itself is meaningless. It is not assigned on the basis of characteristics internal to, or inherent in, a particular term, as the joint reasons themselves acknowledge. Rather, it is imposed retrospectively, in consequence of the application of the judicial process. Effectively, there is no basis, and certainly no clear or predictable basis, for separating "intermediate" terms from the general corpus of "non-essential" terms or "warranties" prior to adjudication in a court. This throws into sharp relief the extreme vagueness of the Hongkong Fir "intermediate" term. Its imprecision occasions difficulties and confusion for parties and those advising them. It has the potential to encourage a proliferation of detailed but disputable evidence in trial courts and consideration of such evidence in intermediate courts. It renders uncertain the distinctions between the several categories said to provide a legal justification for the very significant step of terminating an otherwise valid contract. Several additional factors militate against the incorporation of the so- called "intermediate" term into Australian law. It is a comparatively recent invention, finding little or no reflection in the common law that preceded Hongkong Fir. It is inconsistent with the approach of Australian legislation dealing with breach of contract in particular contexts85. It is not reflected in the general codifications of contractual remedies law adopted in some common law 82 Joint reasons at [54]. 83 Joint reasons at [54]. 84 Joint reasons at [55]. 85 Sale of Goods Act 1923 (NSW), s 34(2); Goods Act 1958 (Vic), s 38(2); Sale of Goods Act 1895 (SA), s 31(2); Sale of Goods Act 1896 (Q), s 33(2); Sale of Goods Act 1895 (WA), s 31(2); Sale of Goods Act 1896 (Tas), s 36(2); Sale of Goods Act (NT), s 34(2); Sale of Goods Act 1954 (ACT), s 35(2). Kirby countries86. It is inconsistent with approaches suggested on the part of law reform bodies in England and Australia87. It finds no reflection in the relevant parts of the United States Restatement of the law. Nor is it adopted in the Uniform Commercial Code of the United States. There is nothing like it in the United Nations Convention on Contracts for the International Sale of Goods 1980. Nor does it appear in the UNIDROIT Principles of International Commercial Contracts 200488. Even where recognising a classification analogous to "essential" terms, none of these codifications encumbers itself with an artificial additional subdivision of the broad class of "non-essential" terms that remains. It is true that Mr Edwin Peel, the present author of Professor Treitel's The Law of Contract, expresses a preference for the retention of the "intermediate term" classification in the context of English law, citing what he describes as its "practical" usefulness89. I am as sensitive as the next judge to the common triumph of pragmatism over principle in the history of the common law. However, for reasons explained above I have considerable doubts as to the suggested justification in this case. The text does not refer to Australian case law on the subject. In any case, Mr Peel acknowledges that there is authority for, and "considerable force in", the "alternative view that there are only two categories: conditions and other terms"90. This represents the classification that I would favour. It is more traditional. It has the weight of history on its side. It recognises the seriousness of providing a further classification with the potential to authorise the termination of a valid contract. It reduces the temptations of consequentialist reasoning essentially designed to fulfil the conclusion already contemplated or arrived at. And it avoids the difficulty of differentiating "intermediate" or "innominate" terms from essential "conditions" and "other" terms. 86 See eg Contractual Remedies Act 1979 (NZ), s 7(2), (3), (4). 87 McGregor, Contract Code Drawn Up on Behalf of The English Law Commission, (1993) at 71-85; cf Ellinghaus and Wright, An Australian Contract Code, Law Reform Commission of Victoria Discussion Paper No 27, (1992) at 25. 88 See Arts 7.3.1, 7.3.3. 89 Peel, The Law of Contract, 12th ed (2007) at 889 [18-048]; cf joint reasons at [50]. 90 Peel, The Law of Contract, 12th ed (2007) at 889 [18-048] citing The Hansa Nord Kirby I acknowledge that, in a sense, whether there are two or three species of contractual terms might well be in large part a "terminological problem"91. However, getting the classification right has significant implications for countless contracting parties and legal practitioners, as well as for trial judges. I also recognise that this is an area of law in which it is difficult to establish rigid standards for the determination of future cases. Thus, Bryson JA noted in the Court of Appeal92: "Whether or not there has been a repudiation [in the broad sense] is a conclusion based on the application to the facts of each case of a standard which has not been, and I think cannot be formulated precisely or exhaustively. As with other legal standards, repudiation calls for judicial decision on whether conduct has passed a boundary although the precise location of the boundary is not clear." However, the central point is that the performance of legal tasks is not assisted when misleading, imprecise and self-fulfilling labels are invoked in an attempt to rationalise results in individual cases after the event. Such labels comprise a source of needless complication and disputation. If what is required is an evaluation of whether the circumstances of a particular breach are of such an objectively serious nature as to vindicate unilateral termination, then this Court should formulate the relevant principles to say so. Continued reference to the vague and artificial concept of "intermediate terms" inhibits this exercise and obscures clear thinking in the performance of the legal task in cases such as the present. In earlier times this Court felt itself obliged to follow judicial developments of legal doctrine affecting the common law of contracts, as expressed in the higher English courts. Substantially, this was because of the then legal tradition and training and because Australian courts, including this Court, were subject to appeals to the Judicial Committee of the Privy Council. Now we answer to a more testing standard of rigour, persuasiveness and conceptual coherence. We are governed not only by our own past decisional authority but also by our consideration of relevant legal principle and applicable legal policy93. 91 Peel, The Law of Contract, 12th ed (2007) at 888 [18-048]; cf Carter, Peden and Tolhurst, Contract Law in Australia, 5th ed (2007) at 694 [30-34] (stating that the "problem of classification is largely, but not entirely, academic"). 92 [2006] NSWCA 291 at [183]. 93 Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at Kirby An alternative formulation: It follows that I would endorse the argument advanced in the ninth Australian edition of Cheshire and Fifoot94: in question "It is difficult to see the necessity for introducing [an 'intermediate'] category of terms as a means of legitimising termination by reference to the extent of loss actually caused by a breach. Unless otherwise agreed, a breach that substantially deprives the other party of the benefit of a contract should entitle that party to terminate it, no matter whether the term The identification of a third kind of term distinct from, and intervening between, essential terms (conditions) and inessential terms (warranties), further proliferates an already over-elaborate terminology, and is an obvious judgments to circularity of reasoning. acknowledge, even if only indirectly, that loss of substantial benefit may be sufficient as such to justify termination by the injured party." intermediate, or is essential, inessential. invitation Many Of the two taxonomies set out in the reasons of Campbell J, I prefer that proposed by Dr Seddon and Associate Professor Ellinghaus in the Australian edition of Cheshire and Fifoot. I regard it as a correct statement of the common law of Australia. Thus, a right to terminate arises in respect of: (1) breach of an essential term; (2) breach of a non-essential term causing substantial loss of benefit; or (3) repudiation (in the sense of "renunciation"). The common thread uniting the three categories is conduct inconsistent with the fundamental postulate of the contractual agreement. This scheme of classification affords the requisite "flexibility" to ensure just outcomes in individual cases – a proper concern upon which the joint reasons rightly place emphasis95. However, it avoids the need to invent so-called "intermediate terms". It also simplifies the determination of the consequences of breach of a contractual term, removing needless steps from the process of reasoning. Under taxonomies incorporating the "intermediate term", a finding that a term has been breached requires a determination of whether that term is essential or non-essential. If it is the latter, the court must then inquire as to whether it is of an "intermediate" character. If the answer to this question is in the affirmative, the court must make a further determination of whether the breach was of "sufficient seriousness" to warrant termination. The latter two steps are interrelated. However, when the "intermediate term" is excluded, the process of reasoning is simplified and clarified. Either the term breached is essential or it is non-essential. It cannot somehow be somewhere in between. If 94 Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract, 9th Aust ed (2008) at 1032 [21.22] (citations omitted). 95 cf joint reasons at [52]. Kirby it is the former, termination will be justified. If it is the latter, the court can turn its attention directly to the objective indicia of "substantial loss of benefit" without feeling a need to affix the "intermediate" label on the contractual terms ex post facto. I would prefer to decide the case on this footing. I express this preference because the holding in the joint reasons will now endorse the Hongkong Fir doctrine as part of the common law of Australia. I cannot agree in that result. Before that doctrine passes into endorsement by this Court as a binding rule of Australian law96, I have endeavoured to explain its theoretical and practical imperfections and to set out an alternative and preferable expression of the governing common law rule. It produces the same outcome in this case. However, it does so without resort to the unpersuasive classification that is now upheld and applied. Outcome and conclusion Application of principles: It remains to apply the foregoing principles to the facts of the present appeal. As the joint reasons recount, Campbell J found that Sanpine had committed significant and repeated breaches of the Agreement in relation to: the preparation and updating of documents97; the opening and maintenance of a joint venture bank account98; and the maintenance of proper books so as to allow assessment of the affairs of the joint venture99. I do not doubt that the terms of the contract found to have been breached were of substantial importance in the context of the agreement between the parties. From the point of view of Koompahtoo, the basic purpose of establishing the joint venture was to obtain the benefit of Sanpine's managerial expertise100. Defaults on the part of Sanpine in this connection would have had the effect of calling into question the assumption that Sanpine was competent to 96 cf Al-Kateb v Godwin (2004) 219 CLR 562 at 609 [127] per Gummow J. 97 Joint reasons at [29]. 98 Joint reasons at [34]-[35]. 99 Joint reasons at [37]-[40]. 100 Joint reasons at [2], [68]. Kirby provide such expertise – an assumption on which the contractual relations between the parties were founded. I do not favour the conclusion that the terms found to have been breached included terms that were "essential" in nature. Even with respect to cl 16.5 of the Agreement101 it is possible to envisage breaches too trivial to be regarded as providing a licence for termination. It does not matter that in the event the relevant breaches were far from being so. The serious and significant consequence of determining a contractual term to be "essential" – being the vindication of unilateral termination for breach regardless of the circumstances – means that courts should be cautious in giving effect to such a result. In the circumstances of the case, I consider that the breaches established had, as a matter of fact, the effect of depriving Koompahtoo of the substantial benefit of the contract102. That benefit in large part comprised the application of Sanpine's expertise in management to the joint venture project. The defaults of Sanpine undercut that benefit to a significant extent. The maintenance of proper documentation and accounts, and the making available of relevant information to Koompahtoo, was basic to Sanpine's obligations under the Agreement. I agree with the joint reasons when they say103: "The nature of Sanpine's breaches was such that, even at trial, it was difficult, if not impossible, to know their full extent. The breaches deprived the Koompahtoo representatives of the capacity to make an informed decision as to the consequences for Koompahtoo of what was going on." Conclusion and disposition: It follows that the appeal succeeds. The defaults of Sanpine were such as to vindicate Koompahtoo's termination of the Agreement. Given the context, those defaults deprived Koompahtoo of the substantial benefit of the Agreement. There is no need to appeal to the elusive and contestable concept of intermediate or innominate terms104. So I would not do so. The Court of Appeal erred in its approach and in its conclusions. The orders of Campbell J should be restored for the reasons that I have explained. 101 cf joint reasons at [69]-[70]. The text of cl 16.5(a) is set out in the joint reasons at 102 cf joint reasons at [71]. 103 Joint reasons at [67]. 104 I previously accepted that the Hongkong Fir approach introduced flexibility into the classification of contractual terms: see Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689 at 697-698. However, as I have shown, there are other and preferable ways to achieve a flexible result. Kirby Orders The orders proposed in the joint reasons105 should be made. 105 Joint reasons at [73]. |
HIGH COURT OF AUSTRALIA APPELLANT AND MINE SUBSIDENCE BOARD RESPONDENT Jemena Gas Networks (NSW) Limited v Mine Subsidence Board [2011] HCA 19 1 June 2011 ORDER Appeal allowed. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 28 June 2010 and in their place order: That the appeal to that Court be allowed. Set aside the orders of the Land and Environment Court of New South Wales made on 17 July 2009 and in their place order that the preliminary question of law identified by Sheahan J of the Land and Environment Court of New South Wales, namely: Whether the Applicant is entitled to an amount under section 12A(1)(b) of the Mine Subsidence Compensation Act 1961 (NSW) in respect of expenses that it incurred in performing work on the Sydney to Moomba Gas Pipeline in circumstances where subsidence occurred at or near Mallaty Creek near Campbelltown in or about October 2005, on the assumption that the Applicant can establish that, for the purposes of that section, the expenses incurred by it were "proper and necessary", be answered: It being agreed that the applicant reasonably anticipated, based on expert advice, that cumulative subsidence at Mallaty Creek from approved longwall mining of Longwalls 30-32 was likely to cause damage to its pipeline, the applicant was entitled under the Mine Subsidence Compensation Act 1961 (NSW) to an amount from the Mine Subsidence Compensation Fund to meet the proper and necessary expense of preventing or mitigating that damage. s 12A(1)(b) of The Board to pay the appellant's costs of the hearing of the preliminary question before the Land and Environment Court and of the appeal to the Court of Appeal. The Board to pay the costs of the appellant of the appeal to this Court. On appeal from the Supreme Court of New South Wales Representation R J Ellicott QC with J R Williams for the appellant (instructed by Freehills) S B Lloyd SC with S J Free for the respondent (instructed by Crown Solicitor (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Jemena Gas Networks (NSW) Limited v Mine Subsidence Board Mining – Compensation – Section 12A(1)(b) of Mine Subsidence Compensation Act 1961 (NSW) allowed claims by owners of improvements for payment from Mine Subsidence Compensation Fund ("Fund") for proper and necessary expense incurred or proposed in preventing or mitigating damage that, in opinion of Mine Subsidence Board, owner "could reasonably have anticipated would otherwise have arisen, or could reasonably anticipate would otherwise arise, from a subsidence that has taken place" – Appellant made claim for costs of preventative and mitigatory works performed on pipeline after receiving expert advice that such works would be necessary as result of certain underground longwall mining – Whether appellant entitled to compensation from Fund under s 12A(1)(b) – Whether entitled to compensation only if subsidence occurred before expense incurred in preventing or mitigating damage – Whether "from a subsidence that has taken place" in s 12A(1)(b) refers to actual past occurrence or hypothetical future occurrence of subsidence. Words and phrases – "from a subsidence that has taken place". Mine Subsidence Compensation Act 1961 (NSW), ss 11, 12A(1)(b), 13A, 14. FRENCH CJ, GUMMOW, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ. This appeal relates to the Mine Subsidence Compensation Act 1961 (NSW) ("the Act"). Section 10 of the Act provides for the creation of a Mine Subsidence Compensation Fund ("the Fund"). The Fund is administered by the respondent, the Mine Subsidence Board ("the Board"). By s 8 of the Act, the Board has the wide powers of a commission under the Royal Commissions Act 1923 (NSW), Pt 2 Div 1. Colliery proprietors make compulsory contributions to the Fund (s 11). Claims may be made by the owners of improvements for payment from the Fund of expenditures in relation to subsidence-caused damage to those improvements (ss 12 and 12A). The appeal concerns the construction of s 12A(1)(b) of the Act. Section 12A(1)(b) provides for compensation to be paid out of the Fund by the Board to the owners of improvements on land for expense incurred in preventing or mitigating damage from subsidence caused by mining1. It is a difficult provision, which has occasioned considerable controversy in the courts of New South Wales. The factual background The appellant owns and operates a gas pipeline which runs from Moomba to Sydney. It is licensed to do so under Pt 3 of the Pipelines Act 1967 (NSW), and hence it is a "licensee" for the purposes of that Act. The gas pipeline is the main source of natural gas for the large populations who live in the Sydney and Newcastle metropolitan areas. For the most part the gas pipeline runs underground, and it does so at a point where it crosses Mallaty Creek. The pipeline traverses an area of land which is subject to a mining lease relating to the West Cliff Colliery. That mining lease is held by a subsidiary of BHP Billiton Limited. The pipeline runs above a series of parallel panels numbered 29-36. Those panels have been proposed for longwall mining. Longwall mining has been taking place in them for some years. On 14 April 2003, longwall mining in Longwall 29 began. In December 2003, expert consultants predicted that there would be subsidence at the point where the pipeline crosses Mallaty Creek when Longwall 30 was mined. They also predicted that the subsidence would increase as subsequent longwall panels were mined. In February 2004, other expert 1 See below at [6]. Crennan consultants advised that no works were needed to mitigate the cumulative effects of subsidence arising from extraction from Longwall 30 and Longwall 31. But they advised that mitigation works would be needed as a result of extraction from Longwall 30, Longwall 31 and Longwall 32. The mining of Longwall 30 was completed on 4 June 2005, and of Longwall 31 on 11 December 2006. Between December 2005 and January 2007, work was done to excavate the pipeline and the three other pipelines which pass along the same easement, to decouple the four pipelines from the soil, and to carry out associated filling. On 20 December 2006, the cumulative subsidence was 42.3mm. In February 2007, the mining of Longwall 32 commenced. By 30 April 2007, the cumulative subsidence had risen to 140.4mm. By 28 August 2007, the cumulative subsidence had risen to 274.7mm. This broadly corresponded with the predictions of the expert consultants. Meanwhile, on 17 July 2007 the appellant made a claim for $2,770,664 against the Board under the Act for the costs of preventative and mitigatory works performed on the pipeline on the northern side of Mallaty Creek. Section 12A(1)(b) provides: "(1) Subject to this section, claims may be made under this Act for payment from the Fund of: an amount to meet the proper and necessary expense incurred or proposed by or on behalf of the owner of improvements or household or other effects in preventing or mitigating damage to those improvements or household or other effects that, in the opinion of the Board, the owner could reasonably have anticipated would otherwise have arisen, or could reasonably anticipate would otherwise arise, from a subsidence that has taken place, other than a subsidence due to operations carried on by the owner."2 2 Section 12A(1)(b), introduced in 1969, may be compared with s 12(1)(a) and (b), which provide: "(1) Claims may be made under this Act for payment from the Fund of: (Footnote continues on next page) Crennan On 28 July 2008, the Board sent a letter to the appellant. It appeared to say that in the Board's view no claim could be made unless the whole of the subsidence occurred before the expense of preventative works was incurred. It relied on the reasoning in Mine Subsidence Board v Wambo Coal Pty Ltd ("the Wambo case")3. The proceedings On 19 September 2008, the appellant instituted class 3 proceedings in the Land and Environment Court of New South Wales against the Board. Section 19(f1) of the Land and Environment Court Act 1979 (NSW) provides that the matters within class 3 of the Land and Environment Court's jurisdiction include jurisdiction to hear and dispose of "appeals under section 12B of [the Act]"4. The Court (Sheahan J) dealt with the following separate question5: (a) compensation for any damage to improvements that arises from subsidence, except where the subsidence is due to operations carried on by the owner of the improvements, (b) an amount to meet the proper and necessary expense incurred or to be incurred as a result of such damage in [listed respects]". Section 13 provides that in lieu of making payments in respect of claims under s 12, the Board has power to purchase the damaged land or restore it. (2007) 154 LGERA 60. 4 Section 12B of the Act provides: "A person claiming compensation under section 12 or 12A may appeal to the Land and Environment Court against the decision of the Board: as to whether damage has arisen from subsidence or could reasonably have been anticipated, or (b) as to the amount of the payment from the Fund." Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2009) 167 LGERA Crennan "Whether the [appellant] is entitled to an amount under section 12A(1)(b) of the Mine Subsidence Compensation Act 1961 (NSW) in respect of expenses that it incurred in performing work on the Sydney to Moomba Gas Pipeline in circumstances where subsidence occurred at or near Mallaty Creek near Campbelltown in or about October 2005, on the assumption that the [appellant] can establish that, for the purposes of that section, the expenses incurred by it were 'proper and necessary'." He answered that question: "No"6. He correctly regarded himself as bound to do so in view of the reversal of a decision of Lloyd J in the Land and Environment Court by the Court of Appeal of the Supreme Court of New South Wales in the Wambo case. The appellant appealed to the Court of Appeal of the Supreme Court of New South Wales. It unanimously dismissed the appeal, but there were internal divisions of reasoning. Since the appellant invited the Court to overrule its own earlier decision in the Wambo case, five judges sat. Spigelman CJ (Allsop P and Giles JA concurring) considered that the Wambo case was correct and should be followed. Basten JA (with whom Macfarlan JA agreed in a short judgment) held that the Wambo case was wrong, but that since it was not "clearly or plainly wrong"7 it should not be overruled8. In this Court the appellant maintains its challenge to the correctness of the Wambo case. The position of the judges and the appellant It was common ground that the pipeline was an improvement, that the appellant was its owner, and that damage would be caused by subsidence unless some preventative or mitigatory works were undertaken. The dispute turns on Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2009) 167 LGERA Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 Crennan the significance of the words "from a subsidence that has taken place" in s 12A(1)(b). The majority of the Court of Appeal, in adopting the construction of s 12A(1)(b) stated in the Wambo case, held that the words "from a subsidence that has taken place" meant that there could be no claim unless the subsidence had already taken place by the time that the "expense" had been "incurred or proposed"9. On that construction, the subsidence liable to cause damage to the appellant's improvements which began in February 2007 had not taken place before the expense had been incurred from December 2005 to January 2007, and hence the Board was correct in rejecting the appellant's claim. The minority in the Court of Appeal thought that that construction was wrong. In its view, s 12A(1)(b) required only that the "subsidence" had taken place before the Board formed its opinion10. On that construction, since subsidence liable to cause damage to the appellant's pipeline had taken place from February 2007, when mining of Longwall 32 began, which was before the Board communicated its rejection of the claim on 28 July 2008, it was wrong for the Board to reject the claim. The appellant relied on the minority construction as sufficient to bring it victory in this appeal. But that was not its preferred approach. The appellant advocated another construction as its preferred approach. It does not appear to have been advanced until the Court of Appeal hearing in the present case. On that construction, the words "from a subsidence that has taken place" do not require that subsidence actually occur before a valid claim can be made or decided. The appellant submitted that the words "damage … from a subsidence that has taken place" merely describe the character of the possible damage to the prevention or mitigation of which the expense is directed and to which the inquiry about the owner's reasonable anticipation is to be directed. Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 at 24-25 [28], 27-28 [42]-[44], 32 [71] and 35 [95]. 10 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 at 35-50 [99]-[186]. This view seems to have been that adopted by Lloyd J, the primary judge in the Wambo case, whose decision was reversed by the Court of Appeal: see Wambo Coal Pty Ltd v Mine Subsidence Board (2006) 147 LGERA Crennan The appellant's submission The appellant's construction focuses attention on the requirement that the Board form an opinion about what damage the owner could reasonably have anticipated as arising from a subsidence unless preventative or mitigatory works were undertaken. Among the assessments to be made by the Board is an assessment of what the owner could reasonably have anticipated in relation to a future event – the future occurrence of damage to the owner's improvement. If, in the opinion of the Board, the owner could reasonably have anticipated or anticipate that, without preventative or mitigatory work, damage would have arisen in the future from subsidence in the future, a claim may be made. The words "from a subsidence that has taken place" refer not to some specific subsidence that has happened, but to a subsidence which may not have happened but which is anticipated to take place in the future, causing damage. The Board has to consider what the owner could reasonably have anticipated at a time after the time of anticipation, but the Board's assessment of that question may take place at points in time before the future events which could reasonably have been anticipated – subsidence and damage – have taken place. The provision creates a condition that "subsidence … has taken place", but the point of time at which the condition must be satisfied is the time at which the damage would otherwise arise if preventative or mitigatory works have not been undertaken. On the hypothesis that future damage could reasonably have been anticipated from a subsidence, the subsidence will necessarily have preceded or accompanied the damage and will necessarily have caused that damage. At the point in time at which the anticipated damage occurs, it can correctly be said that damage has arisen from a subsidence that has taken place. In short, s 12A(1)(b) requires the Board to ask of an owner who has incurred or proposed an expense to prevent or mitigate damage: "Could the owner reasonably have anticipated that subsidence-caused damage would have arisen but for the preventative or mitigatory expense?" or "Could the owner reasonably have anticipated that subsidence-caused damage would otherwise arise but for the preventative or mitigatory expense?" The difference between the two questions is that the first directs itself to a reasonable anticipation that but for the preventative or mitigatory expense subsidence-caused damage will already have arisen, before the time when the Board is forming its opinion. The second question directs itself to a reasonable anticipation that but for the preventative or mitigatory expense, subsidence-caused damage would arise after the time when the Board is forming its opinion. Crennan Section 12A(1)(b) thus permits a claim to be made for payment from the Fund of an amount to meet expense incurred by the owner of improvements in preventing or mitigating damage that, in the opinion of the Board, the owner could reasonably have anticipated would otherwise have arisen, or could reasonably anticipate would otherwise arise, from a subsidence that has taken place prior to that damage arising, even though at the time when the expense is incurred or proposed there has not yet been either subsidence or damage. The appellant's preferred construction is correct. In giving the reasons for that view, it is desirable to start by examining the reasoning of the Court of Appeal majority. The reasoning of the Court of Appeal majority The Court of Appeal majority rejected the appellant's construction for the following reasons. It summarised the appellant's submission thus11: "the words 'subsidence that has taken place' encapsulate a hypothesis. The very purpose of the clause … is to permit the owner to incur expenses to prevent or mitigate damage which has not yet occurred. The reference to 'subsidence that has taken place' should be understood as a component part of the hypothesis, being the damage which the owner of the improvements is seeking to prevent or mitigate. The 'subsidence' to which the subsection refers is not actual subsidence but a hypothetical subsidence. The characterisation of the reference to 'a subsidence that has taken place' as a 'hypothesis' … carries with it the implication that no subsidence needs to take place. On this basis the reference remains hypothetical throughout although, of course, in the usual case there will be subsidence, the effects of which have been avoided by the work carried out by the owner." 11 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 Crennan The Court of Appeal majority said that this was contrary to the Wambo case: that is true, but the correctness of the construction propounded in that case is the very question in issue. The Court of Appeal majority continued12: "It is clear that the purpose of the section under consideration is to prevent or mitigate damage and, in that sense, there is a hypothetical element in s 12A(1)(b). There is no reason, however, to conclude that any other element in the section is similarly hypothetical. Specifically the words 'that has taken place' are … intractable. They refer in their natural and ordinary meaning to an actual, past event." But, it will be suggested below13, it is not only the "damage" which is hypothetical. The "subsidence" may also be hypothetical, since it is part of the compound expression "damage … from a subsidence that has taken place". The Court of Appeal majority then said14: "The interpretation of s 12A(1)(b) adopted in [the Wambo case] is reinforced by the immediate textual context. First, the use of the article 'from a subsidence that has taken place' cannot be set aside as irrelevant. The phrase cannot be read as if it said 'from subsidence' (c/f s 12(1)) or 'by reason of subsidence' (c/f s 13A). … there are numerous other references to 'subsidence' in the Act, some unadorned by any preposition or article and others preceded by prepositions such as 'by' or 'from'. Section 12A(1)(b) is, however, the only example in which an article is used. Together with the past tense of the phrase 'has taken place', the formulation suggests an actual, not a hypothetical occurrence. This conclusion is reinforced by the fact that the article appears twice in immediate successive clauses in s 12A(1)(b), namely: 'from a 12 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 14 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 Crennan subsidence that has taken place, other than a subsidence due to operations carried on by the owner'. The identification of a specific subsidence caused by the 'operations' of the owner is a further indication that what is involved is an actual, rather than a hypothetical, occurrence." (emphasis in original) These considerations do not take account of the need to concentrate on the fact that the Board is to form an opinion about the reasonable anticipation of future events, one of which is "a" subsidence. The indefinite article is used to describe something of which nothing specific is known, but which is merely generic and hypothetical. The Court of Appeal majority referred to nine reasons given in the Wambo case for the conclusion there reached, and in addition gave a tenth reason of its own. Although the reasons in the Wambo case were directed in terms to a rejection of Lloyd J's view in that case, which was also the view of the Court of Appeal minority in this case, the Board relied on them to refute the construction propounded by the appellant as well. The Court of Appeal minority exposed those reasons to considerable criticism, which, so far as it is consistent with the appellant's construction, is sound15. Many of the reasons in the Wambo case do no more than set out the problem, or assume the correctness of a particular answer to it (for example, the first three and the fifth)16. Others are neutral – for example, the fourth and sixth17. Others are not determinative – for example, the seventh and eighth18. The ninth reason was that the Wambo construction was not irrational19; that may be accepted but is not to the point. Section 12A(1)(b) is, as 15 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 16 Mine Subsidence Board v Wambo Coal Pty Ltd (2007) 154 LGERA 60 at 67 [28]-[30] and 68-69 [33]-[38]. 17 Mine Subsidence Board v Wambo Coal Pty Ltd (2007) 154 LGERA 60 at 67-68 [31]-[32] and 69-70 [39]-[43]. 18 Mine Subsidence Board v Wambo Coal Pty Ltd (2007) 154 LGERA 60 at 70 19 Mine Subsidence Board v Wambo Coal Pty Ltd (2007) 154 LGERA 60 at 70-71 Crennan already remarked, a difficult provision, and the issue is which of the proffered constructions is to be accepted over the others, none of which manifests such an absence of reason as to be irrational. The tenth reason – that since the indefinite article was used before "subsidence" the language pointed to a "specific, past subsidence"20 – has already been dealt with. Overall the reasoning in the Wambo case is flawed by its inattention to the significance of the words "in the opinion of the Board" in s 12A(1)(b). The Board's primary argument The parties engaged in numerous peripheral or indecisive battles. Thus the Board relied on the contrast drawn in the Wambo case between the words "subsidence that has taken place" in s 12A(1)(b) and "by reason of subsidence" in s 13A: it was said that the latter words relate to anticipated subsidence but the former do not21. The Court of Appeal minority rejected that inference from the contrast22: "Undoubtedly the wording [in s 13A] is different from that in s 12A(1)(b), but so is the principal purpose of the provision, focussing on the comparative cost to the Fund of different courses of action." In addition, it is not possible to find consistency in the numerous references to "subsidence" in the Act. If that type of analysis were to be employed, one inference from the contrast between the words "actual subsidence" in the definition of "subsidence" in s 4 and the absence of the word "actual" in the phrase "subsidence that has taken place" in s 12A(1)(b) is that s 12A(1)(b) does not require actual subsidence. 20 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 21 Mine Subsidence Board v Wambo Coal Pty Ltd (2007) 154 LGERA 60 at 67-68 22 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 Crennan Both parties took the Court to the Second Reading Speech, but it casts no useful light on the controversy23. The Board argued that even if the appellant was not able to recover under s 12A(1)(b) of the Act, it could recover under s 265(1) of the Mining Act 1992 (NSW). Assuming, which is controversial, that the appellant could recover under s 265(1), the argument casts no light on the question whether the appellant is able to recover under s 12A(1)(b). Both parties also advanced many other arguments that need not be considered in detail because they are not central. All that need be considered is the decisive collision between the Board's claim that the appellant's construction would create unacceptable linguistic incongruity and the appellant's claim that the Board's construction was irrational. The Board submitted that the mischief attacked by s 12A(1)(b) was that before it was enacted, by reason of the narrowness of s 12(1), there was no method by which owners of improvements carrying out preventative or mitigatory works in advance of damage could recover from the Fund. It submitted that the enactment of s 12A(1)(b) met that mischief, subject to a condition. The condition was that a subsidence must have occurred before the expense was incurred or proposed, even though that subsidence had not yet led to damage. It accepted that the words "would otherwise have arisen" and "would otherwise arise" indicated that the provision called for hypothetical reasoning, but contended that the weak link in the appellant's construction was to require the hypothesis to extend to subsidence. That extension, according to the Board, was precluded by the words "subsidence that has taken place". The Board submitted that the appellant's construction might have been sound if the provision had omitted the words "that has taken place". It might have been sound if the provision had said "anticipated subsidence" or "expected subsidence". It might have been sound if the provision had read "a subsidence, if that were to take place", as was suggested by the Court of Appeal minority24. 23 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 2 October 1969 at 1550-1551. 24 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 Crennan The Board's submissions placed considerable weight on these linguistic incongruities as a flaw in the appellant's preferred construction. It may be that the words "or could reasonably anticipate would otherwise arise" were inserted at a late stage, without any corresponding modification to the words "that has taken place". The words "or could reasonably anticipate would otherwise arise" look to the future, and do not fit well with the words "from a subsidence that has taken place" if that expression is construed as looking exclusively to the past. The Board conceded that its construction would be more acceptable if the provision had said "from a subsidence that had or has taken place", but submitted that the words "has taken place" were sufficiently "flexible" to deal with all temporal possibilities. There are linguistic difficulties in the appellant's construction. But there are linguistic difficulties in all possible constructions. The construction in the Wambo case, preferred by the Board, involves inserting the word "already" or "beforehand" after "that has taken place". And, as the Court of Appeal minority said, if the words "in the opinion of the Board" are to be downplayed or ignored, the words "subsidence that has taken place" should read "subsidence 'that had then taken place'"25. In these circumstances it is necessary to look for the least irrational construction. Section 12A as a quid pro quo for s 14 One fundamental support for the appellant's construction stems from s 14 of the Act, which provides: "(1) The proprietor of a colliery holding who: is not in arrears with the contributions payable by the proprietor to the Fund under this Act, and observes or performs every covenant or stipulation relating to the method or extent of the extraction of coal or shale contained in any instrument through which the proprietor derives title to mine such coal or shale, 25 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 at 47 [166] (emphasis in original). Crennan shall not be liable for any damage to improvements or household or other effects occasioned by subsidence. (2) Nothing in this section shall relieve a proprietor of a colliery holding from liability for damage caused by subsidence where the subsidence is due to the negligence of the proprietor of the colliery holding or the proprietor's servants." If the Act had not been enacted, and if no provision corresponding to s 14 existed, at common law the proprietor of a colliery holding, although not liable for a mere withdrawal of support, and not liable merely for subsidence caused by that withdrawal of support, would be liable in nuisance for a withdrawal of support creating subsidence which caused actual damage26. This is because the owner of land has a right to the support of that land in its natural state from the adjacent and subjacent land of neighbouring owners (including lessees). The right is a natural incident of the ownership. There is no natural right of support for structures (as distinct from the natural right of support for land in its natural state) but damages for injury to a structure flowing from subsidence caused by a withdrawal of support (as distinct from the additional weight of structures on the land) are recoverable27. The depreciation in the market value of the property attributable to the risk of future subsidence cannot be taken into account28. But each successive subsidence causing damage creates a fresh cause of action, even though there has been no new excavation29. Although the remedy of damages at law is not available until the subsidence has caused injury to a landowner's property30, in equity the landowner may apply for a negative injunction (interlocutory or final) against conduct causing subsidence in future, whether or not there has been any subsidence, 26 Bonomi v Backhouse (1859) El Bl & El 646 [120 ER 652]; Backhouse v Bonomi (1861) 9 HLC 503 [11 ER 825]; Dalton v Angus (1881) 6 App Cas 740 at 808. 27 Brown v Robins (1859) 4 H & N 186 [157 ER 809]; Stroyan v Knowles (1861) 6 H & N 454 [158 ER 186]; Pantalone v Alaouie (1989) 18 NSWLR 119 at 129. 28 West Leigh Colliery Co Ltd v Tunnicliffe & Hampson Ltd [1908] AC 27. 29 Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127. 30 Midland Bank plc v Bardgrove Property Services Ltd [1992] 2 EGLR 168 at 172. Crennan whether or not there has been any injury caused by subsidence, and indeed whether or not mining has begun31. And the landowner may apply for a mandatory injunction (interlocutory or final) of a quia timet kind, compelling the defendant to take positive steps to prevent subsidence-causing injury32. It is not necessary to explore the details of the hurdles in the landowner's path in taking those courses: depending on the circumstances, they may be significant but they are not insurmountable. In addition, under s 9 of the Equity Act 1901 (NSW), the equivalent of Lord Cairns's Act, which is now s 68 of the Supreme Court Act 1970 (NSW), the court had jurisdiction to award damages in addition to or in lieu of an injunction in the case of an injury which was threatened but had not yet occurred33. Section 14 is thus an extremely important provision. In its absence, the proprietors of colliery holdings would be exposed to the risk of repeated actions for damages and applications for negative and mandatory injunctions. This is particularly so where, as is the case in parts of New South Wales, the operations of mining for the vital resource of coal are conducted in districts with many buildings used by a large population, or through which pipes of various kinds pass, or both. The legislature struck a compromise in s 14. On the one hand, s 14(2) left the proprietors of colliery holdings liable for damage caused by subsidence where the subsidence resulted from their negligence or that of their employees. On the other hand, s 14(1) gave the proprietors an immunity from action where there was no negligence. In return for that immunity, the proprietors were obliged to contribute to the Fund under s 11, and those who otherwise could have sued for damages or injunctive relief were given a right to claim against the Fund. It was for reasons of this kind that in Alinta LGA Ltd v Mine Subsidence Board34 this Court described s 14 as the "statutory quid pro quo for the contributions of colliery proprietors to the Fund". There is a close 31 Redland Bricks Ltd v Morris [1970] AC 652 at 664. 32 Redland Bricks Ltd v Morris [1970] AC 652; Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 31 [33]; [1998] HCA 33 Leeds Industrial Co-operative Society Ltd v Slack [1924] AC 851. 34 (2008) 82 ALJR 826 at 830 [18] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ; 244 ALR 276 at 280; [2008] HCA 17. Crennan relationship between what the colliery proprietors gained under s 14 and what they lost under s 11. It is for that reason that the Alinta case referred to the Act as disclosing "an accommodation, on particular terms, between the interests of colliery proprietors and the owners of damaged improvements."35 Section 14 thus takes away the legal rights of those who could otherwise prevent damage to themselves by obtaining negative or mandatory injunctions, or who could get compensation for any damage caused. Those were rights which were of considerable utility to those who had them, but which posed considerable risks for those who owed the corresponding duties. Legislation is commonly construed not to expropriate or extinguish rights unless just terms are provided in their place. That is because there is a common law rule of statutory interpretation requiring that "clear and unambiguous words be used before there will be imputed to the legislature an intent to expropriate or extinguish valuable rights relating to property without fair compensation."36 The Act does provide substitutes for the rights taken away. Before 1969, the substitutes were found in ss 12 and 1337. In 1969, further substitutes were added – ss 12A, 13A and 13B. Section 51(xxxi) of the Constitution, providing for just terms when property is acquired pursuant to Commonwealth legislation, is to be construed with liberality38. Similarly, non-constitutional legislation which, in accommodating conflicting public and private interests, provides substitutes for what private interests must lose, is to be construed amply. The need for it to be construed amply is reinforced by reflection on the damage to the coal industry which would be caused if s 14 did not exist and colliery proprietors had to fight continual outbreaks of litigation in conducting their businesses. That amplitude of approach applies as much to provisions enacted in 1969, eight years after s 14 was originally enacted, like s 12A, as it does to those enacted contemporaneously with s 14. A purposive construction of ss 10, 12 and 12A is that they give to the 35 (2008) 82 ALJR 826 at 829 [14] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ; 244 ALR 276 at 280. 36 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 111 per Deane and Gaudron JJ; [1992] HCA 23. 37 See above at [6] n 2. 38 ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 212-213 [185]-[186]; [2009] HCA 51. Crennan owners of improvements advantages broadly commensurate with what they lost by reason of s 14. Broadly speaking, it may be said that the scheme of the Act is to convert all relevant rights to sue for damages or seek injunctions into money claims against the Fund. For colliery proprietors, s 14 is a very beneficial provision. For owners of improvements, s 12A is thus properly to be seen as a beneficial provision, not to be restricted by a close and technical reading. To do so would arbitrarily restrict rights of compensation offered in substitution for the rights destroyed by s 14. And it is questionable whether a construction of s 12A which gives compensation to owners of improvements for some of their losses but not all is sound. On the Board's preferred construction of the Act, the owners of improvements would have had all their common law and equitable rights in relation to non-negligent nuisance removed, but with no corresponding right against the Fund in relation to some of those rights. The Board submitted that "there is no common law equivalent to the entitlement to payment which the appellant says now arises from s 12A(1)(b)." The submission fastens on the appellant's contention that it can claim an amount to meet the expense of preventative or mitigatory measures even before mining has begun, or subsidence has taken place. If by "common law equivalent" the submission means "general law equivalent apart from the Act", that is not so. Under Lord Cairns's Act damages may be awarded in addition to or in lieu of an injunction, and an injunction may be obtained quia timet, whether or not any mining or subsidence or damage has yet taken place. Those conclusions are not affected by the fact that the Act replaced the Mine Subsidence Act 1928 (NSW), which also curtailed common law rights. The previous existence of those rights would have affected the construction of the 1928 Act, and it is equally relevant to the construction of its replacement39. Nor is there any incongruity in the fact that the rights given affected owners in 1961 were less extensive than those additionally conferred in 1969, which included the right conferred by s 12A. Section 12A as a means of minimising damage A second fundamental point is that one function of the Act is to minimise damage. That function is not limited to providing means by which maximum 39 Cf Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA Crennan damage can be caused by the activities of colliery owners, so long as the Fund pays for it after it has been caused. The Act operates rather to prevent or reduce damage before it is caused. Prevention may be cheaper than cure, and more efficient than cure. The appellant advanced a telling example from the facts of the Wambo case. In that case the improvement owner predicted that planned underground longwall mining would cause subsidence of the land on which its surface drift coal conveyor was located and inevitably damage the conveyor. The owner was faced with two possible courses of action. The first, which it took, was the prudent and sensible course of dismantling and relocating the conveyor before the predicted subsidence occurred, which in due course it did. The second was to wait until the predicted subsidence occurred and then, if the conveyor was not already damaged, to seek to dismantle and relocate it before damage resulted. The former course was likely to be much more inexpensive than the latter, for the latter might have left the conveyor extensively damaged by the subsidence. A construction which would deny the owner's claim when it took the former, sensible, option rather than the latter, riskier, one is a construction having irrational effects. On those grounds it ought to be rejected. In short, as the appellant correctly submitted, having regard to the serious consequences of subsidence, if the function of the Fund is to allow owners to make claims for expenditure for preventative or mitigatory works, they should be able to do this before the subsidence occurs. That would not expose the Fund to undue perils, for the Fund remains protected by the requirements that the Board be of the opinion that the owner could reasonably anticipate damage from the subsidence and that the expense incurred be proper and necessary. Further, the Fund is also protected by s 13A, which provides: "The Board may carry out, or cause to be carried out such works as, in its opinion, would reduce the total prospective liability of the Fund by preventing or mitigating damage that the Board anticipates would, but for those works, be incurred by reason of subsidence, whether or not the damage anticipated is damage to improvements or household or other effects on the land on which the works are to be carried out." That too suggests a construction of the Act as operating so as to assist in the prevention of damage rather than merely compensating for damage after it has happened. Section 13A contains very clear language to that effect. That is consistent with selecting a construction for the less clear words of s 12A(1)(b) which effectuates the same function. Further, s 13A strengthens the suggestion that the power of owners of improvements to recover an amount from the Fund to meet the expenses of Crennan preventative or mitigatory work under s 12A(1)(b) is ample: for if the Board will not assist under s 13A, the owners of improvements must assist themselves. If s 13A had created a duty on the Board to undertake preventative or mitigatory work, the room for arguing that the scope of s 12A was narrower would have been increased, because the scheme could then be seen as one in which the initiative lay with the Board with a view to reducing the total sum spent on preventative or mitigatory works by several owners of improvements. But s 13A does not create a duty on the Board: it only grants a power. Section 12A in relation to the duties on the appellant Section 26 of the Pipelines Act 1967 (NSW) provides that a licensee (ie the appellant) shall not permit or suffer the waste or escape of any substance from the pipeline or any part thereof, on pain of a criminal sanction of 40 penalty units for each day on which the offence occurs. A penalty unit is $11040. Section 27(b) provides that a licensee (ie the appellant) "shall maintain the pipeline in good condition and repair", on pain of a criminal sanction of 40 penalty units for each day on which the offence occurs. On the construction advanced by the Court of Appeal majority, in emergencies, or even crises falling short of emergency, pipeline owners would be obliged to make expenditures for preventative or mitigatory purposes without the possibility of recompense under s 12A(1)(b). If they wanted to keep that possibility alive they would have to wait until a subsidence had actually occurred. Underlying ss 26 and 27(b) are the gravest considerations of public safety – for gas can be a very dangerous substance – and public convenience – for interrupting the supply of a necessity like fuel in the form of gas is very serious for the many people and businesses reliant on it. In addition, the potential commercial consequences to the appellant of its pipeline being out of order because of damage caused by subsidence, and the potential consequences to be feared from the Government of New South Wales, are likely to be grave. The incongruity of the Board's construction The construction advocated by the Board, if accepted, would have several inappropriate consequences in the conduct of practical affairs. First, it would prevent owners of improvements, who may not have unlimited liquidity, from 40 Crimes (Sentencing Procedure) Act 1999 (NSW), s 17. Crennan obtaining from the Fund an amount to meet expenses to prevent or mitigate damage, leaving owners much worse off under the Act than they would have been under the general law. Secondly, the Board's construction inhibits owners of improvements, such as the appellant's gas pipeline, from responding early to the strong pressures of the criminal law and of commercial and political considerations, by taking steps to protect their interests by dealing with threats to the safety of the improvements, rather than waiting on a decision by the Board under s 13A. On the other hand, the preferred construction of the legislation by the appellant does not carry these consequences. The meaning of anticipation of "damage" from a subsidence that has taken place At times the arguments seemed to rest on an assumption that "anticipate" meant "expect as probable or likely". But the important functions which s 12A(1)(b) performs suggest that its meaning is much wider and that it accommodates outcomes of much lower degrees of certainty. In s 12A(1)(b) "anticipated" is used in the sense described as the ninth meaning of "anticipate" in the Oxford English Dictionary41: "To look forward to, look for (an uncertain event) as certain." The anticipation referred to in s 12A(1)(b) is a looking forward to an uncertain event, and treating it as certain even though it is not. The Board must form one of two opinions if a claim is to succeed. One is an opinion that there might be damage which the owner could reasonably have looked forward to as an event which was, though in fact uncertain, certain in the sense that it was treated as certain – one which would have arisen had preventative or mitigatory measures not been taken. The other is an opinion that there might be damage which the owner could reasonably have looked forward to as an event which was, though in fact uncertain, certain in the sense that it was treated as certain – one which would arise had preventative or mitigatory measures not been taken. The uncertainty surrounding damage has two ingredients: there is uncertainty as to whether there would be subsidence, and, even if there were, there is uncertainty as to whether it would cause damage. When the Board inquires into what it is that the owner could reasonably have anticipated, what is the object of the verb "anticipated"? Not just damage, but 41 2nd ed (1989), vol 1 at 522. Crennan "damage … from a subsidence that has taken place". As the appellant submitted, those words refer to a compound future event: damage which has not yet occurred (and may never occur if forestalled by preventative or mitigatory measures) arising from subsidence which has not yet taken place (and may not). There is no reason to limit the hypothetical analysis which the Board concedes must be applied to one part of the compound conception, "damage", and not employ it in relation to the other part, "subsidence that has taken place". Simultaneity between subsidence and damage Finally, there is another difficulty in the Board's argument. It arises in relation to a reasonable anticipation of a subsidence which causes damage simultaneously with its occurrence. If the subsidence has not taken place at the time when the Board enters upon its task, on the Board's construction the claim must fail. Hence if an owner of improvements could reasonably have anticipated a certain type of damage, there will be a valid claim if the damage is caused slowly by a subsidence that happened before the claim, but no valid claim if the same damage is caused simultaneously with, or very soon after, a reasonably anticipated subsidence that happened after the claim. This would be, as the appellant submitted, a capricious and unfortunate result. Orders The above reasoning suggests an affirmative answer to the separate question. There was debate about whether answering it with a bare affirmative was sufficient, or whether a fuller answer should be given. The appellant proposed the following answer: "It being agreed that the applicant [ie the appellant in this Court] reasonably anticipated, based on expert advice, that cumulative subsidence at Mallaty Creek from approved longwall mining of Longwalls 30-32 was likely to cause damage to its pipeline, the applicant was entitled under s 12A(1)(b) of the Mine Subsidence Compensation Act to an amount from the Mine Subsidence Compensation Fund to meet the proper and necessary expense of preventing or mitigating that damage." The Board put no submission against that answer being appropriate if the appellant's preferred construction were accepted. That answer should be the answer given. The following orders should be made. Crennan Appeal allowed. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 28 June 2010 and in their place order: That the appeal to that Court be allowed. Set aside the orders of the Land and Environment Court of New South Wales made on 17 July 2009 and in their place order that the preliminary question of law identified by Sheahan J of the Land and Environment Court of New South Wales, namely: the Sydney Whether the Applicant is entitled to an amount under section 12A(1)(b) of the Mine Subsidence Compensation Act 1961 (NSW) in respect of expenses that it incurred in performing work on circumstances where subsidence occurred at or near Mallaty Creek near Campbelltown in or about October 2005, on the assumption that the Applicant can establish that, for the purposes of that section, the expenses incurred by it were "proper and necessary", to Moomba Gas Pipeline be answered: It being agreed that the applicant reasonably anticipated, based on expert advice, that cumulative subsidence at Mallaty Creek from approved longwall mining of Longwalls 30-32 was likely to cause damage to its pipeline, the applicant was entitled under s 12A(1)(b) of the Mine Subsidence Compensation Act 1961 (NSW) to an amount from the Mine Subsidence Compensation Fund to meet the proper and necessary expense of preventing or mitigating that damage. The Board to pay the appellant's costs of the hearing of the preliminary question before the Land and Environment Court and of the appeal to the Court of Appeal. The Board to pay the costs of the appellant of the appeal to this Court. Bell BELL J. The factual background and the issues raised by this appeal are set out in the majority reasons. I have come to a different conclusion from that reached by their Honours concerning the interpretation of s 12A(1)(b) of the Mine Subsidence Compensation Act 1961 (NSW) ("the Act"). In my view, the ordinary grammatical meaning of the provision confines valid claims for payment from the Mine Subsidence Compensation Fund ("the Fund") to those made by owners of improvements for proper and necessary expense incurred or proposed for works to prevent or mitigate damage ("preventative works") in circumstances in which, at the time the expense is incurred or proposed, a subsidence has taken place. It is an interpretation that I consider to be consistent with the intended operation of the statutory scheme. For the reasons that follow, I would dismiss the appeal. Section 12A(1)(b) The provision is set out in the majority reasons. However, it is convenient to set out the material parts of the section again at this juncture: "(1) Subject to this section, claims may be made under this Act for payment from the Fund of: an amount to meet the proper and necessary expense incurred or proposed by or on behalf of the owner of improvements or household or other effects in preventing or mitigating damage to those improvements or household or other effects that, in the opinion of the Board, the owner could reasonably have anticipated would otherwise have arisen, or could reasonably anticipate would otherwise arise, from a subsidence that has taken place, other than a subsidence due to operations carried on by the owner. (2) A claim under subsection (1): shall be made, in the case of a claim for payment of an amount under subsection (1)(b), within three months after the day on which the expense to which the claim relates became known to the claimant or, where some other time within which such a claim may be made is prescribed by the regulations, within the time so prescribed …" Section 12A(1)(b) authorises the making of claims in either of two circumstances: where the expense has been incurred or where the expense is proposed. In either circumstance a valid claim is dependent upon the Mine Bell Subsidence Board ("the Board") forming the requisite opinion. In the circumstance of expense incurred the requisite opinion is that the owner could reasonably have anticipated that but for carrying out the works, damage to the improvement would have arisen. In the circumstance of a claim for payment of an amount proposed the requisite opinion is that the owner could reasonably anticipate that but for carrying out the proposed works damage to the improvement would arise. As a matter of grammatical structure I do not read the penultimate subordinate clause as forming part of a compound expression, namely, "damage … from a subsidence that has taken place"42. The conjunction "from" links the penultimate clause to the preceding two clauses. In my view it is strained to read the penultimate clause as forming part of the hypothesis upon which the Board's opinion is formed. Moreover, it is a construction that gives no work to the indefinite article, or the words "has taken place", in the clause. The Board must ask in the case of expense incurred: "could the owner have reasonably anticipated that, but for carrying out the preventative works, damage would have been caused to the improvement?" In the case of expense proposed the Board must ask: "could the owner reasonably anticipate that, but for carrying out the preventative works, damage to the improvement would be caused?" The second question necessarily looks to the future because it is concerned with expenditure that is proposed. However, in each case the anticipation is of damage "from a subsidence that has taken place". There is no linguistic incongruity in the requirement, in the case of proposed expense, that the Board form an opinion as to the reasonable anticipation of the prevention of damage in the future arising from an event that has occurred. Nor is there a need to read the word "already" or the word "beforehand" after the words "has taken place" to give the provision meaning. The Court of Appeal minority concluded that the time to which the penultimate clause of s 12A(1)(b) speaks is the time at which the Board forms its opinion43. Their Honours considered that construction to be consistent with the use of the present perfect tense of the verb, "has taken place". They said that the past perfect tense, "had taken place", would have been appropriate had the Board been required to form an opinion as to "the reasonableness of the claimant's conduct in incurring the expense, when it was incurred, and so as to exclude reference to anticipated subsidence"44. It followed, in the Court of Appeal 43 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 at 43 [144] per Basten JA, 51 [189] per Macfarlan JA. 44 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 at 43 [143] per Basten JA, 51 [189] per Macfarlan JA. Bell minority's opinion, that it is necessary that a subsidence "has taken place" but only by the time the Board forms its opinion45. It will be recalled that under s 12A(2)(b) a claim must be made within three months after the date on which the expense to which the claim relates became known to the claimant. The Court of Appeal minority's construction is one that results in a valid claim being dependent upon the serendipity of whether the threatened subsidence occurs in the time between the expense becoming known and the Board forming its opinion. The Board's opinion is as to the reasonableness of the owner's anticipation of what "would otherwise have arisen" or "would otherwise arise" as the case may be. The present perfect tense is used to convey that the event (subsidence) has occurred in a period up to the time of incurring or proposing the expense. In my view the tense is not inconsistent with the Court of Appeal majority's construction of the provision. That construction is to be preferred to one that, when read with s 12A(2)(b), produces a result that is anomalous. The appellant submits that its preferred construction (that the words "a subsidence that has taken place" form part of the hypothesis) gains support from the use of the indefinite article, signifying that this is a subsidence about which nothing is known, as distinct from an actual subsidence. The appellant draws attention to the words "actual subsidence" in the definition of "subsidence"46 and submits that had it been the intention to condition the making of a valid claim on the occurrence of actual subsidence those words might have been used. To this it must be said that, if the drafter's intention were to refer to hypothesised future subsidence, it is not easy to see why the words "has taken place" were chosen to convey that idea. The definition of "subsidence" does not assist the appellant. Sections 12A and 13A were both inserted into the Act in 196947 ("the 1969 amendments"). At the date of the 1969 amendments the definition of "subsidence" did not use the words "actual subsidence"48. A new definition 45 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 at 43 [144] per Basten JA, 51 [189] per Macfarlan JA. 46 Mine Subsidence Compensation Act 1961 (NSW), s 4. 47 Mine Subsidence Compensation (Amendment) Act 1969 (NSW). 48 A definition of "subsidence" was inserted into s 4 of the Act by the Mine Subsidence Compensation (Amendment) Act 1967 (NSW), s 2(1)(a): "'Subsidence' means subsidence due to – the extraction of coal or shale; or (Footnote continues on next page) Bell containing those words was introduced into the Act by later amendment49. The words "actual subsidence" in the definition serve to distinguish the ordinary meaning of "subsidence", which is the sinking of ground, from the extended meaning for the purposes of the Act, "all vibrations or other movements of the ground", which includes upwards movement of the ground, a phenomenon apparently known within the coal-mining community as "upsidence". The difference between the language of ss 12A and 13A, which, as noted above, were both inserted into the Act at the same time, suggests that the appellant's preferred construction should not be accepted. Section 13A confers power on the Board to carry out works to prevent or mitigate damage that the Board anticipates would otherwise be incurred "by reason of subsidence". The expression "by reason of subsidence" is apt to include actual and anticipated subsidence50. Had the intention been to provide for claims under s 12A(1)(b) for preventative works respecting actual and anticipated subsidence it is to be expected that the drafter would have adopted the words used in s 13A to convey that intention. The fact that s 13A conditions the power on the Board's opinion that the conduct of the preventative works would reduce the total prospective liability of the Fund does not lessen the force of this textual indication. the prospecting for coal or shale carried out within a colliery holding by the proprietor thereof." 49 Mine Subsidence Compensation (Amendment) Act 1989 (NSW), Sched 1(1): "'Subsidence' means subsidence due to: the extraction of coal or shale; or the prospecting for coal or shale carried out within a colliery holding by the proprietor of the holding, and includes all vibrations or other movements of the ground related to any such extraction or prospecting (whether or not the movements result in actual subsidence)." 50 Mine Subsidence Compensation Act 1961 (NSW), s 13A: "Works for prevention or mitigation of damage from subsidence The Board may carry out, or cause to be carried out such works as, in its opinion, would reduce the total prospective liability of the Fund by preventing or mitigating damage that the Board anticipates would, but for those works, be incurred by reason of subsidence, whether or not the damage anticipated is damage to improvements or household or other effects on the land on which the works are to be carried out." Bell The drafting of s 12A(1)(b) may be awkward, but I agree with the Court of Appeal majority that the words "that has taken place", in their natural and ordinary meaning, refer to an actual, past event51 and do not form part of the hypothesis upon which the Board's opinion is formed. An unreasonable result? The construction that I favour produces the result that no provision is made under the Act for payment from the Fund of amounts expended by owners on preventative works respecting threatened subsidence. It is said to be an unreasonable result in that it requires the owner of improvements to stand by in circumstances where, as here, the occurrence of subsidence from the mining operations could be predicted with confidence. It is not in issue that it is better to carry out preventative works than to wait until damage is done. The good sense of this proposition was the reason for the introduction of the 1969 amendments. However, the question is not whether it is unreasonable to take no remedial action against threatened subsidence. It is whether the scheme introduced into the Act by the 1969 amendments confers that power on the Board alone. In my opinion the language of ss 12A and 13A makes clear that the answer to that question is that it does. It is a conclusion that is reinforced by reference to the legislative history and extrinsic material52. The Minister for Mines identified the purpose of the 1969 amendments in his speech on the second reading for the Bill in this way53: "The bill will provide also for the carrying out of works by the board to prevent or mitigate subsidence damage before it occurs. Proposed new section 13A will empower the board to carry out such works where the total prospective liability of the fund will thereby be reduced. … As the Act stands at present the board can carry out works only after damage to improvements by subsidence has arisen. This power to repair is to be supplemented by power to carry out preventative works, as the costs of prevention are often cheaper than of cure. 51 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 at 31 [66] per Spigelman CJ (Allsop P concurring at 35 [97], Giles JA concurring 52 Interpretation Act 1987 (NSW), s 34. 53 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 2 October 1969 at 1550-1551. Bell It is recognized also that emergencies may occur when it might be necessary for the owner to carry out works to prevent or mitigate damage arising from a subsidence. In such cases proposed new section 12A(1)(b) will empower a claim to be made for the proper and necessary expense so incurred." The Minister referred in the course of his speech to an instance in which the Board had carried out works to a residential property to avoid the damage that was likely to result from a subsidence. The mischief that the 1969 amendments were intended to redress was the lack of statutory authority for the Board to carry out such works. Section 12A(1)(b) is not limited to claims respecting "emergencies" but its language is consistent with the intention that claims by owners be limited to circumstances of some exigency in that damage is reasonably anticipated from a subsidence that has taken place54. The appellant's loss of common law rights The appellant's submissions on the hearing of the appeal were principally directed to its loss of common law rights, relevantly to quia timet injunctive relief, occasioned by the statutory immunity conferred on colliery proprietors. The loss of rights is said to speak to the improbability of a legislative intention to circumscribe owners' requires consideration of the complex provisions of the Act that disclose the particular terms of the legislative accommodation struck between the interests of colliery The submission to self-help. recourse 54 The Explanatory Note to the Mine Subsidence Compensation (Amendment) Bill 1969 listed the objects of the Bill as: to authorise the Mine Subsidence Compensation Board, in certain circumstances, to refuse a claim for damage to improvements used in connection with the carrying on of an extractive industry such as quarrying; to authorise that Board to reduce the prospective liability of the Mine Subsidence Compensation Fund by carrying out works to prevent or mitigate anticipated damage from subsidence and to enable to Board to pay compensation for damage due to the carrying out of any such works; to enable the Board to reimburse persons for expense incurred in preventing or mitigating anticipated damage from a subsidence that has occurred; to make provisions consequential upon or ancillary to the foregoing." Bell proprietors and the owners of improvements in mine subsidence districts55. Before considering how that accommodation was affected by the 1969 amendments, it is useful to say something about the history of the legislative adjustment of the rights of the two groups. The first scheme to provide redress to owners of improvements damaged by subsidence was introduced by the Mine Subsidence Act 1928 (NSW) ("the 1928 Act")56. The 1928 Act was enacted in the aftermath of episodes of severe subsidence caused by extensive coal-mining activity around Newcastle and Wallsend. Streets had been disrupted and houses damaged57. Banks were refusing to lend money on property in areas affected by coal-mining activity58. Against this background the legislature adopted a scheme of compulsory insurance. The 1928 Act constituted the Mine Subsidence Board59 ("the former Board") and provided for the proclamation of mine subsidence insurance districts60. Every owner of land within a mine subsidence insurance district was required to insure with the former Board against the risk of subsidence-caused damage to improvements61. Mine owners operating mines within the boundaries of a mine subsidence insurance district were required to insure with the former Board against damage to improvements caused by subsidence62. Owners of land could obtain payment from the former Board for subsidence-caused damage to 55 Alinta LGA Ltd v Mine Subsidence Board (2008) 82 ALJR 826 at 829 [14] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ; 244 ALR 276 at 280; [2008] HCA 17. 56 There was provision under s 155 of the Mining Act 1906 (NSW) (in force at the date of the 1969 amendments) for the warden to assess compensation to be paid by the holder of a miner's right (or other entitlement to occupy or enter lands) for loss caused or likely to be caused to improvements on that land or adjoining land by works carried out in pursuance of the right. Similar provision is now made by s 265 of the Mining Act 1992 (NSW). 57 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 20 December 1928 at 3095. 58 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 20 December 1928 at 3122. 59 Mine Subsidence Act 1928 (NSW), s 7(1). 60 Mine Subsidence Act 1928 (NSW), s 3(1). 61 Mine Subsidence Act 1928 (NSW), s 4(1). 62 Mine Subsidence Act 1928 (NSW), s 4(4). Bell their improvements. The quid pro quo for mine owners who were subject to the requirement of compulsory insurance was that they were relieved of liability for subsidence-caused damage to improvements resulting from their non-negligent mining activity63. The scheme imposed an unfair burden on owners of land located within mine subsidence insurance districts whose land was unlikely ever to be undermined, as they were nonetheless required to insure with the former Board64. The recognition of this unfairness informed the current Act, which introduced a scheme based upon the principle that the coal-mining industry should bear the costs of repairing subsidence-caused damage. Under the scheme as enacted, every colliery proprietor was required to contribute to the Fund. In return for their contributions colliery proprietors were relieved of liability for subsidence- caused damage (other than that occasioned by the proprietor's own negligence)65. The proclamation of mine subsidence districts under the Act resulted in the owners of improvements on land losing common law rights to support and injunctive relief in respect of subsidence-caused damage from non-negligent mining activity. It was a loss of rights that, as the Court of Appeal majority observed, was based on a model that had applied in mine subsidence insurance districts for many years66. Owners of improvements received benefits under the regime enacted by the Act that were superior to those conferred on owners of land under the 1928 Act. Their right to compensation was not dependent upon the obligation to insure or otherwise to contribute to the Fund. Compensation was authorised notwithstanding any covenant or stipulation restricting the recovery of damages for damage arising from subsidence67. The scheme which 63 Mine Subsidence Act 1928 (NSW), s 6. 64 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 9 March 1961 at 3079. 65 Section 14 of the Act provided that relief from liability under the section was restricted to proprietors of colliery holdings who were not in arrears in their contributions to the Fund, and who had duly observed relevant operational covenants and stipulations. 66 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 67 Section 12(5) of the Act. In his speech on the second reading of the Bill for the Act in the Legislative Council, the Minister for Labour and Industry said: "The presence of covenants or stipulations of this kind has often caused grave hardship and it is unjust that people who have purchased land in good faith should be penalised because of a severance of land and mineral ownerships, mostly years (Footnote continues on next page) Bell yielded these benefits to the owners of improvements conferred extensive powers on the Board, which had the effect of restricting owners' freedom to deal with their property. Persons could not erect or alter any improvement on land located within a mine subsidence district without the approval of the Board68. Approval could be subject to prescriptive conditions69. A purchaser of land on which there was an unapproved improvement had a statutory right to cancel any contract for sale and to recover not only the deposit but also reasonable costs and expenses70. Importantly, no claim for compensation was to be entertained, and no payment made under the Act, respecting improvements that were altered or erected without the Board's approval or otherwise than in conformity with the conditions specified in the approval71. The evident purpose of conferring these powers on the Board is to enable it to reduce the prospective liability of the Fund72. They allow the Board to require that an improvement is constructed or altered in accordance with conditions that are designed to enable the improvement to withstand subsidence, or to minimise the extent of damage from subsidence and the cost of repairs to the improvement. Persons owning an improvement that has been erected or altered otherwise than in accordance with the conditions of the Board's approval suffer the loss of rights resulting from the statutory immunity, and yet have no recourse against the Fund. In this respect there is the potential for the scheme to operate harshly in individual cases. However, it is the choice that the legislature has made in devising a scheme that seeks to adjust rights arising out of competing land uses. The Board's power under s 13A Threatened subsidence may be anticipated improvements located on parcels of land owned by many owners. On the appellant's preferred construction of s 12A(1)(b), each owner might choose to carry out preventative works without consultation with the Board and recoup the to cause damage ago." New South Wales, Legislative Council, Parliamentary Debates (Hansard), 15 March 1961 at 3183. 68 Section 15(2) of the Act. 69 Section 15(3) of the Act. 70 Section 15(5)(a) of the Act. 71 Section 15(5)(b) of the Act. 72 Each of the powers enumerated above may be found in ss 14 and 15 of the current version of the Act. Bell proper and necessary expense of the works, notwithstanding that the Board might have carried out works for the benefit of all owners for a lesser sum. The facts of this appeal may illustrate the point. The appellant's pipeline, the Central Trunk Pipeline, is located in the same easement as: an ethane pipeline, operated by Gorodok Pty Limited ("Gorodok"); a natural gas pipeline, owned by Jemena Eastern Gas Pipeline (1) Pty Ltd and Jemena Eastern Gas Pipeline (2) Pty Ltd (formerly owned by members of the Duke Energy group ("Duke") ("the Eastern Gas Pipeline")); and a low-pressure water pipeline. After original approval was obtained for longwall mining respecting Longwalls 29 to 33, the appellant, Duke and Gorodok entered into the Pipeline Undermining Mitigation Project agreement ("the PUMP agreement"). The principal purpose of the PUMP agreement was to allow the parties to undertake mitigatory or preventative works in common so as to pool their expertise and to reduce costs. The four pipes in the easement cross Mallaty Creek within the area of Longwall 32. The appellant's claim on the Board was in respect of the costs attributable to it for the preventative works carried out on the northern side of Mallaty Creek. These works consisted of the excavation of the four pipelines, decoupling the pipelines from the soil, and associated filling. The Board approved the expenditure of $6.2 million on preventative works in respect of the Eastern Gas Pipeline in September 2006. This was before the appellant's preventative works on its pipeline were carried out. The works that the Board carried out on the Eastern Gas Pipeline were similar to the works undertaken by the appellant. At no time did the appellant approach the Board to ask it to carry out preventative works for the benefit of its pipeline. It may be that the cost of the conduct of similar works to protect the two gas pipelines lying in the same easement could have been less overall than the combined cost of the Board's works and the appellant's works73. Whether that is so is not known. However, considerations of this character are consistent with a legislative intent to confer the power on the Board alone to carry out preventative works with respect to anticipated subsidence. 73 It is not known what made up the costs incurred by the Board. It appears that the Board's preventative works were undertaken on both the southern and northern sides of Mallaty Creek. The appellant's claim was confined to its costs of the works on the northern side of Mallaty Creek. The claim for work that it carried out on the northern side was not precluded under s 15(5)(b) of the Act because at the date of the construction of the pipeline the South Campbelltown mine subsidence district, which is on the northern side of Mallaty Creek, had not been proclaimed. The southern side of Mallaty Creek lies within the Appin mine subsidence district. It had been proclaimed under the Act some years before the appellant's pipeline was constructed and in respect of which it would seem no approval had been obtained from the Board. Bell The appellant submits that two related considerations indicate the legislature did not intend that s 13A should be the sole source of power to take action respecting threatened subsidence. First, s 13A authorises the conduct of remedial works only if the Board is of the opinion that the works would reduce the total prospective liability of the Fund. What the appellant did not identify were circumstances in which damage to improvements might reasonably be anticipated as the result of threatened subsidence, but where the Board might consider that taking preventative steps would not reduce its prospective liability. As earlier explained, the 1969 amendments were introduced, inter alia, to address the Board's lack of power to carry out the preventative works that it had been doing. The second consideration is that the legislature chose to confer a power and not a duty on the Board in this respect. To these considerations may be added a third, that no provision is made to appeal against the Board's refusal to exercise its powers under s 13A. However, it remains that the legislature has conferred a broad power on the Board for the conduct of works of a remedial kind in a case in which damage to improvements (or household or other effects) by reason of subsidence is anticipated. The Board may be expected to exercise its powers reasonably. In the event that it does not an aggrieved owner would have recourse to judicial review. The Fund is made up of the compulsory contributions that are exacted from colliery proprietors. Provision is made for the Fund to receive by way of loan or grant such sums as may from time to time be provided for that purpose out of the Consolidated Fund74. It is a public fund serving public purposes. The mechanism for its dispersal in connection with preventative works respecting threatened subsidence is confined to work carried out, or caused to be carried out, by the Board under s 13A. The Court of Appeal majority was right to conclude that that choice does not produce an anomalous result in the context of this statutory scheme75. In my view, there is no warrant to depart from the ordinary meaning of the provision by the adoption of a construction that gives no work to the indefinite article in the penultimate and final clauses, or the words "has taken place". Causation The appellant submitted that even if the issue of construction were resolved adversely to it, there remained an issue of causation raised by the Court of Appeal's decision. Submissions were made on the hearing of the appeal in support of the contention that the extraction of coal by means of longwall mining 74 Section 10(5) of the Act. 75 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 Bell is a process and not an event. A number of the appellant's submissions concerning the process of longwall mining raise questions of fact. The proceedings in the Land and Environment Court of New South Wales were conducted on the basis that the separate question76 could be answered solely by reference to legal principles of statutory construction77. The appellant's challenge on the causation issue may have shown that assumption to be erroneous, as Basten JA noted78. The appeal to the Court of Appeal was on a question of law79. As I am in the minority, it is sufficient to observe that the agreed facts on which the separate question was determined were that the appellant did not anticipate that subsidence arising from the extraction of Longwalls 30 and 31 was likely, in the absence of further mining of Longwalls 32 and following, to result in damage to the pipeline. The works that were the subject of the appellant's claim were carried out in order to prevent damage to its pipeline from subsidence that was anticipated to result from the mining of Longwall 32 and not from a subsidence that "has taken place". I would dismiss the appeal. 77 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 at 20 [2] per Spigelman CJ, 38-39 [114]-[120] per Basten JA. 78 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2010) 175 LGERA 16 79 Land and Environment Court Act 1979 (NSW), s 57(1). |
HIGH COURT OF AUSTRALIA DIRECTOR OF PUBLIC PROSECUTIONS (CTH) APPLICANT AND RESPONDENT Director of Public Prosecutions (Cth) v JM [2013] HCA 30 27 June 2013 ORDER Special leave to appeal granted. Special leave to cross-appeal granted. Appeal and cross-appeal each treated as instituted and heard instanter. Appeal allowed and cross-appeal allowed in part. Set aside paragraphs 1 and 2 of the orders of the Court of Appeal of the Supreme Court of Victoria made on 14 June 2012 and the orders of the Court of Appeal of the Supreme Court of Victoria made on 28 June 2012, insofar as those orders answered the reformulated question reserved, and, in their place, order that the questions reserved by Weinberg JA on 21 October 2011 are answered as follows: Question 1: For the purpose of s 1041A of the Corporations Act 2001 (Cth), is the price of a share on the ASX which has been created or maintained by a transaction on the ASX that was carried out for the sole or dominant purpose of creating or maintaining a particular price for that share on the ASX an "artificial price"? Answer: Yes. Question 2: Was the closing price of shares in [X Ltd] on the ASX on 4 July 2006 an "artificial price" within the meaning [of] s 1041A(c) of the Corporations Act 2001 (Cth)? Answer: Yes. Question 3: Was the price of shares in [X Ltd] on the ASX on 4 July 2006 maintained at a level that was "artificial" within the meaning of s 1041A(d) of the [Corporations Act 2001 (Cth)]? Answer: Yes. On appeal from the Supreme Court of Victoria Representation O P Holdenson QC with G A Hill and C J Winneke for the applicant (instructed by Director of Public Prosecutions (Commonwealth)) M K Moshinsky SC with M I Borsky for the respondent (instructed by Clayton Utz Lawyers) S G E McLeish SC, Solicitor-General for the State of Victoria with P D Herzfeld for the Attorney-General for the State of Victoria, intervening (instructed by Victorian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Director of Public Prosecutions (Cth) v JM Criminal law – Market manipulation – Corporations Act 2001 (Cth), s 1041A – Transactions alleged to have effect or likely effect of creating "artificial price" for shares on Australian Securities Exchange – Meaning of "artificial price" in s 1041A of the Corporations Act – Whether meaning of "artificial price" informed by United States of America conceptions of "cornering" and "squeezing". Criminal procedure – Question of law arising before trial – Question of law referred to Court of Appeal – Case stated – Case stated set out facts which prosecution sought to prove at trial – Facts set out in case stated neither admitted nor proved – Whether question of law referred hypothetical. Words and phrases – "artificial price", "case stated", "cornering", "genuine supply and demand", "market manipulation", "sole or dominant purpose", "squeezing". Corporations Act 2001 (Cth), ss 1041A, 1338B, 1338C. Criminal Procedure Act 2009 (Vic), ss 302, 305, 306. FRENCH CJ, HAYNE, CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ. Following the enactment of the Financial Services Reform Act 2001 (Cth), the relevant provisions of which took effect from 11 March 2002, Pt 7.10 of the Corporations Act 2001 (Cth) dealt with market misconduct and other prohibited conduct relating to financial products and financial services. Section 760A of the Corporations Act 2001 provided that the main object of Ch 7 (which dealt with the regulation of financial services and markets, and included the offence provisions of Pt 7.10) was to promote (among other things) "fair, orderly and transparent markets for financial products"1. Shares listed on the securities exchange operated by ASX Limited ("the ASX") were, and are, one form of "financial product" 2. The ASX is and was a "financial market"3. Division 3 (ss 1042A-1043O) of Pt 7.10 dealt with insider trading of certain financial products4 (including shares and other securities). Division 2 (ss 1041A-1041K) of Pt 7.10 dealt with other forms of prohibited conduct. Section 1041A of the Corporations Act 2001 bore the heading "Market manipulation" and provided: "A person must not take part in, or carry out (whether directly or indirectly and whether in this jurisdiction or elsewhere): a transaction that has or is likely to have; or 2 or more transactions that have or are likely to have; the effect of: creating an artificial price for trading in financial products on a financial market operated in this jurisdiction; or s 760A(c). s 761A, definitions of "financial product" and "security", ss 762A and 764A(1)(a). s 767A(1). s 1042A, definition of "Division 3 financial products". Hayne Crennan Bell (d) maintaining at a level that is artificial (whether or not it was previously artificial) a price for trading in financial products on a financial market operated in this jurisdiction." Failure to comply with the provision was an offence5 punishable6, in the case of an individual, by imprisonment of up to five years7, fine, or both imprisonment and fine. The charges against JM The respondent, JM, was presented in the County Court of Victoria on an indictment charging him with 39 counts of market manipulation contrary to s 1041A and two counts of conspiring with others to commit market manipulation. One count of conspiracy alleged that JM had conspired with his daughter, "T", and his son-in-law, "G", between May and October 2006; the other conspiracy count alleged that JM had conspired with T and another man between September and November 2006. The counts of market manipulation were all alleged to have occurred in September and October 2006. On JM's application, the proceedings were transferred to the Supreme Court of Victoria and a new indictment alleging the same charges was filed in that Court. The Commonwealth Director of Public Prosecutions ("the CDPP") alleged that an entity associated with JM had borrowed money to exercise a large number of call options for shares in a company (referred to in the proceedings in this Court as "X Ltd") whose shares were listed on the ASX. As explained later in these reasons, the CDPP alleged that, on 4 July 2006, JM's daughter, T, bought shares in X Ltd, on behalf of a company controlled by her husband, at a price and in circumstances that prevented the day's closing price for the shares falling s 1311(1A)(db) and (3), Sched 3, item 309B. 7 The maximum term of imprisonment for contraventions of s 1041A, occurring after the times at which the offences alleged against JM were said to have been committed, has since been increased. See Corporations Amendment (No 1) Act 2010 (Cth), Sched 1, item 20. Hayne Crennan Bell below the point at which the lender to JM would make a margin call requiring JM to provide additional collateral for the loan. The CDPP alleged that T made the purchase for the sole, or at least the dominant, purpose of ensuring that the price of the shares did not fall below the price at which the lender would be entitled to make a margin call on her father's loan, and that the transaction had the effect of creating an artificial price for the shares or maintaining the price at a level that was artificial. The CDPP alleged, and, in the Court of Appeal, JM did not deny, that JM took part in the transaction through the agency of his daughter. JM pleaded not guilty to all charges. Questions are reserved, amended and answered After the plea had been made, but before a jury was empanelled, Weinberg JA, sitting in the Trial Division of the Supreme Court, stated a case and reserved three questions for determination by the Court of Appeal. The questions reserved by Weinberg JA ("the original questions") were: For the purpose of s 1041A of the Corporations Act 2001 (Cth), is the price of a share on the ASX which has been created or maintained by a transaction on the ASX that was carried out for the sole or dominant purpose of creating or maintaining a particular price for that share on the ASX an 'artificial price'? 2. Was the closing price of shares in [X Ltd] on the ASX on 4 July 2006 an 'artificial price' within the meaning [of] s 1041A(c) of the Corporations Act 2001 (Cth)? 3. Was the price of shares in [X Ltd] on the ASX on 4 July 2006 maintained at a level that was 'artificial' within the meaning of s 1041A(d) of the Act?" The Court of Appeal (Nettle and Hansen JJA, Warren CJ dissenting) concluded8 that it was inappropriate to decide any of the original questions. In particular, that Court concluded9 that the first of the original questions reserved 8 Director of Public Prosecutions (Cth) v JM (2012) 267 FLR 238. (2012) 267 FLR 238 at 305 [303]. Hayne Crennan Bell was a "mixed question of fact and law dependent upon the assumed but as yet unfound fact of sole or dominant purpose". The Court of Appeal remitted the case stated to Weinberg JA for amendment of the first question reserved to read: Is the expression 'artificial price' in s 1041A of the Corporations Act 2001 (Cth) used in the sense of a term having a legal signification (as opposed to its sense in ordinary English or some non-legal technical sense); and If so, what is its legal signification?" It is convenient to refer to this as "the reformulated question". Weinberg JA amended the question as directed. The Court of Appeal answered the reformulated question: "The expression 'artificial price' in s 1041A of the Corporations Act 2001 (Cth) is used in the sense of a term having legal signification (as opposed to its ordinary English or some non-legal technical sense) and its legal signification is of market manipulation by conduct of the kind typified by American jurisprudential conceptions of 'cornering' and 'squeezing'." Proceedings in this Court The CDPP seeks special leave to appeal against the orders made by the Court of Appeal to allege that the answer given to the reformulated question was founded on a misconstruction of s 1041A of the Corporations Act 2001. JM seeks special leave to cross-appeal to allege that the reformulated question was not a question that would arise at his trial and was no more than a hypothetical question which could not be answered in the valid exercise of the judicial power of the Commonwealth, and to submit that the Court of Appeal was correct to conclude that the original questions were inappropriate to answer. The applications for special leave to appeal and cross-appeal were referred to an enlarged Bench for argument as on appeal. The Attorney-General for the State of Victoria intervened to submit that there was no constitutional bar precluding reference of either the original questions or the reformulated question to the Court of Appeal. Hayne Crennan Bell Both applications for special leave should be granted. No constitutional issue is reached. The original questions were not hypothetical questions10. They were questions of law which arose before JM's trial and should have been answered by the Court of Appeal. The reformulated question did not arise before the trial and would not arise during the trial. The reformulated question should not have been asked or answered. The construction of s 1041A of the Corporations Act 2001 adopted by the majority in the Court of Appeal was not right. Questions reserved under the Criminal Procedure Act 2009 (Vic) It is convenient to deal first with the issues which JM raises by cross-appeal about the form of the questions reserved for determination by the Court of Appeal. Those issues require consideration of the Criminal Procedure Act 2009 (Vic) ("the CP Act"). The provisions of the CP Act which governed the reservation of questions for the opinion of the Court of Appeal were picked up and applied by s 1338C(1) of the Corporations Act 2001 to the Supreme Court's exercise of federal in hearing and determining the charges laid against JM (as a matter arising under a law made by the federal Parliament11 and in which the Commonwealth or a person suing on behalf of the Commonwealth was a party12). jurisdiction (conferred by s 1338B) Weinberg JA reserved the original questions for determination by the Court of Appeal pursuant to s 302 of the CP Act. That section provided: "(1) This section applies to a proceeding in the County Court or the Trial Division of the Supreme Court for the prosecution of an indictable offence. In a proceeding referred to in subsection (1), if a question of law arises before or during the trial, the court may reserve the question 10 cf O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 244-245, 258-259, 279-285, 301-302; [1991] HCA 14. 11 Constitution, s 76(ii). 12 Constitution, s 75(iii). Hayne Crennan Bell for determination by the Court of Appeal if the court is satisfied that it is in the interests of justice to do so, having regard to— the extent of any disruption or delay to the trial process that may arise if the question of law is reserved; and (b) whether the determination of the question of law may— render the trial unnecessary; or substantially reduce the time required for the trial; or (iii) resolve a novel question of law that is necessary for the proper conduct of the trial; or reduce the likelihood of a successful appeal against conviction in the event that the accused is convicted at trial. The court must not reserve a question of law after the trial has commenced, unless the reasons for doing so clearly outweigh any disruption to the trial." Section 306 of the CP Act gave the Court of Appeal powers, on a case stated under s 302, to "hear and finally determine"13 the question of law or to remit the question and the determination of the Court of Appeal back to the court which reserved the question14. In addition, s 305(3) provided that the Court of Appeal might return a case stated for amendment and, if the Court of Appeal did that, "the court that stated the case must amend it as required". Section 305(1) of the CP Act provided (so far as now relevant) that "[i]f a court reserves a question of law under section 302 ... it must state a case, setting out the question and the circumstances in which the question has arisen". Accordingly, Weinberg JA set out, in the form of a case stated, the facts and circumstances giving rise to the questions reserved. Hayne Crennan Bell It is necessary to say a little more about the contents of the case stated. The case stated After reciting the charges against JM, his arraignment and his plea of not guilty, the case stated said that the questions reserved raised "for the consideration of the [Court of Appeal] the meaning of the term 'artificial price' in the context of the facts of this particular prosecution" (emphasis added). The case stated then set out a number of "facts". In reasons for judgment published only to the parties15, Weinberg JA described the facts set out in the case stated as "factual assertions ... established for the purpose of the Court of Appeal determining the reserved questions of law" (emphasis added). But Weinberg JA said that he made "each of these findings, or assume[d] each of these facts, for the limited purpose of the case stated" and "upon the understanding that any such findings of fact, or any such assumptions of fact, do not, and cannot, give rise to any estoppel" against JM. At least some of the "facts" set out in the case stated may not be disputed at JM's trial. So, for example, it may be doubted that there would be any dispute at trial about the way in which trading occurred on the ASX at the relevant times, or the way in which the closing price for a listed share was then determined by the operation of the Closing Single Price Auction conducted by the ASX through its Stock Exchange Automated Trading System. Some "facts" recorded in the case stated may be disputed at trial, or at least not admitted. Count 1 of the indictment charged JM with conspiring with his daughter, T, and son-in-law, G, between on or about 16 May 2006 and about 31 October 2006, to take part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price, for trading in the securities of X Ltd on the ASX. The case stated recorded the course of trading on the ASX on 4 July 2006 in shares in X Ltd. In particular, it recorded how an offer to buy shares in X Ltd, made by T, on behalf of a company controlled by her husband, on 4 July 2006, took part in that day's Closing Share Price Auction of shares in X Ltd and resulted in the closing price for shares in X Ltd being fixed at 35 cents per share. The case stated described 15 Presumably for the avoidance of prejudice to the trial. Hayne Crennan Bell the terms on which an entity associated with JM had borrowed money to exercise some options issued by X Ltd and thus acquire shares in the company which were used as security for the loan. The course of trading on 4 July 2006 and the state of affairs between the lender, JM and entities associated with him may or may not be disputed at trial. Other "facts" set out in the case stated, such as T's purpose for buying shares on 4 July 2006, and the connection between that purchase and avoiding a margin call on the loan, were disputed. And, of course, the parties led no evidence before Weinberg JA that permitted final resolution of that, or any other, dispute about the matters that were set out in the case stated. In these circumstances, it must follow that all of the "findings" and "factual assertions" recorded by Weinberg JA in the case stated, including what was said about T's purpose for buying shares on 4 July 2006, must be understood as recording no more than those matters which the CDPP would seek to prove at trial. Understood in this way, it is evident that the case stated by Weinberg JA set out both some facts which the parties did not, or at trial would not, dispute, and some assertions of (disputed) fact which the CDPP would seek to make good at trial. But contrary to the conclusion reached by the majority in the Court of Appeal16, and JM's submissions in this Court, stating the facts which the CDPP sought to establish at trial (when some of those facts were not agreed) did not make the original questions hypothetical or inappropriate to answer. To explain why the original questions were neither hypothetical nor inappropriate to answer, it is necessary to begin by considering when and how a question of law arises before trial. A question of law arising before trial? The power, given by s 302(2) of the CP Act, to reserve a question of law for determination by the Court of Appeal, with the accompanying obligation under s 305(1) of stating a case setting out the question and the circumstances in which the question has arisen, was predicated upon the question of law arising "before or during the trial" of an indictable offence. The court reserving the question of law had to be satisfied that it was in the interests of justice to do so, having regard to the specific matters stated in s 302(2)(a) and (b). Those matters 16 (2012) 267 FLR 238 at 302-304 [290]-[299]. Hayne Crennan Bell included whether determination of the question reserved may render the trial unnecessary or substantially reduce the time required for the trial. There may be several, even many, different ways in which a question of law may arise before or during the trial of an indictable offence. It is neither necessary nor desirable to attempt to give some comprehensive description, let alone definition, of the circumstances in which a question of law may arise. It is, however, important to understand those provisions of the CP Act which dealt with the reservation of questions of law in the context provided by other provisions of the CP Act which governed the trial of indictable offences. First, the temporal question presented by the reference in s 302 of the CP Act to a question arising before or during the trial may be noted17. But it is a question readily answered by reference to s 210(1) of the CP Act, which provided, in effect, that a trial commences when the accused pleads not guilty on arraignment in the presence of the jury panel. JM had not been arraigned in the presence of the jury panel and his trial had not begun when Weinberg JA decided to reserve the original questions for determination by the Court of Appeal. Accordingly, s 302 was engaged in this case only if a question of law had arisen before JM's trial. Section 199(1) of the CP Act provided for the trial court, "[a]t any time before trial", to "hear and decide any issue with respect to the trial that the court considers appropriate" including, among other things, "an issue of law ... that arises or is anticipated to arise in the trial". At the end of every trial of an indictable offence the judge is obliged to decide what are the real issues in the case and to tell the jury, "in the light of the law, what those issues are"18. As this Court held in Alford v Magee19, "in accordance with Sir Leo Cussen's great guiding rule", the judge will be obliged to direct the jury about the law "not merely with reference to the facts of the particular case but with an explanation 17 cf Criminal Law Consolidation Act 1935 (SA), s 350(1a), considered in Director of Public Prosecutions (SA) v B (1998) 194 CLR 566; [1998] HCA 45. 18 Alford v Magee (1952) 85 CLR 437 at 466; [1952] HCA 3. See also Huynh v The Queen (2013) 87 ALJR 434 at 441 [31]; 295 ALR 624 at 631-632; [2013] HCA 6; CP Act, s 238. 19 (1952) 85 CLR 437 at 466. Hayne Crennan Bell of how it applied to the facts of the particular case". It follows that, if there is any issue between the parties, before the trial begins, about what is the law which will apply to what the prosecution alleges are the facts of the case, the trial court may, pursuant to s 199(1)(a) of the CP Act, "[a]t any time before trial" hear and decide that issue as "an issue of law ... that arises or is anticipated to arise in the trial". But consonant with what was held in Alford v Magee, the issue of law that may be anticipated to arise in the trial is the issue of how the law applies to the facts of the particular case. Before a trial begins, few, if any, of the relevant facts may have been admitted or agreed. But the case which the prosecution seeks to make at trial should be clear. The prosecution case will be identified not only from the statement of the charge laid, and any particulars that have been given of that charge, but also, in a case governed by the CP Act, from the processes of pretrial disclosure required by Div 2 of Pt 5.5 of that Act. In particular, s 182(1)(a) of the CP Act obliged the prosecution, before the day on which the trial of the accused was listed to commence, to serve on the accused and file in court a summary of the prosecution opening which outlined not only the manner in which the prosecution would put the case against the accused, but also the acts, facts, matters and circumstances relied on to support a finding of guilt. Section 183(1)(a) of the CP Act obliged the accused, before the day on which the trial was listed to commence, to serve on the prosecution and file in court a written response to the summary of the prosecution opening that identified the acts, facts, matters and circumstances with which issue was taken and the basis on which issue was taken. Other provisions of Div 2 of Pt 5.5 of the CP Act required the parties to give notice of intention to depart substantially at trial from any matter set out in the documents that had been filed and served20, and imposed21 continuing obligations of disclosure on the prosecution. It follows that before a trial governed by the CP Act begins, it will be possible to decide whether there is any issue between the parties about how the law applies to the acts, facts, matters and circumstances on which the prosecution intends to rely to support a finding of guilt. The question which thus arises may Hayne Crennan Bell be said to be contingent upon the prosecution establishing the relevant facts to the requisite standard of proof. But the question is not hypothetical. That the question is not hypothetical may be demonstrated by reference to the reasons for reserving questions which are set out in s 302(2) of the CP Act. Determination of a question reserved may render the trial unnecessary22. Determination of the question would do so if the matters relied on by the prosecution were held not to establish the offence charged. Similarly, determination of a question reserved may substantially reduce the time required for the trial23 if some matters upon which the prosecution proposed to rely were held not to be necessary to establish the offence charged. Further, to read s 302 of the CP Act as permitting reservation of questions arising before trial, by reference to the facts which the prosecution asserts it will prove at trial, does not differ in principle or effect from the demurrer procedure which has been used by this Court throughout its history24. In cases in which a pleading "is drawn so as to allege with distinctness and clearness the constituent facts of the cause of action or defence set up"25, demurrer to the pleading determines whether those facts are legally sufficient to establish the claim made or defence set up. As may be seen most clearly when a party both pleads and demurs, the issue presented by the demurrer may be contingent upon proof of disputed facts. But it has never been suggested that there is any constitutional impediment to a court exercising the judicial power of the Commonwealth deciding whether facts asserted by one party would, if proved, establish a claim made, or defence advanced, by that party. 22 s 302(2)(b)(i). 23 s 302(2)(b)(ii). 24 See, for example, Bond v The Commonwealth (1903) 1 CLR 13; [1903] HCA 2. 25 South Australia v The Commonwealth (1962) 108 CLR 130 at 142; [1962] HCA 10. See also Wurridjal v The Commonwealth (2009) 237 CLR 309 at 368-369 [119]-[121]; [2009] HCA 2. Hayne Crennan Bell As six members of the Court pointed out in Bass v Permanent Trustee Co Ltd26, demurrer is "a form of procedure which assumes the truth of a particular set of facts". As the joint judgment continued27, "a demurrer assumes that the pleadings exhaust the universe of relevant factual material". On that assumption, the answer provided on demurrer has utility for the parties, if no other evidence could add to or qualify the facts asserted in the relevant pleading, because "the parties' rights will be determined when the evidence finally determines the existence or non-existence of those 'facts'"28. Likewise, when a case is stated under s 302(2) of the CP Act, by reference to the assertions of fact which the prosecution will seek to make good at trial, "the parties' rights will be determined [by the jury] when the evidence finally determines the existence or non-existence of those 'facts'"29. When, as here, the question is one which arises before trial, the facts which give rise to the question are those which the prosecution will seek to establish at trial. Those facts, or at least some of them, may be disputed, but they are confined by the way in which the prosecution has said it will open its case. They are thus confined because it must be assumed that the summary of the prosecution opening "exhaust[s] the universe of relevant factual material"30 upon which it will rely to establish the accused's guilt of the charges laid. That is, unlike in Bass, the "facts ... determinative of the legal issue" presented by the question reserved are stated in such a way that they are identified with precision31. It is those facts from which the relevant question of law arises and to which the answer to that question must be applied. 26 (1999) 198 CLR 334 at 357 [50] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [1999] HCA 9. 27 (1999) 198 CLR 334 at 357 [50]. 28 (1999) 198 CLR 334 at 357 [50]. 29 (1999) 198 CLR 334 at 357 [50]. 30 (1999) 198 CLR 334 at 357 [50]. 31 (1999) 198 CLR 334 at 357 [49]. Cf R v Assange [1997] 2 VR 247 at 254. Hayne Crennan Bell Identifying questions of law in this case It will be recalled that the first of the original questions reserved by Weinberg JA asked whether, for the purpose of s 1041A of the Corporations Act 2001, the price of a share on the ASX "which has been created or maintained by a transaction on the ASX that was carried out for the sole or dominant purpose of creating or maintaining a particular price for that share" is an "artificial price". The terms in which this first question was expressed depended upon, and evidently referred to, aspects of the case stated to which reference has already been made. The case stated said that, on 4 July 2006, JM's daughter, T, had bought shares in X Ltd for the sole, or "at the very least ... dominant", purpose of ensuring that the price of shares in X Ltd was not less than 35 cents at the close of trade on the ASX on that day. More fundamentally, the first of the original questions reserved reflected the critical element of the CDPP's case against JM: that, because the impugned transactions were made with the purpose described, they either created an "artificial price" or maintained the price at a level which was "artificial". The second and third original questions asked whether the closing price of shares in X Ltd on 4 July 2006 was an "artificial price" within the meaning of s 1041A, and whether the price of the shares was "maintained at a level that was 'artificial'" within the meaning of that section. In their terms, both the second and the third questions depended upon the facts and circumstances that were set out in the case stated. The second question was more factually confined than the first of the original questions, but it raised the same legal issue. The third question, about "maintaining" a price, arose out of the course of transactions in the shares of X Ltd during the day in question as that course of trading was described in the case stated. During that day, shares in X Ltd had been traded at prices of 35 or 35.5 cents. The case stated further recorded that, had T not offered to buy, and bought, shares at 35 cents in the closing trades of the day, the closing price of the shares would have been 34 cents. But again, the third question was founded on the CDPP's allegation that T bought the shares she did on 4 July 2006 with the sole, or at the least dominant, purpose of ensuring that the closing price for shares in X Ltd was not less than 35 cents and that, because this was her intention, the price was maintained at a level that was "artificial". By contrast, the reformulated question, asking whether the expression "artificial price" is used in s 1041A "in the sense of a term having a legal signification (as opposed to its sense in ordinary English or some non-legal technical sense)", was cast in abstract terms. The question was evidently Hayne Crennan Bell intended32 to be answered without reference to disputed facts and, in particular, without reference to whether T had the purpose alleged. Necessarily, then, the reformulated question was disconnected from the way in which the CDPP sought to prove its case. This disconnection was made by asking generally about the meaning of "artificial price" in s 1041A. The distinction drawn in the reformulated question, between "legal signification" and "ordinary English or some non-legal technical sense", was derived33 from the reasons of Kitto J in NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation34. There, Kitto J had identified the question whether particular operations were "mining operations upon a mining property" for the purposes of an Act with respect to taxation as one of mixed law and fact. As Kitto J said35, whether the Act used the expressions "mining operations" and "mining property" in any other sense than that which they had in ordinary language was a question of law. If the Act used these expressions in their ordinary meaning, the common understanding of the words then had to be determined, and that was a question of fact. No doubt, it is important to recognise that s 302(2) of the CP Act permits reservation of only questions of law for determination by the Court of Appeal. As cases like Blue-Metal Quarries, Federal Commissioner of Taxation v Broken Hill South Ltd36 and Collector of Customs v Agfa-Gevaert Ltd37 all show, it may therefore be necessary to distinguish between questions of law and questions of fact. And drawing that distinction may not be easy. As this Court said in Agfa-Gevaert38, "no satisfactory test of universal application has yet been 32 (2012) 267 FLR 238 at 304 [300]. 33 (2012) 267 FLR 238 at 304-305 [302]. 34 (1955) 94 CLR 509 at 511; [1956] HCA 80. See also Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 394-396; [1996] HCA 36. 35 (1955) 94 CLR 509 at 511-512. 36 (1941) 65 CLR 150; [1941] HCA 33. 37 (1996) 186 CLR 389. 38 (1996) 186 CLR 389 at 394. Hayne Crennan Bell formulated" for doing so. But the majority in the Court of Appeal did not direct the reformulation of the original questions reserved in this case to ensure that the question reserved was one of law and not one of fact. At no point in this matter (whether before Weinberg JA, in the Court of Appeal, or in argument in this Court) has it been suggested that any of the original questions was only a question of fact and not a question of law. Rather, the question was reformulated to divorce it from any disputed question of fact. In that context, drawing a distinction between questions of law and questions of fact was not useful and served only to distract attention from the imperatives of identifying whether a question of law had arisen before trial and, if it had, what was that question. The answer given by the majority in the Court of Appeal to the reformulated question served only to emphasise the question's disconnection from the facts and circumstances of the particular case. It will be recalled that the majority answered the reformulated question by saying that the expression "artificial price" is used in s 1041A "in the sense of a term having legal signification ... typified by American jurisprudential conceptions of 'cornering' and 'squeezing'" (emphasis added). Neither that answer, nor the reasons given by the majority in the Court of Appeal, said directly whether the share transactions described in the case stated were within the "legal signification" of "artificial price". Neither the answer, nor the reasons, stated expressly whether those share transactions were of a kind that could be described as "cornering" or "squeezing", although it may be inferred from material to which the majority referred in their joint reasons that the impugned transactions were not of that character. But because the answer given to the reformulated question was as abstract as the question itself, the answer did not expressly provide the judge reserving the question with guidance about how s 1041A, on its true construction, intersected with, and applied to, the facts and circumstances described in the case stated. The particular legal question which arose in the prosecution of JM, before his trial began, was defined by what the judge would have to tell the jury at the end of the trial about the law and its application to the particular facts of the case. The abstract generality of the reformulated question severed that question from any issue which had arisen before the trial of JM, or would later arise during his trial. The answer given to the question did not tell the trial judge how to instruct the jury at JM's trial about what is the law which applies to the facts of the case. The reformulated question sought to ask generally how "artificial price" should be understood in s 1041A. Questions about how s 1041A generally, or the Hayne Crennan Bell to other facts and particular expression "artificial price", might apply circumstances did not arise39 in the proceedings brought against JM, and would not arise at any stage of those proceedings. And because those wider questions did not, and would not, arise before or during JM's trial, there was no power under s 302(2) of the CP Act to reserve them for determination by the Court of Appeal. The Court of Appeal was wrong to order that the reformulated question be substituted for the original questions reserved by Weinberg JA. To that extent, JM's cross-appeal should be allowed and the order of the Court of Appeal directing that substitution should be set aside. The Court of Appeal was wrong to decline to answer the original questions reserved. How, then, should the original questions have been answered? Regulating securities markets In the argument in this Court about the proper construction of s 1041A, emphasis was given to the legislative history of the provision. It is necessary, therefore, to say something about not only the particular legislative history of s 1041A but also the history of the regulation of securities markets in Australia. For many years, transactions on Australian stock exchanges were chiefly regulated by the relevant exchange or exchanges. In 1970, Securities Industry Acts were passed in New South Wales40, Victoria41 and Western Australia42 and, in the following year, in Queensland43. All of those Acts prohibited various forms of misconduct in connection with trading in securities. Three relevant types of misconduct were identified in the Acts of New South Wales, Victoria 39 cf R v Assange [1997] 2 VR 247 at 254. 40 Securities Industry Act 1970 (NSW). 41 Securities Industry Act 1970 (Vic). 42 Securities Industry Act 1970 (WA). 43 Securities Industry Act 1971 (Q). Hayne Crennan Bell and Queensland: false trading and markets44, market rigging transactions45, and "affecting" or "effecting" "market price by fictions"46. In particular, s 70 of the New South Wales Act proscribed "false trading and markets", and provided that: "A person shall not create or cause to be created or do anything which is calculated to create, a false or misleading appearance of active trading in any securities on any stock market in the State, or a false or misleading appearance with respect to the market for, or the price of, any securities." In North v Marra Developments Ltd47, this Court considered the construction and application of this section. Mason J, with whose reasons in this respect all other members of the Court agreed, held48 that there was a breach of the section "[w]hen purchases have been made of shares in a company at or about a particular level for the purpose of setting and maintaining a market price for those shares" (emphasis added). intergovernmental agreement providing In 1974, the Governments of New South Wales, Victoria and Queensland made an administration and reciprocal arrangements within those States" with respect, among other things, to the "regulation of the securities industry and trading in securities"49. And in 1975, New South Wales, Victoria, Queensland and Western "uniformity for 44 Securities Industry Act 1970 (NSW), s 70; Securities Industry Act 1970 (Vic), s 70; Securities Industry Act 1971 (Q), s 91. 45 Securities Industry Act 1970 (NSW), s 71; Securities Industry Act 1970 (Vic), s 71; Securities Industry Act 1971 (Q), s 92. 46 Securities Industry Act 1970 (NSW), s 72; Securities Industry Act 1970 (Vic), s 72; Securities Industry Act 1971 (Q), s 93. See also Securities Industry Act 1970 (WA), s 79. 47 (1981) 148 CLR 42; [1981] HCA 68. 48 (1981) 148 CLR 42 at 59. 49 Companies (Interstate Corporate Affairs Commission) Act 1974 (Vic), Sched 1, cl 2(1)(b). Hayne Crennan Bell Australia all passed new, substantially uniform, Securities Industry Acts regulating the conduct of securities business and trading in securities. These 1975 Acts contained50 a prohibition of false trading and markets which was substantially identical with the false trading and markets provision considered in Subsequent Acts regulating the securities industry, made first in accordance with the 1978 Agreement between the Commonwealth and the States51 about co-operative companies and securities regulation52, and later to implement, in accordance with the Corporations Agreement53, the national scheme based on the Corporations Act 1989 (Cth), all contained54 false trading and markets prohibitions of generally similar effect to the provision considered in Meanwhile, however, futures trading became more prominent Australia. The Sydney Greasy Wool Futures Exchange Limited, established in 1960, had changed its name, in 1972, to the Sydney Futures Exchange55, and the markets provided by that Exchange expanded. The federal Parliament enacted the Futures Industry Act 1986 (Cth) and that Act was taken up and applied by State Futures Industry (Application of Laws) Acts enacted in accordance with the 1978 intergovernmental agreement providing for the co-operative scheme of companies and securities regulation. 50 See, for example, Securities Industry Act 1975 (NSW), s 109(1). 51 National Companies and Securities Commission Act 1979 (Cth), s 3(1), definition of "Agreement". 52 Securities Industry Act 1980 (Cth) and the several State Securities Industry Codes. 53 Being the agreement made on 23 September 1997 between the Commonwealth, the States and the Northern Territory. 54 See, for example, Securities Industry (New South Wales) Code, s 124, Corporations Law, s 998. 55 Baxt, Black and Hanrahan, Securities and Financial Services Law, 8th ed (2012) at Hayne Crennan Bell The Futures Industry Act 1986 prohibited various forms of market misconduct. In particular, it prohibited56 what was described in the heading to the section as "[f]utures market manipulation": transactions intended to have, or likely to have, the effect of "creating an artificial price for dealing in futures contracts on a futures market" or "maintaining at a level that is artificial (whether or not that level was previously artificial) a price for dealing in futures contracts on a futures market". In the Explanatory Memorandum for the Bill that became the Futures Industry Act 1986, it was said57, of what became the futures market manipulation offence created by s 130, that: "The two main forms of manipulation are 'squeezing' and 'cornering' which involve attempts to manipulate futures prices by manipulating supply and demand for the physical commodities that are deliverable under futures contracts so that available supply is exceeded and artificial prices are created." The Corporations Law set out in the Corporations Act 1989, which formed the foundation for the national scheme of corporations and securities regulation, contained separate provisions regulating the securities market and the futures market. Division 2 (ss 995-1002) of Pt 7.11 provided for offences relating to securities. Section 997 (headed "Stock market manipulation") identified three kinds of market manipulation effected by persons entering into, or carrying out, two or more transactions in securities of a corporation. Section 997(1) proscribed such transactions that had, or were likely to have, the effect of increasing the price of securities on a stock market with intent to induce others to buy or subscribe for the securities of the corporation or a related body corporate; s 997(4) proscribed such transactions that had, or were likely to have, the effect of reducing the price of securities with intent to induce others to sell the securities of the corporation or a related body corporate; and s 997(7) proscribed such transactions that had, or were likely to have, the effect of maintaining or stabilising the price of securities with intent to induce others to sell, buy or subscribe for the securities of the corporation or a related body corporate. 57 Australia, House of Representatives, Futures Industry Bill 1986, Explanatory Memorandum at [285]. Hayne Crennan Bell Part 8.7 (ss 1251-1267) of the Corporations Act 1989 provided for offences relating to a "futures contract". In particular, s 1259 proscribed futures market manipulation terms not substantially different from those originally used in s 130 of the Futures Industry Act 1986. the Corporations Law set out The Corporations Act 2001, which replaced the former national scheme legislation, re-enacted the provisions of the Corporations Law set out in the Corporations Act 1989. It thus re-enacted the offence provisions relating to securities markets that were contained in Div 2 of Pt 7.11, including the several offences of stock market manipulation created by s 997, and the provisions relating to the futures industry set out in Pt 8.7, including the offence of futures market manipulation created by s 1259. With effect from 2002, however, the Financial Services Reform Act 2001 repealed the whole of Chs 7 and 8 of the Corporations Act 2001 (including Pts 7.11 and 8.7) and enacted a new Ch 7, including Pt 7.10 dealing with market misconduct and other prohibited conduct relating to financial products and financial services. The offences for which the new Pt 7.10 provided applied to all forms of "financial product" and thus did not, in terms, distinguish between shares and futures contracts. In particular, with effect from 11 March 2002, s 1041A of the Corporations Act 2001 created an offence of market manipulation that was expressed in terms evidently drawn from the former provisions dealing with futures markets that had first been enacted as s 130 of the Futures Industry Act 1986. The arguments about "artificial price" It will be recalled that the CDPP submitted that, if it was proved at trial that T had bought shares in X Ltd at the price she did, for the sole, or at the least dominant, purpose of creating or maintaining the price for the shares in the company at a price above the price at which the lender could make a margin call on her father's loan, the price was an "artificial price". By contrast, JM submitted that, having regard to the legislative history that has been described, the references in s 1041A to "artificial price" should be construed as having the meaning given to that expression by the United States Hayne Crennan Bell Court of Appeals, Eighth Circuit, in Cargill Inc v Hardin58 and taken up and repeated in the Explanatory Memorandum for the Futures Industry Bill 1986. That is, JM submitted that the majority in the Court of Appeal were right to conclude that the expression "artificial price" referred to market prices resulting from practices of a kind "typified" by the practices of "cornering" and "squeezing". In Cargill, the Court of Appeals said59 that a "corner", in its most extreme form, amounted: "to nearly a monopoly of a cash commodity, coupled with the ownership of long futures contracts in excess of the amount of that commodity, so that shorts – who because of the monopoly cannot obtain the cash commodity to deliver on their contracts – are forced to offset their contract with the long at a price which he dictates, which of course is as high as he can prudently make it". (footnote omitted) And in Cargill, the Court of Appeals described60 a "squeeze" as "a less extreme situation than a corner" in which "there may not be an actual monopoly of the cash commodity", but deliverable supplies of the commodity in the delivery month were low. It is convenient to approach consideration of the competing submissions about "artificial price" by first considering the reasons of the majority in the Court of Appeal in this case, and then looking at the decision in Cargill. It is important, however, to emphasise that this case concerns on-market transactions in shares listed on the ASX, and that the discussion which follows is confined to transactions of that kind. 58 452 F 2d 1154 (1971). 59 452 F 2d 1154 at 1162 (1971). 60 452 F 2d 1154 at 1162 (1971). Hayne Crennan Bell The reasoning of the majority in the Court of Appeal The majority gave great emphasis to "the chain of statutory development"61 and, in particular, the close similarities between the drafting of s 1041A of the Corporations Act 2001 and what had been s 130 of the Futures Industry Act 1986. As already noted, "cornering" and "squeezing" had been identified in extrinsic material relating to the Futures Industry Act 1986 as the main forms of market manipulation against which s 130 was directed. In this case, the majority in the Court of Appeal described62 these kinds of market manipulation as "the misuse of monopoly or dominant market power". It followed63, in their Honours' opinion, that: "For the purposes of s 130 [of the Futures Industry Act 1986], the concept of 'artificial price' is one of a price which in truth reflects market forces of supply and demand in a free and informed market but which is the result of a monopolist or party otherwise in a position of market dominance taking unfair advantage of market power in order to extract a price different to that which would apply in times of adequate supply." The majority contrasted transactions of this kind with what they identified64 as: "the kind of market rigging activity, of which Mason J spoke in [North v Marra], that is calculated, in the sense of adapted, to set or maintain prices at a level which does not truly reflect the forces of supply and demand in a free and informed market (whether monopolistic or informed by pure competition)". 61 (2012) 267 FLR 238 at 314 [328]. 62 (2012) 267 FLR 238 at 315 [331]. 63 (2012) 267 FLR 238 at 315 [332]. 64 (2012) 267 FLR 238 at 315 [332]. See also Fame Decorator Agencies Pty Ltd v Jeffries Industries Ltd (1998) 28 ACSR 58 at 62-63 per Gleeson CJ. Hayne Crennan Bell The majority saw transactions of this latter kind as having been dealt with, separately from market manipulation, by the false trading and market rigging provision of the Futures Industry Act 1986. In particular, the majority saw65 "the kind of market rigging activity ... of which Mason J spoke" as being the province of s 131(2) of that Act, which dealt with "fictitious or artificial transactions or devices" used to "maintain, inflate, depress or cause fluctuations in, the price for dealing in futures contracts", though why the transactions at issue in North v Marra could be said to have been "fictitious or artificial" was not explained. The majority did say66 that they did not "overlook the possibility" that "artificial price" might be used in s 1041A "in a sense sufficiently protean to cover both market manipulation of the kind typified by 'cornering' and 'squeezing' and also one or more of the kinds of false trading, market rigging and artificial setting and maintenance of prices" dealt with in other provisions of the successive versions of securities and futures industry legislation. But their Honours rejected67 this as a "realistic possibility" on the basis that s 1041A should be read as directed to activities different from those which were dealt with expressly by other provisions of earlier forms of securities and futures industry legislation and, since the Financial Services Reform Act 2001, have been dealt with expressly by other market misconduct provisions of the Corporations Act This view of the relationship between s 1041A and other provisions of Div 2 of Pt 7.10 of the Corporations Act 2001 dealing with market misconduct cannot be accepted. There are at least two separate reasons to reject it. First, when read as a whole, Div 2 of Pt 7.10 does not suggest that the offences prescribed in it were to be understood as operating in separate watertight compartments where any given set of facts could constitute only one of the offences prescribed. And the matter was put beyond doubt by s 1041J, which provided that, subject to any express provision to the contrary, the various sections in Div 2 of Pt 7.10 "have effect independently of each other", and that 65 (2012) 267 FLR 238 at 315 [332]. 66 (2012) 267 FLR 238 at 315 [334]. 67 (2012) 267 FLR 238 at 315 [334]. Hayne Crennan Bell "nothing in any of the sections limits the scope or application of any of the other sections". Second, to read s 1041A as concerned only with transactions effected from a position of monopoly or dominant market power would give the provision little work to do in respect of shares listed on the ASX. The takeover provisions of Ch 6 of the Corporations Act 2001 proceed from the premise that monopoly of, or dominance over, the market on the ASX for shares in a particular listed company can be achieved only by making a successful takeover for that company. (And the provisions of Ch 6 are both informed by, and directed to, the need to maintain an efficient, competitive and informed market68.) Given the provisions of Ch 6, it may be unlikely that any buyer or seller can, in any practical sense, "corner" or "squeeze" the market for listed shares. The terms "cornering" and "squeezing" refer to, and depend for their application upon, the separation between the futures market and the market for the commodity which is the subject of the futures contract. There is no separate market for the future delivery or sale of particular shares. Other than by transactions of a kind regulated by Ch 6, it is to be doubted that a person could acquire monopoly or dominant market power in the market for listed shares in a particular company. No doubt, as JM submitted, it is necessary to recognise that there can be short-selling of shares. It is also necessary to recognise that a short-seller may be commercially vulnerable if the market moves in what, for that short-seller, is the wrong direction. But even if s 1041A may have some particular application to circumstances of the kind just described, nothing in the text, context or purpose of the provision suggests that its application should be confined to those circumstances, or should be confined to circumstances69 in which the buyer or seller accused of market manipulation had monopoly of, or dominant power over, the market for those shares. Cargill Cargill was a case about market manipulation in a futures market. As has been explained, "cornering" and "squeezing" were terms used in that case (and in the Explanatory Memorandum for the Futures Industry Bill 1986) to refer to 68 s 602(a). 69 cf Avgouleas, The Mechanics and Regulation of Market Abuse, (2005) at 131-154. Hayne Crennan Bell attempts to manipulate futures prices by manipulating supply and demand for the physical commodities that were deliverable under the futures contracts. For the reasons that have been given, those terms can have no direct application to the market for listed shares and, on that basis alone, the discussion of those terms by the Court of Appeals in Cargill has no direct application to the issues which arise in this case. But the Court of Appeals did make some points in Cargill which are of immediate relevance to this case. In Cargill, the Court of Appeals rightly noted70 that "[t]he methods and techniques of [market] manipulation are limited only by the ingenuity of man". And it is evident that the Court of Appeals did not intend to restrict the notion of market manipulation in the futures market to "cornering" or "squeezing". Rather, the Court of Appeals said71 of the legislation under consideration in Cargill that "[t]he aim must be therefore to discover whether conduct has been intentionally engaged in which has resulted in a price which does not reflect basic forces of supply and demand". On the face of it, "cornering" and "squeezing" in a futures market are each intended to, and will each, result in prices which reflect the forces of supply and demand, but in a market distorted by one participant having achieved dominance in the market and setting prices accordingly. It is neither necessary nor profitable, however, to examine further what was meant in Cargill by the notion of "basic forces of supply and demand", or how that notion relates to "cornering" and "squeezing" in a futures market. The fundamental point that should be taken from the decision in Cargill is that market manipulation is centrally concerned with conduct, intentionally engaged in, which has resulted in a price which does not reflect the forces of supply and demand. And it is the same proposition which underpinned the decision of this Court in North v Marra, in relation to s 70 of the Securities Industry Act 1970 (NSW). Of that section, Mason J, with whose reasons in this respect all other members of the Court agreed, said72: 70 452 F 2d 1154 at 1163 (1971). 71 452 F 2d 1154 at 1163 (1971). 72 (1981) 148 CLR 42 at 59. Hayne Crennan Bell "The section seeks to ensure that the market reflects the forces of genuine supply and demand. By 'genuine supply and demand' I exclude buyers and sellers whose transactions are undertaken for the sole or primary purpose of setting or maintaining the market price." (emphasis added) "Transactions which are real and genuine but only in the sense that they are intended to operate according to their terms, like fictitious or colourable transactions, are capable of creating quite a false or misleading impression as to the market or the price. This is because they would not have been entered into but for the object on the part of the buyer or of the seller of setting and maintaining the price, yet in the absence of revelation of their true character they are seen as transactions reflecting genuine supply and demand and having as such an impact on the market." (emphasis added) "Genuine supply and demand" The forces of "genuine supply and demand" are those forces which are created in a market by buyers whose purpose is to acquire at the lowest available price and sellers whose purpose is to sell at the highest realisable price. The references in s 1041A to a transaction which has, or is likely to have, the effect of creating an "artificial price", or maintaining the price at a level which is "artificial", should be construed as including a transaction where the on-market buyer or seller of listed shares undertook it for the sole or dominant purpose of setting or maintaining the price at a particular level. It is, however, important to emphasise that whether there are other kinds of transaction which have the effect of creating or maintaining an artificial price in a market for listed shares74 is not, and, given the terms of the case stated, should not be, decided. The price that results from a transaction in which one party has the sole or dominant purpose of setting or maintaining the price at a particular level is not a price which reflects the forces of genuine supply and demand in an open, 73 (1981) 148 CLR 42 at 59. 74 See Avgouleas, The Mechanics and Regulation of Market Abuse, (2005) at Hayne Crennan Bell informed and efficient market. It is, within the meaning of s 1041A, an "artificial price". The offer to supply or acquire of the kind described is made at a price which is determined by the offeror's purpose of setting or maintaining the price. It is not determined by the offeror's purpose, if buying, to minimise, or, if selling, to maximise, the price paid, and it is not determined by the competition between other buyers whose purpose is to minimise the price and other sellers whose purpose is to maximise the price75. If the offer results in a transaction, that is a transaction which can be characterised as at least likely to have the effect of creating or maintaining an artificial price for trading in the shares. Because s 1041A prohibits transactions which are likely to have that effect, it is not necessary to demonstrate, whether by some counterfactual analysis or otherwise, that the impugned transactions did create or maintain an artificial price. It is sufficient to show that the buyer or seller set the price with the sole or dominant purpose described. Further, if a transaction is made for the sole or dominant purpose of setting or maintaining a price for listed shares, it is not necessary to proffer some additional proof that the impugned transactions "went on to affect the behaviour of genuine buyers and sellers in the market"76 in order to demonstrate that the transactions had, or were likely to have, the effect of creating or maintaining an artificial price. On-market transactions on the ASX (like the impugned transactions in this case) are made openly. Participants in the market can be (and are) informed of the transactions which occur. Participants in the market are entitled to assume that the transactions which are made are made between genuine buyers and sellers and are not made for the purpose of setting or maintaining a particular price. Hence, as Mason J explained in North v Marra77, "in the absence of revelation of their true character [as transactions to set or maintain a particular price] they are seen as transactions reflecting genuine supply and demand and having as such an impact on the market". They have, or 75 See also Australian Securities and Investments Commission v Soust (2010) 183 FCR 21 at 43 [90]; Australian Securities and Investments Commission v Administrative Appeals Tribunal (2010) 187 FCR 334 at 349 [47]. 76 (2012) 267 FLR 238 at 295 [260] per Warren CJ. 77 (1981) 148 CLR 42 at 59. Hayne Crennan Bell at least are likely to have, the effect of setting or maintaining an artificial price for the shares in question. Sole or dominant purpose? JM did not submit in this Court that, if the CDPP's construction of s 1041A were to be adopted, it would be necessary for the CDPP to show that the person making the impugned transaction acted with the sole, as distinct from dominant, purpose of setting or maintaining a price for the relevant financial product. In applying s 1041A, no distinction can or should be drawn according to whether the purpose of setting or maintaining a price was the sole or dominant purpose of the person concerned. Proof of a dominant, as distinct from sole, purpose of setting or maintaining a price would establish that the relevant transaction established or maintained an artificial price. To recognise that this is so is not to suggest that proof of a sole or dominant purpose is some separate element of the offence of market manipulation. Rather, proof of a sole or dominant purpose of setting or maintaining a price is one way of demonstrating that the impugned transaction was at least likely to have the effect of setting or maintaining an artificial price. It is neither necessary nor appropriate, in these reasons, to consider by what other ways that effect or likely effect might be established. Conclusion and orders For these reasons, the majority in the Court of Appeal was wrong to conclude that s 1041A should be construed as directed to "market manipulation by conduct of the kind typified by American jurisprudential conceptions of 'cornering' and 'squeezing'". Contrary to the conclusions of the majority in the Court of Appeal, s 1041A is not confined in its application to the creation or maintenance of an artificial price by a dominant market participant exercising that participant's market power. A purchase of listed shares made on the ASX for the sole, or at the least dominant, purpose of ensuring that the price of the shares was not less than the price paid for that purchase is a transaction which has or is likely to have the effect of creating an artificial price for trading in those shares, or maintaining at a level that is artificial a price for trading in those shares. The CDPP's appeal to this Court should be allowed. JM's cross-appeal should be allowed in part. Paragraphs 1 and 2 of the orders of the Court of Appeal made on 14 June 2012 (answering the original questions reserved by Hayne Crennan Bell Weinberg JA on 21 October 2011 as "inappropriate to decide", and remitting the case stated to Weinberg JA to amend the first of the original questions reserved) should be set aside. The further orders of the Court of Appeal made on 28 June 2012, insofar as those orders answered the reformulated question reserved, should also be set aside. In their place, there should be orders that the questions reserved by Weinberg JA on 21 October 2011 are answered as follows: For the purpose of s 1041A of the Corporations Act 2001 (Cth), is the price of a share on the ASX which has been created or maintained by a transaction on the ASX that was carried out for the sole or dominant purpose of creating or maintaining a particular price for that share on the ASX an "artificial price"? Answer: Yes. 2. Was the closing price of shares in [X Ltd] on the ASX on 4 July 2006 an "artificial price" within the meaning [of] s 1041A(c) of the Corporations Act 2001 (Cth)? Answer: Yes. 3. Was the price of shares in [X Ltd] on the ASX on 4 July 2006 maintained at a level that was "artificial" within the meaning of s 1041A(d) of the [Corporations Act 2001 (Cth)]? Answer: Yes. |
HIGH COURT OF AUSTRALIA JAVED HUSSAIN TAHIRI PLAINTIFF AND MINISTER FOR IMMIGRATION AND CITIZENSHIP DEFENDANT Tahiri v Minister for Immigration and Citizenship [2012] HCA 61 13 December 2012 ORDER The questions stated in the special case be answered as follows: Question 1: Did the Delegate make a jurisdictional error in finding that paragraph (a) of PIC 4015 was not satisfied in relation to each additional applicant? Answer: No. Question 2: Did the Delegate make a jurisdictional error in finding that paragraph (b) of PIC 4015 was not satisfied in relation to each additional applicant? Answer: No. Question 3: Was the Decision made in breach of the rules of natural justice? Answer: No. Question 4: Who should pay the costs of this special case? Answer: The plaintiff. Representation L G De Ferrari with K E Grinberg for the plaintiff (instructed by Victoria Legal Aid) S B Lloyd SC with C J Horan for the defendant (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Tahiri v Minister for Immigration and Citizenship Immigration – Visa – Refugee and Humanitarian (Class XB) visa – Subclass 202 Global Special Humanitarian – Public interest criterion 4015 – Combined application by mother and dependent children as additional applicants – Where applicants citizens of Afghanistan living in Pakistan – Where children's father missing – Where delegate found children's "home country" to be Afghanistan – Where delegate not satisfied that father or relatives of father consented to grant of visa – Whether delegate's decision based on correct legal understanding of public interest criterion 4015 – Whether failure to disclose adverse material. Words and phrases – "home country", "person who can lawfully determine where the additional applicant is to live", "usually a resident", "usually resident". Migration Act 1958 (Cth), ss 31, 66. Migration Regulations 1994 (Cth), reg 1.03, Sched 2, Subclass 202, Sched 4, item 4015. FRENCH CJ, BELL AND GAGELER JJ. This special case in proceedings in the original jurisdiction of the High Court under s 75(v) of the Constitution raises questions about the meaning and application of a standard criterion for the grant of a visa to an applicant whose application is combined with that of his or her child. The special case poses four questions. Those questions and the answers are set out at the end of these reasons. Legislation The Migration Act 1958 (Cth) ("the Act") allows regulations made under the Act to prescribe classes of visas in addition to classes for which provision is made in the Act1, and to prescribe criteria for visas of a specified class including a class for which provision is made in the Act2. The Migration Regulations 1994 ("the Regulations") made under the Act prescribe a class of visa called a Refugee and Humanitarian (Class XB) visa, in respect of which there are several subclasses3. The prescribed criteria for a Subclass 202 Refugee and Humanitarian (Class XB) visa include that the applicant is a person who is outside Australia, whose entry to Australia has been proposed by the holder of a Subclass 866 (Protection) visa, and who is a "member of the immediate family" of the proposer4. A person is a member of the immediate family of the proposer only if the person is a spouse or de facto partner, or a dependent child of the proposer, or if the person is a parent of a proposer who is under 18 years old5. Persons who are under 18 years old, who are not engaged to be married, who do not have spouses or de facto partners, and who are children of an applicant for a Subclass 202 Refugee and Humanitarian (Class XB) visa, can make a combined application so as to become additional applicants6. The prescribed criteria include that certain "public interest criteria" are satisfied in 1 Section 31(1) and (2) of the Act. 2 Section 31(3) of the Act. Item 1402 of Pt 4 of Sched 1 to the Regulations. 4 Division 202.2 of Sched 2 to the Regulations. 5 Regulation 1.12AA of the Regulations. 6 Clause 202.228 of Sched 2 to, and regs 1.12 and 1.03 ("dependent child") of, the Regulations. Bell relation to additional applicants7. One of those public interest criteria, public interest criterion 4015 ("PIC 4015"), is expressed as follows8: "The Minister is satisfied of 1 of the following: the law of the additional applicant's home country permits the removal of the additional applicant; each person who can lawfully determine where the additional applicant is to live consents to the grant of the visa; the grant of the visa would be consistent with any Australian child order in force in relation to the additional applicant." PIC 4015 is a standard criterion for the grant of a visa to a child of a primary applicant. The expression "home country", which appears in par (a) of PIC 4015, appears also in many other provisions of the Regulations. The expression is defined for the purposes of the Regulations as follows9: "home country, in relation to a person, means: the country of which the person is a citizen; or if the person is not usually resident in that country, the country of which the person is usually a resident." The expression "Australian child order", which appears in par (c) of PIC 4015, is defined for the purposes of the Regulations to have the meaning in s 70L(1) of the Family Law Act 1975 (Cth)10. That meaning encompasses a parenting order made under Pt VII of the Family Law Act 1975 (Cth), to the extent to which the parenting order deals with whom a child is to live or spend time with or who is responsible for a child's day-to-day care11, as well as an order made under the law of an Australian State that provides for a person or persons to 7 Clause 202.228 of Sched 2 to the Regulations. Item 4015 of Sched 4 to the Regulations. 9 Regulation 1.03 of the Regulations. 10 Regulation 1.03 of the Regulations. 11 Section 4(1) of the Family Law Act 1975 (Cth) ("Subdivision C parenting order"). Bell have custody of, contact with or access to a child who is under 18 or that has the effect of determining the person or persons with whom such a child is to live or providing for the person or persons with whom such a child is to spend time12. Facts The plaintiff is a citizen of Afghanistan. He arrived in Australia, unaccompanied, as a 17 year old. He was granted a Subclass 866 (Protection) visa. The plaintiff's mother ("Mrs Tahiri") is also a citizen of Afghanistan. On the plaintiff's proposal, Mrs Tahiri made an application for a Subclass 202 Refugee and Humanitarian (Class XB) visa. The application was combined with those of four of her children under 18 years old who are also citizens of Afghanistan. A delegate of the Minister refused the applications of Mrs Tahiri and the four children because the delegate was not satisfied that PIC 4015 was satisfied in relation to the children. The plaintiff challenges that refusal as erroneous in law and as wanting procedural fairness. The delegate was required by the Act to notify Mrs Tahiri of the refusal and to specify the criterion not satisfied13, but was not required to give reasons as to why the criterion was not satisfied14. The delegate in fact gave no reasons. The special case nevertheless attaches records of the Department of Immigration and Citizenship ("the Department") from which inferences can be drawn as to what those reasons were15. Mrs Tahiri said in the application that her current country of residence was Pakistan, where her status was that of an illegal resident. She said that she had lived at an address in Pakistan for over six years together with the children who were included as additional applicants. She said that her husband, who was the father of the children and who was not included in the application, was missing. She later explained to an officer of the Department in an interview that her husband had left seven years earlier to go to Kandahar to work and had "disappeared", following which she moved to Pakistan. She also explained that she had recently visited Afghanistan with the children. The delegate later wrote 12 Section 4(1) of the Family Law Act 1975 (Cth) ("State child order"). 13 Section 66(1) and (2)(a) of the Act. 14 Section 66(2)(c) and (3) of the Act. 15 Rule 27.08.5 of the High Court Rules 2004. Bell to Mrs Tahiri inviting her to provide evidence that the children satisfied PIC 4015. The letter set out the terms of PIC 4015 and pointed out that there was no evidence that "[t]he law of Afghanistan permits the removal of the children" and no evidence that "[e]ach person who can determine where the children will live has given their consent". In response, Mrs Tahiri provided what purported to be an English translation of a document emanating from the "Aram High Court, Kabul, Afghanistan". It stated that her husband "was missing from eight years ago" and that "the High Court, Afghanistan" did not have any objection to the children "leaving Afghanistan for any country". Mrs Tahiri later provided what purported to be the Persian original. When an officer of the Department put to her in a telephone interview that the documents were not genuine, she explained that she had asked someone to prepare them and had paid money for that purpose to someone she did not know. In refusing the applications of Mrs Tahiri and the four children, the delegate recorded that the content of the file had been "reviewed" and that there existed "concerns … as to the right for [Mrs Tahiri] to determine where the minor children will live". The record noted that during her interview Mrs Tahiri had claimed that her husband had gone to Kandahar for work seven years before and had not returned. The record further stated that Mrs Tahiri: "did not present any evidence to suggest that the husband is deceased and from what we know about the movement and migration for work and asylum seeking purposes, there are several possible scenarios with regard to his current location." The record went on to note that Mrs Tahiri had been given an opportunity to present evidence of her ability under the law of Afghanistan to remove the children but that the documents provided by her were "non genuine" and were to be given "little weight … positive or negative". The record set out the delegate's conclusion: "On balance I am not satisfied that the law of Afghanistan would permit the removal of the children in the circumstances claimed and we do not have any evidence as to the consent of persons who have the right to determine where the child will live, nor an Australian child order. In both Afghan law and custom, the custody of the minor children would fall to the father's side if there were credible and substantial evidence of the death of the father. On balance I am not satisfied that the public interest criterion 4015 is met in relation to this case ... application refused accordingly." It may be inferred that the delegate's reasons for not being satisfied that PIC 4015 was satisfied in relation to the children were as follows. The delegate Bell found that the "home country" of each of the children was Afghanistan. The delegate found that Mrs Tahiri's husband had been missing for more than seven years since he had gone to Kandahar for work. The delegate made no finding as to whether the husband was alive or dead or, if alive, where he might be located. The delegate found that, under Afghan law, persons who could determine where the children were to live included the husband, if he were alive, and relatives of the husband, if he were dead. In respect of par (a) of PIC 4015, the delegate was not satisfied that the law of Afghanistan would permit the removal of children. In respect of par (b) of PIC 4015, the delegate was not satisfied that the husband or relatives of the husband consented to the grant of the visa. Paragraph (c) of PIC 4015 was irrelevant as there was no Australian child order. Error of law? The delegate was required to decide whether or not to be satisfied that PIC 4015 was satisfied in relation to the children reasonably and on a correct legal understanding of PIC 401516. The focus of the first two questions of the special case is on whether the delegate's decision was based on a correct legal understanding of pars (a) and (b) of PIC 4015. Paragraph (a) of PIC 4015 is expressed in terms that "the law of the additional applicant's home country permits the removal of the additional applicant". Satisfaction of the application of the paragraph requires a finding as to the "home country" of an additional applicant and a finding as to the law of that country. The definition of "home country" sets the default position as the country of a person's citizenship. Another country becomes the "home country" only if the person is not "usually resident" in the person's country of citizenship and the person is "usually a resident" of that other country. In this context, there is no difference in concept between where a person is "usually resident" and where a person is "usually a resident"; the difference in expression in the definition is grammatical. It is apparent that a person may not be "usually resident" in the person's country of citizenship without necessarily being "usually a resident" of another country. However, it is equally apparent that a person who is "usually a resident" of another country cannot be "usually resident" in the person's country of citizenship. Whether a person's home country is a country other than that of the person's citizenship therefore turns on whether or not the person is "usually a resident" of that country. 16 Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 150 [34]; [2000] HCA 5. Bell Whether a person is "usually a resident" of a country other than that of the person's citizenship is a question of fact. "Usual residence" in this context, like "habitual residence" in the context of the Convention on the Civil Aspects of International Child Abduction, "fall[s] for decision in a very wide range of circumstances"17 and involves a "broad factual inquiry", factors relevant to which include "the actual and intended length of stay in a state, the purpose of the stay, the strength of ties to the state and to any other state (both in the past and currently), [and] the degree of assimilation into the state"18. The plaintiff argues that it was not open to the delegate to find that the "home country" of the children was Afghanistan, on the basis that the only finding the delegate could reasonably have made on a correct legal understanding of par (a) of PIC 4015 was that each of the children was "usually a resident" of Pakistan. The argument cannot be sustained. Assuming the delegate to have accepted that the children had lived with Mrs Tahiri at an address in Pakistan for over six years before the making of the application, that factor alone was not sufficient to compel the conclusion that they were each "usually a resident" of Pakistan. The circumstances of their arrival, the fact that they were illegal residents in Pakistan and the fact that they had recently visited Afghanistan were capable of being considered countervailing factors. Paragraph (b) of PIC 4015 is expressed in terms that "each person who can lawfully determine where the additional applicant is to live consents to the grant of the visa". Unlike par (a), par (b) does not require the identification of a single country whose system of law provides other persons with an ability to determine where the additional applicant is to live. The expression "person who can lawfully determine" refers to a person who has a legal ability, alone or with others, to determine where the additional applicant is to live. The legal ability need not arise under Australian law and is not to be determined through the application of Australian choice of law rules. The legal ability may arise under any system of law that governs the relationship between such a person and the additional applicant. The plaintiff argues that the only finding the delegate could reasonably have made on a correct legal understanding of par (b) of PIC 4015 was that Mrs Tahiri was the only person who could lawfully determine where the children 17 LK v Director-General, Department of Community Services (2009) 237 CLR 582 at 596 [35]; [2009] HCA 9. 18 (2009) 237 CLR 582 at 599 [44], quoting P v Secretary for Justice [2007] 1 NZLR Bell were to live. The argument is put on alternative bases. One is that, assuming him to be alive, the fact that the father had been missing for many years meant that he could have no responsibility for the children. The other is that the fact that the father had been missing for more than seven years meant that he should be presumed to be dead under the common law of Australia. It is unnecessary to consider whether the circumstances of the father's disappearance, as known to the delegate, were sufficient to attract the common law presumption that a person is presumed dead where the person has not been heard of for seven years by persons who would be expected to hear from the person if the person were alive19. It is also unnecessary to consider whether that common law presumption governs administrative decision-making. Mrs Tahiri did not claim that her husband was dead and the decision of the delegate did not turn on whether he was dead or alive. The content of foreign law is a question of fact20. The plaintiff has not established that the delegate could not reasonably take the view that Afghan law applied to the relationships between the children and their father, if he were alive, and between the children and his relatives, if he were dead. Nor has the plaintiff established that the delegate could not reasonably take the view that, under Afghan law, persons who could determine where the children were to live included the husband, if he were alive, and relatives of the husband, if he were dead. Want of procedural fairness? The delegate was required to observe procedural fairness, which required that Mrs Tahiri be given the opportunity of ascertaining the relevant issues and be informed of the nature and content of any adverse material21. The focus of the third question in the special case is on whether that occurred. Mrs Tahiri was sufficiently alerted to the critical issues on which the application turned by the letter which set out the terms of PIC 4015 and invited her to provide evidence that PIC 4015 was satisfied in relation to the children. 19 Axon v Axon (1937) 59 CLR 395 at 401, 405; [1937] HCA 80. 20 Neilson v Overseas Projects Corporation of Victoria Ltd (2005) 223 CLR 331 at 370 [115]; [2005] HCA 54. 21 SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 at 162 [32]; [2006] HCA 63, quoting Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 590-591. Bell By pointing out that there was no evidence that "[t]he law of Afghanistan permits the removal of the children", the letter drew attention to what appears then already to have been the provisional view of the delegate that the children's "home country" was Afghanistan. By pointing out that there was no evidence that "[e]ach person who can determine where the children will live has given their consent", the letter also drew attention to the relevance of the consent of each person who could lawfully determine where the children were to live. The plaintiff argues that the reference by the delegate to "what we know about the movement and migration for work and asylum seeking purposes" in recording that there were "several possible scenarios" with regard to the husband's current location shows that the delegate took into account adverse material of which procedural fairness required Mrs Tahiri to be informed. That the delegate referred to undisclosed material may be acknowledged but the material has not been shown to be adverse in any relevant sense. The delegate did not treat it as contradicting Mrs Tahiri's claim that the husband was missing and did not use it to make any finding as to the husband's current location assuming him to be alive. Order The questions stated in the special case should be answered as follows: Question 1 Did the Delegate make a jurisdictional error in finding that paragraph (a) of PIC 4015 was not satisfied in relation to each additional applicant? Answer Question 2 Did the Delegate make a jurisdictional error in finding that paragraph (b) of PIC 4015 was not satisfied in relation to each additional applicant? Answer Question 3 Was the Decision made in breach of the rules of natural justice? Bell Answer Question 4 Who should pay the costs of this special case? Answer The plaintiff. |
HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Ayles v The Queen [2008] HCA 6 28 February 2008 ORDER Appeal dismissed. On appeal from the Supreme Court of South Australia Representation A L Tokley for the appellant (instructed by Townsends) C J Kourakis QC, Solicitor-General for the State of South Australia with S A McDonald for the respondent (instructed by Director of Public Prosecutions Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Ayles v The Queen Criminal law – Practice and procedure – New statutory offence provision in period particularised on the information – Need for amendment – No formal application by prosecutor to amend. Criminal law – Practice and procedure – Admission by accused to offence outside dates particularised on the information – Trial judge's findings follow admission. Criminal law – Practice and procedure – Whether trial judge has power to amend statutory provision without application by parties – Criminal Law Consolidation Act 1935 (SA), s 281(2) – Distinct functions of judge and prosecutor – Whether amendment conformed to prosecutor's intention. Criminal law – Practice and procedure – Procedural fairness – Whether amendment without opportunity for accused to make submissions. Criminal law – Practice and procedure – Correct offence not noted on information – Order for amendment incompletely noted on the information – Whether affects amendment of information – Whether administrative task. Criminal Law Consolidation Act 1935 (SA), ss 281(2) and 281(3). GLEESON CJ. In accordance with the limited grant of special leave to appeal, the grounds of appeal in this matter are as follows: The court below erred in law in holding that the trial judge had power pursuant to s 281 of the Criminal Law Consolidation Act 1935 (SA) to amend the charge in count 1 of the information. The court below erred in law in holding that the trial judge had power to amend count 1 of the charge on the information because the power to lay the charge lies with the Director of Public Prosecutions under s 7 of the Director of Public Prosecutions Act 1991 (SA). The court below erred in law in considering that the trial judge could amend the information as it is not part of the responsibility of the trial judge to determine which charge the appellant should stand trial for. The relevant facts, and the events at trial, are set out in the reasons of Kiefel J, with which I agree. That the trial judge exercised, or purported to exercise, the power of amendment conferred by s 281 of the Criminal Law Consolidation Act 1935 (SA) is accepted in the grounds of appeal and is, in any event, clear from the record of proceedings. Sub-section (3) of s 281, in its opening words, indicates that the amendment of which the section speaks is made by the judicial order referred to in sub-s (2), not by the administrative step dictated by sub-s (3). In this case, an order for amendment having been made by the trial judge, an incomplete note of the order was endorsed on the information by the judge's associate. It is the judicial order that is the subject of the grounds of appeal. The failure to comply with sub-s (3) was not a ground of appeal, either in the Court of Criminal Appeal of South Australia (Doyle CJ, Gray and David JJ)1 or in this Court. It was mentioned in the course of argument, but there was no application to add a further ground of appeal, which would have required leave. As Doyle CJ observed, in Ismail2 the English Court of Appeal took a view inconsistent with a conclusion that, if an order is made under sub-s (2), a failure to make a note, or a complete note, of the order in accordance with sub-s (3) means that the amendment is ineffective. That reflects the statutory language. The issues for decision were formulated in the appellant's written submissions thus: "1. Whether in a trial by judge alone and after all of the evidence has been completed, the trial judge had the power pursuant to statute to 1 R v Ayles (2007) 97 SASR 78. (1990) 92 Cr App R 92 at 95. substitute or add a new charge in the Information, in the absence of an explicit application by the prosecution counsel to do so. 2. Whether by substituting the new charge without giving the Appellant the opportunity to plead to the new charge there was a miscarriage of justice justifying setting aside of the conviction." In essence, the argument was that, in the events that occurred, it was either beyond power (because of an alleged absence of an application by the prosecution) or unfair for the trial judge to make the order for amendment that she made. The events and circumstances are stated by Kiefel J, but there is an aspect of the case that I would emphasise by way of context. What follows is taken from the reasons of Doyle CJ. The charge with which this appeal is concerned, which was the subject of count 1 in the information, related to the first occasion of sexual contact between the appellant and the complainant. That the two had a sexual relationship was not in dispute. There was, however, a dispute about when it began. The complainant could not be precise about the date. He said he was 13 or 14 years old at the time. His 13th birthday was on 2 May 1972. In evidence, the appellant admitted the incident, but said it occurred in October 1973. A change in the law, by which s 69(1)(b)(iii) took the place of s 70(1)(c) of the Criminal Law Consolidation Act 1935 (SA) as the statutory provision relevant to such conduct, took effect on 9 November 1972. The change was not relevant to any element of the offence of indecent assault. The age of consent was altered, but not in a way that affected the complainant. If an order for amendment had been made at the conclusion of the evidence, the proper order would have been to charge in the alternative, alleging a contravention of s 70(1)(c) or, alternatively, a contravention of s 69(1)(b)(iii). The function of particulars as to dates supporting those alternative charges would have been to provide fairness to the appellant, by protecting him against surprise, not to define the elements of the offence. It was because, in the events that occurred at trial, no order for amendment was made until the delivery of reasons for judgment, by which time the trial judge had decided to accept the appellant's evidence on the only matter in dispute (that is, the time when the conduct occurred), that the order for amendment took the form of a substitution for the original charge of a single new charge based on s 69(1)(b)(iii). That is the context in which the issues of power and fairness raised by the appellant are to be considered. I accept that these are serious issues for determination, but their resolution turns upon the facts and circumstances of the particular case. For the reasons given by Kiefel J, I agree that the appeal should be dismissed. Kirby GUMMOW AND KIRBY JJ. This appeal from the Full Court of the Supreme Court of South Australia (Doyle CJ, Gray and David JJ)3 sitting as the Court of Criminal Appeal4 raises a substantial question concerning the proper role of judge and prosecutor, respectively, in relation to the amendment of criminal informations pursuant to powers conferred by the Criminal Law Consolidation Act 1935 (SA) ("the CLCA"). The epithet "technical" should not obscure the importance of this question, which goes to the conduct of trials by procedures which accord with the law and not by other procedures. In Kotsis v Kotsis5 Windeyer J emphasised that, with respect to alleged merely formal defects in the court record: "The observance of forms and the due recording of proceedings are one of the safeguards of justice according to law." When considering the statutory formalities which under English law attend the preferring of indictments, Lord Bingham of Cornhill recently remarked, in R v Clarke6: "Technicality is always distasteful when it appears to contradict the merits of a case. But the duty of the court is to apply the law, which is sometimes technical, and it may be thought that if the state exercises its coercive power to put a citizen on trial for serious crime a certain degree of formality is not out of place." We agree. His Lordship's approach was shared, and the same conclusion reached, by each of the participating members of the House of Lords7. It is an approach that expresses the law of Australia, as long understood. It is the foregoing precept stated by Lord Bingham respecting the manner of exercise of the coercive power of the state which we seek to apply in what follows. 3 R v Ayles (2007) 97 SASR 78. 4 See Byrnes v The Queen (1999) 199 CLR 1 at 12-13 [10]. (1970) 122 CLR 69 at 90. [2008] UKHL 8 at [17]. [2008] UKHL 8 at [24] per Lord Scott of Foscote, [25] per Lord Rodger of Earlsferry, [38] per Lord Carswell, [43] per Lord Brown of Eaton-under-Heywood. Kirby The trial The appellant was charged with a number of sexual offences against the complainant, T, who, many years ago and while a child, attended the church of which the appellant was parish priest. The appellant's trial took place in the District Court of South Australia in June 2006 before Simpson DCJ, sitting without a jury. The appellant was represented by counsel. The information presented against the appellant contained eight counts, six of indecent assault and two of buggery. The appellant pleaded guilty to counts 7 and 8 (indecent assault), but not guilty to the first six counts. Of those six counts, he was found guilty of count 1 (alleging indecent assault) but not guilty of the remaining offences. The one sentence of four years' imprisonment with a two year non-parole period was imposed with respect to the three offences of which the appellant was guilty. Count 1 of the information was a charge that between 24 October 1971 and 2 May 1972 the appellant indecently assaulted T contrary to s 70(1)(c) of the CLCA. The latter date was T's 13th birthday. On the second day of the trial, apparently in response to T's evidence, the prosecutor applied to substitute 1 May 1973 for 2 May 1972, namely the day before T's 14th birthday. That amendment was unopposed by counsel for the appellant, the trial judge made an order to that effect, and a note of the order was endorsed on the information. It is the practice in South Australia for endorsements of this kind to be made by the associate of the judge, the information then being in the court file. So much appears to have accorded with s 281(3) of the CLCA, which will be set out below. If matters had ended there, there could have been no cause for complaint by the appellant: a defect having been identified in the information, an amendment was sought by the prosecutor and was made by the judge. However, complications arose when the appellant gave evidence. He admitted the substance of the conduct alleged in count 1, but he said that it occurred in mid to late October 1973 and was able to relate this date to other events and records in evidence. This evidence about timing was significant because the relevant provisions of the CLCA were amended by the Criminal Law Consolidation Act Amendment Act 1972 (SA) with effect from 9 November 1972. After that date, the relevant offence of indecent assault was to be found in s 69(1)(b)(iii) of the CLCA, and not in s 70(1)(c) as was alleged in count 1 of the information as presented (and as amended on the second day of the trial). At the trial, both the prosecutor and the judge were aware of the legislative change in 1972. Counsel for the appellant, when asked his position, said he had not yet "got to that stage". The judge asked "on what section the prosecution [was] proceeding". The prosecutor's response was that "the legislation changed, so the prosecution would have to proceed" on both s 70(1)(c) and s 69(1)(b)(iii). Kirby Nevertheless, the prosecutor reiterated in her final address that the complainant's evidence about the timing of the offences should be believed, and she made no application for amendment. In the event, the appellant's evidence about timing was accepted by the trial judge in her reasons for judgment given on 16 June 2006. As a result of that acceptance, the judge stated in her reasons for judgment that8: "For the accused to be found guilty of count 1, the particulars on the Information require further amendment, by substituting another date for 1 May 1973, a date some months later. If this were a jury trial, the jury would have to be directed that it did not matter whether the event in question took place when asserted by the prosecution or at some other date, in this case the date asserted by the accused himself. In the circumstances as I have found them, the relevant section of the Criminal Law Consolidation Act 1935 also requires amendment." "I amend count 1 on the Information as follows: Indecent Assault. (Section 69(1)(b)(iii) of the [CLCA]) Particulars of Offence Raymond Frederick Ayles between the 24th day of October 1971 and the 31st day of October 1973 at Para Hills, indecently assaulted T." A notation was made on the information altering the date to the "31st day of October 1973", and indicating that this had been "[a]mended by Her Honour Judge Simpson on 16 June 2006". Importantly, however, no notation was ever made regarding the relevant section of the CLCA: at all times, the information alleged an offence contrary to s 70(1)(c) of the CLCA, not s 69(1)(b)(iii). 8 R v Ayles [2006] SADC 67 at [56]. 9 R v Ayles [2006] SADC 67 at [58]. Kirby Amendment of informations In South Australia, the information fulfils the same role as a presentment or indictment does in other States10, and in South Australia the term does not exclusively connote summary proceedings. The history of the use of the information in summary proceedings to specify the alleged offence was traced by Jordan CJ in Ex parte Walker; Re Goodfellow11. The centrality of the information to criminal procedure in South Australia may be seen in s 275(1) of the CLCA: "Any person may be put upon his trial at any criminal sessions of the Supreme Court or District Court, for any offence, on an information presented to the Court in the name and by the authority of the Director of Public Prosecutions." Likewise, s 284(1) of the CLCA provides that it is the information to which the accused pleads guilty or not guilty, thereby initiating the trial: "Any person arraigned on any information who pleads not guilty thereto shall, by that plea, without any further form, be taken to have put himself upon the country for trial; and the court shall, in the usual manner, proceed to the trial of that person accordingly." That is, it is upon the information that the criminal defendant is tried, and in conjunction with the defendant's plea it delimits the area of contest at the trial. The circumstances of the present case must next be seen against the background of s 277(1) of the CLCA. This provides: "Every information shall contain, and shall be sufficient if it contains, a statement of the specific offence or offences with which the accused person is charged, together with such particulars as are necessary for giving reasonable information as to the nature of the charge." Rule 4(3) in Sched 3 to the CLCA gives content to s 277(1) by providing that "if the offence charged is one created by statute, [the statement of offence] shall contain a reference to the section of the statute creating the offence". In the present case, however, at no time did the information ever contain a statement of 10 cf Criminal Procedure Act 1986 (NSW), s 8; Criminal Code (Q), s 560; Criminal Code Act 1924 (Tas), s 7; Crimes Act 1958 (Vic), s 353; Criminal Procedure Act 2004 (WA), s 83. 11 (1944) 45 SR (NSW) 103 at 106-107. Kirby the specific offence of which the appellant was said to be convicted, namely s 69(1)(b)(iii) of the CLCA. At common law, there was no power to amend an indictment otherwise than by returning it to the grand jury that found it; by contrast, and as explained by Lord Mansfield, an information (using the term in its historical sense) could be amended more readily, being framed by an officer of the Crown and not being found upon the oath of a grand jury12. The inflexibility of the rules governing the technical requirements of indictments coupled with the extremely limited scope for amendment had a tendency, in the words of Sir James Fitzjames Stephen, to "mitigate, though in an irrational, capricious manner, the excessive severity of the old criminal law". Thus, prisoners might escape the consequences of their crimes by taking successful objections to the terms of the indictment presented against them13. Nineteenth century statutory reform in England to change this state of affairs culminated in the Indictments Act 1915 (UK)14. This modified the procedure for amendment of indictments. Section 5 of that Act, which is replicated in the law of each Australian State15, found its way into the law of South Australia as s 281 of the CLCA, which is headed "Objections to informations, amendments and postponement of trial". The breadth of the range of permissible amendments under that section and its equivalents has often been emphasised in the case law. It may be accepted that an amendment to an information may add counts16, substitute an applicable statutory offence for an inapplicable one17, or vary the particularised dates of offending18. The question, in the present case, is whether any such addition or substitution has been effected according to law. 12 R v Wilkes (1770) 4 Burr 2527 at 2569 [98 ER 327 at 351]. 13 Stephen, A History of the Criminal Law of England, (1883), vol 1 at 284. 14 5 & 6 Geo 5 c 90. The earlier statutory reforms were to be found in Criminal Law Act 1826 (UK) 7 Geo 4 c 64; Criminal Procedure Act 1848 (UK) 11 & 12 Vict c 46; Criminal Procedure Act 1851 (UK) 14 & 15 Vict c 100. 15 cf Criminal Procedure Act 1986 (NSW), s 21; Criminal Code (Q), s 572; Criminal Code (Tas), s 326; Crimes Act 1958 (Vic), s 372; Criminal Procedure Act 2004 (WA), s 132. 16 R v Johal [1973] QB 475; Radley (1973) 58 Cr App R 394. 17 Tuttle (1929) 21 Cr App R 85; Ciorra v Cole (2004) 150 A Crim R 189. 18 Dossi (1918) 13 Cr App R 158. Kirby Sub-section (2) of s 281 of the CLCA states: "When before trial, or at any stage of a trial, it appears to the court that any information is defective or that there is any variation between any particular stated therein and the evidence offered in proof thereof, the court shall make such order for the amendment of the information as the court thinks necessary to meet the circumstances of the case unless, having regard to the merits of the case, the required amendment cannot be made without injustice." In the present case, the information as originally presented revealed both a "variation between any particular stated therein and the evidence offered in proof thereof", because the date of offending supported by the evidence was different from that particularised on the information, and a "defect", being the misdescription of the offence in question. The first matter was partially corrected by the amendment to the particulars made on the second day of the trial, although it remains to be seen whether the second attempt at amendment succeeded in completing the correction. Likewise, it remains to be seen whether the second matter (namely the misdescription of the offence) was effectively corrected by the purported amendment that is now in dispute on this appeal. The absence of a notation of the substituted offence The breadth of s 281 is limited in important respects, most notably by the form in which amendments must be made. Sub-section (3) states: "When an information is so amended, a note of the order for amendment shall be endorsed on the information and the information shall be treated, for the purposes of the trial and all proceedings in connection therewith, as having been presented in the amended form." (emphasis added) Section 34 of the Acts Interpretation Act 1915 (SA)19 reinforces the conclusion (contrary to the submission of the respondent) that the requirement that there shall be an endorsement of a notation is imperative, and not "directory", to use that now discarded taxonomy20. This imperative requirement 19 See also the remarks of McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 389-391 [92]-[93]. These remarks commended themselves to Lord Bingham and to Lord Rodger of Earlsferry in R v Clarke [2008] UKHL 8 at [14], [28]. 20 This provides that where in any statute the word "shall" is used in conferring a power, this implies that the power must be exercised. Kirby must then be seen against the background of ss 275(1) and 284(1) of the CLCA, set out earlier in these reasons, which make a properly framed information essential to a successful prosecution. It would seem fundamental to the criminal process that since the prosecution is commenced only by an information alleging a particular offence, a defendant cannot be convicted of an offence other than that alleged in the information. Where, as here, no notation was ever made of the correct offence on the information (whether as originally presented, or as purportedly amended), the information cannot be treated "for the purposes of the trial … as having been presented in the amended form" (s 281(3)). If the information was not presented in its amended form, it was not open to the District Court to convict the appellant of an offence contained therein. For that reason, the requirement in sub-s (3) of s 281 that there be a notation was a provision of the CLCA with a purpose "that an act done in breach of the provision should be invalid"21. In R v Clarke22 the House of Lords quashed the convictions of the appellants at a trial commenced without there being a signed indictment before the Crown Court. The indictment was signed by the proper officer only during the trial and at what Lord Bingham described as "the eleventh hour", after the evidence had ended; this "somewhat adventitious addition of a signature" did not "throw a blanket of legality over the invalid proceedings already conducted"23. The legislation considered in Clarke24 abolished the preferring of indictments by grand juries and provided that a bill of indictment signed as now provided by the statute "shall thereupon become an indictment". The reasoning of the House of Lords was that the step of signing the bill being indispensable to the preferring of the indictment and the indictment being the foundation of the record in the trial, absent that indictment there could be no trial. A view contrary to the tenor of the opinions in Clarke, and to the approach that we take in these reasons, apparently was taken by the English Court of Appeal in the reasons of Lord Lane CJ in Ismail25. His Lordship said: 21 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 22 [2008] UKHL 8. 23 [2008] UKHL 8 at [21]. 24 Sections 1 and 2 of the Administration of Justice (Miscellaneous Provisions) Act 25 (1990) 92 Cr App R 92 at 95. Kirby "It is true that that step was not taken as it should have been. It is suggested by counsel for the appellants that that indicates that this was not an amendment, but was a fresh indictment. We do not take that view. We take the view that that was an oversight on the part of the staff. It certainly is not an oversight which in itself invalidates the amendment which we find to have been made." Whatever may be the authoritative force of that statement in England, it does not control the outcome of the present appeal in this Court and should not be followed in Australia. Sub-section (3) of s 281 is not without its other difficulties. Some of these were raised in argument on the present appeal. One is when "for the purposes of the trial" is the information to be treated as "having been presented in the amended form"? Since no notation had been made of the critical offence, it is not necessary to address such questions. The absence of an application for amendment The absence of an appropriate notation of the amendment to the information was not the only deficiency in the process followed at the appellant's trial. The other defect was that no application for amendment of the information had been made by counsel before Simpson DCJ made her order. The transcript indicates that the prosecution and trial judge were alive to the changed statutory provisions and the defence thus became alive to the point. However, the first indication of any proposed amendment arose not during the course of the trial, but rather in her Honour's reasons delivered immediately after the verdict. Apparently contradictory views were taken by the Full Court that such an application was26 and was not27 made, and, if not made, then at least "foreshadowed". But what is presently significant is that the most that was advanced by the respondent in this Court was that such an application was implicitly made in the statement by the prosecutor that both sections were relied upon. To the extent that such a statement implies that any amendment was sought (or foreshadowed) at all, it cannot have implied that the count should be amended in the manner undertaken by the trial judge. Since the prosecutor made it clear that she relied on both sections, the amendment made by the trial judge 26 (2007) 97 SASR 78 at 85. 27 (2007) 97 SASR 78 at 86. Kirby (substituting one section for the other) may not have been in accordance with the prosecutor's wishes. An amendment that was consonant with the prosecutor's wishes would have required the addition of a new and alternative count, such that one count would allege an offence contrary to s 69(1)(b)(iii) and another would allege an offence contrary to s 70(1)(c), with appropriately particularised dates for each count. Was it necessary for there to be an application before the information could be amended? On its terms, s 281 of the CLCA does not provide an explicit answer. While sub-s (1) refers to an application to quash an information before trial (leaving implicit the court's power to order such a quashing), sub-s (2) refers only to the making of an order by the court (leaving implicit any antecedent need for an application for that order). The answer is found through consideration of the distinct functions of judge and prosecutor. In the Full Court, Doyle CJ (with whom Gray and David JJ agreed) came to the view, upon such a consideration, that such an application was unnecessary. His Honour stated that the trial judge had a responsibility for the regular conduct "A trial judge has a responsibility for the regularity of proceedings, and authority to act to ensure that they are regular: see R v West29. A judge who takes the initiative in this way should, of course, give counsel an opportunity to put submissions before exercising the power to amend. But the important point is that the judge is not obliged to stand by and take no remedial action unless and until counsel makes an application for an amendment. There is no intrusion on the role of the Director of Public Prosecutions by the judge taking the initiative in this way, and making an order (if called for) after hearing submissions from counsel. There is no such intrusion because of the judge's authority over and responsibility for the correct state of the pleadings." True it is that the judge has a responsibility for the regular conduct of proceedings, but that responsibility does not provide an answer to the question of whether an application to amend is necessary. All the provisions of the CLCA, including s 281, must be viewed in the context of the division of functions between prosecutor and judge in the 28 (2007) 97 SASR 78 at 86-87. 29 [1948] 1 KB 709 at 717. Kirby adversarial system of criminal justice. In Director of Public Prosecutions (SA) v B, Gaudron, Gummow and Hayne JJ remarked that30: "The line between, on the one hand, the decisions whether to institute or continue criminal proceedings (which are decisions the province of the executive) and on the other, decisions directed to ensuring a fair trial of an accused and the prevention of abuse of the court's processes (which are the province of the courts) is of fundamental importance." Their Honours went on to quote from the reasons for judgment of Gaudron and Gummow JJ in Maxwell v The Queen, in which it was said that31: "It ought now be accepted, in our view, that certain decisions involved in the prosecution process are, of their nature, insusceptible of judicial review. They include decisions whether or not to prosecute, to enter a nolle prosequi, to proceed ex officio, whether or not to present evidence and, which is usually an aspect of one or other of those decisions, decisions as to the particular charge to be laid or prosecuted. The integrity of the judicial process – particularly, its independence and impartiality and the public perception thereof – would be compromised if the courts were to decide or were to be in any way concerned with decisions as to who is to be prosecuted and for what." (footnotes omitted) The last-quoted sentence is of fundamental importance. It affords a most important principle that lies at the head of the resolution of this appeal. A decision to amend an information so as to add or substitute a new charge is plainly a decision about the particular charge to be laid or prosecuted, yet any suggestion that a court could – let alone should – decide for itself the offences with which a defendant is to be charged would be inimical to the judicial process. It also may well raise concerns about the institutional integrity of the courts in the manner discussed in Kable v Director of Public Prosecutions (NSW)32. In this Court, as in the Full Court, it was argued that the trial judge's actions were not open to objection as her Honour acted with reference to the prosecutor's intentions, and thus did not usurp the role of prosecutor. This, however, is a circumstance that tends against, not towards, the propriety of those actions. In every case, it may be inferred that the prosecutor wishes to see the 30 (1998) 194 CLR 566 at 579 [21]. 31 (1996) 184 CLR 501 at 534. 32 (1996) 189 CLR 51. Kirby defendant convicted of some charge or another. If, however, the evidence shows that the defendant is not guilty of the charged offence, the proper conduct of proceedings requires that a verdict of not guilty be entered. It is no part of the judicial function to attempt to salvage the prosecution's case. Quite aside from these concerns about institutional integrity and the distinct role of prosecutor and judge, the requirements of procedural fairness apply no less to the amendment of informations than to any other aspect of the criminal trial33. Where the judge realises that there is a defect in the information, the proper course is to draw the defect to the parties' attention and to indicate that it is for the prosecutor to apply for an order that the information be amended. Such a course would allow the prosecutor to seek the amendment should she or he so wish, and would allow the defence to raise any submissions about the injustice or otherwise of the amendment. In this way, the requirements of procedural fairness and institutional integrity would be upheld. This procedure was not adopted in the appellant's trial. Conclusions The purported amendment made by the trial judge was defective in two respects: first, because her Honour had no power to make it as no application had been made by counsel; and secondly, in the case of the statement of the offence (but not the particulars), because there was no notation of the purported amendment on the information itself. Because the trial judge misconstrued her powers of amendment, the appellant's conviction was therefore attended by a "wrong decision on [a] question of law" within the meaning of sub-s (1) of s 353 of the CLCA, and subject to consideration of the proviso his appeal should be allowed. The precise significance of the defective amendment caused some confusion in the submissions to this Court. On the one hand, the appellant submitted that, being an order of a superior court of record34, the order for amendment made by the trial judge (or the appellant's conviction of the count as amended) stood unless and until set aside. However, while its status as an order of a superior court would bind an inferior court and also preserve the order from attack in collateral proceedings, the order was liable to be set aside, and could be so set aside in appellate proceedings. The applicable principles were detailed by McHugh J in Ousley v The Queen35. 33 cf R v West [1948] 1 KB 709 at 717. 34 District Court Act 1991 (SA), s 5. 35 (1997) 192 CLR 69 at 99. Kirby For that reason, the respondent properly and correctly submitted that if (as has turned out to be the case) the judge's order was made without power, the appellant stood convicted of count 1 as amended on the second day of trial and not otherwise. That is to say, he was convicted of indecent assault contrary to the CLCA between 24 October 1971 and 1 May 1973. s 70(1)(c) of Accordingly, the appellant was convicted of an offence that was not known to the law at the time he was found to have committed it, namely in October 1973. The proviso The respondent submitted that notwithstanding these irregularities in the appellant's trial no miscarriage of justice occurred in the particular circumstances of the case, as the appellant was convicted upon his own testimony for an offence the substance of which he admitted. The respondent pointed to R v DD36 as a case in which, notwithstanding the accused had been convicted of a statutory offence that was not in force at the time of the alleged offending, the Victorian Court of Appeal held that no substantial miscarriage of justice had occurred. This was said to be so because an equivalent offence continued to exist at common law and "no prejudice in the form of misinformation, lack of information or embarrassment in presentation of defence accrued" to the accused by reason of the misdescribed offence37. In the present case, a substantial miscarriage of justice was also said by the respondent to be absent on like grounds, and in addition because the appellant never denied his guilt and was convicted upon his own testimony. In Weiss v The Queen, this Court left open the question38: "whether some errors or miscarriages of justice occurring in the course of a criminal the presuppositions of the trial as to deny the application of the common form criminal appeal provision with its proviso". to such a serious breach of trial may amount The reasons of the Court in Weiss referred to the earlier decision of this Court in Wilde v The Queen, in which Brennan, Dawson and Toohey JJ stated that39: 37 (2002) 5 VR 243 at 254. 38 (2005) 224 CLR 300 at 317 [46]. 39 (1988) 164 CLR 365 at 373. Kirby "The proviso has no application where an irregularity has occurred which is such a departure from the essential requirements of the law that it goes to the root of the proceedings. If that has occurred, then it can be said, without considering the effect of the irregularity upon the jury's verdict, that the accused has not had a proper trial and that there has been a substantial miscarriage of justice. Errors of that kind may be so radical or fundamental that by their very nature they exclude the application of the proviso". Their Honours referred to R v Hildebrandt40, R v Henderson41, and Couper42. There could hardly be more fundamental presuppositions of a trial than that an accused be convicted only of those offences with which he or she is charged, and that those offences must be known to the law. Substantive defects in an information of the kind identified in this appeal therefore go to the root of the proceedings in the truest sense because – as has been explained above – a properly framed information as alleged by the prosecution authorities is the foundation of the criminal process against the accused as that process is observed in this country. The argument for the application of the proviso should be rejected. Orders The appeal should be allowed, and the orders of the Full Court made on 8 March 2007 should be set aside43. In their place, the appellant's conviction on count 1 should be quashed. Since the information presented against the appellant was never effectively amended so as to charge the appellant with an offence contrary to s 69(1)(b)(iii) of the CLCA, the appellant was never in jeopardy of conviction for that offence44. It will be for the Director of Public Prosecutions to decide whether to lay a fresh information. Should that occur, it will then be for the defence to take any objection to that new information that may arise out of the circumstances of the first trial. 40 (1963) 81 WN (Pt 1) (NSW) 143. 42 (1985) 18 A Crim R 1. 43 Although the Full Court ordered that the appellant's appeal against conviction be dismissed, no order to that effect appears to have been perfected. 44 cf Island Maritime Ltd v Filipowski (2006) 226 CLR 328. Kirby The appeal to this Court was against conviction only, but the successful appeal against conviction requires attention to one aspect of the sentence imposed on the appellant at trial. The appellant was convicted of three offences and, pursuant to s 18A of the Criminal Law (Sentencing) Act 1988 (SA)45, a single sentence was imposed on him with respect to those three offences. One of those convictions now having been quashed, the appellant's sentence should be set aside, and the matter should be remitted to the Full Court for resentencing46. 45 This provides that "[i]f a person is found guilty by a court of a number of offences, the court may sentence the person to the one penalty for all or some of those offences, but the sentence cannot exceed the total of the maximum penalties that could be imposed in respect of each of the offences to which the sentence relates". 46 Sub-section (1) of s 354 of the CLCA provides that "[i]f it appears to the Full Court that an appellant, although not properly convicted on some count or part of the information, has been properly convicted on some other count or part of the information, the Court may either affirm the sentence passed on the appellant at the trial or pass such sentence in substitution therefor as it thinks proper and as may be warranted in law by the verdict on the count or part of the information on which the Court considers that the appellant has been properly convicted". HEYDON J. I agree generally with Kiefel J. In relation to the issues underlying the grounds of appeal, I agree with the order proposed by Kiefel J on grounds which can be summarised as follows. It is not a statutory pre-condition to exercise of the power to amend granted by s 281(2) of the Criminal Law Consolidation Act 1935 (SA) ("the Act") that the prosecutor apply for an amendment. It is within the power of prosecutors to decide what charges should be brought and continued, and, independently of s 281(2), the law makes that power exclusive. But in this case the prosecutor did decide what charge she wished to bring and what charge she wished to continue with in relation to the first item of misconduct alleged by the complainant against the appellant. Depending on the date of that misconduct, the prosecutor desired to continue with the charge alleging that that conduct constituted either the offence created by s 70(1)(c) of the Act or the offence created by s 69(1)(b)(iii) of the Act. Just before the close of the prosecution case, she communicated that desire to the trial judge and counsel for the defence in open court. The amendment to the information concerning the statutory provision allegedly contravened which the trial judge ordered in her reasons for judgment reflected her finding that the misconduct took place after 9 November 1972, the day on which s 70(1)(c) ceased to have effect and s 69(1)(b)(iii) came into effect. The amendment which the trial judge ordered did not literally correspond with the prosecutor's desire to make an allegation in the alternative (i.e. that the misconduct contravened either s 70(1)(c) or s 69(1)(b)(iii)). But it would not have been useful to order an amendment literally corresponding with that desire. The prosecutor's desire to make an allegation in the alternative was stimulated only by the need to cover all possible findings for the date of the misconduct. Once the trial judge found that the misconduct took place on a day after 9 November 1972, it became pointless to make an amendment so as to permit allegations of a contravention of s 70(1)(c) or s 69(1)(b)(iii): the only material provision, in the events which had happened, was the latter. In substance, therefore, the amendment corresponded with the prosecutor's desire so far as that desire retained materiality. (e) While, as Kiefel J indicates, more regard to formal regularity would have been preferable, there was no unfairness to the appellant in the course which the trial took, and in particular no unfairness in the amendment order which the trial judge made in her reasons for judgment. Counsel for the appellant was well aware of the controversy about the date of the misconduct alleged and the significance that date had in relation to the provision allegedly contravened. Counsel for the appellant had an opportunity to object to the prosecution's desire to rely on s 69(1)(b)(iii). There was no objection. The absence of any note on the information reflecting the trial judge's order amending it so as to allege a contravention of s 69(1)(b)(iii) cannot affect the validity of the amendment ordered. Compliance with s 281(3) of the Act is not a pre-condition to the validity of the amendment. The statutory pre- conditions to validity are found exhaustively in s 281(2). KIEFEL J. The appellant was charged with six counts of indecent assault and two counts of buggery under the Criminal Law Consolidation Act 1935 (SA) ("the CLCA"). The first two counts of charges were stated in the information of the Director of Public Prosecutions in terms: "Statement of Offence Indecent Assault. (Section 70(1)(c) of the Criminal Law Consolidation Act, 1935). Particulars of Offence Raymond Frederick Ayles between the 24th day of October 1971 and the 2nd day of May 1972 at Para Hills, indecently assaulted [T]." The appellant pleaded guilty to two charges of indecent assault occurring at a later time and not guilty to all other charges. The charges were heard by Simpson DCJ, sitting without a jury, following the appellant's election of that course47. The date marking the conclusion of the period within which the offences were alleged to have occurred was amended during the course of the trial. Following the hearing, and before verdict, her Honour further ordered that the information be amended so as to refer to another, later, date and to the statutory provision which replaced s 70(1)(c). The extended period allowed for the approximate date upon which the appellant admitted the circumstances giving rise to the offence had occurred. The orders for amendment were made in the absence of an application by the prosecutor. The appellant's contention is that her Honour lacked the power to make the amendments. More particularly it is contended that the making of the orders involved the Court in decision-making reserved to the prosecution. The appellant was a priest at a church at Para Hills in South Australia of which the complainant and his family were parishioners. In the opening for the prosecution it was said that counts 1 and 2 related to the first occasion that the complainant recalled conduct of a sexual nature occurring between the appellant and him. The appellant had asked the complainant to clean his house, in exchange for pocket money. He was at the appellant's house for this purpose when the appellant approached him, touched his penis and encouraged him to do likewise to the appellant. Count 1 related to the firstmentioned act and count 2 to the invitation to touch the appellant indecently. The prosecutor said that the complainant fixed the date of the offence by reference to a short period when his parents were separated, which occurred at about the time he was undertaking an 47 Juries Act 1927 (SA), s 7. entry exam for high school. On this account the complainant would have been 12 years of age, his date of birth being 2 May 1959. After the complainant's evidence-in-chief, and before cross-examination, the prosecutor applied to amend the particulars of counts 1 and 2 by changing the date marking the end of the period in which the offences occurred to "the 1st day of May 1973". The basis for the application was that the complainant had given evidence that he believed that he was 13 years of age at the time of the offences and had just started high school. The prosecutor also sought to amend the concluding date of the periods particularised in other counts, for similar reasons. No objection was taken by the appellant's counsel and her Honour the trial judge ordered the amendments. Particulars of the offences were amended, in handwriting, on the information, presumably by the judge's associate. Section 70(1)(c) of the CLCA provided that any person who indecently assaulted any male person was guilty of a misdemeanour and liable to be imprisoned for a term not exceeding 7 years. Section 70, together with ss 69 and 71, was repealed by the Criminal Law Consolidation Act Amendment Act 1972 (SA) ("the 1972 Amendment Act") and one section, s 69, enacted in their place. The repeal and enactment occurred on 9 November 1972. Sub-section (1)(b)(iii) of that section also provided that any person who indecently assaults any male person is guilty of a misdemeanour and liable to be imprisoned for a term not exceeding 7 years. The only change made by the 1972 Amendment Act, in relation to this offence, was to the age at which a male person could be considered capable of consenting to an indecent assault upon his person. Section 70(2) had provided that no male person under the age of 17 years could be deemed capable of consenting to any indecent assault; s 69(2) provided that a male person could not be considered capable of consenting to an indecent assault by a male person unless he had attained the age of 21 years. When her Honour ordered the amendments to the dates in counts 1 and 2 she was not made aware of the coming into effect of the 1972 Amendment Act and the need, therefore, to identify the offences in the period up to 9 November 1972 by reference to s 70(1)(c) and thereafter by reference to s 69(1)(b)(iii). Before the close of the prosecution case her Honour asked the prosecutor to identify the statutory provisions which were relied upon. By this time it is apparent that the fact of the statutory amendment was known to her Honour. A discussion took place between her Honour and the prosecutor as to the changes effected by the amendments to s 69 with respect to other offences charged. With respect to counts 1 and 2 the prosecutor advised her Honour that "it is the same situation; that the legislation changed, so the prosecution would have to proceed on s 70(1)(c) or s 69B(3)". This latter transcript reference was no doubt to s 69(1)(b)(iii). Defence counsel was asked by her Honour whether the change of section for the offences created any difficulty. Counsel advised that he would consider the matter overnight. The following morning defence counsel made no mention of the matter and called the appellant, who gave evidence. The appellant admitted that the "first incident" referred to by the complainant, which was described as "mutual masturbation", occurred. That first act occurred after the complainant had started house-cleaning for the appellant. The appellant gave as the date for the "first incident" "about October 1973". On this account the complainant would have been 14. The date given by the appellant with respect to the offences in question was generally adopted by the prosecutor in cross-examination of him, although at one point it was suggested to him that the first time he had a physical encounter with the complainant was when the complainant was 13 years of age. The appellant denied this. The matter of the complainant's age, at the time of the offences in question, was not put to the appellant again. The complainant's age was not material to the commission of an offence. It might have had some relevance to sentence. In her address the prosecutor conceded that not all of the elements necessary to establish an indecent assault with respect to count 2 were present. A conviction with respect to count 1 was, however, pursued. The prosecutor observed that the appellant admitted the occasion but he had placed it at a time later than the complainant. There was some discussion between the prosecutor and her Honour about whether this was in fact the first occasion of indecent touching, on the complainant's evidence. His evidence at trial, that most of the offences occurred at a later date than had been particularised in the information, left one occasion, that relating to count 6, as occurring at a time earlier than he had given for the "first incident". This may have affected her Honour's view of the reliability of the complainant's evidence. Nothing turns upon it for the purposes of the appeal. The timing of the offences was a matter to be resolved by her Honour. The prosecutor conceded that the complainant might be wrong about his earlier dates. Earlier in her address she had impressed upon her Honour that it was the occasion, and not the date of the offence, which must be proved and that the appellant had admitted the occasion, although he had put it at a date later than appeared in the information. Her Honour adjourned the trial to allow for further submissions. On the further hearing, and in the course of discussing the inapplicability of the defence of consent, the prosecutor referred to the statutory provisions which did not allow for the consent of a male under 17 years and/or under 21 years to the indecent assault. This was clearly a reference to each of ss 70 and 69. Her Honour's reasons for her verdicts were given in writing. On the occasion of their delivery her Honour said that, "for the reasons which I now publish", she found the appellant guilty on count 1 "as amended" and not guilty with respect to the remaining charges as to which the appellant had pleaded not guilty. Her Honour found that the first occasion when the appellant invited sexual contact was, on his admission, shortly after 6 October 1973 and not as charged in the particulars. She noted the Crown's submission, that the offence was identified by reference to the event itself rather than the particular dates alleged, which in any event covered a lengthy period of time. The date was not critical, either to the prosecution case or to the defence of the appellant, her Honour held. There was no dispute about the events which had occurred. The date of the first incident, when sexual relations may have occurred, might be relevant to the complainant's age and the length of time over which the relationship was maintained, and therefore to sentence. The date of the offence was not, however, material to the charge, in her Honour's view. The incident was properly identified, the appellant knew the incident to which the charge related and the appellant was not at risk of conviction of another offence altogether. Her Honour then said48: "For the accused to be found guilty of count 1, the particulars on the Information require further amendment, by substituting another date for 1 May 1973, a date some months later. If this were a jury trial, the jury would have to be directed that it did not matter whether the event in question took place when asserted by the prosecution or at some other date, in this case the date asserted by the accused himself. In the circumstances as I have found them, the relevant section of the Criminal Law Consolidation Act 1935 also requires amendment." After referring to s 69, her Honour ordered49: "I amend count 1 on the Information as follows: Indecent Assault. Consolidation Act 1935) (Section 69(1)(b)(iii) of the Criminal Law Particulars of Offence Raymond Frederick Ayles between the 24th day of October 1971 and the 31st day of October 1973 at Para Hills, indecently assaulted T." Her Honour proceeded to find the appellant guilty on the information as amended50. 48 R v Ayles [2006] SADC 67 at [56]. 49 [2006] SADC 67 at [58]. 50 [2006] SADC 67 at [59]. Section 281 of the CLCA, in relevant part, provides: "Objections to informations, amendments and postponement of trial (2) When before trial, or at any stage of a trial, it appears to the court that any information is defective or that there is any variation between any particular stated therein and the evidence offered in proof thereof, the court shall make such order for the amendment of the information as the court thinks necessary to meet the circumstances of the case unless, having regard to the merits of the case, the required amendment cannot be made without injustice. (3) When an information is so amended, a note of the order for amendment shall be endorsed on the information and the information shall be treated, for the purposes of the trial and all proceedings in connection therewith, as having been presented in the amended form." In the Court of Criminal Appeal of the Supreme Court of South Australia it was submitted that the section did not provide the Court with power to make the amendment without an application having first been made by the prosecutor. Further, the effect of the amendment was to substitute a new charge and this went beyond the power of amendment. Doyle CJ, with whom Gray and David JJ agreed, held that the prosecutor had made an application51. Later, his Honour considered that when the prosecutor identified the provisions relied upon, at the close of the prosecution case, she should have applied for an order amending the information. It was clear, however, that the prosecutor wished to have the information amended as may be required to accommodate the trial judge's findings of fact. The prosecutor could therefore be taken to have foreshadowed an application to amend52. The order was later made on that foreshadowed application53. Doyle CJ held that there was an additional basis upon which the Court could exercise its powers. It was not necessary for the trial judge to wait for an application from the prosecutor54. In his Honour's view a trial judge has a 51 R v Ayles (2007) 97 SASR 78 at 85 [40]. 52 (2007) 97 SASR 78 at 86 [44], [45]. 53 (2007) 97 SASR 78 at 86 [48]. 54 (2007) 97 SASR 78 at 86 [49]. responsibility for the regularity of proceedings. There was no intrusion into the role of the prosecution by the judge making an order, because it was the judge's responsibility to correct the pleadings55. His Honour observed that it would have been desirable for the trial judge to hear submissions before making the order. In the circumstances of the case there was, however, no miscarriage of justice56. On the appeal it was not argued that an amendment of the kind ordered was not contemplated by s 281 of the CLCA. Doyle CJ dealt with this matter in his reasons for judgment57. His Honour observed that both English cases58 and Australian cases59 recognise that the power of amendment given by s 5 of the Indictments Act 1915 (UK), and State and Territory equivalent provisions, permits the addition of a new charge, so long as no injustice is caused. In the present case the reference to the subsequent statutory provision introduced no new allegations. The scope of the defence of consent varied as between ss 70 and 69, but the availability of the defence was never in issue in the case60. His Honour also referred61 to the decision in Maher v The Queen62. It was there held that a further count could not be added to an indictment once the jury had been sworn. The principle stated by the Court63 was that the jury was sworn to try only the issues on the counts appearing on the indictment. As Doyle CJ observed64, the statutory provisions in question, those then in force in Queensland, did not permit the addition of another count on an indictment. To these observations may be added that of Hunt CJ at CL in R v Stolpe65, that the decision in Maher v The Queen is restricted to jury trials. 55 (2007) 97 SASR 78 at 86-87 [48]-[50]. 56 (2007) 97 SASR 78 at 87 [53]. 57 (2007) 97 SASR 78 at 84-85 [31]-[39], 88-89 [62]-[67]. 58 R v Johal [1973] QB 475; Radley (1973) 58 Cr App R 394. 59 Go v The Queen (1990) 73 NTR 1; R v B [1999] SASC 403. 60 (2007) 97 SASR 78 at 88 [58]. 61 (2007) 97 SASR 78 at 83 [27], 89 [66], [67]. 62 (1987) 163 CLR 221. 63 (1987) 163 CLR 221 at 234. 64 (2007) 97 SASR 78 at 88-89 [65]-[66]. 65 Unreported, Court of Criminal Appeal of the Supreme Court of New South Wales, 30 October 1996 at 7. The appellant's principal contention concerns the maintenance of the separate functions of the executive and of the courts. The appellant's contention is that it is no part of the judicial function to determine what charges are to be brought or proceeded with against an accused. This may also be expressed as a judge lacking the relevant power to make such a decision. A reference to the Director of Public Prosecutions Act 1991 (SA) and other provisions of the CLCA confirms that this is a matter solely for the Director. The contention is clearly correct. Further, the power of amendment given by s 281 does not alter the division of functions. In Director of Public Prosecutions (SA) v B66 Gaudron, Gummow and Hayne JJ referred to the fundamental importance of the line drawn between the decision whether to institute or continue criminal proceedings, the province of the executive, and decisions directed to ensuring a fair trial and the prevention of abuse of the court's processes, the province of the courts. In Maxwell v The Queen67 Dawson and McHugh JJ pointed out that, save where it is necessary to a fair trial or the prevention of abuse, courts in Australia do not purport to exercise control over the institution and continuation of criminal proceedings68. In Barton v The Queen69 it was said that it ought now be accepted that certain decisions involved in the prosecution process are insusceptible of judicial review. They include the decision whether to lay or prosecute a particular charge. In Maxwell v The Queen the refusal of the trial judge to accept a plea, which the prosecution would accept, was considered to be of the nature of a review70. Had the trial judge's order of amendment of the information amounted to the addition of a new charge without the prosecution having determined upon that course of action, there can be little doubt that the appeal should succeed on the ground stated. There would be no occasion for the power given by s 281(2) to be exercised. The sequence of events at trial and statements made by the prosecution do not, however, suggest that the trial judge acted without reference 66 (1998) 194 CLR 566 at 579 [21]. 67 (1996) 184 CLR 501. 68 (1996) 184 CLR 501 at 512, see also at 534 per Gaudron and Gummow JJ; and see Chow v Director of Public Prosecutions (1992) 28 NSWLR 593 at 604-605 per Kirby P. 69 (1980) 147 CLR 75 at 90-91, 96 per Gibbs ACJ and Mason J. 70 (1996) 184 CLR 501 at 534-535 per Gaudron and Gummow JJ; followed Director of Public Prosecutions (SA) v B (1998) 194 CLR 566 at 579-580 [21]-[22] per Gaudron, Gummow and Hayne JJ. to the prosecution's intentions. The question as to the function undertaken by her Honour, in making the amendments, is one to be determined by reference to, although not exclusively to, the course of the trial and exchanges which took place. The starting point is what was required to be contained in the information. Rule 4(3) in Sched 3 to the CLCA provides that the statement of offence in an information shall describe the offence shortly, in ordinary language, and if the offence charged is one created by statute, shall contain a reference to the section creating the offence. The language of the Rule is one of obligation. The offence originally charged in count 1 was properly stated as arising under s 70 of the CLCA. The situation which later confronted the trial judge commenced with the complainant's evidence, of a date later than 9 November 1972, as that when the offence was committed. An order was sought, and obtained, to amend the period shown upon the information as extending to 1 May 1973. The only statutory offence of indecent assault after 9 November 1972 arose under s 69(1)(b)(iii), pursuant to the 1972 Amendment Act. When the information was amended to extend the date to 1 May 1973 it became defective. This was the view of Doyle CJ71. It referred to an offence being committed at a time when the statute identified, in accordance with the Rule, had ceased to have operation. An indictment which refers to a statute which has not come into effect or one which had been repealed is plainly defective: Tuttle72 is an example of the former; and Meek v Powell73 of the latter. It is, however, capable of amendment. The position of the prosecution, with respect to reliance upon the two statutory provisions, was not stated at this point in the trial. It was made clear by the statements made at the close of its case, in answer to her Honour's enquiry. It is to be inferred that the Director of Public Prosecutions, or the prosecutor acting on behalf of the Director74, had made a decision to seek a conviction on count 1 of an offence under either s 70 or s 69. Although not relevant for present purposes, it may be observed that it is unlikely that any argument of substance could have been raised against an amendment at this point. That may explain, in part, why no response was forthcoming by defence counsel to her Honour's enquiry as to whether reliance upon the two provisions caused any difficulty. 71 (2007) 97 SASR 78 at 86 [43]. 72 (1929) 21 Cr App R 85. 74 See Director of Public Prosecutions Act 1991 (SA), s 7(7) and s 6A. It is not apparent why amendment of the information was not sought. It may be inferred from what the prosecutor said in her address that she did not consider the identification, with more precision, of the date of the offence to be necessary. Certainly the date was not an essential element of the offence. It did not therefore need to be further particularised75. It is difficult to accept, however, that the prosecutor did not appreciate that the Rule required that the correct statutory provision creating the offence be stated. It may be that she assumed that it would follow, as a matter of course, upon the making of the earlier order of amendment, which took the offence into the sphere of s 69. This is conjecture, for nothing was said at the time to indicate whether the prosecutor was aware of the 1972 Amendment Act. However, a lack of understanding, as to why the critical amendment was not pursued, does not detract from the clarity of the prosecution's stated intention. Importantly, the prosecutor made it known to the trial judge that the prosecution relied upon the two sections as alternative bases for conviction. A failure to amend in this regard was, clearly enough, an oversight. It follows that when her Honour came to order the amendments, prior to delivery of her verdict, she was not deciding for herself whether to add a charge under s 69. Her Honour was giving effect to the prosecution's stated intention. Whilst her Honour did not give complete effect to the prosecution's position, by maintaining the reference to s 70, it cannot be said that, in giving limited effect to it, she usurped the prosecutorial discretion76. On this approach the appellant's argument may be seen to depend upon her Honour's amendment of the concluding date for the period, extending it to 31 October 1973 to take account of the appellant's admission. This might be thought to come closer to an assumption of decision-making, or a review of what might be inferred to be the prosecutor's decision. It cannot be said that, in making this amendment, her Honour was giving effect to an expressed intention on the part of the prosecution. The prosecution had disclaimed reliance on any particular date as necessary to its case. So long as the offence was found by her Honour to have occurred, the date was not essential. Her Honour agreed with this view in her reasons77. The amendment in this regard simply reflected her Honour's findings with respect to the occasion. It may have been an unwarranted amendment, but it was also unnecessary. It does not affect the critical amendment of the count in the information, to refer to s 69(1)(b)(iii). That amendment cured the defect in the information. 75 Dossi (1918) 13 Cr App R 158 at 159-160. 76 Maxwell v The Queen (1996) 184 CLR 501 at 534 per Gaudron and Gummow JJ. 77 [2006] SADC 67 at [54]. A question may be thought to remain concerning the absence of an application, on the part of the prosecutor, for the amendment. In many cases it will follow from the making of orders, without application having been made for them, that there has been an assumption of the prosecutor's role. So much was accepted at the outset of these reasons, in connection with the appellant's argument. It is not for a judge to speculate about what course a party might take. And as Hayne J reminded in Libke v The Queen78, it is not for a judge to attempt to remedy the deficiencies of a party's case. As his Honour said, it is for the judge to hold the balance between the contending parties and to ensure that the trial is conducted fairly. In the circumstances of this case, however, the making of the orders for amendment did not breach those obligations. There was no misunderstanding about the basis upon which the prosecutor's case was put. The appellant's counsel was given the opportunity to raise any objections to the prosecution's reliance upon s 69. The absence of an application for amendment does not characterise what was undertaken by the Court as non-judicial. Any denial of the trial judge's power to make the orders of amendment, in the absence of an application, must therefore arise from s 281. There is nothing in the language of the section which conditions the exercise of the power to the making of an application. It does not speak of the power being invoked by that means. The lack of a stated qualification, other than that there be no injustice in the making of an order, might give rise to questions about the extent of the court's power and the circumstances in which it can be exercised. It does not, however, warrant the implication of a requirement that an application be made in every case. It suggests to the contrary. The foregoing is not intended as an encouragement for courts to assume an active role in amendments of informations or indictments. It is to be expected that in most cases an application will be made. A trial judge should be alert to any deficiencies in an information, or any variations between the particulars contained in the information and the evidence, and bring these matters to the attention of the parties. An obligation remains on the prosecution to seek such orders as are necessary with respect to the information or indictment, to cure any deficiencies. It is regrettable that a situation was created in which the role of the prosecution and the Court in the amendment process appeared unclear. Any uncertainty or misunderstanding could have been dispelled had the matter been re-listed for mention or further submissions when the trial judge became aware of the deficiency in the information. That is not to say that there was anything present in the circumstances at the time of the order for amendment which 78 (2007) 81 ALJR 1309 at 1325 [72]; 235 ALR 517 at 537. prevented her Honour's exercise of the power to amend under s 281. There was no speculation necessary as to the prosecution's intention. No procedural fairness was denied the appellant. His counsel had an opportunity to raise any concerns about her Honour proceeding to a verdict on the basis of the alternative statutory provisions, and did not do so. The point is that discussion about the Court's intended course of action would have made these matters obvious. It was suggested, in submissions on the appeal, that an injustice may have been worked against the appellant. He might have chosen to plead to a lesser common law offence of an act of gross indecency, had he been given the opportunity to do so. It is not obvious that the amendment necessitated re- arraignment. Re-arraignment is usually required where the amendment is of real significance to an accused79, not where the new charge is essentially the same80. And as Doyle CJ observed81, speculation about the theoretical possibility that the appellant may have so pleaded and that the prosecution may have accepted such a plea, is not a sufficient basis for a conclusion of injustice, assuming the plea to be available. In the course of argument on the appeal it was pointed out that no note of her Honour's order, with respect to s 69, appears to have been made on the face of the information. The practice of making notes on an information or indictment is of long standing82. It does not constitute the record of the District Court of South Australia83. The view which has been expressed with respect to the English provision84 is that an oversight of staff, to make a note, cannot invalidate the amendment ordered85. Doyle CJ considered the act of noting required by s 281(3) to be an administrative one, which could still be performed86. That view is borne out by reference to the section. It is the order made by the court under sub-s (2) which effects the amendment referred to in sub-s (3). The note to be made is of the order; it does not effect the amendment. The reference which follows – "and the information shall be treated … as having 79 Radley (1973) 58 Cr App R 394. 80 R v B [1999] SASC 403 at [121]. 81 (2007) 97 SASR 78 at 87 [55]. 82 Halsbury's Laws of England, 1st ed, vol 9 at 377 [736]. 83 R v Nam and Sansbury [1968] SASR 107 at 114-115. 84 Indictments Act, s 5(2). 85 Ismail (1990) 92 Cr App R 92 at 95; R v Palmer [2002] EWCA Crim 892. 86 (2007) 97 SASR 78 at 89 [70]. been presented in the amended form" – is to the form the information should take consequent upon the order of amendment, not upon the notation. In the recent English decision of R v Clarke87 it was held that the absence of a signature upon an indictment when the trial began invalidated the proceedings. The provisions there concerned88 made the presence of a signature essential to an indictment before it could be proceeded with. Here the information was not void of effect. The defect which arose, by reference to the evidence upon which the prosecution intended to rely, was capable of correction by amendment, pursuant to s 281. The statutory scheme, and the purpose of the power of amendment, do not suggest that proceedings were intended to be vitiated by the absence of a note of an order for amendment. If the appellant made out a ground of appeal questions may arise as to the orders which could be made. Any order for a retrial would be upon an information which is absent reference to the offence which is the subject of his admission. Such an order might be made upon the assumption that an application for amendment would be made, to accord with the appellant's admission. In that event conviction would almost certainly follow, but only if a further trial were held. It may be inferred that the purpose of the appeal is to provide the appellant with something of a bargaining position. This prospect would not prevent the Court making an order for a retrial. It is, in any event, not necessary to further consider this question. In my view the appeal should be dismissed. 87 [2008] UKHL 8. 88 Administration of Justice (Miscellaneous Provisions) Act 1933 (UK), ss 1 and 2. |
HIGH COURT OF AUSTRALIA BROOKFIELD MULTIPLEX LTD APPELLANT AND OWNERS CORPORATION STRATA PLAN 61288 & ANOR RESPONDENTS Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36 8 October 2014 ORDER Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of New South Wales made on 25 September 2013 and, in its place, order that the appeal to that Court be dismissed with costs. Special leave to cross-appeal granted. Cross-appeal treated as instituted and heard instanter and dismissed with costs. First respondent to pay the appellant's costs of the appeal. On appeal from the Supreme Court of New South Wales Representation D F Jackson QC with T J Breakspear for the appellant (instructed by F Corsaro SC with P J Bambagiotti for the first respondent (instructed by Grace Lawyers Pty Ltd) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 Negligence – Duty of care – Pure economic loss – Strata-titled apartment complex constructed pursuant to contract between builder and developer – Apartments sold pursuant to standard form contract of sale – Contracts conferred rights to have defects remedied – Latent defects in common property – Owners corporation for strata scheme claimed damages from builder for pure economic loss – Whether builder owed owners corporation a duty of care – Relevance of inquiry into whether builder owed anterior duty of care to developer. Words and phrases – "assumption of responsibility", "common property", "disconformity of obligations", "proximity", "pure economic loss", "reliance", "vulnerability". Introduction The Court of Appeal of New South Wales held that the builder of strata- titled serviced apartments on land at Chatswood owed a duty of care to the owners corporation to avoid causing it to suffer loss resulting from latent defects in the common property which were structural or constituted a danger to persons or property in the vicinity or made the apartments uninhabitable1. An owners corporation is created by statute whenever a strata plan is registered. The common property is vested in it as manager of the strata scheme and as "agent" for the owners of the apartments. In this case, the owners corporation ("the Corporation") is the first respondent. The serviced apartments were incorporated in levels one to nine of a 22 storey development2. The apartments had been built under a design and construct contract made in November 1997 between the appellant, Brookfield Multiplex Ltd ("Brookfield"), and the registered proprietor of the land and property developer, Chelsea Apartments Pty Ltd ("Chelsea"). All of the apartments were subject to leases given by Chelsea to Park Hotel Management Pty Ltd ("Park Hotel"), a subsidiary of the Stockland Trust Group ("Stockland"), which was to operate them collectively as a serviced apartment hotel under the "Holiday Inn" brand. The principal question raised on this appeal from the decision of the Court of Appeal is whether Brookfield owed the Corporation a duty to exercise reasonable care in the construction of the building to avoid causing the Corporation to suffer pure economic loss resulting from latent defects in the common property. The Corporation has filed a notice of contention asserting, contrary to the conclusion of the Court of Appeal, that the duty owed to it was not contingent upon the existence of a similar duty of care owed to Chelsea. The Corporation also seeks special leave to cross-appeal in relation to the limited ambit of the duty as defined by the Court of Appeal. The contractual arrangements between Brookfield, Chelsea and Stockland had as their purpose the creation of a commercial venture which comprised serviced apartments to be operated collectively as a serviced apartment hotel. The Corporation, a creature of statute, came into existence as the statutory agent of Chelsea, albeit controlled pursuant to the lease arrangements by the hotel operator. The purchasers of individual apartments from Chelsea were effectively investors in the hotel venture. The nature and content of the contractual 1 The Owners — Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479. 2 The balance of the development comprised residential apartments which are the subject of a separate strata scheme and a different owners corporation. arrangements, including detailed provisions for dealing with and limiting defects liability, the sophistication of the parties and the relationship of Chelsea to the Corporation all militate against the existence of the asserted duty of care to either Chelsea or the Corporation. The appeal should be allowed. Special leave to cross-appeal should be granted and the cross-appeal dismissed. The text of relevant statutory and contractual provisions, the reasoning at first instance and the reasoning of the Court of Appeal are set out in the joint judgment of Crennan, Bell and Keane JJ. Reference to the salient features of the statutory framework and the contractual arrangements appears later in these reasons. Procedural history By summons issued out of the Supreme Court of New South Wales on 3 November 2008, the Corporation claimed from Brookfield the cost of rectifying alleged defects in the common property3. The claim was in negligence and depended upon the existence and breach of a relevant duty of care owed by Brookfield to the Corporation. On 10 October 2012, McDougall J delivered judgment on the separate question of the existence of a duty of care4. The alleged duty of care, as propounded by the Corporation, was a duty "to take reasonable care to avoid a reasonably foreseeable economic loss to the [Corporation] in having to make good the consequences of latent defects caused by the building's defective design and/or construction"5. His Honour held that the Corporation had not established that Brookfield owed it the duty of care alleged6. He made orders directing entry of judgment for the defendants and ordered the Corporation to pay their costs. The Corporation appealed to the Court of Appeal. 3 There was one other defendant, the second respondent in this Court, whose involvement is not material for present purposes. 4 Owners Corporation Strata Plan 61288 v Brookfield Multiplex NSWSC 1219. 5 Owners Corporation Strata Plan 61288 v Brookfield Multiplex NSWSC 1219 at [18]. 6 Owners Corporation Strata Plan 61288 v Brookfield Multiplex NSWSC 1219 at [109]. On 25 September 2013, the Court of Appeal allowed the appeal and set aside the orders made by McDougall J. Their Honours answered the separate question thus7: "[Brookfield] owed the [Corporation] a duty to exercise reasonable care in the construction of the building to avoid causing the [Corporation] to suffer loss resulting from latent defects in the common property vested in the [Corporation], which defects (a) were structural, or (b) constituted a danger to persons or property in, or in the vicinity of, the serviced apartments, or (c) made those apartments uninhabitable." Brookfield appeals to this Court by special leave granted on 14 March 20148. The questions The appeal raises two questions: Did Brookfield owe a duty of care to the Corporation independently of the existence of a duty of care owed to Chelsea, and, if so, what was its content? Did Brookfield owe a duty of care to Chelsea and thereby a similar duty of care to the Corporation, and, if so, what was its content? As appears from the reasons that follow, the interaction between the statutory scheme and the contractual matrix causes the two questions to converge. It requires a negative answer to both. An outline of the statutory and contractual arrangements follows. The strata schemes statutes Under strata schemes laws in New South Wales, a parcel of land, including any building or buildings which comprise part of it, can be subdivided into lots in accordance with a strata plan9. A strata plan for freehold lots is registered in the office of the Registrar-General pursuant to s 8 (read with s 5(1)) of the Strata Schemes (Freehold Development) Act 1973 (NSW) ("the Strata Freehold Act"). Common property is so much of a parcel as is not comprised in 7 The Owners — Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 510 [132] per Basten JA, Macfarlan JA agreeing at 511 [133], Leeming JA agreeing at 512 [139]. [2014] HCATrans 052 (French CJ and Crennan J). 9 Strata Schemes (Freehold Development) Act 1973 (NSW), s 7. any lot10. Under the Strata Schemes Management Act 1996 (NSW) ("the Strata Management Act"), the owners of the lots from time to time in a strata scheme constitute a body corporate designated "The Owners—Strata Plan No X", where "X" is the registered number of the strata plan to which that strata scheme relates11. The owners corporation comes into existence upon registration of the strata plan12. The Corporation came into existence on 11 November 1999. An owners corporation has the functions conferred upon it by the Strata Management Act or any other Act13. The common property is vested in it14. It holds its estate or interest as "agent" for the proprietor or proprietors of the lots15. If different persons are proprietors of each of two or more lots, it holds the common property as agent for the proprietors as tenants in common in shares proportional to the unit entitlements of the respective lots16. The content of the term "agent" is to be derived from the statutory functions conferred upon the owners corporation. The interest of a lot owner in the common property has been characterised by the Supreme Court of New South Wales as an equitable interest as a tenant in common with other lot owners17. On that basis, the owners corporation has been described as holding the common property "as trustee for all the lot proprietors in proportion to their unit entitlements"18. Leeming JA in the Court of Appeal also referred to the relationship as "analogous to trustee and 10 Strata Freehold Act, s 5(1). 11 Strata Management Act, s 11(1). The body corporate constituted under s 11 is referred to as an owners corporation elsewhere in the Act: see s 8 and the Dictionary definition of "owners corporation" in the Strata Management Act. 12 Strata Management Act, s 8(1). 13 Strata Management Act, s 12. 14 Strata Freehold Act, s 18. 15 Strata Freehold Act, s 20. 16 Strata Freehold Act, s 20(b). 17 Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 at 56 per Handley JA, Mason P agreeing at 48, Beazley JA agreeing at 60; Young v Owners — Strata Plan No 3529 (2001) 54 NSWLR 60 at 64 [14] per Santow J; Lin v The Owners — Strata Plan No 50276 (2004) 11 BPR 21,463 at 21,464 [7] per Gzell J. 18 Segal v Barel (2013) 84 NSWLR 193 at 209 [81] per Barrett JA, McColl JA agreeing at 195 [1], Preston CJ of LEC agreeing at 218 [140]. beneficiary"19. That cautious description may avoid attachment to the functions of the Corporation of the full panoply of equitable and statutory incidents of the trust relationship. In any event, the characterisation of the Corporation as a trustee or an analogue of a trustee was not in dispute before the Court of Appeal or in this appeal20. The owners corporation has a statutory duty to properly maintain the common property and keep it in a state of good and serviceable repair21. It must renew or replace any fixtures or fittings comprised in the common property22. Those duties do not apply to a particular item of property if the owners corporation, by special resolution, determines that it is inappropriate to do any of those things23, albeit that exemption does not apply if the safety of any building, structure or common property is affected or the appearance of any property in the strata scheme detracted from24. The duties of the owners corporation do not depend upon whether someone was to blame for the common property being other than in a state of good and serviceable repair. As the primary judge correctly observed25: "The duty to maintain and repair common property is not limited by reference to the source of the problem that gives rise to the need for maintenance or [repair]. The duty will extend, in an appropriate case, even to the rectification of defective work left unrectified by the builder." Generally speaking, funding for repairs and maintenance of the common property must come from the lot proprietors by way of levies. The owners corporation must establish an administrative fund and a sinking fund and can, and in some circumstances must, impose a levy so that it can meet particular maintenance and 19 The Owners — Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 512 [142]. 20 The Owners — Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 498 [74]–[76] per Basten JA. 21 Strata Management Act, s 62(1). 22 Strata Management Act, s 62(2). 23 Strata Management Act, s 62(3)(a). 24 Strata Management Act, s 62(3)(b). 25 Owners Corporation Strata Plan 61288 v Brookfield Multiplex NSWSC 1219 at [64]. repair obligations26. Insurance payments, damages awards and negotiated settlements with persons said to be liable for damages for defects in the common property comprise other obvious sources of funding. The connection between the Corporation and Chelsea, created by the Strata Management Act and Strata Freehold Act, was said in argument to be relevant to the question whether the Corporation was "vulnerable" with respect to economic loss arising from latent defects in the common property caused by Brookfield's alleged lack of care. As appears from these reasons, the Corporation's statutory relationship to Chelsea and subsequent purchasers of the lots is a circumstance which, taken with the contractual arrangements described below, militates against a finding of vulnerability supportive of the existence of a duty of care. The Deed of Master Agreement The working of the statutory relationship between the Corporation on the one hand and Chelsea and the purchasers of the apartments on the other was affected by the provisions of a Deed of Master Agreement made between Chelsea and Stockland. Under the Master Agreement, the apartments were to be leased to Park Hotel and operated collectively as a serviced apartment hotel under the "Holiday Inn" brand27. Under the leases, Park Hotel was to acquire Chelsea's rights, in effect, to direct the operation of the Corporation. Individual purchasers of the apartments were to acquire their interests subject to the leases to the operator28. The leases required that the owners yield their voting rights in the Corporation to the operator by appointing it as their proxy29. In the Master Agreement, Chelsea provided detailed warranties to Stockland in relation to the quality of the building work30. 26 Strata Management Act, ss 66–71, 75–76 and 78. 27 Master Agreement, cll 9.1, 10 and 25.4(a). 28 Standard form contract, cl 53.2. The leases were each for a term of 10 years commencing 10 November 1999, with options to renew for two further successive terms of five years each. 29 Lease agreement, cl 19; see also Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 1219 at [36]–[37]. Stockland's interest in Park Hotel was subsequently sold to the Mantra Group and the apartments became known as the "Mantra Chatswood". Nothing turns on that for the purposes of this appeal. 30 Master Agreement, cll 5.2, 6.1 and 9.9. The design and construct contract The design and construct contract between Brookfield and Chelsea was made on 5 November 1997. The contract sum was $57,539,000. The contract contained detailed provisions relating to the quality of the services to be provided by Brookfield31. It imported the Australian Standard General conditions of contract for design and construct AS 4300-1995. It is not in dispute that Brookfield and Chelsea were experienced and sophisticated entities negotiating on an equal footing and at arms length. The contract contemplated the sale of the apartments to individual investors and annexed a standard form contract of sale to such investors. Brookfield was required to register the strata plan by 31 March There was provision in the contract for a Defects Liability Period of 52 weeks, which commenced upon practical completion32. A Final Certificate would stand as evidence that the Works had been completed in accordance with the contract33. An exception was made in cl 42.6(b) for: "any defect (including omission) in the Works or any part thereof which was not apparent at the end of the Defects Liability Period, or which would not have been disclosed upon reasonable inspection at the time of the issue of the Final Certificate". The contract also contained an express provision requiring Brookfield to maintain professional indemnity insurance with a run-off period of four years after issue of the Final Certificate34. The standard form contract of sale The standard form contract of sale to purchasers of the apartments, annexed to the design and construct contract, required Chelsea to cause the property and "the Common Property" to be finished in accordance with the schedule of finishes and "in a proper and workmanlike manner" before completion35. Chelsea was obliged to repair defects or faults in the common property due to faulty materials or workmanship of which written notice was 31 Design and construct contract, cll 4.1 and 30.1. 32 Design and construct contract, cl 37 read with Annexure Pt A, item 44. 33 Design and construct contract, cl 42.6. 34 Design and construct contract, cl 21 read with Annexure Pt A, item 32. 35 Standard form contract, cl 32.1. served on it by the Corporation within seven months after the date of registration of the strata plan36. Notice of Special Faults, which were structural or required urgent attention or might cause danger to persons in the property or made the property uninhabitable, could be served by a purchaser37. Basten JA said in his judgment in the Court of Appeal that there were no specific provisions in any of the contractual arrangements between Brookfield and Chelsea, and Chelsea and the purchasers of the lots, dealing with latent defects or limiting liability with respect to such defects38. There was, however, the qualification in cl 42.6(b) of the design and construct contract on the effect of the Final Certificate with respect to defects not apparent at the end of the Defects Liability Period. The nature of the defects It was conceded before the primary judge that it was reasonably foreseeable, at the time of construction, that if there were defects in the building, some of them might be latent at the time of registration of the strata plan39. His Honour observed that if the defects alleged by the Corporation existed, then many of them would properly be characterised as latent defects not readily detectable by any reasonable process of inspection40. So much can be assumed for present purposes. The question whether the defects existed and were latent and/or structural and/or dangerous would be a matter to be determined at trial if the appeal were to be dismissed. 36 Standard form contract, cl 32.7. 37 Standard form contract, cll 23.1, 32.5 and 32.6. 38 The Owners — Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 496 [68]. 39 Owners Corporation Strata Plan 61288 v Brookfield Multiplex NSWSC 1219 at [67]. 40 Owners Corporation Strata Plan 61288 v Brookfield Multiplex NSWSC 1219 at [71]. The defects alleged related, inter alia, to the failure to hot- dip galvanised steel lintels, the failure to properly fabricate and coat sheet metal cowlings above certain windows to the exterior of the building and the defective installation of picture windows and a spa. The duty of care The existence of a relevant duty of care is a necessary condition of liability in negligence. As this Court said in Sullivan v Moody41: "A defendant will only be liable, in negligence, for failure to take reasonable care to prevent a certain kind of foreseeable harm to a plaintiff, in circumstances where the law imposes a duty to take such care." Historically, duties of care were attached to particular categories of relationships. The search for "some larger proposition" covering differing sets of circumstances was foreshadowed by Brett MR in Heaven v Pender42. Later, as Lord Esher MR, in Le Lievre v Gould43, he introduced what Lord Atkin characterised in Donoghue v Stevenson as a "notion of proximity" underpinning the existence of a duty of care. That "doctrine" was said by Lord Atkin to be reflected in his famous description of the "neighbour" in law to whom a duty of care is owed44. His generalisation, as refined in later decisions bearing with them the metaphor of "proximity", was restated in Wyong Shire Council v Shirt45: "prima facie a duty of care arises on the part of a defendant to a plaintiff when there exists between them a sufficient relationship of proximity, such that a reasonable man in the defendant's position would foresee that carelessness on his part may be likely to cause damage to the plaintiff". An extended concept of proximity was adopted in this Court as a criterion of the existence of a duty of care in the 1980s and until the beginning of this century46. It was used to identify categories of cases in which a duty of care 41 (2001) 207 CLR 562 at 576 [42]; [2001] HCA 59. 42 (1883) 11 QBD 503 at 509. 43 [1893] 1 QB 491 at 497. 44 [1932] AC 562 at 580–581. 45 (1980) 146 CLR 40 at 44 per Mason J, Stephen J agreeing at 44, Aickin J agreeing at 50; [1980] HCA 12. 46 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 44 per Mason J, Stephen J agreeing at 44, Aickin J agreeing at 50; San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340 at 355 per Gibbs CJ, Mason, Wilson and Dawson JJ; [1986] HCA 68; Cook v Cook (1986) 162 CLR 376 at 381–382 per Mason, Wilson, Deane and Dawson JJ; [1986] HCA 73; Gala v Preston (1991) 172 CLR 243 at 252–253 per Mason CJ, Deane, Gaudron and McHugh JJ; [1991] HCA 18; Burnie Port (Footnote continues on next page) arose under the common law of negligence, rather than as a test for determining whether the circumstances of a particular case brought it within such a category47. It was invoked in 1995 in Bryan v Maloney48, in which the Court held that the builder of a dwelling house owed a duty of care to a subsequent purchaser of the house, a breach of which, by careless construction giving rise to latent defects, would support an action in negligence for economic loss. Thereafter it became a metaphor under threat. McHugh J in Perre v Apand Pty Ltd49 regarded it as already despatched50. In Sullivan v Moody, it was put to rest by the whole Court, which observed that despite its centrality for more than a century51: "it gives little practical guidance in determining whether a duty of care exists in cases that are not analogous to cases in which a duty has been established". That was not to say, and the Court did not say, that its application in previous cases such as Bryan v Maloney, which was of a classificatory and conclusionary character, falsified the underlying judgments that the circumstances said to be indicative of "proximity" gave rise to a duty of care. As Basten JA observed in the Court of Appeal, "the factors which were apt to be included" in "the concept of 'proximity' as a touchstone of the existence of a duty of care ... remain relevant"52. Abstracting the reference to proximity in Bryan v Maloney, the decision adverted to factors adverse to the recognition of a duty of care for pure economic Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 542–543 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ; [1994] HCA 13. 47 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 543 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ. 48 (1995) 182 CLR 609; [1995] HCA 17. 49 (1999) 198 CLR 180; [1999] HCA 36. 50 (1999) 198 CLR 180 at 209–210 [74] referring to Hill v Van Erp (1997) 188 CLR 159 at 176–177 per Dawson J, 210 per McHugh J, 237–239 per Gummow J; [1997] HCA 9 and Pyrenees Shire Council v Day (1998) 192 CLR 330 at 414 per Kirby J; [1998] HCA 3. 51 (2001) 207 CLR 562 at 578 [48]. 52 The Owners — Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 486 [24]. loss other than in special cases. The special cases would commonly, but not necessarily, involve an identified element of known reliance or dependence on the part of the plaintiff, or the assumption of responsibility by the defendant, or a combination of the two53. The contract between the prior owner and the builder in that case was "non-detailed and contained no exclusion or limitation of liability"54. The subsequent owner would ordinarily be unskilled in building matters and inexperienced in the niceties of real property investment. Any builder should be aware that such a subsequent owner would be likely to assume that the building had been competently built and that the footings were adequate55. Those considerations may be seen as elements of the notion of "vulnerability", which has become an important consideration in determining the existence of a duty of care for pure economic loss. In this context, it refers to the plaintiff's incapacity or limited capacity to take steps to protect itself from economic loss arising out of the defendant's conduct56. It is in relation to vulnerability that there is a sharp distinction between Bryan v Maloney and the present case. That distinction is analogous to that made in the subsequent decision of this Court in Woolcock Street Investments Pty Ltd v CDG Pty Ltd57, which is discussed below. Before turning to Woolcock, the point should be made that there are special features of the present case, generated by the contractual and statutory matrix in which the duty of care is asserted, that give it an element of novelty not overcome by a straightforward application of precedent. This Court in Sullivan v Moody eschewed any attempt at formulating a general test for determining the existence or non-existence of a duty of care for the purposes of the law of negligence. As the Court said, different classes of case raise different problems, requiring "a judicial evaluation of the factors which tend for or against a conclusion, to be arrived at as a matter of principle"58. The 53 (1995) 182 CLR 609 at 619 per Mason CJ, Deane and Gaudron JJ. 54 (1995) 182 CLR 609 at 622 per Mason CJ, Deane and Gaudron JJ. 55 (1995) 182 CLR 609 at 627 per Mason CJ, Deane and Gaudron JJ. 56 Perre v Apand Pty Ltd (1999) 198 CLR 180 at 225 [118] per McHugh J; see also Stapleton, "Comparative Economic Loss: Lessons from Case-Law-Focused 'Middle Theory'", (2002) 50 UCLA Law Review 531 at 554–561. 57 (2004) 216 CLR 515; [2004] HCA 16. 58 (2001) 207 CLR 562 at 579–580 [50]. development of the law of negligence had revealed "the difficulty of identifying unifying principles that would allow ready solution of novel problems"59. Much legal reasoning in relation to novel cases can proceed by way of analogy, as McHugh J pointed out in Crimmins v Stevedoring Industry Finance Committee60. The advantage of the analogical approach appears from an observation by Professor Cass Sunstein quoted by McHugh J61: "[A]nalogical reasoning reduces the need for theory-building, and for generating law from the ground up, by creating a shared and relatively fixed background from which diverse judges can work. Thus judges who disagree on a great deal can work together far more easily if they think analogically and by reference to agreed-upon fixed points." Reasoning by analogy should be conducive to coherence in the development of the law. Concerns about coherence may also inform the determination of the existence or non-existence of a duty of care in particular classes of case. As the Court said in Sullivan v Moody, the problems in determining the duty of care62: "may [sometimes] concern the need to preserve the coherence of other legal principles, or of a statutory scheme which governs certain conduct or relationships". The reference to analogical reasoning directs attention to the decision in Woolcock. This Court held that an engineering company, which had designed inadequate foundations for a warehouse and office complex resulting in subsequent structural damage, did not owe a duty of care in respect of economic loss suffered by a subsequent purchaser of the complex. The case came to the Court on appeal from a decision of the Court of Appeal of the Supreme Court of Queensland, which had decided the matter on a case stated to that Court from a single judge63. It was decided on a restricted set of agreed and pleaded facts. 59 (2001) 207 CLR 562 at 580 [53]. 60 (1999) 200 CLR 1 at 32 [73]; [1999] HCA 59. 61 (1999) 200 CLR 1 at 33 [74] citing Sunstein, One Case at a Time: Judicial Minimalism on the Supreme Court, (1999) at 42–43. 62 (2001) 207 CLR 562 at 579–580 [50]. 63 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2002) Aust Torts Reports Bryan v Maloney was held not to support the plaintiff's claim. On the agreed and pleaded facts in Woolcock, the prior owner had exercised control over geotechnical investigations carried out by the engineering company64. There was no allegation of any assumption of responsibility by the engineering company or of known reliance by the prior owner65. There was no duty of care owed to the In Bryan v Maloney, the existence of an anterior duty of care to the prior owner was supportive of a duty of care to the subsequent purchaser. Its existence overcame a "policy" concern that liability to the subsequent purchaser would be inconsistent with the defendant's legitimate pursuit of its freedom to protect its own financial interests by limiting its liability to the prior owner67. The building contract had left the way open for concurrent tortious liability to the prior owner. There was no disconformity, therefore, between the duty owed by the builder to the first owner and the duty asserted by the subsequent purchaser 68. This Court in Woolcock did not decide whether such a disconformity would always deny the existence of a duty of care to a subsequent purchaser69. There is no reason to regard the existence, or non-existence, of an anterior duty of care to a prior owner as more than an important factor relevant to the existence of a duty of care in respect of pure economic loss to a subsequent purchaser. The question whether the plaintiff in Woolcock was vulnerable, so as to attract a duty of care, could not be answered definitively in that case. The agreed and pleaded facts were insufficient to demonstrate vulnerability. Specifically70: It was not shown that the plaintiff could not have protected itself against the economic loss which it suffered. No warranty of freedom from defect was included in the contract entered into by the plaintiff in purchasing the complex. 64 (2004) 216 CLR 515 at 531–532 [25] per Gleeson CJ, Gummow, Hayne and 65 (2004) 216 CLR 515 at 532 [26] per Gleeson CJ, Gummow, Hayne and Heydon JJ. 66 (2004) 216 CLR 515 at 532 [27] per Gleeson CJ, Gummow, Hayne and Heydon JJ. 67 (1995) 182 CLR 609 at 623–624 per Mason CJ, Deane and Gaudron JJ. 68 (1995) 182 CLR 609 at 665 per Toohey J. 69 (2004) 216 CLR 515 at 533 [30] per Gleeson CJ, Gummow, Hayne and Heydon JJ. 70 (2004) 216 CLR 515 at 533 [31] per Gleeson CJ, Gummow, Hayne and Heydon JJ. There was no assignment to the plaintiff by the prior owner of the prior owner's rights in respect of any claim for defects. There was nothing to demonstrate what could have been done to cast on to the engineering company the burden of the economic consequences of any negligence by it. There was nothing about whether the plaintiff could have obtained the benefit of terms of that kind in the contract. In the end, Woolcock was not a "special" case in the sense in which that term was used in Bryan v Maloney. The present appeal falls for decision against a background of prior decisions about classes of case in which a person performing a contract may have a concurrent duty of care to another contracting party, classes of case in which a party to a contract may owe a duty of care to a person who is not a party to the contract, classes of case involving pure economic loss, and classes of case in which the careless performance of a building contract has left latent defects in the building and thereby caused economic loss to a subsequent purchaser. Those decisions interact with each other but none is precisely applicable in this case. Consistently with the approach taken in Woolcock and, before that, in Bryan v Maloney, the determination of this appeal requires consideration of the salient features of the relationship between the Corporation and Brookfield, including whether Brookfield owed Chelsea a relevant duty of care and whether the Corporation was vulnerable in the sense discussed above. Whether Brookfield owed a duty of care to the Corporation When Brookfield entered into the design and construct contract with Chelsea, Chelsea was the owner of the parcel of land upon which the apartment block was to be constructed. It remained the registered proprietor of that parcel until it was subdivided into lots and common property when the strata plan was registered by Brookfield in November 1999. Upon that registration, the Corporation came into existence and became the legal owner of the common property. It had no contractual relationship with Brookfield or with Chelsea. Nevertheless, it held the common property as agent for Chelsea within the meaning of the Strata Freehold Act. It was effectively subject to Chelsea's control, albeit Chelsea's controlling rights and those of its successors in title to the strata lots were ceded to Park Hotel under the prior leasing arrangements. The Corporation had a function under the standard form contract of sale whereby it could, within seven months of registration of the strata plan, serve written notice of defects or faults in the common property on Chelsea which would enliven Chelsea's contractual obligation to the lot owners to repair such defects and faults. No doubt control of the Corporation, which was effectively conferred on Park Hotel by the leases from the lot owners, enabled Park Hotel to require the Corporation to issue such notices. Chelsea, as initial owner of all of the lots, was at the outset the directing mind of the Corporation, albeit it had delegated its powers of direction to Park Hotel. The Corporation was controlled by Chelsea and Park Hotel, who were party to and therefore can be taken to have been fully apprised of the contractual arrangements and in particular the extent and limits of Brookfield's obligations and liabilities in relation to defects in the common property. The responsibility assumed by Brookfield with respect to Chelsea, as initial owner of the lots, was defined in detail by the design and construct contract. Chelsea cannot be taken to have relied upon any responsibility on the part of Brookfield, and Brookfield assumed none, in relation to pure economic loss flowing from latent defects extending beyond the limits of the responsibility imposed on it by the contract. The statutory relationship between the Corporation and Chelsea as first owner meant that there was no duty of care owed to the Corporation as a proxy for Chelsea. The question that follows is whether there was a duty of care owed to the Corporation by virtue of its relationship to subsequent purchasers from Chelsea. The purchasers of lots from Chelsea were effectively investors in a hotel venture under standard form contracts which were an integral part of the overall contractual arrangements. The standard form contract contained specific provisions relating to the construction of the building and Chelsea's obligations to undertake repairs. Those provisions have already been mentioned. This is not a case in which, for the purposes of the subsistence of a duty of care, the subsequent owners could be regarded as vulnerable. Nor, therefore, could the Corporation as their statutory "agent". The position of the subsequent owners and the interaction of the contractual and statutory frameworks are antithetical to the proposition that Brookfield owed the Corporation the duty of care found to exist by the Court of Appeal. Against that background, the relationship between Brookfield and the Corporation is not analogous to the relationship in Bryan v Maloney between the builder of a dwelling house and the downstream, arms-length purchaser of the house, who suffered economic loss by reason of latent defects in the construction. It is analogous, although not identical, to the position of the purchaser of the complex in Woolcock. There was no duty of care in respect of pure economic loss flowing from latent defects owed by Brookfield to Chelsea. Nor was there a duty of care owed by Brookfield to the subsequent owners. There was therefore no duty of care owed to the Corporation. That conclusion means that the appeal must be allowed. It is fatal to the notice of contention and to the proposed cross-appeal. In so holding, I would also wish to associate myself with the observation by Hayne and Kiefel JJ that that conclusion does not depend upon any a priori assumption about the proper provinces of contract and tort. Conclusion The following orders should be made: Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of New South Wales made on 25 September 2013 and, in its place, order that the appeal to that Court be dismissed with costs. Special leave to cross-appeal granted. Cross-appeal treated as instituted and heard instanter and dismissed with costs. First respondent to pay the appellant's costs of the appeal. The issue The first respondent ("the Owners Corporation") claimed damages from the appellant ("the builder"). The Owners Corporation alleged that the builder owed it a duty of care in carrying out certain building works on land at Chatswood, New South Wales. The Owners Corporation alleged that, because the builder had breached that duty of care, the building had various latent defects in common property vested in the Owners Corporation and that, as a result, the Owners Corporation had suffered loss and damage. The Owners Corporation particularised that loss and damage as the cost of rectifying the defects and "the diminished value to the Building and the loss of rents and income during the period of and due to the rectifying of the defects". Did the builder owe the Owners Corporation the alleged duty of care? The decisions below and the appeal to this Court In the Supreme Court of New South Wales, McDougall J held71 that the builder did not owe the alleged duty and entered judgment for the builder. On appeal, the Court of Appeal of the Supreme Court of New South Wales held72 that the builder owed the Owners Corporation "a duty to exercise reasonable care in the construction of the building to avoid causing [the Owners Corporation] to suffer loss resulting from latent defects in the common property vested in [the Owners Corporation], which defects (a) were structural, or (b) constituted a danger to persons or property in, or in the vicinity of, the serviced apartments, or (c) made those apartments uninhabitable". By special leave the builder appeals to this Court. The Owners Corporation applies for special leave to cross-appeal seeking orders providing for a larger duty of care than that found by the Court of Appeal. The builder's appeal should be allowed with costs. The orders of the Court of Appeal should be set aside and the appeal to that Court dismissed with costs. The Owners Corporation should have special leave to cross-appeal but the cross-appeal should be dismissed with costs. 71 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 72 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 510 [132]. The essential facts The building works were to construct "a mixed use retail, restaurant, residential and serviced apartments building" on the land. The builder undertook these works under a "design and construct" contract it made with a developer: Chelsea Apartments Pty Ltd ("the developer"). The contract obliged the builder to construct the building in general accordance with detailed plans and specifications for a contract price of more than $57 million. The contract incorporated detailed provisions regulating the performance and superintendence of the work. The contract provided for certain warranties by the builder about the work and for the builder to remedy defects or omissions in the work. It provided that the issue of a "final certificate" under the contract was evidence, subject to specified exceptions, that the works had been completed in accordance with the contract. Before a final occupation certificate was granted by the relevant municipal council, a strata plan was registered in relation to that part of the building which was to be used for serviced apartments. Initially, the developer owned the lots in the strata scheme. The lots were later sold by the developer to different proprietors under standard sale contracts, the form of which was fixed by agreement between the developer and the builder. Those contracts obliged the developer, as vendor, to "cause the Building to be constructed in a proper and workmanlike manner" and made detailed provision about the repair of defects or faults (including defects or faults in the common property). Upon registration of the strata plan, the Owners Corporation was created by operation of law73. The owners of the lots from time to time in the strata scheme constitute74 a body corporate under the name of the Owners Corporation. The estate or interest of that body corporate in the common property is held75 by the Owners Corporation as agent for the owner or owners of the lots the subject of the strata scheme. Initially, the Owners Corporation held the common property as agent for the developer as the owner of all of the lots. Now that the lots are owned by different proprietors, the Owners Corporation holds the common property as agent for those proprietors as tenants in common in shares proportional to their unit entitlements76. The Owners Corporation is bound77 to 73 Strata Schemes Management Act 1996 (NSW), s 8(1). 74 Strata Schemes Management Act 1996 (NSW), s 11(1). 75 Strata Schemes (Freehold Development) Act 1973 (NSW), s 20. 76 Strata Schemes (Freehold Development) Act 1973 (NSW), s 20(b). 77 Strata Schemes Management Act 1996 (NSW), s 62. properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the Owners Corporation and to renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the Owners Corporation. The damage There may be a real and lively debate about whether the Owners Corporation itself suffered any loss as a result of defects in the common property. The better view may be that any loss constituted or occasioned by defects in the common property was suffered by the owners of the lots for whom the Owners Corporation held the common property as "agent"78. It is not necessary, however, to pursue that question. Nor is it necessary to explore what follows from observing that, at the time the builder is alleged not to have taken reasonable care in the execution of the building works, the Owners Corporation did not exist. It is convenient to assume, without deciding, that nothing turns on this observation. It is sufficient to instead focus on whether the builder owed a duty of care to a subsequent owner of part of the building. The nature of the damage suffered is important to resolving the issue about duty of care. The defects which the Owners Corporation identifies in the common property are not alleged to have caused any damage to person or property. Steps can be taken, therefore, to prevent damage to person or property. If the Owners Corporation has suffered damage, that damage is pure economic loss. Duty of care to avoid pure economic loss? Determination of whether, under the common law of Australia, the builder owed a duty of care to a subsequent owner of part of the building (in this case, the Owners Corporation) depends on applying the principles which have been established by the decisions of this Court. Immediately, it requires close attention to what this Court decided in Woolcock Street Investments Pty Ltd v CDG Pty Ltd79. No doubt Woolcock Street must be read and understood in the 78 cf Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 at 50 per Dixon J; [1931] HCA 53, observing the difficulties created by the many senses in which the word "agent" is employed. 79 (2004) 216 CLR 515; [2004] HCA 16. light of the Court's earlier decisions including, in particular, Bryan v Maloney80. No party suggested, however, that Woolcock Street should be reopened. Hence, that decision must be the starting point for considering the issue in this appeal. Woolcock Street Investments Pty Ltd v CDG Pty Ltd In Woolcock Street, six members of the Court held81 that an engineering company which designed the foundations of a warehouse and office complex did not owe a subsequent purchaser of the building a common law duty of care to avoid economic loss. That decision was reached recognising 82 that similar questions had been considered by the courts of other jurisdictions and resolved by applying principles about recovery for negligently inflicted pure economic loss which differ from those which this Court has held are to be applied in Australia. Four members of the Court observed83 that the decision in Bryan v Maloney had depended upon an anterior demonstration that the builder owed a duty to take reasonable care to avoid economic loss to the original owner of the kind suffered by the subsequent purchaser. And the plurality further observed84 that in Woolcock Street there had been neither reliance by the original owner on, nor an assumption of responsibility by, the engineering company. Hence, the plurality held85 that the reasoning in Bryan v Maloney by which an original duty owed by the builder to the owner was extended to a subsequent purchaser did not apply. The plurality founded86 their conclusion that the engineering company did not owe the subsequent purchaser a duty of care on the proposition that the subsequent purchaser was not vulnerable to the economic consequences of the 80 (1995) 182 CLR 609; [1995] HCA 17. 81 (2004) 216 CLR 515 at 534 [35] per Gleeson CJ, Gummow, Hayne and Heydon JJ, 559-560 [114]-[116] per McHugh J, 586-587 [208]-[210] per Callinan J. 82 (2004) 216 CLR 515 at 534 [34] per Gleeson CJ, Gummow, Hayne and Heydon JJ, 538-541 [49]-[55] per McHugh J, 593 [232] per Callinan J. 83 (2004) 216 CLR 515 at 531 [25] per Gleeson CJ, Gummow, Hayne and Heydon JJ. 84 (2004) 216 CLR 515 at 532 [26]. 85 (2004) 216 CLR 515 at 532 [27]. 86 (2004) 216 CLR 515 at 533 [31]. engineering company's negligence in designing the foundations. In the context, vulnerability was said to refer87 to a plaintiff's inability to protect itself from the defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant. It is the question of vulnerability which, consistent with the decision in Woolcock Street, must determine the outcome of this appeal. Matters that need not be considered Before dealing with the issue of vulnerability, two other aspects of the matter, mentioned in argument, should be noted but then put aside from consideration. First, it is not useful to examine particular decisions made in other jurisdictions about the tortious liability of a builder for economic loss occasioned by the negligent construction of a building without recognising that those decisions necessarily reflect the particular ways in which those jurisdictions have developed and applied principles about recovery for negligently caused pure economic loss. It was not submitted that this Court should revisit those principles as they have been developed by this Court. Second, some argument was directed in this Court to the proper construction of the contract pursuant to which the builder built the building. In particular, there was debate about three aspects of that contract: the provisions which stated the builder's obligations; the provisions for superintendence of the work by a superintendent appointed by the developer; and the provisions about the defects liability period and the issuance of the final certificate. In addition, argument was directed to the proper construction of the standard form agreements for purchase of lots in the relevant strata scheme. It will not be necessary to pursue the arguments about the proper construction of these provisions to their conclusion. It is enough to notice that the relevant parties made contracts for the construction of the building and for the subsequent sale of parts of the building which were contracts that could (and did) make provisions regulating the quality of what was to be received in return for payment of the price. The making of those contracts denies vulnerability. It is necessary to explain that conclusion. Vulnerability? It may be assumed, without deciding, that the developer and the purchaser of a lot from the developer relied on the builder to do its work properly. The 87 (2004) 216 CLR 515 at 530 [23] per Gleeson CJ, Gummow, Hayne and Heydon JJ. purchaser of a lot could not check the quality of the builder's work as it was being done. Perhaps the developer was in no different position. (That would turn on what meaning is given to the superintendence provisions of the developer's contract with the builder.) The Owners Corporation was in no better position to check the quality of the builder's work as it was being done than the original purchaser of a lot. Because these parties could not check the quality of what the builder was doing, it can easily be said that each relied on the builder to do its work properly. Reliance, in the sense just described, may be a necessary element in demonstrating vulnerability, but it is not a sufficient element. As noted earlier, vulnerability is concerned with a plaintiff's inability to protect itself from the defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant. It is neither necessary nor profitable to attempt to define what would or would not constitute vulnerability. It is enough to observe that both the developer and the original purchasers made contracts, including the standard contracts, which gave rights to have remedied defects in the common property vested in the Owners Corporation. The making of contracts which expressly provided for what quality of work was promised demonstrates the ability of the parties to protect against, and denies their vulnerability to, any lack of care by the builder in performance of its contractual obligations. It was not suggested that the parties could not protect their own interests88. The builder did not owe the Owners Corporation a duty of care. Contract and tort The conclusion just expressed denies the existence of a duty of care. The conclusion does not depend, however, upon making any a priori assumption about the proper provinces of the law of contract and the law of tort. As McHugh J pointed out89 in Woolcock Street, "[t]he decisions in Hedley Byrne [& Co Ltd v Heller & Partners Ltd90], Donoghue [v Stevenson91], White [v Jones92] 88 cf Smith v Eric S Bush [1990] 1 AC 831; Stapleton, "Comparative Economic Loss: Lessons from Case-Law-Focused 'Middle Theory'", (2002) 50 UCLA Law Review 89 (2004) 216 CLR 515 at 552 [92]. and Hill [v Van Erp93] ... make it difficult to argue that claims in negligence for pure economic loss should be excluded merely because such claims may outflank or undermine fundamental doctrines of the law of contract". And as McHugh J also observed94, this Court rejected in Bryan v Maloney "the notion that in Australia contract and tort were so neatly compartmentalised that it would be an error to give a remedy in tort for economic loss". That rejection manifests the necessary premise for earlier decisions of this Court about liability for pure economic loss, such as Mutual Life & Citizens' Assurance Co Ltd v Evatt95, as well as later decisions like Perre v Apand Pty Ltd96. Nor does the conclusion about absence of vulnerability depend upon detailed analysis of the particular content of the contracts the parties made. As in Woolcock Street97, it is not necessary to decide in this case whether disconformity98 between the obligations owed to the original owner under the contract and the duty of care allegedly owed to the subsequent owner would necessarily deny the existence of that duty. It may again be observed, as it was in Woolcock Street99, that in Bryan v Maloney there was the absence of disconformity of that kind. The absence of disconformity was an essential step in the reasoning in Bryan v Maloney. That step is not available in this case. Conclusion The appeal to this Court should be allowed. The first respondent should pay the appellant's costs. The orders of the Court of Appeal of the Supreme Court of New South Wales should be set aside and, in their place, there should be orders that the appeal to that Court is dismissed with costs. The Owners Corporation should have special leave to cross-appeal; the cross-appeal should be treated as instituted and heard instanter and dismissed with costs. 93 (1997) 188 CLR 159; [1997] HCA 9. 94 (2004) 216 CLR 515 at 552 [92]. 95 (1968) 122 CLR 556; [1968] HCA 74. See, on appeal, Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628; [1971] AC 793. 96 (1999) 198 CLR 180; [1999] HCA 36. 97 (2004) 216 CLR 515 at 532 [28]. 98 cf Voli v Inglewood Shire Council (1963) 110 CLR 74 at 85 per Windeyer J; [1963] HCA 15. 99 (2004) 216 CLR 515 at 532 [29]. Crennan Bell The first respondent, which is CRENNAN, BELL AND KEANE JJ. conveniently referred to as "the respondent"100, is the owners corporation in respect of the common property in a strata-titled serviced apartment complex in Chatswood, New South Wales. The appellant built the complex pursuant to a contract with a developer, who owned the land on which it was built. The respondent brought proceedings against the appellant in the Supreme Court of New South Wales to recover damages for the cost of repairing what were said to be latent defects in the common property of the serviced apartment complex. The respondent contended that the appellant was liable in negligence for breach of a duty "to take reasonable care to avoid a reasonably foreseeable economic loss to the [respondent] in having to make good the consequences of latent defects caused by the building's defective design and/or construction."101 The respondent's contention was rejected102 at first instance, but was upheld103 (albeit subject to limitations presently contested by the respondent) by the Court of Appeal of New South Wales. The Court of Appeal proceeded to its conclusion on the basis that the duty of care propounded by the respondent matched an equivalent tortious duty of care owed by the appellant to the developer of the serviced apartment complex. The appellant contended that the Court of Appeal had erred in supplementing the appellant's obligations to the developer by adding a tortious duty equivalent to that propounded by the respondent: the appellant's obligations to the developer as to the quality of the work were comprehensively stated in the contract pursuant to which the complex was built. The respondent disputed the contention that it was not permissible to supplement the appellant's contractual obligations to the developer in this way, and argued that, in any event, imposing an equivalent tortious duty in favour of the developer was not an essential step on the path to holding the appellant liable in negligence to the respondent. 100 The second respondent played no part in the appeal beyond filing a submitting appearance. 101 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 102 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 103 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479. Crennan Bell To the latter contention the appellant replied that dispensing with the need for an equivalent liability on its part to the developer, for whom it built the complex, would reduce the law to incoherence, in that, in relation to defects in the quality of construction, a builder of a building may find itself potentially liable in tort to every subsequent owner of the building and yet not be liable to the party for whom the building was originally constructed. The appellant also contended that the contracts pursuant to which the owners of apartments acquired their rights in the common property afforded those owners, and the respondent as their agent, such protection against the risk of economic loss attributable to defects in construction that the owners and the respondent were not relevantly vulnerable to the appellant, for the purposes of the law of negligence, in respect of the risk of economic loss by reason of such defects. The appellant's contentions should be accepted. It is of critical importance in this regard that, as was common ground between the parties, the loss for which the respondent claimed damages is truly characterised as economic loss. The respondent's claim is based on the failure of the purchasers of the apartments to get value for money from the developer rather than on the appellant's causing damage to the respondent's property. One difficulty with the respondent's claim is that the respondent itself paid nothing for the common property: it suffered no "loss" arising out of the acquisition of the common property. And to say that the common property, for which it paid nothing, is less valuable to it by the amount which it must expend to repair it, is distinctly not to show that any act or omission on the part of the appellant caused the respondent's assets to be diminished104. As Stanley Burnton LJ said in Robinson v P E Jones (Contractors) Ltd105: "the crucial distinction is between a person who supplies something which is defective and a person who supplies something (whether a building, goods or a service) which, because of its defects, causes loss or damage to something else. … I do not think that a client has a cause of action in tort against his negligent accountant or solicitor simply because the accountant's or solicitor's advice is incorrect (and therefore worth less than the fee paid by the client). The client does have a cause of action in tort if the advice is relied upon by the client with the result that his assets are diminished." 104 Murphy v Brentwood District Council [1991] 1 AC 398 at 477, 478, 479, 487-488. 105 [2012] QB 44 at 64-65 [93]-[94]. Crennan Bell If that preliminary difficulty is put to one side on the basis that the respondent acquired the common property as a proxy for the purchasers of apartments who are disappointed with the bargains they made with the developer, a substantial difficulty remains. The circumstance that economic loss of this kind is a foreseeable consequence of a want of reasonable care by the appellant is not of itself sufficient to make the loss compensable in negligence, even where acceptance of the claim will not give rise to indeterminate liability106. The expansive view of the appellant's obligations to the respondent which was upheld by the Court of Appeal in this case is not supported by the decision in Bryan v Maloney107; and it does not accord with the decision of this Court in Woolcock Street Investments Pty Ltd v CDG Pty Ltd108. This Court's decision in Bryan v Maloney does not sustain the proposition that a builder that breaches its contractual obligations to the first owner of a building is to be held responsible for the consequences of what is really a bad bargain made by subsequent purchasers of the building. To impose upon a defendant builder a greater liability to a disappointed purchaser than to the party for whom the building was made and by whom the defendant was paid for its work would reduce the common law to incoherence109. Moreover, to hold that a subsequent purchaser of a building is vulnerable to the builder so far as the risk of making an unfavourable bargain for its acquisition is concerned would involve a departure from what was held by this Court in Woolcock Street Investments110. The commercial background The serviced apartment complex was constructed by the appellant as part of a transaction between Chelsea Apartments Pty Ltd ("the developer") and 106 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628 at 632-636; [1971] AC 793 at 801-804; Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529 at 555, 572-574, 590-592; [1976] HCA 65; Candlewood Navigation Corporation Ltd v Mitsui OSK Lines Ltd [1986] AC 1; Leigh and Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] AC 785. 107 (1995) 182 CLR 609; [1995] HCA 17. 108 (2004) 216 CLR 515; [2004] HCA 16. 109 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 532 [28]. See also Woollahra Municipal Council v Sved (1996) 40 NSWLR 101 at 120. 110 (2004) 216 CLR 515 at 530 [23], 533 [31], 548-553 [80]-[96]. Crennan Bell companies in the Stockland Group ("Stockland"). The development involved the construction of a 22-storey building, with two major components, the serviced apartment complex being floors one to nine, and residential apartments being floors 10 to 22. The respondent is the owners corporation in respect of the serviced apartment lots on floors one to nine. Pursuant to the terms of a Deed of Master Agreement dated 11 August 1997 ("the Master Agreement"), the developer, who was the registered proprietor of the land on which the building was to be constructed, agreed with Stockland to design and construct the building and then to lease apartments on certain floors to a Stockland subsidiary, Park Hotel Management Pty Ltd ("Park"), to be operated by Park as serviced apartments111. The apartments were to be sold to investors, subject to the leases granted to Park; and Park would operate a business of servicing those apartments under the "Holiday Inn" brand112. Under the Master Agreement, the developer warranted the quality of its building work to Stockland113. On 5 November 1997, the developer and the appellant entered into a design and construct subcontract ("the D&C contract") for the construction of the building for the sum of $57,539,000. It was common ground that the D&C contract was negotiated between sophisticated and experienced parties at arms' length and on an equal footing114. 111 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 1219 at [34]; The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 496-497 [69]-[70]. 112 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 113 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 114 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 1219 at [44]; The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 496 [67]. Crennan Bell The D&C contract The D&C contract contained detailed provisions with respect to the quality of the work to be performed by the appellant as "Contractor" for the developer as "Principal". Clause 3.1 of the D&C contract provided that "[t]he Contractor shall execute and complete the work under the Contract in accordance with the requirements of the Contract." Clause 4 of the D&C contract provided relevantly: "4.1 Contractor's Warranties Without limiting the generality of Clause 3.1, the Contractor warrants to the Principal that the Contractor— (a) … shall exercise due skill, care and diligence in the execution and completion of the work under the Contract; shall execute and complete the work under the Contract in accordance with the Design Documents so that the Works, when completed, shall— be fit for their stated purpose; and comply with all the requirements of the Contract and all Legislative Requirements." Clause 30 of the D&C contract provided relevantly: "30.1 Quality of Material and Work The Contractor shall use the materials and standards of workmanship required by the Contract. In the absence of any requirement to the contrary, the Contractor shall use suitable new materials and proper and tradesmanlike workmanship. Crennan Bell 30.3 Defective Material or Work If the Superintendent discovers material or work provided by the Contractor which the Superintendent shall as soon as practicable notify the Contractor. The Superintendent may direct the Contractor— in accordance with the Contract, is not to … reconstruct, replace or correct the material or work; or The Superintendent may direct the times within which the Contractor must commence and complete the … reconstruction, replacement or correction. 30.6 Generally Nothing in Clause 30 shall prejudice any other right which the Principal may have against the Contractor arising out of the failure of the Contractor to provide material or work in accordance with the Contract." Clause 55 of the D&C contract obliged the appellant to: cause the Building to be constructed in general accordance with the Development Consent (including, without limitation, the plans and specifications in the Development Application); cause the Serviced Apartments Parcel to be constructed in general accordance with the Serviced Apartments Floor Plan; cause the Serviced Apartments Parcel to be finished in general accordance with the Serviced Apartments Finishes; and install in each of the Serviced Apartments the FF&E Package (as amended by the Trade Off List) relevant to the particular Serviced Apartments." Crennan Bell The D&C contract provided for a Defects Liability Period. In this regard, cl 37 provided that the appellant would be liable to rectify construction defects for a period of 52 weeks commencing from the date of practical completion115. Clause 31 of the D&C contract made provision for the Superintendent to test any material or work at any time before the expiry of the Defects Liability Period. To this end the Superintendent was authorised by cl 31.2 to direct that any part of the work under the contract shall not be "covered up or made inaccessible without the Superintendent's prior approval." Clause 42.6 provided for the Superintendent, at the expiry of the Defects Liability Period, to issue to the developer a "Final Certificate" of "the amount which, in the Superintendent's opinion, is finally due from the Principal to the Contractor or from the Contractor to the Principal arising out of the Contract or any alleged breach thereof." Clause 42.6 continued: "Unless either party, either before the Final Certificate has been issued or not later than 21 days after the issue thereof, serves a notice of dispute … the Final Certificate shall be evidence that the Works have been completed in accordance with the terms of the Contract … except in the case of— fraud, dishonesty or fraudulent concealment relating to the work under the Contract or any part thereof or to any matter dealt with in the said Certificate; any defect (including omission) in the Works or any part thereof which was not apparent at the end of the Defects Liability Period, or which would not have been disclosed upon reasonable inspection at the time of the issue of the Final Certificate". The effect of cl 42.6(b) was that the developer had contractual protection against the appellant in respect of the expense of repairing latent defects in the building after the Defects Liability Period had expired. The D&C contract also provided for the terms on which the developer would offer individual lots for sale to investors. Annexed to the D&C contract was a form of standard contract for sale, which conferred on each purchaser of a 115 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 494 [58]. Crennan Bell lot specific contractual rights in relation to defects in the property, including the common property116. The contracts for sale By cl 26.1 of the standard form contract for sale the purchaser represented and warranted that it "did not rely on any representations or warranties about the subject matter of this contract … except those representations and warranties set out in this contract", and had "obtained appropriate independent advice on and is satisfied about … the purchaser's obligations and rights under this contract". Clause 32.1 of the standard form contract set out the purchaser's rights in respect of the quality of construction. In particular, the developer was obliged "[b]efore completion … [to] cause the property and the Common Property to be finished as specified in the Schedule of Finishes … in a proper and workmanlike manner." Clause 32.6 obliged the developer to: "repair in a proper and workmanlike manner, at the [developer's] expense, within a reasonable time after the applicable notice has been served by the purchaser, any defects or faults in the property due to faulty materials or workmanship (including Special Faults but excluding minor shrinkage and minor settlement cracks) of which notice is served by the purchaser within 6 months after completion. The purchaser may not serve notice of defects or faults other than Special Faults on more than 3 occasions." Clause 32.7 obliged the developer to: "repair in a proper and workmanlike manner, at the [developer's] expense, within a reasonable time after the applicable written notice has been served on the [developer], any defects or faults in the Common Property due to faulty materials or workmanship … of which written notice is served on the [developer] by the Owners Corporation within 7 months after the date of registration of the Strata Plan." 116 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 1219 at [45]; The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 495-496 [63]. Crennan Bell The strata scheme legislation and the owners corporation After a construction period of approximately two years, the serviced apartments were completed. On 11 November 1999, the appellant registered the strata plan for the serviced apartments. By virtue of that registration, the respondent was brought into existence117 and the common property in the serviced apartment complex was vested in it118. The developer, as the registered proprietor of the serviced apartment lots, sold them to investors subject to the leases which enabled them to be deployed by Park in its "Holiday Inn" business. Section 20 of the Strata Schemes (Freehold Development) Act 1973 (NSW) ("the SSFD Act") provides: "The estate or interest of a body corporate in common property vested in it or acquired by it shall be held by the body corporate as agent: (a) where the same person or persons is or are the proprietor or proprietors of all of the lots the subject of the strata scheme concerned—for that proprietor or those proprietors, or (b) where different persons are proprietors of each of two or more of the lots the subject of the strata scheme concerned—for those proprietors as tenants in common in shares proportional to the unit entitlements of their respective lots." Section 61(1)(a) of the Strata Schemes Management Act 1996 (NSW) ("the SSM Act") provides that "[a]n owners corporation has, for the benefit of the owners … the management and control of the use of the common property of the strata scheme". Section 62(1) of the SSM Act provides that "[a]n owners corporation must properly maintain and keep in a state of good and serviceable repair the common property". 117 Strata Schemes Management Act 1996 (NSW), s 8(1). 118 Strata Schemes (Freehold Development) Act 1973 (NSW), s 18. Crennan Bell The proceedings The respondent commenced an action against the appellant in 2008119 to recover the cost of rectifying defects found in the construction of the common property of the serviced apartment complex. Initially, the respondent also claimed that the appellant was liable for breaching statutory warranties relating to the quality of workmanship under Pt 2C of the Home Building Act 1989 (NSW), but that claim was resolved before trial120. The respondent particularised the defects of which it complained121. The primary judge accepted that "if the defects alleged exist, then many of them are properly to be characterised as latent defects"122. For present purposes, it is necessary to note only that of the five categories of alleged defects, the complaint made by the respondent in relation to two categories, namely, the steel lintels and windows, was that the work does not comply with the specifications under the D&C contract. The complaint in respect of the third category was that "[t]he external render to the façade of the building is defective." The complaint in respect of the fourth category, namely, the sheet metal cowlings to the fire services shutters, is that they "were fabricated and coated with materials which were unsuitable for exterior exposure." The complaint in respect of the fifth category of defects, namely, the water leak from the spa, is that there were "defects to the waste connection and inadequate waterproofing to the enclosure below the spa." Whether such defects as may be proved to exist are structural or likely to render the building dangerous to person or property or uninhabitable is an issue contested by the appellant. It has not yet been decided. 119 The respondent also commenced proceedings against the second respondent. The respondent's pleadings did not disclose a cause of action against the second respondent; and as noted above, the second respondent has no involvement in this appeal. 120 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 121 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 122 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC Crennan Bell The decision of the primary judge The parties asked the primary judge (McDougall J) to determine the question whether the appellant owed the respondent the duty propounded by the respondent separately from the other issues in the proceedings. On 10 October 2012, the primary judge answered the separate question, holding123 that the appellant did not owe the respondent the duty of care propounded by the respondent. In consequence, his Honour gave judgment for the appellant in the action. His Honour held124 that "[w]here the parties have negotiated in full their rights and obligations, there is no reason for the law to intervene by imposing some general law duty of care." His Honour concluded that the duty of care propounded by the respondent was not supported by this Court's decision in Bryan v Maloney125; and, given the difficulties of principle involved in imposing on the appellant what Brennan J in Bryan v Maloney referred to as a transmissible warranty of quality126, any alteration to the position at common law should be undertaken by the legislature127. The decision of the Court of Appeal The respondent appealed to the Court of Appeal of the Supreme Court of The Court of Appeal (Basten JA, Macfarlan and New South Wales. Leeming JJA agreeing) allowed128 the appeal. 123 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 124 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 125 (1995) 182 CLR 609. 126 (1995) 182 CLR 609 at 644. 127 Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 128 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479. Crennan Bell Basten JA proceeded on the basis "that no general law duty of care can arise with respect to successive owners unless there [is] a general law duty owed to the original owner with whom the builder contracted to construct the building."129 His Honour concluded130 that the appellant owed the developer a duty under the law of tort to take reasonable care that it should not suffer economic loss concurrently with the contractual duties which arose under the D&C contract. In this regard, his Honour held131 that the developer was "vulnerable" to the appellant in the sense that it was reliant on the appellant's "expertise, care and honesty ... in performing its obligations under the [D&C] contract." Basten JA rejected the argument that the contractual arrangements between the appellant and the developer dealt comprehensively with their relationship so as to leave no room for the imposition of a duty of care in tort132. His Honour held that the D&C contract: "did not purport expressly, or by necessary implication, to exclude any liability for defects or omissions which might arise otherwise than during [the Defects Liability Period], whether under contract or under the general law."133 129 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 503 [100]. 130 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 509 [127], 510 [129]. 131 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 508 [118]-[120]. 132 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 501-504 [91]-[100]. 133 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 503 [98]. Crennan Bell It may also be noted here that Macfarlan JA, melding a number of lines of argument, including a reference to this Court's decision in Astley v Austrust Ltd134, said135: "The existence of a contract between the developer and a builder for the latter to construct a building does not preclude the existence of a duty of care owed by the builder to the developer as similar contractual and tortious rights may exist concurrently136. Further, it was not suggested in Astley that proof of the existence of a tortious duty of care concurrent with contractual obligations was dependent upon proof by the party to whom it was owed that it could not have negotiated with the party subject to the duty for contractual protection against the loss that came to be suffered. This being the case, it is difficult to see why a successor in title, or a party otherwise related to that to whom the duty of care was owed, should have to show that it could not have negotiated contractual protection in order to establish that a duty of care was owed to it." Basten JA went on to conclude137 that the appellant owed the propounded duty to the respondent, as successor in title to the developer. His Honour reasoned that, as the respondent was at least as vulnerable as the developer to the risk of economic loss from latent defects, so the respondent was owed a duty in tort equivalent to that held to be owed by the appellant to the developer. Basten JA said138: "[the respondent] was vulnerable with respect to latent defects in the same way that the developer was. Indeed, its position was weaker than that of the developer, which may have had some opportunity to carry out inspections during the course of the construction and before the defective materials were no longer examinable." 134 (1999) 197 CLR 1; [1999] HCA 6. 135 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 511 [136]. 136 Astley v Austrust Ltd (1999) 197 CLR 1 at 20-23 [44]-[48]; see also Bryan v Maloney (1995) 182 CLR 609 at 619-620. 137 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 510 [129]. 138 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 508-509 [122]. Crennan Bell Basten JA summarised his conclusions139: "Accepting that the general law does not impose a general duty of care to avoid economic loss, and that the decision in Bryan v Maloney does not in terms dictate the outcome in the present case, there are significant features which militate in favour of the existence of a duty of care covering loss resulting from latent defects which (a) were structural, (b) constituted a danger to persons or property in, or in the vicinity of, the serviced apartments, or (c) made them uninhabitable. The existence of a duty expressed in those terms should be accepted." It is to be noted that Basten JA confined140 the appellant's duty so that the appellant was bound only to avoid causing economic loss in relation to those defects which were "dangerous" in the sense that, if left unrepaired, they could cause personal injury or damage to property or made the premises uninhabitable. The respondent had not argued for a duty of care confined in this way; and consequently, in this Court, the respondent contended that the duty owed to it by the appellant should not be qualified or limited as indicated by Basten JA. Macfarlan and Leeming JJA made some additional observations upon which the respondent was disposed to rely in this Court in support of its argument that it was unnecessary that there be a duty owed by the appellant to the developer equivalent to the duty propounded by the respondent against the appellant. In this regard, Macfarlan JA said141: "[T]he [appellant] argued that the [respondent] did not show that it had been vulnerable, in the sense that it had been unable to protect itself from the consequences of the [appellant's] lack of care142, because it did not show that it could not have bargained with the developer for contractual protection. One answer to this argument is that the [respondent] only came into existence on registration of the strata plan and was not a 139 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 510 [129]. 140 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 509-510 [127]-[128], [132]. 141 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 511 [135]. 142 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at Crennan Bell conventional successor in title which acquired the property in question under a contract with the previous owner (here the developer)." Leeming JA referred to the SSM Act and to s 20 of the SSFD Act, "There is nothing antithetical in those provisions to a duty of care owed by the builder to that special creature of statute which is intended by builder and developer to come into existence following the performance of the builder's obligations. The legislative scheme is such that the owners' corporation is much more vulnerable than, say, a company which owns land on which is to be erected a company title building. To the contrary, what would be strange, to my mind, would be an imputed legislative intention to deny to that corporation the ordinary rights legal persons enjoy at common law." In the upshot, the Court of Appeal set aside the orders made by the primary judge and answered144 the separate question posed by the parties by holding that the appellant owed the respondent a duty: "to exercise reasonable care in the construction of the building to avoid causing the [respondent] to suffer loss resulting from latent defects in the common property vested in the [respondent], which defects (a) were structural, or (b) constituted a danger to persons or property in, or in the vicinity of, the serviced apartments, or (c) made those apartments uninhabitable." The appeal to this Court The appellant appealed to this Court pursuant to special leave granted on 14 March 2014. The respondent filed a notice of contention to the effect that the Court of Appeal had erred in restricting the scope of the appellant's duty of care to latent defects that were "dangerous". The respondent also sought to cross-appeal on the basis that the appellant owed the respondent the duty propounded by it even if the appellant did not owe an equivalent duty to the developer. 143 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 513 [144]. 144 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 510-511 [132]. Crennan Bell The appellant's submissions The appellant's first submission was that the appellant's obligations to the developer were so comprehensively stated in the D&C contract that there was no room for the imposition by the law of tort of a concurrent duty of care to the developer. The appellant's second submission was that, whatever its obligations to the developer, it did not owe the respondent the duty of care propounded by it. The respondent's submissions The respondent submitted that the duty of care propounded by it does not depend on finding an equivalent duty of care owed by the appellant to the developer. The respondent argued that, in determining whether the appellant owed the respondent a duty of care, the correct approach was to focus on the salient features of the relationship between the appellant and the respondent separately from the relationship between the appellant and the developer. The salient features on which the respondent relied were the appellant's power of administration of the D&C contract (which gave the appellant control of the developer's rights and expectations), the expertise of the appellant in business matters, the commercial cost to the developer of monitoring the construction work, and, based on the foregoing, general notions of assumption of responsibility and reliance. The respondent also embraced the point made by Macfarlan and Leeming JJA that, because the respondent did not come into existence until the registration of the strata plan, it was vulnerable to the risk of loss from latent defects because it had no opportunity to take steps to protect itself against the financial consequences of latent defects in the construction of the common property. In this regard, the respondent emphasised that cl 65 of the D&C contract obliged the appellant to register the strata plan which brought the respondent into existence, so that from the moment of its coming into existence it was obliged by s 62(1) of the SSM Act to rectify defects in the common property as they became apparent. Because the respondent had no opportunity to accept or reject the vesting in it of the common property and to protect itself from the expense of having to make good any defects in the construction, it should be held, so it was said, that the respondent was relevantly vulnerable to a risk of loss in respect of which the appellant owed it the propounded duty. This was said to be so irrespective of whether the appellant owed an equivalent duty to the developer. Crennan Bell In the alternative, the respondent submitted that there was an assumption by the appellant of liability to the developer for latent defects, and reliance by the developer on the appellant, which gave rise to a duty in tort equivalent to the duty propounded by the respondent. In addition, and contrary to the conclusion of the Court of Appeal, the respondent contended that, in establishing the nature and scope of the propounded duty, it is the significance of the loss in value of the building or the expenditure necessary to make good the defects that is germane, rather than the characterisation of the defects as "dangerous". Before addressing these submissions directly, it is desirable to make some general observations in relation to the protection afforded to economic interests by the common law. The common law and economic loss Economic interests are protected by the law of contract and by those torts that are usually described as the economic torts, such as deceit, duress, intimidation, conspiracy, and inducing breach of contract145. Generally speaking, the common law protects the interest of a party in having its contractual expectations met by the law of contract146. The law of negligence developed as part of the common law in this context. As Blackmun J said in delivering the opinion of the Supreme Court of the United States in East River Steamship Corp v Transamerica Delaval Inc147, "the failure of the purchaser to receive the benefit of its bargain [is] traditionally the core concern of contract law." The causes of action known as the economic torts were established in the common law before the decision of the House of Lords in Donoghue v Stevenson148. In Allen v Flood149 in 1897, the House of Lords held that a person may deliberately cause economic harm to another without liability in tort 145 See generally, Heydon, Economic Torts, 2nd ed (1978). 146 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 534- 535 [37]. See also East River Steamship Corp v Transamerica Delaval Inc 476 US 147 476 US 858 at 870 (1986). Crennan Bell provided that the defendant was not part of a conspiracy and that the means employed to inflict the harm were not themselves unlawful. Unintentionally inflicted economic loss was held to be compensable by an action for negligence only after the decision in Hedley Byrne & Co Ltd v Heller & Partners Ltd150. Until then, the common law of tort passed the burden of economic loss from plaintiff to defendant only where the defendant intentionally inflicted harm on the plaintiff by conduct which was unlawful for reasons other than that it was likely to, and did, cause economic loss151. And even then, the expanded liability for economic loss established by Hedley Byrne & Co Ltd v Heller & Partners Ltd depended upon proof of the fact of assumption of responsibility by a person giving advice to another, and that other having relied upon the advice. The respondent sought to rely upon the decision of this Court in Voli v Inglewood Shire Council152. That case establishes that the appellant may have been liable in damages for physical injuries to third parties resulting from defective work performed in the course of its contract with the developer. But the respondent's argument fails to observe the crucial distinction between physical injury and economic loss. Under the common law, "[t]he former is protected by the law even when, in similar circumstances, the latter is not."153 A cause of action in negligence does not arise unless and until the plaintiff suffers damage154. Damage is the gist of the cause of action in negligence155. As Brennan J said in John Pfeiffer Pty Ltd v Canny156, a "duty of care is a thing written on the wind unless damage is caused by the breach of that duty." It is of critical importance to appreciate that the loss for which the respondent seeks damages is the expense which it is obliged to incur as a result of the emergence of latent defects after its acquisition of the common property. It was common 151 cf D v East Berkshire Community Health NHS Trust [2005] 2 AC 373 at 404-405 152 (1963) 110 CLR 74; [1963] HCA 15. 153 Fangrove Pty Ltd v Tod Group Holdings Pty Ltd [1999] 2 Qd R 236 at 242 [19]. 154 Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (The Wagon Mound) [1961] AC 388 at 425. 155 Tame v New South Wales (2002) 211 CLR 317 at 388 [208]; [2002] HCA 35. 156 (1981) 148 CLR 218 at 241; [1981] HCA 52. Crennan Bell ground that this expense is properly understood as a species of economic loss as distinct from damage to its property. The gist of the respondent's cause of action is that the interest in the common property it acquired from the developer was not as valuable as it should have been if the purchasers had got value for their money. Quite apart from "the traditional common law approach" reflected in the maxim "caveat emptor"157, the loss incurred by a purchaser of a building who, it turns out, has paid more for the building than it should have, is significantly different from a liability in the owner to third parties who have suffered personal injuries or damage to their property as a result of a defect in the building. An owner who is, or should presumably be, aware of a defect in a building may incur liability to third parties injured by the defect because the owner decided not to incur the expense of repairing the defect in the building. The decision which attracts that liability will usually not be one to which the negligent builder has contributed158. These considerations were reflected in the observations of McPherson JA in Fangrove Pty Ltd v Tod Group Holdings Pty Ltd159 that the common law maintains the distinction between the protection afforded to personal or property interests and economic interests because the common law "values the physical integrity of a person at a level well above the interests of commerce", and because of "the capacity of those who engage in commerce to protect themselves against the kind of loss that the plaintiff sustained here." These observations accord with this Court's decision in Woolcock Street Investments. Woolcock Street Investments In Woolcock Street Investments160, Gleeson CJ, Gummow, Hayne and Heydon JJ accepted that the general rule of the common law is that damages for economic loss which is not consequential upon damage to person or property are not recoverable in negligence even if the loss is foreseeable. Their Honours said: 157 Gatsios Holdings v Kritharas Holdings (In Liq) (2002) ATPR ¶41-864 at 44,800 158 Murphy v Brentwood District Council [1991] 1 AC 398 at 479-480, 488. 159 [1999] 2 Qd R 236 at 242 [19]-[20]. See also Perre v Apand Pty Ltd (1999) 198 CLR 180 at 299 [328]; [1999] HCA 36. 160 (2004) 216 CLR 515 at 530 [22]. Crennan Bell "In Caltex Oil (Australia) Pty Ltd v The Dredge 'Willemstad'161, the Court held that there were circumstances in which damages for economic loss were recoverable. In Caltex Oil, cases for recovery of economic loss were seen as being exceptions to a general rule, said to have been established in Cattle v Stockton Waterworks162, that even if the loss was foreseeable, damages are not recoverable for economic loss which was not consequential upon injury to person or property." In Woolcock Street Investments163, the plurality noted that the exception to the general rule for negligent misstatement recognised in cases such as Mutual Life & Citizens' Assurance Co Ltd v Evatt164 and Shaddock & Associates Pty Ltd v Parramatta City Council [No 1]165 depends on proof of an assumption of responsibility by the defendant and known reliance on the defendant by the plaintiff. In Woolcock Street Investments166, Bryan v Maloney was explained as an example of a decision based on "notions of assumption of responsibility and known reliance." The plurality said167 that Bryan v Maloney: "depended upon considerations of assumption of responsibility, reliance, and proximity. Most importantly, [the principles that were engaged] depended upon equating the responsibilities which the builder owed to the first owner with those owed to a subsequent owner." 161 (1976) 136 CLR 529. 162 (1875) LR 10 QB 453. 163 (2004) 216 CLR 515 at 531 [24]. 164 (1968) 122 CLR 556; [1968] HCA 74; on appeal to the Privy Council (1970) 122 CLR 628; [1971] AC 793. 165 (1981) 150 CLR 225; [1981] HCA 59. 166 (2004) 216 CLR 515 at 531 [24]. 167 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 527 Crennan Bell Further in this regard, the plurality in Woolcock Street Investments168 noted that in decisions such as Perre v Apand Pty Ltd169, Hill v Van Erp170 and Esanda Finance Corporation Ltd v Peat Marwick Hungerfords171, the concept of vulnerability could be invoked as the rationale explaining the exceptions to the general rule. Vulnerability, in this field of discourse, is concerned not only with the reasonable foreseeability of loss if reasonable care is not taken by the defendant, but also, and importantly, with the inability of the plaintiff to take steps to protect itself from the risk of the loss. Their Honours held172 that the concept of vulnerability did not afford a basis for holding the defendant liable in that case because the facts of the case did: "not show that the appellant could not have protected itself against the economic loss it alleges it has suffered. It is agreed that no warranty of freedom from defect was included in the contract by which the appellant bought the land, and that there was no assignment to the appellant of any rights which the vendor may have had against third parties in respect of any claim for defects in the building. Those facts describe what did happen. They say nothing about what could have been done to cast on the respondents the burden of the economic consequences of any negligence by the respondents." To similar effect McHugh J said173: "The first owners and subsequent purchasers of commercial premises are usually sophisticated and often wealthy investors who are advised by competent solicitors, accountants, architects, engineers and valuers. In the absence of evidence, this Court must assume that the first owner of commercial premises is able to bargain for contractual remedies against 168 (2004) 216 CLR 515 at 530-531 [23]. 169 (1999) 198 CLR 180. 170 (1997) 188 CLR 159; [1997] HCA 9. 171 (1997) 188 CLR 241; [1997] HCA 8. 172 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 533 173 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 553 Crennan Bell the builder. It must also assume that a subsequent purchaser is able to bargain for contractual warranties from the vendor of such premises." These passages accord with the primacy of the law of contract in the protection afforded by the common law against unintended harm to economic interests where the particular harm consists of disappointed expectations under a contract. The common law has not developed with a view to altering the allocation of economic risks between parties to a contract by supplementing or supplanting the terms of the contract by duties imposed by the law of tort174. Statutory provisions may supplement the common law of contract by providing for special protection to identified classes of purchasers on the ground, for example, that they may not be expected to be sufficiently astute to protect their own economic interests. Part 2C of the Home Building Act 1989 (NSW) is an example of such a statutory regime. By enacting the scheme of statutory warranties, the legislature adopted a policy of consumer protection for those who acquire buildings as dwellings. To observe that the Home Building Act does not cover claims by purchasers of serviced apartments is not to assert that the Act contains an implied denial of the duty propounded by the respondent. Rather, it is to recognise that the legislature has made a policy choice to differentiate between consumers and investors in favour of the former. That is not the kind of policy choice with which courts responsible for the incremental development of the common law are familiar175; and to the extent that deference to policy considerations of this kind might be seen to be the leitmotif of this Court's decision in Bryan v Maloney, the action taken by the New South Wales legislature served to relieve the pressure, in terms of policy, to expand the protection available to consumers. It might be said that this Court's decision in Bryan v Maloney is distinguishable from the present case because it was concerned with the construction of a dwelling house rather than a commercial investment. But this distinction was not said to be material by either party in this Court. That is understandable, given that the distinction between purchases of buildings for 174 Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 at 316; Hill v Van Erp (1997) 188 CLR 159 at 179, 223, 231-234. 175 Stevens, Torts and Rights, (2007) at 312; Arvind and Steele (eds), Tort Law and the Legislature: Common Law, Statute and the Dynamics of Legal Change, (2013) Crennan Bell domestic and commercial purposes is an unstable one (at least in the absence of statutory definition), because its application means that liability is apt to come and go depending on the use intended for a building by its successive purchasers176. The material distinctions between the present case and Bryan v Maloney lie, first, in the detailed prescriptions of the D&C contract between the appellant and the developer, in contrast to the simple obligation in Bryan v Maloney between the builder and the original owner to exercise reasonable skill and diligence in the construction of the dwelling; and, secondly, in the express promises in cll 32.6 and 32.7 of the sales contracts, in contrast to the situation in Bryan v Maloney, where there was no promise as to quality given to Mrs Maloney when she acquired the dwelling. As to the first of these grounds of distinction, in Bryan v Maloney177 the builder's obligations as to the quality of design and construction were not expressed in the specific and detailed provisions to be found in the D&C contract. That being so, it could also be said that the relationship between the builder and the original owner in Bryan v Maloney was: "characterized by the kind of assumption of responsibility on the one part (ie the builder) and known reliance on the other (ie the building owner) which commonly exists in the special categories of case in which a relationship of proximity and a consequent duty of care exists in respect of pure economic loss."178 A conclusion that the builder owed to the first owner obligations equivalent in content to the tortious duty asserted by the subsequent owner was apparently thought to lessen the force of the objection to imposing a more onerous obligation on a builder in favour of the subsequent owner than was owed by the builder to the person for whom it agreed to carry out the building work and by whom it was paid179. In Woolcock Street Investments180, the plurality noted that: 176 cf Zumpano v Montagnese [1997] 2 VR 525 at 528-534. 177 (1995) 182 CLR 609 at 623. 178 Bryan v Maloney (1995) 182 CLR 609 at 624. 179 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 532 Crennan Bell "In Bryan v Maloney, it was found that there was no disconformity between the duty owed to the original owner and the duty owed to the subsequent owner. As Toohey J said181, that case was 'uncomplicated by anything arising from the contract between the appellant and Mrs Manion' (the original owner)." In this case, by contrast, there was no substantial equivalence between the obligations of the appellant to the developer and the duty propounded by the respondent. That may be seen by a consideration of the terms of the contract between the appellant and the developer to which reference will be made in the next section of these reasons. As to the second ground of distinction noted above, in the present case each purchaser from the developer exercised its contractual wisdom to bargain for protection against the risk of defects in the work. Purchasers of units in the serviced apartment complex from the developer, and the respondent, were protected by reason of the developer's promises in cll 32.6 and 32.7 of the sales contracts against the risk of economic loss because of defects of quality. It is true that these provisions did not protect purchasers or the respondent against the possibilities that the developer would not be of sufficient substance to meet the liability or that any defect would not be discovered within time to make a claim under the warranty. But as to these possibilities, the appellant had nothing to do with the purchaser's decision to accept the value of the developer's warranty or with the decision by the purchaser not to investigate for defects. Had a purchaser not been satisfied that its investment was adequately protected in this way, it could have avoided the risk of loss by taking its capital and investing elsewhere. As McHugh J said in Woolcock Street Investments182: "A commercial building is constructed or bought because it is perceived to be a suitable vehicle for investment. … [N]o prudent purchaser would contemplate buying a building without determining whether it has existing or potential construction defects. Knowledge of its defects, actual or potential, is central to any evaluation of its worth as an investment. In so far as risks are uncertain or unknown, the prudent purchaser will factor the risk into the price or obtain contractual protections or, if necessary, walk away from the negotiations." 180 (2004) 216 CLR 515 at 532-533 [29]. 181 Bryan v Maloney (1995) 182 CLR 609 at 665. 182 (2004) 216 CLR 515 at 558 [110]. Crennan Bell The obligations of the appellant to the developer Basten JA held that the developer was "vulnerable in the relevant sense" to the appellant. In this regard, his Honour said183: "The defects, so far as one can tell, do not involve complaints about the design stage of the project, but rather the execution of the building works. There was a superintendent appointed under the design and construct contract, but there can be no doubt that the developer relied upon the expertise, care and honesty of the builder in performing its obligations under the contract. Whatever may be possible in theory, there is no suggestion that in practical terms the contract was not administered in accordance with usual industry practices, which inevitably involve reliance by the developer on the exercise of responsibility by the builder. There is no reason in these circumstances to treat the developer as otherwise than vulnerable in the relevant sense." This passage suggests that one may disregard the Superintendent under the D&C contract as a mechanism apt to afford protection to the developer against loss of value due to latent defects. But, whatever the "usual industry practices" to which his Honour was referring, the provision made by cll 31 and 42 of the D&C contract for supervision and assessment of the appellant's performance by the Superintendent, linked as it was to payment of the appellant for its work, was a contractual mechanism which squarely placed the risk of deficient work upon the appellant. the role of The respondent referred to Barclay v Penberthy184 to support its argument that the duty propounded by the respondent was owed by the appellant to the developer concurrently in contract and tort. In Barclay, the plaintiff succeeded in its claim for damages for economic loss suffered when the aircraft it had chartered crashed as a result of the pilot's negligence, killing the plaintiff's valued employees and thus depriving it of their services. The Court held that it was an implied term of the contract of charter that the charter would be carried out with reasonable skill and diligence. There was no express provision in the contract which dealt with the subject of this term. The obligation created by this implied term was sufficient to entitle the plaintiff to recover the loss suffered as a result of negligent performance of the contract between the plaintiff and the defendant. The content of the duty which arose from the defendant's assumption of 183 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 508 [120]. 184 (2012) 246 CLR 258 at 284-285 [42]-[48]; [2012] HCA 40. Crennan Bell responsibility under that contract was the same as that which arose under the implied term of the charter. That was also the case in Astley v Austrust185, to which Macfarlan JA referred. In each of these cases, the content of the duty was the same in contract and tort. That is not the case here. In the present case, the liability of the appellant to the developer was the subject of detailed provisions relating to the risk of latent defects in the appellant's work. The provisions in cll 4, 30, 31, 37 and 42 of the D&C contract expressly cast onto the appellant the risk of expense required to make good any defect in the work. These detailed provisions were apt to secure performance of cl 55 of the D&C contract, which required that the construction be completed in accordance with detailed specifications. They set out the extent of the appellant's obligations to ensure that the developer should "get what it paid for". To supplement them with an obligation to take reasonable care to avoid a reasonably foreseeable economic loss to the developer in having to make good the consequences of latent defects caused by the appellant's defective work would be to alter the allocation of risks effected by the parties' contract. The provisions of the D&C contract regulated the appellant's obligations to the developer and the extent of the appellant's liability for failing to meet those obligations. To the extent that the respondent's complaints in relation to the steel lintels and windows are grounded in an alleged failure to comply with the contract's specifications, reliance on a duty in the terms propounded by the respondent would be unnecessary and indeed embarrassing. Either the work and materials of the appellant complied with the specifications, in which case the appellant had fulfilled its obligations to the developer, or they did not. In relation to the other categories of alleged defect, whether the respondent's claims of defective work could be established would necessarily depend upon the specifications and other documents referred to in cl 55 of the D&C contract, rather than upon the general duty propounded by the respondent. A duty owed by the appellant to the respondent independently of its obligations to the developer? Basten JA analysed the position of the respondent in terms of its vulnerability to the appellant. His Honour said186: 185 (1999) 197 CLR 1 at 22-23 [47]-[48]. 186 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 508-509 [122]. Crennan Bell "[T]he [respondent] is to be viewed as a true successor in title to the interests of the developer. However, it was vulnerable with respect to latent defects in the same way that the developer was. Indeed, its position was weaker than that of the developer, which may have had some opportunity to carry out inspections during the course of the construction and before the defective materials were no longer examinable." In relation to the ability of purchasers of lots from the developer to protect themselves against the risk of economic loss, Basten JA said187: "The question of legal protection is more complicated. The standard sale contracts did not include such protection. They were agreed between the builder and the developer and the builder retained a contractual right to be informed of and to approve any change in their terms. It seems inconsistent with the concept of vulnerability, in relation to the existence of a liability on the part of the [appellant] in tort, to say that the purchasers were not vulnerable because they could have insisted upon a contractual right as against the builder or the developer." That reasoning is not consistent with Woolcock Street Investments188. And, in any event, in this case the purchasers did insist upon "a contractual right as against ... the developer" in cl 32.6 of the sales contracts. It may also be noted that there was no factual basis for a conclusion that each purchaser was deprived by the appellant's conduct of the choice of bargaining with the developer for a more extensive warranty as to quality or of walking away from the negotiation and investing elsewhere if a satisfactory warranty at an acceptable price was not forthcoming. In this regard, there was no encouragement given by the appellant or suggestion that the appellant assumed responsibility to them for their decision. As to the points made by Macfarlan and Leeming JJA in the Court of Appeal upon which the respondent relied in this Court, the question on which the liability asserted by the respondent depends is not whether the legislative scheme of the SSM Act and the SSFD Act excludes a duty of care in favour of the owners corporation. Rather, the question is whether the owners corporation itself suffered a loss in terms of the value of the common property vested in it when, viewed separately from the individual lot owners, it came into existence. 187 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 509 [125]. 188 (2004) 216 CLR 515 at 533 [31], 553 [96]. Crennan Bell The circumstance that the respondent did not exist at the time that the defective work was carried out points against, rather than in favour of, the duty of care propounded by the respondent given that on this basis it could not have relied upon the appellant in any way. There is no basis for a finding of fact that there was an assumption of responsibility by the appellant in favour of the respondent, or known reliance on the appellant on the part of the respondent, in relation to the quality of the common property of the serviced apartment complex. Further, an owners corporation acquires the common property in a strata scheme without any outlay on its part. Its assets are not diminished by the acquisition, at least if the common property is worth more than the cost of repairing latent defects (and there is no suggestion here that the common property is worth less than the cost of repair). Accordingly, if one considers the owners corporation independently of the individual lot owners, it is impossible to see that it has suffered any loss by reason of the quality of the common property vested in If the respondent is viewed as the alter ego of the purchasers from the developer, the respondent's position is not any stronger. Before explaining why that is so, it is desirable to acknowledge that it may be the better view of the position to regard the respondent for present purposes as the representative of the lot owners. In Owners – Strata Plan No 43551 v Walter Construction Group Ltd189, Spigelman CJ, with whom Ipp and McColl JJA agreed, said that the statutory description of an owners corporation in s 20 of the SSFD Act as agent for the proprietors of individual lots should not be understood "solely in terms of an agency at common law." The precise significance of the reference to agency in s 20 of the SSFD Act is debatable190, but it is sufficient for present purposes to 189 (2004) 62 NSWLR 169 at 178-179 [43]-[45]. See also Vero Insurance Ltd v The Owners – Strata Plan No 69352 (2011) 81 NSWLR 227 esp at 240-241 [60], 243 190 It may be of some significance in this regard that, in Salomon v Salomon & Co [1897] AC 22 at 31, the great case which established that a company formed under the Companies Act 1862 (UK) and its analogues is a legal person separate from its shareholders, Lord Halsbury LC expressly rejected the proposition that a limited liability company could be regarded as the "agent" of its shareholders; see also at 35, 54-55. The terms of s 20, in deploying the concept of agency, are at least apt to ensure that an owners corporation is not the owner of the common property as an entity distinct from the lot owners. Rather, it is a convenient statutory conduit for the funds necessary to maintain and conserve the beneficial interests of lot owners in the common property. Crennan Bell say that it tends to confirm, rather than to deny, that the detriment to the economic or financial interests of the owners corporation is, in substance, suffered by the owners of lots. There is nothing in the SSFD Act to suggest that the cost incurred by an owners corporation in meeting the need to keep the common property in good repair is not a loss truly borne by the individual lot owners, given that they are called upon to make proportionate contributions by way of levy under ss 75 and 76 of the SSM Act in order to meet that expense. That view is supported by s 227(2) of the SSM Act, which provides in relation to common property that "[i]f the owners of the lots in a strata scheme are jointly entitled to take proceedings against any person … the proceedings may be taken by ... the owners corporation." Section 227(3) goes on to provide that "[a]ny judgment … given … in favour of or against the owners corporation in any such proceedings has effect as if it were a judgment … given … in favour of or against the owners." These provisions are consistent with the view that the legislation, while establishing the owners corporation as a convenient vehicle for the vindication of the interests of the individual lot owners, does not deny or diminish those interests. On the basis that the respondent is to be regarded as making its claim as a proxy for the purchasers from the developer, counsel for the respondent argued that cl 32.7 of the standard form contracts was concerned not with the protection of the purchasers, but with the conferral on the developer of a right to repair defects and thereby to mitigate the damages which might otherwise be recovered from it by the purchasers if they incurred expense in repairing defects themselves. Counsel's argument was evidently intended to lessen the force of the appellant's argument that the tortious duty propounded by the respondent was more extensive than the contractual protection which purchasers had obtained from the developer. As an argument in favour of discounting the protection conferred on the purchasers it is not persuasive. Clause 32.7 expressly obliged the developer to repair defects brought to its attention within a specified period. The purchasers had a contractual right against the developer which could have protected them against the risk of which the respondent now complains had those rights been pursued in accordance with their terms. It is true that the purchasers would have been required to be alert to the possibility of latent defects in order to exercise their rights under cl 32.7, but the very existence of the provision reflects an awareness of the relevant risk as well as a means of dealing with it. Counsel for the respondent also said that, if individual lot owners might have brought claims against the developer under cl 32.7 in respect of their proportionate share of the loss incurred by reason of the defects in the common property which have emerged, this right might not now be valuable, for example, Crennan Bell because it might be unenforceable due to the lapse of time and associated expiration of the applicable limitation period for bringing an action in contract against the developer, or because of the financial inability of the developer to meet the claims. But these arguments serve only to make the point that the contractual rights of individual purchasers for which they bargained were cast in terms which expressly limited their scope and duration in a manner inconsistent with the open-ended liability now asserted by the respondent. Winnipeg Condominium and dangerous defects Basten JA derived support191 for his answer to the separate question from the decision of the Supreme Court of Canada in Winnipeg Condominium Corporation No 36 v Bird Construction Co192. In that case the Supreme Court of Canada held that a builder owes a duty of care in tort to a subsequent purchaser of the building if it can be shown that it is foreseeable that a failure to take reasonable care in constructing the building would create defects that pose a substantial danger to the health and safety of occupants. Where such defects become manifest before any damage to persons or property occurs, a subsequent purchaser may recover the reasonable cost of making good the defects in order to put the building into a non-dangerous state. The respondent argued that the Court of Appeal erred in limiting the duty said to be owed by the appellant to the respondent to cases where the repair of defects in construction was necessary to obviate a situation of danger to person or property. Nevertheless, counsel for the respondent sought to rely upon the decision of the Supreme Court of Canada in Winnipeg Condominium as a last resort to support the Court of Appeal's answer to the separate question. It may be noted that in Winnipeg Condominium the Supreme Court of Canada chose not to follow the approach of the House of Lords in D & F Estates Ltd v Church Commissioners for England193 and Murphy v Brentwood District Council194. 191 The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 509-510 [127]-[128]. 192 [1995] 1 SCR 85. Crennan Bell The approach in Winnipeg Condominium was noted, but not followed, by this Court in Bryan v Maloney195 and in Woolcock Street Investments196. In Fangrove Pty Ltd v Tod Group Holdings Pty Ltd197, de Jersey CJ, in the Court of Appeal of Queensland, noted that no Australian authority had adopted this approach. In terms of Australian authority, the position has not improved for the respondent in this regard in the years since that case was decided. The approach in Winnipeg Condominium is attended by the practical difficulty that "the existence of the duty will not be known until after the defects have occurred and they can be confidently categorised as dangerous."198 More importantly, in point of principle the approach in Winnipeg Condominium is driven by the assumption that the cost of repair or diminution in market value of a building is a reflex of the liability for physical damage to person or property which may occur if the defect is not repaired. Quite apart from the haphazard nature of this notion of equivalence of damage, this approach is flawed in that it detaches the duty not to inflict harm from the harm which is the gist of the cause of action. As Lord Oliver of Aylmerton said in Murphy v Brentwood District "If one assumes the … case of one who has come into possession of a defective chattel … which may be a danger if it is used without being repaired, it is impossible to see upon what principle such a person, simply because the chattel has become dangerous, could recover the cost of repair from the original manufacturer. The suggested distinction between mere defect and dangerous defect … is, I believe, fallacious. … [O]nce the danger ceases to be latent … [t]he plaintiff's expenditure is not expenditure incurred in minimising the damage or in preventing the injury from occurring. The injury will not now ever occur unless the plaintiff causes it to do so by courting a danger of which he is aware and his expenditure is incurred not in preventing an 195 (1995) 182 CLR 609 at 621 fn 66, 649-651. 196 (2004) 216 CLR 515 at 534 [34] fn 108. 197 [1999] 2 Qd R 236 at 239-240 [12]. 198 Fangrove Pty Ltd v Tod Group Holdings Pty Ltd [1999] 2 Qd R 236 at 248 [46]. 199 [1991] 1 AC 398 at 488-489. Crennan Bell otherwise inevitable injury but in order to enable him to continue to use the property or the chattel." The position in other common law jurisdictions The conclusion that the duty propounded by the respondent should not be accepted is in accord with the position in the United Kingdom200. In addition, the preponderance of judicial authority in the United States accords with the conclusion that the respondent's claim should fail201. That a different view prevails in Canada has already been noted. For the reasons set out above, that approach should not be followed in Australia. The respondent's preferred position is also supported by the decision of the Judicial Committee of the Privy Council on appeal from New Zealand in Invercargill City Council v Hamlin202. But in that decision it was acknowledged that it departed from the approach which has prevailed in the United Kingdom203. For the reasons set out above, the latter view better accords with the coherent development of the common law. 200 D & F Estates Ltd v Church Commissioners for England [1989] AC 177; Murphy v Brentwood District Council [1991] 1 AC 398; Robinson v P E Jones (Contractors) Ltd [2012] QB 44. 201 East River Steamship Corp v Transamerica Delaval Inc 476 US 858 at 870 (1986); Redarowicz v Ohlendorf 441 NE 2d 324 (Ill 1982); Sensenbrenner v Rust, Orling & Neale, Architects Inc 374 SE 2d 55 (Va 1988); Casa Clara Condominium Association Inc v Charley Toppino and Sons Inc 620 So 2d 1244 (Fla 1993); Calloway v City of Reno 993 P 2d 1259 (Nev 2000); Moglia v McNeil Co Inc 700 NW 2d 608 (Neb 2005); Association of Apartment Owners of Newtown Meadows ex rel its Board of Directors v Venture 15 Inc 167 P 3d 225 (Haw 2007); Davencourt at Pilgrims Landing Homeowners Association v Davencourt at Pilgrims Landing LC 221 P 3d 234 (Utah 2009). But see Brown v Fowler 279 NW 2d 907 (SD 1979); Morris v Holt 401 NE 2d 851 (Mass 1980); Terlinde v Neely 271 SE 2d 768 (SC 1980); Cosmopolitan Homes Inc v Weller 663 P 2d 1041 (Colo 1983); Oates v Jag Inc 333 SE 2d 222 (NC 1985). 202 [1996] AC 624. See also Bowen v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394; Mount Albert Borough Council v Johnson [1979] 2 NZLR 234; Chase v de Groot [1994] 1 NZLR 613. 203 [1996] AC 624 at 648-649. Crennan Bell Conclusion and orders The appeal should be allowed. The orders of the Court of Appeal of New South Wales should be set aside, and in their place it should be ordered that the appeal to the Court of Appeal of New South Wales should be dismissed with costs. The first respondent should be granted special leave to cross-appeal, but the cross-appeal should be dismissed with costs. The first respondent must pay the appellant's costs of the appeal to this Court. 169 A duty of care at common law is a duty of a specified person, or a person within a specified class, to exercise reasonable care within a specified area of responsibility to avoid specified loss to another specified person, or to a person within another specified class. Whether or not a particular duty of care should be recognised in a novel category of case is determined on the understanding that "[t]here are policies at work in the law which can be identified and applied to novel problems, but the law of tort develops by reference to principles, which must be capable of general application"204. The question in this appeal from the Court of Appeal of the Supreme Court of New South Wales is whether the builder of a strata development should be recognised to have a duty to exercise reasonable care, in executing the building work undertaken pursuant to a contract with the developer, to avoid specified loss to the owners corporation, which is the body corporate brought into existence on registration of the strata plan205, as the legal owner of the common property206, with an ongoing statutory responsibility for keeping the common property in a good state of repair207. The specified loss, on the widest formulation of the putative duty, would extend to the cost of repairing all defects in common property not apparent at the time of registration of the strata plan. A narrower formulation of the duty, which the Court of Appeal accepted, would limit the specified loss to the cost of repairing only those defects in common property not apparent at the time of registration of the strata plan which are structural, are dangerous to persons or other property, or make an apartment in the building uninhabitable. Neither the existence nor the scope of the putative duty of care can turn on the peculiar feature of an owners corporation that the corporation has no option but to be brought into existence as the legal owner of common property and to shoulder the ongoing responsibility for keeping that common property in a good state of repair. It is not the function of the common law to fashion a principle of tortious liability which would confer a right to compensation exclusively on the unique statutory creation of a particular statutory scheme. If the builder of a strata development is to be recognised as having the putative duty of care, it is because the owners corporation stands in relation to the builder as proxy for the owners from time to time of the registered lots 204 Sullivan v Moody (2001) 207 CLR 562 at 579 [49]; [2001] HCA 59. 205 Section 8 of the Strata Schemes Management Act 1996 (NSW). 206 Section 18 of the Strata Schemes (Freehold Development) Act 1973 (NSW). 207 Section 62 of the Strata Schemes Management Act 1996 (NSW). corresponding to apartments in the building. In them the beneficial interest in the common property is vested as tenants in common208. For them the corporation is constituted agent209. To them the corporation can ultimately look to cover the cost of repair if that cost cannot be recouped elsewhere210. It is they who bear the economic burden of the loss. Whether or not the putative duty of care should be recognised therefore falls to be determined by applying principles which must be capable of general application to determine the existence and scope of such duty as a builder may have to exercise reasonable care, in the execution of building work, to avoid a subsequent owner incurring the cost of repairing latent defects in the building. It has long been accepted that a common law duty of care can coexist with a duty in contract and that a duty of care can be to avoid economic loss. That being so, legal taxonomy alone cannot assign such common law liability as a builder may have to a subsequent owner of a building to the province of contract to the exclusion of the province of tort. Nor is recognition of a duty on the part of a builder to avoid a subsequent owner incurring the cost of remedying a latent defect in the building open to criticisms of indeterminacy which often count against recognising a common law duty of care to avoid economic loss. Markedly divergent approaches to whether a builder should be recognised to have such a duty of care to a subsequent owner have now prevailed for more than two decades in other common law jurisdictions. In the United Kingdom, a duty of care has been rejected211. In Canada, a duty of care has been recognised, limited to the cost of remedying dangerous defects in the building212. In New Zealand, a duty of care has been recognised, extending to the cost of remedying all latent defects213. There is no reason to consider any one of those approaches to result in a greater net cost to society than any other. Provided the principle of tortious liability is known, builders can be expected to accommodate it in the 208 Section 20 of the Strata Schemes (Freehold Development) Act 1973 (NSW). 209 Section 20 of the Strata Schemes (Freehold Development) Act 1973 (NSW). 210 Sections 69-71, 75(2)(e) and 76 of the Strata Schemes Management Act 1996 (NSW). 211 Murphy v Brentwood District Council [1991] 1 AC 398; Department of the Environment v Thomas Bates and Son Ltd [1991] 1 AC 499. 212 Winnipeg Condominium Corporation No 36 v Bird Construction Co [1995] 1 SCR 213 Invercargill City Council v Hamlin [1996] AC 624. contractual terms on which they are prepared to build and subsequent owners can be expected to accommodate it in the contractual terms on which they are prepared to purchase. There is a net cost to society which arises from uncertainty as to the principle to be applied. McHugh J made that point in the context of discussing tortious liability for economic loss more generally when he referred to costs to parties and to the public of principles or rules whose application cannot confidently be predicted, and stated that "[i]f negligence law is to serve its principal purpose as an instrument of corrective justice, the principles and rules which govern claims in negligence must be as clear and as easy of application as is possible"214. Concern to minimise the cost of legal uncertainty was identified as a factor in overruling, rather than attempting to distinguish, prior authority so as to arrive at the position in respect of the liability of a builder to a subsequent owner which has prevailed in the United Kingdom215. Part of the difficulty encountered by the Court of Appeal in the present case was in discerning the principle for which Bryan v Maloney216 remains authority after Woolcock Street Investments Pty Ltd v CDG Pty Ltd217. The question addressed in Bryan v Maloney was identified by the plurality in that case (Mason CJ, Deane and Gaudron JJ) as "whether, under the law of negligence, a professional builder who constructs a house for the then owner of the land owes a prima facie duty to a subsequent owner of the house to exercise reasonable care to avoid ... foreseeable damage" specified as "the diminution in value of the house when a latent and previously unknown defect in its footings … becomes manifest"218 equating to "the amount which would necessarily be expended in remedying the inadequate footing[s] and their consequences"219. Their Honours gave a positive answer to that question. They said that the contrary approach which had then recently come to prevail in the United Kingdom rested on "a narrower view of the scope of the modern law of 214 Perre v Apand Pty Ltd (1999) 198 CLR 180 at 216 [91]; [1999] HCA 36. 215 Murphy v Brentwood District Council [1991] 1 AC 398 at 471-472. 216 (1995) 182 CLR 609; [1995] HCA 17. 217 (2004) 216 CLR 515; [2004] HCA 16. 218 (1995) 182 CLR 609 at 617. 219 (1995) 182 CLR 609 at 616. negligence and a more rigid compartmentalization of contract and tort than is acceptable under the law of this country"220. The plurality in Bryan v Maloney referred to the relationship between the builder and the subsequent owner of a house as one characterised "by assumption of responsibility on the part of the builder and likely reliance on the part of the owner"221, and emphasised that the decision in that case turned, "to no small extent, on the particular kind of economic loss involved" and, in particular, on the building having been "erected to be used as a permanent dwelling house"222. The other member of the majority, Toohey J, similarly emphasised that the decision related to "the building of a house that is a non-commercial building"223. Subsequent decisions of intermediate courts of appeal treated its holding as confined to buildings of that description224. The plurality in Woolcock Street Investments (Gleeson CJ, Gummow, Hayne and Heydon JJ) nevertheless expressed doubt that Bryan v Maloney should be "understood as depending upon drawing a bright line between cases concerning the construction of dwellings and cases concerning the construction of other buildings" and pointed to difficulties of maintaining such a distinction225. The question addressed in Woolcock Street Investments was whether an engineering company owed a duty to exercise reasonable care, in designing the foundations of a warehouse and office complex, to avoid a subsequent purchaser of the building sustaining economic loss when it became apparent after purchase that the building was suffering substantial structural distress. The plurality noted that the engineering company designed the foundations in circumstances where "the original owner asserted control over the investigations which the engineer undertook for the purposes of performing its work"226. Their Honours did not, however, treat the alleged defect in the design of the foundations as outside the scope of the work undertaken. Their stated ground for concluding that the 220 (1995) 182 CLR 609 at 629. 221 (1995) 182 CLR 609 at 627. 222 (1995) 182 CLR 609 at 630. 223 (1995) 182 CLR 609 at 665. 224 Woollahra Municipal Council v Sved (1996) 40 NSWLR 101; Zumpano v Montagnese [1997] 2 VR 525; Fangrove Pty Ltd v Tod Group Holdings Pty Ltd [1999] 2 Qd R 236. 225 (2004) 216 CLR 515 at 528 [17]. 226 (2004) 216 CLR 515 at 531-532 [25]. engineering company did not owe the putative duty was that the subsequent purchaser did not allege that it "could not have protected itself against the economic loss"227. They mentioned as a possible means of achieving that protection that the subsequent purchaser might have contracted on terms which would have cast on the engineering company the "economic consequences" of any negligence228. The ground so stated by the plurality for denying the putative duty accorded with the observation of McHugh J, who also formed part of the majority in Woolcock Street Investments, that "the capacity of a person to protect him or herself from damage by means of contractual obligations is merely one – although often a decisive – reason for rejecting the existence of a duty of care in tort in cases of pure economic loss"229. In Woolcock Street Investments, it was the decisive factor. McHugh J referred in Woolcock Street Investments to a variety of ways in which a subsequent purchaser might take steps to protect against the risk of latent defects by adjusting the terms on which the subsequent purchaser is prepared to contract with the vendor230. He also referred to the possibility of commissioning expert investigation of the building prior to purchase231. He pointed to disadvantages of imposing tortious liability on a builder which included the practical difficulties in determining whether there has been a breach of an appropriate standard of care and the incentive to create artificial business structures to avoid a long tail of claims232. He continued233: "Of course ... contractual protections and expert investigations may turn out to be inadequate. In that event, a remedy in tort – particularly a remedy against secondary parties such as architects, engineers and sub- contractors – would be desirable. But cases where contractual protection will be found deficient are likely to be the exception rather than the rule. Whether exceptional or not, the ultimate question is whether the residual 227 (2004) 216 CLR 515 at 533 [31]. 228 (2004) 216 CLR 515 at 533 [31]. 229 (2004) 216 CLR 515 at 552 [94]. 230 (2004) 216 CLR 515 at 550 [85], 558-559 [111]. 231 (2004) 216 CLR 515 at 559 [111]. 232 (2004) 216 CLR 515 at 557-558 [107]-[109]. 233 (2004) 216 CLR 515 at 559 [112]. advantages that an action in tort would give are great enough to overcome the disadvantages to which I have referred. This involves a value judgment, and the data that might permit that judgment to be made, if the data exists at all, is not before us. Because that is so, the better view is that this Court should not take the step of extending the principle of Bryan v Maloney to commercial premises. That is, this Court should hold that, in the absence of a contract between the owner of commercial premises and a person involved in the design or construction of those premises, the latter does not owe a duty to the current owner to prevent pure economic loss." Turning specifically to the continuing authority of Bryan v Maloney, "Nothing in this judgment is intended to suggest that Bryan v Maloney would now be decided differently. Whether a different decision would now be reached under current doctrine almost certainly depends on whether evidence would reveal that the purchasers of dwelling houses are as vulnerable as the Court assumed in that case." Absent any application that Bryan v Maloney should be overruled, and absent data which might permit the making of a value judgment different from that made in Woolcock Street Investments, the view expressed by McHugh J in Woolcock Street Investments should in my opinion be accepted. The continuing authority of Bryan v Maloney should be confined to a category of case in which the building is a dwelling house and in which the subsequent owner can be shown by evidence to fall within a class of persons incapable of protecting themselves from the consequences of the builder's want of reasonable care. Outside that category of case, it should now be acknowledged that a builder has no duty in tort to exercise reasonable care, in the execution of building work, to avoid a subsequent owner incurring the cost of repairing latent defects in the building. That is because, by virtue of the freedom they have to choose the price and non-price terms on which they are prepared to contract to purchase, there is no reason to consider that subsequent owners cannot ordinarily be expected to be able to protect themselves against incurring economic loss of that nature. The plurality in Woolcock Street Investments noted that the actual decision in Bryan v Maloney had by then been "overtaken, at least to a significant extent, by various statutory forms of protection for those who buy dwelling houses which turn out to be defective"235. The Court of Appeal in the present case 234 (2004) 216 CLR 515 at 560 [116] (footnote omitted). 235 (2004) 216 CLR 515 at 534 [35]. referred in detail to the current statutory regime in New South Wales236. If legal protection is now to be extended, it is best done by legislative extension of those statutory forms of protection. Neither version of the putative duty of care should be recognised. I agree with the orders proposed by the Chief Justice. 236 Part 2C of the Home Building Act 1989 (NSW). See The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd (2013) 85 NSWLR 479 at 498- |
HIGH COURT OF AUSTRALIA APPELLANT AND THE ATTORNEY-GENERAL OF QUEENSLAND RESPONDENT Lacey v Attorney-General of Queensland [2011] HCA 10 7 April 2011 ORDER Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of Queensland made on 11 September 2009 and, in its place, order that the appeal to that Court be dismissed. On appeal from the Supreme Court of Queensland Representation B W Farr SC with J A Fraser and A D Scott for the appellant (instructed by W Sofronoff QC, Solicitor-General of the State of Queensland with E S Wilson and G J D del Villar for the respondent (instructed by Crown Solicitor (Qld)) Interveners S J Gageler SC, Solicitor-General of the Commonwealth with A M Dinelli intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) R J Meadows QC, Solicitor-General for the State of Western Australia with C L Conley intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor (WA)) M G Sexton SC, Solicitor-General for the State of New South Wales with L A Babb SC and J G Renwick intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor (NSW)) M G Hinton QC, Solicitor-General for the State of South Australia with K Hodder intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor (SA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Lacey v Attorney-General of Queensland Criminal law – Appeal – Appeal against sentence – Appeal by Crown – Where s 669A(1) of Criminal Code (Q) permitted appeal by Attorney-General against sentence and provided that appellate court "may in its unfettered discretion vary the sentence and impose such sentence as to the Court seems proper" – Where appellate court increased sentence without identifying any error by sentencing judge – Whether Crown must demonstrate error by sentencing judge before discretion to vary sentence enlivened. Words and phrases – "appeal", "unfettered discretion". Acts Interpretation Act 1954 (Q), s 14A(1). Criminal Code (Q), s 669A(1). FRENCH CJ, GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ. Introduction By s 669A(1) of the Criminal Code (Q) the Attorney-General of Queensland may appeal to the Court of Appeal of the Supreme Court of Queensland1 against any sentence imposed by a trial court or a court of summary jurisdiction dealing with an indictable offence. The court hearing such an appeal "may in its unfettered discretion vary the sentence and impose such sentence as to the Court seems proper."2 The question in this appeal is whether the Court of Appeal has the power under s 669A(1) to vary a sentence absent any demonstrated or inferred error on the part of the sentencing judge. The Court of Appeal answered that question in the affirmative. It held that the "unfettered discretion" conferred by s 669A(1) meant that the Court3: "in exercising its discretion must have regard to the sentence imposed below, but come to its own view as to the proper sentence to be imposed. In doing so, it must act in conformity with the principles relevant to the exercise of judicial power." Based on that construction of s 669A(1) the Court of Appeal, by majority4, increased the crime of manslaughter5. The construction was erroneous. For the reasons that follow the the appellant for imposed upon the sentence 1 Until 1991, the appeal lay to the Court of Criminal Appeal, which was established by ss 3 and 5 of the Criminal Code Amendment Act 1913 (Q), inserting s 668A into the Criminal Code (Q). The appeal to the Court was replaced with an appeal to the Court of Appeal by s 111 of the Supreme Court of Queensland Act 1991 (Q) read with Sched 2 to the Act. 2 Criminal Code (Q), s 669A(1). 3 R v Lacey; Ex parte Attorney-General (Qld) (2009) 197 A Crim R 399 at 4 de Jersey CJ, Keane, Muir and Chesterman JJA; McMurdo P dissenting. (2009) 197 A Crim R 399 at 418 [156]. Crennan Bell appeal should be allowed, the order made by the Court of Appeal set aside and, in its place, an order dismissing the appeal to that Court made. Factual and procedural background On 6 May 2009, the appellant was convicted in the Supreme Court of Queensland of the offence of manslaughter. The Crown Prosecutor submitted that the appropriate sentence was 13 years before deducting two years served by the appellant while on remand. On 13 May 2009, the appellant was sentenced to 10 years imprisonment and declared to have been convicted of a serious violent offence. The trial judge said he would have sentenced the appellant to 12 years imprisonment but took into account two years which he had served on remand. The appellant appealed against his conviction and applied for leave to appeal against his sentence. The Attorney-General also appealed against the sentence on the alternative grounds that it was "inadequate" or "manifestly inadequate". The particulars of both grounds of the Attorney-General's appeal were that: the sentence failed to reflect adequately the gravity of the offence generally and in this case in particular; the sentence failed to take sufficiently into account the aspect of general deterrence; and the sentencing judge gave too much weight to factors going to mitigation. Departing from the position taken by the Crown Prosecutor in sentencing submissions before the trial judge, the Solicitor-General of Queensland, appearing for the Attorney-General, submitted in the Court of Appeal that the appropriate range was 15 to 18 years imprisonment (before deduction for time served on remand). Thus, on the Attorney-General's submission, the appropriate range was 13 to 16 years after the deduction. The appellant's appeal against conviction and application for leave to appeal against sentence were dismissed. The Attorney-General's appeal against sentence was allowed and the sentence increased to 11 years. On 24 June 2010, the appellant was granted special leave to appeal against the decision of the Court of Appeal allowing the Attorney-General's appeal. Crennan Bell At the hearing of the appeal to this Court the appellant was given leave to add a ground of appeal challenging the constitutional validity of s 669A(1) on the basis that, as construed by the Court of Appeal, it required that Court to engage in an activity repugnant to the judicial process. At the hearing of the appeal, the Court confined the parties to their submissions as to the construction of s 669A. As the matter can be decided on the constructional question, the constitutional question does not need to be considered. Before turning to the decision of the Court of Appeal, it is necessary to consider the background leading to the enactment of s 669A in its original form in 1939 and its present form in 1975. Crown appeals against sentence An appeal is not a common law remedy. It requires the creation by statute of an appellate jurisdiction and the powers necessary for its exercise6. There was, at common law, no jurisdiction to entertain appeals by convicted persons or by the Crown against conviction or sentence. In 1892, the Council of Judges of the Supreme Court of England and Wales recommended to the Lord Chancellor7 that a Court of Criminal Appeal be established with jurisdiction to entertain appeals against sentence and to assist the Home Secretary, at his request, in reconsidering sentences or convictions8. The recommendations for appeals against sentence were based upon the "great diversity in the sentences passed by different Courts in respect of offences of the same kind"9. The judges proposed 6 DJL v Central Authority (2000) 201 CLR 226 at 245-246 [40] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; [2000] HCA 17, citing CDJ v VAJ (1998) 197 CLR 172 at 196-197 [95] per McHugh, Gummow and Callinan JJ; [1998] HCA 67. 7 Pursuant to s 75 of the Supreme Court of Judicature Act 1873 (UK) (36 & 37 Vict c 66). 8 Great Britain, Council of Judges of the Supreme Court, Return of Report of the Judges in 1892 to the Lord Chancellor, Recommending the Constitution of a Court of Appeal and Revision of Sentences in Criminal Cases, (1894) at 7. 9 Great Britain, Council of Judges of the Supreme Court, Return of Report of the Judges in 1892 to the Lord Chancellor, Recommending the Constitution of a Court of Appeal and Revision of Sentences in Criminal Cases, (1894) at 7. Crennan Bell an appeal against sentence whereby a prison sentence could be reduced "if justice requires it" and the Court, on such an appeal, should have power to increase the sentence "when the facts seem to need it."10 The judges also recommended that11: "[a]ny independent application to increase punishment should be made on the personal responsibility of the Attorney-General, who would only so apply in cases appearing to him to be of extreme or systematic inadequacy of sentence." The power to be conferred on the Attorney-General would be exercised only in rare cases but it was necessary in order to "attain and enforce a reasonable uniformity of sentences."12 The legislature did not act on that proposal. The Criminal Appeal Act 1907 (UK) made no provision for a Crown appeal against sentence, although it empowered the Court of Criminal Appeal, hearing an appeal by a prisoner against sentence, to reduce or to increase the sentence13. It was not until 198814 that the Attorney-General was empowered to apply to the Court of Appeal (Criminal Division) for leave to refer a case to it for undue 10 Great Britain, Council of Judges of the Supreme Court, Return of Report of the Judges in 1892 to the Lord Chancellor, Recommending the Constitution of a Court of Appeal and Revision of Sentences in Criminal Cases, (1894) at 7. 11 Great Britain, Council of Judges of the Supreme Court, Return of Report of the Judges in 1892 to the Lord Chancellor, Recommending the Constitution of a Court of Appeal and Revision of Sentences in Criminal Cases, (1894) at 7-8. 12 Great Britain, Council of Judges of the Supreme Court, Return of Report of the Judges in 1892 to the Lord Chancellor, Recommending the Constitution of a Court of Appeal and Revision of Sentences in Criminal Cases, (1894) at 8. 13 Criminal Appeal Act 1907 (UK), s 4(3). 14 Criminal Justice Act 1988 (UK), s 36. Crennan Bell leniency in sentencing15. The first common law jurisdiction to introduce a Crown appeal against sentence was Canada16. The right of appeal against sentence conferred upon a convicted person by s 3 of the Criminal Appeal Act 1907 (UK) was replicated in the Australian States17. The first States to provide for a Crown appeal against sentence were New South Wales and Tasmania in 192418. Crown appeals against sentence were introduced at different times in the decades that followed in the other Australian States, the Australian Capital Territory and the Northern Territory19. Following the enactment of the Criminal Appeal Act 1907 (UK), the English courts soon established the proposition that for a convicted person's appeal against sentence to succeed there must be evidence that the sentencing judge had acted on a wrong principle or given undue weight to some of the facts proved in evidence. It was "not possible to allow appeals because individual members of the Court might have inflicted a different sentence, more or less 15 Pattenden, English Criminal Appeals 1844-1994, (1996) at 292-297. 16 Criminal Code RSC 1906, c 146, s 1013(2), as enacted by SC 1923, c 41, s 9. A general right to seek leave to revise a sentence had been introduced in 1921: Criminal Code RSC 1906, c 146, s 1055A, as enacted by SC 1921, c 25, s 22. 17 Criminal Code Amendment Act 1911 (WA), s 10; Criminal Appeal Act 1912 (NSW), s 5(1)(c); Criminal Code Amendment Act 1913 (Q), ss 3 and 8; Criminal Appeal Act 1914 (Vic), s 3(c); Criminal Appeals Act 1924 (SA), s 5(d); Criminal Code (Tas), s 401(1)(iii), as enacted by the Criminal Code Act 1924 (Tas). 18 Crimes (Amendment) Act 1924 (NSW), s 33; Criminal Code (Tas), s 401(2)(iii), as enacted by the Criminal Code Act 1924 (Tas). 19 Criminal Code Amendment Act 1939 (Q), s 4; Criminal Appeals Act 1970 (Vic), s 2; Criminal Code Amendment Act 1975 (WA), s 3(b); Criminal Law Consolidation Act Amendment Act 1980 (SA), s 9; Federal Court of Australia Act 1976 (Cth), ss 24(1)(b) and 28(5) (as enacted). In Western Australia, the Crown had, from 1954, the right to appeal against any sentence "which in the circumstances of the case cannot lawfully be passed on the convicted person for the offence of which he stands convicted": Criminal Code (WA), s 688(2)(d) as inserted by Criminal Code Amendment Act 1954 (WA), s 8. Crennan Bell severe."20 This Court adopted the same approach to appeals against sentence under the Criminal Appeal Act 1912 (NSW) in Skinner v The King21. Barton ACJ, with whom the other Justices agreed, said22: "If the sentence is not merely arguably insufficient or excessive, but obviously so because, for instance, the Judge has acted on a wrong principle, or has clearly overlooked, or undervalued, or overestimated, or misunderstood, some salient feature of the evidence, the Court of Criminal Appeal will review the sentence; but, short of such reasons, I think it will not." Crown appeals against sentence in New South Wales were introduced with the enactment, in 1924, of s 5D of the Criminal Appeal Act 1912 (NSW)23. That section, in language that would be copied in 1939 by s 669A of the Criminal Code, provided that, on such an appeal by the Attorney-General, "the Court of Criminal Appeal may in its discretion vary the sentence and impose such sentence as to the said Court may seem proper." In its first consideration of s 5D, in Whittaker v The King24, this Court by majority appeared to favour, albeit obiter, a construction which conferred "unlimited judicial discretion … on the Court of Criminal Appeal"25. Isaacs J, however, was of the view that the Court of Criminal Appeal should not interfere in the decision of the trial judge unless it was shown to have been affected by an error in principle26. He said that the "jurisdiction of the Court of Criminal Appeal under sec 5D, though discretionary, is an appellate power to control an order that is itself discretionary."27 He also 20 Sidlow (1908) 1 Cr App R 28 at 29. 21 (1913) 16 CLR 336; [1913] HCA 32. 22 (1913) 16 CLR 336 at 340. 23 Crimes (Amendment) Act 1924 (NSW), s 33. 24 (1928) 41 CLR 230; [1928] HCA 28. 25 (1928) 41 CLR 230 at 235 per Knox CJ and Powers J; see also at 253 per Gavan 26 (1928) 41 CLR 230 at 242, 245. 27 (1928) 41 CLR 230 at 236 (emphasis in original). Crennan Bell pointed to the sentencing judge's advantage after a trial28. Higgins J was of the view that the Court should not decide the point on an application for special leave to appeal where no argument had been addressed to it and no consideration had been given to it by the court below29. The view of the majority in Whittaker about the nature of the appeal under s 5D was apparently endorsed by Evatt and McTiernan JJ in Williams v The King [No 2]30. They equated the "unlimited discretion" of which Knox CJ and Powers J in Whittaker had spoken to an "unfettered discretion"31. Nevertheless, it was the judgment of Isaacs J in Whittaker which was cited by Dixon, Evatt and McTiernan JJ in House v The King32 in support of the general proposition that courts of criminal appeal could only interfere with sentences on matters of principle33. In both House and Cranssen v The King34 that requirement was applied to sentences imposed after pleas of guilty, indicating that the principle did not reflect a mandated deference to the sentencing judge's advantage after trial. The appellate jurisdiction considered in Cranssen35 differed in terms from that applicable in House36. The difference did not prevent the majority in 28 (1928) 41 CLR 230 at 249. 29 (1928) 41 CLR 230 at 252-253. 30 (1934) 50 CLR 551; [1934] HCA 19. 31 (1934) 50 CLR 551 at 567. 32 (1936) 55 CLR 499; [1936] HCA 40. 33 (1936) 55 CLR 499 at 505 n 5. 34 (1936) 55 CLR 509; [1936] HCA 42. 35 Judiciary Ordinance 1921 (NG), s 24. 36 Bankruptcy Act 1924 (Cth), s 26(2). Crennan Bell Cranssen from finding common ground with the reasoning in House. They said that it37: "remains true that the appeal [was] from a discretionary act of the court responsible for the sentence. The jurisdiction to revise such a discretion must be exercised in accordance with recognized principles. It is not enough that the members of the court would themselves have imposed a less or different sentence, or that they think the sentence over-severe. There must be some reason for regarding the discretion confided to the court of first instance as improperly exercised." The idea that s 5D of the Criminal Appeal Act 1912 (NSW) conferred an unlimited or unfettered jurisdiction on the Court of Criminal Appeal was rejected by two of the Justices in Griffiths v The Queen38 as a misunderstanding of what had been said in Whittaker39. It was also inconsistent with the principle, derived from the common law's antagonism to double jeopardy, that Crown appeals against sentence should only be brought in exceptional circumstances. The exceptional character of the Crown appeal against sentence had been recognised by the Council of Judges in England in its recommendations to the Lord Chancellor in 1892. That character was acknowledged in Williams [No 2] by Dixon J, who described such appeals as "a marked departure from the principles theretofore governing the exercise of penal jurisdiction"40. In Griffiths, Barwick CJ said that an appeal by the Attorney-General41: "should be a rarity, brought only to establish some matter of principle and to afford an opportunity for the Court of Criminal Appeal to perform its proper function in this respect, namely, to lay down principles for the 37 (1936) 55 CLR 509 at 519 per Dixon, Evatt and McTiernan JJ. See also Harris v The Queen (1954) 90 CLR 652; [1954] HCA 51, which applied Cranssen. 38 (1977) 137 CLR 293; [1977] HCA 44. 39 Griffiths v The Queen (1977) 137 CLR 293 at 308 per Barwick CJ, 326-327 per 40 (1934) 50 CLR 551 at 561. 41 (1977) 137 CLR 293 at 310. Crennan Bell governance and guidance of courts having the duty of sentencing convicted persons." That statement was endorsed by Brennan, Deane, Dawson and Gaudron JJ in Everett v The Queen42. In endorsing it, their Honours expressly included in the notion of a "matter of principle" manifest inadequacy or inconsistency in sentencing standards. The treatment of Crown appeals against sentence as "exceptional" indicated a judicial concern that criminal statutes should not be construed so as to facilitate the erosion of common law protection against double jeopardy. This was reflective of a wider resistance to the construction of statutes, absent clear language, so as to infringe upon fundamental common law principles, rights and freedoms. In R v Snow43, which considered the kind of appeal that would lie to this Court under s 73 of the Constitution, Griffith CJ said44: "The common law doctrine as to the effect of a verdict of acquittal is too well settled to require exposition, and it is too late to inquire into its origin. If it had been intended by the framers of the Constitution to abrogate that doctrine in Australia, and to confer upon the High Court a new authority, such as had never been exercised under the British system of jurisprudence by any Court of either original or appellate jurisdiction, it might have been anticipated that so revolutionary a change would have been expressed in the clearest language." The Chief Justice relied upon a passage from Maxwell on Statutes, earlier quoted by O'Connor J in Potter v Minahan45 and repeatedly invoked in this Court in support of the principle of legality in statutory interpretation46. 42 (1994) 181 CLR 295 at 300; [1994] HCA 49. 43 (1915) 20 CLR 315; [1915] HCA 90. 44 (1915) 20 CLR 315 at 322. 45 (1908) 7 CLR 277 at 304; [1908] HCA 63, a passage taken from the judgment of Marshall CJ in United States v Fisher 6 US 358 at 389-390 (1805). 46 Bropho v Western Australia (1990) 171 CLR 1 at 18 per Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ; [1990] HCA 24; Coco v The Queen (1994) 179 CLR 427 at 437 per Mason CJ, Brennan, Gaudron and McHugh JJ; (Footnote continues on next page) Crennan Bell The influence, on Crown appeals against sentence, of the common law rule against double jeopardy was reflected in the observation by Deane J in Rohde v Director of Public Prosecutions47 that such an appeal "infringes the essential rationale of the traditional common law rule against double jeopardy in the administration of criminal justice in a manner comparable to a conferral of a prosecution right of appeal against a trial acquittal"48. The effect of the common law on the interpretation of criminal statutes was stated by Deane J49 in terms later quoted by the plurality in Byrnes v The Queen50: "As a matter of established principle, a general statutory provision should not ordinarily be construed as conferring or extending such a prosecution right of appeal against sentence unless a specific intention to that effect is manifested by very clear language". Indeed, as Deane J explained, the requirement of "clear language" in this context did not depend critically upon the rule against double jeopardy, for even assuming that rule to be limited to the determination of guilt or innocence and not extending to the quantification of punishment51: "that established principle of construction extends to require clear and unambiguous words before a statute will be construed as effecting, to the [1994] HCA 15; Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at 329 [20] per Gleeson CJ; [2004] HCA 40. See also Wall v The King; Ex parte King Won [No 1] (1927) 39 CLR 245; [1927] HCA 4; Smith v The Queen (1994) 181 CLR 338; [1994] HCA 60; and see generally Pearce and Geddes, Statutory Interpretation in Australia, 6th ed (2006) at 187-188 [5.28]. 47 (1986) 161 CLR 119; [1986] HCA 50. 48 (1986) 161 CLR 119 at 128. 49 (1986) 161 CLR 119 at 128-129, a restrictive approach also applied in Bond v The Queen (2000) 201 CLR 213; [2000] HCA 13. 50 (1999) 199 CLR 1 at 26 [50] per Gaudron, McHugh, Gummow and Callinan JJ. 51 (1986) 161 CLR 119 at 129. Crennan Bell detriment of the subject, any fundamental alteration to the common law principles governing the administration of justice." In Malvaso v The Queen52, Mason CJ, Brennan and Gaudron JJ pointed to the need to insist upon "[s]trict compliance with procedures which authorize an increase in sentence by an appellate court"53. In the same case, Deane and McHugh JJ acknowledged that the Crown appeal against sentence had become commonplace in the common law world, but said that54: "Nonetheless, it should not be forgotten that it represents a departure from traditional standards of what is proper in the administration of criminal justice in that, in a practical sense, it is contrary to the deep-rooted notions of fairness and decency which underlie the common law principle against double jeopardy". That statement was repeated in substance by the plurality in Everett55. In Byrnes56, the plurality explained that: jurisprudence; rather "This is not 'procedural due process' as understood in United States the due constitutional administration of justice governed by the strictures of the rule of law. These strictures have been developed by the courts with respect to power and its exercise in appropriately constituted forums." (footnotes omitted) the process of In construing a statute which provides for a Crown appeal against sentence, common law principles of interpretation would not, unless clear language required it, prefer a construction which provides for an increase of the 52 (1989) 168 CLR 227; [1989] HCA 58, which was concerned with s 352(2) of the Criminal Law Consolidation Act 1935 (SA). 53 (1989) 168 CLR 227 at 233, cited in Byrnes v The Queen (1999) 199 CLR 1 at 26-27 [53] per Gaudron, McHugh, Gummow and Callinan JJ. See also Bond v The Queen (2000) 201 CLR 213 at 223 [29]. 54 (1989) 168 CLR 227 at 234. 55 (1994) 181 CLR 295 at 305 per Brennan, Deane, Dawson and Gaudron JJ. 56 (1999) 199 CLR 1 at 27 [54] per Gaudron, McHugh, Gummow and Callinan JJ. Crennan Bell sentence without the need to show error by the primary judge. That is a specific application of the principle of legality. It is reflected in, and reinforced by, the decisions of this Court. Such a construction also has the vice that it deprives the sentencing judge's order of substantive finality. It effectively confers a discretion on the Attorney-General to seek a different sentence from the Court of Appeal without the constraint of any threshold criterion for that Court's intervention. Such a construction tips the scales of criminal justice in a way that offends "deep-rooted notions of fairness and decency"57. It is not therefore a construction lightly to be taken as reflecting the intention of the legislature. It is necessary now to move from these general considerations to the legislative history and judicial exegesis of s 669A(1). Legislative history of s 669A(1) The legislative history of s 669A(1) was determinative of the decision of the Court of Appeal. That history began in 1939 with the insertion of s 669A into the Criminal Code by the Criminal Code Amendment Act 1939 (Q). Section 669A provided: "The Attorney-General may appeal to the Court against any sentence pronounced by the court of trial and the Court may in its discretion vary the sentence and impose such sentence as to the said Court may seem proper." In explaining the new provision in his Second Reading Speech, the "While the Queensland Criminal Code allows the convicted offender the full right of appeal, the Crown has no such right at present. The provision we propose to insert allowing an appeal against sentence is identical with that enacted by New South Wales in 1924." 57 Malvaso v The Queen (1989) 168 CLR 227 at 234 per Deane and McHugh JJ. 58 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 21 November 1939 at 1716. Crennan Bell In further explanation, the Premier said59: "We are giving the right of appeal only in a case in which it is considered that the sentence is inadequate". The rationale of the provision, as explained in the Second Reading Speech, appears to have been that the Attorney-General should enjoy the same right of appeal against sentence as a convicted person. That right, as was apparent from House, Cranssen, Harris and Griffiths, required demonstration of an error of principle or the imposition of a manifestly excessive or inadequate sentence by the sentencing judge. The right of appeal of a convicted person against sentence under s 668D(1)(c) of the Criminal Code had been so construed in the Supreme Court of Queensland prior to 193960. The judicial interpretation of s 669A was necessarily influenced by the decisions of this Court in Skinner and in Whittaker concerning s 5D of the Criminal Appeal Act 1912 (NSW). In R v McKeown61, the first reported case on s 669A, the Court of Criminal Appeal of Queensland was told by counsel for the Crown not only that it had an "unfettered judicial discretion" but also that the trial judge had "misapplied the principles of punishment."62 The Court held that "[h]ad the principles of punishment applicable been brought to the notice of the trial Judge … we think he would have awarded a different sentence."63 The result did not therefore depend upon a construction of s 669A which would have required something less than an error of principle on the part of the primary judge to enliven the jurisdiction which it conferred. 59 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 21 November 1939 at 1717. 60 R v Buckmaster [1917] St R Qd 30 at 31-32; R v McIntosh [1923] St R Qd 278 at 279-280; R v McCowan [1931] St R Qd 149 at 151-152 per Blair CJ and Webb J; R v Keith [1934] St R Qd 155 at 169 per Blair CJ, 180 per Webb J, 188 per Henchman J; R v Parmenter [1936] QWN 25 at 30 per Blair CJ. 61 [1940] St R Qd 202. 62 [1940] St R Qd 202 at 203. 63 [1940] St R Qd 202 at 213-214. Crennan Bell In R v Beevers64, however, the Court relied upon Whittaker for the proposition that it had "an unfettered discretion to alter the sentence" and was "not bound by the limitations stated in Skinner v The King … to apply where an offender appeals against his sentence."65 This conclusion was reached in the face of the common position of both the Solicitor-General, representing the Attorney-General, and counsel for the respondent that the criterion of intervention was whether or not the sentencing judge had proceeded on wrong principles66. Webb CJ took the view that if he would have imposed a sentence "substantially greater than that imposed by the learned trial judge" he should hold that a heavier sentence should be substituted67. Macrossan SPJ held that the Court should not interfere with a sentence pronounced by a trial judge unless it was "clearly satisfied that the sentence should be altered."68 In the event, he formed the opinion that the primary judge had proceeded upon a wrong principle, being "unduly influenced by what he took to be the view of the Legislature of the gravity of the offence to which the prisoner had pleaded guilty"69. He also acknowledged the advantage of the primary judge, which was greater where there had been a trial than where the prisoner had pleaded guilty to the offence70. It was common ground in the submissions for the appellant and for the Attorney-General in this appeal that the interpretation of s 669A adopted by the Court of Criminal Appeal in Beevers continued to be applied until the decision of 64 [1942] St R Qd 230. 65 [1942] St R Qd 230 at 232 per Webb CJ; see also at 233 per Macrossan SPJ, 66 [1942] St R Qd 230 at 231, citing R v Withers (1925) 25 SR (NSW) 382 and R v McKeown [1940] St R Qd 202. 67 [1942] St R Qd 230 at 232. 68 [1942] St R Qd 230 at 233. 69 [1942] St R Qd 230 at 233. 70 [1942] St R Qd 230 at 233. Crennan Bell that Court in R v Liekefett; Ex parte Attorney-General71. In Liekefett, the Court of Criminal Appeal carefully reviewed Skinner and Whittaker, its own previous decisions in McKeown and Beevers, and decisions of the Court of Criminal Appeal of New South Wales on s 5D of the Criminal Appeal Act 191272. Following that review the Court held73: "In the result we have concluded that there is no decision which binds us to any particular view as to the circumstances in which the discretion reposed in this Court by s 669A should be exercised. We think that the most satisfactory approach in an appeal by the Attorney-General is that which the High Court said should be adopted in an appeal by a convicted person in the passage we have cited from House v The King. So to hold, is in accordance with the views expressed by Isaacs J in Whittaker v The King, and by the Court of Criminal Appeal of New South Wales in Reg v Cuthbert. Both appeals are from the exercise of a discretion and there is no reason why the same principle should not apply." (references omitted) In 1975, s 669A was repealed and replaced with a new section covering appeals by the Attorney-General against sentence and referral of points of law to the Court of Criminal Appeal following an acquittal after a trial upon indictment74. Subsection (1) of the new s 669A provided: "The Attorney-General may appeal to the Court against any sentence pronounced by— the court of trial; a court of summary jurisdiction in a case where an indictable offence is dealt with summarily by that court, 71 [1973] Qd R 355 at 366. 72 R v Withers (1925) 25 SR (NSW) 382; R v King (1925) 25 SR (NSW) 218; R v Geddes (1936) 36 SR (NSW) 554; R v Cuthbert (1967) 86 WN (Pt 1) NSW 272; R v Macaulay [1969] 2 NSWR 700. 73 [1973] Qd R 355 at 366. 74 Criminal Code and the Justices Act Amendment Act 1975 (Q), s 34. Crennan Bell and the Court may in its unfettered discretion vary the sentence and impose such sentence as to the Court seems proper." In the course of the Second Reading Speech, the Minister for Justice said75: "The Bill is being amended to make it clear that the Court of Criminal Appeal has an unfettered discretion to determine the proper sentence to impose when the Attorney-General has appealed against the inadequacy of the sentence. The private legal profession is opposed to this amendment. I do not propose to alter this amendment because it only makes clear what was always intended, and was in fact acted upon by the Court of Criminal Appeal for 30 years until 1973, when a court decision effectively changed the law to what was not intended." The first reported judgment following the 1975 amendment was Adams76. Andrews J (with whom Hoare and W B Campbell JJ agreed) characterised the "unfettered discretion" conferred by the subsection as "a discretion to vary a sentence imposed if the court is in substantial disagreement with it."77 His Honour considered that the unfettered discretion could only be based upon "matters of substance as distinct from trivialities."78 The legislative intention was to impose a standard of comparison less stringent than that involved in a consideration of whether a sentence was manifestly inadequate79. Seven years later, in R v Osmond; Ex parte Attorney-General80, Andrews CJ restated what he had said in Adams and concluded81: 75 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 23 April 76 (1979) 2 A Crim R 207. 77 (1979) 2 A Crim R 207 at 208. 78 (1979) 2 A Crim R 207 at 208. 79 (1979) 2 A Crim R 207 at 208-209. 80 [1987] 1 Qd R 429. 81 [1987] 1 Qd R 429 at 434. Crennan Bell "On the history of the matter it is clear that the legislature intended in the 1975 amending Act to restore the position which had prevailed, albeit on a wrong interpretation of this Court in R v Beevers, of what had been said in Whittaker v The King that the Court is to have an unfettered discretion. It was consequent upon the ruling in this Court in R v Liekefett that the amendment was enacted." Macrossan J took a somewhat more restrictive approach and said82: "The Court is left as the sole Judge of whether to interfere and nothing compels it to do so, but in the absence of a manifest misapplication of principle below, it will be disposed not to interfere unless the quantum of sentence already imposed calls, in an obvious way, for correction. I would not exclude the possibility that apart from these instances there exists, as part of the unfettered discretion, a reserve power to interfere in other cases in which the Court, in the exercise of its supervisory appellate function for the whole of the State, thinks it appropriate." Carter J preferred to express no opinion on the statutory power to vary a sentence as the matter had not been argued before the Court83. Following this Court's decision in Everett, the operation of s 669A(1) was reconsidered by the Court of Appeal of Queensland in R v Melano; Ex parte Attorney-General84. Their Honours held that the discretion to vary a sentence conferred by the subsection "is an unfettered discretion either to do so or to decline to do so."85 The discretion was subject to the limitations imposed by the purpose for which it was given and by applicable statutory and judicial 82 [1987] 1 Qd R 429 at 437-438. 83 [1987] 1 Qd R 429 at 438. 84 [1995] 2 Qd R 186. 85 [1995] 2 Qd R 186 at 189. Crennan Bell sentencing principles86. Pointing to the wide discretion conferred on sentencing judges, the Court said87: "Unless the sentencing judge has erred in principle, either because an error is discernible or demonstrated by a manifest inadequacy or excessiveness, the sentence he or she has imposed will be 'proper' … Variation by this Court will not be justified in such circumstances, unless, perhaps, in exceptional circumstances; for example, to establish or alter a matter of principle or the sentencing range which is appropriate". The Court of Appeal in Melano held that the operation of s 669A(1) was "generally consistent with the established principles relating to appeals against discretion."88 The Court referred to House. To support its construction, the Court also relied upon the common law rule against double jeopardy and the advantage of the sentencing judge, who had seen the accused and perhaps witnesses and heard oral evidence89. The decision in Melano was made in 1994. Its correctness was directly called into question in York v The Queen90 by McHugh J and indirectly by Callinan and Heydon JJ. York involved an appeal against a decision of the Court of Appeal of Queensland on a Crown appeal under s 669A(1). The criticism was obiter because it was common ground91 before this Court and the Court of Appeal that the principles governing appellate intervention under s 669A(1) were as stated in House and Dinsdale v The Queen92. McHugh J considered that Melano could not be correct93. Callinan and Heydon JJ would have been inclined 86 eg Penalties and Sentences Act 1992 (Q). 87 [1995] 2 Qd R 186 at 189. 88 [1995] 2 Qd R 186 at 189. 89 [1995] 2 Qd R 186 at 190. 90 (2005) 225 CLR 466; [2005] HCA 60. 91 (2005) 225 CLR 466 at 468-469 [4] per Gleeson CJ. 92 (2000) 202 CLR 321; [2000] HCA 54. 93 (2005) 225 CLR 466 at 474-475 [26]. Crennan Bell to give the term "unfettered" its ordinary meaning of "fully unrestricted"94 but dealt with the case on the basis upon which it had been argued. Neither Gleeson CJ nor Hayne J expressed any view on the question of construction. The reasoning in the Court of Appeal In the present case the Court of Appeal, sitting as a bench of five, decided to reconsider Melano. It approached that task having regard to principles governing the power of appeal courts to reconsider their own earlier decisions, as explained by this Court in Nguyen v Nguyen95 and John v Federal Commissioner of Taxation96. The reasoning of the majority in the Court of Appeal on the construction of s 669A(1) involved the following propositions: Melano did not rest upon a principle carefully worked out in a significant succession of cases. The Court had not attempted to come to grips with the legislative history of s 669A(1) before or after Liekefett and had given scant attention to the exegesis of s 669A(1) in Adams and Osmond97. Liekefett turned upon the proposition that while the Criminal Code as it stood at the time of that decision did not fetter the discretion of the Court, the Court's discretion was fettered by judicial discretion, that is to say by the acknowledgment that a discretionary power does not arise for exercise on appeal while the decision in which the discretion has been exercised still stands. That requires the earlier exercise of discretion to be set aside for error before the sentencing discretion arises to be exercised afresh98. 94 (2005) 225 CLR 466 at 484 [61]. 95 (1990) 169 CLR 245 at 268-270 per Dawson, Toohey and McHugh JJ; [1990] HCA 9. 96 (1989) 166 CLR 417 at 451-452 per Brennan J; [1989] HCA 5. 97 (2009) 197 A Crim R 399 at 405 [122], 408 [128]. 98 (2009) 197 A Crim R 399 at 406 [124]. Crennan Bell The intention of the legislature in amending s 669A was to remove the "judicial fetter" upon the exercise of the discretion identified in Liekefett99. The observation in Melano that s 669A(1) conferred an unfettered discretion "either to [vary a sentence] or to decline to do so" sits uncomfortably with the fundamental principle that where a court is vested with jurisdiction it is obliged to exercise it100. The use of the term "appeal" in s 669A(1) did not indicate that the right conferred was a right to seek the correction of error, rather than a review of the sentence101. As expressed in an important passage in the reasoning of the majority102: "There can be no doubt that this Court is duty-bound to exercise the jurisdiction conferred upon it in consequence of the invocation of s 669A by the Attorney-General. This Court may decide to decline to vary a sentence where that sentence is not 'such sentence as seems proper to the Court' only where that decision is consistent with the proper exercise of the jurisdiction conferred on the Court. In our view, the terms of s 669A leave no room for this Court to decline to exercise the discretion conferred on it simply because it has not been demonstrated that the decision below should be set aside as erroneous in the House v The King sense." The preceding passage, which will be further considered below, elided an important distinction between jurisdiction and power. The width of the discretion imposed on sentencing judges and relied upon in Melano does not affect the discretion conferred on the Court by 99 (2009) 197 A Crim R 399 at 407 [127]. 100 (2009) 197 A Crim R 399 at 411 [132], citing Ward v Williams (1955) 92 CLR 496 at 507; [1955] HCA 4. 101 (2009) 197 A Crim R 399 at 415 [143]. 102 (2009) 197 A Crim R 399 at 411-412 [133]. Crennan Bell s 669A(1) to vary the sentence to impose "such sentence as seems proper to this Court."103 There is no scope in the language of s 669A(1) for a gloss that would limit the power of the Court to vary a "proper" sentence imposed by a sentencing judge only to "exceptional cases"104. Melano has been acted upon only in the general sense that later decisions have assumed its correctness and the legislature has not intervened again to seek to alter the position established by that decision105. The correctness of Melano was doubted by members of the High Court in York, albeit its authority was not challenged106. The majority in the Court of Appeal rejected a submission that s 669A(1) should be construed so as to minimise any disparity between the position of the Attorney-General and the position of a convicted person in relation to appeals against sentence. The right of appeal conferred on the Attorney-General was said to be an important means of ensuring equality before the law by ensuring that like offences and like offenders were punished alike107. The majority concluded that the approach taken in Melano was "opposed to the undoubted intention of the Parliament as enacted" in s 669A in its current form108. They returned to the approach adopted by Andrews CJ in Osmond and said109: 103 (2009) 197 A Crim R 399 at 412 [134]. 104 (2009) 197 A Crim R 399 at 412 [135]. 105 (2009) 197 A Crim R 399 at 412 [137]. 106 (2009) 197 A Crim R 399 at 412 [138]. 107 (2009) 197 A Crim R 399 at 414-415 [142]. 108 (2009) 197 A Crim R 399 at 416 [146], quoting John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 452 per Brennan J. 109 (2009) 197 A Crim R 399 at 416 [147]. Crennan Bell "This Court in exercising its discretion must have regard to the sentence imposed below, but come to its own view as to the proper sentence to be imposed. In doing so, it must act in conformity with the principles relevant to the exercise of judicial power." Their Honours accepted that they might come to the view that the proper sentence was not so substantially different from the sentence imposed below that They also referred to the Solicitor-General's variation was warranted. acknowledgment that the right of appeal conferred by s 669A(1) "should be exercised sparingly by the Attorney-General and not merely for the purpose of having a 'second bite at the cherry'."110 This was not evidently a factor which yielded any principle informing the exercise of the Court's discretion. However, the majority stated, in increasing the sentence imposed on the appellant, that they bore in mind "the importance of the consideration that appeals under s 669A must not be seen as a means for the prosecution to change its mind as to the level of sentence it is disposed to seek – ie to have a 'second bite of the cherry'"111. This comment referred to the difference between the Crown Prosecutor's submission at the trial seeking a sentence of 13 years subject to two years deduction for time served and the Attorney-General's submission to the Court of Appeal seeking a sentence of 13 to 16 years after that deduction. McMurdo P dissented and, after reviewing the legislative history and judicial exegesis of s 669A(1), referred to House as setting out the principles governing appeals against an exercise of judicial discretion. In her Honour's opinion, it required a two-step approach in allowing appeals against sentence. Her Honour said112: "The Court must first determine whether the appeal from an exercise of judicial discretion should be allowed in accordance with long established legal principle … If the Court allows an Attorney-General's appeal against sentence under s 669A(1), it may then in its 'unfettered discretion vary the sentence and impose such sentence as to the Court seems proper.'" 110 (2009) 197 A Crim R 399 at 416 [148]. 111 (2009) 197 A Crim R 399 at 418 [156]. 112 (2009) 197 A Crim R 399 at 425 [263]. Crennan Bell Order of the Court of Appeal The order made by the Court of Appeal was in the following terms: "1. Appeal allowed. Order that the sentence imposed at first instance be varied to the extent that a sentence of 11 years imprisonment be substituted for the original sentence of 10 years imprisonment." The approach to construction The objective of statutory construction was defined in Project Blue Sky Inc v Australian Broadcasting Authority113 as giving to the words of a statutory provision the meaning which the legislature is taken to have intended them to have114. An example of a canon of construction directed to that objective and given in Project Blue Sky is "the presumption that, in the absence of unmistakable and unambiguous language, the legislature has not intended to interfere with basic rights, freedoms or immunities"115. That is frequently called the principle of legality. The legislative intention there referred to is not an objective collective mental state. Such a state is a fiction which serves no useful purpose116. Ascertainment of legislative intention is asserted as a statement of compliance with the rules of construction, common law and statutory, which have been applied to reach the preferred results and which are known to 113 (1998) 194 CLR 355; [1998] HCA 28. 114 (1998) 194 CLR 355 at 384 [78] per McHugh, Gummow, Kirby and Hayne JJ. 115 (1998) 194 CLR 355 at 384 n 56 per McHugh, Gummow, Kirby and Hayne JJ. 116 Corporate Affairs Commission (NSW) v Yuill (1991) 172 CLR 319 at 345-346 per McHugh J; [1991] HCA 28; Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591 at 613 per Lord Reid. Crennan Bell parliamentary drafters and the courts117. As this Court said recently in Zheng v "It has been said that to attribute an intention to the legislature is to apply something of a fiction. However, what is involved here is not the attribution of a collective mental state to legislators. That would be a misleading use of metaphor. Rather, judicial findings as to legislative intention are an expression of the constitutional relationship between the arms of government with respect to the making, interpretation and application of laws. As explained in NAAV v Minister for Immigration and Multicultural and Indigenous Affairs119, the preferred construction by the court of the statute in question is reached by the application of rules of interpretation accepted by all arms of government in the system of representative democracy." The application of the rules will properly involve the identification of a statutory purpose, which may appear from an express statement in the relevant statute, by inference from its terms and by appropriate reference to extrinsic materials. The purpose of a statute is not something which exists outside the statute. It resides in its text and structure, albeit it may be identified by reference to common law and statutory rules of construction. In this context, reference should be made to s 14A(1) of the Acts Interpretation Act 1954 (Q), which requires a purposive construction of Queensland statutes and is in the following terms: "Interpretation best achieving Act's purpose In the interpretation of a provision of an Act, the interpretation that will best achieve the purpose of the Act is to be preferred to any other interpretation." 117 Mills v Meeking (1990) 169 CLR 214 at 226 per Mason CJ and Toohey J (Brennan J agreeing); [1990] HCA 6; Corporate Affairs Commission (NSW) v Yuill (1991) 172 CLR 319 at 346 per McHugh J. 118 (2009) 239 CLR 446 at 455-456 [28]; [2009] HCA 52 (some footnotes omitted). 119 (2002) 123 FCR 298 at 410-412. Crennan Bell The term "purpose" is defined to include "policy objective"120. Section 14A(1) was introduced into the Acts Interpretation Act in 1991 but may be taken, as required by s 2 of the Act, to apply to all Acts, including those which predated its enactment121. Neither party placed any reliance upon s 14A, which was surprising given that an area of contest in the appeal was about statutory purpose. Section 14A requires preference to be given to that interpretation which will best achieve the purpose of the Act. It differs from s 15AA of the Acts Interpretation Act 1901 (Cth), which requires preference to be given to a construction that would "promote the purpose or object underlying the Act" over "a construction that would not promote that purpose or object." Section 15AA contemplates a limited choice between two constructions122. Assuming that s 14A is not intended to displace common law rules outside its sphere of operation, the interpretations from which the selection which it mandates is to be made must be those which comply with the requirements of those rules, none of which is antagonistic to purposive construction123. The construction of s 669A(1) Section 669A appears in Ch 67 of the Criminal Code, entitled "Appeal – pardon". The chapter provides, inter alia, for appeals by convicted persons from their convictions and sentences124 and for referral to and reservation of points of law for the Court of Appeal125. 120 Acts Interpretation Act 1954 (Q), s 36. 121 Acts Interpretation Act 1954 (Q), s 2, which provides that "[t]his Act applies to all Acts (including this Act)." See also GTK Trading Pty Ltd v Export Development Grants Board (1981) 40 ALR 375. 122 Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249 at 262 per Dawson, Toohey and Gaudron JJ; [1990] HCA 41. 123 Section 14B of the Queensland Acts Interpretation Act, which permits some reference to extrinsic material, may be of assistance. 124 Criminal Code (Q), s 668D. 125 Criminal Code (Q), ss 668A, 668B and 668C (which concerns the reservation of a case for consideration upon the arrest of a judgment). Crennan Bell In construing s 669A(1) it is necessary to approach it as a provision which confers jurisdiction upon the Court of Appeal together with powers to be used by that Court in the exercise of its jurisdiction. The distinction between jurisdiction and power has been made repeatedly by this Court126. It is a distinction which was not sharply drawn by the majority in the Court of Appeal127. The power given to the Court may inform the characterisation of its jurisdiction but does not necessarily define its content. The jurisdiction conferred on the Court of Appeal under s 669A(1) is authority to determine an appeal to the Court by the Attorney-General against any sentence imposed by the court of trial or a court of summary jurisdiction dealing summarily with an indictable offence. The scope and limits of the Court's jurisdiction are to be derived from the word "appeal". Its powers are to be found in the final words of s 669A(1), which refer to its "unfettered discretion" to "vary the sentence and impose such sentence as to the Court seems proper." The word "appeal" must be given content. In answer to a question from the Court during oral argument, the Solicitor-General of Queensland acknowledged that the construction of s 669A(1) for which he was contending was: 126 Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 161-162 per Gibbs CJ, Stephen, Mason and Wilson JJ; [1981] HCA 48; Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 616 per Mason CJ, 619 per Wilson and Dawson JJ, 627-628 per Toohey J; [1987] HCA 23; Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 29 [27]-[28], 32 [35] per Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ; [1998] HCA 30; Lipohar v The Queen (1999) 200 CLR 485 at 516-517 [78] per Gaudron, Gummow and Hayne JJ; [1999] HCA 65; Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 590 [64]-[65] per Gleeson CJ, Gaudron and Gummow JJ; [2001] HCA 1; Keramianakis v Regional Publishers Pty Ltd (2009) 237 CLR 268 at 280 [36] per French CJ; [2009] HCA 18; Osland v Secretary, Department of Justice [No 2] (2010) 241 CLR 320 at 332 [19] per French CJ, Gummow and Bell JJ, 353 [78] per Hayne and Kiefel JJ; [2010] HCA 24. 127 (2009) 197 A Crim R 399 at 411-412 [133]. Crennan Bell "By application by the Attorney the Court of Appeal may, in any case, resentence the prisoner." The jurisdiction is thus collapsed into the power. It is true that jurisdiction can be conferred in the same breath and by the same words as power, although its subject matter must be discernible from some source128. However, for the reasons given earlier, the construction propounded by the Attorney-General is not to be preferred unless required by the clear words of s 669A(1) and/or by the requirement for purposive construction set out in s 14A of the Acts Interpretation Act. It is a construction which gives no jurisdictional content to the term "appeal". It confers upon the Court a power unconstrained by any principle beyond those which constrained the sentencing judge. In CDJ v VAJ129, McHugh, Gummow and Callinan JJ observed, in relation to the appellate jurisdiction of the Full Court of the Family Court, that it was highly unlikely that the Parliament intended that the provision conferring that jurisdiction130: "should be construed in a way that would have the practical effect of obliterating the distinction between original and appellate jurisdiction." That observation was not based upon the particular language of the statute under consideration. It reflected a well established distinction between the two kinds of jurisdiction which informed the construction of the statute in that case. 128 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 168 per Dixon J; [1945] HCA 50. See also Abebe v The Commonwealth (1999) 197 CLR 510 at 605 [280] per Callinan J; [1999] HCA 14; Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 459-460 [77] per McHugh J; [1999] HCA 19; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 602-603 [18]-[20] per Gleeson CJ and McHugh J; [2000] HCA 11; Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 590-591 [66] per Gleeson CJ, Gaudron and Gummow JJ. 129 (1998) 197 CLR 172. 130 (1998) 197 CLR 172 at 202 [111]. Crennan Bell from than would derive The reasoning of the majority in the Court of Appeal did not disclose any more principled basis for interference with the sentence imposed by the trial judge the Attorney-General. Neither overt nor implied error of principle, nor manifest inadequacy or excessiveness, was necessary to enliven the Court's powers on the approach taken by the majority. The majority said that in exercising its discretion the Court "must have regard to the sentence imposed below"131, a formulation which conveyed no comprehensible restraint upon its "unfettered discretion" to vary that sentence. the construction propounded by As noted above, the majority accepted that the right of appeal "should be exercised sparingly by the Attorney-General and not merely for the purpose of having a 'second bite at the cherry'."132 The constraint applied by the majority to give content to that figure of speech was that the Attorney-General should not invoke the jurisdiction to advance a position inconsistent with that taken by the Crown before the primary judge. The Attorney-General did just that on this occasion. The majority's response was to limit the increase in the sentence imposed to that amount which would reflect the level sought by the Crown Prosecutor at first instance. The result could hardly be seen as providing any guidance to judges at first instance in future cases. Otherwise the only limiting criterion for the exercise of the jurisdiction was the indeterminate standard of substantial disagreement with the primary judge, a standard conclusional in character and attainable by a multiplicity of pathways, including both the principled and the visceral. The question raised in this case is: what purpose is served by the construction of s 669A(1) adopted by the majority and advanced on behalf of the Attorney-General on the hearing of this appeal? The majority described the right of appeal conferred on the Attorney-General by s 669A(1) as "an important tool in the maintenance of equality before the law of all convicted persons."133 Its rationale was "so radically, and obviously, different from that which informs the conferral of an entitlement on a convicted person to seek leave to appeal against sentence, that the attempt to urge strict scrutiny of s 669A(1) in the name of the 131 (2009) 197 A Crim R 399 at 416 [147]. 132 (2009) 197 A Crim R 399 at 416 [148]. 133 (2009) 197 A Crim R 399 at 415 [142]. Crennan Bell principle of legality is distinctly unpersuasive."134 The majority appear to have been using the term "equality before the law" in the sense of consistency in sentencing. Yet, as the plurality pointed out in Hili v The Queen135, consistency in sentencing refers to "consistency in the application of the relevant legal principles, not some numerical or mathematical equivalence."136 Consistency in that sense is maintained by the decisions of intermediate courts of appeal. The purpose imputed to s 669A(1) by the majority also invites reflection upon the observation in Wong v The Queen137 that a sentence itself gives rise to no binding precedent and that138: "[w]hat may give rise to precedent is a statement of principles which affect how the sentencing discretion should be exercised, either generally or in particular kinds of case." In the same case, Gleeson CJ made the observation, approved by the plurality in Hili v The Queen139, that140: "The administration of criminal justice works as a system; not merely as a multiplicity of unconnected single instances. It should be systematically fair, and that involves, amongst other things, reasonable consistency." 134 (2009) 197 A Crim R 399 at 415 [142]. 135 (2010) 85 ALJR 195; 272 ALR 465; [2010] HCA 45. 136 (2010) 85 ALJR 195 at 200 [18] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; 272 ALR 465 at 470; see also (2010) 85 ALJR 195 at 205-206 [49]; 272 ALR 465 at 478. 137 (2001) 207 CLR 584; [2001] HCA 64. 138 (2001) 207 CLR 584 at 605 [57] per Gaudron, Gummow and Hayne JJ. 139 (2010) 85 ALJR 195 at 205 [47] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; 272 ALR 465 at 477. 140 (2001) 207 CLR 584 at 591 [6]. Crennan Bell Absent clear language, it should not be an inferred purpose of s 669A(1) to authorise the Court of Appeal, in the name of "equality before the law", simply to plant a wilderness of single instances with more instances of its own choosing. Ascertainment of the statutory purpose is to be based on the words of s 669A(1) and, in particular, the word "appeal", which encompasses the jurisdiction conferred by the subsection. An appeal is a creature of statute and, subject to constitutional limitations, the precise nature of appellate jurisdiction will be expressed in the statute creating the jurisdiction or inferred from the statutory context. The purpose of s 669A(1) is to create an appellate jurisdiction exercisable upon the application of the Attorney-General and coupled with a wide remedial power. The question is what kind of jurisdiction does it create? Appeals being creatures of statute, no taxonomy is likely to be exhaustive141. Subject to that caveat, relevant classes of appeal for present purposes are: Appeal in the strict sense – in which the court has jurisdiction to determine whether the decision under appeal was or was not erroneous on the evidence and the law as it stood when the original decision was given142. Unless the matter is remitted for rehearing, a court hearing an appeal in the strict sense can only give the decision which should have been given at first instance143. 141 A useful list of processes loosely designated "appeals" appeared in Turnbull v New South Wales Medical Board [1976] 2 NSWLR 281 at 297-298 per Glass JA and was cited in Walsh v Law Society (NSW) (1999) 198 CLR 73 at 90 n 51 per McHugh, Kirby and Callinan JJ; [1999] HCA 33. 142 Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73 at 107 per Dixon J; [1931] HCA 34; Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616 at 619 per Mason J (Barwick CJ and Stephen J agreeing); [1976] HCA 62. 143 Allesch v Maunz (2000) 203 CLR 172 at 181 [23] per Gaudron, McHugh, Gummow and Hayne JJ; [2000] HCA 40. Crennan Bell Appeal de novo – where the court hears the matter afresh, may hear it on fresh material and may overturn the decision appealed from regardless of error144. Appeal by way of rehearing – where the court conducts a rehearing on the materials before the primary judge in which it is authorised to determine whether the order that is the subject of the appeal is the result of some legal, factual or discretionary error145. In some cases in an appeal by way of rehearing there will be a power to receive additional evidence146. In some cases there will be a statutory indication that the powers may be exercised whether or not there was error at first instance147. Where the court is confined to the materials before the judge at first instance, that is ordinarily indicative of an appeal by way of rehearing, which would require demonstration of some error on the part of the primary judge before the powers of the court to set aside the primary judge's decision were enlivened. Section 671B of the Criminal Code confers "supplemental powers" on the Court of Appeal generally, including the power to receive evidence148. But those powers are subject to the important limitation in s 671B(2) that "in no case shall any sentence be increased by reason of or in consideration of any evidence that was not given at the trial." 144 Allesch v Maunz (2000) 203 CLR 172 at 180-181 [23] per Gaudron, McHugh, Gummow and Hayne JJ; Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203 [13] per Gleeson CJ, Gaudron and Hayne JJ; [2000] HCA 47. 145 Allesch v Maunz (2000) 203 CLR 172 at 180 [23] per Gaudron, McHugh, 146 CDJ v VAJ (1998) 197 CLR 172 at 202 [111] per McHugh, Gummow and 147 Re Coldham; Ex parte Brideson [No 2] (1990) 170 CLR 267; [1990] HCA 36; see Allesch v Maunz (2000) 203 CLR 172 at 180-181 [23] per Gaudron, McHugh, 148 Criminal Code (Q), s 671B(1)(c). Crennan Bell The appellate jurisdiction conferred by s 669A(1) must be confined, at least when the Attorney-General is asserting that the sentence should be increased, to the evidence before the primary judge, including evidence given at trial, what the jury necessarily found and evidence, if any, given at the sentencing hearing. Having regard to the categories of appellate jurisdiction and the confinement of the Court of Appeal to evidence before the primary judge, it is open to construe s 669A(1) as creating an appeal by way of rehearing and conferring appellate jurisdiction to determine only whether there has been some error on the part of the primary judge. Such error having been detected, the Court has a wide power, indicated by the words "unfettered discretion", to vary that sentence. The Solicitor-General of Queensland pointed to the background to the enactment of the new s 669A(1) in 1975 as a response to the 1973 decision of the Court of Criminal Appeal in Liekefett. The record of the Second Reading Speech shows that the Minister for Justice intended, by the repeal and re-enactment of s 669A(1), to "make it clear that the Court of Criminal Appeal has an unfettered discretion to determine the proper sentence to impose when the Attorney-General has appealed against the inadequacy of the sentence."149 The Minister's words, however, cannot be substituted for the text of the law, particularly where the Minister's intention, not expressed in the law, affects the liberty of the subject150. In any event the Minister's Speech left open the question of the content to be given to the word "appeal" and thereby to the jurisdiction conferred upon the Court. Neither expressly nor by necessary implication do the words of s 669A(1) define the jurisdiction simply by reference to the power to vary sentences if the Attorney-General chooses to appeal. Such a construction would require clear language to overcome the intention which the common law imputes to the legislature that it does not require the Court to consider an appeal on the basis that it might be persuaded to disagree with a sentence which could not be 149 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 23 April 1975 at 993. 150 Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518 per Mason CJ, Wilson and Dawson JJ; [1987] HCA 12. See also Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 499 [55] per Gaudron, McHugh, Gummow, Kirby and Hayne JJ; [2003] HCA 2 and authorities there cited. Crennan Bell challenged as manifestly inadequate or excessive or otherwise affected by error151. In our opinion, the appellate jurisdiction conferred upon the Court of Appeal by s 669A(1) requires that error on the part of the sentencing judge be demonstrated before the Court's "unfettered discretion" to vary the sentence is enlivened. The unfettered discretion may be taken to confer upon the Court of Appeal in such a case the power to substitute the sentence it thinks appropriate where error has been demonstrated. The appeal should be allowed. The question that then arises is whether the matter should be remitted to the Court of Appeal on the basis that it did not determine whether the trial judge erred in principle or imposed a manifestly inadequate sentence indicative of such error. In allowing the Attorney-General's appeal, the majority in the Court of Appeal said that it had been "apparent from what we have said in relation to the sentence imposed on the respondent in respect of his application for leave to appeal against sentence that we consider that the sentence which was imposed on him was inadequate."152 The basis of the inadequacy there referred to appears from the penultimate paragraph of the majority's reasons for judgment disposing of the appellant's application for leave to appeal against sentence. The majority said153: "Even after making due allowance for the appellant's limited criminal history and youth, it cannot be said that the primary judge's selection of 12 years as the starting point for his sentence was excessive, let alone manifestly so. A substantially higher head sentence would have been within the proper exercise of the sentencing discretion and was in fact required if the purposes of denunciation and general deterrence were to be 151 See the discussion of "manifest inadequacy" in Hili v The Queen (2010) 85 ALJR 195 at 207-208 [58]-[60] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; 272 ALR 465 at 480-481. 152 (2009) 197 A Crim R 399 at 417 [154]. This reference to the respondent is a reference to the appellant in this Court. 153 R v Lacey; Ex parte Attorney-General (Qld) [2009] QCA 274 at [203]. This paragraph, which appears in the published medium neutral version of the case, does not appear in the published report in the Australian Criminal Reports. Crennan Bell adequately served. The sentence of 10 years, after allowing for time spent which was not able to be declared time served, was, in consequence, far from excessive." The appellant submitted to this Court that if he were to succeed the order of the Court of Appeal should be set aside and in its place an order made dismissing the appeal to that Court. In the alternative, an order was sought that the notice of appeal be dismissed as the Attorney-General's notice of appeal raised the alternative ground that the sentence imposed was "manifestly inadequate", the appeal could not be dismissed as incompetent on the basis that its grounds failed to invoke the jurisdiction conferred by s 669A(1) properly construed. incompetent. Given that The Attorney-General did not make any submission against the proposed order that the appeal to the Court of Appeal be dismissed. The remarks made by the majority in the Court of Appeal in dismissing the appellant's application for leave to appeal against his sentence did not assert that the majority had discerned an error of principle in connection with the inadequacy of the sentence imposed. No finding of such an error was made in relation to that inadequacy in the majority's reasons for allowing the Attorney-General's appeal. Had such an error been found, that would have been a basis for allowing the Attorney-General's appeal even on the construction of s 669A(1) adopted by the majority. In the absence of any finding of error of principle on the part of the primary judge and the absence of any argument that the matter should be remitted, the appropriate order is: Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of Queensland made on 11 September 2009 and, in lieu thereof, order that the appeal to that Court be dismissed. The stances of the parties Section 669A(1) of the Criminal Code (Q) provides that, when the Court of Appeal is hearing an appeal by the Attorney-General against sentence, it "may in its unfettered discretion vary the sentence and impose such sentence as to the Court seems proper." What does this mean? The appellant's case in a nutshell, accepted by the President of the Court of Appeal (dissenting), was that the Court of Appeal must proceed in two stages. The first stage is to decide whether it is open to the Court to consider varying the sentence at all, and that depends on whether the sentencing judge fell into one of the errors described in House v The King154. Below, this will be called "error in the relevant sense". If, but only if, error in the relevant sense is found, the second stage arises. It turns on the inquiry: "To what extent should the sentence be varied?" The appellant submitted, then, that at the first stage the discretion conferred by s 669A(1) is fettered by the need to find error in the relevant sense, while it is only at the second stage that the discretion is "unfettered". The respondent's case in a nutshell was that s 669A(1) meant that, on an application by the Attorney-General to the Court of Appeal, the Court might in any case re-sentence the prisoner. The respondent accepted that there were two stages, but submitted that at each stage the Court of Appeal's discretion was unfettered, and that it was possible to move to the second stage without finding 154 (1936) 55 CLR 499 at 504-505; [1936] HCA 40. Dixon, Evatt and McTiernan JJ said: "It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." error in the relevant sense at the first stage. At the first stage it might decide not to embark on the second stage – for example, because it agreed with the sentence, or because it thought that any disparity between what the sentencing judge had done and what it would favour was too slight to merit embarking on the second stage, or because the conduct of the prosecution before the sentencing judge did not make it just to embark on the second stage. At the second stage it could select any sentence it chose without any fetter. The parties, then, were agreed in relation to the second stage, but not the first. To avoid doubt, it should be indicated that there was a silent and correct consensus between the parties that at the second stage the discretion, though unfettered, remained a judicial discretion, not to be arbitrarily or capriciously exercised. History In 1939 the precursor to the present form of s 669A was introduced into the Criminal Code by the Criminal Code Amendment Act 1939 (Q). The Premier of Queensland, the Hon W Forgan Smith, said in his Second Reading Speech that the provision, granting a right of Crown appeal against sentence, was "identical with that enacted by New South Wales in 1924."155 That which had been enacted for Crown appeals against sentence in New South Wales in 1924 was s 5D of the Criminal Appeal Act 1912 (NSW). Both s 5D and s 669A gave the appellate court a "discretion". That word was not qualified by the adjective "unfettered". Eleven years before the Premier spoke, it had been said by Knox CJ and Powers J in Whittaker v The King156 that a possible construction of s 5D was that it conferred "unlimited judicial discretion". Gavan Duffy and Starke JJ said157: "There is nothing in the words of the section to limit the exercise of discretion … The Court of Criminal Appeal, in imposing the sentence complained of, did not proceed in opposition to any principle of law but in accordance with its own considered view of the facts." Isaacs J, on the other hand, thought158 that the Court of Criminal Appeal should not interfere unless the sentencing judge had erred in some of the ways later 155 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 21 November 1939 at 1716. 156 (1928) 41 CLR 230 at 235; [1928] HCA 28. 157 (1928) 41 CLR 230 at 253. 158 (1928) 41 CLR 230 at 245. described in House v The King. Higgins J declined to decide the question, which had not been argued, but thought it right to assume that the sentence should not be interfered with "unless there has been a mistake of principle"159. In Williams v The King [No 2]160 Evatt and McTiernan JJ treated Knox CJ and Powers J in Whittaker v The King as having stated not just a possible view, but an opinion that that view was right, and considered that Gavan Duffy and Starke JJ "adopted much the same interpretation, namely, that the section confers an unfettered discretion upon the Court of Criminal Appeal to alter the sentence imposed by a trial Judge." It is true that in House v The King Dixon, Evatt and McTiernan JJ stated that appeals against exercises of discretion should only be allowed if an error was made161. But none of the judicial opinions cited for this proposition came from cases involving Crown appeals or from cases on s 5D, except for the opinion of Isaacs J in Whittaker v The King. And House v The King itself was not a case on s 5D. In Cranssen v The King Dixon, Evatt and McTiernan JJ adopted the same test as they had in House v The King – again in a case which was not a Crown appeal and did not involve s 5D162. Starke J163, on the other hand, repeated what he had said in House v The King, namely that the sentence imposed upon an accused person for an offence is a matter164: "peculiarly within the province of the judge who hears the charge: he has a discretion to exercise which is very wide, but it must be exercised judicially, according to rules of reason and justice, and not arbitrarily or capriciously or according to private opinion." At the time when the Premier of Queensland spoke in 1939, then, there was material to suggest that the conventional understanding of the majority view in this Court on s 5D, as distinct from other provisions relating to appeals from 159 (1928) 41 CLR 230 at 253. 160 (1934) 50 CLR 551 at 567; [1934] HCA 19. 161 (1936) 55 CLR 499 at 505. 162 (1936) 55 CLR 509 at 519; [1936] HCA 42. The same is true of Harris v The Queen (1954) 90 CLR 652 at 655; [1954] HCA 51. 163 (1936) 55 CLR 509 at 513. 164 (1936) 55 CLR 499 at 503. discretionary decisions, was that no error of principle need be established. The Premier was not to know that four decades after he spoke, Barwick CJ would say in Griffiths v The Queen, which was a s 5D case, that while what Knox CJ and Powers J said in Whittaker v The King "could support" the view that no error of principle need be established, what Gavan Duffy and Starke JJ said in Whittaker v The King was "ambiguous"165. Nor was the Premier to know that in Griffiths v The Queen Jacobs J166 would say that it was wrong to interpret what was said in Whittaker v The King as being different from what was said in House v The King – a proposition which, with respect, it is difficult to accept. The construction of s 5D by four judges in Whittaker v The King, as then conventionally understood, was adopted in Queensland in R v Beevers167 and continued until 1973, when the Court of Criminal Appeal decided in R v Liekefett; Ex parte Attorney-General168 to follow instead the approach of Isaacs J. Two years later s 669A was replaced by the Criminal Code and the Justices Act Amendment Act 1975 (Q). The key amendment was to substitute for "discretion" the words "unfettered discretion". With respect, the majority of the Court of Appeal in these proceedings was right to construe s 669A(1) as not requiring a demonstration of error in the relevant sense before a sentence could be varied. That is so for the following reasons. The statutory words First, the majority construction gives proper weight to the adjective "unfettered". It is, of course, open to those who think it is right to do so to criticise s 669A if it means what the Court of Appeal majority said it means in these proceedings. Many may think that, so construed, s 669A may lead to unsatisfactory results, such as a multiplication of unhelpful appellate decisions turning on different perceptions by appellate judges of justice in particular cases. It may be open to many other criticisms. But the legislature is entitled to enact a statute which is open to criticism. It is not for a court to reconstruct the statute after its own desires169. 165 (1977) 137 CLR 293 at 308; [1977] HCA 44. 166 (1977) 137 CLR 293 at 327. 167 [1942] St R Qd 230. 168 [1973] Qd R 355 at 366. 169 In this respect the Court of Appeal majority used some colourful language – it is not adopted here, but only drawn to attention lest oblivion overtake it: R v Lacey (2009) 197 A Crim R 399 at 415 [142] (last sentence). It may be assumed that, without clear words, legislation should not be construed so as to derogate from existing rights or interests of various kinds. Some of the rights or interests mentioned in argument are more important than others. In this case it was said that, without clear words, s 669A(1) should not be construed to affect liberty, or to permit that form of "double jeopardy" which is involved in Crown appeals, or to permit sentences to be increased even if there is no error in the relevant sense, or to place Crown appeals in a different position from that of appeals by the accused, or to permit the Crown to bring sentencing appeals merely because it is dissatisfied with the particular sentence selected by the sentencing judge, or even, as happened here, to permit the Crown to adopt the highly unsatisfactory course of urging before the Court of Appeal a higher sentence than that which it had urged on the sentencing judge. But, to take one of these propositions by way of example, it is incontestable that s 669A, when compared to s 668E, does place the accused in a different position from that occupied by the Crown in relation to the facility of appeal, and a worse one. It is incontestable because of the clarity of the language. Contrary to the views of others, the words "unfettered discretion" are equally clear. To construe the adjective "unfettered" as applying only to the process by which an appellate court decides the level to which the sentence should be varied, but not to the process by which it decides whether it should be varied at all, is both otiose and artificial. It is otiose in this sense: if it were necessary to demonstrate error in the exercise of the sentencing judge's discretion before a sentence could be reviewed, the only unfettered discretion was the "second stage" discretion about what higher sentence should be imposed. But that discretion would have been "unfettered" (within the limits of a judicial discretion), without the need for inserting that word. Even McMurdo P, who dissented from the construction given to s 669A by the majority in the Court of Appeal, said that the word "unfettered" adds "nothing more than emphasis to s 669A(1)"170. But since it was entirely unnecessary to give emphasis, the insertion of the word "unfettered" would have no point. The Court of Appeal majority was correct to say that, on the appellant's argument, the 1975 amendment to s 669A(1) "achieved precisely nothing"171. That is a consideration pointing strongly against the validity of the appellant's argument in this Court. 170 R v Lacey (2009) 197 A Crim R 399 at 428 [267]. 171 R v Lacey (2009) 197 A Crim R 399 at 407 [127] per de Jersey CJ, Keane, Muir and Chesterman JJA. The appellant submitted, however, that the word "unfettered" was not otiose and that it did achieve something. He gave as an example of a "fetter" which the word removed a requirement that in re-sentencing the Court of Appeal sentence only at "the lower end of the available range for sentences of the particular type of offence in question at the time." First, that supposed requirement had no statutory warrant. Secondly, there are no express words in s 669A(1), and no implications from the express words used in s 669A(1), to suggest that that factor – which may well be a relevant discretionary factor – is more significant or controlling than any other172. And, thirdly, that submission leaves unanswered the question why the Court of Appeal's discretion is partially but not wholly unfettered – unfettered at the "second stage", but fettered at the "first stage". The existence of that unanswered question illustrates why the construction advocated by the appellant is artificial. It is artificial because there is no reason on the face of the language to treat the "unfettered" aspect of the Court of Appeal's responsibilities as limited to the "second stage" when a new sentence is selected, and as not extending to the "first stage" of deciding whether or not to interfere with the sentence at all. When Knox CJ and Powers J in Whittaker v The King spoke of an "unlimited judicial discretion"173 (which expression Evatt and McTiernan JJ construed as meaning "unfettered discretion"174) they meant not only that the appellate court had liberty to increase the sentence at the "second stage", but also that it could decide to do so free from any need at the "first stage" to make a finding that, before increasing the sentence, the sentencing judge had proceeded on a wrong principle. That is the natural construction of "unfettered discretion". A discretion which exists only in relation to the second stage and does not exist in relation to the first is not an unfettered discretion. The appellant submitted: "the purposive approach to statutory interpretation in this matter is of no value as such an approach would do nothing other than lead to greater confusion. In such circumstances, reliance must be placed upon the words of the legislation. To change long established legal principle requires clear and unambiguous statutory wording. Such wording is absent in s 669A(1). In that regard it would not have been difficult for the 172 Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 at 89-90 [55]-[59]; [2008] HCA 42. 173 (1928) 41 CLR 230 at 235. 174 Williams v The King [No 2] (1934) 50 CLR 551 at 567. legislature to have amended the section in such a way as to avoid all ambiguity as to its intention." The first two sentences are correct. So, it may be assumed, in the context of the present proceedings, is the third sentence. With respect, the fourth is not correct. And the appellant did not suggest a clearer way by which s 669A could have been amended in 1975. Authority in this Court A second consideration of some weight supporting the construction adopted by the Court of Appeal majority is that McHugh J in York v The Queen175, after giving the matter close consideration, favoured it. What the Minister said A third consideration arises out of what the Minister for Justice said in 1975. Excessive recourse to second reading speeches is one of the blights of modern litigation. Modern legislation permits it, or is often assumed to permit it, to a much greater extent than the common law rules of statutory construction did. Experience is tending to raise grave doubts about the good sense of that legislation. It may be accepted that what Ministers say about what they intended the enactment to provide is no substitute for an examination of what the enactment actually provides, only an aid to it. It may be accepted that that proposition is particularly salutary when the enactment is said to derogate from fundamental rights or damage fundamental interests. But the fact remains that the courts can investigate what Ministers say. There are rare occasions when that investigation has value. This is one of the rare occasions. In what the Minister for Justice said on 23 April 1975 in his Second Reading Speech176, there is support for the clear construction to be given to the legislative words "unfettered discretion" which was adopted by the Court of Appeal majority. There is nothing narrow or incomplete in what he said. The court decision to which the Minister referred, R v Liekefett; Ex parte Attorney-General, was a decision holding that error in the relevant sense had to be established before the appellate court could vary a sentence under s 669A(1). It was a decision which related to the "first stage", not the "second stage". It is that decision which the Minister saw the amendment as reversing, and the insertion of "unfettered" was a sufficiently clear method of reversing it. 175 (2005) 225 CLR 466 at 474-475 [25]-[27]; [2005] HCA 60. 176 It is quoted above at [61]. The appellant dealt with the Minister's Second Reading Speech thus: "when the Minister for Justice told Parliament in 1975 that the amendment only makes clear what was always intended, it would seem that what was originally intended [in 1939] was that the Attorney-General should have a similar right to appeal against decisions to that of a defendant. Of course, the legislation did not give effect to that intention in 1939 as the Attorney-General was given the right of appeal against a sentence whereas an individual had to seek the leave of the Court to appeal against sentence." for Justice Whatever was originally intended in 1939, with respect, it is plain that the Minister the Attorney-General's facility of appealing equivalent to that of the defendant; rather he was talking about making it clear that a Crown appeal did not depend on first establishing error in the relevant sense. in 1975 was not talking about rendering That emerges even more forcefully from what the Minister for Justice said five days before his Second Reading Speech, on 18 April 1975, when the Bill was initiated in committee. Before one examines what he said on that particular occasion, it is necessary to be sure that it is legitimate to do so. A provision in an Act which the President of the Court of Appeal and six judges in this Court construe one way, and four other judges in the Court of Appeal and McHugh J construe another way, must be in some sense "ambiguous" or "obscure", even though the proponents of each side of the argument are adamant that their construction is the only possible one. Section 14B(1)(a) of the Acts Interpretation Act 1954 (Q) thus permits the Court to give consideration to "extrinsic material". Section 14B(3) defines "extrinsic material" as "relevant material not forming part of the Act concerned". Section 14B(3) lists, non-exhaustively, various examples. Section 14B(3)(f) permits recourse to the Second Reading Speech of the Minister for Justice. Section 14B(3)(g) would appear to permit recourse to the Minister's speech when the Bill was initiated in committee, since it would appear to fall within the words "material in the Votes and Proceedings of the Legislative Assembly or in any official record of debates in the Legislative Assembly". In any event, what the Minister said is "relevant" within the meaning of the opening words of s 14B(3). The Minister said177: "The Attorney-General has a right to appeal to the Court of Criminal Appeal where he considers that the sentence on conviction on indictment was too light. For approximately 30 years, until a court decision in 1973, the Court of Criminal Appeal acted on the principle that the court had an unfettered discretion and was not bound to inquire whether the trial judge was manifestly wrong in his sentence. The court simply had the circumstances. The effect of the decision in 1973 was that the Court of Criminal Appeal does not have an unfettered discretion and the Attorney-General now has to prove that the sentence was manifestly inadequate. It is proposed to make it clear that the Court of Criminal Appeal does have an unfettered discretion and has therefore to determine what was the proper sentence in the circumstances." (emphasis added) to determine what was the proper sentence By "too light" the Minister plainly meant a sentence which the Attorney-General disagreed with, whether he thought it "manifestly wrong" or not, or "manifestly inadequate" or not. By "the proper sentence" the Minister plainly meant the sentence which the Court of Criminal Appeal thought proper because it was changed so as not to be "too light" in its view, without any need to consider whether the sentencing judge's sentence was afflicted by an error of principle. The Minister's use of the expressions "manifestly wrong" and "manifestly inadequate" correspond with the words "manifestly wrong", used by Lord Reading CJ in one of the authorities relied on in House v The King178. The Minister's expressions also correspond with the residual category of error in House v The King described in the last two sentences quoted above179. The key 177 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 18 April 178 R v Wolff (1914) 10 Cr App R 107 at 110: see House v The King (1936) 55 CLR 179 At [67] n 154. See also Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360; [1949] HCA 26, where Dixon J, speaking of the decision of an official but in terms relevant to judicial discretionary decisions, said of the residual category: "If the result appears to be unreasonable on the supposition that he addressed himself to the right question, correctly applied the rules of law and took into account all the relevant considerations and no irrelevant considerations, then it may be a proper inference that it is a false supposition. It is not necessary that you should be sure of the precise particular in which he has gone wrong. It is enough that you can see that in some way he must have failed in the discharge of his exact function according to law." (Footnote continues on next page) "fetters" which the Minister had in mind were thus those described in House v The King. They are "fetters" which apply, if at all, at the "first stage". The Minister's language applies to the first stage. It is not limited to the "second stage". "Appeal" The fourth consideration concerns the word "appeal". The appellant submitted that the selection of the word "appeal" in s 669A(1) indicated that the process was one involving the correction of error in the relevant sense. The submission assumes that all procedures described in legislation as "appeals" must involve the correction of error in the relevant sense. That assumption is unsound. The construction of "unfettered discretion" adopted by the Court of Appeal majority is not antithetical to the word "appeal" in s 669A(1). The legislature is at liberty to fashion what particular types of appeal it wishes to create. The word "appeal" covers a variety of processes, and the list of them is not closed. The potential reach of the expression in any particular enactment is confined only by any limit to the fertility of Parliament. Section 669A(1) empowers the Attorney-General to apply to the Court of Appeal in order to complain about a sentence. It confers on the Court of Appeal a jurisdiction to consider the appeal and a duty to do so. In carrying out its duty to consider that kind of appeal against sentence, the Court of Appeal has at the first stage a duty to consider whether the sentence imposed was such as to merit variation. If it decides that it did merit variation, at the second stage its duty is to decide what variation should be made. Nothing in s 669A(1) requires a search for error at the first stage. In carrying out the duty arising at the first stage, however, the Court of Appeal would be entitled to decline to enter upon the sentencing task involved at the second stage if, for example, it thought that any insufficiency in the sentencing judge's sentence was only minor. It would be so entitled partly to discourage frivolous Crown appeals, partly because re-sentencing in those circumstances would be a waste of its time, and partly because it is inherent in the nature of sentencing that different minds will arrive at different sentences on identical facts180. At that first stage the Court of Appeal has a discretion which is not fettered to decline to interfere even though it disagrees with the sentence. At the second stage, if it decides to embark on it, the Court of Appeal has a discretion which is not fettered to determine what the increase should be. The statutory See also Hili v The Queen (2010) 85 ALJR 195 at 207 [58]; 272 ALR 465 at 480; [2010] HCA 45. 180 This points to the fact that the practical difference between the majority and minority views in the Court of Appeal may be slight: for even on the majority view, the Court's discretion to decline to interfere will very commonly be exercised against interference if there is no error in principle. language which creates this structure may be unusual, it may be wanting in sense, but it was open to the legislature to use it, and it has done so. The Kable question The appellant submitted in writing – the Court did not require oral argument in view of the impending success of the appellant on the construction issue – that if the construction given to s 669A by the majority of the Court of Appeal were correct, the provision was constitutionally invalid by reason of the principles stated in the line of cases commencing with Kable v Director of Public Prosecutions (NSW)181. The submission is unsound, but there is no point in lengthening this dissenting judgment by giving reasons for that opinion. Order The appeal should be dismissed. 181 (1996) 189 CLR 51; [1996] HCA 24. |
HIGH COURT OF AUSTRALIA Matter No S249/2016 MALTIMORE SMITH AND THE QUEEN Matter No M144/2016 THE QUEEN AND APPELLANT RESPONDENT APPELLANT RESPONDENT Smith v The Queen The Queen v Afford [2017] HCA 19 10 May 2017 S249/2016 & M144/2016 ORDER Matter No S249/2016 Appeal dismissed. Matter No M144/2016 Appeal allowed. Set aside orders 2 and 3 of the Court of Appeal of the Supreme Court of Victoria made on 4 March 2016 with respect to the appeal against conviction and in their place order that the appeal against conviction be dismissed. Set aside order 1 of the Court of Appeal of the Supreme Court of Victoria made on 4 March 2016 with respect to the appeal against sentence. Remit the matter to the Court of Appeal of the Supreme Court of Victoria to determine the appeal against sentence. Matter No S249/2016: on appeal from the Supreme Court of New South Wales Matter No M144/2016: on appeal from the Supreme Court of Victoria Representation S J Odgers SC with S J Buchen for the appellant in S249/2016 (instructed by Legal Aid NSW) W J Abraham QC with K M J Breckweg for the respondent in S249/2016 and the appellant in M144/2016 (instructed by Commonwealth Director of Public Prosecutions) T Kassimatis SC with A I Burchill and C K Wareham for the respondent in M144/2016 (instructed by James Dowsley & Associates) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Smith v The Queen The Queen v Afford Criminal law – Fault element – Intent – Inferential reasoning – Importation of commercial quantity of border controlled drug – Where accused persons brought substance into Australia – Where substance concealed in items – Where accused persons denied intent to import substance – Where accused persons perceived real or significant chance of presence of substance when entering Australia – Whether permissible to infer intent for purposes of Criminal Code (Cth) from awareness of real or significant chance of presence of substance – Whether process of inferential reasoning identified in Bahri Kural v The Queen (1987) 162 CLR 502; [1987] HCA 16 applicable – Whether jury directions conflated intent with recklessness. Words and phrases – "inferential reasoning", "intent to import", "intention", "jury directions", "real or significant chance", "reckless", "unsafe verdict". Criminal Code (Cth), ss 5.2, 5.4, 5.6, 307.1. KIEFEL CJ, BELL, GAGELER, KEANE, NETTLE AND GORDON JJ. These two appeals were heard together. Each involves a question of whether the process of inferential reasoning posited in Bahri Kural v The Queen1 is applicable to proof of an intention to import a commercial quantity of a border controlled drug contrary to s 307.1 of the Criminal Code (Cth) ("the Code"). The appeal in Afford also involves a question of whether the verdict in that case was unsafe. For the reasons which follow, it should be held, in respect of both appeals, that the process of reasoning posited in Kural is applicable to proof of an intention to import a commercial quantity of a border controlled drug under the Code. In relation to the appeal in Afford it should be held that the verdict was not unsafe. Relevant statutory provisions At the time Kural was decided, s 233B(1)(b) of the Customs Act 1901 (Cth), which was the predecessor to s 307.1 of the Code, made it an offence to import any "prohibited imports" to which the section applied. "Prohibited imports" included narcotic substances2. Section 307.1 of the Code, enacted in 20053, provides that: "(1) A person commits an offence if: the person imports or exports a substance; and the substance is a border controlled drug or border controlled plant; and the quantity imported or exported is a commercial quantity. Penalty: Imprisonment for life or 7,500 penalty units, or both. (2) The fault element for paragraph (1)(b) is recklessness. (1987) 162 CLR 502; [1987] HCA 16. 2 Customs Act, ss 4(1) definition of "narcotic goods", 233B(2). 3 Law and Justice Legislation Amendment (Serious Drug Offences and Other Measures) Act 2005 (Cth), Sched 1, Item 1. Bell Nettle Gordon (3) Absolute liability applies to paragraph (1)(c)." A "border controlled drug" is defined in s 301.4 of the Code to mean: "a substance, other than a growing plant, that is: listed by a regulation as a border controlled drug; or a drug analogue of a listed border controlled drug; or determined by the Minister as a border controlled drug under section 301.13 (which deals with emergency determinations of serious drugs)." So far as is relevant, Div 5 of Ch 2 of the Code provides: "5.1 Fault elements (1) A fault element for a particular physical element may be intention, knowledge, recklessness or negligence. Subsection (1) does not prevent a law that creates a particular offence from specifying other fault elements for a physical element of that offence. 5.2 Intention (1) A person has intention with respect to conduct if he or she means to engage in that conduct. (2) A person has intention with respect to a circumstance if he or she believes that it exists or will exist. (3) A person has intention with respect to a result if he or she means to bring it about or is aware that it will occur in the ordinary course of events. 5.3 Knowledge A person has knowledge of a circumstance or a result if he or she is aware that it exists or will exist in the ordinary course of events. Bell Nettle Gordon 5.4 Recklessness (1) A person is reckless with respect to a circumstance if: he or she is aware of a substantial risk that the circumstance exists or will exist; and having regard to the circumstances known to him or her, it is unjustifiable to take the risk. (2) A person is reckless with respect to a result if: he or she is aware of a substantial risk that the result will occur; and having regard to the circumstances known to him or her, it is unjustifiable to take the risk. (3) The question whether taking a risk is unjustifiable is one of fact. If recklessness is a fault element for a physical element of an offence, proof of intention, knowledge or recklessness will satisfy that fault element. 5.6 Offences that do not specify fault elements If the law creating the offence does not specify a fault element for a physical element that consists only of conduct, intention is the fault element for that physical element. If the law creating the offence does not specify a fault that consists of a element for a physical element circumstance or a result, recklessness is the fault element for that physical element. Note: Under subsection 5.4(4), recklessness can be established by proving intention, knowledge or recklessness." Bell Nettle Gordon By operation of s 5.6(1), the fault element applicable to s 307.1(1)(a) is intention, as defined in s 5.2(1), and, as such, a person cannot be convicted of importing a border controlled drug unless he or she meant to import the substance. The reasoning in Kural In Kural, this Court held4 that it was open to infer intent to import a narcotic drug contrary to s 233B(1)(b) of the Customs Act where it was established that the accused knew or believed or was aware of the likelihood, in the sense of there being a significant or real chance, that what was being imported was a narcotic drug. As the majority stated5: "The problem then is one of proof. How does one prove the existence of the requisite intention? Sometimes there is direct evidence in the form of an admission by the accused that he intended his conduct to involve the forbidden act. More often, the existence of the requisite intention is a matter of inference from what the accused has actually done. The intention may be inferred from the doing of the proscribed act and the circumstances in which it was done. Where, as here, it is necessary to show an intention on the part of the accused to import a narcotic drug, that intent is established if the accused knew or was aware that an article which he intentionally brought into Australia comprised or contained narcotic drugs. But that is not to say that actual knowledge or awareness is an essential element in the guilty mind required for the commission of the offence. It is only to say that knowledge or awareness is relevant to the existence of the necessary intent. Belief, falling short of actual knowledge, that the article comprised or contained narcotic drugs would obviously sustain an inference of intention. So also would proof that the forbidden act was done in circumstances where it appears beyond reasonable doubt that the accused was aware of the likelihood, in the sense that there was a significant or real chance, that his conduct involved that act and nevertheless persisted in that conduct. As a practical matter, the inference of mens rea or a (1987) 162 CLR 502 at 505 per Mason CJ, Deane and Dawson JJ. See also at 512 per Toohey and Gaudron JJ. (1987) 162 CLR 502 at 504-505 per Mason CJ, Deane and Dawson JJ. Bell Nettle Gordon guilty mind will ordinarily be irresistible in cases involving the importation of narcotic drugs if it is proved beyond reasonable doubt that the accused actually imported the drugs and that he was aware, at the time of the alleged commission of the offence, of the likelihood of the existence of the substance in question in what he was importing and of the likelihood that it was a narcotic drug. What we have said is designed to emphasize that the existence of the requisite intention is a question of fact and that in most cases the outcome will depend on an inference to be drawn from primary facts found by the tribunal of fact. In this, as in other areas of the law, it is important not to succumb to the temptation of transforming matters of fact into propositions of law. In that regard, we would emphasize that the foregoing comments are not designed as a direction or instruction to be read by trial judges to juries. They are intended to give guidance to trial judges in order to enable them to formulate such directions as may be appropriate to the facts and circumstances of particular cases." Subsequent developments The reasoning in Kural was later affirmed by this Court in Saad v The Queen6 and Pereira v Director of Public Prosecutions7. On each occasion, the Court emphasised that the existence of intent is a question of fact and that, although the process of reasoning posited in Kural may provide guidance, it is not intended to be a formula applicable to all circumstances. Subsequently, with effect from 15 December 20018, Ch 2 of the Code was made to apply to offences under s 233B(1)(b) of the Customs Act9. As was earlier noted, Ch 2 of the Code provides, inter alia, the "fault elements" for Commonwealth criminal offences. Relevantly, s 5.2(1) of the Code provides that (1987) 61 ALJR 243 at 244 per Mason CJ, Deane and Dawson JJ; 70 ALR 667 at 668-669; [1987] HCA 14. (1988) 63 ALJR 1 at 3; 82 ALR 217 at 219-220; [1988] HCA 57. 8 Law and Justice Legislation Amendment (Application of Criminal Code) Act 2001 (Cth), s 2(3); Criminal Code (Cth), s 2.2(2). 9 Law and Justice Legislation Amendment (Application of Criminal Code) Act, Sched 21, Item 3. Bell Nettle Gordon "[a] person has intention with respect to conduct if he or she means to engage in that conduct". The effect of the application of Ch 2 of the Code to offences under s 233B(1)(b) of the Customs Act was thus to substitute the definition of intent in s 5.2 of the Code for the common law notion of intent. In R v Saengsai-Or, the Court of Criminal Appeal of New South Wales held10 that, notwithstanding the application of Ch 2 of the Code, the process of inferential reasoning identified in Kural continued to apply to proof of offences under s 233B(1)(b) of the Customs Act. Bell J, with whom Wood CJ at CL and "It is appropriate for a judge in directing a jury on proof of intention under the Criminal Code (Cth) to provide assistance as to how (in the absence of an admission) the Crown may establish intention by inferential reasoning in the same way as intention may be proved at common law. Intention to import narcotic goods into Australia may be the inference to be drawn from circumstances that include the person's awareness of the likelihood that the thing imported contained narcotic goods." Bell J also rejected an argument that directions of the kind suggested in Kural were prone to confuse intent with the concept of recklessness under the Code12: "The distinction between proof that an accused person intended to import narcotic goods and proof that he or she was reckless as to the circumstance that the thing imported contained narcotic goods is to my mind a real one. The joint judgment in Kural contains discussion of how the Crown might prove the existence of the intention to import the prohibited imports by a process of inferential reasoning. The inquiry remains one of proof of intention. Their Honours emphasised that their comments were not designed as a direction to be given to juries but rather as guidance for trial judges in formulating directions appropriate to a given case to assist the jury in determining this factual question." 10 (2004) 61 NSWLR 135 at 148 [74] per Bell J (Wood CJ at CL and Simpson J agreeing at 136 [1], [2]). 11 Saengsai-Or (2004) 61 NSWLR 135 at 148 [74]. 12 Saengsai-Or (2004) 61 NSWLR 135 at 147 [69]. Bell Nettle Gordon In R v Cao13, the New South Wales Court of Criminal Appeal affirmed the reasoning in Saengsai-Or. Howie J, with whom Spigelman CJ and Barr J agreed, said14: "In my opinion, the decisions of the High Court to which I have referred [Kural, Saad and Pereira] are still applicable, notwithstanding that this was a prosecution to which the Code applied. They simply set out a process of reasoning that the jury might follow in order to find the mental, or fault, element of the offence proved. That process of reasoning seems to me to be as applicable to proof of intention under the Code as to proof of intention under the Common Law. I have already pointed out that this Court in R v Saengsai-Or accepted that this line of authority was applicable to an offence of importation to which the Code applied. There is no reason in logic or law, that I can see, why it should not also apply to a case of possession or attempted possession of imported goods. The fact that the Code defines recklessness in terms of a circumstance as 'an awareness of a substantial risk that the circumstance will exist' is not to the point. As was acknowledged in R v Saengsai-Or, proof of intention is more difficult for the prosecution than proof of recklessness. In a case where there is some other inference open from a finding of a belief in the likelihood of drugs being present other than that the accused intended to possess the drugs, the Crown will have to negative that inference beyond reasonable doubt before the jury can convict the accused. The fact that in the usual case there will be no other inference available, does not mean that the process of reasoning should not apply under the Code simply because it may have some superficial similarity to how the Code defines recklessness." 13 (2006) 65 NSWLR 552. 14 Cao (2006) 65 NSWLR 552 at 569 [53]-[54] (Spigelman CJ and Barr J agreeing at Bell Nettle Gordon Similar reasoning to that in Saengsai-Or and Cao was later adopted by the Court of Appeal of the Supreme Court of Victoria in Luong v Director of Public Prosecutions (Cth)15 and Weng v The Queen16. The Afford appeal (i) The facts On 14 March 2014, the respondent, Steven Afford ("Afford"), arrived at Tullamarine Airport in Melbourne on a flight from Manila with two suitcases, a laptop bag and a computer bag. He declared on his incoming passenger card that he was not bringing into Australia "[g]oods that may be prohibited or subject to restrictions", such as illicit drugs, and, on arrival, he informed Customs officers that all the bags in his possession were his own; that he had packed them himself; that he was fully aware of their contents; and that he was not carrying any items for anyone else except for an item of jewellery for his wife. When queried by Customs officers about the details of his travel, he said that he had been to Manila on his business partner's recommendation for a "business trip" to see "hotel infrastructure" and "to experience the customer service" because he and his business partner were planning to build a five-star hotel in Perth. He stated that his business partner was located in the "UAE" and had paid for the trip because he was an investor in the hotel's construction, which was a $150 million contract. Afford produced a document headed "Memorandum of Understanding (MOU), Partnership Agreement Deed" and a business card. When Customs officers searched Afford's luggage, they found a total of 2,415.4 grams of pure heroin contained in packages stitched inside the lining of one of the suitcases and inside the lining of the laptop bag that was within that suitcase. They also found four printed emails from a sender, "H E Dr Anwar Mohammed Qargash" ("Anwar"). Subsequent examination of Afford's computer revealed that the four emails were part of a series of emails between Anwar and Afford that had commenced in late 2013. As appeared from the emails, Anwar claimed to be the 15 (2013) 46 VR 780 at 795 [74] per Coghlan JA (Redlich JA and Williams AJA agreeing at 781 [1], 802 [110]). 16 (2013) 236 A Crim R 299 at 315-316 [63]-[64] per Osborn JA (Buchanan JA and Neave JA agreeing at 301 [1], [2]). Bell Nettle Gordon "Minister of State for Foreign Affairs, UAE" and to be seeking to engage Afford in a building project for a hotel that would be worth many millions of dollars. One email recorded Anwar introducing Afford, via email, to a man called Hamza Badijo ("Hamza"), who was represented to be Anwar's lawyer in the United Kingdom. In a later email, dated 15 January 2014, Hamza proposed that Afford should undertake a trip to India. Hamza reiterated that proposal in an email, dated 30 January 2014, thus: "Further to my email dated 14th January, 2014, I have been able to discussed with our clientele also, have duly being permitted to grant you the access to the funds deposited in Australia on behalf of our clientele Mr Anwar Mohammed Qargash. These funds is in the total sum of USD205Million also, is right and solidly kept by a security firm in Australia. Secondly, these funds were defaced before taken it to Australia due to security checks at the airport therefore, will require a thorough cleaning with a separation oil which will be provided to you through their agent in India. Be informed that you will be duly sponsored to go to India to collect this separation oil both your air ticket, Hotel lodge and BTA of USD1,000 will be provided to you by my chambers as soon as you send to us your traveling passport which will enable the flight ticket to you." Afford replied the same day, with evident scepticism as to the legitimacy of the trip: "Thank you for your ph call and e mail, how ever after viewing an earlier e mail with the same content, we have found it very suspicious indeed. We have never heard of such matter, for once currency are defaced it cannot be repaired for reason of tempering with currency which is against International Law. Further more which city of India am I to visit to pick up this magic oil?" On 31 January 2014, Hamza assured Afford via email that, although the proposal might seem suspicious, the currency was not defaced or damaged but required the application of "separation oil"; "only the currency experts [know] how it works". Bell Nettle Gordon A further series of emails followed, concluding with one from Afford in which he stated that he was still not convinced but that he agreed to travel to India to collect the oil. Then, on 4 March 2014, the travel destination was changed from India to Manila. Afford remained sceptical about the legitimacy of the trip. He was still expressing his scepticism in emails as late as two days before his departure for Manila. After Customs officers detected the border controlled drugs in his suitcase and laptop bag, Afford was interviewed by police. During the interview, he stated that he had made the trip to Manila "with a high expectation of half a billion dollar building contract" for a five-star hotel for a client and investor who had approached him online and who had paid for the trip. He said that the plan was that he would build the hotel and in return receive 20 per cent of the profits. Referring to the separation oil, Afford said he told the client "I hope those are not friggin' drugs", to which the client replied they were not. He admitted that he had initially thought the proposal was a scam and he said that it had taken him five months of negotiations with the client to make sure it was legitimate. He stated, however, that he had accepted the legitimacy of the proposal when "they" paid for his travel to Manila. He claimed that the purpose of the trip "was to pick up couple bottles of oil, removable oil or something to that nature". Afford stated that, when he arrived in Manila, he met a person called "Jenna" who gave him a suitcase containing what he believed to be the bottles of oil for him to take to Adelaide and give to the investor's contact. He claimed that he did not know the identity of the investor's contact in Adelaide. He said that Jenna told him that the suitcase contained the bottles of oil and presents for Afford's wife. At one point in the interview, he also claimed that he thought he saw two bottles of water in the suitcase that could be "presented as evidence, that's what I went there for to get". At another point, however, he said that he had never handled the bottles and that he had not opened the suitcase. Afford told police that he was hoping that there was nothing illegal in what he was given, and that the only thing he was thinking about was the half billion dollar contract to build the five-star hotel. But he admitted that he still had concerns as to whether there was "anything illegal" in what he was asked to carry; and so, when stopped by Customs officers at Tullamarine Airport, he "thought of the bottles and said, 'Damn, those bottles'". Seemingly, Afford had been obsessed with the idea of becoming wealthy. There were almost daily entries in his diary in which he had written asking God to grant him his wish of becoming a billionaire and to bless him with wealth and riches. When searched, he was also found to have a cheque in his wallet which Bell Nettle Gordon he had drawn in his own name in the amount of $1 million, as he told police, so that he could visualise his wealth. There were, too, photographs that Afford had taken in Manila of Filipino pesos and US dollars protruding from his wallet and spread out across his hotel bed. (ii) The trial Afford was tried in the County Court of Victoria at Melbourne on one charge of importing a commercial quantity of a border controlled drug, namely heroin, contrary to s 307.1(1) of the Code. The Crown called only two witnesses to give evidence as to the nature and amount of the drugs found in Afford's possession and to verify what Afford had said to Customs officers and police. The trial proceeded substantially on the basis of agreed facts and exhibits. The agreed facts included that Afford was a self-employed builder who operated a business called "Afford Property". He was asked to travel to Manila by a person calling himself Hamza, and Hamza had made the arrangements and paid for the travel. Afford flew to Manila, arriving there on 9 March 2014, and left on 13 March 2014 on a return flight to Australia. He arrived in Melbourne on 14 March 2014 en route to Adelaide and Perth. In effect, the only issue at trial was whether the Crown had established beyond reasonable doubt that Afford intended to import the substance that was concealed in the lining of the suitcase and laptop bag and, if so, whether he knew or believed or was reckless as to whether the substance was a border controlled drug. The Crown presented a circumstantial case that Afford's intent to import the substance was to be inferred from all the facts and circumstances of the matter, including the fact that Afford brought the substance into Australia in a suitcase; the email exchanges in which he had expressed grave scepticism about what he was being asked to do; the inherent implausibility of his story that the purpose of his trip to Manila was to collect two bottles of "separation oil" for cleaning defaced currency and then to return to Australia to deliver the bottles to an unidentified person in Adelaide; and the inconsistencies between the answers he gave to Customs officers and the answers he later gave to police. The Crown prosecutor emphasised that the inherent implausibility of Afford's story was apparent from the fact that Afford knew that notes, once defaced, ceased to be legal tender and the assurance he received to the contrary was plainly unconvincing; that it was self-evident that the "separation oil" was not connected with the supposed hotel construction project; that there was no written contract for what was claimed to be a multimillion dollar building project; that, at the time of the trip, no building site had been selected; that the diary found in Afford's possession on his arrival in Melbourne showed that he had only ever been Bell Nettle Gordon involved in modest construction jobs and was realistically not in a position to undertake a project of the kind alleged; and that Afford had admitted to police that his concerns about the legality of the contents of the suitcase were not allayed. It was submitted that Afford was obsessed with what appeared to him to be the prospect of untold riches and he had persisted with the trip to Manila, despite having active suspicions about the legality of what he was doing, because he wanted the money which he believed he would derive from doing so. He considered it was possible that he had been enlisted to import drugs and he was worried about that possibility, but he believed that the task of collecting the separation oil in Manila and transporting it to Adelaide was a precondition to his being granted the building contract. So, despite his concerns about the legitimacy of the transaction, he was prepared to complete it to ensure that the contract went ahead. Afford did not give evidence. The defence case was that the Crown had not established beyond reasonable doubt that Afford intended to import the substance found in the concealed packages. Defence counsel contended that the fact that Afford intended to import two bottles of "separation oil" said nothing as to whether Afford intended to import the substance in the packages in the lining of the suitcase and laptop bag. It followed, defence counsel argued, that, even if the jury considered that Afford had been suspicious that there might be drugs in the suitcase, it was not established beyond reasonable doubt that Afford intended to import the substance in the concealed packages for the purposes of s 307.1(1)(a). For the same reason, it was said, the jury could not be satisfied beyond reasonable doubt that Afford knew, believed or was reckless as to whether the substance in the concealed packages was a border controlled drug for the purposes of s 307.1(1)(b). (iii) Jury directions The trial judge began the substance of his Honour's directions to the jury by emphasising that the central issue in the case was Afford's state of mind and that, because there was no direct evidence of Afford's state of mind other than his statements to Customs officers and police, his intention could only be determined by drawing inferences from the facts established by the direct evidence. His Honour then proceeded to a comprehensive exposition of the process of drawing inferences from circumstantial evidence, emphasising, among other things, that before the jury could draw any inference as to Afford's state of mind, the jury had to be satisfied beyond reasonable doubt of the facts from which they drew the inference and satisfied that the inference drawn was the only inference reasonably open to be drawn from those facts. Bell Nettle Gordon The trial judge thereafter identified the elements of the offence charged as being: (1) importation of the substance; (2) intent to import the substance; (3) the substance being a border controlled drug; and (4) recklessness as to whether the substance was a border controlled drug. His Honour explained that the first and third elements were not disputed but that the second and fourth were in issue. As to the second element, his Honour stated that, in order to find that Afford intended to import the substance, the jury had to be satisfied beyond reasonable doubt that he knew or believed that the substance was in the suitcase, although it was not incumbent upon the Crown to establish that he knew or believed how or in what way the substance had been concealed in the suitcase: "The second element is much more important. The second element the prosecution must prove is that the accused intended to import the substance. This means that the accused meant to import the substance. For this element you are not required to consider if the accused knew the nature of the substance - that is considered later on. Now intention is a state of mind and to determine the accused's state of mind, the prosecution invites you to draw an inference as to his state of mind from certain facts and you will remember what I have told you just a moment earlier about drawing of inferences. ... you must find intention - that the accused meant to import the substance, that is either he knew, that is he had knowledge or he was aware or he believed that his conduct involved the importation of the substance or believed in the likelihood of importation of the substance and by likelihood I mean a real or significant chance. ... If you are satisfied beyond reasonable doubt that the accused believed that the suitcase [contained] the substance that would sustain an inference, that would sustain an inference as to intention. So also if you were satisfied beyond reasonable doubt that he was aware of a real and significant chance that his conduct involved the importation of the substance and he nevertheless persisted with that conduct. That would suffice to infer an intention to import. A suspicion, members of the jury, on the part of the accused, a mere suspicion falling short of the required belief or awareness necessary to establish his guilt is not sufficient to prove guilt. A suspicion is not sufficient. Nothing less than the requisite knowledge, belief or awareness on his part must be proved beyond reasonable doubt by the prosecution." Bell Nettle Gordon His Honour later said in a re-direction: "Mr Afford does not need to know how the substance was concealed or what it looked like, but he needs to have a knowledge, awareness or belief of the substance in the package. It is not an intent therefore merely to import the bottles of oil. He has to have a knowledge, awareness or belief as to the substance in the packages, even though he does not know how they are concealed in the suitcase or what their appearance might be like." Finally, the trial judge explained to the jury that the fourth element looked to what Afford knew or believed about the substance he was alleged to have imported and that it could only be proved by proof of knowledge, belief or recklessness as to the nature of the substance: "The prosecution will prove this element if you are satisfied that Mr Afford knew or believed that the substance imported was a border control[led] drug such as heroin. This element will also be established, members of the jury if the prosecution has proven that Mr Afford was aware of a substantial risk that the substance imported was a border control[led] drug such as heroin. And apart from being aware of the substantial risk, in the circumstances as he knew them to be, it was unjustifiable to risk importing the substance." Afford was convicted and sentenced to three years and two months' imprisonment with a non-parole period of two years. (iv) The proceedings in the Court of Appeal Afford appealed against conviction to the Court of Appeal of the Supreme Court of Victoria17 on two grounds: (1) that the verdict was unreasonable in that it was not open on the whole of the evidence for the jury to be satisfied of guilt beyond reasonable doubt; and (2) that a substantial miscarriage of justice occurred by reason of the trial judge directing the jury on intention in a manner that undermined the requirements of s 5.2(1) of the Code and in effect obscured that the fault element of recklessness in s 5.4 of the Code was more readily 17 Afford v The Queen (2016) 308 FLR 1. Bell Nettle Gordon susceptible of proof than the fault element of intention in s 5.2(1). The Crown appealed against what it alleged was the manifest inadequacy of the sentence. The Court of Appeal (Priest and Beach JJA, Maxwell P dissenting) allowed the appeal against conviction on both grounds. It was ordered that the conviction and sentence be set aside and a judgment and verdict of acquittal be entered. Priest and Beach JJA dealt first with the second ground of appeal. After referring to the decision in Kural and the way in which it had been applied to the fault element of intent under the Code by the New South Wales Court of Criminal Appeal in Saengsai-Or and Cao, and in Victoria in Luong and Weng18, their Honours stated that, although the reasoning in Kural applied to proof of intention to import a narcotic drug under s 233B(1)(b) of the Customs Act, it was "not easily translatable" to proof of intention to import a substance under the Code19. They declared themselves unable to see how, without more, it could be said that "in all cases" involving any conceivable type of substance a jury could infer to the requisite standard an intention to import the substance from an awareness of the likelihood of the presence of the substance alone. Ultimately, however, their Honours rested their conclusion as to the inapplication of Kural on the more limited basis that, in the way in which the trial judge had directed the jury, the jury might have been left with the impression that the establishment of Afford's awareness of a likelihood of the substance being in his suitcase was equivalent to establishing intent, rather than being part of the circumstances from which the jury could, but were not bound to, infer intent20. Priest and Beach JJA then dealt, but only very briefly, with the first ground of appeal, stating21, without development, that all of the evidence called at trial ran counter to the Crown's contention that Afford knew that the suitcase and laptop bag contained the substance concealed in the lining and that, since the Crown had not disputed the genuineness of the documents said to illustrate the background to the transaction, there was no basis for finding that Afford intended 18 Afford (2016) 308 FLR 1 at 24-27 [126]-[136]. 19 Afford (2016) 308 FLR 1 at 28 [141]. 20 Afford (2016) 308 FLR 1 at 29 [143]. 21 Afford (2016) 308 FLR 1 at 30 [149]. Bell Nettle Gordon to import a prohibited substance, much less that he intended to import the substance that was found in the suitcase and laptop bag. Their Honours concluded that the jury should have had a reasonable doubt about Afford's intent to import the substance. Maxwell P reached the opposite conclusion on both grounds. His Honour considered22 that the issue raised in Kural was essentially the same as the issue raised by the second ground of appeal, namely "what state of mind had to be proved, with respect to the existence of the substance (as distinct from its being a drug), in order to infer intent to commit the offence". As his Honour observed23, the application of Kural to Code offences was supported by the decisions in Saengsai-Or, Cao and Weng. Maxwell P also found24 no error in the trial judge's directions. His Honour considered25 that the trial judge had made clear to the jury that the case was one about drawing inferences from the direct evidence; that the trial judge had given the jury extensive directions on drawing inferences from all the circumstances of the case; and that the trial judge had explained to the jury, and emphasised in a way which the jury would plainly have understood, that what was required was "an intention to import [a substance] by way of knowledge or other inferential reasoning" (emphasis in original). Maxwell P then dealt in detail with the unsound verdict ground of appeal. Based on a comprehensive analysis of the evidence26, his Honour concluded27 that it had been open to the jury to be satisfied beyond reasonable doubt that, at the time Afford brought the suitcase into Australia, he was aware that there was a real or significant chance that the substance was in the suitcase, and, therefore, that it had been open to the jury to infer that his intention was to import the substance. 22 Afford (2016) 308 FLR 1 at 5 [20]. 23 Afford (2016) 308 FLR 1 at 7-8 [28]-[37]. 24 Afford (2016) 308 FLR 1 at 9 [41]. 25 Afford (2016) 308 FLR 1 at 9-10 [41]-[43], 11-12 [59]. 26 Afford (2016) 308 FLR 1 at 12-16 [62]-[76]. 27 Afford (2016) 308 FLR 1 at 17-18 [81], [86]-[87]. Bell Nettle Gordon The Smith appeal (i) The facts Maltimore Smith ("Smith") is a citizen of the United States of America who arrived at Sydney International Airport on 29 October 2013 on a Singapore Airlines flight from India. On his arrival, Customs officers examined his luggage and found traces of methamphetamine. On further examination, they discovered 1,945.5 grams of methamphetamine in packages concealed inside items in the luggage. The packages were secreted in two golf sets, a pair of shoes, two containers of vitamins and various cakes of soap. Smith was interviewed by Customs officers and subsequently by police. He said that he had come to Australia from India as the result of an all-expenses-paid trip from the United States. He claimed that the trip had been organised for him by someone named "Reverend James Ukaegbu" ("the Reverend"), whom he had never met but with whom he had had email and telephone contact over the prior two years. He said that he and the Reverend mainly discussed spiritual and religious matters. By contrast, documents found in Smith's briefcase suggested that there was some kind of financial relationship between Smith and the Reverend. For example, at the top of one document was written "From Rev James Ukaegbu" and directly below that were details for a Deutsche Bank account and what appeared to be a mobile phone number. On the second page of the document appeared "Receiver for Rev James Ukaegbu" and what appeared to be the same mobile phone number, and then a reference to Nigeria, an amount of money, some questions and answers and the words "send cash to". There were similar entries on the last page of the document. Smith told police that the Reverend had offered to arrange and pay for the trip because of their friendship. According to Smith, the Reverend had said to him: "I have some friends ... in Delhi, in India and others ... in Australia. You like to go there and meet them and so forth", and Smith had agreed. There were no conditions attached to the trip; the Reverend told Smith just to go and enjoy himself. By contrast, it appeared from documents found in Smith's possession that Smith's original travel itinerary had been for travel from New York to Delhi, where it was planned that he would stay from 23 October to 11 November 2013, and then return directly to New York. The itinerary was not changed to include Australia until 26 October 2013, when Smith was already in Delhi. Smith said that the Reverend told him that, when he arrived in Delhi, he should call the Reverend and that the Reverend's friends would come and see Bell Nettle Gordon Smith. Smith claimed that he had no pre-planned arrangements to meet anyone in particular. He stated that when he arrived in Delhi he was visited by a friend named "John", whose surname Smith did not know and whose contact details he did not have, despite asking for them "nine times". By contrast, upon examination of documents in Smith's possession, police found an email from "James Ukaegbu" informing Smith of the hotel reservation in Delhi. There was also a diary in which were written contact details for a person that Smith was to meet at the All is Well Hotel and a document entitled "Memorandum from the desk of Maltimore Smith" containing handwritten entries: "Central Bank of India"; "Name of A/C"; "Mr"; "Vishay Karran"; "Yaday" and "phone", and, beneath that, a telephone number the same as the number listed in the diary as the contact to be met at the All is Well Hotel. Further documents were indicative of financial dealings, listing two names and indicating cash sent to those people via Western Union. Smith told police that, when it was time for him to leave Delhi, John collected him from his hotel and took him to John's home. Smith said that, once there, John told him that he, Smith, needed to deliver some things to John's friend, "Vernon", in Sydney. John then opened Smith's suitcase and put some items in it. Smith said that the suitcase felt very heavy after the items were placed inside and that he had concerns about the contents. He told police: "So I said, What are those? He [John] said, Soap ... Said, Okay. I then had sick feeling in my stomach when he said those were soap ... for the reason that, why would he need to send soap to - to Australia? But I didn't voice my thought to him". Later in the interview Smith remarked: "Maybe if I had spoken up then ... I would've avoided [this]". He admitted that: "I said to myself - I rationalise it by saying that if this man [the Reverend] is a Minister, well, he - he wouldn't be recommend me ... to go". Smith continued: "When I got on the aircraft I begin to think about the whole matter. Okay. And then was really, really sick feeling came across me because I know people that ... pretend to disguise contrabands in soaps and all kind of stuff. And there were two bags of them which were heavy. ... But the thing that jarred a little bit and I'm being honest here, was in the jar and the soap. ... Bell Nettle Gordon I asked myself, Have I made a gigantic error? That's what I asked myself, you know. Had my hand on my head and I prayed about it, you know. I said, I hope everything is on the up - up - up and up, you know, especially when - when I got there this - yesterday evening and with all those things in my bag." Smith nonetheless claimed that he had "absolutely no intent" and that he would never agree to carry drugs. He said that he was "an ordained Minister ... through the Masonic organisation", and believed in obeying the law, but had "allowed [himself] to be misled by not being probative enough". And in answer to further questions by police, Smith stated that: "You know ... you trust someone. ... You wouldn't think that people would do these things. ... [B]elieving the man [John] was an honest man ... I really believed only to be ... used." Smith emphasised that he did not receive anything for agreeing to carry the "gifts" to give to Vernon and that he "had no intention of breaking the law [and] would not do it". (ii) The trial Smith was tried in the District Court of New South Wales on one count of importing a commercial quantity of a border controlled drug, namely methamphetamine, contrary to s 307.1(1) of the Code. The only issue at trial was whether Smith intended to import the substance. The Crown case was that Smith knew that there were concealed packages in his luggage and either knew that they contained border controlled drugs or at least was reckless as to whether they contained border controlled drugs. The Crown contended that Smith's intent to import the substance was to be inferred from all the facts and circumstances of the case, including that there was no dispute that Smith brought the substance into Australia in items in his possession; the sheer implausibility of Smith's version of events; the circumstances surrounding his importation of the items; and the incredibility of Smith's denial of wrongdoing, in view of the many inconsistencies in what he told Customs and police. The Crown also adduced evidence that, at the time of the alleged offending, Smith was significantly indebted to the United States Department of Education in an amount of more than US$80,000 and under apparent financial pressure, and submitted that in the circumstances it was implausible that Smith did not expect to be paid for his involvement in bringing the substance into Australia. The Crown further argued that, given that Smith claimed to have tertiary degrees in finance and development, and told police that he worked as a consultant for the finance industry, he was not the sort of person that would have Bell Nettle Gordon been easily tricked or duped. Documents found in Smith's possession and tendered at the trial were indicative of his involvement in some form of financial or business dealings. They included a document displaying a letterhead of "Busa Enterprises and Financial Trust Services Inc", which appeared to be Smith's financial services company, in which he described himself as having a PhD, and other documents in which he represented himself as having an MBA and as being the CEO of the company. The Crown also contended that, because the value of the border controlled drugs was over $2 million, it was unlikely that they would have been entrusted to a person who was unaware that they were in his possession. Smith did not give evidence. His defence was based on what he had said to Customs officers and police, and in particular his statements that he had "absolutely no intent" and that he would never agree to carry drugs. Defence counsel argued that there was evidence upon which the jury would reasonably conclude that Smith had been tricked and that he did not know that there were drugs in the items which he brought into Australia to give to Vernon. (iii) Jury directions The trial judge directed the jury on the critical issue of intention as follows: "That takes me back to Question 2 [whether he intended to import the substance]. First of all, 'Are you satisfied beyond reasonable doubt that the accused intended, that is, he meant to import a substance?' This, as you know, is disputed by the accused. This element, this second question, does not require that the Crown prove that the accused knew or was even aware what was in those packages concealed in the various items, the golf sets, the orange containers and the like, but the Crown must prove that he intended to import those packages whatever they contained. [I]t might be helpful for you to start by looking at what you find the accused knew or believed about the contents of his suitcase and the other items. Has the Crown proved to you that the accused knew or believed that there were those extra packages in the items, the golf sets et cetera, which he admits he imported? If so, you then go on to consider whether the accused intended to import these packages that are the subject of the charge. Bell Nettle Gordon When you are looking at the question of what the accused intended and when looking at what he knew or believed about the contents of his luggage the question is what did the accused know, what did the accused believe, what did the accused intend, not what a hypothetical person in his position would have known or intended. In other words, it is the state of mind of the accused, this accused, which is relevant. When you are considering whether you are satisfied beyond reasonable doubt that the accused intended to import the substance ... you might also consider whether he was aware of the likelihood that those packages were in the items in his suitcase or the briefcase ... in the sense that he recognised there was a significant or real chance that the orange containers, the soaps, the golf sets, contained those extra packages in which the substance was located. If you find that he had that state of mind you would go on to consider whether that was sufficient to satisfy you beyond reasonable doubt he intended to import the extra packages which contained the substance in the sense that he meant that those packages would be imported. A person's intention can often be determined from their actions, that is, their conduct and also you are able to draw a conclusion about what a person intended from what he says as well both at the time of the alleged offence and sometimes after the alleged offence. As I have said, the Crown has to prove beyond reasonable doubt that the accused intended to import the substance. In this case the Crown relies on the accused's actions and also what he said in asking you to conclude that he had the intention to import the substance which was in the extra packages. You can only draw the conclusion the Crown asks you to draw if it is the only reasonable conclusion that you can come to. I repeat, that conclusion cannot be drawn by you unless it is the only reasonable conclusion which you can draw from all the circumstances in the case." (emphasis added) Smith was convicted and sentenced therefor to 10 years' imprisonment with a non-parole period of five years. Bell Nettle Gordon (iv) The proceedings in the Court of Criminal Appeal Smith appealed against conviction to the New South Wales Court of Criminal Appeal28 on the sole ground that the trial judge misdirected the jury with respect to the fault element of intent for the purposes of s 307.1(1)(a) of the Code. He contended that the section of the trial judge's directions which is emphasised above was erroneous in that it wrongly suggested that the Kural process of reasoning is applicable to proof of intent to import a substance contrary to the Code29. Smith argued by reference to the majority's reasoning in the Victorian Court of Appeal in Afford that the introduction of the Code, and the consequent bifurcation of the mental element of the offence of importing a border controlled drug into: (1) intent to import (s 307.1(1)(a)); and (2) recklessness as to whether what was imported was a border controlled drug (s 307.1(1)(b)), rendered the Kural process of reasoning inapplicable30. It was submitted that the jury should have been directed that, in order for Smith to be found guilty of the offence charged, the Crown had to establish beyond reasonable doubt that Smith knew or believed that the substance was concealed in the items in his luggage31. The Court of Criminal Appeal (Beazley P, Harrison and R A Hulme JJ) rejected that submission and also the majority's reasoning in Afford on which it was based32. Their Honours re-affirmed the view taken in Saengsai-Or and Cao that the Kural process of reasoning remains applicable to proof of offences to which Ch 2 of the Code applies. Their Honours observed that33: "The fact that the elements which were conflated under the Customs Act were separated under the Criminal Code did not bring about any change in content of the mental element(s) required to be proved by the Crown. We have earlier ... referred to the Explanatory Memorandum 28 Smith v The Queen (2016) 309 FLR 258. 29 Smith (2016) 309 FLR 258 at 263-264 [21]-[22]. 30 Smith (2016) 309 FLR 258 at 263-264 [21]-[22]. 31 Smith (2016) 309 FLR 258 at 263 [17]. 32 Smith (2016) 309 FLR 258 at 274 [69]-[70]. 33 Smith (2016) 309 FLR 258 at 274 [69]. Bell Nettle Gordon in which it was indicated that the Code offences were designed to accord as closely as possible with the offences in the Customs Act they replaced." The appeals to this Court By grants of special leave, the Crown appealed to this Court against the decision of the majority of the Victorian Court of Appeal to quash Afford's conviction and Smith appealed against the decision of the New South Wales Court of Criminal Appeal to uphold his conviction. As was earlier observed, the appeals were heard together because each raises the question of the application of the process of inferential reasoning posited in Kural to the offence of importing a border controlled drug under the Code. (i) Kural reasoning – contentions on behalf of Smith and Afford Approaches to the application of Kural reasoning to the provisions of the Code differed between counsel for Afford and counsel for Smith, with the latter accepting in this Court that Kural reasoning had not been completely ousted by the terms or structure of s 307.1 of the Code. Counsel for Afford argued that, although Kural reasoning may have been of assistance in proof of intent at common law, the Code had so changed the meaning of intent that Kural ceased to be applicable. In counsel's submission, in order to show that an accused intends to import a substance within the meaning of the Code, it is necessary to show that the accused "means" to import the substance; and, it was said, an accused does not mean to import a substance unless the accused knows, believes or is aware that he or she is importing the substance. Counsel for Afford submitted that, although an accused's knowledge or belief that he or she is importing the substance can sustain an inference that the accused "means" to import the substance, recklessness as to the fact of the substance being imported cannot. So much necessarily followed, it was submitted, from the separation of the elements in s 307.1(1)(a) and (b). As support for his argument, counsel for Afford invoked the obiter dicta observations of McLure P in Karamitsios v The Queen34 that it is "open to challenge" the view taken in the Victorian Court of Appeal in Luong that the Kural process of reasoning for inferring intent is applicable under the Code, and her Honour's conclusion in Karamitsios that, on the facts of that case, proof of 34 [2015] WASCA 214 at [15]-[17]. Bell Nettle Gordon the accused's intent to possess a marketable quantity of methylamphetamine required proof that the accused knew that the drug was in a backpack of which the accused had obtained possession or control. Her Honour stated that35: "an awareness of the likelihood that drugs were in the backpack [was] outside the scope of the definitions of intention and knowledge for the purpose of s 11.1(3) of the Code". Counsel for Smith argued, differently, that the trial judge should have directed the jury that it was not open to find that Smith meant to import the substance, and therefore not open to find that he intended to import the substance, unless the jury were satisfied beyond reasonable doubt that it was Smith's purpose or object to import the substance. Counsel explained that he based that formulation on the recommendations of what became known as the Model Criminal Code Officers Committee ("the MCCOC"), who drafted what became s 5.2 of the Code. After referring to Kural, the MCCOC observed that they had rejected the earlier Gibbs Committee's recommendation that "intention" should be defined to include advertence to probability36. The MCCOC stated that their definition of intention in relation to conduct was derived from the Canadian Draft Code37. The Law Reform Commission of Canada had stated that they preferred a concept of "purpose" in place of "intent" because of a "blurring in the case-law of the distinction" between the common law concepts of intention and recklessness38, and had recommended that: "As applied to conduct, that is, the initiating act, the definition of 'purposely' is straightforward: the accused must do the act on purpose, or mean to do it"39. Counsel submitted that the Code's 35 [2015] WASCA 214 at [15]. 36 Criminal Law Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code, Chapters 1 and 2 – General Principles of Criminal Responsibility: Report, (1992) at 21 [203], 25 [203.1]. 37 Criminal Law Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code, Chapters 1 and 2 – General Principles of Criminal Responsibility: Report, (1992) at 25 [203.1]. 38 Law Reform Commission of Canada, Recodifying Criminal Law, Report 31, (1987) 39 Law Reform Commission of Canada, Recodifying Criminal Law, Report 31, (1987) Bell Nettle Gordon conception of "means to" should thus be seen as informed by the idea of purpose or object. Counsel added that the Court of Criminal Appeal's reliance40 on the statement in the Explanatory Memorandum that offences under the Code were not intended to be any more difficult to prove than those under the Customs Act was misplaced. The comparison drawn in the Explanatory Memorandum was to offences under the Customs Act at the point at which Ch 2 of the Code applied, and not to those offences at the time of Kural. Counsel for Smith rightly accepted that there can be occasions where intent to import a substance under the Code may be inferred from an accused's knowledge or belief of a significant chance of the presence of a substance in his or her possession. But, in counsel's submission, that can only ever occur in cases where an accused affirmatively resolves to proceed notwithstanding his or her perception of the existence of that chance. More precisely, as counsel put it, it can only ever be so where an accused proceeds with the state of mind that he or she is aware that there is a real or significant chance of the presence of the substance being in his or her possession, and is prepared to proceed even if the substance is present. In that event, it was said, it might properly be concluded that it is the accused's object or purpose to import the substance and therefore that the accused intends to do so. But, it was contended, it must be otherwise where an accused, having animadverted the existence of a significant chance of the presence of the substance, proceeds with the state of mind that, although he or she is aware that there is a real or significant chance of the presence of the substance, he or she would not be prepared to proceed if he or she knew that the substance were present. For, in the latter event, counsel submitted, the accused's state of mind would be one of no more than recklessness within the meaning of s 5.4 of the Code, and, therefore, less than intent. Accordingly, it was said, it would only ever be appropriate for a jury to be invited to reason from an awareness of a real chance of the presence of the substance to an intention to import the substance in relatively unusual circumstances; and, on the facts of this case, it was dangerous even to suggest that inferential reasoning process. It was tantamount to directing the jury that they could find intent on a basis that might not even amount to recklessness under the Code since proof of recklessness would require that it be shown that it was unreasonable for the accused to take the risk. 40 Smith (2016) 309 FLR 258 at 264 [25], 274 [69]. Bell Nettle Gordon Lastly, counsel for Smith invoked observations of Lord Steyn, with whom the other members of the House of Lords agreed, in R v Woollin41 that it is seldom beneficial to invite a jury when determining whether an accused intended to commit murder to ask whether the accused appreciated that death or serious injury was likely to result from his conduct, or to direct the jury that if the accused recognised that death or serious harm was virtually certain to result from his voluntary act, the jury may find it easy to infer that the accused intended to inflict death or serious harm. Counsel also invoked the wider proposition advanced by Gaudron ACJ, Gummow, Kirby and Hayne JJ in RPS v The Queen42 that to attempt to instruct a jury about how they may reason towards a verdict of guilt may lead to difficulties. (ii) The application of Kural reasoning to Code offences None of the submissions of counsel for Afford or counsel for Smith can be accepted in the broad terms in which they were stated. Granted, an accused cannot be taken to have intended to import a substance unless the accused meant to import the substance. That is the inevitable consequence of the way in which the Code defines intent in s 5.2(1). In some cases it may also be that a person does not mean to do something unless it is the person's object or purpose to do that thing. But it will not be so in all cases – for the reason that, where a person foresees that the inevitable consequence of what he or she is doing is that it will produce a particular result, the person may sometimes be taken to mean to It may be accepted that, where a person takes an object into Australia, despite being aware of a real or significant chance that the object has a substance in it, the person cannot be regarded as meaning to take the substance into Australia unless the person's state of mind at the time of taking the object into Australia is that: "even if the substance is in the object, I am prepared to take the object into Australia". By contrast, if at the time of taking the object into Australia, the person's state of mind were: "although there is a real or significant 41 [1999] 1 AC 82 at 96 (Lord Browne-Wilkinson, Lord Nolan, Lord Hoffmann and Lord Hope of Craighead agreeing at 87, 97). 42 (2000) 199 CLR 620 at 637-638 [43]; [2000] HCA 3. 43 Peters v The Queen (1998) 192 CLR 493 at 521-522 [68] per McHugh J (Gummow J agreeing at 533 [93]); [1998] HCA 7. Bell Nettle Gordon chance of the presence of the substance in the object, I would not be prepared to take the object into Australia if I knew or believed that the substance is in the object", the person's mental state in terms of the Code would rise no higher than recklessness. But it must be emphasised that, although the latter is a theoretical possibility, in most cases it is most unlikely to occur. Recklessness may be the right conclusion, for example, in the case of an honest tourist who, although being aware of the risk known to us all that strangers may sometimes slip a foreign substance into a tourist's luggage, does not have any particular reason to be concerned about the chance of the presence of a substance in his or her luggage, and, in that state of mind, brings his or her luggage into Australia without declaring any concerns. But, in cases like those the subject of these appeals, a mental state short of intent is highly unlikely because, if someone is aware of a real or significant chance that there is an extraneous substance in his or her luggage, and the person's state of mind is truly that he or she would not be prepared to take the substance into Australia if it were within the luggage, it is to be expected that the person would inspect the luggage to ensure that there is no substance in it, or at the very least declare his or her concerns to Customs upon arrival. Where, therefore, as in these appeals, a person is aware of a real or significant chance of the presence of an extraneous substance in an object which the person brings into Australia, and does nothing by way of inspection or declaration to avoid the risk of its presence, the circumstances of the case strongly suggest that the person's state of mind is, in truth, that he or she is prepared to proceed with bringing the object into Australia even if the substance is in the object; and thus that the person means and intends to import the substance. Consequently, as was determined in Saengsai-Or and Cao, and accepted in Luong and Weng, where it is established in cases like this that an accused perceived there to be a real or significant chance of a substance being present in an object which the accused brought into Australia, it is open to infer on the basis of all the facts and circumstances of the case that the accused intended to import the substance. Nor should there be any doubt that it is correct for a trial judge so to direct the jury. Although attempts to direct a jury about how they may reason to guilt are sometimes productive of difficulties, it all depends on the nature of the offence and on the terms of the direction. The directions in Woollin were problematic because of what was there perceived to be a vexed question of whether foresight of a virtual certainty, or some high probability, of death is tantamount to an intention to kill. The directions in RPS were problematic Bell Nettle Gordon because, by introducing the idea of the rule in Jones v Dunkel44, the directions were prone to suggest a reversal of the burden of proof45. But such difficulties do not attend directions as to how to infer intent to import a border controlled drug. To the contrary, as was stated by Bell J in Saengsai-Or46, it is likely to be of considerable assistance to the jury for the judge to direct them as to how, in the absence of an admission, the Crown may establish intent by inferential reasoning, and to identify for the jury the evidence on which the Crown relies to establish the inference. Bearing in mind always that it is a question of fact for the jury to decide by a process of inferential reasoning on the basis of all the facts and circumstances of the case, and that the jury must be so directed, it is therefore entirely appropriate in cases like this for a trial judge to tell the jury that, if they consider it to be established beyond reasonable doubt that the accused perceived there to be a real or significant chance of the presence of a substance in an object which the accused brought into Australia, it is open to infer that the accused intended to import the substance. (iii) The application of Kural reasoning to Afford It follows that Maxwell P's acceptance of the applicability of Kural reasoning to the offence charged in Afford was correct. Admittedly, as Priest and Beach JJA observed47, the issue in Kural was proof of intent to import a "narcotic drug" – that is, proof of intent to import a substance of a particular identified kind – whereas what is in issue under s 307.1(1)(a) of the Code, and so was in issue in Afford, is proof of intent to import a substance simpliciter. Presumably, it is that difference to which Priest and Beach JJA addressed their observation that, although Kural reasoning was apt to prove intent to import a narcotic drug, it is "not easily translatable" to proof of intent to import a substance. But, as 44 (1959) 101 CLR 298 at 308 per Kitto J, 312 per Menzies J, 320-321 per Windeyer J; [1959] HCA 8. 45 (2000) 199 CLR 620 at 633 [28] per Gaudron ACJ, Gummow, Kirby and Hayne JJ. See also Dyers v The Queen (2002) 210 CLR 285 at 291-293 [7]-[13] per Gaudron and Hayne JJ, 328 [121] per Callinan J (Kirby J agreeing at 305-306 [52]); [2002] HCA 45. 46 (2004) 61 NSWLR 135 at 148 [74] (Wood CJ at CL and Simpson J agreeing at 136 47 Afford (2016) 308 FLR 1 at 28 [141]. Bell Nettle Gordon Maxwell P recognised48, inferring intent to import a narcotic drug from the fact that an accused was shown to have known or believed there to be a real or significant chance that what he or she was carrying into Australia was or included a narcotic drug necessarily involved a process of inferential reasoning which in essential respects was logically identical to inferring intent to import a substance simpliciter from the fact that an accused is shown to have known or believed there to be a real or significant chance that what he or she was carrying into the country was or included the substance simpliciter. Of course, in order for an accused to have known or believed there to be a real or significant chance that an object which he or she was bringing into Australia was or included a substance, the accused would need to have had some conception of the presence or possible presence of the substance within the object. But, as the trial judge in Afford and the trial judge in Smith each correctly directed the jury, it does not follow that the accused must be shown to have known or believed what the substance was or what it looked like, or how it was wrapped or otherwise contained, or where it was located or concealed in the suitcase that the accused carried into Australia. It means no more than that, for the purposes of establishing the fault element for s 307.1(1)(a) of intending to import a substance, the accused must be shown to have known or believed there to be a significant chance that there was a substance within an object that the accused was carrying into the country and, knowing or believing that to be so, meant to carry it in. (iv) The application of Kural reasoning to Smith Likewise, the Court of Criminal Appeal were correct in holding that Kural reasoning was capable of application to the offence with which Smith was charged. Their Honours were right to follow Saengsai-Or and Cao, and Luong and Weng, and, for the reasons given, were correct to reject the reasoning of the majority in Afford. (v) The trial judge's Kural direction in Afford It should also be observed that, contrary to McLure P's observations in Karamitsios49, the application of Kural reasoning to offences of the kind in issue 48 Afford (2016) 308 FLR 1 at 7 [31]. 49 [2015] WASCA 214 at [15]. Bell Nettle Gordon does not mean that juries are to be directed that it is sufficient to find intent that the accused foresaw a real or significant chance that he or she was importing the substance. As was stressed in Kural, and has been stressed repeatedly in other cases since50, directions given in accordance with Kural are required to make clear to the jury that the process of reasoning in which they are engaged is one of inferring intent from the facts and circumstances of the case and, consequently, that, before they may convict the accused, the jury must be persuaded by that process of reasoning, beyond reasonable doubt, that the accused meant to import the substance. There is a passage in the trial judge's directions in Afford which, if read alone, could be read as conveying that, if the jury were satisfied that Afford believed or was aware of a real and significant chance that his conduct involved the importation of a substance, "[t]hat would suffice to infer an intention to import". Possibly, it was that part of the directions which provoked Priest and Beach JJA's concern that the jury may have thought that an accused's knowledge or belief as to a real or significant chance of something being so is necessarily the same as the accused intending it to be so. But, as can be seen from the whole of the trial judge's directions51, his Honour had previously explained to the jury that the primary issue in the case was one of inferring Afford's intent from all the facts and circumstances of the case, and had explained to the jury that they had to consider all of the evidence and could only draw an inference if it appeared to them that it was the only inference reasonably open on the facts. As Maxwell P concluded, therefore, taken as a whole the directions were adequate to convey to the jury that the process of inferring intent was one that involved them drawing an inference from all the facts and circumstances of the case and that, if they found that Afford knew or believed there was a significant chance that his luggage contained the substance, it was then for them to decide whether that, in combination with all the other facts and circumstances of the case, persuaded them beyond reasonable doubt that Afford intended to import the substance. 50 See for example R v Su [1997] 1 VR 1 at 27-28; Saengsai-Or (2004) 61 NSWLR 135 at 148 [74]-[75] per Bell J (Wood CJ at CL and Simpson J agreeing at 136 [1], [2]); Director of Public Prosecutions Reference No 1 of 2004; R v Nguyen (2005) 12 VR 299 at 308-309 [23]; Cao (2006) 65 NSWLR 552 at 571 [63], 572 [67] per Howie J (Spigelman CJ and Barr J agreeing at 553 [1], [2]). 51 See [25]-[28] above. Bell Nettle Gordon (vi) The trial judge's Kural direction in Smith Although accepting the validity of Kural reasoning in principle, counsel for Smith contended that the trial judge's directions occasioned a miscarriage of justice in the circumstances of the case. That submission should be rejected. Once it is accepted that the Kural process of reasoning is applicable to the offence charged, and does not have the limited application for which counsel contended, there can be no complaint about the directions as given. As may be seen from so much of the directions as were earlier set out52, the trial judge in Smith made it abundantly clear to the jury that, while it was relevant for them to consider whether Smith knew or believed there to be a real or significant chance that there was a substance in the items which he brought into Australia, they would then need to go on to consider whether that was sufficient to satisfy them beyond reasonable doubt that Smith intended to import the concealed packages which contained the substance, in the sense that he meant that those packages would be imported, and that they could only reach that conclusion having regard to all the evidence if they considered that that inference was the only reasonable conclusion to be drawn from all the circumstances of the case. Contrary to counsel's submission, this was not a case where a direction in terms of the reasoning in Kural would have misled the jury to equate recklessness with intent regardless of other evidence. Directions in future cases Despite the sufficiency of the directions in Afford and Smith, looking to the future it might be preferable if directions given in cases like these were made to align more closely to the language of the Code, and in particular to the statutory definition of intent in s 5.2, while continuing to stress the importance of keeping consideration of the fault element of intent which applies under the Code to the physical element of the offence (the importation of a substance) separate and distinct from consideration of the fault element of recklessness which applies to the circumstance element of the offence (that the substance is a border controlled drug). It goes without saying that directions must always be tailored to the issues in the case at hand and to the facts and circumstances which are relevant to the determination of the issues. It is not practicable or desirable to suggest anything 52 See [46] above. Bell Nettle Gordon in the nature of a template. In terms of principle, however, in cases like this, where it is not disputed that the accused brought a substance into Australia and not disputed that it was a border controlled drug, in addition to giving the usual ineluctable directions and directions as to drawing inferences from and dealing with circumstantial evidence, it may be advantageous to proceed along the following lines: (1) The accused is charged with importing a border controlled drug. Importing something into Australia means bringing that thing into Australia. (2) What is in dispute is whether the accused intended to import the substance and whether he or she knew, or was reckless as to whether, the substance was a border controlled drug. The accused cannot be convicted of importing a border controlled drug unless it is established beyond reasonable doubt that: he or she intended to import a substance; and he or she knew, or was reckless as to whether, the substance was a border controlled drug. (4) Each of those mental elements must be considered separately. (5) The accused cannot be regarded as having intended to do something unless it is established beyond reasonable doubt that he or she meant to do that thing. To decide whether the accused meant to bring the substance into Australia, it is permissible to draw an inference as to the accused's state of mind at the time of bringing the substance into Australia. In order to draw an inference of intent, it is necessary to be satisfied beyond reasonable doubt of the facts and circumstances from which the inference of intent is drawn and that the inference of intent is the only reasonable facts and circumstances. inference open to be drawn those from (8) Where, as here, the accused brought into Australia a case, object or other thing ("the container") which has a substance in it, and it is open to infer that the accused meant to bring the container into Australia, it is open to Bell Nettle Gordon infer that the accused meant to bring the substance into Australia if, at the time of bringing the container into Australia: the accused knew that the substance was in the container; or the accused knew or believed there was a real or significant chance that the substance was in the container. It is not necessary that the accused knew or had a belief as to where, or in what fashion, or in what form, the substance existed or was secreted in the container. It is enough if the accused knew or believed there was a real or significant chance that the substance was somehow, somewhere, in some form within the container. It must be stressed once again, however, that it is not permissible to draw an inference that the accused meant to bring the substance into Australia unless that is the only inference reasonably open on the established facts and circumstances of the case. If it is established beyond reasonable doubt that the accused meant to bring the substance into Australia, it will then be necessary to decide whether the accused knew, or was reckless as to whether, the substance was a border controlled drug. (12) The accused cannot be taken to have been reckless as to whether the substance was a border controlled drug unless it is established beyond reasonable doubt that: the accused was aware of a substantial risk that the substance was a border controlled drug; and having regard to the circumstances which were known to the accused, it was unjustifiable for him or her to take the risk. The unsafe verdict ground in Afford It remains only to deal with the unsafe verdict ground of appeal in Afford. It is not possible to discern from Priest and Beach JJA's very brief reasoning on the point why their Honours considered that it was not open to the jury to be satisfied beyond reasonable doubt of Afford's guilt. One may only suppose that what their Honours had in mind was that the jury could not have excluded beyond reasonable doubt the possibility that Afford was telling the truth when he Bell Nettle Gordon said that, by the time he came to bring the suitcase into Australia, he did not believe that the suitcase contained any drugs. But, as Maxwell P demonstrated convincingly53, given the circumstances of the case, there can be no doubt that the jury were entitled to conclude beyond reasonable doubt that that was a lie and thus that Afford did believe that there was a real or significant chance that his conduct involved the importation of a substance, and was prepared to proceed even if the substance were present. Apart from anything else, there was no dispute that Afford went to Manila to collect something to be brought back to Australia. There was no dispute that, having gone to Manila for that purpose, he was given the suitcase and laptop bag by Jenna. There was no dispute that, both before and after that occurred, Afford gave active, repeated consideration to the possibility that what he was collecting in Manila and bringing back to Australia contained prohibited drugs. Despite his protestations to the contrary, his emails with Anwar and Hamza were powerful evidence that ultimately he concluded that there was a significant chance that what he was being asked to import was drugs. The absurdity of the account which he offered police reinforces the probability that he believed there to be a real or significant chance that what he was bringing back to Australia contained prohibited drugs. It is next to impossible to suppose that a rational human being could believe anything else. And, although the test of intent is undoubtedly subjective, an objective assessment of the situation was plainly relevant to the jury's assessment of Afford's subjective state of mind. In the end, the only dispute on the facts was, in effect, as to whether Afford had changed his view about the likelihood that he was carrying drugs before he brought the drugs into Australia. And, as the Crown prosecutor submitted to the jury, there was any amount of evidence from which to infer beyond reasonable doubt that, although Afford may have hoped there were not drugs in the suitcase he was given, he remained throughout of the mindset that there was a real or significant chance that there were. Contrary to Afford's written submissions, it is in no way to the point that the Crown did not contest the genuineness of the email exchange, at least in the sense of not suggesting that the emails were not sent and received as they purported to have been. The Crown's case was always that it was to be inferred that Afford's state of mind was that he considered it was likely that he had been recruited to carry drugs to Australia in the objects given to him by Jenna and, although he was worried 53 Afford (2016) 308 FLR 1 at 16-18 [77]-[87]. Bell Nettle Gordon about that prospect, he was prepared to carry them in in the hope of profiting from a scheme that would make him rich. Conclusion and orders In the result: In Smith (Matter No S249/2016), the appeal to this Court should be dismissed. In Afford (Matter No M144/2016), the appeal to this Court should be allowed. Orders 2 and 3 of the Court of Appeal of the Supreme Court of Victoria made on 4 March 2016 with respect to the appeal against conviction should be set aside and Afford's appeal against conviction to that Court dismissed. Order 1 of the Court of Appeal made on 4 March 2016 with respect to the Crown's appeal against sentence should be set aside and the Crown's appeal against sentence remitted to the Court of Appeal for determination. Edelman EDELMAN J. The joint judgment comprehensively sets out the relevant provisions of the Criminal Code (Cth) ("the Code"), the facts, and the decisions below. The essential issue in these two appeals concerns whether the juries were misdirected in relation to assessing intention for the purposes of the element of the offence in s 307.1(1)(a) of the Code, read with s 5.2. Section 5.2 of the Code defines "intention" in three ways. The relevant definition of intention in this case is in s 5.2(1), in that it is "with respect to conduct". An accused has intention with respect to the conduct of importing a substance if he or she "means to" import the substance. In the absence of an admission by direct evidence from the accused that he or she had the relevant intention, proof of intention will be by inference. These two appeals present the question of whether juries should be directed about how intention can be proved by inference and, if so, whether the trial judge in each case erred in the directions given. In each case, the jury was told to consider whether the accused believed that there was a real or significant chance that the article which the accused knew he was importing contained the substance. In the Afford case, the jury was effectively told that a real or significant chance was sufficient to infer intention. In the Smith case, the trial judge directed the jury that a real or significant chance was a matter that the jury might consider but that they still had to be satisfied that the accused meant to import the substance. As I explain below, the directions in the Afford case involved an error. The directions in the Smith case did not. The Kural decision In Bahri Kural v The Queen54, this Court considered how intention could be proved in a prosecution for an offence against s 233B(1)(b) of the Customs Act 1901 (Cth). The offence of importing a prohibited import in s 233B(1)(b) did not expressly provide for any requirement of knowledge or intention by the person importing the prohibited import. However, a majority of the High Court had previously held in He Kaw Teh v The Queen55 that it was necessary for the prosecution to prove that the accused had acted with mens rea, ie a guilty mind. There were different views among the majority in He Kaw Teh about the requirement of mens rea. This was the issue that arose in Kural. In a joint judgment in Kural, the majority (Mason CJ, Deane and Dawson JJ) explained that, depending upon the nature of a particular offence, the requirement for a guilty mind may involve "intention, foresight, knowledge or 54 (1987) 162 CLR 502; [1987] HCA 16. 55 (1985) 157 CLR 523; [1985] HCA 43. Edelman awareness with respect to some act, circumstance or consequence"56. Their Honours did not mention recklessness, a requirement which does not have any stable usage57, and which has sometimes been treated as intention by the fiction of "constructive intention"58. Their Honours said that the requirement for a guilty mind in s 233B(1)(b) of the Customs Act was one of intention. The question was how intention would be inferred. The majority described two ways in which intention might be inferred. The first method of inferring intention to which their Honours referred was that an intention to import a narcotic drug "is established if the accused knew or was aware that an article which he intentionally brought into Australia comprised or contained narcotic drugs"59. The inference of intention in these circumstances is made because the accused's knowledge of the presence of the drugs in the container, and the accused's intention to import the container, require the inference that the accused also intended to import the drugs. The second method of inferring intention is more controversial. Their "Belief, falling short of actual knowledge, that the article comprised or contained narcotic drugs would obviously sustain an inference of intention. So also would proof that the forbidden act was done in circumstances where it appears beyond reasonable doubt that the accused was aware of the likelihood, in the sense that there was a significant or real chance, that his conduct involved that act and nevertheless persisted in that conduct. As a practical matter, the inference of mens rea or a guilty mind will ordinarily be irresistible in cases involving the importation of narcotic drugs if it is proved beyond reasonable doubt that the accused actually imported the drugs and that he was aware, at the time of the alleged commission of the offence, of the likelihood of the existence of the substance in question in what he was importing and of the likelihood that it was a narcotic drug. What we have said is designed to emphasize that the existence of the requisite intention is a question of fact and that in most cases the outcome will depend on an inference to be 56 Bahri Kural v The Queen (1987) 162 CLR 502 at 504. 57 Banditt v The Queen (2005) 224 CLR 262 at 265 [1]; [2005] HCA 80. 58 R v Pembliton (1874) LR 2 CCR 119 at 123; Kenny, Outlines of Criminal Law, 59 Bahri Kural v The Queen (1987) 162 CLR 502 at 504. 60 Bahri Kural v The Queen (1987) 162 CLR 502 at 505. Edelman drawn from primary facts found by the tribunal of fact. In this, as in other areas of the law, it is important not to succumb to the temptation of transforming matters of fact into propositions of law." These remarks have led to some difficulty. They have commonly been understood to suggest that intention to import a narcotic drug will ordinarily be irresistible where, for example, (i) an accused imported a suitcase with a hidden compartment containing a substance, and (ii) at the time of importing the suitcase the accused was aware of a real or significant chance that there was a substance in the suitcase, and of a real or significant chance that it was a narcotic drug. Three points must be made about this passage to emphasise the caution that is needed before applying the reasoning in Kural to the process of drawing an inference of intention as defined in s 5.2(1) of the Code. I do not include within these points the submission of Mr Afford that the majority in Kural conflated two issues when considering the requirement of a guilty mind: (i) whether the accused intended to import the substance, and (ii) whether the accused intended to import the substance knowing that it was a narcotic drug. These two issues were necessarily conflated because the offence considered in Kural involved an intention to import a narcotic drug. In contrast, under the Code the mental element required for proof of whether a substance has been imported (intention) is different from the mental element for proof of whether the substance is a border controlled drug (recklessness). Nevertheless, this point can be put to one side because the process of drawing an inference that an accused intended to import a narcotic drug should not be materially different from the process of drawing an inference that the accused intended to import a substance. First, one reason for caution in applying Kural to the Code is that it is unclear whether the majority in Kural were using "intention" in a sense which included any of the species of recklessness falling short of genuine subjective intention. In the majority in He Kaw Teh61, Gibbs CJ (with whom Mason J agreed) referred to the classification by Dickson J in the Supreme Court of Canada62 of three types of offences: (i) offences of mens rea, consisting of some positive state of mind such as intent, knowledge, or recklessness, (ii) offences where it is a defence for the accused to prove that he or she was not negligent, and (iii) offences of absolute liability. In He Kaw Teh, Gibbs CJ also said that the offence would always be committed, and did not suggest any further inference of intention that needed to be drawn, if "the suspicions of an incoming traveller are aroused, and he deliberately refrains from making any inquiries for 61 (1985) 157 CLR 523 at 533-534. 62 R v Sault Ste Marie [1978] 2 SCR 1299 at 1325-1326. Edelman fear that he may learn the truth"63. Although the common law has had a difficult history of intermingling the concepts of intention and recklessness, the two are separate fault elements in ss 307.1(1)(a) and 307.1(1)(b) of the Code (by ss 5.2 and 5.4 of the Code). The second reason is that the extrinsic materials in relation to the drafting of the Code's definition of intention suggest that the omission of any reference to awareness of a chance was a conscious decision of the Model Criminal Code Officers Committee, as it became known, which produced the report that recommended the provision that became s 5.2. The Committee noted the decision in Kural64, but gave a number of reasons for declining a suggestion from the Gibbs Committee to include within the definition of intention a reference to "advertence to probability"65. One of those reasons was avoiding the confusion of intention and recklessness66. There is, of course, a difference between the inclusion of awareness of a chance in the definition of intention, and the role of the same concept in the process of proof of intention. But the rejection of awareness of a chance from the definition emphasises the importance of the point that the process of proof must ultimately be to prove intention, not to prove a real or significant chance. The third, and most fundamental, reason is that the majority in Kural emphasised that directions must be tailored to the particular circumstances of the case. In that regard, their remarks about intention were "not designed as a direction or instruction to be read by trial judges to juries"67. Instead, their remarks were only intended to give guidance to trial judges in order to enable them to formulate appropriate directions. In that light, the majority in Kural were not suggesting that the irresistible inference would always be drawn merely from the conclusions that (i) the accused imported the suitcase, and (ii) the accused was aware of a real or significant chance that the suitcase contained a 63 He Kaw Teh v The Queen (1985) 157 CLR 523 at 536. 64 Criminal Law Officers Committee of the Standing Committee of Attorneys- General, Model Criminal Code, Chapters 1 and 2 – General Principles of Criminal Responsibility: Report, (1992) at 21 [203]. 65 Criminal Law Officers Committee of the Standing Committee of Attorneys- General, Model Criminal Code, Chapters 1 and 2 – General Principles of Criminal Responsibility: Report, (1992) at 25 [203.1]. 66 Criminal Law Officers Committee of the Standing Committee of Attorneys- General, Model Criminal Code, Chapters 1 and 2 – General Principles of Criminal Responsibility: Report, (1992) at 25 [203.1]. 67 Bahri Kural v The Queen (1987) 162 CLR 502 at 505. Edelman prohibited import. One example might be an honest tourist travelling alone overseas, in a crowded airport without much security. In that circumstance, it is arguable that awareness of a small but nevertheless real risk that something might have been inserted into the tourist's luggage might not even permit an inference of any species of recklessness, much less an inference of intention. The circumstances which the majority in Kural would seem to have had in mind when they spoke of the inference ordinarily being irresistible may have been those similar to the case itself, not uncommon in criminal cases, where a stranger asks the accused to bring a container into Australia. For these three reasons, there should be no automatic translation of the reasoning in Kural to formulate directions concerning the proof of intention under the Code. Nevertheless, as the joint judgment explains, and as Bell J said in R v Saengsai-Or68, it is appropriate in cases such as this for trial judges to provide a jury with assistance to determine how intention can be proved by inferential reasoning. Directions concerning inferring intention to import a substance At first blush, it might be thought inconsistent to infer one state of mind (intention) from another, different, state of mind (belief in a real or significant chance). But there would only be an inconsistency if intention required actual knowledge. It does not. The terms of s 5.2(1) of the Code include both an immediate intention and a conditional intention. A conditional intention would arise where the accused intends to import the substance if it is present in the container. A belief that there is a real or significant chance that the substance is being imported can be an important step in inferring this conditional intention. Counsel for Mr Smith gave an example which neatly illustrates this point. The example was where three couriers carried containers into Australia and each of them believed that it was certain that one of them was carrying the substance. Each would have intended to import the substance if it was in the container that he or she imported. A belief in a real or significant chance that the substance is being imported can be an important step in inferring conditional intention. But this will not always be the case. Everything will depend on the circumstances, particularly the extent of the chance which is believed to be present. Two extremes can be usefully contrasted. At one extreme, as I have mentioned, a tourist travelling overseas might be aware that there is a chance that a stranger could have hidden a prohibited item in his or her baggage. The chance might be small if the baggage has never been left unattended. But, nevertheless, in the circumstances, it might 68 (2004) 61 NSWLR 135 at 148 [74] per Bell J, Wood CJ at CL and Simpson J agreeing. Edelman still be a real chance. At the other extreme, a real or significant chance would also include a circumstance of high probability where, for instance, a stranger offers payment in exchange for delivery of a suitcase at the terminus of the tourist's travel. There will be a large range of circumstances, with differing degrees of chance, in between these two extremes. One difficulty with the expression "real or significant chance" is that it is an "imprecise standard"69 which, in law as in ordinary parlance, encompasses a variety of possible circumstances including remote but real chances. For example, in one context it has been said that a real chance will exist unless the chance is "of no real value at all"70. In another, it has been said that the expression "real possibility" includes an event which is "highly improbable"71. A change in the facts of Kural can further illustrate this point. Suppose that the applicant in Kural had been a businessman in the business of importing samovars into Australia, and that the stranger in Turkey had been the applicant's supplier from whom he had imported samovars over the course of many years. In those circumstances, the inference that the applicant intended to import the drugs hidden in the samovar might be more easily "resistible" (to use the language of the majority in that case) even if the applicant were aware of a small risk that drugs might be hidden in the samovar. In summary, the conclusions from the discussion above are twofold. Each conclusion concerns the circumstance where a trial judge chooses to direct a jury about the process of drawing inferences of intention under s 5.2 of the Code. First, it is not an error for the jury to be directed to consider, as one of the circumstances in drawing an inference of intention to import a substance, whether the accused believed that there was a real or significant chance that the substance was in the container. Secondly, if a trial judge directs a jury to consider this in the process of assessing whether to draw the inference of intention to import the substance, then care should be taken to ensure that the jury does not substitute the required 69 Eades v Gunestepe (2012) 61 MVR 328 at 332 [10] per Basten JA; [2012] NSWCA 204. 70 Coudert Brothers v Normans Bay Ltd [2004] EWCA Civ 215 at [34] per Waller LJ, Laws and Carnwath LJJ agreeing. 71 Australian Securities and Investments Commission v Carey (No 6) (2006) 153 FCR 509 at 520 [35] per French J, quoting Inland Revenue Commissioners v Trustees of Sir John Aird's Settlement [1982] 1 WLR 270 at 276-277; [1982] 2 All ER 929 at Edelman finding of intention for a finding of a belief of a real or significant chance. That substitution can be avoided by directions as to both of the following matters: (1) The jury could be told that it would be open to them to infer that the accused meant to bring the substance into Australia if the accused knew that the substance was in a container that the accused meant to bring into Australia. (2) The jury could be told that even if the accused did not know that the substance was in the container, it would still be open to them to infer that the accused meant to bring the substance into Australia if he or she meant to bring the substance into Australia if it were in the container. In assessing whether the accused meant to bring the substance into Australia if it were in the container, all of the circumstances should be considered including whether the accused believed there was a real or significant chance that the substance was in the container. It might be more difficult to conclude beyond reasonable doubt that the accused meant to import the substance, the presence of which he or she was unaware of, if the accused's belief was that there was only a very small chance that the substance was in the container. In contrast, it might be easier to reach this conclusion if the accused believed that there was a strong chance that the substance was in the container. The Afford appeal The passage in the trial judge's directions in Afford upon which counsel for Mr Afford focused was the central direction that the trial judge gave on the issue of intention. In that passage, the trial judge told the jury that they could conclude that Mr Afford intended to import the substance if he was aware of a real or significant chance that his conduct involved the importation of the substance and he nevertheless persisted with that conduct. That was not an isolated direction. It was reinforced by a checklist which the trial judge gave to the jury and it was reiterated later in his directions. The context can be taken in three stages as follows. First, the jury was given a two-page written checklist. The jury was told that the checklist they were given "encompasses what it is, what the task is that you have to perform". In that checklist, the jury was directed as follows in relation to the second element of the charge, namely the intention to import in s 307.1(1)(a) of the Code, read with s 5.2, with the emphasis as contained in the checklist: Edelman "Intention to import Has the prosecution proved that the accused intended to import the substance? Consider: this may be proved by knowledge that the suitcase contained the substance or awareness or belief that his conduct involved the importation of the substance or the likelihood of the importation of the substance. 'Likelihood' here means a real or significant chance." Secondly, during the trial judge's directions, and after giving the jury the checklist, the trial judge directed the jury in some detail as to each element of the offence. As to the second element, intention to import the substance, the trial judge said this: "The second element that the prosecution must prove is that the accused - I repeat intended to import the substance. This means that the accused meant to import the substance. This element doesn't look at whether the accused was aware that the substance was a border controlled drug even. All that is required to establish the intention is proof that the accused intended to import the package whatever it contained. To determine the accused's state of mind you will [be] asked to draw [an] inference and you will remember what I told you so the prosecution must prove and this is very important for you to note that at the time of entering - at the time at which the importation crystalises in to [sic] Australia - that is the relevant time at which intention has to be proved. Not at an earlier time or not even at a later time, really. It is at that time that you must find intention - that the accused meant to import the substance, that is either he knew, that is he had knowledge or he was aware or he believed that his conduct involved the importation of the substance or believed in the likelihood of importation of the substance and by likelihood I mean a real or significant chance. So the issue of intention does not only rest on actual knowledge, that is the prosecution does not have to prove the accused actually knew that there was the substance in the suitcase. If you are satisfied beyond reasonable doubt that the accused believed that the suitcase believed [sic] the substance that would sustain an inference, that would sustain an inference as to intention. So also if you were satisfied beyond reasonable doubt that he was aware of a real and significant chance that his conduct involved the importation of the substance and he nevertheless persisted with that conduct. That would suffice to infer an intention to import." (emphasis added) The italicised passages are important. They reinforced that which was plain from the checklist: the jury could find that Mr Afford was guilty if they Edelman were satisfied beyond reasonable doubt that he believed there was a real or significant chance that he was importing the substance. The point was reinforced by telling the jury that a finding of a real or significant chance "would suffice" to infer an intention to import. There was no suggestion that an intention to import might not be found in any circumstances involving awareness of a real or significant chance. Rather, the awareness of a real or significant chance was equated as a means of proof with the inevitable inference of intention that would come with the conclusion that Mr Afford knew that the substance was in his luggage. Thirdly, the trial judge returned to this issue again at the conclusion of the directions. In his summary of the second element he said: "The second: Has the prosecution proved that the accused intended to import the substance and what you would ask yourself is that this may be proved by knowledge that the suitcase contained the substance or awareness on his part or belief on his part that his conduct involved the importation of a substance or awareness or belief of the likelihood of the importation of the substance and in this context likelihood here means a real or significant chance. If the answer to that is 'yes', that is he intended then you move on to the next element. If it is 'no' then you find him not guilty." (emphasis added) The combination of the checklist which the jury took into the jury room, the detailed oral directions by the trial judge on intention, and the summary that the trial judge gave on intention must have left the jury with the impression that it was sufficient to prove an intention to import the substance if the jury concluded that Mr Afford believed that there was a real or significant chance that his conduct involved the importation of the substance. For the reasons I have explained above, this was a significant error causing a miscarriage of justice. The Court of Appeal, by majority, was correct to make Orders 1 and 2, granting leave to appeal, and allowing the appeal against conviction. Although I consider that the majority of the Court of Appeal were correct to allow the appeal against conviction, I agree with the reasons given in the joint judgment in this Court that it was open to the jury to conclude that Mr Afford was guilty of the offence. A retrial should have been ordered rather than entry of a judgment of acquittal. The order that I would have made would have been to allow the appeal on this ground, set aside Order 3 of the orders of the Court of Appeal, and in its place order that the matter be remitted for a retrial according to law. The Smith appeal The directions which the trial judge gave to the jury in Smith contrast starkly with those given to the jury in Afford. In Smith, the trial judge directed Edelman the jury that the question of intention was whether they were satisfied beyond reasonable doubt that Mr Smith "meant to import a substance". The trial judge directed the jury that the Crown "must prove that he intended to import those packages whatever they contained". The jury was not told that it was sufficient for proof of intention to conclude that Mr Smith believed that there was a real or significant chance that the various articles contained the substance. The passage of the trial judge's directions upon which counsel for Mr Smith relied followed the trial judge's reiteration that the question to be answered was the intention of Mr Smith. In that passage the trial judge said: "When you are considering whether you are satisfied beyond reasonable doubt that the accused intended to import the substance ... you might also consider whether he was aware of the likelihood that those packages were in the items in his suitcase or the briefcase ... in the sense that he recognised there was a significant or real chance that the orange containers, the soaps, the golf sets, contained those extra packages in which the substance was located. If you find that he had that state of mind you would go on to consider whether that was sufficient to satisfy you beyond reasonable doubt he intended to import the extra packages which contained the substance in the sense that he meant that those packages would be imported." Later, the trial judge explained, for a third time, that the question was whether Mr Smith intended to import the substance, and the trial judge reiterated that the jury was required to consider all of the circumstances. As discussed above, it might have assisted the jury further if the trial judge had also directed the jury in the terms discussed above and told them to consider the extent or magnitude of the chance as Mr Smith believed it to be. But, in the circumstances of this case, there was no error in the direction given by the trial judge. In the manner in which the reference to "real or significant chance" was made by the trial judge, there was no prospect that the jury could have substituted a finding of intention for a finding, instead, that Mr Smith believed that there was a real or significant chance that the substance was in the containers. The appeal in Smith must be dismissed. |
HIGH COURT OF AUSTRALIA TAMAR RIVQA BECK APPELLANT AND AMIRAM DAVID WEINSTOCK & ORS RESPONDENTS Beck v Weinstock [2013] HCA 15 1 May 2013 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation R G McHugh SC with D J Barnett for the appellant (instructed by McCabes Lawyers Pty Limited) D F Jackson QC with J O Hmelnitsky for the first and second respondents (instructed by Baker & McKenzie Solicitors) No appearance for the third respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Beck v Weinstock Corporations law – Shares – Redeemable preference shares – Shares issued as "redeemable preference shares" – No shares over which redeemable preference shares took preference then or later issued – Whether preference shares required ordinary shares to be issued – Whether redemption of shares effective. Words and phrases – "issued share", "ordinary share", "preference share", "redeemable". Companies Act 1961 (NSW), ss 61, 66. Corporations Act 2001 (Cth), ss 254A, 254J. Introduction Companies raise capital by the issue of shares and in a variety of other ways. The shares in a company may be divided into different classes with different rights attaching to them. Preference shares confer priorities on their holders, over ordinary shareholders, with respect to dividends or repayment of capital or voting rights or combinations of those things. They can be used to raise additional capital for a company or to raise original capital or for other purposes. In this appeal, which represents a particular aspect of a wide-ranging and complex family dispute, it is said that preference shares in a company cannot validly be issued unless there are ordinary shares already issued. The issue of redeemable preference shares to the appellant's mother was said to have been invalid for that reason. The right to redeem the shares in the absence of issued ordinary shares was also said to offend against the principle of the maintenance of capital. The arguments are based largely upon historical grounds relating to the original purpose of preference shares, which was to raise additional capital legislative for companies, and restrictions on the reduction of capital. implications derived longstanding from The arguments of the appellant rest upon an unduly narrow view of the legitimate purposes for which preference shares can be used. They also seek to draw an unwarranted implication limiting the powers of companies with respect to the issue and redemption of such shares by reference to a generalised conception of the statutory policy in favour of the maintenance of capital. For the reasons that follow the appeal should be dismissed with costs. Facts and procedural background LW Furniture Consolidated (Aust) Pty Ltd ("LWC") was incorporated on 30 April 1971. Article 3 of the articles of association ("the Articles") stated that its capital was $20,000.00, divided into twenty thousand shares of one dollar each. Its shares included fourteen classes designated "A" to "N". Classes "A" to "D" were described as "preference shares" comprising1: "5 'A' 5% Convertible Preference Shares, 5 'B' Redeemable Preference Shares, 10 'C' Redeemable Preference Shares, 10 'D' Redeemable Preference Shares". 1 Articles, Art 3(1). Article 3 also provided for 1,997 of each of the remaining ten classes designated "E" to "N" and described as "ordinary shares". None of the shares in classes "A" to "D" carried voting rights2. The founding directors of the company were Leo and Hedy Weinstock. Leo, as one of the subscribers to the memorandum of association ("the Memorandum"), held four of the "A" class shares and the other subscriber, a solicitor, Brian Nagel, held the remaining "A" class share on trust for Leo. Leo had the right during his life and while he held at least four of the "A" class shares to convert them to five per cent preference shares carrying voting rights at general meetings of the company. At some time or times Hedy was issued with a total of eight "C" class shares3. Leo and Hedy's children, Amiram Weinstock and Tamar Beck, were each issued a single "C" class share. Two "D" class shares were issued to a company associated with Amiram. The arrangements were designed to reduce death and estate duties payable on the death of Leo4. Leo died in 2003 and Hedy on 6 July 2004. At the time of Hedy's death the issued shares in the company were: Five "A" 5% convertible preference shares, of which four were held by Leo's estate and one by Mr Nagel. Ten "C" redeemable preference shares, of which eight were held by Hedy and one each by Amiram and Tamar. Two "D" redeemable preference shares held by a company connected with Amiram. No ordinary shares were ever issued. Amiram and Tamar were appointed as directors of LWC in June 1973. As appears from the judgment in the related appeal5, both Amiram and Tamar had 2 Articles, Art 3(2)(a), (3)(b), (4)(a), (5)(a). 3 At trial, Hamilton AJ noted that the parties proceeded on the basis that the subject shares were issued in 1971, but that it was not clear on the evidence when the other issued shares were issued: Beck v Weinstock (2010) 241 FLR 235 at 237 [13]. 4 The arrangements may have been inspired by Robertson v Federal Commissioner of Taxation (1952) 86 CLR 463; [1952] HCA 71, which concerned a scheme to alter a shareholder's rights upon his death so that the value of his shares was significantly reduced for estate duty purposes. 5 Weinstock v Beck [2013] HCA 14 at [23]. ceased to be directors at the commencement of the annual general meeting of LWC in December 1973, a consequence of the provisions of the Articles of which they were evidently unaware. They continued to act as directors until 1982 when Tamar resigned. Amiram continued thereafter and purported to appoint his wife, Helen, as a director in 2003. Amiram's status as a director of the company was not in issue in these proceedings. At some time after Hedy's death, Amiram, acting as a director of LWC, purported to pass a resolution redeeming, for one dollar each, the eight "C" class shares which his mother had held at her death. Although there was no company minute to that effect, the primary judge, Hamilton AJ, found a clear statement in a letter written by Amiram to be "sufficient evidence of the requisite resolution."6 In 2007, Tamar commenced proceedings in the Equity Division of the Supreme Court of New South Wales making a large number of claims against Amiram, Helen and LWC, among others. Those proceedings have led to this appeal. Most of the claims were resolved by agreement and consent orders were made by Hamilton AJ. The issues remaining for determination by his Honour related to the eight "C" class shares in LWC that were held by Hedy at her death on 6 July 2004. On Tamar's application, Hamilton AJ made a declaration that the eight "C" class shares held by Hedy at her death were not preference shares within the meaning of the Companies Act 1961 (NSW) ("the 1961 Act") at the times they were issued, nor within the meaning of the Corporations Act 2001 (Cth) ("the 2001 Act"), and that they were not able to be redeemed under the 2001 Act. His Honour declared the resolution purporting to redeem the shares and their purported redemption to be void and of no effect. He made orders for the rectification of the register of LWC to record Hedy as continuing to be the holder of the shares on and from the date of the purported redemption. Amiram, Helen and LWC were ordered to pay Tamar's costs. Amiram, Helen and LWC appealed to the Court of Appeal. By majority (Handley AJA, Giles JA concurring, Young JA dissenting) the Court allowed the appeal, set aside the orders made by Hamilton AJ, and substituted a declaration that the eight "C" class shares held by Hedy were redeemable preference shares which were validly redeemed by the company on or about 29 July 20047. Tamar was ordered to pay the costs of the appeal and also the costs of Amiram, Helen and LWC in the hearing in the Equity Division. (2010) 241 FLR 235 at 241 [33]. 7 Weinstock v Beck (2011) 252 FLR 462. On 10 February 2012, this Court (Gummow and Heydon JJ) granted Tamar special leave to appeal from the whole of the judgment and order of the New South Wales Court of Appeal8. The decisions at first instance and on appeal The primary judge held that it was an essential quality of a preference share that it confer an advantage over another class of share9. Neither the 1961 Act nor the 2001 Act contemplated that preference shares could validly be issued on the basis that they conferred a preference over unissued ordinary shares10. If the only issued shares were redeemable preference shares which could at appropriate times be redeemed, the company could be left without issued shares and the basic rule against the reduction of capital thereby circumvented. His Honour concluded that preference shares could not be created unless there had been issued, at the time of their creation, shares over which they had preference, as to capital or as to dividend or as to both11. His Honour appears to have relied upon implications limiting the powers conferred by the 1961 and 2001 Acts for provision to be made in company constitutions relating to the issue and redemption of preference shares. In the Court of Appeal, Handley AJA, with whom Giles JA agreed, held that the power conferred on the directors by Art 4 of the Articles to issue new shares from available nominal capital could be exercised at all times. It was not affected by the state of the company's share register12. The directors validly in office could have issued ordinary shares at all times and could still do so, subject to the equitable constraints derived from the fiduciary nature of their power13. Handley AJA held that it must follow that the "C" and "D" class shares were validly issued and conferred on their holders the preferential rights defined in the Articles. Those rights would remain potential only, without effective content, unless and until the directors issued ordinary shares14. His Honour held [2012] HCATrans 034. (2010) 241 FLR 235 at 239–240 [23]–[28]. His Honour followed the reasoning of Barrett J in Re Capel Finance Ltd (2005) 52 ACSR 601. 10 (2010) 241 FLR 235 at 239 [23]–[24]. 11 (2010) 241 FLR 235 at 240 [29]. 12 (2011) 252 FLR 462 at 478 [146]. 13 (2011) 252 FLR 462 at 478 [147]. 14 (2011) 252 FLR 462 at 478 [148]. there was nothing unusual about that situation. The preferential right to a dividend was dependent on the company earning divisible profits and the decision of the directors to declare a dividend. Until then the right was potential only15. Young JA in dissent said that although the history of the concept of the preference share in Australia and other jurisdictions provided little assistance, it pointed in one direction, namely that a preference share is one which has preferred rights over another class of share. If there is no other class of share, there cannot be a preference share16. Unissued shares have no existence17. If preference shares confer preferred rights over something else, that something else must exist18. In the event, his Honour came to the same conclusion as the The grounds of appeal The sole ground of appeal to this Court is that: "The Court below erred in holding that eight C class shares in [LWC] were redeemable preference shares for the purposes of the Corporations Act 2001 (Cth) notwithstanding that there were never any other shares on issue in [LWC] by reference to which the C class shares conferred a preference." Consideration of this appeal begins with the company's constitution, specifically the Articles. 15 (2011) 252 FLR 462 at 478 [149]. 16 (2011) 252 FLR 462 at 471 [75]. 17 (2011) 252 FLR 462 at 472 [82]. An observation not always strictly accurate: see Central Piggery Co Ltd v McNicoll and Hurst (1949) 78 CLR 594 especially at 599–600 per Dixon J in relation to the distinction between allotment and issue; [1949] HCA 19. Lindley in A Treatise on the Law of Companies, 5th ed (1889) at 394 said that unissued shares "belong to the company", citing York and North- Midland Railway Co v Hudson (1845) 16 Beav 485 [51 ER 866]. 18 (2011) 252 FLR 462 at 472 [83]. 19 (2011) 252 FLR 462 at 473 [96]. The Memorandum and the Articles The objects of LWC, set out in the Memorandum, included "[t]o raise money by the issue of shares in the capital of the Company and/or otherwise"20. That the object encompassed the issue of preference shares in advance of the issue of ordinary shares was suggested by the subscription clause, which showed that Leo and Mr Nagel had subscribed for "A" class convertible preference shares. Articles 3(2) to 3(5) of the Articles defined the "rights privileges and conditions" attached to each of the share classes "A" to "D". The rights, privileges and conditions attached to the ten "C" class redeemable preference shares were set out in Art 3(4). They were to rank, with respect to return of capital in a winding up and in a reduction of capital, next after the "A" class convertible preference shares and the "B" class redeemable preference shares. Otherwise, but pari passu with any "D" class redeemable preference shares, they would also rank in priority to all other shares in the capital of the company21. They conferred on their holders22: "the right to receive such dividends as may be declared thereon pursuant to Article 101 hereof and subject to the provisions of sub-clause (3) of that Article shall rank as regards such dividends pari passu with the Ordinary Shares in the Company. Such dividends (if any) shall be non-cumulative." They did not carry the right to any further participation in surplus profits or assets23. They were liable to be redeemed at par value on or before 30 June 201624. They were also to be redeemed upon the death of their holder, with payment to be made to the holder's personal representatives25. Article 4 provided for the issue and allotment of unissued shares on such terms and conditions and at such times as the directors thought fit. Article 5 provided for the issue of preference shares: 20 Memorandum, cl 2(c). 21 Articles, Art 3(4)(b). 22 Articles, Art 3(4)(e). 23 Articles, Art 3(4)(f). 24 Articles, Art 3(4)(c). 25 Articles, Art 3(4)(d). "Subject to the provisions of section 61 of the [1961] Act the Company may issue preference shares which are or at the option of the Company are to be liable to be redeemed and such power may be exercised by the directors." Article 101 empowered the directors to declare dividends. It conferred upon the directors, subject to the provisions of Art 3, and until the death of Leo and Hedy, an absolute discretion in the determination from time to time of the rate of dividend, if any, to be paid in respect of shares in the classes "B" to "N" inclusive. The preference which the "C" class shares conferred was a priority over ordinary shares with respect to the return of capital in a winding up or upon a reduction of capital. There was nothing express in the Memorandum or the Articles to prevent the issue of preference shares in the absence of issued ordinary shares. The power to issue preference shares was widely expressed, as was the power to issue shares generally. The limitation propounded by Tamar depended upon the meaning of the term "preference share" as used in the 1961 Act and in the Articles by reference to the history of such shares. The further propounded limitation was that such shares could not be issued as redeemable preference shares or redeemed absent the existence of issued ordinary shares. That limitation was based upon the principle of the maintenance of capital. The questions raised are in part questions of the construction of the relevant companies legislation. It is necessary first to consider the history of the preference share, which was said by Tamar to be relevant to the construction question. The evolving character of the preference share The preference share emerged in the United Kingdom in the 18th and 19th centuries out of the need for private infrastructure corporations to raise capital to fund the completion of projects for which inadequate initial capital had been subscribed. To induce investors to provide that additional capital, shares were issued which attracted preferential dividend rights26. The term "preference share" was not always used. Designations such as "active", "county", "profitable", "new" and "privileged" were also used to describe such shares27. 26 Evans, British Corporation Finance 1775–1850: A Study of Preference Shares, 27 Evans, British Corporation Finance 1775–1850: A Study of Preference Shares, Although initially "a device for emergency finance" directed to raising additional capital, over time the preference share was put to wider uses including the retirement of debt. It came to confer priorities in relation to dividends, capital and voting rights in different combinations. The variety of its uses and the priority rights it conferred made a narrow legal definition elusive28. What all preference shares had in common, however, was that they conferred upon their holders one or more entitlements in priority to the holders of ordinary shares. In the first half of the 19th century in the United Kingdom, the authority to issue preference shares and to create the priorities they conferred was to be found in specific purpose statutes29. Later, the source of that authority was to be found in the constitutions of the companies creating such shares, read with general companies legislation30. That general proposition was reflected in the observation of Lord Simonds in Scottish Insurance Corporation Ltd v Wilsons & "subject to any relevant provision of the general law, the rights inter se of preference and ordinary shareholders must depend on the terms of the instrument which contains the bargain that they have made with the company and each other." Authority to issue preference shares did not have to be spelt out in a company's constitution. A provision authorising an increase in capital by the issue of new shares "with such rights and privileges, or with such restrictions and on such terms and conditions as the company in general meeting directs" was sufficient issue of shares giving priorities over other shareholders32. The nature of the priority authorised by the articles might be to support the 28 Evans, British Corporation Finance 1775–1850: A Study of Preference Shares, 29 A number of early 19th century examples are cited in Evans, British Corporation Finance 1775–1850: A Study of Preference Shares, (1936) at 74–75. 30 The first general provision which provided for the issue of redeemable preference shares was s 46 of the Companies Act 1929 (UK). Sections 13 and 14 of the Companies Clauses Act 1863 (UK) provided for the issue of preference shares for companies where such issues were authorised by special Acts of Parliament. 31 [1949] AC 462 at 488. 32 Webb v Earle (1875) LR 20 Eq 556. limited to priority in dividends or extend to a priority in repayment of capital out of the assets33. It might also be a priority in voting rights34. Consistently with the original and predominant purpose of the preference share, its consideration in textbooks and judicial decisions, particularly in the 19th century and early 20th century, was linked to its use as a means of increasing capital. That was a use which occurred when there were already in existence ordinary shares representing the ordinary capital of the company. That may have been implicit in Palmer's reference, in the first edition of his book on company precedents published in 1877, to "creating shares having a preference over those already issued" when distinguishing preference shares from shares with deferred rights35. In any event, as pointed out by the respondents, even in its first edition, Palmer's book supported the proposition that preference shares of various kinds were in use at the time of its publication36. Tamar referred, in written submissions, to s 14 of the Companies Clauses Act 1863 (UK), which conferred an entitlement on preference shareholders to a preferential dividend out of profits in priority to "the ordinary shares and ordinary stock of the company". The latter term was said to relate to the issued capital of the company. That is not surprising given that s 14 complemented s 13, which was concerned with the issue of preference shares to raise additional capital. Moreover, as the respondents pointed out, ss 13 and 14 of the Companies Clauses Act 1863 applied only to companies whose authority to raise preference shares was expressly conferred by private Acts of Parliament passed for that purpose. Tamar also relied upon the observation by Cotton LJ in In re Brighton and Dyke Railway Co37 that preference shares were "defined" by s 1438. That observation was made in the context of the particular statute. It did not purport to be of general application. 33 In re Eclipse Gold Mining Co (1874) LR 17 Eq 490, cited in Palmer, Conveyancing and Other Forms and Precedents Relating to Companies, (1877) at 267. 34 Lindley, A Treatise on the Law of Companies, 5th ed (1889) at 396–397. 35 Palmer, Conveyancing and Other Forms and Precedents Relating to Companies, 36 Palmer, Conveyancing and Other Forms and Precedents Relating to Companies, 37 (1890) 44 Ch D 28. 38 (1890) 44 Ch D 28 at 36. A broadening of the purpose of the preference share was its use to raise ordinary capital. In Palmer's first edition there is a precedent for a clause dividing the original capital of a company into several classes of shares, including preference shares and deferred shares39. Further, in British and American Trustee and Finance Corporation v Couper40, Lord Macnaghten held that there was nothing in the Companies Act 1862 (UK) or in any other Act requiring the memorandum of a company to contain any reference to the rights of shareholders in the capital of the company inter se41. On that basis he said42: "The division of the capital into shares of a certain fixed amount which must appear in the memorandum would not be altered or affected by issuing some of the shares as preference shares." The respondents also pointed to the decision of Chitty J in In re Floating Dock Company of St Thomas Ltd43, which was decided shortly after British and American Trustee and Finance Corporation. Chitty J approved a capital reduction resulting in the cancellation of ordinary and second preference shares and leaving in place only first preference shares. The proposition that there was an implied condition in a company memorandum that all shareholders were to have equal rights unless the memorandum itself showed the contrary was also rejected by Lindley LJ, in delivering the judgment of the Court of Appeal in Andrews v Gas Meter Co44. Andrews concerned the validity of preference shares issued in order to raise new capital, which was to be treated under the articles as part of the original capital. That decision was relied upon by the Supreme Court of New Zealand in 1913 for the extended proposition that part of the original capital of the company could be 39 Palmer, Conveyancing and Other Forms and Precedents Relating to Companies, 41 [1894] AC 399 at 416. 42 [1894] AC 399 at 416–417, overruling Hutton v Scarborough Cliff Hotel Co (1865) 2 Dr & Sm 521 [62 ER 717]. 44 [1897] 1 Ch 361 at 370. Lindley LJ followed Lord Macnaghten's observation in British and American Trustee and Finance Corporation v Couper [1894] AC 399 raised by the issue of preference shares45. The New Zealand decision in turn was applied by this Court in Rofe v Campbell46, in which the plurality said47: "An express power contained in the articles is enough to enable the directors to issue capital as preference shares … but the power must be given to them by the articles expressly or by necessary intendment." The Privy Council reversed that decision, primarily on the construction of the relevant memorandum and articles. In so doing, however, and consistently with the decision of this Court, their Lordships summarised the relevant law48: "If nothing is said in the memorandum, the articles of association may provide for the issue of the authorized capital in the form of preference shares; if the articles do not so provide, or do provide for equality inter socios, the power to issue preference shares may be obtained by alteration of the articles." In that case there was no express provision in the articles of the company for preference shares as part of the original capital, but there was express provision for the future issue of such shares49. Once it is accepted that preference shares were able to be issued, long before the enactment of the 1961 Act and the formation of LWC, to raise part of the original capital of a company, the historical rationale for the proposition that a share issued, absent the issue of ordinary shares, could not be designated as a "preference share" within the meaning of the 1961 Act and the 2001 Act, is weakened to the point of extinguishment. The variety of purposes for which preference shares could be used, the variety of rights which could attach to them, and their availability as a means of raising original capital, lead to the rejection of the historical argument advanced by Tamar in support of the proposition that the "C" class shares held by Hedy prior to her death were not preference shares when issued. Against that background it is necessary to have regard to the companies legislation relevant to the issue and redemption of preference shares in LWC. 45 Turnbull & Jones Ltd v Turnbull (1913) 32 NZLR 670 at 672 per Sim J. 46 (1931) 45 CLR 82; [1931] HCA 16. 47 (1931) 45 CLR 82 at 90. 48 Campbell v Rofe (1932) 48 CLR 258 at 264; [1933] AC 91 at 98. 49 (1932) 48 CLR 258 at 264; [1933] AC 91 at 98–99. The statutory framework At the time that LWC was incorporated, the 1961 Act was in force. Section 61 of that Act provided that, subject to that section, a company having a share capital could, if so authorised by its articles, issue preference shares liable to be redeemed at the option of the company, the redemption to be effected only on such terms and in such a manner as provided by the articles50. Redemption would not be taken as reducing the amount of authorised share capital of the company51. Section 61(3) provided that the shares were not to be redeemed except out of profits which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of the redemption, nor could such shares be redeemed unless fully paid up. Where redeemable preference shares were redeemed otherwise than out of the proceeds of a fresh issue, s 61(5) required that, out of the profits which would otherwise have been available for dividend, a sum equal to the nominal amount of the shares redeemed be transferred to a reserve called the "capital redemption reserve". The provisions of the 1961 Act relating to the reduction of the share capital of a company applied, except as provided in s 61, as if the capital redemption reserve were paid up share capital of the company52. That being said, the redemption of redeemable preference shares out of profits otherwise available for dividends was a reduction of capital, albeit offset by the crediting of the nominal value of the shares redeemed to the capital redemption reserve53. The ancestry of s 61 can be traced back to s 46 of the Companies Act 1929 (UK), which was the first general companies legislation in the United Kingdom to provide for the issue of redeemable preference shares. Similar but not identical provision was made by s 149 of the Companies Act 1936 (NSW). Tamar submitted that the requirements in s 149 of the 1936 Act for a special resolution for the issue of redeemable preference shares and that the company balance sheets set out what part of the issued capital consisted of such shares assumed the prior issue of ordinary shares. However, as the respondents pointed out, there was no limit expressed in the 1936 Act as to what might be 50 1961 Act, s 61(1). 51 1961 Act, s 61(2). 52 1961 Act, s 61(5). 53 Comptroller of Stamps (Vict) v Ashwick (Vic) No 4 Pty Ltd (1987) 163 CLR 640 at 649; [1987] HCA 60 (a case concerning the similarly worded s 120 of the Companies (Victoria) Code and the question whether redemption was a "reduction of capital" for the purposes of an exemption provision in the Stamps Act 1958 (Vic)). agreed by a special resolution under s 149 nor any constraint on a company's ability to determine what part of its capital was to be redeemed. Neither the 1936 Act, the 1961 Act, nor its successors up to and including the 2001 Act, proscribed the issue of redeemable preference shares in the absence of issued ordinary shares. The Companies Act 1981 (UK) included a specific provision that prohibited the issue of redeemable shares at any time when there were no issued shares of the company which were not redeemable54. That provision has not been replicated in Australia. Section 66 of the 1961 Act required specification in the company constitution of the rights attaching to preference shares with respect to repayment of capital, participation in surplus assets and profits, cumulative or non- cumulative dividends, voting and priority of payment of capital and dividend in relation to other shares or other classes of preference shares55. The 1961 Act did not contain any definition of preference share or redeemable preference share. Nevertheless, the Act indicated the generic character of the "preference share", encompassing shares defined by a variety of priority rights and issued for a variety of purposes. Nothing in the Act excluded from the concept of preference share, shares issued in the absence of issued ordinary shares. And as already observed, nothing in the history of the preference share supports such an exclusion. The Companies (Application of Laws) Act 1981 (NSW) applied the provisions of the Companies Act 1981 (Cth) as a law of New South Wales known as the Companies (New South Wales) Code from 1 July 1982 to the exclusion of the Companies Act 196156. The Companies Code was superseded by the Corporations Act 1989 (Cth), found to be invalid in New South Wales v The Commonwealth57. The 1989 Act was succeeded by the Uniform Legislation Scheme which came into effect in New South Wales in 1991 as the Corporations Law58. The 1961 Act was eventually repealed by the Statute Law (Miscellaneous Provisions) Act 2008 (NSW)59. Even assuming that some of the "C" class shares issued to Hedy were issued when the Companies Code or the Corporations Law were in effect in New South Wales, it has not been suggested that there was any material difference in the provisions of those statutory regimes or in any 54 Companies Act 1981 (UK), s 45(2). 55 1961 Act, s 66(1). 56 Companies (Application of Laws) Act 1981 (NSW), ss 6, 10(2)(d). 57 (1990) 169 CLR 482; [1990] HCA 2. 58 Corporations (New South Wales) Act 1990 (NSW). 59 Section 4 read with Sched 4, Pt 1. transitional provisions which would differentiate the power to issue preference shares or redeemable preference shares under those regimes from the power to issue shares under the 1961 Act. Before turning to the 2001 Act it should be noted that the Articles were affected by legislative change in 1998. In 1998 the requirement that company constitutions define an authorised share capital was removed by the Company Law Review Act 1998 (Cth)60. That requirement was removed because it no longer served the purpose of allowing the creditors of a company to assess the size of its business undertaking61. The concept of par value was also abolished62 as an "arbitrary monetary denomination attributed to the shares", not representing their true value, and potentially "misleading to an unsophisticated investor."63 Section 1427(1) of the Corporations Law, inserted by item 11 of Sched 1 to the Company Law Review Act 1998 (Cth), repealed any provision of a company constitution stating the amount of the company's share capital and dividing it into shares of a fixed amount. There was no submission that that provision made any difference to the outcome of this appeal64. At the time of Hedy's death, the 2001 Act was in force. Section 124 of that Act sets out the legal capacity and powers of a company, including the power to "issue and cancel shares in the company"65. Section 254A(1) provides that a company's power under s 124 to issue shares includes the power to issue66: "preference shares (including redeemable preference shares)". As with s 66 of the 1961 Act, s 254A(2) of the 2001 Act provides that a company can issue preference shares only if the rights attached to them with respect to repayment of capital, participation in surplus assets and profits, cumulative and 60 Schedule 1, item 11, inserting s 1427 into the Corporations Law. 61 Explanatory Memorandum to the Company Law Review Bill 1997 (Cth) at [11.6]. 62 Schedule 5, item 10, inserting s 254C into the Corporations Law. 63 Explanatory Memorandum to the Company Law Review Bill 1997 (Cth) at 64 See the reference in Weinstock v Beck [2013] HCA 14 at [36] to the consideration of the 1998 amendment by Campbell JA in Beck v LW Furniture Consolidated (Aust) Pty Ltd (2012) 265 FLR 60 at 96–100 [159]–[174]. 65 2001 Act, s 124(1)(a). 66 2001 Act, s 254A(1)(b). non-cumulative dividends, voting and priority of payment of capital and dividends in relation to other shares or classes of preference shares are set out in the company's constitution or have been otherwise approved by special resolution of the company. As with s 66 of the 1961 Act, s 254A(1) of the 2001 Act uses the term "preference share" in a generic sense. The term itself is not defined. Section 254A(3), which defines redeemable preference shares, provides: "Redeemable preference shares are preference shares that are issued on the terms that they are liable to be redeemed. They may be redeemable: at a fixed time or on the happening of a particular event; or at the company's option; or at the shareholder's option." Part 2H.2 of the 2001 Act is entitled "Redemption of redeemable preference shares". Section 254J requires that a company redeem redeemable preference shares only on the terms on which they are issued67. On redemption the shares are cancelled68. By s 254K a company can only redeem such shares if they are fully paid up and out of profits or the proceeds of a new issue of shares made for the purpose of the redemption. The 2001 Act, like its predecessors, provides mechanisms for the protection of the capital of a company in the event of the redemption of redeemable preference shares. There is nothing in the Act which would exclude from the concept of "preference share" a preference share issued in the absence of issued ordinary shares. Nor is there anything in the Act to proscribe the redemption of redeemable preference shares in the absence of issued ordinary shares. Redemption and the maintenance of capital Tamar submitted, in effect, that the concept of a redeemable preference share issued in advance of the issue of ordinary shares was inconsistent with the principle that the share capital of a company should be maintained unless the court sanctioned its reduction. The prohibition on the reduction of a company's capital appeared in the Companies Act 1862 (UK)69. It was relaxed by the 67 2001 Act, s 254J(1). 68 2001 Act, s 254J(2). 69 See Simonson, The Law Relating to the Reduction of the Share Capital of Joint Stock Companies, 2nd ed (1924). Companies Act 1867 (UK), which allowed for reduction of capital to be approved by the court70. The rationale of the restriction as explained in the House of Lords in Trevor v Whitworth71 was that persons dealing with a company were entitled to assume that no part of the capital put into the company had later been paid out except in the legitimate course of business72. Consistently with the restrictions on the reduction of capital, the provisions of the Companies Act 1929 (UK) and its Australian descendants required that redemption of redeemable preference shares be out of profits or the proceeds of a fresh issue of shares. Those requirements and that of a capital redemption reserve fund being applicable only to preference shares, it was submitted for Tamar that there was an implication that the holders of ordinary shares would continue to exist and continue to hold the capital of the company. The specific protections of company capital which attach to the redemption of redeemable preference shares do not logically require that such shares only be brought into existence after ordinary shares have been issued and only redeemed while there are ordinary shares in existence. It is a bridge too far to infer from the statutory scheme under either or both of the 1961 Act and the 2001 Act that there is some implied limitation of the kind propounded on behalf of Tamar affecting the issue and redemption of redeemable preference shares but not stated in the respective statutes and not to be found expressly or by implication in the constitution of the company. It may be accepted, as was submitted by the respondents, that the prospect of capital being returned to shareholders other than in accordance with the 2001 Act is not created or heightened by the circumstance that a company has only preference shares on issue at a particular point in time. The submissions on behalf of Tamar as to the issue and redemption of the redeemable preference shares should not be accepted. Conclusion For the preceding reasons the appeal should be dismissed with costs. 70 Companies Act 1867 (UK), ss 9–20. 71 (1887) 12 App Cas 409. 72 (1887) 12 App Cas 409 at 423–424 per Lord Watson. See also Davis Investments Pty Ltd v Commissioner of Stamp Duties (NSW) (1958) 100 CLR 392 at 413 per Kitto J; [1958] HCA 22; Australasian Oil Exploration Ltd v Lachberg (1958) 101 CLR 119 at 132; [1958] HCA 51. HAYNE, CRENNAN AND KIEFEL JJ. A company incorporated under the Companies Act 1961 (NSW) ("the 1961 Act") had five subscriber shares, described as "'A' 5% Convertible Preference Shares". It later issued further shares described as "'C' Redeemable Preference Shares". The company issued other preference shares having the same rights as the "C" class shares, but never issued any ordinary shares, whether before or after the issue of the "C" class shares. The only issue in this appeal is whether the company's purported redemption of certain "C" class shares was valid. The "C" class shares could be redeemed validly only if they were "preference shares" liable to be redeemed. There were no other issued shares over which the "C" class shares had preferential rights. Were the "C" class shares preference shares? These reasons will show that the "C" class shares were preference shares. The redemption of the shares was valid. The facts and proceedings LW Furniture Consolidated (Aust) Pty Limited ("the Company") was incorporated under the 1961 Act. It was formed73 as a proprietary company, limited by shares, by two persons (Mr Leo Weinstock and a solicitor) subscribing their names to a memorandum of association and complying with the 1961 Act's requirements as to registration. In accordance with s 18 of the 1961 Act, the memorandum of association of the Company stated, among other things, the amount of share capital with which the Company proposed to be registered ($20,000) "and the division thereof into shares of a fixed amount"74 (20,000 shares of $1 each). In accordance with the same section, the memorandum of association also stated that the liability of the members was limited and that the subscribers were "desirous of being formed into a company in pursuance of the memorandum and ... respectively agree[d] to take the number of shares in the capital of the company set out opposite their respective names"75. The Company's articles of association provided for several different classes of shares: "5 'A' 5% Convertible Preference Shares, 5 'B' Redeemable 73 Companies Act 1961 (NSW), s 14(1). 74 s 18(1)(c). 75 s 18(1)(i). Preference Shares, 10 'C' Redeemable Preference Shares, 10 'D' Redeemable Preference Shares"76 and a balance of 19,970 ordinary shares divided into 10 classes. The two subscribers to the memorandum of association each agreed to take "A" class shares. Mr Leo Weinstock agreed to take (and took) four; the solicitor agreed to take (and took) the remaining share of that class. Eight "C" class shares were later issued to Mr Leo Weinstock's wife, Mrs Hedy Weinstock. Argument proceeded on the basis that these shares were issued to Mrs Weinstock in 1971. Two further "C" class shares and two "D" class shares were also issued, but the details of those issues need not be considered. The Company's articles of association set out the rights attaching to the several classes of shares. The "A" class shares: carried the right to a fixed cumulative preferential dividend at the rate of five per cent per annum on the amount paid up on the shares; gave no right to vote at any general meeting of the Company; and had priority in a winding up "both as regards return of capital and dividend accrued up to the commencement of the winding up and not declared" or on a reduction of capital as regards return of capital. Until his death, or until he ceased to hold at least four of the "A" class shares (whichever was the earlier), Mr Leo Weinstock could convert the "A" class shares into the only shares carrying a right to vote at a general meeting. The "C" class shares: did not carry any right to vote at any general meeting; ranked as regards return of capital after the "A" class shares but equally with the "D" class shares in priority to ordinary shares; ranked as regards dividends equally with both the "D" class shares and ordinary shares; and were liable to be redeemed on the death of the holder. The "C" class shares thus gave their holder preference to the return of capital over the holder of any ordinary shares but otherwise had no preferential rights. And no ordinary shares were ever issued. Mr Leo Weinstock predeceased his wife. On the death of Mrs Hedy Weinstock, the Company purported to redeem, at their nominal value of $1 per share, the eight "C" class shares she had held. Mrs T R Beck, daughter of Mr and Mrs Weinstock and an executor of the estate of Mrs Weinstock, alleged that the "C" class shares her mother had held ("the disputed shares") were not redeemable because they were not preference shares. At first instance in the Supreme Court of New South Wales, Hamilton AJ concluded77 that "preference shares cannot be created unless there are on issue at the time shares over which they have preference". On appeal to the Court of 76 Articles of association, Art 3(1). 77 Beck v Weinstock (2010) 241 FLR 235 at 240 [29]. Appeal, that Court (Giles JA and Handley AJA, Young JA dissenting) held78 that the disputed shares were preference shares and had been validly redeemed. By special leave, Mrs Beck appealed to this Court. The appeal should be dismissed. The appellant's arguments The appellant framed the issue in the appeal to this Court as whether a share can be a "preference share" for the purposes of the Corporations Act 2001 (Cth) ("the 2001 Act") when the rights attaching to the share do not confer any preference or priority over the rights attaching to any other share actually on issue in the company. The appellant referred to the 2001 Act on the footing that it was the provisions of that Act (in particular, s 254J) which governed the purported redemption of the disputed shares. The appellant submitted that, if the disputed shares were not "preference shares", they could not be "redeemable preference shares" as that term was used in either s 254A of the 2001 Act (dealing with a company's power "to issue bonus, partly-paid, preference and redeemable preference shares") or s 254J(1) (providing that "[a] company may redeem redeemable preference shares only on the terms on which they are on issue"). Because the Company had not exercised the power to issue ordinary shares, the existence of that power was treated by the appellant as irrelevant to whether the disputed shares were "preference shares". The appellant submitted that the disputed shares were not "preference shares" because they conferred no preference or priority over the only other classes of shares ever issued by the Company: the "A" and "D" classes. Which Act? There was no dispute that the provisions of the 2001 Act relating to redemption of redeemable preference shares applied to the Company. In particular, there was no dispute that the Company was a company registered under the 2001 Act79 and thus a "company", both as defined in s 9 and as referred 78 Weinstock v Beck (2011) 252 FLR 462. 79 See ss 20-21 of the Companies (Application of Laws) Act 1981 (NSW), s 126 of the Corporations Law of New South Wales (being s 82 of the Corporations Act 1989 (Cth) as given effect by the Corporations (New South Wales) Act 1990 (NSW)) and, following the amendments made by the Company Law Review Act 1998 (Cth), ss 1362CA-1362CB of the Corporations Law of New South Wales together with ss 57A(1), 1378(1) and 1408 of the 2001 Act. to in ss 254A and 254J of the 2001 Act. But the appellant did not submit that if the disputed shares were validly issued as redeemable preference shares they had ceased to be redeemable preference shares when the Company purported to redeem them. It was not suggested that any provision of any of the several intervening forms of corporations legislation which applied to the Company after it issued the disputed shares in 1971 (when the 1961 Act applied) bore upon whether the shares were properly described, when issued, as preference shares liable to be redeemed. It is necessary, therefore, to consider the 1961 Act's provisions about redeemable preference shares. Redeemable preference shares under the 1961 Act Section 61(1) of the 1961 Act provided that "if so authorised by its articles" a company having a share capital might "issue preference shares which are, or at the option of the company are to be liable to be redeemed" and that the redemption was to be effected "only on such terms and in such manner as ... provided by the articles". Sub-section (2) provided that "[t]he redemption shall not be taken as reducing the amount of authorised share capital of the company". Consistent with the principle of maintenance of capital, firmly established as a cardinal principle of company law by the end of the nineteenth century80, s 61 prevented redemption of the shares by using the company's capital and provided for the maintenance of an amount equal to the nominal amount of the shares redeemed as part of the company's capital. Thus, s 61(3) prohibited redemption of redeemable preference shares except out of profits otherwise available for dividend or out of the proceeds of a fresh issue of shares made for the purpose of the redemption and unless the shares were fully paid up. If redeemable preference shares were redeemed otherwise than out of the proceeds of a fresh issue of shares, s 61(5) required that a sum equal to the nominal amount of the shares redeemed be transferred out of profits otherwise available for dividend "to a reserve called the 'capital redemption reserve'" and provided that, subject to other provisions of s 6181, the provisions of the 1961 Act relating 80 See, for example, In re Dronfield Silkstone Coal Co (1880) 17 Ch D 76; Trevor v Whitworth (1887) 12 App Cas 409; In re Almada and Tirito Co (1888) 38 Ch D 415; Ooregum Gold Mining Co of India v Roper [1892] AC 125; Welton v Saffery 81 Notably s 61(7), which permitted application of the capital redemption reserve "in paying up un-issued shares of the company to be issued to members of the company as fully paid bonus shares". to reduction of capital applied to the capital redemption reserve as if it were paid up share capital of the company. Preference shares Section 66(1) of the 1961 Act provided that: "No company shall allot any preference shares or convert any issued shares into preference shares unless there is set out in its memorandum or articles the rights of the holders of those shares with respect to repayment of capital, participation in surplus assets and profits, cumulative or non-cumulative dividends, voting, and priority of payment of capital and dividend in relation to other shares or other classes of preference shares." Section 66(1) gave some indication of the respects in which the rights attaching to one class of shares might be preferred over the rights attaching to another82. But the 1961 Act contained no definition of "preference share" and no provision of the 1961 Act set out any essential characteristics of a preference share83. As was remarked in one leading text of the time84, "[t]hat this should be so is not surprising any more than that there is no definition of 'ordinary' shares". The absence of legislative definition of a "preference share" is unsurprising because "[t]he rights of ... preference shareholders are, of course, ordinarily to be ascertained from the memorandum and articles of the company and the terms upon which the issue of preference shares was made, and their rights are to be ascertained from those documents or terms as a matter of construction"85. What was a "preference share" was not a matter regulated by some rule of positive law. Section 66 provided that a company could not issue preference shares except in accordance with its memorandum and articles of association. Otherwise, however, the issue of preference shares was treated as a matter not regulated by 82 cf s 254A(2) of the 2001 Act. 83 Subsequent forms of Australian corporations legislation have not contained any definition of preference share or any statement of the essential characteristics of a preference share. 84 Wallace and Young, Australian Company Law and Practice, (1965) at 252. 85 Re Sheffield Manufacturing and Plating Co Ltd (1951) 52 SR (NSW) 34 at 35 per the 1961 Act but by whatever were the provisions actually made in the This treatment of the issue of preference shares was consistent with other provisions of the 1961 Act regulating the capital structure of a company limited by shares. The 1961 Act required87 that the amount of a company's authorised share capital and its division into shares of a fixed amount be stated in the company's memorandum of association. It required that certain steps not be taken in relation to a company's share capital unless authorised by its memorandum or articles of association. Those steps included altering its share capital88, reducing its share capital89, varying or abrogating the rights attaching to any class of share90 and allotting preference shares or converting issued shares into preference shares91. But subject to these statutory limits, the rights of the members of a company limited by shares were fixed by the company's memorandum and articles of association. Preference over issued shares? The appellant's central submission in this appeal was that a share could not be a "preference share" unless the rights attaching to it gave some preference or priority over some other issued share. The appellant submitted that this construction accorded with "the development of the 'preference share' as a practical means of encouraging additional investment in companies in financial difficulty and with the terms and the legislative history of the relevant provisions" of the 2001 Act. It is important, however, to begin by recognising that nothing in the 1961 Act provided any textual footing for the submission that a share was not a "preference share" unless the rights attaching to it gave some preference or priority over some other issued share. The emphasis given by the 1961 Act to 86 cf Tongkah Compound NL v Meagher (1951) 83 CLR 489 at 493 per Dixon J; [1951] HCA 41. 87 s 18(1)(c). the definition of the rights of shareholders in the memorandum and articles of association points very firmly against accepting the appellant's submission. What was a "preference share" for the purposes of the 1961 Act was to be determined by reference to the relevant company's memorandum and articles of association, not by reference to the state of the issued capital of that company at any time. That is, whether a share was a "preference share" did not depend upon what shares the company had issued. If a company's memorandum and articles of association provided that shares of an identified class carried some right with respect to repayment of capital, participation in surplus assets or profits, cumulative or non-cumulative dividends, voting, or priority of payment of capital or dividend which preferred the holder of a share of that class over the holder of some other class of share for which the memorandum and articles of association provided, those shares were preference shares. In this case, the Company's articles of association described the rights which attached to each of the classes of shares. In that regard it may be noted that the subscriber shares in the Company taken by Mr Leo Weinstock and the solicitor were described as preference shares even though, of course, no other shares had been issued. The appellant acknowledged that acceptance of her central argument entailed that those shares were not preference shares, at least when they were first taken by the subscribers. Whether, at the time of issue of any particular share, the rights attaching to that share then afforded any commercial advantage to the holder would no doubt depend upon the content of those rights and what other shares had then been issued. As Handley AJA rightly pointed out92, however, it is necessary to distinguish between the rights attached to a share and the enjoyment of those rights. The holder of a share has whatever rights the memorandum and articles of association attached to that share. If, after the share was issued and allotted, there were to arise some question about the order in which shareholders would be repaid capital, participate in surplus assets or profits, receive or accumulate an entitlement to dividends, vote, or obtain payment of capital or dividend, that question would be resolved according to the rights attaching to the respective shares. A share which had one or more preferential rights was properly described as a "preference share" not only at the time the immediate question about employment or exercise of rights fell for consideration but also at the time of issue. Further support for the conclusion that what was a preference share required consideration only of what was provided by the constituent documents 92 (2011) 252 FLR 462 at 477 [134]-[135]. of the company is found in the text of s 61(1) itself. That sub-section provided that a company, "if so authorised by its articles", might "issue preference shares which are, or at the option of the company are to be liable to be redeemed" (emphasis added). Section 61(1) thus required that the company concerned have authority under its articles of association to issue the shares in question. But the effect of the appellant's argument was to add a further requirement to s 61(1): that the company concerned should have already issued some shares having rights inferior to those which were to be issued under the power given by s 61(1) and the company's articles of association. There is no basis for implying any additional requirement of that kind in s 61(1). The appellant submitted that if what is a preference share was determined by reference to what shares could be issued rather than what shares had been issued a company could be left without any members. This would follow, so it was submitted, if a company issued only redeemable preference shares and those shares were all redeemed. The result to which the appellant pointed may be theoretically possible. It may be doubted, however, that the directors of the company would, or consistently with their duties could, permit the result described in argument to come to pass. But regardless of whether those doubts are well-founded, the point made by the appellant is wholly met by the provisions of both the 1961 Act and the 2001 Act governing winding up by the Court. The 2001 Act provided93 that it was a ground for winding up by the Court that the company had no members. The 1961 Act provided94 that, subject to an exception that is not presently relevant, it was a ground for winding up by the Court that the number of members of a proprietary company was reduced below two. Statute having dealt with the issue in this way, the possibility that a company issuing only redeemable preference shares may be left without members does not point, as the appellant submitted, to concluding that a share is a preference share only if it has rights which prefer the holder over the holders of other shares that have actually been issued. It may be accepted that, as the appellant submitted, preference shares were often issued in England during the nineteenth century to raise capital additional to what had been subscribed for the issue of ordinary shares. This observation about commercial practice is, however, not to the point. Likewise, and contrary to the appellant's submissions, it is not useful to consider what issues arose or 93 s 461(1)(d). 94 s 222(1)(d). what orders were made in approving a reduction of capital by cancellation of preference shares95. Neither the legislative history concerning statutory provisions for redeemable preference shares nor any wider historical examination of the commercial use of preference shares as a means of raising capital sheds any light on the central issue in this appeal. That issue is what was meant in the 1961 Act by "preference share". The 1961 Act required that what was a preference share be answered by reference to the rights that the company's memorandum and articles of association attached to that share and whether those rights preferred the holder of the share in question over the holder of any other class of share which the company could issue. The disputed shares had rights which preferred the holder of those shares over the holder of any ordinary share in the Company. That no ordinary shares were ever issued does not deny that the disputed shares were preference shares. The Company's articles of association provided that the disputed shares were liable to be redeemed. They were redeemable preference shares. Conclusion and orders For these reasons the appeal should be dismissed with costs. 95 In re Dicido Pier Co [1891] 2 Ch 354. French CJ has set out the facts and procedural history. I adopt his abbreviations and agree that the appeal should be dismissed. The appeal is to be determined by reference to the 2001 Act as at the date of putative redemption of the C class shares in LWC on or about 29 July 2004. The question is whether those shares were on that date "redeemable preference shares" liable to redemption and cancellation by LWC under s 254J(1) of the 2001 Act. Tamar's argument that the C class shares in LWC were not then "redeemable preference shares" is founded on the proposition that a share is a "preference share" within the meaning of the 2001 Act only where it has preference or priority over another share that is on issue. That argument, as French CJ has demonstrated, lacks the historical foundation Tamar claimed for it. Questions of contemporary corporate finance are not readily determined by implications drawn from practices of past centuries. Tamar's argument is to be rejected because it finds no toe-hold in the text of the 2001 Act or in any policy that can be discerned to be reflected in the 2001 Act. The provisions of the 2001 Act governing shares in companies and transactions affecting the share capital of companies are in large measure the product of amendments made by the Company Law Review Act 1998 (Cth) to the Corporations Law. Their application, through transitional provisions, to companies registered under earlier legislation, such as the 1961 Act, provides no basis for reading references to preference shares in the 2001 Act more restrictively than is warranted by the proper construction of the 2001 Act in its application to companies brought into existence by registration under the 2001 Act itself. Under the 2001 Act, a company must have at least one member, but need only have one member96. A company comes into existence on the day on which it is registered97, at which time shares to be taken up by members as specified in the application for registration are taken to be issued to members98. For a company limited by shares, the application for registration must state "the number and class of shares each member agrees in writing to take up"99. At the 96 Section 114. 97 Section 119. 98 Section 120(2). 99 Section 117(2)(k)(i). time of registration, a company limited by shares must therefore have at least one share of at least one class but need only have one share of one class. Amongst other circumstances in which a company may adopt a constitution, a company adopts a constitution on registration if each person specified in the application for registration as consenting to become a member agrees in writing to the terms of the constitution before the application is lodged100. A constitution has effect as a contract between the company and each member, between the company and each director and company secretary, and between each member and each other member from time to time 101. The 2001 Act provides that a company has power to issue and cancel shares102, and to determine the terms on which its shares are issued as well as the rights and restrictions attaching to those shares103. A variation or cancellation of rights attached to shares in a class can occur only in accordance with such procedure for variation or cancellation (if any) as is set out in the company's constitution or otherwise by special resolution of the company and either a special resolution of the relevant class or the written consent of members with at least 75 per cent of the votes in the class104. However, a company having one class of shares that issues new shares to which different rights attach is not thereby taken to vary the rights attached to the shares already on issue if the rights attaching to the new shares are provided for in the company's constitution105. The power of a company to issue shares is expressed to include the power to issue "preference shares (including redeemable preference shares)"106. In relation to the issue of preference shares, s 254A(2) provides: "A company can issue preference shares only if the rights attached to the preference shares with respect to the following matters are set out in the 100 Section 136(1)(a). 101 Section 140(1). 102 Section 124(1)(a). 103 Section 254B(1). 104 Section 246B. 105 Section 246C(5). 106 Section 254A(1)(b). company's constitution (if any) or have been otherwise approved by special resolution of the company: repayment of capital; participation in surplus assets and profits; cumulative and non-cumulative dividends; voting; priority of payment of capital and dividends in relation to other shares or classes of preference shares." The expression "redeemable preference share" is defined to mean "a preference share in a body corporate that is, or at the body's option is to be, liable to be redeemed"107. Reflecting that definition, s 254A(3) provides: "Redeemable preference shares are preference shares that are issued on the terms that they are liable to be redeemed. They may be redeemable: at a fixed time or on the happening of a particular event; or at the company's option; or at the shareholder's option." Section 254J(1) provides that a company "may redeem redeemable preference shares only on the terms on which they are on issue" and that, "[o]n redemption, the shares are cancelled". Section 254K further limits redemption under s 254J(1) to circumstances where the shares are fully paid-up and where the redemption is out of profits or the proceeds of a new issue of shares made for the purpose of the redemption. Section 254J(2) makes clear that redeemable preference shares may also be cancelled under a reduction of capital or a share buy-back under Pt 2J.1. Subject always to compliance with the general requirements of the 2001 Act concerning the variation of rights attached to shares in a class, a company can convert a preference share into an "ordinary share"108. It can also convert an ordinary share into a preference share109 provided the holders' rights 107 Section 9. 108 Section 254G(1)(b). 109 Section 254G(1)(a). with respect to the matters referred to in s 254G(2)(a) to (e) are set out in the company's constitution (if any) or have been otherwise approved by special resolution of the company110. The 2001 Act defines neither the expression "preference share" nor the expression "ordinary share". The Explanatory Memorandum for the Company Law Review Act 1998 (Cth) explained a "preference share" to be "a share that gives its holder some right or preference (for example, a guaranteed minimum dividend entitlement) not enjoyed by the holder of a share of another type"111. The underlying concept of a preference share, as distinct from an ordinary share, was explained by Barrett J in Re Capel Finance Ltd112 by reference to "the basic rule applicable to all forms of shareholder participation and entitlement in the absence of contrary provision", being "that members of a company participate and enjoy entitlements according to the numbers of the shares they hold". "Any departure from that rule of proportionate equality according to shares held must arise from the company's constitution or from terms of issue capable of displacing or modifying the general rule. Provisions of that kind affording some priority or superior position to the holders of particular shares are the thing that causes those shares to be 'preference shares'. It is not possible for 'preference shares' to exist except as a result of a process of differentiation from shares which are not 'preference shares' which sees the 'preference shares' entitled to some comparative advantage, commonly with respect to one or more of the matters referred to in s 254A(2)". The scheme of the 2001 Act neither requires nor assumes that a share cannot be a preference share, or a redeemable preference share, unless or until an ordinary share is on issue. It is inherent in the concept of a preference share that the rights attaching to it are differentiated from the rights attaching to an ordinary share. But it is not intrinsic to that differentiation of rights that there be ordinary shares on issue. It is sufficient that the share be of a class of shares in respect of which the constitution of the company provides that rights with respect to matters referred to in s 254A(2)(a) to (e) attach in addition or in priority to such rights as would attach to ordinary shares if and when issued. There is no reason why a company having a constitution registered under the 2001 Act cannot have, on 110 Section 254G(2). 111 Australia, House of Representatives, Company Law Review Bill 1997, Explanatory Memorandum at [11.12]. 112 (2005) 52 ACSR 601 at 605 [11]. registration, only members who hold preference shares of one or more classes or even a single member holding a single preference share. Shares of a class to which additional or preferential rights attach with respect to matters referred to in s 254A(2)(a) to (e) of the 2001 Act are, by reason of those rights being set out in the company's constitution, preference shares at the time of their issue. They are and remain preference shares, unless converted or redeemed, irrespective of whether or not ordinary shares are on issue. The rights attaching to preference shares under the company's constitution take effect in contract between the company and the holders of those preference shares immediately on issue. Those rights take effect in contract between the holders of those preference shares and the holders of ordinary shares if and when ordinary shares are issued. There is, as Tamar points out, potential for a company which has no ordinary shares on issue to be left without members by the redemption of redeemable preference shares. The solution is that the absence of members is a ground for winding up a company113. Tamar's more general argument is that redemption of redeemable preference shares in the absence of ordinary shares contradicts the scheme of the 2001 Act for the protection of creditors in so far as that scheme limits the circumstances in which there can be a reduction in a company's capital. The argument pays insufficient attention to a critical element of that scheme, s 254K. That section applies in every case of redemption under s 254J(1) to ensure that only fully paid-up redeemable preference shares can be redeemed and that their redemption can only be out of profits or the proceeds of a new issue of shares made for the purpose of the redemption. The net capital of the company therefore cannot be reduced by the redemption of redeemable preference shares. That is so irrespective of the existence or non-existence of ordinary shares at the time of redemption. Tamar's proposition that a share is only a preference share within the meaning of the 2001 Act where it has preference or priority over another share that is on issue is therefore to be rejected. Tamar has in consequence failed to demonstrate that the C class shares in LWC were not preference shares capable of redemption under s 254J(1). 113 Section 461(1)(d). |
HIGH COURT OF AUSTRALIA DOUGLAS RONALD CAMPBELL AND ANOR APPELLANTS AND BACKOFFICE INVESTMENTS PTY LTD AND ANOR RESPONDENTS Campbell v Backoffice Investments Pty Ltd [2009] HCA 25 29 July 2009 ORDER Appeal allowed. Set aside paragraphs 3 and 4 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 19 May 2008. Respondents' application of 4 February 2009 for leave to further amend notice of contention refused. Special leave to cross-appeal refused. Remit the matter to the Court of Appeal of the Supreme Court of New South Wales for further hearing and determination in accordance with the reasons of this Court. Appellants to file and serve written submissions as to costs within 14 days of the date of this order. Respondents to file and serve written submissions in reply within 7 days of the service of the Appellants' submissions. On appeal from the Supreme Court of New South Wales Representation A J L Bannon SC with J T G Gibson for the appellants (instructed by Rodd Peters Commercial, Media and European Lawyers) J T Gleeson SC with T L Wong for the respondents (instructed by Watson Mangioni Solicitors) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Campbell v Backoffice Investments Pty Ltd Trade Practices – Misleading or deceptive conduct – Where vendor of share in company provided documents prior to making of share sale agreement that did not accurately state company's past financial performance, failed to correct some estimates of company's expected performance when vendor knew or ought reasonably to have known, prior to making of agreement, that estimated performance not achieved, and incorporated some statements of financial performance in share sale agreement with various warranties as to their accuracy – Whether conduct misleading or deceptive – Whether representations pleaded actually made – Relevance of whole course of conduct between parties – Relevance of character of some statements as estimates. Trade Practices – Misleading or deceptive conduct – Whether purchaser suffered loss or damage "by conduct of" vendor – Causation and reliance – General principles – Relevance of contractual warranty by purchaser that purchaser had not relied on warranties other than those given in agreement. Corporations – Oppression – Where Corporations Act 2001 (Cth), s 233(1) empowered court, if one or more grounds set out in s 232 satisfied, to make any order it considered appropriate in relation to company, including order for purchase of any shares by any member – Where grounds in s 232 included circumstance that conduct of company's affairs "oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity of in any other capacity" – Whether vendor's conduct "oppressive to, unfairly prejudicial to, or unfairly discriminatory against", purchaser – Relevance of circumstance that conduct not continuing at time order made – Whether order for repurchase of share in company could or should be made in circumstances where, at time of making order, provisional liquidator had sold business and assets of company, proceeds had been disbursed and shares in company were worthless. Contracts – Breach of warranties – Whether vendor breached warranties in share sale agreement. Contracts – Implied terms – Implied duty to co-operate – Scope of duty contended for. Words and phrases – "by conduct of another person", "oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member". Fair Trading Act 1987 (NSW), ss 42, 68. Corporations Act 2001 (Cth), Pt 2F.1. Introduction On 24 January 2005, Backoffice Investments Pty Ltd ("Backoffice"), a company controlled by Timothy Weeks, entered into a share sale agreement ("SSA") with Douglas Campbell and his companies, Healthy Water (NSW) Pty Ltd ("Healthy Water") and Sentinel Construction Managers Pty Ltd ("Sentinel"), to purchase, for $850,000, one of the two issued shares in Healthy Water. Under agreements between the three companies (together referred to as the "service agreements"), the two men were to work as joint managing directors of Healthy Water. By April 2005, they had fallen out. Backoffice and Mr Weeks sued Mr Campbell and Sentinel in the Supreme Court of New South Wales. They alleged oppression. They sought an order that Mr Campbell buy back the share1. They also claimed damages for breach of contractual warranty, breach of an implied duty to cooperate, and for misleading or deceptive conduct based, inter alia, on pre-contractual representations2. The facts giving rise to the claims and details of the relevant contractual documents are set out in the joint judgment3. The primary judge found for Backoffice and Mr Weeks on the oppression claim and ordered that Mr Campbell repurchase the share in Healthy Water for $853,0004. Healthy Water by this time was an empty shell, its assets having been disposed of by a provisional liquidator appointed by the parties. Her Honour held that the claim for misleading or deceptive conduct failed, as Backoffice and Mr Weeks did not establish the alleged misrepresentations5. She also held that Mr Campbell had breached contractual warranties6 and an implied contractual duty to cooperate, but held it inappropriate to award any damages given the buy-back order7. relied upon they had that 1 Pursuant to the Corporations Act 2001 (Cth), ss 232 and 233. Hereinafter referred to as a "buy-back order". In contravention of s 42 of the Fair Trading Act 1987 (NSW). 3 Reasons of Gummow, Hayne, Heydon and Kiefel JJ at [76]-[87] and [103]-[130]. 4 Backoffice Investments Pty Ltd v Campbell (2007) 61 ACSR 144. (2007) 61 ACSR 144 at 235 [271]. (2007) 61 ACSR 144 at 215 [219]. (2007) 61 ACSR 144 at 192 [147], 215 [220] and 218 [231]. The Court of Appeal of the Supreme Court of New South Wales set aside the buy-back order but found Mr Campbell liable for misleading or deceptive conduct and awarded $850,000 damages8. Having been granted special leave9, Mr Campbell and Sentinel then appealed to this Court. For the reasons that follow, the appeal should be allowed. Special leave to cross-appeal should be refused. Unresolved aspects of the claims for misleading or deceptive conduct and for breach of warranty should be remitted to the Court of Appeal of the Supreme Court of New South Wales for determination. I agree with the orders proposed in the joint judgment10. The pleading of the misleading or deceptive conduct case Factual bases for the causes of action in misleading and deceptive conduct were set out in a commercial list statement incorporated in the further amended summons in the original proceedings in the Supreme Court of New South Wales. In relation to a document produced to Mr Weeks pre-contractually and referred to as the "add-backs document", it was alleged: "44. On or before 11 December 2004, Campbell, by his agent Horn, provided to Backoffice: a document entitled 'Healthy Water Operating Results: Non- recurring expenses' for the period July to November 2004 (the '2004 Add-Backs'); a document entitled 'Healthy Water Operating Results' that stated the operating results, inter alia, for the 5 months to 30 November 2004 (the '30 November 2004 Results'). 45. By providing Backoffice with the 2004 Add-Backs and the 30 November 2004 Results, Campbell represented to Backoffice that: the Company incurred non-recurring expenses of $96,100.00 for the five months ending 30 November 2004 (the 'Add- Backs Representation'); 8 Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359 at 453-454 [599] per Giles JA, Basten JA and Young CJ in Eq. [2008] HCATrans 310. 10 Reasons of Gummow, Hayne, Heydon and Kiefel JJ at [184]-[185]. the Company had an EBIT (after adjustment for the Add-backs) for the 5 months to 30 November 2004 of $163,590 (the 'EBIT Representation')." The representations were said to have been false, misleading and deceptive or likely to mislead and deceive, in contravention of s 42 of the Fair Trading Act 1987 (NSW), on the basis that the 2004 add-backs overstated the amount of non-recurring expenses of the company. It was further pleaded that on or before 11 December 2004 Mr Campbell, by his agent Mr Horn, provided a document entitled "Healthy Water Operating Results: Sales Revenue" (the "sales revenue report") to Backoffice11. The sales revenue report was said to have contained estimates that12: the Company's sales revenue for December 2004 would be the Company's EBIT for December 2004 would be $37,500; the Company's sales revenue for the financial year ended 30 June 2005 would be $1,289,582." By providing the sales revenue report to Backoffice, Mr Campbell was said to have represented "the December 2004 Estimates" to Backoffice. Those representations were designated as the "Express Representations"13. "Implied Representations", arising out of the circumstances in which the sales revenue report was provided to Backoffice, were also set out14. They were: the December 2004 Estimates were a reliable prediction of the sales revenue and profit that would be achieved by the Company; the December 2004 Estimates were suitable to be used for the purpose of estimating the value of the Company; there was no information known to Campbell which was material to the accuracy of the December 2004 Estimates, and which tended 11 Commercial List Statement [51]. 12 Commercial List Statement [52]. 13 Commercial List Statement [53]. 14 Commercial List Statement [54]. to show or showed that the December 2004 Estimates were false, misleading or deceptive; the December 2004 Estimates represented Campbell's belief as to the likely sales revenue and EBIT that would be achieved by the Company and that there was a reasonable basis for such belief." The Express and Implied Representations were said to have been continuing from on or about 11 December 2004 to 24 January 200515. The December 2004 Estimates allegedly overstated the company's sales revenue by $7,147 and its EBIT by approximately $25,000. Backoffice and Mr Weeks pleaded that by making the Express and Implied Representations, Mr Campbell engaged in conduct in trade or commerce which was misleading and deceptive in contravention of s 42 of the Fair Trading Act for the following reasons, as particularised16: "The December 2004 Estimates were representations as to future matters within the meaning of section 41 of the Fair Trading Act 1987. Contrary to the estimates: the actual sales revenue of the Company for December 2004 was $92,853 rather than $100,000; and the EBIT of the Company for December 2004 was $12,438 rather than $37,500. These matters were or ought reasonably to have been known to Campbell prior to 24 January 200417. The December 2004 Estimates were never revised by Campbell. Nor did he advise that the estimates would, might not be achieved or had not been achieved." Backoffice and Mr Weeks relied upon the inclusion of Schedule 3 to the SSA as an element of misleading or deceptive conduct by Mr Campbell. They pleaded that: "38. On or about 24 January 2005, Campbell represented to Backoffice the contents of Schedule 3 of the Share Sale Agreement." 15 Commercial List Statement [55]. 16 Commercial List Statement [57]. 17 This should have been a reference to 24 January 2005. They alleged that by reason of Schedule 3 Deficiencies (a defined term18), Mr Campbell's conduct in providing Schedule 3 to Backoffice and/or failing to correct or qualify it was misleading or deceptive and constituted a contravention of s 42 of the Fair Trading Act19. The pleaded Deficiencies were20: "Schedule 3 to the Share Sale Agreement: in making the Add-Backs, overstated the non-recurring expenses of the Company for the five months ended 30 November 2004: including Obsolete Inventories ($2,600); including General Expense Allowance ($4,167); (iii) including Business Expense Allowance ($25,000); including Credit Card Re-imbursement significant proportion of which related to business expenses of the Company; failed to disclose that the miscellaneous income of $14,500 related to the sale/trade of a Daewoo and a Toyota motor vehicle (the 'Non-Recurring Income') and, as such, did not represent income reflective of the true operating performance of the Company and/or failed to deduct such income to derive the net profit or adjusted operating profit; overstated the adjusted operating profit of the Company for the five months ended 30 November 2004 by: the inclusion within the calculation of the Add-Backs of the matters referred to in (a); the inclusion within the calculation of the adjusted operating profit of the income referred to in (b) (the 'Profit Overstatement'); understated the amounts owing to trade creditors of the Company as at 30 November 2004 by $12,360; 18 The Schedule 3 Deficiencies were defined in [35], read with [34]. 19 Commercial List Statement [39]. 20 Commercial List Statement [35]. stated that the liability identified on the Balance Sheet as 'Doug Campbell loan to HW' had a balance of negative $74,507.24 instead of positive $3,760; and the adjusted net assets of overstated the Company as at 30 November 2004 (being the net assets less accrued employee entitlements) by: the inclusion within the calculation of the understatement of the trade creditors referred to in (d) above; the inclusion within the calculation of the incorrect amount for the liability identified in the Balance Sheet as 'Doug Campbell loan to HW' referred to in (e) above (the 'Assets Overstatement'); all of which failures will be referred to in this Summons as the 'Schedule 3 Deficiencies'." Backoffice alleged that it relied upon Schedule 3 and was induced by it to enter into the SSA, the shareholders agreement and the service agreements, and to pay $850,000 to Mr Campbell in consideration for the transfer of one of his shares in Healthy Water to Backoffice21. It was further pleaded that, but for this misleading or deceptive conduct, Backoffice would not have entered into the SSA, the shareholders agreement or the service agreements, nor paid the sum of The Court of Appeal's reasoning on the misleading or deceptive conduct claims It is useful to set out the steps in the reasoning of the majority in the Court of Appeal on the misleading or deceptive conduct claims. The reasons of Giles JA in this respect can be summarised as follows: The statutory test of causation in s 68 of the Fair Trading Act is embodied in the word "by". The essential question is one of causation which is "ultimately a matter of common sense"22. 21 Commercial List Statement [40]. The pleaded representations dependent on Schedule 3 to the SSA will be referred to as the "Schedule 3 Representations". 22 (2008) 66 ACSR 359 at 369 [37] and [39], referring to March v Stramare (E & M H) Pty Ltd (1991) 171 CLR 506 at 515; [1991] HCA 12; and Fitzgerald v Penn (1954) 91 CLR 268 at 277-278; [1954] HCA 74. Mr Weeks' concern about the estimates did not mean they played no part in his decision to purchase the share. They were part of the process of arriving at a view as to profitability and an EBIT figure23. The primary judge was incorrect in so far as she found that Mr Weeks' reliance upon the add-backs, EBIT or December 2004 estimate representations was inconsistent with his reliance upon the warranties24. The protection provided by the performance bonus payable to Sentinel if performance exceeded forecast profitability did not negative reliance and left the representations causally operative25. The representations were made and remained causally operative at settlement. Backoffice was paying for a share in the company, not for a cause of action for breach of warranty. Other than at a pleading level, the characterisation of the add-backs and the EBIT figure as estimates did not negate either their misleading or deceptive nature, or Mr Weeks' reliance on them26. On the primary judge's findings, the figures provided to Mr Weeks were incorrect in relation to obsolete inventories and credit card reimbursement, but not as to the general expense or business expense allowances. There was misleading or deceptive conduct. The obsolete inventories figure was not a non-recurring expense and the figure for credit card reimbursement was excessive well beyond an allowance for estimation27. To the primary judge's findings should be added a finding that the figures provided were incorrect in relation to the general expense allowance of $10,000. The total misrepresentation was of the order of $52,000 for the five month period, or $37,500 if account be taken of $14,500 arising out of the sale of a motor vehicle28. 23 (2008) 66 ACSR 359 at 371 [45]. 24 (2008) 66 ACSR 359 at 371 [45]. 25 (2008) 66 ACSR 359 at 371 [46]. 26 (2008) 66 ACSR 359 at 372 [51]. 27 (2008) 66 ACSR 359 at 375 [62]. 28 (2008) 66 ACSR 359 at 376 [68]. The EBIT representation was misleading in the same manner as the add- backs representation29. The December 2004 representations continued when left uncorrected by Mr Campbell, although he knew that the actual revenue result was less than the estimate. There was misleading or deceptive conduct in this respect30. 10. Mr Weeks was not cross-examined on his assertions that, had he known of the true position, Backoffice would not have purchased its share in Healthy Water. Nor was any critique of that evidence presented to the Court of Appeal31. 11. Backoffice would not have purchased the share in Healthy Water if Mr Weeks had known the true position32. Therefore, if loss or damage was suffered by Backoffice by reason of its purchase of the share, then it was suffered by conduct of Mr Campbell in contravention of s 42 of the Fair Trading Act33. 13. As to the Schedule 3 representation, the repetition in Schedule 3 of the add-back and EBIT representations did not detract from the effect of the misleading or deceptive conduct. It confirmed the material upon which Mr Weeks was already relying. The repetition of the Schedule 3 representation was not necessary to establish a contravention of s 42 of the Fair Trading Act, even if it equally gave rise to contravening conduct. It did not add to Backoffice's position in the cross-appeal34. Further misleading or deceptive conduct because of other matters said to be breaches of warranties in the SSA, namely the remainder of the Schedule 3 Deficiencies, would not add to Backoffice's position in the cross-appeal35. 29 (2008) 66 ACSR 359 at 376 [69]. 30 (2008) 66 ACSR 359 at 376 [72]. 31 (2008) 66 ACSR 359 at 377 [75]. 32 (2008) 66 ACSR 359 at 377 [76]. 33 (2008) 66 ACSR 359 at 377 [76]. 34 (2008) 66 ACSR 359 at 380 [88]. 35 (2008) 66 ACSR 359 at 380 [89]. 15. No order should be made under s 72 of the Fair Trading Act avoiding the contracts and returning the consideration paid36. The measure of damages under s 68 of the Fair Trading Act is not confined to the tortious measure37. 17. As a matter of causation rather than fault, the breakdown in relationship between Messrs Campbell and Weeks, and the consequences of that breakdown on the value of Backoffice's share, had such a connection with the misleading or deceptive conduct that the resulting loss or damage extended to them. Backoffice's loss or damage was the $850,000 it had paid for the share38. Basten JA agreed with the reasons of Giles JA on the misleading or deceptive conduct claims39. He also concluded that if he were wrong in upholding the primary judge's order for repurchase of the share, he would adopt the approach of Giles JA with respect to damages for breach of s 42 of the Fair Trading Act, and give judgment for Backoffice for $850,00040. Young CJ in Eq, in dealing with the cause of action in misleading or deceptive conduct, focussed on the question of reliance. He dealt with that question on the hypothesis that the pleaded representations were made and that they were false and misleading41. He referred to cl 7.4(b) of the SSA and a submission that Mr Weeks had carried out extensive due diligence with the assistance of his accountant42. His Honour noted also that Mr Weeks had the assistance of a solicitor, Mr McClure, from whom he sought advice in relation to the agreements43. He pointed to the findings of the primary judge that Mr Weeks was a sophisticated businessman with the capacity to review financial records 36 (2008) 66 ACSR 359 at 384 [109]. 37 (2008) 66 ACSR 359 at 393-394 [151]-[153]. 38 (2008) 66 ACSR 359 at 394 [156]-[157]. 39 (2008) 66 ACSR 359 at 408 [223]. 40 (2008) 66 ACSR 359 at 408 [222]. 41 (2008) 66 ACSR 359 at 443-444 [491]-[492]. 42 (2008) 66 ACSR 359 at 444 [494]. 43 (2008) 66 ACSR 359 at 444 [495]. and make judgments about the prospects of a business using his commercial commonsense to his own advantage, which is what he did in making his offer to purchase the share in Healthy Water44. He referred to her Honour's satisfaction that the evidence established that Mr Weeks did not rely upon the estimated sales figure in the sales revenue report and that this was reflected by the protection built into cl 6.2 of the Sentinel service agreement providing for a performance bonus based on the company's profitability of up to $300,000. His Honour could not discern any error in the primary judge's approach and found that she was entitled to reach the conclusion she did on the matter of reliance which he characterised as an issue of fact45. It followed that no factual matter could affect the result46. The appeal to this Court The appeal by Mr Campbell and Sentinel challenges the finding by the Court of Appeal of liability for misleading or deceptive conduct. It does so on the basis that Mr Weeks and Backoffice were legally advised and had the benefit of contractual warranties. There was no misleading or deceptive conduct and, in any event, there was no reliance. A challenge is also raised to the measure of damages found by the Court of Appeal on the basis that damages were allowed unrelated to the subject matter of the alleged misrepresentations. Further, the Court of Appeal made a simple error of calculation of the extent of the alleged misrepresentations, with the consequence that its reasoning did not, on its face, support a conclusion of causative reliance on either representation. By summons filed on 17 October 2008, Backoffice and Mr Weeks sought orders that the time for filing a notice of cross-appeal and notice of contention be extended and that they be granted leave to file such notices. Draft notices were filed with the summons. Proposed amended notices of cross-appeal and contention were filed with their written submissions. The notice of contention In their proposed notice of contention filed on 4 February 2009, Mr Weeks and Backoffice said that the decision of the Court of Appeal should be affirmed "but on the ground that the Court below erroneously decided or failed to decide some matter of fact or law". 44 (2008) 66 ACSR 359 at 444 [496]. 45 (2008) 66 ACSR 359 at 444 [499]. 46 (2008) 66 ACSR 359 at 444 [500]. Their first ground was that the Court of Appeal erred in failing to find misleading or deceptive conduct in relation to misrepresentations in the Schedule 3 balance sheet as to trade creditors, the loan liability to Mr Campbell and the adjusted net assets of the company. They asserted that the Court of Appeal erred in failing to assess damages for the Schedule 3 representations in the amount of $850,000 or an amount to be assessed by the Court. On the second day of the hearing of the appeal counsel for Backoffice and Mr Weeks sought leave to amend the notice by including in it an additional ground in the following terms: Their Honours erred in failing to find that Campbell engaged in misleading and deceptive conduct in contravention of s 42 of the Fair Trading Act 1987 (NSW) by representing to Backoffice that, to the best of Campbell's knowledge, all information given by or on behalf of the Company or its advisers to Backoffice material to the sale of the Shares and the Assets was substantially accurate and complete and not misleading (the "Clause 10.1 Warranty representation"), in circumstances where it was known to Campbell from 11 January 2005 that sales revenue and adjusted EBIT for December 2004 in the Sales Revenue Report were overstated." For the reasons given in the joint judgment47, I agree that leave to amend the notice of contention in this way should be refused. Mr Weeks and Backoffice also asserted error in the failure of the Court of Appeal to find a breach of the warranties in cl 3.1(a) of Schedule 1 to the SSA arising out of the understatement of trade creditors and the misdescription of Mr Campbell's loan position. The Court should also have found a breach of the warranties given in cll 10.1 and 10.2 arising out of the understatement of trade creditors, and a breach of the warranty in cl 10.2 arising out of the overstatement of the adjusted net assets. It was said to have erred in failing to assess damages in the amount of $440,000 for breach of these warranties. The notice of contention also complained that the Court of Appeal erred in failing to hold that Mr Campbell breached an implied duty to cooperate under the shareholders agreement and the SSA. It was contended that their Honours should have awarded damages for that breach in the amount of $410,000. The proposed notice of contention asserted an entitlement to contractual remedies which differed in character from the statutory relief ordered by the 47 Reasons of Gummow, Hayne, Heydon and Kiefel JJ at [152]. Court of Appeal by way of damages for misleading or deceptive conduct. Rule 42.08.5 of the High Court Rules 2004 provides: "Where a respondent does not seek a discharge or variation of a part of the judgment actually pronounced or made, but contends that the judgment ought to be upheld on the ground that the court below has erroneously decided, or has failed to decide, some matter of fact or law, it is not necessary to give a notice of cross-appeal, but that respondent shall file and serve, within the time limited by rule 42.08.1, a notice of that contention in Form 27." To the extent that it asserted an entitlement to contractual remedies, the notice of contention did not comply with the requirements of the Rules. By that assertion Backoffice and Mr Weeks did not seek to uphold the judgment of the Court of Appeal, but rather sought alternative relief. In the event the claims for relief for breach of warranty and implied duty to cooperate under the shareholders agreement were properly raised in the cross-appeal. The grounds of cross-appeal Subject to the grant of special leave and an extension of time, Mr Weeks and Backoffice also filed a cross-appeal, the grounds of which were, in substance, that the Court of Appeal erred in: setting aside the buy-back order made by the primary judge; failing to find breaches of the warranties contained in the SSA; and failing to hold that Mr Campbell had breached his implied duty to cooperate under the shareholders agreement and the SSA. In respect of the breaches of warranty and the implied duty to cooperate, it was asserted that the Court ought to have assessed damages in the amount of Statutory framework – misleading or deceptive conduct The cause of action for misleading or deceptive conduct invoked by Mr Weeks and Backoffice is created by ss 42 and 68 of the Fair Trading Act read together. They correspond with ss 52 and 82 of the Trade Practices Act 1974 (Cth). In the relevant parts they provide: "42(1) A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. 68(1) A person who suffers loss or damage by conduct of another person that is in contravention of a provision of Part 3, 4, 5 (section 43 excepted), 5A, 5B, 5C, 5D, 5E or 5F may recover the amount of the loss or damage by action against the other person or against any person involved in the contravention." Section 72 of the Fair Trading Act, which corresponds with s 87 of the Trade Practices Act provides for a range of other remedies in relation to contraventions or apprehended contraventions. The characterisation of conduct as misleading or deceptive The question whether conduct is misleading or deceptive or likely to mislead or deceive within the meaning of s 42 of the Fair Trading Act is logically anterior to the question whether a person has suffered loss or damage thereby for the purposes of s 68. The distinction between characterisation of the conduct and determination of the causation of the claimed loss said to result from it must be maintained. In so saying, it is necessary to acknowledge that there may be practical overlaps in the resolution of these logically distinct questions. The characterisation of conduct may involve assessment of its notional effects, judged by reference to its context. The same contextual factors may play a role in determining causation. Characterisation is a task that generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error48. It may be undertaken by reference to the public or a relevant section of the public. In cases of misleading or deceptive conduct analogous to passing off and involving reputational issues, the relevant section of the public may be defined, according to the nature of the conduct, by geographical distribution, age or some other common attribute or interest. On the other hand, characterisation may be undertaken in the context of commercial negotiations between individuals. In either case it involves consideration of a notional cause and effect relationship between the conduct and the state of mind of the relevant person or class of persons. The test is necessarily objective49. 48 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198-199 per Gibbs CJ; [1982] HCA 44, and see Lockhart, The Law of Misleading or Deceptive Conduct, 2nd ed (2003) at 60-61 [3.2]-[3.3] and authorities cited therein. 49 Consistently with the words "likely to mislead or deceive" which indicate that it is unnecessary to show that any person was actually misled or deceived – Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198. This Court has drawn a practical distinction between the approach to characterisation of conduct as misleading or deceptive when the public is involved, on the one hand, and where the conduct occurs in dealings between individuals on the other. In the former case, the sufficiency of the connection between the conduct and the misleading or deception of prospective purchasers50: "is to be approached at a level of abstraction not present where the case is one involving an express untrue representation allegedly made only to identified individuals". Where the conduct is directed to members of a class in a general sense, then the characterisation enquiry is to be made with respect to a hypothetical individual "isolate[d] by some criterion" as a "representative member of that class"51. In the case of an individual it is not necessary that he or she be reconstructed into a hypothetical, "ordinary" person. Characterisation may proceed by reference to the circumstances and context of the questioned conduct. The state of knowledge of the person to whom the conduct is directed may be relevant, at least in so far as it relates to the content and circumstances of the conduct. In Butcher v Lachlan Elder Realty Pty Ltd52 characterisation of conduct directed to identified individuals was set out in the joint judgment of the majority as follows53: the approach "The plaintiff must establish a causal link between the impugned conduct and the loss that is claimed. That depends on analysing the conduct of the defendant in relation to that plaintiff alone. So here, it is necessary to consider the character of the particular conduct of the particular agent in relation to the particular purchasers, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known." Although this passage begins by referring to the need to establish a causal link between the impugned conduct and the claimed loss, it is clear that thereafter their Honours were addressing the task of characterisation. 50 Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 85 [101]; [2000] HCA 12. 51 (2000) 202 CLR 45 at 85 [103]. 52 (2004) 218 CLR 592; [2004] HCA 60. 53 (2004) 218 CLR 592 at 604-605 [37] per Gleeson CJ, Hayne and Heydon JJ. Determination of the causation of loss or damage may require account to be taken of subjective factors relating to a particular person's reaction to conduct found to be misleading or deceptive or likely to mislead or deceive. A misstatement of fact may be misleading or deceptive in the sense that it would have a tendency to lead anyone into error. However, it may be disbelieved by its addressee. In that event the misstatement would not ordinarily be causative of any loss or damage flowing from the subsequent conduct of the addressee. A person accused of engaging in misleading or deceptive conduct may claim that its effects were negated by a contemporaneous disclaimer by that person, or a subsequent disclaimer of reliance by the person allegedly affected by the conduct. The contemporaneous disclaimer by the person engaging in the impugned conduct is likely to go to the characterisation of the conduct. A subsequent declaration of non-reliance by a person said to have been affected by the conduct is more likely to be relevant to the question of causation54. The first situation was discussed in Yorke v Lucas55. Speaking of an example in which a corporation merely passes on false information provided by another, Mason ACJ, Wilson, Deane and Dawson JJ said56: "If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive." Commenting on this passage, the majority in Butcher v Lachlan Elder Realty Pty Ltd said57: "In applying those principles, it is important that the agent's conduct be viewed as a whole. It is not right to characterise the problem as one of analysing the effect of its 'conduct' divorced from 'disclaimers' about that 'conduct' and divorced from other circumstances which might qualify its character." 54 See the discussion in Heydon, Trade Practices Law, (2008) vol 2 at [11.720]- 55 (1985) 158 CLR 661; [1985] HCA 65. 56 (1985) 158 CLR 661 at 666. 57 (2004) 218 CLR 592 at 605 [39]. the Where impugned conduct comprises allegedly misleading pre-contractual representations, a contractual disclaimer of reliance will ordinarily be considered in relation to the question of causation. For if a person expressly declares in a contractual document that he or she did not rely upon pre- contractual representations, that declaration may, according to the circumstances, be evidence of non-reliance and of the want of a causal link between the impugned conduct and the loss or damage flowing from entry into the contract58. In many cases, such a provision will not be taken to evidence a break in the causal link between misleading or deceptive conduct and loss59. The person making the declaration may nevertheless be found to have been actuated by the misrepresentations into entering the contract. The question is not one of law, but of fact. It is important in considering whether conduct is misleading or deceptive to identify clearly the conduct to be characterised60. If the conduct is said to consist of a statement made orally or in writing, the first question to be asked is what kind of statement was made. Was it a statement of historic or present fact made on the basis that its truth was known to its maker? Was it a statement of opinion? That is to say was it a statement of "judgment or belief of something as probable, though not certain or established"61? The term "estimate" itself, used as a verb, means the "act of valuing or appraising" or an "approximate judgement of the number, quantity, position, etc, of something"62. A statement of opinion may be a statement with respect to a future matter63. It may take the form of a prediction. A forward estimate relating to the financial results of a business is a class of prediction. In strict logic there may be some category overlap between opinions and statements of fact. Opinions may carry with them one or more implied representations according to the 58 Heydon, Trade Practices Law, (2008) vol 2 at [11.720]. 59 This is not to say that "reliance" is the only mechanism by which causation may be established in relation to loss said to have flowed from misleading and deceptive conduct. 60 The definition of "conduct" appears in s 4(4) of the Fair Trading Act. 61 Brown (ed), The New Oxford English Dictionary, (1993) vol 2 at 2007. 62 Brown (ed), The New Oxford English Dictionary, (1993) vol 1 at 854 and see references to the meaning of "estimate" in J J Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 at 441-442; [1970] HCA 6. 63 It is not necessary here to consider the effect of s 41 of the Fair Trading Act and the corresponding provision in s 51A of the Trade Practices Act. circumstances of the case. There will ordinarily be an implied representation that the person offering the opinion actually holds it. Other implied representations may be that the opinion is based upon reasonable grounds, which may include the representation that it was formed on the basis of reasonable enquiries. In the case of a person professing expertise or particular skill or experience the opinion may carry the implied representation that it is based upon his or her expertise, skill or experience. Contractual statements as misleading or deceptive conduct As appears from the notice of contention, a head of misleading or deceptive conduct asserted but not decided by the primary judge or the Court of Appeal was the alleged representation by Mr Campbell to Backoffice of the contents of Schedule 3 to the SSA. This raises the question whether statements contained in a contractual document, including those the subject of a warranty, can constitute misleading or deceptive conduct. The term "conduct which is misleading or deceptive or likely to mislead or deceive" is apt to cover a large variety of possible circumstances in which the conduct of one has a tendency to lead another into error. There is no reason in principle why the fact that a false statement is contained in a contractual document thereby takes the use of that statement in the document out of the scope of "misleading or deceptive conduct". Whether the proffering of a contractual document misrepresentation or to misleading or deceptive conduct, is a matter of fact to be determined by reference to all the circumstances. The circumstance that such a representation is the subject of a contractual warranty does not, as a matter of law, exclude the making of it from the purview of the statutory prohibition. This is consistent with the observation by Lockhart and Gummow JJ in Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd64: containing statement amounts false "the making of a statement as to a presently existing state of affairs, if false, may be the engaging in misleading or deceptive conduct, where the statement is embodied as a provision of a contract." The question whether the giving of a warranty about the accuracy of a statement of present fact or a forecast of performance is misleading or deceptive raises slightly different considerations. The giving of a warranty embodying a false statement of present fact may be characterised as misleading or deceptive conduct simply because it involves the making of that false statement. A warranty as to a forecast of performance may fall within the category of, or involve the making of, a statement as to a future matter. Such a statement can be 64 (1993) 42 FCR 470 at 505. characterised as misleading or deceptive or likely to mislead or deceive according to whether there were reasonable grounds for making it or whether any other implied representations which it conveyed were true. The alleged misleading or deceptive conduct The conduct said to be misleading or deceptive or likely to mislead or deceive in this case was the making of representations flowing from: the provision by Mr Campbell to Backoffice of the 2004 add-backs and the 30 November 2004 results; the provision of the sales revenue report for December 2004; and the inclusion of Schedule 3 in the SSA. The add-backs and November 2004 results representations These representations, as pleaded, were in the nature of statements of opinion. Central to them was the characterisation of the expenses set out in the add-backs document as "non-recurring". That was a statement of opinion as to whether such expenses would necessarily have to be incurred in the ordinary running of the business in the future. The nature of the representations as a matter of opinion was reinforced by the primary judge's reliance upon expert accounting evidence in reaching her characterisation of the add-backs as recurring or otherwise65. Her primary findings in respect of the add-backs were made in the context of a consideration of the breach of warranty claim arising out of their incorporation by reference into the warranted profit and loss statement in Schedule 366. In the context of the claim for misleading or deceptive conduct the primary judge said of the add-backs statement that the evidence clearly established that at the time of the delivery of the document and subsequently, Mr Weeks was advised by Mr Horn that its contents were Mr Campbell's estimates. Her Honour then said67: 65 (2007) 61 ACSR 144 at 208 [197] referring to evidence from expert witnesses Gower and Russell re obsolete inventories; at 210 [201]-[202] re general expenses; at 211-212 [207]-[208] re business expenses allowance; and at 212 [210] re credit card reimbursements. 66 (2007) 61 ACSR 144 at 204-206 [185]-[189]. 67 (2007) 61 ACSR 144 at 219 [234]. "The representation as pleaded is not in terms of an estimation of this kind but rather of a firm statement of incursion of that specific amount." Her Honour was therefore not satisfied that the representation as pleaded was made. However, even though the representation as pleaded in relation to the add- backs statement and in the 30 November 2004 results did not use the word "estimates", it related to the quantum of "non-recurring expenses". Its content, as pleaded, conveyed its character as an opinion. The fact that figures designated in the statement as "non-recurring" were, upon expert evidence, properly characterised as recurring did not render the opinion that they were non-recurring misleading or deceptive. The Court of Appeal therefore erred in finding that there was misleading or deceptive conduct in relation to the add-backs representation. The EBIT representation also incorporated the add-backs, for it was adjusted to take account of them. On its face, therefore, it depended for its correctness upon the opinion that the add-backs were expenses which would not recur. It was a statement of opinion. It should not have been characterised as misleading or deceptive. The Schedule 3 profit and loss representation The warranted profit and loss statement in Schedule 3 also invoked the add-back expenses in the following terms68: "Add, Proprietor's estimate of non-recurring expenses for the 5 months ended 30/11/04 The claim of misleading or deceptive conduct in relation to Schedule 3 was therefore not made out to the extent that it relied upon the add-back representations in the warranted profit and loss statement. The Court of Appeal did not express any concluded view of the Schedule 3 deficiencies other than to say that they did not add to the position of Backoffice in its cross-appeal. This was no doubt a result of the success of Backoffice under the other heads of its misleading or deceptive conduct claims. The Schedule 3 balance sheet representation In their notice of contention, Backoffice and Mr Weeks sought to uphold the decision of the Court of Appeal by reference to the following Schedule 3 representations contained in the warranted balance sheet, namely: 68 (2007) 61 ACSR 144 at 205 [185]. that as at 30 November 2004 Healthy Water had trade creditors of $51,388.27, which was $12,36069 less than the actual liability of that as at 30 November 2004 the balance of Mr Campbell's loan to Healthy Water was negative $74,507.24, instead of a liability of $3,760; and that as at 30 November 2004, Healthy Water had adjusted net assets of $210,856.89, which was approximately $50,000 more than the actual balance of $148,326.10. In their written submissions Backoffice and Mr Weeks relied upon the plea, maintained at the hearing before the primary judge, that by providing Schedule 3 to the SSA to Mr Weeks, Mr Campbell "represented to Backoffice the contents of the schedule". The claim was maintained by the notice of contention in reliance upon those representations in Schedule 3 which had been found by the primary judge to be false and material and to demonstrate breaches of warranty. It was submitted that the giving of contractual warranties can constitute misleading or deceptive conduct. Reference was made to Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd70. But the pleading, so far as it related to Schedule 3, alleged in effect representations comprising the statements in the Schedule. It was not linked to the giving of any contractual warranty in relation to them. On the other hand, as discussed earlier in these reasons and contrary to the submissions made on behalf of Mr Campbell, it is not an answer to a plea of misleading or deceptive conduct based on misrepresentation to assert that the misrepresentation is contained in a contractual document. In the context of the breach of warranty claim the primary judge found, relevantly to the Schedule 3 representations raised in the notice of contention, that: the entry of $51,388.27 in the warranted balance sheet in Schedule 3 was $12,360 less than the actual liability of $63,625.75. The additional liability was "a matter of moment or significance and thus material"71; 69 This appears to be an error in the trial judgment – the difference between the two figures is $12,237.48. 70 (1993) 42 FCR 470 at 503-506. 71 (2007) 61 ACSR 144 at 195 [157]. As noted above, it appears that the primary judge miscalculated the precise difference between the entry in the warranted (Footnote continues on next page) the entry in Schedule 3 in relation to Mr Campbell's loan account should have shown a positive figure of $3,759.76 instead of the negative figure of $74,507.24 which was shown. However this was technical rather than a matter of real substance as Mr Weeks knew that Mr Campbell's leave entitlements would probably be set off against the loan and that those figures were included in the balance sheet72; the adjusted net assets shown in the Schedule 3 balance sheet at $210,856.89 had been overstated, the correct figure being $148,326.10 shown in an adjusted balance sheet for 13 January 2005 prepared by the bookkeeper, Mr Eustace. The inaccuracy was material73. The pleading did not in terms set out precisely how Mr Campbell represented Schedule 3 to Backoffice. The representation is said to have been made on or about 24 January 2005, so it is reasonable to infer that it was alleged to have been closely connected in time with the execution of the contract and the payment by Backoffice of $850,000 for its share in Healthy Water. It may be that Mr Weeks perused the documents, including Schedule 3, before executing the SSA. If the primary judge's findings as to the falsity and materiality of two of the statements in the warranted balance sheet were to stand, it would not be difficult to conclude that the proffering of the document including those statements amounted to misleading or deceptive conduct. However, neither the primary judge nor the Court of Appeal dealt with the question. Nor did either Court deal with the question whether Mr Weeks relied upon the two Schedule 3 representations found to have been false and material. Characterisation of Mr Campbell's conduct in this respect and whether it caused the claimed loss cannot be determined on this appeal absent the critical findings of fact necessary to determine those questions. I agree, for the reasons given in the joint judgment74, that this aspect of the claim must be remitted for consideration by the Court of Appeal. The December 2004 representations The remaining element of the misleading or deceptive conduct claims the failure by Mr Campbell to advise Mr Weeks prior concerns balance sheet and the actual liability. The error, however, is not so significant as to affect her Honour's finding that the additional liability was material. 72 (2007) 61 ACSR 144 at 196-197 [164]-[165]. 73 (2007) 61 ACSR 144 at 198 [168]. 74 Reasons of Gummow, Hayne, Heydon and Kiefel JJ at [153]-[157] and [160]. 24 January 2005 that the forecast Healthy Water sales revenue and EBIT set out in the December 2004 estimates had not materialised and that there was a discrepancy of $7,147 in relation to the first and a discrepancy of about $25,000 in relation to the second. The characterisation of the express and implied representations derived from the December 2004 estimates depended upon their continuing operation and the failure by Mr Campbell to correct them when it became known that they were false after the actual sales revenue figures for December came in. The pleading of the December 2004 estimates alleged that they were "representations as to future matters within the meaning of section 41 of the Fair Trading Act 1987". That pleading did not seem relevant to the remainder of the plea of misleading or deceptive conduct in relation to these estimates or to the substantive argument advanced on this issue. The pleading turned upon Mr Campbell's failure to revise the estimates and to advise that they would not be, or had not been, achieved. Although there may be more than one way of looking at the question of characterisation in this case, the substance of the pleading seems to have been based upon non-disclosure or circumstantial silence amounting to misleading or deceptive conduct75. In his affidavit of 13 September 2006, which was in evidence at the trial, Mr Weeks said that he was unaware, at the time of entering into the SSA, of the overstatements of sales revenue and EBIT for December 2004. He said that if he had been aware of those matters he would not have entered into the SSA. The actual profit in December of $12,438 represented a 62% reduction on the average profit during the preceding five months. This would have reduced the annualised profit of the company and therefore his assessment of its value based on its EBIT. He would not have offered to purchase the share for $850,000. In addition, a $25,000 reduction in the December profit would have reduced Healthy Water's annualised profit and cash flow to a level that it would not have been able to meet its liabilities. The primary judge said of this evidence76: "Although Weeks claims in his affidavit … that he would not have entered into the share sale agreement if he had known that the operating results for 75 See Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 41; Warner v Elders Rural Finance Ltd (1993) 41 FCR 399 at 401-402; Beach Petroleum NL v Johnson (1993) 43 FCR 1 at 44-45; Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 465. And see generally Lockhart, The Law of Misleading or Deceptive Conduct, 2nd ed (2003) at 140-150 [5.16]-[5.27]. 76 (2007) 61 ACSR 144 at 233 [264]. December 2004 were different from the actual results (by overstating sales by $7147 and EBIT by the range referred to earlier), the real question for determination is whether he relied on the December estimates in entering into the share sale agreement and the alleged representation." When Mr Weeks received the financial documentation in December 2004, including the sales revenue report containing the estimated sales figure of $100,000 for that month, he estimated an annual result, which he himself characterised as "somewhat conservative". He also took account of the fact that he would be able to make a positive contribution and would have the capacity to "enhance the profitability" of the company. He had structured his offer to purchase the share in a way that recognised that he and Mr Campbell had a different view of the value of the company. Her Honour referred to Mr Weeks' proposal for a performance bonus of up to $300,000 to be paid to Mr Campbell if net profitability to 31 December 2005 exceeded a specific threshold. Mr Weeks had the assistance of a solicitor from whom he sought advice in relation to the agreements. The solicitor had sent him an email dated 11 January 2005 which he forwarded to Mr Horn on 12 January 2005 and which included the solicitor's notation of Mr Weeks' "reliance on your own investigations, relying on your background over many years in corporate management and the due diligence conducted in respect to [Healthy Water] carried out over some time by you and your accountant". Mr Weeks confirmed in cross-examination that he had informed the solicitor of this reliance77. Her Honour concluded78: "Weeks is a sophisticated businessman with the capacity to review financial records and make judgments about the prospects of a business, using his commercial common sense to his own advantage. That is what he did in making his offer to purchase the share in the company. I am satisfied that the evidence extracted above establishes that Weeks did not rely upon the estimated sales figures in the sales revenue report. Rather, it establishes that Weeks doubted those figures to the point that he built in a protection for himself if the figures were not achieved." The Court of Appeal found that misleading or deceptive conduct was made out in relation to the December 2004 estimates. Giles JA said that they were plainly enough estimates because of the use of round numbers. Nevertheless it remained that they were put forward as estimates for which there was a sound basis79. In my opinion however, the question whether the estimates 77 (2007) 61 ACSR 144 at 234 [268]. 78 (2007) 61 ACSR 144 at 234 [269]. 79 (2008) 66 ACSR 359 at 376 [71]. had "a sound basis" might go to an implied representation that they were based on reasonable grounds or reasonable inquiry. The fact that they were falsified by events which became known to Mr Campbell raised a different issue. Giles JA referred to the primary judge's findings that by 24 January 2005 Mr Campbell knew that the actual results had fallen short of the estimates. He said80: "Leaving the estimated sales revenue for December 2004 uncorrected, knowing that Mr Weeks did not know that the actual sales revenue was less, would leave Mr Weeks with an incorrect understanding of the company's trading. The difference of about $8000 when extended beyond the 1 month was not trivial. In my opinion, there was misleading or deceptive conduct in this respect in providing the documents and leaving them to stand as estimates." This was in substance a finding of misleading or deceptive conduct by non-disclosure in circumstances in which there would have been a reasonable expectation on Mr Weeks' part that, if the estimates were materially falsified by actual results, those results would have been disclosed. Here there could be an example of a degree of practical overlap between characterisation of the conduct and the assessment of causation via reliance. However, the question of reliance was not considered by the Court of Appeal in light of this approach to characterisation. In relation to the issue of reliance on the December 2004 estimates, Giles JA referred to Mr Weeks' affidavit evidence outlined above. Mr Weeks, he noted, was not cross-examined to any extent on that aspect of it. And "[n]either Mr Campbell nor Backoffice presented on appeal a critique of this evidence"81. The reference to Backoffice was plainly intended to be a reference to Sentinel. "The evidence included that Mr Weeks would not have purchased the share if add-backs of approximately $20,000 or more were erroneous, and that he would not have purchased the share if he had known that the estimated December 2004 sales revenue and EBIT were overstated as in substance they were. I have departed from the trial judge's finding as to reliance and, consider that I can pay regard to this evidence; I should say that having so departed, I do not see in the trial judge's reasons occasion 80 (2008) 66 ACSR 359 at 377 [73]. 81 (2008) 66 ACSR 359 at 377 [75]. 82 (2008) 66 ACSR 359 at 377 [76]. for the appellate deference to credibility-based findings considered in cases such as Fox v Percy83 and CSR Ltd v Della Maddalena84. In my opinion, there was causation in the misleading or deceptive conduct thus far considered in that the share would not have been purchased at all if Mr Weeks had known the true position. If Backoffice suffered loss or damage in its purchase of the share, the loss or damage was suffered by conduct of Mr Campbell in contravention of s 42 of the Fair Trading Act." Counsel for Mr Campbell pointed out that the primary judge made no finding in relation to Mr Campbell's knowledge of the falsity of the projected EBIT of $37,500 before the SSA was executed. The only specific figure ever put to Mr Campbell as to his knowledge of a shortfall was $8,000 by way of sales revenue. Nothing was put to him to suggest that he knew that the EBIT had a shortfall of $25,000. The submission made was, in substance, that no finding of Mr Campbell's knowledge of the falsity of the December 2004 EBIT figure could be made when that allegation, which amounted to an allegation of fraud, had never been put to him. Mr Weeks' evidence as to reliance upon the December estimates was to the effect that if he had known of the $8,000 shortfall in revenue and the $25,000 shortfall in EBIT, he would not have entered the transaction. There was no evidence that he would not have entered into the transaction had he known only of the $8,000 revenue shortfall. That was the only shortfall in respect of which a finding of knowledge could be made against Mr Campbell. The experts, Messrs Gower and Russell, as the primary judge found, had agreed that the EBIT of the company to December 2004 was overstated in the range of $15,318 to $20,02285. The EBIT stated in the sales revenue report was $37,500. It was submitted for Mr Weeks and Backoffice that this level of misstatement was substantial on any view and that it was open to the Court of Appeal to infer that if Mr Weeks had been provided with this information he would not have proceeded with the transaction. In my respectful opinion, however, it was not open to Giles JA in the Court of Appeal to depart, as he did, from the primary judge's finding as to reliance so far as the December 2004 estimates were concerned. The dissenting reasoning of Young CJ in Eq on this question was correct. There was, as counsel for Mr Campbell submitted, no exploration at trial of whether Mr Weeks would have withdrawn from the transaction had he known only of the shortfall in sales revenue figures. His caution about the figures with which he was provided would indicate that something more than a somewhat speculative inference was 83 (2003) 214 CLR 118; [2003] HCA 22. 84 (2006) 80 ALJR 458; 224 ALR 1; [2006] HCA 1. 85 (2007) 61 ACSR 144 at 194 [152]. necessary to establish the reliance that would forge the link between the misleading or deceptive conduct in relation to the December 2004 estimates and the loss which he claimed. Breach of warranty claims For the reasons set out in the joint judgment86, I agree that the outstanding claims for breach of warranties raised by the appeal and the cross-appeal to the Court of Appeal should be remitted for consideration by that Court. Implied duty to cooperate I agree, for the reasons set out in the joint judgment87, that special leave to advance this ground on the cross-appeal should be refused. Oppression and unfairly prejudicial conduct The order made by the primary judge that Mr Campbell buy back from Backoffice its share in Healthy Water was made under ss 232 and 233 of the Corporations Act 2001 (Cth). The relevant parts of those sections are quoted in the joint judgment88. The order made by the primary judge was made pursuant to s 233(1)(d). The text of s 232 sets out broadly expressed conditions which must be satisfied before the power to make orders under s 233 can be enlivened. As a matter of language the "unfairly prejudicial" conduct of a company's affairs which may enliven the powers under s 233 would appear to subsume oppressive conduct. The claim by Backoffice relied upon the three heads of oppressive, unfairly prejudicial and unfairly discriminatory conduct. The primary judge's findings adverse to Mr Campbell on this claim were all expressed in terms of For the reasons which appear below, I am of the opinion that special leave to appeal should be refused on the cross-appeal. It has no prospect of success. Before turning to the reasons for that conclusion, it is helpful to refer briefly to the legislative ancestry of ss 232 and 233. 86 Reasons of Gummow, Hayne, Heydon and Kiefel JJ at [156]-[159]. 87 Reasons of Gummow, Hayne, Heydon and Kiefel JJ at [165]-[171]. 88 Reasons of Gummow, Hayne, Heydon and Kiefel JJ at [173]-[174] 89 (2007) 61 ACSR 144 at 184-185 [110], 186 [116], 187 [121] and [124]. The history giving rise to ss 232 and 233 commenced with the Cohen Committee which, in 1945, recommended amendments to the Companies Act 1929 (UK). The Committee proposed powers for the court so that, if satisfied that a minority of shareholders was being oppressed and that a winding up order would not do justice to them, it could make orders including an order for the purchase by the majority of the shares of the minority90. The Committee contemplated a very broad power91. The Cohen Committee's recommendation was reflected in s 210 of the Companies Act 1948 (UK). Similar provisions were adopted in a number of Australian States92. Section 86 of the Uniform Companies Act 1961 was based on s 210, albeit the wording was not identical. Uncertainty developed about whether "oppressive conduct" under s 210 required proof of a course of conduct and of illegality and invasion of rights93. In its report on the Companies Act in 1962, the Jenkins Committee expressed the opinion that the intention underlying s 210 was to enable orders to be made when the affairs of the company were being conducted in a manner unfairly prejudicial to the interests of some members94. The Jenkins Committee its recommendation was given effect by the enactment of s 75 of the Companies Act 1980 (UK). Australia followed suit. In 1983, s 320 of the Companies Codes, recommended amendment and 90 United Kingdom, Board of Trade, Report of the Committee on Company Law Amendment, (1945) Cmd 6659 at 95, Recommendation II. 91 United Kingdom, Board of Trade, Report of the Committee on Company Law Amendment, (1945) Cmd 6659 at 30 [60] in which the Committee recommended that the discretion be unfettered as it would be impossible to lay down a general guide to the solution of essentially individual cases. 92 Companies Act 1958 (Vic), s 94, Companies Act 1931 (Q), s 379A, Companies Act 1959 (Tas), s 128. 93 The latter uncertainty appears to have been generated by the definition of "oppressive" as "burdensome, harsh and wrongful" in Scottish Co-operative Wholesale Society Ltd v Meyer [1959] AC 324 at 342 per Viscount Simonds. See United Kingdom, Board of Trade, Report of the Company Law Committee, (1962) Cmnd 1749 (the "Jenkins Committee") at [203]. 94 United Kingdom, Board of Trade, Report of the Company Law Committee, (1962) Cmnd 1749 at [204], invoking and agreeing with a "fair dealing" and "fair play" statement enunciated by Lord Cooper in Elder v Elder & Watson Ltd (1952) SC 49 established under the Cooperative Scheme set up in 1981, was amended to expand the powers of the court in cases of oppression to conduct "unfairly prejudicial to, or unfairly discriminatory against" a shareholder or shareholders. Section 320 later became s 260, then s 246AA of the Corporations Law under the 1989 Cooperative Scheme95. The Corporations Law provisions were split and renumbered as ss 232-235 by the Corporate Law Economic Reform Program Act 1999 (Cth). In the Explanatory Memorandum to that Act it was said that the oppression remedy was to be rewritten without making any significant change. One of the three "minor" changes was to make it clear that the court would be able to make orders even if the act, omission or conduct complained of had yet to occur or had ceased96. The oppression cross-appeal The primary judge made the following findings relevant to the satisfaction of the conditions in s 232: Backoffice, through the provision of Mr Weeks as a joint managing director of Healthy Water, was entitled to share jointly in the management of the company97. There was an expectation of continuing participation in the management of the company98. 3. Mr Campbell's conduct was oppressive to Backoffice in the following respects: his refusal to pay Backoffice's invoices unless Mr Weeks agreed to unreasonable demands, set out in a letter from Mr Campbell of 6 February 2005, requiring that he accept a reduction in the 95 The history and operation of s 320 were briefly discussed by Brennan J in Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459 at 470-471; [1985] HCA 68. The need for caution in the section's application, in order to avoid unwarranted assumption of management responsibilities, was mentioned by Mason ACJ, Wilson, Deane and Dawson JJ at 467. 96 Australia, House of Representatives, Corporate Law Economic Reform Program Bill 1998, Explanatory Memorandum at [6.132]. 97 (2007) 61 ACSR 144 at 178 [98]. 98 (2007) 61 ACSR 144 at 179 [100]. consulting fees agreed to only two weeks before and a reallocation of his duties as a director99; 3.2 Mr Campbell's conduct in changing a password to deny access by Mr Weeks to Healthy Water's MYOB software100; 3.3 Mr Campbell's refusal to attend a board meeting with Mr Weeks, which was part of a plan to keep Mr Weeks, and thus Backoffice, from having any the company101. involvement with true management In making her order that Mr Campbell buy back the Healthy Water share purchased by Backoffice, the primary judge held that neither the appointment of a provisional liquidator to the company nor the sale of the business and assets would preclude such an order102. She adopted 24 January 2005 as the date at which she should value the share103. She accepted a value of $853,000 for the share based on expert evidence from the witness, Mr Russell104. Giles JA in the Court of Appeal referred to the legislative history of ss 232 and 233. He did not consider that the sections required that the conduct complained of be continuing at the time that the Court considered making an order. Claimed relief founded on conduct which was no longer continuing might, but need not necessarily be refused in the exercise of discretion105. He held nevertheless that the buy-back order was not appropriate. The inability of the company to function as a jointly owned and managed entity was due to more than the conduct found to be oppressive. A breakdown in a relationship in a 50/50 entity was not the same as oppression. The sale of the company's business and assets had been consensual. The agreement between the parties made a buy- back order unnecessary to bring the oppression to an end106. In the circumstances 99 (2007) 61 ACSR 144 at 184-185 [110]. 100 (2007) 61 ACSR 144 at 186 [116]. 101 (2007) 61 ACSR 144 at 187 [121]. 102 (2007) 61 ACSR 144 at 190 [131]. 103 (2007) 61 ACSR 144 at 192 [145]. 104 (2007) 61 ACSR 144 at 192 [145]-[146]. 105 (2008) 66 ACSR 359 at 389 [132]. 106 (2008) 66 ACSR 359 at 390 [137]. it would not be just to require Mr Campbell to purchase Backoffice's worthless share107. Giles JA held that the primary judge's discretion had miscarried because she had failed to have regard to the appointment of the provisional liquidator, and the sale of the business and assets of the company as matters going to discretion108. He necessarily implied that the primary judge had considered them as matters going to her power to make the order. In my opinion that characterisation of her Honour's approach was correct. Young CJ in Eq held that, in order to obtain relief under ss 232 and 233, the conduct said to be oppressive or unfairly prejudicial must be taking place at the time of the hearing unless the complaint related to the present effects of past conduct109. On that basis he also considered that no order ought to have been made110. He considered that "the vice in what happened below was not in the exercise of any discretion, but in the making of any order under the section"111. His Honour summed up his conclusions as follows112: "It follows from what I have said above that the claim for oppression must fail for a number of reasons. It fails on the merits. If it had not failed on the merits it would fail on discretionary grounds. In particular, it fails because there has not been oppression because any act of nastiness by Campbell towards Weeks was a personal act not a corporate act, the nastiness has come to an end, the company must be wound up, there is no point in any buyout and there is no ground for ordering rescission even if it were available as a remedy." His Honour appears therefore to have been, at least contingently, on common ground with Giles JA. It seems that he would have held, even were the buy-back order not otherwise precluded, that it should not have been made as a matter of discretion. 107 (2008) 66 ACSR 359 at 390 [138]. 108 (2008) 66 ACSR 359 at 392 [144] and [147]. 109 (2008) 66 ACSR 359 at 432 [382]. 110 (2008) 66 ACSR 359 at 439 [449]. 111 (2008) 66 ACSR 359 at 439 [456]. 112 (2008) 66 ACSR 359 at 443 [487]. Backoffice and Mr Weeks sought special leave to cross-appeal against the decision of the Court of Appeal setting aside the buy-back order made by the primary judge. The notice of cross-appeal was uninformative, simply asserting as its ground that the Court of Appeal erred in failing to order that Mr Campbell purchase Backoffice's share in Healthy Water for the amount of $853,000 or, in the alternative, at a value to be determined by the Court. In my opinion, it is not necessary to deal with the full range of contentions advanced in relation to the cross-appeal. It is neither necessary nor desirable to explore, in the light of the rather diverse approaches taken below, the propounded limitations on the circumstances in which the remedies for oppression or unfairly prejudicial conduct of a company's affairs can be granted. Their language and history indicate that ss 232 and 233 are to be read broadly. The imposition of judge-made limitations on their scope is to be approached with caution. It is sufficient to say, as submitted for Mr Campbell and Sentinel, that Giles JA was correct in concluding that the learned primary judge did not inform the exercise of her discretion by reference to the critically important factors of the appointment of the provisional liquidator and the consensual sale of the business and assets of Healthy Water. The substituted exercise of the discretion as proposed by Giles JA was appropriate and seems to have been supported by Young CJ in Eq even though he would have allowed the appeal against the buy-back order on other grounds. For these reasons I agree that special leave to cross-appeal in relation to the buy-back order should be refused. Conclusion I agree with the orders proposed in the joint judgment. GUMMOW, HAYNE, HEYDON AND KIEFEL JJ. In 1993, Mr Douglas Campbell, the first appellant, established a business that was later conducted by Healthy Water (NSW) Pty Ltd ("Healthy Water"), a company of which Mr Campbell was the sole director and shareholder. By 2004, Healthy Water had an established business supplying and maintaining filtered water systems. Mr Campbell sought to sell part or all of the company or its business. Towards the end of 2004, Mr Timothy Weeks, the second respondent, became interested in the possibility of buying an interest in the company or its business. For a time there was talk of establishing a joint venture between interests associated with each of Mr Campbell and Mr Weeks. The suggestion was that a new company, in which each side would have a 50 per cent interest, would buy Healthy Water's business. This approach was later abandoned in favour of a sale of one of the two issued shares in Healthy Water. In late 2004, Mr Weeks was given documents describing some aspects of the financial affairs of Healthy Water. On 14 December 2004, Mr Weeks offered $850,000 as the price for a 50 per cent share in Healthy Water. During the latter part of December 2004 and the first weeks of January 2005, lawyers for the parties negotiated about both the structure of the transaction and the terms of the agreements that were to be made to effect it. On 24 January 2005, the parties executed four agreements: (a) A share sale agreement between Mr Campbell, a company controlled by Mr Campbell (Sentinel Construction Managers Pty Ltd ("Sentinel") – the second appellant), Healthy Water, and a company Mr Weeks controlled (Backoffice Investments Pty Ltd ("Backoffice") – the first respondent) by which Backoffice agreed to buy one of the two issued shares in Healthy Water for $850,000. (b) A shareholders agreement between Healthy Water, Mr Campbell, Backoffice and Mr Weeks. Two services agreements, one between Healthy Water, Backoffice and the other between Healthy Water, Sentinel and Mr Weeks and Mr Campbell. Sale of the share was completed on the same day. Three aspects of these agreements should be noticed immediately. First, the share sale agreement contained warranties by the vendor, including a warranty that to the best of Mr Campbell's knowledge, all information given by or on behalf of Healthy Water or its advisers to Backoffice or its advisers material to the sale was "substantially accurate and complete and not misleading". Secondly, the services agreements provided, in effect, for Backoffice and Sentinel to make available to Healthy Water the services of Mr Weeks and Mr Campbell respectively as joint managing directors. Thirdly, while the shareholders agreement regulated the rights and obligations of the shareholders, neither that agreement, nor the constitution of Healthy Water, provided any truly effective mechanism for resolving disagreements between the Weeks and the Campbell interests. Within days, the relationship between Mr Weeks and Mr Campbell broke down. There were acrimonious exchanges. Mr Campbell remained in effective control of the affairs of Healthy Water, at least for the most part, but it is evident that neither man had confidence in the other. Litigation soon followed. On 1 April 2005, Backoffice and Mr Weeks began proceedings in the Commercial List of the Equity Division of the Supreme Court of New South Wales. By those proceedings, Backoffice and Mr Weeks sought an order for the winding-up of Healthy Water and appointment of a provisional liquidator. Alternatively, they sought various other forms of relief, including orders for the compulsory acquisition of the share held by Backoffice either by the Campbell interests or by Healthy Water itself. The claims for winding-up and for compulsory acquisition of Backoffice's share in Healthy Water were founded on allegations that Mr Campbell had conducted the affairs of Healthy Water "in a manner contrary to the interests of the members as a whole and in an oppressive and unfairly prejudicial and discriminatory manner, by excluding Backoffice and Weeks from the management of [Healthy Water] and by making payments from [Healthy Water's] funds to meet Campbell's private expenses, not related to [Healthy Water's] business". Backoffice and Mr Weeks did not allege the existence of a deadlock in the affairs of Healthy Water. On the contrary, the case sought to be made was that Mr Campbell controlled what happened in the company and that what he had done fell within the provisions of s 232 of the Corporations Act 2001 (Cth) ("the Corporations Act") dealing with "oppression". Backoffice and Mr Weeks made a number of other claims. It is convenient to summarise the relevant claims in four categories: a claim that Healthy Water had breached its obligations under the services agreement with Backoffice by not paying amounts due under the agreement; claims that Mr Campbell had breached warranties relating to Healthy Water's financial performance given in the share sale agreement; a claim that Mr Campbell had breached terms to be implied in both the shareholders agreement and the share sale agreement that he would do all things necessary on his part to enable Backoffice to have the benefit of those agreements and would do nothing calculated to deprive Backoffice of those benefits; and claims that Mr Campbell had contravened s 42 of the Fair Trading Act 1987 (NSW) ("the Fair Trading Act") in three ways: by providing documents before the agreements were made that did not accurately state Healthy Water's past financial performance; by not correcting some estimates of Healthy Water's expected performance for December 2004 when Mr Campbell knew, or ought reasonably to have known, before the share sale agreement was made, that the estimated performance had not been achieved; and (iii) by representing "the contents of" financial statements contained in Sched 3 to the share sale agreement when those financial statements were inaccurate in a number of ways. In this Court, Backoffice and Mr Weeks submitted that Mr Campbell had contravened the Fair Trading Act in a fourth way: by including in the share sale agreement a warranty that, to the best of Mr Campbell's knowledge, all information provided material to the sale was substantially accurate and complete and not misleading, in circumstances where Mr Campbell knew from 11 January 2005 that certain estimates of Healthy Water's performance for December 2004 had not been achieved. The appellants denied that this claim had been distinctly pleaded or argued in the courts below and submitted that it was too late to make it in this Court. These reasons will show that this fourth way of Backoffice and Mr Weeks putting their case of contravention of the Fair Trading Act is not open. Soon after the proceedings were instituted the parties joined in obtaining an order appointing a provisional liquidator to Healthy Water. Almost two months later (on 31 May 2005), again with the agreement of the parties, the provisional liquidator sold all of the assets of the company to a company controlled by Mr Campbell. Although it was only about four months earlier that Backoffice had agreed to buy one of the two issued shares in the company for $850,000, the business and assets of Healthy Water were sold for $196,815. The whole of that sum was disbursed in payment of some creditors and the provisional liquidator's remuneration and expenses. All its assets having been sold and the proceeds of sale spent, Healthy Water was an empty shell. Yet the claim under the oppression provisions of the Corporations Act for compulsory purchase of the share held by Backoffice in Healthy Water was not only prosecuted to trial and judgment, it was the chief form of relief sought and obtained at trial. By contrast, recognising that Healthy Water was an empty shell, the claim against it for breach of the services agreement was not pressed at trial. Instead, Backoffice and Mr Weeks claimed recovery from Mr Campbell of the amount not paid under the services agreement as damages for breach of an implied duty to co-operate. The claims against Mr Campbell for breach of express warranties in the share sale agreement, and for misleading or deceptive conduct, were also pressed. The trial judge (Bergin J) concluded113 that an order should be made under the oppression provisions of the Corporations Act requiring Mr Campbell to buy Backoffice's share. The price was fixed114 as the value the share had at the date of its original acquisition (24 January 2005). On the basis that, when the share was bought in January 2005, the company had "good potential for growth and success" the trial judge fixed115 the purchase price of the share at $853,000. The trial judge also found116 that Mr Campbell had breached express warranties in the share sale agreement in some but not all of the respects alleged. Her Honour concluded, however, that because Mr Campbell should be ordered to buy Backoffice's share, and pay Backoffice $853,000 for it, no relief should be granted for the breaches of warranties117 or for any breach of an implied duty to co-operate that had deprived Backoffice of its entitlements under its services agreement118. Finally, in relation to the Fair Trading Act claims, the trial judge 113 Backoffice Investments Pty Ltd v Campbell (2007) 61 ACSR 144 at 192 [145]-[146]; 25 ACLC 302 at 346. 114 (2007) 61 ACSR 144 at 192 [145]; 25 ACLC 302 at 346. 115 (2007) 61 ACSR 144 at 192 [145]-[146]; 25 ACLC 302 at 346. 116 (2007) 61 ACSR 144 at 215 [219]; 25 ACLC 302 at 366. 117 (2007) 61 ACSR 144 at 192 [147]; 25 ACLC 302 at 346. 118 (2007) 61 ACSR 144 at 218 [233]; 25 ACLC 302 at 369. expressed119 some doubts about whether the representations alleged by Backoffice and Mr Weeks had been made but, in any event, concluded120 that the claims should fail because her Honour was "satisfied that Weeks and/or Backoffice did not rely upon the representations". Mr Campbell and Sentinel appealed to the Court of Appeal of New South Wales and Backoffice and Mr Weeks cross-appealed. The Court (Giles and Basten JJA and Young CJ in Eq) divided in opinion121. The Court ordered that the appeal should be allowed and the cross-appeal allowed in part and that there be judgment for Backoffice against Mr Campbell for $850,000. On appeal to the Court of Appeal, much attention was directed in argument to the claims of oppression that had succeeded at trial. Two members of the Court of Appeal (Giles JA and Young CJ in Eq) held122 that no order should have been made for compulsory purchase of Backoffice's share in Healthy Water. Giles JA concluded123, however, that Backoffice should have judgment against Mr Campbell for the sum it had paid for the share ($850,000) as damages Basten JA also concluded124 that for misleading or deceptive conduct. Backoffice should have judgment against Mr Campbell for that sum but held that the sum should be allowed partly as consideration fixed under an order that he repurchase the share sold to Backoffice, and partly as damages for misleading or deceptive conduct. The third member of the Court, Young CJ in Eq, held125 that Backoffice and Mr Weeks should have no relief because, in his Honour's opinion, there was no continuing oppression and Mr Weeks had not shown "that his losses were caused by anything else than his own misjudgment of the value of the share he purchased". 119 (2007) 61 ACSR 144 at 218-219 [234], 232 [260]; 25 ACLC 302 at 369, 382. 120 (2007) 61 ACSR 144 at 235 [271]; 25 ACLC 302 at 385. 121 Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359; 26 ACLC 537. 122 (2008) 66 ACSR 359 at 392 [147] per Giles JA, 432-433 [382]-[386], 439 [449] per Young CJ in Eq; 26 ACLC 537 at 564, 597-598, 602. 123 (2008) 66 ACSR 359 at 394 [157]; 26 ACLC 537 at 566. 124 (2008) 66 ACSR 359 at 407-408 [219]-[222]; 26 ACLC 537 at 576-577. 125 (2008) 66 ACSR 359 at 453 [593]; 26 ACLC 537 at 613. As will be elaborated later, neither Giles JA nor Basten JA decided whether there had been any breach of contractual warranties. Young CJ in Eq held126 that the trial judge had not been shown to err in her findings that there had been certain breaches of warranties but concluded that the damages flowing from the breaches were only nominal. Proceedings in this Court In their appeal to this Court the appellants (the Campbell interests) advanced only two grounds of appeal. The first ground was directed to the proposition, accepted by Giles JA and Basten JA in the Court of Appeal, that Mr Campbell had engaged in misleading or deceptive conduct as a consequence of which Backoffice agreed to buy the share in Healthy Water. The first and main thrust of the ground was an allegation, in effect, that Backoffice relied only on the contractually stipulated warranties, not upon any pre-contractual representations. Success on this ground was alleged to warrant setting aside the judgment ordered by the Court of Appeal in favour of Backoffice and, assuming that the oppression claims failed (as two members of the Court of Appeal had held they should), dismissal of all remaining claims against the appellants except the claims for breach of contractual warranties. The appellants also alleged under this first ground of appeal that Giles JA (with whose reasons in this respect Basten JA agreed) had made a mathematical error which falsified a critical step in his reasoning to a finding that Backoffice would not have bought the share if the pre-contractual documents recording Healthy Water's financial position had reflected the true position. The reasoning depended upon identifying the extent of the difference between the financial position indicated in the documents and the true position of the company. It was said that the difference was miscalculated. The respondents did not dispute that there was a mathematical error of the kind identified by the appellants but challenged both the extent of the error and what followed from it. This further aspect of the first ground of appeal need be considered only if the question of causation, namely whether Backoffice suffered loss by any misleading or deceptive conduct, remains an issue for determination. The second ground advanced by the appellants in this Court was that the Court of Appeal erred "in holding that the damages for misrepresentation extended to losses attributable to the cessation of the business of [Healthy Water] ... when such losses were not related to the subject matter of the alleged 126 (2008) 66 ACSR 359 at 450 [549]-[550]; 26 ACLC 537 at 611. misrepresentations". Because the members of the Court of Appeal adopted markedly different paths of reasoning, there may be a question about whether the appellants are right to conflate the separate reasons of the Court in this way. It is not necessary, however, to explore that question here. The appellants submitted that, if they succeeded only on their second ground, the issue of damages should be remitted to the Court of Appeal. The appellants further submitted that, if they succeeded on their first ground of appeal to this Court, concerning misleading or deceptive conduct, so much of the appeal and the cross-appeal to the Court of Appeal as related to the claims for breach of contractual warranties remained undecided by that Court and thus had to be remitted to the Court of Appeal for its further consideration. During the course of the hearing of the appeal in this Court, the respondents, Backoffice and Mr Weeks, sought special leave to cross-appeal to restore the success they had had at trial in obtaining relief under the oppression provisions of the Corporations Act. They further sought to cross-appeal to argue that Mr Campbell had breached warranties he had given in the share sale agreement and to argue that Mr Campbell had breached the shareholders agreement and the share sale agreement by not doing what was necessary to enable Backoffice to have the benefit of those agreements and by acting in a manner calculated to deprive Backoffice of those benefits. By notice of contention they alleged that the orders made by the Court of Appeal should be upheld on the grounds that Mr Campbell had engaged in misleading or deceptive conduct in respects additional to those found by Giles JA and Basten JA, and that the inclusion in the share sale agreement of a warranty providing that, to the best of Mr Campbell's knowledge, all information material to the sale was substantially accurate and complete and not misleading, was itself misleading or deceptive conduct. The Fair Trading Act claims It is convenient to deal first with the claims that Mr Campbell contravened the Fair Trading Act. In this Court, attention focused only upon Backoffice's claims for damages under s 68 of the Act. (Backoffice had made a claim under s 72 for orders rescinding the share sale agreement but that claim was not further pressed in this Court.) It will be recalled that Backoffice and Mr Weeks alleged that Mr Campbell had contravened the Fair Trading Act in three ways. The first concerned the provision, before the agreements were made, of documents said to state inaccurately Healthy Water's past financial performance (for the five months to 30 November 2004). The second related to the provision, before the agreements were made, of some estimates of the company's expected performance for December 2004. It was alleged that, before the share sale agreement was made in January 2005, Mr Campbell knew, or ought reasonably to have known, that the estimated sales revenue and earnings before interest and tax, or EBIT, for December 2004 had not been achieved. The third way in which the Fair Trading Act contraventions were put, that Mr Campbell had represented "the contents of" the financial statements contained in Sched 3 to the share sale agreement, raised issues that overlapped to a very considerable extent with the claims of breach of contractual warranties. It is convenient to leave this third claim to one side for the moment and focus only upon the first two claims. As to the first claim, these reasons will demonstrate that the particular contraventions alleged by Backoffice and Mr Weeks in relation to the past financial performance of Healthy Water (to 30 November 2004) were not made out. As to the second claim, these reasons will show that, although Backoffice and Mr Weeks demonstrated that there was a contravention of the Fair Trading Act relating to the estimate of the expected sales revenue of Healthy Water for December 2004, Backoffice and Mr Weeks did not prove that by that contravention Backoffice suffered the loss and damage it claimed. The Fair Trading Act Section 42 of the Fair Trading Act provides that "[a] person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". Section 68 provides that "[a] person who suffers loss or damage by conduct of another person that is in contravention of [certain provisions of the Act] may recover the amount of the loss or damage by action against the other person or against any person involved in the contravention". Section 72 provides for the making of any of several forms of order in cases where it is found that a person has sustained, or is likely to sustain, loss or damage by conduct of another that contravenes certain provisions of the Act. Both ss 68 and 72 can be engaged in respect of a variety of contraventions of the Fair Trading Act, including s 42. Using tools of analysis drawn from the common law of deceit (misrepresentation and reliance) within the statutory framework provided by ss 42 and 68 of the Fair Trading Act may sometimes be helpful in identifying contravening conduct and deciding whether loss or damage was suffered by the contravention. But as McHugh J correctly pointed out in Butcher v Lachlan Elder Realty Pty Ltd127, the "conduct" with which s 52 of the Trade Practices Act 127 (2004) 218 CLR 592 at 623 [103]; [2004] HCA 60. 1974 (Cth) ("the Trade Practices Act") deals is not confined to "'representations', whether they be representations as to matters of present or future fact or law"128. This proposition applies with equal force to s 42 of the Fair Trading Act. References to misrepresentation or reliance must not be permitted to obscure the need to identify contravening conduct (here, misleading or deceptive conduct) and a causal connection (denoted by the word "by") between that conduct and the loss and damage allegedly suffered. As McHugh J also pointed out in Butcher129, with particular reference to s 52 of the Trade Practices Act, but with equal application to s 42 of the Fair Trading Act: "The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself130. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct131. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole132. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and 128 McHugh J dissented in the result of the particular case but not as to these questions of principle. 129 (2004) 218 CLR 592 at 625 [109]. See also the judgment of the Court in Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 84 [200]; [2000] HCA 12. 130 See Equity Access Pty Ltd v Westpac Banking Corporation [1990] ATPR ¶40-994 at 50,950 per Hill J; see also Taco Co of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202-203 per Deane and Fitzgerald JJ. 131 See, eg, Trade Practices Commission v Lamova Publishing Corporation Pty Ltd (1979) 42 FLR 60 at 65-66; 28 ALR 416 at 421-422 per Lockhart J. 132 See, eg, Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535 at 541 per Sheppard J; Hill J agreeing. any statement, action, silence or inaction in connection with the document." (emphasis added) The pre-contractual documents Two pre-contractual contain misrepresentations. On 9 December 2004, Mr Weeks was given these two documents along with management accounts of Healthy Water for the five months ended 30 November 2004 that showed its operating results for that period. documents were alleged the The information given two documents supplemented the management accounts. One set out a list of "[n]on-recurring expenses". The other set out Healthy Water's operating results and sales revenue for the five months ended 30 November 2004, and projections of that revenue for certain other periods (the month of December 2004, the six months ended 31 December 2004, the six months ended 30 June 2005, and the 12 months ended 30 June 2005). The operating results document recorded the EBIT of Healthy Water "as per Management Accounts" as being $67,490 for the five months ended 30 November 2004. To that figure was then added the various non-recurring expenses, identified in the other document provided at this time, to yield an "EBIT (Adjusted)" of $163,590. The non-recurring expenses (the "add-backs") were added back to EBIT in order to give a better indication of the level of Healthy Water's profitability. Estimates of the EBIT as adjusted in this way were given for each of the four future periods mentioned above. The list of non-recurring expenses provided to Mr Weeks on 9 December 2004 was divided into three categories of expense: obsolete inventories ($2,600), consulting fees ($16,000) and items referable to Mr Campbell ($271,000). The items referable to Mr Campbell were recorded as follows: "Current annual salary Motor vehicle allowance General expense allowance 'Business' expense allowance Credit card reimbursement ($5,000/6,500 pmth) (All of the above are paid monthly) Against the items referable to Mr Campbell (totalling $271,000) was set off an item described as "[e]stimated salary for general manager/$1 million turnover business" of $85,000 and the balance after that set off was given as $186,000 and described as "[e]xcess per annum". Five-twelfths of that amount of $186,000 ($77,500) was recorded against the period "5 months to 30/11/04". The total for the five months ended 30 November 2004 of the three categories of non-recurring expenses (obsolete inventories, consulting fees and items referable to Mr Campbell, net of the allowance for the estimated salary for a general manager) was not recorded on the document but was $96,100. Argument in this Court Argument in this Court and in the courts below about the application of the Fair Trading Act proceeded for the most part by reference to whether there was a misrepresentation and whether there was reliance on the truth of what was represented. In particular, each side in this appeal staked out its position by reference to concepts of misrepresentation and reliance. The appellants' central argument was that negotiation for and inclusion in the share sale agreement of express contractual warranties either showed that Backoffice did not rely on the pre-contractual statements or showed that the pre-contractual statements were not representations that continued to the point at which the agreements were made. Rather, so the appellants submitted, the pre-contractual documents set out estimates of non-recurring expenses that Mr Weeks recognised were no more than estimates and for which he sought an assurance of substantial accuracy to the best of the vendor's knowledge by obtaining contractual warranties to that effect. By contrast, the respondents submitted that the critical point was whether, at the time of making the agreements, Mr Weeks continued to rely on, in the sense of believe in the accuracy of, what he had been told in the pre-contractual statements. If he did, and the respondents pointed out that his continued belief in these facts was not challenged at trial, the making of what were objectively untrue representations about the financial position of the company was said to be still operative and a cause of Backoffice agreeing to buy the share. In their amended summons, Backoffice and Mr Weeks alleged that: "By providing Backoffice with documents] Campbell represented to Backoffice that: [two the impugned 9 December [Healthy Water] incurred non-recurring expenses of $96,100 for the five months ending 30 November 2004 ... [Healthy Water] had an EBIT (after adjustment for the Add-backs) for the 5 months to 30 November 2004 of $163,590". It will be convenient to refer to these claims together as claims about add-backs and EBIT to November 2004. Secondly, Backoffice and Mr Weeks alleged that, by providing the operating results document, Mr Campbell represented (among other things) that Healthy Water's sales revenue for December 2004 would be $100,000 and its EBIT for December 2004 would be $37,500. Backoffice and Mr Weeks further alleged that these representations were representations which continued until the share sale agreement was made; that by the time the share sale agreement was made, Mr Campbell knew, or ought to have known, that the estimates set out in the operating results document of the projected sales revenue and EBIT had not been achieved; and that Mr Campbell did not tell Mr Weeks before the share sale agreement was made that the projections had not been realised. These claims will be referred to as claims about sales revenue and EBIT for December 2004. Add-backs and EBIT to November 2004 The case which Backoffice and Mr Weeks alleged and sought to make at trial in relation to add-backs and EBIT to November 2004 was that by providing the 9 December documents Mr Campbell represented to Backoffice that Healthy Water had incurred non-recurring expenses of a particular amount ($96,100) during the five months ended 30 November 2004 and that the company had an EBIT (adjusted) for that period of a particular amount ($163,590). Backoffice and Mr Weeks submitted that EBIT, as adjusted by adding back non-recurring expenses, was important to Mr Weeks because he calculated the price he offered for a share in Healthy Water as a multiple of the estimated EBIT for 2004-2005. The trial judge concluded133 that the sums recorded in the list of non-recurring expenses were not all accurate. The non-recurring expenses in fact incurred were less than the amount shown on the 9 December documents. Because the figures given for non-recurring expenses in the 9 December documents were not accurate, the EBIT (adjusted) recorded in those documents was also inaccurate. It was too high because the amount added back for non-recurring expenses (the "add-backs") was too high. 133 (2007) 61 ACSR 144 at 208 [198], 212 [210]; 25 ACLC 302 at 360, 364. Finding that the figures were not accurate does not, of itself, conclude the inquiry into whether there was misleading or deceptive conduct. For the reasons given earlier, in deciding whether there was misleading or deceptive conduct, it is necessary to examine the relevant course of conduct as a whole and not look at parts or particular aspects of conduct in isolation. In the present case, the 9 December documents were given to Mr Weeks in the course of investigations or negotiations that took place over a period of weeks, features of which were stated unwillingness or inability on the part of Mr Campbell to substantiate the figures provided and, in consequence, a decision by Mr Weeks to accept contractual warranties in the form ultimately agreed in the share sale agreement. The relevant course of conduct is described below. It shows that, in the circumstances, the provision of estimates of add-backs and EBIT to November 2004 was not a representation (as Backoffice and Mr Weeks alleged) that the add-backs or the EBIT were in fact the amount stated. Further, looking at the relevant course of conduct as a whole, the conduct of Mr Campbell had two features: first, that Mr Campbell provided to Mr Weeks what were estimates of add-backs and EBIT to November 2004 and second, that the estimates he provided were conveyed as being only his estimates which he believed to be true, but which, as expressly indicated, would not be otherwise substantiated. Because it was not shown at trial that Mr Campbell did not believe his estimates to be true, Mr Campbell's conduct was not shown to have been misleading or deceptive. Investigations and negotiations When considering whether to buy an interest in Healthy Water or its business, Mr Weeks sought to make his own investigations about the financial affairs of Healthy Water. He was not given access to all of the company's accounts. Rather, as explained earlier, he was given the management accounts to the 30 November 2004 with management accounts. the 9 December documents supplementing What did the 9 December documents convey to a recipient? It is first important to recognise that one of the items taken into account in the calculation of non-recurring expenses (the allowance for the "[e]stimated salary for general manager") was expressly described as an estimate, and the other items (particularly the items related to Mr Campbell for general expense allowance, "business" expense allowance and credit card reimbursement) bore every indication of being estimates rather than sums recorded in the books of account of the company as having been incurred. In the case of the credit card reimbursement of $65,000, the relevant monthly amount was said to be between $5,000 and $6,500. To the extent to which the items of non-recurring expenses were estimates, the total amounts stated in the 9 December documents as non-recurring expenses incurred for the five months ended on 30 November 2004 (and the total of $96,100 derived from the documents) also had to be understood as a product of estimation rather than record. Because the total amounts given for non-recurring expenses depended upon estimates that were made for at least some items, and the EBIT was calculated by adding back the non-recurring expenses, the amount given for EBIT (adjusted) depended upon those same estimates. It follows that what the documents represented to a reader was that someone (whose identity was not apparent from the face of the documents) estimated the non-recurring expenses to be in the amounts stated and, on that basis, estimated the EBIT (adjusted) to be in the amount stated. Events that followed confirmed that the figures given in the 9 December documents were estimates134. Because Mr Weeks recognised that at least some of the figures given for non-recurring expenses referable to Mr Campbell were estimates, he asked for substantiation of the amounts recorded as non-recurring expenses. Substantiation was not provided. Indeed, the adviser acting for Mr Campbell (Mr Horn) told Mr Weeks that he had tried to obtain details of the credit card charges that had been reimbursed by the company but were not properly attributable to the company's business and that he had not been able to do so. Mr Horn also told Mr Weeks that, although an amount was recorded in Healthy Water's books as owed by Mr Campbell on loan account with the company, Mr Campbell disputed that he owed any sum and maintained that the documents given to Mr Weeks on 9 December were deficient because they did not record any liability to him for long service leave and accrued annual leave. Mr Weeks told Mr Campbell's adviser (Mr Horn) that if he could not substantiate the figures given in the 9 December documents he needed "some kind of ... support, confidence that they are correct". Mr Horn suggested that Mr Weeks seek warranties in the purchase agreement and Mr Weeks decided not to press his requests for substantiation further but instead to take warranties. Despite the uncertainties about what was set out in the 9 December documents that have been described earlier, and despite Mr Weeks not being given the verification he had sought of the items set out in those documents, Mr Weeks made an offer on 14 December 2004 to buy a half interest in the enterprise for $850,000. Those terms were repeated in a revised offer of 16 December 2004, 134 (2007) 61 ACSR 144 at 148-149 [10]-[11]; 25 ACLC 302 at 306-307. which was expressed as being based on the documents he had been given "which form part of this offer and any subsequent agreement to purchase". As noted earlier in these reasons, negotiations between the parties and their lawyers continued after the making of the offer and revised offer. The share sale agreement of 24 January 2005 contained several provisions relevant to the issues that now fall for consideration. Express warranties and an entire agreement clause First, the share sale agreement provided (by cl 10.1 in Sched 1 to the agreement) that the vendor warranted that, to the best of its knowledge (which is to say Mr Campbell's knowledge), all information given by or on behalf of Healthy Water or its advisers to Backoffice or its advisers material to the sale was "substantially accurate and complete and not misleading". Secondly, Sched 3 to the agreement reproduced the management accounts to 30 November 2004 that had been given to Mr Weeks, together with a balance sheet for Healthy Water as at 30 November 2004 and a profit and loss statement for the five months ended 30 November 2004. The profit and loss statement recorded the operating profit of the company for the five months "as per attached Company management accounts" as $66,978.99. It added what it described as "Proprietor's estimate of non-recurring expenses for the 5 months ended 30/11/04" of $96,100 to yield an "Adjusted Operating Profit" of $163,078.99. The vendor further warranted (by cl 10.2 in Sched 1) that, to the best of its knowledge, the information in the schedules to the agreement was "materially accurate and complete and not misleading". The vendor also warranted (but without any qualification that the warranty was to the best of its knowledge) that: (a) Healthy Water had no liabilities other than those disclosed in Sched 3 and another schedule to the agreement, and was not a party to any contract or arrangement not disclosed to the purchaser; (b) Healthy Water had not experienced any extraordinary expense since the Balance Sheet Date (30 November 2004) and the business of the company had been operated in the ordinary course and in good faith since that date; and (c) the profits or losses shown in the Balance Sheet had not, to a material extent, been affected (except as disclosed) by any extraordinary or exceptional event or circumstance, or by any other factor rendering them unusually high or low. Some other warranties were mentioned in the pleadings but need not now be noticed. Reference should also be made to some other provisions of the share sale agreement. First, the agreement provided for a particular meaning to be given to a reference in a warranty to "the knowledge, information and belief" of the vendor, treating that expression or words to that effect as including an additional warranty that the vendor had made due and careful inquiry as to the matter. This additional warranty was not specifically pleaded and the trial judge refused135 an application to amend the summons to rely on it. It was not considered by the Court of Appeal and no reliance was placed upon it in this Court. It may be put aside from further consideration. Secondly, the share sale agreement provided that, notwithstanding any other provision of the agreement: "the Vendor shall have no liability in respect of any claim under the Warranties [set out in the agreement] unless the amount of such claim exceeds the sum of $15,000 for any one event or $25,000 in aggregate". Thirdly, the share sale agreement contained an entire agreement clause and a provision denying that the purchaser relied on any warranty made by or on behalf of the vendor, except those set out in the agreement. Clauses of these kinds have been held136 effective answers to claims to set up collateral agreements but no claim of that kind is at issue in this matter. It would appear that, although mentioned in the pleadings filed on behalf of Mr Campbell and Sentinel, little, if any, emphasis was given to the entire agreement clause at the trial of the proceeding or in the appeal to the Court of Appeal. In this Court, the appellants referred to the clause as supporting submissions they made to the effect that even if Mr Campbell did engage in misleading or deceptive conduct, that conduct was not a cause of the loss or damage allegedly suffered. Backoffice and Mr Weeks submitted that it was now too late for the appellants to rely on the entire agreement clause in this way. It will not be necessary to resolve that question because these reasons will demonstrate that the claims under the Fair Trading Act fail for other reasons. It is as well to add, however, that, of itself, neither the inclusion of an entire agreement clause in an agreement nor the inclusion of a provision expressly denying reliance upon pre-contractual representations will necessarily prevent the provision of misleading information before a contract was made constituting a contravention of the prohibition against misleading or deceptive 135 (2007) 61 ACSR 144 at 203-204 [182]; 25 ACLC 302 at 356. 136 See, for example, L'Estrange v Graucob Ltd [1934] 2 KB 394. conduct by which loss or damage was sustained. As pointed out earlier, by reference to the reasons of McHugh J in Butcher137, whether conduct is misleading or deceptive is a question of fact to be decided by reference to all of the relevant circumstances, of which the terms of the contract are but one. Contravening conduct? Viewed in context, as they must be, the 9 December documents conveyed to a reader no more than that certain estimates of Healthy Water's financial performance had been made. Nothing that was said or done after provision of the 9 December documents alters the conclusion that those documents conveyed no more to a reader than that add-backs and EBIT to November 2004 were estimated to be the amounts that were stated. The conversations Mr Weeks had with Mr Horn, soon after the 9 December documents were provided, confirmed that the documents recorded estimates that had been made, and revealed that it was Mr Campbell who had made at least some of them. The conversations further confirmed that no substantiation or verification of those estimates would be provided and that, in the case of the credit card charges, an attempt had been made to obtain substantiation but had failed. Mr Horn's invitation to seek warranties, in lieu of substantiation, was ultimately translated into the contractual warranties earlier described. No doubt there are circumstances in which the provision of an estimate of a company's financial performance may mislead or deceive every bit as much as providing a report that purports to be an accurate record of performance. In this case, however, the conduct of Mr Campbell taken as a whole was to proffer estimates of the add-backs and EBIT to November 2004 which he was to be understood as asserting that he believed to be true. This was not the conduct which Backoffice and Mr Weeks had alleged. And although the trial judge concluded that the estimates incorporated in the calculation of the add-backs had been made by Mr Campbell "in a less than disciplined manner", her Honour concluded that Mr Campbell did not know that those estimates were inaccurate or incomplete or misleading138. And Backoffice and Mr Weeks never sought to make a case that Mr Campbell had no sufficient basis on which to make the estimates. 137 (2004) 218 CLR 592 at 625 [109]. 138 (2007) 61 ACSR 144 at 214 [218]; 25 ACLC 302 at 366. In the circumstances, Mr Campbell was not shown to have engaged in misleading or deceptive conduct in relation to add-backs and EBIT to November 2004, and the contraventions of the Fair Trading Act alleged by Backoffice and Mr Weeks in relation to those matters were not established. It is necessary to deal now with the claims about the projections of sales revenue and EBIT for December 2004 which were also given in the 9 December documents. Sales revenue and EBIT for December 2004 Because the share sale agreement was not made until 24 January 2005, Healthy Water's actual sales revenue for the month of December 2004 was recorded in its management accounts before the agreement was made. The actual sales revenue achieved was $92,853. This was $7,147 (or about eight per cent) less than had been estimated ($100,000). Because the actual sales revenue for December 2004 was less than the estimate, the actual EBIT for the same period was likely to have been affected and, of course, the difference between estimated and actual sales revenue may well have had consequential effects on other projected figures given in the document. But the figure given for EBIT was an estimate and no actual figure for EBIT was recorded in the December management accounts. The consequences of a variation in sales revenue on EBIT were not explored with Mr Weeks at trial. Further, it was not put to Mr Campbell in cross-examination that he knew that the EBIT for December 2004 was less than the amount estimated or that he knew, as was alleged, that the shortfall was $25,000. It would not be right, in these circumstances, now to find for the first time that when the share sale agreement was made Mr Campbell knew or ought to have known that the estimate of EBIT was false. The trial judge rejected Mr Campbell's evidence that he discussed the December 2004 management accounts, or what they recorded about sales revenue, with Mr Weeks before the share sale agreement was made139. Because the trial judge found140 that Mr Weeks did not rely upon the estimate of projected sales revenue for December 2004, her Honour made no finding about whether the representation made about that revenue in the operating results document continued until the share sale agreement was made on 24 January 2005. 139 (2007) 61 ACSR 144 at 232 [258]; 25 ACLC 302 at 382. 140 (2007) 61 ACSR 144 at 232-234 [261]-[269]; 25 ACLC 302 at 382-384. In the Court of Appeal, Giles JA held141 that for Mr Campbell to leave the estimate of sales revenue for December 2004 uncorrected (when he knew it was greater than actual sales revenue) was misleading or deceptive conduct. Basten JA agreed142 with Giles JA on this point. In this Court, the appellants made two submissions about the estimate of sales revenue for December 2004. First, they submitted that the representation was not a continuing representation because "Mr Weeks did not require that those figures be the subject of any relevant [express] warranty" in the share sale agreement. Secondly, they submitted that the evidence did not support a conclusion that a difference of $7,147 in sales revenue would have caused Mr Weeks not to proceed with the sale. The appellants submitted that, viewed objectively, the difference had no significant effect on Healthy Water's annual EBIT for 2004-2005, if EBIT were to be calculated as twice that achieved for the six months ended 31 December 2004. The first of these submissions of the appellants should be rejected. It will be recalled that the share sale agreement provided that the vendor warranted that, to the best of its knowledge, all information given by or on behalf of Healthy Water or its advisers to Backoffice or its advisers material to the sale of the share was "substantially accurate and complete and not misleading". This is reason enough to reject the submission. Secondly, and more fundamentally, neither the negotiation for, nor the agreement upon, contractual warranties concludes the issue of whether there was misleading or deceptive conduct or the issue of whether conduct of that kind was a cause of the loss or damage alleged in this case. The second of the appellants' submissions was to the effect that it was not shown that Mr Weeks would have acted any differently if he had known the actual sales revenue for December 2004. The trial judge concluded143 that Mr Weeks did not rely upon the estimate of sales revenue. Rather, her Honour found144 that Mr Weeks "doubted those figures to the point that he built in a protection for himself if the figures were not achieved". The "protection" was said to be found in the services agreement made between Healthy Water, 141 (2008) 66 ACSR 359 at 376-377 [72]-[73]; 26 ACLC 537 at 550. 142 (2008) 66 ACSR 359 at 407 [218], 408 [222]-[223]; 26 ACLC 537 at 576, 577. 143 (2007) 61 ACSR 144 at 234 [269]; 25 ACLC 302 at 384. 144 (2007) 61 ACSR 144 at 234 [269]; 25 ACLC 302 at 384. Mr Campbell's company (Sentinel) and Mr Campbell. By that services agreement Sentinel would be entitled to a performance bonus of up to $300,000 if the available profit of Healthy Water permitted its payment. Available profit was to be determined after payment of all expenses of Healthy Water including, of course, amounts otherwise due under the two services agreements. As Giles JA rightly pointed out145, the services agreement with Sentinel gave no protection to Mr Weeks against the possibility that the sales revenue may be less than forecast; the services agreement with Sentinel dealt only with what was to happen if Healthy Water proved to be more profitable than was forecast. The trial judge thus erred in concluding that negotiation of this aspect of the services agreement showed that Mr Weeks did not rely on the estimate of sales revenue. The appellants nevertheless submitted that Giles JA was wrong to hold, as he did146, that Mr Weeks relied on the accuracy of the estimates of future sales revenue and the estimates of future profitability derived from those estimates of revenue. The conclusion which Giles JA reached147 was founded upon the premise that "[i]f a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation"148. Three points may be made about this proposition. First, it is a proposition expressed in relation to the law of deceit, not the operation of statutory provisions for the award of damages suffered by contravention of consumer protection provisions proscribing misleading or deceptive conduct. Secondly, the proposition carries within it a number of subsidiary questions, such as what is a "material" representation, and when is a material representation "calculated" to induce entry into a contract. Thirdly, because the proposition is directed to the drawing of inferences, consideration of its application must always attend closely to all of the evidence that is adduced that bears upon the question being examined. With considerations of these kinds in mind, Giles JA was right to 145 (2008) 66 ACSR 359 at 371-372 [46]; 26 ACLC 537 at 546. 146 (2008) 66 ACSR 359 at 372 [48]; 26 ACLC 537 at 546. 147 (2008) 66 ACSR 359 at 370 [41]; 26 ACLC 537 at 545. 148 Gould v Vaggelas (1984) 157 CLR 215 at 236 per Wilson J; [1985] HCA 85. point out149 that reliance is not a substitute in the context of the Fair Trading Act for the essential question of causation. Moreover, it is also right to observe, as Giles JA said150, that "[i]t may be artificial to speak of reliance in determining what action or inaction would have occurred if the true position had been known". In the present matter, the significance which Mr Weeks attached to the estimate of sales revenue for December 2004 was dealt with only briefly in evidence. Not only was most attention given at trial to questions of oppression, the chief focus of the claims under the Fair Trading Act seems to have been upon the add-backs and EBIT to November 2004. In an affidavit which Mr Weeks swore in September 2006, shortly before the trial began in November 2006, he deposed to what he would have done if he had known of the inaccuracies in the financial information given to him in December 2004. That evidence dealt separately with three aspects of the financial information. First, it dealt with the non-recurring expenses or add-backs. Mr Weeks said: "If any annualised add-back (or combination of add-backs) of approximately $20,000 or greater was found to be erroneous, that is, if the profit for the five month period from 1 July 2004 to 30 November [2004] was approximately $8,000 inaccurate, then this would mean that the profit would not be sufficient to meet Healthy Water's obligations. I would not have entered into the Share Sale Agreement in these circumstances." He then dealt with two other issues not yet touched on in these reasons: an alleged misstatement of amounts owing to trade creditors and an alleged misstatement of the balance of Mr Campbell's loan account with the company. Of these two matters he said that, had he been aware "of either of these matters or both of them together" (emphasis added), he would not have entered into the share sale agreement, and he stated his reasons for that conclusion. The last aspect of the financial information dealt with in the affidavit of Mr Weeks concerned the overstatement of the sales revenue for December by $7,147 and an allegation he had made that the same document had overstated the EBIT for Healthy Water for December 2004 by approximately $25,000. The latter allegation about EBIT was not made good. The affidavit continued: 149 (2008) 66 ACSR 359 at 371 [44]; 26 ACLC 537 at 545-546. 150 (2008) 66 ACSR 359 at 371 [44]; 26 ACLC 537 at 545-546. "Had I been aware of these matters, I would not have entered into the Share Purchase Agreement for the following reasons: The profit in December of $12,438 represented a 62% reduction from the average profit achieved during the preceding 5 months. This would have reduced the annualised profit of Healthy Water and therefore reduced my assessment of the value of Healthy Water based on its EBIT such that I would not have offered to purchase one share for $850,000. In addition, a $25,000 reduction in the profit for December would have reduced Healthy Water's annualised profit and therefore cash flow to a level such that it would not have been able to meet its liabilities including those discussed in paragraph 80(c), above [including liabilities under the services agreements]." (emphasis added) The oral evidence of Mr Weeks did not add to or detract from the evidence set out in the paragraph of his affidavit last quoted. It will be noted that the effect of this aspect of Mr Weeks' evidence was that if two matters had been known to him (overstatement of sales revenue by $7,147 and overstatement of EBIT by $25,000) he would not have made the share sale agreement. But as the facts were found at trial, only one of those matters, overstatement of sales revenue by $7,147, was established. The trial judge noted151 that the accountants who gave evidence at the trial agreed that there had been an overstatement of Healthy Water's EBIT for December 2004, but only of between $15,318 and $20,022. There was no exploration at trial of what Mr Weeks' position would have been in these circumstances. There was no evidence from Mr Weeks that he would not have proceeded with the purchase if he had known only that the sales revenue for December 2004 had been $7,147 less than estimated. There was, therefore, no question of what credence was to be given to Mr Weeks' evidence of what he would have done if he had known more than he did when he made the share sale agreement. As is illustrated by Rosenberg v Percival152, albeit in a different context, assessment of evidence of what would have been done if more information had been known may not be easy. 151 (2007) 61 ACSR 144 at 193-194 [152]; 25 ACLC 302 at 347. 152 (2001) 205 CLR 434; [2001] HCA 18. What is important in the present case is that the evidence that was given by Mr Weeks about what he would have done if he had known more than he did was expressed in a way that distinguished between cases where knowledge of either of two matters would have meant he would not proceed and cases where he attached significance to knowledge of both of two matters. This being the only direct evidence on the subject it was not open to the Court of Appeal to infer, from its own assessment of the materiality of the representation and its own assessment of whether the representation was calculated to induce entry into a contract, that Mr Weeks would not have proceeded with the share purchase. Conclusions about Fair Trading Act claims For these reasons, the claims which Backoffice and Mr Weeks made under the Fair Trading Act about add-backs and EBIT to November 2004 and about sales revenue and EBIT for December 2004 failed. The claims made about add-backs and EBIT to November 2004 failed because the alleged contravention of the Act was not established. The same is true of the contravention alleged in relation to EBIT for December 2004. As for the claims concerning the estimate of sales revenue for December 2004, Backoffice and Mr Weeks established at trial that Mr Campbell had in this respect engaged in conduct that was misleading or deceptive or likely to mislead or deceive. But Backoffice and Mr Weeks did not prove that, had they known the truth, they would not have proceeded with the share purchase. Because it was not shown that Backoffice and Mr Weeks would not have proceeded with the purchase, their claims that they would not have outlaid $850,000 for a share which turned out to be worthless do not arise. It will be convenient to deal with the third form of claim under the Fair Trading Act (about the alleged deficiencies in Sched 3 to the share sale agreement) when dealing with the questions of breach of contractual warranties. Before dealing with those issues, however, it is necessary to say something briefly about the argument advanced in this Court that the provision of a warranty in the share sale agreement that, to the best of Mr Campbell's knowledge, all information provided material to the sale was "substantially accurate and complete and not misleading" was itself misleading or deceptive conduct. As is apparent from what has been said earlier in these reasons, by their amended summons, Backoffice and Mr Weeks made various allegations of representations concerning the add-backs and EBIT to November 2004, the sales revenue and EBIT for December 2004 and the contents of Sched 3 to the share sale agreement. The last paragraph of the contentions in the amended summons was: "Further, or in the alternative, by reason of the Express Representation and the Implied Representation the December 2004 Estimates were not substantially accurate complete and not misleading with the consequence that their provision was contrary to clause 10.1 of Schedule 1 and caused loss and damage to Backoffice." That paragraph did not make a claim of the kind now advanced. We were taken to no other material which would show that this claim that the provision of the warranty described was itself misleading or deceptive was in issue between the parties at trial. It is too late153 for Backoffice and Mr Weeks now to rely on it. On the second day of the hearing of the appeal leave was sought to amend the notice of contention to raise this argument. Leave should be refused. Breach of contractual warranties and the Sched 3 representations The trial judge concluded154 that Mr Campbell had breached the contractual warranties provided in the share sale agreement about the financial statements of Healthy Water contained in Sched 3 to the share sale agreement in three respects, namely, that Healthy Water: (a) owed trade creditors $12,360 more than was disclosed; (b) had a liability of $3,760 to Mr Campbell that was not disclosed; and (c) had adjusted net assets of only $148,326.10, not $210,856.89 as warranted. Having regard to her conclusion that there should be a compulsory sale of the share to Mr Campbell for $853,000, the trial judge decided155 that no damages would be allowed for these breaches. In their cross-appeal to the Court of Appeal, Backoffice and Mr Weeks alleged that the trial judge erred in not assessing damages for these breaches, and further that her Honour should have found other breaches of express warranties. Mr Campbell and Sentinel contended that the trial judge should not have found there to have been any breach of the express warranties. 153 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35; Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33. 154 (2007) 61 ACSR 144 at 215 [219]; 25 ACLC 302 at 366. 155 (2007) 61 ACSR 144 at 215 [220]; 25 ACLC 302 at 366. Two members of the Court of Appeal (Giles JA and Basten JA) did not decide156 these issues about breach of express warranties. The third member of the Court (Young CJ in Eq) concluded157 that the trial judge had not been shown to err in her conclusion that there had been the identified breaches of warranties but rejected the argument that there had been other breaches of warranty. Although Young CJ in Eq accepted that there were the identified breaches, he concluded158 that the matter was "of little moment as the damages flowing from the breaches were only nominal". This followed because, in his Honour's opinion, none of the breaches materially affected EBIT159 and, if the warranties had not been breached, Backoffice would still have bought the share at the price it paid. Reference has been made earlier in these reasons to the application by Backoffice and Mr Weeks seeking special leave to cross-appeal. They sought to argue that the majority of the Court of Appeal should have held that the findings of breach of contractual warranties made by the trial judge should not be disturbed. In addition, Backoffice and Mr Weeks sought to argue that it should be found that the overstatement of sales revenue and adjusted EBIT for December 2004 resulted in a breach of the express warranty that, to the best of Mr Campbell's knowledge, the information given to Backoffice or its advisers material to the sale of the share was "substantially accurate and complete and not misleading". Backoffice and Mr Weeks alleged that damages for these breaches of warranties should have been assessed at $440,000. The figure of $440,000 was arrived at by reference to expert valuation evidence given at trial that one share in Healthy Water was worth $410,000, not the sum of $850,000 paid for it. Valuation of the share at $410,000 was based on the company's historical earnings; both the price paid, and the competing evidence of value adduced at trial were based on the company's future earning capacity160. 156 (2008) 66 ACSR 359 at 395 [159] per Giles JA, 408 [223] per Basten JA; 26 ACLC 537 at 566, 577. 157 (2008) 66 ACSR 359 at 450 [549]; 26 ACLC 537 at 611. 158 (2008) 66 ACSR 359 at 450 [550]; 26 ACLC 537 at 611. 159 (2008) 66 ACSR 359 at 452 [585]; 26 ACLC 537 at 613. 160 cf (2007) 61 ACSR 144 at 192 [144]-[145] per Bergin J; 25 ACLC 302 at 346 and (2008) 66 ACSR 359 at 407 [216]-[217] per Basten JA; 26 ACLC 537 at 576. The parties accepted that in the appeal and cross-appeal to the Court of Appeal issue was joined about whether the trial judge erred in finding the breaches of warranties that she did. Because the issues about breaches of warranties and the damages to be allowed for any such breaches were not decided by the majority in the Court of Appeal, there is evident force in the arguments of Mr Campbell and Sentinel that they are issues that should be remitted for consideration by that Court. Yet it is also important to recognise that this litigation has already been protracted and that the costs of the litigation must now be much larger than the sum which Backoffice and Mr Weeks say should be allowed as damages for the alleged breaches. Continued prosecution of these claims or their defence can be commercially sensible only if each side would be able to pay what would be due if that side lost the litigation. But those are matters for the parties to consider; this Court is not able to do that. Despite the protraction of the litigation that is entailed, issues concerning the claims for breach of warranties that were raised by the appeal and the cross-appeal to the Court of Appeal should be remitted for consideration by that Court. The written submissions to the Court of Appeal may have been broader than those presented by the notice of cross-appeal filed in the Court of Appeal. Further, it is unnecessary to decide whether the issues just mentioned, as to the whole or part, fall within the terms of that notice or are caught up by the notice of contention in this Court and are remitted on that footing to the Court of Appeal. Counsel in this Court appeared to accept that it would be for the Court of Appeal, not this Court, to determine those issues. The issues are whether the trial judge erred in finding that there were breaches of contractual warranties in the three respects identified earlier (trade creditors, the liability to Mr Campbell, and adjusted net assets) and in certain other respects (amounts referable to the disposition of two motor vehicles, and add-backs and EBIT to 30 November 2004). In addition, on that remitter Backoffice and Mr Weeks should be permitted to argue that the failure to correct the overstatement of December sales revenue and the EBIT for December 2004 were breaches of the warranty in cl 10.1 of the share sale agreement, namely that, to the best of Mr Campbell's knowledge, all information provided material to the sale of the share was substantially accurate and complete and not misleading. These allegations about the Sched 3 deficiencies also give rise to claims under the Fair Trading Act. This being so, and the dispute in the Court of Appeal about the trial judge's finding that there were these alleged deficiencies having not yet been decided, those claims must also be remitted for further consideration by the Court of Appeal. On the further consideration of the issues that are remitted to the Court of Appeal it will be for that Court to decide, among other things, whether, having regard to what is decided by this Court and such matters as the course of proceedings at trial, the claims remitted are maintainable. In addition, questions of damages that would arise if there were found to be any of the alleged breaches of warranty that have been mentioned should also be remitted for consideration by the Court of Appeal. There is, however, one aspect of those questions of damages that should now be considered. Backoffice and Mr Weeks alleged, and it may be accepted, that the share Backoffice bought was worthless by the time the proceedings came to trial. The share was rendered worthless when the provisional liquidator realised the assets of Healthy Water for a price insufficient to make any return of capital to shareholders. Mr Weeks alleged that this came about as a result of Mr Campbell's conduct of the affairs of the company and it is convenient to assume for the purposes of argument, without deciding, that this is so. If, on the remitter to the Court of Appeal, Backoffice and Mr Weeks establish that Mr Campbell breached the warranties he gave in the share sale agreement, Backoffice is entitled to such damages as would put it in the position it would have been in if the contract had been performed according to its terms. In assessing those damages it would not be right to attribute any diminution in the value of the share that was a consequence of Mr Campbell's conduct of the affairs of Healthy Water to the breach of contractual warranties about the financial position of Healthy Water. That is, the damages to be assessed for breach of the contractual warranties are not to be assessed on the footing that the share acquired was worthless or on the footing that if the company's true financial position had been known there would have been no sale and purchase of the share. If there was one or more breaches of contractual warranties, there may well be questions presented by what appears to be the adoption of different bases for fixing the price of the share and for valuing the share. If the price paid by Mr Weeks was fixed by a method different from the method later used to assess the "true" value it is not self-evident that damages for breach of warranty should in this case be assessed as the difference between the price paid and the value of what was bought. This issue was not explored in argument in this Court. It is better considered on remitter to the Court of Appeal. Implied duty to co-operate Finally, it is necessary to notice and deal briefly with one further aspect of the cross-appeal which Backoffice and Mr Weeks sought special leave to institute. Backoffice and Mr Weeks submitted that Mr Campbell had breached his implied obligations under the shareholders agreement and the share sale agreement by not doing all things necessary on his part to enable Backoffice to have the benefit of those contracts and by acting in a manner calculated to deprive Backoffice of those benefits. They submitted that by these breaches Mr Campbell rendered Backoffice's share in Healthy Water worthless, and that on this account it should have damages assessed (in effect) as so much of the purchase price as was not made good by damages for Mr Campbell's breach of the contractual warranties. In their amended summons, Backoffice and Mr Weeks alleged that there were implied terms in the shareholders agreement and the share sale agreement that the parties would do all such things as are necessary on their part to enable the other to have the benefit of the agreement, and that neither would act in a manner calculated to deprive the other of the benefit of the agreement. Mr Campbell admitted the existence of the first limb of these terms but denied any breach. At trial, Bergin J considered161 these allegations in connection with the claim by Backoffice and Mr Weeks that Mr Campbell had breached the terms by causing Healthy Water not to pay what was due to Backoffice under its services agreement. In the Court of Appeal, however, Backoffice and Mr Weeks relied on the terms as supporting a broader allegation that Mr Campbell had, in effect, deprived them of the benefits of the acquisition of a half interest in the company. Only Young CJ in Eq dealt with this aspect of the matter and held162 that it was not made out. As Young CJ in Eq rightly pointed out163, care must be exercised in identifying both the content and operation of an implied obligation to co-operate lest it be at odds with the terms upon which the parties have expressly agreed. As advanced in this Court, the claim for breach of an implied obligation to co-operate was radically different from the claim that the trial judge had considered. It went far beyond a claim founded on the well-known rule in 161 (2007) 61 ACSR 144 at 218 [231]; 25 ACLC 302 at 368-369. 162 (2008) 66 ACSR 359 at 451 [562]-[563]; 26 ACLC 537 at 612. 163 (2008) 66 ACSR 359 at 450 [557]; 26 ACLC 537 at 611. Mackay v Dick164. In this Court, the claim was advanced as a reflex of the arguments that were advanced under the heading of oppression. That is, to the extent to which there was oppressive, prejudicial or discriminatory conduct it was said that such conduct constituted a breach of an implied obligation to co-operate. Neither the precise content of the term nor its particular application was explored in argument in this Court. Although described as an implied term that each would co-operate with the other, the content of the duty said to be imposed by the term was, in substance and effect, to bind each of two shareholders, in contract, not to give the other grounds for relief under Pt 2F.1 of the Corporations Act. A term having content of that kind goes well beyond the particular obligations undertaken in either the shareholders agreement, the share sale agreement, or in the constituent documents of Healthy Water. It is not a term necessary to give business efficacy to the parties' agreements165. Special leave to advance this ground should be refused. Oppression As noted at the outset of these reasons, Backoffice sought special leave to cross-appeal to reinstate the success it had had at trial in its oppression claims. Those claims were founded in the provisions of Pt 2F.1 (ss 232-235) of the Corporations Act. Special leave to cross-appeal on these grounds should be refused. Section 1337B(2) of the Corporations Act confers jurisdiction on the Supreme Court of each State with respect to civil matters arising under the 164 (1881) 6 App Cas 251 at 263: "[A]s a general rule ... where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect." See also Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607; [1979] HCA 51. 165 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 346-347 per Mason J; [1982] HCA 24. Corporations legislation166. One species of such matters is an application under Pt 2F.1. Section 234 identifies who can apply for an order; s 233 describes the orders that a court can make; and s 232 identifies the grounds for making an order under s 233. Section 232 provides: "The Court may make an order under section 233 if: the conduct of a company's affairs; or an actual or proposed act or omission by or on behalf of a company; or a resolution, or a proposed resolution, of members or a class of members of a company; is either contrary to the interests of the members as a whole; or oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company." Section 53 of the Corporations Act gives an expanded identification of the "affairs of a body corporate" for a number of provisions of the Act, including s 232. In particular, the affairs of a body corporate include "the promotion, formation, membership, control, business, trading, transactions and dealings" of the body167 and "the internal management and proceedings of the body"168. If one or more of the grounds identified in s 232 of the Corporations Act is established, the Court is empowered by s 233(1) to "make any order under this section that it considers appropriate in relation to the company". Ten species of order are identified – ranging from an order for winding-up to an order 166 A term defined in s 9. 167 s 53(a). 168 s 53(c). restraining a person from engaging in specified conduct or from doing a specified act, or requiring a person to do a specified act. One particular species of order that the court may make169 is an order "for the purchase of any shares by any member". It is not necessary to embark on any detailed examination of the findings made in the courts below about the course of events that happened so soon after completion of the share sale and acquisition. The facts found at trial showed that Mr Campbell excluded Mr Weeks from participation in the management of Healthy Water despite the agreement recorded in both the shareholders agreement and each of the services agreements that he and Mr Campbell were to be joint managing directors. Under an earlier form of companies legislation dealing with oppression of members, wrongful exclusion from participation in the management of the company was held in In re H R Harmer Ltd170 to be a species of oppressive conduct. Section 232 should not be read more narrowly. Wrongful exclusion from management may be a form of oppression. It is not to be supposed that the only conduct of a company's affairs that is to be classified as "oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member" is conduct of the company's affairs that is otherwise lawful. The fact that Mr Campbell's conduct was said to constitute breach of his or Sentinel's contractual obligations under the shareholders agreement, or the procuring of a breach by Healthy Water of its obligations under the services agreement with Backoffice, does not preclude engagement of the oppression provisions. Neither is it to be supposed that there cannot be oppression on the part of one who thinks that he or she is acting rightly171. It is therefore not to the point to examine Mr Campbell's motives for acting as he did. There may be an issue about whether deadlock in the affairs of a company would fall within s 232 of the Corporations Act. It is not necessary to explore these questions further in the present matter. It may be noticed, however, that the facts in the present matter revealed a clear case in which it was just and equitable172 that the company be wound up. The company as constituted after the 169 s 233(1)(d). 170 [1959] 1 WLR 62; [1958] 3 All ER 689. 171 cf M Dalley & Co Pty Ltd v Sims (1968) 120 CLR 603 at 606; [1968] HCA 82. 172 s 461(1)(k). share sale had evident similarities to a partnership and the two shareholders were at loggerheads173. The chief form of relief sought at trial was an order for compulsory purchase of Backoffice's share in Healthy Water for an amount not less than the sum paid for it. Although s 233(1)(d) gives the court power to make an order for the purchase of shares by a member, the Corporations Act is silent about the terms on which such a sale may be ordered. In particular, the Corporations Act does not identify the basis upon which the price for the shares is to be fixed if an order for compulsory purchase is made. Under earlier forms of the oppression provisions of companies legislation, orders were made for the compulsory sale of shares by one member to another at prices to be fixed according to various criteria. In some cases174 the price has been fixed at the value the shares would have had at the commencement of the proceedings but for the effect of the In other cases175 a date other than the date of oppressive conduct. commencement of the proceedings has been fixed. Again, there is no reason to give the present oppression provisions some narrower construction. In particular, the power given to the court by s 233(1)(d) should not be hedged about by implied limitations176. It is not necessary, however, to decide in this case how the power to fix a price for compulsory sale of Backoffice's share in Healthy Water could or should have been exercised. This was not a case in which there should have been an order for compulsory sale. By the time this matter came to trial, a liquidator had been appointed provisionally and the liquidator had sold the whole of the undertaking of Healthy 173 See, for example, In re Yenidje Tobacco Co Ltd [1916] 2 Ch 426; In re Westbourne Galleries [1973] AC 360; In re Wondoflex Textiles Pty Ltd [1951] VLR 458. 174 For example, Scottish Co-operative Wholesale Society Ltd v Meyer [1959] AC 324. 175 See, for example, In re London School of Electronics Ltd [1986] Ch 211 at 224, referring to the order made in In re Jermyn Street Turkish Baths Ltd [1970] 1 WLR 1194; [1970] 3 All ER 57, where the shares were to be valued on an inquiry as at the date of the Master's certificate. See also In re A Company [1983] 1 WLR 927 at 937; [1983] 2 All ER 854 at 862, where consideration was given to fixing the date of valuation as the date at which the applicant had been excluded. 176 See, for example, Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 421; [1994] HCA 5; The Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 301; [1998] HCA 20; Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at 279 [17]; [2000] HCA 30. Water. Both of those steps had been taken with the concurrence of both sides of the litigation. The amount recovered on sale of the undertaking of Healthy Water was applied in satisfaction of the costs and expenses of the provisional liquidation and some external creditors. Thus, when this matter came to trial, Healthy Water had no business and had no assets. Both shares in the company were then worthless. These considerations were of critical importance in deciding what order was to be made under Pt 2F.1 of the Corporations Act. Upon appointment of a provisional liquidator, any conduct of Healthy Water's affairs177 that was "oppressive to, unfairly prejudicial to, or unfairly discriminatory against" Backoffice (whether in its capacity as a member or in some other capacity) was brought to an end. Mr Campbell no longer controlled the affairs of the company. At or soon after the appointment of the provisional liquidator, and at least by the time of the liquidator's sale of the company's undertaking, the only affairs of Healthy Water being conducted were those undertaken by the liquidator with a view to realising Healthy Water's assets. Once those assets had been sold and the proceeds disbursed in the manner indicated, the winding-up of the company was inevitable. In those circumstances, no order should have been made on the application under Pt 2F.1 of the Corporations Act except an order for the winding-up of the company. It is not necessary to decide whether that conclusion follows because there was no power to make such an order in those circumstances or because the discretion to make such an order could be exercised only by refusing to do so. Because the current form of the oppression provisions in Pt 2F.1 was introduced178 with a view to making it clear that the Court may make orders even if the act, omission or conduct complained of has yet to occur or has ceased, it may very well be that the fact that there was no continuing oppression when this case came to trial does not entail that the Court had no power to make any of the orders for which s 233 provides. But that is a point that need not be decided. Given that there was no continuing oppression, and given that Healthy Water had no business and no assets, and was but an empty shell, no order for compulsory purchase of Backoffice's share should have been made. 178 Australia, House of Representatives, Corporate Law Economic Reform Program Bill 1998 (Cth), Explanatory Memorandum at 34 [6.132]. For these reasons a cross-appeal to this Court seeking to reinstate the order of the trial judge for compulsory sale and purchase of the share would enjoy no prospect of success. Special leave to cross-appeal on those grounds should therefore be refused. Conclusion and orders For these reasons, the appeal should be allowed. The orders of the Court of Appeal allowing the appeal and allowing the cross-appeal to that Court in part, and the consequential orders of the Court of Appeal setting aside the trial judge's declarations and orders of 29 March 2007 and the judgment given on 13 April 2007, should both stand. The respondents' application made on 4 February 2009 for leave to amend their notice of contention should be refused. Paragraphs 3 and 4 of the orders of the Court of Appeal made on 19 May 2008 entering judgment for Backoffice for $850,000 and disposing of the costs in the Court of Appeal should be set aside. The respondents' application for special leave to cross-appeal should be refused. The further hearing and determination of the issues raised in the proceedings in the Court of Appeal, but not decided by that Court, concerning breach of contractual warranties, the quantum of any damages to be allowed for such breaches, and Fair Trading Act claims in relation to the contents of Sched 3 should be remitted to the Court of Appeal. The parties should be given the opportunity sought in the course of the hearing in this Court to make such further submissions as to the costs of proceedings in this Court and in the courts below as they may be advised. The appellants should file and serve their submissions in writing about costs within 14 days of the date of this order and the respondents should file and serve their submissions in answer within seven days after the service of the appellants' submissions. |
HIGH COURT OF AUSTRALIA MINISTER FOR IMMIGRATION AND CITIZENSHIP APPELLANT AND SZJSS AND ORS RESPONDENTS Minister for Immigration and Citizenship v SZJSS [2010] HCA 48 15 December 2010 ORDER Appeal allowed. Set aside paragraphs 1 and 2(a) and (b) of the order of the Federal Court of Australia made on 24 November 2009 and, in lieu thereof, order that the appeal to that Court be dismissed. Appellant to pay the costs of the first and second respondents in this Court. On appeal from the Federal Court of Australia Representation S J Gageler SC, Solicitor-General of the Commonwealth with G T Johnson for the appellant (instructed by DLA Phillips Fox Lawyers) B W Walker SC with J R Young for the first and second respondents (instructed by Simon Diab & Associates Solicitors) Submitting appearance for the third respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration and Citizenship v SZJSS Immigration – Refugees – Review by Refugee Review Tribunal ("RRT") – RRT gave "no weight" to certain letters tendered in evidence by first respondent – RRT described the giving of certain oral evidence by first respondent as "baseless tactic" – Whether RRT fell into jurisdictional error by failing to give "proper, genuine and realistic consideration" to letters or by describing certain oral evidence of first respondent as "baseless tactic" – Whether RRT's reasons, to reasonable including use of expression "baseless apprehension of bias by reason of pre-judgment. tactic", gave rise Words and phrases – "jurisdictional error", "proper, genuine and realistic consideration", "reasonable apprehension of bias". Administrative Decisions (Judicial Review) Act 1977 (Cth), ss 5, 6. Migration Act 1958 (Cth), s 474. FRENCH CJ, GUMMOW, HAYNE, HEYDON, CRENNAN, KIEFEL AND BELL JJ. The first and second respondents, husband and wife and citizens of Nepal, arrived in Australia on 22 February 2006. Shortly afterwards, on 5 April 2006, each applied for a protection visa. A criterion for a protection visa under the Migration Act 1958 (Cth)1 is that the applicant is a non-citizen in Australia to whom the Minister is satisfied Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol2, or that the spouse or dependant of such an applicant is a non-citizen in Australia and the applicant holds a protection visa3. The Refugees Convention includes in its definition of a refugee any person who "owing to well-founded fear of being persecuted for reasons of … membership of a particular social group or political opinion" cannot or will not return to their home country4. Under Pt 7 of the Migration Act, the Refugee Review Tribunal ("the Tribunal") is under a duty to review "an RRT-reviewable decision" of the delegate of the Minister5 and in doing so the Tribunal is obliged to determine whether or not it is satisfied that the respondents meet the respective criteria referred to above. A delegate of the appellant refused the first respondent's application on 3 July 2006 in accordance with s 65 of the Migration Act. On 10 October 2006, the Tribunal affirmed that decision. The first and second respondents sought judicial review of that decision in the Federal Magistrates Court. On 15 August 2007, the Federal Magistrates Court set aside the decision and remitted the matter to the Tribunal to be determined according to law6. 1 Reprint No 11 contains the applicable text of the Act. 2 Migration Act, s 36(2)(a). 3 Migration Act, sub-ss 36(2)(b)(i) and (ii). 4 Article 1A(2) of the Refugees Convention as amended by Article 1(2) of the Refugees Protocol. 5 Migration Act, s 414(1). 6 SZJSS v Minister for Immigration and Citizenship [2007] FMCA 1495. Crennan Bell On 11 December 2007 the Tribunal, differently constituted, affirmed the delegate's decision for a second time. Again, the first and second respondents sought judicial review of that decision in the Federal Magistrates Court and on 8 July 2008, the second Tribunal decision was set aside and consent orders were made remitting the matter back to the Tribunal. On 15 October 2008 the Tribunal, differently constituted again, affirmed the delegate's decision for a third time. The first and second respondents sought judicial review of this third Tribunal decision in the Federal Magistrates Court (Lloyd-Jones FM). The application was dismissed on 11 September 20097. The first and second respondents then appealed to the Federal Court of Australia (Rares J) which allowed the respondents' appeal and quashed the decision of the Tribunal8. The Federal Court found that the Tribunal had fallen into jurisdictional error in finding that the first and second respondents are not refugees because it failed to give "proper, genuine and realistic consideration" to letters in evidence and because it described the giving of certain evidence by the first respondent as a "baseless tactic"9. The reasons of the Tribunal were also said by the Federal Court to give rise to a reasonable apprehension of bias10, and the matter was remitted for hearing and determination according to law11. It is against that decision that the Minister now appeals. The third respondent, the Tribunal, submits to any order this Court may make, save as to costs. Special leave to appeal to this Court was granted on the conditions that the Minister does not seek to disturb the costs orders below and that the Minister will pay the respondents' costs to the appeal, in any event. 7 SZJSS v Minister for Immigration and Citizenship [2009] FMCA 886. 8 SZJSS v Minister for Immigration and Citizenship (2009) 113 ALD 270. 9 SZJSS v Minister for Immigration and Citizenship (2009) 113 ALD 270 at 281 [46] and 282 [49]. 10 SZJSS v Minister for Immigration and Citizenship (2009) 113 ALD 270 at 11 SZJSS v Minister for Immigration and Citizenship (2009) 113 ALD 270 at 285. Crennan Bell The facts and procedural history From 1996 until 2006, there was a civil war in Nepal. In November 2006, a Comprehensive Peace Agreement was signed between the Nepalese government and the Communist Party of Nepal – Maoist (the "Maoists"). The Comprehensive Peace Agreement gave the Maoists a role in government. However, in February 2006, when the first and second respondents left Nepal, the Nepalese civil war had not yet ended. Subsequently, in 2008 there were parliamentary elections in Nepal for the Constituent Assembly. In his initial application and before both the first and second Tribunals, the first respondent claimed to fear harm from the Maoists, the Royal Nepalese Army and the police. Before arriving in Australia, he had been a school teacher and, as the owner of a shop, a businessman in the remote Turang village of Gulmi District, Nepal. The first respondent claimed consistently throughout each of the proceedings that the Maoists forced him, and other teachers, to pay compulsory donations out of their wages into Maoist coffers. Originally, the first respondent was forced to pay the equivalent of one day's wages per month, but this gradually increased until he was paying the equivalent of one week's wages each month. The first respondent claimed that he was forced to attend Maoist training camps with other teachers. Also, the first respondent claimed that the Maoists forced him to pay additional taxes in respect of a retail shop which he and his wife were running. The donations were referred to compendiously in the Tribunal's decision as "revolutionary taxes". The first respondent claimed that each of the then government of Nepal and the Maoists suspected he sympathised with the opposite side in the conflict. The donations to the Maoists were, he feared, interpreted by the local government authorities as support for the rebels, whereas the Maoists suspected that he was supplying the government with information and other assistance. He claimed that it would be unsafe and unreasonable for him to relocate to Kathmandu because the Maoists from whom he feared persecution had networks there. The first respondent's claim for protection was based both on his political opinions and his membership of particular social groups, as both a teacher and a businessman. The Tribunal accepted that "school teachers" and "business people" or "shopkeepers" were "particular social groups" in the sense required by the Refugees Convention. The Tribunal accepted that the first respondent had been Crennan Bell forced to participate in Maoist training camps for teachers but noted that in relation to "current-day Nepal" the only evidence the first respondent provided of such practices were examples from remote rural areas and there was no evidence provided of those programs continuing in the bigger cities. Before coming to Australia the first respondent resided in Kathmandu with the second respondent. His brother and his three children currently reside there. The Tribunal rejected the proposition that "if the [first respondent] becomes a school teacher again in Nepal, now or in the reasonably foreseeable future, he would be subjected to [forced participation in Maoist training camps] irrespective of where he might take up a teaching role". This finding was anchored in the fact that, during the period in which the first respondent has been in Australia, the civil war in Nepal has ended and the social and political conditions have changed. The first respondent modified his claims before the Tribunal in the light of these changes. During the course of a hearing on 13 August 2008, at which the first respondent gave evidence and presented arguments, it was put to him that the Maoists now have a parliamentary majority in Nepal and are in a position to draw on State taxes and desist from raising donations as they did formerly. Addressing this and other changes, the first respondent gave evidence to the Tribunal to the effect that a lot of people who used to be in danger are no longer in danger and said a lot of people who used to be in hiding are no longer in hiding. He also said his children who currently remain in Nepal are not in danger but he maintained his claim that he would not be safe in Nepal. Importantly, for present purposes, the Tribunal decided to give "no weight" to certain letters introduced into evidence which appeared to corroborate some of the first respondent's assertions. Issues The essential issues were whether the Tribunal fell into jurisdictional error by choosing to give no weight to the letters produced by the first respondent ("letters issue") and by describing the giving of certain evidence by him as a "baseless tactic" ("baseless tactic issue"), and whether the Tribunal's reasons demonstrated apprehended bias. The letters issue There were three letters to be considered, all written after the first and second respondents arrived in Australia on 22 February 2006. The first letter, in Crennan Bell English, dated 20 March 2006, addressed to the first respondent and signed by the Head Master of the secondary school at which he had taught, stated: "Having been unsatisfied with the social work and teaching you had been performing in VDC; Turang Majuwa Gulmi. We here by inform you that, the place you have been hiding can be protective. After your leave acceptance, too, they have been searching through dictators and some times by arm forces. Therefore we would like you not to come out and just stay at where you are." Another letter in English, also dated 20 March 2006, addressed to the first respondent and signed by the Principal of Polaris Secondary Boarding School (which the first and second respondents' daughters had attended) stated: "We had been teaching your kids for nine years long period. [Name] (Class-Seven), [Name] (Class-Five) & [Name], (Class-Four) who had been studying at this institution for 9, 7 and 6 years accordingly. We are now unable to be accepted as the boarders students for Maoist, the terrorists, have been challenging us time and again not to admit in this institution. Therefore we here by request you to manage your children where ever you feel comfortable and safe." The third letter dated 18 May 2006, addressed to the first respondent again from the Head Master at the school at which he had taught, was sent from and to the same address. As translated into English from Nepalese, it stated: "This is to inform you [first respondent] that your position as a teacher in [name of school] in Gulmi is no longer exist [sic] as you have not join [sic] the School after taking leave for three months until 2061/11/4 (Nepalese date) 16th February, 2006 (Australian date) due to your safety reason and various threats given to you. You are not required to come back and continue your job as a teacher in this School". It is convenient to set out the relevant parts of the Tribunal's decision concerning this evidence. Of the two letters from the Head Master dated 20 March and 18 May 2006, the Tribunal said: "The [first respondent's] claim to the effect that he would still face harm even in Kathmandu stems partly from his claim that the Maoists have been searching for him since he left Gulmi because they suspect he Crennan Bell spied on them to the local authorities back there. Although this claim appears supported by the text in the Gulmi headmaster's letters dated 20 March and 18 May 2006, the Tribunal gives no weight to it. It is undermined by the [first respondent's] evidence at the 13 August 2008 hearing about the local Maoist insurgents having treated pro- and imputed anti-Maoist teachers the same, requiring all of them to attend the training camps and incorporate the Maoist curriculum into their own. The claim also appears dependent on the [first respondent's] suggestion that he had been a member of [Amnesty International] long enough for him to become or appear to be an activist, and this claim is already dismissed. Although the Tribunal accepts that these two letters originated from the relevant school, the Tribunal gives no weight to their content in view of evidence the [first respondent] has presented the Tribunal over time undermining his claims about his purported political and social activism." The Tribunal was of the view that the first respondent "exaggerated and distorted the significance of his having joined [Amnesty International] in September 2005" in the circumstances that he gave evidence that the Maoists began their training camps in 2000. It was also noted that the first respondent joined Amnesty International one month before he and his wife obtained passports; they travelled to Australia in February 2006. The Tribunal also gave the letters from the Head Master no weight because it came to the view that both of the letters and their contents were solicited. Of the Polaris letter, dated 20 March 2006, the Tribunal said: "Although the 'Polaris' school letter does not refer to the [first respondent] being a political activist, and is therefore not undermined by the [first respondent's] oral evidence to the Tribunal over time, the Tribunal still gives this no weight. Even allowing for the possibility that the local Maoist insurgents in Gulmi stopped schools from having boarders, no evidence before the Tribunal suggests that such action in itself was, or would be indicative of a real chance of, Convention-related persecution. The letter speaks of an action undertaken in the past in a particular location prior to the recent [change] in the social-political map in Nepal. The Tribunal gives weight to the fact that the [first respondent's] children are all attending private schools in Kathmandu, and facing no pressure from the Maoists. The [first respondent] has not satisfied the Tribunal that Crennan Bell their situation as students and resident of Kathmandu is in any even remote danger of changing." Revolutionary taxes – the baseless tactic issue It is also convenient to set out the relevant parts of the Tribunal's decision concerning the Tribunal's description of the giving of certain oral evidence by the first respondent as a "baseless tactic": "The [first respondent] claimed to the Department and to the [Tribunal] that as teachers and business people he and his wife were harassed and punished by the Maoists in the form of obligatory, increasing revolutionary taxes, the donations referred to throughout this decision. The Tribunal is not satisfied on the evidence before it that school teachers are currently being charged revolutionary taxes under threat of violence in Kathmandu, where the [first respondent] was last residing. The Tribunal is not satisfied that if the [first respondent] became a school teacher in Kathmandu or other large cities, he would be obliged to donate to the Maoists or face persecutory threats for refusing … For that matter, the Tribunal is not satisfied on the evidence before it that, irrespective of where he might reside in Nepal, the [first respondent] would face a real chance of the resumption in forced donations to the Maoists upon his becoming a businessman or shopkeeper again. When the Tribunal asked him why he could not come out of hiding in Kathmandu now and live there like his brother, he did not suggest that this was because he is a businessman and because his brother is not, or suggest in Kathmandu face a real chance of Convention-related harm. He cited, as the only distinguishing factor, the fact that he is by vocation a school teacher. that businessmen The Tribunal is of the view that to a very large part, the [first respondent]'s reference to being a school teacher at this point was a baseless tactic to help him address the potentially adverse impression the Tribunal disclosed to him after he said that people who used to be in hiding from the Maoists are now living out in the open." Crennan Bell Federal Court decision The appeal to the Federal Court followed the Federal Magistrate's determination that the Tribunal decision contained no jurisdictional error. In their Notice of Appeal to the Federal Court, the first and second respondents advanced a claim that the Tribunal had failed to give "proper, genuine and realistic consideration" to the evidence before it. The Federal Court's reasoning included the following12: "The … [T]ribunal did not find that the two headmasters were prepared to write falsehoods in the letters. I cannot conceive how any rational, reasonable approach to the evaluation of that evidence could give it 'no weight'. I am satisfied rather that the … [T]ribunal was not genuinely considering the [respondents'] claims as corroborated by the letters on the material before it. It used the formula of giving material 'no weight' as a basis on which it might ignore probative, relevant and highly supportive material corroborating the factual basis of the fears which the [first respondent] claimed. It did this simply as a basis for putting the evidence to one side, having said that it had looked at it. … I am of opinion that when the … member said that he gave no weight to the three letters, he simply recited that he had considered them only to discard them. This was not a proper, genuine or realistic evaluation of this material. … Here, the … [T]ribunal disabled itself from assessing the [first respondent's] case in relation to his fear of persecution in [Kathmandu], by putting to one side as having no weight, letters that corroborated his claim that he continued to be pursued in [Kathmandu] and by characterising as 'a baseless tactic' the continued maintenance of his original claim that as a teacher in [Kathmandu] he feared suffering persecution because the Maoists were still pursuing him. … Not only was the attribution of a 'baseless tactic' made without evidence, it was contrary to the evidence. … 12 SZJSS v Minister for Immigration and Citizenship (2009) 113 ALD 270 at Crennan Bell A fair-minded lay observer or properly informed lay person would find the use of the language 'baseless tactic' disturbing in the context of this tribunal's reasoning. Coupled with the … member using the 'no weight' formulation to shut out powerfully corroborative independent evidence, verified at the [T]ribunal's earlier request by the Australian Embassy in Nepal, I am satisfied that a fair-minded lay observer or properly informed lay person would regard this [T]ribunal member as having an apparent bias against the [first respondent's] account". Was there jurisdictional error? General principles governing the limited role of the courts in reviewing administrative error have long been identified. As Mason J observed in Minister for Aboriginal Affairs v Peko-Wallsend Ltd13, "mere preference for a different result, when the question is one on which reasonable minds may come to different conclusions" is not a sufficient reason for overturning a judicial decision upon a review. Further, Brennan J said in Attorney-General (NSW) v Quin14: "The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone." In 1989 with the codification of migration policy the Migration Act was amended significantly. At that time, judicial review of migration decisions was conducted under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("ADJR Act"). Grounds for review under s 5(1) of the ADJR Act include the ground that "the making of the decision was an improper exercise of the power conferred" by the relevant enactment15. Section 5(2) provides that the reference to "an improper exercise of a power" includes a reference to "failing to take a relevant consideration into account"16, "an exercise of a power that is so unreasonable that 13 (1986) 162 CLR 24 at 48; [1986] HCA 40. 14 (1990) 170 CLR 1 at 36; [1990] HCA 21. 15 ADJR Act, s 5(1)(e). 16 ADJR Act, s 5(2)(b). Crennan Bell no reasonable person could have so exercised the power"17, and "any other exercise of a power in a way that constitutes abuse of the power"18. Section 5(2)(f) identifies as a ground for review "an exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case". Section 6 provides further statutory grounds for review of conduct related to the making of decisions, which include a ground that the making of the proposed decision would be an improper exercise of power conferred by the relevant enactment19. In Khan v Minister for Immigration and Ethnic Affairs20, Gummow J considered a migration appeal brought in 1987, when such appeals were decided under the ADJR Act. His Honour construed an improper exercise of power as including a reference to an exercise of a discretionary power in accordance with a rule or policy, without regard to the merits of a particular case. His Honour found that in considering all relevant material placed before him, the Minister's delegate was required to "give proper, genuine and realistic consideration to the merits of the case and be ready in a proper case to depart from any applicable policy."21 On 1 September 1994, Pt 8 of the Migration Act was introduced22. The new Pt 8 scheme for judicial review differed significantly from the provisions of ss 5 and 6 of the ADJR Act; it contained provisions which sought to exclude 17 ADJR Act, s 5(2)(g). 18 ADJR Act, s 5(2)(j). 19 ADJR Act, s 6(1)(e). 20 (1987) 14 ALD 291. 21 (1987) 14 ALD 291 at 292; see also Shand v Minister for Immigration and Ethnic Affairs [1987] FCA 103, and Broussard v Minister for Immigration and Ethnic Affairs (1989) 21 FCR 472. 22 As a result of the Migration Reform Act 1992 (Cth). Note that Pt 8 was initially numbered Pt 4B but was later renumbered by the Migration Legislation Amendment Act 1994 (Cth). Crennan Bell judicial review of migration decisions23 on numerous grounds, which included the grounds of failing to take relevant considerations into account24 and a breach of the rules of natural justice25. Whilst recognising that statutory limits were then prescribed which bore upon the construction of improper exercise of power26, in Minister for Immigration and Multicultural Affairs v Yusuf27, McHugh, Gummow and Hayne JJ observed that jurisdictional error may include ignoring relevant material in a way that affects the exercise of a power. It is sufficient for present purposes to note that from October 200128, Pt 8 as discussed above was repealed and replaced with the current Pt 8, including the privative clause provisions of s 474, which do not protect decisions involving jurisdictional error or oust the jurisdiction conferred by s 75(v) of the Constitution29. In NAIS v Minister for Immigration and Multicultural and Indigenous Affairs30, the Minister accepted that a statutory provision requiring a Tribunal to give an applicant an opportunity to appear before it and give evidence31 implies that such evidence is to be given proper, genuine and realistic consideration. The Minister reiterated that position in this case. 23 Of the Immigration Review Tribunal (the forerunner of the Migration Review Tribunal) and the Tribunal. 24 Migration Act, s 476(3)(e) (as it then stood). 25 Migration Act, s 476(2)(a) (as it then stood). 26 Migration Act, s 476(3) (as it then stood). 27 (2001) 206 CLR 323 at 351-352 [82]-[84]; [2001] HCA 30. 28 As a result of the Migration Amendment (Judicial Review) Act 2001 (Cth). 29 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 508 [83] per Gaudron, McHugh, Gummow, Kirby and Hayne JJ; [2003] HCA 2. 30 (2005) 228 CLR 470 at 482-483 [37] per Gummow J and 526 [171] per Callinan and Heydon JJ; [2005] HCA 77. 31 Migration Act, s 425(1). Crennan Bell In Swift v SAS Trustee Corporation32, Basten JA (with whom Allsop P agreed) noted Khan's case and said of the language of "proper, genuine and realistic consideration": "That which had to be properly considered was 'the merits of the case'. Taken out of context and without understanding their original provenance, these epithets are apt to encourage a slide into impermissible merit review". The first and second respondents contended that the Tribunal's treatment of the facts, more particularly the letters, was arbitrary, capricious, irrational and unreasonable, and accordingly was inconsistent with the Tribunal's statutory duty to review. It was submitted that the Federal Court's findings of irrationality, unreasonableness33 (without describing it as such) and a constructive failure to exercise jurisdiction were wholly consistent with the accepted principles governing judicial review. The Minister contended that the weight to be accorded to the letters, and the factual matters to which they gave rise, were entirely matters for the Tribunal as they concerned the merits of the application. It was submitted that the Federal Court employed the language of "proper, genuine and realistic consideration" to register the Court's response to a weighing of the evidence with which the Court disagreed. This, it was said, does not amount to jurisdictional error of the kind discussed by this Court in Minister for Immigration and Citizenship v SZMDS34. The Minister's submissions on the letters issue must be accepted as on a fair reading of the whole of the Tribunal's decision, when the Tribunal said that it gave the letters "no weight" it was referring to the fact that it did not accept the letters as evidencing that the first respondent was in some danger from the Maoists in Kathmandu. This was in large part because of social and political changes which had occurred since the letters were written. The evidence given 32 [2010] NSWCA 182 at [45]. 33 Of the kind identified with Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. 34 (2010) 240 CLR 611; [2010] HCA 16. Crennan Bell by the first respondent, including his evidence about the effect of those changes, undermined his claim of political and social activism, thereby contradicting the support which the letters gave to his assertion that Maoists were continuing to pursue him in Kathmandu. The weighing of various pieces of evidence is a matter for the Tribunal35. It has been recognised that to describe reasoning as irrational or unreasonable may merely be an emphatic way of disagreeing with it36. In referring to "any rational, reasonable approach to the evaluation" and the need for "a proper, genuine or realistic evaluation" of the letters, the Federal Court was registering emphatic disagreement with the Tribunal's assessment of the factual matters to which the letters were relevant. It appears the Federal Court would have weighed the letters differently which seems to suggest that, on the basis of the letters, the Federal Court would have been satisfied that Maoists were pursuing the first respondent in Kathmandu. When employing the formula "proper, genuine and realistic evaluation" in respect of the letters, the Federal Court did not appear to consider that one of the matters against which the Tribunal weighed the letters was the first respondent's evidence of the effects of social and political changes in Nepal. the "highly Whether letters were supportive" or "powerfully corroborative" (as they appeared to the Federal Court) of the first respondent's claim that Maoists were pursuing him in Kathmandu was a question upon which reasonable minds might come to different conclusions. The Tribunal's preference for other evidence, including the first respondent's own evidence about numerous matters, including the effect of social and political changes from, and since, 2006, over the evidence of the letters written during the first half of 2006, could not be said to constitute a failure to take into account a relevant consideration as canvassed in Peko-Wallsend or Yusuf's case. Nor could it be said to be a failure to respond to a substantial argument thereby giving rise to the kind of error 35 Abebe v Commonwealth (1999) 197 CLR 510 at 580 [197] per Gummow and Hayne JJ; [1999] HCA 14. 36 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1167 [5] per Gleeson CJ; 198 ALR 59 at 61; [2003] HCA 30. Crennan Bell identified in Dranichnikov v Minister for Immigration and Multicultural Affairs37. implication The conclusion that the Tribunal erred in giving "no weight" to the letters, with it should have given different, presumably the determinative, weight to them, depended on the Federal Court reviewing the factual findings of the Tribunal rather than the process by which it arrived at its conclusions. that Further, the Federal Court's conclusion that the Tribunal erred in this way did not, in the light of the whole of the evidence, require the further conclusion that the result in the Tribunal was manifestly irrational or unreasonable. Nor did it support a finding of any other failure which might be characterised as jurisdictional error. As to the Tribunal's use of the expression "baseless tactic" set out above, considered in context, the expression was no more than an indication by the Tribunal that it did not accept the first respondent's evidence that he was at risk of being targeted by Maoists in Kathmandu, as a teacher, particularly as his reference to being a teacher was in response to being alerted to the contradictory effect of his own evidence that people who used to be in hiding from Maoists are now living out in the open. It was for that reason that the Tribunal described the giving of this answer as a "tactic". It is clear from the entirety of the Tribunal's reasons that the Tribunal accepted that the first respondent had been a teacher. What the Tribunal considered "baseless" was the first respondent's claim that being a teacher in Kathmandu would attract the attention of the Maoists. No doubt the Tribunal might have used a simpler expression to convey its evaluation of the answer given by the first respondent to the Tribunal's query as to why he could not, like his brother, live safely in Kathmandu. Nevertheless, the evaluation of that answer was a matter for the Tribunal. Irrespective of the use of the expression "baseless tactic", the Tribunal did not accept "that the [first and second respondents] left Gulmi for Kathmandu, and then for Australia, or seeks [sic] to remain here, because the Maoists were and are searching for them". Further, the Tribunal was "satisfied that both the [first and second respondents] can safely and practically join the rest of their family residing in Kathmandu". 37 (2003) 77 ALJR 1088; 197 ALR 389; [2003] HCA 26. Crennan Bell The Federal Court's disapproval of the Tribunal's use of the expression "baseless tactic" did not reveal that these conclusions had no basis in, or were contrary to, the evidentiary material before the Tribunal. Understood correctly, the Tribunal's use of the expression "baseless tactic" did not give rise to any jurisdictional error. Was there a reasonable apprehension of bias? The first and second respondents contended reasonable apprehension of bias arose because in its reasons the Tribunal categorised the first respondent's critical or central claim that as a teacher he was singled out for harassment as a "baseless it was submitted revealed a pre-judgment of a critical issue as to whether the first respondent could live in Kathmandu. tactic", which that a The Minister submitted that the Tribunal giving no weight to the letters or using the expression "baseless tactic" neither alone nor in combination gave rise to a reasonable apprehension of bias of the kind recognised in Re Refugee Review Tribunal; Ex parte H38. In that case, apprehended bias arose as a result of conduct during the course of the hearing; here the allegation of apprehended bias was based on language used in the reasons. It was further contended by the Minister that in conducting an inquisitorial enquiry the Tribunal was not required to accept uncritically the first respondent's claims, a matter which would be understood by the fair-minded and informed lay observer. The use by the Tribunal of the expression "baseless tactic" has already been discussed above. The assessment by the Tribunal of whether the first respondent could, like his brother, live in Kathmandu was based on evidence, including the first respondent's own evidence of the effects of social and political changes in Nepal. It was also based on the absence of evidence that teachers were at risk from Maoists in large cities in Nepal like Kathmandu. The expression "baseless tactic" was used by the Tribunal in its reasons as part of its rejection of the first respondent's claim that he was at risk, in Kathmandu, as a 38 (2001) 75 ALJR 982; 179 ALR 425; [2001] HCA 28. Crennan Bell teacher. As such, it does not provide any foundation for the contention that a central but contestable issue was pre-judged by the Tribunal. Finally, it should be mentioned that in upholding the appeal before it, the Federal Court referred39 to the Tribunal's failure to refer to the effects of delay and the requirement for the first respondent to repeat evidence, and in doing so referred to both NAIS40 and SZIIF v Minister for Immigration and Citizenship41. This was part of the reasoning that the conduct of the Tribunal in giving "no weight" to the letters, and its use of the expression "baseless tactic", constituted jurisdictional errors characterised as a constructive failure to exercise The evidence which the first respondent gave before the three different Tribunals was not affected by significant delay which might have been expected to affect the Tribunal's capacity to assess the credibility of the first respondent. Rather it was affected by the fact that relevant and significant social and political changes had occurred in Nepal since 2006 and those changes were addressed by the first respondent in a particular way in the third Tribunal. The relevant date for deciding the existence of a well-founded fear of persecution was in 2008 at the time of the third Tribunal's decision. As already explained, no jurisdictional error was shown by the Tribunal's treatment of the letters produced in evidence or by the Tribunal's use of the expression "baseless tactic" to describe the giving of certain evidence. Nor was jurisdictional error shown otherwise in the Tribunal's handling of the fact that the first respondent gave evidence over time before three differently constituted Tribunals. For these reasons, the appeal should be allowed and the decision of the Federal Court set aside. 39 SZJSS v Minister for Immigration and Citizenship (2009) 113 ALD 270 at 40 (2005) 228 CLR 470 at 475 [8] per Gleeson CJ. 41 (2008) 102 ALD 366 at 380 [83] per Weinberg J. 42 SZJSS v Minister for Immigration and Citizenship (2009) 113 ALD 270 at 283 [55]-[57] and 285 [64]. Crennan Bell Orders It should be ordered that: The appeal be allowed. Paragraphs 1 and 2(a) and (b) of the order made by the Federal Court on 24 November 2009 be set aside and in place thereof order that the appeal to that Court be dismissed. The Minister pay the costs of the first and second respondents in this Court. |
HIGH COURT OF AUSTRALIA APPELLANT AND THE STATE OF WESTERN AUSTRALIA RESPONDENT Rodi v Western Australia [2018] HCA 44 10 October 2018 ORDER Appeal allowed. Set aside orders 5 and 6 of the orders of the Court of Appeal of the Supreme Court of Western Australia made on 21 April 2017 and, in their place, order that: the appellant's application for an extension of time to appeal be granted; the appeal be treated as instituted and heard instanter and allowed; the appellant's conviction be quashed; and a new trial be had. On appeal from the Supreme Court of Western Australia Representation M D Howard SC and R R Joseph for the appellant (instructed by Norton Rose Fulbright Australia) A L Forrester SC with L M Fox for the respondent (instructed by Director of Public Prosecutions (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Rodi v Western Australia Criminal law – Prohibited drug – Appeal against conviction – Fresh evidence – Miscarriage of justice – Where appellant convicted of possession of prohibited drug with intent to sell or supply it to another – Where expert witness gave evidence at trial casting doubt on credibility of appellant's testimony – Where expert witness gave evidence in earlier proceedings inconsistent with evidence given in appellant's proceedings – Where earlier inconsistent evidence not disclosed to appellant at trial – Where Court of Appeal of Supreme Court of Western Australia admitted expert witness's earlier inconsistent evidence as fresh evidence but determined that no miscarriage of justice had occurred – Whether miscarriage of justice occurred. Words and phrases – "credible and cogent", "fresh evidence", "miscarriage of justice", "new evidence", "onus of proof", "significant possibility of acquittal", "yield". Misuse of Drugs Act 1981 (WA), ss 6(1)(a), 11(a). KIEFEL CJ, BELL, KEANE, NETTLE AND GORDON JJ. On 14 April 2012, police officers executed a search of the appellant's home. They located a total of 925.19 g of cannabis in the house. Subsequently, the appellant was charged on indictment in the District Court of Western Australia with one count of possession of a prohibited drug, namely cannabis, with intent to sell or supply it to another, contrary to s 6(1)(a) of the Misuse of Drugs Act 1981 (WA). The trial At the beginning of the trial, the appellant formally admitted that he was in possession of the cannabis found by the police1. Because of the quantity of cannabis found in the appellant's possession, he was deemed by s 11(a) of the Misuse of Drugs Act to have had the cannabis in his possession with intent to sell or supply it to another "unless the contrary [was] proved" by him. The prosecution tendered evidence that the police, in searching the appellant's home on 14 April 2012, found a cardboard box and plastic shopping bags in the shower recess of the bathroom containing approximately 531 g of cannabis head. A set of electronic scales and scissors were also located in the shower recess. A box of clip seal bags was also found in the bathroom. About 364 g of cannabis head was found drying on a clothes rack set up on a bed in one of the bedrooms. A little more than 29 g of cannabis, clip seal bags containing cannabis seeds, and smoking implements were found in the laundry. Three cannabis plants, in poor condition, were found at the rear of the premises2. The appellant gave evidence that the cannabis was entirely for his personal use and not intended for sale. He said that all of the cannabis found in his house was harvested from two of the plants located at his home3. He said that he had grown the plants from seeds in pots, and that he used the cannabis to relieve pain in his back caused by injuries suffered at work and in a minor motor car accident4. 1 Rodi v Western Australia (2017) 51 WAR 96 at 100-101 [18]-[19]. 2 Rodi v Western Australia (2017) 51 WAR 96 at 125 [164]. 3 Rodi v Western Australia (2017) 51 WAR 96 at 106 [57], 129 [184]. 4 Rodi v Western Australia (2017) 51 WAR 96 at 105 [55]. Bell Nettle Gordon In cross-examination, the appellant said that he did not use the electronic scales or the clip seal bags to weigh and package cannabis for sale. He said that he intended to pack quantities of about 50 g of head material into 12 bags to be stored in his freezer after discarding about 35 per cent of the cannabis which was leaf material. He intended to use this stored material to ease his back pain over the next 12 months5. He said that the plants had taken nine months to grow to As a result of the cross-examination of a prosecution witness by the appellant's counsel, the prosecutor, anticipating that the appellant would give evidence that all of the cannabis in his possession came from two of the plants found on his premises, called evidence from Detective Coen that it was his mature naturally grown female cannabis plants typically yield between 100 g and 400 g of cannabis head material; it was rare to see a cannabis plant produce 300 g to 400 g of head material; and he would expect the yield from the two plants located at the rear of the appellant's house to be at the lower end of the 100 g to 400 g scale. The appellant's counsel did not object to Detective Coen's evidence, or seek to cross-examine Detective Coen in respect of this evidence8. The jury returned a verdict of guilty. The appellant was sentenced to 12 months' imprisonment. 5 Rodi v Western Australia (2017) 51 WAR 96 at 106 [57]. 6 Rodi v Western Australia (2017) 51 WAR 96 at 106 [58]. 7 Rodi v Western Australia (2017) 51 WAR 96 at 104-105 [47]-[48], 124 [159], 8 Rodi v Western Australia (2017) 51 WAR 96 at 105 [52]. Bell Nettle Gordon The Court of Appeal The appellant, having allowed the period within which to appeal to expire, sought an extension of time within which to appeal against his conviction. His proposed appeal was grounded in the contention that "as a result of fresh or new evidence a miscarriage of justice has occurred"9. His application for an extension of time was refused by a majority of the Court of Appeal of the Supreme Court of Western Australia (Buss P and Newnes JA; Mitchell JA dissenting) on the basis that there was no merit in his proposed appeal10. New evidence The new evidence on which the appellant relied consisted of transcripts of testimony given by Detective Coen in earlier trials. These transcripts revealed that Detective Coen had previously given evidence to the effect that naturally grown female cannabis plants may yield between 300 g and 600 g of head material11 ("the Earlier Coen evidence"). A yield above the mid-level of that range was, of course, consistent with the appellant's account that the head material in his possession had come from two of the three plants found at his house. The prosecution had not disclosed the Earlier Coen evidence to the appellant at trial, and the appellant's counsel did not know of it. The Earlier Coen evidence was admitted by the Court of Appeal pursuant to s 40(1)(e) of the Criminal Appeals Act 2004 (WA), which allows an appeal court to "admit … other evidence" in its discretion12. The Court of Appeal also admitted additional evidence adduced by the State from Detective Coen13. He explained that he had changed his earlier opinion about cannabis yield per plant by reducing the range from 300 g to 600 g 9 Rodi v Western Australia (2017) 51 WAR 96 at 108 [69]. 10 Rodi v Western Australia (2017) 51 WAR 96 at 100 [9]. 11 Rodi v Western Australia (2017) 51 WAR 96 at 125 [160]. 12 Rodi v Western Australia (2017) 51 WAR 96 at 116-117 [106]. 13 Rodi v Western Australia (2017) 51 WAR 96 at 116-117 [106]. Bell Nettle Gordon to 100 g to 400 g after his own experiments and discussions with growers of cannabis about the subject14. He explained further that, in the witness statements he made after this change in his opinion, he qualified his evidence by referring to his previous views and explained that his opinion had changed15. It is convenient to note here that no such qualification was made by him in his evidence at trial in the present case. In the Court of Appeal, Detective Coen also gave evidence under cross-examination to the effect that16: it was possible for a cannabis plant to yield less than 100 g, and that he has seen plants yield between 500 g and 600 g; he would not be surprised by a plant yielding between 500 g and 600 g; and in his experience, plants yielding very large amounts of cannabis were grown naturally (as the appellant's plants had been) rather than hydroponically. Indeed, Detective Coen said that in one of his experiments he saw a naturally growing cannabis plant that yielded 600 g of head material17. In the Court of Appeal, the State also called evidence from Ms White of Counsel, who had been the State prosecutor at trial. Ms White's evidence was that she had no idea until the first day of the trial that the appellant's defence would be that the cannabis found inside his house came from the plants found growing outside his house18. Ms White said that it was only then that she thought to ask Detective Coen to give evidence of cannabis yield and in particular 14 Rodi v Western Australia (2017) 51 WAR 96 at 109 [79]. 15 Rodi v Western Australia (2017) 51 WAR 96 at 109 [81]. 16 Rodi v Western Australia (2017) 51 WAR 96 at 110-111 [83(h)], 133 [209]. 17 Rodi v Western Australia (2017) 51 WAR 96 at 137 [228]. 18 Rodi v Western Australia (2017) 51 WAR 96 at 126 [167]. Bell Nettle Gordon whether the cannabis found at the appellant's house could have come from the plants found outside his house19. The decision Buss P (with whom Newnes JA agreed) accepted that the Earlier Coen evidence was fresh evidence in the sense that "the appellant could not have obtained prior to the trial, by the exercise of reasonable diligence and for use at the trial, details of Detective Coen's previous opinion on typical cannabis yields"20. His Honour was also prepared to assume, without deciding the point, that there had been a breach of the prosecution's duty of disclosure under s 95(6) of the Criminal Procedure Act 2004 (WA) in relation to the Earlier Coen evidence21. Nevertheless, his Honour concluded that neither the fresh evidence nor the non-disclosure of the Earlier Coen evidence established that a miscarriage of justice had occurred. For the purposes of the appeal to this Court it is material to note that this was for reasons which included that22: once the appellant's possession of the cannabis was admitted, the State had no further onus of proof to discharge23; the appellant called no expert evidence, and did not object Detective Coen's giving of expert evidence on cannabis yields on the ground that he was not qualified to do so, or challenge his relevant evidence-in-chief in cross-examination24; there was a reasonable explanation for defence counsel's decision not to challenge Detective Coen's opinion evidence about typical cannabis 19 Rodi v Western Australia (2017) 51 WAR 96 at 127 [175]-[176]. 20 Rodi v Western Australia (2017) 51 WAR 96 at 122 [140]. 21 Rodi v Western Australia (2017) 51 WAR 96 at 122 [142]. 22 Rodi v Western Australia (2017) 51 WAR 96 at 119-124 [118]-[151]. 23 Rodi v Western Australia (2017) 51 WAR 96 at 119 [118]. 24 Rodi v Western Australia (2017) 51 WAR 96 at 119-120 [119]-[124]. Bell Nettle Gordon yields, and no incompetence on the part of defence counsel at trial was alleged25; and Ms White was an honest witness whose evidence should be accepted. In this regard, prior to the commencement of the trial Ms White did not know of the nature of the appellant's defence, or that typical yields from cannabis plants would be in issue in the trial26. In addition, and that Detective Coen's explanation for his change in opinion on typical cannabis yields was "credible and cogent"27. importantly, Buss P held While Buss P observed that the Earlier Coen evidence would have been admissible only as a prior inconsistent statement and not as proof of the facts stated28, his Honour acknowledged that the evidence given by Detective Coen in cross-examination in the Court of Appeal was evidence that he had seen cannabis plants that yielded between 500 g and 600 g29. Nevertheless, his Honour went on to conclude that30: "there is no significant possibility that, on the whole of the trial record and the additional evidence, a fact-finding tribunal, acting reasonably, would be satisfied that the appellant has established on the balance of probabilities that he did not intend to sell or supply to another any of the 925.19 g of cannabis." In dissent, Mitchell JA concluded that a miscarriage of justice had occurred because the appellant had been deprived of an opportunity to make an effective challenge to Detective Coen's evidence31. His Honour noted that the 25 Rodi v Western Australia (2017) 51 WAR 96 at 120-121 [125]-[128]. 26 Rodi v Western Australia (2017) 51 WAR 96 at 121 [129]-[131]. 27 Rodi v Western Australia (2017) 51 WAR 96 at 123 [147]-[148]. 28 Rodi v Western Australia (2017) 51 WAR 96 at 123 [143]. 29 Rodi v Western Australia (2017) 51 WAR 96 at 123 [149]. 30 Rodi v Western Australia (2017) 51 WAR 96 at 124 [150]. 31 Rodi v Western Australia (2017) 51 WAR 96 at 136 [223], 138 [231]. Bell Nettle Gordon "extent of the change in [Detective Coen's] position was dramatic"32, and that the 925.19 g of cannabis found was well within the 600 g to 1200 g range suggested by the Earlier Coen evidence. Detective Coen's evidence at trial had been the basis for a contention by the prosecution that the appellant was lying in his evidence about the source of his cannabis33. In this regard, Mitchell JA said34: "[T]he fresh evidence [was] at least capable of calling into question an important aspect of the State's evidence, which was potentially influential in the jury's assessment of the appellant's evidence." The appeal to this Court In this Court, the appellant submitted that his conviction should have been set aside by the Court of Appeal on the basis that: the fresh evidence gave rise to a significant possibility that the appellant would have been acquitted by the jury; or there was a breach of the duty to disclose evidentiary material pursuant to s 95(6) of the Criminal Procedure Act or at common law. The appellant argued that, on either basis, there had been a miscarriage of justice within the meaning of s 30(3)(c) of the Criminal Appeals Act. By notice of contention, the respondent sought to argue that the decision of the Court of Appeal should be affirmed on the grounds that the majority of the Court erred in proceeding on the footing that there was a breach of the prosecutor's statutory duty of disclosure, and should have held that there was no such breach. The appeal to this Court should be allowed on the ground that the fresh evidence gave rise to a significant possibility that the appellant would have been 32 Rodi v Western Australia (2017) 51 WAR 96 at 137 [227]. 33 Rodi v Western Australia (2017) 51 WAR 96 at 138 [231]. 34 Rodi v Western Australia (2017) 51 WAR 96 at 136 [223]. Bell Nettle Gordon acquitted had the evidence been before the jury. As Mitchell JA held35, the miscarriage of justice which occurred was one to which the proviso did not apply36. Accordingly, it is unnecessary to resolve the other issues raised by the appeal and the respondent's notice of contention. It would be distinctly inappropriate for this Court to embark upon a consideration of the effect of the material provisions of the Criminal Procedure Act relating to disclosure by the prosecution, and the intersection of those provisions with the prosecution's obligations of disclosure at common law, when the Court of Appeal did not itself essay a considered statement of the position, and when a firm conclusion on the point is unnecessary for the determination of the appeal. A miscarriage of justice? There was no issue between the parties as to the test to be applied in order to determine whether fresh evidence requires that a conviction be set aside and a new trial had on the basis that a miscarriage of justice has occurred. It is settled that a miscarriage of justice will be established where fresh evidence, when viewed in combination with the evidence given at trial, shows that there is a "significant possibility that the jury, acting reasonably, would have acquitted the accused" had the fresh evidence been before the jury37. Nor was it in dispute that the additional evidence adduced in the Court of Appeal was fresh evidence insofar as it was evidence which was not available to or obtainable by the appellant with the exercise of reasonable diligence38. That being so, a miscarriage of justice would be established if there were a significant possibility that the jury acting reasonably might have acquitted the appellant had that evidence been available to it. 35 Rodi v Western Australia (2017) 51 WAR 96 at 138 [233]. 36 cf s 30(4) of the Criminal Appeals Act. See Pollock v The Queen (2010) 242 CLR 233 at 252 [70]; [2010] HCA 35; Filippou v The Queen (2015) 256 CLR 47 at 54-55 [15]; [2015] HCA 29. 37 Gallagher v The Queen (1986) 160 CLR 392 at 399, 402, 414, 421; [1986] HCA 26; Mickelberg v The Queen (1989) 167 CLR 259 at 273, 301; [1989] HCA 35. 38 Gallagher v The Queen (1986) 160 CLR 392 at 411; Mickelberg v The Queen (1989) 167 CLR 259 at 288-289, 301. Bell Nettle Gordon The reasons given by the majority for concluding that a miscarriage of justice had not occurred included a number of reasons that were not concerned with the prospect that the fresh evidence was apt to have given rise to a significant possibility of an acquittal. In this regard, as noted above, the majority approached the question whether the appellant was able to demonstrate a miscarriage of justice on the basis of an evaluation of other factors, even though it was accepted that the evidence was fresh in the sense that it could not have been discovered and used with reasonable diligence by the appellant. That approach led the majority into error. The Earlier Coen evidence and the evidence of Detective Coen under cross-examination on appeal were consistent with the appellant's evidence of the source of his cannabis. The circumstance that the appellant bore the onus of proof on the issue of the intent which informed his possession of the cannabis was irrelevant to whether there was a significant possibility of a different verdict if the new evidence had been before the jury39. So was the circumstance that no expert evidence was adduced by the appellant on this issue40. And so was the circumstance that the appellant's counsel at trial had failed to object to Detective Coen's evidence41 and to seek an adjournment of the trial42. Similarly, the circumstance that the non-disclosure by Ms White to the appellant's counsel at trial was understandable in the context of the exigencies of the trial was not relevant to whether the fresh evidence disclosed a possibility that the jury, acting reasonably, might have acquitted43. A significant possibility of acquittal The prosecution's closing address The majority treated the additional evidence given in the Court of Appeal by Detective Coen and Ms White as fresh evidence. It may be that Mitchell JA may have regarded the fresh evidence as confined to the Earlier Coen evidence. 39 Rodi v Western Australia (2017) 51 WAR 96 at 119 [118]. 40 Rodi v Western Australia (2017) 51 WAR 96 at 119 [119], 121 [133]. 41 cf Rodi v Western Australia (2017) 51 WAR 96 at 120 [120]-[121]. 42 Rodi v Western Australia (2017) 51 WAR 96 at 120-121 [122]-[128]. 43 Rodi v Western Australia (2017) 51 WAR 96 at 121 [129]-[132]. Bell Nettle Gordon This possible difference was not adverted to by the parties in argument in this Court. Nothing turns on this possible difference in approach on the part of the members of the Court of Appeal. On the approach taken by the majority, the evidence which emerged in the Court of Appeal in the course of Detective Coen's cross-examination suggests that he could not exclude the possibility that a naturally grown cannabis plant could yield up to 600 g of head material. If this evidence had been before the jury, as would have occurred had the cross-examination which occurred in the Court of Appeal occurred at trial, it would have been distinctly apt to improve the prospect that the appellant's evidence would have been accepted by the jury. Even on the more confined approach of Mitchell JA the possibility that the jury may have reached a different verdict is apparent. At the trial, Ms White deployed Detective Coen's evidence to submit to the jury that the appellant's evidence as to the source of his cannabis was demonstrably a lie because "the expert says [that he has not seen [500 g of] head material grown on [one] plant] before in his experience". Her address included the following further remarks, evidently directed to the 531 g of cannabis found in the shower recess44: "[T]he fact of the matter is that there are a couple of lies, and those lies are the crux of what the State says you can use to find that he's unable to satisfy you on the balance of probabilities because it is a lie, it is fanciful, there is no expert evidence that anyone could possibly grow 530 grams of head material on one plant. And therein lies the key. He got that bit wrong." Given that, as was rightly conceded by the respondent in this Court, that submission could not properly have been made in light of the Earlier Coen evidence and the further evidence given by Detective Coen in the Court of Appeal, it is impossible to accept that there is no significant possibility that the jury's verdict would have been different. The Earlier Coen evidence meant that what was advanced by the prosecution as "the crux" of its case for the rejection of the appellant's evidence as demonstrably false was a contention that could not be sustained. 44 Rodi v Western Australia (2017) 51 WAR 96 at 130 [194]. Bell Nettle Gordon Of course, it would not necessarily follow from the fact that the appellant grew his cannabis himself that he had discharged his burden of proving that he did not intend to sell or supply it to another person. But, as Ms White's address to the jury shows, to demonstrate that the appellant lied about the source of his cannabis was to strike a devastating blow to the credibility of his evidence that his cannabis was for personal use only. Given that the case for the prosecution did not include evidence of a kind usually associated with the supply of drugs such as a store of cash on his premises or telephone evidence of unusually frequent contact with numerous other persons, the blow dealt to the appellant's credibility by Detective Coen's evidence at trial was undeniably significant to the jury's assessment of the strength of the appellant's evidence. Detective Coen was a credible witness the basis of the majority's conclusion that Detective Coen's explanation of the Earlier Coen evidence was "credible and cogent", the respondent argued that their Honours' acceptance of his explanation as to why his opinion as to yield had changed over time meant that there was no significant possibility that the appellant might have been acquitted. There was no occasion for the majority of the Court of Appeal to resolve the possibility that the jury may have taken a decisively more favourable view of the appellant's credibility in light of the Earlier Coen evidence by the majority reaching their own favourable conclusion as to the credibility of Detective Coen's explanation for the change in his evidence45. It is not to the point to say that Detective Coen's explanation for his change of opinion was credible and cogent. In the context of a challenge to a verdict based on fresh evidence, the requirement that the fresh evidence relied upon be "credible and cogent" is a requirement relating trial. Detective Coen's evidence was directed to sustaining the verdict against the attack based on the fresh evidence. In Ratten v The Queen46, Barwick CJ (with whom McTiernan, Stephen and Jacobs JJ agreed) explained, in a passage adopted by Mason and Deane JJ in Gallagher v The Queen47, that the issue as to the credibility or cogency of fresh evidence for this purpose is not concerned with whether the appellate court "acting upon its own view" accepts the evidence as to evidence which the verdict at impugns 45 cf Rodi v Western Australia (2017) 51 WAR 96 at 121 [129]-[132], 123 [148]. 46 (1974) 131 CLR 510 at 519-520; [1974] HCA 35. 47 (1986) 160 CLR 392 at 401. Bell Nettle Gordon true, but "rather upon that view most favourable to an appellant, which in the court's view a jury of reasonable men may properly take". For the majority of the Court of Appeal to resolve the issue as to the likely effect of the Earlier Coen evidence on the appellant's prospects of an acquittal by the jury on the basis that any doubt thrown upon the reliability of Detective Coen's evidence might be resolved by their Honours' acceptance of his explanation was to misunderstand the role of an appellate court confronted by fresh evidence which impugns the verdict at trial. Whether Detective Coen's explanation was a sound basis for accepting his evidence and rejecting that of the appellant was a matter for the jury in the light of all the relevant evidence. In this regard, Detective Coen's acknowledgment under cross-examination in the Court of Appeal that he had seen cannabis plants yielding between 500 g and 600 g, and that he would not be surprised by a plant yielding between 500 g and 600 g48, tends strongly to contradict his evidence at trial. At the very least, it throws a doubt on the value of his evidence at trial as an expression of expert opinion. "Typical yield" The respondent submitted that Detective Coen's evidence at trial was that naturally grown female cannabis plants "typically" yield between 100 g and 400 g of cannabis head material. It was argued that this was not his opinion as to the outer limits of the absolute range but only a "typical range", and further that it was not evidence as to the actual yield from the plants found at the appellant's house. On that basis, the circumstance that Detective Coen said in the Court of Appeal that he had observed yields up to 600 g was said to be consistent with his evidence to the jury and therefore would have been unlikely to mislead it. That submission cannot be accepted. The distinctions now sought to be drawn by the respondent between "particular" plants and "typical" yield, and between "typical" range and "absolute" range, were not drawn at the trial. Detective Coen's evidence was not limited to the yield that might typically be expected from some ideal cannabis plant. In this regard, he gave the following evidence at trial: "I don't think that all the cannabis at the house is from those two plants out the back." And he went on to say: "I'd expect them to yield on the lower end of the 100 to 400 gram 48 Rodi v Western Australia (2017) 51 WAR 96 at 110 [83(h)], 134 [212]. Bell Nettle Gordon scale."49 Detective Coen's evidence at trial as to the likely yield of the particular plants from which the appellant claimed to have harvested his cannabis was inextricably linked with his evidence as to typical yield. His evidence was apt to exclude any possibility of those plants having a significantly greater yield than the upper limit of his typical yield range. Orders The appeal should be allowed, and orders 5 and 6 of the Court of Appeal set aside. The appellant's application for an extension of time to enable his appeal to the Court of Appeal should be granted, and the appeal to that Court allowed and the appellant's conviction quashed. There should be an order for a retrial. 49 Rodi v Western Australia (2017) 51 WAR 96 at 104-105 [48]. |
HIGH COURT OF AUSTRALIA APPELLANT AND JAN TALACKO (AS EXECUTOR OF THE ESTATE OF HELENA MARIE TALACKO) & ORS RESPONDENTS [2021] HCA 15 Date of Hearing: 10 March 2021 Date of Judgment: 12 May 2021 ORDER The grant of special leave to appeal on the second ground be revoked with costs. The appeal be dismissed. Special leave to cross-appeal be granted and the cross-appeals be allowed. Set aside order 2 of the orders of the Court of Appeal of the Supreme Court of Victoria made on 30 April 2020 and the orders of that Court made on 5 May 2020 and, in lieu of those orders, order that: the appeal be allowed; order 2 of the orders of the Supreme Court of Victoria made on 20 December 2018 be varied to replace the sum of $5,900,227.92 with the sum of $8,045,765.34 and the sum of $3,101,822.56 with the sum of $4,229,758.04; order 4 of the orders of the Supreme Court of Victoria made on 20 December 2018 be varied to replace the sum of $5,892,069.06 with the sum of $8,034,639.62 and the sum of $3,084,619.22 with the sum of $4,223,909.11; and the fourth respondent pay the appellants' costs of the application for leave to appeal and the appeal, to be taxed in default of agreement on the standard basis. The appellant pay the costs of the appeal and the cross-appeals. On appeal from the Supreme Court of Victoria Representation B W Walker SC with J B Masters for the appellant (instructed by Strongman & Crouch Solicitors) W A Harris QC with K A Loxley for the first respondent (instructed by Patrick & Associates) D B O'Sullivan QC and B R Kremer with O M Ciolek for the second to fifth respondents (instructed by Brand Partners) Submitting appearances for the ninth and tenth respondents No appearance for the sixth, seventh, eighth and eleventh respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Tort – Unlawful means conspiracy – Loss or damage – Loss of chance – Loss of value of rights or chose in action – Damages – Where conspiracy by unlawful means undertaken to deprive first to fifth respondents ("Respondents") of value of chose in action arising from judgment in their favour – Where conspiracy involved agreements by which valuable properties in Czech Republic were transferred to impede recovery by Respondents of anticipated judgment debt ("Donation Agreement") – Where Respondents commenced proceedings in Czech Republic against two conspirators to set aside Donation Agreement ("Donation Agreement Proceedings") – Where Respondents had 20% prospect of successfully recovering through Donation Agreement Proceedings – Whether loss or damage proved such that unlawful means conspiracy was actionable – Whether damages for unlawful means conspiracy should be discounted to reflect 20% prospect of separate recovery through Donation Agreement Proceedings. Words and phrases – "actionable", "chance of recovery", "chose in action", "contingent", "damages", "diminution in value", "judgment debt", "loss of chance", "loss of opportunity", "loss or damage", "prospect of recovery", "quantification of damages", "unlawful means conspiracy", "value of a plaintiff's rights". KIEFEL CJ, GAGELER, KEANE, GORDON, EDELMAN, STEWARD AND Introduction This appeal is the culmination of a long, complex, and unfortunate tale of a family torn apart. In these reasons, for clarity only, and with no disrespect intended, the parties are described by their first names. The appeal concerns a conspiracy by unlawful means that was undertaken by Jan Emil Talacko, together with his wife, Judith Talacko, and two of their sons, David and Paul. The conspiracy was directed at depriving Jan Emil's siblings, or those claiming through them – who are the first to fifth respondents to this appeal – of the value of their rights, namely a chose in action arising from a judgment in their favour which was subject to a hearing concerning quantum ("the chose in action against Jan Emil"). The conspiracy involved three agreements by which Jan Emil donated valuable assets that he held in the Czech Republic to David and Paul to impede recovery of the anticipated judgment debt (collectively, "the Donation Agreement"). The conspiracy achieved its object. But the judge of the conspiracy claim in the Supreme Court of Victoria held that the unlawful means conspiracy was not actionable because no loss or damage had been proved. The primary category of loss alleged by Jan Emil's siblings or their heirs was held to be only contingent since the value of the properties might yet be recovered from David and Paul through proceedings that had been commenced in the Czech Republic more than two years after the performance of the Donation Agreement ("the Donation Agreement Proceedings"). The Court of Appeal of the Supreme Court of Victoria allowed an appeal, concluding that loss had been suffered immediately upon entry into the Donation Agreement. The subsequent quantification of that loss by the Supreme Court of Victoria discounted the full value of the chose in action against Jan Emil by 25% for contingencies including the prospect that Jan Emil might have impeded recovery of the value of those rights even without the unlawful means conspiracy. The damages were then further reduced by 20% to account for a speculative prospect of separate recovery from David and Paul in the Donation Agreement Proceedings. For the reasons below, the Court of Appeal was correct to conclude that the first to fifth respondents suffered loss or damage such that the unlawful means conspiracy was actionable. The appeal should be dismissed on the basis asserted in the first and second to fifth respondents' notices of contention: their damage is better described as the loss of the value of their rights or chose in action, rather than a loss of a chance or loss of opportunity. But, as the first and second to fifth respondents submitted on their cross-appeals, that loss has not been, and is not likely to be, ameliorated by the Donation Agreement Proceedings. The cross-appeals by the first and second to fifth respondents should be allowed and the award of damages set as 75% of the value of their chose in action. The parties This dispute is between members of the Talacko family and their representatives. The origin of the numerous proceedings was a dispute between three siblings, the children of Alois and Anna Talacko: Helena and Peter on one side, and Jan Emil on the other. All three siblings are now deceased. Peter died in 1995. Helena died in 2012. And Jan Emil died in 2014. The dispute has continued to the next generation of the family. The parties in this proceeding who have represented the interests of Helena and Peter are, collectively, the first to fifth respondents to this appeal. Helena's interests have been, and continue to be, prosecuted by her son, and the executor of her estate, Jan. He is the first respondent. Peter's interests, and the interests of his heirs entitled under his will, have been prosecuted by: (i) his children, Alexandra, Martin, and Rowena; (ii) his widow and executor, Margaret; and (iii) upon Margaret's death, her executors. Alexandra, Martin, and Rowena are the second, third, and fourth respondents to this appeal. Margaret's executors are the fifth respondent to this appeal. The parties with interests opposed to Helena and Peter, whom the trial judge, McDonald J, found to have conspired to harm Helena and Peter by unlawful means, were1: (i) Jan Emil; (ii) Jan Emil's wife, Judith; and (iii) two sons of Jan Emil and Judith, David and Paul. In the Court of Appeal and in this Court, no active part was played by the estate of Jan Emil, which is the sixth respondent to this appeal. Nor was any active part played by David and Paul, who are the seventh and eighth respondents to this appeal. The appellant, Judith, submits that no loss Talacko v Talacko [2015] VSC 287. The ninth and tenth respondents to this appeal were held not to have been parties to, nor liable for, the relevant conspiracy: [2015] VSC 287 at [156]. or damage was suffered by the unlawful means conspiracy, and hence denies that a complete cause of action for conspiracy has been established. Background In 1948, Alois and Anna Talacko, and their children, Helena, Peter, and Jan Emil, left their home in Czechoslovakia and settled in Australia. At the time of their departure, Alois and Anna owned considerable property, including the following ("the Properties"): (i) five buildings in the historic centre of Prague ("the Prague properties"); (ii) approximately 17 hectares of agricultural land at Řepy, on the outskirts of Prague; (iii) approximately 0.8 hectares of agricultural land in Kbely, a suburb of Prague; (iv) a 368 hectare private forest plantation at Suchá in the north-east of what is now Slovakia; and (v) an apartment building and adjacent vacant land in Dresden, East Germany. Following the departure of the Talacko family, these properties were seized by Czechoslovakia and, in the case of (v), by East Germany. Alois and Anna died in Australia in 1964 and 1984 respectively. Following the Velvet Revolution and the end of communist rule in Czechoslovakia in 1989, discussions took place between Jan Emil, Helena, and Peter concerning restitution of the Properties. In September 1991, Jan Emil applied for restitution of the Prague properties. At that time, Jan Emil, as a Czech citizen and resident, was the only sibling entitled to make such a claim. In March 1992, the Prague properties were restored to Jan Emil, either entirely or in part. And, later, Jan Emil also had restored to him the Řepy, the Kbely and the Suchá properties. A dispute arose between Jan Emil, on the one hand, and Helena and Peter, on the other. Helena and Peter alleged that Jan Emil had agreed with them that any interest in the Properties that was recovered or obtained by any one or more of the siblings would be held for the benefit of all of them. In 1998, a proceeding was commenced against Jan Emil by Helena and by Peter's executor and heirs. The plaintiffs' allegations included that Jan Emil had held all properties to which restitution had been made to him as a fiduciary and that he had breached his fiduciary duties by failing to share those properties and the income earned from them with the plaintiffs. The plaintiffs claimed an equitable interest in the title to the properties held by Jan Emil that were formerly owned by Alois and Anna. The hearing commenced on 21 February 2001, but the proceeding settled two days later. By clause 1 of the settlement agreement dated 23 February 2001, Jan Emil was required to transfer his title to particular properties to persons nominated by Helena and those claiming through Peter's will. The titles in clause 1 which Jan Emil was required to transfer were all the rights that he had to the properties described above in Řepy, Kbely, Suchá, and Dresden but not the Prague properties. Clause 2 required Jan Emil to take various necessary steps to give effect to the transfers. Clause 3 provided for the sale by Jan Emil of any of these properties, in the event the transfers could not be given effect, with the proceeds to be paid to Helena and the plaintiffs claiming through Peter's will. Clause 6 provided for a money remedy if Jan Emil failed to comply with clause 1. The premise of clause 6 was held to be that upon failure to comply with clause 1, Jan Emil had "admitted that he had breached the fiduciary duty alleged" in the 1998 proceeding2. Clause 6 required Jan Emil to pay "equitable compensation for breach of fiduciary duty" in respect of a subset of the Properties. Clause 6 was held to be concerned only with those properties for which restitution had been made solely to Jan Emil by 23 February 2001, being the Prague properties, the Řepy property, and the Suchá property3. The first to fifth respondents to this appeal instructed lawyers to draw up and deliver to Jan Emil the documents necessary for transfer of the clause 1 properties. But Jan Emil did not execute those documents. The first to fifth respondents did not seek specific performance of Jan Emil's duty to execute those documents. Nor did they seek damages comprised of the value of the promised performance of clause 1, including damages in lieu of specific performance of Jan Emil's duty to transfer the clause 1 properties. Instead, they applied for orders that the 1998 proceeding be reinstated and that they be granted leave to enter judgment against Jan Emil for equitable compensation under clause 6 of the settlement agreement. Jan Emil denied that his refusal to sign the documents was a breach of contract. He also relied upon defences including that clause 6 was void for uncertainty and that the relief in clause 6 was a penalty for reasons including that the entirety of the clause 1 properties were worth less than the Prague properties, which were included in clause 6. Talacko v Talacko [2009] VSC 533 at [259], [260], [274]. Talacko v Talacko [2009] VSC 533 at [77]-[88]. In April 2008, following a trial in the Supreme Court of Victoria on issues of liability only, Osborn J held that Jan Emil had breached the terms of the settlement agreement dated 23 February 2001 and that clause 6 was not void for uncertainty4. Consequent upon this decision, the first to fifth respondents held valuable rights, as a chose in action, subject to the hearing on issues concerning quantum. On 12 May 2009, Jan Emil executed three donation agreements, collectively the Donation Agreement, by which Jan Emil transferred to two of his sons, David and Paul, his interest in the Prague properties, the Řepy property, and the Kbely property ("the Donation Properties"). Two days later, an application was filed at the real estate registry in Prague for transfer of the ownership of those properties from Jan Emil to David and Paul. On 24 November 2009, the quantum issues in relation to the breach of the settlement agreement were decided by the Supreme Court of Victoria. Kyrou J held that clause 6 was not a penalty and that equitable compensation was to be determined at the date of his judgment as two-thirds of the value of the clause 6 properties together with two-thirds of the net rental income of those properties from the date of restitution of them to Jan Emil5. The total equitable compensation held to be payable by Jan Emil to the first to fifth respondents was €8,955,016 for the value of the clause 6 properties, as at 24 September 2009, and Jan Emil's rent-free use of one of the Prague properties, and €881,017 as two-thirds of the net rental income from the Prague properties. On 11 December 2009, after a further hearing, Kyrou J made final orders. The total equitable compensation, together with interest, was quantified at €10,073,818 and costs were ordered against Jan Emil on an indemnity basis. An appeal to the Court of Appeal, and a special leave application to this Court, were dismissed6. In 2011 and 2012, the second to fifth respondents and the first respondent to this appeal, respectively, commenced proceedings in the District Court of the Talacko v Talacko [2008] VSC 128. Talacko v Talacko [2009] VSC 533. Talacko v Talacko (2011) 31 VR 340; Talacko v Talacko [2011] HCATrans 301. City of Prague 1. The proceeding by the first respondent was dismissed for failure to comply with an order for filing evidence. But the second to fifth respondents continued with their proceeding ("the enforcement proceeding") and sought to have the orders of Kyrou J recognised in the Czech Republic for the purposes of enforcement. The District Court approved the orders of Kyrou J for recognition and enforcement. An appeal by Jan Emil to the Municipal Court of Appeal in Prague was dismissed. On further appeal to the Supreme Court of the Czech Republic, that Court generally upheld the decision of the Municipal Court of Appeal but remitted the enforcement proceeding for further hearing because Jan Emil had not been given the opportunity to comment upon correspondence received by the Municipal Court of Appeal from an Australian official. In the enforcement proceeding, the courts of the Czech Republic had relied upon a certificate issued on 4 July 2012 by the Prothonotary of the Supreme Court of Victoria certifying that the orders of Kyrou J were final and binding. But on 7 November 2011, Jan Emil had been declared bankrupt. In May 2015, in the Supreme Court of Victoria, Sloss J declared that a consequence of Jan Emil's bankruptcy was that the certificate was invalid7. Sloss J's decision was overturned by the Court of Appeal of the Supreme Court of Victoria8, but it was unanimously restored by this Court in 2017. This Court held that s 58(3)(a) of the Bankruptcy Act 1966 (Cth), requiring leave of the court to commence, or take a step in, any proceeding against a bankrupt debtor, was a "stay of enforcement of the judgment" within the meaning of s 15(2) of the Foreign Judgments Act 1991 (Cth), which "is expressed to operate, and does operate, as an absolute bar to an application for a certificate"9. After Jan Emil's death, the enforcement proceeding was suspended and, since there is an absence of a representative of his estate, it is likely that the proceeding will be terminated. For that reason, it was not disputed in this Court Talacko v Talacko (2015) 305 FLR 353. 8 Bennett v Talacko (2016) 312 FLR 159. Talacko v Bennett (2017) 260 CLR 124 at 147 [73]. that the chance of the second to fifth respondents recovering the judgment debt against the estate of Jan Emil in the enforcement proceeding "is worthless"10. A second set of proceedings, the Donation Agreement Proceedings, was commenced by the first respondent, and by the second to fifth respondents collectively, in the District Court of the City of Prague 1. Those proceedings sought to "set aside" the Donation Agreement. The Donation Agreement Proceedings were brought against David and Paul under s 42a of Act No 40 of 1964 of the Czech Republic ("the Czech Civil Code"). The effect of an action under this provision was explained by McDonald J after hearing expert evidence on the foreign law11. If the Donation Agreement is "set aside", this will not affect the title to the properties transferred under it. They will remain registered in the names of David and Paul. Instead, s 42a would permit a claim to be made, and enforced, directly against David and Paul if three preconditions were met: (i) the legal act, namely the Donation Agreement, was done by Jan Emil in the three years before the proceeding; (ii) the legal act was done by Jan Emil "on purpose of curtailing his creditors"; and (iii) David and Paul must have known of that purpose. These proceedings: conspiracy and quantum On 17 July 2009, the proceeding which led to this appeal was commenced by the first to fifth respondents. This proceeding was commenced after each of: (i) the judgment of Osborn J, which established that the first to fifth respondents held rights as a chose in action for equitable compensation pursuant to clause 6 of the settlement agreement; and (ii) the execution of the Donation Agreement. But this proceeding was commenced prior to the decision of Kyrou J, which quantified the value of the rights that Osborn J had found the first to fifth respondents to have. The initial four defendants were Jan Emil, Judith, David, and Paul. Four claims were made in relation to the Donation Agreement: conspiracy to injure; unlawful means conspiracy; knowing receipt of property in breach of, 10 See Talacko v Talacko [2018] VSC 751 at [64], [86]. See also Bennett v Estate of Talacko (Decd) (An undischarged bankrupt) [2020] VSCA 99 at [31]. 11 Talacko v Talacko [2018] VSC 751 at [60], [65]. respectively, an express and implied trust, said to have been created only by the settlement agreement, of the properties in clauses 1 and 6; and inducing breach of contract. McDonald J, deciding only the issues of liability, dismissed all of the claims. The appeal to the Court of Appeal on liability, and the further appeal to this Court, concerned only his Honour's dismissal of the claim for unlawful means conspiracy. In Williams v Hursey12, Menzies J said that "[i]f two or more persons agree to effect an unlawful purpose, whether as an end or a means to an end, and in the carrying out of that agreement damage is caused to another, then those who have agreed are parties to a tortious conspiracy". The agreement or common design between the parties is necessary for them to be jointly liable for the unlawful means13. However, if the conspiracy is merely aimed "at the public, the damage sustained by a member of the public is too remote to give a right of action"14. The agreement which is carried out must be "aimed or directed"15 at the plaintiff. McDonald J held that, with the exception of the requirement of loss or damage, all of these requirements were established for the tort of unlawful means conspiracy. Jan Emil, Judith, David, and Paul were parties to an agreement to deny the first to fifth respondents access to properties which could satisfy any judgment obtained by the first to fifth respondents against Jan Emil. These properties included the Donation Properties, given as restitution to Jan Emil. (1959) 103 CLR 30 at 122. See also Fullagar J at 78: "a combination to do unlawful acts necessarily involving injury". 13 See also Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 14 Vickery v Taylor (1910) 11 SR (NSW) 119 at 130. See also McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 at 435 [137]. 15 Dresna Pty Ltd v Misu Nominees Pty Ltd (2004) ATPR ¶42-013 at 48,885 [9]-[11]; Fatimi Pty Ltd v Bryant (2004) 59 NSWLR 678 at 681 [13]. See also Lonrho Plc v Fayed [1992] 1 AC 448 at 467 and Lonrho Ltd v Shell Petroleum Co Ltd [1981] Com LR 74 at 75. The unlawful means was argued as, and held to be, "equitable fraud". But although the fraud was described as "equitable", the findings amounted to actual deceit. The Donation Agreement was executed the day after Jan Emil had been legally advised of the potential for criminal liability arising from transfer of the properties owned by him in Slovakia and Germany. It was executed in "brazen disregard" of affidavit assurances that "there was no risk that [Jan Emil] would take any steps to dispose of the properties" and contrary to similar representations made to the Supreme Court of Victoria which caused the first to fifth respondents to refrain from proceeding with an application for Mareva relief16. In Peek v Gurney17, Lord Chelmsford said of a Bill alleging actual fraud in equity that it was "precisely analogous to the common law action for deceit" and that the "same principles applicable to them must prevail both at Law and in Equity". As senior counsel for Judith rightly accepted in this Court, the "equitable fraud" unlawful means was no different from common law "Derry v Peek fraud"18. The only reason that McDonald J dismissed the first to fifth respondents' claim for unlawful means conspiracy was his conclusion that they had not proved loss or damage. He did not accept that the first to fifth respondents had suffered any of the various categories of loss and damage which they alleged. Two of those categories are relevant to this appeal: (i) being prevented from recovering the 11 December 2009 judgment debt because the Donation Properties were transferred; and (ii) costs and losses in seeking to enforce the 11 December 2009 judgment debt in the Czech Republic. The first category of alleged loss or damage The first category of alleged loss or damage – being prevented from recovering the 11 December 2009 judgment debt because the Donation Properties were transferred – was not expressed by the first to fifth respondents before McDonald J as a claim based upon loss of opportunity to recover or loss of a chance of recovery of the judgment debt19. Instead, their claim was pleaded as an 16 Talacko v Talacko [2015] VSC 287 at [69]-[75]. (1873) LR 6 HL 377 at 390. See also at 392-393. 18 Derry v Peek (1889) 14 App Cas 337. 19 Bennett v Estate of Talacko (Decd) [2017] VSCA 163 at [106]. immediate loss upon entry into the Donation Agreement by the denial to them of the fruits of the chose in action for equitable compensation arising from the This category was not accepted by McDonald J. His Honour held that any loss attributable to the Donation Agreement was contingent and had not yet been established. McDonald J held that the first to fifth respondents could only be said to have suffered loss caused by entry into the Donation Agreement if the Czech courts were to recognise the judgment debt and the first to fifth respondents were unable to set aside the Donation Agreement in the Donation Agreement Proceedings. In other words, the Donation Agreement might turn out not to have made any difference to the financial position of the first to fifth respondents. Until the Czech proceedings were decided this could not be known20. The Court of Appeal allowed the grounds of appeal concerning this category of alleged damage. The Court accepted that there was an immediate loss to the first to fifth respondents upon the entry by Jan Emil into the Donation Agreement because that agreement had impeded the prospect of enforcement of an anticipated money judgment based on the cause of action recognised by Osborn J. The Court of Appeal characterised that loss as loss of an opportunity and held that the value of that opportunity, and the impact of the Donation Agreement upon it, were matters for quantification of damages, not the existence of damage21. In the subsequent trial on quantum, McDonald J concluded that prior to the Donation Agreement the first to fifth respondents had a 75% chance of recovering the judgment debt, including by resort to the Donation Properties, which were transferred pursuant to the Donation Agreement. His Honour considered that prior to the Donation Agreement the first to fifth respondents would have expected to take a series of steps including obtaining a sequestration order against Jan Emil and when, as would be likely, Jan Emil refused to transfer his title to the Donation Properties to his trustee in bankruptcy, the first to fifth respondents would have obtained orders under s 77(1)(e) of the Bankruptcy Act compelling the transfer, 20 Talacko v Talacko [2015] VSC 287 at [164]-[168]. 21 Bennett v Estate of Talacko (Decd) [2017] VSCA 163 at [111]-[112]. following which the trustee in bankruptcy would have sold the Donation Although McDonald J concluded that after the Donation Agreement this 75% chance had entirely ceased to exist because "there was no prospect of the trustee in bankruptcy getting in and realising the [Donation] Properties"23, he did not accept that the first to fifth respondents were entitled to recover the full 75% value of the "opportunity" that they lost as a result of the unlawful means conspiracy. McDonald J held that, after the Donation Agreement, the first to fifth respondents still had a 20% chance of recovery by successfully pursuing the Donation Agreement Proceedings and subsequent enforcement proceedings against David and Paul. For this reason, his Honour concluded, the 75% value of the first to fifth respondents' opportunity of recovering the judgment debt had been reduced to 20% rather than extinguished24. The value of the opportunity to enforce the judgment debt against the Donation Properties that was lost by the unlawful means conspiracy was therefore 55% of the value of the judgment debt. His Honour's conclusion that the first to fifth respondents had a 20% chance of recovery after the Donation Agreement was informed by three factors25. First, the Donation Agreement Proceedings could take up to ten years before they are concluded. Secondly, although it was likely that the elements of s 42a of the Czech Civil Code would be satisfied, the Donation Agreement Proceedings could not advance without proof of the finality and enforceability of the judgment of Kyrou J. This created a number of obstacles, particularly where, at the time of his Honour's decision, Jan Emil's bankruptcy had been extended to operate until 22 November 2019: the need to establish reciprocity between the Australian courts and the courts of the Czech Republic where a judgment debt has been stayed by operation of s 58(3) of the Bankruptcy Act; the need to demonstrate the ongoing insolvency of Jan Emil in Australia; and the lack of a certificate from a "relevant public authority" that confirmed the finality and enforceability of the judgment of 22 Talacko v Talacko [2018] VSC 751 at [54]. 23 Talacko v Talacko [2018] VSC 751 at [56]. 24 Talacko v Talacko [2018] VSC 751 at [89]. 25 Talacko v Talacko [2018] VSC 751 at [66]-[67], [75], [80], [85], [88]. Kyrou J, which had been stayed. Thirdly, and irrespective of the outcome of the Donation Agreement Proceedings, David and Paul might successfully transfer the properties to a third party. There is presently no legal impediment to them doing so. And, since May 2009, they have already alienated part of the properties the subject of the Donation Agreement. An appeal to the Court of Appeal (Beach, McLeish and Niall JJA) was brought by the first to fifth respondents on the ground that the 20% assessment was excessive26. The Court of Appeal dismissed the appeal, finding that this assessment was open. As Brennan and Dawson JJ said in Malec v J C Hutton Pty Ltd27, "[d]amages founded on hypothetical evaluations defy precise calculation". The Court of Appeal observed that the assessment of 20% prospect of success emphasised the "very low" prospect of successful recovery28. In this Court, the first to fifth respondents did not press their ground of cross-appeal which would have again challenged this 20% assessment as excessive. The second category of alleged loss or damage The second category of loss or damage alleged by the first to fifth respondents to have been suffered included expenses described as costs of undoing a transaction where a defendant formerly of substance was rendered impecunious, namely: (i) the expense involved in ascertaining the steps taken by the parties to the conspiracy in relation to the Donation Agreement; (ii) the costs of advice as to how to set the Donation Agreement aside; and (iii) the expense of steps to recover against parties to the Donation Agreement in the Czech Republic29. 26 Bennett v Estate of Talacko (Decd) (An undischarged bankrupt) [2020] VSCA 99. (1990) 169 CLR 638 at 640. 28 Bennett v Estate of Talacko (Decd) (An undischarged bankrupt) [2020] VSCA 99 29 Bennett v Estate of Talacko (Decd) [2017] VSCA 163 at [99]. McDonald J concluded that these expenses were not loss or damage for two reasons30. First, if it ultimately turned out that the judgment debt recognised by Kyrou J could not be enforced in the Czech Republic in any event, then the Donation Agreement "could not have caused any loss". Secondly, the costs of the Donation Agreement Proceedings were contingent because the Czech courts might ultimately order payment of full indemnity costs. The Court of Appeal also allowed the appeal on this issue and recognised the expenses of undoing the transaction to be a loss31. As to the causation issue, the Court of Appeal held that this was a matter which went to quantification of the loss, not to whether it had been suffered at all. By this, the Court of Appeal must have meant that the extent to which the costs and expenses to undo the Donation Agreement were futile and should be disregarded is only a matter for quantification of the extent of the loss. As to the alleged contingent nature of the costs, the Court of Appeal held that the expenses incurred in the Donation Agreement Proceedings were not contingent. The expenses had actually been incurred already and any recovery of them on an indemnity basis in the Donation Agreement Proceedings was only a mere possibility. Moreover, recovery would not be from Jan Emil, by whose conduct the loss was suffered. It would be from David and Paul. Upon remitter for assessment of loss, McDonald J assessed the expenses of the Donation Agreement Proceedings to be: (i) €63,217.80 for the second to fifth respondents, of which no more than €1,800 would be recoverable from David and Paul; and (ii) $107,991.20 for the first respondent32. The first category of alleged damage: loss of the value of rights Judith's first ground of appeal in this Court was that the Court of Appeal erred by holding that the Donation Agreement had caused the loss of a chance to recover a judgment debt in circumstances in which that chance to recover was only reduced and the judgment debt may yet be recovered. The parties' submissions on this issue focused heavily on the law relating to damages for the loss of a chance and for loss of an opportunity. But the language of loss of a chance or loss of an 30 Talacko v Talacko [2015] VSC 287 at [171]-[173]. 31 Bennett v Estate of Talacko (Decd) [2017] VSCA 163 at [102]-[104], [112]. 32 Talacko v Talacko [2018] VSC 751 at [100]-[103]. opportunity does not always distinguish between two categories: (i) instances where a defendant's tortious act deprives a plaintiff of an opportunity or chance to which the plaintiff was not entitled but where such deprivation constitutes an immediate loss; and (ii) instances where a defendant's tortious act reduces or extinguishes the value of a plaintiff's existing right, where the value might be quantified by reference to the likelihood of future events. In both categories, once the lost opportunity or diminution in value of a right is proved, a separate and sometimes difficult issue is the quantification of the value of the lost opportunity or the extent of the diminution of value of the right33. In both categories, these issues of quantification can depend upon "estimating the significance of events which are, or may be, yet to come"34. But the existence of a loss is often more easily identified in the second category where the plaintiff has an existing right, although it must be shown that there has been a permanent impairment of the value of the plaintiff's existing right. In the first category, where the wrongful act "does not amount to interference with or impairment of an existing right", it is necessary to identify "the interest said to have been harmed by the defendant"35. That interest, whether described as a chance or as an opportunity, must be lost: the chance of a loss is not the same as the loss of a chance36. As Kiefel J said in Tabet v Gett37, an example of such a loss is "a commercial interest of value which is no longer available to be pursued because of the defendant's negligence". An illustration is Sellars v Adelaide Petroleum NL38, where this Court held that "loss or damage" in s 82 of 33 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355, 364. 34 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 at 656 35 Tabet v Gett (2010) 240 CLR 537 at 561 [53]. 36 Segal v Fleming [2002] NSWCA 262 at [25]-[26]. (2010) 240 CLR 537 at 585 [137]. See also Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355. (1994) 179 CLR 332. the Trade Practices Act 1974 (Cth) included the loss of an opportunity to have entered into an agreement with a third party on the more favourable terms that would have been achieved but for the defendant's wrongdoing. In the second category, the existence of a loss is sufficiently shown by proving that the tort caused a permanent impairment of the value of the plaintiff's existing right. It is enough that the right is "something of value" and that its value is diminished or lost39. An example of loss in this category, given by Brennan J in Sellars40, is a plaintiff's cause of action which becomes statute barred by reason of the negligence of a solicitor. The right may not have been lost41 but its value has declined, often to nothing, by the expiry of the limitation period. Damages are assessed as the amount by which the value of the right has diminished from the value it would have had if the acts comprising the tort had not been committed. This quantification of loss, by reference to events which did not happen, has been said to have "nothing to do with loss of chance as such. It is simply the judge making a realistic and reasoned assessment of a variety of circumstances in order to determine what the level of loss has been."42 The notices of contention in this appeal asserted that the type of loss suffered by the first to fifth respondents was in the second category: "economic loss in the form of diminution of the value of property", being the chose in action against Jan Emil. The chose in action held by the first to fifth respondents arose from the judgment and orders of Osborn J, which recognised their rights under clause 6 of the settlement agreement. At the time of the Donation Agreement, the value of those rights was unliquidated. Their value was later quantified by Kyrou J at €10,073,81843. There was no issue on this appeal concerning whether the relevant date for quantification, by reference to values of the Donation Properties, 39 Chaplin v Hicks [1911] 2 KB 786 at 796. See also at 793. (1994) 179 CLR 332 at 362. 41 See, eg, The Commonwealth v Mewett (1997) 191 CLR 471 at 534-535; Brisbane City Council v Amos (2019) 266 CLR 593 at 599 [7], 613-614 [40], 616 [49]. 42 Vasiliou v Hajigeorgiou [2010] EWCA Civ 1475 at [25]. 43 Talacko v Talacko [2009] VSC 579. was, as Kyrou J concluded, 24 September 2009 or whether it should have been the date of the Donation Agreement, 12 May 2009. Where a defendant's tort impairs the value of a plaintiff's rights to tangible property, this will constitute loss or damage. The normal measure of damages in such cases is the diminution in the value to the plaintiff of their rights to tangible property, usually measured by the cost of repair, where it is reasonable to repair, or the cost of replacement44. As the Supreme Court of the United Kingdom recently "If a claimant suffers damage to property, such as a vehicle or a ship, as a result of the tortious actions of a defendant, it can claim as damages the diminution in value of the damaged property, usually measured by the cost of repairing the property, and consequential loss". The same rules apply to a diminution in the value of a plaintiff's rights to intangible property. In Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd46, French CJ, Hayne and Kiefel JJ said that "[a]n interest which is the subject of economic loss need not be derived from proprietary rights or obligations governed by the general law". Their Honours gave examples of rights to intangible property including a statutory right to participate in a Commonwealth superannuation fund47 and a lender's right to recover money that had been lent48. The diminution of the value of those rights might be difficult to assess but "the 44 Evans v Balog [1976] 1 NSWLR 36 at 39-40; Powercor Australia Ltd v Thomas (2012) 43 VR 220 at 227 [25]-[27]. 45 Sainsbury's Supermarkets Ltd v Mastercard Inc [2020] 4 All ER 807 at 861 [200]. (2013) 247 CLR 613 at 629-630 [26]. 47 Citing The Commonwealth v Cornwell (2007) 229 CLR 519 at 526 [18]. 48 Citing Hawkins v Clayton (1988) 164 CLR 539 at 601; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533; Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 425 [16]; The Commonwealth v Cornwell (2007) 229 CLR 519 at 525 [16]. common law does not permit difficulties of estimating the loss in money to defeat an award of damages"49. In this Court, Judith correctly submitted that the mere risk of future loss does not count as loss or damage, relying upon the decision of this Court in Wardley Australia Ltd v Western Australia50. In Wardley, the appellants' wrongful conduct led to the grant of an indemnity by the State of Western Australia against the contingency of loss. This indemnity was held not to occasion loss or damage within s 82 of the Trade Practices Act until the contingency was fulfilled and the indemnity was called upon. The critical distinction between this case and Wardley is that, in Wardley, the State of Western Australia had no existing right that was impaired. Nor did it have any new existing liability to pay money until the indemnity was called upon51. As a mere risk of loss, the contingent liability did not By contrast with Wardley, the unlawful means conspiracy in this case diminished the value of existing rights held by the first to fifth respondents. Indeed, as Mason CJ, Dawson, Gaudron and McHugh JJ observed in Wardley, there will be immediate loss or damage upon the execution of a mortgage over property in reliance on negligent advice which has the immediate effect of reducing the value of the plaintiff's equity of redemption, "the value of her interest in the property"53. Likewise, this appeal involves a wrongful act which decreased the value of the victims' rights, namely the chose in action against Jan Emil. Judith submitted that the decrease in the value of the first to fifth respondents' rights might only be a "fluctuating or temporary" decrease and, for that reason, could not be recognised as loss or damage. She drew an analogy with 49 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 349. (1992) 175 CLR 514. (1992) 175 CLR 514 at 534, 538, 543, 558. (1992) 175 CLR 514 at 527. (1992) 175 CLR 514 at 528-529, explaining Forster v Outred & Co [1982] 1 WLR 86 at 98; [1982] 2 All ER 753 at 764. a negligently drawn mortgage to secure a loan of money where, in general terms, damage would be sustained only when recovery "can be said, with some certainty, to be impossible"54. But in that scenario, where the interest of the lender is to recover upon default the amount owing under the mortgage by sale of the property, the damage to the lender's interest is contingent upon the borrower's default55. It would be "unjust to compel [the lender] to commence proceedings before the existence of his or her loss is ascertainable"56. By contrast, the first to fifth respondents suffered an immediate loss in the value of their rights against Jan Emil when the Donation Agreement was executed. The chose in action against Jan Emil for equitable compensation then became worthless. That loss was permanent precisely because Jan Emil had stripped himself of his valuable assets and it was not suggested that there was any prospect that Jan Emil might recover his assets, or acquire other valuable assets, in the future. It would be unjust to compel the first to fifth respondents to commence speculative proceedings in the Czech Republic when the existence of this loss was already ascertainable. The Court of Appeal was therefore correct to conclude that the Donation Agreement caused the first to fifth respondents to suffer an immediate loss. The reason for this was that the value of their rights, the chose in action against Jan Emil, was reduced by Jan Emil's entry into the Donation Agreement, his implementing of the unlawful means conspiracy. That was the very intention of Jan Emil, who entered the Donation Agreement to reduce, by unlawful means, his available assets to meet an anticipated judgment debt. 54 Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613 at 631 [32], citing Hawkins v Clayton (1988) 164 CLR 539 at 601, Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533, and Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 425 [16]. 55 Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613 at 630 [27], explaining Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 56 Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613 at 631 [32]. See also Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 There was, however, no dispute in this Court concerning the correctness of the assessment that the value of the first to fifth respondents' rights, as assessed by Kyrou J, should be reduced by 25% to allow for any hypothetical conduct by Jan Emil that could have impeded recovery, although McDonald J correctly accepted that hypothetical unlawful conduct by Jan Emil could not be taken into account57. The focus of the cross-appeals was instead upon the conclusion of McDonald J and of the Court of Appeal that the first to fifth respondents' damages should be additionally reduced by reference to the 20% prospect of them succeeding in the Donation Agreement Proceedings in the Czech Republic. The Donation Agreement Proceedings should not reduce the loss The Court of Appeal upheld the conclusion of McDonald J that after the Donation Agreement was executed the first to fifth respondents still had a 20% chance of recovering the value of their anticipated judgment debt against Jan Emil. That chance was said to exist by successfully pursuing the Donation Agreement Proceedings and any subsequent enforcement proceedings against David and Paul. Judith's submissions on the cross-appeals in support of this conclusion reduced essentially to two points. Judith's first point was that the first to fifth respondents' cause of action against David and Paul under s 42a of the Czech Civil Code would render ineffective the transfer of title as a barrier to the enforcement of Jan Emil's obligations to pay the 11 December 2009 judgment debt. In effect, Judith's argument was that this claim was an extension of the first to fifth respondents' rights against Jan Emil and involved enforcing his obligations. The value of their rights prior to the Donation Agreement – quantified as the value of a 75% prospect of recovery upon enforcement – had, on that approach, not been entirely extinguished by the Donation Agreement, but rather had been reduced to the value of a 20% prospect of recovery. Judith's second point was that since the bringing of the Donation Agreement Proceedings was caused by Jan Emil's unlawful conduct, the prospect of success in those proceedings was a valuable benefit to the first to fifth respondents which should be brought into account in the assessment of their loss. 57 Talacko v Talacko [2018] VSC 751 at [49]-[50]. See Lewis v Australian Capital Territory (2020) 94 ALJR 740 at 775 [151]; 381 ALR 375 at 413-414. As to the first point, the short answer is that the first to fifth respondents' right of action in the Donation Agreement Proceedings under s 42a of the Czech Civil Code was not a remaining value of their rights against Jan Emil, which had been extinguished by the unlawful means conspiracy. The first to fifth respondents' rights against Jan Emil were recognised by Osborn J as rights to equitable compensation for a breach of the fiduciary duty admitted by clause 6 of the settlement agreement. Those rights became a judgment debt when quantified by Kyrou J. As the Court of Appeal rightly said, approving the reasoning of McDonald J on this point, the Donation Agreement "extinguished any possibility of recovering the judgment debt against the properties through Jan Emil's trustee in bankruptcy"58. The value of the first to fifth respondents' rights to equitable compensation against Jan Emil was reduced to zero by the Donation Agreement. By contrast, the Donation Agreement Proceedings involved a speculative prospect of recovery in different proceedings, for a different breach (concerning s 42a, not breach of fiduciary duty), against different persons (David and Paul), in relation to a different subject matter (the value of the Donation Properties). Hence, McDonald J, who heard expert evidence about the meaning of s 42a of the Czech Civil Code, described the provision as concerned with recovery against David and Paul, which would need to be enforced directly against them in yet another "separate proceeding"59. As to the second point, a defendant's liability to compensate for loss is usually reduced where a plaintiff takes successful action consequent upon the defendant's wrong to reduce their loss. In some cases, this principle is described as one of the rules of mitigation, being the usual principle that the claimant cannot recover for avoided loss60, even in some cases where a benefit is acquired and the steps taken were not mitigation measures that were reasonably required. In other 58 Bennett v Estate of Talacko (Decd) (An undischarged bankrupt) [2020] VSCA 99 59 Talacko v Talacko [2018] VSC 751 at [65]-[66]. 60 Thai Airways International Public Co Ltd v KI Holdings Co Ltd [2016] 1 All ER (Comm) 675 at 684-685 [32]. See also Ruthol Pty Ltd v Tricon (Australia) Pty Ltd (2005) 12 BPR 23,923 at 23,930 [40]; Clark v Macourt (2013) 253 CLR 1 at 9 [17]. cases, the principle is described simply as part of the principle of compensation that generally requires compensating advantages that are sufficiently connected to the wrongdoing to be deducted from the damages awarded for consequential loss61. The second to fifth respondents accepted that if they had recovered money from David or Paul as a result of the Donation Agreement Proceedings then that recovery would need to be brought into account62. Even assuming this to be correct, where, as here, those speculative proceedings were not required as a step in mitigation63, the difficulty with taking into account the 20% prospect of success arising from the Donation Agreement Proceedings in the assessment of loss is that this unlikely prospect cannot be said to be a benefit to the first to fifth respondents that has reduced their loss. It was not shown that there is any real value to the first to fifth respondents in the existence of a cause of action in a foreign court, with a very low prospect of recovery, which, if it occurs at all, may take up to ten years to achieve, and which no doubt will require considerable additional expense. It was not suggested, for instance, that there was any prospect of an assignment of this cause of action for value, even if a person with a legitimate interest in taking such assignment could be identified. If the 20% prospect of success were to reduce the damages of the first to fifth respondents this would therefore amount to an unjustifiable shift of the risk of those speculative proceedings from the wrongdoers to the victims. The cross-appeals should be allowed and orders made in the terms set out in the notices of cross-appeal, which were not the subject of dispute. In light of this conclusion, it is unnecessary to consider the second to fifth respondents' alternative 61 Ruthol Pty Ltd v Tricon (Australia) Pty Ltd (2005) 12 BPR 23,923 at 23,932-23,934 [44]-[51]; Harold R Finger & Co Pty Ltd v Karellas Investments Pty Ltd [2016] NSWCA 123 at [228]-[229]. See also Burrows, Remedies for Torts, Breach of Contract, and Equitable Wrongs, 4th ed (2019) at 147. 62 cf Fulton Shipping Inc of Panama v Globalia Business Travel SAU of Spain [2017] 1 WLR 2581; [2018] 1 All ER 45. 63 See Dhaliwal v Pade [2003] NSWCA 16 at [36], citing Pilkington v Wood [1953] ground of contention that the orders for payment of compensation, interest, and costs could be upheld as equitable compensation for equitable fraud. The second category of alleged damage: expenses incurred In written submissions before this Court, Judith reiterated the reasoning of McDonald J that the expenses of the Donation Agreement Proceedings remained a contingent, as opposed to an actual, loss because they might ultimately be recovered. The difficulty with that submission, as senior counsel for Judith correctly and properly conceded in this Court, is that, as a matter of principle, costs of litigation that are reasonably incurred in an attempt to reduce losses caused by wrongdoing are a head of loss64. In his decision concerning quantum, McDonald J said that the second to fifth respondents had already incurred €63,217.80 in connection with the Donation Agreement Proceedings of which no more than €1,800 would be recoverable from David and Paul65. In this Court, Judith advanced a new submission. She submitted that the expenses of the Donation Agreement Proceedings were irrecoverable because the Donation Agreement Proceedings might "fail for reasons that have nothing to do with the conspiracy" such as some particular "aspect of Czech law". This was not the same causation submission that had been advanced before McDonald J or in the Court of Appeal. The causation submission in those courts had been that the expenses of the Donation Agreement Proceedings were not caused by the unlawful means conspiracy because the proceedings might ultimately turn out to have been futile if the judgment debt could not be enforced. The obvious flaw in that causation submission was that but for the unlawful means conspiracy, the Donation Agreement Proceedings would never have been commenced and the expenses, a substantial amount of which is irrecoverable, would never have been incurred. The new submission in this Court was not based upon the lack of a causal link and thus was not subject to the same flaw. It was effectively a submission that until the Donation Agreement Proceedings are concluded, it could not be known whether the expenses of the Donation Agreement Proceedings were beyond the scope of liability for the consequences of the unlawful means conspiracy. The new 64 Gray v Sirtex Medical Ltd (2011) 193 FCR 1 at 11 [24], [26], quoting Berry v British Transport Commission [1962] 1 QB 306 at 321. 65 Talacko v Talacko [2018] VSC 751 at [100]-[101]. submission also was not clear from the second ground of appeal, which was said to support it. That ground relied only upon the ongoing nature of the Donation Agreement Proceedings and the possibility that a Czech court might order that the legal expenses be borne by the first to fifth respondents. There was no suggestion that the expenses might be irrecoverable because the reasons of the Czech court might put those expenses beyond the scope of liability for the unlawful means conspiracy. More fundamentally, as the second to fifth respondents submitted and Judith properly did not dispute, if this submission had been made in the courts below, it might have been met with expert evidence about the approach that the Czech courts might take. The point should not be taken on appeal to this Court when it might have been met by calling evidence below66. The grant of special leave on this ground should be revoked. Conclusion Orders should be made as follows: The grant of special leave to appeal on the second ground be revoked with costs. The appeal be dismissed. Special leave to cross-appeal be granted and the cross-appeals be allowed. Set aside order 2 of the orders of the Court of Appeal of the Supreme Court of Victoria made on 30 April 2020 and the orders of that Court made on 5 May 2020 and, in lieu of those orders, order that: the appeal be allowed; order 2 of the orders of the Supreme Court of Victoria made on 20 December 2018 be varied to replace the sum of $5,900,227.92 with the sum of $8,045,765.34 and the sum of $3,101,822.56 with the sum of $4,229,758.04; 66 Water Board v Moustakas (1988) 180 CLR 491 at 497. See also Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438. order 4 of the orders of the Supreme Court of Victoria made on 20 December 2018 be varied to replace the sum of $5,892,069.06 with the sum of $8,034,639.62 and the sum of $3,084,619.22 with the sum of $4,223,909.11; and the fourth respondent pay the appellants' costs of the application for leave to appeal and the appeal, to be taxed in default of agreement on the standard basis. The appellant pay the costs of the appeal and the cross-appeals. |
HIGH COURT OF AUSTRALIA PICO HOLDINGS, INC APPELLANT AND WAVE VISTAS PTY LTD (FORMERLY TURF CLUB AUSTRALIA PTY LTD) & ANOR RESPONDENTS Pico Holdings, Inc v Wave Vistas Pty Ltd [2005] HCA 13 5 April 2005 ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of Queensland made on 23 May 2003 and in their place order: the appeal to that Court is allowed; set aside the orders of Helman J made on 26 March 2002 and in their place declare that the appellant has an interest in the fund comprising the proceeds of sale of Lot 2 in Registered Plan No 817782 in the County of Ward, Parish of Nerang being all the land contained in title reference 1866 0224 ("the Property") corresponding with the equitable mortgage in its favour created by the contract between the appellant, the first respondent and Dominion Capital Pty Ltd arising from the oral promises of 25 April 2001, the letter of 4 May 2001 and Addendum No 2 to the Promissory Note dated 22 December 2000. Remit to the Court of Appeal of the Supreme Court of Queensland the question whether the appellant's equitable mortgage over the Property took priority over any interests in the Property held by the second respondent. Reserve to the Supreme Court of Queensland the question of the costs of the trial. On appeal from the Supreme Court of Queensland Representation: B W Walker SC with M R Pearce for the appellant (instructed by Gilbert & Tobin) G D Sheahan for the first respondent (instructed by Mallesons Stephen Jaques) H B Fraser QC with B T Porter for the second respondent (instructed by Thynne Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Pico Holdings, Inc v Wave Vistas Pty Ltd Contract – Parties to a contract – Sole director of first respondent company was principal actor on behalf of another company in securing a loan – Director, as borrower's actor, offered to use land owned by first respondent as further security to obtain a further extension of loan repayment – No reference was made to the first respondent, or to its ownership of the land, or to the fact that the borrower's actor was the first respondent's sole director – Lender agreed to extend the repayment date – Whether first respondent was a party to the agreement – Whether a reasonable person in position of lender could have understood that the first respondent was making an offer to provide security – Whether borrower's actor was in fact exercising his authority to offer the land as security – Whether the lender supplied consideration for the first respondent's promise. Corporations Law, ss 128(1), 128(4), 129(4), 180 and 181. GLEESON CJ, McHUGH, GUMMOW, HAYNE AND HEYDON JJ. This appeal from the Queensland Court of Appeal should be allowed. The principal relief to which the appellant, Pico Holdings, Inc ("the Lender") is entitled is a declaration that it has an interest in the fund comprising the proceeds of sale of what is identified in these reasons as the "Turf Club Land". This interest corresponds to an equitable mortgage of the Turf Club Land created in favour of the Lender in 2001. The Lender's written submissions suggested that the outcome of the appeal would be determined by the correction of errors in legal principle. However, this appears not to be so. Rather, the differences between the parties turn on questions of inferences from, and characterisation of, the following uncontroversial circumstances. The factual background The First Promissory Note of 8 September 2000. The Lender was a Californian corporation. On 8 September 2000, in circumstances of great urgency, the Lender made a loan of $US1 million to Dominion Capital Pty Ltd ("the Borrower"), a company registered in Victoria. The loan was to bear interest at eight percent per annum. It was said to be repayable on 8 September 2001. The terms were recorded in a Non-Negotiable Secured Promissory Note ("the First Promissory Note"). On the face of this Note, the Lender was given security over 350,000 common shares in "Dominion Wineries"1: an original share certificate was to be delivered to the Lender. It was never delivered, and the loan was never repaid. The Second Promissory Note of 22 December 2000. On 22 December 2000, the Lender made a loan ("the Loan") of $US1.2 million to the Borrower. Again the circumstances were very urgent. The Loan was to bear interest at 12 percent per annum. The terms of the Loan were recorded in a Non-Negotiable Secured Promissory Note ("the Second Promissory Note"). The Loan was to be secured by "Collateral" – share certificates of 400,000 unencumbered common shares in "Dominion Wineries Ltd" were to be delivered to the "Maker", ie to the Borrower2. On Default, the Lender was "entitled to exercise upon and to own the It is possible that this was a mistake for "Dominion Wines Ltd". In proceedings in the Supreme Court of Victoria which were heard and decided after the decision of the Queensland Court of Appeal in the present proceedings, Mandie J found that the relevant language was mistaken, held that Dominion (Footnote continues on next page) [Lender's] interest in the equity of Dominion Wineries". If, as the Second Promissory Note suggested on its face, the Lender was not entitled to possession of the share certificates, the "Collateral" was a rather weak form of security, even though the Second Promissory Note contained a representation that the share certificates were not encumbered and that there were no obligations or commitments on them which were outstanding, and even though it was agreed that a "Default" would be deemed to have occurred if the Borrower assigned the Collateral for the benefit of creditors. The principal and interest were repayable about a fortnight later on 5 January 2001. The principal actor on behalf of the Lender was Mr Hart, who was resident in California. The principal actor on behalf of the Borrower was Peter David Voss, who was resident in Australia. He signed the Second Promissory Note on behalf of the Borrower, giving as his title "Chairman and C.E.O.". The first extension of the repayment date. "In or about early/mid-January 2001", according to Mr Hart's evidence, the Lender extended the repayment date from 5 January 2001 to 30 April 2001, although Mr Hart did not tell Mr Voss this. Pursuant to Mr Hart's instructions, an officer of the Lender, Mr Mosier, executed Addendum No 1 to the Second Promissory Note recording the extension of the repayment date and dated it 4 January 2001. The Borrower's unsatisfactory performance. By the time of a crucial telephone conversation between Mr Hart and Mr Voss, which the former fixed as taking place "[i]n or about the end of April/early May 2001", and which the trial judge found to have taken place on 25 April 2001, there is no evidence that either the Borrower or the Lender had obtained delivery of the share certificates for 400,000 unencumbered shares in Dominion Wineries Ltd or Dominion Wines Ltd. Although the Second Promissory Note on its face did not give the Lender any right to possession of the share certificates, Mr Voss promised to send them in a conversation in early February 2001, and went so far as to say: "The certificates are in the mail". They did not arrive. However, Mr Voss told Mr Hart in March 2001 that a firm of Manly solicitors (Stewart Green Mijovich) Wines Ltd share certificates (not "Dominion Wineries Ltd" as specified on the face of the Second Promissory Note) were to be delivered and assumed that they were to be delivered to the Lender: Pico Holdings Inc v Voss [2004] VSC 263 at [105]- [112]. He reached these conclusions on evidence which was apparently more extensive than that which is before this Court. For the purposes of this appeal it does not matter whether the language is mistaken. evidently acting for the Borrower held a share certificate, issued by a company described as "Dominion Wines Ltd", as security. The Lender never received any share certificates, despite numerous requests. Nor did the Borrower repay the Loan. Mr Hart made many complaints about the failure to repay the Loan; in each case Mr Voss promised that the Loan would be repaid and claimed that the delay in repayment was caused by "administrative problems" which would be remedied shortly. The 25 April 2001 conversation. Mr Hart described the crucial conversation of 25 April 2001 in two ways in his evidence. The first description was: "In or about the end of April/early May 2001, I had a telephone conversation with Mr Voss in which he requested a further extension for repayment of the Loan. I told Mr Voss that the applicant required further security if the Loan was to be extended. Mr Voss then offered to me what he described as the Turf Club property at the Gold Coast, Queensland, the property the subject of these proceedings (the Turf Club Property). In reliance on his representation to me that the Turf Club property was worth at least double the value of the US$1.2 million Loan, I agreed with Mr Voss, relevantly, that: the Turf Club Property was acceptable further security for the Loan repayment and was to be provided to the applicant as further security for the Loan; that in due course the title deeds to the Turf Club Property and a recent valuation would be provided to the applicant; and the applicant would extend the Loan repayment date from 30 April 2001 to 31 May 2001." The second description immediately succeeded the first: "During that telephone conversation words to the following effect were spoken: Hart: 'We have got a continuing problem with our auditors and the US$1.2 Million Loan and the collateral. We are going to have to write it off unless we can demonstrate the adequacy of the collateral to our auditors.' Voss: 'Why don't I give you my Turf Club3 property at the Gold Coast. It's unencumbered. I will give you a recent valuation report. It's worth at least double the value of the Loan. It will be easier for the auditors to work out the value of the property than the winery. I will get the money to you shortly. There have been all sorts of administrative problems. Don't worry. I will definitely get the money to you. If you can wait a little longer until the admin issues are cleared up.' Hart: 'In addition to the property collateral Dominion Capital is going to have to give Pico additional compensation if it extends the due date for the US$1.2 Million Loan. We want the North American and Mexican BioModule waste water treatment technology marketing rights for our water company Vidler Water.' Voss: 'Okay.' Hart: 'I'll need the title deeds to the property and a recent valuation report on the property for our auditors.' Voss: 'Okay.'" There was no objection to these descriptions of the conversation. Although plainly at least the last sentence, and perhaps more, of the first description would have been vulnerable to an objection, it was admitted into evidence and remains in evidence. It is convenient to call the first description the "objectionable material", and the second description the "unobjectionable material". The 4 May 2001 letter. On or about 4 May 2001, Mr Hart received a letter on the letterhead of the Borrower from Mr Voss. It read: "This letter is to confirm that as consideration for PICO Holdings Inc agreeing to extend the maturity date for the US$1.2 Million loan to May 31st, 2001, I will provide additional substitute collateral. The collateral is 3 The second respondent criticised the use of initial capitals on the ground that they cannot have corresponded with anything actually said. Mr Voss, who did not disagree with the terms of the conversations as recorded by Mr Hart and who gave no instructions to counsel for the first respondent to cross-examine Mr Hart to suggest error, recalled himself as having "suggested the Turf Club property" as security. the deed for property described as Lot 2, Registered Plan 817782, County of Ward – Parish of Nerang, Local Government – Gold Coast (as described in Certificate of Title attached) with a valuation of $3.8 to $4.1 Million. This collateral is in substitute of [sic] previous collateral provided which will increase your security to effectively provide you with a loan value ratio of approximately 50%. My solicitors [scil Stewart Green Mijovich of Manly] will immediately provide a letter confirming that the deed is held in trust for the benefit of PICO Holdings Inc as collateral. In addition, a copy of the most recent valuation report will be forwarded. Furthermore, the draft Agreement granting Vidler Water Company the exclusive marketing rights to the BioModule Waste Water Treatment Technology for the US and Mexico is complete and will be sent shortly for your review." Below Mr Voss's signature and typed name appeared the words "CHAIRMAN & MANAGING DIRECTOR". The letter enclosed a photocopy of a certificate of title revealing that land with the title details set out in the letter was owned by a company called Turf Club Australia Pty Ltd. That company is the first respondent (its name has since been changed to Wave Vistas Pty Ltd). That land was the Turf Club Land. On receipt of the 4 May 2001 letter, Mr Hart instructed Mr Mosier to execute Addendum No 2 to the Second Promissory Note. This he did. Addendum No 2 deleted 30 April 2001 as the repayment date and inserted 31 May 2001. Addendum No 2 was dated 25 April 2001. It is convenient to note three aspects of the letter of 4 May 2001. First, it illustrates Mr Voss's Panglossian view of the world. He spoke of "additional substitute collateral" and "previous collateral provided"; it would have been more accurate to speak of collateral being provided, not in addition to, but in lieu of, collateral which had been promised on 22 December 2000, but had not yet been provided. Secondly, it may be doubted whether Mr Hart would have instructed Mr Mosier to execute Addendum No 2 had Mr Voss told him that although he had said on 25 April 2001 that the Turf Club Land was unencumbered and although the photocopy certificate of title sent on 4 May 2001 did not reveal it to be encumbered, he had offered a first registered mortgage over the Turf Club Land to the second respondent on 29 and 30 March 2001 as part of a solution to grave financial difficulties from which he was suffering, and the Borrower had written to the second respondent on 30 April 2001 alleging that an offer had been made to buy the Turf Club Land for $3-3.1 million and that he was expecting contracts to be exchanged within two weeks. Thirdly, the representation of fact by Mr Voss that "the deed is held in trust for the benefit of [the Lender] as collateral" was not true. Mr Voss gave evidence that the certificate of title was in fact in the possession of a firm of solicitors named Wockner Partners of the Gold Coast (not Stewart Green Mijovich of Manly) until it came into the possession of the second respondent in July 2001. In truth, Wockner Partners had a possessory lien over the certificate of title for unpaid fees of $15,865.88. They did not release it until the second respondent paid that sum on 11 December 2001. From 4 May to 30 August 2001. After 4 May 2001, on several occasions Mr Hart spoke to Mr Voss on the telephone and requested the certificate of title promised on 25 April 2001. On each occasion Mr Voss said it was on its way. The extended repayment date of 31 May 2001 came and went without repayment. Solicitors acting for the Lender requested confirmation that the Borrower's solicitors held the certificate of title in trust and requested advice as to the terms on which the certificate of title could be released by letter of 14 June 2001. Those solicitors followed that up by telephone messages. On 21 June 2001 they requested the certificate of title as a matter of urgency. On Friday 29 June 2001 they required from the Borrower's solicitors, by the close of business on the following Monday, 2 July 2001, confirmation that the Borrower's solicitors held the certificate of title in trust and an undertaking not to release it to anyone else. They also required, by the close of business on the following Tuesday, 3 July 2001, delivery of the certificate of title together with a recent valuation of the property. The letter concluded with a statement that a failure to satisfy the Lender's demands would result in a breach of the Borrower's obligations and cause the Lender to suffer significant damage. On 29 June 2001, the Lender's solicitors also sent a letter to the Borrower alleging that the failure to repay the Loan on 31 May 2001 was a breach of the Second Promissory Note, as amended by Addendum No 2, and that pursuant to cll 3(a) and 5 of the Second Promissory Note, the Borrower had two days to remedy the breach and repay the principal and interest. The letter demanded payment by 3 July 2001, and conveyed a threat by the Lender to exercise "its right of ownership" over the Turf Club Land and to apply to the court for relevant orders. The demands were not met. Not surprisingly, neither the confirmation nor the certificate of title were ever supplied. On 9 July 2001, the Lender instituted proceedings in the Supreme Court of Victoria against the Borrower for recovery of the Loan. On 30 August 2001, it obtained judgment. The present proceedings The Lender then instituted the present proceedings in the Supreme Court of Queensland against the first respondent. Initially it sought orders for the sale of the Turf Club Land owned by the first respondent. In the course of the proceedings, during Mr Voss's cross-examination, it came to light that on 21 May 2001 the first respondent had granted a mortgage to National Australia Bank Ltd. Accordingly, it was joined as second respondent. The Lender sought declarations that it had an equitable charge over the Turf Club Land, and that that charge had priority over the second respondent's mortgage. Helman J held that on 25 April 2001 the Lender and the Borrower made an oral agreement, the terms of which were recorded in the 4 May 2001 letter. However, he held that the first respondent was not a party to that agreement. He found that even if it had been, the agreement would not have been enforceable because of non-compliance with ss 11(1)(a)4 and 59 of the Property Law Act 1974 (Q)5. Hence the Lender had no equitable charge over the Turf Club Land, and the priorities dispute between the Lender and the second respondent did not arise6. The Court of Appeal of Queensland (McMurdo P, Jerrard JA and Mullins J) dismissed an appeal7. The Lender's pleaded case In the Amended Statement of Claim and at the trial the Lender put two cases in the alternative. The first alleged a bipartite transaction between the Lender and the first respondent pursuant to which the first respondent granted an equitable mortgage or charge over the Turf Club Land. The grant was said to have taken place on or 4 The respondents do not now press s 11(1)(a) as a bar to the Lender's success. This provides for the creation or disposition of an interest in land by writing signed by the person creating or conveying the same (or the agent of that person lawfully authorised in writing) or by a will or by the operation of law. 5 The text of s 59 is set out later in these reasons under the heading "Written memorandum or note". 6 Pico Holdings Inc v Turf Club Australia Pty Ltd [2002] QSC 86. 7 Pico Holdings Inc v Wave Vistas Pty Ltd [2003] QCA 204. about 25 April 2001; so far as it was oral it was "constituted" by the 25 April 2001 telephone conversation, and so far as it was written it was "constituted" by Addendum No 2 dated 25 April 2001 and the 4 May 2001 letter. Mr Voss was alleged to have been acting, both in the conversation and in signing the letter, on behalf of the first respondent. Alternatively, the Lender claimed that on or about 25 April 2001, the Lender, the first respondent and the Borrower agreed that the first respondent would cause the "title deeds" to the Turf Club Land to be delivered to the Lender. The agreement was said to have been "constituted" by the 25 April 2001 conversation, Addendum No 2 and the 4 May 2001 letter. These two claims raise several preliminary issues. Equitable mortgage or equitable charge? The first preliminary issue is whether, if the Lender had made out its case in other respects, it would have been entitled to an equitable mortgage or an equitable charge. The Amended Originating Application sought a declaration of equitable charge; the Amended Statement of Claim spoke of the first respondent having "granted an equitable mortgage or charge". The parties did not engage in debate about this, perhaps because what the Lender wanted when it began the proceedings was an order permitting it to exercise a power of sale, and a power of sale would exist in either case. Before the trial concluded on 7 March 2002 and judgment was given on 26 March 2002, the parties agreed that a contract to sell the Turf Club Land which had been entered by the first respondent on 11 February 2002 could proceed, and on 21 February 2002 the first respondent undertook that the proceeds would be held in its solicitor's trust account. In the circumstances it is convenient hereafter to speak of the interest allegedly created as an "equitable mortgage". What kind of equitable mortgage? The next issue is what kind of equitable mortgage the Lender was claiming. An equitable mortgage of the first respondent's Turf Club Land, of which it appeared on 4 May 2001 to be absolute owner, in favour of the Lender could have been created by the first respondent entering a specifically enforceable agreement to grant a legal mortgage over it. That appears to correspond with the first way in which the Amended Statement of Claim put the Lender's claim. It must fail. Neither the facts pleaded nor those proved established that on or about 25 April 2001 an equitable mortgage in that sense had been created. The trial judge and the Court of Appeal said nothing supporting the first way the claim was put, and the Lender did not attempt to revive it in this Court. The second way in which the Amended Statement of Claim put the Lender's claim is plainly not an allegation of an equitable mortgage created by actual deposit of title deeds. Rather it alleges an equitable mortgage created by entry into a specifically enforceable contract to deposit the title deeds with the Lender. That allegation is consistent with the demands made by Mr Hart and his solicitors from 5 May 2001 until the Victorian proceedings were instituted for delivery of the certificate of title. Assuming that the relevant promisor was the first respondent and not the Borrower, the evidence supported that allegation in several ways. On 25 April 2001 Mr Voss told Mr Hart that the "title deeds" to the Turf Club Land would be provided. According to the 4 May 2001 letter, the Turf Club Land was to be provided "in substitute of previous collateral": that is, as replacement for the weak security over the Dominion Wineries Ltd share certificates which would have been created by the Second Promissory Note had those share certificates been delivered to the Borrower. The terms of Addendum No 2 spoke of the Borrower's obligations being "secured by a deed for real property", and of the Lender having "a first lien on the real property pledged as collateral for the Note". Oral agreement, or partly oral and partly written? A third issue arises from the way in which the second claim is pleaded in the Amended Statement of Claim. It is not entirely clear whether it is alleged that the 4 May 2001 letter is an element of a partly oral and partly written contract, or whether it is alleged that it is evidence of an entirely oral contract made on 25 April 2001. The respondents and the trial judge treated the pleaded case as involving an allegation of the former kind. The trial judge found proved an allegation of the latter kind, but with the wrong parties from the Lender's point of view: "There was … an agreement reached in late April 2001 between Mr Hart acting on behalf of the [Lender] and Mr Voss acting on behalf of [the Borrower] as recorded in the facsimile transmission of 4 May 2001 and the second addendum to the promissory note. The first respondent was, however, not a party to the agreement." In this Court counsel for the Lender's primary position was to support the trial judge's conclusion of an oral agreement, but with the first respondent as a party. In the alternative he adopted a secondary position of contending for the pleaded agreement – one partly oral and partly in writing. Nothing prevents the Lender from reverting to its stance in the Amended Statement of Claim. In general, where a point is not taken in the court below and evidence could have been given there which by any possibility could have prevented the point from succeeding, it cannot be taken afterwards. But here the point was taken below, and in any event the respondents did not attempt to identify any evidence capable of being given there which by any possibility could have prevented the point from succeeding. Tripartite or bipartite? The events of late April to early May 2001 could have supported a conclusion of an oral bipartite agreement on 25 April 2001, an oral tripartite agreement on 25 April 2001, a partly oral and partly written bipartite agreement made between 25 April 2001 and 4 May 2001, or a partly oral and partly written tripartite agreement made between 25 April 2001 and 4 May 2001. It is not necessary to consider all the details of these and other permutations, because below it will be concluded that the case which the trial judge understood the Lender to be advancing is made out – a tripartite agreement to which the Lender, the Borrower and the first respondent were parties and by which Mr Voss, on behalf of the first respondent, contracted with the Lender to hand over the first respondent's certificate of title in consideration of the Lender giving forbearance to the Borrower. The respondents' conduct of the trial The defences relied on. The second respondent was joined in the proceedings after the oral evidence of Mr Hart and Mr Voss was completed. It did not file any defence. It did not seek the recall of Mr Hart or Mr Voss. Thus the conduct of the trial so far as it was concerned with the dealings between Mr Hart and Mr Voss was entirely in the hands of the first respondent. The first respondent's defence advances numerous answers to the Lender's contention that the first respondent had promised security over the Turf Club Land. Putting on one side the answers which have been unquestionably abandoned, the defences pressed at trial and still distinctly pressed in this Court are that no reasonable person in Mr Hart's position could have thought that the first respondent was entering the agreement; that Mr Voss, although authorised to enter the agreement on behalf of the first respondent, was not in fact exercising that authority at the material time; that there was no consideration for any promise by the first respondent to supply the certificate of title; that s 59 of the Property Law Act 1974 (Q) had not been complied with; and that the Lender could not take advantage of the doctrine of part performance. The respondents' acceptance of Mr Hart's evidence. The first respondent did not object to or seek to contest Mr Hart's version of the 25 April 2001 conversation, whether through Mr Voss's evidence or otherwise. Indeed Mr Voss's evidence indicated agreement with some of the key points that Mr Voss was in difficult financial and forensic circumstances. His testimony might be expected to contain, and to some extent did contain, surprises for all parties. The 4 May 2001 letter afforded some confirmation of Mr Hart's evidence about the 25 April 2001 conversation. Hence it is understandable that counsel for the first respondent did not choose to attack Mr Hart's account of the 25 April 2001 conversation, and counsel for the second respondent no doubt lacked instructions which would have permitted him to have Mr Hart recalled with a view to going beyond the cross-examination conducted by counsel for the first respondent. It is as if the parties chose to conduct the trial, at least in this respect, on agreed facts, the relevant facts being recorded in Mr Hart's affidavit material, both unobjectionable and objectionable. The respondents proceeded on the basis that those facts did not point to a contract. That strategy succeeded below. It is not now open to the respondents to take up a different strategy and concentrate only on the unobjectionable material and ignore the objectionable material. It is not the case that had objection been taken and upheld only the unobjectionable material would have remained: it would have been open to the Lender to seek leave to call further evidence of the conversation from Mr Hart orally in chief. To ignore the objectionable material now is to alter the blueprint of the case developed by the parties at the trial. Hence the key finding of the trial judge – that the first respondent was not party to any agreement – is not credit-based, for there was no assault on Mr Hart's credit and no contrary version of Mr Voss to be preferred on demeanour-based grounds. Rather, as the trial judge said, the conclusion he reached was based primarily on the letterhead of the 4 May 2001 letter and the description in it of Mr Voss's capacity. For those reasons, had the trial judge, instead of concluding that the agreement was wholly oral, concluded that an agreement was reached in late April and early May 2001 which was partly oral and partly in writing, he would still have found that the first respondent was not a party. Since his reasoning was not credit-based, it is open to this Court to consider for itself whether the Court of Appeal's refusal to depart from the trial judge's conclusion was sound. The "incomplete negotiations" case. The cross-examination of Mr Hart was directed to an argument that the negotiations of Mr Voss and Mr Hart had not progressed sufficiently far to arrive at a binding contract, and that there were unfulfilled preconditions to the existence of contractual liability. The first respondent appeared to be urging that no contract could be made until provision of a valuation establishing that the Turf Club Land was worth at least $US2.4 million; that the transaction was not contractual in character, but was merely designed to generate documentation which would satisfy the Lender's auditors; and that well after 25 April 2001 and 4 May 2001, the Lender appreciated that no binding agreement could be made until the first respondent had provided its written consent and various draft documents were settled. The trial judge impliedly rejected the first respondent's argument that the negotiations which might have led to a contract were incomplete. The argument was not repeated before the Court of Appeal. Neither respondent raised it in this Court by notice of contention or by written submissions provided in advance of the hearing. The belated revival of the "incomplete negotiations" case However, during the oral hearing of the appeal, each respondent did fleetingly return to the "incomplete negotiations" argument. So far as it was put, it was unconvincing. No agreement to extend time? For example, the second respondent submitted that the unobjectionable material did not establish any agreement to extend time. That overlooks the references to waiting "a little longer" and it overlooks the agreement on the extension to 31 May 2001 recorded in the objectionable material. No agreement by Mr Hart on 25 April 2001 to anything? Another example is the suggestion that the conversation of 25 April 2001 did not show Mr Hart to be agreeing to anything at all. The suggestion is unsound. First, the unobjectionable material can be read as setting out a conversation in which Mr Hart raised a problem, Mr Voss made an offer to solve it, and Mr Hart made two counter-offers, to each of which Mr Voss assented. Secondly, the objectionable material records an agreement by Mr Hart, and Mr Hart's affidavit did not state that the conversation recorded in the unobjectionable material exhausted the content of the agreement stated in the objectionable material. Waste water treatment technology marketing rights agreement condition precedent to contract? Another example is the claim that no contract could arise until the terms of the draft waste water treatment technology marketing rights agreement, referred to at the end of the 4 May 2001 letter, were settled. This point cannot be relied on now, since it was not pleaded. Disconformity between conversation and letter? Finally, the second respondent said that there was disconformity between the 25 April 2001 conversation and the 4 May 2001 letter. The letter said that Mr Voss's solicitors would "immediately provide a letter confirming that the deed is held in trust for the benefit of [the Lender] as collateral." It was submitted that the conversation did not refer to that. However, there is no inconsistency. In the 25 April 2001 conversation it was agreed that "in due course" the certificate of title would be provided. A promise to provide the letter confirming that the certificate of title was held in trust before the certificate of title was provided is not inconsistent with the promise to give delivery. In general, the theory that no agreement had been reached by 4 May 2001 encounters a fundamental difficulty: the evidentiary material before this Court does not report any asseveration by Mr Voss of that theory either in that letter or in any the present proceedings. later communication before the commencement of Further, the transaction is capable of analysis as one in which the Lender promised forbearance in return for two promises – a promise by the first respondent to provide a certificate of title to the Turf Club Land and a promise by the Borrower to supply the waste water treatment technology marketing rights. The second of those promises may well have been, not a condition precedent to the existence of a contract, but only at most a condition subsequent, which if breached was actionable in damages and would have entitled the Lender to terminate. The Lender performed its promise by granting forbearance until 31 May 2001, even though none of the promises made to the Lender were performed. A construction of the parties' dealings which entitled the Lender to waive whatever its rights were under the second promise, and to seek specific performance only of the first – to provide the certificate of title – is possible and plausible. But these questions need not be examined further. It might have been open to the respondents to re-agitate their arguments based on incompleteness and uncertainties in the negotiations, but the fact is that in substance they did not do so. The respondents touched on the arguments, but did not press them. This makes it unnecessary to deal with them. Who was to provide the security? The key submission. The key submission of the respondents – some refinements will be noted below – was that when on 25 April 2001 Mr Voss proposed the supply of security, no reasonable person in Mr Hart's position could have understood that an offer by the first respondent to provide security was being made. The Borrower wanted an extension of time to repay the Loan, and the Lender was prepared to give it. Mr Hart and Mr Voss made no reference to the first respondent, or to its ownership of the Turf Club Land, or to the fact that Mr Voss was its sole director. The position was not altered by Addendum No 2, which did not mention anyone except the Lender and the Borrower. Nor was the position altered by the 4 May 2001 letter: it was on the letterhead of the Borrower, and the reference to Mr Voss as Chairman and Managing Director was to be understood as a reference to that office in the Borrower. In short, the respondents submitted that the only relevant promise was a promise by the Borrower to procure the grant of security over the Turf Club Land; there was no promise by the first respondent to grant it. The respondents also advanced a related contention: that it has not been shown either that the first respondent intended to be bound, or that Mr Voss was exercising his authority to act on its behalf. In his evidence Mr Voss conceded very early in cross-examination that he was the sole director of the first respondent and had authority to offer the Turf Club Land as security. In this Court the respondents did not dispute that evidence and did not dispute that Mr Voss was the effective controller of the first respondent. Rather they submitted that, although Mr Voss had authority to offer the Turf Club Land as security, he was not in fact exercising that authority, and hence there was insufficient evidence of an intention on the part of the first respondent to be bound. A further submission was that even if Mr Voss had actual authority, there was no "outward manifestation" of an exercise of it. The pre 25 April 2001 background. In evaluating these arguments the following background matters must be borne in mind. Mr Hart had known Mr Voss since June or July 1998. Mr Hart and the Lender had had many dealings with Mr Voss from then until 2001. Mr Hart knew before 25 April 2001 that in Mr Voss's commercial empire there were many entities for which he claimed to have power to act, as the second respondent conceded. Mr Hart gave evidence that "Mr Voss was in the habit of referring to the number of entities he was involved with as his companies." He knew of the Borrower (Dominion Capital Pty Ltd) and Dominion Wineries Ltd, both of whom were referred to in the Second Promissory Note. He knew of Dominion Wines Ltd, which according to Mr Hart was referred to in the negotiations leading up to and following the making of the First Promissory Note, although the First Promissory Note refers to "Dominion Wineries". Mr Hart also knew of a company described in some parts of the Second Promissory Note as "Dominion [Winemakers]". Mr Hart knew of Dominion International Investments, Inc, a Canadian company. Mr Hart knew of a company Mr Voss called "Dominion Japan". According to Mr Hart, on 8 September 2000 the Lender sold some shares to Dominion Capital Japan, Inc, and Mr Hart described that company as "Mr Voss' nominated purchaser". At periods apparently before 25 April 2001, Mr Hart had observed on the Dominion International website references to "Dominion Wines" and "Dominion Estates". It may be that Mr Hart was confused about the company which he in his affidavits and his solicitors in their letters to Mr Voss persistently referred to as "Dominion Wines Ltd". It may be that it was actually called "Dominion Wineries Ltd". In oral evidence he referred to the company, the shares in which were to be the Collateral under the Second Promissory Note, as "Dominion Winery" and "winery". Another possibility is that the reference in the First and Second Promissory Notes to "Dominion Wineries Ltd" was a mistake for "Dominion Wines Ltd"8. The question of whether, and how far, Mr Hart was confused was not investigated in oral evidence. But, whether he was right or confused, his mental state was that of a man who perceived Mr Voss to act through numerous corporate vehicles. There are instances of Mr Voss using the first person singular pronoun not only in relation to his proposals for the Borrower but also in relation to his proposals for companies other than the Borrower. When Mr Voss told Mr Hart that it would be easier for the auditors to work out the value of the "Turf Club property" than the "winery", he doubtless was referring by the last word to an asset of Dominion Wineries Ltd or Dominion Wines Ltd, and implying that the "Turf Club property" was owned by some other company. Hence when on 25 April 2001 Mr Voss used the first person singular pronoun in relation to the company providing the Turf Club Land, he was reasonably to be understood as speaking not of the Borrower but of another company. The effect of the 4 May 2001 letter. But any doubts a reasonable person in Mr Hart's position might have had on 25 April 2001 about which company was the promisor would have been cleared up on receipt of the 4 May 2001 letter and its enclosure. When Mr Voss used the first person pronoun to promise substitute collateral on 25 April and 4 May 2001, he can only have been referring to 8 See Pico Holdings Inc v Voss [2004] VSC 263, discussed in footnote 2. himself, to the Borrower, or to the owner of the substitute collateral. No party contends that he was referring to himself. Was he referring to the Borrower? That was a corporation which seemed to be in an acute financial crisis, which had not been able to repay an urgently requested and very short-term loan advanced under the Second Promissory Note and which had not complied with its duties in relation to the Collateral created by both Promissory Notes. The known difficulties and non-performance of the Borrower would prevent any reasonable person from thinking that the Borrower owned unencumbered land worth twice as much as the $US1.2 million debt under the Second Promissory Note. That left as the promisor the owner of the Turf Club Land. Mr Voss's language suggested that he controlled the corporation which owned the land. A reasonable person in the position of Mr Hart would have appreciated on 4 May 2001 that the Borrower did not own the land and that the first respondent, whose name appeared on the copy of the certificate of title attached to the letter of 4 May, did. It is contrary to reason to conclude that Mr Voss's promise to supply a certificate of title over the Turf Club Land was a promise by the Borrower, which did not own that land, rather than a promise by the first respondent, which did. Hence a reasonable person in Mr Hart's position would have inferred that Mr Voss was purporting to act on behalf of the first respondent. The contrary inference from the Borrower's letterhead on the 4 May 2001 letter relied on by the respondents is nullified by the disclosure of the true position in the copy of the certificate of title which the letter enclosed. It is common ground that Mr Voss in fact had the authority to commit the first respondent to that promise. There is nothing more that he could have done to suggest that he was acting on that authority. There was no reason for Mr Voss to take the unusual course of making any "outward manifestation" of the authority he possessed or of its exercise beyond his conduct in purportedly exercising it by speaking as he did on 25 April 2001, saying what he said in the 4 May 2001 letter, and enclosing a copy of the certificate of title to the first respondent's land. The 4 May 2001 letter would have indicated to a reasonable person in Mr Hart's position that Mr Voss was an officer of the first respondent. That would have entitled him to assume that Mr Voss was properly performing his duties to the first respondent, given that he did not know or suspect that that assumption was incorrect: see s 128(1) and (4) and s 129(4) of the Corporations Law9. Hence a reasonable person in Mr Hart's position would have concluded not only that Mr Voss had actual authority from the first respondent, as he did, but that he was exercising it. Mr Hart's failure to seek proof of the first respondent's consent and authority. The first respondent submitted that if a reasonable person in the position of Mr Hart had appreciated that the first respondent was involved in providing its security, he would have done three things. He would have asked for proof of its consent and proof of authority from the company. He would have done what he did after 4 May 2001 – that is, demand a letter saying that the certificate of title was held by the solicitor in trust, and demand delivery of the certificate of title. And he would have done what he did on 13 July 2001 – that is, demand execution of a mortgage over the Turf Club Land. This submission is flawed. First, even if (which, in view of his past dealings with Mr Voss, may be doubted) Mr Hart's conduct differed from what a reasonable person in his position would have done, that cannot affect the question whether a contract was arrived at. Secondly, since Mr Voss had actual authority to bind the first respondent, Mr Hart's failure to inquire was without significance: a truthful response to his inquiry would not have altered the 9 The Corporations Law provided: (1) A person is entitled to make the assumptions in section 129 in relation to dealings with a company. The company is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect. (4) A person is not entitled to make an assumption in section 129 if at the time of the dealings they knew or suspected that the assumption was incorrect. (4) A person may assume that the officers and agents of the company properly perform their duties to the company." conclusion at which a reasonable man in his position would have arrived without inquiry. Thirdly, since a reasonable person in Mr Hart's position would have thought that the first respondent had promised to supply the certificate of title, the Lender's demands for the certificate of title to be provided did not establish a recognition by the Lender of some deficiency in the formation of the contract; rather they pointed to a belief that the contract had been validly formed, that it had been fully performed by the Lender, and that all that remained was for the obligations owed to the Lender to be performed. Fourthly, the Lender's demands for an executed mortgage on 13 July 2001 were made only after it had become apparent that the April-May agreement was not being performed and a new agreement was allegedly struck between Mr Hart and Mr Voss: they cast no light on what a reasonable person in Mr Hart's position believed had been agreed by 4 May 2001 or would have done in that state of belief. Mr Hart's personal reaction to the copy certificate of title. The respondents relied on Mr Hart's evidence of his mental state on receiving the copy of the certificate of title enclosed with the 4 May 2001 letter. The evidence does not make it clear whether Mr Hart did not notice the name of the owner, or whether he did not infer that the owner was not the Borrower. But Mr Hart's personal reaction is immaterial. What matters is the reaction of a reasonable person in his position, and that person would have appreciated that the owner was not the Borrower. Later "admissions" of Lender. The first respondent relied on the fact that in the Victorian Supreme Court proceedings the Lender and Mr Hart appeared to proceed on the basis that it was the duty of the Borrower to deliver the certificate of title, the recent valuation and the so-called "Water Treatment Exclusive Marketing Agreement". But that conduct is not inconsistent with the stand the Lender now takes, and it is not an admission which can stand against the view that a reasonable person in Mr Hart's position would have formed of the events of 25 April and 4 May 2001. Lack of benefit for first respondent. Finally, an argument advanced by the second respondent was that Mr Voss could not have been exercising his authority as a director of the first respondent, because to grant security to the Lender over the first respondent's Turf Club Land in order to assist the Borrower to obtain forbearance conferred no benefit on the first respondent. According to the second respondent, a likelier explanation for what happened was that Mr Voss promised on behalf of the Borrower that the Borrower would provide the certificate of title, intending to fulfil that promise by making arrangements with, and beneficial to, the first respondent to enable him to cause the Borrower to fulfil the promise. Attention was directed to the following passage in an affidavit of Mr Voss's, particularly the last sentence: "In those circumstances there was never a concluded agreement between [the Lender] and [the Borrower] regarding the Turf Club property. Moreover, there was never any agreement between [the first respondent] and any other entity that it would grant security over its assets in support of any other entities' debts. It was never proposed that [the first respondent] would get any benefit from the granting of any such security." That passage was, it seems, not objected to, and Mr Voss was not cross- examined on it. Its probative value is very low: it appears at the end of an affidavit as a brief summary of Mr Voss's case, apparently generated by a lawyer. And it does not actually say that the first respondent got no benefit, merely that it was never proposed that it would. There was no more evidence that the offer by Mr Voss of the first respondent's land as security to the Lender was without benefit to the first respondent than there was that his offer of the first respondent's land as security to the second respondent was without benefit to the first respondent. This argument of the second respondent should be rejected. The lack of benefit issue was not pleaded. Even if it had been pleaded, by reason of s 128(1) and s 129(4) of the Corporations Law Mr Hart was entitled to assume that Mr Voss was properly performing his duties to the first respondent, and hence was acting with care and diligence, in good faith and in the best interests of the first respondent, and for a proper purpose: see ss 180 and 181 of the Corporations Law. In consequence, s 128(1) debarred the first respondent from asserting that that assumption was incorrect. Further, to seek to infer from the lack of benefit to a particular company that Mr Voss was not intending to act on its behalf is wholly unconvincing: a man whose problems were as pressing and whose actions were as shifty as Mr Voss's were in 2000-2001 is very unlikely to have been guided by scruples of that kind. Even if he was, a promise by the Borrower to procure the first respondent to put up the Turf Club Land as security would raise the issue of benefit to the first respondent at a later stage, and would require it to be resolved by a process of internal dialogue in Mr Voss's brain between two corporations which he controlled. The difficulty of establishing a benefit to the first respondent was never advanced by Mr Voss after 4 May 2001 as a reason for not supplying the certificate of title. The complicated, indirect and unrealistic transaction for which the second respondent argues is much less likely than the simple transaction for which the Lender argues. Consideration In the courts below only Jerrard JA dealt with this question. He said that there was a "lack of any obvious consideration"10. He continued11: its "The [Lender] contended that consideration was provided by forbearance to sue [the Borrower] for the money lent, and that a request for that forbearance by [the first respondent], to be implied from the circumstances, was sufficient to bind [the first respondent]. As the first respondent submits, the problem with that argument is that there was no 'forbearance' promised or granted in the unusual circumstances of this case. Instead, the [Lender] had 'threatened' to write off the debt, not to enforce it; and it was Mr Voss who responded on [the Borrower's] behalf to that 'threat' with a request for an extension. No one bargained to obtain forbearance." The first respondent supported this conclusion by contending that the first respondent did not request any extension of time or indulgence in favour of the Borrower: the only relevant request came from the Borrower. This reasoning depends on three propositions. The first is that the Lender had threatened to write off the Loan, not to enforce it. The second proposition is that the Borrower, not the first respondent, met that threat with a request for an extension. The third proposition is that it is not sufficient that there be forbearance in fact: no forbearance was bargained for, and hence none was promised. The first proposition, that the Lender had threatened to write off the Loan, not to enforce it, is only defensible by concentrating on the second sentence of what Mr Hart said in the unobjectionable material describing the 25 April 2001 repeated conversation, and by communications which Mr Hart had with Mr Voss from 6 January 2001 about the Borrower's failure to repay the Loan. It ignores the first two sentences of the objectionable material, according to which Mr Voss requested a further extension, and Mr Hart said that the Lender required further security if there was to be a further extension. And it ignores the Lender's strenuous attempts after ignoring much else. ignores the 10 Pico Holdings Inc v Wave Vistas Pty Ltd [2003] QCA 204 at [18]. 11 Pico Holdings Inc v Wave Vistas Pty Ltd [2003] QCA 204 at [19]. 4 May 2001 to recover the Loan, including the commencement of both the Victorian and the Queensland litigation. It defies belief that if the negotiations of 25 April 2001 and 4 May 2001 had not taken place, Mr Hart would meekly have written off the Loan without any attempt to obtain repayment. Read as a whole, the relevant evidence indicates an implied threat by the Lender communicated by Mr Hart to enforce the Loan and refuse forbearance unless further security was provided. This first proposition was also rejected by the first respondent, which, in another part of its submissions, accepted that the "purpose of the communications [on 25 April 2001] was to seek an extension of time in which to repay a debt." The second proposition, that the Borrower, not the first respondent, requested the extension, is immaterial. It does not matter who requested the extension. The only real question is that posed by the third proposition: whether forbearance was promised. The third proposition, that forbearance was neither bargained for nor promised, both depends on a misreading of the unobjectionable material, and excludes from consideration the objectionable material. The unobjectionable material supports a conclusion that the Lender impliedly promised to forbear – to "wait a little longer" – if the title deeds, a valuation report and the waste water treatment technology marketing rights were supplied. The objectionable material proves a promise by the Lender to extend the repayment date to 31 May 2001. The Lender's contention that it supplied consideration for the first respondent's promise is sound. The first respondent advanced one other consideration argument – that the Lender conferred no benefit on the first respondent, and that the first respondent "was not a party to any consideration." This argument is fallacious. Consideration must move from the promisee (the Lender); it need not move to the promisor (the first respondent). Written memorandum or note Section 59 of the Property Law Act 1974 (Q) provided: "No action may be brought upon any contract for the sale or other disposition of land or any interest in land unless the contract upon which such action is brought, or some memorandum or note of the contract, is in writing, and signed by the party to be charged, or by some person by the party lawfully authorised." A binding promise for the delivery of a certificate of title by way of security is a contract to create an equitable mortgage and, if specifically enforceable, creates an interest in the relevant land. The respondents did not challenge these propositions. The promise to deliver the certificate of title in this case, being backed by consideration, which has been fully performed, and being clear, is specifically enforceable. The letter of 4 May 2001 is a note of that contract. It identifies the relevant promise of the first respondent, namely to provide the certificate of title: "I will provide additional substitute collateral. The collateral is the deed for" the Turf Club Land. It identifies the other promises of the first respondent. It identifies the consideration moving from the promisee (the Lender) for the creation of the equitable mortgage (namely, the extension of the maturity date of the Loan to 31 May 2001). The only point relied upon by the respondents was that the letter was signed by Mr Voss in his capacity as an officer of the Borrower, not the first respondent. That point fails: the first respondent is the party which executed the letter for the reasons given above in concluding that the first respondent was party to the contract12. Part performance Since s 59 is satisfied, it is unnecessary to consider whether there were sufficient acts of part performance. Orders The matter must be remitted to the Court of Appeal of Queensland for determination of the outstanding question of priorities, which did not arise on the reasoning of the courts below and was not dealt with by them. It will be for the Court of Appeal to determine whether the proceedings should continue there or be remitted to a single judge. The appellant should have an order for its costs to date in the Court of Appeal and in this Court. Since the appellant may yet fail in the proceedings as a whole, the costs of the trial should be reserved to the Supreme Court of Queensland. The claims for relief in the appellant's Amended Originating Application (save for that relating to priorities) have been overtaken by the sale of the Turf Club Land and the trust over the proceeds of sale, and more appropriate orders should be made as follows: The appeal is allowed with costs. The orders made by the Court of Appeal of Queensland on 23 May 2003 are set aside and in lieu thereof order: appeal allowed with costs; the order and judgment of Helman J given on 26 March 2002 are set aside and in lieu thereof declare that the appellant has an interest in the fund comprising the proceeds of sale of Lot 2 in Registered Plan No 817782 in the County of Ward, Parish of Nerang being all the land contained in title reference 1866 0224 ("the Property") corresponding with the equitable mortgage in its favour created by the contract between the appellant, the first respondent and Dominion Capital Pty Ltd arising from the oral promises of 25 April 2001, the letter of 4 May 2001 and Addendum No 2 to the Promissory Note dated 22 December 2000. The Court remits to the Court of Appeal of Queensland the question whether the appellant's equitable mortgage over the Property took priority over any interests in the Property held by the second respondent. The Court reserves to the Supreme Court of Queensland the costs of the trial. |
HIGH COURT OF AUSTRALIA AND APPELLANT RESPONDENT [2013] HCA 56 18 December 2013 ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 9 November 2012, 13 December 2012 and 24 December 2012 and, in their place, order that: the appeal to that Court be dismissed with costs; the cross-appeal to that Court be allowed in part with costs; and paragraph 3 of the order of the Supreme Court of New South Wales made on 8 November 2011 be set aside and, in its place, order that, subject to paragraph 5 of that order and subject to all costs orders already made in the proceedings, David Macourt pay Anne Clark's costs of the proceedings in that Court on and after 30 May 2009 on an indemnity basis and otherwise on the ordinary basis. On appeal from the Supreme Court of New South Wales Representation D F Jackson QC with A R R Vincent and L M Jackson for the appellant (instructed by Norton Rose Fulbright Australia) C M Harris SC with H Altan for the respondent (instructed by Redmond Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Contract – Damages – Vendor of business failed to deliver assets compliant with warranty – Purchaser bought compliant assets from alternative supplier – Purchaser used compliant assets in business and charged fee covering costs of buying them – Whether damages measured by reference to amount purchaser was unable to recoup in using assets in business or by reference to cost of buying compliant assets at date of breach – Whether purchaser mitigated loss by charging fee covering costs of buying compliant assets. Words and phrases – "expectation interest", "same situation ... as if the contract had been performed". HAYNE J. The appellant and respondent were registered medical practitioners who each specialised in providing assisted reproductive technology services. In 2002, the appellant agreed to buy assets of St George Fertility Centre Pty Limited, a company which was controlled by the respondent and which provided medical and assisted reproductive technology services to patients. The company ("the vendor") agreed to sell certain assets of the practice, including a stock of frozen donated sperm. The respondent guaranteed the vendor's obligations under the contract. The vendor warranted that the identification of donors of the sperm complied with specified guidelines. There is now no dispute that, of the stock of sperm delivered, 1,996 straws which the appellant would have expected to be able to use were not as warranted and were unusable. The appellant could not buy suitable replacement sperm in Australia but could in the United States of America. The primary judge found that buying 1,996 straws of replacement sperm from the American supplier ("Xytex") would have cost about $1 million at the time the contract was breached. The purchase price for the assets (including the stock of frozen donated sperm) was less than $400,000. The appellant accepted that ethically she could not charge, and in fact had not charged, any patient a fee for using donated sperm greater than the amount the appellant had outlaid to acquire it. How should the appellant's damages for breach of warranty be fixed? The proceedings In the Supreme Court of New South Wales, Macready AsJ entered judgment for the appellant against the vendor for breach of warranty, and against the respondent as guarantor of the vendor's obligations, for damages to be assessed. Those orders were not the subject of appeal. On the assessment of damages, the primary judge (Gzell J) assessed1 the damages for breach of warranty as the amount that the appellant would have had to pay Xytex (at the time the contract was breached) to buy 1,996 straws of sperm. On appeal, the Court of Appeal (Beazley and Barrett JJA and Tobias AJA) held2 that the appellant should have no damages for the vendor's breach of warranty. The appellant had bought straws of sperm from Xytex to use in treating patients and had charged each patient a fee which covered the costs the appellant had incurred in buying the straws that were used in treating that patient. The Court of Appeal held that the appellant had thus avoided any loss she would otherwise have sustained. 1 St George Fertility Centre Pty Ltd v Clark [2011] NSWSC 1276. 2 Macourt v Clark [2012] NSWCA 367. Hayne By special leave, the appellant appealed to this Court seeking orders reinstating the award of damages made by the primary judge. The appeal should be allowed. Principles At no stage of this litigation has either party submitted that the assessment of the damages due for the vendor's breach of contractual warranty called for the modification of any principle, let alone the application of some new principle. There was, therefore, no dispute in this Court, or in the courts below, that a plaintiff who sues for breach of contract is to be awarded as damages "that sum of money which will put the party who has been injured ... in the same position as he [or she] would have been in if he [or she] had not sustained the wrong for which he [or she] is now getting his [or her] compensation or reparation"3. Nor was there, or could there have been, any dispute that when a contract has been breached, the position in which the plaintiff is to be put, by an award of damages, is the position in which the plaintiff would have been if the contract had been performed4. The only dispute between the parties was about how these principles were to be applied in this case. Any difficulty encountered in applying these principles stems ultimately from the failure, when speaking of "compensation" for "loss", to identify what "loss" is being compensated. Identification of the relevant loss does not depend (as much of the respondent's argument assumed) on whether the contract can be classified as a contract for the sale of goods. Three different forms of "loss" might be identified. First, there might be a loss constituted by the amount by which the promisee is worse off because the promisor did not perform the contract. That amount would include the value of whatever the promisee outlaid in reliance on the promise being fulfilled. Second, the loss might be assessed by looking not at the promisee's position but at what the defaulting promisor gained by making the promise but not performing it. Third, there is the loss of the value of what the promisee would have received if the promise had been performed. Subject to some limitations, none of which was said to be engaged in this case, damages for breach of contract must be measured5 by reference to the third 3 Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39. 4 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 286 [13]; [2009] HCA 8. See also Robinson v Harman (1848) 1 Exch 850 at 855 [154 ER 363 at 365]. 5 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 286 Hayne kind of loss: the loss of the value of what the promisee would have received if the promise had been performed. As Professor Fuller and Mr Perdue wrote6, many years ago: "This seems on the face of things a queer kind of 'compensation'. ... In actuality the loss which the plaintiff suffers (deprivation of the expectancy) is not a datum of nature but the reflection of a normative order. It appears as a 'loss' only by reference to an unstated ought. Consequently, when the law gauges damages by the value of the promised performance it is not merely measuring a quantum, but is seeking an end, however vaguely conceived this end may be." As those authors demonstrated7, the protection which the law thus gives to the expectation that a contract will be performed can be seen as resting on, first, "the need for curing and preventing the harms occasioned by reliance" upon the expectation of performance, and second, "on the need for facilitating reliance on business agreements". The loss which is compensated reflects a normative order in which contracts must be performed. Valuing what should have been received Under the contract which the appellant made, she should have received 1,996 more straws of sperm having the warranted qualities than she did receive. The relevant question in the litigation was: what was the value of what the appellant did not receive? The answer she proffered in this Court was that it was the amount it would have cost (at the date of the breach of warranty) to acquire 1,996 straws of sperm from Xytex. That answer should be accepted. The answer depends upon determining the content of the unperformed promise. The answer does not depend upon whether the contract can be described as one for the sale of goods or for the sale of a business. How much the appellant paid for the benefit of the promise is not relevant. It does not matter whether the value of what she did not receive was more than the price she had agreed to pay under the contract or (if it could have been determined) the price she had agreed to pay for the stock of sperm. The extent to which the appellant could have turned the performance of the promise to profit would be relevant only if the appellant had claimed for loss of profit. She did not. She 6 Fuller and Perdue, "The Reliance Interest in Contract Damages: 1", (1936) 46 Yale Law Journal 52 at 53. 7 Fuller and Perdue, "The Reliance Interest in Contract Damages: 1", (1936) 46 Yale Law Journal 52 at 62. Hayne sought, and was rightly allowed by the primary judge, the value of what should have been, but was not, delivered under the contract. Mitigation? As already noted, however, the Court of Appeal concluded8 that the appellant had mitigated her loss by buying replacement sperm from Xytex. In respect of "the loss of each straw of replacement sperm actually sourced from Xytex" before the date of assessment of damages, Tobias AJA concluded9 that the chief component of the appellant's "loss" would be "the sum (if any) representing that part of the overall cost of acquisition of that straw not recouped from a patient". And in respect of "the residue of the 'lost' 1996 straws over and above those in fact replaced by Xytex sperm up to the date of trial", Tobias AJA concluded10 that "the appropriate course would have been to assume that [the appellant] would continue to source straws of donor sperm from Xytex at a cost consistent with that which had prevailed since August 2005, and that she would continue to recoup from patients the same proportion of that cost as she had done in the past". On this footing, Tobias AJA concluded11 that the appellant's damages in respect of straws not "replaced" would be "the aggregate of the discounted present value of the un-recouped balances (if any) of that cost as at the date of their assessment" (emphasis added). Two points must be made about this analysis. First, the calculations described would reveal whether, and to what extent, the appellant was, or would be, worse off as a result of the breach of warranty. That is, the calculations of the net amount which the appellant had outlaid, and would thereafter have to outlay, would reveal the amount needed to put the appellant in the position she would have been in if the contract had not been made. The calculations would not, and did not, identify the value of what the appellant would have received if the contract had been performed. Second, the reference to mitigation of damage was apt to mislead. In order to explain why, it is necessary to say something about what is meant by "mitigation" of damage. [2012] NSWCA 367 at [127] per Tobias AJA (Beazley and Barrett JJA agreeing). [2012] NSWCA 367 at [129]. 10 [2012] NSWCA 367 at [130]. 11 [2012] NSWCA 367 at [130]. Hayne For present purposes, "mitigation" can be seen as embracing two separate ideas12. First, a plaintiff cannot recover damages for a loss which he or she ought to have avoided, and second, a plaintiff cannot recover damages for a loss which he or she did avoid. The Court of Appeal's analysis, and the respondent's argument in this Court, both depended upon engaging the second of these propositions. In this Court, the respondent submitted, correctly, that it is a proposition recognised in the speech of Viscount Haldane LC in British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd13. But there remains for consideration how the proposition applied in this case. The appellant's subsequent purchases and use of replacement sperm left her neither better nor worse off than she was before she undertook those transactions. In particular, unlike British Westinghouse and other cases referred to14 in the speech of Viscount Haldane, the appellant obtained no relevant benefit from her subsequent purchases of sperm. The purchases replaced what the vendor had agreed to supply. The purchase price paid for the replacement sperm revealed the value of what was lost when the vendor did not perform the contract. But the commercial consequences flowing from the appellant's subsequent use of those replacements would have been relevant to assessing the value of what should have been supplied under the contract only if she had obtained some advantage from their use, or if she had alleged that the replacement transactions had left her even worse off than she already was as a result of the vendor's breach. If she had obtained some advantage, the value of the advantage would have mitigated the loss she otherwise suffered. If she had been left even worse off (for example by losing profit that otherwise would have been made), that additional loss may have aggravated her primary loss. But the appellant was not shown to have obtained any advantage from the later transactions and she did not claim that they had left her any worse off. Those transactions neither mitigated nor aggravated the loss she suffered from the vendor not supplying what it had agreed to supply. The value of that loss was revealed by what the appellant paid to buy replacement sperm from Xytex. 12 cf Chitty on Contracts, 31st ed (2012), vol 1 at 1805-1806 [26-077]. 13 [1912] AC 673 at 689-690. 14 Staniforth v Lyall (1830) 7 Bing 169 [131 ER 65]; Erie County Natural Gas and Fuel Co v Carroll [1911] AC 105; Wertheim v Chicoutimi Pulp Co [1911] AC 301. Hayne Showing that the appellant had charged, or could charge, third parties (her patients) the amount she had paid to acquire replacement sperm from Xytex was irrelevant to deciding what was the value of what the vendor should have, but had not, supplied. If the contract had been performed according to its terms, the appellant would have had a stock of sperm having the warranted qualities which she could use as she chose. She could have stored it, given it away or used it in her practice. In particular, she could have used it in her practice and charged her patients nothing for its supply. But because the vendor breached the contract, the appellant could put herself in the position she should have been in (if the contract had been performed) only by buying replacement sperm from Xytex. Whatever transactions she then chose to make with her patients are irrelevant to determining the value of what should have been, but was not, provided under the contract. Conclusion and orders For these reasons, and for the reasons given by Keane J (with which I agree generally), the appeal should be allowed. Consequential orders should be made in the terms sought by the appellant. CRENNAN AND BELL JJ. The factual background and the procedural history are set out in the reasons for judgment of Keane J. We agree that the appeal should be allowed and consequential orders should be made, for the reasons given by Keane J. We make additional comments in relation to the circumstance that the primary judge made an award of damages of $1,246,025.01 in respect of the vendor's breach of warranty, in the supply of frozen donor sperm ("the St George sperm"), when the total purchase price for assets of the vendor's fertility clinic business, including that sperm, was $386,950.91. The issue on the appeal is the measure of damages recoverable by the appellant, as purchaser of assets of a business, when the vendor promised to deliver stock complying with a warranty, but did not do so. We agree that the assessment of damages undertaken by the primary judge required assessment of the value of what should have been delivered in accordance with the vendor's contractual promise to the appellant15. The applicable principle, confirmed in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd16 and traceable to Robinson v Harman17, is that damages for breach of contract are to put the promisee, so far as money can do it, in the same situation as if the contract had been performed as promised. Different, even cumulative, heads of damage may be pleaded by a plaintiff, depending on the type of contract involved and the kinds of breach and damage occasioned, provided there is no double recovery. In The Commonwealth v Amann Aviation Pty Ltd18, Mason CJ and "'expectation damages', 'damages for loss of profits', 'reliance damages' and 'damages for wasted expenditure' are simply manifestations of the central principle enunciated in Robinson v Harman rather than discrete and truly alternative measures of damages which a party not in breach may elect to claim." Their Honours went on to observe that the corollary of the principle in Robinson v Harman is that a plaintiff is not entitled, by an award of damages for breach of 15 Reasons for judgment of Keane J at [111]; see also reasons for judgment of 16 (2009) 236 CLR 272 at 286 [13]; [2009] HCA 8. 17 (1848) 1 Exch 850 at 855 [154 ER 363 at 365]. 18 (1991) 174 CLR 64 at 82; [1991] HCA 54. contract, to be placed in a superior position to that in which he or she would have been had the contract been performed19. The plaintiff's loss must be genuine20 and the expenses incurred in putting himself or herself in the position in which he or she would have been, had the contract been performed, must be reasonable21. The onus of proof in respect of a claim for contract damages is on the plaintiff22. It is the plaintiff's objectively determined expectation of recoupment of expenses which is protected by an award of damages for loss of a bargain23. This explains the prima facie measure of damages at common law in respect of a sale of goods stated in Barrow v Arnaud24, and codified subsequently in sale of goods legislation. The measure is the market price of goods at the contractual time for delivery, less the contract price (if the latter has not been paid to the seller). This is the amount of money theoretically needed to put the promisee in the position which would have been achieved if the contract had been performed. Subject to being displaced for some reason, this is the applicable measure, notwithstanding the circumstance that a buyer is a non-profit organisation25, or that the buyer is constrained in relation to market regulation and control as to the price at which the buyer could sell to a subsequent purchaser26. 19 (1991) 174 CLR 64 at 82. 20 Radford v De Froberville [1977] 1 WLR 1262 at 1270; [1978] 1 All ER 33 at 42. 21 Erie County Natural Gas and Fuel Co v Carroll [1911] AC 105 at 118; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 288-290 22 The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80 per Mason CJ and Dawson J. 23 The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 85 per Mason CJ and Dawson J. 24 (1846) 8 QB 595 at 609-610 [115 ER 1000 at 1006]; see also Hussey v Eels [1990] 2 QB 227; see further McGregor, McGregor on Damages, 18th ed (2009) at 780 25 Diamond Cutting Works Federation Ltd v Triefus & Co Ltd [1956] 1 Lloyd's Rep 26 British Motor Trade Association v Gilbert [1951] 2 All ER 641; Mouat v Betts Motors Ltd [1959] AC 71 at 82. Whilst the second limb of Hadley v Baxendale27 in respect of indirect loss is frequently invoked on behalf of a buyer when a figure higher than the normal measure of damages should apply, there is no reason in principle why it cannot also be relied on by a seller if the facts and circumstances are such that a figure lower than, or different from, the normal measure of damage should apply − for example, when the actual loss suffered is less than the prima facie measure of Resolution of this appeal does not turn on any distinction between a contract for the sale of goods and a contract for the sale of a business, or on the respondent's invocation of the second limb of Hadley v Baxendale29 on the basis that replacement costs of non-compliant sperm would be passed on to patients. It is sufficient to dispose of the appeal on the basis that no facts or circumstances were proven which displaced the application of the normal measure of contract damages put forward by the appellant. It was uncontroversial that, at all material times, assisted reproductive technology businesses conducted in New South Wales were subject to a statutory and regulatory regime. The appellant, as cross-claimant, obtained summary judgment in her favour, by consent, on the basis of admissions that the St George sperm failed to comply with the extant regulatory regime30. In seeking summary judgment against the vendor and the respondent (as guarantor) on the basis of certain claims, the appellant abandoned other claims including a claim for loss of profits in respect of embryos, a claim for loss of profits in respect of donor sperm having been abandoned at some point earlier in time. This reduced the issue before the primary judge to an assessment of the value of the St George sperm which had not been delivered in accordance with the vendor's warranty. On the nature of the damages claimed, the appellant's pleadings stated: 27 (1854) 9 Exch 341 [156 ER 145]. 28 Bence Graphics International Ltd v Fasson UK Ltd [1998] QB 87; cf Slater v Hoyle & Smith [1920] 2 KB 11; see also McGregor, McGregor on Damages, 18th ed (2009) at 816-818 [20-065]-[20-067]; Beale (ed), Chitty on Contracts, 31st ed (2012), vol 2 at 1666 [43-452]. 29 (1854) 9 Exch 341 [156 ER 145]. 30 Code of Practice for Assisted Reproductive Technology Units of the Reproductive Technology Accreditation Committee. "the damages ... are in the nature of compensation which, so far as possible gives her the benefit of her bargain under the Deed by giving her, so far as money is capable of doing so, something equivalent to the value of the worthless Sperm delivered to her, as opposed to damages to compensate her specifically for her outlay to Xytex (the amount actually paid and payable to Xytex being no more than evidence of an appropriate measure of damages)". The applicable regulatory scheme was such that a medical practitioner treating a patient was ethically bound not to treat donor sperm as a commodity, by profiting when using donor sperm for a patient's treatment. It also appeared to be uncontroversial that costs in relation to donor sperm which might be passed on to a patient included the costs of acquisition of donor sperm and related items such as storage costs. The appellant gave evidence that Xytex Corporation ("Xytex") operated a business in which Xytex supplied donated sperm to buyers, which included both patients and medical practitioners. The appellant also gave uncontested evidence that in her business, during the period from 2002 to 2005, she used donor sperm from different local and overseas sources which included the St George sperm, her clinic's stock and stock obtained from Cryos International Sperm Bank, Queensland Fertility Clinic, Westmead Fertility Centre and Xytex. The appellant gave evidence that she did not make a profit from patients when using donor sperm which she had purchased and that there was always a "buffer" between the real costs to her and those passed on to a patient. Evidence was also given by and on behalf of the appellant of unsuccessful efforts to recruit local sperm donors through newspaper advertising in 2005, when the appellant had exhausted her stock of St George sperm which complied with the warranty. Further, evidence that a shortage of donors was occasioned in 2005 by requirements for donor identification was not disputed. The respondent conceded in the Court of Appeal of the Supreme Court of New South Wales that some part of the sale price for the assets of the business related to the transfer of the St George sperm from the business to the appellant. Further, there was no issue that the appellant had used 504 straws of St George sperm which had complied with the warranty given. In leading evidence of the costs of acquiring the Xytex sperm, the appellant discharged the onus on her to show the recoupment costs necessary to restore her to the position in which she would have been, absent the vendor's breach of warranty. It was conceded that the costs of Xytex sperm which the appellant passed on to patients equalled the acquisition and other costs incurred by her. Importantly, contested issues concerning the Xytex sperm appeared not to include an assertion that the appellant could have obtained replacement sperm more cheaply than she acquired such sperm from Xytex. The emphasis in the respondent's case was otherwise. It was contended on behalf of the respondent that Xytex sperm was not compliant with regulatory guidelines. That challenge failed before the primary judge. Then, it was contended that, since the appellant could pass on to patients the reasonable costs of procuring the replacement sperm, she had wholly mitigated her loss. This was the basis of the respondent's success in the Court of Appeal. Such an approach fails to take into account that the circumstances of the appellant's subsequent dealings with patients did not avoid, or increase or diminish, the loss of her bargain for delivery of St George sperm which was compliant with the warranty. Regulatory constraints on a promisee's subsequent dealings with goods have no necessary relationship with the market price which a promisee may pay to be in as good a position as if a promisor had performed. In Mouat v Betts Motors Ltd31, on behalf of the Privy Council, Lord Denning described the entitlements of a buyer of goods claiming the normal measure of contract damages, when the market in such goods is subject to price controls. He said: "It does not lie in [the seller's] mouth to say that, if he had fulfilled his covenant, the [buyers] could only resell the car for £1,207. That was a matter peculiar to the [buyers] which was no concern of his. The [buyers] were entitled in law to be put into as good a position as if he had fulfilled his covenant: and to do this they were entitled to go into the market and buy a similar car at the market price ... This rule applies even though the only available market is a surreptitious market which is fed by persons who have broken their covenants". Issue having been joined, and the forensic contest having been fought as described, there was neither cross-examination of the appellant, nor production of any evidence in chief on behalf of the respondent, directed to the proposition that the acquisition costs of Xytex sperm were not an appropriate proxy for the value of the St George sperm, had it been compliant with the vendor's warranty. There being no evidence on the point, the respondent cannot sustain an argument that the measure of damages proven by the appellant was not the correct measure to be applied or that it should be displaced by some other measure. The submission, in the respondent's notice of contention, that "the cost of the acquisition of replacement Xytex sperm was not an appropriate proxy" for the value of the St George sperm must be rejected. There was no error in the decision of the primary judge. 31 [1959] AC 71 at 82. GAGELER J. This appeal concerns the measure of damages for breach of a warranty in a contract for the sale of a business. Its unusual facts give rise to unusual difficulties. Facts Dr Clark and Dr Macourt were, in 2002, obstetricians and gynaecologists practising assisted reproductive technology in New South Wales. Dr Clark ran a fertility clinic. Dr Macourt, through a company he had established in 1983 ("the company"), ran another fertility clinic. In the conduct of their respective practices, Dr Clark and Dr Macourt were bound by ethical guidelines on assisted reproductive technology published by the National Health and Medical Research Council in 1996. The guidelines prohibited, as "ethically unacceptable", "[c]ommercial trading in gametes or embryos" and "[p]aying donors of gametes or embryos beyond reasonable expenses". Those ethical prohibitions came later to be overlaid by a criminal prohibition in s 16 of the Human Cloning for Reproduction and Other Prohibited Practices Act 2003 (NSW), inserted in 2007, making it an offence for a person intentionally to receive "valuable consideration" from another person for the supply of a human egg, human sperm or a human embryo and defining "valuable consideration" for this purpose to exclude "the payment of reasonable expenses incurred by the person in connection with the supply". Nothing turns on that later statutory development. By a written contract entered into in 2002, the company agreed to "sell" its "assets" to Dr Clark. The purchase price, payable in three annual instalments, was to be calculated as a percentage of the amount by which Dr Clark's gross fee income for the calendar years 2002, 2003 and 2004 exceeded her gross fee income for the year 2001. Included within the assets which the company was obliged to deliver to Dr Clark within 30 days of entering into the contract, and which Dr Clark was obliged to "keep and maintain … in accordance with recognized practice", was "all frozen sperm". The company warranted that "the consents, screening tests ... and identification … of donors" of that frozen sperm had been conducted in accordance with applicable guidelines. Dr Macourt guaranteed the obligations of the company under the contract. The company in fact delivered some 3,500 straws of frozen sperm to Dr Clark. Dr Clark would have expected ultimately to have been able to use 2,500 of those straws, over several years, in the normal course of her practice. Dr Clark was in fact able to use only 504. The remaining straws were ultimately found to be unusable as a result of the company having breached its warranty concerning the consents, screening tests and identification of donors. When Dr Clark realised in 2005 that she was unable to use the remaining straws, she began to acquire replacement sperm as and when required for the treatment of her patients from a supplier in the United States. She charged her patients for the use of that replacement sperm an amount covering most (but not all) of the cost and expense to her of its acquisition. Mindful of her ethical and legal obligations, she always wanted to ensure that there was a "buffer" between what she paid for the sperm and what the patient paid to her. The total purchase price payable under the contract ended up being $386,950.91, of which Dr Clark paid only $167,000, leaving $219,950.91 outstanding. The company sued Dr Clark in the Supreme Court of New South Wales for the outstanding amount of the purchase price. Dr Clark made a cross-claim against the company and Dr Macourt for breach of warranty by the company. Liability was found on the cross-claim. The outcome of the appeal turns on a choice between competing approaches to the assessment of damages on the cross-claim adopted by the primary judge (Gzell J)32 and by the Court of Appeal (Beazley and Barrett JJA and Tobias AJA)33. Primary judge The primary judge proceeded on the basis that the breach of warranty deprived Dr Clark of the use of 1,996 straws of frozen sperm, which Dr Clark would have expected to have been able to use in the normal course of her practice had the company complied with the warranty34. No issue has been taken with that aspect of his reasoning. The primary judge assessed Dr Clark's damages for the deprivation of the use of 1,996 straws as the difference, as at the date of delivery of the straws in 2002, between the amount that Dr Clark would have obtained in a "hypothetical sale" of 1,996 of the unusable straws delivered, and the amount that Dr Clark would have paid in a "hypothetical purchase" of 1,996 replacement straws35. 32 St George Fertility Centre Pty Ltd v Clark [2011] NSWSC 1276. 33 Macourt v Clark [2012] NSWCA 367. 34 [2011] NSWSC 1276 at [48], [96]. 35 [2011] NSWSC 1276 at [9]-[10], [18]-[19], [108]. The primary judge implicitly accepted that the first amount was nothing. He found that the "best evidence" of the second amount was the amount (corresponding to $511.15 per straw) in fact first paid by Dr Clark to acquire donor sperm from the supplier in the United States in 200536. The primary judge therefore calculated damages on the cross-claim (exclusive of interest) at $1,020,252.70. In what he described as "robust fashion", he accounted for the likely increase in the acquisition cost of a straw of sperm between the date of hypothetical purchase in 2002 and the date of that actual acquisition in 2005 by allowing interest on the damages so calculated only from the date of that acquisition in 200537. Court of Appeal The Court of Appeal rejected the primary judge's approach to the assessment of damages by reference to a hypothetical sale and purchase of straws Tobias AJA, with whom the other members of the Court of Appeal agreed, stressed that the contract was not for the sale of goods but for the sale of a business38. He noted that it was not suggested that Dr Clark could ever obtain title to the sperm, to be delivered to her as an asset of the business, and that Dr Clark had acknowledged in her evidence before the primary judge that ethical (and later legal) constraints prevented her profiting from its purchase or sale39. He found that it was "patently clear" that Dr Clark could not ethically have charged her patients for the supply of such usable sperm as she acquired under the contract, as there was no way of determining its cost given the terms by which the purchase price was to be calculated40. Turning to the identification of Dr Clark's loss, and to the steps she had by then taken to mitigate that loss by acquiring replacement sperm as needed and charging her patients something less than the total cost and expense to her of the acquisition of that replacement sperm, Tobias AJA explained41: 36 [2011] NSWSC 1276 at [109]-[110]. 37 [2011] NSWSC 1276 at [110]-[111]. 38 [2012] NSWCA 367 at [42]-[50]. 39 [2012] NSWCA 367 at [33]-[41], [67]. 40 [2012] NSWCA 367 at [126]. 41 [2012] NSWCA 367 at [127]. "[The company's] breach of contract made it necessary for [Dr Clark] to acquire sperm from an alternative source. She did so at a cost to her. That cost represented the prima facie loss she suffered as a result of [the company's] breach, subject to the effects of such mitigation as she achieved or ought to have achieved. She in fact achieved mitigation to what was, in practical terms, the maximum extent allowed by the legal and ethical constraints under which she operated and which both parties necessarily had in contemplation as being operative in the particular circumstances." The "true measure" of Dr Clark's loss, Tobias AJA went on to explain, consisted of an amount representing that part of the overall cost of sourcing straws of replacement sperm already acquired which had not been recouped from patients up to the date of trial, together with an amount representing the capitalised value of that part of the overall cost of sourcing replacements for the rest of the 1,996 straws which could be expected not to be able to be recouped from patients in the future. Dr Clark could have sought damages along those lines, but did not42. The Court of Appeal accordingly reduced the assessment of damages on the cross-claim to nothing. Analysis Choosing between the competing approaches of the primary judge and of the Court of Appeal requires a return to first principles43: "The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed. Compensation is the cardinal concept. It is the 'one principle that is absolutely firm, and which must control all else'. Cognate with this concept is the rule, described … as universal, that a plaintiff cannot recover more than he or she has lost." The assessment of compensatory damages for breach of contract at common law is accordingly subject to the "ruling principle" that the injured party "is, so far as money can do it, to be placed in the same situation, with respect to 42 [2012] NSWCA 367 at [128]-[131]. 43 Haines v Bendall (1991) 172 CLR 60 at 63; [1991] HCA 15 (references omitted). damages, as if the contract had been performed"44 as well as to its corollary that the injured party "is not entitled, by the award of damages upon breach, to be placed in a superior position to that which he or she would have been in had the contract been performed"45. The "expectation interest" sometimes identified as protected by an award of damages for breach of contract at common law is a reflection of that ruling principle and of its corollary. The expectation interest is no less, but no more, than the interest protected by seeking "to give [a] promisee the value of the expectancy which the promise created"46. In other words, it is the interest of the injured party "in having the benefit of [the contractual] bargain by being put in as good a position as he [or she] would have been in had the contract been performed"47. The common law does not compensate an injured party for the non- fulfilment of an expectation which could not reasonably be supposed to have been within the contemplation of other parties when they made the contract as the probable result of breach48. That limitation can for present purposes be put to one side. Dr Clark accepts the Court of Appeal's identification of her loss as the cost to her of acquiring replacement sperm from an alternative source, and properly points out that her need to acquire replacement sperm from an alternative source can reasonably be supposed to have been within the contemplation of all parties, when they made the contract in 2002, as the probable result of breach of warranty by the company. Dr Clark has at no stage suggested that her loss is to be identified as the difference between the value of the business she acquired and the value of the business for which she contracted49, and at an early stage 44 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 286 [13]; [2009] HCA 8, quoting Robinson v Harman (1848) 1 Ex 850 at 855 [154 ER 45 The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 82; [1991] HCA 54. 46 Fuller and Perdue, "The Reliance Interest in Contract Damages: 1", (1936) 46 Yale Law Journal 52 at 54. 47 Restatement, Second, Contracts, §344. 48 European Bank Ltd v Evans (2010) 240 CLR 432 at 438 [12]-[13]; [2010] HCA 6, referring to Hadley v Baxendale (1854) 9 Ex 341 [156 ER 145]. 49 Cf Senate Electrical Wholesalers Ltd v Alcatel Submarine Networks Ltd [1999] 2 Lloyd's Rep 423 at 429. abandoned a claim that a component of her loss was consequential loss of profits in the conduct of her business. She has at every stage sought substantial, not merely nominal, damages. Dr Macourt, for his part, points to the remarkable prospect of being saddled, if the primary judge's measure were to be upheld, with an obligation to pay Dr Clark $1,020,252.70 in damages as a consequence of the company in effect failing to deliver one asset of a business which the company ended up selling to Dr Clark for a total price of only $386,950.91. But Dr Macourt does not seek to attach any particular legal significance to the disparity between those two figures50. The precise question in the appeal, given the way in which issue has been joined between the parties, is therefore limited to asking: which of the competing approaches to the assessment of damages adopted by the primary judge and by the Court of Appeal goes furthest in placing Dr Clark, so far as money can achieve the result, in the same position she would have been in had the company complied with its contractual obligation and had she thereby been able to use in the normal course of her practice a further 1,996 straws of the frozen sperm delivered to her by the company? In answering that question, statements of subsidiary principle framed in the context of working out the ruling principle in standard categories of case must be approached with circumspection51. There is, as has often been pointed out, "a danger in elevating into general principles what are in truth mere applications to particular facts or situations of the overriding general principle"52. The measure appropriate in a particular case "cannot be divorced from the [claimant's] personal position and obligations, both legal and moral, or from what the [claimant] ought reasonably to do by way of mitigation"53, and a rigid distinction cannot always be drawn between measure and mitigation54. 50 Cf Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344, referred to in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 289 51 Wenham v Ella (1972) 127 CLR 454 at 467; [1972] HCA 43, quoting Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) [1949] AC 196 at 223. 52 Radford v De Froberville [1977] 1 WLR 1262 at 1270; [1978] 1 All ER 33 at 42, citing Admiralty Commissioners v SS Susquehanna [1926] AC 655 at 661 and Admiralty Commissioners v SS Chekiang [1926] AC 637 at 643-644. 53 [1977] 1 WLR 1262 at 1270; [1978] 1 All ER 33 at 42. 54 [1977] 1 WLR 1262 at 1272-1273; [1978] 1 All ER 33 at 44. To measure a buyer's damages as the difference, as at the date of delivery, between what the buyer would have obtained in a hypothetical sale of contractually non-compliant goods delivered and what the buyer would have paid in a hypothetical purchase to obtain delivery of contractually compliant goods from another seller is ordinarily appropriate in the standard category of case where a seller fails to deliver marketable goods to a buyer in compliance with a contractual warranty55. That is because the measure ordinarily gives to the buyer the monetary equivalent of the value to the buyer of the performance of the contract by the seller. The value to the buyer of having ownership of, and control over, contractually compliant goods that can be bought and sold in a market as at the time of delivery ordinarily equates to the market value of those goods at that date. The market value of goods is not ordinarily dependent on circumstances peculiar to an individual seller or individual buyer. Accordingly, it ordinarily makes no difference why the buyer chose to purchase the goods56 or whether the buyer could be expected actually to realise the monetary equivalent of that value by re-selling or otherwise disposing of the goods57. This case does not fit within that standard category. The critical difference does not lie in the difference between a sale of goods and the sale of a business or in such difficulty as may exist in allocating some part of the overall purchase price for the business to a particular asset. The critical difference lies in the limited value to the buyer (Dr Clark) of the performance of the contract by the seller (the company) given the peculiar nature of the asset (frozen sperm) which the company was obliged to deliver under the contract. There is no suggestion that the frozen sperm was of any use to Dr Clark, or would have been of any use to another purchaser of the company's assets, other than for the treatment of patients in the normal course of practice. In using frozen sperm for the treatment of patients, Dr Clark was in 2002 ethically bound not to charge patients more than the costs and expenses of acquiring the sperm, whatever those costs and expenses happened to be. Dr Clark's evidence before the primary judge about those ethical obligations was unequivocal. She considered it unethical to profit from buying or selling sperm, was not doing so, and had never done so. A technical submission made on her behalf, that the ethical guidelines published by the National Health and Medical Research 55 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 286 [13]. See also Wertheim v Chicoutimi Pulp Company [1911] AC 301 at 307-308; Slater v Hoyle & Smith [1920] 2 KB 11. 56 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 287- 57 Eg Diamond Cutting Works Federation Ltd v Triefus & Co Ltd [1956] 1 Lloyd's Rep 216 at 227. Council, on their proper construction, did not have that effect, is to be rejected. The guidelines had the effect Dr Clark acknowledged in her evidence. The value to Dr Clark of the company delivering frozen sperm in 2002 in compliance with the contract could not, in those circumstances, be equated with the value to a buyer of having dominion over contractually compliant goods of a nature which would be available to be re-sold by the buyer in a market at the time of delivery. The value to Dr Clark of the company delivering contractually compliant frozen sperm lay rather in Dr Clark gaining control over a stock of frozen sperm which she could then use for the treatment of her patients in the normal course of her practice. That is to say, if she had been able to take possession from the company of contractually compliant frozen sperm, Dr Clark would have had the benefit of being relieved of the need thereafter to source sperm from somewhere else as and when she needed sperm to treat her patients. The primary judge found that the company's failure to deliver 3,500 contractually compliant straws of frozen sperm deprived Dr Clark of the expected use in the normal course of her practice of 1,996 of those straws. To what extent was Dr Clark worse off in that factual position of non-fulfilment of her contractual expectation of taking possession of frozen sperm of which she could have used 1,996 straws in the normal course of her practice than she would have been in the counterfactual position of having that contractual expectation fulfilled? Dr Clark was worse off to the extent that later she was forced to incur, but was not able to recoup from her patients, the additional costs of sourcing 1,996 straws of sperm from an alternative supplier. Conclusion The appropriate measure of Dr Clark's loss is so much of the cost to Dr Clark of sourcing 1,996 straws of replacement sperm for the treatment of her patients as she had been, and would be, unable to recoup from those patients. That measure, adopted by the Court of Appeal, is appropriate because it yields an amount which places Dr Clark in the same position as if the contract had been performed so as to provide her with the expected use in the normal course of her practice of 1,996 straws of the frozen sperm delivered to her by the company. To Dr Clark's protest that adoption of that measure leaves her without an award of damages in circumstances where the company has been found to have breached its warranty, the answer lies in the way she has chosen to put her case. She has made a forensic choice to eschew the measure which, together with the Court of Appeal, I would hold to be the appropriate measure. The appeal should be dismissed with costs. KEANE J. At issue in this appeal is the measure of the damages recoverable by a purchaser of assets of a business where the vendor has failed to meet its obligations in relation to the delivery of stock of the business. Because of the unusual nature of the stock involved, the case has given rise to a contest between an approach to the measure of recoverable loss which is focused upon the loss to the purchaser of the value of the stock at the date of completion of the purchase, and one which is focused on the expense incurred by the purchaser to acquire substitute stock in the ongoing conduct of her business. For the reasons which follow, the former approach is correct. An understanding of the terms of the parties' agreement, and its commercial context, is necessary to gain an appreciation of the competing arguments. Factual background The appellant and St George Fertility Centre Pty Ltd ("St George") each conducted an assisted reproductive technology ("ART") medical practice in Sydney. Each practice provided ART treatments for patients aimed at inducing pregnancy by means other than sexual intercourse. The ART treatments included intrauterine insemination ("IUI"), which is the transfer of sperm via a catheter into the uterus. Sperm that has been donated by a male unknown to the female patient is used in some IUI procedures. Sperm from such donors is stored in thin straws about a hand-length long and up to 5 mm wide. In January 2002, the appellant and St George entered into a deed ("the Deed") whereby the appellant agreed to purchase, and St George agreed to sell, "assets" used in, or attached to, St George's ART practice. The respondent guaranteed the performance of St George's obligations under the Deed; he is the only respondent to the appeal because St George is now in liquidation. Clause 18.1 of the Deed contained the following definitions: "Assets means the following assets of the vendor used in or attached to the Business, being the goodwill of the vendor in respect of the Business, Records, Embryos (to the extent title in them can at law pass to the Purchaser) and Sperm but specifically excluding Plant & Equipment and any debts owed to the vendor in respect of the Business as at completion. Business means the ART business known as 'St George Fertility Centre' conducted by the Vendor. Records means all of the records of the Business, including all original and copy records of donor and patient screening records (at both storage and 6 month quarantine for the Sperm) lists of Sperm donors and patients, all patient records, consent forms and the vendor's Patient List of the Business excluding the Accounting Records. RTAC means the Reproductive Technology Accreditation Committee of the Fertility Society of Australia. Sperm means all frozen sperm whether from donors, stored for patients or reserved for patients with the vendor in the Business." Clause 2a of the Deed provided that the purchase price for "the assets" was to be calculated according to the following formulation: "In respect of each of the calendar years 2002, 2003 and 2004, 15% of the amount by which the purchaser's gross fee income exceeds 105%, 110% and 115% respectively of the fee income of the purchaser for the calendar year 2001." It was common ground that, as at 8 April 2005, the total amount payable by the appellant to St George for the assets under this provision was $386,950.91. The appellant had paid St George only $167,000, leaving a balance of $219,950.91 outstanding58. St George sued the appellant to recover that balance. The appellant counter-sued St George and the respondent for damages for breach of a number of warranties under the Deed59. Under cl 5.1(a) of the Deed, St George warranted relevantly that: "the consents, screening tests (including at storage and after 6 months quarantine) and identification (including identification, contact details and physical characteristics) of donors of Sperm … have been conducted in compliance with the guidelines of RTAC". Under cl 9.1 of the Deed, St George was relevantly obliged at completion give to the Purchaser: except as is otherwise provided by this contract, to the extent title in them can at law pass to the Purchaser, 58 Macourt v Clark [2012] NSWCA 367 at [16]. 59 [2012] NSWCA 367 at [17]. unencumbered title to the Assets, free from any charges, liens or restrictions; possession of the Assets; (iii) a copy of the vendor's Patient List; all patient records for the Sperm, which must include details of the Sperm donor, consent forms, results of screening tests information and sufficient accordance with RTAC guidelines of all Sperm". identification to allow On completion, St George delivered to the appellant 3,513 straws of donor sperm, but the appellant used only 504 of those straws, the balance being discarded due to the breaches of contract by St George60. By September 2005, the appellant had exhausted the stock of usable sperm straws obtained from St George. The only donor sperm available to the appellant to meet the shortfall resulting from St George's breach of contract, and which complied with all requisite regulatory and legislative requirements, was supplied by a company in the United States called Xytex Corporation ("Xytex")61. The appellant's case of breach of contract against St George was established primarily on the basis of admissions made by the respondent that "sperm donor records were not maintained in each case as required"62. St George's breaches of warranty were not at issue in the task of assessment of damages, which fell to the primary judge, Gzell J. The decision at first instance His Honour assessed the appellant's damages at $1,246,025.01, being the value of 1,996 warranty-compliant sperm straws at the date of the completion of the acquisition of the assets63. His Honour arrived at the figure of 1,996 sperm straws in the following way: 60 [2012] NSWCA 367 at [28]. 61 St George Fertility Centre Pty Ltd v Clark [2011] NSWSC 1276 at [41]-[42], [82]. 62 [2012] NSWCA 367 at [159]. 63 [2011] NSWSC 1276 at [110]-[111]. St George transferred 3,513 straws of donor sperm, of which only 504 were usable as a result of St George's breaches of warranty. Not all of the 3,513 straws could have been used even if all warranties had been complied with because of the effect of the "family limit rule" in par 9.14 of the RTAC Code of Practice. The rule stipulated that an ART practice must have a policy that limits the number of children generated by any one donor to no more than 10 in order to avoid "accidental consanguinity within the community"64. Of the 3,513 straws transferred, the appellant could reasonably have expected to be able to use "at least The number of straws actually used was deducted from the amount the appellant could reasonably have expected to be able to use. The resulting figure was 1,99666. The primary judge quantified the appellant's loss by calculating what it would have cost the appellant to purchase 1,996 warranty-compliant sperm straws at the date of St George's breach of contract67. St George and the respondent contended that the date for assessment of damages should have been the date of trial. They argued that any loss suffered by the appellant was suffered during the period between completion of the contract and trial, and during that period the purchaser recovered the cost of acquisition, transport and storage of sperm by charging those costs to patients. On that approach, the appellant had suffered no loss by the date of trial. The primary judge rejected that contention, applying "the general rule of common law … that damages are assessed at the time of breach of contract or when the cause of action arises"68. The date of breach was the date of completion of the acquisition, that is, early 2002. The primary judge used the cost of acquiring 1,996 sperm straws from Xytex after September 2005 to determine the notional cost to the appellant 64 [2011] NSWSC 1276 at [34]. 65 [2011] NSWSC 1276 at [45]. 66 [2011] NSWSC 1276 at [48]. 67 [2011] NSWSC 1276 at [18]. 68 [2011] NSWSC 1276 at [13]. of acquiring, transporting and storing Xytex sperm straws in early 200269. His Honour acknowledged that the price at that time was likely to have been less than the price as at September 2005, and adjusted for that circumstance by not allowing the appellant any interest for the intervening three and a half year period70. The decision of the Court of Appeal The Court of Appeal of New South Wales (Beazley and Barrett JJA and Tobias AJA) allowed the respondent's appeal against the judgment of the primary judge. Several propositions were brought together in two broad strands of reasoning to support the Court of Appeal's conclusion. First, the Court of Appeal was disposed to regard the Deed as a contract for the sale of a business, not a sale of goods71, and to treat this difference as a reason for holding that the measure of damages applied by the primary judge was not applicable in this case. Further, the Court of Appeal said that the method of calculation of the purchase price provided by cl 2a of the Deed made it "extremely difficult, if not impossible, to determine" what portion of the purchase price could be attributed to the sperm72. In this regard, Tobias AJA noted that "[t]here was no apportionment in the purchase price of an amount which could be attributed to that sperm and no attempt was made by [the appellant] to do so at trial."73 On that footing, the Court of Appeal concluded that it could not be demonstrated that the appellant had actually paid anything for the sperm pursuant to the terms of the Deed74. On this approach, the appellant suffered no loss by reason of the circumstance that St George's sperm straws were worthless. The second broad strand of the reasoning of the Court of Appeal was that the appellant had suffered no loss because she recovered her expenditure on the Xytex stock from her patients in the course of providing ART treatments in the period between completion of the contract and the trial. 69 [2011] NSWSC 1276 at [109]-[110]. 70 [2011] NSWSC 1276 at [111]. 71 [2012] NSWCA 367 at [8]-[10], [49]-[50], [67]. 72 [2012] NSWCA 367 at [66]. 73 [2012] NSWCA 367 at [49]. 74 [2012] NSWCA 367 at [66]. The two broad strands of reasoning of the Court of Appeal, and the propositions collected to support them, can be seen in the following passage. It is necessary to set the passage out in full75: "Of particular significance to the issues on the appeal was his Honour['s] reference76 to the contention by St George and [the respondent] that damages should be assessed at the date of trial because Fertility First recovered the cost to it of the acquisition and storage of sperm purchased from Xytex by charging those costs to patients. Accordingly, [the appellant] had suffered no loss. The primary judge's response to this submission was as follows[77]: 'The simple answer to that proposition is that [the appellant] paid twice for the use of sperm and recovery of the cost of acquisition and storage of the sperm purchased from Xytex still left her out of pocket for the amount paid under the deed.' It is convenient to immediately identify the flaw to this response of the primary judge. The answer may indeed have been simple if [the appellant] had in fact paid twice for the St George sperm on the one hand and the Xytex sperm on the other but that required proof that she was in fact out of pocket for the amount paid for the St George sperm under the Deed. However … there was no evidence that she paid anything for the St George sperm under the terms of the Deed. The method of calculation of the purchase price pursuant to clause 2a of the Deed made this extremely difficult, if not impossible, to determine. Although the transaction involved her taking possession of the St George sperm as part of the sale of its business to her, it was conceded first, that the St George sperm was in all probability obtained from local donors and, secondly, that apart from any expenses incurred by such donors in making the donation, s 32(1) of the Human Tissue Act 1983 [(NSW) ('the Human Tissue Act')] prohibited any donor receiving valuable consideration for his donation. In these circumstances, it is not surprising that no amount of the purchase price payable under clause 2a of the Deed was (or could be) apportioned to the St George sperm which [the appellant] was to receive as part of 'the Assets'. As I observed … above, the contract constituted by the Deed was for the sale of [St George's] business or practice, not one for 75 [2012] NSWCA 367 at [64]-[68]. 76 [2011] NSWSC 1276 at [20]. 77 [2011] NSWSC 1276 at [21]. the sale of goods, in whole or in part. I would add that it was not suggested that [the appellant] would obtain title to that sperm because she acknowledged that a donor could always withdraw his consent to the use of his sperm at any time. It must therefore follow that contrary to his Honour's finding78 … [the appellant] was not 'left out of pocket for the amount paid under the Deed' for the St George sperm. Furthermore, the evidence of [the appellant] to which I have already referred demonstrates that she recovered the full cost of acquiring the replacement Xytex sperm from her patients. Accordingly, she was also not 'left out of pocket' for those costs." (emphasis of Tobias AJA) It may be noted here, before turning to discuss the arguments agitated in this Court, that, having regard to the measure of damages applied by the primary judge, it was perhaps unfortunate that his Honour spoke of the appellant as having been "left … out of pocket for the amount paid under the [D]eed". This flourish was not necessary to the application of the measure of loss applied by his Honour, and it seems to have served as a distraction to the Court of Appeal. The appeal The appellant's challenge to the decision of the Court of Appeal may be stated succinctly. St George's breach of contract meant that the value of the sperm straws as assets acquired by the appellant under the Deed was less than it would have been if St George's promises had been kept. The appellant suffered that loss of value at the date of completion of the acquisition of the assets. On this approach, the first strand of the Court of Appeal's reasoning failed to appreciate that her claim did not require proof of the price paid by the appellant specifically for the non-compliant sperm. As to the second strand of the reasoning of the Court of Appeal, the appellant argued that the Court of Appeal erred in treating her claim as if it was for the recovery of outlays incurred to obtain replacement stock in the course of her practice. The appellant contended that she had claimed the value of the sperm which should have been delivered to her by St George, the amount paid to Xytex being evidence of that value. That being her claim, she was entitled to recover the monetary equivalent of the value which St George failed to transfer to her. 78 [2011] NSWSC 1276 at [21]. What did the appellant claim? The respondent contended that the appellant's claim was not for the value of the sperm to which she was entitled, but for the costs and expenses associated with the "procurement of replacement sperm". The respondent said that these costs and expenses were incurred subsequent to the date of breach and, accordingly, should have been assessed at the date of trial. The forensic advantage to the respondent of framing the appellant's claim in this way was that it opened the way for the argument, accepted by the Court of Appeal, that the appellant recouped from her dealings with her patients the costs and expenses incurred by her in procuring replacement sperm, so that she suffered no loss by reason of St George's breach of contract79. The respondent's contention under this heading should be rejected. The appellant was entitled to frame her claim in the manner most advantageous to her, and to have that claim determined. The nature of the appellant's claim was made clear in par 13(a) of the appellant's reply in the Supreme Court. Her claim for damages was for an award which: "gives her the benefit of her bargain under the Deed by giving her, so far as money is capable of doing so, something equivalent to the value of the worthless Sperm delivered to her, as opposed to damages to compensate her specifically for her outlay to Xytex (the amount actually paid and payable to Xytex being no more than evidence of an appropriate measure of damages)". It was this measure which the primary judge applied80, notwithstanding the rhetorical flourish criticised by the Court of Appeal. The Court of Appeal disagreed with the primary judge's approach, but did not suggest that the terms in which the appellant advanced her claim meant that the approach taken by the primary judge was not open as a matter of procedural fairness. One may now turn to consider whether the measure applied by the primary judge was correct in principle. Damages for breach of contract: the ruling principle The principle according to which damages for breach of contract are awarded is that the damages should put the promisee in the same situation with 79 British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673 at 691. 80 [2011] NSWSC 1276 at [7]-[19], [96], [111]. respect to damages, so far as money can do it, as it would have been in had the broken promise been performed81. The appellant was entitled to claim this measure, rather than a measure based, either on the difference between what she paid for the sperm straws and what they were worth, or on the expense "of undoing the harm which [her] reliance on the defendant's promise has caused [her]."82 This Court said in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd83: "The 'ruling principle'84, confirmed in this Court on numerous occasions85, with respect to damages at common law for breach of contract is that stated by Parke B in Robinson v Harman86: 'The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.'" In Bellgrove v Eldridge87, Dixon CJ, Webb and Taylor JJ explained that the practical operation of the ruling principle may vary depending on the commercial context; but that the principle is always applied with a view to assuring to the purchaser the monetary value of faithful performance by the vendor of the bargain88. The decision in Bellgrove v Eldridge confirms that the circumstance that a case does not involve the transfer of marketable commodities 81 Robinson v Harman (1848) 1 Ex 850 at 855 [154 ER 363 at 365]; Wenham v Ella (1972) 127 CLR 454 at 460, 471; [1972] HCA 43; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 286 [13]; [2009] HCA 8. 82 Fuller and Perdue, "The Reliance Interest in Contract Damages: 1", (1936) 46 Yale Law Journal 52 at 54. 83 (2009) 236 CLR 272 at 286 [13]. 84 Wertheim v Chicoutimi Pulp Co [1911] AC 301 at 307. 85 See, for example, Wenham v Ella (1972) 127 CLR 454 at 460, 471. 86 (1848) 1 Ex 850 at 855 [154 ER 363 at 365]. 87 (1954) 90 CLR 613 at 617-618; [1954] HCA 36. 88 As Fuller and Perdue explained in "The Reliance Interest in Contract Damages: 1", (1936) 46 Yale Law Journal 52 at 65, "such transactions form the very mechanism by which production is organized in a capitalistic society." does not displace the application of the ruling principle. To the same effect, in Tabcorp the Court went on to say89: "Oliver J was correct to say in Radford v De Froberville90 that the words 'the same situation, with respect to damages, as if the contract had been performed' do not mean 'as good a financial position as if the contract had In some been performed' (emphasis added [by their Honours]). circumstances putting the innocent party into 'the same situation … as if the contract had been performed' will coincide with placing the party into the same financial situation. Thus, in the case of the supply of defective goods, the prima facie measure of damages is the difference in value between the contract goods and the goods supplied. But as Staughton LJ explained in Ruxley Electronics Ltd v Forsyth91 such a measure of damages seeks only to reflect the financial consequences of a notional transaction whereby the buyer sells the defective goods on the market and purchases the contract goods. The buyer is thus placed in the 'same situation … as if the contract had been performed', with the loss being the difference in market value. However, in cases where the contract is not for the sale of marketable commodities, selling the defective item and purchasing an item corresponding with the contract is not possible. In such cases, diminution in value damages will not restore the innocent party to the 'same situation … as if the contract had been performed'." The ruling principle governs the assessment of damages, not only in the case of a failure to supply goods in accordance with the requirements of a contract for the sale of goods, but also in a case where, as here, the goods are supplied as an aspect of performance under a contract for the sale of assets of a business. The application of the ruling principle does not depend on characterising the Deed as a contract for the sale of goods. The rule in s 54(3) of the Sale of Goods Act 1923 (NSW), whereby a purchaser is "prima facie" entitled to recover "the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty", is a statutory expression of the ruling principle, but it does not exhaust its operation92. 89 (2009) 236 CLR 272 at 286 [13]. 90 [1977] 1 WLR 1262 at 1273; [1978] 1 All ER 33 at 44. 91 [1994] 1 WLR 650 at 655; [1994] 3 All ER 801 at 806. 92 Johnson v Perez (1988) 166 CLR 351 at 355-356; [1988] HCA 64. See also Golden Strait Corp v Nippon Yusen Kubishika Kaisha [2007] 2 AC 353 at 396-397 The value to be paid in accordance with the ruling principle is assessed at the date of breach of contract, not as a matter of discretion, but as an integral aspect of the principle, which is concerned to give the purchaser the economic value of the performance of the contract at the time that performance was promised. In this way, the measure of damages captures for the purchaser the benefit of the bargain and so compensates the purchaser for the loss of that benefit93. The application of the ruling principle to measure value lost at the date of breach of contract serves the important end of bringing finality and certainty to commercial dealings. It ensures that whatever might befall the purchaser after the date of breach, for good or ill, and whether by reason of the purchaser's acumen, or lack of it, in dealing with other persons who were not party to the contract, and whatever movements may occur in the market, these developments have no bearing on the entitlement of the purchaser and the liability of the seller94. Application of the principle and the reasoning of the Court of Appeal As to the first strand of the reasoning of the Court of Appeal, it is true to say that the contract did not permit a calculation of the price paid by the appellant specifically for the St George sperm. But that circumstance was irrelevant to the application of the ruling principle. Because the ruling principle is concerned to provide the purchaser with compensation for the loss of the benefit of the bargain, it does not require an apportionment of the components of the bargain. It was not necessary for the appellant to demonstrate that a particular part of the price paid for the business was referable to the sperm acquired as part of the transaction. Her loss fell to be measured, not by reference to what she outlaid as compared with what she obtained from St George, but by reference to the value of what St George had promised to deliver to her but did not. As Warrington LJ said in Slater v Hoyle & Smith Ltd95, where the purchaser has "received inferior goods of smaller value than those he ought to have received … [h]e has lost the difference in the two values … In truth … the contract price does not directly enter into the calculation at all." Accordingly, the circumstance that there was no way of determining under the Deed the cost to the appellant of the St George sperm to which she was entitled, a central element of the first strand of the reasoning of the Court of 93 Johnson v Perez (1988) 166 CLR 351 at 355-356. 94 Benjamin's Sale of Goods, 8th ed (2010) at [17-056]. 95 [1920] 2 KB 11 at 18; see to similar effect at 22-23 per Scrutton LJ. Appeal, is immaterial to the true measure of damages to which the appellant was entitled. The respondent sought to meet the difficulties which application of the ruling principle poses for the first strand of the Court of Appeal's reasoning by arguing that, even if the St George sperm delivered to the appellant had complied with the warranties in the Deed, the sperm would have been valueless. Would compliant sperm have been valueless? At the outset of the discussion of this question, it should be noted that, in this Court, the appellant denied making the concession attributed to her by Tobias AJA in the passage cited above96, viz "s 32(1) of the [Human Tissue Act] prohibited any donor receiving valuable consideration for his donation." Section 32(1)(a) of the Human Tissue Act provides, it may be noted, that "[a] person must not enter into … a contract or arrangement under which any person agrees, for valuable consideration … to the sale or supply of tissue from any such person's body or from the body of any other person". Tobias AJA went on to say that, having regard to this concession, "it is not surprising that no amount of the purchase price payable under clause 2a of the Deed was (or could be) apportioned to the St George sperm which [the appellant] was to receive as part of 'the Assets'." In this Court, the respondent was not disposed to dispute the appellant's contention that the concession attributed to her was not made; and the respondent did not, in his submissions, seek to rely upon s 32(1) of the Human Tissue Act. That the respondent was right to take this course is apparent from the terms of s 32(2), which provides that the prohibition in s 32(1) "does not apply to or in respect of the sale or supply of tissue if the tissue has been subjected to processing or treatment and the sale or supply is made for the purpose of enabling the tissue to be used for therapeutic purposes [or] medical purposes". Section 32(2) ensured that neither the sale by St George to the appellant, the sale of replacement sperm to the appellant by Xytex, nor the use of any sperm by the appellant in treating her patients was prohibited by s 32(1) of the Human Tissue Act. In this Court, the respondent did contend, as the Court of Appeal appears to have accepted97, that the appellant could not ethically charge patients for sperm used by her in treatments because she had not actually paid St George for any sperm at all. 96 [2012] NSWCA 367 at [67]. 97 [2012] NSWCA 367 at [67], [118]-[119], [127]. The respondent submitted that, at the time of entry into the Deed, it would have been within the "reasonable contemplation" of the parties that the appellant could not ethically, and so would not in fact, make any charge to the patients to whom she supplied the sperm in respect of the cost to her of that sperm. Somewhat inconsistently, when supporting the second strand of the Court of Appeal's reasoning, the respondent also sought to invoke the rule in Hadley v Baxendale98 in support of the contention that it was outside the contemplation of the parties that, if the St George sperm did not comply with the Deed, the appellant would incur expense to acquire replacement sperm that she would not pass on to her patients. Under the rule in Hadley v Baxendale, the entitlement of a plaintiff to recover damages for breach of contract is limited to such damages as arise naturally, that is, according to the usual course of things, from the breach of contract, or such damages as may reasonably be supposed to have been in the contemplation of the parties at the time they made the contract as the probable result of the breach99. In European Bank Ltd v Evans100, French CJ, Gummow, Hayne, Heydon and Kiefel JJ approved the view of Mason CJ and Dawson J in The Commonwealth v Amann Aviation Pty Ltd101 that the two limbs of the rule in Hadley v Baxendale represent the statement of a single principle, and that the application of that principle may depend on the degree of relevant knowledge possessed by the defendant in the particular case. In the present case, given the terms of the Deed and the commercial context in which it was made, there can be no doubt that St George and the respondent knew that the sperm straws were likely to be deployed in the provision of ART services by the appellant. The respondent's contention ultimately rested upon the Code of Practice promulgated by RTAC. The respondent relied upon cll 11.9 and 11.10 of the National Health and Medical Research Council guidelines imported into the RTAC Code by cl 7.1 of the Code. These guidelines were concerned to prevent commercial that practitioners were entitled to recover their reasonable expenses. The appellant denied that she had made a profit from supplying sperm, and there was no reason they also contemplated in human sperm; and trading 98 (1854) 9 Ex 341 [156 ER 145]. 99 European Bank Ltd v Evans (2010) 240 CLR 432 at 437-438 [11]-[13]; [2010] HCA 6. 100 (2010) 240 CLR 432 at 438 [13]. 101 (1991) 174 CLR 64 at 92; [1991] HCA 54. to doubt her evidence. The appellant, in providing ART services for a fee, cannot sensibly be said to be engaging in commercial trading in sperm for a profit. In this Court, the respondent also sought to base the contention that compliant St George sperm would have been worthless upon s 16 of the Human Cloning for Reproduction and Other Prohibited Practices Act 2003 (NSW) ("the Human Cloning Act"). That provision is in the following terms: "(1) A person commits an offence if the person intentionally gives or offers valuable consideration to another person for the supply of a human egg, human sperm or a human embryo. Maximum penalty: Imprisonment for 15 years. (2) A person commits an offence if the person intentionally receives, or offers to receive, valuable consideration from another person for the supply of a human egg, human sperm or a human embryo. Maximum penalty: Imprisonment for 15 years. In this section: reasonable expenses: in relation to the supply of a human egg or human sperm includes, but is not limited to, expenses relating to the collection, storage or transport of the egg or sperm, and in relation to the supply of a human embryo: does not include any expenses incurred by a person before the time when the embryo became an excess ART embryo within the meaning of the Prohibition of Human Cloning for Reproduction Act 2002 of the Commonwealth, and includes, but is not limited to, expenses relating to the storage or transport of the embryo. valuable consideration, in relation to the supply of a human egg, human sperm or a human embryo by a person, includes any inducement, discount or priority in the provision of a service to the person, but does not include the payment of reasonable expenses incurred by the person in connection with the supply." The Human Cloning Act was not in force at the date of the making or completion of the Deed. It was not suggested that it operated retrospectively upon the Deed. Accordingly, it does not affect the lawfulness of the Deed, or the expectations of the parties to it, or claims to enforce those expectations. No title to the sperm The last point to be made in relation to the first strand of the reasoning of the Court of Appeal is that the observations by Tobias AJA that the appellant did not obtain title to the sperm acquired from St George and that a "donor could always withdraw his consent to the use of his sperm at any time", cited above, are irrelevant. There was no suggestion in the evidence that the value of the appellant's contractual entitlements might be in any way diminished by those circumstances. Was the appellant's loss mitigated? In support of the second strand of the reasoning of the Court of Appeal, the respondent contended that, irrespective of whether the Deed was or was not a contract for the sale of goods, or whether it contained a sale of sperm, the loss claimed by the appellant was fully mitigated by recovery from her patients of the outlays she made in respect of the Xytex sperm. In the reasons of Tobias AJA, his Honour returned to the second strand of his reasoning, focusing upon an argument by the appellant that St George and the respondent102: "had not demonstrated that [the appellant's] prima facie damages were diminished or mitigated by the receipt of payments from her patients for the supply of Xytex sperm. This was because it was not established that receipts of that magnitude could not have been received by [the appellant] in respect of hypothetically compliant St George sperm." In rejecting that argument, Tobias AJA said103: "In my view, it cannot be gainsaid that [the appellant] took steps to mitigate her loss and that those steps met with a high degree of success. St George's breach of contract made it necessary for her to acquire sperm from an alternative source. She did so at a cost to her. That cost represented the prima facie loss she suffered as a result of St George's breach, subject to the effects of such mitigation as she achieved or ought 102 [2012] NSWCA 367 at [125]. 103 [2012] NSWCA 367 at [127]. to have achieved. She in fact achieved mitigation to what was, in practical terms, the maximum extent allowed by the legal and ethical constraints under which she operated and which both parties necessarily had in contemplation as being operative in the particular circumstances." To say that in the conduct of the appellant's practice she was able to recover the cost to her of the Xytex sperm incurred in the course of her practice after acquiring the assets is to fail to address the claim which the appellant actually made. The loss for which the appellant claimed compensation occurred at the completion of the Deed, at which time the assets which she acquired were not as valuable as they would have been had St George's performance measured up to its warranties. One may make this point, without dwelling impermissibly on "circumstances peculiar to the plaintiff"104, by observing that, at the completion of the Deed, if the appellant had been minded to on-sell her business (enhanced by the acquisition of the assets from St George) the value of that business would have been substantially less because much of the stock in trade could not have been profitably deployed by the purchaser. That the appellant was not, in fact, in the market to sell her business or its assets including its stock in trade is beside the point, which point is that the appellant's post-acquisition assets were less valuable than should have been the case. The point that the appellant had suffered a real loss in terms of the benefit of her bargain at the date of completion of the acquisition of the assets may be made another way. The appellant may have been able to charge fees for her services in the conduct of her practice which were within the market range but returned her a greater profit because she was not obliged to incur the extra cost of replacement sperm. Whether or not she chose to realise the value of compliant St George sperm in this way was a matter for her. Whether or not she would have been disposed to take such a course was not explored in evidence at trial; but that is not a deficit in her claim. She was entitled to claim the measure of damages under the ruling principle without going into such matters. It would be an unprecedented application of the rule in Hadley v Baxendale to confine the measure of a purchaser's damages by reference to the likely effects of the particular decisions of the purchaser as to how she might choose commercially to exploit the assets acquired from a seller. The point is that one cannot say that the appellant's loss was confined to the expense that she had to incur (but was able to recoup from patients) in acquiring 1,996 straws of sperm from an alternative supplier as and when she needed those straws for the treatment of patients. On behalf of the respondent, reliance was placed on the observations of Lord Atkinson on behalf of the Judicial Committee of the Privy Council in 104 Slater v Hoyle & Smith Ltd [1920] 2 KB 11 at 23. Wertheim v Chicoutimi Pulp Co105. His Lordship began by articulating the ruling principle: "And it is the general intention of the law that, in giving damages for breach of contract, the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed: Irvine v Midland Ry Co (Ireland)106, approved of by Palles CB in Hamilton v Magill107. That is a ruling principle. It is a just principle. The rule which prescribes as a measure of damages the difference in market prices at the respective times … is merely designed to apply this principle and … it generally secures a complete indemnity to the purchaser. But it is intended to secure only an indemnity. The market value is taken because it is presumed to be the true value of the goods to the purchaser. In the case of non-delivery, where the purchaser does not get the goods he purchased, it is assumed that these would be worth to him, if he had them, what they would fetch in the open market; and that, if he wanted to get others in their stead, he could obtain them in that market at that price. In such a case, the price at which the purchaser might in anticipation of delivery have resold the goods is properly treated, where no question of loss of profit arises, as an entirely irrelevant matter: Rodocanachi v Milburn108." This passage provides general support for the appellant's position rather than that of the respondent. Lord Atkinson went on, however, to give an example of an exception to the presumption that the market value of goods which comply with contractual requirements reflects their value. His Lordship said109: "[B]ut if in fact the purchaser, when he obtains possession of the goods, sells them at a price greatly in advance of the then market value, that presumption is rebutted and the real value of the goods to him is proved by the very fact of this sale to be more than market value, and the loss he sustains must be measured by that price, unless he is, against all justice, to be permitted to make a profit by the breach of contract, be compensated 105 [1911] AC 301 at 307-308. 106 (1880) 6 LR Ir 55 at 63. 107 (1883) 12 LR Ir 186 at 202. 108 (1886) 18 QBD 67. 109 [1911] AC 301 at 308. for a loss he never suffered, and be put, as far as money can do it, not in the same position in which he would have been if the contract had been performed, but in a much better position." In Slater v Hoyle & Smith Ltd, the Court of Appeal of England and Wales distinguished Wertheim in this respect. Warrington LJ said of the facts in Slater110: "The purchaser here has received inferior goods of smaller value than those he ought to have received. He has lost the difference in the two values, and it seems to me immaterial that by some good fortune, with which the [sellers] have nothing to do, he has been able to recoup himself what he paid for the goods." The observations of Warrington LJ apply with equal force to the present case. The value of the St George sperm lay not in what it might bring in a market for sperm as a commodity, but, as the Deed contemplated, as stock of a business. And as stock of the business they were distinctly inferior. As noted above, there is no room to doubt that the parties to the Deed had it in contemplation that the sperm straws acquired from St George would ultimately be deployed in an ART practice. The failure of St George to meet its warranties in relation to the sperm being transferred meant that the appellant's business was not augmented as expected by the addition of a quantity of stock in trade. It was said, however, on behalf of the respondent, to be counter-intuitive that a contract for the sale of assets of a business for a total price of $386,950.91 should give rise to an award of damages of $1,246,025.01 for failure to deliver some only of the assets. This appeal to intuition is unsupported by evidence, and should not be countenanced for several reasons. First, this is the complaint of any vendor in breach of a contract in which the purchaser made the better bargain. The fundamental value protected by the law of contract is that pacta sunt servanda, bargains are to be kept. That the contract crystallises a state of affairs in which the purchaser's gain is the vendor's loss is a characteristic of commerce in a capitalistic economy111. Secondly, the only source of replacement sperm was Xytex: the appellant was obliged to incur storage and transport costs associated with getting sperm from the United States, and, on the evidence adduced at trial, the exchange rate 110 [1920] 2 KB 11 at 18. 111 Fuller and Perdue, "The Reliance Interest in Contract Damages: 1", (1936) 46 Yale Law Journal 52 at 65. between the US dollar and the Australian dollar was, at the relevant time, substantially to the disadvantage of the Australian dollar112. Thirdly, the respondent's appeal to intuition ignores the possibility that St George's sperm straws would have been, within the contemplation of the parties, deployed on a higher turnover, as stock of the appellant's expanded business, than had previously been achieved by St George or the appellant. The appellant's acquisition of St George's assets (which included its goodwill and patient lists) expanded her client base, and the sale of the assets by St George meant that the potential for the expansion of the appellant's business would be realised in a market from which St George had been removed as a competitor. The acquisition may have generated greater demand for, and a concomitant increase in the rate of turnover of, sperm straws in comparison with the turnover relevant to the pre-acquisition gross fee income referred to in cl 2a of the Deed. That possibility would, of course, be consistent with the price formula in cl 2a of the Deed. Fourthly, at trial St George and the respondent did not seek to advance an evidentiary basis for a finding as to the true value of the St George sperm had St George kept its contractual obligations. In this respect, the elements of the primary judge's calculation based on the cost of replacement sperm from Xytex were not challenged. It may also be noted here that the respondent sought leave to file out of time a notice of contention to the effect that, if the appellant was entitled to recover damages assessed by reference to the non-delivery of the contract sperm, then the cost of the acquisition of the Xytex sperm was not an accurate proxy for that value. But the respondent did not adduce any evidence to establish a more reliable proxy. The view formed by the primary judge on this factual matter was not unreasonable. The submission advanced pursuant to the notice of contention should be rejected. Betterment discount? The respondent also argued that the appellant was better off by utilising replacement donor sperm in patient treatments, as compared to if she had been able to use contractually compliant St George donor sperm. At trial, the respondent advanced an argument that the sperm the appellant obtained from Xytex was superior to the sperm that would have been supplied by St George if it had complied with its warranty obligations113. The primary judge accepted that the information available concerning Xytex's donors was more extensive than would have been available for compliant 112 [2012] NSWCA 367 at [32]. 113 [2011] NSWSC 1276 at [76]. St George sperm; but his Honour held that St George and the respondent failed to prove "the presence of betterment and its quantum"114. His Honour concluded115: "Here the market comprised but one seller, Xytex. [The appellant] had no choice. It was not suggested that she could have acquired the sperm more cheaply elsewhere. It was not suggested that the price paid was inflated by the agreement for exclusive supply to [the appellant]. And St George Fertility and [the respondent] failed to establish the quantum of any benefit." The Court of Appeal did not address this aspect of the case. The respondent's argument should be rejected. This case is not analogous to British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd116, on which the respondent relied. In that case, the cost of machines purchased as substitutes for defective machines was recoverable but subject to a reduction to take account of any extra profit to the buyer resulting from the replacement of the defective machines. It is not suggested that the evidence established extra profitability attributable to the use of the Xytex sperm. As noted above, the respondent did not advance evidence which might have permitted a finding that the Xytex sperm was of a quality which would have commanded a higher price than the St George sperm would have had it satisfied the warranties in the Deed. Rather, the respondent's case was that the appellant's claim was flawed in point of principle so that no damages were recoverable, and he advanced no evidence to establish a basis for a "betterment discount"117. British Westinghouse is irrelevant in this case for the further reason that the buyer in that case did not claim the difference between the actual value of the goods at the time of delivery and the value they would have had if they had complied with the seller's contractual obligations. Because the buyer claimed the cost of buying substitute goods several years after the original delivery, the House of Lords held that the buyer's action "formed part of a continuous dealing with the situation in which [the buyer] found [itself], and was not an independent or disconnected transaction."118 As Benjamin's Sale of Goods explains, if the 114 [2011] NSWSC 1276 at [79]-[83]. 115 [2011] NSWSC 1276 at [82]. 117 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 291 118 [1912] AC 673 at 692. buyer in British Westinghouse had claimed the difference between the value of the goods and the value of compliant goods at the time of delivery, that claim could not have been reduced119. The purchase price covered the breach The respondent also advanced an argument that it was within the parties' contemplation that any consequence for breach of warranty in respect of the donor sperm was built into the contract itself. According to this argument, if the appellant was unable to use some or all of the sperm in medical procedures and treatments, there would be a resultant reduction in the increase in fees that she might otherwise have received from performing those procedures and treatments. This would, in turn, result in a reduction in the purchase price the appellant would be required to pay St George under cl 2a of the Deed. This argument should be rejected. It is predicated on the assumption that the protection afforded to the appellant's interests by the warranties in the Deed was exhaustively addressed by the prospect of downward adjustment in the purchase price payable by her. But the terms of the Deed contain no hint that the parties had any such common intention. Indeed, the argument is contrary to the evident intention of cl 2a of the Deed, whereby both vendor and purchaser expected to share in the benefit of the greater profitability of the appellant's business to be expected from the deployment of the assets in that (expanded) business. That common intention would not be advanced if St George's warranties were not made good. Conclusion and orders The appeal should be allowed and consequential orders should be made. 119 Benjamin's Sale of Goods, 8th ed (2010) at [17-056]. |
HIGH COURT OF AUSTRALIA APPELLANT AND RESPONDENT Harriton v Stephens [2006] HCA 15 9 May 2006 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: B W Walker SC with G P Segal and D H Hirsch for the appellant (instructed by Maurice Blackburn Cashman) S J Gageler SC with J K Kirk for the respondent (instructed by Blake Dawson Waldron) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Harriton v Stephens Torts – Medical negligence – Wrongful life – Birth of severely disabled child – Agreed for the purposes of separate questions at first instance that the respondent doctor failed to diagnose the mother's rubella infection during pregnancy – Doctor failed to warn the mother of the risk of serious disability as a consequence of the rubella infection – Whether the appellant child born with disabilities can recover from the doctor. Duty of care – Medical practitioners – Whether the doctor owed the child a duty of care to diagnose rubella and advise the child's mother in relation to the termination of the pregnancy – Foreseeability of risk to the appellant – Whether the facts of the case fall within the established duty of care which medical practitioners owe to foetuses to take reasonable care to prevent pre-natal injury – Vulnerability of the appellant – Relevance of duty of care owed to the appellant's mother. Damage – Whether a life with disabilities is actionable damage – Whether it is possible to prove damage by comparing a life with disabilities with non- existence. Damages – Assessment – Measure of damages – Compensatory principle – Non- existence as a comparator – Comparison to child born without disability – Whether claim for special damages quantifiable – Whether only special damages may be awarded – Corrective justice. Public policy – Principle of the sanctity of human life – Whether life is capable of constituting a legally cognisable injury – Effect on disabled people of awarding damages for wrongful life – Whether it would be appropriate to award damages in respect of minor defects in circumstances where a child's mother would have terminated her pregnancy had she been warned of the risk of such defects – Whether disabled child could sue his or her mother for failing to terminate her pregnancy – Whether awarding damages for wrongful life would undermine familial relationships – Relevance of unforeseen advances in genetic science. Statutes – Whether common law can be developed by analogy with legislation – Whether it is possible to develop the common law by analogy in circumstances where there is no relevant legislative provision in any Australian jurisdiction – Relevance of legislature's inaction. Words and phrases – "wrongful life", "wrongful birth". Civil Liability Act 2002 (NSW), ss 70, 71. Civil Liability Act 2003 (Q), s 49A. Civil Liability Act 1936 (SA), s 67. GLEESON CJ. I have had the advantage of reading in draft form the reasons for I agree that the appeal should be dismissed with costs, for the reasons given by her Honour. GUMMOW J. The appeal should be dismissed with costs. I agree with the reasons of Crennan J. Kirby KIRBY J. In Cattanach v Melchior1 this Court decided that the parents of an unplanned child, born following the negligence of a medical practitioner, could claim damages for the cost of raising that child. This type of action has become known as an action for "wrongful birth"2. The decision in Cattanach followed earlier like decisions in other Australian courts supporting such recovery3. The holding in that case was not challenged in this appeal. The Court is now required to decide whether a child, born with profound disabilities, whose mother would have elected to terminate her pregnancy had she been aware that there was a real risk of the child being born with such disabilities, is entitled to damages where a medical practitioner negligently failed to warn the mother of that risk. Such actions have been called "wrongful life" actions. This is a value-loaded label. An alternative, namely, "wrongful suffering", has been suggested. However designated, such proceedings have received a generally hostile reception from courts in Australia and elsewhere. Many academic commentators have regarded them as insupportable4. Yet others have considered that they are compatible with the established principles of the tort of negligence5. There is no legislation and no settled judicial authority in Australia to resolve the content of the law. It is therefore the duty of this Court to do so in the (2003) 215 CLR 1 (McHugh, Gummow, Kirby and Callinan JJ; Gleeson CJ, Hayne 2 Regarding this choice of label see Cattanach (2003) 215 CLR 1 at 32 [68]. 3 See, eg, CES v Superclinics (Australia) Pty Ltd (1995) 38 NSWLR 47; Veivers v Connolly [1995] 2 Qd R 326. 4 See, eg, Todd, "Wrongful Conception, Wrongful Birth and Wrongful Life", (2005) 27 Sydney Law Review 525 at 538-541; Dimopoulos and Bagaric, "The Moral Status of Wrongful Life Claims", (2003) 32 Common Law World Review 35; Pace, "The Treatment of Injury in Wrongful Life Claims", (1986) 20 Columbia Journal of Law and Social Problems 145; Tedeschi, "On Tort Liability for 'Wrongful Life'", (1966) 1 Israel Law Review 513. 5 See, eg, Teff, "The Action for 'Wrongful Life' in England and the United States", (1985) 34 International and Comparative Law Quarterly 423 at 427; Cane, "Injuries to Unborn Children", (1977) 51 Australian Law Journal 704 at 720; Grainger, "Wrongful Life: A Wrong Without a Remedy", (1994) 2 Tort Law Review 164; Capron, "Tort Liability in Genetic Counseling", (1979) 79 Columbia Law Review 618 at 661; Stretton, "The Birth Torts: Damages for Wrongful Birth and Wrongful Life", (2005) 10 Deakin Law Review 319 at 320, 364. Kirby usual way. It must proceed by analogous reasoning from past decisions, drawing upon any relevant considerations of legal authority, principle and policy6. "Wrongful life" and the danger of labels The label "wrongful life" has been criticised as "unfortunate"7, "ill- chosen"8, "uninstructive"9 and "misleading and decidedly unhelpful"10. In my view, its use, even as a shorthand phrase, should be avoided11. First, it has been borrowed from another context. The expression was originally used in the United States of America to describe claims brought by healthy but "illegitimate" children against their fathers, seeking damages for the disadvantages caused by reason of their illegitimacy12. Such actions are quite different from "modern" wrongful life actions because, among other things, the alleged wrong is not in any meaningful sense the cause of the plaintiff's existence13. Secondly, the epithet "wrongful life" is seriously misleading. It misdescribes the essential nature of the complaint. The plaintiff in a wrongful life action does not maintain that his or her existence, as such, is wrongful14. Nor 6 Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556 at 563; Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 252; Northern Territory v Mengel (1995) 185 CLR 307 at 347; Cattanach (2003) 215 CLR 1 at 42 [102]. 7 Teff, "The Action for 'Wrongful Life' In England and the United States", (1985) 34 International and Comparative Law Quarterly 423 at 425. 8 Kashi, "The Case of the Unwanted Blessing: Wrongful Life", (1977) 31 University of Miami Law Review 1409 at 1432. 9 Harriton v Stephens [2002] NSWSC 461 at [8]. 10 Lininger v Eisenbaum 764 P 2d 1202 at 1214 (1988). See also Viccaro v Milunsky 551 NE 2d 8 at 9 n 3 (1990); Hester v Dwivedi 733 NE 2d 1161 at 1163-1164, 11 Contra Berman v Allan 404 A 2d 8 at 11 (1979). 12 Zepeda v Zepeda 190 NE 2d 849 at 858 (1963). 13 See Tedeschi, "On Tort Liability for 'Wrongful Life'", (1966) 1 Israel Law Review 14 Hester 733 NE 2d 1161 at 1169 (2000); Viccaro 551 NE 2d 8 at 9 n 3 (1990). Kirby does the plaintiff contend that his or her life should now be terminated. Rather, the "wrong" alleged is the negligence of the defendant that has directly resulted in present suffering. Professor Peter Cane identified this distinction, stating "[t]he plaintiff in [wrongful life] cases is surely not complaining that he was born, simpliciter, but that because of the circumstances under which he was born his lot in life is a disadvantaged one"15. Thirdly, the expression is apt to obscure potentially important differences between actions brought by or on behalf of children who would not have existed but for the negligence of another. Such actions may arise out of varying circumstances. For instance, the negligence complained of may be a failure to make an accurate diagnosis or a failure to warn the plaintiff's parents. It may precede, or it may follow, conception16. The range of potential defendants includes medical practitioners, manufacturers of pharmaceuticals, genetic testing laboratories and possibly even the child's parents17. The extent of the child's disabilities is another variable. By lumping all such cases under the one description there is a danger that important factual distinctions will be overlooked or obscured18. Fourthly, by referring to actions such as the present as actions for "wrongful life", there is a risk that they will be perceived as the opposite of actions for "wrongful birth". The latter actions are distinguishable on several grounds19. Actions for "wrongful life" are brought by or for the child. Actions the parents20. for "wrongful birth" are commenced at Additionally, "wrongful life" actions are often said to raise concerns about the relative values of existence and non-existence. Such concerns are absent in a case of "wrongful birth". Yet the two actions share certain similarities. One instance of the 15 Cane, "Injuries to Unborn Children", (1977) 51 Australian Law Journal 704 at 719. 16 See Waller v James [2006] HCA 16 at [28]. 17 Although see below these reasons at [127]-[133]. 18 Curlender v Bio-Science Laboratories 165 Cal Rptr 477 at 481, 486 (1980). 19 See Harriton (by her tutor Harriton) v Stephens (2004) 59 NSWLR 694 at 743 20 Actions for wrongful birth are sometimes distinguished from so-called actions for wrongful conception. The difference between these labels appears to turn on the fact that wrongful conception consists of negligence resulting in conception while wrongful birth, according to those who draw this distinction, involves negligence that deprives a pregnant woman of the opportunity to undergo an abortion or negligence that fails to effect an abortion. Kirby important similarity is that they both require a birth. Another is that they both involve the contention that the child would not have been born but for the negligence of the defendant. Unless the similarities and differences are properly acknowledged, considerations favouring parental claims might be disregarded in claims brought by or for the child21. Fifthly, the words "wrongful life" implicitly denigrate the value of human existence. Arguably, because of the law's respect for human life22, the label has caused judges to recoil from affording remedies in "wrongful life" cases. It discourages dispassionate legal analysis23. It is essential that the availability of actions such as the present be determined by reference to accepted methods of judicial reasoning rather than by invoking emotive slogans and the contestable religious or moral postulates that they provoke24. Notwithstanding this analysis, in these reasons I will have to use the phrase "wrongful life". The term is consistently used in the reasons of the other members of this Court and in the reasons of the courts below. Its use is ubiquitous in the legal literature. To adopt a more fitting description would risk confusion25. However, the appeal should be approached with full awareness of the shortcomings in the label "wrongful life". It must be decided by reference to legal analysis, not emotive labels or slogans. The agreed facts This appeal was heard concurrently with two other appeals concerning the permissibility of wrongful life actions26. The facts were agreed between the parties for the purposes of determining whether the appellant had a cause of 21 Harriton (2004) 59 NSWLR 694 at 706 [69]; Lininger 764 P 2d 1202 at 1214 22 See Wilson v The Queen (1992) 174 CLR 313 at 341. 23 Harriton (2004) 59 NSWLR 694 at 706-707 [69]; Teff, "The Action for 'Wrongful Life' in England and the United States", (1985) 34 International and Comparative Law Quarterly 423 at 427-428; Kashi, "The Case of the Unwanted Blessing: Wrongful Life", (1977) 31 University of Miami Law Review 1409 at 1431-1432. 24 Berman 404 A 2d 8 at 20 (1979); In re A (Children) (Conjoined Twins: Surgical Separation) [2001] Fam 147 at 155. 25 Lininger 764 P 2d 1202 at 1204 n 2 (1988). 26 Waller [2006] HCA 16. Kirby action against the respondent and, if so, what heads of damages were available in respect of it27. Alexia Harriton is the appellant in this Court. In early August 1980, before her birth, her mother, Mrs Olga Harriton, experienced a fever and noticed a rash. Suspecting that she might be pregnant, she contacted Dr Max Stephens, who was a medical practitioner in general practice. Dr Max Stephens (who has since died) was the father of Dr Paul Stevens ("the respondent"). He was also in general practice. On 13 August 1980, Dr Max Stephens attended on Mrs Harriton. She informed him that she believed that she might be pregnant. She expressed concern that her illness might be rubella (commonly known as German measles). On Dr Max Stephens's advice, Mrs Harriton underwent blood testing to determine whether she was pregnant and whether she had been exposed to the rubella virus. The testing was performed by Macquarie Pathology Services. Dr Max Stephens recorded the following clinical history: "Urgent,? pregn,? recent rubella contact." On 21 August 1980, the Pathology Service reported to Dr Max Stephens in the following terms: "Rubella – 30 If no recent contact or rubella-like rash, further contact with this virus is unlikely to produce congenital abnormalities." Mrs Harriton consulted the respondent on 22 August 1980. She supplied him with substantially the same history as she had given to his father. The respondent was in possession of the pathology report. He advised her that she was pregnant but assured her that her symptoms were not caused by the rubella virus. It was common ground that, assuming that a relevant duty of care existed, the respondent was negligent in informing the appellant that she did not have rubella and in failing to arrange further and more detailed blood testing. It was also agreed that, in 1980, a reasonable medical practitioner in the position of the respondent would have advised Mrs Harriton of the high risk that a foetus which had been exposed to the rubella virus would be born profoundly disabled. Finally, the parties agreed that, had Mrs Harriton received competent medical advice, she would have terminated the pregnancy. 27 Facts further to those stated here may be found at Harriton (2004) 59 NSWLR 694 Kirby Alexia Harriton was born on 19 March 1981. She suffered from catastrophic disabilities as a consequence of exposure to the rubella virus in utero. Her disabilities include blindness, deafness, mental retardation and spasticity. She will require constant supervision and care for the rest of her life. The decisional history Decision at first instance: By her tutor and father, Mr George Harriton, the appellant sued the respondent in the Supreme Court of New South Wales. Her claim was pleaded in tort and contract. She claimed damages for pain and suffering, loss of amenities, medical expenses and under the principle in Griffiths v Kerkemeyer28. Damages for a loss of earning capacity were not claimed29. Her parents did not commence proceedings in their own names. By reason of the expiry of the relevant limitation period, they are now precluded from doing so30. Pursuant to Pt 31 r 2 of the Supreme Court Rules 1970 (NSW)31 and with the consent of both parties, Studdert J on 25 February 2002 ordered that there be a separate determination of the following questions32: If the [respondent] failed to exercise reasonable care in his management of the [appellant's] mother and, but for that failure the [appellant's] mother would have obtained a lawful termination of the pregnancy, and as a consequence the [appellant] would not have been born, does the [appellant] have a cause of action against the [respondent]? If so, what categories of damages are available?" Relying heavily on the decision of the English Court of Appeal in McKay v Essex Area Health Authority33, in which the admissibility of wrongful 28 (1977) 139 CLR 161. 29 Counsel for the appellant submitted otherwise during argument and in written submissions but the appellant's pleadings do not make a claim for damages for a loss of earning capacity. 30 Harriton (2004) 59 NSWLR 694 at 724 [179]. 31 See now Uniform Civil Procedure Rules 2005 (NSW), r 28.2. 32 Harriton [2002] NSWSC 461 at [2]. Kirby life actions was rejected34, Studdert J answered the first question in the negative35. The second question therefore did not need to be decided. His Honour identified several reasons why the appellant lacked a cause of action. First, he found that whilst a health care provider owes a duty of care to an unborn child to take reasonable care to avoid causing that child physical injuries in utero, that duty did not include an obligation to give advice to the mother of an unborn child that could deprive that unborn child of the opportunity of life36. Secondly, Studdert J held that there was no breach of the accepted duty of care that health care providers owe to unborn children to guard against acts or omissions which might cause physical injury because the respondent did not do anything which caused her mother to contract the rubella virus37. Nor was the respondent negligent in failing to take prophylactic measures either to ameliorate the risk of the appellant's being infected with rubella or to reduce the severity of the appellant's disabilities. It was accepted by the appellant that no such Thirdly, Studdert J considered that, to recover for negligence, the appellant's claim necessitated a comparison between her present position and the position that she would have been in but for the respondent's negligence. As the appellant would not have been born had the respondent exercised reasonable care, Studdert J found such a comparison was "an impossible exercise"39. Finally, Studdert J found that public policy considerations militated against recognising wrongful life actions. He stated that recognising wrongful life actions would erode the value of human life; undermine the perceived worthiness of those born with disabilities; open the door to actions brought by anyone born with a disability regardless of the severity of their disability; enable children born with disabilities to sue their mothers for failing to undergo an 34 See below these reasons at [49]-[51]. 35 Judgment was delivered concurrently with judgments in two other wrongful life actions, Waller v James [2002] NSWSC 462 and Edwards v Blomeley [2002] NSWSC 460. Studdert J also found for the defendants in these actions for substantially the reasons that he gave in Harriton. 36 Harriton [2002] NSWSC 461 at [21]. 37 Harriton [2002] NSWSC 461 at [25]. 38 Harriton [2002] NSWSC 461 at [26]. 39 Harriton [2002] NSWSC 461 at [33]. Kirby abortion if advised of the risk of disability; and place unacceptable pressure on the cost of insurance premiums of medical practitioners40. Studdert J also rejected the appellant's alternative action in contract. On the basis of this Court's decision in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd41, it had been argued for the appellant that she enjoyed a derivative cause of action as a beneficiary of the contract between the respondent and her mother42. In rejecting this argument, Studdert J found that the agreed facts did not enable him to find that the contract created a trust in favour of the appellant43 and that, in any case, such action did not avoid the foregoing problems of how Decision of the Court of Appeal: The appellant appealed to the New South Wales Court of Appeal45. A majority of that Court (Spigelman CJ and Ipp JA; Mason P dissenting) dismissed the appeal. Spigelman CJ found that no relevant duty of care was owed to the appellant by the respondent. The principal reasons that led the Chief Justice to this conclusion were the absence of the requisite degree of directness in the relationship between the appellant and the respondent46 and of any clear moral support for the existence of the alleged duty47. Spigelman CJ also found that the agreed statement of facts did not include sufficient information for it to be established that the appellant would have been better off had she not been born, proof of which he considered necessary for the appellant to succeed48. In Ipp JA's view, the main difficulty with the appellant's action was that damages could not be quantified because of the impossibility of comparing 40 Harriton [2002] NSWSC 461 at [71]. 41 (1988) 165 CLR 107. 42 Harriton [2002] NSWSC 461 at [73]-[77]. 43 Harriton [2002] NSWSC 461 at [78]. 44 Harriton [2002] NSWSC 461 at [79]. 45 Harriton (2004) 59 NSWLR 694. The Court of Appeal heard the appeal in this matter together with appeals against the decision in Waller [2002] NSWSC 462. 46 Harriton (2004) 59 NSWLR 694 at 701-702 [25]-[33]. 47 Harriton (2004) 59 NSWLR 694 at 699-701 [12]-[23]. 48 Harriton (2004) 59 NSWLR 694 at 704 [45]-[46]. Kirby existence with non-existence49. Ipp JA would also have rejected the appellant's action on the basis of the absence of a duty of care50 and causation51. He cited a number of policy arguments militating against recognition of the interest asserted by the appellant52. It is convenient to address these policy arguments later in these reasons53. In dissent, Mason P identified the argument that "life" cannot be a legal injury and the supposed impossibility of quantifying the appellant's damage as the main barriers to the appellant's succeeding in her action. His Honour was not persuaded by these arguments. In relation to the argument that life itself cannot constitute a legal injury, Mason P perceived this as a question-begging statement which contained its own conclusion. It did not supply a reason for denying relief54. Mason P also drew attention to the fact that the creation of life is the main trigger of the damage in wrongful birth actions and that it was not clear why the "life cannot be a legal injury" argument should have more force in the context of wrongful life than in the context of wrongful birth55. Mason P also rejected the proposition that the appellant's action should be disallowed by reason of the impossibility of determining the damage she suffered. He did so for several reasons56. These included that the law values other intangible losses and explicitly or implicitly weighs existence against non- existence in other legal contexts. Grant of special leave: By special leave, the appellant now appeals to this Court. The questions requiring determination are the same as those in the courts below. They are (1) whether a wrongful life action constitutes a valid cause of action and, if so, (2) what heads of damages are recoverable57. The appellant 49 Harriton (2004) 59 NSWLR 694 at 737-738 [265]-[271]. 50 Harriton (2004) 59 NSWLR 694 at 748 [351]. 51 Harriton (2004) 59 NSWLR 694 at 748-749 [353]-[363]. 52 Harriton (2004) 59 NSWLR 694 at 744-748 [321]-[351]. 53 See below these reasons at [110]-[152]. 54 Harriton (2004) 59 NSWLR 694 at 717 [131], 719 [144]. 55 Harriton (2004) 59 NSWLR 694 at 718 [136]-[137]. 56 Harriton (2004) 59 NSWLR 694 at 721-722 [157]-[162]. 57 See above these reasons at [22]. Kirby abandoned her contractual action before this Court, electing to rely exclusively on the tort of negligence. The absence of a trial A threshold consideration which must be borne in mind in deciding this appeal is the fact that the appellant has not yet had a trial. As such, the facts available to this Court are brief and unelaborated. While the parties doubtless had in mind cost-saving and tactical considerations in adopting the abbreviated course they did, it is often important, in cases concerning the tort of negligence, that appellate courts have the benefit of comprehensive findings based on full evidence58. Because of the location of the burden of proof, a paucity of evidence usually works to the detriment of the party bringing the action. Especially in novel claims asserting new legal obligations, the applicable common law tends to grow out of a full understanding of the facts. To decide the present appeal on abbreviated agreed facts risks inflicting an injustice on the appellant because the colour and content of the obligations relied on may not be proved with sufficient force because of the brevity of the factual premises upon which the claim must be built59. Where the law is grappling with a new problem, or is in a state of transition, the facts will often "help to throw light on the existence of a legal cause of action – specifically a duty of care owed by the defendant to the plaintiff"60. Facts may present wrongs. Wrongs often cry out for a remedy. To their cry the common law may not be indifferent. Notwithstanding these difficulties, this Court, like the courts below, must decide the contest applying established law to the abbreviated facts. This process yields an answer favourable to the appellant despite the unfavourable forensic procedure she adopted. Confining the issues The breach issue: Two issues can be exposed which do not present any real problem for this Court. The first is the breach element of the tort of negligence. As already mentioned, the parties agreed that, if the respondent 58 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 561- 562 [123]; Hester 733 NE 2d 1161 at 1168 (2000). 59 Behrooz v Secretary, Department of Immigration and Multicultural and Indigenous Affairs (2004) 219 CLR 486 at 518 [91]. 60 Woolcock (2004) 216 CLR 515 at 565-566 [138] applying E (A Minor) v Dorset County Council [1995] 2 AC 633 at 694 per Sir Thomas Bingham MR. Kirby owed the appellant a relevant duty of care, the respondent had breached that duty61. The causation issue: Secondly, although contested by the respondent, it is clear, in my view, that no real difficulty arises over causation. The respondent pointed to several factual considerations which, he submitted, sustained a finding adverse to the appellant on causation. These considerations included the fact that the respondent had played no part in the appellant (or her mother) actually contracting rubella; the absence of any measures which could have been taken to reduce either the risk that the appellant would be infected with rubella or the severity of the appellant's disabilities once she had been exposed to that virus; and that no other life was possible for the appellant than the one she was living. These submissions are unconvincing62. Had it not been for the respondent's negligence, the appellant would not have been born. The suffering, expenses and losses of which she now complains would therefore have been avoided. True, the respondent did not give rise to, or increase, the risk that the appellant would contract rubella. However, he did, through his carelessness, cause the appellant to suffer, as she still does, the consequences of that infection63. As Mason P observed in the Court of Appeal, "[d]octors seldom cause their patients' illnesses. But they may be liable in negligence for the pain and cost of treating an illness that would have been prevented or cured by reasonable medical intervention."64 In the present case, the only way in which the appellant's suffering could have been prevented was by terminating the pregnancy. The respondent's negligence deprived the appellant's parents of the opportunity to act on that preventative measure. As such, the respondent was a cause of the appellant's damage. The issues for determination Once the breach and causation issues are put aside, three main issues remain for determination of the legal liability of the respondent to the appellant. They are: 61 See above these reasons at [19]. 62 Cf Trindade and Cane, The Law of Torts in Australia, 3rd ed (1999) at 476. 63 Todd, "Wrongful Conception, Wrongful Birth and Wrongful Life", (2005) 27 Sydney Law Review 525 at 539-540; Jackson, "Wrongful Life and Wrongful Birth: The English Conception", (1996) 17 Journal of Legal Medicine 349 at 353-354. 64 Harriton (2004) 59 NSWLR 694 at 714 [110]. Kirby The duty of care issue: Did the respondent owe the appellant a relevant duty of care? Does this case fall within the duty a health care provider owes to take reasonable care to avoid causing pre- natal injury to a foetus? The damage issue: Is the appellant's damage capable of being quantified? Do the suggested difficulties of quantification arise in relation to all of the heads of damages pleaded by the appellant? The policy issues: Assuming that a relevant duty of care was owed to the appellant and that her damage is capable of quantification, are there any policy considerations that should preclude this Court from upholding the claim? Are there countervailing considerations that support recognition of the appellant's cause of action? Before examining these questions it is helpful to consider Australian and overseas decisions on wrongful life actions. Australian authorities on wrongful life actions Other than the present case, and the appeals in Waller v James65, heard at the same time, there have only been three reported wrongful life actions brought in Australia. In each case, the plaintiff failed. The first was Bannerman v Mills66. The plaintiff there was born with severe defects as a result of contracting rubella from her mother while a foetus. The facts of the case are not entirely clear from the report. However, it appears that the mother, while pregnant with the plaintiff, had consulted the defendants about her infection. The plaintiff alleged that the defendants were negligent in failing to advise her, among other things, to terminate her pregnancy. The defendants brought a motion for summary dismissal of the proceedings on the basis that no reasonable cause of action was disclosed. A Master of the Supreme Court of New South Wales, after surveying decisions in the United Kingdom and the United States, dismissed the plaintiff's action on the basis that it was unarguable as a matter of law. The next case was Hayne v Nyst67. That was a proceeding commenced by a mother in her own right and on behalf of the child. The mother had given birth 65 (2004) 59 NSWLR 694. 66 (1991) Aust Torts Reports ¶81-079. 67 Unreported, Supreme Court of Queensland, 17 October 1995. Kirby to a child who had contracted rubella in utero. An application for leave to bring the proceedings outside the applicable limitation period was ultimately discontinued with the apparent acquiescence of counsel for both sides. However, Williams J commented that, in any event, he did not consider that the child had a viable cause of action. The third case was Edwards v Blomeley68. The plaintiff there was the seventh child born to her parents. Before she was conceived, her father, Mr Edwards, had approached the defendant, a medical practitioner, for a vasectomy. That operation failed. The parties agreed that the defendant had not only negligently performed the vasectomy but, contrary to indications from sperm count tests, subsequently advised Mr Edwards that the procedure had been successful. Acting in reliance on this advice, Mr Edwards engaged in unprotected sexual intercourse with his wife. This resulted in the plaintiff's conception. At birth it was found that the child suffered from cri du chat syndrome. This is a rare chromosomal disorder that causes severe intellectual and physical disabilities. In the Supreme Court of New South Wales, Studdert J rejected the child's action for want of a relevant duty of care. His Honour stated69 "I cannot accept that the defendant owed to the ... plaintiff a duty to prevent her conception, or to give to her parents advice such as would have prevented her conception". Studdert J also rejected the action on the basis of causation70 and the impossibility of assessing the damage that the plaintiff suffered71. Finally, his Honour considered that public policy militated against recognition of the plaintiff's action. He found that wrongful life actions, among other things, erode the sanctity of human life and devalue members of society living with disabilities72. The parallels with Studdert J's reasoning in the present case are obvious73. The preponderance of decisions on wrongful life actions in countries other than Australia is also against the appellant. It is useful to identify the leading international authorities and their reasoning. 68 [2002] NSWSC 460. 69 [2002] NSWSC 460 at [62]. 70 [2002] NSWSC 460 at [69]. 71 [2002] NSWSC 460 at [72]-[75]. 72 [2002] NSWSC 460 at [119]. 73 See above these reasons at [23]-[27]. Kirby Overseas authorities on wrongful life actions United Kingdom: The most important decision in the United Kingdom is that of McKay74. In that case a mother and her daughter sued the defendants for negligently misinterpreting tests of the mother's blood for the rubella virus, with the result that the mother was not properly advised of the risk that her infection with rubella presented to her daughter in utero75. The defendants brought a motion to strike out the daughter's claim on the ground that it failed to disclose a reasonably arguable cause of action. That motion was granted by a Master of the High Court. However, it was overturned by Lawton J on appeal. In the Court of Appeal, Stephenson and Ackner LJJ, in separate reasons, restored the orders of the Master. In dissent, Griffiths LJ would have upheld the orders made by Lawton J on the basis that the issue to be determined was not so straight-forward that it should be summarily decided76. However, because this was a minority view, his Lordship proceeded to hold that wrongful life actions should not be recognised by English law77. In retrospect, and in the light of the later development of authority in England on the proper approach to strike-out applications in cases of such a kind, it can probably be said that Griffiths LJ's initial conclusion (that there should first be a trial) was one that would probably now be followed78. Stephenson LJ, who wrote the principal reasons for the majority in McKay, held that the daughter's action was unarguable. In his Lordship's opinion this was because (1) the defendants' negligence had merely caused her birth, as opposed to her disabilities79; (2) wrongful life actions postulate a duty to terminate life and this would make an unacceptable inroad on the principle of the sanctity of human life80; (3) such actions would expose medical practitioners to 74 [1982] QB 1166. See also P's Curator Bonis v Criminal Injuries Compensation Board 1997 SLT 1180. [1982] QB 1166 at 1174. 76 [1982] QB 1166 at 1191. 77 [1982] QB 1166 at 1193. 78 See, eg, E (A Minor) [1995] 2 AC 633 at 694; cf D'Orta-Ekenaike v Victoria Legal Aid (2005) 79 ALJR 755 at 796 [228]; 214 ALR 92 at 149. 79 [1982] QB 1166 at 1178. 80 [1982] QB 1166 at 1180-1181. Kirby liability in respect of "mercifully trivial abnormalit[ies]"81; (4) they would open the door for wrongful life actions to be brought against mothers for failing to abort82; and (5) it would be impossible to assess damages because one cannot compare the daughter's disabled position with non-existence83. In addition to these arguments, the Court of Appeal obviously placed considerable weight on the fact that, not long before proceedings were commenced (but after the daughter's birth), Parliament had enacted the Congenital Disabilities (Civil Liability) Act 1976 (UK)84. That Act, which did not apply to the daughter's claim85, expressly prohibited wrongful life actions86. It had been drafted pursuant to recommendations of the Law Commission87. Canada: Few actions for wrongful life have been reported in Canada. Those that have been have failed88. All but two were struck out before trial89. In Arndt v Smith90, a wrongful life action was commenced in respect of severe mental and physical disabilities suffered by a child as a result of her 81 [1982] QB 1166 at 1181. 82 [1982] QB 1166 at 1181. 83 [1982] QB 1166 at 1181-1182. 84 [1982] QB 1166 at 1177-1178, 1182, 1187, 1192. 85 The Act only applied to children born on or after 22 July 1976. The daughter was born on 15 August 1975. 86 Section 1(2)(b). 87 Law Commission, Report on Injuries to Unborn Children, Law Com No 60, (1974) Cmnd 5709 at 45-54. 88 Reference is sometimes mistakenly made to the decision of the Manitoba Court of Appeal in Lacroix (Litigation Guardian of) v Dominique (2001) 202 DLR (4th) 121 as though it were a wrongful life action (see, eg, Cattanach (2003) 215 CLR 1 at 146 [407] n 654). In that case, the infant suffered disabilities caused by a drug prescribed for her mother while she was pregnant. The damage could have been averted by human agency other than by performing an abortion. Twaddle JA at 133 [38] appeared to acknowledge that Lacroix was not a wrongful life action. 89 Mickle v Salvation Army Grace Hospital (1998) 166 DLR (4th) 743 and Patmore v Weatherston [1999] BCJ No 650 were wrongful life actions struck out before trial. But see Bartok v Shokeir (1998) 168 Sask R 280. 90 (1994) 93 BCLR (2d) 220. Kirby mother becoming infected while pregnant with the virus which causes chickenpox. While actions for wrongful birth and wrongful life were commenced, at trial, the wrongful life action was abandoned. Citing McKay, Hutchison J stated that the91: "decision to abandon the claim for wrongful life on behalf of their child was most appropriate. By doing so, they quite properly accepted the inevitable finding of this court that no such action lies." In Jones (Guardian ad litem of) v Rostvig92, an infant born with Down's syndrome brought an action against his mother's medical practitioner for failing to recommend that the mother undergo testing which would have shown that, if born, he would be affected by the syndrome. Macaulay J found for the defendant, adopting the reasoning in McKay93. Singapore: In a recent decision in JU v See Tho Kai Yin94, the High Court of Singapore rejected an action for wrongful life. The plaintiff in that case was an infant born with Down's syndrome. He sued his mother's obstetrician and gynaecologist, alleging a negligent failure to advise his mother of tests available to detect chromosomal abnormalities and to warn her that, at her age, there was an increased risk of such abnormalities. Relying on McKay, the Court held that the plaintiff lacked a valid cause of action95. United States: In the United States, one of the earliest and most frequently cited decisions on wrongful life is Gleitman v Cosgrove96. The evidence adduced in that case indicated that the plaintiff's mother had consulted the defendant medical practitioners when she was pregnant with the plaintiff. She advised the defendants that approximately one month after falling pregnant she had fallen ill with rubella. The defendants reassured her that this would have no effect on the foetus97. Subsequently, the child was born in a seriously impaired condition. The plaintiff's mother gave evidence that, if she had been informed of the risk of grave disability that her infection with rubella presented to the child, she would 91 (1994) 93 BCLR (2d) 220 at 227 [28]. 92 (1999) 44 CCLT (2d) 313. 93 (1999) 44 CCLT (2d) 313 at 318-320 [18]-[22]. 94 [2005] 4 SLR 96. 95 [2005] 4 SLR 96 at 120 [95]-[99]. 96 227 A 2d 689 (1967). 97 227 A 2d 689 at 690 (1967). Kirby have sought an abortion98. Summary judgment was entered for the defendants. That judgment was affirmed by the Supreme Court of New Jersey. Proctor J (with whom Weintraub CJ and Francis J agreed) considered that the impossibility of assessing the plaintiff's damage was the main obstacle in the path of his action99. His Honour stated100: "The infant plaintiff would have us measure the difference between his life with defects against the utter void of nonexistence, but it is impossible to make such a determination. This Court cannot weigh the value of life with impairments against the nonexistence of life itself. By asserting that he should not have been born, the infant plaintiff makes it logically impossible for a court to measure his alleged damages because of the impossibility of making the comparison required by compensatory remedies." Since Gleitman101, wrongful life actions have been rejected in several jurisdictions of the United States102. Relief has been denied for disabilities 98 227 A 2d 689 at 691 (1967). 99 His Honour also considered that the action was precluded by public policy considerations concerning the sanctity of human life: see 227 A 2d 689 at 693 100 227 A 2d 689 at 692 (1967). 101 Which was followed by the Supreme Court of New Jersey in Berman 404 A 2d 8 102 Alabama (Elliott v Brown 361 So 2d 546 (1978)); Arizona (Walker v Mart 790 P 2d 735 (1990)); Colorado (Lininger 764 P 2d 1202 (1988)); Connecticut (Kyle and Donnelly v Candlewood Obstetric-Gynecological Associates 6 Conn L Rptr 532 (1992)); Delaware (Garrison v Medical Center of Delaware Inc 581 A 2d 288 (1989)); Florida (Kush v Lloyd 616 So 2d 415 (1992)); Georgia (Atlanta Obstetrics & Gynecology Group v Abelson 398 SE 2d 557 (1990)); Indiana (Cowe v Forum Group Inc 575 NE 2d 630 (1991)); Kansas (Bruggeman v Schimke 718 P 2d 635 (1986)); Idaho (Blake v Cruz 698 P 2d 315 (1984)); Illinois (Williams v University of Chicago Hospitals 688 NE 2d 130 (1997)); Louisiana (Pitre v Opelousas General Hospital 530 So 2d 1151 (1988)); Maryland (Kassama v Magat 792 A 2d 1102 (2002)); Massachusetts (Viccaro 551 NE 2d 8 (1990)); Michigan (Proffitt v Bartolo 412 NW 2d 232 (1987)); Nevada (Greco v United States 893 P 2d 345 (1995)); New Hampshire (Smith v Cote 513 A 2d 341 (1986)); New York (Becker v Schwartz 386 NE 2d 807 (1978)); North Carolina (Azzolino v Dingfelder 337 SE 2d 528 (1985)); Ohio (Hester 733 NE 2d 1161 (2000)); Pennsylvania (Speck v Finegold 439 A 2d 110 (1981)); Texas (Nelson v Krusen 678 SW 2d 918 (1984)); (Footnote continues on next page) Kirby from syndrome104, muscular dystrophy105, resulting albinism106, haemophilia107, hereditary blindness108, neurofibromatosis109 and spina bifida110. rubella103, Down's Despite this weight of decisional authority, wrongful life actions have been upheld in the United States on a number of occasions111. The first such decision was Curlender v Bio-Science Laboratories112. The plaintiff sued a genetic testing laboratory. Before she was born, her parents had retained the services of the laboratory to determine whether they were carriers of Tay-Sachs disease. That disease is an ultimately fatal degenerative neurological disorder. The plaintiff alleged that the test was negligently performed with the result that her parents erroneously believed that they were not carriers of the causative gene. The plaintiff was born with Tay-Sachs disease. It was estimated that the plaintiff would only live to the age of four. She required substantial and expensive care. Jefferson PJ (with whom Lillie and Rimerman JJ agreed) considered that the essential question was whether the birth of the plaintiff, in her disabled West Virginia (James G v Caserta 332 SE 2d 872 (1985)); Wisconsin (Dumer v St Michael's Hospital 233 NW 2d 372 (1975)). 103 Dumer 233 NW 2d 372 (1975); Strohmaier v Associates in Obstetrics & Gynecology PC 332 NW 2d 432 (1982); Blake 698 P 2d 315 (1984); Smith 513 A 2d 341 (1986); Walker 790 P 2d 735 (1990). 104 Becker 386 NE 2d 807 (1978); Berman 404 A 2d 8 (1979); Phillips v United States 508 F Supp 537 (1980); James G 332 SE 2d 872 (1985); Azzolino 337 SE 2d 528 (1985); Garrison 581 A 2d 288 (1989); Atlanta Obstetrics 398 SE 2d 557 (1990). 105 Nelson 678 SW 2d 918 (1984). 106 Pitre 530 So 2d 1151 (1988). 107 Siemieniec v Lutheran General Hospital 512 NE 2d 691 (1987). 108 Lininger 764 P 2d 1202 (1988). 109 Speck 439 A 2d 110 (1981); Ellis v Sherman 515 A 2d 1327 (1986). 110 Hester 733 NE 2d 1161 (2000). 111 There are also instances where courts have refused motions to strike out wrongful life actions: see, eg, Ahsan v Olsen 4 Conn L Rptr 282 (1991); Quinn v Blau 21 Conn L Rptr 126 (1997). 112 165 Cal Rptr 477 (1980) (CA). Kirby condition, was an "injury" cognisable at law as a civil wrong. Holding that it was, his Honour emphasised the need to focus on the plaintiff in her present condition rather than on metaphysical and theological concerns. He stated113: "The reality of the 'wrongful-life' concept is that such a plaintiff both exists and suffers, due to the negligence of others. It is neither necessary nor just to retreat into meditation on the mysteries of life. We need not be concerned with the fact that had defendants not been negligent, the plaintiff might not have come into existence at all." Jefferson PJ concluded that damages were recoverable for pain and suffering which the plaintiff would endure whilst she lived as well as any pecuniary loss resulting from her disabilities114. Curlender was overruled, in part, by the Supreme Court of California in Turpin v Sortini115. That was a wrongful life action arising out of hereditary deafness. The Court held that general damages could not be awarded, principally on the basis that they were impossible to assess because of the need to compare existence with non-existence116. However, a majority of that Court affirmed Curlender in so far as it held that special damages were available in a wrongful life action on the basis that such damages are "both certain and readily measurable"117. The decision in Turpin has been followed by the Supreme Courts of New Jersey118 and Washington119. The duty of care issue Deciding the existence of a duty: In this appeal, the first issue of law is whether the respondent owed the appellant a relevant duty of care. In Australia, there is no settled methodology or universal test for determining the existence of 113 165 Cal Rptr 477 at 488 (1980) (emphasis in original). 114 165 Cal Rptr 477 at 489-490 (1980). 115 182 Cal Rptr 337 (1982). 116 182 Cal Rptr 337 at 346-347 (1982). Contra at 349. 117 182 Cal Rptr 337 at 348 (1982). 118 Procanik v Cillo 478 A 2d 755 (1984). 119 Harbeson v Parke-Davis Inc 656 P 2d 483 (1983). Kirby a duty of care120 such as is provided in most common law countries by the Caparo test121. The inability of this Court to agree on a principle of general application is unfortunate122. "[C]onfusion approaching chaos has reigned."123 This is evident in decisions such as Northern Sandblasting Pty Ltd v Harris124, Perre v Apand Pty Ltd125, Crimmins v Stevedoring Industry Finance Committee126 and Graham Barclay Oysters Pty Ltd v Ryan127. However, in practice, the absence of an agreed legal formula has not caused difficulty for the overwhelming majority of tort actions. Most tort actions fall within a recognised duty of care category. Of the actions that fall outside, or lie on the boundary of, an established duty category, the test of reasonable foreseeability will ordinarily provide guidance in determining whether a duty is in fact owed. This is not because satisfying this test is sufficient to establish a duty of care. This Court has repeatedly affirmed that this is not the case128. Rather, it is because, in so far as physical injuries arising from a positive act are 120 Sullivan v Moody (2001) 207 CLR 562 at 578-579 [48]; McHugh, "Introduction: Sydney Law Review Torts Special Issue", (2005) 27 Sydney Law Review 385 at 121 Caparo Industries Plc v Dickman [1990] 2 AC 605 at 617-618, disapproved in Sullivan (2001) 207 CLR 562 at 579 [49] per Gleeson CJ, Gaudron, McHugh, 122 See, eg, Perre v Apand Pty Ltd (1999) 198 CLR 180 at 215-216 [88]-[92]; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 616-617 [211]; Woolcock (2004) 216 CLR 515 at 538 [48]. 123 Woolcock (2004) 216 CLR 515 at 536 [45] per McHugh J. See also Perre (1999) 198 CLR 180 at 262-263 [230], 286 [288]. 124 (1997) 188 CLR 313. 125 (1999) 198 CLR 180. 126 (1999) 200 CLR 1. 127 (2002) 211 CLR 540. 128 Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 268 [35]; Sullivan (2001) 207 CLR 562 at 573 [25], 576 [42], 583 [64]; Graham Barclay (2002) 211 CLR 540 at 555 [9], 624 [234] and [236], 664-665 [323]; Tame v New South Wales (2002) 211 CLR 317 at 331 [12], 339 [46], 355 [103], Kirby concerned, it is accepted that if the reasonable foreseeability test is satisfied, the elusive additional component of a duty of care will generally exist129. Furthermore, instruction on the duty issue can be secured from several "salient features"130 that have been identified as potentially relevant to the existence of a duty. In Sullivan v Moody131 three particular considerations were identified which will often point against the existence of a duty. These were (1) that finding a duty of care would cut across or undermine other legal rules132; (2) that the duty asserted would be incompatible with another duty133; and (3) that to recognise a duty would expose the defendant to indeterminate liability134. Elsewhere, factors capable of supporting a duty of care have been identified. These include (1) vulnerability on the part of the plaintiff135; (2) special control136; or (3) knowledge137 possessed by the defendant about the circumstances that gave rise to the damage suffered by the plaintiff. 129 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 44; Jaensch v Coffey (1984) 155 CLR 549 at 581-582; Hawkins v Clayton (1988) 164 CLR 539 at 576; Neindorf v Junkovic (2005) 80 ALJR 341 at 354 [56]; 222 ALR 631 at 645-646. 130 Perre (1999) 198 CLR 180 at 253 [198]. 131 (2001) 207 CLR 562. 132 (2001) 207 CLR 562 at 580-581 [53]-[54]. 133 (2001) 207 CLR 562 at 581-582 [55]-[60]. 134 (2001) 207 CLR 562 at 582-583 [61]-[63]. 135 See, eg, Perre (1999) 198 CLR 180 at 194-195 [11]-[13], 202 [41]-[42], 204 [50], Graham Barclay (2002) 211 CLR 540 at 577 [84], 597 [149], 664 [321]; Cole v South Tweed Heads Rugby League Football Club Ltd (2004) 217 CLR 469 at 493 [85], 495 [92]. See Stapleton, "The golden thread at the heart of tort law: protection of the vulnerable", (2003) 24 Australian Bar Review 135 at 141-149. 136 See, eg, Perre (1999) 198 CLR 180 at 201 [37]-[38], 326 [408]-[409]; Graham Barclay (2002) 211 CLR 540 at 558 [20], 577 [83]-[84], 579-580 [90]-[91], 597- 137 See, eg, Graham Barclay (2002) 211 CLR 540 at 577 [84], 630 [248]; Woolcock (2004) 216 CLR 515 at 547 [74], 577 [174]. Kirby An established duty category exists: Originally, the common law accepted a principle that, because legal personality arises at birth, duties cannot be owed to a person before that person is born138. However, it is now established that health care providers owe a duty to an unborn child to take reasonable care to avoid conduct which might foreseeably cause pre-natal injury. Such a duty has been held to exist even before conception139. Once the child is born, the damage accrues in law and the child is able to maintain an action for damages. Unless some disqualifying consideration operates, the present case falls within the duty owed by persons such as the respondent to take reasonable care to prevent pre- natal injuries to a person such as the appellant. In the Court of Appeal, Ipp JA, whose reasons were supported in this Court by the respondent, considered that the interest asserted by the appellant was distinguishable from that of an unborn child in respect of pre-natal injuries. His Honour gave the following reasons for adopting this distinction140: "The [appellant is] required to assert, as part of [her] cause of action, that, as a matter of causation, had the [respondent] not been negligent, [she] would not be alive in [her] disabled condition. But no such allegation forms part of the cause of action of a plaintiff suing for damages for injuries caused to the foetus in utero." Ipp JA also said141: "There is a further significant distinction. In order to prove that, but for the [respondent's] negligence, [she] would not have been born, the [appellant] would have to prove that [her mother] would have terminated [her] pregnancy lawfully. ... This ... forms no part of the claim for damages by a child for injuries caused to the foetus in utero." The appellant does indeed need to prove the matters to which Ipp JA refers in order to succeed in her action. However, these are not matters directly relevant to the issue of the existence of a duty of care, but to the issue of causation142. Needless to say, the question of causation cannot be entirely quarantined from the duty of care element. None of the definitional elements of 138 See, eg, Watt v Rama [1972] VR 353. 139 X and Y (By Her Tutor X) v Pal (1991) 23 NSWLR 26. 140 Harriton (2004) 59 NSWLR 694 at 742 [302]. 141 Harriton (2004) 59 NSWLR 694 at 742 [304]. 142 See Harriton (2004) 59 NSWLR 694 at 716 [125]-[126] per Mason P. Kirby the tort of negligence stand alone143. This is particularly so in relation to the duty of care, which is intimately bound to the other elements constituting the integrated tort of negligence. Thus, it is relevant, in deciding whether a duty of care exists, to ask (among other things) how the postulated duty might be discharged144 and the type of damage to which it relates145. But this does not alter the fact that it is a mistake to fragment duty categories in an artificial fashion. Primarily, the duty of care issue is concerned with the directness of the association between the injurer and the injured. In Donoghue v Stevenson146, Lord Atkin stated that "there must be, and is, some general conception of relations giving rise to a duty of care". In Neindorf v Junkovic147, I proffered three reasons why enquiries relating to the duty of care should, as Lord Atkin indicated, be made at a relatively general level of abstraction. These were that is already overworked and unduly complex; (2) particularising the duty of care to too great a level of specificity carries with it the risk of eliding questions of law and fact; and (3) making specific enquiries at the duty stage subverts the traditional structure of the cause of action in negligence, which is designed to pose increasingly specific questions as each successive element falls for decision. the duty concept this approach. There are additional reasons supporting Lifting considerations relating to the breach and damage elements into the duty element of the tort threatens the continued relevance of the duty of care in the negligence context. For this reason, it is important to avoid unnecessarily conflating the different components of the cause of action. Furthermore, defining the content of the duty of care to an excessive degree would diminish the precedential value of decisions on duty. Decisions that cast duties of care in narrow terms are of limited assistance to litigants and to judges in future cases. As a matter of practicality, it is desirable that determinations on points of law be framed with a 143 Neindorf (2005) 80 ALJR 341 at 352 [50]; 222 ALR 631 at 644. 144 See, eg, Romeo v Conservation Commission (NT) (1998) 192 CLR 431 at 478 [122]. See also Fleming, The Law of Torts, 9th ed (1998) at 117-118. 145 Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 487; Sullivan (2001) 207 CLR 562 at 579 [50]. 146 [1932] AC 562 at 580 (emphasis added). 147 (2005) 80 ALJR 341 at 352-354 [49]-[56]; 222 ALR 631 at 643-646. See also Jones v Bartlett (2000) 205 CLR 166 at 184-185 [57]; Vairy v Wyong Shire Council (2005) 80 ALJR 1 at 8-9 [25]-[27]; 221 ALR 711 at 718-719; Fleming, The Law of Torts, 9th ed (1998) at 117-118. Kirby sufficient degree of generality to make them useful in later cases where the facts are necessarily different but where the concepts will necessarily be the same148. The duty owed by health care providers to take reasonable care to avoid causing pre-natal injury to a foetus is sufficiently broad to impose a duty of care on the respondent in this case. In order to discharge that duty, the respondent did not need to engage in conduct that was significantly different from conduct that would ordinarily be involved in a medical practitioner's fulfilling the pre-natal injury category of duty. Furthermore, the damage involved immediate, discernible physical damage, which the duty relating to pre-natal injuries ordinarily encompasses. This is not a case involving pure economic loss or another type of loss which is distinguishable from physical damage that could take this case outside the ambit of the pre-natal injury duty of care. Subject to what follows, therefore, the appellant's case on the duty issue is an unremarkable one in which she sues a medical practitioner for failure to observe proper standards of care when she was clearly within his contemplation as a foetus, in utero of a patient seeking his advice and care. She was thus in the standard duty relationship for such a case. She evidenced the important "salient feature" of vulnerability to harm (in the event great harm), should the respondent not observe proper standards of case with respect to her. Denying the existence of a duty amounts, in effect, to the provision of an exceptional immunity to health care providers. The common law resists such an immunity149. Conflicting duties: It is suggested that a significant impediment to recognising a duty of care in this case is that it would potentially conflict with the duty the respondent owed to the appellant's mother150. The fact that a putative duty may conflict with an existing duty has been identified as a reason for not recognising the first-mentioned duty151. However, while this concern may initially appear persuasive, closer analysis reveals that it is impossible to justify. There are at least three reasons why this is so. First, it is strongly arguable that the fact that a defendant is under conflicting duties of care is a consideration more satisfactorily accommodated under the rubric of breach than duty152. For the reasons which I explained above, 148 Fuller, The Morality of Law, rev ed (1969) at 46-49. 149 Lanphier v Phipos (1838) 8 Car & P 475 at 479 [173 ER 581 at 583]. 150 See reasons of Crennan J at [248]-[250]. 151 See above these reasons at [64]. See also Winnipeg Child and Family Services (Northwest Area) v G (DF) [1997] 3 SCR 925 at 947 [34], 959-960 [56]. 152 See Buckley, The Law of Negligence, 4th ed (2005) at 18. Kirby the structure of the tort of negligence is threatened by injecting the duty element with too much content153. This Court has recognised that the existence of conflicting obligations is a relevant consideration in determining whether a defendant lived up to the required standard of care154. In the event that a defendant's legal duties are divided between a mother and the foetus, this will bear upon whether there has been a breach of either duty. A mere potential for conflict will not prevent a duty of care arising. Secondly, this argument would logically apply to exclude the duty owed by medical practitioners to unborn children in respect of pre-natal injuries. Such a duty has the same potential in every case to conflict with the duty owed to the mother. For example, a medical practitioner may decide to withhold treatment from a foetus on the basis that such treatment, while necessary to address a risk of injury to the foetus, would be harmful or conceivably harmful to the pregnant woman. However, it is not suggested that the duty of care concerning pre-natal injuries should be abolished. Thirdly, invoking suggested incompatibility between duties as a reason for refusing to recognise a new duty fails to explain why the suggested duty should yield to an existing duty. Reasons may exist in a particular case for favouring the propounded duty to the child over that already in existence to the mother. Conclusion: In the result, the respondent owed the appellant a relevant duty of care. The damage issue Unquantifiability of damage? The principal argument of the respondent for rejecting this appeal was that it was impossible to quantify the appellant's loss according to the compensatory principle. This, so it was said, was because one cannot compare existence with non-existence because no one has any experience with non-existence. In the words of the philosopher Ludwig Wittgenstein, "[d]eath is not an event of life. Death is not lived through."155 Accordingly, the 153 See above these reasons at [69]-[70]. 154 See, eg, Giannarelli v Wraith (1988) 165 CLR 543 at 572; Manley v Alexander (2005) 80 ALJR 413 at 415 [11], 419-420 [43]-[44]; 223 ALR 228 at 230-231, 155 Tractatus Logico-Philosophicus, (1958) at 185 [6.43II]. Kirby respondent submitted that because damage is the gist of the tort of negligence156, the appellant's action must fail. The cogency of this argument has divided legal scholars. It appealed to Professor Harold Luntz, who stated in his influential text on damages that157: "Conceptually [wrongful life] actions are not reconcilable with tort principles, since in accordance with such principles they involve a comparison between being born with a handicap and non-existence, a comparison which it is impossible to make in money terms." On the other hand, Professor John Fleming found this argument unconvincing158: "Objection [to wrongful life actions] is made on the supposedly value-free ground that it is legally and logically impossible to assess damages on a comparison between non-existence and life even in a flawed condition. Yet such comparison is not required with respect to added (medical) expenses, which are moreover recognised in parental claims. Also symbolic awards are regularly made for pain and suffering, even for loss of expectation of life." The compensatory principle: The principle governing the assessment of compensatory damages in tort, invoked by the respondent, was stated by Lord Blackburn in Livingstone v Rawyards Coal Co in the following terms159: "[W]here any injury is to be compensated by damages, in settling the sum of money to be given for ... damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation". 156 Cox Bros (Australia) Ltd v Commissioner of Waterworks (1933) 50 CLR 108 at 119; John Pfeiffer Pty Ltd v Canny (1981) 148 CLR 218 at 241-242; Tame (2002) 211 CLR 317 at 388 [208]. 157 Luntz, Assessment of Damages for Personal Injury and Death, 4th ed (2002) at 641 [11.8.8]. See also Luntz and Hambly, Torts: Cases and Commentary, 5th ed 158 Fleming, The Law of Torts, 9th ed (1998) at 184-185 (footnote omitted). 159 (1880) 5 App Cas 25 at 39. Kirby This principle has been endorsed by this Court on many occasions160. However, it is subject to numerous qualifications, three of which are relevant to this appeal. First, assessing damages is always a practical exercise in approximation161. There can never be an exact equivalence between a personal injury and money. Obviously, a court cannot restore the appellant to her pre-tort position by way of an award of damages any more than it can restore plaintiffs in everyday personal injury cases to their pre-tort position. Secondly, notwithstanding the compensatory principle, the courts have been willing to assign monetary values to many intangible injuries and nebulous losses. Thus, Fleming pointed to examples in the personal injury context, namely, pain and suffering and loss of expectation of life162. Outside the personal injury context lie many other examples including injury to intangibles such as reputation and deprivation of liberty163. Merely because the damage is imperfectly translated into monetary terms will not necessarily preclude a court from awarding compensation in respect of that damage. It is a mistake to think otherwise. Thirdly, it has long been established that difficulties of quantification do not preclude relief where it is accepted that the plaintiff has suffered actionable damage164. A judge faced with a paucity of evidence must simply do the best that he or she can to assess the extent of the plaintiff's loss. So much is clear law165. There is no reason to conclude that it is otherwise in a wrongful life case. 160 See, eg, Registrar of Titles v Spencer (1909) 9 CLR 641 at 645; Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 at 191; Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 145 CLR 625 at 646; Todorovic v Waller (1981) 150 CLR 402 at 412; Johnson v Perez (1988) 166 CLR 351 at 367, 371; Haines v Bendall (1991) 172 CLR 60 at 63; Nominal Defendant v Gardikiotis (1996) 186 CLR 49 at 54. 161 Cattanach (2003) 215 CLR 1 at 56 [144]. 162 Regarding damages for a loss of expectation of life see especially Skelton v Collins (1966) 115 CLR 94 at 98. 163 Cf Ruddock v Taylor (2005) 79 ALJR 1534; 221 ALR 32. 164 Fink v Fink (1946) 74 CLR 127 at 143; Story Parchment Co v Paterson Parchment Paper Co 282 US 555 at 563 (1931). 165 Luntz, Assessment of Damages for Personal Injury and Death, 4th ed (2002) at Kirby Application of the compensatory principle: It was not disputed by the appellant that the compensatory principle applies to this case. The appellant did not submit that this Court should fashion a new principle in order to do justice to her case, such as by comparing the appellant with a hypothetical "normal" person166. The question thus becomes whether the compensatory principle, and the necessity for the appellant to postulate that careful conduct on the part of the respondent would have averted her life of suffering, denies her a legal remedy for the accepted lack of care and the profound (and unquestioned) damage the appellant suffers and the costs she incurs every day of her life. The respondent urged the logic of his argument. However, as Justice Oliver Wendell Holmes famously observed, the life of legal systems derived from the common law of England has not been fashioned by logic alone167. It is the product of experience, judgment and opinion offered by the judges168. The problem in the present case is, in large part, an outcome of new technology that permits genetic and other tests to identify grave foetal defects in utero and medical and social changes that permit abortions to occur in some such cases that once would have been impossible, unprofessional or even criminal. To apply logic alone would be to defy the wisdom of the law in responding to a novel problem. It is necessary to draw on past examples expressed in very different circumstances. But it is also necessary to adapt those principles to the circumstances of the present case in the present time169. Special damages for needs created: It is important to observe that the "impossible comparison" argument, as Fleming pointed out170, falls away entirely in so far as special damages are concerned171. This includes damages under the principle in Griffiths v Kerkemeyer172. Because a plaintiff in a wrongful life action would not have any economic needs had the defendant exercised 166 Cf Waller [2006] HCA 16 at [39]. 167 Holmes, The Common Law, (1881) at 1. 168 CSR Ltd v Eddy (2005) 80 ALJR 59 at 83 [91]; 222 ALR 1 at 29. Cf Scott v Davis (2000) 204 CLR 333 at 373 [121]. 169 CSR (2005) 80 ALJR 59 at 83-84 [95]; 222 ALR 1 at 30. 170 See above these reasons at [80]. 171 Cf Pace, "The Treatment of Injury in Wrongful Life Claims", (1986) 20 Columbia Journal of Law and Social Problems 145 at 156-158. 172 (1977) 139 CLR 161. See CSR (2005) 80 ALJR 59 at 71 [39], 82-83 [90], 84-85 [100], 87 [111]; 222 ALR 1 at 13, 28, 31, 34. Kirby reasonable care, a loss in this regard is directly caused by the defendant's negligent acts and omissions. In this respect, at least, the assessment of the appellant's damages presents no unusual or peculiar problem whatsoever. Courts in some jurisdictions in the United States have acknowledged this fact and awarded special damages in wrongful life actions whilst denying general damages173. This approach has been criticised on the basis that it would be incongruous to award only special damages. For instance, in Turpin174, in the Supreme Court of California, Mosk J, who would have awarded both general and special damages, reasoned that an "order is internally inconsistent which permits a child to recover special damages for a so-called wrongful life action, but denies all general damages for the very same tort"175. In Procanik v Cillo, Schreiber J, who would have rejected wrongful life actions in toto, stated that the "position that the child may recover special damages despite the failure of his underlying theory of wrongful life violates the moral code underlying our system of justice from which the fundamental principles of tort law are derived"176. A variant of this criticism is stated by the Court of Appeals of Michigan in Strohmaier v Associates in Obstetrics & Gynecology PC177: "The special damages that are claimed cannot be considered in a vacuum separate from the reality that, but for the alleged negligence, plaintiff would not exist. Plaintiff's damages, general and special, consist of the difference between his present life with defects and no life at all. Plaintiff's economic liabilities, like the daily pain and suffering he must endure, are a part and parcel of his life with birth defects. Therefore, this Court cannot view those economic losses apart from the incalculable benefit of life conferred upon plaintiff by the events antecedent to his birth. Consequently, we conclude that plaintiff's special damages are as incognizable as any general damages for pain and suffering." Such criticisms are not convincing. The reasoning in Strohmaier offends the principle that a collateral benefit under one head of damage, enjoyed as a result of the defendant's tort, cannot be applied to offset, still less to destroy, a 173 See above these reasons at [61]. 174 See above these reasons at [61]. 175 182 Cal Rptr 337 at 349 (1982). 176 478 A 2d 755 at 772 (1984). 177 332 NW 2d 432 at 435 (1982). Kirby separate head178. Furthermore, it would be a curious result if special damages were denied for the needs created because of difficulties arising in the assessment of general damages when special damages will normally constitute the greater part of the damages claimed in a wrongful life action. A claim for damages under one head of damage can be denied while allowing the residue of a claim. Consider, for instance, an action that includes a claim for damages in respect of a diminution of earning capacity following negligently inflicted personal injury. If that lost capacity would have been applied to derive earnings in contravention of the criminal law, a claim for damages in respect of that loss may be denied179. Yet damages may be awarded under other heads. In short, criticisms of awarding special damages while denying general damages buy into a specious "all or nothing" mentality. I know of no other situation where a claim for damages is denied in totality, regardless of the fact that quantifiable damage has been sustained under certain heads, merely because objections exist to awarding damages under another head. Appealing to "the moral code underlying our system of justice"180 in explanation for so doing hardly furnishes a compelling reason for such an approach. It follows that by ordinary principles, at least special damages are recoverable in a case such as the present. There is no difficulty in the computation of such damage. In my view this application of basic principles of law discloses starkly that the impediment to recovery is founded in policy considerations, not law. But are general damages recoverable in accordance with the compensatory principle? Comparing existence and non-existence: The proposition that it is impossible to value non-existence is undermined by the fact that, for some time, the courts have been comparing existence with non-existence in other legal settings. Thus, courts have declared lawful the withdrawal of life-sustaining 178 Cattanach (2003) 215 CLR 1 at 37-39 [84]-[91]; Restatement (Second) of Torts, §920, comment b. 179 Meadows v Ferguson [1961] VR 594; Burns v Edman [1970] 2 QB 541; Lee v McClellan (1995) 127 FLR 383. 180 Procanik 478 A 2d 755 at 772 (1984). Kirby medical treatment from severely disabled newborns181 and adults182 and from the terminally ill183. The English Court of Appeal authorised separation surgery on conjoined twins in order to preserve the life of one twin, although doing so would result in the death of the other184. Such cases are distinguishable from the present. Unlike the case at hand, they are not concerned with assigning a monetary figure to the difference between existence and non-existence. However, one cannot escape the fact that they entail a judicial comparison between existence and non-existence. Furthermore, some courts which have denied wrongful life actions have done so not because the damage cannot be quantified but because they consider that existence will always be preferable to non-existence185. As Professor Harvey Teff points out, "[p]aradoxically, this very premise logically entails the measurability in principle of non-existence"186. Guidance from another context: The appellant has unarguably suffered, and continues to suffer, significant pain and discomfort which she would not have had to endure had the respondent acted with reasonable care. It would be wrong to deny compensation where resulting damage has occurred merely because logical problems purportedly render that damage insusceptible to precise or easy quantification. As Pollock J stated in Procanik187, reflecting the observations of Holmes J188 already mentioned: "Law is more than an exercise in logic, and logical analysis, although essential to a system of ordered justice, should not become an instrument of injustice. Whatever logic inheres in permitting parents to recover for the cost of extraordinary medical care incurred by a birth- 181 See, eg, In re J (A Minor) (Wardship: Medical Treatment) [1991] Fam 33. 182 See, eg, Re BWV; Ex parte Gardner (2003) 7 VR 487; Re B (adult: refusal of medical treatment) [2002] 2 All ER 449. 183 See, eg, Airedale NHS Trust v Bland [1993] AC 789. 184 In re A (Children) [2001] Fam 147. 185 See, eg, Blake 698 P 2d 315 at 322 (1984). 186 Teff, "The Action for 'Wrongful Life' in England and the United States", (1985) 34 International and Comparative Law Quarterly 423 at 433 (emphasis in original). See also Goldberg v Ruskin 499 NE 2d 406 at 411 (1986). 187 478 A 2d 755 at 762 (1984). See also at 765, 771. 188 See above these reasons at [85]. Kirby defective child, but in denying the child's own right to recover those expenses, must yield to the injustice of that result."189 The pitfalls of adopting an inflexible approach on this issue can be seen from another legal context where a supposedly impossible comparison was initially invoked to justify acceptance of a wrong without a remedy. Several cases in the United Kingdom raised the question whether a pregnant woman, who was dismissed from her employment by reason of her becoming pregnant, was entitled to relief under the Sex Discrimination Act 1975 (UK) ("the SDA"). The statutory test for unlawful discrimination required a comparison of the claimant's treatment with the treatment which an employee of the other sex would have received in similar circumstances190. In Turley v Allders Department Stores Ltd191 Bristow J, applying the statutory formula, held that claims for relief under the SDA by women who had been dismissed from their employment, allegedly on the grounds of their becoming pregnant, must fail because the comparison contemplated by the SDA was impossible because there is no masculine equivalent of a pregnant woman. "In order to see if [the applicant] has been treated less favourably than a man the [SDA requires one to] compare like with like, and you cannot. When she is pregnant a woman is no longer just a woman. She is a woman, as the Authorised Version of the Bible accurately puts it, with child, and there is no masculine equivalent." The issue subsequently arose in Hayes v Malleable Working Men's Club and Institute193. In that case, Waite J made the following remarks about the decision in Turley194: 189 See also Harriton (2004) 59 NSWLR 694 at 719-720 [149]; Berman 404 A 2d 8 at 12 (1979); Curlender 165 Cal Rptr 477 at 488 (1980); Goldberg 499 NE 2d 406 at 190 SDA, s 1(1). 191 [1980] ICR 66. 192 [1980] ICR 66 at 70. 193 [1985] ICR 703. 194 [1985] ICR 703 at 705. Kirby "The logic appears flawless. Sex discrimination consists (according to its statutory definition) of treatment of a member of one sex less favourable than the treatment given to a member of the other sex. If you dismiss a woman on the ground of her pregnancy, no one can say that you have treated her less favourably than you would treat a man, because nature has ensured that no man could ever be dismissed upon the same ground." Notwithstanding these concessions, Waite J declined to follow Turley on the ground that, on his reading of the SDA, a strict comparison was not required. His Lordship's approach was later confirmed by the English Court of Appeal in Webb v EMO Air Cargo (UK) Ltd195. In that case, Glidewell LJ stated that holding that the dismissal of a pregnant woman was not contrary to the SDA because of the impossibility of making a comparison "would be so lacking in fairness and in what I regard as the proper balance to be struck in the relations between employer and employee that we should only [accede to that argument] if we are compelled by the wording of the [SDA] to do so"196. The judicial discourse in the State Supreme Court in the present case and in other like Australian and overseas cases has been permeated by a search for the appropriate "comparator". It looms large in the reasons of the majority in this Court197. It has resulted in a conclusion that such a "comparator" does not exist because the posited "comparator" is a foetus whose life would have been terminated by a medical practitioner acting with due care. To this apparently logical argument the foregoing cases afford two answers that, for me, are applicable and compelling. First, the comparator contemplated in this case, non- existence, is purely hypothetical – a fiction, a creature of legal reasoning only. No one is now suggesting the actual death of the appellant. Indeed, it is her very existence that gives rise to the pain, suffering and expense for which she brings her action. And secondly, there are limits to the insistence on this fictitious comparator where doing so takes the law into other inconsistencies and to a conclusion that is offensive to justice and the proper purpose of the law of negligence. A medical practitioner who has been neglectful and caused damage escapes scot-free. The law countenances this outcome. It does nothing to sanction such carelessness. It offers no sanction to improve proper standards of care in the future. Can non-existence ever be preferable? It is often assumed in the cases that the only obstacle posed by the compensatory principle to the appellant is that 195 [1992] 2 All ER 43. 196 [1992] 2 All ER 43 at 52. 197 Reasons of Hayne J at [167]-[172], reasons of Callinan J at [205], reasons of Kirby of comparing existence and non-existence. However, there is an additional hurdle created by the principle. In order to recover damages, the compensatory principle requires a plaintiff to show he or she has lost something as a result of the defendant's tort. In other words, a plaintiff needs to establish that he or she is worse off in some respect than he or she would otherwise have been. In ordinary personal injury actions, it is not necessary for a plaintiff to establish that, all in all, his or her life is worse than it would have been but for the defendant's tort198. A plaintiff who suffers an injury, which is not sufficiently severe to lead him or her to think that the quality of life is materially less than it would have been but for that injury, is still entitled to bring an action for, and recover damages in respect of, that injury. The compensatory principle does not put such a person out of court. The position is somewhat different in the case of wrongful life actions. The compensatory principle, if applied in full rigour, requires the appellant to show that, because of the respondent's negligence, she is worse off than she otherwise would have been. Yet, the only way for a person who owes her existence to the respondent's negligence to establish a loss is to show that the alternative, non-existence, would have been preferable199. In order to succeed the appellant is required to show that, in light of her present and prospective suffering, non-existence would (in retrospect) have been preferable. In extreme cases, it may be a valid contention200. Clearly, people can sometimes express a preference for non-existence. The law has recognised this by declaring it lawful, in certain circumstances, for medical practitioners to accede to requests by the terminally ill to cease treatment that is keeping them alive but at the price of subjecting them to intolerable pain and suffering201. It is also reflected in changes to the law on suicide202. Furthermore, it is arguable that a life of severe and unremitting suffering is worse than non-existence. Consider the situation of a newborn child who has a very limited life span and has no capacity to think or appreciate his or her surroundings and is only capable of experiencing unrelenting and excruciating 198 Stretton, "The Birth Torts: Damages for Wrongful Birth and Wrongful Life", (2005) 10 Deakin Law Review 319 at 352. 199 See Harriton (2004) 59 NSWLR 694 at 704-705 [46]-[50]; Gleitman 227 A 2d 689 200 See Turpin 182 Cal Rptr 337 at 345-346 (1982). 201 See above these reasons at [95]. 202 See, eg, Crimes Act 1900 (NSW), s 31A. Kirby pain. In such a case, many people might think that non-existence would be preferable to existence, particularly where heroic measures were necessary to keep the patient alive. In the Supreme Court of the United States, Brennan J suggested that control over the moment and circumstances of death was one of the most important of all rights. He thereby clearly postulated the right in some circumstances to be protected by the law in giving effect to such a preference203. A more pressing problem than that of deciding the question of whether non-existence can sometimes be preferable to existence is the difficulty of deciding when this is factually so. Spigelman CJ adverted to this difficulty, stating204: "The identification of what is to be regarded as 'acceptable' physical characteristics of children is a field into which the law should not, at least at this stage of the development of knowledge, in my opinion, enter. Specifically, the law should be very slow to decide how much 'disability' is to be regarded as acceptable. Is, for example, hereditary deafness enough?"205 Professor Stephen Todd has voiced similar concerns206: "Do we really want courts deciding whether a disability is sufficiently serious to justify a mother making a decision to terminate a pregnancy? Where exactly might the line be drawn? And why? If the court does not make the decision then it must depend solely on that of the mother or father or both. Many parents, if given the choice, would decide to terminate pregnancies where the disabilities fall far short of those suffered by [the appellant]. Indeed, supposedly minor or cosmetic disabilities can have a very serious impact, both socially and financially, on the kind of life that the child in question might expect to live." 203 Cruzan v Director, Missouri Department of Health 497 US 261 at 302-303 (1990). Cf Price, "Fairly Bland: an alternative view of a supposed new 'Death Ethic' and the BMA guidelines", (2001) 21 Legal Studies 618; Keown, "Restoring the sanctity of life and replacing the caricature: a reply to David Price", (2006) 26 Legal Studies 109. 204 (2004) 59 NSWLR 694 at 702 [31]. 205 Regarding hereditary deafness see Turpin 182 Cal Rptr 337 (1982) discussed above these reasons at [61]. 206 Todd, "Wrongful Conception, Wrongful Birth and Wrongful Life", (2005) 27 Sydney Law Review 525 at 540. Kirby While I acknowledge these arguments, sight should not be lost of the fact that courts are continually concerned with such line drawing207. Furthermore, neither the appellant nor her parents are asking the courts to declare lawful the termination of her existence. To this extent the hypothesis of non-existence is an abstract one suggested by an established legal principle. In fact, it is a red herring to claim that it presents, in a case of the present kind, the agony of judicial decision over termination of life. In our society such agony normally happens in medical circumstances. It usually involves medical practitioners and patients rather than judges. The spectre of termination in the appellant's case is now a theoretical construct. It is not a practical matter. Conclusion on damages: For the foregoing reasons, subject to what follows, I would hold that, on the birth of the child in a case such as the present, general damages for proved pain and suffering and special damages for needs created by the negligence of a medical practitioner in respect of a foetus in utero are recoverable in an action brought by or for that child. Policy issues and their resolution Supposed policy arguments: It remains for me to consider whether any policy reasons exist that would warrant rejecting wrongful life actions although they are consistent with established tort doctrine. Numerous policy arguments have been suggested in the courts below and in other cases. None of these arguments is convincing. Some of them are premised on a misunderstanding of the tort of negligence. Most depend upon what I regard as a distorted characterisation of wrongful life claims. A number seem to rest on religious beliefs rather than on the application of legal doctrine in a secular community. In today's world a steady adherence to secularism in the law is more important to a mutually respectful civil society than before208. Judges have no right to impose their religious convictions (if any) on others who may not share those convictions209. The suggested duty to kill: One of the more absurd arguments that has been raised against wrongful life actions (possibly stemming from the inapt label) is that they impose a duty to kill. Stephenson LJ assumed as much in 207 Cattanach (2003) 215 CLR 1 at 61 [158]; Insurance Commission (WA) v Container Handlers Pty Ltd (2004) 218 CLR 89 at 127 [116]. 208 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 122 209 Cattanach (2003) 215 CLR 1 at 53 [137]. Kirby McKay when he posed the question210 "how can there be a duty to take away life?" Similarly, in Jones, Macaulay J stated211 "I cannot logically reconcile the duty owed to the mother predicated upon the mother's right to choose whether or not to abort with a duty owed to the foetus to terminate life". Sometimes, this charge is made in a more qualified form. For instance, in the present proceedings, Ipp JA in the Court of Appeal suggested that wrongful life actions involve "the proposition that the foetus should have been terminated"212. It is axiomatic that wrongful life actions do not entail the proposition that the foetus should have been terminated. Less still do they impose a duty to kill. It would be impossible to comply with any such duty considering that medical practitioners can never compel an expectant mother to undergo an abortion213. A defendant in a wrongful life action will discharge his or her duty of care if reasonable care is exercised in detecting foreseeable risks which may befall the foetus; warning of those risks where the reasonable person would have done so; and taking reasonable care in providing advice and guidance to the patient or sending the patient to those who can give such advice. Sometimes, the duty can be discharged by doing nothing214. If a mother chooses to continue a pregnancy or to conceive in the first place where a proper, careful and informative warning has been given, that is her decision to make215. No liability will accrue to the health care provider if a mother adopts such a course having been accurately advised of the risks and competently treated. A related argument for rejecting wrongful life actions is that, as a practical matter, such actions would impose pressure on medical professionals to counsel women to undergo abortions216. For instance, in a United Kingdom Royal Commission report, it is claimed that, if the courts countenanced wrongful life 210 [1982] QB 1166 at 1179. 211 (1999) 44 CCLT (2d) 313 at 320 [21] (emphasis added). 212 Harriton (2004) 59 NSWLR 694 at 742 [301]. 213 Cf St George's Healthcare NHS Trust v S [1999] Fam 26. 214 As was held in Neindorf (2005) 80 ALJR 341; 222 ALR 631. See especially at 80 ALJR 341 at 346 [14]; 222 ALR 631 at 635. 215 Harriton (2004) 59 NSWLR 694 at 701 [27]; McKay [1982] QB 1166 at 1192. 216 See, eg, reasons of Callinan J at [205]. The same argument has been advanced in the wrongful birth context: see, eg, Udale v Bloomsbury Area Health Authority [1983] 1 WLR 1098 at 1109; [1983] 2 All ER 522 at 531. Kirby actions, "a doctor would be obliged to urge a woman to have an abortion if there was the slightest chance that her child would be born defective"217. Contentions of this nature, like the suggestion that wrongful life actions would impose a duty to kill, betray a fundamental misunderstanding of the principles of the tort of negligence. They overlook the tests of reasonable foreseeability and reasonable care. Wrongful life actions could not arise for failing to persuade women to undergo abortions. Nor could they lie, as it is sometimes suggested218, where there was a failure by the defendant to prevent a child from being born. This is simply not what a duty of care in negligence entails. In McKay, Griffiths LJ, subject to one qualification, accurately expressed the legal duty that recognising wrongful life actions would create219: "The decision whether or not to have an abortion must always be the mother's; the duty of the medical profession can be no more than to advise her of her right to have an abortion and of the pros and cons of doing so. If there is a risk that the child will be born deformed, that risk must be explained to the mother, but it surely cannot be asserted that the doctor owes a duty to the foetus to urge its destruction. Provided the doctor gives a balanced explanation of the risks involved in continuing the pregnancy, including the risk of injury to the foetus, he cannot be expected to do more, and need have no fear of an action being brought against him." I would endorse this passage with the exception of the proposition that, if there is a risk of deformity, that risk must be explained. Whether in a particular case a possible risk requires investigation or explanation depends on available technology, proper practice and application of tests of reasonable foreseeability and reasonable care. the "Life" as a legal injury: Most of the decisions in which an action for wrongful life has been denied have relied upon the argument that "life" itself cannot amount to a legal injury because so to hold would violate the "sanctity of 217 Royal Commission on Civil Liability and Compensation for Personal Injury, Report: Volume One, (1978) Cmnd 7054-I at 311 [1485]. See also Law Commission, Report on Injuries to Unborn Children, Law Com No 60, (1974) Cmnd 5709 at 34 [89]. 218 See, eg, Watson, "Edwards v Blomeley; Harriton v Stephens; Waller v James: Wrongful Life Actions in Australia", (2002) 26 Melbourne University Law Review 219 [1982] QB 1166 at 1192. Kirby human life"220. The special features and uniqueness of human life are indeed fundamental principles in the law221. But they do not represent absolute principles. They are subject to numerous qualifications. For example, in certain circumstances, such as in some cases of self-defence, it is lawful to kill another human being. The fact that life-sustaining medical treatment can be withdrawn or withheld, the limited acceptance of abortion, and the abrogation of the common law offences of suicide and attempted suicide222 in some jurisdictions are further examples of qualifications to the principles. This argument against allowing actions for wrongful life depends upon a false characterisation of such actions. It is not life, as such, which a plaintiff in a wrongful life action claims is wrongful. It is his or her present suffering as a life in being223. Nor, for reasons which I have set out, does the plaintiff assert that a duty to kill should be imposed on defendants224. Once the real character of an action for wrongful life is understood, it is apparent that it does not infringe the special precious features of human life. Effect on disabled members of society: In McKay, Stephenson LJ asserted that allowing wrongful life actions "would mean regarding the life of a handicapped child as not only less valuable than the life of a normal child, but so much less valuable that it was not worth preserving"225. This argument is also without justification. Like the argument based on the principle of the sanctity of human life, it evaporates when what is at stake in a wrongful life action is properly understood. Wrongful life actions arise out of allegedly negligent conduct which causes suffering. Were this Court to allow this appeal, the decision would contribute to the requirement that health care providers such as the respondent exercise reasonable care to detect and warn of risks which a foetus faces. This 220 See, eg, McKay [1982] QB 1166 at 1180, 1188. 221 International Covenant on Civil and Political Rights [1980] Australian Treaty Series 23, Art 6.1. See also First Optional Protocol to the International Covenant on Civil and Political Rights [1991] Australian Treaty Series 39; Universal Declaration of Human Rights, Art 3. 222 See generally, Williams, The Sanctity of Life and the Criminal Law, (1958), ch 7. Cf Cruzan 497 US 261 at 302-303 (1990). 223 See above these reasons at [10]. 224 See above these reasons at [111]-[112]. 225 [1982] QB 1166 at 1180. See also reasons of Crennan J at [258]-[263]. Kirby would say nothing about how disabled individuals, such as the appellant, once born, are to be treated226. Accordingly, there is no support for the suggestion227 that actions for wrongful life are inconsistent with legislation prohibiting discrimination on the basis of disability. It could not seriously be suggested that awarding damages to an infant who sustained pre-natal injuries would demean that infant or lower him or her in the eyes of others. This is so even if, because of the extent of those injuries and before birth, medical opinion would have advised the infant's mother of her entitlement to terminate her pregnancy. How is such an infant materially different from an infant bringing an action for wrongful life? As Kaus J said in Turpin228: "[I]t is hard to see how an award of damages to a severely handicapped or suffering child would 'disavow' the value of life or in any way suggest that the child is not entitled to the full measure of legal and nonlegal rights and privileges accorded to all members of society." Contrary to devaluing plaintiffs in wrongful life actions, awarding damages in a case such as this would provide the plaintiff with a degree of practical empowerment. Such damages would enable such a person to lead a more dignified existence. They would provide him or her with a better opportunity to participate in society than he or she might otherwise enjoy where the burden of care and maintenance falls on the disabled person's family, on charity or on social security. A supposed problem of "minor defects": The respondent submitted that, if wrongful life actions were upheld in a case such as the present, it would be possible that children, born with putative "minor defects" or some "mercifully trivial abnormality"229, might claim damages in respect of such defects and that it would be inappropriate for the law to accede to such a claim. This concern is also meritless. Mason P rightly pointed out that it "trivialises the [appellant's claim] to suggest that accepting the cause of action would entitle a child born with a very minor disability, such as a squint, to sue 226 Hester 733 NE 2d 1161 at 1168 (2000); Grainger, "Wrongful Life: A Wrong Without a Remedy", (1994) 2 Tort Law Review 164 at 168. 227 Reasons of Crennan J at [262]-[263]. 228 182 Cal Rptr 337 at 344-345 (1982). 229 McKay [1982] QB 1166 at 1180-1181. Kirby the doctor for not advising an abortion"230. The catastrophic injuries suffered by the appellant, and by persons like her, cannot be equated with a squint. To suggest that the appellant's disabilities are analogous to a squint is absurd and insulting. However, there are even more profound problems with this argument. In terms of legal principle, minor injuries are not apprehended as categorically different from non-minor injuries in ordinary personal injury cases. It is not apparent why such a distinction is necessary as a disqualification in wrongful life actions. None of the arguments militating against recognising wrongful life actions apply with more force to wrongful life actions brought in respect of "minor defects". Even if there were a convincing reason of principle for regarding the magnitude of the disability as going other than to the extent of the damage (a doubtful proposition), there would be insuperable practical hurdles confronting wrongful life actions brought in respect of "minor defects". For one thing, a plaintiff who suffers from "minor defects" will hardly be able to show, as required by the compensatory principle231, that non-existence would have been preferable. Such actions would probably also encounter difficulties in establishing causation, that is, that if properly advised of the risk of congenital defects, the mother would have aborted her pregnancy. Equally, proving breach of the duty of care would be problematic. For instance, in wrongful life actions arising out of a failure to diagnose or a failure to warn, depending on the evidence, it may often be reasonable for the defendant to abstain from conducting tests for "minor defects" or from warning the prospective mother about such risks. In the case of some parents, there would be moral and religious inhibitions that would restrain resort to termination for a defect such as a squint. Effect on familial relationships: An argument against wrongful life actions which has enjoyed support in the cases is that, if wrongful life actions against medical practitioners are countenanced, the logical corollary is that an action should also lie against the child's mother who refuses to undergo an abortion in circumstances where the mother receives competent medical advice that, in all probability, her child would be disabled. Thus, in McKay, Stephenson LJ stated that permitting wrongful life actions would entail "the opening of the courts to claims by children born handicapped against their 230 (2004) 59 NSWLR 694 at 717 [135]. 231 See above these reasons at [104]. Kirby mothers for not having an abortion"232. In a similar vein, in Curlender, Jefferson PJ, with whom Lillie and Rimerman JJ concurred, stated233: "If a case arose where, despite due care by the medical profession in transmitting the necessary warnings, parents made a conscious choice to proceed with a pregnancy, with full knowledge that a seriously impaired infant would be born, that conscious choice would provide an intervening act of proximate cause to preclude liability insofar as defendants other than the parents were concerned. Under such circumstances, we see no sound public policy which should protect those parents from being answerable for the pain, suffering and misery which they have wrought upon their offspring." The possibility of litigation of such a kind has occasioned expression of judicial revulsion234. It has been condemned on the grounds that it would have the "potential for the disturbance of family life [and] the fabric of society"235 and "provide a basis for ... interfamilial [sic] warfare"236. The flaws in this reasoning are so obvious that they scarcely require expression237. First, it is not unknown in Australia for children to sue their parents in tort. Australian law does not recognise any principle of parental immunity in tort238. Thus, actions against parents by their children are not uncommon in the context of motor vehicle accidents. It has been held that children even enjoy a right of action against their mothers in respect of pre-natal 232 [1982] QB 1166 at 1181. See also at 1188 per Ackner LJ. 233 165 Cal Rptr 477 at 488 (1980). 234 Reasons of Callinan J at [205]. 235 Edwards [2002] NSWSC 460 at [119]. 236 Ploscowe, "An Action for 'Wrongful Life'", (1963) 38 New York University Law Review 1078 at 1080. 237 A similar argument has been raised in the wrongful birth context. In Cattanach it was rejected as "speculation" ((2003) 215 CLR 1 at 36 [79] per McHugh and Gummow JJ) and "judicial fantasy" ((2003) 215 CLR 1 at 56 [145] of my own reasons). 238 Hahn v Conley (1971) 126 CLR 276. Kirby injuries sustained as a result of the mother's negligent driving239. There is no evidence that such proceedings have resulted in any disintegration of the family. It is true that there are distinctions between actions seeking damages in respect of personal injuries and actions for wrongful life. Most notably, the latter, unlike the former, involve the proposition that, but for the negligence of the defendant, the plaintiff would not have existed. Yet the suggestion that, when compared with run-of-the-mill personal injury actions, wrongful life actions are liable to provoke familial discord is highly contestable. It is possible, perhaps even likely, that a child who suffers from debilitating disabilities might hold greater resentment towards his or her mother if those disabilities flowed from, say, the mother's negligent driving, rather than from a decision not to submit to an abortion once the mother discovered that her child would suffer from such disabilities. Secondly, this argument ignores the reality of tort litigation. The plaintiff in a wrongful life case is typically a profoundly disabled infant who has little, if any, personal awareness of the proceedings. Accordingly, it is difficult to see how a wrongful life action, if exceptionally commenced against the mother, would be apt to fracture the familial relationship. The reality is that wrongful life actions, like wrongful birth actions, are about money rather than love or family feelings240. For such actions to be viable in the first place there normally has to be an insurer or other deep pocket. Thirdly, just because it is held that a wrongful life action lies against a negligent health care provider, it does not necessarily follow that such an action would lie against the mother. There is a clear difference in the relationship between a child and a health care provider, on the one hand, and between a child and his or her mother, on the other. Particularly important to the former is the professional association involved. In the latter, considerations of the mother's own autonomy and bodily integrity would have to be given full weight241. The relationships are fundamentally different. If this Court were to hold that a wrongful life action existed in the present proceedings against the respondent, that decision would say nothing at all about whether such an action lay against the mother. 239 See, for example, Lynch v Lynch (1991) 25 NSWLR 411; Bowditch v McEwan [2003] 2 Qd R 615. 240 Cattanach (2003) 215 CLR 1 at 56 [145]; Hester 733 NE 2d 1161 at 1168 (2000). 241 Dobson v Dobson [1999] 2 SCR 753 at 768-769 [23]. Kirby Fourthly, as a practical matter, it is highly unlikely that any court would conclude that a mother's decision to decline to undergo an abortion would constitute a breach of any duty of care owed to the foetus242. Such a duty would only be breached if the trier of fact decided that a reasonable person in the mother's position would have terminated the pregnancy. While the gravity of the harm and the likelihood of the risk of injury might be given weight in favour of a finding of a breach of duty, the right of a woman to be free to make unencumbered choices regarding such serious questions as procreation and abortion would be an overriding consideration pointing against breach243. jurisdictions have enacted The influence of legislative change: Since 2002, the legislatures of all Australian that has reduced, or eliminated, the ability of plaintiffs to sue in tort. The chief stated purpose of such legislation has been to reduce the cost of insurance premiums245, particularly for public liability and medical negligence insurance246. A national inquiry, established to make recommendations on how this objective should be realised, was required to proceed on the assumption that "[t]he award of damages for legislation244 242 See Emeh v Kensington and Chelsea and Westminster Area Health Authority [1985] QB 1012 at 1019, 1024-1025, 1027-1028. Although cf Glover, Causing Death and Saving Lives, (1977) at 147-149. 243 Waters, "Wrongful Life: The Implications of Suits in Wrongful Life Brought by Children against their Parents", (1981-1982) 31 Drake Law Review 411; Capron, "Tort Liability in Genetic Counseling", (1979) 79 Columbia Law Review 618 at 244 The most relevant legislation includes the Trade Practices Amendment (Liability for Recreational Services) Act 2002 (Cth); Civil Liability Act 2002 (NSW); Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW); Wrongs and Other Acts (Public Liability Insurance Reform) Act 2002 (Vic); Wrongs and Other Acts (Law of Negligence) Act 2003 (Vic); Personal Injuries Proceedings Act 2002 (Q); Civil Liability Act 2003 (Q); Civil Liability Act 2002 (WA); Volunteers (Protection from Liability) Act 2002 (WA); Wrongs (Liability and Damages for Personal Injury) Amendment Act 2002 (SA); Law Reform (Ipp Recommendations) Act 2004 (SA); Civil Liability Act 2002 (Tas); Civil Law (Wrongs) Act 2002 (ACT); Personal Injuries (Liabilities and Damages) Act 2003 (NT); Personal Injuries (Civil Claims) Act 2003 (NT). 245 Harriton (2004) 59 NSWLR 694 at 722 [164] per Mason P. 246 Spigelman, "Negligence and insurance premiums: Recent changes in Australian law", (2003) 11 Torts Law Journal 291 at 293. Kirby personal injury has become unaffordable and unsustainable as the principal source of compensation for those injured through the fault of another"247. In the present case, in the Court of Appeal, Ipp JA suggested that, in this legislative climate, it would be wrong for a court to expand the range of interests protected by tort law by recognising an action for wrongful life. His Honour said248: "Generally speaking, at the present time, when legislatures throughout the country have legislated or have foreshadowed legislation restricting liability for negligence, it would be quite wrong to expand, by judicial fiat, the law of negligence into new areas." Before considering this issue, it is appropriate to make some preliminary observations about the legislative intervention. First, while there has been a long history of legislation affecting the ambit of the law of torts249, on the whole, previous changes have been context-specific and supplementary in nature. However, the legislation identified by Ipp JA, by making substantial alterations to the principles of reasonable foreseeability250 and causation251, has intruded upon the doctrine of the common law of torts252. Secondly, although all Australian jurisdictions have enacted legislation sharing a similar general objective, there are significant differences between the laws of the several jurisdictions. This has resulted in a reduction of the earlier relative uniformity of the law of torts as emanating from this Court. This country 247 Terms of Reference to the Review of the Law of Negligence: see Panel of Eminent Persons, Review of the Law of Negligence: Final Report, (2002) at ix. 248 Harriton (2004) 59 NSWLR 694 at 746 [337] (citations omitted). Studdert J in Edwards [2002] NSWSC 460 at [120] also appears to have taken this consideration into account in denying recovery. Cf McHugh, "Introduction: Sydney Law Review Torts Special Issue", (2005) 27 Sydney Law Review 385 at 390-391. 249 Spigelman, "Negligence: the Last Outpost of the Welfare State", (2002) 76 Australian Law Journal 432 at 437-440. 250 See, eg, Civil Liability Act 2002 (NSW), s 5B(1). 251 See, eg, Civil Liability Act 2002 (NSW), s 5D. 252 McDonald, "Legislative Intervention in the Law of Negligence: The Common Law, Statutory Interpretation and Tort Reform in Australia", (2005) 27 Sydney Law Review 443 at 446-448. Kirby now faces the real prospect of a "crazy quilt" of tort legislation, akin to that existing in the United States253. Thirdly, the legislation is fundamentally restrictive. The obstacles for plaintiffs seeking damages in tort, especially where the damages are sought in respect of personal injury, have been considerably increased254. For instance, in New South Wales, the "far-fetched or fanciful" formula for reasonable foreseeability stated by Mason J in Wyong Shire Council v Shirt255 has been replaced by one of "not insignificant"256. This Court's decision in Rogers v Whitaker257 has been partly confined. The principle in Bolam v Friern Hospital Management Committee258 has been resurrected in a modified form259. Exemplary and aggravated damages have been abolished in personal injury cases260. Of special relevance to the present appeal is the hostile legislative reaction to this Court's decision in Cattanach261. Provisions preventing recovery of damages in wrongful birth cases have been enacted in New South Wales262, Queensland263 and South Australia264. 253 Sugerman, "United States Tort Reform Wars", (2002) 25 University of New South Wales Law Journal 849 at 852. 254 See Spigelman, "Tort law reform: An overview", (2006) 14 Tort Law Review 5 at 255 (1980) 146 CLR 40 at 47. 256 See Civil Liability Act 2002 (NSW), s 5B(1). 257 (1992) 175 CLR 479. 258 [1957] 1 WLR 582; [1957] 2 All ER 118. 259 See Civil Liability Act 2002 (NSW), s 5O. 260 See Civil Liability Act 2002 (NSW), s 21. 261 (2003) 215 CLR 1. 262 Civil Liability Act 2002 (NSW), s 71. 263 Civil Liability Act 2003 (Q), s 49A. 264 Civil Liability Act 1936 (SA), s 67. Kirby The notion that statutory provisions can cause the common law to alter its course is not new265. In McKay, the English Court of Appeal was clearly influenced by the then recent enactment of the British legislation prohibiting wrongful life actions266. In Pilmer v Duke Group Ltd (In Liq)267 this Court considered whether common law notions of contributory negligence, affected by apportionment legislation enacted in all Australian jurisdictions, could diminish awards of equitable compensation for breach of fiduciary duty. Unanimously, that question was answered in the negative268. That answer was given principally on the ground that to admit a "defence" of contributory negligence in that context would be opposed to the character of fiduciary duties269. Although I agreed with that conclusion, I acknowledged that both equity and the common law were susceptible to influence by statutory changes270: "I do not consider that equitable remedies (any more than those of the common law) are chained forever to the rules and approaches of the past. Nor do I find the notion of developing equitable rules (any more than those of the common law271) by reference to statutory developments as uncongenial as, on occasion, this Court has done272. The idea that the common law develops in 'imitation' of statutes is not a recent one273. A 265 See Gummow, Change and Continuity: Statute, Equity, and Federalism, (1999) at 11-18; Atiyah, "Common Law and Statute Law", (1985) 48 Modern Law Review 1; Pound, "Common Law and Legislation", (1908) 21 Harvard Law Review 383. 266 See above these reasons at [51]. 267 (2001) 207 CLR 165 at 230 [170]. 268 (2001) 207 CLR 165 at 201-202 [86]-[87], 228-232 [165]-[176]. 269 (2001) 207 CLR 165 at 201-202 [86], 230-231 [171]. 270 (2001) 207 CLR 165 at 230 [170]. 271 Osmond v Public Service Board of NSW [1984] 3 NSWLR 447 at 465; Kelly, "The Osmond Case: Common Law and Statute Law", (1986) 60 Australian Law Journal 513; Ralevski v Dimovski (1986) 7 NSWLR 487 at 493; cf Esso Australia Resources Ltd v Commissioner of Taxation (1998) 83 FCR 511 at 519-526. 272 Lamb v Cotogno (1987) 164 CLR 1 at 11-12; cf Cotogno v Lamb (No 3) (1986) 5 NSWLR 559 at 570-572. 273 Pearson v Pulley (1668) 1 Chan Cas 102 at 102 [22 ER 714 at 715]; cf Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 at Kirby similar notion was sometimes reflected in equitable remedies, particularly in relation to defences based on statutes of limitations274. Furthermore, all equitable and legal principles must today operate in a universe dominated by the star of statute. It would be surprising if the gravitational pull of statute, felt everywhere else in the law, did not penetrate into the expression and re-expression of non-statutory rules275." In the common law of torts, the recent turn of the Australian judicial tide in favour of defendants276 may not be wholly unrelated to legislative developments. Although the reversal of previous approaches, effected by the courts, preceded the enactment of the most recent legislation, the legislation was widely anticipated. The judicial reversals have arguably gathered momentum since those enactments. This development presents an important issue of judicial methodology. If the courts are, in fact, relying on legislative policy as a reason for altering the course of the common law of torts, that reliance should be disclosed277. Without such disclosure, the appropriateness of such reliance could never properly be considered and contested278. 274 Knox v Gye (1872) LR 5 HL 656 at 674; Meagher, Gummow and Lehane, Equity: Doctrines and Remedies, 3rd ed (1992) at 785-786 [3415]. 275 See Gray v Motor Accident Commission (1998) 196 CLR 1 at 12-13 [33], 27 [83], 45-47 [128]-[130]; Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 61-62 [23], 89-90 [105]. 276 See Luntz, "Round-up of cases in the High Court of Australia in 2003", (2004) 12 Torts Law Journal 1 at 1-2; Luntz, "Turning points in the law of torts in the last 30 years", (2003) 15 Insurance Law Journal 1 at 22; Luntz, "Torts Turnaround Downunder", (2001) 1 Oxford University Commonwealth Law Journal 95. 277 See Wong v The Queen (2001) 207 CLR 584 at 622 [102]; Cattanach (2003) 215 CLR 1 at 104 [291]; Woolcock (2004) 216 CLR 515 at 573 [160]; Johnson v The Queen (2004) 78 ALJR 616 at 626-627 [41]; 205 ALR 346 at 359; Travel Compensation Fund v Tambree t/as R Tambree and Associates (2005) 80 ALJR 183 at 197-198 [66]-[67]; 222 ALR 263 at 281; Osmond [1984] 3 NSWLR 447 at 462-464; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 259- 261; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 418-421. 278 Mason, "The Role of a Constitutional Court in a Federation: A Comparison of the Australian and the United States Experience", (1986) 16 Federal Law Review 1 at 5; Mason, "Future Directions in Australian Law", (1987) 13 Monash University Law Review 149 at 159. Kirby While I adhere to the views that I expressed in Pilmer279, in the present case there are significant arguments against developing the common law by analogy with legislation or by reference to a trend said to exist in such legislation. Most obviously, as a practical matter, it is difficult to see how this Court could confidently develop the common law in general conformity with legislation where different approaches have been taken in different jurisdictions and where, in other jurisdictions, no relevant law has been enacted. How could the courts set the common law in a parallel course when the legislatures themselves have struck off in a number of different directions280? Attempts to reformulate the common law in this way would also throw up many imponderables. Discerning the purpose lying behind legislation is often an arduous exercise. Yet it is an immeasurably more difficult exercise to discover what Parliament intended for the law where it has abstained from expressly spelling out what the law should be, as the New South Wales Parliament has on the issue of wrongful life. As Mason P noted in the Court of Appeal281, s 70 of the Civil Liability Act 2002 (NSW) provides that the restriction on wrongful birth actions contained in s 71 "does not apply to any claim for damages by a child in civil proceedings for personal injury ... sustained by the child pre-natally". Therefore, so far as New South Wales is concerned, Parliament has left the particular question to the courts. Professor Patrick Atiyah has warned that it is futile to engage in speculation about a failure to legislate because numerous explanations may exist to explain the inaction282. They might include a lack of interest, satisfaction with the existing common law, or an absence of agreement on what any different law should be283. Professor Atiyah also suggested that to engage in such speculation would be a constitutional mistake on the basis that Parliament's purpose, unless it 279 See also Cotogno v Lamb (No 3) (1986) 5 NSWLR 559 at 568-570; Gray (1998) 196 CLR 1 at 25 [80]. 280 Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 669; Esso (1999) 201 CLR 49 at 61-62 [23] and [25]; R v Iby (2005) 63 NSWLR 278 at 290 [77]- 281 Harriton (2004) 59 NSWLR 694 at 722-723 [165]. 282 Atiyah, "Common Law and Statute Law", (1985) 48 Modern Law Review 1 at 26. 283 See also Stapleton, "Duty of Care Factors: a Selection from the Judicial Menus", in Cane and Stapleton (eds), The Law of Obligations: Essays in Celebration of John Fleming, (1998) 59 at 68. Kirby is realised in legislation, has no legal value whatsoever284. Each of these arguments militates against any reliance by this Court in the present case on the tort "reform" legislation as a reason for disallowing this appeal. On the particular issue before this Court in this appeal the several legislatures of Australia have been totally silent. By inference, they have left it to the courts to perform their constitutional functions unimpeded by legislation285. The courts should do their duty in the normal way286. That duty, in a novel case, involves the provision of an answer that accords with established judicial authority. Necessarily, to address the novel features of the case, untouched by past decisional authority, this Court must reason by analogy. It must develop legal principle and legal policy to the extent that these are relevant287. Irrelevance of the parental action: A further argument that has frequently been advanced against recognising wrongful life actions is that the law, by way of an action for wrongful birth, already provides relief for the consequences of medical negligence that results in the birth of disabled children288. Proponents of this argument have sought to bolster it by asserting that wrongful birth actions, unlike wrongful life actions, do not give rise to problems in terms of quantifying the damages289. While it may be agreed that, where a wrongful life action lies, it is likely that a wrongful birth action would also exist, with respect, it is little short of astonishing that this line of reasoning has been entertained as a serious answer to wrongful life actions. 284 Atiyah, "Common Law and Statute Law", (1985) 48 Modern Law Review 1 at 26- 27. Cf Brodie v Singleton Shire Council (2001) 206 CLR 512 at 537 [44]-[45]. 285 Cf reasons of Callinan J at [206]. 286 Brodie (2001) 206 CLR 512 at 594 [211]. 287 Woolcock (2004) 216 CLR 515 at 566 [139]. 288 See, eg, reasons of Callinan J at [200]; Harriton (2004) 59 NSWLR 694 at 747-748 [349]; McKay [1982] QB 1166 at 1178; Watson, "Edwards v Blomeley; Harriton v Stephens; Waller v James: Wrongful Life Actions in Australia", (2002) 26 Melbourne University Law Review 736 at 749; Pace, "The Treatment of Injury in Wrongful Life Claims", (1986) 20 Columbia Journal of Law and Social Problems 289 Todd, "Wrongful Conception, Wrongful Birth and Wrongful Life", (2005) 27 Sydney Law Review 525 at 538-541. Kirby Wrongful birth actions are claims brought by parents in their own right for loss incurred by them by reason of the birth of an unplanned or unexpected child. Because the courts in Australia eschew any concern with the manner in which damages awards, once ordered, are used290, parents who recover any such damages are, at present, under no legal obligation to apply any damages recovered for the benefit of the child291. On this basis, damages recovered in wrongful birth actions are prone to dissipation by the parents292. As well, there is no guarantee that the damages would correspond with the extent of the child's loss and suffering. Nor is there any assurance that the parents would be willing, or able, to pursue a wrongful birth action. Whether in the particular case a parental action lies is fortuitous293. More fundamentally, this argument would lead to an incongruous result whereby the existence of one action (the parental action) is presented as a reason for denying another action, although it is vested in a different legal person and is designed to vindicate injury to a different legal interest. The fact that a parental action may lie is therefore not ultimately relevant to the determination of this appeal, except in so far as it may give rise to a possible problem of the overlapping of damages awards and the adoption of a common law rule that prevents double recovery for the same losses. Prospects of genetic progress: In the Court of Appeal, Ipp JA suggested that unknowable advances in genetic science should encourage the courts to stay their hand in any development of tort law and stop short of protecting the interest asserted by the appellant. His Honour reasoned294: "[D]iscoveries and potential discoveries in the field of genetics should make courts cautious in altering established principle so as 290 Todorovic (1981) 150 CLR 402 at 412. 291 In some jurisdictions in the United States courts have imposed a fiduciary duty on parents who recover damages in a wrongful birth action (see, eg, Garrison 581 A 2d 288 (1989)), and in Canada parents hold the damages on trust for the child (Krangle v Brisco (2000) 184 DLR (4th) 251). 292 Luntz, Assessment of Damages for Personal Injury and Death, 4th ed (2002) at 641 293 Turpin 182 Cal Rptr 337 at 348 (1982). See also Nelson 678 SW 2d 918 at 934 294 Harriton (2004) 59 NSWLR 694 at 746 [338]. See also Todd, "Wrongful Conception, Wrongful Birth and Wrongful Life", (2005) 27 Sydney Law Review Kirby accommodate claims for wrongful life. At this stage of genetic science it is simply not possible to know what consequences would follow from the making of such changes." I agree with Ipp JA that there are many imponderables presented to the law by advances in genetic, specifically genomic, science. However, I disagree with his Honour's solution which is that, in this respect, the judges should place the common law into a deep freeze. This has not been the usual response of the judges to a time of rapid social and technological change. Quite the contrary. legislatures of Australia, within In medical science, there will always be imponderables. If Ipp JA's argument were taken to its logical conclusion, there would be no future for tort law in the field of medical negligence. The courts would opt out with a unilateral self-denying ordinance on the basis of the possibility (by no means certain) that the several their respective areas of responsibility, will energetically address the countless problems requiring legal solutions. Part of the genius of the tort of negligence in the common law has been its malleability and versatility, which permit it to respond to the exigencies of changing times295. One of the values of a constitutional federation is the scope that it leaves for local innovation to stimulate the eventual emergence of national standards296. With reasonable care as the touchstone of liability, the action of negligence has adapted to circumstances which would have been inconceivable when Donoghue v Stevenson297 was written. The injunction against judging conduct with the benefit of technological hindsight298 provides a safeguard for defendants. So does the current judicial mood that has constrained the provision of remedies299, reversing previous remedial and communitarian doctrines300. Whether this Court likes it or not, genetic testing and other sophisticated technology is playing an increasingly significant role in reproductive decision- making and subsequent life support to the profoundly disabled. In light of this, it would be erroneous for tort law in Australia to opt out of its function of 295 Scott v Davis (2000) 204 CLR 333 at 370 [109]; Brodie (2001) 206 CLR 512 at 591-592 [203]; Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 50 [72]. 296 North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146 298 Roe v Minister of Health [1954] 2 QB 66 at 83-84. 299 See above these reasons at [140]. 300 Neindorf (2005) 80 ALJR 341 at 359-360 [84]-[85]; 222 ALR 631 at 653. Kirby expressing the rules that govern the rights and obligations of parties in relevant relationships301. Tort law, by the threat of a liability to pay damages, can stimulate and require those who offer genetic services to take reasonable care in delivering those services. The prospects of discoveries in genetic science support, rather than detract from, the need for judicial elaboration of tort law in this area. As Justice Allen Linden has said302: "[T]ort actions force us to consider novel questions of morality, ethics and economics in a rational way in a dignified setting – not in the streets or in the legislatures, where the public interest so often is ignored or even rejected in favour of special interests." Conclusions Denying the existence of wrongful life actions erects an immunity around health care providers whose negligence results in a child who would not otherwise have existed, being born into a life of suffering. Here, that suffering is profound, substantial and apparently lifelong. The immunity would be accorded regardless of the gravity of the acts and omissions of negligence that could be proved. The law should not approve a course which would afford such an immunity and which would offer no legal deterrent to professional carelessness or even professional irresponsibility303. In virtually all matters where wrongful life remedies would be available by the application of common law principles, legislatures in Australia would ultimately have the last word. But just as parliaments have their functions in our governance and law-making, so have the courts. The courts develop the common law in a principled way. They give reasons for what they do. They constantly strive for the attainment of consistency with established legal principles as well as justice in the individual case. In the present appeal, that approach favours the provision of damages to the appellant whose life of profound suffering and costly care is a direct result of the agreed negligence of the respondent. That is why this case is not really to be labelled as one about wrongful life. The appellant's life exists. It will continue to exist. No one suggests otherwise. The question is who should pay for the 301 See Greco 893 P 2d 345 at 354 (1995). 302 Linden, "Torts Tomorrow – Empowering the Injured", in Mullany and Linden (eds), Torts Tomorrow: A Tribute to John Fleming, (1998) 321 at 322. 303 Gleitman 227 A 2d 689 at 703 (1967); Goldberg 499 NE 2d 406 at 412 (1986). Cf D'Orta-Ekenaike (2005) 79 ALJR 755 at 810-811 [314]-[317]; 214 ALR 92 at Kirby suffering, loss and damage that flow from the respondent's carelessness. That is why the proper label for the appellant's action, if one is needed, is "wrongful suffering". The ordinary principles of negligence law sustain a decision in the appellant's favour. None of the propounded reasons of legal principle or legal policy suggests a different outcome. Orders The appeal should be allowed with costs. The judgment of the Court of Appeal of the Supreme Court of New South Wales should be set aside. In place of that judgment it should be ordered that the appeal to that Court be allowed with costs. The orders of Studdert J should be set aside. The respondent should pay the appellant's costs in the Supreme Court of New South Wales. The questions formulated by Studdert J should be answered as follows: 1. Yes. The categories available in personal injuries cases. The proceedings should be remitted to the Supreme Court of New South Wales for trial in accordance with these answers. Hayne 158 HAYNE J. The essential facts in this appeal can be stated shortly. The appellant was born suffering from severe physical and intellectual disabilities. Her mother had rubella during the first trimester of pregnancy. The appellant alleges that if her mother had been given proper medical advice, her mother would have lawfully terminated the pregnancy. Nothing that the respondent doctor did, or failed to do, is alleged to have contributed to the appellant developing any of the disabilities from which she suffers. But it is alleged that if proper advice had been given to the appellant's mother, the appellant would not have been born. The appellant has sued the doctor in negligence, alleging that he should have advised her mother of the risks of the appellant being born with severe disabilities and should have counselled her that "the only way to prevent" a child suffering these disabilities throughout its life would be to terminate the pregnancy. Whether the doctor failed to act with reasonable care and skill has not been decided. It is said that there are more fundamental reasons why the appellant's action should fail. The procedural history of the matter, and a more detailed description of the relevant facts, are set out in the reasons of Crennan J. Reference is made in her Honour's reasons to a number of decisions of courts of other jurisdictions deciding issues like those that arise here. I need make no detailed reference to any of those matters. I agree with Crennan J that the appellant has not suffered what the law should recognise as "damage". I prefer to leave aside any consideration of what that might suggest about the existence of a duty of care. Because an essential element of the cause of action for negligence, damage, cannot be established, the appellant's action must fail. The appeal should be dismissed with costs. What is damage? Since Donoghue v Stevenson304, to establish a cause of action for negligence it has been necessary to demonstrate that the defendant owed the plaintiff a duty of care, to prove a breach of that duty, and to prove damage of which the breach of duty was a cause. Having regard to the origins of the modern tort of negligence in the old action on the case, damage has been seen as the gist of the action for negligence. But none of these three elements of the tort of negligence – duty, breach, or damage – is self-defining. Over recent decades the courts have considered difficult questions about duty of care and causation of damage by breach. The decisions that have been made yield no single overarching principle that may be understood as uniting them. In this case a central, and the determinative, question is what does the law recognise as Hayne "damage"? That question is separate and distinct from questions of duty or causation. To decide the question, it is necessary to consider the place that is to be given to the tort of negligence in the fabric of the law as a whole. Deciding what is "damage" cannot be undertaken as an exercise in syllogistic logic. The statement of the premise of a syllogism would inevitably embrace the conclusion which is said to follow from it. The real task will be found to lie in identifying what would be the content of the relevant premise. In particular, what constitutes "damage"? While the task must begin from an understanding of the place of the law of negligence in the fabric of the law, it must also begin with a clear recognition of the difficulties and limitations that are inherent in attempting to classify the law, or the purposes of particular branches of the law. Classification of judge-made law is hazardous because the common law is a practical instrument which does not develop by reference only to considerations of theoretical harmony and taxonomic elegance. It is only "[f]or convenience, [that] the law creates certain pigeon-holes (labelled: property, contract, tort, and so on) in which it may file the rather untidy facts of life"305. There is not, and never has been, any wholly accurate and concise definition of what should be placed in the pigeon-hole marked "tort". Nonetheless, as Holmes pointed out306: "Be the exceptions more or less numerous, the general purpose of the law of torts is to secure a man indemnity against certain forms of harm to person, reputation, or estate, at the hands of his neighbors, not because they are wrong, but because they are harms." (emphasis added) By contrast, the chief focus of the criminal law can be seen to be the infliction of punishment by the State for commission of certain conduct or contravention of stipulated standards. That is, tort focuses chiefly upon harm, crime focuses chiefly upon fault. Yet the tort of negligence requires proof of fault. As was pointed out in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd307, it is not useful to attempt to divide the litigious world into only two parts, one marked "civil" and the other marked "criminal". The litigious world is more complex than that. And as Windeyer J pointed out in 305 Paton, A Text-Book of Jurisprudence, 3rd ed (1964) at 118. 306 Holmes, The Common Law, (1881) at 144. 307 (2003) 216 CLR 161 at 198 [114]. Hayne Uren v John Fairfax & Sons Pty Ltd308, "the roots of tort and crime ... are greatly intermingled". No doubt this historical intermingling contributes to the considerable overlapping that can be seen between the purposes to which the law of tort and the criminal law seek to give effect. Because both the law of tort and the criminal law have several and overlapping purposes and effects, it is incomplete to see the former as concerned only with harm and its compensation, and the latter as concerned only with fault and its punishment. Yet that does not deny the central importance played in the law of tort by the concept of compensation for harm. So much appears from the remedy which is granted to a plaintiff who succeeds in an action for negligence. Upon proof of damage, the plaintiff will be awarded damages. Demonstrating no more than that a person owed another a duty of care and acted without reasonable care will not suffice to establish the cause of action. Absent proof of damage, a claim for negligence must fail. Leaving aside the anomaly presented by the power to award exemplary damages309, the damages that are awarded in an action for negligence are damages to compensate the plaintiff for the harm that is suffered as a result of the defendant's negligence. The well-known basic rule310 is that those damages are to be assessed as the sum which will, so far as possible, put the plaintiff in the position the plaintiff would have been in had the tort not been committed. At once it can be seen that measuring the damages that are to be awarded to a plaintiff who has demonstrated that he or she has suffered damage, of which the defendant's breach of a duty of care owed to the plaintiff was a cause, requires the making of a comparison. It invites attention to the position in which the plaintiff would have been had the tort not been committed and the position in which the plaintiff is shown now to be. Often that comparison is not easily made. Very often, the results of the comparison are not readily expressed as a sum of money. Pain and suffering, loss of enjoyment of life, and the like are not readily measured in dollars311. But pecuniary compensation is the best remedy the law has for harms sustained by a person even where those harms do not represent an inroad upon a person's financial or material assets. 308 (1966) 117 CLR 118 at 149. See also Gray v Motor Accident Commission (1998) 196 CLR 1 at 7-8 [16] per Gleeson CJ, McHugh, Gummow and Hayne JJ. 309 Gray v Motor Accident Commission (1998) 196 CLR 1. 310 Livingstone v Rawyards Coal Company (1880) 5 App Cas 25 at 39 per Lord Blackburn. 311 Owners of Steamship "Mediana" v Owners, Master and Crew of Lightship "Comet" (The "Mediana") [1900] AC 113 at 116. Hayne To say of a plaintiff that he or she has suffered "damage" or "harm" likewise invites comparison between what would have been and what is. That inquiry cannot be made in the abstract. First, it directs attention to the position of the particular plaintiff, not some hypothetical class of persons of which the plaintiff might be said to be a member. But secondly, and critically, it requires identification of the condition of, or state of affairs concerning, that plaintiff which would have existed had the tort not been committed. This second step is required not just for the purposes of assessing the extent of relief (by way of damages) that is to be allowed, it is a step that is required at the logically prior point of identifying whether the plaintiff has suffered damage. Deciding whether the plaintiff has suffered harm, and what that harm is, requires comparison. In the appellant's written submissions it was said that she had suffered "grievous injury". It is necessary to understand how that expression is used in this case. It is not used to describe the condition of, or state of affairs concerning, the appellant as differing from some condition or state that previously existed or was previously enjoyed by her. Nor is it used to describe any physical or economic consequence that is alleged to have been caused by any negligent act or omission of the doctor, other than the consequence that the appellant's mother did not terminate her pregnancy and the appellant was born. The appellant contended that she demonstrated that she had suffered damage (that she had in the relevant sense suffered "injury" or "harm") by comparing her condition with not having been born. The appellant expressly disavowed the argument that the appropriate comparison is with the "ordinary", "able" or "average" person. The appellant insisted that the proper comparison is with "not having been born" because, so the argument ran, the comparison that must be made is with what would have been the case if the doctor had not been negligent. If the doctor had not been negligent, the appellant's mother would have terminated the pregnancy. As the reasons of Crennan J demonstrate, it is not possible to compare the appellant's life with non-existence. Rather, in order for the appellant's life to be viewed as an "injury" or "harm", it is logically necessary to compare her life with that of another person. Indeed, a comparison of that kind (a comparison between the plaintiff's condition and the condition of some other person) is implicit in the use of expressions like "grievous injury". That is, by using expressions like "injury" or "harm" the appellant implicitly invited comparison between her condition and the condition of a person who does not have the disabilities she has. So, too, other descriptions given of the damage, or harm, for which the appellant seeks redress implicitly invited the same comparison. Thus, when it was said that she seeks redress for having and living with "disabilities", "deficits", "injuries" or the like, those descriptions, in the end, point to the disabilities the appellant has and hinge upon her comparing her past, present and expected physical and intellectual state and capacities with some hypothetical "ordinary", "able" or "average" person. (I leave aside any consideration of what exactly those words "ordinary", "able" or Hayne "average" may encompass and any consideration of the difficulties inherent in their use or application.) A comparison with that other hypothetical person is necessarily implicit in the descriptions given by the appellant of her "injury" because the appellant herself has never had a life free from the disabilities she has. But for the reasons stated earlier, a comparison of that kind does not show that the appellant has suffered what the law recognises as damage. It is because the appellant cannot ever have and could never have had a life free from the disabilities she has that the particular and individual comparison required by the law's conception of "damage" cannot be made. Because she has never had and can never have any life other than the life she has, with the disabilities she has, she cannot show that she has suffered damage, as that legal concept is now understood, as a result of a failure to give the advice she says her mother should have been given. Although this conclusion is determinative, it is as well to recognise, and deal with, some further aspects of the appellant's arguments which, together, could be understood as advancing reasons for extending the legal concept of "damage" to include living with the disabilities the appellant has. The features of the appellant's arguments relevant to this aspect of the matter can be summarised as follows. The appellant's disabilities are very severe. She needs constant care. An important element of her case is that the risks of which her mother should have been advised were so grave that termination of the pregnancy would have been warranted. The circumstances of the case might therefore be said to be both exceptional and confined. If the doctor was negligent, why should the cost of providing care not fall upon a party who is shown to be negligent rather than upon the appellant's parents or society at large? Neither the severity of the appellant's disabilities, nor the (in this case, assumed) demonstration of duty coupled with want of reasonable care, compels the conclusion that living with her disabilities should be recognised as a form of damage. It is as well to explain why that is so. In doing that, it is necessary to touch upon some aspects of questions of causation and policy. The appellant's case is that a reasonable doctor would have advised the appellant's mother of the risks of her being delivered of a child with severe disabilities and would have advised her that the only way to avoid the risks coming to pass was to terminate the pregnancy. In this case, the risks came to pass. The appellant has severe disabilities. But if the asserted negligence is a failure to recognise and advise of risks, what is to be done in the case where the risks are not fully realised? Is the child of a woman whose doctor should have advised her of the risks consequent upon exposure to rubella to have an action against the doctor if the child has any form of adverse consequence from the mother's exposure and can show that the mother would have chosen lawfully to terminate the pregnancy? Or is the concept of "damage" to be confined to cases Hayne where the risk of severe disabilities is substantially realised? What would be the principle which would warrant confining recovery in that way? These questions provoke examination of some steps that lie behind the appellant's contentions about what is "damage". In particular, they provoke some limited reference to some aspects of questions of duty and causation. The appellant contends that her mother's doctor owed a duty of care to the appellant, not just her mother. For present purposes, the existence of a duty of care may be accepted312. It is a duty that the appellant cannot enforce until after birth. Only then does she have legal personality to enforce the duty. But that does not deny the existence of the duty. lawfulness of a The appellant contends that to discharge the duty, the doctor should have offered information and advice to her mother. But her mother would then have been confronted by the choice of terminating the pregnancy or not. Determining the the pregnant woman's termination focuses upon circumstances – especially upon her health313. That inquiry examines the reasonable belief of the doctor who performs the termination but is not directly concerned with the subjective beliefs of the mother. It is, essentially, an objective inquiry. If termination is lawful, the woman must choose whether to take that course. That choice is wholly subjective. Not terminate a pregnancy. A mother may think it right to take account of all sorts of considerations in those deciding whether considerations are her religious and other beliefs. The choice is hers to make. For a court to decide what a plaintiff's mother would have done if confronted by proper information and advice about the risks of continuing with a pregnancy, it may well be necessary to explore the matters that the mother would or may have taken into consideration in reaching her decision. Necessarily, that would be a difficult314 and intrusive inquiry. That does not mean that a rule must be adopted which avoids making such inquiries. But what it may be thought to point to is some questions about causation. least among The duty posited, owed by the doctor to the unborn, is said to require the doctor to give advice and information to the mother. Whether it would be lawful to terminate the pregnancy is a question decided objectively. How the mother would act in response to proper advice and information would be a matter for her 312 cf Watt v Rama [1972] VR 353. 313 CES v Superclinics (Australia) Pty Ltd (1995) 38 NSWLR 47 at 59-60 per Kirby ACJ, 80 per Priestley JA. 314 cf Rosenberg v Percival (2001) 205 CLR 434. Hayne choice. If, given proper information and advice, the woman concerned would have chosen not to terminate the pregnancy, a doctor's failure to give proper information or advice to the mother during pregnancy could not be said to have caused the child, when born, any damage, however broadly "damage" is understood. At least to this extent a doctor's liability to the child would then depend upon the particular subjective views of the mother. But in a case where it is shown that the mother would have terminated the pregnancy, the subjective nature of the considerations which inform the mother's choice about termination may well be thought to be insufficient reason to conclude that the doctor's failure to tender proper advice was not a cause of the plaintiff being born. And if that is so, rather than pointing to some issue about causation, the interjection of the element of the mother's choice reveals only that there will be a significant number of cases where, because the mother would not have terminated the pregnancy, the doctor who negligently failed to proffer advice about the risks of continuing with the pregnancy would not be liable to the child. The importance of this observation is that it reveals that to adopt a rule which would extend the concept of "damage", whether by inviting comparison between the life the plaintiff has and the kind of life which others have, or by describing the consequence of the asserted negligence as "living with disabilities", in the name of promoting careful practice by doctors, would be to adopt a rule whose engagement in a particular case would depend upon the mother's choice. Such a rule would, at best, have only indirect effects on the promotion of careful medical practice. There is, then, no basis demonstrated for departing from the established rule that the law recognises as "damage" the difference between what the particular plaintiff is or has and what that plaintiff was or would have had. The appellant's disabilities in this case are not a form of damage. She could have had no life other than the life she has. The common law should not be developed in the way for which the appellant contended. The appeal should be dismissed with costs. Callinan CALLINAN J. The question that this appeal raises is one that has exercised the minds of philosophers, theologians, scientists, legislators and lawyers throughout the world: may a child born profoundly disabled who probably would have been aborted by her mother had she been informed of the child's likely condition at birth, as she should have been, but negligently was not, by the medical practitioner responsible for her, sue the practitioner for damages? There has been no trial. The facts that I summarize have been taken as correct for the purposes of deciding the questions posed at this stage of the proceedings. The facts In early August 1980, believing herself to be pregnant, Mrs Harriton became particularly concerned when she suffered an acute illness which manifested itself by fever and rash. On 13 August 1980, she consulted a general practitioner who is now deceased. She told him that she thought she might be pregnant, and was aware that rubella, which she believed she may have contracted, could produce congenital abnormalities in an unborn child. The practitioner advised her that when she was well enough to do so, she should provide a blood sample to determine whether she was in fact pregnant, and whether her illness was rubella. A pathologist, who analyzed the specimen of blood which she gave pursuant to the general practitioner's advice, reported to him that Mrs Harriton was pregnant, and that if there had been no recent contact or rubella-like rash, further contact with the virus would be unlikely to produce congenital abnormalities. After the report had been provided to the general practitioner, Mrs Harriton consulted his son, with whom he was in partnership, the respondent, Dr Paul Stephens. She recounted her history to him. He confirmed to her that she was pregnant, but that the acute illness of which she had complained, was not rubella. The respondent referred Mrs Harriton to a gynaecologist and obstetrician for the management of her pregnancy. This is what his referral note stated: "Herewith Mrs Olga Harriton. (illegible) LMP [last menstrual period] 15/7/80. +ve preg test. She had ? viral illness 2/52 ago and rubella titre 30. I have reassured her that she has no problems. Could you please see and continue. Paul. PS: Morning sickness. Debendox PRN." The respondent should not have given the reassurance that he did to Mrs Harriton. There was a further blood test which a prudent medical practitioner would have recommended, an "IgM" blood test. Had it been performed, it would have yielded positive results for rubella antibodies, and a diagnosis of rubella would have been made. Callinan Prudent medical practice in 1980 required a medical practitioner to advise a pregnant woman who had suffered rubella in the first trimester of her pregnancy (as Mrs Harriton had), that there was a very high risk that the unborn child would suffer grievous injury, more correctly, disability, as a result of the rubella infection. The advice would have included that the only way to prevent a child from so suffering throughout the child's life would be to terminate the pregnancy. It would not have been unlawful for Mrs Harriton to act on advice of that kind and to terminate the pregnancy. The appellant was born profoundly, incurably and tragically disabled. In order to survive, she will need, as she has done throughout her life, constant care and attention. Whether after conception some measures may have been taken to alleviate the effects of the infection did not arise for consideration. The case proceeded on the basis that Mrs Harriton, had she been advised of the matters of which the respondent failed to advise her, would have terminated the pregnancy, and the appellant would never have been born. The proceedings at first instance By her tutor, her father, the appellant has sued the respondent in the Supreme Court of New South Wales. The facts that I have stated, although not determined, have been agreed for the purposes of the disposition of the threshold point that arises, whether the appellant can maintain her action against the respondent. In her prayer for relief, the appellant claimed damages "representing the extraordinary past and future medical and care costs created by her disabilities; damages pursuant to the principle in Griffiths v Kerkemeyer315 [that is for care gratuitously provided]; interest; and costs". The threshold point was decided at first instance adversely to the appellant His Honour did not doubt that a relevant duty of care can be owed to an unborn child, indeed that the duty may be owed to a child not even conceived at the time of a negligent act, provided that the child be within the class to whom 315 (1977) 139 CLR 161. 316 Harriton v Stephens [2002] NSWSC 461. Callinan the duty is owed, but that, because the only duty which the appellant was owed, was not to harm her, she could not recover. Not surprisingly, the question which had to be answered by Studdert J had been considered in many other jurisdictions throughout the world. In his careful and comprehensive judgments in this, and similar cases argued at the time, Studdert J referred to many of these, and to statements of principle in other cases in this Court, which did not raise precisely this, or even any very similar sort of claim. It is unnecessary for me to repeat his Honour's review of those authorities. The appeal to the Court of Appeal of New South Wales The appellant appealed unsuccessfully to the Court of Appeal of New South Wales (Spigelman CJ and Ipp JA, Mason P dissenting)317. Spigelman CJ sought first to identify the loss suffered by the appellant, and asked whether there was a duty with respect to that kind of loss. In answering that question, a court had to be attentive, his Honour said, to the ethical foundation for the relevant legal principles. The duty asserted by the appellant did not reflect values generally, or even widely, held in the community. There was no sufficiently direct relationship between the respondent and the appellant to support the appellant's claim. Ipp JA was of the opinion that the case was one in which the compensatory principle could simply not be applied: it was impossible to compare existence, even in a profoundly disabled state, with non-existence. His Honour was unable to find any supporting justifications in policy, for a refashioning of the compensatory principle in such a way as to enable damages to be awarded to the appellant. The considerations of policy to which his Honour referred were that the notion of "sanctity of life" militates against recognition of any duty for which the appellant contended. Increasing knowledge of genetics should make courts extremely cautious accommodate a law of the kind for which the appellant contended. In any event, there was a remedy available to parents, to whom a disabled child was born if medical negligence caused the disability, and that should suffice. legal principle in varying In dissent, Mason P pointed out that the common law strived to ensure that a claim for damages, even a novel one, attract the full range and measure of damages usually allowed. In his opinion, responsibility of a doctor treating a pregnant woman, extends to the foetus, and is a different duty from the duty not to cause harm or injury. The respondent's negligence precluded the making of any informed decision by the parents. His Honour took the view that there was 317 Harriton (by her tutor Harriton) v Stephens (2004) 59 NSWLR 694. Callinan no conceptual difference between the critical event that might enable parents to sue, and a child's putative claim that he or she should not have been born. The appellant should not fail because she is unable to demonstrate the monetary value of non-existence. Any contention to the contrary offends the principle that the wrongdoer bears the evidential onus of establishing the existence and value of offsets and collateral advantages said to stem from the wrong. The judicial equation of pre-birth non-existence and death arguably offends against the principle of judicial agnosticism. The appeal to this Court In this Court the appellant advances the same arguments as in the courts below. Reference was again made to like cases in many other jurisdictions. The appellant sought to place particular emphasis upon a decision of the Supreme Court of Israel318 in which as a result of medical negligence a woman was not advised of the possibility of the transmission of an hereditary illness which could affect any child whom she might conceive. She became pregnant, and gave birth to a boy to whom the hereditary disease was passed, and who, in consequence, was severely disabled. The Supreme Court of Israel held that non-life was preferable to impaired life, and that the wrongdoer should compensate the child so that his quality of life would be better as far as money could help. Two judges of the Court, Ben-Porat DP and Barak J, in holding that the child could recover, said that the amount of damages awarded should be as much as he had lost due to his impaired situation. The decision was however tellingly criticized in an article written by David Heyd319 who pointed out that the reasoning necessarily involved the erection of a fiction which the Court nowhere acknowledged in the reasons for judgment320. The appellant also placed weight upon Burton v Islington Health Authority321. But that case does not in my opinion assist her. It was a case in which the plaintiff suffered injury after he had been conceived, and as a result directly of the defendant's negligent treatment of his mother and himself during the confinement and delivery. The issue was quite different from the issue here. It was in substance whether any distinction should be drawn between injuries suffered immediately after birth, and injuries after conception322. 318 Zeitsov v Katz (1986) 40(2) PD 85. 319 Heyd, "Are 'Wrongful Life' Claims Philosophically Valid? A Critical Analysis of a Recent Court Decision", (1986) 21 Israel Law Review 574. 320 (1986) 21 Israel Law Review 574 at 584-585. 322 [1993] QB 204 at 219. Callinan In her submissions in this Court, the appellant acknowledged the necessity to confront the problem of seeking to make a comparison between non-being and disabled being. Her contention was that but for the negligence of the respondent, there would have been a state of affairs (necessarily non-being) which would include neither the pain and suffering arising from the physical condition, nor any incapacity to earn income. It was not argued that the comparison should be between the appellant and a perfect child. Vicissitudes of life should be taken into account. Questions of degree are inevitably involved. A court should not shrink, indeed common law courts generally have not shrunk from making the best approximations that they can, well understanding that perfection or precision in any assessment of general damages, particularly in cases of personal injury, is impossible. Inevitably, many policy considerations were touched upon in argument. A wariness of eugenics, selective breeding, was sensible but does not justify a principle that a negligent act causing the birth of a profoundly disabled child should be left without a remedy. The disposition of the appeal There are many other policy concerns arguing in both directions the the relevance and significance of which may well vary according philosophical, theological and perhaps even economic perceptions of those called upon to give consideration to them. Some of them are touched upon in Cattanach v Melchior323, in particular by the minority in that case. The matters which influenced Mason P in reaching his dissenting opinion are all weighty ones of legal and social concern. There are also these. Defensive medicine, practised as a result of a decision favourable to the appellant, could lead to a greater readiness on the part of practitioners to counsel abortion324. The damages in a case of this kind, unless in some way arbitrarily restricted, are likely to be very great. Should the state therefore rather than the doctor support the child? To seek to compare for the purpose of assessing damages, non-existence with the state of existence is impossible. Nonetheless, that practical impossibility should 323 (2003) 215 CLR 1. 324 It must be emphasized that I raise this as a practical concern. Of course there are "the tests of reasonable foreseeability and reasonable care" (reasons of Kirby J at [114]) which may serve to protect a doctor in a legal dispute. But decisions of this Court can affect people's lives and decisions before legal proceedings are initiated or even contemplated. And even if they are contemplated, those legal tests have on occasion been interpreted to produce what Professor Atiyah has described as a "damages lottery" (Atiyah, The Damages Lottery, (1997)), and it seems to me that many doctors might not find them particularly reassuring (consider, eg, Rogers v Whitaker (1992) 175 CLR 479). Callinan be outflanked by the erection of a fiction involving a comparison between an ordinary, non-disabled life and a disabled life. Throughout the history of the common law, fictions have been devised and applied as if they represented the true position. Modern jurisprudence leans against fictions. There should be coherence in the law. Absolute coherence, if the appellant were to succeed here, would require that a mother, who knew of, but failed to abort a foetus likely to emerge at full term seriously disabled, be liable to that child, a prospect that I suspect few would contemplate with equanimity. Why should the wrongdoer be obliged to pay damages to the parents, but not to the person actually afflicted? But on the other hand, the law does from time to time impose arbitrary limits and boundaries. One of the purposes of the law of tort is to set standards, and in that respect, it operates as a deterrent to careless conduct. On the other hand however, there are some departures from proper standards which do not attract damages, for example, by reason of indeterminacy of a kind spoken of in cases of claims for economic loss325. On the basis of the facts stated, there is every reason to expect that a person in the position of the respondent will however be appropriately very severely disciplined by the relevant disciplinary body. The consequence of failing to allow this appellant to recover, is that a person such as she, catastrophically disabled, will recover nothing, whilst, if after the moment of conception, she had suffered negligently caused injury, even of a much lesser kind, she may be able to recover. A case of this kind is so different from any other, and goes so much to the heart of diverse theological and philosophical opinion, that the courts should leave it to the legislators to state the law to govern What I have just said is not a comprehensive statement of all of the policy considerations which have troubled the minds of those who have already had to deal with this type of problem. I do not however need to make a comprehensive review of those considerations, any more than I need to undertake another review of all of the authorities, an exercise which has been very helpfully performed in the courts below. I do not need to do these because I would decide the case neither on policy grounds, the common law or any adaptation of it, the law of other jurisdictions, nor on the basis of other cases in Australian jurisdictions so far decided, none of which are sufficiently similar to this case to assist in resolving it, but on logic. The appellant's case propounds these propositions. "Had my mother been properly advised, she would have caused me to be aborted. I would never therefore have come into existence as a formed human being. I am, in consequence, entitled to damages upon the basis that I should never have been born." It is not logically possible for any person to be heard to say "I should not be here at all", because a non-being can say nothing at all. If this conclusion is unacceptable to some, or many, it is for the legislature, and the legislature 325 Perre v Apand Pty Ltd (1999) 198 CLR 180. Callinan alone, to say so, and in terms which would enable some principled basis of assessment of damages. It has not. I would dismiss the appeal with costs. 208 HEYDON J. I agree with Crennan J. Crennan CRENNAN J. This appeal and two appeals in Waller v James and Waller v Hoolahan326 ("the Waller cases") were heard consecutively and much of what is said in the reasons in this case applies also to the Waller cases. The submissions in the Waller cases bore on the issues in this case and they have also been taken into account. By majority (Spigelman CJ and Ipp JA, Mason P dissenting) the New South Wales Court of Appeal327 dismissed an appeal brought by the plaintiff Alexia Harriton (the appellant in this Court) against a judgment in the Supreme Court of New South Wales (Studdert J) dismissing with costs a claim for damages against Dr Paul Richard Stephens ("Dr P R Stephens"), a general medical practitioner. Alexia Harriton was born on 19 March 1981 with severe congenital disabilities caused by the rubella virus with which her mother, Mrs Harriton, had been infected in the first trimester of her pregnancy. Mrs Harriton had an acute illness with a fever and rash in early August 1980. On 13 August 1980 she consulted Dr Max Stephens, father of this Court, Dr P R Stephens, and told him she was concerned that she might be pregnant and that her recent illness might be rubella. She told him she was aware that rubella in early pregnancy could produce congenital abnormalities in an unborn child. Dr Max Stephens advised Mrs Harriton to have a blood test to determine whether she was pregnant and whether she was suffering from rubella. On 21 August 1980 Macquarie Pathology Services reported: the respondent "Rubella – 30 If no recent contact or rubella-like rash, further contact with this virus is unlikely to produce congenital abnormalities. Preg test – positive." On 22 August 1980 Mrs Harriton consulted Dr P R Stephens and informed him that she had had a fever and a rash and was concerned that her recent illness was rubella. Dr P R Stephens then had the Macquarie Pathology Services report. He informed Mrs Harriton that she was pregnant and assured her that her illness was not rubella. Mrs Harriton had had rubella and Alexia Harriton's congenital disabilities as a result of rubella include blindness, deafness, mental retardation and spasticity. She is unable to care for herself and requires continuous care which she will need for the rest of her life. Her claims for damages include special damages for past and future medical and care costs and general damages for pain 326 [2006] HCA 16. 327 Harriton (by her tutor Harriton) v Stephens (2004) 59 NSWLR 694. Crennan and suffering. Additionally, a claim for loss of income based upon the average weekly wage and the average life expectancy was raised in submissions. Any claim which Mrs Harriton has against Dr P R Stephens is statute barred. The parties prepared an agreed statement of facts for the purposes only of a separate determination under the provisions of Pt 31 of the Supreme Court Rules 1970 (NSW) of the following questions: If the defendant failed to exercise reasonable care in his management of the plaintiff's mother and, but for that failure the plaintiff's mother would have obtained a lawful termination of the pregnancy, and as a consequence the plaintiff would not have been born, does the plaintiff have a cause of action against the defendant? If so, what categories of damages are available?" Studdert J answered "No" to the first question, so the second question did not arise. Those answers were premised on findings that Dr P R Stephens's duty to the appellant was a duty not to injure her and she was not born disabled because of any breach of that duty by him. Further, Studdert J found that the impossibility of determining damage suffered by the appellant and the impossibility of assessing compensatory damages supported rejection of the claim. The trial judge also noted what he called weighty considerations of public policy against recognising a "wrongful life" claim. Whilst it is not relevant to the present appeal, the appellant also failed in a claim as a beneficiary of any trust or contract between Mrs Harriton and Dr P R Stephens. The appellant appealed to the Court of Appeal contending that Studdert J erred in law in not concluding that Dr P R Stephens's duty to the appellant extended to providing to her mother all information about her medical condition, in failing to recognise that being born disabled was legally cognisable damage and in failing to recognise the appellant's claims as a matter of consistent legal policy when (if not statute barred) a claim is available to the mother to recover the costs of the child's care arising out of the same events328. It was also contended that his Honour erred in regarding the difficulty of assessing damages as a bar to such a claim. The issues The main issue is whether the appellant/child who was born disabled has a cause of action in negligence against the respondent/doctor on the agreed facts 328 Cattanach v Melchior (2003) 215 CLR 1. Crennan which stated that the doctor failed to advise the child's mother during her pregnancy of circumstances which would have led the child's mother to obtain a lawful termination of that pregnancy. If such a cause of action exists, the next issue is whether the heads of damages are limited to, or different from, damages generally available in claims for personal injury. Consideration of the nature of the damage in this case, and the principles relevant to assessment of damages, leads to the result that the appellant has no cause of action against Dr P R Stephens. To have a cause of action in negligence the appellant needs to show damage suffered by her and a duty of care on Dr P R Stephens to avoid that damage. In Fleming, The Law of Torts, it is stated329: "Actual damage or injury is a necessary element ('the gist') of tort liability for negligence. Unlike assault and battery or defamation, where violation of a mere dignitary interest like personal integrity or reputation is deemed sufficiently heinous to warrant redress, negligence is not actionable unless and until it results in damage to the plaintiff." The question of what, if any, categories of compensatory damages are available only arises when actual damage or injury, together with breach of a duty of care and causation, are established. Because of the agreed statement of facts, questions of breach of any duty of care (if one were established) and of any causal connection between the breach of duty and the claimed damage, characterised as "life with disabilities", received less attention in argument than questions of whether the damage as alleged was legally cognisable, whether a duty of care as alleged existed, and whether, if calculating damages according to compensatory principles was virtually impossible, the damage could be treated as actionable. The phrase "legally cognisable" is used here to mean "capable of being known or recognised for the purposes of judicial proceedings". These latter issues differed from the question which was considered in Cattanach v Melchior330. The agreed statement of facts relevantly included the following facts: It would have been prudent medical practice in 1980 to advise a pregnant woman who had rubella in the first trimester of her 329 9th ed (1998) at 216 (footnotes omitted). 330 (2003) 215 CLR 1. Crennan pregnancy that there was a very high risk that the unborn child would suffer grievous injury as a result of the rubella infection. In these circumstances, prudent medical practice would have been to counsel a woman that the only way to prevent a child from suffering these injuries throughout its life would be to terminate the pregnancy. 18. Had the rubella been diagnosed, [Mrs Harriton] would have exercised her lawful right to terminate the pregnancy. The plaintiff did not become infected in utero with rubella by reason of any negligence on the part of the defendant." The specific duty of care postulated in respect of Alexia Harriton was a duty upon Dr P R Stephens to diagnose rubella and then advise Mrs Harriton that the only way to prevent a very high risk of bearing a child with grievous injury caused by rubella would be to terminate the pregnancy. The agreed facts do not cover whether it was known in Australia in 1980 that the effects of rubella may be variable331 or whether treatment to ameliorate the effects of rubella was available332. It is only because Mrs Harriton did not have an abortion or miscarry but continued the pregnancy to term that Dr P R Stephens could be liable for his failures to diagnose rubella and advise of rubella's consequences as identified in the agreed statement of facts. The issue here has arisen elsewhere in both common law and civil law jurisdictions because of advances in reproductive medicine including diagnostic testing during pregnancy. Typically claims have been advanced that a medical practitioner was negligent in failing to provide sufficient information to a mother concerning the risk of foetal abnormality and as a result of such negligence the mother's pregnancy was not terminated and the child was born into a life with disabilities. The appellant's counsel eschewed labelling the appellant's claim a "wrongful that what was wrongful was Dr P R Stephens's failures to diagnose rubella and to advise. It was those failures life" claim and emphasised 331 cf Gleitman v Cosgrove 227 A 2d 689 at 703-705 (1967). 332 cf Sylvia v Gobeille 220 A 2d 222 (1966). In that case, the plaintiff alleged the defendant doctor should have administered gamma globulin to her mother as such treatment would have decreased the likelihood of the plaintiff's defects caused by rubella. Crennan which were said to have caused or materially or effectively caused the damage, namely Alexia Harriton's "life with disabilities". However, such claims have come to be recognised internationally for some decades as "wrongful life" claims333. The term encompasses claims by disabled children for alleged negligence after conception, including cases such as the instant case involving rubella334, and claims based on negligent medical advice or diagnosis prior to conception concerning the possible effect of treatment administered to the mother335, contraception or sterilisation336, or genetic disability337, and 333 See Becker v Schwartz 386 NE 2d 807 at 810, esp fn 4 (1978); see also Curlender v Bio-Science Laboratories 165 Cal Rptr 477 at 481-483 (1980). 334 For example, in Australia, Bannerman v Mills (1991) Aust Torts Reports ¶81-079; Hayne v Nyst unreported, Supreme Court of Queensland, 17 October 1995; in the United Kingdom, McKay v Essex Area Health Authority [1982] QB 1166; in the United States of America, Gleitman v Cosgrove 227 A 2d 689 (1967); Dumer v St Michael's Hospital 233 NW 2d 372 (1975); Strohmaier v Associates in Obstetrics & Gynecology 332 NW 2d 432 (1982); Blake v Cruz 698 P 2d 315 (1984); Procanik v Cillo 478 A 2d 755 (1984); Smith v Cote 513 A 2d 341 (1986); Proffitt v Bartolo 412 NW 2d 232 (1987); Walker v Mart 790 P 2d 735 (1990); Bonta v Friedman 111 Cal Rptr 2d 194 (2001); as to Germany, see Stolker, "Wrongful Life: The Limits of Liability and Beyond", (1994) 43 International and Comparative Law Quarterly 521; in France, Perruche Cass. ass. plén., Nov. 17, 2000, noted in 2000 Bull. Civ. No. 9, 15. The claim was denied in all cases except Procanik v Cillo and Perruche. 335 Lacroix v Dominique (2001) 202 DLR (4th) 121; Harbeson v Parke-Davis Inc 656 P 2d 483 (1983). 336 For example, in Australia, Edwards v Blomeley [2002] NSWSC 460; in the United States of America, Elliott v Brown 361 So 2d 546 (1978); Speck v Finegold 439 A 2d 110 (1981); Pitre v Opelousas General Hospital 530 So 2d 1151 (1988). 337 For example, in Australia, Waller v James [2006] HCA 16; in Canada, Jones (Guardian ad litem of) v Rostvig (1999) 44 CCLT (2d) 313; in Singapore, JU v See Tho Kai Yin [2005] 4 SLR 96; in the United States of America, Curlender v Bio- Science Laboratories 165 Cal Rptr 477 (1980); Turpin v Sortini 182 Cal Rptr 337 (1982); Nelson v Krusen 678 SW 2d 918 (1984); Bruggeman v Schimke 718 P 2d 635 (1986); Lininger v Eisenbaum 764 P 2d 1202 (1988); Viccaro v Milunsky 551 NE 2d 8 (1990); Kush v Lloyd 616 So 2d 415 (1992); Schloss v The Miriam Hospital unreported, Rhode Island Superior Court, 11 January 1999; Moscatello v University of Medicine and Dentistry of New Jersey 776 A 2d 874 (2001); Johnson v Superior Court of Los Angeles County 124 Cal Rptr 2d 650 (2002); Paretta v Medical Offices for Human Reproduction 760 NYS 2d 639 (2003); in Israel, Zeitsov v Katz (1986) 40(2) PD 85. The claim was denied in all cases except Turpin v Sortini, Curlender v Bio-Science Laboratories and Zeitsov v Katz. Crennan contradistinguishes such claims from "wrongful birth" claims by parents for the costs of raising a child whether healthy338 or disabled339, whose unplanned birth occurs as a result of medical negligence. There have been numerous instances where claims of wrongful birth and wrongful life have been brought concurrently. While precise facts have differed, a comparative survey reveals that many courts have recognised the difficulty and novelty of the question of whether life with congenital defects can be recognised as damage, at the suit of a disabled person who would not exist in the absence of the alleged negligence340. Speaking generally, such claims have been resisted in common law jurisdictions. It appears that on the very few occasions when such claims have been allowed the results have not always been uncontroversial and legislatures have reacted to such decisions, or acted proleptically, to restrict or prohibit such suits341. A right of action and a duty of care are inseparable342. In a case like this, the existence and extent of a duty of care can usefully be considered by reference to the nature of the damage suffered343 because a cardinal principle of imposing liability for negligence in novel circumstances is that the party complained of should owe to the party complaining a duty to take care, which the law can recognise as a matter of principle344, and that the party complaining should be 338 Cattanach v Melchior (2003) 215 CLR 1. 339 Parkinson v St James and Seacroft University Hospital NHS Trust [2002] QB 266. 340 For example, McKay v Essex Area Health Authority [1982] QB 1166 at 1177, 1186 and 1193. 341 Roper, "An Open Question in Utah's Open Courts Jurisprudence: The Utah Wrongful Life Act and Wood v University of Utah Medical Center", (2004) Brigham Young University Law Review 893 at 894. See Hondius, "The Kelly Case – Compensation for undue damage for wrongful treatment", in Gevers, Hondius and Hubben (eds), Health Law, Human Rights and the Biomedicine Convention, (2005) 105 at 112. 342 Smith v Jenkins (1970) 119 CLR 397 at 418 per Windeyer J. 343 Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 487 per Brennan J; Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 290 [104] per Hayne J. See also Cole v South Tweed Heads Rugby League Football Club Ltd (2004) 217 CLR 469 at 472 [1] per Gleeson CJ; cf Vairy v Wyong Shire Council (2005) 80 ALJR 1 at 16 [62] per Gummow J; 221 ALR 711 at 727. 344 Sullivan v Moody (2001) 207 CLR 562 at 579-580 [50] and [53] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ. Crennan able to prove that actual loss or damage has been suffered as a consequence of a breach of that duty345. Proving that actual loss or damage has been suffered requires proof of interference with a right or interest recognised as capable of protection by law346. Decisions from overseas jurisdictions where the same issue and identical questions have arisen may assist, despite not being binding, because determining, as a matter of law, whether a duty of care exists or not falls to be considered at a "higher level of abstraction"347 than, for example, factual questions of breach, turning on local normative standards, and causation. The position elsewhere In the United Kingdom, the English Court of Appeal in McKay v Essex Area Health Authority348 unanimously rejected such a claim by a child affected by rubella as disclosing no reasonable cause of action against her local health authority and her mother's doctor. The reasoning deals with objections to such a cause of action which have been raised in numerous courts before and since. In finding neither defendant was under any duty to the child to give the child's mother an opportunity to terminate the child's life, Stephenson LJ said349: "That duty may be owed to the mother, but it cannot be owed to the child. To impose such a duty towards the child would, in my opinion, make a further inroad on the sanctity of human life which would be contrary to public policy. It would mean regarding the life of a handicapped child as not only less valuable than the life of a normal child, but so much less valuable that it was not worth preserving, and it would even mean that a doctor would be obliged to pay damages to a child infected with rubella before birth who was in fact born with some mercifully trivial abnormality." 345 Donoghue v Stevenson [1932] AC 562 at 619 per Lord Macmillan. 346 Cattanach v Melchior (2003) 215 CLR 1 at 15 [23] per Gleeson CJ. 347 Shirt v Wyong Shire Council [1978] 1 NSWLR 631 at 639 per Glass JA. 348 [1982] QB 1166 at 1171 per Stephenson LJ. It should be noted that Griffiths LJ rejected the claim along with the majority but dissented in the result of the case concerning the question of whether the claim should have been summarily dismissed for failing to disclose a sustainable cause of action. 349 [1982] QB 1166 at 1180. Crennan He then went on to recognise that a court could not evaluate non-existence for the purpose of determining whether a disabled child had lost anything by being born350. Stephenson LJ also referred, with approval, to the approach underpinning the Congenital Disabilities (Civil Liability) Act 1976 (UK)351 which precludes suits for wrongful life by children born after 22 July 1976352, following recommendations made by the English Law Commission's Report on Injuries to Unborn Children353. Ackner LJ said354: "But how can a court begin to evaluate non-existence, 'the undiscovered country from whose bourn no traveller returns?' No comparison is possible and therefore no damage can be established which a court could recognise. This goes to the root of the whole cause of action." Griffiths LJ said355: "To my mind, the most compelling reason to reject this cause of action is the intolerable and insoluble problem it would create in the assessment of damage." 350 [1982] QB 1166 at 1181. 351 [1982] QB 1166 at 1182. 352 Section 4(5). 353 Law Com No 60, (1974) Cmnd 5709. Paragraph 89 states: "Such a cause of action [ie a claim for 'wrongful life'], if it existed, would place an almost intolerable burden on medical advisers in their socially and morally exacting role. The danger that doctors would be under subconscious pressure to advise abortions in doubtful cases through fear of an action for damages is, we think, a real one." Similar policy considerations were noted in the Report of the Canadian Royal Commission on New Reproductive Technologies entitled Proceed with Care, (1993), vol 2 at 957-959. 354 [1982] QB 1166 at 1189. 355 [1982] QB 1166 at 1192. Crennan In Gleitman v Cosgrove356, an early cognate decision in the United States of America, to which the Court was referred in McKay357, a majority of the Supreme Court of New Jersey found that it was impossible to determine the difference between a life with defects and "the utter void of nonexistence"358 and determined that the child's complaint was "not actionable because the conduct complained of, even if true, does not give rise to damages cognizable at law"359. In denying a concurrent claim by the parents claiming they were denied their right to an abortion in the circumstances, the Court found that even if their damage were cognisable to the law, their claim would be precluded by the "countervailing public policy supporting the preciousness of human life"360. While the objection to the parents' claim may be affected by the decision in Roe v Wade361, the objection to the child's claim continued to be influential in American jurisprudence concerning wrongful life even as it developed after Roe v Wade362. Courts in California, New Jersey and Washington have permitted "wrongful life" claims and the recovery of special damages associated with a plaintiff's disabilities363 and the Superior Court of Connecticut has declined to strike out such a claim summarily364. Stephenson LJ noted in McKay365 that Gleitman v Cosgrove366 had been preceded by an article by Tedeschi367 which dealt with the 356 227 A 2d 689 (1967). 357 [1982] QB 1166 at 1182. 358 227 A 2d 689 at 692 (1967) per Proctor J. 359 227 A 2d 689 at 692 (1967) per Proctor J. 360 227 A 2d 689 at 693 (1967) per Proctor J. 363 Turpin v Sortini 182 Cal Rptr 337 (1982), overruling in part the earlier decision of the Court of Appeal in Curlender v Bio-Science Laboratories 165 Cal Rptr 477 (1980) which is the only American court to have awarded general damages; Harbeson v Parke-Davis Inc 656 P 2d 483 (1983); Procanik v Cillo 478 A 2d 755 364 Quinn v Blau 21 Conn L Rptr 126 (1997). 365 [1982] QB 1166 at 1182. 366 227 A 2d 689 (1967). 367 "On Tort Liability for 'Wrongful Life'", (1966) 1 Israel Law Review 513. Crennan issue of the impossibility of comparing two alternatives of non-existence and existence with disease. Many other American states have rejected "wrongful life" claims both before and after Roe v Wade368 for a variety of reasons, but two recur. First, such a claim requires an impossible comparison between a life with disability and non-existence such that the damage claimed, that is a life with disabilities, is not cognisable to the law and, secondly, damages in respect of that damage are not ascertainable. These objections have led a number of courts, since Gleitman v Cosgrove369, to continue to find that life is not actionable damage or compensable injury at the suit of a disabled child370. The trial judge has conveniently dealt with some of the American cases371. It appears that numerous state legislatures in the United States since Roe v Wade372 have prohibited a person from maintaining a cause of action or receiving an award of damages based on a claim that, but for the negligent conduct of another, the foetus would have been aborted373. Lesser legislative restrictions include excluding parents from the class of persons against whom such a claim might be made and restricting damages to special damages associated with disease, defect or handicap374. 369 227 A 2d 689 (1967). 370 See Becker v Schwartz 386 NE 2d 807 (1978) and Kassama v Magat 792 A 2d 1102 (2002) each of which contains a relevant summary of case law. 371 Harriton v Stephens [2002] NSWSC 461 at [12], [35]-[49]; see also Edwards v Blomeley [2002] NSWSC 460 at [33]-[43] and Pollard, "Wrongful Analysis in Wrongful Life Jurisprudence", (2004) 55 Alabama Law Review 327. 373 Roper, "An Open Question in Utah's Open Courts Jurisprudence: The Utah Wrongful Life Act and Wood v University of Utah Medical Center", (2004) Brigham Young University Law Review 893 at 895, fn 12. 374 Roper, "An Open Question in Utah's Open Courts Jurisprudence: The Utah Wrongful Life Act and Wood v University of Utah Medical Center", (2004) Brigham Young University Law Review 893 at 895, fn 12. Crennan In Canada, such claims have not been recognised375. The Court of Appeal in Manitoba has rejected a wrongful life claim on the grounds of public policy and because of the impossibility of assessing damages376, although the Saskatchewan Court of Appeal has declined to uphold the summary dismissal of such a claim377. A wrongful life claim has been allowed by the Supreme Court of Israel378. It is reported that two judges in a majority of four (of a bench of five judges) deal with the difficulty of comparing life with disability with non-existence, by employing for the purposes of assessing damages a legal fiction as a comparator, namely "life as a healthy child"379. As to Europe's civil law jurisdictions, it is reported that in Germany, a year before McKay380, a mother's wrongful birth claim for the extra costs of bringing up a handicapped child affected by rubella was allowed by the German Supreme Court but it rejected the child's concurrent wrongful life claim381. 375 Nelson and Robertson, "Liability for Wrongful Birth and Wrongful Life", (2001) 2(3) Isuma: Canadian Journal of Policy Research 102. 376 Lacroix v Dominique (2001) 202 DLR (4th) 121. 377 Bartok v Shokeir (1998) 168 Sask R 280. 378 Zeitsov v Katz (1986) 40(2) PD 85, as discussed in Heyd, "Are 'Wrongful Life' Claims Philosophically Valid? A Critical Analysis of a Recent Court Decision", (1986) 21 Israel Law Review 574. 379 Heyd, "Are 'Wrongful Life' Claims Philosophically Valid? A Critical Analysis of a Recent Court Decision", (1986) 21 Israel Law Review 574 at 584ff. 381 Stolker, "Wrongful Life: The Limits of Liability and Beyond", (1994) 43 International and Comparative Law Quarterly 521, the Bundesgerichtshof, 18 January 1983, Juristenzietung (1983) at 450, "dass in Fällen wie dem vorliegenden überhaupt die Grenzen erreicht und überschritten sind, innerhalb derer eine rechtliche Anspruchsregelung tragbar ist" as "in cases like the present the limits have definitely been reached and overstepped within which a legal claim is acceptable" (see fn 2 at 521). translating Crennan A wrongful life claim which appears to have been based on contract has been allowed in France382. A claim has been upheld under the Dutch Civil Code in the Netherlands383. The appeal to the New South Wales Court of Appeal In the instant case Spigelman CJ found the proposed duty of care should not be accepted because it did not reflect values generally or even widely held in the community, it involved a "highly contestable" notion that Alexia Harriton would have been better off not being born, the relationship between doctor and child (formerly the foetus) was mediated through the parents and the damage complained of was not "legally cognisable damage" as it involved impossible comparison between life with disability and non-existence384. He agreed with Ipp JA's analysis of the difficulties of applying the compensatory principle to the appellant's claim. Ipp JA agreed with Spigelman CJ that it is impossible to use non-existence as a comparator and found that if damages were not capable of measurement, the damage claimed will not be actionable and no duty of care will arise385. Mason P, in dissent, found the disabilities were "in one sense caused by the negligence of the [doctor]"386 and that it would be inconsistent387 to disallow recovery for a wrongful life claim given the result in Cattanach v Melchior388. He considered that compensation for a wrongful life could be allowed on the application of the ordinary principles of tort. He regarded the essence of the appellant's complaint as her "present and future suffering and the needs it creates"389. The steps in his reasoning were first to recognise that wrongful life 382 Perruche Cass. ass. plén., Nov. 17, 2000, noted in 2000 Bull. Civ. No. 9, 15. 383 See Leids Universitair Medisch Centrum v Kelly Molenaar, Hoge Raad 18 maart 2005, RvdW 2005, 42 as discussed in Hondius, "The Kelly Case – Compensation for undue damage for wrongful treatment", in Gevers, Hondius and Hubben (eds), Health Law, Human Rights and the Biomedicine Convention, (2005) 105. 384 (2004) 59 NSWLR 694 at 701 [24], 705 [54]. 385 (2004) 59 NSWLR 694 at 737 [266], 739 [280]. 386 (2004) 59 NSWLR 694 at 715 [116]. 387 (2004) 59 NSWLR 694 at 718 [136]-[137]. 388 (2003) 215 CLR 1. 389 (2004) 59 NSWLR 694 at 721 [155]. Crennan involves physical damage being the disability, which is reasonably foreseeable390, reasonably preventable391 and caused by the doctor's conduct of omitting to give advice and treatment392. It appears the treatment to which Mason P was referring was termination of the pregnancy as no other treatment was under consideration in the case. The appellant adopts the reasoning and conclusions of Mason P in the Court of Appeal. Duty of care In Sullivan v Moody in the joint judgment of five Justices, it was stated393: "Different classes of case give rise to different problems in determining the existence and nature or scope, of a duty of care. Sometimes the problems may be bound up with the harm suffered by the plaintiff, as, for example, where its direct cause is the criminal conduct of some third party. Sometimes they may arise because the defendant is the repository of a statutory power or discretion. Sometimes they may reflect the difficulty of confining the class of persons to whom a duty may be owed within reasonable limits. Sometimes they may concern the need to preserve the coherence of other legal principles, or of a statutory scheme which governs certain conduct or relationships. The relevant problem will then become the focus of attention in a judicial evaluation of the factors which tend for or against a conclusion, to be arrived at as a matter of principle." In the present appeal, particular significance attaches to the need to preserve the coherence of legal principles, as emphasised in Sullivan v Moody394. In what follows, consideration will be given to the nature of the damage alleged and to the difficulty of confining the proposed duty of care to grievously disabled persons, a suggestion made during the argument for the appellant. The conclusion will be reached that the nature of the damage alleged is not such as to be legally cognisable in the sense required to found a duty of care. That conclusion will make it unnecessary to determine the other matters referred to, but as they were fully argued, consideration will be given to them. 390 (2004) 59 NSWLR 694 at 713-714 [107]-[112]. 391 (2004) 59 NSWLR 694 at 714-716 [114]-[121]. 392 (2004) 59 NSWLR 694 at 715 [116], 716 [121]-[123]. 393 (2001) 207 CLR 562 at 579-580 [50] (footnotes omitted). 394 (2001) 207 CLR 562 at 580 [50]. Crennan It was not Dr P R Stephens's fault that Alexia Harriton was injured by the rubella infection of her mother. Once she had been affected by the rubella infection of her mother it was not possible for her to enjoy a life free from disability. The agreed facts assert that Dr P R Stephens should have treated Mrs Harriton differently, in which case rubella would have been diagnosed. However, on the agreed facts, it was not possible for Dr P R Stephens to prevent the appellant's disabilities. Dr P R Stephens would have discharged his duty by diagnosing the rubella and advising Mrs Harriton about her circumstances, enabling her to decide whether to terminate her pregnancy; he could not require or compel Mrs Harriton to have an abortion. It is important to an understanding of the right or interest which the appellant is seeking to protect, to maintain the distinction between suing the doctor for causing physical damage, being the disability395, and suing the doctor for causing a "life with disabilities", as the case was put by the appellant in this Court. The former is immediately caused by rubella, whereas the latter is said to be immediately, or materially, or effectively caused by the doctor's failure to advise the mother such that her response would have been to obtain a lawful abortion. In the Court of Appeal, Spigelman CJ was of the opinion that it is not "possible to avoid or obfuscate the fact that an action by a disabled child, as distinct from an action by the parents, involves an assertion by the child that it would be preferable if she or he had not been born"396. This raises the difficult question of whether the common law could or should recognise a right of a foetus to be aborted, or an interest of a foetus in its own termination, which is distinct from the recognised right of a foetus not to be physically injured whilst en ventre sa mère, whether by a positive act397 or by an omission398. It is an important consideration in determining whether a duty of care as alleged exists that it is only Mrs Harriton who was entitled to terminate her pregnancy lawfully in New South Wales, by reference to her physical and mental health399. 395 (2004) 59 NSWLR 694 at 713-714 [109]-[110] per Mason P. 396 (2004) 59 NSWLR 694 at 701 [24]. 397 Watt v Rama [1972] VR 353 at 360-361; Lynch v Lynch (1991) 25 NSWLR 411 at 416-417; R v King (2003) 59 NSWLR 472 at 486 [73]. See also Burton v Islington Health Authority [1993] QB 204. 398 X and Y (By Her Tutor X) v Pal (1991) 23 NSWLR 26. 399 Crimes Act 1900 (NSW), s 82; CES v Superclinics (Australia) Pty Ltd (1995) 38 NSWLR 47 at 53-54, 59-61. NSWLR 472 at 486 [73]. See also Burton v Islington Health Authority [1993] QB NSWLR 26; Lynch v Lynch (1991) 25 NSWLR 411 at 416-417; R v King (2003) 59 403 Watt v Rama [1972] VR 353 at 360-361; X and Y (By Her Tutor X) v Pal (1991) 23 402 (2004) 59 NSWLR 694 at 714 [113] per Mason P. 401 9th ed (1998) at 185. Emeh v Kensington and Chelsea and Westminster Area Health Authority [1985] also McFarlane v Tayside Health Board [2000] 2 AC 59 at 81 per Lord Steyn; and 400 Cattanach v Melchior (2003) 215 CLR 1 at 79-80 [220]-[222] per Hayne J; see foetus in not being born, which may or may not be compatible with the same of the Crennan A court is not able to infer from a mother's decision to terminate a pregnancy that her decision is in the best interests of the foetus which she is carrying. The law does not require that considerations of the mother's physical and mental health, which may render an abortion lawful, should be co-incident with the interests of her foetus. Equally, a mother with an ethical, moral or religious objection to abortion is entitled to continue her pregnancy despite risks identified by her doctor to her physical and mental health or despite being advised by her doctor that rubella may have affected the foetus she carries. In the context of wrongful birth claims, the decision of parents not to have even a lawful abortion has been respected by the law400. In commenting on wrongful birth claims, and parental decisions not to have an abortion, in Fleming, The Law of Torts401, it is stated that "it is not unreasonable for a woman to decline an abortion". Such decisions are bound up with individual freedom and autonomy. The duty of care proposed to the foetus (when born) will be mediated through the mother. The damage alleged will be contingent on the free will, free choice and autonomy of the mother. These circumstances can be expected to make it difficult for a court to assume that a possible conflict between the interests of mother and child would be "exceptional"402 and to complicate the task of a court in formulating normative standards of conduct against which breach of such a duty of care could be assessed. It is not to be doubted that a doctor has a duty to advise a mother of problems arising in her pregnancy, and that a doctor has a duty of care to a foetus which may be mediated through the mother403. However, it must be mentioned that those duties are not determinative of the specific question here, namely whether the particular damage claimed in this case by the child engages a duty of care. To superimpose a further duty of care on a doctor to a foetus (when born) to advise the mother so that she can terminate a pregnancy in the interest Crennan doctor's duty of care to the mother in respect of her interests, has the capacity to introduce conflict, even incoherence, into the body of relevant legal principle404. A further consideration is that there would be no logical distinction to be made between a duty of care upon a doctor as proposed, and a correlative duty of care upon a mother or parents who decline to have an abortion and choose to continue a pregnancy despite being informed of the risk of disability to the child. Such conduct would then be the intervening immediate cause of the damage claimed. The appellant's answer to this difficulty was that the mother's current right to make a choice and to terminate the pregnancy lawfully or not could not be cut down by recognising the right of a child to sue in respect of a life with disability. But this answer exposes rather than resolves the possible lack of coherence in principle occasioned by the appellant's claim. The risk of a parent being sued by the child in these circumstances was recognised in the United Kingdom in Curlender v Bio-Science in California Laboratories406. Further, the need to protect parents from such suits has been addressed both by the United Kingdom legislature407 and by the Californian legislature408. in McKay405 and Damage Because damage constitutes the gist of an action in negligence, a plaintiff needs to prove actual damage or loss and a court must be able to apprehend and evaluate the damage, that is the loss, deprivation or detriment caused by the alleged breach of duty. Inherent in that principle is the requirement that a plaintiff is left worse off as a result of the negligence complained about, which can be established by the comparison of a plaintiff's damage or loss caused by the negligent conduct, with the plaintiff's circumstances absent the negligent conduct. In the Court of Appeal, Spigelman CJ recognised that in cases of this kind, to find damage which gives rise to a right to compensation it must be established that non-existence is preferable to life with disabilities409. A right 404 Sullivan v Moody (2001) 207 CLR 562 at 581-582 [55]-[62]. 405 [1982] QB 1166 at 1188 per Ackner LJ. 406 165 Cal Rptr 477 (1980). 407 Congenital Disabilities (Civil Liability) Act 1976 (UK), s 1(1) excepts "the child's own mother" from such a liability. 408 Cal. Civ. Code §43.6(a): "No cause of action arises against a parent of a child based upon the claim that the child should not have been conceived or, if conceived, should not have been allowed to have been born alive." 409 (2004) 59 NSWLR 694 at 701 [24]. Crennan capable of being protected by the law of tort, to not exist (or to be aborted), must necessarily require the comparison which Spigelman CJ identified. The appellant's counsel conceded correctly that it is the usual principles of tort liability which compel the appellant to contest her own existence. A comparison between a life with disabilities and non-existence, for the purposes of proving actual damage and having a trier of fact apprehend the nature of the damage caused, is impossible. Judges in a number of cases have recognised the impossibility of the comparison and in doing so references have been made to philosophers and theologians as persons better schooled than courts in apprehending the ideas of non-being, nothingness and the afterlife410. There is no present field of human learning or discourse, including philosophy and theology, which would allow a person experiential access to non-existence, whether it is called pre-existence or afterlife. There is no practical possibility of a court (or jury) ever apprehending or evaluating, or receiving proof of, the actual loss or damage as claimed by the appellant. It cannot be determined in what sense Alexia Harriton's life with disabilities represents a loss, deprivation or detriment compared with non-existence. Physical damage such as a broken leg is within the common experience of a trier of fact who then has no difficulty apprehending the loss, deprivation or detriment claimed. With more complex physical damage, outside the common experience of a trier of fact, evidence can be led from medical experts to assist the trier of fact to apprehend the loss, deprivation or detriment by comparison with prior circumstances, which can also be the subject of evidence. The same applies with loss or deprivation which is economic. Imaginative access to non-existence, not based on experience, or on a proved sub-stratum of fact, cannot assist a court or jury in the forensic tasks necessary to determine a claim such as that of the appellant. The practical forensic difficulty is independent of arguments about the value (or sanctity) of human life and any repugnance evoked by the appellant's argument that her life with disabilities is actionable. This objection to the cause of action is in no way affected or diminished by shifts in any absolute value given to human life (if such shifts have occurred), occasioned by liberalised abortion laws or other developments in the law in respect of lawful discontinuation of medical treatment where the welfare of a suffering person is the main consideration. A duty of care cannot be stated in respect of damage which cannot be proved by persons alleging such a duty has been breached, and which cannot be apprehended by persons said to be subject to the duty, and which cannot be apprehended or evaluated by a court (or jury). 410 Edwards v Blomeley [2002] NSWSC 460 at [75]; see also McKay v Essex Area Health Authority [1982] QB 1166 at 1189; Gleitman v Cosgrove 227 A 2d 689 at Crennan It was submitted for the appellant that if the majority's rejection of a cause of action in the Court of Appeal on this basis is a legal principle, it is a flawed legal principle or a legal principle wrongly applied because the law has shown itself regularly as capable of balancing a present life of suffering against a therapeutically accelerated death as evidenced in a number of cases in the parens patriae jurisdiction411. It was next contended that the "impossible comparison" argument was either an aspect, or a corollary, of the "sanctity of life" argument, which did not preclude recovery in Cattanach v Melchior412. The cases involving discontinuation of medical treatment have been conveniently collected by Spigelman CJ in the Court of Appeal413. Analogy to decisions in the parens patriae jurisdiction is not apt, chiefly because the wardship cases do not require a forensic establishment of damage by reference to non-existence. The comparisons generally called for (in a non-tortious context) are between continuing medical treatment prolonging life and discontinuing medical treatment which may hasten death, always determined by reference to the best interests of the child or person unable to decide for themselves. It is possible for a court to receive evidence allowing it to undertake a balancing exercise in respect of those two possible courses of action414 before making a decision. As accepted in In re J (A Minor) (Wardship: Medical Treatment)415, such comparisons involve matters of degree and lack the absolute quality of a comparison between a life with disability (or suffering) and death. The analogy between this case and the wardship cases is also inapt because of the clear distinction between death accelerated by non-intervention or the withholding of medical treatment and death by the intervention of lawful abortion, a difference recognised in In re J416. 411 In re J (A Minor) (Wardship: Medical Treatment) [1991] Fam 33; In re T (A Minor) (Wardship: Medical Treatment) [1997] 1 WLR 242; [1997] 1 All ER 906. 412 (2003) 215 CLR 1. 413 (2004) 59 NSWLR 694 at 704 [45] citing Airedale NHS Trust v Bland [1993] AC 789; In re A (Children) (Conjoined Twins: Surgical Separation) [2001] Fam 147; Re B (adult: refusal of medical treatment) [2002] 2 All ER 449; Re BWV; Ex parte Gardner (2003) 7 VR 487. 414 In re J (A Minor) (Wardship: Medical Treatment) [1991] Fam 33; In re T (A Minor) (Wardship: Medical Treatment) [1997] 1 WLR 242; [1997] 1 All ER 906. 415 [1991] Fam 33 at 44 per Lord Donaldson of Lymington MR. 416 [1991] Fam 33 at 46 per Lord Donaldson of Lymington MR. 423 Sullivan v Moody (2001) 207 CLR 562 at 579 [49], 580 [53]. per Kirby J, 108-109 [301] per Callinan J. Crennan These considerations highlight the differences between claims for wrongful birth and wrongful life. These differences show the latter cannot be considered incremental claims in relation to the former. Damage was not in issue in Cattanach v Melchior417. The Court there was not considering whether the damage claimed was capable of being evaluated by a court. Likewise in Watt v Rama418 there was evidence of damage capable of being evaluated by the Court and the question was whether established principle could encompass that damage. In the present case, the damage claimed cannot be the subject of evidence or forensic analysis. This highlights the need to distinguish between considerations going to the existence of a duty of care and considerations going to breach, a distinction referred to by Gummow J in Vairy v Wyong Shire Council419. The Court in Cattanach v Melchior420 was considering whether the law would require a doctor defendant to bear certain costs. That question was resolved by reference to "general principles, based upon legal values"421, and legal policy considerations, encompassing the community, coherence and fairness422, a common law technique for dealing with novel claims423. Considering the question here by reference to that technique exposes many formidable obstacles to recognition of the appellant's claim. Another problem is the difficulty of assessing damages, in respect of the damage, a topic to be discussed later in these reasons. Not every claim for damage is actionable. The principles of negligence are designed to set boundaries in respect of liability. The analytical tools therefor, such as duty of care, causation, breach of duty, foreseeability and remoteness, all depend for their employment on damage capable of being apprehended and evaluated. the corporate welfare of 417 (2003) 215 CLR 1. 419 (2005) 80 ALJR 1 at 17-18 [70]-[73]; 221 ALR 711 at 730-731. 420 (2003) 215 CLR 1. 421 (2003) 215 CLR 1 at 8 [2] per Gleeson CJ. 422 (2003) 215 CLR 1 at 32-35 [70]-[76] per McHugh and Gummow JJ, 52-53 [136]- Crennan The value of life There is nothing in the majority's rejection of the "blessing" argument in Cattanach v Melchior424 or in their disinclination to bar a wrongful birth claim because of the law's recognition of broad underlying values of the importance of life425, which prevents the additional observation in this case that it is odious and repugnant to devalue the life of a disabled person by suggesting that such a person would have been better off not to have been born into a life with disabilities. In the eyes of the common law of Australia all human beings are valuable in, and to, our community, irrespective of any disability or perceived imperfection. The premises upon which cases are conducted in the parens patriae jurisdiction, which have already been mentioned, do not contradict that proposition. While Alexia Harriton's disabilities are described in the agreed statement of facts, her disabilities are only one dimension of her humanity. It involves no denial of the particular pain and suffering of those with disabilities to note that while alive, between birth and death, human beings share biological needs, social needs and intellectual needs and every human life, within its circumstances and limitations, is characterised by an enigmatic and ever- changing mixture of pain and pleasure related to such needs. The Court knows very little about Alexia Harriton but it is possible for the Court to infer that Alexia Harriton is no different in this respect from fellow human beings, despite the fact that her grave disabilities include mental retardation. A seriously disabled person can find life rewarding426 and it was not contended to the contrary on behalf of the appellant. It was not contended as a fact that Alexia Harriton cannot experience pleasure427. The Court was informed Alexia Harriton commanded the devotion of her parents. Arguments giving primacy to the value of Alexia Harriton's life, which are additional to and independent of the arguments based on the forensic 424 (2003) 215 CLR 1 at 36 [79] per McHugh and Gummow JJ, 54-60 [141]-[153] per Kirby J; see also at 72-74 [195]-[198] per Hayne J. 425 (2003) 215 CLR 1 at 35-36 [77]-[78] per McHugh and Gummow JJ, 55-56 [142]- [145] per Kirby J, 108-109 [301] per Callinan J. 426 In re J (A Minor) (Wardship: Medical Treatment) [1991] Fam 33 at 46-47 per Lord Donaldson of Lymington MR. 427 Portsmouth Hospitals NHS Trust v Wyatt [2005] 1 WLR 3995 at 4001 [26] and 4011 [46]; see also Airedale NHS Trust v Bland [1993] AC 789 and In re a Ward of Court (withholding medical treatment) (No 1) [1996] 2 IR 73. Crennan impossibility of proving and apprehending the nature of the damage claimed, highlight the lack of certainty about the class of persons to whom the proposed duty is owed. Is it only owed to persons whose disability is so severe they could be said to constitute a group for whom life is not worth living? Other categories of established negligence, in which a duty of care exists, do not discriminate between those damaged by a breach of the duty on the basis of the severity or otherwise of the damage. A further consideration is that to recognise a cause of action at the suit of a person living a life with disabilities would occasion incompatibility with other areas of the law. Such incompatibility is pervasive but can be illustrated by two examples. Statutes advancing equality of treatment in our legal system prohibit differential treatment of the disabled, which may have as its wellspring, or be otherwise connected with, eugenic anxieties428. As was noted in the judgment of McHugh and Gummow JJ in Cattanach v Melchior429, differential treatment of the worth of the lives of those with ill health or disabilities has been a mark of the societies and political regimes we least admire. To allow a disabled person to claim his or her own existence as actionable damage, is not only inconsistent with statutes prohibiting differential treatment of the disabled, but it is also incompatible with the law's sanction of those who wrongfully take a life. No person guilty of manslaughter or murder is entitled to defend the accusation on the basis that the victim would have been better off, in any event, if he or she had never been born. All human lives are valued equally by the law when imposing sentences on those convicted of wrongfully depriving another of life. The compensatory principle The fundamental principle governing the assessment of compensatory damages is well settled. As stated in Husher v Husher430: "A person who is physically injured by the negligence of another may suffer damage in a number of ways. As has long been established, the damages to be awarded to the victim are 'that sum of money which will 428 See, for example, the Anti-Discrimination Act 1977 (NSW); the Anti-Discrimination Act 1998 (Tas); the Equal Opportunity Act 1995 (Vic); and the Discrimination Act 1991 (ACT). the Disability Discrimination Act 1992 (Cth); 429 (2003) 215 CLR 1 at 35-36 [78]. 430 (1999) 197 CLR 138 at 142-143 [6] per Gleeson CJ, Gummow, Kirby and Crennan put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation'." Providing compensation if liability is established is the main function of tort law; compensation is "[t]he one principle that is absolutely firm, and which must control all else"431; if the principle cannot be applied the damage claimed cannot be actionable. Many examples demonstrating the principle were referred to in the Court of Appeal432. Whilst Mason P did not consider that the impossibility of a comparison between life with disability and non-existence should bar the claim, he recognised the damages issues were "quite profound"433. It can be accepted that mere difficulty in the calculation of damages is not a bar to recognising a cause of action, especially when damages conventionally awarded in personal injuries can assist434. However, it is not possible on the facts of this case to apply the compensatory principle. Alexia Harriton's condition before the alleged breach of duty of care by Dr P R Stephens was that she was a foetus affected by rubella. The comparison which is called for on the agreed facts is a comparison between her life with disabilities and the state of non-existence in which she would have been, absent the doctor's alleged carelessness in failing to advise her mother, which advice would have led her mother to obtain a lawful abortion. It is not that the comparison is difficult or problematic. It is impossible, for the reasons already explained. To posit that the necessary comparison can be achieved by comparing Alexia Harriton's "notional life without disabilities" with her actual "life with disabilities" (the comparator used in Zeitsov v Katz435 and suggested by the appellant in the Waller cases) depends on a legal fiction. So too does a comparison of her "life with disabilities" with the life of "someone otherwise comparable with her in all respects except for her suffering and her needs", the 431 Skelton v Collins (1966) 115 CLR 94 at 128 per Windeyer J. 432 (2004) 59 NSWLR 694 at 698-699 [3]-[8] per Spigelman CJ, 728-730 [215]-[230] per Ipp JA. 433 (2004) 59 NSWLR 694 at 723 [169]; see also Edwards v Blomeley [2002] NSWSC 460 at [33]-[43] per Studdert J. 434 Rees v Darlington Memorial Hospital NHS Trust [2003] QB 20; see also Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44. Crennan "fictional healthy person"436. In the United States, courts of the three states which have recognised recovery of special damages for a child/plaintiff's disabilities (California, New Jersey and Washington) have, on occasion, frankly acknowledged that the inherent problems arising out of the impossibility of comparing a life with disabilities with non-existence and the related problem of assessing damages, have been put to one side for reasons of social or economic policy. For example, in Curlender437, the only case in the United States in which general damages were awarded, the Court said438: "The reality of the 'wrongful-life' concept is that such plaintiff both exists and suffers, due to the negligence of others. It is neither necessary nor just to retreat into meditation on the mysteries of life. We need not be concerned with the fact that had defendants not been negligent, the plaintiff might not have come into existence at all." In Turpin v Sortini439, overruling the result in Curlender440 in disallowing the claim for general damages, but allowing the claim for special damages, the Court stated that it would be illogical and anomalous to permit only parents, not the child, to recover such costs. It can be conceded this would be a forceful argument if the child's damage were the same. It is not; it is profoundly different, as already explained. After Turpin441, in Procanik v Cillo (allowing special damages) the Court said442: "Our decision to allow the recovery of extraordinary medical expenses is not premised on the concept that non-life is preferable to an impaired life, but is predicated on the needs of the living. We seek only to respond to the call of the living for help in bearing the burden of their affliction." 436 Adopted also by the appellant in the Waller cases, in the alternative. 437 165 Cal Rptr 477 (1980). 438 165 Cal Rptr 477 at 488 (1980) per Jefferson PJ, with whom Lillie and 439 182 Cal Rptr 337 (1982). 440 165 Cal Rptr 477 (1980). 441 182 Cal Rptr 337 (1982). 442 478 A 2d 755 at 763 (1984) per Pollock J. 444 Scott v Davis (2000) 204 CLR 333 at 421-422 [265] 445 (2004) 59 NSWLR 694 at 735-748 [254]-[350]. 446 [1990] 2 AC 605 at 617-618. Crennan The common law is hostile to the creation of new legal fictions443 and the use of legal fictions concealing unexpressed considerations of social policy has been deprecated444. Employment of either of the legal fictions proposed would have the effect of excepting the appellant from the need to come within well- settled and well-understood principles of general application to the tort of negligence. Also, the heads of damages sought to be recovered reveal the conceptual difficulty of assessing damages in respect of the appellant's claim. The appellant relies on conventional awards of damages in personal injury. However, there cannot have been any damage to the appellant's earning capacity and none was claimed. In respect of the appellant's special pain and disabilities caused by rubella, it was suggested that a comparison could be made in the light of the ordinary range of usual experience of pain and disabilities. As to medical and care needs, on the actual comparator, nothing is recoverable. A life without special pain and disabilities was never possible for the appellant, even before any failures by Dr P R Stephens. Approaching the task of assessing general and special damages, as suggested, has the effect of making Dr P R Stephens liable for the disabilities, which he did not cause. The manifold difficulties in assessing damages in respect of the claim have been discussed conveniently and comprehensively by Ipp JA445. The analytical tool for measuring damages, the compensatory principle, depends for its utility and execution on proof of the actual damage suffered. Corrective justice Finally, the appellant's submissions included a submission that "corrective justice" or "practical justice" would permit the appellant to recover despite the inherent difficulties her claim posed in the light of established principles. The argument ran that the appellant is suffering, the suffering is causally linked to Dr P R Stephens's conduct and the suffering will go uncompensated if the cause of action is not recognised. No-one would deny that Alexia Harriton's circumstances are tragic. She is entitled to look for support to both the state and her devoted parents. In confirming the rejection in Australia of the three-stage approach in Caparo Industries Plc v Dickman446, which had the effect of adding questions of 443 Scott v Davis (2000) 204 CLR 333 at 375-376 [128] Crennan what was "fair, just and reasonable" to questions of duty of care and foreseeability of damage, the Court said in Sullivan v Moody447: "The question as to what is fair, and just and reasonable is capable of being misunderstood as an invitation to formulate policy rather than to search for principle. The concept of policy, in this context, is often ill-defined. There are policies at work in the law which can be identified and applied to novel problems, but the law of tort develops by reference to principles, which must be capable of general application, not discretionary decision-making in individual cases." In Prosser and Keeton, On Torts448, it is stated: "It is sometimes said that compensation for losses is the primary function of tort law and the primary factor influencing its development. It is perhaps more accurate to describe the primary function as one of determining when compensation is to be required. Courts leave a loss where it is unless they find good reason to shift it. A recognized need for compensation is, however, a powerful factor influencing tort law. Even though, like other factors, it is not alone decisive, it nevertheless lends weight and cogency to an argument for liability that is supported also by an array of other factors." Aristotelian notions of "corrective justice"449, requiring somebody who has harmed another without justification to indemnify that other, and "distributive justice"450, requiring calculation of benefits and losses and burdens in society, were referred to by Lord Steyn in McFarlane v Tayside Health Board451, for the purpose of explicating the dynamic interrelationship between differing values, which values need to be considered when faced with a novel claim in negligence. The Aristotelian backdrop to the notions of "corrective justice" and "distributive justice" was a community whose common good included laws, both reflecting the community's common values and enabling individual members to achieve reasonable objectives452. However, there remains a problem in Aristotle's 447 (2001) 207 CLR 562 at 579 [49] per Gleeson CJ, Gaudron, McHugh, Hayne and 448 5th ed (1984) at 20 (footnote omitted). 449 Nicomachean Ethics V,2:1131a1; 3:1131b25; 4:1132b25. 450 Nicomachean Ethics V,3:1131b28; 3:1132b24, 32. 451 [2000] 2 AC 59 at 82. 452 Nicomachean Ethics V,1:1129a27ff; 1129b15. Crennan analysis, relevant to this submission. In emphasising "corrective justice", even as added to by his consideration of "distributive justice", Aristotle left unexplored the dependence of "correction" on the prior establishment of principles. As Finnis453 puts it, "'[c]orrection' and 'restitution' are notions parasitic on some prior determination of what is to count as a crime, a tort, a binding agreement, etc". The values of fairness, coherence, and the corporate welfare of the community or community expectations as referred to in Cattanach v Melchior454, are not considered singly, in isolation from each other or from relevant matters, particularly the doctrines and well-established principles determining what constitutes negligence. Putting aside doubt as to whether a need for "corrective justice" arises when a person is affected by rubella, for which no-one is responsible, a need for "corrective justice" alone could never be determinative of a novel claim in negligence. Moreover, to the extent that it may be a factor to be taken into account when considering a novel claim, a need for "corrective justice" is not a persuasive factor here. The claim here is to extend a boundary in respect of liability for compensation when the liability is precluded by "an array of other factors"455. Conclusion In the present case the damage claimed is not amenable to being determined by a court by the application of legal method. A duty of care cannot be clearly stated in circumstances where the appellant can never prove (and the trier of fact can never apprehend) the actual damage claimed, the essential ingredient in the tort of negligence. The appellant cannot come within the compensatory principle for measuring damages without some awkward, unconvincing and unworkable legal fiction. To except the appellant from complying with well-established and well-known principles, integral to the body of doctrine concerning negligence applicable to all plaintiffs and defendants in actions in all other categories of negligence, would occasion serious incoherence in that body of doctrine and would ignore the limitations of legal method in respect of the appellant's claim. 453 Finnis, Natural Law and Natural Rights, (1980) at 178-179. 454 (2003) 215 CLR 1 at 29 [60], 30-31 [65], 32-33 [70], 33-35 [73]-[77] per McHugh and Gummow JJ, 55-56 [142]-[145] per Kirby J, 81-89 [224]-[242] per Hayne J, 108-109 [301] per Callinan J. 455 Prosser and Keeton, On Torts, 5th ed (1984) at 20. Crennan The other considerations, the autonomy of a mother in respect of any decision to terminate or continue a pregnancy, the problematic nature of the right or interest being asserted, the uncertainty about the class of persons to whom the proposed duty would be owed and the incompatibility of the cause of action with values expressed generally in the common law and statute all support the conclusion that the appellant does not have a cause of action against the respondent on the agreed facts. For these reasons Cattanach v Melchior456 represents the present boundary drawn in Australia by the common law (subject to retreat of the legislatures in New South Wales457, South Australia458 and Queensland459) in respect of claims of wrongful birth and wrongful life. Life with disabilities, like life, is not actionable. The decision of the majority of the Court of Appeal should be upheld. The appeal should be dismissed with costs. 456 (2003) 215 CLR 1. 457 Civil Liability Act 2002 (NSW), ss 70 and 71. 458 Civil Liability Act 1936 (SA), s 67. 459 Civil Liability Act 2003 (Q), ss 49A(2) and 49B(2). |
HIGH COURT OF AUSTRALIA Matter No S110/2019 SANKO LORDIANTO & ANOR APPELLANTS AND COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE RESPONDENT Matter No P17/2019 GANESH KALIMUTHU & ANOR APPELLANTS AND THE COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE RESPONDENT Lordianto v Commissioner of the Australian Federal Police Kalimuthu v Commissioner of the Australian Federal Police [2019] HCA 39 Date of Hearing: 7 & 8 August 2019 Date of Judgment: 13 November 2019 S110/2019 & P17/2019 ORDER Matter No S110/2019 Appeal dismissed with costs. Matter No P17/2019 Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales (S110/2019) and the Supreme Court of Western Australia (P17/2019) Representation B W Walker SC with T P Mitchell for the appellants in S110/2019 (instructed by Lincolns Lawyers & Consultants) H K Dhanji SC with E W L Greaves for the appellants in P17/2019 (instructed by Putt Legal Migration) S P Donaghue QC, Solicitor-General of the Commonwealth, with L T Livingston and C Ernst for the respondent in both matters (instructed by Criminal Assets Litigation – Australian Federal Police) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Lordianto v Commissioner of the Australian Federal Police Kalimuthu v Commissioner of the Australian Federal Police Criminal practice – Forfeiture of tainted property – Where appellants remitted money to Australia using money remitters or money changers in foreign country – Where large number of cash deposits, usually each less than $10,000, made into appellants' bank accounts in Australia in process known as "cuckoo smurfing" – Where deposits proceeds or instrument of structuring offence under s 142 of Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) – Where Commissioner of Australian Federal Police successfully applied for restraining orders over appellants' bank accounts under s 19 of Proceeds of Crime Act 2002 (Cth) ("POCA") – Where appellants applied under ss 29 and 31 of POCA to have property excluded from orders – Whether property "ceased" to be proceeds or instrument of offence under s 330(4) of POCA – Whether property acquired by third party for sufficient consideration without third party knowing, and in circumstances that would not arouse reasonable suspicion, that property proceeds or instrument under s 330(4)(a) of POCA. Words and phrases – "acquisition of property", "cuckoo smurfing", "for sufficient consideration", "in circumstances that would not have aroused a reasonable suspicion", "instrument of a serious offence", "money changers", "money laundering", "money remitters", "proceeds of an indictable offence", "proceeds of crime", "reporting threshold", "structuring offence", "third party", "volunteer". Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), Proceeds of Crime Act 2002 (Cth), ss 19, 29, 31, 317, 329, 330, 338. KIEFEL CJ, BELL, KEANE AND GORDON JJ. In both appeals, which were heard together, the appellants had remitted large sums of money to Australia using remitters or money changers in a foreign country. The appellants either deposited foreign currency in a foreign country into accounts nominated by the remitters or gave cash to the remitters. A large number of cash deposits, usually each less than $10,0001, were then made into the appellants' nominated bank accounts in Australia using a process known as "cuckoo smurfing", a form of money laundering, which was explained by the primary judge in the Kalimuthu appeal in these terms: "[I]t relies on identifying a person offshore who wishes to transfer funds to a bank account in Australia using a money remitter. The remitter withholds amounts corresponding to the amount of money he has been told is to be laundered in Australia. The customer's bank account details are provided to people in Australia. A team of depositors in Australia deposits cash into the bank account, generally at a series of bank branches and below the threshold for reporting transactions involving physical currency. The account holder sees deposits that match the amounts they intended to remit. Because the amounts of each deposit are below the threshold, there is generally no record that could enable regulatory agencies to intervene." In both cases, the Commissioner of the Australian Federal Police ("the AFP") successfully applied for orders under s 19 of the Proceeds of Crime Act 2002 (Cth) ("the POCA") restraining the disposal of, or any dealing with, specific bank accounts in the name of one or more of the appellants, including all funds standing to the credit of each account. Each restraining order was made on the basis that there were reasonable grounds to suspect that the "property" was the proceeds of an indictable offence, or an instrument of a serious offence, or both. The alleged indictable or serious offence, relevantly, was a structuring offence, as a result of the cuckoo smurfing, contrary to s 142(1) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) ("the AML/CTF Act")2. The offence is aimed at those who try to avoid 1 All references to amounts in dollars in these reasons are references to Australian dollars. 2 The offence under s 142 of the AML/CTF Act is both an "indictable offence" and a "serious offence" under s 19(1)(d) of the POCA. It is an "indictable offence" Footnote continues Bell Gordon "threshold transactions" of $10,000 or more, so that they are not reported to the Australian Transaction Reports and Analysis Centre3. It is committed if two conditions are met. First, a person is, or causes another person to become, a party to two or more non-reportable transactions (that is, transactions under $10,0004). Second, it would be reasonable to conclude that the person conducted the transactions in the manner or form in which they did for the sole or dominant purpose of ensuring, or attempting to ensure, that the money or property was transferred to a reportable "threshold transaction". in such a way so as not to give rise Subsequent to the restraining orders being made, the appellants applied under ss 29 and 31 of the POCA to have their interest in the property the subject of the restraining orders excluded from those orders. The property sought to be excluded was the appellants' choses in action in respect of their various bank accounts. Those choses in action entitled them "to require [the relevant bank] to pay to them all or part of whatever amount was credited to the accounts"5. There was no dispute that these choses in action were "property" for the purposes of the POCA. The appellants in both cases also conceded that that "property" was proceeds or an instrument of an offence. The appellants' property therefore could not be excluded from the relevant restraining order unless the appellants could establish, on the balance of within the definition of that term in s 338 of the POCA, due to the fact that it is punishable by five years' imprisonment: see Crimes Act 1914 (Cth), s 4G. It is a "serious offence" under para (ec)(i) of the definition of that phrase in s 338 of the POCA, which specifically refers to this offence. 3 A "reporting entity" must report such transactions within ten business days of the transaction being made: see AML/CTF Act, s 5 definitions of "reporting entity" and "designated service", ss 6, 43. 4 AML/CTF Act, s 5 definitions of "non-reportable transaction" and "threshold transaction". 5 Commissioner of the Australian Federal Police v Lordianto (2017) 324 FLR 237 at 252 [78]. See, eg, Joachimson v Swiss Bank Corporation [1921] 3 KB 110 at 127; Russell v Scott (1936) 55 CLR 440 at 450-451; Croton v The Queen (1967) 117 CLR 326 at 330; Parsons v The Queen (1999) 195 CLR 619 at 627 [17]; Foskett v McKeown [2001] 1 AC 102 at 127-128. Bell Gordon probabilities6, that it had ceased to be proceeds, or an instrument, of an offence within one of the limited circumstances identified in s 330(4) of the POCA. Relevantly, s 330(4)(a) required the appellants to establish that the property had been: "acquired by a third party for sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence or an instrument of an offence (as the case requires)". In Lordianto, the primary judge held, and the Court of Appeal of the Supreme Court of New South Wales unanimously agreed, that the appellants had failed to discharge the burden of showing that s 330(4)(a) applied7. In Kalimuthu, the primary judge held that the appellants had discharged the burden of showing that s 330(4)(a) applied8, but the Court of Appeal of the Supreme Court of Western Australia unanimously allowed the AFP's appeal9. Leave to appeal to this Court was granted in both appeals, in part, because of the differences in, and doubts expressed about, the construction and application of s 330(4)(a) in the judgments below. As these reasons will show, the issues in these appeals require consideration of four issues affecting the construction and application of s 330(4)(a) – what is the "property" restrained by the order which a person seeks to have excluded from that order; how is the reference to "a third party" to be understood; did the applicant for an exclusion order acquire the property "for sufficient consideration"; and was the property acquired in circumstances that would not arouse a "reasonable suspicion" that the property was proceeds of an offence or an instrument of an offence. As these reasons will also show, POCA, s 317. 7 Commissioner of the Australian Federal Police v Lordianto (2017) 324 FLR 237 at 260 [127]; Lordianto v Commissioner of the Australian Federal Police (2018) 337 FLR 17 at 53 [165]-[166]. 8 Commissioner of the Australian Federal Police v Kalimuthu [No 3] (2017) 338 FLR 241 at 261 [139]. 9 Commissioner of the Australian Federal Police v Kalimuthu [No 2] (2018) 340 FLR 1 at 70 [318], 106 [507]. Bell Gordon none of these issues can be considered in isolation. Section 330(4)(a) must be construed and applied as a whole and in light of the operation of the POCA as a whole. Proceeds of Crime Act The POCA is intended to deprive persons of the proceeds of offences and the instruments of offences, and to undermine the profitability of criminal enterprises10. The POCA achieves these objects, among others, through a confiscation scheme11 which provides for orders restraining the disposal of, or otherwise dealing with, particular property where there are reasonable grounds to suspect that the property is, among other things, the proceeds of an indictable offence or an instrument of a serious offence12. Each of the italicised words is defined broadly in the POCA. Relevantly, "property" is defined to mean "real or personal property of every description, whether situated in Australia or elsewhere and whether tangible or intangible, and includes an interest in any such real or personal property"13. "[I]nterest", in relation to property or a thing, is defined to mean14: a legal or equitable estate or interest in the property or thing; or a right, power or privilege in connection with the property or thing; 10 POCA, s 5(a), (da). See also Commissioner of the Australian Federal Police v Hart (2018) 262 CLR 76 at 82 [2], 89 [32]. 11 As part of the confiscation scheme, a court may make a forfeiture order where a restraining order has been in place for at least six months and other criteria are satisfied: POCA, Ch 2, Pt 2-2. 12 POCA, s 19. "[S]erious offence" is defined to mean, among others, an indictable offence punishable by imprisonment for three or more years and of a particular type: POCA, s 338 definition of "serious offence". 13 POCA, s 338 definition of "property". 14 POCA, s 338 definition of "interest". Bell Gordon whether present or future and whether vested or contingent." By s 329(1), property is "proceeds" of an offence if: it is wholly derived[15] or realised, whether directly or indirectly, from the commission of the offence; or it is partly derived or realised, whether directly or indirectly, from the commission of the offence; whether the property is situated within or outside Australia." By s 329(2), property is an "instrument" of an offence if: the property is used in, or in connection with, the commission of an offence; or the property is intended to be used in, or in connection with, the commission of an offence; whether the property is situated within or outside Australia." Furthermore, property can be proceeds of an offence or an instrument of an offence even if no person has been convicted of an offence16. Section 330 extends the circumstances in which property "becomes" and "remains" the proceeds or an instrument of an offence17. It also narrows the circumstances in which property "ceases" to be the proceeds or an instrument of an offence18. It relevantly provides: 15 There is an inclusive definition of "derived" in s 336 of the POCA. It has no application in these cases. 16 POCA, s 329(3). 17 POCA, s 330(1)-(3), (5)-(6). 18 POCA, s 330(4). Bell Gordon "(1) Property becomes proceeds of an offence if it is: (a) wholly or partly derived or realised from a disposal or other dealing with proceeds of the offence; or (b) wholly or partly acquired using proceeds of the offence; including because of a previous application of this section. Property becomes an instrument of an offence if it is: (a) wholly or partly derived or realised from the disposal or other dealing with an instrument of the offence; or (b) wholly or partly acquired using an instrument of the offence; including because of a previous application of this section. Property remains proceeds of an offence or an instrument of an offence even if: it is credited to an account[19]; or it is disposed of or otherwise dealt with. Property only ceases to be proceeds of an offence or an instrument of an offence: if it is acquired by a third party for sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence or an instrument of an offence (as the case requires) ..." (emphasis added) important these provisions. First, the provisions speak of "dealing" with proceeds or an instrument of an offence. "[D]eal" is defined as "dealing with a person's property"20, including: to emphasise some aspects of 19 See POCA, s 338 definition of "account". 20 POCA, s 338 definition of "deal". Bell Gordon if a debt is owed to that person – making a payment to any person in reduction of the amount of the debt; and removing the property from Australia; and receiving or making a gift of the property ..." Second, consistent with the stated objects of the POCA, the text of s 330(1), (2) and (3) intends to capture within the Act's operation a broad range of circumstances in which property might be disposed of or otherwise dealt with, in order to ensure that the property is and remains proceeds of an offence or an instrument of an offence. Indeed, s 330(3) further extends the operation of the Act by providing that property remains proceeds of an offence or an instrument of an offence even if it is credited to an account or it is disposed of or otherwise dealt with. Third, whether specific property has been wholly or partly derived or realised from the disposal or other dealing with proceeds, or an instrument, of an offence necessarily "turns on considerations of substance and economic reality which can be expected to vary in different factual settings"21. And the factual setting that may need to be considered includes a gift and any other dealing with the property. Thus, there can be no "detailed exposition in the abstract"22. It is in that context that s 31 of the POCA provides that a person who claims an interest in property covered by a restraining order may apply for an exclusion order under s 2923. The court to which an application for a restraining order is made must, in limited circumstances, exclude a specified interest in property from the restraining order, either at the time the restraining order is made, or at a later time24. And the applicant for the exclusion order bears the onus of proving, on the balance of probabilities, the matters necessary to establish the grounds for an exclusion order25. 21 Hart (2018) 262 CLR 76 at 86 [16]; see also at 100-101 [71], 107 [97]. 22 Hart (2018) 262 CLR 76 at 86 [16]. 23 POCA, s 31(1). 24 POCA, s 29(1). 25 POCA, ss 29(2)(d), 317. Bell Gordon In both appeals, the appellants applied, relevantly, for an order under s 29(2)(d) seeking to exclude a specified interest in property from a restraining order on the basis that the interest had ceased to be proceeds, or an instrument, of an offence. A note26 to s 29(2) records that "[o]ne of the circumstances in which property ceases to be proceeds of an offence ... involves acquisition of the property by an innocent third party for sufficient consideration: see paragraph 330(4)(a)". "[S]ufficient consideration" is defined as follows: "an acquisition or disposal of property is for sufficient consideration if it is for a consideration that is sufficient and that reflects the value of the property, having regard solely to commercial considerations"27. In both cases, the appellants sought to establish that they had satisfied s 330(4)(a). Before addressing the proper construction of s 330(4)(a), it is necessary to say something about both the proceedings and the facts that give rise to the present appeals. It is also desirable to spell out, in some detail, how the judges below identified and dealt with the issues arising in relation to the construction and application of s 330(4)(a). Lordianto The application for exclusion In June 2016, the AFP successfully applied in the Supreme Court of New South Wales under s 19 of the POCA for a restraining order in relation to "[f]unds standing to the credit" of specific bank accounts in the name of one or more of Mr Sanko Lordianto and Ms Indriana Koernia. The total amount restrained was just under $6 million. Mr Lordianto and Ms Koernia applied under s 29 of the POCA to exclude their interest in the funds from the restraining order on the basis that, by operation of s 330(4)(a), their interest ceased to be proceeds or an instrument of an offence. The exclusion application was made in a manner referable to s 330(4)(a) and set out the circumstances in which Mr Lordianto and Ms Koernia stated that the funds came to be in the bank accounts the subject of the restraining order. Ms Koernia, and then Mr Lordianto, were each examined pursuant to 26 See Acts Interpretation Act 1901 (Cth), s 13(1). 27 POCA, s 338 definition of "sufficient consideration". Bell Gordon s 180 of the POCA. The AFP then filed a notice setting out the grounds on which the exclusion application was to be contested. The notice relevantly put in issue the whole of s 330(4)(a). The exclusion application was heard by Simpson J. Each of Mr Lordianto and Ms Koernia made an affidavit and gave oral evidence. As Simpson J recorded, much of the evidence was not in dispute. It may be summarised as follows. Facts Mr Lordianto and Ms Koernia are Indonesian citizens and are husband and wife. Both have been granted permanent residency in Australia. In order for them to maintain their entitlement to Australian permanent residency, and to secure their future in Australia, they arranged to transfer large sums of money to Australia. Ms Koernia had the task of managing this aspect of their financial affairs. Five Commonwealth Bank of Australia ("the CBA") bank accounts were involved: a Cash Investment Account and a Standard Term Deposit Account in the joint names of Mr Lordianto and Ms Koernia and a second Cash Investment Account and two further Standard Term Deposit Accounts in the name of Ms Koernia ("the CBA Accounts"). Between 22 October 2013 and 5 August 2015, Ms Koernia arranged for $4.5 million to be transferred from Indonesia to the Cash Investment Accounts using the services of "money changers" or "money remitters" in Indonesia. The rate was better than that offered by banks. On the instructions of the remitters, Ms Koernia separated large sums of Indonesian rupiah into smaller amounts and deposited them in a series of separate transactions into a number of different bank accounts in Indonesia, including into accounts of persons who were not the remitters and whom she did not know. There were multiple transactions on a single day. On one occasion, on 5 June 2015, Ms Koernia made two separate transfers, each under 500 million Indonesian rupiah, into one account and then three additional transfers, again each under 500 million Indonesian rupiah, into a different account – all within a little over half an hour. Ms Koernia gave evidence that at no stage did she obtain any written receipts for these transfers. The $4.5 million was deposited into the Cash Investment Accounts through cuckoo smurfing. In the period from 22 October 2013 to 5 August 2015, $2,786,062 was deposited by 390 cash deposits of less than $10,000 at various bank branches across New South Wales, Queensland, Victoria, South Australia Bell Gordon and Western Australia. Multiple deposits were made on the one day or over a short period of time. For example, on one day, no fewer than 35 cash deposits, all in amounts less than the reporting threshold of $10,000, were made into one of the Cash Investment Accounts at branches in New South Wales and Victoria. Between 23 and 31 October 2013, 77 cash deposits under $10,000 were made into one of the Cash Investment Accounts in various branches across New South Wales and in other States. The remainder of the money was deposited into the Cash Investment Accounts in various amounts over $10,000. For example, on 24 October 2013, a cash deposit of $80,000 was made in New South Wales; on 29 November 2013, two cash cheques in the sum of $100,000 and $300,000 respectively were deposited in Queensland; and on 2 June 2015, $104,800 was deposited at a branch in Western Australia. Ms Koernia did not use internet banking. Instead, Ms Koernia telephoned her contact in the relevant branch of the CBA to ensure that funds had been deposited. She tallied up the individual deposits to ensure the total sum corresponded to the sum of her deposits in Indonesia. She also received paper copies of her bank statements, which disclosed the deposits, the branches at which they had been made, and the fact that they were cash deposits. From the information given to her by the CBA representatives and from the bank statements, Ms Koernia was aware that numerous cash deposits in small amounts were being made into the Cash Investment Accounts. In particular, Ms Koernia was aware that almost 400 cash deposits of amounts under $10,000 were made. Ms Koernia said that she did not make any inquiry of the money remitters in Indonesia or of the CBA as to why deposits were being made in that form or in those amounts. On 25 February 2015, Ms Koernia deposited, by cheque, $1,500,000 into each of two of the Standard Term Deposit Accounts, and on 16 July 2015 she transferred $1,500,000 from one of the Cash Investment Accounts into one of the Standard Term Deposit Accounts. It was the AFP's contention that these funds were taken from the Cash Investment Accounts and were, accordingly, the proceeds of the structuring offence, contrary to s 142 of the AML/CTF Act. Both Mr Lordianto and Ms Koernia accepted that Ms Koernia kept Mr Lordianto informed of the manner in which the money was paid to the Indonesian money remitters and of the various deposits into the CBA Accounts. First instance – Simpson J The exclusion application filed by Mr Lordianto and Ms Koernia was dismissed by Simpson J of the Supreme Court of New South Wales. Her Honour held that there had been no acquisition of property by Mr Lordianto and Bell Gordon Ms Koernia because "[t]he property ... remained what it had always been – a chose in action; a contractual right", the value of which rose and fell with deposits and withdrawals. Her Honour held that "[t]he deposits represented an increment in the value of the property, but did not change its nature, and did not constitute an acquisition of property". However, if the deposits did involve an acquisition of property, her Honour found that neither Mr Lordianto nor Ms Koernia was a "third party" for the purposes of s 330(4)(a). Simpson J held that a "third party" is "a party who is, at the time of the criminal conduct, wholly removed from the property constituting the proceeds or instrument; it is not an owner of property who is wholly removed from the criminality that causes the property to be tainted". Thus, the requirement was not met. Her Honour also held that Mr Lordianto and Ms Koernia's interests in that property were not acquired for sufficient consideration. On the issue of knowledge, Simpson J found that Ms Koernia deposited very large sums of money into the accounts of individuals she did not know and that she did so by breaking up the sums deposited into amounts less than 500 million Indonesian rupiah. Her Honour found that Ms Koernia was also aware of the multiple cash deposits in Australia, including multiple transactions under $10,000, which was the reporting threshold28. Thus, her Honour held that Mr Lordianto and Ms Koernia had "not established that the property was acquired without their knowledge that it was either proceeds or an instrument of an offence". For the same reasons, her Honour also held that Mr Lordianto and Ms Koernia had failed to establish that the property had been acquired in such a way as not to arouse a reasonable suspicion that it was proceeds of, or an instrument of, an offence. Court of Appeal Mr Lordianto and Ms Koernia's appeal to the Court of Appeal of the Supreme Court of New South Wales (Beazley P, McColl and Payne JJA) was dismissed. Beazley P and Payne JA concluded that Mr Lordianto and Ms Koernia had acquired an interest in property each time a deposit was made into one of the accounts, because on each such occasion they "acquired a 'right' or 'power … in connection with the property' within the meaning of the term 'interest'". Beazley P and Payne JA held, however, that "[a]s a matter of ordinary English 28 See [3] above. Bell Gordon expression and in the context of s 330 as a whole, the interest in property the subject of s 330(4)(a) must be acquired after the interest in property becomes proceeds of an offence". Beazley P and Payne JA agreed with Simpson J that a "third party" was someone "wholly removed from the property constituting the proceeds or instrument", by which their Honours meant "a person with no involvement in the transaction by which property first becomes proceeds of an offence or an instrument of an offence". Their Honours found that neither Mr Lordianto nor Ms Koernia was a third party. Their Honours said that the property in issue was not acquired for sufficient consideration because "[t]he property was ... acquired from the unnamed persons who made the deposits", and Mr Lordianto and Ms Koernia "had no connection, contractual or otherwise, with those persons". Further, "there was no transfer of funds, whether electronically or by any other means, between Indonesia and Australia". On the issue of reasonable suspicion, Beazley P and Payne JA said that Mr Lordianto and Ms Koernia "were financially sophisticated and used to transferring large sums of money across national borders, as well as dealing with currency controls and a myriad of national disclosure requirements". Their Honours relied on the advantageous rate offered by the remitters and the almost 400 cash deposits of amounts under $10,000. Thus, their Honours found that "the conclusion that there were abundant circumstances here that would arouse a reasonable suspicion that the interests in property were proceeds of an offence or an instrument of an offence was inevitable". McColl JA dissented on the "third party" issue but otherwise agreed with Beazley P and Payne JA. McColl JA said that a third party was someone who was not "intentionally complicit in the laundering activity" or, "to put it another way", someone who stood "at arms' length to the transaction". Kalimuthu The application for exclusion On 24 October 2014, the AFP successfully applied in the Supreme Court of Western Australia, under s 19 of the POCA, for a restraining order in relation to "all funds standing to the credit" of specific bank accounts in the name of one or more of Mr Ganesh Kalimuthu and Ms Macquelene Dass (also known as Bell Gordon Mr and Mrs Ganesh applied under s 29 to exclude their interest in the restrained property on the basis that, by operation of s 330(4)(a), their interest had ceased to be proceeds or an instrument of an offence. The exclusion application was heard by Allanson J. As his Honour recorded, the areas of factual dispute were limited, the primary issue being whether Mr and Mrs Ganesh had established that the circumstances in which they acquired their interest in the restrained bank accounts would not arouse a reasonable suspicion that the property was proceeds, or an instrument, of an offence. That evidence may be summarised as follows. Facts Mr Ganesh is a Malaysian citizen. Mr and Mrs Ganesh are married and live in Penang. Mr Ganesh said that he acted on the advice of a friend by transferring funds to Australia, with the aim of investing about $5 million in Australia to facilitate a later visa application. Mr Ganesh decided to use a local money changer rather than a bank, for the better exchange rates. He went to an acquaintance, Mr Zamri, whose parents ran a money changing business, and whose services he had used before. Mr Zamri advised him to use a bank, but told Mr Ganesh he could arrange the transfer over several months. Mr Ganesh said that he met Mr Zamri "maybe 7 or 8 times between August and October 2014 to give him the money to transfer to Australia". The amounts were linked to when Mr Ganesh received cash from the sale of a turbine. Each time, Mr Zamri would come to Mr Ganesh's apartment to collect the cash. The cash amounts varied between about RM200,000 and RM1.5 million (approximately $65,000 to $500,000 on the exchange rate he was being given). Mr Ganesh travelled to Australia for the purpose of opening an Australian bank account, which he did on 11 August 2014. Mr Ganesh opened an account with a deposit of $5,000 cash at the Canning Vale branch of the Australia and New Zealand Banking Group Ltd ("the ANZ"). On 13 August 2014, six cash deposits totalling $50,000 were made. Between 13 August 2014 and 30 September 2014, the credit balance increased to more than $730,000. The increased balance was mainly attributable to 96 cash deposits of amounts between $1,000 and $9,500. On more than one occasion there were multiple deposits on the same day. On the same day, 11 August 2014, Mr Ganesh opened an account with a deposit of $5,000 cash at the Canning Vale branch of the CBA. On 13 August 2014, eight cash deposits totalling $150,000 were made. Three of those deposits Bell Gordon were reportable transactions29. Between 11 August 2014 and 9 October 2014, the credit balance increased to more than $970,000. During that period, there were nine deposits of amounts in excess of the reporting threshold of $10,000 and 94 deposits of amounts less than $10,000. The majority of the transactions occurred in New South Wales. There were also transactions in Victoria and Western Australia. There were multiple deposits on the same day. Mrs Ganesh opened a third account on 25 September 2014 with a deposit of $5,000 cash at the Canning Vale branch of the ANZ. Mr Ganesh provided cash to Mr Zamri to transfer into that account, as he had done with the other two accounts. On 30 September 2014, 11 cash deposits totalling $93,250 were made. Each deposit was for an amount less than $9,300. On 1 October 2014, 11 deposits totalling in excess of $100,000 were made. Each deposit was for an than $10,000. amount equal Between 25 September 2014 and 13 October 2014, the credit balance increased to more than $755,000. There were 90 deposits of amounts between $1,000 and $9,950, with many of the deposits being in excess of $9,000, but less than $10,000. Numerous deposits were made on the same day. than $9,000, but to or greater less Mr Ganesh had "view only" internet banking with the ANZ and the CBA which enabled him to check the accounts from Malaysia, but not to make transactions. Mr Ganesh said that, in this way, he checked to make sure the amounts he gave to Mr Zamri were being received in the accounts in Australia in the correct amounts. He said he never saw any printed bank statements. In his oral evidence, Mr Ganesh said that he was not aware where the deposits were being made or who was making the deposits. He later became aware that the deposits were being made in cash in Sydney when he was shown statements for the CBA account. Mrs Ganesh made an affidavit but was not cross-examined. Mrs Ganesh's evidence was, relevantly, that: Mr Ganesh had told her that she should open a bank account in Australia; she and Mr Ganesh travelled to Perth between 25 and 28 September 2014 to do so; she opened the third bank account, with the ANZ, in her name, on 25 September 2014; and she first saw a statement of that account in August 2016. 29 See [3] above. Bell Gordon First instance – Allanson J Allanson J allowed the exclusion application. His Honour found that Mr Ganesh held existing contractual rights against the bank with regard to the current balance of his account. His Honour concluded that "third party" did not "simply refer to someone not a party to the offence". His Honour gave three reasons for finding that Mr Ganesh was a third party. First, "Mr Ganesh was not in a legal relationship (such as a director, partner, or fiduciary) with anyone involved in the transaction that would make [it] a transaction between related parties". Second, "Mr Ganesh had no interest in the Australian physical currency, or any property derived from it, before the cash was deposited into his account". Third, "Mr Ganesh's position [was] relevantly no different from that of a person who sells property to a stranger and is paid by direct debit into his bank account". His Honour further held that "Mr Ganesh [had] proved that the amount he paid, through Mr Zamri, was sufficient consideration for what he acquired" and that "[t]he fact that the Malaysian ringgit passed through the hands of one or more intermediaries [did] not affect that Mr Ganesh gave consideration to someone". On the question of reasonable suspicion, his Honour observed that Mr Ganesh "could not have a reasonable suspicion that his interest in his bank account was tainted unless he knew that the deposits were structured (that is, deposits of physical currency in amounts of less than $10,000) and there was some material sufficient to induce a suspicion that they were being done in that manner and form for the purpose of avoiding reporting requirements". His Honour found in favour of Mr Ganesh. Allanson J concluded that his findings necessarily applied also to Mrs Ganesh, "who knew less than her husband". Court of Appeal The AFP successfully appealed to the Court of Appeal of the Supreme Court of Western Australia (Buss P, Murphy and Beech JJA). On whether there was an acquisition of property, Murphy and Beech JJA noted they were bound to follow the New South Wales Court of Appeal in Lordianto unless the decision was "plainly wrong" and thus concluded that there was an acquisition of property. Buss P stated that the term "acquired" had a broad connotation and was satisfied that receipt of the structured deposits by Mr and Mrs Ganesh constituted the acquisition of an "interest" and thus "property". Bell Gordon On the question of construction of the words "third party", Murphy and Beech JJA said that if they were deciding the question independently of the Court of Appeal's decision in Lordianto, they would have preferred the construction adopted by McColl JA. Their Honours doubted the existence of any "temporal disjunction" such that the interest in property the subject of s 330(4)(a) must be acquired after the interest in property becomes proceeds of an offence. Their Honours were concerned that the AFP's proposed construction would have the vendors. However, their Honours were not satisfied that the decision of the Court of Appeal was "plainly wrong". consequence protection innocent denying Buss P took a different view. His Honour concluded that "[t]he text of s 330(4)(a), in its ordinary and natural meaning (in particular, the phrase 'only ceases to be' and the phrase 'if it is acquired by a third party'), indicates that an acquisition of the property will not be by a 'third party' unless the acquisition occurs after the property became proceeds of an offence or an instrument of an offence" (emphasis in original). Thus, "a 'third party' [was] a person who was not involved with or connected to any transaction by which the property became proceeds of an offence or an instrument of an offence" (emphasis in original). Therefore, his Honour concluded that as "[n]one of the acquisitions by Mr Ganesh or Mrs Ganesh occurred after the property became proceeds of an offence" (emphasis in original), and neither Mr Ganesh nor Mrs Ganesh "was involved with or connected to the transaction in that he or she was the recipient of the moneys which were the proceeds of the offence", they were not third parties. His Honour also stated that, in any case, Beazley P and Payne JA in the Court of Appeal were not "plainly wrong". the question whether Mr and Mrs Ganesh gave sufficient consideration, Murphy and Beech JJA held that "it was not enough to conclude, as the primary judge did, that [Mr and Mrs Ganesh] 'gave consideration to someone', without finding that the property was acquired 'for' – thus, in exchange footnote omitted). for – Rather, "no such finding could be made" because Mr and Mrs Ganesh's "lack of connection to the depositors, from whom the property was acquired, [was] a fatal obstacle to a conclusion that they acquired the property for sufficient consideration". that consideration" in original, (emphasis Buss P adopted a different construction. His Honour stated that "[t]he preposition 'for' requires, in effect, that the consideration be exchanged for the property", and that the consideration is "adequate or equivalent", in that it reflects "the value of the property, having regard solely to commercial considerations". His Honour held that "the preferable and correct inference is that, by some means, Mr Zamri or [the person to whom Mr Zamri gave the Bell Gordon money] procured the cuckoo smurfers to make the structured deposits into [Mr and Mrs Ganesh's] bank accounts". His Honour further found that "there was accordingly a nexus (that is, a connection or series of connections) between the Malaysian Ringgit banknotes handed by Mr Ganesh to Mr Zamri and the Australian Dollar banknotes deposited by the cuckoo smurfers into the [Australian] bank accounts". Thus, his Honour was satisfied that Mr or Mrs Ganesh had given "consideration 'for' each acquisition of property and that the consideration for the acquisition was sufficient". Despite this, his Honour followed the New South Wales Court of Appeal in Lordianto as he was not convinced that decision was "plainly wrong". On the question of reasonable suspicion, Murphy and Beech JJA found that Mr Ganesh had not established that he acquired the property in circumstances that would not arouse a reasonable suspicion that the deposits were proceeds of an offence. Their Honours referred, among other things, to the fact that Mr Ganesh "knew that the very large amounts of cash he provided to Mr Zamri, from time to time, were not leading to deposits in corresponding amounts, but rather to a number of deposits of considerably smaller amounts" and he "did not establish a cogent explanation for why this might be so". Buss P adopted a different approach in reaching the same conclusion. His Honour referred to the fact that Mr Ganesh had "actual knowledge that, despite the fact that the cash amounts he gave to Mr Zamri were between about $65,000 and $500,000, Mr Ganesh's Australian bank accounts were being credited regularly with numerous small deposits in amounts of less than $10,000". His Honour stated that when determining whether the third party acquired the property "in circumstances that would not arouse a reasonable suspicion" that the property was proceeds of an offence or an instrument of an offence, the test is objective. Thus, it is irrelevant that the third party did not know that the actions or omissions constituting the offence were an offence. Moreover, his Honour held that the purpose of the provisions would be "impeded" if ignorance of the law allowed someone to rely on s 330(4)(a). Mrs Ganesh was not in the same position as Mr Ganesh. The AFP's appeal succeeded in relation to Mrs Ganesh on the "third party" and "sufficient consideration" points but failed on the "reasonable suspicion" aspect. Buss P and Murphy and Beech JJA referred to the primary judge's summary of her unchallenged evidence and found that the circumstances of which Mrs Ganesh had knowledge were materially different from the circumstances of which Mr Ganesh had knowledge and, thus, there was no basis for ascribing to Mrs Ganesh any of the knowledge of Mr Ganesh. Their Honours concluded that Mrs Ganesh had established, on the balance of probabilities, that she had acquired the property in circumstances that would not have aroused in the mind Bell Gordon of a reasonable person, in her position, who had actual knowledge of those circumstances, a reasonable suspicion that the property was proceeds of an offence or an instrument of an offence. Construction of s 330(4)(a) On appeal to this Court, the parties approached the question of construction of s 330(4)(a) as if the paragraph comprised separate elements which are to be construed in isolation from one another. That is not the proper approach to the construction of s 330(4)(a). The paragraph must be read as a whole and in the context provided by the whole of the statutory framework. As seen earlier, that framework commences with a restraining order (or an application for a restraining order) to prevent identified property being disposed of or otherwise dealt with by any person if there are reasonable grounds to suspect that the property is, relevantly, the proceeds of, or an instrument of, an offence30. And then, of course, the circumstances in which property becomes and when it remains proceeds, or an instrument, of an offence are defined broadly in ss 329 and 330 of the POCA. Those sections are intended to, and do, have multiple applications. Against that background, the exclusion provided by s 330(4)(a), by which property ceases to be proceeds, or an instrument, of an offence, is limited. It is limited to a person who acquired specific property (necessarily, the subject of an existing or proposed restraining order) for sufficient consideration without that person knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds, or an instrument, of an offence. In many cases, perhaps most, that will be an inquiry very similar to the inquiry under the general law about whether a person is a bona fide purchaser for value without notice31. 30 POCA, s 19. 31 See, eg, Pilcher v Rawlins (1872) LR 7 Ch App 259; In re Nisbet and Potts' Contract [1906] 1 Ch 386; Wilkes v Spooner [1911] 2 KB 473; Midland Bank Trust Co Ltd v Green [1981] AC 513; Corbett v Halifax Building Society [2003] 1 WLR 964; [2003] 4 All ER 180. See also Australian Law Reform Commission, Confiscation that Counts: A review of the Proceeds of Crime Act 1987, Report No 87 (1999) at [12.82]. Bell Gordon The person who acquired the property which that person seeks to have excluded from a restraining order under s 330(4)(a) is the "third party" referred to in that paragraph. It is not, as the AFP put rhetorically, no more than a "person". Rather, a "third party" is no more, and no less, than a person who meets the description of what follows in s 330(4)(a), in light of the scheme of the Act and, in particular, ss 329 and 330. It is therefore necessary to say something further about s 330(4)(a). Property Section 330(4)(a) falls for consideration only if a person seeks to exclude from a restraining order specific property which is the subject of a restraining order (or an application for a restraining order). As the applicant for the exclusion order bears the onus of satisfying a court, on the balance of probabilities32, that specific property should be excluded from the order, the first step is to identify the "property" that the applicant seeks to have excluded. In the present appeals there was no dispute that the property the appellants sought to have excluded was their respective choses in action against the Australian banks, which entitled them "to require [the relevant bank] to pay to them all or part of whatever amount was credited to the accounts"33. Contrary to the substance and effect of some of the AFP's submissions, the appellants did not contend that they had an interest in, or sought to exclude, the cash that had been deposited to the credit of the Australian accounts through the cuckoo smurfing. The appellants did not acquire the cash or deposit that cash. The banks acquired the benefit of those deposits. Following each deposit to the credit of their bank accounts, the appellants acquired from the relevant bank an interest, in the sense of a "right" or "power" within the meaning of the word "interest"34, in connection with their respective choses in action. It was because that interest in the restrained property (the choses in action) was said to be acquired in the circumstances specified in s 330(4)(a) that the appellants in each case made applications for exclusion orders of their property. 32 POCA, s 317. 33 See fn 5 above. 34 See POCA, s 338 definition of "interest". Bell Gordon Identifying the property sought to be excluded, and the property said to be acquired (as they may be different), is a critical initial step. It ensures that the property sought to be excluded is the subject of the restraining order and, where relevant, that it is proceeds, or an instrument, of an offence (not disputed in these appeals). Significantly, it also ensures that the balance of the question under s 330(4)(a) is the right question: namely, did the applicant for the exclusion order acquire the relevant property for sufficient consideration without that applicant knowing, and in circumstances that would not arouse a reasonable suspicion, that that property was proceeds, or an instrument, of an offence? If the property is misdescribed, what an applicant needs to prove necessarily proceeds from the wrong starting point. Acquired for sufficient consideration Having identified the property and determined that the property is proceeds, or an instrument, of an offence, the next step is to determine whether the applicant for the exclusion order acquired that property for sufficient consideration. That necessarily directs attention to the circumstances in which the property was acquired by the applicant as well as the balance of s 330(4)(a) – whether the applicant did not know, and in circumstances that would not have aroused a reasonable suspicion, that the property was proceeds, or an instrument, of an offence. In its terms, the test is objective. As seen earlier, "an acquisition or disposal of property is for sufficient consideration if it is for a consideration that is sufficient and that reflects the value of the property, having regard solely to commercial considerations"35. Aspects of that definition should be noted: the consideration must be sufficient and reflect the value of the property and, in assessing both of those matters, the court is to have regard solely to commercial considerations. That inquiry, and analysis, are self-evidently not undertaken in some vacuum divorced from the circumstances in which the applicant acquired the property. As the text of s 330(4)(a) indicates, the focus must be upon what the applicant paid to acquire the property and in what circumstances. The objective inquiry is directed at identifying what the applicant acquired and how, what were the form and amount of the consideration the applicant provided, and when and how that consideration was provided. That list is not exhaustive. It cannot be exhaustive: the analysis of whether the acquisition by the applicant was for 35 POCA, s 338 definition of "sufficient consideration". Bell Gordon sufficient consideration forms part of an assessment of whether the circumstances of that acquisition (which must at least include the facts and matters just identified) would not have aroused a reasonable suspicion that the property was proceeds, or an instrument, of an offence. Obviously, different kinds of property are acquired in different ways. The purchase of a house at auction on the open market will be attended by different circumstances from the acquisition of a chose in action against a bank or, indeed, of an "interest" in connection with that chose in action. That last statement needs some unpacking. The statutory focus is necessarily on the sufficiency of the consideration the applicant provided for the acquired property that is sought to be excluded from the restraining order, having regard solely to commercial considerations. In relation to most property – such as the purchase of a house or a car – the sufficiency of the consideration may be assessed by asking what is the price a hypothetical willing but not anxious vendor could reasonably expect to obtain and a hypothetical willing but not anxious purchaser could reasonably expect to pay after proper negotiations between them have been concluded36. And the identity of the person who provided that consideration will usually be disclosed by records, electronic or otherwise. But other forms of property raise different commercial considerations and the property in issue in these appeals, a chose in action against a bank, is instructive. In a typical transaction for the payment of a debt or the transfer of money, there is no delivery of a physical asset in the form of notes and coins but a transfer through the electronic clearing and settlement systems used by the banking industry. The essential initiating event is an instruction by a payer (or the originator of a payment) to their bank to reduce the value of their bank balance in an account and to increase, correspondingly, the bank balance of an account held by a named recipient (also known as the beneficiary). The form of the instruction is not fixed. The originator's title to "money" is not transferred. The transfer operates by adjusting the total amount of the debts owed by the participants, the banks, to each other by a process which the banks commercially describe as "netting". It is a process whereby a series of obligations between two participants is replaced with a single obligation which is calculated by adding all of the 36 Spencer v The Commonwealth (1907) 5 CLR 418 at 436-437, 441. Bell Gordon obligations owed by each participant to the other and deducting the smaller from the larger. On any one day, the netting involves multiple participants in the industry, often using clearing houses, which operate as multilateral contracts. The process of netting determines the net sum which each bank owes to each other in the clearing system, which is then settled37. There are a number of consequences. First, when an originator instructs a bank to make a transfer from their account, the chose in action representing that credit balance is extinguished or reduced by the amount of the transfer. Second, a fresh chose in action is created, or the value of an existing chose in action is increased, for the beneficiary which entitles them to withdraw an equivalent amount from their bank, subject always to the terms of their contract with their bank. Third, the property the beneficiary acquires is wholly distinct from the property which the originator had before the transfer. Indeed, the POCA recognises the change in the nature of property held by a bank by providing that "property" remains proceeds, or an instrument, of an offence even if credited to These processes considerations and, thus, consequences for the proper construction of s 330(4)(a). As stated earlier, different forms of property will necessarily raise different questions about the form, amount, nature and source of the consideration. commercial significant raise Once the property in a bank account is properly identified and it is recognised that the value credited to another account is not the property that was deposited, many of the submissions about what was necessary in order for an applicant for an exclusion order to demonstrate that they have provided "sufficient consideration" for the acquisition of an interest in connection with their chose in action in a bank account must be rejected. First, contrary to the AFP's submissions, it was unnecessary for the appellants to establish, and contrary to established banking practice to require proof, that the "funds" deposited into the appellants' respective Australian bank 37 See, eg, Cranston et al, Principles of Banking Law, 3rd ed (2017) at 349-350; Ellinger, Lomnicka and Hare, Ellinger's Modern Banking Law, 5th ed (2011) at 562-569; Tyree and Weaver, Weerasooria's Banking Law and the Financial System in Australia, 6th ed (2006) at 58-59 [7.5]-[7.7]. 38 POCA, s 330(3)(a). Bell Gordon accounts, which they sought to exclude from the restraining order, were "their own funds". As just seen, the funds deposited with the banks were not the property the appellants held and sought to exclude. Second, contrary to the approach adopted by some of the courts below, it was unnecessary for the appellants to establish, and contrary to established banking practice to require proof, that the appellants had a direct connection, contractual or otherwise, with the persons who "made the deposits" into their Australian bank accounts or that there was any contractual relationship, whether as agents or otherwise, between the remitters in the foreign country and the depositors in Australia. that focuses attention away from whether Third, a construction the relevant towards whether consideration has been paid and relationships are direct or indirect diverts attention from the fact that a purpose of the provision is to exclude those who have not paid sufficient consideration, including volunteers, from being able to keep proceeds, or an instrument, of an offence. instead Thus, as Buss P recognised in Kalimuthu, the consideration must be by way of exchange but may not be direct. It may be sufficient if the applicant for an exclusion order can demonstrate that there was a connection, or series of connections, between the provision of the consideration by them and the acquisition of the property by them that they seek to have excluded. What the necessary connection or connections might be is as varied as the nature of property itself. For example, when acquiring an asset and paying for that asset by bank transfer, the required connection may be no more than evidence of the instruction of the buyer to their bank to reduce the value of their bank balance, and, correspondingly, to increase the bank balance of an account held by the vendor. In the present appeals, the connections were sought to be explained by the arrangements the appellants had with the remitters in the foreign country. The fact that remitters were used by the appellants, as well as how the remitters were used, might show, if nothing more were known, that the appellants provided foreign currency in cash in exchange for an Australian dollar equivalent being deposited into specific bank accounts in Australia. But, as will be explained, that is not what happened here. Section 330(4)(a) requires that the property in issue was acquired by a third party for sufficient consideration. And s 330(4)(a), read with s 329 and the Bell Gordon rest of s 330, makes it clear that this does not include a volunteer. A volunteer simply does not provide any consideration (let alone "sufficient" consideration) for the property they acquire. In the course of argument, the AFP used an example of a mother and her drug dealing son where the drug dealer gives cash from the sale of the drugs to his mother and the mother uses the cash to buy a car. The example is illustrative of the objective inquiry that must be undertaken in response to an application for an exclusion order. The property the mother has as a result of the gift (the cash she has been given) is, by reason of s 330(1)(a), wholly derived from the disposal of, or other dealing with, the proceeds of an offence and remains proceeds of an offence39. And the car remains proceeds of an offence by reason of the operation of s 330(1)(b) and (3)(b). But does the car cease to be proceeds under s 330(4)(a)? There is a distinction to be drawn. If, objectively, the purchase is seen as the mother buying the car with the money provided by the son (which is purchased by the son in the name of the mother or, more accurately, the mother acquiring the car as a gift from the son), then the mother is a volunteer. The mother has provided no value and the car remains subject to the restraining order and then possible forfeiture under the POCA because the mother did not provide the consideration for the car. As a volunteer, she cannot satisfy s 330(4)(a) of the POCA. Put in different terms, the mother, as the acquirer, would not be a bona fide purchaser for value, because the acquirer will have provided no value40. This example shows that if the acquisition of property can be characterised as a gift from the proceeds of an offence, then the property acquired will not cease to be proceeds of an offence under s 330(4)(a). The tighter the connection between the gift of money and the acquisition of property (in the sense of both the time between receipt and outlay and the difference between the amount received and the amount outlaid), the more likely the conclusion that she has acquired the car as a gift from the son. Hence, it is an objective test; any one 39 By reason of s 330(3)(b) of the POCA. 40 See, eg, Black v S Freedman & Co (1910) 12 CLR 105 at 109; In re Diplock; Diplock v Wintle [1948] Ch 465 at 522, 524; Foskett v McKeown [2001] 1 AC 102 at 127. See also, in a related context, Russell v Scott (1936) 55 CLR 440 at 450-458; Wirth v Wirth (1956) 98 CLR 228 at 235; Napier v Public Trustee (WA) (1980) 55 ALJR 1 at 3; 32 ALR 153 at 158; Nelson v Nelson (1995) 184 CLR 538; Heydon and Leeming, Jacobs' Law of Trusts in Australia, 8th ed (2016) at 212. Bell Gordon example cannot resolve every case. Thus, different issues might arise if the property acquired is only characterised as being partially a gift or partly acquired using proceeds of an offence – for example, where a mother, without knowledge or suspicion, buys a car with her own money which has been increased at some time by the gift of money by her son. Those issues were not addressed in these appeals. Not knowing and in circumstances that would not arouse a reasonable suspicion The balance of s 330(4)(a) is directed at the person who acquired the property not knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds, or an instrument, of an offence. A reasonable suspicion must have a factual basis41. As this Court has previously stated, the test is objective42. The question is: would a reasonable person in the position of the acquirer of property have had a suspicion that the property was proceeds, or an instrument, of an offence? It is a positive feeling and more than a mere idle wondering43. In the context of a similar provision in the Confiscation Act 1997 (Vic), the test has been described as "whether the circumstances in which the applicant acquired her interest in the property were such as to arouse in her a reasonable suspicion that the property had been used in connection with the [crime]"44. Two related questions were raised in argument: first, whether the "circumstances" that are taken into account include subjective ignorance of the law; and second, whether it is "reasonable suspicion" of the exact offence committed or an offence of the kind committed (or some illegality generally). The first has been answered. The test is objective, and although knowledge may 41 George v Rockett (1990) 170 CLR 104 at 115. 42 Director of Public Prosecutions (Vic) v Le (2007) 232 CLR 562 at 565 [1], 595 [127]-[128], quoting Director of Public Prosecutions v Le (2007) 15 VR 352 43 Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266 at 303. 44 Director of Public Prosecutions v Le (2007) 15 VR 352 at 359 [24] (emphasis in original). This decision was overruled by this Court but the test for reasonable suspicion was affirmed: Director of Public Prosecutions (Vic) v Le (2007) 232 CLR 562 at 565 [1], 595 [127]-[128]. Bell Gordon in some circumstances be relevant, that does not extend to subjective ignorance of the law. The purpose of the scheme of the POCA is to prevent criminals from enjoying the proceeds of crime. To find that ignorance of the law is a defence would subvert this purpose. It would allow anyone to deal with criminals and merely assert ignorance of the law. That construction is reinforced by the Revised Explanatory Memorandum which accompanied the introduction of the POCA45, as well as the note to s 29(2), which, respectively, use the phrase "innocent third parties" and "innocent third party". This emphasis on innocence weighs against the idea that being on notice but too ignorant to appreciate the significance of the notice would be enough. Further, the wider legal context supports this construction. In criminal law, ignorance of the law is no defence46. In property law, ignorance of the law is irrelevant to the question of taking without notice47. Second, contrary to the submissions of the appellants, the objective inquiry is not whether a reasonable person in the position of the person acquiring the property would have had a suspicion that the property was proceeds of a specified crime. The requirement is that the suspicion be that "the property was proceeds of an offence or an instrument of an offence" – not proceeds or an instrument of a particular offence. Third party Section 330(4) is a provision which identifies when property ceases to be proceeds, or an instrument, of an offence. Property only ceases to be proceeds or an instrument, under s 330(4)(a), if it is acquired by a third party for sufficient consideration without that party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds, or an instrument, of an offence. A "third party" is a person who satisfies s 330(4)(a). That the phrase "third party" is no more than a descriptor of a person who satisfies s 330(4)(a) is reinforced by the fact that the alternative constructions proffered were contrary to the scheme of the POCA, or unworkable, or both. 45 Australia, Senate, Proceeds of Crime Bill 2002, Revised Explanatory Memorandum at 119. 46 Ostrowski v Palmer (2004) 218 CLR 493 at 500-501 [1]-[2]. 47 See generally fn 31 above. Bell Gordon First, the appellants' contention that "third party" refers to someone who is not a party to, and is not criminally responsible for, the criminal offence or offences in question and who satisfies the other requirements of s 330(4)(a) finds no basis in the text of the provision. Second, there are difficulties with the construction adopted by Beazley P and Payne JA in the Lordianto appeal that a "third party" was someone who is "wholly removed from the property constituting the proceeds or instrument", being "a person with no involvement in the transaction by which property first becomes proceeds of an offence or an instrument of an offence". (It was on this basis that the AFP submitted that "third party" was referring to a person who was not a party to a transaction by which the relevant property first became tainted as the proceeds, or an instrument, of an offence.) To read the POCA in this way would not be consistent with the scheme of the Act as a whole. There may not be an identified antecedent offence. As Murphy and Beech JJA explained in Kalimuthu, when contesting an exclusion application the AFP may particularise an offence, for example of dealing with property reasonably suspected of being proceeds of offences under s 400.9 of the Criminal Code (Cth), and rely upon one or more of the deeming provisions in that section. In a case of that kind, it may not be possible to identify the transaction by which the property first became proceeds of an offence or an instrument of an offence. And it is not consistent with the text of the POCA. Sections 330(1) and 330(2) expressly state that they operate repeatedly as proceeds of offences or instruments of offences are used to acquire, wholly or partly, other property. Thus, the nature and identity of the property will change. The POCA does not provide for, or anticipate, a historical tracing of the proceeds of crime back to when they were first tainted. Section 330(4)(a) requires identification of the restrained property which is suspected of being proceeds, or an instrument, of an offence and consideration of whether the person who has applied for the exclusion order can, on the balance of probabilities, satisfy the requirements of that provision. Furthermore, it would present significant practical problems. Beazley P and Payne JA's construction would require the first offence to be identified and that, of course, may not be possible, especially given the breadth of operation of ss 329 and 330. But, even if the first offence can be identified, an applicant for an exclusion order who had not investigated the source of the proceeds or an instrument of an offence (that is, the way in which they were first tainted as proceeds or an instrument of some offence), and put that evidence before the court, could not establish that they satisfied s 330(4)(a). As Murphy and Beech JJA explained in Kalimuthu, it would mean that an innocent person who otherwise satisfied s 330(4)(a) would be precluded from relying on the provision Bell Gordon because they had failed to trace the proceeds or instrument of an offence back to the way in which they first became tainted as proceeds or an instrument. That is not what the provision says or requires. The present appeals may be used to demonstrate some of the practical difficulties if an applicant for an exclusion order was required to trace the proceeds or instrument back to the way in which the proceeds or instrument first became tainted. Consistent with the nature of cuckoo smurfing, the appellants conceded that their property was proceeds or an instrument of an offence prior to the structuring offence (indeed, that was the entire point of the cuckoo smurfing), and, thus, the deposits were not in fact "first tainted" through the structuring offence. However, what those prior offences may have been was not known to the appellants or, absent some full blown investigation, capable of being known to them. Next, during the course of argument, the AFP sought to advance a construction that the phrase "third party" should be construed as referring to a "third party to the transaction by which property first became the proceeds of crime" (emphasis added). That submission should also be rejected. It is not found in the text. And, contrary to the AFP's submissions, if the construction is rejected, s 330(4)(a) does not operate in a way that leads to absurd results. On the contrary, the AFP's construction would create similar practical difficulties to those just identified: an applicant for an exclusion order would be required to trace the proceeds or instrument of an offence back to the transaction in which they first became tainted. Third, the reliance in some judgments below on a "temporal" issue – property "becoming" proceeds or an instrument of an offence under s 330(1) or (2) at the same time as it "ceased" to be proceeds or an instrument under s 330(4)(a) – is inconsistent with the POCA. It does not take account of the operation of s 330(1) and (2), to which reference has just been made48. Further, it does not take account of the fact that the inquiry under s 330(4)(a) is objective. Necessarily, there can be no detailed exposition in the abstract. In addressing the AFP's contention that, unless "third party" means a "third party to the transaction by which property first became the proceeds of crime", s 330(4)(a) would lead to absurd results, it is sufficient to address two of the examples referred to by the AFP. 48 See [96] above. Bell Gordon One example was the purchase of a house in a wife's name, using funds gifted to the wife by the husband for that purpose. The house is purchased at auction. There is no issue about the sufficiency of the consideration. Part of the funds used to purchase the house are proceeds of an offence but the wife has no grounds to suspect this. The funds held by the husband, whether credited to a bank account or otherwise, were and remained proceeds of an offence under s 330(1) and (3). The property, the house, was "acquired" in the wife's name using proceeds of an offence and, thus, the house became proceeds of an offence by reason of the operation of s 330(1)(b). The wife, however, cannot take the benefit of s 330(4)(a). She did not provide the consideration for the house49; she acquired the house using funds that were gifted to her50. The vendor of the house stands in a different position. The amount that the vendor received is proceeds of an offence by reason of the operation of s 330 but the vendor, absent anything further, would be able to exclude the proceeds by reason of s 330(4)(a). The further example of the mother and the drug dealing son has been addressed51. In both examples, the property – the house and the car – would cease to be proceeds of an offence only on a further sale to what might conveniently be described as a bona fide purchaser for value. In this context, it is necessary to consider the position of a bank. When receiving a deposit in cash or by way of bank transfer, the bank acquires that property for sufficient consideration. The sufficient consideration is the bank's promise to credit the account of the relevant account holder with the amount deposited or transferred. Absent any other information, the bank remains entitled to retain the cash or the benefit of the bank transfer by reason of s 330(4)(a). But the entitlement of the bank to that property says nothing about the entitlement of the account holder to retain and exercise their chose in action over the funds standing to the credit of the account, which is different property from that held by the bank. 49 That is not to say that if she is a dependant, she may not be entitled to make an application under s 72 of the POCA to be relieved from the hardship effected by a forfeiture order. 50 See [85] above. 51 See [86] above. Bell Gordon The AFP's submission would lead to the absurd result that absent any other information, a bank would not be entitled to retain the cash or the benefit of the bank transfer by reason of s 330(4)(a). That would occur in the case of, for example, an offence against s 142 of the AML/CTF Act where the money first became proceeds, or an instrument, of an offence upon depositing to the bank. That is a strong indicator that the reference in s 330(4)(a) to "third party", read in the context provided by this understanding of the way in which the POCA operates, reinforces what follows – that is, that s 330(4)(a) is directed to an acquisition of property that is the proceeds or an instrument of an offence by someone who acquires that property by providing sufficient consideration for that property, without knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds, or an instrument, of an offence. It has no larger purpose or effect than that. Finally, the construction adopted is consistent with the legislative history and the extrinsic materials that preceded the introduction of the POCA. The predecessor Act to the POCA allowed a restraining order to be made where a person had been convicted of an indictable offence, had been charged with an indictable offence, or was about to be charged with an indictable offence52. Forfeiture orders could be made where a person was convicted of a serious offence (and where a restraining order had been granted over property in connection with that offence)53. In that context, an applicant could obtain relief where they met two conditions. The first was that the applicant was not involved in any way in the commission of the offence in respect of which property was to be restrained or forfeited54. The second was that if the applicant acquired the interest in property at or after the commission of such an offence, the applicant acquired the interest for sufficient consideration, without knowing the property was tainted and in circumstances such as not to arouse a reasonable suspicion that the property was tainted55. That Act did not use the phrase "third party" as part of these requirements. 52 Proceeds of Crime Act 1987 (Cth), s 43(1). The orders could extend to specified property of another person: s 43(1)(f). 53 Proceeds of Crime Act 1987 (Cth), s 30(1). 54 Proceeds of Crime Act 1987 (Cth), ss 21(6)(a), 31(6)(a)(i), 48(3)(f)(i). 55 Proceeds of Crime Act 1987 (Cth), ss 21(6)(b), 31(6)(a)(ii), 48(3)(f)(ii). Section 21(6)(b) referred to the applicant's knowledge about the property at the Footnote continues Bell Gordon The circumstances under which restraining orders may be made under the POCA are wider. A restraining order may be made where there are "reasonable grounds to suspect" that the relevant property is the proceeds of an indictable offence, or an instrument of a serious offence. The scope of property captured under the POCA is therefore wider than under the predecessor Act. As a result, the POCA has the potential to affect the property interests of a wider class of people who are not connected in any way to the commission of an offence. Thus, it would not be expected that the POCA would narrow the circumstances in which such people could have their property excluded from a restraining order. The words "third party" in s 330(4)(a) do not impose some extra limit on the ability of an applicant to have an exclusion order made. This is confirmed by the Revised Explanatory Memorandum accompanying the introduction of the POCA, which stated that the new law would "replicate[] the safeguards for innocent third parties"56. As the AFP accepted, there was nothing in the Revised Explanatory Memorandum or the 1999 Australian Law Reform Commission report57 (which preceded the new law) that suggested that the intention behind the third party requirement in s 330(4)(a) was to cast the net wider. Lordianto analysis The property which Mr Lordianto and Ms Koernia sought to have excluded from the restraining order was their respective choses in action against the Australian banks, which entitled them "to require [the relevant bank] to pay to them all or part of whatever amount was credited to the accounts"58. There was no dispute that that property was proceeds, or an instrument, of an offence under s 330(1)(a) or s 330(2)(a), as it was wholly or partly derived or realised from the structuring offence under s 142 of the AML/CTF Act. time of acquisition. It was a requirement under s 31(6)(a)(ia) that the applicant's interest in the property was not subject to the effective control of the person who was convicted of the offence. 56 Australia, Senate, Proceeds of Crime Bill 2002, Revised Explanatory Memorandum at 2. 57 Australian Law Reform Commission, Confiscation that Counts: A review of the Proceeds of Crime Act 1987, Report No 87 (1999). 58 See fn 5 above. Bell Gordon The AFP did not dispute that each of Mr Lordianto and Ms Koernia had acquired that property, or that the consideration was sufficient, but disputed that the acquisition was for sufficient consideration. In addressing the question of the sufficiency of the consideration, as well as whether they had provided that consideration, Mr Lordianto and Ms Koernia relied upon the arrangements Ms Koernia had with the remitters in Indonesia. The fact that remitters were used, as well as how the remitters were used, might show, if nothing more were known, that Mr Lordianto and Ms Koernia provided foreign currency in cash in exchange for an Australian dollar equivalent being deposited into specific bank accounts in Australia. But that does not complete the s 330(4)(a) inquiry. identifying what The objective Mr Lordianto and Ms Koernia acquired and how, the form and amount of the consideration they provided, when and how that consideration was provided, and whether Mr Lordianto and Ms Koernia did not know, and in circumstances that would not arouse a reasonable suspicion, that the property they acquired was proceeds or an instrument of an offence. inquiry under s 330(4)(a) is directed at they were aware of As Beazley P and Payne JA stated, Mr Lordianto and Ms Koernia "were financially sophisticated and used to transferring large sums of money across national borders, as well as dealing with currency controls and a myriad of national disclosure requirements". Moreover, the advantageous rate offered by the remitters and the almost 400 cash deposits of amounts under $10,000 into their nominated Australian bank accounts. Thus, they did not discharge the onus they bore of establishing that they acquired the property, the "interests" in connection with their respective choses in action against the Australian banks, for sufficient consideration and in circumstances that would not have aroused a reasonable suspicion that that property was proceeds or an instrument of an offence. As their Honours stated, "the conclusion that there were abundant circumstances here that would arouse a reasonable suspicion that the interests in property were proceeds of an offence or an instrument of an offence was inevitable". Mr Lordianto and Ms Koernia did not discharge the onus that they bore to prove the matters necessary to establish that they were each a third party within the terms of s 330(4)(a). They were not. Kalimuthu analysis Similarly, in the case of both Mr and Mrs Ganesh, the property which they sought to have excluded from the restraining order was their respective choses in action against the Australian banks, which entitled them "to require [the relevant bank] to pay to them all or part of whatever amount was credited to the Bell Gordon accounts"59. And there was no dispute that that property was proceeds or an instrument of an offence for the same reason as in Lordianto. It is necessary, however, to address Mr and Mrs Ganesh separately. Mr Ganesh stands in substantively no different position from Mr Lordianto and Ms Koernia. Mr Ganesh sought to address the question of the sufficiency of the consideration by the fact that he provided that consideration by the arrangements he had with Mr Zamri in Malaysia. However, the fact that Mr Zamri was used, as well as how he was used, raised more questions than it answered. Mr Ganesh did not own other assets outside Malaysia and, unlike Mr Lordianto and Ms Koernia, had not previously been involved in international financial transactions. However, Mr Ganesh "knew that the very large amounts of cash he provided to Mr Zamri, from time to time, were not leading to deposits in corresponding amounts, but rather to a number of deposits of considerably smaller amounts". And, although he made an inquiry of Mr Zamri about that fact, he did not establish a cogent explanation for why that might be so. Thus, Mr Ganesh did not discharge the onus he bore of establishing that he acquired the property, the "interests" in connection with his choses in action against the Australian banks, for sufficient consideration and in circumstances that would not have aroused a reasonable suspicion that that property was proceeds or an instrument of an offence. As noted above, Mrs Ganesh must be considered separately. As an applicant for an exclusion order, Mrs Ganesh bore the onus of proving, on the balance of probabilities, the matters necessary to establish the grounds for the exclusion order60, which included the requirements of s 330(4)(a). The property Mrs Ganesh sought to have excluded was her chose in action against the Australian bank. It was held by the lower courts, and not challenged on appeal, that the circumstances of which Mrs Ganesh had knowledge would not have aroused a reasonable suspicion that the property was proceeds, or an instrument, of an offence. In this Court, Mrs Ganesh appealed against the finding that she had not provided sufficient consideration for the interests she acquired in connection with her chose in action against the Australian bank because she did not have any connection to the persons who deposited the funds into her bank account. That ground of appeal cannot succeed. 59 See fn 5 above. 60 POCA, ss 29(2)(d), 317. Bell Gordon Mrs Ganesh did not challenge the following factual findings. Mrs Ganesh opened an Australian bank account. The account was opened with a cash deposit of $5,000. Though Mrs Ganesh's affidavit was not before this Court, the primary judge summarised her evidence, including the fact that the relevant funds were provided by her husband drawing on his business. It was Mr Ganesh who provided the cash to Mr Zamri, and the timing of Mr Ganesh's payments to Mr Zamri was linked to when Mr Ganesh received cash from the sale of a turbine. Mrs Ganesh did not make any case to suggest that the finding that the relevant funds were provided by her husband drawing on his business was not open or that she had herself provided any consideration. Thus, Mrs Ganesh does not answer the description of a third party who acquired the relevant property for sufficient consideration. Mrs Ganesh was a volunteer. She provided no value. Her position was no different from the mother who bought a car entirely with cash from her son, which was the proceeds of drug dealing, or the wife who purchased a house with a gift of funds from her husband, part of which was the proceeds of an offence. A different conclusion might have been reached if, for example, Mrs Ganesh had established that she had withdrawn cash from her bank account in Malaysia, given it to her husband to give to Mr Zamri, and, without more, was told that an Australian dollar equivalent was now in her bank account in Australia. But that did not occur. Although this may, at first blush, appear harsh, s 72 of the POCA does provide for a dependant to make an application to be relieved from the hardship caused by a forfeiture order. Although Mrs Ganesh must be considered separately, on the facts before this Court she stands in no different position from her husband. In the absence of identified facts or submissions to show that she was not a volunteer it is pure speculation as to what case she might have mounted, an exercise which should not be undertaken by this Court. Conclusion For those reasons, both appeals should be dismissed with costs. Edelman Introduction I agree with the reasons in the joint judgment in the Lordianto appeal and, with one exception, I agree generally with the joint judgment in the Kalimuthu appeal. The exception concerns the appeal in so far as it relates to Macquelene Patricia Michael Dass, whose preferred description, used by the courts below, is The Commissioner of the Australian Federal Police ("the AFP") resisted the appeal, in so far as it related to Mrs Ganesh, on two bases. I agree with the joint judgment that the AFP's submissions on both of those bases should be rejected62. However, in my respectful view, that conclusion should require the appeal, in so far as it concerns Mrs Ganesh, to be allowed. To treat Mrs Ganesh as a volunteer, unlike her husband, is contrary to an assumption made at trial. It is contrary to the continuation of that assumption before the Court of Appeal of the Supreme Court of Western Australia. And it is a matter as to which in this Court there was no notice of contention, no written or oral argument, and no questions from the bench. The onus of proof and the pleaded issues Mr and Mrs Ganesh applied under s 31 of the Proceeds of Crime Act 2002 (Cth) ("the POCA") to exclude from the restraining order their "bank accounts", that is the respective rights that they held against the Australia and New Zealand Banking Group Ltd and Mr Ganesh's rights against the Commonwealth Bank of Australia. Apart from their initial deposits into those accounts, the value of Mr and Mrs Ganesh's rights against the banks had increased as a result of deposits by Australian depositors who were colloquially described as "cuckoo smurfs", apparently as a description of a large number of people making small deposits into the "nest" of others. Mr and Mrs Ganesh's application for exclusion relied upon s 330(4)(a) of the POCA, which provides that property, relevantly the bank accounts, "ceases to be proceeds of an offence or an instrument of an offence ... if it is acquired by a third party for sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence or an instrument of an offence (as the case requires)". 61 Commissioner of the Australian Federal Police v Kalimuthu [No 3] (2017) 338 FLR 241 at 243 [3]. 62 Reasons of Kiefel CJ, Bell, Keane and Gordon JJ at [64], [79], [99]. Edelman Mr and Mrs Ganesh bore the onus of proving that they satisfied the conditions in s 330(4)(a)63, with matters of fact to be proved on the balance of probabilities64. But the onus of proof operated in a forensic setting. Mr and Mrs Ganesh were not required to prove matters that were not in issue. In Commissioner of the Australian Federal Police v Hart65, this Court considered the conditions in s 102(3) of the POCA, as to which an applicant bears the onus of proof, and the joint judgment said of proof by the applicant: "It is proof in an adversarial proceeding conducted in accordance with the civil procedure of that court, including such procedure as exists in that court for the definition of issues between parties. ... [W]here an application for orders under s 102 proceeds on pleadings, an applicant need not negative possibilities which the Commonwealth does not raise in its defence." The relevant forensic setting was as follows. In their application to exclude property from the restraining order, Mr and Mrs Ganesh relied on the following grounds66: "[Mr and Mrs Ganesh] acquired their interests in the property for sufficient consideration, without knowing, and in circumstances that would not arouse a reasonable suspicion, that the money was the proceeds or an instrument of 'structuring offences'; so as to invoke s 330(4)(a) of the [POCA]. Specifically, [Mr and Mrs Ganesh] contend that on each relevant occasion: iii. They paid Malaysian Ringgit to a money remitter in Penang (Zamri); Zamri agreed to remit an Australian dollar equivalent to the relevant Australian bank account; on each relevant occasion, such an Australian dollar equivalent was remitted to the relevant account, albeit in a structured fashion; 63 POCA, ss 29(2)(d), 317(1). 64 POCA, s 317(2). (2018) 262 CLR 76 at 83-84 [7] (footnotes omitted). 66 Commissioner of the Australian Federal Police v Kalimuthu [No 3] (2017) 338 FLR 241 at 245 [11]. Edelman [Mr and Mrs Ganesh] had no knowledge or control over how Zamri remitted funds to them, nor any intermediaries that Zamri may have used to do so, The properties, by virtue of s 330(4)(a), are not proceeds nor an instrument in [Mr and Mrs Ganesh's] hands." The AFP opposed the application, relevantly in relation to s 330(4)(a), on two grounds67: (i) the property was not acquired by a third party for sufficient consideration; and (ii) the circumstances would arouse a reasonable suspicion that the property is proceeds of an offence or an instrument of an offence. The AFP did not dispute the assertion by Mr and Mrs Ganesh, made in point (i) of their grounds, that they (ie jointly) paid Malaysian Ringgit to Mr Zamri, the money remitter in Malaysia. The evidence and the way that the case was run at trial At first instance, in the Supreme Court, Allanson J identified the two matters that were in issue concerning Mr and Mrs Ganesh's claims that their rights against the banks had ceased to be proceeds of an offence under s 330(4)(a) of the POCA. The first question was whether Mr and Mrs Ganesh had shown that they were third parties and had acquired their interest for sufficient consideration68. The second question was whether Mr and Mrs Ganesh acquired their interest in circumstances that would not arouse a reasonable suspicion that the funds deposited in their bank accounts were the proceeds of an offence or an instrument of an offence69. As to the first question, the "factual issue[s] on which the case was fought"70 did not include any issue about whether the payment of Malaysian Ringgit to Mr Zamri, as a matter of Australian or Malaysian law, should be characterised as a payment only by Mr Ganesh and not by Mrs Ganesh. The focus was upon the meaning of "third party" and whether the consideration was sufficient. 67 Commissioner of the Australian Federal Police v Kalimuthu [No 3] (2017) 338 FLR 241 at 245 [12]. 68 Commissioner of the Australian Federal Police v Kalimuthu [No 3] (2017) 338 FLR 241 at 257 [110]. 69 Commissioner of the Australian Federal Police v Kalimuthu [No 3] (2017) 338 FLR 241 at 259 [125]. 70 Henderson v Queensland (2014) 255 CLR 1 at 15 [33]. Edelman The evidence at trial was that funds provided to Mr Zamri led to 112 deposits in September and October 2014 into Mrs Ganesh's ANZ bank account, increasing its balance by $750,000. There was evidence that the cash payments to Mr Zamri were linked to the receipt of cash by Mr Ganesh from the sale of a turbine by MGE Ramesh Metal in 2014. The business, MGE Ramesh Metal, was registered in the name of Mr Ganesh's brother, Mr Ramesh, because Mr Ganesh had been an undischarged bankrupt. Mr Ganesh's evidence was that the letters M and G in the business name were a reference to himself and The trial judge concluded that "the respondents [Mr and Mrs Ganesh] have proved that, at the relevant time, they earned money sufficient for them to transfer the amounts to Australia which they claimed"71. The trial judge specifically observed that there was no factual allegation raised by the AFP that the payment to Mr Zamri should be characterised as having been made by Mr Ganesh only72: "[N]o distinction was drawn between Mr and Mrs Ganesh in these proceedings. In particular, it was not submitted that some distinction should be drawn because the relevant funds were provided by her husband's drawing on his business." The trial judge concluded that Mr and Mrs Ganesh were third parties, as that term did not "simply refer to someone [who was] not a party to the offence"73. He also concluded that the consideration given by Mr and Mrs Ganesh was sufficient and that no reasonable suspicion would have been aroused in the circumstances known to Mr and Mrs Ganesh (focussing upon Mr Ganesh because Mrs Ganesh knew less than her husband)74. 71 Commissioner of the Australian Federal Police v Kalimuthu [No 3] (2017) 338 FLR 241 at 247 [34] (emphasis added). 72 Commissioner of the Australian Federal Police v Kalimuthu [No 3] (2017) 338 FLR 241 at 257 [112]. See also at 258 [115]. 73 Commissioner of the Australian Federal Police v Kalimuthu [No 3] (2017) 338 FLR 241 at 258 [118]. 74 Commissioner of the Australian Federal Police v Kalimuthu [No 3] (2017) 338 FLR 241 at 258 [124], 260 [130]. Edelman The way that the case was run in the Court of Appeal In the Court of Appeal, no ground of appeal alleged that Mrs Ganesh, separately from Mr Ganesh, had not provided sufficient consideration or that she was a volunteer. Rather, the grounds of appeal proceeded on the same assumption that had been made before the trial judge. Ground 2 alleged that sufficient consideration had not been provided by Mr and Mrs Ganesh, treating them collectively. The basis for ground 2 was that the consideration for the credits to their bank accounts was given by the payments from the Australian cuckoo smurf depositors to the banks rather than the payments from Mr and Mrs Ganesh to Mr Zamri. As to ground 2, all members of the Court of Appeal also proceeded on the same basis as the trial judge, namely that the funds provided to Mr Zamri had come from both Mr and Mrs Ganesh. Buss P treated Mrs Ganesh in the same way as Mr Ganesh and found that Mrs Ganesh "gave consideration 'for' each acquisition of property" and that the consideration was sufficient75. Murphy and Beech JJA also considered that the issue was whether Mr and Mrs Ganesh collectively could "prove that they gave sufficient consideration for the acquisition of their rights in relation to the increased balance of their accounts after the deposits"76. However, their Honours concluded that Mr and Mrs Ganesh had not provided consideration because although "the payment by the respondents [Mr and Mrs Ganesh, plural] to Mr Zamri" was equivalent to the amount ultimately deposited in the accounts of Mr and Mrs Ganesh, they lacked a connection with the cuckoo smurf depositors. Their collective payment to In the overall result, Mr and Mrs Ganesh were unsuccessful in the Court of Appeal because: (i) they were not third parties to the transaction; (ii) by majority: they did not give sufficient consideration because they lacked a connection with the cuckoo smurf depositors; and (iii) in relation to Mr Ganesh only, he had not established that he acquired the relevant property in circumstances that would not arouse a reasonable suspicion that the property was proceeds of an offence or an instrument of an offence. 75 Commissioner of the Australian Federal Police v Kalimuthu [No 2] (2018) 340 FLR 1 at 52-53 [230]-[231], 53 [233]. 76 Commissioner of the Australian Federal Police v Kalimuthu [No 2] (2018) 340 FLR 1 at 98 [471]. 77 Commissioner of the Australian Federal Police v Kalimuthu [No 2] (2018) 340 FLR 1 at 98-99 [472]. Edelman The way that the appeal was run in this Court The appeal to this Court, in so far as it concerned Mr Ganesh, relied upon the same three grounds upon which he had been unsuccessful in the Court of Appeal. In so far as it concerned Mrs Ganesh, the appeal relied upon the same two grounds upon which she had been unsuccessful in that Court. To succeed on this appeal, Mrs Ganesh needs to succeed on both of the grounds of appeal which relate to her. I agree with the joint judgment that a third party is a person who satisfies s 330(4)(a) (the first ground of appeal). Mrs Ganesh's success in the appeal in this Court therefore depends upon the second ground of appeal, which she shares in common with Mr Ganesh. That ground is as follows: "The Court of Appeal erred in law in concluding that the appellants did not acquire property for 'sufficient consideration' for the purposes of s 330(4)(a) and s 338 of the [POCA] because they did not have any connection to the persons who deposited money into their bank accounts." The AFP submitted that to establish that they had acquired property "for sufficient consideration", Mr and Mrs Ganesh were required to prove that value passed between the parties to the relevant transaction, establishing a "causal connection" between the payment of money and the receipt of property. The AFP submitted that Mr and Mrs Ganesh could not establish the requisite nexus because their case was that (i) they provided consideration to Mr Zamri in Malaysia but Mr Zamri did not make the relevant deposits in Australia and (ii) they acquired the relevant property from the cuckoo smurf depositors in Australia, with whom they had no relationship, and to whom they paid no money. Mr and Mrs Ganesh submitted that the POCA did not require them to establish a legal relationship or a direct relationship with the Australian cuckoo smurf depositors. They submitted that the deposits in Australia were not made gratuitously and that the only available inference was that the deposits into Australian bank accounts were made by people who had a connection or a series of connections to Mr Hameed, the Malaysian money remitter engaged by thereby Mr Zamri, and ultimately Mr and Mrs Ganesh. This submission should be accepted for the reasons given in the joint judgment78. The appeal should therefore succeed in so far as it relates to Mrs Ganesh. 78 Reasons of Kiefel CJ, Bell, Keane and Gordon JJ at [80]-[83]. Edelman Issues that might have been raised if consideration from Mrs Ganesh had been an issue No notice of contention was filed by the AFP in this Court seeking to uphold the decision of the Court of Appeal on the basis that Mrs Ganesh was a volunteer. Nor was such a submission made by the AFP in written or oral submissions to this Court. No question was raised about this issue during the oral hearing by any member of this Court. If the AFP had sought to rely on a notice of contention to raise such an issue in this Court, it would have been sufficient for Mrs Ganesh to say that it is "elementary that a party is bound by the conduct of his case"79. Even if the matter had been raised in the Court of Appeal, in this Court Mrs Ganesh could also have added that the absence of evidence before this Court, including the absence of her witness statement, means that this Court does not "have before us all the facts bearing upon this belated [claim] as completely as would have been the case had it been raised in the court below"80. These matters that Mrs Ganesh might have raised would not have been sterile points attempting to dispute "facts ... established beyond controversy"81 that, if raised, could never have been met by Mrs Ganesh. There may have been good reasons why, at every stage of this litigation, every party and every judge proceeded upon the basis that Mrs Ganesh was not a volunteer. Mrs Ganesh gave evidence by a witness statement and she was not cross- examined. Her witness statement might have revealed the reason for the assumption that Mrs Ganesh was not a volunteer or, at the very least, if the AFP had made such an allegation the witness statement might have been amended to include facts from which an inference could be drawn that she was not a volunteer. Those facts include, or might have included: (i) whether it was the practice of Mr and Mrs Ganesh to treat income from the business as the family's income, especially in circumstances in which evidence had been given by Mr Zamri that in the past he had dealt with both Mr and Mrs Ganesh and that Mrs Ganesh was more frequently his first point of contact; (ii) whether Mrs Ganesh had any interest in the business herself, or any interest in Mr Ganesh's shareholding in the business, which had apparently been named after both her and Mr Ganesh, including any interest as a result of any Malaysian laws relating to marital property; and (iii) presuming, in the absence of evidence 79 University of Wollongong v Metwally [No 2] (1985) 59 ALJR 481 at 483; 60 ALR 80 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438. 81 Water Board v Moustakas (1988) 180 CLR 491 at 497. Edelman of Malaysian law, that Australian law is relevantly the same82, whether there was any evidentiary basis for a joint endeavour constructive trust as between Mr and Mrs Ganesh83 in relation to cash received from the business and any other income received by Mrs Ganesh, including from her role in the business. Conclusion I agree with the orders proposed in the joint judgment in relation to the Lordianto appeal. In the Kalimuthu appeal, orders should be made allowing the appeal in part, in so far as it relates to Mrs Ganesh, but otherwise dismissing the appeal. The orders that should be made are: appeal allowed in part; set aside paragraphs 1 to 5 of the orders of the Court of Appeal and in their place order as follows: the appeal be allowed in part; set aside paragraphs 3 and 4 of the orders made by the Supreme Court on 19 April 2017; vary paragraph 1 of the orders made by the Supreme Court on 19 April 2017 by replacing "respondents'" with "second respondent's"; the respondents' application by way of chamber summons dated 15 June 2016 (exclusion application) be otherwise dismissed; and the matter be remitted to the Supreme Court for an assessment of the second respondent's damages pursuant to the undertaking proffered by the applicant in that Court on 14 October 2014; and (iii) the parties have seven days liberty to file an agreed minute or brief submissions to this Court concerning: 82 Neilson v Overseas Projects Corporation of Victoria Ltd (2005) 223 CLR 331 at 83 See, eg, Baumgartner v Baumgartner (1987) 164 CLR 137 at 149. Edelman the terms by which paragraph 2 of the orders made by the Supreme Court on 19 April 2017 should be varied; and the orders as to costs of the primary proceeding, the appeal to the Court of Appeal and the appeal to this Court, including whether the respondent should pay the second appellant's costs on an indemnity basis under s 323(1) of the POCA for each of the primary proceeding, the appeal to the Court of Appeal, the special leave application, and the appeal to this Court. |
HIGH COURT OF AUSTRALIA APPELLANT AND WAVERLEY MUNICIPAL COUNCIL RESPONDENT Swain v Waverley Municipal Council [2005] HCA 4 9 February 2005 ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 3 April 2003 and in their place order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: P Menzies QC with D J S Jenkins for the appellant (instructed by Beston Macken McManis) J R Sackar QC with M T McCulloch and S P W Glascott for the respondent (instructed by Phillips Fox) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Swain v Waverley Municipal Council Negligence – Standard of care – Breach – Swimmer injured by diving into sandbank while swimming between flags – Jury finding of negligence on part of Council – Whether finding reasonably open on evidence. Appeals – Civil trial by jury – Function of appellate court – Appellate review of jury finding on issue of breach of duty of care. Words and phrases – "risk", "obvious", "reasonably practicable alternative". GLEESON CJ. Actions for damages for personal injury suffered by a plaintiff allegedly in consequence of the negligence of a defendant in the past were commonly tried before a judge and a civil jury, usually of four persons. In New South Wales, and in some other Australian jurisdictions, the use of civil juries in such cases has become less common. This appeal draws attention to the different considerations involved in appellate review of primary decision-making, according to whether the decision-maker is a judge or a jury. In the common law system of civil justice, the issues between the parties are determined by the trial process. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal. Most decisions of trial courts are never the subject of appeal. When there is an appeal, the appellate court does not simply re-try the case. Depending on the nature of the appeal provided by statute, courts of appeal act according to established principles by which their functions are constrained. Those principles reflect the primacy of the trial process and the practical limitations upon the capacity of a court which does not itself hear the evidence justly to disturb an outcome at first instance. Trial by jury carries with it significant limitations of that kind. At a trial by jury, the functions of judge and jury are clearly distinguished. The judge decides issues of law; the jury decides issues of fact. A judge, whether sitting alone or presiding at a jury trial, gives reasons for his or her decisions. An appellate court, having the benefit of a statement of a judge's reasons for a decision, may be well placed to identify error. Juries give no reasons for their decisions. Leaving to one side cases where a special verdict is taken, ordinarily a jury at a civil trial will simply announce a verdict for the plaintiff or the defendant and, where necessary, an award of damages. The jury will reach that verdict after receiving directions from the trial judge as to the relevant principles of law, and their relationship to the evidence in the case and the arguments of opposing counsel. Where unanimity is required, the jurors need be unanimous only in relation to the ultimate issue or issues presented to them for decision. So long as individual jurors act in accordance with the directions they are given, different jurors might be impressed by different parts of the evidence, or by different arguments of counsel. Jurors are instructed that they may take a selective approach to the evidence, and even to different parts of the evidence of a particular witness. They may arrive at their joint conclusion by different paths. There may be no single process of reasoning which accounts for a jury verdict. In an action framed in negligence, the judge (if necessary) will decide, as a matter of law, whether the facts alleged by the plaintiff are capable of giving rise to a duty of care in the defendant towards the plaintiff. A legal issue of that kind is often capable of being decided on the pleadings. On the other hand, the alleged duty of care might depend upon contested facts that need to be resolved as part of the trial process. In order to be entitled to a verdict, the plaintiff will need to establish a duty of care, conduct on the part of the defendant in breach of that duty (negligent conduct), and consequential damage. In legal formulations of the duty and standard of care, the central concept is reasonableness. The duty is usually expressed in terms of protecting another against unreasonable risk of harm, or of some kind of harm; the standard of conduct necessary to discharge the duty is usually expressed in terms of what would be expected of a reasonable person, both as to foresight of the possibility of harm, and as to taking precautions against such harm. Life is risky. People do not expect, and are not entitled to expect, to live in a risk-free environment. The measure of careful behaviour is reasonableness, not elimination of risk. Where people are subject to a duty of care, they are to some extent their neighbours' keepers, but they are not their neighbours' insurers. Where an action for damages for negligence is tried before a jury, the question whether the conduct of the defendant has been negligent, that is, whether it has departed from what reasonableness requires, is presented as a question of fact for the jury. The jury's decision will ordinarily involve both a resolution of disputed questions of primary fact and an application, to the facts as found, of the test of reasonableness. Depending upon the nature of the case, and the findings of primary fact, the application of the test of reasonableness might be straightforward, or it might involve a matter of judgment upon which minds may differ. Either way, it is a jury question. In 1845, in Tobin v Murison1, the Privy Council identified a fundamental error of procedure in a Canadian trial where a jury was asked to find particular facts and then it was left to the judge to decide whether, on those facts, the defendant was negligent. Lord Brougham said2: "Negligence is a question of fact, not of law, and should have been disposed of by the Jury." Of course, it may be a complex question. To the extent to which it requires the application to disputed primary facts of a contestable standard of reasonable behaviour, it may require different kinds and levels of judgment. The resolution of disputed issues of fact, including issues as to whether a defendant's conduct conforms to a requirement of reasonable care, by the verdict of a jury involves committing a decision to the collective and inscrutable judgment of a group of citizens, chosen randomly. The alternative is to commit the decision to a professional judge, who is obliged to give reasons for the decision. In one process the acceptability of the decision is based on the assumed collective wisdom of a number of representatives of the community, properly (1845) 5 Moo PC 110 [13 ER 431]. (1845) 5 Moo PC 110 at 126 [13 ER 431 at 438]. See also Municipal Tramways Trust v Buckley (1912) 14 CLR 731 at 738 per Isaacs J. instructed as to their duties, deciding the facts, on the evidence, as a group. In the other process, the acceptability of the decision is based on the assumed professional knowledge and experience of the judge, and the cogency of the reasons given. In the administration of criminal justice in Australia, the former process is normal, at least in the case of serious offences. In the administration of civil justice, in New South Wales and some other jurisdictions, in recent years there has been a strong trend towards the latter process. Originally, there were no procedures for appealing against the verdict of a jury, reflecting what Barwick CJ described as "the basic inclination of the law towards early finality in litigation"3. He referred, in another case, to the move towards trial by judge alone in civil cases as an abandonment of "the singular advantage of the complete finality of the verdict of a properly instructed jury"4. In many areas, the law seeks to strike a balance between the interest of finality and the interest of exposing and correcting error. In a rights-conscious and litigious society, in which people are apt to demand reasons for any decision by which their rights are affected, the trend away from jury trial may be consistent with public sentiment. Even so, decision-making by the collective verdict of a group of citizens, rather than by the reasoned judgment of a professional judge, is a time-honoured and important part of our justice system. It also has the important collateral advantages of involving the public in the administration of justice, and of keeping the law in touch with community standards. Although the question whether certain conduct is a departure from a requirement of reasonable care, notwithstanding its normative content, is treated as a question of fact for the jury, a related, but different, question is treated as a question of law. That is the question whether there is evidence on which a jury could reasonably be satisfied that the defendant has been negligent. To the extent to which the dispute in a particular case is about the objective features of a defendant's conduct, that will come down to a question whether there is any evidence from which a jury could reasonably reach a conclusion about those features. There may also be a dispute about what reasonableness requires in a given case. When a trial judge, or an appeal court, asks as a matter of law whether a judgment adverse to the defendant is reasonably open to a jury, the enquiry may be affected by the nature of the judgment required of the jury. A judgment about whether the evidence could support a certain finding of primary fact might require nothing more than attention to the detail of the evidence, and a consideration of its probative potential. A judgment about whether behaviour is reasonable might involve the application of a measure that is to be found, not in the evidence, but in the wisdom and experience of those who make the decision. 3 Buckley v Bennell Design & Constructions Pty Ltd (1978) 140 CLR 1 at 8. 4 Edwards v Noble (1971) 125 CLR 296 at 302. The present appeal provides an example of a case where the jury was required to engage in both kinds of decision-making. The facts are set out in the reasons of Gummow J, with which I agree. The appellant, the plaintiff, suffered serious injury as a result of diving into the surf at Bondi Beach. He said he was swimming between the flags. His case was that he struck his head or neck on a sand bank which was invisible to him, and which he could not reasonably have been expected to see, and that the conduct of the respondent Council, in the circumstances, involved a lack of reasonable care for his safety. The jurors had to decide disputed facts about the conduct of the appellant and the circumstances in which he was injured, they had to consider substantially undisputed facts about the conduct of the respondent, they had to take into account circumstances relating to other people for whose safety the respondent also had to be concerned, and then they had to make a judgment about the reasonableness of the respondent's conduct. The trial judge said to the jury: "You are the only judges of ... fact in the case. It is for you to decide what evidence you accept and what evidence you reject, what inferences you draw and what conclusions you come to by reference to the evidence and upon the principles of law that I will give you." One of the conclusions to which the jurors had to come was whether, on the facts and in the circumstances found by them, the conduct of the respondent exhibited a failure to take reasonable care for the safety of the appellant. The case of negligence relied upon by the appellant was summarised by the trial judge for the jury as follows: "[Counsel for the plaintiff] said that the plaintiff went into the water where he did for the reason that that was where the flags were. He was directed or guided to that place because he knew or believed, first of all, that it was where he was supposed to swim because that is how the set up on the beach was ... he thought he would be swimming in a place that was safe because he assumed – [counsel] suggested reasonably assumed – that the persons or the organisation, which had the care, control and management of the beach, namely the Waverley Council, would not place those flags in a position where a person could be as it were encouraged to do something which might be dangerous. [The plaintiff] ... suffered those injuries because the council set up of a system of having flags in the particular place where there was a sand bank, which was a disguised danger. They could have done a number of things. First thing, warn people of the existence of it. Secondly, look for somewhere else to place the flags. And, third, if there was not anywhere else then do something so people had a choice." There was a dispute at trial about whether the appellant was between the flags when he was injured, or was outside the flags. There was ample evidence, including that of the appellant, upon which the jury could find that he was between the flags. The respondent having made an issue out of whether the appellant was outside the flags, the jury would be likely to have treated their conclusion that he was between the flags as a substantial point in his favour. Nevertheless, it was far from conclusive. There was some debate before this Court as to what the flags might reasonably be taken to have signified to a person such as the appellant. On the day in question, surf conditions were calm. No one could seriously suggest that the beach should have been closed to surfers. Undoubtedly, the flags were there to give guidance (indeed, instruction) to people as to where they should bathe. As to precisely what they represented concerning safety, somewhat different views may have been open. Safety is not an absolute concept. No reasonable person would understand flags on a beach to indicate a complete absence of risk. People who use beaches are of all ages, all degrees of competence as swimmers, all sizes, and all standards of physical fitness. The evidence was that, for some people, such as children, or elderly or infirm swimmers, sand banks can be a safety feature rather than a hazard. Furthermore, as was pointed out in the Court of Appeal, flags are not placed in the water. No one could possibly think that it was safe to dive anywhere between the flags. That would be nonsense. It would not mean it was safe to dive at the water's edge. To say that the flags conveyed a representation that it was safe to swim or dive in a particular area requires consideration of the range of persons to whom the representation was made, and the conditions that might constitute a hazard to different classes of person. Swimming in the ocean is never entirely risk-free. For some people who are poor swimmers, the water itself may be a considerable hazard. For many people, swimming in water beyond a certain depth is dangerous, even if they are between the flags. For all people, diving in shallow water is risky. Flags do not indicate an absence of risk. Even so, considerations of comparative safety play an important part in where they are placed. The respondent succeeded in persuading a majority in the Court of Appeal that, as a matter of law, there was no evidence upon which the jury could reasonably be satisfied that the conduct of the respondent Council exhibited a failure to exercise reasonable care for the safety of the appellant. That involved a finding, not that the jury's conclusion about reasonableness was wrong, but that it was not even open. It was clearly open to the jury to accept the appellant's version of how he came to suffer his injury. That was that he was swimming between the flags, he was not affected by drink, the manner in which he dived, or attempted to dive, into the water was orthodox, and he struck a submerged obstacle in the form of a sand bank which was not visible to him. The facts relating to the conduct of the respondent, so far as the evidence went, were uncontroversial. The condition of the surf, the location of the flags, the size and shape of the sand bank, and the number of people at the beach were not in dispute. There was, however, one matter that was not the subject of evidence. The appellant's case criticised the respondent for placing, or leaving, the flags in such a location that a submerged sand bank was in the path of swimmers intending to go any significant distance into the water. There was evidence that this was not unusual. There was also evidence that a sand bank (assuming it is stable) can provide security to some swimmers as well as a possible hazard to others. There was no evidence as to whether it would have been possible to move the flags so that the hazard was removed without compromising other aspects of safety. Witnesses spoke of general practice in relation to placing and moving flags at beaches, but no witness addressed that particular question. An employee of the respondent who was on duty at the beach that day gave evidence, but he did not assume responsibility for deciding whether or not to move the flags, or go into the question of the availability of possible alternative locations on the day. The trial judge, in his summing-up to the jury, recorded the argument of the respondent's counsel in these terms: "The third [point] was that the plaintiff has to satisfy you that reasonable care required the council to do something differently on the day. That is, place the flags elsewhere or do something else. He said to you should the flags have been placed elsewhere? ... He said that the sand banks are the safest place to swim, and what was it that was dangerous? Essentially he said it was an unexceptional day and the beach formation was unexceptional. It was a characteristic day. He described the size of the waves. He said that the plaintiff agreed that there are irregularities in the surf from time to time. He said a real possibility of a sand bar is a part of life and there must be gutters and they vary because the beach is dynamic. The beach has to be safest for children and infirm people ... The way the flags were put was not unreasonable. ... The council has to take into account the needs of all bathers and must recognise the beach does move around, and that it is a place where people go because of the thrill and it does have its inherent dangers. He said [that in] the exercise of reasonable care [in] the circumstances of the day it was appropriate to place the flags there. There were half metre waves. He said the plaintiff should have been capable of swimming out in front and the conditions were 'run of the mill'. He said that there was no evidence the area between the flags was dangerous. People had been in and out during the day and he said it was obvious that he needed to go out further before he could dive." When counsel for the respondent, in final address, invited the jury to consider whether the flags should have been placed elsewhere, it might have occurred to the jury that no witness, and in particular no witness for the respondent, had given evidence about that possibility. It was open to the jury to consider that the sand bank was a danger, although not one that was either unusual or such as necessarily to require the respondent either to prevent people from swimming near it or to give them a warning about it. Yet a possible point of view was that an assessment of the reasonableness of the respondent's conduct would involve a consideration of whether, by moving the flags, the danger could have been avoided without the creation of any countervailing problems. The argument of the respondent invited such a consideration. On that matter, the evidence was silent. As the trial judge's summary of the argument for the respondent shows, the approach of the respondent came down to the proposition that, regardless of conditions to either side of the flags, the sand bank did not constitute a sufficient danger to warrant moving, or even considering moving, the flags. Apparently, the jury did not accept that. More than 200 years ago, Lord Mansfield said that "all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted."5 This basic principle of adversarial litigation is not a matter of esoteric legal knowledge; it accords with common sense and ordinary human experience. When the jurors in this case were asked to consider whether the flags should have been placed elsewhere, they may have thought that it was up to the respondent, rather than the appellant, to tell them what difficulty there would have been about moving the flags to avoid the sand bank, or to explain why nothing would have been gained by putting the flags in a different location. That is something they might the reasonably have reasonableness of the conduct of the respondent. judgment about in making a into account taken Given a finding that the appellant was swimming between the flags, the argument for the respondent was that the sand bank was not really a danger, or at least not such a danger as could have affected a decision about where to place the flags. Faced with a quadruplegic plaintiff, and a jury, that was a strong line to take in the absence of any evidence to show that moving the flags would not have made a material difference, or improved overall safety. 5 Blatch v Archer (1774) 1 Cowp 63 at 65 [98 ER 969 at 970]. Many judges, and many juries, might have accepted the respondent's argument. Some people, applying their standards of reasonableness, might have reflected that variable water depths are as much a feature of the surf as variable wave heights, that diving into waist-deep water without knowing what lies ahead is obviously risky, just as catching and riding a wave to shore is risky, and for much the same reason, and that, if the conduct of the respondent in this case constituted negligence, the only prudent course for councils to take would be to prohibit surfing altogether. To my mind, those are powerful considerations. However, under the procedure that was adopted at this trial, the assessment of the reasonableness of the respondent's conduct was committed to the verdict of a jury. The question for an appellate court is whether it was reasonably open to the jury to make an assessment unfavourable to the respondent, not whether the appellate court agrees with it. The Court of Appeal should have answered that question in the affirmative. The appeal should be allowed with costs. The judgment of the Court of Appeal should be set aside, and it should be ordered that the appeal to that Court be dismissed with costs. McHugh 21 McHUGH J. The issue in this appeal is whether there was any evidence on which a jury could find that the respondent, Waverley Municipal Council ("the Council"), was guilty of negligence that resulted in the appellant, Mr Guy Swain, suffering spinal injury while swimming at Bondi Beach. In my opinion, there was no evidence upon which a jury could find that the Council was negligent. That is because, assuming that there was a reasonably foreseeable risk of injury to the appellant when he attempted to dive through a wave while swimming at the beach, he tendered no evidence that would have entitled the jury to find that there existed a reasonably practicable means of avoiding that risk. One reason why the appellant failed to prove a reasonably practicable alternative is that he failed to tender any evidence that his suggested alternative would not only have eliminated that risk of injury but would also not have exposed himself or other swimmers to similar or other risks. Before a case of negligence can be submitted to a jury for determination, there must be evidence upon which the jury can find: that the risk of injury to the plaintiff was reasonably foreseeable; that a reasonably practicable means of eliminating that risk existed; and that there was a causal connection between the defendant's failure to eliminate the risk of injury and the sustaining of the plaintiff's injury. In the present case, it was probably open to the jury to find that, on this day, swimming or bodysurfing between the flags at Bondi Beach exposed the swimmer to a risk of injury that was reasonably foreseeable. The risk arose from the possibility that, if the swimmer dived through a wave in an area about 15-25 metres from the shore, the swimmer might strike an unseen sandbar6. I say that it was probably open to find that that risk was reasonably foreseeable because there was no evidence as to how long the risk had existed. For all that the evidence disclosed, the risk might have been confined to only a small part of the flagged area and might have existed only for a short period. If the risk had only recently arisen, the appellant would have had the difficulty at trial of showing that the Council should have known of the risk and taken immediate action to avoid it. Assuming, however, that there was a reasonably foreseeable risk of injury to the appellant, there was no evidence whatsoever that there was a 6 Although the terms "sandbank" and "sandbar" were used interchangeably at the trial, Handley and Ipp JJA in the Court of Appeal distinguished the terms as follows: "Troughs or channels are created by the movement of water 'to the left and right across the sandbank'. The seaward edge of a channel is known as a sand bar." Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at McHugh reasonably practicable means available to avoid it. There was no evidence that the risk was not also present at other parts of the beach outside the flagged area or that there were parts of the beach within the flagged area that did not have the same degree of risk. There was no evidence that other parts of the beach were free from other dangers associated with swimming and could have been safely used by swimmers including the appellant. Indeed, the fact that the flags directed bathers to swim between them strongly indicates that areas of the beach outside the flagged area were more dangerous than the part of the beach within the flagged area. Furthermore, in this Court the appellant accepted that reasonable care did not require the Council to warn him of the danger of striking the sandbar. And no-one, not even counsel for the appellant, suggests that, on this day with a calm surf running, a reasonably practicable alternative means of eliminating the risk would have been to close Bondi Beach or even the flagged area where he swam. It is no answer to the above analysis to say that the Council, through its employed lifeguards, was in the better position to give evidence concerning the condition of other parts of the beach that day and whether they were safe for swimming. The law places the onus on the plaintiff to prove negligence. As part of that proof, the plaintiff must show that there was a reasonably practicable alternative available that would have eliminated a reasonably foreseeable risk of injury. In some cases, the plaintiff may satisfy that requirement by relying on common knowledge of alternative actions or precautions that would have eliminated the risk. However, common knowledge was not sufficient in this case to satisfy that requirement. It did not – could not – prove the conditions of the surf and the seabed at other parts of Bondi Beach on that day. What was required – and what was absent in this case – was evidence that other parts of the beach outside or even inside the flagged area did not expose swimmers to risks of injury. Once a plaintiff tenders some evidence of a reasonably practicable alternative, the failure of the defendant to tender evidence that the suggested alternative is not reasonably practicable is relevant in determining whether a verdict for the plaintiff was reasonable. But it does not eliminate the need for the plaintiff to tender some evidence that there existed a reasonably practicable alternative means of eliminating the risk of injury of the kind that the plaintiff suffered. With great respect to those who hold the contrary view, I find it impossible to hold that the appellant tendered any evidence against the Council that, as a matter of law, was capable of proving that the Council was negligent. Statement of the case The appellant, Mr Guy Swain, became a quadriplegic when he dived into a sandbar while attempting to dive through a wave at Bondi Beach, Sydney, which is under the care, control and management of the respondent, Waverley Municipal Council. At the time, the beach was supervised by three lifeguards McHugh employed by the Council. Subsequently, Mr Swain commenced an action in the Supreme Court of New South Wales against the Council, claiming damages for the breach of a duty of care that he claimed the Council owed him. He alleged that the Council had placed flags on the beach, that the flags had induced him to swim where he did and that the Council had failed to take reasonable care in positioning the flags. Alternatively, he alleged that the Council was negligent in failing to warn swimmers of the danger of the sandbar that caused his injury. A judge and a jury of four tried the action. Before the trial commenced, the parties agreed on the amount of damages that reflected proper compensation for Mr Swain's injury. The jury found that the Council had been negligent, that Mr Swain was guilty of contributory negligence and that his negligence was 25% responsible for the injury that he suffered. As a result, the Supreme Court entered a verdict and judgment for Mr Swain in the sum of $3.75 million after reducing the agreed amount of damages by 25%. The Council appealed to the New South Wales Court of Appeal on the ground that the verdict of negligence against the Council was against the evidence and the weight of the evidence. Later, the Council amended its notice of appeal to allege that there was no evidence of negligence on its part. The Court of Appeal set aside the verdict in favour of Mr Swain and entered a verdict and judgment in favour of the Council7. By majority (Handley and Ipp JJA, Spigelman CJ dissenting), the Court of Appeal held that there was no evidence upon which the jury could find that the Council was negligent in placing the flags where it did. The majority held that it was not open to the jury to find that the flags suggested that the patrolled swimming area between them was safe for diving8. In addition, the majority thought that the dangers associated with diving into the surf were so obvious that the jury could not find that the Council had breached its duty by its placement of the flags9. The majority also held that there was no evidence of any action that the Council could have taken in placing the flags that would have avoided injury to Mr Swain10. All judges of the Court of Appeal held that there was no evidence to support a verdict against the Council on the basis of its failure to warn that it was dangerous to dive in the surf because of the presence of sandbanks11. 7 Swain [2003] Aust Torts Rep ¶81-694. 8 Swain [2003] Aust Torts Rep ¶81-694 at 63,786. 9 Swain [2003] Aust Torts Rep ¶81-694 at 63,786. 10 Swain [2003] Aust Torts Rep ¶81-694 at 63,786. 11 Swain [2003] Aust Torts Rep ¶81-694 at 63,781 per Spigelman CJ, 63,785-63,786 per Handley and Ipp JJA. McHugh Subsequently, this Court gave Mr Swain special leave to appeal against the orders of the Court of Appeal. The only issue in the appeal in this Court is whether the Court of Appeal erred in finding that there was no evidence that the Council was negligent in placing the flags where it did. Mr Swain has not challenged the unanimous finding of the Court of Appeal that there was no evidence the Council was negligent in failing to warn him of the danger of diving into or hitting the sandbar. The power of the Court of Appeal to set aside the jury's verdict Section 108(3) of the Supreme Court Act 1970 (NSW) empowers the Court of Appeal to direct a verdict in favour of the defendant where the defendant is "as a matter of law, entitled to a verdict in the proceedings". Ever since Hampton Court Ltd v Crooks12, appellate courts in New South Wales have been empowered to set aside a jury's verdict on the ground that there was no evidence to support it, even though that objection was not taken at the trial. The issue in this appeal, therefore, is whether there was any evidence upon which the jury could reasonably find that the Council was negligent in placing the flags where it did. As I pointed out in Naxakis v Western General Hospital13, when a defendant submits that there is no evidence to go to the jury, the submission raises a question of law for the judge to decide. The question is not whether the quality of the evidence is such that a verdict for the plaintiff would be unreasonable or perverse. It is whether the plaintiff has adduced evidence that, if uncontradicted and accepted, would justify a verdict for the plaintiff. An appellate court may later be able to set aside a verdict for the plaintiff on the ground that the quality of the evidence is such that the verdict for the plaintiff was unreasonable or that it was against the weight of all the evidence in the case. But the question whether there is evidence that, as a matter of law, supports the verdict is more circumscribed. Evidence that is sufficient as a matter of law to entitle the plaintiff to a verdict must be distinguished from the totality of the evidence and its quality. The common law draws a distinction between evidence that, as a matter of law, entitles the jury to find a verdict for the plaintiff and evidence that supports a verdict claimed to be unreasonable or against the weight of the evidence. In the former case, the court looks only at the evidence and the inferences most favourable to the plaintiff. In the latter case, the court not only looks at the 12 (1957) 97 CLR 367. 13 (1999) 197 CLR 269 at 282 [40]. McHugh whole of the evidence but also examines its weight and quality in order to determine whether the verdict returned was reasonable or in accordance with the evidence14. Consequently, a plaintiff may tender evidence that, if accepted, is sufficient as a matter of law to constitute negligence but insufficient as a matter of fact to be regarded as reasonable by an appellate court. The evidence of the defendant may be so overwhelming or the quality of the plaintiff's evidence may be so weak that the verdict for the plaintiff cannot be regarded as reasonable, even though, as a matter of law, the evidence could justify a verdict for the plaintiff. The much litigated case of Hocking v Bell15 illustrates the difference between evidence sufficient to constitute negligence as a matter of law and evidence sufficient to justify a verdict claimed to be against the weight of the evidence or to be unreasonable. In Hocking, a jury found a verdict for the plaintiff in an action of negligence against a surgeon. The Full Court of the Supreme Court of New South Wales set aside the verdict on the ground that it was against the weight of the evidence and such as no reasonable jury could find. The Full Court ordered a new trial. In two subsequent trials, the juries could not agree. At a fourth trial, a jury again found a verdict for the plaintiff. The Full Court of the Supreme Court again set aside the verdict for the plaintiff. This time, however, by majority, it entered a verdict "as a matter of law" for the defendant. The minority judge, Roper J, also set aside the verdict. He held that there was evidence of negligence as a matter of law, but that as the verdict of the jury was against the weight of the evidence, the defendant could only obtain an order for a new trial16. By majority, this Court upheld the order of the Full Court17. In a further appeal, the Judicial Committee of the Privy Council reversed the decision of this Court18. It held19 that the dissenting judgments of Latham CJ and Dixon J in this Court were correct in holding that, despite the overwhelming strength of the defendant's case20, as a matter of law, the plaintiff had established a case of negligence. 14 See Hocking v Bell (1945) 71 CLR 430 at 440-442, 444-445 per Latham CJ; Naxakis (1999) 197 CLR 269 at 282 [41], 284-285 [45] per McHugh J. 15 (1945) 71 CLR 430; (1947) 75 CLR 125. 16 Hocking v Bell (1944) 44 SR (NSW) 468 at 509. 17 Hocking (1945) 71 CLR 430. 18 Hocking (1947) 75 CLR 125. 19 Hocking (1947) 75 CLR 125 at 132. (Footnote continues on next page) McHugh In one situation, however, a jury's verdict may be set aside even though evidence tendered for the plaintiff, standing alone, supports a case of negligence against the defendant. That situation occurs when the plaintiff has to rely on an inference to make out a case of negligence and other evidence that is admitted to be true or cannot reasonably be disputed proves conclusively that the inference, favourable to the plaintiff, cannot be drawn21. Thus, what may appear to be a clear case of trespass to land will disappear once the defendant irrefutably proves lawful authority to enter the land22. In De Gioia v Darling Island Stevedoring & Lighterage Co Ltd23, for example, a receipt for wages signed by a negligent watchman appeared to establish that he was the paid employee of the defendant. However, evidence from the defendant conclusively established that the receipt showed "that the watchmen were thereby acknowledging that the defendant company had paid them, not on its own account but on account of the ship, for services rendered to the shipping company as ship watchmen."24 Because that was so, the Full Court of the Supreme Court of New South Wales held that there was no evidence upon which the jury could find that the defendant was responsible for the negligence of the watchman. In Hocking, Latham CJ pointed out25 that further evidence in such cases does not contradict the plaintiff's case, but rather supplements it, with the result that it makes unavailable the inference upon which the plaintiff relies. "During the course of this protracted litigation, the evidence has been examined by many judges, but I believe that it has produced the same impression upon the minds of all of them. There has not, I think, been one of them, who, if the responsibility of deciding the facts had rested with him and not with a jury, would not have found unhesitatingly that the defendant did not leave a piece of tubing in the wound in the plaintiff's neck. If I myself were a tribunal of fact I should feel much confidence in that conclusion." Hocking (1945) 71 CLR 430 at 487. 21 De Gioia v Darling Island Stevedoring & Lighterage Co Ltd (1941) 42 SR (NSW) 1 at 4 per Jordan CJ; Hocking (1945) 71 CLR 430 at 461 per Latham CJ; Hocking (1947) 75 CLR 125 at 131-132. 22 See, eg, Hocking (1947) 75 CLR 125 at 131-132. 23 (1941) 42 SR (NSW) 1. 24 De Gioia (1941) 42 SR (NSW) 1 at 7 per Jordan CJ. 25 (1945) 71 CLR 430 at 461. McHugh Hence, in determining whether, as a matter of law, a jury could find that the defendant was negligent, the court – be it a trial judge or an appellate court – must consider all the evidence which, if accepted, could reasonably establish negligence. If the plaintiff has tendered such evidence, it is irrelevant in determining the question of law that the defendant has tendered evidence that contradicts the evidence of the plaintiff. It is also irrelevant that a witness for the plaintiff has given evidence that contradicts evidence of negligence upon which the plaintiff relies26. In both cases it is irrelevant because determining which evidence to accept or reject is the prerogative of the jury, not the court. Even when an appellate court sets aside a jury's verdict on the ground of unreasonableness, it does not accept or reject the evidence of witnesses. It merely says that it was unreasonable for the jury to accept or reject certain evidence and, at common law, sends the case back to the trial court to be determined by another jury27. Furthermore, it is the province of the jury to determine not only what evidence is acceptable but also the inferences that should be drawn from that evidence. If an inference upon which the plaintiff relies is "equally consistent" with an inference or inferences upon which the defendant relies, the jury cannot reasonably act on the inference upon which the plaintiff relies28. But the cases in which a court can say that two inferences are "equally consistent" are rare. This is particularly so where the inference is not one of fact but a conclusion incorporating a value judgment, such as the reasonable care element of negligence. As Isaacs J pointed out in Cofield v Waterloo Case Co Ltd29 in the context of discussing whether causation was established: "A Court has always the function of saying whether a given result is 'consistent' with two or more suggested causes. But whether it is 'equally consistent' is dependent on complex considerations of human life and experience, and in all but the clearest cases – that is, where the Court can see that no jury applying their knowledge and experience as citizens reasonably could think otherwise – the question must be one for the determination of the jury." 26 Naxakis (1999) 197 CLR 269 at 283-284 [42]-[43] per McHugh J. 27 In some jurisdictions, statutes or Rules of Court give an appellate court, which has set aside a jury verdict, power to determine the matter itself instead of ordering a new trial. 28 Wakelin v London and South Western Railway Co (1886) 12 App Cas 41 at 45 per Lord Halsbury LC. 29 (1924) 34 CLR 363 at 375. McHugh Statements can also be found in the cases, for example, by Jordan CJ in De Gioia, to the effect that in determining whether, as a matter of law, there is evidence of negligence, the court may take into account that "some of the facts essential to the plaintiff's case are peculiarly within the knowledge of the defendant"30. In Hampton Court Ltd31, Dixon CJ held that there was no evidence of negligence, but his judgment also appears implicitly to have endorsed this "But a plaintiff is not relieved of the necessity of offering some evidence of negligence by the fact that the material circumstances are peculiarly within the knowledge of the defendant; all that it means is that slight evidence may be enough unless explained away by the defendant and that the evidence should be weighed according to the power of the party to produce it". With great respect to these great jurists, however, it is not legitimate to take into account on a "no evidence" submission that some of the facts essential to the plaintiff's case are peculiarly within the knowledge of the defendant. Either the facts relied upon by the plaintiff give rise to a reasonable inference of negligence or they do not. If the evidence tendered by the plaintiff cannot reasonably support an inference of negligence, it does not matter that the defendant has knowledge of facts that may have assisted the plaintiff's case. The plaintiff has simply failed to make out a case of negligence. If the evidence tendered does support a reasonable inference of negligence, the knowledge of the defendant is irrelevant because, as a matter of law, the plaintiff has established a prima facie case of negligence. Moreover, applying the knowledge-of-the- defendant doctrine leads to incongruous results, which seem to have been overlooked. It would mean that, at the end of the plaintiff's case, an application for a non-suit might succeed on the ground of insufficiency of evidence. At that stage, the defendant has not had an opportunity to tender evidence, so its conduct is irrelevant. On the other hand, an application for a verdict by direction in the same case when the evidence has closed might fail because the defendant has elected not to go into evidence or rebut the inference. The proposition that "evidence should be weighed according to the power of the party to produce it, in accordance with the often repeated observation of Lord Mansfield in Blatch v Archer"33 is not relevant in determining whether, as a 30 (1941) 42 SR (NSW) 1 at 4. 31 (1957) 97 CLR 367. 32 Hampton Court Ltd (1957) 97 CLR 367 at 371. 33 Hampton Court Ltd (1957) 97 CLR 367 at 371-372 per Dixon CJ, citing Blatch v Archer (1774) 1 Cowp 63 at 65 [98 ER 969 at 970]. McHugh matter of law, there is evidence of negligence. It applies only where, although the evidence is sufficient as a matter of law, the defendant seeks to set aside the verdict on the ground of unreasonableness. The remarks of Lord Mansfield in Blatch v Archer34 to which Dixon CJ referred were made in a motion for a new trial. Although the report does not say so, the ground for a new trial must have been that the verdict was against the weight of the evidence. The grounds that would support a motion for a new trial at common law were basically the same then as they are today: evidence wrongly admitted or rejected, misdirection by the trial judge or that the verdict was perverse or against the evidence or the weight of the evidence. The remarks of Lord Mansfield were not spoken in the context of an issue whether, as a matter of law, there was evidence to support the plaintiff's case. They should not be applied in that context. The need for evidence of a reasonably practicable alternative Evidence of the existence of an alternative The plaintiff bears the legal and evidentiary burden of establishing a prima facie case of negligence35. To prove negligence, the plaintiff must be able to point to a reasonably practicable precaution or alternative course of conduct that could have avoided, or reduced the consequences of, the injury to the plaintiff36. The plaintiff does not establish a prima facie case simply by asserting that there "must be" a practicable alternative, and that it is for the defendant to provide evidence that no such alternative exists37. The plaintiff does not prove a case of negligence, for example, by proving the existence of the risk and then alleging that the defendant took no precautions to protect the plaintiff against that risk38. 34 (1774) 1 Cowp 63 at 65 [98 ER 969 at 970]. 35 De Gioia (1941) 42 SR (NSW) 1 at 3-4 per Jordan CJ. 36 Neill v NSW Fresh Food and Ice Pty Ltd (1963) 108 CLR 362 at 364 per Dixon CJ, 369-370 per Taylor and Owen JJ; Vozza v Tooth & Co Ltd (1964) 112 CLR 316 at 319 per Windeyer J; Kingshott v Goodyear Tyre & Rubber Co Australia Ltd (No 2) (1987) 8 NSWLR 707 at 725 per McHugh JA. 37 Neill (1963) 108 CLR 362; Vozza (1964) 112 CLR 316. 38 Kingshott (1987) 8 NSWLR 707 at 727 per McHugh JA, referring to Australian Iron & Steel Pty Ltd v Krstevski (1973) 128 CLR 666 at 668 per Barwick CJ and McHugh Evidence of the practicability of the alternative The plaintiff must also provide at least some evidence from which the jury can find that the alternative is a practicable one that was reasonably open to the defendant39. Thus in Vozza v Tooth & Co Ltd40, the plaintiff suggested two alternatives to obviate the risk of injury arising from the broken bottles he was required to handle, namely, the installation of a system for the mechanical handling of the bottles or the provision of thicker gloves. He did not describe the mechanical handling system in sufficient detail to enable the jury to contrast it with the defendant's manual handling system or to assess its advantages and disadvantages or to say whether or not it would have been practicable and reasonable to install it in the defendant's premises. He tendered evidence that more strongly reinforced gloves were available but there was no evidence that they would be suitable for the plaintiff's task. The defendant called an expert who said he could make a better glove (not an impenetrable glove). This Court held that there was insufficient evidence in relation to any of the alternatives suggested by the plaintiff to support a verdict for the plaintiff as a matter of law. The Court affirmed the decision of the Full Court of the Supreme Court of New South Wales to set aside the jury's verdict for the plaintiff and enter a verdict for the defendant. Similarly, in Neill v NSW Fresh Food and Ice Pty Ltd41, the plaintiff suggested that a handrail might have been placed inside a cylindrical milk container to minimise the risk of injury from slipping inside the container while the plaintiff cleaned it. Alternatively, he contended that the defendant employer could have provided "non-skid boots". The plaintiff provided no evidence of the practicability of either suggestion. This Court held that in the absence of expert evidence, it was merely "a matter of conjecture" whether the suggested precautions would have been practicable or not42. Accordingly, as the plaintiff had not established a prima facie case of negligence, the Court upheld the decision of the Full Court of the Supreme Court of New South Wales to set aside the jury's verdict for the plaintiff and enter a verdict for the defendant. 39 Neill (1963) 108 CLR 362; Vozza (1964) 112 CLR 316. 40 (1964) 112 CLR 316. 41 (1963) 108 CLR 362. 42 Neill (1963) 108 CLR 362 at 365 per Kitto J. McHugh Where the suggested alternative carries its own risks, the plaintiff must tender some evidence to support the practicability of that alternative43. Thus, the plaintiff may be required to describe an alternative system in sufficient detail to enable the jury to contrast it with the defendant's system, or to assess its advantages and disadvantages, or to say whether or not it would have been practicable and reasonable for the defendant to adopt it44. The plaintiff may also be required to provide some technical or expert evidence of the feasibility of the alternative, especially where the operation is complex and technical45. A matter of expert evidence or common knowledge and common sense In some cases, common knowledge or common sense is all that is required to prove a reasonably practicable alternative46. In other words, the plaintiff may be able to discharge the evidentiary onus of establishing a practicable alternative without the benefit of technical or expert evidence. In Maloney v Commissioner for Railways47, Barwick CJ said that evidence of the practicability of the proposed alternative course or safeguard "is essential except to the extent [that it is] within the common knowledge of the ordinary man." Similarly, in Tressider v Austral Stevedoring and Lighterage Co Pty Ltd48, the New South Wales Court of Appeal said that in some cases: "[N]o more than common knowledge or common sense is necessary to enable a judge or jury to perceive the existence of a real risk of injury and 43 See, eg, General Cleaning Contractors Ltd v Christmas [1953] AC 180 at 193 per Lord Reid, 196 per Lord Tucker; Neill (1963) 108 CLR 362 at 365 per Kitto J; Vozza (1964) 112 CLR 316 at 319 per Windeyer J; Krstevski (1973) 128 CLR 666 at 669-670 per Barwick CJ and Menzies J. 44 See, eg, Vozza (1964) 112 CLR 316 at 319 per Windeyer J. 45 See, eg, Krstevski (1973) 128 CLR 666 at 680 per Mason J. 46 See, eg, Hamilton v Nuroof (WA) Pty Ltd (1956) 96 CLR 18; Tressider v Austral Stevedoring and Lighterage Co Pty Ltd [1968] 1 NSWR 566 at 568; Neill (1963) 108 CLR 362 at 368 per Taylor and Owen JJ; Maloney v Commissioner for Railways (1978) 18 ALR 147 at 148 per Barwick CJ; Colquhoun v Australian Iron and Steel Pty Ltd (Unreported, New South Wales Court of Appeal, 15 November 1996, Mahoney P, Handley and Powell JJA). 47 (1978) 18 ALR 147 at 148. 48 [1968] 1 NSWR 566 at 568 per Herron CJ, Sugerman and Jacobs JJA agreeing. McHugh to permit the tribunal of fact to say what reasonable and appropriate precautions might appropriately be taken to avoid it." Where the case involves a technical or complex operation or service, however, it is likely that the plaintiff will not have a case to go to the jury without leading technical or expert evidence as to the existence and practicability of the suggested alternative. Where the issues involve "technical knowledge and experience"49, the plaintiff must provide evidence as to what the defendant ought to have done. The question cannot be determined by the application of common knowledge, and a jury cannot decide the issue on the basis of its own ideas as to what the defendant ought to have done50. Thus, a mere allegation that a precaution is practicable is insufficient where the evaluation of whether or not the precaution technical knowledge and experience51. is practicable issues of involves In Bressington v Commissioner for Railways (NSW)52, this Court held that there was no evidence of negligence in the absence of expert evidence as to the practicability of measures which the defendant could have undertaken to reduce the risk of injury to the plaintiff's deceased husband. The plaintiff's husband, a fireman employed by the Commissioner for Railways, was struck and killed by a van while crossing railway lines in his employer's shunting yard. While there was evidence that a system of stationing people at the stationary vans to warn others that the vans might suddenly move would have been a safe precaution to take, there was also evidence that this system would not be practicable. Latham CJ held that, where the issue of negligence involved issues of technical knowledge and experience, a jury acting on its own knowledge could not find negligence on the basis of its own ideas of what ought to be done53. His Honour said that the practicability of providing a system of warnings in a large railway shunting yard "is not a question to be determined in the light only of the common knowledge which is attributable to juries."54 49 Bressington v Commissioner for Railways (NSW) (1947) 75 CLR 339 at 348 per 50 Urban Transit Authority (NSW) v Hargreaves (1987) 6 MVR 65 at 72 per Clarke JA, citing Bressington (1947) 75 CLR 339 at 348 per Latham CJ. 51 Bressington (1947) 75 CLR 339 at 348 per Latham CJ. 52 (1947) 75 CLR 339. 53 Bressington (1947) 75 CLR 339 at 348. 54 Bressington (1947) 75 CLR 339 at 348. Another case where the defendant succeeded because of the plaintiff's failure to lead technical evidence of the practicability of the suggested measure to obviate the risk of injury is Da Costa (Footnote continues on next page) McHugh In Maloney, the plaintiff fell through the open door of a Sydney suburban train and suggested that automatic closing doors should have been fitted or some other system should have been provided to ensure that the doors were closed when the train was in motion. The plaintiff led no evidence that the installation of the suggested automatic closing doors was feasible or practicable. There was also no evidence about the feasibility of providing and installing such doors in circumstances which included the continued operation of the Sydney suburban train service. This Court held that in the absence of evidence, among other things, as to the practicability of the precautions proposed, no tribunal of fact could reach a conclusion on the reasonableness of the defendant's conduct. The reasonable practicability of the proposed alternative of installing automatic closing doors was not a matter within common knowledge in those days. In Carlyle v Commissioner for Railways55, however, the Full Court of the Supreme Court of New South Wales held that the jury could use common knowledge to determine whether a risk of injury to railway employees could have been obviated by the provision of warning bells with markedly different tones. Carlyle concerned the death of a railway porter, who was struck and killed by a train as it passed through the station where he worked. Although there was an alarm system to warn of approaching trains, which used different bell tones for each train line, the tones were not easy to distinguish and cut out when the train was quite close to the station. The plaintiff, the railway porter's wife, suggested that the risk of injury could have been obviated by the provision of bells with markedly different tones, and there was evidence that it was reasonably practicable to provide for different tones in the bells. Maxwell J, who gave the leading judgment in the Full Court, held that the jury could use its own knowledge to determine whether the plaintiff's alternative system was reasonably practicable. His Honour said56: "An examination of the system does reveal, I think, that the common knowledge of mankind would enable a jury to say at least that it was v Australian Iron & Steel Pty Ltd (1978) 20 ALR 257. In that case there was "a total absence of evidence of any kind" on the matter of the safety and practicability of the suggested alternative: at 266 per Mason J. As the practicability of the suggested alternative could not be assessed on the basis of common sense or common knowledge – in other words, expert evidence was required – the absence of such expert evidence meant that the verdict for the plaintiff could not stand. This Court ordered a new trial. 55 (1954) 54 SR (NSW) 238. 56 Carlyle (1954) 54 SR (NSW) 238 at 243. McHugh practicable to have a bell on each platform either in the place where at present installed on one only and, as well, within the office of each platform where the porter was from time to time obliged to be. This suggestion, which is part of the plaintiff's case, is not so confined to the technical field as to require that it should be the subject of expert evidence. The same considerations apply also to provision for marked distinction in the tones of the bell's warning in respect of the up-line and the down-line. If this is correct then there was evidence for the jury of negligence on the part of the defendant Commissioner related to the accident." Another example of a case that did not require expert evidence is City of Richmond v Delmo57. However, it is a case of the use of common sense rather than common knowledge and experience. In Delmo, the plaintiff's car was struck by a golf ball that passed through a fence on the defendant's golf course. The plaintiff suggested that the risk of damage could have been avoided by using a different type of fencing. There was evidence that the fence was a typical cyclone wire mesh fence with an interlocking pattern of wire strands. Smith J held that the inference was open that, if the wire fencing could be manufactured in an interlocking pattern, it could be manufactured in other patterns, including a pattern with smaller openings. The defendant did not lead evidence to suggest that this was not possible. In General Cleaning Contractors Ltd v Christmas, Lord Reid said58 that a plaintiff is generally required to put forward some alternative that can be tested by evidence, but that this might not be necessary in a "clear" case. In that case, the plaintiff window cleaner fell from the sill on which he was working when the sash of the window that he was gripping moved. The plaintiff led some evidence about alternative systems of work, such as the use of safety belts and hooks or ladders. There was very little evidence about the practicability of these alternatives. Lord Tucker said59 that "in some cases there may be precautions which are so obvious that no evidence is required on the subject". He went on to say, however, that in cases where there is a system in general use, it is60: "eminently desirable … that it should be clearly established by evidence that some other and safer system is reasonably practicable and that its 57 Unreported, Supreme Court of Victoria, 13 November 1992, Smith J. 58 [1953] AC 180 at 193. 59 Christmas [1953] AC 180 at 198. 60 Christmas [1953] AC 180 at 198. McHugh adoption would have obviated occasioned damage to the plaintiff." the particular accident which has The House of Lords held that this case fell into the former category. In Dixon v Cementation Co Ltd61, Devlin LJ appeared to accept that in some cases the plaintiff may discharge the evidentiary burden simply by saying: "If this is dangerous, then there must be some other way of doing it that can be found by a prudent employer and it is not for me to devise that way or to say what it is." With great respect to one of the greatest judges of the 20th century, that statement is wrong. In Australian Iron & Steel Pty Ltd v Krstevski62, Barwick CJ and Menzies J sought to explain it as depending on a finding that the employers could have altered a system which they knew or ought to have known was unsafe. But this is not the natural meaning of what Devlin LJ said. His statement is contrary to basic principle, and it should not be followed. The material facts Mr Swain sustained his injury at about 4.30pm on 7 November 1997, which was a fine but overcast day. About 2,500 persons were at Bondi Beach that afternoon. About 3,500 persons attended that beach that day. The surf was light, the swell size in the afternoon being only 0.5 metres. Flags, designating the patrolled swimming area, had been placed in the sand at about 6am by a lifeguard employed by the Council. They were in the same place when Mr Swain was injured. The flags may have been 100 metres apart but were probably closer than that. High tide of 1.5 metres occurred at approximately 2pm. Low tide that morning was at 7.30am and was about 0.6 metres. Mr Swain arrived at the beach at about 3pm with two friends, Mr Earl Wilson and Ms Kathryn Galvin. Mr Wilson and Mr Swain drank some beer. Some time before 4.30pm Mr Wilson went into the surf between the flags. He gave evidence that there was a "normal ... downward slope" in the seabed. He said that, about 15-20 metres from the shore, he took a slight step down, took "three or four" steps and "kicked a sandbar." In the evidence, the terms "sandbar" and "sandbank" were used interchangeably. Just before the sandbar, the water was about waist deep. Mr Wilson said, "[W]hen I stepped over it, I was at a depth of up to my knees." He said that "it was quite a big step" and that 61 [1960] 1 WLR 746 at 748; [1960] 3 All ER 417 at 419. 62 (1973) 128 CLR 666 at 668. McHugh "got a bit of a surprise because it was quite a big step and I hadn't been used to such conditions, so I, you know, I did notice it and think, ooh, that's a bit dangerous, because I was thinking of diving when I got to waist-deep, as you do, thinking that it's safe." After he returned to the beach, Mr Swain and Ms Galvin went into the water. Ms Galvin said that there was a "ditch or hollow in the water" just before the sandbank. She stumbled forward on the sandbank and the water became "shallow again without a doubt." At that stage, she said that Mr Swain was about a metre to the right of her. Mr Swain was the last of the three to enter the water. He was 24 years of age and a very experienced surfer. As an 11 or 12 year old, he had taken a Learn to Surf course. He was familiar with rips, able to identify them and knew that they were dangerous. He knew that the safest areas to swim were areas without rips. He had dived under waves many times before. He knew that rocks or other dangers might be under the water. He was aware of the presence of sandbanks in surfing and swimming areas, particularly at North Curl Curl Beach where he had frequently surfed. Asked to define a sandbank, he said: "[Y]ou have this wall of sand that is sticking up from the base of the sand or the bottom of the ocean." He was familiar with the phenomenon of waves breaking on a sandbank, washing over the sandbank and then running out to sea. He was also aware that, where the waves break close to the shore, there is froth from the surf and scour from the sand as it is dragged back to where the waves break. He also accepted that the water tends to be shallower over the sandbank and that it is "deeper again closer to the shore". He agreed that the "slightly deeper area in front of the sand bank is where you have the water going off to the sides and finding its way out towards the rip area and is being fed out to sea". When surfing, he usually used a surfboard. He said that he avoided surfing over sandbanks because inconsistency in water depth meant "the waves aren't always the best over the sand bank." He had been to Bondi Beach more than 10 times before. Only on one occasion had he used a surfboard at Bondi. Handley and Ipp JJA inferred from Mr Swain's evidence that: "He knew there were likely to be channels and sandbars in sandbanks."63 "There might be irregularities on a sandbank closer to the shore."64 "The irregularities include channels and sandbars."65 63 Swain [2003] Aust Torts Rep ¶81-694 at 63,784. 64 Swain [2003] Aust Torts Rep ¶81-694 at 63,785. McHugh "Waves break as they hit the sandbank and the water usually gets deeper where a channel has formed closer to the shore."66 "Inshore from the channel, the water becomes shallower again."67 Mr Swain said that he went into the surf between the flags, waded about 15 metres through the water and then dived through an oncoming wave. He said that he swam between the flags because he thought "it was safe and a [patrolled] area." The surf was "quite calm". He could not see the sand beneath his feet as he waded out. At the point where he dived, the water was about waist deep. Ms Galvin was about 18 metres ahead of him. He had no idea of the depth of the water in front of him but agreed that it must have been shallow enough for the wave to break. When he dived, the wave was 0.5 to 1 metre away. After diving, his next awareness was an inability to move and a lot of pain. Evidence about the uniformity of channels and sandbars Mr Jeffrey Williams was called as an expert witness in Mr Swain's case. Mr Williams was a senior ocean lifeguard and beach and surf education officer for the Sutherland Shire Council. He testified that a beach is generally "one large sandbar" that "is dissected by the channels." The typical formation is "a sandbar, a rip, a sandbar, a rip, in that formation." Rip tide currents form the channels. The water is gathered at the shore-line and creates the easiest flow of water back out to sea, which results in the formation of a channel and a sandbar. The feeder system for the channels starts "where the waves gather then they travel either side and join up to a rip … to either side." The channel then goes out to sea. Mr Williams gave uncontradicted evidence that: There is always a channel where the rips are, but the channel "depends on the passiveness of the ocean." The two channels that go out to sea are generally joined by another channel, which results in a U-shape formation. It is inevitable that there is "guttering", that is, a channel, in the inshore area of a sandbank. 65 Swain [2003] Aust Torts Rep ¶81-694 at 63,785. 66 Swain [2003] Aust Torts Rep ¶81-694 at 63,785. 67 Swain [2003] Aust Torts Rep ¶81-694 at 63,785. McHugh The dimensions of the channel, that is, the depth and width of the channel, are not uniform; rather, the channel is "a fluctuating entity determined by the concentration of water or the tidal influence." During the course of any day on the beach, the channels "may move or they may stay the same" depending on the circumstances. Such circumstances include the wave direction and the size of the waves, the tidal influence, wind, currents and the availability of the sand. These circumstances affect the formation of the beach, including the formation of channels and sandbars and, by implication, the movement of channels during the course of the day. The direction from which the wave comes determines the actual formation of the sandbank and the location of the channels or rips. Wind alters the direction and flow of the wave. The strength of the water flow and the concentration of the water determine the size of the sandbank and the size of the channels. The tidal influence that affects the formation of channels is the difference between the mean high water and the mean low water. The more extreme the swing between the mean high water and the mean low water, the greater the differences in the relative current flow between the rips or channels and the sandbank area. If there is a rip tide flowing out and there is a strong current, the sandbar typically becomes isolated and surrounded by the current on either side. Every part of the beach seaward of the shoreline contains natural hazards. Mr Williams was unable to say as a general proposition that the further the sand goes out, the more likely there is to be a gradual change in the depth. The trial judge summarised Mr Williams' evidence about the factors that influence conditions and sand structure at a beach as follows68: "[Mr Williams] said the conditions of the surf and the effect of the winds and tide and currents are potential hazards. He identified the hazards as wind, currents, occurrence of channels, and the actual formation of the beach. He said that the formation of the beach was generally affected by the wave direction, the size of the waves, and what he described as the total influence. This dictates the construction of the beach on the day. He 68 Swain v Waverley Municipal Council, Supreme Court of New South Wales, Trial Transcript, 13 May 2002 at 13-15 per Taylor AJ. McHugh said the wind alters the direction and flow of the wave. He said the varying effect which the movement of the waves make on the formation of the beach and the direction the waves come from nominates the actual sand bank formation and the location of channels and what people normally describe as rips. He said the tidal influence can be a strong factor on the size of waves and the formation of channels. He said that the strength of the water flow and the concentration of the water create the channels as areas of sand are relocated. He said the rip tide currents occur because the direction of a wave coming on the beach gathers at the shore line. It was unable to be stored so [the] natural process is for the water to find its own level so it creates the easiest flow of water back to the sea. That results in the formation of a channel and also a sand bar. He says you would expect the sand bar with a strong current to become isolated by a surrounding current on either side. Generally a beach is one large sand bar and is dissected by the channels. So you will generally find the sand bar rip in that formation. The dimension and depth of the channel is variable and fluctuates as determined by the concentration of water or the tidal influence. The channels do move depending on the circumstances on the day. They may stay the same." Evidence about the conditions at Bondi Beach on the day of the accident Waves Mr Harry Nightingale, a lifeguard employed by the Council who was on duty at Bondi Beach on the day, testified that on that day the surf conditions were "[v]ery small" and that there was "[n]ext to no surf". The lifeguards' daily report gave the measurement of the waves from the crest to the base of the face of the wave as approximately half a metre. Mr Swain said that the waves were about two feet from the crest of the wave to the base of the wave on the ocean side. All witnesses said that the surf was light. Current and rips Mr Wilson testified that he had been swept to the south of the flags while swimming. This indicates the existence of a current or rip in that direction. A reasonable jury could draw the inference that the current or rip extended from the area between the flags to the waters outside (to the south) of the flagged area. The channel and sandbar One of the many difficulties of the case is that there was no detailed evidence concerning the length, breadth, height or direction of the sandbank. There was no evidence whether the sandbank was parallel to the beach or ran diagonally or was crescent shaped. There was no evidence whether the height of the sandbank was uniform through its length and breadth or whether it sloped in McHugh any particular direction. However, Mr Wilson said that, after he stepped on to the sandbar, "I continued walking, where it dropped off again and I dove [sic] in and breast-stroked out." Nor was there any detailed evidence concerning the length, width or depth of the channel on the shore-side of the sandbank. For all that the evidence reveals, the ditch or hollow of which Ms Galvin spoke may have been a hole only a few metres wide. I have already referred to what Mr Wilson and Ms Galvin said about the sandbar and the conditions leading to it. Mr Wilson also said that, before he kicked the sandbar, he did not see anything that indicated its presence. Mr Wilson gave the following evidence about the variation in the depth of the water: "Q. What do you call a slight step down; from about knee deep to waist deep? No, it wasn't that great. That's why I said it was above – higher than the knee before the trench. … Q. What you indicated is the water about a third of the way up your thigh above the knee? Yes. And then waist deep to about your crotch level or maybe a little bit higher? Yes." Ms Galvin said that "there was a definite sort of ditch or hollow in the water because I fell down. And as I kept moving forward I stood up and it was shallow again without a doubt." She said that when she stood up and moved forward, she "noticed that it got really shallow again straightaway afterwards." She said that the ditch was deep enough "to make me actually lose my balance and fall over", and "[b]efore the ditch it was just shallow water." Ms Galvin was unable to say how shallow the water was, but it was "shallow enough to be jogging in." She said that Mr Swain dived at the point where she stumbled, and that he was about a metre or two away from her. In that respect, her evidence is inconsistent with that of Mr Swain. Mr Swain said that the water was "[a]bout waist depth, maybe a little bit higher than waist depth" or a little bit above his navel when he commenced his dive. He agreed under cross-examination that there was "quite a deal of frothing, surging surf in front of the wave", which "would suggest … that some distance in front of [him] the water was shallow enough to cause the wave to break". McHugh As Spigelman CJ in the Court of Appeal noted, evidence from Mr Wilson and Ms Galvin showed the existence of a sandbar and no evidence contradicted it69. Mr Wilson estimated the variation in the depth of the water as being somewhat less than from waist deep to knee deep. Ms Galvin could not estimate the height of the variation in the depth of the water, but said that after the "ditch" the water "got really shallow again straightaway". The Council led no evidence concerning the sand structure beneath the water at the relevant time70. Placement of the flags General beach conditions which affect placement of the flags Mr Williams testified as to the beach conditions that a prudent lifeguard takes into account when deciding where to position the flags on the beach. He said that, before positioning flags on a beach, the lifeguard should take into account the "condition of the surf and the effect of the wind and tide and currents, potential hazards." He identified the types of "potential hazards". He said: "Wind can be a hazard, current can be a hazard, the occurrence of currents and channels and the actual formation of the beach." He also said that channels and sandbars can present a hazard, as can the trough that is created. The hazard presented by the trough is that "the circumstance is that it's a variable depth and people aren't familiar with that circumstance." Mr Williams said that "[g]enerally flags are erected and placed on sandbanks." By "on" he meant on the beach adjacent to the sandbanks. He agreed that flags are placed there because that is generally regarded as the safest place to swim. He agreed that the person responsible for placing the flags has to make a judgment about the conditions on the day. As Spigelman CJ observed, Mr Williams also agreed that: "[A]n area with a 'shallow trough' could be an ideal spot for young children, but added: '... well, depending on the circumstance on the day, the trough could be the biggest hazard on the day.'"71 In cross-examination, Mr Nightingale said that "channels for sure are dangerous positions for swimmers." Mr Nightingale gave evidence about how a 69 Swain [2003] Aust Torts Rep ¶81-694 at 63,771. 70 Swain [2003] Aust Torts Rep ¶81-694 at 63,770 per Spigelman CJ. 71 Swain [2003] Aust Torts Rep ¶81-694 at 63,773. McHugh prudent lifeguard identified the conditions of the beach, including potentially dangerous conditions. He said that he identified dangerous positions for swimmers "visually by colour checks". In cross-examination he said: "I do it visually by colour checks. That is the way I do it. Dark green, to me, signifies deep water. And more oftentimes than not there is a current in the deep water. That is the first thing that I looked at on the beach; that is the first thing I would see. And then I would be drawn to that position and to check it out to see if there is a current running out or whether it's a still piece of ocean." He agreed that "[s]ometimes a deep hole would be a safe place to swim as long as there is not a current et cetera, et cetera." However, he agreed that this would depend on whether he perceived the deep hole to be a danger or not. There was therefore evidence that it was generally accepted practice to place the flags opposite a sandbank, although the beach conditions on the day ultimately determine where the flags are placed. Placement of the flags at Bondi Beach on the day There were two sets of flags at Bondi Beach that day, one at the North Bondi end and one – the set where Mr Swain was – in the centre of the beach. Mr Nightingale said that the southern end of the beach was "a more dangerous part of the beach usually." The area from south of the centre part of the beach "to the south end is allocated to board riding." Mr Swain also said that the "surf is bigger at the south than the north." Mr Sean Tagg, who in November 1997 had been a lifesaver for eight years, agreed that it would be fair to rate North Bondi "4", South Bondi "7" and the middle part varying between "4" and "6" on a scale of 1 to 10 of the dangerousness of the conditions at the beach, where "1" represented the safest conditions. However, none of the witnesses was asked about the conditions of the surf or the seabed at the North Bondi and South Bondi ends on this particular day or how they compared with the conditions at the centre of the beach. The Council did not call the person who placed the flags on the day of the accident. Mr Nightingale said that, during the course of the day there was no change in conditions at the beach which required the flags to be moved: "I could definitely tell you now there was no change in the beach conditions." Mr Nightingale was not asked about the channel in front of the sandbank, that is, whether he was aware of it on the day. He was merely asked about his capacity to determine the existence of a channel. Nor was he asked whether there were any "holes" in the inshore area that day. He was asked in cross-examination whether he would take action if he found that there were "deep holes, for example, near the shore". His answer was that "it depends on how deep is deep." McHugh He said that "[s]ometimes, a deep hole would be a safe place to swim as long as there is not a current". Mr Williams was not asked to express any view as to whether the Council should or should not have placed the flags where they were on the day. Neither Mr Williams nor Mr Nightingale was asked whether the particular sandbar present on the day was an unusual or usual occurrence for the seabed. In the state of the evidence, that was not surprising. Accordingly, the evidence entitled the jury to find that, at a beach such as Bondi, a channel or channels with variable depth and width commonly existed. Sandbanks were also part of the typical formation of the beach. "Guttering", that is, a channel on the inshore side of a sandbank, was inevitable. There was also evidence that the position and dimensions of the channels and the location and size of the sandbanks depended on the conditions prevalent on the day, such as the direction and size of the waves, the tidal influence, wind, currents and the availability of the sand. It was therefore open to the jury to infer – whether favourably to Mr Swain is another matter – that, at a beach such as Bondi, the location and size of the sandbanks and the position, depth and width of the channels were not uniform. It was also open to the jury to find that the current flowing in the channel also varied from day to day and during the course of the day. In addition, there was evidence that there were risks to swimmers associated with sandbanks, but there were much greater risks associated with rips. Given the state of the evidence, however, it was not open to the jury to make any reasonably precise findings concerning the length, breadth, height, level or direction of the sandbank in question or the channels in front of and surrounding it. All that the jury could reasonably find on the evidence was that there was a sandbank in the centre flagged area of Bondi Beach, that on its inshore side there was a channel and that, in the area where Mr Swain, Mr Wilson and Ms Galvin swam, the water just before the channel was about a metre deep, the channel itself was about 40 centimetres deeper, and the top of the sandbar was about 60 centimetres above the bottom of the channel72. Reasonably foreseeable risk of injury and reasonably practicable alternatives Counsel for Mr Swain submitted that there was evidence that the flags were placed in front of a hazard, namely, the channel and the sandbar. He submitted further that it did not matter that the flags were placed where such flags are generally erected, that is, opposite a sandbank. He contended that, in the circumstances, the flags were placed in a position where there was a hazard to 72 See Swain [2003] Aust Torts Rep ¶81-694 at 63,785 per Handley and Ipp JJA. McHugh Mr Swain of which he was not aware and where the Council (through Mr Nightingale) would or ought to have been aware of that hazard. Counsel argued that Mr Swain had discharged his evidentiary burden by demonstrating that it was apparent that "by a simple manoeuvre, that is, moving the flags, the problem [the hazard] may be resolved." Counsel for Mr Swain also submitted that the identification of the risk was a matter of common sense and that the appropriate precautions to take to avoid the risk were also a matter of common sense73. He argued that this was not a case that required technical expertise (that is, which required the plaintiff to call an expert to testify concerning reasonably practicable alternatives). Rather, once Mr Swain demonstrated that the place where the flags were located was a hazard and that there existed an alternative that obviated or minimised the risk to Mr Swain, the evidentiary onus then passed to the Council to adduce evidence that such an alternative was not feasible. It could have done that, for example, by showing that there was no safer place to locate the flags. As a result of the Council's failure to do this, there was sufficient evidence – the circumstance of the hazard presented by the channel and the sandbar and the suggestion that the flags could have been moved – on which the jury could have found breach of duty by the Council. Did the sandbar and the channel present a reasonably foreseeable risk of injury? The question whether the presence of the sandbar and the channel gave rise to a reasonably foreseeable risk of injury for legal purposes is a difficult one. It is true, of course, that there existed a risk that a swimmer might dive into the sandbar and sustain injury. In that sense, the injury that Mr Swain sustained was foreseeable. But reasonable foreseeability in the law of negligence is not a simple question of the likelihood that an event will occur and cause harm. It is not a mere question of fact or prediction. The adjective "reasonable" indicates that "reasonable foreseeability" is a "fact-value complex"74. Inherent in the notion of "reasonable foreseeability" are questions of fairness, policy, practicality, proportion, expense and justice. One of the reasons that the law of negligence now faces a crisis is because, for too long under the influence of the Judicial Committee's advice in Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty ("The Wagon Mound (No 2)")75, common lawyers have equated reasonable foreseeability with physical possibility. In the result, since 73 Citing Neill (1963) 108 CLR 362 at 368 per Taylor and Owen JJ. 74 See Stone, Precedent and Law, (1985) at 256; Tame v New South Wales (2002) 211 CLR 317 at 355 [105] per McHugh J. 75 [1967] 1 AC 617 especially at 643-644. McHugh that time the common law has imposed obligations on persons that are often unreal and out of step with the way that ordinary people behave. It was not always that way. In the first edition of his great work, The Law of Torts, Professor Fleming pointed out76: "Almost any activity is fraught with some degree of danger to others but, if the existence of a remote possibility of harm were sufficient to attract the quality of negligence, most human action would be inhibited. Inevitably, therefore, a person is only required to guard against those risks which society recognizes as sufficiently great to demand precaution. The risk must be unreasonable, before he can be expected to subordinate his own ends to the interests of other." This statement was an accurate statement of the rationale of the law of negligence until the decision of the Privy Council in The Wagon Mound (No 2). If the common law doctrine of negligence is to survive, the philosophy behind Professor Fleming's summary has to be resurrected77. In my opinion, therefore, before any issue of reasonable practicability arises, there must be a risk of injury to the plaintiff that is so significant that it is reasonable to require the defendant to examine the need for a precaution to eliminate it. Only when such a risk is present is it necessary to consider issues of reasonably practicable alternatives. It is no longer accurate to say that a defendant is obliged to guard against any risk that is not far-fetched or fanciful. That pernicious principle has done such damage to the utility of the common law doctrine of negligence that it is now on the verge of legislative extinction in many jurisdictions. It will survive only if the common law now sets its face against the principles expounded in The Wagon Mound (No 2) and the cases that have faithfully followed it. Once it is seen that the term "reasonable" is not an empty vessel that adds nothing to the notion of foreseeability, the question of reasonable foreseeability of risk in the present case is one of great difficulty. There was no evidence that the prevailing conditions on the day were unusual or such that any channels or sandbanks formed on that day could have been unusual. There was no evidence about the probable effect of the tides on the beach conditions that day. There was also no direct evidence about whether the sandbank and channel in question were unusual. No-one asked Mr Williams whether some sandbanks are unusual and, if so, what the features of an unusual sandbank are. There was evidence that the channels would vary each day, 76 Fleming, The Law of Torts, (1957) at 131-132. 77 See my discussion of the need to do so in Tame (2002) 211 CLR 317 at 351-357 McHugh depending on the movement of the rip tide current and other prevailing conditions. The evidence given by Mr Williams concerning the formation of beaches generally permitted a reasonable jury to draw the inference that on Bondi Beach a channel with variable depth commonly existed. The evidence of Mr Wilson and Ms Galvin showed that it existed on that day. There was little evidence about the dimensions of the sandbank or the channel in question. There was no evidence that the sandbank or the channel in question changed significantly during the course of the day, although it would seem likely that at least small changes to parts of the sandbank and the channel were constantly occurring. Mr Williams agreed that it was inevitable, given the movement of water, that there would be a relocation of sand in the area on the inshore side of the sandbank. Consequently, the depth and width of the channel may have changed considerably during the course of the day. However, Mr Nightingale said that, although during the course of the day the beach conditions can change, it does not happen "all the time". Moreover, he said that "there was no change in the beach conditions" on that day. Accordingly, I think it was open to the jury to infer from the evidence that the beach conditions did not change during the course of the day and that the general structure of the channel and sandbar in question did not alter greatly during the day. On that view, the sandbank and the channel that were present at 4.30pm on that day had been present in the same general form for the entire day. It is another question, however, whether the particular area where Mr Swain swam had been in the same condition for the entire day. For all that the evidence discloses, the particular area may have been more of a hole than part of a channel of uniform width and depth. Just as channels "may move or they may stay the same" depending on the circumstances, so "holes" may be created or disappear during the course of the day. Wave direction and the size of waves, the tidal influence, wind, currents and the availability of the sand affect the formation of channels and sandbars. Mr Williams' evidence seems to imply that the depth and width of channels will also change during the course of the day. Ms Galvin's evidence is indicative of there being a sudden "hole". She spoke of a "ditch or hollow in the water" just before the sandbank. She stumbled forward on the sandbank and the water became "shallow again without a doubt". In contrast, Mr Wilson said that there was a "normal ... downward slope" in the seabed and that when he reached the channel, which was a slight step down, he took "three or four" steps and "kicked a sandbar." His evidence is inconsistent with there being a sudden hollow or ditch in the place where he swam. For Mr Swain, the most favourable view of the evidence, therefore, was that, between 15 and 25 metres from the shore, there was a ditch or hollow, as Ms Galvin called it, in the shore-side channel that was a few steps wide. On the seaward side of the channel was a sandbank. There was no evidence as to whether the channel and sandbank were unusual. From the shore to the ditch or McHugh hollow, the water gradually got deeper until it was about waist deep or a little deeper at the edge of the hollow. Handley and Ipp JJA found that the channel was a "few steps" wide and that the "top of the sandbar was about 60 centimetres or about two feet above the bottom of the channel."78 Waves were breaking on the sandbank and coming towards those who were approaching the sandbank from the beachside. They were "about 2-foot waves". The sandbank and the channel with its ditch or hollow were within the flagged area. Mr Nightingale said: "The flags are – indicates to people a reference where they can swim safely. If they stay between the flags, ideally they should come to no harm. It's safe swimming." The scene so described or scenes very similar to it must have occurred many thousands of times on many beaches in Australia since bodysurfing became a popular pastime about a century ago. Many hundreds of thousands – probably millions – of people must have bodysurfed under conditions broadly similar to those present in this case. And a great many of them must have dived through oncoming waves that had broken on a sandbank. The evidence in this case does not reveal whether such apparently benign conditions have led to injury in the past. Such evidence would throw much light on the issues in this case, particularly the reasonable foreseeability issue. In the absence of evidence about what has happened in the past, that issue can be determined only by reference to the very sparse evidence placed before the jury. As a result, the question is whether, on a day when the surf was "quite calm", the Council should reasonably have foreseen that the presence of the sandbar, about 20-25 metres from the shore, covered with water about knee-deep and about 60 centimetres high, presented a reasonably foreseeable risk of injury to the 2,500 swimmers present at Bondi that afternoon. In particular, should the Council have reasonably foreseen that its flags might mislead a swimmer into thinking that he or she could "flat dive" through any wave coming off the sandbank without fear of injury? "[N]o person attending an Australian beach could fail to know that there are sudden variations in the sand level under water. The formation of the ocean floor at the edge of the water is subject to continuous movement of currents and the pounding of waves which causes undulation in the sand formation that can, sometimes, become quite steep." 78 Swain [2003] Aust Torts Rep ¶81-694 at 63,785. 79 Swain [2003] Aust Torts Rep ¶81-694 at 63,779. McHugh Mr Swain himself conceded that "when you go to the beach in those first 10 or so metres of the water, you can get irregularities." If the top of the sandbank had been only 30 centimetres above the ocean floor, it seems impossible to conclude that it presented a reasonably foreseeable risk of injury to swimmers that required the Council to consider what it should do to protect them from injury. It would be well within the class of "irregularities" in the ocean floor that swimmers must reasonably expect and tolerate. "Safe swimming" is not a guarantee of safety. It does not mean that those swimming between the flags can do what they like and have no need to keep a lookout for dangers. It does not mean that they can dive – even make flat dives – in shallow water. It does not mean that they need not worry about being struck by other swimmers or loose floats or bodyboards. Does it make a difference that the top of the sandbank was not 30 centimetres above the ocean floor but 60 centimetres above it? If I had to decide that question as a matter of fact, I would unhesitatingly find that it made no difference. After all, the presence of the sandbank was readily apparent. Not only would experienced swimmers and surfers know of its existence from the breaking waves above it, but, as the evidence of Mr Wilson and Ms Galvin showed, the water depth on the seaward side of the channel, that is, on the sandbank, was only knee deep. That pointed irresistibly to the existence of a sandbank. To find in those circumstances that the Council should have reasonably foreseen a risk of injury to swimmers would impose an unreasonable burden on it. Such a finding would require the Council and its employees to consider taking action in respect of a risk that would seldom eventuate and about which swimmers would or should have been aware. However, the question for decision in this Court is not one of fact but of law. Could a reasonable jury find that reasonable care required the Council to consider whether part of a sandbank, 60 centimetres high and covered by about 60 centimetres of water, posed a risk to a swimmer making a flat dive into an oncoming wave that had broken on the sandbank? I think they could. Even if the area containing the hollow or ditch was not representative of the sandbank and channel generally, the jury could conclude that, because the conditions had not changed much that day, it had been in that condition for much of the day. Hence, the lifeguards should have been aware of the risk associated with it even if the ditch or hollow was no more than a few steps wide. In so holding, I have not overlooked Mr Swain's evidence that he could not see the ocean floor and that broken waves were coming off the sandbank and no doubt obscuring the visibility of the ocean floor. Importantly, the jury might also think that, although the risk to swimmers was most unlikely to eventuate, if it did, its consequences could be so grave that reasonable care required the risk to be eliminated if it was reasonably practicable to do so. McHugh Accordingly, because a reasonably foreseeable risk of injury to swimmers such as Mr Swain existed, it was open to the jury to find that reasonable care required the Council to take a reasonably practicable precaution, if one existed, to eliminate or reduce the risk. As I have indicated, Mr Swain had the onus of tendering evidence to prove that such a precaution existed. Reasonably practicable alternatives Mr Swain contended that the risk of injury to him could have been avoided by relocating the flags. The learned trial judge told the jury80: "Essentially, the plaintiff says the danger should or could have been avoided, could reasonably have been avoided by moving the flags." Relocating the flags Mr Nightingale gave the following evidence about the placement and repositioning of the flags: "We set up at six but during the course of the day we are always observing the beach, of course, and at times situations change; you might have a wind change, a swell starts to come up and what was a safe area might have to be minimised or moved. So we basically – apart from watching for people in trouble we are waiting to reassess the situation. ... I think basically all we can do is – what we could do is pick out something that is a danger. If we pick out or see a situation that is a threat, doesn't matter to whoever it is." Mr Nightingale was not asked why he did not move the flags that day. Mr Williams said that what happens to channels during the course of the day is a factor that a prudent lifeguard supervising the beach would take into account. He agreed that, if there was a variation in the channel, it could affect the steps, if any, that the lifeguard might take, for example, in relation to the flags. Mr Nightingale also agreed that, if there was a strong current running out, a prudent lifeguard might consider whether or not the conditions were so dangerous that a warning sign, such as a "no swimming" sign, would need to be placed. He said that whether a prudent lifeguard would take any action if there were a deep hole near the shore would depend on whether the deep hole was perceived to be a danger. The depth of the hole and the existence of any current would affect whether the hole was perceived to be a danger. 80 Swain, Supreme Court of New South Wales, Trial Transcript, 10 May 2002 at 9 per McHugh Mr Williams was not asked whether the general practice to place flags opposite a sandbank would have been general practice at both 6am and 5pm or when the tide was flowing in or running out. In other words, he was not asked to identify the general practice at different times of the day and whether such general practice would vary according to the times of day or the movement of the tides. Was there a safer place to put the flags or should the flags have been removed? The fundamental difficulty in the way of Mr Swain's case is that there was no evidence that the areas to the north or south of the flagged centre area were safer than the flagged area. Nor was there any evidence that a portion of the flagged area did not have as high a risk of injury from the sandbank, rips and guttering as existed at the point where Mr Swain suffered his injury. Mr Nightingale was not asked whether there was a safer place to put the flags. Indeed, there was no direct evidence about whether there was a safer place to put the flags. The very fact that the flags were placed where they were points strongly to the conclusion that the areas to the north and to the south of the flagged centre area were more dangerous than the area between the flags. Moreover, there was no evidence about the conditions to the north or to the south of the flagged area where Mr Swain swam. Nor was there any evidence about the conditions of the flagged area other than what can be accepted or inferred from the evidence of Mr Swain, Mr Wilson and Ms Galvin. Hence, there was no evidence whether the channel and sandbank between the flags ran along the whole length of the beach. However, it seems unlikely that they did so. The evidence indicated that, on a beach such as Bondi, the typical formation of the beach would have been a rip, a sandbar, a rip, a sandbar. A jury could infer – although it does not help Mr Swain's case – that there would have been other rips and other sandbars along the beach on the day in the formation of a rip, a sandbar, a rip, a sandbar. In light of the evidence about the variable dimensions and locations of channels and sandbars, no inference could be drawn about the locations or dimensions of any other channels and/or sandbars at Bondi on the day. There was, as I have indicated, evidence that the North Bondi area was marginally safer than the area in the centre of the beach. There was also evidence that the South Bondi area was more dangerous than the centre area. And there was evidence that a beach such as Bondi typically consists of a series of channels and sandbanks and that the channels and sandbanks vary from day to day and during the course of the day. A reasonable jury could infer from this evidence that the location and dimensions of channels and sandbars are not uniform, that there probably would have been other channels and sandbanks outside the flagged area, and that the dimensions of these channels and sandbanks would vary. But it would be sheer speculation to infer from any of this general evidence that the sandbanks and inevitable channels to the north and south of the flagged area would not have exposed swimmers to the same, similar or other risks of injury as the centre area did. No inference could reasonably be McHugh drawn that the channels and sandbanks outside the flagged area in the centre of the beach would have been any smaller or would have exposed swimmers to a lower risk of injury than the channel and sandbank where the accident occurred. Nor could any inference be drawn that, within the flagged area, there was an area where swimmers could swim without running risks of injury. Just as no inference could be drawn that the "ditch or hollow" extended uniformly along the whole of the channel in the flagged area, no inference could be drawn that it did not so extend. As I have indicated, a plaintiff is required to identify an alternative means of eliminating a risk and to provide evidence that the alternative is indeed a practicable one. The plaintiff may be required to lead more evidence (or perhaps technical or expert evidence) as to an alternative and the feasibility of that alternative where the defendant has followed a generally accepted practice – which the Council had in this case. The plaintiff is also required to adduce technical or expert evidence concerning the practicability of the alternative unless it is one where common knowledge or common sense is all that is required to prove the reasonably practicable alternative. However, this was not a case where the jury could use its common knowledge or experience to find that the flags could be moved to another area of the beach because there was no evidence concerning the conditions of the surf and the seabed at other parts of the beach on that day. As a result, Mr Swain's evidence did not disclose whether it would have been reasonably practicable to move the flags from that part of Bondi Beach on the day to another part of the beach. As the cases show, where a suggested alternative carries its own risks, the plaintiff is required to provide evidence that these alternatives would have been practicable. Moving the flags would have carried its own risks to the safety of swimmers. Mr Swain did not suggest that the beach itself should have been closed or even that the flagged area in the centre of the beach should have been closed. Nothing short of expert evidence to that effect could have enabled the jury to find that closing the beach or its centre area was the only reasonably practicable way of responding to risks arising from the size and shape of the sandbank that caused Mr Swain's injury. Counsel for Mr Swain boldly contended that he did not need to tender evidence that there was a reasonably practicable precaution that would reduce or eliminate the risk of injury to Mr Swain. He contended that Mr Swain was "entitled to succeed if we can demonstrate that it is apparent that by a simple manoeuvre, that is, moving the flags, the problem may be resolved." He argued that it was then "for the [Council] to deal with that by coming along and saying, 'Could not do it', and that did not happen." This submission reverses the onus of proof in a negligence case. It could not be accepted without overruling Vozza81 81 (1964) 112 CLR 316. McHugh and Neill82 to mention but two cases in this Court. In Vozza, the plaintiff suggested two alternatives to obviate the risk of injury: the installation of a system for the mechanical handling of the bottles and the provision of thicker gloves. This Court held that, in the absence of evidence that either suggestion was reasonably practicable, there was no evidence of negligence. In Neill, the plaintiff suggested that a handrail might have been placed inside a milk container to minimise the risk of injury from slipping or that the employer could have provided "non-skid boots". The plaintiff provided no evidence of the practicability of either suggestion. This Court held that, in the absence of expert evidence that the suggested precautions were practicable, his claim failed. Similarly, in this case Mr Swain alleges that the risk could have been avoided by moving the flags. But he led no evidence that it was reasonably practicable to move the flags to some other place on the beach. Counsel for Mr Swain also relied on the decision of this Court in Nelson v John Lysaght (Australia) Ltd83 to support his submission that he had discharged the onus of proving reasonable practicability. But that case does not assist Mr Swain's case. In Nelson, the plaintiff was injured as a result of a system of work that required him to walk backwards to carry out a task. About a month after his accident, a new system was installed that made it unnecessary for a workman to walk backwards to carry out the task. It was hardly surprising that this Court, reversing the decision of the Court of Appeal of the Supreme Court of New South Wales, held that there was evidence of a reasonably practicable alternative system that would have eliminated or minimised the risk of injury to the plaintiff. As Gibbs J said84: "Even on that assumption [ie, that a bar had been installed as part of a remodelling of the plant] the [plaintiff] has shown that it was practicable to provide a new method of doing the work that would eliminate or minimize the risk, because such a new method has in fact been put into operation." Nelson would have relevance in this case if Mr Swain had proved that, after his injury, the Council had adopted a new method of guarding against the risk of injury from the presence of sandbanks. No such proof was offered. Nelson does not assist Mr Swain. What was required for Mr Swain to succeed in this case was evidence – which almost certainly would have had to be expert evidence – that the 82 (1963) 108 CLR 362. 83 (1975) 132 CLR 201. 84 Nelson (1975) 132 CLR 201 at 214. McHugh conditions at some part of the beach to the north or south of or even in a section of the centre flagged area were such that the risk of injury from the sandbank, rips and guttering was much lower than the risk existing at the point where Mr Swain suffered his injury. No such evidence was led. In my opinion, there was no evidence upon which the jury could reasonably find that the Council was guilty of negligence and, as a result, caused Mr Swain's injury. Order The appeal must be dismissed with costs. 106 GUMMOW J. The appellant, Mr Guy Swain, suffered spinal injury while entering the surf at Bondi Beach in 1997. He is now a quadriplegic. The respondent, Waverley Municipal Council ("the Council"), is the local council having the care, control and management of that beach. In this Court the appellant seeks the correction of what he submits was the impermissible interference by the New South Wales Court of Appeal (Handley and Ipp JJA; Spigelman CJ dissenting)85 with a jury verdict in his favour. The Court of Appeal set aside the verdict and entered a verdict and judgment for the Council86. The appeal is to be resolved by the application of established principles and no novel point of law is urged by the appellant. Counsel for the appellant relied in general terms upon what he said were the well-known propositions in Wyong Shire Council v Shirt87. Counsel for the respondent fought the appeal on grounds which did not seek to gainsay Shirt. In particular, no application was made for leave to re-open Shirt, a step that would be required by Evda Nominees Pty Ltd v Victoria88. Shirt has stood for some 25 years and must have been applied across the understanding of the law on which many cases were settled. the country on numerous occasions and supplied Shirt considered what had been said by the Privy Council in The Wagon Mound [No 2]89, an appeal taken directly from the judgment of Walsh J in the Supreme Court of New South Wales. It is the treatment of The Wagon Mound [No 2] in Shirt which represents the law. In deciding the present appeal, to speculate whether what was said by the Privy Council and adopted by this Court in Shirt took the law around a wrong turning and introduced "deleterious foreign matter into the waters of the common law" in which the courts "have no more than riparian rights"90 would be inappropriate. It should be added immediately that this is not a case in which this Court is required to determine the extent of the duty of care of municipal authorities to swimmers who use beaches in their local government areas. Nor will this appeal 85 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694. 86 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at 63,787. 87 (1980) 146 CLR 40. 88 (1984) 154 CLR 311. 89 Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty [1967] 1 AC 617. 90 The words are those of Kitto J in Rootes v Shelton (1967) 116 CLR 383 at 387. determine in general terms what is required of local authorities in exercising reasonable care for the safety of beach-goers91. The issue in this case is narrower; simply put, it is whether the Court of Appeal correctly applied settled principle in setting aside the jury's verdict. The facts On Friday, 7 November 1997, Mr Swain went to Bondi with a friend, Ms Kathryn Galvin, and her flatmate, Mr Earl Wilson. Mr Swain was then aged 24. The evidence was that the conditions that day were calm, with next to no surf. The party arrived at Bondi in the afternoon some time around 3.00 pm. Mr Swain and Mr Wilson went to get a "long neck", or 750 ml bottle, of beer each from a nearby shop. Mr Swain, Ms Galvin and Mr Wilson then sat on the grass opposite the beach for about an hour and a half, during which time Mr Swain and Mr Wilson consumed this beer. Mr Wilson decided to go for a swim. He left the grassed area and went down onto the beach, entering the surf between the red and yellow flags. Mr Swain and Ms Galvin remained on the grass. Mr Wilson gave evidence that he had waded out about 15 or 20 metres at which point he "kicked a sandbar". Mr Wilson said that the water was waist deep immediately before the sandbar, but that it was only knee deep above the sandbar. Mr Wilson also gave evidence to the effect that the sandbar was "a bit of a surprise because it was quite a big step" and that he remembered thinking it "a bit dangerous" at the time. He claimed that he had been thinking of diving into the surf before he hit the sandbar. Later, Ms Galvin and Mr Swain also decided to go for a swim. Ms Galvin entered the water first, with Mr Swain about 20 metres behind her. By that time, Mr Wilson had finished his swim and was back on the beach. Ms Galvin gave evidence that as she made her way out into the surf she "fell into a ditch in the water" which was sufficiently deep to make her lose her balance and fall over. She also said the water became "really shallow again straightaway" after the ditch. As Mr Swain entered the water, he found that it "gradually got deeper" the farther he went out. He said that he waded out about 15 metres, at which point the water was around waist deep. At that point, he could not see the sand 91 cf Nagle v Rottnest Island Authority (1993) 177 CLR 423; Tomlinson v Congleton Borough Council [2004] 1 AC 46. beneath him. A wave started coming towards him and Mr Swain decided to "dive through it". The next sensation he felt was "not being able to move". The trial In 2000, Mr Swain instituted an action in tort in the Supreme Court of New South Wales alleging that his injuries were caused by the negligence of the Council. Specifically, Mr Swain alleged that he had sustained his injuries when he dived into a sandbar as he made his way out into the surf. The particulars of negligence alleged at trial were that the red and yellow flags erected by the Council induced Mr Swain to swim where he did, and that the Council had failed to take reasonable care in positioning the flags ("the flag placement issue"), or in failing to warn swimmers of the sandbar through the use of warning signs ("the failure to warn issue"). The action was tried by Taylor AJ and a jury of four. The trial proceeded before a jury on the requisition of the Council and pursuant to the provisions of the Supreme Court Act 1970 (NSW) ("the Supreme Court Act"), as it then stood92. Taylor AJ directed the jury on the question whether the Council owed a duty of care to Mr Swain. His Honour instructed the jury that, as a matter of law, the Council did have a duty to beach-goers by reason of its care, control and management of the beach. The duty was to take reasonable care of the safety of those citizens using the beach. That direction was not challenged at trial, nor has it subsequently been called into question, in either the Court of Appeal or this Court. The jury found the Council liable, and found contributory negligence of 25 per cent on the part of Mr Swain. This finding of contributory negligence has not been challenged in the Court of Appeal or this Court. The parties had agreed on the quantum of damages prior to the trial. Taylor AJ therefore adjusted the agreed figure to account for the degree of contributory negligence found by the jury and entered a verdict for Mr Swain in the sum of $3.75 million. 92 At the time and subject to ss 87 and 88 which are not presently relevant, s 86 of the Supreme Court Act provided that a party had a right to have issues of fact tried by a jury in proceedings on a common law claim, conditioned only upon the filing of a requisition for jury and the payment of the prescribed fee. Following the amendments made by the Courts Legislation Amendment (Civil Juries) Act 2001 (NSW), s 85 now provides that trials are to proceed without juries, unless a party requests that the trial be conducted by jury and unless the Court is satisfied that "the interests of justice require a trial by jury in the proceedings". The Court of Appeal decision The Council appealed to the Court of Appeal on the grounds that there was no evidence capable of sustaining the jury's findings or, alternatively, that in its totality the evidence preponderated so strongly against the verdict that reasonable jurors could not have reached it. This latter ground failed in the Court of Appeal and has not been revived by the Council in this Court. While no distinction was drawn at trial between the flag placement issue and the failure to warn issue93, the Court of Appeal approached these alleged breaches separately. The Court of Appeal unanimously accepted that there was no evidence to support a verdict against the Council on the failure to warn issue94; however, by majority (Handley and Ipp JJA; Spigelman CJ dissenting), the Court accepted that there was likewise no evidence to support such a verdict on the flag placement issue95. The Court of Appeal thus allowed the appeal and ordered that the verdict for Mr Swain be set aside and that, in lieu thereof, verdict and judgment be entered for the Council. The reasoning of the majority in the Court of Appeal upon the flag placement issue appears to have been based on three propositions. First, that there was no evidence upon which the jury could conclude that the flags conveyed that the designated area is one in which it is safe to dive. Secondly, that the dangers of diving into the surf were so obvious that there was no evidence upon which the jury could conclude that the Council had breached its duty of care towards Mr Swain. Finally, that there was no evidence to suggest that the Council could have taken any course of action with respect to the placement of the flags that would have avoided injury to Mr Swain96. The appeal to this Court In this Court, the only challenge by Mr Swain is to the Court of Appeal's decision in relation to the flag placement issue. The failure to warn claim has not been re-agitated. Therefore there is no occasion to express any opinion as to whether the Court of Appeal's conclusions on that issue are correct. In order to 93 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at 63,773. 94 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at 63,781, 95 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at 96 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at succeed at trial, it was not necessary for Mr Swain to make good both the flag placement claim and the failure to warn claim. The appeal to the Court of Appeal should have been dismissed if there was sufficient evidence to support either claim. Did the majority in the Court of Appeal err when it concluded that there was no evidence upon which a reasonable jury could have found that the Council was in breach of its duty in the placement of the flags? That question should be answered "yes" for the reasons that follow. The relevant principles The live issues at the trial, which were reflected in the directions given to the jury by Taylor AJ, were whether the appellant in fact had been swimming between the flags, whether he was injured in fact by making the low dive (which issue included alleged impairment of his judgment or recollection by the effects of alcohol or drug-taking the previous night), and the alternative action the Council could have taken on the day to avoid the injury to the appellant. The Council's contention that there was no evidence to support a verdict on the flag placement issue was not raised at trial. It was first raised in an amendment to the grounds of appeal in the Court of Appeal. However, Hampton Court Ltd v Crooks97 is authority in this Court that a party may raise a "no evidence" objection on appeal notwithstanding that no such objection was taken at trial, provided that the objection is one which, if taken at trial, would have been fatal to the appellant's case. The criteria applicable under the Supreme Court Act for the disposition of appeals in jury actions differ from those for non-jury actions. The distinction was explained by McHugh J in Puntoriero v Water Administration Ministerial Corporation98. The criteria reflect the circumstance that, from the decision of a judge sitting without a jury, the reasoning process for the decision should be apparent from reasons provided by the judge and thus available for appellate analysis. In setting aside the verdict in favour of Mr Swain, the Court of Appeal was proceeding under ss 102 and 108 of the Supreme Court Act. Section 102 confers jurisdiction on the Court of Appeal in any application for the setting 97 (1957) 97 CLR 367. 98 (1999) 199 CLR 575 at 586 [25]-[27]. See also the discussion of Latimer v AEC Ltd [1953] AC 643 in Glass, McHugh and Douglas, The Liability of Employers, 2nd ed (1979) at 42-43. aside of a verdict or judgment following a jury trial. Section 108 relevantly provides: "(1) This section applies to an appeal to the Court of Appeal in proceedings in the Court in which there has been a trial with a jury. (3) Where it appears to the Court of Appeal that upon the evidence the plaintiff or the defendant is, as a matter of law, entitled to a verdict in the proceedings or on any cause of action, issue or claim for relief in the proceedings, the Court of Appeal may direct a verdict and give judgment accordingly." (emphasis added) The relief the Council obtained in the Court of Appeal was an order substituting the trial verdict and judgment for a verdict and judgment in its favour under s 108(3). Such an order was only available if the Council was entitled to a verdict "as a matter of law". Both parties accepted that, in assessing whether the Council was entitled to a verdict "as a matter of law", the relevant principles are those laid down by the Privy Council in Hocking v Bell99, and by this Court in Naxakis v Western General Hospital100. In the latter case, McHugh J and Kirby J each traced the development of these principles from their formulation by the common law courts in England to their modern expressions101. The principles have been variously formulated in the modern cases. In Hocking, the Privy Council102 approved the formulation adopted by Latham CJ in dissent in this Court103. Latham CJ had held that, provided "there is evidence upon which a jury could reasonably find for the plaintiff" and that such evidence is not "so negligible in character as to amount only to a scintilla", a defendant will not be entitled to a verdict "as a matter of law", and an appellate court will have no basis for disturbing the verdict of the jury. 99 (1947) 75 CLR 125. 100 (1999) 197 CLR 269. 101 (1999) 197 CLR 269 at 281-282 [39], 288-291 [55]-[60]. 102 (1947) 75 CLR 125 at 130-131. 103 Hocking v Bell (1945) 71 CLR 430 at 441-442. This formulation differs in its terms from that adopted by Jordan CJ in the Supreme Court of New South Wales in the earlier case of De Gioia v Darling Island Stevedoring & Lighterage Co Ltd104. In a passage which was approved by Latham CJ in Hocking105, and by Gleeson CJ and Callinan J in Naxakis106, "if the stage is reached that a prima facie case has been made out [by the plaintiff], the question whether the jury should accept that case, or should accept rebutting evidence called for the defendant, is one for them, no matter how overwhelming the rebutting evidence may be". The formulation by Latham CJ is apt where the submission on appeal is that there was no evidence upon which a jury could have been satisfied of a specific and ultimate issue of fact. In Hocking itself, that issue was whether, after performing a thyroidectomy on the plaintiff, the defendant surgeon had left in the plaintiff's neck a portion of a rubber drainage tube which later passed through the tonsil and into her mouth. The appeal was determined by the Privy Council by asking whether there was evidence not so negligible in character as to amount only to a scintilla upon which the jury reasonably could have found that the plaintiff had made out her case. Where, as in the present litigation, the allegation is that the respondent had failed to take reasonable care in one or more ways (here represented by the flag placement issue, and the failure to warn issue), some jurors may have accepted the appellant's case on one issue, some on another. Their verdict is inscrutable. In such a situation, the formulation by Jordan CJ in De Gioia108 better encompasses the permissible range of choice open to the jury where a prima facie case has been made out. What the flag placement represented It remains to be considered whether these principles support the intervention of the Court of Appeal in the present case. 104 (1941) 42 SR (NSW) 1. 105 (1945) 71 CLR 430 at 442. 106 (1999) 197 CLR 269 at 271 [1], 309 [117]. See also at 281-283 [39]-[42] per 107 (1941) 42 SR (NSW) 1 at 5. 108 (1941) 42 SR (NSW) 1 at 3-5. There was evidence before the jury that the red and yellow flags designate a zone in which it is safe to swim. Mr Harry Nightingale, one of the Council's lifeguards who was on duty on the day of the accident gave evidence that the presence of the flags: "indicates to people a reference where they can swim safely. If they stay between the flags, ideally they should come to no harm. It's safe swimming." This evidence was consistent with Mr Swain's evidence that he had swum between the flags because it was "safe and a patrolled area". In the Court of Appeal, the majority said that, while they accepted that the placement of the flags acted as an express indication that bathing between the flags was reasonably safe, the flags did not indicate that it was reasonably safe to dive109: "The flags are there to designate swimming areas and to indicate to people where they can swim safely. They do not indicate that it is safe to dive anywhere between them. They do not indicate, for example, that it is safe to dive at the water's edge, or that it is safe to dive into a channel. The flags were not intended to convey, and did not convey, any indication to persons in the water of the condition of the sand floor or the depth of water immediately in front of them." While this conclusion may have been open to the jury on the evidence, it was not the only reasonable conclusion open to the jury. Spigelman CJ properly stressed in his dissenting judgment that it was open to the jury to conclude that the flags not only represented that it was safe to bathe, but also that it was safe to engage in the ordinary activities of surf-swimming or body surfing, which may include some forms of diving110. However, even accepting that the distinction drawn by the majority between swimming and diving is correct, it does not follow that this precluded the jury from finding that the Council had failed in the exercise of its duty of care. It was open to the jury to conclude that, in placing the flags, the Council should have exercised reasonable care to prevent injury to persons who misunderstood what the flags represented111. A person who owes a duty of care must take account of the possibility that one or more of the persons to whom the 109 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at 63,786. 110 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at 63,781. 111 See Wyong Shire Council v Shirt (1980) 146 CLR 40 at 48. duty is owed might fail to take proper care for his or her own safety112. So much was recognised by Taylor AJ in his summation to the jury: "Obviously, by using your common sense, you can take into account in assessing the standard of care expected of the reasonable Council, the possibility of the inadvertent or careless conduct on the part of the bathers." In the circumstances of this case, it was open to the jury to conclude that reasonable care required the Council, in placing the flags, to consider the possibility that an inadvertent or careless bather would assume that the flags indicated that it was both safe to swim and safe to dive. That does not mean that the Council was required to guard against far-fetched or fanciful risks113. It is for that reason that the majority in the Court of Appeal was correct when it noted that the jury could not properly conclude that the flags represented that it was safe to dive at the water's edge114. That said, it was here open to the jury to conclude that, whilst it may have been foolhardy for Mr Swain to attempt to dive where he did, the standard of care required of the Council extended to taking steps to take account of the possibility of such behaviour. The hazards were "obvious" The second ground upon which the majority in the Court of Appeal concluded that there was no evidence to support a finding of breach on the flag placement issue was that the hazard posed by the sandbar was both notorious and "obvious". The suggestion was not that the danger was so obvious as to negative the existence of a duty of care, but that, in light of the obviousness of the hazard, there was insufficient evidence to satisfy a jury that the Council had breached its duty115. In support of this contention, the majority placed reliance upon116 the decision of the Full Court of the Supreme Court of Western Australia (Ipp, Wallwork and Parker JJ) in what was said to be the factually similar case of Prast v Town of Cottesloe117. That was an action tried by a judge sitting alone. 112 Nagle v Rottnest Island Authority (1993) 177 CLR 423 at 431. 113 Nagle v Rottnest Island Authority (1993) 177 CLR 423 at 431. 114 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at 63,786. 115 cf Tomlinson v Congleton Borough Council [2004] 1 AC 64. 116 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at 63,786. 117 (2000) 22 WAR 474. The Full Court there drew a distinction between cases in which the plaintiff was injured by diving into a concealed obstacle, such as Nagle v Rottnest Island Authority118, and those "body surfing" cases where the risk is obvious and inherent119. It is clear that, in assessing the standard of reasonable care required of a local authority, the obviousness of the risk is a factor to be considered in determining the standard of reasonable care120. However, whether or not a risk is obvious is a question of fact121. It is for this reason that the Court of Appeal's reliance on Prast is misconceived. As with all other considerations relating to the question of breach, previous cases carry no precedential value on the question of whether a risk is obvious122. In Jolley v Sutton London Borough Council, Lord Steyn observed123: "[I]n this corner of the law the results of decided cases are inevitably very fact-sensitive. Both counsel nevertheless at times invited your Lordships to compare the facts of the present case with the facts of other decided cases. That is a sterile exercise. Precedent is a valuable stabilising influence in our legal system. But, comparing the facts of and outcomes of cases in this branch of the law is a misuse of the only proper use of precedent, viz, to identify the relevant rule to apply to the facts as found." To this should be added that this is particularly so where an appellate court is reviewing the decision of a jury, as the evidence upon which the jury relied cannot always be identified with any certainty. Furthermore, in determining an issue of breach of duty, the circumstance that a risk is obvious is only one factor to be weighed and is not conclusive124. A 118 (1993) 177 CLR 423. 119 (2000) 22 WAR 474 at 481-483. 120 Romeo v Conservation Commission (NT) (1998) 192 CLR 431 at 456 [56], 481 [131], 489 [157]; Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 121 Romeo v Conservation Commission (NT) (1998) 192 CLR 431 at 491 [164]-[165]. 122 Bus v Sydney County Council (1989) 167 CLR 78 at 88-89. 123 [2000] 1 WLR 1082 at 1089; [2000] 3 All ER 409 at 416. 124 Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 474 [45]. duty of care may extend to preventing injuries that result from the "inadvertence and inattention" of plaintiffs to obvious risks125. It was for the jury to determine whether the risk was obvious, and it was open to them to infer from the evidence of Mr Swain, Mr Wilson and Ms Galvin that the channel and sandbar were unexpected and concealed hazards. Moreover, nothing turns on the observation by the majority in the Court of Appeal that126: "[t]here was no evidence that the conditions of the channel and sandbar within the flags that afternoon where the [appellant] was injured were materially different from those encountered there on previous hours, days, weeks, months or years, or that they were unusual or more dangerous than those which would be encountered on other surfing beaches in Australia." Mr Swain did not need to satisfy the jury that the risks posed by the channel or sandbar were unusual or unique to establish a case to go to the jury. So much is clear from Nagle where the particular hazard was a submerged rock that sat adjacent to a flat wave platform from which the plaintiff dived – a hazard that was no doubt common in such areas, and which presumably had existed for some time. If a hazard is common or longstanding, that may be a factor from which a jury could infer that the risk was obvious. Again, however, it may not be unreasonable for the jury to reject that inference. The placement of the flags Finally, the majority in the Court of Appeal concluded that there was no evidence that could sustain a finding of negligence on the part of the Council in the placement of the flags because the appropriate place for the flags was opposite a sandbank. In their Honours' view127: "It was therefore normal, if not inevitable, that there would be a channel and therefore a sandbar in the swimming area between the flags." That conclusion appears to have been based on evidence by the respondent's expert witness, Mr Jeffrey Williams. Mr Williams was then a senior ocean lifeguard and a beach surf education officer for the Sutherland Shire Council, and had been a professional ocean lifeguard since 1978. In cross- examination, Mr Williams gave evidence that flags are generally erected on the 125 Smith v The Broken Hill Pty Co Ltd (1957) 97 CLR 337 at 342. 126 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at 63,785. 127 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at 63,786. beach directly in front of the sandbanks. The reason for this is that sandbanks are often shallower and because, depending on the day, the current on a sandbank tends to be less strong than the movement in the rips either side of the sandbank. Nevertheless, there also was material before the jury upon which it could reasonably conclude that, on the day in question, the Council had failed to exercise reasonable care in positioning the flags in front of the sandbar. In his evidence in chief, Mr Williams had said that both channels and sandbars present potential hazards for swimmers. The hazard created by a channel was said to be that it created a trough of variable depth that "people aren't familiar with". He repeated this evidence in cross-examination accepting that, although it may be safest on some occasions to set up flags opposite a sandbar, on others the trough created by a sandbank "could be the biggest hazard on the day". Another witness called by the Council, Mr Nightingale, likewise said that troughs or channels could be dangerous for swimmers. Mr Nightingale is a lifeguard employed by the Council and was on duty at Bondi on 7 November 1997. There also was evidence which suggested that the Council was in a position to locate and to deal with such hazards when they arose. Mr Nightingale said that he could visually identify channels because sections of deep water appear dark green, while sandbanks are "yellowy". He said that he also could generally identify sandbars from his position in the demountable lifeguard's shed (which was being used instead of the observation tower at the time), and that he was able to tell whether the flags needed to be moved from that position. Mr Nightingale's evidence that he could visually identify sandbars is to be contrasted with the evidence of Mr Swain, Mr Wilson and Ms Galvin, all of whom claimed that they saw no indication of the hazard prior to actually stumbling across it. Their evidence was consistent with Mr Williams' contention that troughs can be hazards because they are something with which people are not generally familiar. It was open to the jury to conclude that the sandbar was a hazard which would have been known to the Council, but one which was not apparent to people in the position of Mr Swain. There also was evidence to suggest that the appropriate response to such a hazard would be to reposition the flags. Mr Williams said that the location of the flags is generally made after an assessment of the prevailing conditions. He said that the wind, current, channels and "the actual formation of the beach" all could constitute hazards of which the prudent lifeguard would take account in positioning the flags. Specifically, Mr Williams said that the channels on the beach may change over the course of the day and that such changes may require the flags to be moved. Mr Nightingale gave similar evidence and suggested that part of his work was to reposition the flags when conditions changed so much that what had been a safe area in which to swim became unsafe. Mr Nightingale was not involved in placing the flags on the day of the accident. That was done at 6.00 am, before he commenced his shift. The flags were not moved all day. It was open to the jury to infer that Mr Nightingale and the other lifeguards failed to respond to a known hazard by moving the flags. The Court of Appeal's contention that there was no evidence capable of sustaining a finding of negligence on the part of the Council in the placement of the flags cannot be maintained. Onus of proof with respect to reasonably practicable alternatives An issue arose in this Court as to which party had borne the onus to establish the existence or non-existence of a reasonably practicable alternative to the placement of the flags in their location at the time of the accident. This issue arose partly from the assertion of the majority in the Court of Appeal that "[m]oving the flags along the beach in front of another part of the same sandbank or another sandbank would not have protected the [appellant] from a channel and its sandbar"128. Neither party led any evidence as to the formation of the beach outside the flags on 7 November 1997. Nor did either party ask Mr Nightingale why he did not move the flags. There was no evidence to suggest that the particular sandbar stretched the length of the beach. The closest any witness came to such evidence was an observation by Mr Williams that "generally a beach is one large sandbar" dissected by a series of channels. That comment was not made with specific reference to the conditions prevailing at Bondi on the day of the accident, nor did it necessitate the conclusion that there was no more suitable location for the flags at that time. While the plaintiff bears the ultimate burden of proving that his or her injuries could have been avoided by some reasonably practicable alternative course of conduct available to the defendant129, in some cases, the evidentiary burden which has come to rest upon the defendant may prove decisive of the outcome. In Nelson v John Lysaght (Australia) Ltd130, it was held by this Court that upon the evidence the jury had been entitled to find that the system of work in 128 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at 63,786. 129 Neill v NSW Fresh Food and Ice Pty Ltd (1963) 108 CLR 362 at 364-365, 365, 368-371; Australian Iron & Steel Pty Ltd v Krstevski (1973) 128 CLR 666 at 668- 670; Nelson v John Lysaght (Australia) Ltd (1975) 132 CLR 201 at 214. 130 (1975) 132 CLR 201. force where the plaintiff was injured exposed him to a clear risk of injury. The onus lay upon the plaintiff to prove that it was unreasonable of the defendant not to take a suggested precaution, which it had later adopted. However, Gibbs J pointed out131: "[W]hen the [defendant], which must have had full knowledge of the nature, cost and practical consequences of the new installation, gave no evidence, and by its counsel asked no questions, to suggest that it was inordinately expensive or in any other way disadvantageous, the jury was entitled to infer at the very least that the advantages of the method which the [defendant] has since adopted were not outweighed by any disadvantages." Here, also, the Council, as indicated above, led no evidence and asked no questions upon critical matters. The Council's witness, Mr Nightingale, was the person well placed to give evidence upon these matters. It was open to the jury to infer, for example, that the Council could have moved the flags. In the circumstances of the trial, the Council had carried at least an evidentiary onus to lead evidence that no reasonably practicable alternative course of conduct was open to it132. Conclusion In its essence, the reasoning of the majority in the Court of Appeal leads to no more than the conclusion that a verdict for the Council was the preferable outcome on the evidence before the jury. That is an insufficient basis for holding that the Council was entitled to a verdict "as a matter of law" under s 108(3) of the Supreme Court Act. Orders The appeal should be allowed with costs. The orders of the Court of Appeal entered on 27 May 2003 should be set aside and, in lieu thereof, it should be ordered that the appeal to that Court be dismissed. The grounds upon which the Council succeeded in the Court of Appeal were only added by amendment on the day of the hearing. For that reason, the 131 (1975) 132 CLR 201 at 214-215. 132 Brodie v Singleton Shire Council (2001) 206 CLR 512 at 585 [180]. See also Neill v NSW Fresh Food and Ice Pty Ltd (1963) 108 CLR 362 at 368-369. Court of Appeal made no orders as to costs in that appeal133. As Mr Swain now succeeds in upholding the verdict of the jury, the Council should pay Mr Swain's costs in the appeal to the Court of Appeal. 133 Waverley Municipal Council v Swain [2003] Aust Torts Rep ¶81-694 at Kirby 159 KIRBY J. This appeal concerns the application of the principles governing the appellate disturbance of a judgment entered following a jury's verdict in a trial of an action for damages for negligence. The appeal comes from a divided decision of the New South Wales Court of Appeal134. This appeal is not so much one concerned with the negligence liability of local government authorities for the placement of safety flags on patrolled surfing beaches. It is one about the respect accorded by the law to jury verdicts and the severe difficulty presented to those who receive them and then seek to overturn them. This Court is twice separated from the merits of the case. The primary responsibility for deciding those merits belonged, at trial, to the jury, summoned to resolve the factual differences between the parties. The secondary obligation, to consider complaints about the outcome of the trial, lay with the Court of Appeal. This Court's duty is neither to perform the functions of the jury nor to perform de novo the appellate obligations of the Court of Appeal. It must consider whether any error has been shown on the part of the Court of Appeal warranting the correction of that Court's judgment and the restoration of the jury's verdict. The trial, verdicts and appellate issue Mr Guy Swain (the appellant) received injuries to his cervical spine on 7 November 1997. The injuries occurred at Bondi Beach. That beach, comprising a long stretch of sand facing the Pacific Ocean, is one of the most popular in Sydney. It falls within the local government area of the Waverley Municipal Council ("the Council"), the respondent to this appeal. As a result of his spinal injury, the appellant was rendered quadriplegic. In the Supreme Court of New South Wales he sued the Council in an action framed in negligence. A civil jury was summoned to try the action. The trial took place over six days in May 2002. The quantification of the appellant's damage was agreed between the parties135. The factual issues for the jury's decision were confined to whether the appellant had proved that his injuries were caused by negligence on the part of the Council; whether, if so, the Council had proved contributory negligence on the part of the appellant; and if so, to what extent (expressed as a percentage). The jury returned verdicts of 134 Waverley Municipal Council v Swain [2003] Aust Torts Reports ¶81-694. 135 Following the jury's verdict, and having regard to the agreed damages and for contributory negligence found by the jury, judgment was entered by the trial judge in favour of the appellant in the sum of $3.75 million. Kirby negligence and contributory negligence. They found the latter at 25 per cent on the part of the appellant. Following the entry of judgment in favour of the appellant, in terms of the jury's verdicts, the Council appealed. Originally, the only ground of appeal was one complaining that the verdict of negligence was against the evidence and the weight of the evidence. However, on the return of the appeal before the Court of Appeal, the Council sought, and was granted, leave to argue that there was no evidence to sustain the conclusions necessary to the verdict in favour of the appellant. Alternatively, the Council pressed the complaint that the verdict was against the evidence on the basis that the overwhelming preponderance of the evidence at trial indicated that the appellant had received his injuries whilst swimming outside the area of the beach designated by flags. That factual issue had loomed large in the trial and it did so again on appeal. However, most of the arguments before the Court of Appeal were addressed to the "no evidence" ground. As it was the only ground ultimately argued before this Court, it is essential to examine the evidence given before the jury on that point136. The state of the evidence Many of the basic facts concerning the events leading to the appellant's injury were not contested. Bondi Beach is patrolled by lifeguards employed by the Council. On 7 November 1997, the day began in the normal way with the placement of flags on the beach, not far from the beach pavilion, indicating the patrolled area. The weather was fine but overcast. The patrol record suggests that between 1,500 and 2,500 people attended the beach that afternoon. A high tide of 1.5 metres occurred at 2 pm. Until the appellant's injury, it was an uneventful day for the lifeguards on duty, one of whom was Mr Harry Nightingale. The appellant was a young man aged 24 years. He was an experienced surfer and normally surfed at North Curl Curl Beach. He had been to Bondi Beach on at least ten occasions. On the day of his injury, he travelled to the beach with two friends, Ms Galvin and Mr Wilson. The appellant acknowledged that he was familiar with rips in the surf, and how to spot them. He had dived under waves many times. He was fairly familiar with the pattern of waves breaking on a sandbank. He appreciated that there were a number of judgments that he had to exercise in deciding whether and when to dive, including how deeply to dive whilst still remaining safe. He acknowledged that every time he 136 In this Court, the Council filed a notice of contention asserting (ground 1) that "the finding that the appellant swam between the flags and was injured there was against the weight of the evidence". That ground was expressly withdrawn before the hearing of this appeal. Kirby dived into the surf before his injury he had made his own assessment on whether or not it was safe to do so. Following the arrival of the appellant and his friends at the beach sometime between 2.45pm and 3.30pm, Mr Wilson and the appellant drank approximately three quarters of a litre of beer each. After about an hour or an hour and a half, Mr Wilson proceeded to the water for a swim. He said that he swam between the flags, but that when he came out of the water, the surf had pushed him outside the flag area. According to Mr Wilson, about 15 to 20 metres from the shore, he encountered a sandbank that made the water appreciably shallower. He said that the water went out "like normal ... on a downward slope" and then he "kicked a sandbar". The water, that had earlier been at waist height, then reached only to his knees. Mr Wilson did not mention this feature to the appellant or to Ms Galvin as he returned to the beach. Ms Galvin and the appellant passed him on their way to the water. The appellant and Mr Wilson said that Ms Galvin proceeded in front of the appellant. Ms Galvin too encountered the sandbank. She described it as "a definite sort of ditch or hollow in the water because I fell down. And as I kept moving forward I stood up and it was shallow again without a doubt". Ms Galvin did not dive in the water. She explained that she had never been good at swimming nor able to dive properly. Ms Galvin said that when she fell, the appellant was about a metre or two metres to the right of her137. She pressed forward and later looked around to see the appellant "still in the shallows". She wondered why he had not come with her. However, by this time, the appellant had suffered his injury. The appellant gave evidence (supported by the evidence of Mr Wilson) that he had entered the water between the flags. He said that he had waded into the water in the normal way. About 15 metres from the beach, he saw a wave coming and decided to dive through it. The water was waist deep or a little higher. He described the dive that he executed as one "through the wave". The next thing he felt was an inability to move and a lot of pain. He was immobile, floating face downwards. Eventually, he was rescued, Mr Wilson helping to take him to the beach. An ambulance was summoned just before 5 pm. Mr Wilson and Ms Galvin stayed with the appellant, greatly upset by his predicament, until a helicopter took him away to hospital. There, his spinal injury was confirmed. Contemporaneous records were tendered in the trial. The ambulance report contained a history: 137 The evidence of the appellant was that he was about 20 metres behind Ms Galvin. Kirby "[Male person] was running in shallow water dived under wave [and] hit head on sand. [Patient] brought to shore by friends." The history taken from the appellant on admission to the hospital was: "I entered the water within the area indicated by the flags and proceeded to wade out through the surf towards [Ms Galvin] who was further out in the surf. Whilst the surf was not very rough I reached a point where I needed to dive through a breaker. I next remember rolling around in the surf unable to move any part of my body." It was not put to Ms Galvin that she had said to the ambulance personnel that the appellant ran and dived under a wave. This omission was the more curious because Mr Sean Tagg, a member of the Bondi Surf Lifesaving Club, gave evidence that he had spoken to Ms Galvin on the beach, after the appellant had been dragged from the water. He attributed to her the statement that the appellant "had ran and dove [sic] into the shallow water". The appellant's counsel objected to Mr Tagg giving this evidence, pointing out that it had not been put to Ms Galvin during cross-examination. However, Mr Tagg's evidence was allowed and was received before the jury. The appellant's own version, on admission to hospital, was consistent with his assertion at the trial that his injury occurred when he executed a flat dive through a wave at a time when the surf was relatively calm. He claimed that he did not execute the dive as he ran through the surf. Much of the evidence at the trial concerned the Council's contention that the appellant, when injured, had been swimming outside the flags. Certainly, he was dragged out of the surf outside and to the south of the flagged area. This fact and Ms Galvin's equivocal testimony on the point, together with available inferences, raised an argument about whether the point of impact was between, or outside, the patrolled area. If it was outside that area, the Council would have had a powerful case that it had no legal responsibility to the appellant. However, the appellant and Mr Wilson were adamant on the point. Clearly, it was open to the jury to accept the appellant's evidence on this issue138. Upon the withdrawal of the notice of contention in this Court, the contest concerning the place where the appellant was injured, and whether it had been between the flags, must be taken to have been resolved in the appellant's favour. 138 Swain [2003] Aust Torts Reports ¶81-694 at 63,769 [41]-[47] per Spigelman CJ, 63,782-63,783 [145] per Handley and Ipp JJA. Kirby Three other factual issues were the subject of lively contest at the trial. One of them concerned the appellant's consumption of intoxicants. This was presented by the Council as a possible cause of an unsafe dive. Like the issue of whether the appellant was injured in the patrolled area, it can now be put to one side. The appellant acknowledged that on the evening before the day of his injury, he, and Ms Galvin, had each consumed a tablet of Ecstasy. He also acknowledged drinking a quantity of beer before entering the water. Questions addressed to the appellant sought to suggest that this intake may have contributed to the unsafe diving manoeuvre that he had allegedly undertaken. It was presented as an explanation supporting the hypothesis that he had dived in shallow water under the wave, thereby coming into contact with the ocean floor. The appellant denied being adversely affected by his consumption. He said that he had slept overnight after taking the Ecstasy tablet, and that he had not felt any "residual effect" the next day. The amount of beer consumed, as described, was small. The appellant said he drank the beer over approximately one to one and a half hours before entering the water. Clearly, it was open to the jury to reject the suggestion that the appellant's conduct and manoeuvre had been influenced in any way by the consumption either of Ecstasy or alcohol. Likewise, it was open to the jury to reject any suggestion that such consumption had caused him to forget, or mistake, his manoeuvre or to describe it inaccurately as a dive through a wave into an unseen sandbank, rather than as a dive executed whilst running through shallow water. This left two other issues of fact contested at the trial. One concerned the suggestion advanced for the appellant that the Council was negligent for failing to put in place warning signs to alert bathers like himself about the hidden danger or risk of diving in the course of body-surfing because of the particular land formation of the beach. This ground of negligence was unanimously rejected by the Court of Appeal as unavailable139. It was held that there was no proper basis on which the jury could determine that reasonable conduct on the part of the Council required the provision of such warning signs. That Court had particular regard to the appellant's acknowledged experience in, and awareness of, the risks of swimming and surfing, and specifically of the existence of sandbanks in the ocean. The Court of Appeal's conclusion was correct in this regard. The case based upon the lack of warning signs was so unreasonable as to be untenable. Prudently, in this Court, the appellant did not challenge the Court of Appeal's conclusion on this issue. 139 Swain [2003] Aust Torts Reports ¶81-694 at 63,781 [126] per Spigelman CJ, 63,785-63,786 [173] per Handley and Ipp JJA. Kirby The foregoing confined the ambit of the factual contest to the imputed conclusion of the jury that the Council was negligent in the placement and maintenance of the flags in the position they were in at the time the appellant entered the water before he was injured. As this was the essential point on which the Court of Appeal divided, it is necessary to refer to still more evidence concerning it. The appellant said that he had entered the water "between the flags" because he "believed it was safe and a paroled [sic] area". He stated that he would not have swum there if he had believed that the area was not safe. He was aware of no obvious danger in the water. He said that he could not see the sand beneath his feet as he was wading out into the surf. Whilst the latter evidence is relevant, it is not conclusive as to the purpose, function and effect of the flags, which was for the jury to assess. Nor does it indicate what it was reasonable to expect the Council and its employees to do with respect to those flags. Upon these issues, two witnesses gave evidence. One, Mr Jeffrey Williams, was called in the appellant's case. He was a professional senior ocean lifeguard and surf and beach education officer for the Sutherland Shire Council (a local government body which, like the Council in this appeal, has responsibility for coastline beaches in Sydney attracting large numbers of surfers). The other relevant witness was Mr Harry Nightingale, a lifeguard employed by the Council at the time of the appellant's injury. He was called in the Council's case. He gave evidence of his involvement in providing assistance to the appellant after his injury and before removal from the beach. But he was also asked questions concerning the role of lifeguards and the facilities available to them to protect persons entering the water at the beach. Mr Williams explained that the placement of flags on a beach by lifeguards was made after consideration of the prevailing conditions. The function of the flags, such as were in position on the day of the appellant's injury, was to designate "ocean beach swimming areas". According to Mr Williams, the exact points of placement were determined by the conditions of the surf and the effect of wind, tide and currents as well as potential hazards. Amongst the hazards mentioned by the witness were the currents of the water, the appearance of channels ("rips") and "the actual formation of the beach". Wave direction and size can affect sandbank and rip formation. The width and depth of rips were the described by Mr Williams as "fluctuating" entities "determined by concentration of water or the tidal influence". Depending on the circumstances, they could move or stay the same throughout the day. "Q: Now, so far as the lifeguard observer is concerned who may have control and supervision of the beach, is what happened to the Kirby channels during the course of the day, is that something which a prudent lifeguard would take into account? I believe so, yes. And if there is some variation in the channels, could that affect what steps, if any, the lifeguard might take, for example, with the flags? Yes. And do the channels themselves present a hazard? Yes. And can a sandbar present a hazard? Yes. And what hazard does a channel present and what hazard does a sandbar present? A: Well the – generally where there is a channel in respect to an inshore channel, or the outgoing rip tide, the inshore channel would present a hazard to small children, that would be a determining circumstance. And also the trough that's created presents a hazard. And what's the hazard that's presented by the trough that's created? A: Well, the circumstance is that it's a variable depth and people aren't familiar with that circumstance." In cross-examination, Mr Williams agreed the appropriate position to place the flags, the person "on the spot" had to make a judgment about the conditions on the day. He conceded that it was difficult to second-guess that person's assessment years afterwards. But he would not be pressed into agreement that the distance between the flags was controlled by the number of persons attending the beach. He insisted that the governing determinant was the safety of the situation so far as swimmers were concerned. in assessing that, Mr Williams was cross-examined concerning the placement of flags opposite sandbanks: "Q: People generally concerned, such as you, with beach safety take the view that generally bathing on sandbanks is the safest place to bathe? Generally flags are erected and placed on sandbanks. Kirby HIS HONOUR: Could you say that again? Generally flags are erected or placed adjacent to sandbanks. COUNSEL: Q: What do you mean 'adjacent to'? A: Well, the flags are not placed in the water, they are placed on the beach and then they designate that area in the water. On the sandbank, the water tends to be more shallow? Yes. In placing the flags, a person concerned with beach safety also has to take into account that the people who may attend the beach may be very inexperienced swimmers? Yes. And it's a characteristic, isn't it, that depending upon the conditions, the water that comes in on the sandbank through the action of the surf has got to get out to the sea again? That's right. And characteristically you find some movement to the left and right across the sandbank where the flags are placed? Yes. Q: … [T]here is inevitably going to be a channel there, or some kind of channel? Yes. And it's all a matter of judgment for the person on the spot as to what the degree of depth of the channels or gutters is as to whether or not they are safe or not? Yes." Mr Nightingale had not himself placed the flags in position on 7 November 1997. That had occurred before his shift began. The flags were not Kirby moved from their original position before the appellant was injured. At the relevant times, the beach conditions included virtually no surf. Mr Nightingale agreed that the flags were set up to indicate a place where bathers could swim safely, and ideally they should come to no harm there. He accepted that he and the other lifeguard on duty had a relevant advantage over surfers. The lifeguards could view the beach from an elevated position whenever they were not patrolling. According to his evidence, lifeguards concentrate on beach conditions, such as wind change and surf swell that could cause danger to swimmers. Lifeguards, apart from watching swimmers, wait, "to reassess the situation". Curiously, Mr Nightingale was not asked by the legal representative of the Council why he had not moved the flags before the appellant's injury. But in cross-examination he was asked: If there was uncalm water, a variation in the depth such that there was, as it were, a hidden sandbank, you wouldn't be able to see that? I wouldn't be able to? Yes; you would not be able to, would you? Yes. Just have a look … at exhibit 7. Is that the sort of view one would have of the water where you were seated or standing? A: We'll [sic], it's a picture, it's flat. Like you can't see into the water, that's what I'm trying to say. And with … photos, you don't get an accurate reproduction of gradients and colour, that's how they look. I can see a sandbank because it's yellowy. And a deeper water would be signified by darker green. ... Well, I can see where a sandbank is because this wave's breaking. I can see a sandbar here at the front." There was no specific evidence concerning the systems (if any) adopted by other councils or their lifeguards in the placement of flags. The Council did not lead Mr Nightingale (or any other witness) to give evidence concerning the location and width of the sandbank into which the appellant dived or any immediate post-accident investigation of the condition of the ocean floor in or near that place. This was so, although Mr Nightingale insisted that, from his elevated lookout position, a sandbank and adjacent trough would have been visible, being "under a transparent medium which is the ocean". Such was the state of the evidence that was left to the jury. Kirby A large measure of common ground In this Court, a large measure of common ground between the parties narrowed the legal and factual issues for determination. First, it was common ground that the Council was responsible, in accordance with the law of negligence, for the safety of a person such as the appellant. It was conceded at the trial that the Council owed the appellant a duty of care. That duty did not extend to ensuring that the appellant was not injured in his use of Bondi Beach. It was confined to exercising reasonable care in all the circumstances to protect a person such as the appellant from unnecessary risk of injury140. The trial judge so directed the jury. Neither in this, nor in any other respect, was there a request for redirection at trial nor any complaint in this Court, or the Court of Appeal, concerning the judge's summing up141. In retrospect, the judge's directions might have given the jury more assistance on the considerations that they could take into account in deciding what it was reasonable to expect a body such as the Council to do in protecting the safety of the large numbers of persons who visit this and other beaches around the coastline of Australia. For example, attention might have been drawn to considerations such as the magnitude of risks, the likelihood of the occurrence of risks, the expense and difficulty of responding to every possible risk in an effective way and the potentially conflicting considerations to be given weight142. However, such directions were not sought at trial nor were they argued on appeal. They can therefore be disregarded. Substantially, the trial judge left the issue of negligence to the jury in very general terms. His summing up reminded them, accurately, of the principal arguments on the facts advanced for the parties. Given the way the trial was conducted and the issues in the appeal, no complaint could be made about the duty issue involved in the claim of negligence. In effect, the contest left the issues to be decided by the jury (apart from contributory negligence) as the breach of duty and causation of damage143. 140 Nagle v Rottnest Island Authority (1993) 177 CLR 423 at 429-430; Romeo v Conservation Commission (NT) (1998) 192 CLR 431 at 453-454 [47]-[49], 458 141 Swain [2003] Aust Torts Reports ¶81-694 at 63,772 [66]-[68]. 142 See Wyong Shire Council v Shirt (1980) 146 CLR 40 at 46-48; Romeo (1998) 192 CLR 431 at 462 [81], 481-482 [130]-[132], 490-491 [163]-[164]. 143 See Swain [2003] Aust Torts Reports ¶81-694 at 63,772 [68]. Kirby Secondly, as has been said, three major factual issues that consumed much time at the trial must now be taken as resolved. Thus, the appellant now accepts that the complaint at trial concerning the absence of a warning sign to notify him of the hidden dangers of a channel and an elevated sandbank is not reasonably arguable. In the state of this Court's authority, that was a proper concession144. For the Council, it was likewise accepted that the contest at trial over where precisely the accident had occurred could no longer be pressed. Clearly, on that issue and also on whether the appellant had been affected by the consumption of Ecstasy or alcohol, the jury's verdict must be taken as resolving those arguments adversely to the Council. These too were proper concessions, made on the Council's part. In the context of the trial, the concession about the place where the injury occurred was an important one. An examination of the record shows that this was the principal forensic point that the Council had argued. It had the benefit of evidence to support its arguments. One gets an impression from the transcript that the Council put the weight of its case at trial on the resolution of this factual issue. Having lost that point, as it obviously did, it was forensically on the back- foot in arguing against the principal case advanced for the appellant, namely the safety of the placement of the flags. Thirdly, it was virtually common ground between the witnesses called on both sides that the position of the flags, on a public beach such as Bondi, signified to a person such as the appellant that he could swim safely between the flags. Mr Nightingale gave evidence to that effect145. The appellant asserted that this was his expectation. Mr Williams significantly clarified the safety which the flags indicated and of which he was speaking. This was the safety of "ocean beach swimming". In the nature of things, such swimming is not identical to that involved in the controlled situation of public swimming baths. Such facilities exist, including near Bondi in the Council's area of responsibility. But the beach flags speak of the conditions of ocean swimming. This involves activities in addition to swimming as such. It extends to safe physical interaction with waves and, to some degree at least, passing through the waves, including by a movement such as a "flat" dive of the kind described by the appellant. Certainly, it was open to an Australian jury, familiar with the popular recreation of ocean swimming and surfing, to interpret the message that the flags in position on the day of the appellant's injuries communicated in this way. 144 Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 472-474 [37]-[45], 145 Swain [2003] Aust Torts Reports ¶81-694 at 63,773-63,774 [80]. Kirby Fourthly, it was also common ground that no provision under the statute by which the Council is established, nor any subordinate legislation made by it, was relevant to the outcome of the proceedings. None was pleaded by the appellant. None was asserted by the Council. The case therefore fell to be decided exclusively as a matter of common law liability. It must be decided as the common law stood before the enactment of more recent amendments to legislation in New South Wales designed to reduce liability for injuries arising from recreational activities146. The limits on appellate disturbance of jury verdicts There was further common ground concerning the principles that govern the disturbance by the Court of Appeal of the judgment that followed the jury's verdict and the role of this Court in performing its function. First, it was accepted that the case was one where the Court of Appeal was not conducting a "rehearing" of the kind that occurs in an appeal from a judgment following a trial by judge alone. In such cases, the appellate court's powers to reconsider factual conclusions reached at trial are controlled by legislation147. They are wider than in the case of a judgment following a jury's verdict. Because the trial judge must give reasons for a decision, an appeal in such a case affords an appellant greater scope to identify errors of fact or law and to seek appellate correction. There remain constraints148. However, the ambit of appellate review is obviously enlarged by the availability of reasons. Necessarily, because a jury does not give reasons, different rules govern appeals that follow jury verdicts. In consequence, those rules are governed by different legislative provisions. In the case of an appeal to the Court of Appeal following proceedings conducted with a jury, the powers of that Court are afforded by the Supreme Court Act 1970 (NSW), ss 102 and 108149. Relevantly 146 Civil Liability Act 2002 (NSW), ss 5J, 5K, 5L. 147 In the case of the New South Wales Court of Appeal: Supreme Court Act 1970 (NSW), s 75A. See Fox v Percy (2003) 214 CLR 118 at 124-126 [20]-[23], 164- 148 See eg Warren v Coombes (1979) 142 CLR 531 at 550-552; Abalos v Australian Postal Commission (1990) 171 CLR 167 at 178-179; Devries v Australian National Railways Commission (1993) 177 CLR 472; State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306; 160 ALR 588; Fox (2003) 214 CLR 118. 149 See Puntoriero v Water Administration Ministerial Corporation (1999) 199 CLR Kirby to this case, the Council sought to defend the setting aside of the verdict and the judgment150 on the basis expressed in s 108(3) of the Supreme Court Act. That provision states151: "Where it appears to the Court of Appeal that upon the evidence the plaintiff or the defendant is, as a matter of law, entitled to a verdict in the proceedings or on any cause of action, issue or claim for relief in the proceedings, the Court of Appeal may direct a verdict and give judgment accordingly." Secondly, by the time the proceedings reached this Court, the only relief that the Council sought was that which it had obtained by the orders of the Court of Appeal. Relevantly, this was the order setting aside the verdict and judgment at trial and substituting judgment in favour of the Council. Neither by its notice of contention, nor in argument, did the Council seek to revive a claim to a retrial based on the alternative way in which it had claimed relief in the Court of Appeal, namely that the verdict was against the evidence. The Council maintained that it was entitled to judgment as a matter of law on the basis that there was "no evidence" to support the jury's verdict, and hence the judgment that followed it. This "no evidence" ground was one which was available to the Council to argue at trial following the close of the appellant's case. In the event, the Council did not move the trial judge for a verdict by direction in its favour. However, it was common ground, correctly so, that the omission to seek a directed verdict at trial did not deprive the party complaining of the right to do so on appeal. Either there is such evidence or there is not. In many cases, it is prudent to receive the jury's verdict152. Not uncommonly, where a judge might conclude that there was "no evidence", the jury is of like opinion and returns a verdict against the party concerned. The majority of the Court of Appeal in this case upheld the "no evidence" submission, notwithstanding the omission of the Council to press the point at trial. 150 Supreme Court Act, s 102(a). 151 See Swain [2003] Aust Torts Reports ¶81-694 at 63,765 [10]. This provision is adapted from the Supreme Court Procedure Act 1900 (NSW), s 7, considered by this Court in Hocking v Bell (1945) 71 CLR 430 at 441-442, 486-487. 152 Naxakis v Western General Hospital (1999) 197 CLR 269 at 290 [59]. See also Jones v Dunkel (1959) 101 CLR 298, which was such a case, although the trial was held (by majority) to be flawed by the erroneous direction on the inference favourable to the plaintiff by reason of the unexplained failure of the defendant to call a witness. Kirby Thirdly, there was no issue or argument concerning the jury's decisions on the issue of contributory negligence. The findings on that issue and the deduction of 25 per cent can be explained on the footing that, although the jury found the Council negligent, it concluded that in diving as he did in waist-deep water the appellant had failed to take proper care of his own safety. There is no inconsistency between the verdicts returned by the jury. None was suggested. Fourthly, the parties accepted that the principles applicable to the "no evidence" ground were those stated in the reasons of this Court in Hocking v Bell153 and Naxakis v Western General Hospital154. As was pointed out in Ryder v Wombwell155, and affirmed in Naxakis156, the assertion that there is "no evidence" does not mean that the party claiming relief on this ground must show that there "is literally no evidence". The question is whether there is no evidence "that ought reasonably to satisfy the jury that the fact sought to be proved is established"157. This is a question of law to be decided by judges, initially (if raised there) by the trial judge and, if not, on appeal. It is not the same question as whether the verdict complained of is against the weight of evidence and in that sense unreasonable or perverse158. The approach to be taken where matters of this kind are argued is established by the cases that were decided in large numbers when civil jury trials were more common in Australia and England than they are today. In calling a witness to give evidence, a party is entitled to rely on all, or a part, even a small part, of the evidence of that witness159. Likewise, the jury is not bound to believe any witness, or combination or preponderance of the evidence of witnesses. It is for the jury to determine what evidence is worthy of belief and what is not160. 153 (1945) 71 CLR 430 at 442-444. 154 (1999) 197 CLR 269. 155 (1868) LR 4 Ex 32 at 39 per Willes J. 156 (1999) 197 CLR 269 at 281-282 [39], 288 [57]. 157 Ryder v Wombwell (1868) LR 4 Ex 32 at 39 per Willes J. 158 Naxakis (1999) 197 CLR 269 at 282 [40] per McHugh J. 159 Naxakis (1999) 197 CLR 269 at 282-283 [41] referring to Dublin, Wicklow, and Wexford Railway Co v Slattery (1878) 3 App Cas 1155 at 1168 per Lord Hatherley; Barker v Charley [1962] SR (NSW) 296 at 303-304; Leotta v Public Transport Commission (NSW) (1976) 50 ALJR 666 at 669; 9 ALR 437 at 450 per Murphy J. 160 Bell (1945) 71 CLR 430 at 443. Kirby Juries are trusted to resolve the contradictions and inconsistencies in the evidence161. Judges considering a "no evidence" submission attribute to a jury prima facie reasonableness in finding facts and drawing inferences from those facts162 and also bringing to bear upon that function their experience and "ordinary sense and fairness"163. Where a "no evidence" argument is advanced, the issue is never whether the judge concerned would draw the inferences and make the findings involved164. It is not whether that judge thinks that the case made for a party is probable or improbable165. It is whether, accepting to the full the evidence (or parts of the evidence) most favourable to the party concerned, as a matter of law, the jury might reasonably return a verdict on that evidence in favour of that party166. If there is evidence that reaches this standard, no amount of contradictory evidence, even if it be overwhelming, warrants the withdrawal of a civil case from the jury167 or the setting aside of a verdict taken from such a jury by action of an appellate court168. The strong inclination evident in the foregoing authorities towards receiving the jury's verdict, and respecting it once it is given, derives from the long experience of the law that has taught the general wisdom and reasonableness of the verdicts of civil juries169. Indeed, in recent years, such jury verdicts have sometimes served as a corrective to the approach of judges as tribunals of fact. That is why, now, it is not uncommon for defendants rather than plaintiffs to 161 Naxakis (1999) 197 CLR 269 at 283 [42]. 162 Naxakis (1999) 197 CLR 269 at 289 [58], referring to Glass, McHugh and Douglas, The Liability of Employers, 2nd ed (1979) at 206. 163 Bridges v Directors of North London Railway Co (1874) LR 7 HL 213 at 236 per 164 Bell (1945) 71 CLR 430 at 498-501. 165 Morison, "The Quantum of Proof in Relation to Motions for Non-Suit and Verdicts by Direction", in Glass (ed), Seminars on Evidence, (1970) 22 at 23. 166 Bell (1945) 71 CLR 430 at 498-501. 167 Slattery (1878) 3 App Cas 1155 at 1168. 168 Bell (1945) 71 CLR 430 at 440-441, 497; Leotta (1976) 50 ALJR 666 at 669; 9 ALR 437 at 450. 169 See Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478 at 507 [81]. Kirby summon juries where they remain legally available170. It is the history of jury trial and the absence of reasons for jury verdicts that explain the strong rule of restraint evident in the foregoing principles. Fifthly, where an appeal from an intermediate appellate court is before this Court, the intermediate court has completed its function. This Court does not simply re-exercise the powers of the intermediate court. At least, it does not do so without the finding of error on the part of the intermediate court. Where the intermediate court has set aside a judgment, including one based on a jury's verdict, this Court will not disturb the outcome simply because its members would themselves have reached a different result171. As was explained by Gibbs J in Precision Plastics Pty Ltd v Demir172: "We must decide whether they were in error in being so satisfied. In reaching our conclusion we should … give due weight to the views of … the Court of Appeal … we should not proceed as though we were sitting in their places and they had never spoken." The rule of judicial restraint upon appellate disturbance of judgments based on jury verdicts is not an absolute or mechanical one. Being a rule devised by judges to afford a limited opportunity for appellate interference with jury verdicts, it must be exercised having regard to the features of the particular case173. Judgment is inherent in the application of the test expressed in terms of a conclusion that there is no evidence "that ought reasonably to satisfy the jury that the fact sought to be proved is established"174. The law books are full of cases in which appellate courts have divided over the application of the foregoing test to the evidence given in a particular trial175. Hocking v Bell is a vivid illustration of such divided opinions176. There 170 Naxakis (1999) 197 CLR 269 at 290-291 [60]. 171 Liftronic Pty Ltd v Unver (2001) 75 ALJR 867 at 879-880 [65]; 179 ALR 321 at 172 (1975) 132 CLR 362 at 370. 173 Liftronic (2001) 75 ALJR 867 at 879-880 [65]; 179 ALR 321 at 336-338. 174 Ryder (1868) LR 4 Ex 32 at 39 per Willes J. See also Jewell v Parr (1853) 13 CB 909 at 916 [138 ER 1460 at 1463]; Metropolitan Railway Co v Jackson (1877) 3 App Cas 193 at 207 per Lord Blackburn; Bressington v Commissioner for Railways (NSW) (1947) 75 CLR 339 at 353 per Dixon J. 175 Naxakis (1999) 197 CLR 269 at 291-292 [64]. Kirby are many other illustrations177. It is timely to repeat the warning given by Evatt J in Davis v Bunn178 about the fallacy of reasoning that can arise in applying these principles: judge himself does not consider "The the defendant's conduct unreasonable in the circumstances, therefore no other person should consider it unreasonable, therefore any person who thinks it unreasonable is an unreasonable person." Whilst avoiding this fallacy, it remains for the intermediate appellate court to discharge functions of the kind conferred in this case by the court's constituent statute179. So long as there is no error of principle or reasoning in the performance of this function, this Court should not disturb the judgment that has been entered by the intermediate court of appeal. On the other hand, where error is demonstrated this Court is authorised by the circumstances, and may be required, to perform its own constitutional function. Errors on the part of the Court of Appeal Approaching this appeal with the foregoing considerations in mind, can it be said that error has been shown on the part of the Court of Appeal to justify the intervention of this Court? The ultimate point of division between the majority judges (Handley and Ipp JJA) and the dissenting judge (Spigelman CJ) is rather confined180. As the majority said, they agreed with Spigelman CJ on all matters other than on the question of the breach of the Council's duty by the placement of flags on the beach. The majority were of the view that there was no evidence of negligence in that respect. It was on that footing alone that they allowed the appeal181. 176 Bell (1945) 71 CLR 430 per Rich, Starke and McTiernan JJ; Latham CJ and Dixon J dissenting; reversed by the Privy Council in Hocking v Bell (1947) 75 CLR 177 For example Luxton v Vines (1952) 85 CLR 352; Holloway v McFeeters (1956) 94 CLR 470. 178 (1936) 56 CLR 246 at 265-266. 179 Supreme Court Act, s 108(3). 180 Swain [2003] Aust Torts Reports ¶81-694 at 63,782-63,783 [145]. 181 Swain [2003] Aust Torts Reports ¶81-694 at 63,782-63,783 [145]. Kirby Clearly, the majority were correct in rejecting the respondent's submission that, for the appellant to succeed on this ground, it was necessary for the Council to demonstrate that there was "literally" no evidence to support the finding of the jury182. This is not, and has never been, the law of Australia. That fact was put beyond any residual doubt by this Court's decision in Naxakis183. Indeed, the assertion to the contrary would be to make the law even stricter than the now overthrown "scintilla doctrine". Therefore, it is not enough to show that there is a mere scintilla of evidence favouring a party. The "no evidence" ground, as it is currently named, bears little relationship to the concept which it is intended to signify. More properly, it should be called the "no reasonable evidence" ground. That is how I mean the expression to be understood. It remains to decide whether the evidence that has been proved is such that it could reasonably satisfy the jury that the contested fact is established. Allowing that there is no error to this point in the reasoning of the majority of the Court of Appeal, there follow three errors of analysis that warrant, when read together, an order by this Court allowing the appeal. The first is, of itself, a relatively trivial one. But it is indicative of a flaw that is more serious. At an important passage in their reasoning, the majority state that it is "necessary to distinguish between a 'sandbank' and a 'sandbar'", and declare that the "seaward edge of a channel is known as a sandbar"184. They then proceed even to correct the evidence given by the appellant, substituting "sandbanks" for "sandbars" as used by him in his testimony. This approach to the evidence of the witnesses does not conform to the governing authorities that have been cited concerning the approach which the appellate court must take to the evidence adduced in a jury trial. The question on appeal in a case of this kind is not how the appellate court reads the evidence (still less how it corrects it). It is how it was open to the jury to consider the evidence, accepting that evidence at its most favourable from the point of view of the party in favour of whom the jury's verdict was entered. Mr Williams, the experienced ocean lifeguard and beach education officer, gave evidence contrary to the factual analysis of the majority judges: "Q: Now [the appellant's counsel] asked you a number of questions where he used the expression 'sandbank' and then he used the expression 'sandbar'; remember that? 182 See Swain [2003] Aust Torts Reports ¶81-694 at 63,783 [146]. 183 (1999) 197 CLR 269 at 281-282 [39]-[40], 288 [55]-[57]. 184 Swain [2003] Aust Torts Reports ¶81-694 at 63,784 [156]. Kirby Yes. Did you have any understanding when he was asking you those questions of the distinction between the two concepts? A: Well, they're two terms used to describe the same entity, to me. So the members of the jury should understand that despite [this] use of two different words, you understood them to mean the same thing? Generally, yes." In the face of this evidence, it was clearly open to the jury to draw no distinction whatever between a "sandbank" and a "sandbar". To the extent that, for their factual analysis, the majority judges in the Court of Appeal thought that such a distinction was "necessary", as they put it185, it was a mistake and one that does not comply with the proper legal approach. Indeed, despite endorsing Spigelman CJ's citation of the applicable authorities, it suggests the adoption of an approach that did not undertake the task of the appellate court as those authorities required. In effect, the Court of Appeal was performing the function much more familiar to it in its everyday work of reviewing decisions about the facts found at trial as expressed in the reasons of judges. It was reconsidering and re-evaluating the evidence in that way. It was not doing so in the more limited and strict way necessary where a judgment under consideration has followed a jury's verdict. Secondly, confirmation that this was the approach adopted by the majority in the Court of Appeal may be found in the passages in the majority's reasons where they cite a decision in which Ipp JA had earlier participated. This was Prast v Town of Cottesloe186. His Honour had there referred to the distinction between the inherent risks of body-surfing and the risks in "diving" cases, such as Nagle v Rottnest Island Authority187, where there were held to be hidden dangers which created a duty to warn. This citation is followed, in turn, by a passage of reasoning which, with great respect, can only be understood as expressing an evaluation of particular facts by the members of the majority in the Court of Appeal for themselves. Their Honours state188: 185 Swain [2003] Aust Torts Reports ¶81-694 at 63,784 [156]. 186 (2000) 22 WAR 474 at 481-483. 187 (1993) 177 CLR 423. 188 Swain [2003] Aust Torts Reports ¶81-694 at 63,786 [178]. Kirby "The risks of channels and sandbars, such as those that caused the respondent's injury, close to the shore, are also well-known and can only be avoided by not diving or diving with care. When one dives into a wave over a channel close to the shore there is an inherent and well-known risk of encountering a sandbar. Although a broken wave may obscure a channel and sandbar this does not mislead a swimmer who has surfed before. A sensible swimmer in that situation will either not dive into a wave or will make a shallow dive with little force and arms extended for protection. The dangers of doing otherwise are obvious." Allowance must be made for the proper function of the appellate court in reviewing the evidence proved in a jury trial in order to decide whether there is no evidence that ought reasonably to have satisfied the jury that the matter in issue is established. Nevertheless, the starting point in the foregoing reasoning was incorrect. No analysis is undertaken of the evidence that was before the jury favourable to the appellant. Nor is there a measurement of such evidence against the limited circumstances in which the appellate court is permitted to intervene in such a case. Although the applicable test, expressed by Willes J in Ryder189 was cited in the majority reasons190, what followed reads as their Honours' own evaluation of the facts and not a consideration of the appellant's case at its highest and then scrutiny of whether that case was sufficiently reasonable to satisfy the jury and to sustain their verdict. Thirdly, the foregoing points of criticism emerge in still sharper relief when the majority's reasons are contrasted with those of Spigelman CJ. Thus, the majority state that191: "The flags are there to designate swimming areas and to indicate to people where they can swim safely. They do not indicate that it is safe to dive anywhere between them. They do not indicate, for example, that it is safe to dive at the water's edge, or that it is safe to dive into a channel. The flags were not intended to convey, and did not convey, any indication to persons in the water of the condition of the sand floor or the depth of water immediately in front of them. The respondent said he went in between the flags because he 'believed it was safe and a patrolled area' and if he had not thought it was safe he 'wouldn't have swum there'. He said 'you swim in between the 189 (1868) LR 4 Ex 32 at 38-39. 190 Swain [2003] Aust Torts Reports ¶81-694 at 63,783 [147]. 191 Swain [2003] Aust Torts Reports ¶81-694 at 63,786 [175]-[176]. Kirby flags'. In fact it was safe to swim there. He did not say, knowing he was between the flags, that he thought for that reason it was safe to dive as and where he did. His evidence of reliance was directed, not to the flags which were on the shore, but to the warning signs which were not." Once again, with respect, the analysis by the majority constitutes an explanation by them of what they considered the flags, put in place by the Council's employees, signified. That was not the correct approach. The issue is how the jury could have understood the information conveyed by the position of the flags, not how appellate judges interpreted them. If regard is paid to the evidence that the jury had before them from Mr Williams, it was open to the jury to conclude that the safety indicated by the flags was the safety relevant to "ocean swimming". It was also open to the jury to conclude that this encompassed a number of activities, and included body- surfing. It was open to the jury to decide that the flags were put in place to indicate to persons such as the appellant that it was safe for him to body-surf in the designated area. It would likewise have been open to the jury to conclude that the flags signified the assessment of the Council's lifeguards on duty that, so long as the bather remained within the space marked out, no special warning or caution was being signified to the public. In the words of Mr Nightingale, if "they stay between the flags, ideally they should come to no harm. It's safe swimming" (emphasis added). It was in this way that Spigelman CJ, in his reasons192, approached the issue for resolution. Repeatedly, by reference to the detailed evidence, his Honour considered not his own assessment but what it was open to the jury to find, looking at the evidence in the way required, namely as that evidence was reviewed most favourably to the appellant. The steps in Spigelman CJ's reasoning on this point are clear. The Council's accepted duty of care with respect to the beach extended to the placement of the flags and the provision of warnings of any hazards relevant to the inducement (which it was open to the jury to infer the flags otherwise provided) that people could safely enter the water between them193. His Honour noted that the Council did not adduce evidence about what its officers had in fact done or considered with respect to the placement of the flags on the day of the appellant's injury. Mr Nightingale said that there had been no change in the conditions of the beach during the day194. However, it was open to the jury to 192 Swain [2003] Aust Torts Reports ¶81-694 at 63,781-63,782 [133]-[140]. 193 Swain [2003] Aust Torts Reports ¶81-694 at 63,782 [140]. 194 Swain [2003] Aust Torts Reports ¶81-694 at 63,781 [133]. Kirby conclude that this was unconvincing evidence because Mr Nightingale would have been unaware of the original conditions when the flags were first put in position hours before he commenced duty. Another inference that the jury might have accepted was that the initial placement of the flags was incorrect. Certainly, the jury could properly conclude that lifeguards, including Mr Nightingale, were in a good position to see the general contours of sandbanks, channels and troughs within the water from their elevated vantage point. Yet no evidence was called for the Council to indicate that the flags on that day were shifted by specific reference to movements in the ocean floor creating an unexpected hazard for ocean swimming. In particular, the Council, which called Mr Nightingale to give evidence, failed to ask him why, on the day of the appellant's injury, the flags had not been shifted. By inference, he could have answered that question. It is true, that the appellant, as the plaintiff in the action, bore the legal onus throughout the trial of adducing evidence sufficient to discharge his burden of proof195. However, in the context of the trial, it was unreasonable to expect the appellant, on the blind, to have asked Mr Nightingale such a question. It was for the jury to draw inferences from the facts proved at the trial. Inferences (representing something more than mere conjecture196) may be drawn by a jury from the omission of a party with the interest to do so to ask such an obvious question197. The Council had the interest to ask the question. Similarly, it had the interest to cross- examine Ms Galvin over her alleged statement to Mr Tagg concerning the way the appellant's injury had occurred. Neither of these steps was undertaken. Where such forensic omissions happen, it is open to a jury to conclude that the failure to elicit the apparently relevant evidence, or to press the relevant point, has occurred for good reason. They might conclude that it was a simple mistake or oversight. But in a case of such importance, the Council having called Mr Nightingale to give evidence, it was open to the jury to decide that he was never asked to meet directly the case being advanced for the appellant, concerning the shifting of the safety flags which was within his authority and responsibility, because his answer would not help the Council's case. Thus, the jury could properly have decided that, forensically, the omission in questioning was deliberate, occurring for some reason consistent with the appellant's assertions. 195 See reasons of Handley and Ipp JJA, Swain [2003] Aust Torts Reports ¶81-694 at 196 Holloway (1956) 94 CLR 470 at 480; Naxakis (1999) 197 CLR 269 at 289 [58]. 197 See Nelson v John Lysaght (Australia) Ltd (1975) 132 CLR 201 at 214-215 per Gibbs J; Chappel v Hart (1998) 195 CLR 232 at 247-248 [34] per McHugh J. Kirby Two witnesses (Mr Wilson and Ms Galvin) gave evidence strongly suggestive of the presence of a sudden trough that Mr Wilson described and that caused Ms Galvin to fall over in the water. It was open to the jury to conclude that, from his elevated position, Mr Nightingale could have seen that trough and the sandbank formed next to it, if he had been paying due attention. It was Mr Nightingale after all who had said: "I can see a sandbank because it's yellowy. And a deeper water would be signified by darker green." Once this course of reasoning was accepted by the jury (as was their entitlement) it was but a small step for them to conclude that the Council had failed to take reasonable care for the safety of the appellant as a person using the beach and that this failure had caused (in the sense of contributed to) his injury. Thus, the jury may have concluded that, although the lifeguards on duty could see the contours of troughs and channels and sandbanks, on this day they paid no adequate attention to them, or that they noticed them, but decided to place the flags adjacent to the sandbank regardless. Given the description of the features of the sandbank and trough in the evidence of Mr Wilson and Ms Galvin, the jury must have concluded that the appearance of each was plain to attentive lifeguards viewing the beach from their vantage point. In the particular circumstances, it was a hazard. lt should have been drawn to the notice of bathers and their safety protected by the shifting of the flags to a point beyond the trough adjacent to the sandbank. Visually, this would have been clear to the lifeguards. But it was open to the jury to accept that it was invisible to the appellant. Against this reasoning, powerful contrary arguments existed that supported the Council's case on the positioning of the flags. According to the evidence, sand levels on the ocean floor often vary, especially near the shore. They are in a constant state of change. They create channels, troughs and dangers of varying degrees. The beach in question is very popular, attended by large numbers of people and on the day of the appellant's injury the water was calm and the conditions unremarkable. All of this was also known to the appellant and he tendered no evidence of different practices on different beaches, whether in Sydney or elsewhere. Moreover, the appellant's own expert witness, Mr Williams, gave evidence that it was usual to place flags opposite sandbanks precisely because, in general, the shallower water above a sandbank near the beach gave protection to children, the aged, the infirm and inexperienced swimmers. On this basis, there was certainly plenty of evidence available to the jury on the basis of which they would have been entitled to reject the appellant's case. Such a rejection would have been reasonable and in no way irrational or unexpected. However, that is not the question presented by this appeal. What the jury made of the evidence was, within very large boundaries, a matter for them. It was so, as long as they acted within the ultimate legal Kirby requirement of reasonableness as established in the cases. They were not obliged to accept the Council's evidence or argument. They were entitled to conclude that the lifeguards on duty had the capacity to perceive a trough adjacent to a sandbank. They could then conclude that this represented a hazard on the particular day that misled the appellant as to the water's depth and contours and caused his injury. Yet, the lifeguards on duty had failed to shift the flags to a position where that hazard was not present. And they gave no evidence, although they had every reason to do so if it had been the case, that there was no safer place for the flags than that maintained by them throughout the fateful day. The dissenting opinion in the Court of Appeal approached the issue in the appeal in the legally correct way. Because the correct approach was taken, it is unsurprising that the correct conclusion was reached by Spigelman CJ. History shows that the verdicts of juries on safety questions have sometimes reflected the commonsense of ordinary citizens which experts and established practice have occasionally neglected. The notion that lifeguards on duty on a popular public beach should be vigilant throughout the day for troughs and emerging sandbanks presenting particular dangers to ocean swimmers, and attentive to shifting the flags as required by such changes, is not one offensive to rationality and reasonableness. It may not be a conclusion that every judge would draw in the present case. But once such a conclusion was reached by the jury, the resulting verdict must be upheld by an appellate court save for the very limited circumstances where such a court is authorised by law to set it aside. Conclusion and orders In some ways, the jury's verdict in this case was a surprising one. However, as the dissenting judge said in the Court below, too much should not be read into it198. No jury verdict (nor appellate decision reconsidering it) enjoys the authority of precedent that belongs to a reasoned decision of a judge upheld by the judicial process199. Of necessity, a jury's verdict speaks enigmatically. It gives neither reasons nor explanations. It gives nothing more than the jury's ultimate decision on the mass of evidence in the particular case. In the present case much may have turned on the primary forensic battleground which the Council chose and upon which it obviously failed (swimming outside the flags). It would not have been surprising if that issue had 198 Swain [2003] Aust Torts Reports ¶81-694 at 63,782 [142]-[143]. 199 Indeed all such judgments are in any case merely decisions confined to their facts. They do not establish principles of law: Joslyn v Berryman (2003) 214 CLR 552 at 602 [158] per Hayne J. Kirby distracted the jury's attention from the truly separate issues of reasonableness of conduct in the case. This case was not one where there was "no evidence" to support the appellant's claim of negligent breach of duty causing him damage. There was evidence. I am not convinced that the jury's conclusion was such that no jury performing their functions properly could reasonably have been satisfied of the facts necessary to sustain the verdict in favour of the appellant. Accordingly, the jury's verdict, and the judgment that followed it, must be restored. The appeal should be allowed with costs. The judgment of the Court of Appeal of the Supreme Court of New South Wales should be set aside. In place thereof, it should be ordered that the appeal to that Court be dismissed with costs. 236 HEYDON J. I agree with McHugh J that the appeal should be dismissed with costs on the ground that there was no evidence that would have entitled the jury to find that there existed a reasonably practicable means of avoiding the risk of the injury which the plaintiff suffered. However, in my opinion, applying existing principle, the factual question whether it was reasonably foreseeable that there was a risk of injury to the plaintiff of the kind he suffered in the circumstances should also be answered in the negative. I do not agree with McHugh J that it was open to a reasonable jury to find that the risk was reasonably foreseeable in this case200. I would reserve for later consideration, if necessary, the question whether, in determining as a matter of law that there is evidence of negligence, a court may take into account the circumstance that some of the facts essential to the plaintiff's case are peculiarly within the defendant's knowledge201. The present was not a case where a plaintiff had advanced some evidence from which inferences could be drawn that there was a reasonably practicable alternative, and where the failure of a defendant who was in a position to call evidence rebutting those inferences to do so enabled the inferences to be drawn more strongly. It was instead a case in which, by the end of the trial, there was no evidence from which it could be inferred that there was a reasonably practicable alternative. 200 cf reasons of McHugh J at [90]. 201 cf reasons of McHugh J at [37]-[39]; reasons of Gummow J at [154]-[155]. |
HIGH COURT OF AUSTRALIA RE PHILLIP RUDDOCK IN HIS CAPACITY AS MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS & ANOR RESPONDENTS EX PARTE APPLICANT S154/2002 APPLICANT/PROSECUTRIX Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S154/2002 [2003] HCA 60 8 October 2003 ORDER 1. Order nisi, granted on 7 November 2002, discharged. 2. Prosecutrix to pay second respondent’s costs. Representation: J M Patel for the applicant/prosecutrix (instructed by the applicant/prosecutrix) No appearance for the first respondent S J Gageler SC with S B Lloyd for the second respondent (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant Immigration – Refugees – Refugee Review Tribunal – Procedural fairness – Whether Tribunal misled applicant into believing factual claim had been accepted as true – Whether Tribunal relied on evidence tendered earlier to disbelieve factual claim without giving applicant opportunity to demonstrate evidence was not inconsistent with factual claim – Whether Tribunal relied on belated disclosure of rape incident to disbelieve factual claim in circumstances where belated disclosure might have been explicable – Whether subsequent hearing and provision of written submissions cured any earlier breach of requirements of procedural fairness – Inquisitorial hearing by Tribunal – Whether failure by Tribunal to afford procedural fairness amounting to jurisdictional error. Constitution, s 75(v) Migration Act 1958 (Cth), s 420(2). GLEESON CJ. The facts of the case are set out in the reasons for judgment of Gummow and Heydon JJ ("the joint reasons"). I agree with those reasons, and would add only two observations. First, the Tribunal Member's remark that he did not need to ask any further questions about an incident said by the prosecutrix to involve rape was a response to her statement that "I cannot tell this", indicating that she did not wish to be pressed for further details. It is improbable that the Tribunal Member intended to use legal jargon indicating an acceptance of that part of the case for the prosecutrix, as when a judge says to counsel: "I do not need to hear you further". It is improbable in the extreme that the prosecutrix would have been familiar with such legal jargon, and would have understood the remark in that light. In any event, as the joint reasons demonstrate, even if such a misapprehension had been created, it must have been dispelled by what followed. Secondly, the particulars in the order nisi complain of a denial of procedural fairness by the creation of a wrong and misleading impression and a false belief that the Tribunal had accepted part of the prosecutrix's evidence. I do not accept that contention. Additionally, however, it should be noted that what is alleged is materially different from a complaint that, apart from the creation of a misleading impression or a false belief, the Member in some way, by his conduct of the proceedings, prevented the prosecutrix, and the migration agent who was assisting her, from presenting her case as they wished, or from saying everything they wanted to say. Further, there is no complaint that the prosecutrix received insufficient assistance or encouragement from the Tribunal Member. If any such complaint were made, there would be a serious question to be considered as to the relationship between a complaint of that nature and the requirements of procedural fairness. The order nisi should be discharged with costs. The nature of the proceedings On 17 July 2001 the Refugee Review Tribunal ("the Tribunal"), which is the first respondent, affirmed the decision of a delegate of the Minister for Immigration and Multicultural Affairs ("the Minister"), who is the second respondent, refusing the prosecutrix a protection visa under the Migration Act 1958 (Cth) ("the Act") on the ground that it was not satisfied that the prosecutrix was a person to whom Australia owed protection obligations under the Refugees Convention. On 7 November 2002, a Justice of this Court (Gaudron J), on an application made by the prosecutrix in the original jurisdiction conferred by s 75(v) of the Constitution, ordered that the Tribunal and the Minister show cause why in respect of the decision of 17 July 2001 certiorari should not issue to remove that decision into this Court to be quashed and mandamus should not issue directing the Tribunal to rehear and determine the matter according to law. The argument which led to the Order Nisi and which was advanced to this Court was that the prosecutrix was denied natural justice. The Tribunal rejected a claim by the prosecutrix that she had been raped by police officers in Sri Lanka while in their custody. The prosecutrix complained that after she had made this claim to the first respondent, she was told by the Tribunal Member conducting the hearing: "Ok. I don't need to ask you any further question about that particular incident." Counsel for the prosecutrix adopted as the essence of her case a statement made by Gaudron J about that observation: "If I had been appearing for the applicant and the presiding member had said that to me, I would have thought that has been accepted as fact It is not a question of what the Tribunal was thinking. I am not in the least bit concerned what the Tribunal is thinking. The question from a procedural fairness point of view is what the applicant, but perhaps more significantly her representative, thought was indicated by that. Ordinarily, if a court says that to you, a wink is as good as a nod and you sit down." The background to the proceedings The prosecutrix is Sri Lankan in citizenship, Tamil in ethnicity, and Christian in religion. She was born on 18 January 1974 in Kandy. In 1994 she went to live in Colombo. In 1995 she moved to Nilambe, a town near Kandy. In 1996 she moved to the Maldives and lived in a de facto relationship with her employer, a Pakistani national of Muslim religion. She made several return trips to Sri Lanka in 1996-1998. She married her employer on 20 December 1998 and they arrived in Australia on 31 December 1998, together with the prosecutrix's mother. On 9 February 1999 the prosecutrix applied for a protection visa. Her contention was that she was a Tamil suspected by the authorities of being a member of the Liberation Tigers of Tamil Eelam ("LTTE"), a Tamil separatist group. On 12 March 1999 a delegate of the second respondent refused the application. He did so on the ground that she was not regarded as being associated with the LTTE, had never been arrested or detained under anti- terrorist legislation, had been free to leave and return to Sri Lanka in the past, was of no interest to the Sri Lankan authorities, had no well-founded fear of persecution, and hence was not owed protection obligations by Australia. On 29 March 1999 the Tribunal received an application to review the delegate's decision. Among the material relied on to support the application was a report by a consultant psychologist with whom the prosecutrix had had ten consultations in 1999-2000, "mostly with her mother … sometimes with her husband and, more rarely, alone". On 29 March 2000 the Tribunal, after a hearing conducted by Mr J Vrachnas on 8 February 2000, affirmed the delegate's decision. On 31 August 2000 the Federal Court of Australia set aside the decision of 29 March 2000 on the ground that the Tribunal had failed to make findings about a claim made by the prosecutrix for the first time at the hearing on 8 February 2000 that she feared being recruited by the LTTE. The matter was remitted to the Tribunal. An oral hearing of the Tribunal was arranged for 1 June 2001 and conducted by another Member, Mr J C Blount. The prosecutrix's evidence was given in Tamil and translated into English by an interpreter. The prosecutrix was assisted by a migration agent ("prosecutrix's adviser"). At that hearing the Tribunal Member said he would have regard to evidence previously provided by the prosecutrix. He questioned her about her movements from Sri Lanka to the Maldives and back in 1996-1998. He then questioned her about her claims to have moved about Sri Lanka from 1984 on. After asking some questions seeking to clarify whether the prosecutrix had stayed in Colombo in the period before moving to the Maldives in 1996, and being told that she had been staying at Nilambe, the Tribunal Member asked the following questions1: "M" refers to the Tribunal Member, and "I" to the interpreter. "M Did your mother arrange the travel and employment in the Maldives for you? No Sir I ... Do you want me to repeat the question? Yes Sir I ... I was asking whether when you went to the Maldives whether it was your mother who arranged your travel and employment there? In the meantime there was an incident that happened in my life. M Which was in Nilambe? Yes. M When was this? M When in 95 you recall? In the middle of the year, the end of the year? It should be I think in the end of the year. Ok. What was that happened? This has not been described in the statement. My mother doesn't know. Nor does my husband know. Please continue. I have described in the statement the saying that one night some boys came and knocked at the door. Later mother came no no that elderly lady. That elderly lady came and she scolded and wanted them to go. I have described this in the statement. Later, the following day police came there. Police came and asked are you trying to threaten us with Tamil boys? Are you in the LTTE? They took me. Later I was kept in the police. One thing happened to me Sir. So far I have not revealed this to my mother because my mother has pressure problems. And in the future she should not know about this. They raped me. Owing to this fear, I asked my mother to take me away. I cannot tell this. Ok. I don't need to ask you any further question about that particular incident. Now, after that you went to the Maldives and you became established there with employment and after a period with a relationship with a person who later became your husband? Yes." The italicised sections of the transcript above ("italicised passages") were relied on in the particulars included in the Order Nisi. It is common ground that this claim of rape had not been mentioned to the Minister's Department, to the delegate, to the psychologist, at the first Tribunal hearing or at any time before it was volunteered in the manner just set out. A little later the prosecutrix made a second fresh claim, namely that she had been asked by agents of the LTTE to join that organisation. This became linked to the rape allegation, since the prosecutrix said: "It was in relation to this matter that when I was taken by police in 95 they accused me of having contacts with the LTTE." Later the following exchange, also relied on in the particulars given in the "M Did you when you had the problem with the local police in 95, you didn't seek to make a complaint or carry that forward by through lawyers, through courts, through more senior authorities. They threatened me and warned me that I shouldn't tell anything outside. Then they even to a doctor I couldn't go I got just a native treatment. Ok is there anything else?" The hearing continued for some time, and it is necessary to return below to some aspects of it. It concluded with a request by the prosecutrix's adviser for liberty to put in written submissions because "so many issues" had arisen that day. Those written submissions repeated the prosecutrix's claim to have been raped while in custody. On 7 August 2001 the Tribunal handed down its decision. It affirmed the delegate's decision. In particular it rejected the two new claims which the prosecutrix had made on 1 June 2001. It said: "Although in her original statement the Applicant had referred to some Singhalese youths coming to her house in Nilambe and being scolded away by her elderly maid, she made no mention of being taken to the police station the next day because of this, let alone that she had been accused by the police of LTTE contacts or that she was raped in police custody. The Applicant stated that she had not mentioned the rape previously because her former husband and mother did not know about it and so she had not referred to it. However, that does not adequately explain why the matter was not raised at the previous Tribunal hearing at which neither her husband nor mother was present (and does not explain why being taken to the police station was not mentioned at all). Nor was the rape referred to in a psychological report submitted by the Applicant to the first Tribunal in February 2000, prepared by a consultant psychologist from the Queensland Program of Assistance to Survivors of Torture and Trauma after some ten appointments with the Applicant (some without her mother or husband present)." The Tribunal continued by stating that its: "… concerns about this were strengthened by the Applicant's linking this alleged detention and rape with her other new claim, that she had been approached that same year to join the LTTE and that the police had asked her specifically about those persons who had approached her. The Tribunal found the Applicant's evidence about this particular claim to be most unsatisfactory. It is evidence that one would have expected to have been provided at the hearing before the previous Tribunal when the Applicant was asked specifically about her claim that she fears the LTTE because she believes that they might try and recruit her. However, notwithstanding the previous Tribunal's question, the Applicant on that occasion made no reference at all to the claim now advanced that in 1995 two persons had come to her house on more than one occasion and had asked her to join the LTTE. Nor did the Applicant mention this matter when she first referred at the most recent hearing to being taken in by the police for allegedly threatening the Singhalese youths, whereas later in that hearing she claimed that the two matters were linked and that this was the reason she was taken in and questioned. At one point in the hearing the Applicant stated that it was the two teachers who had approached her in 1995 and asked her to join the LTTE but later she stated that it was two friends of the teachers who came to see her and asked her to join the LTTE." The Tribunal stated its conclusions as follows: "The way in which this claim was presented and developed at hearing led the Tribunal to conclude that this did not represent the Applicant's own actual experience. Further, the Tribunal found it most implausible that two persons who the Applicant had met through teachers when she was a young girl should suddenly come to her house eight years later seeking to recruit her to the LTTE. The Tribunal was satisfied that this claim was not true but was presented solely for the purpose of bolstering the Applicant's claims. The Applicant's insistence that this circumstance was the reason she was taken and questioned (on the occasion when she said she was raped) leads the Tribunal to conclude that the detention (if it occurred at all) did not occur in the manner and for the reason claimed. Having carefully considered the Applicant's evidence about these particular matters, the Tribunal does not accept that the Applicant was approached by LTTE members in 1995, or that she was asked or pressed to join the LTTE, or that she was for that reason detained by the police or that she was raped when detained by the police. These findings must affect the Tribunal's view of the Applicant's credibility on other matters, especially where her stated fears are inconsistent with her actions in repeatedly returning to Sri Lanka." The grant of the Order Nisi The prosecutrix, through counsel, advanced various grounds for the making of an Order Nisi in oral hearings before Gaudron J on 11 June, 8 July, 30 August and 1 November 2002. The one ground on which the order was granted asserted jurisdictional error by reason of failure to accord procedural fairness2. The ground was expressed thus: The Applicant was denied natural justice and procedural fairness required to be observed by the Tribunal with respect to its review of the delegate's decision and in reaching its ultimate decision. PARTICULARS: The Tribunal during and in the course of the hearing conveyed to the Applicant wrong and misleading impression which misled and induced a false belief on the part of the Applicant that the Tribunal had accepted her claim and evidence given by her that she was raped and there was no need for her to give any further evidence or make any representations regarding the incident of rape. In the circumstances the Applicant was disadvantaged by the conclusion and findings reached by the Tribunal that it could not accept her claim and evidence that she was raped. The conclusion and findings reached by the Tribunal were 2 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82. improper, unfair and not in keeping with the rule and principles of natural justice. The wrong and misleading impression and false belief referred to in paragraph 1 herein was caused by the following exchange that occurred at the hearing between the Tribunal member and the Applicant:" [The italicised passages set out above were then quoted.] The Tribunal drew unfair and improper adverse inference and conclusion against the Applicant that she was not raped on the basis that the incident of rape was not mentioned in the psychological report that was tendered at the earlier hearing. In as much as the Tribunal had not made any inquiry and had not asked the author or the Applicant for any other plausible explanation as to why the incident was not mentioned in the report, the adverse inference and conclusion drawn by the Tribunal in all the circumstances was not in keeping with the rule and principles of natural justice." The prosecutrix relied on three affidavits in this Court. They were dated 22 April 2002, 15 August 2002 and 6 September 2002. For at least part of the period covered by those dates the prosecutrix had access to counsel. In paragraph 4 of the 15 August 2002 affidavit she said: I was denied natural justice in as much as the Tribunal did not put to me any questions or make any reasonable inquiry with respect to why there was not any specific mention made of the rape incident in the psychological report that was submitted by the Applicant to the first Tribunal and did not give me opportunity to respond, why the inference the Tribunal sought to draw was wrong." In paragraphs 9-10 of the affidavit of 6 September 2002 she said: "9. The Tribunal relied on the psychological report I had tendered in evidence to draw an adverse inference against me with respect to the incident of rape without giving me opportunity to comment and without the benefit of any explanation from the author of the report. 10. Had I been given the opportunity to comment, or had the Tribunal sought comments from the author of the report, the Tribunal would have appreciated that the author of the report had taken care not to disclose any sensitive details of the confidential communications that passed between the parties. The Tribunal would have also appreciated that the subject matter of the meeting and the purpose of the meeting had between the psychologist and the applicant when her husband and her mother were not present, had no relation or any connection with the incident of rape." In none of the affidavits did the prosecutrix state that she understood from what had been said to her in the italicised passages that the Tribunal Member had accepted her claim of rape and that there was no need for her to give further evidence or make any representations about it. The prosecutrix's arguments Underpinning the prosecutrix's arguments was the contention that the rape claim was of critical importance to her application for refugee status. It may be accepted that this is so. Its rejection was inevitably damaging to the prosecutrix's credibility on other issues. Had it been accepted, it would have advanced the substance of her claim powerfully. The first three arguments of the prosecutrix were directed to Particulars 1 and 2 of the Order Nisi. The fourth argument of the prosecutrix was directed to Particular 3. The primary argument advanced by the prosecutrix was that the Tribunal Member misled her and induced a false belief in her that the Tribunal had accepted her claim of rape and that there was no need to go further. A second and related argument was that the Tribunal Member did not at any time express any concerns or reservations about the rape claim and did not afford the prosecutrix a fair opportunity to respond to any concerns or reservations or to adduce further evidence in relation to them. A third argument was that whatever new information the prosecutrix gave, it was elicited by the Tribunal Member, not volunteered by the prosecutrix. It was submitted that the hearing was inquisitorial, that the prosecutrix's answers were responsive to the questions put to her by the Tribunal Member in his interrogation, and that the information given was largely influenced by the questions and comments of the Tribunal Member. Finally, it was submitted that the Tribunal Member was wrong to employ the lack of reference to the rape in the psychological report as a step in rejecting the prosecutrix's claim to have been raped. The Tribunal Member had erred in not inquiring of the author of the report or the prosecutrix whether there was any explanation as to why the incident was not mentioned. The prosecutrix's principal argument considered: was she misled? If counsel addressing a judge is stopped in the middle of a submission on a matter of fact, it is safe for counsel to assume that, unless notice to the contrary is given, the submission will be accepted: if the judge later rejects that submission, an appeal will succeed unless it is shown that a properly conducted trial could not possibly have produced a different result3. And if, as is illustrated by Re Refugee Review Tribunal; Ex parte Aala4, the Tribunal tells the applicant for refugee status that it will take material into account and does not and if in reliance on that statement the applicant does not elaborate on that material, there will have been a denial of a fair hearing. But the prosecutrix here was not counsel addressing a judge. It is highly unlikely that the prosecutrix fell within the limited number of those persons without legal training and experience who would understand what a judicial officer means when that officer "stops counsel". Nor, in any of her three affidavits, did the prosecutrix say she had been misled or that she would have taken a different course if she had not been misled by the Tribunal Member's statement that he did not need to ask any further questions about the rape claim. However, had the subject of the rape never been mentioned again after the Tribunal Member acquiesced in the prosecutrix's desire not to talk about the matter further, the prosecutrix's argument that the hearing was unfair may have been strengthened. It is understandable that any human being who had been the victim of rape would be reluctant to talk about it to strangers. Without deciding the point, it may also be assumed, as counsel for the prosecutrix urged, that a Christian Sri Lankan Tamil married to a Pakistani Muslim would be particularly reluctant to talk about the matter, whether to her mother, her husband, the psychologist or the Tribunal Member. Though this Court did not see the prosecutrix's testimony or any video recording of it, it may be assumed that the prosecutrix was showing signs of distress at the time when she said "I cannot tell this". Hence an argument may have been open that procedural fairness had been denied the prosecutrix because of what happened when the Tribunal Member said he would not question the prosecutrix about the rape, if that episode were considered in isolation. But what happened later negated any such argument. 3 Stead v State Government Insurance Commission (1986) 161 CLR 141. (2000) 204 CLR 82 at 88 [3] per Gleeson CJ, 122 [103] per McHugh J, 130 [128] per Kirby J, 150 [200] per Callinan J. After some further questioning, the hearing was adjourned for an interval. the Tribunal Member began raising problems he was On resumption, experiencing in assessing the prosecutrix's story. First, the Tribunal Member said it was difficult to see how the prosecutrix was suspected of involvement with the LTTE, since she had not been detained or charged, since she had been able to travel out of and return to Sri Lanka openly on a passport in her own name, and since she did not fit the usual profile of those whom the security forces suspected of involvement with the LTTE. The prosecutrix then gave her account, for the first time, of being asked to join the LTTE by two friends of two of her teachers who were in the LTTE. In the course of this explanation she referred, in answer to non-leading questions, to the "matter … when I was taken by police in 95", and several times to the "incident" at the police station, which post-dated the attempt to recruit her. The Tribunal Member's questioning, which revealed some incredulity, led to exchanges which, by reason of their importance, it is necessary to set out in full: I don't understand what the connection of this incident? There is nothing else happened. I don't understand the connection of that when police took you to the police station? This is the issue, Sir, because the Singhalese people living around my house in the neighbourhood – normally no one comes to my house. In case if someone comes they note and inform the police that this is taking place. Because of this reason when I was taken to police they asked about this and threatened a lot. Previously when you were talking about the incident with the police you told me it happened because the Singhalese boys who would come to your place had been sent away. And you said nothing. You said nothing when you described it. I asked what the police had said. You said nothing about them asking you about this incident. I don't understand. In the police station, Sir, they asked me about this whether I had any connections with the LTTE. Did they ask you specifically about these two people coming to your house? They asked this and in fact as a result of this that incident happened. Did they specifically ask referring to the two persons coming to the house? How could I have spoken because they were beating me they asked me whether I had any connections with the LTTE? Did they specifically ask you whether these two people had come to your house? Did they specifically refer to them? Yes. M Why didn't you mention previously when you were talking about what police said to you when they took you to the police station? Because I don't remember very well and this is not a pleasant thing to speak about? M Well well this question about these two people coming to your house if it is something that you may attach significance to it was not mentioned in your very detailed written statement. It was not mentioned in [your] detailed evidence to the tribunal at the first hearing. It was not mentioned today when you were speaking about that period and only mentioned in the last few minutes. I have some difficulty with that. I have to say. All these things are related to that police incident and therefore in the statement, because my mother doesn't know anything, and in fact, she should not know anything about this. I don't understand why that would stop you from mentioning that the LTTE people had come to your house and asked you to join if that was the case particularly since at the previous hearing you mentioned briefly a fear that you might be asked to join the LTTE and did not say that you have ever been asked. I don't see how that would involve talking about the police itself. All these events are related to that incident and therefore I didn't wish to tell anyone. Even when you told me about the other incidents an hour ago. Even to think about this I find it very difficult for my own self." After further questioning, the Tribunal Member said: "… I have to say also that I have to think very carefully about these matters that have been raised today for the first time. And they are really two separate matters in that regard even though there may be some link between them. The first one is the question of your treatment by the police at the police station in 1995. The second issue which is much more difficult to understand because the issue was actually discussed with you in the previous tribunal hearing is the alleged approach to you to join the LTTE in 1995. I have to consider whether it is reasonable to accept that each of these was raised on previous occasions including before the tribunal at the last hearing.5 Do you want to say anything about that?" The prosecutrix responded but did not say anything more specific about the rape incident. A little later the Tribunal Member extended an even more open invitation: "Is there anything else you would like to say to the tribunal about any of these matters you think are relevant while you have the opportunity?" Again, the prosecutrix's response did not refer to the rape incident. After some discussion of anti-Tamil riots, the Tribunal Member advanced yet another invitation: "Are there any other particular matters that you want to raise?" The transcript continues: Those who provide security or protection did not provide me with security. Did you when you had the problem with the local police in 95, you didn't seek to make a complaint or carry that forward by through lawyers, through courts, through more senior authorities. They threatened me and warned me that I shouldn't tell anything outside. Then they even to a doctor I couldn't go I got just a native treatment. Ok is there anything else? While you are thinking about that I might ask your adviser whether he would like to say anything to the tribunal at this point?" Counsel for the Minister submitted that what was said in the last question suggested there had been a pause after the further invitation in the second last question. 5 As was pointed out during the argument in this Court, the context requires that these words be read as meaning "it is reasonable to accept having regard to the fact that each of these was not raised …". After a short discussion between the Tribunal Member and the prosecutrix's adviser about written submissions, the Tribunal Member extended a final invitation: "But in the meantime is there anything else you would like to say while you have the opportunity in this hearing which is to close very soon?" The prosecutrix answered: "I am scared to return to Colombo. I do not have anyone. Even my husband has abandoned me. I won't be able to bear up the torture hereafter. I am scared to go by myself and get a house and live." It is necessary to reject the prosecutrix's argument that the Tribunal Member had misled her and induced a false belief in her that it had accepted her claim of rape, and that there was no need to go further for the following reasons. First, the prosecutrix gave no direct evidence of any such beliefs on her part. This contrasts with the fact that the prosecutrix did give direct evidence about some aspects of what did and did not happen at the hearing in relation to the psychologist's report. Nor was there any direct evidence of what the prosecutrix would have said but which she thought the Tribunal Member's statement had rendered it unnecessary to say. An inference can be drawn that there was no direct evidence she could have given which was favourable to the existence of those beliefs. Secondly, there is objective material pointing against the existence of the beliefs asserted by the prosecutrix. If these beliefs were ever entertained, their continued existence was inconsistent with the Tribunal Member's evident scepticism about the rape claim and the Tribunal Member's evident desire to examine and test it. As a result of that scepticism the Tribunal Member gave the prosecutrix several opportunities in the form of invitations to say more about the rape claim, and this must have stimulated in the prosecutrix a consciousness that the Tribunal Member had not accepted the rape claim as a fact. Thirdly, in response to one of those invitations, prefaced with the words "Are there any other particular matters that you want to raise?", the prosecutrix did allude to the rape claim by saying that those responsible for providing her with security had not done so, but without any further details. Fourthly, there is evidence that the prosecutrix's camp was conscious that the rape claim had not been accepted. One piece of evidence is that the reason advanced by the prosecutrix's adviser for requiring written submissions was that "so many issues" had arisen that day, that is, had been identified for the first time that day, and one of these was the rape claim. Another is that the written submissions which the Tribunal Member granted the prosecutrix leave to file in fact dealt with that subject. Did the Tribunal Member fail to express, or afford the prosecutrix a chance to deal with, his concerns or reservations about the rape claim? The passages quoted above show that on several occasions the Tribunal Member explicitly revealed his scepticism about the rape claim and asked the prosecutrix to say anything further she wished to on that subject. The grant of liberty to file written submissions afforded another opportunity to do this, and the prosecutrix took advantage of it. There was no relevant failure on the part of the Tribunal Member. Did the Tribunal Member wrongly influence the form in which the prosecutrix gave information? The contention that the prosecutrix's new claim of rape was not volunteered, but was influenced by the form of the Tribunal Member's questions, is to be rejected. That part of the transcript in which the rape claim was initially made commenced with a question about whether the prosecutrix's mother had arranged her travel to and employment in the Maldives. The prosecutrix did not answer that question, but rather volunteered material about the incident in Nilambe in late 1995 which led to her arrest and alleged rape by the police. It was she, not the Tribunal Member, who raised the subject. The same thing happened when the Tribunal Member, after a break, began to communicate the difficulties he was experiencing with the prosecutrix's evidence. The Tribunal Member said he did not understand the connection between the attempt to recruit her into the LTTE and the fact that the police brought her to the police station. It was the prosecutrix, not the Tribunal Member, who mentioned the different topic of the rape (the "incident" or "thing") four times. The only reference the Tribunal Member made to the incident ("the problem with the local police in 95") was responsive to the prosecutrix's complaint that she had not been provided with security. The Minister's submission that the questioning of the Tribunal Member was entirely open-ended and non-leading is correct. Was the Tribunal Member wrong to use the absence of reference to rape in the psychologist's report as a step towards rejecting the rape claim? The prosecutrix's complaint is that the Tribunal Member failed to ask the author of the psychologist's report or the prosecutrix about any explanation for the rape not being mentioned in the report, and in this light it was wrong to rely on the silence about rape in the psychologist's report as a step towards rejecting the rape claim. This argument appears to rely on the principle that the rules of natural justice are contravened when a decision-maker fails to advise an affected person "of any adverse conclusion which has been arrived at which would not obviously be open on the known material"6. The Tribunal Member made it plain to the prosecutrix that one of the difficulties he was experiencing both with the rape claim and with the recruitment claim was the fact that each was being advanced for the first time. The Tribunal Member also made it plain that he was concerned about why no earlier complaint had been made. The Tribunal Member during the second hearing queried why neither had been raised at the first hearing. The Tribunal Member also queried why the prosecutrix had not made a complaint about the rape through lawyers, or through the courts or through more senior authorities. The scepticism of the Tribunal Member about the rape claim was so natural a reaction to the lateness with which it was put forward that the prosecutrix herself anticipated and attempted to deal with the criticism. Just before she made the rape claim she said that neither her husband nor her mother knew of it, and she had not so far "revealed this to my mother because my mother has pressure problems." This assertion was repeated later. The Tribunal Member in effect later retorted that the claim could have been made at the first hearing. The Tribunal Member found, in the decision under challenge, that neither the husband nor the mother was present at the first hearing. That was a mistake, for the parties have agreed that the husband was present, though the mother was not. That mistake, of course, is not a ground of challenge in itself, and it is not supportive of the ground of challenge under consideration. The reasons which might exist for the prosecutrix not mentioning a rape to her mother or husband did not apply to her failure to mention to them the police interrogation about the alleged attempt to recruit her into the LTTE, about which the Tribunal Member was equally curious. The failure to mention the rape in the statement used before the Tribunal Member at the first hearing, or at the first hearing itself on 8 February 2000, is in the same category as the failure to mention the rape claim to the psychologist who had seen the prosecutrix ten times in 1999-2000, and whose report was dated 17 January 2000, just before the first hearing. 6 Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 592. It was the prosecutrix who had provided the psychologist's report to the first respondent, and the Tribunal Member was entitled to assume that she was familiar with what it did and did not say. The Tribunal Member was also entitled to assume, in view of the prosecutrix's proleptic attempt to explain why she had not complained earlier by reference to the attitude of her mother and husband, that she was aware of a similar difficulty with the psychologist's report. Yet the prosecutrix never attempted to explain the silence of the psychologist's report in this respect. In all the circumstances it was open to the Tribunal Member to use the silence of the psychologist as a reason for inferring that the prosecutrix had not raised the rape claim with the psychologist, and further to infer that the reason why the psychologist had not been told of the rape was because it had never happened. The relevant adverse inferences were of the same kind as the inferences to be drawn from the failure to insert the rape claim (as well as the recruitment claim) into the prosecutrix's statement, or to raise them at the first hearing, or to raise them on any occasion before they eventually were raised at the second hearing. The explanations which the prosecutrix gave for her conduct were not accepted by the Tribunal Member, and this course was open despite the one factual error which he made as to the presence of the prosecutrix's husband during the first hearing. The Tribunal Member was not obliged to set out every detail of the reasoning process which he eventually employed for the prosecutrix's consideration7. The rule in Browne v Dunn On occasion the submissions advanced for the prosecutrix were couched in the language of a contention that the rule in Browne v Dunn had not been complied with8. Where a complaint is made about the failure of a questioner to put to a person giving oral answers a particular question, it is natural for a lawyer's mind to turn to the rule in Browne v Dunn. In essence, and subject to numerous qualifications and exceptions, that rule requires the cross-examiner of a witness in adversarial litigation to put to that witness the nature of the case on 7 Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 592; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 117-118 [194] per Kirby J. (1893) 6 R 67; R v Birks (1990) 19 NSWLR 677 at 686-692 per Gleeson CJ. which the cross-examiner's client proposes to rely in contradiction of that witness. However, the rule has no application to proceedings in the Tribunal. Section 420(2) of the Act states: "The Tribunal, in reviewing a decision: is not bound by technicalities, legal forms or rules of evidence; and (b) must act according to substantial justice and the merits of the case." The purpose of a provision such as s 420(2) is to free bodies such as the Tribunal from certain constraints otherwise applicable in courts of law which the legislature regards as inappropriate9. Further, as was emphasised in Minister for Immigration and Ethnic Affairs v Wu Shan Liang10, administrative decision- making is of a different nature from decisions to be made on civil litigation conducted under common law procedures. There, the court has to decide where, on the balance of probabilities, the truth lies as between the evidence the parties to the litigation have considered it in their respective interests to adduce at trial. Accordingly, the rule in Browne v Dunn has no application to proceedings in the Tribunal. Those proceedings are not adversarial, but inquisitorial; the Tribunal is not in the position of a contradictor of the case being advanced by the applicant11. The Tribunal Member conducting the inquiry is not an adversarial cross-examiner, but an inquisitor obliged to be fair. The Tribunal Member has no "client", and has no "case" to put against the applicant. Cross-examiners must not only comply with Browne v Dunn by putting their client's cases to the witnesses; if they want to be as sure as possible of success, they have to damage the testimony of the witnesses by means which are sometimes confrontational and aggressive, namely means of a kind which an inquisitorial Tribunal Member could not employ without running a risk of bias being inferred. Here, on the other hand, it was for the prosecutrix to advance whatever evidence or argument 9 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 628 (49], 635 [74]-[77], 642-643 [108], 668 [179]. See also Sue v Hill (1999) 199 CLR 462 at 485 [42], 520 [147]-[148]. 10 (1996) 185 CLR 259 at 282. See also Mahon v Air New Zealand [1984] AC 808 at 11 Abebe v The Commonwealth (1999) 197 CLR 510 at 576 [187] per Gummow and Hayne JJ; Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka (2001) 206 CLR 128 at 146 [52] per Kirby J. she wished to advance, and for the Tribunal to decide whether her claim had been made out12; it was not part of the function of the Tribunal to seek to damage the credibility of the prosecutrix's story in the manner a cross-examiner might seek to damage the credibility of a witness being cross-examined in adversarial litigation. It would have been erroneous for the Tribunal to have represented at the hearing that a particular piece of evidence or argument had been accepted and then to have rejected it in the decision in circumstances where, but for the representation, the prosecutrix could have mended her hand. It would also have been erroneous for the Tribunal to have relied on a particular conclusion about the material before it which was not open on the material. But it was not erroneous for the Tribunal not to have pressed the prosecutrix more than it did about the rape claim. A cross-examiner in a notional criminal case in which the Crown was charging a man with rape might, if that cross-examiner wanted to be as sure of success as possible, have had to have adopted a much more detailed and forceful style of questioning than the Tribunal Member did here. But in proceedings of the type which he was conducting, the Tribunal Member was not obliged to go further than he did. In particular he was not obliged to go even further than a cross-examiner endeavouring to comply with the rule in Browne v Dunn would have to do, and seek a detailed amplification of the prosecutrix's account of the rape including the fullest and most minute particulars she could remember, together with an explanation of her failure to give that account on every earlier occasion when that account might conceivably have been given. The Tribunal conducting an inquisitorial hearing is not obliged to prompt and stimulate an elaboration which the applicant chooses not to embark on. Orders The following orders should be made. The order nisi is discharged. The prosecutrix is to pay the costs of the second respondent. 12 Abebe v The Commonwealth (1999) 197 CLR 510 at 576 [187] per Gummow and Kirby KIRBY J. A tribunal member, with obligations to perform his functions in an inquisitorial manner, failed to elicit facts relevant to the exercise of the tribunal's jurisdiction. Moreover, he did so by diverting the evidence away from a pertinent matter raised by the applicant. On one view, he even stopped the applicant from elaborating her story, relevant to that matter. Thereafter, that story was not fully told. In such circumstances there was a departure from the requirements of procedural fairness. This amounts to jurisdictional error. It enlivens the provision of relief by way of the constitutional writs and certiorari. There is no discretionary reason to refuse relief. The orders nisi should be made absolute. The facts The prosecutor, known as Applicant S154 of 2002, is a national of Sri Lanka. She is of Tamil ethnicity. She is now aged 29 years. She arrived in Australia in December 1998. In February 1999 she lodged an application for a protection visa. This was refused by a delegate of the Minister for Immigration and Multicultural Affairs ("the Minister") (the second respondent). There ensued an application by the prosecutor to the Refugee Review Tribunal ("the Tribunal") (the first respondent) for a review of the delegate's decision. This resulted in a hearing before the Tribunal in March 2000 ("the first Tribunal"). However, the first Tribunal affirmed the delegate's decision. The prosecutor then sought an order of review from the Federal Court of Australia. Her application came before Beaumont J ("the first Federal Court hearing"). His Honour upheld the application. He set aside the first Tribunal's decision and remitted the matter to the Tribunal to be reconsidered in accordance with law. It was in these circumstances that the prosecutor's application for a review of the delegate's decision came before the second Tribunal. So constituted, the second Tribunal heard the application on 1 June 2001. The Tribunal refused it on 17 July 2001. Nothing daunted, the prosecutor again sought an order of review from the Federal Court ("the second Federal Court hearing"). That application came before Wilcox J. In accordance with the terms of s 476(1) of the Migration Act 1958 (Cth) ("the Act") as then applying, the grounds of relief were confined. As Wilcox J pointed out, the reasons of the second Tribunal were lengthy "mainly because there has been quite a history to this claim"13. The complaint in the second Federal Court hearing was that the second Tribunal had failed to explore the difficulties the prosecutor faced as a Christian who had married a Muslim. 13 [2001] FCA 1512 at [3]. Kirby Unsurprisingly, on this complaint, Wilcox J dismissed the application. There was no mention before the second Federal Court that the second Tribunal had failed to accord the prosecutor procedural fairness. However, it was common ground before this Court that within s 476 of the Act, as it stood at the time of the second Federal Court hearing, it was not open to the prosecutor to seek relief in that Court against the orders of the second Tribunal on the basis of departure from the requirements of natural justice or procedural fairness. The prosecutor then began her proceedings in this Court. She sought the constitutional remedies of mandamus and an injunction against the Tribunal and the Minister as well as a writ of certiorari to make those remedies effective by quashing the decision of the second Tribunal so that the application could be returned to the Tribunal for rehearing. On 7 November 2002 Gaudron J granted orders nisi. One ground was nominated, namely that the prosecutor was "denied natural justice and procedural fairness required to be observed by the Tribunal with respect to its review of the delegate's decision and in reaching its ultimate decision". The proceedings now before this Court are the return of the orders nisi. The Tribunal submits to the orders of this Court. The Minister resists the grant of relief. Common ground Exhaustion of remedies: Various matters can be treated as common ground. It was accepted by the Minister that the prosecutor had exhausted her remedies before the Federal Court before seeking relief from this Court. It was not suggested that she should first have pursued an appeal against the order of Wilcox J or that the availability of any other relief in the Federal Court was a reason of a discretionary kind to refuse the relief she now seeks. It is accepted that the constitutional relief sought by the prosecutor, and relief by way of the writ of certiorari to make the constitutional relief effective, are discretionary in character14. There is no discretionary impediment to the grant of relief. Procedural unfairness and jurisdictional error: It was also common ground that, if the prosecutor could make good her complaint that the second Tribunal had departed from the requirements of procedural fairness, she would thereby demonstrate jurisdictional error on the part of the second Tribunal15. By 14 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 89 [5], 107 [54], 136-137 [145]-[148], 156 [217]; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 88 [106], 124 [217]. 15 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 89 [5], 91-92 Kirby the authority of this Court, the existence of jurisdictional error is required for the grant of relief of the kind mentioned in s 75(v) of the Constitution16. Whatever uncertainty may exist about the boundaries of jurisdictional error, it is accepted that a demonstrated departure from the requirements of natural justice or procedural fairness, fall on the right side of the line. Such a case entitles a person in the position of the prosecutor to relief. Merits and errors of jurisdiction: Relief of the kind sought is not concerned, as such, with the merits of the prosecutor's claim. Under the Act, these are exclusively questions for the Minister, his delegate and the Tribunal, playing their respective parts under the Act. This Court is not concerned with the ultimate disposition of the prosecutor's application. If a departure from the requirements of natural justice or procedural fairness is established, the evaluation of those merits would be a matter for the Tribunal, at a third hearing. The only function of this Court, if grounds for relief are established, is to quash the decision of the second Tribunal and remit the matter to be heard afresh without the flaw of a jurisdictional kind that the prosecutor set out to prove. Even where a defect of such a kind is shown, occasionally relief will be refused if it is clear that the default complained of is insubstantial or that the application is futile. The present was not such a case. Rejection of claim of bias: During the hearing in this Court, a suggestion was made for the prosecutor that the member constituting the second Tribunal was biased against the prosecutor in the relevant legal sense17. No such claim had been made in the initial application for orders nisi before Gaudron J; nor was this the basis upon which her Honour granted the orders nisi to the prosecutor. Nor was an evidentiary basis for such a claim established. When it became clear in argument that any such claim was unsustainable, counsel for the prosecutor prudently retreated. He made it clear that the only "bias" that was alleged was in failing to accord procedural fairness to his client. I deprecate unjustified contentions of bias18. Such allegations should not be lightly made or made without appropriate supporting evidence. There was no such evidence in the present case. The member constituting the second Tribunal may have made errors in the manner in which he conducted the second hearing in the Tribunal. However, I reject any suggestion that bias towards the prosecutor 16 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 209 [32], 226-229 [78]-[85]. 17 Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka (2001) 206 CLR 128 at 147-149 [57]-[61]. 18 Fox v Percy (2003) 77 ALJR 989 at 997 [41]; 197 ALR 201 at 212. Kirby should be imputed to him19. Still less was any actual bias shown. On the contrary, it is my conclusion that it was the attempted sensitivity to the issue that the prosecutor raised, and the desire of the member to spare the prosecutor unnecessary distress in that regard, that led the second Tribunal into error. That alone warrants this Court's intervention. The second Tribunal's errors Curtailing evidence about a rape: There were, in fact, two connected errors in the conduct of the second Tribunal hearing. They amount to procedural unfairness and require that the orders nisi be made absolute. The first arose at a point when the prosecutor was being questioned by the Tribunal and when she was identifying the grounds upon which she claimed to have a "well-founded fear of being persecuted for reasons of race"20 and that "owing to such fear, [she] is unwilling to avail [herself] of the protection of [the] country [of her nationality and therefore] … is unwilling to return to it"21. A common factual element in the establishment of a "well-founded fear" of the stated kind is the existence, for reasons of a prohibited ground, of an inability on the part of the person claiming to be a refugee to rely upon the police or other governmental officials of the country of that person's nationality to provide basic protection22. Clearly, if an applicant could show that, on such grounds, he or she was subjected to violence, oppression and deprivation of basic rights by police or other officials of the government of the country, that would be a relevant evidentiary step in establishing the "well-founded fear" necessary to enliven the right to protection. In the present application, it is the prosecutor's case that, before the second Tribunal, she endeavoured to recount what had happened to her when she was raped by police after she had been taken to a police station. Her removal to the police station resulted in her interrogation by police about whether she had any 19 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1182 [100]-[101]; 198 ALR 59 at 81-82. 20 Explained in Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 21 Article 1A(2) of the Convention relating to the Status of Refugees done at Geneva on 28 July 1951, as amended by the Protocol relating to the Status of Refugees done at New York on 31 January 1967. 22 Minister for Immigration and Multicultural Affairs v Khawar (2002) 210 CLR 1 at Kirby connections with the revolutionary Tamil organisation in Sri Lanka commonly known as the "Tamil Tigers" (the LTTE). In the second Tribunal there followed the critical exchange of which the prosecutor complains23: "M: Ok. What was [it] that happened? This has not been described in the statement. My mother doesn't know. Nor does my husband know. Please continue. I have described in the statement the saying that one night some boys came and knocked at the door. Later mother came no no that elderly lady. That elderly lady came and she scolded and wanted them to go. I have described this in the statement. Later, the following day police came there. Police came and asked are you trying to threaten us with Tamil boys? Are you in the LTTE? They took Later I was kept in the police. One thing happened to me Sir. So far I have not revealed this to my mother because my mother has pressure problems. And in the future she should not know about this. They raped me. Owing to this fear, I asked my mother to take me away. I cannot tell this. M: Ok. I don't need to ask you any further question about that particular incident. Now, after that you went to the Maldives and you became established there with employment and after a period with a relationship with a person who later became your husband? Yes." The prosecutor argues that, instead of permitting and encouraging her to tell her story about the rape by Sri Lankan police that she had said had happened to her at the police station, the member at the second Tribunal hearing had pursued the matter no further. He had said that he did not need to ask further questions about the "incident". He then proceeded to address a completely 23 "M" means "Tribunal member" and "I" means "Interpreter" translating the responses of the prosecutor. Further passages from the transcript of the hearing before the second Tribunal appear in the reasons of Callinan J at [119]-[121]. Kirby different issue concerning the prosecutor's life in the Maldives. Her complaint is that this course of events cut her off from an elaboration of the rape that she would otherwise have provided. It failed to elicit from her even the rudimentary details of a matter she had disclosed that was relevant to her application for protection. It also misled the prosecutor into believing that it was unnecessary for her to elaborate the point. On the face of the record, there is merit in this complaint. The course that the hearing took effectively stopped the prosecutor from giving evidence about an event that was relevant to her entitlements under the Convention and the Act. Instead of saying that he did not need to ask further questions about the incident, the Tribunal member should, within the boundaries of relevance, have probed the issue further in order to secure whatever additional information the prosecutor was willing to give about it. This was not what he did. Adverse inferences from unmentioned reports: The prosecutor raised a second complaint. It is based on the reasons given by the second Tribunal concerning the alleged incident of rape. In those reasons, the Tribunal said24: "Although in her original statement the Applicant had referred to some Singhalese youths coming to her house in Nilambe and being scolded away by her elderly maid, she made no mention of being taken to the police station the next day because of this, let alone that she had been accused by the police of LTTE contacts or that she was raped in police custody. The Applicant stated that she had not mentioned the rape previously because her former husband and mother did not know about it and so she had not referred to it. However, that does not adequately explain why the matter was not raised at the previous Tribunal hearing at which neither her husband25 nor mother was present (and does not explain why being taken to the police station was not mentioned at all). Nor was the rape referred to in a psychological report submitted by the Applicant to the first Tribunal in February 2000, prepared by a consultant psychologist from the Queensland Program of Assistance to Survivors of Torture and Trauma after some ten appointments with the Applicant (some without her mother or husband present)." As to these explanations for the concern of the Tribunal about the veracity of the prosecutor's complaint of rape in police custody, she made three complaints. 24 Fuller extracts appear in the reasons of Callinan J at [123]-[124]. 25 The prosecutor's husband was in fact present at the first Tribunal hearing: see the reasons of Gummow and Heydon JJ at [50]. Kirby First, the prosecutor said that, before the second Tribunal acted upon the record of the first Tribunal hearing and the psychologist's report tendered to the second Tribunal to disbelieve her statement that she had been raped, such evidence should have been put to her so that she could give her version of why these documents were not inconsistent with her statement about the rape. Secondly, the prosecutor suggested that even a moment's thought about her predicament would have afforded an explanation of why she had been loathe to mention an incident of rape earlier. Thirdly, she contended that, to rely on such materials after effectively having stopped her from elaborating her complaint of the rape, was doubly unfair. Had she been encouraged, or permitted, to continue her statement about the rape (instead of being told that there was no need for further questions about that particular incident) she could have provided the necessary details to add flesh and bones to the accusation she was making against the Sri Lankan police. Analysis of the prosecutor's complaints: The Tribunal is not in the position of a contradictor. Ordinarily, it is for the applicant to advance whatever evidence or argument he or she wishes to offer in support of the claim26. The Tribunal proceeds by inquisitorial methods27. This imposes additional burdens on Tribunal members28. They are somewhat different from those borne by most courts and tribunals in Australia which operate by adversarial procedures. A court conducting a proceeding by way of judicial review, addressed to a tribunal so operating, should not be overly fastidious about the course of questioning. It is the substance and not peripheral matters of detail to which a court will look when considering a complaint about a departure by the Tribunal from the requirements of procedural fairness. Nevertheless, on the face of the record, there were obvious reasons why the disclosure of the rape by police might have been particularly difficult for the prosecutor, a young woman. Her ethnicity (Tamil), religion (Christian), relationship with her husband (who was Islamic), her age, and general predicament in Sri Lanka could make it more difficult than usual for such a matter to be raised, elaborated and explained29. In fairness, the second Tribunal member appeared to appreciate some of these issues. I believe that they lie 26 Abebe v The Commonwealth (1999) 197 CLR 510 at 576 [187]. 27 Abebe v The Commonwealth (1999) 197 CLR 510 at 576 [187]. 28 See Kneebone, "The Refugee Review Tribunal and the Assessment of Credibility: An Inquisitorial Role?", (1998) 5 Australian Journal of Administrative Law 78. 29 Some details of the hardships of the prosecutor's life in Sri Lanka are set out in the reasons of Callinan J at [114]-[115]. Kirby behind his well intentioned, but ultimately mistaken, intervention to divert the prosecutor from telling her story. The statement belatedly made by the prosecutor might, or might not, have been true. Ultimately, the Tribunal member concluded that it was not true. Yet the possibility that the Tribunal would so decide made it all the more important that the Tribunal should afford the prosecutor a proper opportunity to disclose what she said had happened to her. In the course that he adopted, the member failed to do this. In then relying upon the previous Tribunal record and the history in the psychologist's report, without putting these evidentiary matters to the prosecutor as matters tending to disprove her claim, the member enlarged the unfairness of the first exchange. Allowing for a substantial degree of informality and unstructured discourse in the Tribunal, and reminding myself that this Court should not adopt an overly pernickety scrutiny of the record, what happened after the prosecutor raised the accusation of rape fell short of fair procedures. It was essential that the prosecutor should have been given a proper opportunity to tell her story. In particular, she should not have been stopped from doing so. She should not have been disbelieved by reference to documents available to the second Tribunal but not drawn to her notice so that she could explain (if that was possible) why they were compatible with her accusation of rape. The hearing rule and its object: The "hearing rule" applicable to administrative decision-making in Australia requires that the decision-maker, in a tribunal such as this, must afford an applicant for administrative relief a fair opportunity to present relevant evidence and submissions in support of his or her case. It is not obligatory for the tribunal member to expose for comment or submissions or rebutting evidence, every development in the decision-maker's thinking before, at or after a hearing30. But where an issue is clearly important for the decision, it is impermissible to abbreviate the attempt of an applicant to give evidence or to curtail important evidence relevant to that issue. The extent of the duty to indicate a relevant piece of apparently adverse evidence for comment obviously depends upon the importance that may be attached to that evidence and whether the importance was so obvious that it did 30 Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 591-592; Pilbara Aboriginal Land Council Aboriginal Corporation Inc v Minister for Aboriginal and Torres Strait Islander Affairs (2000) 103 FCR 539 at 557; York v General Medical Assessment Tribunal [2003] 2 Qd R 104 at Kirby not need to be underlined31. In a body proceeding by inquisitorial methods, procedural fairness may require bringing the attention of the applicant to critical facts that appear to contradict, or cast doubt on, his or her claim. Where an observation about an applicant's case is one that is obvious and natural to the circumstances that evoked it, it is usually unnecessary for it to be specifically called to notice32. The object of the foregoing rules is not only to ensure compliance with technical obligations of law. The rules have a utilitarian purpose. Sometimes, if confronted with an apparent flaw in the case, an applicant will be able to provide a full explanation that satisfies the decision-maker and dispels initial doubts. The apparent flaws in a case may only emerge after the hearing, in the light of a closer examination of the record and lengthier reflection on its content. But even then, care must be taken before elevating to a critical status a fact or feature of the evidence that was not fairly put to an applicant, where it is possible that the perceived defect could be answered or it is desirable that the applicant should at least have the opportunity of doing so. In an adversarial proceeding a decision-maker is normally entitled to look to the legal representatives of the respective parties to bring out the relevant evidence and submissions. In an inquisitorial proceeding a somewhat heavier burden is assumed by the decision-maker in relation to adducing the evidence. In their reasons33, Gummow and Heydon JJ cite s 420(2) of the Act, which states that the Tribunal "must act according to substantial justice". To fulfil this mandate, the use of inquisitorial techniques, such as the clarification of points raised by an applicant in the course of answering questions put by the Tribunal, might be required to ensure that the decision reached is made on the basis of the most probative evidence available34. Thus, in the case of a vulnerable, anxious applicant, with a poor command of English, little understanding of the procedures and an imperfect appreciation of the law being applied, it would not be enough for the Tribunal simply to leave it to the applicant to prove the case 31 Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 592. 32 Somaghi v Minister for Immigration, Local Government and Ethnic Affairs (1991) 31 FCR 100 at 108; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 117-118 [194]. 33 Reasons of Gummow and Heydon JJ (with whom Gleeson CJ agrees) at [56]. 34 Kneebone, "The Refugee Review Tribunal and the Assessment of Credibility: An Inquisitorial Role?", (1998) 5 Australian Journal of Administrative Law 78 at 82, Kirby unaided. That would reduce the hearing to a charade. It is not what the Act contemplates. What is required depends on the facts of each case. Inhibitions and sexual offence complaints: The prosecutor knew of the earlier proceedings, because she had been at them. She also knew of the psychologist's report and of its contents. What she did not know was that, following the initial exchange with the Tribunal member, these records, and the history they contained, would be used against acceptance of her claim of rape. It is possible that the prosecutor could have explained satisfactorily, by reference to cultural, religious, marital and personal factors her failure to mention the rape earlier. In Australian criminal process we are now aware of the reasons that can occasion an omission, on the part of a victim of a sexual offence, to make an immediate complaint and accusation35. In the context of criminal law and procedure, this subject has been fully researched. It has been recognised by the courts36. It has resulted in amendments that have replaced the earlier law, based upon now discarded legal presuppositions. How much more readily understandable might be the omission of a person in the position of the prosecutor to make her accusation of a coerced sexual incident involving powerful men employed in the government of the country of her nationality and exposing her, within her family and marriage, to the possible stain of defilement, risk of divorce and even expulsion? Of course, none of these considerations might have been applicable to the prosecutor. But we now know enough about sexual assault in its social setting to appreciate that, before an accusation is disbelieved or treated as suspect on the basis of delay or reticence in its making, regard must be had to the circumstances that can sometimes explain such matters. Conclusion – breach of procedural fairness: I would not wish to be thought of as unduly critical of the member constituting the second Tribunal in what he said and did. However, in my view, the procedures he adopted involved a departure from the standards of procedural fairness required in this case. On the face of things, this conclusion invites the intervention of this Court. So what arguments are put on the other side? 35 See Bronitt, "The rules of recent complaint: Rape myths and the legal construction of the 'reasonable' rape victim", in Easteal (ed), Balancing the Scales: Rape, Law Reform and Australian Culture, (1998) 41 at 52-56; Hunter and Mack, "Exclusion and silence: Procedure and evidence", in Naffine and Owens (eds), Sexing the subject of law, (1997) 171 at 179-181. 36 M v The Queen (1994) 181 CLR 487 at 515; Jones v The Queen (1997) 191 CLR 439 at 464; cf R v Seaboyer [1991] 2 SCR 577 at 648-650. Kirby The supposed explanations are inadequate Interpretation of the transcript: It was suggested that it was impossible for this Court to conclude that the prosecutor had been stopped in her description of the rape by the Tribunal member's statement "I don't need to ask you any further question about that particular incident". It is true that this Court did not have access to a sound recording of the hearing before the second Tribunal. Thus, we could not tell whether there was a substantial pause between the accusation of rape and the impugned intervention of the Tribunal member. Likewise, it is impossible to say whether (as might have been the case) the prosecutor broke down at that point, causing the member to say what he did in order to progress the hearing. These considerations are not ultimately relevant. Certainly, they are not considerations adverse to the prosecutor's claim to relief. The complaint is not that the Tribunal member jumped in to stop the prosecutor from elaborating the story of the rape. It is that, by stating that there was no need to ask further questions on the subject, he misstated his own duty. Moreover, by proceeding to other questions about the Maldives, he diverted the attention of the prosecutor from an issue that she said was one difficult and painful for her to raise and recount. In such circumstances, it was the Tribunal member's duty, the accusation of rape by governmental officials having been stated and being relevant if proved to the case propounded, to inform the prosecutor that, if she wished to rely on that matter, she would have to state what occurred, at least in a detail sufficient to allow the claim to be evaluated and to explain why she had never mentioned it before in the earlier protracted proceedings. This was not done. Sufficiency of the allegation: It was then suggested that the prosecutor had said enough by claiming to have been raped and that the precise details of the sexual acts were not, of themselves, relevant. In that sense, so it was said, the intervention of the Tribunal member had done the prosecutor no injustice. I do not accept this interpretation of events. Once the accusation of rape was made, if it was to be considered properly, it was necessary to have at least sufficient detail of what the prosecutor alleged had happened to her to decide whether her evidence in this respect rang true. In the end, the Tribunal member effectively disbelieved the allegation of rape. But he reached his conclusion about it without the benefit of a statement by the prosecutor in sufficient detail to express her real version of events. The prosecutor's interpretation: During the application for the orders nisi, Gaudron J pointed to the consequences that are normal during a formal hearing in Australia, where the decision-maker indicates to an advocate that he or she does "not need to ask any further question[s]" about an incident. Her Honour said (and it is the case) that, typically, this signals that the relevant fact had been Kirby accepted. Counsel appearing for the Minister before Gaudron J agreed that this was normally a reasonable inference for an advocate to draw. He insisted, however, that it was necessary to look at the entire transcript where, it was said, "a different picture appears". There is no doubt that stopping a party to a hearing from presenting further evidence or argument upon an issue and then deciding the case upon a basis that might have been the subject of such evidence or argument will normally be regarded as unfair. It will usually attract relief from the courts37. Similarly, where, although not stopped, an applicant is effectively misled by conduct on the part of the decision-maker, relief may be granted to prevent a Before this Court it was suggested that only a lawyer would interpret the statement by the decision-maker in the way that Gaudron J described. It was doubted that the prosecutor, a person without legal training, extensive English language skills or sophistication, communicating through an interpreter, would have so understood the impugned statement of the member constituting the second Tribunal. Obviously, the prosecutor would not have been aware of the conventions of legal advocacy. But the fact remains that the prosecutor had brought herself to open up the issue of rape by government officials, self-evidently a serious matter. Once this was done, it was important that she should have been allowed, and properly encouraged, to tell her story. Instead, she was told that no further questions "about that particular incident" were needed. The questioner immediately turned elsewhere. It is not the formula of words used by the Tribunal member that matters. Nor is it the familiarity on the part of the prosecutor in the ways of the law. What matters is the course that the hearing then took. The state of the prosecutor's evidence: The Minister complained that the prosecutor had not sworn an affidavit in these proceedings to state what had occurred to her so as to indicate what she would have said had she not been interrupted by the Tribunal member39. 37 Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145; cf Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd (1980) 144 CLR 300 at 303. 38 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 122 [103]; cf at 39 cf Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82. See also Muin v Refugee Review Tribunal (2002) 76 ALJR 966; 190 ALR 601. Kirby In many areas of litigation, this argument would be a telling one. The prosecutor's proceedings are in the original jurisdiction of this Court. This Court is, therefore, effectively, conducting a trial. The prosecutor bears the burden of proof. She did swear an affidavit. It consisted of little more than the complaints that founded the orders nisi. Nevertheless, the affidavit does contain the statement that the Tribunal did not at any time bring to the prosecutor's attention the specific evidence cited in its decision which the Tribunal relied on to disbelieve her; did not give her a fair opportunity to express comments in respect of that evidence; and relied on the psychologist's report to draw an adverse inference against her with respect to the incident of rape without giving her an opportunity to comment and without the benefit of any explanation from the author of the report. The affidavit goes on: "Had I been given the opportunity to comment, or had the Tribunal sought comments from the author of the report, the Tribunal would have appreciated that the author of the report had taken care not to disclose any sensitive details of the confidential communications that passed between the parties. The Tribunal would have also appreciated that the subject matter of the meeting and the purpose of the meeting had between the psychologist and the applicant when her husband and her mother were not present, had no relation or any connection with the incident of rape." This affidavit was read without objection. No request was made on behalf of the Minister to cross-examine the prosecutor upon it. Whilst it might have been elaborated in greater detail, I am not inclined to impose on a person in the position of the prosecutor the requirements that might be expected of other more well resourced litigants. In any case, if the prosecutor were to succeed in this Court, there would be a full opportunity for the factual issues to be explored where they should be, namely before the Tribunal in a hearing that was procedurally fair. The subsequent course of the hearing: It was finally submitted that, in subsequent exchanges between the Tribunal and the prosecutor, and in permitting the prosecutor's migration agent to file a written submission "because there are so many issues [that arose] today", the member constituting the second Tribunal had repaired any error that had occurred when he stated that he did not need to ask the prosecutor further questions on the rape incident. It is certainly true that, in later questions, the Tribunal member returned to what had happened at the police station40. But throughout his questioning he described the rape obliquely and by circumlocution as the "incident" or "event". 40 The passages in the transcript appear in the reasons of Callinan J at [120]. Kirby This delicacy may have been adopted to protect the feelings of the prosecutor or to shield the member's own feeling of discomfort. However, in proceeding as he did, he compounded the error of failing to give the prosecutor the opportunity (or inform her of the necessity) to tell her version of what had happened if she wished to rely on it. To take the course of delicacy and then effectively to disbelieve the prosecutor because she had not established the truth of what she claimed was, in substance, unfair, particularly in an inquisitorial hearing. Moreover, having told the prosecutor at the time she raised it that the Tribunal did not need to question her about "that particular incident", the later interrogation must be read in the context of that statement. So too the grant of the request to provide a written submission must be read in that context. Whilst the Tribunal member did ask the prosecutor on a number of occasions whether she wished to say anything further concerning her "treatment by the police at the police station", the opportunity for the provision of the prosecutor's version of what had happened to her had effectively passed. Certainly, the Tribunal member did not make it plain that he found it difficult to accept the prosecutor's statement of rape on the basis of the record of the first Tribunal and the history recorded in the psychologist's report. One gets an impression in this case of two cultures passing each other, like ships in the night, in the midst of a polite hearing. To the contrary of the opinion of others, there was much to "prevent [the prosecutor] from explaining earlier that societal prejudice, and the shaming that would follow in her homeland, as well as her ingrained modesty had been the reason for her previous silence"41. The inhibitions that made mentioning and explaining such things difficult may seem irrational and self-defeating to others whose life's experience has been different. But they were, at least potentially, the source of the prosecutor's disadvantage before the Tribunal. Sometimes in such matters silence, a pause and just a little proper encouragement, will help empower a witness to open up a most painful and difficult subject. That was missing in the second Tribunal hearing. The delicacy of the Tribunal, in the result, did the prosecutor a (doubtless unintended) injustice. It is to repair the resulting unfairness that the prosecutor now moves this Court. Conclusion – the excuses fail: None of the claimed explanations or justifications for the course that the proceedings took before the second Tribunal is therefore persuasive. 41 Reasons of Callinan J at [129]. Kirby Conclusion: constitutional writs should issue It is true that a third hearing before the Tribunal would be a misfortune. However, as this Court has repeatedly said, the issues raised by applications of this kind are serious and important for the applicant, for the Australian population and for the nation, fulfilling its obligations under international law42. High standards of procedural fairness are required, and usually observed, by the Tribunal. In this case a mistake occurred. The obligation to repeat the exercise does not ensure that the prosecutor will ultimately succeed on the merits. Nor is that its object. But it would ensure that she be allowed to recount her story about being raped by police officers of the Sri Lankan government as a factual foundation for her claim of having a well-founded fear of persecution. Further, she would not then have her allegation disbelieved, if it is, without a full opportunity to elaborate it as she wishes; nor have her allegation discounted on the basis of her failure to mention the rape in earlier records without being fairly told that such considerations inclined the decision-maker to an adverse conclusion about the truth of that allegation. She could then give her answer, a chance that was denied to her by the course taken in the hearing in the second Tribunal. The prosecutor is entitled to succeed. Orders The orders nisi granted by Gaudron J should be made absolute. A writ of certiorari should issue to the Tribunal to remove into this Court the decision of the Tribunal of 17 July 2001 so that the decision might be quashed. A writ of mandamus should issue to the Tribunal requiring it to rehear and determine the prosecutor's application according to law. The prosecutor should have leave to apply for any other relief, by way of injunction or otherwise, as might be needed, to give effect to the foregoing orders. The Minister should pay the prosecutor's costs in this Court, except for the special interlocutory costs ordered by Gaudron J in favour of the Minister. 42 Minister for Immigration and Multicultural Affairs v Haji Ibrahim (2000) 204 CLR Callinan CALLINAN J. The question in this case is whether the refusal of a grant of a protection visa to the prosecutor involved a denial of natural justice to her, specifically, by an alleged intimation by the first respondent, the Refugee Review Tribunal ("the Tribunal") that the prosecutor had satisfied it of a matter, and in respect of which the Tribunal subsequently made a finding adverse to her. Facts The prosecutor is a Christian Tamil Sri Lankan who was born in Kandy in 1974. She entered Australia accompanied by her husband and mother in 1998. She applied for a protection visa in 1999. A delegate of the second respondent refused the application. She sought a review of that refusal by the Tribunal. The prosecutor's claims The prosecutor gave this account of her life in Sri Lanka to the Tribunal. In 1983 her parents' property was looted during riots in the course of which she suffered injuries in fleeing from the looters. On 18 January 1987, the prosecutor's thirteenth birthday, police officers raided her family home, and assaulted and arrested the guests who were however released the next day. In 1989 there was an attack upon the prosecutor's family by the Janatha Vimukthi Peramuna, a left-wing Singhalese group, at their house. Her father was injured. He was ill and bedridden until he died in 1992. In 1991 one of the prosecutor's brothers disappeared and did not return until 1998. In 1992, another brother was beaten by the police. He died in 1994. Some time afterwards she went to live and work in Colombo, residing there with her uncle and another brother. The prosecutor returned to the family home at Nilambe, near Kandy, to live in 1995. It is there, as she has subsequently claimed, that she was raped. During 1996 political tension increased in Sri Lanka. The prosecutor felt increasingly insecure. She arranged to take a position in the Maldives where she lived in a de facto relationship with her future husband, a Pakistani Muslim, until they married in late 1998. The prosecutor was rejected by her husband's family who threatened to harm her if she were to go to Pakistan with him. She was ostracized by her own family. She said she feared harm and persecution if she were to return to Sri Lanka. After her arrival in Australia with her husband and mother, the former abandoned her and has returned to Pakistan to live. The first Tribunal hearing Included in the evidence before the first Tribunal which dealt with her claim was a report by a psychologist by whom the prosecutor had been treated, sometimes, but not always in the company of members of her family. There had been ten consultations. The psychologist's task was to treat the prosecutor for "the psychological and emotional sequelae of her traumatic experiences chronically throughout most of her life in Sri Lanka and more acutely in recent Callinan years prior to her ... departure for Australia". The report sets out in some, but not by any means complete detail, the events and matters which have distressed the prosecutor over the years, and have caused her to suffer a post traumatic stress disorder. The report makes no mention of rape. On 8 February 2000, the prosecutor attended a hearing before the Tribunal constituted by Mr Vrachnas. Towards the end of the hearing, the prosecutor made a claim that she had a fear of being recruited by the Liberation Tigers of Tamil Eelam ("LTTE"). She did not identify any particular event to support that claim. The Tribunal pointed out that her fear was contrary to its understanding of the position, which was that the LTTE did not seek to recruit Christian Tamils. She did not claim to have been raped by any policemen. On 29 March 2000, the Tribunal made a decision affirming the decision of the delegate. On 24 May 2000, the prosecutor made an application for an order of review to the Federal Court. On 31 August 2000, the Court (Beaumont J) made orders setting aside the decision of the Tribunal and remitting the matter for reconsideration according to law. His Honour held that the Tribunal had made a reviewable error in failing to make findings in relation to the prosecutor's further claim, made at the hearing, that she feared recruitment by the LTTE. The matter was duly remitted to the Tribunal for a second hearing. The second Tribunal hearing On 2 January 2001, the Tribunal sent a letter to the prosecutor stating that it had looked at all of the relevant materials but that it was not prepared to make a favourable decision on that information alone. It invited her to attend a hearing to give oral evidence. On 17 January 2001, the prosecutor requested the Tribunal to transfer the matter from the Melbourne Registry to the Sydney Registry so that she could appear personally. On 23 January 2001, the Tribunal agreed to this request. At the outset of the postponed hearing the Tribunal, constituted by Mr Blount, made it clear that it would have regard, but not exclusively, to the material previously provided by and on behalf of the prosecutor. The first part of the hearing was taken up with questions and answers about the prosecutor's movements before she came to Australia. A little later this exchange (the "first exchange") occurred43: I was asking whether when you went to the Maldives whether it was your mother who arranged your travel and employment there? In the meantime there was an incident that happened in my life. 43 M denotes Tribunal Member. I denotes Interpreter. Callinan M Which was in Nilambe? Yes. M When was this? M When in 95 you recall? In the middle of the year, the end of the year? It should be I think in the end of the year. Ok. What was that happened? This has not been described in the statement. My mother doesn't know. Nor does my husband know. Please continue. I have described in the statement the saying that one night some boys came and knocked at the door. Later mother came no no that elderly lady. That elderly lady came and she scolded and wanted them to go. I have described this in the statement. Later, the following day police came there. Police came and asked are you trying to threaten us with Tamil boys? Are you in the LTTE? They took Later I was kept in the police. One thing happened to me Sir. So far I have not revealed this to my mother because my mother has pressure problems. And in the future she should not know about this. They raped me. Owing to this fear, I asked my mother to take me away. I cannot tell this. Ok. I don't need to ask you any further question about that particular incident. Now, after that you went to the Maldives and you became established there with employment and after a period with a relationship with a person who later became your husband? Yes." Subsequently during a second exchange, the rape, referred to as the "police incident", was obliquely mentioned. Callinan "M Why didn't you mention previously when you were talking about what police said to you when they took you to the police station? Because I don't remember very well and this is not a pleasant thing to speak about? M Well well this question about these two people coming to your house if it is something that you may attach significance to it was not mentioned in your very detailed written statement. It was not mentioned in your detailed evidence to the tribunal at the first hearing. It was not mentioned today when you were speaking about that period and only mentioned in the last few minutes. I have some difficulty with that. I have to say. All these things are related to that police incident and therefore in the statement, because my mother doesn't know anything, and in fact, she should not know anything about this. I don't understand why that would stop you from mentioning that the LTTE people had come to your house and asked you to join if that was the case particularly since at the previous hearing you mentioned briefly a fear that you might be asked to join the LTTE and did not say that you have ever been asked. I don't see how that would involve talking about the police itself. All these events are related to that incident and therefore I didn't wish to tell anyone. Even when you told me about the other incidents an hour ago. Even to think about this I find it very difficult for my own self." The respondent submits that the prosecutor was given an appropriate opportunity which she did not take to enlarge upon the rape during two subsequent exchanges: I have to say also that I have to think very carefully about these matters that have been raised today for the first time. And they are really two separate matters in that regard even though there may be some link between them. The first one is the question of your treatment by the police at the police station in 1995. The second issue which is much more difficult to understand because the issue was actually discussed with you in the previous tribunal hearing is the alleged approach to you to join the LTTE in 1995. Callinan I have to consider whether it is reasonable to accept that each of these was raised on previous occasions including before the tribunal at the last hearing. Do you want to say anything about that? One thing is I am scared to go back to Colombo. The LTTE will recruit. Police and army have already threatened me not to come. I won't be able to go in the same manner I did previously while travelling from the Maldives, that is to pay money. And I won't be able to face the torture that I had already faced. No one will give accommodation in Colombo. And the Singhalese thugs and mobs - they will cause me problems. Even to get house, that is accommodation, I got to get myself. Is there anything else you would like to say to the tribunal about any of these matters you think are relevant while you have the opportunity? That is the thing. It is very difficult for me to go and get accommodation get a house and Tamils and Singhalese mobs." One further factual matter should be noted. At the end of the hearing the prosecutor's solicitor and migration agent said that he wished to make a further written submission. This he accordingly did setting out in some detail other assertions and arguments. Included in them was an explanation of her earlier reticence about being raped: "The [prosecutor] was raped on one occasion while she was in custody. This matter was kept secret from her mother and ex husband. Consequently, because of this reluctance to tell her relatives she decided to not disclose this matter in her previous submission and hearing. [I]t must be noted that the [prosecutor] is a young Tamil girl and victim of domestic violence. Her husband left her. She was previously raped, tortured and extorted by people working for the authorities. For many years she had been a victim of persecution by Singhalese thugs. The [prosecutor] is ostracised by her relatives and friends." In affirming the delegate's decision the Tribunal on this second occasion said this: Callinan "The [prosecutor] stated that during this period in Nilambe there had been an incident at the end of 1995, which had not been described in her earlier statement and of which neither her mother nor her husband were aware. The [prosecutor] stated that she had described in her statement how one night some boys had come and knocked at the door. She said that her elderly maid had scolded them and warned them to go, and the following day the police had come and accused them of threatening the Singhalese with Tamil boys and asked if she was in the LTTE and had taken her and detained her at the police station. The [prosecutor] stated that the police had raped her and this is why she had asked her mother to help her leave Sri Lanka (for the Maldives). The Tribunal asked the [prosecutor] later in the hearing why she did not lodge a complaint or take the matter further with lawyers or courts or more senior authorities. The [prosecutor] stated that she had been threatened not to tell and could not even go to a doctor. The Tribunal again referred to the question of claims raised for the first time at this hearing which had not been mentioned before, in relation to the alleged approaches by the LTTE and the police detention and rape, all in 1995. The [prosecutor] stated that she was scared to go back to Colombo because the LTTE will recruit her. She claimed that the police and army had already asked her not to return and she would not be able to enter as she had before by paying money. She would not be able to face again the torture she had already faced and no-one will give her accommodation in Colombo as she no longer has any relatives there and everyone has abandoned her (including her relatives in Australia) because she married a Muslim." The Tribunal then relevantly made these findings: "There were some problems with differing evidence by the [prosecutor] in her application and statement and at hearings, which suggested that her recollections might be unreliable. For example, in her application the [prosecutor] had stated that she worked in Colombo from August 1994 to December 1995, but at the last hearing stated that she was in Colombo for only six to seven months. Also at the hearing, the [prosecutor] played down the frequency of her visits back to Sri Lanka until she was prompted by reference to her passport and, similarly, overstated the frequency of accommodation moves in the mid to late 1980s until reminded of documentary evidence previously submitted by her mother. The Tribunal had more serious difficulties with the new claims which emerged at the hearing before the present Tribunal, not having been mentioned at all in her original lengthy statement or at the hearing before the previous Tribunal. Callinan Although in her original statement the [prosecutor] had referred to some Singhalese youths coming to her house in Nilambe and being scolded away by her elderly maid, she made no mention of being taken to the police station the next day because of this, let alone that she had been accused by the police of LTTE contacts or that she was raped in police custody. The [prosecutor] stated that she had not mentioned the rape previously because her former husband and mother did not know about it and so she had not referred to it. However, that does not adequately explain why the matter was not raised at the previous Tribunal hearing at which neither her husband nor mother was present (and does not explain why being taken to the police station was not mentioned at all)44. Nor was the rape referred to in a psychological report submitted by the [prosecutor] to the first Tribunal in February 2000, prepared by a consultant psychologist from the Queensland Program of Assistance to Survivors of Torture and Trauma after some ten appointments with the [prosecutor] (some without her mother or husband present). The Tribunal's concerns about this were strengthened by the [prosecutor's] linking this alleged detention and rape with her other new claim, that she had been approached that same year to join the LTTE and that the police had asked her specifically about those persons who had approached her. The Tribunal found the [prosecutor's] evidence about this particular claim to be most unsatisfactory. It is evidence that one would have expected to have been provided at the hearing before the previous Tribunal when the [prosecutor] was asked specifically about her claim that she fears the LTTE because she believes that they might try and recruit her. However, notwithstanding the previous Tribunal's question, the [prosecutor] on that occasion made no reference at all to the claim now advanced that in 1995 two persons had come to her house on more than one occasion and had asked her to join the LTTE. Nor did the [prosecutor] mention this matter when she first referred at the most recent hearing to being taken in by the police for allegedly threatening the Singhalese youths, whereas later in that hearing she claimed that the two matters were linked and that this was the reason she was taken in and questioned. At one point in the hearing the [prosecutor] stated that it was the two teachers who had approached her in 1995 and asked her to join the LTTE but later she stated that it was two friends of the teachers who came to see her and asked her to join the LTTE. 44 The prosecutor's husband was in fact present at the first Tribunal hearing but the mistake is not material to the present application: see the reasons of Gummow and Callinan The way in which this claim was presented and developed at hearing led the Tribunal to conclude that this did not represent the [prosecutor's] own actual experience. Further, the Tribunal found it most implausible that two persons who the [prosecutor] had met through teachers when she was a young girl should suddenly come to her house eight years later seeking to recruit her to the LTTE. The Tribunal was satisfied that this claim was not true but was presented solely for the purpose of bolstering the [prosecutor's] claims. The [prosecutor's] insistence that this circumstance was the reason she was taken and questioned (on the occasion when she said she was raped) leads the Tribunal to conclude that the detention (if it occurred at all) did not occur in the manner and for the reason claimed. Having carefully considered the [prosecutor's] evidence about these particular matters, the Tribunal does not accept that the [prosecutor] was approached by LTTE members in 1995, or that she was asked or pressed to join the LTTE, or that she was for that reason detained by the police or that she was raped when detained by the police. These findings must affect the Tribunal's review of the [prosecutor's] credibility on other matters, especially where her stated fears are inconsistent with her actions in repeatedly returning to Sri Lanka." The prosecutor sought and failed to obtain a review of the Tribunal's decision by the Federal Court (Wilcox J) on grounds that are of no relevance to these proceedings which are in the original jurisdiction of this Court. The respondent does not suggest that the fact of them provides any discretionary basis for the refusal of the relief which the prosecutor seeks in this Court if she can make out her case for it. The proceedings in this Court On 7 November 2002 the Court (Gaudron J) made an order nisi on the prosecutor's application for relief under s 75(v)45 of the Constitution as follows: 45 "Original jurisdiction of High Court In all matters: (v) in which a writ of Mandamus or prohibition or an injunction is sought against an officer of the Commonwealth; the High Court shall have original jurisdiction." Callinan "IT IS ORDERED THAT: The first and second respondents show cause why, in respect of decision of first respondent made on 17 July 2001 that the prosecutor was not entitled to a protection visa: A Writ of Mandamus should not be issued out of this Court directed to the first respondent to rehear and determine the matter according to law. A Writ of Certiorari should not be issued out of this Court directed to the first respondent to remove into this Court the decision to be quashed; and If the above Writs of Mandamus and Certiorari are issued, an Injunction should not be issued out of this Court directed to the second respondent restraining the second respondent from removing the prosecutor from Australia until the matter has been reheard and redetermined by the first respondent. UPON THE GROUNDS THAT: The Applicant was denied natural justice and procedural fairness required to be observed by the Tribunal with respect to its review of the delegate's decision and in reaching its ultimate decision. PARTICULARS: The Tribunal during and in the course of the hearing conveyed to the Applicant wrong and misleading impression which misled and induced a false belief on the part of the Applicant that the Tribunal had accepted her claim and evidence given by her that she was raped and there was no need for her to give any further evidence or make any representations regarding the incident of rape. In the circumstances the Applicant was disadvantaged by the conclusion and findings reached by the Tribunal that it could not accept her claim and evidence that she was raped. The conclusion and findings reached by the Tribunal were improper, unfair and not in keeping with the rule and principles of natural justice. The wrong and misleading impression and false belief referred to in paragraph 1 herein was caused by the [statements made in the first exchange and subsequently] ... Callinan The Tribunal drew unfair and improper adverse inference and conclusion against the Applicant that she was not raped on the basis that the incident of rape was not mentioned in the psychological report that was tendered at the earlier hearing. In as much as the Tribunal had not made any inquiry and had not asked the author or the Applicant for any other plausible explanation as to why the incident was not mentioned in the report, the adverse inference and conclusion drawn by the Tribunal in all the circumstances was not in keeping with the rule and principles of natural justice. IT IS FURTHER ORDERED THAT: That there be an enlargement of time to permit the prosecutor to commence proceedings for the relief specified in this Order Nisi. That the second respondent his agents and delegates be restricted from the the prosecutor determination of these proceedings in the High Court. from Australia until removing IT IS FURTHER ORDERED THAT: The applicant/prosecutor pay the respondent's costs of High Court proceeding No S154/2002 up to and including 30 August 2002. In my opinion the order nisi should be discharged. First, there is not the slightest evidence from the prosecutor that she was in fact misled, or that she believed that the Tribunal had accepted her claim of having been raped. This distinguishes her case from Re Refugee Review Tribunal; Ex parte Aala46 and Muin v Refugee Review Tribunal47. This is not surprising for the following reason, which is another substantial reason why the order nisi should be discharged. There was no denial of natural justice. The Tribunal's language taken as a whole was not even ambiguous. If there were any misapprehension arising out of the Tribunal's statement during the first exchange, that it did "[not] need to ask ... any further question about that particular incident", it should have been dispelled by the 46 (2000) 204 CLR 82. 47 (2002) 76 ALJR 966; 190 ALR 601. Callinan explicit question during the second exchange, "why didn't you mention previously when you were talking about what police said to you when they took you to the police station?" The Tribunal was not only troubled by the failure of the prosecutor on the earlier occasion to refer to a rape at the police station, but it also made it clear that this was so during the subsequent exchanges. It was then that the Tribunal said that very careful thought would have to be given to the two matters, (of which the rape was one) "raised today for the first time". A little later the Tribunal asked "Do you want to say anything about that?" And yet another opportunity was given to the prosecutor by the asking of a final question, "Is there anything else ... you think ... relevant [about any of these matters] while you have the opportunity?" And finally, there is the additional fact that the prosecutor's advisers wrote a letter to the Tribunal after the hearing actually elaborating on the points raised during it and expressly attempting to deal with the omission that the Tribunal made clear was troubling it. A factual foundation, that she was denied natural justice, for the relief claimed by the prosecutor has not been laid. The Tribunal was entitled to find the facts that it did. Courts and tribunals do, not infrequently, gauge the reliability of a party or a witness by the incompleteness of their accounts on other occasions. That is so even though, and as with all exercises of assessing credit, it is a method which on occasions may have its limitations. It was said here, that delicacy, and a natural cultural reticence had deterred the prosecutor from mentioning on other occasions that she had been raped. So much may be accepted. But the prosecutor's failure to persuade the Tribunal of her claims did not simply depend upon that. She did in fact, belatedly, refer to the rape. Natural delicacy may have deterred her from going into the details of it, but it was its occurrence and her failure even to mention it earlier, which caused the Tribunal to reject her assertion. There was nothing to prevent her from explaining earlier that societal prejudice, and the shaming that would follow in her homeland, as well as her ingrained modesty had been the reason for her previous silence. It is not a question whether this Court might have decided the purely factual question before the Tribunal differently. The only question for this Court is whether there has been jurisdictional error by way of denial of natural justice entitling the prosecutor to the relief claimed. To that question the answer is a negative one for the reasons I have given. The order nisi should be discharged with costs. |
HIGH COURT OF AUSTRALIA YOLANDA GATTELLARO & ANOR APPELLANTS AND WESTPAC BANKING CORPORATION RESPONDENT Gattellaro v Westpac Banking Corporation [2004] HCA 6 11 February 2004 ORDER Appeal dismissed. On appeal from the Supreme Court of New South Wales Representation: G J McVay with D M Loewenstein for the appellants (instructed by Spencer Whitby and Co) J C Sheahan SC with K A Rees for the respondent (instructed by Henry Davis York) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Gattellaro v Westpac Banking Corporation Evidence – Judicial notice – Whether judicial notice can be taken that institutions such as the respondent use a standard form of guarantee. Guarantee – Consequence of person named as co-surety not being shown to have executed guarantee. Practice and procedure – High Court – Determination of appeal – Appellants' ground of appeal succeeds – Notice of Contention – Whether respondent should have leave to amend contentions sought in motion filed immediately before appeal hearing – Whether outstanding issues should be determined in intermediate appellate court. Words and Phrases: "judicial notice", "common knowledge". Contracts Review Act 1980 (NSW). Evidence Act 1995 (NSW), s 144. Supreme Court Rules 1970 (NSW), Pt 15 r 13(2). GLEESON CJ, McHUGH, HAYNE AND HEYDON JJ. Background of the appeal From the late 1960s Falgat Constructions Pty Ltd ("the company") engaged in the business of acquiring, renovating and selling houses; extending and altering houses; and building houses and home units. Mr and Mrs Gattellaro were its sole directors and shareholders. The company and the Gattellaros had accounts with the Goulburn Street, Sydney branch of the Commercial Bank of On 17 June 1977 Mr and Mrs Gattellaro executed a mortgage over their home to secure their personal indebtedness to CBA ("the 1977 mortgage"). Following a merger between CBA and Westpac Banking Corporation ("Westpac") in October 1982, a statutory novation took place substituting Westpac for CBA in its contractual relationships with the company and the Gattellaros. By late 1985 officers of Westpac were becoming concerned with the incapacity of the Gattellaros to finance the interest burdens on their loans from income. On 2 June 1986 the accounts of the company and the Gattellaros at the Goulburn Street branch were closed. New accounts were opened at the Westpac Plaza branch. A bill acceptance line of credit in favour of the Gattellaros was arranged. This was used to pay out the indebtedness of the company and the Gattellaros at the Goulburn Street branch. The Gattellaros entered a mortgage over their home to secure the advance of $450,000 ("the 2 June 1986 mortgage"). The 1977 mortgage was discharged. On 30 May 1990 Westpac instituted proceedings under the 2 June 1986 mortgage claiming $197,378.09 and also seeking judgment for possession of the Gattellaros' home. After a trial on 1-3 and 5 November 1999, Hulme J in the Supreme Court of New South Wales delivered reasons for judgment on 11 August 2000 upholding Westpac's claims and rejecting the Gattellaros' defences1. On 25 August 2000 he ordered the Gattellaros to pay Westpac $983,339.02 and 1 Westpac Banking Corporation v Gattellaro [2000] NSWSC 775. McHugh Hayne ordered them to give up possession of their home. On 6 April 2001 the Court of Appeal dismissed an appeal by the Gattellaros2. Among the defences advanced by the Gattellaros and rejected by the trial judge was a defence under the Contracts Review Act 1980 (NSW). That defence was that the 2 June 1986 mortgage was unjust in that it rendered the Gattellaros personally liable for the indebtedness of the company. It was contended that they had not been personally liable for that indebtedness before; that their home had not been security for that indebtedness; that no adequate explanation had been given about these changes; and that they had not understood that these changes had been effected. Among the answers which Westpac gave to that defence was the contention that the company's indebtedness on the Goulburn Street branch accounts was secured by an unlimited guarantee given by Mr Gattellaro in or about November 1985; that the obligations under that guarantee were secured by the 1977 mortgage of their home; and that the 1977 mortgage made Mrs Gattellaro liable for that indebtedness also. Hence, said Westpac, the 2 June 1986 mortgage was not unjust because it did not make the Gattellaros liable for any company indebtedness they were not previously liable for, and it did not make their home security for any indebtedness for which it was not previously security. A difficulty in Westpac's position was that it could not produce the unlimited guarantee of November 1985 on which its contention depended. It endeavoured to prove its existence by recourse to other materials. Those other materials included an internal Westpac memorandum of 27 November 1985 suggesting that Mr Gattellaro had given a guarantee of the company's indebtedness to the extent of $120,000 which was secured by the 1977 mortgage and that Mrs Gattellaro was also to give a guarantee that week. Other Westpac documents (a diary note of 14 February 1986 and a Westpac memorandum from the Goulburn Street branch to the regional office dated 21 February 1986) suggested that the reference to a guarantee limited to $120,000 was in error. The trial judge found that at the time of the 2 June 1986 mortgage, Westpac had an unlimited guarantee from Mr Gattellaro executed in November 1985 guaranteeing the company's liability, but said that he was not persuaded that Westpac had obtained one from Mrs Gattellaro. 2 Gattellaro v Westpac Banking Corporation [2001] NSWCA 76. McHugh Hayne The minority judge in the Court of Appeal agreed in relation to both the Gattellaros. The majority of the Court of Appeal agreed in relation to Mr Gattellaro, and said it was not necessary to decide whether Mrs Gattellaro had given a guarantee. No attempt was made in this Court to contend that she had. The Gattellaros conceded to the Court of Appeal that if there were in fact a guarantee of the company's debts unlimited as to amount, and if the obligations of the Gattellaros under that guarantee were secured on their home by the 1977 mortgage, then the 2 June 1986 mortgage was not unjust. The Court of Appeal acted on that concession, modified in light of the fact that only Mr Gattellaro had given an unlimited guarantee of the company's debts: it said that because he had given that guarantee, the 1977 mortgage made Mrs Gattellaro liable in relation to his responsibility under the guarantee and rendered their home security for the company's debts. Though the Gattellaros unsuccessfully argued to the Court of Appeal that the evidence did not support an inference that Mr Gattellaro had signed an unlimited guarantee in November 1985, they had a further argument. They apparently contended that even if Mr Gattellaro had given the unlimited guarantee it could not be operative even against him if it was in the form of a co- guarantee and if Mrs Gattellaro had not signed it. That contention would fail if there were an express clause providing that the guarantee was binding on each person who did sign it notwithstanding that some other person named as guarantor had not. The majority of the Court of Appeal found that there was an express clause of that kind, because they took judicial notice of the fact that Westpac had a standard form guarantee and that it contained an express clause of that kind. The only aspect of the Court of Appeal's reasoning which the Gattellaros challenged was the premise that Mr Gattellaro had given an unlimited guarantee in November 1985, and they challenged it, not on the ground that Mr Gattellaro had not signed it, but on the ground that the reasoning leading to the conclusion that the express clause relied on by the majority of the Court of Appeal was part of the November 1985 guarantee was erroneous. The majority reasoning relevantly contained the following passage: "It was submitted that the guarantee given by Mr Gattellaro might not have become operative in the absence of signature by Mrs Gattellaro as co-guarantor. However, the evidence included a guarantee given by a relative of Mr and Mrs Gattellaro in May 1986 in respect of their indebtedness, a Westpac guarantee on a printed form with a print date of 1 October 1984. Judicial notice can be taken of the fact that institutions such as Westpac used a standard form guarantee. It was submitted that this could not be found to have been Westpac's standard form guarantee, and so the form of guarantee which would have been given in November 1985, in the absence of explicit evidence from Westpac. I think that McHugh Hayne unrealistic, and conclude that the guarantee given by Mr Gattellaro in November 1985 was in the same form. It provided that the guarantee was binding on each signatory notwithstanding that one or more of the persons named as guarantor did not execute it." The "guarantee given by a relative" which was "on a printed form with a print date of 1 October 1984" was a guarantee dated 21 May 1986 given by Mr and Mrs Falcomata to Westpac securing the indebtedness of the Gattellaros to Westpac ("the Falcomata guarantee"). Clause 20 of the Falcomata guarantee provided: "THAT this instrument shall bind each of the signatories hereto to the extent aforesaid notwithstanding that one or more of the persons named herein as the Guarantor or the Debtor may never execute the same or that the execution of this instrument by any one or more of such persons (other than the person sought to be made liable hereunder) is or may become void or voidable." The minority judge in the Court of Appeal said that the majority reasoning depended on a view taken by the majority of what was in the guarantee which they inferred Mr Gattellaro had signed. He stated: "This view depends upon their taking judicial notice both of the fact that the Bank used a standard form of guarantee and of what was in it. I do not think judicial notice can safely be taken of either of those matters, for three reasons: in my experience bank forms frequently change – they must, in light of constantly changing economic conditions and legislative provisions, and never ending court decisions around the world about the meaning and effect of bank forms; there are, I believe and there certainly may be, different forms of guarantee within a single bank; and, transaction by transaction, additions and/or deletions may be made to standard forms." Judicial notice While in the course of the hearing of the special leave application on 14 February 2003 counsel for Westpac did not formally concede that the reasoning advanced by the majority of the Court of Appeal on judicial notice was wrong, he did not defend it. He submitted that no judicial notice question arose and that the Court of Appeal's orders dismissing the appeal could be defended on other grounds. Westpac adopted a similar posture in its Notice of Contention filed on 17 March 2003. On 12 June 2003, in its written submissions, Westpac McHugh Hayne accepted "that the doctrine of judicial notice did not permit the majority of the Court of Appeal to find that [Westpac] in 1985 used a standard form of guarantee"3. In these circumstances it is not necessary to deal with the judicial notice question in detail. Below, the matter was dealt with as though the common law applied. In New South Wales there would appear to be no room for the operation of the common law doctrine of judicial notice, strictly so called, since the enactment of the Evidence Act 1995 (NSW), s 144. This section provides: "(1) Proof is not required about knowledge that is not reasonably open to question and is: common knowledge in the locality in which the proceeding is being held or generally, or capable of verification by reference to a document the authority of which cannot reasonably be questioned. The judge may acquire knowledge of that kind in any way the judge thinks fit. The court (including, if there is a jury, the jury) is to take knowledge of that kind into account. The judge is to give a party such opportunity to make submissions, and to refer to relevant information, relating to the acquiring or taking into account of knowledge of that kind as is necessary to ensure that the party is not unfairly prejudiced." Knowledge of the proposition that institutions such as Westpac use, or at any particular time used, a standard form guarantee is not common knowledge, either in Sydney, which is the locality in which the proceeding was held, or generally. Nor is it knowledge capable of verification by reference to a document the authority of which could not reasonably be questioned. Further, it has not been demonstrated that the majority of the Court of Appeal gave the Gattellaros an opportunity to make submissions, and to refer to relevant information, relating to the acquiring or taking into account of the knowledge in question as was 3 The emphasis is Westpac's. McHugh Hayne necessary to ensure that they were not unfairly prejudiced. Indeed, counsel for both sides said that the judicial notice issue was raised by the Court of Appeal for the first time in its judgments. For these reasons judicial notice could not be taken in the way the majority of the Court of Appeal did. However, Westpac submitted that the Court of Appeal's dismissal of the appeal could be upheld on one or other of two contentions propounded in its Amended Notice of Contention. Inference that Mr Gattellaro's guarantee contained cl 20 of the Falcomata guarantee The first of the two contentions propounded in Westpac's Amended Notice of Contention was "that there was sufficient evidence (albeit barely sufficient) to warrant a finding that, more probably than not, the guarantee executed by Mr Gattellaro would have included a term such as cls 20 of the Falcomata guarantee". A brief submission to the same effect had been put to, but not dealt with by, the Court of Appeal. In this Court, Westpac pointed to four circumstances in support of the contention. First, several aspects of the Falcomata guarantee suggested it was a standard form. It had marginal notes giving instructions for execution; and in particular there were instructions relating to execution in different jurisdictions. It referred to "all moratorium legislation and regulations which may now or hereafter be in force". It contained words permitting imposition of a limit on liability which had been struck out. While this reasoning certainly supports the conclusion that the Falcomata guarantee was a standard form, it does not justify the conclusion that it was the only standard form in use in May 1986, let alone November 1985. There may have been others. And even if the Falcomata guarantee was in the form of the guarantee signed by Mr Gattellaro, just as parts of the Falcomata guarantee were filled in or struck out, so cl 20 may have been struck out of the guarantee signed The second circumstance which Westpac relied on was that the form of the Falcomata guarantee was apt to be used for a guarantee by Mr Gattellaro of the company's debts. It is true that its form was not inappropriate for that use. But it does not follow that a guarantee in that form was the only form capable of use for that purpose, or that it was in fact used for that purpose. McHugh Hayne The third circumstance is that the form of the Falcomata guarantee was used in relation to a transaction to which the Falcomatas were party which was equivalent to that entered by Mr Gattellaro. Even if that is correct, it does not exclude the possibility that other forms were capable of use, particularly since Mr Gattellaro's guarantee was signed at the request of officers of the Goulburn Street branch, while the Falcomata guarantee was signed at the request of officers of the Westpac Plaza branch. The fourth circumstance relied on was that the Falcomata form of guarantee was used in May 1986, only six months after Mr Gattellaro's guarantee was given in November 1985, and the marginal notes referring to 1 October 1984 indicate that the Falcomata form of guarantee was in use from that date. One difficulty with that contention is that the significance of the date was unexplored. Another is that it does not point to the form of the Falcomata guarantee as being the only one in use in November 1985. For these reasons it is necessary to reject the submission that an inference could be drawn that Mr Gattellaro's guarantee contained cl 20 of the Falcomata guarantee. Issues relating to whether the giving of the guarantee by Mr Gattellaro was subject to Mrs Gattellaro executing it Before this Court the Gattellaros contended in their written submissions in chief: "[I]f it is a term of the arrangements leading to the execution of a guarantee that there will be another co-surety of the debt, then unless the intended surety who has executed the guarantee consents to the other co- surety not thereafter executing the guarantee, failure of the co-surety to execute the guarantee relieves the intended co-surety of liability under the guarantee despite his execution of it." Arguments relating to this contention were both elaborated and varied in the course of the oral hearing and it will be necessary to trace the course of these arguments in some detail. It is convenient to say at once, however, that they are arguments which, in both their original and varied forms, should fail. Counsel for the Gattellaros conceded that it was for the Gattellaros to prove that Mr Gattellaro was relieved from his obligation under the guarantee. This they did not do. Even if, in the courts below, Westpac did not advance the argument that the Gattellaros bore this onus, it is not debarred from doing so in this Court. McHugh Hayne In oral argument, counsel for the Gattellaros submitted that the relevant principles were conveniently recorded in Marston v Charles H Griffith & Co Pty Ltd4. In that case Powell J said: "1. if it is a term, whether express or implied, of the arrangements pursuant to which a parol contract of guarantee is executed, that there will be another co-surety or other co-sureties, or that the principal debt, or the guarantee, will be secured in an identified way, then, unless the intended surety who has executed the guarantee consents to the other co-surety or co-sureties not the contemplated security not being provided … then the intended surety never becomes liable under the guarantee despite his execution of it – the failure of the other co-surety or co-sureties to execute the guarantee, or the failure to provide the intended security, thus affords the intending surety who executed the guarantee a defence at law to an action on the guarantee; the guarantee … or thereafter executing 2. if a parol contract of guarantee which is executed by an intending surety is drawn in a form showing another or others as intended joint and several sureties, it will be presumed, in the absence of acceptable evidence to the contrary, that the execution of that other, or those others, was a condition precedent to the surety who signed the guarantee becoming liable under it, and his, or their, failure to execute the guarantee will afford to the intending surety who executed the guarantee a defence at law to an action on the guarantee; …" (footnotes omitted) It thus appeared to be a contention of the Gattellaros that if it was a term of Mr Gattellaro's guarantee that Mrs Gattellaro was to be a co-surety, since Westpac had not established that she had become a co-surety, Mr Gattellaro was relieved of liability under the November 1985 guarantee ("the Marston contention"). At all events, Westpac appeared to understand the Gattellaros' position in this way, because after the Gattellaros had served their written submissions in chief, Westpac formulated a second ground on which it sought to uphold the order of the Court of Appeal dismissing the Gattellaros' appeal to that Court. The second ground was put thus in par 4 of the Amended Notice of Contention: (1982) 3 NSWLR 294 at 300-301. McHugh Hayne "[T]he decision below should be affirmed on the ground that the [Gattellaros] did not plead or prove that the guarantee given by [Mr Gattellaro] was subject to [Mrs Gattellaro] also giving such a guarantee, or that [Mr Gattellaro] had such a belief, induced by the form of the guarantee, and did not plead or prove that [Mrs Gattellaro] did not give such a guarantee." The Gattellaros opposed Westpac's application for leave to amend its Notice of Contention to rely on this ground. The written submissions of Westpac in support of the second ground were to the effect that the Marston contention had not been pleaded, and that the conduct of both parties at the trial suggested that the Marston contention had not been advanced by the Gattellaros. The written submissions of the Gattellaros in reply took the stance that it was not open to Westpac to raise any issue adverse to them about whether it was a term of the arrangements pursuant to which Mr Gattellaro entered the November 1985 guarantee that Mrs Gattellaro should become a co-surety. It was said not to be open to Westpac to do this because of the principles relating to the raising of issues in an appeal which had not been raised at the trial. From the Gattellaros' point of view, the difficulty in that stance is that their success on the judicial notice point did not affect the concurrent findings of the trial judge and the Court of Appeal that Mr Gattellaro gave the guarantee of November 1985 in an unlimited amount. The effect of that guarantee was to make Mr Gattellaro liable for all the company's debts to Westpac, and hence also to make Mrs Gattellaro liable for them, and to make their home security for the company's debts by reason of the 1977 mortgage. That meant that the attack on the 2 June 1986 mortgage would fail since it did not worsen the Gattellaros' position. Perhaps because of a perception of that difficulty, in oral argument the Gattellaros appeared to adopt a slightly different posture. They submitted that until notice was given in Westpac's written submissions of what became par 4 of the Amended Notice of Contention, the joint position of the parties was that "if one joint guarantor signed a guarantee form which was expressed to be with others and unless that guarantor who signed the guarantee form agreed, he was not bound if the others did not sign." The Gattellaros conceded that as "a matter of law" they bore the onus on the Marston contention; but said that it was not McHugh Hayne open to Westpac to rely on that legal rule in this Court in view of Westpac's failure to rely on it below5. The Gattellaros thus seemed to contend that they could rely on the propositions of law inherent in the Marston contention favourable to them (the validity of which, according to them, was common ground at all stages until the oral argument in this Court), but that Westpac could not rely on one of the propositions of law associated with the Marston contention favourable to it, namely that the surety seeking to escape liability bore the onus of proving the facts which had to be established if the Marston contention were to be made good. It is far from clear whether the Marston contention was raised before the trial judge. There are strong indications that it was not. Since the Gattellaros bore the onus of proving that the 2 June 1986 mortgage was unjust, they bore the onus of nullifying the November 1985 guarantee signed by Mr Gattellaro. Their counsel conceded this to be so as a matter of law, as has been noted. That meant that it was for them to prove that there was a clause in that guarantee, or in the arrangements leading to its execution, that Mrs Gattellaro was to be a co-surety. The structure of the pleadings was that Westpac relied on the 2 June 1986 mortgage in its Statement of Claim. The Further Amended Cross Claim filed by the Gattellaros pleaded that the 2 June 1986 mortgage was unjust because, for the first time, it caused them to guarantee the company's debts, and secured them over the Gattellaros' home. Par 5 alleged: "By the said mortgage of 2 June 1986 [Westpac] obtained a mortgage over land owned by the [Gattellaros] which had the effect of securing amounts which had previously been advanced to [the company] and which were previously unsecured and which became the debts of the [Gattellaros] after 2 June 1986." In view of that concession, and in view of the fact that it is possible to decide this appeal by assuming that the law is as stated in Marston's case, it is convenient to proceed by assuming, but not deciding, both that the law is as stated in that case and that the Gattellaros bore the onus of establishing facts which would enable them to take advantage of the law so stated. McHugh Hayne In its Amended Defence to Further Amended Cross Claim, par 10, Westpac responded as follows: "In further answer to the allegation made in the Claim to the effect that prior to 2 June 1986 the monies advanced by the Bank to [the company] had been unsecured, the Bank: denies the allegation; says that by mortgage dated 17 June 1977 and registered number Q283741 ('the 1977 Mortgage') the cross-claimants mortgaged the [Gattellaros' home] to the Bank (by its predecessor [the CBA]) to secure, among other things, all monies that the cross-claimants, or either of them, had then guaranteed to the Bank (or its predecessor) or thereafter guarantee to the Bank (or its predecessor). Particulars Paragraphs 2 and 27 of the 1977 Mortgage says that by a Guarantee made in or about November 1985 the first cross-claimant guaranteed to the Bank payment of all monies owing to the Bank by [the company]. Particulars The Bank is not able to produce a copy of the Guarantee. Its existence is to be inferred from the entries made in the Bank's diary notes of 27 November 1985 and 21 February 1986 (2) and from item 22 in the defendants' List of Documents dated 7 March 1991 in these proceedings." By par 10 Westpac was contending that since Mr Gattellaro was liable for the company's debts under the November 1985 guarantee, that Mrs Gattellaro was also liable for them under the 1977 mortgage, and that the Gattellaros' home was security for those debts under the 1977 mortgage. Part 15 r 13(2) of the Supreme Court Rules 1970 (NSW) provides: "In a defence or subsequent pleading the party pleading shall plead specifically any matter … (a) which he alleges makes any claim, defence or other case of the opposite party not maintainable; McHugh Hayne (b) which, if not pleaded specifically, may take the opposite party by surprise; or (c) which raises matters of fact not arising out of the preceding pleading." The Marston contention was one which, if sound, would have made par 10 of Westpac's Amended Defence to Further Amended Cross Claim not maintainable, because it would have nullified the November 1985 guarantee. It was also a contention which, if not pleaded specifically, might have taken Westpac by surprise. And the Marston contention would have raised matters of fact not arising out of the preceding pleading. If the Gattellaros wished to rely on the Marston contention, on which they bore the burden of proof, Pt 15 r 13(2) obliged them to file a reply to Westpac's Amended Defence to Further Amended Cross Claim. This they did not do. Counsel for the Gattellaros complained about the alleged failure of Westpac to make it clear at the trial that it saw the Gattellaros as bearing the onus of proof in relation to the Marston contention, and said that his clients were prejudiced because the passage of nearly four years from the trial caused him not to be able to remember the details of what had happened at the trial and what informal accommodations he may have come to with his opponent during the trial. This complaint, however, cannot affect the question of what ought to have been pleaded. The Amended Defence to Further Amended Cross Claim was served before the trial. The failure of the Gattellaros to plead the facts necessary to make good the Marston contention was not necessarily fatal to any intention they had of relying on it. It was open to the parties by their conduct of the trial to consent to a widening or narrowing of the issues defined by the pleadings. Demonstration to an appellate court of how a trial was conducted depends on proof by affidavit, or on an admission, or on clear evidence in the transcript or in some other part of the record of the proceedings, or on an inference from the record. Here there was no affidavit. There was no admission: neither of the counsel for Westpac who appeared before this Court had appeared at the trial, and though leading counsel for the Gattellaros had, he could not recall what had happened more than three and a half years earlier. There is no clear evidence in the transcript. It may be possible to draw inferences from passages in the reasons for judgment of the trial judge and of the majority of the Court of Appeal, and in various written submissions, that the Marston contention had been in issue. Even if it was in issue, it was not dealt with by either the trial judge or the Court of Appeal. There is no utility in this Court remitting the matter to one of the courts below for the Marston contention to be decided, since if it has to be decided, this Court is in as McHugh Hayne good a position as they were. It is not necessary to reach a conclusion on whether the Marston contention was in issue, since even if it was, the Gattellaros must fail. If the crucial question were whether, assuming that the Gattellaros bore an onus of making good the Marston contention in the different forms in which they described it, they satisfied it – and the parties wavered on whether that was the question – the answer would be that they did not. The onus on the Gattellaros would have been to prove: that there was a term, express or implied, of the arrangements pursuant to which the November 1985 guarantee was executed, that Mrs Gattellaro was to be a co-surety; or that the November 1985 guarantee was drawn in a form showing Mrs Gattellaro as an intended joint and several surety. The Gattellaros did not prove proposition (b). That is because Westpac lost its copy of the guarantee, and because although the Gattellaros may have given discovery of the guarantee (which their solicitor denied was in signed form), they too lost their copy. Since the form of the guarantee is not in evidence, no inference can be drawn from it. Further, the Gattellaros did not prove proposition (a). The internal Westpac documents reveal that Westpac expected Mrs Gattellaro to sign a guarantee; but they do not prove any relevant term of the arrangements. But at the end of the day the parties appeared to be inviting this Court to decide a different question – not whether the Gattellaros satisfied an onus borne by them of making good the Marston contention, but whether Westpac bore the onus of disproving the Marston contention, and whether Westpac was disentitled from taking the point in this Court that the onus lay on the Gattellaros. The Gattellaros argued that even if, as a matter of law, they would otherwise have borne the onus of establishing the matters of fact necessary to make good the Marston contention, Westpac had not taken that point below, concentrating instead on the issue, not raised by the pleadings but introduced by the parties during the trial, of whether Mrs Gattellaro had signed the guarantee. Hence, they argued, Westpac could not rely on any contention now that the Gattellaros bore the onus. In effect the Gattellaros argued that while there was a gap in proof in relation to the Marston contention, and while cases containing gaps in proof ought to be decided by recourse to the onus of proof, since Westpac took no point at the trial that the onus of proof lay on the Gattellaros, it was debarred from relying on that location of the onus in this Court, and hence had to fail. McHugh Hayne One difficulty in this argument is that just as it is difficult to conclude that the Marston contention was advanced at trial because of the absence of any relevant affidavit, admission, express indication in the record or inference from the record, for the same reasons it is difficult to conclude that the validity of the Marston contention was common ground, or to conclude that the question of the burden of proof in relation to the Marston contention was not argued at trial or was assumed by Westpac. If in truth Westpac did not take the onus of proof point below, that points to the conclusion that the Marston contention was not put below by the Gattellaros and hence cannot be relied on now. In any event, the question of where the onus of proof on the Marston contention lies (as distinct from the question whether it was satisfied) is an issue of pure law. If the Gattellaros wished to rely on the Marston contention at any stage, it was in their interests to ensure that evidence was called to support it, wherever the onus lay. Either the Marston contention was advanced at trial or it was not. If it was, the Gattellaros had an opportunity to call evidence about it, but failed to do so to a degree sufficient to permit them to discharge their onus of proof. If the Gattellaros did not advance the Marston contention at trial, but wished to do so for the first time in the Court of Appeal or this Court, it was for them to make it good on the existing evidentiary material: any deficiency in the evidentiary material flows from their failure to call more evidence about it at trial. The Gattellaros did not call one item of evidence which it was within their power to call, namely evidence from Mr Gattellaro, including evidence as to his state of mind, as to any relevant term in the arrangements. And the Gattellaros did not cross-examine a relevant witness called by Westpac in that regard. The Gattellaros' contention that Westpac cannot now rely on the rule of law which places the onus of establishing the facts relevant to the Marston contention on the surety must be rejected. If the Marston contention was never raised below and is not raised now by the Gattellaros, then the location of the onus is immaterial: par 10 of the Amended Defence to Further Amended Cross Claim will have been made out. If the Marston contention was raised at trial or is now raised, then the onus lay or now lies on the Gattellaros, unless Westpac assumed the onus. Since counsel for the Gattellaros lacked any recollection about the specific conduct of the trial, there were only two circumstances to which the Gattellaros pointed as a sign that Westpac assumed, or had abandoned any point about, the onus. The first circumstance was that Westpac made several attempts to procure an admission from Mrs Gattellaro in cross-examination that she had signed the guarantee even though Westpac had not alleged in its Amended Defence to the Further Amended Cross Claim that she had. These attempts wholly failed, but Westpac's conduct in trying to elicit this admission does not point to any assumption of an onus or abandonment of any point about McHugh Hayne onus on its part. Westpac's conduct is readily explicable in other ways: had Westpac established that Mrs Gattellaro had signed the guarantee, it would have made Westpac's overall task easier, and it would have tended to weaken various allegations in the Further Amended Cross Claim that she was unaware that the 2 June 1986 mortgage worsened her position. The other circumstance to which the Gattellaros pointed was that counsel for Westpac on the special leave application said that it was common ground that the general principle was that in the absence of contrary language, "if a guarantee is drawn up for two guarantors, and one only signs, then [that] one is not bound, because the only promise he made was to join with the other to guarantee, and if the other does not join, then he is not bound". But counsel for Westpac made no concession about the onus of proof or about how the trial had been conducted in that regard. Hence there is nothing to suggest that Westpac did assume the onus. Even if Westpac remained silent about the onus, there was no reason why the Gattellaros should have assumed that the onus lay anywhere but where the law placed it, namely, on them. Accordingly, Westpac is not debarred from relying on the fact that the onus of pleading and proof rests on the Gattellaros and from pointing out that the evidence called at trial does not satisfy the onus of proof. Leave to amend the Notice of Contention to include ground 4 should be granted, and the ground should be upheld. Conclusion It follows that Mr Gattellaro's contention that he is not bound by the November 1985 guarantee fails. Since it obliged him to pay to Westpac the debts owed by the company, the 1977 mortgage applied. The 1977 mortgage made Mrs Gattellaro liable for, and secured against the Gattellaros' home, all monies for which Mr Gattellaro might be liable to Westpac. In consequence the 2 June 1986 mortgage did not increase the Gattellaros' liability, and the appeal to this Court must be dismissed. What should be done about costs? Special leave to appeal was granted to determine an important point concerning judicial notice. The Court of Appeal of New South Wales had rejected the appellants' appeal because it held that courts could take judicial notice that banks such as Westpac used a standard form of guarantee and that it could be inferred that the appellants had signed Westpac's standard form. That was a far-reaching proposition of great practical importance in the conduct of commercial litigation. Special leave was granted to test the correctness of that ruling. In Westpac's written submissions, however, it conceded "that the doctrine of judicial notice did not permit the majority of the Court of Appeal to find that McHugh Hayne [Westpac] in 1985 used a standard form of guarantee." It had made no such concession on the special leave hearing. After conceding that the Court of Appeal had erred in relying on the doctrine of judicial notice, Westpac sought to uphold the Court of Appeal's decision on certain factual grounds. Thus, by reason of Westpac's concession concerning judicial notice, the Court of Appeal's decision could not stand unless Westpac made good one or both of the two grounds in its Notice of Contention. From this Court's point of view, the better course would have been to allow the appeal and remit the Notice of Contention to the Court of Appeal. That course would, however, have put the parties to further expense and delay. In the circumstances, the interests of justice have been best served by this Court determining the factual and procedural questions, questions of a kind with which ordinarily it should have no concern. For the reasons given above, the second of the grounds relied on by Westpac must succeed and the appeal must be dismissed. But in our opinion, Westpac should not have the costs of the appeal in this Court. Its dilatoriness in conceding that the Court of Appeal had erred caused the appellants to incur the expense of filing a notice of appeal, preparing appeal books, briefing counsel and preparing written submissions. This expense could have been avoided if Westpac had conceded at the special leave application that the Court of Appeal had erred. If it had, this Court could have allowed the appeal instanter and remitted the matter to the Court of Appeal to determine at least the first ground in the Notice of Contention which had been raised in the Court of Appeal but not decided. Whether on a remitter Westpac could have raised the second ground of the Notice of Contention – the ground on which it succeeds in this Court – may be debatable. In this Court, it was entitled to support the decision in its favour on that ground, even if the point was being raised for the first time, because it involved a question of law that could not be affected by further evidence6. If the matter had been remitted to the Court of Appeal, however, the public interest in the finality of litigation might have induced that Court in its discretion to refuse to allow the second ground to be argued, if it had not been raised on the first hearing of the appeal. Thus, Westpac may have gained a considerable advantage in not making its concession earlier than it did. In these circumstances, Westpac should not have its costs. Indeed, there is much to be said for ordering Westpac to pay the costs of the appeal even though 6 Connecticut Fire Insurance Co v Kavanagh [1892] AC 473 at 480; Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438. McHugh Hayne it succeeds in having the appeal dismissed. However, on balance, the justice of the case is served by not making a costs order in favour of either side. Kirby KIRBY J. This appeal7 began as one concerned with the law of judicial notice. It was for that purpose that special leave to appeal was granted to the appellants. However, whilst it was before this Court, the case took a different turning. It has ended, essentially, as a trial before this Court of an issue relating to the liability of co-sureties under an alleged guarantee. As I shall show, that issue arose at a very late stage in the contest between the parties. Indeed, it could hardly have arisen later. The facts and issues To discover how this Court became involved in such a trial (effectively deciding the point in issue for the first time), it is necessary to read the reasons of Gleeson CJ, McHugh, Hayne and Heydon JJ ("the joint reasons"). Because the facts and course of the litigation are described there, those reasons relieve me of the obligation to repeat most of the material. As shown8, Westpac Banking Corporation ("Westpac") instituted proceedings as long ago as 1990 against the appellants, Mr and Mrs Gattellaro ("the Gattellaros"). The proceedings were based on Westpac's rights under a mortgage which the Gattellaros had executed over their home. The mortgage secured an advance from Westpac to re-finance the debts of a company in which the Gattellaros were interested, Falgat Constructions Pty Ltd ("Falgat"). There was no dispute that the Gattellaros executed that mortgage in 1986. Relevantly, the way they sought to escape their liability as mortgagors was to invoke relief under the Contracts Review Act 1980 (NSW). Their complaint was that they had been unfairly led by Westpac into personal liability for the debts of Falgat. Proof of that complaint depended upon the Gattellaros being able to establish that, by entering the 1986 mortgage, they had materially changed their personal positions, to their joint and several disadvantage. They asserted that they had. They claimed that the 1986 mortgage extended liability to them personally for Falgat's debts and did so for the first time. For its part, Westpac argued that the Gattellaros had not changed their position to their disadvantage. If Westpac could make good that assertion, it would knock away any hope that the Gattellaros could obtain relief under a defence based on the Contracts Review Act. So much was accepted by the Gattellaros. Westpac submitted that, in November 1985, Mr Gattellaro had already executed an unlimited personal guarantee in favour of Westpac for the debts of Falgat. Westpac's evidentiary problem in making this submission good 7 From the Court of Appeal of the Supreme Court of New South Wales: Gattellaro v Westpac Banking Corporation [2001] NSWCA 76. Joint reasons at [5]. Kirby was that it could not produce the contract of guarantee. This was so although reference was made in Westpac's contemporary records to the fact that the guarantee had been given by Mr Gattellaro and that it was also to be executed by Identifying the burden of proof Forensically, where there was a dispute over such a matter, and where the fact contested was legally relevant to the Contracts Review Act issue, one would normally have expected Westpac to bear the burden of proving, by the best evidence available to it, the giving of the guarantee by Mr Gattellaro and the terms of the guarantee. Normally, it would be inferred that security documents of such a kind would not be mislaid; that they would typically be kept by a bank in a safe place, available for proof when needed; and that Westpac would have forms and systems to govern such cases. No procedure of human records is perfect. Documents and files get lost. In earlier times of paper records the larger the organisation, in a sense, the greater the risk of loss. Now, with electronic records, the risks are different but no less. The law, recognising these realities, will ordinarily allow for proof to be given by secondary means of the contents of documents and records alleged to have been lost. At the trial of the present case, it was open to Westpac to call evidence as to what its standard forms of personal guarantee were in November 1985 and what those forms contained. However, in the trial, no such evidence was led by Westpac. In these circumstances, as between the parties, the proper inference would be that relevant witnesses could not have proved the facts asserted by Westpac by direct evidence. Otherwise, surely, the witnesses would have been asked the relevant questions9. Especially is this so because the manager of the Goulburn Street branch and the assistant manager of the Westpac Plaza branch were called in Westpac's case to give oral evidence. Neither was asked the relevant questions concerning Westpac's practice at the time. Nor was either asked to give evidence about the existence of standard guarantee forms or to produce such forms from the bank's records. It is not possible for a party, who denies the execution of such documents, to prove the negative except by assertion. Nor is it reasonable to expect a party, denying such execution, to prove the existence and contents of documents which it contests. Still less, would it be reasonable to expect a customer to know bank practice or to have a collection of bank forms and documents. On the face of cf Commercial Union Assurance Company of Australia Pty Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419. Kirby things, therefore, in the light of the factual disagreement that arose at the trial, it was for Westpac, forensically, to prove from its records or practice, the existence and contents of the instrument of guarantee which it claimed was executed by Mr Gattellaro in November 1985 and upon which it relied to resist the Contracts Review Act defence. This was so although the issue to which that evidence related, being a matter of defence by the Gattellaros, was otherwise one upon which the Gattellaros bore the burden of proof. In the event, Westpac set about trying to prove the existence and content of the guarantee of November 1985 from contemporary records. However, it did so imperfectly. It also relied upon various legal arguments. The reliance on judicial notice was erroneous One legal argument, accepted by the majority of the Court of Appeal, depended upon the doctrine of judicial notice. According to this argument, judicial notice could be taken by the court of the fact that institutions, such as Westpac, "used a standard form guarantee"10. This was the approach that the majority in the Court of Appeal embraced to derive the conclusion that the guarantee executed by Mr Gattellaro contained a clause rendering him liable in the absence of a signature of Mrs Gattellaro as co-surety. I agree with the joint reasons that this conclusion was erroneous11. Whether approached by reference to the applicable language of the Evidence Act 1995 (NSW), s 14412 or by reference to the former principles of the common law, the dissenting view of Priestley JA in the Court of Appeal is to be preferred13. On the face of things, this conclusion vindicates the Gattellaros' appeal to this Court. It would normally require that the appeal be allowed. That order would usually be accompanied by orders that the matter be remitted to the Court of Appeal to hear and determine any remaining issues in the appeal to it consistently with the reasons of this Court. Similarly, it would involve an order that Westpac pay the Gattellaros' costs of the appeal. These were the orders that the Gattellaros sought in their notice of appeal and in their submissions to this Court. In favour of making such orders are two significant considerations. First, this Court is the final appellate and constitutional court of the nation. It does not 10 Gattellaro [2001] NSWCA 76 at [35] per Giles JA, with whom Handley JA agreed. 11 Joint reasons at [15]-[28]. 12 Joint reasons at [17]. 13 Gattellaro [2001] NSWCA 76 at [10]-[12]. Kirby ordinarily involve itself in performing, effectively for the first time, the trial of contested new issues. This is especially so where those issues have not previously been advanced on the pleadings; where they raise questions addressed to the detailed evidence and record of the case (comprising in this appeal three appeal books); and where, ultimately, their resolution is said to depend upon the manner in which the case was fought below; the way it was pleaded; and the location of the legal and forensic burden of proof of establishing disputed facts. The second consideration favouring making the usual orders is that, where this Court, effectively for the first time, decides a contested issue, it deprives a party discontented with its resolution of that issue of the opportunity of further appellate consideration of its determination. Sometimes, even a Court such as this, can err in deciding a matter on a new ground14. Where that happens elsewhere in the Australian judicature, the decision, if wrong, is susceptible to correction, ultimately by this Court. Where it happens in this Court, it is not capable of being corrected, unless it falls within the truly exceptional class of case where this Court will reopen its consideration of a matter that it has decided15. Further considerations that are relevant to the course to be adopted include the rather narrow points of pleading and proof that were argued for Westpac and the consequence that the course urged by Westpac has for depriving the Gattellaros of the costs order that their initiative of appeal would normally merit. This consideration has persuaded the majority of this Court to withhold a costs order in this Court in favour of Westpac although they eventually dismiss the appeal and such a costs order would usually follow such dismissal16. This is small consolation for the Gattellaros who were otherwise justified, by the Court of Appeal's error about judicial notice, in bringing their appeal to this Court. It suggests a departure from normal practice both in the disposal of the appeal and in the provision for its costs. It indicates a measure of ambivalence about the outcome - a feeling that I share but, respectfully, follow to its logical, and usual, conclusion. 14 eg Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd (1980) 144 CLR 300 at 304 (PC). 15 Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684; State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 38, 45-46; Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 302-303; Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 168; De L v Director-General, New South Wales Department of Community Services [No 2] (1997) 190 CLR 207 at 215-217. 16 Joint reasons at [58]-[59]. Kirby An extremely belated reliance on a new contention The majority decided to permit new arguments to be advanced by Westpac, based on its notice of contention. Indeed, the majority has gone further. It has permitted Westpac, in this Court and for the first time, to add a second contention although it was not pleaded in the Court of Appeal in resistance to the Gattellaros' unsuccessful appeal to that Court17. By its notice of motion the respondent sought this Court's leave to rely on an amended ground in its notice of contention. But it was not filed until 18 June 2003. That was one day before the hearing of this appeal. To say the least, this was a last minute attempt by Westpac to rescue the appeal from the looming jaws of defeat. Prior to the amendment, the notice of contention raised only one relevant issue. This was the issue of evidentiary inference. The joint reasons explain why the argument concerning that inference must be rejected18. The motion to amend was opposed by the Gattellaros. For reasons that I will explain, the motion should be dismissed. In this Court, Westpac should be confined to the substantive issues fought and argued at trial and in the Court of Appeal. As the joint reasons correctly state19, it is doubtful that, on remitter to the Court of Appeal, that Court would permit Westpac to raise the new ground upon which it now succeeds in this Court. If this is so, then, by taking the course that the majority favour, this Court effectively alters the character and course of the case. It does so at the last conceivable moment. It does so in a way that would probably not have occurred below. In doing so it adds a third novelty to the two other departures from the usual practice of this Court. With all respect, I disagree with such a turn of events. The proper course is remitter Given the antiquity of the circumstances out of which this litigation arose, the delay in Westpac's prosecution of its claim in the Supreme Court and the consequence of such tardiness for the availability of evidence, written and oral, and the memory of counsel concerning what exactly transpired in earlier proceedings, there are strong reasons for adhering to the usual rules. In the present case, this would require remitter. I do not need to elaborate the consideration of the seemliness of this Court's busying itself, at the death-knock, 17 Joint reasons at [52]-[53]. 18 Joint reasons at [15]-[28]; cf Holloway v McFeeters (1956) 94 CLR 470 at 477. 19 Joint reasons at [58]. Kirby by trying to identify from the pleadings the location of the relevant burden of proof and to resolve subjects never tried below, so as to determine on the record the residual question presented by Westpac's new contention. Issues may be raised in an ultimate court for the first time20. Under the rules of court, this may be done by a respondent to an appeal relying on a notice of contention21. However, normally, at least in civil appeals22, contentions will be confined to questions where the law is clear and is applied to facts that are found, admitted or proved and addressed to an issue raised in the court below23. Rare indeed is the case, at least in a civil appeal, where this Court will embark upon examination of the detailed evidence, and the course of the trial, effectively for the first time24. I remain of the view that I expressed in Dovuro Pty Ltd v Wilkins25, also a case involving civil liability: "As a court of law, this Court should adhere to common law principle. Above all, we should be cautious in assuming the function of a jury, redetermining factual conclusions in a complex case with a lot of evidence, where it is difficult, or impossible, to recapture all of the advantages of the trial." In countless proceedings, this Court has declined the invitations of the parties, in effect, to try residual factual and evidentiary questions although to do so would bring to an end a protracted saga of litigation26. Why should this Court accept such an invitation in this case, where, with all of the resources available to 20 Water Board v Moustakas (1988) 180 CLR 491 at 497; Minister for Immigration and Multicultural Affairs v Singh (2002) 209 CLR 533 at 562 [82]. 21 High Court Rules O 70 r 6(5). 22 Different considerations arise in criminal appeals: Gipp v The Queen (1998) 194 CLR 106 at 116 [23], 154-155 [136]-[138]. 23 O'Brien v Komesaroff (1982) 150 CLR 310 at 319; Coulton v Holcombe (1986) 162 CLR 1 at 8. In cases where a successful party does not seek a retrial, the issue raised is a simple one of fact and the relevant facts are found or admitted, the Court will sometimes determine the outstanding issue: eg Nicol v Allyacht Spars Pty Ltd (1987) 163 CLR 611 at 619, 622. 24 See eg Water Board v Moustakas (1988) 180 CLR 491 at 497. 25 (2003) 77 ALJR 1706 at 1729 [122]; 201 ALR 139 at 170 (footnote omitted). 26 For example Walsh v Law Society of New South Wales (1999) 198 CLR 73 at 99- Kirby Westpac, a substantial banking corporation with access to the best legal advice, it only discovered the key to its success on the very eve of the hearing in this Court27? The cobwebs that have grown over the facts and memories relevant to the just disposition of the residual question propel judges, concerned with substance, to attempt to bring a case such as the present to a speedy and lawful conclusion. These considerations have persuaded the majority to permit the new contention to be added and to decide the appeal upon that basis. Whilst I understand that decision, and the motivation that has led to it, I disagree. Where a case has gone so far, it is desirable, in my view, that it should proceed to judicial orders in the orthodox way. This means remitter to the Court of Appeal28. Remitter should especially be ordered where, as here, serious legal issues arise concerning a very late amendment to the notice of contention upon which Westpac now succeeds. The assessment of the trial on a completely new footing is a course that should be performed, if at all, by the intermediate court. New issues of law are raised, that have not previously been passed upon either by the trial judge or by the Court of Appeal. In my view, they should not be decided by this Court without the benefit of the opinion and analysis of the appellate court of the State in which the trial took place. Liabilities of co-sureties who do not execute a guarantee Much weight is given in the joint reasons to the question of whether the Gattellaros satisfied an evidentiary burden borne by them, in the circumstances of the original pleadings, by making good a contention that they were entitled to the benefit of the law of guarantees expressed in the decision of a single judge of the Supreme Court of New South Wales (Powell J) in Marston v Charles H Griffith & Co Pty Ltd29. The joint reasons adopt a view of the principles of law stated in that decision that leads to the search for the location of the relevant onus of proof, and hence to the record at trial. However, with respect, these are not matters that have ever been explored by the court below. Nor does this Court have the benefit of the opinion of the Court of Appeal on the correctness, scope and application of 27 cf University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 483; 60 ALR 68 at 70-71; cf Multicon Engineering Pty Ltd v Federal Airports Corp (1997) 47 NSWLR 631 at 645-646. 28 Murphy v Overton Investments Pty Ltd [2004] HCA 3 at [70]. 29 (1982) 3 NSWLR 294 at 300-301. Kirby the Marston principle to guide it to the proper resolution of the dispute between Westpac and the Gattellaros. The reasons in Marston conclude with a series of propositions, two of which have been extracted in the joint reasons30. However, in his consideration of the state of legal authority leading to those propositions, Powell J expressed himself as differing from the views stated in the respected text, Rowlatt on Principal and Surety31. Powell J said that "[d]espite the respect which is customarily accorded to Rowlatt", he adhered to an opinion that "the statement of principle contained in the passages [from Rowlatt … was] rather less than clear"32. The issue in Marston is therefore one of legal principle upon which the opinions of a judge and respected text-writers have diverged. Nor is the point of divergence an insignificant one for this case. Neither is it unimportant for the law of guarantees, with respect to the obligations owed to a principal where a co- surety "does not join or after joining is released" from the guarantee obligations in question33. Basic legal principle would therefore appear to support the proposition that where an instrument of guarantee intended to be signed by two sureties, is signed only by one and not by the other, the signatory is entitled to have the instrument "given up to be cancelled, and not merely to have relief to the extent of the contribution which the other surety might have been compelled to pay in his relief"34. If this proposition could be made good, upon full argument, it is one of law. It is not one, as such, that depends upon the proof by the sole signatory of that person's intention or state of mind. In the present case, the legal character of the contest between the Gattellaros and Westpac is accepted in the joint reasons35. At one stage, Westpac's case at trial was that the instrument of guarantee of November 1985 had been signed both by Mr Gattellaro and Mrs Gattellaro. Westpac's claim in written submissions to this Court was that it had never been their argument that both of the Gattellaros had signed the 30 Joint reasons at [31]. 31 3rd ed (1936) at 281-284; 4th ed (1982) at 180-182. 32 Marston (1982) 3 NSWLR 294 at 300. 33 Rowlatt cited in Marston (1982) 3 NSWLR 294 at 299. 34 Rowlatt cited in Marston (1982) 3 NSWLR 294 at 299, referring to Wood VC in Evans v Bremridge (1855) 2 K & J 174 at 185 [69 ER 741 at 745-746]. 35 Joint reasons at [29]-[37]. Kirby guarantee. However, Westpac's Notice of Contention in the Court of Appeal, in par 1(b) claimed that "the [a]ppellants, or alternatively … the First Appellant" executed the guarantee. It therefore appears that Westpac was still trying to establish this fact in the appeal, but abandoned its attempt in this Court. Having regard to the fact that the trial judge concluded that Mrs Gattellaro had not signed the guarantee and that the Court of Appeal was satisfied that only Mr Gattellaro had signed the guarantee, this was a prudent if belated course to adopt. Because Mrs Gattellaro, in her oral evidence, had resisted the attempt of Westpac to suggest that she also had signed it, the primary judge's conclusion about her conduct must have depended, to some extent, upon his Honour's assessment of her veracity as a witness. Indeed, that conclusion is the more significant because of reservations which the primary judge expressed about the general acceptability of the Gattellaros' evidence36. The finding in relation to Mrs Gattellaro's actions therefore appeared impregnable against appellate disturbance37. It provided the factual foundation upon which the application of the law of guarantees has now to be applied to the case. In the Court of Appeal, Giles JA took judicial notice of the terms of cl 20 of a contemporaneous but different contract of guarantee38. Such evidentiary matters would have been superfluous if issue had been joined at trial only on whether Mr Gattellaro, alone, had signed the guarantee. It was clear from the diary entries produced by Westpac that the bank always envisaged that both Mr and Mrs Gattellaro were to give the 1985 guarantees39. If the Marston principle accurately states the common law, it enlivens a question of whether the signature of each of the sureties was required as a condition to the effectiveness of the promise of the other in the joint contract of guarantee that Westpac propounded. That is a question of law upon which views have differed. 36 Westpac Banking Corporation v Gattellaro [2000] NSWSC 775 at [64], [66]-[67], [70] and [73]; see also Gattellaro [2001] NSWCA 76 at [4]. 37 See Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at 1608 [52]-[53], 1614-1616 [90]-[100]; 200 ALR 447 at 461, 470-473 where the authorities governing appellate disturbance of credibility-based findings are collected. 38 The guarantee given by Mr and Mrs Falcomata in May 1986 securing the indebtedness of the Gattellaros to Westpac. See joint reasons at [13]. 39 The trial judge referred to an internal memo of Westpac which provided that "Mr Gattellaro has signed … Guarantee to support Company advances. Mrs Gattellaro is to sign this week." Westpac Banking Corporation v Gattellaro [2000] NSWSC 775 at [37] (emphasis added). Kirby The operation of a principle of law If a true understanding of the law considered in Marston is that joint signatures to the guarantee, in the case of Mr and Mrs Gattellaro was necessary for the legal validity of the 1985 guarantee, the absence of Mrs Gattellaro's signature was fatal to Westpac's strategy in the trial. Moreover, if, upon a full examination of the applicable law there is an evidentiary presumption that, in the absence of acceptable evidence to the contrary, the execution by both sureties to a joint guarantee constitutes a condition precedent to its validity, Mr Gattellaro was released by the failure of Westpac to establish that it had secured the signature of Mrs Gattellaro. Upon this footing both Mr and Mrs Gattellaro would have had an arguable defence at law to Westpac's action on the 1985 guarantee. It would follow that, by assuming personal liability to Westpac in the 1986 mortgage for Falgat's debts, the Gattellaros had indeed altered their position to their disadvantage. And this was the evidentiary element they needed to establish their defence under the Contracts Review Act. If the foregoing analysis accurately describes this case, then the respective positions of the Gattellaros and Westpac are not decided by the state of the pleadings or the burden of proof which the respective parties bore to establish their competing claims. It was determined by the application of the law of guarantees to the evidence as found by the primary judge. Given the way the issue has arisen, this Court does not have the advantage either of an analysis of the applicable principles of law nor an examination of the application of that law to the facts of this case as found at trial. Nor do the parties, Westpac as well as the Gattellaros, have the opportunity to challenge any determination on either of these points by a further appeal. Instead, in the manner of a trial court, this Court proceeds on the assumption of the correctness of the principles stated by Powell J and upon views concerning the respective obligations of the parties based on those principles and on the state of pleadings which may, or may not, accurately reflect the ultimate way in which the trial was conducted. Because I accept the importance of the issues raised in Marston for the law to be applied to the rights of Westpac and obligations of the Gattellaros (and because those principles are on any view significant for legal doctrine concerning the rights and obligations of parties to joint guarantees) I am confirmed in my opinion that the correct course is to remit the matter to the Court of Appeal. Adopting this course has three clear advantages. First, by order of this Court it corrects the error of the Court of Appeal on the issue of judicial notice. It also holds that the same outcome cannot be reached, in the evidence, on the basis of an available inference. Secondly, it withholds any alteration to the position of the parties which flows from the belated attempt of Westpac, in this Court, to add a new contention for the first time with significant consequences both for the costs and the outcome. Thirdly, it adheres to the normal rule that this Court does not accept the obligation of conducting a trial upon points such as Kirby now determine this appeal40. Moreover, before it accepts and applies important principles of law, giving them the cachet of the endorsement of this Court, this Court ordinarily requires the opinion of an intermediate appellate court addressed to the subject. This is a particularly wise course where the point of law is not without commercial importance, is the subject of conflicting legal opinions and has not previously been passed upon either by the primary judge or by the Court of Appeal41. In correcting the error of the Court of Appeal when it sought to resolve the case by reference to an inapplicable principle of judicial notice, this Court should not itself proceed in an unconventional way. Least of all should it do so when the decision and then endorses have significant that consequences for the parties and for the exposition of the relevant law, hereafter binding throughout Australia. There must indeed be an end to litigation. But it is important that such end should be attained by procedures that avoid injustice to the parties and do not derogate from the larger obligations of this Court to the orderly development of legal doctrine. the principles Consideration of the new point in the proper place Generally speaking, I am sympathetic, whilst proceedings remain alive in the judicature, to a relatively flexible approach to the raising of new issues where that is just, particularly when a point of law is discovered at a late stage42. By their conduct of proceedings, parties cannot oblige a court to mis-apply the law. However, by the way they have acted, parties can sometimes disentitle themselves from raising a new point, even if it is purely one of law43. Considerations of natural justice and procedural fairness govern the response of 40 Dainford Ltd v Smith (1985) 155 CLR 342 at 366; Walsh v Law Society of New South Wales (1999) 198 CLR 73 at 100 [75], 109 [110] per McHugh, Kirby and 41 Neat Domestic Trading Pty Ltd v AWB Ltd (2003) 77 ALJR 1263 at 1280 [92]; 198 ALR 179 at 201. 42 cf A Solicitor v The Council of the Law Society of New South Wales [2004] HCA 1 at [39]-[41] where the facts were uncontested and fully litigated in the Supreme Court, where the applicable law was clear and settled and the parties joined in asking this Court to give effect to its own conclusions. 43 Roberts v Bass (2002) 212 CLR 1 at 54-55 [143]-[144]; British American Tobacco Australia Ltd v Western Australia (2003) 77 ALJR 1566 at 1586 [106]; 200 ALR Kirby appellate courts to such issues rather than the rigid rules of pleading and practice applied in earlier times44. In the present case, I would certainly not exclude Westpac from its attempt to rely upon a completely new contention. However, considerations of procedural fairness suggest to me that that attempt should not enjoy larger prospects because raised for the first time in this Court. It should be left to Westpac to seek leave to rely on the new point in the court where it ought to have been raised in the first place: in the Court of Appeal of New South Wales. Not only is this fairer to the parties, avoiding a change in the character of the appeal at the last moment and alteration of the normal disposition of costs after so many years of litigation. It is also one more respectful of the constitutional role of the Supreme Court of the State and the functions of its appellate court in cases of such a kind. Application of the strict law of guarantees My strong preference would therefore be for this Court to determine the content of the governing rule for joint sureties after that question had been fully litigated at trial, or at least fully considered in a court of appeal. If forced without these normal advantages to decide the question in the peculiar circumstances of this case, I would express the following conclusion. If a contract of guarantee is to be signed by co-sureties, so that a principal debt will be secured in that way then, unless the intended surety who has executed the guarantee consents to the other co-surety who has not executed the guarantee not thereafter executing it, the intended surety never becomes liable under the guarantee. This is so despite the execution of it by one party alone. If this is a rule of law, as I presently think it is, the failure of Westpac to obtain the signature to the personal guarantee of Mrs Gattellaro (as found by the primary judge) released Mr Gattellaro of any obligation assumed under the guarantee45. At least it did so in the absence of a clear term of the contract of guarantee (not proved by Westpac) rendering Mr Gattellaro separately and individually liable. On this footing, Westpac failed to prove that there was a personal guarantee binding Mr and Mrs Gattellaro in respect of Falgat's debts to the bank on the basis of the propounded guarantee of November 1985. It follows that, when in June 1986, Westpac refinanced the debt owed by the Gattellaros 44 Coulton v Holcombe (1986) 162 CLR 1 at 8; Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 155, 169-172; Jackamarra v Krakouer (1998) 195 CLR 45 cf Walker v Bowry (1924) 35 CLR 48 at 54, 58; Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643 at 655, 657-658. Kirby and Falgat and procured from the Gattellaros a mortgage over their home to secure the advance made by the bank for such refinancing, the Gattellaros were not at that time shown to have been personally liable for Falgat's debts. They therefore changed their financial obligations significantly to their disadvantage. They did so in circumstances giving rise to an arguable defence under the Contracts Review Act. At the very least, as Priestley JA pointed out in the Court of Appeal46, Mrs Gattellaro suffered an arguable disadvantage. It would follow that the primary judge erred in rejecting the foundation for the argument based on the Contracts Review Act. Upon this view, despite the great delay, it would be necessary, if the subject is to be addressed, for the issue to be retried. This is appropriate because an error of law has occurred based upon mistaken findings as to the relevant facts. That error was occasioned by the failure at trial to apply the strict law governing the liability of sureties under the law of guarantees in determining a question relevant to the defence of the Gattellaros47. In Australian law, the surety is a favoured debtor, viewed with solicitude both at law and in equity48. Many are the creditors that have failed to recover from a surety because of the doctrine of strictissimi juris49. The results may not always seem just or sensible. However, they represent settled law in this Court50. In this appeal, this Court should apply that law. Orders The motion of the respondent to amend its notice of contention should be dismissed. The appeal should be allowed. The judgment of the Court of Appeal of the Supreme Court of New South Wales should be set aside. In lieu thereof, the proceedings should be remitted to that Court to be determined conformably with the conclusions of this Court on the issues of judicial notice and inference. It should be for the Court of Appeal to decide whether Westpac should have leave to rely upon the amended ground of its notice of contention. Westpac should pay the appellants' costs in this Court. The costs of the proceedings in the 46 Gattellaro [2001] NSWCA 76 at [16]. 47 See eg Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 at 561; cf Chan v Cresdon Pty Ltd (1989) 168 CLR 242 at 256. 48 Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689 at 693-694. 49 Chan (1989) 168 CLR 242 at 256; Tricontinental (1990) 21 NSWLR 680 at 710, 50 eg Ankar (1987) 162 CLR 549 at 560-562. Kirby Court of Appeal should be decided by that Court in the light of the ultimate outcome of those proceedings. |
HIGH COURT OF AUSTRALIA ANDAR TRANSPORT PTY LTD APPELLANT AND BRAMBLES LIMITED RESPONDENT Andar Transport Pty Ltd v Brambles Limited [2004] HCA 28 15 June 2004 1. Appeal allowed with costs. ORDER 2. Set aside the orders of the Court of Appeal of the Supreme Court of Victoria dated 21 November 2002. 3. Remit the matter to the Court of Appeal of the Supreme Court of Victoria for further consideration. 4. Costs of the whole of the proceedings in the Court of Appeal of the Supreme Court of Victoria to be for that Court to determine. On appeal from the Supreme Court of Victoria Representation: D F Jackson QC with P H Solomon for the appellant (instructed by Wisewoulds) S G Finch SC with D J Christie for the respondent (instructed by Allens Arthur Robinson) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Andar Transport Pty Ltd v Brambles Limited Employer and employee – Duty of care by employer to employee – Common law duty – Safe system of work – Relevance of corporate structure – Where employee is director of employer – Where employee responsible for day-to-day operation of the company – Where employee injured due to unsafe system of work – Where employee in part responsible for devising system of work – Whether employer liable to employee for breach of duty committed by employee in his capacity as director of employer. Employer and employee – Duty of care by employer to employee – Common law duty – Safe system of work – Meaning of "safe system of work" – Where existing system of work had been in place for many years – Whether employer took reasonable steps in ensuring that a safe system of work was created and maintained – Whether length of time in which system of work has been used is relevant in assessing whether system is safe. Contract – Construction – Indemnity clauses – Whether principles governing construction of contracts of guarantee also govern the construction of contracts of indemnity – Whether indemnity clause to be construed in favour of the indemnifier. Tort – Joint or several tortfeasors – Contribution between tortfeasors – Wrongs Act 1958 (Vic), ss 23B, 24(2) – Where appellant liable as employer – Where injured employee responsible for breach of duty by appellant – Where damages previously reduced to account for contributory negligence of employee – Whether previous apportionment based on contributory negligence relevant in assessing contribution under statute – Whether previous apportionment based on contributory negligence is ground for exemption from contribution under s 24(2). Words and phrases – "safe system of work". Wrongs Act 1958 (Vic), ss 23B, 24(2). Corporations Act 2001 (Cth), s 124. GLEESON CJ, McHUGH, GUMMOW, HAYNE AND HEYDON JJ. This is an appeal from the orders of the Victorian Court of Appeal1 allowing in part an appeal from the jury verdict and consequential orders of the County Court of Victoria. The issues that arise in this appeal fall into two categories: the construction of a contract of indemnity, and the operation of Pt IV of the Wrongs Act 1958 (Vic) ("the Wrongs Act"). The facts The respondent, Brambles Limited ("Brambles"), provides laundry delivery services to a number of hospitals. Those services involve, amongst other things, the delivery by truck of large trolleys of clean linen. Since 1990, it has been the practice of Brambles to contract out its laundry delivery services to corporations that, in turn, employ drivers to load, deliver and unload the linen as directed by Brambles. Mr Daryl Wail was one such driver. He was employed by the appellant, Andar Transport Pty Ltd ("Andar"). Prior to the change in business practice adopted by Brambles, Mr Wail had been employed directly by Brambles to load, deliver and unload linen trolleys. Mr Wail was also one of two directors of Andar and one of two shareholders in the company. It will be necessary to say something further regarding the corporate structure of Andar later in these reasons. On 26 July 1993, Mr Wail loaded a truck with 22 trolleys of clean linen at Brambles' laundry premises in Box Hill, Victoria and drove to Cotham Private Hospital in Kew. After reversing the truck into a driveway adjacent to the hospital's delivery bay, Mr Wail opened the rear of the truck and lowered the hydraulic tailgate. He then attempted to remove one of the trolleys. However, that trolley was jammed against another trolley and, in attempting to pull it free, Mr Wail felt a searing pain across his lower back. It was subsequently determined that, as a result of this incident, the lumbosacral disc in Mr Wail's lower back had been damaged. The litigation By a writ and statement of claim filed on 17 June 1998 in the County Court of Victoria, Mr Wail commenced proceedings against Brambles alleging 1 Brambles Ltd v Wail (2002) 5 VR 169. negligence. The particulars of negligence pleaded by Mr Wail included a failure by Brambles to ensure that the trolleys could be manoeuvred without risk of injury and a failure by Brambles to ensure that the trolleys could be manoeuvred having regard to their excessive weight when fully laden. On 22 March 2000, the jury found in favour of Mr Wail. Mr Wail was awarded general damages of $100,000 and pecuniary loss damages of $315,000. After a subtraction of $104,411.60 pursuant to s 135A of the Accident Compensation Act 1985 (Vic), the balance of damages was reduced by 35 per cent to take account of Mr Wail's contributory negligence. As a result, the trial judge entered judgment for Mr Wail in the amount of $201,822.46 with damages by way of interest of $2,000 and costs to be paid on a "solicitor/client" basis. The findings of the jury, and the consequential orders of the trial judge in this respect, are not the subject of an appeal to this Court. However, it will be necessary further to consider the basis of the jury's determination as to the negligence of Brambles later in these reasons. By a third party notice deemed to have been served on 7 June, Brambles had joined Andar as a party to the County Court proceedings. It had sought an indemnity from Andar in respect of any damages which Brambles might be ordered to pay to Mr Wail or, in the alternative, contribution by reference to Andar's own alleged negligence as the employer of Mr Wail. By agreement between the parties, the issues arising on the third party notice were heard by Judge Kent sitting without a jury. On 6 June 2001, Judge Kent dismissed Brambles' claims against Andar. Brambles appealed against the jury verdict and the orders of Judge Kent in the principal proceeding and the third party proceeding2. On 27 September 2002, the Court of Appeal (Winneke P, Charles and Batt JJA) dismissed the appeal in respect of the former, but allowed the appeal in respect of the latter. The Court held that a contractual agreement said to be in force between Brambles and Andar obliged Andar to indemnify Brambles against all sums payable by Brambles in the principal proceeding. Although the Court also concluded that Brambles was entitled to contribution pursuant to s 23B of the Wrongs Act, the existence of the indemnity made it unnecessary to consider further the contribution claim. Andar now appeals to this Court. 2 Brambles Ltd v Wail (2002) 5 VR 169. Two primary questions arise for consideration: first, whether the Court of Appeal erred in concluding that Andar was contractually obliged to indemnify Brambles for liability incurred as a result of Mr Wail's injury; and, secondly, whether the Court of Appeal erred in concluding that a claim for contribution by Brambles against Andar pursuant to the Wrongs Act was otherwise available. The latter question in turn requires consideration of the circumstance that the person who suffered damage in the present case (Mr Wail) was a director of the company said to be jointly liable in respect of that damage (Andar) and also was responsible for the day-to-day operations of that company in respect of its laundry delivery operations. As will appear from these reasons, the first question should be answered in the affirmative and the second in the negative. The result is that the appeal should be allowed, the orders of the Court of Appeal should be set aside, and the matter should be remitted to that Court for calculation of the amount of contribution to which Brambles is entitled. Contractual relationship is entitled Before turning to the indemnity clause said to apply in the present case, it is first convenient to consider the agreement in which the clause arises. That "INDEPENDENT TRUCKING CONTRACTOR agreement AGREEMENT" ("the Agreement"). The parties to the Agreement are identified as Princes Fabricare Services ("Princes Services") and Andar. Princes Services is a division of Brambles and, for present purposes, it is convenient to refer to it as Brambles when construing the Agreement. Brambles did not dispute that the Agreement is a standard form document prepared by solicitors acting on its behalf. That, as will appear, is a significant circumstance for questions of construction of the document. The Agreement is dated 28 March 1990. Pursuant to cl 1 of the Agreement, when read with the definition of "Term" on the attestation page, the Agreement is limited to a period of three years from the commencement date of 4 April 1990. During argument before this Court, and before the courts below, submissions were made concerning the extent to which the terms of the Agreement continued in force after the conclusion of the three year period. However, as will appear from these reasons, a proper construction of the indemnity clauses relied upon by Brambles makes it unnecessary to determine that question. Clause 1 of the Agreement sets out the principal obligation imposed upon Andar. By virtue of that clause, Andar is obliged to make available to Brambles a specified truck for use in connection with Brambles' laundry delivery business. Clause 2 regulates the operation of the truck. Amongst other things, Andar is required to procure and retain the services of a "suitably qualified driver" to operate the truck (cl 2.1), and to ensure that the truck is painted with the colours and insignia of Brambles (cl 2.2). By virtue of cl 2.3, Andar is required to: "procure the Driver to undertake and complete a course of training to be conducted by [Brambles] at the expense of [Andar] in relation to the operational standards procedures and requirements of [Brambles] in relation to the Delivery Round to be completed by the Vehicle". "Driver" is defined in Item 7 of the Schedule to the Agreement as "the person named in the Agreement or any other person nominated by [Andar] who has been trained and approved by [Brambles]". Mr Wail is so named on the attestation page of the Agreement. "Delivery Round" is defined in the Schedule to mean all current and future customers of Brambles' laundry business located within the geographical area assigned to Andar in the Agreement. Clause 3 of the Agreement is headed "Principal Obligations of [Andar]". By virtue of cl 3.4, Andar is obliged to procure "prompt compliance" by Mr Wail "with the conditions and provisions of any plans and schemes formulated by [Brambles]". Andar is further required to repair, maintain and fit out the vehicle in accordance with Brambles' instructions, plans and/or specifications and to obtain and install any fixtures, fittings and equipment in the vehicle as may be prescribed by Brambles (cl 3.11). In this way, the Agreement seeks to balance a right to supervise the operations and conduct of the truck and driver with the competing objective of isolating the truck drivers from Brambles' employment structure. In this context, cl 9 is relevant. That clause is headed "Direction and Control" and provides that: "[Mr Wail] shall not form part of [Brambles'] organisation and [Mr Wail] and any other employee nominee or agent of [Andar] shall not be under the direction or control of [Brambles] but [Brambles] shall have the right to notify [Andar] that it is dissatisfied with the manner in which the Delivery Round is being completed and in that event [Andar] (if required by [Brambles]) may substitute another Driver." It is now convenient to consider the extent and scope of the indemnity sought to be relied upon by Brambles in this appeal. Indemnity provisions Mention should first be made of cl 4 of the Agreement. That clause is headed "Further Obligations of [Andar]". Clause 4.6 provides that Andar agrees: "[t]o assume sole and entire responsibility for and indemnify [Brambles] against all claims liabilities losses expenses and damages arising from operation of the Vehicle by reason of any happening not attributable to the wilful negligent or malicious act or omission of [Brambles]". A second right of indemnity is contained in cl 8 of the Agreement. It is this clause, and, in particular, cll 8.2.2 and 8.2.3, upon which Brambles seeks to rely in order to ground the liability of Andar to indemnify Brambles for the judgment entered against it in respect of Mr Wail's injury. It is convenient to set out cl 8 in full: "[Andar] shall – 8.1 Conduct the Delivery Round at its sole risk and releases [Brambles] from all claims and demands of every kind and from all liabilities of every kind which may arise in respect of any accident loss or damage to property or death of or injury to any person of any nature or kind in the conduct of the Delivery Round by [Andar]. Indemnify [Brambles] from and against all actions, claims, demands, losses, damages, proceedings, compensation, costs, charges and expenses for which [Brambles] shall or may be or become liable whether during or after the currency of the Agreement and any variation renewal or extension in respect of or arising from – loss damage or injury from any cause to property or person occasioned or contributed to by the neglect or default of [Andar] to fully, duly, punctually and properly pay, observe and perform the obligations, covenants, terms and conditions contained in the Agreement and on the part of [Andar] to be paid, observed and performed. loss, damage, injury or accidental death from any cause to property or person caused or contributed to by the conduct of the Delivery Round by [Andar]. loss, damage, injury or accidental death from any cause to property or person occasioned or contributed to by any act, omission, neglect or breach or default of [Andar]. [N]otwithstanding that any of such actions, claims, demands, losses, damages, proceedings, compensation, cost, charges, and expenses shall have resulted from any act or thing which [Andar] may be authorised or obliged to do under the Agreement and notwithstanding that any time waiver or other indulgence has been given to [Andar] in respect of any obligation of [Andar] under the Agreement AND PROVIDED ALWAYS it is agreed and declared that the obligations of [Andar] under this Clause shall continue after variation or termination of the Agreement and any renewal or extension in respect of any act, deed, matter or thing happening before such termination." The Court of Appeal concluded that cll 8.2.2 and 8.2.3 applied to the injury incurred by Mr Wail. According to their Honours3: "In their plain and ordinary meaning both clauses are apt to cover the occurrence of the injury to Wail. His injury clearly arose out of and was contributed to by the conduct of the delivery round, the injury having been in part caused by Andar's breach of its obligation to provide a safe system of work. We see no justification for reading down the clauses so as to exclude a situation in which Brambles' negligence was partly responsible for the occurrence of the injury." Principles of construction The proper construction of cll 8.2.2 and 8.2.3 cannot be undertaken without reference to the principles of construction applicable to contractual indemnities. The starting-point is the decision of this Court in Ankar Pty Ltd v National Westminster Finance (Australia) Ltd4. In that case, the Court considered whether two clauses of a guarantee operated as conditions the breach of which would discharge the surety from liability. In answering that question in the affirmative, Mason ACJ, Wilson, Brennan and Dawson JJ said5: "At law, as in equity, the traditional view is that the liability of the surety is strictissimi juris and that ambiguous contractual provisions should be (2002) 5 VR 169 at 191-192. (1987) 162 CLR 549. (1987) 162 CLR 549 at 561. construed in favour of the surety. The doctrine of strictissimi juris provides a counterpoise to the law's preference for a construction that reads a provision otherwise than as a condition. A doubt as to the status of a provision in a guarantee should therefore be resolved in favour of the surety". In Chan v Cresdon Pty Ltd6, Mason CJ, Brennan, Deane and McHugh JJ described the statement in Ankar set out above as evidencing a "settled principle governing the interpretation of contracts of guarantee". It may be noted that the conclusions reached in Ankar and Chan as to the principles to be applied to the construction of contracts of guarantee are binding, but did not enjoy unanimous support in the early case law. In Mason v Pritchard7, the Court of King's Bench was reported to have held that the terms of a guarantee "were to be taken as strongly against the party giving the guarantie as the sense of them would admit of". That approach was disputed in Nicholson v Paget8. There, Bayley B said9: "[T]his is a contract of guarantie, which is a contract of a peculiar description; for it is not a contract which a party is entering into for the payment of his own debt, or on his own behalf; but it is a contract which he is entering into for a third person: and we think that it is the duty of the party who takes such a security to see that it is couched in such words as that the party so giving it may distinctly understand to what extent he is binding himself." The approach adopted by Bayley B echoed the decision of the Supreme Court of the United States in Russell v Clarke10. There, Marshall CJ had remarked that the law should subject a person having no interest in a transaction to pay the debt of another only when the person's undertaking manifests a clear intention to bind (1989) 168 CLR 242 at 256. (1810) 12 East 227 at 228 [104 ER 89 at 89]. (1832) 1 C & M 48 [149 ER 309]. (1832) 1 C & M 48 at 52 [149 ER 309 at 311]. 10 7 Cranch 69 (1812). himself for that debt. In his Honour's view, "[w]ords of doubtful import ought not, it is conceived, to receive that construction"11. However, by 1840, the balance of authority had shifted in favour of the approach adopted in Mason. In Mayer v Isaac, Alderson B, with whom Gurney, Rolfe and Parke BB agreed, observed12: "There is a considerable difficulty in reconciling all the cases on this subject, arising principally from their not being at one as to the principle of decision: some laying it down that a liberal construction ought to be put upon the instrument in favour of the person giving the guarantee, as in Nicholson v Paget; others that it ought to be strictly construed, as in Mason v Pritchard. Undoubtedly, the generally received principle of law is, that the party who makes any instrument should take care so to express the amount of his own liability, as that he may not be bound beyond what it was his intention that he should be; and, on the other hand, that the party who receives the instrument, and parts with his goods on the faith of it should rather have a construction put upon it in his favour, because the words of the instrument are not his, but those of the other party. And therefore, if I were obliged to choose between the two conflicting principles which have been laid down on this subject, I should rather be disposed to agree with that given in Mason v Pritchard, than with the opinion of Bayley B, in Nicholson v Paget." Writing in 1897, de Colyar, after referring to Mason, Nicholson and Mayer, summarised the position as follows13: "The result of the authorities, therefore, seems to be, that in the construction of guarantees it is a general rule that a guarantee is, like any contract to be construed against the contractor and in favour of the person receiving it." 11 7 Cranch 69 at 92 (1812). 12 (1840) 6 M & W 605 at 612 [151 ER 554 at 557]. 13 A Treatise on the Law of Guarantees and of Principal & Surety, 3rd ed (1897) at 200-201. See also Stearns, The Law of Suretyship, 2nd ed (1915) at 18-20. However, although the conclusion reached by de Colyar continues to find support in England14, it must be read in light of the decision of the Judicial Committee, sitting on appeal from the Court of Appeal of New South Wales, in Coghlan v S H Lock (Australia) Ltd15. In that case, decided very shortly before Ankar, Lord Oliver of Aylmerton referred to "certain well-known principles of construction in relation to guarantees" and observed16: "Such a document falls to be construed strictly; it is to be read contra proferentem; and, in case of ambiguity, it is to be construed in favour of the surety." In any event, it should be noted that the rationale for the approach adopted in Mayer appears to lie in the circumstance that the guarantee there in question was prepared and drafted by the guarantor; hence the statement by Alderson B that "the party who makes any instrument should take care so to express the amount of his own liability"17. Such reasoning can have no application in circumstances where, as here, the relevant instrument was drafted by a party other than the guarantor or indemnifier18. In Ankar, reference was also made to a distinction then accepted in the United States between the construction of guarantees in which the surety was "compensated" and those in which the surety was not. Mason ACJ, Wilson, Brennan and Dawson JJ observed19: 14 Moss and Marks, Rowlatt on Principal and Surety, 5th ed (1999) at 44; cf Andrews and Millett, Law of Guarantees, 3rd ed (2000) at 70-71. 15 (1987) 8 NSWLR 88. 16 (1987) 8 NSWLR 88 at 92; cf Tam Wing Chuen v Bank of Credit and Commerce Hong Kong Ltd [1996] 2 BCLC 69 at 77 (PC). 17 (1840) 6 M & W 605 at 612 [151 ER 554 at 557]. 18 See also Halford v Price (1960) 105 CLR 23 at 30, 34, 40, 41 (an insurance policy case); Davis v Commissioner for Main Roads (1968) 117 CLR 529 at 534 (a contract of indemnity case). 19 (1987) 162 CLR 549 at 560. "In the United States the rule of strict construction, though applied in favour of sureties who receive no reward, is not applied to a compensated surety, ie, a surety for reward. On the contrary the suretyship contract is construed against the compensated surety." Their Honours referred to the decision of the Supreme Court of the United States in Chapman v Hoage. In that case, Stone J, speaking for the Court, said20: "One who engages in the business of insurance for compensation may properly be held more rigidly to his obligation to indemnify the insured than one whose suretyship is an undertaking uncompensated and casual." In Ankar, this Court declined to adopt the distinction in the United States cases. No party in the present case has sought to dispute Ankar. Moreover, in any consideration of the law in the United States it is important to note that the mere circumstance that a surety undertakes its obligations for consideration or profit does not automatically result in the characterisation of that surety as "compensated"21. Rather, the expression "compensated surety" appears to be directed toward corporations whose regular business is the writing of surety agreements and who, as a result, are able to assess the risk involved under each agreement and charge compensatory premiums accordingly22. So much was made clear by the Restatement of the Law of Security promulgated in 1941. This defined the expression to mean23: "[A] person who engages in the business of executing surety contracts for a compensation called a premium, which is determined by a computation of risks on an actuarial basis." Other sureties, whether strictly gratuitous or whether receiving some pecuniary advantage, whose surety contracts were occasional and incidental to other 20 296 US 526 at 531 (1936). 21 Bank of Nova Scotia v St Croix Drive-In Theatre Inc 728 F 2d 177 at 181 (1984). 22 Bank of Nova Scotia v St Croix Drive-In Theatre Inc 728 F 2d 177 at 181 (1984); Stearns, The Law of Suretyship, 5th ed (1951) at 89-92; Arnold, "The Compensated Surety", (1926) 26 Columbia Law Review 171 at 172-173. 23 §82, comment (i). business, did not fall within the definition of a "compensated surety"24. It follows that the present case falls outside the approach adopted in the United States with respect to compensated sureties. In any event, it may be significant that the recent Restatement of the Law of Suretyship and Guaranty, promulgated since Ankar was decided, no longer distinguishes between compensated and uncompensated sureties25. The result appears to be that, in jurisdictions which apply the Restatement, guarantees will no longer be construed in favour of an uncompensated surety in the event of ambiguity26. That circumstance may be a further example of the concern in the United States, identified but rejected in Ankar, that the law not be over-zealous in its protection of sureties27. It is, however, unnecessary further to consider the United States position given the reasoning in Ankar and the position of the parties in the present appeal. This case concerns not a guarantee but an indemnity: guarantee provisions such as those considered in Ankar and indemnity clauses such as those at issue in the present case differ in form and effect. In Sunbird Plaza Pty Ltd v "Discussion of the question must begin with the proposition, established by the cases on s 4 of the Statute of Frauds 1677 (UK) that a contract of guarantee is, subject to any qualifications made by the particular instrument, a collateral contract to answer for the debt, default or miscarriage of another who is or is contemplated to be or to become liable to the person to whom the guarantee is given. Such a promise was required by s 4 of the Statute of Frauds to be evidenced in writing, unlike a contract of indemnity, which stands outside the statutory requirement. An indemnity is a promise by the promisor that he will keep the promisee 24 §82, comment (i). 25 See, eg, §14, comment (c) with §49, comment (b). 26 cf Corpus Juris Secundum, (1987), vol 72 at 232. 27 See Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 at 560. 28 (1988) 166 CLR 245 at 254. harmless against loss as a result of entering into a transaction with a third party." (footnotes omitted) However, notwithstanding the differences in the operation of guarantees and indemnities, both are designed to satisfy a liability owed by someone other than the guarantor or indemnifier to a third person. The principles adopted in Ankar, and applied in Chan, are therefore relevant to the construction of Conclusions as to construction Before this Court, Andar submits that cll 8.2.2 and 8.2.3 are limited to the indemnification of Brambles against any vicarious liability which Brambles might incur against third parties. Such a construction would, if adopted, prevent recourse to the clauses in respect of injuries suffered by employees of Andar such as Mr Wail. On their face, neither cl 8.2.2 nor cl 8.2.3 expressly provides that liability arising on the part of Brambles as a result of injuries suffered to employees of Andar falls within the terms of the indemnity. That omission is not surprising. As noted earlier in these reasons, one of the primary concerns of the Agreement is to ensure that, to outside observers, Brambles appears to be the sole entity involved in the provision of the relevant laundry services. In this way, the Agreement may be seen as an attempt to minimise, as far as is possible, the practical effects of the change in business practice embarked upon by Brambles when it required employees such as Mr Wail to be employed by independent corporations. The obligation upon Andar to paint the vehicle used by Mr Wail with the Brambles livery and name is a practical example of this desire to present to the public at large a seamless delivery operation. The possibility of a suit against Brambles premised upon vicarious liability was, in these circumstances, a distinct possibility. There are additional reasons for adopting Andar's proposed construction of the indemnity. With respect to cl 8.2.2, the indemnity is limited to liability 29 See Davis v Commissioner for Main Roads (1968) 117 CLR 529 at 534, 537; Smith v South Wales Switchgear Co Ltd [1978] 1 WLR 165; [1978] 1 All ER 18; Greenwell v Matthew Hall Pty Ltd (No 2) (1982) 31 SASR 548. See also Andrews and Millett, Law of Guarantees, 3rd ed (2000) at 73; O'Donovan and Phillips, The Modern Contract of Guarantee, Eng ed (2003) at 258-259. arising in connection with the "conduct of the Delivery Round by [Andar]". As noted earlier in these reasons, the effect of cl 2.1 of the Agreement was that the Delivery Round could only be "conducted" by Andar through a nominated driver. In the absence of an express provision to the contrary, it is unlikely that the indemnity contained in cl 8 extends to liability arising in respect of injuries suffered by that nominated driver as a result of the conduct of the Delivery Round by that person. With respect to cl 8.2.3, the phrase "injury … from any cause to property or person occasioned or contributed to by any act, omission, neglect or breach or default of [Andar]" is critical. That expression contains two elements: first, an injury suffered by a "person" and, secondly, a requirement that the injury be occasioned, or contributed to, by the conduct of Andar. In the context of the Agreement as a whole, the latter element required the involvement of Mr Wail as driver. The structure of the clause therefore suggests that the person mentioned in the first element is a person other than the person necessarily encompassed within the second. This construction of cll 8.2.2 and 8.2.3 has the advantage of operating consistently with cl 4.6. That clause provides for an indemnity granted by Andar in favour of Brambles which does not extend to liabilities arising from the operation of the truck which are attributable to the negligent acts or omissions of Brambles. The liability for which Brambles now seeks an indemnity clearly falls within that limitation. Finally, to the extent that cll 8.2.2 and 8.2.3 remain ambiguous, the principles of construction outlined earlier in these reasons require the provisions to be construed in favour of Andar. Accordingly, cll 8.2.2 and 8.2.3 do not oblige Andar to indemnify Brambles in respect of liability arising as a result of Mr Wail's injury. That conclusion makes it unnecessary to consider the extent to which the terms of the Agreement continued in force after their formal expiry on 4 April 1993. The Wrongs Act Part IV of the Wrongs Act (ss 23A-24AD) establishes a statutory right to contribution. The history and scope of Pt IV was recently discussed by this Court in Alexander v Perpetual Trustees WA Ltd30. 30 (2004) 78 ALJR 411; 204 ALR 417. Section 23B of the Wrongs Act is headed "Entitlement to contribution". Sub-section (1) thereof provides that: "Subject to the following provisions of this section, a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with the first-mentioned person or otherwise)." (emphasis added) Section 24(2) provides that the amount of contribution recoverable under s 23B shall be such as may be found by the jury, or by the court if the trial is without a jury, "to be just and equitable having regard to the extent of that person's responsibility for the damage". That sub-section also permits the judge or jury to exempt a person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity. The phrase italicised in s 23B(1) as set out above is given content by s 23A. Sub-section (1) thereof provides: "For the purposes of this Part a person is liable in respect of any damage if the person who suffered that damage, or anyone representing the estate or dependants of that person, is entitled to recover compensation from the first-mentioned person in respect of that damage whatever the legal basis of liability, whether tort, breach of contract, breach of trust or otherwise." In Alexander, Gleeson CJ, Gummow and Hayne JJ said31: "Two relevant propositions are … central to the proper application of s 23B as it is to be understood in the light of s 23A. First, the party claiming contribution (the claimant) must show that it is liable in respect of damage suffered by another person (the injured plaintiff). Secondly, the claimant may recover contribution from any other person (the potential contributor) who is also liable to the injured plaintiff in respect of the same damage. The relevant inquiry is not confined to whether the damage for which each is liable can be said to be the same; both claimant and potential contributor must be liable to the injured plaintiff." 31 (2004) 78 ALJR 411 at 417 [32]; 204 ALR 417 at 425. In the present case, there is no dispute that the first of those propositions has been satisfied as a result of the findings made against Brambles by the jury at trial. This appeal is therefore concerned with the second proposition. Put shortly, the issue to be determined is whether Andar is liable to Mr Wail for the injury suffered by him on 26 July 1993. The Court of Appeal answered that question in the affirmative. In our view, it was correct to do so. Employer's common law duty of care It is well accepted that, in the absence of statutory provisions to the contrary, an employer owes a common law duty to its employees to take reasonable care for their safety32. The duty encompasses an obligation to take reasonable steps to provide safe plant and machinery and a safe system of work. Of particular significance in the present case are two features of the duty. The first is its non-delegability33. In Kondis v State Transport Authority, Deane J said34: "[I]n the context of the particular relationship of employer and employee and of the undertaking by the employee of the general obligation to work in the interests of the employer, the content of the employer's duty to take reasonable care to provide a safe system and conditions of work for the employee is not discharged by delegation unless the delegate, be he employee or independent contractor, in fact provides the reasonable care which the employer was under an obligation to bring to bear." The second feature to be noted is that the duty is imposed upon all employers, however the business be formed or structured. As Lord Wright noted in Wilsons and Clyde Coal Co Ltd v English35: 32 Hamilton v Nuroof (WA) Pty Ltd (1956) 96 CLR 18 at 25; Commissioner for Railways (NSW) v O'Brien (1958) 100 CLR 211 at 216-217; O'Connor v Commissioner for Government Transport (1954) 100 CLR 225 at 229; Ferraloro v Preston Timber Pty Ltd (1982) 56 ALJR 872 at 873; 42 ALR 627 at 629. 33 See Kondis v State Transport Authority (1984) 154 CLR 672 at 688, 689, 694, 695; Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 32, 44, 49; McDermid v Nash Dredging & Reclamation Co Ltd [1987] AC 906 at 919. 34 (1984) 154 CLR 672 at 694. 35 [1938] AC 57 at 84. "[T]he whole course of authority consistently recognizes a duty which rests on the employer and which is personal to the employer, to take reasonable care for the safety of his workmen, whether the employer be an individual, a firm, or a company, and whether or not the employer takes any share in the conduct of the operations." (emphasis added) In the present case, Andar seeks to qualify the substantive effect of this proposition. In Andar's submission, Mr Wail's status as a director of Andar and, in particular, his responsibility for the day-to-day operation of Andar's laundry delivery business prevented his recourse to Andar for any breach by Andar of the common law duty to take reasonable care. At bottom, Andar complains that it should not be made liable to Mr Wail, in his capacity as an employee, for a breach of duty committed by him in his capacity as a director. Statutory obligations The submissions of Andar seek to derive support from decisions given in litigation concerning statutory obligations imposed upon employer and employee alike36. One example is the decision of Pearson J in Ginty v Belmont Building Supplies Ltd37. In that case, the plaintiff employee was injured as a result of failing to use boards to support his weight when working on an asbestos roof. He had been instructed to use the boards by his employer and had been supplied with them. His failure to follow his employer's instructions amounted to a breach of the Building (Safety, Health and Welfare) Regulations 1948 on the part of both himself and his employer. In such circumstances, Pearson J held that the plaintiff was unable to recover damages from the employer for breach of statutory duty. His Lordship observed38: "[T]he important and fundamental question in a case like this is not whether there was a delegation, but simply the usual question: Whose fault was it? ... If the answer to that question is that in substance and reality the accident was solely due to the fault of the plaintiff, so that he was the sole author of his own wrong, he is disentitled to recover. But that has to be applied to the particular case and it is not necessarily 36 See, generally, Stanton et al, Statutory Torts, (2003) at 329-332. 37 [1959] 1 All ER 414. 38 [1959] 1 All ER 414 at 423-424. conclusive for the employer to show that it was a wrongful act of the employee plaintiff which caused the accident. … One has to inquire whether the fault of the employer under the statutory regulations consists of, and is co-extensive with, the wrongful act of the employee. If there is some fault on the part of the employer which goes beyond or is independent of the wrongful act of the employee, and was a cause of the accident, the employer has some liability." (emphasis added) Reference may also be made in this context to Ross v Associated Portland Cement Manufacturers Ltd39 and Boyle v Kodak Ltd40. Various rationales have been posited in order to justify the propositions outlined by Pearson J and subsequently developed in Ross and Boyle41. For Pearson J himself, as for the House of Lords in the two later cases, the issue was best seen as one of causation; hence the requirement propounded by Pearson J that the plaintiff will be unsuccessful where the accident was "solely due" to the The reasoning evident in Ginty, Ross and Boyle suffers from fundamental infirmities. In March v Stramare (E & M H) Pty Ltd43, Mason CJ ascribed the historical concern with the identification of a "sole" or "effective" cause to the existence of the absolute defence of contributory negligence at common law and the absence of any mechanism for the apportionment of liability between plaintiff and defendant. In the joint judgment in Astley v Austrust Ltd44, reference was 39 [1964] 1 WLR 768 at 777; [1964] 2 All ER 452 at 455. 40 [1969] 1 WLR 661 at 668; [1969] 2 All ER 439 at 442. 41 See, eg, Shedlezki v Bronte Bakery Pty Ltd (1970) 72 SR (NSW) 378 at 388-389; Buckman (H C) & Son Pty Ltd v Flanagan (1974) 133 CLR 422 at 442; Nicol v Allyacht Spars Pty Ltd (1987) 163 CLR 611 at 623-624. 42 See also Ross v Associated Portland Cement Manufacturers Ltd [1964] 1 WLR 768 at 777, 783-784, 787; [1964] 2 All ER 452 at 455, 460, 462; Boyle v Kodak Ltd [1969] 1 WLR 661 at 667, 668, 670, 673; [1969] 2 All ER 439 at 441, 442, 444, 446; Stanton et al, Statutory Torts, (2003) at 329. 43 (1991) 171 CLR 506 at 511. Toohey J (at 524) and Gaudron J (at 525) agreed with 44 (1999) 197 CLR 1 at 14-15 [31]. made to the course of authority culminating in Davies v Adelaide Chemical and Fertilizer Co Ltd45. This established that a plaintiff could be guilty of contributory negligence and the defendant have a good defence even though the plaintiff was injured as a result of a breach of a statutory duty whose very purpose was to prevent that type of injury by placing the defendant under a duty to protect people in the class of which the plaintiff was a member. However, since the displacement of the absolute defence by the statutory apportionment of damages between those at fault in accordance with the degree of their individual responsibility, a different situation has applied. In March46, Mason CJ concluded that "the courts are no longer as constrained as they were to find a single cause for a consequence". The propositions contained in Ginty, and developed in Ross and Boyle, would, if adopted, mark a significant exception to that circumstance. To the extent that the reasoning in Ginty and cognate decisions was adopted in this Court in Nicol v Allyacht Spars Pty Ltd47, it should now be emphasised that that reasoning has since been undermined by that in March which fixed upon the removal of that "fertile source of confusion" in the common law, the defence of contributory negligence, for "the development of a coherent legal concept of causation"48. The reasoning in Ginty should no longer be accepted. Further, the reasoning of Dawson J in his dissenting judgment in Nicol should be preferred. Moreover, the reliance on principles of causation evident in Ginty and its successors may more accurately be viewed as a means of masking the introduction of an extraneous policy judgment as to the circumstances in which an employee should be permitted to recover against an employer who has contravened an obligation imposed by statute. That causation has, in truth, only a small role to play is demonstrated by the principle that an employee can recover damages from an employer for breach of a statutory duty notwithstanding that the "sole cause" of the plaintiff's injury is a breach of the same duty committed by a fellow employee49. Perhaps with this objection in mind, attempts have been 45 (1946) 74 CLR 541 at 545, 547, 549. 46 (1991) 171 CLR 506 at 512. 47 (1987) 163 CLR 611. 48 (1991) 171 CLR 506 at 511. 49 See Buckman (H C) & Son Pty Ltd v Flanagan (1974) 133 CLR 422 at 442. made to present the reasoning of Pearson J as an aspect of the proper construction of the relevant statutory obligation. The necessary tension that results from such an approach is evident in the judgment of Mason J in Buckman (H C) & Son Pty Ltd v Flanagan50. There, his Honour observed51: "The language in which the principle has been expressed, notably that of Lord Reid in Boyle's Case52, tends perhaps to suggest that it is a rule invented by the courts as a proposition of the general law superimposed upon statutory provisions which impose a duty and create a cause of action in favour of private individuals. I would not wish to quarrel with these observations so long as it is understood that the formulation of the principle is not unconnected with the construction of the relevant statutory provisions. Were it otherwise I should feel some difficulty in its application in New South Wales in face of s 2(1) of the Statutory Duties (Contributory Negligence) Act [1945 (NSW)] which provides that contributory negligence shall not be a defence to an action for damages for personal injury founded on a breach of a statutory duty imposed on the defendant for the benefit of a class of persons of which the plaintiff was a member53." The liability incurred by employers on breach of statutory obligations of the kind considered in cases such as Ginty is, ordinarily, strict54. In such circumstances, caution should be exercised before implying limitations on the right of an employee to recover for breach of that obligation. Especially is this the case where Parliament has provided a mechanism for the apportionment of responsibility between employee and employer. It may certainly be accepted that, in the absence of an express provision conferring a cause of action upon employees for breach of their employers' obligation, courts have recognised the plaintiff's right by implication and as an 50 (1974) 133 CLR 422. See also the judgment of Mason JA in Shedlezki v Bronte Bakery Pty Ltd (1970) 72 SR (NSW) 378 at 389-390. 51 (1974) 133 CLR 422 at 442. 52 [Boyle v Kodak Ltd] [1969] 1 WLR 661 at 665-666; [1969] 2 All ER 439 at 440. 53 cf Sherman v Nymboida Collieries Pty Ltd (1963) 109 CLR 580 at 591. 54 See, eg, Australian Iron and Steel Ltd v Ryan (1957) 97 CLR 89 at 95-96. exercise in statutory interpretation55. However, that process does not in turn permit the development of a limitation which cannot legitimately be inferred from the nature, scope and terms of the legislation in question. These implications are, as Kitto J put it in Sovar v Henry Lane Pty Ltd56, not to be "conjured up by judges to give effect to their own ideas of policy". There must be read with these qualifications in mind statements to the effect of those in Nicol that "[t]he courts, having created the liability, are able to confine it"57 and that "the approach [in Ginty] to the question of an employer's escape from liability for breach of statutory duty may be applied with equal validity to the question of an employer's escape from liability for breach of a common law duty"58. Sole duty of employer In any event, it is significant that an underlying threshold requirement for the application of the reasoning propounded in Ginty is that the duty breached by both the employer and employee be co-extensive or co-terminous59. As will appear, the existence of that requirement is a further bar to the ability of Andar to rely upon those principles in order to avoid liability for the injury incurred by Mr Wail. Unlike the statutory duties construed in Ginty and its successors, the common law duty to take reasonable care for the safety of employees is imposed solely upon an employer. No equivalent duty was imposed upon Mr Wail in his capacity as employee. In such circumstances, questions such as "Whose fault was it?" are apt to mislead. This is because any breach of duty committed by Andar was inherently different in scope and effect from any negligence of Mr Wail at the time of the accident. It must follow that the requirement of co-extensiveness necessary in order to take advantage of the reasoning evident in 55 Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397 at 404-405. 56 (1967) 116 CLR 397 at 405. 57 (1987) 163 CLR 611 at 624. 58 (1987) 163 CLR 611 at 621. 59 See Nicol v Allyacht Spars Pty Ltd (1987) 163 CLR 611 at 623. See also Stanton et al, Statutory Torts, (2003) at 331; Glass, McHugh and Douglas, The Liability of Employers, 2nd ed (1979) at 233-234. cases such as Ginty did not exist in the present case. In Nicol, in a passage with which we agree, Dawson J said60: "[I]t does not seem to me that the duty of an employer and an employee in such regard can ever be co-extensive or co-terminous. The duty is that of the employer and even if the employee is entrusted with its performance it remains an the employer of a more comprehensive kind to ensure that reasonable care is taken." independent obligation of Corporate structure During argument, the submissions of Andar evidenced a reluctance to accept that an individual may act both as a director of a company and that company's employee without unduly affecting the company's legal capacity. However, in Peate v Federal Commissioner of Taxation, Windeyer J remarked61: "It is not in legal theory impossible or incompatible for a person to be both governing director in sole control of a company and servant of that company or its agent to contract on its behalf, 'always assuming', said Lord Morris, 'that the company was not a sham'62. If a company is duly incorporated and registered under the Act and the proper records are kept in due form and the prescribed returns are made, it continues to exist as a legal entity." So much is now made clear by s 124 of the Corporations Act 2001 (Cth). As a company registered pursuant to that Act, Andar enjoys by virtue of that section the legal capacity and powers of an individual. That such powers can only be exercised on Andar's behalf by natural persons in no way impacts upon their force and effect63. Thus it has been said that a company may be charged with an offence as principal, and the director charged as an accessory, 60 (1987) 163 CLR 611 at 625. See also the judgment of Mason JA in Shedlezki v Bronte Bakery Pty Ltd (1970) 72 SR (NSW) 378 at 389-390. 61 (1964) 111 CLR 443 at 480; affd (1966) 116 CLR 38 (PC); [1967] 1 AC 308. See also Industrial Equity Ltd v Blackburn (1977) 137 CLR 567 at 577; Nicol v Allyacht Spars Pty Ltd (1987) 163 CLR 611 at 616-617. 62 Lee v Lee's Air Farming Ltd [1961] AC 12 at 26. 63 See Shedlezki v Bronte Bakery Pty Ltd (1970) 72 SR (NSW) 378 at 389-390. notwithstanding that the elements constituting both offences were committed by the director alone64. In R v Goodall, Bray CJ remarked65: "[T]he logical consequence of Salomon's Case66 is that the company, being a legal entity apart from its members, is also a legal person apart from the legal personality of the individual controller of the company, and that he in his personal capacity can aid and abet what the company speaking through his mouth or acting through his hand may have done." That statement of principle was accepted as correct by Mason CJ, Wilson and Toohey JJ in Hamilton v Whitehead67. Reliance was also placed by Andar upon the circumstance that Mr Wail had day-to-day control of that part of the company's business which related to the company's obligations under the Agreement. However, as is indicated by the statements in Goodall and Whitehead, the circumstance that a company may ultimately be owned or controlled by one person will not affect its status as a legal entity that is distinct from its members or controllers. So much has been recognised in the United States in the context of attempts by the directors of small or one-person companies to claim the Fifth Amendment privilege against self-incrimination and avoid the production of company documents under subpoena. In Bellis v United States68, Marshall J, delivering the opinion of the Supreme Court, noted that "[i]t is well settled that no privilege can be claimed by the custodian of corporate records, regardless of how small the corporation may be". This is so even where the disclosure of the 64 Hamilton v Whitehead (1988) 166 CLR 121. See also Attorney-General's Reference (No 2 of 1982) [1984] QB 624; Macleod v The Queen (2003) 77 ALJR 1047 at 1052 [28]-[29]; 197 ALR 333 at 340. 65 (1975) 11 SASR 94 at 101. 66 Salomon v Salomon & Co [1897] AC 22. 67 (1988) 166 CLR 121 at 128. 68 417 US 85 at 100 (1974). See also Braswell v United States 487 US 99 at 113 (1988); United States v Stone 976 F 2d 909 at 912 (1992). Braswell was discussed in Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477 esp at 492-493, 515, 527-531, 542. relevant corporate records is likely to incriminate the custodian personally69. The rationale for this rule is that where a person holds documents as a custodian for a company they do so in a representative, rather than personal, capacity70. Their production of documents is deemed to be an act of the corporation, rather than a personal act71. In this way, it is possible here to distinguish between the common law duties owed by Andar and those owed by Mr Wail in his personal capacity as director or employee. The common law duty to take reasonable care for the safety of employees is imposed directly upon Andar by virtue of its status as an employer. The duty is not imposed upon individual directors of a corporate employer. (The duties which directors have are different. For the most part, they are found in the applicable corporations law, and are owed to the company, not others.) To seek, as Andar does, to derive some significance from the circumstance that the board of the company is limited to two directors and that one of those directors (Mr Wail) ordinarily manages aspects of the delivery business is therefore to ignore the nature of the obligation relevantly imposed upon Andar by the common law. Similar observations were made by Mason JA in Shedlezki v Bronte Bakery Pty Ltd72 in the context of an alleged breach by an employer of a statutory obligation to fence off dangerous parts of a dough-cutting machine pursuant to s 33(1) of the Factories and Shops Act 1912 (NSW). There, his Honour said73: "The evidence discloses that the plaintiff, who with his wife held the entire share capital of the defendant and who was the managing director of the defendant, was in control of the day-to-day activities of the company. However, except in so far as the evidence justifies the conclusion that the plaintiff was subject in his own right to the duties imposed by the [Factories and Shops Act] … it matters not that the 69 417 US 85 at 88 (1974). 70 United States v White 322 US 694 at 699 (1944); Braswell v United States 487 US 71 Braswell v United States 487 US 99 at 110 (1988). 72 (1970) 72 SR (NSW) 378. 73 (1970) 72 SR (NSW) 378 at 386. plaintiff had control or the capacity to control the defendant's activities, for the principle that a corporation is a legal entity distinct from the corporators applies with equal force to a company which is 'a one man' company74." Nor, in the event of a company's insolvency, would it be open to a third party creditor of the company to commence proceedings personally against a director for recovery of the debt merely on the basis that the director had day-to-day control of the company's dealings with the third party75. For these reasons, the Court of Appeal correctly concluded that Brambles' claim for contribution was not barred by Mr Wail's dual responsibilities as a director and employee of Andar. Safe system of work Although the exact basis upon which the jury held Brambles negligent to Mr Wail is not entirely clear, it was accepted during argument that the jury had concluded that the trolleys provided by Brambles were not safe to use. No challenge is made to that finding before this Court. On one view, it follows that Andar in turn breached its common law duty to provide its employees with safe equipment and a safe system of work. This was the approach adopted by the Court of Appeal76: "Brambles supplied Andar with trolleys and linen to deliver to and collect from various hospitals, and the jury's verdict shows that the trolleys were not safe to use. It necessarily follows that since Andar had a duty to take reasonable care in making the trolleys and the system of handling them safe, there was a breach of Andar's duty to Wail to provide a safe system of work." However, Andar submits that the jury's finding of breach on the part of Brambles does not determine the question of Andar's liability to Mr Wail. In Andar's submission, there was insufficient evidence before Judge Kent (who heard the contribution application without a jury), and the Court of Appeal, to sustain a 74 Lee v Lee's Air Farming Ltd [1961] AC 12. 75 See Industrial Equity Ltd v Blackburn (1977) 137 CLR 567 at 577. 76 (2002) 5 VR 169 at 182; see also at 178. finding that Andar had also breached its duty of care to Mr Wail. While the case against Andar was not a particularly strong one, the insufficient-evidence point should not succeed in this Court. Andar's submissions in particular focused upon whether or not it had breached its duty to provide a "safe system of work" to Mr Wail. In English v Wilsons and Clyde Coal Co Ltd, Lord Aitchison described a "system of work" in the following terms77: "[B]roadly stated, the distinction is between the general and the particular, between the practice and method adopted in carrying on the master's business of which the master is presumed to be aware and the insufficiency of which he can guard against, and isolated or day to day acts of the servant of which the master is not presumed to be aware and which he cannot guard against; in short, it is the distinction between what is permanent or continuous on the one hand and what is merely casual and emerges in the day's work on the other hand." Similarly, it has been said that "[a] system of working normally implies that the work consists of a series of similar or somewhat similar operations"78. The loading and unloading of linen trolleys from a delivery truck, pursuant to a contractual arrangement requiring regular repetition of that activity, clearly falls within these descriptions. As a result, Andar was obliged to take reasonable steps to ensure that the loading and unloading was carried out in a safe manner. That obligation in turn required Andar to develop, and maintain, a methodology or system which would achieve that result. As a sub-set of the general common law duty of care outlined earlier in these reasons, the obligation is non-delegable. This Court's decision in Nicol demonstrates that an employer may be liable for breach of the duty notwithstanding that the system of work was devised, in part, by an employee who was subsequently injured as a result of carrying out the system79. 77 1936 SC 883 at 904. See also Speed v Thomas Swift & Co [1943] KB 557 at 563. 78 Winter v Cardiff Rural District Council [1950] 1 All ER 819 at 825 per Lord Reid. See also Glass, McHugh and Douglas, The Liability of Employers, 2nd ed (1979) at 79 (1987) 163 CLR 611 at 618. See also Munkman on Employer's Liability, 13th ed In our view, Andar failed to take reasonable steps to develop and maintain a safe system of work for its employees in relation to the loading and unloading of the truck with linen trolleys. On the evidence adduced at trial, it was clear that the loading of 22 trolleys into the truck could result in the jamming of those trolleys by the time they were ready to be unloaded. The significant weight of the trolleys, the circumstance that the trolley wheels were not fixed in one direction, and the level of the gradient upon which the truck was parked were all factors which could be expected to facilitate the jamming of the trolleys if they were not loaded in a particular fashion. That injuries could result from such an occurrence was reasonably foreseeable. However, only limited attempts appear to have been made by Andar to prevent such jamming from occurring. The primary mechanism provided by Andar to its employees in this regard was a strap designed to be tied around the trolleys closest to the rear of the truck. Although the purpose of the strap is not entirely clear from the evidence, it appears to have been designed to assist in preventing the movement of the trolleys after loading. The strap, of itself, provided no assistance to Mr Wail when loading the trolleys. Thus, on the day of the accident, the trolleys had jammed notwithstanding the use of the strap. That circumstance indicates the need for particular consideration to have been given to the best method of loading the trolleys in order to enable the strap to work to full effect. No such consideration appears to have been given by Andar to that aspect of its employees' work. It is not difficult to conceive of steps which reasonably could have been taken to reduce the likelihood of injury. Those steps might have involved a change in the design of the trolleys, a reduction in the amount of linen carried within them, or the alteration of the truck to ensure the correct placement of the trolleys during loading. To rely, as Andar does, on the circumstance that the trolleys had been in use by Brambles for many years previously is to ignore Andar's independent obligation to satisfy itself of the safety of the system. In any event, that a system has been in place for a significant period of time does not mean that an employer's obligations in respect of that system have been therefore complied with80. Nor can it be said that Mr Wail's injury was the result of a casual departure by him from an otherwise safe system of work. This is because the evidence did not suggest that Mr Wail had loaded the trolleys on the day of the 80 See, eg, Ferraloro v Preston Timber Pty Ltd (1982) 56 ALJR 872 at 873; 42 ALR 627 at 629; Ross v Tennant Caledonian Breweries Ltd 1983 SLT 676. accident differently from previous occasions. Accordingly, it is clear that Andar did not do all that was reasonable to ensure that a safe system of work was created and maintained in respect of the loading and unloading of the linen trolleys. It is also clear that Mr Wail was injured as a result of that failure. Andar is therefore liable to Mr Wail for the damage suffered by him on that occasion. Just and equitable Given the conclusion reached earlier in these reasons that Brambles cannot rely upon the indemnity contained in cl 8 of the Agreement, further consideration need be given to the quantum of contribution to which Brambles is entitled pursuant to s 24(2) of the Wrongs Act. That inquiry is more appropriately conducted by the Court of Appeal. It is, however, necessary to say something further concerning the significance to be attached to the jury's determination that Mr Wail's damages should be reduced by reference to his contributory negligence. Before this Court, Andar submitted that Andar should be exempted from paying contribution because the "causative fault" of Mr Wail in respect of his injury was "precisely equivalent" to the fault of Andar. As a result of the contributory negligence finding and subsequent apportionment at trial, Andar submitted that Brambles' responsibility for Mr Wail's injury had been identified as 65 per cent. It was said to follow that an award of contribution, after a reduction had already been made to establish the true levels of responsibility, would be inappropriate. Andar relied in part upon the decision of Jackson J in Doyle v Pick and Rickwood81. There, his Honour had said82: "As the damages awarded against the defendant correspond exclusively to his own share of the responsibility and the negligence of the third party has already been taken into account in arriving at those damages, it would not be just and equitable that the defendant should have any recovery against the third party. If it were otherwise, then the third party would have to pay twice, because he is liable at the suit of the plaintiff for his share of the responsibility for the damage." 81 [1965] WAR 95. 82 [1965] WAR 95 at 96. Andar further submitted that, in circumstances where Andar had inherited the relevant system of work from Brambles, to permit an award of contribution would be to reward Brambles for its own negligence. The power of exemption invested in a judge or jury pursuant to s 24(2) is not lightly to be constrained by judicial pronouncement83. As this Court noted in Owners of "Shin Kobe Maru" v Empire Shipping Co Inc84: "It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words85." It may therefore be doubted whether s 24(2) categorically requires or denies that the submissions of Andar be adopted. Nevertheless, several points may be made which should inform the exercise of the discretion. In respect of Andar's first submission, the above reasons have sought to demonstrate that the negligence of Mr Wail and that of Andar are not to be equated. The apportionment of liability between Mr Wail and Brambles carried out at trial was a distinct and separate inquiry from that now required by s 24(2) of the Wrongs Act regarding the liability incurred by Brambles and Andar in respect of Mr Wail's injury. The Court of Appeal was therefore correct in concluding that the apportionment of liability between Mr Wail and Brambles should not determine the quantum of contribution, if any, to which Brambles was entitled against Andar86. With respect to Andar's second submission, Andar possessed an independent personal obligation to take reasonable steps to ensure that a safe system of work was established and maintained for its employees. Reliance upon the "inheritance" of a defective system cannot therefore absolve Andar from a conclusion that it breached its common law duty. However, given the width of the power conferred upon the court by s 24(2), caution should be exercised 83 Soblusky v Egan (1960) 103 CLR 215 at 235; Amaca Pty Ltd v New South Wales (2003) 77 ALJR 1509 at 1513 [20]; 199 ALR 596 at 601. 84 (1994) 181 CLR 404 at 421. 85 See FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 at 283-284, 290. See also Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 185, 202-203, 205. 86 (2002) 5 VR 169 at 184. before concluding that it would be impermissible for Andar's submission to be taken into account when considering whether or not the company should be exempted from liability. It will be for the Court of Appeal to determine whether, in all the circumstances of the case, the statutory power of exemption invested in it by s 24(2) of the Wrongs Act should be exercised on this, or any other, basis. Conclusion The appeal should be allowed with costs, the orders of the Court of Appeal dated 21 November 2002 should be set aside and the matter should be remitted to that Court for further consideration. Costs of the whole of the proceedings in the Court of Appeal will be for that Court to determine. Kirby KIRBY J. The issues presented by this appeal are set out in the reasons of Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ ("the joint reasons") along with the facts87 and the statutory provisions88 necessary for its resolution. Because I agree in the outcome reached and orders proposed by the joint reasons, and substantially with the reasoning, I can provide my own reasons briefly, by reference to what is written there. The three issues in the appeal The three issues to be decided are: The contractual indemnity issue: Whether as a matter of law the terms of the indemnity clause in the written agreement between the respondent, Brambles Limited ("Brambles") and the appellant, Andar Transport Pty Ltd ("Andar") ("the Agreement") indemnified Brambles from legal liability89; The statutory contribution issue: Whether the provisions of the Wrongs Act 1958 (Vic) ("the Wrongs Act") permitted recovery by Brambles against Andar for contribution, having regard to the suggested coextensiveness of the relevant legal positions of Andar and the plaintiff, Mr Wail; and The scope of the contribution issue: Whether the jury's verdict in the recovery proceedings brought by Mr Wail against Brambles for negligence, reducing his recovery against Brambles by 35 per cent for Mr Wail's contributory negligence, was determinative of, or relevant to, the contribution that a court should order in favour of Brambles against Andar. The contract afforded no applicable indemnity As to the contractual indemnity issue, it must be conceded that a first reading of the very broad language of the Agreement, and its apparent purpose as gleaned from that language, lend support to the conclusion of the Court of Appeal of Victoria90 that the Agreement afforded Brambles a complete indemnity 87 Joint reasons at [1]-[16]. 88 Joint reasons at [30]-[32] setting out the relevant provisions of ss 23A and 23B of the Wrongs Act 1958 (Vic). 89 Joint reasons at [15]-[16]. 90 Brambles Ltd v Wail (2002) 5 VR 169. Kirby against Mr Wail's action. Thus, it can be argued that the Agreement provided the indemnity on the footing that Mr Wail's action represented a claim for "damages arising from operation of the Vehicle" (cl 4.6) and a "claim" or "demand" arising "in respect of any … damage … or injury to any person of any nature or kind in the conduct of the Delivery Round by [Andar]" (cl 8.1). Alternatively, it can be argued that the claim or demand was for "damages" for which Brambles had become liable arising out of "injury from any cause to … [a] person occasioned or contributed to by the neglect or default of [Andar]" or "caused or contributed to by the conduct of the Delivery Round by [Andar]" (cll 8.2.1 and 8.2.2)91. Two reasons suggest modification of this first impression. The first derives from the internal indication, in the language of cll 8.2.2 and 8.2.3, of the limited operation of the indemnity necessary to ensure consistency in the operation of the clause in a way apparently contemplated by cl 4.692. The second reason arises from the conventional rule of construction of such indemnity clauses requiring that they be interpreted, especially in the case of any ambiguity or uncertainty, in favour of the party thereby rendered liable to afford a complete indemnity. Indemnity clauses are provisions that purport to exempt one party from civil liability which the law would otherwise impose upon it. They are provisions that shift to another party the civil liability otherwise attached by law to the first party. Self-evidently this is a serious thing to do or to attempt to do. Where such indemnities are said to arise out of contracts which are ambiguous or unclear, it is not unreasonable that their provisions should be construed so that any uncertainty is resolved favourably to the party thereby burdened by legal obligations that would not otherwise attach to it93. In every case judges must struggle with the language of the contract. They must not use mechanical formulae. Nor do rules of interpretation provide easy answers to the judicial task94. However, it is sometimes useful to remember, and apply, time honoured approaches. A feature that makes doing so specially appropriate is that the propounded interpretation would shift legal liability from that which the law would otherwise normally provide. 91 See the terms of the indemnity provisions set out in the joint reasons at [15]. 92 Joint reasons at [28]. 93 cf McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at 602 [74.4]; Siemens Ltd v Schenker International (Australia) Pty Ltd (2004) 78 ALJR 508 at 537 [167]; 205 ALR 232 at 272. 94 cf reasons of Callinan J at [122]-[124]. Kirby This is also a principle of construction more readily applied where, as here, the contractual indemnity appears in a standard form of contract designed to impose upon a party in a weaker bargaining position the obligations demanded by a party in a stronger economic position, which party drafts and presents the written contract for execution. It has special significance in a case like the present where there are features of the factual relationship between the parties that are designed to give an appearance to outsiders of a different relationship from that purportedly established in law by the written agreement. Here the object of the Agreement was to maintain the appearance of Brambles' control (the use of Brambles' signs and livery on the delivery truck and Brambles' supervision and power over the use of particular truck drivers). The Agreement was designed to establish a different regime of legal liability from that which therefore appeared to be the case and that which had formerly been the case. That was an employment relationship between Brambles and the truck driver engaged in driving and using the truck with Brambles' marking according to a delivery round substantially, or exclusively, designed to meet Brambles' requirements, standards and conditions. It is on this footing that I agree with the reasoning of the joint reasons that a strict construction should be adopted with respect to the terms of the contractual indemnity contained in the Agreement upon the basis of which Brambles sued Andar seeking indemnity. I would reserve my opinion about the general principles applicable to the construction of contracts of guarantee95. Clearly in Australian law, as in English law, the surety is a favoured debtor96. In the United States of America, a variation upon (or qualification to) this theme has been developed in the case of so-called compensated sureties97. An illustration of the United States approach can be seen in the decision of the Supreme Court in Chapman v Hoage98. Under that approach, a compensated surety in the United States is not favoured with the solicitude shown to private uncompensated sureties, "either with regard to interpretation of his contract or definition of his defenses"99. 95 Joint reasons at [17]-[23]. 96 Holdsworth, A History of English Law, 3rd ed (1945), vol 5 at 298. 97 Arnold, "The Compensated Surety", (1926) 26 Columbia Law Review 171; Stearns, The Law of Suretyship, 5th ed (1951) at 89-92. 99 Williston, A Treatise on the Law of Contracts, 3rd ed (1967), vol 10 at 706-707. Kirby There is much to be said for this more nuanced approach to interpretation of contracts of guarantee. An acceptance of such a differentiation seems more consonant with the general moves in Australian law to interpret private contracts in accordance with their meaning and purposes freed from rigid rules inherited unquestioningly from earlier doctrines, sometimes expressed long ago in different factual, economic and social circumstances100. The unyielding application of the strictissimi juris rule to all contracts of guarantee can certainly lead to results that strike untutored observers as unrealistic and even commercially absurd. The decision in Tricontinental Corporation Ltd v HDFI Ltd101 may be such a case. For this reason, at some future time, and in a proper case, it might be appropriate for this Court to revisit some of the observations appearing in Ankar Pty Ltd v National Westminster Finance (Australia) Ltd102. This is not such a case. Ankar was not challenged in this appeal. The issue of the liability of compensated entities was not argued. The decision in this appeal can therefore be reached without venturing upon the question. It can await another day. Otherwise, for the reasons contained in the joint reasons, the contractual indemnity issue should be decided in favour of Andar. This conclusion requires that the appeal from the Court of Appeal be allowed. Statutory contribution was available in this case As to the statutory contribution issue, I agree with the general analysis in the joint reasons103. Andar is a corporation, a legal entity separate from Mr Wail. He may have been its effective moving spirit and public manifestation. But in law, Andar was a separate legal body. It was Mr Wail's employer. Subject to any question of fraud or any conclusion of false representation, Andar therefore owed to Mr Wail the legal duties owed by an employer to an employee. It owed those duties personally. In accordance with established doctrine, those duties were not delegable to an employee or officer of the employer, including Mr Wail. This was simply the consequence of interposing a corporate structure between 100 Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510; Nissho Iwai Australia Ltd v Malaysian International Shipping Corporation Berhad (1989) 167 CLR 219 at 227. 101 (1990) 21 NSWLR 689. 102 (1987) 162 CLR 549 at 561. See the joint reasons at [17]-[18]. See also Chan v Cresdon Pty Ltd (1989) 168 CLR 242 at 256. 103 Joint reasons at [30]-[62]. Kirby Mr Wail and Brambles, accepting that it was legally a real and not a fraudulent or purely fictitious or contrived corporate arrangement. No party to this appeal argued a challenge so fundamental as to the doctrine in Salomon's case104. It is too late in the day, and inappropriate in this case, to suggest that, in law, Mr Wail and Andar were the same legal entity. In law, they had different duties and responsibilities. Legal liability, and, dare I say it, insurance arrangements and premiums, are dependent upon the dichotomy that the law draws in such cases. In accordance with basic legal doctrine it is neither possible, nor would it be desirable105, to obscure the difference between the legal positions of Andar and Mr Wail, any more than between Andar and Brambles. It was therefore the personal duty of Andar to provide Mr Wail, as its employee, with a safe system of work, so far as this was within its proper functions and powers and not the sole responsibility of third parties. Mr Wail's complaint in his action against Brambles concerned aspects of the system of workplace activities in which he was engaged. Certain of these activities appear to have been under the direct or indirect control of Brambles. However, that left Andar owing its own separate duties to Mr Wail, as his employer, relevant to the way the accident occurred. It would be wrong in legal principle to minimise or circumscribe Andar's responsibilities as employer in accordance with settled doctrine. They were separate from, and different to, those of Brambles to Mr Wail or Mr Wail's obligations in respect of his own safety. Obviously, such responsibilities overlapped in factual and evidentiary terms. But in law they are distinct and must be kept so. I therefore agree with the joint reasons that the evidence adduced at first instance suggests that Andar failed to take reasonable steps as Mr Wail's employer to develop and maintain a safe system of work relevant to the way Mr Wail's injury occurred106. There was no present contest that Brambles was itself liable to Mr Wail. There was thus a concurrence of several liabilities of the kind for which the Wrongs Act provides107. It follows that the determination of the recovery of compensation by Brambles against Andar fell to be decided. The Court of Appeal was correct to so conclude. Andar's challenge against that conclusion fails. I agree with what the joint reasons have written on this subject. 104 Salomon v Salomon & Co [1897] AC 22. 105 cf Lee v Lee's Air Farming Ltd [1961] AC 12. 106 Joint reasons at [55]. 107 Wrongs Act, ss 23A, 23B. See the joint reasons at [31]-[32]. Kirby The scope of contribution is not yet determined I also agree with the joint reasons in respect of the scope of contribution issue. It is for the Court of Appeal, in light of the foregoing, to determine what, if any, contribution by Andar to Brambles would be "just and equitable"108 in the case. For the reasons given109, jury's determination of Mr Wail's the contributory negligence is not, in law or fact, determinative of, or coextensive with, Andar's liability to contribute to Brambles under the Wrongs Act. However, the decision on Mr Wail's contributory negligence is plainly relevant to that determination. Given the close factual and evidentiary interrelationship of Mr Wail and Andar, the judicial consideration of what is "just and equitable" will obviously take into account the jury's verdict on contributory negligence. At the very least, this must be done to avoid double-counting or ignoring a relevant overlap of responsibilities. It would be unjust and inequitable to ignore the elements common to the legal liability of Andar to Mr Wail and Mr Wail's own obligation to be careful as to his personal safety. The two are not the same. However, they overlap in fact. The fact that Brambles has already received the benefit of the jury's discount for Mr Wail's contributory negligence would therefore be at the forefront of the determination of what different, and (effectively) additional, allowance should be made, if any, to cover the additional and separate defaults of Andar to Mr Wail. The statutory formula permits the tribunal deciding what is "just and equitable" to cut through legal forms and to reach a conclusion that reflects the substantial justice of the case. It should be left to the Court of Appeal, in the light of the decision of this Court, to do that. Orders I agree in the orders proposed in the joint reasons. 108 Wrongs Act, s 24(2). 109 Joint reasons at [59]-[62]. Callinan CALLINAN J. This appeal raises questions about the effect of a contract the term of which has expired but in accordance with which the parties have continued to act, and the responsibility and liability of a company to and for its employees. Facts Mr Wail had earned his living as a truck driver for many years. In about 1988, he became a driver for Princes Linen Service which operated a commercial laundry and cleaning service involving collection from, and deliveries to hospitals and nursing homes in Melbourne. His duties included the loading and unloading of trolleys containing laundry from a truck owned by his employer. Subsequently the respondent acquired the business of Princes Laundry. Mr Wail became an employee of it. The respondent maintained the same methods of delivery and collection as Princes Linen Services. The respondent decided however to make different arrangements with its drivers, that is, to cease to employ them, but to enter into a contract for services with companies controlled by them. Mr Wail and Mr Parker incorporated the appellant. There were only two directors, and two shareholders, Mr Wail and Mr Parker. Mr Wail's employment with the respondent ceased in April 1990. The respondent entered into a written agreement with the appellant for services, and the appellant purchased the truck which he had previously driven. Mr Wail continued to do exactly the same work in the same way as formerly. He was not only a director of the appellant, but he was also the person responsible for the day to day performance of the work from which it derived its profits. The other director, Mr Parker, was responsible only for the books and other financial matters. The appellant also owned and operated another truck, and employed two other employees from time to time. The written agreement, entitled "Independent Trucking Contractor Agreement" was for a term of 3 years and provided for an "operator fee" of $1600 per week. The appellant was to procure a suitably qualified driver, in practice, Mr Wail to operate an Hino 1985 10-tonne truck with van body and hydraulic tailgate as specified in the agreement ("the vehicle"). By cl 1 the respondent and the appellant agreed that the appellant would make the vehicle available for use in connexion with the respondent's cleaning business from 4 April 1990, for the term of the agreement. Clause 3.11 required the appellant to repair, maintain and fit out the vehicle as prescribed by the respondent. The agreement made provision for an indemnity by the appellant in favour of the respondent. By cl 4.6 the appellant agreed: "To assume sole and entire responsibility for and indemnify [the respondent] against all claims liabilities losses expenses and damages Callinan arising from operation of the Vehicle by reason of any happening not attributable to the wilful negligent or malicious act or omission of [the respondent]." And by cl 8.2 the appellant (referred to in the agreement as "the Operator") agreed to: Indemnify [the respondent] from and against all actions, claims, demands, losses, damages, proceedings, compensation, costs, charges and expenses for which [the respondent] shall or may be or become liable whether during or after the currency of the Agreement and any variation renewal or extension in respect of or arising from – 8.2.1 loss damage or injury from any cause to property or person occasioned or contributed to by the neglect or default of the Operator to fully, duly, punctually and properly pay, observe terms and the obligations, covenants, and perform conditions contained in the Agreement and on the part of the Operator to be paid, observed and performed. 8.2.2 loss, damage, injury or accidental death from any cause to property or person caused or contributed to by the conduct of the Delivery Round by the Operator. 8.2.3 loss, damage, injury or accidental death from any cause to property or person occasioned or contributed to by any act, omission, neglect or breach or default of the Operator. notwithstanding that any of such actions, claims, demands, losses, damages, proceedings, compensation, costs, charges, and expenses shall have resulted from any act or thing which the Operator may be authorised or obliged to do under the Agreement and notwithstanding that any time waiver or other indulgence has been given to the Operator in respect of any obligation of the Operator under the Agreement AND PROVIDED ALWAYS it is agreed and declared that the obligations of the Operator under this Clause shall continue after variation or termination of the Agreement and any renewal or extension in respect of any act, deed, matter or thing happening before such termination." Clause 9 is important. Its unmistakable purpose was to make it clear that although the respondent could insist upon the employment by the appellant of an efficient driver, the last was not on any account to be regarded as an employee, nominee, or agent of the respondent: Callinan "Direction and Control The Driver shall not form part of [the respondent's] organisation and the Driver and any other employee nominee or agent of the Operator shall not be under the direction or control of [the respondent] but [the respondent] shall have the right to notify the Operator that it is dissatisfied with the manner in which the Delivery Round is being completed and in that event the Operator (if required by [the respondent]) may substitute another Driver." Mr Wail went to the respondent's laundry at Box Hill early on 26 July 1993. He was then about 30 years old and experienced in the job. He loaded his truck with trolleys of clean linen. About three quarters of an hour later, he arrived at the Cotham Private Hospital in Cotham Road, Kew, where he was required to unload some of the trolleys. He reversed the vehicle into a driveway adjacent to the delivery bay of the hospital. The rear of the vehicle was higher than its front. He opened the rear of the truck, lowered its hydraulic tailgate, and untied the trolleys which were to be delivered. He placed his left hand on the roof of the truck and his right hand on a trolley which was at the end of a line of trolleys. He moved to pull it up the slight slope towards the hydraulic tailgate. He felt a searing pain across his lower back which made him sink to his knees. He sat down to ease the pain. After 10 minutes he was able to continue unloading laundry. Despite that he was in "considerable pain" he was able to complete his deliveries. Mr Wail, it was subsequently established, had damaged the lumbosacral disc in his lower back. The injury has disabled him from working as a truck driver. The appellant's business declined. Mr Wail was forced to seek to earn a living by other means. The trial Mr Wail sued the respondent in negligence for damages for personal injuries in the County Court of Victoria. The appellant was joined as a third party by the respondent. The proceedings were governed by the Accident Compensation Act 1985 (Vic) which relevantly limited Mr Wail to "pecuniary loss damages" and "pain and suffering damages" up to specified limits110. The case was tried by a judge with a jury. Despite that the case against the respondent was at best a slight one, the jury gave a verdict in favour of Mr Wail. Damages were assessed at $100,000 for pain and suffering and at $315,000 for economic loss. The jury also found that Mr Wail's damages should 110 See s 135A(7). Callinan be reduced by 35% for contributory negligence. The effect of that, and the Act to which I have referred, was that the total damages were reduced to $201,822.46 plus interest. The appellant and the respondent agreed that the issues between them should be determined by a judge without the jury. Those issues had to be decided in the light of the jury's verdict against the respondent. His Honour (Judge Kent) made these findings. Mr Wail conducted the affairs of the appellant: he effectively controlled it and its decisions were in reality his. The system of work had been established by the respondent and pre-dated the appellant's contract with the respondent. The contract continued to bind the parties as they had both acted in accordance with it. He rejected however that the respondent had an entitlement to indemnity under it. In consequence the third party claim was dismissed. The appeal to the Court of Appeal The respondent appealed to the Court of Appeal of Victoria (Winneke P, Charles and Batt JJA)111. The appeal against the verdict in favour of Mr Wail failed. The appeal against the dismissal of the third party proceedings succeeded. The members of the Court of Appeal were of the same opinion as the trial judge as to the continued operation of the terms of the written agreement. They thought however that his Honour had taken a very narrow view of the provisions in it with respect to indemnity. They said112: "Clause 8.2.2 covers a situation of injury to a person contributed to by the conduct of the delivery round by [the appellant]. Clause 8.2.3 covers a situation of injury to a person contributed to by any neglect or breach or default of [the appellant]. We have already found that the injury to Wail was contributed to by [the appellant's] breach of its obligation to provide a safe system of work, an obligation quite separate and distinct, and of quite a different kind, from any owed by Wail. In their plain and ordinary meaning both clauses are apt to cover the occurrence of the injury to Wail. His injury clearly arose out of and was contributed to by the conduct of the delivery round, the injury having been in part caused by [the appellant's] breach of its obligation to provide a safe system of work. We see no justification for reading down the clauses so as to exclude a situation in which [the respondent's] negligence was partly responsible for the occurrence of the injury. 111 Brambles Ltd v Wail (2002) 5 VR 169. 112 Brambles Ltd v Wail (2002) 5 VR 169 at 191-192 [71]-[74]. Callinan It follows that [the respondent] is, by virtue of either of cl 8.2.2 or 8.2.3, entitled to be indemnified by [the appellant] against [the respondent's] own liability to Wail. Since a complete indemnity is given by these clauses it is unnecessary to consider further the question of contribution as between [the respondent] and [the appellant]." The appeal to this Court Several questions arise in this appeal as to the nature and extent of the liability of a company to and for its employees: also whether the terms of a written agreement which has expired, but in accordance with which the parties are still conducting themselves, continue to bind them; as to the proper construction of those terms; and, assuming that they can and do otherwise bind the parties, the effect of Pt IV of the Wrongs Act 1958 (Vic) ("the Act") on the parties. The relationship between Mr Wail and the appellant Let it be assumed that Mr Wail had sued the appellant. It seems to me that had he done so he would have been bound to fail. It was Mr Wail who parked the truck on the incline where it was parked. It was he who was responsible for the method (subject to the role of the respondent in devising or acquiescing in it, a matter to which I will return) of transferring the trolleys to and from the truck. He was under no direct supervision by the respondent. No other person had any involvement in fact in the events which led to Mr Wail's injury and subsequent incapacity. Mr Parker, the other director, was not an executive director in any way responsible for, or even remotely involved in the design of the method, or the performance of the work of the appellant or its drivers. The matters to which I have referred distinguish this case from Nicol v Allyacht Spars Pty Ltd113. As Mason CJ, Toohey and Gaudron JJ pointed out114, the plaintiff there, although a director of the defendant company, was not, or certainly not solely, the author of the dangerous method of work adopted. Brennan J was of a similar view. His Honour said115: "His injury was caused by his failure and by the failure of other executive directors to prescribe a safe system for reaching the horizontal arm. The 113 (1987) 163 CLR 611. 114 (1987) 163 CLR 611 at 616. 115 (1987) 163 CLR 611 at 621-622. Callinan function of prescribing the system fell to all the executive directors who were involved in the discussion, and the failure of the executive directors other than the plaintiff to prescribe a safe system is a failure for which the company is responsible. It is immaterial whether the company's liability rests on its vicarious liability for their negligence or on its failure by its agents to discharge the duty of care which it owed to the plaintiff. The failure of the plaintiff and the failure of the other executive directors to prescribe a safe system for reaching the horizontal arm of the flag-pole together caused the plaintiff's injuries." (original emphasis) It follows that if the appellant were negligent, its negligence was co-extensive with, and in all respects the negligence also of the relevant executive director, here, Mr Wail. His negligence was the appellant's negligence and vice versa. If Mr Parker had been the person carrying out the work of the appellant, or had he been in any way involved in the operation or driving of its vehicle, and had Mr Wail been injured in consequence thereof, the appellant would have been entitled to recover the damages payable to Mr Wail, for which it would then have been vicariously liable, from Mr Parker to the extent of his negligence116. Why should the practical and legal result be any different when Mr Wail was both the person entirely responsible for devising the method of carrying out the employing company's work, and suffering injury in the course of doing so? In my opinion there is every reason why it should not be. 116 See Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555. In some jurisdictions, but not in Victoria, the rule established in this case has been abolished by legislation. See the discussion in Fleming, The Law of Torts, 9th ed (1998) at 298-300. The correctness and application of Lister in Australia appear to have been assumed in Commercial and General Insurance Co Ltd v Government Insurance Office (NSW) (1973) 129 CLR 374 at 380-381. In FAI General Insurance Co Ltd v A R Griffiths & Sons Pty Ltd (1997) 71 ALJR 651, on application for special leave to appeal from the Court of Appeal of Queensland, the Court said: "The applicant seeks special leave to canvass in this Court the decision of the House of Lords in Lister v Romford Ice & Cold Storage Co Ltd and its application in Australia. However, that question necessarily arises on the footing that the employer was under the statutory obligation contained in s 3 of the Motor Vehicle Insurance Act 1936 (Qld). That provision has been repealed. Moreover, the principle which Lister expresses has been legislatively overruled in some jurisdictions and, in circumstances of which this case is an example, it is desirable that a legislative rather than a judicial solution be found. In those circumstances, this is not a suitable case for the grant of special leave. Accordingly special leave is refused." Callinan Corporations can only think, decide and act by natural persons. If as Dawson J thought correct in Nicol117, and as the appellant here contended, the duty of an employer and employee can never be coterminous, in practice a corporate employer, obliged as it is to think and act by natural persons, would always be at risk, no matter how diligent it may have been, of being held not to have discharged its duty to its employees. I am unable to accept that there is some robotic unidentifiable agency remote from human agency for which a company may be held to be responsible. If it were otherwise there would have been no need for the majority in Nicol to undertake the careful examination that it did of the conduct of the injured plaintiff and other directors. It was only because another human agency on behalf of the company was involved, another director or directors who participated in the devising and adoption of the unsafe method of work there, that the injured director was able to succeed in his claim against the company. Legislation118 imposing criminal or quasi-criminal liability upon both directors of a company and the company itself falls to be construed according to the language used. Neither it, nor other legislation imposing statutory duties giving rise to civil rights of action for breach can provide a solution, or indeed even a reliable guide to the common law as stated in Lister v Romford Ice and Cold Storage Co Ltd119 and by this Court in Nicol, in the latter of which the Court clearly regarded as decisive, the answer to the question, was the director who was injured the director who in fact [solely] devised the system. I have proceeded so far on the basis that the appellant (by Mr Wail) was negligent, and that its negligence caused or contributed to Mr Wail's injury. As to this the Court of Appeal said120: "[The respondent] supplied [the appellant] with trolleys and linen to deliver to and collect from various hospitals, and the jury's verdict shows that the trolleys were not safe to use. It necessarily follows that since [the appellant] had a duty to take reasonable care in making the trolleys and the system of handling them safe, there was a breach of [the appellant's] duty to Wail to provide a safe system of work." 117 (1987) 163 CLR 611 at 624-625. 118 See for example s 124 of the Corporations Act 2001 (Cth). 120 Brambles Ltd v Wail (2002) 5 VR 169 at 182 [45]. Callinan The appellant submits that this holding suffers from the defect that it does not identify the respects in which, in continuing to implement the respondent's system of work, the appellant had acted unreasonably or negligently. The difficulty for the appellant is however that it owed its employees an independent duty of care. That duty included a duty to provide a safe system of work. The duty, of course, could only in reality be discharged by a natural person or persons on behalf of the company, in this case, unlike in Nicol, by one person, Mr Wail, the director assuming responsibility for all relevant aspects of the work. It was a duty not to be discharged however, by accepting, or uncritically implementing a system of work devised by the party with whom it had a contract. The jury has held that the respondent was negligent and that as between it and Mr Wail, the latter was guilty personally of contributory negligence to the extent of 35%. And the trial judge has found that his personal negligence was also the negligence of the appellant. These are findings of fact. The last was inevitable. I do not think that this Court can disturb them. There was clearly evidence upon which the findings could be made. It included the evidence about the way and place in which the vehicle was parked, the placement of the trolleys in the truck, the means adopted to pull or push them to and from the truck, the failure of the appellant (by Mr Wail) to notice that a trolley was perhaps defective, and, in particular, the decision of Mr Wail to pull a trolley from the truck out of the stack in the way in which he did. The operation and effect of the agreement between the parties It is convenient to deal next with the effect of the written agreement of the parties. The first of the questions arising in relation to it is whether the parties continued to be bound by its terms despite that its stated period of operation had expired. As to that, cl 15.5 is of relevance: "15.5 [E]xpiry or determination of the Agreement shall operate without prejudice to the rights and obligations of [the respondent] and the Operator which have accrued prior to the date of expiry or termination and shall not affect the parties [sic] respective continued rights and obligations under the Agreement and in particular shall not prejudice the rights – 15.5.1 to require the payment of all monies due and payable, and 15.5.2 to pursue any other remedy existing at law or in equity by either party against the other party or any other person." No formal renewal was effected but the parties continued to deal with each other in the same way as previously. Payment was made in accordance with the written agreement. In all respects the course of dealings between the parties and the work done were exactly the same as they had been. Callinan In Brogden v Metropolitan Railway Co121 a slightly different problem arose. The parties there had failed to execute an agreement for the supply of a commodity that had been settled in all essential respects (except as to the identity of an arbitrator). The form of the agreement had been the subject of voluminous correspondence. But of more significance was the fact that for some years the course of dealings between the parties, including the price payable for the coal, was in accordance with the written but unexecuted contract. By parity of reasoning the parties here should be held to be in a similar situation, that is, of being bound by the terms of the written contract (except as to duration). Indeed it may be that the continued allocation of work by the respondent to the appellant and payment in accordance with the agreement should be regarded as the exercise of a discretion by the respondent to renew the contract. It is unnecessary however to reach a conclusion about this. I doubt whether it would ever have occurred to the parties that their arrangements were governed other than by the terms of the written contract. It is to the terms of the contract that I now go. This observation should be made at the outset. The whole of the contract manifests in the plainest of language the intention that no relationship of, or indeed in any respect similar to a relationship of employer and employee is to exist between the appellant or its employees and the respondent for any purpose. An entirely new relationship of independent contractor with independent contractor was created to replace the former relationship of employer and employee. Anything that the parties thereafter accepted and agreed was based on that premise, including the financial terms of the contract. I agree generally with the reasoning and conclusion of the Court of Appeal with respect to the effect of the contract. There can be readily discerned in it the clearest possible intention on the part of the parties to ensure that the respondent is not to be liable for any loss arising out of the performance of the work by the appellant. That intention is not manifested by cl 8 alone. The summary of the rights and obligations at the beginning of the agreement contained two items intended to put beyond doubt that the appellant was to be, and the respondent not to be, responsible for the negligence of the appellant, and that the driver of the truck was to be directed and controlled by the appellant: "25. INDEMNITY Operator to conduct Delivery Round at his sole risk and 121 (1877) 2 App Cas 666 at 678 per Lord Cairns, 686 per Lord Hatherley, 690 per Lord Selborne. 26. DIRECTION & CONTROL Callinan indemnify against all liabilities. [the respondent] The Driver will remain under the Direction and Control of the Operator, but if unsatisfactory driver substitute appointed." As to cl 4.6, I would suspect that "wilful" when used there was intended as "wilfully" but it must be read according to its terms, that is, as entitling the respondent to an indemnity except in the case of its own wilful, or negligent, or malicious act or omission arising from the operation of the motor vehicle, something quite different from the circumstances, I would observe, of Mr Wail's injury here. It may be that liability on the part of the respondent of the kind referred to by McHugh J in Hollis v Vabu Pty Ltd122 was in the contemplation of the parties in settling cl 4.6, but it is unnecessary to speculate about that. The respondent is correct in its submission that the express exception in respect of negligence on its part arising from the operation of the motor vehicle in cl 4.6 argues against the reading of a like exception into cll 8.2, 8.2.2 and 8.2.3 of the agreement. Clause 8.1 obliges the appellant to conduct the delivery round at its sole risk, and goes on to provide that the appellant releases the respondent from all liabilities, injuries and damages of any nature or kind in connexion with it. This is a very clear indication of the parties' intention, that is that the respondent is to have no liability with respect to claims arising out of the performance of the contract by the appellant, except for a case within the narrow category of instances with which cl 4.6 is concerned. The appellant argues that the reference in cl 8.2.2 to "operator" should be read as a reference to "operator by its driver". That being so, it said that it would be an unlikely interpretation of the clause to regard it as encompassing an injury to the driver. The appellant makes effectively the same submission in respect of the meaning of cl 8.2.3. The submissions should be rejected. They ignore the separateness of the legal personalities involved, the operator, the corporate appellant, and the natural persons including Mr Wail who were its employees. They also overlook the several references in the agreement to, and separate treatment of each of the driver and the operator, and the numerous requirements imposed on the latter 122 (2001) 207 CLR 21 at 47 [64]-[65]. Callinan with respect to the ways in which the former is to carry out the work that the appellant has agreed to undertake for reward for the respondent. The submissions would require the Court to insert by implication an expression at odds with the clear thrust of the arrangements between the parties, that they are to be at arms length legally, and that not only was the respondent not to be liable in respect of the operation of the vehicle, except as agreed in cl 4.6, but also that any potential liability it might have in respect of the neglect or default of the appellant in the performance of the contract was to be the subject of an indemnity by the latter. The fact that the contract was in a standard form prepared by the respondent does not avail the appellant. There is nothing ambiguous in its terms. The contract can be seen to be an arrangement accepted by the appellant by its directors, not just to change a business practice of the respondent, but to effect a radical change in the legal relationship between the respondent and its former employees, and a different legal personality which Mr Wail must have preferred to substitute as a contracting party. To treat the relationship, for any legal purpose, between Mr Wail and the respondent, as if this express radical change had not occurred would be to subvert the whole intention of the parties. They were free to make their own arrangements for insurance on the basis of the contract. Its terms as a whole, including its financial terms, were similarly no doubt agreed upon the basis of the changed respective legal rights and obligations to which it gave rise. As Lord Diplock said in a case of exclusion of liability by contract, Photo Production Ltd v Securicor Transport Ltd123: "It is generally more economical for the person by whom the loss will be directly sustained to do so rather than that it should be covered by the other party by liability insurance." It would be an unlikely construction, one which the plain words do not in any event in my opinion permit, that the indemnity is to be in favour of the respondent in respect of injury or damage to anyone in the whole world, except one of the persons most likely to suffer it, Mr Wail as the driver of the vehicle on a day to day basis. I would reject the submission that this is a case in which the contra proferentem rule has any role to play. In Darlington Futures Ltd v Delco Australia Pty Ltd124 Mason, Wilson, Brennan, Deane and Dawson JJ said this: 123 [1980] AC 827 at 851. 124 (1986) 161 CLR 500 at 510. Callinan "[T]he interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity." This is not, as I have pointed out, a case of an ambiguity of language in a contract. Nor does the application of the ordinary meaning of its words produce any absurdity, indeed the contrary, the consequences for which the parties plainly contracted. To allow the appellant to escape its liability to indemnify would be to put Mr Wail in the position in which he had been before, as if no presently relevant change had been made in his relationship with the respondent. As Kirby J in McCann v Switzerland Insurance Australia Ltd said125: "Courts now generally regard the contra proferentem rule (as it is called) as one of last resort because it is widely accepted that it is preferable that judges should struggle with the words actually used as applied to the unique circumstances of the case and reach their own conclusions by reference to the logic of the matter, rather than by using mechanical formulae." (footnote omitted) The Court of Appeal was right to hold that the appellant was contractually bound to indemnify the respondent. The relevant provisions of Pt IV of the Wrongs Act are set out in the judgment of Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ. There is nothing in them to prevent the operation of the agreement as to indemnity. Indeed, again the contrary is the case because contractual rights in that regard are expressly preserved126. 125 (2000) 203 CLR 579 at 602 [74]. See also Johnson v American Home Assurance Co (1998) 192 CLR 266 at 274-275 [19] per Kirby J. 126 See s 24AD(4) which provides: "(4) The right to recover contribution in accordance with section 23B supersedes any right, other than an express contractual right, to recover contribution (as distinct from indemnity) otherwise than under this Part in corresponding circumstances but nothing in this Part shall affect – any express or implied contractual or other right to indemnity; or any express contractual provision regulating or excluding contribution – (Footnote continues on next page) Callinan The appellant advanced a further argument. these propositions. The damages payable by the respondent in the principal proceedings were reduced by the jury in consequence of the finding of contributory negligence. That reduction necessarily took into account the "causative fault" of Mr Wail: the causative fault of Mr Wail was precisely equivalent to the fault of the appellant. It would not, in those circumstances, be just and reasonable to award the respondent any amount by way of contribution. involved In support of this argument the appellant relied on a passage in the judgment of Jackson J in Doyle v Pick and Rickwood127, contending that a similar conclusion should be reached here: "[T]he amount recoverable is such as is found to be just and equitable. As the damages awarded against the defendant correspond exclusively to his own share of the responsibility and the negligence of the third party has already been taken into account in arriving at those damages, it would not be just and equitable that the defendant should have any recovery against the third party. If it were otherwise, then the third party would have to pay twice, because he is liable at the suit of the plaintiff for his share of the responsibility for the damage. This opinion, which I advanced during argument at the hearing, has, I am glad to find, the support of Professor Glanville Williams in his book on Joint Torts and Contributory Negligence". The second proposition was that as the appellant had inherited the system of work from the respondent and had continued to implement it, any allowance for contribution would constitute an inequitable or unfair "windfall" for the respondent. I disagree with both propositions. The parties were bound by a contract. Whether, viewed subjectively or even objectively, its provisions may appear to have operated unfairly and inequitably in relation to one or other of them would be beside the point. The event in question, the contributory negligence of the appellant, necessarily by one or other of its employees, in this instance the injured person, was precisely the sort of event which the parties' agreement had in contemplation. It is likely, as I have already said, that provision was made for it as the price of an adjustment to some other term or terms of the contract. The which would be enforceable apart from this Part or render enforceable any agreement for indemnity or contribution which would not be enforceable apart from this Part." 127 [1965] WAR 95 at 96. Callinan parties were free to effect their own arrangements for insurance and otherwise on the basis of the contract. It is not for the Court to say that a consequence different from the one bargained for should ensue, that the appellant should not be answerable to, and obliged to indemnify the respondent for its own (by Mr Wail) negligence. There are two answers to the second proposition. One is the answer that I have just made to the appellant's first contention on this aspect of the case. The second is that inheritance of the respondent's system of work did not relieve the appellant of its own continuing obligation, in this case assumed and undertaken by Mr Wail himself, to devise and maintain a safe system of work. For the reasons that I have given, Mr Wail's contributory negligence should and would have been held to be the complete and only contributory cause as between him and the appellant of his injuries. Any action by him against the appellant would therefore have failed. The fact that the respondent has been held liable to Mr Wail has nothing to say about the contractual indemnity owed by the appellant to the respondent. Even if otherwise the appellant's submissions about justness and equity were correct, they could provide no answer to cl 8 of the agreement. It entitles the respondent to an indemnity against the appellant in the circumstances here, of an injury arising out of the performance by the operator (in this case the appellant) of the work. The appeal should be dismissed with costs. |
HIGH COURT OF AUSTRALIA VICTORIA INTERNATIONAL CONTAINER TERMINAL LIMITED APPELLANT AND RICHARD SIMON LUNT & ORS RESPONDENTS Victoria International Container Terminal Limited v Lunt [2021] HCA 11 Date of Hearing: 9 February 2021 Date of Judgment: 7 April 2021 ORDER Appeal dismissed. On appeal from the Federal Court of Australia Representation S J Wood QC with N Burmeister for the appellant (instructed by Seyfarth Shaw Australia) N J Williams SC with C Tran and N K Kam for the first respondent (instructed by Maurice Blackburn Lawyers) Submitting appearances for the second, third and fourth respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Victoria International Container Terminal Limited v Lunt Courts – Abuse of process – Where Fair Work Commission approved enterprise agreement – Where approval of enterprise agreement supported by union – Where first respondent was longstanding member of union – Where first respondent brought proceedings seeking to quash approval of enterprise agreement – Where appellant sought summary dismissal of proceedings on basis they were abuse of process – Where proceedings funded by union – Where union unwilling to bring proceedings in own name because of risk of discretionary refusal of relief – Whether deployment of first respondent as "front man" for union amounted to abuse of process by bringing administration of justice into disrepute – Whether choice of first respondent as plaintiff prevented scrutiny of union's acquiescence in approval of enterprise agreement – Whether power to stay or summarily dismiss proceedings informed by considerations of deterrence or punishment. Words and phrases – "abuse of process", "administration of justice", "bring the administration of justice into disrepute", "deterrence", "discretionary grounds for the refusal of relief", "enterprise agreement", "forensic or juridical advantage", "front man", "illegitimate or improper purpose", "integrity of the court's own processes", "lack of candour", "motive", "punishment", "stay of proceedings", "summary dismissal", "trade union", "true moving party". KIEFEL CJ, GAGELER, KEANE AND GORDON JJ. On 19 October 2016, the Fair Work Commission ("the Commission") approved an enterprise agreement upon an application by the appellant, Victoria International Container Terminal Limited. The application to the Commission was made with the support of the Maritime Union of Australia ("the MUA"), the trade union that later amalgamated with the Construction, Forestry, Mining and Energy Union ("the CFMEU") to form the fourth respondent, the Construction, Forestry, Maritime, Mining and Energy Union ("the CFMMEU"). More than a year later, the CFMMEU arranged for the first respondent, Mr Lunt, to bring proceedings in the Federal Court of Australia seeking an order in the nature of certiorari to quash the Commission's approval of the enterprise agreement on the ground that the Commission's approval was beyond its jurisdiction. On an application by the appellant, the primary judge (Rangiah J) concluded that the proceedings brought by Mr Lunt should be summarily dismissed as an abuse of process because they were brought for the improper purpose of benefiting the CFMMEU. The Full Court of the Federal Court of Australia reversed the decision of the primary judge. For the reasons that follow, the decision of the Full Court was correct and should be upheld, and the appeal dismissed. The Enterprise Agreement the Victoria On 6 October 2016, the appellant applied to the Commission for approval International Container Operations Agreement 2016 ("the Enterprise Agreement")1. On 10 October 2016, the MUA filed with the Commission a statutory declaration in support of the application for approval of the Enterprise Agreement, and a notice pursuant to the Fair Work Act 2009 (Cth) ("the Act") that it wished to be covered by the Enterprise Agreement2. On Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Gordon the Enterprise Agreement3. 19 October 2016, Thereafter, the MUA did not apply for permission to appeal against that approval4. the Commission approved Following the approval of the Enterprise Agreement, the MUA brought several proceedings against the appellant in reliance upon the Enterprise Agreement5. However, from November 2017, the MUA became dissatisfied with the Enterprise Agreement and began publicly to criticise it6. The MUA merged with the CFMEU in March 2018 to form the CFMMEU7. Mr Lunt had been a member of the MUA for more than two decades before it amalgamated with the CFMEU8. Mr Lunt, while a member of the MUA, was employed by the appellant from about 21 June 2017 until his dismissal on 23 November 20179. On 14 December 2017, Mr Lunt commenced proceedings against the appellant in the Federal Court, claiming that the appellant had contravened the Act by, among other things, breaching the Enterprise Agreement ("the first Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Gordon proceedings")10. On 1 February 2018, Mr Lunt sought leave to amend the originating application in the first proceedings, among other things, to seek an order in the nature of certiorari quashing the Commission's approval of the Enterprise Agreement on the ground that the approval was beyond the jurisdiction of the Commission11. On 23 April 2018, the primary judge refused leave to amend12. On 4 May 2018, Mr Lunt commenced fresh proceedings in the Federal Court, being the proceedings to which this appeal relates ("the current proceedings"), in which he sought the same relief as that sought by the leave to amend application13. The appellant countered by filing an application seeking the summary dismissal of the current proceedings as an abuse of process. Before the primary judge, the appellant argued that the CFMMEU was the true moving party behind the current proceedings, with Mr Lunt being deployed to conceal the CFMMEU's role14. Mr Lunt denied this allegation. He maintained that he sought the quashing of the Commission's approval of the Enterprise Agreement by reason of his concerns about its conditions and the manner in which it was made15. The appellant also argued that Mr Lunt's evidence should be rejected as unreliable. In this regard, the appellant relied on Mr Lunt's intentional destruction 10 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 11 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 12 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 13 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 14 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 15 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Gordon of his mobile phone as going to the credibility of his account of the nature of his involvement in the proceedings16. The decisions below The primary judge allowed the appellant's application for summary dismissal of the current proceedings17. His Honour found that the MUA and the CFMMEU respectively funded the first proceedings and the current proceedings18. His Honour also found that the MUA was heavily involved in obtaining and communicating Mr Lunt's instructions to apply for leave to amend in relation to the first proceedings19, that Mr Lunt allowed himself to be used by the CFMMEU as a "front man" to bring the current proceedings under its control, and that the MUA and the CFMMEU were unwilling to bring the first proceedings or the current proceedings in their own names20. Further, as to this last point, the primary judge found that the MUA and the CFMMEU were not willing to bring proceedings in their own names because of the risk that they would be refused relief on the discretionary grounds that the MUA had acquiesced in the approval of the Enterprise Agreement by the Commission, failed to exercise its right to apply for permission to appeal against the approval, and thereafter delayed in bringing any challenge for over a year21. The primary judge concluded that to deny the appellant the opportunity to resist Mr Lunt's challenge to the approval of the Enterprise Agreement on 16 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 17 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542. 18 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 19 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 20 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 21 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Gordon discretionary grounds would be unjustifiably oppressive to the appellant22. His Honour also concluded that Mr Lunt brought the current proceedings for the predominant purpose of enabling the CFMMEU to obtain relief which it was unlikely to obtain if the proceedings were brought in its own name, rather than for the predominant purpose of vindicating his own legal rights23. Although Mr Lunt may have had his own concerns about the merits of the Enterprise Agreement and the circumstances in which it was made, those concerns were not sufficient to motivate him to commence proceedings to have it quashed24. On that basis, the primary judge held that the proceedings were brought by Mr Lunt for an "illegitimate and collateral purpose"25. His Honour reasoned that it would bring the administration of justice into disrepute if the CFMMEU were permitted, by deploying Mr Lunt as a "front man", to bring the current proceedings to challenge the approval of the Enterprise Agreement while avoiding scrutiny by the Court of its acquiescence in the approval of, and reliance upon, the Enterprise Agreement26. Mr Lunt appealed to the Full Court of the Federal Court. The Full Court (Bromberg, Kerr and Wheelahan JJ) allowed Mr Lunt's appeal27. The Full Court reasoned that "where a person has commenced or maintained a proceeding desiring to obtain a result within the scope of the remedy sought, the presence of a motive or reason for pursuing a proceeding which may be fulfilled as a consequence of obtaining the legal remedy which the proceeding is intended to produce, does not ground an abuse of process"28. The Full Court concluded that, because Mr Lunt 22 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 23 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 24 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 25 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 26 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 27 Lunt v Victoria International Container Terminal Ltd [2020] FCAFC 40. 28 Lunt v Victoria International Container Terminal Ltd [2020] FCAFC 40 at [16]. Gordon sought to obtain a result within the scope of the remedy sought by the current proceedings, there was no impropriety of purpose and hence no abuse of process. The circumstance that Mr Lunt may have been motivated by the desire that the CFMMEU should benefit from the relief sought did not alter that conclusion29. The appellant's argument In this Court, the appellant submitted that the Full Court's conclusion that Mr Lunt did not bring the current proceedings for an illegitimate or improper purpose was not a sufficient basis on which to reverse the decision of the primary judge. It submitted that, whatever conclusion was reached regarding the impropriety of Mr Lunt's purpose, the current proceedings could still amount to an abuse of process for other, independent, reasons. In PNJ v The Queen30, French CJ, Gummow, Hayne, Crennan and Kiefel JJ said: "It is not possible to describe exhaustively what will constitute an abuse of process. It may be accepted, however, that many cases of abuse of process will exhibit at least one of three characteristics: the invoking of a court's processes for an illegitimate or collateral purpose; the use of the court's procedures would be unjustifiably oppressive to a party; or the use of administration of justice into disrepute." the court's procedures would bring the Focusing upon the third of the characteristics referred to in PNJ, the appellant submitted that, in the circumstances, to permit the pursuit of the current proceedings by Mr Lunt would bring the administration of justice into disrepute. The appellant argued that the Full Court had failed to appreciate the force of the findings of the primary judge that the purpose of Mr Lunt was to allow the CFMMEU to obtain relief "which it could not, or might not, obtain if the 29 Lunt v Victoria International Container Terminal Ltd [2020] FCAFC 40 at (2009) 83 ALJR 384 at 385-386 [3]; 252 ALR 612 at 613 (footnotes omitted). Gordon proceeding were brought in its own name"31 or "which it was unlikely to obtain if the proceeding were brought in its own name"32 because of the acquiescence of the MUA in the approval by the Commission of the Enterprise Agreement. In this regard, the appellant emphasised the lack of candour involved in Mr Lunt's attempt to conceal the role of the CFMMEU in promoting the proceedings and in his destruction of potential evidence. Mr Lunt submitted that the Full Court was correct to hold that, even though his motive in bringing the current proceedings may have been to obtain a benefit for the CFMMEU, his predominant purpose was truly to seek the quashing of the Commission's approval. That being so, the circumstance that he was motivated to benefit the CFMMEU was immaterial. Further, it was said that concealment of an immaterial motive was no basis for finding an abuse of process. Mr Lunt submitted that the current proceedings should be allowed to be determined on their merits rather than summarily dismissed as an abuse of process. It was said that the Enterprise Agreement is an important instrument that affects the rights of many employees, and the court has available to it other remedies to deal with misconduct by a party that are more appropriate than granting a summary dismissal by reason of an abuse of process. Those remedies might include the making of an appropriate costs order against Mr Lunt or the CFMMEU33. The courts and abuse of process The fundamental responsibility of a court is to do justice between the parties to the matters that come before it. In the performance of that function, the doing of justice may require the court to protect the due administration of justice by protecting itself from abuse of its processes34. The power to stay, or summarily dismiss, proceedings because one party has abused the processes of the court is 31 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 32 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 33 Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 190. 34 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 266 [12]. Gordon concerned to prevent injustice35, and that power is properly exercised where the conduct of the moving party is such that the abuse of process on its part may prevent or stultify the fair and just determination of a matter. In Strickland (a pseudonym) v Director of Public Prosecutions (Cth)36, Gageler J explained that the concern which engages a court's power to order a stay of proceedings is the need to protect the integrity of its own processes. His Honour said: "The power of a superior court to stay its own proceedings as an abuse of process is a power to protect the integrity of its own processes. The power is in that limited respect and to that limited extent a power to 'safeguard the administration of justice'37." In cases where proceedings are brought for an improper purpose, "no remedy is likely to be appropriate other than a stay of the proceedings"38 because, in such cases, the abuse of the court's processes cannot be remedied in any other way. But where a court is able, by means less draconian than summary termination, to cure any apprehended prejudice to a fair trial so as to ensure that justice is done, the court's responsibility to the parties, and to the community, requires that those other means be deployed so that the matter before the court is heard and determined in accordance with the justice of the case. So, for example, where a party has engaged in sharp practice apt to delay the fair trial of a matter, an order for costs may be sufficient to cure the prejudice to the other party. Where a party's misconduct amounts to a contempt of court, such as the destruction of material evidence, the vindication of the court's authority may require the punishment of the miscreant. The remedy of a stay of proceedings, however, is concerned not with the punishment of the miscreant but with the protection of the integrity of the court's ability fairly and justly to determine the matter in dispute. 35 Barton v The Queen (1980) 147 CLR 75 at 96. See also Connelly v Director of Public Prosecutions [1964] AC 1254 at 1301-1302, 1347; Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at 518-519 [25]; UBS AG v Tyne (2018) 265 CLR 77 at 83 [1]. (2018) 266 CLR 325 at 372-373 [113]. 37 Moti v The Queen (2011) 245 CLR 456 at 464 [11]. 38 Jago v District Court (NSW) (1989) 168 CLR 23 at 71. Gordon In Strickland39, Kiefel CJ, Bell and Nettle JJ held that a stay of proceedings was warranted in the circumstances of that case because the abuse of process on the part of the prosecution so affected the prospects of a fair hearing that "the prejudice to a fair trial is at least to a significant extent incurable". Edelman J40, who concurred with the plurality, explained that an order for a permanent stay is "a measure of last resort" which will be ordered "where there is no other way to protect the integrity of the system of justice administered by the court". His Honour went on to say: "Before a permanent stay can be ordered, it is necessary to consider whether there are any other curial measures that could be taken to address any systemic incoherence that would be caused by a trial of the accused. This must be considered because the court's ability to protect its integrity is not confined to orders that grant a permanent stay of proceedings." Gageler J, who dissented as to the result of the case, was also of the opinion that a permanent stay of proceedings cannot properly be ordered where the substantial unfairness in the conduct of proceedings is capable "of being averted through the adoption ... of measures less drastic than ordering a permanent stay"41. And Gordon J, who also dissented as to the result of the case, agreed that there is no occasion to order a permanent stay of proceedings where the prejudice resulting from an abuse of process is curable by less drastic means. Her Honour said42: "[I]f a fair trial can be had, or if it is not possible to say now that a fair trial cannot be had, why would the administration of justice be brought into disrepute if the prosecutions were permitted to proceed?" Illegitimate or improper purpose While the thrust of the appellant's argument in this Court shifted away from an argument about illegitimacy of purpose, it is desirable to be clear that the Full Court was right to conclude that, while Mr Lunt may have been motivated to bring the current proceedings out of loyalty to the CFMMEU or to avoid a possible (2018) 266 CLR 325 at 360 [85]. (2018) 266 CLR 325 at 409 [248], 415 [264]. (2018) 266 CLR 325 at 373 [115]. (2018) 266 CLR 325 at 408 [244]. Gordon forensic disadvantage to the CFMMEU, that does not mean that the proceedings were brought for an improper purpose. In this context the distinction between motive and purpose is of crucial importance. In Williams v Spautz43, the plurality (Mason CJ, Dawson, Toohey and McHugh JJ) said: "To say that a purpose of a litigant in bringing proceedings which is not within the scope of the proceedings constitutes, without more, an abuse of process might unduly expand the concept. The purpose of a litigant may be to bring the proceedings to a successful conclusion so as to take advantage of an entitlement or benefit which the law gives the litigant in that event. Thus, to take an example mentioned in argument, an alderman prosecutes another alderman who is a political opponent for failure to disclose a relevant pecuniary interest when voting to approve a contract, intending to secure the opponent's conviction so that he or she will then be disqualified from office as an alderman by reason of that conviction, pursuant to local government legislation regulating the holding of such offices. The ultimate purpose of bringing about disqualification is not within the scope of the criminal process instituted by the prosecutor. But the immediate purpose of the prosecutor is within that scope. And the existence of the ultimate purpose cannot constitute an abuse of process when that purpose is to bring about a result for which the law provides in the event that the proceedings terminate in the prosecutor's favour. It is otherwise when the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers." In the present case, the desired result – the quashing of the Enterprise Agreement – was squarely within the scope of the remedy sought by the current proceedings. That Mr Lunt did not desire the result for himself, or desired the CFMMEU to take the benefit, does not change this fact44. (1992) 174 CLR 509 at 526-527 (footnotes omitted). See also at 535 per Brennan J. 44 Lunt v Victoria International Container Terminal Ltd [2020] FCAFC 40 at Gordon Administration of justice Substance of the arrangements between Mr Lunt and the CFMMEU Before turning to address the appellant's principal argument as to Mr Lunt's alleged lack of candour, it is also desirable to say that there could not be any substantive objection to the arrangements between Mr Lunt and the CFMMEU. It is well settled that "a plaintiff who has regularly invoked the jurisdiction of a court has a prima facie right to insist upon its exercise"45. Where the applicable rules as to standing are so broad as to enable a number of plaintiffs to bring proceedings, the choice of a plaintiff who is likely to enjoy some legitimate forensic or juridical advantage over other candidates is not an abuse of process. Rather, it is a use of the processes made available by the law. To the extent that Mr Lunt, as a person whose standing to bring his claim was and is undisputed by the appellant, may have enjoyed some forensic or juridical advantage over the CFMMEU as an applicant for the relief he sought in the current proceedings, there was nothing improper in taking advantage of what the law allows. Mr Lunt and the CFMMEU having made a choice between themselves as plaintiffs, there was similarly nothing objectionable in the CFMMEU's funding and direction of the proceedings brought by Mr Lunt. The decision of this Court in Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd46, relied on by Mr Lunt, is instructive in this regard. In that case, the plaintiff entered into an arrangement with a litigation funder and the plaintiff's action was determined in favour of the defendant. Because the defendant was left with a shortfall of costs, it sought to recover costs from the litigation funder, who was not a party, on the basis that the litigation funder had caused an abuse of process. The majority of this Court (French CJ, Gummow, Hayne and Crennan JJ) held that "an agreement by a non-party, for reward, to pay or contribute to the costs of a party in instituting and conducting proceedings is not, of itself, an abuse of the court's processes"47. Concealing the arrangements between Mr Lunt and the CFMMEU The appellant's argument focused upon what was said to be Mr Lunt's lack of candour in attempting to conceal the nature and extent of the involvement of the CFMMEU in promoting and maintaining the current proceedings. The appellant's 45 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 554. (2009) 239 CLR 75. (2009) 239 CLR 75 at 94 [30]. Gordon concern was that the administration of justice had been brought into disrepute because the deployment of Mr Lunt as a "front man" for the CFMMEU was likely to avoid or minimise the possibility that the court would refuse to quash the approval of the Enterprise Agreement on discretionary grounds because of the MUA's longstanding acquiescence in and reliance upon the agreement. The use of colourful and pejorative language to describe Mr Lunt's actions and the CFMMEU's promotion of the current proceedings should not be allowed to obscure the mundane reality of the situation. First, it bears repeating that there is no basis for any substantive objection to the arrangements between Mr Lunt and the CFMMEU. Secondly, it should be understood that it was not incumbent on Mr Lunt to disclose the nature and extent of the CFMMEU's involvement in the current proceedings when they were brought. At that stage of the proceedings the relationship between Mr Lunt and the CFMMEU was not material to Mr Lunt's claim. Of course, once an issue was raised by the appellant in relation to the role of the CFMMEU, if Mr Lunt were to respond to that issue, he was obliged to do so honestly. In this regard, it may be noted that Mr Lunt admitted in his reply in the current proceedings that the MUA and the CFMMEU had borne the legal costs of the first proceedings and the current proceedings. Thirdly, insofar as Mr Lunt had concealed his ultimate purpose or motive through the destruction of his mobile phone, the appellant had relied on that evidence only as going to his credit rather than as proof of participation in a "sham" proceeding, or some other form of misconduct which should disentitle Mr Lunt to a determination of the current proceedings on their merits. Moreover, the concern voiced by the appellant as to its purported inability to rely on discretionary grounds for the refusal of relief was always illusory. If Mr Lunt had been able to satisfy the court that the approval was given in excess of the Commission's jurisdiction, the court might nevertheless have refused relief in the exercise of its discretion by viewing Mr Lunt as an officious intermeddler in the affairs of other persons who, on the face of things, appeared to be perfectly content with the Enterprise Agreement, at least in the absence of any suggestion that the union which had approved its terms now repented of its bargain and sought to change its position. Whatever result might have eventuated in this regard, it is inconceivable that the court asked to quash the approval of the Enterprise Agreement would do so without noting that the approval was supported by the MUA as the representative of affected employees and that the Enterprise Agreement had been invoked by it in proceedings before the Commission. The circumstance that Mr Lunt was the person who brought the proceedings would not have prevented, in any real way, scrutiny of the role played by the CFMMEU's predecessor union Gordon in the making of the Enterprise Agreement. None of the parties to the Enterprise Agreement other than Mr Lunt were disposed to complain of it. In any event, with the arrangements between Mr Lunt and the CFMMEU now being well known, it is not possible to say that a fair trial cannot be had. That being so, the administration of justice could not be brought into disrepute by allowing the current proceedings to continue to a determination on their merits. In the course of the hearing of the appeal, the appellant's argument reduced to the proposition that failure to stay or summarily dismiss would bring the administration of justice into disrepute because the court should be astute to deter or punish a want of candour on the part of a litigant of the kind revealed in this case irrespective of whether a fair trial can now be had. The appellant was not able to cite any authority in support of the proposition that considerations of deterrence or punishment are relevant to the exercise of the court's powers in relation to abuse of process. That is not surprising because, as has been noted above, the court's powers in relation to abuse of process are not informed by considerations of deterrence or punishment. Rather, they are exercised in order to protect the integrity of the court's own processes48. Conclusion Whether or not Mr Lunt understood that there was nothing improper in the bringing of the current proceedings in his name, that was in truth the case. Any misunderstanding on Mr Lunt's part that may have prompted him to attempt to conceal the CFMMEU's involvement does not change that. That being so, to permit the current proceedings to continue to a conclusion on their merits would not be to allow the pursuit of an illegitimate or improper purpose. Nor would it bring the administration of justice into disrepute. For these reasons, in the circumstances found by the primary judge, there was no basis for the making of an order summarily to dismiss the current proceedings49. The CFMMEU's involvement in the current proceedings is not a reason why the merits of the case should not be determined by the Federal Court. The appeal should be dismissed. 48 Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 266 CLR 49 Barton v The Queen (1980) 147 CLR 75 at 111; Jago v District Court (NSW) (1989) 168 CLR 23 at 34, 49, 74. Gordon Mr Lunt does not seek an order for his costs of the appeal to this Court. There should therefore be no order in relation to those costs. As to the costs of the proceedings before the primary judge, an application in relation to those costs is before the primary judge and is for his Honour to determine. Edelman EDELMAN J. I have had the considerable benefit of reading in draft the joint reasons for decision of the other members of this Court. I agree with those reasons and wish to add only the following brief remarks. The sole category of abuse of process with which this appeal was concerned is the category loosely described in the ground of appeal as one where the proceeding brings "the administration of justice into disrepute". This expression is loose because the concern is not with the public reputation of the court, nor with public confidence in the court, in any real sense. The concern is with the integrity of the court, including its processes50. It was not alleged on appeal to this Court that the abuse of process arose from Mr Lunt bringing the proceeding for an improper purpose. A difficulty that can arise in relation to claims of improper purpose is the ambiguity of "purpose". When lawyers speak of legislative purpose, their concern is with purpose in its sense in "ordinary parlance"51 as the legislative motive or goal – the mischief to which the Act is directed – and not merely the immediate purpose of enacting statutory provisions by which that motive or goal is to be achieved52. By contrast, in areas such as the exercise of fiduciary power, the focus is upon the immediate purpose rather than the motive: "the exercise of a power for an ulterior or impermissible purpose is bad notwithstanding that the motives of the donee of the power in so exercising it are substantially altruistic"53. Similarly, when considering an abuse of process constituted by an improper purpose, "the existence of an unworthy or reprehensible motive for bringing the action [is] not enough"; rather, the issue is whether the immediate purpose "sought to be effected by the litigant in bringing the proceedings was not within its scope and was improper"54. Mr Lunt's action in bringing a proceeding for the immediate purpose of setting aside the Enterprise Agreement was not improper merely because his 50 Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 266 CLR 51 Zaburoni v The Queen (2016) 256 CLR 482 at 490 [17]. 52 APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 394 [178]; McCloy v New South Wales (2015) 257 CLR 178 at 232 [132]; Brown v Tasmania (2017) 261 CLR 328 at 363 [101], 391-392 [208]-[209], 432 [321]; Unions NSW v New South Wales (2019) 264 CLR 595 at 657 [171]. 53 Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285 at 293. 54 Williams v Spautz (1992) 174 CLR 509 at 525, explaining the reasoning of the Privy Council in King v Henderson [1898] AC 720 at 731. Edelman motive or "ultimate purpose"55 was to obtain a benefit for the union which, after merger, became the Construction, Forestry, Maritime, Mining and Energy Union ("the CFMMEU")56. Since Mr Lunt had the immediate purpose of setting aside the Enterprise Agreement, and since the law would not be stultified by him bringing the proceeding for the benefit of the CFMMEU57, his motive did not render that purpose improper for the same reason that it would not be improper for an action to be brought by a union with the motive of obtaining a benefit for its members58. As senior counsel for Victoria International Container Terminal Limited properly conceded in this Court, if Mr Lunt had been wholly transparent about the role of the CFMMEU, there would not have been an abuse of process. The focus of submissions in this Court was not, therefore, upon Mr Lunt's motive or upon the role of the CFMMEU. It was upon Mr Lunt's attempt to conceal those matters. The primary judge found that Mr Lunt conducted his case "on the basis that he has brought the proceeding for his own benefit, and not to represent the CFMMEU"59. The primary judge concluded that there was "a substantial risk that ... an application would have failed"60 if it had been brought in the name of the CFMMEU. The motive for concealing the role of the CFMMEU as the driving force of the proceeding, and for Mr Lunt conducting his case on the basis that he was not representing the interests of the CFMMEU, was to reduce that risk. The forensic strategy adopted by Mr Lunt and the CFMMEU was a gamble. Without revealing the principal role of the CFMMEU, Mr Lunt might have needed to provide evidence of a more widespread concern with the Enterprise Agreement, particularly from employees, such as himself, who were not relevantly employed in 2016 and therefore were not represented in the bargaining process. Otherwise the court might have exercised its residual discretion to refuse prerogative relief to 55 Williams v Spautz (1992) 174 CLR 509 at 526. 56 See also Lunt v Victoria International Container Terminal Ltd [2020] FCAFC 40 at 57 Compare Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509 at 523-524, citing In re Dashwood; Ex parte Kirk (1886) 3 Morr 257. 58 See, for example, Regional Express Holdings Ltd v Australian Federation of Air Pilots (2017) 262 CLR 456. 59 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 60 Lunt v Victoria International Container Terminal Ltd [No 2] (2019) 165 ALD 542 Edelman Mr Lunt as a single, disaffected employee. On the other hand, if the full role of the CFMMEU as the driving force for the proceeding had been revealed, Victoria International Container Terminal Limited at trial might have relied upon the change of position by the CFMMEU in seeking to set aside an Enterprise Agreement to which the union had acquiesced and upon its delay of 15 months in doing so, a period within which many employees might have relied upon the agreement. Let it be supposed that the gamble had succeeded and that the proceeding had been resolved at first instance in favour of Mr Lunt. In those circumstances, if the discretionary factors arising from the role of the CFMMEU and weighing against relief had been concealed, but were later discovered, then the decision might be set aside on appeal61. If there were evidence of a "fraud on the court", it could even be set aside by the primary judge62. But in either case the remedy would be a new trial. The court would not permanently stay proceedings and thereby deprive a party such as Mr Lunt of the liberty of a fair adjudication of their rights. The reason that a permanent stay of proceedings would not be appropriate is that any successful concealment of the CFMMEU's role is of a different nature from a tortious abuse of process, such as where the purpose of bringing the proceedings is not to prosecute them to a conclusion but "some [ultimate] purpose other than the attainment of the claim in the action"63. In the latter case, concerns of deterrence might arise but, more significantly, without a permanent stay the wrongful action would continue. In the former case, the remedial responses to the concealment are limited to those necessary to achieve the function of protecting the integrity of the court. If the integrity of the court can be protected by remedies less drastic than a permanent stay of proceedings then there is no justification for a court to go further than necessary to protect its processes by denying a party the liberty of a fair hearing. The same approach is also taken by courts applying remedies for illegality64, where courts do the minimum necessary to avoid self-stultification of the law. 61 Commonwealth Bank of Australia v Quade (1991) 178 CLR 134 at 142-143; Clone Pty Ltd v Players Pty Ltd (In liq) (Receivers and Managers Appointed) (2018) 264 CLR 165 at 187-191 [45]-[51]. 62 Clone Pty Ltd v Players Pty Ltd (In liq) (Receivers and Managers Appointed) (2018) 264 CLR 165 at 191-192 [53]. 63 Varawa v Howard Smith Co Ltd (1911) 13 CLR 35 at 91. 64 Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 266 CLR Edelman An example is the decision of this Court in Nelson v Nelson65. In that case, Mrs Nelson engaged in fraudulent conduct by transferring land to her children in order to obtain a Commonwealth subsidy for a later purchase of land. The remedial response to her claim for a resulting trust of the land was not to deny her rights but to condition her relief upon payment to the Commonwealth of an amount that would deny Mrs Nelson the benefit of the subsidy that she had fraudulently obtained. Such a remedy was sufficient to avoid "self-stultification in the law"; in positive terms, it served the objective of "maintaining coherence in the law"66. The judicial response where it is alleged prior to trial that relevant matters are being concealed cannot be stronger than the judicial response where those matters are discovered after trial. Just as a court which is confronted with obstacles to a fair trial should usually protect its processes by "flexible use of the power to control procedure and by the giving of forthright directions"67 rather than "refusing to exercise the jurisdiction to hear and determine the issues"68, so too should a court use its processes to prevent any threat to its integrity such as that which might be suggested by allegations of concealment. But, in this case, once the extent of the role of the CFMMEU had been revealed, there was no threat to the integrity of the court's processes. Putting to one side any issues concerning costs, no further remedial response, including the extreme measure of a stay of proceedings, was necessary. Orders should be made as proposed in the joint reasons. (1995) 184 CLR 538. 66 Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 520 [38]. 67 Jago v District Court (NSW) (1989) 168 CLR 23 at 49. 68 Jago v District Court (NSW) (1989) 168 CLR 23 at 47. |
HIGH COURT OF AUSTRALIA APPELLANT AND JAMS 2 PTY LTD & ORS RESPONDENTS Stubbings v Jams 2 Pty Ltd [2022] HCA 6 Date of Hearing: 14 October 2021 Date of Judgment: 16 March 2022 ORDER Appeal allowed. Set aside orders 2 and 3 made on 5 August 2020 and orders 2 and 3 made on 24 August 2020 by the Court of Appeal of the Supreme Court of Victoria and, in their place, order that: orders 1 and 3 made on 22 July 2019 by the primary judge be varied so that the date of those orders be taken instead to be the date of final orders in Proceeding No M13 of 2021 in the High Court of Australia; the appeal be otherwise dismissed; the appellants pay the respondent's costs of the application for leave to appeal and of the appeal on the standard basis; and pursuant to r 63.34.2 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic): the appellants pay the costs of the legal assistance provided to the respondent by the legal practitioners on a pro bono basis, as if the legal assistance had been provided by the legal practitioners not on a pro bono basis but on the basis that the respondent was under an obligation to pay for the legal assistance in the ordinary way; and costs payable in respect of legal assistance given on a pro bono basis are payable directly to the legal practitioners. The respondents pay the appellant's costs. On appeal from the Supreme Court of Victoria Representation N C Hutley SC with A M Dinelli and A Christophersen for the appellant (instructed by Garland Hawthorn Brahe Lawyers) B W Walker SC with J D Watson for the respondents (instructed by Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Stubbings v Jams 2 Pty Ltd Equity – Unconscionable conduct – Where respondents engaged in business of asset-based lending – Where system of lending involved law firm, acting through intermediary, facilitating secured loans by respondents – Where law firm acted as agent of respondents – Where respondents' agent never dealt directly with appellant – Where appellant unemployed with no regular income and poor financial literacy – Where appellant guaranteed loan made by respondents to company owned and controlled by appellant – Where company had no assets and never traded – Where loan and guarantee secured by mortgages over appellant's three properties – Where appellant provided signed certificates of independent financial advice and independent legal advice drafted by law firm – Where company defaulted on loan and respondents sought to enforce rights against appellant – Whether respondents acted unconscionably in seeking to enforce rights – Whether respondents' agent had knowledge of appellant's circumstances – Whether respondents entitled to rely on certificates of independent advice – Whether unconscientious exploitation of appellant's special disadvantage. Words and phrases – "agent", "asset-based lending", "certificates of independent advice", "knowledge of that special disadvantage", "special disadvantage", "system of conduct", "unconscientious", "unconscientious exploitation", "unconscionable conduct", "vulnerability", "wilfully blind". KIEFEL CJ, KEANE AND GLEESON JJ. The respondents in this matter are in the business known as asset-based lending, or "pure asset lending". This type of lending has the distinguishing feature, which often makes it easier for a borrower to obtain finance, that loans are made exclusively on the basis of the value of the assets securing the loan "without regard to the ability of the borrower to repay by instalments under the contract, in the knowledge that adequate security is available in the event of default"1. The appellant was the guarantor of loans made by the respondents to a company owned and controlled by him, Victorian Boat Clinic Pty Ltd ("the company")2. The appellant's obligations as guarantor were secured by mortgages given over parcels of land owned by him. The company had no assets and had never traded. The appellant had no income or other means to meet his obligations to the respondents. The primary judge (Robson J) found that the appellant's indebtedness to the respondents had been procured by unconscionable conduct on the part of their agent which was attributable to them. This conduct was found to be contrary to equitable principle and to s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act")3. The Court of Appeal of the Supreme Court of Victoria (Beach, Kyrou and Hargrave JJA) overruled the primary judge's decision, concluding that the evidence could not support a finding of unconscionable conduct attributable to the respondents4. In this Court, the respondents argued that there is nothing inherently unconscionable about asset-based lending insofar as it involves lending on the value of the assets that secure the loan without any reliance upon the borrower's ability to repay the loan from his or her income or other assets. The appellant conceded this general proposition, but contended that in this case, on the unchallenged findings of fact made by the primary judge, the loans to the company and the appellant's guarantee were effected in circumstances which made the enforcement of the respondents' rights against the appellant unconscionable. The appellant's contentions should be accepted. 1 Perpetual Trustee Co Ltd v Khoshaba (2006) 14 BPR 26,639 at 26,660 [128]. Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [3]. Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [317]. Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [126]-[135]. The appellant's lack of commercial understanding coupled with his inability to repay the loans from his own income or other assets meant that default in repayment, and the consequent loss by the appellant of his equity in his properties by way of interest payments to the respondents, were inevitable as a matter of objective fact. The respondents, through their agent, sufficiently appreciated that reality that the exercise of their rights under the mortgages to turn the appellant's disadvantages to their own profit was unconscionable. Equitable intervention was justified in this case "not merely to relieve the [appellant] from the consequences of his own foolishness ... [but] to prevent his victimisation"5. The appeal to this Court should be allowed. The facts The appellant owned two houses in Narre Warren, both of which were mortgaged to Commonwealth Bank. The mortgage repayments were between $260 and $280 per week. The appellant did not live in either house; instead he lived at rental premises at Boneo, where he worked repairing boats for the owner of the property. Due to a falling out with the owner, the appellant ceased work and needed to move house. Rather than live at one of the Narre Warren properties, he sought to purchase another property on the Mornington Peninsula6. The appellant was unemployed and had no regular income. He had not filed tax returns in several years and was in arrears on rates payments in respect of the two Narre Warren properties7. After a home loan application to ANZ was rejected for lack of financial records, the appellant was introduced to Mr Zourkas8. Mr Zourkas described himself as a "consultant", in the business of introducing potential borrowers to Ajzensztat Jeruzalski & Co ("AJ Lawyers"). AJ Lawyers in turn provided a service to clients, such as the respondents, to facilitate the making of secured loans by those clients. The primary judge found Louth v Diprose (1992) 175 CLR 621 at 638; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 401 [18]. Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [8], [105]-[106]; Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [7]. Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [8]. Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [108]-[109]; Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [9]. that Mr Zourkas played an "important and essential" role in these transactions, in that his involvement ensured that AJ Lawyers never dealt directly with the borrower or guarantor, such as the appellant9. The appellant and Mr Zourkas met on a number of occasions in 2015. At their first meeting, the appellant said that he "wanted to buy a little house" to live in, to which Mr Zourkas responded that "there would not be a problem going bigger and getting something with land"10. On the strength of that suggestion, the appellant found a five-acre property with two houses on it in Fingal, available for $900,000. At another meeting, Mr Zourkas told the appellant that he could borrow a sum sufficient to pay out the existing mortgages over the Narre Warren properties, purchase the Fingal property, and have approximately $53,000 remaining to go towards the first three months' interest on the loan. Mr Zourkas advised the appellant that he could then sell the Narre Warren properties, reducing the loan to approximately $400,000, which the appellant could then refinance with a bank at a lower interest rate11. The two Narre Warren properties and the Fingal property would secure the appellant's obligations as guarantor12. The existing debt to Commonwealth Bank secured on the Narre Warren properties totalled approximately $240,00013. On the basis that the two properties had a market value of $770,000, the appellant's equity was thus worth about $530,00014. Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [10]-[11]. 10 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [114]; Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [10]. 11 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [116], [120]-[124], [137]-[138]; Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [11]. 12 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [15]. 13 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [105]. 14 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [304]. On 30 June 2015, the appellant signed a contract to purchase the Fingal property for $900,000. A deposit of $90,000 became payable on 7 July 2015. The appellant only ever paid $100 towards it15. In late July or early August 2015, Mr Zourkas introduced the appellant to Mr Jeruzalski, a partner at AJ Lawyers. On 10 August 2015, AJ Lawyers arranged to have the two Narre Warren properties and the Fingal property valued as security for the loan. Together, the properties were valued at $1,570,00016. Satisfied that this would support a loan, AJ Lawyers provided two letters of offer, on behalf of their clients, including the respondents, to provide first and second mortgage finance to the company. Each offer was conditional on the appellant acting as guarantor and with the three properties as security for his guarantee17. It is necessary to note here that AJ Lawyers, and Mr Jeruzalski in particular, acted for the respondents in these transactions18. On that basis, Mr Jeruzalski's state of mind and his conduct can be sheeted home to the respondents. The first mortgage loan was for a sum of $1,059,000 at an interest rate of 10 per cent per annum and a default rate of 17 per cent per annum. The second mortgage loan was for a sum of $133,500 at an interest rate of 18 per cent per annum and a default rate of 25 per cent per annum. Two loans were necessary because, in line with AJ Lawyers' standard practice, the first was capped at two-thirds of the combined property valuations to avoid a higher loan-to-security ratio that might be considered too risky for the lender. The second loan was required to pay Mr Zourkas' consultancy fees, loan procuration fees, the respondents' legal costs as mortgagees, and the costs and expenses of purchasing the Fingal property. It was also necessary to enable the appellant to pay the first month's interest, which was payable in advance19. After another meeting with Mr Zourkas, the appellant accepted the offers on 21 or 22 August 2015, signing on his own behalf and on behalf of the company. At the meeting, the appellant also signed a "mandate" at Mr Zourkas' request, 15 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [12]. 16 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [13]. 17 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [15]. 18 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [111], [126], [131]. 19 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [17]-[18]. which contained an agreement to pay Mr Zourkas' consultancy fee, even if the loans did not proceed, which was secured by a charge over the Narre Warren properties. The primary judge found, and the Court of Appeal accepted, that the amount of the fee ($27,000) was not written on the document at the time the appellant signed it20. Around this time, the price for the Fingal property was renegotiated to $815,100. The appellant signed a contract of sale for that price on 27 August 2015. Although the appellant had no income, Mr Zourkas assured him that he would "not have a problem in obtaining finance"21. The deposit on the Fingal property was $81,510, of which $5,100 was described as having already been paid. However, the appellant gave evidence at trial that he had "no idea" where the reference to a payment of $5,100 came from22. On 19 September 2015, Mr Zourkas presented the appellant with two letters, dated 16 and 17 September 2015, which indicated that AJ Lawyers had been "instructed to approve" the two loans. The letters enclosed documents for execution by the appellant and the company. This documentation included a certificate of "Independent Financial Advice", to be signed by an accountant, and a certificate of "Independent Legal Advice", to be signed by a lawyer23. The certificates were of critical importance to the decision of the Court of Appeal and were a significant focus of argument in this Court. In the certificate of independent legal advice, under the heading "Acknowledgement by Guarantor", was the following list of questions, which the appellant was to answer by writing in the right-hand column24: "1. Have you received copies of the documents described under the heading 'Security Documents' below? Have you been given an opportunity to read those Security Documents? 20 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [131]-[132], [290]; Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [19]. 21 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [130]. 22 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [21]. 23 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [22]-[23], [25]. 24 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [77]-[81]. Have the Security Documents been fully explained to you by your solicitor? Do you understand the effects of the Security Documents and the consequences to you if the Borrower defaults on its obligations to the Lender? In particular, do you understand that if the Borrower fails to pay all of the moneys due to the Borrower to the Lender then the Lender will be entitled to call on you as Guarantor to recover the moneys due to it? 6. Was this Acknowledgement read and signed by you BEFORE you signed the Security Documents? I confirm the accuracy of the answers to the above questions and acknowledge that the Lender will be relying on these answers in respect of giving the loan to THE VICTORIAN BOAT CLINIC PTY LTD." The certificate of independent financial advice, meanwhile, required an independent accountant to sign and attest to the following25: I have been instructed by THE VICTORIAN BOAT CLINIC PTY LTD ACN 601 712 172 to explain the financial risks being assumed:- by executing the security documents in respect of the financial accommodation to be provided by the Lender which security documents are referred to in Item 1 of the Schedule below ('the Security'); by the application of the said financial accommodation for the purposes referred to in Item 2 of the Schedule below. Before the Security was executed by the Borrower, I explained the financial risk being assumed by executing the Security and by the application of the aforesaid financial accommodation in the manner stated in Item 2 of the Schedule. 25 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [85]. To the best of my knowledge and belief and in my opinion the Borrower appears to understand the nature and extent of the financial risk which the Security places and the nature and extent of the financial risk which will be assumed by the application of the aforesaid financial accommodation in the manner stated in Item [2] of the Schedule. I have been engaged by the Borrower in advising and have given this Certificate entirely independently of any other Borrower or Guarantor. The Loan herein is required for business purposes." The primary judge found that Mr Zourkas had presented the certificates to the appellant by handing over two sealed envelopes (one labelled "Accountant", the other labelled "Solicitor"), a business card for a solicitor, Mr Kiatos, and a phone number for an accountant, Mr Topalides. Mr Zourkas told the appellant to "take these documents, get them signed and bring them back"26. The Court of Appeal observed that it was clear from context that approval of the loans was conditional on the two certificates being duly signed and returned27. The appellant visited both Mr Kiatos and Mr Topalides that same day. Mr Kiatos (and not the appellant) completed and signed the certificate of independent legal advice, writing in answers to the list of questions directed to the appellant as guarantor. The appellant signed an acknowledgment on behalf of the company confirming the accuracy of those answers and that he had received independent legal advice. Mr Kiatos also signed the certificate, both as witness to the appellant's signature and to confirm that he had explained the content, nature and effect of the loans to the appellant, including the consequences of default28. Mr Topalides signed the certificate of independent financial advice. In completing the certificate, Mr Topalides stated that the purpose of the borrowings was to "Set up & Expand the business"29. The primary judge noted Mr Jeruzalski's evidence that he understood the purpose of the loan to be a "business loan ... mainly 26 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [134], [170]; Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [25]. 27 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [23]. 28 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [26]-[30]. 29 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [31]-[32]. concerned with boat repairs"30. But this evidence sat awkwardly with Mr Jeruzalski's evidence in cross-examination that, around the time of issuing the letters of offer dated 16 and 17 September 2015, he telephoned the council and made inquiries which informed him that the Fingal property was zoned "green wedge", meaning that it could not be used for commercial purposes31. It is evident that, as Mr Jeruzalski must have known, the statement of the purpose of the loan in the certificate did not reflect reality. It is necessary to note, in this regard, Mr Jeruzalski's evidence that, on instructions from the respondents, all loans in the course of his practice were made subject to the condition that they were not for personal, domestic or household purposes. Mr Jeruzalski insisted on this condition to avoid loans being governed by the National Credit Code ("the Code")32. This practice was reflected in a deed signed by the appellant, on his own behalf and on behalf of the company, whereby he variously agreed that the first mortgage loan was "for business purposes", "not for personal, domestic or household purposes", "not to purchase, renovate or improve the residential property for investment purposes" and not to "refinance credit that [had] been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes"33. The true purpose of the loan was identified by the Court of Appeal as being "to enable [the appellant] to purchase, in his own name, a property as a home"34. With the documentation complete, the loans were settled, the mortgages were registered, and the Fingal property was purchased on 30 September 2015. Once the various fees and payments had been made, the appellant was left with a sum of $6,959. The appellant subsequently moved into the Fingal property with his son. He never carried on any boat repair business35. 30 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [88]. 31 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [22]. 32 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [10], [70]-[72]. See National Consumer Credit Protection Act 2009 (Cth), Sch 1. 33 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [242]-[243]; Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [33]. 34 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [3]. 35 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [40]-[42]. The first month's interest having been paid in advance by the funds received from the second loan, the appellant managed to sell some assets to pay off the second month's interest. However, on 30 December 2015, the company defaulted on the third month's interest payments36. The respondents commenced proceedings against the appellant, seeking to enforce the guarantee and their rights as mortgagees of the two Narre Warren properties and the Fingal property. The primary judge The primary judge found that the appellant laboured under circumstances of "special disadvantage". His Honour described the appellant's financial position as "bleak". Notably, in this regard, the Narre Warren properties were the appellant's only assets of any value37. The primary judge also found that the appellant was "unsophisticated, naïve and had little financial nous"38. The primary judge observed that the appellant's demeanour at trial – at which he represented himself – indicated that he was "completely lost, totally unsophisticated, incompetent and vulnerable"39. The primary judge found that Mr Jeruzalski "[did] not seek or want any further information about the guarantor or his or her personal or financial circumstances"40. Mr Jeruzalski's attitude in this regard conformed to the standard practice of AJ Lawyers of making no inquiries as to a borrower's capacity to repay the loan, and having no contact with borrowers save for written correspondence and documentation41. The primary judge found that Mr Jeruzalski knew that the loans were "a risky and dangerous undertaking for [the appellant]"42 because of the high interest 36 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [17], [23]; Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [43]. 37 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [97]-[105]. 38 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [264]. See also [266], [269]. 39 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [265]. 40 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [57]. 41 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [61]-[62], [65]. 42 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [308]. rates, the risk to the appellant of the cost of forced sales, and the consequential impact of a default upon the appellant43. The primary judge concluded that Mr Jeruzalski "knowingly and deliberately failed to make any inquiries about [the appellant] and whether Mr Zourkas had misled him about [the appellant's] ability to service the loans, about [the appellant's] understanding of the loans, or about [the appellant's] financial nous and vulnerability"44. The primary judge inferred that Mr Jeruzalski's ostensible indifference to the appellant's financial circumstances reflected a concern on his part that proof of his knowledge of such matters "would in some way undermine his clients' ability to recover their loans"45. The primary judge did not accept that Mr Kiatos and Mr Topalides were truly independent sources of advice for the appellant46. The primary judge concluded that these findings demonstrated a "high level of moral obloquy"47 and "wilful blindness" as to the appellant's financial and personal circumstances48. His Honour found that the loans were procured by unconscionable conduct, and ordered that the mortgages be discharged, and the loan agreement be declared unenforceable49. The Court of Appeal The Court of Appeal concluded that the primary judge's reasons reflected an adverse view of asset-based lending "as a concept" and concluded that this adverse view "overwhelmed ... his determination of the unconscionability issue"50. The Court of Appeal was not satisfied that Mr Jeruzalski had either actual or 43 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [300]-[307]. 44 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [312]. 45 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [58]. See also [312]. 46 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [314]. 47 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [313]. 48 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [315]. 49 Jams 2 Pty Ltd v Stubbings [No 4] (2019) 59 VR 1 at 14-15 [46]. 50 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [126]. constructive knowledge of the appellant's desperate personal and financial circumstances51. Importantly in this regard, the Court of Appeal considered that Mr Jeruzalski was entitled to rely on the certificates of independent advice as showing that the appellant had consulted a solicitor and an accountant, and as to the truth of the matters stated therein52. In their Honours' view, the certificates made it reasonable for Mr Jeruzalski to refrain from any further inquiry as to the appellant's circumstances; indeed, their Honours noted that, absent the certificates, there may have been sufficient knowledge on Mr Jeruzalski's part to "justify the serious finding that it was unconscionable for him to abstain from inquiry in all the circumstances"53. As to the primary judge's finding that the certificates did not reflect truly independent advice54, the Court of Appeal held that there was no sufficient basis in the evidence for that inference55. Nevertheless, the Court of Appeal accepted that at the time Mr Jeruzalski approved the loans on behalf of the respondents, he knew that the appellant and the company had paid only a nominal amount as a deposit on the Fingal property; that the proceeds of the loans would be applied by the appellant as explained to him by Mr Zourkas; and that any remaining sum available to the appellant after such application of funds would be "very small"56. Importantly, the Court of Appeal accepted that Mr Jeruzalski proceeded on the assumption "that [the appellant] and the company had 'no income', in the sense that they did not have sufficient income to service interest under the loans for between six and 12 months"57. The parties' contentions in this Court In this Court, the appellant conceded that asset-based lending is not necessarily unconscionable in itself, and focussed upon the circumstances of the 51 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [130]. 52 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [132]. 53 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [132]-[133]. 54 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [314]. 55 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [134]. 56 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [131(2)-(4)]. 57 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [131(1)]. system of asset-based lending employed by the respondents and AJ Lawyers in this case. The appellant submitted that the Court of Appeal attributed unwarranted significance to the certificates of independent advice. The appellant argued that the primary judge was entitled to infer that Mr Jeruzalski knew it was unlikely that the appellant had received truly independent advice. More broadly, the appellant argued that the Court of Appeal failed to have due regard to the findings made and inferences drawn by the primary judge as to Mr Jeruzalski's appreciation of the dangers confronting the appellant in taking the loans, particularly since the primary judge had relied on his impressions of the witnesses in making these findings. The respondents, on the other hand, emphasised the appellant's concession that asset-based lending, in and of itself, is not unconscionable, and submitted that the facts attending the making of the loans exclusively by reference to the security value of the appellant's assets were not significant as to a finding of unconscionability. In this regard, it was said that the Court of Appeal was right to hold that Mr Jeruzalski was entitled to rely on the certificates as conveying that the nature and consequences of the loans had been sufficiently explained to the appellant58. The respondents supported the conclusion of the Court of Appeal that it was permissible for Mr Jeruzalski deliberately to abstain from further inquiries precisely because he had the "comfort" of the certificates. The respondents argued that the only significant finding of the primary judge that was disregarded by the Court of Appeal was the finding to the effect that the certificates were not truly independent59. It was said that the Court of Appeal was justified in taking this course on the basis that there was no evidence to support the primary judge's inference. Unconscionable conduct In Kakavas v Crown Melbourne Ltd60, this Court said: "[E]quitable intervention does not relieve a plaintiff from the consequences of improvident transactions conducted in the ordinary and undistinguished course of a lawful business. A plaintiff who voluntarily engages in risky 58 See Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [77]-[85]. 59 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [133]-[134]. (2013) 250 CLR 392 at 401-402 [20]. business has never been able to call upon equitable principles to be redeemed from the coming home of risks inherent in the business. The plaintiff must be able to point to conduct on the part of the defendant, beyond the ordinary conduct of the business, which makes it just to require the defendant to restore the plaintiff to his or her previous position." In Commercial Bank of Australia Ltd v Amadio61, this Court held that unconscionability involves: a relationship that places one party at a "special disadvantage" vis-à-vis the other; knowledge of that special disadvantage by the stronger party; and unconscientious exploitation by the stronger party of the weaker party's disadvantage62. But these considerations should not be understood as if they were to be addressed separately as if they were separate elements of a cause of action in tort. As Dixon CJ, McTiernan and Kitto JJ said in Jenyns v Public Curator (Qld)63, in a passage approved by this Court in Kakavas64 and Thorne v Kennedy65, the application of the equitable principles relating to unconscionable conduct: "calls for a precise examination of the particular facts, a scrutiny of the exact relations established between the parties and a consideration of the mental capacities, processes and idiosyncrasies of the [vulnerable party]. Such cases do not depend upon legal categories susceptible of clear definition and giving rise to definite issues of fact readily formulated which, when found, automatically determine the validity of the disposition. Indeed no better illustration could be found of Lord Stowell's generalisation concerning the administration of equity: 'A court of law works its way to short issues, and confines its views to them. A court of equity takes a more comprehensive view, and looks to every connected circumstance that ought to influence its determination upon the real justice of the case'." (citation omitted) (1983) 151 CLR 447 at 459-460, 461, 474. 62 See also Louth v Diprose (1992) 175 CLR 621 at 626; Micarone v Perpetual Trustees Australia Ltd (1999) 75 SASR 1 at 109 [589]; Turner v Windever [2003] NSWSC 1147 at [105]; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392. (1953) 90 CLR 113 at 118-119. (2013) 250 CLR 392 at 426 [122]. See also 401 [18]. (2017) 263 CLR 85 at 105 [43]. Special disadvantage In this field of discourse, "special disadvantage" means something that "seriously affects the ability of the innocent party to make a judgment as to his [or her] own best interests"66. While the factors relevant to an assessment of special disadvantage have not been exhaustively listed, Fullagar J in Blomley v Ryan67 considered that special disadvantage may be inferred from "poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary". No particular factor is decisive, and it is usually a combination of circumstances that establishes an entitlement to equitable relief68. At all times, the appellant was incapable of understanding the risks involved in the transaction69. He was unable to perform simple calculations, such as 10 per cent of $130,00070. The primary judge observed that the very circumstance that the appellant was disposed to enter into such a transaction was evidence of his vulnerability71. To say the least, the appellant's financial circumstances were "bleak"72. It could not be, and was not, disputed by the respondents that the primary judge's findings as to the appellant's circumstances established that he was at a special disadvantage vis-à-vis the respondents. The outcome of the appeal to this Court turns on the extent of Mr Jeruzalski's knowledge of the appellant's circumstances and whether Mr Jeruzalski exploited that disadvantage so that the 66 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462. (1956) 99 CLR 362 at 405; see also Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462, 474-475; Louth v Diprose (1992) 175 CLR 621 at 628- 68 Dal Pont, Equity and Trusts in Australia, 7th ed (2019) at 298 [9.30]. 69 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [264]-[272]. 70 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [103], [269]. 71 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [266]. 72 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [101]. respondents' attempt to enforce their rights under the loans and mortgages was unconscionable. Knowledge and exploitation The inevitable outcome of the transaction was, objectively speaking, that the appellant's equity in his properties would be taken by the respondents by way of interest payments, including at default interest rates. The dangerous nature of the loans, obvious to Mr Jeruzalski but not to the appellant, was central to the question whether the appellant's special disadvantage had been exploited by the respondents. The primary judge found that Mr Jeruzalski "should have known" that the appellant was bound to lose his equity in the Narre Warren properties73. It may be accepted that his Honour's findings as to Mr Jeruzalski's state of mind did not rise to an unequivocal finding of actual knowledge on the part of Mr Jeruzalski that the appellant would inevitably lose his equity in his properties by taking these loans; but a finding in such terms was not essential to the appellant's case for relief. For a court of equity, the question is whether Mr Jeruzalski's appreciation of the appellant's special disadvantage was such as to amount to an exploitation of that disadvantage. In Kakavas74, this Court approved of the emphasis laid by Mason J in Amadio75 on the point that: "the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his [or her] own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party." A case for relief against an unconscionable attempt to enforce legal rights is established in this case because Mr Jeruzalski had sufficient appreciation of the appellant's vulnerability, and the disaster awaiting him under the mortgages, that 73 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [17]. (2013) 250 CLR 392 at 398 [6]. See also Thorne v Kennedy (2017) 263 CLR 85 at (1983) 151 CLR 447 at 462. See also 467. his conduct in procuring the execution of the mortgages is justly described as unconscientious. There can be no doubt that Mr Jeruzalski, on behalf of the respondents, had a lively appreciation of the likelihood that the loss of the appellant's equity in his properties would be suffered by reason of his financial naïveté and his lack of means. The findings of the primary judge pertaining to Mr Jeruzalski's state of knowledge were made after having had the benefit of hearing Mr Jeruzalski in person over several days76. The primary judge's findings were "inevitably affected" by his collective impressions of Mr Jeruzalski as a witness and were not "glaringly improbable" or "contrary to compelling inferences"77. The Court of Appeal had no basis for disregarding those findings. Certainly the certificates were not a basis for doing so. The certificates contained nothing to suggest that the appellant had actually turned his attention to the difference between the cost of his existing borrowings with Commonwealth Bank and the proposed loans, or to how he would service the proposed loans. The absence of even the most general reference in the certificates as to the existence and terms of the company's business plan or as to how the Fingal property zoning problem (of which Mr Jeruzalski was aware) might be resolved is eloquent of their artificiality. In addition, given the bland boilerplate language of the certificates and the statement therein of the purpose of the loan (which Mr Jeruzalski must have known to be inaccurate), it is open to draw the inference that the certificates were mere "window dressing". A similar inference may be drawn in relation to the commercially unnecessary interposition of the company as borrower, a step calculated to prevent or impede scrutiny of the fairness of the transaction under the Code. The certificates might also be seen to have been a precautionary artifice designed to prevent an inference that the respondents were wilfully blind to the obvious danger to the appellant. But however one views the certificates, they could not negate Mr Jeruzalski's actual appreciation of the dangerous nature of the loans and the appellant's vulnerability to exploitation by the respondents78. Indeed, one might regard the deployment of such artifices in a context where the lender or its agent deliberately distances itself from evidence that must confirm the dangerous 76 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [88]-[90], [92]-[96], [313]. 77 See, eg, Castle v The Queen (2016) 259 CLR 449 esp at 472 [66]. 78 See Bridgewater v Leahy (1998) 194 CLR 457 at 470-471 [41]; Thorne v Kennedy (2017) 263 CLR 85 at 112 [64]-[65], 128-129 [123]. nature of the transaction for the borrower or its guarantor as evidence pointing to an exploitative state of mind on the part of the lender. The primary judge found that Mr Jeruzalski suspected that the appellant did not receive truly independent advice from either Mr Kiatos or Mr Topalides79. Mr Jeruzalski's evidence was that, "if [the appellant] or [the company] had no income, then, from his experience, a first-tier bank would not have lent money to him", and further, that "his firm would not assist somebody like [the appellant] to obtain a bank loan"80. There was nothing in the evidence to suggest to Mr Jeruzalski that the appellant had an income that would enable him to refinance with a bank. The circumstances of Mr Jeruzalski's involvement with the appellant meant that what Mr Jeruzalski did know of the appellant's affairs made the prospect of the appellant's refinancing with a bank a forlorn hope. Mr Jeruzalski, on behalf of the respondents, appreciated that the loans were a dangerous transaction from the appellant's point of view; but the prospect of obtaining the profit to be made by the taking of the appellant's equity by way of interest payments made the exploitation of the appellant's disadvantages good business for the respondents. The transaction in this case cannot be regarded as if it were, for example, a loan to an asset-rich but income-poor individual sought for the purposes of meeting a temporary liquidity problem. The transaction could not even be seen as a high-risk loan to a person willing to gamble on the prospect of a rise in property values. Having regard to the unchallenged findings of fact by the primary judge, it is evident that Mr Jeruzalski, on behalf of the respondents, took the opportunity to exploit the appellant's lack of business acumen and meagre financial resources to deprive him of his equity in the Narre Warren properties. Conclusion Mr Jeruzalski's conduct on behalf of the respondents amounted to the unconscientious exploitation of the appellant's special disadvantage. The primary judge was right to hold that it was unconscionable for the respondents to insist upon their rights under the mortgages. That being so, it is unnecessary to consider whether the appellant was entitled to succeed pursuant to s 12CB of the ASIC Act. 79 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [315], cf Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [133]-[134]. 80 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [93]. Orders We would make the following orders: Appeal allowed. Set aside orders 2 and 3 made on 5 August 2020 and orders 2 and 3 made on 24 August 2020 by the Court of Appeal of the Supreme Court of Victoria and, in their place, order that: orders 1 and 3 made on 22 July 2019 by the primary judge be varied so that the date of those orders be taken instead to be the date of final orders in Proceeding No M13 of 2021 in the High Court of Australia; the appeal be otherwise dismissed; the appellants pay the respondent's costs of the application for leave to appeal and of the appeal on the standard basis; and pursuant to r 63.34.2 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic): the appellants pay the costs of the legal assistance provided to the respondent by the legal practitioners on a pro bono basis, as if the legal assistance had been provided by the legal practitioners not on a pro bono basis but on the basis that the respondent was under an obligation to pay for the legal assistance in the ordinary way; and costs payable in respect of legal assistance given on a pro bono basis are payable directly to the legal practitioners. The respondents pay the appellant's costs. GORDON J. The detail of the relevant background is set out in the reasons of other members of the Court. I agree that the appeal must be allowed. I write separately because I consider that the respondent lenders' system of conduct was contrary to s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"). Section 12CB of the ASIC Act – system of conduct the supply of Section 12CB(1)(a) of the ASIC Act prohibits persons from engaging "in conduct that is, in all the circumstances, unconscionable", in connection with, relevantly, trade or commerce. financial services Section 12CB(4)(b) makes clear that the prohibition in s 12CB(1) can apply "to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour" (emphasis added). "A 'system' connotes an internal method of working; a 'pattern' connotes the external observation of events"81. Because a specific person need not be identified, "special disadvantage of an individual is not a necessary component of the prohibition"82. "Unconscionable" is not defined in the ASIC Act. Unconscionable conduct under s 12CB "is not limited by the unwritten law of the States and Territories relating to unconscionable conduct"83, a clear reference to the equitable doctrine of unconscionable conduct84. The statutory conception of unconscionability is more broad-ranging than the equitable principles; it does something more85. Section 12CB of the ASIC Act, like equity, requires a focus on all the circumstances86. The court must take into account each of the considerations 81 Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1 at 56 [143], citing Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631 at 654 [104]. 82 Kobelt (2019) 267 CLR 1 at 78 [232]; see also 101 [293]. 83 ASIC Act, s 12CB(4)(a). 84 See Kobelt (2019) 267 CLR 1 at 37 [83], 39 [89], 56 [144], 97 [284]. 85 Kobelt (2019) 267 CLR 1 at 37 [83], 38-39 [87]-[89], 56 [144], 102 [295]. 86 Kobelt (2019) 267 CLR 1 at 15 [8], 37 [83], 60-61 [154]-[155]. See also Jenyns v Public Curator (Qld) (1953) 90 CLR 113 at 118-119, quoted in Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 426 [122] and Thorne v Kennedy (2017) 263 CLR 85 at 105 [43]; Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 at 587 [188], 620 [294]. "[T]he court must not have regard to identified in s 12CC if and to the extent that they apply in the circumstances87. The considerations listed in s 12CC are non-exhaustive, but they provide "express guidance as to the norms and values that are relevant to inform the meaning of unconscionability and its practical application"88. They assist in "setting a framework for the values that lie behind the notion of conscience identified in s 12CB"89. "The assessment of whether conduct is unconscionable within the meaning of s 12CB involves the evaluation of facts by reference to the values and norms recognised by the statute, and thus, as it has been said, a normative standard of conscience which is permeated with accepted and acceptable community standards. It is by reference to those generally accepted standards and community values that each matter must be judged"90. Put in different terms, the s 12CC considerations assist in evaluating whether the conduct in question is "outside societal norms of acceptable commercial behaviour [so] as to warrant condemnation as conduct that is offensive to conscience"91. A court should take the serious step of denouncing conduct as unconscionable only when it is satisfied that the conduct is "offensive to a conscience informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within contemporary Australian society"92. It was common ground that the lenders' conduct in issue in these proceedings was subject to the prohibition in s 12CB(1) of the ASIC Act. The appellant, Mr Stubbings, contended that the lenders' system of lending money secured against a guarantor's property, suspecting that the guarantor had no income or capacity to service the loan, yet deliberately avoiding information as to the any circumstances that were not reasonably foreseeable at the time of the alleged contravention": ASIC Act, s 12CB(3)(a). 87 Kobelt (2019) 267 CLR 1 at 38 [87]; see also 49 [120], 60-61 [154]-[155], 105 [302]. 88 Kobelt (2019) 267 CLR 1 at 60 [154], quoting Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 at 270 [279]. 89 Kobelt (2019) 267 CLR 1 at 60 [154]; see also 37-38 [84]-[87], 105 [302]. 90 Kobelt (2019) 267 CLR 1 at 78 [234] (footnote omitted). 91 Kobelt (2019) 267 CLR 1 at 40 [92]; see also 59 [153], 78 [234]. See also Australian Competition and Consumer Commission v Lux Distributors Pty Ltd (2013) ATPR ¶42-447 at 43,463 [23]; Paciocco (2015) 236 FCR 199 at 275 [298], 276 [304]. 92 Kobelt (2019) 267 CLR 1 at 40 [93]. guarantor's financial or personal circumstances in order to "immunise" themselves from knowledge of vulnerability, was, in all the circumstances, unconscionable conduct in connection with the supply of financial services in trade or commerce contrary to s 12CB of the ASIC Act. I agree. Lenders and Mr Jeruzalski Mr Jeruzalski is a solicitor and partner of Ajzensztat Jeruzalski & Co ("AJ Lawyers"). AJ Lawyers "acts for clients who wish to lend money". At the time of trial, Mr Jeruzalski had 10 to 15 clients who wished to lend money and used the services of AJ Lawyers to do so. The lenders conceded in this Court that "[Mr] Jeruzalski's conduct [was] attributable to the lenders as their agent". In other words, Mr Jeruzalski's system was the lenders' system. Typical loan terms Mr Jeruzalski prepared and advanced all loans in the same manner using the same pro forma documents. Mr Jeruzalski would only make loans to companies, ostensibly for business purposes, to avoid the operation of the National Credit Code (Cth)93. He required the loans to be guaranteed by an individual, with the guarantee secured by a mortgage over real property held by the guarantor. He would not make loans that were covered by the National Credit Code. The loans were short-term, interest-only loans; around 90 per cent of the loans arranged by AJ Lawyers were for a maximum of 12 months and a minimum of between four and six months; and most of the loans were "around the million-dollar mark". The interest rates on a loan secured by a first mortgage were high. Before suggesting to his clients that they lend money, Mr Jeruzalski obtained a valuation of the proposed security, which was normally provided by the intermediary seeking the loan on behalf of the borrower. The maximum loan-to-value ratio for a loan secured by a first mortgage was typically two-thirds. Assumptions made about borrowers and guarantors Mr Jeruzalski assumed that anyone seeking a loan from one of his clients had no income, because if they did they would not need to come to him. In effect, he assumed that the loans were "unbankable", in the sense that the personal and financial circumstances of anyone seeking a loan from one of his clients were such that they would not be able to access funds from a traditional financial lender. 93 See National Consumer Credit Protection Act 2009 (Cth), Sch 1, s 5(1)(a) and (b). Acknowledged risks An interest-only, asset-based, 12-month loan of around $1 million at a high rate of interest will always be, at the very least, an extremely risky product for a person who has no income and is unbankable. Mr Jeruzalski was aware that a loan of this kind could be "a dangerous product in the hands of the wrong person". Lack of information about borrowers and guarantors Mr Jeruzalski did not require application forms from borrowers. He did not "seek income particulars" or "look at the income of the [borrower]". Mr Jeruzalski had no interest in the ability of the borrower (the company) or the guarantor (the individual) to service the loan and was only concerned with the sufficiency of the security to meet repayment of capital and accrued interest. Mr Jeruzalski checked that proposed guarantors and directors of proposed borrowers were not bankrupt, but he otherwise "[gave] no weight to the ability of the borrower or guarantor to repay the loan, other than from the mortgaged security". He did not run credit checks: if the borrower was a registered corporation, that satisfied AJ Lawyers' requirements. Mr Jeruzalski did not make any inquiries into whether borrowers (or guarantors) had any assets other than the proffered security. And despite the requirement that loans be "for business purposes", Mr Jeruzalski's evidence was that his practice was not to ask what the actual purpose of the loan was. As Mr Jeruzalski would only make loans that were guaranteed and secured by a mortgage over real property held by a guarantor, he treated the asset position of the borrower (the company) as irrelevant. If the borrower (the company) defaulted, Mr Jeruzalski's practice was to seek judgment against the guarantor and execute on the mortgage given over the guarantor's real property. Refusal to communicate, meet or negotiate with proposed borrowers Mr Jeruzalski would be approached by intermediaries, such as solicitors, accountants and brokers, who were seeking a loan for a client. He would not make loans to people who approached him directly. Mr Jeruzalski communicated with borrowers and guarantors exclusively through intermediaries, who assisted him in arranging for loan documentation to be executed. Any details that Mr Jeruzalski needed to know about the borrower (the company) and the guarantor (the individual) were obtained from the intermediary. Mr Jeruzalski's evidence was that "most of the work [he did was] verbal, oral" and he did not keep file notes of his conversations with intermediaries, except in relation to title particulars. Mr Jeruzalski did not seek information about what representations, if any, the intermediary had made to the borrower or guarantor. Mr Jeruzalski did not interview prospective borrowers or guarantors. He did not meet with them. He did not negotiate with them. Mr Jeruzalski deliberately avoided knowledge of borrowers' and guarantors' personal and financial circumstances "in case his knowledge would in some way undermine his clients' ability to recover their loans". Mr Jeruzalski's clients and pro forma loan documents If Mr Jeruzalski considered that the security was satisfactory, he would approach one or more of his clients to ascertain whether they were interested in making a loan. If one or more of his clients wished to make a loan, Mr Jeruzalski prepared pro forma documents, which were given to the borrower and guarantor by an intermediary. The relevant documents included a deed certifying that the loan was "for business purposes", a "certificate of independent legal advice" in respect of the guarantor and a "certificate of independent financial advice" in respect of the borrower. Deed The pro forma deed was entered into by the borrower, the guarantor and the lenders. In the deed, the borrower94 and the "guarantor/mortgagor"95 separately covenanted that the purpose of the loan was: "for business purposes"; not "for personal, domestic or household purposes"96; not "to purchase, renovate or improve the residential property for investment purposes"97; and not "to refinance credit that [had] been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes"98. As is apparent, each clause of the deed was drafted to address and avoid the application of the National Credit Code. Pro forma certificates of independent legal and financial advice As noted above, Mr Jeruzalski prepared pro forma certificates of independent legal and financial advice. The pro forma certificate of independent legal advice, to be signed by a solicitor, was addressed to the lenders. Under the heading "Acknowledgement by Guarantor", the certificate contained a list of questions, which were to be answered by the guarantor writing their reply in the right-hand column. The questions were directed, among other things, to whether the the guarantor had received, read and had their solicitor explain 94 Deed, cll 1-4. 95 Deed, cll 5-8. 96 cf National Credit Code, s 5(1)(b)(i). 97 cf National Credit Code, s 5(1)(b)(ii). 98 cf National Credit Code, s 5(1)(b)(iii). "Security Documents" (the Loan Agreement and Debenture Charge) and whether they understood the effects of the Security Documents and the consequences to the guarantor if the borrower defaulted on its obligations to the lender. The certificate of independent financial advice, to be signed by an accountant, stated that advice had been given to the borrower entirely independently of the guarantor. The certificate was addressed to the lenders in respect of the debenture charge granted by the borrower (the company). It contained no substantive information about the borrower, the guarantor or the transaction. The certificate did not require the accountant to sight any financial documents. Neither certificate suggested that the guarantor had turned their attention to or had had their attention drawn to the financial consequences for them. As stated above, on default, Mr Jeruzalski's practice was to enforce against the guarantor and the guarantor's mortgaged property. He treated the asset position of the borrower (the company) as irrelevant. System of conduct unconscionable Two separate but related points should be made at the outset. First, "[c]onduct can be unconscionable even where the innocent party is a willing participant; the question is how that willingness or intention was produced" (emphasis in original)99. Second, "a system of conduct or pattern of behaviour may be unconscionable, even though not every individual affected by the conduct or behaviour is or has been disadvantaged by the conduct or behaviour"100. There does not need to be loss or disadvantage for a system to be unconscionable. What can be significant is that the conduct targeted a group to take advantage of their likely, although not certain, vulnerability or, as in this case, that the lenders recognised a likely, although not certain, vulnerability and yet designed a system of lending against a guarantor's property, suspecting that they had no income or capacity to service the loan, and deliberately avoiding information as to the guarantor's financial or personal circumstances in order to "immunise" themselves from knowledge of the vulnerability. 99 Kobelt (2019) 267 CLR 1 at 62 [157], citing Bridgewater v Leahy (1998) 194 CLR 457 at 491 [118], quoting Huguenin v Baseley (1807) 14 Ves Jun 273 at 299-300 [33 ER 526 at 536]. 100 Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd (In liq) [No 4] [2018] FCA 1408 at [729]. Those related points reflect, and are consistent with, Parliament's intention that101: "[T]he focus of the [unconscionable conduct] provisions is on conduct that may be said to offend against good conscience; it is not specifically on the characteristics of any possible 'victim' of the conduct (though these may be relevant to the assessment of the conduct)." (emphasis in original) The assessment of whether conduct is unconscionable within the meaning of s 12CB involves the evaluation of the conduct – here a system of conduct – by reference to the values and norms recognised by the statute, a normative standard of conscience which is permeated with accepted and acceptable community standards102. Here, the lenders' system – their "internal method of working"103 – did not, and was not designed to, prevent the lenders acting unconscionably contrary to s 12CB of the ASIC Act. The lenders' system was designed to do the opposite – to hide from the lenders any information which might later be said to make the loan, the guarantee or the taking of security unconscionable. The system sought to "immunise" the lenders from claims by borrowers or guarantors to set aside loans as unconscionable by studiously avoiding any inquiry about why or in what circumstances the individual guarantor provided their property as security despite the lenders recognising that a loan of the kind they were offering "could be a dangerous product in the wrong hands and wreak significant damage on the guarantor" (emphasis added). And the lenders' system was not reasonably necessary to protect the lenders' legitimate interests104. Vulnerability With knowledge of the significant risks associated with the financial product he was providing, Mr Jeruzalski's system facilitated the making of 101 Australia, House of Representatives, Competition and Consumer Legislation Amendment Bill 2011, Explanatory Memorandum at 21 [2.21], quoted in Kobelt (2019) 267 CLR 1 at 78 [232]. 102 Kobelt (2019) 267 CLR 1 at 78 [234], citing Lux Distributors (2013) ATPR ¶42-447 at 43,463 [23], cited in Paciocco (2015) 236 FCR 199 at 275 [298]; see also 31 [59], 103 Kobelt (2019) 267 CLR 1 at 56 [143], citing Unique International College (2018) 266 FCR 631 at 654 [104]. 104 ASIC Act, s 12CC(1)(b). interest-only loans to companies (avoiding the operation of the National Credit Code), where the loans were guaranteed by persons who he assumed had no income and were otherwise unbankable105, whilst deliberately avoiding any knowledge that might enliven the court's equitable or statutory jurisdiction to set aside unconscionable transactions. It may be inferred that the system assumed that some borrowers and guarantors would be vulnerable in a sense capable of enlivening that jurisdiction106. But the lenders' system sought to "immunise" the lenders against that assumption being known to be true because knowledge of its truth would inevitably attract the court's equitable or statutory jurisdiction to set aside the transactions. That was unconscionable. Unconscientious taking advantage law protections Mr Jeruzalski's system used "unfair tactics"107 and lacked good faith108. Developing and applying a system that seeks to avoid the application of statutory and general the ASIC Act. is contrary Taking advantage of vulnerable borrowers and guarantors reveals a clear power imbalance built into the system109, reflected in Mr Jeruzalski's refusal even to meet or communicate (let alone negotiate) with prospective borrowers and guarantors. As explained, he acted only through intermediaries. to s 12CB of The system was also characterised by a lack of transparency110, which was exacerbated, not ameliorated, by the certificates of independent advice. The certificates were crafted by Mr Jeruzalski to avoid any meaningful disclosure not only to the lenders but also to the borrowers and guarantors. The certificates of advice were "part of the system of conduct adopted by AJ Lawyers to immunise the [lenders] from knowledge that might threaten the enforceability of the loan". 105 ASIC Act, s 12CC(1)(e). 106 cf Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132 at 142-143 [43]. 107 ASIC Act, s 12CC(1)(d). 108 ASIC Act, s 12CC(1)(l). 109 ASIC Act, ss 12CC(1)(a), 12CC(1)(c), 12CC(1)(e), 12CC(1)(i), 12CC(1)(j)(i). 110 ASIC Act, ss 12CC(1)(c), 12CC(1)(i), 12CC(1)(j)(i). The lenders' system of conduct is outside the societal norms of acceptable behaviour so as to warrant condemnation as offensive to conscience111. It does not reflect values that can be recognised by a court to prevail within contemporary Australian society. It is a system of conduct that is unconscionable contrary to s 12CB(1) of the ASIC Act. Lenders' conduct unconscionable on other bases The lenders' dealings with Mr Stubbings were consistent with the system that Mr Jeruzalski had established. The lenders lent $1,059,000 to Victorian Boat Clinic Pty Ltd ("VBC"), a shell company with no assets of which Mr Stubbings was the sole shareholder and director. They thereby avoided the operation of the National Credit Code. The loan was an interest-only loan for a minimum of six months and a maximum of 12 months with high monthly interest payments of $8,825 or $15,002.50 at default rates. Mr Stubbings guaranteed the loan and gave mortgages over two existing properties he owned and a third property ("the Fingal property") which he bought with the loan proceeds. The decision to lend to VBC was based solely on the valuations of the properties Mr Stubbings offered as security for him acting as guarantor of the loan. The lenders "had no evidence and did not request any evidence regarding Mr Stubbings' ability to repay or the capacity of VBC to repay the loan". At the time the loan was made, Mr Jeruzalski assumed Mr Stubbings had no income and that, if Mr Stubbings had no or limited income, a bank would not have lent money to him112. Indeed, Mr Jeruzalski's evidence was that if Mr Stubbings "had an income sufficient to service a loan of [the amount he wished to borrow], he would've gone to a bank". Mr Jeruzalski knew Mr Stubbings had paid only a $100 deposit on the Fingal property. Despite the loan being "for business purposes" (to remove any risk that it might be caught by the National Credit Code), Mr Jeruzalski knew that the Fingal property was zoned "green wedge", which meant that a business could not be operated from the property without getting an exemption, and that there would be almost no funds left over from the transaction (once the Fingal property had been purchased) to establish or conduct a business. Mr Jeruzalski also knew 111 Kobelt (2019) 267 CLR 1 at 40 [92]; see also 59 [153], 78 [234]. See also Lux Distributors (2013) ATPR ¶42-447 at 43,463 [23]; Paciocco (2015) 236 FCR 112 ASIC Act, s 12CC(1)(e). that Mr Stubbings' two existing properties (also taken as security) were lived in by Mr Stubbings' family. Moreover, Mr Jeruzalski was aware that the loan "could cause severe damage" to Mr Stubbings if VBC defaulted113. Mr Jeruzalski was a solicitor with considerable experience "in the area of making loans on behalf of clients". Mr Jeruzalski knew that, if VBC defaulted, interest would start accruing at $15,002.50 per month114, Mr Stubbings' secured properties would be sold, and "the damage to Mr Stubbings' accumulated savings would be severe". In other words, Mr Jeruzalski knew the loan was "a risky and dangerous undertaking for Mr Stubbings". Indeed, based on what Mr Jeruzalski knew at the time that the loan was made, Mr Jeruzalski must have known that no bank would have refinanced the lenders' loan115. The entry into the improvident transaction by Mr Stubbings – a man with no income who was required to make monthly interest payments of at least $8,825 in respect of a loan which was to buy the Fingal property, but which was described as a loan "for business purposes" when a business could not be conducted from the Fingal property without an exemption, secured against the Fingal property and his only other assets – demonstrated his inability to make any realistic assessment of the worth and consequences of the transaction116. The conclusion that, in those circumstances, Mr Stubbings was vulnerable and under a special disadvantage vis-à-vis the lenders was inevitable117. Mr Jeruzalski knew of Mr Stubbings' vulnerability and that the transaction would inevitably be disastrous for him118. Yet, despite Mr Jeruzalski knowing that 113 ASIC Act, s 12CC(1)(d) and (l). 114 ASIC Act, s 12CC(1)(j)(ii). 115 ASIC Act, s 12CC(1)(e). 116 ASIC Act, s 12CC(1)(c). See Thorne (2017) 263 CLR 85 at 128 [121], quoting Bridgewater (1998) 194 CLR 457 at 493 [123]. See also Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 466. 117 See Blomley v Ryan (1956) 99 CLR 362 at 405; Amadio (1983) 151 CLR 447 at 459, 461-462, 474-475; Louth v Diprose (1992) 175 CLR 621 at 628-629, 637-638, 650; Kakavas (2013) 250 CLR 392 at 398 [6], 424-425 [117]-[118]; Thorne (2017) 263 CLR 85 at 103 [38], 115-116 [74], 122 [94], 125-126 [109]-[113]. 118 ASIC Act, s 12CC(1)(a). Mr Stubbings was under that disadvantage, he exploited that disadvantage119. There was an immediate need for the lenders, through Mr Jeruzalski, to provide Mr Stubbings with an explanation and assistance in the form of a warning that the loan was "a risky and dangerous undertaking for Mr Stubbings" and that the damage to Mr Stubbings from entry into the transaction would be severe. Not only did Mr Jeruzalski have no reason to think that Mr Stubbings had received that assistance or explanation120, but his behaviour was worse than that. Mr Jeruzalski deliberately did not make any inquiries or provide Mr Stubbings with the advice and explanations that were necessary. He deliberately avoided making inquiries about Mr Stubbings' personal and financial circumstances in order to avoid acquiring any knowledge that might enliven the court's equitable or statutory jurisdiction to set aside the loan on the grounds of unconscionability121. Mr Jeruzalski refused to meet Mr Stubbings, relying instead on an intermediary122. He avoided finding out anything about the dealings between Mr Stubbings and the intermediary. The only evidence Mr Jeruzalski had about the assistance or explanation provided to Mr Stubbings was the two certificates he had drafted. The certificates were deficient. As stated above, it may be inferred that the certificates were crafted that way to avoid any meaningful disclosure123. The certificate of independent legal advice did not state that Mr Stubbings had received financial advice. The certificate of independent financial advice stated that advice had been given to VBC, independently of any guarantor, in relation to the debenture charge to be executed by it. It did not require the accountant to sight any financial documents. It did not refer to the mortgage security. Neither certificate stated that Mr Stubbings had been given any financial advice as guarantor. Neither certificate stated that Mr Stubbings had turned his attention to or had had his attention drawn to the improvidence of the transaction and the inevitable and disastrous consequences for him. The completed certificates contained no information regarding the "business", VBC's or Mr Stubbings' financial position, the substance of the advice given or the purpose of the borrowing except for the handwritten words "Set up & Expand the business". 119 ASIC Act, s 12CC(1)(d) and (l). See Blomley (1956) 99 CLR 362 at 405. 120 cf Amadio (1983) 151 CLR 447 at 466, 468. 121 ASIC Act, s 12CC(1)(d) and (l). 122 ASIC Act, ss 12CC(1)(a), 12CC(1)(i), 12CC(1)(j)(i). 123 ASIC Act, s 12CC(1)(d), (i) and (l). to unconscientious In the circumstances, the lenders' conduct (through Mr Jeruzalski) amounted taking advantage of Mr Stubbings' special disadvantage124 – there was a "lack of assistance or explanation where assistance or explanation [was] necessary"125. The lenders are fixed with the knowledge that they deliberately avoided, that Mr Stubbings was effectively unemployed, had no regular income and fundamentally misunderstood the transaction126. In all the circumstances, the lenders' conduct in respect of Mr Stubbings was unconscionable contrary to the prohibition in s 12CB of the ASIC Act and unconscionable in equity. including Orders I agree with the orders proposed by Kiefel CJ, Keane and Gleeson JJ. 124 See Thorne (2017) 263 CLR 85 at 125-126 [109]-[112]. 125 Blomley (1956) 99 CLR 362 at 405. 126 ASIC Act, s 12CC(1)(c). STEWARD J. The respondents lent money, secured by mortgages over three properties and by a debenture charge, to Victorian Boat Clinic Pty Ltd ("VBC"). The appellant was the sole director and shareholder of VBC, which was at all times no more than a shell company with no assets. The loan was guaranteed by the appellant. The purpose of this loan was to refinance existing indebtedness and to fund the purchase of a property in Fingal which would become the appellant's home. Subsequently, VBC defaulted on the payment of interest to the respondents. The respondents brought proceedings in the Supreme Court of Victoria against the appellant to enforce the guarantee and to seek possession, as mortgagees, over the appellant's home127. VBC also entered into a smaller second loan with a different lender who was not a party to the proceedings below. The appellant's financial position was bleak. He was effectively unemployed, was not receiving any government benefits and had no savings. He also owed two years of council rates in arrears. The primary judge made findings, undisturbed on appeal, that in reality there were "no circumstances" in which the appellant's plan for repayment could "work", and that any person with a "modicum of intelligence" who had been apprised of the actual nature of the transaction and the appellant's circumstances would not have proceeded with the loans128. However, the agent of the respondents – a solicitor – made no attempt to enquire into the appellant's fitness to be a guarantor and made no enquiries about his personal or financial circumstances. Nor was the appellant ever warned about the dangers of entering into what was, for him, so glaringly improvident an arrangement. The primary judge found that the solicitor had developed a "system of conduct" whereby such enquiries would not need to be made. It was found at first instance, however, that this system rendered the solicitor wilfully blind and that the failure to make enquiries constituted unconscionable conduct129. The Court of Appeal agreed that there may have been a sufficient basis to conclude that it was unconscionable for the solicitor to have made no enquiries "in all the circumstances"130. But the Court of Appeal decided, nonetheless, that the receipt 127 The respondents, as mortgagees, had already sold the other two properties previously owned by the appellant. 128 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [16]-[17] per Robson J. 129 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [315]-[316] per Robson J. 130 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [132] per Beach, Kyrou and Hargrave JJA. of two certificates, from an independent solicitor and an independent accountant, ensured that the solicitor was not wilfully blind131. For the reasons set out below, and with respect, that conclusion was mistaken. It follows that equity must deny the respondents the remedy of possession over the appellant's home. The "system of conduct" and the appellant Save for one finding, the Court of Appeal did not disturb the facts found by the primary judge. It is necessary to address those facts with a degree of detail. The appellant's plan The appellant owned two properties in Narre Warren. He leased one to his son. He wanted to buy a new property to live in after falling out with the owner of a property where he had lived. He found a property for sale in Fingal on the Mornington Peninsula. The sale price was $900,000. However, with no savings and being unemployed, no regular bank would lend to him. The appellant was nonetheless able to obtain the necessary funds from the respondents in the circumstances described below by procuring VBC to enter into two loans, secured by mortgages over the three parcels of land and by a debenture charge. For each loan, the appellant guaranteed VBC's loan obligations. The appellant's plan was to use these funds to purchase the land in Fingal, renovate the two properties in Narre Warren, sell them, and then refinance the two loans at a lower interest rate through a bank after two or three months, leaving him with the Fingal property and a manageable amount of debt. As already mentioned, and for the reasons which follow, this plan was never going to work. The "system of conduct" In order to borrow money from the respondents, the appellant needed to participate in what the primary judge described as a "system of conduct"132. That system is described below. For the moment it is necessary to describe its principal parties. The system employed a solicitor, an intermediary, a borrower, a guarantor and a lender or lenders. It also employed an independent solicitor and an independent accountant to provide advice to the borrower and the guarantor. 131 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [132]-[133] per Beach, Kyrou and Hargrave JJA. 132 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [293] per Robson J. The first-mentioned solicitor was Mr Jeruzalski, a partner of the law firm Ajzensztat Jeruzalski & Co ("AJ Lawyers"). Amongst other things, that firm arranged loans between its clients and third-party borrowers. The type of loan used was called "asset-based lending". Nothing turns upon whether that label has any necessary meaning. Here, it simply refers to the type of loans organised by Mr Jeruzalski. The primary judge found that Mr Jeruzalski gave his evidence at trial with "apparent smugness"133. The intermediary was Mr Zourkas. His role was to assist a potential borrower to apply to AJ Lawyers for a loan and to assist Mr Jeruzalski in having the borrower complete the necessary paperwork. In the past three or four years, Mr Zourkas had referred to Mr Jeruzalski about 60 to 80 potential borrowers, which resulted in 30 to 40 loans being made. The primary judge found that Mr Zourkas believed that the appellant had no money when he arranged the loan with him134. His Honour characterised Mr Zourkas' evidence at trial as "dismissive, flippant, arrogant, patronising, and rude"135. The primary judge was not prepared to accept his evidence on any relevant issues unless it was corroborated136. His Honour found that Mr Zourkas was "not an honest man, but a man prepared to prey upon the weak and vulnerable like [the appellant]"137. The borrower was VBC. For reasons explained below, the loans organised by AJ Lawyers were only ever made to companies. The guarantor was the appellant. At the time the loans were made, he was earning some money as a handyman, doing things such as replacing tap washers and mowing lawns, but was otherwise unemployed. Both of the Narre Warren properties were mortgaged. These secured outstanding indebtedness of, in aggregate, the sum of $240,000. The appellant was obliged to pay, in total, about $260 per week by way of interest. He also owed two years of council rates in arrears. The appellant left school after fourth form. In that year, he failed English and third-form mathematics (after repeating that latter subject). By his own admission, he could not budget, could not understand a balance sheet, and could 133 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [313] per Robson J. 134 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [163] per Robson J. 135 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [178] per Robson J. 136 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [180] per Robson J. 137 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [271] per Robson J. not calculate interest. He was self-represented at trial. The primary judge described the appellant's demeanour at trial as "completely lost, totally unsophisticated, incompetent and vulnerable"138. It was said that he behaved "much as you would expect a child to behave"139. The appellant was also found to have had an "obvious lack of understanding"140 of the details of the loans and his ability to finance them. For example, he did not understand that the loans could not be repaid for six months, and he failed to understand how much surplus loan funds he would receive. He was easily manipulated, naïve, vulnerable and "lacking in financial nous"141. From the way the appellant spoke in the witness box, it was clear to the primary judge that "he was precisely the sort of person who needed protection and was vulnerable to being exploited"142. The foregoing findings about the appellant's history, education and experience, as well as the observations made by the primary judge about his demeanour, were not matters known to Mr Jeruzalski when organising the loans to VBC. The lenders of the first loan were the respondents. They did not know the appellant and never met him. Again, they also had no knowledge concerning the appellant's history, education and experience. They lent on the basis of valuations of the three properties obtained by AJ Lawyers and no more. They had never met The second solicitor, Mr Kiatos, and the accountant, Mr Topalides, played the role of respectively providing independent legal advice to the appellant and independent financial advice to VBC, and of issuing certificates which confirmed that this advice had been provided. Mr Kiatos, a sole practitioner, had previously dealt with Mr Jeruzalski on a "handful"143 of occasions, and Mr Zourkas had previously referred clients to him for loan purposes. Mr Topalides was Mr Kiatos' accountant. Mr Zourkas and Mr Topalides had met three or four times previously. 138 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [265] per Robson J. 139 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [265] per Robson J. 140 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [141] per Robson J. 141 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [289] per Robson J. 142 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [270] per Robson J. 143 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [182] per Robson J. The "system of conduct" devised by AJ Lawyers had a number of features. First, it used asset-based loans secured by mortgages. Under these loans, the lender is concerned with the quality of the assets that can be pledged, or mortgaged, to secure repayment144. The loans are always secured in this way. There is, however, no one "type" of asset-based lending145. Parties are always free to negotiate their own particular terms for lending money. The type of asset-based lending used by AJ Lawyers, if it may be so termed, contained the following further feature. The lender, once satisfied with the borrower's security, otherwise has no interest in, and makes no enquiries about, the borrower's capacity to service the loan146. In this case, the "system of conduct" permitted Mr Jeruzalski, as agent for the respondents, to proceed with the first loan even though he was most probably aware that the appellant had no income. Indeed, Mr Jeruzalski said in evidence147: "If [the appellant] had an income sufficient to service a loan of that amount, he would've gone to a bank." It was on this basis that the primary judge found that Mr Jeruzalski suspected that the appellant had no income to service the loans and also knew that the guarantee was a risky and dangerous undertaking for him148. Inferentially, the system of asset-based lending used by AJ Lawyers could have been attractive to financially distressed individuals or entities who are not eligible to obtain a loan in the ordinary way. That was the case here with the appellant. In that respect, the respondents emphasised that, but for the availability 144 Paterson, "Knowledge and neglect in asset-based unconscionable or unjust to lend to a borrower who cannot repay?" (2009) 20 Journal of Banking and Finance Law and Practice 18 at 18; MacLeod, Patterson and Aiken, "Asset-Based Lending Credit Facilities: The Borrower's Perspective" [2017] (February) Business Law Today 1 at 1; Rajapakse, "Unconscionable or unfair dealing in asset-based lending in Australia" (2014) 22 Competition & Consumer Law Journal 151 at 151-152. lending: When 145 For example, while asset-based lending traditionally relied on "tangible" security such as inventory or real estate, the security relied on can also include intangible assets such as patents and contracts: Gertzof, "The Changing Face of Asset-based Lending" (2000) 15(4) Commercial Lending Review 52 at 53. 146 Whether this feature is commonly found in asset-based lending need not be considered. 147 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [92] per Robson J; see also 148 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [308]-[310] per Robson J; see also at [94]-[96]. of the asset-based loans offered by AJ Lawyers' clients, the appellant would never have been able to raise the funds he needed. The respondents also submitted that he borrowed here understanding the obligations and risks involved. Another feature of the loan system used by AJ Lawyers, at least in the case of the appellant, is that it imposed an obligation to pay interest at rates that appeared to be greater than that which might be obtained in a subsequent refinancing with a bank. Certainly, the appellant expected this. Here, absent an act of default, the rate in relation to the first loan was 10% per annum and in relation to the second loan the rate was 18%. Upon an act of default taking place, the interest rate on the first loan increased to 17% per annum and on the second to Secondly, to buttress the "system of conduct" and to reduce the possibility that loans made to potentially impecunious land owners might be set aside, AJ Lawyers only ever organised loans to companies. This was said to avoid the National Credit Code contained in Sch 1 to the National Consumer Credit Protection Act 2009 (Cth). This step in the "system of conduct" explains the presence of VBC as the borrower. In addition, to remove any further risk that the National Credit Code might apply, AJ Lawyers always stipulated in the documentation that the loans were not to be used for personal, domestic or household purposes. Thirdly, lending to potentially impecunious individuals raised the risk that equity might intervene to inhibit the enforcement of the loans Mr Jeruzalski organised on behalf of AJ Lawyers' clients. That is because AJ Lawyers knew that the loans could cause severe damage to a guarantor, such as the appellant, if the loans could not be serviced. These loans were, as the primary judge found, a "dangerous product in the wrong hands"149. Fourthly, in response to this potential issue, AJ Lawyers took deliberate steps, in the case of the appellant, to ensure that it did not ascertain any information about VBC's actual financial capacity to service the loans made to it or about the appellant's economic capacity to guarantee the performance of the loans. To assist in achieving this end, AJ Lawyers used Mr Zourkas, as the intermediary, to deal exclusively with the appellant. Deliberate steps were taken to ensure that AJ Lawyers did not obtain any information about the appellant's financial circumstances and, further, to ensure that the firm was not informed of the representations and inducements made by Mr Zourkas to the appellant. Fifthly, in an attempt to enhance the enforceability of each loan, the system required the procurement of two certificates – one from a solicitor and one from an accountant. Without both certificates there would be no loans. Each pro forma 149 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [283] per Robson J. certificate used here had been drafted by Mr Jeruzalski. Mr Kiatos and Mr Topalides were chosen by Mr Zourkas to be the independent solicitor and accountant. In the case of Mr Kiatos, what was here headed "Certificate of Independent Legal Advice" ("the Legal Certificate") was addressed to the respondents. It identified both VBC and the appellant, and under the heading "Acknowledgement by Guarantor" asked the appellant the following questions: "1. Have you received copies of the documents described under the heading 'Security Documents' below? Have you been given an opportunity to read those Security Documents? Have the Security Documents been fully explained to you by your solicitor? Do you understand the effects of the Security Documents and the consequences to you if the Borrower defaults on its obligations to the Lender? In particular, do you understand that if the Borrower fails to pay all of the moneys due to the Borrower to the Lender then the Lender will be entitled to call on you as Guarantor to recover the moneys due to it? 6. Was this Acknowledgement read and signed by you BEFORE you signed the Security Documents?" The Legal Certificate in this case continued with the following: "I confirm the accuracy of the answers to the above questions and acknowledge that the Lender will be relying on these answers in respect of giving the loan to [VBC]. I request the Lender to give this loan to the Borrower." The Legal Certificate needed to be signed by the proposed guarantor, with that signature witnessed by the solicitor. Below these signatures, the form contained a "Certificate by Independent Solicitor" in the following terms: "Before the Security Documents were executed by the Guarantor/s I explained the contents, nature and effect of them to the Guarantor/s. In particular, I explained and advised on the consequences of default under the relevant Security Documents, including the Lender/Mortgagee's right to sell the property constituting the security. The Guarantors appeared to be aware Steward of and to understand the terms, nature and effect of the Security Documents and their obligations under them. I have made a diary note of the advice and explanation give to the Guarantor/s." The document headed "Certificate of Independent Financial Advice" ("the Financial Certificate") contained, in this case, the following certification by Mr Topalides concerning the risks to be undertaken by VBC: I have been instructed by [VBC] to explain the financial risks being assumed:- by executing the security documents in respect of the financial accommodation to be provided by the Lender which security documents are referred to in Item 1 of the Schedule below ('the Security'); by the application of the said financial accommodation for the purposes referred to in Item 2 of the Schedule below. Before the Security was executed by the Borrower, I explained the financial risk being assumed by executing the Security and by the application of the aforesaid financial accommodation in the manner stated in Item 2 of the Schedule. To the best of my knowledge and belief and in my opinion the Borrower appears to understand the nature and extent of the financial risk which the Security places and the nature and extent of the financial risk which will be assumed by the application of the aforesaid financial accommodation in the manner stated in Item [2] of the Schedule. I have been engaged by the Borrower in advising and have given this Certificate entirely independently of any other Borrower or Guarantor. The Loan herein is required for business purposes." By these means, AJ Lawyers sought to immunise the loans it had organised from the reach of equitable remedies. That this was the very object of the "system of conduct" was conceded by Mr Jeruzalski, who gave evidence, as already mentioned, with "apparent smugness" when he explained that this was so150. 150 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [313] per Robson J. Obtaining the Certificates from a solicitor and an accountant was an essential part of this system. A final critical feature of the "system of conduct" was the enrichment of AJ Lawyers, Mr Zourkas, Mr Kiatos and Mr Topalides. This was achieved by obliging the appellant to pay AJ Lawyers and the individuals consultancy, procuration and other fees. For the most part, these fees were funded out of the loan proceeds. Indeed, as the Court of Appeal observed, the smaller second loan was needed precisely to enable these fees to be paid, together with "mortgagees' legal costs totalling $31,500 to AJ Lawyers; the costs and expenses of the purchase of the Fingal property, including stamp duty; and, importantly, the first month's interest under the two mortgages (about $10,000), which was payable in advance"151. Application of the "system of conduct" to the appellant Meetings with Mr Zourkas, Mr Kiatos and Mr Topalides Initially the appellant attempted to borrow from the ANZ Bank. However, his application was refused because he had no financial records, such as tax returns. He was then put on to Mr Zourkas. There was an initial telephone conversation between the appellant and Mr Zourkas and then six further meetings. Mr Zourkas suggested that the appellant borrow enough to pay out the loans relating to the Narre Warren properties ($240,000), to pay $900,000 for the Fingal property, and to pay for three months of interest, which Mr Zourkas said would be $8,000 per month. He told the appellant that the loan should be around $1,059,000. Mr Zourkas never asked the appellant whether he had the means to make any further interest payments. As already mentioned, he believed (and not merely suspected) that the appellant had no money. Mr Zourkas told the appellant that all applicable fees would "be covered". He also told the appellant that he would have surplus loan funds of $53,000, which would be used to pay the first three months of interest and to renovate the Narre Warren houses. Remarkably, Mr Zourkas also told the appellant that based upon a record of having made three monthly interest payments, and no more, the appellant would then be able to refinance his loans with a bank with lower interest rates. The appellant thought that once he had sold the Narre Warren properties, his outstanding overall loan balance to be refinanced would be only $300,000. At the fourth meeting, reassured by Mr Zourkas that there would be no problem in obtaining finance, the appellant signed a contract of sale for the Fingal property (for which he had previously placed only a $100 deposit). At the fifth meeting, the appellant, as requested, gave $1,000 in cash to Mr Zourkas and he 151 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [18] per Beach, Kyrou and Hargrave JJA. signed offers for the first and second mortgages as well as a "mandate". The latter document obliged the appellant to pay Mr Zourkas his fee even if the loans were not ultimately made. At the sixth meeting, Mr Zourkas gave the appellant two envelopes, one labelled "accountant" and the other labelled "solicitor". The appellant was told to take the documents contained in the envelopes to Mr Kiatos and Mr Topalides, and to have them signed and then returned to Mr Zourkas. The envelope labelled "solicitor" contained the Legal Certificate described above as well as the applicable loan documents (as prepared by AJ Lawyers) to be executed. The envelope labelled "accountant" enclosed the Financial Certificate and documents pertaining to the first and second mortgages. Mr Zourkas then met with Mr Kiatos. Mr Kiatos wrote next to each of the questions set out above in the Legal Certificate the word "yes". He also witnessed the appellant's signature on the Legal Certificate. What took place when the appellant met Mr Topalides was the subject of conflicting evidence before the primary judge. In general, it would appear that the primary judge had difficulty in accepting Mr Topalides' account. In essence, the appellant gave evidence that he handed Mr Topalides the envelope and $1,000 in cash. Mr Topalides looked through the contents of the envelope and then the appellant signed the documents as directed by Mr Topalides. Mr Topalides asked no questions of the appellant, such as what his earnings were. According to the appellant, the meeting took about 15 minutes. The appellant did not bring to this meeting any financial documents, such as tax returns or documents setting out his assets, liabilities, income and expenses. The Financial Certificate contained a Schedule that needed completion with respect to "Item 2". Item 2 stated: "(purpose of borrowings) (please complete)". At this part of the Financial Certificate, Mr Topalides then handwrote the phrase "Set up & Expand the business". The primary judge made an unchallenged finding that Mr Topalides otherwise did not understand the very transaction about which he purported to give advice152. Critically, as set out above, the Financial Certificate was addressed to VBC and not to the appellant as guarantor. Nowhere did the certification completed by Mr Topalides identify or refer to the appellant as guarantor. There is no suggestion that he ever received independent personal financial advice before entering into the two loans in his capacity as guarantor. 152 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [217] per Robson J. Knowledge of Mr Jeruzalski and AJ Lawyers Mr Zourkas' knowledge cannot be attributed to Mr Jeruzalski. Mr Zourkas was not an agent of either Mr Jeruzalski or the respondents153. In contrast, Mr Jeruzalski was the agent of the respondents. As an example of this distinction, the primary judge found that from the moment the loans were entered into, the appellant, as guarantor, was "bound to lose his existing properties"154. His Honour found that this was a fact that "would" have been well known to Mr Zourkas, but which only "should" have been known by AJ Lawyers155. Nor is there any reason to conclude that Mr Jeruzalski had knowledge of the circumstances in which each Certificate was obtained, especially the one signed by Mr Topalides. Moreover, the observations made by the primary judge about the appellant's demeanour when presenting his case at trial, and the findings made about his history, education and experience, were matters unknown at the time to Mr Jeruzalski and AJ Lawyers. It was Mr Zourkas who had approached Mr Jeruzalski about a possible loan to VBC. To proceed, Mr Jeruzalski obtained valuations for each of the three properties. He confirmed that it was his practice not to seek "income particulars". As already mentioned, Mr Jeruzalski suspected that the appellant had no income. It would appear that he knew from Mr Zourkas of the appellant's plan to sell the Narre Warren properties and to seek to refinance the loans. He also said that he had been told by Mr Zourkas that the loan would be used to fund a business concerned with boat repairs. Even though he knew the Fingal property was located in a "green wedge" planning zone, precluding the conduct of a business without planning permission, he assumed that council consent would be obtained. Other than the foregoing knowledge, AJ Lawyers was not apprised of the appellant's financial or personal circumstances. Mr Jeruzalski did not ask Mr Zourkas any questions that might have elicited such information. That is because he relied on the three valuations and ostensibly upon both of the Certificates. It is also because, consistently with the "system of conduct", he deliberately wished to avoid knowledge of the truth. Mr Jeruzalski did not wish to see the appellant. Mr Zourkas told the appellant that he could not go to AJ Lawyers' offices. Indeed, when Mr Zourkas went with the appellant to attend the offices of AJ Lawyers to obtain the pro forma loan documents, he instructed the appellant to "wait in the car"156. Nonetheless, even with such confined 153 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [223] per Robson J. 154 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [17] per Robson J. 155 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [17] per Robson J. 156 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [310] per Robson J. knowledge of the appellant, the primary judge found that Mr Jeruzalski knew the loan transactions were a risky and dangerous undertaking157. Critically, the appellant was never warned that this was so. Mr Jeruzalski knew that the appellant had no other lawyer acting for him, and that Mr Zourkas had a significant incentive for closing the deal between the respondents, the appellant and VBC. Of course, given the fees to be earned by AJ Lawyers, Mr Jeruzalski had the very same incentive. The consequences for the appellant In September 2015, VBC entered into two loans. The first loan was entered into with the respondents and was for a term of one year. The smaller second loan was also for a term of one year. Neither loan could be repaid for a period of six months. The appellant was the guarantor of both loans. The guarantee was secured by mortgages over the three properties. In addition, VBC granted a debenture charge over its assets, although it in fact had no assets and had never traded. Prior to default, the first loan obliged VBC to make monthly interest payments of $8,825 to the respondents; the second loan obliged VBC to make monthly interest payments of $1,552.50. The appellant moved into the Fingal property on 28 or 29 September 2015. Before VBC entered into the two loans, the appellant had significant equity in the Narre Warren properties. The primary judge considered that this was likely to be the only equity he would take into retirement158. The aggregate value of both properties was $770,000. As already mentioned, the aggregate loan balance was $240,000, leaving the appellant with equity of about $530,000. The loans threatened that equity with high interest repayments; with the fees payable to AJ Lawyers, Mr Zourkas, Mr Kiatos and Mr Topalides; and with the cost of the forced sales that would inevitably occur, estimated by the primary judge to be in excess of $100,000159. As already mentioned, the appellant understood that following the application of the loan funds to pay for the Fingal property and to pay out the amounts owed on the Narre Warren properties, there would be a surplus of $53,000. This is what the appellant said Mr Zourkas had told him. Mr Zourkas 157 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [299], [308] per Robson J. 158 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [303] per Robson J. 159 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [305] per Robson J. denied this, but the primary judge observed that it was corroborated by In fact, the fees swallowed up almost all of the expected surplus. AJ Lawyers was paid "procuration" fees in the sum of about $19,000 and $12,000 for each loan. Mr Zourkas was paid a consultancy fee of $27,000, a sum described by the primary judge as "obscene"161. Mr Kiatos was paid $1,650 and Mr Topalides was paid $300, although the appellant's evidence was that he also gave him $1,000 in cash. Save for that cash payment, each of the foregoing fees were paid out of the loan proceeds. Emblematic of the appellant's lack of understanding of the arrangement was that he did not appreciate the size of Mr Zourkas' fee, and did not know about the procuration fees charged by AJ Lawyers until after each loan had been entered into. The appellant was left with only $6,900 to fund the second and third monthly interest payments and the cost of renovations. In the end, VBC was only able to pay the first two monthly interest payments before it defaulted. In order to fund the second monthly payment of interest, the appellant had to sell certain assets he owned. He then tried to sell each of his Narre Warren properties, but on each occasion the sale was blocked by AJ Lawyers, presumably acting on behalf of the respondents as mortgagees. The appellant unsuccessfully tried to contact AJ Lawyers in an attempt to negotiate a resolution. But neither AJ Lawyers nor the respondents replied to that attempt. Instead, the appellant was just sent a notice to pay. Eventually the respondents obtained summary judgment against the appellant and the Narre Warren properties were sold. At trial, the appellant said he was unsure about how much was still owing to the respondents. The economic result for the appellant is that, in substance, his equity in the Narre Warren properties has ultimately been used to fund the fees paid to AJ Lawyers, Mr Zourkas, Mr Kiatos and Mr Topalides and to pay some interest to the respondents. He is no longer the owner of the Narre Warren properties and, by reason of the orders of the Court of Appeal, stands to lose his home. 160 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [165], [199] per Robson J. 161 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [290] per Robson J. Disputed finding The primary judge made the following additional finding162: "Mr Jeruzalski must have suspected that [the appellant] would be guided by Mr Zourkas as to which solicitor and accountant to approach. I see this conduct as part of the system of conduct adopted by AJ Lawyers to immunise the firm from knowledge that might threaten the enforceability of the loan. As far as Mr Jeruzalski was concerned, the accountant and the solicitor would only be paid if the loans went ahead. There was no incentive for them to withhold the certificates. If they withheld the certificates, then they would receive nothing for their services. To characterise them as independent is perhaps a bridge too far." The Court of Appeal found that these inferential findings were not supported by the evidence before the primary judge163. The appellant, however, submitted that the inferences were wrapped up in the primary judge's overall impression of the credibility of Mr Jeruzalski and Mr Zourkas as witnesses. As such, the Court of Appeal should not have overturned the factual inferences drawn by the primary judge unless the findings were "demonstrated to be wrong by 'incontrovertible facts or uncontested testimony', or [were] 'glaringly improbable' or 'contrary to compelling inferences'"164. The Court of Appeal's reasoning never went this far. It merely expressed disagreement with the primary judge. In a case where the credibility of Mr Jeruzalski and Mr Zourkas loomed large, where much of Mr Zourkas' evidence was rejected, and where the primary judge recorded in his reasons that Mr Jeruzalski gave evidence with "apparent smugness", it was not open to the Court of Appeal to overturn the inferences drawn by the primary judge concerning the independence of Mr Kiatos and Mr Topalides. Those inferences are entirely consistent with the other findings made by the primary judge about the "system of conduct" used, which findings the Court of Appeal did not disturb. The conclusions of the primary judge The primary judge decided that the appellant was in a position of special disadvantage. Much of that finding turned upon the appellant's greatly diminished economic circumstances, the evidence he gave and his conduct in representing 162 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [314] per Robson J. 163 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [134] per Beach, Kyrou and Hargrave JJA. 164 Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 at 687 [43] per French CJ, Bell, Keane, Nettle and Gordon JJ; 331 ALR 550 at 558-559. himself before his Honour. For example, in relation to the last matter, the primary judge observed165: "[The appellant] did not grasp the gravity of the occasion. He did not bring any relevant documents to court. It didn't occur to him that they might be needed. He behaved as if he could have been at a social gathering. He could not differentiate between serious matters and incidental matters. In fact, in many ways, he behaved, much as you would expect a child to behave. As mentioned, he was not able to put his case to any of the witnesses. He didn't appear to understand the concept or the consequences of not putting his case to the witnesses." The primary judge went on to find that the appellant misunderstood his rights and obligations under the loan agreements and was "completely out of his depth"166. The fact that he even entered into them, given his circumstances, was said to evidence his vulnerability167. The primary judge decided that the actions of AJ Lawyers constituted wilful blindness as to the appellant's financial and personal circumstances168. His Honour concluded that Mr Jeruzalski had "knowingly and deliberately shut his eyes" to those circumstances169. It followed that AJ Lawyers was fixed with actual knowledge of the appellant's inability to service both loans as guarantor. Accordingly, lending in such circumstances was found to be unconscionable170. In support of the foregoing conclusion, the primary judge reasoned as follows: First, his Honour found that Mr Jeruzalski knew the loans were a "risky and dangerous" undertaking for the appellant171. 165 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [265] per Robson J. 166 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [266] per Robson J. 167 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [266] per Robson J. 168 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [315] per Robson J. 169 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [316] per Robson J. 170 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [316] per Robson J. 171 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [308] per Robson J. Secondly, in those circumstances, standards of ethical conduct imposed upon Mr Jeruzalski a moral duty to satisfy himself that the appellant was not unreasonably exposing himself to significant financial risk. And because Mr Jeruzalski was a solicitor and an officer of the Supreme Court of Victoria, that duty was all the more compelling172. Thirdly, Mr Jeruzalski's duty was "enlivened" because he suspected or believed that the appellant had no income to service the loans. He then purported to apply AJ Lawyers' "system of conduct" to prevent him from ever confirming that this was actually so173. Fourthly, Mr Jeruzalski was aware of Mr Zourkas' considerable incentive to complete the loan transactions and to receive his fee. But again, he made no attempt to determine the basis upon which Mr Zourkas dealt with the appellant. In particular, he made no attempt to determine whether Mr Zourkas may have misled the appellant174. Fifthly, it was the "system of conduct" used by AJ Lawyers that prevented these enquiries from taking place. They did not take place precisely because Mr Jeruzalski was concerned, or suspected, that the answers he may have obtained would have suggested a basis for setting the loans aside on the grounds of unconscionability175. Sixthly, the "system of conduct" deployed by AJ Lawyers demonstrated a high level of "moral obloquy"176. Seventhly, the procurement of the two Certificates was part of the "system of conduct" utilised to immunise AJ Lawyers from knowledge that might imperil the enforceability of each loan. The independence of each of Mr Kiatos and Mr Topalides was undermined because if they withheld their respective Certificates, they would not be paid their fees177. 172 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [309] per Robson J. 173 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [310] per Robson J. 174 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [311] per Robson J. 175 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [312] per Robson J. 176 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [313] per Robson J. 177 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [314] per Robson J. The conclusions of the Court of Appeal The Court of Appeal did not express disagreement with the finding of the primary judge that the appellant was at a special disadvantage178. The Court said that the "real question" was whether Mr Jeruzalski had knowledge of facts which ought to have put him on enquiry as to the appellant's personal and financial circumstances, including details of the assets and business of VBC179. The Court distilled the case "at its highest" for the appellant as follows180: Jeruzalski assumed that [the appellant] and [VBC] had 'no income', in the sense that they did not have sufficient income to service interest under the loans for between six and 12 months. Jeruzalski knew that [the appellant] and [VBC] had paid only a token deposit under the two contracts to purchase the Fingal property – $100 under the first contract (in force when the loan offers were made) and $5,100 under the second contract (in force when the loans were approved). This supported Jeruzalski's assumption that [the appellant] and [VBC] had insufficient income to service the loans. Jeruzalski had been informed by Zourkas that the proceeds of the two loans would be used to both settle the purchase of the Fingal property and to pay out the existing CBA mortgage loans over the two Narre Warren properties; and that [the appellant's] plan was to then sell the two Narre Warren properties and then refinance the loans with a bank. Jeruzalski gave evidence that he treated [the appellant's] equity in these properties as his deposit on the Fingal property. From the disbursement authorities prepared by his office at the time the loans were approved, Jeruzalski knew that – after settlement of the Fingal property purchase, repayment of the mortgages over the Narre Warren properties, and the payment of all costs and expenses including loan procuration fees and commissions – the net proceeds of the loans available to [the appellant] and [VBC] for any business 178 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [65] per Beach, Kyrou and Hargrave JJA. 179 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [127] per Beach, Kyrou and Hargrave JJA. 180 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [131] per Beach, Kyrou and Hargrave JJA. purposes would be very small in comparison to the amount borrowed. Jeruzalski had been told by Zourkas that [the appellant] and [VBC] intended to conduct a 'business concerned with boat repairs' at the Fingal property. Jeruzalski knew that he, as agent of the mortgagees, had the right under conditions (y) and (z) of the letters of offer to demand that [the appellant] and [VBC] provide 'evidence of serviceability' or evidence of 'proposed means of repayment of the loans' but chose not loans." to exercise (footnotes omitted) right before approving that the There is, with respect, some force in the criticism articulated by senior counsel for the appellant that some of the foregoing findings diluted the facts set out in the reasons of the primary judge. For example, in the finding concerning Mr Jeruzalski's suspicion that the appellant had no income, the Court of Appeal added a qualification, not made by the primary judge, that this referred to having insufficient income to service the interest payable for between six and 12 months. In addition, the Court of Appeal made no reference to the primary judge's finding that Mr Jeruzalski knew that the loans were risky and dangerous. In any event, based on the appellant's case perceived at its highest, the Court of Appeal considered that the circumstances "may have been sufficient to justify the serious finding that it was unconscionable for [Mr Jeruzalski] to abstain from inquiry"181. However, the Court of Appeal also considered that the obtaining of independent legal and financial advice foreclosed any such conclusion182. The Court reasoned that Mr Jeruzalski was entitled to rely on each Certificate as evidence both that the appellant had consulted a solicitor and accountant for advice and of the truth of the matters contained in each Certificate183. It followed, it was said, that Mr Jeruzalski should not be fixed with knowledge of the appellant's 181 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [132] per Beach, Kyrou and Hargrave JJA. 182 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [132] per Beach, Kyrou and Hargrave JJA. 183 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [132] per Beach, Kyrou and Hargrave JJA. "personal and financial circumstances such that default under the loans was In reaching this conclusion, the Court of Appeal may have been distracted by the "concept" of asset-based lending185. "[P]ure" or "mere" asset-based lending was said to comprise a situation where lenders deliberately intend neither to seek nor to receive information about the personal and financial circumstances of the borrowers186. The Court of Appeal was of the view, based upon its understanding of the prevailing authorities, that this type of asset-based lending "is not, by itself, unconscionable conduct"187, especially when combined with a system of lending that includes a requirement for certificates of independent legal and financial advice. The Court of Appeal then characterised the reasoning of the primary judge as constituting "in substance an adverse view of asset-based lending as a concept"188. That view, it was said, "infected" the reasoning of the primary judge189. With respect, those observations are not sustainable. In the first place, as already mentioned, there is not one "type" of asset-based lending. In that regard, determining whether identified conduct is unconscionable cannot turn upon some a priori categorisation of a product – here a type of lending – as being either immune from, or subject to, equitable remedies. Observing that asset-based 184 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [132] per Beach, Kyrou and Hargrave JJA. 185 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [126] per Beach, Kyrou and Hargrave JJA. 186 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [126] per Beach, Kyrou and Hargrave JJA. 187 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [126] per Beach, Kyrou and Hargrave JJA, citing Kowalczuk v Accom Finance Pty Ltd (2008) 77 NSWLR 205 at 227-228 [96]-[99] per Campbell JA (Hodgson and McColl JJA agreeing); Tonto Home Loans Australia Pty Ltd v Tavares (2011) 15 BPR 29,699 at 29,706 [3], 29,765-29,766 [291]-[293] per Allsop P (Bathurst CJ and Campbell JA agreeing); Violet Home Loans Pty Ltd v Schmidt (2013) 44 VR 202 at 219-220 [59] per Warren CJ, Cavanough and Ferguson A-JJA; Perpetual Trustees Australia Ltd v Schmidt [2010] VSC 67 at [200], [207] per J Forrest J. 188 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [126] per Beach, Kyrou and Hargrave JJA. 189 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [126] per Beach, Kyrou and Hargrave JJA. lending "by itself" is not unconscionable conduct is not, with respect, a useful proposition. Rather, in every matter there must be "close consideration of the facts of each case"190. Secondly, that is exactly what the primary judge did here. His Honour's reasoning was not concerned with asset-based lending generally but with the particular circumstances of the entry into the two loans here, and upon the application of AJ Lawyers' "system of conduct" to those facts. So much is clear from his Honour's careful examination of the actions of Mr Jeruzalski, Mr Zourkas and others in connection with the application of that system to the appellant. Unconscionability and the application of the "system of conduct" The appellant's pleaded case relevantly contended that the respondents had engaged in unconscionable conduct pursuant to s 21 of the Australian Consumer Law as set out in Sch 2 to the Competition and Consumer Act 2010 (Cth), pursuant to s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth), and in accordance with applicable equitable principles. For the reasons set out below, and concordantly with the conclusion of the primary judge, Mr Jeruzalski, as agent for the respondents, acted unconscionably in accordance with equitable principles in failing to make necessary enquiries concerning the personal and financial circumstances of the appellant. Accordingly, it is not necessary to consider the application of s 21 or s 12CB. This appeal ultimately turns upon a narrow issue, namely whether the Court of Appeal was correct in concluding that the Legal Certificate and the Financial Certificate not only precluded a finding of wilful blindness on the part of AJ Lawyers but also, as a result, effectively immunised its failure to make enquiries about the circumstances of the appellant from a conclusion, which might otherwise have been available, that there had been unconscionable conduct. There was no dispute concerning the governing test for when equity will bar a remedy because a party has acted contrary to conscience. The applicable principles were summarised by Kiefel CJ, Bell, Gageler, Keane and Edelman JJ in Thorne v Kennedy as follows191: "A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage 'which seriously affects the ability of 190 Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 400 [14] per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ. It is noted that the Court of Appeal appeared to understand the importance of considering the particular facts of a given case in other parts of its reasons: see, eg, Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [2] per Beach, Kyrou and Hargrave JJA. 191 (2017) 263 CLR 85 at 103 [38]. the innocent party to make a judgment as to [the innocent party's] own best interests'. The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring 'victimisation', 'unconscientious conduct', or 'exploitation'. Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage." (footnotes omitted) The foregoing tests must be applied to the facts and circumstances in existence at the time the two loans were entered into192. As found by the primary judge, the appellant's disadvantage included his lack of education and business experience, his lack of understanding of the transactions, and his relative impecuniosity. In that respect, relative poverty has long been recognised as a category of special disadvantage. In addition, it has also been recognised that a special disadvantage can exist where there is a need for an explanation and assistance, and none has been forthcoming. As Fullagar J said in "The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set a transaction aside, are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-à-vis the other." (emphasis added) The respondents relied upon the observation of the Court of Appeal that the appellant did not suffer from any "profound disabilities" and "was in control of his own affairs and could well speak and read English"194. So much may be accepted. But such observations do not address the critical issue here, namely whether, given the suspicion held by Mr Jeruzalski that the appellant had no income, there was a need to give him assistance in the form of a warning about the potential danger to 192 See Thorne v Kennedy (2017) 263 CLR 85 at 125 [110] per Gordon J. 193 (1956) 99 CLR 362 at 405. See also Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 474-475 per Deane J; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 424-425 [117]-[118] per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ. 194 Jams 2 Pty Ltd v Stubbings [2020] VSCA 200 at [123] per Beach, Kyrou and Hargrave JJA. him arising from entering into the two loans. The appellant suffered from a disadvantage because he was impecunious and because no such warning or explanation was ever proffered. The disadvantage must be "special". It is well established that this refers not to any mere difference in bargaining power, but to an inability to make a judgment by the innocent party as to her or his best interests, which inability is known, or ought to be known, by the other party195. Having regard to Mr Jeruzalski's suspicion, together with his knowledge of the transactions that were to be undertaken, the appellant's disadvantage was special. That was because the appellant's company was about to borrow over $1 million on terms which obliged it to pay at least six months of interest (over $10,000 per month absent default) in circumstances where it was assumed that the appellant, as guarantor, had no income. Lending such a substantial sum of money exposed the appellant to very great danger. It thus gave rise to a need to make enquiries about the actual extent of that danger and to warn the appellant accordingly. For the reasons set out below, had enquiries been made, it would have been realised that the appellant was unable to make a judgment in his best interests. That explains why he entered into what was, for him, such a calamitous transaction. Consistently with the "system of conduct", as already mentioned, Mr Jeruzalski's actual knowledge of the appellant was confined. He suspected that the appellant had no income and he also knew that acting as a guarantor of the loans was a risky and dangerous matter for the appellant. Mr Jeruzalski had a general appreciation of the appellant's plan to sell the Narre Warren properties and to refinance the outstanding debt. He also mistakenly believed that the appellant intended to conduct a business at the Fingal property. Finally, he also relied on the contents of the Legal Certificate and the Financial Certificate, both of which he had drafted. Mr Jeruzalski otherwise cannot be fixed with knowledge of the dealings that Mr Zourkas, Mr Kiatos or Mr Topalides had with the appellant. Nor can he be fixed with any knowledge concerning the appellant's history, education and experience. In that regard, unlike the primary judge, Mr Jeruzalski did not, at any stage, have the benefit of observing the appellant's demeanour. In such circumstances it was for the appellant to demonstrate that Mr Jeruzalski, as agent for the respondents, knew or ought to have known about the existence and effect of the appellant's special disadvantage. 195 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462 per Mason J; Thorne v Kennedy (2017) 263 CLR 85 at 112 [64] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ. In Commercial Bank of Australia Ltd v Amadio196, Mason J said: "[I]f A having actual knowledge that B occupies a situation of special disadvantage in relation to an intended transaction, so that B cannot make a judgment as to what is in his own interests, takes unfair advantage of his (A's) superior bargaining power or position by entering into that transaction, his conduct in so doing is unconscionable. And if, instead of having actual knowledge of that situation, A is aware of the possibility that that situation may exist or is aware of facts that would raise that possibility in the mind of any reasonable person, the result will be the same." (emphasis added) Here, Mr Jeruzalski's suspicion that the appellant had no income and his knowledge that the transaction was for the appellant "risky and dangerous" was sufficient, in and of itself, to establish the "possibility" that he was in a position of special disadvantage. If enquiries had been made, they would have led to Mr Jeruzalski discovering not only that the appellant in fact had no or very little income, and that VBC was no more than a shell company, but also that, by reason of the terms of each loan, VBC was bound to default, with the consequence that all three properties the appellant owned would need to be sold. He would have realised that the transactions from the perspective of the appellant were not merely risky and dangerous but entirely uncommercial and could not in any way have advanced his interests. Mr Jeruzalski would also have learned that the appellant had fundamentally misunderstood the transaction, whether by reason of Mr Zourkas' conduct or for some other reason, and that it was possible that Mr Topalides had given VBC and the appellant no financial advice at all. Mr Jeruzalski would also have realised that the appellant's willingness to enter into what was, for him, such a disastrous arrangement was only explicable because he was in a position of vulnerability, such that he was unable to make a judgment as to what was in his best interests. As the learned primary judge found, AJ Lawyers, but for the "system of conduct", should have known that the appellant was bound to lose his properties197. That finding was not disturbed on appeal. It supports the conclusion that equity will treat Mr Jeruzalski and AJ Lawyers as having had knowledge of the appellant's special disadvantage. Nothing about the "system of conduct" deployed by AJ Lawyers compels any different conclusion. That system was, at least in this case, no more than a deliberate artifice intended to frustrate the provision of equitable relief. 196 (1983) 151 CLR 447 at 467, quoted in Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 436-437 [151] per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler 197 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [17] per Robson J. It may otherwise be doubted whether Mr Jeruzalski would, by making enquiries, have discovered that the appellant lacked education and experience and that he had the demeanour witnessed by the primary judge. No reliance is placed upon such matters in these reasons. Alternatively, AJ Lawyers was also wilfully blind by reason of the deployment of its "system of conduct". In R v Crabbe, this Court defined the doctrine of wilful blindness in the following way198: "When a person deliberately refrains from making inquiries because he prefers not to have the result, when he wilfully shuts his eyes for fear that he may learn the truth, he may for some purposes be treated as having the knowledge which he deliberately abstained from acquiring." In the same case199, the Court also referred with approval to the following description of the doctrine of wilful blindness by Professor Glanville Williams200: "A court can properly find wilful blindness only where it can almost be said that the defendant actually knew. He suspected the fact; he realised its probability; but he refrained from obtaining the final confirmation because he wanted in the event to be able to deny knowledge. This, and this alone, is wilful blindness. It requires in effect a finding that the defendant intended to cheat the administration of justice." It cannot be doubted that the very point of AJ Lawyers' "system of conduct", in this case, was the taking of deliberate steps to avoid discovering the truth about the financial state of VBC and the appellant's inability as guarantor to service the payment of interest on each loan. The use of an intermediary to deal with the appellant was directed at that outcome. Mr Jeruzalski, having suspected that the appellant had no income and knowing that the transaction was risky and dangerous for him, then did everything he could to ensure that this would never be confirmed. It follows that Mr Jeruzalski and AJ Lawyers must be fixed, as at the time the loans were made, with that knowledge which they had deliberately abstained 198 (1985) 156 CLR 464 at 470 per Gibbs CJ, Wilson, Brennan, Deane and Dawson JJ. 199 (1985) 156 CLR 464 at 470-471 per Gibbs CJ, Wilson, Brennan, Deane and 200 Glanville Williams, Criminal Law: The General Part, 2nd ed (1961) at 159. from acquiring. The findings of the primary judge plainly support the drawing of that inference of fact201. The arrangement also rewarded the other parties to the "system of conduct". It ensured, in substance, that the appellant's equity in the Narre Warren properties would ultimately be used to pay fees to AJ Lawyers, Mr Zourkas, Mr Kiatos and Mr Topalides, and interest to the respondents. In the particular circumstances that prevailed, not only was the fee paid to Mr Zourkas "obscene"202, but the same description should apply to the fees charged by AJ Lawyers. As a result, the arrangement secured the only outcome that it objectively could: the enrichment of individuals at the expense of the appellant and his loss of two properties and potentially also his home. The appellant was never warned that this was a likely, or indeed even a possible, outcome. Such a warning or explanation should have been given. In such circumstances, there has been an unconscionable exploitation of the appellant's special disadvantage. The primary judge's finding that Mr Jeruzalski's conduct was unconscionable was correct. The question then is whether, as the Court of Appeal found, the two Certificates can operate to undo this conclusion. The Legal Certificate was directed at two matters. The first was confirmation that the appellant had received the "Security Documents" and had been given an opportunity to read them. The term "Security Documents" was defined to mean the loan agreement and the debenture charge. The second matter was directed at confirmation that the appellant understood the "terms, nature and effect" of the Security Documents and, in particular, that the respondents would be entitled to call on the appellant, as guarantor, to recover monies owed in the event of VBC's default. This Certificate suffered from a critical defect. Whilst on its face it confirmed that the appellant had understood the effect of the Security Documents, it said nothing at all about VBC's or the appellant's capacity to service the loans. It did not address the suspicion held by Mr Jeruzalski and it did nothing to reverse his conclusion that the transaction was risky and dangerous for the appellant. The Certificate avoided these issues. On its face, the Financial Certificate purported to confirm that Mr Topalides had explained the financial risks being assumed by VBC by executing the "security documents". But again, this Certificate suffers from two critical defects. First, it stated that the advice was given to VBC. It made no reference to the appellant 201 See English and Scottish Mercantile Investment Company v Brunton [1892] 2 QB 700 at 707-708 per Lord Esher MR; Pereira v Director of Public Prosecutions (1988) 63 ALJR 1 at 3 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ; 82 ALR 217 at 219-220. 202 Jams 2 Pty Ltd v Stubbings [No 3] [2019] VSC 150 at [290] per Robson J. receiving any advice in his capacity as guarantor. According to this Certificate, the appellant never received any independent advice about the financial risks he was assuming. The respondents sought to avoid that conclusion by contending that the appellant was the sole director and shareholder of VBC and that the advice must have been given to him by Mr Topalides. With respect, there is no evidence which suggests that Mr Topalides ever gave such advice. Indeed, on the findings of the primary judge, it is possible that no advice was given at all. Secondly, this Certificate must be judged from the perspective of Mr Jeruzalski. He knew that the appellant was to be the guarantor of the loans and he suspected that the appellant had no income. But like the Legal Certificate, nothing in this Certificate addressed VBC's or the appellant's ability to service the loans. Nor again did it address the dangerous nature of the transaction from the appellant's perspective. The somewhat glib reference in it to the "financial risk" to be "assumed" falls far short of any written record of the warning or explanation that was needed here. As such, the contents could not undo in any way Mr Jeruzalski's suspicion or his belief that the transaction was dangerous. Given these defects or shortcomings, the Court of Appeal, with great respect, erred in deciding that Mr Jeruzalski was entitled to rely on the Certificates and not make enquiries about the appellant's personal and financial circumstances. Neither Certificate provided Mr Jeruzalski with any comfort or assurance that VBC or the appellant would be able to service the loans and not default. By their terms, neither Certificate could have led Mr Jeruzalski to believe that the guarantee, from the perspective of the appellant, had ceased to be risky or dangerous. Neither Certificate had the effect of validating the system used by AJ Lawyers on the facts of this case. Instead, each Certificate was part of the very "system of conduct" designed to inhibit the grant of equitable relief arising from the unconscionable conduct of Mr Jeruzalski and AJ Lawyers in the circumstances of this case. The appeal must be allowed. I agree with the orders proposed by Kiefel CJ, |
HIGH COURT OF AUSTRALIA VBAO AND APPELLANT MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS & ANOR RESPONDENTS VBAO v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 60 14 December 2006 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation R M Niall with C G Fairfield for the appellant (instructed by Arnold Bloch Leibler) P J Hanks QC with C J Horan for the first respondent (instructed by Clayton Utz) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS VBAO v Minister for Immigration and Multicultural and Indigenous Affairs Immigration – Refugees – Well-founded fear of persecution – Section 91R(1) of the Migration Act 1958 (Cth) required that persecution involve "serious harm to the person" – Serious harm defined to include "threat to the person's life or liberty" – Whether "threat to the person's life or liberty" referred to likelihood of death or deprivation of liberty, or communication of intention to kill or deprive of liberty – Whether expression of intention to harm sufficient to constitute "serious harm". Immigration – Refugees – Application for protection visa – Whether Refugee Review Tribunal made findings of fact favourable to the appellant so as to call into operation s 91R of the Migration Act 1958 (Cth). Words and phrases – "threat", "threat to the person's life or liberty", "serious harm". Migration Act 1958 (Cth) s 91R(1)(b), (2). GLEESON CJ AND KIRBY J. Depending upon context, the word "threat" can mean a communication of an intention to harm, or it can mean a likelihood of harm. The word has other meanings as well, but those are the two possibilities of present relevance. Where the word has the second of the two meanings mentioned, a communication of an intention to harm might be some evidence of a likelihood of harm, but, if there is an issue about the matter of threat, the question to be decided concerns the existence of the likelihood of harm. The immediate context of present relevance is s 91R of the Migration Act 1958 (Cth) ("the Act"). The wider context is the whole Act and the provisions of the Refugees Convention referred to in s 91R. In deciding whether a person has a well-founded fear of persecution if sent or returned to a particular place, and whether, on that account, the person is entitled to a protection visa, the decision- maker is directed by s 91R that Art 1A(2) of the Convention does not apply in relation to persecution unless the persecution involves serious harm to the person. Section 91R(2)(a) gives, as an instance of serious harm, a threat to the person's life or liberty. The serious harm in question, by hypothesis, is future harm. Elsewhere in sub-s (2) of s 91R, the word "threatens" appears three times in a context where, clearly, it bears the second of the two meanings mentioned earlier. Both the immediate and the wider context make it plain that, in s 91R(2)(a), "threat" is used in the second sense. A past communication of an intention to harm a person may, or may not, be some evidence that there is a likelihood of future harm to the person's life or liberty, but the question for the decision-maker is whether there is such a likelihood. The decision-maker is required to consider future persecution that involves serious harm, and one instance of such serious harm is a threat to life or liberty. The decision-maker is to decide the risk of future harm, not the risk of future communications. This accords with the view of s 91R(2)(a) that was taken by Marshall J in the present case, and by Crennan J in VBAS v Minister for Immigration and Multicultural and Indigenous Affairs1. For that reason, and for the reasons given by Callinan and Heydon JJ concerning the findings of fact made in the present case, the appeal should be dismissed with costs. (2005) 141 FCR 435. GUMMOW J. The appellant seeks in this Court orders effecting the reinstatement of his success before the Federal Magistrates Court (Walters FM). That Court, by order made 14 May 2004, declared invalid and of no effect the decision of the second respondent ("the RRT") which had affirmed the decision of a delegate of the first respondent ("the Minister"). The Minister had refused the grant of a protection visa, deciding that the appellant was not a person to whom Australia owed protection obligations under the Refugees Convention and so failed to meet a criterion stipulated by s 36(2) of the Migration Act 1958 (Cth) ("the Act"). The construction of another provision of the Act, s 91R, was at the centre of the litigation. The Federal Court of Australia (constituted by Marshall J) allowed the appeal by the Minister against the decision of the Federal Magistrate and dismissed the application made to the Federal Magistrates Court for review of the decision of the RRT. Marshall J construed s 91R in a fashion which the appellant seeks to controvert in this Court. The Minister supports the construction given the provision by the Federal Court and further, by a notice of contention, submits that, if the construction proffered by the appellant (adopting that of the Federal Magistrates Court), be correct, the Federal Magistrates Court erred in the construction it placed upon the factual findings made by the RRT. The appellant had relied upon particular assaults and threatening telephone calls and letters. In their joint reasons for judgment, Callinan and Heydon JJ explain that the Federal Magistrates Court did proceed upon a misunderstanding that the RRT had made findings of fact favourable to the appellant calling for the application of s 91R of the Act. I agree with what their Honours say on that subject. That conclusion is sufficient to support the dismissal of the appeal to this Court. However, in view of the arguments that were pressed upon the question of construction, it is appropriate to go on to deal with that aspect of the appeal. Section 91R was introduced into the Act by the Migration Legislation Amendment Act (No 6) 2001 (Cth) ("the Amending Act"). Paragraphs 17, 18 and 19 of the Explanatory Memorandum on the Bill for the Amending Act, circulated by the authority of the then Minister, stated: "17. This item inserts new section 91R into the Act which deals with 'persecution'. 18. Broadly speaking, Australia owes protection obligations to a person who is a refugee as defined in Article 1 of the Refugees Convention and who is not excluded from protection by the provisions of Articles 1 or 33 of the Convention. Under Article 1A(2) a refugee is a person who, among other things, has a well founded fear of being persecuted for reason of race, religion, nationality, membership of a particular social group or political opinion. 19. Claims of persecution have been determined by Australian courts to fall within the scope of the Refugees Convention even though the harm feared fell short of the level of harm accepted by the parties to the Convention to constitute persecution. Persecution has also been interpreted to be for reason of the above Convention grounds where there have been a number of motivations for the harm feared and the Convention-based elements have not been the dominant reasons for that harm. Taken together these trends in Australian domestic law have widened the application of the Refugee Convention beyond the bounds intended." Paragraph 18 of the Explanatory Memorandum is to be read in the light of the treatment of the elements of the Convention definition of "refugee" in the joint judgment of six members of this Court in Minister for Immigration and Ethnic Affairs v Guo2. Their Honours said3: "The definition of 'refugee' in Art 1A(2) of the Convention contains four key elements: (1) the applicant must be outside his or her country of nationality; (2) the applicant must fear 'persecution'; (3) the applicant must fear such persecution 'for reasons of race, religion, nationality, membership of a particular social group or political opinion'; and (4) the applicant must have a 'well-founded' fear of persecution for one of the Convention reasons." Section 91R contains three sub-sections. Section 91R(3) is addressed to what was identified in Guo as element (4) of the Convention definition and the significance to be attached to conduct in Australia when assessing the presence of a well-founded fear of persecution. Nothing in this appeal turns upon s 91R(3). Sub-sections (1) and (2) of s 91R are addressed to elements (2) and (3). In particular, pars (b) and (c) of s 91R(1) concern the second element, namely the adverse consequences that constitute "persecution", whilst par (a) of s 91R(1) is concerned with the third element, the reasons for persecution. Section 91R(1) should now be set out. It provides: (1997) 191 CLR 559 (Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ). (1997) 191 CLR 559 at 570. "For the purposes of the application of this Act and the regulations to a particular person, Article 1A(2) of the Refugees Convention as amended by the Refugees Protocol does not apply in relation to persecution for one or more of the reasons mentioned in that Article unless: that reason is the essential and significant reason, or those reasons are the essential and significant reasons, for the persecution; and the persecution involves serious harm to the person; and the persecution involves systematic and discriminatory conduct." This appeal requires attention to that aspect of persecution dealt with in par (b) of s 91R(1), namely, the necessity that the persecution "involves serious harm to the person". In the joint judgment in Guo and under the heading "Persecution", the following was said of that notion4: "In Chan [v Minister for Immigration and Ethnic Affairs]5, Mason CJ referred to persecution as requiring 'some serious punishment or penalty or some significant detriment or disadvantage'. One other statement of his Honour in that case is also relevant to this appeal. His Honour said6: 'Discrimination which involves interrogation, detention or exile to a place remote from one's place of residence under penalty of imprisonment for escape or for return to one's place of residence amounts prima facie to persecution unless the actions are so explained that they bear another character.' In the same case, Dawson J said7 that: 'there is general acceptance that a threat to life or freedom for a Convention reason amounts to persecution ... Some would confine persecution to a threat to life or freedom, whereas others would extend it to other measures in disregard of human dignity.'" (1997) 191 CLR 559 at 570. (1989) 169 CLR 379 at 388. (1989) 169 CLR 379 at 390. (1989) 169 CLR 379 at 399. Paragraph 19 of the Explanatory Memorandum challenges not these statements which include terms now found in s 91R, so much as perceived inconsistencies in their subsequent application from case to case. The paragraph manifests a concern that the degree of the apprehended "harm" not rise above the level regarded by the Parliament as that accepted by the parties to the Convention as constituting "persecution". Hence pars (b) and (c) of s 91R(1). The notion of "serious harm" for the purposes of par (b) of s 91R(1) is given further treatment in s 91R(2). This states: "Without limiting what is serious harm for the purposes of paragraph (1)(b), the following are instances of serious harm for the purposes of that paragraph: a threat to the person's life or liberty; significant physical harassment of the person; significant physical ill-treatment of the person; significant economic hardship that threatens the person's capacity to subsist; denial of access to basic services, where the denial threatens the person's capacity to subsist; denial of capacity to earn a livelihood of any kind, where the denial threatens the person's capacity to subsist." The arguments on this appeal gave particular attention to the phrase "a threat to the person's life or liberty" in par (a) of s 91R(2). It is to be noted that the verb "threatens" is used in pars (d), (e) and (f) of the sub-section in the present tense. Additional observations of Mason CJ in Chan are in point here. After noting8 that the application of the Convention definition is for determination by regard to the facts existing when the person concerned seeks recognition as a refugee, Mason CJ continued in Chan9: "In making such a determination under the Convention, a logical starting point in the examination of an application for refugee status would generally be the reasons which the applicant gave for leaving his country of nationality. Those reasons will necessarily relate to an earlier time, (1989) 169 CLR 379 at 386-387. (1989) 169 CLR 379 at 387. since when circumstances may have changed. But that does not deny the relevance of the facts as they existed at the time of departure to the determination of the question whether an applicant has a 'fear of persecution' and whether that fear is 'well-founded'." Counsel for the appellant urged a reading of par (a) of s 91R(2) which would include a past or current communication of an intention to kill or deprive a person of liberty which, looked at objectively, is capable of instilling fear in the person and does so. The Minister supports the construction adopted by Marshall J, in particular that (i) threats to life or liberty in the form of declarations of intent do not, without more, constitute the serious harm which persecution must involve, (ii) the term "threat" connotes "risk" in the sense of danger or hazard, and (iii) the threat to life or liberty must manifest itself as an instance of serious harm as distinct from a possibility of danger. The submissions for the Minister should be accepted. It is trite to observe that the six pars (a)-(f) of s 91R(2) should be considered together; they all take their colour from the specification of "serious harm" in the opening words of the sub-section. That phrase in turn may be traced to judicial statements such as that of Mason CJ in Chan to which reference has been made. His Honour also used the adjective "significant" to describe a detriment or disadvantage which answers the description of persecution10. The phrase "a threat" to life or freedom was used in Chan by Dawson J11. The term "significant" qualifies the physical harassment, physical ill-treatment and economic hardship spoken of in pars (b), (c) and (d) of s 91R(2). The consequence of an action or state of affairs spoken of in pars (d), (e) and (f) must be one which "threatens the person's capacity to subsist". This reading of the whole of the text of s 91R(2) suggests that no less an element of comparable gravity is involved in the stipulation of a threat to the life or liberty of the person in question. More is required than a possibility which is capable of instilling a fear of danger to life or liberty. The present tense is employed throughout sub-ss (1) and (2) of s 91R. However, as Mason CJ remarked in the passage from Chan12 set out above, past facts may bear upon the present well-founded fear of persecution on a Convention ground. In that setting, the threat or threats upon which reliance now is placed may be specific instances of past conduct by particular individuals. That was so in the present case. But it need not always be so. 10 (1989) 169 CLR 379 at 388. 11 (1989) 169 CLR 379 at 399. 12 (1989) 169 CLR 379 at 387. The "threat" may have been an indication of evil to come if the person in question were to be returned to the country of nationality but may not have been based upon any direct statement to that person by any official source. Thus, in the years immediately preceding the adoption of the Convention, many persons outside the Soviet Union as émigrés would have believed themselves to be under a very significant threat of liquidation upon repatriation (as "victims of Yalta") to their country of nationality. That apprehension may not have been provoked by a particular communication, but yet it may have been well founded. Such a state of affairs would have answered par (a) of s 91R(2) as construed in the submissions of the Minister in this appeal. The appeal should be dismissed with costs. CALLINAN AND HEYDON JJ. The matter that was extensively argued in this appeal was the meaning of the phrase "threat to ... life or liberty" in s 91R(2)(a) of the Migration Act 1958 (Cth) ("the Act"). The appellant says that it means a communication, past or current, of an intention to kill or deprive a person of liberty which is objectively capable of instilling fear in the person and does so. The first respondent argues that "threat to ... life or liberty" means a real threat of persecution, that is, relevantly here, of serious harm now or in the future sufficient to engender a well-founded fear of it in the person. The legislation An applicant will be eligible for a "protection visa"13 if he or she is a non- citizen, in Australia, to whom the Minister is satisfied Australia owes protection obligations under the Convention relating to the Status of Refugees14, taken with the Protocol relating to the Status of Refugees15 (together, "the Convention"), as adapted and received into Australian law by and in the Act16. Article 1A of the Convention relevantly defines "refugee" as a person who: "owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it." Section 91R of the Act however defines "persecution" for the purposes of Australian law: "Persecution For the purposes of the application of this Act and the regulations to a particular person, Article 1A(2) of the Refugees Convention as 13 The Act, s 36. 14 Done at Geneva on 28 July 1951. 15 Done at New York on 31 January 1967. 16 See Minister for Immigration and Multicultural and Indigenous Affairs v QAAH of 2004 [2006] HCA 53. amended by the Refugees Protocol does not apply in relation to persecution for one or more of the reasons mentioned in that Article unless: that reason is the essential and significant reason, or those reasons are the essential and significant reasons, for the persecution; and the persecution involves serious harm to the person; and the persecution involves systematic and discriminatory conduct. (2) Without limiting what is serious harm for the purposes of paragraph (1)(b), the following are instances of serious harm for the purposes of that paragraph: a threat to the person's life or liberty; significant physical harassment of the person; significant physical ill-treatment of the person; significant economic hardship that threatens the person's capacity to subsist; denial of access to basic services, where the denial threatens the person's capacity to subsist; denial of capacity to earn a livelihood of any kind, where the denial threatens the person's capacity to subsist. For the purposes of the application of this Act and the regulations to a particular person: in determining whether the person has a well-founded fear of being persecuted for one or more of the reasons mentioned in Article 1A(2) of the Refugees Convention as amended by the Refugees Protocol; disregard any conduct engaged in by the person in Australia unless: the person satisfies the Minister that the person engaged in the conduct otherwise than for the purpose of strengthening the person's claim to be a refugee within the meaning of the Refugees Convention as amended by the Refugees Protocol." The facts The appellant is a national of Sri Lanka. As the holder of an entertainment visa which was issued on the basis that he was a member of a troupe of dancers sponsored by the Sinhala Cultural and Community Services Foundation, he was permitted to enter Australia on 5 November 2001. The Foundation withdrew its sponsorship when it became clear to it that the troupe was not a troupe of genuine dancers. The appellant applied for a protection visa on 9 November 2001. The appellant told an Australian official who interviewed him after he applied for that visa that for four years he had wanted to work in Australia to pay off a personal loan and to provide for his family. He said that he was a member of the Sri Lankan Freedom Party ("SLFP"), which was a part of the People's Alliance ("PA"). He claimed that he had attended and performed at political rallies, and had organized political meetings. In his written application for the visa, the appellant said that his life had been threatened by members of the United National Party ("UNP"), the parliamentary arm of which was in opposition in Sri Lanka. The appellant claimed that he would be killed if the UNP were soon to come to power in Sri Lanka, a likely event according to him. The appellant provided additional information to the delegate of the first respondent about his political activities. He said that he had worked from time to time as a musician, and had performed at PA rallies; that one day in December 2000 or in January 2001, on his way home from a wedding, he had been pulled into a van, beaten, and his hair had been cut, allegedly by UNP members; that he had lost his job as a musician because of his political involvement; that he had received many threats to his life from UNP members; that he had been obliged to leave his home; and, that he would be in grave danger should the UNP win the next election. The appellant claimed that after the incident in December or January he had received countless threats, and on one occasion, two or three months earlier, he had been struck, apparently intentionally, by the rear-view mirror of a passing van, and that eggs had been thrown at him. He said that his parents also had been directly threatened. The appellant said that he went into hiding because of the threats, although he was still able to visit his family occasionally. His explanation for his failure to complain about the threats was that because his father was a police officer and police officers did not become involved in political matters, it would have been inappropriate for him to do so. The delegate of the first respondent refused the appellant a protection visa. He then applied to the Refugee Review Tribunal ("the Tribunal") for review of the delegate's decision. The Tribunal The Tribunal found that the appellant had not been actively involved in politics: "It is in my view not plausible that a person who had been actively involved in the way described by the [appellant] – in particular his involvement in organising and attending rallies and pasting posters and attending meetings – could fail to recall the 1999 Presidential election and could not know what the long-standing PA leader of the Provincial Council left the role to do. I do not accept that the [appellant] had any active involvement in politics outside election campaigns or that he had any practical involvement with organisational aspects of the PA or its component parties and note that he told me he attended meetings at other times only when I told him that meetings of political parties at other times occurred. The [appellant's] knowledge about the policies of the main parties in Sri Lanka was very limited and in my view supports a conclusion that while he was a supporter of the PA, or a member, his involvement was limited to voting for it, assisting with practical support tasks during election campaigns and to attending rallies and providing musical entertainment on some of these occasions." Even so, the Tribunal was prepared to consider the appellant's case on the basis that he may have received intimidating and threatening telephone calls and letters, and that he may have been assaulted in December 2000 or January 2001, possibly by UNP thugs. The Tribunal was not satisfied, however, that these would constitute persecution within the meaning of the Convention. The telephone calls and letters, although they may have been "troubling", did not constitute "serious harm": they were no more than isolated incidents, and not precursors to further attempts to harm the appellant. The account of other events, of egg-throwing, and the collision with the passing van, was "unconvincing". But again, if it was to be assumed that the events did occur as the appellant alleged, they did not amount to harm "of a severity ... as to constitute persecution". The Tribunal also rejected the appellant's evidence that he had been in hiding, and that he had lost his job as a result of his political activities, the job referred to being "a series of casual engagements". Further, the Tribunal disbelieved the appellant's claimed reasons for his decision not to complain to police officers about the assaults upon and threats to him. The Tribunal accordingly affirmed the delegate's decision not to grant the appellant a protection visa. Federal Magistrates Court The appellant applied to the Federal Magistrates Court (Walters FM) for relief against the Tribunal's decision17. The ground relied on was that, in determining that the appellant was not entitled to a protection visa, the Tribunal had erred in the construction and application of s 91R of the Act, by failing to hold that the threats made to the appellant's life constituted persecution, within the meaning of s 91R(2)(a). The Magistrate accepted18 that not all death threats or threats of imprisonment could amount to "serious harm". But he regarded a threat, even a threat made in the past, to a person's life or liberty as sufficient to amount to persecution under the Act19: "The fact of the matter is, however, that s 91R(2)(a) clearly states that 'a threat to (a) person's life or liberty' is an instance of serious harm for the purposes of s 91R(1)(b). The other sub-paragraphs of s 91R(2) use adjectives or descriptive phrases to qualify or elucidate the scope of the relevant behaviour described within them. For example, s 91R(2)(b) and (c) refer to significant physical harassment or ill treatment of a person, and s 91R(2)(d) refers to significant economic hardship that threatens the persons [sic] capacity to subsist. But no such descriptive or qualifying words or phrases adhere to s 91R(2)(a). In my view, the absence of such qualifying or descriptive words or phrases is of importance. I can see no reason why the plain meaning of the relevant words should be read down in the manner urged ... Whilst the term 'threat' may cover any actual (objective) risk, danger, hazard or peril to a person's life or liberty, it clearly cannot exclude the making of oral or written threats against the person." (original emphasis) The Magistrate then posed this further question: whether "the words spoken or written, or the actions taken, could fairly engender in the mind of a reasonable person a reasonable apprehension that his or her life or liberty is genuinely at risk"20. He was of the view that the Tribunal had failed properly or fairly to address the appellant's claims, and had failed to apply in its terms s 91R 17 VBAO v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 182 FLR 446. 18 (2004) 182 FLR 446 at 454 [31]. 19 (2004) 182 FLR 446 at 454 [31]. 20 (2004) 182 FLR 446 at 454 [33]. of the Act. The Magistrate in consequence granted relief in the form of a declaration, certiorari to quash the Tribunal's decision, mandamus, and costs. Appeal to the Federal Court of Australia The first respondent appealed to the Federal Court of Australia21. Marshall J, sitting as the Full Court of the Federal Court22, thought relevant23 to the construction of s 91R the Explanatory Memorandum to the Bill to insert s 91R in the Act in its current form24: "[C]laims of persecution have been determined by Australian courts to fall within the scope of the Refugees Convention even though the harm feared fell well short of the level of harm accepted by the parties to the Convention to constitute persecution". His Honour s 91R(2)(a)25: rejected a non-contextualist literal construction of "The principles of statutory construction, applied to s 91R(2)(a), favour the definition of 'threat' advanced by the [respondent]. When regard is had to extrinsic material, in particular the Explanatory Memorandum referred to ... the position is put beyond doubt. Section 91R is a relatively recent addition to the Act, designed to set the parameters and raise the threshold of what can properly amount to 'serious harm', within the spirit of the Refugees Convention. Against this backdrop, the word 'threat', in the context of s 91R(2)(a), cannot sensibly be construed to have the meaning contended for by the [appellant]. It could not, in my view, have been the intention of Parliament that threats in the form of declarations of intent, could prima facie constitute 21 Minister for Immigration and Multicultural and Indigenous Affairs v VBAO (2004) 139 FCR 405. 22 Federal Court of Australia Act 1976 (Cth), s 25(1AA). 23 (2004) 139 FCR 405 at 409 [20]. 24 Explanatory Memorandum to the Migration Legislation Amendment Bill (No 6) 25 (2004) 139 FCR 405 at 411 [35]-[38]. serious harm. Even with the qualification to s 91R(2)(a), which the [appellant] submits must operate to exclude from its scope, threats which do not have the capacity to instil fear, it is clear that application of the [appellant's] definition would be productive of anomalous consequences. For example, a threat to kill, inadvertently directed to an individual in a case of 'mistaken identity', may well engender fear in the unsuspecting recipient not appraised of the circumstances in which the threat has been made. However, this could not be serious harm of the type contemplated by either Parliament or the Refugees Convention." His Honour accordingly allowed the first respondent's appeal, set aside the orders of the Federal Magistrates Court, and dismissed the application for judicial review of the Tribunal's decision. The appeal to this Court In substance the appellant adopts as his submission the reasoning of the Federal Magistrate which appears in the passages from his judgment that we have quoted. In our opinion the Federal Magistrate proceeded upon a misconception. The Tribunal did not26 make findings of fact favourable to the appellant calling for the application of s 91R(2)(a) of the Act. This appears clearly from the Tribunal's several findings adverse to the appellant with respect to his political activities which in turn were to provide the foundation for his assertions that it was these that provoked the dangerous threats to which he was subjected. That this is so, also appears from the language, carefully chosen by the Tribunal, with respect to the possible application of s 91R(2)(a) of the Act, if the appellant's factual claims were true. The key, and effectively decisive, factual finding, was that it was "not plausible that a person who had been actively involved in the way described by the [appellant] ... could fail to recall ... and ... not know" various relevant political matters about which he had been asked. Thereafter, with one possible exception only, the Tribunal used only provisional language – the language of assumption or hypothesis, not belief – about the facts to which s 91R(2)(a) might be applicable had the appellant's assertions about them been believed. This follows from the repeated references to the appellant's "claims". It follows from the use of the words, "I am prepared to accept that the [appellant] might have received intimidating and threatening telephone calls" and "I am also prepared to accept that he was assaulted in 26 cf (2004) 182 FLR 446 at 454 [30]. December 2000/January 2001 and that this may have been done to him by UNP thugs" (emphasis added). It follows from the Tribunal's later significant use of some contrasting expressions turning on the notions of "finding" and "view": "I found the [appellant's] evidence [about the incident involving a collision with a van and the egg-throwing] unconvincing. Even if it occurred as the [appellant] claimed ... it ... is not in my view harm ... of a severity so as to constitute persecution" (emphasis added). It follows from the fact that this statement was succeeded by a statement in the language of a finding: "I am not satisfied that the [appellant] was in hiding as he claimed". And it follows from the Tribunal's next statement: "Had there been a serious intent to harm him [during the van incident, he would have been harmed] ... Nor am I satisfied, against the background of all of the [appellant's] evidence, that it was his political involvement which led him to lose his job as a musician ... I found very unconvincing the [appellant's] evidence about why he did not report the incidents to the police". (emphasis added) The only possible exception to the consistently provisional language is to be found in a later paragraph of the Tribunal's reasoning which begins with this sentence: "I have concluded that the chance of the [appellant] coming to serious harm upon return to Sri Lanka because of his past involvement – which I have found was limited to voting for the PA, attending rallies during election campaigns, providing musical entertainment at some gatherings and undertaking practical support tasks during election campaigns – is remote." (emphasis added) But the sentence following it27, and the other findings and the manner of expression of the Tribunal to which we have earlier referred, leave little doubt that the evidence before the Tribunal regarding the claims and evidence of the appellant, as evaluated by the Tribunal, could provide no factual foundation for a claim of persecution for the Convention reason relied on, the holding of a political opinion or membership of a political group. In those circumstances the decision of the Tribunal was not open to challenge on the basis of jurisdictional or like error. Occasion for the application and therefore consideration of the 27 "I do not accept that the nature and extent of his involvement was of a kind which led to the sustained adverse interest of political opponents to an extent where he was subjected to serious harm of a kind which can, even if seen altogether, reasonably be regarded as persecutory or that his past involvement would lead to such treatment if he were to return." meaning of s 91R(2)(a) of the Act by the Federal Magistrate did not therefore strictly arise. The latter matters were however fully argued. In those circumstances, we are prepared, as did the Federal Court, to give consideration to them. The correct starting point for this is the language of s 91R and not the Convention, although of course regard must be had to it to the extent that it can be seen to be incorporated in, or otherwise adopted by the Act. Section 91R(1) emphasizes that Art 1A(2) of the Convention will not apply to persecution unless three conditions are satisfied, relevantly: that membership of a political group or the holding of a political opinion is the essential and significant reason for the persecution; that the persecution involves serious harm to the person; and, that the persecution involves systematic and discriminatory conduct. For the reasons which we have given, it must be concluded that not all of those necessary conditions have been satisfied, and indeed none have. However, the requirement that they must be in any particular case, provides a manifestation of a statutory intent to define persecution, and therefore serious harm, in strict and perhaps narrower terms than an unqualified reading of any unadapted Art 1A(2) of the Convention might otherwise require. We come then to s 91R(2). No one would doubt that what has occurred in the past may provide a good indication of what might, but not always necessarily will, happen in the future. Section 91R is not concerned exclusively with, or applicable to events in the past, rather than current or future circumstances. The Convention is framed to ensure that persons will not be exposed to persecution, as defined by Australian law, if they were to return to the country which they have left. If any threat or relevant risk is not current or prospective, then there can be no well-founded fear of persecution. Neither the Convention nor s 91R of the Act can be read as if a threat of sufficient gravity which has passed, has not been renewed or revived, and is unlikely to be renewed or revived for a Convention reason, will suffice to give rise to the requisite well-founded fear. Accordingly the Federal Magistrate erred in holding that the fact that a threat for a Convention reason to life or liberty, made in the past, but neither current nor prospective, satisfied the requirements of s 91R of the Act. The Federal Court did not err in allowing the appeal from the Magistrates Court to it. The appeal to this Court should be dismissed with costs. |
HIGH COURT OF AUSTRALIA AND APPELLANT OFFICIAL SECRETARY TO THE GOVERNOR GENERAL & ANOR RESPONDENTS Kline v Official Secretary to the Governor General [2013] HCA 52 6 December 2013 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation R Merkel QC with E M Nekvapil for the appellant (instructed by Bartley J T Gleeson SC, Solicitor-General of the Commonwealth with N Kidson and C L Lenehan for the first respondent (instructed by Australian Government Solicitor) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Kline v Official Secretary to the Governor General Administrative law − Freedom of information − Request for access to documents − Section 6A(1) of Freedom of Information Act 1982 (Cth) provided that documents held by Official Secretary to the Governor-General were excluded from disclosure unless they related to "matters of an administrative nature" − Whether documents relating to nomination of person to Order of Australia were excluded from disclosure by operation of s 6A(1). Words and phrases − "matters of an administrative nature". Freedom of Information Act 1982 (Cth), ss 5, 6, 6A. FRENCH CJ, CRENNAN, KIEFEL AND BELL JJ. The appellant, Ms Kline, made a request under s 15 of the Freedom of Information Act 1982 (Cth) ("the FOI Act") for access to certain categories of documents held by the first the respondent, Commonwealth of Australia ("the Official Secretary"). The second respondent, the Administrative Appeals Tribunal ("the Tribunal"), filed an appearance submitting to any order the Court may make save as to costs. the Governor-General of the Official Secretary The documents in the request related to the Australian system of honours, the Order of Australia. They included two nomination forms for the making of an award and correspondence in relation to those nominations, criteria for making awards, working manuals, policy guidelines, and documents relating to review processes. Subsequently, the appellant expanded her request to include an additional category of documents, being "all file notes from the Secretariat" contained in the nominations, which she made in 2007 and 2009. The decision of the Official Secretary1, an "agency" subject to the operation of the FOI Act2, was conveyed in writing. In that communication it was stated that some of the documents requested by the appellant did not exist. In relation to the balance, it was said that "no documents relating to matters of an administrative nature" had been identified, being the only class of documents of the Official Secretary which are subject to obligations under the FOI Act3. The letter also stated that the appellant would be provided with one copy of each of the two nominations she had made, but as those documents did not relate to matters of an administrative nature, they were not subject to the FOI Act. On review, under s 55K of the FOI Act, the Australian Information Commissioner ("the Commissioner") affirmed the Official Secretary's decision to refuse the appellant access to the documents she had requested. The appellant then appealed to the Tribunal, which affirmed the Official Secretary's decision4. 1 Authorised under s 23 of the FOI Act. 2 FOI Act, s 4(1). 3 See FOI Act, s 6A(1). 4 Kline v Official Secretary to the Governor-General (2012) 127 ALD 639. Crennan Bell On an appeal on a question of law5, the Full Court of the Federal Court of Australia6 upheld the Tribunal's decision7. This appeal A panel granted special leave to appeal limited to the following grounds: "That the Federal Court erred: in holding that the Freedom of Information Act 1982 (Cth) ('the FOI Act') did not apply to the [appellant's] requests for access to documents made on 26 and 30 January 2011 by reason of s 6A of that Act; in holding that any document that 'relates to [a] substantive power or function' of the Governor General is not a document that 'relates to matters of an administrative nature' within the meaning of s 6A, and is thereby excluded from the coverage of the Act; or in characterizing each document the subject of the requests as a document that 'relates to [a] substantive power or function' of the Governor General." The grounds show that the disposition of this appeal depends on the proper construction of s 6A of the FOI Act, set out below. The Order of Australia The Order of Australia was established by Letters Patent dated 14 February 1975, in which it was recited: "it is desirable that there be established an Australian society of honour for the purpose of according recognition to Australian citizens and other persons for achievement or for meritorious service". Accordingly, the Letters Patent established "a society of honour to be known as the 'Order of Australia'". The Constitution of the Order of Australia8 ("the Constitution"), as amended, provides that the Governor-General 5 Under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth). 6 Sitting pursuant to the Administrative Appeals Tribunal Act 1975 (Cth), s 44(3)(b). 7 Kline v Official Secretary to the Governor-General (2012) 208 FCR 89. 8 Schedule to the Letters Patent. Crennan Bell shall be the Chancellor of the Order and the Principal Companion in the General Division9, taking precedence, after the Sovereign, over all other members of the Order10. The Governor-General "is charged with the administration of the Order"11, a reference to the Governor-General's overall responsibility in respect of the Order. The Order has a General Division, which is relevant to these proceedings, and a Military Division12. the General Division16, make recommendations The Constitution also provides for an independent Council for the Order consisting of 19 members13 and for the receipt of nominations from individuals or groups in the Australian community by the Secretary of the Order14, described as appointed by the Governor-General15. The Council is empowered to consider nominations the the Governor-General the Governor-General on Governor-General may refer to the Council for its consideration 17. It was not contested that research and inquiry carried out in the Office of the Official Secretary formed the basis of the Council's consideration of any nomination. Apart from receiving nominations, the functions of the Secretary of the Order also include maintaining the records of the Order and the Council and performing the such other those nominations, and advise the Order as directed by such matters the Order respect of concerning functions relation 9 The Constitution, s 2(1). 10 The Constitution, s 2A(1). 11 The Constitution, s 3. 12 The Constitution, s 1(1). 13 The Constitution, s 4. 14 The Constitution, s 19. 15 The Constitution, s 6(1). 16 Appointments to the Order and awards of the Medal of the Order in the Military Division are made by the Governor-General on the recommendation of the Minister for Defence. 17 The Constitution, s 5. Crennan Bell Governor-General18. By convention and practice, the Official Secretary is the Secretary of the Order. The procedure in respect of a nomination for an appointment or award in the Order of Australia was summarised by the Full Court19 and does not need to be repeated here, save to note that the nomination forms contain criteria and state that all nominations are "strictly confidential". Appointments to the Order and awards of the Medal of the Order are made "with the approval of The Sovereign, by Instrument signed by the Governor-General and sealed with the Seal of the Order."20 The features of the Order described above ensure that the grant of honours in the General Division is rendered independent of government and politics. Relevant legislative provisions This appeal concerns the proper construction of s 6A of the FOI Act. In particular, it concerns the meaning of the phrase "unless the document relates to matters of an administrative nature" in s 6A(1), which identifies the only documents of the Official Secretary which are subject to the operation of the FOI Act. Before turning to the text of s 6A and the statutory scheme of which it is a part, it is convenient to say something more about the Governor-General and the statutory functions of the Official Secretary. The Governor-General Section 61 in Ch II of the Australian Constitution vests the executive power of the Commonwealth in the Queen and provides that such power is exercisable by her representative in Australia, the Governor-General. The grant of honours, once regarded as part of the prerogative of the Crown21, is now encompassed in the executive power conferred by s 6122. These proceedings are 18 The Constitution, s 6(2). 19 Kline v Official Secretary to the Governor-General (2012) 208 FCR 89 at 92 [11]. 20 The Constitution, s 9. 21 R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] QB 365 at 398-399 [44]-[46]. 22 Cadia Holdings Pty Ltd v New South Wales (2010) 242 CLR 195 at 226 [86]; [2010] HCA 27; Williams v Commonwealth (2012) 86 ALJR 713 at 723 [24] per (Footnote continues on next page) Crennan Bell not concerned with any of the many powers or functions of the Governor-General which involve acting on the advice of the Executive Council23. Whilst it is accurate to describe the role of the Governor-General as having evolved since Federation24, Governors-General have exercised a range of constitutional25, statutory, ceremonial and community responsibilities. The Governor-General's role in respect of the Order reflects ceremonial and community responsibilities, as well as the Governor-General's constitutional position as the representative of the Sovereign in Australia. Sections 6 to 19 of the Governor-General Act 1974 (Cth) make provision for the office and functions of the Official Secretary. Relevantly, s 6 provides: "(1) There shall be an Official Secretary, who shall be appointed by the Governor-General. The Official Secretary, together with the staff employed under section 13, constitute the Office of Official Secretary to the Governor-General. The function of the Office is to assist the Governor-General." Section 13 provides that the Official Secretary may employ a person as "a member of the Governor-General's staff." Section 6A(2) of the FOI Act provides that a document in the possession of a person so employed, by reason of that person's employment, is taken to be in the possession of the Official Secretary for the purposes of the FOI Act. The Official Secretary determines the remuneration of staff26 and may terminate the employment of a member of French CJ, 747 [123] per Gummow and Bell JJ, 828 [582] per Kiefel J; 288 ALR 410 at 417-418, 450, 559; [2012] HCA 23. 23 As to which see R v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170 at 219 per Mason J; [1981] HCA 74; see also FAI Insurances Ltd v Winneke (1982) 151 CLR 342; [1982] HCA 26. 24 Winterton, "The Evolving Role of Groves (ed), Law and Government in Australia, (2005) 44; Boyce, The Queen's Other Realms, (2008) at 119-121 and 124-138. the Australian Governor-General", 25 Constitution, ss 5, 32, 57, 58, 60, 61, 64, 70, 72, 103 and 128. 26 Governor-General Act 1974 (Cth), s 14. Crennan Bell statutory responsibilities under staff27. The Official Secretary is required to prepare and furnish an annual report on the performance of the functions and duties of the Official Secretary, which is ultimately laid before both Houses of Parliament28. The Official Secretary also the Financial Management and has Accountability Act 1997 (Cth). The evidence showed that the Governor-General is assisted and supported by the Office of the Official Secretary in two ways. First, the Office assists and supports the Governor-General in respect of all aspects of the Governor-General's role, which includes assisting and supporting the Governor-General's discharge of substantive powers and functions in respect of the Order. Secondly, the Governor-General is assisted and supported by the management and administration of office resources, such as financial and human resources and information technology. The distinction between the two forms of support will need to be borne in mind when approaching the task of construing s 6A(1). The FOI Act The general objects of the FOI Act are to give the Australian community access to information held by the Commonwealth Government, thereby "promoting better-informed decision-making" and permitting "increasing scrutiny" of the Government's activities29. Those objects are to be achieved by requiring "agencies" which are subject to the operation of the FOI Act30 to "publish ... information" and to "provid[e] ... access to documents."31 The powers and functions given by the FOI Act to achieve its objects are to be performed and exercised, as far as possible, promptly and at the lowest reasonable cost32. Relevantly, "agency" is defined to include "a Department" or "a prescribed authority", which latter term is defined, in turn, to include the person 27 Governor-General Act 1974 (Cth), s 15(1). 28 Governor-General Act 1974 (Cth), s 19. 29 FOI Act, s 3(2). 30 FOI Act, ss 4 and 7. 31 FOI Act, s 3(1). 32 FOI Act, s 3(4). Crennan Bell holding, or performing the duties of, an office established by an enactment33. Whilst neither the Governor-General, the Council for the Order, nor the Office of the Official Secretary is "a prescribed authority", the Official Secretary is 34, and is therefore an "agency" for the purposes of the FOI Act. The statutory obligations to give access to certain documents35 and to publish certain information36 are then qualified by specified exemptions. Relevantly, courts, specified tribunals and the Official Secretary are excluded from the statutory obligation to grant access to a document "unless the document relates to matters of an administrative nature."37 In addition, a document of a Minister that is not an "official document of a Minister" is exempt from the operation of the FOI Act38. Division 2 of Pt II of the FOI Act39 identifies information which agencies must publish, which includes "operational information"40, about which more will be said later. Part III41 governs the access which must be given to documents. Relevantly, s 11 provides that a person has a legally enforceable right to obtain access to a document of an agency, other than an exempt document. A person seeking access to a document must make a "request"42, which may be refused if the document cannot be found or does not exist43 or if the work involved in processing the request would substantially and unreasonably direct the resources 33 FOI Act, s 4(1). 34 FOI Act, s 4(1), par (c) of the definition of "prescribed authority". 35 FOI Act, ss 11 and 11A(3). 36 FOI Act, s 7A. 37 FOI Act, ss 5, 6 and 6A(1). 38 FOI Act, s 4(1), definition of "official document of a Minister" and s 11(1)(b). 39 FOI Act, ss 8-8E. 40 FOI Act, ss 7A and 8A. 41 FOI Act, ss 11-31. 42 FOI Act, ss 11A, 15, 16 and 17. 43 FOI Act, s 24A. Crennan Bell of the agency from its other operations44. Division 2 of Pt IV45 provides for a diverse group of exemptions from the obligations imposed by the FOI Act. Relevantly included as exempt are "[d]ocuments containing material obtained in confidence"46. Division 3 of Pt IV47 contains a scheme of conditional exemptions, including documents disclosing "deliberative matter"48, where there is a public interest to be served by non-disclosure. The crucial provision for the purposes of these proceedings is s 6A49, which provides: "(1) This Act does not apply to any request for access to a document of the Official Secretary to the Governor-General unless the document relates to matters of an administrative nature. For the purposes of this Act, a document in the possession of a person employed under section 13 of the Governor-General Act 1974 that is in his or her possession by reason of his or her employment under that section shall be taken to be in the possession of the Official Secretary to the Governor-General." (emphasis added) It should be noted that the drafting technique emphasised above is used elsewhere in the FOI Act. Sections 5 and 6 deem a federal court50 or a specified tribunal, authority or body51 to be a "prescribed authority". However, the FOI Act does not apply to any request for access to a document of either a court or a 44 FOI Act, ss 24, 24AA and 24AB. 45 FOI Act, ss 33-47A. 46 FOI Act, s 45. 47 FOI Act, ss 47B-47J. 48 FOI Act, s 47C. 49 Introduced in 1984 by the Public Service Reform Act 1984 (Cth), s 154. 50 See, for example, Constitution, s 71 and Federal Court of Australia Act 1976 (Cth), 51 Encompassed by Constitution, Ch II. Crennan Bell specified tribunal, authority or body "unless the document relates to matters of an administrative nature." It can also be noted that Sched 1 to the FOI Act, entitled "Courts and tribunals exempt in respect of non-administrative matters", exempts three entities from the operation of the Act. Pursuant to s 7, Pt I of Sched 2 lists agencies which are also exempt, and Pt II of Sched 2 lists agencies which are exempt from granting a right of access to particular documents. The decision of the Tribunal The Tribunal affirmed the decision of the Official Secretary to refuse the appellant access to documents which were the subject of her request. In accordance with an agreement reached between the parties, the Tribunal did not scrutinise the requested documents in detail. The Tribunal noted that if any categories of documents to which the appellant had requested access did not fall within the exception in s 6A(1), it would be necessary to consider at a further hearing whether such documents were exempt from disclosure by reference to some other provision of the FOI Act. The Tribunal found that the Official Secretary held some documents which fell within the categories the appellant had requested. The Tribunal considered that documents generated in connection with the conferral of honours in the Order related to substantive functions of the Governor-General. Accordingly, as the documents requested "squarely relate[d] to the operation of the system of honours"52, the Tribunal considered that none of the documents, or categories of documents, related to "matters of an administrative nature" within the meaning of s 6A(1) of the FOI Act. The Tribunal affirmed the decision under review. The decision of the Full Court The Full Court held that the relevant distinction drawn by s 6A(1) of the FOI Act, between "matters of an administrative nature" and matters which were not of such a nature, reflected a distinction between the substantive powers and functions of the Governor-General and the "apparatus" for the exercise of those powers or functions, which was merely supportive53. The Full Court considered 52 Kline v Official Secretary to the Governor-General (2012) 127 ALD 639 at 53 Kline v Official Secretary to the Governor-General (2012) 208 FCR 89 at 95 [21]. Crennan Bell that the terms of the appellant's request for documents referred to a substantive power or function, namely the administration of the Order of Australia. In particular, that substantive power or function involved nominations for appointments and awards, and consideration of those nominations, which culminated in a decision of whether or not to appoint or award a particular person. It followed that the appellant's request sought access to documents relating to that substantive power, which were excluded from disclosure under s 6A(1) of the FOI Act. In reviewing the Tribunal's decision and dismissing the appeal before it, the Full Court found that it was sufficient for the Tribunal to determine whether the categories of documents identified in the appellant's request were documents relating to "matters of an administrative nature". It was not necessary, in the Full Court's view, for the Tribunal to examine each document individually as "the character of the documents was apparent from the terms of the request."54 Submissions On behalf of the appellant it was contended that the question before the Tribunal was whether the appellant's request for access to documents of the Official Secretary was capable of covering documents which related to matters of an administrative nature. If the appellant succeeded on that issue, the exclusion from the operation of the FOI Act, contained in s 6A(1), would not apply to the documents. The matter should then be remitted to the Tribunal to consider whether any (or any part) of some 400 documents (comprising about 1500 pages), which were covered by the appellant's request, were excluded from disclosure by virtue of some provision of the FOI Act other than s 6A(1), such as provisions exempting confidential documents from disclosure. In oral argument, it was further submitted that such inspection might also show that the documents requested did indeed fall within the exclusion provided by s 6A(1), because they disclosed some aspect of the decision-making processes relevant to the Order. Appealing to text, context and legislative history, it was contended for the appellant that the exception in s 6A(1) should be construed widely, such that the only documents of the Official Secretary excluded from the operation of the FOI Act were documents which disclosed any aspect of the decision-making process in respect of a particular nomination for the Order. A correlative submission was that documents unrelated to that decision-making process "prima facie would be administrative and not disclose anything confidential." The distinction between 54 Kline v Official Secretary to the Governor-General (2012) 208 FCR 89 at 97 [29]. Crennan Bell the two categories was said to identify the boundary between what s 6A(1) excluded and what it included, for the purposes of access to documents under the FOI Act. included the examples given Contextual matters relied upon by the appellant in support of those submissions the "operational information" required to be published55, as defined under s 8A56, and the distinct exemption of agencies such as the Australian Security Intelligence Organisation ("ASIO") from the statutory scheme under the FOI Act, compared with the inclusion of the Official Secretary. The underlying purpose and operation of ss 5 and 6 of the FOI Act were said to be analogous to the underlying purpose and operation of s 6A, elucidated, it was submitted, by Bienstein v Family Court of Australia57. illustrate Relying on some analogy between functions of the Governor-General and judicial officers, as holders of independent office, the appellant identified the public interest underpinning s 6A(1) as the public interest in the independent and the impartial discharge of Governor-General, as decision-maker, and in this case as decision-maker in respect of the Order. That led to a submission that secrecy or confidentiality in respect of the Governor-General's responsibilities concerning the Order was not the dominant public interest protected by s 6A, because that interest was specifically covered by other provisions in the FOI Act. the substantive powers and functions of The competing contention of the first respondent was that the exception in s 6A(1) should be construed narrowly. It was submitted that s 6A(1) operates to oblige the Official Secretary only to give access to documents under the FOI Act which involved the management or administration of the Office. That limited purpose was said to be clear from the text of s 6A(1) and its wider context. The wider context included the circumstance that the Governor-General was excluded from all statutory obligations imposed by the FOI Act, and the Official Secretary was only covered by s 6A to the same limited extent as courts and tribunals were covered by ss 5 and 6. The exception in s 6A(1), so construed, was said to 55 FOI Act, s 8(2)(j). 56 These were an agency's rules, guidelines, practices and precedents relating to "decisions or recommendations affecting members of the public (or any particular person or entity, or class of persons or entities)." See FOI Act, s 8A(1). 57 (2008) 170 FCR 382. Crennan Bell adequately serve the object of "public scrutiny" of the Government's processes and activities identified in the FOI Act58. Further, the purposive construction of the exception in s 6A(1), proffered by the first respondent, was said to be supported by a number of factors: the heterogeneous nature of the Governor-General's substantive powers and functions; the function of the Official Secretary to assist and support the Governor-General in relation to all of those diverse powers and functions; and extrinsic materials containing statements regarding the legislative purpose underpinning ss 5 and 6. Generally, it was submitted that the appellant was not seeking documents which related to the management or administration of the Office, such as the office resources. Rather, the appellant was seeking documents which would elucidate the failure of her two nominations, whilst eschewing any right to be given access to any documents which disclosed the precise reasons for that failure. "Matters of an administrative nature" The task of construing s 6A(1) of the FOI Act is governed by what has been said in this Court recently about the importance of the text of a statute, the meaning and effect of which are not to be displaced by statements in secondary materials59. A purposive construction of s 6A(1) accords with s 15AA of the Acts Interpretation Act 1901 (Cth). Further, cognate expressions in a statute should be given the same meaning unless the context requires a different result60. A preliminary consideration of considerable contextual significance is that the Governor-General is not subject to the operation of the FOI Act. Stating the same point positively, and utilising the nomenclature of the FOI Act, the Governor-General The Governor-General does not fall within the definition of an "agency" or is exempted from the operation of that Act. 58 FOI Act, s 3(2). 59 Northern Territory v Collins (2008) 235 CLR 619 at 642 [99]; [2008] HCA 49; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 47 [47]; [2009] HCA 41; Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 265 [33]; [2010] HCA 23. 60 Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 618 per Mason J; [1975] HCA 41. Crennan Bell "prescribed authority" in the FOI Act. The Governor-General is appointed by Letters Patent, pursuant to s 2 of the Australian Constitution, and therefore does not hold office in accordance with the provisions of an enactment of the federal Parliament or an Order-in-Council61. Similarly, the federal Parliament62 and Justices of the High Court of Australia are not subject to the operation of the FOI Act. Further, holders of federal judicial office and holders of office in specified federal tribunals, authorities and bodies are expressly exempted from the operation of the provisions of the FOI Act63. In summary, certain individuals, including the Governor-General, who hold independent offices pursuant to the Australian Constitution or a federal enactment, requiring the impartial discharge of the powers and functions of such office, are not subject to the operation of the FOI Act. Thus the processes and activities of government, which are opened to increased public scrutiny by the operation of the FOI Act, do not include those associated with the exercise of the Governor-General's substantive powers and functions, many (even most) of which are exercised in public. Similarly, the FOI Act does not expose to public scrutiny the discharge of the substantive powers and functions of judicial officers or holders of quasi-judicial office to the extent that they have not been discharged in an open court or a public forum. Independence from government and the public is important in relation to the exercise of the various responsibilities of the Governor-General, including, but not limited to, the making of decisions. Furthermore, freedom from interference or scrutiny by members of the public (or other branches of government) is an essential aspect of the making of decisions in relation to the General Division of the Order. The first matter of textual significance is that the Official Secretary is "a prescribed authority" subject to the operation of the FOI Act as a person holding, or performing, the duties of that office under the Governor-General Act 1974 (Cth). The next matter of textual significance is that s 6A(1), and ss 5(1) and 6, reveal a plain intention to constrain the extent to which the FOI Act pursues its 61 FOI Act, s 4(1), definition of "prescribed authority". 62 Documents in the possession of a Minister in his or her capacity as a member of Parliament are not subject to the operation of the FOI Act: see FOI Act, s 11(1)(b) and the definition of "official document of a Minister" in s 4(1). 63 FOI Act, ss 5(1)(b) and 6(b). Crennan Bell purposes and objects against persons (or entities) providing administrative support to individuals who hold independent offices and are not subject to the operation of the FOI Act. The Official Secretary, like courts and other bodies governed by the FOI Act, is only required to grant access to a limited class of documents, characterised by a relationship between the document and subject matter of an "administrative nature". that statutory characterisation cannot be determined without some reference to the FOI Act as a whole64, and the circumstance that the documents to which access must be granted are an exception to the position that the Governor-General is not subject to the operation of the FOI Act. The meaning of The FOI Act does not pursue its objects, as legislative purposes, at any cost65. The statutory scheme is complex in achieving a balance between the exposure of some government processes and activities to increased public participation and scrutiny, by making information freely available to persons on request, and exempting other government processes and activities from public participation and scrutiny, in order to secure a competing or conflicting public interest in non-disclosure. A clear example is the exemption of ASIO from the operation of the FOI Act. The Governor-General, in common with judges, takes an oath to undertake his or her functions without fear or favour. However, as mentioned, the position of the Governor-General calls for the exercise of a multiplicity of powers and functions, many (but not all) of which are undertaken in public, and some (but few) of which involve making decisions other than on the advice of a Minister or the Executive Council. The responsibility of the Governor-General for the administration of the Order is a sui generis role involving processes and decision-making triggered by the nomination of a person for an appointment or award. The proper independent discharge of the Governor-General's responsibility for the administration of the Order requires full and frank assistance to the Governor-General from the Council for the Order. The Council, in turn, requires full and frank assistance 64 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69]; [1998] HCA 28. 65 Carr v Western Australia (2007) 232 CLR 138 at 143 [5]; [2007] HCA 47, cited with approval in Construction Forestry Mining and Energy Union v Mammoet Australia Pty Ltd (2013) 87 ALJR 1009 at 1016 [40]-[41]; 300 ALR 460 at 469; [2013] HCA 36. Crennan Bell from the Office of the Official Secretary. The possibilities of giving offence to failed nominees, defamation, or political controversy in the administration of the General Division of the Order are all avoided by the confidentiality of the selection process, which culminates in public announcement, in due course, of appointments and awards in the Order. The Office supports the Council and the Governor-General in completing the selection process. However, the task of statutory construction here is not resolved by asking whether any particular document relates to processes and activities "supporting" the role of the Governor-General, because documents answering that description fall within both the exclusion, and the exception, in s 6A(1). The "non-application" of the FOI Act to requests for access to documents of the Official Secretary, as stated in s 6A(1), inevitably refers to a class of documents relating to matters which are not "of an administrative nature". In conformity with the exclusion of the Governor-General from the operation of the FOI Act, those documents relate to the discharge of the Governor-General's substantive powers and functions. By contrast, the exception of a class of document which relates to "matters of an administrative nature" connotes documents which concern the management and administration of office resources, examples of which were given above66. This is a common enough connotation of the epithet "administrative"67. The Full Court apprehended this distinction in s 6A(1) correctly, referring to the latter class of documents as relating to the office "apparatus" which supported the exercise of the Governor-General's substantive powers and functions. The preceding construction of s 6A(1) governs its operation and application in relation to the range of diverse powers and functions of the Governor-General in respect of which the Official Secretary may be called upon to provide assistance and support. The limited construction adopted by the Full Court of the class of documents relating to "matters of an administrative nature" is appropriate because s 6A(1) must apply equally to powers and functions whose exercise is of the greatest sensitivity, requiring high levels of confidentiality, as it must apply to powers and functions of lesser sensitivity. The correctness of the construction of s 6A(1) adopted by the Full Court is illustrated by the specific case of its application in relation to the Order. In that application it strikes a balance between the public interest in maintaining an Australian system of 66 See [13]. 67 Burns v Australian National University (1982) 40 ALR 707 at 713-714. Crennan Bell honours and the public interest in efficient public administration, which is supported by the scrutiny for which the FOI Act provides. The first public interest or purpose is achieved by the exclusion from disclosure of documents relating to non-administrative matters. In relation to the Order, these must include all unpublished documents associated with the administration (that is, the operation) of the Order, involving, as it does, a confidential selection process in respect of all nominations received within a particular period. The second public interest and purpose is achieved by exposing to public scrutiny documents of the Official Secretary which fall within the exception. The operation of the exception in relation to the Order must be governed by its general construction in application to that particular case. So applied, the exception can only be read as referring to documents relating to the management and administration of the resources of the Office and is consistent with the general non-application of the FOI Act to requests for access to documents of the Official Secretary. The analogous exclusion of federal courts and specified tribunals, authorities and bodies from the general operation of the FOI Act, except for documents which relate to matters of an administrative nature, also involves a balance of conflicting public interests. There is a long-recognised public interest in the protection of judicial independence to enable holders of judicial office to exercise authority without fear or favour − judges work in public, are obliged to give reasons, and are subject to appellate review68. However, not every action undertaken by a judge in the discharge of the substantive powers and functions of adjudication is undertaken in public. For example, revision of an unrevised transcript of proceedings heard in open court may occur in chambers. That task is referable to the exercise of judicial, rather than administrative, powers and functions69. Similar policy considerations apply in respect of specified tribunals, authorities or bodies. Holders of office in such bodies also exercise authority without fear or favour. Determinations are made in public, but distinct conciliatory functions may depend for their success on confidentiality so as to 68 Fingleton v The Queen (2005) 227 CLR 166 at 186 [38]-[39] per Gleeson CJ; [2005] HCA 34; Herijanto v Refugee Review Tribunal (2000) 74 ALJR 698 at 700-701 [13]-[16] per Gaudron J; 170 ALR 379 at 382-383; [2000] HCA 16. 69 Loughnan v Altman (1992) 39 FCR 90. Crennan Bell ensure full and frank private discussions designed to effect the settlement of, for example, an industrial dispute. Accordingly, the only documents which courts and specified tribunals, authorities and bodies are obliged to open to increased public scrutiny are those documents relating to the management and administration of registry and office resources. Whilst the proper construction of s 6A(1) plainly emerges from a consideration of the textual and contextual matters discussed, that construction is fortified by resort to statements in relevant secondary materials. In brief, s 6A(1) of the FOI Act, which was inserted in 1984, drew upon the language of ss 5(1) and 6, which were included in the FOI Act as originally enacted. In the relevant parliamentary debates, Senator Evans described the operation of ss 5 and 6 and explained their object. He said70: "courts, judicial offices, certain industrial tribunals and their registries ... are not exempt from the operation of the [FOI] Act so far as their administrative procedures, properly so-called, are concerned." The Senator went on to explain that the inclusion of ss 5 and 6 would secure a legitimate public interest in "efficient administration" and was not intended to intrude on the independence of the judiciary71. In Bienstein72, the respondent denied the applicant's request for access to all documents relating to the case management of her matters before it. It was decided in Bienstein that ss 5 and 6 of the FOI Act were not intended to extend so far as requiring the giving of access to documents that would put judicial independence, or the independence of other institutions, at risk73. However, it was also decided that the verbiage "relates to matters of an administrative nature", as it occurs in s 5 of the FOI Act, can include documents relating to judicial functions and decision-making. The next step in the reasoning was that documents which would not impinge on the independence essential to the 70 Australia, Senate, Parliamentary Debates (Hansard), 7 May 1981 at 1768. 71 Australia, Senate, Parliamentary Debates (Hansard), 7 May 1981 at 1768. 72 (2008) 170 FCR 382. 73 (2008) 170 FCR 382 at 400 [54]. Crennan Bell exercise of judicial or decision-making functions were documents relating to matters of an administrative nature74. That reasoning was relied on by the appellant to support the proposition that the only documents of the Official Secretary which were excluded from disclosure under s 6A(1) were documents relating to the substantive powers and functions of the Governor-General as decision-maker. That aspect of the reasoning in Bienstein is erroneous. First, the references in the extrinsic materials to examples of "administrative matters", such as the number of sitting days of a court, were misread in Bienstein as suggesting that even documents held by a court which related to individual cases might be characterised as documents "relating to 'matters of an administrative nature'."75 Secondly, it was decided that since some powers and functions of a judicial officer were administrative in nature, those administrative powers and functions which were not closely related to judicial independence would not need protection from the operation of the FOI Act76. However, that reasoning, deriving from the different factual circumstances in Fingleton v The Queen77, accords no weight to the circumstance that a judicial officer is not subject to the operation of the FOI Act. Only a registry or office of a court or specified tribunal is subject to the operation of the FOI Act, and then only in respect of documents relating to administrative matters. The approach in Bienstein, relied on by the appellant, is not apt for application to s 6A(1). That approach would not accord proper weight to the circumstance that the Governor-General is not subject to the operation of the FOI Act and would result in an impractical and unwieldy approach to the application of s 6A(1), contrary to the provision that public access to information is to be achieved promptly and at the lowest reasonable cost78. Application of s 6A(1) to the appellant's request Correspondence and file notes relating to nominations Correspondence and file notes relating to the appellant's nominations are directly related to the Governor-General's exercise of substantive powers and 74 (2008) 170 FCR 382 at 399-400 [53]-[54]. 75 (2008) 170 FCR 382 at 399 [53]. 76 (2008) 170 FCR 382 at 403 [67]. 77 (2005) 227 CLR 166. 78 FOI Act, s 3(4). Crennan Bell functions in respect of the Order. These are excluded from disclosure as they do not fall within the exception in s 6A(1) of the FOI Act. Criteria for making awards Relevant criteria for the making of awards are explained in the nomination form, which is a document that is available to the public. Working manuals and policy guidelines To the extent that relevant criteria are further explained in working manuals or policy guidelines, the evidence showed that those documents were used in processes and activities concerned with the Governor-General's exercise of substantive powers and functions in respect of the Order. Those are excluded from disclosure, as they do not fall within the exception in s 6A(1). It has been mentioned that s 8 of the FOI Act obliges publication of an agency's "operational information", being information held by the agency to assist the agency in "making decisions or recommendations affecting members of the public"79. The appellant drew comfort from the circumstance that an agency's "guidelines" and "practices and precedents relating to [the agency's] decisions and recommendations" are cited as examples of the kinds of documents covered by the expression "operational information". However, the Governor-General's information relevant to decisions made in respect of the Order is not subject to the operation of the FOI Act. Further, the Official Secretary does not make decisions public; recommendations in respect of the General Division of the Order are made by the Council for the Order and ultimate decisions as to the appointment or the making of awards repose with the Chancellor of the Order, the Governor-General. affecting members recommendations the Documents relating to review processes No documents relating to review processes are in existence, but the Official Secretary accepted that if such documents were brought into existence, they would be available to the public without recourse to the FOI Act. 79 FOI Act, s 8A. Crennan Bell Conclusion and orders There was no error in the Tribunal's decision. Accordingly, the grounds of appeal in respect of the decision of the Full Court were not made out. The appeal should be dismissed with costs. Introduction The Freedom of Information Act 1982 (Cth) ("the FOI Act") confers rights to obtain, on request, access to documents in the possession of "agencies" as well the possession of Ministers of State of the as official documents in Commonwealth. Departments of State of the Commonwealth and "prescribed authorities" are agencies. Most bodies established by Acts of the Commonwealth Parliament are prescribed authorities, as are most persons holding offices established by Acts of the Commonwealth Parliament. Courts (but not judges) are deemed to be prescribed authorities. Specified industrial bodies such as the Australian Industrial Relations Commission (but not their members) are similarly deemed to be prescribed authorities. The Official Secretary to the Governor-General, by virtue of holding an office established by the Governor-General Act 1974 (Cth), is also a prescribed authority. The Governor-General is not. The FOI Act is expressed (in ss 5, 6 and 6A respectively) to have no application to a request for access to a document in the possession of a court, a specified industrial body or the Official Secretary "unless the document relates to matters of an administrative nature". The question of statutory construction on which this appeal turns is: when is a document a document that "relates to matters of an administrative nature"? Legislative history In answering that question, "a page of history is worth a volume of logic"80. Sections 5 and 6 were in the FOI Act as originally enacted in 1982. They were inserted into the Bill for the FOI Act by amendment in the Senate in 198181. The purpose of the amendment was to give effect to recommendations made by the Senate Standing Committee on Constitutional and Legal Affairs in 197982. 80 Cf New York Trust Co v Eisner 256 US 345 at 349 (1921). 81 Australia, Senate, Parliamentary Debates (Hansard), 7 May 1981 at 1767-1776. 82 Australia, Senate Standing Committee on Constitutional and Legal Affairs, Report by the Senate Standing Committee on Constitutional and Legal Affairs on the Freedom of Information Bill 1978, and aspects of the Archives Bill 1978, (1979) at The Senate Standing Committee had recommended amending what had been proposed in the original form of the Bill as a wholesale exemption of courts and industrial bodies from the FOI Act so as to limit the exemption in respect of courts "to documents of a non-administrative character"83 and in respect of industrial bodies to "their non-administrative functions only"84. Explaining the reasons for its recommendation to limit the exemption in respect of courts, the Senate Standing Committee said85: "There is obviously very good reason for governments not imposing requirements which would interfere with the independence of the judiciary and the proper administration of justice. It would not be appropriate for freedom of information legislation to be the vehicle for obtaining access, where this was otherwise unavailable, to court documents filed by parties to litigation. Nor would it be appropriate for this legislation to operate in any way as a substitute or supplement for discovery procedures presently administered by the courts." The Senate Standing Committee continued86: "However, there are other documents of a more clearly administrative character associated with the functioning of registries and collection of statistics on a host of matters associated with judicial administration which, equally clearly, should be opened up to public gaze. These would include such matters as the number of sitting days, the number of cases determined, the number of cases withdrawn, the cases which were 83 Australia, Senate Standing Committee on Constitutional and Legal Affairs, Report by the Senate Standing Committee on Constitutional and Legal Affairs on the Freedom of Information Bill 1978, and aspects of the Archives Bill 1978, (1979) at 84 Australia, Senate Standing Committee on Constitutional and Legal Affairs, Report by the Senate Standing Committee on Constitutional and Legal Affairs on the Freedom of Information Bill 1978, and aspects of the Archives Bill 1978, (1979) at 85 Australia, Senate Standing Committee on Constitutional and Legal Affairs, Report by the Senate Standing Committee on Constitutional and Legal Affairs on the Freedom of Information Bill 1978, and aspects of the Archives Bill 1978, (1979) at 86 Australia, Senate Standing Committee on Constitutional and Legal Affairs, Report by the Senate Standing Committee on Constitutional and Legal Affairs on the Freedom of Information Bill 1978, and aspects of the Archives Bill 1978, (1979) at subsequently appealed and the occasions on which bail was awarded. The very existence within the Commonwealth Attorney-General's Department of a Division of Judicial Administration is testimony to the ability to distinguish between the judicial and administrative aspects of the operation of the courts." What was the Division of Judicial Administration within the Attorney- General's Department doing in 1979 to allow its "very existence" to be "testimony to the ability to distinguish between the judicial and administrative aspects of the operation of the courts"? The answer was apparent from the Annual Report of the Attorney-General's Department87. In anticipation of the enactment of the High Court of Australia Act 1979 (Cth), the Division was providing "administrative assistance in the development of an independent system of judicial administration" as well as providing "assistance in the detailed planning, furnishing and the general fitting out of the High Court building in Canberra and in matters associated with the move of the High Court to Canberra"88. The Attorney-General's Department was in the meantime providing staff and "management services" for the Sydney and Melbourne registries of the High Court as well as "registry services", in addition to providing ongoing "management services and general administrative assistance" to the Federal Court as well as staffing and maintaining registries of the Family Court89. With the commencement of the High Court of Australia Act 1979 (Cth) in 1980, it became the responsibility of the High Court itself to "administer its own affairs"90 and for that purpose the High Court was given power "to do all things … necessary or convenient to be done for or in connection with the administration of its affairs" including, without limitation, power to: enter into contracts; acquire, hold and dispose of property; take on hire, exchange, and accept on deposit or loan, library material and also furnishings, equipment and goods needed for the purposes of the Court; and control and manage any land or building occupied by the Court and any adjacent land or building that is part of the precincts of the Court91. 87 Australia, Attorney-General's Department, Annual Report 1978-1979, (1979). 88 Australia, Attorney-General's Department, Annual Report 1978-1979, (1979) at 43. 89 Australia, Attorney-General's Department, Annual Report 1978-1979, (1979) at 44. 90 Section 17(1). 91 Section 17(2). Speaking in favour of the relevant amendment to the Bill for the FOI Act in the Senate in 1981, Senator Evans drew attention to the then recent enactment of the High Court of Australia Act 1979 (Cth) when he said92: "The utility, or indeed the necessity, for an exemption for administrative questions of this kind is in fact made more obvious by the recent change in the legislation governing the High Court of Australia. These sorts of administrative questions are now clearly within the Court's jurisdiction, whereas previously the majority of administrative matters of this kind were performed by or through the Attorney-General's Department and as such were the subject of ordinary access procedures so far as information was concerned." The word "administrative" was obviously being used by the Senate Standing Committee in 1979 and by Senator Evans in 1981 in a sense narrower and more specific than the same word had earlier been used in the Administrative Decisions (Judicial Review) Act 1977 (Cth) as part of the definition of a decision to which that Act was to apply. The focus of the amendment to the Bill for the FOI Act recommended in 1979 and implemented in 1981 was not on the separation of judicial power from executive power – after all, the same distinction between "administrative" and "non-administrative" was being employed in respect of industrial bodies which did not exercise judicial power. The focus was more prosaically on ensuring inclusion within the scope of the FOI Act of documents in the possession of courts and industrial bodies which related to matters of organisation and management of the kind which in 1979 were still being provided to the High Court by the Division of Judicial Administration within the Attorney-General's Department and of the kind which by 1981 had been taken over by the High Court itself with the commencement of the High Court of Australia Act 1979 (Cth) in 1980. Section 6A was then inserted into the FOI Act two years later by the Public Service Reform Act 1984 (Cth)93. Its insertion was contemporaneous with, and consequential upon, the amendment by the Public Service Reform Act 1984 (Cth) of the Governor-General Act 1974 (Cth) which created the statutory office of Official Secretary94. Immediately before those amendments in 1984, the Official Secretary had been an officer of the Australian Public Service 92 Australia, Senate, Parliamentary Debates (Hansard), 7 May 1981 at 1768. 93 Section 154 of the Public Service Reform Act 1984 (Cth). 94 Section 141 of the Public Service Reform Act 1984 (Cth), inserting s 6 of the Governor-General Act 1974 (Cth). seconded to the Governor-General's staff from the Department of the Prime Minister and Cabinet95. The identity of the language used in s 6A of the FOI Act and the language used in ss 5 and 6 of the FOI Act suggests that the same distinction was being drawn in 1984 to govern inclusion within the scope of the FOI Act of documents in the possession of the Official Secretary as had earlier been drawn to govern inclusion within the scope of the FOI Act of documents in the possession of a court or industrial body. Construction The Full Court of the Federal Court, in the decision under appeal, held the distinction drawn by s 6A of the FOI Act to be between "substantive powers and functions" and the "apparatus" supporting the exercise or performance of those substantive powers and functions96. The legislative history compels the conclusion that that is not only a correct distillation of the distinction drawn by s 6A of the FOI Act, but also a correct distillation of the distinction drawn by ss 5 and 6 of the FOI Act. Bienstein v Family Court of Australia97, which reached a different conclusion in relation to s 5 of the FOI Act, was wrongly decided. Sections 5, 6 and 6A of the FOI Act draw a dichotomy between documents which relate to "administrative matters" and those which do not. The word "administrative" is used in each of those sections in the primary sense of "[p]ertaining to, or dealing with, the conduct or management of affairs"98. The relevant affairs, or "matters", to which each of ss 5, 6 and 6A of the FOI Act refers, are distinct from, but incidental to, the exercise or performance of substantive powers or functions in the sense of providing logistical support (or infrastructure or physical necessities or resources or platform) for the exercise or performance of those substantive powers or functions to be able to occur. The distinction sought to be drawn by the appellant between documents which "relate to administrative tasks … to support or assist the exercise of … 95 Australia, Senate, Public Service Reform Bill 1984, Explanatory Memorandum at 96 Kline v Official Secretary to the Governor-General (2012) 208 FCR 89 at 95 [21]. 97 (2008) 170 FCR 382. 98 Oxford English Dictionary, 2nd ed (1989), vol 1 at 163. powers or the [performance] of … functions", on the one hand, and documents which answer that description but which would "disclose the decision-making process involved in the exercise of those powers or performance of those functions in a particular matter or context", on the other, is too fine to be sustained. The true distinction is more robust and more practical. Matters which do not relate to the provision of logistical support do not become "administrative" merely because they are in some way preparatory to an exercise of a substantive power or to the performance of a substantive function. The Governor-General has many functions, some of which are ceremonial. Were, for example, the Governor-General to travel to a remote location to attend a ceremony in her official capacity, documents relating to travel by and accommodation for the Governor-General and her entourage would relate to matters of an administrative nature within the meaning of s 6A and would therefore fall within the scope of the FOI Act. Documents relating to the Governor-General's participation in the ceremony, whether generic or specific and whether prepared or received by the Governor-General or by the Official Secretary before or after the Governor-General's participation in the particular ceremony, would not relate to matters of an administrative nature within the meaning of s 6A and would therefore fall outside the scope of the FOI Act. Application To the extent that they remain material to this appeal, the categories of documents in the possession of the Official Secretary to which the appellant sought access comprised: correspondence held by the Official Secretary in relation to the appellant's nominations of a named person for an Order of Australia; working manuals, policy guidelines and criteria related to the administration of the Order of Australia; documents relating to review processes; and "file notes from the Secretariat" (being in fact the Office of Official Secretary) concerning the nominations. All of those categories on their face relate to the exercise of the substantive function which the Governor-General performs as Chancellor of the Order of Australia pursuant to Letters Patent issued by the Queen99. All relate to the "administration" of the Order of Australia within the meaning of the Letters Patent100, but none relates to matters of an "administrative nature" within the meaning of s 6A of the FOI Act. None, therefore, falls within the scope of the FOI Act. 99 Constitution of the Order of Australia. 100 Section 3 of the Constitution of the Order of Australia. The Full Court of the Federal Court rightly held that the Administrative Appeals Tribunal was correct in law in so finding. Conclusion For these reasons, the appeal should be dismissed. |
HIGH COURT OF AUSTRALIA BRITISH AMERICAN TOBACCO AUSTRALIA LTD APPELLANT AND THE STATE OF WESTERN AUSTRALIA & ANOR RESPONDENTS British American Tobacco Australia Ltd v Western Australia [2003] HCA 47 2 September 2003 ORDER 1. The proceedings be amended to name the appellant as British American Tobacco Australia Ltd. 2. Appeal allowed with costs. 3. Set aside orders 2, 3 and 4 made by the Full Court of the Supreme Court of Western Australia on 13 February 2001 and, in place thereof, order that the appeal to the Full Court be dismissed with costs. On appeal from the Supreme Court of Western Australia Representation: N C Hutley SC with N Perram for the appellant (instructed by Clayton Utz) R J Meadows QC, Solicitor-General for the State of Western Australia with R M Mitchell for the respondents (instructed by Crown Solicitor for the State of Western Australia) Interveners: D M J Bennett QC, Solicitor-General of the Commonwealth with A R Beech and G A Hill intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) B M Selway QC, Solicitor-General for the State of South Australia with J C Cox intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for the State of South Australia) M G Sexton SC, Solicitor-General for the State of New South Wales with J K Kirk intervening on behalf of the Attorneys-General for the State of New South Wales and Victoria (instructed by Crown Solicitor for the State of New South Wales and Victorian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS British American Tobacco Australia Ltd v Western Australia Constitutional law (Cth) – Exclusive powers of Commonwealth Parliament – Duties of excise – State law imposing tobacco wholesalers' and retailers' licence fee in contravention of s 90, Constitution – Claim against State for money had and received to the use of taxpayer – Federal jurisdiction – Whether action arises under the Constitution or involves its interpretation – Constitution, s 76(i). Constitutional law (Cth) – Exclusive powers of Commonwealth Parliament – Duties of excise – State law imposing tobacco wholesalers' and retailers' licence fee in contravention of s 90, Constitution – Claim against State for money had and received to the use of taxpayer – Right to proceed against State – State laws imposing conditions on right of action against State – Whether State laws apply of their own force – Whether State laws apply pursuant to s 64 or s 79, Judiciary Act 1903 (Cth) – Crown Suits Act 1947 (WA), ss 5, 6 – Limitation Act 1935 (WA), s 47A. Constitution, covering cl 5, ss 75, 76, 77(iii), 78, 90. Judiciary Act 1903 (Cth), ss 39(2), 64, 79. Business Franchise (Tobacco) Act 1975 (WA), s 6(1). Crown Suits Act 1947 (WA), ss 5, 6. Limitation Act 1935 (WA), s 47A. GLEESON CJ. The appellant, formerly named Rothmans of Pall Mall (Australia) Ltd, commenced an action in the Supreme Court of Western Australia, claiming a declaration that licence fees imposed by State legislation regulating the sale by wholesale of tobacco were duties of excise within the meaning of s 90 of the Constitution. The appellant also sought an order that the State of Western Australia repay an amount which was particularised as $6,957,528.30. The contention that the licence fees were duties of excise, and that it was beyond the legislative power of the Parliament of Western Australia to impose them, is clearly correct, in the light of the decision of this Court in Ha v New South Wales1. However, the tax was passed on to consumers; and the question of the State's obligation, if any, to repay the licence fees became one of legal and political dispute. The decision in Ha was given in August 1997. Over the succeeding months, there were negotiations between the appellant and the government. On 15 April 1998, the appellant gave notice, said to be under s 6 of the Crown Suits Act 1947 (WA) ("the Crown Suits Act"), that it proposed to commence action, and, on the same day, commenced the present proceedings. Section 5 of the Crown Suits Act provides that, subject to the Act, the Crown (which is defined to mean the Crown in right of the Government of Western Australia) may sue and be sued in any court in the same manner as a subject. In such proceedings, the Crown is to be identified as "the State of Western Australia". Section 6 provides, so far as presently relevant, that no right of action lies against the Crown unless the party proposing to take action gives, as soon as practicable or within three months after the cause of action accrues (whichever period is the longer), written notice containing certain information. The appellant's cause of action had accrued by August 1997. The Full Court of the Supreme Court of Western Australia held that the appellant "must have been well and truly in a position to give the required notice by 13 February 1998". Hence, since notice was not given until April 1998, there was no compliance with s 6. On that ground, the Full Court (Malcolm CJ, Wallwork J, Stein AJ) entered summary judgment for the respondents. Against that decision, insofar as it relates to the first respondent, the appellant appeals. (The claim against the second respondent, the Commissioner of State Taxation, is not pursued). The issue in the appeal is whether, as was assumed in argument before the Full Court, and in the Full Court's reasons, ss 5 and 6 of the Crown Suits Act were relevant to the proceedings. What appears to have been overlooked, in making the assumption just mentioned, is that the proceedings were in federal jurisdiction. In consequence, ss 5 and 6 did not directly apply. The question is whether they were picked up, and rendered applicable, by federal law. That question was not addressed in the Full Court. (1997) 189 CLR 465. In the Full Court, there was also a question of the application, to a claim against the second respondent, the Commissioner of State Taxation, of s 47A of the Limitation Act 1935 (WA). Although the claim against the Commissioner is not pursued, in one possible contingency, s 47A could still be relevant. However, it is convenient to put it to one side for the moment. The claim for repayment of the licence fees is a claim for moneys payable by the first respondent to the appellant for moneys had and received by the first respondent to the use of the appellant. It is based upon the principles stated by this Court in Mason v New South Wales2 and David Securities Pty Ltd v Commonwealth Bank of Australia3. The fees were paid pursuant to an unlawful exaction under colour of legislative authority. The unlawfulness of the exaction, and the invalidity of the legislation pursuant to which the exaction was made, are central to the appellant's claim. We are not presently concerned with whether there are any defences to the claim; the appellant is merely seeking to have the summary judgment set aside, and to continue with its action. The allegation of legislative invalidity is based upon s 90 of the Constitution, which confers exclusive power to impose duties of excise upon the Commonwealth Parliament, and upon the (now unanswerable) contention that the licence fees were duties of excise. The matter is, therefore, one arising under the Constitution, within the meaning of s 76(i) of the Constitution, and the Parliament was empowered to confer original jurisdiction on this Court in such a matter. By virtue of s 77(iii) of the Constitution, the Parliament may make laws investing any court of a State with federal jurisdiction. One such law is s 39(2) of the Judiciary Act 1903 (Cth) ("the Judiciary Act"), which provides that the several Courts of the States shall, within the limits of their jurisdiction, be invested with federal jurisdiction in all matters in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon it. That was the jurisdiction that was enlivened when the proceedings were commenced in the Supreme Court of Western Australia. The legal foundation of the appellant's claim consists in a combination of the common law principles considered in Mason and David Securities, and the distribution of legislative powers amongst the polities of the Commonwealth made by the Constitution and, in particular, s 90. By reason of s 90, the purported imposition of a duty of excise by the Parliament of Western Australia was unconstitutional and invalid. This action is brought by a taxpayer which was subjected to such an unconstitutional imposition, and which claims, according to common law principles, to be entitled to recover money unlawfully exacted under colour of authority. The jurisdiction to which the first respondent is (1959) 102 CLR 108. (1992) 175 CLR 353. amenable is that conferred by s 39(2) of the Judiciary Act, which, in turn, has its source in ss 76(i) and 77(iii) of the Constitution. Why, then, does the appellant need to rely upon s 5 of the Crown Suits Act, and how, in turn, does the first respondent become entitled to rely upon s 6? We are not presently concerned with some limitation of actions arising under a Western Australian law of general application. We are dealing with specific State legislation defining the circumstances under which the Crown in right of the Government of Western Australia may be sued, under the title of the State of Western Australia. The operation of such legislation in State matters to which it applies directly has a long history, and is well understood. It has its background in a collection of rules, the combined effect of which is described compendiously as Crown immunity from suit. But we are here dealing with a particular kind of claim. The Constitution provides that the Parliament of Western Australia has no power to impose taxes of a certain kind: duties of excise. The common law of Australia is to the effect that, at least in certain circumstances, when a public authority purports to impose, and collects, a tax which is beyond its power, a taxpayer may sue to recover the tax. A law of the Commonwealth Parliament provides that, in a matter arising under the Constitution, which includes a claim by a taxpayer to recover money exacted by a State under colour of an unconstitutional tax, the Supreme Court of Western Australia is invested with federal jurisdiction. Why is a taxpayer, bringing such a claim in federal jurisdiction, in want of assistance from s 5, or at risk of non-compliance with the conditions imposed by s 6, of the State Act? It was submitted on behalf of the first respondent that s 6 of the Crown Suits Act imposes the requirement of notice as a condition of the existence of any right of action against the State. So much may be accepted in relation to a case to which the Act applies, such as an action in State jurisdiction by a citizen against the Western Australian government. Sections 5 and 6 work together. Section 5 provides that, subject to the Act, (in this case, subject to s 6), the Crown in right of the Government of Western Australia may be sued. Section 6 provides that no right of action lies unless certain conditions are fulfilled. The predecessor to the present legislation was said to have been "intended to define all the claims and demands that can be made against the Crown in Western Australia".4 However, once it is accepted that the claim is made in federal jurisdiction, and that the Crown Suits Act does not apply directly, then it becomes necessary to consider whether federal law, in its operation in relation to a claim that a State has exacted an unconstitutional tax, and should repay the amount collected, picks up and applies a State law which is intended to define all the claims and demands that can be made against the government, and which imposes a condition that, unless fulfilled, means that no right of action lies under any circumstances. 4 The Crown v Dalgety & Co Ltd (1944) 69 CLR 18 at 49 per Williams J. The contention of the first respondent is that s 79 of the Judiciary Act picks up ss 5 and 6 of the Crown Suits Act, and applies them in federal jurisdiction. That contention depends upon the proposition that neither the Constitution nor any law of the Commonwealth provides otherwise. Much of the argument in this Court turned upon an assumption that the primary source of any potential contrary provision was s 64 of the Judiciary Act. The assumption led to much debate about the meaning, and even the validity, of s 64, and to an application for leave to re-open The Commonwealth v Evans Deakin Industries Ltd5. However, as I see the case, there is an anterior question. The first respondent accepted that, in the case of the Commonwealth, s 75(iii) of the Constitution denies any operation of common law doctrines of Crown immunity from suit, and that such denial is carried forward when, under s 77, the Parliament makes laws with respect to matters mentioned in s 75, as, for example, in s 39(2) of the Judiciary Act. It is necessary to consider why this is The first respondent's submission was supported by reference to the reasons of Gummow and Kirby JJ, with which Brennan CJ agreed, in The Commonwealth v Mewett6. The principles of Crown immunity from suit, well understood by the framers of the Constitution, and addressed by s 78, reflected the concepts that the courts of justice were those of the Sovereign, that the Sovereign could not be impleaded in his or her own courts7, and, in relation to claims in tort, that "the King can do no wrong".8 As was pointed out in Mewett9, those concepts are impossible to relate to certain aspects of the constitutional arrangements established for the Australian Federation. They have relevance to many kinds of claim made by citizens against Commonwealth or State governments; hence the need for s 78, and for State legislation such as the Crown Suits Act. One class of justiciable controversy described in Mewett as "not encompassed by the common law as it developed in England" was said to be "litigation by which an individual or corporation seeks redress for tortious injury to private or individual rights by government action in administration of a law which the plaintiff asserts was not authorised by the Constitution but upon which the defendant relies for justification of the alleged tortious conduct". That was a (1986) 161 CLR 254. (1997) 191 CLR 471 at 491, 542-552. 7 The Crown v Dalgety & Co Ltd (1944) 69 CLR 18. 8 Feather v The Queen (1865) 6 B & S 257 at 295-296 [122 ER 1191 at 1205]. (1997) 191 CLR 471 at 547-548 per Gummow and Kirby JJ. reference to the nature of the proceedings in that case. The nature of the present proceedings provides an even clearer example. The Constitution denies to the States the power to impose duties of excise. A claim is made that a State, contrary to s 90, purported to impose duties of excise, and that the common law entitles a taxpayer to recover the amount that was the subject of such an unconstitutional exaction. Such a claim is justiciable in federal jurisdiction. As "To deny such a claim on the footing that, in the absence of enabling legislation, the Crown can do no wrong and cannot be sued in its own court would be to cut across the principle in Marbury v Madison. It would mean that the operation of the Constitution itself was crippled by doctrines devised in other circumstances and for a different system of government." The Constitution, in s 71, vests the judicial power of the Commonwealth, not in the Sovereign, but in this Court, and in such other federal courts as the Parliament creates, and in such other courts (including State courts) as it invests with federal jurisdiction. The Supreme Court of Western Australia was invested with federal jurisdiction in relation to the present matter. The idea that the Crown in right of the Government of Western Australia can do no wrong, and cannot be sued in its own court, is incongruous in the context of a claim that the State of Western Australia has purported to impose a tax in a manner contrary to the Constitution's division of legislative powers, and that the judicial power of the Commonwealth should be exercised, in application of the Constitution and the common law of Australia, to compel repayment of the money unlawfully exacted. The first respondent contends that there is a vital difference between Mewett and the present case: s 75(iii) of the Constitution operated of its own force to confer jurisdiction in Mewett; the present case falls within s 76(i), which merely empowers the Parliament to make laws conferring jurisdiction. It is said that, unlike s 75, s 76 does not exclude the Crown's immunity from suit in the matters to which it refers. There is no constitutional imperative for the Parliament to confer jurisdiction on this Court in matters arising under the Constitution or involving its interpretation. In the case of matters to which s 76 applies, it is necessary to identify some law of the Commonwealth which confers a right to proceed against the State11. The distinction in this respect between 10 (1997) 191 CLR 471 at 548 per Gummow and Kirby JJ. 11 China Ocean Shipping Co v South Australia (1979) 145 CLR 172 at 205 per ss 75 and 76 was considered in The Commonwealth v New South Wales12 and Werrin v The Commonwealth13. This submission, it is to be noted, assumes that the common law concept of the immunity from suit of the Crown in right of the Government of Western Australia is relevant to a claim that the State of Western Australia has levied an unconstitutional tax and should be ordered to repay the money it collected. the subject of governmental obligation As was pointed out in Antill Ranger & Co Pty Ltd v Commissioner for repay unconstitutional taxes is complex. As in the present case, such taxes may have been passed on to third parties. As in the present case, such taxes may have been levied upon an understanding of the law which was based upon a long line of judicial authority. The merits of claims by individual taxpayers may vary; and the extent of claims may have significant budgetary implications. We are not presently concerned with the substantive law which determines such liability, or even with a law relating to limitation of periods within which action to recover overpaid taxes may be brought. We are concerned with the threshold question of a right to proceed. The Attorney-General of the Commonwealth, intervening, argued that, in the present case, the right to proceed against the State of Western Australia is implied from the Constitution. It was accepted that the cause of action arises under the common law, and not the Constitution15. However, it was said that "[b]ecause the Constitution defines both the powers of the Commonwealth and, to a more limited extent, the powers of the States, the right to proceed against both the Commonwealth and the States in respect of matters concerned with the scope of such powers is conferred by the Constitution itself. In the case of the Commonwealth, the right to proceed can be implied from covering clause 5 and s 75(iii) of the Constitution. In the case of the States, the right to proceed can be implied from covering clause 5 and the particular provision limiting State powers (in this case, s 90)." It may be doubted whether the first part of covering cl 5, which is that to which the argument refers, adds anything to what is necessarily implied in the Constitution itself. Subject to that qualification, I would accept the Attorney- General's argument. The incongruity between the concept of the Crown's immunity from suit, understood in the light of its historical and theoretical 12 (1923) 32 CLR 200 at 207, 215. 13 (1938) 59 CLR 150 at 165. 14 (1955) 93 CLR 83 at 100. 15 Kruger v The Commonwealth (1997) 190 CLR 1. foundations, and the scheme of the federal arrangements established in the Constitution, is striking. It is true that s 78 empowers the Parliament to make laws conferring rights to proceed against a State; but it does not follow that, in the absence of such a law, there is no right to proceed against a State where the matter in issue concerns the State's failure to observe the provisions of the Constitution itself, or the working out of the division of powers and functions effected by the Constitution. Section 75 confers jurisdiction; and s 76 empowers Parliament to confer jurisdiction. Both provisions address the authority of a court to determine a justiciable controversy. The closely related issue of present concern is the right to proceed against a body politic, in a dispute arising under the Constitution, where the dispute involves a contention that the body politic has exceeded the limits placed upon its authority by the Constitution. The Commonwealth v New South Wales16 concerned a civil action arising out of a collision between two government owned vessels. In that context, Isaacs, Rich and Starke JJ, discussing the relationship between ss 75, 76 and 78, said that s 75, of its own force, conferred a right to proceed in the cases it covered, and that s 78 enabled the Commonwealth Parliament, if it thought fit, to do the same in other matters within the judicial power17. In that respect, they appeared to treat the giving of a right to proceed as involved in the conferring of jurisdiction. As Dixon J observed in Werrin18, the material parts of the judgment are directed to the actionable liability of the Crown for tort. Werrin was a case of a claim against the Commonwealth for the recovery of overpaid sales tax. The goods in respect of which the tax was paid were secondhand, and therefore sales tax was not payable. The case turned upon the substantive law governing the right to recover such overpayments, and, in particular, the meaning and effect of a Commonwealth statute regulating such a right of recovery. It was not about common law rules relating to Crown immunity from suit. It stands as authority for the proposition that the Parliament has legislative power "to say that a sum of money erroneously collected under a tax Act by administrative officers acting in good faith should be retained".19 Such a law is a law with respect to taxation. Dixon J considered whether the Constitution contained some provision fettering the power of the Federal Parliament to bar an existing cause of action against the Commonwealth. In that connection, he addressed s 75(iii), and the joint 16 (1923) 32 CLR 200. 17 (1923) 32 CLR 200 at 215. 18 (1938) 59 CLR 150 at 161. 19 (1938) 59 CLR 150 at 161. judgment of Isaacs, Rich and Starke JJ in The Commonwealth v New South Wales. He doubted that their Honours regarded s 75 as a source of substantive liability, and referred to the blurring between substantive law and procedure which often occurs20. He thought the explanation of what they said was that s 75 was seen as sufficient to expose the State and the Commonwealth to a remedy for tortious liability. Even so, s 75 was not a source of substantive liability, and did not deny to Parliament the power to extinguish a cause of action that had accrued21. To say that the Constitution implies a right to proceed against a State in a case such as the present is not necessarily to deny that, within limits, the Commonwealth can regulate the manner in which such a claim may be brought in federal jurisdiction against the State22. But the existence of such a capacity is not presently in question. Some of the arguments in this Court proceeded upon the premise that it was s 64 of the Judiciary Act, enacted at least partly in pursuance of the power given by s 78 of the Constitution, that conferred the appellant's right to proceed. I do not accept that premise. Section 79 of the Judiciary Act provides that the laws of a State, including the laws relating to procedure, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all courts exercising federal jurisdiction in that State in all cases to which they are applicable. According to the first respondent, that section applies here; s 6 of the Crown Suits Act of Western Australia is such a law; this is a case to which it is applicable; and neither the Constitution nor a law of the Commonwealth otherwise provides. The Crown Suits Act is described, in its long title, as an Act to make better provision for suits by and against the Crown (defined as the Crown in right of the Government of Western Australia) and for other purposes relative thereto. It applies to causes of action which accrue after its commencement (s 4). Section 5 provides that subject, amongst other provisions, to s 6, the Crown, as defined, may be sued in the same manner as a subject. Section 6 imposes a condition upon the right of action otherwise conferred by s 5. Sections 5 and 6 should be read together as parts of a State legislative scheme dealing with the 20 (1938) 59 CLR 150 at 166-167. 21 (1938) 59 CLR 150 at 168. 22 As to invalidly imposed Commonwealth taxes, see Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 166-167, 182-183, 204 and 209. subject of Crown immunity from suit. As was noted earlier, they purport to define the circumstances in which any right to proceed against the Government of Western Australia exists. In my view, either they are not applicable to the present action because the rules relating to Crown immunity from suit are irrelevant to a claim based upon a contention that a State has acted in contravention of a limitation upon its power or authority imposed by the Constitution, or if they are applicable, then the Constitution otherwise provides. The Constitution, by implication, confers the appellant's right to proceed against the State of Western Australia, and recourse to the provisions of the Crown Suits Act is neither necessary nor appropriate. Reference was earlier made to s 47A of the Limitation Act 1935 (WA). It provides that, subject to certain qualifications, no action shall be brought against any person (excluding the Crown) for any act done in pursuance or execution or intended execution of any Act, or of any public duty or authority, unless the prospective plaintiff gives to the prospective defendant, as soon as practicable after the course of action accrues, a notice containing certain information. It was argued by the first respondent that, assuming (contrary to its main argument) that s 64 of the Judiciary Act applies, (a contention advanced positively, but in my view unnecessarily, by the appellant), then the effect of s 64 is to render s 47A of the Limitation Act applicable and thereby to defeat the appellant's claim. On the approach I take, this is the only aspect of s 64 that requires consideration. On the assumption expressed, the rights of the parties are to be as nearly as possible the same as in a suit between subject and subject. Section 47A deals with a suit against a very particular kind of defendant, in relation to a very particular kind of act of neglect, or default. In broad terms, it deals with agents of the Crown, and confers upon them a protection similar in some respects to that provided to the Crown by the Crown Suits Act. If s 64 were to operate in the present case, it would not do so by putting the Government of Western Australia in the place of an agent of the Government of Western Australia; it would do so by putting the Government of Western Australia in the place of an ordinary citizen. Section 64 speaks of rights in a suit between subject and subject; not rights in a suit between subject and Crown agent. It is unnecessary to decide whether the language of s 47A otherwise covers the cause of action here asserted by the appellant; it suffices to note that it is at least arguable that it does not. The appellant has a right to proceed against the State. That right does not depend upon, and is not subject to, the Crown Suits Act. There should not have been summary judgment for the first respondent. The proceedings should be amended to name the appellant as British American Tobacco Australia Ltd. The appeal should be allowed with costs. Orders 2, 3 and 4 made by the Full Court, in their application to the first respondent, should be set aside, and, in place of those orders, the appeal to the Full Court by the first respondent should be dismissed with costs. McHugh 28 McHUGH, GUMMOW AND HAYNE JJ. On 5 August 1997, in Ha v New South Wales23, this Court declared that certain provisions of the Business Franchise Licences (Tobacco) Act 1987 (NSW) were invalid as imposing a duty or duties of excise within the meaning of s 90 of the Constitution. The appellant ("BAT"), then named Rothmans of Pall Mall (Australia) Ltd, carried on in Western Australia the business of tobacco wholesaling within the meaning of s 6(1) of the Business Franchise (Tobacco) Act 1975 (WA) ("the Franchise Act"). The scheme of that statute followed that in the New South Wales legislation. Section 6 of the Franchise Act required that the business of tobacco wholesaling be carried on only under and in accordance with a licence under the Franchise Act. Section 12B provided that fees payable under the Franchise Act were debts due to Her Majesty and payable to the Commissioner of State Taxation ("the Commissioner"), the present second respondent. The Commissioner is identified by the definition in s 2(1) of the Franchise Act, when read with s 112 of the Public Sector Management Act 1994 (WA), as the person holding that office under the latter statute. On 15 July 1997, shortly before the decision in Ha, BAT paid to the Commissioner an amount of $6,957,528.30. This was the last payment made for renewal of BAT's licence. Thereafter BAT entered into discussions with the State of Western Australia ("the State") with a view to repayment of these moneys. Nothing now turns for present purposes upon the apparent failure of those discussions. By writs of summons with annexed statements of claim issued out of the Supreme Court of Western Australia on 14 April 1998 and 14 July 1998, BAT sought recovery from the State and the Commissioner of licence fees as moneys had and received to the use of BAT. It now is common ground that the only repayment sought is of that made on 15 July 1997 and that BAT's cause of action accrued on 5 August 1997 when the decision in Ha was delivered. The first writ was served on or about 12 April 2000 and the second writ on 28 April 2000. The two actions later were consolidated. In the consolidated action, BAT also claimed declaratory relief in respect of the invalidity of the Franchise Act of the same nature as that obtained in Ha with respect to the New South Wales statute. It is not suggested that there are any relevant differences between the legislation in the two States. 23 (1997) 189 CLR 465. McHugh The windfall tax legislation In response to the decision in Ha, three federal statutes were enacted: the Franchise Fees Windfall Tax (Collection) Act 1997 (Cth) ("the Collection Act"), the Franchise Fees Windfall Tax (Imposition) Act 1997 (Cth) ("the Imposition Act") and the Franchise Fees Windfall Tax (Consequential Amendments) Act 1997 (Cth) ("the Amendments Act"). In general terms, and in respect of amounts that a State is liable to repay to persons by reason of the invalidity of State franchise fees legislation (including, as regards Western Australia, the Franchise Act), the legislation imposes upon those persons a tax (identified as "windfall tax") equivalent to the amount of that State's liability24. The effect of s 6(1)(b) of the Collection Act is that the windfall tax is limited to payments made under State franchise fees laws before 5 August 1997 (the date of the delivery of the judgment in Ha) and in respect of a licensing period commencing before that date. Both the Collection Act and the Imposition Act are taken to have commenced their operation on 5 August 1997. Section 9 of the Collection Act, when read with the definition of "taxable amount" in s 6, so operates as to oblige a State to withhold windfall tax from amounts it is liable to repay under a court order and to remit the tax to the Commissioner; a State then is discharged from liability to pay or account to any person other than the Commissioner. The Amendments Act, in general terms, amends federal income tax legislation to ensure that "taxable amounts", being the amounts which States are liable to repay, do not attract income tax, and also that the windfall tax does not attract a deduction. The Attorney-General of the Commonwealth (an intervener in this Court) submits that at this stage of the litigation between BAT and the State no question arises respecting the operation of the windfall tax legislation. This is because there has been no determination of BAT's claim to repayment by the State. No party or other intervener submits otherwise. The jurisdiction of the Supreme Court It is convenient at this stage to pause to consider the nature of the jurisdiction invoked by BAT. This is important for at least two reasons. First, the parties appear at no stage in the Supreme Court to have considered that it was 24 cf s 20 of the Finance Statutes Amendment Act 1981 (BC) which inserted a new s 25 in the Gasoline Tax Act 1948 (BC) and was considered by the Supreme Court of Canada in Air Canada v British Columbia [1989] 1 SCR 1161 at 1192-1194, McHugh federal jurisdiction that had been engaged, thereby depriving this Court of the benefit of the reasoning of the Supreme Court upon the issues now accepted as arising. Secondly, the consideration later in these reasons of those issues will be assisted by an immediate appreciation of the basic jurisdictional framework within which the litigation is placed. Subject to the exclusions specified in s 38, s 39(2) of the Judiciary Act 1903 (Cth) ("the Judiciary Act") invested the Supreme Court with federal jurisdiction in a range of "matters" appearing in ss 75 and 76 of the Constitution. One such category (not excluded by s 38) was matters "arising under this Constitution, or involving its interpretation". That is the first category of matter in which original jurisdiction can be conferred upon this Court by the Parliament pursuant to s 76(i) of the Constitution and upon State courts by a law such as s 39 which is supported by s 77(iii) of the Constitution. The action instituted by BAT answered that description and thereupon the Supreme Court was seised of federal jurisdiction. It should be added, if only to put the point to one side, that, correctly, no reliance has been placed upon s 75(iv) of the Constitution (in conjunction with s 39(2) of the Judiciary Act) as founding federal jurisdiction. Section 75(iv) identifies matters: "[b]etween States, or between residents of different States, or between a State and a resident of another State". The authorities in this Court, which are to be followed until a successful challenge be made to them, establish that (i) an artificial person, including a corporation such as BAT, cannot be a "resident" within the meaning of s 75(iv), and (ii) even if the Commissioner be a "resident" of Western Australia, the joinder of the State, plainly not a resident, denied to that side of the record the character of a matter between inter-State residents. The authorities for the first proposition are affirmed in Crouch v Commissioner for Railways (Q)25 and those for the second were applied by Gaudron J in Rochford v Dayes26. As was said in Re Patterson; Ex parte Taylor27, "this Court should not embark upon the reconsideration of an earlier decision where, for the resolution of the instant case, it is not necessary to do so". 25 (1985) 159 CLR 22. 26 (1989) 63 ALJR 315; 84 ALR 405. See also Zines, Federal Jurisdiction in Australia, 3rd ed (2002) at 99-105. 27 (2001) 207 CLR 391 at 473 [249]. McHugh Further, as was also pointed out in Re Patterson28, there are sound prudential considerations for it long having been the settled practice of the Court to reserve its opinion on questions of constitutional construction until it is necessary to decide them. It follows that we confine our reasons to those that are necessary for the disposition of the present matter, expressing no opinion on questions that were not raised in argument and do not fall for decision. The claim to declaratory relief respecting the invalidity of the Franchise Act plainly involves a matter to which s 76(i) and s 77(iii) of the Constitution speak. What of the further claim for moneys had and received? The categories of case in which that action lies are not closed29. The claim made by BAT is that the receipt by the State (or the Commissioner on its behalf) of the licence fees was to the use of BAT because the payment was in relief of liability for an unconstitutional impost. There is a distinction, emphasised by Barwick CJ and Menzies J in Felton v Mulligan30, between a matter "arising under" the Constitution and a matter "involving its interpretation". However, the better view is that BAT's action for moneys had and received "arises under" the Constitution because the asserted obligation to repay would not exist were it not for the operation of s 90 to invalidate the Franchise Act31. To conclude that the action for moneys had and received "arises under" the Constitution is not to accept that any liability on the part of the State to effect repayment springs without more from s 90 of the Constitution. The Bivens action for damages32, developed in the United States since 1971, has not been adopted by this Court. It was rejected in Kruger v The Commonwealth33. No application was made to re-open that holding. Two points respecting Bivens may be added to what was said in Kruger. First, the majority in Bivens34 stressed that 28 (2001) 207 CLR 391 at 473-474 [248]-[252]. 29 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 30 (1971) 124 CLR 367 at 374, 382-383. 31 See LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581. 32 After Bivens v Six Unknown Named Agents of Federal Bureau of Narcotics 403 US 33 (1997) 190 CLR 1 at 46-47, 93, 125-126, 146-148. 34 403 US 388 at 394-395 (1971). McHugh State law remedies (there being no national common law in the United States and no national court of final appeal) might be inadequate or hostile to the federal constitutional interest. Secondly, Bivens suits against State governments are not allowed because of the preclusion by the Eleventh Amendment of suits against States in federal courts35. Rather, in the present case, the common law action attracts federal jurisdiction, in accordance with the decisions construing the phrase "arising under" in s 76(i) and (ii) of the Constitution because it is the operation of s 90 upon the Franchise Act which is said to render the retention of the moneys against conscience. Thus, in Sargood Bros v The Commonwealth36, Isaacs J referred to the statement by Lord Mansfield in Moses v Macferlan37 that the gist of the action for money had and received was "that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money" (original emphasis). In Antill Ranger & Co Pty Ltd v Commissioner for Motor Transport38, this Court considered a claim to moneys had and received for charges levied under State law which had been held to contravene s 92 of the Constitution. Fullagar J emphasised that the common law action was informed by the Constitution in a crucial respect. His Honour said39: "The right asserted is a common law right, but an essential element in the cause of action is that the moneys in question were unlawfully exacted from it. If the unlawfulness of the exaction depended upon State law, the State could, of course, by statute make the exaction retrospectively lawful, or abolish the common law remedy in respect of the exaction. But the unlawfulness of the exaction does not depend upon State law. It depends on the Constitution. No State law can make lawful, either prospectively or retrospectively, that which the Constitution says is unlawful." 35 Alabama v Pugh 438 US 781 (1978); Burton v Waller 502 F 2d 1261 at 1273 (1974); Chemerinsky, Federal Jurisdiction, 3rd ed (1999), §9.1.4. 36 (1910) 11 CLR 258 at 303. 37 (1760) 2 Burr 1005 at 1012 [97 ER 676 at 681]. 38 (1955) 93 CLR 83; affd (1956) 94 CLR 177 (PC); [1956] AC 527. 39 (1955) 93 CLR 83 at 102-103. The Supreme Court of Canada spoke in similar terms in Amax Potash Ltd v Saskatchewan [1977] 2 SCR 576 at 590-592, and referred to Antill Ranger. McHugh He added40: "A claim for repayment of moneys alleged to have been exacted in contravention of s 92 [of the Constitution] is a matter arising under the Constitution or involving its interpretation." The same is true where, as here, the contravention was of s 90 of the Constitution. The points made by Fullagar J answer any complaint that, without the adoption of a Bivens action into Australian constitutional law, the effectiveness of the exclusive power conferred upon the Commonwealth may be mocked by State legislation or executive action. The claim by BAT to repayment is framed along the lines of the comparable claims in Antill Ranger and thereafter in Barton v Commissioner for Motor Transport41 and Mason v New South Wales42. It was pleaded in those cases that the money was had and received to the use of the plaintiff because it had unlawfully been demanded by the defendant colore officii and paid involuntarily. At the time of these cases, a distinction was drawn, respecting recovery on the further ground of mistaken payment, between mistakes of law and mistakes of fact. Since the decision of this Court in David Securities Pty Ltd v Commonwealth Bank of Australia43, a mistake by BAT as to the validity of the Franchise Act, a matter of law, would not stand in the way of a claim for money had and received put on this further ground of mistaken payment. Further, none of the foregoing reasoning as to the constitution and nature of the action instituted by BAT engages the statute law of Western Australia for the determination of the rights and liabilities in the action. For example, the State statute law respecting limitation of actions could not apply directly in the exercise of federal jurisdiction44. The reason was expressed by Gleeson CJ, 40 (1955) 93 CLR 83 at 103. 41 (1957) 97 CLR 633 at 651. 42 (1959) 102 CLR 108 at 109. See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516. 43 (1992) 175 CLR 353; cf Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70. 44 John Robertson & Co Ltd v Ferguson Transformers Pty Ltd (1973) 129 CLR 65 at 79, 84, 87, 93; Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 35 [41]; Re Macks; Ex parte Saint (2000) 204 CLR (Footnote continues on next page) McHugh Gaudron and Gummow JJ in Australian Securities and Investments Commission v Edensor Nominees Pty Ltd45: "An attempt by State law to achieve that result would, as to this Court, be repugnant to s 75 of the Constitution. Where jurisdiction was conferred by a law made by the Parliament in exercise of its powers under s 77 of the Constitution, the State law also would be invalid for inconsistency under s 109 of the Constitution". (footnote omitted) Any relevant constraints must be found in federal not State law. As to federal law, there can be no issue regarding the standing of BAT or the existence of a Ch III "matter" in this litigation46. Reference already has been made to the windfall tax legislation; these are laws with respect to "taxation" as provided in s 51(ii) of the Constitution. No question arises in this appeal from the subjection of this and the other powers in s 51 to the other provisions of the Constitution, including Ch III. Those opposing BAT do not refer to any other federal legislation, for example, a federal limitation law, which affects the availability to BAT of the appropriate common law rights and remedies to vindicate the operation of s 90 of the Constitution upon the Franchise Act47. Rather, as will appear, reliance is placed upon generally expressed and ambulatory provisions of the Judiciary Act, ss 79 and 64. There are disputes respecting the construction of those provisions to "pick up" State law and, dependent thereupon, claims of invalidity. The strike out application The respondents applied to strike out the statements of claim on grounds assuming the operation of certain State laws. The application by the respondents was unsuccessful and on 14 August 2000 an order was made dismissing the chamber summons. Thereafter, the Full Court (Malcolm CJ, Wallwork J and 158 at 187 [58]; Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 588 [59]. 45 (2001) 204 CLR 559 at 591-592 [68]. 46 cf Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 47 cf the remarks of Fullagar J in Antill Ranger & Co Pty Ltd v Commissioner for Motor Transport (1955) 93 CLR 83 at 103 and Barton v Commissioner for Motor Transport (1957) 97 CLR 633 at 659-660. McHugh Stein AJ) granted to the present respondents leave to appeal and allowed the appeal, ordering the whole of the consolidated statement of claim be struck out and judgment be entered for the respondents. The only issue on which in this Court BAT challenges the decision of the Full Court concerns entry of judgment for the State. It accepts that summary judgment was properly entered in favour of the Commissioner. With respect to the action against the State, the principal remaining issue in this Court concerns the operation of s 6 of the Crown Suits Act 1947 (WA) ("the Crown Suits Act"). On its face, s 6 places the State in a privileged position by requiring the giving of particular notice before commencement of action against it. BAT accepts that, if s 6 is applicable, it was not satisfied and summary judgment was properly entered in favour of the State. It is convenient to deal with the operation of s 6 in three steps: first, to consider its provisions; secondly, by reference to the submissions made in this Court, to consider ss 76(i) and 78 of the Constitution; and thirdly, again by reference to those submissions, to consider the operation of s 79 and then s 64 of the Judiciary Act. At the second step, reference will be made to the conferral of any necessary right to proceed against a State as a party, a subject to which a deal of attention was given in argument. But, as appears from what has been said earlier in these reasons, the question of right to proceed invites attention, in this case, to the Constitution and to federal law, not to the Crown Suits Act. Section 39 of the Judiciary Act, supported as it is by ss 76(i) and 78 of the Constitution, invests jurisdiction in State courts in matters arising under the Constitution or involving its interpretation. It necessarily subjects the States to the exercise of the judicial power thus invested. That is a conclusion which is consistent with, even required by, the text and structure of the Constitution. Historic common law doctrines of Crown immunity which lie behind the enactment of the Crown Suits Act are not relevant to, and do not affect, the conclusion that the State was amenable to the suit which BAT instituted. The further question which then arises, and the third step in these reasons, is whether by some federal law (either s 79 or s 64 of the Judiciary Act) the relevant provisions of the Crown Suits Act are to be applied in the suit brought by BAT. That further question is not answered by the conclusion reached about right to proceed. It should, however, be answered no. McHugh The Crown Suits Act As it appears in the Crown Suits Act, the term "Crown" is defined in s 3 as meaning "the Crown in right of the Government of Western Australia". Section 6 is to be read with s 5. Section 5 states: "(1) Subject to this Act, the Crown may sue and be sued in any Court or otherwise competent jurisdiction in the same manner as a subject. Every proceeding shall be taken by or against the Crown under the title 'the State of Western Australia.'" The immediately relevant portion of s 6 is sub-s (1). The terms of s 6(1) appear to distinguish between a "right of action" which lies, a "cause of action" which accrues, and "an action" which is brought or commenced. The sub-section states: "Subject to the provisions of subsections (2) and (3) of this section, no right of action lies against the Crown unless – the party proposing to take action gives to the Crown Solicitor, as soon as practicable or within three months (whichever of such periods is the longer), after the cause of action accrues, notice reasonable information of the circumstances upon which the proposed action will be based and the name and address of the party and his solicitor or agent; and in writing giving the action is commenced before the expiration of one year from the date on which the cause of action accrued, and for the purposes of this section where the act, neglect, or default on which the proposed action is based is a continuing one, no cause of action in respect of the act, neglect or default accrues until the act, neglect or default has ceased but the notice required by paragraph (a) of this subsection may be given and an action may thereafter be brought while the act, neglect or default continues." (emphasis added) It is accepted that BAT's cause of action accrued on 5 August 1997. No notice in writing was given within the three month period specified in par (a) of s 6(1) of the Crown Suits Act. The Full Court, no doubt encouraged by the way in which the case then was put by the parties, treated the Crown Suits Act as applicable of its own force. The Full Court held that no notice was given "as soon as practicable" within the meaning of par (a) of s 6(1). The action had been commenced before the expiration of one year after 5 August 1997 so that par (b) McHugh was satisfied. However, if s 6(1) of the Crown Suits Act otherwise applies in federal jurisdiction, the deficiency with respect to par (a) is fatal for BAT. The effect of s 6(1) appears to be that, although a cause of action may have accrued, no right of action lies, and so no action may be brought or commenced, unless the requisite notice is given and the stipulated one year period has not expired. There is a question whether the sub-section imposes conditions which are of the essence of a new right, or bar existing causes of action. The distinction is drawn in various decisions of this Court, beginning with The Crown v McNeil48. The Crown Suits Act repealed the Crown Suits Act 1898 (WA) which was construed by Isaacs J in McNeil49 as falling within the first category. That this is true of the present legislation is apparent when ss 5 and 6 are read together. The State subjects itself to action in the same manner as a subject but does so on the conditions specified in s 6. This linkage between the two sections in the Crown Suits Act is important for present purposes. To speak of s 79 of the Judiciary Act "picking up" s 6 divorced from its attachment to s 5 would be to change or limit the meaning of The submissions in this Court BAT now puts its case in various ways. Initially, perhaps reflecting the emphasis given to the State legislation in the Supreme Court, it focused its submissions upon the interaction between s 6(1) of the Crown Suits Act and the provisions of ss 64 and 79 of the Judiciary Act. However, as the argument developed, BAT fixed upon an anterior starting point. This concerns the nature and content of the matter arising under the Constitution, jurisdiction in respect of which was conferred upon the Supreme Court by s 39(2) of the Judiciary Act. Sections 76(i) and 78 of the Constitution Section 76(i) of the Constitution does not identify any particular party, though the bodies politic to the federal compact, or one or more of them, may 48 (1922) 31 CLR 76 at 99-101. See also Australian Iron & Steel Ltd v Hoogland (1962) 108 CLR 471 at 488; David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 276-277; Emanuele v Australian Securities Commission (1997) 188 CLR 114 at 130-131, 156; Rudolphy v Lightfoot (1999) 197 CLR 500 at 507-508 [11]-[12]. 49 (1922) 31 CLR 76 at 99-101. McHugh readily be contemplated as parties in constitutional cases. Section 76(i) may be contrasted with s 75(iv) which fixes upon the presence of a State as a party as the connecting factor for the attraction of federal jurisdiction in matters (a) between States and (b) between one State and a resident of another State. (Section 75(iv) also applies to matters between those who are residents of different States but nothing turns on this for present purposes.) Unlike s 76(i), in none of its operations does s 75(iv) identify the content of the matter which otherwise answers these descriptions as to parties. Section 78 of the Constitution states: "The Parliament may make laws conferring rights to proceed against the Commonwealth or a State in respect of matters within the limits of the judicial power." It follows from the judgments of Brennan CJ, Gaudron J, and Gummow and Kirby JJ in The Commonwealth v Mewett50 and of McHugh J in Austral Pacific Group Ltd (In liq) v Airservices Australia51 that, in an action against the Commonwealth in contract and tort, it is the common law that provides the source of liability and s 75(iii) denies the operation of what otherwise might be doctrines of Crown or Executive immunity which could be pleaded in bar to that common law cause of action. The result is that a cause of action in tort or contract can be brought against the Commonwealth by virtue of the combined operation of the common law of Australia and the Constitution itself without reference to a federal law based upon s 78 of the Constitution. The same may be said of actions in tort or contract between States or between a State and a resident of another State to which s 75(iv) applies. But the action by BAT does not answer any of the descriptions of "matter" given in s 75(iv). The power conferred by s 78 will have a field of operation where a law of the Parliament which confers jurisdiction with respect to matters identified in one or more of the paragraphs in s 76. Thus, a law under which there arises a matter in which original jurisdiction is conferred for s 76(ii) may give a new substantive right against the Commonwealth or a State52. The present case concerns legislation implementing the power, not conferred by s 76(ii), but by s 76(i). There is, as mentioned above, no express identification of any party in the text of s 76(i) and the conferral of jurisdiction by s 39(2) of the Judiciary Act with 50 (1997) 191 CLR 471 at 491, 527, 550-551. 51 (2000) 203 CLR 136 at 157 [59]. 52 The Commonwealth v Mewett (1997) 191 CLR 471 at 551. McHugh respect to the Supreme Court (as by s 30(a) with respect to this Court) does not do more than invoke the terms of s 76(i). Nevertheless, as a matter of necessary implication, the conferring of jurisdiction with respect to matters arising under the Constitution (or involving its interpretation) involves the conferral of any necessary right to proceed against a State as a party in that matter. The Constitution contains various provisions imposing obligations or restraints upon the exercise of the legislative, executive and judicial powers of the State. Section 77(ii) authorises the making of federal laws which define the extent to which the jurisdiction of a federal court is exclusive of that which "belongs to" the courts of the States. Section 114 forbids a State, without the consent of the Parliament of the Commonwealth, raising or maintaining any naval or military force. Section 115 forbids the States to coin money. Section 90, which is in point in this litigation, has the effect of denying the competency of the State legislatures to impose duties of customs or of excise and to grant bounties on the production or export of goods. Reference has been made to cases such as Antill Ranger and Mason which, at the time of their decision, reflected a particular interpretation of s 92 of the Constitution leading to the invalidity of various State legislation. Thus, it is to be expected from the text and structure of the Constitution and the new federal legal order it established that matters will arise under the Constitution or involve its interpretation where one or more of the States is a party. In Griffin v South Australia53, Isaacs ACJ said of s 76(i) that it "necessarily includes States as possible litigants". A law like s 39 of the Judiciary Act which invests jurisdiction in the terms of s 76(i) is a law which necessarily subjects the States to the relevant exercise of the judicial power of the Commonwealth to resolve the controversy reflected in the matter arising under the Constitution or involving its interpretation. Such a law may also be seen as an exercise of the power under s 78 to confer rights to proceed against the State in respect of a matter within the limits of the judicial power, namely within s 76(i). Historic common law doctrines which in England restricted the liability of the Crown or its amenability to suit cannot stand in the way of these conclusions54. This reasoning leads to the conclusion that in the present case no further federal law was required to render the State amenable to the exercise of the 53 (1924) 35 CLR 200 at 205. 54 cf the remarks to similar effect of Lord Bingham of Cornhill in Gairy v Attorney General of Grenada [2002] 1 AC 167 at 178. McHugh federal jurisdiction invoked by BAT when it instituted the consolidated action in the Supreme Court. As indicated earlier in these reasons, State legislation of itself could not control the constitution of the action or its outcome. Section 79 of the Judiciary Act The question then is whether, in addition to s 39(2) of the Judiciary Act, there is further federal legislation which requires some other outcome which is adverse to BAT and, if so, whether that legislation validly operates to achieve that result. It is in that way that ss 64 and 79 of the Judiciary Act enter the picture. The common law of Australia respecting the action for money had and received supplies, to the extent that it is not qualified by relevantly applicable federal statute, the principles for the adjudication of the dispute respecting the repayment of moneys sought by BAT. Section 79 of the Judiciary Act directs where the Supreme Court is to go for the applicable statute law dealing with matters of procedure. But, as the phrase in s 79 "including the laws relating to procedure, evidence, and the competency of witnesses" shows, s 79 is not limited to laws of that description. Section 79 states: "The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable." BAT refers to the statement in Solomons v District Court of New South Wales by five members of the Court that the text of s 79 contains various limitations55: "First, the section operates only where there is already a court 'exercising federal jurisdiction', 'exercising' being used in the present continuous tense. Secondly, s 79 is addressed to those courts; the laws in question 'shall … be binding' upon them. The section is not, for example, directed to the rights and liabilities of those engaged in non-curial procedures under State laws. Thirdly, the compulsive effect of the laws in question is limited to those 'cases to which they are applicable'. To that it may be 55 (2002) 76 ALJR 1601 at 1606 [23]; 192 ALR 217 at 224. McHugh added, fourthly, the binding operation of the State laws is 'except as otherwise provided by the Constitution'." The third and fourth points are of importance for this appeal. The notion that the compulsive effect of the laws lifted up by s 79 is limited to those "cases to which they are applicable" is reflected in the statements made in various cases56 that the State laws do not have their meaning changed. It is here that the interrelation between ss 5 and 6 of the Crown Suits Act is important. As indicated earlier in these reasons, to pick up s 6(1), divorced from its interrelation with s 5, would be to give it a changed meaning. Section 6 imposes a condition by which the State places itself, by dint of s 5, in the same position as a subject with respect to actions by and against the State. To pick up ss 5 and 6 and translate them into the federal jurisdiction invested by s 39(2) with respect to a matter arising under the Constitution or involving its interpretation, as with the action by BAT, would be a work of supererogation. This is because, as indicated earlier in these reasons, a federal law such as s 39(2) of the Judiciary Act which exercises the power given the Parliament by ss 76(i) and 77(iii) of the Constitution, where a State is a party to the controversy, necessarily also confers the right to proceed against the State. The terms of s 79 allow of such situations by the express limitations therein to accommodate what is "otherwise provided" in (i) the Constitution or (ii) the laws of the Commonwealth. Section 39(2) of the Judiciary Act, as applied in the present case, is such a law of the Commonwealth57. Section 64 of the Judiciary Act There is an alternative or additional path by which s 79 is to be seen as not "picking up" s 6(1) of the Crown Suits Act. Section 64 of the Judiciary Act is a law of the Commonwealth which may "otherwise provide" within the meaning of Section 64 states: "In any suit to which the Commonwealth or a State is a party, the rights of parties shall as nearly as possible be the same, and judgment may 56 Collected in Austral Pacific Group Ltd (In liq) v Airservices Australia (2000) 203 CLR 136 at 143 [13]. See also the remarks of Mason J in John Robertson & Co Ltd v Ferguson Transformers Pty Ltd (1973) 129 CLR 65 at 94-95. 57 cf Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55. McHugh be given and costs awarded on either side, as in a suit between subject and subject." The term "suit" is defined in s 2 of the Judiciary Act as including "any action or original proceeding between parties". BAT submits that if, contrary to its primary submission, s 6(1) of the Crown Suits Act may be divorced in consideration from s 5 of that statute, it puts the State in a special position above that enjoyed by others bringing actions against the State. To apply s 6(1), by dint of s 79 of the Judiciary Act, as a surrogate federal law in the Supreme Court would deny the requirement by s 64 that the rights of BAT and the State in that action be as nearly as possible the same as those in a suit between subject and subject. That submission should be accepted and those to the contrary by the State and its supporting interveners should be rejected. Section 64 replaced what in Baume v The Commonwealth58 O'Connor J called the "temporary" statute, the Claims against the Commonwealth Act 1902 (Cth)59. O'Connor J pointed out60 that "[t]he temporary Act of 1902 gave a right merely to petition the Crown in the form of a petition of right and it was in the power of the Government to appoint a nominal defendant, but if the Government refused to do so the subject had no remedy." That passage may require reconsideration in the light of Air Canada v British Columbia (Attorney General)61; there, mandamus issued to the Attorney-General of that Province to advise the Lieutenant Governor to grant a fiat to a petition of right under which a claim was made for the return of money levied by the Province under an allegedly invalid statute. The significance of s 64 was seen by O'Connor J in Baume to lie in its emphasis upon "the equality of subject and Crown in litigation"62. That, however, does not fully identify the significance of s 64. It applies in any suit to 58 (1906) 4 CLR (Pt 1) 97 at 119. 59 Section 8 stated that the statute was to expire on 31 December 1903, but it was repealed by s 3 of the Judiciary Act which commenced on 25 August 1903. 60 (1906) 4 CLR (Pt 1) 97 at 119. See also Daly v State of Victoria (1920) 28 CLR 395; (1921) 29 CLR 491. 61 [1986] 2 SCR 539. 62 (1906) 4 CLR (Pt 1) 97 at 119. McHugh which the Commonwealth or a State is a party and, in The Commonwealth v Miller, Isaacs J pointed out63: "The full force of the provision is better appreciated if we suppose a case where the litigants are the Commonwealth on one side and a State on the other, or a case between two States." That remark emphasised the importance of s 64 in the structure of federal jurisdiction which provided for species of litigation unknown at common law and in the Colonies before federation. The present litigation, a matter arising under the Constitution or involving its interpretation, is an example. For this reason, the progenitors in various of the Colonies, including Western Australia, of the Crown Suits Act and decisions such as Farnell v Bowman64, whilst important, should not obscure the particular significance of s 64 in the federal constitutional system. In The Commonwealth v Anderson65, Dixon CJ emphasised that: "it is the rights of parties as in a suit between subject and subject, not the law, that are to apply as nearly as may be". Thereafter, it was said in the joint judgment in Bass v Permanent Trustee Co Ltd66: "It was held in Maguire v Simpson67 that s 64 of the Judiciary Act has an ambulatory operation so that it may extend rights in proceedings in 63 (1910) 10 CLR 742 at 753. 64 (1887) 12 App Cas 643. See also Finn, "Claims Against the Government Legislation", in Finn (ed), Essays on Law and Government, vol 2, The Citizen and the State in the Courts, (1996), 25 at 26-32. 65 (1960) 105 CLR 303 at 310. 66 (1999) 198 CLR 334 at 350 [28]. 67 (1977) 139 CLR 362 at 388 per Gibbs J, 395 per Stephen J, 397 per Mason J, 407 per Murphy J. See also Moore v The Commonwealth (1958) 99 CLR 177 at 182 per Dixon CJ; Suehle v The Commonwealth (1967) 116 CLR 353 at 356-357; Downs v Williams (1971) 126 CLR 61 at 100 per Gibbs J; The Commonwealth v Evans Deakin Industries Ltd (1986) 161 CLR 254 at 263 per Gibbs CJ, Mason, Wilson, Deane and Dawson JJ. McHugh which the Commonwealth or a State is a party by reference to subsequent legislation. It was also held in that case68, and reaffirmed in The Commonwealth v Evans Deakin Industries Ltd69, that s 64 operates to apply substantive as well as procedural laws, although that distinction is, perhaps, not one that sheds any great light on this or any other area of the law70. And, it follows from Evans Deakin that s 64 may operate to confer a cause of action against the Commonwealth which would not have existed 'if s 64 had not equated the substantive rights of the parties to those in a suit between subject and subject'71." The Commonwealth, which intervenes partly in support of BAT and partly in support of the State, seeks leave to re-open Maguire and Evans Deakin in so far as they hold that s 64 applies to substantive and procedural laws of the States. Leave should be refused. First, Maguire was decided 25 years ago and has been applied on innumerable occasions in the exercise of federal jurisdiction by a range of courts. Secondly, the Commonwealth would limit s 64 to State laws answering its preferred description of "adjectival". What was said in Bass respecting the distinction between procedural and substantive laws would apply to this substituted distinction. Thirdly, this appeal can be decided, as already indicated, without any necessary reference to s 64. With respect to Evans Deakin, a particular and further question arose from the circumstance that what was involved was a State statute which, on one view of the matter, created both right and remedy in such a fashion that one could not be dissociated from the other, with the result that the time when the right arose could not be deferred until the seeking of the remedy by the institution of an action. This was a point upon which Brennan J dissented72. That particular 68 Maguire v Simpson (1977) 139 CLR 362 at 373 per Barwick CJ, 377-378, 388 per Gibbs J, 400 per Mason J, 405 per Jacobs J, 407 per Murphy J. 69 (1986) 161 CLR 254 at 262 per Gibbs CJ, Mason, Wilson, Deane and Dawson JJ. See also The Commonwealth v Western Australia (1999) 196 CLR 392 at 476 per 70 See, eg, in relation to choice of law questions McKain v R W Miller & Co (SA) Pty Ltd (1991) 174 CLR 1 at 57-58, 62 per Gaudron J. See also The Commonwealth v Mewett (1997) 191 CLR 471 at 549-550 per Gummow and Kirby JJ. 71 The Commonwealth v Evans Deakin Industries Ltd (1986) 161 CLR 254 at 267, referring to Pitcher v Federal Capital Commission (1928) 41 CLR 385. 72 (1986) 161 CLR 254 at 276, 277. See also Austral Pacific Group Ltd (In liq) v Airservices Australia (2000) 203 CLR 136 at 142 [11], 158 [61]. McHugh difficulty does not arise in the present case. The source of right and remedy is found not in any State statute but in the interaction between the Constitution and the common law. Thus, this is not an appropriate occasion to consider whether the correctness of Evans Deakin should be reconsidered. Three other principal objections were taken to the operation of s 64 in the manner for which BAT contends. The first reflected a submission for the Commonwealth in Evans Deakin73. This had been that s 64 could only apply where there existed a "validly constituted suit" to which the Commonwealth or a State was a party. However, in Evans Deakin, the majority said in their joint judgment74: "The Supreme Court is given jurisdiction to entertain a suit to which the Commonwealth is a party by the combined effect of s 39(2) of the Judiciary Act and s 75(iii) of the Constitution. When an action is brought against the Commonwealth in the Supreme Court the condition for the operation of s 64 is satisfied: see The Commonwealth v Anderson75. Once the suit is commenced the substantive rights of the parties shall be, as nearly as possible, as in a suit between subject and subject." Likewise, in the present litigation, the Supreme Court was invested with jurisdiction by the combined effect of s 39(2) of the Judiciary Act and s 76(i) of the Constitution and when the action was brought in the Supreme Court the condition for the operation of s 64 was satisfied. It was submitted against BAT nevertheless that the action in the Supreme Court was not "validly constituted". This was said to be because there had been a failure to comply with the notice provisions in s 6(1) of the Crown Suits Act, a matter which went to the existence of the cause of action. For the reasons given earlier, s 6(1) is to be read with s 5 and when so construed is not picked up and translated into federal law. That is because other provision is made by the laws referred to in the last paragraph which invested the Supreme Court with federal jurisdiction to entertain the action. Secondly, it was submitted, particularly by New South Wales which intervened in support of the State, that the phrase in s 64 "as nearly as possible" was of decisive importance. The submission was that this criterion was 73 (1986) 161 CLR 254 at 255, 256. 74 (1986) 161 CLR 254 at 264. 75 (1960) 105 CLR 303 at 310. McHugh incapable of fulfilment here because to apply s 64 would prejudice the peculiar governmental interest in the protection of public revenue against reimbursement of moneys levied and collected without valid legislative mandate. There have been differences of opinion respecting the significance of the phrase in question. In The Commonwealth v Miller76, this Court rejected the proposition that the phrase excluded the Commonwealth from an obligation to give discovery because the requirement for an affidavit attesting to the discovery "would be an indignity"77 or because the Commonwealth as a body politic could not take an oath. With respect to the latter submission, Higgins J said78: "Therefore, to comply with the words 'as nearly as possible' in sec 64, the obvious course is to direct that the answer to interrogatories and the affidavit of discovery be made by some suitable officer of the Commonwealth." Later, Kitto J, speaking of a particular State law, said79: "[I]f, in its original setting any provision of that law was so expressed as not to apply to the Crown, s 64 nevertheless explicitly makes it applicable, as completely as possible, to the determination of the rights of the Commonwealth or State against its opponents and of their rights against the Commonwealth or State". (emphasis added) On the other hand, in South Australia v The Commonwealth80, Dixon CJ made observations from which the State (and those interveners which support it) sought to draw comfort for their case that s 64 can have no operation with respect to s 6 of the Crown Suits Act where what is sought is the recovery of moneys extracted by the State without the authority of valid statute. In that case, his Honour indicated that because the subject-matters of private and public law were "necessarily different", there would be some respects in which rights of parties could not be rendered "as nearly as possible" the same within the meaning of 76 (1910) 10 CLR 742. 77 (1910) 10 CLR 742 at 756. 78 (1910) 10 CLR 742 at 758. 79 Asiatic Steam Navigation Co Ltd v The Commonwealth (1956) 96 CLR 397 at 427. 80 (1962) 108 CLR 130 at 139-141. McHugh s 64. Examples of that impossibility had been given by Else-Mitchell J in The Commonwealth v Lawrence81. Later, in The Commonwealth v Burns82, Newton J noted with apparent approval the absence of a submission that s 64 prevented the application of the principle in Auckland Harbour Board v The King83. This was to the effect that payments made out of consolidated revenue without legislative authority might be recovered by the Executive Government and that, for example, questions of estoppel which might arise in an action between citizens were not relevant. The effect of the submission of the State is that similar reasoning applies where recovery is sought not by but against the State in respect not of moneys disbursed without authority but moneys collected without authority. The truth of the matter is to the contrary. Auckland Harbour Board reflects the fundamental constitutional principle prohibiting the Executive Goverment from spending public funds except under legislative authority84. Further, that authority of the legislature, in Australia, will be absent where the legislation relied upon is invalid, here by reason of the operation of s 90 of the Constitution. The action by BAT is in furtherance of rather than in opposition to the operation of basic constitutional principle. In Amax Potash Ltd v Saskatchewan85, the Supreme Court of Canada said of the unsuccessful submissions in that case by Saskatchewan and Alberta: "The two Provinces apparently find nothing inconsistent or repellent in the contention that a subject can be barred from recovery of sums paid to the Crown under protest, in response to the compulsion of the legislation later found to be ultra vires." However, those remarks are not directly in point for this appeal. The phrase presently under consideration does not appear in legislation barring such recovery. The extent to which the Commonwealth might legislate to curtail or 81 (1960) 77 WN (NSW) 538 at 540-541. 82 [1971] VR 825 at 830. 83 [1924] AC 318 at 326-327. 84 See Northern Suburbs General Cemetery Reserve Trust v The Commonwealth (1993) 176 CLR 555 at 575-576, 597-599. 85 [1977] 2 SCR 576 at 590. McHugh limit the pursuit by BAT of the rights to recovery which it may otherwise have is not in issue here. Rather, the question is whether a facilitative provision such as s 64 of the Judiciary Act, which otherwise assists BAT, should be given a limited operation by an expanded, and contradictory, reading of the phrase "as nearly as possible". The submissions made against BAT respecting the construction of s 64 should be rejected. Finally, a submission by South Australia, which also intervened, should be noted. Whilst it is well settled that s 64 applies only to suits in federal jurisdiction86, even within that field of operation of the section there are statements in the authorities which question the valid operation of s 64 in suits to which the State is a party, particularly (which is not the case here) the moving party87. In Evans Deakin, doubt was expressed in the joint judgment88: "whether the Commonwealth Parliament has a general power to legislate to affect the substantive rights of the States in proceedings in the exercise of federal jurisdiction". It was upon such statements that South Australia built its submissions. South Australia submitted that (i) the only available power to support s 64 in relation to the States was s 78 of the Constitution; (ii) s 78 is limited to "rights to proceed against ... a State"; (iii) s 64 speaks more broadly of "any suit to which the Commonwealth or a State is a party" and thus is invalid in its application to the States; and (iv) s 64 could not be "read down" other than by excluding the States from its operation and therefore wholly fails. Submission (iv) should be rejected, thereby making it unnecessary to rule upon the preceding submissions. The Commonwealth correctly submitted that upon the hypothesis presented by South Australia, s 64 might be read down to operate differentially between the Commonwealth and the States, and to apply to the suits a federal jurisdiction, including those based upon s 76(i) of the Constitution, in which the State has the character of a defendant. 86 China Ocean Shipping Co v South Australia (1979) 145 CLR 172 at 223, 234; Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 474; The Commonwealth v Western Australia (1999) 196 CLR 392 at 414 [48], 439 [135]. 87 For example, Maguire v Simpson (1977) 139 CLR 362 at 401, 404-405; China Ocean Shipping Co v South Australia (1979) 145 CLR 172 at 203. 88 (1986) 161 CLR 254 at 263. McHugh Conclusions The appeal should be allowed with costs. Orders 2, 3 and 4 of the orders made by the Full Court should be set aside. In place thereof, the appeal to the Full Court should be dismissed with costs. Kirby KIRBY J. This is another appeal arising out of the constitutional invalidation of the State tobacco licensing laws operating before 1997. Pursuant to such laws, the States of the Commonwealth raised very large amounts of revenue. By this Court's decision in Ha v New South Wales89 the State laws were held invalid. Numerous problems then arose as to the entitlement to recover payments that had been made on the erroneous assumption of the validity of those laws. "An important constitutional value" Recovery of invalid taxes: In Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd, Mason CJ observed90: "There is [a] fundamental principle of public law that no tax can be levied by the executive government without parliamentary authority, a principle which traces back to the Bill of Rights 1688 (Imp)91. In accordance with that principle, the Crown cannot assert an entitlement to retain money paid by way of causative mistake as and for tax that is not payable in the absence of circumstances which disentitle the payer from recovery. It would be subversive of an important constitutional value if this Court were to endorse a principle of law which, in the absence of such circumstances, authorized the retention by the executive of payments which it lacked authority to receive and which were paid as a result of causative mistake." In a federal polity, such as the Commonwealth of Australia, the foregoing passage is necessarily understood as requiring a clarification of the "fundamental principle of public law" so that no tax may be levied by an executive government without valid parliamentary authority. This additional requirement derives from the language and implications of the Constitution itself. The foregoing is the starting point for analysis in the present appeal92. It was overlooked by the Full Court of the Supreme Court of Western Australia 89 (1997) 189 CLR 465. 90 (1994) 182 CLR 51 at 69. See also Northern Suburbs General Cemetery Reserve Trust v The Commonwealth (1993) 176 CLR 555 at 597-599 where the history of unconstitutional exaction of taxation is described by McHugh J. 91 (1688) 1 W & M, Sess 2, c 2 ("By levying Money for and to the Use of the Crown, by pretence of Prerogative, for other Time, and in other Manner, than the same was granted by Parliament"). 92 From a judgment of the Full Court of the Supreme Court of Western Australia: The State of Western Australia v Rothmans of Pall Mall (Australia) Ltd [2001] (Footnote continues on next page) Kirby from which this appeal comes. It is a point that distinguishes this case from earlier proceedings in Roxborough v Rothmans of Pall Mall Australia Ltd93 in which an attempt was made (successful in the event) to recover moneys paid by retailers to a wholesaler pursuant to contracts framed to conform to the system of State licence fees on the sale of tobacco products. The wholesaler in that case, which failed in its resistance to the action of the retailers, was the present appellant, British American Tobacco Australia Ltd ("BAT"), then known by its former name. The foundation for the proceedings was the decision of this Court in Ha94. The basis of that decision was that, properly understood, the State law imposed a duty of excise. That is a form of taxation the imposition of which is reserved by the Constitution to the Federal Parliament95. In Roxborough96, I dissented from the conclusion that the retailers could recover the payments that they had made. The point of distinction between the approach I favoured and that of the majority was a view I took of the implications of the Constitution for the principles of the common law and of equity as they bound private parties. In the present case, the law of a different State is involved97. But there is no relevant distinction of legal principle on that ground. Centrality of the Constitution: It was central to my reasoning in Roxborough (as it is here) that this Court is "obliged to solve the legal problem that has arisen … by reference to the constitutional invalidation of a taxation statute"98. Rules of the common law and of equity upon which a party might rely to achieve recovery in such circumstances "always adapt themselves to the Constitution"99. They offer a solution necessarily "fashioned in a way that is WASCA 25. The Full Court reversed a decision of Master Sanderson who, on 14 August 2000, had dismissed the State's application for summary judgment. 93 (2001) 208 CLR 516. 94 (1997) 189 CLR 465. 95 Constitution, s 90. Note also the special provisions in relation to Western Australia in s 95 of the Constitution, now spent. 96 (2001) 208 CLR 516 at 559 [111], 579-580 [174]. 97 The State law in Ha was the Business Franchise Licences (Tobacco) Act 1987 (NSW). In the present case, the State law is the Business Franchise (Tobacco) Act 98 Roxborough (2001) 208 CLR 516 at 560-561 [117]. 99 Roxborough (2001) 208 CLR 516 at 563 [124]. Kirby harmonious with the postulates upon which constitutional invalidity, and its outcomes, fall to be decided"100. Because of the "important constitutional value" referred to by Mason CJ in Royal Insurance, I suggested in Roxborough that a different principle would apply where proceedings were brought not (as there) between private parties but in order to oblige a governmental party "to disgorge funds unlawfully collected by invalid taxes"101. Such a distinction has been recognised in judicial decisions both in the United States of America and in Europe. Ultimately, such a distinction "derives its justification from the way in which the constitutional context shapes the applicable legal rules"102. In the case of a governmental defendant, there are special reasons, traceable to public law and ultimately to the Constitution, that oblige recovery103. This is so because recovery from the polity that exacts an unconstitutional tax is ordinarily the most effective, appropriate and just way of enforcing the "important constitutional value" at stake and discouraging future breach of it. The issue that occasioned my dissent in Roxborough no longer separates me from the other members of this Court. In this case, the Constitution is accepted as the starting point for deriving the legal rights and obligations of the parties, both substantive and procedural. On the face of things, the first respondent, the State of Western Australia ("the State"), which exacted the constitutionally invalid tax from the appellant, BAT, should therefore be required to surrender the tax it unlawfully collected and to refund the same to the taxpayer that paid the tax. For my analysis of the issues in this appeal, this "important constitutional value" is crucial to the resolution of the remaining points of controversy that fall for decision. The facts and legislation The facts and statutes: The facts are explained in other reasons104. The applicable legislation may also be found there. Leaving aside the Constitution itself105, the relevant legislation falls into four categories. These are (1) the 100 Roxborough (2001) 208 CLR 516 at 563 [124]. 101 Roxborough (2001) 208 CLR 516 at 567-568 [136]. 102 Roxborough (2001) 208 CLR 516 at 569 [142]. 103 See Roxborough (2001) 208 CLR 516 at 574 [155]. 104 Reasons of Gleeson CJ at [1]-[5]; reasons of McHugh, Gummow and Hayne JJ ("joint reasons") at [28]-[31], [47]. 105 Notably ss 75(iii) and (iv), 76(i) and 77(iii). Kirby applicable provisions of the Judiciary Act 1903 (Cth) ("the Judiciary Act")106; (2) the provisions of the Business Franchise (Tobacco) Act 1975 (WA) ("the Franchise Act") effectively invalidated by the decision of this Court in Ha; (3) the provisions of the Crown Suits Act 1947 (WA) ("the Crown Suits Act")107; and (4) a provision of the Limitation Act 1935 (WA)108 ("the Limitation Act"). Also set out in other reasons is a description of the course that these proceedings took in the Supreme Court of Western Australia. Doubtless responding to the arguments of the parties, that Court did not notice that the proceedings were in federal jurisdiction, involving therefore the exercise of the judicial power of the Commonwealth. That was undoubtedly the case, at least because the matter brought by BAT against the State was one "arising under [the] Constitution, or involving its interpretation"109. With respect to such matters, the Federal Parliament, pursuant to the Constitution, has made a law investing a court of a State with the relevant federal jurisdiction, namely the Judiciary Act, Implications of federal jurisdiction: It follows from these incontestable facts that the analysis whereby the Full Court held that s 6(1) of the Crown Suits Act operated of its own force to govern the outcome of the proceedings could not be sustained as a matter of law. As it was the failure of BAT to give the notice provided for in s 6(1) that had founded the conclusion of the Full Court that BAT's proceedings were bound to fail, the premise upon which summary judgment was entered by the Full Court against BAT was knocked away. Once this point was established, the balance of the proceedings in this Court became a search on the part of the State (supported in this respect by other States intervening and, in large part, by the Commonwealth) for provisions of federal law that would sustain or uphold, as applicable in federal jurisdiction, the notice requirements of the Crown Suits Act or (as a fallback position) a notice requirement of the Limitation Act. In this way, the central issue in this appeal became one of reconciling two important constitutional values. The first, already mentioned, is the principle that a polity that lacks constitutional authority to receive payments extracted from a taxpayer should normally be obliged to refund such payments. The second is the principle that a key invention of the Constitution, whereby federal jurisdiction may be vested in State courts, should normally be safeguarded and upheld, not 106 Especially ss 39(2), 58, 64, 79. 107 ss 5 and 6. See joint reasons at [52]-[53]. 108 s 47A. See reasons of Gleeson CJ at [4], [23]. 109 Constitution, s 76(i). Kirby stultified110. This can best be achieved in practice if, to the full extent provided by law111, State laws are picked up, and adapted, so as to apply to the resolution of matters in federal jurisdiction. BAT's arguments, in effect, laid emphasis upon the first constitutional value. The State, and the interveners, laid emphasis upon the second. Common ground There was much common ground between the parties. It permitted this Court to concentrate on the differences that emerged before it. Thus, there was no suggestion that the decision in Ha should be reopened or that the principle in that case did not apply to the Franchise Act of Western Australia. Nor was it contested that BAT's action against the State attracted federal jurisdiction and that the Supreme Court of Western Australia was exercising such jurisdiction when it purported to give summary judgment in favour of the State. The amenability to summary judgment of BAT's action was ultimately the only legal issue in contest. That contest was to be resolved by the application of the principles of law that govern the provision of summary judgment. Such relief is not restricted to a case that is simple or self-evident. Establishing that a party has no reasonably arguable cause of action may sometimes require extended legal analysis112. In the case of novel causes of action, a measure of caution should be exercised in providing summary judgment113. This is especially so where the facts, adduced at trial, might cast light and colour upon the resolution of the legal questions. But no such concerns arise on the facts of the present appeal. BAT accepted that, if s 6 of the Crown Suits Act applied to its proceedings, it had not satisfied the obligation to give notice to the State before 110 Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 591 [68]; Solomons v District Court of New South Wales (2002) 76 ALJR 1601 at 1617 [83]; 192 ALR 217 at 238-239. 111 Under the Constitution or the Judiciary Act. 112 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 84; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129- 130; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 268 [162]. 113 Johnson v Gore Wood & Co [2002] 2 AC 1 at 36; cf Lenah Game Meats (2001) 208 CLR 199 at 268 [161]; Wickstead v Browne (1992) 30 NSWLR 1 at 5. Kirby action as there provided. On the face of things, if the premise were established, that conclusion would justify the entry of summary judgment. On the other hand, if s 6 of the Crown Suits Act did not apply to the proceedings brought by BAT against the State (subject to the supplementary argument concerning the applicability of the Limitation Act), the judgment would have to be set aside. The matter would then proceed to trial on the defences raising legal issues that have not so far been considered. The high measure of concurrence between the parties thus presents a comparatively simple principal question. Yet it is not one simple to answer. It is whether, as a matter of law, s 6 of the Crown Suits Act applied to BAT's matter in federal jurisdiction. If it did, the judgment of the Full Court, although for different reasons, would be affirmed. If it did not, the judgment would have to be set aside and the matter remitted for trial unless the Limitation Act defence could sustain the summary judgment. There are three preliminary points that I must mention. They concern assumptions that were made in presenting the foregoing issue for decision in this Court. I must identify them because, otherwise, it will be assumed that I make the assumptions inherent in the reasoning of others. I do not. It is important for me to say why this is so. No judge is bound to accept the concessions of parties, or the assumptions that they adopt about the law – least of all the Constitution114. One day the assumptions accepted in this case will be challenged. Other important and arguable issues will then be disentangled. Diversity jurisdiction: a constitutional foundation? Suits by interstate "residents": By s 75(iv) of the Constitution, it is provided that this Court shall have original jurisdiction in all matters: "between States, or between residents of different States, or between a State and a resident of another State". BAT's statement of claim, annexed to the writ issued out of the Supreme Court of Western Australia, asserts in par 1 that BAT is "a company incorporated in the State of New South Wales". The second respondent, the Commissioner of State Taxation of Western Australia, was sued by that statutory title. The Commissioner is no longer an active party to these proceedings. In this Court, BAT accepted that its action should be confined to its claim against the State. Nevertheless, when the proceedings were commenced in the Supreme Court of Western Australia, clearly the Commissioner was a resident of that State. On the face of things, it would therefore appear that the matter propounded in the 114 Roberts v Bass (2002) 77 ALJR 292 at 320-321 [143]-[144]; 194 ALR 161 at 199. Kirby proceedings was one "between residents of different States" or "between a State and a resident of another State". Without any resort to laws enacted by the Federal Parliament, and on the basis of an express constitutional provision, federal the Commonwealth would be engaged. jurisdiction would be established. The judicial power of The supposed defect in this reasoning about the constitutional words lies in early decisions of this Court holding that a corporation cannot be a "resident" within s 75(iv) of the Constitution115. The decisions establishing that principle involved a remarkable narrowing of the constitutional language. In my view, it is a narrowing unjustified by the text or the context. In many ways it is reminiscent of judicial holdings in Australia and elsewhere at the same time to the effect that a "person", when referred to in legislation (for example for the purpose of admission to professional practice) did not include a woman116. The only justification for such a narrow interpretation of s 75(iv) of the Constitution was the expressed judicial fear about an extension of the jurisdiction of this Court that might result in an inundation of work that this Court could not easily deflect to other courts in the views then held concerning the obligation of this Court to discharge a jurisdiction conferred on it by the Constitution. Today, such fears have receded. The reasons include the statutory powers of this Court to remit proceedings, including to a court of a State where there is at any time pending a cause involving the exercise of federal jurisdiction117. True, a new spectre has arisen, to revive the early fears, following the action of the Federal Parliament in purporting to define the jurisdiction of federal courts other than this Court, and to provide for exclusive jurisdiction of matters in federal courts, with the apparent intent to restrict, or prevent, remittal or removal of causes to other courts118. But such transitory concerns cannot control the 115 Australasian Temperance and General Mutual Life Assurance Society Ltd v Howe (1922) 31 CLR 290 at 307, 331-337; Watson and Godfrey v Cameron (1928) 40 CLR 446 at 448. There are many other illustrations of resistance to s 75(iv) of the Constitution. See for example R v Langdon; Ex parte Langdon (1953) 88 CLR 158 at 161, 163; Commissioner of Stamp Duties (NSW) v Owens [No 2] (1953) 88 CLR 116 In re Edith Haynes (1904) 6 WAR 209; Graycar and Morgan, The Hidden Gender of Law, 2nd ed (2002) at 42. 117 Judiciary Act, s 42. See also s 40(2). 118 See for example Migration Act 1958 (Cth) s 476(4); cf Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 132 [134]; Re Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham (2000) 74 ALJR 405 at 407-408 [7]-[15]; 168 ALR 407 at 409-411. Kirby that corporations, the early determination meaning of constitutional language119. In a proper case, this Court should reconsider including statutory corporations, cannot be "residents" of a different State for the purposes of s 75(iv) of the Constitution. Self-evidently, corporations are, and were at the time when the Constitution was made, legal persons. They were then, and still are, frequent litigants in the courts. Their existence was contemplated by the Constitution itself120. Although in 1985 in Crouch v Commissioner for Railways (Q)121 this Court declined to reopen its early holding on the meaning of s 75(iv), the decision is open to the strongest doubt and criticism. In my view it is wrong122. One day this Court will say so. As I have pointed out, there was another (statutory) foundation for the claim to federal jurisdiction, namely the power in s 76(i) of the Constitution whereby the Parliament could make laws conferring original jurisdiction on this Court in any matter "arising under this Constitution, or involving its interpretation". BAT's claim involves the interpretation of the Constitution (and on one view arises under its terms). It therefore attracts federal jurisdiction on that basis. Constitutional foundation for suits: I have mentioned this first preliminary point for a purpose. In respect of s 76 of the Constitution, and the list of matters there appearing, federal jurisdiction has only an indirect foothold in the Constitution. There it is dependent upon the making of laws by the Federal Parliament. In the matters mentioned in s 75, including s 75(iv), federal jurisdiction is conferred by the Constitution itself. By implication, the matters of federal jurisdiction expressly provided by the Constitution are core or cardinal matters for which an irreducible minimum jurisdiction was thought to be constitutionally essential. Leaving aside the provisions of pars (i) and (ii) of s 75 (which concern relations with other countries) and par (v) (which is a vital means of upholding the rule of law in relation to the Executive Government of the Commonwealth123) 119 There are, in any case, sanctions that may be imposed by the Court against needless invocation of diversity jurisdiction, including in costs. See for example Cox v Journeaux (1934) 52 CLR 282. 120 eg Constitution, s 51(xiii), (xx). 121 (1985) 159 CLR 22 at 24. 122 cf Commissioner for Railways (Qld) v Peters (1991) 24 NSWLR 407 at 426. 123 Plaintiff S157/2002 v The Commonwealth (2003) 77 ALJR 454 at 473-475 [98]- [104]; 195 ALR 24 at 50-52 applying Australian Communist Party v The (Footnote continues on next page) Kirby the provisions of pars (iii) and (iv) reflect, in the Australian context, an important feature of a federal polity. Such a polity is made up of a national entity (in Australia, the Commonwealth) and subnational entities (the States). The powers of government of the nation (legislative, executive and judicial) are divided and distributed, according to the Constitution, between these entities. Inevitably, there will be disputes as to where power in a particular case lies. It is inherent in s 75(iii) and (iv) that the resolution of such questions involves federal jurisdiction and the exercise of the judicial power of the Commonwealth. It is to prevent any risk that, misguidedly or by oversight or mistake, the Parliament might restrict the exercise of federal jurisdiction in such matters, that express provision is made by s 75, not only for the existence of the federal jurisdiction in question but for its conferral on this Court as an irreducible minimum. It would be hard to imagine a clearer indication than appears in s 75(iii) and (iv) of the recognition that, in matters involving the respective powers of the Commonwealth and the States, where questions of constitutional validity of governmental acts are commonly difficult or impossible to avoid, a specific means and judicial venue are provided for their resolution. It would be inconsistent with this explicit constitutional arrangement for legislation to be enacted, whether federal or State, that purported to constrain or restrict the federal jurisdiction so provided in a way limiting or curtailing its exercise. By s 78 of the Constitution, the Federal Parliament is empowered to "make laws conferring rights to proceed against the Commonwealth or a State in respect of matters within the limits of the judicial power". However, that provision, appearing after the three constitutional sections providing for federal jurisdiction, can only be a facultative one. It is limited by its terms to conferring "rights". Such "rights" are only those that permit the beneficiary "to proceed". And the rights to proceed are in respect of the "matters within the limits of the judicial power". Irreducible jurisdiction and power: To the extent that provisions of the Judiciary Act124 rest for their validity upon the terms of s 78 of the Constitution, such provisions must partake of the beneficial character contemplated by that section. They are not to be read as diminishing, restricting or imposing limitations upon the incidents of federal jurisdiction necessary to fulfil the scheme of the Constitution. On the contrary, this Court has repeatedly held that s 78 empowers the Parliament, as necessary, to create and confer substantive Commonwealth (1951) 83 CLR 1 at 193; cf Kartinyeri v Commonwealth (1998) 195 CLR 337 at 381 [89]. 124 Notably ss 39, 64 and 79. Kirby rights, not just procedural rights125. Implicit in the constitutional scheme is the provision to the independent Judicature (and in the matters mentioned in s 75, irreducibly to this Court) of the judicial power of the Commonwealth to resolve conflicts of a defined constitutional character. Relevantly, BAT's claim is such a conflict. The foregoing conclusion helps to clarify the essential federal and constitutional character of BAT's claim and of the jurisdiction exercised by the courts of Australia to resolve contested questions about its enforcement. Existence of a constitutional cause of action Statutory and constitutional rights: A second preliminary question arises as to whether it is necessarily implicit in the Constitution itself that a cause of action exists upon which a party may sue, to vindicate its constitutional rights, at least where those rights involve a claim to reimbursement of an invalidly extracted tax. Such a proposition is by no means heterodox. If it can be held (as it often is) that an ordinary statute gives rise to a private cause of action so as to vindicate its provisions126, how much more powerful are the arguments for recognising such an implication in a constitutional text? Typically, such a text concerns very important matters and is expressed in succinct language that does not purport to cover, in terms, every aspect of its application. Necessarily, implications must be derived from the text and structure of the document. The history of the importance of Australian Constitution has repeatedly demonstrated the 125 Asiatic Steam Navigation Co Ltd v The Commonwealth (1956) 96 CLR 397 at 427; Maguire v Simpson (1977) 139 CLR 362 at 370, 400-401, 405; Bropho v Western Australia (1990) 171 CLR 1 at 20-21; cf Peters (1991) 24 NSWLR 407 at 430-434. 126 Pyrenees Shire Council v Day (1998) 192 CLR 330 at 422-423 [250]; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 76-80 [213]-[222] referring to Mersey Docks Trustees v Gibbs (1866) LR 1 HL 93; Allen v Gulf Oil Refining Ltd [1981] AC 1001; X (Minors) v Bedfordshire County Council [1995] 2 AC 633 at 736. Kirby constitutional implications127. Nowhere has this been more so than in the case of the exercise of the judicial power128. In the present proceedings, the relevant questions would be these: Having regard to the express terms of s 90 of the Constitution, which provides that the imposition of duties of excise is exclusive to the Federal Parliament, where it is shown that a State Parliament has purported to impose a duty of excise on a taxpayer, in breach of that constitutional proscription, does an implied constitutional cause of action exist by which the taxpayer may recover the invalid impost paid on the mistaken assumption that the State law was valid? Is such a cause of action implicit as a means of vindicating the proscription of the Constitution? If such an implied cause of action were found in the Constitution, any purported intrusion of State legislation to defeat or limit its successful enforcement would be unlikely to succeed. Federal legislation might regulate the enforcement of such a claim. But it would seem unlikely that a State law, purporting to defend the State against recovery designed to vindicate the Constitution, would be picked up and treated as "applicable" to a claim in a State court exercising federal jurisdiction in such a matter. (In the view that I take of s 75(iv) such a cause of action between BAT and the State could always be brought in the original jurisdiction of this Court circumventing any need to bring proceedings in a State court or to rely on State laws to render the State liable as such). United States analogues: In Bivens v Six Unknown Named Agents of Federal Bureau of Narcotics129, the Supreme Court of the United States decided an analogous question arising under the United States Constitution. The 127 eg Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 83; R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254; Lange v Australian Broadcasting Corporation (1997) 189 CLR 520; Austin v The Commonwealth (2003) 77 ALJR 491 at 497 [19]-[20], 517 [116], 536 [218], 547 [275]; 195 ALR 321 at 328-329, 355, 382, 397. 128 eg Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1; Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51; Re Wakim; Ex parte McNally (1999) 198 CLR 511. In some cases the emergence of the implication is incomplete. See for example Leeth v The Commonwealth (1992) 174 CLR 455 at 486-491 and 501-503; cf 466-469, 474-480 and Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 363 [81] per Gaudron J and at 373 [116] of my own reasons. Kirby appellant there claimed to have suffered an actionable wrong by reason of the entry into his apartment of federal agents who, without warrant, searched the apartment and arrested him on narcotics charges, allegedly without probable cause. He brought proceedings in the federal District Court claiming damages. That Court dismissed the suit on the basis that there was no federal cause of action130. However, the Supreme Court upheld the argument that there was a constitutional cause of action based on breach of the Fourth Amendment131. The availability of such an action had been a matter of uncertainty for some time132. It was central to the reasoning of Brennan J, who wrote the opinion of the Supreme Court of the United States, that the Constitution imposed a limitation on the exercise of governmental power133 and that damages constituted a conventional remedy, in the common law legal system, for the vindication of rights in the event of an invasion of personal interests134. His Honour cited Marbury v Madison135 to demonstrate that: "The very essence of civil liberty certainly consists in the right of every individual to claim the protection of the laws, whenever he receives an injury." In Bivens it was held that the appellant did not have to prove that the provision of damages was essential to uphold the Constitution in order to establish this right of action. It was sufficient that he should show a violation of the Constitution to be "entitled to redress his injury through a particular remedial mechanism normally available in the federal courts"136. The same view has been taken in this Court concerning private causes of action based on ordinary statutory provisions. The existence of statutory procedures to uphold the statutory prescription is not necessarily fatal to the co-existence of an action for damages based on the statute. 130 The District Court also held that the federal agents were immune from suit. The Court of Appeals affirmed the decision on the first ground only. 131 Brennan J delivered the opinion of the Court; Harlan J concurred in a separate opinion; Burger CJ, Black and Blackmun JJ dissented. 132 cf Bell v Hood 327 US 678 (1946). 133 Bivens 403 US 388 at 394 (1971). 134 403 US 388 at 395-396 (1971). 135 5 US 137 at 163 (1803) cited 403 US 388 at 397 (1971). 136 403 US 388 at 397 (1971). Kirby The dissentients in the Supreme Court in Bivens feared what was termed "another avalanche of new federal cases"137. This was a view reminiscent of the early decisions in this Court on s 75(iv) of the Australian Constitution. The spectre of avalanches, floods and other natural catastrophes is often invoked by those who resist the orderly exposition and elaboration of the law according to principle. However, in Bivens that concern was rejected by the majority138. In every new thought about the law or the Constitution judicial anxieties of such a kind must be faced. The legal mind often displays a tendency to resist novelty because it challenges its repose. We must be alert to this trend so that we can avoid unwarranted manifestations of it. Damages, in our law, include not only general damages in tort (of the kind for which Mr Bivens sued) but also special damages (for which BAT sues). Special damages include the recovery of a specific money sum founded in a cause of action framed in contract, including implied contract139, on the principles of restitution140 on the basis of a constructive trust or a sui generis cause of action based on the Constitution itself afforded to redress invalid governmental action taken under colour of office (colore officii)141. Constitutional actions in Australia: So far, this Court has not adopted a view of the enforcement of the Constitution that extends to implying from its terms (even language as emphatic and exclusory as s 90) an implied constitutional cause of action enjoyed by a party for redress in the case of a breach of a constitutional prohibition142. In Kruger v The Commonwealth143 four members of the Court considered this issue explicitly in the circumstances of that case, namely Brennan CJ144, Toohey J145, Gaudron J146 and Gummow J147. 137 403 US 388 at 430 per Blackmun J, diss (1971). 138 403 US 388 at 391 fn 4 (1971). 139 eg the indebitatus claim upheld in Roxborough (2001) 208 CLR 516 at 524-525 140 Roxborough (2001) 208 CLR 516 at 570-574 [144]-[155] citing Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 177, 191 and 123 East Fifty-Fourth Street Inc v United States 157 F 2d 68 (1946) per Learned Hand J. 141 Roxborough (2001) 208 CLR 516 at 563-570 [125]-[143]. 142 Reasons of Gleeson CJ at [14]; joint reasons at [40]. 143 (1997) 190 CLR 1. 144 (1997) 190 CLR 1 at 46-47. Kirby Technically, for the purpose of deriving a binding rule from Kruger on this point, the reasoning of Gaudron J must be disregarded because her Honour was in dissent as to the ultimate disposition of the proceedings. However, from the answers given by the Court to the questions separated for decision in Kruger it is clear that the Court held that the Constitution did not contain any right, as alleged in that case, breach of which would give rise to a right of action sounding in damages148. It could be said that Kruger is distinguishable from the present case and that recovery of an invalid tax, collected in breach of a constitutional prohibition, is different from the causes of action propounded by the plaintiffs respectively in Bivens and Kruger. Nevertheless, there is no escaping the way in which this Court expressed its opinion in Kruger. A lot of words were written. But in the end, they come down to little more than Toohey J's aphorism that "[t]he implied limitation [in the Constitution] operates as a restriction on legislative power, not as grounding a cause of action"149. There is no suggestion in the reasoning in Kruger that a different approach would follow from an express constitutional prohibition such as that stated in s 90. The Court's approach was said by Brennan CJ to follow from a view of the Australian Constitution as an instrument of government and one "concerned with the powers and functions of government and the restraints upon their exercise"150. It is, with respect, an invalid leap of logic from the identification of the suggested character of the Constitution (even accepting it for the moment to be accurate and complete) to a conclusion that the instrument "reveals no intention to create a private right of action for damages for an attempt to exceed the powers it confers or to ignore the restraints it imposes"151. Alike with the majority of the Supreme Court of the United States in Bivens, I see no reason to infer such a restrictive "intention". "Intention" is a judicial fiction. It can only be given content according to the Constitution's purposes, express or implied. 145 (1997) 190 CLR 1 at 93. 146 (1997) 190 CLR 1 at 125-126. 147 (1997) 190 CLR 1 at 146-148. 148 See the answer to question 2: Kruger (1997) 190 CLR 1 at 176-177. 149 Kruger (1997) 190 CLR 1 at 93. 150 James v The Commonwealth (1939) 62 CLR 339 at 362 cited by Brennan CJ in Kruger (1997) 190 CLR 1 at 46. 151 Kruger (1997) 190 CLR 1 at 46. Kirby Where the applicable purpose is to prohibit a State Parliament from imposing a duty of excise152 my view is that the "intention" of the Constitution is to permit the right in those from whom the invalid "duty of excise" has been extracted to sue to obtain repayment of the sum. In Kruger, Gaudron J was reassured in her conclusion that there was "no necessity to invent a new cause of action" because she had concluded that there were common law rights already available in that case which the plaintiffs could invoke to vindicate the rights that she held them to enjoy153. So it is now held, because BAT may sue the State on an indebitatus count at common law for moneys had and received by the State to the use of BAT as an exaction of an invalid duty of excise. The defect of this reasoning has been noted in earlier cases154. If a party must rely on common law rights to vindicate itself against governmental conduct beyond the powers provided by the Constitution (even, in this case, prohibited by its terms) that party is vulnerable to the legislative abolition of such rights. Alternatively, such rights might be so circumscribed by procedural requirements (such as a notice before action) or limitations imposed upon the bringing of proceedings, as effectively to limit or curtail the enforcement of such rights, although the constitutional prohibition. they derive ultimately from If (as intuition suggests) such abolition or restriction could not validly be given effect, this must be so because ultimately the Constitution will itself recognise, and uphold, a private action brought to vindicate its provisions in this regard. Litigants already bring many proceedings of various kinds that invoke the beneficial protection of the Constitution. I am unpersuaded by the reasoning in Kruger that this Court should deny the kind of constitutional cause of action that the Supreme Court of the United States found implied in Bivens. If the New Zealand courts, following Bivens, can derive by the techniques of the common law an action for damages for the violation by public employees of the civil rights of others, without aid of an entrenched constitutional provision155, how much stronger is the footing for such a claim in the Australian constitutional context? At least, how much stronger is such a claim in the case of a demand for the recovery of an unconstitutional tax exacted in the face of an explicit constitutional prohibition? 152 As s 90 of the Constitution does. 153 Kruger (1997) 190 CLR 1 at 125-126. 154 Antill Ranger & Co Pty Ltd v Commissioner for Motor Transport (1955) 93 CLR 83 at 102-103 per Fullagar J. 155 Simpson v Attorney-General (NZ) (Baigent's Case) [1994] 3 NZLR 667 at 702 noted by Gummow J in Kruger (1997) 190 CLR 1 at 147. Kirby In his reasons in Kruger, Gummow J drew comfort from the lack of necessity in this country that was said to have forced United States courts to provide remedies where, by contrast here, the Judiciary Act provides differently and the Constitution relates differently to the common law156. But what the Australian Parliament has enacted in the Judiciary Act, it may repeal157. As an issue of principle, in matters of constitutional doctrine, it is impossible to rely upon the terms of current legislation to vindicate the Constitution. It is true that, by decisions of this Court, the common law in Australia, unlike that of the United States, has a national character. However, that differentiation reinforces, and does not undermine, my approach. It is impossible for the common law or the principles of equity158 to conflict with the Constitution. Such law, including in respect of proceeding for the recovery of invalid payments, moulds itself to the constitutional provisions. The facts of this case make it simpler in Australia to invoke the common law and rules of equity to supplement, with a single national voice, the norms of the Constitution. Whatever dispute there may be about the provision of damages for implied constitutional torts (as upheld in Bivens and rejected in Kruger), a constitutional claim for reimbursement of an invalidly exacted tax is a much clearer case. In effect, it is no more than a constitutional means of upholding the "important constitutional value" mentioned earlier in these reasons159. The fact that there may presently be other common law and equitable remedies is irrelevant. Where the Constitution speaks clearly in terms of a prohibition, its words necessarily carry the power of its own vindication and enforcement. A constitutional source of rights: It follows that, if I were approaching the question in this appeal as I think it should be answered, I would resolve it by reference to an implied cause of action, derived from the Constitution itself, permitting recovery of an invalid tax levied in breach of a constitutional provision. I would overrule Kruger to the extent that it holds otherwise. I do not accept the view that the leave of a majority of the Court is necessary for the correction of erroneous constitutional decisions160. There is no hint of such a 156 Kruger (1997) 190 CLR 1 at 148 per Gummow J referring to Lange (1997) 189 CLR 520 at 562-564. 157 Kartinyeri (1998) 195 CLR 337 at 356-357 [15]-[16], 375-376 [66]-[70]; cf 419- 158 Lenah Game Meats (2001) 208 CLR 199 at 279-280 [192]. 159 Royal Insurance (1994) 182 CLR 51 at 69. See above at [90]. 160 Evda Nominees Pty Ltd v Victoria (1984) 154 CLR 311 at 316 per Gibbs CJ, Mason, Murphy, Wilson, Brennan and Dawson JJ; cf Re Governor, Goulburn (Footnote continues on next page) Kirby procedural requirement in the Constitution itself and it cannot be imposed by judicial fiat. In so far as the joint reasons161 rely on what Gummow and Hayne JJ said in Re Patterson; Ex parte Taylor162, I would point out that, on the constitutional question in that case, that was a dissenting opinion which evidenced an unwillingness to accept the majority holding overruling Nolan v Minister for Immigration and Ethnic Affairs163. In so far as the joint reasons in this case suggest that the Justices of this Court are bound by majority determinations about the meaning of the Constitution until a majority give permission to reopen past authority on the point164, I disagree. It is neither what the Constitution says nor what the Justices of this Court have done, including in Re Patterson. Nor is such a course compatible with the special legal character of the basic law of a nation and the constitutional duty of this Court165. No Justice can be relieved of that duty, by a past or present majority in the Court – still less by the way the parties (who are so bound until the law is re-expressed by a majority of the Court) make concessions or conduct their litigation. It is by voices of the judges expressed in dissent166 that parties may be encouraged eventually to raise objections about erroneous judicial interpretations. Only in that way is error ultimately corrected and the true meaning of the Constitution expounded. This Court should read the Australian Constitution as a charter for the government of the Australian people. Intellectual limitations dating to a time when it was viewed as nothing more than an Imperial statute or an economic pact between colonies should long since have been discarded. History, including Correctional Centre; Ex parte Eastman (1999) 200 CLR 322 at 358 [95], 369-370 [122]; Re Colina; Ex parte Torney (1999) 200 CLR 386 at 407 [58]; Ha v New South Wales (1996) 70 ALJR 611 at 614; 137 ALR 40 at 43-44. 161 Joint reasons at [38]. 162 (2001) 207 CLR 391 at 473 [248]-[249]. 163 (1988) 165 CLR 178; cf Taylor (2001) 207 CLR 391 at 491 [300] per Kirby J. 164 cf Evda (1984) 154 CLR 311 at 316 per Deane J. 165 Victoria v The Commonwealth ("the Payroll Tax Case") (1971) 122 CLR 353 at 166 eg the long series of dissents of Isaacs J concerning the so called doctrine of immunity of State instrumentalities leading up to Amalgamated Society of Engineers v Adelaide Steamship Co Ltd ("the Engineers Case") (1920) 28 CLR 129. There are many other examples. Kirby recent history, denies such a character to the Constitution. It is beyond time for this Court to recognise the need for a fresh approach to its interpretation: one more in harmony with the Constitution's function and purpose and with the mainstream of judicial opinion in the contemporary common law world167. Our Constitution is an instrument of government. But it is also a source of rights and obligations of the people, not necessarily dependent for their vindication upon legislation vulnerable to change or reliant upon governmental action susceptible to the power of interests that may not always coincide with those of the citizens. These conclusions notwithstanding, because the majority of this Court approaches BAT's action in a different way, and views it as an action at common law that arises "under [the] Constitution, or involv[es] its interpretation"168 (but is not sourced there with the consequences such a source would import) it is necessary for me, in the state of present authority, to pursue the same course. The State, the Constitution and Crown suits Constitutional status of the States: This brings me to a third preliminary point. It concerns the distinctive status of a State of the Commonwealth, summoned into existence by the Constitution. Once the colonies named in s 6 of the covering clauses to the Constitution were "admitted into … the Commonwealth as States" they became, and were to be named, States as "parts of the Commonwealth"169. So also, in my opinion, were "the territories" there mentioned parts of the Commonwealth. This did not mean that the States' colonial history, origins and governance became irrelevant. Express provision was made for the continuance, as at the establishment of the Commonwealth, of "the Constitution of each State of the Commonwealth" until "altered in accordance with the Constitution of the State"170. The Constitution also saved the powers of the Parliament of a Colony which became the Parliament of a State171 and of the laws in force in the Colony which continued in force in the State172 until Parliament provided otherwise. Decisions of this Court 167 Cooke, "Final Appeal Courts: Some Comparisons", (2003) 12 Commonwealth Lawyer 43 at 45. 168 Constitution, s 76(i). 169 Commonwealth of Australia Constitution Act 1900 (Imp) (63 & 64 Vict c 12), s 6. 170 Constitution, s 106. 171 Constitution, s 107. 172 Constitution, s 108. Kirby have made clear the features of constitutional continuity between the colonies, as they were, and the States, as they became173. Nevertheless, the federal arrangements established by the Constitution, and the necessary interrelationship between the States inter se (and to a limited extent, their respective relationships with the government of the United Kingdom174) made it impossible to conceive of the States, after federation, as merely the colonies retitled. Their position in the new federal Constitution was substantively different. As States, they partly share in the aggregate governmental powers of a new national entity, the Commonwealth of Australia. This change requires reconceptualisation of the legal character of the States. However, that process has taken a long time even to begin, such is the hold on the legal mind of entrenched notions. The States and Crown immunity: In The Commonwealth v Mewett175, Gummow J and I, after referring to the history of the doctrine of Crown immunity in England, pointed out that the doctrine could not make an easy passage into Australian constitutional law, at least once the federal Constitution established the Commonwealth and the States and postulated an independent judicature with the constitutional power and duty to decide controversies involving them. As we pointed out in Mewett176, a similar observation had earlier been made by Murphy J177 in respect of the distinctive governmental character of the powers provided for in the Constitution. Yet, although these insights have become generally accepted178 (and are endorsed by the reasoning of other members of this Court in this case179), historically they took a long time to emerge. Until they became accepted, there was a great deal of erroneous thinking concerning the constitutional character of a State of the Commonwealth. 173 Yougarla v Western Australia (2001) 207 CLR 344 at 369 [64], 377-378 [89]. 174 See Constitution, ss 58, 59, 74; cf s 51(xxxviii). 175 (1997) 191 CLR 471 at 542-545. 176 (1997) 191 CLR 471 at 546-55; see also at 491 per Brennan CJ and at 527 per 177 In Johnstone v The Commonwealth (1979) 143 CLR 398 at 406. 178 See for example Austral Pacific Group Ltd (In Liq) v Airservices Australia (2000) 203 CLR 136 at 157 [59] per McHugh J. 179 See for example reasons of Gleeson CJ at [11]-[12] and joint reasons at [59]. Kirby This thinking assumed, without challenge, that a State represented, in some way, nothing more than a particular manifestation of the Crown. Hence, statutory texts and judicial decisions were replete with statements to the effect that a State of the Commonwealth was legally equivalent to the Crown in right of that geographical area of Australia. With the benefit of hindsight, appreciation of the democratic origins of the federal Constitution and analysis of its text, we can now see that such descriptions were fundamentally misconceived. However correct it might have been to conceive of a British colony beyond the seas, politically speaking, as a manifestation of the Crown (later refined, when the unity of the Crown was abandoned, as a manifestation of the Crown in a particular geographical "right"), such a notion was inapposite to a constituting polity of the Australian Commonwealth. It was a notion or legal metaphor rarely expressed in relation to the Commonwealth itself, that is, the federal polity. Doubtless this was because of the entirely novel character of the Commonwealth as a national political entity that had no earlier legal existence in any form. But in the States, where there remained a continuity of legislation (including constitutional legislation)180 the perception of their true legal character was slow to dawn. Before the present Crown Suits Act, the Parliament of Western Australia, in colonial times, had enacted a statute of the same title181. This was done just before federation. Historically, upon the creation of the State, it was natural enough that little thought would be given to the need for new constitutional thinking, and new statutory provisions, to provide for the enforcement of liability against the new and different political entity constituted by the State. Instead, a confusion between the constitutional State and the Crown persisted. It did so, notwithstanding the increasingly circumscribed role which the Crown played as such (including at a State level) in the legislature, executive and judicial organs of the State – the last, by the federal Constitution, fully integrated into the independent Judicature of the Commonwealth182. A similar question in Ireland: I referred to these considerations in passing in the last case in which application was made (as now repeated in this appeal) to reopen the rule established by the decision of this Court in The Commonwealth v 180 Yougarla (2001) 207 CLR 344 at 377-378 [89]. 181 Crown Suits Act 1898 (WA). 182 Kable (1996) 189 CLR 51. Kirby Evans Deakin Industries Ltd183. In Bass v Permanent Trustee Co Ltd184 I expressed doubt as to: "whether, at this stage in the understanding of the nature of a State of the Commonwealth, as provided for in the Constitution, it is appropriate to continue to treat it as an emanation of the Crown; and whether, in the Australian Commonwealth a State enjoys (as has until now been assumed) the immunity from suit historically attributed to the Crown as the personification of the sovereign". I drew attention, in Bass, to the reasoning of Walsh J in the Supreme Court of Ireland in Byrne v Ireland185. His Lordship there considered the liability of the Irish State in the context of the suggestion that the immunity of the Crown had devolved upon the successive manifestations of the Irish polity186. The question addressed the State as initially established, before the republican constitution, by the Constitution of the Irish Free State in 1922. At that stage, Ireland remained (as the Commonwealth and the States of Australia still are) a constitutional monarchy under the Crown. In Byrne187, Walsh J concluded that the importation of the prerogative immunity of the Crown from English law to the new constitutional Irish State had evidenced "an erroneous over-simplification"188. It was a result of lawyers and judges who had embraced that opinion overlooking "the fact that the basis of the Crown prerogatives in English law was that the King was the personification 183 (1986) 161 CLR 254. See also Bradken Consolidated Ltd v Broken Hill Proprietary Co Ltd (1979) 145 CLR 107; cf Australian Postal Commission v Dao (1985) 3 NSWLR 565 at 582-583, 604. 184 (1999) 198 CLR 334 at 374-375 [99], footnotes omitted. 185 [1972] IR 241 at 272-273. 186 See also Attorney-General v Great Southern and Western Railway Co of Ireland [1925] AC 754 at 765-766, 774-775 on the effect on the Irish Free State of liability undertaken by the United Kingdom Government before formation of the Irish Free State; R v Secretary of State for Foreign and Commonwealth Affairs; Ex parte Indian Association of Alberta [1982] QB 892 at 929-930 on whether the Crown in right of the United Kingdom owed treaty obligations to Indigenous peoples in Canada. 187 Writing with the concurrence of Ó Dálaigh CJ. 188 [1972] IR 241 at 272. Kirby of the state"189 whereas the establishment of a new and distinct State in Ireland by a written constitution deriving its authority ultimately from the people whose will gave it birth, introduced a new and different character to the State. Similar views were expressed in Byrne by Budd J190. A contrary opinion was stated by FitzGerald J191. Some measure of the fundamental differences that can exist on such basic questions of constitutional principle may be seen in the fact that the trial judge, whose decision was overturned by the majority of the Supreme Court of Ireland, described some of the propositions advanced to him, and subsequently upheld, as "preposterous"192. Crown Suits Act and the State: The significance of this issue to BAT's proceedings is that the Crown Suits Act, invoked by the State in this case, does not, in its terms, purport to impose an obligation to give notice in writing as a pre-condition to an action against the State of Western Australia as such. It expresses that obligation as a precondition to a "right of action [lying] against the Crown"193. An "action" (being in the context an action against the Crown) must be commenced within the specified period of a year. But if, under the Australian Constitution, the action in question lies not against the Crown but against the State, as such, a statutory provision addressed to the requirement to give notice to, and to commence proceedings against, the Crown within a specified time is irrelevant. Upon this hypothesis, the source of BAT's cause of action lies elsewhere. It lies against the State of Western Australia which it has sued by that name. The Crown Suits Act says nothing at all in relation to it. This view of the meaning of ss 5 and 6 of the Crown Suits Act may still leave work for that Act to perform, in respect of residual Crown liability in Western Australia where no issue arises of the liability of the State as a constitutional polity created by the federal Constitution. But in the context of that Constitution, at least, the State enjoys a constitutional status as such, indeed one that renders it liable to the exercise of federal jurisdiction in this Court pursuant to s 75(iv) of the Constitution and in State courts pursuant to the Constitution and the Judiciary Act. That liability, expressly stated, reconfirms in the Australian context the error of oversight identified by the Supreme Court of Ireland in Byrne in assuming that a State law is necessary to render the State liable to be sued in a State court, because it is a manifestation of the Crown. In 189 [1972] IR 241 at 272. 190 [1972] IR 241 at 302-303 with the concurrence of Ó Dálaigh CJ and O'Keeffe P. 191 [1972] IR 241 at 310-311. 192 [1972] IR 241 at 255 per Murnaghan J. 193 Crown Suits Act, s 6(1). Kirby my opinion, the language of s 75(iv) of the Australian Constitution denies that assumption. Upon the basis of the foregoing reasoning, the source of the supposed problems of BAT, in terms of ss 5 and 6(1) of the Crown Suits Act, disappears. There being no State law expressly addressed to the obligation of notice to the State, as such, or requiring the commencement of the action within a year of the accrual, no question arises as to whether, conformably with the federal Constitution, any such requirements are picked up and applied to BAT's claim. Conclusion – an open question: Although this is the way that I would dispose of the principal obstacle posited by the State in these proceedings194, I accept that there may be arguments to the contrary that have not been fully canvassed in the way the arguments proceeded in the hearing of this appeal. For example, by s 3 of the Crown Suits Act, the term "Crown" is defined to mean "the Crown in right of the Government of Western Australia". Whilst this is not, as such, the "State", it is conceivable that a purposive construction of that Act might treat the references to "Crown" as no more than a statutory shorthand for the "State". Such an interpretation would derive some support from the provision in s 5(2) of the Crown Suits Act directing that proceedings against the Crown are to be taken under the title "the State of Western Australia", although I am conscious that there is a world of difference between titles and substance. To reach a final view on the extent to which (if at all) the former immunity of the Crown survived the change of the one-time Australian colonies into States of the Commonwealth, and inured to the advantage of such States, it would be necessary to invite more detailed submissions than were received on that issue. Such submissions would have to address the way in which governmental immunity has evolved in other constitutional democracies195 and the extent to which some form of immunity may be postulated, or tolerated, by the language of s 78 of the Constitution. With all of the foregoing reservations about the assumptions which the parties made before us concerning the approach that this Court should take to the issues before it, I therefore turn to the conclusions that I would reach on the matter as it was argued. 194 There would remain the defence based on the Limitation Act, s 47A. 195 cf Bropho (1990) 171 CLR 1 at 15, 22-23. Kirby The Crown Suits Act and the Judiciary Act A constitutional right to proceed: In the view that I take, that the Constitution was the proper starting point for resolving the supposed impediment to BAT's claim posed by the State, like other members of the Court196, I would conclude that the right of BAT to proceed against the State was implied from, or possibly stated in, the Constitution itself. It did not require a State law, such as the Crown Suits Act, to afford that right (with the consequent risk that it might be afforded on procedural or other conditions that were not fulfilled in the particular case). Upon these premises I agree with Gleeson CJ that there was a question anterior to that presented by the State197. It lay behind much of the argument in this Court. It was to be answered by a reflection on the implications of the federal Constitution itself. I agree that the Constitution, by implication, confers BAT's right to proceed against the State of Western Australia and recourse to the provisions of the Crown Suits Act for that purpose is neither necessary nor appropriate198. I also agree with the joint reasons that "State legislation of itself could not control the constitution of the action or its outcome"199. That leaves the questions presented by the arguments of the State concerning whether, notwithstanding this foundation for BAT's right to proceed, State law restrictions, in the form of s 6(1) of the Crown Suits Act or s 47A of the Limitation Act are picked up and applied in federal jurisdiction by force of s 79 of the Judiciary Act and this notwithstanding the terms of s 64 of the Judiciary Act. Application of the Judiciary Act: So far as s 79 of the Judiciary Act is concerned, I agree with the joint reasons that, given that the Constitution itself impliedly affords BAT the right to proceed against the State, federal law "otherwise provided" both in the Constitution and (to the extent necessary) by s 39(2) of the Judiciary Act200. The provisions of s 6(1) of the Crown Suits Act cannot be severed from s 5 of that Act. The two sections constitute an integrated 196 Reasons of Gleeson CJ at [15]-[16]; joint reasons at [39]. 197 Reasons of Gleeson CJ at [9]. 198 Reasons of Gleeson CJ at [22]. See also joint reasons at [60]. 199 Joint reasons at [63]. 200 Joint reasons at [67]. See also Solomons (2002) 76 ALJR 1601 at 1606-1607 [23]- [25], 1612-1614 [57]-[62]; cf at 1621-1623 [111]-[120]; 192 ALR 217 at 224-225, Kirby State scheme for Crown (and possibly State) liability. In a matter in federal jurisdiction involving the State as a party they are inapplicable and therefore ineffective. It is necessary to consider s 64 of the Judiciary Act because of the supplementary argument of the State invoking s 47A of the Limitation Act. By s 64 of the Judiciary Act it is provided that, in the particular case of a suit in which, relevantly, a State is a party, the rights of the parties "shall as nearly as possible be the same, and judgment may be given … as in a suit between subject and subject". By s 47A of the Limitation Act particular provision is made in respect of actions brought against any person, excluding the Crown, for acts done in pursuance (putting it generally) of statutory or other public authority. In such cases it is obligatory for the proposed plaintiff, as soon as practicable, to give notice of action. By this provision of State law, agents of the State, and on one view the State itself as a constitutional entity, are arguably protected from suit by procedural preconditions that do not apply to a suit between subject and subject. Arguable questions invalidate judgment: The State, supported by other governmental parties, urged that a leeway was recognised in s 64 of the Judiciary Act for the special governmental characteristics, relevantly, of a State, by the words in s 64 "as nearly as possible". In a greater understanding of a State's need for protection, it is conceivable that a basis might be established to exempt the State, in this regard, from the requirement, in federal jurisdiction, that the rights of the parties in a suit against it should generally be the same as in a suit between subjects so as to expel notice provisions. Given that the foundation of BAT's right to proceed lies in the Constitution itself and to vindicate a constitutional provision, it seems highly doubtful that s 47A of the Limitation Act, with its special protective provisions, could impede BAT's recovery. Section 64 of the Judiciary Act might be read as giving effect, in this respect, to the high constitutional purpose that would otherwise be frustrated by a narrow reading. State statutory impediments are not made more palatable (or valid) by being conceptualised as preconditions to the existence of a suit when their practical effect is to defeat the success of the suit claiming reimbursement of moneys extracted by a constitutionally invalid tax. It is unnecessary to resolve this question finally. It is sufficient to say that, on several grounds, it is arguable that s 47A of the Limitation Act is not applicable to the action BAT has commenced against the State, is not picked up by s 79 of the Judiciary Act and is excluded by s 64 of that Act. In these proceedings it is also unnecessary to consider whether, and if so to what extent, federal legislative power extends to pick up, and apply, the State law in an action in federal jurisdiction that has the effect of protecting a State from liability in respect of moneys recovered as a tax which the State Parliament had no power to enact. That question may arise at a later stage of these proceedings. Kirby Conclusion and orders It follows that this Court must set aside the summary judgment entered by the Full Court of the Supreme Court of Western Australia. At the very least BAT's case was reasonably arguable. So much followed once it was appreciated that the matter involved the exercise of federal jurisdiction. Indeed, once the case was seen as an action involving the federal Constitution (if not actually based upon it) the possibility of special State procedural laws impeding the interests became difficult, perhaps vindication of federal constitutional impossible, for the State ultimately to sustain. I therefore agree in the orders proposed by Gleeson CJ. CALLINAN J. The facts and relevant legislative provisions are fully stated in the judgment of McHugh, Gummow and Hayne JJ. There is now no question that the first respondent has levied and been paid by the appellant, an unconstitutional tax. Questions (if any) as to compulsion (actual or implied), the need or otherwise for payment to have been made under protest, the relevance of payment under a mistake of law, and as to the proper characterization of the appellant's cause of action against the respondents need not be answered at this stage of the proceedings. It is enough, for present purposes, that the appellant has shown that it has an arguable case against the first respondent for recovery of money as a result of its unconstitutional legislation, to bring the case within federal jurisdiction under ss 76(1), 77 and 78 of the Constitution. It is also clear that a State, any more than the Commonwealth, may not legislate to validate what the Constitution does not permit it to do. What are not so clear, but do not need to be decided, are the nature and extent of the immunity enjoyed by a State as a separate Constitutional polity, almost certainly rightly assumed to exist by the framers201, and to be available to be invoked by the States202. Nor is it necessary to revisit the controversy as to the existence or otherwise of any similar immunity in favour of the Commonwealth203. I would accept that if the Judiciary Act 1903 (Cth) were to operate to pick up ss 5 and 6 of the Crown Suits Act 1947 (WA) (the "State Act"), the rights of the parties would not be as nearly as possible the same as those between other parties. Three possible arguments are advanced by the first respondent as to why any provision of the Judiciary Act does not, or cannot avail the appellant. The first is that a suit against the State, even one arising out of a Constitutional breach by it, is sui generis: that therefore no occasion for a comparison of "rights" can arise in such a case; and, secondly, on a lower plane, in any event a polity, a government, is by its very nature in such a different position from a non- governmental party that there must always be a qualification or reservation in favour of the governmental party as a defendant, in respect of litigation arising out of the conduct of affairs of state. I leave aside for present purposes the third possible argument. 201 Among other matters Ch 5 of the Constitution entrenches the States and there are numerous provisions referring to governors of a State who represent the Crown in the States. (See also s 7 of the Australia Act 1986 (Cth)). 202 See Official Report of the National Australasian Convention Debates, (Sydney), 2 March to 9 April 1891, vol 1 at 957. 203 The Commonwealth v Mewett (1997) 191 CLR 471. Callinan The first argument should be rejected. Even though the action arises out of a Constitutional breach it is not an action for a breach of a Constitutional duty or rule. Nor is it an action or claim of a kind peculiar to a governmental activity legitimately undertaken, or one which a government has abstained from taking. It is a claim in common law. That reasoning also defeats the second possible argument in this case. The role of the Constitution is an overarching one. Even though the differences (as for example, with respect to recovery and enforcement, ostensible authority and like matters) between the position of a polity and some other type of party in litigation may sometimes be exaggerated, there may well be cases in which a State party may enjoy a special immunity, advantage or other privilege, but this cannot be one of them. The third suggested argument of the first respondent is a more formidable one: that s 64 of the Judiciary Act only applies after there is a suit in being, and that ss 5 and 6 of the State Act may accordingly operate to defeat the appellant's action in default of the giving of the notice within time which is a condition precedent to it. This, the first respondent submits, is the consequence of an ordinary reading of s 64, in particular of the words, "in any suit". It was decided in The Commonwealth v Evans Deakin Industries Ltd204 however that s 64 of the Judiciary Act operates to apply both substantive and procedural laws, and accordingly could and did confer a cause of action against the Commonwealth205. Because I do not see any relevant distinction between the Commonwealth and a State in this particular case, whilst that decision stands, it meets the third argument of the respondent State. This is not, in my opinion, an occasion to reopen the decision in Evans Deakin. The existence here of the underlying Constitutional breach is reason enough for that. I would also wish to leave open any question of the existence of any general power (which I am disposed to doubt) of the Commonwealth to legislate in any, or all ways in respect of suits against the States arising out of activities unaffected by the Constitution. Sections 39(2) and 79 of the Judiciary Act operating in the manner described by McHugh, Gummow and Hayne JJ produce the consequence that the appellant's action does not fail for non-compliance with the State Act. Subject to the matters that I have mentioned I agree with the judgment and orders proposed by McHugh, Gummow and Hayne JJ. 204 (1986) 161 CLR 254. 205 (1986) 161 CLR 254 at 269 per Brennan J. |
HIGH COURT OF AUSTRALIA APPELLANTS AND OVERTON INVESTMENTS PTY LIMITED RESPONDENT Murphy v Overton Investments Pty Ltd [2004] HCA 3 5 February 2004 ORDER 1. Appeal allowed with costs. 2. Set aside pars 5(viii), (ix), (x) and (xi) of the orders made by the Full Court of the Federal Court on 22 June 2001 and, in lieu thereof, order that: (a) Appeal allowed with costs. (b) Remit the applications in Matters N159 of 1999 and N946 of 1999 to the trial judge for consideration of the assessment of damages and interest to be allowed to the appellants conformably with the reasons given by this Court, and entry of judgment accordingly. (c) Costs of the original trial and of the further proceedings on remitter to be in the discretion of the trial judge. On appeal from the Federal Court of Australia Representation: R J Ellicott QC with G A Moore for the appellants (instructed by The Aged-Care Rights Service Inc) J C Kelly SC with A J McInerney for the respondent (instructed by Gadens Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Murphy v Overton Investments Pty Ltd Trade Practices – Remedies – Misleading conduct – Lease for unit in retirement village – Lessee liable to pay proportionate part of all expenditure incurred in operating village – Estimate of likely expenditure given to prospective lessees – Estimate misleading – Estimate did not include all expenditure being incurred in operation of the village – Accepted that respondent engaged in conduct in contravention of Pt V of the Trade Practices Act 1974 (Cth) – Relief available under Pt VI of the Trade Practices Act – Whether appellants suffered "loss or damage" within meaning of ss 82 and 87 of the Trade Practices Act – Whether "loss or damage" confined to economic loss – Whether incurring unexpected expenditure can be loss or damage – Whether "loss or damage" is necessarily singular – Whether loss or damage constituted only by any diminution in value of the lease – Whether increased future contributions could be awarded as damages. Words and phrases – "loss or damage". Trade Practices Act 1974 (Cth), ss 4K, 82, 87. GLEESON CJ, McHUGH, GUMMOW, KIRBY, HAYNE, CALLINAN AND HEYDON JJ. In 1992, the appellants, Mr and Mrs Murphy, were considering moving into a retirement home. The respondent, the developer and then owner of the Heritage Retirement Village, at Padstow Heights, a suburb of Sydney, gave the appellants an information brochure about the village. The brochure explained that the respondent was selling leasehold interests in units at the village. (The leases were to be registered leases for a term of 99 years.) The brochure said that there would be an "on-going management and maintenance program" at the village. It said that "[p]resent budget figures would indicate" that, for a unit of the kind that the appellants were considering leasing, a pensioner would incur a weekly cost of $55.71. The lease which the respondent offered obliged the lessee to contribute to outgoings. The relevant provision of the lease (cl 5) gave a long, but not exhaustive, list of items which could be included in the amount of outgoings. They included such things as rates, insurance premiums, and a great variety of maintenance and like expenses, but in effect extended to all expenditure incurred in carrying on the operations of the village. The lease provided that the respondent would make a periodical estimate of likely outgoings, which tenants would then pay by monthly or other instalments, and that, as soon as practicable after the end of the period, the respondent would charge or credit tenants with the amount of any difference between the estimate and the actual outgoings incurred. In 1992, the appellants agreed to take a lease of Unit 53 in the village. Before they executed the relevant documents, which they did on 20 October 1992, the appellants sought legal advice about the lease. The first appellant read and understood the provisions of the lease dealing with outgoings. The reference schedule annexed to the appellants' lease said that the estimated initial outgoings for their unit, in the case of pensioner tenants (as the appellants were), was $55.71 per week. The lease made plain that the figure of $55.71 given in the schedule was no more than an estimate, and that the amount of outgoings to be charged to tenants was subject to determination and variation from time to time. But the figure of $55.71 was calculated "on figures that did not adequately provide for all expenditure actually being incurred in the operation of the Heritage Village"1. It 1 Murphy v Overton Investments Pty Ltd [2000] FCA 801 at [191]. is now not disputed that it was misleading, or likely to mislead, for the respondent to give this estimate to the appellants without disclosing that it did not adequately provide for all the expenditure then actually being incurred in the operation of the village. It is accepted, therefore, that the respondent engaged in conduct in contravention of Pt V of the Trade Practices Act 1974 (Cth) ("the Act"). The ultimate question in the appeal is what, if any, relief under Pt VI of the Act the appellants should have for this contravention of Pt V. That question arises in an appeal brought against orders of the Full Court of the Federal Court of Australia2. Those orders were made in appeals against the dismissal of the proceedings at first instance3. The Full Court ordered that the proceedings be remitted to the trial judge for further consideration of certain claims that had been made by the appellants under the Contracts Review Act 1980 (NSW) and a costs order. Otherwise, the appeals were dismissed. The claims under the Contracts Review Act were held, on remitter, to fail. An appeal against those orders was abandoned. In this Court, the appellants contended that the Full Court was wrong to dismiss their appeal against the trial judge's refusal to award damages. Recognising that this Court was not in a position to assess the damages which should be allowed, the appellants contended that the assessment of damages should also be remitted to the trial judge. That contention should be accepted. It will be necessary to say more about the history of the proceedings in the Federal Court but, to understand that history and the issues which fall for decision in this Court, it is necessary to begin the description of the dispute between the parties at an earlier point. The dispute about outgoings Until 1997, the respondent did not charge tenants of the village all outgoings that could properly be charged under the leases. It seems that the 2 Murphy v Overton Investments Pty Ltd (2001) 112 FCR 182. 3 Murphy v Overton Investments Pty Ltd [2000] FCA 801. prospect of increasing tenants' contributions was first raised in early 1993. Tenants opposed this suggestion. Reference was made to a code of practice known as the Retirement Village Industry Code of Practice 1989, it being said that this prevented the respondent increasing the level of contributions without tenants' approval. (This, and a later Code made in 1995, were made by regulation under the Retirement Villages Act 1989 (NSW).) In March 1994, the respondent received advice from an accountant that much more could be charged for outgoings than was then being charged, and that to continue charging outgoings at the level then being charged "would be undesirable to the financial position" of the respondent. Thereafter the respondent attempted to increase the amounts it charged tenants for outgoings. These attempts led to several meetings between groups of tenants and representatives of the respondent in which there was much discussion, and dispute, about the rights and wrongs of increasing the levies for outgoings. In July 1994, the respondent told tenants that, with effect from 1 July 1994, it would increase the levy for outgoings by more than 18 per cent and would make some other changes to the way in which outgoings would be calculated. The respondent did not demonstrate that in arriving at the increase of more than 18 per cent, categories of outgoings were taken into account which were additional to those taken into account in arriving at the estimate of $55.71. The increase of more than 18 per cent appears later to have been understood as no more than an interim measure. Nonetheless, tenants consulted solicitors; consideration was given to tenants commencing proceedings in the Residential Tenancies Tribunal of New South Wales. The appellants and other tenants paid the increased charge but the underlying dispute continued to simmer. In May 1996, the respondent produced its 1997 budget giving its estimate of likely outgoings for that year. In November 1996, it told tenants that it would thereafter charge all that it incurred in operating the village. This was later to be said to be the first unequivocal statement of this intention. 1996 saw the start of what was soon to prove to be an avalanche of litigation between the respondent and its tenants. It is necessary only to sketch an outline of that litigation. Litigation in the Residential Tenancies Tribunal, the Local Court and the Supreme Court In 1996, the respondent commenced proceedings in the Residential Tenancies Tribunal seeking orders that tenants agree to the financial budgets that the respondent had produced for its expenditure in connection with the village. The Tribunal dismissed this claim, holding that it had no jurisdiction to make the orders sought. The respondent appealed to the Supreme Court of New South Wales against the Tribunal's dismissal of its claim. In addition, it commenced proceedings against tenants in the Local Court, seeking to recover amounts which it claimed were due for outgoings it had incurred in past periods. The tenants' riposte was to commence proceedings in the Supreme Court seeking (among other things) declarations that the Retirement Village Industry Code of Practice 1989, and the 1995 Code, overrode those provisions of the leases which permitted the respondent, without the tenants' consent, to increase levels of contributions to be made by tenants. A flurry of interlocutory applications followed in the Supreme Court: some dealing with the Local Court proceedings, some dealing with proceedings that had been brought by the Director-General of the Department of Fair Trading against the respondent in the Commercial Tribunal of New South Wales alleging contraventions of the Retirement Village Industry Codes of Practice. The respondent was restrained from prosecuting its Local Court proceedings. It then claimed, in the Supreme Court proceedings, the amounts it alleged were due for outgoings incurred since 1993. It is necessary to give no more than a general outline of the further progress of the proceedings in the Supreme Court. The tenants' contentions that the Codes of Practice in some way overrode the obligations set out in the leases failed. Claims that the respondent had failed to use its best endeavours to conduct the village in a proper and efficient manner and had failed to act in good faith in the performance of its duties and functions gave rise to a detailed examination of amounts that had been spent in running the village. Those claims were referred to a special referee and, in substance, failed. So, too, the claims which the respondent had made for alleged shortfalls in amounts due for outgoings for the years between 1993 and 1998 were referred to the special referee. The amounts claimed included some legal and accounting costs incurred by the respondent in dealing with the dispute about how much could be recovered as maintenance levies. The total claimed on this account exceeded $496,000 and included accounting charges made for work done to provide evidence, and for giving evidence in the Supreme Court. It did not include amounts for costs which the respondent had been ordered to pay to tenants. The special referee reported that these legal and accounting charges could be recovered as outgoings and the report in this and other respects was adopted by the Court. Ultimately, therefore, the respondent obtained judgment in the Supreme Court against a large number of tenants (including the present appellants) for amounts which were held to be the balance of sums due to the respondent for outgoings. As is implicit in what is said above, these sums included legal and accounting costs incurred in dealing with the dispute. On condition that the tenant in question pay 50 per cent of the amount of the principal sum for which judgment was entered (excluding interest and costs), proceedings for enforcement of most of the judgments against the tenants (including the judgments against the appellants) were stayed pending the conclusion of the proceedings in the Federal Court which now give rise to the present appeal, or further order. It was also ordered, in the Supreme Court, that certain matters, raised by tenants as defences to the claim in that Court for amounts due for outgoings, should be brought to trial by separate action, and that judgments be entered against the tenants without regard to those defences. Those matters raised as defences included contentions: (iii) that the respondent had engaged in misleading or deceptive conduct, contrary to the Act, thereby causing the tenants damage; that the respondent, in breach of a duty of care, had negligently made misrepresentations about the level of outgoings, thereby causing the tenants damage; that the respondent was estopped from recovering outgoings from tenants "insofar as they exceed the assumptions made" about their quantum by the tenant; and that each tenant's lease was "unjust, harsh or oppressive within the meaning of s 7 of the Contracts Review Act". Litigation in the Federal Court In 1999, proceedings in the Federal Court were commenced, by the first appellant and others, as a representative claim. In August 1999, Emmett J ordered that the proceedings no longer continue as a representative claim, that the further amended statement of claim that had been filed be struck out, and that applicants other than the first appellant be removed as parties. Most tenants then commenced separate proceedings. Ultimately, Emmett J tried together the proceeding instituted by the first appellant and a separate proceeding later instituted by the second appellant. As finally framed, the appellants' claims raised each of the contentions which the Supreme Court had ordered should be brought to trial by separate action: misleading or deceptive conduct, negligent misrepresentation, estoppel, and claims under the Contracts Review Act. The appellants' case at trial: misrepresentation Reference should first be made to some claims that were made at trial but failed. The appellants alleged more than 20 separate misrepresentations had been made to them. These included alleged representations about the "affordability" of living in the village and about the outgoings which would be charged. They alleged that there were 13 relevant matters of which they should have been told, but were not. By the end of the trial both the number of representations and the number of omissions relied on had diminished, but the essential thrust of the appellants' case remained the same. The claims founded on alleged misrepresentation about affordability failed. The trial judge pointed out4 the intrinsic imprecision of the statement alleged, but that was not treated as determinative of the issue. Rather, central to the trial judge's conclusions about misrepresentations and omissions were the findings5 that the first appellant, with the benefit of legal advice, had carefully examined the lease memorandum before the appellants undertook the obligations it recorded, and [2000] FCA 801 at [174]. [2000] FCA 801 at [176]. that the first appellant had understood that the figure given for outgoings was an estimate only, subject to determination and variation from time to time in accordance with the lease. But the trial judge also reached critical conclusions favourable to the appellants which partly depended on the second of those two findings. These conclusions were that the statement of an estimate of outgoings implied that all expenditure that could properly be taken into account in forming the estimate had been taken into account6; that since it had not been, the respondent's conduct was misleading or likely to mislead in contravention of s 52 of the Act7; and that if the truth had been revealed, the appellants would not have entered the lease8. That is, though the first appellant understood that the 1992 estimate of $55.71 per week for outgoings was subject to the respondent's discretion to vary it upwards, he and his wife thought the discretion would only be exercised in future on the same basis as the basis underlying that 1992 estimate. Because just described was the misrepresentation the only misrepresentation established, the case was conducted in this Court by reference only to the Act. The respondent argued that the representation was only a representation of present fact – the elements of expenditure taken into account in relation to the 1992 estimate of $55.71 per week – and that no liability could arise from departures from the representation in relation to future years. The argument fails, because as a matter of causation the misleading representation induced the appellants to enter the lease, and once they had done so they were at risk of loss if the respondent decided to employ different elements of expenditure in arriving at future levies for outgoings. The claim for damages for negligent misrepresentation need not be considered further. [2000] FCA 801 at [191]. [2000] FCA 801 at [191]. [2000] FCA 801 at [203]. The appellants' claim to relief under s 87 The trial judge identified9 the appellants' primary claim to relief as being for relief under s 87 of the Act. He said10 that "[t]hey seek to restrict [the respondent's] recovery of maintenance fees from them by reference to a proportion of the single pension from time to time". This formulation of the relief sought was dictated largely, if not entirely, by the assumption that the appellants' case about "affordability" would be made out. But it was not confined to that eventuality; it encompassed a claim to relief under s 87 if any of the allegations of misleading or deceptive conduct were to be established. It was, of course, a claim that was framed without taking account of the possibility (later realised) that the respondent might sell its interest in the land to a third party before the lease arrangements had been reformed. The appellants' claim to damages The appellants' alternative claim, to damages, was described in the Full Court11 as being to seek "to quantify their loss by reference to the difference in value of the Lease according to whether maintenance fees are calculated in accordance with [the respondent's] legal entitlement or whether there is some restriction on [its] entitlement to recover full reimbursement for expenditure incurred in operating the Heritage Village". The trial judge pointed out12 that there was no claim for damages related to the consideration which the appellants paid for the grant of the lease. There was, his Honour said13, "no evidence that that consideration was other than a proper consideration for the leasehold interest" that the appellants acquired. That is, there was no evidence that the price paid on entry into the lease on 20 October 1992 exceeded its value at that date, and no case based on that contention was ever put. [2000] FCA 801 at [207]. 10 [2000] FCA 801 at [207]. 11 (2001) 112 FCR 182 at 187 [11]. 12 [2000] FCA 801 at [208]. 13 [2000] FCA 801 at [208]; see also [221]. The alternative claim to damages thus sought to arrive at a single capital sum to reflect the difference in value of the lease. The appellants rested their case upon the evidence of valuers who sought to compare the market value of the lease at November 1996 and at the date of trial, according to whether all outgoings could be recovered, or only some limited sum could be charged. The claim was not framed by direct reference to an assessment of the present value of the difference between the outgoings to be incurred in the future when assessed on alternative bases. There appears to have been no consideration given to how any shortfall in outgoings would be met or whether the respondent would be able to continue to operate the village without recovering all the outgoings incurred in its operation. These matters appear to have been treated as matters irrelevant to an assessment of what loss the appellants had suffered, or would later suffer, and the contrary was not suggested in argument in this Court. Like many assessments of future economic consequences, a calculation of the present value of the difference between future outgoings assessed on alternative bases is not simple. As will be explained later, a calculation of that kind may well require a finding about how far into the future the obligation to pay outgoings (and thus the obligation to pay a larger than expected sum for outgoings) could be expected to endure. It appears that no evidence was led and no argument advanced at trial about those matters. Conclusions at trial The trial judge concluded14 that the appellants had not proved that they had suffered any loss or damage. There were two steps taken to reach that conclusion. First, his Honour said that15: "When a claimant is induced by a misrepresentation to enter into an agreement that proves to be to his or her disadvantage, the claimant sustains a detriment, in a general sense, on entry into the agreement. That is because the agreement subjects the claimant to obligations and liabilities that exceed the value or worth of the rights and benefits that it confers upon the claimant. However, detriment in that general sense is not 14 [2000] FCA 801 at [221]. 15 [2000] FCA 801 at [215]. universally equated with the legal concept of 'loss or damage' – Wardley Australia Ltd v Western Australia16 ... Where a misrepresentation induces a claimant to enter into an agreement to purchase property, the claimant's loss, apart from any question of consequential damage, is measured by the difference between the price paid or payable under the agreement and the value of the property at the date of the agreement – Potts v Miller17." As has been said above, there was no evidence of any difference between price paid under the agreement and the value of the property at the date of the agreement. Secondly, it was said that, because the lease obliged the appellants to pay the sums claimed as outgoings, and there was no evidence that the appellants were "not receiving value for the maintenance fees that they [were] paying", they suffered no loss "by reason of the level of maintenance fees that they [were] liable to pay"18. It was said that the appellants had done nothing to their detriment after the respondent indicated that it intended to charge all that it was entitled to charge under the lease for outgoings19. Their obligation to make those payments was undertaken when they took their lease and that obligation was not "contingent in the sense that was referred to in Wardley"20. Two comments about this reasoning may be made at once. First, the difference between price and value will often be an important element in assessing the damage suffered by a person who, by a misrepresentation, has been induced to buy an item of property. As the trial judge said, there may also be questions of consequential damage. It would be wrong, however, to assume that in every case of misrepresentation (leave aside other forms of misleading or deceptive conduct) the only kind of damage which may be suffered, and compensated or redressed by orders under Pt VI of the Act, is any difference 16 (1992) 175 CLR 514 at 527. 17 (1940) 64 CLR 282 at 297-299. 18 [2000] FCA 801 at [213]. 19 [2000] FCA 801 at [214]. 20 [2000] FCA 801 at [220]. between price and value or any consequential losses. In particular, care must be exercised before seeking to apply what it described as the "rule in Potts v Miller"21 to claims made for relief under Pt VI of the Act . This is especially so when it is recalled that while the only monetary remedy for the tort of deceit is damages, a far wider range of remedies is available where contravention of the Act has caused or is likely to cause loss or damage to a party to the proceeding. Secondly, while the trial judge rightly pointed out22 that there was no evidence that the appellants did not receive value for the maintenance fees they paid, it does not necessarily follow that there was no loss incurred by the appellants if the outgoings for which they were liable included sums of a kind which had not been taken into account in forming the estimate they were given. Both appellants' proceedings in the Federal Court were dismissed at first instance. Emmett J held that the Federal Court had no jurisdiction to make orders of the kind sought by the appellants under the Contracts Review Act and that those claims must be ventilated in a State court23. Accordingly, provision was made by the orders dismissing the appellants' claims, for the appellants to seek orders for referral to the Supreme Court of New South Wales of questions arising out of the Contracts Review Act. As noted earlier, the Full Court24 reached the opposite conclusion about this jurisdictional question and neither the correctness of the Full Court's conclusion, nor the subsequent dismissal of claims to relief under the Contracts Review Act, is now in issue. The Full Federal Court The appellants appealed to the Full Court against the orders dismissing their claims. When those appeals came on for hearing the position which had been reached in the litigation between tenants and the respondent could be summarised as being this. First, the respondent had judgment against the 21 (1940) 64 CLR 282. See also Toteff v Antonas (1952) 87 CLR 647 at 650-651. 22 [2000] FCA 801 at [213]. 23 [2000] FCA 801 at [246], [249]. 24 (2001) 112 FCR 182 at 200 [60] per Branson J, 208 [95] per R D Nicholson J, 230 [161]-[162] per Gyles J. appellants and other tenants, in the Supreme Court, for the unpaid balance of amounts the respondent claimed as outgoings incurred by it in operating the village between 1993 and 1998. Those outgoings included legal and accounting costs incurred in connection with the dispute. Secondly, the tenants' contentions that the Retirement Village Industry Codes of Practice precluded enforcement of the obligation in the leases to contribute the amounts which the respondent claimed as outgoings had failed. Thirdly, execution of the judgments obtained in the Supreme Court was stayed on condition that one half of the principal was paid to the respondent. Fourthly, claims which the appellants had made, alleging misleading or deceptive conduct, negligent misrepresentation, and that the respondent was estopped from recovering some or all of the amounts it claimed, had been dismissed in the Federal Court. Fifthly, the claims that powers under the Contracts Review Act to reform the contractual arrangements underlying the appellants' interests in land should be exercised in the appellants' favour had not then been determined. In addition, it is necessary to notice one further matter of fact which intruded between the making of orders at first instance in the Federal Court and the hearing of argument in the appeal to the Full Court of that Court. The respondent sold the village to a third party. That sale was completed on 29 June 2000 and the respondent ceased to be owner or manager of the village. That third party was not joined to the proceedings. Nor were other tenants party to the proceedings. Absence of these parties (new owner or other tenants or both) may have presented some difficulties. It would have been wrong to make any order reforming the leases the tenants had taken, in a way that would affect their future obligations to the new owner, without hearing the new owner. Similarly, if an order reforming the appellants' lease would have adversely affected other tenants, there may very well have been difficulty in making such an order without hearing from those others. Neither of these possible difficulties was debated in the courts below and they may be put aside in this Court. That is not to say, however, that they may not have to be examined in other cases like the present. The Full Court decision In the Full Court, the majority (Branson and R D Nicholson JJ) held that the trial judge was right not to make any award of damages to either appellant. That conclusion depended upon the following steps in reasoning. First, the critical question was identified25 as being what would the appellants have done had the respondent not engaged in contravention of a provision of Pt V of the Act. Secondly, because it was known that in that event the appellants would have entered another, identified, retirement village, the question became26 what would the appellants' position have been had they not entered the lease they did, but entered the other village. Thirdly, because no evidence was led to establish what would have been the appellants' position had they entered the other village, the majority held27 that the claim to damages under s 82 or s 87 or other relief under s 87 had been rightly held to fail for want of proof of loss or damage. Branson J noted28 that the primary relief sought at trial was relief under s 87 in the form of an order restricting the respondent's right to recover outgoings from the appellants. Her Honour went on to say29 that, as the respondent no longer owned or operated the village, "an order of this nature would now be of limited value". The principal focus of the majority in the Full Court was upon the claim for damages under s 82. Yet it appears plain from the judgments in the Full Court that the claim for relief under s 87 was not then abandoned. It is also clear that the arguments about relief advanced to the Full Court were, as might be expected, shaped by the course of evidence at trial. In particular, the arguments were shaped having regard to the fact that the only evidence led at trial which sought to quantify the loss suffered by the appellants was evidence about the capital value of their leases assessed at different times and on different assumptions about the extent of the obligation to meet outgoings. It may also be that the sale of the village shifted the principal emphasis of the claim away from relief under s 87 to relief under s 82. 25 (2001) 112 FCR 182 at 195 [40] per Branson J, 207 [92] per R D Nicholson J. 26 (2001) 112 FCR 182 at 195 [39]-[41] per Branson J, 207 [92] per R D Nicholson J. 27 (2001) 112 FCR 182 at 195 [42] per Branson J, 207 [92] per R D Nicholson J. 28 (2001) 112 FCR 182 at 187 [11]. 29 (2001) 112 FCR 182 at 187 [11]. What is clear is that the reasons of the majority in the Full Court focused upon whether the appellants had proved an entitlement to damages. The majority held that they had not. The third member of the Court (Gyles J) held that the respondent should have been found to have been estopped from recovering part of the outgoings it claimed and that, accordingly, damages could have been awarded. He concluded30 that it was "not possible to make any final orders for relief, as much depends upon further decisions to be made by the judge and elections to be made by the appellants". He referred31, in this connection, to what appeared to be difficulties in giving effect to the estoppel, to what he called "other complications" which followed from the respondent's sale of the village, and to the possible effect of "other collateral proceedings" upon relief. Gyles J would have remitted to the trial judge, for further consideration, the question of what relief should be allowed. In part, the conclusion reached by Gyles J was based on the view32 that the respondent should have been held to be estopped from claiming outgoings of a kind other than those that had been taken into account in forming the estimate the appellants were given. This abbreviated description of the reasons of the Full Court reveals that the majority of the Court focused upon what might be described as the capital consequences to the appellants of the respondent's misleading or deceptive conduct. The majority confined attention to whether the appellants had paid too much for the lease they had acquired. By contrast, Gyles J, in dissent, can be understood as directing attention to a more general inquiry about whether, and how, the appellants were worse off as a result of the respondent's contravention. This division of opinion in the Full Court was understood to raise a fundamental question about what the Act means by "loss or damage" and how loss or damage is to be identified. Particular attention was given, both in the 30 (2001) 112 FCR 182 at 230 [164]. 31 (2001) 112 FCR 182 at 230 [164]. 32 (2001) 112 FCR 182 at 228 [153]. reasons of the Full Court33 and in the arguments advanced in this Court, to analysing this Court's reasons in Marks v GIO Australia Holdings Ltd34 concerning the identification of loss or damage. In the end, however, the resolution of this appeal does not depend upon identifying the nature or extent of any differences there may be between the separate reasons given in Marks. It depends upon the application of the Act according to its terms. Some general principles affecting remedies under Pt VI This Court has now said more than once35 that it is wrong to approach the operation of those provisions of Pt VI of the Act which deal with remedies for contravention of the Act by beginning the inquiry with an attempt to draw some analogy with any particular form of claim under the general law. No doubt analogies may be helpful, but it would be wrong to argue from the content of the general law that has developed in connection, for example, with the tort of deceit, to a conclusion about the construction or application of provisions of Pt VI of the Act. To do so distracts attention from the primary task of construing the relevant provisions of the Act. In the present case, analogies with the tort of deceit appear to have led to an assumption, at least at trial, that a person can suffer only one form of loss or damage as a result of a contravention of Pt V of the Act. The Act's references to "loss or damage" can be given no narrow meaning. Section 4K of the Act provides that loss or damage includes a reference to injury. It follows that the loss or damage spoken of in ss 82 and 87 is not confined to 33 (2001) 112 FCR 182 at 192-193 [29]-[33] per Branson J, 206-207 [84]-[90] per R D Nicholson J, 218-220 [126]-[131] per Gyles J. 34 (1998) 196 CLR 494. 35 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 503-504 [17] per Gaudron J, 510 [38] per McHugh, Hayne and Callinan JJ, 529 [103] per Gummow J, 549 [152] per Kirby J; Henville v Walker (2001) 206 CLR 459 at 501-502 [130]-[131] per McHugh J; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at 124-125 [42]-[48] per Gaudron, economic loss36. What kinds of detriment constitute loss or damage, when a detriment is to be identified as occurring or likely to occur, and what remedies are to be awarded, may all raise further difficult questions. Especially is that so when it is recalled that remedies may be awarded to compensate, prevent or reduce loss or damage that has been or is likely to be suffered by conduct in contravention of the Act. In Wardley Australia Ltd v Western Australia, a case about the application of s 82 of the Act, not s 87, a majority of the Court held37 that risk of loss is not itself a category of loss, and that, if a plaintiff enters a contract which exposes the plaintiff to a contingent loss or liability, that plaintiff "sustains no actual damage until the contingency is fulfilled and the loss becomes actual"38. Wardley illustrates that it is necessary to identify the detriment which is said to be the loss or damage which has occurred (or, when considering the application of s 87, has occurred or is likely to occur). In that case, the mere entry into obligations which might, but need not, have had detrimental consequences in the future was held not to have occasioned loss or damage to the party making the contract. Loss is not necessarily singular and may require more than one remedy Both s 82 and s 87 of the Act invite attention to whether a person has suffered (or, in the case of s 87, has suffered or is likely to suffer) loss or damage by contravention of (among other provisions) a provision of Pt V. Section 87 invites attention to whether any of a wide range of orders might be made to compensate, in whole or in part, for the loss or damage or to prevent or reduce the loss or damage. It is convenient to explain and illustrate the points that are to be made about the operation of those provisions by drawing on the distinction made in the law of taxation between capital and revenue account39. But it must be 36 Marks (1998) 196 CLR 494 at 513 [46] per McHugh, Hayne and Callinan JJ, 526-527 [93]-[96] per Gummow J. 37 (1992) 175 CLR 514 at 526-527 per Mason CJ, Dawson, Gaudron and McHugh JJ. 38 (1992) 175 CLR 514 at 532 per Mason CJ, Dawson, Gaudron and McHugh JJ. 39 Federal Commissioner of Taxation v Montgomery (1999) 198 CLR 639. emphasised that the distinction is drawn only for the limited purposes of explanation and illustration. The Act draws no such distinction. It speaks only of loss or damage. It should not be assumed that the loss or damage which a person suffers as a result of a contravention of Pt V is necessarily singular. Nor should it be assumed that loss or damage is incurred either as a loss on capital account, or as a loss on revenue account which, if to be compensated by an award of damages, must be translated into a single capital sum. These assumptions find no support in the language of the relevant provisions. Loss or damage may be a loss of capital. But there may also be a loss on revenue account which, unless some other remedy is granted which will prevent it continuing into the future, will, or may, continue into the future. And the losses on capital account may be sustained at a time different from any loss on revenue account. The latter form of loss may, in many cases, be sustained after the loss on capital account has been suffered. In some cases the loss on capital account may overlap with a loss on revenue account. If that is so, it is necessary to mould relief in a way which will avoid double compensation. A loss on revenue account, whether past or future, can be reduced to a single capital sum. Courts often undertake that exercise, and in doing so may acknowledge that it is difficult and that the result is imperfect. But the frequency with which the courts have had to grapple with the problem of translating a continuing stream of future losses (sometimes of uncertain amounts, over an indefinite and uncertain time) into a single capital sum does not mean that the only kind of loss which a person may sustain as a result of conduct of the kind now in issue is the loss of a capital sum. Nor does it mean that remedies other than an award of damages may not be made under the Act to compensate for, prevent or reduce those future losses. It would be wrong, therefore, to assume that, where a person is induced by misleading or deceptive conduct to undertake a continuing future obligation, the remedy to be awarded for a contravention of Pt V of the Act must be, or even ordinarily will be, a lump sum award of damages. There will be cases in which that will be the appropriate remedy. But that is a conclusion to be reached only after identifying the loss or damage which has been or will likely be suffered. That loss or damage may take several forms. It may be incurred at different times. Whether damages are to be awarded in compensation may depend upon what other forms of relief are to be awarded. In particular it will be much affected by what orders to prevent or reduce the loss or damage are made under The appellants' loss No doubt the appellants' disclaimer of any contention that they had suffered loss when they entered the lease in 1992 must be understood in the light of the three year limitation period then prescribed by the Act in ss 82(2) and 87(1CA)(b)40. It was important for the appellants to demonstrate that they had suffered loss or damage only when the respondent first said, in 1996, that it would recover from tenants all amounts that it was entitled to under the lease. If that were established, no limitation defence could be made out. It by no means follows, however, from the fact of disclaimer of any contention that damage was suffered by the appellants when they took the lease, that they did not suffer loss later. In the present case, the finding that the appellants had been induced to enter the lease by a statement of estimated outgoings that was misleading, because it did not take account of all amounts that could properly be charged as outgoings, meant that the appellants undertook an obligation which may, but need not, have proved to be larger or more costly than they had been led to believe. There may be cases in which a person misled in this way suffers loss upon entering the agreement. That may be so if it could be shown that the sum paid exceeded the market value. But that was not this case. No evidence at trial suggested that they had paid more than market value. There was no misrepresentation about the nature or quality of the property being acquired. The first appellant knew and understood that the lease obliged the appellants, as tenants, to pay outgoings in amounts which the lessor was to determine. What the appellants did not know was that the estimate of outgoings they were given did not provide for all the outgoings that were then being incurred. Here, therefore, the appellants suffered no loss as a result of undertaking the obligations they did unless and until the contingency which the misrepresentation hid (that items other than those used to form the estimate were then being incurred and could be charged as outgoings) was first realised. That was a 40 The periods prescribed in those sections were extended to six years by the Trade Practices Amendment Act (No 1) 2001 (Cth). contingency in the sense that the adverse risk might never have eventuated. When the lease was entered in 1992, the respondent was charging levies in relation only to limited categories of the overall outgoings. The respondent might have chosen to continue to charge the appellants only for those limited categories. On the other hand, it was possible that after 1992 it might decide to charge for wider categories. It was only from the time when it in fact decided to depart from the 1992 position and charge for the wider categories that the adverse risk eventuated. When it did, but only then, the appellants suffered loss and damage. And this Court's decision in Wardley41 requires the conclusion, on the evidence in this case, that it was only when the contingency came to pass that the appellants sustained loss or damage. It follows that no limitation defence was available. The onus of establishing that the appellants' claim under ss 82 and 87 was statute barred by reason of s 82(2) and s 87(1CA)(b) lay on the respondent42. The respondent accepted that onus by pleading the defences. The only ways by which the respondent endeavoured to discharge the onus were to contend that loss occurred on entry into the lease on 20 October 1992, or to contend that it occurred on payment of the 18.37 per cent increase in contributions to outgoings from 1 July 1994. Since the respondent called no evidence that the value of the lease was less than the consideration paid and failed to establish loss arising on 20 October 1992 in any other way, the first contention failed. And since the respondent did not establish that the 18.37 per cent increase in contributions was based on items of outgoings which were additional to those used in relation to the estimate conveyed in the representation, the second contention failed. However, even if one or other of these contentions had succeeded, it would not necessarily follow that all of the appellants' claims were statute barred. That is because while s 82(1) and s 87(1A) may prevent an applicant from suing for some items of loss or damage, they may leave open the possibility of recovering others, even though all items of loss or damage arose from a single piece of contravening conduct. The question was raised briefly in argument but not debated. Its resolution is unnecessary in this case, and should be postponed until some case arises in which its resolution is necessary and it is fully debated. 41 (1992) 175 CLR 514 at 532-533 per Mason CJ, Dawson, Gaudron and McHugh JJ. 42 Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410 at 415; State of Western Australia v Wardley Australia Ltd (1991) 30 FCR 245 at 259. The appellants' case in this Court Although the claim for relief under s 87 was not abandoned, the chief weight of the appellants' case in this Court (as it had been in the Full Court) was placed on their claim to damages. They maintained their contentions that the loss or damage they had sustained was reflected in a diminution in value of their leasehold interest and submitted that the diminution in value of the unit due to increased future contributions (said by the appellants to be but one aspect of their loss) could be awarded as damages. In addition, however, it was said that the loss or damage they had suffered was reflected in "the increase in levies above those paid prior to the inclusion of all expenditure". It was submitted that orders could have been made under s 87(2)(a), (ba) or (c) (for the reforming of the lease and refunding of sums already paid) if the respondent had still been manager. The conditional expression of this proposition must be noted. It is a proposition which appeared to assume that the respondent's sale of the village necessarily precluded the making of orders under those provisions of s 87. That assumption, if made, would not be universally right. Orders under s 87 could be made reforming the contractual arrangements between the appellants and the respondent at least for as long as that relationship had subsisted. For the reasons given earlier, the formulation of orders affecting the purchaser would have presented other and more difficult questions. Be this as it may, the appellants' proposition about the availability of relief under s 87 was advanced only as the premise for the conclusion which they submitted that this Court should reach. It was said that, because orders could have been made under s 87 if the respondent had still been manager, it followed that it was open to this Court to make an order that the respondent pay the appellants "an amount which represents the present value of the anticipated increased payments in contributions due to the falsity of the representation". And the orders which the appellants asked this Court to make were confined to orders remitting the matter to the trial judge to determine damages. No orders under s 87 were sought. Relief under Pt VI by way of damages is not contingent upon showing that an order, not requiring the payment of money, could be made under s 8743. 43 I & L Securities (2002) 210 CLR 109 at 124-125 [42]-[48] per Gaudron, Gummow Although the premise for this aspect of the appellants' argument (that orders under s 87, which did not require the payment of money, could have been made if the respondent had still owned the village) happens to be right in this case, that is irrelevant to the inquiry about damages. What must be shown is that the appellants had suffered or were likely to suffer loss or damage by conduct of the respondent engaged in contravention of a relevant provision of the Act. For the reasons given earlier, that was established. Three points should be made, however, about the particular formulation of the appellants' claim to damages. First, the claim for alleged difference in value of the lease must deal with the fact that the trial judge preferred44 the evidence of a valuer called by the respondent (to the effect45 that there was no substantial diminution in value of the appellants' property as a result of the increase in outgoings after November 1996) to the evidence given on that topic by the appellants' valuer. Secondly, the claim for alleged difference in value of the lease and the claim for the present value of the anticipated increased payments must be treated as alternative claims if double compensation is to be avoided. Although that was not conceded, the appellants offered only faint resistance to its being accepted. Thirdly, the claim for the present value of anticipated increased payments represented a significant departure from the way in which the case was conducted both at trial, and on appeal to the Full Court. It proffered a wholly new basis for assessment of damages and did so explicitly recognising that, in order to deal with it satisfactorily, further evidence might have to be called by the parties. The appellants' contention that they should be allowed damages assessed by reference to an asserted difference in value of their lease, according to whether the respondent may recover from the appellants all or only part of the outgoings it incurred, should now be rejected. First, as we have said above, there is the evidentiary difficulty presented by the trial judge's preference for the evidence of one expert over the other. There is no reason to set aside that finding. The opinions expressed by both experts were supported by argument and explanation. In the end, the critical 44 [2000] FCA 801 at [289]-[290]. 45 [2000] FCA 801 at [283]. question of opinion which each answered was: what effect, if any, did the false statement implicitly conveyed by the estimate of outgoings have on the value of the lease at various times? The trial judge was entitled to prefer one opinion over the other. Secondly, if the appellants confine their claim, as they did in this Court, to a claim for damages, and if, further, they intend to retain ownership of the lease, the obligations under which are not to be reformed by Court order, the property which they retain is identical with the property they bought. If they are entitled to recover damages assessed by reference to the amount by which the obligation to meet outgoings is larger than the estimate led them to anticipate, it would be to give the appellants double compensation to award an additional sum said to represent the difference in value of the lease of the unit. It would be double compensation because the assertion of difference in value seeks to compare the value of the lease of the unit assessed on the assumption that the representation made by the respondent was true (and the estimate did take full account of outgoings incurred) and the value assessed on the assumption that the representation was not true. Yet the damages which the appellants seek to be allowed for past and future outgoings would make good the position they would have been in had the misrepresentation not been made. It is neither necessary nor appropriate to award some further sum. The third point noted earlier was that the contention that the appellants' damages should be assessed as the present value of anticipated increased payments for outgoings appears to be wholly new. The evidence led at trial did not quantify the amount by which it was alleged that future payments for outgoings would increase due to the falsity of the representation. The weight of the appellants' argument at trial was directed to questions of affordability. That being so, argument at trial appears to have focused upon the allegation that increases in amounts charged for outgoings should be limited by reference to changes in the Aged Pension. In addition, however, there was argument directed to demonstrating that certain kinds of charge imposed in the past (particularly legal and accounting costs) could not be recovered as outgoings. In argument in this Court we were taken to no evidence about the likely period for which the appellants would be exposed to the obligation to pay outgoings and to no evidence about the way in which the present value of that future stream of expenditures should be valued. So far as the appeal books reveal, no evidence of that kind was adduced at trial. Quantifying the appellants' loss The appellants had been induced by the respondent's conduct to undertake an obligation which may, but need not, have been more onerous than the respondent's representation led them to believe. When the respondent started to charge all the outgoings it was entitled to charge, the appellants suffered a loss. The amount of that loss was not to be determined, as the majority of the Full Court held, only by comparing the financial position of the appellants according to whether they entered this lease or took some other accommodation. The appellants did not contend that they had suffered loss in that way. The appellants suffered loss because the continuing financial obligations they undertook when they took the lease proved to be larger than they had been led to believe. The question then became: how much larger was that burden? Answering that question is not easy. It would be necessary to take account of a number of considerations. First, the appellants knew that outgoings might increase. When they took the lease they knew, or at least must be taken to have known, that unexpected outgoings could occur in the future: unexpected both as to the subject-matter of the expense and the amount. It would be wrong to compensate them for their incurring outgoings of that kind, but how is proper account to be taken of that fact? The nature of this difficulty (and its resolution) may be illustrated by reference to the legal and accounting costs which the respondent incurred in connection with the dispute about fixing outgoings. Those could be described as unexpected outgoings. But had the respondent not engaged in the misleading or deceptive conduct it did, these outgoings would not have been incurred. The incurring of them was, therefore, caused by the conduct of which complaint was made and, being part of the sums for which the appellants are liable under the judgments entered in the Supreme Court, are prima facie to be allowed in assessing the damage they have suffered. As for other kinds of unexpected outgoings (for example, for the early repair of some piece of capital equipment in the village that could reasonably have been expected to have given longer service) the relevant question would be whether, when the original estimate of outgoings was given, such an amount had been incurred or foreseen as likely to be incurred and could then have been included in the estimate. If it could have been included, but was not, the later inclusion of similar amounts in levies for outgoings is prima facie reason to consider those sums to be a part of the damage the appellants have suffered. But if those amounts had not been incurred and could not have been included, then, unless more is shown, they are not part of the appellants' loss or damage. Secondly, once the contingency which had been hidden by the misrepresentation came to pass, it may be necessary to consider whether it was then reasonable for the appellants to continue to remain in the village rather than attempt to sell their interest and move elsewhere. It would, however, be for the respondent to raise this issue, being, as it is, a matter going in answer to the appellants' claim to damages. Though we were taken to no pleading, evidence or argument advanced by the respondent along these lines, the issue was raised in par 1 of the respondent's Notice of Contention. In all the circumstances it is not appropriate that we resolve it. As will be seen, we propose to remit the assessment of damages to the trial judge. If the respondent wishes to persist with the issue of whether the appellants behaved reasonably, and if the trial judge, in the light of the course of proceedings, considers that it is open to the respondent to raise it, it may be investigated as part of the remitter. The inquiry would, no doubt, have to give due weight to the then age of the appellants, their state of health and other matters affecting whether it was reasonable to expect them to confront the turmoil, cost and burdens associated with selling their residence, buying or renting another, and shifting to it. The trial judge summarised, not unsympathetically, some evidence of the first appellant as to why he and his wife did not move out after the 18.37 per cent increase of 1 July 199446. That evidence may also have relevance to the question of whether it was reasonable not to move out in 1997. But if it were found that it was, or would at some later time become, unreasonable for the appellants not to sell their interest in the lease, the point at which they could be expected to sell the lease would mark the outer limit to the period for which they would be exposed to the obligation to pay more outgoings than they were led to anticipate. Thirdly, as has been mentioned earlier, it would in the circumstances of this particular case, in which the appellants accepted that there could be no claim in relation to the period after their deaths, have been necessary to estimate how long this larger financial burden would likely be borne by the appellants. This would be a matter for the appellants to establish. It would require estimates of life expectancy and the making of adjustments to take account of possibilities 46 [2000] FCA 801 at [132]-[134]. like the decline in health of the second appellant which necessitated her moving to other accommodation. Estoppel As noted earlier, Gyles J concluded47 that the respondent should have been held to be estopped from claiming any outgoings of a kind which had not been taken into account in forming the estimate the appellants were given before they entered the lease. There are at least two reasons to reject this formulation of an estoppel. First, it is an estoppel which deals only with the dealings between the appellants and the respondent for the period during which the respondent was owner of the village. No account is taken of the intervening sale of the village. Secondly, as indicated earlier, the particular formulation adopted by Gyles J made no allowance for the fact that it must be taken to have been within the contemplation of all concerned, at the time the lease was made, that there may be unexpected outgoings. If an estoppel were to be found it would have to be framed differently. Given that the appellants now frame their claim as one for damages, there is little utility in examining the questions which now arise by reference to notions of estoppel. The remedies to be allowed under Pt VI, and in particular the allowance of damages under s 82 (in respect of past damage) and further, or alternatively, under s 87 (in respect of future, or past and future damage) are adequate to meet the consequences that would follow from a finding of estoppel. Conclusion and orders The reasoning employed by the Full Court in reaching the conclusion that the appellants proved no loss or damage was erroneous. The appellants did establish that they had undertaken an obligation which, in the events that happened, proved to be larger than the respondent's misleading conduct led them to believe. Though at the end of the day the appellants may fail to prove any loss or damage, it is possible that they will demonstrate that they have suffered loss or damage. The matter should be remitted to the trial judge to assess the damages, if any, to be allowed to the appellants. The trial judge, while hearing the remitted 47 (2001) 112 FCR 182 at 228 [153]. issues, may think it proper to draw inferences in favour of the appellants, if it is concluded that the respondent's wrong itself made quantification difficult48. The order for remitter is not an order for retrial. Nothing we have said, however, should be understood as indicating any view about whether, on remitter, an application by either side for leave to reopen its case to lead further evidence should be granted. That question has not yet arisen. We do not have the full record of the evidence led at trial that may bear upon the assessment which must now occur. We do not know whether, or to what extent, either side may contend that the evidence already led is deficient. We do not know how, or why, any deficiency of proof or answer at trial may have come about. While the length, the complexity and, in some of its branches, the futility of this litigious saga is to be deprecated, it will be for the trial judge to deal with any question of reopening that is raised. If that is the footing on which the litigation leaves this Court, the Federal Court will be better equipped to discharge its obligation to ensure that "as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided49". The issue raised by par 1 of the respondent's Notice of Contention of whether the appellants behaved reasonably in not leaving the village is also remitted to the trial judge, but, as indicated above, it will be for him to decide, given his close familiarity with the course of the trial, whether it is open to the respondent now to rely on it. The appeal to this Court should be allowed with costs. Paragraphs 1 to 4 and sub-pars (i) to (vii) of par 5 of the orders of the Full Court should not be disturbed. (Paragraph 5(vii) providing for remitter of the claims under the Contracts Review Act is now spent.) Paragraph 5(viii), (ix), (x) and (xi) of the orders made by the Full Court on 22 June 2001 should be set aside. In their place there should be orders that: 48 Armory v Delamirie (1722) 1 Stra 505 [93 ER 664]; LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1990) 24 NSWLR 499 at 508; Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 at 59. 49 Federal Court of Australia Act 1976 (Cth), s 22. The appeal is allowed with costs. The applications in Matters N159 of 1999 and N946 of 1999 are remitted to the trial judge for consideration of the assessment of damages and interest to be allowed to the appellants conformably with the reasons given by this Court, and entry of judgment accordingly. The costs of the original trial and of the further proceedings on remitter are to be in the discretion of the trial judge. |
HIGH COURT OF AUSTRALIA AMACA PTY LIMITED (Formerly known as James Hardie & Coy Pty Limited) APPELLANT AND THE STATE OF NEW SOUTH WALES & ANOR RESPONDENTS Amaca Pty Ltd v State of New South Wales [2003] HCA 44 7 August 2003 ORDER Appeal allowed with costs. Set aside the order of the Court of Appeal of New South Wales dated 12 December 2001. Remit the matter to that Court for further hearing and determination conformably with the reasons of this Court. On appeal from the Supreme Court of New South Wales Representation: F M Douglas QC with G M Watson SC and T G R Parker for the appellant (instructed by Allens Arthur Robinson) J M Ireland QC with J F Burn for the first respondent (instructed by Crown Solicitor for New South Wales) No appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS AMACA Pty Limited (Formerly known as James Hardie & Coy Pty Limited) v The State of New South Wales & Anor Tort – Joint tortfeasors – Contribution – Contribution claimed from third party not found or admitted to be liable to injured plaintiff – Whether claim could be dismissed without first deciding whether third party would if sued have been liable to plaintiff. Tort – Joint tortfeasors – Contribution – Exemption from liability to contribution – Circumstances in which exemption may be granted. Appeal and New Trial – Appeal to Court of Appeal of New South Wales – Appeal if error in point of law – Court of Appeal to consider whether appeal to that Court should be dismissed on ground that third party owed injured plaintiff no duty of care. Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5(1), (2). Dust Diseases Tribunal Act 1989 (NSW), s 32. McHUGH, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ. Section 5 of the Law Reform ("the Miscellaneous Provisions Act") provides, among other things, for contribution between tortfeasors. This appeal concerns the operation of those provisions. (Miscellaneous Provisions) Act 1946 (NSW) An injured plaintiff sued three defendants. He obtained judgment by consent against two of them. Those two defendants sought contribution from the appellant, which was not a party to the proceedings brought by the injured plaintiff. The appellant, in turn, sought contribution from the State of New South Wales, not then a party to the proceedings. Could the appellant's claim for contribution be decided without it being found or admitted that the State, if sued, would have been liable to the injured plaintiff? The trial judge held that, assuming that the State would have been liable to the injured plaintiff, the appellant's claim for contribution should nonetheless be dismissed. The Court of Appeal, again without deciding whether the State would have been liable to the injured plaintiff, upheld the trial judge's dismissal of the appellant's claim against the State1. The appeal to this Court against the Court of Appeal's orders should be allowed. The Court of Appeal should have held that the appellant's contribution claim could not be dismissed without first deciding whether the State, if sued, would have been liable to the injured plaintiff. The injured plaintiff's claim In 1993, Mr Warren Hay injured plaintiff") contracted mesothelioma. He had been exposed to asbestos dust and fibre between 1955 and 1961 when he was working on the construction of the Wallerawang Power Station for the Electricity Commission of New South Wales2. ("the 1 Rolls Royce Industrial Power (Pacific) Ltd v James Hardie & Coy Pty Ltd (2001) 53 NSWLR 626. 2 A body established by the Electricity Commission Act 1950 (NSW). Its name was changed to "Pacific Power" by the Electricity Legislation Amendment Act 1995 (NSW). Item 3 of Sched 7 to the Electricity Commission Act (now renamed as the Electricity (Pacific Power) Act 1950 (NSW)) provides that Pacific Power is a continuation of, and the same legal entity as, the Electricity Commission of New South Wales. McHugh Kirby Hayne Callinan The injured plaintiff brought proceedings in the Dust Diseases Tribunal of New South Wales against three defendants: the company which had employed him at Wallerawang (the second respondent to this appeal – Rolls Royce), the Electricity Commission, and a sub-contractor of his former employer. The third of those defendants, the sub-contractor, took no active part in the proceedings. In June 1994, the injured plaintiff settled the proceedings he had brought. By consent, he obtained judgment against Rolls Royce and the Electricity Commission, in each case for $185,000 (inclusive of costs). The contribution proceedings Rolls Royce and the Electricity Commission, defendants to the injured plaintiff's action, each sought contribution from the appellant ("James Hardie"). Those claims, so far as now relevant, were based on the contention that James Hardie, if sued by the injured plaintiff, would have been liable to him in respect of the damage for which the party claiming contribution was liable. It was alleged that the asbestos products to which the injured plaintiff had been exposed were manufactured, sold and supplied by James Hardie. The Electricity Commission's claim for contribution against James Hardie was settled. Judgment was entered on the Electricity Commission's cross-claim against James Hardie for $129,500: 70 per cent of the amount for which the injured plaintiff had judgment against the Electricity Commission. James Hardie, being liable to make contribution to the Electricity Commission and potentially liable to make contribution to Rolls Royce, claimed contribution from the State of New South Wales. James Hardie alleged that the State was liable to the injured plaintiff, either vicariously for the acts and omissions of others, or directly for breach of a duty of care which the State allegedly owed the injured plaintiff. The various contribution claims that had not been settled, including James Hardie's claim to contribution from the State, were tried in the Dust Diseases Tribunal. James Hardie's allegation that the State was vicariously liable to the injured plaintiff centred on a contention that the State was responsible for the acts or omissions of inspectors appointed under the Scaffolding and Lifts Act 1912 (NSW). (Allegations that the State was vicariously liable for the acts or omissions of the Electricity Commission were not pursued at trial.) The trial McHugh Kirby Hayne Callinan judge (Judge Curtis) rejected the contention that the State was vicariously liable for the acts or omissions of the inspectors3 and that contention, although maintained in the Court of Appeal, was not dealt with by that Court. It may be put aside. Both at trial and in the Court of Appeal, James Hardie contended that the State owed the injured plaintiff a duty of care. In its written submissions to the Court of Appeal, James Hardie said that its case was: "that the State – armed as it was with various statutory powers and knowing as it did of the dangers of asbestos – was at all relevant times in a position to prevent or to minimise the risk of harm through exposure to asbestos of persons (here Mr Hay) working in power stations and at other sites throughout New South Wales (here, Wallerawang power station)." In his reasons for judgment, the trial judge gave some consideration to whether the State owed the injured plaintiff a duty of care but came to no conclusion. He said that he found it unnecessary to decide whether the State did owe a duty to the injured plaintiff because of his views on apportionment. Under the heading, "Apportionment", he said only that: "Even if the State should have been liable to [the injured plaintiff], I do not believe it just and equitable that it should contribute to the liability of James Hardie. James Hardie created a danger which the State merely failed to avoid. James Hardie made large profits from selling vast quantities of asbestos products heedless of the dangers to others which James Hardie knew to be created by the use of these products. Essentially James Hardie submit that a loss inevitably flowing from these commercial activities should be borne in part, not out of James Hardie's profits or risk capital, but by the taxpayers of New South Wales. Such a result would in my opinion be neither just nor equitable having regard to the State's responsibility for the damage." In the Court of Appeal the parties proceeded on the basis that the trial judge had exercised the power under s 5(2) of the Miscellaneous Provisions Act to exempt the State from liability to make contribution. James Hardie submitted to the Court of Appeal that the exemption power given by s 5(2) was not 3 Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR McHugh Kirby Hayne Callinan available if both tortfeasors were independently at fault4. The State submitted that the exemption power was discretionary, and that the exercise of the discretion was not shown to have miscarried5. The State's submissions were accepted in the Court of Appeal6. James Hardie's appeal was dismissed. The Court did not decide whether the State owed a duty of care to the injured plaintiff or, if it did, whether it had breached that duty. Attention was not directed to whether, in considering what order should be made under s 5(2) of the Miscellaneous Provisions Act, it was sufficient to make an assumption that the State, if sued, would have been liable to the injured plaintiff. The Miscellaneous Provisions Act To examine whether the Court of Appeal was right to dismiss James Hardie's appeal, it is necessary to begin by considering the text of s 5 of the Miscellaneous Provisions Act. So far as now relevant, s 5 provides that: "(1) Where damage is suffered by any person as a result of a tort (whether a crime or not): any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought. In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage; and the court shall (2001) 53 NSWLR 626 at 645 [122]. (2001) 53 NSWLR 626 at 646 [126]. (2001) 53 NSWLR 626 at 648-649 [143]-[147] per Stein JA, 653-654 [174]-[176] per Fitzgerald AJA, 658 [189] per Davies AJA. McHugh Kirby Hayne Callinan have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity." Section 5(2) provides for three different outcomes in contribution proceedings: (i) recovery of an amount such as may be found by the court to be just and equitable having regard to the extent of the contributing party's responsibility for the damage; (ii) an order exempting any person from liability to make contribution; and (iii) a direction that the contribution to be recovered should amount to a complete indemnity. (As noted earlier, in the Court of Appeal it was accepted that the trial judge had made an order of the second kind – exempting the State from liability to make contribution.) Those three outcomes of proceedings for contribution are predicated upon the claimant being entitled to recover contribution. The circumstances in which that entitlement arises are specified in s 5(1)(c). Two matters must be established: (i) that the claimant is a tortfeasor liable in respect of particular damage; and (ii) that the person against whom the claim is made is another tortfeasor "who is, or would if sued have been, liable in respect of the same damage". As was pointed out in James Hardie & Coy Pty Ltd v Seltsam Pty Ltd7, the contribution provisions of the Miscellaneous Provisions Act have become notorious for the conceptual and practical difficulties they engender. Some of those difficulties stem from the fact that it is possible to bring proceedings for contribution that are heard and determined separately from proceedings establishing the liability in respect of which contribution is sought. It was the separation between hearing the proceedings brought by an injured plaintiff and hearing proceedings for contribution which gave rise to the issue decided by this Court in James Hardie & Coy Pty Ltd v Seltsam Pty Ltd. In that case, contribution proceedings were brought against a defendant sued by the injured plaintiff. By consent, however, the defendant had obtained judgment dismissing the injured plaintiff's claim against it. This Court held that the consent judgment in favour of that defendant absolved it from liability to make contribution to another defendant that had been found liable to the plaintiff. The Court also held, however, that a person who wished to seek contribution from a defendant (1998) 196 CLR 53 at 59 [7] per Gaudron and Gummow JJ. See also at 69 [45] per McHugh J and 69-70 [46] per Kirby J. McHugh Kirby Hayne Callinan against whom the plaintiff was content not to pursue a claim was entitled to be heard in opposition to the entry of judgment for that defendant by consent8. Like James Hardie & Coy Pty Ltd v Seltsam Pty Ltd, the principal proceedings brought by the injured plaintiff in this case were determined separately from the contribution claims. Unlike James Hardie & Coy Pty Ltd v Seltsam Pty Ltd, however, in the present case there has been no judicial determination (whether by consent or otherwise) that the person from whom contribution is sought (the State) is or would, if sued, have been liable to the injured plaintiff. Nor did the State admit that liability. Accordingly, the premise for making any of the orders specified in s 5(2) was neither established nor admitted, whether in the contribution proceedings or in the principal proceedings instituted by the injured plaintiff. The trial judge erred The trial judge made two errors in dealing with James Hardie's claim for contribution from the State. First, the reasons given for concluding that it was not just and equitable that the State should contribute to the liability of James Hardie were irrelevant. That James Hardie was a commercial enterprise pursuing profit and the State a polity raising revenue by taxation are not considerations relevant to their respective responsibilities to contribute to the damage sustained by the injured plaintiff. Secondly, and no less fundamentally, the assumption which the trial judge made about the State's liability was an insufficient basis for deciding what order should be made in the contribution claim against the State. The making of assumptions and the acceptance of concessions for the purpose of litigation is sometimes an appropriate and efficient way to proceed. It may allow a court to sever irrelevant or immaterial questions to permit it to concentrate on those issues that are legally essential to the decision. However, this was not a case where such a shortcut could be taken. What was assumed was that the State had breached a duty of care which it owed the injured plaintiff. But neither the duty nor the breach was identified with any particularity. Without identifying the duty owed, and the breach or breaches committed, it was not, and is not, possible to identify the extent of that party's responsibility for the damage. Nor is it possible to say that that party should be exempted from liability despite it having breached (1998) 196 CLR 53 at 62-63 [17] per Gaudron and Gummow JJ, 98-99 [133] per McHugh Kirby Hayne Callinan a duty which it owed the plaintiff. (It is unnecessary to consider whether, or in what circumstances, it would be proper to exempt a negligent party from liability to contribute. It may be that the power to exempt is engaged only where the party to be exempted was not at fault but found liable for some form of strict liability. That question was not argued and need not be decided.) The trial judge, therefore, made errors of law in concluding that James Hardie's claim for contribution from the State should be dismissed. Unless the order dismissing the claim for contribution could be supported on some other basis, James Hardie's appeal to the Court of Appeal should have been allowed. What orders should the Court of Appeal have made? The appeal to the Court of Appeal was brought pursuant to s 32 of the Dust Diseases Tribunal Act 1989 (NSW)9. So far as is now relevant, s 32 then provided10: "(1) A party who is dissatisfied with a decision of the Tribunal in point of law or on a question as to the admission or rejection of evidence may appeal to the Supreme Court. The Supreme Court may, on the hearing of any appeal under this section, remit the matter to the Tribunal for determination by the Tribunal in accordance with any decision of the Supreme Court and may make such other order in relation to the appeal as the Supreme Court sees fit." Whether, once an error in point of law is identified, the Court of Appeal is confined to that point only and has no power to decide any other matter may not be clear11. It is not necessary to decide that question here. 9 Section 48 of the Supreme Court Act 1970 (NSW) assigned to the Court of Appeal proceedings in the Supreme Court on an appeal from the Dust Diseases Tribunal. 10 Amendments since made to s 32(4) by the Courts Legislation Miscellaneous Amendments Act 2002 (NSW) need not be noticed. 11 Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 447 [14] per Gleeson CJ, Gummow and Callinan JJ, 464 [69]-[70] per Kirby J; cf Krew v Federal Commissioner of Taxation (1971) 45 ALJR 324 at 325-326 per Walsh J. McHugh Kirby Hayne Callinan The trial judge came to no final conclusion about whether the State owed a duty of care to the injured plaintiff and he did not decide what the scope or content of any such duty might be. Accordingly, it may be said that such findings of fact as he made about what the State did or did not do were not made with any definition of duty in mind. It follows that it may not be clear whether all the findings of fact that might bear upon any question of breach of duty were made at trial. If not all necessary findings about breach were made at trial, and if it became necessary to compare the respective degrees of responsibility of James Hardie and the State for the damage suffered by the injured plaintiff, the trial judge's reasons would have provided an insufficient factual platform for doing so. In those circumstances it may well have been appropriate for the Court of Appeal to allow the appeal and remit the matter to the Dust Diseases Tribunal for determination in accordance with the Court of Appeal's decision. But the question whether the State owed a duty of care to the injured plaintiff is logically anterior to any question of apportionment of responsibility. As these reasons have sought to demonstrate, deciding whether the State was a tortfeasor, which if sued would have been liable to the injured plaintiff, precedes any decision about the kind of order to be made under s 5(2) of the Miscellaneous Provisions Act. The State sought leave to file at the hearing of the appeal to this Court a notice of contention alleging, first, that the State had owed no duty of care to the injured plaintiff and, secondly, that the State had not breached any duty. Leave to rely on that notice was refused. Consideration of those contentions in this Court would have required extensive reference to a very large factual record. That is a task which, not having been performed in either of the courts below, it is not appropriate that this Court should undertake. For the reasons given earlier, there may be some question about whether the Court of Appeal, and therefore this Court, could undertake a review of the factual question of breach. But it is clear that the Court of Appeal did have power to determine whether, on the facts found at trial, the State did owe the injured plaintiff a duty of care. That was a question of law. If the Court of Appeal had identified the errors of law which the trial judge made, it would then have been appropriate, and in this case necessary, for the Court of Appeal to go on to consider whether the claim for contribution should have failed on the ground, urged by the State, that the State owed no duty of care to the injured plaintiff. The Court of Appeal should now consider that question. McHugh Kirby Hayne Callinan The appeal to this Court should be allowed with costs. The orders of the Court of Appeal made on 12 December 2001 should be set aside and the matter remitted to that Court for further hearing and determination. |
HIGH COURT OF AUSTRALIA THE QUEEN AND APPLICANT RESPONDENT The Queen v Hillier [2007] HCA 13 22 March 2007 ORDER Special leave to appeal is granted. The appeal is treated as instituted and heard instanter and allowed. The orders of the Court of Appeal of the Supreme Court of the Australian Capital Territory made on 15 December 2005 are set aside and the matter is remitted to that Court for rehearing. On appeal from the Supreme Court of the Australian Capital Territory Representation D F Jackson QC with P J de Veau for the applicant (instructed by Director of Public Prosecutions (ACT)) P F Tehan QC with W P Lowe for the respondent (instructed by Nelson & Co) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS The Queen v Hillier Criminal law – Criminal appeals – The respondent appealed to the Court of Appeal of the Australian Capital Territory against his conviction for murder – The Court of Appeal quashed the conviction and entered verdict of acquittal – Whether Court of Appeal erred in quashing the verdict of the jury – Nature of appellate jurisdiction where no common form criminal appeal statute is enacted – Extent of duties and powers given to the Court of Appeal under Pt 2A of the Supreme Court Act 1933 (ACT) – Principles governing the exercise of those duties and powers – Whether in this case it would have been unjust or unsafe for the Court of Appeal to allow the verdict to stand. Criminal law – Criminal appeals – Prosecution appeal to the High Court of Australia against verdict of acquittal entered by intermediate appellate court – Circumstances in which special leave will be granted. Criminal law – Evidence – Circumstantial evidence – Whether the Court of Appeal erred in reasoning that, because evidence looked at in isolation from other evidence was consistent with innocence, the conviction should be quashed – Whether the Court of Appeal should have considered whether it was open to the jury, on consideration of the whole of the evidence, to be satisfied beyond reasonable doubt that the respondent was guilty. Words and phrases – "unjust or unsafe", "unsafe or unsatisfactory". Supreme Court Act 1933 (ACT), Pt 2A. GLEESON CJ. I have had the advantage of reading in draft form the reasons for judgment of Gummow, Hayne and Crennan JJ ("the joint reasons") and the reasons for judgment of Callinan J. They would allow the appeal from the decision of the Court of Appeal of the Supreme Court of the Australian Capital Territory, but on different grounds, and with a different outcome. I agree with the joint reasons, and with the orders they propose. The ground of appeal that succeeded in the Court of Appeal was that the verdict of the jury was unsafe and unsatisfactory. The sense in which that expression was relevantly understood in the Court of Appeal, both by counsel and the members of the Court, appears from the way in which the majority in the Court of Appeal expressed their conclusion. They held that it was "impossible ... to conclude that it was open to the jury to find that the guilt of the [accused] had been proven beyond reasonable doubt" and that, for that reason, "a miscarriage of justice may well have occurred". As to the ground upon which Callinan J proposes that the appeal be allowed, and a new trial ordered, I would note the following. Although the majority in the Court of Appeal, in the course of considering the evidence about motive, commented adversely on what they regarded as the "potential unfairness" of not putting to Mr Hillier in cross-examination a proposition that was put by prosecuting counsel in final address, that was not the ground on which they decided the case. As senior counsel for Mr Hillier acknowledged in the course of his argument in this Court, the suggested failure to put a matter in cross- examination was not the subject of a ground of appeal in the Court of Appeal, and had not been the subject of any complaint by trial counsel. If trial counsel had raised the suggested unfairness at trial, it is the kind of problem that could have been dealt with by the trial judge in his summing-up to the jury. Any unfairness of the kind now complained of could have been remedied at trial. It was not considered by Spender J in his dissenting judgment in the Court of Appeal even though, if it had been raised, he would have had to deal with it before concluding, as he did, that the appeal should be dismissed. If the point had been raised, and dealt with as a ground of appeal, I would have thought that the cross-examiner gave the witness a fairly blunt indication of what he was suggesting. He put to the witness that, at the time the telephone calls stopped, the witness was beginning to despair of his prospects of appeal (from a court order concerning custody of the children) and suggested that the witness had decided to take the law into his own hands. In context, that can only have meant the witness had decided to kill the victim. The failure of experienced trial counsel to complain that the submission put to the jury in final address was unfair, or unavailable, because of the course taken in cross-examination, strengthens this impression. Furthermore, if the point had been argued as a ground of appeal, and had been upheld, there would still have been a question whether, standing alone, it would have warranted a quashing of the conviction. That question was not addressed by any member of the Court of Appeal. As to the ground of appeal that succeeded in the Court of Appeal, I agree with what is said in the joint reasons. The result is that the respondent's case on appeal was not decided according to the applicable legal standards. It does not follow that his case was bound to fail. This court is not a court of criminal appeal. There is a reluctance to grant special leave to appeal against an acquittal such as occurred here, sometimes expressed by reference to a need to show "very exceptional circumstances"1. I would grant special leave, but for the purpose, upon allowing the appeal, of remitting the matter for further consideration as proposed in the joint reasons. 1 R v Benz (1989) 168 CLR 110 at 111-113; R v Taufahema [2007] HCA 11 at [32]. Crennan GUMMOW, HAYNE AND CRENNAN JJ. On 2 October 2002, Ana Louise Hardwick was found dead in her bedroom. There had been a fire in the room but she had died before the fire. She had a skin abrasion on her nose and a complex abraded injury predominantly to the left side of her neck. She had small bruises on the outer aspect of each wrist, one measuring two centimetres, the other measuring four centimetres. The cause of her death was neck compression, though the pathologist could not say whether as a result of ligature, rod or manual strangulation. The respondent, Steven Wayne Hillier, was charged with Ms Hardwick's murder. Mr Hillier and Ms Hardwick had lived together for about 12 years, from 1987 to 1999. They had two children. When the couple separated in 1999, they agreed that the two children would live with their father. In June 2002, on Ms Hardwick's application, the Family Court of Australia ordered that the children reside with her. Pending an appeal against those orders by Mr Hillier, orders were made that the children live week and week about with each parent, but those interim orders were discharged on 20 September 2002, with the result that the orders for the children to reside with their mother took effect. The prosecution's case at Mr Hillier's trial was that he murdered Ms Hardwick to regain custody of his children. Mr Hillier was tried in the Supreme Court of the Australian Capital Territory by Gray J and a jury. The trial occupied 15 days but the jury deliberated for only a few hours before returning a verdict of guilty. Mr Hillier appealed to the Court of Appeal of the Supreme Court of the Australian Capital Territory against his conviction. As finally amended, his notice of appeal stated six grounds. The first two grounds alleged that the verdict was "unsafe and unsatisfactory" and was "against the evidence and the weight of the evidence". Other grounds alleged errors in the judge's charge to the jury and in the judge not excluding certain evidence. It is not necessary to notice the detail of these other grounds. The Court of Appeal held, by majority (Higgins CJ and Crispin P; Spender J dissenting)2, that the appeal should be allowed. The only orders the Court made were that the appeal be allowed and the conviction and sentence be set aside. No order was made directing entry of a verdict of acquittal, although it would follow from the reasons given by the majority of the Court of Appeal that such an order should have been made. 2 Hillier v The Queen [2005] ACTCA 48. Crennan The Director of Public Prosecutions seeks special leave to appeal against those orders. He contends that "this was an inappropriate case for the Court of Appeal to set aside the verdict of the jury" and that the majority of the Court of Appeal "erred in combining a series of factual matters which each had little or no evidentiary foundation in order to find a real possibility that the respondent did not commit the murder". The Director contends that the interests of the administration of justice in the particular case warranted the grant of special leave to appeal3. The application for special leave was referred for argument before the whole Court as on appeal. To examine the parties' submissions it will be necessary to examine the reasons of the Court of Appeal, and the evidence given at trial. Before embarking on that task, however, it is essential to begin by considering the statutory framework within which the questions that arise in the matter must be identified and considered. Criminal appeals in the Australian Capital Territory Criminal appeals from the Supreme Court of the Australian Capital Territory have never been governed by legislation of the kind, long found in each of the States of the Commonwealth4, which derives from the Criminal Appeal Act 1907 (UK). The Supreme Court of the Australian Capital Territory was created by the Seat of Government Supreme Court Act 1933 (Cth). Section 52 of that Act conferred an appellate jurisdiction upon the High Court in respect of convictions on indictment before the Supreme Court. Appeal to this Court lay as of right on any ground of appeal which involved "a question of law alone"5; appeal lay, with leave of the Supreme Court, on any ground of appeal which Judiciary Act 1903 (Cth), s 35A. 4 Criminal Appeal Act 1912 (NSW), s 6; Criminal Appeal Act 1914 (Vic), s 4 (now Crimes Act 1958 (Vic), s 568); Criminal Appeals Act 1924 (SA), s 6 (now Criminal Law Consolidation Act 1935 (SA), s 353); Criminal Code (Q), s 668E; The Criminal Code (WA), s 689 (now Criminal Appeals Act 2004 (WA), s 30); Criminal Code (Tas), s 402. 5 Seat of Government Supreme Court Act 1933 (Cth), s 52(a). This Act was renamed, by the Statute Law Revision Act 1950 (Cth), as the Australian Capital Territory Supreme Court Act 1933 (Cth) and by the A.C.T. Supreme Court (Transfer) Act 1992 (Cth) as the Supreme Court Act 1933 (ACT). Crennan involved "a question of fact alone or a question of mixed law and fact"6 or, with the leave of the Full Court of this Court, on any ground which involved a question of fact alone or a question of mixed law and fact, "or on any other ground which appears to the Full Court of the High Court to be a sufficient ground of appeal"7. These provisions, although amended in 19648, remained in substantially identical form until the establishment of the Federal Court of Australia. Section 24(1)(b) of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act") conferred jurisdiction on the Federal Court to hear and determine appeals from judgments of the Supreme Court of a Territory. A judgment was defined by s 4 of that Act to mean "a judgment, decree or order, whether final or interlocutory, or a sentence". That definition did not include a verdict of a jury. Nonetheless, s 28(1)(e) empowered the Federal Court to "set aside the verdict and judgment in a trial on indictment and order a verdict of not guilty or other appropriate verdict to be entered". Further, the Federal Court was given power9 to "grant a new trial in any case in which there has been a trial, either with or without a jury, on any ground upon which it is appropriate to grant a new trial". As was said in Duff v The Queen10, "a jurisdiction to entertain any appeal from a judgment entered upon a jury verdict would not be useful unless there were power to set aside that verdict". The provisions of s 28 of the Federal Court Act that have been mentioned supplied powers of the kind held in Musgrove v McDonald11 to be necessary to permit an appellate court to set aside the order of conviction entered in consequence of the jury's verdict12. Unlike the common form criminal appeal statute adopted in the States, the grounds upon which the appellate jurisdiction of the Federal Court was to be exercised in a criminal appeal were not specified in the Federal Court Act. The s 52(b). s 52(c). 8 Australian Capital Territory Supreme Court Act 1964 (Cth), s 8. s 28(1)(f). 10 (1979) 28 ALR 663 at 670. 11 (1905) 3 CLR 132. 12 cf Baume v The Commonwealth (1906) 4 CLR 97; R v Snow (1915) 20 CLR 315. Crennan appeal was not an appeal in the strict sense13. Not only did the powers to set aside a jury verdict14 and to grant a new trial15 extend beyond those which may be exercised on a strict appeal, the powers, to draw inferences of fact and to receive further evidence, conferred by s 27 of the Act, required the conclusion that the appeal was not an appeal in the strict sense. But whereas the common form criminal appeal statute speaks of setting aside the verdict of the jury on the ground "that it is unreasonable or cannot be supported having regard to the evidence", and setting aside the judgment of the court where "on any ground there was a miscarriage of justice", the Federal Court Act was silent about when the verdict of the jury, or the judgment entered in consequence of the jury's verdict, was to be set aside. In 1937, in Davies and Cody v The King16, this Court examined some important aspects of the operation of the common form criminal appeal statute. At that time, the Court of Criminal Appeal in England, unlike courts of criminal appeal in the Australian States, had no power to order a new trial. The English Court therefore did not have to distinguish between cases in which there had been some miscarriage at the trial which required the conclusion that the verdict could not stand and cases in which, even if there had been no miscarriage at trial, the evidence adduced would not have sufficed to support the verdict of guilt. Nonetheless, as this Court noticed in Davies and Cody17: "[f]rom the beginning, that court [the English Court of Criminal Appeal] has acted upon no narrow view of the cases covered by its duty to quash a conviction when it thinks that on any ground there was a miscarriage of justice". Rather, the Court went on to say18 in Davies and Cody: 13 Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 107; CDJ v VAJ (1998) 197 CLR 172; Allesch v Maunz (2000) 203 CLR 172; Western Australia v Ward (2002) 213 CLR 1. 14 s 28(1)(e). 15 s 28(1)(f). 16 (1937) 57 CLR 170. 17 (1937) 57 CLR 170 at 180. 18 (1937) 57 CLR 170 at 180. Crennan "it will set aside a conviction whenever it appears unjust or unsafe to allow the verdict to stand because some failure has occurred in observing the conditions which, in the court's view, are essential to a satisfactory trial, or because there is some feature of the case raising a substantial possibility that, either in the conclusion itself, or in the manner in which it has been reached, the jury may have been mistaken or misled". (emphasis added) The distinction between the conclusion reached by the jury and the manner by which that conclusion was reached is important. The common form criminal appeal statute was understood in Davies and Cody as reaching both kinds of case. It is against this background of the understanding of the common form criminal appeal statute that this Court's decision in Chamberlain v The Queen [No 2]19 must be approached. In that case, applications were made for special leave to appeal against the dismissal of appeals to the Full Court of the Federal Court of Australia against the conviction of the applicants, in the one case for murder and in the other for being an accessory after the fact to murder, which were convictions recorded in the Supreme Court of the Northern Territory. The central ground of the proposed appeals was that the convictions were unsafe and unsatisfactory. The Court granted special leave to appeal but, by majority, dismissed the appeals. In Chamberlain [No 2], all members of the Court proceeded on the footing that the Full Court of the Federal Court, in exercising its appellate jurisdiction on appeal against conviction in a Territory court for an indictable offence, was to undertake a task not relevantly different from the task of a court of criminal appeal acting under the common form criminal appeal statute. In particular, Gibbs CJ and Mason J noted20 that the power and duty of a court of criminal appeal, whose jurisdiction was governed by the common form criminal appeal statute, to set aside a verdict "if for any reason it considers that it would be unsafe or dangerous to allow the verdict to stand", was well established. Their Honours went on to say21 that "we cannot believe that the Parliament intended that the Federal Court should be more restricted in determining criminal appeals" and accordingly concluded22 that the Full Court of that Court, dealing with an 19 (1984) 153 CLR 521. 20 (1984) 153 CLR 521 at 531. 21 (1984) 153 CLR 521 at 532. 22 (1984) 153 CLR 521 at 532. Crennan appeal from a Territory court, "has the power and duty to set aside the verdict of a jury in a case where a miscarriage of justice has occurred, including a case where it would be unsafe or dangerous to allow the verdict to stand" (emphasis added). As subsequent cases revealed, expressing the content of the proposition that it would be "unsafe or dangerous" to allow a verdict to stand was not without difficulty. The difficulties focused upon the dictum of Barwick CJ in Ratten v "There is a miscarriage if on the material before the court of criminal appeal, which where no new evidence is produced will consist of the evidence given at the trial, the appellant is shown to be innocent, or if the court is of the opinion that there exists such a doubt as to his guilt that the verdict of guilty should not be allowed to stand. It is the reasonable doubt in the mind of the court which is the operative factor. It is of no practical consequence whether this is expressed as a doubt entertained by the court itself, or as a doubt which the court decides that any reasonable jury ought to entertain. If the court has a doubt, a reasonable jury should be of a like mind. But I see no need for any circumlocution; as I have said it is the doubt in the court's mind upon its review and assessment of the evidence which is the operative consideration." The difficulties were resolved in M v The Queen24 where the Court examined what had been said in a number of previous cases25 on the subject of a miscarriage because the jury's verdict was "unsafe or unsatisfactory". Four members of the Court in M (Mason CJ, Deane, Dawson and Toohey JJ) joined in stating four propositions in a form intended26 "to provide authoritative guidance to courts of criminal appeal". Their Honours said27: 23 (1974) 131 CLR 510 at 516. 24 (1994) 181 CLR 487. 25 Whitehorn v The Queen (1983) 152 CLR 657 at 660, 686-687; Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 532-534; Knight v The Queen (1992) 175 CLR 495 at 504-505, 511. 26 (1994) 181 CLR 487 at 495. 27 (1994) 181 CLR 487 at 494-495. Crennan the evidence, upon "It is only where a jury's advantage in seeing and hearing the evidence is capable of resolving a doubt experienced by a court of criminal appeal that the court may conclude that no miscarriage of justice occurred. That is to say, where the evidence lacks credibility for reasons which are not explained by the manner in which it was given, a reasonable doubt experienced by the court is a doubt which a reasonable jury ought to have experienced. itself, contains discrepancies, displays inadequacies, is tainted or otherwise lacks probative force in such a way as to lead the court of criminal appeal to conclude that, even making full allowance for the advantages enjoyed by the jury, there is a significant possibility that an innocent person has been convicted, then the court is bound to act and to set aside a verdict based upon that evidence28. In doing so, the court is not substituting trial by a court of appeal for trial by jury, for the ultimate question must always be whether the court thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty29." the record It was the exercise of the power to set aside the verdict of a jury where a miscarriage had occurred, in the sense described in M, that fell for consideration in Chamberlain [No 2]. In Conway v The Queen30, this Court examined some questions presented by the provisions of the Federal Court Act dealing with appeals to the Full Court of that Court from convictions on indictment in Territory courts. The central question in Conway was not whether the verdict of the jury should be set aside as unsafe or unsatisfactory. Rather, there having been misdirections at trial, was the conviction to be set aside regardless of the significance to be attached to those misdirections? If the common form criminal appeal statute had applied, the question would have been whether the proviso was engaged31. Those issues were resolved in Conway by reference32 to the content of rules that had developed at 28 Chamberlain [No 2] (1984) 153 CLR 521 at 618-619; Chidiac v The Queen (1991) 171 CLR 432 at 443-444. 29 Chidiac (1991) 171 CLR 432 at 443, 451, 458, 461-462. 30 (2002) 209 CLR 203. 31 See Weiss v The Queen (2005) 224 CLR 300. 32 (2002) 209 CLR 203 at 217-220 [32]-[39]. Crennan common law to govern applications for new trial33 as applied to a criminal appeal under s 52 of what was then the Australian Capital Territory Supreme Court Act 1933 in Stokes v The Queen34. In Stokes, the Court said35: "In the end we think the decision of the application must depend upon the general rule that if an error of law or a misdirection or the like occurring at the trial is of such a nature that it could not reasonably be supposed to have influenced the result a new trial need not be ordered. The rule applies, we think, in an appeal under s 52." But the questions that arise in the present case differ from those considered in Conway and in Stokes and are of the same kind as were considered in Chamberlain [No 2]. What was sought in this case, in the Court of Appeal of the Australian Capital Territory, was not an order for a new trial, it was an order quashing the verdict and conviction and, in its place, the recording of a verdict of acquittal, on the ground that it was not open to the jury to be satisfied beyond reasonable doubt of the guilt of the accused. That question fell to be determined under a different statutory framework from that considered in Chamberlain The legislation regulating Mr Hillier's appeal to the Court of Appeal of the Australian Capital Territory was contained in Pt 2A of the Supreme Court Act 1933. Those provisions were introduced into the 1933 Act by the Supreme Court Amendment Act 2001 (No 2) (ACT). That Act provided for the establishment of the Court of Appeal. Part 2A of the 1933 Act required36 the Court of Appeal to "have regard to the evidence given in the proceeding out of which the appeal arose", empowered37 the Court to draw inferences of fact from that evidence, and empowered38 the Court to receive further evidence in any of a number of ways. The powers given to the Court of Appeal by s 37O of the Act included powers 33 Balenzuela v De Gail (1959) 101 CLR 226 at 234-235. 34 (1960) 105 CLR 279. 35 (1960) 105 CLR 279 at 284-285. 36 s 37N(1). 37 s 37N(2). 38 s 37N(3). Crennan cast in terms not relevantly different from those that had previously been given to the Federal Court of Australia by the Federal Court Act in respect of appeals to that Court from convictions in Territory Supreme Courts. They included power to set aside the verdict and order in a trial on indictment and order a verdict of not guilty (or another verdict) to be entered39 and power to order a new trial, with or without jury, on any appropriate ground40. But as had been the case with the Federal Court Act, the provisions of Pt 2A, governing the jurisdiction of the Court of Appeal of the Australian Capital Territory in appeals from convictions for indictable offences, said nothing about the principles governing the exercise of the powers given by the Act. There is no persuasive reason to read the provisions of Pt 2A of the Act, spare as they are, as giving to the Court of Appeal of the Australian Capital Territory duties and powers in criminal appeals narrower than those described in Davies and Cody and held in Chamberlain [No 2] to apply in criminal appeals from Territories regulated by earlier, equally spare, legislative provisions. In particular, the duties and powers of the Court of Appeal given by Pt 2A of the 1933 Act extend to setting aside a conviction "whenever it appears unjust or unsafe to allow the verdict to stand because some failure has occurred in observing the conditions which, in the court's view, are essential to a satisfactory trial, or because there is some feature of the case raising a substantial possibility that, either in the conclusion itself, or in the manner in which it has been reached, the jury may have been mistaken or misled"41. The circumstances in which it might be concluded that there was a substantial possibility that "in the conclusion itself ... the jury may have been mistaken" are those identified in the joint reasons in M. To understand how the powers and duties of the Court of Appeal fell to be exercised in this case, it is necessary to begin by considering the case at trial. The case at trial Counsel for the prosecution, in his final address to the jury, identified three "major components" of the prosecution case against Mr Hillier. First, the prosecution submitted that Mr Hillier had the opportunity to kill Ms Hardwick. It was submitted that he was alone and his movements were unaccounted for on 39 s 37O(1)(d). 40 s 37O(1)(e). 41 Davies and Cody v The King (1937) 57 CLR 170 at 180. Crennan the night she died. Secondly, it was submitted that he had a motive to kill Ms Hardwick. It was submitted that the custody proceedings in the Family Court caused him "to decide to take the law into his own hands in order to ensure that he retained custody of the children". The third "major component" of the prosecution case was evidence said to demonstrate the presence of Mr Hillier's DNA on the pyjama top Ms Hardwick had been wearing at the time of her death. A fourth aspect of the evidence, concerning chemical injuries to Mr Hillier's fingertips and his explanations of how he came by these injuries, assumed significance at the trial. The prosecution submitted that it showed an attempt by Mr Hillier to conceal his involvement in the offence. It is convenient to examine the evidence led at trial following the pattern adopted by the prosecution. Opportunity As noted earlier, Ms Hardwick was found dead on the morning of 2 October 2002, a Wednesday. At about 9.00 pm on the previous Monday, 30 September, she had spoken by telephone with a friend. She did not attend work on Tuesday, 1 October and when she was not at work on the Wednesday, her parents went to her house to investigate. It was they who found her body. A pathologist called to give evidence at Mr Hillier's trial was unable to form an opinion about when Ms Hardwick had died. Mr Hillier had picked his children up from school on Friday, 27 September 2002. He arranged for the children to sleep at his father's house on the night of Monday, 30 September as he had an early morning business meeting on Tuesday, 1 October. There was no dispute at trial that he was alone on the night of Monday, 30 September. Ms Hardwick's parents, who found her body, had gained access to the house by unlocking the back door using keys their daughter had previously given them. Mr Hardwick described his wife, Ms Hardwick's mother, going to call the ambulance and then both going outside to wait for the emergency services to arrive. He said in evidence that "[a]t that stage" his wife had opened "the door", and she later gave evidence consistent with her having opened the front door of the house from inside. The only keys the parents had were keys to the back door of the house; there was no evidence that Mrs Hardwick used a key to open the front door to let the emergency services in. Expert evidence was given at the trial to the effect that the four sets of keys found in the house showed no sign of having been copied and that the locks on neither the front nor the back door showed any sign of forced entry or entry Crennan by manipulation. There was no evidence that Mr Hillier had possession of any key which would have given him access to the house. There was no evidence suggesting how the person who killed Ms Hardwick had obtained entry. As the evidence stood, one inference available was that Ms Hardwick had let her killer into the house. The evidence given by the parents about opening a door to wait for the emergency services was consistent with the possibility that the person who had killed Ms Hardwick left the house by that means, closing the door as he or she left. Motive Mr Hillier and Ms Hardwick had been actively engaged in litigation about the custody of their children for some time before Ms Hardwick was killed. At the time of her death, Ms Hardwick had obtained orders of the Family Court in her favour. Mr Hillier was dissatisfied with that outcome and had instituted an appeal against the orders. The interim arrangements that had been made for shared custody of the children had come to an end shortly before Ms Hardwick's death. The prosecution case at trial was that Mr Hillier had been taking very active steps towards the prosecution of that appeal until the end of the week before Ms Hardwick died. Those steps were not maintained on the Monday or Tuesday before the discovery of her body on the Wednesday morning. The DNA evidence Several tape lifts were taken from the pyjamas Ms Hardwick had been wearing at the time of her death and these lifts were subjected to DNA analysis. One tape lift, taken from the right-side flap of the collar of the pyjama top worn by Ms Hardwick, revealed a mixed DNA profile consistent with the profiles of Ms Hardwick and Mr Hillier. Three scientists gave evidence about the DNA analyses that were conducted. Each gave a different opinion about the probability that the contributors to the DNA found on the particular tape lift taken from the right-side flap of the collar of the pyjama top were Ms Hardwick and Mr Hillier rather than Ms Hardwick and another person chosen at random. Two witnesses, called by the prosecution, estimated the likelihood that the contributors were the deceased and Mr Hillier rather than the deceased and another person as very high. The third witness, a Dr McDonald, who was called by the defence at trial, considered that it was not possible to exclude Mr Hillier or the children as possible contributors to the DNA profile. He said that he regarded it as a "real possibility" that Mr Hillier's DNA had been transferred to the pyjama top without him ever touching the pyjamas, it having been transferred, innocently, by the children. Another tape lift was taken from an area of the collar of the pyjamas closer to Ms Hardwick's neck. All three experts gave evidence that there was an Crennan unidentified contributor to the DNA found at that point. They did not agree about whether Mr Hillier could be excluded as a possible contributor to that DNA. One expert, Ms Ristevska, concluded that he could not be excluded; another, Dr Roberts, concluded that there was no clear evidence either way; Dr McDonald concluded that there was evidence to exclude Mr Hillier. Damage to Mr Hillier's hands On 14 October 2002, police wrote to Mr Hillier's solicitors asking that he provide fingerprints and DNA samples. A court order was subsequently obtained that these be provided and on 1 November Mr Hillier attended to provide fingerprints. His fingers had been damaged and he told the officer taking the prints that the damage had been caused by chemicals he had been using while cleaning. Other evidence was given which the prosecution alleged showed Mr Hillier giving inconsistent or implausible accounts about the cause of damage to his fingers. The prosecution submitted that this evidence showed consciousness of guilt because, so it was submitted, the jury should conclude that the injuries to the fingers had been self-inflicted in order to impede the police investigation. The trial judge instructed the jury that the evidence could be used as pointing to Mr Hillier's guilt only if the jury were satisfied beyond reasonable doubt that what had happened to his fingers was a deliberate act on his part done because he knew the taking of his fingerprints could implicate him as the person who killed Ms Hardwick. The judge further directed the jury that even if they were satisfied of those matters, that evidence, standing by itself, could not prove Mr Hillier's guilt. No exception was taken to these instructions at trial or on appeal. The reasons of the Court of Appeal All members of the Court of Appeal referred to this Court's decision in M. Examination of the joint reasons of the majority of the Court of Appeal reveals, however, that the answer given by the majority to the question presented in M – whether "upon the whole of the evidence [at Mr Hillier's trial] it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty"42 – depended, in important respects, upon considering certain features of the circumstantial case sought to be made against Mr Hillier, in isolation from the evidence as a whole. In particular, the identification of facts which, when examined in isolation from other evidence led at the trial were consistent with Mr Hillier's innocence, was treated as requiring the conclusion that it was not open to the jury to be satisfied of Mr Hillier's guilt beyond reasonable doubt. 42 (1994) 181 CLR 487 at 494-495. Crennan The ultimate conclusion reached by the majority was expressed43 as being that "there is a real possibility that another person was responsible" for Ms Hardwick's death. That, of course, is no more or less than a conclusion that it was not established beyond reasonable doubt that Mr Hillier was responsible for her death. Five, perhaps six, matters were identified44 as yielding one or more alternative hypotheses consistent with Mr Hillier's innocence. Those matters included, some evidence about handcuffs found at were, or at Ms Hardwick's house and some marks on her bed-head, the bruises on her wrists, the DNA from an unknown person on her collar, some footprints observed in soot deposited by the fire in her bedroom and other evidence said45 to be consistent with the presence of a third person at the relevant time. least To understand the significance to be attached to at least some of these matters it is necessary to say something more about some aspects of the way in which the trial was conducted by the parties. In his final address at the trial, counsel for Mr Hillier expressly disavowed a suggestion that had emerged in the course of the trial that Ms Hardwick may have died as a result of a sexual misadventure. For present purposes, it does not matter how or why that suggestion had first emerged. Police examining Ms Hardwick's bedroom had seen a pair of handcuffs in her wardrobe. The handcuffs appeared to be in their original packaging. Police had investigated the possibility of death as a result of sexual misadventure, and evidence was given at the trial that there were some marks on the bed-head that were consistent with the use of handcuffs. But the point which counsel for Mr Hillier sought to make at trial was not that Ms Hardwick had met her death as the result of sexual misadventure, it was that there was a real possibility that there was "someone else involved in this case". Who that person might be, and why that person might have murdered Ms Hardwick, was not identified. The jury heard evidence from Ms Hardwick's boyfriend, Mr Michael Koppie, and from a person described as her "best friend", Ms Lesa Wells, as well as from Mr Hillier. Neither Mr Koppie nor Ms Wells knew of any possible involvement of Ms Hardwick with some other man. Mr Koppie knew nothing of the handcuffs, and knew nothing about certain pornographic videos found at the 43 [2005] ACTCA 48 at [106]. 44 [2005] ACTCA 48 at [99]. 45 [2005] ACTCA 48 at [99]. Crennan premises. There was, however, evidence of a third, unidentified contributor to DNA found on Ms Hardwick's pyjamas. It was in this setting that trial counsel for Mr Hillier, in his final address, said to the jury: "Now, why isn't there, on this evidence because of C1 [the tape lift revealing DNA of a third, unidentified person], a Mr X, who may or may not have been involved in bondage and discipline, who may or may not have been involved in porno videos or handcuffs. Just because there was handcuffs that were there, that doesn't mean they were the ones that were used, but the marks are consistent with handcuffs, and why would Ana tell Mick Koppie or Lesa if there was something going on of this sort that she didn't want anyone to know about? But why wouldn't the pattern have been that the front door was left open for Mr X to come in? There's a real possibility of that and even if it doesn't go to the scenario of bondage and handcuffs, the evidence of someone else on C1 is something of great significance in this case that the Crown can't counter and forms a foundation for you to acquit in this case." The majority in the Court of Appeal added several further features of the evidence, to the matters advanced by counsel for Mr Hillier in final address, to reach the conclusion that "there is a real possibility that another person was responsible" for Ms Hardwick's death46. Although no witness gave evidence to this effect, the majority concluded that the bruises found on Ms Hardwick's wrists, and some marks similar to fingermarks found on her thigh, "are all suggestive of a sexual relationship or incident with someone" other than Mr Hillier or Mr Koppie47, though when this might have happened was not stated. In addition, their Honours referred48 to evidence of fingerprints from an unidentified person which had been found on door handles in Ms Hardwick's house and also on an ashtray, cigarette packet and lighter found near her bed. And as noted earlier, their Honours also referred49 to evidence of footprints observed in the soot that had been deposited in the bedroom as a result of the fire that had taken place after Ms Hardwick's death and that were footprints "not those of firemen or of [Mr Hillier]". Their Honours recognised50, however, that 46 [2005] ACTCA 48 at [106]. 47 [2005] ACTCA 48 at [97]. 48 [2005] ACTCA 48 at [102]. 49 [2005] ACTCA 48 at [84]. 50 [2005] ACTCA 48 at [103]. Crennan the footprints may have been left by Ms Hardwick's father when he discovered her body and that the evidence which had been led at trial had not excluded that possibility. Finally, their Honours referred51 to evidence that hair had been found on Ms Hardwick's pyjamas and in the bed which had not been identified as being hair of Ms Hardwick or Mr Hillier. Their Honours said52 that "[a]t face value" these considerations provided "strong grounds for an inference that someone else may have entered the house and been responsible for [the] death" of Ms Hardwick. The majority went on to say53 that "there may be explanations for these matters that are compatible with the Crown case" but said54 that "potentially exculpatory inferences cannot be ignored merely because there may be other possible explanations for the relevant facts". This reasoning was erroneous. A circumstantial case The case against Mr Hillier was a circumstantial case. It has often been said that a jury cannot be satisfied beyond reasonable doubt on circumstantial evidence unless no other explanation than guilt is reasonably compatible with the circumstances55. It is of critical importance to recognise, however, that in considering a circumstantial case, all of the circumstances established by the evidence are to be considered and weighed in deciding whether there is an inference consistent with innocence reasonably open on the evidence56. The force of that proposition is well illustrated by the decision in Plomp v The Queen57. There, this Court held that the motive of the accused to murder his 51 [2005] ACTCA 48 at [102]. 52 [2005] ACTCA 48 at [102]. 53 [2005] ACTCA 48 at [103]. 54 [2005] ACTCA 48 at [104]. 55 See, for example, Martin v Osborne (1936) 55 CLR 367 at 375; Plomp v The Queen (1963) 110 CLR 234 at 243 per Dixon CJ. 56 Shepherd v The Queen (1990) 170 CLR 573 at 579 per Dawson J. 57 (1963) 110 CLR 234. Crennan wife (he having proposed marriage to another woman on the representation of his being a widower) was one circumstance to be taken into account in deciding whether he had killed his wife while they were surfing alone together, at dusk, in apparently good conditions. His application for special leave to appeal against conviction was refused upon the basis that it was open to the jury to be satisfied beyond reasonable doubt that he had murdered his wife. Often enough, in a circumstantial case, there will be evidence of matters which, looked at in isolation from other evidence, would yield an inference compatible with the innocence of the accused. But neither at trial, nor on appeal, is a circumstantial case to be considered piecemeal. As Gibbs CJ and Mason J said in Chamberlain [No 2]58: "At the end of the trial the jury must consider all the evidence, and in doing so they may find that one piece of evidence resolves their doubts as to another. For example, the jury, considering the evidence of one witness by itself, may doubt whether it is truthful, but other evidence may provide corroboration, and when the jury considers the evidence as a whole they may decide that the witness should be believed. Again, the quality of evidence of identification may be poor, but other evidence may support its correctness; in such a case the jury should not be told to look at the evidence of each witness 'separately in, so to speak, a hermetically sealed compartment'; they should consider the accumulation of the evidence: cf Weeder v The Queen59. Similarly, in a case depending on circumstantial evidence, the jury should not reject one circumstance because, considered alone, no inference of guilt can be drawn from it. It is well established that the jury must consider 'the weight which is to be given to the united force of all the circumstances put together': per Lord Cairns, in Belhaven and Stenton Peerage60, cited in Reg v Van Beelen61; and see Thomas v The Queen62 and cases there cited." 58 (1984) 153 CLR 521 at 535. 59 (1980) 71 Cr App R 228 at 231. 60 (1875) 1 App Cas 278 at 279. 61 (1973) 4 SASR 353 at 373. 62 [1972] NZLR 34 at 37-38, 40. Crennan And as Dixon CJ said63 in Plomp: "All the circumstances of the case must be weighed in judging whether there is evidence upon which a jury may reasonably be satisfied beyond reasonable doubt of the commission of the crime charged. There may be many cases where it is extremely dangerous to rely heavily on the existence of a motive, where an unexplained death or disappearance of a person is not otherwise proved to be attributable to the accused; but all such considerations must be dealt with on the facts of the particular case. I cannot think, however, that in a case where the prosecution is based on circumstantial evidence any part of the circumstances can be put on one side as relating to motive only and therefore not to be weighed as part of the proofs of what was done." (emphasis added) In the present case, there was evidence (such as the evidence of unidentified DNA on the pyjama top) which was consistent with Mr Hillier's innocence. But the question for the Court of Appeal was whether, on the whole of the evidence, it was open to the jury to be persuaded beyond reasonable doubt that he was guilty. In that regard it is important to recognise that Mr Hillier gave evidence at his trial. The Court of Appeal made no reference to this evidence when considering whether the jury's verdict should be set aside. One question which the jury was bound to consider was what they made of Mr Hillier's evidence. Did they believe that Mr Hillier may have been telling the truth when he denied responsibility for Ms Hardwick's death? Or were they, as the verdict revealed, positively persuaded on a consideration of all of the evidence (including his) that he was not? None of the matters mentioned by the majority in the Court of Appeal as permitting an than Mr Hillier caused someone other Ms Hardwick's death was said to require that conclusion. (As the majority said64, "[T]here may be explanations for these matters that are compatible with the Crown case.") And as the majority also said65: inference that 63 (1963) 110 CLR 234 at 242. 64 [2005] ACTCA 48 at [103]. 65 [2005] ACTCA 48 at [105]. Crennan "[A]spects of the evidence, particularly that relating to motive, timing and DNA extracted from the 15C7 tape lift, provided ample grounds for grave suspicion that [Mr Hillier] may have murdered [Ms Hardwick]." But the conclusion then reached66 (that it was "impossible ... to conclude that it was open to the jury to find that the guilt of [Mr Hillier] had been proven beyond reasonable doubt") was said67 to depend upon: "other aspects of the evidence, such as that relating to the unusual features of the injuries she suffered and the apparent use of the handcuffs [which] make it difficult to reconstruct what actually occurred on the night in question and the evidence suggesting that another person may have been present at the time of her death". (emphasis added) Assuming, as one must, that these "other aspects of the evidence" were those identified earlier in their Honours' reasons, it by no means followed that it was not open to the jury to conclude that guilt had been proved beyond reasonable doubt. The asserted conclusion would follow only if the significance to be given to the "other aspects of the evidence" was assessed separately from the rest of the evidence. The reasoning of the majority was, therefore, erroneous. Conclusion and orders It has been said that this Court will grant special leave to the prosecution to appeal only in very exceptional circumstances68. While it is clear that the Court has several times said it is, and should be, reluctant to grant special leave to the prosecution, it is not necessary to consider the exact content of the principle that underpins that reluctance. Where, as here, the verdict of a jury has been quashed by an intermediate court of appeal, and it is demonstrated, as here, that that court reached its order by a path that was not in accordance with proper principle, it is in the interests of the administration of justice, both generally and in this particular case, that the error be corrected. Because the error that has been made will require that the whole case be reviewed to decide whether "upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was 66 [2005] ACTCA 48 at [105]. 67 [2005] ACTCA 48 at [105]. 68 R v Wilkes (1948) 77 CLR 511 at 516-517; R v Lee (1950) 82 CLR 133 at 138; R v Benz (1989) 168 CLR 110 at 111, 119-120, 131-132, 146. Crennan guilty"69, the interests of justice will best be served by granting special leave to appeal, treating the appeal as instituted and heard instanter and allowed, setting aside the order of the Court of Appeal, and remitting the matter to the Court of Appeal for rehearing. Upon a rehearing by a differently constituted Court of Appeal, it will be open to the parties to canvass the whole of the evidence at trial to an extent greater than reasonably possible in this Court, and to do that in light of this Court's identification of the error made by the majority of the Court of Appeal in the judgment which gives rise to this appeal. We would therefore make the following orders: Grant special leave to appeal. Treat the appeal as instituted and heard instanter and allowed. Set aside the orders of the Court of Appeal of the Australian Capital Territory made on 15 December 2005 and remit the matter to that Court for rehearing. 69 M v The Queen (1994) 181 CLR 487 at 494-495. Callinan CALLINAN J. I agree with Gummow, Hayne and Crennan JJ for the reasons that their Honours give, that special leave should be granted, that the appeal should be allowed and that the orders of the Court of Appeal of the Supreme Court of the Australian Capital Territory should be set aside. Instead, however, of remitting the appeal for rehearing by that Court, I would order a retrial. The circumstantial evidence referred to in the joint judgment, and upon which the applicant relied, included a spate of telephone calls proved to have been made by the respondent in the week before Ana Hardwick died and their immediate cessation after it. No reference was made to these matters in the applicant's opening. A written record of the calls made by the respondent was introduced into evidence without any specific commentary or explanation during the applicant's case. When the respondent gave evidence, he was cross-examined about them, but no particular imputation was directly made to him of the kind that was forcefully pressed in the applicant's closing speech to the jury. I would read the cross-examination, as do Gummow, Hayne and Crennan JJ70, as than secret and guilty knowledge of focussing upon motive, Ms Hardwick's murder, because of its reference to the respondent's inability to fund an appeal, and realization that his prospects of success in it were poor. rather The relevant part of the cross-examination should be set out: "All right. Well, the term's probably a bit extravagant but what you did during that week was to make a number of phone calls to various doctors, psychologists, lawyers and so forth for the purposes of strapping up your appeal? --- Well, there was a process I had to go through to - to get through the appeal and I needed the assistance of these professional people and I had to search for who was the most appropriate. I won't take you through them again because Mr Purnell drew your attention to them on the chart, but you rang a number of doctors during that week? --- Yes. Starting from The Royal Australian and New Zealand College of Psychiatrists, I think it was? --- Yes. Looking for names of psychiatrists in the field, were you? --- Looking for - yes, I suppose, yes. And in ringing some psychiatrists? --- Yes. Dr Nielsen was a psychiatrist, is he? --- I believe so. Callinan Was he from the Paddington Practice? --- I believe that's where he practised from, yes. Were you generally aware of the need to produce some evidence of that type if your appeal was to have any prospects of success? --- I'm sorry, the type of? Psychiatrists? --- Well, I was looking for something so that could possibly support us if the fresh evidence was allowed. Well, you'd need to negative the effects of Antoinette Harmer's report, would you not? --- Yes, probably a fair comment. Had you also looked for new solicitors that week? --- No. One of the calls on the 23rd is to Ray Swift and Associates, Solicitors, do you remember ringing them? --- Yes. Are they your current lawyers? --- No. Lawyers who'd been representing you in the Family Court? --- No, they previously were the ones who arranged Deed of Agreement [sic]. Sorry, what? --- They arranged the deed of agreement for me. And is Ms Moutrage from that firm? --- Yes, she's the lawyer that actually handles my matter, or handled my matter. But not the lawyers who acted for you at the hearing in the Family Court? --- No, she started off in the Family Court. You also spoke to Christine Paynter during that week, did you not? --- Yes. And discussed with her the prospects of her being able to provide some sort of report which would assist your appeal? --- There was two things there, one to see how she could help me, and the second was to see - reading the documentation and Antoinette Harmer and her - Antoinette's handwritten notes to see if she could help in any way with the appeal. When you say help you, do you mean help you with some counselling? --- Yes. Did you feel that you needed that? --- Well, maybe. She probably thought it - well, that's why she suggested - she thought it would be a good thing. And what did you think? --- I agreed. That's why we made a further appointment. Callinan And why did you think you needed some counselling? --- Just to help me think things through and just get around things, help me be comfortable with things. What sort of things? --- Just the way I was feeling that, you know, this had happened and what was my next step, and do I take the stay matter back, and so we discussed a range of things. Well, she wasn't a lawyer, was she? So she wasn't there to give you legal advice? --- No, no, no. How were you feeling? --- Upset. Angry? --- I suppose at times, yes. Is that why you wanted some assistance from her to help you with your anger? --- Well, initially I hadn't thought about myself, I was thinking about the children, but it was her suggestion that she does it, I don't know, maybe she was - maybe she thought that would help me, and maybe she thought that was good for her practice. Did she give you some counselling? --- Yes. What day was that? --- I think it was around the 26th or thereabouts we had a session. I think those names were drawn to your attention this morning, but the Canberra Psychiatry Group. Is that somebody who you contacted for assistance? --- Yes. Lee Leonard, a psychiatrist from Elizabeth Street in the city, Sydney, presumably? --- Yes, that was one of the names I'd received from the association. And the others, I think, Mr Purnell mentioned this morning, Dr Waters, Dr Potter, Dr Dureck? --- Yes, they're all people that I'd received from the societies to contact. Silk Chambers was somebody who contacted you - Silk Chambers Pty Ltd, was there a lawyer from there? --- They're - that's a chambers for counsel. Right. Had you been looking for counsel? --- No, no, they were doing some work for me with the appeal. Is it fair to say that you spent a fair bit of your time that week, that is the week after you received the news on 20 September, exploring options for Callinan the appeal - or an appeal? --- No, I hadn't explored options for the appeal. I was exploring the next stages of the appeal. And did that include the sort of evidence and other assistance that you might need to run an appeal? --- Yes. Did it become clear to you that money was going to be a major issue in relation to mounting an appeal of the type that was necessary? --- No, my indications from my legal representative, Mr Lardner, was that I had more than sufficient funds to run an appeal. Was it correct that Legal Aid was no longer available to you? --- I never applied for an appeal. So any appeal would be privately funded? --- Yes. Did Mr Lardner tell you how much money would be involved in mounting an appeal? --- Yes. How much was that? --- He said somewhere between $8,000 to $20,000. Before you abandoned the appeal, as you said, this afternoon, how much money had you spent? --- On the appeal? Yes? --- Less than $2,000 at that stage. Did you pay Mr Lardner for that? --- Sorry, are you talking about prior to Ana's - - - No, I'm talking about when you finally abandoned it? --- Okay, sorry, no, I'd probably spent about $4,500 to $5,000. You paid Mr Lardner that? --- Well, it was not only to Mr Lardner, there was various parties and things that needed to be done along the way, such as acquiring the transcripts. Have you paid Mr Lardner? --- Yes, I did pay Mr Lardner for that, yes. But you're in dispute with Mr Lardner over legal fees, aren't you? --- Not for the issue of the appeal. Was it the fact by the end of the week, when you'd made these various efforts in relation to the appeal, that you were beginning to despair of your prospects on appeal? --- No. Did you take the view that your chances of overturning the decision were becoming low? --- No. Callinan Did you realise that the findings of fact made by the judge, Purdy J, the chances of getting the decision overturned were going to be remote? --- My advice was we had a better than not success [sic]. HIS HONOUR: Better than not? MR PURNELL: Better than not. MR HASTINGS: Did you tell Mr Polkinghorne that the proceedings had not gone well? --- Well, Mr Polkinghorne on many occasions asked me how things were going, and that was possibly one of the discussions or questions he asked me. Did you tell him that your wife had lied and got away with it? --- Probably not in those words, but yes. Did you tell Daphne Hillier that you'd had to tell Daniel that you couldn't take it any further because you'd run out of money? --- No. Did you hear her say that in evidence? --- I did actually, yes. I see. What was she mistaken was she? --- Well I'm not - not exactly sure what she was talking about, or what she was going to, but - - - Did you ever have a conversation with her about whether you'd be able to take the matter any further? --- I rarely had conversations with Daphne. Did you ever have a conversation with her when you told her something to the effect that you wouldn't be able to take it any further? --- No, I would've been discussing it with my father. Well, was there an occasion when she - did you discuss it with your father and tell him that you'd had to tell Daniel that you couldn't take it any further because you'd run out of money? --- No. Had you run out of money? --- No. Was that the point at which you decided you should take the law into your own hands? --- No. The end of that week, had you decided that there was little prospect of you going through the Family Court in order to regain custody of your children? --- No. Had you decided that you'd have to take the law into your own hands? --- Did you go there on the Monday night and strangle Ana? --- No." In his closing speech the applicant said this: Callinan "And what's clear, we suggest, from the phone records and from what the accused himself has said, that come the next week, on Monday the 23rd, he embarked upon a very vigorous program of proceeding with his appeal. And you will remember the telephone chart identifies the lawyers and the psychiatrists and the doctors whom he rang or spoke to quite constantly during the week commencing 23 September. But in the course of all that, problems started to emerge, we suggest, particularly in relation to money. Whilst he asserts that he had a redraw facility which provided him with the funding for the appeal, the fact is that the evidence of Daphne Hillier was that he said to her that he'd had to tell Daniel that he couldn't take it any further because he'd run out of money and was upset and the evidence of the psychologist, Christine Paynter, was that they'd had some discussions about the funding and that the accused had indicated that he was no longer able to get legal aid as a result of which they'd have to talk about money. So that even though the accused might assert that he had a redraw facility, he'd already drawn on it to some significant extent and was faced with more substantial charges if he was going to run the appeal in the way that he thought he might. And what we suggest is that over the weekend of 28 and 29 September it's highly likely that the realisation set in for the accused that this was all getting too hard to run the appeal. The evidence was against him. The psychologist who'd given evidence was against him. The judge had been against him. He was running out of money. And some time over that weekend he decided to take the law into his own hands and that night kill the competitor for the custody of his children. And the fact which I suggest very compelling [sic] demonstrates that is if you go [sic] the phone records on the Monday, all the calls of the previous week to the psychiatrist, the doctors and the lawyers suddenly stop. And if you go to the Tuesday, 1 October, he doesn't make one single call to any lawyer or any doctor or anybody else. There's one incoming call which is unsuccessful from a person he can't remember, but it's quite marked, we suggest, when you look at the week of 23 September, and he's making up to a dozen calls a day to various people including doctors and psychiatrists and lawyers, but then in the week commencing 30 September there are no such calls apart from a couple incoming and then when you get to 1 October, the day after the probable death of the deceased, he makes absolutely no calls at all. Callinan So it just seems, we submit however, that when you look at the pattern of phone calls, it's just quite consistent with the prosecution case that over the weekend of the 28th and 29th he suddenly realised that he was in real trouble in the Family Court and at that point decided to take the law into his own hands and on the night of 30 September, went to the home of the deceased and strangled her. And 1 October's significant as well because on the evidence, he didn't know of the death of Ana until after the police contacted him and you can pick up that call which is at 2 o'clock on 2 October whereupon he went to Tuggeranong Police Station for the first time and learned of her death so that otherwise of course he would have no reason for taking no further action in his appeal if he knew she was deceased because he didn't find out that she was dead until, on the police evidence anyway, he was told at Tuggeranong Police Station sometime after 2 o'clock. So all of that we suggest provides a very neat and concise and logical motive which fits very squarely with the prosecution's circumstantial case in the broad terms that I have outlined." The majority in the Court of Appeal summarized the submissions made by the applicant about the calls in his address, and took the view, erroneously in my opinion71, that they could not be circumstantially evidentiary of the respondent's guilt. The criticism of the way in which that evidence was sought to be used did, however, have validity. They said this of it72: "The Crown also referred to evidence that on the weekend of Friday, 27 September 2002, the [respondent] had made numerous phone calls concerning his pending appeal from the custody decision. The learned Crown prosecutor suggested that this evidence was very compelling because the phone records for the following Monday and Tuesday showed that the calls that the [respondent] had made during the previous week to a psychiatrist, doctors and lawyers 'suddenly stopped'. Counsel asserted that this was 'quite remarkable' and said that it was consistent with the prosecution case that, over the weekend of 28 and 29 September 2002, the [respondent] had suddenly realised that he was 'in real trouble in the Family Court' and decided to take the law into his own hands by strangling the deceased. Despite the somewhat forceful language with which these submissions were apparently delivered it is, with respect, difficult to see how any 71 cf Plomp v The Queen (1963) 110 CLR 234 at 242 per Dixon CJ. 72 Hillier v The Queen [2005] ACTCA 48 at [27]-[29] per Higgins CJ and Crispin P. Callinan substantial support for the Crown case could have been fairly derived from the fact that a spate of telephone calls made during the previous week had not been maintained after the weekend. As previously mentioned, an order effectively lifting the stay of proceedings in relation to the residence orders had been made on Friday, 20 September 2002. It was entirely understandable that a father, who was distressed by an order of this nature and believed that his children were also very distressed by it, might make a flurry of enquiries during the next few working days with a view to ascertaining whether anything could be done to prevent the orders appealed from coming into effect. There was no reason to suppose that he would have continued to make numerous telephone calls about the appeal once those enquiries had been completed. Furthermore, if it had been intended to attach such a sinister connotation to the pattern of calls, then the issue should have been raised with the [respondent] in cross-examination so that he could have had an opportunity of providing an explanation in respect of it. Yet this was not done. The potential unfairness of raising the matter in the Crown's closing address without having given the accused an opportunity to deal with the matter in cross-examination was compounded by the fact that it had not been mentioned by the Crown when opening the case. Whilst the telephone records had been tendered, nothing apparently occurred during the course of the trial to alert the accused to the possibility that they might be used as anything other than evidence of the extent of his feelings during the previous week. There appears to have been no forewarning of any suggestion that the [respondent] may have stopped making the calls because he knew that the deceased was already dead and that further action on the appeal would be unnecessary." I would not wish to be unduly critical of the prosecutor in proceeding as he did. As evidence is adduced and cross-examination conducted, pieces of evidence can come to assume different complexions, or a higher degree of significance than, or even a different relevance from what may have earlier, even earlier in the trial itself, been foreseen. That may explain what occurred here. Nonetheless, the absence of a direct and unmistakeable imputation of guilt demonstrated by the sudden cessation of telephone calls to the persons to whom they had regularly recently been made, is of consequence to the order that should be made here. In Shepherd v The Queen73, Dawson J said this of evidence in a circumstantial case74: 73 (1990) 170 CLR 573. 74 (1990) 170 CLR 573 at 579. Callinan "Circumstantial evidence is evidence of a basic fact or facts from which the jury is asked to infer a further fact or facts. It is traditionally contrasted with direct or testimonial evidence, which is the evidence of a person who witnessed the event sought to be proved. The inference which the jury may actually be asked to make in a case turning upon circumstantial evidence may simply be that of the guilt of the accused. However, in most, if not all, cases, that ultimate inference must be drawn from some intermediate factual conclusion, whether identified expressly or not. Proof of an intermediate fact will depend upon the evidence, usually a body of individual items of evidence, and it may itself be a matter of inference. More than one intermediate fact may be identifiable; indeed the number will depend to some extent upon how minutely the elements of the crime in question are dissected, bearing in mind that the ultimate burden which lies upon the prosecution is the proof of those elements. For example, with most crimes it is a necessary fact that the accused was present when the crime was committed. But it may be possible for a jury to conclude that the accused was guilty as a matter of inference beyond reasonable doubt from evidence of opportunity, capacity and motive without expressly identifying the intermediate fact that the accused was present when the crime was committed. On the other hand, it may sometimes be necessary or desirable to identify those intermediate facts which constitute indispensable links in a chain of reasoning towards an inference of guilt. Not every possible intermediate conclusion of fact will be of that character. If it is appropriate to identify an intermediate fact as indispensable it may well be appropriate to tell the jury that that fact must be found beyond reasonable doubt before the ultimate inference may be drawn. But where – to use the metaphor referred to by Wigmore on Evidence, vol 9 (Chadbourn rev 1981), par 2497, pp 412-414 – the evidence consists of strands in a cable rather than links in a chain, it will not be appropriate to give such a warning. It should not be given in any event where it would be unnecessary or confusing to do so. It will generally be sufficient to tell the jury that the guilt of the accused must be established beyond reasonable doubt and, where it is helpful to do so, to tell them that they must entertain such a doubt where any other inference consistent with innocence is reasonably open on the evidence." I would use somewhat different or additional circumstance, that is, a relevant fact, proved, but not of itself alone directly probative of guilt, must have some weight and significance to qualify for admissibility. Some circumstances however will be of greater or lesser weight or significance than others. The required degree of satisfaction of the terminology. Callinan adjudicative mind of the jury as to the veracity of such a circumstance and fact is likely to vary according to its significance to the case overall75. I do not myself therefore see the division as being one between intermediate facts and ultimate facts, or inferences of fact. None of this is in any way to detract from this fundamental proposition: a case, whether circumstantial or not, against an accused must be proved beyond reasonable doubt, which means that each element of it but not necessarily every circumstance of relevance to guilt, must be so proved, and a jury instructed accordingly. Whilst I agree that the Court of Appeal failed to undertake the appellate review in the way that the other members of this Court say that it should have, as I have foreshadowed, I think that there is force in the observations of the majority of the former regarding the possibility of prejudice to the respondent lying in the denial to him of an opportunity to deal in cross-examination with the specific imputation about the telephone calls and their sudden cessation strongly pressed in final address. This was a case in which compliance with the rule in Browne v Dunn76 was required. In saying that, I do not wish to depart from anything said about that rule by Gummow and Kirby JJ and myself in MWJ v The Queen77. The sorts of measures to cure non-compliance with the rule to which reference was made there, could not satisfactorily be adopted in this trial. It would be quite inappropriate to interrupt a final address, or await its conclusion and then to recall an accused to put to him an imputation already made to the jury. It would be quite unfair to an accused to proceed in that way. The present position can be summarized in this way. The respondent has been convicted by a jury. The case was an entirely circumstantial one. The evidence was such however that it would not be possible to say that the jury could or should not have convicted the respondent. As to this, and subject to what follows, I agree with the reasoning of Spender J in the Court of Appeal, particularly with respect to the force and relevance of the DNA evidence and the trial judge's directions concerning it. There remains however the fact that a significant irregularity occurred in the conduct of the trial. That irregularity was the subject of submissions in the Court of Appeal and in this Court. The Court of Appeal by majority thought the irregularity notable and important and so do I. That Court after its review, albeit not undertaken as it should have been, quashed the conviction. This Court, conscious of the gravity of allowing an appeal against acquittal, has been bound to uphold the appeal from the Court of Appeal. This Court has, in doing that, necessarily itself reviewed the substance of the 75 cf Rejfek v McElroy (1965) 112 CLR 517. 77 (2005) 80 ALJR 329; 222 ALR 436. Callinan case. In any event, enough has appeared to show that a material irregularity in the conduct of the trial occurred. This Court is, in my view therefore, in as good a position to decide what should follow, as a Court of Appeal differently constituted to which the majority in this Court would remit the appeal. No court, and in particular no jury yet, has had the benefit of a response by the accused to the imputation made against him in address, but not in cross-examination. His response to that in the context of the evidence as a whole, particularly in an entirely circumstantial case, is a matter quintessentially for a jury. In my view therefore, an order for a retrial is right and inevitable. This Court may, and I think, should so order. There are further interests involved which favour such an order, the public interest and the personal interest of the respondent in the early resolution of the case, and the avoidance of the expense of a further hearing in the Court of Appeal. I would accordingly grant special leave to appeal, allow the appeal and order a retrial. It is the combination of the matters to which I have referred that dictates for me the course that should follow. It is that combination also which makes this case special, and such that it warrants the grant of special leave. |
HIGH COURT OF AUSTRALIA APPELLANT AND NATIONWIDE NEWS PTY LIMITED RESPONDENT Rogers v Nationwide News Pty Limited [2003] HCA 52 11 September 2003 1. Appeal allowed with costs. ORDER 2. Set aside the orders made by the Court of Appeal of the Supreme Court of New South Wales on 15 March 2002 and, in lieu thereof, order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: T K Tobin QC with A S Martin SC and A A Henskens for the appellant (instructed by Harrington Maguire & O'Brien) B W Walker SC with R G McHugh for the respondent (instructed by Gallagher De Reszke) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Rogers v Nationwide News Pty Limited Defamation – Defences – Fair protected report of court proceedings – Later publication of protected report or fair extract – Whether court officer making available reasons for judgment publishes a protected report of court's proceedings – Whether court or court officer a "person" – Whether newspaper article was a later publication of a fair extract, fair abstract or fair summary of a protected report – Whether publisher had knowledge which should make him or her aware that publication not fair – Corporate knowledge of publisher – Defamation Act 1974 (NSW), ss 24(3), 24(4). Defamation – Defences – Qualified privilege – Reasonableness of conduct of publisher – Defamation Act 1974 (NSW), s 22. Defamation – Damages – Comparison with other awards of damages for defamation – Comparison with awards of damages for personal injuries – Defamation Act 1974 (NSW), s 46A(2). Words and phrases – "protected report", "fair extract or fair abstract from, or fair summary", "manifestly excessive". Defamation Act 1974 (NSW), ss 22, 24(3), 24(4), 46A(2). GLEESON CJ AND GUMMOW J. The appellant, a prominent eye surgeon, was defamed in an article published by the respondent on the front page, and page two, of the Daily Telegraph of 22 August 1996. He sued, and was awarded $250,000 damages in the District Court of New South Wales. By majority (Stein JA and Grove J, Mason P dissenting)1 the Court of Appeal allowed an appeal, holding that the publisher had made out a defence under s 24 of the Defamation Act 1974 (NSW) ("the Act"), which protects fair reports of certain proceedings, including court proceedings. All members of the Court of Appeal considered that the damages were excessive. The story which attracted the respondent's attention involved two related, but different, court cases. It is convenient to explain those cases, which formed the background to the publication. The two court cases The first is a famous case in the law of professional negligence. It received wide publicity in the legal and medical professions, and was extensively reported in the general press, including publications of the respondent. The appellant was sued for damages by a patient, Mrs Whitaker. The case ultimately came to this Court under the name Rogers v Whitaker2. The importance of the case turned upon the aspect of the appellant's conduct which was held to involve a breach of his duty of care. Mrs Whitaker, who for many years had been almost totally blind in her right eye, consulted the appellant, who advised surgery on that eye. After the operation, she lost the sight of her left eye, without any improvement to the right eye. This was not the result of any lack of care or skill in the performance of the operation. The procedure that was undertaken involved an inherent risk, a risk said to occur only once in approximately 14,000 such procedures, of a development of sympathetic ophthalmia3. The appellant had failed to warn Mrs Whitaker of that possibility. He argued that, in so doing, he was acting in accordance with the standards of the medical profession generally; but the Court held that those standards were not determinative, that he should have warned the patient, and that he was liable to compensate her. That brief recital of the facts of Rogers v Whitaker ("the professional negligence case") is sufficient to demonstrate that it would be a serious misrepresentation of the case, and defamatory of the appellant, to say that his 1 Nationwide News Pty Ltd v Rogers [2002] NSWCA 71. (1992) 175 CLR 479. (1992) 175 CLR 479 at 482. negligent surgery had blinded Mrs Whitaker. He was found liable to pay her damages because he had failed to warn her of a remote risk inherent in the surgical procedure he recommended and performed. There was no finding that it was negligent to recommend the procedure, or that there was negligence in the manner in which it was performed. The second case is Whitaker v Commissioner of Taxation4 ("the tax case"). The judgment which Mrs Whitaker obtained against the appellant included substantial amounts for interest on her damages, covering the periods up to and after the date of judgment. It is not presently material to examine the statutory provisions under which those entitlements to interest arose. There was a dispute between Mrs Whitaker and the revenue authorities as to whether the amounts in question formed part of her assessable income. The issue came before Hill J in the Federal Court, and was decided adversely to Mrs Whitaker. That decision was the immediate occasion of the article in the Daily Telegraph, which appeared on the day after Hill J delivered his reasons for judgment. The publication The question whether interest payable on an award of damages constitutes assessable income raises a technical issue of revenue law. What attracted the attention of the respondent appears to have been the blindness of the taxpayer. Most of the front page was taken up with the words: "Blind Justice", and a photograph of Mrs Whitaker walking with the assistance of a white cane. The article was headed: "Scrooge taxman wins legal battle to take $168,000 from a woman robbed of sight by a surgeon's negligence". The reference to the "Scrooge taxman" seems to imply that the Commissioner of Taxation has a choice as to whether to collect tax from disabled taxpayers. But it is what was said about the circumstances of Mrs Whitaker's disability that is of present concern. The first paragraph of the article said she was "blinded by a surgeon's negligence". The article also stated that she was "[b]linded during an eye operation", and that she "lost sight in both eyes after an operation involving corneal grafts performed by a prominent eye surgeon". In the District Court it was not in dispute that the article conveyed the imputation that the appellant had blinded Mrs Whitaker by negligently and carelessly carrying out an eye operation on her. Plainly, the imputation was defamatory. Apart from the matter of damages, the only issue in this Court is whether the respondent can make out a defence under s 24 of the Act, or, perhaps, s 22. (1996) 63 FCR 1. The section 24 defence This defence failed at first instance, but was accepted by a majority of the Court of Appeal. However, there seems to have been some confusion as to exactly what the defence was. Section 24 provides: In this section, protected report means a report of proceedings specified in clause 2 of Schedule 2 as proceedings for the purposes of this definition. There is a defence for the publication of a fair protected report. (3) Where a protected report is published by any person, there is a defence for a later publication by another person of the protected report or a copy of the protected report, or of a fair extract or fair abstract from, or fair summary of, the protected report, if the second person does not, at the time of the later publication, have knowledge which should make him or her aware that the protected report is not fair. (4) Where material purporting to be a protected report is published by any person, there is a defence for a later publication by another person of the material or a copy of the material or of a fair extract or fair abstract from, or fair summary of, the material, if the second person does not, at the time of the later publication, have knowledge which should make him or her aware that the material is not a protected report or is not fair." Clause 2 of Sched 2 covers public proceedings of a court. The proceedings in both the professional negligence case and the tax case fall into that category. The Daily Telegraph article made reference to both cases, and contained some information about both of them. It contained a good deal of other material as well, including commentary by Mrs Whitaker and others upon the merits of the decision in the tax case. There was a dispute as to whether the article, in whole or in part, constituted a report of proceedings in either case. That dispute is to be related to the portions of the article that conveyed the defamatory imputation stated above. That is a matter to which it will be necessary to return. The reasons for judgment of Hill J in the tax case contained only a very brief reference to the facts of the professional negligence case. That is understandable. Hill J was only concerned to recite so much of the facts about how Mrs Whitaker became entitled to the interest in question as was necessary for an understanding of the legal issue he was to decide, which was whether she had derived assessable income. The precise nature of the conduct of the appellant that had exposed him to liability to Mrs Whitaker was immaterial for that purpose, and Hill J did not attempt to describe it in any detail. He simply recorded that Mrs Whitaker sought the appellant's services, that she was operated on by him, and that she ultimately lost sight in both eyes5. That was accurate, so far as it went. It was incomplete as an account of the facts of the professional negligence case, but Hill J was not setting out to explain anything more about that case than was necessary for an understanding of the issues to be decided in the tax case. The journalist who wrote the article in the Daily Telegraph gave evidence that she based her understanding of the facts of the professional negligence case solely upon what she read in the reasons of Hill J in the tax case. She acknowledged that the facts of the professional negligence case were not in issue in the tax case, and that there was not to be found in the reasons of Hill J any statement that the appellant carried out an operation on Mrs Whitaker negligently or carelessly. She was aware that there were various published reports of the professional negligence case, but she did not think it necessary to consult them. She did not check with the appellant. She did not examine the articles her employer had published about the professional negligence case at the time it was in the news. The trial judge was critical of the journalist's evidence. Her Honour found that the article was written "in a way which would attract as much public notice and sympathy [for Mrs Whitaker] as possible" and that the author was more concerned with sensationalism than accuracy. As counsel for the appellant submitted, the sparse account of the facts of the professional negligence case given by Hill J in his reasons in the tax case left substantial gaps, and the journalist filled them in by the use of her imagination rather than by undertaking any further investigation, although numerous avenues for such investigation were open. The essence of the error in the article was acknowledged in an apology, published after proceedings were commenced, in which the Daily Telegraph referred to the appellant's complaint (later sustained at trial and on appeal) that the article "implied" (more accurately, asserted) that the damages awarded against him "related to his negligent performance of an operation" whereas "[his] care and expertise in conducting the operation were never questioned". That error is not to be found in anything said by Hill J. Rather, the error is in what the journalist added to what was said by Hill J. It made the story more colourful, but it also made it untrue; and untrue in a respect that was likely to be very hurtful to the appellant, and damaging to his professional reputation. (1996) 63 FCR 1 at 3. The policy of the common law's protection of fair reports of court proceedings, and of the legislative extension of the common law in s 24 of the Act, is that it is in the public interest that there should be open administration of justice. That interest is served by protecting persons who publish fair and accurate reports of court proceedings so that a reader of the report will see a substantially correct record of what was said and done in court6. In Kimber v The Press Association7, Lord Esher MR said: "The rule of law is that, where there are judicial proceedings before a properly constituted judicial tribunal exercising its jurisdiction in open Court, then the publication, without malice, of a fair and accurate report of what takes place before that tribunal is privileged. Under certain circumstances that publication may be very hard upon the person to whom it is made to apply, but public policy requires that some hardship should be suffered by individuals rather than that judicial proceedings should be held in secret. The common law, on the ground of public policy, recognizes that there may be greater danger to the public in allowing judicial proceedings to be held in secret than in suffering persons for a time to rest under an unfounded charge or suggestion." In the same case, Kay LJ8 explained the basis of the privilege as the "extreme importance that publicity should be given to all judicial proceedings". It is the public interest in the openness of the administration of justice that sustains the privilege or protection. Matter does not constitute a report of proceedings merely because it repeats information obtained from those proceedings. To take an example from Grech v Odhams Press Ltd9, if a statement made by a witness in a proceeding is fairly and accurately reported, and attributed to the witness who made it, then the protection may be attracted; it would be otherwise if, without attribution to the witness or the proceedings, the substance of the statement were merely repeated. 6 Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519; Anderson v Nationwide News Pty Ltd (1970) 72 SR (NSW) 313 at 324 per Mason JA; Waterhouse v Broadcasting Station 2GB Pty Ltd (1985) 1 NSWLR 58 at 63 per [1893] 1 QB 65 at 68-69. [1893] 1 QB 65 at 75. [1958] 2 QB 275 at 285. The importance of attribution, and the making of what purports to be a report of proceedings, as distinct from the mere repetition of information that emerges in the course of proceedings, is illustrated by Burchett v Kane10. The requirement of attribution does not necessarily require direct quotation and acknowledgment; but it must appear that the published matter bears the character of a report of the proceedings in question. It is not enough that the proceedings are a source of information, or the subject of an expression of opinion. As has been noted, there are, in the law reports and elsewhere, numerous reports of the proceedings in the professional negligence case. However, those were not consulted by the journalist who wrote the Daily Telegraph article, and she did not profess to have any acquaintance with those proceedings other than such as she gained from a reading of the judgment of Hill J in the tax case. That judgment gave only an extremely attenuated account of the professional negligence case. Furthermore, very little of the material in the Daily Telegraph article was attributed to the judgment of Hill J, or otherwise purported to be a record of what he said. A reader of the article would not know that its author was entirely dependent upon Hill J for her information about the professional negligence case; nor would the reader know what Hill J had said about the facts of that case. Most significantly, a reader of the article would not know the extent to which the matter that conveyed the imputation defamatory of the appellant went beyond what Hill J had said. Notwithstanding the reasoning of the majority in the Court of Appeal, some of which appeared to assume that an article about a court case is, on that account alone, a report of court proceedings, the respondent's defence was not based on s 24(2) of the Act. It was based on s 24(3). In particular, it was based upon the proposition that the relevant proceedings for the purpose of s 24(1) were the proceedings in the tax case (not the professional negligence case); that the protected report of those proceedings within the opening words of s 24(3) consisted of the reasons for judgment of Hill J; that the person who published the protected report within the meaning of the opening words of s 24(3) was the officer of the Federal Court who handed a copy of the reasons for judgment to the journalist; and that the respondent published a fair extract or fair abstract from, or fair summary of, the protected report. The argument fails in a number of respects. First, the theory that, when a court, through the agency of one of its officers (whether a judge's associate, or an official in the registry, or a public information officer, or a court attendant), hands a copy of the court's reasons for judgment to a party or a member of the public (such as a journalist), that officer is a person publishing a report of the 10 [1980] 2 NSWLR 266. court's proceedings within the meaning of s 24(3), cannot be sustained. The delivery by a court of its reasons for judgment is part of the proceedings of the court11. The reasons for judgment do not constitute a report of the proceedings to which the judgment relates; they constitute part of those proceedings. The court itself is not a "person" within s 24(3)12. Court officials who, in accordance with the practice of the court, undertake administrative acts involved in the publication of reasons for judgment are not persons engaged in the publication of reports of the court's proceedings; they are participating in those very proceedings. The legislative purpose of s 24(3) is to provide a defence to a person who publishes matter in reliance upon a protected report previously published by someone else, where that person does not have grounds for knowing the report to be unfair13. It is not the purpose of the provision to treat court officials who administer that part of the business of the court which involves making available its reasons for judgment as publishers of reports of court proceedings. Secondly, for the reasons already given, the Daily Telegraph article was not presented as an extract or abstract from, or summary of, Hill J's judgment. The fact that we now know, from the evidence of the author of the article, that it constituted the source of information for what she wrote about the facts of the professional negligence case, does not mean that a reasonable reader would have understood the relevant parts of the article to be reporting or summarising what was said by Hill J. Most newspaper readers have probably never read a judge's reasons for judgment. They would have no reason to assume that the judgment of Hill J recounted the facts of the professional negligence case. They would have had no relevant expectation as to the detail into which he would have gone. And they would have no reason to suspect that the journalist had not consulted any other source of information. Thirdly, the article, to the extent to which it extracted from, or summarised, what Hill J said, was not fair. The defamatory sting in the article arose from what the journalist added to what was said by Hill J, not from any repetition or summary of what he said. The trial judge, and Mason P in the Court of Appeal, were right to reject the s 24 defence. It is unnecessary to consider whether, had it been available otherwise, it would have been defeated by s 26. 11 Leslie v Mirror Newspapers Ltd (1971) 125 CLR 332 at 341 per Gibbs J. 12 Hilton v Wells (1985) 157 CLR 57 at 87 per Mason and Deane JJ. 13 New South Wales, Report of the Law Reform Commission on Defamation, (1971) The section 22 defence This defence was rejected by the trial judge and by all the members of the Court of Appeal. Section 22 provides that where, in respect of matter published to any person, the recipient has an interest or apparent interest in having information on some subject, the matter is published to the recipient in the course of giving to the recipient information on that subject, and the conduct of the publisher in publishing that matter is reasonable in the circumstances, there is a defence of qualified privilege for that publication. The respondent's defence under s 22 raised a number of issues, but it is sufficient to deal with only one of them. Tupman DCJ, and the three members of the Court of Appeal, held that the conduct of the respondent in publishing the defamatory matter was not reasonable in the circumstances. In order to succeed on this point, the respondent needs to displace those concurrent findings. The principal difficulty for the respondent is that the author of the Daily Telegraph article relied solely on the judgment of Hill J as the source of her information about the facts of the professional negligence case, but that judgment did not contain the information that the appellant had blinded Mrs Whitaker by operating upon her negligently. That was the journalist's own contribution to the story. Whether it is described as speculation, inference, or pure invention, does not matter. It was an addition to the facts stated by Hill J, and it gave the article its sting. It would not have been difficult to check the facts of the professional negligence case. They were available in the law reports; and they were also available in previous publications of the respondent. It is unnecessary, for the purposes of the present case, to enter upon the vexed question of the circumstances in which knowledge or information possessed by one officer of a corporation, or existing in corporate records, will be attributed to another officer of the corporation, or to the corporation itself14. That subject has implications that extend beyond the law of defamation. It is sufficient to note that in 1990, 1991 and 1992 the respondent published articles about the professional negligence case which revealed the nature of the conduct for which the appellant was made liable. No attempt was made to consult those articles as a source of information. Tupman DCJ found that both the journalist who wrote the Daily Telegraph article and the editor who approved its publication knew that it 14 cf Waterhouse v Broadcasting Station 2GB Pty Ltd (1985) 1 NSWLR 58 at 73 per contained a very serious and potentially defamatory imputation against the appellant, and that it was probably for that reason that he was not named in the article. (Even so, there was evidence that a large number of people would have been able to identify the appellant as Mrs Whitaker's surgeon.) Her Honour found that there was a failure to seek legal advice from the respondent's legal department, and that almost any lawyer would have had sufficient familiarity with the circumstances of the professional negligence case to see the need to check the accuracy of what the article said about that case. This failure to make enquiries was related to the trial judge's earlier finding that the article was deliberately composed in a sensational manner. The requirements of a good story prevailed over those of fairness and accuracy. The considerations that bear upon the reasonableness of the conduct of a publisher of information for the purposes of s 22(1)(c) of the Act vary with the circumstances of individual cases. Some considerations of common relevance were set out by Hunt AJA in Morgan v John Fairfax & Sons Ltd [No 2]15, but reasonableness is not a concept that can be subjected to inflexible categorization. In the respondent's written submissions, reference was made, without elaboration, to "the circumstances in which daily newspapers are published". It may be enlightening if, in cases such as the present, courts were given more evidence as to those circumstances. Such evidence would be available to the publishers, not to those who have been defamed. Courts know that newspapers are published in a competitive environment. They know about competition between publishers. Perhaps, if it is relevant, courts could be provided with evidence about competition between journalists, within newspapers, for the space and prominence to be given to their articles. Where, as here, serious errors are made, and attributed to "the circumstances in which daily newspapers are published", a court would be in a better position to judge the reasonableness of the publisher's conduct if it were told exactly what those circumstances were, why they prevailed, and how they contributed to the error. What was it about the circumstances in which the article presently in question was published that made it unreasonable to expect that those involved would acquaint themselves with the facts of the professional negligence case before publishing the article? If there is a serious answer to that question, it is not one that emerges from the respondent's evidence. In this context, reasonableness is to be judged by reference to the legitimate interests which the law of defamation seeks to protect. That includes the public interest in freedom of speech, and the appellant's interest in his 15 (1991) 23 NSWLR 374 at 387-388. reputation. The legitimate commercial interests of the respondent are entitled to due consideration. But reasonableness is not determined solely, or even mainly, by those commercial interests. The respondent carries on its business with a view to making profits for the benefit of its shareholders. All business entails risk. Profit is the reward for taking risks. From the point of view of the success of the respondent's enterprise it might be rational to take a risk of damaging someone's reputation, and of being found liable to pay damages. A publisher may calculate that it is worthwhile to risk defaming somebody, or perhaps even to set out deliberately to defame somebody. From the point of view of its internal management, such conduct may be economically rational. That does not mean it is reasonable for the purposes of s 22(1)(c). It may be that most people who are defamed in newspapers never sue. For all the courts know, that may be something that publishers take into account in deciding their business practices. But if, in consequence of an avoidable error, a person is defamed, and sues, then reliance on s 22 of the Act will ordinarily involve explaining how the error came to be made, and why it could not reasonably have been avoided, bearing in mind the harm it was likely to cause. Defendants who rely upon "the circumstances in which daily newspapers are published" need to greater particularity when seeking to persuade a court that their conduct has been reasonable. to condescend This defence was not made out. Damages The trial judge awarded $250,000. That included an element of aggravation based on the "sensationalist and excessive quality" of the article. As her Honour pointed out, court decisions about the law of income tax rarely occupy the front page of the Daily Telegraph. The respondent, for its own commercial purposes, played up the human interest side of the story for all it was worth, and a good deal more besides. This aspect of the respondent's conduct must have increased the hurt to the appellant. His evidence, accepted by the trial judge, was that he was already extremely sensitive about the professional negligence case, and the cavalier manner in which his professional reputation as a surgeon was treated by the respondent came as a severe blow to him. As to the harm to his reputation, the appellant was right to submit that to publish on the front page of a major newspaper that an eye surgeon has blinded a patient through his negligent surgery is self-evidently a grave defamation. We agree with what Hayne J has said on the matter of damages. The Court of Appeal gave no convincing reasons for concluding either that the award of $250,000 was manifestly excessive or that the reasoning of Tupman DCJ was affected by specific error. On the contrary, her Honour's reasoning on the point was careful and orthodox, and the amount she awarded was reasonable. Conclusion The appeal should be allowed with costs. The orders of the Court of Appeal should be set aside. It should be ordered that the appeal to that Court be dismissed with costs. Hayne HAYNE J. The appellant, a medical practitioner, sued the respondent in the District Court of New South Wales for defamation. He succeeded at trial, obtaining judgment for $250,000 together with interest and costs. On appeal, a majority of the Court of Appeal (Stein JA and Grove J, Mason P dissenting on this point) held16 that a defence of fair report should have succeeded. The Court set aside the judgment entered at trial and ordered that the present respondent have judgment. Mason P did not agree that the defence of fair report should have succeeded, but considered that the damages awarded should be reduced to $75,000. Both Stein JA and Grove J were also of the view that the damages allowed at trial were manifestly excessive. Stein JA would have reassessed them at $100,00017; Grove J agreed with the sum of $75,000 proposed by Mason P18. On appeal to this Court there are two principal issues. Could the respondent rely on defences relating to fair protected reports of court proceedings? If it could not, were the damages allowed at trial excessive? The facts On the front page of The Daily Telegraph of 22 August 1996 the respondent published an article under the headline "Blind Justice". It was later conceded that the material published was defamatory of the appellant and could convey the imputation that the appellant had blinded a patient named Maree Lynette Whitaker "by negligently and carelessly carrying out an eye operation on her". The trial judge found that it did convey that imputation and that finding was not disputed in this Court. The article, with an accompanying photograph of Mrs Whitaker using a white cane, occupied most of the front page of the newspaper. It continued on page two, under the headline "Blind justice as taxman swoops". To identify how the issues about fair protected report arise it is necessary to refer to two other pieces of litigation – one, an action for damages brought by Mrs Whitaker against the appellant in the Supreme Court of New South Wales, and the other, proceedings in the Federal Court of Australia between Mrs Whitaker and the Commissioner of Taxation. In the first of those 16 Nationwide News Pty Ltd v Rogers [2002] NSWCA 71. 17 [2002] NSWCA 71 at [134]. 18 [2002] NSWCA 71 at [135]. Hayne proceedings19, Mrs Whitaker sued the appellant for damages for negligence. On appeal to this Court20, it was held that the appellant was liable for failing to warn Mrs Whitaker of a material risk inherent in proposed operative treatment of her almost totally blind right eye. That risk, slight as it was, came to pass, through no fault of the appellant but, as a result, Mrs Whitaker became almost totally blind in both eyes. There was no question that the appellant conducted the operation with the required skill and care21. In the second proceedings22, the questions in issue were whether some of the damages recovered by Mrs Whitaker from the appellant were assessable income, and whether some of the costs she incurred prosecuting the action against the appellant that were not met by the taxed costs the appellant was ordered to pay her, were allowable deductions. The matter published by the respondent The article was published on the day after the primary judge, Hill J, gave judgment in the Federal Court proceedings between Mrs Whitaker and the Commissioner. The article referred to those proceedings saying, among other things, that the Federal Court had upheld an "Australian Tax Office decision to tax Mrs Whitaker $168,000 on her total interest payment of $353,185" and that: "Following established legal precedent, Federal Court Justice Donald Hill upheld the ATO ruling that pre-judgment interest on personal injury compensation payouts is taxable income. Justice Hill said the interest paid recompenses the plaintiff for being deprived of the use of the money awarded to them in damages. 'If instead of litigation a defendant in a personal accident case had immediately paid the amount claimed, then presumably the plaintiff could have invested that money and if it had been invested would have received interest upon it which would have been taxable,' Justice Hill said." The article also said that: 19 Whitaker v Rogers [1990] Aust Torts Reports ¶81-062, and on appeal Rogers v Whitaker (1991) 23 NSWLR 600; (1992) 175 CLR 479. 20 Rogers v Whitaker (1992) 175 CLR 479. 21 (1992) 175 CLR 479 at 482. 22 Whitaker v Commissioner of Taxation (1996) 63 FCR 1, and on appeal (1998) 82 FCR 261. Hayne "In 1984, Mrs Whitaker lost sight in both eyes after an operation involving corneal grafts performed by a prominent eye surgeon." Other parts of the article, or its headings, referred to "a woman robbed of sight by a surgeon's negligence", to Maree Whitaker "blinded by a surgeon's negligence", and to her being "[b]linded during an eye operation". The respondent's defence In an amended defence filed at the trial of the appellant's defamation action, the respondent raised a number of defences. Some of those were defences for which the Defamation Act 1974 (NSW) ("the Act") provides and it is necessary to refer first to those founded in s 24 of the Act. That section provides for three different defences where what is published is, or relates to, a "protected report". The expression "protected report" is defined in s 24(1) as meaning a report of proceedings specified in cl 2 of Sched 2 of the Act. One of the proceedings so specified23 is "proceedings in public of a court". (Clause 1 of that Schedule provides that "court" means a court of any country.) The three different defences for which s 24 provides are identified in sub-ss (2), (3) and (4) of the section. It is desirable to set them out in full: "(2) There is a defence for the publication of a fair protected report. (3) Where a protected report is published by any person, there is a defence for a later publication by another person of the protected report or a copy of the protected report, or of a fair extract or fair abstract from, or fair summary of, the protected report, if the second person does not, at the time of the later publication, have knowledge which should make him or her aware that the protected report is not fair. (4) Where material purporting to be a protected report is published by any person, there is a defence for a later publication by another person of the material or a copy of the material or of a fair extract or fair abstract from, or fair summary of, the material, if the second person does not, at the time of the later publication, have knowledge which should make him or her aware that the material is not a protected report or is not fair." The first of those defences, that for which s 24(2) provides, is a defence for the publication of a fair protected report. The second defence, for which 23 Sched 2, cl 2(5). Hayne s 24(3) provides, is a defence for the "later publication" by another person of a protected report that was published by any person (or a fair extract or abstract from it, or a fair summary of it). The third defence, for which s 24(4) provides, is again a defence for the "later publication" by another person of material purporting to be a protected report (or, again, a fair extract or abstract from it, or a fair summary of it). The qualifications on the availability of defences under ss 24(3) and 24(4) (that the second person does not, at the time of publication, have knowledge of certain matters) need not be examined further. The respondent's amended defence did not allege that it had published a fair protected report of proceedings in public of a court. Rather, the defence alleged that what the respondent had published "was published as a fair extract, abstract or summary of a protected report" or "was published as a fair extract, abstract or summary of material purporting to be a fair protected report". That is, the defence raised defences under ss 24(3) and 24(4) of the Act; it did not raise a defence under s 24(2). The s 24 defences in the courts below The distinctions between the three different provisions of sub-ss (2), (3) and (4) were not kept at the forefront of argument at trial, or on appeal to the Court of Appeal. The trial judge, having set out the text of s 24(2), said that the respondent relied on "this defence, claiming that the published article was a fair report of the proceedings held in public in the Federal Court of Australia on 21 August 1996, in which Justice Hill delivered judgment in Whitaker v Commissioner of Taxation". Yet immediately following this statement, her Honour said that "[s]pecifically the [respondent] relies on the defences arising in both Section 24(3) and Section 24(4) of the Act". In the Court of Appeal the chief focus of the reasons for judgment concerning liability was upon four issues. First, was the article a fair protected report of the proceedings in Whitaker v Commissioner of Taxation24? Secondly, did the article expressly or impliedly attribute what it said to the judgment which Hill J gave25? Thirdly, if it did not, was that fatal to the defence of fair protected report? Fourthly, was the article substantially accurate26? It may be assumed that this identification of the issues reflected the course which argument took in the Court of Appeal. To identify them in this way, however, accurately reflects neither the pleadings in the proceedings nor the questions presented by an invocation of ss 24(3) and 24(4) of the Act. 24 [2002] NSWCA 71 at [112] per Stein JA, [136] per Grove J. 25 [2002] NSWCA 71 at [7] per Mason P, [112] per Stein JA, [136] per Grove J. 26 [2002] NSWCA 71 at [35] per Mason P, [113] per Stein JA, [136] per Grove J. Hayne The application of ss 24(3) and 24(4) In this Court the respondent accepted that, in the courts below, it had not relied on, and could not now rely on, the defence provided by s 24(2). Rather, it contended that it was entitled to what might be described as the derivative defences for which sub-ss (3) and (4) provide. As is apparent from what has already been said, those defences may be engaged only where what is, or purports to be, a protected report is published by one person, and another person (here, it was said, the respondent) later publishes that report, or a fair extract or abstract from it, or a fair summary of it. The premise for the operation of ss 24(3) and 24(4) is that another person has published what is, or purports to be, a protected report before the defendant publishes the matter of which the plaintiff complains. That is why I describe them as "derivative defences". Attention was not directed to this premise in the argument in, or the reasons of, the Court of Appeal. In this Court the respondent submitted that, before it published its article, a protected report of the reasons for judgment of Hill J in Whitaker v Commissioner of Taxation was published when a copy of those reasons for judgment was made available to its reporter by the Federal Court. The questions raised by the submission could be described in a number of ways. What is meant by "report"? Can the provision, by the court, of a facsimile copy of written reasons for judgment published by a court, be described as a "report" of proceedings in public of a court? What is meant by "any person"? Does the handing of a copy of those reasons for judgment by a court officer to a person, other than a party or representative of a party to the proceedings in which the judgment is given, constitute a publication "by any person"? Is a court a "person"? Taking the expression in s 24(3), "[w]here a protected report is published by any person", or the equivalent expression in s 24(4), and considering each element of the expression separately is not helpful. The expression must be considered as a whole. When that is done, what can be seen is that the reports of which ss 24(3) and 24(4) speak are secondary accounts of what are the relevant "proceedings": "secondary" in the sense of being derived from some other report that is, or purports to be, a protected report. What the respondent's argument sought to do was to confine the "proceedings" to the original written reasons for judgment, kept on the Court's file, and the steps taken to publish those reasons in open court. But the "proceedings" of the Court are not to be understood as being confined so narrowly. No doubt the delivery of reasons for judgment was part of the proceedings in the Court. That delivery was effected by the judge delivering them, in written Hayne form, in open court, to an associate or other proper officer of the court27. The proceedings were, therefore, proceedings in public. The reasons delivered in writing were then made available for examination by others. That could have been done in any of a number of different ways. It is common for courts to have copies of written reasons made available to the parties as soon as they are published. Other copies may be made available to the press. Subject to any contrary order, the original reasons may be searched on the court's file. In this matter, the journalist said that she obtained a copy of the reasons in court immediately after their publication. No matter which of these methods is adopted, when a court makes written reasons available for examination by others, it does not make any report of what transpired in proceedings of the court. For present purposes, the reasons are the proceedings and the court makes those proceedings available for examination. If a third person then chooses to publish those reasons, whether to form part of a series of law reports, or for some other reason, that third person may then publish a report of the proceedings of the court. But when a court makes its file available to be searched it publishes no report. And if, instead of making the original reasons available on the file, it provides a facsimile copy of those reasons to an inquirer, the court publishes no report of that part of its proceedings in which the court gave its reasons for decision; it makes that part of its public proceedings available for inspection. Making proceedings available for inspection and examination is not to make a report of them. It follows that the premise for neither of the s 24 defences pleaded by the respondent was established. The further questions which may then have arisen about the availability of defences under ss 24(3) and 24(4) do not fall for consideration. The Court of Appeal was wrong to hold that defences under s 24 should have succeeded. Section 22 defence The respondent submitted that if the defences under s 24 were held to fail, it should have been held that it had a defence of qualified privilege under s 22 of the Act and that, accordingly, the judgment of the Court of Appeal should stand. The primary judge held that the defence under s 22 was not made out. Her Honour held that those to whom the respondent published its newspaper had an interest or apparent interest in having information about the conduct of the Australian Taxation Office in assessing taxation on part of the sums awarded as damages for personal injury. If that is right, and I need not consider what is meant in s 22(1)(a) by "interest or apparent interest", the primary judge was 27 Federal Court Rules, O 35 r 2. Hayne nevertheless right to conclude that other requirements for the application of s 22 were not met. Paragraphs (b) and (c) of s 22(1) require that: the matter is published to the recipient in the course of giving to the recipient information on [the subject in which the recipient has an interest or apparent interest in having information], and the conduct of the publisher in publishing that matter is reasonable in the circumstances". The matter published included words conveying the imputation that the appellant had blinded Mrs Whitaker "by negligently and carelessly carrying out an eye operation on her". No doubt the words conveying that imputation were published at the same time as words giving readers information about what the Australian Taxation Office had done. But the words which conveyed that imputation were not published in the course of giving readers information about the relevant subject. How Mrs Whitaker had become blind, and what claim she had had against the appellant, were not the subject in which readers may have had a relevant interest. That subject concerned what the Australian Taxation Office had done, not what the appellant had done. What was said about the appellant's conduct was not sufficiently connected with the subject that may have been of interest to fall within s 22(1)(b). It is unnecessary to consider whether publishing the matter without first seeking legal advice was reasonable. Damages The second of the issues that must be decided in this Court concerns the damages awarded. Section 46(2) of the Act provides that: "Damages for defamation shall be the damages recoverable in accordance with the common law, but limited to damages for relevant harm." "[R]elevant harm" is defined28 as "harm suffered by the person defamed" (except in cases where the person defamed dies before damages are assessed, in which case a narrower operation is given to the expression29). The Act further provides that damages for defamation shall not include exemplary damages30 and 28 s 46(1)(a). 29 s 46(1)(b). 30 s 46(3)(a). Hayne "shall not be affected by the malice or other state of mind of the publisher at the time of the publication complained of or at any other time, except so far as that malice or other state of mind affects the relevant harm."31 The three purposes to be served by an award of damages for defamation are identified in the joint reasons in Carson v John Fairfax & Sons Ltd32: (i) consolation for the personal distress and hurt caused to the appellant by the publication; (ii) reparation for harm done to the appellant's personal, and in this case, professional reputation; and (iii) the vindication of the appellant's reputation. As pointed out in Carson33: the first two purposes are frequently considered together and constitute consolation for the wrong done to the appellant; vindication looks to the attitudes of others. The respondent contended that the Court of Appeal had been right to conclude that an award of $250,000 was manifestly excessive. The respondent also submitted that the trial judge made a specific error in assessing damages and it will, of course, be necessary to deal with that submission. The chief weight of the argument, however, was placed on the contention about manifest excess, and it is better to deal with that subject first. Manifestly excessive? A contention that an award of damages is manifestly excessive invokes the last of the bases for appellate review of an exercise of discretion identified in House v The King34. If manifest excess is alleged, it is not said that a specific error of principle or fact can be identified. Rather, the contention that damages are manifestly excessive alleges that the result at which the primary judge arrived is evidently wrong and that, although the nature of the error made may not be discoverable, there must have been a failure to properly exercise the discretion in fixing the amount to be awarded35. This method of reasoning necessarily assumes that there is a standard against which excess can be judged. Identification of that standard does not require precise specification of the range of results within which a proper exercise of discretion might be bounded. It will usually be impossible to set such 31 s 46(3)(b). 32 (1993) 178 CLR 44 at 60 per Mason CJ, Deane, Dawson and Gaudron JJ. 33 (1993) 178 CLR 44 at 60-61 per Mason CJ, Deane, Dawson and Gaudron JJ. 34 (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and McTiernan JJ. 35 Miller v Jennings (1954) 92 CLR 190 at 196 per Dixon CJ and Kitto J. Hayne bounds precisely. Nonetheless, the standard must be capable of identification with sufficient precision to say whether a particular result clearly departs from it. It is important to emphasise, however, that the task of an appellate court asked to set aside an award of damages as manifestly excessive is not simply mathematical. The appellate court does not begin by identifying the damages which it would have allowed and then, applying some margin for difference of view, observe the mathematical relationship between the award made and the figure it would have awarded. Rather, the question for the appellate court is whether the result at which the trial judge arrived bespeaks error. What must be identified is manifest excess, not just excess. When trial by jury was common and damages for defamation were assessed by a jury, it was said36 that damages for defamation "cannot be measured by any standard known to the law". It was often said37 that the damages were "at large". Even so, the verdict of a jury was not immune from appellate review. In Triggell v Pheeney38, it was held that the determinative question on appeal was whether "the amount [was] such that no reasonable body of men could have awarded it". The similarity between that test and the last of the bases for appellate review identified in House v The King is evident. But as Windeyer J demonstrated in Australian Iron and Steel Ltd v Greenwood39, there are relevant differences between appellate review of jury verdicts and appellate review of judicial assessments of damages. It is not necessary to examine those differences. In searching for the standard against which manifest excess of an award of damages for defamation can be judged, account must be taken of three basic propositions. First, damage to reputation is not a commodity having a market value. Reputation and money are in that sense incommensurable. Secondly, comparisons between awards for defamation are difficult. Every defamation, and every award of damages for defamation, is necessarily unique. Thirdly, because the available remedy is damages, courts can and must have regard to what is allowed as damages for other kinds of non-pecuniary injury. It is necessary to say something about each of these propositions. 36 Bray v Ford [1896] AC 44 at 52-53 per Lord Herschell. 37 Rook v Fairrie [1941] 1 KB 507 at 516 per Sir Wilfrid Greene MR. 38 (1951) 82 CLR 497 at 516. 39 (1962) 107 CLR 308 at 321-328. See also Miller v Jennings (1954) 92 CLR 190 at 196 per Dixon CJ and Kitto J; Papanayiotou v Heath (1969) 43 ALJR 433 at Hayne The worth of reputation Defamation may cause identifiable economic consequences for the person who is defamed. This was not said to be the case in this matter. In the present, as in so many cases of defamation, the wrong that was done to the appellant was alleged to have caused him personal distress and hurt and to have caused harm to his personal and his professional reputation; it was not alleged that his professional earnings had diminished by an identified amount. Assigning a money sum as sufficient to remedy those harms and to vindicate the appellant's reputation translates losses which have no market value into amounts of money. Of course, defamation is not the only area of the law in which this is done. Damages for pain and suffering suffered in consequence of personal injury or for the loss of liberty brought about by wrongful imprisonment are two other cases in which this is done. But in neither defamation nor in other cases of non-pecuniary loss can any standard of evaluation be employed except one that is described in qualitative and therefore necessarily imprecise terms. The damages that may be awarded "are such as the jury may give when the judge cannot point out any measure by which they are to be assessed, except the opinion and judgment of a reasonable man"40. The measure of what is reasonable compensation, if not supplied by the collective wisdom of a jury, must be distilled from within the transactions of the law. That is, the standard against which an allegation that damages for defamation are manifestly excessive must be judged is a standard which is to be found within the administration of the law. It is not some external standard supplied, for example, by transactions within a market. Because reputation is not bought and sold, it is only in the courts that money values are assigned to the consequences of infliction of harm to reputation. Comparisons between awards for defamation Two of the three purposes served by an award of damages for defamation are to provide consolation to the person defamed for the personal distress and hurt which has been done, and reparation for the harm done to that person's reputation. Necessarily, then, the amount awarded for defamation should reflect the effect which the particular defamation had on the individual plaintiff. It follows that the drawing of direct comparisons between particular cases is apt to mislead, just as the drawing of direct comparisons in personal injury cases can also mislead. Comparison assumes that there is sufficient identity between the effect which each defamation had on the particular plaintiff, whereas in fact circumstances alter cases41. The amount allowed in each case should reflect the 40 Prehn v Royal Bank of Liverpool (1870) LR 5 Ex 92 at 99-100 per Martin B. 41 Australian Iron and Steel Ltd v Greenwood (1962) 107 CLR 308 at 325. Hayne subjective effect of the defamation on the plaintiff. Unless that is recognised, the courts fall into "that form of the judicial process that Cardozo J deprecated, the mere matching of the colours of the case in hand against the colours of samples spread out upon a desk"42. The consideration of other cases can yield no norm or standard derived from the amounts awarded in those other specific cases43. Nonetheless, as Windeyer J said in relation to the assessment of damages for personal injuries44: "Of course no two cases are exactly alike ... One award is never really a precedent for another case. But we would I think be ignoring facts if we were to say that judges when asked to consider whether a particular verdict is beyond the bounds of reason – either excessive or inadequate – are unmindful of what was done in other cases, similar or dissimilar. If we were to say that, we would I consider deceive ourselves, as well as belie statements in judgments of high authority." Damages for defamation and other non-pecuniary losses What is the use that is to be made of "what was done in other cases, similar or dissimilar"? Assessment of whether an award of damages for defamation is manifestly excessive will necessarily invite attention to what was done in other defamation cases. But the inquiry cannot stop there. In Carson45, the majority of the Court said46 that an appellate court hearing appeals in both defamation and personal injury cases needs to ensure that there is an appropriate or rational relationship between the scale of awards in the two classes of case. As three members of the Court later said in Theophanous v Herald & Weekly Times Ltd47: "That relationship stands on the foundation represented by the scale of awards for general damages in cases of serious physical injuries which, in 42 (1962) 107 CLR 308 at 325. 43 Planet Fisheries Pty Ltd v La Rosa (1968) 119 CLR 118 at 124-125 per Barwick CJ, Kitto and Menzies JJ. 44 Chulcough v Holley (1968) 41 ALJR 336 at 338. 45 (1993) 178 CLR 44 at 56-60. 46 cf Coyne v Citizen Finance Ltd (1991) 172 CLR 211 at 234-235 per Toohey J (with whom Dawson and McHugh JJ agreed). 47 (1994) 182 CLR 104 at 132 per Mason CJ, Toohey and Gaudron JJ. Hayne their severity and disabling consequences, may transcend injury to reputation48." Section 46A Statutory effect is now given to that proposition in New South Wales by s 46A of the Act and its provisions that: In determining the amount of damages to be awarded in any proceedings for defamation, the court is to ensure that there is an appropriate and rational relationship between the relevant harm and the amount of damages awarded. In determining the amount of damages for non-economic loss to be awarded in any proceedings for defamation, the court is to take into consideration the general range of damages for non-economic loss in personal injury awards in the State (including awards made under, or in accordance with, any statute regulating the award of any such damages)." No doubt the purpose of comparing awards for defamation and awards in personal injury cases is to ensure that what Diplock LJ called49 "the scale of values of the duel" is not adopted. A person's reputation is not to be valued more highly than life or limb. If an award of damages for defamation is greater than the amount that would be allowed for the non-economic consequences of the most serious physical injuries with permanently disabling consequences, it may be evident that the amount awarded for defamation is manifestly excessive. In this way, the comparison which s 46A requires limits awards for defamation. What it does not do, however, is identify where, within the outer limits of proper awards, a particular case should find its proper level. It does not, for example, say that some or all forms of defamation should attract awards less than (or greater than) an award that might be made for (say) the loss of a limb. Nor would it be consistent with the statutory adoption of the rule that "[d]amages for defamation shall be the damages recoverable in accordance with the common law"50 to understand s 46A as prescribing a particular, let alone a mathematical, relationship between the damages to be awarded for defamation and the damages for non-economic loss in personal injury awards. It is of the first importance to recall the fundamental principle that the damages to be 48 (1993) 178 CLR 44 at 58-59 per Mason CJ, Deane, Dawson and Gaudron JJ. 49 McCarey v Associated Newspapers Ltd (No 2) [1965] 2 QB 86 at 109. Hayne awarded for defamation must compensate for the effect of the defamation on the particular plaintiff. Likewise, it is fundamental that the damages for non-economic loss in personal injury awards must compensate for the effect of the injury on the particular plaintiff. Classifying kinds of defamation and kinds of personal injury, and using that classification to assert some relationship between the damages to be awarded in these cases would deny those fundamental principles. Nothing in s 46A permits or requires it to be done. In the end, what s 46A draws to attention is that damages awarded for defamation must take their proper place in the administration of justice. In particular, they must stand in a proper relationship with awards for the non-economic consequences of personal injury. The relationship which s 46A(2) identifies is not, however, some precise or mathematical relationship between particular cases of defamation and personal injury or between particular classes of such cases. To do that would compare the incomparable. Nonetheless, s 46A(2) should be understood as having two particular consequences of relevance to the present appeal. First, it invites attention to the nature of the injury done by defamation compared with the consequences of physical injury. The injury done by defamation, even if serious, is often evanescent. By contrast, some personal injuries are permanent and devastatingly disabling. One of the principal purposes of an award of damages for defamation is to vindicate the wrong that was done. By contrast, damages for personal injury can compensate, but cannot right the wrong that was done. Yet, in neither defamation nor in personal injuries is there any measure by which the compensation for the non-pecuniary loss which the particular plaintiff has suffered can be assessed except what is "reasonable". The second effect of s 46A(2) flows from both the reference to the "general range" of damages allowed in personal injury cases and the inclusion, within the class of personal injury cases to be considered, of cases where the damages to be allowed are regulated by statute. Treating cases where the damages allowable are capped by statute as included within the "general range" to be considered shows that those statutory limits imposed in cases of motor or workplace accident51 are not to be taken as being indirectly imposed as limits on the amount to be allowed in defamation. But the reference to the general range of damages does identify the highest sums awarded for the non-economic consequences of personal injury as what might be called a presumptive outer limit to awards for defamation. So much follows from the fact that rarely, if 51 At the time of the trial of these proceedings the Motor Accidents Act 1988 (NSW) and the Workers Compensation Act 1987 (NSW). See now the Motor Accidents Compensation Act 1999 (NSW). Hayne ever, will the harm done by a defamation be greater than the most serious form of physical injury which leads to permanent and serious disabilities. And if that represents the presumptive outer limit to awards for defamation, each particular award that is made must find a place within a range which is marked out in that way. It is convenient to deal at this point with the respondent's contention that the trial judge fell into specific error in assessing the damages to be allowed to the appellant. The respondent submitted that the trial judge erred in her application of s 46A(2). Her Honour said that she did take into account "that awards for non-economic loss in personal injuries verdicts can range from very low in those minor cases where there are no thresholds operating by statute up to about $500,000 where there are no statutory caps and the injury is extremely serious, such as in the case of quadriplegia". In the Court of Appeal, Stein JA said that "[t]his may be too high a figure and $300,000 may be closer to the top of the range of general damages for personal injury"52. In this Court, however, it was accepted that $300,000 was not the highest sum awarded for non-economic loss in personal injury awards in New South Wales, reference being made to at least one case, in 2002, where $420,000 had been awarded. It is not necessary to identify the highest amount that has been awarded on this account. For present purposes what is significant is that the trial judge's general statement about the range of amounts involved, with its evident approximation, is not shown to have led her Honour into specific error in the assessment of the amount to be allowed to the appellant. The amount which her Honour allowed as damages did not exceed the presumptive outer limit marked by the amount awarded for non-economic loss in personal injury cases. It did not come close to doing so. Even if the outer limit could have been identified more precisely than it was – as "up to about $500,000" – the assessment of the damages to be allowed not being a mathematical task, no error is revealed in what the trial judge said. Nor was the Court of Appeal right to conclude that the sum of $250,000 was manifestly excessive. It was open to the trial judge to conclude that the respondent's defamation of the appellant had a serious effect upon him. He had already suffered the inevitable emotional cost of the trial and appeals in the proceedings brought against him by Mrs Whitaker. That action had culminated in his being held to have been negligent in not advising Mrs Whitaker of the risks associated with the procedure he advised her to undergo. Yet through that litigation his skill as a surgeon emerged unchallenged. Now, some years after that chapter of his professional life appeared to have been closed, the respondent 52 [2002] NSWCA 71 at [130]. Hayne published words which conveyed the imputation that he had conducted the surgery on Mrs Whitaker without reasonable care. It was well open to the trial judge to conclude that the effect of that publication on this appellant was very large. An award of $250,000 in those circumstances was not outside the range of damages that could properly be awarded. Nowhere in the reasons of the Court of Appeal is to be found any reference to the effect of this publication on the appellant beyond general statements53 that the appellant was entitled to be compensated for his distress and hurt feelings. Stein JA, with whose reasons in this respect the other members of the Court agreed, emphasised54 that only a "necessarily limited number of readers" of the article would have recognised that the appellant was the surgeon to whom it referred but did not name. No doubt that is so. But in significant respects the assessment of damages had to take account of the subjective response of the appellant. To this there was no reference in the Court of Appeal. In this respect that Court fell into error. It is inevitable and right that appellate courts seek to guide and direct the work that is done at trial level. Consistency in and predictability of the outcome of litigation is fundamental to the proper administration of justice. But consistency and predictability are to be achieved within the confines of applicable legal principle. They are not to be achieved by treating different cases alike any more than they are to be achieved by treating like cases differently. It is of the first importance, then, to identify what are the features or characteristics of a case which it is relevant to compare. Where, as is the case with both defamation and personal injury, so much turns on the effect of the wrong on the particular plaintiff, the drawing of such comparisons has obvious difficulty. But more than that, it reveals that any comparison which is drawn must look to the particular plaintiff, not what others may have thought of the defamatory words that were published or what kind of physical injury was sustained. The appeal to this Court should be allowed with costs. The orders of the Court of Appeal should be set aside and, in their place, there should be orders that the appeal to that Court is dismissed with costs. 53 [2002] NSWCA 71 at [134]. 54 [2002] NSWCA 71 at [131]. Callinan CALLINAN J. This appeal raises questions as to the proper construction of the Defamation Act 1974 (NSW) ("the Act") and the assessment of damages for defamation by a publisher of a newspaper in wide circulation. The facts The respondent is the publisher of numerous newspapers in Australia. It is therefore, in the business of gathering, storing and disseminating information. There was no evidence whether, as is the case with some publishers of newspapers, the respondent made the claim that it was a publisher of journals of record, newspapers which recorded accurately the events of the day, and whose editions would serve as a reliable source of information for historians and others in the future. Whether that claim is made or not, the fact is that newspapers do, as has otherwise been claimed, provide a "first rough draft of history"55. On 1 August 1984 the appellant, a surgeon who lives and works in Sydney, operated on Mrs Whitaker's blind right eye. There was no want of care and skill on his part in the performance of the operation. He did not however warn her that as a result of the surgery, there was a risk of the occurrence of sympathetic ophthalmia in her good left eye. The risk was realised. By about March 1986 she had become almost totally blind. Mrs Whitaker sued the appellant for damages in negligence in the Supreme Court of New South Wales. Her action succeeded and she was awarded substantial damages. It was held that the failure by the appellant to warn Mrs Whitaker of the risk of sympathetic ophthalmia was negligent. This judgment was reported as Whitaker v Rogers56. It received very wide publicity. The respondent published on the front page of its newspaper, the Daily Telegraph, of 4 August 1990, the day after the judgment, an article about it, describing the appellant as the surgeon who had failed to warn Mrs Whitaker of the risk of sympathetic ophthalmia. On 14 August 1990 the respondent published a further article in the Daily Telegraph discussing the amount of interest on the judgment sum awarded to Mrs Whitaker. This article did not identify the appellant by name. The appellant appealed to the Court of Appeal of New South Wales. On 26 June 1991 the appellant's appeal was dismissed. That judgment was reported as Rogers v Whitaker57. 55 Attributed to Philip L Graham, Publisher, Washington Post. 56 (1990) Aust Torts Reports ¶81-062. 57 (1991) 23 NSWLR 600. Callinan On 27 June 1991 the respondent published in the Telegraph Mirror an article about the judgment of the Court of Appeal, again naming and describing the appellant as the surgeon who had been found to be "negligent in failing to warn" Mrs Whitaker that "an operation on her blind right eye might lead to blindness in the left." On 19 July 1991 the respondent also published in another one of its newspapers, a national daily, the Australian, an article about the judgment of the Court of Appeal. There the respondent discussed the issues in the litigation and named the appellant by referring to the case name of Rogers v Whitaker. On 28 April 1992 this Court heard an appeal by the appellant from the decision of the Court of Appeal. On 1 May 1992 the respondent published in the Australian an article about that appeal. There the appellant was identified by name as the surgeon who "had been negligent in not advising Mrs Whitaker of the chances (about one in 14,000) of losing sight in her good eye." Not surprisingly, as an acquirer and disseminator of information for profit, the respondent maintained in a readily accessible form, copies of the articles that it had published in its newspapers including the articles to which I have referred. The appellant's appeal to this Court was dismissed on 19 November 1992. The decision excited a great deal of public and professional interest in both legal and medical circles. It was reported in the Commonwealth Law Reports58. It was particularly widely publicised in the media and medical and legal journals in which the appellant was either identified by name, or referred to in and by the case name of Rogers v Whitaker. After the judgment of this Court had been given, the Commissioner of Taxation assessed as income, the interest received by Mrs Whitaker on her damages. She challenged the assessment. On 21 August 1996 the Federal Court of Australia (Hill J) delivered judgment in Whitaker v Commissioner of Taxation59, rejecting Mrs Whitaker's challenge to the Commissioner's assessment. His Honour made a number of references to the earlier litigation between Mrs Whitaker and the appellant. He narrated the course of the proceedings against the appellant in the various courts in which they were heard. His Honour said nothing about the nature and extent 58 Rogers v Whitaker (1992) 175 CLR 479. 59 (1996) 63 FCR 1. Callinan of the negligence found against the appellant. He did say that Mrs Whitaker had been "operated on by [the appellant] and ultimately lost her sight in both eyes." Later, his Honour made a passing reference to the claim as one for damages for personal injury. There were two other relevant references: to a "claim ... for damages for personal injury" and to "damages for a personal injury ... suffered at the hands of [the appellant]." On 22 August 1996 the respondent published the following headline and report in the Daily Telegraph newspaper (paragraph numbers added). BLIND JUSTICE THE CASE OF MAREE LYNETTE WHITAKER 1984: Blinded during an eye operation. 1990: Successfully sues surgeon in the NSW Supreme Court. Awarded $808,564 in damages and $65,514 in interest. 1992: Awarded a further $287,671 in interest after surgeon fails in appeal to the High Court. 1996: Federal Court upholds Australian Tax Office decision to tax Mrs Whitaker $168,000 on her total interest payment of $353,185. 3. Maree Whitaker, blinded by a surgeon's negligence, walked from a Sydney court yesterday the first victim of a tax department assault on compensation payouts that could reap it billions of dollars. The test case, fought in the Federal Court, means the right of the tax office to treat as income interest accrued on compensation payouts has been upheld in law. The decision has cost Mrs Whitaker $168,000, and other people awarded compensation for injuries and other trauma face similar moves against their money. The litigation leading to the landmark ruling, which could raise billions of dollars for the government coffers from those who have been crippled in car accidents, lost limbs or suffered nervous shock, was immediately attacked as heartless. 7. Mrs Whitaker, who was awarded more than $1 million, including interest, for her lost sight labelled the tax office's pursuit of her money as 'barbaric'. 'It's discrimination at its worst,' Mrs Whitaker said. Callinan Following established legal precedent, Federal Court Justice Donald Hill upheld the ATO ruling that pre-judgment interest on personal injury compensation payouts is taxable income. Justice Hill said the interest paid recompenses the plaintiff for being deprived of the use of the money awarded to them in damages. 'If instead of litigation a defendant in a personal accident case had immediately paid the amount claimed, then presumably the plaintiff could have invested that money and if it had been invested would have received interest upon it which would have been taxable,' Justice Hill said. 12. Mrs Whitaker was the first person to have her interest taxed and appealed to the Federal Court to overturn the decision. The decision means the ATO will keep $168,000 she had to pay in income tax on her interest. 14. Outside the court, Mrs Whitaker said those who are awarded compensation 'only get one bite of the cherry'. 'I realise that [the ATO] have to bring in revenue but I think they are going the wrong way about it,' Mrs Whitaker said. 'They are basically giving it to them with one hand and taking it away with the other.' 'It's like they are waiting outside the courts for compensation people to come out, give them 12 months with the money and at the end of that time say, "don't forget half of that is ours".' In 1984, Mrs Whitaker lost sight in both eyes after an operation involving corneal grafts performed by a prominent eye surgeon. She sued for negligence in the NSW Supreme Court and was awarded $808,564, plus $64,514 in interest. 20. Mrs Whitaker was later awarded a further $287,671 in interest after the surgeon failed in his appeal to the High Court. 21. But the ATO determined the $353,185 in interest was subject to income tax and billed Mrs Whitaker $168,000. President of the National Tax and Accountants' Association Ltd Ray Regan said it was a devastating decision. Callinan 23. Mr Regan said about 300,000 people who had received payouts would be affected because the ATO could apply the law retrospectively for the past four years. 'Should our tax system take advantage of Maree Whitaker?' 'Should it take advantage of up to 300,000 people affected right now who clearly have got no additional amount for any provision for tax? 'Do we want our tax system to sink to such a low level where it takes advantage of compensation victims?' 27. Mr Regan said more than 65,000 people received this sort of compensation each year and the Government would get at least $2.5 billion a year. 28. A press release issued by the ATO said it had paid for the cost of It said: 'The Federal Court has confirmed today that interest income is subject to tax. 'This is not a surprising outcome. 'Interest income derived from any source including investing lump sum compensation payments has always been considered assessable.' 32. Mrs Whitaker's lawyers said they would consider appealing against the decision." In due course, an apology of a kind was published in the Daily Telegraph of 22 October 1996. By then the appellant had commenced these proceedings. The apology in which the respondent described what it had done as a "misunderstanding" was as follows: EYE surgeon Dr Christopher Rogers has complained that the article headed 'Blind Justice' published in The Daily Telegraph on August 22 implied an award of $808,000 obtained by Mare Whicker [sic] against him for medical negligence related to his negligent performance of an operation on her eyes. In fact, Dr Rogers' care and expertise in conducting the operation were never questioned. He was found negligent because he failed to warn Ms Whicker [sic] of a possible effect of the operation. The Daily Telegraph apologises to Dr Rogers for any misunderstanding." Callinan The proceedings at first instance The appellant sued the respondent for damages for defamation in respect of the article. One imputation only was pleaded, that the "Plaintiff blinded Mrs Whitaker by negligently and carelessly carrying out an eye operation on her". In the District Court (Tupman DCJ), in which the trial was heard, the respondent conceded that the matter complained of conveyed that imputation. The respondent pleaded four defences. The first was not pressed and requires no discussion in this Court. The second was quite non-specific and not the subject of any application for particulars. It was as follows: [The matter] was published under qualified privilege". The appellant did however file a reply which shows the way in which he understood the nature of the respondent's plea of qualified privilege, and provides some indication of the basis upon which the issue was litigated. After alleging and pleading particulars of malice, the appellant pleaded as follows: If there was an occasion of qualified privilege (which is denied) then that occasion was in relation to the Australian taxation system and the application of taxation laws as applied to Mrs Whitaker and compensation awards and not with regard to the manner in which the Plaintiff had carried out an eye operation on Mrs Whitaker. Further, in reply to paragraph 6(c) and (d) of the Defence alleging that the matter complained of was a Protected Report, the Plaintiff alleges that the publication complained of was not made in good faith for public information or the advancement of education. Particulars The Plaintiff relies on the particulars in paragraph 2 above." The two other defences pleaded reflect the wording of ss 24(3) and 24(4) and not, it should be noted, s 24(2) of the Act, and are as follows: [The matter] was published as a fair extract, abstract or summary of a protected report and the defendant did not at the time of publication have knowledge which should have made it aware that the protected report was not fair; [The matter] was published as a fair extract, abstract or summary of material purporting to be a fair protected report and the defendant Callinan did not at the time of publication have knowledge which should have made it aware that the material was not a protected report or was not fair." Tupman DCJ compared the matter complained of with the reasons for judgment of Hill J. Her Honour held that the matter complained of contained four identifiable mistakes or inaccuracies, and that these deprived the respondent of a defence of fair protected report. Her Honour also rejected the defence that the matter complained of had been published on an occasion of common law, or statutory qualified privilege, on the basis that the defamatory matter was irrelevant to the story concerning the conduct of the Australian Taxation Office. She was also of the opinion that the respondent had not acted reasonably in not having the article checked by its lawyers. Tupman DCJ found that the appellant had proved a case for aggravated damages by reason of "the issues of manner and extent of publishing, timing and nature of apology, sensationalist nature of the publication and falsity of the defamatory imputation." Her Honour expressly found that the matter complained of had a "sensationalist and excessive quality about it." She rejected the appellant's submission that the respondent was actuated by malice in publishing the defamatory matter. She awarded damages in the sum of $250,000, plus interest. Some uncertainty remains however as to the way in which the case was litigated. At one point her Honour said that the respondent relied on s 24(2) of the Act. Almost immediately afterwards she said, and correctly so by reference to the pleadings, that the respondent's reliance was on ss 24(3) and 24(4) of the Act. The appeal to the Court of Appeal The respondent appealed to the Court of Appeal of New South Wales60. Again it is not entirely clear how the matter was argued there. From the holdings of the members of that Court it would seem that the pleadings were in part at least disregarded, and attention was focussed on s 24(2) of the Act. Stein JA, with whom Grove J61 agreed on this point, was of the opinion that the matter complained of, to the extent that it summarised the judgment of Hill J, was a "substantially accurate report" of it62. Mason P held that a defence of fair protected report under s 24(2) of the Act failed, because those parts of the matter 60 Nationwide News Pty Ltd v Rogers [2002] NSWCA 71. 61 Nationwide News Pty Ltd v Rogers [2002] NSWCA 71 at [136]. 62 Nationwide News Pty Ltd v Rogers [2002] NSWCA 71 at [100]. Callinan complained of giving rise to the defamatory imputation "were not expressly or impliedly attributed" to the judgment of Hill J63. The President did not deal with a defence under either s 24(3) or 24(4) of the Act. Mason P64 and Grove J65 would have reduced the damages to $75,000 while Stein JA was of the view that an award of $100,000 would have been appropriate66. The basis for reduction was said to be that the appellant was not entitled to aggravated damages67. The appeal to this Court The appellant appealed to this Court on grounds which reflected the issues that were joined on the pleadings as well as the issue upon which the majority in the Court of Appeal largely focussed: The Court of Appeal erred in holding that the defence of fair protected report under s 24(3) of the Defamation Act 1974 (NSW) ('the Act') does not require those parts of the matter complained of giving rise to the defamatory imputation to be directly attributed to the proceedings in question. The Court of Appeal erred in finding that it was clear on its face that the matter complained of was a report of the judgement of Hill J in Whitaker v Commissioner of Taxation68. The Court of Appeal erred in finding that the matter complained of was a substantially accurate summary of the judgement of Hill J in Whitaker v Commissioner of Taxation69. 63 Nationwide News Pty Ltd v Rogers [2002] NSWCA 71 at [8]. 64 Nationwide News Pty Ltd v Rogers [2002] NSWCA 71 at [40]. 65 Nationwide News Pty Ltd v Rogers [2002] NSWCA 71 at [135]. 66 Nationwide News Pty Ltd v Rogers [2002] NSWCA 71 at [134]. 67 Nationwide News Pty Ltd v Rogers [2002] NSWCA 71 at [2] per Mason P, [131]-[134] per Stein JA, [135] per Grove J. 68 (1996) 63 FCR 1. 69 (1996) 63 FCR 1. Callinan The Court of Appeal erred in finding that the judgment of Hill J conveyed the same imputation conveyed by the matter complained of. The Court of Appeal erred in holding that the knowledge of the corporate publisher on the issues of absence of good faith under s 26 of the Act and malice is limited only to the knowledge of the publisher's servants or agents who were responsible for the content of the matter complained of. The Court of Appeal erred in failing to find that the respondent knew of the falsity of the defamatory imputation conveyed by the matter complained of by the Rogers v Whitaker litigation. its earlier publications of reason of The Court of Appeal erred in failing to find that the respondent was actuated by malice in publishing the matter complained of. The Court of Appeal erred in failing to find that matter complained of was published in absence of 'good faith for public information' within s 26 of the Act. The Court of Appeal erred in failing to find that the appellant was entitled to aggravated damages." The grounds of appeal do not however exhaust the issues which at one stage at least the respondent sought to raise and argue in this Court. One of them, the alleged availability of a constitutional defence based on an implied freedom of political communication could only be argued if leave were granted. It needs no further reference as leave was refused. Another was the availability of a defence under, not s 26 of the Act as pleaded, but s 22 of it. The appellant came prepared to meet that argument but it too was not in the event pursued by the respondent. And despite that the Court of Appeal did not really deal with the respondent's defences under ss 24(3) and 24(4) of the Act, the appellant does not accept in this Court that the respondent is not entitled to avail itself of them if it can. It is convenient to deal first therefore with the matters to which the parties directed their attention in argument, the availability or otherwise of defences under s 24 of the Act which provides as follows: "24 Protected reports – Schedule 2 In this section, protected report means a report of proceedings specified in clause 2 of Schedule 2 as proceedings for the purposes of this definition. There is a defence for the publication of a fair protected report. Callinan (3) Where a protected report is published by any person, there is a defence for a later publication by another person of the protected report or a copy of the protected report, or of a fair extract or fair abstract from, or fair summary of, the protected report, if the second person does not, at the time of the later publication, have knowledge which should make him or her aware that the protected report is not fair. (4) Where material purporting to be a protected report is published by any person, there is a defence for a later publication by another person of the material or a copy of the material or of a fair extract or fair abstract from, or fair summary of, the material, if the second person does not, at the time of the later publication, have knowledge which should make him or her aware that the material is not a protected report or is not fair." By s 24(1) a "protected report" means a report of "proceedings" specified in Sched 2 of the Act. "Proceedings" are there, in cl 2(5), defined to include "proceedings in public of a court". And as I have said, the respondent neither pleaded nor sought otherwise to rely on a defence under s 24(2) of the Act. For a defence to be available to the respondent under s 24(3) these conditions would need to be satisfied: that the judgment of Hill J be a report of "proceedings", that is, of the earlier litigation between Mrs Whitaker and the appellant, and therefore a protected report within s 24(3) of the Act; that Hill J or the Federal Court or whoever promulgated his judgment is a "person" for the purposes of the sub-section, a very unlikely proposition for more than one reason; that his Honour's reasons for judgment were published within the meaning of the Act; that the article was a "later publication"; and, that the respondent did not have knowledge at the time of publication which should, not I would emphasize did, make it aware that the report was not fair. As will appear, none of these is satisfied. I propose to deal with the last of them first. The facts that I have narrated with respect to the earlier stories published by the respondent about Rogers v Whitaker show beyond all dispute that the respondent had knowledge which should have made it aware that the judgment of Hill J was not a fair report. The respondent corporation was the publisher. No doubt the sub-editor and other natural persons involved, by participating in the compilation of the article, the invention of the headline for it, and the decision to publish it, were also publishers70, but it is with the corporate respondent that this case is concerned. 70 See Webb v Bloch (1928) 41 CLR 331 at 347 per Knox CJ, 363-367 per Isaacs J. Callinan It can be no answer for a corporate publisher, whether it asserts itself to be a publisher of a journal of record or not, to claim inadvertence to, or forgetfulness on the part of its employees of, matter earlier published by it. If it could successfully do that the law would be conferring a great advantage upon corporate publishers. The more geographically separated its offices or employees were, the more employees it had, the more forgetful they were, or the less assiduous it was in seeking, keeping and retrieving information, the greater would be its chances of escaping liability for the publication of defamatory matter relating to subjects which it had earlier reported and discussed. To the extent, if any, that some observations of Hunt J in Waterhouse v Broadcasting Station 2GB Pty Ltd71 made in the context of a discussion of malice might suggest otherwise, they should not be accepted for several reasons. Neither they, nor the cases referred to by his Honour, satisfactorily dealt with the fact that although a corporation may have many people working for it, it has only one legal personality. Nor was sufficient attention paid to the necessary corollary, that it was the corporation that had inflicted the injury that was the subject of the suit, and was the party liable to pay any damages that might be assessed, and not the natural persons forgetting or remembering, searching its records, or speaking and writing as employees of it. Hunt J in Waterhouse cited Calwell v Ipec Australia Ltd72. That case does not provide a basis for a proposition that a publisher may insulate, for the purposes of defending proceedings in defamation, pockets of memory and records. Mason J, with whom Barwick CJ and Stephen J agreed, referred to the state of mind of the "author or the publisher"73, the latter being of course the corporate defendant, indicating thereby that what was known (or accessible) to the publisher, and not just the author, was what was relevant. Sellers LJ, who offered a different view in Broadway Approvals Ltd v Odhams Press Ltd (No 2)74, cites no authority for it. There is no basis, with respect, for his Lordship's sweeping assertion that "a company's mind is not to be assessed on the totality of knowledge of its servants."75 Perhaps the knowledge of some of them, those who are mere functionaries may be disregarded, but certainly not the knowledge, or the capacity to acquire or retrieve it, of those who have an active 71 (1985) 1 NSWLR 58 at 73. 72 (1975) 135 CLR 321. 73 (1975) 135 CLR 321 at 333. 74 [1965] 1 WLR 805 at 813; [1965] 2 All ER 523 at 532. 75 [1965] 1 WLR 805 at 813; [1965] 2 All ER 523 at 532. Callinan role in the compiling and publishing of a newspaper or parts of it and the publisher itself. In any event, Davies LJ took a different view from Sellers LJ, holding, unlike the latter, that there was evidence of malice on the part of the publisher fit to go to the jury76. The other member of the Court, Russell LJ, declined to decide the point77. Hunt J in Waterhouse also cited Pinniger v John Fairfax and Sons Ltd78. An examination of that case provides insufficient foundation for the proposition propounded by his Honour: only Barwick CJ espoused it79. Stephen J agreed with both Barwick CJ and Gibbs J. Mason J agreed with Gibbs J who did not advance any such proposition, and Murphy J fairly clearly rejected it80. Reference was also made to Brain v Commonwealth Life Assurance Society Ltd81. This was a case of malicious prosecution at the instigation of a company. The question there was, whose mind was the guiding mind for the launching of the prosecution. It has nothing to say about the knowledge, actual or imputed, of a corporate publisher. Another of the cases referred to by Hunt J, Mowlds v Fergusson82 is equally irrelevant to the question of corporate knowledge. It was litigation between natural persons. It was also a case in which the information available to the alleged defamer at the time of the publication was by no means exculpatory of the person of whom he wrote. Accordingly no question of corporate knowledge, or the collective knowledge of more than one employee was in point. Hunt J also cited Bickel v John Fairfax & Sons Ltd83. In that case84, his Honour had referred to an unreported decision of this Court in Atkinson v Custom 76 [1965] 1 WLR 805 at 824; [1965] 2 All ER 523 at 539. 77 [1965] 1 WLR 805 at 825; [1965] 2 All ER 523 at 540. 78 (1979) 53 ALJR 691; 26 ALR 55. 79 (1979) 53 ALJR 691 at 692; 26 ALR 55 at 58. 80 (1979) 53 ALJR 691 at 694-695; 26 ALR 55 at 64-65. 81 (1934) 35 SR (NSW) 36. 82 (1939) 40 SR (NSW) 311 at 323. 83 [1981] 2 NSWLR 474. 84 [1981] 2 NSWLR 474 at 499. Callinan Credit Corporation Ltd85, another case of malicious prosecution, a cause of action with its own peculiarities. The issues raised in Atkinson required an examination of matters of little or no relevance to the knowledge of a publisher. The Court instead concerned itself with questions of authority and vicarious liability. The decision in Atkinson turns very much on its own facts. The Court drew no distinctions, indeed it did not have to, between the vicarious liability in tort of an employer for its employees, and the knowledge possessed by a publisher. Some of what the case does say however is to the contrary of the proposition propounded by Hunt J, as appears from the reasons for judgment of Dixon CJ86 (who was in dissent) in which his Honour had regard to the collective knowledge and participation of several employees of a corporation as a basis for a finding of malice on its part. Menzies J (also in dissent) also had regard87 to the collective knowledge of the natural persons working for the defendant, whereas the joint judgment of Taylor and Owen JJ88, with which Windeyer J generally agreed89, dwells largely upon questions of authority, actual or implied, vicarious liability, and the construction of a power of attorney, matters of no relevance to the knowledge of a publisher. In any event, the defendant in Waterhouse was a radio broadcaster. Publishers of newspapers and magazines, dealing as they do in the written word, are much more likely to keep, and may be expected to keep, electronically or otherwise, copies and records of past publications. Reference was made in argument in this appeal to Hay v The Australasian Institute of Marine Engineers90. Both parties sought to rely on it. The statement by Griffith CJ91, that the state of mind (of knowledge of falsity) of the publisher, was the state of mind of some person for whom the publisher was responsible, suffers from these defects. It introduces notions of vicarious liability foreign to the law relating to publication of defamatory matter, and it cannot satisfactorily 85 Unreported, 25 March 1964. 86 Atkinson v Custom Credit Corporation Ltd unreported, 25 March 1964 at 10. 87 Atkinson v Custom Credit Corporation Ltd unreported, 25 March 1964 at 13. 88 Atkinson v Custom Credit Corporation Ltd unreported, 25 March 1964 at 9-12. 89 Atkinson v Custom Credit Corporation Ltd unreported, 25 March 1964 at 1-2. 90 (1906) 3 CLR 1002. 91 (1906) 3 CLR 1002 at 1011. Callinan be reconciled with Webb v Bloch92 to which I have already referred. His Honour placed reliance93 upon a statement that the Court (Griffith CJ, Barton and O'Connor JJ) had earlier made in Brisbane Shipwrights' Provident Union v Heggie94. But there, the plaintiff's cause of action was in conspiracy, another tort some distance removed from the tort of defamation. The Court concerned itself with questions of authorization. No question of publication arose. Barton J agreed with Griffith CJ in Hay. O'Connor J was however prepared to assume that the knowledge of the secretary who distributed the defamatory matter was the knowledge of his employer95. His Honour made a reference96 to the advice of the Privy Council delivered by Lord Lindley in Citizens' Life Assurance Company v Brown97, from which it appears that the law in relation to the knowledge to be imputed to corporations was still in an embryonic state. Even so, had Brown been followed in Hay, the respondent there would have succeeded because the secretary of the company in distributing the defamatory matter, was doing it in the course of his employment, regardless whether the particular act giving the cause of action was, or was not authorized98. What was said by the Court of Appeal of New South Wales (Sheller, Stein and Giles JJA) in Fightvision Pty Ltd v Onisforou99 is, in my opinion, of some relevance to the question of corporate knowledge generally of a publisher for the purposes of defamation proceedings, and accords much better with contemporary notions of the obligations of corporations: "We can see the force of the observation by von Doussa J in Beach Petroleum NL v Johnson100 that knowledge imputed to a company should not be treated as capable of being simply forgotten or lost at the death of the director whose knowledge was imputed. In El Ajou v Dollar Land 92 (1928) 41 CLR 331. 93 (1906) 3 CLR 1002 at 1010. 94 (1906) 3 CLR 686 at 699-700. 95 (1906) 3 CLR 1002 at 1017. 96 (1906) 3 CLR 1002 at 1014. 97 [1904] AC 423 at 426. 98 See Citizens' Life Assurance Company v Brown [1904] AC 423 at 428. 99 (1999) 47 NSWLR 473 at 527 [244]. 100 (1993) 43 FCR 1 at 32. Callinan Holdings Plc101 Hoffmann LJ, as his Lordship then was, said that once knowledge was treated as being the knowledge of a company in relation to a given transaction, the company continued to be affected with that knowledge for any subsequent stages of the same transaction, whether or not it was imputed from the knowledge of a director who had in the interval ceased to be a director. We do not think this was in contest, and there are sound practical reasons for corporate knowledge including the knowledge of former officers and employees. A corporation cannot cause itself to shed knowledge by shedding people". To that should be added these practical considerations. Today, both the storage and retrieval of information have become greatly simplified by electronic means. Electronic systems have almost certainly replaced, or, at the very least, provide a much speedier and easier means of ascertaining what has happened in the past, than a laborious trawl through the "morgues" traditionally maintained by publishers. In short, a publisher may not be selective about what it claims to "know" of what is readily ascertainable and retrievable from its own records. Even if I were wrong about what I have said in relation to corporate knowledge of publishers of newspapers, in this case, the appellant proved, almost beyond doubt, that there were persons concerned in the publication who did actually know the true facts relating to the operation performed by the appellant. One of these was Mr Allen, a senior editor employed by the respondent at the time of both Rogers v Whitaker and the later case brought by Mrs Whitaker to challenge the assessment of income tax made against her. The respondent must bear the consequences of the failure to call him, an inference that any evidence he might have given, almost certainly that he knew, or, should have known the true facts, could not possibly assist it. Additionally, the appellant actually proved what might almost equally certainly have been assumed, that copies of earlier articles stating the true facts were readily accessible to those who were concerned in the publication. What I have said so far is enough to show that the respondent's defences under both ss 24(3) and 24(4) of the Act must fail. They would fail also for these reasons. The judgment of Hill J was not a "fair report" of the earlier litigation between the appellant and Mrs Whitaker. It is very doubtful whether it is a report at all in the sense in which the section uses that word. It is not to the point that it is understandable that his Honour may have made misstatements in his judgment that would have made it unfair if it were a "report". His Honour was not concerned with the detail, important as it may have been to the appellant, of 101 [1994] 2 All ER 685 at 706. Callinan the findings made in Rogers v Whitaker against him. That was of no relevance to the matter that he had to decide. There are yet further conditions of ss 24(3) and 24(4) which the respondent cannot satisfy. The word "person" in s 24(3) of the Act cannot be read to mean a court, or an official of it. Hill J was the Federal Court for the purposes of the litigation he decided. So too would any official of it be in handing out or distributing a judgment of the Court. Furthermore, neither the Federal Court nor any official of it falls within the definition of "person" in s 21 of the Interpretation Act 1987 (NSW). Nor does the defamatory matter answer the description in s 24(4) "purporting to be a protected report" because, if anything, it is principally concerned with the decision of Hill J and not the earlier proceedings which are only touched upon. In any event, it is in the nature more of a commentary upon Rogers v Whitaker than a report of it to the extent that it does refer to it. The respondent's defences under both ss 24(3) and 24(4) therefore fail. On the assumption that it had established a defence under s 24 of the Act, the respondent sought to rely on s 26 of it also. That section provides as follows: "26 Defeat of defence under secs 24, 25 Where a defence is established under section 24 or section 25, the defence is defeated if, but only if, it is shown that the publication complained of was not in good faith for public information or the advancement of education." I strongly doubt whether, even if a defence under s 24 had been made out, the publication was made in good faith for public information or the advancement of education. The respondent chose to go beyond the judgment of Hill J. What it had to say on that excursion was false and damaging to the appellant. And, as the trial judge held, the matter had a "sensationalist and excessive quality about it." The matters to which I have referred in the preceding paragraph, the failure to seek a pre-publication comment by the appellant, the failure of the respondent to have the matter checked by its lawyers before publication, and the respondent's failure to consult earlier publications concerning Rogers v Whitaker would also disentitle the respondent to rely upon a defence based on s 22 of the Act, which requires as one of the conditions for its successful invocation, that the conduct of the publisher in publishing the (defamatory) material be reasonable in the circumstances. The last issue is of damages. I agree generally with the observations of Heydon J with respect to the operation of s 46A of the Act and the limited Callinan relevance that it possessed in the circumstances of this case and the way it was argued. It is almost certain that the section was enacted in response to remarks by Justices of this Court in Coyne v Citizen Finance Ltd102, Carson v John Fairfax & Sons Ltd103 and Theophanous v Herald & Weekly Times Ltd104 which acknowledged that serious personal injury may, in its impact upon a plaintiff, transcend damage to reputation. It is, with respect however, important to keep in mind that the impact of a severely defamatory statement upon the person defamed can be devastating. That impact may be aggravated by the knowledge that the defamed person has, that despite even a published apology, there will be some who will either not read it or not believe it, and that the defamatory statement may well constitute a public record for the future, or serve for some, as, at least a rough draft of the truth for historical purposes. The statutory regime in New South Wales now allocates the assessment of damages for defamation to judges rather than to juries. Some indication of the community's disapprobation of serious defamations by publishers of newspapers having wide circulation appears from the sequence of events following the decision of this Court in Carson105. There the Court held that an award in aggregate of $600,000 for two gross defamations was so excessive that a retrial, confined to the issue of damages, should be ordered. The second jury on the retrial, on 29 April 1994 assessed the damages at $1.3 million106. In November 1994, presumably in response to Carson, the legislature of New South Wales amended the Act, inter alia, to insert ss 7A and 46A. In the second reading speech concerning the amendments, the Attorney-General relevantly said that107: "These, of course, give rise to problems which generate appeals and, in turn, new trials. In assessing an imputation a jury reflects the view of the community and is a good safeguard in the process of balancing reputation against freedom of speech. Moreover, by enabling the trial judge and not the jury to determine damages, the bill will ensure that 102 (1991) 172 CLR 211. 103 (1993) 178 CLR 44. 104 (1994) 182 CLR 104. 105 (1993) 178 CLR 44. 106 See Carson v John Fairfax and Sons Ltd unreported, Supreme Court of New South Wales, 6 May 1994. 107 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 22 November 1994 at 5472. Callinan damages awards in defamation proceedings correctly reflect the aim of compensating a person for an injured reputation. Honourable members need have no concern that the legislation now before the House will fetter the proper exercise of judicial discretion. On the contrary, the bill envisages that such discretion will be retained. All it requires is that, in assessing non-economic damages, the judge will take into consideration awards made in other types of cases. Such awards are an important factor, but they are by no means the only factor legitimately to exercise a judge's mind. In performing the task it is not expected that judges will need to tread the tortuous path of detailed analysis of every personal injury verdict. It would be nonsense to expect any exact equivalence. It is anticipated only that judges will draw on their experience and knowledge of the range of possible verdicts in the light of the seriousness of the cases occasioning them. They will then consider the relative seriousness of the case that they are actually deciding and, having taken into account all other relevant factors, will make an award. The second change the bill will effect is to provide for a justification defence of truth alone." Neither s 46A in terms, nor the second reading speech suggests that equivalence is possible, or that in every case of defamation, awards for other injuries provide a ceiling above which an award for defamation should not go. The defamation here was a very serious one. It was published on the first page of a newspaper circulating very widely. The appellant gave detailed evidence about the hurt that he felt and his anger about the apology which was published, containing as it did, another false assertion, that his care and expertise were not questioned in the defamatory publication. It was published presumably in response to the institution of the proceedings, five days after they were begun. As the trial judge said, the apology constituted: "at best a cynical attempt to mitigate damages and at worst a 'slap in the face' for the Plaintiff and thus an aggravation of his injury to feelings." The failure to give a sufficient apology and the circumstances surrounding an apology are proper matters to take into account in assessing aggravated damages108. There was no discernible error demonstrated on the part of the trial judge. Indeed, her assessment of damages was made in an entirely orthodox fashion. In no way does the amount appear to me to be unreasonable. 108 See Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44; David Syme & Co Ltd v Mather [1977] VR 516; Clark v Ainsworth (1996) 40 NSWLR 463. Callinan In any event, the damages assessed, of $250,000, fall within the range of other reasonable awards in defamation cases. An amount of $600,000 (about $300,000 in general damages) awarded to a doctor was upheld on appeal in Crampton v Nugawela109; and $200,000 was awarded in respect of a pamphlet (not a mass-media publication) including a digitally obscured image of a surgeon wearing a mask in Nixon v Slater & Gordon110. This was, in all the circumstances, a case in which aggravated damages were appropriate. Exemplary or punitive damages are not of course available under the Act111, but that does not mean that damages properly assessed as compensatory do not have the salutary effect of deterring a repetition of hurtful and ill-considered defamatory matter in the future. Indeed, with all due respect to those who think differently, experience tells that damages provide the only satisfactory remedy for a defamatory publication, particularly by a large commercial publisher with much more at stake and on its mind than the dissemination altruistically of news and comment. A moderately diligent, well- motivated publisher has nothing to fear from the current legal regime. By contrast correction orders suffer many defects: they frequently pay mere lip service to accuracy; they are not always read by those who have seen and absorbed the earlier defamatory matter; they do little to vindicate a wounded or 109 (1996) 41 NSWLR 176. 110 (2000) 175 ALR 15. Other relevant amounts are these: $420,000 in total awarded to the Deputy Police Commissioner in Jarratt v John Fairfax Publications Pty Ltd [2001] NSWSC 739; $450,000 to the female kindergarten teacher upheld on appeal in State of New South Wales v Deren (1999) Aust Torts Reports ¶81-502; and $525,000 to a solicitor in Marsden v Amalgamated Television Services Pty Ltd [2001] NSWSC 510 (a rehearing was ordered in relation to some aspects of the award but not with respect to the amount of ordinary compensatory damages which were not held to be excessive – see Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419). 111 Section 46(3) provides: "In particular, damages for defamation: shall not include exemplary damages, and shall not be affected by the malice or other state of mind of the publisher at the time of the publication complained of or at any other time, except so far as that malice or other state of mind affects the relevant harm." Callinan destroyed reputation; and, to adopt the language of Kirby J in Burke v LFOT Pty Ltd112: "[They] will [not] make [the publisher] more careful in what [it does in the future]. [It] should [not] get off scot-free." The Court of Appeal erred in holding that the damages were excessive. The assessment of the primary judge has not been shown to be wrong and should be restored. The appeal should be allowed with costs and judgment entered for the appellant with costs of the action and the appeal to the Court of Appeal. 112 (2002) 209 CLR 282 at 323 [114]. 144 HEYDON J. The background circumstances are set out in the reasons for judgment of Hayne J and of Callinan J. It is only necessary to deal with the defences provided by s 24(3), s 24(4), and s 22 of the Defamation Act 1974 (NSW) ("the Act"), and with damages. Section 24(3) The journalist who wrote the article containing the imputation on which the plaintiff sued gave evidence that on 21 August 1996 she was present in Hill J's court. She was asked: "Q. Did he come on the bench and indicate that he had reduced his reasons to writing and then indicated that he wished to publish those reasons? A. Publish those reasons and read out his orders. Q. And then after, if his Honour went on to another matter or the court adjourned, you then collected from his Honour's associate a copy of the judgment? A. That's right, yes." These questions, asked in cross-examination, were leading ones, and they do not make it clear whether the journalist understood the distinction between "Hill J's associate", a "court officer", an "officer in the Registry" or any other "proper officer of the court". That may be because what in this Court became a key element in the defendant's argument was skirted around in the Defence. It was apparently not debated below. Hence there are no findings of fact about precisely what happened. The argument in this Court proceeded on the assumption that at or very soon after the time when Hill J read out his orders, he handed his reasons for judgment to his associate. No party challenged the correctness of the journalist's evidence as far as it went, and it was common ground that the journalist was saying that she received the duplicate copy of the judgment from the associate. The defendant submitted that even if she was not saying that, it made no difference: the position would be the same if she got it from a court officer, and the position would also be the same even if she did not get it from either source but from a Registry clerk. The argument of the defendant that there was a defence under s 24(3) of the Act may have been different at earlier stages; but, at least in its finally developed oral form on this appeal, it rested on the distinction between the document which Hill J handed to the associate and the document which the journalist obtained from the associate or some other officer of the court. The former document was characterised as the "original" reasons for judgment. The latter document was characterised as a "copy". The argument that the defence existed had the following steps: The "copy" of Hill J's reasons for judgment in Whitaker v Commissioner of Taxation handed to the journalist (as distinct from the "original" which he handed to his associate) was a "report" of "proceedings in public of a court", namely the proceedings in Whitaker v Commissioner of Taxation, and was therefore a "protected report": the Act, Sched 2, cl 2(5). The copy so handed to the journalist was published by a "person", namely a person "associated with the Federal Court", being a "functionary" who gave it to the journalist. The protected report was, ex hypothesi, not "fair" (since the s 24(2) defence was not pleaded or relied on, and s 24(3) operates on the assumption that the protected report under consideration is not fair, which is why the s 24(3) defence is provided). The publication in the defendant's newspaper was "a fair extract or fair abstract from, or fair summary of" the copy handed to the journalist (ie the protected report) by a "second person", namely the defendant. The defendant did not have knowledge at the relevant time which should have made it aware that the protected report was not fair. Steps (a), (b), (d) and (e) were controversial. The defendant accepted that steps (a) and (b) were crucial to the argument. In my opinion steps (a) and (b) are flawed, and it is not necessary to deal with steps (d) and (e). The relevant part of the New South Wales Law Reform Commission's Report recommending the enactment of s 24(3) is113: "127. Section 24(3) of the Bill makes an innovation. 'Protected reports' in newspapers and other journals, and broadcast reports, are a large part of the material upon which informed discussion of matters of public interest must be based. Such discussion must involve repetition of the reported matter or publication of the substance of the reported matter, in whole or in part. The law should not inhibit such discussion. But it would do so if a person engaging in the discussion were at risk in defamation in case of some hidden unfairness in a protected report previously published by some one else. Section 24(3) therefore gives a defence to a person who 113 Report of the Law Reform Commission on Defamation (LRC 11, 1971) at 117 publishes matter in reliance on a protected report which he does not have grounds for knowing to be unfair, being a protected report previously published by some one else. 128. Section 24(4) is analogous to section 24(3), but deals with the case of publication of matter in reliance on what purports to be a protected report but in fact is not. In the cases dealt with by s 24(3), (4), the real author of the harm to the plaintiff is the original publisher of matter bearing a deceptive appearance. A victim of the deception who republishes the material for a proper purpose ought not to be liable in defamation." This language does not support the defendant's argument. Indeed it points against it. That is because it identifies the mischief being remedied as the risk that a person who is engaging in "informed discussion of matters of public interest" may commit the tort of defamation "in case of some hidden unfairness in a protected report previously published by some one else" because it is "matter bearing a deceptive appearance". A "copy" of reasons for judgment obtained after the "original" has been published in open court, if it can be characterised as a report of the original at all, is incapable of embodying any unfairness in relation to the original, let alone any hidden unfairness. It is also incapable of bearing any deceptive appearance in relation to the original. The Commission's Report in fact suggests that s 24(3) might provide a defence for any "hidden unfairness" or "deceptive appearance" in Hill J's reasons for judgment if the difficult enterprise is undertaken of considering them as a report, not of Whitaker v Commissioner of Taxation, but of Rogers v Whitaker. But this way of analysing the matter was not pleaded, and whether or not it was argued below, it was not argued or otherwise relied on in this appeal. The argument advanced on behalf of the defendant depended on a fundamental distinction between the original reasons for judgment and copies of it. Those who devised the argument were no doubt forced to that fundamental distinction for at least two reasons. One was that they must have apprehended that neither a judge of the Federal Court of Australia, nor the court itself, is a "person"114. Hence it could not be submitted, as was frankly conceded, that the "original" judgment in Whitaker v Commissioner of Taxation was published by Hill J or by the Federal Court within the meaning of s 24(3). The second reason was, as the defendant again frankly conceded, that the "original" judgment was not a report of the proceedings, but a part of the proceedings: it could not be a report of itself. That "original" judgment was said to be a "delivery of reasons, 114 Canadian Pacific Tobacco Co Ltd v Stapleton (1952) 86 CLR 1 at 6; Cowan v Stanhill Estates Pty Ltd [1966] VR 604 at 606-609; Miller v Miller (1978) 141 CLR 269 at 277; Hilton v Wells (1985) 157 CLR 57 at 69. which is a judicial act intellectual in character, which can be either vocal or written, which involves the physical movement in the case of a written delivery of a document. That document retains its identity for all time as the reasons for judgment. All duplicates thereafter are copies of it." Hence the presentation of the defendant's argument often returned to the supposed distinction. The distinction was said to be between the "original" or "Urtext" of Hill J's reasons for judgment and copies of his reasons for judgment. The distinction was also said to be between the "Urtext" and "all other replications of it". The distinction was further said to be between "the transaction or dealing by which the judge publishes his or her reasons for judgment by physically handing over – in the case of written reasons – a document" and "the photographic reprint, the photocopy, that in fact becomes available, informally or formally, after and separately from" that transaction or dealing. reconstructed parent Hence an "Ursprache" This language suggests difficulties for the defendant. The prefix "ur" denotes "primitive, original, earliest"115. is "a as primitive Germanic hypothetically (reconstructed by comparative linguistics) from which the Germanic languages have developed"116. An "Urtext" is "An original text; the earliest version"117. The expression refers to circumstances in which there are several texts and where it is an obscure and controversial question which came first, and often the expression is used where it is also obscure and controversial whether the text which may have come first among those texts which are available is in fact the earliest of all the texts which ever existed. language, This type of language is simply incapable of application to reserved modern judgments in general, and reserved Federal Court judgments in particular. The couching of the defendant's argument in that language points towards its fallacious character. In the course of oral argument the defendant's attention was drawn to two relevant provisions in the Federal Court Rules. Order 35 r 2 provides: "The reasons of the Court for any order may, if in written form, be published by being delivered in open Court to an associate or other proper officer." 115 Oxford English Dictionary, 2nd ed (1989), vol XIX at 327. 116 The Macquarie Dictionary, 3rd ed (1997) at 2330. 117 Oxford English Dictionary, 2nd ed (1989), vol XIX at 346. Order 46 r 6 provides118: "(1) A person may search in the Registry for, and inspect, a document in a proceeding that is specified in subrule (2), unless the Court, or a Judge, has ordered that the document is confidential. For the purposes of subrule (1), the documents are: a judgment; an order; (m) reasons for judgment. (6) A party to a proceeding or other person may copy a document in the proceeding if: the document is produced by the Court, a Judge or the Registrar for inspection by the party or other person; and the Registrar gives the party or other person permission to copy the document; and the party or other person has paid the prescribed fee." The practice permitted by O 35 r 2 in relation to reasons for judgment is in fact a standard practice. It is also standard practice for documents in identical form to the reasons for judgment which are delivered to the associate or other proper officer to be available at the time of publication of the court's reasons for judgment and to be handed to the parties and to any journalists present, either in court or at the Registry. Those documents in identical form will have been generated either as a result of a process of photocopying the pieces of paper in due course delivered to the associate or other proper person or as the result of a process by which the computer which generated those pieces of paper virtually simultaneously produced identical pieces of paper. Those processes are not attended by any mystery as to what the order is in which particular differing versions of a text were produced or as to whether the version which seems 118 Order 46 r 6 was in a different form at the time of publication, but the defendant's argument can be analysed equally well by reference to the rule in its present form. earliest was in fact the version composed by the author. "Urtext" analysis is wholly inappropriate to these processes. Further, it will often be a matter of chance which set of reasons for judgment is the "original". Among the stapled sheets of paper each comprising a set of the reasons for judgment, the selection of the one to be delivered in open court to an associate or other proper officer may simply turn on the chance of which one is nearest to hand as the associate goes to court or as the judge leaves chambers to go to court. A particular problem in step (a) of the defendant's argument is this. Counsel for the defendant correctly accepted that a "protected report" of what Hill J did had to be "something subsequent to and extraneous from that actual dealing, transaction, phenomenon or event of which the spoken words or the unique handed-down copy comprise part". But just as the pieces of paper delivered in open court to an associate or other proper officer are not themselves a report of that event, so too the identical copies prepared in the preceding days and made available within seconds or minutes to the parties, to journalists and to other interested persons are not a report of what Hill J did. If a question arose as to whether a Federal Court judge actually did what O 35 r 2 contemplates, an examination of the copies prepared for the purposes of handing out, either just before they were handed out or just after they were handed out, would not be material in deciding whether O 35 r 2 had been complied with. The copies do not record that event; they record the reasoning process which led the judge to a decision as to what orders should be made, and they reveal the orders themselves. That is, they perform functions which are equally performed by the "original" or "Urtext". Step (b) in the argument is fallacious in distinguishing between the court and its proper officers. While the orders of the Federal Court are made by Federal Court judges and while the reasons for judgment supporting those orders are prepared by Federal Court judges, the court also functions through agents such as its proper officers. If the handing to the defendant's journalist of the pieces of paper she was given was an act of "publishing", it was an act of publishing by the court through its proper officer. The practice recognised by O 35 r 2 of publishing reasons for judgment by delivering them to the associate or other proper officer operates on the assumption that the officer will pass copies on to those persons who were in court. If the proper officer refused to hand over any copies to any person, not even the parties, it would only be in the most formal and literal sense that it could be said that reasons had been "published". The proper officer who handed the pieces of paper to the journalist was no more a "person" for the purposes of s 24(3) than was Hill J or the court as an institution, and the defendant rightly conceded that neither Hill J nor the court was a "person". There is no substantive distinction between the following cases: (a) A journalist, after paying the prescribed fee, photocopies the "original" of the trial judge's reasons for judgment (which were published pursuant to O 35 r 2) held in the court file pursuant to O 46 r 6(6). (b) A journalist, after paying the prescribed fee, copies out by hand the "original" of the trial judge's reasons for judgment (which were published pursuant to O 35 r 2) held in the court file pursuant to O 46 r 6(6). (c) A journalist asks the Registry staff to photocopy the "original" of the trial judge's reasons for judgment (which were published pursuant to O 35 r 2) held in the court file in the Registry in return for paying a fee which the staff stipulate – a course not in terms justified by O 46 r 6(6), but a plainly sensible one from every point of view. (d) A journalist procures a copy of the reasons for judgment made by the court from the associate or some other person present in court just after the trial judge has published his reasons for judgment pursuant to O 35 r 2. (e) A journalist procures a copy of the reasons for judgment made by the court from the associate or some other person present in court just after the trial judge, who has not delivered any document in open court to an associate or other proper officer as required by O 35 r 2, has simply said "I publish my reasons". A journalist procures a copy of the reasons for judgment made by the court from the associate or some other person present in court just after the trial judge has come onto the bench, noticed that by some mischance no "associate or other proper officer" was present, asked counsel present to take judgment to request counsel's instructing solicitor to take the original reasons for judgment from the judge's hands and show it to counsel with a view to brief debate about the form of an order, and, after the debate concluded, pronounced orders but failed to comply with O 35 r 2 or to say "I publish my reasons". In all of these cases what has happened is part of the process by which the proceeding, or in the case of some interlocutory orders the relevant part of the proceeding, is coming to an end. In analysing the consequences of differences in the methods by which a journalist obtains possession of a document communicating the reasoning which led a judge to make particular orders, it is immaterial whether that possession was obtained by reason of a journalist acting in a particular way at the Registry, or the Registry itself acting in a particular way as a result of what the journalist said, or the proper officers of the court acting in a particular way a few minutes earlier in court after a range of possible actions by the judge. The lawful obtaining by the journalist of a version of the reasons for judgment which is identical with that which the judge hands to a proper officer or to a representative of a party is, in the case of proceedings conducted in the publicity which our law requires Federal Court proceedings to be conducted, so closely connected with the movement of the proceedings, or a stage of the proceedings, towards completion that no separation of some items of conduct into a category characterised as "proceedings" and other items of conduct into a category characterised as "a report of proceedings" is maintainable. Any such distinction would be a false one. The defendant did not plead or rely on s 24(2). Nor did it plead or rely on s 25, which provides: "There is a defence for the publication of: a document or record specified in clause 3 of Schedule 2 as a document or record to which this section applies or a copy of such a document or record, and a fair extract or fair abstract from, or fair summary of, any such document or record." Schedule 2 cl 3(3) provides that s 25 applies to: "a document which is: a judgment, being a judgment, decree or order in civil proceedings, of a court, or a record of the court relating to: such a judgment, or the enforcement or satisfaction of such a judgment". The defendant's argument about s 24(3) (and the corresponding argument about s 24(4)) might be more attractive if s 24(3) and s 24(4) were the only provisions giving defences for reports of judicial proceedings, but in view of s 24(2) and s 25 there is no need to adopt the tortured construction of s 24(3) (and s 24(4)) which the defendant advanced. For those reasons the argument of the defendant fails at steps (a) and (b). It is not necessary to consider step (d), to which considerable attention was devoted below. Nor is it necessary to consider the validity of step (e). In that particular respect, it appears undesirable to consider the precise meaning of the word "knowledge" in relation to corporations under s 24(3). Though that very important and potentially far reaching matter was raised by the court in argument, it was not a matter which the parties were fully prepared to deal with, and in consequence it was not sufficiently debated to justify deciding the case on that question in view of the fact that the case, so far as it turns on s 24(3), can be decided on the issue discussed above. Section 24(4) This defence must fail for the same reasons as those advanced in relation to s 24(3). Section 22 Though the defendant was not given leave to argue that the Court of Appeal erred in refusing to consider whether there was an available defence of the type recognised in Lange v Australian Broadcasting Corporation119, and though the defendant abandoned any claim to a common law defence of qualified privilege, it maintained a claim that it had a s 22 defence. Its position was that the s 22 defence need be considered only if the s 24 defences failed. So far as it is material, s 22 provides: "(1) Where, in respect of matter published to any person: the recipient has an interest or apparent interest in having information on some subject, the matter is published to the recipient in the course of giving to the recipient information on that subject, and the conduct of the publisher in publishing that matter is reasonable in the circumstances, there is a defence of qualified privilege for that publication. For the purposes of subsection (1), a person has an apparent interest in having information on some subject if, but only if, at the time of the publication in question, the publisher believes on reasonable grounds that that person has that interest." The trial judge rejected the s 22 defence because she concluded that neither s 22(1)(b) nor s 22(1)(c) was satisfied. The Court of Appeal agreed with her120. 119 (1997) 189 CLR 520. 120 [2002] NSWCA 71 at [2], [124]-[125] and [135]. The trial judge held that the general public had an interest or apparent interest in the conduct and activities of the Australian Taxation Office relating to the assessment of taxation on portions of damages for personal injuries, particularly as it affected Mrs Whitaker. Hence s 22(1)(a) was satisfied. But the trial judge held that s 22(1)(b) was not satisfied because the publication of the defamatory material as part of the article on Hill J's judgment was irrelevant to the information which the article conveyed about the taxation issue, and was unnecessary. In her view the information relevant to the taxation issue could have been conveyed without any reference to the plaintiff and his role as Mrs Whitaker's surgeon, or at least it could have been conveyed by a fair and accurate report of Hill J's judgment so far as it referred to that material, using a "more verbatim, less sensationalist" approach. For that reason, too, the trial judge found the defendant's conduct not reasonable within the meaning of s 22(1)(c). The defendant joined issue with the trial judge's view. However, the Court of Appeal was right to conclude that the trial judge was correct, and correct for the reasons she gave. The trial judge gave a second and a third reason for finding that the defendant's conduct was unreasonable. The second was that the article was not a fair and accurate report because of four mistakes in it, namely those which in her view prevented the s 24(3) defence from being available. It is not necessary to consider whether she was correct in that respect. Her third reason was that though the journalist and the editor knew the article was making serious allegations against the plaintiff, the defendant failed to seek legal advice before publishing it and failed to call evidence explaining why it did not do so. Had it done so, her Honour found that either the article would have been amended to remove the irrelevant and unnecessary references to the plaintiff, or the article would have been amended so as to assume a less sensationalist approach. The defendant did not appear to quarrel with this reasoning as a matter of probable causation. The defendant submitted to this Court that the last step in this reasoning was "fanciful" because it would have required the defendant "to second-guess factual findings in a judgment before publishing an article based on it". It was said that the journalist was entitled to trust the judge. This contention does not meet the trial judge's point: the issue was not one of second-guessing what Hill J said, but seeking to act reasonably by removing irrelevant and unnecessary material about the plaintiff. The defendant only relied on the s 22 defence in the event that its s 24 defences failed. That is, there was not a fair protected report defence within the meaning of s 24(2) because the defendant did not claim there was; and ex hypothesi the s 24(3) and s 24(4) defences failed. Further, the defendant did not rely on any s 25 defence. The defendant, as a result, was in difficult circumstances by reason of the serious allegations which its employees realised the defendant was making. The trial judge was right to conclude that in those circumstances it was unreasonable not to have the article examined by a lawyer. The defendant submitted that the trial judge had engaged in "judicial blinkering of perfectly proper editorial choice, having nothing to do with sensationalism, having nothing to do with extremism but putting appropriately the facts to be found from [Hill J's] reasons which [Hill J] obviously regarded as relevant background". The fact is that the article was sensationalist and extreme; and what a judge regards as material appropriately to be expressed as background in a lengthy judgment is not necessarily material which is relevant or necessary for the fostering of debate about the conduct and activities of the Australian Taxation Office in relation to the assessment of taxation on portions of damages for personal injuries. Damages For the reasons given by Callinan J, the Court of Appeal was wrong to conclude that the trial judge's award of $250,000 should be set aside. The defendant contended that the trial judge had erred in one specific respect, and that in any event the damages were excessive. Application of s 46A(2). The specific error was said to have occurred in relation to the application of s 46A(2) of the Act. It provides: "In determining the amount of damages for non-economic loss to be awarded in any proceedings for defamation, the court is to take into consideration the general range of damages for non-economic loss in personal injury awards in the State (including awards made under, or in accordance with, any statute regulating the award of any such damages)." The trial judge said that where there are no statutory caps and the injury was extremely serious, awards for non-economic loss in personal injury cases could go up to $500,000. Stein JA appeared to treat this as an error in saying: "This may be too high a figure and $300,000 may be closer to the top of the range of general damages for personal injury."121 The defendant submitted that the trial judge had "clearly erred" in this respect, and defended Stein JA's "offering, with the peculiar advantage an appellate tribunal has over a first instance judge, what, as it were, the going rate ought to be seen as". The experience of the trial judge on that question is likely to have been much more intense and recent than that of the members of the Court of Appeal, and her figure ought to be accepted in the absence of any specific demonstration of error. The defendant did not condescend to any demonstration of how and why the trial judge had erred. The plaintiff, in pointing to a decision in which general 121 [2002] NSWCA 71 at [130]. damages of $420,000 had been awarded to a badly injured plaintiff122, demonstrated that Stein JA was wrong. In the circumstances the differing reductions proposed by the Court of Appeal cannot be justified as based on any specific error of the trial judge. Section 46A(2) presents difficulties of both construction and application in relation to the role of capped awards of damages for personal injury for non- economic loss. The sub-section is often regarded as an enactment codifying the common law. That perception is questionable when one analyses the common law position immediately prior to the introduction of s 46A in 1994123. In Coyne v Citizen Finance Ltd124 the issue was whether the jury approached the assessment of defamation damages by using as a comparison awards in personal injury cases, and, if so, whether that was wrong. Toohey J (Dawson and McHugh JJ concurring) said the trial judge had left the jury in little doubt that no help was to be obtained from personal injury awards. He then said125: "From time to time, appellate courts have referred to awards of damages in serious personal injury cases … But that is not to say that the adequacy of awards in one type of case may be tested by reference to awards in the other." Mason CJ and Deane J, on the other hand, said126: "[I]t seems to us that it would be quite wrong for an appellate court, entrusted with hearing appeals in both defamation and personal injury cases, to be indifferent to the need to ensure that there was a rational relationship between the scale of values applied in the two classes of case." The latter view was approved in Carson v John Fairfax & Sons Ltd127 by a majority (Mason CJ, Deane, Dawson and Gaudron JJ) in relation to the 122 Palmer v Roads & Traffic Authority of New South Wales [2002] NSWSC 34. 123 Defamation (Amendment) Act 1994 (NSW), Sched 1(7). 124 (1991) 172 CLR 211. 125 (1991) 172 CLR 211 at 235. 126 (1991) 172 CLR 211 at 221. 127 (1993) 178 CLR 44. legitimacy of a comparison by appellate courts. They pointed out that Toohey J's remarks were directed to the different question of jury comparison128. However, they then said129: "[W]e see no significant danger in permitting trial judges to provide to the jury an indication of the ordinary level of the general damages component of personal injury awards for comparative purposes, nor in counsel being permitted to make a similar reference … [T]here is much to be said for trial judges offering some guidance on damages – such as inviting the jury to consider the investment or buying power of the amount it might award or perhaps even indicating a range of damages which might be considered appropriate – while ensuring that the jury knows that they are to reach their own decision. Providing basic information on the general damages component of personal injury awards might even be more helpful than these other examples." (footnotes omitted) These are tentative observations. "[I]t is appropriate for the trial judge in a defamation action to indicate to the jury a range of figures which might be awarded. The range would have regard to the judge's experience in and knowledge of awards in other defamation actions." Yet he also said that in appellate courts "comparisons with awards in personal injury cases are rarely likely to be helpful"131. Taken together, these observations do not support the use of personal injury awards by trial courts in assessing defamation damages. The words of the majority in Carson v John Fairfax & Sons Ltd were, strictly speaking, dicta so far as they applied to the role of trial courts. The issue before the High Court was whether the procedure of comparing personal injury awards with defamation awards in which the Court of Appeal had engaged was correct. The trial judge in that case had not directed the jury about comparative awards, and this Court was not confronted with any concrete issue for decision 128 (1993) 178 CLR 44 at 57. 129 (1993) 178 CLR 44 at 59-60. 130 (1993) 178 CLR 44 at 93. 131 (1993) 178 CLR 44 at 92. about the correctness or otherwise of that course. In addition, Brennan J132 disagreed in relation to whether appellate courts in defamation cases should consider personal injury verdicts. Further, McHugh J disagreed in relation to comparisons with personal injury verdicts both in appeals and at trials133. If s 46A(2) adopted the opinions of the majority in Carson v John Fairfax & Sons Ltd, it adopted opinions stated only tentatively, and stated when it was not necessary for them to be stated, about jury trials, and applied them to trials by judge alone – for in New South Wales it is the judge, not the jury, which now assesses damages in defamation by reason of s 7A(4)(b) of the Act. That is a process which it was open to the legislature to adopt, but it cannot be described as a codification of the common law. Nor, if the opinions of the majority were adopted in s 46A(2), can it be said that those opinions cast useful light on the construction and application of s 46A(2). It does not seem that the trial judge received any specific submissions about s 46A. She said: "I am informed that there is yet no appellate or binding authority construing s 46A of the Act or providing any assistance in how it is to be applied. I have been provided with a number of first instance judgments where Judges have awarded damages for defamation after applying s 46A. None of these it seems operates as binding authority in relation to construing or applying the section and the cases depend on their own facts. Each judicial officer, it appears, seems to experience some difficulty in finding any logical connection between general damages awarded in defamation cases with damages for non-economic loss awarded in personal injury cases whether those damages are capped or not according to statute. I confess to finding it equally difficult, and with respect to the legislators, equally illogical. However I do take into account that awards for non-economic loss in personal injuries verdicts can range from very low in those minor cases where there are no thresholds operating by statute up to about $500,000 where there are no statutory caps and the injury is extremely serious, such as in the case of quadriplegia. Where a particular case lies on that continuum depends on whether or not there are caps and thresholds on the non-economic loss aspect of damages and the particular circumstances of both the injury and the Plaintiff. Such is the case in relation to damages for defamation, although there are neither thresholds nor caps on the appropriate quantum. If the legislature had meant by this section that Judges would devise some sort of sliding scale with a capped maximum being for the most serious 132 (1993) 178 CLR 44 at 72-75. 133 (1993) 178 CLR 44 at 111-113. defamation and requiring any particular defamation to fit within that scale, appropriate legislation could have been enacted after proper debate. It did not do so. I do not regard myself as required to adopt such a course when applying s 46A." If the proposition rejected in the last three sentences was in fact advanced to the trial judge as a submission, it was not one repeated to this Court. The language of the Court of Appeal, too, does not suggest that it was favoured with any detailed argument about s 46A. In stating his opinion that the verdict should be reduced to $75,000, Mason P said nothing about s 46A. Stein JA, who favoured a reduction to $100,000, said of s 46A only134: "[W]hatever else ss 46 and 46A mean, they point to the need for courts to confine defamation damages to reflect the harm done by the libel. Section 46A seems to be a legislative attempt at containment of defamation damages, although perhaps not expressed in a very helpful way." Grove J said of s 46A only135: "This is not an appropriate vehicle to dissert upon ss 46 and 46A … but giving full weight to the [plaintiff's] claim of damage which did not include any claim for economic loss, I would regard the assessment by Mason P of $75,000 as proportionate damages." With respect to the parties to this appeal, they did not address the precise construction and application of s 46A(2). In particular, the defendant did not contend, and specifically disavowed any contention, that the trial judge had made any error in that regard but for her reference to $500,000 as the maximum uncapped figure for non-economic loss in personal injury cases. That is, it did not contend for any particular construction favourable to its interests. Judging by what the four judges below said, the defendant adopted the same approach before them. This indicates the correctness of Grove J's view that this case is "not an appropriate vehicle" for any definitive analysis of s 46A(2). Manifestly excessive damages. If the complaint about the trial judge's reference to $500,000 is put aside, the defendant's only complaint was that the damages were manifestly excessive. Non-jury judgments assessing general damages for personal injury attract the principles relating to appeals from discretionary judgments. In consequence, the defendant does not complain on appeal about any of the four categories of specific error – any specific error of 134 [2002] NSWCA 71 at [130]. 135 [2002] NSWCA 71 at [135]. fact, any specific error of law, any taking into account by the trial judge of irrelevant matters, or any failure to consider relevant matters. The defendant's complaint can only rest on the view that the damages exceeded the maximum amount which could reasonably have been awarded, or were so large that no court could have awarded them without having committed one of the four errors just described in some undetectable way136. In principle similar tests should apply in relation to general damages in defamation cases which, as is now the position in New South Wales, have not been assessed by a jury137. Whether a judgment which is discretionary in this sense for appellate purposes will be held incorrect on appeal sometimes depends on what argument was put to the court which exercised the original discretion. The seeming failure of the defendant to advance any specific argument about the construction and application of s 46A(2) at any stage makes it difficult to conclude that there was any excessiveness in the damages arising from some hidden misapplication of s 46A(2). For the reasons given above it is neither necessary nor desirable to attempt any definitive construction of s 46A(2). One or two observations, however, may be made. The analyses by Brennan J and by McHugh J in Carson v John Fairfax & Sons Ltd of the differences between defamation litigation and personal injuries litigation, much of which is relevant in considering s 46A(2), are well known138. The following points made by Sir Michael Davies, who had considerable experience of defamation work in England, should also be remembered139: 136 Lee Transport Co Ltd v Watson (1940) 64 CLR 1 at 13; Miller v Jennings (1954) 92 CLR 190 at 197; Wilks v Bradford Kendall Ltd (1962) 79 WN (NSW) 850 at 853; Moran v McMahon (1985) 3 NSWLR 700 at 715-723; Mobilio v Balliotis [1998] 3 VR 833 at 837-842. 137 It has been so held in England: Davies v Powell Duffryn Associated Collieries Ltd [1942] AC 601 at 616-617; Dingle v Associated Newspapers Ltd [1964] AC 371 at 393; and Fielding v Variety Inc [1967] 2 QB 841 at 853. The position appears to be the same in New Zealand (Truth (NZ) Ltd v Bowles [1966] NZLR 303 at 308); Canada (Pat v Illinois Publishing and Printing Co [1929] 2 WWR 14 at 16-17; Grabarevic v Northwest Publications Ltd (1968) 67 DLR (2d) 748 at 750, 752); South Africa (SA Associated Newspapers Ltd v Samuels 1980 (1) SA 24 at 34 (translation 4 at 11-12)) and Barbados (Advocate Co Ltd v Husbands (1969) 15 WIR 180 at 182-183). See also Gatley on Libel and Slander, 9th ed (1998) at 138 (1993) 178 CLR 44 at 72-75 and 111-113 respectively. 139 (1995) 69 Australian Law Journal 161 at 161. "[T]he comparison between defamation and personal injury damages used often to be drawn in England. The instinctive reaction to a perceived imbalance is understandable. But the parallel is far from exact and upon examination is unconvincing. A truck driver who knocks down and kills or seriously injures a pedestrian is unlikely to have done so deliberately, intending to do grievous bodily harm. Neither is such a negligent driver likely to have been motivated by the prospect of personal financial gain nor, having damaged the pedestrian, to reverse and then run over the prostrate form a second time. If he does any of these things, he will be faced with grave criminal charges. Yet in England certainly, in the high damage cases, the defendant newspaper will have acted deliberately, will have published in order to sell copies and to make money and in most cases will have repeated the defamatory matter. And when it comes to court, the cross-examination of a personal injury plaintiff is usually mild compared with the vicious attack which a defamation plaintiff will have to endure." Further, if the purpose of s 46A(2) is the same as that advocated by the majority in Carson v John Fairfax & Sons Ltd, namely "the need to maintain an appropriate relationship between the scale of values in the two classes of case"140, it must be remembered that the statutory capping of damages is not an ethically- driven or value-infused exercise. The State of New South Wales in its judicial branch, unaffected by legislation, arrives at much higher figures for general damages in personal injury cases than the State in its legislative branch permits the judicial branch to award in other areas. This difference is not to be explained by reason of a different perception of "value". It is to be explained as resulting from a perception by the legislature that some classes of compensation have become too substantial and have gone beyond the capacity of those bodies which have to fund them to do so. Motor accident awards lead to what are regarded as insupportably high registration fees. Workers compensation awards are perceived to lead to excessive premiums or an unacceptable rise in unfunded liabilities. The motivations are financially based, not value based. To the authorities referred to by Callinan J on the question whether the damages were excessive may be added John Fairfax & Sons Ltd v Vilo141. The 140 (1993) 178 CLR 44 at 59 n 38. 141 [2001] NSWCA 290 at [16]-[63]. See also State of New South Wales v Moss (2000) 54 NSWLR 536 at 546 [36] (upholding a jury award of $225,000 in general damages for a badly scarred school girl, despite the fact that she had since married, obtained steady employment, and participated in various sports). plaintiff was a medical practitioner. He was a specialist in occupational and industrial medicine, servicing a number of large industrial companies. He was also one of two executive directors of an insurance company which went into provisional liquidation four days after the plaintiff left Australia on a short overseas journey undertaken for family and business reasons. An article in the Business Review Weekly was found to contain three imputations. The jury awarded $200,000 in relation to an imputation that the plaintiff was a fugitive from justice, $250,000 in relation to an imputation that the plaintiff had misappropriated funds from the insurance company, and $50,000 in relation to an imputation that the plaintiff was party with the other executive director to the misappropriation of $19,000,000 from the insurance company. The Court of Appeal upheld these awards. They suggest that the trial judge's award in this case was not excessive. The words of Mahoney ACJ (Handley JA concurring) in Crampton v Nugawela142, on which the trial judge relied, are also relevant to the position of the present plaintiff: "In some cases, a person's reputation is, in a relevant sense, his whole life ... The reputation of a doctor is, I think, of this character: at least, it is so where a substantial part of his work is in an area where he acts on reference from or with the recommendation of other doctors." To the factual material summarised by Callinan J relating to the damaging impact of the article on the plaintiff may be added the evidence of the plaintiff's wife, on which she was not cross-examined. She said it made him "really angry", it "flattened" him, it caused him to become "withdrawn", and it caused him to let his interests "slide" and to talk less to his children. Speaking as a general practitioner of medicine, she said she thought the article made him "clinically depressed". She said he had not "quite" returned to normal, four years after the publication. I would also adopt the reasoning of Hayne J in relation to the serious effect of the publication on the plaintiff. In all the circumstances it cannot be said that the damages were in excess of the maximum amount which could have been awarded, or were of a size which pointed to the commission of some otherwise undetectable error. Orders The appeal to this Court should be allowed with costs. The orders of the Court of Appeal should be set aside and, in their place, there should be orders that the appeal to that Court is dismissed with costs. 142 (1996) 41 NSWLR 176 at 193. |
HIGH COURT OF AUSTRALIA GAYE PRUDENCE LYONS APPELLANT AND STATE OF QUEENSLAND RESPONDENT Lyons v Queensland [2016] HCA 38 5 October 2016 ORDER Appeal dismissed. On appeal from the Supreme Court of Queensland Representation K T Nomchong SC with B E Fogarty for the appellant (instructed by Australian Centre for Disability Law) W Sofronoff QC with K A Mellifont QC and A D Scott for the respondent (instructed by Crown Law (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Lyons v Queensland Discrimination law – Disability discrimination – Where deaf person summoned for jury service – Where deaf person required assistance of Auslan interpreters to participate as juror – Where deaf person excluded from jury panel – Whether exclusion was unlawful discrimination. Juries – Persons constituting jury – Jury deliberations – Whether permissible for interpreter to be present in jury room during deliberations – Whether deaf person who requires assistance of interpreter in jury room eligible for jury service under Jury Act 1995 (Q). Words and phrases – "deaf person", "direct discrimination", "functions of a juror", "indirect discrimination", "jury deliberations", "jury service", "separation of the jury". Anti-Discrimination Act 1991 (Q), ss 10, 11, 101. Jury Act 1995 (Q), ss 4(3), 54, 70. FRENCH CJ, BELL, KEANE AND NETTLE JJ. It is unlawful for a person performing any function or exercising any power under Queensland law to discriminate against a person on the basis of the person's impairment1. The question in this appeal is whether the Deputy Registrar of the Ipswich District Court Registry ("the Deputy Registrar") unlawfully discriminated against the appellant by excluding her from a jury panel because the appellant, a profoundly deaf person, requires the services of an Australian Sign Language ("Auslan") interpreter. For the reasons to be given, a deaf person who requires the services of an interpreter in order to communicate with others is not eligible for jury service in Queensland. The Deputy Registrar's decision not to include the appellant in a jury panel did not constitute unlawful discrimination in the performance of her functions or the exercise of her powers under Queensland law. The Anti-Discrimination Act The Anti-Discrimination Act 1991 ("the ADA") prohibits discrimination on the basis of any of the attributes that are specified in s 7. One such attribute is "impairment"2. "Impairment" includes the total or partial loss of a person's bodily functions3. Discrimination on the basis of an attribute includes direct and indirect discrimination on the basis of a characteristic that a person with the attribute generally possesses or a characteristic that is often imputed to a person with the attribute4. The appellant's deafness is an impairment and communication by means of Auslan is a characteristic that persons who are deaf generally possess. A person directly discriminates against another on the basis of an attribute if the person treats, or proposes to treat, the person with the attribute less favourably than another person without the attribute is, or would be, treated in circumstances that are the same or not materially different5. It is not necessary that the discriminator considers that the treatment is less favourable6. His or her 1 Anti-Discrimination Act 1991 (Q), s 7(h). 2 ADA, s 7(h). 3 ADA, Schedule. 4 ADA, s 8(a) and (b). 5 ADA, s 10(1). 6 ADA, s 10(2). Bell Nettle motive for discriminating is irrelevant7. If there is more than one reason why a person treats, or proposes to treat, another person with an attribute less favourably, that less favourable treatment will be on the basis of the attribute if the attribute is a substantial reason for the treatment8. Section 10(5) is prominent in the way the appellant puts her case. It provides that in determining whether a person treats, or proposes to treat, a person with an impairment less favourably, the fact that the person with the impairment may require special services or facilities is irrelevant. It is common ground that Auslan interpretation is a "special service". Indirect discrimination on the basis of an attribute happens if a person imposes, or proposes to impose, a term with which a person with the attribute does not or is unable to comply and with which a higher proportion of people without the attribute comply or are able to comply and that term is not reasonable9. Whether a term is reasonable depends on all the relevant circumstances of the case, including the consequences of failing to comply with the term, the cost of alternative terms and the financial circumstances of the person who imposes or proposes to impose the term10. It is not necessary that the discriminator is aware that he or she is indirectly discriminating by the imposition, or proposed imposition, of the term11. The Deputy Registrar's powers under the Jury Act The Deputy Registrar, acting pursuant to a delegation, was exercising powers that are conferred on the Sheriff of Queensland under the Jury Act 1995 (Q) ("the Jury Act")12. The Deputy Registrar had the responsibility of preparing lists of prospective jurors for the Ipswich jury district13. The names of the persons included in those lists were drawn from the jury roll for the Ipswich jury 7 ADA, s 10(3). 8 ADA, s 10(4). 9 ADA, s 11(1). 10 ADA, s 11(2). 11 ADA, s 11(3). 12 Jury Act, s 72. 13 Jury Act, s 15. Bell Nettle district. The Deputy Registrar was required to give each prospective juror a written notice informing the recipient that he or she had been summoned for jury service accompanied by a questionnaire and an application form14. The questionnaire was designed to find out whether the recipient was qualified to serve as a juror15. The application form provided the recipient with a means of applying to be excused from jury service16. Upon application, the Deputy Registrar had the power to excuse a person from jury service17. The Deputy Registrar was required to revise the list of prospective jurors after the return of the questionnaires18. She was required to exclude from the list the names of persons who in her opinion were not qualified for jury service19. She was empowered to make reasonable inquiries to find out if a person was not qualified for jury service20. The revised list of prospective jurors formed the basis for the issue of summonses for jury service in the Ipswich jury district21. The appellant's name was included in the list of prospective jurors for the Ipswich jury district and she was sent a notice stating that she may be summoned for jury service. The appellant did not apply to be excused from jury service. Her answers to the questions in the questionnaire did not suggest that she was not qualified for jury service. The Deputy Registrar was required to summon enough prospective jurors to enable the selection of juries for trials starting in the Ipswich jury district in a jury service period22. The appellant was summoned for jury service by summons 14 Jury Act, s 18(1) and (2). 15 Jury Act, s 18(2)(a). 16 Jury Act, s 18(2)(b). 17 Jury Act, s 19(1). 18 Jury Act, s 24(1). 19 Jury Act, s 24(2). 20 Jury Act, s 24(3). 21 Jury Act, s 25(1). 22 Jury Act, s 26(1). Bell Nettle which required her to be available to attend the District Court at Ipswich for a period of three weeks commencing on 13 February 2012. The appellant wrote to the Ipswich Courthouse following receipt of the summons stating that she was "[l]ooking forward to sitting on the Jury" and advising that she is deaf and would require the services of two Auslan interpreters. The Deputy Registrar responded to the appellant's request by email stating: "After confirming with the Sheriff at the Brisbane Supreme & District Courts, unfortunately you won't be able to perform jury service. There is no provision in the Jury Act to swear in an interpreter for a juror. It also isn't possible to have another person in the jury room other than the jurors and bailiff whilst deliberating. I will need to excuse you on that basis. If, in the future, you get another jury questionnaire, please note on it that you are a deaf person." The appellant asked the Deputy Registrar to supply her with "a copy of the Jury Act that says [she is] not allowed to be on the Jury". In response to this request, the Deputy Registrar supplied the appellant with an extract of s 4(3)(l) of the Jury Act. Section 4(1) of the Jury Act provides that a person is qualified to serve as a juror at a trial within a jury district if the person is enrolled as an elector, the person's address as shown on the electoral roll is within the jury district and the person is eligible for jury service. Section 4(3) relevantly provides: "The following persons are not eligible for jury service – a person who has a physical or mental disability that makes the person incapable of effectively performing the functions of a juror". The Deputy Registrar was required to arrange for the attendance before the District Court at Ipswich of a jury panel formed from among the persons summoned for jury service for the period beginning 13 February 2012 and who had not been excluded from the list of prospective jurors by reason of being not Bell Nettle qualified for jury service23. The Deputy Registrar did not arrange for the attendance of the appellant as a member of the jury panel. The Deputy Registrar is an officer of the Queensland Department of Justice and Attorney-General for whose conduct the State is vicariously liable under the ADA24. The procedural history A person who is the subject of an alleged contravention of the ADA may complain to the Anti-Discrimination Commissioner ("the Commissioner")25. If the Commissioner believes that a complaint may be resolved by conciliation, the Commissioner must try to resolve the complaint in that way26. If the complaint has not been resolved by conciliation following a conciliation conference, the complainant may give the Commissioner a written notice requiring that the complaint be referred to the Queensland Civil and Administrative Tribunal ("the Tribunal")27. The appellant complained to the Commissioner that the State of Queensland ("the State") had unlawfully discriminated against her directly and indirectly in the administration of Queensland law and Queensland Government programs contrary to s 101 of the ADA. The appellant's complaint was not resolved by conciliation and she gave notice to the Commissioner requiring that it be referred to the Tribunal28 for determination29. The Commissioner referred the complaint to the Tribunal on 16 July 2012. 23 Jury Act, s 36. 24 ADA, s 133. 25 ADA, s 134. 26 ADA, s 158. 27 ADA, s 164A. 28 ADA, s 164A(2). 29 ADA, s 174A(a); Queensland Civil and Administrative Tribunal Act 2009 (Q), s 10(1)(b). Bell Nettle The appellant lodged a statement of contentions with the Tribunal. The statement particularised the law as the Jury Act and the Government program as the administrative arrangements associated with the assembly and formation of juries and the conduct of jury trials pursuant to the Jury Act. The appellant asserted that a necessary incident of the power to summon persons for jury service is the requirement that the State provide facilities and services to enable those persons to participate in the jury selection process. She stated that she had requested Auslan interpretation of proceedings and that the Deputy Registrar had refused to provide it and had purported to excuse her from jury service. The Tribunal accepted the expert evidence led in the appellant's case that there is no significant difference between the capacity of deaf persons for whom proceedings are interpreted in Auslan and hearing persons in their respective capacities to understand legal proceedings. This evidence was said to be in accord with the Report of the New South Wales Law Reform Commission30 and the experience in jurisdictions in which deaf persons perform jury duty. The Tribunal found, however, that the Deputy Registrar's decision to exclude the appellant's name from the jury panel was not made on the basis of the appellant's impairment. The Tribunal found that the decision was made because the Deputy Registrar considered that under s 4(3)(l) of the Jury Act, the appellant was not eligible for jury service: she did not have the capacity to effectively perform the functions of a juror in circumstances in which there is no provision to administer an oath (or affirmation) to a person interpreting for a juror and the Jury Act does not permit a 13th person to be kept together with the jury. The Tribunal found that the Deputy Registrar's understanding of the scope of s 4(3)(l) was incorrect but that this did not affect the Tribunal's conclusion that the appellant had not been subject to less favourable treatment on the basis of her impairment. The Tribunal said that the appropriate comparator was a prospective juror who requested the assistance of another person in the jury room in case the prospective juror did not understand all that was said there. The appellant's case in indirect discrimination contended that the Deputy Registrar imposed a condition on her participation in the jury selection process that she be able to communicate with others by means of conventional speech, a condition with which she was unable to comply and with which a higher proportion of people who are not deaf are able to comply. The Tribunal rejected 30 New South Wales Law Reform Commission, Deaf jurors' access to court proceedings via sign language interpreting: An investigation, Research Report 14, Bell Nettle this contention, finding that the Deputy Registrar had not imposed any condition on the appellant's participation in the jury selection process. The appellant's complaint was dismissed. The appellant appealed to the Appeal Tribunal (Cullinane PJM and Oliver SM)31. The State filed a notice of contention seeking to uphold the Tribunal's reasons on the ground that the Deputy Registrar's construction and application of the Jury Act was correct. In the interval between the publication of the Tribunal's reasons and the hearing before the Appeal Tribunal, the Supreme Court of Queensland (Douglas J) determined the like question in a proceeding initiated by the Sheriff32. His Honour held that a deaf person who required the services of an Auslan interpreter was not eligible for jury service under s 4(3)(l) of the Jury Act because the person is unable to effectively perform the functions of a juror33. His Honour reasoned that, in the absence of legislative provision, the necessity to maintain the secrecy of its deliberations does not permit an interpreter to be present in the jury room during the jury's retirement34. The absence of statutory provision to administer an oath or affirmation requiring an interpreter to keep the jury's deliberations secret reinforced this conclusion35. The Appeal Tribunal agreed with Douglas J's analysis, which provided a complete answer to the appellant's complaint. The Court of Appeal of the Supreme Court of Queensland (Holmes and Gotterson JJA and Mullins J) refused leave to appeal from the Appeal Tribunal's orders. Although it was not necessary to the decision, Holmes JA (as her Honour then was), giving the leading judgment of the Court of Appeal, considered that the Appeal Tribunal was right to hold that a deaf person who requires an Auslan interpreter in order to communicate in the course of deliberations in the jury room is incapable of effectively performing the functions of a juror36. 31 Queensland Civil and Administrative Tribunal Act 2009 (Q), s 142(3)(b). 32 Re Application by Sheriff (Qld) (2014) 241 A Crim R 169. 33 Re Application by Sheriff (Qld) (2014) 241 A Crim R 169 at 171 [9]. 34 Re Application by Sheriff (Qld) (2014) 241 A Crim R 169 at 170 [4], [6]. 35 Re Application by Sheriff (Qld) (2014) 241 A Crim R 169 at 170 [5]. 36 Lyons v Queensland (2015) 328 ALR 550 at 563 [47]. Bell Nettle The appellant appeals by special leave from the orders of the Court of Appeal37. The appellant's case The appellant submits that it is ineluctable that her deafness was the "true basis" or "real reason" for the Deputy Registrar's decision to exclude her from the jury panel. The Tribunal's error, in her submission, was to fail to give effect to s 10(5) of the ADA. The Tribunal was required to treat the appellant's need for Auslan interpretation as irrelevant to the determination of whether she was subjected to less favourable treatment. Given that Auslan interpretation cannot be separated from the person who provides it, the Tribunal erred in selecting as a comparator a hearing person who asked to have another person present to assist him or her during the jury's deliberations. Alternatively, the appellant submits that the Tribunal erred by rejecting her indirect discrimination case. She contends that it was not necessary that the Deputy Registrar in terms convey to her a requirement that she satisfy a specified condition for inclusion in the jury panel. The Deputy Registrar's conclusion that an Auslan interpreter may not be present in the jury room amounted to the imposition of a condition that the appellant not require an Auslan interpreter38. In either way the appellant's case is framed, the antecedent issue is the correctness of the Appeal Tribunal's conclusion that, under Queensland law, an Auslan interpreter is not permitted to be present during the jury's deliberations. This directs attention to the provisions of the Jury Act governing the conduct of jury trials. The Jury Act Section 50 of the Jury Act provides: "The members of the jury must be sworn to give a true verdict, according to the evidence, on the issues to be tried, and not to disclose anything about the jury's deliberations except as allowed or required by law." Provisions of the Jury Act govern the segregation of the jury in criminal cases. Section 53(1) enacts the common law rule that after the jury in a criminal trial has been sworn, it must not separate until it has given its verdict or been 37 [2016] HCATrans 060 per Kiefel and Nettle JJ. 38 Catholic Education Office v Clarke (2004) 138 FCR 121. Bell Nettle discharged. The rigour of that rule is ameliorated by the remaining sub-sections, which variously provide for separation subject to the judge not being of the opinion that separation would prejudice a fair trial. Section 55 provides that while the jury is kept together outside the courtroom, the jurors must be kept in a private place under the supervision of an officer of the court or as the judge directs. Section 54 relevantly provides: "(1) While a jury is kept together, a person (other than a member of the jury or a reserve juror) must not communicate with any of the jurors without the judge's leave. (2) Despite subsection (1) – the officer of the court who has charge of the jury may communicate with jurors with the judge's leave; and if a juror is ill – communication with the juror for arranging or administering medical treatment does not require the judge's leave." The parties' submissions The appellant submits that Douglas J's interpretation of the Jury Act, on which the Appeal Tribunal relied, should not be accepted because it fails to give the Jury Act an harmonious operation with the ADA. The latter Act has as its object the promotion of equality of opportunity for everyone by protecting them from unfair discrimination in areas of activity including in the performance of functions and the exercise of powers under Queensland law. In light of the command of the ADA to treat the need of a person with an impairment for special services as irrelevant to the determination of unlawful discrimination, communications made in the presence of an Auslan interpreter while the jury is kept together should be understood as disclosures that are "allowed by law". Alternatively, the judge's power under s 54(1) is said to be sufficiently wide to permit the grant of leave permitting an Auslan interpreter to be present in the jury room throughout the jury's deliberations. The grant of leave, it is said, would not prejudice a fair trial given that the interpreter acts merely as a conduit through which communications are conveyed and is subject to professional obligations of confidentiality. The appellant's argument accepts that her impairment may prevent her from effectively performing the functions of a juror in some cases. She instances a trial at which voice identification is expected to be an issue. In such a case, she Bell Nettle observes, the court retains the power to excuse her39. Her complaint is that the Deputy Registrar's decision prevented her from being included in the process of jury selection regardless of whether the issues at any trial for which she was selected might disqualify her from jury service. The predecessor to the Jury Act40 exempted from jury service "persons who are blind, deaf, or dumb, or are of unsound mind or are otherwise incapacitated by disease or infirmity"41. The appellant argues that the legislative choice reflected in the present Act, to impose a functional test rather than to exclude from jury service all persons having some form of impairment, reflects a legislative intention that juries be representative of the community as a whole42. She submits that s 4(3)(l) requires a case by case evaluation of the ability of the prospective juror to perform jury service and, consistently with the ADA, serves to eliminate discrimination on the basis of irrelevant characteristics. The State adopts Douglas J's analysis in Re Application by Sheriff (Qld). Additionally, by notice of contention, the State seeks to have the Court of Appeal's decision affirmed on the ground that the phrase "perform the functions of a juror" for the purposes of s 4(1)(c) of the Jury Act describes both listening to oral evidence and participating in the deliberations of the jury without the need for a non-juror to be present. The State's argument is that a deaf juror who has the evidence mediated through the services of an Auslan interpreter is not able to give a true verdict based upon his or her assessment of the evidence. Interpretation of the evidence to a juror is said to result in a trial that is no longer wholly under the supervision of the judge. The trial at which the evidence of one or more witnesses is interpreted is distinguished, in the State's argument, on the basis that in such cases each juror gives a true verdict according to the same evidence. Moreover, in such cases a party who is dissatisfied with the accuracy of the interpretation may challenge it. There is no way to challenge the accuracy of the interpretation of communications made in the jury room. Consideration In the event, the State's contention is not reached. Absent specific statutory provision, the contention that disclosure of the jury's deliberations to an 39 Jury Act, s 20. 40 Jury Act 1929 (Q). 41 Jury Act 1929 (Q), s 8(1)(s). 42 Queensland, Legislative Assembly, Jury Bill 1995, Explanatory Notes at 1. Bell Nettle Auslan interpreter is "allowed by law" must be rejected. The common law has long required that the jury be kept separate43. The possibility that, while the jury is kept together, one or more jurors may have communicated with a person other than a fellow juror (or officer of the court) is an irregularity which has been held to vitiate the verdict44. The presence of a person other than a juror in the jury room during the course of deliberations is an incurable irregularity regardless of whether the person takes any part in the jury's deliberations45. The prohibition on the presence of a 13th person in the jury room protects the jury from the suggestion of external influence and promotes the frank exchange of views. It is the latter consideration that informs the exclusionary rule which precludes the admission of evidence of the deliberations of the jury46. Each member of the jury is free to speak in the knowledge that no one other than fellow jurors, each of whom is bound by the oath taken at the commencement of the trial and each of whom will be responsible for the ultimate verdict, hears what is said. The appellant's contention that s 54(1) of the Jury Act extends to the grant of leave to an Auslan interpreter to be present during the jury's deliberations must also be rejected. Section 54(1) states a rule that while the jury is kept together no person other than a juror or reserve juror may communicate with any of the jurors without the judge's leave. The rule is subject to specific exception in the case of the officer who has the charge of the jury. That officer is permitted to communicate with the jurors with the judge's leave. The efficient conduct of the trial would be impeded were there no provision of that kind. However, the power to grant leave, whether to the officer who has charge of the jury or to another person, is to communicate with a juror or jurors while the jury is kept 43 Devlin, Trial by Jury, rev ed (1966) at 41-42; Holdsworth, A History of English Law, (1938), vol 11 at 553-554; Blackstone, Commentaries on the Laws of England, 15th ed (1809), bk 3 at 375. 44 R v Ketteridge [1915] 1 KB 467 at 470 per Lush J (delivering the judgment of the Court); R v Neal [1949] 2 KB 590 at 595-596 per Lord Goddard CJ (delivering the judgment of the Court) and see R v Crippen [1911] 1 KB 149 at 155 per Darling J (delivering the judgment of the Court). 45 Goby v Wetherill [1915] 2 KB 674; R v McNeil [1967] Crim LR 540; In re Osman [1995] 1 WLR 1327. 46 Smith v Western Australia (2014) 250 CLR 473 at 481 [30]-[31]; [2014] HCA 3; R v Pan [2001] 2 SCR 344 at 373 per Arbour J (delivering the judgment of the Court); R v Mirza [2004] 1 AC 1118. Bell Nettle together. It is not a power to grant leave to a person to be present during any part of the jury's deliberations. The conclusion is reinforced by the absence of provision to administer an oath to an interpreter assisting a juror. This is by way of contrast with the elaborate provision that is made in the Oaths Act 1867 (Q) for the form of oaths to be administered in judicial proceedings to interpreters: in civil causes47; in civil causes on the voir dire48; on the arraignment of any person49; between a prisoner, defendant or witness and others in a criminal trial50; and where the witness and the prisoner are speakers of different languages51. The omission is of any provision to administer an oath requiring the interpreter to swear (or affirm) that he or she understands Auslan and shall "well and truly interpret" the proceedings and the jury's deliberations to the juror. The omission is also of any provision to administer an oath requiring the interpreter to swear (or affirm) that he or she shall not participate in the jury's deliberations or disclose anything about those deliberations except as allowed or required by law. The conclusion is also reinforced by the treatment of the disclosure of jury information under s 70 of the Jury Act. Jury information, relevantly, is information about statements made, opinions expressed, arguments advanced, or votes cast, in the course of a jury's deliberations52. Section 70(2) makes it an offence for a person to publish jury information to the public. An Auslan interpreter in possession of jury information would be precluded from publishing that information on pain of criminal sanction. However, the prohibition on seeking the disclosure of jury information from a member or former member of the jury53 would not apply to an Auslan interpreter. Nor would the prohibition on the disclosure of jury information if the person has reason to believe that any of 47 Oaths Act 1867 (Q), s 26. 48 Oaths Act 1867 (Q), s 27. 49 Oaths Act 1867 (Q), s 28. 50 Oaths Act 1867 (Q), s 29. 51 Oaths Act 1867 (Q), s 30. 52 Jury Act, s 70(17). 53 Jury Act, s 70(3). Bell Nettle the information is likely to be or will be published to the public54 apply to an It may be, as the appellant submits, that the secrecy of the jury's deliberations would not be compromised by the presence of an accredited Auslan interpreter in the jury room during the jury's deliberations. Nonetheless, Douglas J was right to hold that, absent specific legislative provision for that to occur, Queensland law does not permit an Auslan interpreter to be present during the jury's deliberations. The Deputy Registrar rightly concluded that Queensland law did not permit an Auslan interpreter to assist the appellant while the jury was kept together. It followed that the appellant was incapable of effectively performing the functions of a juror55. This conclusion made the appellant ineligible for jury service56. A person who is not eligible for jury service is not qualified to serve as a juror57. The Deputy Registrar was required to exclude from the jury panel a person not qualified for jury service58. The Deputy Registrar was required under Queensland law to exclude the appellant from the jury panel. The exercise of the Deputy Registrar's powers in conformity with the command of the Jury Act did not the the ADA's prohibition on unlawful discrimination performance of a function or exercise of a power under Queensland law. infringe Order There should be the following order: Appeal dismissed. 54 Jury Act, s 70(4). 55 Jury Act, s 4(3)(l). 56 Jury Act, s 4(3). 57 Jury Act, s 4(1)(c). 58 Jury Act, s 36(2)(b). The reasons for judgment of the plurality demonstrate that, as one of the functions of a juror under the Jury Act is to deliberate with other jurors in isolation in order to give a verdict, a person who requires the assistance of an interpreter in order to communicate with other jurors is a person who is incapable of effectively performing the functions of a juror within the meaning of s 4(3)(l) of the Jury Act. What follows are my reasons for considering that conclusion to answer Ms Lyons' claim that the Deputy Registrar contravened the prohibition against discrimination in s 101 of the ADA. The Deputy Registrar's application of that meaning of s 4(3)(l) to exclude Ms Lyons from jury service did not amount to discrimination in the administration of the Jury Act within the meaning of the ADA. The ADA explains that it achieves its purpose, of promoting equality of opportunity for everyone by protecting them from unfair discrimination in certain areas of activity59, by prohibiting discrimination that is on a ground set out in Pt 2 of Ch 2, of a type set out in Pt 3, and in an area of activity set out in Pt 4, unless an exemption set out in Pt 4 or Pt 5 applies60. Part 2 of Ch 2 of the ADA explains the prohibited grounds of discrimination in terms of discrimination on the basis of any one of a number of listed attributes, one of which is impairment61. Part 3 explains the prohibited types of discrimination to comprise "direct discrimination" and "indirect discrimination"62, the elements of which are explained in the reasons for judgment of the plurality. Critical to the disposition of the present case is that an implicit element of direct discrimination is that the attribute is a "substantial reason" for the relevant treatment63 and that an explicit element of indirect discrimination is that the term imposed not be "reasonable"64. Of the numerous areas of activity set out in Pt 4, that relevant for present purposes is administration of State laws and State Government programs. That area is dealt with within Pt 4 by s 101, which provides: 59 Section 6(1) of the ADA. 60 Section 6(2) of the ADA. 61 Section 7(h) of the ADA. 62 Section 9 of the ADA. 63 Cf s 10(4) of the ADA. 64 Section 11(1) of the ADA. "A person who – performs any function or exercises any power under State law or for the purposes of a State Government program; or has any other responsibility for the administration of State law or the conduct of a State Government program; must not discriminate in – the performance of the function; or the exercise of the power; or the carrying out of the responsibility." On the facts found by the Tribunal, the Deputy Registrar's exclusion of Ms Lyons from jury service was not in the performance of any function or the exercise of any power which she had as a delegate of the sheriff under the Jury Act. The exclusion rather occurred in the course of the Deputy Registrar carrying out responsibility for the administration of the Jury Act in a genuine attempt to give effect to s 4(3)(l)65. There is no suggestion that any of the exemptions set out in Pt 4 or Pt 5 applied to the action of the Deputy Registrar. Nevertheless relevant is the exemption created by s 106, which provides: "(1) A person may do an act that is necessary to comply with, or is specifically authorised by – an existing provision of another Act; or In this section – existing provision means a provision commencement of this section." in existence at the At the time of the commencement of s 106 of the ADA in 1992, the Jury Act had not been enacted. Section 8(1)(s) of the Jury Act 1929 (Q) at that time prohibited the insertion in any jury list of the names of "persons who are blind, deaf, or dumb, or are of unsound mind or are otherwise incapacitated by disease 65 Lyons v State of Queensland (No 2) [2013] QCAT 731 at [57]-[58], [169]. or infirmity". Section 106(1)(a) of the ADA exempted a person who observed the prohibition in s 8(1)(s) in the course of administering that existing provision from compliance with s 101 of the ADA. With the subsequent enactment of the Jury Act in 1995, s 106(1)(a) of the ADA had no application to exempt an act done by the Deputy Registrar in compliance with s 4(3)(l) of the Jury Act from the necessity for that act to comply also with s 101 of the ADA. Section 4(3)(l) was not an existing provision. The question is then as to how those two statutory imperatives are to be reconciled. Ms Lyons answers that the application of s 4(3)(l) of the Jury Act by a person administering the Jury Act is controlled by s 101 of the ADA: s 4(3)(l) requires the making of a functional assessment and s 101 requires that assessment to be made in a non-discriminatory way. The State answers that the Jury Act impliedly repealed the ADA. Ms Lyons' answer depends on reading s 4(3)(l) of the Jury Act as allowing for administrative choice in its application. That reading is not open. Functional though it is, s 4(3)(l) enacts no more than a definition. The definition is objective and self-executing. The definition is either met or not met independently of any action, inaction, knowledge or opinion of a person administering the Jury Act. The State's answer is not compelling. It depends first on establishing that there is inconsistency between the Jury Act and the ADA and second on resolving that inconsistency in favour of the Jury Act. Establishing inconsistency encounters the presumption that the legislature intended both to operate66, a presumption which is reinforced by the limited carve-out from the operation of the ADA effected by s 106(1)(a). Resolving inconsistency in favour of the Jury Act would sit uncomfortably both with the enactment of the Jury Act against the background of s 101 of the ADA and with the avowed purpose of the Jury Act of ensuring that juries are more representative of the community67. The better answer is that to act in the administration of the Jury Act solely to give effect to the definition in s 4(3)(l) is not to discriminate against the person to whom the definition applies either by way of direct discrimination or by way of indirect discrimination. Leaving the satisfaction of other elements of those two types of discrimination entirely to one side, the act cannot be direct discrimination because the sole reason for it is to give effect to the definition and 66 Saraswati v The Queen (1991) 172 CLR 1 at 17; [1991] HCA 21; Ferdinands v Commissioner for Public Employment (2006) 225 CLR 130 at 134 [4], 138 [18], 163 [109]; [2006] HCA 5. 67 Queensland, Legislative Assembly, Jury Bill 1995, Explanatory Notes at 1. the act cannot be indirect discrimination because (assuming the act to involve the imposition of a term) a term that does no more than give effect to the definition cannot be unreasonable. |
HIGH COURT OF AUSTRALIA PGA AND THE QUEEN APPELLANT RESPONDENT PGA v The Queen [2012] HCA 21 30 May 2012 ORDER Appeal dismissed. On appeal from the Supreme Court of South Australia Representation D M J Bennett QC with P F Muscat SC and A L Tokley for the appellant (instructed by Legal Services Commission (SA)) M G Hinton QC, Solicitor-General for the State of South Australia with K G Lesses for the respondent and intervening on behalf of the Attorney-General for the State of South Australia (instructed by Director of Public Prosecutions S J Gageler SC, Solicitor-General of the Commonwealth with G A Hill intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) J D McKenna SC with G J D del Villar intervening on behalf of the Attorney- General of the State of Queensland (instructed by Crown Law (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS PGA v The Queen Criminal law – Rape – Husband's immunity from prosecution for rape of wife – Presumption of consent to intercourse by wife in marriage – Appellant charged in 2010 with two counts of rape contrary to s 48 of Criminal Law Consolidation Act 1935 (SA) – Alleged rapes committed in 1963 against then spouse – Legislative amendments enabled institution of proceedings despite lapse of time – Elements of offence of rape in 1963 supplied by common law – Whether in 1963 common law of Australia presumed consent by wife in marriage. Precedent – Judicial method – Development of common law – Whether presumption of consent by wife in marriage was part of common law of Australia – Whether statement of common law in R v L (1991) 174 CLR 379 applied to events alleged to have occurred in 1963. Words and phrases – "common law", "marital exemption", "marital immunity", "presumption of consent", "rape", "retrospective application". Criminal Law Consolidation Act 1935 (SA), s 48. Matrimonial Causes Act 1857 (UK) (20 & 21 Vict c 85). FRENCH CJ, GUMMOW, HAYNE, CRENNAN AND KIEFEL JJ. The appellant and his wife, the complainant, were lawfully married in South Australia on 1 September 1962. At the relevant times in 1963 they remained lawfully married and were cohabiting in South Australia as husband and wife at the house of her parents; there were in force no legal orders or undertakings of any kind which affected their matrimonial relationship. The charges On 5 July 2010, by information of the Director of Public Prosecutions of South Australia, the appellant was charged for trial in the District Court of South Australia with two counts of carnal knowledge, with four counts of assault occasioning actual bodily harm and, what is immediately relevant for this appeal, with two counts of rape (counts 3 and 5) contrary to s 48 of the Criminal Law Consolidation Act 1935 (SA) ("the CLC Act"). The particulars of count 3 were that between 22 March 1963 and 25 March 1963, at Largs Bay in South Australia, the appellant had vaginal sexual intercourse with his wife without her consent. The particulars of count 5 were that on or about 14 April 1963, also at Largs Bay, the appellant had vaginal sexual intercourse with his wife without her consent. The issue before the Court is whether the appellant is correct in his contention that, as a matter of the common law, upon their marriage in 1962 his wife had given her consent to sexual intercourse and thereafter could not retract her consent, at least while they remained lawfully married, with the result that he could not be guilty of raping her as charged by counts 3 and 5. The proposition of law upon which the appellant relies has its source in a statement in extra-judicial writings of Sir Matthew Hale, Chief Justice of the Court of King's Bench (1671-1676), which were first published in 1736 as The History of the Pleas of the Crown. The statement by Hale is more fully set out later in these reasons1, but is encapsulated in the bald proposition that a husband cannot be guilty of a rape he commits upon his wife. It was repeated in East's work A Treatise of the Pleas of the Crown, published in 18032; by Chitty in his A Practical Treatise on the Criminal Law, published in 18163; and by Russell in A 2 Volume 1, Ch 10, §8. 3 Volume 3 at 811. Crennan Treatise on Crimes and Misdemeanors, the first edition of which was published in 18194. In each case the proposition was further repeated in later 19th century editions. What, however, was lacking in all these standard texts was any statement and analysis of reasoning which might have supported the statement by Hale and its continued acceptance. Given this state of affairs, it is perhaps not surprising that the Canadian Criminal Code of 1892 (s 266) and the Criminal Code of Queensland of 1899 (s 347), in defining the crime of rape, included the phrase "not his wife"5. The provisions in the Queensland Code, and those of Western Australia and Tasmania, were to be amended in 1989, 1985 and 1987 respectively6. The attempted abstraction and statement of doctrine in provisions of a code by means of propositions which do not represent generalised deductions from particular instances in the case law occasions difficulty when the common law later is shown to be to different effect7. Justice Holmes, in his essay "Codes, and the Arrangement of the Law"8, wrote: "New cases will arise which will elude the most carefully constructed formula. The common law, proceeding, as we have pointed out, by a series of successive approximations – by a continual reconciliation of cases – is prepared for this, and simply modifies the form of its rule. But what will the court do with a code? If the code is truly law, the court is confined to a verbal construction of the rule as expressed, and must decide the case wrong. If the court, on the other hand, is at liberty to decide ex 4 Volume 1, Bk 2, Ch 6, §1. 5 By 1984 over 40 of the United States retained statute laws conferring some form of marital exemption for rape: People v Liberta 474 NE 2d 567 at 572-573 (1984). However, in that case the New York provision was held invalid as denying the the United States equal protection required by Constitution. the 14th Amendment 6 See R v L (1991) 174 CLR 379 at 402; [1991] HCA 48. 7 See Murray v The Queen (2002) 211 CLR 193 at 206-207 [40]; [2002] HCA 26; Director of Public Prosecutions (NT) v WJI (2004) 219 CLR 43 at 53-54 [30]-[31]; [2004] HCA 47. (1870) 5 American Law Review 1, reprinted in Novick (ed), The Collected Works of Justice Holmes, (1995), vol 1, 212 at 213. Crennan ratione legis, – that is, if it may take into account that the code is only intended to declare the judicial rule, and has done so defectively, and may then go on and supply the defect, – the code is not law, but a mere text-book recommended by the government as containing all at present known on the subject." Indeed, in 1888, among the 13 judges sitting in the Court for Crown Cases Reserved, on the case stated in R v Clarence9 with respect to charges of "unlawfully and maliciously inflicting grievous bodily harm" and "assault occasioning actual bodily harm", contrary to s 20 and s 47 respectively of the Offences against the Person Act 1861 (UK)10 ("the 1861 UK Act"), differing views had been expressed as to whether the consent of the wife to intercourse with her husband had been vitiated by his failure to disclose to her that he was suffering from a contagious venereal disease. Thereafter, in the annotation to s 48 of the 1861 UK Act which appeared in Halsbury's Statutes of England, published in 192911, it was said: "It is said that a husband cannot be guilty of rape upon his wife as a principal in the first degree". (emphasis added) The 28th edition of Archbold's Pleading, Evidence & Practice in Criminal Cases, published in 1931, four years before the enactment of the CLC Act, cited Hale for the proposition expressed as: "It is a general proposition that a husband cannot be guilty of a rape upon his wife ... but it would seem that the proposition does not necessarily extend to every possible case"12. In the intervening period there appears to have been no reported case in England in which a husband had been prosecuted for the rape of his wife during their (1888) 22 QBD 23. 10 24 & 25 Vict c 100. 11 Volume 4 at 615. 13 See R v R [1992] 1 AC 599 at 614. Crennan As it stood in 1963, s 48 of the CLC Act stated: "Any person convicted of rape shall be guilty of felony, and liable to be imprisoned for life, and may be whipped." It is accepted that the elements of the offence of rape identified in s 48 were supplied by the common law. Section 4 of the CLC Act had wholly repealed The Criminal Law Consolidation Act 1876 (SA). As amended by s 13 and the Schedule to the Criminal Law Amendment Act 1925 (SA), s 60 of the 1876 statute had read: "Whosoever shall be convicted of the crime of rape shall be guilty of felony, and, being convicted thereof, shall be liable to be imprisoned for life, with hard labor, and may be whipped."14 The scheme of the legislation in South Australia, in its various forms, was to classify the offence of rape as a felony and to specify the range of punishments upon conviction. This followed the pattern in s 48 of the 1861 UK Act. The legislative emphasis upon the classification of the crime and the punishments which might be inflicted, leaving the elements of the crime itself to the common law, reflected past fluctuations in the statute law. Shortly after the enactment of the 1861 UK Act, there appeared in the 5th edition (1877) of Russell's work, A Treatise on Crimes and Misdemeanors15, the following: "This offence formerly was, for many years, justly visited with capital punishment; but it does not appear to have been regarded as equally heinous at all periods of our Constitution. Anciently, indeed, it appears to have been treated as a felony, and, consequently, punishable with death; but this was afterwards thought too hard; and, in its stead, another severe but not capital punishment was inflicted by William the Conqueror, namely, castration and loss of eyes, which continued till after Bracton wrote, in the reign of Henry III. The punishment for rape was still further mitigated, in the reign of Edward I, by the statute of Westm 1, c 13, which reduced the offence to a trespass, and subjected the party to 14 The Criminal Law Amendment Act 1925 (SA) omitted the words "or any term not less than four years". 15 Volume 1 at 858 (footnote omitted). Crennan two years' imprisonment, and a fine at the King's will. This lenity, however, is said to have been productive of terrible consequences; and it was, therefore, found necessary, in about ten years afterwards, and in the same reign, again to make the offence of forcible rape a felony, by the statute of Westm 2, c 34. The punishment was still further enhanced by the 18 Eliz c 7, s 1." The lapse of time Something should be said respecting the legal significance of the length of time between the alleged conduct in 1963 and the institution of proceedings in 2010. As the CLC Act stood in 1963, it included s 76a16. The effect of s 76a was that in respect of offences, including an offence against s 48, no information was to be laid more than three years after the commission of the offence. Section 76a was repealed by the Criminal Law Consolidation Act Amendment Act 1985 (SA). However, in R v Pinder17 it was held that the repeal of s 76a did not authorise the laying of an information which would deprive a person of immunity already acquired before the repeal of s 76a. The response of the legislature was to reverse the effect of this decision by the enactment of s 72A of the CLC Act by the Criminal Law Consolidation (Abolition of Time Limit for Prosecution of Certain Sexual Offences) Amendment Act 2003 (SA). The result was that a person, such as the appellant, who had acquired immunity by reason of the operation of the repealed s 76a had lost that immunity and could now be prosecuted. Changes have been made to the elements of the offence of rape, beginning with the Criminal Law Consolidation Act Amendment Act 1976 (SA), but it has not been submitted that these changes to the elements of the offence apply retrospectively. The permanent stay application On 6 July 2010 Herriman DCJ gave reasons for dismissing an application by the appellant for a permanent stay of proceedings. His Honour's reasons included the following passage: 16 This had been added by the Criminal Law Consolidation Act Amendment Act 1952 17 (1989) 155 LSJS 65. Crennan "The complainant's evidence is that in 1960 and 1961, when she was 15 or 16, the accused was in a relationship with her and she says that at that time they were living in her parents' house, albeit that he slept in a separate room. They were ultimately married in September 1962, when she was 17, but she says that before that age she had sexual intercourse with him on two occasions. Those two occasions represent counts 1 and 2 on the information. The parties then lived as husband and wife in her parents' house until mid-1963, when they went to their own premises. They separated in The complainant says that on two occasions, in March and April 1963, which she relates to times immediately before and soon after the birth of their first child, the accused had forcible sexual intercourse with her against her will. She says that she did not, at any time during the marriage, complain of carnal knowledge or, indeed, of that forced sexual intercourse. The time for laying of any such charges was then within three years of the act, so that the time for laying a complaint with respect to the carnal knowledge counts expired in about 1964 and, with respect to rape, in about 1966. Those time limits were not abolished until the year 2003. More importantly, there was, and, indeed, there remains, a real question as to whether in 1963 an offence of rape in marriage, as it is commonly called, was then part of the common law of this State." His Honour went on to stay the trial pending the statement for the Full Court of the Supreme Court of South Australia of a case under s 350(2)(b) of the CLC Act. This dealt with the argument of the appellant that at the time of the alleged offences in 1963, he could not, as a matter of law, have committed the crime of rape upon his wife. What was said in 1991 by four of the five members of this Court in R v L18 has been treated by the parties in the present litigation at least as having the result that by 1991 it was no longer the common law in Australia that by 18 (1991) 174 CLR 379 at 390 per Mason CJ, Deane and Toohey JJ, 405 per Crennan marriage a wife gave irrevocable consent to sexual intercourse with her husband. Herriman DCJ saw the outstanding issue for determination as being "was the offence of rape by one lawful spouse of another ... an offence known to the law of South Australia as at 1963?". A question to this effect was stated for consideration by the Full Court19. The Court (Doyle CJ and White J; Gray J dissenting) ordered that the question be answered as follows: "The defendant is liable at law to be found guilty of the offences of rape charged in count 3 and count 5 of the Information, notwithstanding that at the time of the alleged offence he was married to the alleged victim and was cohabiting with her, the marriage giving rise to no presumption of consent on her part to intercourse with her husband, and giving rise to no irrebuttable presumption to that effect." Gray J was of the contrary opinion and would have answered the question in the negative and applied the presumption of irrevocable consent. The appeal to this Court By special leave the appellant appeals to this Court seeking an order setting aside the answer given by Doyle CJ and White J. By Notice of Contention the respondent submits that, regardless of what follows from the decision in R v L20, the answer by Doyle CJ and White J, the majority in the Full Court, is to be supported on the basis that: (a) "the supposed marital exemption to the offence of rape ... was never part of the common law of Australia"; or (b) "if it ever was part of the common law of Australia, it ceased to be so as at the date of the commission of the offences in this matter". For the reasons which follow, if the "marital exemption" ever was part of the common law of Australia, it had ceased to be so by the time of the enactment in 1935 of s 48 of the CLC Act and thus before the date of the commission of the alleged offences charged as count 3 and count 5. It follows that the appeal must be dismissed. That conclusion does not involve any retrospective variation or modification by this Court of a settled rule of the common law. At the time of 19 (2010) 109 SASR 1. The Full Court sat as the Court of Criminal Appeal: see Lipohar v The Queen (1999) 200 CLR 485 at 504 [41]; [1999] HCA 65. 20 (1991) 174 CLR 379. Crennan the commission of the alleged offence the common law rule for which the appellant contends did not exist. The term "the common law" The references above to "the common law" and "the common law of Australia" require further analysis before consideration of the immediate issue concerning the crime of rape upon which this appeal turns. In his contribution under the heading "common law" in The New Oxford Companion to Law21, Professor A W B Simpson distinguishes five senses in which that term is used. The primary sense is that body of non-statutory law which was common throughout the realm and so applicable to all, rather than local or personal in its application. An example of such local or personal laws is the customary mining laws which had applied in various localities in England22. The second sense of the term is institutional, to identify the body of law administered in England by the three royal courts of justice, the King's Bench, Common Pleas and Exchequer, until the third quarter of the 19th century. The third sense is a corollary of the second, the expression "the common law" differentiating the law administered by those courts from the principles of equity administered in the Court of Chancery (and, one should add, from the law applied in the ecclesiastical courts until 1857 and the law applied in courts of admiralty). In that regard, Sir George Jessel MR emphasised in In re Hallett's Estate23 that, while the rules of the common law were "supposed to have been established from time immemorial", those of equity had been invented, altered, improved, and refined by the Chancellors from time to time, and he instanced "the separate use of [ie trust for] a married woman". With the development since the second half of the 19th century of appellate structures governing all species of primary decisions, judicial reasoning has tended not to invoke time immemorial and rather to follow the course which had been taken by the Chancellors in expounding legal principle. 21 Cane and Conaghan (eds), The New Oxford Companion to Law, (2008) at 164-166. 22 See TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576 at 587 [30]-[31]; [2010] HCA 49. 23 (1879) 13 Ch D 696 at 710. Crennan The fourth and fifth senses of "common law" identified by Professor Simpson are as follows: "The term 'common law' came, in a fourth sense, to have the connotation of law based on cases, or law evolved through adjudication in particular cases, as opposed to law derived from the analysis and exposition of authoritative texts. Indeed sometimes 'common law' is more or less synonymous with the expression 'case law'. Since the common law was developed by the judges, interacting with barristers engaged in litigation, the expression 'common law' came, in a related fifth sense, to mean law made by judges." This draws attention to a difficulty in the appellant's reliance in this case upon a principle of the common law based upon a statement in a text published in 1736, many years after the death of the author, without citation of prior authority and lacking subsequent exposition in cases where it has been repeated. In that regard, observations by six members of the Court in the Native Title Act Case24 are significant. Their Honours noted that the term "common law" might be understood not only as a body of law created and defined by the courts in the past, but also as a body of law the content of which, having been declared by the courts at a particular time, might be developed thereafter and be declared to be different. Writing at the time of the establishment of this Court, and when he was Professor of Law at the University of Adelaide, Sir John Salmond said25: "The statement that a precedent gains in authority with age must be read subject to an important qualification. Up to a certain point a human being grows in strength as he grows in age; but this is true only within narrow limits. So with the authority of judicial decisions. A moderate 24 Western Australia v The Commonwealth (1995) 183 CLR 373 at 484-486; [1995] HCA 47. 25 Salmond, "The Theory of Judicial Precedents", (1900) 16 Law Quarterly Review 376 at 383. See also Holmes, "Codes, and the Arrangement of the Law", (1870) 5 American Law Review 1, reprinted in Novick (ed), The Collected Works of Justice Holmes, (1995), vol 1, 212 at 212-213. Crennan lapse of time will give added vigour to a precedent, but after a still longer time the opposite effect may be produced, not indeed directly, but indirectly through the accidental conflict of the ancient and perhaps partially forgotten principle with later decisions. Without having been expressly overruled or intentionally departed from, it may become in course of time no longer really consistent with the course of judicial decision. In this way the tooth of time will eat away an ancient precedent, and gradually deprive it of all authority and validity. The law becomes animated by a different spirit and assumes a different course, and the older decisions become obsolete and inoperative." The term "the common law of Australia" Finally, in his treatment of "common law", Professor Simpson refers to the expansion of British imperial power and the creation of "a common law world". The common law was received in the Province of South Australia with effect 19 February 1836, but despite the differing dates of the reception of the common law in the Australian colonies, the common law was not disintegrated into six separate bodies of law; further, what was received included the method of the common law, which in Australia involved judicial determination of particular parts of the English common law which were inapplicable to local conditions26. The "common law" which was received did not include the jurisdiction with respect to matrimonial causes (including suits for declarations of nullity of marriage, judicial separation (a mensa et thoro) and restitution of conjugal rights) which in England was exercised by the ecclesiastical courts. This exclusion appears to have been a deliberate decision by the Imperial authorities27. Further, unlike the situation in England, in the Australian colonies there was to be no 26 Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 at 466-467; [1995] HCA 44; Lipohar v The Queen (1999) 200 CLR 485 at 508-509 [54]-[55]; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 557-558 [99]-[101], 559-560 [104], 588-589 [193]-[196]; [2001] HCA 29; R v Gardener and Yeurs (1829) NSW Sel Cas (Dowling) 108; Ex parte The Rev George King (1861) 2 Legge 1307; Campbell v Kerr (1886) 12 VLR 384. 27 Castles, An Australian Legal History, (1982) at 140-142; Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 242. Crennan established religion28. The Anglican church was expressly enjoined from exercising any authority or jurisdiction in matrimonial causes29. The result was that the jurisdiction with respect to matrimonial causes, as well as divorce, which has been exercised by the colonial and State courts always has been derived from local statute law, not received "common law". Further, in Skelton v Collins30, Windeyer J said of the reception in the Australian colonies of the doctrines and principles of the common law: "To suppose that this was a body of rules waiting always to be declared and applied may be for some people satisfying as an abstract theory. But it is simply not true in fact. It overlooks the creative element in the work of courts. It would mean for example, that the principle of Donoghue v Stevenson31, decided in the House of Lords in 1932 by a majority of three to two, became law in Sydney Cove on 26th January 1788 or was in 1828 made part of the law of New South Wales by 9 Geo IV c 83, s 25. In a system based, as ours is, on case law and precedent there is both an inductive and a deductive element in judicial reasoning, especially in a court of final appeal for a particular realm or territory." Inductive and deductive reasoning This creative element of both inductive and deductive reasoning in the work of the courts in Australia includes the taking of such steps as those identified by Sir Owen Dixon in his address "Concerning Judicial Method"32. In his words, these are: (i) extending "the application of accepted principles to new 28 Wylde v Attorney-General (NSW) (at the Relation of Ashelford) (1948) 78 CLR 224 at 257, 275-276, 285-286, 298; [1948] HCA 39; Scandrett v Dowling (1992) 27 NSWLR 483 at 534-541; Shaw, The Story of Australia, (1955) at 98-100. 29 Wylde v Attorney-General (NSW) (at the Relation of Ashelford) (1948) 78 CLR 224 at 284-285; Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 242. 30 (1966) 115 CLR 94 at 134; [1966] HCA 14. 32 (1956) 29 Australian Law Journal 468 at 472. Crennan cases"; (ii) reasoning "from the more fundamental of settled legal principles to new conclusions"; and (iii) deciding "that a category is not closed against unforseen instances which in reason might be subsumed thereunder". To these steps may be added one which is determinative of the present appeal. It is that where the reason or "foundation"33 of a rule of the common law depends upon another rule which, by reason of statutory intervention or a shift in the case law, is no longer maintained, the first rule has become no more than a legal fiction and is not to be maintained. An example is provided by a division of opinion in Brown v Holloway34 and Edwards v Porter35 respectively between this Court and the House of Lords, as to the consequences of the Married Women's Property Act 1882 (UK) ("the 1882 UK Act") and its Queensland counterpart36. Of those cases, it was said in Thompson v Australian Capital Television Pty Ltd37: "The issue [in Edwards v Porter] concerned the effect of the provision in [the 1882 UK Act] that married women were to be capable of suing or being sued as if each were a feme sole, the immediate issue being whether a husband remained liable at common law with his wife for a tort committed by her during joint coverture. In this Court it had previously been decided by Griffith CJ, O'Connor and Isaacs JJ that the liability of the husband was gone38. At common law the wife had been liable for her own torts but there was no way in which that liability could be enforced save by an action against her in which her spouse was joined as a party. The joinder of the husband was necessary only because the liability of the wife could not be made effective without his joinder as a party. The 33 See the statement by Lord Penzance in Holmes v Simmons (1868) LR 1 P & D 523 34 (1909) 10 CLR 89; [1909] HCA 79. 36 Married Women's Property Act 1890 (Q). 37 (1996) 186 CLR 574 at 614-615; [1996] HCA 38. See also at 584-585, 591. 38 Brown v Holloway (1909) 10 CLR 89. Crennan legislation39 removed that procedural disability and therefore the reason which had rendered the husband a necessary party. In Edwards v Porter, without consideration of the reasoning of this Court in Brown v Holloway, their Lordships divided 3:2 in favour of a decision that, notwithstanding the legislation, the husband remained liable to suit with his wife for her torts40. One of the minority, Viscount Cave 'The whole reason and justification for joining a husband in an action against his wife for her post-nuptial tort has therefore disappeared; and it would seem to follow, upon the principle "cessante ratione cessat lex," that he is no longer a necessary or proper party to such an action.'" It is with this reasoning in mind that there is to be understood the earlier statement by Dawson J in R v L42 that: "whatever may have been the position in the past, the institution of marriage in its present form provides no foundation for a presumption which has the effect of denying that consent to intercourse in marriage can, expressly or impliedly, be withdrawn. There being no longer any foundation for the presumption, it becomes nothing more than a fiction which forms no part of the common law." 39 In Brown v Holloway, the Married Women's Property Act 1890 (Q). [See also Married Women's Property Act 1883 (Tas), Married Women's Property Act 1883-4 (SA), Married Women's Property Act 1884 (Vic), Married Women's Property Act 1892 (WA), Married Women's Property Act 1893 (NSW).] 40 Later, in Ford v Ford (1947) 73 CLR 524 at 528; [1947] HCA 7, Latham CJ expressed the opinion that, in accordance with the then prevailing doctrine in Piro v W Foster & Co Ltd (1943) 68 CLR 313; [1943] HCA 32, this Court would follow the House of Lords at the expense of its own earlier decision. In any event, legislation in all States and Territories ensured that married status has no effect on the rights and liabilities of a woman in tort: Balkin and Davis, Law of Torts, 2nd ed (1996) at 836. 41 Edwards v Porter [1925] AC 1 at 10. 42 (1991) 174 CLR 379 at 405. Crennan That statement points the way to the resolution of this appeal. The common law crime of rape The point should first be made that, the issue of irrevocable consent by a wife apart, the common law with respect to the crime of rape did not remain static. Sir Edward Coke in The First Part of the Institutes of the Laws of England early in the 17th century wrote43: "'Rape.' Raptus is, when a man hath carnall knowledge of a woman by force and against her will." In 1957 in their joint reasons in Papadimitropoulos v The Queen44, Dixon CJ, McTiernan, Webb, Kitto and Taylor JJ referred to Australian decisions given in 1915, 1919 and 1947 when stating: "The modern history of the crime of rape shows a tendency to extend the application of the constituent elements of the offence. The 'violenter et felonice rapuit' of the old Latin indictment is now satisfied although there be no use of force: R v Bourke45. The 'contra voluntatem suam' requires only a negative absence of consent; (as to the need of the man's being aware of the absence of consent, see R v Lambert 46). The 'violenter et felonice carnaliter cognovit' is established if there has been some degree of penetration although slight, and no more force has been used than is required to effect it: R v Bourke47; R v Burles48." 43 (1628), Section 190. 44 (1957) 98 CLR 249 at 255; [1957] HCA 74. 45 [1915] VLR 289. 46 [1919] VLR 205 at 213. 47 [1915] VLR 289. 48 [1947] VLR 392. Crennan Their Honours added49: "To return to the central point; rape is carnal knowledge of a woman without her consent: carnal knowledge is the physical fact of penetration; it is the consent to that which is in question; such a consent demands a perception as to what is about to take place, as to the identity of the man and the character of what he is doing. But once the consent is comprehending and actual the inducing causes cannot destroy its reality and leave the man guilty of rape." The reference in Papadimitropoulos to "[t]he modern history of the crime of rape" may be seen as foreshadowing two points with respect to the development of the common law made by Dixon CJ shortly thereafter. In Commissioner for Railways (NSW) v Scott50 Dixon CJ spoke of the gradual growth of the legal system by proceeding by reasoning from accepted notions about remedies and rights to the evolution of rules "to govern new or changed situations to which an ever developing social order gives rise"; he went on to observe that "[t]he resources of the law for superseding or avoiding the obsolescent have for the most part proved sufficient". It is upon that sufficiency that the respondent relies in this appeal. The statement by Hale What now follows in these reasons emphasises that some care is required when visiting what Professor Glanville Williams described as "the museum of the English criminal law"51. The relevant passage in The History of the Pleas of the Crown appears in Ch 58, headed "Concerning felonies by act of parliament, and first concerning rape". The importance of statutory intervention in this respect may be seen from the passage from Russell's treatise set out earlier in these reasons52. 49 (1957) 98 CLR 249 at 261. 50 (1959) 102 CLR 392 at 399-400; [1959] HCA 29. 51 Williams, "The Legal Unity of Husband and Wife", (1947) 10 Modern Law Review Crennan Hale referred to the statement by Bracton that it was a good exception to an appeal (ie formal accusation) of rape that the parties were living in amicable concubinage, adding "and the reason was, because that unlawful cohabitation carried a presumption in law, that it was not against her will". Hale went on to say: "But this is no exception at this day[. I]t may be an evidence of an assent, but it is not necessary that it should be so, for the woman may forsake that unlawful course of life." (emphasis added) This is followed by the critical statement: "But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." (emphasis added) Several points may be made immediately. First, it is apparent from Hale's treatment of Bracton's view in the 13th century of concubinage that he did not regard what had been said in past times as necessarily expressing the common law "at this day" four centuries later. Secondly, Hale gave, as the reason for the proposition that a husband cannot be guilty of a rape upon his wife, the nature in law of the matrimonial relationship. But, in that regard, it was well settled that marriage was constituted by the present consent of the parties expressed under such circumstances as the law required, but without the requirement for consummation to complete the marriage53. Further, as explained later in these reasons54, the ecclesiastical courts did not enforce any duty of sexual intercourse between husband and wife. Thirdly, Hale did not explain the character in law of the proposition respecting rape in marriage, whether it stated an element of the offence, a defence, or an immunity. Nor did Hale refer to any prior cases which might be 53 Dalrymple v Dalrymple (1811) 2 Hag Con 54 at 62-63 [161 ER 665 at 668-669]; R v Millis (1844) 10 Cl & F 534 at 719 [8 ER 844 at 913]. Crennan said to illustrate and support the proposition. From the immediately preceding treatment by Hale of Bracton it is apparent that the proposition is more than a bar to the reception of evidence by the wife or a statement of her absolute testimonial incompetence in this respect. This is further apparent from what immediately follows in Hale's text. This is a treatment of what had been decided at the trial of Lord Audley before the House of Lords in 163155 as follows: "A the husband of B intends to prostitute her to a rape by C against her will, and C accordingly doth ravish her, A being present, and assisting to this rape: in this case these points were resolved, 1. That this was a rape in C notwithstanding the husband assisted in it, for tho in marriage she hath given up her body to her husband, she is not to be by him prostituted to another. 2. That the husband being present, aiding and assisting, is also guilty as a principal in rape, and therefore, altho the wife cannot have an appeal of rape against her husband, yet he is indictable for it at the king's suit as a principal. 3. That in this case the wife may be a witness against her husband, and accordingly she was admitted, and A and C were both executed." It should be added that in the 19th century, it was held in the Supreme Judicial Court of Massachusetts56 that there should be no arrest of judgment on the ground that the indictment had not alleged that the complainant was not the wife of any of those charged with raping her. The relevant passage from Hale had been cited, but Bigelow J responded57: "Such an averment has never been deemed essential in indictments for rape, either in this country or in England. The precedents contain no such allegation. See authorities before cited. A husband may be guilty at common law as principal in the second degree of a rape on his wife by assisting another man to commit a rape upon her; Lord Audley's case, 3 Howell's State Trials, 401; and under our statutes he would be liable to be punished in the same manner as the principal felon. Rev Sts c 133, §1. An indictment charging him as principal would therefore be valid. 55 The Trial of Lord Audley (1631) 3 St Tr 401. 56 Commonwealth v Fogerty 74 Mass 489 (1857). 57 74 Mass 489 at 491 (1857). Crennan Of course, it would always be competent for a party indicted to show, in defence of a charge of rape alleged to be actually committed by himself, that the woman on whom it was charged to have been committed was his wife. But it is not necessary to negative the fact in the indictment." Thus it will be seen that whatever its character in law, Hale's proposition was not framed in absolute terms, given his treatment of Lord Audley's Case. But what is important for the present appeal is further consideration of the reason given by Hale, which was based in an understanding of the law of matrimonial status in the second half of the 17th century when he wrote. Matrimonial status and its incidents in England In the period in which Hale wrote, and until the significant legislative changes in the course of the 19th century, each of the three jurisdictions in England represented by the courts of common law, the courts of equity and the ecclesiastical courts, had distinct roles in matters affecting matrimonial status58. The law applied in the common law courts had absorbed much canon law learning and it defined basic concepts such as legitimacy, procedural rights at law between spouses, and the duties and responsibilities of husbands, including their rights and duties in respect of the contracts and torts of their wives. Marriage had important consequences in property law, for establishing and securing inheritance of legal estates in land. In such contexts a court of common law would determine whether there had been a marriage. The common law also provided forms of action such as breach of promise to marry, criminal conversation by adulterers and seduction of daughters. As already observed59 by reference to the statement of Sir George Jessel MR in In re Hallett's Estate60, equity intervened in a notable fashion by means of the trust to reserve separate property for a wife after her marriage. In his lecture entitled "Of Husband and Wife", Chancellor Kent, after referring to the incompetency at common law of a married woman to deal with her property 58 See the discussion by Professor Cornish in The Oxford History of the Laws of England, (2010), vol 13 at 724-726. 60 (1879) 13 Ch D 696 at 710. Crennan as a feme sole61, went on to contrast the position in equity and described the procedural consequences as follows62: "The wife being enabled in equity to act upon property in the hands of her trustees, she is treated in that court as having interests and obligations distinct from those of her husband. She may institute a suit, by her next friend, against him, and she may obtain an order to defend separately suits against her; and when compelled to sue her husband in equity, the court may order him to make her a reasonable allowance in money to carry on the suit." The provision in the 1882 UK Act and in the corresponding colonial married women's property legislation63 that a married woman was capable of acquiring, holding and disposing of any real or personal property as her separate property, as if she were a feme sole, "without the intervention of any trustee", represented a triumph in statutory form of the principles of equity64. However, it was not until 1862, with the decision of Lord Westbury LC in Hunt v Hunt65, that the Court of Chancery enforced a negative covenant in a deed of separation not to sue in the ecclesiastical courts (or after 1857 in the Divorce Court) for restitution of conjugal rights. Ecclesiastical courts in England had limited powers to order separation of spouses but could not order the dissolution of marriage. This required a statute. Hale wrote in a period in which Parliamentary intervention was beginning. In 1669 a private Act was granted to Lord de Roos, and in 1692 to the Duke of Norfolk; only five such divorces were granted before 1714, but between 1800 and 1850 there were 9066. (Divorce by private Act of the legislature was to be 61 Kent, Commentaries on American Law, (1827), vol 2, 109 at 136. 62 Kent, Commentaries on American Law, (1827), vol 2, 109 at 137. 63 See fn 39. 64 Yerkey v Jones (1939) 63 CLR 649 at 675-676; [1939] HCA 3. 65 (1862) 4 De G F & J 221 [45 ER 1168]; see also Fielding v Fielding [1921] NZLR 66 Sir Francis Jeune, "Divorce", Encyclopaedia Britannica, 10th ed (1902), vol 27, Crennan attempted in 1853 in New South Wales, but the Instructions issued to colonial governors required that any Bill dealing with divorce be reserved for the Queen's pleasure67 and the Royal Assent was only given to the Bill after some delay68.) However, it should be noted that in Scotland since the 16th century, provision had been made for judicial grant of divorce on grounds of adultery of either spouse or malicious desertion for at least four years69. Given the significant settlement of Scots immigrants in the Australian colonies, this element of their inheritance should not be overlooked in understanding the development of Australian institutions70. In 1891, the English Court of Appeal held that habeas corpus would issue to free a wife confined by her husband in his house in order to enforce restitution of conjugal rights71. In R v L72 Brennan J said: "The ecclesiastical courts made decrees for the restitution of conjugal rights but the decree commanded a general resumption of cohabitation and did not purport to compel a spouse to do or abstain from doing particular acts in performance of a connubial obligation73. The legal significance of connubial obligations was to be found in the making of decrees based on breaches of those obligations. Breaches were established only by proof of conduct that was a gross infringement of a connubial right or by proof of a 67 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 68 Bennett, A History of the Supreme Court of New South Wales, (1974) at 144-145. 69 Walker, A Legal History of Scotland, (2001), vol 6 at 658, 661. 70 See generally, McPherson, "Scots Law in the Colonies", [1995] Juridical Review 191. 71 R v Jackson [1891] 1 QB 671. 72 (1991) 174 CLR 379 at 393. 73 Hunt v Hunt (1943) 62 WN (NSW) 129. Crennan continuous failure to perform a connubial obligation in satisfaction of the corresponding connubial right of the other spouse. The courts exercising jurisdiction in matrimonial causes recognized the mutual rights of husband and wife relating to sexual intercourse and, in granting or withholding their decrees, ascertained whether either party had wilfully and persistently refused to accord the right of sexual intercourse to the other party. From the days of the ecclesiastical courts, however, it was accepted that no mandatory order to compel sexual intercourse would be made." In 1933, when describing the nature and incidents of a decree for restitution of conjugal rights under the jurisdiction conferred by Pt III (ss 6-11) of the Matrimonial Causes Act 1899 (NSW), Dixon J observed in Bartlett v Bartlett74 that, so long as this remedy was retained, it must be treated as a process imposing an obligation, the performance or non-performance of which is ascertainable, and he added75: "On the one hand, it is clear that the obligation requires cohabitation, a physical dwelling together. On the other hand, it is clear that it does not require the resumption of sexual intercourse. It cannot, in fact, and in principle ought not to be understood as attempting to, control motives, feelings, emotions, sentiment or states of mind. Its operation must be limited to overt acts and conduct. ... Perhaps, all that can be said is that the decree of restitution requires the spouse against whom it is directed again to dwell with the other spouse in outward acceptance of the relationship, to act as if they were husband and wife maintaining a matrimonial home and to commence no course of conduct intended to cause a separation." Evatt J set out76 a passage from the reasons of Salmond J in Fielding v Fielding77 in which, with reference to the jurisdiction conferred by s 7 of the Divorce and Matrimonial Causes Act 1908 (NZ) for the issue of decrees for restitution of conjugal rights, Salmond J had said: 74 (1933) 50 CLR 3 at 15-16; [1933] HCA 53. 75 (1933) 50 CLR 3 at 16. 76 (1933) 50 CLR 3 at 18. 77 [1921] NZLR 1069 at 1071. Crennan "The Ecclesiastical Courts [in England] never professed or attempted by means of decrees for restitution of conjugal rights, and imprisonment for disobedience to such decrees, to enforce any duty of sexual intercourse between husband and wife. The basis of such a decree was the wrongful refusal of matrimonial cohabitation. The duty enforced was merely the duty of husband and wife to live together under the same roof in the normal relationship of husband and wife, but without reference to the question of intercourse." The divorce legislation The passage of the Matrimonial Causes Act 1857 (UK)78 ("the 1857 UK Act") later was described by Dicey as "a triumph of individualistic liberalism and of common justice"79. But it was the culmination of many years of agitation. Of the delay, Professor Cornish writes80: "It is less easy to explain why, given the long availability of judicial divorce in Scotland and its spread to other Protestant countries, the step did not come earlier. Jeremy Bentham, for instance, had been an advocate of fully consensual divorce, but subject to time delays for reflection and a bar on the re-marriage of a guilty party." (footnote omitted) The 1857 UK Act terminated the jurisdiction of the ecclesiastical courts in matrimonial matters (s 2) and vested that jurisdiction in the new Court for Divorce and Matrimonial Causes (s 6), but the Court was to act on the principles and rules which had been applied by the ecclesiastical courts (s 22). A decree dissolving marriage might be pronounced on a petition by the husband alleging adultery by the wife, and on a wife's petition, alleging adultery coupled with desertion for at least two years and without reasonable excuse, or alleging adultery with aggravated circumstances including "such Cruelty as without Adultery would have entitled her to a Divorce à Mensâ et Thoro" (ss 27 and 31). 78 20 & 21 Vict c 85. 79 Lectures on the Relation between Law and Public Opinion in England during the Nineteenth Century, 2nd ed (1914) at 347. 80 The Oxford History of the Laws of England, (2010), vol 13 at 781. Crennan In 1858 the Secretary of State for the Colonies conveyed to all colonial governors and legislatures the wish of the Imperial Government that steps be taken to introduce, "as nearly as the circumstances of the Colony will admit", the provisions of the 1857 UK Act81. The colonies acted accordingly, but at different paces: Matrimonial Causes Act 1858 (SA), Matrimonial Causes Act 1860 (Tas), Matrimonial Causes Act 1861 (Vic), Matrimonial Causes Act 1863 (WA), Matrimonial Causes Act 1865 (Q), Matrimonial Causes Act 1873 (NSW). This legislation did not need to abolish in the colonies the non-existent jurisdiction of ecclesiastical courts. Rather, it conferred jurisdiction in matrimonial causes on the Supreme Courts. The differential treatment in the 1857 UK Act between the grounds of divorce available to husbands and wives was carried into the initial colonial legislation. But there followed attempts by New South Wales and Victoria to assimilate and expand the grounds for divorce; the Governor's Instructions required these Bills to be reserved for the Royal Assent on advice of the Imperial Government and, initially, in circumstances of considerable controversy in the colonies, the Royal Pressure for reform of legislation respecting divorce was, however, maintained, particularly in the more populous colonies of New South Wales and Victoria83, and eventually succeeded. In Victoria The Divorce Act 1889 provided extended grounds for divorce84. Advocates of the women's movement in New South Wales were able to press for further liberalisation of the laws, despite the opposition of the churches85. The Divorce Amendment and Extension Act 1892 81 The Despatch by Lord Stanley to the Governor of New South Wales for presentation to both Houses of the Parliament is reproduced in Votes and Proceedings of the Parliament of New South Wales 1859-1860, vol 4 at 1169. 82 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 83 See the account given by Finlay, To Have But Not to Hold, (2005), Ch 3. 84 Which included adultery, desertion for a period of three years and upwards, habitual drunkenness, habitual cruelty to a wife, conviction for attempt to murder a wife, conviction for having assaulted a wife with intent to cause grievous bodily harm, or repeated assaults on a wife: The Divorce Act 1889 (Vic), s 11. 85 Grimshaw et al, Creating a Nation, (1994) at 172. Crennan (NSW) was expressed in terms similar to those of the Victorian Act. The extended grounds gave colonial women greater access to divorce than their contemporaries in the United Kingdom. Conclusions What was the immediate significance of these 19th century legislative measures for the continued vitality of the reasoning upon which Hale in the 17th century had based his proposition respecting "rape in marriage"? In answering that question it is convenient first to repeat what was said by the Supreme Court of New Jersey in State v Smith86 as follows: "We believe that Hale's statements concerning the common law of spousal rape derived from the nature of marriage at a particular time in history. Hale stated the rule in terms of an implied matrimonial consent to intercourse which the wife could not retract. This reasoning may have been persuasive during Hale's time, when marriages were effectively permanent, ending only by death or an act of Parliament87. Since the matrimonial vow itself was not retractable, Hale may have believed that neither was the implied consent to conjugal rights. Consequently, he stated the rule in absolute terms, as if it were applicable without exception to all marriage relationships. In the years since Hale's formulation of the rule, attitudes towards the permanency of marriage have changed and divorce has become far easier to obtain. The rule, formulated under vastly different conditions, need not prevail when those conditions have changed." To that may be added the statement in that case88: "If a wife can exercise a legal right to separate from her husband and eventually terminate the marriage 'contract', may she not also revoke a 'term' of that contract, namely, consent to intercourse?" 86 426 A 2d 38 at 42 (1981). 87 Clark, The Law of Domestic Relations in the United States, (1968) at 280-282. 88 426 A 2d 38 at 44 (1981). Crennan In similar vein is the statement made from the New South Wales Supreme Court bench by Sir William Windeyer in 1886, in which he regretted that while the State regarded marriage as a civil contract and in this case the contract had been destroyed by the husband "having done his best to degrade you", by reason of the then limited grounds of divorce then available to her in New South Wales, she had no redress89. Insofar as Hale's proposition respecting the nature of the matrimonial contract was derived from an understanding of the principles applied by the ecclesiastical courts, the following may be said. First, as Lord Brougham observed in R v Millis90: "[Marriage] was always deemed to be a contract executed without any part performance; so that the maxim was undisputed, and it was peremptory, 'Consensus, non concubitus, facit nuptias vel matrimonium.'" Secondly, with respect to the exercise of their jurisdiction in suits for restitution of conjugal rights, the ecclesiastical courts did not accept that the exercise of the mutual rights of spouses was to be an occasion of abuse and degradation. The following further remarks of Brennan J in R v L91 are in point: "To acknowledge a connubial obligation not to refuse sexual intercourse wilfully and persistently is to acknowledge that the giving of consent to acts of sexual intercourse is necessary to perform the obligation. It would have been inconsistent with such an obligation to hold that, on marriage, a wife's general consent to acts of sexual intercourse has been given once and for all. If no further consent was required on the part of a wife, how could there be a wilful and persistent refusal of sexual intercourse by her? The ecclesiastical courts never embraced the notion of a general consent to sexual intercourse given once and for all on marriage by either spouse." Thirdly, and in any event, in the Australian colonies jurisdiction with respect to matrimonial causes was not part of the general inheritance of the Supreme 89 Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 248. 90 (1844) 10 Cl & F 534 at 719 [8 ER 844 at 913]. 91 (1991) 174 CLR 379 at 396. Crennan Courts. They received such jurisdiction only by local statute in the second half of the 19th century. That legislation, as interpreted in the period before the enactment of the CLC Act in 1935, did not require, for compliance with a decree for restitution of conjugal rights, more than matrimonial cohabitation; in particular the duty of matrimonial intercourse was one of imperfect legal obligation because it could not be compelled by curial decree92. Finally, although Hale did not expressly rely upon it, his proposition respecting irrevocable consent could not have retained support from any common law concept that the wife had no legal personality distinct from that of her husband. This was never wholly accepted by the Court of Chancery, given the development there of the trust. The references earlier in these reasons to the significance of the married women's property legislation93 indicate that, by statute, the attitudes of the equity jurisdiction were given effect in the latter part of the 19th century to a significant degree throughout the legal system in England and the Australian colonies. To that may be added the significance of the conferral by the Commonwealth Franchise Act 1902 (Cth) of the universal adult franchise94. It has been said that the gaining of suffrage for women in South Australia in 1894 was critical to the national suffrage movement95. At the turn of the 20th century, suffragists in England were looking to what had been achieved in Australia96. An English suffragist, Dame Millicent Garrett Fawcett, writing in 1911 when women in England had not yet been granted suffrage, observed that97: 92 Bartlett v Bartlett (1933) 50 CLR 3 at 12, 15, 18. 94 See Roach v Electoral Commissioner (2007) 233 CLR 162 at 195-196 [70]-[71]; [2007] HCA 43. 95 Oldfield, Woman Suffrage in Australia, (1992) at 213 (Western Australia followed in 1899 through the passage of the Constitution Acts Amendment Act 1899 (WA)). 96 See for example Zimmern, Women's Suffrage in Many Lands, (1909) at 160; Fawcett, Women's Suffrage: A Short History of a Great Movement, (1911) at 59. 97 Fawcett, Women's Suffrage: A Short History of a Great Movement, (1911) at 59. Crennan "In the Commonwealth of Australia almost the first Act of the first Parliament was the enfranchisement of women. The national feeling of Australia had been stimulated and the sense of national responsibility deepened by the events which led to the Federation of the Independent States of the Australian Continent." By 1930 Isaacs J was able to say that98: "women are admitted to the capacity of commercial and professional life in most of its branches, that they are received on equal terms with men as voters and legislators, that they act judicially, can hold property, may sue and be sued alone". By the time of the enactment in 1935 of the CLC Act, if not earlier (a matter which it is unnecessary to decide here), in Australia local statute law had removed any basis for continued acceptance of Hale's proposition as part of the English common law received in the Australian colonies. Thus, at all times relevant to this appeal, and contrary to Hale's proposition, at common law a husband could be guilty of a rape committed by him upon his lawful wife. Lawful marriage to a complainant provided neither a defence to, nor an immunity from, a prosecution for rape. To reach that conclusion it is unnecessary to rely in general terms upon judicial perceptions today of changes in social circumstances and attitudes which had occurred in this country by 1935, even if it were an appropriate exercise of legal technique to do so. The conclusion follows from the changes made by the statute law, as then interpreted by the courts, including this Court, before the enactment of the CLC Act. Order The appeal should be dismissed. 98 Wright v Cedzich (1930) 43 CLR 493 at 505; [1930] HCA 4. HEYDON J. The events giving rise to this appeal allegedly took place in 1963. At that time it was universally thought in Australia that a husband could not be convicted of having sexual intercourse with his wife without her consent save where a court order operated or where there were other exceptional circumstances. This immunity from conviction was thought to exist because Sir Matthew Hale, who died in 1676, had asserted its existence in The History of the Pleas of the Crown, published in 1736. The reason he assigned was that on marriage wives irrevocably consented to sexual intercourse with their husbands99. Below the immunity will be called "the immunity" or "Hale's proposition". By what warrant did the State of South Australia seek in 2010 to prosecute the appellant for allegedly having sexual intercourse with his wife without her consent more than 47 years earlier? A sufficient answer to that question would be: "It had none, for the reasons that Bell J powerfully states." However, in deference to the arguments put by South Australia, a fuller answer should be given. One matter must be put aside, though the appellant may wish to rely on it at a later stage in these proceedings. This appeal is not directly concerned with any oppressiveness that results from the delay in prosecution. But that tardiness does support the appellant's submission that in 1963 there was no crime of rape for which he could be charged. One primary explanation which South Australia gave to the District Court for its delay was that the immunity created considerable doubt as to whether the appellant was liable for rape. Yet prosecutors have to demonstrate with clarity that the crimes they charge exist. South Australia tells the District Court that the appellant's liability was thought doubtful. It tells this Court that it is certain. South Australia's stance in the District Court is inconsistent with its dogmatic and absolute submissions in this Court. The first of its submissions in this Court was that the immunity never existed100. The second, alternative, submission was that even if the immunity had existed at one time, it had ceased to exist at some indeterminate time before South Australia put only those two submissions. It did not put a third submission – that even if the immunity existed and even if it had not ceased to exist up to now, it should be abolished now. That was a course which the 99 See below at [172]. 100 The first submission is discussed below at [71]-[113]. 101 The second submission is discussed below at [114]-[161]. English courts took in 1991102. It is a course which would raise issues different in some respects from those discussed below. South Australia's first submission: the detailed contentions South Australia's first submission was that it had never been the law, in England or in Australia, that a husband was immune from prosecution for having sexual intercourse with his wife without her consent. The Commonwealth supported that submission. It was based on a number of contentions. The first group of contentions centred on the following points. Hale's work was published 60 years after he died. The relevant part had not been revised before his death. Hale had not supported his statement with any reference to authority. Standing alone his proposition would not constitute the common law. At best it reflected "his view of a custom in 17th century England." As Blackstone asserted, "judicial decisions are the principal and most authoritative evidence, that can be given, of the existence of such a custom as shall form a part of the common law."103 A second group of contentions concerned ecclesiastical law. In the ecclesiastical courts there was no support for Hale's proposition. In ecclesiastical law each spouse had a right to sexual intercourse, but it was only to be exercised reasonably and by consent. This undermined the foundation of Hale's proposition. It revealed him to be mistaken in thinking that the wife's consent was irrevocable. It caused his proposition to be affected by "frailty". South Australia then turned to the history of Hale's proposition after he had enunciated it. It relied on Lord Lowry's very extreme statement that "Hale's doctrine had not been given the stamp of legislative, judicial, governmental and academic recognition."104 So far as "academic recognition" was concerned, South Australia submitted that the only statement of support for the immunity in absolute terms was that of Hale, and that there was no support for it in Blackstone. So far as "judicial … recognition" was concerned, South Australia submitted that Hale's proposition "was never authoritatively declared as part of the common law in Australia." It also submitted that no case had Hale's 102 R v R [1992] 1 AC 599. 103 Commentaries on the Laws of England, (1765), bk 1 at 69. 104 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. proposition as its ratio decidendi. There were only dicta and assumptions that the proposition existed. In some of the cases stating the dicta or resting on the assumptions Hale's proposition was cut down. There were also dicta to the contrary. Hale's proposition was further said to be inconsistent with some authorities. South Australia did not advance detailed submissions about any lack of "legislative" and "governmental" recognition. Perhaps it is hard to say much in support of negative propositions. However, there is a lot to be said against those two. Finally, South Australia submitted that the immunity was completely outdated and offensive to human dignity. It is convenient to deal with South Australia's first submission under the following headings. Defects in Hale's statement of the immunity It is immaterial that Hale's work was published 60 years after his death, that the reference to the immunity appears in a part of it which Hale had not revised, and that he stated no elaborate reasons justifying the immunity. Hale's work is capable of being an accurate account of the law of his day despite these things. There is no reason to suppose that, had he revised the relevant part of his work, he would have considered it desirable to change it. South Australia is not alone in complaining about Hale's failure to cite authorities105. But it is anachronistic to do so. The modern approach to precedent was only struggling to be born in Hale's day106. Hale himself said107: "the decision of courts of justice, though by virtue of the laws of this realm they do bind, as a law between the parties thereto, as to the particular case in question, till reversed by error or attaint; yet they do not 105 Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 878-883. The first maker of this criticism appears to have been Field J in R v Clarence (1888) 22 QBD 23 at 57. 106 Williams, "Early-modern judges and the practice of precedent", in Brand and Getzler (eds), Judges and Judging in the History of the Common Law and Civil Law: From Antiquity to Modern Times, (2012) 51. 107 The History of the Common Law of England, 6th ed (1820) at 89-90 (emphasis in original). make a law, properly so called; – for that only the king and parliament can do; yet they have a great weight and authority in expounding, declaring, and publishing what the law of this kingdom is; especially when such decisions hold a consonancy and congruity with resolutions and decisions of former times. And though such decisions are less than a law, yet they are a greater evidence thereof than the opinion of any private persons, AS SUCH, whatsoever". Hale's work often does not contain the dense citation of authorities characteristic of modern books. Indeed, many parts of it refer to only a few authorities. That is so of the passages in which he discusses the crime of rape. Hale did not cite direct authority for the immunity, or for his justification of the immunity. Whether there were in fact "authorities" of any kind to be cited on the present point is a matter which a 21st century court cannot easily deal with. It would need the assistance of close research into the question by modern legal historians with high expertise108. Subject to that matter, Hale did point out that there was authority for other propositions that he asserted. Those propositions were not inconsistent with the immunity. To some extent they supported it109. In view of Hale's high reputation for research into the criminal litigation of his day110, it seems likely that in practice husbands were not prosecuted for raping their wives, so that there were no authorities to cite. Even nowadays, a proposition can be correct though no precedent supports it. Ethical and tactical considerations prevent counsel from arguing what they perceive to be the unarguable. There are some propositions which seem too clear to the profession to be contradicted by argument. Propositions of that kind are widely accepted as good law. Subject to the research difficulties referred to in the previous paragraph, a lack of support from earlier authors such as Coke is, as Bell J explains, not significant and does not reveal Hale to be wrong111. Windeyer J once said: "an accepted rule of law is not to be overthrown by showing that history would not support it"112. None of the defects which 108 Australian Crime Commission v Stoddart (2011) 86 ALJR 66 at 81 [70]; 282 ALR 620 at 637; [2011] HCA 47. 109 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 153-156. See also below at [208]. 110 See below at [209]. 111 See below at [200]. 112 Commissioner for Railways (NSW) v Scott (1959) 102 CLR 392 at 447; [1959] HCA 29. supposedly existed in Hale's statement of the immunity prevented it from being an accepted rule of law. Hale and ecclesiastical law South Australia's appeal to ecclesiastical law encounters two difficulties. The first is that while the civil law of marriage was a matter for the ecclesiastical courts, the criminal law was a matter for the common law courts. Thinking in the ecclesiastical courts does not necessarily vitiate an account of the criminal law as administered in the common law courts. The second difficulty is that ecclesiastical law in the 17th century is another field not to be entered without expert assistance. In R v L113 Brennan J wrote at some length about ecclesiastical law. But the sources to which he referred were largely modern. None were contemporary with or earlier than Hale. Lord Lane CJ in R v R114 and Mason CJ, Deane and Toohey JJ in R v L115 pointed out that in Popkin v Popkin116 Sir William Scott (later Lord Stowell) stated: "The husband has a right to the person of his wife, but not if her health is endangered." Mason CJ, Deane and Toohey JJ commented that this showed that "even in the ecclesiastical courts, the obligation to consent to intercourse was not asserted in unqualified terms." If so, it also shows that Hale's proposition was not completely wrong. On the other hand, Brennan J did not think that Sir William Scott's statement showed that a husband had "a right to the person of his wife" without consent117. The submissions of the parties in this appeal did not take the matter further than Brennan J's researches took it. The parties did not cite any expert material throwing light on ecclesiastical law in or before Hale's time. For that reason, it is imprudent to examine it. 113 (1991) 174 CLR 379 at 391-402; [1991] HCA 48. 114 [1992] 1 AC 599 at 604. 115 (1991) 174 CLR 379 at 389. 116 (1794) 1 Hagg Ecc 765n [162 ER 745 at 747]. 117 R v L (1991) 174 CLR 379 at 398. Post-Hale writers South Australia submits that there is no statement of support for Hale's proposition except Hale himself, and that Hale's proposition has received no "academic recognition". That submission is extremely ambitious. It is also utterly incorrect. It is true that Hale's proposition is neither confirmed nor denied by Blackstone or Hawkins. Blackstone was writing at a considerable level of generality about much wider issues than those Hale wrote about. Whether or not it is right to describe Hawkins as "a somewhat second-rate institutional writer"118, it was not open to him to take up Hale's proposition in the first edition of his treatise. It appeared in 1716. Hale's work was not published until 1736. South Australia echoes the Crown's complaint to the House of Lords in R v R119 that the first writer to refer to the immunity after Hale was East in 1803. That is, however, less than 70 years after History of the Pleas of the Crown was published in 1736. In truth, Hale has enjoyed a great reputation. Lord Denning called him "the great Chief Justice Sir Matthew Hale"120. Hale's proposition garnered massive support from professional writers after 1803, and, as academic like too. lawyers emerged, Glanville Williams121, Smith and Hogan122 and Cross and Jones123 acknowledged the correctness of Hale's proposition. Like others who have attacked courts that relied on Hale's proposition124, South Australia failed to grapple with this uncomfortable point. Leading modern writers them from 118 Seaborne Davies, "The House of Lords and the Criminal Law", (1961) 6 Journal of the Society of Public Teachers of Law 104 at 110. 119 [1992] 1 AC 599 at 614. 120 Sykes v Director of Public Prosecutions [1962] AC 528 at 558. 121 Textbook of Criminal Law, 2nd ed (1983) at 236; "The problem of domestic rape", (1991) 141 New Law Journal 205 and 246. 122 Criminal Law, 6th ed (1988) at 430-432 (and all earlier editions). 123 Card (ed), Cross and Jones: Introduction to Criminal Law, 9th ed (1980) at 177 [9.2] (and all earlier editions). 124 For example, Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 One source of law is "informed professional opinion"125. Where there is little authority on a question of law, the opinions of specialist writers, particularly their concurrent opinions, are very important in revealing, and indeed in establishing, the law. That is particularly true of books written by practitioners. But it has force in relation to well-respected academic writers as well126. As Lord Reid said: "Communis error facit jus may seem a paradox but it is a fact."127 Owen J put the matter with trenchant simplicity in relation to the first edition of Archbold in 1822. It said128: "A husband … cannot be guilty of a rape upon his wife." Owen J said129: "It seems to me that the consequences of that statement is this: if he was right, then practitioners would follow what he said. Equally, however, if he was wrong, practitioners would follow what he said." Hale's proposition in the courts South Australia relied on Lord Lowry's statement that Hale's proposition had not been "given the stamp of … judicial … recognition."130 South Australia greatly exaggerated the extent to which the authorities cast doubt on the immunity before 1991, when the House of Lords decided it should be abolished131, and four members of this Court said that it had ceased to represent the law132. An illustration is provided by South Australia's submission in relation to R v Clarence: 125 Jones v Secretary of State for Social Services [1972] AC 944 at 1026 per Lord Simon of Glaisdale. 126 Australian Crime Commission v Stoddart (2011) 86 ALJR 66 at 84-98 [90]-[138]; 282 ALR 620 at 641-660. 127 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 25. 128 Archbold, A Summary of the Law Relative to Pleading and Evidence in Criminal Cases, (1822) at 259. 129 R v R – (rape: marital exemption) [1991] 1 All ER 747 at 748. 130 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 131 R v R [1992] 1 AC 599. 132 R v L (1991) 174 CLR 379 at 390 and 405. "The exemption was first the subject of judicial comment in R v Clarence.133 In R v Clarence, seven of the thirteen judges declined to comment on the issue;134 of the six judges who did, two of them reiterated and confirmed the marital rape proposition,135 three of them questioned or qualified it,136 and another briefly adverted to it without engaging in it.137 The comments of the judges in R v Clarence were obiter dicta, however, taken as a whole they indicate that even as at 1888 there existed no settled view." It is true that the few things said about Hale's proposition in R v Clarence were dicta. The submission is otherwise very misleading. It suggests that only A L Smith J and Pollock B favoured Hale's proposition. In fact the position is as follows. Stephen J supported Hale's proposition138. The following seven judges concurred: A L Smith J139, Mathew J140, Grantham J141, Manisty J142, Wills J146, Huddleston B143, Pollock B144 and Lord Coleridge CJ145. 133 (1888) 22 QBD 23. 134 Lord Coleridge CJ, Huddleston B, Grantham, Manisty and Mathew JJ (quashing the conviction); Charles and Day JJ (dissenting because upholding the conviction). 135 A L Smith J and Pollock B (quashing the conviction). 136 Wills J (quashing the conviction) and Hawkins and Field JJ (dissenting because upholding the conviction). 137 Stephen J (quashing the conviction). 138 R v Clarence (1888) 22 QBD 23 at 46. 139 R v Clarence (1888) 22 QBD 23 at 37. 140 R v Clarence (1888) 22 QBD 23 at 38. 141 R v Clarence (1888) 22 QBD 23 at 46. 142 R v Clarence (1888) 22 QBD 23 at 55. 143 R v Clarence (1888) 22 QBD 23 at 56. 144 R v Clarence (1888) 22 QBD 23 at 61-62 and 63-64. 145 R v Clarence (1888) 22 QBD 23 at 66. 146 R v Clarence (1888) 22 QBD 23 at 33. Hawkins J147 and Field J148 each stated or left open the possibility that in some circumstances a husband could be convicted of raping his wife. But at least the latter two judges plainly thought that Hale's proposition was correct in some circumstances. Day J concurred with Hawkins J149. Charles J concurred with Field J150. its operation South Australia correctly submitted that English trial judges assumed that Hale's proposition was correct, but qualified in special circumstances. Examples of special circumstances included where there was a court non-cohabitation order151, or a decree nisi of divorce had effectively terminated the marriage152, or the husband had given an undertaking to the court not to molest the wife153, or there was an injunction restraining the husband from molesting or having sexual intercourse with the wife154, or there was an injunction and a deed of separation (even though the injunction had expired)155. The outer limit of these exceptions was unilateral withdrawal from cohabitation coupled with a clear indication that the wife's consent to sexual intercourse was On one view, each of the courts that reached these decisions was attempting to achieve justice by tailoring the absolute nature of Hale's proposition to the circumstances before it. Even if the wife could be said to have 147 R v Clarence (1888) 22 QBD 23 at 51. 148 R v Clarence (1888) 22 QBD 23 at 57-58. 149 R v Clarence (1888) 22 QBD 23 at 55. 150 R v Clarence (1888) 22 QBD 23 at 61. 151 R v Clarke [1949] 2 All ER 448. The judge was Byrne J, of whom Owen J said in R v R – (rape: marital exemption) [1991] 1 All ER 747 at 749: "Those who appeared before him will know that he was a judge of the highest repute. As a criminal lawyer, there were not many to excel him in his day." In R v Miller [1954] 2 QB 282 at 289 Lynskey J concurred with R v Clarke. 152 R v O'Brien [1974] 3 All ER 663. 153 R v Steele (1976) 65 Cr App R 22. 154 R v Steele (1976) 65 Cr App R 22 at 25; R v McMinn [1982] VR 53. 155 R v Roberts [1986] Crim LR 188. 156 R v R – (rape: marital exemption) [1991] 1 All ER 747 at 754. given consent by marriage, in those cases it had been withdrawn as a matter of practical reality either because the wife had successfully invoked court process or because the spouses had reached a formal agreement negating consent. Another view is that these cases travel down a road "potholed with ever greater illogicalities"; produce "a gaggle of technical and anomalous distinctions" and "absurdity"; and lack any "relationship to the real world."157 But even if this latter view is correct, it is adverse to South Australia's position. The cases show the enduring toughness of Hale's proposition in legal thought. To destroy Hale's proposition might eliminate formal anomalies and technicalities. But it was a course which many judges found unattractive. Instead they turned their minds to devising narrow exceptions. In two of the cases just referred to, the correctness of Hale's proposition, in the absence of special circumstances, was specifically acknowledged by quotation158. In another, Hale's proposition was thought to be correct at common law though not necessarily satisfactory159. And in R v Miller160, where the prosecution failed to prove any special circumstance and could point to no more than the wife having petitioned for divorce, Hale's proposition was applied. R v Miller renders false South Australia's submission that "no binding precedent can be found where [Hale's] principle represented the ratio decidendi." Contrary to that submission, R v Miller was an "authoritative declaration of the common law on the matter." R v Miller also demonstrates that McGarvie J was wrong to say in R v McMinn161: "There does not seem to have been any recent case in which it was considered whether [Hale's proposition] remains part of the common law." R v Miller was a binding precedent in England until 1991. A second case which applied Hale's proposition is R v J – (rape: marital exemption)162. There are numerous cases, including Australian cases, in which courts have assumed Hale's proposition to be correct at common law163. One is R v 157 Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 880-882. 158 R v Clarke [1949] 2 All ER 448 at 448; R v Steele (1976) 65 Cr App R 22 at 24. 159 R v McMinn [1982] VR 53 at 55, 57-59 and 61. 160 [1954] 2 QB 282, criticised by Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 882-883. 161 [1982] VR 53 at 61. 162 [1991] 1 All ER 759. 163 R v Brown (1975) 10 SASR 139 at 141 and 153; R v Cogan [1976] QB 217 at 223; R v Wozniak (1977) 16 SASR 67 at 71; R v Sherrin (No 2) (1979) 21 SASR 250 at 252; R v C (1981) 3 A Crim R 146 at 148-150; R v Caswell [1984] Crim LR 111; (Footnote continues on next page) Kowalski164, in which the English Court of Appeal described Hale's proposition as "clear, well-settled and ancient law". Another is R v Bellchambers165, in which Neasey and Everett JJ said that Hale's proposition "still expresses the common it as "archaic, unjust and they criticised discriminatory"166. A third is Brennan J's statement in R v L167: law", even though "Irrespective of the validity of Hale's reason for declaring that a husband could not be guilty as a principal in the first degree of rape of his wife, it appears that a substantive rule of the common law was established by his declaration." That statement followed more than 10 pages denouncing Hale's reasoning. Thus these last two cases, too, reveal the enduring toughness of Hale's proposition in legal thought. South Australia proffered three authorities that, in its submission, reveal that contrary to Hale's proposition, there was no irrebuttable presumption that on marriage the wife irrevocably consented to sexual intercourse with her husband. In R v Lister168, it was held that while it was lawful for a husband to restrain his wife's liberty where she was making "an undue use" of it, either by "squandering away the husband's estate, or going into lewd company", he could not do so where he had entered into a deed of separation with his wife. In R v Jackson169, the English Court of Appeal held that where a wife refused to live with her husband, he was not entitled to deprive her of liberty by kidnapping her and confining her to his house, even though he had obtained a decree for restitution R v Henry unreported, 14 March 1990 per Auld J: see R v J – (rape: marital exemption) [1991] 1 All ER 759 at 762-763 and Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 97-108; R v Shaw [1991] Crim LR 301; Question of Law Reserved on Acquittal (No 1 of 1993) (1993) 59 SASR 214 at 164 (1987) 86 Cr App R 339 at 341. 165 (1982) 7 A Crim R 463 at 465. 166 (1982) 7 A Crim R 463 at 466. 167 (1991) 174 CLR 379 at 402. 168 (1721) 1 Strange 478 [93 ER 645 at 646]. of conjugal rights. In R v Reid170, that Court held that matrimonial status conferred no immunity on a husband who kidnapped his wife. These cases do not support South Australia's submission. They do not proceed on the basis that on marriage there was a presumption that the wife consented to having her liberty restrained and that she could rebut that presumption by withdrawing her consent. Indeed, in R v Reid171 the Court said of the doctrine in R v Miller that it was "impossible to stretch that doctrine to the extent of saying that on marriage a wife impliedly consents to being taken away by her husband using force or threats of force from the place where she is living." Accordingly, these cases are not inconsistent with Hale's proposition. In 1991, the English Court of Appeal and the House of Lords overturned Hale's proposition172. But it is notable that they did not accept the Crown's submission that "Hale's statement was never the law"173. The rulings of those Courts had retrospective consequences. But they did not hold that Hale's proposition had never been the law. They did not hold that the judgments which had decided, said or assumed that it was correct were wrong at the time they were handed down. Lord Lane CJ said in the Court of Appeal that Hale's proposition had been "accepted as an enduring principle of the common law."174 And the House of Lords altered the law because social conditions had changed quite recently. Hale's proposition was seen as reflecting the society of his day, and its rejection was seen as reflecting the different form which modern society had recently taken175. On that reasoning, Hale's proposition was good law in South Australia in 1963 – a matter relevant to rejection of South Australia's second submission176. 171 [1973] QB 299 at 302. 172 R v R [1992] 1 AC 599. 173 R v R [1992] 1 AC 599 at 602. 174 R v R [1992] 1 AC 599 at 604. 175 R v R [1992] 1 AC 599 at 616. 176 See below at [121]-[161]. Governmental recognition South Australia also relied on Lord Lowry's statement that Hale's proposition "had not been given the stamp of … governmental … recognition."177 That submission too must be rejected. Hale's proposition has received indirect governmental recognition – by the Executive – in two ways. One form of governmental recognition took place in a report of the Criminal Law and Penal Methods Reform Committee of South Australia published in 1976. That report acknowledged that Hale's proposition represented the common law178. It recommended that the immunity be abolished where the event charged took place while the parties were living separately179. There are several other reports before and after the South Australian report also resting on the view that Hale's proposition represented the common law180. Another form of governmental recognition has taken place. Not only in South Australia but in many other places, the authorities did not prosecute charges against husbands accused of raping their wives. This Court was not told of any prosecutions having been brought in England between Hale's time and 1949. In the second half of the 20th century, as exceptions developed to Hale's proposition, there were attempts to prosecute husbands, not for non-consensual 177 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 178 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 13 [6.2]: see below at [174]. 179 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 15 [6.2.1]. 180 For example, Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 17-18 [2.56]-[2.57]; Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 9-12 [2.8]-[2.10]; American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 271-275, 341-346 and American Law Institute, Model Penal Code: Official Draft and Explanatory Notes, (1985), §213.1(1). The greatest example of this kind, which is not modern but does come from a time when, according to South Australia, legislative changes were being made which would mean that Hale's proposition "crumbled to dust", is the Royal Commission commenting on Stephen's Draft Code: see below at [219]. Sir Rupert Cross thought that Stephen had "one of the highest places" among the makers of English criminal law: "The Making of English Criminal Law: (6) Sir James Fitzjames Stephen", [1978] Criminal Law Review 652 at 661. sexual intercourse with their wives, but for crimes committed in connection with that conduct, such as assault or false imprisonment. So far as these crimes were distinct from sexual intercourse without consent, the prosecutions rested on sound legal thinking, though they were at peril of failing if there were difficulties in establishing that the husband's conduct had gone beyond sexual intercourse without consent181. What the prosecution assumes about the law is not decisive as to what the law is. But it is some guide to the thinking of experienced criminal lawyers. That thinking can be highly persuasive as to what the law is. Legislative recognition Finally, South Australia relied on Lord Lowry's statement that Hale's proposition "had not been given the stamp of legislative … recognition."182 That submission must also be rejected. Some forms of "legislative recognition" are of limited materiality. A statute expressly adopting Hale's proposition in South Australia would have superseded the common law. A statute expressly adopting it outside South Australia would have had slight relevance only to what the common law was in South Australia. Statutes rejecting it would have had little relevance to the position at common law unless they reflected a consistent legislative view of what the public interest demanded183. But there is South Australian legislation recognising Hale's proposition in the sense that it did not interfere with it when there was an occasion to do so. The South Australian Parliament did not adopt the recommendation of the Criminal Law and Penal Methods Reform Committee of South Australia to abolish the immunity when husband and wife were living separately. Instead two provisions relevant to the common law were enacted. First, s 73(3) of the Criminal Law Consolidation Act 1935 (SA) was introduced, removing any presumption that consent to sexual intercourse flowed from marriage. Secondly, s 73(5) was introduced: it prevented a spouse from being convicted not only of rape but also of indecent assault, attempted rape or indecent assault, and assault with intent to commit rape or indecent assault, unless the alleged offence was accompanied by various forms of aggravated conduct184. In substance it 181 See, for example, R v Henry unreported, 14 March 1990 per Auld J, set out in Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 97-108. 182 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 183 Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 61-63 [23]-[28]; [1999] HCA 67. 184 See below at [175]. overlapped with the common law position precluding convictions of husbands for the conduct of sexual intercourse with their wives without consent. Thus the South Australian Parliament assumed that the immunity existed at common law, and left it in existence. It appears to have gone further in creating an immunity without any common law counterpart for non-aggravated forms of the crimes other than rape to which s 73(5) referred. That state of affairs continued until "Legislative recognition" in places other than South Australia assuming that the immunity existed at common law is relevant to the content of South Australian law – particularly Australian legislation, since there is a single common law in Australia. There are three points to be made. First, in the Code States (Queensland, Tasmania and Western Australia), the definition of rape excluded sexual intercourse by a husband with his wife. The relevant statutes assumed the correctness of Hale's proposition186. Secondly, the numerous changes in State and Territory legislation in the 1970s and 1980s indicated an assumption by each legislature (and by each Executive, which had a large measure of control over what draft legislation was introduced) that Hale's proposition was sound at common law. If not, it would not have been necessary to abolish or qualify it187. Thirdly, Canadian188 and New Zealand189 legislation assumed the correctness of Hale's proposition. An anachronistic and offensive proposition? There are no doubt many criticisms to be made of Hale's proposition if it is to be applied in the circumstances of 2012. But these criticisms do not show that his proposition was necessarily anachronistic or offensive in 17th century circumstances. That would depend on historical analysis which the parties' submissions did not perform. The criticisms therefore do not demonstrate that Hale's proposition was wrong from the outset. They are, however, appropriate arguments to consider when deciding whether Hale's proposition ought to be abandoned. It is a question which legislatures answered affirmatively from the 1980s on. It is not a question which South Australia places before this Court. Whether they are appropriate arguments to consider when deciding whether 185 See below at [176]. 186 See below at [176] n 298. 187 See below at [176]. See also Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26 at 35. 188 See below at [221]. 189 See below at [233]. Hale's proposition dropped out of the law at some point before 1963 is a question which relates to South Australia's second submission. South Australia's first submission rejected It was inherent in South Australia's first submission that all the writers, all the judges, all the government officials, all the law reformers, all the public servants advising Ministers, all the prosecution authorities and all the legislatures who wrote or acted on the assumption that Hale's proposition was the law were wrong. South Australia explicitly adopted a statement to this effect in the Full Court of the Supreme Court of South Australia190. I flatly disagree. South Australia's second submission On the assumption that Hale's proposition was correct for some time after he stated it, South Australia put various contentions denying its applicability in South Australia contended that before 1963 the law had changed so as to nullify Hale's proposition, even though no case had stated this before 1991. This is an unusual invocation of the judicial process. South Australia's contention is different from a contention that this Court should now declare Hale's proposition to be wrong, and do so with effect retrospective to 1963. This latter course presents in an overt form the considerable difficulties which cluster around the making of retrospective changes to the criminal law. South Australia did not choose to tackle these difficulties head on. It did not suggest that this Court should now change the law. Rather, it submitted that the dicta of four Justices in R v L191 recognised that Hale's proposition had ceased to be the law at some time before 1991. South Australia submitted that this time was a time before 1963. In fact, nothing in R v L suggests that the demise of Hale's proposition took place at any specific time before 1991, such as 1963. South Australia's thesis that R v L bound the Full Court of the Supreme Court of South Australia to reach this conclusion must be rejected. South Australia relied on the following arguments as indications that Hale's proposition had ceased to be the law before 1963. South Australia submitted that in R v Jackson192 the denial of the husband's right to use physical coercion on his wife suggested that the immunity 190 R v P, GA (2010) 109 SASR 1 at 9 [43]. 191 (1991) 174 CLR 379 at 390 and 405. 192 [1891] 1 QB 671: see above at [101]. had disappeared from the law. But it does not follow that a husband lost the immunity where he had not employed physical coercion against his wife. South Australia also submitted that Hale's proposition was based on the doctrine of coverture – that the legal status of a wife is assimilated with that of her husband. And it submitted that by the turn of the 20th century the law had come to acknowledge the rights of married women as independent of their husbands' rights. In effect, it submitted that so many inroads had been made on the doctrine of coverture that it could no longer support Hale's proposition. This submission has the drawback that Hale did not base his proposition on the doctrine of coverture. However, the developments on which South Australia relied could be used, and to a degree were used, to support an argument that by the mid-20th century the rights and privileges of married women in Australia were inconsistent with any theory that on marriage wives gave their husbands irrevocable consent to sexual intercourse. South Australia advanced detailed submissions on the capacity of wives, gained by statute, to own property, to sue and be sued, to vote, to have custody of children, and to compel payment of and be compelled to pay child maintenance. It also relied on the termination by statute of discrimination between husbands and wives in relation to the grounds of divorce. In that way South Australia advances an argument for permitting the appellant to be prosecuted now for conduct which allegedly occurred in 1963. Whether it should be accepted depends on four matters. One is whether in fact the changes in the rights and privileges of wives by 1963 were, to use the words of South Australia's written submissions, "entirely inconsistent with the principle that a wife gave irrevocable consent to sexual intercourse with her husband upon marriage." A second concerns the need for certainty in the criminal law. A third concerns whether South Australia's argument could, in a practical sense, work a retrospective change in criminal law. A fourth is whether the task being undertaken is appropriate for the courts as distinct from the legislature. It is convenient to deal with these points in order. Is there inconsistency between the modern rights and privileges of wives and the immunity of husbands for rape? Bell J gives convincing reasons for answering this question in the negative193. Some ideas which tend to render Hale's proposition anachronistic can be discerned in 19th and early 20th century legislation. But the crucial triggers that would push Hale's proposition into disfavour arose in the 1970s. Before that decade there had been some questioning by lawyers of the stated 193 See below at [224]-[248]. justification for Hale's proposition. In that decade questioning began to grow about whether the proposition should be abolished by the legislature. The questioning grew as public concern about the law of rape in general and marital rape in particular began to rise. Law reform agencies began to examine numerous problems in detail. Legislative changes of different kinds were introduced. One trigger was the controversial decision in R v Morgan194 that a mistaken but honest belief that the victim had consented to intercourse was a defence to a rape charge, whether or not that belief was reasonable. R v Morgan was decided on 30 April 1975, seven months before the then Attorney-General for the State of South Australia requested the Criminal Law and Penal Methods Reform Committee of South Australia to report on the law relating to rape and other sexual offences. It was the very first topic the Committee dealt with195. Another trigger concerned whether warnings about the desirability of finding corroboration for the evidence of those complaining that they had been raped rested on unsatisfactory stereotyping. Another trigger was discontent about the rules relating to the cross-examination of complainants about their sexual histories. There were many other issues about which debates began to widen and intensify in those years. The immunity was only one of them. Further, the reasons underlying the legislation which has altered the status of wives over the last 150 years are not necessarily inconsistent with the immunity. To describe Hale's proposition as creating a presumption which no longer has any foundation, and as a fiction not forming part of the common law196, overlooks the fact that a common law rule can rest on a fiction, particularly when the rule in question develops a new and non-fictitious basis. As Lord Sumner observed197: "an established rule does not become questionable merely because different conjectural justifications of it have been offered, or because none is forthcoming that is not fanciful." A fortiori, an established rule does not become questionable merely because a justification which appealed to the minds of lawyers more than 300 years ago has ceased to have appeal now. In Australia, the controversy has been resolved. The resolution lies in abolition of the immunity. Abolition came by degrees. It also came from legislatures. In England, on the other hand, the first decision to abolish the immunity was made by a judge – Simon Brown J, in 1990198. Rougier J, sitting alone, at once refused 195 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 2-8 [2]. 196 R v L (1991) 174 CLR 379 at 405. 197 Admiralty Commissioners v SS Amerika [1917] AC 38 at 56. 198 R v C – (rape: marital exemption) [1991] 1 All ER 755. This was a controversial decision. to follow it199. Then the immunity was abolished by the Court of Appeal and the House of Lords in R v R in 1991. The House of Lords decision has been supported on the ground that Hale's proposition was one which "nobody defended on the merits."200 That, however, is not true201. It is true to say, though, that R v R was based, as Lord Lowry later said, "on a very widely accepted modern view of marital rape"202. But the fact that an idea is very widely accepted does not mean that an inference from it automatically becomes a rule of law. The fact that a rule of law is disliked does not mean that it has ceased to be the law. The fact that a rule of law favourable to the accused is disliked does not mean that the courts rather than the legislature should abolish it. Indeed, after the English courts abolished the immunity, Parliament did as well203, once the matter had been considered by the Law Commission204. And the fact that very many people have disliked a rule of law favourable to the accused for a long time does not mean that it has ceased to be the law at some time in the past. The Permanent Court of International Justice said, in a somewhat different context, in Consistency of Certain Danzig 199 R v J – (rape: marital exemption) [1991] 1 All ER 759. 200 Spencer, "Criminal Law", in Blom-Cooper, Dickson and Drewry (eds), The Judicial House of Lords 1876-2009, (2009) 594 at 604. 201 See Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 258-259; Howard, Australian Criminal Law, (1965) at 146; Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 14 [6.2]; American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 345; Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 21 [2.69]. As late as 15 February 1991, just before the Court of Appeal decision of 14 March 1991 and the House of Lords decision of 23 October 1991 abolishing the immunity, Glanville Williams contended in "The problem of domestic rape", (1991) 141 New Law Journal 205 and 246, that husbands who had non-consensual intercourse with their wives should not be guilty of rape, but should be liable to prosecution for a new statutory crime. 202 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 203 Criminal Justice and Public Order Act 1994 (UK), s 142, inserting a new s 1 of the Sexual Offences Act 1956 (UK). 204 Law Commission, Criminal Law: Rape within Marriage, Law Com No 205, Legislative Decrees with the Constitution of the Free City205, "[s]ound popular feeling is a very elusive standard." And mere popular feeling, however widespread, is a very unsafe standard to apply in relation to claims that common law rules have fallen into desuetude. Professor Robertson has contrasted R v R with C (A Minor) v Director of Public Prosecutions, in which the House of Lords declined to alter the common law rule that there is a rebuttable presumption that a child aged between 10 and 14 is doli incapax206. He correctly noted that the speeches in R v R contained "almost no argument", only "a bald statement"207. He argued that R v R rested on "the assumption, though it is an untested one, that there is wide consensus in the general public on the question of marital rape."208 He also argued that Lord Lowry's attempt to reconcile a change in the criminal law in R v R with a decision not to change it in C (A Minor) v Director of Public Prosecutions was "specious"209. He said210: "The abolition of the rule on rape, though occasioned by a rape where the man and wife were separated, would in fact apply inside an ongoing marriage. It is sociologically extremely unlikely that this view would command anything like as much support amongst the mass public as would a rule that allowed the conviction of thirteen-year-old auto-thieves. The fact that there had been several cases where judges had attempted to convict husbands for rape is on par with the attempt by the Divisional Court to change the doli incapax rule, where there was extensive quotation from judges who had wanted to but were dutiful to precedent. What is true is that liberal elite opinion was uniform in the rape context, and largely missing in the criminal capacity case. Asked how to square the two results, one Law Lord who had been a member of the bench in C but not in R v R threw his hands in the air and admitted he could not imagine how they squared it. Another though, who had heard C, indicated that his 205 Advisory Opinion, (1935) PCIJ (Ser A/B) No 65 at 53 per Sir Cecil Hurst (President), Judge Guerrero (Vice-President) and Judges Rolin-Jaequemyns, Fromageot, de Bustamante, Altamira, Urrutia, van Eysinga and Wang. 207 Judicial Discretion in the House of Lords, (1998) at 119. 208 Judicial Discretion in the House of Lords, (1998) at 120. 209 Judicial Discretion in the House of Lords, (1998) at 121. 210 Judicial Discretion in the House of Lords, (1998) at 121. decision was prompted by a desire to force the Government's hand and make it legislate." (emphasis in original) The task of assessing public opinion, or even the full range of legal opinion, whether now or in the past, is not an enterprise that is easy for courts to carry out. "The court does not, and cannot, carry out investigations or enquiries with a view to ascertaining whether particular common law rules … command popular assent."211 The question is not whether the view which the House of Lords stated in R v R about the general public's opinion is correct. The point is that if the general public's opinion is a relevant criterion, it is a criterion for the legislature to consider, not the courts212. Certainty in the criminal law Those who seek to foster the rule of law prize certainty. Ordinarily, certainty in the common law is assisted by the doctrine of precedent. Normally, a common law rule is supported by authorities. If an intermediate or ultimate appellate court decides to change the rule, it overrules the authorities and its decision creates a new binding authority. South Australia's submission is not that Hale's proposition be rejected, so that this Court's decision would be a new binding authority with retrospective effect. Instead South Australia submits that at some time which is not clearly specified, Hale's proposition ceased to be the law. At some time in the past that which had a solid existence is said to have dissolved into nothingness. In State Government Insurance Commission v Trigwell213, Gibbs J said: "Although the rules of the common law develop as conditions change, a settled rule is not abrogated because the conditions in which it was formulated no longer exist. It is now fashionable to criticize the rule in Searle v Wallbank[214] as anachronistic, inconsistent with principle and unsuitable to modern conditions, but it is by no means obvious that it would be a reasonable and just course simply to abolish the rule. The 211 State Government Insurance Commission v Trigwell (1979) 142 CLR 617 at 633 per Mason J; [1979] HCA 40. 212 See below at [128]-[129] and [146]-[150] for other arguments favouring legislative change in the criminal law over judicial change. 213 (1979) 142 CLR 617 at 627. See also Mason J at 633 (otherwise than in "a simple or clear case"). question whether the rule should be altered, and if so how, is clearly one for the legislatures concerned rather than for the courts." A fortiori, it does not follow from anachronism that a rule simply dissolves without any court ruling at the time it dissolved, leaving its dissolution to be detected by a court many years or decades later. To the extent that they may be changed retrospectively, uncertainty is inherent in common law rules. But the standard technique is to make the change in a particular case. It is announced as having happened at the time of that case. Even though it operates retrospectively, that retrospective operation tends to affect only quite recent conduct. That was so in R v R and other cases following it: the conduct charged took place only a short time before the law changed. At least in non-criminal fields, if the change is the result of altering "the law's direction of travel by a few degrees" as distinct from setting "it off in a different direction"215, no great harm may follow. Assuming it is permissible for the courts to change the substantive criminal law, R v R is an example of the standard technique. It relied on quite recent changes in the status of married women. It did not purport to announce that a change had taken place many years ago, by reason of changes in status even earlier. South Australia's urging of the latter course engenders much more uncertainty. It invites Bentham's reproach216: "Nebuchadnezzar put men to death for not finding a meaning for his dreams: but the dreams were at least dreamt first, and duly notified. English judges put men to death very coolly for not having been able to interpret their dreams, and that before they were so much as dreamt." Retrospective change in the criminal law and the appropriate institutions to effectuate it South Australia's arguments involve a retrospective change in the criminal law. Indeed, they willingly embrace it. They involve the proposition that conduct no-one saw as attracting criminal liability in 1963 in fact attracted that liability because an historical investigation in 2010-2012 is said to reveal that changes in legal and social conditions at some unspecified time before 1963 caused the conduct to become criminal. And this proposition involves a very serious crime. Rape in 1963 was punishable by life imprisonment and whipping217. 215 Bingham, "The Rule of Law", (2007) 66 Cambridge Law Journal 67 at 71. 216 Bowring (ed), The Works of Jeremy Bentham, (1843), vol IV at 315. 217 See below at [170]. The law's aversion to the judicial creation of crimes. In those circumstances, though it may be trite to do so, it is desirable to recall the law's aversion to the judicial creation or extension of crimes. In the early 17th century Bacon put the central difficulty in a retroactive criminal law thus in Aphorism 8 of his treatise De Augmentis218: "Certainty is so essential to law, that law cannot even be just without it. 'For if the trumpet give an uncertain sound, who shall prepare himself to the battle?'219 So if the law give an uncertain sound, who shall prepare to obey it? It ought therefore to warn before it strikes." And Aphorism 39 read in part220: "Let there be no authority to shed blood; nor let sentence be pronounced in any court upon capital cases, except according to a known and certain law. … Nor should a man be deprived of his life, who did not first know that he was risking it." Hobbes stated in 1651221: "harm inflicted for a fact done before there was a law that forbade it, is not punishment, but an act of hostility: for before the law, there is no transgression of the law". Hence, said Hobbes in 1681222: "A Law is the Command of him, or them that have the Soveraign Power, given to those that be his or their Subjects, declaring Publickly, and plainly what every of them may do, and what they must forbear to do." "The citizen must be able to ascertain beforehand how he stands with regard to the criminal law; otherwise to punish him for breach of that law is purposeless cruelty. Punishment in all its forms is a loss of rights or advantages consequent on a breach of law. When it loses this quality it 218 Spedding, Ellis and Heath (eds), The Works of Francis Bacon, (1877), vol V at 90. 219 1 Corinth. xiv. 8. 220 Spedding, Ellis and Heath (eds), The Works of Francis Bacon, (1877), vol V at 95. 221 Leviathan, reprinted by George Routledge and Sons, 2nd ed (1886) at 143. 222 A Dialogue Between a Philosopher and a Student of the Common Laws of England, Cropsey (ed) (1971) at 71. 223 Criminal Law: The General Part, 2nd ed (1961) at 575. degenerates into an arbitrary act of violence that can produce nothing but bad social effects." Stephen J stated in R v Price224: "the great leading rule of criminal law is that nothing is a crime unless it is plainly forbidden by law." Hence Hayek saw it as crucial to the rule of law that "the coercive power of the state … be used only in cases defined in advance by the law and in such a way that it can be foreseen how it will be used."225 Finally, as Harris said, retroactivity in criminal law is "pointless … because of the brutal absurdity of today commanding someone to do something yesterday."226 South Australia submitted, however, that the change it favoured "does not create a new offence, it merely removes a protection, arguably, formerly held by husbands." It submitted that there was no inhibition against judicial legislation which fell short of creating a new offence. South Australia relied on the following statement by the English Court of Appeal in R v R about the judicial abolition of the immunity227: "The remaining and no less difficult question is whether … this is an area where the court should step aside to leave the matter to the Parliamentary process. This is not the creation of a new offence, it is the removal of a common law fiction which has become anachronistic and offensive and we consider that it is our duty having reached that conclusion to act upon it." With respect to both South Australia and the English Court of Appeal, this is captious. The substantive effect of South Australia's argument is to expose persons to a risk of criminal prosecution for conduct which was not believed to be criminal at the time it was carried out. That is true even though South Australia sees this reasoning as doing nothing more pernicious than removing an anachronistic and offensive fiction. Sir John Smith said, correctly, "it is not clear that there is a difference in principle" between the judicial creation of a new 224 (1884) 12 QBD 247 at 256. 225 The Road to Serfdom, (1944) at 62. See generally Juratowitch, Retroactivity and the Common Law, (2008) at 43-65, 127-138 and 183-197. 226 Harris, Legal Philosophies, 2nd ed (1997) at 146. 227 R v R [1992] 1 AC 599 at 611 per Lord Lane CJ, Sir Stephen Brown P, Watkins, offence in Shaw v Director of Public Prosecutions228 and the judicial abolition of the immunity229. Zecevic v Director of Public Prosecutions (Vict). South Australia also relied on the following statement of Deane J (dissenting) in Zecevic v Director of Public Prosecutions (Vict)230: "There may be circumstances in which an ultimate appellate court is justified in overruling a previous decision of its own with the consequence that what had previously been accepted as a defence to a charge of murder is no longer, and never was, such a defence". This was a somewhat selective quotation. There are three reasons why it does not support South Australia's case. First, Deane J gave as an illustration the case of R v Shivpuri. In that case the House of Lords departed from earlier authority in order to state the true construction of a statute231. That is a very different matter from changing the common law. There are more difficulties in courts continuing to apply an erroneous construction of a statute than continuing to apply the received common law. The courts are masters of the common law, but servants of statutes. Further, the case in question was a special one. The change in construction did not cut down any "liberty" the accused had enjoyed. On the earlier and rejected construction, the accused was free to attempt to commit a crime if circumstances unknown to him made it impossible to do so. On the later and favoured construction, an attempt to commit the crime in those circumstances was criminal. The freedom arising under the earlier construction was a strange type of freedom. It was not a freedom which persons in the accused's position could be said to have been able to rely on: the relevant circumstances were unknown to them. Thus, as Juratowitch says232: "The absence of sensible reliance or liberty considerations in the case meant that the prohibition on criminal retroactivity was, without 228 [1962] AC 220: see below at [144]-[152]. 229 Commentary on R v C [1991] Crim LR 60 at 63. See also Sir John Smith's commentary on R v R [1991] Crim LR 475 at 478. 230 (1987) 162 CLR 645 at 677; [1987] HCA 26. 232 Retroactivity and the Common Law, (2008) at 195. diminishing the strength of that prohibition in general, eminently susceptible to being justifiably overcome in Shivpuri." Secondly, Deane J gave very detailed reasons for not applying his tentative observation to the case before him in Zecevic v Director of Public Prosecutions (Vict). They do not support South Australia's argument. Thirdly, Deane J made it plain that the undesirability of retroactive changes in criminal law adverse to the accused applies as much to abolishing defences as it does to creating new offences. Thus he said233: "It is simply wrong that an accused may be adjudged not guilty or guilty of murder according to the chance of whether his trial is completed before or after this Court has abolished a defence which, under the law which the Court itself had definitively settled at the time the offence was committed, reduced the offence from murder to manslaughter." He called this "a macabre lottery". The macabre character of the lottery is heightened in this case. Those who have caused the prosecution to be brought have allowed 47 years to pass before charging the appellant. Another problem with South Australia's argument is that it invites retrospective judicial legislation which collides with legal structures created by parliamentary legislation. Thus Brennan J, the only Justice in R v L not to state that Hale's proposition had ceased to exist, succinctly and correctly said234: "a mere judicial repeal of the [exception] would extend the liability for conviction of the crime of rape to cases which would be excluded from liability for conviction by s 73(5) of the Criminal Law Consolidation Act."235 Brennan J's point was that s 73(5) permitted convictions for rape in the aggravated circumstances stated in the sub-section, but otherwise preserved the common law "exception" from liability. To "repeal" the common law "exception" would expose husbands to a greater risk of prosecution for acts carried out before s 73(5) was enacted in 1976 than after it. Section 73(5) did not apply retrospectively. The greater exposure of husbands to risk of prosecution would depart significantly from the legislative scheme. It would mean that in 233 (1987) 162 CLR 645 at 677-678 (citation omitted). 234 R v L (1991) 174 CLR 379 at 402. The text has "section" instead of "exception", but this is an error. 235 See below at [175]. 1976 Parliament narrowed the scope of a husband's liability for sexual offences committed against his wife, rather than expanded it. And yet the seeming function of the legislation was to expand liability, not narrow it. Professional attitudes in 1963-1965. The retrospectivity involved in South Australia's arguments is highlighted by considering the following question. What would actually have happened if, instead of the appellant being charged with rape in 2010, he had been charged immediately after the second of the alleged offences had occurred in April 1963? the law "the is what judge says Lord Reid said: Mr Justice Holmes, as is well known, remarked that the bad man "does want to know what the Massachusetts or English courts are likely to do in fact. I am much of his mind. The prophecies of what the courts will do in fact, and nothing more pretentious, are what I mean by the law."237 No doubt it is often unrealistic to assume that people take account of the criminal law in deciding what conduct to engage in238. It is probably particularly unrealistic in relation to violent sexual crimes. However, people should be able to know, by recourse to a competent lawyer, what the legal consequences of a proposed course of action are before embarking on it239. What would a bad man in South Australia have learned if he had asked for a prophecy as to what the South Australian courts, and this Court, would be likely to say in the years 1963 to 1965, for example, if he had been charged in April 1963 with raping his wife in March and April and he had challenged the validity of the indictment or appealed against a conviction? There were at that time seven judges in the Supreme Court of South Australia. The Chief Justice was Sir Mellis Napier, in his 40th year of service on that Court. The senior puisne judge was Sir Herbert Mayo, in his 22nd year of service. Next in seniority came Sir Reginald Roderic St Clair Chamberlain: universally known as "Joe", he did not share the impulsiveness or the radicalism 236 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 22. 237 Holmes, "The Path of the Law", (1897) 10 Harvard Law Review 457 at 461. 238 Rodger, "A Time for Everything under the Law: Some Reflections on Retrospectivity", (2005) 121 Law Quarterly Review 57 at 68. Cf Williams, Criminal Law: The General Part, 2nd ed (1961) at 601-603. 239 See Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591 at 638; Fothergill v Monarch Airlines Ltd [1981] AC 251 at 279; and R v Rimmington [2006] 1 AC 459 at 480-482 [33]. of his namesake. The other judges were Justices Millhouse, Travers, Hogarth and Bright. This Court comprised Chief Justice Dixon and Justices McTiernan, Kitto, Taylor, Menzies, Windeyer and Owen. It is hard to see where a majority of two was to be found in the Supreme Court of South Australia in favour of the view that Hale's proposition never was, or had ceased to be, the law in South Australia. It is equally hard to see where a majority of three or four in favour of that view was to be found in this Court. Indeed, it is hard to find even one vote for that proposition. This is not simply a crass piece of legal "realism". It does not rest on the personal idiosyncrasies of the individual judges. The probabilities were strongly against either majority because of the particular ideas of the time. They were universal ideas among the Australian judiciary. To overturn Hale's proposition, or to deny that it ever had been the law, or to hold that it had earlier dissolved into nothingness, was to widen the criminal law. It was a legal commonplace in the middle of the 20th century that it was wrong for judges "to declare new offences": that "should be the business of the legislature." So spoke Lord Goddard CJ, Sellers and Havers JJ in 1953, in R v Newland240. They also stated that it was wrong for241: "the judges to declare new crimes and enable them to hold anything which they considered prejudicial to the community to be a misdemeanor. However beneficial that might have been in days when Parliament met seldom or at least only at long intervals it surely is now the province of the legislature and not of the judiciary to create new criminal offences." And in Director of Public Prosecutions v Withers, in 1974, Lord Simon of Glaisdale said242 that it was an "undoubted [principle] of law" that "it is not open to the courts nowadays either to create new offences or so to widen existing offences as to make punishable conduct of a type hitherto not subject to punishment". The same view would prevent any judicial widening of so extremely serious a crime as rape. That view was well-entrenched among judges, practising lawyers and academic lawyers. Contemporary reaction to two surprising decisions of the House of Lords in 1960 and 1961 demonstrates how well-entrenched it was. Director of Public Prosecutions v Smith. The first was a murder case, Director of Public Prosecutions v Smith. The trial judge (Donovan J) directed a 240 [1954] 1 QB 158 at 165. 241 [1954] 1 QB 158 at 167. 242 [1975] AC 842 at 863. jury that if the accused, in doing what he did, must as a reasonable man have contemplated that serious harm was likely to occur to the victim, he was guilty of murder – whether or not the accused actually had that contemplation. The Court of Criminal Appeal (Byrne, Sachs and Winn JJ) allowed Smith's appeal and substituted for the verdict of capital murder a verdict of manslaughter. On 28 July 1960, the House of Lords (Viscount Kilmuir LC, Lords Goddard, Tucker, Denning and Parker of Waddington) allowed a prosecution appeal and restored the conviction for capital murder. Viscount Kilmuir LC said that an accused person who was accountable for his actions and who carried out an unlawful and voluntary act was guilty of murder if the ordinary reasonable man would, in all the circumstances of the case, have contemplated grievous bodily harm as the natural and probable result of that act243. Shaw v Director of Public Prosecutions. The second case was decided on 4 May 1961. The House of Lords (Viscount Simonds, Lords Tucker, Morris of Borth-y-Gest and Hodson; Lord Reid dissenting) held in Shaw v Director of Public Prosecutions that the courts could create new crimes. Viscount Simonds said that the courts had: "a residual power, where no statute has yet intervened to supersede the common law, to superintend those offences which are prejudicial to the public welfare. Such occasions will be rare, for Parliament has not been slow to legislate when attention has been sufficiently aroused. But gaps remain and will always remain since no one can foresee every way in which the wickedness of man may disrupt the order of society."244 Lord Reid, whose reputation, still high, was extremely high in the early 1960s, dissented. He quoted with approval the second passage from R v Newland set out above245. He said246: "the courts cannot now create a new offence". Contemporary reactions to Shaw v Director of Public Prosecutions. Shaw v Director of Public Prosecutions attracted heavy criticism247. Probably for that 243 [1961] AC 290 at 327. 244 [1962] AC 220 at 268. 245 [1962] AC 220 at 274-275. 246 [1962] AC 220 at 276. 247 For example, Hall Williams, "The Ladies' Directory and Criminal Conspiracy: The Judge as Custos Morum", (1961) 24 Modern Law Review 626; Smith, "Commentary", [1961] Criminal Law Review 470; Seaborne Davies, "The House of Lords and the Criminal Law", (1961) 6 Journal of the Society of Public Teachers (Footnote continues on next page) reason, the principle it enunciated has since been narrowed 248. The modern English view corresponds with Lord Reid's. Thus Lord Bingham of Cornhill said249: "there now exists no power in the courts to create new criminal offences". An example of the contemporary reaction to Shaw v Director of Public Prosecutions is what P J Fitzgerald, a prominent Anglo-Irish criminal lawyer, wrote in 1962250: "Few cases in recent years have been quite so disturbing as this. The resuscitation of the judicial power to create crimes runs counter to two cardinal principles of free and democratic government." Fitzgerald put the first as follows251: "[T]he idea of the rule of law … is based on the demand that the citizen should be ruled by laws and not by the whims of men. In the sphere of criminal law this idea has become crystallized as … a principle according to which only breaches of existing criminal law should be punishable. The justification of this principle, which has been adopted as an actual rule in some legal systems, though not in the English legal system, is that the citizen should be able to know beforehand what conduct is permitted and what forbidden; for only in this way can he order his affairs with certainty and avoid coming into conflict with the law. It is this demand for certainty with regard to the provisions of the criminal law that militates against retrospective criminal legislation. When Parliament creates a new crime, it almost invariably legislates for the future only. This, however, is just what the courts cannot do. Our legal system is such that a court can of Law 104; Turpin, "Criminal Law – Conspiracy to Corrupt Public Morals", [1961] Cambridge Law Journal 144. 248 Director of Public Prosecutions v Bhagwan [1972] AC 60 at 80; Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions [1973] AC 435; Director of Public Prosecutions v Withers [1975] AC 842. 249 R v Jones (Margaret) [2007] 1 AC 136 at 161-162 [28]; see also at 171 [61] per Lord Hoffmann and 179-180 [102] per Lord Mance. 250 Criminal Law and Punishment, (1962) at 9. 251 Criminal Law and Punishment, (1962) at 9-10. The passage from Bentham to which Fitzgerald refers is from "Truth versus Ashhurst", in Bowring (ed), The Works of Jeremy Bentham, (1843), vol V at 235. It is conveniently set out in R v Rimmington [2006] 1 AC 459 at 480 [33]. only decide a point of law which arises in some actual case before the court, and consequently the court's decision always relates back to the facts of this case, facts which of course precede the decision. If, therefore, a court manufactures a new crime, it thereby determines after the event that the defendant's conduct, which at the time of commission was not prohibited by law, is a criminal offence. To countenance this type of retrospective criminal legislation means that certainty and consequently freedom are at an end. Bentham long ago pointed out that when the judges make law like this, they are treating the citizen as a man treats his dog, hitting him every time he does something to which the master takes exception. Animals and young children can only be trained in this way. Sane and adult members of a free society, however, are entitled to demand first to be told what conduct is forbidden so that they may choose whether or not to keep within the law." Fitzgerald put the second objection to "the creation of new offences by the courts" thus252: "Even suppose that a court could decide that the kind of act which the defendant had done would in future, though not in the instant case, constitute a crime, there is still the objection that this type of proceeding is not consonant with democratic government. If Parliament creates a new crime, the citizens whose liberty is thereby restricted have the consolation that this was done by their elected representatives whom they chose to perform this sort of activity, and whom in due course they may re-elect or reject. The judges, on the other hand, are appointed by the Crown, virtually irremovable and in practice accountable to no one. That such a body should have the power to decree that certain acts shall constitute crimes is totally incompatible with the notion of democracy." In similar vein, Lord Reid said that judicial legislation should be avoided when "public opinion is sharply divided on any question"253. The development of the criminal law raises questions which often sharply divide public opinion. Lord Reid employed arguments similar to those of Fitzgerald in Shaw v Director of Public Prosecutions254. And twice in R v Newland255, the Court of 252 Criminal Law and Punishment, (1962) at 10. 253 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 23. See also Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions [1973] AC 435 at 489. 254 [1962] AC 220 at 275. 255 [1954] 1 QB 158 at 165 and 167. Criminal Appeal referred to Sir James Fitzjames Stephen's statement of related arguments 70 years earlier256: "it is hardly probable that any attempt would be made to exercise [a power of declaring new offences] at the present day; and any such attempt would be received with great opposition, and would place the bench in an invidious position. … In times when legislation was scanty, [that power was] necessary. That the law in its earlier stages should be developed by judicial decisions from a few vague generalities was natural and inevitable. But a new state of things has come into existence. On the one hand, the courts have done their work; they have developed the law. On the other hand, parliament is regular in its sittings and active in its labours; and if the protection of society requires the enactment of additional penal laws, parliament will soon supply them. If parliament is not disposed to provide punishments for acts which are upon any ground objectionable or dangerous, the presumption is that they belong to that class of misconduct which it is not desirable to punish. Besides, there is every reason to believe that the criminal law is, and for a considerable time has been, sufficiently developed to provide all the protection for the public peace and for the property and persons of individuals which they are likely to require under almost any circumstances which can be imagined; and this is an additional reason why its further development ought to be left in the hands of parliament." Lord Diplock used similar reasoning in Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions257 to advocate a retreat from Shaw v Director of Public Prosecutions. The views of a scholar who received his legal education in Adelaide shortly before the appellant allegedly committed the conduct charged are representative of how lawyers thought at that time and in that place258: "the administration, or working-out, of the criminal law's prohibitions is permeated by rules and principles of procedural fairness ('due process of law') and substantive fairness (desert, proportionality), which very substantially modify the pursuit of the goal of eliminating or diminishing the undesired forms of conduct: such principles as nulla poena sine lege 256 A History of the Criminal Law of England, (1883), vol III at 359-360. 257 [1973] AC 435 at 473-474. See also Lord Simon of Glaisdale at 489. 258 Finnis, Natural Law and Natural Rights, (1980) at 261-262. (and rather precise leges, at that), and the principles which outlaw retroactive proscription of conduct (at the known cost of letting some dubious characters slip through the net), and restrain the process of investigation, interrogation, and trial (even at the expense of that terror which a Lenin knows is necessary for attaining definite social goals)." (emphasis in original) Ideas of this kind, though perhaps less congenial to the mentalities of recent decades, were very familiar to Australian judges in the early 1960s. They universally assented to those ideas. Contemporary reactions to Director of Public Prosecutions v Smith. Director of Public Prosecutions v Smith, too, attracted immediate criticism. In Australia it was rightly seen as an extension of the law of murder. Shortly before his death, Sir Wilfred Fullagar, then a Justice of this Court, entered Sir Owen Dixon's chambers and observed: "Well, Dixon, they're hanging men for manslaughter in England now."259 The doctrine stated in Director of Public Prosecutions v Smith was soon abolished by statute in England260. Glanville Williams called it "the most criticised judgment ever to be delivered by an English court."261 Lord Reid called it a "disaster"262. Dixon CJ, in his 35th year on the High Court and nearing the end of his eighth decade, levelled the most damaging criticism of all at it in Parker v The Queen. Judgment was delivered on 24 May 1963. That was at or shortly before the time the present appellant could have had the question of his immunity from prosecution for allegedly raping his wife in March and April 1963 considered by the courts, had the complainant, the police, the prosecuting authorities, and the courts moved expeditiously. Dixon CJ delivered a dissenting judgment. But it concluded with a passage263 with which all other members of the Court (Taylor, Menzies, Windeyer and Owen JJ) agreed264. In reading that passage, it must be remembered that up to 1963 it had been the High Court's 259 Ayres, Owen Dixon, (2003) at 276. 260 Criminal Justice Act 1967, s 8. 261 Textbook of Criminal Law, 2nd ed (1983) at 81. See also Williams, "Constructive Malice Revived", (1960) 23 Modern Law Review 605. 262 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 29. 263 (1963) 111 CLR 610 at 632; [1963] HCA 14. 264 (1963) 111 CLR 610 at 633. practice to follow decisions of the House of Lords265. It had also been the Court's practice to pay great respect to the decisions of the English Court of Appeal266, and decisions of English High Court judges. That was so even though no appeal lay from any Australian court to those Courts. "In Stapleton v The Queen267 we said: 'The introduction of the maxim or statement that a man is presumed to intend the reasonable consequences of his act is seldom helpful and always dangerous'268. That was some years before the decision in Director of Public Prosecutions v Smith269, which seems only too unfortunately to confirm the observation. I say too unfortunately for I think it forces a critical situation in our (Dominion) relation to the judicial authority as precedents of decisions in England. Hitherto I have thought that we ought to follow decisions of the House of Lords, at the expense of our own opinions and cases decided here, but having carefully studied Smith's Case270 I think that we cannot adhere to that view or policy. There are propositions laid down in the judgment which I believe to be misconceived and wrong. They are fundamental and they are propositions which I could never bring myself to accept." Dixon CJ then said that Smith's case "should not be used as authority in Australia at all." Those were terrible words. They were brooding, sombre and unusually passionate. In them the aged Chief Justice revealed that at the end of his career he had plumbed the depths of an intolerable nightmare. His reaction shows the Court being provoked by a retrospective judicial expansion of criminal liability in England into a determination to preserve crucial common law principles in Australia, not applaud or foster their destruction. This Court had changed its own rules of stare decisis in order to preserve Australian law. Those rules are 265 Piro v W Foster & Co Ltd (1943) 68 CLR 313 at 320; [1943] HCA 32. See also Wright v Wright (1948) 77 CLR 191 at 210; [1948] HCA 33. There Dixon J said that diversity was "an evil", and that the "avoidance [of diversity] is more desirable than a preservation here of what we regard as sounder principle." 266 Waghorn v Waghorn (1942) 65 CLR 289 at 292; [1942] HCA 1. 267 (1952) 86 CLR 358; [1952] HCA 56. 268 (1952) 86 CLR 358 at 365. fundamental to the judicial method. The change was very substantial. Though the High Court continued to be bound by Privy Council decisions, on most points of law there was much more authority from the House of Lords and the English Court of Appeal than the Privy Council. For those reasons Parker v The Queen astonished the Australian legal profession. But its repudiation of the thinking underlying Director of Public Prosecutions v Smith accorded with the ideas of the Australian legal profession. What would the courts have done in 1963-1965? Had the appellant been charged with rape in April 1963, the immediate background to any claim by him of immunity from prosecution would have included the following elements. There was a continuing furore in which Lord Reid's dissent in Shaw v Director of Public Prosecutions was receiving overwhelming favour. There had been an explicit repudiation of English authority for the first time in Australian history271 in part because of its retrospective expansion of criminal liability. There was universal acceptance in the Australian judiciary of conceptions of the kind stated by Stephen, Lord Reid and Fitzgerald. They were conceptions ultimately rooted in the common understanding of the rule of law272. Recourse to the principal English works on criminal law which were available in 1963273 or soon to be published274 would have revealed that Hale's proposition as reflected in recent authorities was stated as the law. The same was true of Australian works 271 However, there had been a premonitory sign in Commissioner for Railways (NSW) v Cardy (1960) 104 CLR 274 at 285; [1960] HCA 45. 272 See Finnis, Natural Law and Natural Rights, (1980) at 270 (proposition (i)). 273 Fitzwalter Butler and Garsia (eds), Archbold: Pleading, Evidence & Practice in Criminal Cases, 35th ed (1962) at 1150 [2880]; Halsbury's Laws of England, 3rd ed (1955), vol 10 at 746 [1437]; Sturge (ed), Stephen's Digest of the Criminal Law (Indictable Offences), 9th ed (1950) at 263 (which includes the footnote Stephen had amended in the 4th ed (1887), the last he published in his lifetime): see below at [218]; Turner (ed), Russell on Crime, 11th ed (1958), vol 1 at 791; Turner (ed), Kenny's Outlines of Criminal Law, 18th ed (1962) at 192; Cross and Jones, An Introduction to Criminal Law, 4th ed (1959) at 76 and 160; Palmer and Palmer (eds), Harris's Criminal Law, 20th ed (1960) at 244. 274 Cross and Jones, An Introduction to Criminal Law, 5th ed (1964) at 79; Smith and Hogan, Criminal Law, (1965) at 290-292. available in 1963275 or shortly thereafter276. This Court was not taken to any works stating that Hale's proposition was not the law. The leading English and Australian academic lawyers specialising in criminal law – Professor Glanville Williams, Sir Rupert Cross, Sir John Smith, Professor Hogan, Professor Howard, Professor Brett, Professor Waller and Professor Morris – were agreed that the immunity existed. No Australian case denied Hale's proposition. A handful of English cases had qualified it, but only to a small degree277. Against that background, four questions arise. What prospect was there that the South Australian courts or the High Court would accede to an attempt by South Australia to effect a judicial extension, retrospectively, of criminal liability? What prospect was there that they would rule that the immunity had never existed? What prospect was there that they would accede to a submission that though the immunity had existed for a long time, it had disappeared some decades earlier? What prospect was there that they would accede to a submission that though the immunity had existed up to 1963, it should be abolished (necessarily with retrospective effect)? To each of those four questions the answer must be: "None". That answer is supported by the fact that once they came to consider the problem, neither the Australian nor the English courts wavered, until 1991, from the view asserted and assumed until then that Hale's proposition was substantially correct278. is necessary, with respect, emphatically to reject the statement that "in 1963, a respectable challenge to Sir Matthew Hale's opinion could have been mounted."279 To believe that is to believe that history can be rewritten in complete defiance of all contemporary evidence. It contradicts the reasoning of the House of Lords in R v R280. Foreseeability. South Australia did not rely on an argument which appealed to the European Court of Human Rights. But it is convenient to mention it. That Court held that the United Kingdom was not in contravention of 275 Weigall and McKay (eds), Hamilton and Addison: Criminal Law and Procedure, 6th ed (1956) at 88; Bourke, Sonenberg and Blomme, Criminal Law, (1959) at 43. See also Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247. 276 Brett and Waller, Cases and Materials in Criminal Law, 2nd ed (1965) at 300; Howard, Australian Criminal Law, (1965) at 145-147. 277 See above at [97]-[98]. 278 See above at [94]-[100]. 279 R v P, GA (2010) 109 SASR 1 at 13 [66] per Doyle CJ. 280 [1992] 1 AC 599: see above at [103]. Art 7 of the European Convention on Human Rights by reason of the decision in R v R because the abolition of the immunity was reasonably foreseeable281. This is a highly questionable justification for retrospective judicial change in the criminal law. But even if it is an arguable justification, it cannot apply here. It may be one thing to hold that it was reasonably foreseeable in 1990 that the immunity might be abolished in 1991. But in 1963 it was not reasonably foreseeable that if the matter came to court there would be an immediate abolition of the immunity by judicial means282. The significance of R v L. South Australia submitted that statements in R v L supported its second submission283. But it accepted that they were unnecessary to the decision in that case, and hence were dicta only. They were dicta about an aspect of the common law – a presumed incapacity to withdraw consent – which had been abolished by statute in every Australian jurisdiction. Further, they were dicta which said only that Hale's proposition was not in 1991 part of the common law of Australia. They said nothing in terms about what the position was in 1963. For the Court in this appeal the question is whether, as a matter of ratio decidendi, not obiter dicta, South Australia's second submission should be recognised as correct. An annihilatingly powerful reason for not recognising it is that it criminalises conduct which, if it took place, was lawful at the time it took place. Conclusion on South Australia's second submission. A decision by the legislature of South Australia after 1963 to enact a law retrospectively providing that the immunity was abolished with effect from a date before 1963 would have been subject to criticism from many quarters. That would have been significant, not because the critics would have been numerous, but because their criticisms would have been most trenchant284. South Australia's submission that the same result is to be achieved by a judicial decision to that effect is open to even greater criticism. The position of the judiciary in this respect is not superior to that of the legislature. For those reasons South Australia's second submission must be rejected. 281 SW v United Kingdom (1995) 21 EHRR 363 at 402 [43/41]. 282 Cf R v C [2004] 1 WLR 2098; [2004] 3 All ER 1, dealing with conduct in 1970 – a case exemplifying to a very marked degree the fallacy known to personal injury lawyers of finding foreseeability solely on the basis of hindsight. 283 (1991) 174 CLR 379 at 390 per Mason CJ, Deane and Toohey JJ and 405 per 284 See Walker, The Rule of Law, (1988) at 315-324. Issues which need not be resolved The appellant contended that a common law rule should be created by this Court to the effect that when there is a judicial change to the common law it only operates prospectively, not retrospectively. This would involve overruling prior authority285. That contention would only become a live issue if the common law as stated by Hale were held to have changed in the past (as South Australia submitted) or were to be changed now (as South Australia did not submit). It is not correct to arrive at either holding. Hence the need to consider the contention does not arise. Orders The appeal should be allowed. For the answer to the question of law given by the majority in the Full Court of the Supreme Court of South Australia there should be substituted the answer: "No". 285 Ha v New South Wales (1997) 189 CLR 465 at 503-504; [1997] HCA 34. Bell BELL J. In 2010, an Information was filed in the District Court of South Australia, charging the appellant with offences including two counts of rape. The complainant in each count was his then wife, GP, with whom he was living at the time. The offences of rape are alleged to have occurred in March and April 1963. It cannot be sensibly suggested that the appellant would have been prosecuted for those offences, had the allegations come to the attention of the authorities in 1963. This is because at that time it was understood that the crime of rape could not be committed by a husband against his wife with whom he was living ("the immunity"). A husband was amenable under the criminal law for any other offence of violence committed against his wife. The imposition of criminal liability on a person for an act or omission to which criminal liability did not attach at the date the act was done or omitted to be done is contrary to fundamental principle286. It is said that the prosecution of the appellant today for his conduct in 1963 does not offend that principle because the immunity has never formed part of the common law of Australia or, if it did, it had ceased to do so sometime before 1963. The first of these alternatives rests on demonstrating either the absence of an authoritative source for the immunity or that in R v L287 this Court declared the common law in terms that denied its existence. For the reasons that follow, neither of those propositions should be accepted. Nor should this Court now hold that, on some date before 1963, a settled rule of the common law affecting liability for a serious criminal offence ceased to exist. Procedural history The appellant was due to stand trial in the District Court of South Australia (Herriman DCJ) on 5 July 2010. On 29 June 2010, he applied to quash the counts in the Information charging him with rape contrary to s 48 of the Criminal Law Consolidation Act 1935 (SA) ("the CLC Act"). Herriman DCJ stated a case reserving a question of law for the determination of the Full Court of the Supreme Court of South Australia288. His Honour set out the following facts: each count charged an act of non-consensual penile-vaginal sexual intercourse with GP; GP and the appellant were married and cohabiting as husband and wife at the date of each alleged offence; and no legal orders or undertakings of any kind affected the marital relationship on those dates. The question of law that his Honour reserved is: 286 Nullum crimen sine lege; nulla poena sine lege (no crime or punishment without law). See Dicey, Introduction to the Study of the Law of the Constitution, 10th ed 287 (1991) 174 CLR 379; [1991] HCA 48. 288 CLC Act, s 350(2)(b). Bell "Was the offence of rape by one lawful spouse of another, in the circumstances as outlined above, an offence known to the law of South Australia as at 1963?" The Full Court, by majority (Doyle CJ and White J, Gray J dissenting), answered the question289 in this way290: "The defendant is liable at law to be found guilty of the offences of rape charged in count 3 and count 5 of the information, notwithstanding that at the time of the alleged offence he was married to the alleged victim and was cohabiting with her, the marriage giving rise to no presumption of consent on her part to intercourse with her husband, and giving rise to no irrebuttable presumption to that effect." By special leave, the appellant appeals to this Court against the answer given by the majority in the Full Court. The law of rape in South Australia Before turning to the Full Court's reasons, some reference should be made to the history of the law governing liability for rape in South Australia and to the decision in R v L. In 1963, the punishment for the offence of rape was provided by s 48 of the CLC Act: "Any person convicted of rape shall be guilty of felony, and liable to be imprisoned for life, and may be whipped." The elements of the offence of rape were supplied by the common law. The understanding that a husband could not be guilty as a principal in the first degree of the rape of his wife is traced to the statement of Sir Matthew Hale in The History of the Pleas of the Crown291: 289 Doyle CJ (White J concurring) restated the question as "whether Mr P can, as a matter of law, properly be convicted of count 3 and count 5 in the circumstances outlined": R v P, GA (2010) 109 SASR 1 at 4 [6]. 290 R v P, GA (2010) 109 SASR 1 at 19 [93] per Doyle CJ, 45 [174] per White J. 291 (1736), vol 1, c 58 at 629. Bell "But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." There does not appear to have been a single case in which a husband had been prosecuted for the rape of his wife with whom he was living in any common law jurisdiction at the date of the conduct with which the appellant is charged. By that date, as will appear, the justification for the immunity may have come to rest more upon the notion that the criminal law ought not to intrude into the marital bedroom, than upon the fiction of the wife's irrevocable consent. By the 1970s, the idea that there could be any justification for conferring immunity on a husband for the rape of his wife was the subject of critical academic attention and pressure for reform of the law292. South Australia was the first of the Australian jurisdictions to respond to the call for reform of the law of rape. In December 1975, the Attorney-General appointed a Committee of persons distinguished for their knowledge of the criminal law to report on the law relating to sexual offences293. The Committee was chaired by Justice Roma Mitchell of the Supreme Court of South Australia. The Committee submitted its Report to the Attorney-General in March 1976294. The Report contained a summary of the law stating that a husband could not be 292 The Women's Electoral Lobby was formed in 1972. See s 2 of its "Draft Bill and Other Recommendations on Sexual Offences (Superseding Draft Bill of August 1977; plus addenda of July 1978)", in Scutt (ed), Rape Law Reform, (1980) 265 at 268. See also Scutt, "Consent in Rape: The Problem of the Marriage Contract", (1977) 3 Monash University Law Review 255; Buddin, "Revision of Sexual Offences Legislation: A Code for New South Wales?", (1977) 2 University of New South Wales Law Journal 117 at 128-130; Sallmann and Chappell, Rape Law Reform in South Australia: A Study of the Background to the Reforms of 1975 and 1976 and of their Subsequent Impact, Adelaide Law Review Research Paper No 3, (1982) at v, 1-4, 10, 19-23. See, further, LeGrand, "Rape and Rape Laws: Sexism in Society and Law", (1973) 61 California Law Review 919; Brownmiller, Against Our Will: Men, Women and Rape, (1975); Geis, "Lord Hale, Witches, and Rape", (1978) 5 British Journal of Law and Society 26. 293 The other members of the Committee were Professor Howard, Hearn Professor of Law at Melbourne University and the author of the leading text on the criminal law in Australia, and Mr David Biles, the Assistant Director (Research) at the Australian Institute of Criminology. Mr Warren Brent Fisse, then Reader in Law at the University of Adelaide, was engaged as a consultant to the Committee. 294 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976). Bell guilty as a principal in the first degree of the rape of his wife. The Committee noted judicial development of the law in England allowing an exception to the immunity in the case of a wife who had obtained an order for separation relieving her from the obligation to cohabit with her husband295. It recommended that the immunity should be confined such that a husband should be liable to conviction for the rape of his wife whenever the act constituting the rape was committed while the two were living apart and not under the same roof296. Following receipt of the Committee's Report, the South Australian Parliament amended the CLC Act297 by introducing s 48(1), which stated the elements of the offence of rape, and s 73, which relevantly provided: "(3) No person shall, by reason only of the fact that he is married to some other person, be presumed to have consented to sexual intercourse with that other person. (5) Notwithstanding the foregoing provisions of this section, a person shall not be convicted of rape or indecent assault upon his spouse, or an attempt to commit, or assault with intent to commit, rape or indecent assault upon his spouse (except as an accessory) unless the alleged offence consisted of, was preceded or accompanied by, or was associated with – assault occasioning actual bodily harm, or threat of such an assault, upon the spouse; an act of gross indecency, or threat of such an act, against the spouse; 295 In R v Clarke [1949] 2 All ER 448, Byrne J held that, although as a general proposition of law a husband could not be guilty of rape of his wife, there was an exception where the wife was living separately and with the protection of a court order. The exception was recognised but did not apply in the circumstances in R v Miller [1954] 2 QB 282 (see fn 339 below) and it was extended in R v O'Brien [1974] 3 All ER 663. See Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 296 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 15 [6.2.1]. 297 Criminal Law Consolidation Act Amendment Act 1976 (SA). Bell an act calculated seriously and substantially to humiliate the spouse, or threat of such an act; or threat of the commission of a criminal act against any person." In the period following the South Australian reforms, the parliaments of each of the States and Territories enacted legislation with the evident intention of modifying or abolishing the immunity. This process of reform was completed by December 1991, when R v L was decided. In the Code States, this was achieved by removing the words "not his wife" from the definition of the offence298. In the Northern Territory, it was achieved by enacting the Criminal Code (NT) in terms that did not limit rape to an offence outside marriage299. In the Australian Capital Territory and New South Wales, it was done by enacting that the fact of marriage was no bar to conviction for the offence300. In Victoria and South Australia, any presumption of spousal consent to sexual intercourse on marriage was, in terms, abolished301. South Australia was alone in providing a limited immunity for 298 The Acts Amendment (Sexual Assaults) Act 1985 (WA) repealed s 325 of the Criminal Code (WA) and introduced s 324D, which provided that "[a]ny person who sexually penetrates another person without the consent of that person is guilty of a crime". The Criminal Code Amendment (Sexual Offences) Act 1987 (Tas) substituted a new s 185(1) of the Criminal Code (Tas), providing that "[a]ny person who has sexual intercourse with another person without that person's consent is guilty of a crime". The Criminal Code, Evidence Act and other Acts Amendment Act 1989 (Q) repealed s 347 of the Criminal Code (Q) and substituted a provision defining rape as "carnal knowledge of a female without her consent". 299 Criminal Code Act 1983 (NT), incorporating the Criminal Code (NT), s 192(1). 300 The Crimes (Sexual Assault) Amendment Act 1981 (NSW) inserted s 61A(4) into the Crimes Act 1900 (NSW), which provided that the fact that a person is married to a person on whom an offence of sexual assault is alleged to have been committed is no bar to conviction for that offence. The Crimes (Amendment) Ordinance (No 5) 1985 (ACT) inserted s 92R into the Crimes Act 1900 (NSW), as it applied to the ACT, which provided that the fact that a person is married to a person upon whom an offence of sexual intercourse without consent contrary to s 92D is alleged to have been committed shall be no bar to the conviction of the first-mentioned person for the offence. 301 In Victoria, the Crimes (Amendment) Act 1985 (Vic) substituted for s 62(2) of the Crimes Act 1958 (Vic) a new sub-section providing that the existence of a marriage does not constitute, or raise any presumption of, consent by a person to a sexual penetration or indecent assault by another person. Bell husbands in the case of non-aggravated offences. Further amendments introduced into the CLC Act in 1992 removed this partial immunity302. In R v L, the validity of s 73(3) of the CLC Act was challenged on the ground of inconsistency with Commonwealth law. The claimed inconsistency was with s 114(2) of the Family Law Act 1975 (Cth), which conferred power on the Family Court of Australia to make an order relieving a party to a marriage from any obligation to perform marital services or to render conjugal rights. The Court held that there was no direct or indirect inconsistency between the State and Commonwealth laws303. Resolution of the issue presented in R v L did not require consideration of proof of the offence of rape under the common law. Among the submissions advanced on L's behalf was that s 114(2) of the Commonwealth statute preserved the common law inability of a wife to withhold her consent to sexual intercourse with her husband. In their joint reasons, Mason CJ, Deane and Toohey JJ said that, "if it was ever the common law that by marriage a wife gave irrevocable consent to sexual intercourse by her husband, it is no longer the common law"304. This statement was prominent in the respondent's submissions before the Full Court and on this appeal. The Full Court Doyle CJ, writing for the majority in the Full Court, answered the reserved question on the footing that it was likely that Hale's statement of the immunity would have been accepted as a correct statement of the common law of Australia in 1963305. Nonetheless, his Honour said the Full Court should apply the considered statement of this Court that any presumption of irrevocable consent to sexual intercourse no longer formed part of the common law306. His Honour encapsulated the operation of the declaratory theory of the common law in the following statement307: 302 Criminal Law Consolidation (Rape) Amendment Act 1992 (SA). 303 R v L (1991) 174 CLR 379 at 385. 304 R v L (1991) 174 CLR 379 at 390. 305 R v P, GA (2010) 109 SASR 1 at 13 [66]. 306 R v P, GA (2010) 109 SASR 1 at 4 [8], 17 [82]. 307 R v P, GA (2010) 109 SASR 1 at 4 [9]. Bell "Mr P is charged with offences against the then s 48 of the [CLC Act]. In 1963 the elements of that offence were determined by the common law. Today, those elements are determined by the common law as stated by the majority in R v L." Gray J dissented. His Honour considered that the majority in R v L had not declared the common law with respect to liability for rape308. He reviewed the history and concluded that the appellant could not have been convicted of the rape of GP in 1963309. His Honour would have answered the reserved question in the negative310. Developments in Scotland and England Before returning to the decision in R v L, reference should be made to judicial development of the law relating to the immunity in Scotland and England. In S v HM Advocate311, an accused was indicted in the High Court of Justiciary in Scotland for the rape of his wife, with whom he was cohabiting. He challenged the count, contending that no crime known to the law of Scotland had been committed. The motion was dismissed and the dismissal upheld on appeal. Lord Justice-General Emslie, giving the judgment of the Court, noted that there was no authority holding that a cohabiting husband could be convicted of the rape of his wife312. His Lordship considered the state of English law to be sufficiently summarised in Glanville Williams' Textbook of Criminal Law313: 308 R v P, GA (2010) 109 SASR 1 at 36 [146], 37 [148]. The reference to the majority in the context is to the joint reasons of Mason CJ, Deane and Toohey JJ and the 309 R v P, GA (2010) 109 SASR 1 at 29 [132]. 310 R v P, GA (2010) 109 SASR 1 at 45 [173]. 311 1989 SLT 469. 312 S v HM Advocate 1989 SLT 469 at 471. There had been cases in Scotland following Clarke (see fn 295 above) that allowed the conviction of a man for the rape of his wife where they were separated: HM Advocate v Duffy 1983 SLT 7; HM Advocate v Paxton 1985 SLT 96. 313 S v HM Advocate 1989 SLT 469 at 472, citing Williams, Textbook of Criminal Law, 2nd ed (1983) at 236. Bell "A husband is legally incapable of perpetrating rape upon his wife unless the parties are judicially separated, or (probably) separated by consent, or unless the court has issued an injunction forbidding the husband to interfere with his wife, or the husband has given an undertaking to the court in order to avoid the issue of the injunction." Lord Emslie referred with approval to Glanville Williams' views on the justification for the immunity314: "The reason traditionally given for the general rule is the totally unconvincing one that the wife's consent is given on marriage, and she cannot revoke it. It would be an understatement to say that this authentic example of male chauvinism fails to accord with current opinion as to the rights of husbands." The immunity in the law of Scotland was traced to the unequivocal statement of it by Baron Hume315, which, in turn, drew on Hale. The Court accepted that Hume's statement of the law may have been correct in the 18th and early 19th centuries. However, the application of the rule in the late 20th century depended on the reasons justifying it and it was said that irrevocable consent, "if it ever was a good reason, no longer applies today"316. In 1985, in R v Roberts, the Criminal Division of the Court of Appeal of England and Wales said317: "In our judgment the law is now quite plain on this topic [marital rape]. The status of marriage involves that the woman has given her consent to her husband having intercourse with her during the subsistence of the marriage. She cannot unilaterally withdraw it." 314 S v HM Advocate 1989 SLT 469 at 473-474, citing Williams, Textbook of Criminal Law, 2nd ed (1983) at 237. 315 S v HM Advocate 1989 SLT 469 at 472, citing Hume, Commentaries on the Law of Scotland Respecting Crimes, (1797), vol 1, and subsequent editions published in 1819 and 1829, and the fourth edition edited by Bell in 1844. Also cited were Burnett, Criminal Law of Scotland, (1811) and Macdonald, A Practical Treatise on the Criminal Law of Scotland, 5th ed (1948) at 119. 316 S v HM Advocate 1989 SLT 469 at 473. 317 [1986] Crim LR 188, (Transcript: Marten Walsh Cherer). Bell The decision in Roberts followed Steele318 and allowed that a husband might be convicted of the rape of his wife in circumstances in which he and she had, by mutual agreement or court order, effectively put an end to the wife's fictional consent. The enactment of s 1(1)(a) of the Sexual Offences (Amendment) Act 1976 (UK), which defined rape in terms incorporating the expression "unlawful sexual intercourse", led to conflicting decisions at the trial court level319 as to the ability to judicially develop further exceptions to the immunity. The perceived difficulty was occasioned by the recognition that the word "unlawful" in this context had always been understood to refer to sexual intercourse outside marriage320. The Court of Appeal addressed this controversy in R v R321. The accused had been convicted of the attempted rape of his wife committed on an occasion in 1989 when the two were living separately. The wife had informed the accused of her intention to petition for divorce but had not commenced proceedings before the date of the offence. Lord Lane CJ, giving the judgment of the Court, said322: "It seems to us that where the common law rule no longer even remotely represents what is the true position of a wife in present day society, the duty of the court is to take steps to alter the rule if it can legitimately do so in the light of any relevant Parliamentary enactment." It was held that the word "unlawful" in the definition was surplusage. "We take the view that the time has now arrived when the law should declare that a rapist remains a rapist subject to the criminal law, irrespective of his relationship with his victim." 318 (1976) 65 Cr App R 22. 319 R v R [1991] 1 All ER 747; R v C [1991] 1 All ER 755; R v J [1991] 1 All ER 759. 320 R v Chapman [1959] 1 QB 100 at 105. 321 R v R [1992] 1 AC 599. 322 R v R [1992] 1 AC 599 at 610. 323 R v R [1992] 1 AC 599 at 611. Bell The House of Lords affirmed the decision. Lord Keith of Kinkel (with whom the other members of the House agreed) observed324: "It may be taken that [Hale's dictum] was generally regarded as an accurate statement of the common law of England. The common law is, however, capable of evolving in the light of changing social, economic and cultural developments. Hale's proposition reflected the state of affairs in these respects at the time it was enunciated. Since then the status of women, and particularly of married women, has changed out of all recognition in various ways which are very familiar and upon which it is unnecessary to go into detail." The European Court of Human Rights dismissed an application in respect of the decision in R v R325, holding that the accused's conviction did not violate Art 7(1) of the European Convention on Human Rights326. The decision had continued a perceptible line of authority dismantling the immunity327 and the development of the law "had reached a stage where judicial recognition of the absence of immunity had become a reasonably foreseeable development of the law"328. The courts in S v HM Advocate and R v R declared the common law of Scotland, England and Wales, taking into account changes in the conditions of 324 R v R [1992] 1 AC 599 at 616. 325 SW v United Kingdom (1995) 21 EHRR 363. 326 Article 7 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1950) provides: "1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed. 2. This article shall not prejudice the trial and punishment of any person for any act or omission which, at the time when it was committed, was criminal according to the general principles of law recognised by civilised nations." 327 SW v United Kingdom (1995) 21 EHRR 363 at 402. 328 SW v United Kingdom (1995) 21 EHRR 363 at 402. Bell society. In this respect, Lord Keith adopted the following statement from S v HM Advocate329: "By the second half of the 20th century, however, the status of women, and the status of a married woman, in our law have changed quite dramatically." The decisions in S v HM Advocate and R v R necessarily operated with retrospective effect. In each case, the conduct giving rise to the charge was alleged to have occurred not long before the date of the decision. That was important to the reasoning of the European Court of Human Rights in dismissing the application in R v R. One issue raised by this appeal that was not present in S v HM Advocate or R v R concerns the imposition of criminal liability in consequence of developing the law to take account of changed social conditions, for conduct that may have occurred before those changes took place. Prospective overruling and R v L the The Attorneys-General for South Australia, Queensland and Commonwealth intervened to address a constitutional issue raised by the appellant's third ground of appeal. This ground asserts that, if the common law was capable of further development following the 1976 amendments to the CLC Act, it should only be developed on a prospective basis. The submission was argued by reference to the decision of the House of Lords in In re Spectrum Plus Ltd (in liquidation)330. It was said in that case that the flexibility inherent in the English legal system permits the prospective overruling of a previous decision in a case in which it would otherwise produce gravely unfair and disruptive consequences for past transactions or events331. However, it has been held that a constitutional limitation on the exercise of judicial power does not permit this Court flexibility of that kind332. In their joint reasons in R v L, Mason CJ, Deane and Toohey JJ discussed the content of conjugal rights in the law of marriage, rejecting the submission that the doctrine imposes a continuing obligation on the part of a spouse to 329 R v R [1992] 1 AC 599 at 617, citing S v HM Advocate 1989 SLT 469 at 473. 331 In re Spectrum Plus Ltd (in liquidation) [2005] 2 AC 680 at 699 [40] per Lord Nicholls of Birkenhead. 332 Ha v New South Wales (1997) 189 CLR 465 at 504 per Brennan CJ, McHugh, Gummow and Kirby JJ; [1997] HCA 34. Bell to sexual intercourse as a legal consequence of marriage333. consent Their Honours noted Lord Lane CJ's statement in R v R that "there can be little doubt that what [Hale] wrote was an accurate expression of the common law as it then stood"334. They went on to say335: "Without endeavouring to resolve the development of the common law in this regard, it is appropriate for this Court to reject the existence of such a rule as now part of the common law of Australia. … The notion is out of keeping also with recent changes in the criminal law of this country made by statute, which draw no distinction between a wife and other women in defining the offence of rape. It is unnecessary for the Court to do more than to say that, if it was ever the common law that by marriage a wife gave irrevocable consent to sexual intercourse by her husband, it is no longer the common law." (emphasis added; citations omitted) It was unnecessary for the Court to "resolve the development of the common law" because, as their Honours observed, the law had been changed by statute. There was no jurisdiction in Australia in which a presumption of spousal consent to sexual intercourse had any bearing on a person's liability for rape336. The answer to the question of law reserved by Herriman DCJ requires consideration of an issue that was not addressed by the joint reasons or the reasons of Dawson J in R v L, which is the liability under the common law of a cohabiting husband for the rape of his wife. Did the immunity form part of the received common law? The laws and statutes of England applicable to the Province of South Australia were received on 19 February 1836. The relevant history and principles are explained by Mason J in State Government Insurance Commission v Trigwell337. It is not in question that, if Hale's statement of the immunity was a 333 R v L (1991) 174 CLR 379 at 387. 334 R v L (1991) 174 CLR 379 at 389, citing R v R [1992] 1 AC 599 at 603-604. 335 R v L (1991) 174 CLR 379 at 389-390. 336 See above at [176]. 337 (1979) 142 CLR 617 at 634-635; [1979] HCA 40. As explained, s 3 of Act No 9 of 1872 (SA) re-enacted s 1 of Ordinance No 2 of 1843 (SA). Section 3 of the 1872 Act declared that: "In all questions as to the applicability of any laws or statutes of England to the Province of South Australia, the said Province shall be deemed to (Footnote continues on next page) Bell rule of the common law in 1836, it was part of the laws of England received in South Australia338. In light of the history leading to the enactment of s 73(3) and (5) of the CLC Act, there can be little doubt that the common law of Australia was understood as embodying a rule that a husband was not amenable to conviction for the rape of his wife. It is also evident that, by 1976, the justification for that immunity was not perceived to depend upon the concept of irrevocable consent that presumption while maintaining the immunity save for offences committed in circumstances of aggravation. the Parliament of South Australia abolished intercourse, since As will appear, the Parliament of South Australia was not alone in acting upon acceptance that a husband was immune under the common law for the rape of his wife. Nonetheless, it is said that, correctly understood, the common law has never conferred the immunity. This is because Hale did not cite any authority for it and there is no binding judicial decision confirming its existence339. These criticisms will be addressed in turn. have been established on the twenty-eighth day of December, one thousand eight hundred and thirty-six." A modified version of this declaration was enacted in s 48 of the Acts Interpretation Act 1915 (SA). That section was repealed by s 26 of the Acts Interpretation Act Amendment Act 1983 (SA), with the effect that the date of settlement of the Province of South Australia is now taken to be 19 February 1836, on which date letters patent were issued defining its borders. See Lipohar v The Queen (1999) 200 CLR 485 at 508 [54]; [1999] HCA 65, citing South Australia v Victoria (1911) 12 CLR 667 at 676-677; [1911] HCA 17. 338 See R v Brown (1975) 10 SASR 139 at 153; R v Wozniak and Pendry (1977) 16 SASR 67 at 71; Question of Law (No 1 of 1993) (1993) 59 SASR 214 at 230; Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 13 [6.2]. 339 The only decision turning directly on the immunity appears to be R v Miller [1954] 2 QB 282. In that case, the accused was tried for the rape of his wife. The prosecution was brought after the decision in Clarke (see fn 295 above). The Crown relied on the evidence that the wife had been living separately at the time of the incident and had petitioned for divorce. Lynskey J held that the presentation of the petition for dissolution of the marriage did not have any effect in law upon the existing marriage and, accordingly, that the accused had no case to answer on the count charging rape: at 290. Bell An authoritative statement of the law of rape before Hale? It would be foolish to attempt to state the elements of liability for the offence of rape in the period before Hale. Holdsworth gives an account of the development of the offence in general terms, observing that Bracton would have confined the offence to violent intercourse with a virgin340. At the time of the writings attributed to Glanvill, rape was a plea of the Crown, which could be prosecuted by private appeal or on the presentation of the jury341. It appears that, in the early period, most prosecutions were by private appeal and that an appeal could be compromised by the marriage of the victim to her assailant342. There is evidence that, before the time of Hale, it was a good defence to an appeal of rape to say that the woman was one's concubine343. Holdsworth saw the essentials of the offence of rape as having been defined sometime after the Statute of Westminster II c 34, which made all rapes punishable as felonies344. The statute was passed in 1285 in the reign of Edward I. The only authority cited in Holdsworth for the statement of the essentials of the offence is Hale345. The explanation for this gap of some 400 340 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316, citing Bracton f 148. The most severe punishment, it seems, was reserved for the rape of a virgin, but elsewhere Bracton refers to punishment for the forcible ravishment of various categories of women: Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 414-415. 341 Hall (ed), The treatise on the laws and customs of the realm of England commonly called Glanvill, (1965) at 3, 175-176; Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. 342 Hall (ed), The treatise on the laws and customs of the realm of England commonly called Glanvill, (1965) at 176; Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 417-418; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212; Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. 343 Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 416; Dalton, The Country Justice, (1690), c 160 at 392; Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 41 at 108. 344 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. The Statute of Westminster II c 34 and its predecessor, the Statute of Westminster I c 13, also dealing with the punishment for rape, were both repealed by the Offences against the Person Act 1828 (UK) (9 Geo 4 c 31). 345 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. Bell years may lie in Professor Baker's account of the development of the criminal law. In the period up to the mid-16th century, the common law comprised the "common learning" found, not only in the yearbooks, but in the oral tradition of the Inns of Court346. It was the latter that shaped the criminal law. Few criminal cases were decided in the courts at Westminster and only a small number of criminal cases "trickled into the year books"347. Much of the record of the criminal law is found in the notes made by readers348 and these, it would seem, contain little discussion of rape349. Professor Baker says that the most visible result of the body of experience of the courts disposing of criminal cases is to be found in the treatises of Crompton, Dalton and Hale, all of whom drew heavily on rulings made at gaol deliveries350. It was their selection, rather than the rulings at large, which he suggests influenced the future development of the law351. The authority of the Pleas of the Crown Hale's statement was of a negative condition of liability for rape. This circumstance tends to explain the absence of prosecutions of husbands for the offence. Consideration of whether Hale's statement of the immunity came to acquire the status of a rule of law (if it was not one in 1736) requires some account of the standing of the Pleas of the Crown among common lawyers. Sir Matthew Hale held office as Chief Baron of the Exchequer and Chief Justice of the King's Bench successively in the years 1660 to 1676. He died in 1676, leaving instructions in his will prohibiting the publication of any work 346 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 486. See also at 469: "[I]t was the settled learning of the inns of court, referred to in the 1490s as the 'old learning of the court', or the 'common learning in moots'. Common learning, by its nature, did not require chapter and verse to support it. It was what the whole system of exercises was implicitly calculated to transmit, to test, and to teach" (citations omitted). 347 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 471. 348 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 529. 349 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 562. In fn 92, Baker notes that the Statute of Westminster II c 34 was glossed "very briefly". 350 Baker, "The Refinement of English Criminal Jurisprudence, 1500-1848", in The Legal Profession and the Common Law: Historical Essays, (1986) 303 at 313. 351 Baker, "The Refinement of English Criminal Jurisprudence, 1500-1848", in The Legal Profession and the Common Law: Historical Essays, (1986) 303 at 313. Bell other than that which he had permitted to be published in his lifetime. At the time of his death, he was writing the Pleas of the Crown, which he had planned as a work in three volumes352. Only the first volume was completed. Four years after his death, the House of Commons ordered that it be printed. However, it was not until 1736 that the first edition appeared under the editorship of Sollom Emlyn, barrister of Lincoln's Inn. Sir William Blackstone acknowledged his debt to Hale353 and drew on the Pleas of the Crown in his account of felonies in the Commentaries. Sir James Fitzjames Stephen accorded the composition of the Pleas of the Crown an important place in the evolution of the criminal law in the 17th century354. It was, in his estimate, a work "of the highest authority", demonstrating both "a depth of thought and a comprehensiveness of design" that put it in "quite a different category" from Coke's Institutes355. Important principles of criminal responsibility were hardly noticed before Hale356. Stephen saw the definition of many crimes as settled in the period that separates Coke from Blackstone, and Hale and Foster as having contributed more than any other writers to that development357. Maitland said of Hale that "none had a wider or deeper knowledge of the materials; he was perhaps the last great English lawyer who habitually studied records; he studied them pen in hand and to good purpose". He was, in Maitland's estimate, "the most eminent lawyer and judge of his time"358. Holdsworth accounted Hale "the greatest historian of English law before 352 Yale, Hale as a Legal Historian, (1976) at 8; Holdsworth, "Sir Matthew Hale", (1923) 39 Law Quarterly Review 402 at 419. The second volume was intended to deal with non-capital crimes and the third with franchises and liberties. 353 Blackstone, An Analysis of the Laws of England, 3rd ed (1758) at vii. 354 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 211. 355 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 211. Stephen was not uncritical in his treatment of the Pleas of the Crown. He described the weight of technical detail in the chapters dealing with procedure as almost unreadable except by a very determined student: at 212. 356 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 212. 357 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 219. 358 Maitland, "The Materials for English Legal History", in Fisher (ed), The Collected Papers of Frederic William Maitland, (1911), vol 2, 1 at 5. Bell Maitland"359. He considered the Pleas of the Crown to have been left in the best state of any of Hale's works that had not been published at the date of his death360. Holdsworth, like Stephen, regarded the treatise highly361: "It was a branch of the law which could not then be adequately described without a very complete knowledge of the history of the law; and, partly because it contained very ancient ideas and rules, partly because it had been added to and in many details modified by a variety of statutes, it greatly needed systematic Coke and Crompton had summarized it, in a somewhat unsystematic form. Hale, because he was both a competent historian, a competent jurist, and a competent lawyer did the work which they endeavoured to do infinitely better. Ever since its first publication it has been a book of the highest authority." (citations omitted) treatment. Holdsworth saw Coke as standing midway between the medieval and the modern law, and Hale as "the first of our great modern common lawyers"362. The analysis of the offence in the Pleas of the Crown Hale described the offence of rape as "the carnal knowledge of any woman above the age of ten years against her will, and of a woman-child under the age of ten years with or against her will"363. Hale acknowledged Coke for this statement364, but proceeded to a much more detailed analysis of proof of the offence. He discussed additional elements (any degree of penetration was sufficient and it was not necessary to prove emission of semen); accessorial liability for the offence; liability in the case of infants under 14 years; liability in the case of consenting females under 12 years; and consent obtained by threat of 359 Holdsworth, "Sir Matthew Hale", (1923) 39 Law Quarterly Review 402 at 402. 360 (1923) 39 Law Quarterly Review 402 at 419-420. 361 (1923) 39 Law Quarterly Review 402 at 420. 362 (1923) 39 Law Quarterly Review 402 at 425. 363 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. 364 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. The fourth edition of the Third Part of Coke's Institutes, published in 1669, in fact described the offence of rape as "the unlawfull and carnal knowledge and abuse of any woman above the age of ten years against her will, or of a woman-child under the age of ten years with her will, or against her will" (emphasis added): The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 11 at 60. Bell violence, among other matters. He also gave a deal of attention to the older law concerning appeals of rape, including the concubinage exception365. The account of the husband's immunity follows discussion of the latter. The relevant passage is set out below366: "It appears by Bracton ubi supra, that in an appeal of rape it was a good exception, quod ante diem & annum contentas in appello habuit eam ut concubinam & amicam, & inde ponit se super patriam, and the reason was, because that unlawful cohabitation carried a presumption in law, that it was not against her will. But this is no exception at this day, it may be an evidence of an assent, but it is not necessary that it should be so, for the woman may forsake that unlawful course of life. But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." Writing of the criticism that Hale had conjured up the immunity without authority, one commentator has observed that it might be thought incongruous that the law allowed an exception in the case of de facto relationships (for which there is clear evidence before Hale's time) but not de jure relationships367. The writer suggests that Hale lacked authority, not for the existence of the immunity, but for confining it to marriage368. It should be noticed that Hale said the concubinage exception was no longer good law because of the recognition that a 365 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. 366 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628-629. 367 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 154, citing Dalton, Countrey Justice, (1619) at 256; R v Lord Audley (1631) 3 St Tr 401 368 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 155. Professor Lanham identifies two extra-judicial supports for the existence of the immunity in Hale's time. Hale referred to Isabel Butler v William Pull, introducing the case by explaining that if A forces B to marry him and then has carnal knowledge of her against her will, he cannot be found guilty of rape during the subsistence of the voidable marriage; and Statute 6 R 2 stat 1 c 6, giving a husband a right of appeal where his wife had consented to a rape by a third party after the fact. Bell woman may forsake her unlawful way of life. This was stated by way of contrast to sexual intercourse within marriage, which was seen as lawful369. Hale had a commanding knowledge of the work of the courts administering criminal justice370. It may safely be taken that husbands were not prosecuted for rape of their wives in the period before the publication of his treatise. Given the subordinate status of married women under the law, this may not surprise371. Among the few benefits that the law conferred on the married woman was to immunise her from prosecution for a crime committed by her in her husband's presence372. The presumption of the law was that she was bound to obey her husband's command. This is not an idea that readily accommodates the prosecution of the husband for an act of non-consensual sexual intercourse with his wife. Hale is the source for locating the immunity in contract. It is a rationale that is consistent with Blackstone's treatment of the relations between husband and wife at law. The latter's celebrated account of the nature and effect of 369 See extract from Coke at fn 364 above. Similarly, Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 41 at 108 described rape, relevantly, as an offence "in having unlawful and carnal Knowledge of a Woman" (emphasis added). 370 See Yale, Hale as a Legal Historian, (1976) for an account of Hale's record-searching and collecting from 1630, and his extensive knowledge of King's 371 Williams, "The Legal Unity of Husband and Wife", (1947) 10 Modern Law Review 16 at 29; Easteal, "Rape in marriage: Has the licence lapsed?", in Easteal (ed), Balancing the Scales: Rape, Law Reform and Australian Culture, (1998) 107 at 372 Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 1 at 2; Hale, The History of the Pleas of the Crown, (1736), vol 1, c 7 at 44-48; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 2 at 29; J W C Turner, Russell on Crime, 12th ed (1964), vol 1 at 94-95. The presumption did not extend to treason or murder: Hale, The History of the Pleas of the Crown, (1736), vol 1, c 7 at 45. It has been abolished in all Australian jurisdictions: Crimes Act 1900 (NSW), Sched 3, cl 4(1) (originally s 407A(1)); Criminal Code (Q), s 32 (omitted in 1997); CLC Act, s 328A; Criminal Code (Tas), s 20(2); Crimes Act 1958 (Vic), s 336(1); Criminal Code (WA), s 32 (omitted in 2003); Crimes Act 1900 (ACT), s 289. It is not included in the defence of duress in the Criminal Code (NT), s 40. However, an affirmative defence of marital coercion has been retained in South Australia and Victoria: CLC Act, s 328A; Crimes Act 1958 (Vic), s 336. Bell coverture373 was prefaced by the statement: "[o]ur law considers marriage in no other light than as a civil contract"374. While "[t]he holiness of the matrimonial state" (emphasis in original) was a matter for the ecclesiastical courts, Blackstone emphasised that the temporal courts treated marriage like all other contracts, asking whether the parties were willing and able to contract375. It is an analysis which has been seen as a civilised advance on the medieval concept of the husband's natural and God-given power over his wife376. Professor Stretton suggests that, for Blackstone, the fundamental point was that married women consented to their modified legal status by their agreement to marriage377: "It was therefore the logic of contract that justified married women's particular treatment at law. However, it was a narrow concept of consent that ended abruptly at the church door, with no room for renegotiation during marriage and virtually no effective ability to escape the legal effects of marriage through separation or divorce." Blackstone's treatment of rape was largely taken from Hale378. He did not refer to the immunity, but it is evident that Hale's statement of it was not controversial. Blackstone drew attention to those occasions on which Hale's account of the law departed from the views of other writers. In Blackstone's analysis of the offence of rape, there was one such occasion. He noted that Hale considered that carnal knowledge of a girl aged under 12 years was rape regardless of consent, but that the law had in general been held only to extend to the carnal knowledge of a girl aged under 10 years379. 373 "By marriage, the husband and wife are one person in law: that is, the very being or legal existence of the woman is suspended during the marriage, or at least is incorporated and consolidated into that of the husband: under whose wing, protection, and cover, she performs every thing": Commentaries on the Laws of England, (1765), bk 1, c 15 at 430 (emphasis in original). 374 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 375 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 376 Stretton, "Coverture and Unity of Person in Blackstone's Commentaries", in Prest (ed), Blackstone and his Commentaries, (2009) 111 at 120-121. 377 Stretton, "Coverture and Unity of Person in Blackstone's Commentaries", in Prest (ed), Blackstone and his Commentaries, (2009) 111 at 123, citing Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 378 Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 211-215. 379 Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212. Bell The operation of the immunity Hale's statement of the law may be analysed in either of two ways. First, that the offence comprises two elements: (i) carnal knowledge of a female (involving some degree of penetration); (ii) without her consent. On this analysis the immunity arises by the operation of an irrebuttable presumption of law. The alternative analysis is that the first element of the offence requires proof of the "unlawful" carnal knowledge of a female and that "unlawful" in this context means outside marriage380. The latter view accords with the treatment of the offence by text-writers, including Coke and Hawkins writing before the publication of Hale's treatise381. It is the analysis adopted by the Supreme Court of South Australia in those cases in which consideration has been given to the question. Bray CJ, discussing the elements of the offence in R v Brown382, considered that they were as stated in the 37th edition of Archbold: "Rape consists in having unlawful sexual intercourse with a woman without her consent by force, fear or fraud"383. The word "unlawful" was thought by Bray CJ to exclude intercourse between spouses384. Wells J appears to have been of the same view385. King CJ in R v Sherrin (No 2) also considered proof of the unlawfulness of the act of intercourse to have undoubtedly been an element of the offence at common law386. The resolution of the reserved question does not turn on whether the rule of law traced to Hale requires proof of the unlawfulness of the intercourse as an element, or is an irrebuttable presumption of consent. The latter, while "disguised in the language of adjective rules"387, is in truth a substantive rule of 380 R v Chapman [1959] 1 QB 100. 381 See fnn 364 and 369 above. 382 (1975) 10 SASR 139. 383 Butler and Garsia, Archbold: Pleading, Evidence & Practice in Criminal Cases, 37th ed (1969) at [2872], citing East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 434 and Hale, The History of the Pleas of the Crown, (1736), vol 1 at 627 et seq (emphasis added). 384 R v Brown (1975) 10 SASR 139 at 141. 385 R v Brown (1975) 10 SASR 139 at 153. 386 (1979) 21 SASR 250 at 252. 387 J W C Turner, Kenny's Outlines of Criminal Law, 19th ed (1966) at 455 [490]. Bell law. A husband could not be convicted as principal in the first degree for the rape of his wife on either analysis. At issue is the existence of the immunity, not whether the reason given for it is flawed or has, over time, ceased to provide a principled basis for it. A number of common law rules of liability for criminal offences have their origins in discredited ideas. The definition of the offence of murder stated by Coke388, and thereafter accepted as an authoritative statement of the elements of the offence389, required that the death of the deceased take place within a year and a day of the act causing death. The reason for the rule is suggested to be the limitations of medieval medical knowledge390. If that is the reason, it must be said that the rule survived long after its justification ceased. The rule has since been abolished by statute391. In the same category is the presumption that a boy under 14 years of age is physically incapable of sexual intercourse. This, too, is traced to the statement of the law in the Pleas of the Crown392. The presumption is patently absurd. Nonetheless, it was accepted as a rule of law precluding the 388 Coke, The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 7 at 389 Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 31 at 79; Hale, The History of the Pleas of the Crown, (1736), vol 1, c 33 at 426; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 14 at 197-198; East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 214, 343; Halsbury's Laws of England, 2nd ed, vol 9 at 428. See also R v Dyson [1908] 2 KB 454; R v Evans & Gardiner (No 2) [1976] VR 523. 390 Coke, The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 7 at 53. See also Rogers v Tennessee 532 US 451 at 463 (2001); Fisse (ed), Howard's Criminal Law, 5th ed (1990) at 31; Waller and Williams, Criminal Law, 11th ed 391 Crimes Act 1900 (NSW), s 17A; CLC Act, s 18; Crimes Act 1958 (Vic), s 9AA; Crimes Act 1900 (ACT), s 11. The rule has been removed in the Code States: Penalties and Sentences Act 1992 (Q) (as enacted), s 207, Schedule, item 7 under the heading "Criminal Code"; Criminal Code Amendment (Year and a Day Rule Repeal) Act 1993 (Tas); Criminal Law Amendment Act 1991 (WA), s 6. It never formed part of the Criminal Code (NT). 392 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 630 (mispaginated in the original as 730): "An infant under the age of fourteen years is presumed by law unable to commit a rape, and therefore it seems cannot be guilty of it, and tho in other felonies malitia supplet aetatem in some cases as hath been shewn, yet it seems as to this fact the law presumes him impotent, as well as wanting discretion." Bell conviction of boys for rape393 until it was abolished by statute394. It was sufficient for Lord Coleridge CJ in R v Waite to observe that the rule had been "clearly laid down by Lord Hale" and, on that authority, judges had "refused to receive evidence to shew that a particular prisoner was in fact capable of committing the offence"395. Hale's statement of the immunity was taken as an authoritative statement of the law by all the leading text-writers396. 393 See, eg, R v Eldershaw (1828) 3 Car & P 396 [172 ER 472]; R v Waite [1892] 2 QB 600; R v Williams [1893] 1 QB 320. See also Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212; Roscoe, A Digest of the Law of Evidence in Criminal Cases, 2nd ed (1840) at 797; Williams, Criminal Law: The General Part, 2nd ed (1961) at 821. 394 Crimes Act 1900 (NSW), s 61S (originally s 61A(2)); CLC Act, s 73(2); Crimes Act 1958 (Vic), s 62(1); Crimes Act 1900 (ACT), s 68; Sexual Offences Act 1993 (UK), s 1. The presumption has been removed in the Code States: Criminal Code, Evidence Act and other Acts Amendment Act 1989 (Q), s 9; Criminal Code Amendment (Sexual Offences) Act 1987 (Tas), s 5; Acts Amendment (Sexual Assaults) Act 1985 (WA), s 4. It never formed part of the Criminal Code (NT). 395 R v Waite [1892] 2 QB 600 at 601. See also R v Young [1923] SASR 35; R v Packer [1932] VLR 225. 396 East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 446; Burnett, A Treatise on Various Branches of the Criminal Law of Scotland, (1811) at 102; Chitty, A Practical Treatise on the Criminal Law, (1816), vol 3 at 811; Russell, A Treatise on Crimes and Misdemeanors, (1819), vol 1, bk 3, c 6 at 802; Archbold, A Summary of the Law Relative to Pleading and Evidence in Criminal Cases, (1822) at 259; Alison, Principles of the Criminal Law of Scotland, (1832) at 215; Roscoe, A Digest of the Law of Evidence in Criminal Cases, (1835) at 708; Hume, Commentaries on the Law of Scotland, Respecting Crimes, (1844), vol 1, c 7 at 306; Macdonald, A Practical Treatise on the Criminal Law of Scotland, (1867) at 194; Stephen, A Digest of the Criminal Law (Crimes and Punishments), 4th ed (1887), c 29 at 194; Halsbury, The Laws of England, 1st ed, vol 9, par 1236; Sturge, Stephen's Digest of the Criminal Law (Indictable Offences), 9th ed (1950) at 263; Halsbury's Laws of England, 3rd ed, vol 10, par 1437; Butler and Garsia, Archbold: Pleading, Evidence & Practice in Criminal Cases, 35th ed (1962) at 1150; J W C Turner, Russell on Crime, 12th ed (1964), vol 1 at 708; Howard, Australian Criminal Law, (1965) at 135, 145-147. Bell R v Clarence The first judicial consideration of the immunity was in R v Clarence397. A bench of 13 judges was constituted to consider the question of whether the transmission of gonorrhoea by husband to wife in an act of consensual sexual intercourse could amount to the malicious infliction of grievous bodily harm. Wills, Field and Hawkins JJ each left open that circumstances may exist in which a husband could be liable for the rape of his wife. Wills J doubted that "between married persons rape is impossible"398. Field J thought that there may be cases in which a husband could be convicted of a crime arising out of forcibly imposing sexual intercourse on his wife; he did not say whether for rape or some other offence399. Hawkins J accepted that, by the marriage contract, a wife confers on her husband "an irrevocable privilege to have sexual intercourse with her during such time as the ordinary relations created by such contract subsist between them" and that a husband could not be convicted of a rape committed by him upon the person of his wife400. However, a husband was not at liberty to endanger his wife's health and cause her grievous bodily harm by the exercise of "the marital privilege" at a time when he was suffering from venereal disease and when the natural consequence of sexual intercourse would be the communication of that disease to her401. He explained the principles in this way402: "Rape consists in a man having sexual intercourse with a woman without her consent, and the marital privilege being equivalent to consent given once for all at the time of marriage, it follows that the mere act of sexual communion is lawful; but there is a wide difference between a simple act of communion which is lawful, and an act of communion combined with infectious contagion endangering health and causing harm, which is unlawful. … The wife submits to her husband's embraces because at the time of marriage she gave him an irrevocable right to her person. The intercourse which takes place between husband and wife after marriage is not by virtue of any special consent on her part, but is mere submission to an 397 (1888) 22 QBD 23. 398 R v Clarence (1888) 22 QBD 23 at 33. 399 R v Clarence (1888) 22 QBD 23 at 57. 400 R v Clarence (1888) 22 QBD 23 at 51. 401 R v Clarence (1888) 22 QBD 23 at 51. 402 R v Clarence (1888) 22 QBD 23 at 51, 54. Bell obligation imposed upon her by law. Consent is immaterial." (emphasis in original) Pollock B said403: "The husband's connection with his wife is not only lawful, but it is in accordance with the ordinary condition of married life. It is done in pursuance of the marital contract and of the status which was created by marriage, and the wife as to the connection itself is in a different position from any other woman, for she has no right or power to refuse her consent." Consideration of the immunity in Clarence appears to have been prompted by a submission based on a footnote in Stephen's Digest of the Criminal Law. The law in the first edition of the Digest was stated, relevantly, in this way404: "Rape is the act of having carnal knowledge of a woman without her conscious permission ... Provided that: – (1) A husband [it is said] cannot commit rape upon his wife by carnally knowing her himself, but he may do so if he aids another person to have carnal knowledge of her." The footnote relevantly said405: "Hale's reason is that the wife's consent at marriage is irrevocable. Surely, however, the consent is confined to the decent and proper use of marital rights. If a man used violence to his wife under circumstances in which decency or her own health or safety required or justified her in refusing her consent, I think he might be convicted of rape, notwithstanding Lord Hale's dictum. He gives no authority for it, but makes the remark only by way of introduction to the qualification contained in the latter part of clause (1), for which Lord Castlehaven's Case (3 St Tr 402) is an authority." 403 R v Clarence (1888) 22 QBD 23 at 63-64. 404 Stephen, A Digest of the Criminal Law (Crimes and Punishments), (1877), c 29 at 405 Stephen, A Digest of the Criminal Law (Crimes and Punishments), (1877), c 29 at Bell Stephen J gave the leading judgment in Clarence406. He used the occasion to draw attention to the alteration of the footnote, removing the suggestion that a man might in certain circumstances be indicted for the rape of his wife, in the most recent edition of his text407. Stephen was a great master of the criminal law408. An account of his draft criminal code and the subsequent Commission appointed to report upon it is contained in the joint reasons in Darkan v The Queen409. To the extent that the Draft Code appended to the Report of the Commissioners differed from Stephen's original draft, the differences were noted in the Report. The provisions dealing with offences against the person were said to correspond (as did the provisions in Stephen's original draft) with the Offences against the Person Act 1861 (UK)410, "supplemented by a reduction to writing of the common law doctrines and definitions"411. The Offences against the Person Act 1861 (UK) prescribed the punishment for rape but left the definition of the offence to the common law. It is apparent that the definition of rape in the Draft Code was understood by its authors412 to be a statement of the common law. Relevantly, the offence was defined as "the act of a man having carnal knowledge without her consent of a female who is not his wife"413. The Criminal Code Indictable Offences Bill 1878 (UK), on which the Commissioners' draft was based, and which defined rape in the same terms, had been circulated to the Judges, Chairmen and Deputy Chairmen of Quarter Sessions, Recorders and "many members of the bar and 406 A L Smith, Mathew and Grantham JJ, Huddleston B and Lord Coleridge CJ concurred. 407 R v Clarence (1888) 22 QBD 23 at 46. See Stephen, A Digest of the Criminal Law (Crimes and Punishments), 4th ed (1887), c 29 at 194 fn 4. 408 Radzinowicz, Sir James Fitzjames Stephen, 1829-1894, Selden Society Lecture, 409 (2006) 227 CLR 373 at 385-386 [33]-[36]; [2006] HCA 34. 410 24 & 25 Vict c 100, s 48. 411 Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 22. 412 Lord Blackburn, Mr Justice Barry, Lord-Justice Lush and Sir James Fitzjames Stephen. 413 Section 207 of the Draft Code, Appendix to the Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 107. Bell other gentlemen having practical experience in the administration of the criminal law"414 in England and Ireland with the invitation to comment on it. The absence of any suggestion in the Commissioners' Report that the offence of rape was to be modified under the Code is eloquent of the acceptance by those engaged in the administration of the criminal law in England and Ireland at the time that the offence could not be committed by a husband against his wife415. Sir Samuel Griffith drew on the English Draft Code in preparing his draft criminal code for Queensland416. In the latter, the offence of rape was defined, relevantly, as the "carnal knowledge of a woman, not his wife"417. The marginal notes reveal that Sir Samuel Griffith considered this definition to be a statement of the common law. In Canada, before the enactment of the Criminal Code in 1892, the offence of rape, while punishable as a felony under legislation modelled on the Offences against the Person Act 1861 (UK), depended upon the common law for its elements of proof. It is apparent that the understanding in that jurisdiction was that the offence could not be committed by a husband against his wife418. The Criminal Code defined rape as involving the "carnal knowledge of a woman who is not his wife"419. It does not appear that this was thought to involve any departure from the existing law. The absence of binding decision The absence of a binding decision does not mean that a rule stated in authoritative texts and accepted and acted upon by the legal profession over many years may not acquire status as law. The point is made by Sir John Smith 414 Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 5. 415 See Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 25. 416 Griffith, Draft of a Code of Criminal Law, (1897) at iv. 417 Griffith, Draft of a Code of Criminal Law, (1897), s 353 at 135. 418 Taschereau, The Criminal Statute Law of the Dominion of Canada, 2nd ed (1888) 419 Criminal Code 1892 (Can), s 266. Bell in his commentary on R v C420, by reference to Foakes v Beer421. In the latter case, the House of Lords held itself bound to follow a rule stated by Coke to have been laid down in Pinnel's Case422 in 1602, although their Lordships disliked it and there was no decision in which it had been applied. As the Earl of Selborne LC put it423: "The doctrine itself, as laid down by Sir Edward Coke, may have been criticised, as questionable in principle, by some persons whose opinions are entitled to respect, but it has never been judicially overruled; on the contrary I think it has always, since the sixteenth century, been accepted as law. If so, I cannot think that your Lordships would do right, if you were now to reverse, as erroneous, a judgment of the Court of Appeal, proceeding upon a doctrine which has been accepted as part of the law of England for 280 years." Brennan J, the only Justice in R v L to consider proof of the offence of rape under the common law, considered the elements to have been fixed by Hale's statement of them424. The evidence in favour of that conclusion is compelling. Has the immunity ceased to exist? It was submitted that legal and social changes to the status of married women had produced the result that the immunity had ceased to be a rule of law on a date before the subject events. There were differing views about when that change to the law occurred, a circumstance which tends to highlight a difficulty with accepting the underlying premise. The respondent and the Attorney- General for South Australia contended that the foundation for the immunity had "crumbled to dust" as at the "early to mid twentieth century". The Attorney- General of circumstances had occurred "by the end of the 19th century". Reference was made to the enactment of the Married Women's Property Acts; the amendment of matrimonial causes statutes removing the "double-standard" relating to adultery as a ground for dissolution of marriage; and, more generally, the extension of the the Commonwealth contended the relevant change that 420 [1991] Crim LR 62. 421 (1884) 9 App Cas 605. 422 (1602) 5 Co Rep 117a [77 ER 237]. 423 Foakes v Beer (1884) 9 App Cas 605 at 612. See also at 622-623 per Lord Blackburn, 623-624 per Lord Watson, 629-630 per Lord FitzGerald. 424 R v L (1991) 174 CLR 379 at 399. Bell franchise to women, as combining to produce a state of affairs that was inconsistent with the continued existence of the immunity. These submissions were maintained in the face of a good deal of evidence to the contrary. The one case relied on to support the submissions was R v Jackson425. In that case, Lord Halsbury LC rejected the proposition that the relation of husband and wife gave the husband "complete dominion over the wife's person"426. The holding that an order for restitution of conjugal rights did not confer on the husband a right to imprison his wife is a tenuous basis for concluding that the husband was now amenable to prosecution for having sexual intercourse with his wife without her consent. In the first edition of Halsbury, published in 1909, almost 20 years after the decision in Jackson, the law was stated as being that "[a] man cannot be guilty as a principal in the first degree of a rape upon his wife, for the wife is unable to retract the consent to cohabitation which is a part of the contract of In Tasmania, the Married Women's Property Act was enacted in 1882. Women had been granted the franchise for both federal and State parliamentary elections by 1904428. The Matrimonial Causes Act 1860 (Tas) was amended in 1919 to remove the double-standard with respect to adultery429. Nonetheless, when the Parliament enacted the Criminal Code for Tasmania in 1924, a quarter of a century after the enactment of the Queensland Criminal Code, the crime of 426 [1891] 1 QB 671 at 679. 427 Halsbury, The Laws of England, 1st ed, vol 9, par 1236. The second edition, under the editorship of Viscount Hailsham, published in 1933, stated the law in the same terms: vol 9, par 815. It was not until after Clarke (see fn 295 above), which provided a limited exception to the immunity in the case of a wife living separately under the protection of a court order, that the third edition, under the editorship of Viscount Simons, published in 1955, stated the rule in qualified terms: "[a] man cannot, as a general rule, be guilty as a principal in the first degree of a rape upon his wife" (vol 10, par 1437). 428 Commonwealth Franchise Act 1902 (Cth); Constitution Amendment Act 1903 (Tas). 429 Matrimonial Causes Amendment Act 1919 (Tas) (Royal Assent proclaimed on 17 May 1920). Bell rape was defined in the same way as under the latter430. The significant changes in the legal status of married women which had occurred by 1924 do not appear to have been viewed at the time as inconsistent with the immunity. In the same year, the House of Lords delivered judgment in G v G431. That was an appeal from the dismissal of an application for a decree of nullity of marriage brought by a husband on the ground of his wife's impotency. The appellant and his wife were married in 1913 and the evidence of their relations spanned the period from that date to 1921. The wife had evinced an hysterical reluctance to engage in sexual intercourse. The question for the court was whether this psychological obstacle to consummation amounted to incapacity, as distinct from the mere wilful refusal of conjugal rights. The court below had doubted that the husband's repeated attempts at intercourse had exhibited "a sufficient virility"432. It was in this context that Lord Dunedin observed433: "It is indeed permissible to wish that some gentle violence had been employed; if there had been it would either have resulted in success or would have precipitated a crisis so decided as to have made our task a comparatively easy one." His Lordship considered the husband's account "as to why he did not use a little more force than he did" to have been an acceptable explanation434 and the appeal was allowed. The speeches in G v G speak to another age. The decision in that case is closer to the date of the acts charged against the appellant than was the hearing of this appeal. More than a decade after the events giving rise to this appeal, in 1975, Lawton LJ, giving the judgment of the English Court of Appeal in R v Cogan, proceeded upon acceptance that it was a legal impossibility for a man to rape his wife during cohabitation435. The accused bore accessorial liability for the rape of his wife by another. In the following year, Geoffrey Lane LJ extended the exception to the immunity to allow the conviction of a husband for the rape of his 430 Criminal Code (Tas), s 185 (as enacted). Relevantly, rape was defined as involving "carnal knowledge of a female not his wife". 432 G v G [1924] AC 349 at 357. 433 G v G [1924] AC 349 at 357. 434 G v G [1924] AC 349 at 358. 435 R v Cogan [1976] QB 217 at 223. Bell wife where he had given an undertaking not to molest her436. Of present significance is his Lordship's view that, "[a]s a general principle, there is no doubt that a husband cannot be guilty of rape upon his wife"437. The undertaking given in lieu of an injunction operated in that case to eliminate the wife's matrimonial consent to intercourse. A convenient account of the law in England as it was understood in December 1983 is contained in the Report of the Criminal Law Revision Committee, which had been asked to review the law relating to, and penalties for, sexual offences438: "In defining rape the Sexual Offences (Amendment) Act 1976 uses the term 'unlawful sexual intercourse'. What is 'unlawful' is left to the common law. The general rule is that sexual intercourse is 'unlawful' if it occurs outside marriage. Sexual intercourse between husband and wife is not 'unlawful' except in a fairly narrow class of cases, which can be broadly described as cases where the parties have separated and their separation has been acknowledged by a court." The existence of the immunity was also accepted in decisions of Australian courts delivered after 1963. Reference has been made earlier in these reasons to decisions of the South Australian Supreme Court439. In New South Wales, Victoria and Tasmania, the English line of authority allowing an exception to the immunity in the case of a wife living separately and under the protection of a court order was adopted440. In R v McMinn, Starke ACJ observed441: "There can be no doubt that for centuries the law in England (and in Australia) has been that a man cannot rape his wife. That this principle of law is out of tune with modern thinking has been recognized in Victoria 436 Steele (1976) 65 Cr App R 22. 437 Steele (1976) 65 Cr App R 22 at 24. 438 Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 17-18 [2.57]. 439 See above at [212]. 440 C (1981) 3 A Crim R 146; R v McMinn [1982] VR 53; Bellchambers (1982) 7 A Crim R 463. 441 [1982] VR 53 at 55. Bell by the Crimes (Sexual Offences) Act 1980 and there are similar Acts in other States." In New Zealand, a statute enacted in 1961 provided that no man could be convicted of rape of his wife unless, at the time of the intercourse, there was in force a decree nisi of divorce or nullity and the parties had not resumed cohabitation, or there was in force a decree of judicial separation or a separation order442. An amendment to the statute in 1981 maintained the immunity, save in cases where the husband and wife were living separately443. This restricted immunity was not removed until 1986444. The Model Penal Code, first published by the American Law Institute in 1962, relevantly provided that "[a] male who has sexual intercourse with a female not his wife is guilty of rape"445. In the revised commentary, published in 1980, this "traditional limitation" of the offence was maintained446. The proposition that by the mid-20th century or earlier the immunity had fallen into desuetude as the result of changes in the conditions of society is without support. In this country, as in other common law countries, the continued existence of the immunity does not appear to have been seen as inconsistent with the recognition of the equal status of married women. There is the curious spectacle in this appeal of the respondent and the Attorney-General for South Australia contending that the maintenance of the immunity by the mid- 20th century was inconsistent with the rights and privileges of married women, notwithstanding that as late as 1976 the Parliament of South Australia chose to preserve it447. 442 Crimes Act 1961 (NZ), s 128(3). 443 Family Proceedings Act 1980 (NZ), First Schedule. 444 Crimes Amendment Act (No 3) 1985 (NZ), s 2. 445 American Law Institute, Model Penal Code: Official Draft and Explanatory Notes, 446 American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 271-275, 341-346. The Comment notes that the rule existed at common law, prevailed at the time the Model Penal Code was drafted and "has been continued in most revised penal laws": at 341. 447 The original Bill introduced into Parliament, which purported to abolish the immunity completely, was rejected by the House of Assembly: Sallmann and Chappell, Rape Law Reform in South Australia: A Study of the Background to the Reforms of 1975 and 1976 and of their Subsequent Impact, Adelaide Law Review Research Paper No 3, (1982) at 20-21, 30-31. Bell By the mid-20th century, the notion that the immunity depended on the wife's irrevocable consent to intercourse may no longer have been seen as the justification for it. However, this is not to accept that the immunity had "crumbled to dust". The contemporary evidence suggests that the immunity was a recognised and accepted feature of the law of rape, albeit that the rationale supporting it may have changed. In 1954, Norval Morris and A L Turner, both then senior lecturers in law at the University of Melbourne, writing of the law respecting marital rape, were critical of irrevocable consent as the justification for the immunity448. They went on to discuss the "special position" of a married couple in law and in fact and to say449: "Intercourse then is a privilege at least and perhaps a right and a duty inherent in the matrimonial state, accepted as such by husband and wife. In the vast majority of cases the enjoyment of this privilege will simply represent the fulfilment of the natural desires of the parties and in these cases there will be no problem of refusal. There will however be some cases where, the adjustment of the parties not being so happy, the wife may consistently repel her husband's advances. If the wife is adamant in her refusal the husband must choose between letting his wife's will prevail, thus wrecking the marriage, and acting without her consent. It would be intolerable if he were to be conditioned in his course of action by the threat of criminal proceedings for rape." The leading Australian text on the criminal law published in 1965 praised the decision in R v Clarke450, which allowed an exception to the immunity; however, the author went on to observe451: "[A] husband should not walk in the shadow of the law of rape in trying to regulate his sexual relationships with his wife. If a marriage runs into difficulty, the criminal law should not give to either party to the marriage 448 Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 258. 449 Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 259. 450 [1949] 2 All ER 448. See fn 295 above. 451 Howard, Australian Criminal Law, (1965) at 146. Bell the power to visit more misery upon the other than is unavoidable in the nature of things." The Mitchell Committee explained its reasons for proposing to confine the immunity in this way452: "The view that the consent to sexual intercourse given upon marriage cannot be revoked during the subsistence of the marriage is not in accord with modern thinking. In this community today it is anachronistic to suggest that a wife is bound to submit to intercourse with her husband whenever he wishes it irrespective of her own wishes. Nevertheless it is only in exceptional circumstances that the criminal law should invade the bedroom. To allow a prosecution for rape by a husband upon his wife with whom he is cohabiting might put a dangerous weapon into the hands of the vindictive wife and an additional strain upon the matrimonial relationship. The wife who is subjected to force in the husband's pursuit of sexual intercourse needs, in the first instance, the protection of the family law to enable her to leave her husband and live in peace apart from him, and not the protection of the criminal law. If she has already left him and is living apart from him and not under the same roof when he forces her to have sexual intercourse with him without her consent, then we can see no reason why he should not be liable to prosecution for rape." (emphasis added) The views expressed by the Mitchell Committee were in line with those expressed by the authors of the revised commentaries to the US Model Penal Code in 1980453 and by the English Criminal Law Revision Committee in 452 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 14 [6.2]. 453 American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 345: "The problem with abandoning the immunity ... is that the law of rape, if applied to spouses, would thrust the prospect of criminal sanctions into the ongoing process of adjustment in the marital relationship." 454 Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 21 [2.69]. Explaining the majority view, which was not to remove the immunity, the Committee said: "Some of us consider that the criminal law should keep out of marital relationships between cohabiting partners – especially the marriage bed – except where injury arises, when there are other offences which can be charged." Bell In R v C, the English Court of Appeal set out the advice that an imagined solicitor might have given a husband who inquired as to the legality of marital rape in 1970455. This was in the context of a submission respecting the foreseeability of further development of the law in light of decisions which had allowed exceptions to the immunity. The Commonwealth Attorney-General submitted that the hypothesised advice applied with equal force in this case. The determination of the issue raised by this appeal does not depend upon consideration of foreseeability of change to the law. Nonetheless, the opinions of the academic lawyers and the members of law reform committees set out above may suggest that the solicitor in R v C was a man in advance of his times. There is a more fundamental difficulty with the submission that the Court should hold that a substantive rule of law affecting liability for a serious criminal offence has simply disappeared because of a perception that changed conditions of society no longer provided a justification for it. The powerful reasons against an ultimate court of appeal varying or modifying a settled rule or principle of the common law456 apply with particular force to a variation or modification which has the effect of extending criminal liability. It is for the parliament to determine that a rule of exemption from criminal liability is no longer suited to the needs of the community. The respondent and the Attorney-General for South Australia submitted that it is the responsibility of this Court to modify the law to avoid the "unjust" operation of a rule of immunity respecting criminal liability457. The submission is singular, given that there is no jurisdiction in Australia in which the common law governs a husband's liability for the rape of his wife. No occasion arises to modify the law to make it "an effective instrument of doing justice according to contemporary standards in contemporary conditions"458. The law of marital rape in each Australian jurisdiction has been brought into line with contemporary 455 R v C [2004] 1 WLR 2098 at 2103-2104 [19]; [2004] 3 All ER 1 at 6-7. 456 State Government Insurance Commission v Trigwell (1979) 142 CLR 617 at 633 per Mason J (Stephen and Aickin JJ agreeing); Zecevic v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 664 per Wilson, Dawson and Toohey JJ, 677-678 per Deane J; [1987] HCA 26; Lamb v Cotogno (1987) 164 CLR 1 at 11 per Mason CJ, Brennan, Deane, Dawson and Gaudron JJ; [1987] HCA 457 The respondent's Notice of Contention asserts that, "if [the immunity] ever was part of the common law of Australia, it ceased to be so as at the date of the commission of the offences in this matter". 458 O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 267 per Brennan J; [1991] HCA 14. Bell standards. Any statement of the common law respecting the liability of a husband for the rape of his wife with whom he was living could only apply to offences alleged to have been committed before the enactment of the statutory reforms. The declaration of the law for which the respondent contends carries with it that the parliaments of the States and Territories legislated over the course of the last century459 upon a wrong understanding of the law. That understanding was reflected in the Code States in the way in which the offence of rape was defined. In those States, the position remains that a husband is not liable to be convicted for the rape of his wife before the date on which the words "not his wife" were removed from the Criminal Code. In the jurisdictions which preserved the common law, the declaration would make it possible to reach back beyond the date on which statutory reforms were effected and attach liability to conduct occurring not less than a quarter of a century ago. In South Australia, it would be possible to successfully prosecute a man for the rape of his wife in the years up to 1976. In the more recent past, the same man would enjoy an immunity for the same conduct460. That is because the 1976 amendments enacted by the South Australian Parliament with the evident intention of limiting the immunity would now be seen to have conferred it. The fact that the parliaments of every Australian jurisdiction enacted legislation upon the understanding that the immunity was a rule of the common law provides some evidence that it was; and is a good reason for this Court not to now declare it to be otherwise. The rule of law holds that a person may be punished for a breach of the law and for nothing else461. It is abhorrent to impose criminal liability on a person for an act or omission which, at the time it was done or omitted to be done, did not subject the person to criminal punishment. Underlying the principle is the idea that the law should be known and accessible, so that those who are subject to it may conduct themselves with a view to avoiding criminal punishment if they choose462. However, its application does not turn on consideration of whether a person might be expected to have acted differently had he or she known that the proposed conduct was prohibited. Deane J's 459 In the case of Queensland, since 1899. 460 The immunity conferred by s 73(5) of the CLC Act was in force between 9 December 1976 and 16 April 1992. 461 See fn 286 above. See also Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 609-611 per Deane J, 687-688 per Toohey J; [1991] HCA 32; Williams, Criminal Law: The General Part, 2nd ed (1961) at 575-576. 462 Blackstone, Commentaries on the Laws of England, (1765), bk 1 at 45-46. Bell dissenting reasons in Zecevic v Director of Public Prosecutions (Vict) explain why that is so463: "The vice of such a retrospective abolition of a defence to a charge of murder lies not in the prospect of injustice to some imaginary killer who has killed on the basis that his crime will be reduced from murder to manslaughter in the event that he was found to have been acting excessively in self-defence. It lies in the fundamental injustice of inequality under the law which is unavoidable when the administration of the criminal law is reduced to a macabre lottery by what the late Professor Stone described as flagrant violation of the 'well-established judicial policies of the criminal law in favorem libertatis, and against ex post facto punishment'464." The departure from the statement of the elements of self-defence in Viro v The Queen465, sanctioned by the majority in Zecevic, was undertaken in circumstances in which it was considered unlikely to occasion injustice and in which it was acknowledged that the endeavour to state the "defence" by reference to the onus had proved unworkable466. Nothing in the judgments in Zecevic affords support for the acceptance of the respondent's contention that this Court should restate the common law with the effect of extending criminal liability to a class of persons previously exempt from that liability. The common law was demeaning to women in its provision of the immunity. It is no answer to that recognition to permit the conviction of the appellant for an act for which he was not liable to criminal punishment at the date of its commission. For these reasons I would allow the appeal, set aside the answer to the question of law given by the majority in the Full Court and, in lieu thereof, answer that question "no". 463 (1987) 162 CLR 645 at 677-678. 464 Precedent and Law, (1985) at 190. 465 (1978) 141 CLR 88 at 146-147; [1978] HCA 9. 466 Zecevic v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 664 per Wilson, Dawson and Toohey JJ. Bell |
HIGH COURT OF AUSTRALIA Matter No S309/2010 AMANDA CUSH AND APPELLANT RESPONDENT Matter No S310/2010 APPELLANT AND RESPONDENT Boland v Dillon [2011] HCA 30 10 August 2011 S309/2010 & S310/2010 ORDER In each matter, appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation T A Alexis SC with P M Sibtain for the appellant in both matters (instructed by Cole & Butler Solicitors) G O'L Reynolds SC with G R Rubagotti for the respondent in both matters (instructed by Banki Haddock Fiora) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Boland v Dillon Defamation – Defence of qualified privilege – Where occasion of qualified privilege existed to communicate existence of rumour – Where defendant published rumour as "common knowledge" – Whether matter published on occasion attracting defence of qualified privilege – Whether distinction between publication of rumour and publication of fact of rumour. Defamation – Defence of qualified privilege – Rebuttal by express malice – Where defendant did not believe truth of publication – Whether lack of belief in truth of publication sufficient to establish malice. Words and phrases – "express malice", "qualified privilege". Defamation Act 1974 (NSW), s 7A. FRENCH CJ, CRENNAN AND KIEFEL JJ. In two separate actions brought in the District Court of New South Wales under the Defamation Act 1974 (NSW) and heard together, a jury found that Mrs Meryl Dillon, the respondent in each of these appeals, had defamed the appellants, Ms Amanda Cush and Mr Leslie Boland. The jury found that, on 8 April 2005, she had said to Mr James Croft, "It is common knowledge among people in the CMA that Les and Amanda are having an affair." In the proceedings below the respondent did not suggest that the content of this statement was true. It was accepted by her that it was not. And she did not believe the statement to be true when she made it to Mr Croft. The "CMA" is the Border Rivers-Gwydir Catchment Management Authority. It is a statutory body, representing the Crown, established under the Catchment Management Authorities Act 2003 (NSW)1. It is subject to the control of the relevant Minister2. Its general function is to carry out or fund "catchment activities"3. The affairs of the CMA are controlled by the Board of the CMA, the members of which are appointed by the Minister4. The office of member is a part-time office5 and a member is entitled to be paid such remuneration, including travel allowances, as the Minister may from time to time determine6. At the time of the defamatory statement Mr Croft was the Chairperson of the Board of the CMA and Mrs Dillon and Mr Boland were Board members. Ms Cush was the General Manager. The CMA had offices in Inverell and Moree. Some five employees worked at the Moree office, where the rumour about Ms Cush and Mr Boland appears to have originated. Internal complaints against officers of the CMA were dealt with by a "Grievance Committee" constituted by members of the CMA Board. A grievance against Ms Cush was filed with the Committee in December 2004. Mr Boland and Mr Croft were members of the Committee which dealt with that 1 Catchment Management Authorities Act 2003 (NSW), s 6. 2 Catchment Management Authorities Act 2003, s 9(1). 3 Catchment Management Authorities Act 2003, s 14(1). "Catchment activities" are defined in s 4(1) as "activities relating to natural resource management in an area (including the planting of trees, the removal of weeds or obstructions, the carrying out of works and education or training)." 4 Catchment Management Authorities Act 2003, s 8. 5 Catchment Management Authorities Act 2003, Sched 3, cl 3. 6 Catchment Management Authorities Act 2003, Sched 3, cl 4. Crennan complaint. The Committee recommended that no further action be taken. The employee who had lodged the complaint was dissatisfied with this outcome and informed Mrs Dillon that he felt that his matter had not been dealt with impartially, because he believed Ms Cush and Mr Boland were having an affair. The rumour about the appellants appears to have surfaced around the time of a workshop meeting of CMA staff which was held at Tweed Heads in January 2005. The trial judge, Elkaim SC DCJ, considered it likely that the rumour started before the meeting because it was unusual to hold meetings outside the organisation's area of responsibility and persons may have interpreted the reason for the meeting being held at Tweed Heads as connected to the fact that Mr Boland owned a unit nearby. Presumably Ms Cush was involved in the organisation of the meeting. The rumour appears to have strengthened, in part, because of a perception by some persons of familiarity between Ms Cush and Mr Boland. Mr Randall Hart was the Regional Director of the Department of Infrastructure, Planning and Natural Resources, which Department had certain responsibilities for the CMA. He was also aware of the rumour in early 2005. On 30 March 2005 Mr Hart rang Mrs Dillon in order to have a confidential discussion concerning some allegations which had been made to him and which he intended pursuing. In the course of that discussion Mrs Dillon mentioned the subject of the rumour. It would not seem that Mr Hart was unduly concerned about it. Following that discussion Mr Hart prepared a memorandum to the Director-General of the Department dated 1 April 2005, in which he referred to allegations made against Ms Cush concerning approvals of inappropriate travel allowance claims and expenses associated with the Tweed Heads meeting, and also the circumstances surrounding the non-appointment of an indigenous officer to the CMA. The memorandum included advice that a Board member had contacted Mr Hart concerning "corporate governance matters" relating to the Board. Mr Hart recommended that the allegations against Ms Cush be referred to the Department for investigation. These matters came to the attention of Mr Croft, who sought support for Ms Cush from the Board. On 31 March 2005 he sent an email in the nature of an "Out of Sessions Business Paper" to members of the Board to that end. Mrs Dillon responded to the email by enquiring as to the urgency of the issue. Mr Croft advised her that Ms Cush "may have to respond to an accusation prior to the next meeting and needs our support to be prepared for that eventuality". The other members of the Board provided that support. Mrs Dillon did not. It is against this background that a meeting between Mrs Dillon and Mr Croft took place on 8 April 2005 at a café in Moree during which the defamatory words were spoken. Mrs Dillon said that she organised it after she Crennan had spoken with Mr Hart. At the meeting she informed Mr Croft of the telephone conversation she had had with Mr Hart and that he had raised a number of "concerns" about the CMA with her. In particular she referred to the complaint concerning the appointment process of the position of indigenous officer within the CMA, and issues of corporate governance and of staff management. In the latter regard she told Mr Croft that some members of staff had made complaints about "the conduct of the general manager" and she discussed the Board's attitude to staff and complaints about the grievance process. Mrs Dillon advised Mr Croft that Mr Hart was looking into the question of the Board's reaction to these issues. Mr Croft gave evidence that during this discussion Mrs Dillon said it was "well known" or "widely known" that "Les and Amanda were having an affair", although the statement put to the jury was that it was "common knowledge". Nothing would appear to turn upon this difference. What is important, for the purposes of these appeals, is that such words do not convey merely that an unfounded rumour was circulating. They convey the fact of an affair which was known to staff at the CMA. The imputations found by the jury confirm such a perception. The jury found that the statement conveyed the following defamatory imputations with respect to Mr Boland that: (a) as a member of the Board of the CMA he was "acting unprofessionally by having an affair with the General Manager of that organisation"; and (b) "he was unfaithful to his wife." With respect to Ms Cush, the jury found that the statement conveyed the defamatory imputations that: (a) as the General Manager of the CMA she was "acting unprofessionally by having an affair with a member of the board of that organisation"; and (b) "she was undermining the marriage of [Mr Boland] and his wife". Mrs Dillon pleaded, by way of defence to the claims against her, that the statement had been made on an occasion of qualified privilege. In a separate hearing7, his Honour the trial judge held that any privilege which may have attended the making of the statement had been lost, on account of malice on the part of Mrs Dillon8. His conclusion of malice was based upon two findings: that Mrs Dillon had previously spread the rumour and that she had not believed the allegation to be true when she made the statement to Mr Croft. His Honour also found that the conduct of Mrs Dillon was not reasonable in the circumstances. 7 Defamation Act 1974 (NSW), s 7A(4). 8 Cush v Dillon; Boland v Dillon [2009] NSWDC 21. Crennan That finding was referable to, and destructive of, the statutory defence of qualified privilege9. But it does not affect the defence of qualified privilege at common law, which is preserved by the Defamation Act10. The statutory defence was not pursued by Mrs Dillon on appeal. Reciprocity of duty and interest, as giving rise to a privileged occasion, is not a feature of the statutory defence, but it is the hallmark of the common law defence of a qualified privilege11. As Parke B explained in Toogood v Spyring12, the law regards the publication of a false statement which is injurious to the reputation of a person as malicious: "unless it is fairly made by a person in the discharge of some public or private duty, whether legal or moral, or in the conduct of his own affairs, in matters where his interest is concerned. In such cases, the occasion prevents the inference of malice, which the law draws from unauthorized communications, and affords a qualified defence depending upon the absence of actual malice." The defence of qualified privilege is based upon notions of public policy, that freedom of communication may in some circumstances assume more importance than an individual's right to the protection of his or her reputation13. The question of whether the person making a defamatory statement was subject to some duty or was acting in the protection of some interest, in making the statement, is to be understood in this light. It was therefore encumbent upon Mrs Dillon to establish that she had a duty to convey the information about the rumour to Mr Croft. She gave evidence that she felt such an obligation, but of course this could not be determinative of the question for the trial judge, namely whether there was a duty of a kind which created the occasion to make the statement, in which case the privilege attached 9 Defamation Act 1974, s 22(1)(c); Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 573; [1997] HCA 25. 10 Aktas v Westpac Banking Corporation (2010) 241 CLR 79 at 87 [14]; [2010] HCA 11 Adam v Ward [1917] AC 309 at 334; Roberts v Bass (2002) 212 CLR 1 at 26 [62]; [2002] HCA 57. 12 (1834) 1 C M & R 181 at 193 [149 ER 1044 at 1049-1050]. 13 Aktas v Westpac Banking Corporation (2010) 241 CLR 79 at 89 [22]. Crennan to it. That question fell to be determined by a consideration of the positions of Mr Croft and of Mrs Dillon within the CMA, the nature and importance of the matters conveyed and the relationship of the defamatory statement to those matters. Mrs Dillon's evidence as to the sense of obligation she felt, if accepted, may be relevant to the question of malice. It will be necessary to say something more about the two questions and the relationship between them. If the trial judge was satisfied that the occasion for a qualified privilege arose, it would then be necessary for Ms Cush and Mr Boland to prove that Mrs Dillon was actuated by malice in making the statement, in order to overcome the privilege. It may be seen from the passage from Toogood v Spyring above that the defence of qualified privilege is sufficient to overcome the law's presumption of malice (also referred to as "implied malice"14), a presumption which is based upon the making of a false and defamatory statement. The protection given by the privilege is, however, lost if the person making the statement did so for an improper motive15. "Express malice" is the term of art used to describe the motive of a person who uses a privileged occasion for some reason not referable to the duty or interest pursued16. In the joint judgment in Roberts v Bass17 it was said that the privilege is qualified by the condition that the occasion must not be used for some purpose or motive which is foreign to the duty or interest which protects the making of the statement. His Honour the trial judge did not determine the question whether the occasion for the making of the statement by Mrs Dillon to Mr Croft was a privileged one. His Honour proceeded directly to consider the issue of malice. But that question cannot be approached in isolation, independent of a determination of whether there was present in the circumstances a duty or interest which would support the privilege. A conclusion of express malice requires a finding that the maker of the statement was actuated by some improper purpose or motive, which is to say one not connected to the furtherance of the duty or interest so found. The nature and the extent of the duty or interest must be considered before the question of malice is addressed. In Roberts v Bass18, Gleeson CJ observed that the "kind of malice that defeats a defence of qualified 14 See Roberts v Bass (2002) 212 CLR 1 at 30 [75]. 15 Roberts v Bass (2002) 212 CLR 1 at 31 [76]. 16 Horrocks v Lowe [1975] AC 135 at 149 per Lord Diplock. 17 (2002) 212 CLR 1 at 26 [62]. 18 (2002) 212 CLR 1 at 11 [8]. Crennan privilege at common law is bound up with the nature of the occasion that gives rise to the privilege." Bergin CJ in Eq, with whom the other members of the Court of Appeal agreed (Allsop ACJ and Tobias JA), held that his Honour had fallen into error in failing to find that the publication had occurred on a privileged occasion19. Her Honour explained the duty which arose, which justified the making of the statement by Mrs Dillon, as follows20: "The rumour of the affair was intrinsically intertwined with the concerns [Mrs Dillon] raised with Mr Croft about the nature of the relationship between members of the Board and staff members and the complaints about the grievance process. That a Regional Director of the Department had become aware of the rumour was a new dimension to its existence, elevating it to an importance that imposed a duty on [Mrs Dillon] to convey its existence to the Chairperson. Equally the Chairperson had a reciprocal interest in receiving the information. To allow the Chairperson to remain ignorant of the rumour when it had been raised by staff of the CMA and discussed between a Board Member and a Regional Director of a Department that had certain supervisory functions over the CMA would have been in breach of the Board member's duty to inform the Chairperson of information relevant to matters that were clearly to be the subject of investigation by the Department and possibly by ICAC[21]." Ms Cush and Mr Boland do not challenge that finding. It is clearly correct. It was accepted in argument for them on these appeals that an occasion of privilege, to communicate the existence of the rumour, arose. The point taken by them is within a narrow compass. It is that, in saying that it was "common knowledge" that the appellants were having an affair, or words to that effect, thereby giving the rumour the quality of a known fact, Mrs Dillon went too far. They submitted that the statement was extraneous to, and made outside of, the "umbrella of the applicable privilege"22. If this were correct, the privilege would not extend to protect the statement. It would not be necessary to address the question of malice. 19 Dillon v Cush; Dillon v Boland [2010] NSWCA 165. 20 Dillon v Cush; Dillon v Boland [2010] NSWCA 165 at [52]. 21 Independent Commission Against Corruption. 22 Referring to Bashford v Information (Newsletters) Pty Ltd Australia at (2004) 218 CLR 366 at 415 [135] per Gummow J; [2004] HCA 5. Crennan The appellants' contention brings to mind the further requirement spoken of by Parke B in Toogood v Spyring for statements to attract the qualified privilege23: "If fairly warranted by any reasonable occasion or exigency, and honestly made, such communications are protected for the common convenience and welfare of society; and the law has not restricted the right to make them within any narrow limits." (emphasis added) Adam v Ward confirms that there may be limits to what may be said upon a subject on an occasion of qualified privilege and that those limits are to be tested by the connection of the statement to the subject. In that case Earl Loreburn observed that the fact that an occasion is privileged "does not necessarily protect all that is said or written on that occasion" and that anything "not relevant and pertinent" to the discharge of the duty or the safeguarding of the interest which creates the privilege will not be protected24. Where such a question is raised it will be necessary for the trial judge to consider the matter of the duty or interest and rule whether the defendant has published something "beyond what was germane and reasonably appropriate to the occasion"25. Lord Dunedin spoke of a statement "quite unconnected with and irrelevant to the main statement"26; Lord Atkinson to "foreign and irrelevant" matter27 and Lord Shaw of Dunfermline to matter which was "not in any reasonable sense germane"28 to what was being conveyed in the discharge of duty or the protection of an interest. Although the statements in Adam v Ward were not central to the matter being communicated, they were held to be relevant. In that case the plaintiff had made allegations against a Major-General in Parliament, that he had deliberately misstated the facts relating to one of five officers who had been placed on half-pay, in a confidential report he had submitted to a superior officer. The 23 Toogood v Spyring (1834) 1 C M & R 181 at 193 [149 ER 1044 at 1050]. 24 Adam v Ward [1917] AC 309 at 320-321. 25 Adam v Ward [1917] AC 309 at 321. 26 Adam v Ward [1917] AC 309 at 327. 27 Adam v Ward [1917] AC 309 at 340. 28 Adam v Ward [1917] AC 309 at 348. Crennan defendant was the secretary to the Army Council which investigated the allegation and then issued a letter, addressed to the General, to the press. The evident purpose of the letter was to vindicate the General from the charges made by the plaintiff. But in the course of doing so it identified the plaintiff as one of the other officers who had been the subject of the report and who were afterwards removed from the regiment. It said that the plaintiff had been called upon to retire from the service, but that the General had intervened on his behalf29. The statements were held to be relevant to what was said on the occasion of the privilege, since they were necessary to the complete vindication of the General. In that regard it was considered necessary that the true position of the plaintiff, a person not disinterested in the report, be revealed30. Earl Loreburn entertained some doubt on the question of relevance, but did not dissent. It is not necessary to determine whether the descriptions given of irrelevant material in Adam v Ward vary as to the stringency with which relevance ought to be tested. The passage from Toogood v Spyring31 suggests that no narrow view should be taken of the pursuit of a duty or interest in what was said. To do so may unduly restrict the operation of the defence. More recently an issue of the kind here in question was stated in the joint judgment in Bashford v Information Australia (Newsletters) Pty Ltd32 to be "whether the matter which defamed the appellant was sufficiently connected to the privileged occasion to attract the defence". In that case the article in question incorrectly described the result of court proceedings, by identifying the plaintiff as the subject of findings of contravention of s 52 of the Trade Practices Act 1974 (Cth), by engaging in misleading and deceptive conduct. In fact the party the subject of the findings was a company controlled by the plaintiff and his wife. In the joint judgment it was held that the error "did not alter or reduce the connection between the privileged occasion and the defamatory matter."33 29 Adam v Ward [1917] AC 309 at 311-313. 30 Adam v Ward [1917] AC 309 at 319 per Lord Finlay LC, 329 per Lord Dunedin, 342 per Lord Atkinson and 348-349 per Lord Shaw of Dunfermline. 31 At [18] above. 32 (2004) 218 CLR 366 at 378 [27]. 33 Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366 at 379 Crennan In this case it cannot be said that the necessary connection was absent. As Bergin CJ in Eq held, the duty Mrs Dillon had in disclosing and the interest Mr Croft had in receiving the information concerning CMA staff-related matters, including the nature of the relationship between members of the Board and members of staff, gave rise to an occasion of privilege. The concession, properly made, was that the occasion of the privilege extended to the communication of the existence of the rumour. It could not, in our view, then be suggested that the communication of the fact of an affair was less relevant to the matters discussed than a rumour. The error inherent in the statement does not deny the privilege. The final determination of this case rests upon the issue of actual malice. The observations of Lord Esher MR in Nevill v Fine Arts and General Insurance Company34, to which Lord Dunedin referred in Adam v Ward35, are apposite to this case. Lord Esher was concerned to distinguish an excessive statement, otherwise connected to the privileged occasion, from one which has no such connection: "There may be an excess of the privilege in the sense that something has been published which is not within the privileged occasion at all, because it can have no reference to it. Instances have been put during the argument of cases where a defendant on an occasion which is privileged as between himself and some other person makes some defamatory statement affecting a third person which has nothing to do with the privileged occasion, in which case, of course, that third person would have a right of action against the defendant, and, as between him and the defendant, there would be no privileged occasion. But when there is only an excessive statement having reference to the privileged occasion, and which, therefore, comes within it, then the only way in which the excess is material is as being evidence of malice." The enquiry which precedes that of actual malice is undertaken in order to determine the boundaries of the privilege36, by reference to the duty or interest which gave rise to it. It may be said to involve an objective assessment. It is not to be confused with an enquiry as to whether a person was actuated by malice in using exaggerated words. As Earl Loreburn observed in Adam v Ward37, a 34 [1895] 2 QB 156 at 170. 35 [1917] AC 309 at 327. 36 As observed by Kirby J in Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366 at 435 [193]-[194]. 37 [1917] AC 309 at 321. Crennan statement which exceeds the occasion may be evidence of malice, but "the two things are different". The statement made by the defendant in Guise v Kouvelis38 might be considered as excessive, both in the manner of its delivery and with respect to the number of persons to whom it was communicated. The defendant was a member of a club and of its committee. He had formed the opinion that the plaintiff was cheating at cards. He accused the plaintiff, in a loud voice, "You are a crook" in the presence of a large number of persons at the club. Dixon J dissented on the question of whether the statement was made on an occasion of privilege. But his Honour identified the approach to be taken, in relation to the statement, in the event that it was determined that the occasion was privileged and permitted the defendant to state his belief as to the propriety of the plaintiff's play. He said in that event "unless the words complained of were so foreign to the occasion that they must be held extraneous or irrelevant, the rest is all matter for the jury."39 The "matter" for the jury involved whether the occasion was used by the defendant for the purpose of the privilege, or some other purpose40. The trial judge's findings as to malice were not directed to Mrs Dillon's purpose in using the words that she did, which is to say whether she was actuated by malice. Bergin CJ in Eq held, correctly, that his Honour's finding that Mrs Dillon had spread the rumour was based upon evidence which was hearsay and inadmissible41. His Honour's conclusion of malice therefore rested upon his finding as to Mrs Dillon's lack of belief in the statement as true. However, by itself this would not be sufficient to destroy the privilege. More importantly, it is not the correct question to be addressed in connection with actual malice. The question is whether some purpose foreign to the privilege caused Mrs Dillon to use the words she did. In Roberts v Bass42 it was pointed out that qualified privilege, which attaches to a defamatory statement, can only be destroyed by the existence of an improper motive that causes the person to make the statement. Thus, lack of belief in the truth of the statement, or even ill-will felt towards the person 38 (1947) 74 CLR 102; [1947] HCA 13. 39 Guise v Kouvelis (1947) 74 CLR 102 at 118. 40 Guise v Kouvelis (1947) 74 CLR 102 at 117. 41 Dillon v Cush; Dillon v Boland [2010] NSWCA 165 at [99]. 42 (2002) 212 CLR 1 at 31 [76]. Crennan defamed, will not be sufficient. There must be evidence that the making of the statement was actuated by improper motive. As Cotton LJ said in Clark v Molyneux43 the question is "whether [the defendant] acted as he did from a desire to discharge his duty." Knowledge on the part of a defendant that a statement is untrue may be almost conclusive evidence of malice. This is because a person who knowingly publishes false and defamatory material will usually have an improper motive. A lack of belief in the statement may stand in a different category. But in neither event is there warrant for equating knowledge or lack of belief with actual malice44. Bergin CJ in Eq properly considered that it was not appropriate for the Court of Appeal to make findings based upon an evaluation of the evidence of Mrs Dillon. Her Honour made an order for a new trial on the defence of qualified privilege at common law. Given that the defamatory statement had a sufficient connection to the occasion of qualified privilege, that trial should be restricted to the issue of malice. Orders The appeals should be dismissed with costs. The third order of the Court of Appeal should be varied to require a new trial on the issue of malice. 43 (1877) 3 QB 237 at 250. 44 Roberts v Bass (2002) 212 CLR 1 at 32 [77]-[78], 34 [83] and 66-67 [185]. Bell GUMMOW, HAYNE AND BELL JJ. Several aspects of the defence in the common law of defamation of publication on an occasion of qualified privilege have been considered in recent decisions of this Court. In Bashford v Information Australia (Newsletters) Pty Ltd45 the requirement of reciprocity of duty or interest necessary to attract the defence, and it did so again in Aktas v Westpac Banking Corporation46. Also in Bashford the Court rejected a submission that on the facts of that case inaccuracies in the report of court proceedings denied the presence of a sufficient connection between the defamatory matter and the privileged occasion. Earlier, in Roberts v Bass47 the Court considered the requirements of proof of the express malice which destroys the privilege and held that mere absence of belief in the truth of a publication did not constitute express malice. the Court considered Issues of this nature are presented in the litigation which has reached this Court on appeals from the Court of Appeal of the Supreme Court of New South Wales (Allsop ACJ, Tobias JA, Bergin CJ in Eq)48. The principal judgment was given by the Chief Judge in Equity. The appeals to this Court were heard together, as had been done in the Court of Appeal. The parties accept that the effect of the orders made by the Court of Appeal is that there is to be a new trial confined to the issue whether the qualified privilege which was held by the Court of Appeal in these cases to otherwise exist at common law has been destroyed by the malice of the respondent. For the reasons which follow, the appeals to this Court should be dismissed, with the result that there will be a new trial on that limited issue. The litigation concerns a statement published by the respondent (Mrs Meryl Dillon) to Mr James Croft in the course of a conversation between them in a café at Moree, in regional New South Wales, on 8 April 2005. The litigation was governed by the Defamation Act 1974 (NSW) ("the Defamation Act"). Section 8 thereof provides that slander is actionable without special damage, in the same way and to the same extent as libel. Section 11 operates to preserve the common law defence of qualified privilege. 45 (2004) 218 CLR 366; [2004] HCA 5. 46 (2010) 241 CLR 79; [2010] HCA 25. 47 (2002) 212 CLR 1; [2002] HCA 57. 48 Dillon v Cush; Dillon v Boland [2010] NSWCA 165. Bell The two actions brought by the present appellants were tried together. After a hearing in the District Court (Elkaim DCJ) conducted pursuant to s 7A of the Defamation Act49, the jury answered "yes" to the question whether Mrs Dillon had said to Mr Croft the following words or words substantially the same: "It is common knowledge among people in the CMA that Les and Amanda are having an affair"; and also answered "yes" to the question whether the ordinary reasonable listener could reasonably have believed that these words referred respectively to the appellants, Mr Leslie Boland and Ms Amanda Cush. With respect to Mr Boland, the jury further found that these words conveyed the imputations that, as a member of the Board of the CMA, he was acting unprofessionally by having an affair with the General Manager, Ms Cush, and that he was unfaithful to his wife. With respect to Ms Cush, the jury found that the words conveyed the imputations that she was acting unprofessionally, and that she was undermining the marriage of Mr Boland. The "CMA" referred to was the Border Rivers-Gwydir Catchment Management Authority, established under the Catchment Management Authorities Act 2003 (NSW) ("the CMA Act"). In the exercise of its functions, the CMA was subject to the control and direction of the Minister (s 9). The affairs of the CMA otherwise were controlled by the Board appointed by the Minister (s 8(2), (3)). Section 13 empowered the Minister to appoint an administrator to the CMA if satisfied, inter alia, that it had failed to comply with its statutory obligations or that the Board had ceased to function effectively. The responsible Department of the New South Wales Government was that of Infrastructure, Planning and Natural Resources. Mr Randall Hart was its Regional Director and Ms Wendy Bate worked with him. Mr Croft was Chairperson of the Board of the CMA, of which Mr Boland and also Mrs Dillon were members. In addition to Mr Boland and Mrs Dillon, there were four other members of the Board. Ms Cush had been General Manager of the CMA since mid-2004. The main office of the CMA was at Inverell, but five employees worked at the Moree office. They were Mrs Cross, Ms Chittenden, Mr Pitman, Mr O'Brien and Mr Mills. On appeals by Mrs Dillon, the Court of Appeal set aside the awards of damages to each of Mr Boland and Ms Cush of $5,000. The awards had been made after the trial judge had ruled against the defence by Mrs Dillon of qualified privilege at common law. The Court of Appeal held that in doing so 49 As to the split trial procedures established by s 7A, see John Fairfax Publications Pty Ltd v Gacic (2007) 230 CLR 291 at 303-304 [32]-[36], 336-338 [156]-[158]; [2007] HCA 28. Bell the trial judge had erred, but, as noted above, the issue of malice was left to a new trial. In this Court, Mr Boland and Ms Cush seek to restore the decision at trial that the defence was not made out, accepting, however, that if their appeals fail there will be a new trial on the question of malice. They submitted in their written submissions that the "voluntary" nature of the defamatory imputations should have been a decisive answer to the defence of qualified privilege. In that regard they relied upon a passage in the dissenting reasons of McHugh J in Bashford50 where his Honour had said: "Ordinarily the occasion for making a volunteered statement will be privileged only where there is a pressing need to protect the interests of the defendant or a third party or where the defendant has a duty to make the statement to the recipient. The common law has generally perceived no advantage to society in giving qualified privilege to volunteered statements in the absence of a pre-existing reciprocity of interest between the defendant and the recipient51." He had added52: "But where neither life is in immediate danger nor harm to the person or injury to property imminent, the fact that the defendant has volunteered defamatory matter is likely to be decisive against a finding of qualified privilege." The appellants initially contended that there had been no "pressing need" for Mrs Dillon to speak as she had to Mr Croft so as to protect her interests or those of the CMA. However, there intervened the decision of the Court of Appeal in Holmes a Court v Papaconstuntinos53, given shortly before these appeals were heard. In that case, the Court of Appeal held that the circumstance 50 (2004) 218 CLR 366 at 393 [73]. 51 Wyatt v Gore (1816) Holt 299 [171 ER 250]; Brooks v Blanshard (1833) 1 C & M 779 [149 ER 613]; Wenman v Ash (1853) 13 CB 836 [138 ER 1432]; Dickeson v Hilliard (1874) LR 9 Exch 79; Thomas v Moore [1918] 1 KB 555; Guise v Kouvelis (1947) 74 CLR 102; [1947] HCA 13; Andreyevich v Kosovich (1947) 47 SR (NSW) 357. 52 (2004) 218 CLR 366 at 395 [77]. 53 [2011] NSWCA 59. Bell that a defamatory statement was volunteered in the sense described by McHugh J in Bashford is not decisive against the existence of a defence of qualified privilege. The upshot was that at the hearing in this Court of the present appeals, the appellants did not press this ground of their appeal. There remained alive at the hearing an alternative submission by the appellants. This proceeded by the following steps: (i) the only reciprocal duty or interest articulated by the Court of Appeal was one to inform Mr Croft as Chairperson of the Board of the CMA of the existence of the "rumour" concerning Mr Boland and the General Manager; (ii) Mrs Dillon had published the "rumour" as a fact and conveyed the defamatory imputations; (iii) Mrs Dillon had known that she was repeating to Mr Croft no more than a rumour and such a communication could not be classified as one for the common convenience and welfare of society within the meaning of the authorities dealing with privileged occasions; and (iv) no reciprocal duty or interest had been engaged. The trial judge had found that Mrs Dillon had spread the "rumour" before she spoke to Mr Croft and that this, "combined with her belief that the allegation was not true, establishes the malice necessary to negate the privilege". In the Court of Appeal, Bergin CJ in Eq referred to evidence that before Mrs Dillon spoke to Mr Croft there had circulated among staff at the Moree office a "rumour" that Mr Boland and Ms Cush were having an affair. On 30 March 2005, Mr Hart had telephoned Mrs Dillon to discuss the operation of the CMA, including the existence or otherwise of an affair between Mr Boland and Ms Cush, before he reported to the Director-General of the Department. Then on 1 April 2005, a week before the conversation between Mrs Dillon and Mr Croft, Mr Hart prepared a memorandum the Director-General which he sent by facsimile on 4 April. In her reasons, Bergin CJ in Eq said of this memorandum: "That Memorandum referred to the 'seriousness' of allegations that had been made against Ms Cush and to an investigation carried out by Mr Hart and Ms Bate. It included alleged inappropriate claims in relation to a Travelling Allowance and approvals thereof. It referred to the Tweed Heads [workshop] meeting [in January 2005] and raised questions about the expenses incurred in relation to that meeting. It also referred to the circumstances surrounding the non-appointment of an indigenous officer. It included advice that a CMA Board member had 'been in contact with' Mr Hart in relation to corporate governance matters of the Board and that the Board member would bring those matters to the attention of the Minister." Bell Her Honour continued: "There was also a reference to so-called 'anomalies' including that Mr O'Brien had resigned; a further two staff members of the CMA had indicated they would resign; and two Departmental staff members had indicated they would refuse a transfer to the CMA. The Memorandum did not mention the 'rumour', however it recommended that the allegations against Ms Cush should be referred to the relevant area of the Department for investigation. On 6 April 2005 the Director-General of the Department wrote to Ms Cush advising her that she had decided to treat a complaint in relation to the selection process for the 'Catchment Officer Indigenous' as a 'disciplinary matter'. The Director-General advised Ms Cush of the process to be followed and the possible 'disciplinary actions' that could be applied if a finding of misconduct were to be made." Against that background, the response of counsel for Mrs Dillon in this Court was to emphasise that: (i) having regard to the establishment of the CMA as a statutory authority, as a member of the Board Mrs Dillon had been under a public duty to bring to the attention of the Board, through its Chairperson, matters affecting the proper performance by the Board of its functions under s 8(2) of the CMA Act and Mr Croft had a corresponding interest in having those matters brought to his attention; (ii) Mrs Dillon had had conveyed to her by the Regional Director (Mr Hart), three employees at the Moree office (Messrs Mills, O'Brien and Pitman) and others of allegations constituting more than a mere rumour; and (iii) more accurately, Mrs Dillon had received allegations of an affair, expressions of concern that there was an affair and expressions of belief that there was an affair. Probably early in 2005 Mr Mills had told Mrs Dillon that he had a matter of grievance in relation to Ms Cush, and that he felt the matter was not being dealt with impartially by a three member Grievance Committee established by the Board, of which Mr Boland and Mr Croft were members, because he believed Mr Boland and Ms Cush were having an affair. At about this time Mr O'Brien told Mrs Dillon that he had "concerns" about the relationship between Mr Boland and Ms Cush and that these related to issues about the Grievance Committee. Mr Pitman regarded Mr Boland as "normally aloof" but had observed signs of physical intimacy or "a relative closeness" in the workplace between Mr Boland and Ms Cush. The venue of Tweed Heads for the workshop and retreat held in January 2005 had been unusual and Mr Pitman identified as the basis of the rumour the proximity of the Tweed Heads venue to a home unit Mr Boland had at the Gold Coast. At some time around February 2005 Bell Mr Pitman had a conversation with Mrs Dillon in the course of which he mentioned the rumour of a relationship between Ms Cush and Mr Boland. He also had had a conversation on the subject with Ms Bate, from Mr Hart's office. Mrs Dillon met with Mr Croft in the Moree café on 8 April 2005 as a location where they could have a private conversation. Mr Croft was concerned that the Department was raising questions whether the Board was doing its job properly. Mrs Dillon referred to a complaint respecting the appointment process for an indigenous officer's position, complaints by staff about the conduct of Ms Cush, the "grievance process" and other "concerns" she had about the CMA. In that setting, what Mrs Dillon said to Mr Croft concerning "common knowledge" of people in the CMA about the conduct of Mr Boland and Ms Cush was intertwined with the above matters concerning the operations of the CMA which she raised with Mr Croft. There was the necessary reciprocity of interest, as the Court of Appeal held, to render the meeting on 8 April a privileged occasion. Counsel for the appellants emphasised a distinction between an allegation, belief or concern about an affair on the one hand, and the statement using the expression "common knowledge". Counsel for the respondent correctly responded that, in the context in which Mrs Dillon spoke to Mr Croft, in substance there was no relevant distinction. Both forms of words imply that, as a member of the Board and as General Manager of the CMA respectively, Mr Boland and Ms Cush were acting unprofessionally by having an affair. Further, an inaccuracy in relation to the relevant subject matter will not necessarily render what was said irrelevant to the privileged occasion54. The words used by Mrs Dillon were not, as Dixon J put it in Guise v Kouvelis55, "so foreign to the occasion that they must be held extraneous or irrelevant". The appeals should be dismissed with costs. 54 Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366 55 (1947) 74 CLR 102 at 118. HEYDON J. The jury found that in the course of a long conversation on several topics the defendant said to Mr Croft words to the following effect: "It is common knowledge among people … that [the plaintiffs] are having an affair." In so finding the jury rejected the defendant's denial that she said that. The jury also rejected her claim that she had made only vague remarks about the concerns expressed by others concerning the relationship between the plaintiffs. The jury found that in consequence certain defamatory imputations had been made. The defendant contended that the defamatory imputations were published on an occasion of qualified privilege. Two of the necessary conditions of that defence were that she had a duty to say or an interest in saying what she said, and that Mr Croft had a corresponding duty to hear it or a corresponding interest in hearing it. In her evidence going to qualified privilege, she contended that the duty or interest arose from her perception that she needed to inform Mr Croft of the existence of "the rumour and the accusation" – that is, a rumour that the plaintiffs were having an affair. The plaintiffs contended that the Court of Appeal of the Supreme Court of New South Wales had erred in finding that there was an occasion of qualified privilege. The plaintiffs submitted that a duty to convey the existence of a rumour about and an accusation of a matter of fact would create an occasion of qualified privilege, but that that duty was different from a duty to convey that that fact was "common knowledge" – that is, a fact known to be the case. They argued that it "is an odd proposition for [the defendant] to assert a reciprocal duty or interest for a publication she denied making". The plaintiffs were thus seeking to exploit the jury's rejection of the defendant's denial of having said to Mr Croft what the jury found she had said. They were seeking to drive a wedge between the jury finding and the defendant's evidence going to qualified privilege. The defendant's evidence going to qualified privilege might have matched her evidence going to publication, but it did not match what the jury found had been published. Thus the plaintiffs attacked the conclusion of the Court of Appeal that "the existence of the rumour that the [plaintiffs] were having an affair was relevant and sufficiently connected to the privileged occasion as to attract the defence of qualified privilege" (emphasis added). It was said that this conclusion was flawed in failing to distinguish between the defendant's evidence suggesting that she arranged the meeting with Mr Croft to acquaint him with the rumour and the accusation and the jury's rejection of her evidence that she spoke of a rumour but not of what was "common knowledge". There are authorities to the effect that there is no necessary distinction between saying that a thing is rumoured and saying that that thing is the case56. 56 For example, Lewis v Daily Telegraph Ltd [1964] AC 234 at 274-275 and 283-284. But even apart from those authorities, the submissions of the plaintiffs rest on a distinction which, in the particular circumstances of this case, is too rigid. First, the submissions do not give sufficient significance to the difficulties a witness may have in giving a recollection of a small part of a long conversation long after the event, coupled with the possibility that a jury may choose for itself one among a number of available versions of the conversation. An account of why something – whatever precisely it was – was said may satisfy the two conditions for qualified privilege under discussion even though what the witness says was said does not correspond with what the trier of fact finds was said. Secondly, the plaintiffs submitted that the publication of a matter of "common knowledge" as a fact was "extraneous to the occasion" or "irrelevant" to the occasion of seeking to publish a "rumour and [an] accusation" of that fact. The flaw is that this draws too sharp a distinction between "rumour" and "common knowledge". To state that a rumour exists can be to give weight to a conclusion drawn by a hearer that what is rumoured actually took place. To state that something is common knowledge is not necessarily to say that what is commonly known in truth exists, for "common knowledge" can be a euphemism for rumour. If a defendant says "X is true", the statement may have much more force than a statement that "X is common knowledge", and the latter statement may have more force than a statement that "it is rumoured that X is true". Depending on the circumstances, the central core of a statement that there is a rumour that X is true may not coincide with the central core of a claim that X actually is true. The central core of a statement that something is common knowledge may not coincide with the central core of a claim that it is merely rumoured. But about the central core of each statement there can cluster wider meanings which are capable of overlapping. That is so here. A third problem arises even if the plaintiffs were correct to contend that there is a sharp distinction between saying that there is a rumour that something is the case (without conveying that the rumour is true) and saying that it is common knowledge that something is the case (conveying that it is true). If, as the plaintiffs accept, there was a duty to convey or an interest in conveying that there is a rumour about a matter, there would appear to be at least as much a duty to convey or an interest in conveying the proposition that that matter is a matter of common knowledge. The appeals must be dismissed with costs. |
HIGH COURT OF AUSTRALIA RE MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS RESPONDENT EX PARTE AMOS BODE AME APPLICANT/PROSECUTOR Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Ame [2005] HCA 36 4 August 2005 Questions in the Case Stated answered as follows: ORDER 1. Q. On the proper construction of regulation 4 of the Papua New Guinea Independence (Australian Citizenship) Regulations 1975 and the Papua New Guinea Constitution, did the Applicant cease to be an Australian citizen under the Australian Citizenship Act 1948 on Independence day? Yes. If the answer to question (1) is "Yes", is regulation 4 of the Papua New Guinea Independence (Australian Citizenship) Regulations 1975 authorised by s 6 of the Papua New Guinea Independence Act Yes. If the answer to questions (1) and (2) is "Yes", is s 6 of the Papua New Guinea Independence Act 1975, to the extent that it authorises regulation 4 of the Papua New Guinea Independence (Australian Citizenship) Regulations 1975, invalid in that it is not supported by s 51(xix), (xxvii), (xxix) or (xxx) of the Constitution, ss 51(xxxix) and 61 of the Constitution, the "implied nationhood" power, s 122 of the Constitution, or any other head of Commonwealth power? Once the [applicant's] bridging visa … has expired, are ss 189, 196 and 198 of the Migration Act 1958 capable of valid application to the applicant on the basis that: he is an alien, within the meaning of section 51(xix) of the Constitution; or in their application to him those provisions are laws with respect to immigration within section 51(xxvii) of the Constitution; or on any other basis? (1) Yes. Q. Who should pay the costs of the Stated Case and the hearing of the Stated Case before the Full Court of this Court? The applicant. Representation: K Rubenstein with G J Williams for the prosecutor (instructed by Clothier Anderson & Associates) D M J Bennett, QC, Solicitor-General of the Commonwealth with G R Kennett and G A Hill for the respondent (instructed by the Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Ame Immigration – Applicant born in Papua prior to 1975 – Applicant acquired Australian citizenship by birth but required an entry permit to enter or reside in Australia – Applicant in Australia without a substantive visa – Whether ss 189, 196 and 198 of the Migration Act 1958 (Cth) could apply to the applicant – Whether the applicant ceased to be an Australian citizen under the Australian Citizenship Act 1948 (Cth) when Papua New Guinea became an independent sovereign state in 1975 by virtue of Papua New Guinea Independence Act 1975 (Cth) and regulations made thereunder – Whether the applicant became a citizen of Papua New Guinea by virtue of the provisions of the Papua New Guinea Constitution – Whether the applicant had a right of permanent residence in Australia within the meaning of the Papua New Guinea Constitution. Statutes – Whether the Papua New Guinea Independence Act 1975 (Cth), s 6 validly authorised the making of a regulation affecting citizenship. Constitutional Law (Cth) – Territories – Where Papua and New Guinea were acquired as external territories by the Commonwealth and then relinquished – Ambit of the law-making power conferred by s 122 of the Constitution respecting relations between Australia and inhabitants of an external territory – Whether power may be exercised to change a person's status from non-alien to alien without that person's consent. Constitutional law (Cth) – Naturalization and aliens – Whether the legislative power conferred in s 51(xix) of the Constitution may be exercised to change a person's status from alien to non-alien without that person's consent. Constitution, ss 51(xix), 122. Constitution of the Independent State of Papua New Guinea, ss 64, 65. Migration Act 1958 (Cth), ss 189, 196, 198. Papua New Guinea Act 1963 (Cth), ss 4, 5, 6. Papua New Guinea Independence Act 1975 (Cth), ss 4, 6. Papua New Guinea Independence (Australian Citizenship) Regulations 1975 (Cth), reg 4. GLEESON CJ, McHUGH, GUMMOW, HAYNE, CALLINAN AND HEYDON JJ. The applicant was born on 20 May 1967, in Pale village, Ialibu district, in the Southern Highlands province of Papua. At the time, Papua was administered by Australia as a Possession of the Crown and as part of an administrative union known as the Territory of Papua and New Guinea. The applicant's four grandparents also were born in the Ialibu district of Papua. He was aged eight when, on 16 September 1975 ("Independence Day"), Papua New Guinea became an independent sovereign state by the name of the Independent State of Papua New Guinea. In 1967, Papua was part of "Australia" for the purposes of the Australian Citizenship Act 1948 (Cth) ("the Citizenship Act"). Persons born in Papua after the commencement of the Citizenship Act, such as the applicant, acquired the status of Australian citizens by birth. Nevertheless, under the Migration Act 1958 (Cth) ("the Migration Act") such persons required an entry permit in order to be entitled to enter or reside in any of the States or internal Territories1. This case concerns the citizenship changes that occurred on Independence Day. The applicant did not enter, or apply for any right to enter, any of the States or internal Territories of Australia ("mainland Australia") before Independence Day. He has never applied to become an Australian citizen by naturalization or by registration under the Citizenship Act. The applicant last entered Australia on 3 December 1999, as the holder of a visa which expired on 3 March 2000. Since then he has held a series of visas, the most recent of which is a bridging visa that will expire no later than 28 days after the completion of these proceedings. He does not currently hold a substantive visa. The applicant has commenced proceedings against the Minister for Immigration and Multicultural and Indigenous Affairs seeking writs of prohibition and mandamus and a declaration. The Minister contends that ss 189, 196 and 198 of the Migration Act apply to the applicant. The applicant contends that he did not cease to be an Australian citizen on Independence Day, that he is not an alien, and that the provisions of the Migration Act referred to do not validly apply to him. Those contentions have been further refined in a series of 1 See Minister for Immigration and Multicultural and Indigenous Affairs v Walsh (2002) 125 FCR 31 at 35-36 [15]-[21]. questions stated by a Justice for the opinion of the Full Court. The questions are as follows: "1. On the proper construction of regulation 4 of the Papua New Guinea Independence (Australian Citizenship) Regulations 1975 and the Papua New Guinea Constitution, did the Applicant cease to be an Australian citizen under the Australian Citizenship Act 1948 on Independence day? If the answer to question (1) is 'Yes', is regulation 4 of the Papua New Guinea Independence (Australian Citizenship) Regulations 1975 authorised by s 6 of the Papua New Guinea Independence Act If the answer to questions (1) and (2) is 'Yes', is s 6 of the Papua New Guinea Independence Act 1975, to the extent that it authorises regulation 4 of the Papua New Guinea Independence (Australian Citizenship) Regulations 1975, invalid in that it is not supported by s 51(xix), (xxvii), (xxix) or (xxx) of the Constitution, ss 51(xxxix) and 61 of the Constitution, the 'implied nationhood' power, s 122 of the Constitution, or any other head of Commonwealth power? Once the [applicant's] bridging visa … has expired, are ss 189, 196 and 198 of the Migration Act 1958 capable of valid application to the applicant on the basis that: he is an alien, within the meaning of section 51(xix) of the Constitution; or in their application to him those provisions are laws with respect to immigration within section 51(xxvii) of the Constitution; or on any other basis? 5. Who should pay the costs of the Stated Case and the hearing of the Stated Case before the Full Court of this Court?" The Independent State of Papua New Guinea The former Possession of British New Guinea was placed under the authority of the Commonwealth of Australia by Letters Patent dated 18 March 1902, and was accepted by the Commonwealth, as the Territory of Papua, by s 5 of the Papua Act 1905 (Cth). The former German possession of New Guinea was placed under Australian administration by Mandate of the League of Nations in 1920. It was administered by Australia, as the Territory of New Guinea, under the New Guinea Act 1920 (Cth). After 1945, the two Territories were administered jointly under legislation of the Commonwealth2. Even so, the two Territories kept their separate identities. Papua remained "a possession of the Crown". New Guinea was a "Trust Territory" administered by Australia under an agreement approved by the United Nations. The author of a work on the history of the Constitution of Papua New Guinea wrote3: "Before Independence, most Papua New Guineans had no 'real' citizenship. Those born in Papua were technically Australian citizens, but they had no right to enter or remain in Australia, or even to leave their own country. Those born in New Guinea had the status of 'Australian Protected Persons'. Although in the years immediately prior to Independence permission to enter or to leave the country was readily granted and the Papua New Guineans were issued with Australian passports, the technical barrier remained." (reference omitted) On 18 November 1963, the Papua and New Guinea Act 1963 (Cth) established a House of Assembly to make laws for the peace, order and good government of the Territory of Papua and New Guinea. On 9 July 1974, the House of Assembly resolved that Papua New Guinea move to independent status. On 13 August 1974, the Constitutional Planning Committee, which had been established to prepare a draft Constitution, reported to the Chief Minister of Papua New Guinea. On 18 June 1975, the House of Assembly nominated 2 Papua-New Guinea Provisional Administration Act 1945 (Cth); Papua and New Guinea Act 1949 (Cth); Papua and New Guinea Act 1963 (Cth). 3 Goldring, The Constitution of Papua New Guinea: A Study in Legal Nationalism, 16 September 1975 as the date on which Papua New Guinea was to become an independent state. On Independence Day (16 September 1975) Papua New Guinea became an independent sovereign state by the name of the Independent State of Papua New Guinea, having a constitution established, adopted and given to themselves by the people of Papua New Guinea acting through their Constituent Assembly. The Papua New Guinea Independence Act 1975 (Cth) ("the Papua New Guinea Independence Act") provided, in s 4, that on the expiration of the day preceding Independence Day, Australia would cease to have any sovereignty, sovereign rights or rights of administration in respect of or appertaining to the whole or any part of Papua New Guinea. Citizenship under the Papua New Guinea Constitution: "no man ... can stand in more than one canoe" The Papua New Guinea Constitution was developed against an historical background of colonialism, ownership of land and business enterprises by people other than the indigenous inhabitants, and importation of foreign labour. The Constitutional Planning Committee attached high importance to the need to identify citizenship in a manner that affirmed the status of the indigenous inhabitants and related the concept of nationhood to citizenship. Chapter 4 of the Committee's Final Report said: "2. Papua New Guinean citizens will have certain rights (and obligations) that will be theirs alone. Only Papua New Guinean citizens will have the right to vote at elections, or to stand, for local government bodies, provincial assemblies and the National Parliament. They will have the right to be appointed to posts in government and private enterprise for which they are otherwise qualified. They will be eligible for services and other benefits the government may provide – in health, education, and economic development. They will receive protection from the Papua New Guinea Government when they travel abroad on its passports. And, in turn, they will owe their country certain obligations – to pay taxes, to uphold its laws, and to serve it in peace and in war. 14. A weak citizenship law will help no one. It will not serve the interests of our indigenous people. It will not serve those of the foreigners among us, nor those of overseas investors." (emphasis in original) The Report saw dual citizenship as incompatible with a strong citizenship law. It said that people in all parts of the country had expressed opposition to the idea of dual citizenship. It went on: "84. Our country stands on the threshhold [sic] of independence. The Papua New Guinea citizenship law will form part of the foundations of our country's freedom, independence and identity as a nation state. It is an essential part of those foundations because it states in law who the people are who belong to Papua New Guinea. These people will be the citizens of Papua New Guinea. 88. The people of Papua New Guinea have told us clearly and firmly that they do not believe that a person can be fully committed to more than one country. In making this point, they have frequently resorted to imagery; no man, it is said, can stand in more than one canoe." The Committee proposed three methods of acquisition of citizenship: registration; and citizenship by automatic citizenship; citizenship by naturalization. The Report stated: "20. The vast majority of the inhabitants of Papua New Guinea will become citizens of Papua New Guinea as of right when our recommendations come into force. They will automatically become Papua New Guineans. They will not have to do anything in order to become citizens. They will simply be defined by law as citizens. 21. Any person who was born in Papua New Guinea before the citizenship law comes into force ... shall be a citizen of Papua New Guinea he or she is not a 'real' citizen of a foreign country; and he or she has at least two indigenous grandparents. 22. For the purposes of this provision, persons who are Australian citizens by virtue only of their birth in Papua, and persons who are Australian Protected Persons, are regarded as holding no real foreign citizenship, provided that they have not been granted the right to reside in Australia." (emphasis in original) The reason why persons who were Australian citizens by virtue only of their birth in Papua (persons such as the applicant and almost all other indigenous Papuans as at Independence Day) were regarded as holding no "real" foreign citizenship appears from what has been noted above. Although technically Australian citizens, under the Migration Act that citizenship did not of its own force give them the right to enter, or remain in, mainland Australia. To have a right of residence in Australia, they needed to apply for, and be granted, such a right. Hence the reference to a grant of a right of residence. The recommendations made by the Report were reflected in Pt IV of the Papua New Guinea Constitution. The provisions of direct relevance to the present case are ss 64 and 65, which are as follows: "64. Dual citizenship (1) Notwithstanding the succeeding provisions of this Part but subject to Subsection (2), no person who has a real foreign citizenship may be or become a citizen, and the provisions of this Part shall be read subject to that prohibition. (2) Subsection (1) does not apply to a person who has not yet reached the age of 19 years, provided that, before he reaches that age and in such manner as is prescribed by or under an Act of the Parliament, he renounces his other citizenship and makes the Declaration of Loyalty. (3) A person who has a real foreign citizenship and fails to comply with Subsection (2) ceases to be a citizen of Papua New Guinea when he reaches the age of 19 years. (4) For the purposes of this section, a person who – (a) was, immediately before Independence Day, an Australian citizen or an Australian Protected Person by virtue of – (i) birth in the former Territory of Papua; or (ii) birth in the former Territory of New Guinea and registration under Section 11 of the Australian Citizenship Act 1948-1975 of Australia; and (b) was never granted a right (whether revocable or not) to permanent residence in Australia, has no real foreign citizenship. Division 2 – Acquisition of Citizenship 65. Automatic citizenship on Independence Day (1) A person born in the country before Independence Day who has two grand-parents who were born in the country or an adjacent area is a citizen. (2) A person born outside the country before Independence Day who has two grand-parents born in the country is a citizen as from Independence Day if – (a) within one year after Independence Day or such longer period as the Minister responsible for citizenship matters allows in a particular case, application is made by him or on his behalf for registration as a citizen; and (b) he renounces any other citizenship and makes the Declaration of Loyalty – (i) if he has not reached the age of 19 years – in accordance with Section 64(2) (dual citizenship); or (ii) if he has reached the age of 19 years – at or before the time when the application is made. (3) In Subsection (1), 'adjacent area' means an area that immediately before Independence Day constituted – (a) the Solomon Islands; or (b) the Province of the Republic of Indonesia known as Irian Jaya; (c) the islands in Torres Straits annexed to the then Colony of Queensland under Letters Patent of the United Kingdom of Great Britain and Ireland bearing date the 10th day of October in the forty-second year of the reign of Her Majesty Queen Victoria (that is, 1878), not forming on Independence Day part of the area of Papua New Guinea. (4) Subsections (1) and (2) do not apply to a person who – (a) has a right (whether revocable or not) to permanent residence in Australia; or (b) is a naturalized Australian citizen; or (c) is registered as an Australian citizen under Section 11 of the Australian Citizenship Act 1948-1975 of Australia; or (d) is a citizen of a country other than Australia, unless that person renounces his right to residence in Australia or his status as a citizen of Australia or of another country in accordance with Subsection (5). (5) A person to whom Subsection (4) applies may, within the period of two months after Independence Day and in such manner as may be prescribed by or under an Act of the Parliament, renounce his right to permanent residence in Australia or his status as an Australian citizen or as a citizen of another country and make the Declaration of Loyalty. (6) Where in his opinion it is just to do so, the Minister responsible for citizenship matters may in his deliberate judgement (but subject to Division 4 (Citizenship Advisory Committee)), extend the period of two months referred to in Subsection (4), but unless the Minister is satisfied that the applicant – (a) assumed in error that he was a citizen; or (b) did not know that he was not a citizen; or (c) had no reasonable opportunity or not enough time to determine his status, the period may not be extended beyond a further two months." Sub-section (1) of s 64 declares the general prohibition against Papua New Guinea citizenship on the part of any person who has a real foreign citizenship, subject to certain presently irrelevant qualifications. Plainly, the section treats Australia as a foreign country, as it was from Independence Day. The concept of "real foreign citizenship" is defined in sub-s (4). The reference, in s 64(4)(b), to a grant of a right to permanent residence in Australia is clearly related to the reference in s 65(4)(a) to a person who has a right to permanent residence in Australia. According to the then current Australian immigration laws, in the absence of such a grant, persons of the kind referred to had no such right. Although the applicant had not reached the age of 19 years on Independence Day, he had no real foreign citizenship for the purposes of s 64 unless he was a person who had been granted a right to permanent residence in Australia. No such right was ever granted to the applicant. Accordingly, the procedure of renunciation provided for in s 64(2) did not apply to him. The applicant was a person falling within the terms of s 65(1). The procedure for renunciation of an Australian right of residence, or Australian citizenship, provided for in sub-s (5) only related to a person to whom sub-s (4) applied. The applicant contends, and the respondent denies, that sub-s (4) applied to him and, therefore, that sub-s (1) did not apply. Counsel for the applicant, while anxious to maintain the position that the ultimate issues for decision by this Court concern the status of the applicant under Australian law including the Australian Constitution, made submissions as to the Papua New Guinea Constitution, and, in particular, s 65. Question 1 in the Case Stated refers to the Papua New Guinea Independence (Australian Citizenship) Regulations 1975 (Cth), which were made under the Papua New Guinea Independence Act. Regulation 4 provided: "4. A person who – immediately before Independence Day, was an Australian citizen within the meaning of the Act; and on Independence Day becomes a citizen of the Independent State of Papua New Guinea by virtue of the provisions of the Constitution of the Independent State of Papua New Guinea, ceases on that day to be an Australian citizen." Questions of constitutional power were raised in relation to that regulation, and the legislation under which it was made. At this stage, however, it is necessary to deal with the meaning of reg 4, which in turn raises a question of the meaning of s 65 of the Papua New Guinea Constitution. It is common ground that the applicant fell within par (a) of reg 4. The respondent contends, and the applicant denies, that the applicant also fell within If the contention of the applicant were correct, the practical par (b). consequences would be far-reaching. Before Independence Day most indigenous Papuans had been Australian citizens, although not what the Constitutional Planning Committee, and the Papua New Guinea Constitution, regarded as "real" Australian citizens. If the applicant did not become a citizen of the Independent State of Papua New Guinea by virtue of s 65(1) of the Papua New Guinea Constitution, it seems highly likely that the same applied to most other Papuans living on Independence Day. (The fact that the applicant was under 19 years on Independence Day is irrelevant unless he had a real foreign citizenship within the meaning of s 64(4), that is to say unless he had been granted a right to permanent residence in Australia.) The consequences of such a conclusion would be so extreme, and so obviously contrary to the recommendations of the Constitutional Planning Committee, that the clearest language would be required to compel their acceptance. (It should be added that we were informed by counsel that they had found no decision of any Papua New Guinea court on the point.) The question whether the applicant became a citizen of the Independent State of Papua New Guinea on Independence Day by virtue of the provisions of the Papua New Guinea Constitution, which is the question raised by par (b) of reg 4, turns upon the meaning and effect of s 65 of that Constitution. Section 65 is to be understood in its context. The historical and social context has been referred to briefly. It is described more completely in the Final Report of the Constitutional Planning Committee. The whole of Ch 4 of Pt 1 of that Report is instructive. The textual context requires particular consideration of s 64. Another significant part of the context in which s 65 was written is the immigration law of Australia as it stood in 1975, and, in particular, the provisions of the Migration Act at that time. Those provisions evidently were taken at face value by the framers of the Papua New Guinea Constitution, as appears from the definition of real foreign citizenship in s 64(4). In construing s 65 of the Papua New Guinea Constitution, and in identifying the context as an aid to the resolution of any doubts that may arise, what is significant is the Australian immigration legislation as it applied to the people of Papua and New Guinea at the time of independence. Counsel for the applicant contends that "[t]he applicant maintained his Australian citizenship pursuant to [reg 4] by virtue of his right to permanent residence in Australia[,] and by not taking up the opportunity, provided in s 65(5) of the Papua New Guinea Constitution[,] of renouncing that citizenship in order to become a Papua New Guinea citizen." The argument is that, on Independence Day, the applicant, and all persons born in Papua, who had previously been Australian citizens, fell within s 65(4)(a) of the Papua New Guinea Constitution. The applicant, so it is said, (and, presumably, most other Papuans) did not become a citizen by virtue of s 65(1). In order to become a citizen of Papua New Guinea it was necessary for the inhabitants of Papua, individually, to renounce their Australian citizenship under s 65(5). The applicant never made any act of renunciation of his Australian citizenship. Nor, it appears, did most indigenous Papuans. Therefore, it is said, the applicant did not become a citizen of Papua New Guinea on Independence Day, and remains an Australian citizen for the purposes of the Papua New Guinea Constitution. In considering whether this was the purpose and effect of s 65 of the Papua New Guinea Constitution, it is necessary to keep in mind the rejection of dual citizenship, which was such an important issue in Papua New Guinea before Independence Day, and which was implemented (subject to qualifications) by s 64. The rejection of dual citizenship meant that, for most Papuans, the corollary of retaining Australian citizenship was not obtaining citizenship of Papua New Guinea. From the point of view both of Papua New Guinea and of Australia that was a foundational aspect of the constitutional arrangements of the new Independent State. A policy against dual citizenship (subject to qualifications) was adopted by Papua New Guinea, and respected by Australia. On this point, the argument for the applicant depends upon the proposition that he was, on Independence Day, a person who had a right to permanent residence in Australia, within the meaning of s 65(4)(a) of the Papua New Guinea Constitution. This is not an abstract or theoretical question. It concerns the meaning of words in an instrument of nationhood and government, dealing with a practical issue affecting the membership of the new Independent State. When the framers of the Papua New Guinea Constitution referred to persons who had a right to permanent residence in Australia, part of the contextual background in which that reference was made was an Australian immigration law which, according to its terms, and as it was administered, denied people such as the applicant a right to permanent residence in Australia in the absence of a specific grant. That background explains the terms of s 64(4). At the time, s 6(1) of the Migration Act provided that an immigrant who entered Australia without an entry permit was a prohibited immigrant. Such a person was liable to deportation under s 18. Sections 6 and 7 provided for the discretionary grant of entry permits, which might be temporary or permanent. A right of permanent residence (in practice, a right to re-enter Australia free of the constraints of s 6) could be acquired by a person who was granted a permanent entry permit (s 15). Before Independence Day, Papua was an external Territory of Australia. External Territories were excluded from the definition of Australia in s 17 of the Acts Interpretation Act 1901 (Cth). The Migration Act did not define Australia in any manner inconsistent with the definition in the Acts Interpretation Act. Section 5(4) of the Migration Act referred to persons who had left Australia but not "entered any country other than a Territory outside Australia". That was consistent with an external Territory being outside Australia. The Migration Act defined "immigrant" to include persons entering Australia for temporary or permanent purposes. The Act applied, and was administered on the basis that it applied, to persons entering mainland Australia from external Territories. As is evident from the Report of the Constitutional Planning Committee, that historical fact was known to the framers of the Papua New Guinea Constitution; it was, indeed, a fact of which they were acutely aware. It led them to describe their Australian citizenship as other than "real". It was asserted that s 65 of the Papua New Guinea Constitution should be interpreted in the light of an understanding that "the applicant's Australian citizenship at birth (and non-alien status) carried with it a right to permanent residence in Australia as a matter of both statutory construction and as a matter of constitutional principle". In this connection reliance was placed upon a passage in Air Caledonie International v The Commonwealth4 where reference was made, in a different context, to the right of an Australian citizen to enter the country being unqualified by any law. Clearly, that passage was not referring to the right of inhabitants of Papua to enter mainland Australia, which was qualified by the Migration Act. As has been observed, in construing s 65 what is important is the law as it was applied to the inhabitants of Papua, an application that is reflected in the language of ss 64 and 65. The understanding of Australian law reflected in ss 64 and 65 of the Papua New Guinea Constitution was not erroneous. When Australia acquired Papua as an external territory, it was not obliged constitutionally to give inhabitants of that external territory an unfettered right of entry into mainland Australia. To the contrary, the broad power conferred by s 122 of the Australian Constitution supported laws restricting such entry by those inhabitants. In any event, where the question is one of construing s 65 of the Papua New Guinea Constitution, the understanding of Australian law and practice clearly revealed in the text is what matters. judgment of this Court the It is improbable in the extreme that it was the purpose of s 65 of the Papua New Guinea Constitution to exclude from citizenship of the new nation all indigenous Papuans living at Independence Day unless they took positive steps to (1988) 165 CLR 462 at 469. See also the observations of Starke J in R v Macfarlane; Ex parte O'Flanagan and O'Kelly (1923) 32 CLR 518 at 580. renounce their Australian citizenship. The purpose was the opposite. Although indigenous Papuans were Australian citizens before Independence Day, they were treated by Australian law, and regarded by the framers of the Papua New Guinea Constitution as not having, on that account alone, a right to permanent residence in Australia. The right to permanent residence referred to in s 65(4)(a) is the same as the right referred to in s 64(4)(b), that is to say, the right which a small number of Papuans had received by grant, not a right which all Papuans had by virtue of birth in the Territory of Papua at a time when it was an external Territory of Australia. The construction which the applicant seeks to place on s 65 must be rejected. On Independence Day, the applicant became a citizen of Papua New Guinea by virtue of the Papua New Guinea Constitution. That Constitution was antagonistic to dual citizenship. In recognition of that policy of the new Independent State, Australia, by reg 4, withdrew the applicant's Australian citizenship. That withdrawal was not arbitrary. It was consistent with the maintenance of proper relations with the new Independent State, and with the change that occurred in Australia's relationship with the inhabitants of that State. It is necessary now to consider whether that regulation was valid. The validity of reg 4 Reference has already been made to s 4 of the Papua New Guinea Independence Act. Regulation 4 was made pursuant to s 6 of the same Act, which empowered the Governor-General to make regulations making provision for or in relation to matters arising out of or connected with the attainment of the independence of Papua New Guinea. The regulations treated citizenship as such a matter. The Court was provided in argument with many examples of legislation enacted by the United Kingdom Parliament in the 1960s and 1970s in which it was provided that a person who, before the day on which a former colony attained independence, was a citizen of the United Kingdom should, on independence, cease to be a United Kingdom citizen5. In fact, reg 4 appears to have been modelled on such provisions. The provisions vary in certain respects, but they show that there was nothing unusual in what was done, or attempted, in reg 4, and, further, that providing for what was to happen in relation to eg Aden, Perim and Kuria Muria Islands Act 1967 (UK) s 1; Bahamas Independence Act 1973 (UK) s 2; Barbados Independence Act 1966 (UK) s 2; Botswana Independence Act 1966 (UK) s 3; Fiji Independence Act 1970 (UK) s 2; Guyana Independence Act 1966 (UK) s 2; Jamaica Independence Act 1962 (UK) s 2; Malaysia Act 1963 (UK) s 2; Nigeria Independence Act 1960 (UK) s 2. citizenship was within the contemplation of s 6 of the Papua New Guinea Independence Act. It was submitted for the applicant that s 6 should not be construed as extending to the making of a regulation affecting such an important status as that of citizenship. The Papua New Guinea Independence Act, it was said, did not in terms deprive the applicant of Australian citizenship, and the regulation-making power conferred by the Act should not be understood as empowering such deprivation. The power given by s 6 expressly extended to "regulations making modifications or adaptations of any Act". The reference to "any Act" covered the Citizenship Act. The matter of citizenship was one that needed to be dealt with on independence, especially having regard to the stand against dual citizenship taken in Papua New Guinea. Parliament enacted s 6 in the light of an understanding of the terms of the Papua New Guinea Constitution, and its drafting history. The recitals to the Papua New Guinea Independence Act refer to those matters. Section 6 must have contemplated regulations dealing with citizenship. The applicant's submission cannot be accepted. Next, it was submitted that, assuming s 6 purported to empower the making of reg 4, then s 6 itself was invalid. In brief, it was said that the Parliament lacked the legislative capacity to deprive the applicant of his Australian citizenship in the manner attempted in reg 4. In this respect, the absence of any step on the part of the applicant to renounce his Australian citizenship was said to be significant, not so much for the purposes of s 65 of the Papua New Guinea Constitution, as for the purposes of the Australian Constitution. Section 4 of the Papua New Guinea Independence Act provided for the cessation of any Australian sovereignty, sovereign rights, or rights of administration in respect of or appertaining to the whole or any part of Papua New Guinea on the expiration of the day preceding Independence Day. For the purposes of domestic law, Australia assumed, and exercised, the rights referred to in s 4 by or under legislation enacted by the Parliament pursuant to s 122 of the Constitution (the territories power).6 That section covers both internal and external Territories, the Commonwealth". It was pointed out in Fishwick v Cleland7 that, in the context, territories "otherwise acquired by including 6 Fishwick v Cleland (1960) 106 CLR 186. (1960) 106 CLR 186 at 197-198. acquisition is a broad and flexible term covering developing conceptions of the authority of the Crown in right of Australia over external territories. In that case it was held to cover authority over the Territory of Papua New Guinea. The variety of circumstances and conditions that could apply to territories within the contemplation of s 122 was considered in Re Governor, Goulburn Correctional The capacity to acquire and exercise sovereignty, sovereign rights, and rights of administration in respect of external territories necessarily includes the capacity to make provision for the bringing to an end of those rights. The capacity to acquire external territory necessarily implies a capacity to relinquish such territory. It is not in dispute that s 4 of the Papua New Guinea Independence Act was within the legislative power of the Parliament. That power was conferred by s 122 of the Constitution. The acquisition of an external territory by Australia, as contemplated by s 122, involves the establishment of relations between Australia and the inhabitants of that territory. There is no single form of relationship that is necessary or appropriate. The kinds of relationship that may be regarded by Parliament as appropriate are as various as the kinds of territory that may be acquired, and the forms of acquisition that may be adopted. Just as acquisition of a territory ordinarily involves the creation of relationships, the relinquishment of a territory involves the alteration or termination of relationships. The steps that may be taken for the purpose of such alteration or termination are also various. The relations that may exist between Australia and the inhabitants of external territories are not necessarily identical with those that apply to the people united in a Federal Commonwealth pursuant to covering cl 3 of the Constitution, the people of the Commonwealth referred to in covering cl 5, or the people referred to in s 24. For example, the Constitution does not require that the inhabitants of an external territory should have the right to vote at federal elections. The references in the Constitution to "the people of [particular States]" or "the people of the Commonwealth" serve a significant purpose in their various contexts, but they do not have the effect of binding Australia to any particular form of relationship with all inhabitants of all external territories acquired by the Commonwealth, whatever the form and circumstances of such acquisition. (1999) 200 CLR 322 at 331 [7]. One aspect of the acquisition by the Commonwealth of sovereignty and the exercise of sovereign rights by the Commonwealth in respect of an external territory and its inhabitants is the making of laws concerning the entry and re- entry of such inhabitants to and from that territory and to and from Australia. This may also be a matter in its latter aspect upon which the Parliament may exercise the immigration power found in s 51(xxvii). The apparent reliance upon one head of power does not deny support by another, the question being one not of intention but of power from whatever source it is derived9. The manner in which that power was exercised in relation to Papua New Guinea in the Migration Act has already been described. It is unnecessary to consider whether the legislation was also supported by s 51(xxx) (relations with islands of the Pacific). The Constitution does not require that all inhabitants of all external territories acquired by Australia should have an unfettered right of entry into, and residence in, mainland Australia. There is no reason why Parliament cannot treat such an inhabitant as an immigrant. Another aspect of such relations between Australia and the inhabitants of an external territory to which the law-making power conferred by s 122 extends is the status of such inhabitants within what may be called for this purpose the Australian community. This also is a matter upon which the Parliament may make laws under s 51(xix) (naturalization and aliens). The Citizenship Act treated the inhabitants of Papua and New Guinea as citizens. The validity of that legislative provision is not in dispute. Indeed, an assumption of its validity is the foundation of the applicant's argument. It cannot be said, however, that such provision was necessary or inevitable. It represented a legislative choice. Parliament is not obliged to confer Australian citizenship upon all inhabitants of all external territories. Furthermore, the powers under which it may legislate to confer such citizenship when a territory is acquired enable Parliament to legislate to withdraw such citizenship when rights of sovereignty or rights of administration in respect of such territory come to an end. It was argued for the applicant that there is a limitation inherent in the power conferred by s 51(xix) that prevents that power from being applied unilaterally (that is, without the consent of the individual manifested by renunciation or some similar act) to change a person's status from non-alien to alien. This proposition, respecting a limitation upon the s 51(xix) power, 9 R v Hughes (2000) 202 CLR 535 at 548 [15]. overlooks the present significance of the territories power conferred by s 122. We are presently concerned only with whether any such limitation exists in relation to the inhabitants of external territories. What follows is to be understood in that context. In any event, no limitation of the kind proposed applies to the power conferred by s 51(xix). The extent of the power of Parliament to deal with matters of nationality and immigration, to create and define the concept of Australian citizenship, to prescribe the conditions on which citizenship may be acquired and lost, and to link citizenship with the right of abode, has been considered most recently by this Court in Singh v The Commonwealth10. Two points of present relevance emerge from that consideration. First, the legal status of alienage has as its defining characteristic the owing of allegiance to a foreign sovereign power11. Secondly, changes in the national and international context in which s 51(xix) is to be applied may have an important bearing upon its practical operation. Decisions such as Sue v Hill12, Shaw v Minister for Immigration and Multicultural Affairs13, and Singh illustrate the manner in which changes in national and international circumstances may affect the application of terms such as "foreign" and "alien". In Singh14, a majority of the Court rejected the view that concepts of alienage and citizenship describe a bilateral relationship which is a status, alteration of which requires an act on the part of the person whose status is in issue. The change in the relationship between Australia and the Independent State of Papua New Guinea was given as an example of the difficulty involved in such a view15. 10 (2004) 78 ALJR 1383; 209 ALR 355. 11 Singh v The Commonwealth (2004) 78 ALJR 1383 at 1426 [200]; 209 ALR 355 at 12 (1999) 199 CLR 462. 13 (2003) 78 ALJR 203; 203 ALR 143. 14 (2004) 78 ALJR 1383 at 1391-1392 [30]-[31], 1426 [198]; 209 ALR 355 at 366- 15 (2004) 78 ALJR 1383 at 1426 [198]; 209 ALR 355 at 414. As is pointed out earlier in these reasons, the capacity to acquire an external territory and the power to make laws for the government of that territory necessarily implied a capacity to legislate for the consequences of the cessation of those powers of government. When Papua ceased to be an external territory of Australia, and became part of the sovereign Independent State of Papua New Guinea, the people of Papua owed allegiance to the new sovereign State. Their rights and obligations were declared by the Papua New Guinea Constitution, and the membership of the new nation was defined by the provisions of that Constitution relating to citizenship. It was within the power of the Parliament, cognisant of those provisions, to respond to the change in sovereign rights, and the new realities affecting the relationship between the inhabitants of Papua and their government, by treating those inhabitants as aliens and withdrawing their Australian citizenship. Parliament did this, knowing that the Papua New Guinea Constitution gave them automatic citizenship of the new Independent State. The power in s 122 pursuant to which Parliament enacted legislation to deal with the acquisition of the external Territory enabled it also to enact legislation to deal with the relinquishment of sovereign rights and rights of administration over that Territory. The power pursuant to which Parliament could enact legislation to treat the inhabitants of the Territory as citizens enabled it also to treat the inhabitants of the new Independent State as aliens. Migration Act, ss 189, 196 and 198 It follows from what has been said that the above provisions are capable of valid application to the applicant. Costs It was submitted that, even if the applicant fails, he should not be ordered to pay costs because he has raised "significant and fundamental matters of public interest". The applicant commenced these proceedings, and his arguments have failed. The ordinary consequences as to costs should follow. Answers to Questions The questions stated for the opinion of the Court should be answered as follows: Yes. Yes. (1) Yes. The applicant. Kirby KIRBY J. This application for the constitutional writ of prohibition and other relief, concerns Australian nationality and citizenship. It is important for the applicant who is facing removal from the Commonwealth. He raises objections that this Court must determine. However, the chief significance of the case arises from the potential implications that the proceedings may have for the citizenship and nationality of all Australians. In short, could they be stripped of their status and rights as citizens in the same way as federal law has purported to provide in the case of the applicant? Deprivation of nationality and its significance The interpretation of a constitutional text obliges courts entrusted with that function to consider more than the meaning of words. They must have a notion of the character of the polity to which the text applies. A national constitution, contained in a document difficult to amend, is typically designed to impose restrictions on the exercise, even by democratically elected legislatures, of powers that may affect adversely the units of the polity as well as individuals, groups and communities within it. Judges with the responsibility of decision- making must look ahead and test propositions advanced in one case for the consequences that might flow in other circumstances, if the interpretation that is advanced is upheld. Mr Amos Ame (the applicant) was born an Australian citizen. This much is undisputed. Such status was accorded to him by Australian federal law16. The constitutional validity of that law, as applied to the applicant, was not contested by anyone in these proceedings. On the contrary, the validity of the law was relied upon by the applicant17. Yet without the specific knowledge or consent of the applicant, without renunciation or wrongdoing on his part, notice to him, due process or judicial or other proceedings, he was purportedly deprived of his Australian citizenship. This was said to have occurred under the provisions both of Australian18 and foreign law19. Indeed, in the Australian case the change was 16 Australian Citizenship Act 1948 (Cth) ("Citizenship Act"), s 10(1) read with the definition of "Australia" in s 5(1). The Citizenship Act was originally titled Nationality and Citizenship Act. It was retitled Citizenship Act in 1969 and Australian Citizenship Act in 1973: see Statute Law Revision Act 1973 (Cth), s 4, Sched 2. 17 For their validity, the relevant provisions relied principally on the Constitution, ss 51(xix), (xxvii), (xxix) and 122. 18 Papua New Guinea Independence Act 1975 (Cth) ("PNG Independence Act"), s 6(1) and Papua New Guinea Independence (Australian Citizenship) Regulations ("the Regulations"), reg 4. Kirby purportedly effected not by an Act of the Federal Parliament but by a regulation made by the Executive Government20. The applicant, having later entered Australia, was taken into immigration detention by officials, purporting to act under the Migration Act 1958 (Cth) ("the Migration Act")21. He was eventually released from such detention pending the outcome of these proceedings. He contests the right of Senator Amanda Vanstone, the federal Minister for Immigration and Multicultural and Indigenous Affairs (the respondent), to detain him, to subject him to restrictions on his movement within the Commonwealth, or to remove him from Australia. He says that this cannot be done within the true meaning of the applicable Australian law. Least of all, according to the applicant, could such a profound change in his nationality status be effected by a regulation made by the Executive Government. And if it was done in such a way by the federal laws properly construed, the applicant submits that such laws are invalid when measured against the Australian Constitution. For the respondent, this was a simple case in which Australian federal laws had been enacted to give effect to a major political change that occurred, with the support and encouragement of the Government of the Commonwealth, in the achievement of national independence and full sovereignty by the former Australian territories of Papua and New Guinea. In 1975, those territories united in the Independent State of Papua New Guinea under a national constitution that included provisions affecting the applicant's status as an Australian citizen. The applicant does not accept that he was so affected under that Constitution. And, he asserts that he had not been, and could not be, deprived of his Australian citizenship by valid laws of the Federal Parliament. He appeals to this Court to uphold the claim affecting persons like himself, in the transitional category of those born into Australian citizenship in Papua before 1975. In effect, the applicant submitted that this Court should sustain his claim, applying to the Australian laws relied upon by the respondent the strict principles ordinarily invoked where it is suggested that important rights and liberties are removed from a person22. If removal could so easily occur in his case, it could, by inference, happen to other Australian citizens, at least to other citizens born in a territory of the Commonwealth, like himself, including internal territories (such 19 Constitution of the Independent State of Papua New Guinea 1975 ("PNG Constitution"), ss 64, 65. See joint reasons at [13]. 20 The Regulations, reg 4. 22 Coco v The Queen (1994) 179 CLR 427 at 437. Kirby as the Australian Capital Territory and the Northern Territory of Australia) in which live significant numbers of Australian citizens who would not normally regard themselves as vulnerable to so significant a change of status by such a simple legal device. This application is important, in a sense, for the operation within Australia of the Constitution of Papua New Guinea, an independent nation. However, within their jurisdiction and powers, it is for the courts of that country to interpret and apply the constitutional provisions there provided23. This Court does not presume (nor was it asked by the applicant) to intrude upon the functions of the courts of Papua New Guinea. However, the jurisdiction and powers of this Court being invoked, purportedly for the protection of the applicant's status as an Australian citizen and his Australian constitutional status as a national of Australia24, this Court must discharge its own constitutional functions. History, and not only ancient history, provides many examples of legislation depriving individuals and minority groups of their nationality status25. Such laws, when made, have sometimes been challenged as contrary to established legal principles governing the equal enjoyment by all nationals of their civil rights26. Although the applicant's case fell short of such historical circumstances, and arose out of quite different political events, it was inherent in his argument that this Court should overturn the attempt to deprive him of his status as an Australian citizen lest what happened to him should establish a 23 This Court was informed by the parties that no decisions of the courts of Papua New Guinea have been delivered concerning the meaning of these provisions. 24 See Constitution, covering cl 3, ss 7, 24, 30, 128. 25 See for example the Nuremburg Laws of September 1935 by which Germans of defined Jewish ethnicity living in Germany were stripped of German nationality: Fraser, "Law Before Auschwitz: Aryan and Jew in the Nazi Rechtsstaat", in Cheah, Fraser and Grbich (eds), Thinking Through the Body of the Law, (1996) at 66. There are many other examples: Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 416 [163]. 26 Typically, such claims failed. Thus, the German courts held that the previously propounded rule of civil equality did not apply because, under the new law, Germans of Jewish ethnicity were civilly dead: Curran, "Fear of Formalism: Indications from the Fascist Period in France and Germany of Judicial Methodology's Impact on Substantive Law", (2002) 35 Cornell International Law Journal 101 at 169-170. Kirby precedent for treating Australian nationality and citizenship as an insubstantial and readily erasable legal category27. The facts, applicable laws and questions The facts and relevant laws: The facts in this case are stated in the reasons of Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ ("the joint reasons")28. So are the applicable provisions of the Constitution of Papua New Guinea and the report of the Constitutional Planning Committee out of which that Constitution arose29. Also set out there are the provisions of the relevant Australian federal laws designed, so far as it was considered possible and appropriate, to give Australian parliamentary and governmental endorsement to the decision on its national future made in Papua and New Guinea itself. That decision provided for the independence and full sovereignty of the new Independent State of Papua New Guinea, as from the appointed Independence Day30. Autochthonous constitutionalism: In providing for the new nation, care was taken, within Papua New Guinea (and respect was given within Australia), to achieve an autochthonous foundation for the constitution of the new nation. Whereas, in form and at first in law, the Australian Constitution derived its legal authority from its enactment by the United Kingdom Parliament31, viewed from within Papua New Guinea, the foundation for that country's future constitutional arrangements was the decision of the people to adopt, and give to themselves, a constitution in the form approved by those people through their Constituent Assembly32. In its terms, the Constitution of Papua New Guinea derives its authority from "the people" who "do now establish this sovereign nation and declare ourselves, under the guiding hand of God, to be the Independent State of Papua 27 cf Simmons, "In Civilian Dress and with Hostile Purpose: The Labeling of United States Citizens Captured on American Soil as Enemy Combatants: Due Process vs National Security", (2004) 37 Indiana Law Review 579. 28 Joint reasons at [1]-[4]. 29 Joint reasons at [9]-[13]. 30 Joint reasons at [8], [16] referring to the PNG Independence Act, s 4, and the Regulations, reg 4. 31 Commonwealth of Australia Constitution Act 1900 (Imp) (63 & 64 Vict c 12). 32 PNG Constitution, Preamble. Kirby New Guinea"33. The first of the assertions in that Preamble to the Constitution is that "all power belongs to the people – acting through their duly elected representatives". Although the Australian Constitution also makes reference, in the first of the Covering Clauses, to the people of the various colonies who "have agreed to unite in one indissoluble Federal Commonwealth under the Crown … and under the Constitution hereby established", and although the form of the Australian instrument followed extensive colonial and inter-colonial debates and plebiscites of qualified electors in Australia approving the Constitution, the Australian instrument, in its terms, initially traced the establishment of the Constitution to the authority of the Imperial Parliament. The people of Papua New Guinea determined not to follow that precedent. It is clear from the report of the Constitutional Planning Committee that the question of citizenship was regarded both as sensitive and important for Papua New Guinea34. Reference is made in the joint reasons to the relevant debates, and the resolution of them35. The references included one to the vivid metaphor, expressed to the Constitutional Planning Committee by the people who were consulted, that "no man … can stand in more than one canoe"36. Invocation of Australian rights: For the applicant, such verbal imagery and the provisions of the Constitution of Papua New Guinea were ultimately irrelevant to his claim in this Court37. He came before an Australian court, to uphold his asserted nationality rights as a person born an Australian citizen. He asserted that his rights had not been lawfully abolished under Australian law. Moreover, he argued that if, contrary to this argument, the attempt at abolition had been technically successful, it failed because of a want of relevant constitutional power in the Federal Parliament to so provide or because the endeavour was inconsistent with the basic features of the Constitution that protected Australian nationals (now called "citizens") from deprivation of their status in the manner attempted in his case. 33 PNG Constitution, Preamble. 34 Papua New Guinea, Constitutional Planning Committee, Final Report of the Constitutional Planning Committee, (1974) Pt 1 ch 4 ("Citizenship") ("PNG Constitutional Report") at 1-3 [1]-[24]. 35 Joint reasons at [9]-[11]. 36 PNG Constitutional Report at 12 [88]; cf 2-3 [16]-[18]. See joint reasons at [10]. 37 Thus, under the PNG Constitution, dual citizenship is generally not permitted (s 64(1)) and only citizens of Papua New Guinea may be elected to Parliament and may own freehold land (s 56(1)(a) and (b)). Many of the fundamental rights provided for in the PNG Constitution are restricted in their application to citizens: see eg ss 50, 51, 52, 55, 56. Kirby Ultimately, it was inherent in the applicant's submission that this Court's duty was to give effect to the Constitution and valid laws of the Australian Commonwealth. It might pay respectful attention to the Constitution and laws of Papua New Guinea, a friendly neighbouring country. But it was neither entitled, nor obliged, to modify or ignore Australia's constitutional and legal requirements, such as he invoked, because of any suggested inconvenience that this might cause for assumptions hitherto adopted in Papua New Guinea. In short, the applicant asked this Court to apply Australian law and to do so with appropriate vigilance, given the significance of the status of nationality ("citizenship") and the historical examples of the wrongful deprivation of that status that had occurred where courts had been powerless, or insufficiently attentive, to protect The issues Statutory and constitutional issues: The materials placed before this Court and the questions stated for the opinion of the Full Court38 present the following issues for decision. In accordance with a practice of the Court, I shall state the issues in an order that addresses first the meaning and application of the Australian laws, nominated as the source and origin of the removal of the applicant's Australian citizenship. I shall do this before consideration of the constitutional validity of such laws, so construed39. Such a course is usually adopted, so as to avoid unnecessary invalidation of legislation, where a dispute can be resolved without recourse to such a drastic constitutional remedy. The issues for decision: Approached in this way, the issues are: The Regulation issues: These issues are: (a) Under reg 4 of the Papua New Guinea Independence (Australian Citizenship) Regulations ("the Regulations"), did the applicant cease to be an Australian citizen under the Australian Citizenship Act 1948 (Cth) ("Citizenship Act") on Papua New Guinea's Independence Day40? 38 Joint reasons at [4]. 39 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 186; Fairfax v Federal Commissioner of Taxation (1965) 114 CLR 1 at 7; R v Hughes (2000) 202 CLR 535 at 565 [66]; Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 at 662 40 "Independence Day" is specified in s 3(1) of the PNG Independence Act as 16 September 1975. Kirby If so, was such a provision one that might be made by regulation within the power to make regulations granted by the Papua New Guinea Independence Act 1975 (Cth)? The Australian constitutional issues: If the answers to the foregoing issues are in the affirmative: (a) Was it competent to the Federal Parliament, and to the makers of the Regulations, to provide in such a way for the deprivation of Australian citizenship? Or were such purported laws beyond the powers the Parliament? regulation-makers and of respectively of the (b) Having regard to the answers to the foregoing questions, is the applicant liable to detention and removal from Australia under the Migration Act as an "alien"41 or otherwise? Or is such removal unavailable in his case because he has never lost his status as an Australian citizen or because he has never validly lost his constitutional status as an Australian national? The costs issue: Having regard to the answers to the foregoing issues, if the applicant should fail in his challenge to the invocation of the Australian Constitution and the Migration Act, should he be spared an order to pay the respondent's costs, having regard to the public interest in Australia in the resolution of the issues that he presented to this Court? Regulation issues: Application to the applicant Foreign law as an Australian factum: The impossibility of divorcing entirely the entitlements of the applicant under the Constitution of Papua New Guinea from his entitlements under federal law in Australia, is demonstrated by the terms of the Regulations. By reg 4(b), reference is made to the terms of the Constitution of Papua New Guinea. The applicable provisions of the foreign law are expressed as a factum, by reference to which the governing law of Australia is to be ascertained. There is no reason of legal principle why the ascertainment of Australian law cannot be performed by reference to a specified law of a foreign country. In the Australian Constitution itself42 reference is made to "the powers, privileges, and 41 Constitution, s 51(xix). 42 Constitution, s 49. Kirby immunities ... of the Commons House of Parliament of the United Kingdom" as a factum by which the powers, privileges and immunities of the Houses, Members and Committees of the Federal Parliament were to be ascertained until these were declared by the Federal Parliament. Subject to questions of validity, the ascertainment of the content of a regulation made under Australian law, by reference to the law of another nation, although unusual, presents no legal difficulty43. Least of all does it present a difficulty in the historical circumstances reflected in the Regulations. They were designed to deal with transitional circumstances necessary in respect of citizenship of the people of Papua New Guinea, to that time administered in an administrative union known as the Territory of Papua New Guinea as it was moving to political independence and legal sovereignty separate from Australia. PNG Constitution: Australian citizenship: The applicant relied on s 65(4)(a) of the Constitution of Papua New Guinea to avoid the loss of Australian citizenship in terms of reg 4(b). He argued that, whatever might have been believed, or assumed, in Papua New Guinea or even Australia, under Australian constitutional doctrine, as an Australian citizen, he enjoyed a right to permanent residence in Australia both as a matter of statutory construction and of constitutional principle. The point of statutory construction relied on was that expressed by this Court in Air Caledonie International v The Commonwealth44. There, the Full Court said45: "The right of the Australian citizen to enter the country is not qualified by any law imposing a need to obtain a licence or 'clearance' from the Executive." To any suggestion that this involved reading the Constitution of Papua New Guinea as subject to Australian law, rather than in accordance with the realities and expectations of that independent country, the applicant was entitled to say that such law had also adopted, as a factum, the Australian legal position in the expression of the citizenship rights of Australians under Australian law. Constitutional requirements might necessitate a different result. But what did Australian law immediately before Independence Day say of the right to permanent residence in Australia of persons, like the applicant, born in the Territory of Papua who, at birth, had been made an Australian citizen under Australian law? 43 cf Queensland v The Commonwealth (1989) 167 CLR 232 at 239. 44 (1988) 165 CLR 462. 45 (1988) 165 CLR 462 at 469 per Mason CJ, Wilson, Brennan, Deane, Dawson, Kirby Initially, when Papua, then British New Guinea, was placed under the authority of the Commonwealth by Letters Patent of the Crown in 190246 (and accepted by the Commonwealth in accordance with the Papua Act 1905 (Cth))47 there was no statutory concept of Australian citizenship. The nationality of all persons born in the Territory of Papua, as much as in the entire Commonwealth of Australia, was that of British subject. This was a nationality concept that operated throughout the British Empire. It was one reflected in the Australian Constitution itself48. This notion of nationality followed the rejection, at the Australian constitutional conventions, of the proposal to incorporate in the Australian Constitution the status of citizenship that had been adopted in the Constitution of the United States of America49. It followed that, upon the acquisition of Papua by the Commonwealth, there was no immediate need for separate legal provision to be made for the citizenship or nationality of those persons thereafter governed under Australian federal law, living in that territory. None was enacted or made. Nor was separate provision made when, in 1920, the former German New Guinea was placed under the administration of the Commonwealth, pursuant to a mandate of the League of Nations and accepted in those terms by the Federal Parliament50. However, the separate status, for nationality purposes, of persons born in, or migrating to, New Guinea was recognised during the mandate and later when New Guinea became a Trust territory of the United Nations. This was so because, as such, those persons were not born or located within a dominion of the Crown. They were not, therefore, entitled to the nationality status of British subjects. 46 Joint reasons at [5]. 47 s 5. See joint reasons at [5]. 48 Constitution, ss 34(ii), 42, 117. 49 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 3 March 1898 at 1786-1801. The specific concern of Mr Josiah Symon was that, if a power with respect to citizenship were placed in the hands of the Commonwealth, the Parliament could legislate to deprive a person of such citizenship: see Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1763-1764; Singh v The Commonwealth (2004) 78 ALJR 1383 at 1407 [101]-[103] per McHugh J; 209 ALR 355 at 388; cf Koessler, "'Subject', 'Citizen', 'National' and 'Permanent Allegiance'", (1946) 56 Yale Law Journal 58. 50 New Guinea Act 1920 (Cth). See Thompson v Minister for Immigration and Multicultural Affairs (2004) 136 FCR 28 at 38 [32]-[33]. Kirby The need to provide separately, at least for the citizenship of those born in, or migrating to, the Territory of Papua, only arose as a practical matter when the statutory concept of Australian citizenship was introduced by legislation in terms of the Citizenship Act51. Under that Act, out of respect for the separate status of New Guinea as a Trust territory of the United Nations, a distinction was drawn, relevantly, between persons born in Australia (including Papua) and persons born in New Guinea. The former became Australian "citizens". The latter were recognised, instead, as Australian "protected persons"52. The applicant latched onto this distinction. As a person born in Papua, an external territory of the Commonwealth defined by federal law as part of Australia53, the applicant claimed identical treatment with all other persons born within the territory of the Commonwealth, as defined by the applicable Australian law. In this sense, inconvenient as it might be for the citizenship rights of persons in the new Independent State of Papua New Guinea (and contrary to the unifying concept of its Constitution), the applicant sought to distinguish Papuans from New Guineans for Australian legal and constitutional purposes. He claimed the benefit of the distinction which, he submitted, was founded both in established constitutional principle (common status as "subjects of the Queen") and on the applicable statutory differentiation (under the Citizenship Act). The applicant's interpretation rejected: Against this background of history and enacted law, the applicant argued that he had a vested right, as an Australian citizen by birth, to permanent residence in Australia. Accordingly, he was within the exception acknowledged in s 65(4)(a) of the Papua New Guinea Constitution, as, by inference, were all other persons born in Papua who were Australian citizens by birth on Independence Day. Whilst I regard this contention as presenting an arguable proposition, it is not one that I would accept as the preferable meaning of s 65 of the Constitution of Papua New Guinea, so far as it is incorporated into Australian law by the reference made to it in reg 4(b) of the Regulations. 51 See ss 10(1) and 5(1) of the Citizenship Act defining "Australia" as including "Norfolk Island and the Territory of Papua". See also Nationality and Citizenship Act 1953 (Cth), s 2(a) read with Acts Interpretation Act 1901 (Cth), s 17(pa). 52 Rubenstein, Australian Citizenship Law in Context, (2002) at 81 [4.3.1.1]. See also Galligan and Roberts, Australian Citizenship, (2004) at 21-26. 53 Acts Interpretation Act 1901 (Cth), s 17(pa). See also the Citizenship Act, s 5(1), definition of "Australia". Kirby First, it is clearly not the way in which the lawmakers, enacting the Australian statutory provisions in 1948, providing for Australian citizenship, thought they were proceeding54. The Minister responsible for the Citizenship Act was specifically asked in the Parliament whether a "native of Papua" was, under the legislation entitled to come to Australia and enjoy the right to vote in "We do not even give them the right to come to Australia. An Englishman who came to this country and complied with our electoral laws could exercise restricted rights as a British subject, whereas a native of Papua would be an Australian citizen but would not be capable of exercising rights of citizenship." The Minister's statement to the Federal Parliament, and the repeated references to ethnicity and race in the parliamentary debates, reflected a concern, very much alive at the time of the enactment of the Citizenship Act, to preserve to the Commonwealth the power to exclude from entry into the Australian mainland foreign nationals and even British subjects who were "ethnologically of Asiatic origin" or other "pigmentation or ethnic origin"56. Secondly, this was also the way in which the Citizenship Act was administered in relation to Australian citizens who were "natives of Papua". Indeed, it remained so from the passage of the Citizenship Act until the Independent State of Papua New Guinea gained its independence. An acknowledgment of the perceived realities appears in many documents published in Papua New Guinea before and after such independence. Thus, in the Encyclopaedia of Papua and New Guinea, issued just before independence, an entry concerning "Nationality and citizenship" acknowledged that "[l]egally, Papuans have the status of Australian citizens, whereas New Guineans are 'Australian protected persons'"57. However, in practice, this distinction was said 54 Australia, House of Representatives, Parliamentary Debates (Hansard), 30 November 1948 at 3658 (Mr Calwell, Minister for Information and Minister for Immigration). 55 Australia, House of Representatives, Parliamentary Debates (Hansard), 30 November 1948 at 3660. 56 Australia, House of Representatives, Parliamentary Debates (Hansard), 30 November 1948 at 3658. 57 Grosart, "Nationality and Citizenship", in Ryan (ed), Encyclopaedia of Papua and New Guinea, (1972) vol 2, 838 at 838. See also Hassall, "Citizenship", in Regan, Jessep and Kwa (eds), Twenty Years of the Papua New Guinea Constitution (2001) ch 16, 255 at 255. Kirby to mean little. Members of both communities were treated the same when it came to entry to the Australian mainland. A favourable gloss was put on this position by 1971 when a spokesperson for the Administrator of the Territory of Papua New Guinea proposed a single form of citizenship "in preparation for self-government"58. However, the true source of the failure of Australian authorities in Papua and New Guinea and on the mainland to differentiate nationality in practice was more likely based in the determination to control entry into the Australian mainland of all persons, including nominally Australian "citizens" and undoubted British subjects governed under Australian law but "ethnologically" of non-European origin and different skin colour from the majority of the "people of the Commonwealth"59. The provision of Australian citizenship under the Citizenship Act afforded to Papuans no automatic right to travel to, or reside in, the Australian mainland, or to participate in Australian elections or in other civic duties such as jury service. In practice, such persons, although called "citizens", were required to secure an "entry permit", without which they were treated as a "prohibited immigrant" and liable to deportation60. Thirdly, the textual foundation for the foregoing practice, as applied to Australian citizens who were "Papuan natives", is found after 1958 in s 5(4) of the Migration Act, as then appearing. That sub-section excluded from the definition of entry or re-entry to Australia, a person who had "left Australia" and "returned to Australia ... without having entered any country other than a Territory of the Commonwealth outside Australia". This provision shows that the Federal Parliament considered that going to an external territory of the Commonwealth (such as Papua) amounted to leaving "Australia". The Acts Interpretation Act 1901 (Cth) as then applying61, which excluded most external territories (including Papua) from the definition of "Australia", confirms the inference, thus arising, that such an external territory was not part of Australia for the particular purpose of exemption from entry permits. Certainly, this was the view of the law taken at that time. The grant of statutory "citizenship" of 58 Grosart, "Nationality and Citizenship", in Ryan (ed), Encyclopaedia of Papua and New Guinea, (1972) vol 2, 838 at 838. 59 see eg Australia, House of Representatives, Parliamentary Debates (Hansard), 30 November 1948 at 3658. 60 Under the Migration Act 1958 (Cth), s 18. See Minister for Immigration and Multicultural and Indigenous Affairs v Walsh (2002) 125 FCR 31 at 35-36 [15]- 61 s 17(a). Kirby Australia to natives of Papua must be understood in the light of this significant legal inhibition upon the rights belonging to such "citizens". Fourthly, the foregoing circumstance being well known in Papua (and also New Guinea) at the time the Constitution of the Independent State of Papua New Guinea was adopted, adds a further reason to give meaning to the provisions of that Constitution, as they were understood in that country immediately before independence. It was to cure the indignity of a largely nominal Australian citizenship; to abolish the differentiation between the nationality status of Papuans and New Guineans; and to fulfil the national aspirations of that new nation, that the Constitution of Papua New Guinea drew the distinction expressed in s 64 between "real foreign citizenship" and other such citizenship62. According to this distinction, whilst Papuans in the Territory of Papua before Independence Day enjoyed, by Australian law, a form of Australian citizenship it was not, in fact or law, full or real citizenship63. Indeed, it was no more than nominal citizenship, applicable for limited purposes, such as securing a passport for overseas travel. It conferred few rights and specifically no rights freely to enter the States and internal territories of Australia, as other Australian citizens might do. Nor did it permit its holders to enjoy permanent residence in the States and internal territories of the Commonwealth. On this basis, it could not be said, within the Constitution of Papua New Guinea (and thus within the Regulations, reg 4(b)) that, on Independence Day, the applicant had a "right of permanent residence" in Australia. He had not before that day entered Australia or sought to gain or assert such permanent residence. He was never "granted a right" under the then Australian law, to do so64. In referring, as it did, to the grant of such a right, including in relation to persons born in the former Territory of Papua, the Constitution of Papua New Guinea accurately expressed the reality, and the then understanding, of the provisions of the law of Australia. On this footing, the interpretative argument of the applicant must be rejected. Were such an argument necessary, or relevant, to a contemporary issue 62 PNG Constitution, s 64(1) and (4). 63 Recent discussion of theories of citizenship has focused on the variable meanings of citizenship, noting that its substantial content is dependent on the particular legal, political and social context: see eg Rubenstein, Australian Citizenship Law in Context, (2002) at 3-4; Bosniak, "Citizenship Denationalized", (2000) Indiana Journal of Global Legal Studies 447. 64 PNG Constitution, s 64(4)(a). Kirby before an Australian court, different considerations would apply. The attitudes to ethnicity and to skin pigmentation, reflected in the understandings and administration of Australian federal law before the independence of Papua and New Guinea were different from those now existing in Australian law. But reg 4(b) of the Regulations expressed legal consequences by reference to historical facts at the given time of 1975. At that time, and by virtue of the provisions of the Constitution of Papua New Guinea, that regulation clearly purported to deprive the applicant of his Australian citizenship of birth. This conclusion presents the issues whether such a provision is valid having regard to the way in which the result was achieved by regulation and, if so, whether the law so providing offended enduring Australian constitutional norms that deprived the regulation of validity. Regulation issues: Validity and effectiveness of reg 4 Deprivation by regulation: The applicant next complained that, interpreted as above, the provisions of reg 4(b) of the Regulations fell outside the power to make regulations contained in the Papua New Guinea Independence Act 1975 (Cth). The applicable power appears in s 6(1) of that Act in conventional language. It empowered the Governor-General to make provision "for or in relation to matters arising out of or connected with" the attainment of independence of Papua New Guinea. The report of the Constitutional Planning Committee, the body that prepared the Constitution of Papua New Guinea, and the terms of that Constitution itself, make it clear that citizenship of the new Independent State was a matter of great significance for the people of Papua New Guinea65. It was also important for Australians whose families derived from the Australian mainland, some of whom had been born in Papua or New Guinea or had established economic and other links with the country. On the face of things, an argument that reg 4(b) of the Regulations fell outside the wide words of connection contemplated by the Act appears hopeless. Nevertheless, the applicant relied on a long line of decisional authority in this Court, from its earliest days66, to the effect that the fundamental rights of individuals will not be overthrown by or under legislation unless this is done with 65 Goldring, The Constitution of Papua New Guinea: A Study in Legal Nationalism, 66 eg Potter v Minahan (1908) 7 CLR 277. Kirby "irresistible clearness"67. In the contemporary circumstances of substantial and detailed parliamentary legislation, Australian courts are more vigilant to safeguard individual rights against needless or accidental derogations of fundamental rights and freedoms68. Many cases, old and new, illustrate the application by this Court of this important principle of interpretation69. The applicant submitted that the foregoing principle applied in his case because, as it was put, it was unlikely in the extreme that the status of Australian citizenship would be taken away under an elliptical provision in which the deprivation, said to apply to hundreds of thousands of Australian citizens in Papua, was not spelt out in terms by an Australian statute but left to a curious indirect route chartered by reference to the constitutional law of a foreign country. Furthermore, the applicant argued that it was even more unlikely that such an important legal change would be left to be made by the Executive Government. The Parliament had enacted Australian citizenship for Papuan-born subjects of the Crown so that it could be expected that the Parliament itself, if it so intended, would take away the citizenship so granted. It would not leave that serious consequence to rule-making by the Executive. Regulation valid and effective: Once again, I accept that these are available arguments. However, in the end, they do not persuade me. First, it has not been unusual in the legislation affording independence to former colonial and equivalent territories for the legislature of the former governing power to leave it to subordinate legislation, or orders in council, to provide for the detail of such nationality and citizenship provisions70. Provided such subordinate laws are themselves within power, including any applicable constitutional power, there is no reason why that means might not be deployed. Doing so affords the opportunity, in sometimes complex and controversial circumstances, more readily to amend or supplement legal rules as events prove necessary. 67 Potter v Minahan (1908) 7 CLR 277 at 304. See also Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11], 555 [16], 577 [90], 578 [94]. 68 cf Buck v Comcare (1996) 66 FCR 359 at 364 per Finn J. 69 See eg Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commissioner (2002) 213 CLR 543. 70 See eg Hong Kong (British Nationality) Order 1986 (UK) (No 948): see Fransman, British Nationality Law, (1998) at 584-585, 597. Kirby Secondly, there was a particular reason in the present case for the observance by Australia of such deference to the Constitution of Papua New Guinea. This was the strong desire, reflected in the Constitution of the new Independent State, to provide a local or indigenous foundation for its new constitutional law (including in respect of citizenship). This historical fact helps in the understanding of the choice made by the Australian lawmakers of a style of legislation that avoids notions of a "grant of independence". Instead, the Australian lawmakers respected the claim of the new Independent State to make its own laws concerning independence, including on the subject of the citizenship of those persons living within its borders. Both the terms and manner of providing for such citizenship, as expressed in reg 4(b) of the Regulations, reflect these concerns of constitutional policy. Subject to any Australian constitutional disqualification, there is no legal deficit in proceeding in this way. Thirdly, the historical considerations, already described, help to indicate why, in 1975, the Australian lawmakers did not regard it as an impermissible infringement of established rights of Australian citizenship to provide for their abolition in the manner chosen, including by regulation. This was because, up to that time, the Australian lawmakers, like those who drafted the Constitution of Papua New Guinea, did not consider the nominal Australian citizenship afforded to those born in Papua New Guinea after 26 January 1949 as "real … citizenship" of Australia71. It is true that, under Art 13(2) of the Universal Declaration of Human Rights72, it is provided that "everyone has the right to leave any country, including his own, and to return to his country". It is also true that under Art 12(4) of the International Covenant on Civil and Political Rights73 ("ICCPR"), it is provided that "no one shall be arbitrarily deprived of the right to enter his own country". It is likewise true that Australia is now a party to the First Optional Protocol to the ICCPR and that the provisions of that instrument are available to influence the interpretation of Australian statue law74, including, in my opinion, a 71 PNG Constitution, ss 64(1) and 64(4)(b). 72 Adopted by the United Nations General Assembly, Resolution 217A(III), 10 December 1948. 73 Adopted and opened for signature by the United Nations General Assembly, Resolution 2200(XXI), 16 December 1966; entered into force on 23 March 1976 in accordance with Art 49. Entered into force with respect to Australia on 13 November 1980: see [1980] ATS 23. 74 cf Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 492 [29] per Kirby law made before ratification of the treaty and signature of the First Optional Protocol75. However, these provisions do not assist the applicant. As I have demonstrated, the expectations and administration of the Australian law before Independence Day did not treat Australia as the "country" or "own country" of a person such as the applicant. His true "country" remained Papua. The veneer of "Australian citizenship" did not afford him a right to enter or "return" to mainland Australia. This may have been in breach of international law, especially as it is now understood. But so have been many aspects of Australian statute law governing immigration before the independence of Papua New Guinea76 and perhaps since77. There is no ambiguity sufficient to construe reg 4(b) of the Regulations so as to avoid the deprivation of the basic human right of nationality. When that "right" is examined more closely in this case, and especially when its incidents and practice are examined, the "right" of Australian citizenship granted by statute to Papuans is disclosed as having been a deliberately limited entitlement. In such circumstances, it is scarcely a cause for surprise (and not a reason of invalidity) that the extinguishment of such a status was effected by subordinate legislation, expressed in the manner chosen. Fourthly, it is necessary to add something out of fairness to those who, in 1975, provided for the removal of such Australian citizenship, both under the Constitution of Papua New Guinea and the Australian regulations giving its provisions legal force in Australia. The move would certainly have been viewed by the lawmakers involved, in both countries, as an affirmative step to extinguish the flawed "citizenship" that Australia had previously enacted for people born in the Territory of Papua (like the applicant) and to replace it with a "real citizenship" as afforded under the Constitution and laws of a new, independent and sovereign country having both the right and duty to provide for its own nationals. In place of a veneer of citizenship were substituted substantial and enforceable rights of citizenship of Papua New Guinea that conform to international law. As well, provision was made in transitional cases, in the 75 Coleman v Power (2004) 78 ALJR 1166 at 1211-1212 [245]-[251]; cf 1171-1173 [17]-[24] per Gleeson CJ; 209 ALR 182 at 244-246; 189-191. 76 See eg Immigration Restriction Act 1901 (Cth). 77 eg Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 78 ALJR 737 at 768-769 [169]-[173]; 206 ALR 130 at 172-173; Re Woolley; Ex parte Applicants M276/2003 (2004) 79 ALJR 43 at 79 [173], 84 [201]; 210 ALR Kirby limited categories specified, for the retention of any "real" Australian citizenship earlier acquired78. The applicant fell outside those special, residual categories. It follows that his arguments based on the Regulations fail. It remains only to consider the constitutional validity of the Australian laws that have such a consequence for him. The constitutional issues Deprivation of citizenship: validity: The applicant submitted that the Australian Federal Parliament lacked power to make, and thus to authorise the Executive Government to make, a federal law in terms of reg 4(b) of the Regulations, depriving him of Australian citizenship previously granted under the Citizenship Act. Thus, he was not an "alien"79; nor was he subject to the immigration power80, the implied nationhood power81, the external affairs power82 or any other paragraph of s 51 of the Australian Constitution permitting such a course. The applicant submitted that it was also not within the territories power83 for the Federal Parliament to enact a law on citizenship that would support reg 4(b) of the Regulations. On the contrary, so it was put, all of the foregoing lawmaking powers were constrained by a broader constitutional principle that prevented the Federal Parliament and the Executive Government of the Commonwealth from depriving a person such as the applicant of his fundamental constitutional status as an Australian national ("citizen"). This status was described by reference to the provisions in the Constitution referring to a "subject of the Queen" or the notion of the "people of the Commonwealth"84 that ultimately defined Australian constitutional nationality85. 78 PNG Constitution, s 64(4). 79 Constitution, s 51(xix). 80 Constitution, s 51(xxvii). 81 Davis v The Commonwealth (1988) 166 CLR 79 at 98-99, 101-104, 110-111. 82 Constitution, s 51(xxix). 83 Constitution, s 122. 84 Attorney-General (Cth); Ex rel McKinlay v The Commonwealth (1975) 135 CLR 1 85 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 478-479 [264]-[265]. Kirby The applicant was forced back to such constitutional concepts because Australian "citizenship", the right that had been afforded to him at birth, is not, as such, a constitutional status, at least in this connection86. If citizenship is no more than a statutory status, what the Parliament has provided to a person such as the applicant, in terms of the Citizenship Act, it can also take away. It can do so by repeal or by provision for deprivation of statutory rights considered by the Parliament to be no longer applicable87. However, the applicant here sought to take this Court's jurisprudence at its word. This Court's reasoning has sometimes assimilated constitutional notions of nationality (including the references to "British subject"88 and "subject of the Queen"89) by differentiating "citizens" from "aliens"90. The applicant invoked these texts to support his argument that, by affording him the status of citizenship at birth, Australia had conferred on him constitutional nationality. The self-same principle treating non-citizenship of Australia, and citizenship of a foreign state, as determinative of nationality for constitutional purposes91 was invoked by the applicant, stated in reverse. Because he was born an Australian citizen, with no other citizenship applicable at the time, he acquired Australian nationality. He was a member of the Australian community and owed allegiance in accordance with his citizenship. The applicant thus suggested that the Citizenship Act recognised not only a statutory but a constitutional status. It was not, therefore, competent to the Federal Parliament (at least without renunciation or incompatible action on his part, judged with due process) to deprive him of his constitutional status. The deficit (statutory citizenship by birth or naturalisation) that had deprived Mr Pochi92, Mr Nolan93, Messrs Te and Dang94 and Mr Shaw95 of immunity from 86 cf Sue v Hill (1999) 199 CLR 462 at 503 [96]-[97], 523-524 [159], 527-528 [171]. 87 Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 355-356 [13], 375-376 88 Sue v Hill (1999) 199 CLR 462 at 527-528 [171] per Gaudron J. 89 Street v Queensland Bar Association (1989) 168 CLR 461 at 505 per Brennan J, 525 per Deane J, 553 per Toohey J. 90 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178; Shaw v Minister for Immigration and Multicultural Affairs (2003) 78 ALJR 203; 203 ALR 143; Singh (2004) 78 ALJR 1383; 209 ALR 355. 91 See eg Singh (2004) 78 ALJR 1383 at 1427 [205]; 209 ALR 355 at 416. 92 Pochi v Macphee (1982) 151 CLR 101 at 109-110. Kirby the "aliens" power (and hence of deportation from Australia despite long residence here) was inapplicable in his case. On the contrary, he was a natural- born citizen and "national" and thus constitutionally incapable of being prevented from coming to and remaining in Australia, just like any other "citizen". If he could be deprived of constitutional nationality, and of rights ordinarily inhering in that notion, the same could be done to any other Australian who was also a citizen by birth. Against that risk, notions lying deep in the Constitution provided a protection that should be afforded to him against the possibility that they might one day be needed for others. It will be evident, in this description of the way in which the applicant's case was presented, that I regard it as having more substance than others appear to perceive in it. The deprivation of nationality, including nationality by birth and especially in cases affecting minority ethnic communities96, has been such a common affront to fundamental rights that I would not, without strong persuasion, hold it to be possible under the Constitution of the Australian Commonwealth. It will be necessary to return to the notion of fundamental rights of Australian nationality inherent in the applicant's arguments, and whether they attached to the applicant. But first, it is appropriate to consider the suggested heads of legislative power under which the respondent Minister supported the federal laws that she said had deprived the applicant of his Australian citizenship. Deprivation: territories power: The primary way in which the respondent argued the validity of the Australian laws was by reference to the provision of the Constitution affording the Federal Parliament the power to "make laws for the government of any territory … placed by the Queen under the authority of and accepted by the Commonwealth"97. 93 Nolan (1988) 165 CLR 178 at 183. 94 Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162. 95 Shaw (2003) 78 ALJR 203; 203 ALR 143. 96 Notably (but not only) Jews in the German Third Reich and in countries ruled or affected by the Nazi nationality laws. See Curtis, Verdict on Vichy: Power and Prejudice in the Vichy France Regime, (2003) at 116-117. Under the Vichy regime in France, laws were successively made to strip of French nationality those who had acquired it after 1927. Such laws were extended to French overseas protectorates and colonies and later expanded to apply to other French nationals. 97 Constitution, s 122. See Fishwick v Cleland (1960) 106 CLR 186. Kirby The wide ambit of the territories power has been repeatedly emphasised in decisions of this Court. Many decisions have suggested the distinctiveness of the powers afforded by this separate, general conferral of lawmaking authority98. On the other hand, from early days, the need has been expressed to integrate s 122 in the Constitution and to read it "with the entire document" so that it is not "disjoined from the rest of the Constitution"99 but allows the decision-maker to "treat the Constitution as one coherent instrument for the government of the federation, and not as two constitutions, one for the federation and the other for its territories"100. In case of uncertainty about the ambit of this power, I favour the latter approach, believing it to be more consonant with general principles of constitutional interpretation101. The applicant latched onto this issue. He urged that any limitations specifically imposed by the Constitution on the power of the Australian Federal Parliament to deprive him of Australian nationality in the form of citizenship enjoyed at birth (as under the "aliens" power or the "immigration" power) could not be overcome in his case simply because he was born in a territory of the Commonwealth. In this respect, the applicant invoked the reasoning, adopted in another context, by which the Court had declined to permit attempted circumvention of the "just terms" guarantee in s 51(xxxi) of the Constitution by the adoption of a "circuitous device" of legislation relying on some other, specific, head of power to effect the acquisition102. that, were The applicant submitted it would be constitutionally permissible for the Federal Parliament, in reliance upon s 122 of the Constitution, to deprive all or some Australians born within internal territories of their Australian nationality (called citizenship). If it could be done to him, the applicant suggested, it could be done to them. the Commonwealth of it otherwise, 98 see eg Buchanan v The Commonwealth (1913) 16 CLR 315 at 326-328, 335; R v Bernasconi (1915) 19 CLR 629 at 635, 637-638; Teori Tau v The Commonwealth (1969) 119 CLR 564 at 569-570. 99 Lamshed v Lake (1958) 99 CLR 132 at 145 per Dixon CJ. 100 Lamshed v Lake (1958) 99 CLR 132 at 154 per Kitto J. 101 Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 566-567, 653; Re Governor, Goulburn Correctional Centre; Ex parte Eastman (1999) 200 CLR 322 at 372-374 [130]-[132]. 102 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349 per Dixon J. See also Attorney-General (Cth) v Schmidt (1961) 105 CLR 361 at 371-372. Kirby This apparently startling consequence does not follow as a matter of constitutional analysis. Even if the territories of the Commonwealth are not disjoined from the rest of the nation, a clear textual distinction is drawn in s 122 between "any territory surrendered by any State to and accepted by the Commonwealth", (such as the Australian Capital Territory and the Northern Territory of Australia) and "any territory placed by the Queen under the authority of and accepted by the Commonwealth" or "otherwise acquired by the Commonwealth" (such as Papua and the mandated, subsequently trusteeship, territory of New Guinea respectively). Given this textual distinction, it is permissible, reading s 122 of the Constitution with the other provisions of that document, to differentiate between the making of laws for the government of territories of the first kind and for the government of territories of the second and third kinds. This is because territories of the first kind are, by definition, within the continental description of Australia as constituted by the former Australasian colonies of the Queen named in the covering clauses103. It is the people of those colonies whose assent led to the creation of the united federal Commonwealth under the name of the Commonwealth of Australia. later By contrast, other possessions of the Crown at the time of Australian federation (whether New Zealand104, Papua, the Fiji Islands or other territories potentially then regarded as possible future parts of the Commonwealth) are to be treated as having a different status. Such differentiation finds still further reflection in s 122 of the Constitution by the recognition that the representation of territories "in either House of the Parliament" was to depend on action of the Federal Parliament itself. It was for it to decide "the extent and … the terms" for any such representation. Similarly, when s 128 of the Constitution was amended in 1977105, to permit the people of the Commonwealth in a "territory" to participate in referendums for the amendment of the Constitution, such entitlement was confined to the electors qualified to vote for the election of members of the House of Representatives in a territory "in respect of which there is in force a law allowing its representation in the House of Representatives". Only the "internal" territories of Australia have ever fallen within this class. Australian citizens in the Territory of Papua who were not otherwise entitled, never enjoyed rights as "electors", as that word is used in the Constitution. 103 Covering cl 3. See Commonwealth of Australia Constitution Act 1900 (Imp), s 3. 104 Mentioned in covering cl 6 (definition of "The States"). See Commonwealth of Australia Constitution Act 1900 (Imp), s 6. 105 Constitution Alteration (Referendums) 1977 (Cth), s 2. Kirby Inherent in the power to make laws for a territory "placed by the Queen under the authority of and accepted by the Commonwealth" (as Papua was) is a power to make laws providing for the termination of that acquisition and for the independence of that territory. Whether or not this was a notion originally contemplated when the independence secured under the Constitution by the Australian colonies themselves, it is an interpretation apt to the constitutional language and purpose in the political events that have occurred over the intervening century. Such political events interpretation of a national constitution106. Thus, in Reference re Secession of Quebec107, the Supreme Court of Canada remarked: the Constitution was adopted, by analogy inevitably influence the "The ultimate success of such a secession [by Quebec] would be dependent on effective control of a territory and recognition by the international community." By these criteria, the enactment of laws providing for the independence and separate sovereignty of the Territory of Papua within the new Independent State of Papua New Guinea (and for consequential changes to the nationality of people resident there) was within the ambit of the lawmaking power provided by s 122 of the Constitution, read with today's eyes. territories is different. The participation The spectre of the potential misuse of the same power in relation to an internal territory can be put aside. The textual foundation in s 122 for the the government of such Commonwealth of Australians resident there is recognised in the language of the Constitution. The divestment from the Commonwealth of such territories, and the the deprivation of nationality Commonwealth and electors, by reference to their connection with such territories, would present distinct questions that need not be decided in this case. Subject to what follows, I would hold that the power to accept or acquire a the territory Commonwealth), the Commonwealth of such a territory. It also necessarily carries with it the power to make laws providing for the future nationality of a person ordinarily resident in such an external territory at the time of that divestment, such as the applicant. surrendered by a State of to divest the power ("citizenship") status of people of that carries with (otherwise territories is one than 106 cf Singh (2004) 78 ALJR 1383 at 1426 [198]; 209 ALR 355 at 414. See also Sue v Hill (1999) 199 CLR 462 at 488 [53], 526 [168]. 107 [1998] 2 SCR 217 at 274-275 [106]. Kirby Deprivation of nationality: aliens power: Both the applicant and respondent relied on the "aliens" power108 under the Australian Constitution to support their respective submissions. The respondent called that power in aid to provide a second and supplementary foundation for the Australian laws limiting and eventually abolishing, the applicant's status as an Australian citizen. The applicant submitted that the aliens power, as elaborated by this Court, did not extend to him because from birth he had enjoyed Australia nationality as a citizen and could not retrospectively be made an alien. Moreover, the applicant argued that the specific limitation on the power to deprive him of his Australian nationality flowed over to limit the use for that purpose of the general provisions of the territories power. In this respect, he said, the general grant was subject to the specific restriction. In Re Patterson; Ex parte Taylor109, a majority of this Court overruled the earlier decision of the Court in Nolan v Minister for Immigration and Ethnic Affairs110. In respect of a substantial number of British subjects resident in Australia who are not Australian citizens, this Court rejected the contention that they were aliens within the Constitution susceptible, as such, to removal from the Commonwealth. The majority view in Re Patterson rested on a rejection of the earlier opinion that "alien", within the Australian Constitution, was an antonym to "citizen" under the Citizenship Act. Instead, at the time relevant to that case, the majority concluded that persons in the given class enjoyed a status as Australian "nationals", that is Australian subjects of the Queen who could not be deprived of that status by, or under, legislation enacted by the Parliament. Had this view of Australian nationality prevailed in this Court, the applicant in the present case might have enjoyed a foundation for his argument that, being an Australian citizen by birth, he enjoyed Australian nationality under the Constitution and could not be divested of it in the manner attempted, any more than any other Australian national could lose the equivalent status under the Constitution. However, the reasoning in Re Patterson was overruled by this Court, in its new membership, in Shaw v Minister for Immigration and Multicultural Affairs111. Whilst adhering to the view that I expressed in Re Patterson, I have accepted that the constitutional doctrine in Nolan has, for the time being, been 108 Constitution, s 51(xix). 109 (2001) 207 CLR 391. 110 (1988) 165 CLR 178. 111 (2003) 78 ALJR 203; 203 ALR 143. Kirby restored112. Some day the issue in Re Patterson and Shaw may be revisited. Certainly, the decision in Shaw, like that of Nolan, exposes to expulsion and seriously unfair treatment subjects of the Queen who have lived in mainland Australia for years, voted in elections and referenda, performed jury service and other civic duties and fought in the Australian Defence Forces. To me this is an offensive doctrine affecting hundreds of thousands of persons in a residual class of effective Australian nationals. I hope that it will be reversed as its offensiveness to constitutional concepts of nationality and allegiance becomes obvious, and before more wrongs are done under it. For the moment, however, it must be accepted that Nolan and Shaw state the applicable constitutional rule. This conclusion presents a significant hurdle for the applicant. If the British subjects long resident as of right in the Australian mainland (most of them born in the United Kingdom) enjoy no status as Australian nationals protected by the Australian Constitution, how much weaker is the applicant's claim? Although a citizen, he could not come to, still less reside in, Australia before 1975 without specific permission. He had no right (still less a duty) to vote in Australian elections and referenda. He could perform no jury or other civic service in Australia. To all intents, he was treated as a foreigner; whereas the group denied nationality status in Nolan and Shaw were (and still are) apparently assimilated as part of the "people" and "electors" of the Commonwealth under the Constitution. The applicant sought to circumvent this difficulty by reliance on suggestions in the reasoning of the newly re-established majority in Shaw and Singh v The Commonwealth, that the status of "alien" in s 51(xix) of the Constitution had become synonymous with "non-citizen"113. Thus, he called in aid the reasoning of Gleeson CJ in Singh114: "Brennan, Deane and Dawson JJ said in Chu Kheng Lim v Minister for Immigration115, that the effect of Australia's emergence as a fully independent sovereign nation with its own distinct citizenship was that alien in s 51(xix) of the Constitution had become synonymous with non- citizen. … Within the class of persons who could answer that description, Parliament can determine to whom it will be applied, and with what consequences." 112 Singh (2004) 78 ALJR 1383 at 1437 [265]; 209 ALR 355 at 430-431. 113 See eg Cunliffe v The Commonwealth (1994) 182 CLR 272 at 375; cf Singh (2004) 78 ALJR 1383 at 1411 [122] per McHugh J; 209 ALR 355 at 394. 114 (2004) 78 ALJR 1383 at 1385 [4]; 209 ALR 355 at 357. 115 (1992) 176 CLR 1 at 25, referring to Nolan (1988) 165 CLR 178 at 183-184. Kirby Because he had been born an Australian citizen, the applicant argued that he enjoyed, from his birth, an immunity from being treated by the Federal Parliament as a non-national or "alien". He urged that s 122 of the Constitution would be read as "subject to the Constitution" and thus subject to this specific limitation on the powers of the Parliament to deprive a person such as himself, a citizen by birth, of the nationality status that came with that designation. There are many difficulties in this argument. Subject to the Constitution, what Parliament enacts, it can amend or repeal. This is the flaw in suggesting that, by the Citizenship Act, the Parliament conclusively, for all purposes and for all time, defined those who were Australian nationals and thus "non-aliens" for constitutional purposes. It deprives the separate constitutional idea of Australian nationality of any content. The notion that nationality (including for constitutional purposes) is fixed in every case by the place of birth, is not one that gained the acceptance of this Court in Singh116. It was there held, by a majority117, that it was competent for the Australian Parliament to impose, in addition to birth, other appropriate tests or disqualifications as the notion of admission to nationality had evolved within the Commonwealth. Although many countries of the world accept variations on a principle of nationality expressed in terms of jus soli (law of the place of birth), more have embraced the rule of jus sanguinis (law of descent). Singh accepts that the Federal Parliament may, within limits fixed ultimately by the courts, enact laws that adopt variations of both of these principles. International law recognises that nationality normally falls to be determined by the domestic law of each nation state118. In the view of the majority, the disqualifying element in Ms Singh's case was that, at birth, she was a citizen of a foreign state (India) and thus subject to the "aliens" power in the Australian Constitution119. Yet even these arguments are not conclusive. Unlike Messrs Pochi, Nolan, Taylor, Te, Dang and Shaw and Ms Singh, the applicant was not at birth a 116 (2004) 78 ALJR 1383; 209 ALR 355. 117 Gleeson CJ, Gummow, Hayne, Heydon JJ and myself; McHugh and Callinan JJ dissenting. 118 Brownlie, Principles of Public International Law, 6th ed (2003) at 373. See Nationality Decrees issued in Tunis and Morocco (Advisory Opinion) [1922] PCIJ Series B No 4 at 24. 119 Singh (2004) 78 ALJR 1383 at 1392 [30], 1416 [144], 1427 [205], 1438 [272]; 209 ALR 355 at 366-367, 400, 416, 432. Kirby "citizen or subject of a foreign State"120. At the instant that the Australian legislation and Regulations took effect in 1975, the Constitution of the Independent State of Papua New Guinea came into force and the Australian law was intended to facilitate the achievement of the purposes of that Constitution providing a new and different citizenship for persons living within the borders of that country, having defined links to its territory and peoples. Subject to the exceptions there defined, from the moment those laws took effect the applicant received a new nationality which, under those laws, he still holds. He therefore is, and has since Independence Day been, a citizen of a foreign state. As such, in accordance with Singh, it was competent for the Australian Parliament, in addition to the powers it enjoyed under s 122, to provide for the termination of the applicant's statutory status of Australian citizen in consequence of his new status of a citizen of Papua New Guinea. It did not have to do so. It might have provided for dual citizenship (a later legal development in Australia). But as a matter of constitutional power, the legal entitlement existed. The change in the applicant's status as a citizen, as an incident to the achievement of the independence and national sovereignty of a former territory of the Commonwealth, affords no precedent for any deprivation of constitutional nationality of other Australian citizens whose claim on such nationality is stronger in law and fact than that of the applicant. The acceptance of the validity of constitutional powers propounded by the respondent in this case does not therefore present any risk that later laws might purport to divest Australian nationals of their status as such, based on the decision in this case121. It follows that, having regard to the particular historical circumstances of this case and the fragile and strictly limited character of the "citizenship" of Australia which the applicant previously enjoyed, no requirement was implicit in the Australian Constitution that afforded the applicant rights of due process that might arise in another case in other circumstances of local nationality having firmer foundations122. Nor is it necessary, in light of these conclusions, to consider further the fundamental constitutional questions that would arise were the Federal Parliament ever to attempt to extend the deprivation of Australian nationality (including statutory citizenship) beyond the strictly limited categories of cases provided by the present law123. The laws which the applicant challenged 120 Milne v Huber 17 Fed Cas 403 at 406 (1843), cited in Singh (2004) 78 ALJR 1383 at 1427 [205]; 209 ALR 355 at 416. 121 Patidar, "Citizenship and the Treatment of American Citizen Terrorists in the United States", (2004) 42 Brandeis Law Journal 805 at 808-814. 122 cf Kruger v The Commonwealth (1997) 190 CLR 1 at 63. 123 Citizenship Act, ss 18, 19, 21. Kirby in these proceedings replace shadows with substance; appearances and mere titles with a new enforceable reality. There is no constitutional infirmity in the Australian laws that have facilitated that outcome124. As it has been defined by this Court up to Nolan and since Shaw, the "aliens" power applied to the applicant. Indeed, it did so from his birth. It did so notwithstanding the provision to him of a nominal statutory status of "citizen" which, when examined, fell far short of constitutional nationality. No question therefore arises of depriving the applicant of a supposed status of "non-alien" for Australian constitutional purposes. The territories and aliens powers reinforce and supplement each other. They afford an ample constitutional foundation for the validity of the Australian laws impugned by the applicant. Deprivation of nationality: conclusions: It is unnecessary to consider the other heads of legislative power relied on by the respondent to support the validity of the Australian laws in issue in this appeal125. Similarly, it is unnecessary to consider the question whether the foregoing interpretation of the specific heads of legislative power offends any fundamental notions concerning nationality, expressed or implied in the Constitution, to which the specific legislative powers are subject. I do not doubt that there are fundamental notions of nationality, sufficiently expressed126 or necessarily implied, in the Australian Constitution. However, the limited and special circumstances of the applicant's 124 In addition to becoming a citizen of Papua New Guinea on Independence Day, any previous constitutional status of the applicant as a "subject of the Queen" in right of Australia was changed to his relationship thereafter with the Queen in right of her position as Queen and Head of State of Papua New Guinea: see PNG Constitution, 125 Most notably, the immigration power (Constitution, s 51(xxvii)). The Minister argued that, notwithstanding the type of citizenship he acquired at birth, the applicant remained an "immigrant" because, by law, he continued to need permission to enter and stay in Australia and, in conformity with that law had sought and obtained extensions of that permission. After arriving in Australia in December 1999, the applicant held substantive visas for less than four months. In the remaining time he has held bridging visas or has not been in possession of a valid visa. cf Ex parte De Braic (1971) 124 CLR 162 at 164, 166. 126 eg as a "subject of the Queen", or as a member of the "people of the Commonwealth". Limits on the power of the United States Congress to deprive persons of citizenship were recognised in Vance v Terrazas 444 US 252 (1980). See also Perez v Brownell 356 US 44 at 64-65 (1958); Trop v Dulles 356 US 86 (1958); cf Aleinikoff, "Theories of Loss of Citizenship", (1986) 84 Michigan Law Review 1471. Kirby case do not require the refinement of such limitations. Whatever their precise ambit may be, the laws challenged by the applicant fall far short of offending such basic notions. International law: compatibility: Like judges of many final courts127, including recently128, I regard it as useful and proper to check conclusions affecting constitutional interpretation by reference to any relevant international law, and especially as such law relates to human rights and fundamental freedoms. Clearly, laws depriving people of a former status as citizens, utilising criteria that might be portrayed as based on racial or ethnic considerations, are arguably suspect. They invite consideration of any applicable principles of international law to check the validity of conclusions reached within the paradigm of Australian municipal law. When this approach is adopted in the present case, it is clear that the conclusion to which the foregoing analysis has brought me conforms to international law. Expressing the general position of customary international law in the case of the succession of states, Professor Ian Brownlie has stated that129: "[T]he evidence is overwhelmingly in support of the view that the population follows the change of sovereignty in matters of nationality." The Universal Declaration of Human Rights, Art 15, declares that "everyone has the right to a nationality" and that "no one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality". Although the applicant submitted that the Australian laws which he challenged (and the counterpart Constitution and laws of Papua New Guinea) amounted to an arbitrary deprivation of his Australian nationality, when examined against repeated state practice, the contrary is the case. Regulation 4 of the Regulations was not "arbitrary". It operated only in relation to a person who had already acquired citizenship of the new Independent 127 eg Lawrence v Texas 539 US 558 at 576 (2003); Reference re Public Service Employee Relations Act (Alta) [1987] 1 SCR 313 at 350; Matthew v State of Trinidad and Tobago [2005] 1 AC 433 at 463 [55]; Vishaka v State of Rajasthan 1997 AIR 3011 at 3015 (SC); cf Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1134-1136 [184]-[191], cf 1112-1115 [62]-[73] per McHugh J; 208 ALR 124 at 170-173, 140-145. See also Barak, "Foreword: A Judge on Judging: The Role of a Supreme Court in a Democracy", (2002) 116 Harvard Law Review 16 at 69. 128 Roper v Simmons 161 L Ed 2d 1 at 27 (2005) per Kennedy J for the United States Supreme Court. 129 Brownlie, Principles of Public International Law, 6th ed (2003) at 628. Kirby State under the Constitution of Papua New Guinea. This the applicant did. He did not lose a right to a nationality. He was not rendered stateless. His nationality status simply changed, by reason of the change of the sovereignty of the place of his birth, his long-term residence and the place of birth and residence of his forebears. Draft Articles on Nationality of Natural Persons in Relation to the Succession of States have been adopted by the International Law Commission130, designed to express the pre-existing international law and practice in this regard. By their Preamble, they pay due regard to the Universal Declaration of Human Rights and obligations of international law. Relevantly, they provide that "persons ... having their habitual residence in the territory affected by the succession of States are presumed to acquire the nationality of the successor State on the date of such succession" (Art 5). Moreover, the successor state is required to "attribute its nationality to persons ... having their habitual residence in its territory" (Art 24(a)). The "predecessor State" [in the applicant's case, Australia] is required to "withdraw its nationality from persons [who are] qualified to acquire the nationality of the successor State in accordance with article 24" (Art 25(1)). Such withdrawal of nationality is, under the Draft Articles, only restricted in the case of persons who "have their habitual residence" in the territory of the predecessor state; or continue to have an "appropriate legal connection" with the predecessor state; or have their habitual residence in a third state and have an "appropriate legal connection" with the predecessor state (Art 25(2))131. Although these Draft Articles were prepared, and adopted132 after the Independence Day of Papua New Guinea and the making of the Australian laws 130 United Nations, International Law Commission, Report of the International Law Commission on the Work of its Fifty-first Session, (1999) ch 4, "Nationality in Relation to the Succession of States". 131 The applicant relied on the "right of option" mentioned in the Draft Articles (Arts 16 and 24). However, this right does not apply to the applicant in its terms and customary international law does not appear to support the automatic conferral of such a right on persons affected by state succession: Brownlie, Principles of Public International Law, 6th ed (2003) at 628-630. 132 Adopted by the United Nations General Assembly, Resolution 51/160, 16 December 1996, par [8]. The Convention on Nationality between Chile and other countries of Latin America, relied on by the applicant, permitting an election by persons affected by succession of states is a deviation from the general principle observed in customary international law: Weis, Nationality and Statelessness in International Law, 2nd ed (rev) (1979) at 148-149. Kirby in question in this case, such laws fully conform to the Draft Articles. To the extent that the Draft Articles express customary international law, there is no disconformity with such law. Nor is there any disharmony with the universal principles of human rights in the conclusion to which I have come concerning the validity of such laws under the Australian Constitution. Similarly, there is no inconsistency between the state practice reflected respectively in the Australian laws and the Constitution of Papua New Guinea (on the one hand) and the common state practice evident in the devolution of territorial sovereignty to independent nations created out of territories formerly governed by a colonial or like power. Thus, in the case of the United States of America and its former unincorporated territory of the Philippine Islands, that territory was not treated as part of the "United States" for the constitutional purpose of attracting the protections of the Fourteenth Amendment to the Constitution133. Persons born in the Territory of the Philippines were not treated as born in "the United States", and United States citizenship was not conferred on them by statute134. By contrast, a statutory form of United States citizenship has been conferred on residents of the territory of Puerto Rico135. Whether that right might be revoked by statute, conformably with the United States Constitution, need not be considered by this Court. Countless instances in legislation designed to terminate colonial and like status, including in territories formerly part of the dominions of the Crown, involved laws of the United Kingdom Parliament relevantly similar to those made in Australia in the present instance136. There is no departure in the 133 United States doctrine differentiates the application of the Bill of Rights to "unincorporated" territories: Dorr v United States 195 US 138 at 148-149 (1904); Downes v Bidwell 182 US 244 at 289 (1901); Balzac v Porto Rico 258 US 298 at 134 Rabang v Immigration and Naturalization Service 35 F 3d 1449 (9th Cir, 1994), Cert denied Sanidad v Immigration and Naturalization Service 515 US 1130 135 Organic Act of Porto Rico (1917) (US) c 145, 39 Stat 951; 48 USC 731, referred to in Balzac 258 US 298 at 306-308 (1922). 136 See eg Aden, Perim and Kuria Muria Islands Act 1967 (UK), s 2(1) and Sched; Bahamas Independence Act 1973 (UK), s 2; Barbados Independence Act 1966 (UK), s 2; Botswana Independence Act 1966 (UK), s 3; Cyprus Act 1960 (UK), s 4 and British Nationality (Cyprus) Order 1960 [No 2215]; Fiji Independence Act 1970 (UK), s 2; Gambia Independence Act 1964 (UK), s 2; Ghana Independence (Footnote continues on next page) Kirby Australian laws, impugned by the applicant, from normal state practice observed in many such cases. Nor is there any apparent ground to criticise a conclusion as to Australian constitutional law when that law is measured against the standards of international law and typical state practice. On the contrary, such law and practice afford confirmation of my conclusions. They provide no reason to re- examine the conclusions on the basis that they are inconsistent with international law in matters of legal fundamentals, scrutinised with strictness. The reverse is the case. The concordance of Australian law with international law and practice, including as that law expresses human rights and fundamental freedoms, provides "significant confirmation for our own conclusions"137, namely that the Australian laws involve no constitutional or other legal infirmity in this case. Remaining issues and conclusion In the result, the applicant's challenge to the meaning and operation of reg 4 of the Regulations in his case and to the constitutional validity of the Australian laws that had the effect of removing his previous status as a citizen of Australia, fails. This analysis brings me to the remaining issues concerning the application to the applicant of the Migration Act and the disposition of the costs of these proceedings138. On each of those issues I agree with what is written in the joint reasons139. In the result, the applicant's claim for relief entirely fails. Act 1957 (UK), s 2; Guyana Independence Act 1966 (UK), s 2; Jamaica Independence Act 1962 (UK), s 2; Kenya Independence Act 1963 (UK), s 2; Lesotho Independence Act 1966 (UK), s 3; Malawi Independence Act 1964 (UK), s 2; Malaysia Act 1963 (UK), s 2; Malta Independence Act 1964 (UK), s 2; Mauritius Independence Act 1968 (UK), s 2; Nigeria Independence Act 1960 (UK), s 2; Seychelles Act 1976 (UK), s 3; Sierra Leone Independence Act 1961 (UK), s 2; Swaziland Independence Act 1968 (UK), s 3; Tanganyika Independence Act 1961 (UK), s 2; Trinidad and Tobago Independence Act 1962 (UK), s 2; Uganda Independence Act 1962 (UK), s 2; West Indies Act 1967 (UK), s 12 and Sched 3; Zambia Independence Act 1964 (UK), s 3; Zanzibar Act 1963 (UK), s 2. See also Bangladesh Citizenship (Temporary Provisions) Order 1972 (Bangl), par 2. 137 Roper v Simmons 161 L Ed 2d 1 at 27 (2005) per Kennedy J for the United States Supreme Court. 138 See issues 2(b) and 3, above these reasons at [57]. 139 Joint reasons at [41]. Kirby Orders It follows that I agree in the answers to the questions stated for the opinion of the Court given in the joint reasons. |
HIGH COURT OF AUSTRALIA AUSSIE VIC PLANT HIRE PTY LTD APPELLANT AND ESANDA FINANCE CORPORATION LIMITED RESPONDENT Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Limited [2008] HCA 9 26 March 2008 ORDER Appeal dismissed. Mr Bruno Strangio pay the respondent's costs of the appeal to this Court. On appeal from the Supreme Court of Victoria Representation J M Selimi for the appellant (instructed by Starnet Legal Pty Ltd) D G Collins SC with N A Frenkel for the respondent (instructed by Gadens Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Limited Corporations law – Winding up in insolvency – Statutory demand – Extension of time – Application by appellant to set aside statutory demand under s 459G(2)(a) of the Corporations Act 2001 (Cth) dismissed by Master, but extension of time granted for compliance with the demand – After the expiration of the extension of time for compliance, the appellant applied for an order further extending the time for compliance with the demand – Presumption of insolvency where there was a failure to comply with a statutory demand – Whether Court had the power to extend the time for compliance after the period had expired – General interpretation provisions applied subject to contrary intention – Whether contrary intention sufficiently shown. Words and phrases – "extend", "period of compliance", "the last such order". Corporations Act 2001 (Cth), ss 9, 70, 459F(2), 459G(2)(a). GLEESON CJ, HAYNE, CRENNAN AND KIEFEL JJ. On an application under s 459P of the Corporations Act 2001 (Cth) ("the Act"), a "Court"1 may order that an insolvent company be wound up in insolvency. For the purposes of an application under s 459P the Court is required, by s 459C, to presume that the company is insolvent if, during or after the three months ending on the day when the application was made, the company failed to comply with a statutory demand2. That presumption "operates except so far as the contrary is proved for the purposes of the application"3. Section 459F of the Act identifies when a company is taken to fail to comply with a statutory demand. If, at the end of the period for compliance with a statutory demand, the demand is still in effect and the company has not complied with it, the company is taken to fail to comply with that demand at the end of that period4. Section 459F(2) identifies the period for compliance with a statutory demand. If the company does not apply in accordance with s 459G for an order setting aside the demand, the period for compliance with the demand is 21 days after the demand is served5. If the company does apply in accordance with s 459G for an order setting aside the demand, s 459F(2)(a) makes alternative provisions fixing the period for compliance with the demand according to the outcome of the application for an order setting aside the demand. If such an application is made, the period for compliance with the demand is: if, on hearing the application under section 459G, or on an application by the company under this paragraph, the Court makes 1 Defined in s 58AA of the Corporations Act 2001 (Cth) as any of: "(a) the Federal Court; (b) the Supreme Court of a State or Territory; (c) the Family Court of Australia; (d) a court to which section 41 of the Family Law Act 1975 applies because of a Proclamation made under subsection 41(2) of that Act". s 459C(2)(a). s 459C(3). s 459F(1). s 459F(2)(b). Hayne Crennan an order that extends the period for compliance with the demand— the period specified in the order, or in the last such order, as the case requires, as the period for such compliance; or otherwise—the period beginning on the day when the demand is served and ending 7 days after the application under section 459G is finally determined or otherwise disposed of". The central question in this appeal is whether an order may be made extending the period for compliance with a statutory demand after the period for compliance has expired. That question should be answered "no". The proceedings below The respondent is a finance company. It served a statutory demand on the appellant. The affidavit accompanying the demand alleged that the appellant owed the respondent more than $400,000 under several hiring and chattel mortgage contracts between the parties. Pursuant to s 459G of the Act, the appellant applied to the Supreme Court of Victoria for an order setting the demand aside. On 20 June 2006, Master Efthim of the Supreme Court dismissed the application to set aside the statutory demand but ordered that the time for compliance with the demand be extended until 4 July 2006. The appellant was entitled to appeal as of right to a single judge of the Trial Division of the Supreme Court against the orders of the Master6 and that appeal would be by rehearing de novo7. The appellant, being dissatisfied with the orders of Master Efthim, gave notice of appeal. After the time fixed by the Master as the time for compliance with the statutory demand had expired, but before the appeal to a single judge had come on for hearing, the appellant applied for an order further extending the time for compliance. The application for further extension and the appeal came on for hearing by Whelan J. Both the application for further extension and the appeal were dismissed8. His Honour held that9: 6 Supreme Court (Corporations) Rules 2003 (Vic), r 16.5. 7 Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 77.05(7). 8 Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2006] VSC 306. [2006] VSC 306 at [9]. Hayne Crennan "The point is not whether an extension of time can or should be granted, the point is that the consequence provided for by s 459F(1) has already attached ... and no order which I make can or should purport to undo that." The appellant sought to appeal to the Court of Appeal of the Supreme Court of Victoria against the orders made by Whelan J. One of the questions for the Court of Appeal was whether an appeal to that Court lay as of right or only by leave. That depended upon whether the subject of the proposed appeal was "a judgment or order in an interlocutory application"10. The Court of Appeal held11 that an appeal lay only by leave but that the appellant should have leave. The Court of Appeal's holdings that an order refusing to extend time for compliance with a statutory demand is an order in an interlocutory application, and that to challenge the order in the Court of Appeal requires leave, are conclusions that are not in issue in the proceedings in this Court. What is in issue is whether the time for compliance with a statutory demand can be extended after it has expired. On that issue the Court of Appeal divided in opinion. Because submissions were to be made to the Court of Appeal that it should depart from its earlier decision in Buckland Products Pty Ltd v Deputy Commissioner of Taxation12, five members of the Court of Appeal heard the appeal in the present matter. Two members of the Court (Maxwell P and Neave JA) held13 that time for compliance with a statutory demand can be extended after it had expired. Two members of the Court (Nettle and Ashley JJA) held14 that while the preferable construction of the Act is that time for compliance can be extended after it has expired, earlier decisions to the opposite effect15 could not be said to 10 Supreme Court Act 1986 (Vic), s 17A(4)(b). 11 Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2007) 63 ACSR 300 at 320 [77] per Maxwell P and Neave JA, 322 [82] per Chernov JA, 331 [108] per Nettle JA, 336 [125] per Ashley JA. 12 [2003] VSCA 85. 13 (2007) 63 ACSR 300 at 308-316 [28]-[58]. 14 (2007) 63 ACSR 300 at 336 [124] per Nettle JA, 345 [187] per Ashley JA. 15 Livestock Traders International Pty Ltd v Thi Lam Bui & Van Quang Bui (1996) 22 ACSR 51; Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1997) 80 FCR 296; Buckland Products Pty Ltd v Deputy Commissioner of Taxation [2003] VSCA 85. Hayne Crennan be wrong and productive of inconvenience and should therefore be applied16. The fifth member of the Court, Chernov JA, concluded17 that the policy of Pt 5.4 of the Act (ss 459A-459T) and the mischief which s 459F(2)(a)(i) sought to abrogate required the conclusion that s 459F(2)(a)(i) does not empower the Court to extend the period for compliance after it has expired. The Court of Appeal dismissed the appellant's appeal. By special leave, the appellant now appeals to this Court. A question of construction The competing views about construction of the relevant provisions of the Act hinge about whether certain general interpretation provisions in Pt 1.2 of the Act (ss 6-109X) are engaged. Section 6(1) of the Act provides that the provisions of Pt 1.2 "have effect for the purposes of this Act, except so far as the contrary intention appears in this Act". Two provisions of Pt 1.2 are relevant: s 70 and the definition of "extend" set out in the Dictionary to the Act contained in s 9. Section 70 provides that: "Where this Act confers power to extend the period for doing an act, an application for the exercise of the power may be made, and the power may be exercised, even if the period, or the period as last extended, as the case requires, has ended." Section 9 provides that: "Unless the contrary intention appears extend, in relation to a period: includes further extend; and has a meaning affected by section 70." 16 Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; [1993] HCA 15. 17 (2007) 63 ACSR 300 at 323-326 [85]-[92]. Hayne Crennan As noted earlier, s 459F(2) fixes the period for compliance with a statutory demand. Paragraph (a) of that sub-section is predicated upon the company applying "in accordance with section 459G for an order setting aside the demand" and sub-par (i) of s 459F(2)(a) is further predicated upon the Court making "an order that extends the period for compliance with the demand" (emphasis added) either on hearing the application under s 459G or on an application by the company "under this paragraph" (that is, s 459F(2)(a)). It therefore follows from the reference to "an order that extends the period for compliance" that, unless the contrary intention appears in the Act, the power to extend the time for compliance thus given to a Court is to be understood in the manner described in the definition of "extend" in s 9, and as the meaning of that word is affected by s 70. That is, unless the contrary intention appears in the Act, the power to extend the period for compliance is to be understood as including power to extend it even if the period has ended. But there are several features of Pt 5.4 of the Act which lead to the conclusion that a contrary intention does appear. Part 5.4 of the Act (ss 459A-459T) is entitled "Winding up in insolvency". Division 1 of Pt 5.4 (ss 459A-459D) is concerned with when a company is to be wound up in insolvency; Div 2 (ss 459E-459F) provides for statutory demands; Div 3 (ss 459G-459N) provides for applications to set aside statutory demands; Div 4 (ss 459P-459T) deals with applications for an order to wind up a company in insolvency. The evident purposes of Pt 5.4 of the Act include speedy resolution of applications to wind up companies in insolvency. One particular feature of the way in which that purpose is carried into effect is to focus principal attention at the hearing of the winding up application upon whether a company is insolvent rather than upon defects in the procedures that precede the institution of the application for winding up. The provisions that now appear in Pt 5.4 of the Act were first enacted as amendments to the Corporations Act 1989 (Cth) by s 57 of the Corporate Law Reform Act 1992 (Cth). The provisions found their origins in the Report of the General Insolvency Inquiry conducted by the Law Reform Commission18 generally referred to as the "Harmer report". As that report recorded19, the Law 18 Australia, The Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988). 19 Report No 45, (1988), vol 1 at 68 [138]. Hayne Crennan Reform Commission recommended repeal of what was then s 364(2) of the relevant companies legislation20. That section had "deemed" a company to be insolvent if a creditor to whom the company was indebted for more than $1,000 made demand for payment of the sum due and the company had, for three weeks after the service of the demand, failed to comply with the demand. The Law Reform Commission recommended21 repeal of this provision and replacement by "a provision which specifies the circumstances from which it may be presumed that a company is unable to pay its debts". It was intended22 that this approach, coupled with provisions designed to overcome defects in notices of demand, would "more clearly permit the court to exercise a discretion in relation to defective notices of demand and may avoid winding up proceedings against a company being dismissed for technical or minor defects when the company is clearly insolvent". That speed in the resolution of applications to wind up in insolvency is an important underlying policy of Pt 5.4 of the Act is evident from a number of provisions. First, there is the requirement of s 459R that an application for a company to be wound up in insolvency is to be determined within six months after it is made. Although that period may be extended by a Court, an extension may be granted only if the Court is satisfied that special circumstances justify the extension and if the order is made within the six months or within the period as last extended23. Secondly, there is the absolute limitation in s 459G of the time within which a company may apply for an order setting aside a statutory demand to 21 days after the demand is served. This Court held in David Grant & Co Pty Ltd v Westpac Banking Corporation24 that the period of 21 days within which an application to set aside a statutory demand may be commenced cannot be extended. Thirdly, there is the fixing by s 459E(2)(c) of the time for compliance with a statutory demand (21 days) coupled with the fixing of times under s 459F(2) for compliance with a demand according to whether or not an application is made to set it aside. 20 Found at that time in what was called the "co-operative scheme" to which effect was given, so far as now relevant, by the Companies Act 1981 (Cth) and the several State Companies Codes. 21 Report No 45, (1988), vol 1 at 68 [138] (footnote omitted). 22 Report No 45, (1988), vol 1 at 68 [137]. 23 s 459R(2). 24 (1995) 184 CLR 265; [1995] HCA 43. Hayne Crennan The emphasis which these provisions give to the speedy resolution of an application to wind up in insolvency is coupled with provisions which seek to focus attention at the hearing of an application to wind up in insolvency upon whether the company is insolvent rather than upon the formal adequacy of steps which have preceded the institution of the application to wind up. Chief among the provisions intended to focus attention upon solvency is s 459S. That section limits the grounds on which a company may oppose a winding up application which is founded on failure to comply with a statutory demand. Section 459S provides: In so far as an application for a company to be wound up in insolvency relies on a failure by the company to comply with a statutory demand, the company may not, without the leave of the Court, oppose the application on a ground: that the company relied on for the purposes of an application by it for the demand to be set aside; or that the company could have so relied on, but did not so rely on (whether it made such an application or not). The Court is not to grant leave under subsection (1) unless it is satisfied that the ground is material to proving that the company is solvent." The reference in s 459S to grounds that a company relied on or could have relied on in an application to set aside a statutory demand takes its content from s 459J. That section identifies when a Court may set aside a statutory demand. In particular, the Court "must not set aside a statutory demand merely because of a defect"; the defect must be such that "substantial injustice will be caused unless the demand is set aside"25. It would be sharply at odds with the purposes revealed by the provisions of Pt 5.4 to read the power to extend time for compliance with a statutory demand as capable of exercise after the time has expired. That may well be reason enough to consider that the Act intends that the general provisions of s 70 and the definition of "extend" in s 9 should not apply to the power to extend time for compliance with a statutory demand. But the point is put beyond doubt when regard is had to the consequence that the Act attaches to a failure to comply with 25 s 459J(1)(a) and (2). Hayne Crennan a statutory demand. As noted at the outset of these reasons, if a company fails to comply with a statutory demand, and that failure occurs during or after the three months ending on the day when that winding up application is made, the Court must presume that the company is insolvent. It is s 459C that requires the Court to make that presumption. Section 459C(2) identifies several circumstances in which, for the purposes of an application to wind a company up in insolvency, a "Court must presume that the company is insolvent". Those circumstances are: "if, during or after the 3 months ending on the day when the application was made: the company failed (as defined by section 459F) to comply with a statutory demand; or execution or other process issued on a judgment, decree or order of an Australian court in favour of a creditor of the company was returned wholly or partly unsatisfied; or a receiver, or receiver and manager, of property of the company was appointed under a power contained in an instrument relating to a floating charge on such property; or an order was made for the appointment of such a receiver, or receiver and manager, for the purpose of enforcing such a charge; a person entered into possession, or assumed control, of such property for such a purpose; or a person was appointed so to enter into possession or assume control (whether as agent for the chargee or for the company)." The temporal focus of s 459C is upon a period which commences three months before the date of the application for winding up, but the period does not terminate upon the date on which the winding up application commences. The question for a Court is whether any of the identified events has occurred at any time after the commencement of the relevant period. The Act does not require any further consideration of whether the event persists at the date of the application for winding up. Hayne Crennan If one of the specified events has occurred at any time during the identified period, the Court must presume that the company is insolvent. But the presumption may be rebutted. Section 459C(3) provides that: "A presumption for which this section provides operates except so far as the contrary is proved for the purposes of the application." On its face, s 459F(1) is engaged if the time for compliance with a statutory demand expires and the company has not then complied with it. The demand was in force; the time expired; the company did not comply with the demand. An order made after the time for compliance had expired, but which sought to extend the period for compliance, would not, in its terms, alter the fact that a failure to comply with the demand had then occurred. But that conclusion depends upon identifying that there was a failure to comply. Whether there has been a failure depends upon identifying the end of the period of compliance and the period of compliance is to be fixed in accordance with s 459F(2). The appellant's argument that an order extending the time for compliance with a statutory demand can be made after the period has expired can find no textual footing in s 459F(2). Although s 459F(2)(a)(i) refers to "the last such order" extending the time for compliance with a statutory demand, that cannot include an order made after the period has expired. To read "the last such order" as including an order made after the period for compliance has expired would focus attention upon the state of affairs at either the date of commencement of the winding up application or the date of the hearing of that application. But s 459C neither requires nor permits that focus. It directs attention to what has happened at any time during a period, not upon a state of affairs at either of the particular times just nominated (commencement or hearing of the winding up application). Further, it is of fundamental importance to recognise that the provisions which are now in question do no more than create a presumption about the ultimate issue that arises in an application to wind up in insolvency: is the company insolvent? Denying the power of a Court to extend time for compliance with a statutory demand after the time has already expired determines no right or liability of the company or of the party that has made the demand. And contrary to much of the argument advanced in this case on the appellant's behalf, denying the power to extend time after its expiry does not cut down the utility, or impede the exercise, of rights of appeal. The principles Hayne Crennan governing orders preserving the utility of the exercise of rights of appeal are well established26. If there is a right of appeal and those principles are engaged, orders will be made to preserve the subject matter of the appeal. Thus if, as in the present case, the appellant had an appeal as of right from the orders of the Master who heard the matter at first instance it was open to the appellant to seek orders preserving the utility of that right. Conclusion and Orders For these reasons it follows that, if the period for compliance with a statutory demand has expired, the Act does not permit the making of an order extending the period for compliance. It also follows that the appeal must be dismissed. Consistent with the undertakings given to the Court by Mr Bruno Strangio, he should pay the respondent's costs of the appeal to this Court. 26 See, for example, Paringa Mining & Exploration Co plc v North Flinders Mines Ltd (1988) 81 ALR 501; Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [No 2] (1998) 72 ALJR 869; [1998] HCA 32; cf Wilson v Church (No 2) (1879) 12 Ch D 454; Erinford Properties Ltd v Cheshire County Council [1974] Ch 261. Kirby KIRBY J. This appeal, from the orders made by the Court of Appeal of the Supreme Court of Victoria27, raises a contentious question about the meaning of s 459F(2)(a)(i) of the Corporations Act 2001 (Cth) ("the Act"). The appeal concerns the jurisdiction and power of the Supreme Court of Victoria to extend time for compliance with a statutory demand by a company subject to being wound up in insolvency upon that demand, notwithstanding that the stated period for such compliance has expired. The relevant circumstances are explained in the reasons of Gleeson CJ, Hayne, Crennan and Kiefel JJ ("the joint reasons"). The applicable provisions of the Act and references to antecedent legislation and to a relevant law reform report may be found there. I need not repeat any of this material. The reasoning in the Court of Appeal Reasons of the minority: Because I agree substantially with the reasons expressed in the Court of Appeal by Maxwell P and Neave JA, in dissent28, it is unnecessary for me to recount the entirety of their Honours' analysis. It can be found in the reports of the decision below. Maxwell P and Neave JA describe the statutory scheme of the Act29. They explain the three basic reasons why they come to a conclusion opposite to that now favoured in the joint reasons in this Court. I agree with their Honours: That the view of the statute now adopted effectively requires the reader of s 459F(2)(a)(i) of the Act to insert into that sub-paragraph words of limitation upon the jurisdiction and power there afforded to the court in ample terms. Such words of limitation do not appear in the language used by the Parliament. They should not be introduced in the guise of 27 Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2007) 63 ACSR 300. The Court of Appeal divided. For differing reasons, Chernov, Nettle and Ashley JJA favoured rejecting the appeal; Maxwell P and Neave JA reached the opposite conclusion and would have afforded relief. 28 (2007) 63 ACSR 300 at 302-320 [1]-[77]. 29 (2007) 63 ACSR 300 at 305 [14]-[17]. 30 (2007) 63 ACSR 300 at 308 [31], 309-310 [32]-[36]. Kirby That the view now adopted also ignores the clear facultative language of s 70 of the Act which ostensibly applies to the case and which, when read with s 459F(2)(a)(i) of the Act, reinforces the contrary result31; and That the decision wrongly extends the application of the earlier reasoning of this Court in David Grant & Co Pty Ltd v Westpac Banking Corporation32, which was concerned with the very different statutory language of s 459G(2) of the Act ("may only"), held to be relevantly unambiguous33. The presently applicable provision, in s 459F(2)(a)(i), not only clearly contemplates the possibility of extension of time for compliance but makes it plain that the jurisdiction and power to grant such extension is ambulatory ("or in the last such order, as the case requires"). Hence, it is clear that the Parliament envisaged a large power of extension in the particular case, a postulate which is compatible only with a facility for retrospective extension as stated in s 70 of the Act34. Substantive support of a majority: It is important to appreciate that, upon the substantive question now before this Court, the majority opinion in the Court of Appeal favoured the analysis of the Act preferred by Maxwell P and Neave JA. Thus, Nettle JA concluded35: "The natural and ordinary meaning of s 459F(2)(a)(i) of the [Act], as reinforced by s 70, is that an application to extend time for compliance with a statutory demand may be made under the section after the time for compliance has expired." To similar effect Ashley JA, in his reasons, agreed with Maxwell P and Neave JA, and with Nettle JA, that36: "[N]otwithstanding the weighty considerations adverted to [in the reasons of Chernov JA], the proper construction of Pt 5.4 of the Act should yield the result that a court has power under s 459F(2)(a)(i), in conjunction with 31 (2007) 63 ACSR 300 at 308 [31], 310-312 [37]-[45]. 32 (1995) 184 CLR 265; [1995] HCA 43. 33 (2007) 63 ACSR 300 at 305 [17] referring to David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 277. 34 (2007) 63 ACSR 300 at 308 [31], 312 [43]. 35 (2007) 63 ACSR 300 at 334 [118]. See also at 336 [124]. 36 (2007) 63 ACSR 300 at 344 [184]. Kirby s 70, to extend time for compliance, despite the last date for compliance having passed, in order that a right of appeal not be rendered nugatory. That seems to me to be the ordinary meaning of the pertinent provisions." The only basis upon which Nettle JA37 and Ashley JA38 respectively accepted the orders giving effect to the contrary view, as proposed by Chernov JA39, was the existence of previous authority and practice to the contrary effect, relevantly deriving from decisions of single judges. As Nettle JA put it succinctly40: "It follows, as I see it, that if the interpretation of the section is to be revisited, it is a matter for the High Court or parliament." The construction of the Act that I favour, therefore, enjoyed strong majority support in the Court of Appeal. To deny a relevant ambiguity41 is, with respect, to fail to respond adequately to the careful analysis of the Act set out in the reasons of the judges of that Court. That analysis obliges this Court to reconsider the language and purpose of the Act, as well as any matters of legal principle or policy that may properly be taken into account in resolving the question of controversy. Favouring the facility of extension of time The court enjoys the power: Without restating in its entirety the analysis of the judges in the Court of Appeal, let me express briefly, in my own words, the main considerations that lead me to the conclusion that the court enjoys the power to grant an extension for compliance with a statutory demand even though the initial period for compliance with the demand has expired. Multiple exercises of the power: As all of the judges except Chernov JA concluded in the Court of Appeal, this is what the literal terms of s 459F(2)(a)(i) state, even without the support of s 70 of the Act. Statutory interpretation is always, ultimately, a text-based activity. This Court has spent the last decade reminding Australian courts of their duty to 37 (2007) 63 ACSR 300 at 336 [124]. 38 (2007) 63 ACSR 300 at 345 [187]. 39 (2007) 63 ACSR 300 at 331 [107]. 40 (2007) 63 ACSR 300 at 336 [124]. 41 Joint reasons at [19]. Kirby discharge the function of applying the law, when expressed in legislation, by starting with a close analysis of the text. We must be consistent in that approach. We should apply it in our own endeavours. The language of s 459F(2)(a)(i) clearly contemplates the availability of extensions of the period for compliance with the demand and, moreover, that the circumstances of the particular case may require successive orders, inferentially over time, responding to demonstrated needs that arise ("or in the last such order, as the case requires"). The view that now prevails effectively obliges the insertion of words that the Parliament refrained from expressing such as "provided that any such application shall be made before the period for compliance has expired"42. The Parliament did not use such words. They are contrary to the generality of the language of the sub-paragraph. This Court has no authority to, and should not, insert words into a statute that cut down the generality of the words chosen by the Parliament. Express provision where period ended: Section 70 of the Act renders even clearer the case for reading s 459(2)(a)(i) in this manner. That section, expressed in general terms, provides that "[w]here this Act confers power to extend the time for doing an act, an application for the exercise of the power may be made, and the power may be exercised, even if the period, or the period as last extended, as the case requires, has ended". The effect of s 6(1) of the Act is that s 70 is applicable in respect of s 459(2)(a)(i) unless "the contrary intention appears"43. The joint reasons suggest that such an intention can be taken to be manifested in the degree to which Pt 5.4 emphasises speed in the resolution of proceedings arising under that Part44. However, the general rule set out in s 70 is facultative, protective and beneficial. It has clear and particular procedural consequences in respect of a provision such as s 459(2)(a)(i). The rule should not be cut down by reference to general concerns said to be evident in other, related, sections of the Act. This is especially so because it is part of the scheme of the Act that a number of interpretative provisions (of which s 70 is one) are stated to be applicable in the absence of indication of an opposite intention. Given that the Act has been drafted on this basis, it would be reasonable to expect any purpose to displace the general rule to be expressed with a considerable degree of precision. In the face of the explicit grant of power, derogations are not to be left to judicial inference. 42 cf joint reasons at [2]. 43 Joint reasons at [12]. 44 Joint reasons at [17]-[18]. Kirby Interpreting judicial powers broadly: Most importantly, the provisions for extension of time are reposed in a superior court. They constitute a grant of jurisdiction and power to such a court to deploy as the circumstances of the particular case necessitate. It is a basic rule of statutory construction, frequently repeated by this Court, that such a grant is not to be narrowly construed nor cut back without very clear reasons for doing so45. Why is this so? It is because such courts can be trusted to deploy the power so granted in a wise, prudent and just way. Courts know that they must do so judicially and consistently with the judicial process. It is the experience of such courts, and of ordinary life, that circumstances can and do arise involving a myriad of factual indications, such that orders may need to be made to suit the requirements of justice in the particular case. We must be consistent in the application of this principle. Courts below watch not only what we say in this Court, when expounding the governing rules of statutory construction, but what we do when ourselves purporting to apply those rules. Discretions to cure innocent error: Experience specifically teaches that, on questions such as the present, judges, including in this Court, may exhibit different general inclinations. Thus, some judges incline to a narrower application of legislation so as to maximise the role of strict rules and to minimise the space for discretion that may adapt to the special demands of justice in the particular case. There are several instances where this tension has revealed 45 See eg Knight v F P Special Assets Ltd (1992) 174 CLR 178 at 205; [1992] HCA 28; Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 421; [1994] HCA 5; The Commonwealth v SCI Operations (1998) 192 CLR 285 at 301 [26]; [1998] HCA 20; Oshlack v Richmond River Council (1998) 193 CLR 72 at 81 [21], 112-113 [111]; [1998] HCA 11; Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 57 [112]; [1998] HCA 30; Fejo v Northern Territory (1998) 195 CLR 96 at 140 [79]; [1998] HCA 58; Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 at 201 [41.3]; [1998] HCA 44; Re East; Ex parte Nguyen (1998) 196 CLR 354 at 383 [71.2]; [1998] HCA 73; Abebe v The Commonwealth (1999) 197 CLR 510 at 586-587 [221]; [1999] HCA 14; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 423 [110]; [1999] HCA 18; Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 461 [79]; [1999] HCA 19; R v Gee (2003) 212 CLR 230 at 274 [131]; [2003] HCA 12; Minister for Immigration and Multicultural Affairs v Wang (2003) 215 CLR 518 at 529-530 [32], 553 [114]; [2003] HCA 11; Mansfield v Director of Public Prosecutions for Western Australia (2006) 226 CLR 486 at 492 [10]; [2003] HCA 38; John Fairfax Publications Pty Ltd v Gacic (2007) 81 ALJR 1218 at 1239 [103]; 235 ALR 402 at 428; [2007] HCA 28. Kirby itself46. Nevertheless, the general trend in this Court in recent years has, I believe, been to uphold the broad grant of jurisdiction and power to a court where this is afforded by legislation in terms that permit the court to soften the edges of overly rigid applications of procedural and other rules, and where otherwise an unyielding application of the law might defeat the attainment of justice in the particular case47. traced Differences of the foregoing kind might perhaps be considerations embedded in individual judicial conceptions of the ameliorating role of courts of justice; a recognition of (and allowance for) human frailties; or the scars of particular professional experiences48. However that may be, when a choice exists in the construction of legislation, the trend of this and other courts has been to accept the need to uphold provisions that permit courts to cure particular defaults for reasons of justice. That is the approach that this Court should apply in circumstances such as the present. Above all where, with an explicit provision, the Parliament has afforded jurisdiction and power to a superior court, "[i]t is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to Consistency with insolvency administration: This Court has also repeatedly emphasised that "the modern approach to statutory interpretation … insists that the context [is to] be considered in the first instance … to include such things as the existing state of the law and the mischief which … one may discern the statute was intended to remedy"50. So can it be said, as the joint reasons conclude, that the reading of s 459F(2)(a)(i) of the Act urged by the appellant would cut across, and potentially defeat, the overall practical purpose of the Parliament? I think not: 46 See eg Jackamarra v Krakouer (1998) 195 CLR 516 (Brennan CJ, McHugh and Kirby JJ; Gummow and Hayne JJ dissenting); [1998] HCA 27. 47 See eg Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 167-172; [1997] HCA 1. 48 cf Kirby, "Ten Parables for Freshly-minted Lawyers", (2006) 33 University of Western Australia Law Review 23 at 24-25. 49 Thompson v Goold & Co [1910] AC 409 at 420 per Lord Mersey, cited (2007) 63 ACSR 300 at 309 [32]. 50 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; [1997] HCA 2. See (2007) 63 ACSR 300 at 323 [85]. Kirby Such a view seriously underestimates the capacity of courts to organise their lists and to uphold applications for the extension of time only in cases where the proved circumstances clearly warrant that course. The capacity of judicial officers to decide such matters promptly (if necessary reserving reasons to be delivered at a later date, and then in short terms) is constantly demonstrated in busy practice lists throughout this country. There is no need to read down the ample language of the Act to avoid the dangers of misuse of such a facility. Courts, and particularly State Supreme Courts, are well capable of dealing quickly and resolutely with the substance of such applications. They will remember that the purpose of any extension of time is decidedly not to afford the company concerned further time to satisfy, or still worse, to delay creditors; (2) Human nature being what it is, the proved default of an individual officer, employee or lawyer may fully explain the relevant delay. In such a case, it should be open to a court to provide relief as the Act contemplates and to do so even after the period for compliance with a statutory demand has elapsed, if adequate reasons are shown. The contrary postulate involves an assumption that an appeal might proceed, and even succeed in later demonstrating grounds on the merits, but be rendered nugatory because the relief is unavailable under the Act. Whilst other, later, remedies remain available to the company concerned, the issue remains whether the company has lost the particular opportunity afforded by the Act to invoke relief at the earlier stage. There may well be good commercial, financial and practical reasons, and reasons on the merits, why a company might wish to do so – asserting, in effect, that the proceedings against it are misconceived. In such a case, the Act affords remedies that are not futile, provided that the grounds for relief are satisfactorily proved and promptly invoked. Courts are well-equipped to differentiate cases deserving of relief from those that involve no more than delaying tactics51; and In the report that preceded the enactment of the relevant provisions of the Act, the Australian Law Reform Commission acknowledged that a company should be able to apply to set aside a statutory demand before the time for compliance expired and that, once the application was filed, the time for compliance should be extended for a fixed period or until such later time as a court determined52. As Maxwell P and Neave JA 51 In his reasons in the Court of Appeal, Ashley JA dealt briefly, but convincingly, in the facts of this case, with circumstances which, if accepted, might well have resulted in the refusal of relief on the merits: see (2007) 63 ACSR 300 at 338-345 52 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 72-73 [148]-[149]. Kirby remarked in the Court of Appeal, interpreting s 459F(2)(a)(i) of the Act so as to allow the time to be extended after the period for compliance with the statutory demand has expired would not add significantly to any uncertainty. Ashley JA too was surely right in pointing out that it could not be said that "even on the construction contended for by [the respondent, s 459F(2)(a)(i)] will always produce a day certain in the near future at which the time for compliance will expire"53. His Honour noted that the position arising is unlike the situations which result from the operation respectively of s 459F(2)(b) or of s 459F(2)(a)(ii)54. He also contrasted s 459R(2)(b), inserted in the Act at the same time as was s 459F(2)(a)(i). As Ashley JA pointed out, in the case of the former provision, "the legislature appears to have settled upon a form of words that would have the effect for which [the respondent] contended in respect of s 459F(2)(a)(i)"55. These are powerful and entirely orthodox reasons for preferring the construction of the provisions in question here that the majority of the Court of Appeal favoured. Two judges of that majority did not feel able to give any effect to their preference for reasons immaterial for us. The outcome in that Court would otherwise have been different. This Court is under no equivalent inhibitions. Conclusion: the preferable interpretation favours the power This Court should therefore give s 459F(2)(a)(i) its natural and textual meaning. It is a meaning that preserves the jurisdiction and power of the Supreme Court, where the interests of justice warrant that course, to extend the period for compliance with a statutory demand, including after the initial period for compliance has expired. This conclusion is still further strengthened by the comparatively clear indication of the Parliament's overall purpose in s 70 of the Act. It respects and trusts the judges of the relevant courts, who are afforded the jurisdiction and power to enable them to respond judicially to the necessities of the particular case. It conforms to the important instruction of this Court on the approach to be taken to questions of statutory construction. It recognises the fact that occasional defaults can arise because of human failings and innocent error, particularly, one might say, in a case where the postulate is that the company concerned has failed to comply with a statutory demand within the time fixed for compliance. 53 (2007) 63 ACSR 300 at 344 [185]. 54 (2007) 63 ACSR 300 at 344-345 [185] referring to Buckland Products Pty Ltd v Deputy Commissioner of Taxation [2003] VSCA 85. 55 (2007) 63 ACSR 300 at 345 [186]. Kirby The foregoing outcome is only "sharply at odds with the purposes revealed by the provisions of Pt 5.4" of the Act56 if those who perceive those purposes derive them only from the language of nominated sections without giving due effect to the terms of s 459F(2)(a)(i) and s 70. Reading all the statutory language in its entire context is another principle of construction upon which this Court has insisted in recent times. It is an approach to the ascertainment of the meaning of ideas conveyed by words that finds its ultimate source in ordinary human experience57. As Ashley JA correctly remarked in the Court of Appeal, courts in Australia are "equipped and … able" to deal quickly and resolutely with such applications58. They should not be denied the jurisdiction and power to afford relief where a proper case is established. It is for the applicant to provide, in the usual way, both an excuse for non-compliance with the statutory demand within time and a reason, on the merits, why the period for compliance should be extended and why that course would not be futile, or inconsistent with the terms and purposes of the Act, which are generally directed to the prompt and efficient administration of insolvency law in its application to companies. Often, perhaps usually, it would be impossible for the company to establish its entitlement to an extension of time for compliance. The application would then fail. But the Parliament has provided for the exceptional case. This Court should not erase such a provision. Orders The appeal should be allowed with costs. The orders of the Court of Appeal of the Supreme Court of Victoria should be set aside. In place of those orders, this Court should order that leave to appeal be granted and the appeal allowed with costs. The order made in the Trial Division of the Supreme Court of Victoria should be set aside. In its place it should be ordered that the time for compliance with the statutory demand be extended for 21 days. The proceedings should be remitted to the Supreme Court of Victoria for hearing and for further orders within that time. 56 Joint reasons at [19]. 57 Collector of Customs v Agfa Gevaert Ltd (1996) 186 CLR 389 at 397; [1996] HCA 36 citing R v Brown [1996] 1 AC 543 at 561 per Lord Hoffmann. 58 (2007) 63 ACSR 300 at 338 [136]. |
HIGH COURT OF AUSTRALIA CNY17 AND APPELLANT MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR RESPONDENTS CNY17 v Minister for Immigration and Border Protection [2019] HCA 50 Date of Hearing: 16 October 2019 Date of Judgment: 13 December 2019 ORDER Appeal allowed with costs. Set aside orders 1 and 2 made by the Full Court of the Federal Court of Australia on 21 September 2018 and order 1 made by the Full Court of the Federal Court of Australia on 12 October 2018 and, in their place, order that: the appeal be allowed with costs; and orders 1 and 2 of the Federal Circuit Court of Australia dated 8 November 2017 be set aside and, in their place, order that: the decision of the Immigration Assessment Authority dated 12 May 2017 be quashed; the matter be remitted to the Immigration Assessment Authority differently constituted; and (iii) the first respondent pay the applicant's costs. On appeal from the Federal Court of Australia Representation L G De Ferrari SC with M W Guo for the appellant (instructed by Estrin Saul Lawyers) G R Kennett SC with A P Yuile for the first respondent (instructed by Australian Government Solicitor) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS CNY17 v Minister for Immigration and Border Protection Immigration – Refugees – Application for protection visa – Where Pt 7AA of Migration Act 1958 (Cth) requires Immigration Assessment Authority ("IAA") to review certain decisions to refuse applications for protection visas – Where s 473CB(1)(a), (b) and (d) requires Secretary of Department to give certain material to IAA to conduct review – Where s 473CB(1)(c) requires Secretary to give to IAA any other material Secretary considers relevant to review – Where s 473DB requires IAA to review decision by considering material given by Secretary – Where Secretary gave material to IAA pursuant to s 473CB(1)(c) – Where material irrelevant to task of IAA – Where material prejudicial to applicant – Where applicant unaware of material – Whether jurisdictional error by Secretary – Whether jurisdictional error invalidated decision of IAA – Whether apprehended bias. Administrative law – Judicial review – Procedural fairness – Where s 473FA requires IAA to operate free of bias – Whether apprehended bias. track Words and phrases – "apprehended bias", "bias", "fair-minded lay observer", "fast reviewable decision", "Immigration Assessment Authority", "impartial", "irrelevant", "irrelevant and prejudicial material", "jurisdictional error", "material", "materiality", "prejudicial", "prejudicial but inadmissible", "procedural fairness", "professional decision maker", "reasonable apprehension of bias", "relevant", "relevant to the review", "required to consider", "review material", "rule against bias", "subconscious bias". Constitution, s 75(v). Migration Act 1958 (Cth), Pt 7AA. KIEFEL CJ AND This appeal from a decision of the Full Court of the Federal Court1 concerns a problem that has arisen in the administration of Pt 7AA of the Migration Act 1958 (Cth). The statutory scheme Part 7AA of the Migration Act, the scheme of which has been noted in this Court on previous occasions2, imposes a requirement for automatic merits review by the Immigration Assessment Authority of decisions of the Minister for Immigration and Border Protection referred to as "fast track reviewable decisions". Fast track reviewable decisions include certain decisions to refuse protection visas on the basis that the Minister is not satisfied that the applicants meet the main statutory criterion for the grant of protection visas, that they are persons in respect of whom Australia owes protection obligations3. The Part establishes the Authority within the Migration and Refugee Division of the Administrative Appeals Tribunal4. The Authority as so established is to consist of the President of the Tribunal and the Division head5, each of whom must hold appointment for a fixed term under the Administrative Appeals Tribunal Act 1975 (Cth)6, together with a Senior Reviewer and other Reviewers7, each of whom are to be persons engaged under the Public Service Act 1999 (Cth)8. 1 CNY17 v Minister for Immigration and Border Protection (2018) 264 FCR 87. 2 Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 264 CLR 217 at 225-232 [13]-[38]; BVD17 v Minister for Immigration and Border Protection (2019) 93 ALJR 1091 at 1094-1096 [3]-[17]; 373 ALR 196 at 198-201. Sections 5(1) (definition of "fast track decision"), 36, 65 and 473BB (definition of "fast track reviewable decision") of the Migration Act. Section 473JA(1) of the Migration Act. Section 473JA(2)(a) and (aa) of the Migration Act. Section 8, read with ss 6 and 17K. Section 473JA(2)(b) of the Migration Act. Section 473JE(1) of the Migration Act. The requirement which the Part imposes for automatic review by the Authority of a fast track reviewable decision is achieved through the imposition of three cumulative and consecutive statutory duties. The Minister has a duty to refer a fast track reviewable decision to the Authority as soon as reasonably practicable after the decision is made9. The Secretary of the Department of Immigration and Border Protection then has a duty to give specified "review material" to the Authority at the same time as, or as soon as reasonably practicable after, the decision is referred to the Authority10. The Authority then has a duty to "review" the referred decision11 and to do so "by considering the review material" provided to it by the Secretary without accepting or requesting new information and without interviewing the referred applicant12. That requirement for the Authority to conduct the review by considering the review material provided to it by the Secretary is expressly made subject to other provisions within the Part which confer power on the Authority to get13 and in specified circumstances to consider14 "new information", being information which was not before the Minister when making the referred decision and which the Authority considers may be relevant. The review material which the Secretary has a duty to give to the Authority is specified to include a statement that sets out the findings of fact made by the person who made the fast track reviewable decision, that refers to the evidence on which those findings were based, and that gives the reasons for the decision15, together with all material provided by the referred applicant to the Minister before the fast track reviewable decision was made16. By operation of s 473CB(1)(c), the review material which it is the duty of the Secretary to give to the Authority also includes "any other material that is in Section 473CA of the Migration Act. 10 Section 473CB of the Migration Act. 11 Section 473CC(1) of the Migration Act. 12 Section 473DB(1) of the Migration Act. 13 Section 473DC of the Migration Act. 14 Section 473DD of the Migration Act. 15 Section 473CB(1)(a) of the Migration Act. 16 Section 473CB(1)(b) of the Migration Act. the Secretary's possession or control and is considered by the Secretary (at the time the decision is referred to the Authority) to be relevant to the review". To consider material that is in the Secretary's possession or control to be relevant to the review within the meaning of the provision, the Secretary (who can be expected ordinarily to act through a delegate17) obviously needs to form the opinion that the material is capable directly or indirectly of rationally affecting assessment of the probability of the existence of some fact about which the Authority might be required to make a finding in the conduct of its review of the referred decision. Compliance with the duty to provide such material to the Authority accordingly necessitates that the Secretary or delegate of the Secretary turn his or her mind to the range of material that is in the Secretary's possession or control which pertains to the referred applicant in order to determine whether or not to form that opinion in relation to the whole or some part of that material. The opinion of the Secretary that material is relevant to the review (so as to be required to be given to the Authority) or is not relevant to the review (so as not to be required to be given to the Authority) must be formed reasonably and on a correct understanding of the law18. The requirement for the Authority then to consider the review material that is given to it by the Secretary is not a requirement for the Authority to adopt the Secretary's opinion of the relevance of the review material to the review of the merits of the referred decision that it is the duty of the Authority to conduct. The requirement is no more than that the Authority examine the review material provided to it by the Secretary in order for the Authority to form and act on its own assessment of the relevance of that material to the review of the referred decision. Within the bounds of reasonableness, it is open to the Authority to assess review material as probative of an issue of fact arising in the review, and give that material such weight as it thinks the material deserves in making the decision on the review. Alternatively, it is open to the Authority to assess review material as wholly irrelevant to the review and place no reliance at all on that material in making its decision on the review. What the Authority cannot do is to fail or refuse to turn its attention to any of the review material that is given to it by the Secretary. To the extent that the Authority treats review material as a basis for making a finding of fact that forms part of the reason for the decision that it 17 Section 496(2) of the Migration Act and s 34AB of the Acts Interpretation Act 1901 (Cth). 18 Graham v Minister for Immigration and Border Protection (2017) 263 CLR 1 at makes on the review, the Authority is obliged to identify that material in the written statement of reasons that it is required to give for the decision19 as evidence on which that finding is based20. The nature of the problem The problem with which the appeal is concerned arises in the following apparently not-uncommon scenario. In purported compliance with s 473CB(1)(c), a delegate of the Secretary gives to the Authority a large amount of material contained on a departmental file relating to the referred applicant. Some of the material which the Secretary gives to the Authority is not capable of rationally affecting assessment of the probability of the existence of any fact about which the Authority needs to make a finding in reviewing the referred decision. That material is nevertheless prejudicial to the referred applicant in the sense that the material might be argued to be capable of founding an inference that the referred applicant is a person of bad character or might be interpreted as indicating that the referred applicant is a person who, in the view of the Secretary or of one or more officers of the Department, has been shown by his or her conduct or associations to be a person unworthy of being granted permission to remain in Australia. Without requesting new information and without interviewing the referred applicant, the Authority conducts a review which results in the Authority making a decision affirming the decision to refuse the referred applicant a protection visa. Unsurprisingly, given the irrelevance of that material to the review, the Authority's written statement of reasons makes no reference to the irrelevant but prejudicial material given to it by the Secretary. The consequences of the problem for the decision of the Authority The absence of reference to material in the Authority's written statement of reasons will ordinarily support the inference that the material was not intentionally relied on by the Authority in reaching its decision on the review21. Where that inference is appropriate to be drawn in relation to irrelevant but prejudicial material given to the Authority by the Secretary, the decision of the 19 Section 473EA(1)(b) of the Migration Act. 20 Section 25D of the Acts Interpretation Act. 21 Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at Authority will not be open to challenge on the basis that the Authority has reached the decision taking into account an irrelevant consideration. The Secretary's giving of the irrelevant but prejudicial material to the Authority nevertheless has potential to result in the decision-making of the Authority having transgressed either or both of two distinct limitations which Pt 7AA imposes on its jurisdiction. One is failure of a precondition to the exercise of the jurisdiction of the Authority to conduct a review. The other is non-compliance with the need for the Authority to avoid any appearance of bias. including the Authority, The first of those potentially operative procedural limitations on the jurisdiction of the Authority is inherent in the structure of Pt 7AA. That structure makes compliance by the Secretary with the duty to give the specified review material s 473CB(1)(c), a precondition to the Authority exercising jurisdiction to review the fast track reviewable decision that has been referred to it by the Minister. To the extent that material given by the Secretary to the Authority in purported compliance with that duty is material which the Secretary at the time of referral could not reasonably have considered capable of rationally affecting assessment of the probability of the existence of some fact about which the Authority might be required to make a finding in reviewing the referred decision, the giving of that material to the Authority by the Secretary is not compliant with that duty22. the review material specified For the purpose of determining whether or not that precondition to the exercising of the Authority's jurisdiction to review a referred decision is met, no meaningful distinction can be drawn between under-compliance and over- compliance with the Secretary's duty. The legislative contemplation is that the Authority is to receive from the Secretary the totality of the statutorily specified review material and that the Authority is not to receive any other information about the referred applicant from the Secretary unless and until the Authority chooses to exercise its specific power to get new information. Consistently with repeatedly articulated interpretative principle23, however, the precondition to the Authority exercising jurisdiction is not to be interpreted so rigidly as to result in the invalidity of the Authority's decision where the non-compliance that occurred 22 cf Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 23 Wei v Minister for Immigration and Border Protection (2015) 257 CLR 22 at 32 [23], 33-34 [26]-[28]; Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123 at 133-134 [27]-[29]; Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at 444-445 [44]-[45], 452-453 [72]. is immaterial to the decision of the Authority in the sense that the non- compliance could not realistically have made any difference to the decision. The second of the potentially operative procedural limitations on the jurisdiction of the Authority is implied into the scheme of Pt 7AA by the common law. The operative common law principle of statutory interpretation is that observance of procedural fairness is an implied condition of the exercise of jurisdiction by "every one who decides anything"24 pursuant to statute to affect the interests of an individual by force of the statute, unless and to the extent that procedural fairness is clearly excluded by the statutory scheme25. One aspect of procedural fairness – the hearing rule – must be taken to be exhausted by those provisions within Pt 7AA that are expressed to make exhaustive provision as to the natural justice hearing rule in the conduct of the review26. The other aspect of procedural fairness – the bias rule – is unconfined by any provision of Pt 7AA. The fullness of its common law vigour is acknowledged in the terms of the express statutory exhortation27 that in carrying out its functions the Authority "is to pursue the objective of providing a mechanism of limited review" that is, amongst other things, "free of bias"28. What the bias rule requires of the Authority is that its conduct and that of the Minister and the Secretary is never such that a fair-minded lay observer properly informed as to the nature of the procedure for which Pt 7AA provides might reasonably apprehend that the Authority might not bring an impartial and unprejudiced mind to the resolution of the factual and legal questions that arise for its decision in the conduct of a review. That adaptation to the scheme of 24 Board of Education v Rice [1911] AC 179 at 182, quoted in Kioa v West (1985) 159 CLR 550 at 584. 25 Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 26 Section 473DA(1) of the Migration Act. See BVD17 v Minister for Immigration and Border Protection (2019) 93 ALJR 1091 at 1098-1099 [29]-[34]; 373 ALR 27 cf Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 342 [12], 28 Section 473FA(1) of the Migration Act. Pt 7AA of the standard formulation of the bias rule29 has a number of elements which warrant further exposition. The purpose of combining the "double might"30 with the construct of the hypothetical "fair-minded lay observer" is to stress that the bias rule is concerned as much to preserve the public appearance of "independence and impartiality"31 on the part of the Authority as it is to preserve the actuality. The requisite independence is decisional independence, most importantly from influence by the Secretary or the Minister. The requisite impartiality is objectivity in the finding of facts, in the exercise of procedural discretions, and in the application of the applicable legislated criteria for the grant or refusal of a protection visa. The purpose of combining the "fair-mindedness" of the hypothetical lay observer with the "reasonableness" of that observer's apprehension is to stress that the appearance or non-appearance of independence and impartiality on the part of the Authority falls to be determined from the perspective of a member of the public who is "neither complacent nor unduly sensitive or suspicious"32. Together they emphasise that "the confidence with which the [Authority] and its decisions ought to be regarded and received may be undermined, as much as may confidence in the courts of law, by a suspicion of bias reasonably – and not fancifully – entertained by responsible minds"33. The question whether conduct has resulted in a breach of the bias rule falls to be determined in light of the totality of the circumstances that exist at the time when that question arises34. Where the question arises for determination after the Authority has made a decision on a review, the totality of the circumstances 29 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344 [6]; Re Refugee Review Tribunal; Ex parte H (2001) 75 ALJR 982 at 989-990 [27]-[28]; 179 ALR 425 at 434-435. Islam v Minister for Immigration and Citizenship (2009) 51 AAR 147 at 154-155 31 cf Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 345 [7]. 32 Johnson v Johnson (2000) 201 CLR 488 at 509 [53]. 33 R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546 at 553. 34 Webb v The Queen (1994) 181 CLR 41 at 55, 73-74. includes the decision and the reasons that the Authority has given for the decision. Establishment of an apprehension of bias on the part of the Authority then requires the taking of two essential steps: first, identification of the factor which it is postulated might have led the Authority to have decided the review otherwise than on an independent and impartial evaluation of the merits; and, second, articulation of how that factor might have led the Authority to have decided the review otherwise than on an independent and impartial evaluation of the merits35. Taking those two steps is necessary to provide the foundation for the third and critical step in the application of the bias rule. That is the step of assessing whether the fair-minded lay observer might reasonably apprehend in the totality of the circumstances that the articulated departure might have occurred36. In taking that third step, "it is the court's view of the public's view, not the court's own view, which is determinative"37. Stepping through that analysis in respect of the conduct of the Secretary in having given irrelevant but prejudicial material to the Authority allows for the recognition of two quite distinct ways in which the material might conceivably be apprehended by the fair-minded lay observer to have compromised the independence or impartiality of the Authority in the conduct of the review. To the extent that the fair-minded lay observer might interpret the material as a communication to the Authority of the opinion of the Secretary about the character of the referred applicant or about the worthiness of the referred applicant to be granted a visa or about the merits of the decision of the Minister to refuse to grant the referred applicant a protection visa, the hypothetical fair- minded lay observer can be expected to be reluctant to discount as unrealistic the possibility that the Authority might have been influenced by that communication. The fair-minded lay observer would expect the Authority and the Secretary to adhere scrupulously to the standard expected of a court and court officer38 of 35 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 345 [8]; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at 445 [63]; Isbester v Knox City Council (2015) 255 CLR 135 at 146 [21]. 36 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 345 [8]; Isbester v Knox City Council (2015) 255 CLR 135 at 155-156 [59]. 37 Webb v The Queen (1994) 181 CLR 41 at 52. 38 cf Re JRL; Ex parte CJL (1986) 161 CLR 342. avoiding any private communication of opinion pertaining to the review and would view any departure from that standard with justifiable suspicion. The general concern about private communications to decision-making bodies was expressed some thirty years ago39: "Citizens are generally aware that it is the accepted practice that no party or representative of a party should have a private communication with a judge or a member of a tribunal who is to hear a case. The mere knowledge that there had been an undisclosed departure from that proper practice would have tended to produce doubts and reduce confidence in the member of the tribunal who presided at the hearing. People would be inclined to wonder why the breach of practice had occurred and how far it had gone." Within the cloistered and non-adversarial context of Pt 7AA, there is a structural consideration which makes that general concern more acute. It is the marked discrepancy in hierarchical position between the Secretary, on the one hand, and a Reviewer engaged under the Public Service Act, on the other. That discrepancy would make any communication from the Secretary to the Authority that might smack of instruction, advice or opinion concerning the conduct or outcome of a review a matter of grave concern. To the extent that the fair-minded lay observer might interpret material given to the Authority by the Secretary not as instruction, advice or opinion concerning the conduct or outcome of a review but merely as material capable of founding an inference on the part of the reader that the referred applicant is a person of bad character or a person who is in some way (unrelated to the applicable criteria for the grant of a protection visa) unworthy of being granted permission to remain in Australia, the hypothetical fair-minded lay observer can be expected to be more circumspect. The fair-minded lay observer would again here recognise that an understanding of the role of the judge within the judicial process has some analogical application to the role of the Reviewer within the review process. In relation to the role of the judge within the judicial process, she would recognise the wisdom of the following observation40: 39 The City of St Kilda v Evindon Pty Ltd [1990] VR 771 at 777. 40 Public Utilities Commission of the District of Columbia v Pollak (1952) 343 US "The judicial process demands that a judge move within the framework of relevant legal rules and the covenanted modes of thought for ascertaining them. He must think dispassionately and submerge private feeling on every aspect of a case. There is a good deal of shallow talk that the judicial robe does not change the man within it. It does. The fact is that on the whole judges do lay aside private views in discharging their judicial functions. This is achieved through training, professional habits, self- discipline and that fortunate alchemy by which men are loyal to the obligation with which they are entrusted. But it is also true that reason cannot control the subconscious influence of feelings of which it is unaware. When there is ground for believing that such unconscious feelings may operate in the ultimate judgment, or may not unfairly lead others to believe they are operating, judges recuse themselves. They do not sit in judgment. They do this for a variety of reasons. The guiding consideration is that the administration of justice should reasonably appear to be disinterested as well as be so in fact." The fair-minded lay observer would recognise that although the Authority is not a court and although a Reviewer is not necessarily a lawyer, the Authority as constituted by a Reviewer is a professional decision-making body that can ordinarily be expected to be capable of discarding "the irrelevant, the immaterial and the prejudicial"41. But, the fair-minded lay observer must also be taken to recognise that even a professional decision-maker is not "a passionless thinking machine"42 and that information consciously and conscientiously discarded might still sometimes have a subconscious effect on even the most professional of decision-making43. That last proposition can be illustrated in respect of material given to the Authority by the Secretary in purported compliance with s 473CB(1)(c) by an earlier judgment of the Full Court of the Federal Court, the correctness of which is not challenged in this appeal44. The Full Court there concluded that information contained in material given to the Authority by the Secretary, which was irrelevant to the review and to which the Authority made no reference in its 41 Johnson v Johnson (2000) 201 CLR 488 at 493 [12], quoting Vakauta v Kelly (1988) 13 NSWLR 502 at 527. See also Re The Queen and Judge Leckie; Ex parte Felman (1977) 52 ALJR 155 at 158; 18 ALR 93 at 99. In re J P Linahan Inc (1943) 138 F 2d 650 at 653. 43 eg, Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 299-300. 44 Minister for Immigration and Border Protection v AMA16 (2017) 254 FCR 534. reasons for affirming the decision of a delegate of the Minister to refuse the referred applicant a protection visa, was so "highly prejudicial" to the referred applicant that "the fair-minded lay observer, acting reasonably, would not dismiss the possibility that the [Authority] may have been affected by [the information] albeit subconsciously"45. The highly prejudicial information with which the Full Court was concerned was information that the referred applicant had been charged with the commission of a serious sexual assault while in immigration detention. Although not spelt out in the Full Court's reasoning, the information was evidently regarded by the Full Court as so appalling as to give rise to the reasonable perception that it might play on the subconscious of the Authority the Authority conscientiously sought to evaluate the merits of the referred applicant's claims to have met the statutory criteria to be recognised as a person in respect of whom Australia has protection obligations. the referred applicant as the detriment of The problem instantiated in the present appeal The problem arises in the present appeal in the context of the Minister's referral to the Authority of a decision of a delegate of the Minister which refused to grant a protection visa to the appellant, who arrived in Australia by boat in August 2013. The appellant was detained in immigration detention on Christmas Island from the time of his arrival until November 2015 when he was transferred to a correctional facility in Albany in Western Australia. He applied in September 2016 for a protection visa, which a delegate of the Minister refused in March 2017 on the basis that the delegate was not satisfied that the appellant was a person in respect of whom Australia has protection obligations. Material which the Secretary indisputably had a duty to give to the Authority as review material in consequence of the referral, and which the Secretary in fact gave to the Authority, included the prescribed form of application for a protection visa which the appellant signed in August 2016 as well as the statement of reasons which the delegate gave for refusing that application in March 2017. The appellant's answers to standard questions in the prescribed form revealed that he had in February 2016 been placed on a six month good behaviour bond for an offence involving the breaking of a window. His answers also revealed that he had been charged with, and was awaiting trial for, offences involving spitting at a guard and breaking a window when still in immigration detention on Christmas Island in November 2015 following the death of a friend there. 45 Minister for Immigration and Border Protection v AMA16 (2017) 254 FCR 534 at 552 [75] (original emphasis). The delegate's reasons for decision also referred to the February 2016 good behaviour bond, being for the offence of intentionally destroying or damaging property belonging to the Commonwealth. The reasons did so in the context of noting that the appellant's conviction for the offence might have been relevant for the delegate to consider in relation to another criterion for the grant of a protection visa had the delegate been satisfied that the appellant was a person in respect of whom Australia has protection obligations. The reasons made clear that the delegate properly did not take the conviction into account in coming to the decision that he was not so satisfied. The source of the problem is some 48 pages of accompanying documents which the Secretary gave to the Authority in purported compliance with s 473CB(1)(c). Those 48 pages comprised formal letters from officers of the Department to the appellant concerning the provision to him of assistance in the preparation of his application for protection, the formal record of the conviction and the order and recognisance in the Magistrates Court of Western Australia in February 2016 for the offence of intentionally destroying or damaging Commonwealth property, a prosecution report to the Department by the Commonwealth Director of Public Prosecutions referring to that conviction, copies of emails passing between officers of the Department as well as between the Department and "WA Compliance Courts Prisons" concerning the custody and management of the appellant during the period from November 2015 to March 2016, and a departmental "Case Review" in relation to the appellant dated March 2016. Nothing in those 48 pages was capable of rationally affecting assessment of the probability of the existence of any fact about which the Authority needed to make a finding in reviewing the delegate's decision. Within the email correspondence could be found numerous statements which referred to the appellant having been transferred from Christmas Island to the Albany correctional facility following his participation in events on Christmas Island in November 2015 which were described sometimes as an "incident" and sometimes as a "riot". One of the emails, sent from one departmental officer to another in January 2016 soon after the transfer of the appellant from Christmas Island to the Albany correctional facility, offered a "brief background" to the appellant. Under the heading "Immigration History", the email set out a chronology which made reference to numerous events including references (not otherwise explained in the evidence) to the appellant having taken part in a peaceful protest in May 2014, to advice in February 2015 that the appellant was "no longer of interest to Det Intel", and to the appellant in March 2015 having participated in an "interview with National Security Monitoring Section". Under the heading "Mental Health", it referred to then recent "Case Management observations" of "possible mental health issues". Under the heading "Behaviour", it referred to the appellant having a history of "aggressive and/or challenging behaviour" when "engaging with the department" possibly attributable to frustration from being held in detention or to mental health issues. Within the departmental "Case Review", under the heading "Immigration history", was a similar chronology as had been recorded under that heading in the January 2016 email. Under the heading "Barriers to case resolution and actions taken or being taken to resolve those barriers", were statements to the effect that the appellant had been considered on several occasions for release from detention as the holder of a bridging visa and had been "involved in many incidents while in detention". Under the heading "Justification of ongoing detention", was a statement that a recommendation had been made to the effect that the appellant remain in the Albany correctional facility until the Australian Federal Police had finalised "their [Christmas Island] riot investigation". Why the departmental case officer responsible for selecting the review material to be given to the Authority on behalf of the Secretary might have thought it appropriate to include the 48 pages does not appear from the record on the appeal. In a standard form referral document completed by the case officer, the pages are listed without explanation simply by document numbers under the residual category of "[a]ny other relevant documents that should be included". After writing to the appellant informing him that the Minister had referred the delegate's decision to refuse him a protection visa to it for review and that the Department "has provided us with all documents they consider relevant to your case", the Authority went on to make a decision affirming the decision of the delegate without requesting new information and without interviewing the appellant. The statement of the Authority's reasons for affirming the decision of the delegate expressly states that the Authority "had regard to the material referred by the Secretary". The Authority's reasons make no reference to the February 2016 conviction or to any events on Christmas Island or to anything else contained only in the 48 pages. Is there a reasonable apprehension of bias on the part of the Authority? Plainly, the 48 pages had nothing to do with the merits of the decision of the Minister to refuse to grant the referred applicant a protection visa. And plainly, the 48 pages were looked at and were consciously discarded as irrelevant by the Authority in the course of undertaking its review. Differing from the majority in this Court and agreeing with the majority in the Full Court of the Federal Court in the judgment under appeal46, we are unable to conclude that a hypothetical fair-minded lay observer, acting reasonably, would entertain as realistic the possibility that looking at anything contained in the 48 pages might in any way have diverted the Authority from its statutory function of undertaking an independent and impartial evaluation on the merits of whether or not the appellant was a person in respect of whom Australia has protection obligations. The hypothetical fair-minded lay observer might well wonder why the 48 pages were included in the material provided to the Authority, but would recognise that most of the information contained in all of the pages was information which fleshed out the references to the conviction and pending charges arising from events on Christmas Island in March and November 2015 to which the appellant had referred in his application for a protection visa which was quite properly given to the Authority. The hypothetical fair-minded lay observer would understand that, whatever relevance those events and the information which pertained to them might possibly have had for the processing of the appellant's application for the protection visa had he been found to be a person in respect of whom Australia has protection obligations, the events and information could have no legitimate bearing on whether the appellant met the statutory definition of a person in respect of whom Australia has protection obligations and therefore could have no legitimate bearing on the review to be conducted by the Authority. Whilst the hypothetical fair-minded lay observer would therefore be led to question the judgment of the departmental case officer who included the 48 pages within the review material given to the Authority on behalf of the Secretary, she would not, without undue suspicion, find reason to question the case officer's motive. The characterisation of the events of November 2015 in which the appellant was involved sometimes as a "riot", the reference to him as having a history of "aggressive" and "challenging" behaviour in his dealings with the Department, the references to his mental health, and the obscure security-related references within his "immigration history", would be recognised by the hypothetical fair-minded lay observer as expressions of opinion and records of events that were all explicable in the context of the communications in which they were originally made. Neither in form nor in substance would she see the provision to the Authority of the documents containing those expressions of opinion as an attempt to communicate to the Authority an opinion of the 46 CNY17 v Minister for Immigration and Border Protection (2018) 264 FCR 87 at Secretary or of any officer within the Department to the effect that the appellant was a person of bad character or otherwise unworthy to be granted a visa. Finally, the hypothetical fair-minded lay observer would not regard the revelations and opinions contained in the 48 pages as so shocking as to give rise to the realistic possibility that knowing of them would play on the subconscious of the Authority to the detriment of the appellant. Just as the Authority could be expected to engage in an impartial evaluation of the merits of whether or not the appellant met the applicable criteria for the grant of a protection visa untainted by the information about the conviction and pending charges which the appellant had included in his form of application properly given to the Authority by the Secretary, so the Authority could be expected to engage in that evaluation untainted by the dashes of colour added by the contents of those pages. Was there a material failure of a condition precedent to the Authority's conducting the review? Not only was the impugned information contained in the 48 pages objectively incapable of rationally affecting assessment of the probability of the existence of any fact which the Authority needed to find in reviewing the delegate's decision; that information was not reasonably capable of being regarded by the Secretary at the time of referral as capable of rationally affecting assessment of the probability of the existence of any fact which the Authority might need to find in reviewing the delegate's decision. That conclusion of fact appears to have been seen by the Full Court either to have lain beyond the scope of the case presented by the appellant or to have been inappropriate to be drawn47. However, the appropriateness of the conclusion was raised without objection by a ground of appeal to this Court and was effectively conceded by the Minister in argument on the appeal. The conclusion of fact carries with it the conclusion of law that the inclusion of the information contained in the 48 pages did not comply with the duty imposed on the Secretary by s 473CB(1)(c). Whether that non-compliance would have led to the failure of a condition precedent to the conduct of the review by the Authority turns on whether the further conclusion is properly to be reached that non-compliance could realistically have made any difference to the decision that the Authority in fact went on to make. 47 CNY17 v Minister for Immigration and Border Protection (2018) 264 FCR 87 at The question so framed as of the materiality of the information contained in the 48 pages to the decision of the Authority differs in concept and in nature from the question of whether the provision of the information gave rise to a reasonable apprehension of bias. The difference is that materiality is a question of counter-factual analysis to be determined by the court as a matter of objective possibility as an aspect of determining whether an identified failure to comply with a statutory condition has resulted in a decision that has in fact been made being a decision that is wanting in statutory authorisation. The question is not one of perception to be determined by the court by reference to the reasonable apprehension of a hypothetical fair-minded lay observer, which apprehension if established is of itself sufficient to result in a want of statutory authorisation. Nevertheless, the question of whether the information contained in the 48 pages could realistically have made any difference to the decision of the Authority falls to be answered by reference to the same considerations as inform the answer already given to the question of whether a hypothetical fair-minded lay observer, acting reasonably, would entertain as realistic the possibility that the information might have diverted the Authority from its statutory function of undertaking an independent and impartial evaluation on the merits. The material had no objective relevance to the review, can be inferred not in fact to have been consciously taken into account by the Authority in making the decision, and could at most be conjectured to have had a subconscious effect on the Authority in making the decision. In those circumstances, the negative answer already given to the latter question leads inexorably to a negative answer to the former. Disposition of the appeal For these reasons, we would dismiss the appeal. NettleJ NETTLE AND GORDON JJ. A decision by a delegate of the first respondent to refuse the appellant's application for a protection visa was referred to the Immigration Assessment Authority ("the IAA") for review under Pt 7AA of the Migration Act 1958 (Cth)48. The Secretary of the Department was required to give to the IAA, among other things, "any other material that [was] in the Secretary's possession or control and [was] considered by the Secretary (at the time the decision [was] referred to the [IAA]) to be relevant to the review"49. The IAA had to review the decision "by considering the review material provided to [it]" by the Secretary, without accepting or requesting new information, and without the appellant, the Secretary gave the IAA material which was not only irrelevant but prejudicial to him. The question in this appeal is whether a hypothetical fair-minded lay observer with knowledge of the material objective facts might reasonably apprehend that the IAA might not bring an impartial mind to the decision before it as a result of that information being given to it51. the appellant50. Unbeknown interviewing The answer to that question is "yes". A fair-minded lay observer, cognisant of the way Pt 7AA works52, including the role of the Secretary, might have apprehended that the IAA might not have brought an impartial mind to the review, by reason of the irrelevant and prejudicial material which the IAA was mandated to consider. The source of the apprehended bias is the irrelevant and prejudicial material. That material might have led the decision-maker to make a decision otherwise than on the legal and factual merits of the case53 because it might have led the decision-maker to the view that the appellant was not the sort of person who should be granted a visa or that the appellant was not a person who should be believed. A fair-minded lay observer might have apprehended that this might have had an effect on the decision-maker, even if that effect was subconscious. 48 Migration Act, s 473CA. 49 Migration Act, s 473CB(1)(c). 50 Migration Act, s 473DB(1). 51 Webb v The Queen (1994) 181 CLR 41 at 73; Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344 [6]; Isbester v Knox City Council (2015) 255 CLR 135 at 146 [20]. Isbester (2015) 255 CLR 135 at 146 [20], [23]. Isbester (2015) 255 CLR 135 at 146 [21]. NettleJ The other grounds of appeal concerning an opportunity for the appellant to be heard, the lawfulness of the actions of the Secretary of the Department, and jurisdictional error do not arise once this conclusion is reached. Apprehended bias The rule against bias for judicial and administrative decision-makers is long standing54. The public is entitled to expect that issues determined by judges and other public office holders should be decided, among other things, free of prejudice and without bias55. Bias, although incapable of precise definition, "connotes the absence of impartiality"56. The rule against bias is one aspect of the requirements of procedural fairness57. Breach of the rules of procedural fairness, including where error58, apprehended bias attracting relief under s 75(v) of the Constitution59. is demonstrated, jurisdictional constitutes As the rule applies to any decision which is subject to the principles of procedural fairness60, it applies "not only to the judicial system but also, by extension, to many other kinds of decision-making and decision-makers"61. 54 See Ebner (2000) 205 CLR 337 at 343 [3]; Dr Bonham's Case (1610) 8 Co Rep 113b at 118a [77 ER 646 at 652]. 55 Webb (1994) 181 CLR 41 at 53. 56 Ebner (2000) 205 CLR 337 at 348 [23], 396 [182]. 57 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 490 [25]. 58 Plaintiff S157/2002 (2003) 211 CLR 476 at 490 [25]. 59 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 89 [5], 101 [41], 106 [51]-[52], 135 [142], 136 [145], 143 [170], 144 [172]; Re Refugee Review Tribunal; Ex parte H (2001) 75 ALJR 982 at 990 [33]; 179 ALR 425 60 Aronson, Groves and Weeks, Judicial Review of Administrative Action and Government Liability, 6th ed (2017) at 643 [9.10]. Isbester (2015) 255 CLR 135 at 146 [22]. This includes tribunals (Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka (2001) 206 CLR 128), judges (Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427), for jurors (Webb (1994) 181 CLR 41), government ministers (Minister Footnote continues NettleJ The rule is concerned with public confidence in the administration of justice62. It is important to the quality of decisions being made and to the confidence and cooperativeness of individuals affected by those decisions63. By enhancing the appearance and actuality of impartial decision-making, it fosters public confidence in decision-makers and their institutions. The test for apprehended bias is whether "a fair-minded lay observer might reasonably apprehend that the [decision-maker] might not bring an impartial mind to the resolution of the question the [decision-maker] is required to decide"64. A finding of apprehended bias is not to be reached lightly65. The determination of whether an apprehension of bias is "reasonable" is not assisted by philosophical conceptions of the varieties of seriousness or materiality. The test has two steps. First, one must identify what it is that might lead a decision-maker to decide a case other than on its legal and factual merits66. What is said to affect a decision-maker's impartiality? Partiality can take many forms, including disqualification by direct or indirect interest in the proceedings, pecuniary or otherwise; disqualification by conduct; disqualification by association; and disqualification by extraneous information67. As Deane J said in Webb v The Queen, in relation to disqualification by extraneous information, "knowledge of some prejudicial but inadmissible fact or circumstance [may give] rise to [an] apprehension of bias"68. Second, a logical connection must be Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at 529 [64]) and local councils (Isbester (2015) 255 CLR 135). It is a rule of "almost universal application": Groves, "The Rule Against Bias" (2009) 39 Hong Kong Law Journal 485 at 485. 62 Webb (1994) 181 CLR 41 at 68. 63 Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 107 [186]. 64 Ebner (2000) 205 CLR 337 at 344 [6]; see also Isbester (2015) 255 CLR 135 at 65 Re JRL; Ex parte CJL (1986) 161 CLR 342 at 371. Isbester (2015) 255 CLR 135 at 146 [21]. 67 Webb (1994) 181 CLR 41 at 74. 68 Webb (1994) 181 CLR 41 at 74. NettleJ articulated between the identified thing and the feared deviation from deciding the case on its merits69. How will the claimed interest, influence or extraneous information have the suggested effect? involved in making the decision and In applying the test, "it is necessary to consider ... the legal, statutory and factual contexts in which the decision is made"70. It is also necessary to consider "what the decision-maker"71. This draws attention to the fact that the test must recognise "differences between court proceedings and other kinds of decision-making"72. The fair-minded lay observer knows the nature of the decision, the circumstances which The fair-minded lay observer has "a broad knowledge of the material objective facts ... as distinct from a detailed knowledge of the law or knowledge of the character or ability of the [decision-maker]"74. the decision and the context identity of in which the led Where, however, as here, the statutory context is complex, the fair-minded lay observer at least must have knowledge of the key elements of that scheme. In this case, those key elements, summarised below75, are not themselves overly complex. It is necessary to consider the statutory regime. Statutory context Part 7AA of the Migration Act provides the process for review by the IAA of decisions made by delegates of the Minister. The IAA is to "pursue the objective of providing a mechanism of limited review that is efficient, quick, free of bias and consistent with Division 3 (conduct of review)"76 (emphasis added). 69 Ebner (2000) 205 CLR 337 at 345 [8]; Isbester (2015) 255 CLR 135 at 146 [21]. Isbester (2015) 255 CLR 135 at 146 [20]. Isbester (2015) 255 CLR 135 at 146 [23]. Isbester (2015) 255 CLR 135 at 146 [22]; see also Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 90. Isbester (2015) 255 CLR 135 at 146 [23]. 74 Webb (1994) 181 CLR 41 at 73. 75 See [94] below. 76 Migration Act, s 473FA(1). See also s 473DA(1). NettleJ Part 7AA furthers that objective by creating a "fast track reviewable decision"77 which the Minister administering the Migration Act (or his or her delegate) is obliged to refer to the IAA as soon as reasonably practicable after that decision Part 7AA applies only to a "fast track applicant"79 and a decision to refuse the applicant's visa application must not have been made because of the character test in s 501 of the Migration Act, or on the basis of s 5H(2), 36(1C), or 36(2C)(a) or (b) of the Migration Act80. Those latter provisions are concerned primarily with excluding people who the Minister has serious reasons for considering have committed certain international crimes, a "serious non-political crime"81 before entering Australia, or acts contrary to the purposes and principles of the United Nations or who the Minister considers, on reasonable grounds, would be a danger to Australia's security, or a danger to the Australian community having been convicted of a "particularly serious crime"82. Where those provisions are relied upon in making a decision to refuse a visa, the decision will be reviewed by the Administrative Appeals Tribunal, rather than by the IAA83. Those provisions were not relied upon in refusing the appellant's protection visa. A number of other aspects of the Part should be emphasised. First, s 473CB(1) requires the Secretary of the Department to give the following review material to the IAA: (a) a statement setting out the facts found by the decision-maker, the evidence on which those findings were based and the reasons for the decision; (b) material provided by the applicant to the decision-maker before the decision was made; (c) "any other material that is in the Secretary's possession or control and is considered by the Secretary (at the 77 Migration Act, ss 5(1), 473BB definition of "fast track reviewable decision". 78 Migration Act, s 473CA. 79 Migration Act, s 5(1) definition of "fast track applicant". 80 Migration Act, s 500(1)(c). 81 The term "non-political crime" is further defined by the Migration Act, s 5(1). 82 The term "particularly serious crime" is further defined by the Migration Act, s 5M. 83 Migration Act, s 500(1)(c). NettleJ time the decision is referred to the [IAA]) to be relevant to the review"; and (d) certain contact details for the applicant. This appeal concerns para (c). Second, s 473DA(2) provides that nothing in Pt 7AA "requires the [IAA] to give to a referred applicant any material that was before the Minister when the Minister made the [original] decision". Indeed, subject to the rest of Pt 7AA, the IAA must review the decision "by considering the review material provided to [it] under section 473CB", without accepting or requesting new information, and without interviewing the applicant84. The IAA does not have a duty to accept new information in any circumstances85. Nevertheless, the IAA may "get" any documents or information which were not before the Minister which the IAA considers to be relevant, and may invite a person to give new information86. Such "new information" gained under s 473DC must not be considered by the IAA unless it is satisfied that there are exceptional circumstances which justify its consideration, and the applicant satisfies the IAA that the new information could not have been provided to the Minister before the original decision was made, or is credible personal information which was not previously known but which may have affected consideration of the applicant's claims87. If the new information is considered by the IAA under s 473DD and would be the reason, or part of the reason, for affirming a decision, the IAA must give the applicant particulars of the new information88. The IAA must also explain to the applicant why that new information is relevant to the review and invite the applicant to give comments on the new information, either in writing or to "non-disclosable at an interview89. This obligation does not apply 84 Migration Act, s 473DB(1). 85 Migration Act, s 473DC(2). 86 Migration Act, s 473DC(1) and (3). 87 Migration Act, s 473DD. 88 Migration Act, s 473DE(1)(a). 89 Migration Act, s 473DE(1)(b) and (c). NettleJ information"90, information which is about a class of persons rather than the applicant themselves, or information which is prescribed by regulations91. It will be necessary to return to the application of the test for apprehended bias in the context of Pt 7AA of the Migration Act and the facts of this appeal. However, before doing so, it is both appropriate and necessary to consider why the question of apprehended bias should be considered before the other appeal grounds and, indeed, makes the consideration of those grounds unnecessary. Order of consideration The rule against bias is a principle of procedural fairness, and "principles of procedural fairness focus upon procedures rather than outcomes"92. The rule against bias is designed to ensure that the process is, and appears to a fair-minded lay observer to be, a fair process. As four members of this Court said in Michael Wilson & Partners Ltd v Nicholls93: "An allegation of apprehended bias does not direct attention to, or permit consideration of, whether the judge had in fact prejudged an issue. To ask whether the reasons for judgment delivered after trial of the action somehow confirm, enhance or diminish the existence of a reasonable apprehension of bias runs at least a serious risk of inverting the proper order of inquiry (by first assuming the existence of a reasonable apprehension). Inquiring whether there has been 'the crystallisation of that apprehension in a demonstration of actual prejudgment'94 impermissibly confuses the different inquiries that the two different allegations (actual bias and apprehended bias) require to be made." (emphasis in original) The test for apprehended bias requires the court to consider what it is which might lead a decision-maker to stray from the merits of the case, and then to articulate a logical connection between that thing and the feared deviation 90 Migration Act, s 5(1) definition of "non-disclosable information". 91 Migration Act, s 473DE(3). 92 Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88 at 96 [16]. (2011) 244 CLR 427 at 446 [67]. 94 Nicholls v Michael Wilson & Partners Ltd (2010) 243 FLR 177 at 200 [91]. NettleJ from the merits95. These points can be, and often are, considered before the decision is made. Here, they could have been considered as soon as the IAA was given the material by the Secretary. The test does not depend on anything which happens at the time of decision, or later. Next, the test for apprehended bias does not rest on a finding of actual bias96 or depend on the final decision actually made. One does not need to find that the irrelevant material affected the decision97. One needs only to find that the fair-minded lay observer might have reached the conclusion that the irrelevant material might lead to a deviation from the merits98. Finally, the remedies for apprehended bias reinforce the need to consider apprehended bias upfront. In cases of apprehended bias, recusal of the decision-maker is a possible remedy and is available before a decision is made. Indeed, in Michael Wilson it was said99: "If a party to civil proceedings, or the legal representative of that party, knows of the circumstances that give rise to the disqualification [of a decision-maker] but acquiesces in the proceedings by not taking objection, it will likely be held that the party has waived the objection." Put in different terms, a remedy for apprehended bias should be sought (and, if appropriate, made) at the earliest possible time. There is no utility in allowing a flawed process to run to its conclusion. Here, the provision of irrelevant and prejudicial material to the IAA immediately raised an issue of whether a fair-minded lay observer might apprehend that the IAA might, as a result of the provision of that information, not bring an impartial mind to the resolution of the review. As will be seen, that question of bias having arisen and been considered, it is not necessary in the circumstances of this appeal to go on to consider issues of jurisdictional error which may have otherwise affected the IAA's final decision. 95 Ebner (2000) 205 CLR 337 at 345 [8]; Isbester (2015) 255 CLR 135 at 146 [21]. 96 Ebner (2000) 205 CLR 337 at 345 [7]. 97 Ebner (2000) 205 CLR 337 at 345 [7]. 98 Ebner (2000) 205 CLR 337 at 344 [6]. (2011) 244 CLR 427 at 449 [76] (footnote omitted). NettleJ Factual context The appellant arrived in Australia on 13 August 2013. He was detained on Christmas Island and was unable to apply for a visa because of the bar in s 46A of the Migration Act. He broke a window on 20 March 2015 while in detention and was charged with damaging Commonwealth property ("the March 2015 incident"). He pleaded guilty, was convicted and was released without sentence, on condition of good behaviour for six months and the payment of $820.60 in reparation. The Minister lifted the s 46A visa application bar for the appellant on 29 September 2015. In November 2015, there were protests on Christmas Island. The appellant was charged, he said in his visa application, with "spitting at a guard & breaking a window" during the protests ("the November 2015 incident"). The appellant was transferred to a correctional facility on 12 November 2015. The appellant lodged an application for a safe haven enterprise visa on 16 September 2016. He disclosed his conviction from the March 2015 incident, and the pending charges from the November 2015 incident. In relation to the March 2015 incident, the appellant's form also said "[t]here may be further updates on the cases". The visa application was refused on 14 March 2017. By letter of that date, the Department advised that the decision had been referred to the IAA. The Department said it had provided the IAA with the decision record, material given by the appellant to the Department, and "any other material the Department considers to be relevant to the review". That material was not identified. The appellant then received a letter from the IAA dated 23 March 2017. It stated that the Department had provided "all documents they consider relevant to your case", though these were not identified. The IAA stated that a decision would be made on that material, "unless we decide to consider new information", but this could only happen "in limited circumstances". The IAA affirmed the decision on 12 May 2017, stating that it "had regard to the material referred by the Secretary under s 473CB of the Migration Act 1958". The material was not particularised. The Minister identified the material provided to the IAA only when the appellant sought judicial review of the IAA's decision. The material included departmental documents with the following assertions. First, that the appellant had a "history of aggressive and/or challenging behaviour when engaging with the [D]epartment", and had been "involved in many incidents while in detention" (without identifying the history or the incidents). Second, that he had been NettleJ recommended for detention in a correctional facility while there was a police investigation into a "riot". Third, that Australian Border Force had advised the Department "to not engage" with the appellant (or other detainees) while in prison. Fourth, that the appellant was "no longer of interest to Det Intel" and was the subject of unspecified "on-going investigations". There was no identification of what, exactly, "Det Intel" referred to. Fifth, that he had been considered for release from detention on a Bridging E visa "on several occasions", which the appellant characterises as an implicit representation that his behaviour resulted in him not being granted those bridging visas. The appellant never had these documents. The information in the documents went beyond what was provided by the appellant and, in many cases, it was information of which the appellant was not even aware. It is not known whether the delegate had the documents. The information outlined above was irrelevant to the task of the IAA. That information could only plausibly have gone to questions of whether the appellant was a danger to the Australian community, or had been convicted of a particularly serious crime. A decision on that basis could not have been made by the IAA100. The decisions below In the Federal Circuit Court of Australia, Judge Street dismissed the appellant's application for judicial review of the IAA's decision. His Honour held that the information identified by the appellant was not such that a fair-minded lay observer might reasonably apprehend that the IAA might not bring an impartial mind to the determination of the matter on its merits. The appellant appealed to the Full Court of the Federal Court of Australia. The appeal was dismissed by majority. Each judge gave separate reasons. Moshinsky and Thawley JJ both found that much of the information which the appellant claimed to be prejudicial was already contained in the original visa application and the delegate's reasons for decision. This included the conviction for the March 2015 incident and the charges for the November 2015 incident. The information which was not otherwise provided by the visa application or the delegate's reasons was irrelevant to the IAA's task, but not prejudicial enough to meet the test for apprehended bias. Mortimer J would have allowed the appeal. Her Honour held that the material was "plainly adverse to the appellant's interest" in having matters concerning his credibility, the reliability of his narrative, his motives for seeking 100 See [61] above. NettleJ asylum and whether he should be granted a visa determined in his favour. Having considered the effect of individual pieces of information contained in the review material, her Honour came to the view that the material overall gave: "a strong impression that the appellant was not trustworthy, that he was aggressive towards authority, that he challenged authority, that he was a person of interest to officers within the Commonwealth Government who were dealing with issues of sensitivity and of national security, that he had a disregard for Australian law and that overall, there were considerable, sustained concerns at an official level ... that the appellant posed a risk to the safety of the ... Australian community". Submissions in this Court The appellant, after noting that Pt 7AA preserved the bias rule, submitted that a fair-minded lay observer would be aware of how Pt 7AA of the Migration Act worked. The appellant submitted that the material provided to the IAA was "objectively irrelevant" and that the Secretary's error in providing it resulted in the IAA exceeding its jurisdiction, because the legislative scheme contemplates the IAA undertaking its review only on the basis of certain materials (which it needs to properly exercise its powers), not including the material impugned in this case. The information in the review material was characterised by the appellant as being a character assessment at best, and a "character assassination" at worst. The appellant submitted that the material was capable of having a subconscious effect on the IAA, and that this gave rise to a reasonable apprehension of bias. The appellant further submitted that this apprehension was strengthened by the fact that the information was provided by the Secretary of the Department, who considered the material "relevant" to the review. The appellant accepted that the risk of bias could have been "neutralised" by affording the appellant an opportunity to comment on the material, but that was not done in this case. The Minister said that if Pt 7AA required a decision-maker to consider information, that information could not logically cause the decision-maker to depart from the statutory task. The information in this case was initially said to constitute "background" to the IAA's decision. But during oral argument, the Minister accepted that describing the material as "relevant" to assessment of the appellant's credibility or claims to protection would be to draw "a very long bow". The Minister further submitted that the information provided by the Secretary was not prejudicial. The reference to the appellant no longer being of interest to "Det Intel" was characterised as being "positive in character". A reference to the appellant being interviewed by the National Security NettleJ Monitoring Section did not say anything about why that interview was held, and so could not lead to any inference on the part of a reasonable observer. The references to investigations into a "riot" on Christmas Island did not say that the appellant himself was under investigation. The reference to the appellant's history of aggressive or challenging behaviour was explained by reference to the appellant's mental health, evidence of which was otherwise before the IAA in any event. Although the Minister accepted that it may be possible for information to be put before the IAA which is so prejudicial as to raise an apprehension of bias, he submitted that the material in this case did not reach that level of prejudice. The Minister also pointed out that some of the information said to be prejudicial had already been disclosed by the appellant himself, such as the existence of the pending criminal charges; that even if the material was irrelevant, the IAA was capable of putting that material aside for the purposes of making a decision; and that it would not lead a fair-minded lay observer to conclude that the IAA might not decide the case on its merits. The fact that the Secretary had provided the information, according to the Minister, conveyed no "official view" about its significance, and the over-provision of information by the Secretary would rarely, if ever, constitute an error. The Minister said that there was no prohibition on the Secretary providing additional material which was not strictly required by s 473CB. The Minister further submitted that there was no obligation on the IAA to seek any comment from the appellant on the material in light of s 473DA of the Migration Act101. As will be explained, the provision of irrelevant and prejudicial material to the IAA immediately raised an issue whether a fair-minded lay observer might apprehend that the IAA might, as a result of the provision of that information, not bring an impartial mind to the resolution of the review. Apprehended bias here? What might lead the IAA to decide the appellant's case otherwise than on its merits? The presence of prejudicial material which was irrelevant to the question before the IAA and which the IAA was mandated to consider. As Deane J said in Webb, "knowledge of some prejudicial but inadmissible fact or circumstance [may give] rise to [an] apprehension of bias"102. Is there a logical connection between this and the feared deviation from deciding the case on its merits? Yes. The material was not relevant to the IAA's task. If it influenced the 101 See [102] below. 102 Webb (1994) 181 CLR 41 at 74. NettleJ IAA, whether consciously or subconsciously, then the IAA would deviate from deciding the case on its merits. In light of this, might the fair-minded lay observer apprehend a lack of impartiality? Yes. This conclusion is largely a factual one103. It is therefore necessary to consider the facts of the case in light of the statutory context104. The fair-minded lay observer knows the key aspects of the statutory scheme, which are as follows. First, the Secretary must give the IAA any material which he or she considers to be "relevant" to the review105. Second, the IAA must conduct its review "by considering the review material" provided under s 473CB106. Third, it must do so "without accepting or requesting new information" and "without interviewing the referred applicant", except as provided by Pt 7AA107. Fourth, the IAA has no duty to accept or request new information108 and must not consider it except in exceptional circumstances109. Fifth, the IAA is under no obligation to give the applicant any material which was before the Minister110. The appellant was not aware of the information provided by the Secretary. The Secretary had decided that the information was "relevant". The IAA then had to consider that information111, without the appellant knowing about that information or having any ability to comment on it. The material was prejudicial to the appellant. The material included assertions that the appellant had a history of aggressive or challenging behaviour, 103 Isbester (2015) 255 CLR 135 at 146 [20]. 104 Isbester (2015) 255 CLR 135 at 146 [20]. 105 Migration Act, s 473CB(1)(c). 106 Migration Act, s 473DB(1). 107 Migration Act, s 473DB(1). 108 Migration Act, s 473DC(2). 109 Migration Act, s 473DD(a). 110 Migration Act, s 473DA(2). 111 Migration Act, s 473DB(1). NettleJ had some link to investigations of a "riot" and was himself the subject of investigations for unspecified matters, had been of interest to "Det Intel", and had been refused bridging visas in the past. These matters had not been disclosed by the appellant in his visa application, and, in many cases, were information of which the appellant was not even aware. Nor were they disclosed in the reasons for the delegate's decision. There is a risk that such information would lead a decision-maker in the place of the IAA to have a bias against the appellant, possibly by thinking that the appellant is not a fit person to hold a visa or that the appellant would be a danger to the community. Of course, it does not matter whether the IAA actually had such a bias112, or whether the IAA in fact put the prejudicial information aside. There is a risk of subconscious bias here113, and that risk cannot be cured by putting the information aside. The idea that the information could or would be put aside is also difficult to reconcile with the statutory scheme. As noted above114, the Secretary endorses the information which he or she gives to the IAA as "relevant" to the IAA's task. The IAA then has to consider that information. The Minister submitted that administrative decision-makers routinely set aside irrelevant material. But that is not the point. The material was not only irrelevant, but also prejudicial. Putting the material aside does not overcome the subconscious bias which might result from seeing that material. Nor did the IAA expressly state that the material had been put to one side115. Returning to the test, a fair-minded lay observer might apprehend a lack of impartiality on the part of the IAA where: (i) material has been designated as "relevant" by the Secretary; (ii) the IAA must have regard to that material; (iii) the information is prejudicial to the applicant; and (iv) that information is hidden from the applicant. A fair-minded lay observer may well ask why prejudicial information is provided and hidden from the applicant, if that information was not to be taken into account. In those circumstances, 112 Ebner (2000) 205 CLR 337 at 345 [7]. 113 Kioa v West (1985) 159 CLR 550 at 629; Minister for Immigration and Border Protection v AMA16 (2017) 254 FCR 534 at 552 [75]. 114 See [94] above. 115 cf AMA16 (2017) 254 FCR 534 at 552 [77]. NettleJ the fair-minded lay observer might apprehend that the decision-maker might decide the case other than on its merits. This conclusion depends on the facts of this case. There may be other cases in which the material given to the IAA was somewhat prejudicial to an applicant, but not such as might lead a fair-minded lay observer to apprehend a lack of impartiality. The particular point at which prejudicial information will lead to apprehended bias cannot be identified in the abstract. Here, the information was such that a fair-minded lay observer might think it would bias the decision-maker against the grant of a visa to the appellant. If circumstances like this arise, a decision-maker may need to invite an applicant to comment on adverse information to counteract the apprehension of bias. Is this consistent with the statutory scheme? Yes. Section 473DA(2) says that "nothing in this Part requires the [IAA] to give to a referred applicant any material that was before the Minister" when the Minister made the original decision. But this says nothing about "what might be required of the [IAA] in particular circumstances in order to exercise [its] power [under s 473DC(3)] reasonably"116. The power in s 473DC(3) allows the IAA to get new information. While the IAA "does not have a duty to get, request or accept, any new information" in any circumstances117, it may still invite an applicant to comment on information under s 473DC(3) if that would be the best way of avoiding an apprehension of bias. That conclusion is reinforced by the statutory scheme. The IAA is statutorily obliged to "pursue the objective of providing a mechanism of limited review that is efficient, quick, free of bias and consistent with Division 3 (conduct of review)"118 (emphasis added). The provisions concerning the giving and receipt of new information did not override the requirement that the IAA act free from bias. Other appeal grounds The Minister accepted that where apprehended bias is shown, it would be appropriate to grant relief under s 75(v) of the Constitution, subject to relief 116 Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 264 CLR 217 at 229 [26]. 117 Migration Act, s 473DC(2). 118 Migration Act, s 473FA(1). NettleJ under s 75(v) being discretionary119. In the circumstances of this appeal, where the Minister accepted that if apprehended bias was demonstrated, relief would be granted, the role (if any) of materiality in questions of jurisdictional error, and its precise metes and bounds, does not arise. IAA Moreover, given the conclusions reached on the question of apprehended bias in this appeal, it is unnecessary to address the other appeal grounds concerning an opportunity for the appellant to be heard, the lawfulness of the actions of the Secretary of the Department, and jurisdictional error on the part of the the Secretary's allegedly unlawful actions. Indeed, given the conclusions on the question of apprehended bias, the process of the IAA in making the decision was not, and might not have appeared to a fair-minded lay observer to be, a fair process. It is, for that reason alone, inappropriate and unnecessary to consider and address the legality of an outcome of that flawed process. resulting from The Minister contended that quashing the decision of the IAA and remitting the matter back to it would put the IAA in an "impossible bind", because the IAA would once again be exposed to the prejudicial material. Any further decision it made would, therefore, be infected by the same apprehended bias found this appeal. That submission should not be accepted. Section 473EA(4) of the Migration Act requires the IAA to return to the Secretary those documents provided by the Secretary, after the IAA's review is complete. Moreover, the matter would be remitted to a differently constituted IAA. As a result, the "impossible bind" spoken of by the Minister would not arise. The relief would not be futile. Conclusion For those reasons, the appeal should be allowed with costs. Orders 1 and 2 made by the Full Court of the Federal Court of Australia on 21 September 2018 and order 1 made by the Full Court of the Federal Court of Australia on 12 October 2018 should be set aside and, in their place, order that: The appeal be allowed with costs. Orders 1 and 2 of the Federal Circuit Court of Australia dated 8 November 2017 be set aside and, in their place, order that: 119 Ex parte Aala (2000) 204 CLR 82 at 89 [5], 106 [51]-[52], 136 [145], 144 [172]; Ex parte H (2001) 75 ALJR 982 at 990 [33]; 179 ALR 425 at 435-436. NettleJ the decision of the Immigration Assessment Authority dated 12 May 2017 be quashed; the matter be remitted to the Immigration Assessment Authority differently constituted; and the first respondent pay the applicant's costs. Edelman Introduction A deduction from the world around us, usually as a natural implication if it is not expressed, is that in exercising powers to adjudicate upon the rights of others an adjudicator will be, and will be seen to be, impartial and independent. This appeal concerns whether that requirement of a lack of apprehended bias was violated in a hearing by the Immigration Assessment Authority ("the Authority"). The hearing was a review, under Pt 7AA of the Migration Act 1958 (Cth), of a decision of a delegate of the Minister for Immigration and Border Protection to refuse the appellant's application for a protection visa. The apprehension of bias was said to arise from the existence of irrelevant but prejudicial material provided to the Authority by the Secretary of the Department of Immigration and Border Protection. Before the Federal Circuit Court of Australia, and before the Full Court of the Federal Court of Australia, the issue of apprehended bias was raised by the appellant as a direct reason for impugning the decision of the Authority. However, during the course of submissions in this Court, an anterior issue was raised by the Court upon which the parties made oral submissions and provided further written submissions after the hearing of the appeal. The anterior issue is that s 473CB(1)(c) of the Migration Act requires, as a prima facie precondition for the exercise of any jurisdiction by the Authority, the formation of an opinion, on reasonable grounds, by the Secretary that the material provided to the Authority was relevant to the review. No reasonable grounds existed for such an opinion to have been formed by the Secretary. However, s 473CB does not contemplate that jurisdictional error will exist, invalidating the decision of the Authority, unless the failure by the Secretary is material. The Minister accepted that if the appellant established a reasonable apprehension of bias then materiality would be satisfied. For this reason, despite the anterior issue being resolved in favour of the appellant, the issue of apprehended bias still arises on this appeal, although in an indirect way. As Nettle and Gordon JJ explain, the Federal Circuit Court and a majority of the Full Court concluded that there was no apprehension of bias. I agree with Nettle and Gordon JJ that this conclusion was in error. The Secretary had provided the Authority with 48 pages of irrelevant and prejudicial material involving prejudicial opinion, innuendo and tacit suggestion, on the basis that the Secretary considered that the material was relevant to the review. A fair-minded lay observer would consider that the prejudice arising from any consideration of this irrelevant material could be substantial. Importantly, the Authority said, in a letter to the appellant, that it would make a decision on the basis of the information provided by the Secretary. The Authority acknowledged in its reasons that it had considered all of the material provided to it. Edelman It appears from the index of the court book before the Federal Circuit Court that the 48 pages of irrelevant material comprised a very large part of the material provided to the Authority. And yet, the Authority, a professional decision maker, did not suggest that any of that irrelevant and prejudicial material that it had considered had been disregarded or had been given no weight. In these circumstances, a fair-minded lay observer would apprehend, at the very least, that the Authority might have taken the material into account, either consciously or subconsciously. The apprehension might be that the Authority might have formed adverse views of the appellant's character and, consciously or subconsciously, might have acted upon those adverse views when reaching conclusions on the issues in dispute either directly, or indirectly by the effect on its assessment of the credibility of the appellant. The appeal must be allowed. The manner in which the apprehended bias issue arises A decision of the Secretary as a prima facie pre-requisite for the Authority's jurisdiction The arrived appellant in Australia 16 August 2013. On 16 September 2016 the appellant applied for a protection visa, namely a Safe Haven Enterprise (subclass 790) visa. The application was refused on 14 March 2017 by a delegate of the Minister on the ground that the appellant was not a person in respect of whom Australia has protection obligations. The appellant was a fast track applicant120, requiring the Authority to review the decision of the delegate of the Minister121. On 23 March 2017, a delegate of the Minister referred the matter to the Authority as required by s 473CA. The Authority is required to perform its function of reviewing a decision and either affirming it or remitting it for reconsideration122 by "considering the review material provided to the Authority"123. The Authority does not have jurisdiction to review a decision to refuse a visa in various categories concerning 120 Migration Act 1958 (Cth), s 5(1) definition of "fast track applicant". 121 Migration Act 1958 (Cth), s 473CC read with s 473BB definition of "fast track reviewable decision" and s 5(1) definitions of "fast track decision" and "fast track review applicant". 122 Migration Act 1958 (Cth), s 473CC. 123 Migration Act 1958 (Cth), s 473DB(1). Edelman the character of an applicant124: under s 501 (the character test), s 36(1C) (danger to Australia's security; danger to the Australian community, having been convicted of "a particularly serious crime"), or ss 5H(2) and 36(2C) (serious reasons for considering that various crimes have been committed). Section 473CB placed the Secretary under a duty to provide the Authority with various categories of review material including the following: "Material to be provided to Immigration Assessment Authority The Secretary must give to the Immigration Assessment Authority the following material (review material) in respect of each fast track reviewable decision referred the Authority under section 473CA: a statement that: sets out the findings of fact made by the person who made the decision; and refers to the evidence on which those findings were based; and (iii) gives the reasons for the decision; (b) material provided by the referred applicant to the person making the decision before the decision was made; any other material that is in the Secretary's possession or control and is considered by the Secretary (at the time the decision is referred to the Authority) to be relevant to the review; A prima facie precondition for the Authority's jurisdiction to conduct a review of a fast track reviewable decision was compliance by the Secretary with the duty under s 473CB(1). Although s 473CB(1)(c) is expressed in positive terms, concerning the material that the Secretary must provide, contrary to the submission of the Minister on this appeal it also carries an implied prohibition against the provision of any other material which the Secretary could not 124 Migration Act 1958 (Cth), s 473BB definition of "fast track reviewable decision", s 5(1) definition of "fast track decision". Edelman reasonably consider to be relevant to the review. The duty of the Secretary to assess relevance might involve difficult or nuanced decisions, particularly since the Secretary, or their delegate, might not be aware of the issues that could be considered by the Authority. However, subject to judicial restraint in any review of a decision of this nature125, the decision of the Secretary that material is considered relevant must be formed reasonably on the material before the Secretary126. The Authority was provided with material by the Secretary that could not reasonably be considered to be relevant The Authority concluded that the appellant was not a person in respect of whom Australia has protection obligations127: he was not a refugee128, nor was he a person entitled to complementary protection129. In the course of its reasons, the Authority rejected the appellant's claims including: (i) that he was stateless, with no right to return to Iraq, and had travelled to Australia using an Iraqi passport that was not genuine; (ii) that there was a real chance of harm to him in Basra, including as a result of discrimination, by the Iraqi government on the basis of his Faili Kurd ethnicity; and (iii) that he would be killed or persecuted in Iraq by various extremist insurgent groups because of his Shia religion, his Faili Kurd ethnicity, his imputed political views including links to Iran, and his imputed statelessness. The material provided by the Secretary to the Authority for the purposes of the review included considerable information, innuendo and opinions about the appellant's character over 48 pages. It is unclear whether any of this material had even been before the delegate of the Minister130. If not, and there are 125 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 654 [137]; Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 126 Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 150 [34]; Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123 at 136 [34]. 127 See Migration Act 1958 (Cth), s 36(2)(a)-(aa); Migration Regulations 1994 (Cth), Sch 2 cll 790.211, 790.221. 128 Migration Act 1958 (Cth), ss 5H, 36(2)(a). 129 Migration Act 1958 (Cth), s 36(2)(aa). 130 CNY17 v Minister for Immigration and Border Protection (2018) 264 FCR 87 at Edelman indications that it was not before the delegate, the material would have been specifically chosen by the Secretary for provision to the Authority as new information. In either event, however, the material was not relevant to any issue which the Authority had to decide. The irrelevant material can be divided into three overlapping categories of information about the appellant's character. One category of the irrelevant material provided by the Secretary to the Authority concerned periods of detention of the appellant and offences or alleged offences committed by the appellant. The underlying facts concerning the appellant's commission of an offence, his detention, and his charges were not controversial and were disclosed by the appellant himself in his application. One offence, in March 2015, to which he had pleaded guilty, involved breaking a window whilst he was in detention. The appellant was convicted of damage to Commonwealth property and was released without sentence, with conditions of a reparation payment and good behaviour for six months. The other offence for which he had been charged, as he described it in his application, was "spitting at a guard & breaking a window" during protests in November 2015. However, the material in this first category was not merely factual statements about the appellant's criminal record. It included descriptive language and suggestions of grave concerns when describing the appellant's criminal charges in November 2015. The material referred to his transfer to different prisons in Western Australia, to his alleged "participation" in a "riot" on Christmas Island in November 2015, and to him facing criminal charges in relation to that riot. It also included an internal departmental email chain with an update from the office of the Commonwealth Director of Public Prosecutions concerning the appellant's "criminal matters" and statements by departmental officers that the appellant's criminal matters were in relation to rioting on Christmas Island and that these criminal matters were still under investigation by the Australian Federal Police. References were also made to "multiple incidents" involving the appellant and there were assertions that a Superintendent of the Australian Border Force had recommended that the appellant remain in detention pending the finalisation of an Australian Federal Police investigation into the "riot" on Christmas Island. A second category was material that, by vague suggestions and opinions, had the potential to raise concerns about permitting the appellant to become a member of the Australian community. Putting to one side a reference in the materials to the appellant's "possible mental health issues", which a fair-minded lay observer with knowledge of the appellant's broad circumstances would not today treat as prejudicial, the appellant was described as displaying "a history of aggressive and/or challenging behaviour when engaging with the department". He was twice described as having been "involved in many incidents while in detention", in the context of statements that he had been "considered on several Edelman occasions for release from detention" on a bridging visa, such that he was to "be considered as a Cat 2 BVE consideration", from which it might be inferred that the visa had been denied. A third category was material that might have tacitly suggested that the appellant might be a national security risk. There was a reference to the appellant no longer being "of interest to Det Intel" and having been "[e]scalated" to another departmental team. There were two references to the appellant having an "interview with National Security Monitoring Section" and two references to him having been "Esc [escalated] to NSSCRT [which was accepted in oral submissions to be a national security body]". There is no basis upon which, on any reasonable view, this material could be considered relevant to the issues before the Authority. It had no legal relevance to the issues before the Authority, including any assessment of the appellant's credibility. Yet the expressions of opinion, the innuendo, and the tacit suggestions in the material could be seen by a fair-minded lay observer as painting a picture of the appellant as a man of poor or doubtful character. Non-compliance with s 473CB of the Migration Act is a jurisdictional error if it is material Although the provision of material that could not reasonably be seen to be relevant to the determination of any issue before the Authority establishes a prima facie case of jurisdictional error, s 473CB of the Migration Act does not contemplate that jurisdictional error will exist, and that the decision of the Authority will be invalidated, unless the failure by the Secretary is "material". As Professor Daly has perceptively noted, the concept of materiality has sometimes been used in three different senses131. In one sense, it might be used to describe a threshold of sufficient seriousness before an act or omission could be treated as an "error", or perhaps more accurately a recognised category of administrative injustice132, capable of being jurisdictional in the sense of being a condition for the exercise of authority by the decision maker. For instance, just as a violation of the hearing rule requires real, or practical, injustice133, so too does a violation of the rule against 131 See Daly, "A Typology of Materiality" (2019) 26 Australian Journal of Administrative Law 134. 132 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 36. 133 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 14 [37]-[38]; Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at 433 [38]; BVD17 v Minister for Footnote continues Edelman bias require an apprehension of bias to be reasonable. Contrary to the submissions of the appellant, the receipt of prejudicial information, no matter how trivial, will not necessarily give rise to a reasonable apprehension of bias. the administrative The second sense of materiality is the sense in which it has been used in recent decisions of this Court134. Materiality in this sense concerns any required the decision. connection between An administrative injustice will commonly be intended by Parliament to be immaterial, and not capable of invalidating a decision, if it did not involve a fundamental departure from the proper process of decision making and if there was no possibility that the decision would have been different. Assuming that there is no difference in onus of proof135, this involves an approach that mirrors the long-standing approach to whether a miscarriage of justice in a criminal appeal is "substantial"136, or whether an appellate court should order a new civil trial following a denial of procedural fairness137. injustice and The third sense in which materiality has been used, but which might better be avoided, concerns the residual discretion to refuse relief despite the presence of jurisdictional error. This third sense can overlap with the second sense, but it is distinct. It might also apply in cases such as delay or bad faith138 or in a case Immigration and Border Protection (2019) 93 ALJR 1091 at 1104-1105 [66]; 373 ALR 196 at 212. 134 Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123 at 136 [34]; Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at 441 [30], 452-453 [72]. 135 Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at 459 [93]. See also Lindsay v The Queen (2015) 255 CLR 272 at 294 [64]. But compare (2019) 264 CLR 421 at 445 [46]. 136 BVD17 v Minister for Immigration and Border Protection (2019) 93 ALJR 1091 at 1105 [67]; 373 ALR 196 at 212-213. 137 Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147; Nobarani v Mariconte (2018) 92 ALJR 806 at 812-813 [38]; 359 ALR 31 at 38-39. 138 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd (1949) 78 CLR 389 at 400; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 108 [56]; SZBYR v Minister for Immigration and Citizenship (2007) 81 ALJR 1190 at 1197-1198 [28]; 235 ALR 609 at 618. Edelman where there would be no utility in a new trial139 such as where "the illegality at issue had subsequently been legitimised"140. It is unnecessary on this appeal to consider any of these different dimensions of "materiality" other than the first. The Minister accepted that if the appellant established a reasonable apprehension of bias then the Secretary's non- compliance with s 473CB of the Migration Act would be material. However, relying upon the first sense of materiality, the Minister submitted that any apprehension of bias did not reach a threshold of reasonableness. The principles concerning apprehended bias The principles of apprehended bias are derived by implication and expression from the terms of the particular statutory framework. They are commonly an implication from the terms of the statute in the context of the natural foundations of our legal system. As an implication, however, their content must accommodate the particular statutory framework141. Section 473FA(1), in Pt 7AA, provides that in carrying out its functions under the Migration Act, the Authority is required to act in a manner that is "free of bias". Although Subdiv A of Div 3 of Pt 7AA is headed "[n]atural justice requirements" and relates to the conduct of reviews by the Authority, s 473DA provides that Div 3, together with ss 473GA and 437GB, is an "exhaustive statement" only of the natural justice hearing rule. It is not concerned with the rule against bias (whether actual or apprehended). With the long-standing approach to the natural components of justice, the express reference to bias in s 473FA(1) is not limited to actual subjective bias but extends also to circumstances where the bias might reasonably be apprehended by a fair-minded lay observer. The test for a reasonable apprehension of bias is a test of a "double might": whether a fair-minded lay observer might reasonably apprehend that the adjudicator might not bring an impartial and independent mind to the fair 139 Nobarani v Mariconte (2018) 92 ALJR 806 at 813 [39]; 359 ALR 31 at 39. 140 Daly, "A Typology of Materiality" (2019) 26 Australian Journal of Administrative Law 134 at 141, referring to R (Nadarajah) v Home Secretary [2002] EWHC 2595 (Admin) at [30] and GXL Royalties Ltd v Minister of Energy for New Zealand [2010] NZCA 185. 141 Isbester v Knox City Council (2015) 255 CLR 135 at 154 [55]. Edelman resolution of the issue to be decided142. The notion of independence and impartiality is not limited to prejudgment of the issue. It is a "recognition of human nature"143 and "human frailty"144. It can include any other "preponderating disposition or tendency" and can arise by matters that create emotions of sufficient strength to sway opinion: "affection or enmity"145, "fear, hatred or love"146. The prism through which a reasonable apprehension of bias is tested, a fair-minded lay observer, is a familiar legal construct used for objective assessment. The construct assumes that the person is "intelligent"147. The person will be aware of the phenomenon that in adjudication, as in life generally, the mental plasticity of human decision making is subject to the unconscious148 "stream of tendency, whether you choose to call it philosophy or not, which gives coherence and direction to thought and action. ... Deep below consciousness are other forces, the likes and the dislikes, the predilections and the prejudices, the complex of instincts and emotions and habits and convictions, which make the [person]". 142 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344-345 [6]-[7]; British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283 at 322 [104]; see also at 331 [139]. See also Isbester v Knox City Council (2015) 255 CLR 135 at 146 [20]-[21], 149 [33], 154 [57]. 143 British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283 at 144 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 345 [8]. 145 Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 146 British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283 at 300 [34], quoting Bracton, On the Laws and Customs of England, Woodbine ed, Thorne trans (1977), vol 4, f 411 at 280. 147 R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 267. 148 Cardozo, The Nature of the Judicial Process (1921) at 12, 167 (footnote omitted). See R v S (RD) [1997] 3 SCR 484 at 508-509 [47]. Edelman In Webb v The Queen149, Deane J, who was not dissenting on this point, described four overlapping categories of apprehended bias. The submissions on this appeal focussed upon the fourth category: "cases where knowledge of some prejudicial but inadmissible fact or circumstance gives rise to the apprehension of bias". But some of the matters mentioned in the second category were also submitted to be relevant: "conduct, either in the course of, or outside, the proceedings", including the published reasons of the Authority. Apprehended bias must be assessed by reference to all the circumstances existing at the relevant time of enquiry. If apprehended bias is assessed at the conclusion of a hearing, as the appeal in this case requires, then the reasons for decision might reveal matters relevant to the consideration of whether a reasonable apprehension exists. It would be absurd if, on the one hand, remarks made by the decision maker during the course of a hearing could be considered as part of an assessment of the presence of reasonable apprehension of bias but, on the other hand, remarks at the conclusion of the proceeding could not150. However, remarks at the conclusion of a proceeding or in reasons for decision are only one of the circumstances to take into account. In Michael Wilson & Partners Ltd v Nicholls151, a joint judgment of four members of this Court cautioned against the error of assuming a reasonable apprehension of a decision maker's bias and using comments in the reasons for judgment by the decision maker to "confirm, enhance or diminish the existence of a reasonable apprehension of bias". In assessing whether a reasonable apprehension of bias arose through the construct of the fair-minded lay observer, the nature of the decision maker is a relevant consideration152. When assessing whether the presence of the irrelevant material could have given rise to a reasonable apprehension of bias, the Authority should not be equated with a judicial officer, whose "independence and security of tenure"153 might permit a more robust approach to be taken to any possibility of influence from material provided by senior officers of the Executive 149 (1994) 181 CLR 41 at 74. See also Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 348-349 [24]. 150 See British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 151 (2011) 244 CLR 427 at 446 [67]. 152 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 343-344 [4]; Isbester v Knox City Council (2015) 255 CLR 135 at 146 [22]. 153 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344 [4]. Edelman Government and whose "training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial"154. On the other hand, a professional decision maker in a specialised area, such as the Authority, should not be equated with a purely lay body such as a jury155. The effect of the irrelevant material in this case There are three matters which combine to compel the conclusion that a fair-minded lay observer might reasonably apprehend that the Authority might not have brought an impartial and independent mind to the issue to be decided at the hearing. First, the material provided by the Secretary to the Authority was qualitatively and quantitatively significantly prejudicial to an assessment of the appellant's character on grounds other than legal grounds. The three categories of material, over nearly 50 pages, provided opinion, suggestion, and innuendo in relation November 2015, unspecified "multiple incidents" involving the appellant, alleged but unspecified aggressive behaviour, "[e]scalation" of consideration of the appellant including by national security bodies, and interviews of him by the National Security Monitoring Section. the appellant's criminal charges concerning "rioting" The Minister submitted that some of the prejudicial information provided by the Secretary should, in effect, be disregarded because the appellant had himself provided that information in response to questions in his visa application. But the information provided by the appellant was factual statements of relatively minor, although irrelevant, content. The appellant said that he was "awaiting trial on charges of spitting at a guard & breaking a window", that he had been convicted of "[b]reaking window - in prison and has 6 month good behaviour bond", that his occupation was "Prisoner (formerly self-employed)", and that his previous addresses included prisons in Western Australia. None of the information provided by the appellant involved any of the opinion, suggestion or innuendo described above. Secondly, the fair-minded lay observer would expect the Authority to have been aware that, by s 473CB(1) of the Migration Act, material was provided by the Secretary on the basis that the Secretary considered that it was relevant to the review, and that by s 473DB(1) the Authority was required to consider that 154 Johnson v Johnson (2000) 201 CLR 488 at 493 [12], quoting Vakauta v Kelly (1989) 167 CLR 568 at 584-585. 155 Minister for Immigration and Border Protection v AMA16 (2017) 254 FCR 534 at Edelman material. Although the Authority, as a professional decision maker in a specialised area, would be expected to make its own assessment of relevance and weight, the fair-minded lay observer would be aware that the Authority remains part of the Executive Government. The apparent assessment of the material, and the opinions and innuendos contained therein, as relevant by the Secretary or a delegate of the Secretary, and the provision of 48 pages of materials to the Authority concerning issues in the three broad categories described above, is a matter that, at least subconsciously, might be expected to have an influence upon the Authority that considers it. Thirdly, although the material was irrelevant, the fair-minded lay observer might reasonably have expected from statements made by the Authority, together with a deafening silence in the reasons of the Authority, that the Authority might have been influenced by the information within the material. On 23 March 2017, prior to reaching its decision, the Authority wrote to the appellant and said that the Department had "provided us with all documents they consider relevant to your case" and that the Authority would "make a decision on your case on the basis of the information sent to us by the department, unless we decide to consider new information". At the outset of its reasons for decision, in the second paragraph, the Authority said that it had "had regard to the material referred by the Secretary under s 473CB of the Migration Act 1958". Nowhere in its reasons did the Authority suggest that any of the material provided by the Secretary was not relevant or that weight had not been placed on any of the material provided by the Secretary. In these circumstances, a fair-minded lay observer would apprehend that the material, together with the basis upon which it was apparently provided, might cause the Authority to form adverse views of the appellant's character and, consciously or subconsciously, the Authority might be influenced by those adverse views either directly in the course of dismissing each of the appellant's claims to be a person in respect of whom Australia has protection obligations or indirectly when reaching conclusions based upon the credibility of the appellant. Conclusion The appeal should be allowed and orders made as proposed by Nettle and Gordon JJ. The matter should be remitted to a differently constituted Authority for a new hearing. Since the Authority will have returned all materials to the Secretary156, the new hearing will require the Secretary to re-exercise the task of considering which of the material that is in the Secretary's possession or control is relevant to the review. 156 Migration Act 1985 (Cth), s 473EA(4). |
HIGH COURT OF AUSTRALIA PLAINTIFF S297/2013 PLAINTIFF AND MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR DEFENDANTS Plaintiff S297/2013 v Minister for Immigration and Border Protection [2014] HCA 24 20 June 2014 ORDER The questions asked by the parties in the special case dated 22 April 2014 and referred for consideration by the Full Court be answered as follows: Question 1 Is the Minister's determination made on 4 March 2014 pursuant to s 85 of the Migration Act invalid? Answer Yes. Question 2 What, if any, relief sought in the further amended writ of summons and further amended statement of claim, dated 1 April 2014, should be granted to the plaintiff? Answer A writ of mandamus directing the first defendant to consider and determine the plaintiff's application for a Protection (Class XA) visa according to law. Question 3 Who should pay the costs of the proceeding? Answer The defendants should pay the costs of the special case. The costs of the balance of the proceeding should be determined by a single Justice. Representation S B Lloyd SC with J B King for the plaintiff (instructed by Fragomen) S P Donaghue QC with P D Herzfeld for the defendants (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Plaintiff S297/2013 v Minister for Immigration and Border Protection Migration – Refugees – Protection visas – Power of Minister under s 85 of Migration Act 1958 (Cth) to determine maximum number of visas of specified class granted in specified financial year, in circumstances where s 65A imposed time limit in which protection visa applications must be decided – Minister signed instrument limiting number of protection visas granted in current financial year – Plaintiff's protection visa application not determined by Minister pursuant to that determination – Whether power under s 85 extended to protection visas – Whether instrument valid. Words and phrases – "harmonious construction", "implied repeal", "leading provision", "legislative instrument", "subordinate provision". Legislative Instruments Act 2003 (Cth), s 56. Migration Act 1958 (Cth), ss 36, 39, 65, 65A, 84, subdiv AH. FRENCH CJ. The plaintiff is a national of Pakistan, who entered Australia by sea at Christmas Island on 19 May 2012 without a visa. He was thereby an "offshore entry person" within the meaning of s 5(1) of the Migration Act 1958 (Cth) ("the Migration Act") as it then stood. From 1 June 2013, he fell within the statutory definition of an "unauthorised maritime arrival"1. He was also, at all times, an "unlawful non-citizen" within the meaning of ss 5(1) and 14 of the Migration Act and, accordingly, was held in and remains in immigration detention pursuant to ss 189 and 196 of the Migration Act. As an offshore entry person in 2012, the plaintiff was unable to make a valid application for a Protection (Class XA) visa2 unless the Minister exercised a non-compellable personal discretion to allow him to do so3. The Minister took that step on 23 September 2012 and the plaintiff made an application for a protection visa on the same day. The application was refused by a delegate of the Minister on 11 February 2013. On an application by the plaintiff for review of that decision, the Refugee Review Tribunal ("the RRT"), on 17 May 2013, remitted the matter for reconsideration by the Minister on the basis that the plaintiff satisfied the criterion for the grant of a protection visa in s 36(2)(a) of the Migration Act. The plaintiff's application for a protection visa remains on foot. No decision has been made by the Minister, or his delegate, pursuant to the remitter by the RRT. The reasons for that are found in a number of events which occurred between October 2013 and March 2014. A regulation, the Migration Amendment (Temporary Protection Visas) Regulation 2013 (Cth), which would have denied permanent protection visas to unauthorised maritime arrivals such as the plaintiff, was made on 17 October 2013 and disallowed by the Senate on 2 December 20134. On the same day, the Minister made a purported determination, under s 85 of the Migration Act, that the maximum number of protection visas that could be granted in the financial year 1 July 2013 to 30 June 2014 was 1,650. The effect of that determination would have been to deny the grant of any further protection visas in the remainder of the year ending 30 June 2014. 1 A term introduced into the Migration Act by the enactment of s 5AA pursuant to the Migration Amendment (Unauthorised Maritime Arrivals and Other Measures) Act 2013 (Cth), Sched 1, Pt 1, item 8. 2 Migration Act, s 46A(1) as it then stood. 3 Migration Act, s 46A(2) as it then stood. 4 The disallowance was made pursuant to s 42 of the Legislative Instruments Act 2003 (Cth). On 12 December 2013, the Migration Amendment (Unauthorised Maritime Arrival) Regulation 2013 (Cth) ("the UMA Regulation") was made. It came into effect on 14 December 2013. On 19 December 2013, the Minister revoked his determination of 2 December 2013. The object of the UMA Regulation was to deny permanent protection visas to unauthorised maritime arrivals, including the plaintiff. On 4 March 2014, the Minister made a further determination under s 85 that the maximum number of protection visas that could be granted in the year ending 30 June 2014 was 2,773. The effect of that determination, if valid, was that no more protection visas could be granted between 24 March 2014, when the maximum number of protection visas was reached, and 30 June 2014. The UMA Regulation was disallowed by the Senate on 27 March 2014. The legal minuet between the Minister and the Parliament was reflected in the shifting form of these proceedings, which commenced on 16 December 2013. A special case was referred to the Full Court, based on the proceedings as they now stand, for determination of the following questions: Is the Minister's determination made on 4 March 2014 pursuant to s 85 of the Migration Act invalid? 2. What, if any, relief sought in the further amended writ of summons and further amended statement of claim, dated 1 April 2014, should be granted to the plaintiff? 3. Who should pay the costs of the proceeding? The plaintiff submits that s 85 did not empower the Minister to make a determination in relation to protection visas. For the reasons I have given in Plaintiff M150 of 2013 v Minister for Immigration and Border Protection5, that submission should be accepted. It is therefore not necessary to consider the further submissions by the plaintiff that the Minister exercised his power for an improper purpose and that the requirement of s 85 that the determination be "by notice in the Gazette" was not met. The answers to the questions in the special case should be: Yes. The question of relief should be remitted for determination by a single Justice. [2014] HCA 25. The defendants should pay the costs of the special case. The costs of the proceeding otherwise should be remitted to a single Justice. The facts The plaintiff is a Pakistani national. In May 2012, he entered Australia at Christmas Island. He had no visa permitting him to enter or remain in Australia. At the time he entered Australia, he was an "offshore entry person" within the meaning of s 5(1) of the Migration Act 1958 (Cth) ("the Act") as it then stood. Upon the commencement of the Migration Amendment (Unauthorised Maritime Arrivals and Other Measures) Act 2013 (Cth), he became an "unauthorised maritime arrival" within the meaning of s 5AA(1) of the Act. In September 2012, the then Minister permitted6 the plaintiff to make a valid application for a protection visa, and the plaintiff did so. The plaintiff has been found to be a refugee within the meaning of the Refugees Convention7. The Minister has not decided the plaintiff's visa application. It is not necessary to describe all the regulatory and other steps which have been taken between October 2013 and March 2014 that have been thought to prevent the Minister deciding pending applications for a protection visa made by the plaintiff and others. Those steps have included the making8 and the subsequent disallowance9 of regulations, and the making10 and subsequent revocation11 of a determination limiting the number of protection visas that may be granted during the financial year ending on 30 June 2014. Instead, attention may be confined to the Minister's determination, made on 4 March 2014, limiting the number of protection visas that may be granted s 46A(2). 7 Convention relating to the Status of Refugees (1951) as amended by the Protocol relating to the Status of Refugees (1967). 8 Migration Amendment (Temporary Protection Visas) Regulation 2013 (Cth) ("the TPV Regulation"), made on 17 October 2013; Migration Amendment (Unauthorised Maritime Arrival) Regulation 2013 (Cth) ("the UMA Regulation"), made on 12 December 2013. 9 The Senate disallowed the whole of the TPV Regulation on 2 December 2013 and disallowed the whole of the UMA Regulation on 27 March 2014. 10 On 2 December 2013. 11 On 19 December 2013. during the financial year ending on 30 June 2014 to 2,773. The limit was reached on 24 March 2014. If the limit was validly determined, the plaintiff can neither be granted nor refused a protection visa during the financial year. Whether or when it could be granted thereafter would depend upon whether the Minister made a further determination limiting the number of protection visas which may be granted in the next financial year and, if the Minister did that, in what order the Minister considered applications. (The Minister is not bound12 to consider in any particular order applications for a class of visas in respect of which a limit has been fixed.) The plaintiff's claims and the special case The plaintiff made three arguments. First, he alleged that the Act did not permit the Minister to make any determination of a limit on the number of protection visas that may be issued in a financial year. Second, he alleged that the Minister acted for an improper purpose in making the determination. Third, the plaintiff alleged that, if the Minister had power to determine a limit on the number of protection visas which could be issued during a financial year, the determination should have been, but was not, published in the Commonwealth of The parties joined in stating the questions of law arising in the matter in the form of a special case. This case was heard at the same time as the special case in the proceeding brought by Plaintiff M150 of 2013. Conclusion and orders For the reasons given13 in the proceeding brought by Plaintiff M150 of 2013, the Minister had no power to make the determination limiting the number of protection visas which may be granted during the financial year ending on 30 June 2014. This being so, it is neither necessary nor appropriate to consider either of the other issues which the plaintiff sought to agitate. Question 1 asks whether the Minister's determination made on 4 March 2014 pursuant to s 85 of the Act is invalid. That question should be answered: "Yes". 12 ss 90 and 91; cf s 51, which also provides that the Minister may consider and dispose of applications for visas "in such order as he or she considers appropriate". 13 Plaintiff M150 of 2013 v Minister for Immigration and Border Protection [2014] HCA 25. Question 2 asks what relief the plaintiff should be granted. As in the proceeding brought by Plaintiff M150 of 2013, the exact form of relief to be granted should be a matter for the single Justice making orders finally disposing of the proceeding and the question should be answered accordingly. As the matter presently stands, it would seem probable that the plaintiff would be entitled to relief which included a declaration that the Minister's determination is invalid and an order for mandamus directed to the Minister requiring the Minister to determine according to law the plaintiff's application for a protection visa. Question 3 asks who should pay the costs of the proceeding. The defendants should pay the plaintiff the costs of the special case. What other order for costs should be made should again be a matter for the single Justice who finally determines the proceeding. Question 3 should be answered accordingly. Crennan Bell CRENNAN, BELL, GAGELER AND KEANE JJ. Introduction On 4 March 2014, the Minister for Immigration and Border Protection ("the Minister") signed an instrument ("the instrument") which was registered the following day in the Federal Register of Legislative Instruments ("the Register") established under the Legislative Instruments Act 2003 (Cth) ("the Legislative Instruments Act"). The instrument purported, from the day after its registration, to determine under s 85 of the Migration Act 1958 (Cth) ("the Act") the maximum number of Protection (Class XA) visas that may be granted in the financial year 1 July 2013 to 30 June 2014. That maximum number has now been reached. The plaintiff in this proceeding in the original jurisdiction of the High Court under s 75(v) of the Constitution is an unlawful non-citizen who has made a valid application for a Protection (Class XA) visa in respect of which the Minister is yet to make a decision under s 65 of the Act. A special case in the proceeding reserves questions for the consideration of the Full Court. One question asks whether the instrument is invalid. Another asks what, if any, relief is to be granted. The last asks about costs. The special case has been heard concurrently with the special case in Plaintiff M150 of 2013 v Minister for Immigration and Border Protection14. Submissions made in that case on the issues in this case have been taken into account in these reasons. The answer to the first question is that the instrument is invalid. The instrument is in the form of an instrument under s 85 of the Act. The instrument is, however, beyond the substantive scope of the power conferred by s 85 of the Act. In light of the requirement of s 65A that the Minister make a decision under s 65 granting or refusing to grant a protection visa within a specified period of 90 days, s 85 is not to be construed as empowering the Minister to determine the maximum number of protection visas that may be granted in a financial year. That construction of s 85 makes it unnecessary to examine the legal and factual basis of a distinct allegation of the plaintiff that the Minister made the instrument for an improper purpose. 14 [2014] HCA 25. Crennan Bell The answer to the second question is that there is to be a writ of mandamus directing the Minister to consider and determine the plaintiff's application for a protection visa according to law. The plaintiff's costs of the special case are to be paid by the Minister and the Commonwealth. The reasoning underlying those answers necessarily begins by locating s 85 within the scheme of the Act in its current amended form. "Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible", in the manner indicated in Project Blue Sky Inc v Australian Broadcasting Authority15, "by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions". The numerous amendments that have been made to the Act form part of its legislative history and bear legitimately on its construction16. They are to be construed as part of the Act17, so as to be read together "as a combined statement of the will of the legislature"18. The timing of amendments might assist in determining the "hierarchy" of apparently conflicting provisions of the Act as amended19, but notions of "implied repeal" have no place. The Act The stated object of the Act is "to regulate, in the national interest, the coming into, and presence in, Australia of non-citizens"20. "To advance its object", the Act "provides for visas permitting non-citizens to enter or remain in 15 (1998) 194 CLR 355 at 382 [70]; [1998] HCA 28. 16 Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 87 ALJR 98 at 107 [39]; 293 ALR 257 at 268-269; [2012] HCA 55. 17 Section 11B(1) of the Acts Interpretation Act 1901 (Cth). 18 Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 at 463; [1995] HCA 44. 19 Cf Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 382 [70]. See also Ross v The Queen (1979) 141 CLR 432 at 440; [1979] HCA 20 Section 4(1). Crennan Bell Australia" and explains that "the Parliament intends that [the] Act be the only source of the right of non-citizens to so enter or remain"21. Within the nomenclature of the Act, a "visa" is a grant of permission to a non-citizen to do either or both "travel to and enter Australia" or "remain in Australia"22. A visa to remain in Australia is to be either a permanent visa or a temporary visa23. A non-citizen in the "migration zone" (an area consisting of the States and Territories and certain installations24) who holds a visa is a "lawful non-citizen"25. A non-citizen in the migration zone who is not a lawful non- citizen is an "unlawful non-citizen"26. Subject to immaterial exceptions, an unlawful non-citizen in the migration zone is to be detained27; is then to be kept in immigration detention until granted a visa or removed from Australia28; and is to be removed from Australia as soon as reasonably practicable if the non-citizen has not made a valid application for a substantive visa that can be granted when the applicant is in the migration zone, or, if the non-citizen has made a valid application for such a visa, when that application has been finally determined29. Within the scheme of the Act, a visa can only be of a class provided for either by regulations made under the Act30, or by a section of the Act31. Regulations made under the Act are made by the Governor-General32. The 21 Section 4(2). 22 Section 5(1) "visa" and s 29. 23 Section 30. 24 Section 5(1) "migration zone". 25 Section 13(1). 26 Section 14(1). 27 Section 189. 28 Section 196(1). 29 Section 198(2). 30 Section 31(1). 31 Section 31(2). 32 Section 504(1). Crennan Bell sections of the Act which provide for classes of visas are ss 32 to 38B. Some of those sections, ss 33, 34 and 35, expressly state that subdiv AH of Div 3 of Pt 2 does not apply to visas of the class for which they provide. Section 36 of the Act provides for a class of visas to be known as protection visas33 and goes on to provide that it is a criterion for a protection visa that the applicant for the visa is "a non-citizen in Australia in respect of whom the Minister is satisfied Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol"34. As amended in 2012, to insert "in respect of" in the place of "to"35, s 36 no longer proceeds on what had previously been identified as a "false but legislatively required" assumption that Australia's protection obligations under the Refugees Convention as amended by the Refugees Protocol are owed to individuals36. The section now correctly reflects the position in international law that protection obligations are owed to other Contracting States in respect of individuals37. Subject to the Act and the regulations, a non-citizen who wants a visa must apply for a visa of a particular class38. Section 46 sets out the requirements for a valid application for a visa, which include that the application is for a visa of the class specified in the application39. Other sections provide that the 33 Section 36(1). 34 Section 36(2)(a). Pursuant to s 5(1), the "Refugees Convention" means "the Convention relating to the Status of Refugees done at Geneva on 28 July 1951"; the "Refugees Protocol" means "the Protocol relating to the Status of Refugees done at New York on 31 January 1967". 35 Migration Legislation Amendment (Regional Processing and Other Measures) Act 2012 (Cth). 36 NAGV and NAGW of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 222 CLR 161 at 172 [27]; [2005] HCA 6; Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 339 [27]; [2010] HCA 41; Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144 at 189 [90]; [2011] HCA 32. 37 NAGV and NAGW of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 222 CLR 161 at 169 [16]. 38 Section 45(1). 39 Section 46(1)(a). Crennan Bell regulations may prescribe criteria for visas, or visas of a specified class, including the class of protection visas provided for by s 3640, and that the regulations may also provide that visas or visas of a specified class may only be Section 39, to which it will be necessary to return, provides: ... a prescribed criterion for visas of a class, other than protection visas, may be the criterion that the grant of the visa would not cause the number of visas of that class granted in a particular financial year to exceed whatever number is fixed by the Minister, by legislative instrument, as the maximum number of such visas that may be granted in that year (however the criterion is expressed). For the purposes of this Act, when a criterion allowed by subsection (1) prevents the grant in a financial year of any more visas of a particular class, any outstanding applications for the grant in that year of visas of that class are taken not to have been made." The reference in s 39 to a "prescribed" criterion is to a criterion prescribed by regulation42. Section 47 of the Act imposes on the Minister a duty to consider a valid application for a visa43, and a corresponding duty not to consider an application for a visa that is not a valid application44. The duty to consider a valid application continues, subject to exceptions, until the Minister grants or refuses to grant the visa45 in the performance of a complementary duty imposed by s 65. 40 Section 31(3). 41 Section 40(1). 42 Section 5(1) "prescribed". 43 Section 47(1). 44 Section 47(3). 45 Section 47(2)(b). Crennan Bell To the extent now material, s 65(1) provides: "After considering a valid application for a visa, the Minister: if satisfied that: (iii) the ... criteria for it prescribed by this Act or the regulations have been satisfied; and the grant of the visa is not prevented by … any other provision of the this Act or of any other Commonwealth; ... law of is to grant the visa; or if not so satisfied, is to refuse to grant the visa." The decision to be made by the Minister in performance of the duty imposed by s 65 is binary: the Minister is to do one or other of two mutually exclusive legally operative acts – to grant the visa under s 65(1)(a), or to refuse to grant the visa under s 65(1)(b) – depending on the existence of one or other of two mutually exclusive states of affairs (or "jurisdictional facts"46) – the Minister's satisfaction of the matters set out in each of the sub-paragraphs of s 65(1)(a), or the Minister's non-satisfaction of one or more of those matters. The decision is not made, the duty is not performed, and the application is not determined, unless and until one or other of those legally operative acts occurs: that is to say, unless and until the Minister either grants the visa under s 65(1)(a) or refuses to grant the visa under s 65(1)(b). The Minister grants a visa by causing a record of it to be made47. Section 65A addresses the period within which the Minister must make such a decision under s 65 in respect of a valid application for a protection visa. Section 65A provides: 46 Eg, Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 651 [130]-[131]; [1999] HCA 21; Minister for Immigration and Multicultural and Indigenous Affairs v SGLB (2004) 78 ALJR 992 at 998 [37]; 207 ALR 12 at 20; [2004] HCA 32. 47 Section 67. Crennan Bell If an application for a protection visa: (a) was validly made under section 46; or (b) was remitted by any court or tribunal to the Minister for reconsideration; then the Minister must make a decision under section 65 within 90 days starting on: the day on which the application for the protection visa was made or remitted; or in the circumstances prescribed by the regulations – the day prescribed by the regulations. Failure to comply with this section does not affect the validity of a decision made under section 65 on an application for a protection visa." Section 65A is complemented by s 91Y, which requires the Secretary of the Department of Immigration and Border Protection to provide a report to the Minister every four months containing information about each application for a protection visa in respect of which the Minister has not made a decision within the required 90 day period, together with reasons why the decision was not made within that period. Section 91Y goes on to require the Minister to cause a copy of the report to be tabled in each House of the Parliament. The Act, in contrast, is silent as to the period within which the Minister must make such a decision in respect of a valid application for a visa of a class other than a protection visa. The duties of the Minister to consider a valid application for a visa of a class other than a protection visa and to make a decision granting or refusing such a visa are, by implication, to be performed within a reasonable time48. Section 51(2) acknowledges that implication in providing that the fact that an application has not been considered or disposed of, when a later application has, "does not mean that the consideration or disposal of the earlier application is unreasonably delayed". What amounts to a reasonable 48 Koon Wing Lau v Calwell (1949) 80 CLR 533 at 573-574; [1949] HCA 65; Re O'Reilly; Ex parte Australena Investments Pty Ltd (1983) 58 ALJR 36 at 36; 50 ALR 577 at 578; Shahi v Minister for Immigration and Citizenship (2011) 246 CLR 163 at 174 [28]; [2011] HCA 52. Crennan Bell time is ultimately for determination by a court, on an application for mandamus against the Minister under s 75(v) of the Constitution or equivalent statutory jurisdiction, having regard to the circumstances of the particular case within the context of the decision-making framework established by the Act. Subdivision AH of Div 3 of Pt 2 of the Act, headed "Limit on visas", is part of that decision-making framework. Section 85 is within subdiv AH, and sets out the trigger for its operation. Section 85 provides: "The Minister may, by notice in the Gazette, determine the maximum number of: the visas of a specified class; or the visas of specified classes; that may be granted in a specified financial year." The reference to "the Gazette" is to the Commonwealth of Australia Gazette49, published routinely since 1 January 1901 in the exercise of non-statutory executive power. One effect of a determination under s 85 for which subdiv AH provides is that set out in s 86: there is a determination of the maximum number of visas of a class or classes that may be granted in a financial year; and the number of visas of the class or classes granted in the year reaches that maximum number; no more visas of the class or classes may be granted in the year." Sections 87 and 87A each qualify the scope of s 86 by providing that "[s] 86 does not prevent the grant of" a visa to a person in specified circumstances. Section 86 prohibits the Minister from deciding under s 65(1)(a) to grant a visa if, having considered a valid application, the Minister is satisfied of the 49 Section 2B of the Acts Interpretation Act 1901 (Cth). Crennan Bell matters set out in each of the sub-paragraphs of s 65(1)(a). That decision is prohibited only during the remainder of the specified financial year if the maximum number specified for visas of that class has been reached. For s 86 not itself to result indirectly in the Minister being obliged to refuse to grant a visa under s 65(1)(b), it is apparent that the reference in s 65(1)(a)(iii) to the grant of a visa not being "prevented" by any other provision of the Act must be read as referring to the grant of the visa not being "permanently prevented". Section 88 goes on to clarify the limited scope of that prohibition by stating that "[s] 86's prevention of the grant of a visa does not prevent any other action related to the application for it". Section 88 thereby makes clear that s 86 does not prohibit performance of the Minister's duty to consider a valid application under s 47. Section 88 thereby also makes clear that the effect of s 86 on the making of a binary decision under s 65 is asymmetric: s 86 does not prohibit the Minister deciding under s 65(1)(b) to refuse to grant a visa if, having considered a valid application, the Minister is not satisfied of the matters set out in each of the sub-paragraphs of s 65(1)(a). Implicit in s 88 is that a determination under s 85 has no effect on the existence of an application for a visa of a class specified in the determination. Another effect of a determination under s 85 for which subdiv AH provides is that set out in s 89: "The fact that the Minister has neither granted nor refused to grant a visa of a class or classes to which a determination under section 85 applies does not mean, for any purpose, that the Minister has failed to make a decision to grant or refuse to grant the visa." Section 89 has the effect that the duty imposed on the Minister by s 65 to make a binary decision either to grant or refuse to grant a visa of a class to which a determination under s 85 applies is suspended for the remainder of the financial year specified in the determination whether or not the maximum number specified for visas of that class has been reached. That is because failure by the Minister to make a decision, one way or the other, cannot be treated as a failure by the Minister to make a decision in the performance of the duty imposed by Where triggered by a determination under s 85 of the maximum number of visas of a specified class that may be granted in a specified financial year, ss 86 and 89 therefore combine: to leave unaffected a valid application for a visa of that class; to leave unaffected the duty of the Minister under s 47 to consider that application; to suspend the duty of the Minister under s 65, having considered the application, to make a binary decision either to grant or refuse to grant a visa of Crennan Bell that class; once the specified maximum number of visas has been reached, to prohibit the Minister from deciding under s 65(1)(a) to grant a visa of that class if, having considered a valid application, the Minister is satisfied of the matters set out in each of the sub-paragraphs of s 65(1)(a); and to permit the Minister still to decide under s 65(1)(b) to refuse to grant a visa of that class if, having considered a valid application, the Minister is not satisfied of all of the matters set out in the sub-paragraphs of s 65(1)(a). The remaining sections in subdiv AH are ss 90 and 91. It is not necessary to refer to their detail, other than to note that both operate to confirm that a determination under s 85 suspends the duty imposed on the Minister by s 65 to make a decision to grant or refuse to grant a visa of a class specified in the determination without affecting the existence of an application for a visa of that class. Section 90 does so by making clear that the consideration or disposal of an application for a visa of a class to which a determination applies is not taken to be unreasonably delayed by reason only of the consideration or disposal of a subsequent application for another visa of that class. Section 91 does so by conferring power on the Minister to dispose of outstanding applications for visas of a class to which a determination applies or has applied in such order as the Minister considers appropriate. Formal validity The instrument was not published in the Gazette. By force of s 56(1) of the Legislative Instruments Act, however, its registration was sufficient to result in the instrument satisfying the description in s 85 of the Act of a "notice in the Gazette". The Legislative Instruments Act commenced on 1 January 2005 with the object of providing "a comprehensive regime for the management of Commonwealth legislative instruments" by means which include establishing the Register as a "repository of Commonwealth legislative instruments" and "improving public access to legislative instruments"50. It pursues that object in part by requiring maintenance of the Register, comprising a database which at any time includes all legislative instruments made on or after its commencement that have been registered51, by providing that the Register is, for all purposes, to be taken to be a complete and accurate record of all legislative instruments that 50 Section 3(a) and (d). 51 Section 20(1) and (2). Crennan Bell are included in the Register52, and by requiring steps to be taken to ensure that legislative instruments that are registered are available to the public53. Subject to immaterial extensions and qualifications, the Legislative Instruments Act provides that an instrument that is registered is taken, by virtue of that registration and despite anything else in the Legislative Instruments Act, to be a legislative instrument54. It defines "enabling legislation" in relation to a legislative instrument to mean "the Act or legislative instrument, or the part of an Act or of a legislative instrument, that authorises the making of the legislative instrument concerned"55. The instrument, sufficiently by virtue of its registration, answers the description of a legislative instrument. Section 85 of the Act, by virtue of being a part of an Act pursuant to which the instrument as so registered was purportedly made, answers the description of enabling legislation. Section 56 of the Legislative Instruments Act provides: If the enabling legislation in relation to a legislative instrument as in force at any time before [1 January 2005] required the text of the instrument, or particulars of its making, to be published in the Gazette, the requirement for publication in the Gazette is taken, in relation to any such instrument made on or after that day, to be satisfied if the instrument is registered. If the enabling legislation in relation to a legislative instrument as enacted, or as amended, at any time on or after [1 January 2005] requires the text of the instrument, or particulars of its making, to be published in the Gazette, the requirement for publication in the Gazette is taken in respect of any such instrument to be in addition to any requirement under this Act for the instrument to be registered." 52 Section 22(1). 53 Section 20(1A). 54 Section 5(3). 55 Section 4(1). Crennan Bell By virtue of giving legal operation before and after 1 January 2005 to a "notice in the Gazette", s 85 of the Act required and requires the text of the legislative instrument to be published in the Gazette. Section 85 of the Act has not been amended since subdiv AH of Div 3 of Pt 2 was inserted into the Act in 199256. Section 56(1), rather than s 56(2), of the Legislative Instruments Act therefore applied in respect of the instrument at the time of its registration on 5 March 2014. Substantive invalidity The determinative issue is whether the instrument is within the substantive scope of the power conferred by s 85 of the Act. Turning to that issue, and before addressing the relationship between s 85 and s 65A, it is convenient to address arguments of the parties about the relationship between s 85 and s 39. It is argued that the reference in s 39(1) of the Act to a "legislative instrument", by which the maximum number of visas of a class that may be granted in a financial year is fixed by the Minister, is a reference to a legislative instrument made under s 85 of the Act; and that the power conferred by s 85 is confined to making legislative instruments which determine the maximum numbers of visas of classes for which s 39(1) permits a criterion to be prescribed. As protection visas are expressly excluded from the classes of visas for which a criterion is permitted to be prescribed by s 39, it is argued, protection visas are necessarily excluded from the scope of the power conferred by s 85. The Minister argues in response that s 39 and subdiv AH of Div 3 of Pt 2 provide separate and distinct mechanisms by which the Minister might choose, by legislative instrument, to fix the maximum number of visas of a class that may be granted in a financial year. Within those separate and distinct mechanisms, the Minister argues, s 39(1) (by implication) and s 85 (in its express terms) confer separate and distinct powers on the Minister to make different legislative instruments. Those different legislative instruments have different legislated consequences: the former, set out in s 39(2); the latter, set out in the subsequent sections in subdiv AH of Div 3 of Pt 2. Both arguments appeal to legislative history: the Minister emphasising that the precursor to s 39 was inserted by amendment enacted in 199157, before 56 Migration Laws Amendment Act 1992 (Cth). 57 Migration Amendment Act (No 2) 1991 (Cth). Crennan Bell subdiv AH of Div 3 of Pt 2 was inserted by amendment enacted in 199258; the plaintiff emphasising the inapplicability of subdiv AH of Div 3 of Pt 2 when inserted to what were in 1992 entry permits (not visas) for refugees. None of that legislative history is of much weight given that s 39 was substituted, and subdiv AH of Div 3 of Pt 2 was left unchanged, when visas to remain in Australia replaced entry permits and when protection visas and mandatory detention of unlawful non-citizens were introduced by further amendment enacted later in 199259. Section 39 and subdiv AH of Div 3 of Pt 2 (apart from the insertion of s 87A in 200060) have remained substantially unaltered since the Act took what remains essentially its current structure with the commencement of that 1992 amendment in 1994. Each argument proves too much. There is one power in the Act for the Minister, by legislative instrument, to fix the maximum number of visas of a class that may be granted in a financial year: the power expressly conferred by s 85. There is no need to imply another. The Minister's exercise of the power conferred by s 85 has the automatic consequences for the processing of applications for visas of the specified class which are set out in the subsequent sections in subdiv AH of Div 3 of Pt 2, to which reference has already been made. Section 39(1) does not confer power on the Minister to make a different legislative instrument. It confers power on the Governor-General to prescribe by regulation a criterion for visas, of a class other than protection visas, which is to operate by reference to any legislative instrument made by the Minister under s 85. Subject to s 39(2), the criterion so prescribed is then one of the criteria given operative effect in the decision-making process by s 65(1)(a)(ii) and (1)(b). If a criterion prescribed under s 39(1) would operate through s 65(1)(b) to prevent the grant in a financial year of any more visas of a particular class, because the maximum number specified in a legislative instrument made by the Minister under s 85 has been reached, s 39(2) intercepts that operation by introducing that any outstanding applications for visas of that class are taken not to have been made. That consequence, attaching in those circumstances by force of s 39(2) to the criterion prescribed under s 39(1), renders otiose the consequences for the processing of the additional automatic consequence 58 Migration Laws Amendment Act 1992 (Cth). 59 Migration Reform Act 1992 (Cth). 60 Migration Legislation Amendment Act (No 1) 2000 (Cth). Crennan Bell applications which subdiv AH of Div 3 of Pt 2 attaches the same circumstances to the legislative instrument under s 85. By requiring outstanding applications for visas of the specified class to be taken not to have been made, s 39(2) removes the basis on which the subsequent sections in subdiv AH of Div 3 of Pt 2 would otherwise operate. The result is that there is no tension between the operation of s 39(2) and ss 86 and 89; the starker consequence for which s 39(2) provides prevails, rendering ss 86 and 89 inapplicable by reason of the absence of an application. The power in s 85 is capable of being exercised by the Minister so as to have the consequences set out in subdiv AH of Div 3 of Pt 2 independently of any exercise of power by the Governor-General under s 39(1). The express exclusion of protection visas from the scope of the power conferred by s 39(1) is insufficient to indicate that protection visas are to be excluded by implication from the power conferred by s 85. The implication to be drawn from s 65A is different. When s 65A was inserted (together with s 91Y) in 200561, its purpose was identified as being to reflect the policy "that decisions on protection visa applications should be made in a timely and efficient manner so as to provide greater transparency and certainty for protection visa applicants". "Timeliness in the decision-making process will be enhanced by [s 65A]", it was explained, "as the Minister will be required to make all decisions within a set time frame"62. By so requiring the making of a timely decision, the section limits the potential for prolongation of detention of an unlawful non-citizen who has made a valid application for a protection visa during the decision-making process63. There is a conflict between the requirement of s 65A that the Minister perform the duty to make a decision under s 65 in respect of a valid application for a protection visa within the 90 day period to which s 65A refers and the consequences which subdiv AH of Div 3 of Pt 2 would attach to an instrument under s 85 determining the maximum number of protection visas that may be granted in a specified financial year. 61 Migration and Ombudsman Legislation Amendment Act 2005 (Cth). 62 Australia, Senate, Migration and Ombudsman Legislation Amendment Bill 2005, Explanatory Memorandum, Sched 1 [3]. 63 See Australia, House of Representatives, Parliamentary Debates (Hansard), 2 November 2005 at 121-122; Australia, Senate, Migration and Ombudsman Legislation Amendment Bill 2005, Explanatory Memorandum, Sched 1 [13]. Crennan Bell The Minister recognises that conflict, but argues that it is addressed and resolved by s 89 in favour of the primacy of subdiv AH of Div 3 of Pt 2. By force of s 89, the fact that the Minister has neither granted nor refused to grant a protection visa could not mean for the purpose of s 65A (or any other purpose) that the Minister has failed to make a decision to grant or refuse to grant. The conflict, however, is starker and more pervasive than the Minister's argument accommodates. What s 65A requires, within the time frame it sets, is the making in respect of a valid application for a protection visa of the binary decision for which s 65 provides: either granting the protection visa under s 65(1)(a) or refusing to grant the protection visa under s 65(1)(b). Were an instrument under s 85 to be capable of determining the maximum number of protection visas that may be granted in a specified financial year, s 65A would not merely conflict with the ability of the Minister, by reason of s 89, to delay the making of a decision during the remainder of that financial year. Section 65A would also conflict with the ability of the Minister, by reason of the limited prohibition in s 86 as clarified by s 88, not to decide to grant a protection visa under s 65(1)(a) once the maximum number of protection visas was reached yet still to decide to refuse to grant a protection visa under s 65(1)(b). Unlike s 85, as the plaintiff points out, s 65A is expressed as a duty rather than as a discretion, and is addressed to applications for visas of a single identified class of visa. To resolve the conflict by giving primacy to s 65A best achieves the identified purpose of that section within the scheme of the Act, which, in a number of other respects, treats applications for protection visas differently from other classes of visas. Not only does giving primacy to s 65A provide the greater certainty for protection visa applicants, but it places the greater limits on the potential for the prolongation of their detention. The conflict is resolved by construing the reference in s 85 to "visas of a specified class" as not extending to visas of the class for which s 65A makes provision: protection visas. Relief The plaintiff made a valid application for a protection visa on 23 September 2012. A delegate of the Minister refused to grant him a protection visa, following which he applied for review of the delegate's decision by the Refugee Review Tribunal. On 17 May 2013, the Tribunal remitted his application to the Minister with a direction that he satisfies the criterion of being a non-citizen in Australia in respect of whom Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol. Crennan Bell The Minister has not made a decision to grant or refuse to grant the protection visa despite more than 90 days having now elapsed since the application was remitted to him. The Minister has therefore failed to perform the duty imposed by s 65 in compliance with s 65A of the Act. The Minister having advanced no discretionary reason why that relief should not be granted, the plaintiff should have a writ of mandamus directing the Minister to consider and determine the plaintiff's application according to law. The plaintiff also seeks injunctive relief, but the availability of mandamus in those terms makes that further relief inappropriate. Costs The third question reserved by the special case asks who should pay the costs of the proceeding. There is no dispute that the costs of the special case should follow the event. There is a dispute as to whether the plaintiff should have the whole of his costs of the proceeding. The defendants should pay the costs of the special case. The costs of the balance of the proceeding should be determined by a single Justice. Orders The questions reserved should be answered as follows: Question 1: Is the Minister's determination made on 4 March 2014 pursuant to s 85 of the Migration Act invalid? Answer: Yes. Question 2: What, if any, relief sought in the further amended writ of summons and further amended statement of claim, dated 1 April 2014, should be granted to the plaintiff? Answer: A writ of mandamus directing the first defendant to consider and determine the plaintiff's application for a Protection (Class XA) visa according to law. Questions 3: Who should pay the costs of the proceeding? Answer: The defendants should pay the costs of the special case. The costs of the balance of the proceeding should be determined by a single Justice. |
HIGH COURT OF AUSTRALIA PLAINTIFF AND MINISTER FOR IMMIGRATION AND CITIZENSHIP DEFENDANT Shahi v Minister for Immigration and Citizenship [2011] HCA 52 14 December 2011 ORDER Order that the question stated in the special case be answered as follows: Question 1: Did the delegate make a jurisdictional error in finding that the plaintiff's mother did not meet the requirements of cl 202.221 of Sched 2 to the Migration Regulations 1994 (Cth)? Answer: Yes. Representation L G De Ferrari for the plaintiff (instructed by Victoria Legal Aid (Civil Law Section)) S B Lloyd SC for the defendant (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Shahi v Minister for Immigration and Citizenship Immigration – Visa – Refugee and Humanitarian (Class XB) visa – Subclass 202 Global Special Humanitarian – Plaintiff Australian permanent resident, eligible proposer for and held Subclass 202 visa – Plaintiff's mother applied for Subclass 202 visa – Primary criteria for grant of visa in cl 202.211 of Sched 2 to Migration Regulations 1994 (Cth) included that applicant "member of the immediate family of the proposer" on date proposer's visa granted and that applicant "continues to be a member of the immediate family of the proposer" at time of applicant's application for visa – Applicant must continue "to satisfy the criterion in clause 202.211" at time of decision for applicant's visa – Mother "member of the immediate family" of proposer only until proposer 18 years old – Plaintiff proposed mother for visa before turned 18 but Minister's delegate's decision not made until after plaintiff turned 18 – Minister's delegate decided that mother ceasing to be member of plaintiff's "immediate family" after date of application but before date of decision required refusal of mother's application – Whether "continues to be a member of the immediate family of the proposer" is criterion to be determined at time of application or time of decision – Whether jurisdictional error. Words and phrases – "continues to be a member of the immediate family", "continues to satisfy the criterion", "criteria to be satisfied at time of decision". Migration Act 1958 (Cth), ss 31(3), 47(1), 65(1), 65A. Migration Regulations 1994 (Cth), regs 2.01, 2.03(1), Sched 1, item 1402, Sched 2, Div 202.2. FRENCH CJ, GUMMOW, HAYNE AND BELL JJ. The plaintiff, a refugee from Afghanistan, holds a protection visa. He proposed that his mother (and some other relatives) be granted visas to enter and remain in Australia. A criterion for the grant of the visa for which the plaintiff's mother applied was that at the time of her application she continue to be a member of the proposer's immediate family. After the mother made her application, but before the Minister's delegate decided whether to grant or refuse the application, the plaintiff attained 18 years of age and, as a result, the mother ceased to be a member of the plaintiff's "immediate family". The Minister's delegate decided that the mother's ceasing to be a member of the plaintiff's immediate family required that the mother's application be refused. Was this jurisdictional error, attracting relief in the original jurisdiction of this Court under s 75(v) of the Constitution? The litigation has proceeded on the footing that in this matter the Parliament has not conferred the necessary federal jurisdiction upon any other court. The Act and Regulations The Migration Act 1958 (Cth) ("the Act") provides, by s 31(3), that regulations made under the Act "may prescribe criteria for a visa or visas of a specified class". The Migration Regulations 1994 (Cth) ("the Regulations") provide (reg 2.01) for prescribed classes of visas. One such class, identified in item 1402 of Sched 1 to the Regulations, is Refugee and Humanitarian (Class XB). That class of visa is divided1 into several subclasses. The presently relevant subclass is Subclass 202 Global Special Humanitarian. Regulation 2.03(1) provides that "the prescribed criteria for the grant to a person of a visa of a particular class" are those set out in Sched 2 to the Regulations. The criteria may be (and in the case of Subclass 202 visas are) divided into primary and secondary criteria. This case concerns the construction of those provisions of the Regulations that prescribe the primary criteria for the grant of a Subclass 202 visa. More particularly, how does the requirement made by cl 202.221 that "[t]he applicant continues to satisfy the criterion in clause 202.211" apply in relation to what is provided for by cl 202.211? What is "the criterion" in cl 202.211 which the applicant must continue to satisfy? 1 Migration Regulations 1994 (Cth), reg 2.02(1), Sched 1, item 1402(4). Bell The proceeding The issue that has been identified arises in a proceeding instituted in the original jurisdiction of this Court. The plaintiff seeks certiorari to quash a decision made by a delegate of the defendant Minister refusing applications by the plaintiff's mother (and other relatives of the plaintiff) for Refugee and Humanitarian (Class XB) visas. The plaintiff alleges that the Minister's delegate made a jurisdictional error by misconstruing the applicable regulation and thus asking a wrong question2. The parties have joined in stating a Special Case asking whether "the delegate [made] a jurisdictional error in finding that the Plaintiff's mother did not meet the requirements of clause 202.221 of Schedule 2" to the Regulations. These reasons will show that the question should be answered "Yes". Subclass 202 Global Special Humanitarian visas That part of Sched 2 to the Regulations which is set out under the general heading "Subclass 202 Global Special Humanitarian" (like other similar parts of the Schedule) is divided into seven subjects: Interpretation (Div 202.1); Primary criteria (Div 202.2); Secondary criteria (Div 202.3); Circumstances applicable to grant (Div 202.4); When visa is in effect (Div 202.5); Conditions (Div 202.6); and Way of giving evidence (Div 202.7). As has already been observed, this case concerns the second of these seven subjects: the specification of the primary criteria for a Subclass 202 Global Special Humanitarian visa. It is necessary to set out the full text of the relevant parts of Div 202.2, but it will then be necessary to look more closely at some aspects of that text. The relevant text of Div 202.2 Division 202.2 provides (so far as now relevant): "202.2 Primary criteria Note The primary criteria must be satisfied by all applicants except certain applicants who are members of the family unit, or members of the immediate 2 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 351 [82]; [2001] HCA 30. Bell family, of certain applicants who satisfy the primary criteria. Those other applicants need satisfy only the secondary criteria. 202.21 Criteria to be satisfied at time of application 202.211 (1) The applicant: (a) is subject to substantial discrimination, amounting to gross violation of human rights, in the applicant's home country and is living in a country other than the applicant's home country; or (b) meets the requirements of subclause (2). (2) The applicant meets the requirements of this subclause if: (a) the applicant's entry to Australia has been proposed in accordance with approved form 681 by an Australian citizen or an Australian permanent resident (in this subclause called the proposer); and (b) either: (iia) the proposer is, or has been, the holder of a Subclass 202 visa, and the applicant was a member of the immediate family of the proposer on the date of grant of that visa; or the proposer is, or has been, the holder of a Subclass 866 (Protection) visa, and the applicant was a member of the immediate family of the proposer on the date of application for that visa; or the proposer is, or has been, the holder of a Resolution of Status (Class CD) visa, and the applicant was a member of the immediate family of the proposer on the date of application for that visa; (iii) the proposer is, or has been, the holder of a special assistance visa, and the applicant was a member of the immediate family of the proposer on the date of the application for that visa; and Bell (ba) the application is made within 5 years of the grant of that visa; and (c) the applicant continues to be a member of the immediate family of the proposer; and (d) before the grant of that visa, that relationship was declared to Immigration. 202.22 Criteria to be satisfied at time of decision 202.221 The applicant continues to satisfy the criterion in clause 202.222 The Minister is satisfied that there are compelling reasons for giving special consideration to granting to the applicant a permanent visa, having regard to: (a) the degree of discrimination to which the applicant is subject in the applicant's home country; and (b) the extent of the applicant's connection with Australia; and (c) whether or not there is any suitable country available, other than Australia, that can provide for the applicant settlement and protection from discrimination; and (d) the capacity of the Australian community to provide for the permanent settlement of persons such as the applicant in Australia. 202.223 The permanent settlement of the applicant in Australia would be consistent with the regional and global priorities of the Commonwealth in relation to the permanent settlement of persons in Australia on humanitarian grounds. 202.224 The Minister is satisfied that permanent settlement in Australia: (a) is the appropriate course for the applicant; and (b) would not be contrary to the interests of Australia." Clauses 202.225 and 202.227-202.229 provide for further criteria to be satisfied at time of decision. Neither party submitted that the content of any of those criteria bore upon the issues for decision in this matter. But some reference Bell was made in argument to cl 202.226, which provides, in effect, that the number of Subclass 202 visas that can be granted in any financial year can be limited to the number "determined by Gazette Notice". It will be necessary to say a little more about that provision at a later point in these reasons. Some observations may be made about the structure of Div 202.2. Under the general heading "202.2 Primary criteria" there are two subdivisions: subdiv 202.21 entitled "Criteria to be satisfied at time of application" and subdiv 202.22 entitled "Criteria to be satisfied at time of decision". Subdivision 202.21 states alternative criteria to be satisfied at time of application. The first (cl 202.211(1)(a)) is that the applicant "is subject to substantial discrimination, amounting to gross violation of human rights, in the applicant's home country and is living in a country other than the applicant's home country". The second (cll 202.211(1)(b) and 202.211(2)) applies to cases where the applicant's entry to Australia has been proposed by an Australian citizen or an Australian permanent resident. Clause 202.211(1)(b) states, as the criterion to be satisfied at time of application, that the applicant "meets the requirements of subclause (2)". Sub-clause (2) of cl 202.211 sets out six requirements. First, the proposer must be an Australian citizen or an Australian permanent resident and have proposed the applicant in accordance with a particular form (cl 202.211(2)(a)). Second, the proposer must be or have been the holder of one of four specified kinds of visa (cl 202.211(2)(b)). Third, the visa applicant must have been a member of the immediate family of the proposer at a particular date. (The date is identified in cl 202.211(2)(b)) according to the kind of visa held by the proposer as either the date of grant of or the date of application for the relevant visa.) Fourth, the application must be made within five years of the grant of the relevant visa that the proposer holds or held (cl 202.211(2)(ba)). Fifth, the visa applicant must continue to be (at the time of the application) a member of the immediate family of the proposer (cl 202.211(2)(c)). Sixth, before the grant of the relevant visa held by the proposer, the relationship between visa applicant and proposer must have been "declared to Immigration" (cl 202.211(2)(d)). The issue As earlier indicated, the issue in this case is how, if at all, the provision made by cl 202.221 (that "[t]he applicant continues to satisfy the criterion in clause 202.211") engages with the six requirements stated in cl 202.211(2). More particularly, does cl 202.221 require that at the time of the Minister's decision the visa applicant continue to be a member of the immediate family of the proposer? Bell The expression "member of the immediate family" is defined in reg 1.12AA(1): "For these Regulations, a person A is a member of the immediate family of another person B if: (a) A is a spouse or de facto partner of B; or (b) A is a dependant child of B; or (c) A is a parent of B, and B is not 18 years or more." The facts In May 2009, the plaintiff arrived in Australia as an unaccompanied minor. In September 2009, he applied for and was granted a Protection (Class XA) visa. In December 2009, the plaintiff was the proposer in an application by his mother (and some other relatives) for the grant of a Refugee and Humanitarian (Class XB) visa. The relevant subclass of visa was Subclass 202 Global Special Humanitarian. At the time of the visa application the plaintiff was under 18 years of age and thus the mother was "a member of the immediate family" of the plaintiff. The visa application was refused by a delegate of the Minister in September 2010. The plaintiff does not know his exact date of birth. The parties have agreed that at some time between the date of the visa application (in December 2009) and the date of the decision to refuse the application (in September 2010) the plaintiff attained 18 years of age. Once the plaintiff turned 18, his mother was no longer a member of his "immediate family" as reg 1.12AA(1) defines that term. The delegate's decision The Minister's delegate decided that the visa application should be refused on grounds including that, at the time of the decision, the plaintiff's mother was no longer a member of the immediate family of the proposer (the plaintiff) because the proposer was no longer under 18 years of age. The delegate also decided that another provision of subdiv 202.22 had not been met. That other provision (cl 202.222) requires the Minister to be "satisfied that there are compelling reasons for giving special consideration to granting to the applicant a permanent visa, having regard to" certain matters. The parties agreed that the delegate's conclusion about the application of this other provision "does not provide a separate basis for the decision". It was said, in argument, that it was Bell the policy of the Minister to treat the presence or absence of "compelling reasons" as affected by (even dependent upon) satisfaction of the matters identified in cl 202.211. The accuracy of this view was not in issue and need not be examined. Applying cl 202.221 The provision made by cl 202.221 that "[t]he applicant continues to satisfy the criterion in clause 202.211" is readily applied to the first of the alternative criteria stated in cl 202.211 (that "[t]he applicant … is subject to substantial discrimination, amounting to gross violation of human rights, in the applicant's home country and is living in a country other than the applicant's home country"). The criterion in cl 202.211(1)(a) is stated in such a way as readily to permit its application "at time of application" and its separate application "at time of decision". Seeking to have cl 202.221 engage with the second criterion stated in cl 202.211 (that "[t]he applicant … meets the requirements of subclause (2)") is more difficult. The difficulty arises from the circumstance that the requirements of sub-cl (2) of cl 202.211 have several different temporal elements. Those different temporal elements can be identified as follows. One of the requirements of cl 202.211(2) (provided by cl 202.211(2)(a)) looks to the past, that is, to a time before the time of application: "the applicant's entry to Australia has been proposed …". The requirements made by cl 202.211(2)(b)(i) to (iii) look to the present or the past: "the proposer is, or has been, the holder" of a particular class of visa. The requirement made by cl 202.211(2)(ba) looks to a period of time fixed by reference to the date of application for the visa and the date of grant of the proposer's relevant visa: "the application is made within 5 years of the grant" of the relevant visa that is or was held by the proposer. The requirement made by cl 202.211(2)(d) takes the time of the grant of the relevant visa that is or was held by the proposer as the relevant time and looks backwards: "before the grant of that visa, that relationship was declared to Immigration". And of critical importance to the present matter, the requirement of cl 202.211(2)(c) has a temporal requirement that differs from all other elements of cl 202.211(2). It requires that "the applicant continues to be a member of the immediate family of the proposer". All of the requirements of cl 202.211(2), other than the requirement about membership of the immediate family of the proposer, are requirements that, if met at the time of application, cannot thereafter cease to be met. Or to put the same point positively, the only one of the requirements of cl 202.211(2) satisfaction of which can change over time is the requirement about membership Bell of the immediate family. That requirement can cease to be met by the simple effluxion of time (because the person in question attains the age of 18 years3). It can cease to be met because dependency ceases4. It can cease to be met because of a change in marital status (by dissolution of a marriage)5. It can change because there is some change in the relationship between persons that makes one the "de facto partner" of the other6. Whether such a change has occurred may obviously be affected by how long a time has elapsed between the application for a visa and the decision to grant or refuse the application. When the relevant change is the proposer's attaining 18 years of age (as it is in this case), the length of time taken to decide the application will directly determine whether the visa applicant continues to be a member of the immediate family of the proposer at the time the decision to grant or refuse the visa application is made. One criterion; several criteria? The heading to subdiv 202.21 refers to "Criteria" to be satisfied at time of application; the text of cl 202.221 requires that the applicant continue to satisfy "the criterion" in cl 202.211. The drafter thus does not observe the distinction that must be made between the specification of a single criterion and the specification of several criteria. An examination of the rest of Sched 2 to the Regulations shows that the drafter has not (or successive drafters have not) observed that distinction. Rather, as in subdivs 202.21 and 202.22, a common form of heading referring to "Criteria" has been adopted throughout the several provisions of Sched 2, regardless of whether the text set out under the heading states one criterion or several criteria. As already noted, cl 202.211(1) states alternative criteria yet cl 202.221 speaks of the applicant continuing to satisfy the (single) criterion in cl 202.211. It is, however, not a large step to take to read cl 202.221 (with its reference to continuing to satisfy a single criterion) as referring to continued satisfaction of reg 1.12AA(1)(c). reg 1.03 ("dependent child") with reg 1.12AA(1)(b). 6 Determination of who is the "de facto partner" of another is to be made in accordance with s 5CB of the Migration Act 1958 (Cth) and reg 1.09A of the Regulations. The detail of those provisions need not be examined. Bell whichever of the alternative criteria is relied on. If that step is taken, the question that then is posed in the present case – where the relevant alternative in cl 202.211(1) is par (b) ("meets the requirements of subclause (2)") – is how cl 202.221 ("[t]he applicant continues to satisfy" the criterion) can or does engage with that criterion when it contains several requirements, each with a temporal aspect, but only one of which can vary over time. There is an evident textual awkwardness in reading the requirement of "continues to satisfy" the criterion as engaging with only one of the several requirements that go to make up the relevant criterion. And that awkwardness is increased when the requirement in question is expressed as "continues to be" a member of the immediate family. As the plaintiff submitted, the requirement would have to be read textually as being that the applicant "continues to continue to be" a member of the immediate family of the proposer. Statutory context How cl 202.221 (providing that the applicant continues to satisfy the criterion in cl 202.211) can or does engage with cl 202.211(1)(b) and the requirements of cl 202.211(2) must be considered in the context provided by those provisions of the Act that regulate the grant of visas. Of particular importance is s 65(1) of the Act, which provides in effect that after considering a valid application for a visa the Minister, if satisfied that the relevant criteria are met, "is to grant the visa". Although s 65A of the Act fixes the time within which the Minister must make a decision on certain applications for protection visas (those validly made under s 46 or remitted by any court or tribunal to the Minister for reconsideration), the Act and the Regulations do not fix the time within which a visa application of the kind now in issue must be decided. Yet it is not to be supposed that the Minister could refuse to consider a valid application for a visa7 or could unreasonably delay making the decision to grant or refuse the application8. That is, the relevant provisions of the Regulations are to be construed on the footing that a decision to grant or refuse to grant a visa will be made promptly. cf NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 470; [2005] HCA 77. Bell In the present case, the visa application was made in December 2009 but the decision to refuse the application was not made until September 2010. Counsel for the Minister submitted (rightly) that there was no evidence before the Court which would show that this apparently long interval between application and decision constituted some unreasonable delay in dealing with the application. The weight to be accorded to the absence of demonstrated unreasonable delay is to be assessed in the light of a further submission advanced on behalf of the Minister. Section 39(1) of the Act expressly permits the provision of limits on the number of certain visas that may be granted and, as noted earlier, particular provision for the prescription of such a limit has been made in respect of Subclass 202 visas by cl 202.2269, but no limit has been fixed. Given that s 39(2) provides expressly that outstanding applications for the grant of such visas remaining after the prescribed number of visas have been granted "are taken not to have been made", it is not to be supposed that this requirement could, as the Minister submitted, be circumvented by "deferring" consideration of an application to the next financial year. It is, however, not necessary to explore this aspect of the matter further. It is enough to observe that, although an interval of nine months was not shown in this case to be an unreasonable delay, it is not to be assumed that a period of that length is typical of the time that will elapse between application and decision. There is, as already noted, evident textual awkwardness in reading the requirement that an applicant continue to meet a single criterion as applying to only one of the several requirements that make up that criterion, and especially is that so when the temporal element of the relevant requirement is expressed as "continues to be". But more than that, there is evident scope for capricious and unjust operation of the requirement in circumstances where its engagement depends upon the occurrence of a relevant factual change which, in the case of a 9 Clause 202.226 provides: "Grant of the visa would not result in either: (a) the number of Subclass 202 visas granted in a financial year exceeding the maximum number of Subclass 202 visas, as determined by Gazette Notice, that may be granted in that financial year; or (b) the number of visas of particular classes, including Subclass 202, granted in a financial year exceeding the maximum number of visas of those classes, as determined by Gazette Notice, that may be granted in that financial year." Bell person attaining the age of 18 years, depends wholly upon how promptly the application for a visa is determined. Why should such a construction of the provisions be adopted? Drafting history and context The drafting history of the Regulations points against reading cl 202.221 as engaging at all with the second of the criteria stated in cl 202.211. Rather, that history points to reading the requirement that the applicant continue to satisfy "the criterion" in cl 202.211 as engaging only with the first criterion stated in cl 202.211 (the criterion concerning being subject to substantial discrimination in the visa applicant's home country). Provision was made for Subclass 202 Global Special Humanitarian visas in the Regulations when first they were made10 in 1994. The primary criteria for such visas were expressed (so far as now relevant) as being: Criteria to be satisfied at time of application The applicant is subject to substantial discrimination, amounting to gross violation of human rights, in the applicant's home country. home country. The applicant is living in a country other than the applicant's Criteria to be satisfied at time of decision 202.211 and 202.212." The applicant continues to satisfy the criteria in clauses Two features of those provisions should be noted. First, what were originally stated as two criteria to be satisfied at time of application (substantial discrimination and living outside the applicant's home country) are now expressed as a single compound criterion. Second, there was no doubt about the relationship between the criteria to be satisfied at the time of decision and those to be satisfied at time of application. Clause 202.221 specified "the criteria" to be satisfied at the time of decision as those "in clauses 202.211 and 202.212". Visas were to be available only to those who, both at time of application and at time of decision, were subject to discrimination of the stated kind and were living 10 As Statutory Rule No 268 of 1994. Bell in a country other than their home country. And whether the applicant met those criteria could change over time. The discrimination might cease; the applicant might resume living in his or her home country. Application of cl 202.221 to the criteria to which it referred (those "in clauses 202.211 and 202.212") presented neither verbal awkwardness nor any likelihood of capricious or unjust application. In 1997, the Regulations were amended11 to a form which in all material respects is the form that now applies. In particular, the first criterion to be satisfied at time of decision was changed12 to become "[t]he applicant continues to satisfy the criterion specified in clause 202.211". (This criterion took its present form in 1999 when "specified" was omitted13 from cl 202.221. This amendment is immaterial.) If the drafter of the amending Regulations had wanted to provide as a criterion to be satisfied at time of decision that the applicant continue to be a member of the immediate family of the proposer, the Regulations as made in 1994, and as amended in 1997, contained within the text of the provisions dealing with Subclass 202 visas a readily available form of words that could have been adopted. Secondary criteria to be satisfied by applicants for Subclass 202 visas who were (in 1994) members of the family unit of a person who satisfies the primary criteria or (since 1997) are members of the family unit or members of the immediate family of certain persons meeting the primary criteria have always included a requirement that, at the time of decision, the applicant continue to be a member of the relevant immediate family or family unit. So, as the Regulations now stand, subdiv 202.32 provides: Criteria to be satisfied at time of decision The applicant: continues to be a member of the family unit of a person who, having satisfied the primary criteria (and, in particular, having met the requirements of 11 Migration Regulations (Amendment) 1997 (Cth) (Statutory Rule No 137 of 1997), reg 14. 12 Migration Regulations (Amendment) 1997, reg 14.3. 13 Migration Amendment Regulations 1999 (No 6) (Cth) (Statutory Rule No 81 of 1999), Sched 6, Pt 6.3. Bell paragraph 202.211(1)(a)), Subclass 202 visa; or the holder of a continues to be a member of the immediate family of a person who, having satisfied the primary criteria (and, in particular, having met the requirements of the holder of a paragraph 202.211(1)(b)), Subclass 202 visa."14 But despite having numerous precedents for a provision which would have the effect for which the Minister now contends, and despite the drafter adopting and adapting those precedents in drafting an amended cl 202.321 in 1997, the drafter did not adopt this precedent in making provisions for primary "Criteria to be satisfied at time of decision". The failure to adopt this precedent suggests that the provision made by cl 202.221 of continuing to satisfy the criterion in cl 202.211 was to engage with the first criterion in that clause: being subject to substantial discrimination and living outside the applicant's home country. It suggests that the requirement of continuing to satisfy the criterion in cl 202.211 was not to engage at all with the second criterion in that clause: meeting the requirements of sub-cl (2) of cl 202.211. In particular it suggests that the provision made by cl 202.221 of continuing to satisfy the criterion in cl 202.211 was not to engage with the requirement about membership of the proposer's immediate family. An intervening divorce? The Minister submitted that the relevant provisions should be read as having an operation in this case that was the same as that specifically provided in subdiv 202.32 (although that drafting was not adopted) lest, despite an intervening divorce, the Minister be obliged to grant a Subclass 202 visa to the former spouse of the proposer. Two points must be made in respect of this submission. First, it is a submission that depends, at least inferentially, on the unstated premise that conformably with the due administration of the Act and the Regulations the interval between application and decision may be so long that the 14 This form of cl 202.321 (in all presently material respects) was inserted by reg 14.4 of the Migration Regulations (Amendment) 1997. As originally made in 1994, cl 202.321 provided: "The applicant continues to be a member of the family unit of a person who, having satisfied the primary criteria, is a holder of a subclass 202 visa." Bell relationship between proposer and visa applicant may deteriorate to the point of final rupture, even divorce. The premise should not be accepted. Second, even if the premise were to be accepted, the Minister has ample discretion to deal with such a case should it arise. The breakdown in relationship would bear directly upon "the extent of the applicant's connection with Australia" (one of the matters to which the Minister is to have regard under subdiv 202.22 in deciding whether there are "compelling reasons for giving special consideration to granting to the applicant a permanent visa"). Conclusion and orders The Minister's submission to the effect that adopting the plaintiff's construction of the provisions would lead to an absurd result or a result contrary to the purpose of the provisions should therefore not be accepted. On the contrary, adoption of the Minister's construction of the provision would lead to results that in some cases – including the present – are properly to be described as capricious and unjust15. For these reasons cl 202.221 should not be read as engaging with cl 202.211(1)(b) or any of cl 202.211(2). It is not a requirement for the grant of a Subclass 202 visa under cl 202.211(1)(b) that the visa applicant continue to be, at time of decision, a member of the immediate family of the proposer. Contrary to the Minister's further submission, to read the provisions in this way does not give cl 202.221 no work to do. Clause 202.221 does have work to do but that work is confined to applications made on the basis of the first criterion stated in cl 202.211. the requirements stated The question reserved for the opinion of the Full Court should be answered "Yes". The costs of the proceedings in the Full Court should be disposed of by the Justice who disposes of the proceedings. 15 cf Berenguel v Minister for Immigration and Citizenship (2010) 84 ALJR 251; 264 ALR 417; [2010] HCA 8. HEYDON J. I would answer the reserved question "No". Clauses 202.211 and 202.221 of Sched 2 to the Migration Regulations 1994 (Cth) unquestionably present problems whichever interpretation is adopted. However, the defendant's is the more attractive. that Clause 202.221 imposes a requirement Clause 202.211(1)(a) requires the applicant for a Subclass 202 visa – the plaintiff's mother – "continues to satisfy the criterion in clause 202.211." What is that "criterion"? Clause 202.211(1) states alternative the applicant for a requirements. Subclass 202 visa be subject to substantial discrimination in his or her home country and be the home country. in a country other Clause 202.211(1)(b) states an alternative requirement: that an applicant for a Subclass 202 visa "meets the requirements of subclause (2)" (of which there are five). Thus cl 202.211 may be said to create two criteria. One criterion is that the applicant for a Subclass 202 visa be subject to substantial discrimination. The other criterion is that the applicant for a Subclass 202 visa has been proposed by a proposer meeting certain conditions. living than that In respect of any particular applicant for a Subclass 202 visa, it is only necessary that one of the two criteria be satisfied at the time of application. An applicant might seek to meet the cl 202.211(1)(a) criterion. Or an applicant might seek to meet the cl 202.211(1)(b) criterion. In those circumstances, the use of the words "the criterion" in cl 202.221 is not inappropriate, for any given applicant is likely to be concerned only with the single criterion relevant to his or her application. Whatever criterion the applicant is seeking to meet, if the applicant meets it at the time of the application, the applicant must also continue to satisfy it at the time of decision. It is true that among the five requirements of cl 202.211(1)(b) set out in cl 202.211(2) there are some which, once satisfied at the time of the application, will continue to be satisfied at the time of decision whatever events take place between those two times. They are those listed in cl 202.211(2)(a), (b), (ba) and (d). In that sense an applicant will have no difficulty in continuing to satisfy them. But an event after application and before decision could prevent cl 202.211(2)(c) from continuing to be satisfied from whatever date it was satisfied on pursuant to cl 202.211(2)(b)(i), (ii), (iia) or (iii). If the applicant and the proposer were married at the time of the application, they may be divorced by the time of the decision. If they were de facto partners at the time of the application, they may have ceased to be de facto partners by the time of the decision. If the applicant were a dependent child of the proposer at the time of the application, the applicant may have ceased to be dependent by the time of the decision. If the proposer were a dependent child of the applicant at the time of the application, the proposer may have ceased to be a dependent child by the time of the decision. If the applicant were a parent of a child under 18 at the time of the application, the child may have turned 18 by the time of the decision. In short, cl 202.221 requires the applicant to continue to satisfy whichever of the matters in cl 202.211 are capable of varying over time. It is capable of affecting applicants adversely so far as a matter is capable of varying over time. But it is not capable of affecting applicants adversely so far as a matter is not capable of varying over time, for it is inevitable that the applicant will continue to satisfy the requirement in relation to it. The matters which are capable of varying over time are the two mentioned in cl 202.211(1)(a), namely being subject to substantial discrimination and living in a particular country (if the applicant is seeking a visa pursuant to that paragraph), and the matter mentioned in cl 202.211(2)(c) (if the applicant is seeking a visa by reason of a proposer being a member of the applicant's immediate family). Where an applicant is relying on cl 202.211(1)(b), the provisions assign great importance to an applicant for a Subclass 202 visa being a member of the proposer's immediate family. Here the applicant is relying on the proposer falling within cl 202.211(2)(b)(ii). But an applicant relying on cl 202.211(2)(b) (ie (i), (iia) or (iii)) again must establish that the applicant is a member of the proposer's immediate family. The function of cll 202.211 and 202.221 appears to be to enable a Subclass 202 visa to be granted to an applicant, even though that applicant is not claiming to be subject to substantial discrimination, provided the applicant is a member of the immediate family of a proposer who is an Australian citizen or an Australian permanent resident who holds or has held one of the visas described in cl 202.211(2)(b). In short, cll 202.211 and 202.221 appear to have the function of ensuring the reunion of families, or at least the reunion of "immediate" families. The plaintiff's construction has the result that a provision concerning the grant of visas to be granted to members of a proposer's immediately family is to be construed as compelling the grant of a visa even though the grantee has ceased to be a member of the proposer's immediate family. The plaintiff construes a provision dealing with the reunion of "immediate" families as compelling a grant of a visa even though that grant will not lead to the reunion of "immediate" families because the successful applicant, though once a member of the proposer's immediate family, no longer is. Leaving aside the simple instance of a child attaining 18 years of age shortly after the application, changes in the membership of the immediate family of the proposer – whether by divorce, or termination of a de facto relationship, or the movement of an adult child from dependency – can happen quite quickly. They are particularly likely to happen quickly in the circumstances contemplated by cl 202.211, where one person who at the time of the application was in the immediate family of another is in Australia and the other is not: geographical separation is not conducive to permanency of relationships. The plaintiff asked why rights should be defeasible by Ministerial delay. Some applications will be easy to decide quickly. It may be reasonable that others take more time. It is not to be assumed that the Minister or the delegates of the Minister will slow down so as to create obstacles in the path of applicants, and no assumption of that kind should be taken into account as bearing on interpretation. the plaintiff's Although, as indicated at the outset, there are anomalies and difficulties with both the plaintiff's interpretation and the defendant's interpretation, it is a drawback to the plaintiff's interpretation that cl 202.221 applies only to cl 202.211(a), and not to cl 202.211(b), even though cl 202.221 is not expressed to be so limited. The plaintiff, in avoiding the difficulty that if cl 202.221 applies to cl 202.211(1)(b) it only operates on cl 202.211(2)(c), creates the greater difficulty that on his interpretation cl 202.221 applies even more narrowly still. Thus following anomaly. Clause 202.211 is dealing with the grant of a visa to two categories – persons who are subject to substantial discrimination and persons proposed by members of their immediate families. It is common ground that in relation to the first category, those who claim to be subject to substantial discrimination must be subject to it both at the time of the application and the time of decision. But on the plaintiff's interpretation, in relation to the second category the requirement that the applicant be a member of the proposer's immediately family only applies at the date of application, not the date of decision. interpretation produces the In short, it is necessary that the applicant for a visa, here the plaintiff's mother, be "a member of the immediate family" of the proposer, here the plaintiff, at three points in time. It had to be so when the plaintiff applied for the Subclass 866 (Protection) visa on 14 September 2009: cl 202.211(2)(b)(ii). It had to be so when the plaintiff's mother applied for a Subclass 202 visa on 4 December 2009: cl 202.211(2)(c). And it must also be so on the day of the delegate's decision as to the mother's application, namely 7 September 2010: cl 202.221. There is no controversy in relation to the first two points in time. The controversy centres on the third. It would be curious if the need for membership of the immediate family applied at the first two points but not the third. |
HIGH COURT OF AUSTRALIA Matter No S291/2005 RINGROW PTY LTD AND APPELLANT BP AUSTRALIA PTY LTD RESPONDENT Matter No S292/2005 ULTIMATE FUEL PTY LIMITED APPELLANT AND BP AUSTRALIA PTY LTD RESPONDENT Matter No S293/2005 NADER-ONE PTY LIMITED APPELLANT AND BP AUSTRALIA PTY LTD RESPONDENT Ringrow Pty Ltd v BP Australia Pty Ltd Ultimate Fuel Pty Limited v BP Australia Pty Ltd Nader-One Pty Limited v BP Australia Pty Ltd [2005] HCA 71 17 November 2005 S291/2005, S292/2005 and S293/2005 ORDER Appeals dismissed with costs. On appeal from the Federal Court of Australia Representation: T E F Hughes QC with T D F Hughes for the appellants (instructed by Stojanovic Solicitors) B W Walker SC with M Walton SC and D R Sibtain for the respondents (instructed by Corrs Chambers Westgarth) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Ringrow Pty Ltd v BP Australia Pty Ltd Contract – Penalty – Agreement to purchase service station from distributor of fuel – Collateral agreement requiring fuel to be purchased exclusively from distributor – Breach of collateral agreement – Termination of collateral agreement by distributor pursuant to contractual power – Option to buy back service station exercisable by distributor on termination of collateral agreement – Whether option void and unenforceable as a penalty – Whether exercise of option oppressive or extravagant and unconscionable compared with genuine pre- estimate of damage – Relevance of proportionality to penalty questions. GLEESON CJ, GUMMOW, KIRBY, HAYNE, CALLINAN AND HEYDON JJ. These appeals concern the effect of contracts by which each of Ringrow Pty Ltd, Ultimate Fuel Pty Ltd and Nader-One Pty Ltd bought service stations from BP Australia Pty Ltd. The identical point arises in each appeal and it is convenient to confine analysis to the first appeal. The background The essential facts. On 27 May 1999, Ringrow Pty Ltd ("the appellant") entered a contract with BP Australia Pty Ltd ("the respondent") to buy a service station known as BP Lansvale ("Contract for Sale of Site"). The appellant, or persons connected with it, had conducted a service station business on that site since 1988 as franchisee. On 28 July 1999, the contract to buy BP Lansvale was completed, and certain related transactions were entered, including an Option Deed dated 28 July 1999 and a BP Branded Privately Owned Sites Agreement ("POSA"). At various times in 2002 the appellant purchased fuel from a supplier other than the respondent, and on-sold the fuel to the public. This was a breach of cl A4.2 of the POSA. The respondent gave the appellant Notices of Breach of Condition. These were followed by a Notice of Termination of Contract on 2 December 2002, with effect from 1 January 2003, pursuant to cl A13.2.1(a) of the POSA. On 17 December 2002, the solicitors for the respondent informed the solicitors for the appellant that the respondent intended to exercise its contractual rights under the Option Deed to buy back the BP Lansvale site. Clause 38.1 of the Contract for Sale of Site provided that, in consideration of the respondent agreeing to sell BP Lansvale to the appellant, the appellant "HEREBY GRANTS to the [respondent] an irrevocable option to purchase [BP Lansvale] on the terms set out in the option to purchase", a copy of which was annexed, and which on execution became the Option Deed. Clause 1.2(a) of the Option Deed provided that the option was only exercisable if the POSA "is terminated". Clause 2.1 of the Option Deed provided that the price payable for BP Lansvale by the respondent was its "market valuation ... as an operational service station as determined by an independent valuer". Clause 2.5 provided: "The valuer shall be instructed to determine the market valuation of [BP Lansvale] … and in making the determination shall have regard to all factors the valuer considers relevant but shall not include in the determination of the market valuation of [BP Lansvale] any allowance for any goodwill attaching to any business conducted at [BP Lansvale]." The duration of the option was five years and three months: cl 1.3. Conformably with what its solicitors had said on 17 December 2002, the respondent gave a Notice of Intention to exercise the option over BP Lansvale on 19 June 2003. Decisions of the Federal Court. The appellant commenced proceedings in which it made numerous allegations. Only one of these is now pressed: that cl 1.2(a) of the Option Deed was "void and unenforceable" as a penalty. In the Federal Court of Australia, Hely J rejected that contention1. He made declarations upholding the validity of the respondent's termination of the POSA and its exercise of the option. He declined to accede to the respondent's application for a decree of specific performance of the contract created by the valid exercise of the option, on the ground that it was premature to do so, since this "might have the unintended effect of preventing the [appellant] from mounting some legitimate challenge to the valuation process, should [it] have one"2. The Full Court of the Federal Court of Australia unanimously dismissed an appeal by the appellant3. Separate reasons for judgment were delivered by Beaumont J and by Conti and Crennan JJ. Their reasoning was similar to that of the trial judge. The performance of the task of the Full Court, and then of this Court, has been facilitated by the skill of Hely J in marshalling the details of the complex form in which the parties set down their legal relationship, and in the clear and precise statement both of the issues presented and the resolution of those issues. The appellant's arguments in this Court The law of penalties. The manner in which the trial was conducted relieved Hely J of the need to determine whether there was any scope for the 1 Ringrow Pty Ltd v BP Australia Ltd (2003) 203 ALR 281. 2 Ringrow Pty Ltd v BP Australia Ltd (2003) 203 ALR 281 at 317 [159]. 3 Ringrow Pty Ltd v BP Australia Pty Ltd (2004) 209 ALR 32. application of equitable principles respecting relief against forfeiture to the exercise of the option4. Rather, the case turned upon the law concerning penalties. In that regard, not every aspect of the arguments put to this Court were advanced at trial or in the Full Court. Nevertheless, the respondent did not oppose all of them being considered. The law of penalties, in its standard application, is attracted where a contract stipulates that on breach the contract-breaker will pay an agreed sum which exceeds what can be regarded as a genuine pre-estimate of the damage likely to be caused by the breach. The starting point for the appellant was the following passage in Lord Dunedin's speech in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd5: "2. The essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine covenanted pre-estimate of damage … 3. The question whether a sum stipulated is penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract, not as at the time of the breach … 4. To assist this task of construction various tests have been suggested, which if applicable to the case under consideration may prove helpful, or even conclusive. Such are: (a) It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach … (b) It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid … (2003) 203 ALR 281 at 307 [119]-[120]. [1915] AC 79 at 86-87. (c) There is a presumption (but no more) that it is penalty when 'a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage'6." the the principles governing Neither side in the appeal contested the foregoing statement by Lord Dunedin of identification, proof and consequences of penalties in contractual stipulations. The formulation has endured for ninety years. It has been applied countless times in this and other courts7. In these circumstances, the present appeal afforded no occasion for a general reconsideration of Lord Dunedin's tests to determine whether any particular feature of Australian conditions, any change in the nature of penalties or any element in the contemporary market-place8 suggest the need for a new formulation. It is therefore proper to proceed on the basis that Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd continues to express the law applicable in this country, leaving any more substantial reconsideration than that advanced, to a future case where reconsideration or reformulation is in issue9. The appellant submitted that there were three "penal factors" in the contractual arrangements to which the respondent was seeking to hold it. These it summarised as "the exclusion of goodwill from the re-sale price", "the cumulative imposition of the option upon the liability to pay liquidated damages if [the respondent] enforces the latter liability before exercising the option", and "the indiscriminate factor". 6 Lord Elphinstone v Monkland Iron and Coal Co (1886) 11 App Cas 332 at 342 per eg O'Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 at 368, 378, 399, 400; Acron Pacific Ltd v Offshore Oil NL (1985) 157 CLR 514 at 520; AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 190; Stern v McArthur (1988) 165 CLR 489 at 540 and Esanda Finance Corporation Ltd v Plessnig (1989) 166 CLR 131 at 139, 143, 145. 8 See eg AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 190. 9 O'Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 at 400; cf at 392; AMEV Finance Ltd v Artes Studios Thoroughbreds Pty Ltd (1989) 15 NSWLR 564 at 566, 574. The appellant did not submit either at trial or in this Court that the provisions requiring payment of liquidated damages themselves are void as a penalty10. Rather, the appellant submitted that it is the purported imposition upon the appellant by the Option Deed of an obligation, in the events that have happened, to transfer to the respondent the freehold of BP Lansvale, which is void as a penalty. The elements of each of the three "penal factors", as urged by the appellant with respect to the contractual arrangements, can be summarised as follows. Exclusion of goodwill from the resale price. Clause 40.4(a) of the Contract for Sale of Site provided: "The [respondent] and [appellant] acknowledge and agree that: the [respondent] is prepared to sell [BP Lansvale] on the basis of continued operation of the business of a retail fuel outlet operating as a going concern at the property under the POSA for a period of 5 years and the Liquidated Damages reflects the expected returns to the [respondent] under the POSA over that 5 year period …" The "Liquidated Damages" referred to were those stipulated by cl 40.2 of the Contract for Sale of Site and cl SC1.3 of the POSA. They rested on an assumed financial benefit to the respondent of $289,531 over the five year life of the POSA. It was provided that if the POSA were terminated in the first year, the sum of $289,531 would be payable by the appellant; if in the second year, 80 percent of that sum, and so on. The appellant contrasted cl 40.4(a) of the Contract for Sale of Site with cl 2.5 of the Option Deed. It submitted that the price payable by the respondent on exercise of the option "excluded any allowance for … goodwill, even though [the appellant] had paid an entry price expressly calculated as including such goodwill". It submitted that the principles stated by Lord Dunedin were not limited to payments of a "single lump sum" of money, but extended to the transfer of valuable property where the value of that property exceeded the damage suffered by the recipient of it. It contended that the word "terminated" in 10 (2003) 203 ALR 281 at 319 [173]. cl 1.2(a) of the Option Deed referred only to termination of the POSA for breach. It submitted that, viewed from the time when the POSA was made, it could be seen that it could be terminated on the occurrence of events which might occasion only trifling damage to the respondent. It submitted that par 4(c) of the passage quoted from Lord Dunedin's speech rested on "a concept of proportionality between breach and supposed remedy". The submission continued: "One must assess the proportionality (if any) between the interest sought to be vindicated by the stipulation impugned as penal and the means contractually devised for is a manifest that purpose. disproportion, the stipulation is presumptively a penalty … The exercise to be undertaken in such a case requires a precise definition of the interest requiring vindication in case of breach." there It submitted that the only legitimate commercial interest which the respondent was entitled to protect by the agreements it entered with the appellant, and in particular the Option Deed, was to preserve BP Lansvale as an outlet for the sale exclusively of BP petroleum products during the five year term of the POSA. A sufficient vindication of the respondent's interest would have been a contractual requirement for the appellant to grant a lease of BP Lansvale to the respondent for the unexpired balance of the term of the POSA after it had been terminated for breach. The appellant submitted that a comparison of the consideration payable to the appellant for the transfer back to the respondent with the real value of BP Lansvale at that time revealed that the option was penal. It also submitted that a want of proportionality was revealed by the fact that if the POSA were terminated for a trivial breach in the first month of its term, thus ending the respondent's obligation to supply petroleum to the appellant, the option would overhang the property for another five years and two months. The appellant "would have to 'sit out' that period with [its] effective use of the site virtually sterilised. Such an outcome would be grossly disproportionate to the breach". Cumulative imposition of option on the liquidated damages clause. By reason of cl A16.17 of the POSA certain special conditions were part of it. By cl SC1.1 the appellant acknowledged that it had acquired from the respondent the freehold of BP Lansvale. Clause SC1.3 provided for the payment of liquidated damages on termination of the POSA before the passing of five years in identical fashion to that provided for by cl 40.2 of the Contract for Sale of Site. Clause SC1.2(e) provided: "[The respondent] has the right to acquire [BP Lansvale] under [the Option Deed] … If [the POSA] is terminated and [the respondent] has exercised its right to acquire [BP Lansvale] under the [Option Deed], the Liquidated Damages will not be repayable [scil payable] to [the respondent] under clause SC1.3." The appellant submitted that it followed that if the respondent relied on its right to liquidated damages before it relied on its right to exercise the option, it would be "securing a double 'remedy' for the same breach". The appellant also complained that the Full Court had not dealt with this point. The indiscriminate factor. The appellant argued that the right to exercise the option was "unrelated to the extent or gravity of any contractual default relied upon to trigger the entitlement to terminate the POSA". Hence it was said that "[t]he entitlement is indiscriminate as regards the nature or quality of the breach". For the reasons given below, these arguments must be rejected, and the appeal must be dismissed. An evidentiary difficulty The argument of non-monetary penalties. The respondent did not contest the appellant's submission, for which there is authority11, that Lord Dunedin's statement applies not only to cases where money is payable but also to cases where money's worth (including property) is transferable on a particular event. In that extended application, Lord Dunedin's statement requires a different approach from that employed in typical penalty cases. In typical penalty cases, the court compares what would be recoverable as unliquidated damages with the sum of money stipulated as payable on breach. In cases like the present, on the other hand, assuming (contrary to certain submissions of the respondent) that the doctrine of penalties is capable of application at all, one relevant comparison would be between the price payable by the respondent to the appellant on retransfer of BP Lansvale by the appellant, and the actual value of what is transferred. Applying that approach to this case, assuming (contrary to certain 11 Forestry Commission of New South Wales v Stefanetto (1976) 133 CLR 507 at 519, 524; Jobson v Johnson [1989] 1 WLR 1026 at 1034-1035, 1042; [1989] 1 All ER 621 at 628, 634; Wollondilly Shire Council v Picton Power Lines Pty Ltd (1994) 33 NSWLR 551 at 555. submissions of the respondent, and subject to various disputes between the parties about the meaning of "goodwill") that the appellant paid the respondent for goodwill on buying BP Lansvale in 1999, but was not to be paid for goodwill in retransferring it once the option was exercised in 2003, a suspicion would arise that what was retransferred might be worth more than the price to be paid for it. But a mere difference is not enough, let alone a suspicion of a difference. The comparison calls for something "extravagant and unconscionable" in the value of what is transferred compared to the price to be received, to use Lord Dunedin's words12. It calls for a "degree of disproportion" sufficient to point to oppressiveness, to use the words of Mason and Wilson JJ13. In assessing extravagance and oppressiveness, it is necessary to be able to compare the price to be paid and the value of what is to be transferred as a result of the option's having been exercised. The argument about goodwill. Since the difference alleged by the appellant is the goodwill excluded from the valuer's consideration by the concluding words of cl 2.5 of the Option Deed, it is necessary to value that goodwill. An expert witness identified various potential sources of goodwill in relation to a service station – its location, its pricing strategy, its facilities other than those for the provision of fuel, its branding, the quality of its staff, and the identity of its owner or manager. He concluded that the sources of goodwill other than location either were not a source of any significant goodwill or, so far as they were, did not generate goodwill of significant value. He put no monetary value on these sources of goodwill, and none on the goodwill deriving from location either. The trial judge accepted that witness's evidence and rejected some contrary evidence. He said: "It follows that the [appellant has] failed to establish the existence of valuable goodwill in relation to [BP Lansvale] of which [the appellant] will be deprived without adequate compensation by virtue of the exercise of the option[]."14 12 Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 at 13 AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 193. 14 Ringrow Pty Ltd v BP Australia Ltd (2003) 203 ALR 281 at 314 [146]. The appellant did not attack that conclusion or refer to any other evidence permitting an inference of monetary value to be drawn. It follows that, even if the appellant is right in contending that in 1999 it paid for goodwill and when the retransfer takes place it will receive nothing for goodwill, it is not possible to say what, if any, money sum it has lost. Hence it is not possible to say that there is a penalty on the first basis for which the appellant contended, which rested on a comparison of the consideration payable to the appellant for the transfer back to the respondent with the real value of BP Lansvale. The same reasoning must lead to the rejection of the appellant's argument based on the cumulative imposition of the option on the liquidated damages clause. Since there is no evidence as to the value of any goodwill excluded from the price to be paid by the respondent to the appellant on the retransfer of BP Lansvale after exercise of the option, it cannot be said that the cumulative imposition of the option on the liquidated damages clause, the validity of which was not challenged in this Court, is oppressive, or was extravagant and unconscionable in comparison with the loss which flowed from the breach of the POSA. In any event, such evidence as there was about goodwill tends to contradict the argument of the appellant. The argument of proportionality. The next argument advanced by the appellant to be examined is its argument that par 4(c) of the passage from Lord Dunedin's speech rested on a concept of proportionality which the Option Deed contravened in calling for a reconveyance of BP Lansvale after termination of the POSA rather than a lease for the balance of the five year term of the POSA. It must be rejected for three reasons. First, neither Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd15 nor any other authority16 supports the "proportionality" doctrine which the appellant advocated. The principles of law relating to penalties require only that the money stipulated to be paid on breach or the property stipulated to be transferred on breach will produce for the payee or transferee advantages 15 [1915] AC 79 at 86-87. 16 The appellant also relied on Pigram v Attorney-General for the State of New South Wales (1975) 132 CLR 216 at 227 per Gibbs J and O'Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 at 369 per Gibbs CJ, 383 per Wilson J and 399 per Deane J. significantly greater than the advantages which would flow from a genuine pre-estimate of damage. Among the different words which have been used to describe how extensive the difference must be before the transaction creates a penalty are the words employed by Mason and Wilson JJ in AMEV-UDC Finance Ltd v Austin17 – a "degree of disproportion" sufficient to point to oppressiveness. But their Honours were not asserting any doctrine of the kind relied on by the appellant, which would rest on a disproportion between the innocent party's commercial interests and the promise extracted to protect them. That type of idea underlies the law relating to contracts in restraint of trade, which recognises certain interests which it is legitimate for a covenantee to seek to protect by a covenant in restraint of the covenantor's trade, so long as the covenant is not wider than is reasonably necessary to protect those interests18. Such an idea is not, however, part of the law relating to penalties. Mason and Wilson JJ initially made the point that an agreed sum should only be "characterized as a penalty if it is out of all proportion to damage likely to be suffered as a result of breach"19. Later their Honours referred to proportionality as follows20: "[E]quity and the common law have long maintained a supervisory jurisdiction, not to rewrite contracts imprudently made, but to relieve against provisions which are so unconscionable or oppressive that their nature is penal rather than compensatory. The test to be applied in drawing that distinction is one of degree and will depend on a number of circumstances, including (1) the degree of disproportion between the stipulated sum and the loss likely to be suffered by the plaintiff, a factor relevant to the oppressiveness of the term to the defendant, and (2) the nature of the relationship between the contracting parties, a factor relevant to the unconscionability of the plaintiff's conduct in seeking to enforce the term. The courts should not, however, be too ready to find the requisite degree of disproportion lest they impinge on the parties' freedom to settle 17 (1986) 162 CLR 170 at 193. 18 See, for example, Butt v Long (1953) 88 CLR 476 at 486 per Dixon CJ. 19 (1986) 162 CLR 170 at 190. 20 (1986) 162 CLR 170 at 193-194. The appellant relied on the approval given to this and the preceding passage by Wilson and Toohey JJ in Esanda Finance Corporation Ltd v Plessnig (1989) 166 CLR 131 at 139. for themselves the rights and liabilities following a breach of contract." (emphasis added) Nothing in either passage supports the need to inquire into whether there is proportionality between the impugned provision and the legitimate commercial interests of the party relying on it. The same is true of other judicial uses of the expression "proportion" in the penalty context. Thus in Lord Elphinstone v Monkland Iron and Coal Co21 Lord Herschell LC, in examining the validity of a covenant by which lessees who had been given a right to place slag on the land leased to them covenanted to pay the lessor £100 per acre for all land not levelled and soiled within a particular period, said: "The agreement does not provide for the payment of a lump sum upon the non-performance of any one of many obligations differing in importance. It has reference to a single obligation, and the sum to be paid bears a strict proportion to the extent to which that obligation is left unfulfilled. There is nothing whatever to shew that the compensation is [inordinate] or extravagant in relation to the damage sustained." This reasoning did not require there to be a strict proportion; it merely relied, as a step towards the conclusion that the compensation was not inordinate or extravagant, on the fact that the compensation bore a strict proportion to the unfulfilled obligation. Secondly, for this Court to take the unusual step of recognising the proportionality doctrine advocated by the appellant notwithstanding its lack of support in authority might, depending on how it was formulated, involve the overruling of cases on the penalty doctrine which have not up to now been doubted. There are likely to be instances in which the courts, applying received principles, would find that no penalty existed, but would decide the case in favour of the contract-breaker if there were a proportionality doctrine. It must be concluded that the proportionality doctrine does not exist in this context and should not be recognised. Although the appellant presented the proportionality doctrine as part of the received law on penalties, in truth its 21 (1886) 11 App Cas 332 at 345. closest analogy is with the restraint of trade doctrine. The problem is that the proportionality doctrine contradicts the rules on penalties without satisfying the requirements of the restraint of trade doctrine. Thirdly, consideration of the purpose of the law of penalties shows why this must be so. The law of contract normally upholds the freedom of parties, with no relevant disability, to agree upon the terms of their future relationships. As Mason and Wilson JJ observed in AMEV-UDC Finance Ltd v Austin22: "[T]here is much to be said for the view that the courts should return to … allowing parties to a contract greater latitude in determining what their rights and liabilities will be, so that an agreed sum is only characterized as a penalty if it is out of all proportion to damage likely to be suffered as a result of breach23." Exceptions from that freedom of contract require good reason to attract judicial intervention to set aside the bargains upon which parties of full capacity have agreed. That is why the law on penalties is, and is expressed to be, an exception from the general rule. It is why it is expressed in exceptional language. It explains why the propounded penalty must be judged "extravagant and unconscionable in amount". It is not enough that it should be lacking in proportion. It must be "out of all proportion". It would therefore be a reversal of longstanding authority to substitute a test expressed in terms of mere disproportionality. However helpful that concept may be in considering other legal questions24, it sits uncomfortably in the present context. Remaining arguments of the appellant Two arguments of the appellant remain for consideration. 22 (1986) 162 CLR 170 at 190. 23 Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 at 1447-1448; [1966] 3 All ER 128 at 142-143 and United Kingdom, Law Commission, Penalty Clauses and Forfeiture of Monies Paid, Working Paper No 61, (1975), pars 33, 42-44. 24 See eg Cunliffe v The Commonwealth (1994) 182 CLR 272 at 300, 324, 339-340, 387-388 and Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at One is the argument that if the POSA were terminated just after it came into operation, the option would continue to hang over the land for over five years and would sterilise it. The difficulty with the argument is that if the POSA were terminated, even though the respondent would cease to supply petroleum products, the appellant could obtain petroleum products from other suppliers – as the appellant did before the POSA was terminated. No evidence was pointed to from which it could be inferred that the continuing existence of the unexercised option after termination of the POSA would be damaging to the appellant, nor that the law relating to penalties was attracted on that ground alone. The final argument of the appellant is that connected with what it called the "indiscriminate factor". The argument rested on the contention that the option could be exercised after termination of the POSA for merely technical breaches. That contention is sound, but it does no more than reveal the existence of a possible precondition to the penalty doctrine. It does not, of itself, demonstrate that the disparity between what the respondent was to receive on retransfer of BP Lansvale and a genuine pre-estimate of damage was so great as to trigger the penalty doctrine. Controversies not needing to be resolved The appellant's arguments thus fail. It was not suggested that the other appellants were in a different position. Accordingly, their arguments also fail. The appeal can be dismissed without this Court having to decide whether cl 1.2(a) of the Option Deed means that the option could only be exercised if the POSA were terminated for breach under cl A13.2.1 or that the option could be exercised if it were terminated on grounds other than breach under cl A13.2.2; and, in either event, whether the outcome matters. It is not necessary to reach a conclusion on the precise meaning and operation of cl 40.4 of the Contract for Sale of Site or cl 2.5 of the Option Deed, or on the extent to which particular types of goodwill are or are not within those provisions. Nor is it necessary to deal with various contentions of the respondent to the effect that the doctrine of penalties was incapable of applying to the circumstances of this case, for example, on the ground that breach was not the cause but merely the occasion for the option to be triggered. And it is not necessary to consider whether the appellant's construction of cl SC1.2(e) of the POSA (on which its argument about the penal character of the cumulative imposition of the option on the liquidated damages clause rests) is correct. There is, however, one argument advanced by the respondent which should be rejected. As part of an argument that the penalty doctrine did not apply in this case, the respondent contended: "The option was part of the consideration for the original conveyance of [BP Lansvale]: see special condition 38 of the [Contract for Sale of Site] … The option encumbered the original conveyance. Had the option not been part of the consideration, the purchase price would have been higher." There is an echo of this argument in the reasoning of the courts below25. By itself, that point could not prevent a conclusion that a contractual term was a penalty, for in almost every case the impugned term will be part of the consideration for the innocent party's promises, and it can be said that if it had not been so, the other elements of the consideration required by the innocent party would be more valuable. Orders The appeals should be dismissed with costs. 25 Ringrow Pty Ltd v BP Australia Ltd (2003) 203 ALR 281 at 303 [103]; Ringrow Pty Ltd v BP Australia Pty Ltd (2004) 209 ALR 32 at 44 [30]. |
HIGH COURT OF AUSTRALIA THE QUEEN AND APPELLANT KRITSINGH DOOKHEEA RESPONDENT The Queen v Dookheea [2017] HCA 36 13 September 2017 ORDER Appeal allowed. Set aside the orders of the Court of Appeal of the Supreme Court of Victoria made on 12 April 2016 and, in their place, order that: the application for leave to appeal against conviction is granted; the appeal is treated as instituted and heard instanter and is dismissed. On appeal from the Supreme Court of Victoria Representation G J C Silbert QC with B L Sonnet for the appellant (instructed by Solicitor for Public Prosecutions (Vic)) O P Holdenson QC with C A Boston for the respondent (instructed by Stary Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS The Queen v Dookheea Criminal law – Criminal procedure – Jury directions – Standard of proof – Where jury directed that Crown required to prove accused's guilt not beyond any doubt but beyond reasonable doubt – Whether such direction error of law – Whether such direction productive of substantial miscarriage of justice. Words and phrases – "any doubt", "beyond reasonable doubt", "fanciful doubt". KIEFEL CJ, BELL, GAGELER, KEANE, NETTLE AND EDELMAN JJ. The question for decision in this appeal is whether the Court of Appeal of the Supreme Court of Victoria (Maxwell P, Redlich JA and Croucher AJA) erred in holding1 that it was an error of law productive of a substantial miscarriage of justice for the trial judge (Emerton J) to direct the jury that the Crown did not have to satisfy the jury of the respondent's guilt "beyond any doubt, but beyond reasonable doubt". As the authority of this Court stands, it is generally speaking undesirable for a trial judge to direct a jury in terms which contrast proof beyond reasonable doubt with proof beyond any doubt. But, for the reasons which follow, it was not an error to do so in the circumstances of this case. Facts The respondent ("Dookheea") was arraigned before a judge of the Supreme Court of Victoria on one charge that he did at Tarneit in Victoria on 9 May 2013 murder Faisal Zazai ("the deceased"). On 15 May 2014, Dookheea pleaded not guilty to murder but guilty to manslaughter, but the Crown did not accept that plea in discharge of the indictment and so the matter proceeded to trial. The sole issue at trial was whether Dookheea had acted with murderous intent. At the conclusion of the trial, Dookheea was convicted of murder and sentenced therefor to 19 years' imprisonment with a non-parole period of 15 years. The case at trial The Crown case at trial was that the deceased had been the owner of a pizza store business one store of which was managed by Dookheea's wife, Ms Ramjutton. At relevant times, Dookheea and Ms Ramjutton were in significant financial debt and faced eviction from their home. On the evening of 9 May 2013, the deceased went to Dookheea's and Ms Ramjutton's home to collect the takings from the store managed by Ms Ramjutton. Earlier that day, Dookheea had gambled away the takings at the Crown Casino. The evidence showed that shortly after the deceased arrived at the home, a violent physical altercation started between Dookheea and the deceased in the kitchen and then continued on the front lawn as the deceased attempted to flee from Dookheea and Ms Ramjutton. It was accepted that Dookheea had placed 1 Dookheea v The Queen [2016] VSCA 67 at [89]. Bell Nettle Edelman his hands around the deceased's neck and squeezed until the deceased stopped resisting. Dookheea and Ms Ramjutton then dragged the deceased's body into the house and placed it in a spare room, where Dookheea sat on the deceased's back. Shortly afterwards, the police arrived. Expert medical evidence pointed strongly towards the deceased having died as the result of neck compression (or strangulation). When first questioned by police, Dookheea stated that the deceased had come to his home in the belief that Ms Ramjutton would be at home alone and that the deceased had attempted to sexually assault her. Dookheea claimed that, when Ms Ramjutton cried out for help, he intervened to assist her and a fight ensued during which the deceased suddenly went limp while on the front lawn. Dookheea said that he had taken the deceased back into the house in order to prevent the deceased escaping. In a subsequent police interview, Dookheea conceded that the account of events he had previously given was false. He explained that he had once worked as an employee in the deceased's pizza store business and then acquired a franchised store from the deceased. He said that the franchise had failed and he blamed the deceased for his difficult financial circumstances, which he attributed to the failure of the franchise. He admitted that he had conceived of a plan to assault the deceased in order to extract money from him, or at least persuade him to waive a debt owed to him. Dookheea also admitted that, prior to the deceased's arrival at the house, he had purchased duct tape and parked his vehicle away from the house so as to make the deceased believe that Ms Ramjutton was home alone, and that it had been part of his plan to hit the deceased if necessary. He admitted to contemplating disposal of the deceased's corpse if the deceased died during the execution of this plan. Dookheea did not give or call evidence at trial. His defence was that the Crown had not established beyond reasonable doubt that he had acted with intent to kill or inflict really serious injury. The course of the trial The trial was conducted over 10 days in 2014. The trial judge gave the jury a number of preliminary directions before evidence was called. As part of that exercise, the trial judge directed the jury as to the standard of proof as follows: Bell Nettle Edelman "The other important thing for a criminal trial such as this is that the prosecution must prove the offence beyond reasonable doubt. Beyond reasonable doubt. That's the expression that's used and one that you might have heard before (you probably will have). It's the highest standard known to our legal system. If any of you have been involved in civil cases involving contractual disputes or personal injuries or anything of that kind disputes around fences, neighbourhood disputes - the [civil] standard is a different standard, it's a lower standard. It's on the balance of probabilities: is something more probable than not. The criminal standard is much higher than that. If you're not satisfied beyond reasonable doubt of the elements of the offence, then you should find Mr Dookheea not guilty of that offence." Later on the same day, in the course of the Crown's opening address to the jury, the Crown prosecutor stated that the sole issue in the trial would be the question of intent and that it was incumbent on the Crown to establish murderous intent beyond reasonable doubt: "The real issue in this trial will be what was [Dookheea's] state of mind at the time that he did the acts that caused the death of the victim in this case, [the deceased]. How do you work out what his state of mind is? You look at the evidence as it unfolds, you consider, for example, the evidence of the pathologist who we will call and she will give evidence of the number of injuries and talk about the amount of force required, the time that it required to strangle somebody. So all of those things will be things that you'll ultimately consider as to whether you are satisfied beyond a reasonable doubt whether he is guilty of murder. It's the third element for murder that will be in issue, that the Crown must prove, thirdly, that at the time that [Dookheea] was performing the acts that caused the death, that he was intending to kill - this is the required state of mind - that he was intending to kill or cause really serious injury." During the trial, the trial judge answered a jury question as to the meaning of really serious injury in relation to murder. Her Honour prefaced her answer with the following statement as to the necessity for the Crown to establish each of the four elements of murder beyond reasonable doubt: Bell Nettle Edelman "In order for the accused to be found guilty of murder, the prosecution must prove beyond reasonable doubt four elements of murder. ... The third is that the accused committed those acts intending to kill someone or cause them really serious injury; and that is the issue in this trial." In the course of delivering the Crown's closing address to the jury, the Crown prosecutor re-emphasised the need for the jury to be satisfied of guilt beyond reasonable doubt, and thus for the jury to be sure of Dookheea's guilt: "Because there are four elements in relation to murder which the Crown must prove beyond a reasonable doubt. [Dookheea] and Mr Dempsey on his behalf do not have to prove anything, we do. We have to prove it beyond a reasonable doubt. Each element to murder we must prove beyond a reasonable doubt to your satisfaction, acting on the evidence. Let's go through the elements because I should do that in any event. The first one is the Crown must prove beyond a reasonable doubt that it was the acts of [Dookheea] that caused the death of [the deceased]. There's no argument in this case that he did cause his death. Secondly, the Crown must prove beyond a reasonable doubt that at the time that he did that he was acting consciously, voluntarily and deliberately. There's no argument about that in this trial. It is the third element that is in dispute, that is, at the time that he was performing the act or acts that killed [the deceased], the Crown must prove beyond a reasonable doubt he was intending to kill or at the very least intending to cause really serious injury. That's the issue. Can we prove it? If we haven't proved it to your satisfaction you will acquit him, that is, you will bring back a verdict of not guilty. If you are not sure - and that is the collective state of your minds: did he, didn't [he], we don't know - you will acquit him because you would not be satisfied beyond a reasonable doubt. ... So we have embarked on this task - and I suppose I should mention the fourth element being that the Crown must prove beyond a reasonable doubt that the acts - that when he killed [the deceased] that he had no lawful justification or excuse, for example, acting in self-defence. That does not arise here. So there is no suggestion at all that he was acting in Bell Nettle Edelman self-defence and the defence, as I understand it, concede that. So we're focusing on the narrow issue, that third element. Let's just pause again for a moment. The Crown undertakes to prove beyond a reasonable doubt - I've gone through all the elements and, in particular, this third element, the one in dispute, but it does not mean that we have to prove each and every fact that we rely upon. ... In other words, going back to what your task is, thinking about can the Crown prove beyond a reasonable doubt [Dookheea] was intending to kill or cause really serious injury?" On the same day, while delivering the defence closing address to the jury, defence counsel similarly re-emphasised the need for the jury to be satisfied of guilt beyond reasonable doubt: "To judge this man's action for the most grave charge that we know, the man's rigour and detachment, it is not enough for you to say well, we think he probably meant what the Crown say he meant or he probably meant or he might have meant; you need to be satisfied beyond reasonable doubt of that which is presented to you by the prosecution in a very narrow band of things that are in issue in this case, about what he was thinking. And your decision is final. You can't call each other up or Facebook each other three weeks from now or a month from now and go look, I've just had this nagging doubt about why people behave strangely when they've done something wrong. I'm not sure it means that. You can't do that. You can't have second thoughts. So if you're not sure, if you have a doubt, if you have a reasonable doubt, then that's the way you approach your task, if that means you're true to your oath." On the next day of trial, the trial judge directed the jury in the course of the charge as to the standard of proof beyond reasonable doubt as follows: "In order for the prosecution to succeed and for you to find Mr Dookheea guilty of murder, the prosecution must establish each element of the offence. I will explain to you shortly what the elements of the offence are, that is, the offence of murder. Elements is just a lawyers' term for the essential ingredients or the essential components of the Bell Nettle Edelman offence. The prosecution has to prove each of these elements beyond reasonable doubt. The words 'beyond reasonable doubt' are common English words. They mean what they say. Beyond reasonable doubt is not something that is capable of expression on some sort of percentage basis. You will remember at the start of the trial I contrasted the beyond reasonable doubt standard, which is the highest standard known to law, with the much lower civil standard that applies where there are contractual disputes or personal injuries claims or things of that kind. There, it is a much lower standard, it is called the balance of probabilities, more likely than not. It is for you as the jury to decide in respect of the elements of murder whether you have a reasonable doubt that an intention to kill or cause really serious injury was present at the time Mr Dookheea killed [the deceased]. During the course of my charge at various times I am going to say 'the Crown' or 'the prosecution' - those terms are interchangeable - the Crown or the prosecution must establish or prove something. When I say that, understand that I mean the prosecution must establish or prove the thing beyond reasonable doubt. But I am not necessarily going to repeat those words every time or we would be here for longer than we need to. But just understand that that is the burden that is carried by the Crown. That does not mean the Crown has to prove every fact that it puts before you or every fact that it says you should accept. What the prosecution has to prove beyond reasonable doubt are the elements of the crime, that is, the essential ingredients of the offence. I will take you to those in a minute and you will already have I think a pretty clear understanding that three of the elements of murder are not in dispute in this case. There is really only one of the elements and that is intention. It is not disputed by Mr Dookheea that his acts caused the death of [the deceased], that he did those acts consciously, voluntarily and deliberately and that he had no lawful justification for doing them. You should have no difficulty in finding these elements proven beyond reasonable doubt. But whether Mr Dookheea intended to kill or cause really serious injury to [the deceased] remains to be proven by the prosecution beyond reasonable doubt. Bell Nettle Edelman You will have noticed that Mr Dookheea as the accused did not give evidence. Because it is for the prosecution to prove its case beyond reasonable doubt, he is not bound to give evidence. ... You must therefore not draw any inferences against Mr Dookheea for not choosing to give evidence; you must not even consider that he did not give evidence when deciding whether the Crown has proved its case beyond reasonable doubt." Specifically with respect to inferential reasoning, the trial judge directed the jury in terms that further emphasised the need to be satisfied beyond reasonable doubt: "You may not draw an inference about an important matter such as an element of the offence unless it is the only reasonable inference that can be drawn on the facts. As you probably appreciate, that stems from the burden of proof on the prosecution, that is, the burden to prove all the elements of the offence beyond reasonable doubt. In determining whether an inference is a reasonable one, you consider the evidence as a whole. You are not obliged to discard or disregard every piece of evidence that does not by itself establish the element of the offence beyond reasonable doubt. You can look at all the evidence together." Later, with respect to motive, the trial judge directed the jury in terms that still further emphasised the need for the jury to be satisfied of Dookheea's guilt beyond reasonable doubt: "Circumstances can and do arise from time to time in which it may be established beyond reasonable doubt that a particular person committed a specific crime, yet to the outside observer the behaviour involved may be inexplicable. There may be no motive that can be discerned. On the other hand, the situation may arise when an accused person may be considered to have a powerful motive for engaging in the unlawful activity but nevertheless the jury may not be satisfied beyond reasonable doubt that the accused person committed the criminal offence. A jury can derive assistance from the absence or presence of motive as affecting the likelihood of the participation of a person in the illegal conduct, but ultimately the absence of motive cannot affect your judgment when you are satisfied beyond reasonable doubt on the evidence of the guilt of the accused person and nor can motive be used to fill a gap in the Crown case Bell Nettle Edelman if you are not so satisfied. The presence or absence of motive is simply one of the factors to be taken into account when considering whether or not the accused may have been involved in the criminal activity the Crown is attempting to attribute to the accused." The trial judge then directed the jury as to the elements of the offence of murder, and it was in the course of that exercise that her Honour contrasted proof beyond reasonable doubt with proof beyond any doubt. The impugned passage of the direction was as follows: "I am going to move on to murder then and the elements of murder. You have heard this before. I will say it again. Before you could find Mr Dookheea guilty of murder there are four elements that the prosecution must prove beyond reasonable doubt. ... The question you have to ask yourselves is 'has the Crown established beyond reasonable doubt that at the time Mr Dookheea committed the relevant act or acts that caused [the deceased's] death, he intended to kill [the deceased] or cause him really serious injury?' As a corollary you might ask, 'do I hold a reasonable doubt that at the time he committed the relevant act or acts that caused [the deceased's] death, Mr Dookheea intended to kill [the deceased] or cause him really serious injury?' In other words, you do not have to work out definitively what Mr Dookheea's state of mind was when he caused the injuries that killed [the deceased]. You have to consider whether the Crown has satisfied you that Mr Dookheea had the intention that is required. And the Crown has to have satisfied you of this not beyond any doubt, but beyond reasonable doubt." (emphasis added) Thereafter, however, the trial judge further directed the jury in terms that once again emphasised that the need for proof beyond reasonable doubt meant that if the jury had any reservations they should acquit Dookheea: "You can only infer that Mr Dookheea intended to kill [the deceased] or cause him really serious injury if you are satisfied beyond reasonable doubt that that is the only reasonable inference open from the facts that you have found. If any evidence causes you to have reservations about drawing such an inference, then the benefit of your doubt should go to Mr Dookheea. ... Bell Nettle Edelman You cannot return a verdict on manslaughter until you return a verdict on murder. Returning a verdict on murder is deciding whether he is guilty or not guilty of murder. If you cannot agree on murder, that is, whether he is guilty or not guilty of murder, then you cannot move on to manslaughter. You can only move to manslaughter if you are all agreed that Mr Dookheea is not guilty of murder, that is, you all agree that the Crown has failed to satisfy you beyond reasonable doubt of the elements of murder." (emphasis added) Finally, the trial judge issued the jury with an aide memoire of each of the elements of the offence charged, in which it was stated in bold type that the jury had to be satisfied of guilt beyond reasonable doubt: "Before you could find Kritsingh Dookheea guilty of murder, there are four elements that the prosecution must prove beyond reasonable doubt: At the conclusion of the charge, the jury retired to consider their verdict. There were no exceptions taken to the directions. Proceedings before the Court of Appeal Dookheea appealed against conviction to the Court of Appeal on a number of grounds. The Court of Appeal rejected all but one: that the trial judge erred in directing the jury that the Crown was required to satisfy them of guilt "not beyond any doubt, but beyond reasonable doubt". Their Honours' reasons for accepting it were as follows2: "The submission for [Dookheea] was that the judge fell into error by making the final statement in [the impugned] passage, since: the common law does not permit (except in very limited circumstances, not here applicable) any explanation of the phrase 'beyond reasonable doubt'; 2 Dookheea [2016] VSCA 67 at [87]-[91] (footnotes omitted). Bell Nettle Edelman the jury not having asked any question about the meaning of the phrase, the power conferred on a trial judge by s 20 of the Jury Directions Act 2013 [see now the Jury Directions Act 2015 (Vic), ss 61-64] to give an explanation of its meaning had not been enlivened; and the direction would have left the jury with the erroneous understanding that they could hold some doubts and still convict [Dookheea]. The submission for the [Crown] accepted that the power under the Jury Directions Act was not enlivened, but maintained that its enactment gave a judge 'greater scope to explain the phrase'. Moreover, although the terms of the direction 'were unfortunate', it was 'strictly speaking not wrong as a matter of logic'. Finally, the [Crown] pointed out, defence counsel had not taken any exception. We have concluded that her Honour did fall into error when she spoke of the Crown having to satisfy the jury 'not beyond any doubt but beyond reasonable doubt'. The standard of proof being fundamental to a fair trial, the failure to take exception could not stand in the way of the ground succeeding. It was on that basis that we concluded that the appeal must succeed. The position at common law was clearly explained by the South Australian Court of Criminal Appeal in Compton [(2013) 237 A Crim R 177]. The respective judgments of Kourakis CJ and Peek J analyse the relevant authorities in comprehensive and illuminating terms, which it is unnecessary for us to repeat. The short point, as highlighted in [Dookheea's] written case, is that a doubt held by a jury is, by definition, a reasonable doubt. As the High Court said in Green [(1971) 126 CLR 28 at 32-33], 'a reasonable doubt is a doubt which a particular jury entertain in the circumstances'. It is an error, therefore, to suggest to jurors that they may entertain a doubt which is not a 'reasonable' doubt and on that basis proceed to convict the accused. In due course, consideration should be given to removing the precondition to the power of explanation in the Jury Directions Act. It is not clear to us why, as a matter of policy, the power of a judge to assist a jury in this respect should depend for its exercise upon the jury first having asked a question." Bell Nettle Edelman The contentions Before this Court, the Crown argued, as it did before the Court of Appeal, that although the trial judge had strayed from the traditional formulation of the criminal standard of proof by directing the jury in terms that contrasted reasonable doubt with any doubt, it was not an error to do so, and, in any event, it was not productive of a substantial miscarriage of justice because the charge taken as a whole sufficiently made clear to the jury that Dookheea was to be given the benefit of any reasonable doubt3. Counsel for Dookheea contended to the contrary that the impugned direction was erroneous in that it invited jurors to subject their mental processes to an objective analysis – a two-stage process of deciding whether they had any doubt and then, if so, whether they considered that doubt to be a reasonable doubt – and thereby tended to undermine the standard of proof on the critical issue at trial. It was submitted that it was apparent from Green v The Queen4 that a reasonable doubt means a doubt that is held by a jury as a whole, as opposed to a doubt that is held by an individual juror as such; that an individual juror is not required or to be encouraged to submit his or her mental processes to any sort of objective analysis; and that, for that reason, this Court has previously rejected further elaboration of the meaning of proof beyond reasonable doubt. To direct the jury as the trial judge had done, it was said, ran counter to that authority by conveying to individual jurors the impression that any doubt which the juror might hold was to be disregarded unless it passed some further test requisite to reach a particular degree of doubt. 3 See generally R v Neilan [1992] 1 VR 57 at 68-70; R v Chatzidimitriou (2000) 1 VR 493 at 495 [5], 496 [8] per Phillips JA, 509 [46] per Cummins AJA; Ho (2002) 130 A Crim R 545 at 552 [32] per Bell J (Meagher JA and Hidden J agreeing at 562 [66], [67]); Ladd v The Queen (2009) 27 NTLR 1 at 55 [155] per Martin (BR) CJ; R v Hettiarachchi [2009] VSCA 270 at [59]. (1971) 126 CLR 28 at 32-33; [1971] HCA 55. Bell Nettle Edelman Explication of "beyond reasonable doubt" In Darkan v The Queen5, the majority remarked that the stand which this Court has taken against a trial judge attempting to explain to a jury what is meant by "beyond reasonable doubt" is "an extreme and exceptional stand" which "has not been shared elsewhere". It is therefore open to question why that stand has been taken. In part it is the product of history, but it also proceeds from a perception that explanations of "reasonable doubt" are more likely to exacerbate a jury's uncertainties than alleviate their concerns. Historically, the notion that it is undesirable for a trial judge to attempt to explain to the jury what is meant by "beyond reasonable doubt" took root at a time when it was conceived that the expression "reasonable doubt" was "a well understood expression". It was considered that it was dangerous for a trial judge to attempt "to define with precision a term which is in ordinary and common use with relation to this subject matter"6. Half a century after Brown v The King7 was decided, in Thomas v The Queen8, Kitto J added to the reasons for avoiding explication of "beyond reasonable doubt" that: "[w]hether a doubt is reasonable is for the jury to say; and the danger that invests an attempt to explain what 'reasonable' means is that the attempt not only may prove unhelpful but may obscure the vital point that the accused must be given the benefit of any doubt which the jury considers reasonable." A further decade later came the point made in Green – which was so much relied upon by counsel for Dookheea in this case – that9: (2006) 227 CLR 373 at 395-396 [69] per Gleeson CJ, Gummow, Heydon and Crennan JJ; [2006] HCA 34. 6 Brown v The King (1913) 17 CLR 570 at 584 per Barton ACJ; [1913] HCA 70. See also at 594 per Isaacs and Powers JJ, cf at 596. (1913) 17 CLR 570. (1960) 102 CLR 584 at 595; [1960] HCA 2. See also at 593 per Fullagar J, 599, 601 per Taylor J, 604-605 per Windeyer J. (1971) 126 CLR 28 at 33 (footnote omitted). Bell Nettle Edelman "[j]urymen themselves set the standard of what is reasonable in the circumstances. It is that ability which is attributed to them which is one of the virtues of our mode of trial: to their task of deciding facts they bring to bear their experience and judgment. They are both unaccustomed and not required to submit their processes of mind to objective analysis of the kind proposed in the language of the judge in this case. 'It is not their task to analyse their own mental processes': Windeyer J, Thomas v The Queen. A reasonable doubt which a jury may entertain is not to be confined to a 'rational doubt', or a 'doubt founded on reason' in the analytical sense or by such detailed processes as those proposed by the passage we have quoted from the summing up." Later again, in La Fontaine v The Queen10, Barwick CJ summarised the position thus: "This Court has clearly laid it down that it is both unnecessary and unwise for a trial judge to attempt explanatory glosses on the classical and, as I think, popularly understood formula which expresses the extent of the onus resting on the Crown in its attempt to establish the commission of a crime: see Green v The Queen. The Court has also indicated the limited occasions on which, in a case depending on circumstantial evidence, the extended formula proposed by Alderson B in R v Hodge [(1838) 2 Lewin CC 227 [168 ER 1136]] should be used: see Grant v The Queen [(1975) 11 ALR 503]." Today, views might reasonably differ as to whether "proof beyond reasonable doubt" is a well-understood expression in ordinary and common use with relation to the subject matter. On the one hand, it might be supposed that generally increased standards of education and increased exposure to film, television and digital media would have made the concept of proof beyond reasonable doubt better understood today than it was considered to be a century ago. But, on the other hand, the relative frequency with which juries these days are known to ask trial judges to define "reasonable doubt" or to provide some other form of guidance as to how they should decide if they have a reasonable 10 (1976) 136 CLR 62 at 71 (Mason J relevantly agreeing at 87) (footnotes omitted); [1976] HCA 52. Bell Nettle Edelman doubt11 suggests that the concept of proof beyond reasonable doubt is not as well known or well understood as it was once supposed to be. And significantly, it appears that the experience in the United Kingdom, Canada and New Zealand is that juries today do have difficulties with the concept of proof beyond reasonable doubt, and, accordingly, that more is required by way of explication. In the course of argument and in written submissions, the Crown referred to a number of decisions of courts of those countries in which the problem, and measures adopted to lessen it, have been considered12. It was not contended, however, that we should depart from what was said in Green and La Fontaine. Counsel for the Crown explained that the decisions to which he referred concerning developments abroad were provided only by way of background. It was accepted that, for the purposes of this appeal, the law as to how a trial judge should direct a jury regarding proof beyond reasonable doubt is as stated in Green and La Fontaine. But, the Crown submitted, it does not follow that it is an error for a trial judge to contrast reasonable doubt with any doubt. While it may be unnecessary and unwise for a trial judge to do so, it will not always result in a substantial miscarriage of justice and in this case it did not do 11 See Chatzidimitriou (2000) 1 VR 493 at 494 [3]-[4] per Phillips JA; R v Cavkic (2005) 12 VR 136 at 139 [213] per Vincent JA (Charles JA and Osborn AJA agreeing at 137 [1], 144 [269]); Ladd (2009) 27 NTLR 1 at 52-53 [147] per Martin (BR) CJ; Martin v The Queen (2010) 28 VR 579 at 580 [58] per Ashley JA (Buchanan JA and Redlich JA agreeing at 580 [1], 587 [93]). See also Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 December 2012 12 See for example Miller v Minister of Pensions [1947] 2 All ER 372 at 373; Bracewell (1978) 68 Cr App R 44 at 49; R v Lifchus [1997] 3 SCR 320 at 327 [14], 334 [31], 335 [36], 336-337 [39] per Lamer CJ, Sopinka, Cory, McLachlin, Iacobucci and Major JJ (L'Heureux-Dubé J agreeing at 340 [48]); R v Starr [2000] 2 SCR 144 at 267-268 [242] per Iacobucci, Major, Binnie, Arbour and Lebel JJ; R v Wanhalla [2007] 2 NZLR 573 at 587-588 [48]-[49] per William Young P, Chambers and Robertson JJ, 612 [173] per Hammond J. See also R v Stephens [2002] EWCA Crim 1529; R v Majid [2009] EWCA Crim 2563; R v Smith [2012] EWCA Crim 702. Bell Nettle Edelman The distinction between reasonable doubt and any doubt The Crown's submissions should be accepted. Evidently, the Court of Appeal based13 their decision on the approach adopted by the South Australian Court of Criminal Appeal in R v Compton14. In turn, Compton was based on what was there said to be the binding effect of three earlier decisions of the South Australian Court of Criminal Appeal in R v Wilson15, R v Dam16 and R v Pahuja17. In each of those decisions, it was held that if a trial judge directs a jury, in substance or effect, that when left with any doubt at the end of deliberations it is for them to decide whether that is a reasonable doubt, an appeal against conviction must be allowed18. Wilson was the wellspring of that line of authority. In that case, King CJ premised his conclusion – that such a direction will invariably be productive of a miscarriage of justice – on the notion that reasonable doubt is a doubt which is entertained by a reasonable person in the circumstances and hence that reasonable doubt encompasses any doubt entertained by the jury acting reasonably19. King CJ therefore concluded that to suggest to a jury that there is a difference between a reasonable doubt and any doubt is calculated to cause the jury to subject their mental processes to analysis, to incline the jury to discount a doubt for fear that it may not be reasonable, and thus to obscure the point that the accused must be given the benefit of any doubt which the members of the jury as a reasonable jury may have. 13 Dookheea [2016] VSCA 67 at [90]. 14 (2013) 237 A Crim R 177. 15 (1986) 42 SASR 203. 16 (1986) 43 SASR 422. 17 (1987) 49 SASR 191. 18 Wilson (1986) 42 SASR 203 at 207 per King CJ (Johnston J agreeing at 224); Dam (1986) 43 SASR 422 at 429-431 per Jacobs J (Mohr J and Bollen J agreeing at 433); Pahuja (1987) 49 SASR 191 at 194-195 per King CJ, 220-221 per 19 Wilson (1986) 42 SASR 203 at 207 (Johnston J agreeing at 224). See also Pahuja (1987) 49 SASR 191 at 194-195 per King CJ, 220-221 per Johnston J. Bell Nettle Edelman With respect, so to reason misconceived the effect of this Court's decisions in Thomas and Green, and it is a process of reasoning that should not be followed. During the late 19th century, Chief Justice May of the Boston Municipal Court propounded20 a theory that the standard of proof beyond reasonable doubt was adopted in the late 18th century to ameliorate the harshness of the criminal justice system, and so to make conviction more difficult by increasing the standard of proof. Wigmore21 and McCormick22 later adopted May's thesis. More recently, to the contrary, however, it has been suggested that the standard of proof beyond reasonable doubt was introduced to compensate the prosecution for the advantage obtained by an accused upon being permitted to adduce evidence23. There is now, too, a third school of thought, which proposes that the standard of proof beyond reasonable doubt was introduced to make the delivery of a conviction easier for juries constituted of anxious Christians, living in an age still haunted by fear of damnation for convicting an innocent man24. But, in fact, it appears most likely that the test of beyond reasonable doubt was introduced in the mid-18th century simply as a means of expressing more clearly the then well-settled test of satisfaction as a matter of conscience or moral 20 May, "Some Rules of Evidence: Reasonable Doubt in Civil and Criminal Cases", (1876) 10 American Law Review 642 at 656-659. 21 Wigmore, Evidence in Trials at Common Law, Chadbourn rev (1981), vol 9 at 405 22 Broun, McCormick on Evidence, 7th ed (2013), vol 2 at 670 §341. 23 Morano, "A Reexamination of the Development of the Reasonable Doubt Rule", (1975) 55 Boston University Law Review 507 at 515. 24 Whitman, The Origins of Reasonable Doubt: Theological Roots of the Criminal Trial, (2008) at 5. 25 Shapiro, Beyond Reasonable Doubt and Probable Cause: Historical Perspectives on the Anglo-American Law of Evidence, (1991) at 20, 23, 40-41; Jonakait, "Finding the Original Meaning of American Criminal Procedure Rights: Lessons from Reasonable Doubt's Development", (2012) 10 University of New Hampshire Law Review 97 at 145. Bell Nettle Edelman The invocation of trial by jury as a substitute for trial by ordeal resulted from Pope Innocent III's 1215 Fourth Lateran Council prohibition on clergy performing religious ceremonies in connection with ordeals26. Jurors then, as now, were required to swear by God that they would determine the truth of the matters presented to them27. Jurors were not initially directed as to the standard of proof they were required to apply28; the standard was left to each juror's own conscience. But, in an age of strong Christian belief and adherence, it was understood that to convict an accused despite lingering doubts was a violation of the juror's oath, and that to convict an innocent man was a mortal sin that would result in damnation29. Writing in the 13th century, Britton thus recorded that "if the jurors are in doubt of the matter and not certain, the judgment ought always in such case to be for the defendant"30. By contrast, by at least the 17th century, English law had rejected the idea that facts, or trial proof, could be established with absolute certainty31. During the 17th century, English judges thus began to direct jurors that they should acquit unless satisfied in their conscience or morally certain of the accused's 26 Plucknett, A Concise History of the Common Law, 3rd ed (1940) at 112-113; Whitman, The Origins of Reasonable Doubt: Theological Roots of the Criminal Trial, (2008) at 53, 126-127. 27 Nichols, Britton – The French Text Carefully Revised with an English Translation Introduction and Notes, (1865), vol 1 at 30-31; Whitman, The Origins of Reasonable Doubt: Theological Roots of the Criminal Trial, (2008) at 153. 28 See Whitman, The Origins of Reasonable Doubt: Theological Roots of the Criminal Trial, (2008) at 153. 29 See Whitman, The Origins of Reasonable Doubt: Theological Roots of the Criminal Trial, (2008) at 3. 30 Nichols, Britton – The French Text Carefully Revised with an English Translation Introduction and Notes, (1865), vol 1 at 32-33. 31 Franklin, The Science of Conjecture: Evidence and Probability before Pascal, (2001) at 62-63; Jonakait, "Finding the Original Meaning of American Criminal Procedure Rights: Lessons from Reasonable Doubt's Development", (2012) 10 University of New Hampshire Law Review 97 at 140-141. Bell Nettle Edelman guilt32. As Professor Shapiro has observed33, directions of that kind reflected, or were at least consistent with, Protestant theological conceptions of conscience as an act of intellect, rather than will or deference to the wishes of another. As described by Professor Jonakait, "[c]onscience ... was a product of rationality and understanding and not of the passions or feelings. ... [A] person seeking the solace of a right conscience did not have to reach mathematical certainty"34. A satisfied conscience could be reached short of the absence of all doubt; a satisfied conscience was one without a reasonable or rational doubt35. Society's regard for the 17th century jury system's approach to fact finding appears to have informed some aspects of the thinking of English Enlightenment philosophers36. Reciprocally, Enlightenment philosophy – particularly John 32 Morano, "A Reexamination of the Development of the Reasonable Doubt Rule", (1975) 55 Boston University Law Review 507 at 511-512; Jonakait, "Finding the Original Meaning of American Criminal Procedure Rights: Lessons from Reasonable Doubt's Development", (2012) 10 University of New Hampshire Law Review 97 at 141. See also Whitman, The Origins of Reasonable Doubt: Theological Roots of the Criminal Trial, (2008) at 180-181. 33 Shapiro, Beyond Reasonable Doubt and Probable Cause: Historical Perspectives on the Anglo-American Law of Evidence, (1991) at 13-15. 34 Jonakait, "Finding the Original Meaning of American Criminal Procedure Rights: Lessons from Reasonable Doubt's Development", (2012) 10 University of New Hampshire Law Review 97 at 142. See also McAdoo, The Structure of Caroline Moral Theology, (1949) at 76-77. 35 Shapiro, Beyond Reasonable Doubt and Probable Cause: Historical Perspectives on the Anglo-American Law of Evidence, (1991) at 16; Jonakait, "Finding the Original Meaning of American Criminal Procedure Rights: Lessons from Reasonable Doubt's Development", (2012) 10 University of New Hampshire Law Review 97 at 142. 36 See Waldman, "Origins of the Legal Doctrine of Reasonable Doubt", (1959) 20 Journal of the History of Ideas 299 at 303-304; Shapiro, Beyond Reasonable Doubt and Probable Cause: Historical Perspectives on the Anglo-American Law of Evidence, (1991) at 11-12; Jonakait, "Finding the Original Meaning of American Criminal Procedure Rights: Lessons from Reasonable Doubt's Development", (2012) 10 University of New Hampshire Law Review 97 at 141. Bell Nettle Edelman Wilkins' epistemology of three categories of knowledge (physical, mathematical and moral), each involving a different type of certainty and of which the last was based on testimony and reports without requiring absolute proof37, and John Locke's consideration of probability bordering so near upon certainty as to form the basis of human conduct38 – influenced 18th century Anglo-American jurisprudential thought on the processes of proof and the rules of evidence39. Thus, from about the mid-18th century, most likely first in America and then in England40, judges began to employ the expression "beyond reasonable doubt" as, it appears, a means of explaining to juries what was meant by being satisfied in their conscience or being morally certain of guilt41. At the start of that process, all three expressions – "satisfied in conscience", "moral certainty" and "beyond reasonable doubt" – were used together and all three meant the same. Ultimately, 37 See Waldman, "Origins of the Legal Doctrine of Reasonable Doubt", (1959) 20 Journal of the History of Ideas 299 at 301-303 citing Wilkins, Of the Principles and Duties of Natural Religion, 4th ed (1699), Bk 1, Chs 1 and 3. 38 See Locke, An Essay Concerning Human Understanding: Collated and Annotated, with Prolegomena, Biographical, Critical and Historical, by Alexander Campbell Fraser, (1894), vol 2 at 364-365; Waldman, "Origins of the Legal Doctrine of Reasonable Doubt", (1959) 20 Journal of the History of Ideas 299 at 311. 39 See Gilbert, The Law of Evidence, 7th ed (1805) at 1; Waldman, "Origins of the Legal Doctrine of Reasonable Doubt", (1959) 20 Journal of the History of Ideas 299 at 305-306, 311-312; Shapiro, Beyond Reasonable Doubt and Probable Cause: Historical Perspectives on the Anglo-American Law of Evidence, (1991) at 25-27. 40 Langbein, The Origins of Adversary Criminal Trial, (2003) at 262; Jonakait, "Finding the Original Meaning of American Criminal Procedure Rights: Lessons from Reasonable Doubt's Development", (2012) 10 University of New Hampshire Law Review 97 at 102. 41 See Shapiro, Beyond Reasonable Doubt and Probable Cause: Historical Perspectives on the Anglo-American Law of Evidence, (1991) at 21-22; Langbein, The Origins of Adversary Criminal Trial, (2003) at 263-264; Whitman, The Origins of Reasonable Doubt: Theological Roots of the Criminal Trial, (2008) at 197-199. See also Waldman, "Origins of the Legal Doctrine of Reasonable Doubt", (1959) 20 Journal of the History of Ideas 299 at 310. Bell Nettle Edelman however, as Professor Franklin has concluded42, the previous common understanding that the standard of proof in criminal trials should be somewhere between probable suspicion and complete certainty came to be expressed solely in the formulation "beyond reasonable doubt". Given, as this scholarship suggests, that the standards of satisfied conscience and moral certainty, and thus of beyond reasonable doubt, were adopted as the result of the English law's rejection of the idea that facts could be established with absolute certainty beyond any doubt, it is in that sense that Kitto J should be taken to have stated in Thomas that whether a doubt is reasonable is for the jury to say43. Contrary to King CJ's reasoning in Wilson, it is not the case that whenever a reasonable jury recognises the existence of a doubt, no matter how slight the doubt may be, the jury ipso facto has a reasonable doubt. Rather, as was stated in Green44, and has since been appreciated in decisions on this point by most Australian intermediate courts of criminal appeal45 (including in previous decisions in Victoria46), a reasonable doubt is a doubt which the jury as a reasonable jury considers to be reasonable (albeit, of course, that different jurors might have different reasons for their own 42 Franklin, The Science of Conjecture: Evidence and Probability before Pascal, (2001) at 62-63. See also Shapiro, Beyond Reasonable Doubt and Probable Cause: Historical Perspectives on the Anglo-American Law of Evidence, (1991) 43 (1960) 102 CLR 584 at 595. 44 (1971) 126 CLR 28 at 32-33. 45 See Goncalves (1997) 99 A Crim R 193 at 196 per Malcolm CJ, 204 per Wheeler J (Heenan J agreeing with both Malcolm CJ and Wheeler J at 200); Graham (2000) 116 A Crim R 108 at 127 [59] per Underwood J (Evans J agreeing at 129 [71]); Ho (2002) 130 A Crim R 545 at 552 [32], 554 [41] per Bell J (Meagher JA and Hidden J agreeing at 562 [66], [67]); R v Clarke (2005) 159 A Crim R 281 at 290 [53] per McMurdo P (Helman J and Chesterman J agreeing at 292 [81], [82]); W v The Queen (2006) 16 Tas R 1 at 7 [10] per Slicer J; Ladd (2009) 27 NTLR 1 at 55 [155] per Martin (BR) CJ. 46 See for example Neilan [1992] 1 VR 57 at 71; Chatzidimitriou (2000) 1 VR 493 at 495 [5], 496-497 [8]-[9] per Phillips JA, 509 [46] per Cummins AJA; Hettiarachchi [2009] VSCA 270 at [59], [61]. Bell Nettle Edelman reasonable doubt). Phillips JA accurately summarised the position in R v Chatzidimitriou47: "the test remains one of reasonable doubt, not of any doubt at all; and ... the jury's function includes determining what is reasonable doubt – or to put that in more concrete fashion, whether the doubt which is left (if any) is reasonable doubt or not." (emphasis in original) Granted, the idea that a reasonable doubt is one that a particular jury entertains at the conclusion of their deliberations is an idea that pertains to the corporate state of mind of the jury as opposed to the animadversions of the individual members of the jury. But, as Cox J knowingly observed in Pahuja48, it is the votes of each of the individual members of the jury that are determinative of the verdict of the jury as a whole. Each juror is appointed to consider the evidence and to decide whether it satisfies him or her of guilt beyond reasonable doubt; and, in order to discharge that function, each individual member of the jury must in effect enquire of himself or herself whether he or she entertains a reasonable doubt. In practical reality, each individual juror may at some point in the course of the juror's consideration of an issue have a doubt which, upon reflection and evaluation, he or she is disposed to discard as an unreasonable doubt. For that reason, a judge's directions to a jury as to the applicable standard of proof are as much directed to each individual member of the jury as they are to the jury as a whole. The same is true of a Black direction49. Contrary, therefore, to Dookheea's submissions, it is not the case that any doubt on the part of an individual juror dictates that the prosecution has failed to convince that juror to the criminal standard. Indeed, as counsel for Dookheea conceded, a fanciful doubt would not require a juror to vote for an acquittal; and to reason, as was suggested, that a fanciful doubt is distinguishable as not a doubt 47 (2000) 1 VR 493 at 498 [11]. 48 (1987) 49 SASR 191 at 210 (dissenting). See also Neilan [1992] 1 VR 57 at 70-71; Ladd (2009) 27 NTLR 1 at 60-61 [176]-[177] per Martin (BR) CJ. 49 Black v The Queen (1993) 179 CLR 44 at 51-52 per Mason CJ, Brennan, Dawson and McHugh JJ; [1993] HCA 71. Bell Nettle Edelman at all is not at all convincing50. Not all jurors would regard a fanciful doubt as no doubt and nor logically should they do so. the Admittedly, it has been said that to invite a jury to consider the distinction jury's between reasonable doubt and any doubt risks obfuscating understanding of their task51. Consequently, as the authority of this Court stands, it is generally speaking undesirable for a trial judge to contrast reasonable doubt with any doubt. But, for the reasons already given, in point of principle it is not wrong to notice the distinction; and, therefore, as a matter of authority, it is not necessarily determinative of an appeal against conviction that a trial judge may for one reason or another happen to do so. When and if a trial judge does mention the distinction, the question is whether the words spoken in terms of the record of the summing up are such that the jury would have derived a false perception of the basis for deciding whether the Crown has proved its case52. And as was held in Green53 and stressed in La Fontaine54, that is a question to be decided by taking the summing up as a whole and as a jury listening to it might understand it, not upon some subtle examination of its transcript record or by undue prominence being given to any of its parts. Moreover, where, as here, the accused has been represented at trial by competent counsel, the reaction of defence counsel on hearing the impugned portion of the summing up is a cogent consideration55. 50 See Pahuja (1987) 49 SASR 191 at 207-208 per Cox J; Neilan [1992] 1 VR 57 at 69-70; Ladd (2009) 27 NTLR 1 at 60-62 [173]-[179] per Martin (BR) CJ. Cf Compton (2013) 237 A Crim R 177 at 183 [14] per Kourakis CJ. 51 See Thomas (1960) 102 CLR 584 at 595 per Kitto J; Green (1971) 126 CLR 28 at 32-33; La Fontaine (1976) 136 CLR 62 at 84-85 per Stephen J. 52 La Fontaine (1976) 136 CLR 62 at 72 per Barwick CJ (Mason J relevantly agreeing at 87). 53 (1971) 126 CLR 28 at 32. 54 (1976) 136 CLR 62 at 72, 73 per Barwick CJ (Mason J relevantly agreeing at 87), 55 La Fontaine (1976) 136 CLR 62 at 72 per Barwick CJ (Mason J relevantly agreeing at 87), 85 per Stephen J. Bell Nettle Edelman Jury not misled Counsel for Dookheea argued that it was nothing to the point that the trial judge had several times directed the jury concerning proof beyond reasonable doubt in terms that were unexceptionable. Nor was it of much significance, it was submitted, that the jury were provided with the aide memoire. For in counsel's submission, given that the trial judge contrasted reasonable doubt with any doubt while directing the jury as to the element of murderous intent, and since that was in effect the only matter at issue in the trial, the jury were bound to have borne the contrast in mind. That was likely to have caused the jury to approach the element of intent by a two-stage reasoning process: first, deciding whether they had any doubt, and then discounting their doubt on the basis that it was not or might not be reasonable. And as counsel would have it, that surely deprived, or at least could have deprived, Dookheea of the benefit of any doubt which the members of the jury as a reasonable jury may have had. Those submissions should be rejected, for two reasons. First, as has been explained, a reasonable doubt is not just any doubt that the members of a jury as a reasonable jury might entertain, but is rather what a reasonable jury considers to be a reasonable doubt. Dookheea was not entitled to the benefit of any doubt, but rather to the benefit of what the jury as a whole considered to be a reasonable doubt. Secondly, and in light of the correct understanding of reasonable doubt, it cannot realistically be supposed that the jury might have been left in any uncertainty as to the true meaning of the need for proof beyond reasonable doubt. At the outset of the trial, the trial judge correctly explained to the jury that proof beyond reasonable doubt is the highest standard of proof known to the law, and therefore requires a much higher state of satisfaction than proof on the balance of probabilities; both the Crown prosecutor and defence counsel emphasised that proof beyond reasonable doubt meant that the jury had to be sure of guilt and that, if they were not, they were bound to acquit; the trial judge emphasised the need for proof beyond reasonable doubt in answering the jury's question as to the meaning of really serious injury; the trial judge began the relevant part of her summing up with the statement that the words "beyond reasonable doubt" are common English words which mean what they say, and are not capable of expression on some sort of percentage basis, and later reminded the jury of what she had told them at the outset of the trial as to proof beyond reasonable doubt being a far higher standard of proof than proof on the balance of probabilities; the trial judge re-emphasised on more than 20 further occasions during the charge that the jury must be satisfied of guilt beyond reasonable doubt, and five of those occasions followed the impugned passage; the jury were left with an aide memoire which stressed in bold type the need for proof of each of the elements Bell Nettle Edelman of the offence beyond reasonable doubt; and defence counsel took no exception to the impugned passage of the trial judge's directions and did not seek any further directions in that regard. There can be no doubt that the jury would clearly have understood that it was up to them to decide whether there was what they considered to be a reasonable doubt as to Dookheea's guilt and that, if there were, they were bound to acquit him. Further matters So to conclude is sufficient to dispose of the appeal. For the sake of completeness, however, two points remain to be mentioned. First, as has been noticed, previous decisions in Victoria approached the issue of proof beyond reasonable doubt correctly, on the basis that a reasonable doubt is not just any doubt which the members of a jury as a reasonable jury might entertain, but is rather what a reasonable jury considers to be a reasonable doubt56. Why the Court of Appeal departed from that approach in this case is less than clear. Apparently, the earlier decisions were drawn to their Honours' attention, and there is no suggestion in their Honours' reasons that they regarded them as wrongly decided. Nor is there any mention of this Court's conclusion in La Fontaine57, and still less an explanation of why the approach in La Fontaine was regarded as inapplicable. If the Court of Appeal had followed their own earlier decisions on the subject, or this Court's decision in La Fontaine, the need for this appeal might have been avoided. Secondly, although, as authority stands, it is generally speaking unwise for a trial judge to attempt any explication of the concept of reasonable doubt beyond observing that the expression means what it says and that it is for the jury to decide whether they are left with a reasonable doubt (and in certain circumstances explaining that a reasonable doubt does not include fanciful possibilities58), the practice ordinarily followed in Victoria, as it was in this case, and often followed in New South Wales, includes contrasting the standard of proof beyond reasonable doubt with the lower civil standard of proof on the 56 See for example Neilan [1992] 1 VR 57 at 71; Chatzidimitriou (2000) 1 VR 493 at 495 [5], 496-497 [8]-[9] per Phillips JA, 509 [46] per Cummins AJA; Hettiarachchi [2009] VSCA 270 at [59], [61]. 57 (1976) 136 CLR 62 at 72-73 per Barwick CJ. 58 Green (1971) 126 CLR 28 at 33. Bell Nettle Edelman balance of probabilities59. That practice is to be encouraged. It is an effective means of conveying to a jury that being satisfied of guilt beyond reasonable doubt does not simply mean concluding that the accused may have committed the offence charged or even that it is more likely than not that the accused committed the offence charged. What is required is a much higher standard of satisfaction, the highest known to the law: proof beyond reasonable doubt. Conclusion For these reasons, the appeal should be allowed. The orders of the Court of Appeal should be set aside. In their place, it should be ordered that leave to appeal to the Court of Appeal be granted and the appeal be dismissed. 59 Judicial College of Victoria, Victorian Criminal Charge Book, (2017) at 1.7.2. See also Judicial Commission of New South Wales, Criminal Trial Courts Bench Book, (2017) at [1.480], [1.490]; Ho (2002) 130 A Crim R 545 at 548 [15] per Bell J (Meagher JA and Hidden J agreeing at 562 [66], [67]); Ward v The Queen [2013] NSWCCA 46 at [54] per McClellan CJ at CL (Latham J and Adamson J agreeing |
HIGH COURT OF AUSTRALIA CGU INSURANCE LIMITED APPELLANT AND ONE.TEL LIMITED (IN LIQUIDATION) & ORS RESPONDENTS CGU Insurance Limited v One.Tel Limited (In Liquidation) [2010] HCA 26 4 August 2010 ORDER Appeal allowed in relation to order 2 of the Court of Appeal of the Supreme Court of New South Wales made on 18 December 2009. The answers to the questions reserved for separate determination be recorded as: Question 1: Can the plaintiff named in the amended summons maintain these proceedings to seek recovery from the first defendant of the alleged property identified in paragraph v of Schedule A to the deed ('the Property')? Answer: Yes. Question 2: Upon the termination of the Deed, did any alleged interests or rights of Greaves in respect of the alleged Property cease to be held by the plaintiff as trustee or otherwise identifying the same? Answer: No. Question 3A: In what capacity does the plaintiff hold any alleged interests or rights of Greaves in respect of the alleged Property? Answer: Not necessary to answer. Question 3B: In what capacity would the plaintiff hold any proceeds of the realisation of any interests or rights of Greaves in respect of the alleged Property? Answer: Not necessary to answer. Question 4: Which of the parties (including Greaves), if any, hold any alleged interests or rights of Greaves in respect of the alleged Property, and in what capacity? Answer: Not necessary to answer. Question 5A: Upon termination of the Deed, was Greaves released and discharged from all liability at law and/or in equity in respect of the orders made on 6 September 2004? Answer: No. Question 5B: Upon termination of the Deed, did Greaves obtain the accrued benefit of a covenant not to enforce in respect of the compensation and costs order made on 6 September 2004 in the ASIC proceedings? Answer: No. Question 6: Does CGU have accrued or binding rights under the Deed such that the plaintiff and/or Greaves have no further rights to seek recovery of the alleged Property? Answer: No. Question 7: Are any or all of the plaintiff and the second to fourth defendants precluded from bringing any claim, including the present proceedings, against CGU in respect of the alleged Property in relation to the orders made on 6 September 2004 by reason of any or all of the following matters: (a) There being no relevant 'Loss' (at the time of entry into the Deed or upon termination of the Deed) within the meaning of the Policy; (b) Greaves having no existing Loss within the meaning of the Policy for which he may be legally indemnified arising out of any Claim by reason of any Wrongful Act for the purpose of Insuring Agreement A of the Policy in relation to the compensation and costs order made on 6 September 2004 in the ASIC proceedings; There being no subject matter for indemnity as provided in the opening words of the Policy? Answer: No. Question 8: Is the covenant in the deed to assign to the plaintiff effective in the events that have occurred? Answer: Yes. Question 9: Is any transfer and assignment to the plaintiff of the Property void and of no effect within cl 1(e) of the Deed after termination of the Deed by reason of cl 1(e) of the Deed and/or s 213 of the Bankruptcy Act 1966 (Cth)? Answer: No. Appeal otherwise dismissed. The appellant is to pay the first respondent's costs of the appeal. On appeal from the Supreme Court of New South Wales Representation D F Jackson QC with A W Street SC, E G Romaniuk and W A D Edwards for the appellant (instructed by Colin Biggers & Paisley Solicitors) B A J Coles QC with P Kulevski for the first respondent (instructed by Clayton Utz Lawyers) Submitting appearances for the second and fourth respondents No appearance for the third respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS CGU Insurance Limited v One.Tel Limited (In Liquidation) Bankruptcy – Deed of Arrangement – Directors and officers liability policy of insurance – Equitable assignment of rights under policy of insurance to trustee under Deed of Arrangement – Trustee commenced proceedings in pursuit of rights under policy of insurance – Deed of Arrangement terminated – Effect of termination – Whether trustee had power to continue proceedings – Whether "loss" suffered under policy of insurance – Whether certain clauses of Deed of Arrangement survived termination. Trusts – Bare trust – Duties and powers of trustee. Words and phrases – "loss", "bare trust". Bankruptcy Act 1966 (Cth), Pt X. Conveyancing Act 1919 (NSW), s 12. FRENCH CJ, HEYDON, CRENNAN, KIEFEL AND BELL JJ. These proceedings were heard on agreed facts. It is desirable to outline the material parts of those facts at the outset. The agreed facts The proceedings have their origins in the conduct of the third respondent, John Huyshe Greaves ("Mr Greaves"). From 28 February 1995 to 31 December 1995, and from 25 July 1997 to 31 March 2001, Mr Greaves served as a director of the first respondent, One.Tel Limited (In Liquidation) ("One.Tel"). He was insured under a directors and officers liability policy of insurance ("the Policy"). The insurer was the appellant, CGU Insurance Limited ("CGU"). On 12 December 2001 the fourth respondent in this appeal, the Australian Securities and Investments Commission ("ASIC"), sued Mr Greaves in the Supreme Court of New South Wales ("the ASIC proceedings"). On 21 May 2002 CGU purported to avoid the Policy. On 6 September 2004, by consent, the Supreme Court made orders and declarations against Mr Greaves in the ASIC proceedings. That relief included an order that Mr Greaves pay compensation to One.Tel in the sum of $20 million ("the $20 million compensation order"). It also included an order that he pay $350,000 to ASIC. On 30 November 2004 Mr Greaves entered into a Deed of Arrangement ("the Deed") pursuant to Pt X of the Bankruptcy Act 1966 (Cth) ("the Act")1. The other party was David Patrick Watson, who died on 18 July 2009. His executrix, the second respondent, is Christine Watson. It is convenient to refer to Mr and Mrs Watson as "the Trustee". Clause 2 of the Deed provided: "[Mr Greaves] covenants to convey, transfer or assign or cause to be conveyed, transferred or assigned to the Trustee all the property more particularly described in Schedule A hereto on trust to be dealt with by the Trustee in accordance with this Deed of Arrangement." 1 The relevant provisions are in Pt X as it stood before the commencement on 1 December 2004 of the Bankruptcy Legislation Amendment Act 2004 (Cth), which made very substantial amendments to Pt X. Crennan Bell Paragraph (v) of Sched A included Mr Greaves's rights under the Policy. Clause 3 provided: "The Trustee accepts appointment as Trustee of this Deed and the conveyance and assignment of the said property upon the trusts hereinafter set out." Clause 4 provided: "The Trustee shall get in and realise the assets set out in the said paragraph 2 hereto as soon as reasonably practicable provided that he shall have the power to postpone the sale of any part thereof as he in his discretion considers expedient." Clause 5 provided that the Trustee should apply any amount received by him under the Policy in payment of any liability that Mr Greaves might have to ASIC and One.Tel. Clause 6 provided: "Subject to clauses 5 and 18, the Trustee shall apply any moneys received by him pursuant to this Deed in making payments in the order described by Section 108 to 114 inclusive of the Act as modified by Section 237(2) thereof." Clause 7 provided: "Immediately after [Mr Greaves] has in all respects complied with his obligations under this Deed and the Act the Trustee shall certify that [Mr Greaves] has complied with the Deed. Notice that such certificate has been executed shall be given by the Trustee to [Mr Greaves] and the Creditors." A certificate pursuant to cl 7 was executed on 2 March 2006. Clause 8 provided that on execution of the certificate, Mr Greaves was released from all debts and claims against him except for any liability under certain orders, one of which was the $20 million compensation order. Crennan Bell Clause 9 provided that immediately after the Trustee: completes or settles any claim for the realisation of assets being rights under the [Policy] including the pursuit to judgment or settlement of any claim under [the Policy]; or makes a decision not to pursue a claim under the [Policy], the Trustee will issue a certificate to the effect that he has completed the realisation of assets being rights under the [Policy] or to the effect that the Trustee does not intend to pursue a claim against CGU … under [the Policy]." Clause 10 provided: "[Mr Greaves] shall upon execution of the said certificate by the Trustee be absolutely released and discharged from all liability in respect of the compensation and costs order made on 6 September 2004 in the ASIC Proceedings." Clause 11 provided: "Prior to the execution of the certificate referred to in clause 9, neither the Trustee nor any creditor will take any steps to enforce against [Mr Greaves] the compensation order and the costs order made on 6 September 2004 in the ASIC Proceedings other than to seek recovery pursuant to the arrangement constituted by this Deed." On 16 October 2006 the Trustee gave notice to CGU of the assignment of Mr Greaves's rights under the Policy. On 18 October 2006 the Trustee commenced proceedings in the Commercial List of the Equity Division of the Supreme Court of New South Wales ("the Trustee proceedings"). The Trustee proceedings pursued Mr Greaves's cause of action on the Policy in respect of the $20 million compensation order2. CGU was the first defendant, ASIC the second, One.Tel the third and Mr Greaves the fourth. In its Amended Defence to the Trustee's 2 The claim which the Trustee made in the Trustee proceedings against CGU did not extend to a claim in relation to the order of the Supreme Court of New South Wales made on 6 September 2004 that Mr Greaves pay $350,000 to ASIC. Crennan Bell Amended Summons, which extended over 36 closely typed pages, CGU raised many allegations against Mr Greaves of fraudulent non-disclosure and fraudulent misrepresentation in support of its claim that its purported avoidance of the Policy was valid. On 30 November 2007, by reason of cl 17(c) of the Deed and s 235(d) of the Act, the Deed terminated because three years had passed since it was executed. Although cl 17(c) permitted an extension of this period for the purpose of the Trustee finalising any claim under the Policy if the creditors so resolved, no meeting of creditors had been called to consider such a resolution. With effect from 8 August 2008, the summons in the Trustee proceedings was amended. The name of the plaintiff was changed from "David Patrick Watson, as trustee of the Deed of Arrangement in respect of John Huyshe Greaves" to "David Patrick Watson". Underlying the change was the controversy which has now reached this Court. The issues in the controversy were propounded in nine questions for separate determination prior to the resolution of other issues. The primary judge The primary judge (McDougall J) held that, once the Deed terminated, the Trustee had no power to continue the Trustee proceedings. He also held that Mr Greaves had suffered no "Loss", because even after the Deed was terminated, cl 11 continued to operate so as to prevent the Trustee and creditors from enforcing against Mr Greaves the orders made in the ASIC proceedings3. The primary judge therefore gave judgment for CGU4. The Court of Appeal The Court of Appeal of the Supreme Court of New South Wales (Hodgson and Campbell JJA and Sackville AJA) allowed the appeal, and remitted the matter to the Equity Division of the Supreme Court for further hearing5. 3 Clause 11 is quoted at [14] above. 4 Watson v CGU Insurance Ltd [2008] NSWSC 1409. 5 One.Tel Ltd (In Liq) v Watson [2009] NSWCA 282; One.Tel Ltd (In Liq) v Watson (No 2) [2009] NSWCA 396. Crennan Bell The appeal to this Court CGU appealed to this Court. In substance the appeal fails for several reasons. Before turning to those reasons, it is necessary to note CGU's central contentions. CGU's central contentions CGU advanced two central contentions. The first was that the Trustee had no power to continue the Trustee proceedings once the Deed was terminated. CGU submitted that neither the Act nor the Deed gave that power. It submitted that, even if the assignment of the Policy by Mr Greaves to the Trustee was an absolute assignment at law pursuant to s 12 of the Conveyancing Act 1919 (NSW) (which CGU said was not the case), that assignment did not give the Trustee that power. And it submitted that even if the assignment was a valid equitable assignment, it did not give the Trustee that power. The second central contention of CGU was that Mr Greaves had suffered no "Loss" to which the Policy responded. The effect of these arguments, if sound, would have been to give CGU an adventitious windfall benefit. Subject to the merits of CGU's defences in the Trustee proceedings, it would be better off to the extent of $20 million as a result of the execution of the Deed, to which it was not a party, than it would have been if the Deed had not been executed. Was there an assignment of the benefit of the Policy? In considering CGU's first central argument, the legal assignment question may be put to one side at the outset. The primary judge's "tentative view" was that the Deed was a legal assignment to the Trustee of Mr Greaves's rights under the Policy pursuant to s 12 of the Conveyancing Act. But he said that even if that were not so, cl 2 was a valid equitable assignment of those rights because of the consideration flowing from cll 8, 10 and 11, and from the Trustee's other Crennan Bell promises6. The Court of Appeal found that there was a legal assignment7. CGU challenged that conclusion. It is not necessary to decide the merits of this challenge. Even if the challenge were sound, and there was no legal assignment, there was a valid equitable assignment for the reasons given by the primary judge. CGU expressly conceded, and below it will be assumed, that there was a valid equitable assignment, so that Mr Greaves, as assignor, became a trustee of a chose in action – his rights under the Policy – for the Trustee, and the Trustee held equitable title to Mr Greaves's rights under the Policy in trust for the beneficiaries identified in the Deed. For reasons now to be explained, that gave the Trustee the right to continue the Trustee proceedings even after the Deed terminated. No argument is available that the Trustee proceedings are not properly constituted by reason of the non-joinder of Mr Greaves, as assignor: he was joined (as fourth defendant). Did the Act or the Deed disentitle the Trustee from continuing the Trustee proceedings after the Deed came to an end? CGU argued that although the Trustee was entitled to commence the Trustee proceedings, it lost any entitlement to continue them once the Deed terminated. The Deed was to be construed subject to Pt X of the Act (cl 1(e)). The powers which the Deed conferred on the Trustee ceased once cl 17(c) came into effect by reason of s 235(d) of the Act. And the duties which the Deed created – to apply the monies to One.Tel and ASIC under cl 5 and to issue a certificate under cl 9 – also ceased. While the Deed was still on foot, the Trustee held the assigned chose in action (Mr Greaves's right to sue CGU) on trust in the manner specified in cll 2 and 3 of the Deed, and validly commenced the Trustee proceedings. But once the Deed ceased to be on foot, the Trustee lost any capacity to continue those proceedings, for the standing of the Trustee to do so depended on the Deed. This conclusion was said, in detailed arguments, to be supported by s 224(b) (which preserved the validity of acts done under a deed of arrangement before it was terminated), by par (c) of the definition of "trustee" in s 5, and by ss 187, 188, 194, 195, 204, 206, 213, 214, 218, 219(1), 223, 224A, 226(4), 229, 231(2), 233, 234, 234A, 234B, 236, 237(2) and 237AA. Very great stress was placed on a provision to which the Court of Appeal was not referred, 6 Watson v CGU Insurance Ltd [2008] NSWSC 1409 at [57]-[58]. 7 One.Tel Ltd (In Liq) v Watson [2009] NSWCA 282 at [96]-[110]. Crennan Bell and which was only raised in this Court in oral argument: s 276, rendering criminal the conduct of a person who acted as a trustee under a deed of arrangement that had been terminated. One.Tel argued at some length that the trust in favour of itself created by the Deed survived the termination of the Deed because nothing in the Act or the Deed had any contrary effect. It is not necessary to deal with these arguments. Indeed, in view of the fact that the form of Pt X now is very different from the form to which the parties' arguments were addressed, it is undesirable to do so. The primary judge considered that the termination of the Deed did not divest the Trustee of any property held as "Trustee" pursuant to the Deed, but that it did affect the identification of those entitled to the beneficial interest. He thought that after termination of the Deed, the Trustee ceased to hold the chose in action under the trusts of the Deed, but held it as "bare trustee" for Mr Greaves beneficially. This approach was in substance defended and adopted by counsel for CGU in the Court of Appeal, although it was criticised by counsel for One.Tel. The primary judge's approach was also adhered to by CGU in this Court in substance. In the pleadings CGU alleged that the termination of the Deed meant that the Trustee had ceased to be a trustee of any kind. It did not contend that before this Court. CGU instead contended that once the Deed had ended, while the Trustee had ceased to hold the equitable title to the chose in action created by the Policy on the trusts in the Deed, it had commenced to hold it as trustee in favour of Mr Greaves. This is a concession by CGU that the termination of the Deed did not cause the Trustee to cease holding the equitable interest in the chose in action on trust. The concession was correct. Even if CGU's submission that the Trustee was prevented from acting as trustee of the Deed after it was terminated is assumed to be correct, nothing in the Deed or the Act either caused the Deed to unwind on termination, or returned the parties to the status quo just before the execution of the Deed. The title on which the Trustee had held the benefit of the equitable interest in the chose in action did not vanish into thin air or return to Mr Greaves or go anywhere else: it remained with the Trustee. Nor was it open to the Trustee to enjoy the property beneficially: the Trustee continued to hold it on trust. Thus the Trustee continued to have the duties of a trustee, but, on CGU's assumptions, on trusts other than those created by the Deed, because on Crennan Bell those assumptions the beneficial interests under those trusts and the powers to continue the Trustee proceedings had come to an end. Even if the termination of the Deed is assumed to have deprived the Trustee of any power in the Deed or the Act to continue the Trustee proceedings, it does not follow that there was not some other power to do so. The primary judge described the trust on which the Trustee held the rights under the Policy which Mr Greaves assigned to it as a "bare trust" after the termination of the Deed. Let that be assumed. The trustee of a bare trust has no interests in the trust assets other than those which exist by reason of the office of trustee and the holding of legal title. Further, the trustee of a bare trust has no active duties to perform other than those which exist by virtue of the office of the trustee, with the result that the property awaits transfer to the beneficiaries or awaits some other disposition at their direction. One obligation of a trustee which exists by virtue of the very office is the obligation to get the trust property in, protect it, and vindicate the rights attaching to it. That obligation exists even if no provision of any statute or trust instrument creates it. It exists unless it is negated by a provision of any statute or trust instrument. Here no provision of the Act or the Deed negates it. Mr Greaves's equitable assignment of his right to sue CGU under the Policy gave the Trustee the duty to vindicate that right. After the Deed terminated, the Trustee continued to comply with the duty to vindicate that right by prosecuting the Trustee proceedings against CGU in order to crystallise its advantages by reducing them to a judgment in damages. Even assuming in favour of CGU that, after termination of the Deed, the Trustee no longer held the chose in action on the trusts of the Deed, the Trustee did remain a trustee, and did have an obligation to continue the process of complying with the duty to vindicate the rights associated with the trust property. It does not follow from CGU's contention that the Trustee had no entitlement to continue the proceedings which could be derived from the Deed once it had terminated that the Trustee did not have an entitlement to continue the proceedings after the Deed terminated which derives from a source other than the Deed. The latter entitlement derives from the duty and power of trusteeship. The Deed created a trusteeship with express duties. The termination of the Deed caused the Trustee to have duties and powers outside the Deed. Here the duty of the Trustee to vindicate the rights connected with the trust property related to a chose in action being enforced in the Trustee proceedings. The hoped-for fruits of those proceedings lay in an order for damages. Discontinuance by the Trustee with a view to letting some other person enforce the chose in action by starting a new action may have run the risk that the new action might be statute-barred, and would certainly have involved a waste of costs. In these circumstances the only Crennan Bell way of protecting the chose in action, vindicating the rights attached to it and getting in its fruits was for the Trustee to continue the proceedings. As One.Tel submitted, the only interest of CGU is in denying or qualifying the right asserted against it in an action by the Trustee as equitable owner of the chose in action created by the Policy. All that matters is that the Trustee is equitable owner of the chose in action. Provided the suit is otherwise properly constituted, in general it is of no concern to defendants whether the plaintiff suing on a chose in action is suing as assignee or not; or is suing under an equitable assignment, not a legal assignment; or is holding the right sued on in trust for a beneficiary. A person who is a trustee as a result of an equitable assignment of the benefit of a contractual right on trust can maintain the same actions on the right as that person could maintain if the contractual right were held by that person free of trust. Whether the Trustee is holding the chose in action for beneficiaries, and which beneficiaries, then, are not matters that are material to CGU. CGU has no right to seek the due administration of the trust or complain about any maladministration of it: that is a matter for the beneficiary or beneficiaries. If Mr Greaves is the beneficiary, as the primary judge found and as CGU contends, and if he has reason to suppose that the Trustee is about to do or continue to do an act prohibited by the terms of the trust or any statute, he is at liberty to apply for an injunction to restrain it. And if he has reason to suppose that the Trustee is failing to perform trust duties, he may institute proceedings to compel performance. The Trustee is not disentitled from continuing the Trustee proceedings. Was there a "Loss"? The starting point of CGU's second central argument is that cl 11 survived the termination of the Deed. CGU put this even though for the purpose of its first central argument it contended that the Deed ceased to have any operation once it was terminated by effluxion of time. It contended that once the Deed was terminated, no certificate could be issued under cl 9, for the Trustee no longer had any powers under the Deed. It followed that the prohibition on enforcement of the $20 million compensation order remained permanently in operation. Clause 11 was an accrued and continuing protection for Mr Greaves despite the termination of the Deed. Crennan Bell Position if cl 11 continued in force. The submission to this point corresponds with the reasoning of the primary judge8. Even if the submission to this point is assumed to be correct, it fails at the next stage. The Policy defined "Loss" as meaning "the amount payable in respect of a Claim made against the Directors and Officers for a Wrongful Act and shall include damages, judgements, settlements, interest, costs and Defence Costs." CGU argued that since cl 11 prevented the Trustee and the creditors taking any steps to enforce the $20 million compensation order, there was no "amount payable" in respect of a claim against Mr Greaves. It supported that argument by submitting that the Policy was one of indemnity. It relied on the primary judge's statement: "If and for so long as the orders are not enforceable against Mr Greaves, there is nothing in respect of which he has any entitlement to be indemnified."9 The Court of Appeal rejected that argument by saying that cl 11 "does not discharge or release [Mr Greaves] from the judgment debts." It said: "That occurs only on the execution of the certificate by the Trustee in accordance with cl 10 of the Deed"10. The Court of Appeal's reasoning is correct. Its conclusion may also be supported for the following additional reasons. First, "Loss" is defined to include "judgments" and "settlements". The judgment of 6 September 2004, which was consented to as part of a settlement, remains on foot. Secondly, the $20 million compensation order is an order which was made in respect of a claim made against Mr Greaves in the ASIC proceedings. It created a judgment debt. That debt remains an "amount payable" even though, on the assumption in favour of CGU that cl 11 survives the termination of the Deed, the Trustee and the creditors are debarred from taking any steps to enforce 8 A submission advanced to this Court, but apparently not below, was that s 233(2) of the Act caused cl 11 to remain binding on creditors, but the submission did not explain why this assisted CGU, for the stay on enforcement of creditors' remedies created by s 233(2) only continued for "so long as the deed remains in force", and CGU's entire case depended on the Deed having ceased to be in force. 9 Watson v CGU Insurance Ltd [2008] NSWSC 1409 at [52]. 10 One.Tel Ltd (In Liq) v Watson [2009] NSWCA 282 at [94]. Crennan Bell the $20 million compensation order against Mr Greaves. An "amount payable in respect of a Claim made against" Mr Greaves includes an amount which Mr Greaves is legally liable to pay. The $20 million compensation order created in him a legal liability to pay $20 million. If by some happy chance Mr Greaves became sufficiently wealthy to pay the $20 million, and chose to do so, it could not validly be contended that the Policy did not respond. Mr Greaves would have paid an amount which he was liable to pay under a judgment debt. That demonstrates that the status of the $20 million as an "amount payable", which rests on Mr Greaves's legal liability to pay it, is not affected by any bars which may prevent particular people from enforcing the judgment debt, because the creation of those bars does not affect his legal liability. There is a distinction between Mr Greaves's duty to pay, and the capacity of others to enforce that duty. Thirdly, at least during the lifetime of the Deed, cl 11 did not prevent an assignee of Mr Greaves, namely the Trustee, from enforcing the Policy. The assigned rights of Mr Greaves against CGU arose because of a judgment debt that came into existence against him. Clause 11 did not set aside the judgment. It did not extinguish the judgment debt. It did not release Mr Greaves from the duty to pay that debt. Fourthly, CGU's submission produces an absurd result, because it creates a conflict between cl 9 and cl 11. The point of the Deed was to enable the Trustee to enforce Mr Greaves's rights under the Policy in favour of One.Tel. Clause 9 assumes that the successful completion or settlement of the claim against CGU will produce a payment from CGU which can be used by the Trustee in effect to fund compliance by Mr Greaves with his duty to satisfy the $20 million compensation order by paying the money to One.Tel. Yet on CGU's construction of cl 11 and assuming it continued in force, Mr Greaves has suffered no "Loss" because of the ban on the Trustee and creditors enforcing the $20 million compensation order, and hence nothing can be recovered from CGU to fund payment of it. If CGU's argument about "Loss" were correct, it could have struck out, demurred to or obtained summary dismissal of the Trustee proceedings soon after their inception on 18 October 2006. It would not have been necessary for CGU to have waited until the Deed came to an end on 30 November 2007. Clause 11 did not continue in force. In any case the conclusion urged by CGU must fail. That is because the assumption that cl 11 survived the termination of the Deed is not correct. Crennan Bell The termination of the Deed on 30 November 2007 did not invalidate any steps taken by the Trustee to realise assets and employ them in making payments required by the Deed (for example, under cl 6). The termination of the Deed did prevent the Trustee from taking steps required by the Deed which were uncompleted before the time of its termination. That meant that no further steps could be taken under cl 9 (issue of a certificate in relation to the realisation of assets, for example, rights under the Policy), which meant that the absolute release of Mr Greaves from liability in relation to the $20 million compensation order referred to in cl 10 could not take place. As the Court of Appeal said, the "opening words of cl 11 ('Prior to the execution of the certificate referred to in clause 9') imply that the stay provided by cl 11 continues only while it is still possible that the Trustee can execute a certificate under cl 9."11 However, the Court of Appeal preferred to accept CGU's contention that the cl 11 stay continued beyond the date of termination of the Deed, and inferred that cl 9 authorised the issue of a certificate after the date of termination of the Deed. The Court of Appeal was certainly correct to see cll 9-11 as marching in tandem: either cl 9 ceased to have potential operation when the Deed terminated (in which case cll 10 and 11 did as well), or cl 11 continued to have potential operation when the Deed terminated (in which case cll 9 and 10 did as well). However, there is no reason why some clauses in the Deed should remain operative after its termination while others do not. The preferable conclusion is that once the Deed terminated, while acts carried out under it remained effective, the whole of its future potential operation ceased. That outcome is not unfair to Mr Greaves. Before 30 November 2007 he had no entitlement to recover on the Policy because he had assigned it to the Trustee, holding for One.Tel in particular as beneficiary, and he had the cl 11 protection. After 30 November 2007, while he lost his cl 11 protection, he became beneficiary under a resulting trust of the Policy on the assumptions underlying other parts of CGU's submissions12: in that respect he had in substance returned to the pre-Deed position. Clause 11 was a covenant by the Trustee and creditors not to take any step against Mr Greaves until whatever recovery from CGU on the Policy that could be achieved had been achieved. If no recovery against CGU had been achieved, or if what was recovered was less than what Mr Greaves owed to ASIC and One.Tel, and the cl 9 certificate was issued, it would then have been open to 11 One.Tel Ltd (In Liq) v Watson [2009] NSWCA 282 at [89]. 12 See above at [33]. Crennan Bell ASIC and One.Tel to pursue their rights against Mr Greaves to the extent to which their claims had fallen short of full satisfaction after the relevant amounts had been paid under cl 5. Once the Deed terminated, the cl 5 duty ceased. So did the cl 9 duty. That left no room for cl 11 to continue: it did not operate perpetually, but only in an interim period "[p]rior to the execution of the certificate referred to in clause 9". Once it became impossible for any cl 9 certificate to be executed, the basis on which cl 11 could operate collapsed. As CGU submitted for the purpose of other arguments, the Deed established only a short-term regime to hold the position while the Trustee made attempts to bring in assets for the benefit of creditors. It was only to last three years, unless extended by a meeting of the creditors. It did not have the function of giving permanent protection to Mr Greaves. It is true that by taking one step in performing the Deed – assigning the Policy to the Trustee – Mr Greaves had provided "all the consideration required from him"13. But that step was part of a series of interconnected steps. Clause 8 released him from all but a limited number of liabilities (one of which was liability under the $20 million compensation order). Clause 9 contemplated a decision to commence proceedings in respect of the Policy, or settle or not pursue a claim under the Policy. The decision was made to commence the Trustee proceedings, but they had not been completed when the Deed came to an end. The future steps of prosecuting them and issuing a cl 9 certificate could not be carried out under the Deed because it had ended. CGU's submissions allege that, in place of the trust created by the Deed, under which the Trustee held the Policy for One.Tel and ASIC, there sprang up a resulting trust in favour of Mr Greaves. Assuming that to be correct, to construe cl 11 as continuing in these circumstances would be unjust: it would leave One.Tel stripped of its beneficial interest under the trust created by the Deed, while simultaneously remaining unable to exploit its original right to enforce the $20 million compensation order, which it had given up in return for gaining its beneficial interest. And if, contrary to what is said above about CGU's argument in relation to "Loss"14, cl 11 operated not merely to prevent One.Tel enforcing the $20 million compensation order but also to wipe out Mr Greaves's legal liability to pay that sum, there would be injustice to One.Tel in losing its capacity to compel the Trustee to proceed with the Trustee proceedings against CGU. 13 One.Tel Ltd (In Liq) v Watson [2009] NSWCA 282 at [4]. Crennan Bell The construction of the Deed propounded by CGU – that cl 11 survives the termination of the Deed – is a construction which produces absurdity because of the harsh consequences for One.Tel. Further, CGU's primary position was that the Deed came to an end on 30 November 2007: it would be an unexplained anomaly if cl 11 survived, but nothing else. CGU's argument that cl 11 continued in force must be rejected. How should the questions be answered? In substance the appeal fails. But the reasoning stated above differs in some respects from that of the Court of Appeal. It is therefore necessary to examine whether any of the answers given by the Court of Appeal to the questions for separate determination should be changed. The questions are set The Court of Appeal's answers to questions 1 and 2 are correct for the reasons given above16. Question 5A was answered in the same way by the primary judge and the Court of Appeal, CGU did not suggest that it should be changed, and it is correct. The Court of Appeal's answer to question 5B is correct because cl 11 did not survive the termination of the Deed for reasons given above17. The Court of Appeal's answer to question 6 is correct for reasons given above in relation to CGU's "Loss" argument18. So is the Court of Appeal's answer to question 7. Question 8 was answered in the affirmative by both the primary judge and the Court of Appeal. It was common ground in this Court that the covenant referred to in question 8 was effective at least as an equitable assignment. Hence the Court of Appeal's answer is correct. Question 9 was answered in the negative by both the primary judge and the Court of Appeal. An affirmative answer would be inconsistent with CGU's concession that the trust property remains vested in the Trustee notwithstanding the termination of the Deed19. Hence the Court of Appeal's answer is correct. 19 Above at [33]-[34]. Crennan Bell That leaves questions 3A, 3B and 4. The Court of Appeal's answers were that the Trustee held the trust property for ASIC and One.Tel. The primary judge's answers, in substance, were that the Trustee held it for Mr Greaves. Questions 3A, 3B and 4 should not be answered for the following reasons. Part C of the Trustee's Amended Commercial List Statement contained the Trustee's "Contentions" as plaintiff. Paragraph 32 alleged: "In the premises, following the termination of the Deed, the plaintiff is entitled to continue the present proceedings and: holds the Rights and any proceeds of the realization of the Rights on express or alternatively constructive trust for ASIC and OneTel; holds the Rights and any proceeds of the realization of the Rights on resulting trust for [Mr] Greaves; or holds the Rights absolutely but will hold any proceeds of the realisation of the rights on trust for: ASIC and OneTel; or alternatively; [Mr] Greaves." CGU answered that allegation of the Trustee thus: "The First Defendant denies paragraph 32 and says: 12.1 The Plaintiff as trustee or otherwise: 12.1.1 Cannot maintain and/or prosecute these proceedings; and 12.1.2 Cannot receive the proceeds of judgment and/or realisation of property the subject of these proceedings; 12.2 The First Defendant repeats the matters set out in paragraphs 1(ii), 1(iii), 1(iv) and 2, above." The matters so referred to were relevantly allegations that the Trustee had ceased to be a trustee, had no standing to prosecute the Trustee proceedings, and had no right to recover the $20 million because of cl 11; and that Mr Greaves had the benefit of a "release and discharge from all liability" under the $20 million Crennan Bell compensation order and had suffered no loss. The second defendant (ASIC) did not admit that the Trustee could hold the proceeds of the Trustee proceedings for Mr Greaves, but admitted that the Trustee could hold them for ASIC and One.Tel. The third defendant (One.Tel) admitted par 32 of the Trustee's contentions. No Commercial List Response from the fourth defendant (Mr Greaves) appears in the appeal papers before this Court. Mr Greaves took no part in formulating the questions for separate and prior determination and he took no active part in the hearings in the courts below or in this Court. ASIC took no active part in the hearings before the Court of Appeal or this Court. And the Trustee took no active part in the hearing before this Court. Thus the position is that the only party in this Court (or the Court of Appeal) to advance the proposition that Mr Greaves is the beneficiary, namely CGU, was a party who could not profit from establishing that proposition. That is because, for reasons given above20, the identity of the beneficiary for whom the Trustee was holding the trust property after the Deed terminated is not a concern of CGU and CGU cannot rely on any particular answer to questions 3A, 3B and 4 as a means of supporting the primary judge's judgment in its favour. The only parties potentially interested in the proposition that Mr Greaves is the beneficiary are Mr Greaves on the one hand and One.Tel or ASIC on the other. The proposition is not at present a live issue as between Mr Greaves and One.Tel or ASIC. Those three parties are defendants in the Trustee proceedings, but there are no cross-claims between them. One.Tel has an interest in the Trustee proceedings succeeding. There is nothing to suggest that Mr Greaves opposes the Trustee proceedings succeeding. Indeed he has an interest in them succeeding, because to the extent that there is any shortfall in recovery against CGU, Mr Greaves will remain exposed to enforcement of the $20 million compensation order in view of the conclusion reached above that the protection afforded to Mr Greaves by cl 11 no longer exists21. And it is unlikely that Mr Greaves will make a claim to the beneficial enjoyment of any damages produced by the Trustee proceedings: that claim would be rendered nugatory by the capacity of One.Tel to enforce against him the $20 million compensation order. Thus the issues underlying questions 3A, 3B and 4 are moot. The application to the primary judge was not an application for judicial advice to a trustee; it was a separate trial of issues in controversy. To answer the questions would be to give a merely advisory opinion, not quell a controversy between 21 See [48]-[55]. Crennan Bell parties entitled to participate in the controversy. Hence those three questions need not be answered. In the event that they become live issues if the Trustee proceedings succeed, they can be agitated in separate proceedings. That event is unlikely for the reasons just given. Orders In substance One.Tel has enjoyed complete success in resisting the appeal. Accordingly, the Court's orders should be22: Appeal allowed in relation to order 2 of the Court of Appeal made on 18 December 2009. The answers to the questions reserved for separate determination be recorded as: Question 1: Can the plaintiff named in the amended summons maintain these proceedings to seek recovery from the first defendant of the alleged property identified in paragraph v of Schedule A to the deed ('the Property')? Answer: Yes. Question 2: Upon the termination of the Deed, did any alleged interests or rights of Greaves in respect of the alleged Property cease to be held by the plaintiff as trustee or otherwise identifying the same? Answer: No. Question 3A: In what capacity does the plaintiff hold any alleged interests or rights of Greaves in respect of the alleged Property? Answer: Not necessary to answer. 22 Save for the numbering, which follows that of the Court of Appeal, the questions are set out as they appear in the primary judge's order that there be a prior determination of them. Crennan Bell Question 3B: In what capacity would the plaintiff hold any proceeds of the realisation of any interests or rights of Greaves in respect of the alleged Property? Answer: Not necessary to answer. Question 4: Which of the parties (including Greaves), if any, hold any alleged interests or rights of Greaves in respect of the alleged Property, and in what capacity? Answer: Not necessary to answer. Question 5A: Upon termination of the Deed, was Greaves released and discharged from all liability at law and/or in equity in respect of the orders made on 6 September 2004? Answer: No. Question 5B: Upon termination of the Deed, did Greaves obtain the accrued benefit of a covenant not to enforce in respect of the compensation and costs order made on 6 September 2004 in the ASIC proceedings? Answer: No. Question 6: Does CGU have accrued or binding rights under the Deed such that the plaintiff and/or Greaves have no further rights to seek recovery of the alleged Property? Answer: No. Question 7: Are any or all of the plaintiff and the second to fourth defendants precluded from bringing any claim, including the present proceedings, against CGU in respect of the alleged Property in relation to the orders made on 6 September 2004 by reason of any or all of the following matters: There being no relevant 'Loss' (at the time of entry into the Deed or upon termination of the Deed) within the meaning of the Policy; Crennan Bell (b) Greaves having no existing Loss within the meaning of the Policy for which he may be legally indemnified arising out of any Claim by reason of any Wrongful Act for the purpose of Insuring Agreement A of the Policy in relation to the compensation and costs order made on 6 September 2004 in the ASIC proceedings; There being no subject matter for indemnity as provided in the opening words of the Policy? Answer: No. Question 8: Is the covenant in the deed to assign to the plaintiff effective in the events that have occurred? Answer: Yes. Question 9: Is any transfer and assignment to the plaintiff of the Property void and of no effect within cl 1(e) of the Deed after termination of the Deed by reason of cl 1(e) of the Deed and/or s 213 of the Bankruptcy Act? Answer: No. Appeal otherwise dismissed. The appellant is to pay the first respondent's costs of the appeal. |
HIGH COURT OF AUSTRALIA NEW SOUTH WALES ABORIGINAL LAND COUNCIL APPELLANT AND MINISTER ADMINISTERING THE CROWN LANDS ACT RESPONDENT New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act [2016] HCA 50 14 December 2016 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation B W Walker SC with B K Lim for the appellant (instructed by Chalk & M G Sexton SC, Solicitor-General for the State of New South Wales with H El-Hage for the respondent (instructed by Crown Solicitor (NSW)) M E O'Farrell SC, Solicitor-General of the State of Tasmania with S K Kay for the Attorney-General of the State of Tasmania, intervening (instructed by Office of the Solicitor-General (Tasmania)) R M Niall QC, Solicitor-General for the State of Victoria with K A O'Gorman for the Attorney-General for the State of Victoria, intervening (instructed by Victorian Government Solicitor) P D Quinlan SC, Solicitor-General for the State of Western Australia with J E Shaw for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act Aboriginal and Torres Strait Islander peoples – Land rights – Claimable Crown lands – Crown land dedicated for public purposes – Where State recorded as registered proprietor – Where Crown land dedicated for gaol purposes – Where Crown land proclaimed as correctional complex and correctional centre – Where gaol closed but dedications continued in force – Where proclamations revoked – Where Crown land held pending decision as to future use – Where activities on Crown land not inconsistent with dedications – Whether land "lawfully used or occupied" under s 36(1)(b) of Aboriginal Land Rights Act 1983 (NSW). Constitutional law (NSW) – Executive power – Power over Crown lands – Whether executive power abrogated by s 2 of New South Wales Constitution Act 1855 (Imp) – Whether statutory authorisation required for lawful occupation of Crown lands. Words and phrases – "actual occupation", "beneficial and remedial legislation", "beneficial construction", "claimable Crown lands", "Crown lands", "dedication", "lawfully used or occupied", "lawful occupation", "the Crown". Aboriginal Land Rights Act 1983 (NSW), s 36. New South Wales Constitution Act 1855 (Imp) (18 & 19 Vict c 54), s 2. Real Property Act 1900 (NSW), ss 13D, 13J. FRENCH CJ, KIEFEL, BELL AND KEANE JJ. This appeal concerns a claim by the appellant, the New South Wales Aboriginal Land Council ("the NSW ALC"), under the Aboriginal Land Rights Act 1983 (NSW) ("the ALR Act") over two adjoining parcels of land in Berrima (together, "the claimed land") which have been the site of a gaol and correctional centre. Different parts of the claimed land have been the subject of dedications under statutes which preceded the Crown Lands Act 1989 (NSW) ("the CLA"). The first dedication, in 1891, was for "Gaol Site (extension)"; the second, in 1894, was for "Gaol Purposes"; and the third, in 1958, was for "Gaol Site (addition)". At the date of the claim the dedications continued in force under the CLA. The claimed land was also the subject of various proclamations over the years, most recently in 2001 when it was proclaimed to be "Berrima Correctional Centre" and "Berrima Correctional Complex" pursuant to the Crimes (Administration of Sentences) Act 1999 (NSW). The correctional centre was closed in about November 2011. Following the closure of the correctional centre, Corrective Services NSW ("CSNSW"), which is a part of what is now the Department of Justice of New South Wales, requested an assessment of the likely future use for the claimed land and buildings thereon. At the date of the claim consideration was being given to the "appropriate future ownership and/or management arrangements for the property". One option being considered was the creation of a Crown Reserve under the management and care of a Reserve Trust. The proclamations of "Berrima Correctional Centre" and "Berrima Correctional Complex" were revoked on 10 February 2012. The NSW ALC's claim was made on 24 February 2012. The claim was refused by the joint Crown Lands Ministers on the basis that the claimed land was "lawfully used and occupied" within the meaning of s 36(1)(b) of the ALR Act. Another fact concerning the claimed land needs to be mentioned. The State of New South Wales was at the date of the claim registered as proprietor of both parcels of land under the New South Wales Torrens system of registration1. The conversion of some Crown land appears to have followed amendments to the Real Property Act 1900 (NSW) ("the Real Property Act")2. 1 See Real Property Act 1900 (NSW), s 13D. 2 Real Property (Crown Land Titles) Amendment Act 1980 (NSW). Bell The ALR Act and "claimable Crown lands" The purposes of the ALR Act include the provision of land rights for Aboriginal persons in New South Wales and the vesting of lands in Aboriginal Land Councils in New South Wales3. The NSW ALC or a Local Aboriginal Land Council may make a claim4 to lands which fall within the description of "claimable Crown lands" in s 36(1) of the ALR Act. It cannot be doubted that the purposes of the ALR Act are intended to be both beneficial and remedial. Further, land which may be claimed is not restricted to land to which any Aboriginal person or group has a particular historical connection, as is generally the case with other legislation conferring Aboriginal land rights. The definition of "claimable Crown lands" is broad. Section 36(1) provides: "In this section, except in so far as the context or subject-matter otherwise indicates or requires: claimable Crown lands means lands vested in Her Majesty that, when a claim is made for the lands under this Division: (a) are able to be lawfully sold or leased, or are reserved or dedicated for any purpose, under the Crown Lands Consolidation Act 1913 or the Western Lands Act 1901, (b) are not lawfully used or occupied, (b1) do not comprise lands which, in the opinion of a Crown Lands Minister, are needed or are likely to be needed as residential lands, (c) are not needed, nor likely to be needed, for an essential public purpose, and (d) do not comprise lands that are the subject of an application for a determination of native title (other than a non-claimant application that is an unopposed application) that has been registered in accordance with the Commonwealth Native Title Act, and 3 Aboriginal Land Rights Act 1983 (NSW), s 3. 4 Aboriginal Land Rights Act 1983 (NSW), ss 36(2), 36(3). Bell (e) do not comprise lands that are the subject of an approved the title than an approved determination of native Commonwealth Native Title Act) (other determination that no native title exists in the lands). the meaning of (within time being administering any provisions of the Crown Lands Consolidation Act 1913 or the Western Lands Act 1901 under which lands are able to be sold or leased." the Minister for the The claimed land might not be thought to fulfil the first part of the description of "claimable Crown lands", namely "lands vested in Her Majesty", for the reason that the State of New South Wales is now registered as the proprietor of it. However, the effect of s 3(2) of the CLA is that land does not cease to be Crown land merely because of the fact of such registration under the Real Property Act. This appears to have been the basis of the concession by the Minister that the claimed land was vested in the Crown at the date of the claim. The CLA also defines "Crown land" as land vested in the Crown5. However, s 36(1) of the ALR Act does not define "claimable Crown lands" by reference to the definition of "Crown land" in the CLA. Section 3(1) of the CLA excludes lands dedicated for a public purpose from the definition of "Crown land", whereas s 36(1)(a) of the ALR Act includes lands dedicated for any purpose as "claimable Crown lands". There is no dispute that the dedications fell within one of the two statutes specified in s 36(1)(a). Although the first two dedications of the claimed land were made under an earlier statute, they were deemed to have been made under the Crown Lands Consolidation Act 1913 (NSW)6 and the third was made under that Act. The balance of s 36(1) provides for exclusions from the definition of "claimable Crown lands". Paragraphs (b1) and (c) of s 36(1) exclude land which is needed or likely to be needed for the purposes there stated. The Minister may certify that the land is needed or is likely to be needed for those purposes7. The certificate is final 5 Crown Lands Act 1989 (NSW), s 3(1). 6 Crown Lands Consolidation Act 1913 (NSW), s 3. 7 Aboriginal Land Rights Act 1983 (NSW), s 36(8). Bell and conclusive evidence of the matters set out in it. The exclusions effected by s 36(1)(d) and (e) are of land which is being dealt with under a different statutory regime, namely the Native Title Act 1993 (Cth). The focus of this appeal is upon s 36(1)(b), which, in effect, excludes land which is lawfully used or occupied. It will be recalled that this was the reason given for the refusal of the NSW ALC's claim. The issue subsequently narrowed to one as to whether the claimed land was "lawfully occupied" at the date of the claim. The Land and Environment Court is given jurisdiction by s 36(7) to hear appeals from decisions with respect to claims to land under the ALR Act8. The onus is on the Minister to satisfy the Court that the lands, or a part thereof, are not "claimable Crown lands". If the Minister does not discharge that onus, s 36(7) provides that the Court "may … order that the lands … be transferred" to the claimant Aboriginal Land Council or, where the claim is made by the NSW ALC, to a Local Aboriginal Land Council nominated by the NSW ALC. This sub-section provides the Land and Environment Court with the power to transfer land in the event that the Minister does not satisfy it that the land is not claimable Crown lands. It is not a grant of discretion, despite the use of the word "may": in the event that the Minister failed to satisfy the Court that the land is not claimable, the Court would be obliged to order its transfer9. Lands lawfully occupied It was not necessary in Minister Administering the Crown Lands Act v NSW Aboriginal Land Council10 ("Wagga Wagga") to decide whether "lawfully used or occupied" is a composite expression or is better understood by separate consideration of the words "used" and "occupied". The latter understanding is correct. The two terms refer to different concepts and a natural reading of the phrase is that either a lawful use or a lawful occupation of the land will defeat a claim. 8 Aboriginal Land Rights Act 1983 (NSW), s 4(1) ("Court"), s 36(7). 9 See New South Wales Aboriginal Land Council v Minister Administering the Crown Lands (Consolidation) Act and the Western Lands Act (1988) 14 NSWLR 10 (2008) 237 CLR 285 at 306-307 [73]; [2008] HCA 48. Bell The Courts below The Land and Environment Court found that the activities conducted on the claimed land established occupation at the date of the claim and that that occupation was lawful11. It would appear from the findings of the primary judge (Pain J) that a security guard was present at all times; the buildings were kept locked; essential services continued to be supplied to the buildings; and the buildings were the subject of a continuing contract for their maintenance. The gardens on the claimed land continued to be maintained, largely by the work of offenders serving community service orders on weekends. The gardens comprised a substantial collection of roses and a vegetable garden. The public could, and did, visit the gardens, after permission was obtained from CSNSW. The Court of Appeal (Leeming JA, with whom Beazley P and Macfarlan JA agreed) upheld the primary judge's findings regarding occupation. The Court approached the question as one of fact12. Leeming JA rejected the argument of the NSW ALC that the assessment by the primary judge of occupation was flawed because it was undertaken by reference to the claimed land being held pending a decision as to its future use, rather than by reference to the purpose of its dedications. A difficulty with that argument, his Honour observed, is that, because there was evidence of regular use by offenders under community service orders, the claimed land had not ceased to be used for the purposes of the punishment of offenders13. Leeming JA also took the view that acts preparatory to a sale may amount to a lawful use or occupation, so long as the land has not been left unused for a lengthy period, in which case the sale itself would not suffice for use of the land14. 11 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (Berrima) [2014] NSWLEC 188 at [169]. 12 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2015) 303 FLR 87 at 92 [17], citing Daruk Local Aboriginal Land Council v Minister Administering the Crown Lands Act (1993) 30 NSWLR 140 at 13 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2015) 303 FLR 87 at 107 [91]. 14 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2015) 303 FLR 87 at 107 [92]-[93]. Bell Occupation in fact In Daruk Local Aboriginal Land Council v Minister Administering the Crown Lands Act, Priestley JA (with whom Cripps JA agreed) observed15 that in one sense the Crown can be said always to be in occupation of what were first known as the "waste" lands and then the "Crown" lands of New South Wales, but his Honour considered that a constructive notion of occupation is not appropriate in the context of s 36(1)(b). The better reading of "occupied", in his Honour's view, is "'actually occupied' in the sense of being occupied in fact and to more than a notional degree". His Honour agreed16 with the approach taken by Clarke JA in Minister Administering the Crown Lands (Consolidation) Act v Tweed Byron Local Aboriginal Land Council17 ("Tweed Byron"). In the view of Clarke JA, mere proprietorship could not suffice for occupation under s 36(1)(b). Physical acts of occupation, the exercise of control and maintaining the lands were all factors which are relevant. Clarke JA approved what had been said by Bowen JA in Commissioner of Land Tax v Christie18, that occupation includes legal possession, but also something more – an element of control, of being in a position to prevent the intrusion of strangers. A physical presence on the land and fencing may therefore be evidence of occupation. Clarke JA in Tweed Byron considered19 that, given the diversity of circumstances which could arise with respect to occupation, it was preferable not to attempt to articulate a comprehensive test. For example, it may not be appropriate to enquire about fencing or the possible exclusion of persons in circumstances where land is reserved for public recreation. It may be more important to ask whether there is a person exercising control over and undertaking maintenance responsibilities on the land. 15 Daruk Local Aboriginal Land Council v Minister Administering the Crown Lands Act (1993) 30 NSWLR 140 at 160-162. 16 Daruk Local Aboriginal Land Council v Minister Administering the Crown Lands Act (1993) 30 NSWLR 140 at 164. 17 (1992) 75 LGRA 133 at 140-141. 18 [1973] 2 NSWLR 526 at 533. 19 Minister Administering the Crown Lands (Consolidation) Act v Tweed Byron Local Aboriginal Land Council (1992) 75 LGRA 133 at 140. Bell The observations in these cases are not inconsistent with statements of this Court in Wagga Wagga. In the joint reasons it was said20 that attention must be directed to the "acts, facts, matters and circumstances which are said to deprive the land of the characteristic of being 'not lawfully used or occupied'"21. And it is necessary to measure those acts, facts, matters and circumstances against an understanding of what would constitute use or occupation of the land. In Wagga Wagga, the issue was whether the land was being used at the time of the claim. It was held22 that it was not. Nothing had been done on the land for a considerable time before the claim was made. Only transitory visits had been made to it by surveyors and the agent appointed to sell the land. Whilst the word "use" might encompass exploitation, the sale of the land was an exploitation of it as an asset, rather than use of the land itself. There was no contention in Wagga Wagga that the land was occupied at the relevant time. Accordingly, there was no detailed discussion in Wagga Wagga of what might amount to occupation, much less lawful occupation. In the joint reasons it was merely observed that a combination of legal possession, conduct amounting to actual possession and some degree of permanence or continuity will usually constitute occupation of the land, but they are not propositions intended to "chart the metes and bounds of those ideas"23. It was not necessary in Wagga Wagga to decide whether there could be steps taken on land in preparation for its sale which are of a kind which could constitute use or occupation24. In that case none of the steps taken towards sale had been taken on the land itself. Apart from the surveyor's and agent's visits to the land, everything that was done towards sale took place away from the land. 20 Minister Administering the Crown Lands Act v NSW Aboriginal Land Council (2008) 237 CLR 285 at 305 [69]. 21 Referring to Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493 at 507-508; [1957] HCA 15. 22 Minister Administering the Crown Lands Act v NSW Aboriginal Land Council (2008) 237 CLR 285 at 306-308 [71]-[76]. 23 Minister Administering the Crown Lands Act v NSW Aboriginal Land Council (2008) 237 CLR 285 at 306 [69]. 24 Minister Administering the Crown Lands Act v NSW Aboriginal Land Council (2008) 237 CLR 285 at 308 [77]. Bell Neither these steps nor the decision to sell the land could therefore be said to constitute a use of the land25. The NSW ALC's contentions The NSW ALC does not deny the proposition that "occupied" in s 36(1)(b) of the ALR Act refers to actual occupation, which is to say occupation is to be determined by reference to acts, facts, matters and circumstances. Rather, the NSW ALC submits that lawful occupation could not encompass the mere holding of surplus land pending a decision as to its future use. The NSW ALC submits, by reference to what was said in Arbuckle Smith & Co Ltd v Greenock Corporation26, that an owner who simply maintains and repairs land is not occupying it. It was held in that case that the company which owned a warehouse was not a "person in the actual occupation" of it and it was therefore not rateable. The owner had merely had some alterations carried out preparatory to its possession and use. It was against this background that Lord Reid said27 that "the owner who merely maintains, repairs or improves his premises is not thereby occupying them: he is preparing for future occupation by himself, his tenant or his disponee". But the facts of that case are far removed from the situation here. In that case the owner had never entered into possession of, or used, the premises. Here there has been a long history of the use of the claimed land and buildings thereon and the question is whether it continued to be occupied. This enquiry directs attention to all that is taking place with respect to the land at the time of the claim. The NSW ALC further submits that to construe s 36(1) of the ALR Act as excluding lands which were held or maintained pending a decision as to future use would defeat the purpose of the ALR Act. It would permit the Crown to deal with any surplus land owned by it so as to defeat a claim. Surplus land is, so it is said, of its nature, the very kind of land which is intended to be claimable. It may be accepted that s 36(1) identifies as "claimable Crown lands" lands which are no longer needed, and so surplus in that sense. This may be inferred from the contrary position which is stated in s 36(1)(b1) and (c) with 25 Minister Administering the Crown Lands Act v NSW Aboriginal Land Council (2008) 237 CLR 285 at 308 [77]. 27 Arbuckle Smith & Co Ltd v Greenock Corporation [1960] AC 813 at 824. Bell respect to lands which continue to be needed or are likely to be needed. It is a conclusion which may also be reached about the land to which par (b) refers, which is no longer used or occupied. However, the NSW ALC's argument assumes that land is surplus to needs from the moment that its dedicated purpose is no longer pursued by use for that purpose. Section 36(1)(b) contains no such assumption. It poses a question of fact about the land which must be answered before the land can be said to be claimable: whether it is lawfully used or occupied. Clearly, at the date of the claim, the claimed land and the buildings on it were not deserted. They had been the subject of continuous physical possession. Even if that possession was reduced to a minimum, it was more than notional. The acts of repair and maintenance of the claimed land and buildings, including the tending to the gardens, were acts associated with continued occupation, even if the buildings were no longer being actively put to their former use. The act of permitting the public to enter and view parts of the claimed land was an act consistent with the exercise of control over the claimed land. Viewing these factors as a whole, the claimed land was occupied at the date of the claim. The NSW ALC submits that something more in the nature of an active, as distinct from a passive, occupation is necessary. This meaning is said to be possible by reading "occupied" in collocation with "used". The submission implies that for land to continue to be occupied there must be something of the former use conducted on the land. This would deny "occupied" a separate sphere of operation, contrary to the proper construction of s 36(1)(b). A beneficial construction? The NSW ALC submits that the ALR Act has a beneficial and remedial purpose, such that it should be construed broadly and the exclusions contained in s 36(1)(b)-(e) should be construed narrowly. This approach accords with that of Kirby J in Wagga Wagga. His Honour considered this to be an important aspect of the construction of s 36(1) and warranted because the word "use" was ambiguous28. The NSW ALC says "occupy" is likewise capable of a range of meanings. 28 Minister Administering the Crown Lands Act v NSW Aboriginal Land Council (2008) 237 CLR 285 at 290 [8]. Bell Kirby J was in the minority in Wagga Wagga on that point. In the joint judgment it was said29 that it was not necessary to invoke a principle of beneficial construction to resolve the issue in that case. No choice was required between competing constructions of s 36(1)(b) or as between broad or narrow approaches. Rather, one needs to focus on the activities undertaken on the land, which is to say on questions of fact. It has been said that remedial or beneficial legislation should be accorded a "fair, large and liberal interpretation", rather than one which is literal or technical30. At issue in R v Kearney; Ex parte Jurlama31 was whether a claim could be made under the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) with respect to land which could only acquire the necessary character of being "traditionally owned" by reference to land which lay outside that which was available to be claimed. Gibbs CJ (with whom Brennan, Deane and "If the section is ambiguous it should in my opinion be given a broad construction, so as to effectuate the beneficial purpose which it is intended to serve." The statute in that case left the question open and provided the Court with choices in its approach to the statute's construction. In such a circumstance the Court was clearly justified in adopting a broader approach on the basis of the beneficial purpose of the statute. That is not the situation which arises with respect to s 36(1) of the ALR Act, where it is the meaning of particular words which is in question. In Victims Compensation Fund Corporation v Brown it was pointed out33 that to commence the process of construction by posing the type of construction to be afforded – 29 Minister Administering the Crown Lands Act v NSW Aboriginal Land Council (2008) 237 CLR 285 at 301 [48]. 30 IW v City of Perth (1997) 191 CLR 1 at 12, 39; [1997] HCA 30, citing Coburn v Human Rights Commission [1994] 3 NZLR 323 at 333. 31 (1984) 158 CLR 426; [1984] HCA 14. 32 R v Kearney; Ex parte Jurlama (1984) 158 CLR 426 at 433, 435. 33 Victims Compensation Fund Corporation v Brown (2003) 77 ALJR 1797 at 1804 [33]; 201 ALR 260 at 269; [2003] HCA 54. Bell liberal, broad or narrow – may obscure the essential question regarding the meaning of the words used. It is one thing to say that no restricted construction should be given to legislation which confers benefits; but if the focus is on the meaning of specific words, the circumstance for a liberal application may not arise. True it is that the words "used" and "occupied" might be said to take much of their meaning from context. But that is not to say that they are devoid of a commonly understood meaning in ordinary parlance. They require an examination of activities undertaken upon the land in question and, in the case of "occupied", factors such as continuous physical possession must be taken into account. No question of differing approaches to construction arises for limiting the ordinary understanding of that term by reference to the beneficial purposes of the ALR Act. Occupation and purpose The central plank of the NSW ALC's argument is that any consideration of whether the claimed land is lawfully occupied cannot be divorced from the purpose for which the claimed land was dedicated, and that the dedicated purpose was not the holding of land pending a decision as to its future use. It is to be expected that land dedicated for gaol purposes would be occupied as a gaol. It may be accepted, as the NSW ALC submits, that the acts taking place on the claimed land as found by the Land and Environment Court do not amount to occupation of the land and buildings as a gaol or for the purposes of a correctional centre. The attendance of the offenders to work in the gardens in compliance with orders for community service could not be said to be for the purpose of continuing the property as a gaol. The Court of Appeal appears to have rejected this submission on the basis that the claimed land was "used for the purposes of punishment of offenders"34. However, the claimed land and buildings thereon are not used or occupied for the purpose of the incarceration of offenders. It may be accepted that the Court of Appeal was in error in this regard. The NSW ALC's submissions direct attention to the terms of the dedications. It may be recalled that only one part of the claimed land was actually dedicated for "Gaol Purposes". The balance was dedicated in more 34 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2015) 303 FLR 87 at 107 [91]. Bell passive terms, for the purposes of "Gaol Site (extension)" and "Gaol Site (addition)". Clearly enough, the purpose for which lands are dedicated may be relevant to the question of whether they are occupied. The discussions in the cases referred to above show that different factors may assume importance depending upon the purpose for which land is reserved or dedicated. Thus, in the case of land reserved for public recreation, such as an extensive forestry park, fencing was not an important factor, whereas the exercise of control over the land was. This is not the exercise to which the NSW ALC's argument is addressed. In reality the NSW ALC's argument is that the dedicated purpose of the land must be actively pursued by the acts which are relied on as constituting occupation of the land. The central submission is really that land dedicated for gaol purposes is to be used as a gaol and that it is not lawfully occupied unless it is actively used as a gaol. The submission again denies the distinction between the use and the occupation of land and it denies occupation its separate sphere of operation35. The NSW ALC's argument also creates a further requirement for the test of use or occupation. It would necessitate the addition of words to s 36(1)(b), to read it as if it said "lands … not lawfully used or occupied for the purposes for which they are dedicated or reserved". There is no warrant in the reference in s 36(1)(a) to dedicated purposes for such an implication. The reference there to lands which are "reserved or dedicated for any purpose" does not direct attention to the particular purpose for which lands are dedicated, as part of the description of the lands the subject of a claim. Lands which are dedicated or reserved for any purpose qualify as claimable Crown lands. The phrase is merely descriptive of lands which are reserved or dedicated. If they are set apart from other Crown lands by this means it will be for a purpose, namely a public purpose36. Further, s 36(1)(a) is not limited in its terms to lands which are reserved or dedicated for purposes. It extends to lands which are able to be sold or leased, to which a purpose is not relevant. This does not suggest as necessary the 35 Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493 at 36 Crown Lands Act 1989 (NSW), ss 80, 87. Bell importation into s 36(1)(b) of part of s 36(1)(a). There is no other contextual indication for such an implication. The adjective "lawfully" which precedes "used or occupied" does not assist the NSW ALC's argument. It may be accepted that the dedication of land has a limiting effect. Its use, benefit and possession must conform to the purpose for which it was dedicated37. A use which is made of land which is inconsistent with its dedicated purpose is not a lawful use of it. But the NSW ALC does not suggest that the acts relied upon as constituting occupation are inconsistent with the dedicated purposes. What it does say is that for it to be lawful occupation, those purposes must be pursued. To say that is to say that the claimed land must be actively used for those purposes if it is to be said to be lawfully occupied. There is no basis to be found in s 36(1) for that submission. In Daruk, Priestley JA said38: "[T]he fact that … under the [ALR Act] reservation for any purpose under the Crown Lands Consolidation Act 1913 is a qualifying condition, must have a bearing on the meaning of s 36(1)(b). This is because reserved Crown land is ipso facto lawfully occupied in at least some senses of the word." (emphasis in original) In Minister Administering Crown Lands Act v Bathurst Local Aboriginal Land Council39, Basten JA adopted the same approach, saying: "[T]he legal status of the Crown as the holder of the land (whether by way of radical title, fee simple or other interest), being a precondition to land being claimable, must be treated as insufficient to constitute lawful use or occupation, even though it may carry with it a right of control and, possibly, statutory obligations attaching to land ownership." It is one thing to acknowledge that ownership of land is not, of itself, actual occupation for the purposes of s 36(1)(b) of the ALR Act; it is another thing to say that actual occupation by the owner is not lawful occupation. 37 New South Wales v The Commonwealth (1926) 38 CLR 74 at 91; [1926] HCA 23. 38 Daruk Local Aboriginal Land Council v Minister Administering the Crown Lands Act (1993) 30 NSWLR 140 at 160. 39 (2009) 166 LGERA 379 at 427 [225]. Bell Legislative authority for occupation? The NSW ALC submits that the claimed land was not lawfully occupied because CSNSW was not empowered or authorised to occupy the claimed land or to authorise its occupation. Further, the claimed land could not lawfully be occupied without statutory authorisation. The latter submission involves the construction of s 2 of the New South Wales Constitution Act 1855 (Imp)40, which provided that "the entire Management and Control of the Waste Lands belonging to the Crown … shall be vested in the Legislature of the said Colony". The submission proceeds upon the assumption that that Act has not been repealed and that the claimed land qualifies as waste lands of the Crown. It rests upon the proposition that the management and control of waste lands has been, since the Constitution Act of 1855, vested in the New South Wales legislature to the exclusion of any non-statutory, executive power. The submission was rejected by the Court of Appeal41. The term "the Crown" has more than one meaning. In the context of s 2 of the Constitution Act of 1855, it may be taken to refer to that meaning which arose in the course of colonial development in the nineteenth century. It was described in the joint judgment of Gleeson CJ, Gummow and Hayne JJ in Sue v Hill42 as "the paramount powers of the United Kingdom, the parent state, in relation to its dependencies". The Constitution Act of 1855 was drawn on the understanding that the Crown, in the sense just mentioned, was the beneficial owner of Crown lands43. That may not now be considered a sufficient explanation of the title held by the Crown44. The construction of s 2 needs to be approached in its historical context and by reference to its purpose. Prior to the passing of the Constitution Act of 1855, it was not competent for the legislature of the colony of New South Wales to 40 18 & 19 Vict c 54. 41 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2015) 303 FLR 87 at 115 [137]. 42 (1999) 199 CLR 462 at 499 [88]; [1999] HCA 30. 43 Williams v Attorney-General for New South Wales (1913) 16 CLR 404 at 426, 439; [1913] HCA 33. 44 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 48-51, 81; [1992] HCA 23. Bell make a law which interfered with the sale of Crown lands or with the revenue from those lands45. The purpose of s 2 was to devolve legislative power upon a government which was no longer merely representative, but also responsible in the constitutional sense. In the Tasmanian Dam Case46, Brennan J observed that "power over waste lands and their proceeds was not granted until responsible government was granted". It would follow from the NSW ALC's submission that, whilst the legislative power over Crown lands became vested in the colonial legislature, executive control over them remained in the United Kingdom. This is difficult to accept47. More obviously, what occurred was that "[o]n the grant of responsible government, certain prerogatives of the Crown in the colony, even those of a proprietary nature, became vested 'in the Crown in right of the colony'"48. The grant of responsible government necessarily involved adding to the executive power of the colony that which had been held by the Imperial Crown as representing the supreme executive power of the British Empire49. As was said in the Court of Appeal in this case, the essential purpose of s 2 "was to confirm that it would henceforth be the colonial legislature, not the imperial government, which regulated dealings with the 'waste lands of the Crown'"50. The purpose of s 2 of the Constitution Act of 1855 was not to abrogate executive power with respect to Crown lands, or, more particularly, to abrogate the executive power of the Imperial Crown to appropriate to itself by way of dedication, use or occupation, waste lands. However, by devolving legislative power to the legislature of New South Wales, the executive's powers became 45 Australian Constitutions Act 1842 (Imp) (5 & 6 Vict c 76), s 29; Wik Peoples v Queensland (1996) 187 CLR 1 at 172-173; [1996] HCA 40. 46 The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 210; [1983] HCA 21. 47 Williams v Attorney-General for New South Wales (1913) 16 CLR 404 at 430. 48 Sue v Hill (1999) 199 CLR 462 at 500 [89], referring to New South Wales v The Commonwealth (1975) 135 CLR 337 at 494; [1975] HCA 58. 49 South Australia v Victoria (1911) 12 CLR 667 at 710-711; [1911] HCA 17. 50 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2015) 303 FLR 87 at 112 [120]. Bell subject to the control of the legislature51. The exercise of executive power over waste lands may be subjected to statutory prohibition or modification. The Court of Appeal considered that if statutory authority was required, it could be found to be implied by the CLA52. At the time of the claim the claimed land was being assessed, with one possibility being that it be reserved on trust for other purposes. This would require revocation of the existing dedications. Assessment of the land is a prerequisite to any further dedication or reservation under the CLA, unless the Minister is satisfied that it is in the public interest not to do so and due regard is had to principles of Crown land management53. Such an assessment would obviously take time. The CLA must therefore impliedly confer power to maintain the land to the extent necessary for the exercise of that power. Reliance on an implied statutory power would not seem to be necessary, given that the State of New South Wales is the registered proprietor of the claimed land. Whilst this fact may not prevent a claim being made, as explained earlier in these reasons, it must mean that, like any other holder of an estate in fee simple, the State has a right to occupy its lands. The effect of s 2 of the Constitution Act of 1855 was to bring all the lands within the colony under the legal control of the colonial legislature so that the radical title of the Crown could be exercised only in conformity with the statutes of the colony. The position was then, as described by Knox CJ, Gavan Duffy, Rich and Starke JJ in New South Wales v The Commonwealth54, that Crown land, even when reserved or dedicated for specific purposes, remained "subject always to the legislative powers of the State of New South Wales under its Constitution". And so, once Crown land became vested in the State of New South Wales as an estate in fee simple pursuant to the provisions of Pt 3 of the Real Property Act, the State acquired the rights enjoyed by the owner of a fee simple estate in the claimed land, even if the land remained Crown land for the purposes of s 36(1) of the ALR Act. 51 Sue v Hill (1999) 199 CLR 462 at 499-500 [88]. 52 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2015) 303 FLR 87 at 116 [138]-[139]. 53 Crown Lands Act 1989 (NSW), ss 85, 91. 54 (1926) 38 CLR 74 at 84. Bell While the Minister does not seek to argue that, because the fee simple estate in the claimed land was now vested in the State of New South Wales, the land was no longer Crown land available to be claimed under s 36(1) of the ALR Act, the circumstance that the State of New South Wales is now the registered proprietor of an estate in fee simple in the land has an undeniable bearing on whether the land is "lawfully … occupied". Section 13D(1) of the Real Property Act provides: "The Registrar-General may bring under the provisions of this Act any land to which this Part applies … by creating a folio of the Register recording 'The State of New South Wales' as the proprietor of the land." Section 13J of the Real Property Act provides: "Where 'The State of New South Wales' is recorded as the registered proprietor of land in accordance with this Act, the estate to which that recording relates is an estate in fee simple." In Mabo v Queensland [No 2]55, Deane and Gaudron JJ noted that: "It has … long been accepted as incontrovertible that the provisions of the common law which became applicable upon the establishment by settlement of the Colony of New South Wales included that … upon the establishment of the Colony, the radical title to all land vested in the Crown." The radical title attributed to the Crown by the common law is distinctly not to be equated with the ownership of an estate in fee simple of the land by the State of New South Wales pursuant to s 13J of the Real Property Act. The foundation of the decision in Mabo [No 2] was the recognition by the majority of the Justices that the radical title to the land in the colony of New South Wales acquired by the Crown upon the establishment of the colony did not encompass absolute beneficial ownership of the land, even though the exercise of the Crown's radical title might create rights of ownership in itself or dispose of them in favour of others56. 55 (1992) 175 CLR 1 at 81. 56 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 15, 48-51, 81, 86-87. Bell On the acquisition of the fee simple estate in the claimed land under s 13D(1) of the Real Property Act, the State became the owner of the estate in fee simple over the claimed land. As the owner of that estate, the State enjoyed the right to occupy the claimed land, so that the State's occupation of the land is lawful, subject to any statutory prohibition upon occupation. While the dedications may not permit the claimed land to be actively used for purposes inconsistent with the dedications, occupation for the purpose of preserving the value of the land as an asset of the State of New South Wales so that it may then be used by the State to best advantage having regard to any dedications existing at that time is not occupation inconsistent with the dedications. The Crown in right of the State of New South Wales, as encompassing the executive government of that State, is able to occupy the claimed land without additional statutory permission. It does so through its agents, which includes persons employed by CSNSW. It is not correct to suggest that CSNSW itself occupies the claimed land. It has no legal personality. Conclusion and orders The appeal should be dismissed with costs. GAGELER J. Berrima Gaol is located on land in the centre of the town of Berrima in New South Wales. The main gaol building is an imposing walled structure built in the nineteenth century from local sandstone. There are accompanying buildings and grounds which include lawns, fruit trees, a notable rose garden and a vegetable garden. "The State of New South Wales" is recorded in the Register maintained under the Real Property Act 1900 (NSW) ("the Real Property Act") as the proprietor of the land, as a consequence of which the State holds an "estate in fee simple" in the land by force of that Act57. Portions of the land, adding up to the whole, have long been dedicated for public purposes described respectively as "Gaol Purposes", "Gaol Site (extension)" and "Gaol Site (addition)". The earlier two of those three dedications were made in the 1890s58 under the Crown Lands Act 1884 (NSW) and the last was made in 195859 under the Crown Lands Consolidation Act 1913 (NSW)60. Each dedication was continued in force by the Crown Lands Act 1989 (NSW) ("the Crown Lands Act") as if made under that Act61. Each dedication accordingly remains in force unless revoked by a Minister administering that Act acting in accordance with procedures for revocation set out in that Act62. For so long as it remains in force, each dedication restricts use of the portion of the land to which it relates to use for the particular public purposes for which the portion was dedicated63. Berrima Gaol was in fact used as a gaol for a very long time. Most recently, it was operated as the "Berrima Correctional Centre", having been proclaimed a "correctional complex" and a "correctional centre" for the purposes ("the Administration of Sentences Act")64. Berrima Correctional Centre was operated the Crimes (Administration of Sentences) Act 1999 (NSW) 57 Sections 13J and 42(1) of the Real Property Act. 58 New South Wales Government Gazette, No 710, 11 November 1891 at 8883; New South Wales Government Gazette, No 686, 19 October 1894 at 6598. 59 New South Wales Government Gazette, No 122, 5 December 1958 at 3781. 60 Section 24. 61 Sections 80 and 186 of, and Items 1(1) and 20(1) of Sched 8 to, the Crown Lands Act. 62 Section 84 of the Crown Lands Act. 63 New South Wales v The Commonwealth (1926) 38 CLR 74 at 84; [1926] HCA 23. 64 New South Wales Government Gazette, No 158, 19 October 2001 at 8693-8694. by "Corrective Services NSW", the name given to the group of staff principally involved in the administration of that Act within the "Department of Justice and Attorney General"65 established as a Department of the Public Service of New South Wales by the Public Sector Employment and Management Act 2002 (NSW) ("the Public Sector Management Act")66. That use of Berrima Gaol came to an end in November 2011, following a public announcement by Corrective Services NSW that Berrima Correctional Centre would be closed, its population of inmates relocated and its staff redeployed or offered redundancies. The proclamations of Berrima Correctional Centre as a correctional complex and a correctional centre for the purposes of the Administration of Sentences Act were subsequently revoked on 10 February Beginning in November 2011 at the instigation of Corrective Services NSW and continuing through February 2012, the future use of Berrima Gaol was under consideration by the State Property Authority in consultation with the Crown Lands Division of the Department of Trade and Investment, Regional Infrastructure and Services. The State Property Authority was the corporation established by the State Property Authority Act 2006 (NSW)68. It had statutory functions which included managing, maintaining and disposing of property for the Government of New South Wales and for Departments of the Public Service69 and it was subject to the direction and control of the Minister for Finance and Services in the exercise of those functions70. The Department of Trade and Investment, Regional Infrastructure and Services, like the Department of Attorney General and Justice, was established as a Department of the Public Service71. 65 Section 3(1) of the Administration of Sentences Act, definition of "Corrective Services NSW". 66 Section 6(1) and (2) of, and Pt 1 of Sched 1 to, the Public Sector Management Act ("Department of Attorney General and Justice"). 67 New South Wales Government Gazette, No 18, 10 February 2012 at 404. 68 Section 4 of the State Property Authority Act 2006 (NSW). 69 Section 11(1)(a) of the State Property Authority Act 2006 (NSW). 70 Section 6 of the State Property Authority Act 2006 (NSW); Allocation of the Administration of Acts (NSW). 71 Section 6(1) and (2) of, and Pt 1 of Sched 1 to, the Public Sector Management Act. During the period in which the State Property Authority was considering its future use, Corrective Services NSW assumed continuing responsibility for Berrima Gaol. The buildings were kept locked. Corrective Services NSW entered into an arrangement with ATMAAC Pty Ltd for the presence of an on- site security guard 24 hours each day of the week. Electrical, water and sewerage services were kept on. Essential services and emergency maintenance of the buildings continued to be the subject of a pre-existing contract under which maintenance services were to be provided on request by ProGroup Management Pty Ltd. Corrective Services NSW also organised for groups of between eight and 15 offenders who were the subject of non-custodial community service orders imposed under the Crimes (Sentencing Procedure) Act 1999 (NSW) ("CSO workers") to be bussed from Campbelltown to Berrima each weekend to work in the grounds as part of their community service work. The CSO workers mowed the lawns and attended to the fruit trees, the rose garden and the vegetable garden. That is how matters stood when, on 24 February 2012, the New South Wales Aboriginal Land Council ("the Land Council") made a claim for the land under s 36(2) of the Aboriginal Land Rights Act 1983 (NSW) ("the Land Rights Act"). The Minister for Regional Infrastructure and Services and the Minister for Primary Industries then had joint administration of the Crown Lands Act72. Either therefore answered the description of the "Crown Lands Minister" for the purposes of the Land Rights Act73. The Ministers acted jointly to refuse the claim under s 36(5)(b) of the Land Rights Act. From that refusal, the Land Council appealed to the Land and Environment Court of New South Wales under s 36(6) of the Land Rights Act. No distinction was drawn in the appeal to the Land and Environment Court between the two Ministers who had jointly refused the claim. The single named respondent was styled the "Minister Administering the Crown Lands Act", corresponding to the "Crown Lands Minister" for the purposes of the Land Rights Act. Under s 36(7) of the Land Rights Act, that Minister bore the onus of satisfying the Court that the land was not "claimable Crown lands" within the definition in s 36(1) at the date of the claim. The Minister did not contend before the Land and Environment Court that the land was not "vested in Her Majesty", was not dedicated under the Crown Lands Act or was any longer "used". The Minister sought to discharge the onus of satisfying the Court that the land was not claimable Crown lands at the date of 72 Allocation of the Administration of Acts (NSW). 73 Section 36(1) of the Land Rights Act read with s 15 of the Interpretation Act 1987 (NSW). the claim by satisfying the Court that the land was "lawfully occupied" within the meaning of s 36(1)(b). The Minister identified and relied on the cumulative effect of nine "indicia of occupation". They were: that 24-hour on-site security was maintained; that the buildings were kept locked; that the water supply was maintained; that the electricity supply was maintained; that sewerage services were maintained; that there was a continuing contract for the maintenance of essential services and emergency maintenance; that groups of CSO workers attended the land each week; that gardening tools and implements were stored on the land; and that members of the public wanting to visit the gardens sought permission from Corrective Services NSW or from an on-site security guard. In the Land and Environment Court, Pain J found that the evidence led by the Minister was sufficient to establish each of the nine indicia on which the Minister relied74. Her Honour went on to conclude by reference to those indicia that Corrective Services NSW lawfully occupied the land at the date of the claim75. Being satisfied on that basis that the land was not claimable Crown lands at the date of the claim, her Honour dismissed the appeal from the refusal of the claim. An appeal from the Land and Environment Court to the Court of Appeal of the Supreme Court of New South Wales is limited by s 57(1) of the Land and Environment Court Act 1979 (NSW) to an appeal on a question of law. On appeal by the Land Council from the decision of Pain J, the Court of Appeal rejected challenges to her Honour's findings of fact and held that her conclusion that Corrective Services NSW was in lawful occupation of the land at the date of the claim was not affected by legal error76. On further appeal by special leave to this Court, the Land Council advances three arguments challenging the Court of Appeal's holding that there was no legal error in the conclusion of Pain J. The first is that the conclusion that the land was occupied at the date of the claim was not open in light of the dedications which remained in force under the Crown Lands Act. The second is that Corrective Services NSW's occupation of the land was unlawful without statutory authority and that there was no statutory authority for Corrective the land once Services NSW Administration of Sentences Act were revoked. The third, which is put in the the proclamations under to occupy the 74 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (Berrima) [2014] NSWLEC 188 at [168]. 75 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (Berrima) [2014] NSWLEC 188 at [168]. 76 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2015) 303 FLR 87. alternative to the second, is that Corrective Services NSW lacked authority to exercise such non-statutory executive power to occupy the land as may then have existed. The arguments are best taken in turn. Occupation The Land Council's first argument – that the conclusion that the land was occupied was not open in light of the dedications which remained in force – has as its major premise that determination of whether land that is dedicated for public purposes is land that is occupied within the meaning of s 36(1)(b) of the Land Rights Act can only proceed by reference to those public purposes. The land on which Berrima Gaol stands could not have been occupied at the time of the claim, so the argument continues, because nothing then happening on the land had anything to do with the public purposes for which the land was still dedicated: what was then happening on the land did not constitute "occupation of a gaol". The Land Council seeks support for its major premise in the decision of this Court in Minister Administering the Crown Lands Act v NSW Aboriginal Land Council ("the Wagga Wagga Motor Registry claim case")77 and in the decisions of the Court of Appeal in Daruk Local Aboriginal Land Council v Minister Administering the Crown Lands Act ("Daruk")78 and in Minister Administering the Crown Lands Act v La Perouse Local Aboriginal Land Council ("La Perouse")79. None of those decisions in truth provides that support. The factual context of the decision in the Wagga Wagga Motor Registry claim case was that "subject to the possible qualification required by reference to some transitory visits to the land, nothing was being done on the land when the claim was made, and nothing had been done on the land for a considerable time before the claim was made"80. The plurality did not need to decide in that context whether "used or occupied" in s 36(1)(b) referred to one concept or two. The plurality commented that, on either view, "it is an expression that encompasses utilisation, exploitation and employment of the land"81. None of that was occurring. 77 (2008) 237 CLR 285; [2008] HCA 48. 78 (1993) 30 NSWLR 140. 79 (2012) 193 LGERA 276. 80 (2008) 237 CLR 285 at 307 [76]. 81 (2008) 237 CLR 285 at 306-307 [73]. The plurality in the Wagga Wagga Motor Registry claim case nevertheless acknowledged the reasoning of Kitto J in Council of the City of Newcastle v Royal Newcastle Hospital82 as illuminating consideration of when "acts, facts, matters and circumstances ... deprive the land of the characteristic of being 'not lawfully used or occupied'"83. The plurality went on to state in language derived from that of Kitto J that "a combination of legal possession, conduct amounting to actual possession, and some degree of permanence or continuity will usually constitute occupation of the land"84. The approach of the plurality was in those respects consistent with acceptance that the distinction drawn by Kitto J carefully between "occupation" and "use" of land when juxtaposed in a statutory context was apposite to s 36(1)(b). Daruk was one of two early decisions of the Court of Appeal on s 36(1)(b) to which the plurality in the Wagga Wagga Motor Registry claim case referred without disapproval85. The other was Minister Administering the Crown Lands Act v NSW Aboriginal Land Council ("the First Nowra Brickworks claim case")86. The reasoning in Daruk drew heavily on the explanation of the concepts of occupation and use of land given by Bowen JA in Commissioner of Land Tax v Christie87, which echoed the distinction drawn by Kitto J and which was made with express reference to Royal Newcastle Hospital. "Occupied" was explained to mean "'actually occupied' in the sense of being occupied in fact and to more than a notional degree", in respect of which "[p]hysical acts of occupation, the exercise of control, maintaining of lands are all factors which are relevant"88. "Used" was separately explained to mean "'actually used' in the sense of being used in fact and to more than a merely notional degree"89. 82 (1957) 96 CLR 493 at 507-508; [1957] HCA 15. 83 (2008) 237 CLR 285 at 305 [69]. 84 (2008) 237 CLR 285 at 306 [69] (emphasis in original; footnote omitted). 85 (2008) 237 CLR 285 at 303 [62]. 86 (1993) 31 NSWLR 106. 87 [1973] 2 NSWLR 526 at 533. 88 Daruk (1993) 30 NSWLR 140 at 162-163. 89 (1993) 30 NSWLR 140 at 164. The reasoning in the First Nowra Brickworks claim case reiterated an important aspect of the concept of use of land as so explained. The holding was that whether land is used cannot be determined without taking into account the purpose for which the land is claimed to be used, in that "purpose will dictate the degree of immediate physical use required to decide whether [land is] actually used in more than a notional sense"90. La Perouse was a unanimous decision of five members of the Court of Appeal reaffirming Daruk after the Wagga Wagga Motor Registry claim case. The Court of Appeal there reiterated that in the determination of whether land is used or occupied within the meaning of s 36(1)(b): transitory physical activities on land do not necessarily amount to either use or occupation; an evaluative process is to be undertaken in respect of the facts of each case; and the function of undertaking that evaluation (subject only to an appeal on a question of law) is that of the Land and Environment Court91. As I have explained, the explanations of the meanings of occupation and use given in Daruk, developed in the First Nowra Brickworks claim case in relation to use, and reaffirmed in La Perouse, were derived from and consistent with the distinction between occupation and use of land drawn by Kitto J in Royal Newcastle Hospital. There is utility in now recalling the terms in which that distinction was articulated and illustrated. In Royal Newcastle Hospital, after noting that "conduct which satisfies the one word may also satisfy the other" and that the two words were for that reason unsurprisingly treated in some judgments as if they were interchangeable, Kitto J (with whom Fullagar J agreed92) explained occupation and use of land to involve different concepts. The concept of "occupation" of land is that of "legal possession, conduct amounting to actual possession, and some degree of permanence"93. The concept of "use" of land is that of "physical acts by which the land is made to serve some purpose"94. The reasoning of other members of the High Court reflected the same distinction95. 90 (1993) 31 NSWLR 106 at 121. 91 (2012) 193 LGERA 276 at 289 [57]. 92 (1957) 96 CLR 493 at 505. 93 (1957) 96 CLR 493 at 507. 94 (1957) 96 CLR 493 at 508. 95 (1957) 96 CLR 493 at 500-501, 505, 515. The reasoning of the Privy Council on appeal from the decision of the High Court in that case adopted that distinction and provided a useful illustration of it. The Privy Council was satisfied that the land in question – a large expanse of unfenced virgin bushland located adjacent to a sanatorium for tuberculosis patients – was used, despite having doubt about whether the land was occupied96. The Privy Council explained its doubt97: "The hospital was undoubtedly in legal possession of the two hundred and ninety-one acres; for the simple reason that, where no one else is in possession, possession follows title. But legal possession is not the same as occupation. Occupation is matter of fact and only exists where there is sufficient measure of control to prevent strangers from interfering: see Pollock and Wright on Possession in the Common Law (1888) pp 12, 13. There must be something actually done on the land, not necessarily on the whole, but on part in respect of the whole. No one would describe a bombed site or an empty unlocked house as 'occupied' by anyone: but everyone would say that a farmer 'occupies' the whole of his farm even though he does not set foot on the woodlands within it from one year's end to another. Their Lordships have some doubt whether these two hundred and ninety-one acres were 'occupied' by the hospital, because they were not fenced in or enclosed in any way, and it is difficult to say they were so much linked with the hospital grounds as to form part of an entire whole." The explanations in Daruk and in the First Nowra Brickworks claim case conform to the distinction spelt out by Kitto J and adopted and illustrated by the Privy Council in treating occupied and used as distinct in concept, albeit as overlapping in application. Land that is occupied will often be land that is used. But land can be occupied without being used, just as land can be used without being occupied. The aspect of the distinction between occupation of land and use of land that assumes critical importance in the present case concerns the significance of purpose. Occupation of land can be occupation for a purpose, and the purpose for which physical acts are undertaken can inform whether those acts amount to occupation in fact. Unlike the concept of use, however, purpose is not intrinsic to the concept of occupation. Physical acts can be sufficient to amount to occupation in fact irrespective of the purpose for which they are undertaken. To expand on the illustration given by the Privy Council, a farmer might remain in occupation of his farm by staying in his farmhouse and maintaining his fences 96 Council of the City of Newcastle v Royal Newcastle Hospital (1959) 100 CLR 1; 97 (1959) 100 CLR 1 at 4; [1959] AC 248 at 255-256. despite having chosen to cease farming and despite not yet having chosen what else he might do with the farmland. Had the question here been whether the land on which Berrima Gaol is situated was used at the date of the claim, an argument of the kind now advanced by the Land Council would have been unanswerable. The only lawful use to which the land could then have been put was use for the dedicated public purposes of a gaol. What was then happening on the land could not be described as use of the land for those purposes. But the question tendered for the determination of the Land and Environment Court was not one of use. The question was one of occupation. Although Corrective Services NSW was not doing anything with the land at the date of the claim, Corrective Services NSW had a continuing presence on the land and remained active in asserting control over the land. The buildings were being kept locked and were not being allowed to fall into disrepair. There was someone on site 24 hours a day. The lawns and gardens were being maintained on a weekly basis. That state of affairs had been in place for some months and it could be expected to continue until the future use of the land was settled. The evaluative conclusion of the Land and Environment Court that the land was occupied was open. The beneficial purposes of the Land Rights Act and the structure of s 36(1) suggest no oddity about that result. The principle that beneficial legislation is to be construed beneficially is a manifestation of the more general principle that all legislation is to be construed purposively. Application of that more general principle to New South Wales legislation is mandated by the requirement of s 33 of the Interpretation Act 1987 (NSW) that a construction that would promote the purpose or object underlying the Act is to be preferred to a construction that would not. Neither in its general application nor in its particular manifestation can that principle be applied other than on the understanding that legislation "rarely pursues a single purpose at all costs" and that "[u]ltimately, it is the text, construed according to such principles of interpretation as provide rational assistance in the circumstances of the particular case, that is controlling"98. Evidently employing "legislative intent" as an orthodox expression of the constitutional relationship that exists between an enacting legislature and a court 98 Carr v Western Australia (2007) 232 CLR 138 at 143 [5]-[6]; [2007] HCA 47; Construction Forestry Mining and Energy Union v Mammoet Australia Pty Ltd (2013) 248 CLR 619 at 632-633 [40]; [2013] HCA 36. doing its best to extract and articulate the meaning of an enacted text99, the Supreme Court of the United States warned of the danger of overzealous or insufficiently nuanced purposive construction when it stated in Rodriguez v United States100: "Deciding what competing values will or will not be sacrificed to the achievement of a particular objective is the very essence of legislative choice – and it frustrates rather than effectuates legislative intent simplistically to assume that whatever furthers the statute's primary objective must be the law." The beneficial purpose of the Land Rights Act is reflected in its recital and has repeatedly been acknowledged101. Yet the beneficial purpose of the Land Rights Act says nothing of itself about how far the Act goes in pursuit of that purpose. In particular, it says nothing of itself about where the precise limits of claimable Crown lands are to be drawn in applying the detail of the definition in s 36(1). The principle that, as beneficial legislation, the Land Rights Act is to be construed beneficially does not mean that the most expansive view of claimable Crown lands must be taken whenever constructional choice arises in the application of that definition. The principle was not considered by the plurality in the Wagga Wagga Motor Registry claim case to provide relevant assistance in giving precise content to the words of s 36(1)(b)102. The principle provides no greater assistance in giving precise content to the same words here. Placing s 36(1)(b) within the structure of s 36(1), it is apparent from s 36(1)(a) that land to which the application of s 36(1)(b) can fall to be considered is not limited to land that has been dedicated or reserved for a purpose. That land extends to land able to be lawfully sold or leased under the Crown Lands Act. Land able to be lawfully sold or leased under the Crown Lands Act is, by definition, land that is not dedicated for any public purpose103. It is therefore apparent that the application of s 36(1)(b) to particular land is not 99 Cf Singh v The Commonwealth (2004) 222 CLR 322 at 335-336 [19]; [2004] HCA 100 480 US 522 at 526 (1987) (emphasis in original). See also Brennan v Comcare (1994) 50 FCR 555 at 572-574; Victims Compensation Fund v Brown (2002) 54 NSWLR 668 at 671-672 [8]-[11]. 101 See Minister Administering the Crown Lands Act v Deerubbin Local Aboriginal Land Council [No 2] (2001) 50 NSWLR 665 at 674 [54]. 102 (2008) 237 CLR 285 at 301 [48]. 103 Section 3(1) of the Crown Lands Act, definition of "Crown land". tied by the structure of s 36(1) to such public purposes as for which the land might happen to be dedicated. Section 36(1)(b) mandates a stand-alone inquiry. It is also apparent that s 36(1)(c) is directed to the distinct and logically subsequent question of whether land, which may not currently be used or occupied at all, is land that is needed or likely to be needed for an "essential public purpose". Nothing in the inquiry mandated by s 36(1)(c), or by any other element of the definition of claimable Crown lands, can be read as limiting occupation of land within the meaning of s 36(1)(b) to occupation for public purposes for which that land is currently dedicated. Lawful occupation without statutory authority The Land Council's second argument – that occupation of the claimed land was unlawful without statutory authority – is founded primarily on the proposition that s 2 of the New South Wales Constitution Act 1855 (Imp)104 ("the Constitution Statute"105) operates to vest management and control of the land in the Parliament of New South Wales to the exclusion of non-statutory executive power. The Land Council's reference to non-statutory executive power in this context is to the power or capacity which the Crown, as the executive branch of government, is recognised to have at common law. The argument makes no attempt to dice non-statutory executive power. Whether non-statutory executive power to occupy the land might be seen as an incident of the extraordinary power of executive governance fairly described by the traditional label "prerogative"106, or as an ordinary incident of "proprietorship", does not matter to the argument. The argument is simply that the power has been abrogated by statute. Since the enactment of the Australia Act 1986 (Cth) under s 51(xxxviii) of the Commonwealth Constitution, the legislative power of the Parliament of New South Wales has included power to repeal or amend s 2 of the Constitution Statute107. The Minister argues that the Parliament impliedly repealed s 2 by enacting s 6 of the Crown Lands Act, which the Minister argues "on its face, overtakes s 2". That argument is unfounded. There is no inconsistency. The later provision has not displaced or supplanted the earlier provision. For reasons 104 18 & 19 Vict c 54. 105 As to the appropriateness of the label, see Twomey, The Constitution of New South Wales, (2004) at 19-20. 106 Cf Johnson v Kent (1975) 132 CLR 164 at 169, 174; [1975] HCA 4. 107 Sections 2 and 3(2) of the Australia Act 1986 (Cth). to be explained, s 2 of the Constitution Statute and s 6 of the Crown Lands Act operate on altogether different planes. The Attorney-General for Victoria, intervening, argues that conferral on the State of New South Wales of an estate in fee simple in the land by force of the Real Property Act was an exercise of legislative power of management and control of the land the result of which was to remove the land from the purview of s 2 of the Constitution Statute. The first part of that argument can be accepted, but the second cannot. For reasons again to be explained, s 2 of the Constitution Statute continues to operate in relation to the land. The answer to the Land Council's argument is that the section does not confer legislative power to the exclusion of non-statutory executive power. Quite the opposite: the section confirms non-statutory executive power in the context of the system of responsible government ushered in by the Constitution Statute. From the settlement of New South Wales in 1788, the Governor was authorised and empowered by the Crown to exercise non-statutory executive power to the extent and in the manner set out in Letters Patent. From 1823, the Governor was authorised and empowered by the Imperial Parliament to exercise legislative power for the welfare and good government of the Colony108, and from 1828 the legislative power of the Governor was required to be exercised only on the advice of a local Legislative Council appointed by the Crown109. A New South Wales law promulgated in 1836 in the exercise of that legislative power recited that "Governors … and persons administering the Government of New South Wales" had from time to time been authorised and empowered by Letters Patent "to grant and dispose of the waste lands of New South Wales". For the avoidance of doubt, the law declared that past grants and conveyances were not invalid merely because they had not been executed under the public seal of the Colony110. Representative, but not yet responsible, government was established in New South Wales by the Australian Constitutions Act 1842 (Imp)111 ("the Australian Constitutions Act (No 1)"). The Legislative Council constituted under that Act was given authority "to make Laws for the Peace, Welfare, and good 108 4 Geo IV c 96, s 24. 109 Australian Courts Act 1828 (Imp) (9 Geo IV c 83), ss 20, 27. 110 Land Grants Confirmation Act 1836 (NSW) (6 Gul IV No 16). 111 5 & 6 Vict c 76. Government of the said Colony" subject to the presently relevant proviso "that no such Law shall ... interfere in any Manner with the Sale or other Appropriation of the Lands belonging to the Crown within the said Colony, or with the Revenue thence arising"112. The proviso reflected the influence on the Imperial Parliament at that time of the social theorist Edward Gibbon Wakefield, who advocated that colonial land should be sold at a substantial price and that the proceeds of its sale should be used to fund further emigration to the colonies113. Enacted barely a month earlier, the Australian Colonies Waste Lands Act 1842 (Imp)114 ("the Waste Lands Act") had instantiated the so-called Wakefield theory. That Act defined "Waste Lands of the Crown" to mean "any Lands situate therein, and which now are or shall hereafter be vested in Her Majesty, Her Heirs and Successors, and which have not been already granted or lawfully contracted to be granted to any Person or Persons in Fee Simple, or for an Estate of Freehold, or for a Term of Years, and which have not been dedicated and set apart for some public Use"115. The Waste Lands Act provided for the alienation of "Waste Lands of the Crown" situated within the Australian colonies to occur only in accordance with the regulatory scheme set out in that Act116. Under that regulatory scheme, alienation was to occur only as a result of conveyance by the Governor by way of sale at or above a specified minimum price117. The Waste Lands Act went on to provide for the distribution of the gross proceeds of sale. Half of those gross proceeds were appropriated to be applied to the "public Service" of New South Wales in such manner as the Commissioners of the Imperial Treasury might from time to time direct. The other half were appropriated to be applied to defray expenses of emigration from the United Kingdom118. 112 5 & 6 Vict c 76, s 29. 113 McMinn, A Constitutional History of Australia, (1979) at 32-33. 114 5 & 6 Vict c 36. 115 Section 23 of the Waste Lands Act. 116 Section 2 of the Waste Lands Act. 117 Sections 5 and 8 of the Waste Lands Act. 118 Section 19 of the Waste Lands Act. The Waste Lands Act contained a proviso to its restriction on alienation expressed in the following terms119: "Provided always, and be it enacted, That nothing in this Act contained shall extend or be construed to extend to prevent Her Majesty, or any Person or Persons acting on the Behalf or under the Authority of Her Majesty, from excepting from Sale, and either reserving to Her Majesty, Her Heirs and Successors, or disposing of in such other Manner as for the public Interests may seem best, such Lands as may be required for public Roads or other internal Communications, whether by Land or Water, or for the Use or Benefit of the aboriginal Inhabitants of the Country, or for Purposes of Military Defence, or as the Sites of Places of public Worship, Schools, or other public Buildings, or as Places for the Interment of the Dead, or Places for the Recreation and Amusement of the Inhabitants of any Town or Village, or as the Sites of public Quays or Landing Places on the Sea Coast or Shores of navigable Streams, or for any other Purpose of public Safety, Convenience, Health, or Enjoyment; and provided also, that nothing in this Act contained shall extend or be construed to extend to prevent Her Majesty, or any Person or Persons acting on her Behalf or under the Authority of Her Majesty, from fulfilling any Promise or Engagement made or hereafter to be made by or on the Behalf of Her Majesty in favour of any Military or Naval Settlers in the said Colonies respectively, in pursuance of any Regulations made by Her Majesty's Authority in favour or for the Benefit of any such Settlers." Expressed as an exception to the legislatively imposed prohibition on alienation rather than as a legislative conferral of power, that proviso made clear that the prohibition against alienation imposed by the Waste Lands Act was not intended to affect the authority of the Governor and persons acting under his authority to exercise on behalf of the Crown non-statutory executive power to occupy, use and dispose of land for what can be described as public purposes. To the extent that an additional or subsidiary strand of the Land Council's argument that occupation of the claimed land was unlawful without statutory authority is founded on the proposition that the Waste Lands Act abrogated all non-statutory executive power to grant or assume any right of occupation of the waste lands of the Crown to which it referred, the argument is refuted by the terms of that Act. From the beginning, and increasingly over the ensuing decade, the policy implemented by the Waste Lands Act was to be the source of tension between the Imperial Government and colonists in New South Wales. One of the first actions of the newly representative Legislative Council was to petition the 119 Section 3 of the Waste Lands Act. Queen, the House of Lords and the House of Commons, calling for repeal of the Waste Lands Act and amendment of the Australian Constitutions Act (No 1) to place the management of waste lands belonging to the Crown and the proceeds of their disposal within the power of the Legislative Council. Those petitions were rejected by the Imperial Government in 1845120. The following year, the Australian Colonies Waste Lands Amendment Act 1846 (Imp)121 ("the Waste Lands Amendment Act") amended the Waste Lands Act to provide also for the lease or licence of "Waste Lands of the Crown"122, which it defined to mean described lands "which have not been already granted or lawfully contracted to be granted by Her Majesty, Her Heirs and Successors, to any other Person or Persons in Fee Simple, and which have not been dedicated or set apart for some public Use"123. The Waste Lands Amendment Act adopted the scheme of the Waste Lands Act in providing for the resulting "Rent or pecuniary Service" to be distributed in the same way as the gross proceeds of sale124. Very soon after the enactment of the Waste Lands Amendment Act in 1846, a "bold argument, which then had a political flavour"125 was put to, and rejected by, the Supreme Court of New South Wales in Attorney-General v Brown126. The argument was advanced in response to an action for intrusion brought by the Attorney-General of New South Wales against a person who had engaged in mining coal the subject of express reservation from a Crown lease granted in 1840, two years before the enactment of the Waste Lands Act. The argument was that the Crown as represented by the Attorney-General did not have the legal possession necessary to found an action for intrusion for the reason "that the Crown has not and never had any property in the waste lands of the Colony – that is, any beneficial ownership or right to grant any of them without 120 Sweetman, Australian Constitutional Development, (1925) at 185-187. 121 9 & 10 Vict c 104. 122 Section 1 of the Waste Lands Amendment Act. 123 Section 9 of the Waste Lands Amendment Act. 124 Section 2 of the Waste Lands Amendment Act. 125 Randwick Corporation v Rutledge (1959) 102 CLR 54 at 71; [1959] HCA 63. 126 (1847) 1 Legge 312. authority of Parliament"127. The conclusion firmly stated by the Supreme Court was128: "that the waste lands of this Colony are, and ever have been, from the time of its first settlement in 1788, in the Crown; that they are, and ever have been, from that date (in point of legal intendment), without office found, in the Sovereign's possession; and that, as his or her property, they have been and may now be effectually granted to subjects of the Crown." In the course of explaining that conclusion, the Supreme Court noted the reference to the "Waste Lands of the Crown" in the Waste Lands Act. Of that reference, the Supreme Court said "[i]t will hardly be disputed, that by these words were meant all the waste and unoccupied lands of the colony; for, at any rate, there is no other proprietor of such lands"129. Attorney-General v Brown was very long afterwards overruled in Mabo v Queensland [No 2]130 to the extent that it held the Crown to be the absolute beneficial owner of all of the land in New South Wales from the time of settlement in 1788 and to the extent that (in disregard of Aboriginal inhabitants, their laws and their customs) it treated all land which had not been the subject of a grant from the Crown as unoccupied and having no other proprietor. The doctrine of the common law of Australia is now that what the Crown acquired at the time of "settlement" was "radical title" – "no more than a postulate to support the exercise of sovereign power within the familiar feudal framework of the common law"131 – and that "[a]bsolute and beneficial Crown ownership, a plenum dominium, was established not by the acquisition of radical title but by subsequent exercise of the authority of the Crown" either to grant an interest in land to another or to appropriate land to itself132. Momentous as Mabo [No 2] was in the development of the common law of Australia, its significance for those aspects of Attorney-General v Brown that are of present relevance is minimal. Given that the land in question had been the 127 (1847) 1 Legge 312 at 316. 128 (1847) 1 Legge 312 at 316. 129 (1847) 1 Legge 312 at 319 (emphasis in original). 130 (1992) 175 CLR 1; [1992] HCA 23. 131 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 54. 132 Wik Peoples v Queensland (1996) 187 CLR 1 at 186; [1996] HCA 40. See Mabo v Queensland [No 2] (1992) 175 CLR 1 at 69-70. subject of the grant of a Crown lease from which the coal in question had been expressly reserved, it is difficult to see how the result in Attorney-General v Brown could have been different even if the view which was to prevail in Mabo [No 2] had been applied. What would have been different would have been the steps in the analysis leading to that result: instead of the grant and reservation being seen as the exercise by the Crown of a proprietary right which the Crown had as the original absolute owner of all land in New South Wales on and from settlement in 1788, the grant and reservation would have been seen as an exercise by the Crown of non-statutory executive power which had the consequence of creating rights of ownership in respect of the land in question, in the Crown and in the lessee, on and from the time of the exercise of that non-statutory executive power in 1840. Either way, the Crown as represented by the Attorney-General would still have had the possession necessary to found an action for intrusion. The Australian Constitutions Act 1850 (Imp)133 ("the Australian Constitutions Act (No 2)") made no amendment to the Waste Lands Act or to the scope of the power conferred on the Legislative Council by the Australian Constitutions Act (No 1). The Australian Constitutions Act (No 2) did, however, grant permission to the Governor and Legislative Council to enact colonial legislation altering the constitution of the colonial legislature but not the scope of its legislative power. The procedural condition for the enactment of that legislation was that the Bill for the legislation had to be reserved for the signification of Her Majesty's pleasure and to be laid before the Imperial Parliament before that pleasure was signified134. To say that the Australian Constitutions Act (No 2) was not well received in New South Wales135 is an understatement; it provoked "a great crisis"136. The Legislative Council adopted in 1851 a "Declaration and Remonstrance against the New Constitution Act" its "deep disappointment and recording dissatisfaction" with the Australian Constitutions Act (No 2). Recording in the Declaration and Remonstrance that "[t]he exploded fallacies of the Wakefield theory [were] still clung to" and that "the pernicious [Waste Lands Act] [was] still enforced", the Legislative Council concluded by protesting, insisting and declaring, amongst other things: "[t]hat the Imperial Parliament has not, nor of right ought to have, any power to tax the people of this Colony, or to appropriate any of the monies levied by authority of the Colonial Legislature; – that this power can only be lawfully exercised by the Colonial Legislature"; "[t]hat the 133 13 & 14 Vict c 59. 134 Section 32 of the Australian Constitutions Act (No 2). 135 Cf Twomey, The Constitution of New South Wales, (2004) at 7. 136 Sweetman, Australian Constitutional Development, (1925) at 270. Revenue arising from the Public Lands, derived as it is 'mainly' from the value imparted to them, by the labour and capital of the people of this Colony, is as much their property as the ordinary Revenue, and ought therefore to be subject only to the like control and appropriation"; and "[t]hat plenary powers of Legislation should be conferred upon and exercised by the Colonial Legislature, for the time being"137. The Declaration and Remonstrance was rebuffed by the Secretary of State for the Colonies in early 1852, but a resolution of the Legislative Council reiterating the same demands later in 1852 received a more conciliatory response from his successor. Then, in 1853, the Legislative Council adopted a Bill for a Constitution Act which had been drafted to give effect to those demands. Because the Bill went beyond the permission granted to the Governor and Legislative Council by the Australian Constitutions Act (No 2) to enact colonial legislation altering the constitution of the colonial legislature, further Imperial legislation was needed to authorise its enactment138. The upshot was the enactment by the Imperial Parliament not only of the Constitution Statute but also of the Australian Waste Lands Act 1855 (Imp)139 ("the Waste Lands Repeal Act"). The Constitution Statute authorised the Queen to assent to the Bill for what was to become the Constitution Act 1855 (NSW)140 ("the Constitution Act"141), the text of which (slightly modified from that which had been adopted by the Legislative Council in 1853) was set out in a schedule to the Constitution Statute. The Constitution Act provided for the Parliament of New South Wales to have power "to make Laws for the Peace, Welfare, and good Government of the said Colony in all Cases whatsoever"142, adding for good measure that "it shall be lawful for the Legislature of this Colony to make Laws for regulating the Sale, Letting, Disposal, and Occupation of the Waste Lands of the Crown within 137 New South Wales, Legislative Council, Votes and Proceedings of the Legislative Council, 1 May 1851 at 31-32. 138 See generally Sweetman, Australian Constitutional Development, (1925) at 256- 270; McMinn, A Constitutional History of Australia, (1979) at 32-33; Twomey, The Constitution of New South Wales, (2004) at 8-10. 139 18 & 19 Vict c 56. 140 18 & 19 Vict c 54, Sched 1. 141 As to the appropriateness of the label, see Twomey, The Constitution of New South Wales, (2004) at 19-20. 142 Section 1 of the Constitution Act. the said Colony"143 and that "All Taxes, Imposts, Rates, and Duties, and all territorial, casual, and other Revenues of the Crown … from whatever Source arising within this Colony … shall form One Consolidated Revenue Fund, to be appropriated for the Public Service of this Colony"144. Section 2 of the Constitution Statute relevantly provided in that context that (subject to a proviso of no present relevance) from the date of the proclamation of the Constitution Statute in New South Wales: "the entire Management and Control of the Waste Lands belonging to the Crown in the said Colony, and also the Appropriation of the gross Proceeds of the Sales of any such Lands, and of all other Proceeds and Revenues of the same, from whatever Source, arising within the said Colony, including all Royalties, Mines, and Minerals, shall be vested in the Legislature of the said Colony". The Waste Lands Repeal Act was expressed to repeal the Waste Lands Act and the Waste Lands Amendment Act with effect from the date of proclamation of the Constitution Statute145. The Waste Lands Repeal Act contained a savings provision to the effect that the regulations imposed by those Acts "respecting the Sale or other Disposal of the Waste Lands of the Crown" were to remain in force until the Parliament of New South Wales made other provision146. The Parliament of New South Wales made such other provision in 1861, when it enacted the Crown Lands Alienation Act 1861 (NSW) ("the Crown Lands Alienation Act") and the Crown Lands Occupation Act 1861 (NSW) ("the Crown Lands Occupation Act"). Defining "Crown Lands" to mean "[a]ll Lands vested in Her Majesty which have not been dedicated to any public purpose or which have not been granted or lawfully contracted to be granted in fee simple"147, the Crown Lands Alienation Act provided in s 3 that "[a]ny Crown Lands may lawfully be granted in fee simple or dedicated to any public purpose under and subject to the provisions of [that] Act but not otherwise" and that "the Governor with the advice of the Executive Council is hereby authorized in the name and on the behalf of Her Majesty so to grant or dedicate any Crown Lands". Adopting 143 Section 43 of the Constitution Act. 144 Section 47 of the Constitution Act. 145 Sections 1 and 2 of the Waste Lands Repeal Act. 146 Section 6 of the Waste Lands Repeal Act. 147 Section 1 of the Crown Lands Alienation Act. in substance the same definition, the Crown Lands Occupation Act regulated the renewal of existing leases on Crown lands. Provisions similar in effect to s 3 of the Crown Lands Alienation Act have been a consistent feature of subsequent Crown lands legislation in New South Wales, just as they have been a consistent feature of Crown lands legislation in other States. Section 6 of the Crown Lands Act is the current incarnation. Those provisions have operated to displace non-statutory executive power within their fields of operation148. The Privy Council in Cudgen Rutile (No 2) Pty Ltd v Chalk149 accepted as "fully established" the proposition that in Australian States "the Crown cannot contract for the disposal of any interest in Crown lands unless under and in accordance with power to that effect conferred by statute". Together with subsequent statements of similar generality in the High Court150, what was said in Cudgen Rutile (No 2) needs to be understood as a reference to the operation of provisions cognate to s 3 of the Crown Lands Alienation Act. To understand the quite different operation of s 2 of the Constitution Statute, it is necessary to turn back to consider the significance which its language bore on 16 July 1855, the date of the proclamation of the Constitution Statute in New South Wales. Whereas the power to make laws for the peace, welfare and good government conferred on the Legislative Council constituted under the Australian Constitutions Act (No 1) had been expressly limited to exclude the enactment of laws concerning the sale or other appropriation of lands belonging to the Crown, the equivalent power to make laws conferred on the Parliament to be constituted by the Constitution Act, under the authority of the Constitution Statute, was expressly to extend to "all Cases whatsoever". This was a large, even dramatic, change in Imperial policy for which colonists in New South Wales had long campaigned: "[i]ndeed, control of the unalienated land may be said to have been wrested by the colonists from the Imperial authorities by continued argument and protestation"151. 148 Blackwood v London Chartered Bank of Australia (1874) LR 5 PC 92 at 112; Lukey v Sydney Harbour Trust Commissioners (1902) 2 SR (NSW) (Eq) 152 at 165; De Britt v Carr (1911) 13 CLR 114 at 122; [1911] HCA 32; Walsh v Minister for Lands for NSW (1960) 103 CLR 240 at 254; [1960] HCA 52. 149 [1975] AC 520 at 533. 150 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 63; Wik Peoples v Queensland (1996) 187 CLR 1 at 173; Western Australia v Ward (2002) 213 CLR 1 at 121 [167]; [2002] HCA 28. 151 New South Wales v The Commonwealth (1975) 135 CLR 337 at 369; [1975] HCA Against the background of political struggle that had occurred, the principal concerns of which had been highlighted by the Declaration and Remonstrance, s 2 of the Constitution Statute served as a solemn and emphatic declaration by the Imperial Parliament of the scope of the legislative power that was finally being conferred on the Parliament of New South Wales. That legislative power was not to be relevantly constrained, whether by the paramount force of the Waste Lands Act and the Waste Lands Amendment Act or otherwise, but was to extend as declared by that section to "the entire Management and Control of the Waste Lands belonging to the Crown in the said Colony". Section 2 of the Constitution Statute serving in that way to confirm the plenary scope of the legislative power of the Parliament, there appeared no reason to read its reference to the waste lands belonging to the Crown other than in the broadest sense of referring to all land in New South Wales which had not been the subject of a grant from the Crown as at 16 July 1855. That broad reading would eventually be confirmed by the High Court152. In the short term, however, the position was somewhat clouded by an opinion given by colonial law officers in 1862153 and by a decision of the Supreme Court of New South Wales two years later in Attorney General v Eagar154. Each contained statements linking the undefined reference to waste lands in s 2 of the Constitution Statute to the earlier defined meanings of waste lands in the Waste Lands Act and the Waste Lands Amendment Act. In so doing, they appeared to treat s 2 of the Constitution Statute as having the effect of taking land which the Crown had dedicated or set apart for some public use before 16 July 1855 outside the scope of the legislative power of the Parliament155. That odd and restrictive reading featured prominently in argument in litigation which commenced with Attorney-General v Williams156 in the Supreme Court of New South Wales, and which wound its way through the High Court to the Privy Council between 1913 and 1915. It will be necessary to give some attention to that litigation after reflecting on what is for present purposes the critical aspect of s 2: that the section spoke only to the scope of legislative power. 152 New South Wales v The Commonwealth (1926) 38 CLR 74 at 83. 153 See Attorney General v Eagar (1864) 3 SCR (NSW) (L) 234 at 281. 154 (1864) 3 SCR (NSW) (L) 234. 155 See generally Randwick Corporation v Rutledge (1959) 102 CLR 54 at 75. 156 (1913) 13 SR (NSW) 295. If s 2 of the Constitution Statute spoke only to the scope of the legislative power of the Parliament of New South Wales, what of the scope of the non- statutory executive power of the Crown within New South Wales? The Constitution Statute did not address the non-statutory executive power of the Crown at all and the Constitution Act touched on it only to the extent of making provision for the appointment of public officers to be "vested in the Governor, with the Advice of the Executive Council, with the Exception of the Appointments of the Officers liable to retire from Office on political Grounds … which Appointments shall be vested in the Governor alone"157. The general understanding underlying the framing of the Constitution Act, to which that provision gave but a glimpse158, was that its enactment would bring about "responsible government"159, the nature of which had been outlined in the Canadian context in the well-known report by Lord Durham in 1839160. In accordance with that conception of responsible government, non- statutory executive power no less broad as to its subject-matter than the legislative power exercisable by the Parliament would be exercisable by or on behalf of the Governor acting on the advice of the Executive Council, at least a majority of whom would in practice be Ministers and who would be members of and politically responsible to the popularly elected chamber of the Legislative Assembly as the Parliament. That conception was realised in practice. By the end of the nineteenth century, it had become constitutional doctrine. 157 Section 37 of the Constitution Act. 158 Cf Toy v Musgrove (1888) 14 VLR 349 at 391-392. 159 See generally Egan v Willis (1998) 195 CLR 424 at 472-475 [94]-[99]; [1998] HCA 71; Melbourne, "The Establishment of Responsible Government", in Rose, Newton and Benians (eds), The Cambridge History of the British Empire, (1933), vol VII, pt I, ch X. See for example Chapman, Parliamentary Government; or Responsible Ministries for the Australian Colonies, (1854) at 10-12. 160 Lucas (ed), Lord Durham's Report on the Affairs of British North America, (1912). An orthodox explanation was as follows161: "The essential features of Responsible Government as stated by Durham, and afterwards elaborated … were the division between imperial and local matters, and the giving over of the latter without reserve into the hands of the colonial legislature. Matters thus given over were to be administered by an Executive responsible to the Assembly. Imperial concerns on the other hand were to be retained absolutely in the control of the British Government; and in regard to these matters the Colonies were to remain mere dependencies. In accordance with this twofold division of powers, the functions of the Governor were to be dual. As regards Imperial matters he was to remain an Imperial officer responsible to the British Government, but as regards domestic affairs he was to assume a rôle comparable to that of a constitutional monarch." The conferral of legislative power in that way brought with it corresponding executive power: "[a]s rights of self-government were conferred on each Colony exclusive rights of executive authority over matters within the ambit of the rights conferred became of necessity vested in the executive power of the Colony"162 to the effect that "[w]ithin the limits of self-government conferred by its Constitution the executive power of each self-governing Colony, though subject to control by Imperial enactment, [became] as independent of the executive power of the Empire as it [was] of the executive power of any Colony of the Empire"163. The result was that, through "the silent operation of constitutional principles"164, there emerged in each Colony a distinct Executive Government of 161 Hall, The British Commonwealth of Nations, (1920) at 25, quoted in Evatt, The King and his Dominion Governors, 2nd ed (1967) at 15-16. To similar effect, see Finn, Law and Government in Colonial Australia, (1987) at 4, quoted in Plaintiff M68/2015 v Minister for Immigration and Border Protection (2016) 90 ALJR 297 at 321 [116]-[117]; 327 ALR 369 at 394; [2016] HCA 1; Pitt Cobbett, "The Crown as Representing the State", (1904) 1 Commonwealth Law Review 145 at 146-147, quoted in Sue v Hill (1999) 199 CLR 462 at 499-500 [88]; [1999] HCA 30. 162 South Australia v Victoria (1911) 12 CLR 667 at 710; [1911] HCA 17. See also The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 211; [1983] HCA 21. 163 South Australia v Victoria (1911) 12 CLR 667 at 711. 164 The Commonwealth v Kreglinger & Fernau Ltd and Bardsley (1926) 37 CLR 393 at 413; [1926] HCA 8, quoting Cooper v Stuart (1889) 14 App Cas 286 at 293. the Colony, conventionally referred to as "the Crown in right of the Colony"165, which on federation was to become the Executive Government of the State. Within the twofold division of the executive responsibilities of the Governor of New South Wales ushered in by the advent of responsible government, management and control of what s 2 of the Constitution Statute described as the waste lands belonging to the Crown fell within that hemisphere of responsibilities in which executive power was to be exercised by or on behalf of the Governor on the advice of his New South Wales Ministers. The entire management and control of those lands came, in short, to be exercisable only by the Executive Government of New South Wales subject only to legislation enacted by the Parliament of New South Wales. Doubt about that, if there ever could realistically have been any, was dispelled in 1913 by the decision of the High Court in Williams v Attorney- General for New South Wales166, affirmed by the Privy Council two years later167. The litigation in Williams v Attorney-General for New South Wales was prompted by a decision of the Executive Government of New South Wales (that is, of the Cabinet, comprised of Ministers responsible to the Parliament) that Government House (which had from 1900 until 1912 been occupied as the Sydney residence of the Governor-General) and its grounds would be opened to the public and that its stable would be turned into an academy of music. The land in question had been set apart by the Crown as a residence for the Governor in the first half of the nineteenth century. Informants in a relator action in the Supreme Court of New South Wales relied on the narrow view of the reference to waste lands belonging to the Crown in s 2 of the Constitution Statute supported by Attorney General v Eagar to argue that the Parliament would not have power to alter the use of the land and that "a fortiori the Government could not"168. The Supreme Court, accepting that argument, was persuaded to declare that the land was "vested in His Majesty the King dedicated to the public purpose of a residence for the Sovereign's representative in New South Wales, and that the action or concurrence of His Majesty's Imperial Government is a necessary condition precedent to their diversion from that purpose". The Supreme Court also issued an injunction which enjoined the defendant "as nominal defendant for and on behalf of the Government of New South Wales and the officers and 165 Sue v Hill (1999) 199 CLR 462 at 500-501 [89]-[90]. 166 (1913) 16 CLR 404; [1913] HCA 33. 167 Attorney-General for New South Wales v Williams (1915) 19 CLR 343; [1915] AC 168 Attorney-General v Williams (1913) 13 SR (NSW) 295 at 296. servants of the Government from any unauthorised interference with that purpose"169. The High Court, on appeal, and the Privy Council, on further appeal, each held that the proceeding in the Supreme Court was irregularly constituted. That alone justified setting aside the relief that had been granted. But each also held the informants' arguments to lack merit. The reference to waste lands belonging to the Crown in s 2 of the Constitution Statute, a majority of the High Court held, did not have the restricted meaning in the Waste Lands Act and the Waste Lands Amendment Act. In the words of Barton ACJ, the reference was simply to "such of the lands of which the Crown became the absolute owner on taking possession of this country as the Crown had not made the subject of any proprietary right on the part of any citizen"170. Those lands fell within the power of the Executive Government of the State to manage and control, subject to legislation enacted by the Parliament of the State. If there was no relevant State law, there was no relevant restriction on the power of the Executive Government. The result, again in the words of Barton ACJ, was that "the Executive Government of [the] State [was] entitled to put the house and grounds in question to any use not expressly or impliedly forbidden by the terms of its Crown Lands Acts or any other of its laws"171. The Land Council draws attention to a statement of Isaacs J to the effect that the management and control of waste lands was given under the Constitution Act "not as a matter of title" but "as a matter of governmental function" and "not to the King in his Executive capacity" but "to the legislature"172. Plainly, like that of Barton ACJ, the reasoning of Isaacs J proceeded on an unquestioned acceptance of the view stated in Attorney-General v Brown that the Crown had become absolute owner of the land at least from the time173 of settlement in 1788. His point was that the Constitution Act was concerned with the conferral of legislative power and was not concerned to alter that ownership. The point was not made in the context of suggesting that the conferral of legislative power operated to exclude executive capacity. That is made clear by his later specific discussion of the effect of responsible government. He referred in that context to the "uncontrolled management of all land occupied by … public buildings" in New South Wales and said "[c]learly that passed, not as specifically given over 169 (1913) 13 SR (NSW) 295 at 322. 170 (1913) 16 CLR 404 at 428. 171 (1913) 16 CLR 404 at 430. See also at 465. 172 (1913) 16 CLR 404 at 456 (emphasis in original). 173 Cf Mabo v Queensland [No 2] (1992) 175 CLR 1 at 43. to the control of the legislature, but as part of the governmental means and property taken over by the self-governing community"174. Williams v Attorney-General for New South Wales, no less than Attorney- General v Brown, has been overruled by Mabo [No 2] to the extent that it proceeded on the basis that the Crown had been the absolute owner of all of the land in New South Wales from the time of settlement. But also like Attorney- General v Brown, the result in Williams v Attorney-General for New South Wales would not have been different if the view which was to prevail in Mabo [No 2] had been applied. The reference to waste lands belonging to the Crown in s 2 of the Constitution Statute would simply have been read, as it is to be read now, as a reference to all land that had not been the subject of the grant of a proprietary right from the Crown. The power of the Executive Government of the State, to manage and control that land subject to legislation enacted by the Parliament of the State, would not have been couched in terms of a proprietary right. That power would have been couched, as it is sufficiently couched now, simply as within non-statutory executive power. No argument was put to the High Court in Williams v Attorney-General for New South Wales to the effect that s 2 of the Constitution Statute abrogated executive power. But the outcome, and the whole thrust of the reasoning, stands against acceptance of the argument. That is so even allowing for aspects of the reasoning to be reconsidered in light of Mabo [No 2]. Before the Privy Council, an argument does appear to have been put for the first time to the effect that the "property could not be disposed of without some legislative act"175. From the scant reference to the argument in the report of the case, the argument appears to have been directed to a permanent disposition or alienation. The argument was rejected on the basis that it was based on a misapprehension that the change in use in that case was irrevocable. Implicit in that rejection is the proposition that statutory authority was not required for that change in use to occur. The authority of the Privy Council is not needed, however, to demonstrate that the Land Council's argument that s 2 of the Constitution Statute abrogates executive power is unsound. 174 (1913) 16 CLR 404 at 460 (emphasis in original). 175 (1915) 19 CLR 343 at 348; [1915] AC 573 at 582. Lawful occupation by Corrective Services NSW The Land Council's final argument – that Corrective Services NSW lacked authority to exercise non-statutory executive power to occupy the claimed land – can be dealt with quite briefly. Corrective Services NSW, it will be recalled, was the name given to the group of staff principally involved in the administration of the Administration of Sentences Act within the Department of Attorney General and Justice. Established as a Department of the Public Service of New South Wales by the Public Sector Management Act, the Department of Attorney General and Justice had no separate legal personality. The Department was no more than a division of the Executive Government of the State176. The Executive Government of the State having non-statutory executive power to occupy the land, subject to statute, that power was capable in law of being exercised by any of its Ministers or through any of its Departments177. There is no suggestion that Corrective Services NSW was disabled by statute from exercising that power. Conclusion None of the Land Council's three arguments can be accepted. The appeal must be dismissed with costs. 176 Cf Waterford v The Commonwealth (1987) 163 CLR 54 at 55; [1987] HCA 25. 177 New South Wales v Bardolph (1934) 52 CLR 455 at 519-520; [1934] HCA 74. NettleJ Introduction For Crown lands to be "claimable Crown lands" under the Aboriginal Land Rights Act 1983 (NSW) ("the Land Rights Act"), the Crown lands must not be "lawfully used or occupied" within the meaning of s 36(1)(b) of that Act. Two parcels of Crown land in Berrima, New South Wales ("the claimed land"), which remain dedicated for "gaol purposes", ceased to be proclaimed or operate as a gaol, with no new use identified. Was the claimed land "occupied" within the meaning of s 36(1)(b) of the Land Rights Act because it was secured, serviced by utilities, guarded by an on-site security guard and maintained intermittently by community service order ("CSO") workers, pending a decision on its future use? That question should be answered "no" and the appeal should be allowed with costs. These reasons will identify the claimed land and the claim, discuss the decisions below, consider the legislative framework (especially the Land Rights Act and its legislative history), and then turn to consider whether the claimed land constituted "claimable Crown lands" under the Land Rights Act. These reasons will show that this last question turns, in this case, on whether "occupied" in the phrase "lawfully used or occupied" in s 36(1)(b) of the Land Rights Act should be understood, in the context of that Act and, in particular, against remedial purposes, as "occupied" pursuant to the purpose for which the land is dedicated; or simply as "occupied" in the sense that there is possession of, and a presence on, the land. These reasons will also show that only the former view is consistent with the text, context and purpose of the Land Rights Act. important beneficial and its The claimed land The claimed land was used as a gaol from the 1830s. It comprises two parcels. A gaol building was on one of the parcels, along with three other separate buildings, substantial gardens, outbuildings and recreational facilities. The adjoining parcel was substantially occupied by gardens and a small building. Both parcels of land are now held under Torrens title, with "the State of New South Wales" as the registered proprietor. In 1891 and 1894 different parts of the claimed land were dedicated by the Governor for "Gaol Site (extension)" and "Gaol Purposes" under s 104 of the NettleJ Crown Lands Act 1884 (NSW) ("the 1884 Act")178. In 1958, a different and further part of the claimed land was dedicated for "Gaol site (addition)" under s 24 of the Crown Lands Consolidation Act 1913 (NSW) ("the 1913 Act")179. Those dedications continued in force at the date of the claim at issue in this appeal. The legal effect of those dedications is addressed later in these reasons180. By the date of the claim, all proclamations under colonial and State legislation relating to the detention of prisoners on the claimed land had been revoked181 and the claimed land could no longer lawfully be used as a gaol. The last proclamations to be revoked were two proclamations that took effect on and from 19 October 2001, which proclaimed the land (together with all buildings or premises) to be the "Berrima Correctional Centre" and the "Berrima Correctional Complex" under the Crimes (Administration of Sentences) Act 1999 (NSW). Those proclamations were revoked on 10 February 2012, 14 days before the claim was lodged. The claimed land ceased to be used as a correctional centre by no later than February 2012. In late 2011, the Attorney-General described the premises as "mothballed". Although the claimed land was no longer functioning as a gaol at the date of the claim, the primary judge (Pain J) found that the following activities were occurring on and in relation to the claimed land182: 24 hour on-site security was maintained; the premises on the claimed land were kept locked; 178 New South Wales Government Gazette, No 710, 11 November 1891 at 8883; New South Wales Government Gazette, No 686, 19 October 1894 at 6598. 179 New South Wales Government Gazette, No 122, 5 December 1958 at 3781. 180 See [171]-[172] below. 181 See New South Wales Government Gazette, No 94, 22 September 1944 at 1621; New South Wales Government Gazette, No 207, 4 November 1949 at 3329; New South Wales Government Gazette, No 99, 12 September 1997 at 8038-8039; New South Wales Government Gazette, No 158, 19 October 2001 at 8693-8694; New South Wales Government Gazette, No 18, 10 February 2012 at 404. 182 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (Berrima) [2014] NSWLEC 188 at [103]. NettleJ (c) water supply to the claimed land was maintained; electrical supply to the claimed land was maintained; sewerage services to the claimed land were maintained; there was a continuing contract for the maintenance of essential services and any emergency maintenance at the claimed land; approximately every week, 8 to 15 CSO workers attended the claimed land, including replacement of the sprinkler system; gardening tools and implements were stored on the claimed land for the use of CSO workers [although that evidence was 'vague, imprecise and lacking in probative value'183]; and members of the public wanting to visit the gardens sought permission from [Corrective Services NSW] and/or the on-site security personnel." None of those findings of fact was challenged on appeal. Claim and refusal On 24 February 2012, the appellant ("NSWALC") lodged a claim under s 36(2) of the Land Rights Act over the claimed land. On 20 November 2012, the "Crown Lands Minister"184 advised NSWALC that the Minister was satisfied that the claimed land was "lawfully used and occupied" within the meaning of s 36(1)(b) of the Land Rights Act by Corrective Services NSW ("CSNSW"). The Minister was therefore required to refuse the claim under s 36(5)(b). In the courts below, the Minister later did not contend that the claimed land was "lawfully used". Rather, the Minister contended that the claimed land was "occupied", and that, to the extent that purpose was relevant to "occupation", the asserted occupation of the claimed land was for a purpose of holding the claimed land pending a decision on its future use. 183 Berrima [2014] NSWLEC 188 at [110]. 184 In fact, there were two individual Ministers, each a "Crown Lands Minister" as defined in s 36(1) of the Land Rights Act, who acted jointly. NettleJ Decisions below On appeal to the Land and Environment Court of New South Wales under s 36(6) of the Land Rights Act, the primary judge found that the claimed land was occupied in fact at the date of the claim185 and that such occupation by CSNSW was lawful186. The claimed land was therefore not "claimable Crown lands" under the Land Rights Act. In reaching the conclusion that the claimed land was "occupied", the primary judge relied on the matters earlier identified187. Pursuant to s 57(1) of the Land and Environment Court Act 1979 (NSW), NSWALC appealed to the Court of Appeal of the Supreme Court of New South Wales on questions of law. In relation to whether the claimed land was occupied, NSWALC contended that the asserted occupation for the purpose of holding land pending a decision on its future use was not lawful occupation within the meaning of the Land Rights Act, and that the activities said to constitute occupation had to be assessed by reference to the gaol purposes for which the claimed land was dedicated. The Court of Appeal (Leeming JA, Beazley P and Macfarlan JA agreeing) dismissed the appeal188. Leeming JA concluded that it was open to the primary judge to hold that the claimed land was occupied based on the findings of fact that there was a "24 hours a day, 7 days a week presence of security on the site, retained by the State, who kept the buildings locked, coupled with regular visits on Saturdays and Sundays by offenders under the supervision of a CSNSW officer"189. In relation to whether such occupation was lawful, Leeming JA rejected NSWALC's submission that s 2 of the New South Wales Constitution Act 1855 (Imp) (18 & 19 Vict c 54) had the effect that statutory authorisation was required for control of Crown land190 and held that, in any case, there was an implied statutory authority under the Crown Lands Act 1989 (NSW) ("the CLA 1989") to 185 Berrima [2014] NSWLEC 188 at [126]. 186 Berrima [2014] NSWLEC 188 at [126], [168]-[169]. 187 See [151] above. 188 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2015) 303 FLR 87 ("Berrima Appeal"). 189 Berrima Appeal (2015) 303 FLR 87 at 109 [100]. 190 Berrima Appeal (2015) 303 FLR 87 at 110 [108], 114-115 [128]-[137]. NettleJ maintain and secure the claimed land for the time reasonably needed to make a decision about its future use191. Leeming JA also rejected NSWALC's submission that the primary judge materially erred in finding that CSNSW, a part of what was known as the Department of Justice and Attorney General or the Department of Attorney General and Justice192, lawfully occupied the land193. His Honour held that the identity of the occupant was not material to the question of whether the claimed land was lawfully occupied194 and that, in any case, the acts constituting occupation of the claimed land could be attributed simply (and generally) to the Crown in right of New South Wales and not CSNSW195. The Preamble to the Land Rights Act records that land in New South Wales was traditionally owned and occupied by Aborigines, that land is of spiritual, social, cultural and economic importance to them, and that it is fitting to acknowledge the importance which land has for Aborigines and their need for land; and accepts that, as a result of past Government decisions, the amount of land set aside for Aborigines has been progressively reduced without compensation. Against that background, the Land Rights Act was enacted with the express purposes of, amongst other things, providing land rights for Aboriginal persons in New South Wales, providing for representative Aboriginal Land Councils in New South Wales and vesting land in those Councils197. Representative Aboriginal Land Councils, known as "Local Aboriginal Land Councils" ("LALCs"), are established under Pt 5 of the Land Rights Act. 191 Berrima Appeal (2015) 303 FLR 87 at 116 [138]-[139]. 192 s 3(1) of the Crimes (Administration of Sentences) Act 1999 (NSW); Pt 1 of Sched 1 to the Public Sector Employment and Management Act 2002 (NSW). 193 Berrima Appeal (2015) 303 FLR 87 at 117 [147]. 194 Berrima Appeal (2015) 303 FLR 87 at 116 [141]. 195 Berrima Appeal (2015) 303 FLR 87 at 117 [146]. 196 The Land Rights Act being considered is the historical version for 16 November 2011 to 5 July 2012, being the Act in force at the time of the claim at issue in this appeal. 197 s 3(a)-(c) of the Land Rights Act. NettleJ There are currently nine regions consisting of more than 100 LALCs198. The stated objects of each LALC are to "improve, protect and foster the best interests of all Aboriginal persons within the Council's area and other persons who are members of the Council"199. Their functions are prescribed by Div 1A of Pt 5 and include land acquisition and land use and management, as well as protection, and promotion of awareness, of the culture and heritage of Aboriginal persons in the LALC's area200. Division 2 of Pt 5 governs the membership of LALCs. Those qualified to be members of an LALC in an area are Aboriginal persons who satisfy one of three different bases for inclusion201: the person is an adult Aboriginal person who resides within the area of the [LALC] concerned and is accepted as being qualified on that basis to be a member by a meeting of the Council, or the person is an adult Aboriginal person who has a sufficient association with the area of the [LALC] concerned (as determined by the voting members of the Council at a meeting of the Council) and is accepted as being qualified on that basis to be a member by a meeting of the Council, or the person is an Aboriginal owner in relation to land within the area of the [LALC] concerned and has made a written application for membership in accordance with subsection (3)." (emphasis added) "Aboriginal owners of land" means the "Aboriginal persons whose names are entered on the Register of Aboriginal Owners because of the persons' cultural association with particular land"202. The membership roll must indicate whether a member is on the roll "because of residence or association, or as an Aboriginal owner, and must indicate the basis for that inclusion"203. An Aboriginal person 198 See Pt 6 of, and Sched 5 to, the Land Rights Act. 199 s 51 of the Land Rights Act. 200 s 52(2)-(4) of the Land Rights Act. 201 s 54(2A) of the Land Rights Act. 202 s 4(1) of the Land Rights Act. 203 s 54(2B) of the Land Rights Act. NettleJ may be a member of more than one LALC but is entitled to voting rights in relation to one LALC only at any one time204. Consistent with the Preamble and those provisions, s 36 of the Land Rights Act, headed "Claims to Crown lands", relevantly provides: In this section, except in so far as the context or subject-matter otherwise indicates or requires: claimable Crown lands means lands vested in Her Majesty that, when a claim is made for the lands under this Division: are able to be lawfully sold or leased, or are reserved or dedicated for any purpose, under the [1913 Act] or the Western Lands Act 1901, are not lawfully used or occupied, (b1) do not comprise lands which, in the opinion of a Crown Lands Minister, are needed or are likely to be needed as residential lands, are not needed, nor likely to be needed, for an essential public purpose, and do not comprise lands that are the subject of an application for a determination of native title (other than a non-claimant application that is an unopposed application) that has been registered in accordance with the Commonwealth Native Title Act, and do not comprise lands that are the subject of an approved determination of native title (within the meaning of the Commonwealth Native Title Act) (other than an approved determination that no native title exists in the lands). Crown Lands Minister means the Minister for the time being administering any provisions of the [1913 Act] or the Western Lands Act 1901 under which lands are able to be sold or leased. [NSWALC] may make a claim for land on its own behalf or on behalf of one or more [LALCs]. 204 s 55(1) and (2) of the Land Rights Act. NettleJ (5) A Crown Lands Minister to whom a claim for lands (being lands which are, or, but for any restriction on their sale or lease, would be, able to be sold or leased under a provision of an Act administered by the Crown Lands Minister) has been referred under subsection (4) shall: if the Crown Lands Minister is satisfied that: the whole of the lands claimed is claimable Crown lands, or part only of the lands claimed is claimable Crown lands, grant the claim by transferring to the claimant Aboriginal Land Council (or, where the claim is made by [NSWALC], to [an LALC] (if any) nominated by [NSWALC]) the whole or that part of the lands claimed, as the case may be, or if the Crown Lands Minister is satisfied that: the whole of the lands claimed is not claimable Crown lands, or part of the lands claimed is not claimable Crown lands, refuse the claim or refuse the claim to the extent that it applies to that part, as the case may require. (8) A certificate being: a certificate issued by a Crown Lands Minister stating that any land the subject of a claim under this section and specified in the certificate is needed or is likely to be needed as residential land, or a certificate issued by a Crown Lands Minister, after consultation with the Minister administering this Act, stating that any land the subject of a claim under this section and specified in the certificate is needed or likely to be needed for an essential public purpose, NettleJ shall be accepted as final and conclusive evidence of the matters set out in the certificate and shall not be called into question in any proceedings nor liable to appeal or review on any grounds whatever. (10) A transfer of lands pursuant to this section operates to revoke any dedication or reservation under the [1913 Act] to which the lands were subject immediately before the transfer." Section 36(1) defines which Crown "claimable". Sub-section (1)(a) defines the outer limit of the available pool of Crown lands – Crown lands able to be lawfully sold or leased, or that are reserved or dedicated for any purpose, under the 1913 Act or the Western Lands Act 1901 (NSW). Importantly, the fact of reservation or dedication of land is not itself disentitling; it is a fact that allows Crown lands to be claimable. lands are Critically, the question of whether lands are claimable is considered when a claim is made. That is clear from "claimable Crown lands" being assessed "when a claim is made for the lands" under Div 2 of Pt 2205. The Land Rights Act recognises that what lands are claimable can and will change. Here, the lands were dedicated within the meaning of s 36(1)(a) of the Land Rights Act and, prima facie, claimable. What facts and factors are relevant to assessing whether those lands were not claimable? It was common ground that the lands were not lands which, in the opinion of the Crown Lands Minister, were needed or are likely to be needed as residential lands (sub-s (1)(b1)); were not lands needed, nor likely to be needed, for an essential public purpose (sub-s (1)(c)); and did not comprise lands that were the subject of an application for a determination of native title that had been registered in accordance with the Native Title Act 1993 (Cth) or the subject of an approved determination of native title within the meaning of that Act (sub-ss (1)(d) and (1)(e))206. That leaves sub-s (1)(b) – the lands would be claimable if they were "not lawfully used or occupied"207. It was common ground that the claimed land was not being lawfully used. That is unsurprising – the necessary proclamations had been revoked; the gaol 205 s 36(1) of the Land Rights Act. 206 Berrima Appeal (2015) 303 FLR 87 at 92 [14]. 207 Berrima Appeal (2015) 303 FLR 87 at 92 [14]. NettleJ facilities had been decommissioned and could no longer lawfully be used as a gaol. But was the claimed land, dedicated for "Gaol Site (extension)", "Gaol Purposes" or "Gaol site (addition)", "not lawfully used or occupied" at the time the claim was made? Was it otherwise being "occupied" within the meaning of the phrase "not lawfully used or occupied"? It was not in dispute that the respondent, the Minister, bore the onus of establishing that, at the date of the claim, the claimed land was not "claimable Crown lands" because the claimed land was otherwise being "occupied" within the meaning of the phrase "not lawfully used or occupied". Before turning to that issue, however, it is necessary to consider the balance of s 36. Section 36(2) provides that NSWALC may make a claim for land on its own behalf or on behalf of one or more LALCs. An LALC may make a claim for land within its area or, with the approval of the Registrar appointed under the Land Rights Act, outside its area208. The definition of "Aboriginal person" in the Land Rights Act is broad209. Consistent with the scope and purpose of the Land Rights Act, the definition of "claimable Crown lands" and the ability of an LALC to claim such land is also broad. Any transfer of lands to an Aboriginal Land Council under s 36 is for an estate in fee simple "subject to any native title rights and interests existing in relation to the lands immediately before the transfer"210. Such a transfer of lands "operates to revoke any dedication or reservation under the [1913 Act] to which the lands were subject immediately before the transfer"211. Dedication of land As seen earlier, the second half of s 36(1)(a) provides that, subject to the remaining paragraphs in s 36(1), "claimable Crown lands" means lands that are "reserved or dedicated for any purpose, under the [1913 Act]". It was common ground that the claimed land answered that description. As Leeming JA explained, even though the 1891 and 1894 dedications were made under the 1884 Act, s 3 of the 1913 Act deemed them to have been made under the 1913 Act212. The 1958 dedication was made under the 1913 Act. 208 s 36(3) of the Land Rights Act. 209 s 4(1) of the Land Rights Act. 210 s 36(9) of the Land Rights Act, subject to s 36(9A), which is presently not relevant. 211 s 36(10) of the Land Rights Act. 212 Berrima Appeal (2015) 303 FLR 87 at 98-99 [50]. NettleJ The CLA 1989 repealed the 1913 Act. Clause 1(1) of Sched 8 to the CLA 1989 deems dedications that were "in force or taken to be in force under a repealed Act immediately before its repeal [to have] effect as if [they] had been made under" the CLA 1989. Clause 1(2) provides that the dedication is for the same purpose and on the same terms as the original dedication and dates from the date of the original dedication. In this appeal, each of the dedications continued in force as at the date of the claim and they are taken to have been made under the CLA 1989213. Clause 21 of Sched 8 to the CLA 1989 provides that a "reference in any other Act ... to the [1913 Act] shall be read as a reference to the [CLA 1989]". Accordingly, the claimed land was within the scope of s 36(1)(a). It is the fact of dedication that brings the claimed land within the scope of s 36214. The legal effect of a dedication of the kind to which a statutory provision like s 36 of the Land Rights Act refers was explained by Isaacs J in New South Wales v The Commonwealth when considering s 3 of the Crown Lands Alienation Act 1861 (NSW) (25 Vict No 1), an equivalent provision to that now found in s 80 of the CLA 1989. His Honour stated that a dedication "impresse[s] upon dedicated lands a statutory status limiting their use and benefit, and consequently their possession, in conformity to the purpose to which they were dedicated"215. The legal effect of a dedication is reinforced by Pt 5 of the CLA 1989. It provides that the Minister has power to dedicate Crown land for a public purpose and that the dedication takes effect on publication of the notification in the Gazette216. Before land is dedicated, the Minister must be satisfied that the capabilities of and suitable uses for the land have been assessed under Pt 3 of the CLA 1989, although no assessment is required if it is in the public interest to dedicate the land without such an assessment and the Minister has due regard to the principles of Crown land management217. 213 See also s 90 of the CLA 1989. 214 See Daruk Local Aboriginal Land Council v Minister Administering the Crown Lands Act (1993) 30 NSWLR 140 at 160. 215 (1926) 38 CLR 74 at 91; see also at 84; [1926] HCA 23. 216 s 80 of the CLA 1989. Land dedicated for a purpose is no longer Crown land under the CLA 1989 (see the definition of "Crown land" in s 3(1) of the CLA 1989) but upon revocation of the dedication, the land reverts to Crown land. 217 s 85 of the CLA 1989. NettleJ Legislative history of the Land Rights Act In considering the proper construction of the phrase "not lawfully used or occupied" in s 36(1)(b), the legislative history of the Land Rights Act is instructive. It was helpfully summarised in the joint reasons in this Court in Minister Administering the Crown Lands Act v NSW Aboriginal Land Council ("Wagga Wagga")218 and by Priestley JA in Daruk Local Aboriginal Land Council v Minister Administering the Crown Lands Act219. The following aspects of that history should be noted. First, that the Land Rights Act is legislation intended for "beneficial and remedial purposes" is evident from both the text of the Act and the extrinsic materials220. Second, in 1980, a Select Committee of the Legislative Assembly of New South Wales report making ("the Keane Committee") published a "recommendations regarding land rights for New South Wales Aboriginal citizens"221 including a recommendation that claims to land be founded on any or all of four bases: needs, compensation, long association and traditional rights222. It was the Committee's opinion that the granting of land rights "should be regarded as an act of elementary justice"223. Third, following the Report of the Keane Committee, a Bill for what was to become the Land Rights Act was introduced into the New South Wales Parliament in 1983224. A Green Paper published before the Bill was introduced 218 (2008) 237 CLR 285 at 300-301 [43]-[48]; see also at 291 [12]; [2008] HCA 48. 219 (1993) 30 NSWLR 140 at 159-160. 220 Wagga Wagga (2008) 237 CLR 285 at 300 [44]; see also at 291 [11]-[12], 221 New South Wales, Legislative Assembly, First Report from the Select Committee of the Legislative Assembly upon Aborigines – Part I, (1980) at 19; see also at 21. 222 New South Wales, Legislative Assembly, First Report from the Select Committee of the Legislative Assembly upon Aborigines – Part I, (1980) at 8, 68 [4.24]; see also at 62 [4.4]; Wagga Wagga (2008) 237 CLR 285 at 300 [45]. 223 New South Wales, Legislative Assembly, First Report from the Select Committee of the Legislative Assembly upon Aborigines – Part I, (1980) at 61 [3.34]. 224 Wagga Wagga (2008) 237 CLR 285 at 300 [45]. NettleJ stated that "[w]hilst claimable Crown Lands are very limited in comparison to the overall land stock of New South Wales, they will provide a compensatory resource for Aboriginal community groups"225. Fourth, in the Second Reading Speech for the Bill that became the Land Rights Act, the Minister for Aboriginal Affairs said that the Government had "made a clear, unequivocal decision that land rights for Aborigines is the most fundamental initiative to be taken for the regeneration of Aboriginal culture and dignity, and at the same time laying the basis for a self-reliant and more secure economic future for our continent's Aboriginal custodians"226. He said that it was the first such Bill in New South Wales and "on many counts goes far beyond land rights legislation existing in the Northern Territory and South Australia"227. The Minister also said that the Bill would provide "a substantial amount of resources for the 40,000 Aborigines in New South Wales to secure land" by purchase on the open market and "claims upon unused Crown land"228. Fifth, after referring to the Preamble to the Land Rights Act, the joint reasons in Wagga Wagga readily accepted that the claims process in the Land Rights Act, which allows for Aboriginal Land Councils to claim limited categories of Crown lands, gave effect to the beneficial and remedial purposes of the Land Rights Act229. Comparable legislation In Daruk, Priestley JA compared the Land Rights Act and the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) ("the Northern Territory Act") and identified two differences between them of "particular relevance to understanding s 36(1)" of the Land Rights Act230. The first was the class of 225 New South Wales, Minister for Aboriginal Affairs, Green Paper on Aboriginal Land Rights in New South Wales, (1982) at 11. 226 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 24 March 1983 at 5088. 227 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 24 March 1983 at 5088. 228 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 24 March 1983 at 5090. 229 Wagga Wagga (2008) 237 CLR 285 at 301 [47]. 230 Daruk (1993) 30 NSWLR 140 at 160. NettleJ potential claimants. Under the Northern Territory Act the class of claimants to land was "Aboriginals claiming to have a traditional land claim to an area of land"231. Under s 36(3) of the Land Rights Act, the class of claimants was then, and remains, much broader. The second relevant difference was the land that was claimable land. Under the Northern Territory Act, the land that could be claimed was restricted to "unalienated Crown land or alienated Crown land in which all estates and interests not held by the Crown are held by, or on behalf of, Aboriginals"232, and "Crown Land" was defined as not including "land set apart for, or dedicated to, a public purpose under an Act"233. Under the Land Rights Act, claimable Crown land was, and remains, broader, and includes specifically that which is excluded from the Northern Territory Act – land dedicated for a public purpose. As Priestley JA stated234: "[T]he fact that under the [Northern Territory Act] the setting apart of land for a public purpose disqualifies it from being claimable, whereas under the [Land Rights Act] reservation for any purpose under the [1913 Act] is a qualifying condition, must have a bearing on the meaning of s 36(1)(b). This is because reserved Crown land is ipso facto lawfully occupied in at least some senses of the word." (emphasis in original) Priestley JA then turned to the notion of "occupation". His Honour noted that where, in that case, Crown land had been temporarily reserved for public recreation pursuant to ss 28 and 29 of the 1913 Act but the appointment of the local shire as its trustee was some months later, "the Crown undoubtedly remained the occupant of the land [during that interim period], at least in one well recognised sense of the word"235. But, as his Honour observed, the "juxtaposition of par (a) and par (b) of s 36(1) of the [Land Rights Act] makes it clear that occupation in [that] broad sense is not what par (b) refers to or 231 s 50(1)(a) of the Northern Territory Act. 232 s 50(1)(a) of the Northern Territory Act. 233 s 3(1) of the Northern Territory Act. 234 Daruk (1993) 30 NSWLR 140 at 160. 235 Daruk (1993) 30 NSWLR 140 at 160. See also Wagga Wagga (2008) 237 CLR NettleJ means. The word 'occupied' in par (b) must have a more limited meaning"236. That issue – the meaning of occupied – is addressed next. Claimed land not "lawfully used or occupied" Here, the Crown in right of New South Wales has the right to exclusive possession of the claimed land and has actual possession of it. An agency of the Crown – CSNSW – exercises control over the claimed land and undertakes maintenance responsibilities. Clearly enough, the Crown occupies the claimed land in one well-recognised sense of the word. But is that any more than, as Priestley JA described in Daruk, reserved Crown land being, by that fact alone, lawfully occupied in a broad sense of the word "occupied"? Does controlling and maintaining the claimed land in those circumstances rise higher than what might be described as "notional" occupation or "legal possession"? In Council of the City of Newcastle v Royal Newcastle Hospital, Kitto J reviewed earlier English authorities on the word "occupy" as it was understood in the "specialised" rating context237. His Honour discerned from the authorities three "elements" that together would amount to occupation of land: "legal possession, conduct amounting to actual possession, and some degree of permanence"238. That formulation was endorsed in the joint reasons in Wagga Wagga, subject, however, to the qualification that while those elements "may sufficiently identify the most common cases where it can be said that there is use or occupation of the land" they are not exhaustive of the circumstances in which land might be "used" or "occupied"239. As the joint reasons also explained, it is important for the purposes of s 36(1)(b) that attention be "given to identifying the acts, facts, matters and circumstances which are said to deprive the land of the characteristic of being 'not lawfully used or occupied'". It is "necessary to measure those acts, facts, matters and circumstances against an understanding of what would constitute use or occupation of the land"240 within the meaning of the provision. 236 Daruk (1993) 30 NSWLR 140 at 161. 237 (1957) 96 CLR 493 at 508; [1957] HCA 15. 238 City of Newcastle (1957) 96 CLR 493 at 507. 239 Wagga Wagga (2008) 237 CLR 285 at 306 [69]. 240 Wagga Wagga (2008) 237 CLR 285 at 305 [69]. NettleJ It has been observed that "occupied" is a "protean" word241, capable of different meanings depending on the context in which it is used242. That is not a novel proposition. In 1888, Pollock and Wright recognised that "in order to ascertain whether acts of alleged occupation ... are effective as regards a given thing" it may be relevant to consider "(a) of what kinds of physical control and use the thing in question is practically capable[;] (b) with what intention the acts in question were done[;] (c) whether the knowledge or intention of any other person was material to their effect, and if so, what that person did know and intend"243. For example, in relation to proposition (a), "[c]onduct which would be almost evidence of abandonment with regard to one kind of land may with regard to another be as good evidence of use and occupation as can be expected"244. Thus, within s 36(1)(b), the meaning of "occupied" is informed, in accordance with ordinary principles of statutory construction, by the text, context and purpose of the legislation. As seen earlier, the express legislative purposes of the Land Rights Act include providing land rights for Aboriginal persons in New South Wales245, in acknowledgement of the importance of land for Aboriginal people and that land traditionally owned and occupied by Aboriginal people had "been progressively reduced without compensation"246. The purposes of the Act also include that there is to be a significant pool of land that is claimable for the purpose of compensating Aboriginal persons who were dispossessed247 and that the claims process in the Land Rights Act, which allows for Aboriginal Land Councils to claim that pool of land, is to be the "primary mechanism" for giving effect to the beneficial and remedial purposes of the Land Rights Act248. Hence, 241 cf Wagga Wagga (2008) 237 CLR 285 at 306 [69]. See also Daruk (1993) 30 NSWLR 140 at 161-162. 242 cf Independent Commission Against Corruption v Cunneen (2015) 256 CLR 1 at 28 [57]; [2015] HCA 14. 243 Pollock and Wright, An Essay on Possession in the Common Law, (1888) at 14. 244 Pollock and Wright, An Essay on Possession in the Common Law, (1888) at 31. 245 s 3(a) of the Land Rights Act. 246 See Preamble to the Land Rights Act. 247 See Wagga Wagga (2008) 237 CLR 285 at 297 [32]. 248 See Wagga Wagga (2008) 237 CLR 285 at 301 [47]. NettleJ although Crown land is ipso facto in one sense lawfully occupied249, a more nuanced understanding of "occupation" better accords with the purpose of the Land Rights Act as informed by both its terms and its important legislative history. The question then is whether "lawful" occupation under the Land Rights Act is satisfied by an assertion of rights as fee simple owner or whether, as NSWALC contended, the occupation of the land is required to be judged against the dedication – here, gaol purposes. The answer is the latter. As the Green Paper recognised, prior to the Land Rights Act, claimable Crown lands were already "very limited in comparison to the overall land stock of New South Wales"250. The evident object of the Land Rights Act (consistent with the Preamble, the purposes stated in s 3 of the Act and the overall scheme of the Act) was thus to provide for successful land rights claims on terms broader than those adopted in the Northern Territory Act. To construe "occupation" as not requiring consideration of the purpose for which land has been dedicated would not increase opportunities for successful land rights claims. It would make it easier for land to be excluded from the definition of "claimable Crown lands", thereby reducing the opportunities for successful land rights claims. By contrast, a construction of s 36(1) that requires that "occupied" be tied, in some way, to the relevant dedication accords with the statutory object of the Land Rights Act. It is also supported by the fact that, unlike the Northern Territory Act, dedicated Crown land that is, ipso facto, lawfully occupied in at least some senses of the word is claimable. The fact that the Crown land is dedicated does not disqualify the land from being claimable; quite the opposite, as a dedication qualifies the land as claimable. More is required for "occupation". The acts of occupation must be tied to the relevant dedication. No occupation here Apart from the fact that the State of New South Wales is the registered proprietor of the claimed land, the only acts upon which the Minister relied as establishing occupation for the purposes of s 36(1)(b) are security, the supply of utilities, and maintenance. But the fact that there are buildings on the claimed land that were once a gaol and that those buildings are connected to utilities and are being "maintained" and "secured" for purposes yet to be decided does not 249 See Daruk (1993) 30 NSWLR 140 at 160. 250 New South Wales, Minister for Aboriginal Affairs, Green Paper on Aboriginal Land Rights in New South Wales, (1982) at 11. NettleJ mean that the land is being occupied in a way that is tied to its dedication for gaol purposes. No doubt, the nine matters relied on by the primary judge to establish that the Crown (however identified) exercised control over the claimed land and was maintaining the land are relevant to assessing occupation251. But, in the context of land dedicated for gaol purposes, merely maintaining the land to prevent it from falling into disrepair and ensuring it is secure does not amount to "occupation" tied to its dedication for gaol purposes. In truth, "maintenance" of the buildings on the claimed land is a distraction – the buildings have been decommissioned, vacated and mothballed. Nothing is occurring on the land that is linked to its dedicated gaol purposes. It is not a gaol. There is no relevant proclamation, and if it were likely to be needed in future as a gaol, that would not be enough to exclude it from being "claimable Crown lands", unless the Minister was prepared to certify under s 36(1)(c) that such need or likely need was for an "essential public purpose". The Minister did not. That the dedications might be revoked does not change the fact that, at the date of the claim, the land was dedicated for particular purposes and it was not being occupied for those purposes. The Minister contended that if the acts and conduct here were not sufficient to establish occupation for the purposes of s 36(1)(b), then certain undesirable practical consequences would flow: the Crown would have had to determine what to do with the land before or at the same time as the revocation of the proclamations; and there would have been no period of time in which the Crown could decide what to do with the land after it ceased to be used or occupied for the purposes set out in the dedications. Those potential practical consequences are not persuasive. The timing of the revocation was at the executive's discretion and the Minister had appropriate powers under both the Land Rights Act and the CLA 1989 to deal with the future use of the claimed land. The fact that there was no future use identified is the very reason why the claimed land, dedicated for gaol purposes but no longer used or occupied for those purposes, is claimable. Whether land dedicated for a public purpose is occupied depends on the public purpose identified in the dedication. Pending decision on future use The Minister made a separate but related submission that it is enough to establish "occupation" for the purposes of s 36(1)(b) that the Crown, through its agencies, maintains the claimed land pending a decision as to its future use and 251 Daruk (1993) 30 NSWLR 140 at 163. NettleJ the Crown's conduct is not inconsistent with the dedication and not incompatible with the dedication. That submission should be rejected. The primary judge accepted the submission and held that "the purpose of the occupation was to hold the land pending a decision on its future use"252. But that was an error. That purpose had no connection with the purpose for which the land was dedicated: gaol purposes. The conclusion reached did not pay sufficient regard to the other paragraphs in the definition of "claimable Crown lands" in s 36(1) of the Land Rights Act. As has been explained, all of the paragraphs of the definition of "claimable Crown lands" in s 36(1) of the Land Rights Act must be satisfied. Two are relevant in assessing this submission – pars (b1) and (c). Those paragraphs exclude land from the definition of "claimable Crown lands" if the Minister thinks the land is needed, or is likely to be needed, as residential lands, or if the land is needed, or likely to be needed, for an essential public purpose. That is the extent of what may be done to reserve otherwise claimable Crown lands for a future possible use. If land is needed for either residential lands or an essential public purpose, those two provisions provide a sufficient and broad basis on which a claim might be rejected. And if land is not needed for either of those purposes, and instead the Minister intends to sell or lease the land, has a different future use in mind, or has no future use identified, that is precisely when it is intended that Crown lands will be claimable under the Land Rights Act. Otherwise, to use this case as an example, a claim might be rejected if there were merely a suggestion, at the time of the claim, that a new proclamation would be made and the land would again become an operative correctional centre. Other issues Given the views formed, the further issue about whether statutory authorisation is required for the Crown to occupy Crown land does not arise. Accordingly, the Attorneys-General for Western Australia, Tasmania and Victoria, each of whom intervened in these proceedings and made submissions limited to that issue. the submissions of is unnecessary to consider Orders The appeal should be allowed with costs and the orders of the Court of Appeal of the Supreme Court of New South Wales and the Land and Environment Court of New South Wales should be set aside. Further, there 252 Berrima [2014] NSWLEC 188 at [93]. NettleJ should be an order that the claimed land be transferred in fee simple to the Illawarra Local Aboriginal Land Council under s 36(7) of the Land Rights Act. |
HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Gately v The Queen [2007] HCA 55 6 December 2007 ORDER Appeal dismissed. On appeal from the Supreme Court of Queensland Representation P E Smith for the appellant (instructed by Fisher Dore Lawyers) B G Campbell with P J Alsbury for the respondent (instructed by Director of Public Prosecutions (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Gately v The Queen Criminal law – Evidence – Video evidence of the complainant – Appellant charged with sexual offences against a child – Jury shown a videotape of the complainant's evidence in chief and cross-examination given at a preliminary hearing – Whether the videotape itself was admissible into evidence as an exhibit – Whether permitting the jury to replay the complainant's pre-recorded video evidence during its deliberations and in the absence of judge and counsel constituted a miscarriage of justice. Criminal law – Evidence – Admissibility of prior consistent statements – Whether the complainant's written statement to police was admissible despite the tender of the pre-recorded video evidence. Criminal law – Jury trials – Directions – Whether a direction that the jury not give undue weight to the complainant's pre-recorded video evidence or written statement to police was required. Criminal law – Appeals against conviction – Application of "proviso" – Nature of inquiry – Order of consideration of statutory criteria. Criminal Code (Q), s 668E. Evidence Act 1977 (Q), Div 4A of Pt 2, ss 93A, 98, 99. GLEESON CJ. The facts of the case are set out in the reasons of Hayne J. The grounds of appeal are as follows: "That a miscarriage of justice has occurred in this case: The Trial Judge erred in allowing the jury during its deliberations to play a pre-recorded video statement taken under s 21A[M] of the Evidence Act (Qld) 1977; That the Trial Judge erred in failing to direct the jury when the complainant's statement was re-read to them that they should not give undue weight to the evidence; The Trial Judge erred in permitting the prosecutor to tender written statements (in particular the statement of the complainant) taken pursuant to section 93A of the Evidence Act 1977 (Qld) in circumstances where the preliminary complaint witness had already given full pre-recorded evidence." the complainant and Paragraph (a) refers to the oral evidence of the complainant, which was recorded before the empanelling of the jury. The video recording was then played to the jury at the trial. A transcript of the complainant's evidence consists of five pages of evidence in chief and 22 pages of cross-examination. Paragraph (c) refers to "police statements" (that is, statements made to the police at the investigation stage) which were tendered at the trial as exhibits. The only other evidence at the trial was some formal evidence from a police officer, and some brief evidence from a friend of the complainant and from the complainant's mother and grandmother. The appellant did not give evidence. As to par (a), I agree with Hayne J that, technically, the video recording should have been marked for identification rather than treated as an exhibit and, more significantly, that, when the trial judge decided (as he was entitled to do) to comply with the jury's request to hear again the pre-recorded evidence of the complainant, that should have been done by replaying the recording of the evidence in open court, before the judge, the jury and counsel. I agree with Hayne J's analysis of the relevant statutory provisions. The course that was taken was irregular. The irregularity occurred in the following circumstances. After the jury expressed a desire to hear the complainant's evidence again, the trial judge asked counsel to consider whether they wanted the court to be reconvened while that occurred. He should not have given them the choice. The prosecutor said he did not see any need for the court to be reconvened if the jury watched the video in the courtroom in the presence of the bailiff. He said it would "facilitate their deliberations more openly if legal counsel and other people aren't present." Counsel for the appellant concurred. He said: "Yes, that seems a sensible and practical approach. If they want to play it they can play it while here in the presence of the Bailiff and not in the presence of other members of the Court." The procedure agreed to by counsel was adopted. An irregularity having occurred, the issue raised by the grounds of appeal, and the statute pursuant to which the Court of Appeal was exercising its jurisdiction, is whether, in the circumstances of the case, there was a miscarriage of justice. I agree with Hayne J that the question should be answered in the negative. The jury had been told to scrutinise carefully the evidence of the complainant. Evidently, they thought listening to her evidence again would help them to do that. Their request was hardly surprising, although it raised a procedural question. This was not a case in which the problem of undue weighting of some evidence at the expense of other evidence was of substantial importance. The pre-recorded evidence included the whole of the cross- examination of the complainant. Apart from the "police statements", there was very little other evidence of significance in the case. There were numerous counts in the indictment, and the jury apparently considered them separately and in detail. Their desire to scrutinise the evidence of the complainant by having it played back to them again does not raise, in the circumstances, any apprehension of inappropriate concentration on part only of the evidence, or of other unfairness to the appellant. Paragraph (b) appears to refer to the complainant's police statement, the contents of which were substantially repeated in her pre-recorded evidence in chief. The jury requested that a copy of the statement be provided for use in the jury room. The trial judge declined the request but, with the agreement of both counsel, re-read the statement to the jury in open court. No direction of the kind referred to in the ground of appeal was requested, and, on a fair reading of the whole of the summing-up, including the directions as to the use that could be made of the statement, none was required. In oral argument in this Court, par (b) seems to have been treated as referring to the pre-recorded evidence of the complainant, although that was not "re-read to [the jury]". If that is what par (b) is about, then for the reasons given above there was not, in this case, any miscarriage of justice arising from the absence of a direction not to give undue weight to the evidence, by comparison with other evidence. For practical purposes, there was very little other evidence. The other possible form of undue weight might have been that which could arise from repetition. Here, the jury necessarily heard the complainant's version of events in her police statement, her evidence in chief, and her cross-examination. Repetition is a common feature of the criminal trial process. Cross-examination itself often elicits multiple repetitions of a complaint. There could be circumstances in which a warning needs to be given to counter the possibility of unfairness arising, but the present was not such a case. As to par (c), I agree, for the reasons given by Hayne J, and the additional reasons given by Heydon J, that the appellant's complaint has not been made out. The written statements referred to were admissible. There was no error as alleged in the grounds of appeal. I would dismiss the appeal. Kirby KIRBY J. This appeal1 concerns the general principles governing the provision to juries of direct access to pre-recorded evidence of child complainants in criminal trials involving sexual offences. The appeal also concerns a second issue. The appellant claimed that he had suffered a miscarriage of justice at his trial because a written statement that the complainant made to police was received in evidence. That submission turned on the interpretation of s 93A of the Evidence Act 1977 (Q) ("the Evidence Act"). That section is set out, and the arguments of the parties recounted, in the reasons of Hayne J2. On the second basis of appeal, I agree substantially with what Hayne J has written. It is true that there were certain problems in the directions that the trial judge gave (or failed to give) concerning the use that the jury might make of the written statement when it was read to them. However, without more, there is no warrant to conclude that a relevant error or actual miscarriage of justice occurred on that account. The appeal on that ground fails. Complaints about the use of pre-recorded evidence The issues that remain are nonetheless of some importance. At their heart is a recording made in compliance with provisions of the Evidence Act dealing with the testimonial evidence of young persons (such as the complainant in this matter) in relation to alleged sexual offences. Neither at trial nor on appeal did the appellant challenge the validity of the provisions of the Evidence Act as they operated in his case. Nor did he complain, as such, about the unfairness of their deployment. In particular, he did not contest the presentation of the complainant's evidence (and cross- examination) in the form of a video-recording, so far as it was viewed by the jury in his presence. Instead, the two respects in which, on this point, the appellant asserted that the verdicts of the jury should be set aside were: That the trial judge erred in allowing the jury unsupervised and unrestricted access to the recording during their deliberations; and That the trial judge erred in failing to warn the jury as to the use they might make of the recording and any considerations they should take into account in order to avoid affording it "undue weight". 1 From a judgment of the Court of Appeal of the Supreme Court of Queensland: R v GT [2005] QCA 478. 2 See reasons of Hayne J at [99]-[102]. Kirby Authority on jury access to pre-recorded evidence In directing submissions to these matters, the appellant suggested that differences have emerged in the approaches being taken in intermediate courts in Australia, both as between jurisdictions3 and within Queensland4. He also pointed to conflicting authorities on the application of the "proviso" as to the circumstances in which departure from proper procedures would occasion a fundamental miscarriage of justice such as to require an order for a retrial5. Similar questions have arisen for judicial decision in England6, New Zealand7 and Canada8, countries that share the same conventions of jury trial for serious offences, the same fundamental requirement for fairness in the conduct of such trials9, and like provisions for the pre-recording of the evidence of child complainants (including cross-examination) in relation to allegations of sexual offences. There is also a growing body of academic and law reform analysis as to both the practice of (and dangers involved in) interviewing children10 and the rules that should be observed in jury trials so as to reduce potential unfairness to an accused that might arise from the very use of recording technology11. 3 As between the Court of Appeal of Queensland in R v H [1999] 2 Qd R 283 and the Court of Appeal of Victoria in eg R v BAH (2002) 5 VR 517 on the one hand and the majority of the Court of Criminal Appeal of New South Wales in R v NZ (2005) 63 NSWLR 628 on the other. 4 As between the approach of the Court of Appeal of Queensland in R v H [1999] 2 Qd R 283 and R v C [2000] 2 Qd R 54 and in the present case. cf R v NZ (2005) 63 NSWLR 628 at 632-633 [10]-[20] per Spigelman CJ and at 680 [223] per Howie and Johnson JJ (Wood CJ at CL and Hunt AJA agreeing). 6 R v Rawlings [1995] 1 WLR 178; [1995] 1 All ER 580 and Welstead [1996] 1 Cr App R 59. 7 R v O [1996] 3 NZLR 295. 8 R v F (CC) [1997] 3 SCR 1183. 9 See R v NZ (2005) 63 NSWLR 628 at 631 [4]. 10 Wilson and Powell, A Guide to Interviewing Children, (2001). 11 Elliott, "Video Tape Evidence: The Risk of Over-Persuasion", (1998) Criminal Law Review 159; Corns, "Videotaped Evidence of Child Complainants in Criminal (Footnote continues on next page) Kirby The relevant material (or some of it) was placed before this Court. The applicable legislation varies between jurisdictions12, but there is a great deal of common ground as between the conclusions reached concerning the approach to be taken to the two issues that remain for consideration in this appeal. Whilst it is doubtless appropriate to recognise and utilise technological advances that might assist juries in performing their task13, it is self-evident that such assistance must accord with the fundamental requirements, and essential characteristics, of a fair criminal trial. Such a trial is accusatorial and adversarial14. In a jury trial, a heavy duty falls on the presiding judge to protect the accused against material risks of unfairness and to direct (and sometimes warn) the jury about any particular dangers of unfairness to which they need to be alert in considering an electronic recording of evidence or a printed transcript based on such a The reasons of Hayne J on the outstanding issues are split into two parts. His Honour first deals with whether there was a miscarriage of justice in the trial of the appellant16. He examines that question placing emphasis on the manner in which the appellant's counsel conducted his defence. He also considers (amongst other matters) the general principle that decisions of counsel in that context must be attributed to the client. Hayne J concludes that the appellant has failed to establish that his trial involved a miscarriage of justice, such that there is no warrant for quashing his convictions and ordering a retrial. However, having concluded the miscarriage question against the appellant, Hayne J then proceeds to consider the general principles that should govern cases such as the present. Proceedings: A Comparison of Alternative Models", (2001) 25 Criminal Law Journal 75; Corns, "Videotaped evidence in Victoria: some evidentiary issues and appellate court perspectives", (2004) 28 Criminal Law Journal 43; Victorian Law Reform Commission, Sexual Offences, Interim Report, (2003) at 255-264. 12 See R v NZ (2005) 63 NSWLR 628 at 668 [167]-[168]. 13 See Kirby, "Delivering justice in a democracy III – the jury of the future", (1998) 17 Australian Bar Review 113. 14 See eg RPS v The Queen (2000) 199 CLR 620 at 630 [22]. 15 R v H [1999] 2 Qd R 283 at 290-291 [18] per McMurdo P; cf R v NZ (2005) 63 NSWLR 628 at 676 [208]. 16 Reasons of Hayne J at [76]-[84]. Kirby Considering errors before concluding on miscarriage With respect, it is my view that this reverses the approach an appellate court should take in deciding an appeal such as this one. It is first necessary to identify any rules of law or practice that affect the resolution of the complaints made about the trial. Only when any defects in the conduct of the trial have been identified and fully appreciated does the appellate court turn to consider the issue of whether or not an actual miscarriage of justice has occurred. This approach follows from the structure and language of s 668E of the Criminal Code (Q) ("the Code"), which governs the determination of appeals in criminal cases such as this. Relevantly, that provision, which is in conventional terms, states: "(1) The Court on any such appeal against conviction shall allow the appeal if it is of opinion that the verdict of the jury should be set aside on the ground that it is unreasonable, or can not be supported having regard to the evidence, or that the judgment of the court of trial should be set aside on the ground of the wrong decision of any question of law, or that on any ground whatsoever there was a miscarriage of justice, and in any other case shall dismiss the appeal. (1A) However, the Court may, notwithstanding that it is of the opinion that the point or points raised by the appeal might be decided in favour of the appellant, dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred." The appellant's submissions presented a clear suggestion that more than one "wrong decision of [a] question of law" had affected the decision of the court of trial. In so far as the reasons of Hayne J17 suggest that the appellant's complaints were limited to an assertion that a "miscarriage of justice" had occurred in the absence of such a "wrong decision", I respectfully disagree. It is, in my view, mistaken to insist upon a rigid separation of the second and third bases of appeal stated in s 668E(1). In this case, the appellant submitted that the trial judge had misapplied the relevant law, having been prompted to make a decision as to the use of the video-recording by the jury's request and defence counsel's subsequent objection. The appellant further submitted that this error had occasioned a miscarriage of justice. Implicit in his complaint, therefore, was the claim that the trial judge had made a wrong decision on a question of law. 17 cf reasons of Hayne J at [58], [76]. Kirby If the appellant's complaints in this respect were to be made out, consideration would then be required as to whether the errors involved had occasioned an actual and substantial miscarriage of justice for the purposes of s 668E(1A) ("the proviso"). The language and structure of s 668E are clear, as is the manner in which it and counterpart provisions have been interpreted since the template was first introduced in England in 190718. The point is as fundamental as it is logical. The appellate court first considers any complaints of error occasioning injustice in the trial. Then, if such error is established, it turns to whether a want of actual miscarriage of justice might nonetheless deprive the appellant of success. In my view, it is a basic mistake to reverse that process of consideration. Without identified error occasioning injustice (whether on evidentiary, legal or other grounds), there is no basis for consideration of the proviso, which is addressed to the substantiality and materiality of the resulting miscarriage of justice19. Thus, it is necessary at an initial stage to have clearly in mind the nature and extent of any errors of law or procedure that can be shown. Such errors alone potentially open the door to the provision of relief and throw light on the question of the existence and significance of any resulting miscarriage of justice20. Indeed, some errors in the conduct of a criminal trial are so fundamental as to be treated as occasioning a "miscarriage of justice" of themselves. Such errors may be so basic to the postulate of a fair trial that the ensuing verdict cannot be saved by the application of the proviso21. Application of the orthodox approach The orthodox approach is of particular importance in a case such as the present, which was admitted to appeal, in effect, as a test case concerning general issues as to the conduct of criminal trials before juries in Australia. If an appellate court determines the question of substantial miscarriage against a 18 Criminal Appeal Act 1907 (UK), s 4(1). 19 Darkan v The Queen (2006) 227 CLR 373 at 414 [141]. 20 See eg KBT v The Queen (1997) 191 CLR 417 at 423, 431-437; Gilbert v The Queen (2000) 201 CLR 414 at 422-423 [21], 438 [86]; cf Festa v The Queen (2001) 208 CLR 593 at 633 [124]-[127], 655-657 [205]-[213]. 21 See Wilde v The Queen (1988) 164 CLR 365 at 372-373; Glennon v The Queen (1994) 179 CLR 1 at 7-8, 11-12; Green v The Queen (1997) 191 CLR 334 at 371- 372; KBT (1997) 191 CLR 417 at 435; Eastman v The Queen (2000) 203 CLR 1 at 22 [63]; R v BAH (2002) 5 VR 517 at 536 [67]; Eastman v Director of Public Prosecutions (ACT) (2003) 214 CLR 318 at 358 [115]; Weiss v The Queen (2005) 224 CLR 300 at 317 [45]; Darkan (2006) 227 CLR 373 at 413-415 [139]-[142]. Kirby person such as the appellant at the threshold, all that is said after that determination (eg concerning general principles) represents non-binding obiter dicta. It may or may not provide rules for subsequent cases. Logically, it is inessential to the disposition. Moreover, I perceive, with respect, a tension between the principles embraced in the latter part of the reasons of Hayne J22 and the earlier rejection of any miscarriage of justice in the appellant's case. It would be of little comfort to a person in the position of the appellant to read the first part of such judicial reasons and find that he has failed for want of a miscarriage of justice, only to discover that the second part proceeds to determine the questions of principle advanced in his complaints, generally in the manner that he pressed them. For these reasons, I prefer to deal first with the general principles that the appellant's complaints of error make relevant for this Court. Such principles afford both the measure and significance of the miscarriage of which the appellant complains. Moreover, in this case, their clarification helps to demonstrate the importance they bear upon the fair conduct of a criminal trial before a jury. They also help to show the significant extent of the defaults that occurred on this occasion, the existence of an actual miscarriage of justice affecting the appellant, and the resulting need to provide relief to him and to order a new trial. Principles governing jury access to pre-recorded evidence Criminal trials: fundamental considerations: Certain fundamental considerations must guide the derivation of the rules of practice relating to juries' use of pre-recorded evidence: In general, as in Queensland, legislation that obliges or permits the pre- recording of evidence does not attempt to address all possible questions that might arise as to juries' access to, or use of, the physical medium (whether electronic or paper) in which the evidence in question is reproduced. Nor is it usual for such legislation to set out an exhaustive list of warnings or directions necessary or appropriate to such access or use23. It is therefore important to derive the practice to be observed from any implications to be drawn from the legislation, the mode of trial into which the evidence is introduced and the judge's general duties in respect of the conduct of the trial. In Queensland, the starting point is s 21AM(1) of the Evidence Act, which renders the recorded testimony "admissible as if the 22 Reasons of Hayne J at [85]-[96]. 23 See eg Evidence Act, ss 21AW, 21AX. Kirby evidence were given orally in the proceeding in accordance with the usual rules and practice of the court". The "proceeding" referred to is a trial in which the oral evidence of witnesses, including (if any) that of the accused, is normally given once and not repeated. In such a trial, on request, a judge may remind the jury of part of the record, usually by reading it or causing it to be read from the written transcript. The judge may also provide the record, or parts of it, in written form. Such steps are normally accompanied by the provision of appropriate warnings or directions. In this context, I agree with Hayne J that s 21AM is to be understood as doing no more than permitting the earlier recorded testimony to be imparted to the jury, if appropriate, by the playing of the recording24. On the face of things, that means playing it once. It does not mean providing it to the jury for repeated playing; The type of "proceeding" conducted before a jury in a criminal trial in Australia is distinctive. It follows a general course established by the history of criminal trial in England in such cases. This Court noted in Butera v Director of Public Prosecutions (Vict)25 that the consistent presentation of testimonial evidence in oral form is thought to assist in the "legitimate merging of opinions" as between jurors, which is critical to their reaching a verdict in accordance with judicial instructions on the relevant law. The evidence is not expected to be analysed in a manner equivalent to judicial consideration, for which reasons must be given. In this context, there is an obvious danger in the provision of voluminous printed (let alone electronic) records of oral testimony. That danger is that such material could divert jurors from their proper function. The jury should not be misled into confusing their role with that of a judge deciding the facts. To say this is not to diminish the importance or the expected rationality of a jury's determination. It is simply to insist that the jury perform their function as a jury; In light of the foregoing, there is a need for caution with regard to the supplementation and repetition of oral evidence in a criminal trial conducted before a jury. The court must guard against the danger of distortion and unbalanced "over-persuasion"26. It is that danger that requires judicial control over the provision of recordings to juries. Where recordings are provided, warnings or directions will often be required as to the use that the jury may make of them and of the dangers that are 24 Reasons of Hayne J at [96]. 25 (1987) 164 CLR 180 at 189. See reasons of Hayne J at [88]. 26 See R v H [1999] 2 Qd R 283 at 290 [18]. Kirby involved. The resulting rules of practice derive from the "fundamental characteristics of a criminal trial" before a jury27. In adapting jury trial to the higher levels of literacy and general education found amongst contemporary jurors and to the increased availability of technology with which jurors will be familiar, care must be taken to avoid distorting the jury's role or turning the jury into a decision-maker of a substantially different kind; and The overriding duty of the judge presiding in a jury trial is to ensure the fairness of the trial and to avoid any miscarriage of justice28. The warnings and directions that the trial judge should give to the jury on questions of law and on the rules that should govern the discharge of their functions are those essential to the resolution of the issues necessary to the jury's verdicts. Such issues are defined by the charges laid by the prosecution, any defences that are relied on, the requirements of the law concerning such charges and defences and any evidence that may be relevant to the determination of those issues29. Availability of evidence and warnings: Taking these basic considerations into account, I agree in substance with the conclusions of Hayne J concerning the proper approach to be taken in trials such as that the subject of this appeal: Under the Evidence Act, a recording (whether electronic or printed) is not admissible as "evidence" as such. It is simply a record of the oral testimony it contains. It is not real evidence (as a gun or other weapon or like item might be), available, as such, to the jury30; A request by a jury for access to pre-recorded testimony is ordinarily to be dealt with in the same way as a request to be reminded of other testamentary evidence. It will seldom, if ever, be appropriate to give the jury unsupervised access to the recording so that they may play and replay the recording as they decide31; 27 cf reasons of Hayne J at [89]. 28 Dietrich v The Queen (1992) 177 CLR 292 at 299-300. 29 See Alford v Magee (1952) 85 CLR 437 at 466; cf Melbourne v The Queen (1999) 198 CLR 1 at 52-53 [142]-[143]; Doggett v The Queen (2001) 208 CLR 343 at 373-374 [115]-[117]; Murray v The Queen (2002) 211 CLR 193 at 205 [37], 219 30 Reasons of Hayne J at [86]-[93]. See also reasons of Gleeson CJ at [3]. 31 Reasons of Hayne J at [94]-[96]. Kirby A request by a jury to be reminded of evidence should rarely be denied by a trial judge. However, if the request is made, the judge, after affording the parties the opportunity to make submissions on the matter, should consider whether the request can be fulfilled either by: Reading the transcript of the evidence requested (and any related evidence) to the jury in open court in the normal and traditional way; or If it is considered appropriate to accede to a specific request to view pre-recorded testimony again, permitting this to be done in open court32. When this course is taken, the attention of the jury should ordinarily be drawn to the need to take account of any cross- examination or contrary evidence that may exist33 and the need to guard against selective reinforcement of particular oral evidence received for a second time and out of context; and Because the repetition of pre-recorded oral evidence creates dangers of distortion, loss of balance and unfairness, the judge should consider whether there is a need, in the circumstances, to warn or direct the jury: To avoid giving undue weight to evidence that is recorded and thus available for repetition as against the rest of the evidence that is not34; and To consider the recorded evidence in the context of other, countervailing evidence, whether recorded or not, and of any arguments of the accused relevant to that evidence. Departures from the principles in the appellant's trial The trial judge's errors: Identification of the foregoing principles (about which I am in substantial agreement with Hayne J) renders the appellant's complaint of a serious miscarriage of justice in his case much clearer. In the present case, the trial judge departed from the stated principles. He appears to have treated the video-recording (as distinct from the oral evidence it reproduced) as though it were part of the "evidence" itself. He marked and 32 See reasons of Gleeson CJ at [3]. 33 Reasons of Hayne J at [96]. 34 cf reasons of Hayne J at [95]. Kirby treated the physical recording as an exhibit in the trial. This constituted an error of law in relation to the interpretation of the Evidence Act. When the jury requested access to copies of the complainant's "two statements" and also a statement by the complainant's friend, it was the trial judge (not the prosecutor and certainly not the appellant's trial counsel) who proffered the suggestion that the jury be given unrestricted access to the pre- recorded evidence. This was proposed by the judge so that "[the jurors] can have that played themselves during the course of their deliberations". Correctly, this course was immediately objected to by the appellant's trial counsel, who alerted the trial judge to the risk that the jury might pay undue attention to the pre-recorded evidence. The trial judge then said: "That is a practice [sic], but of course they are entitled to have resort to them by coming into this room and having those passages played." For the reasons I have given, this represented an incorrect appreciation of the applicable principle. Moreover, it ran counter to earlier rulings of the Court of Appeal of Queensland35, which by then had been followed, and endorsed, elsewhere in Australia36. Those rulings were binding on the judge in the conduct of the trial. Yet they were not observed. The prosecutor's error: Compounding the error of the trial judge, the prosecutor then submitted: "I don't see that there's any need for [the court] to be reconvened if they're in here watching the video with the Bailiff … It will let them facilitate their deliberations more openly if legal counsel and other people aren't present." This too evidenced a misunderstanding of the character of the testimony contained in the recording. It seriously discounted the risks of its repeated use. It cut across the principle that access to a video-recording in circumstances such as those of the present matter should be carefully considered, appropriately limited, only permitted in open court and then made subject to appropriate judicial warnings or directions. In so far as the prosecutor's comment envisaged that it would be permissible for the jurors to continue their deliberations whilst in the presence of the bailiff (but not legal counsel and other people), it also 35 R v H [1999] 2 Qd R 283 at 290-291 [18] per McMurdo P; R v C [2000] 2 Qd R 54. 36 R v BAH (2002) 5 VR 517 at 522-523 [10]-[11] per Winneke P; cf at 524 [17] per Callaway JA and 536 [66] per O'Bryan AJA. See also R v Lewis (2002) 137 A Crim R 85 at 88-89 [11]; R v Lyne (2003) 140 A Crim R 522 at 528 [20]; R v MAG [2005] VSCA 47 at [20], [23]; R v Davies (2005) 11 VR 314 at 321 [26]. Kirby demonstrated a serious misunderstanding of the requirement that those deliberations be wholly private and confidential. Ensuing course of the trial: Unfortunately, trial counsel for the appellant then endorsed the foregoing proposal of the prosecutor as a "sensible and practical approach". This too was a mistake, albeit one which was shared with both the judge and the prosecutor. The judge then recalled the jury and told them, in effect, that they would be entitled to unlimited and unrestricted access to the video-recording in the courtroom during the course of their deliberations. Obviously, at the least, this presented the risk just mentioned that the bailiff (who would have to provide access to the courtroom and to the recording and the recording equipment) might overhear juror communications: potentially a significant breach of the secrecy and integrity of the jury's deliberations37. It was at this point in the trial that the appellant informed the court that he would not be giving, or calling, evidence in his own case. In fact, his case, as indicated in his counsel's address to the jury, relied substantially on the prosecution's obligation to prove the allegations against him beyond reasonable doubt. Absence of warning to the jury: Whilst considering their verdict, the jury requested to view the recorded evidence again. The judge told them: "[W]e'll make arrangements for you to … come into this Courtroom so at your leisure you can see the evidence alone and I think at this stage I won't take a verdict before 9.30 in the morning." The trial judge gave no warning or direction to the jury, then or later, about the way they should approach such evidence. On the contrary, the jury were permitted unrestricted and unsupervised access to the recorded evidence, otherwise than in open court and after the close of the evidence. It may be inferred that they viewed the whole or parts of it at least once, and perhaps repeatedly. Effectively, it happened in secret. The judge, the accused and the public were unaware of the course that the jury took. When, the following day, the jury also requested to see the complainant's written statement to the police, the entire statement was read to them in open court. Again, no direction or warning was given by the trial judge as to the weight to be accorded to the statement in light of its repetition. The jury requested that part of the statement be read yet a third time Once more, that 37 cf R v Jackson and Le Gros [1995] 1 Qd R 547. Kirby request was complied with, but without any judicial warning or direction along the lines of the governing principles. Verdicts of guilty were subsequently returned by the jury, almost 24 hours after they had been charged to consider their verdicts. The conviction of the accused and his sentencing followed. Conclusion: a miscarriage of justice is established Absence of any miscarriage? In light of the principles that should have been observed and the actual course adopted in the trial, the appellant has demonstrated a miscarriage of justice. In his reasons, Hayne J concludes that there was no miscarriage because: Trial counsel consented to the jury having access to the pre-recorded evidence38; As a general rule a party is bound by decisions made at trial by his counsel, whose function it is to defend him from any miscarriage of justice39; The appellant did not give evidence and thus there was no countervailing actual evidence of which the jury might otherwise have been warned40; and As presented, the case turned upon the jury's acceptance or rejection of the evidence of the complainant and was thus simple and straightforward enough that the course adopted did not occasion a miscarriage41. For similar reasons, Hayne J holds that the trial judge was not obliged to provide a warning to the jury about the use they might make of the pre-recorded evidence, in particular because no warning of that kind was sought by the appellant's trial counsel42. I disagree with these conclusions. 38 Reasons of Hayne J at [77]. 39 Reasons of Hayne J at [77]. 40 Reasons of Hayne J at [78]-[79]. 41 Reasons of Hayne J at [80]. 42 Reasons of Hayne J at [82]. Kirby The consent of trial counsel: There are several reasons why the consent of trial counsel to the course adopted is not conclusive for the outcome of this appeal. First, it is the overriding duty of a trial judge to conduct a lawful and fair trial. That duty cannot be delegated to counsel on either side. In this case, trial counsel did initially object to the provision of the recording to the jury. That objection ought to have alerted the trial judge to the problem inherent in the course he was proposing. Secondly, it was the trial judge himself who first suggested the provision of the recording to the jury for unsupervised use during their deliberations. It was the prosecutor who proposed the expedient that avoided the proper course of providing supplementary access to the recording in open court in the presence of the appellant and both counsel, which might have enlivened consideration of the need for appropriate warnings or directions to the jury about the use they might make of the evidence. The consent of the appellant's trial counsel to that course was, as I have said, a mistake. But the fundamental error originated with the trial judge and the prosecutor, each of whom, under our system of criminal justice, had special responsibilities to ensure the fairness of the conduct of the trial. Thirdly, this was not unploughed territory in the law of Queensland. The Court of Appeal of Queensland, in repeated rulings and in clear terms, had correctly called to notice the applicable principles43 and such authority of this Court as touched on the matter44. It had also noted overseas authorities that collected relevant considerations to guide trial judges45. It was the duty of the judge in the appellant's trial to advert to, and comply with, those considerations. It was the specific responsibility of the prosecutor to be aware of them and to remind the judge about them. The entire fault cannot fairly be placed at the door of the appellant's trial counsel, still less the appellant himself. I regard this as involving inappropriately the application of games theory to the criminal trial. That theory may have a place in politics and business management, but in criminal trials, where liberty is at stake, the appellate court is concerned with substance, not merely with who was to blame for breaching the applicable rules. I adhere to what I said in Conway v The Queen46: 43 R v H [1999] 2 Qd R 283 at 290 [18], 295 [47]-[49]; R v C [2000] 2 Qd R 54. 44 Bulejcik v The Queen (1996) 185 CLR 375 at 386. 45 Especially Rawlings [1995] 1 WLR 178; [1995] 1 All ER 580; Welstead [1996] 1 Cr App R 59 and R v Thomas (1992) 9 CRNZ 113. 46 (2002) 209 CLR 203 at 241 [104] (citation omitted); see also Heron v The Queen (2003) 77 ALJR 908 at 912 [22]; 197 ALR 81 at 86. Kirby "The 'miscarriage of justice' with which an appellate court is concerned in a criminal appeal is addressed to matters of substance and not just procedure … Courts of criminal appeal are not mere referees of a game that can only be played once in accordance with a single game plan. Practical considerations ordinarily necessitate holding parties to the way in which they conducted their trial, normally through the lawyers who represent them. But an appellate court should not allow that principle to divert it from its fundamental responsibility." Fourthly, it was not suggested that the appellant's counsel's oversight of the Court of Appeal authority and acquiescence in the course proposed by the trial judge was based on a tactical or forensic decision, now being disclaimed on appeal because it did not pay dividends at trial. The record clearly shows that there was a common error shared between the judge and counsel on both sides. The reference in the proviso to a "miscarriage of justice"47 focuses attention on the position of an appellant. In this matter, the appellant was entitled to expect that, in essential respects, his trial would be conducted in his presence in a public court, according to law and without lapsing into potential unfairness48. A binding decision of counsel? I acknowledge that the principle that an appellant is bound by the conduct of his counsel stands against a conclusion of actual miscarriage49. However, this is not an inflexible principle, nor is it one that could displace the language and purpose of the Code, a statute entrusting to the courts (including consequences of mistakes in the conduct of criminal trials that occasion a miscarriage of justice. the protection of defendants against this Court) Just as the failure of trial counsel to reserve points or to perceive and raise grounds of appeal is not fatal to the case of an accused person who comes to the judicature of the Commonwealth for protection against injustice50, so the mistaken acquiescence of trial counsel in the proposals of the judge and the prosecutor is not, in the end, conclusive of this appeal. This is particularly so because trial counsel's initial objection to the course initiated by the judge was correct. That objection should have alerted the judge and the prosecutor to the 47 The Code, s 668E(1A). 48 cf Darkan (2006) 227 CLR 373 at 413-414 [139]-[141]. 49 R v Birks (1990) 19 NSWLR 677; TKWJ v The Queen (2002) 212 CLR 124; Nudd v The Queen (2006) 80 ALJR 614; 225 ALR 161. 50 Gipp v The Queen (1998) 194 CLR 106; Crampton v The Queen (2000) 206 CLR Kirby applicable principles expressed and repeated in successive decisions of the Queensland Court of Appeal. What is the practical use of courts of criminal appeal laying down clear rulings to be observed in criminal trials if, when they are not observed by the judge or prosecutor, this Court (whilst substantially endorsing those rulings) does not proceed to afford the accused, who is adversely affected, the relief that he seeks? Apart from the injustice in the particular case, this approach, when it becomes a common practice of this Court, presents a serious question as to whether further appeal to uphold basic principles had any point. The best way that this Court can reinforce principle in such matters, where a miscarriage has occurred, is to order a retrial. That is when principle tends to be learnt and applied. Failure to give or call evidence: It is true that the failure of the appellant to give or call evidence removes one consideration that would otherwise have been very important in a case of this kind. Had such evidence been received, it would have been essential for the trial judge to remind the jury of it as a counterweight to the repetition of the complainant's evidence. Moreover, a direction or warning as to the balancing of the competing evidence would have been appropriate. Nevertheless, the failure of the appellant to give or call evidence is not fatal to his complaint. It is an essential feature of the system of criminal justice observed in Australia that it is accusatorial in character. It is no part of the function of this Court to penalise the appellant because he elected to put the prosecution to proof of its charges. In one sense, the appellant's conduct of his case made it more, not less, important that the balance of the trial should be safeguarded through observance of the applicable rules concerning access to the pre-recorded evidence. Resulting issues for trial: It is true that the issues presented for the jury's determination were relatively straightforward in that they ultimately revolved around the acceptance or rejection of the complainant's evidence. But in the usual case, the complainant (or prosecution witnesses) would, in our system of criminal justice, have but one chance to convince a jury to return a verdict adverse to the accused. To permit repeated re-presentation of the prosecution's evidence without any judicial supervision or countervailing remarks and otherwise than in open court creates a serious potential for injustice to a defendant. As Spigelman CJ remarked in R v NZ51: 51 (2005) 63 NSWLR 628 at 633 [18]-[19]; cf reasons of Gleeson CJ at [4]. Kirby "[T]he videotape evidence, by its very nature, is of greater force than a transcript. Whatever impression a jury may have been left with at the end of the complainant's oral evidence as to her credibility could easily have been altered when the whole of the evidence was reviewed in the jury room, where the videotape had to be compared with the transcript. … [T]he circumstance that the appellant did not give evidence [is not determinative]. There may be a relevant imbalance in the sense of disproportionate weight being given to part of the evidence even though the accused has exercised his right not to give evidence. In the present case the possibility of disproportionate weight existed [in relation to] the evidence on the videotape". A serious procedural irregularity: This Court has acknowledged that miscarriages of justice can occur requiring retrial where there has been a serious procedural irregularity in the conduct of a trial52. Having reviewed the English and Australian authorities up to 2004, Dr Christopher Corns concluded that a breach of the requirement that a jury should not ordinarily have unsupervised access to pre-recorded evidence "would normally constitute a fundamental procedural irregularity sufficient to quash the conviction"53. I agree. Whilst no rigid rule can govern the evaluative decision that the proviso in criminal appeals requires, the wisdom of so many courts that have gone before concerning the serious dangers inherent in the kind of procedural irregularities that affected the appellant's trial suggests that no mechanistic view should be taken with regard to the miscarriages of justice of which he complains. In particular, it would be a misapplication of the proviso to invoke it simply because of mistakes by the accused's trial counsel. Both of the appellant's complaints about the use of the pre-recorded evidence are made out. He should have relief. Matching principles and outcomes: The trial judge erred in proposing and then permitting unsupervised use by the jury of the pre-recorded evidence. Having taken that course, he also erred in failing to give the jury a warning or direction of the type required in the circumstances. A rigid application of the rule governing the responsibilities of counsel would defeat the purpose of criminal appeals. It would risk turning such appeals into an instrument of injustice rather than a protection against miscarriages of justice. The appropriate response to the appellant's success in establishing the principles and rules of practice for which he argued, as set out in the latter part of the reasons of Hayne J 52 Weiss (2005) 224 CLR 300 at 317 [45]-[46]. 53 Corns, "Videotaped evidence in Victoria: some evidentiary issues and appellate court perspectives", (2004) 28 Criminal Law Journal 43 at 52. Kirby (with which I agree)54, is to apply them to the appellant's case. That is what I would do. Orders The appeal should be allowed. The orders of the Court of Appeal of the Supreme Court of Queensland should be set aside. In place of those orders, the appeal to that Court should be allowed; the appellant's convictions should be quashed; and a new trial should be ordered. 54 Reasons of Hayne J at [85]-[96]. Hayne HAYNE J. The principal issue in this appeal concerns the application of particular provisions of the Evidence Act 1977 (Q) ("the Evidence Act") governing the giving of evidence by a young person allegedly the victim of sexual offending. the complainant's evidence-in-chief and cross-examination were video-recorded. (There was no re-examination.) The recording was played to the jury at the appellant's trial in the District Court of Queensland. those provisions, Pursuant In the course of debate between the trial judge and counsel about what material the jury should have available during their deliberations, trial counsel for the appellant agreed that it "seem[ed] a sensible and practical approach" for the jury, when considering their verdict, to be able to play the recording in the courtroom "in the presence of the Bailiff and not in the presence of other members of the Court". The appeal in this Court was conducted on the footing that, during their deliberations, the jury were able to and did play the recorded evidence of the complainant otherwise than in the presence of the trial judge and counsel for the parties. In his appeal to this Court, the appellant alleged that there had been a miscarriage of justice. That is, he invoked the third of the three grounds of appeal provided for by s 668E(1) of the Criminal Code (Q) ("the Code")55. The appellant did not seek to contend that there had been any wrong decision of any question of law. Two particulars of the allegation of miscarriage of justice related to the jury's access to the recorded evidence of the complainant. First, he alleged that the trial judge erred in allowing the jury, during their deliberations, to play the pre-recorded evidence of the complainant, and secondly that the trial judge should have directed the jury that "they should not give undue weight to the evidence". The appellant placed the chief weight of his argument upon the first of these particulars. The third particular given by the appellant of the alleged miscarriage of justice at his trial was that a written statement made by the complainant to police 55 Section 668E(1) of the Criminal Code (Q) ("the Code") provided: "The Court on any such appeal against conviction shall allow the appeal if it is of opinion that the verdict of the jury should be set aside on the ground that it is unreasonable, or can not be supported having regard to the evidence, or that the judgment of the court of trial should be set aside on the ground of the wrong decision of any question of law, or that on any ground whatsoever there was a miscarriage of justice, and in any other case shall dismiss the appeal." Hayne was wrongly received in evidence. Whether the written statement was wrongly admitted in evidence turns upon particular provisions of the Evidence Act. It will be convenient to deal with this issue (and the statutory provisions that govern its disposition) separately from the complaints made about the jury's access to the recording of the complainant's evidence. In dealing with the appellant's principal complaint about the access the jury had to the pre-recorded evidence of the complainant, it is first necessary to say something about the charges brought against the appellant and their disposition at trial, next to refer to the relevant provisions of the Evidence Act, and then to refer to some aspects of the course of events at trial and on appeal to the Court of Appeal of the Supreme Court of Queensland. These reasons will demonstrate that the course of events at the appellant's trial is determinative of the appellant's principal complaint (about the access the jury had to the record of the complainant's evidence) and the related issue about the directions to be given to the jury about that evidence. It will be necessary none the less to consider some more general questions about the meaning and application of the relevant provisions of the Evidence Act. Indictment, pleas and verdicts The appellant was tried, in the District Court of Queensland, on an indictment alleging 12 counts of sexual offences against the one complainant. The complainant was aged 14 at the time of the alleged offences but was 16 by the time of the appellant's trial. There was no dispute at trial, or on appeal, that the complainant was, to the knowledge of the appellant, a person who was the "lineal descendant" of the appellant and there was, therefore, no occasion to consider in this appeal the statutory or other basis upon which that conclusion could be founded. Each count in the indictment alleged that the relevant offence occurred between 22 July 2002 and 4 August 2002. The counts were described on the face of the indictment as 11 counts of "[i]ndecent treatment of a child under 16 years who is a lineal descendant" and one count of "[i]ncest". That summary description of the counts, though broadly accurate, did not identify the particular statutory provisions that were said to be engaged. Ten of the offences were identified in the counts of the indictment as offences under s 210(1)(a) or (b) of the Code56 and further alleged, as a circumstance of aggravation, that the 56 Section 210 of the Code, as it stood at the time of the alleged offences, provided, so far as presently relevant: "(1) Any person who— (Footnote continues on next page) Hayne complainant was, to the knowledge of the appellant, his lineal descendant; one count alleged an attempt57 to commit an offence under s 210(1)(b) and further alleged that the complainant was, to the knowledge of the appellant, his lineal descendant; the last count alleged an offence under s 222 of the Code of having carnal knowledge of the complainant, his lineal descendant, knowing that the complainant bore that relationship to him. The appellant pleaded not guilty to all counts. The count alleging an attempt to commit an offence under s 210(1)(b) was withdrawn from the jury's consideration upon the prosecutor entering a nolle prosequi in respect of that count. The appellant was convicted of each of the 11 remaining counts. Evidence of "affected children" Division 4A of Pt 2 of the Evidence Act (ss 21AA-21AX) made provision for the evidence of what it referred to as an "affected child". An "affected child" was defined58 as "a child who is a witness in a relevant proceeding and who is not unlawfully and indecently deals with a child under the age of 16 years; unlawfully procures a child under the age of 16 years to commit an indecent act; is guilty of an indictable offence. (4) If the child is, to the knowledge of the offender, his or her lineal descendant ... the offender is guilty of a crime, and is liable to imprisonment for 14 years. (6) In this section— deals with includes doing any act which, if done without consent, would constitute an assault as defined in this Code." 57 Section 4 of the Code makes provisions relevant to identifying what constitutes an attempt to commit a crime. It is not necessary to examine the operation of those provisions. 58 s 21AC. Hayne a defendant in the proceeding". A "relevant proceeding" included59 "a criminal proceeding for a relevant offence" and a "relevant offence"60, in relation to a proceeding, included "an offence of a sexual nature". A "child" was defined61 for the purposes of a criminal proceeding (and so far as is now relevant) as an individual under 16 years when the first of a number of events, by which criminal proceedings could be initiated, occurred. The complainant in the present matter was a "child" within the meaning of this definition, even though aged 16 years at the time of the trial. The proceedings against the appellant were a "relevant proceeding". The Evidence Act described62 the purposes of Div 4A as being: to preserve, to the greatest extent practicable, the integrity of an affected child's evidence; and to require, wherever practicable, that an affected child's evidence be taken in an environment that limits, to the greatest extent practicable, the distress and trauma that might otherwise be experienced by the child when giving evidence." Section 21AB recorded that "[t]o achieve the purposes of this division" the division prescribed various measures for an affected child when giving evidence. Section 21AB(a)(i) recorded the effect of the division as being that, for a criminal proceeding, "the child's evidence is to be pre-recorded in the presence of a judicial officer, but in advance of the proceeding". The Evidence Act distinguished between taking an affected child's evidence at a committal63 and taking an affected child's evidence (otherwise than as a witness for the defence64) at a trial on indictment for a relevant offence65. For present purposes, two provisions of subdiv 3 of Div 4A – ss 21AK and 21AM – are of critical importance. Section 21AK provided that: 59 s 21AC. 60 s 21AC. 61 s 21AD(1)(a). 62 s 21AA. 63 Subdiv 2 (ss 21AE-21AH). 64 s 21AI(2). 65 Subdiv 3 (ss 21AI-21AO). Hayne "(1) The affected child's evidence must be taken and video-taped at a hearing under this section (a 'preliminary hearing') presided over by a judicial officer. The video-taped recording must be presented— if taken for a trial—to the court at the trial. In this section— 'evidence' means evidence-in-chief evidence given cross-examination or re-examination." Section 21AM provided that: "(1) A video-taped recording of the affected child's evidence made under this subdivision for a proceeding, or a lawfully edited copy of the recording— is as admissible as if the evidence were given orally in the proceeding in accordance with the usual rules and practice of the court; and is, unless the relevant court otherwise orders, admissible any rehearing or re-trial of, or appeal from, the proceeding ... The admissibility of the recording or copy for a proceeding is not affected only because the child turns 18 before the evidence is presented at the proceeding." It was these provisions that provided for the video-taping of the complainant's evidence and for the use that was to be made of the recording at the appellant's trial. And because these provisions of subdiv 3 of Div 4A were engaged, the trial judge was obliged66 to give (and in this case did give) certain instructions to the 66 s 21AW. Hayne jury about evidence given in this way – in effect that the measure was a routine practice from which no inference as to guilt might be drawn, that the probative weight of the evidence was not increased or decreased because of the measure, and that the evidence was not to be given any greater or lesser weight because of the measure. The course of trial and the appeal to the Court of Appeal After a prosecutor had presented the indictment against the appellant (a step that had to occur67 before evidence could be taken under subdiv 3 of Div 4A) the complainant's evidence (both evidence-in-chief and cross-examination) was taken and video-taped. A little over a month later, the appellant was arraigned on the indictment, and a jury was empanelled. The prosecutor opened the case to the jury. Evidence was adduced, in the ordinary way, from the investigating police officer. The prosecutor then, without objection, provided the members of the jury, and the trial judge, with a transcript of the recorded evidence of the complainant. The prosecutor did not tender the tape as an exhibit but the trial judge, of his own motion, marked it as an exhibit. He directed the jury that the transcript was "merely an aid for you" and that "the evidence in the proceedings is what is contained on the tape itself, the sounds, what you hear and, indeed, what you see". The recording of the complainant's evidence was then played to the jury. (The transcripts provided for the use of the jury were recovered before the jury commenced their deliberations.) As the trial came towards an end, there was some discussion between counsel for the parties and the trial judge, about what directions should be given to the jury, and about what material the jury should have access to in the jury room. Trial counsel for the appellant indicated that he would be "asking that the statements – and I mean not only the written statements, but the pre-recorded evidence of the complainant ... not be taken into the jury room". The prosecutor said that he supported that request. Next morning, the jury sent a message to the trial judge saying, among other things, that "our deliberations would be assisted by having copies of [the complainant's] two statements". In the ensuing discussion about the response that was to be made to this message, the trial judge expressed doubts about what the jury meant by the reference to the complainant's "two statements". But without resolving those doubts, counsel for the parties and the trial judge discussed what material should be made available to the jury. During that discussion, the trial judge suggested that, in the course of their deliberations, the jury could themselves play the pre-recorded evidence of the complainant (as well 67 s 21AJ. Hayne as a record of some evidence given by another child witness). Trial counsel for the appellant submitted that the pre-recorded evidence should not go into the jury room. The trial judge said that the jury "are entitled to have resort to [the recordings] by coming into [the courtroom] and having those passages played". He asked counsel for both parties to consider whether the Court should be reconvened for that to be done. The prosecutor responded at once, and suggested that there was no need to reconvene the Court if the jury were in the courtroom, watching the video with the Bailiff. And trial counsel for the appellant agreed that this seemed "a sensible and practical approach". When the jury came back into court, the trial judge dealt with the message that had been sent. The jury's speaker said that what the jury wanted was the transcript of the recordings that had been played in court. The trial judge told the jury that the transcripts had been no more than an aid to understanding but that the jury could have access to the recordings "by simply asking the Bailiff, and during the course of your deliberations you can listen to those videotapes again". That was to be done in the courtroom; the tapes "won't go with you into the jury room". The use that might be made of the pre-recorded evidence of the complainant was not the subject of any further submission during the trial. The appellant appealed to the Court of Appeal against his convictions. That Court (Williams JA, Muir and Atkinson JJ) dismissed68 the appeal. One of the several grounds advanced by the appellant, in the Court of Appeal, was that there had "been a miscarriage of justice on the basis that the jury were permitted to view tapes of the pre-recorded evidence of the complainant during the course of their deliberations in the courtroom and not in open court". In dealing with this ground, the Court of Appeal proceeded on the footing that the jury had watched and listened to the pre-recorded evidence of the complainant late on the afternoon of the first day on which they retired. The principal reasons of the Court were given by Atkinson J, who said69 that "[t]here is no general rule that video recordings made under s 21AM of the [Evidence Act] cannot be taken by the jury into the jury room for their consideration". Noting70 that counsel for both parties had "consented to the jury having the capacity to watch the s 21AM video recordings" her Honour concluded that there was no merit in the ground advanced by the appellant. 68 R v GT [2005] QCA 478. 69 [2005] QCA 478 at [18]. 70 [2005] QCA 478 at [18]. Hayne Miscarriage of justice at trial? It is important to recognise the statutory basis underpinning the appellant's submissions to the Court of Appeal about the access the jury had had to the pre-recorded evidence of the complainant. The ground of appeal which the appellant advanced invoked the third of the three grounds stated in the criminal appeal provisions of the Code. Those provisions, which substantially follow the common form of appeal provisions derived from the Criminal Appeal Act 1907 (UK), require the Court of Appeal to allow an appeal against conviction if it is of the opinion, first, that the verdict of the jury should be set aside on the ground that it is unreasonable, or cannot be supported having regard to the evidence, or second, that the judgment of the court of trial should be set aside on the ground of any wrong decision of any question of law, or third, that "on any ground whatsoever there was a miscarriage of justice"71. The appellant's complaint was that there had been a miscarriage of justice72, not that there had been any wrong decision of any question of law. Trial counsel for the appellant consented to the jury having the access they did to the pre-recorded evidence of the complainant. Great weight must be attached to that consent in considering whether there was a miscarriage of justice. So much follows inevitably from the adversarial nature of a criminal trial73. As was said in R v Birks74, "[a]s a general rule, a party is bound by the conduct of his or her counsel, and counsel have a wide discretion as to the manner in which proceedings are conducted". It is for the parties, by their counsel, to decide how and on what bases the proceeding will be fought75. Consent by counsel for a party to a course of conduct is usually an important indication that that party suffers no miscarriage of justice by pursuit of the intended course. But, as the cases76 concerning allegations of incompetent representation illustrate, the miscarriage of justice ground may yet be established despite the course that is taken by an accused person's counsel at trial. In the present case there was no allegation of incompetent representation. The circumstances surrounding trial 71 s 668E(1). 72 Nudd v The Queen (2006) 80 ALJR 614 at 622 [24]; 225 ALR 161 at 170. 73 Ratten v The Queen (1974) 131 CLR 510 at 517; RPS v The Queen (2000) 199 CLR 620 at 630 [22]; TKWJ v The Queen (2002) 212 CLR 124 at 158 [106]. 74 (1990) 19 NSWLR 677 at 683. 75 Ratten (1974) 131 CLR 510 at 517; Re Ratten [1974] VR 201 at 214. 76 For example, R v Birks (1990) 19 NSWLR 677; R v Miletic [1997] 1 VR 593; TKWJ (2002) 212 CLR 124; Nudd (2006) 80 ALJR 614; 225 ALR 161. Hayne counsel consenting to the course that was followed require the conclusion that there was no miscarriage of justice. The appellant did not give evidence at his trial. He did not call any evidence in his defence. There was no evidence that he had made any out-of-court admission, whether to police or otherwise. There was no evidence led of the appellant having been interviewed by police about the matters alleged against him. The appellant advanced no positive case in answer to the allegations made. In final address, his counsel submitted to the jury that the prosecution had not established its case beyond reasonable doubt and sought to persuade the jury to that view by reference to what were said to be "very grave inconsistencies" in the complainant's account of events. It follows that the critical evidence to be considered by the jury (and in one sense the only evidence about which they had to be satisfied) was the evidence given by the complainant. No doubt the jury would have had to assess the veracity of the complainant's evidence in the light of the other evidence adduced as part of the prosecution's case (including evidence of a complaint made about the appellant's conduct and some evidence of previous accounts the complainant had given of the relevant events). But in the end, both the prosecution's case, and the appellant's answer that the prosecution had not proved its case beyond reasonable doubt, depended entirely upon what the jury made of the complainant's evidence. Competing arguments were put to the jury by the parties, but the evidence that the complainant had given was not controverted otherwise than by the appellant's cross-examination. To allow only the complainant's evidence to be re-examined by the jury presented no risk of an unbalanced consideration of competing accounts of what was alleged to have happened. In those circumstances, there was no miscarriage of justice occasioned by the jury having the access they did to the complainant's pre-recorded evidence. The appellant further contended that the trial judge should have directed the jury that they should not give undue weight to the pre-recorded evidence of the complainant. The argument was advanced under cover of a ground of appeal which directed attention to "the complainant's statement [being] re-read" to the jury. It may be that the reference to "the complainant's statement" should be understood as referring to the complainant's written statement to police but the appellant's arguments were directed largely to the need to warn about misuse of the video-recorded evidence. No direction of this kind was sought at trial. For the reasons that lead to the conclusion that, in this particular case, there was no miscarriage of justice occasioned by the jury having the access they did to the complainant's pre-recorded evidence, this contention should also be rejected. Hayne The grounds of appeal asserting error in connection with the jury having the access they did to the complainant's pre-recorded evidence were not made out. It is as well, however, to say something further about the operation of the relevant provisions of the Evidence Act and, in particular, about the proposition77 that "[t]here is no general rule that video recordings made under s 21AM of the [Evidence Act] cannot be taken by the jury into the jury room for their consideration". Pre-recorded evidence Whether a jury may have access "[in] the jury room" to recordings of evidence made under subdiv 3 of Div 4A of the Evidence Act is a question about whether a jury may have unsupervised access to the recording. It is not, as some statements made at the trial of the appellant may appear to have supposed, a question about geography. Thus, when it was said78 that "[t]here is no general rule that video recordings made under s 21AM of the [Evidence Act] cannot be taken by the jury into the jury room for their consideration", the proposition should be understood as denying the existence of a general rule that a jury may not have unsupervised access to recordings of the kind now in question. The unstated premise for the proposition that a jury may have unsupervised access to recordings of evidence made under subdiv 3 of Div 4A of the Evidence Act is that the record of that evidence is a piece of real evidence, properly received in evidence as an exhibit. That premise is not right. The record of evidence given under these provisions is no more a piece of real evidence receivable at trial than is the written or electronic record of oral evidence given at the trial in the ordinary way. It may be accepted that, divorced from its context, s 21AM of the Evidence Act might suggest that when the evidence of an affected child is pre-recorded, the record itself is admissible evidence. Section 21AM(1) says that a "video-taped recording of the affected child's evidence ... is as admissible as if the evidence were given orally in the proceeding" and that the recording is "admissible in ... any rehearing or re-trial of ... the proceeding". When regard is had, however, to some fundamental considerations about the nature of the trial process, and to some particular textual indications found in the relevant division of the Evidence Act, it is evident that the record itself is not ordinarily admissible as a piece of real evidence. 77 [2005] QCA 478 at [18]. 78 [2005] QCA 478 at [18]. Hayne First, there are some fundamental characteristics of Australian trial processes, particularly at a criminal trial, that must be borne at the forefront of consideration. Subject to whatever statutory modifications may have been made to applicable rules of procedure, a criminal trial in Australia is an accusatorial and adversarial process79. It is essentially an oral process80. Subject to exceptions, the hearsay rule excludes evidence of out-of-court assertions when tendered as evidence of the truth of the assertions. As a result, the focus of the trial falls chiefly upon what is said in the evidence given in the courtroom. As three members of this Court said in Butera v Director of Public Prosecutions (Vict)81: "The adducing of oral evidence from witnesses in criminal trials underlies the rules of procedure which the law ordains for their conduct. A witness who gives evidence orally demonstrates, for good or ill, more about his or her credibility than a witness whose evidence is given in documentary form. Oral evidence is public; written evidence may not be. Oral evidence gives to the trial the atmosphere which, though intangible, is often critical to the jury's estimate of the witnesses. By generally restricting the jury to consideration of testimonial evidence in its oral form, it is thought that the jury's discussion of the case in the jury room will be more open, the exchange of views among jurors will be easier, and the legitimate merging of opinions will more easily occur than if the evidence were given in writing or the jurors were each armed with a written transcript of the evidence." The whole of the oral evidence of an affected child, adduced by the prosecution at a relevant proceeding, is pre-recorded. (In this and in other important respects the Evidence Act differs from some generally similar provisions made in other jurisdictions82.) The record is then played before the jury and the jury both hear and observe the child giving evidence. The evidence that the affected child gives, although given at a "preliminary hearing", is given subject to all applicable rules governing relevance and admissibility. It is pre-recorded in accordance with, and for the achievement of the purposes described in, s 21AA – to preserve the integrity of the evidence and to limit the 79 TKWJ (2002) 212 CLR 124 at 158 [106]; RPS (2000) 199 CLR 620 at 630 [22]; Ratten (1974) 131 CLR 510 at 517. 80 Butera v Director of Public Prosecutions (Vict) (1987) 164 CLR 180 at 189-190. 81 (1987) 164 CLR 180 at 189 per Mason CJ, Brennan and Deane JJ. 82 Many of those provisions were examined in R v NZ (2005) 63 NSWLR 628 at Hayne distress and trauma that the child might otherwise experience when giving evidence. None of those considerations suggests that the record itself is to be treated as an item of real evidence. All point only to the conclusions that the evidence is what the child says, and that the record itself is not evidence. Those conclusions are reinforced by the fundamental characteristics of a criminal trial that have been mentioned earlier. Two textual considerations support those conclusions. First, there is the reference in s 21AM to the recording being admissible in any appeal from the proceeding. To speak of the record as an item of evidence in an appeal (as distinct from a record of evidence that is to be considered in an appeal) is incongruous. It follows that the reference in the same section to the recording being "as admissible as if the evidence were given orally in the proceeding in accordance with the usual rules and practice of the court" is not to be understood as requiring the reception of the recording as an item of real evidence. Rather, it is to be understood as doing no more than permitting the child's evidence, taken earlier, to be imparted to the jury by the playing of the recording. Secondly, the directions that s 21AW requires a trial judge to give are consistent only with the relevant evidence consisting of what the child says, as distinct from whatever electronic record may be made of the questions and answers. Those directions make little sense if the relevant evidence is the record rather than the information that is conveyed when the recording is played. Several of the steps taken at the trial of the appellant in relation to the recorded evidence of the complainant were of a kind similar to those that would be taken in dealing with recordings of out-of-court statements made by an accused person, tendered at trial as admissions. In particular, the provision of a transcript of the recording as an aid to understanding what was said, coupled with a direction that the recording not the transcript was the relevant evidence, reflect principles of the kind discussed in Butera83. But the critical difference between Butera and cases of the kind now under consideration is that Butera concerned the admission of evidence of out-of-court assertions as an exception to the hearsay rule. The relevant evidence in Butera was what the accused person had said on an earlier occasion. In cases like the present, the affected child gives evidence of what he or she knows, saw, or did. The evidence that the child gives is direct evidence, not hearsay. Unless some exception to the hearsay rule is engaged, the child may not give evidence of an out-of-court assertion as evidence of the truth of its content. When the effect of the relevant provisions of the Evidence Act is thus understood, it becomes evident that seldom, if ever, will it be appropriate to 83 (1987) 164 CLR 180. Hayne admit the record of that evidence as an exhibit. (That is not to say that there may not be evident good sense in marking the record for identification; but that is a step that is distinctly different from receiving the record in evidence and marking it as an exhibit.) Moreover, when the effect of the relevant provisions is understood in the manner described, it also follows that a request by a jury for access to evidence pre-recorded in accordance with those provisions should ordinarily be dealt with in the same way as any request by a jury to be reminded of evidence that has been led at the trial. Seldom would it be appropriate to meet a request of that kind by giving the jury unrestrained access to the recording to play and replay. The reasons for not allowing access of that kind lie in the need to preserve fairness and balance in the conduct of the trial. Replaying the evidence given by one witness, after all the evidence has been given, carries risks. First, there is the risk inherent in the form in which it is presented. As was said in Butera84, there is the risk that undue weight will be given to evidence of which there is a verbatim record when it must be compared with evidence that has been given orally. Secondly, there is the risk that undue weight will be given to evidence that has been repeated and repeated recently. Other risks may arise from the circumstances of the particular trial. The purpose of reading or replaying for a jury considering its verdict some part of the evidence that has been given at the trial is only to remind the jury of what was said. The jury is required to consider the whole of the evidence. Of course the jury as a whole, or individual jurors, may attach determinative significance to only some of the evidence that has been given. And if that is the case, the jury, or those jurors, will focus upon that evidence in their deliberations. While a jury's request to be reminded of evidence that has been given in the trial should very seldom be refused, the overriding consideration is fairness of the trial. If a jury asks to be reminded of the evidence of an affected child that was pre-recorded under subdiv 3 of Div 4A of the Evidence Act and played to the jury as the evidence of that child, that request should ordinarily be met by replaying the evidence in court in the presence of the trial judge, counsel, and the accused. Depending upon the particular circumstances of the case, it may be necessary to warn the jury of the need to consider the replayed evidence in the light of countervailing evidence or considerations relied upon by the accused. It may be desirable, in some cases necessary, to repeat the instructions required by s 21AW. Seldom, if ever, will it be appropriate to allow the jury unsupervised access to the record of that evidence. 84 (1987) 164 CLR 180 at 189-190. Hayne The admission of the complainant's statement to police Although the prosecution played the complainant's pre-recorded evidence to the jury, the prosecution also tendered a written statement the complainant had made to police describing what the appellant had done. The prosecution tendered the statement relying upon s 93A of the Evidence Act. There was an issue in the Court of Appeal about the form of the legislation that was to be applied. After the trial, but before the appeal to the Court of Appeal was decided, s 93A had been amended85. The amendment altered the age requirements for engaging s 93A. There was room for debate whether the complainant, being 16 years old at the time of the trial, met the age requirements stated in the section as it stood before the amendment. The amendment was expressed86 as having retrospective effect. In the Court of Appeal, the appellant argued that the relevant form of the section to apply was as it stood at the time of the trial. That argument was resolved against the appellant in the Court of Appeal87 and it was not maintained in this Court. It was accepted that the relevant form of the legislation to be considered is as it stood after those amendments. In this Court the appellant alleged that the trial judge erred "in permitting the prosecutor to tender written statements (in particular the statement of the complainant) taken pursuant to [s 93A of the Evidence Act] in circumstances where the complainant ... had already given full pre-recorded evidence". This argument was not made at trial, or in the Court of Appeal. The appellant's argument in this Court extended to the reception in evidence of a written statement made by another young person to whom the complainant had first made a complaint about the appellant's conduct. That other young person had also given pre-recorded evidence. No separate question arises about the reception of that statement and it is convenient to proceed by reference only to the written statement of the complainant. Section 93A, so far as presently relevant, provided that: In any proceeding where direct oral evidence of a fact would be admissible, any statement tending to establish that fact, contained in a document, shall, subject to this part, be admissible as evidence of that fact if— 85 Justice and Other Legislation Amendment Act 2005 (Q), s 93. 86 Justice and Other Legislation Amendment Act 2005, s 95. 87 [2005] QCA 478 at [1], [3], [33]. Hayne the maker of the statement was a child or an intellectually impaired person at the time of making the statement and had personal knowledge of the matters dealt with by the statement; and the maker of the statement is available to give evidence in the proceeding. (3) Where the statement of a person is admitted as evidence in any proceeding pursuant to subsection (1) ... the party tendering the statement shall, if required to do so by any other party to the proceeding, call as a witness the person whose statement is so admitted and the person who recorded the statement. (3A) For committal offence, subsections (1)(b) and (3) do not apply to the person who made the statement if the person is an affected child." proceeding relevant for The expressions "relevant offence" and "affected child" used in s 93A(3A) were defined88 by reference to the definitions contained in s 21AC referred to earlier in these reasons in connection with the pre-recording of evidence of an affected child. Section 98 of the Evidence Act gave the court discretion to reject any statement notwithstanding that the requirements of s 93A (or other provisions of the same part of the Act) were satisfied. That discretion was exercisable "if for any reason it appears ... to be inexpedient in the interests of justice that the statement should be admitted". And s 99 of the Evidence Act permitted the court to direct that a statement in a document be withheld from the jury during their deliberations if it appeared that "if the jury were to have the document with them during their deliberations they might give the statement undue weight". The essence of the proposition advanced by the appellant on this issue was that a party cannot tender an out-of-court statement as evidence of the facts, and at the same time call oral evidence from the maker of the statement upon the same subject. That proposition should be rejected. The stated premise89 upon which s 93A is engaged is that the maker of the statement which it is sought to tender in evidence is available to give evidence. 88 s 93A(5). 89 s 93A(1)(b). Hayne Any other party may require that the party tendering the statement "call as a witness the person whose statement is so admitted"90. Nothing in the text of the section suggests that the party tendering the statement may not choose to call the maker of the statement as a witness. If the tendering party is required by an "other party" to "call as a witness" the maker of the statement, nothing in the text of the section suggests that the tendering party may not adduce evidence-in-chief from the maker about the matters that are the subject of the statement. The maker of the statement is to be called "as a witness", not only "made available for cross-examination"91. And if the tendering party chooses to call the maker of the statement as a witness, nothing in the text of the section suggests that some different rule applies such that the tendering party is precluded from adducing evidence-in-chief from the maker about the matters dealt with in the statement. These textual considerations point against the proposition advanced by the appellant. They are reinforced by other considerations. First, the statutory rule enacted by s 93A does not have universal application. The section makes a special rule for children and intellectually impaired persons. That rule is made for the evident purpose of preserving the integrity of the evidence of such persons, by allowing evidence of an account of relevant events that was made before, sometimes well before, the trial of the relevant proceeding. But if the party relying on the account of a child or intellectually impaired person is able to and wishes to have that person give their account orally, as well as in the form of the statement that has previously been made, there is no reason to prevent that being done. Secondly, a statement admitted under s 93A is admitted as evidence of the facts that the statement tends to establish; it is not admitted to bolster the credit of the maker of the statement. The general rule92 that prior consistent statements of a witness are not admissible to bolster the credit of the witness is not engaged. Because the statement is admitted as evidence of the facts it tends to establish, the hearsay rule is engaged. But the statute provides an exception. It operates according to its terms. Whether or not the maker of the statement is called to give evidence, the statement of a child is admissible as evidence of the facts that the statement tends to establish, if the conditions specified in s 93A are satisfied. This third ground of appeal fails. 90 s 93A(3). 91 Compare, for example, Uniform Civil Procedure Rules 1999 (Q), r 439(3), concerning making the deponent of an affidavit "available for cross-examination". 92 Cross on Evidence, 7th Aust ed (2004) at 497-498. Hayne Conclusion and orders For these reasons the appeal should be dismissed. 108 HEYDON J. I agree with Hayne J that the appeal should be dismissed. Playing the pre-recorded video evidence Method of approach. The accused's first claim is that the appeal should be allowed on the ground that permitting the jury to play the pre-recorded video evidence of the complainant in the absence of judge and counsel constituted a miscarriage of justice. It appears to follow from s 668E of the Criminal Code (Q)93 that that claim needs to be approached in four stages. First, was there an irregularity? Secondly, if so, was it, or did it cause, a miscarriage of justice? Thirdly, if so, can it be said, after examining the whole trial record, that the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt of the offence on which the jury returned their verdict of guilty so that no substantial miscarriage of justice has actually occurred within the meaning of the "proviso" in s 668E(1A)? Fourthly, if so, does the case nonetheless fall within a category precluding the application of s 668E(1A) on the ground, for example, that there has been a significant denial of procedural fairness or a serious breach of the presuppositions of the trial94? On occasion it may be desirable to consider the fourth stage before the third. This preferred method of approach to the complaint about playing the pre- recorded video should also be adopted for the accused's other two complaints. Was there any irregularity? For the reasons given by Hayne J95, this question must be answered "Yes". Was there a miscarriage of justice? In the special circumstances of this case, for the reasons given by Hayne J96, the question must be answered "No". Substantial miscarriage of justice? Since there was no miscarriage of justice, the ground of appeal fails, and there is no occasion to go to the proviso. In any event, the prosecution did not rely on it. Failure to direct jury This too was said to be a miscarriage of justice. 93 See the reasons of Kirby J at [20]. 94 Weiss v The Queen (2005) 224 CLR 300 at 317 [45]-[46] per Gleeson CJ, Gummow, Kirby, Hayne, Callinan and Heydon JJ. Was there an irregularity? In view of the special emphasis the jury were permitted to devote to the evidence it probably was irregular in the circumstances of this case not to warn them against giving the evidence undue weight97. Was there a miscarriage of justice? For the reasons given by Hayne J98, the answer is "No". Substantial miscarriage of justice? This question does not arise for the same reasons as those given in relation to the issue of playing the pre-recorded video. Admission of the complainant's statement to police This was claimed to be a third miscarriage of justice. Was there an irregularity? For the reasons given by Hayne J99, it was not an error to receive the complainant's statement under s 93A of the Evidence Act 1977 (Q) ("the Act") despite the tender of the pre-recorded evidence. The following additional points may be made. The opening words of s 93A are similar to those of legislation modelled on the Evidence Act 1938 (UK), s 1100. The Queensland model is s 92(1) of the Act which opens as follows: "In any proceeding (not being a criminal proceeding) where direct oral evidence of a fact would be admissible, any statement contained in a document and tending to establish that fact shall, subject to this part, be admissible as evidence of that fact ...". 97 See R v Rawlings [1995] 1 WLR 178 at 183; [1995] 1 All ER 580 at 585; R v Welstead [1996] 1 Cr App R 59 at 66 and 70; R v H [1999] 2 Qd R 283 at 291 [18]; R v C [2000] 2 Qd R 54 at 56 [32]; R v Lewis (2002) 137 A Crim R 85 at 89 [12]; R v BAH (2002) 5 VR 517 at 523 [11], 524 [13] and 536 [65]-[66]; R v Lyne (2003) 140 A Crim R 522; R v NZ (2005) 63 NSWLR 628 at 632 [11], 664 [152], 676 [208] and 677 [210]. 100 It was repealed by the Civil Evidence Act 1995 (UK). Certain conditions are then set out, one of which is that the maker of the statement be called as a witness in the proceeding101. There are cases holding that legislation in this form does not permit the tender of previous inconsistent statements102 or previous consistent statements, including the proofs of witnesses103. The argument for this outcome is that the latter course in particular undercuts the benefits of oral trial in cases of factual controversy. A witness's proof of evidence can be a document carefully prepared by a lawyer who is under the influence of high hopes of what the witness may say as distinct from what the witness is initially prepared to say, who has one eye to the avoidance of future difficulties, and who relies heavily on the employment of leading questions. Thus a witness's proof can sometimes be something which is not really the witness's own statement. In contrast, witnesses who answer non- leading questions, whether they do so along the lines the party calling them wants or not, are giving their own evidence. The technique of oral question and answer enables witnesses to do themselves better justice by giving evidence which is theirs, not someone else's, and renders it easier for triers of fact to assess their reliability and credibility as they are speaking directly to those triers of fact, and not through the medium of a written statement of questionable provenance. However, the better view is that on the true construction of legislation taking the form of s 92(1) of the Act, prior written statements can be tendered as of right104. That outcome in English law was reversed by legislation105. But it remains the law in Australian jurisdictions having legislation in the form of s 92(1) of the Act. It is one thing to approve or disapprove of legislation. It is another thing to construe it. Section 93A is dealing with a narrow field, and with peculiar 101 See also Evidence Act 1958 (Vic), s 55(1); Evidence Act 1929 (SA), s 34C(1); Evidence Act (NT), s 26D(1). For repealed Australian legislation to the same effect see Evidence and Discovery Acts 1867 to 1962 (Q), s 42B; Evidence Act 1898 (NSW), s 14B(1). 102 Cartwright v W Richardson & Co Ltd [1955] 1 WLR 340; [1955] 1 All ER 742. 103 Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647 at 104 Harvey v Smith-Wood [1964] 2 QB 171; Hilton v Lancashire Dynamo Nevelin Ltd [1964] 1 WLR 952; [1964] 2 All ER 769; North v Union Steam Ship Co of New Zealand Ltd [1973] 2 NZLR 577; Nominal Defendant v Owens (1978) 22 ALR 105 Civil Evidence Act 1968 (UK), s 2(2). problems – those concerned with evidence from children and intellectually impaired persons. The legislation rests on the assumption that an account given before the trial "can be of more probative value than present testimony, particularly if the present memory is faulty or it is difficult for the witness to articulate it in court"106. The legislative judgment is that it is more important to have before the trier of fact a clear statement from these types of witnesses, even if it is in an unsworn document, than to preserve the principle of orality in its full integrity. The arguments of the accused rested on an appeal to traditional analysis, and to the startling outcome that would eventuate if s 93A were construed adversely to the accused. The outcome is less startling when it is remembered that certain types of crime and other unlawful conduct can be hard to prove without the relaxation effected by s 93A. It is also less startling when some of the safeguards provided in the Act are borne in mind. One is that it is a condition of admissibility that the maker of the statement be available to give evidence (s 93A(1)(b)) and be called by the tendering party if any other party requires it107. A second is the discretion to reject the evidence conferred by s 98108. A third is s 130109. A fourth is s 99110. A fifth is s 100111. But even without these safeguards, the construction of s 93A advocated by the accused cannot be maintained in the face of its language. 106 R v F (CC) [1997] 3 SCR 1183 at 1200 [37]. 107 The provisions are set out in the reasons of Hayne J at [100]. 108 See the reasons of Hayne J at [101]. 109 Section 130 provides: "Nothing in this Act derogates from the power of the court in a criminal proceeding to exclude evidence if the court is satisfied that it would be unfair to the person charged to admit that evidence." 110 See the reasons of Hayne J at [101]. 111 Section 100 provides: "For the purpose of any rule of law or practice requiring evidence to be corroborated or regulating the manner in which uncorroborated evidence is to be treated, a statement rendered admissible as evidence by this part shall not be treated as corroboration of evidence given by the maker of the statement ...". There is one other provision which may support the construction of s 93A stated by Hayne J. It is s 103, which provides: "Sections 92 to 95 and 101 shall be construed as in aid of and as alternative to one another, any other provision in any other part, and any other law practice or usage with respect to the admissibility in evidence of statements." The reception of "statements" in oral evidence in chief takes place under a law with respect to the admissibility of statements – a "law" established by the common law. The reception of "statements" under ss 21AK and 21AM of the Act takes place under a "provision" in another part of the Act. Section 93A is to be construed "as in aid of and as alternative to" that law and that provision – not to be narrowed so as to be subordinated to them and to have no effect where they operate. However, since s 103 received no attention in argument it is undesirable to say anything more about it. Crennan CRENNAN J. I agree, for the reasons given by Hayne J and the additional reasons given by Heydon J, that the appeal in this matter should be dismissed. I have nothing to add. |
HIGH COURT OF AUSTRALIA AND APPELLANT DIRECTOR-GENERAL OF THE DEPARTMENT OF COMMUNITY SERVICES RESPONDENT MW v Director-General, Department of Community Services [2008] HCA 12 28 March 2008 ORDER Appeal allowed. Set aside order 1 of the orders of the Full Court of the Family Court of Australia made on 30 April 2007 and in its place order: appeal allowed; set aside orders 1 to 8 of the orders of the Family Court of Australia made on 18 December 2006 and in their place order that the application filed 11 October 2006 be dismissed. On appeal from the Family Court of Australia Representation G O'L Reynolds SC with B R Kremer for the appellant (instructed by Le Vaccaro Lawyers) B W Walker SC with T Tockar for the respondent (instructed by Department of Community Services) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS MW v Director-General, Department of Community Services Family Court of Australia – Jurisdiction under s 111B of Family Law Act 1975 (Cth) ("Family Law Act") and reg 16 of Family Law (Child Abduction Convention) Regulations 1986 (Cth) ("Regulations") to make a return order – Whether Family Court was properly satisfied that removal of child from New Zealand to Australia was wrongful – Whether Access Order conferred rights of custody upon father – Whether right of access conferred by Access Order was right to determine place of residence of child. Family Court of Australia – Jurisdiction under s 111B of Family Law Act and reg 16 of Regulations to make a return order – Whether Family Court was properly satisfied that removal of child to Australia was wrongful – Whether Regulations accommodate application for return order by parent asserting breach of rights of custody vested in a court. Family Court of Australia – Jurisdiction under s 111B of Family Law Act and reg 16 of Regulations to make a return order – Whether Family Court was properly satisfied that removal of child to Australia was wrongful – Whether removal breached rights of custody held by father by operation of s 17 of Care of Children Act 2004 (NZ) – Whether mother living with father as de facto partner at time child was born. Family Court of Australia – Jurisdiction to make parenting orders under Pt VII of Family Law Act – Parens patriae or wardship jurisdiction. Family Court of Australia – Procedure – Power to make order permitting cross- examination in application for return order under reg 16 of Regulations. Care of Children Act 2004 (NZ), s 17. Convention on the Civil Aspects of International Child Abduction, Chs III, IV. Evidence and Procedure (New Zealand) Act 1994 (Cth), Pt 6. Family Law Act 1975 (Cth), Pt VII, s 111B. Family Law (Child Abduction Convention) Regulations 1986 (Cth). Family Law Rules 2004 (Cth). Interpretation Act 1999 (NZ), s 29A. GLEESON CJ. The Full Court of the Family Court of Australia, by majority, upheld a decision of the primary judge, Steele J, who made a return order pursuant to the Family Law (Child Abduction Convention) Regulations 1986 (Cth) ("the Regulations")1. Of particular relevance are regs 4 and 16, which are set out in the reasons of Gummow, Heydon and Crennan JJ. The basis of the Family Court's order was a finding that a child of the appellant had been wrongfully removed by the appellant from New Zealand to Australia. That finding, in turn, rested upon a conclusion that the father of the child, a resident of New Zealand, had rights of custody in relation to the child under the law of New Zealand (reg 16(1A)(c)). The existence of those claimed rights of custody is the point on which the Full Court divided. The child was born in New Zealand in 1996. At that time, and until September 2006, the appellant and the child were residents of New Zealand. The difference between the majority (May and Thackray JJ) and the dissentient (Finn J) in the Full Court turned upon the question whether there was evidence to support Steele J's finding of fact that the appellant was "living with the father of the child as a de facto partner at the time the child was born." It is common ground that, by reason of s 17 of the Care of Children Act 2004 (NZ), if the answer to that question is in the affirmative, the appellant and the father are joint guardians of the child. In that event, the father had, and has, rights of custody within the meaning of reg 16(1A)(c). A striking, and disconcerting, feature of the case is the absence of factual detail, on an issue that is now presented as potentially decisive, in the evidentiary material before the Family Court. Part of the explanation appears to be that, until shortly before the hearing at first instance, the issue did not emerge as a matter of serious contest. The case was dealt with as one of urgency. The application for a return order was filed on 11 October 2006. The response and the supporting affidavit of the appellant were filed on 14 November 2006. The hearing took place on Monday 18 December 2006. An ex tempore judgment was delivered. Most of the affidavit evidence was directed to matters which are irrelevant to this appeal. When, from an affidavit sworn by the appellant on the Thursday before the hearing, it became apparent that there was to be a serious dispute about the relationship between the father and the appellant at the time of the birth of the child, the evidence of the father (who was not a party to the proceedings), and other witnesses for the respondent, was not supplemented. One example of the deficiency of the material illustrates the point. The appellant was born in September 1977. The father was born in 1964. They met in October 1995. The child was born in September 1996. There was some sketchy evidence on the topic of their living arrangements at and immediately after the birth of the child. 1 Wenceslas v Director-General, Department of Community Services (2007) 211 FLR 357. There was, however, an almost complete absence of evidence about their living arrangements during the months leading up to the birth of the child. The Family Court was left to rely upon inferences from subsequent conduct, and upon one or two broad generalisations, in order to reach a conclusion about a question of fact the answer to which was well known by both the father and the appellant. If there is one thing in the case that is certain, it is that the evidence before the Family Court did not reveal, or even attempt to reveal, the full history of the relationship in question. Since the father was not a party to the litigation, he was in a position of disadvantage. The appellant gave some evidence, not in all respects consistent, about where she was living in the weeks following the birth of the child. It is surprising that no one thought to adduce evidence about where she was living during her pregnancy. The relationship between father and mother at the time the child was born Before the removal of the child to Australia, in September 2006, there had been a history of disputation and litigation, between the father and the appellant, concerning the father's rights of access to the child, and alleged interference with those rights. Steele J found that, shortly after the birth of the child, the parties separated. In November 1997, a parenting agreement was reached which provided that the child would live with the appellant and spend some time with the father. In 1997, the appellant married a man described by Steele J as "a notorious criminal". Steele J said that the father "was attempting, somewhat valiantly, to build a relationship with the [c]hild". The appellant's marriage to the criminal broke down, and the husband disappeared. In 1997, following counselling, there was a counsellor's report which recorded the agreement of the appellant and the father to court orders giving custody to the appellant and rights of access to the father. The counsellor's report said that the appellant agreed to "recognise [the father's] guardianship rights." The appellant, in her evidence, denied the accuracy of that part of the report. Nevertheless, the report was in evidence before Steele J, who declined to accept the appellant's evidence on a number of matters, but made no specific finding about the report. Court orders relating to custody and access were made in 2000. There were later court proceedings over the years between 2000 and 2006. The application initiating the present proceedings asserted, among other things, that, pursuant to s 17 of the Care of Children Act 2004, the father was a guardian of the child "as he was living with the child's mother when the child was born." Plainly, this was intended to be an elliptical assertion that the two were living as de facto partners. So much appears from the reference to s 17, which provides that the father and mother of a child are joint guardians unless the mother is the sole guardian, and further provides that, in the case of a child conceived at the relevant time, where the parents were not married or in a civil union, the mother is the sole guardian if she was not living with the father as a de facto partner at the time the child was born. By reason of s 29A of the Interpretation Act 1999 (NZ), that turned upon whether the two lived together as a couple in a relationship in the nature of marriage or civil union. A supporting affidavit of the father asserted, without elaboration, that he was the child's joint guardian by virtue of the fact that he lived with the appellant at the time of the child's birth. An affidavit sworn by the father's New Zealand lawyer repeated the same assertion, expressly relating it to s 17. The appellant's first affidavit in response, sworn on 10 November 2006, did not contradict those assertions. It alleged physical abuse, which, according to the appellant, began during her pregnancy. "This", she said, "is why I moved out with my 2-month old son and went to live with my parents." Her statement that she "moved out" is to be understood in the light of the assertions to which she was responding, and appears to confirm at least the fact of previous cohabitation. That was the state of the evidence until 14 December 2006. It is difficult to accept that, up to that stage, the matter of the relationship of the appellant and the father at the time of the birth of the child was regarded by the parties to the litigation as a serious issue. If it had been so regarded, it was treated by both sides in a remarkably casual fashion. It is clear that the respondent alleged that the father and the appellant were living in a de facto relationship, as that term was understood in New Zealand law, at the time of the birth of the child, but the evidence tendered in support of that allegation was brief, formal, and, until shortly before the hearing, apparently not only uncontested, but consistent with the evidence of the appellant, as far as that evidence went. In her affidavit of 14 December 2006, the appellant raised an issue about the factual basis of the father's claim to joint guardianship, and therefore custody rights. This confronted the respondent with a tactical dilemma: to seek an adjournment of the proceedings in order to obtain further evidence from the father, or to conduct the case on the existing, manifestly incomplete, evidence. The further evidence of the appellant said that since the child was born she had lived with her parents, and denied that she lived with the father when the child was born. The appellant also said that, about one and a half months after the child's birth, she stayed with the father for three nights a week for around six weeks to see if he was capable of being a father to the child. The appellant said: "During that time, I did want his home to be mine on the condition that he [was] capable of assisting in the care of [the child]." She denied that she ever lived as the father's de facto partner, and that she ever regarded herself as such. As has been noted, some of the appellant's evidence on certain matters, including cohabitation, was rejected. This piece of evidence addressed a mixed question of fact and law. To the extent to which it was bound up with the question of cohabitation at the time of the birth of the child, it was not accepted. The primary judge preferred the evidence of the father to that of the appellant. Specifically, he rejected the appellant's evidence that she was not living with the father when the child was born. This finding of fact was re- examined by all three members of the Full Court. The majority said they agreed with it. The dissentient, Finn J, said the finding was open. She did not express disagreement with it. The point of departure between Finn J and the majority concerned a further matter that the respondent had to prove. It has already been noted that under the New Zealand legislation defining de facto relationship, it was not enough to establish that the appellant and the father lived together; it was necessary to establish that they lived together as a couple in a relationship in the nature of marriage or civil union. Finn J held that there was no evidence from which it could be inferred that the father and the appellant had lived together as a couple in a relationship in the nature of marriage or civil union. Finn J was correct to stress the difference between living together and living together "as a couple in a relationship in the nature of marriage or civil union". The relationship between two people who live together, even though it is a sexual relationship, may, or may not, be a relationship in the nature of marriage or civil union. One consequence of relationships of the former kind becoming commonplace is that it may now be more difficult, rather than easier, to infer that they have the nature of marriage or civil union, at least where the care and upbringing of children are not involved. (As will appear, the qualification is significant in the present case.) When divorce, for various reasons, was more difficult, in former times, de facto relationships often existed because there was an impediment to legal marriage. A common impediment was a subsisting marriage of one of the parties. Marriage, in Australia and New Zealand, involves legal requirements of formality, publicity and exclusivity. A person may be a party to only one marriage at a time. De facto relationships, on the other hand, do not involve these elements. They are entered into, and may be dissolved, informally. In Australia, marriages are required to be entered on a public register2. In New Zealand, marriages and civil unions must be registered3. Parties to marriages and civil unions do not have a choice as to whether, when, and by what means they will disclose their status to the public. It goes without saying that there is no mandatory public registration of sexual relationships, even if they involve cohabitation. De facto relationships may co-exist with the marriage of one or both parties and, at least in some circumstances, people may be parties to multiple de facto relationships4. Yet the law to be applied in this case 2 Marriage Act 1961 (Cth), s 50(4) and Marriage Regulations 1963 (Cth), reg 42(2)(a); see also, for example, Births, Deaths and Marriages Registration Act 1995 (NSW), s 33. 3 Births, Deaths, and Marriages Registration Act 1995 (NZ), ss 53, 62A. 4 See, for example, Green v Green (1989) 17 NSWLR 343. acknowledges that some are, and some are not, in the nature of marriage. How is the difference to be determined? No single and comprehensive answer to that question can be given, but there is one test that is applicable to the present case. In Stack v Dowden5, Baroness Hale of Richmond said: "Cohabitation comes in many different shapes and sizes. People embarking on their first serious relationship more commonly cohabit than marry. Many of these relationships may be quite short-lived and childless. But most people these days cohabit before marriage ... So many couples are cohabiting with a view to marriage at some later date – as long ago as 1998 the British Household Panel Survey found that 75% of current cohabitants expected to marry, although only a third had firm plans: John Ermisch, Personal Relationships and Marriage Expectations (2000) Working Papers of the Institute of Social and Economic Research: Paper 2000-27. Cohabitation is much more likely to end in separation than is marriage, and cohabitations which end in separation tend to last for a shorter time than marriages which end in divorce. But increasing numbers of couples cohabit for long periods without marrying and their reasons for doing so vary from conscious rejection of marriage as a legal institution to regarding themselves 'as good as married' anyway: Law Commission, Consultation Paper No 179, Part 2, para 2.45." There is no reason to doubt that the same is generally true of Australia and New Zealand. It may be added that, in Australia, what often prompts cohabiting couples to marry is a decision to have a child, and to do so within the context of a marriage. People often refer to this as "starting a family". The cohabiting parties to many relationships, especially first relationships of the "short-lived and childless" kind, may be surprised to be told that they are involved in a relationship in the nature of marriage or civil union. They may intend no such thing. The same may apply to some people in longer-term cohabitation who have chosen not to marry. It is the common intention of the parties as to what their relationship is to be, and to involve, and as to their respective roles and responsibilities, that primarily determines the nature of that relationship. The intention need not be formed in terms of legal status: to some people that is important; to others it is a matter of indifference. (By hypothesis, the parties to a relationship that satisfies the statutory description are not married, or in a civil union.) The intention may be expressed, or it may be implied. What is relevant is their intention as to matters that are characteristic of a marriage or a civil union, but that do not depend upon the formal legal status thus acquired. To describe a relationship as being in the nature of marriage implies a view about the nature of marriage. The same applies to a civil union. It is unnecessary, for [2007] 2 AC 432 at 450-451 [45]. present purposes, to attempt a comprehensive account of the features of a relationship that might justify such a description. Plainly, "living together" is not enough. For present purposes it is sufficient to focus upon that aspect of the relationship between the appellant and the father that gives rise to this dispute, that is to say, shared parenthood, and upon the inferences as to intention that may be drawn from that. In Magill v Magill6, and earlier in Russell v Russell7, reference was made to the historical role of the institution of marriage as a means of involving males in the nurture and protection of their offspring, and to the importance of the structure of marriage and the family in sustaining responsibility for, and obligations towards, children. There is a wide range of human behaviour across the spectrum between a sexual encounter and a marriage or civil union. It includes relationships which could never be described as being in the nature of marriage or civil union. Nevertheless, when a sexual union results in the birth of a child, cohabitation between the parties to the union is no longer a matter of purely personal convenience or satisfaction. The interests of a third party have intervened. Traditional concepts of marriage and the family as institutions for the protection of children, and modern concepts of shared parental responsibilities even in the absence of a formal union, may come into play in characterising the relationship. The present case provides an example. In her December affidavit, the appellant said that after the birth of the child, for about six weeks, she stayed for three nights a week with the father to see if he was capable of being a father to the child, and that she wanted his home to be her home on condition that he was capable of assisting in the care of the child. I would infer from the fact that (contrary to her evidence) she was cohabiting with the father at the time of the birth of the child, and from her silence on the subject of her living arrangements during her pregnancy, that, before and at the time of the birth of the child, her intention was that, if possible, the father, the appellant, and the child would live together as members of a family unit. I would also infer, from his general assertions in his affidavit, and from his later conduct in vigorously asserting his claims to guardianship of the child, that the father had the same intention. These inferences receive some support from the names given to the child at birth, which reflected the father's cultural heritage. Although other factors also may be important in deciding whether the relationship between a cohabiting couple is in the nature of marriage or civil union, where, in a given case, their union has resulted in pregnancy, and the (2006) 226 CLR 551 at 564 [24]; [2006] HCA 51. (1976) 134 CLR 495 at 548-549; [1976] HCA 23. couple are living together with the intention that, when the child is born, they and the child will form a family unit, with the parents sharing responsibility for the nurture of the child, there is at least a sound basis for characterising their relationship as having such a nature. In the particular context of this case, and in the general context of applications for return orders under the Child Abduction Convention, the relationship is not merely one between two adults. It involves a child or children. The majority in the Full Court of the Family Court pointed out that s 29A of the Interpretation Act 1999 of New Zealand directs a court to have regard to context and purpose in interpreting a statutory expression such as "relationship in the nature of marriage or civil union". They also referred to the general purposes of the Care of Children Act 2004 of New Zealand. Both the general and the particular context are relevant to the question to be decided. If there had been no child of the union, and if all that was shown had been the fact of cohabitation of the appellant and the man in question, I would have agreed with Finn J that there was no evidence to support a finding that their relationship was in the nature of marriage or civil union. On that basis, they were simply two adults (one, the appellant, a rather young adult) cohabiting for a fairly brief time in a sexual relationship. If that were all there was to it (and, of course, in many cases of cohabitation there is a great deal more), I would not attribute to such a relationship the statutory description with which we are concerned. To do so would be to mock the institution of marriage. There was more. There was a child, or an expected child, and this was a vital part of the setting in which their relationship at the time of the birth of the child was to be characterised. While I am not quite sure what they meant by their reference to a "relatively low threshold" of proof, I agree with the conclusion of the majority in the Full Court that the evidence, unsatisfactory as it was, sufficed to establish that the couple were living together in a de facto relationship, and not merely living together, at the time of the birth of the child. In consequence, the father is a joint guardian of the child, and therefore has rights of custody. Other questions The majority in the Full Court decided the case adversely to the appellant on the issue considered above. May and Thackray JJ said: "Since we have found that [the child's] parents were living in a de facto relationship at the time of his birth, they are both his guardians and both have the right to determine his place of residence. The father therefore had 'rights of custody' at the time of his removal from New Zealand." The appellant's grounds of appeal were all aimed at that conclusion. Against the possibility that this Court might not accept the conclusion of the Full Court, the respondent, by notice of contention, advanced arguments in support of alternative grounds for deciding that the child's removal was wrongful. These arguments were based upon the father's rights of access under a court order, and the "rights" of the New Zealand courts concerning the removal of the child. Because I would reject the appellant's grounds of appeal, for the reasons given above, it is unnecessary to deal with the respondent's notice of contention. If the basis on which the Full Court decided the case is accepted, the issues which the notice of contention seeks to propound do not arise. I should add, however, that I agree with what Gummow, Heydon and Crennan JJ have said on those issues, bearing in mind, in particular, the language of the Regulations which the Family Court was to apply, and the terms of the particular order upon which the respondent relied. Conclusion The appeal should be dismissed with costs. Crennan GUMMOW, HEYDON AND CRENNAN JJ. The appellant was born in Poland in 1977 and is a Polish citizen. On 20 September 1996, while she was living in New Zealand, she gave birth to a son. The father was born in 1964 in New Zealand and resides in that country. He is of Maori descent. The parties have not married, and at least since the child was a very young infant they have not lived together. The child lived in New Zealand primarily with his mother but had extensive contact with his father. Relations between the parents deteriorated. Accompanied by the child, and without advising the father of her intention to do so, the appellant travelled to Australia on 15 September 2006. She and the child reside with her parents who now live in an outer suburb of Sydney; at an earlier stage her parents had lived in New Zealand. On 11 October 2006, the respondent ("the Authority"), as State Central Authority appointed under reg 8 of the Family Law (Child Abduction Convention) Regulations 1986 (Cth)8 ("the Regulations"), applied to the Family Court for orders requiring the return of the child to New Zealand. The opposition by the appellant was unsuccessful and on 18 December 2006 the primary judge (Steele J) made the orders sought by the Authority. The appellant appeals to this Court against the dismissal on 30 April 2007 by the Full Court of the Family Court of Australia (May and Thackray JJ; Finn J dissenting)9 of her appeal against the orders of the primary judge. The Regulations The purpose stated in reg 1A(1) of the Regulations is to give effect to s 111B of the Family Law Act 1975 (Cth) ("the Act"). Section 111B comprises Div 2 of Pt XIIIAA of the Act and is headed "International child abduction". Section 111B(1) states: "The regulations may make such provision as is necessary or convenient to enable the performance of the obligations of Australia, or to obtain for Australia any advantage or benefit, under the Convention on the Civil Aspects of International Child Abduction signed at The Hague on 25 October 1980 (the Convention) but any such regulations shall not come into operation until the day on which that Convention enters into force for Australia." 8 Statutory Rules 1986 No 85 as amended. 9 Reported as Wenceslas v Director-General, Department of Community Services (2007) 211 FLR 357. Crennan The text of the Convention is set out as Sched 1 to the Regulations. Schedule 2 lists the Convention countries and includes New Zealand along with some 70 other countries. The Convention countries have a range of legal systems, many not based in the common law. Further, the Convention contemplates in Art 11 that proceedings for the return of children may be conducted by "[t]he judicial or administrative authorities" of the Convention country in question. In the Full Court May and Thackray JJ observed that the ideal that an international agreement or convention should bear the same meaning in all contracting states was more easily stated than attained and their Honours continued10: "Not only have some countries used different words from those appearing in the Convention when enacting legislation to give effect to it, but also courts of different countries have sometimes taken different approaches in interpreting key elements of the Convention." In some Convention countries (of which the United Kingdom is one11) the text of the Convention by statute is given the force of law in the domestic law of the country. That is not the case in Australia, as attested by the Regulations, and in New Zealand. Cooke P observed in Gross v Boda12 of the New Zealand legislation as enacted in 199113 that it differed in some aspects from the text of the Convention. This Court held in De L v Director-General, NSW Department of Community Services14 that s 111B and the Regulations are laws with respect to external affairs independently of the Convention. Regulation 1A states that the purpose of the Regulations is to give effect to s 111B and that the Regulations are intended to be construed "having regard to the principles and objects" which are mentioned in the preamble to the Convention and Art 1 thereof. However, as a consequence of De L, no provision of the Regulations will be invalid merely on the ground that it goes beyond what may be reasonably capable of being considered appropriate and adapted to implement the Convention. (This is 10 (2007) 211 FLR 357 at 376-377. 11 Child Abduction and Custody Act 1985 (UK), s 1. 12 [1995] 1 NZLR 569 at 570. 13 Guardianship Amendment Act 1991 (NZ). 14 (1996) 187 CLR 640. Crennan important for the consideration later in these reasons of the comparison between Art 8 of the Convention and reg 16(1A).) The Regulations distinguish between requests for the return of children abducted to Australia and those abducted from Australia, and requests for access to a child in Australia or in another Convention country. Parts 2 and 3 (regs 11-21) deal with the former and Pt 4 (regs 23-25) with the latter. The phrase "rights of access" is defined in reg 2(1) as including: "the right to take a child for a limited period of time to a place other than the child's habitual residence". However, as will be further explained in these reasons, the notion of abduction is linked to that of the removal or retention of a child which is "wrongful" because it is in breach of "rights of custody". The distinction is apparent from the statement of objects in Art 1 of the Convention as being: to secure the prompt return of children wrongfully removed to or retained in any Contracting State; and to ensure that rights of custody and of access under the law of one Contracting State are effectively respected in the other Contracting States". (emphasis added) Chapter III of the Convention (Arts 8-20) is titled "RETURN OF CHILDREN" and Ch IV (Art 21) is titled "RIGHTS OF ACCESS". The concern of Ch III is with the return of children whereas the more modest objective of Ch IV is the protection and observance of access rights to a child in Australia or in a Convention country. The distinction drawn by the Convention is further explained by La Forest J in Thomson v Thomson15. His Lordship also stressed that despite the emphasis in the Convention upon removal or retention that is "wrongful", "the Convention is not aimed at attaching blame to the parties"16. The application for return Regulation 13 provided for the taking of action in Australia upon receipt of a request in relation to a child removed from a Convention country to 15 [1994] 3 SCR 551 at 580. 16 [1994] 3 SCR 551 at 582. Crennan Australia. Regulation 14 empowered the Authority to apply to the "court"17, seeking an order under Pt 3 of the Regulations (regs 14-21) for the return under the Convention of the child. Section 39(5)(d) of the Act conferred on the Family Court jurisdiction with respect to matters arising under the Act in respect of which proceedings were instituted under the Regulations. The proceeding in the Family Court followed receipt of a request dated 2 October 2006 by the New Zealand Central Authority. Attached to it was an authorisation by the father to the New Zealand Central Authority to act on his behalf and supporting documents including the order of 4 December 2000 referred to below. The application to the Family Court by the Authority stated that the father had rights of custody of the child. This was said to be because (i) he had in his favour "an access order [dated 4 December 2000] made by the Family Court at Auckland ... which provides that the child be in his father's care every second weekend" ("the Access Order") and (ii) he was a guardian of the child, pursuant to s 17 of the Care of Children Act 2004 (NZ) ("the NZ Children Act"), by reason of the fact that "he was living with the child's mother when the child was born"; the application also stated that pursuant to the NZ Children Act the father had "the right to determine the child's place of residence". The Full Court divided on the question whether the Authority had crossed the threshold and established its case that the father had rights of custody which were breached when the appellant removed the child to Australia; in the absence of those rights and this breach the removal would not have been wrongful and the application by the Authority to the Family Court would not have been effectively instituted under the Regulations. In this Court, the appellant seeks to uphold the minority judgment that the Authority had failed to establish its case. For the reasons that follow the appeal to this Court should be allowed. The evidence on the Family Court application Questions of fact and law, including the statute law of New Zealand, were involved. In that regard some assistance is given by Pt 6 (ss 38-46) of the Evidence and Procedure (New Zealand) Act 1994 (Cth). In proceedings in a court in Australia proof is not required about the provisions and coming into operation of a New Zealand statute, or of delegated legislation thereunder, and 17 This is so defined in reg 2(1) as to include, by reference to s 39 of the Act, a range of federal, State and Territory courts. Crennan the judge may inform himself or herself about those matters in any way thought fit (ss 38, 40). Further, reg 29(5) of the Regulations applies generally to Convention countries and in the present litigation empowered the Family Court to take judicial notice of a law in force in New Zealand and of New Zealand decisions of a judicial or administrative character. Regulation 29(2) rendered admissible as evidence of the facts stated therein, the application and supporting documents. Regulation 29(3) rendered admissible in evidence affidavits of witnesses who resided outside Australia and did not attend for cross-examination. But reg 29(3) did not exclude any power to permit cross-examination. the Family Court may have In the present case, when giving his ex tempore reasons Steele J said: "As is typical of these applications, the factual matters have been dealt with on affidavit evidence and have not been the subject of cross examination." Upon various disputed events in the relationship between the parents, his Honour said it was "not possible to form a conclusive view ... without lengthy and detailed cross examination, which is not possible". In the Full Court, the majority, after noting that the proceedings before the primary judge "were conducted entirely on the papers", indicated that therefore it was open to the Full Court to substitute its own findings of fact18. The material before the primary judge comprises more than 200 pages of the appeal record in this Court. It includes affidavits sworn by the father in support of the application by the Authority on 3 October 2006 and thereafter on 28 November 2006, and by the appellant on 10 November 2006 and 14 December 2006. That last date was shortly before the hearing by the primary judge. The father's solicitor in Auckland also provided affidavit evidence which, among other topics, considered some of the relevant provisions of New Zealand legislation. Some affidavits by the other New Zealand deponents were filed in support of the father's case, some in support of the appellant. Much of the affidavit evidence dealt with disputed issues of fact and alleged fact (particularly relating to domestic violence between the parents) which are not immediately relevant to the factual and legal issues which are still 18 (2007) 211 FLR 357 at 394. Crennan in dispute in this Court. These include the issue whether the appellant was living with the father as a de facto partner at the time of the birth of the child. It is unfortunate that the answer to such a question does not more readily appear on the evidence. Both at first instance and in the Full Court much attention was given to what were said to be discrepancies in the affidavit evidence of the appellant which bore upon this issue. Perceived weaknesses in her account were relied upon to strengthen the positive case for a conclusion of wrongful removal or retention of the child which it was for the Authority to establish. The deficiencies in the appellant's affidavit evidence would not have been left for textual analysis had one of several courses been followed. Upon application, or at the initiative of the Family Court itself, the proceedings may have been adjourned for the prompt provision of more adequate affidavit evidence. the cross-examination of the appellant19. Leave may have been sought by the Authority for Section 98 of the Act states that the Rules of Court may provide for evidence of any material matter to be given on affidavit at the hearing of proceedings other than divorce or validity of marriage proceedings. The Family Law Rules 2004 ("the Rules") are so drawn as to require evidence in chief to be given by affidavit (r 15.05). But exercise by the Family Court of its general powers expressed in Pt 1.3 of the Rules would have allowed an order permitting cross-examination of the appellant; such leave might properly have been limited by the Family Court to particular areas of dispute. Cross-examination in interlocutory applications generally is not to be encouraged. But an application for a return order under reg 16 of the Regulations is a special type of proceeding. It is apt to achieve what in Australia is a final result upon the application for return of a child to another Convention country. To emphasise these matters is not to encourage the amplitude of the evidence to which the House of Lords referred in In re M (Children) (Abduction: Rights of Custody)20. The oral evidence in that Convention application was heard over two days21. 19 cf DP v Commonwealth Central Authority (2001) 206 CLR 401 at 426 [77]; [2001] HCA 39. 20 [2007] 3 WLR 975 at 980. 21 See In the Matter of M (Children) [2007] EWCA Civ 992 at [5]. Crennan Regulation 15(2) obliged the Family Court, "so far as practicable", to give to the application by the Authority "such priority" as would "ensure that [it was] dealt with as quickly as a proper consideration of each matter relating to the application allows". If within 42 days of its filing the application had not been determined, the Authority would have been empowered by reg 15(4) to seek from the Registrar a written statement of the reasons for the absence of a Regulation 15 reflects the exhortation in Art 11 of the determination. Convention that "judicial or administrative authorities" act "expeditiously" in these matters and the reference in Art 7 to "the prompt return of children". The judicial or administrative authorities which decide return applications in some Convention countries may not, under their legal systems, have the obligations to provide the measure of procedural fairness and to give reasons which generally apply in common law systems and which were observed here by the Family Court. Thus, in this country, the requirement of promptitude can be an onerous one. Nevertheless, prompt decision making within 42 days is one thing, and a peremptory decision upon a patently imperfect record would be another. The references to "summary procedure" and to the dealing with applications on affidavit evidence and "in a summary manner" by the Full Court in In Marriage of Gazi22 are apt to mislead. This is particularly true of the statement in that case23: "The primary purpose of the Convention, the relevant legislation and regulations is to provide a summary procedure for the resolution of the proceedings and, where appropriate, a speedy return to the country of their habitual residence of children who are wrongly removed or retained in another country in breach of rights of custody or access [sic] (see Convention, Arts 7 and 11, Family Law (Child Abduction Convention) Regulations, reg 19(1)). Accordingly, whilst there may be cases in which it is appropriate to allow cross-examination of deponents of affidavits, such cases would be rare. The majority of proceedings for the return of children, pursuant to the Convention, should be dealt with in a summary manner and cross-examination of deponents of affidavits would not be appropriate". 22 (1992) 111 FLR 425 at 428. 23 (1992) 111 FLR 425 at 428. The reference in the first sentence to the breach of rights of "access" appears to be per incuriam. Crennan The danger in reading such remarks too literally (and without regard to the circumstances of each particular case) is apparent in situations such as that considered in the United States by the Court of Appeals for the Third Circuit in In re Application of Adan24. An application by the father for the return of his child to Argentina was resisted on the grounds that he had not established his custody rights under the law of Argentina and there was grave risk there of harm to the child. After considering the cursory treatment by the United States District Court of the application, the Court of Appeals said25: "Although the Convention seeks to facilitate the prompt return of wrongfully removed children to their country of habitual residence, it does not condone deciding that a child is another country's problem and dumping her there, and nor do we." No criticism of that degree is directed to the conduct of the present case, but In re Application of Adan provides a caution against inadequate, albeit prompt, disposition of return applications. The policy of the Convention The jurisdiction exercised by the Family Court in this case with respect to the international child abduction provisions of s 111B of the Act and the Regulations did not exhaust the jurisdiction which might otherwise have been attracted under other provisions of the Act. Regulation 6(2) confirmed the preservation of two other heads of jurisdiction for the return of a child to the country in which he or she habitually resided before the removal to or retention in Australia of the child. One was that with respect to parenting orders under Pt VII of the Act, to which further reference will be made. The other was jurisdiction "under any other law in force in Australia", an expression in reg 6(2) apt to include statutory adaptations of the wardship or parens patriae jurisdiction derived from the general law26. It is instructive to contrast the jurisdiction based upon s 111B of the Act and the Regulations and what, under the general law, would have been the controlling principles for this dispute in a court exercising parens patriae or wardship jurisdiction. First, one of the grounds upon which parens patriae or wardship jurisdiction with respect to a child is asserted is the physical presence 24 437 F 3d 381 (3rd Cir 2006). 25 437 F 3d 381 at 398 (3rd Cir 2006). 26 See Marion's Case (1992) 175 CLR 218; P v P (1994) 181 CLR 583. Crennan of the child within the territorial jurisdiction, even falling short of residence, if the protection of the court is needed27. Secondly, in questions of custody the paramount consideration, to which "all others yield"28, is the welfare of the child. Thirdly, this remains the case even where there is an existing custody order made by a foreign court. Thus in the joint judgment of five members of this Court in Kades v Kades29 their Honours said: "The courts in Australia have complete jurisdiction over the question of the custody of the child. The order of the Supreme Court of New York is a factor which must be considered, but the responsibility lies with the courts here and the welfare of the child remains the paramount consideration: McKee v McKee30." The nature and scope of return applications heard in the Family Court pursuant to the Regulations differ in all three of the aspects just mentioned. Further reference should now be made to Pt VII of the Act, which is headed "Children" and comprises ss 60A-70Q. Part VII comprises 16 Divisions and provides for the making of a range of orders, of which parenting orders are but one category. Orders made under Pt VII of the Act are not formulated in terms of the grant to a person of custody of, or access to, a child. Nevertheless, the animating principle of the best interests of the child remains in Pt VII. Section 60CA states: "In deciding whether to make a particular parenting order in relation to a child, a court must regard the best interests of the child as the paramount consideration." Pt VII is not confined to parenting orders. Section 67ZC provides: 27 De L v Director-General, NSW Department of Community Services (1996) 187 CLR 640 at 657; AMS v AIF (1999) 199 CLR 160 at 168-169 [11]; [1999] HCA 26; Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 219 CLR 365 at 401-402 [93]; [2004] HCA 20. 28 McKee v McKee [1951] AC 352 at 365. 29 (1961) 35 ALJR 251 at 254 per Dixon CJ, McTiernan, Kitto, Taylor and Crennan In addition to the jurisdiction that a court has under this Part in relation to children, the court also has jurisdiction to make orders relating to the welfare of children. In deciding whether to make an order under subsection (1) in relation to a child, a court must regard the best interests of the child as the paramount consideration." This Court has held of a previous provision in the Act to the same effect as s 67ZC that it31: "invested the Family Court with a welfare jurisdiction in respect of a child of a marriage which encompasses the substance of the traditional parens patriae jurisdiction freed from the preliminary requirement of a wardship order32". The exhaustive list in s 69E of criteria to attract jurisdiction includes the presence of the child in Australia when the application is filed in court (s 69E(1)(a)) and the satisfaction of the common law rules of private international law for the exercise of jurisdiction in the proceedings (s 69E(1)(e)). Thus while it appears that jurisdiction under Pt VII of the Act would also have been attracted in the circumstances of this case, the paramount consideration, as with the traditional wardship jurisdiction, would have been the best interests of the child in the particular circumstances of the case. However, a different policy with respect to the best interests of the child has prevailed with return applications under the Regulations. There the focus is upon the appropriate forum. This may be detected in the statement in par (b) of reg 1A(2) of the Regulations that they were intended to be construed: "recognising, in accordance with the Convention, that the appropriate forum for resolving disputes between parents relating to a child's care, welfare and development is ordinarily the child's country of habitual residence". 31 P v P (1994) 181 CLR 583 at 598. 32 Marion's Case (1992) 175 CLR 218 at 256, 294, 318. Crennan A recent discussion of the provenance and mixed objectives of the Convention contains the following33: "The aims of the Convention are distilled from a number of fundamental principles that featured prominently during the negotiation of the Convention and led to its wide acceptance. These are that the interests of children are paramount in cases of child abduction; that it is generally contrary to the best interests of any child to be abducted; and that it is the courts of habitual residence (normally the home environment of the child) that are generally best placed to decide on the future upbringing of the child. So the Convention seeks to restore the child's status quo in order both to reduce the incidence of international child abduction through the provision of legal rules which effectively mean there is nothing to be gained by abducting this child, and to ensure that the decision on the future of the child is taken in the forum conveniens, ie, the most appropriate jurisdiction to make such a determination." (footnote omitted) The distinction between the exercise of jurisdiction founded in legislation adopting the Convention and the wardship jurisdiction was identified by Baroness Hale of Richmond in In re M (Children) (Abduction: Rights of Custody)34 as follows: "In non-Convention cases the child's welfare may well be better served by a prompt return to the country from which she was wrongly removed; but that will be because of the particular circumstances of her case, understood in the light of the general understanding of the harm which wrongful removal can do ... In Convention cases, however, there are general policy considerations which may be weighed against the interests of the child in the individual case. These policy considerations include, not only the swift return of abducted children, but also comity between the contracting states and respect for one another's judicial processes. Furthermore, the Convention is there, not only to secure the prompt return of abducted children, but also to deter abduction in the first place. The message should go out to potential abductors that there are no safe havens among the contracting states." 33 Beevers and Peréz Milla, "Child Abduction: Convention 'Rights of Custody' – Who Decides? An Anglo-Spanish Perspective", (2007) 3 Journal of Private International Law 201 at 202. 34 [2007] 3 WLR 975 at 989-990. Crennan It was against this background that the Court held in De L v Director-General, NSW Department of Community Services35 that proceedings under the Regulations are not subject to the paramountcy principle which was then expressed in s 64 of the Act. Nevertheless, in In re M36 the House of Lords disagreed with authorities indicating that a Convention case must be "exceptional" before the court might properly decide to refuse to make an order for return. In the circumstance of the case before it, the House held that "children should not be made to suffer for the sake of general deterrence of the evil of child abduction world wide"37 and dismissed the Convention application by the father of the children. In the present litigation, it was recorded by the primary judge to be common ground that while the best interests of the child were not paramount in determining whether an order for return should be refused on one or more of the 35 (1996) 187 CLR 640 at 658. 36 [2007] 3 WLR 975. 37 [2007] 3 WLR 975 at 992. Crennan grounds in reg 16(3)38, those best interests were a factor in that decision making process39. The appeal to this Court does not turn upon the identification of the best interests of the child in the sense indicated by the primary judge. This is so although much of the affidavit evidence in support of the appellant's case does 38 Regulation 16(3) empowers a court to refuse to make an order for return if any one or more of pars (a)-(d) are established by a person opposing return. Paragraphs (a)-(d) state: the person, institution or other body seeking the child's return: (i) was not actually exercising rights of custody when the child was removed to, or first retained in, Australia and those rights would not have been exercised if the child had not been so removed or retained; or (ii) had consented or subsequently acquiesced in the child being removed to, or retained in, Australia; or there is a grave risk that the return of the child under the Convention would expose the child to physical or psychological harm or otherwise place the child in an intolerable situation; or (c) each of the following applies: the child objects to being returned; the child's objection shows a strength of feeling beyond the mere expression of a preference or of ordinary wishes; (iii) the child has attained an age, and a degree of maturity, at which it is appropriate to take account of his or her views; or the return of the child would not be permitted by the fundamental principles of Australia relating to the protection of human rights and fundamental freedoms." 39 The discretion may be exercised in an appropriate case by ordering return but upon attached conditions: DP v Commonwealth Central Authority (2001) 206 CLR 401 at 417 [40], 456 [191]. The value of attached conditions will depend upon their enforceability and proper foundation in the evidence: DP v Commonwealth Central Authority (2001) 206 CLR 401 at 425 [72]-[73]. Crennan appear to have been prepared with a view to attracting the exercise of the discretion under reg 16(3) in favour of refusal of return of the child to New Zealand, if, as proved to be the case, she failed upon the threshold issue of jurisdiction. The appeal does turn on that threshold issue. Whilst, as remarked above, the mere presence of the child might found the exercise of the wardship jurisdiction or that under Pt VII of the Act, the operation of the regime for which the Regulations provide is attracted by more complex criteria. These threshold matters fix upon the timing of the application, and the satisfaction of the court that the child's removal or retention was "wrongful". It is with the latter criterion that the appeal is concerned. Regulation 1640 Paragraphs (a) and (b) of s 111B(1A) of the Act provide for the Regulations to deal with the onus of establishing that a child should not be returned and to establish rebuttable presumptions in favour of return of the child. Regulation 16 is to be read in this light. The application to the Family Court was made41 well within one year of the removal of the child from New Zealand. The consequence was that reg 16(1) applied to the application. This meant that, subject to the power of the Court to refuse to make an order because the appellant, the person opposing return, established one or more of the matters in reg 16(3), the Family Court was obliged to make an order for return if "satisfied" by the Authority of a critical matter. This was that the removal to or retention in Australia of the child "was wrongful under subregulation (1A)". Was the Family Court properly "satisfied" by the Authority within the meaning of these provisions? Sub-regulation (1A) of reg 16 should be set out. It states: "(1A) For subregulation (1), a child's removal to, or retention in, Australia is wrongful if: the child was under 16; and 40 The appeal was conducted on the footing that the appropriate form of the Regulations was that of the compilation prepared on 1 July 2006, taking into account amendments up to SLI 2006 No 139. 41 Under reg 14(1). Crennan the child habitually resided in a convention country immediately before the child's removal to, or retention in, Australia; and the person, institution or other body seeking the child's return had rights of custody in relation to the child under the law of the country in which the child habitually resided immediately before the child's removal to, or retention in, Australia; and the child's removal to, or retention in, Australia is in breach of those rights of custody; and at the time of the child's removal or retention, the person, institution or other body: was actually exercising the rights of custody (either jointly or alone); or (ii) would have exercised those rights if the child had not been removed or retained." (emphasis added) What is meant by the expression "rights of custody in relation to the child" which appears in par (c)? A detailed explanation is provided by reg 4 as follows: "(1) For the purposes of these regulations, a person, an institution or another body has rights of custody in relation to a child, if: the child was habitually resident in Australia or in a convention country immediately before his or her removal or retention; and rights of custody in relation to the child are attributed to the person, institution or other body, either jointly or alone, under a law in force in the convention country in which the child habitually resided immediately before his or her removal or retention. For the purposes of subregulation (1), rights of custody include rights relating to the care of the person of the child and, in particular, the right to determine the place of residence of the child. For the purposes of this regulation, rights of custody may arise: by operation of law; or Crennan by reason of a judicial or administrative decision; or by reason of an agreement having legal effect under a law in force in Australia or a convention country." (emphasis added) The case presented by the Authority In submissions to this Court the Authority contended that the dismissal of the appellant's appeal to the Full Court was supported upon several distinct grounds. First, reliance was placed upon the terms of the Access Order, made on 4 December 2000 and still operative when the appellant and the child left New Zealand on 15 September 2006; the Access Order was said to confer upon the father rights relating to the care of the child which were to be understood as including "the right to determine the place of residence of the child" within the meaning of reg 4(2), and it was said that the removal of the child had been in breach of the Access Order rights; these rights amounted to a "right of veto" and were to be treated as rights of custody held by the father. Secondly, the removal was said to be in breach of rights of custody held by the New Zealand Family Court at Auckland which had made the Access Order. Thirdly, and this was the ground which founded in this Court the debate as to the evidence, the father was said, by the operation of the statute law of New Zealand upon the facts, to have had rights which in turn answered the description in reg 16(1A) of "rights of custody". It will be apparent that the critical provisions of the Regulations are so drawn as to involve in the determination of their operation in this case consideration of matters of New Zealand law. The Full Court correctly emphasised that the Family Court was not seeking to decide the issues under the Regulations by its assessment of the answer a New Zealand court would give upon the matters of New Zealand law42. Insofar as matters of foreign law are involved in determination of an application under the Regulations, observations of the Court of Appeals for the Third Circuit (made respecting the role of the United States District Court in 42 (2007) 211 FLR 357 at 376. Crennan cases of alleged wrongful removal under Art 3 of the Convention) are in point. In In re Application of Adan that Court said43: "The duty of the host forum – in this case, the District Court – to make a threshold determination of custody rights under the country of origin's laws is not novel; indeed, it comports with the federal courts' frequent responsibility to examine the law and choice of law rules of another forum to determine the rights and duties of litigants. Such a determination does not, of course, bind the other forum to reach the same result in future litigation, nor does it run afoul of comity concerns. Article 3's requirement that the host country determine custody rights under the country of origin's law to ascertain whether removal was 'wrongful', and is a straightforward question of law of the sort federal courts routinely encounter, and thus presents no unusual burden on the competence of our courts." the Convention applies, therefore whether It is convenient to consider together the first and second grounds relied upon by the Authority. Right of veto a right of custody The starting point must be the text of the Access Order. This comprised orders as follows: [The child] will be in his father's care every second weekend (beginning 1-3 December 2000) 5.00pm Friday to 5.00pm Sunday [The child] will be in his father's care half the school holidays with the Christmas holiday period he is with his father between 4-25 January At all other times [the child] will be in his mother's care Father will provide transport collecting him from his mother's home at 5.00pm and returning him at 5.00pm 5 Weekend access is suspended during the school holiday periods (access weekend to recommence 2-4 February 2001)". 43 437 F 3d 381 at 391 (3rd Cir 2006). Crennan These orders answer the description in reg 2(1) of "rights of access" because they provide for the father to take the child to a place other than that of his habitual residence with the appellant. But do they confer "rights of custody" because they confer upon the father "the right to determine the place of residence of the child" (reg 4(2))? Some difficulty arises from the use of the term "right" in the expressions in reg 4 (and in Art 5) "rights of custody" and "right to determine". Even when used in a broad sense, to speak of a "right" in one person suggests a correlative duty, obligation, disability or liability in others44. Regulation 4 is so drawn that "rights of custody", and, by inference, those of determination of place of residence, may arise by reason of a judicial decision (reg 4(3)(b)). Here, the Access Order gave rise to rights in each parent with correlative duties or obligations in the other parent to observe the requirements of the Access Order. But unlike the court orders in some of the cases arising directly under the Convention45 or specific provisions made for parental rights and duties by legislation considered in other cases46, the Access Order was not addressed to and imposed no prohibition on, in the absence of consent by both parents, the removal of the child from the jurisdiction of the New Zealand court which made the order. A "right of veto" of that nature may give rise to a right in each parent to determine that there be no change in the "place of residence", using that phrase to refer to the Convention country where the child habitually resides; the right of each is attended by the correlative obligation of the other party to observe the status quo and the observance of the obligation will attract whatever remedies are given by the judicial or administrative authorities of that Convention country of habitual residence. That power of prohibition of change may answer the phrase in reg 4 (and in Art 5) "the right to determine ...". The majority of the Full Court referred to decisions in Australia and other Convention countries in which that 44 Minister for Immigration and Multicultural and Indigenous Affairs v Al Khafaji (2004) 219 CLR 664 at 672 [19]; [2004] HCA 38; Western Australian Planning Commission v Temwood Holdings Pty Ltd (2004) 221 CLR 30 at 47-48 [36]-[37]; [2004] HCA 63. 45 See Thomson v Thomson [1994] 3 SCR 551 at 560-561; In re D (A Child) (Abduction: Rights of Custody) [2007] 1 AC 619 at 635. 46 See In re D (A Child) (Abduction: Rights of Custody) [2007] 1 AC 619 at 627-628; Furnes v Reeves 362 F 3d 702 at 714-715 (11th Cir 2004). Crennan proposition found favour and Finn J was prepared to accept them. The Authority supported this line of authority. The appellant pointed to several difficulties in its acceptance. One fixed upon the distinction between a restriction upon change of the status quo and an active power to choose and change at will the country of residence of the child. In that respect the appellant relied upon a line of authority including the majority of the Court of Appeals for the Second Circuit in Croll v Croll47. A distinct difficulty would arise where, as in Croll v Croll itself48, the source of the power of veto was found not in the terms of a court order or in statute but merely in an agreement between the parents. There, as the appellant correctly submitted, the "right of veto" would be at best a potential right, dependent upon a successful application to the relevant judicial or administrative authorities for its enforcement by creation of a presently imperative bar to removal. The "right to determine" spoken of in reg 4 (and Art 5) is more than an expectancy or potential right. Putting that distinct difficulty to one side, it is unnecessary to decide on this appeal which of the above lines of authority concerning the "right of veto" should be accepted as indicative of the proper construction of reg 4(2). This is because, as we have indicated, the access rights provided for the father by the Access Order conferred no "right of veto" in any sense discussed in the authorities. Some reliance was placed by the Authority upon s 80 of the NZ Children Act49. This makes it an offence for, among other things, a person, knowing that 47 229 F 3d 133 (2nd Cir 2000). 48 229 F 3d 133 at 135-136 (2nd Cir 2000). 49 Section 80 reads: "Taking child from New Zealand Every person commits an offence and is liable on summary conviction to a fine not exceeding $2,500, or to imprisonment for a term not exceeding 3 months, or to both, who, without the leave of the Court, takes or attempts to take any child out of New Zealand – (a) knowing that proceedings are pending or are about to be commenced under this Act in respect of the child; or (Footnote continues on next page) Crennan there is in force an order of a court having jurisdiction under that statute which gives to any other person "the role of providing day-to-day care for, or contact with, the child", to take the child out of New Zealand without the leave of that court. It is not clear that the Access Order provided the father with such a role, still less apparent on the evidence that the appellant knowingly acted in breach of the Access Order. Further, in final oral submissions the Authority appeared to resile from reliance upon s 80 (and any suggestion of contempt of the Access Order) as necessary to its case. The Authority fails in its reliance upon the Access Order as the source of custodial rights of the father because its argument does not adequately observe the distinction drawn in the Regulations and in the Convention between rights of custody and those of access. The importance of the preservation of the distinction in construing the Convention was, with respect, correctly emphasised by the House of Lords in In re D (A Child) (Abduction: Rights of Custody)50. Reference was made by the Authority to the "frustration" of the rights of access given the father pursuant to the Access Order, by removal of the child from New Zealand. But that description of the events that happened does not translate the rights of the father to a right of determination of the place of residence of the child and thus to a right of custody. Moreover, the avenue which may have been open to the father to approach a New Zealand court to obtain an order barring removal of the child from New Zealand without his consent, in some of the cases dubbed a ne exeat order51, did (b) knowing that there is in force an order of a Court (including an order registered under section 81) giving any other person the role of providing day-to-day care for, or contact with, the child; or (c) with intent to prevent an order of a Court (including an order registered under section 81) about the role of providing day-to-day care for, or about contact with, the child, from being complied with." 50 [2007] 1 AC 619 at 635. 51 To obtain from the Court of Chancery the writ of ne exeat the plaintiff had to show real ground for believing that the defendant was seeking to avoid the jurisdiction or for apprehending that if allowed to depart the plaintiff would be prejudiced in his remedy: Glover v Walters (1950) 80 CLR 172 at 176. Alimony decreed by an ecclesiastical court might be enforced in Chancery by the writ of ne exeat if the husband was about to quit the realm: Vandergucht v De Blaquiere (1838) 8 Sim 315 [59 ER 125]. Crennan not, without more, render him a person with presently subsisting rights of custody. The custody of the New Zealand court? The terms of reg 4 ("a person, an institution or another body") are sufficiently broad to render what may be classed as a court the holder of rights of custody in relation to a child. This will be no curiosity at least in Convention countries which have inherited the wardship jurisdiction derived from the English Court of Chancery. Article 8 uses broad terms and speaks of an application by a person, institution or other body claiming that a child has been removed or retained in breach of "custody rights", without limiting the identity of the applicant to the holder of the rights. But in Australia, reg 16(1A), in defining what amounts to a "wrongful" removal, fixes (par (c)) upon the person, institution or other body seeking return and requires it to have had rights of custody immediately before the removal. Even if the New Zealand court did have such rights, it was not the Convention applicant here. The Authority moved in the present case upon the motion of the father whom it described in the application to the Family Court as "[t]he applicant under the Convention" and as having the alleged rights of custody spelled out earlier in these reasons. The decisions of courts in other Convention countries, including those of the Supreme Court of Canada52 and the House of Lords53 which do not link the identity of the Convention applicant to the holder of the custody rights, must be read with attention to the precise requirements in the Australian legislation. The Regulations, as Finn J indicated, do not accommodate a Convention application by a parent asserting breach of the rights of custody vested in a court. Furthermore, the reasoning in these decisions fixes upon the engagement of the court's jurisdiction to deal with custody of the child, and the pendency of those proceedings. That court, at least in a common law system, will have an inherent power to protect its own processes once set in motion54. 52 Thomson v Thomson [1994] 3 SCR 551 at 588. 53 In re H (A Minor) (Abduction: Rights of Custody) [2000] 2 AC 291 at 302-306. 54 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 392; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 393; [1999] HCA 18; Batistatos v (Footnote continues on next page) Crennan This reasoning is reflected in the statement by La Forest J in Thomson v Thomson55: "It seems to me that when a court has before it the issue of who shall be accorded custody of a child, and awards interim custody to one of the parents in the course of dealing with that issue, it has rights relating to the care and control of the child and, in particular, the right to determine the child's place of residence." As Finn J noted, there were no such pending proceedings in the present case. Nor can it sensibly be said that s 80 of the NZ Children Act, in creating a criminal offence to be prosecuted by the proper authorities, confers a "power of veto" with respect to the country of residence of a child which gives rise to existing custody rights vested in any court which has made an order to which the section speaks in pars (b) and (c)56. It remains to consider the third ground, that upon which the majority of the Full Court upheld the primary judge. Joint guardianship? In relation to this third ground, there was no issue between the parties in this Court that if the father was a "joint guardian" by virtue of s 17 of the NZ Children Act, then under the law of New Zealand and immediately before the removal of the child he had "rights of custody" within the meaning of Section 15 of the NZ Children Act states that for the purpose of that statute "guardianship" of a child bears a meaning which includes "all duties, powers, rights, and responsibilities that a parent of the child has in relation to the upbringing of the child". These include the determination for the child of important matters affecting the child; changes to the child's place of residence is one of these matters (s 16(1) and (2)). Section 17(1) enacts that the father and Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 265 [9]; [2006] HCA 55 [1994] 3 SCR 551 at 588. 56 The pendency of proceedings within the meaning of par (a) of s 80 may give rise to considerations discussed by La Forest J in Thomson, but par (a) was not shown to apply in this case. Crennan mother of a child are guardians jointly of the child, and that this is so "unless" sub-s (2) or sub-s (3) applies. Section 17(3) provides that if a child is conceived before the commencement of the NZ Children Act (the case here), the mother of the child is the sole guardian, if the mother was neither: "(a) married to, or in a civil union with, the father of the child at any time during the period beginning with the conception of the child and ending with the birth of the child; nor living with the father of the child as a de facto partner at the time the child was born". (emphasis added) Section 17 is so cast that if the facts and circumstances answer sub-s (3), then the consequence indicated in sub-s (1) applies. The mother of the child is the sole guardian. If sub-s (3) does not apply to the facts and circumstances of this case then the opening words of sub-s (1) apply, and the parents are joint guardians. There is involved here no issue of onus of proof of the kind encountered in cases dealing with the distinction between exceptions and provisos such as Vines v Djordjevitch57. The better view is that the scheme of s 17 is to specify the various elements of the several species of right which it then establishes. There is no issue that the child was conceived before the commencement of the NZ Children Act. The dispute has been whether within the meaning of par (b) of s 17(3) the appellant was "living with the father of the child as a de facto partner at the time the child was born". This must be read with s 29A of the Interpretation Act 1999 (NZ) ("the NZ Interpretation Act"). Reference to that provision does not appear in the reasons of the primary judge, no doubt because his Honour had not been referred to it. The Full Court located it through its own efforts during the course of argument58. Section 29A(1) of the NZ Interpretation Act states: "In an enactment, de facto relationship means a relationship between 2 people (whether a man and a woman, a man and a man, or a woman and a woman) who – live together as a couple in a relationship in the nature of marriage or civil union; and 57 (1955) 91 CLR 512 at 518-519; cf Australian Iron & Steel Pty Ltd v Seco (1968) 117 CLR 342 at 346. 58 (2007) 211 FLR 357 at 393. Crennan are not married to, or in a civil union with, each other; and are both aged 16 years or older." In determining whether two people "live together as a couple in a relationship in the nature of marriage or civil union" within the meaning of par (a) of s 29A(1), sub-s (3) requires the court which is determining the question to have regard to: the context, or the purpose of the law, in which the question is to be determined; and all the circumstances of the relationship". The purpose stated in s 3(1) of the NZ Children Act includes promotion of the welfare and best interests of children "by helping to ensure that appropriate arrangements are in place for their guardianship and care". From this provision the majority of the Full Court concluded59: "it would seem appropriate to set a relatively low threshold when determining whether the parents of a child were living in a de facto relationship". The appellant criticised this passage. She pointed to the lack of any stated comparator against which the relativity was to be assessed, and added that on any considered evaluation of the evidence in this case there could be no confident conclusion that the Authority had made out its case. It will be observed from the New Zealand legislation that two complex and related questions emerged in this case. The first was whether the appellant and the father were living together at the time of the birth of the child. The second was whether at the time of the birth of the child the appellant and the father were in a relationship in the nature of marriage or a civil union under the law of New Zealand. The primary judge dealt as follows with the evidence: "The evidence of the Father and the Mother is in conflict. In the circumstances of this case, I prefer the evidence of the Father, who says that he lived with the Mother at the time the Child was born. The Father did not use the phrase 'in a de facto relationship' but the evidence infers 59 (2007) 211 FLR 357 at 396. Crennan that. I am satisfied that the Father and Mother were cohabiting, so that by operation of section 17, the Father and the Mother are joint guardians of the Child. The Mother's affidavit filed 14 November 2006 in paragraph 3, sworn at a time when the issue of the parties living together was not seen as being central to the issues, records, 'I moved out with my two month old son and went to live with my parents'. Her later affidavit filed on 15 December 2006, the day before the hearing, asserts that the parties never lived together as de facto partners." The evidence referred to in this passage was as follows. The only evidence from the father was the statement in his affidavit of 3 October 2006, in support of the Convention application: "I am [the child's] joint guardian by virtue of the fact that I lived together with the mother at the time of [the child's] birth." Paragraph 3 of the appellant's earlier affidavit, sworn on 10 November 2006, reads: "Abuse from [the father] started during my pregnancy. This included verbal abuse, pushing, and pulling hair. After the child was born, I experienced starvation, and name-calling (such as 'Fat Cow', 'Zebra' because of my stretch marks, and 'Hungry like a Pig') when I was breast-feeding [the child]. [The father] restricted my parent's visits, the phone was disconnected, power shut off, there was no food, and strange people would visit our house demanding money for [the father's] business transactions, which I knew nothing about. This is why I moved out with my 2-month old son and went to live with my parents. My Parents were living in New Zealand at that time." Paragraphs 2, 3, 5, 6 and 7 of the appellant's affidavit of 14 December 2006 read: About October 1995 I met [the father]. My son ... was conceived from my brief encounter with [the father]. [The child] was born on 20 September 1996. Since [the child] was born, I lived at my parents' address ... Attached and marked 'Annexure A' is a hospital tag confirming my place of residence as [that address] as at 29 October 1996. I did not live with [the father] when [the child] was born. About one and a half (1.5) months after [the child's] birth, I stayed three (3) nights per week for around six weeks with [the father] to see if Crennan he was capable of being a father to [the child]. During that time, I did want his home to be mine on the condition that he is capable of assisting in the care of [the child]. At the time, I was not dependent on [the father] in any way. [The father] did not assist me and [the child] financially, and did not take any active part in the care and raising of [the child]. He did not do any house-work. The house was severely dirty, smelly, and un-kept with old food rotting under the bed. I made attempts to clean up the house to make it liveable, but the messiness and rubbishing of the house continued. When I was at the house, there were numerous overdue electricity, water and rental bills. People came to the house regularly to demand for payment of such overdue bills. I did not even have keys to the house. At no time did I ever regard myself as, or live as, [the father's] de facto partner. [The father] never lived with me in the capacity as a de facto partner, nor did he ever assumed any responsibilities as such. I was never married to [the father]." Annexed to that affidavit was a photocopy of a double sided name tag which shows the date of birth of the child as 20 September 1996 and on the reverse bears a stamp which shows the address of the appellant as that of her parents. The stamp bears a date "29.10.96". The appellant also relied on an affidavit sworn by a family friend ("LG") who deposed: "I am aware that [the appellant] lived with her parents at [her parents' address] when [the child] was born. During that time, I visited [the appellant and the child] at her parents' house around three times a week in addition to seeing them at the local church every Sunday." Counsel for the Authority properly pointed out that the phrase "when [the child] was born" which appears in the affidavits of the appellant and LG describes the social situation of the appellant and allows for confinement of the appellant in hospital. The same may be said of the phrase in s 17(3)(b) of the NZ Children Act, "living with the father of the child as a de facto partner at the time the child was born". The appellant's affidavit sworn 14 December 2006 must have been received by the Authority at best only shortly before the hearing. In these circumstances it is unfortunate that one or more of the courses mentioned earlier in these reasons was not taken to supplement the record before the primary judge. Crennan The need to do so was particularly pressing given the bald statement by the father in his first affidavit. This represented all he had to say on the matter, although it was for the Authority to establish that there had been wrongful removal. Further, with respect to the evidence by the appellant there was lacking, for example, clearly expressed evidence which would base a finding as to when the parties began to cohabit and when they ceased to cohabit and whether the appellant moved into the house of the father after or before she became pregnant. The majority in the Full Court accepted a submission by the Authority that the evidence given in par 5 of the appellant's affidavit sworn 14 December 2006 was "concocted in order to fit the provisions of the [NZ Children Act]". May and Thackray JJ said that they were drawing an "inference from the way in which the evidence unfolded". As to the address on the name tag their Honours said60: "The address on the nametag might have been the mother's address at the time of the child's birth, but there could also have been some other explanation. Furthermore, no explanation was provided as to why the date shown on the tag was more than a month after the date of birth of the baby." With respect to the affidavit provided by LG the majority said that it was "worth noting" that the deponent was "purporting to remember the wife's [sic] place of abode some ten years previously" and referred to her evidence "at least initially" that she had moved in with her parents when the child was two months old. The conclusion was that "[i]t would therefore not be surprising that the witness recalled visiting mother and baby at the home of the mother's parents"61. Their Honours continued62: "Although the father provided virtually no evidence to assist the Court to determine the issue, we consider the mother's own evidence in her original affidavit was (just) sufficient to justify a finding that at the time of [the child's] birth the mother was living with the father as 'a de facto partner'." 60 (2007) 211 FLR 357 at 395. 61 (2007) 211 FLR 357 at 395. 62 (2007) 211 FLR 357 at 396. Crennan The majority expressed as follows their conclusions upon this aspect of the case63: "The [Authority] bears the onus of establishing that the child's removal from New Zealand was wrongful and therefore bears the evidentiary onus on issues such as whether or not [the child's] parents were living in a de facto marriage relationship at the time of [the child's] birth. We are satisfied that the onus has been discharged and we therefore arrive at the same conclusion as did Steele J, albeit by different route." The satisfaction as to onus expressed in the second sentence appears to have been based on the proposition that while the father had provided virtually no evidence, that of the appellant in her first affidavit was sufficient, when turned against her by the Authority in submissions, for the Authority to discharge the onus. This also involved discounting the evidence of the name tag and that given by LG. It was inappropriate for the Full Court to make a finding of "concoction". This was much more than a finding of an unexplained change of recollection. There had been no cross-examination of the appellant and explanation of apparent inconsistencies between two affidavits was a matter of speculation. There was, however, the other evidence which provided some support for her version of events in the later affidavit. The proper conclusion on the record before the Full Court was that reached by Finn J in her dissenting reasons. Her Honour stressed the burden of persuasion carried by the Authority, found that the affidavit material was insufficient to found an inference that the parents had lived together as a couple in a relationship in the nature of marriage or civil union, and concluded that the Authority had "simply failed to establish its case that the father was a guardian of the child and could thus determine the child's place of residence"64. Conclusions The majority of the Full Court erred in the ground upon which they upheld the decision of the primary judge. The further grounds urged by the Authority in this Court in support of the outcome in the Full Court are not made out. The consequence is that the appeal to this Court should succeed. 63 (2007) 211 FLR 357 at 396. 64 (2007) 211 FLR 357 at 367. Crennan Counsel for the Authority properly accepted that the scheme of the Regulations (and of the Convention) was that the need for certainty and prompt disposition of wrongful removal applications presented a controversy susceptible of investigation and adjudication once only. The Authority did not seek, were the appeal to be allowed, any order for rehearing of the application. The circumstance just mentioned emphasises the need for prompt but, so far as the circumstances permit, thorough examination on adequate evidence of the issues arising on wrongful removal applications under the Regulations. Orders The appeal should be allowed. Order 1 of the orders of the Full Court of 30 April 2007 should be set aside and in place thereof it should be ordered that the appeal to the Full Court be allowed, orders 1-8 made by the primary judge on 18 December 2006 be set aside and in place thereof the application filed 11 October 2006 be dismissed. Two further points should be made. The first concerns costs. The primary judge made no order for costs, and order 2 of the orders of the Full Court, which will stand, is that each party pay their own costs of the appeal to the Full Court. Regulation 30 provides in some circumstances for an order by the Family Court that the person who has removed or retained the child pay the costs of the Authority of its successful application for return. Regulation 30 has no application here. In this Court, the matter of costs is controlled by the general provision of s 26 of the Judiciary Act 1903 (Cth)65. In the circumstances, there should be no order for costs of the appeal to this Court. The second matter concerns the stay ordered by this Court on 31 August 2007 of the orders of the primary judge. The stay was until the determination by this Court of the appeal or earlier further order of this Court. The appeal having been determined, the stay expires. In any event the relevant orders of the primary judge themselves have been set aside. 65 De L v Director-General, New South Wales Department of Community Services [No 2] (1997) 190 CLR 207. Kirby 123 KIRBY J. This is an appeal from a judgment entered by the Full Court of the Family Court of Australia66. That Court was divided. The majority (May and Thackray JJ, in joint reasons) favoured affirming the orders of the primary judge in the Family Court (Steele J). His Honour had made orders that the Central Authority, represented by the Director-General of the Department of Community Services of New South Wales ("the State Central Authority"), "make such arrangements as are necessary for the return of the child ['K'] … born 20 September 1996 to Auckland New Zealand, accompanied by the child's mother"67. One judge in the Full Court (Finn J) favoured allowing the appeal and substituting orders dismissing the State Central Authority's application. The proceedings, issues and disposition The Convention and Regulations: The proceedings in the Family Court were brought by the State Central Authority68 in response to a request by its New Zealand counterpart ("the New Zealand Central Authority"). They were initiated on behalf of K's father. The request was made pursuant to the Hague Convention on the Civil Aspects of International Child Abduction ("the Convention")69. Australia and New Zealand are Contracting States under the Convention. In Art 1, the objects of the Convention are stated to be: to secure the prompt return of children wrongfully removed to or retained in any Contracting State; and to ensure that rights of custody and of access under the law of one Contracting State are effectively respected in the other Contracting States". In Australia, the Convention has not been incorporated directly into municipal law. Instead, its provisions are reflected in the Family Law (Child Abduction Convention) Regulations 1986 (Cth) ("the Regulations"). The Regulations are made pursuant to s 111B of the Family Law Act 1975 (Cth) ("the Act"). Substantially, the Regulations follow the language of the Convention. 66 Wenceslas v Director-General, Department of Community Services (2007) 211 FLR 357. In the practice of the Family Court of Australia, fictitious names are assigned to case titles in cases of this kind. 67 SYF 4027 of 2006 ("reasons of the primary judge"). 68 See Family Law (Child Abduction Convention) Regulations 1986 (Cth), regs 8, 9. 69 [1987] ATS 2. The Convention entered into force on 1 December 1983. Australia ratified it with effect from 1 January 1987. See DP v Commonwealth Central Authority (2001) 206 CLR 401 at 411 [23]; [2001] HCA 39. Kirby Their general purpose is stated to be "to enable the performance of the obligations of Australia, or to obtain for Australia any advantage or benefit, under [the Convention]"70. The Convention itself appears as Sched 1 to the Regulations. By reg 1A(2) it is provided that the Regulations are intended to be construed: having regard to the principles and objects mentioned in the preamble to and Article 1 of the Convention; and in accordance with the recognising, appropriate forum for resolving disputes between parents relating to a child's care, welfare and development is ordinarily the child's country of habitual residence; and the Convention, that recognising that the effective implementation of the Convention depends on the reciprocity and mutual respect between judicial or administrative authorities … of convention countries". Requirement of wrongful removal: As Baroness Hale of Richmond has remarked71, it would have been simpler if the Convention had provided that all removals or retentions of a child outside the country of habitual residence, without the consent of the other parent or the authority of a court, were wrongful. However, the Convention does not so provide. Nor do the Regulations do so. The Convention reflects compromises agreed during the negotiations. In effect, the Convention recognises, as Baroness Hale put it, that "not all parents have the right to demand the automatic return of children who have been taken away without their consent"72. Preconditions to that entitlement are expressed. Those preconditions must be satisfied if the somewhat drastic consequences for which the Convention provides are to be invoked. Such consequences include the intervention of designated Central Authorities; the non-voluntary return of the child, if necessary, to the country of habitual residence; likely further proceedings in that country; and a consequential impact on the lives of the child, parents and guardians concerned. In an application under the Regulations to an Australian court, it is a precondition to the making of a "return order" that the court should be satisfied "that the child's removal or retention was wrongful"73. To be "wrongful", the 70 The Act, s 111B(1). 71 In re D (A Child) (Abduction: Rights of Custody) [2007] 1 AC 619 at 631 [24]. See (2007) 211 FLR 357 at 379 [122]. 72 In re D [2007] 1 AC 619 at 631 [24]. 73 Regulations, reg 16(1). Kirby removal or retention must be shown to be in breach of "rights of custody", as defined in the Regulations74. It follows that it is necessary that the person, institution or other body requesting the return of an allegedly abducted child should be possessed of such rights, which have been breached either by the removal of the child from another Contracting State to Australia or the retention of the child in Australia. In effect, the drafting recognises that some persons (usually one parent) will have a legal entitlement unilaterally to remove a child from one Contracting State to another, however painful that course may be for other persons who assert an interest in the child and whose relationship with the child will thereby be interrupted or even terminated75. Mother's abandoned and remaining issues: A number of issues that were contested below have been abandoned following determinations adverse to the appellant. Thus, the appellant no longer contends: that the removal of K from New Zealand was not wrongful because New Zealand was not K's country of "habitual residence"76; that the father had consented to, or acquiesced in, the removal77; that a return order should be refused because there is a "grave risk" that it would expose K to physical or psychological harm or otherwise place him in an intolerable situation78; or that K had expressed a desire not to be returned to New Zealand79. 74 Regulations, reg 4 giving effect to Convention, Arts 3 and 5(a). 75 The Explanatory Report of Professor Elisa Pérez-Vera of April 1981 made it clear that the original parties to the Convention drew a distinction between rights of custody and rights of access and did not intend "mere rights of access" to entitle a parent to demand the summary return of the child. See In re D [2007] 1 AC 619 at 76 Reasons of the primary judge at [30]-[31]; (2007) 211 FLR 357 at 397-399 [229]- [241]; cf Regulations, reg 16(1A)(b). 77 Reasons of the primary judge at [33]; (2007) 211 FLR 357 at 400-403 [242]-[267]; cf Regulations, reg 16(3)(a). 78 Reasons of the primary judge at [34]-[44]; cf Regulations, reg 16(3)(b). 79 Reasons of the primary judge at [45]-[48]; cf Regulations, reg 16(3)(c). Kirby The essence of the appellant's grounds of appeal is that the majority in the Full Court erred in determining that the evidence tendered in the proceedings was sufficient to sustain a finding that, at the time of the child's birth, the appellant was living with the father as a de facto partner. It was this finding that had occasioned the majority's conclusion that the father was a "guardian" of K under New Zealand law, and thus possessed of "rights of custody" in respect of K for the purposes of the Regulations. Central Authority's contentions: By a notice of contention, the State Central Authority contends that, even if the appellant is successful on her appeal point, the orders of the Full Court should be upheld on alternative bases. First, it is contended that the father had a right to object to the removal of K from New Zealand independent of the question of "guardianship". Such a right was said to be implicit in a New Zealand court order assigning the "care" of K at specified times to the father. If such a right could be established, so it was argued, the appellant's removal of K from New Zealand without the father's consent was "wrongful" for the purposes of the Regulations. In the alternative, the Authority contended that the "New Zealand courts" had a right to object to the removal of K because, given that court order, the appellant's action in effecting such removal without the consent of the New Zealand courts put her in breach of a particular criminal prohibition applicable in that jurisdiction80. This, it was submitted, also served to render the removal "wrongful". The result: the appeal fails: The evidence relevant to the appellant's appeal point was unsatisfactory. However, having regard to the issues fought at trial, the available evidence and the conduct of the parties, the appellant has not made good her submission that the majority of the Full Court erred in reaching their conclusion. Even if this is not accepted, the State Central Authority is still entitled to succeed on the basis of the first-mentioned contention point. K's removal, in effect, rendered meaningless the father's rights under the New Zealand court order. It follows that, on either basis, the orders of the Full Court of the Family Court are sustained. The appeal to this Court should be dismissed. In light of this conclusion, it is possible to put the remaining contention point to one side. As the judges in the Full Court acknowledged, whilst such claims have been upheld in the past, they present certain difficulties, not least because of the language and apparent assumptions of the Regulations81. Because it is unnecessary to decide whether rights of custody over K existed in a New Zealand court, it is appropriate to refrain from doing so. 80 See below these reasons at [158]. 81 (2007) 211 FLR 357 at 396-397 [222]-[228]; cf at 368-369 [48]-[54]. Kirby The facts Birth of the child K: Many of the facts contested at trial are no longer relevant, given what the appellant correctly describes as "the limited scope of the appeal". The appellant ("the mother") is a Polish national, who had been resident in New Zealand "for at least some time" prior to the birth of K82. The father was born in New Zealand, is a national of that country and is of Maori descent. The child, K, was born in Auckland, New Zealand in September 199683. It is accepted that he is a New Zealand national and he holds a New Zealand passport. The paternity of the father is acknowledged. In her own court documents, the mother identifies the names of the child, obviously derived from each parent. K's first name is Polish whilst his middle name is Maori. His surname is a hyphenated combination of the mother's and the father's surnames. The mother and father were not married at the time of K's birth. They have not married since, nor entered a civil union under New Zealand law. Parents' affidavit evidence: The request for the return of K drew support from an affidavit of the father dated 3 October 2006. That document contained an account of the circumstances of K's removal from New Zealand. It also set out some factual background relating to the parents' relationship with each other and with K, and to various court proceedings that had taken place in that connection. It contained the assertion: "I am [K's] joint guardian by virtue of the fact that I lived together with the mother at the time of [his] birth". On 10 November 2006, the mother filed an affidavit of her own. It was, for the most part, non-responsive to the material contained in the father's affidavit. Instead, it seemed to be directed to establishing that the father was "violent and irresponsible" and posed a danger to her and to K84. Annexed were various documents claimed to substantiate this allegation. The affidavit made no mention of the formal aspects of the father's relationship with the mother or K, or the various court proceedings as between the father and the mother. However, it did cast some incidental light on the domestic arrangements of the father and the mother around the time of K's birth, stating that: "Abuse from [the father] started during my pregnancy. This included verbal abuse, pushing, and pulling hair. After [K] was born, I experienced starvation, and name-calling … when I was breast-feeding [K]. [The 82 Reasons of the primary judge at [8]. 83 Reasons of the primary judge at [3]. 84 cf reasons of Gummow, Heydon and Crennan JJ at [64]. Kirby father] restricted my parent's [sic] visits, the phone was disconnected, power shut off, there was no food, and strange people would visit our house demanding money for [the father's] business transactions, which I knew nothing about. This is why I moved out with my 2-month old son and went to live with my parents." The inference that the primary judge drew from these statements, coupled with the father's evidence, was that, at the time of K's birth, the couple were living together in what the mother had described as "our house" until the mother moved out, two months after K's birth85. On 28 November 2006, the father filed a second affidavit. It sought to respond, in a methodical fashion, to the specific allegations made by the mother. Without setting out the details, it is clear that the father's second affidavit, if accepted, would have rendered untenable the mother's claims of violence and abuse. It drew support from a number of annexures. Then, on 14 December 2006, the mother swore a second affidavit, directing her attention belatedly to the father's assertion that she was cohabiting with him at the time of K's birth. She stated that "[s]ince [K] was born, I lived at my parents' address" and further that "[a]t no time did I ever regard myself as, or live as, [the father's] de facto partner". She stated that she had spent three nights a week at the father's house for a six week period a month and a half after the birth of K on what amounted, in effect, to a trial basis. According to the mother, "[d]uring that time, I did want his home to be mine on the condition that he [was] capable of assisting in the care of [K]". However, on her evidence, the father offered no domestic or financial assistance to her, the house was unclean, and there were "numerous" problems relating to overdue bills. The foregoing was the extent of the direct evidence about the nature and characteristics of the relationship between the mother and father at the time of K's birth. The primary judge, and the Full Court, therefore had to resolve the conflict of testimony. No oral evidence was called by the mother or the State Central Authority. There was no cross-examination either of the father or the mother. In the result, the primary judge preferred the evidence of the father86. He pointed out that the mother's second affidavit was filed only the day before the hearing. Obviously, the primary judge regarded the mother's first affidavit, sworn without apparent regard to the consequences of the admissions made, as more reliable, truthful and convincing. The same conclusion was reached by the majority in the Full Court. They considered that "the mother's own evidence in 85 Reasons of the primary judge at [25]. 86 Reasons of the primary judge at [25]. Kirby her original affidavit was (just) sufficient to justify a finding that at the time of K's birth the mother was living with the father as 'a de facto partner'"87. It will be necessary to return to these conclusions. Early disputes in New Zealand: It was common ground that, from not long after K's birth, the mother and the father had lived separately. In 1997, the mother and father attended counselling in relation to their care of K. An agreement between them before a statutory counsellor88 recorded concurrence as to their future relationship and their respective contributions to the care of K. That agreement ("the parenting agreement") was in evidence. It included an acknowledgment by the mother that she would give the father two months' notice of an intention to leave the country, that she would "recognise [the father's] guardianship rights", and that the father would contribute to K's childcare costs during the mother's attendance at an educational course. It also noted that both parents agreed that it was important for K "to discover his Maori heritage and both have stated their commitment to this". In these proceedings, the mother contested having agreed to the father's guardianship rights. Nevertheless, it is apparent from the contemporaneous documents that, pursuant to the parenting agreement, the child was to live with the mother and to spend some time with the father89. When, in 1998, the father became concerned that the mother might take K from New Zealand without his consent, he applied to the District Court of New Zealand for an order forbidding such removal. Such an order was made on 24 March 1999. In June 1999, what is described in later court documents as a "custody access order" was made in respect of K, although that order was not itself in evidence in these proceedings. On 4 December 2000, it was replaced by a new order, made by consent, which in essence reflected aspects of the parenting agreement ("the NZ court order"). Under this order, K was to be in his father's care every second weekend and for half of the school holidays. The father was to provide transport to collect the child from his mother's home at 5 pm on Fridays and to return him at 5 pm on Sundays. At other times the child was to remain in his mother's care. It was common ground that the father proceeded to exercise his rights at least at the level provided for in the order90. By consent of the father, in March 2002 and December 2004 fresh orders were made suspending the non-removal order for short periods, during which 87 (2007) 211 FLR 357 at 396 [217]. 88 Pursuant to the Family Proceedings Act 1980 (NZ), s 11(2). 89 Reasons of the primary judge at [11]. 90 Reasons of the primary judge at [12]. Kirby intervals the mother took K to visit her parents, who had by then moved from New Zealand to Australia. Then, in June 2005, the non-removal order was discharged by order of the Family Court of New Zealand upon the joint application of the father and the mother. They recorded the basis for their application as being that "past grievances have … been resolved and … both parents have an excellent relationship regarding [their] son". Thereafter, the evidence shows that the mother continued to visit her parents in Australia from time to time. On one such occasion, she left K in the father's care in New Child's removal from New Zealand: On 14 September 2006, a dispute broke out between the mother and the father. The events of that evening, which the father and mother contest, apparently persuaded the mother to depart from New Zealand immediately and permanently with K. This she did on 15 September 2006, taking the child to Australia where he has since lived. In New Zealand, the father immediately sought the assistance of local officials. On 2 October 2006, the New Zealand Central Authority made its request on behalf of the father to the State Central Authority for the return of the child to New Zealand pursuant to Australia's obligations under the Convention. It was this request that led to the State Central Authority, on 11 October 2006, filing its application in the Family Court seeking a return order pursuant to the Regulations. It was that application that has led to these proceedings. The Convention, Regulations and relevant legislation The Convention and Regulations: As this Court pointed out in DP v Commonwealth Central Authority92, the task of the Family Court in a matter of this kind is "to apply the Regulations to the facts established by the evidence". It is to do so taking into account the purpose of the Regulations, being the fulfilment of Australia's obligations under the Convention. As in DP, it was not suggested in this appeal that there was any relevant discordancy between the Regulations and the Convention. In Australia, the Regulations express what is the governing law. The critical regulation, both for the issue raised by the mother in this appeal and the issue advanced by the State Central Authority in its notice of contention, is reg 16. Relevantly, that regulation provides93: 91 Reasons of the primary judge at [13]. 92 (2001) 206 CLR 401 at 411 [25]. 93 cf Convention, Art 3. See Regulations, reg 2(2). Kirby an application is made to a court under subregulation 14(1) for an order for the return of a child who has been removed to, or retained in, Australia; and the responsible Central Authority … satisfies the court that the child's removal or retention was wrongful under subregulation (1A); the court must, subject to subregulation (3), make the order. (1A) For subregulation (1), a child's removal to, or retention in, Australia is wrongful if: the child was under 16; and the child habitually resided in a convention country immediately before the child's removal to, or retention in, Australia; and the person, institution or other body seeking the child's return had rights of custody in relation to the child under the law of the country in which the child habitually resided immediately before the child's removal to, or retention in, Australia; and the child's removal to, or retention in, Australia is in breach of those rights of custody; and at the time of the child's removal or retention, the person, institution or other body: (i) was actually exercising the rights of custody (either jointly or alone); or (ii) would have exercised those rights if the child had not been removed or retained." "[R]ights of custody" are defined in reg 4, which provides94: 94 cf Convention, Art 5. Kirby "(1) For the purposes of these regulations, a person, an institution or another body has rights of custody in relation to a child, if: the child was habitually resident in … a convention country immediately before his … removal or retention; and rights of custody in relation to the child are attributed to the person, institution or other body, either jointly or alone, under a law in force in the convention country in which the child habitually resided immediately before his … removal or retention. For the purposes of subregulation (1), rights of custody include rights relating to the care of the person of the child and, in particular, the right to determine the place of residence of the child. For the purposes of this regulation, rights of custody may arise: by operation of law; or by reason of a judicial or administrative decision; or by reason of an agreement having legal effect under a law in force in Australia or a convention country." The NZ Care of Children Act: At all relevant times, K was under the age of 16 years. It is now undisputed that, before his removal to Australia in 2006, he habitually resided in New Zealand (a convention country). The question that remains is whether, immediately before such removal, the father had "rights of custody" in relation to K under the law of New Zealand which were breached by K's removal to Australia, and which he was exercising or would have exercised but for such removal. The evidence at trial left no doubt (and indeed there was a finding) that the father continuously and sufficiently exercised such rights in relation to K as he enjoyed under New Zealand law. A measure of whether he would have continued to exercise such rights, but for the removal, can be found in the father's conduct as described by the primary judge, his repeated assertion of his rights before the courts of New Zealand, and, when K was removed to Australia, his action to invoke the assistance of the Convention through the New Zealand Central Authority. Given that the inquiry is as to rights that existed "in relation to the child under the law of" New Zealand, it is necessary to have regard to any New Zealand statute law or common law that touches upon the content and character of the father's "rights" and assists in determining whether they are "rights of Kirby custody" within the meaning of the Regulations as understood by reference to the Convention. It was common ground that, if the father was shown to be a legal guardian of K, he would have "rights of custody" for present purposes. For that reason, much attention was given below to the Care of Children Act 2004 (NZ)95 ("the NZ Act"). As the majority reasons in the Full Court indicated, if it were established that the father was a "guardian" of K under the terms of that Act, there would be no need to establish any other "rights of custody"96. Of itself, this would be sufficient to lend the propounded legal colour to the father's rights. Section 15 of the NZ Act provides: "For the purposes of this Act, guardianship of a child means having (and therefore a guardian of the child has), in relation to the child – all duties, powers, rights, and responsibilities that a parent of the child has in relation to the upbringing of the child; every duty, power, right, and responsibility that is vested in the guardian of a child by any enactment; every duty, power, right, and responsibility that, immediately before the commencement, on 1 January 1970, of the Guardianship Act 1968, was vested in a sole guardian of a child by an enactment or rule of law." Section 16(1) of the NZ Act provides that the duties, powers, rights and responsibilities of a guardian of a child include "determining for or with the child, or helping the child to determine, questions about important matters affecting the child". Under s 16(2), "important matters affecting the child" include "changes to the child's place of residence (including, without limitation, changes of that kind arising from travel by the child) that may affect the child's relationship with his or her parents and guardians". Section 16(5) provides that, in exercising his or her duties, powers, rights and responsibilities, "a guardian … must act jointly (in particular, by consulting wherever practicable with the aim of securing agreement) with any other guardians of the child". Against this background, s 17 of the NZ Act (which is critical for this issue) provides, relevantly: 95 See eg reasons of the primary judge at [24]-[26]; (2007) 211 FLR 357 at 391-392 96 (2007) 211 FLR 357 at 392 [194]. Kirby "(1) The father and the mother of a child are guardians jointly of the child unless the child's mother is the sole guardian of the child because of subsection (2) or subsection (3). If a child is conceived on or after the commencement of this Act, the child's mother is the sole guardian of the child if the mother was neither – (a) married to, or in a civil union with, the father of the child at any time during the period beginning with the conception of the child and ending with the birth of the child; nor living with the father of the child as a de facto partner at any time during that period. If a child is conceived before the commencement of this Act, the child's mother is the sole guardian of the child if the mother was neither – (a) married to, or in a civil union with, the father of the child at any time during the period beginning with the conception of the child and ending with the birth of the child; nor living with the father of the child as a de facto partner at the time the child was born." Section 18 of the NZ Act contains a special provision under which a father, who is not otherwise a guardian of the child, becomes a guardian if his particulars are registered on the child's birth certificate. In the present case, the father's particulars were registered on the birth certificate of K. So much is uncontested97. However, because K was born before the commencement of the NZ Act in 2004, neither s 18 nor s 17(2) of the NZ Act is applicable. It follows that the determination of whether or not the mother was, according to New Zealand law, the sole guardian of K is to be determined in accordance with the formula stated in s 17(3) of the NZ Act. It was for that reason (not apparently perceived by the mother at the time of making her first affidavit) that s 17(3)(b) became critical, with its reference to the character of the relationship between the mother and the father "at the time the child was born". Two other provisions of the NZ Act must be noted in deciding whether it was shown that the father was a joint guardian of K or otherwise held "rights of 97 (2007) 211 FLR 357 at 392 [196]. Kirby custody" in relation to him. The first is s 3 of the NZ Act, which states that the purpose of that Act is to "promote children's welfare and best interests, and facilitate their development, by helping to ensure that appropriate arrangements are in place for their guardianship and care". In addition, s 80 of the NZ Act imposes criminal responsibility on parents who remove specified children from New Zealand without leave of a relevant court. That section states: "Every person commits an offence and is liable on summary conviction to a fine not exceeding $2,500, or to imprisonment for a term not exceeding 3 months, or to both, who, without the leave of the Court, takes or attempts to take any child out of New Zealand – knowing that proceedings are pending or are about to be commenced under this Act in respect of the child; or knowing that there is in force an order of a Court … giving any other person the role of providing day-to-day care for, or contact with, the child; or (c) with intent to prevent an order of a Court … about the role of providing day-to-day care for, or about contact with, the child, from being complied with." The NZ Interpretation Act: The majority in the Full Court invoked s 29A of the Interpretation Act 1999 (NZ) in an attempt to shed some light on the meaning of the expression "de facto partner" in s 17(3)(b) of the NZ Act98. Section 29A provides, relevantly: In an enactment, de facto relationship means a relationship between 2 people (whether a man and a woman, a man and a man, or a woman and a woman) who – live together as a couple in a relationship in the nature of marriage or civil union; and are not married to, or in a civil union with, each other; and are both aged 16 years or older. 98 (2007) 211 FLR 357 at 393-394 [204]. See Evidence and Procedure (New Zealand) Act 1994 (Cth), s 40. Kirby In determining whether 2 people live together as a couple in a relationship in the nature of marriage or civil union, the court or person required to determine the question must have regard to – the context, or the purpose of the law, in which the question is to be determined; and all the circumstances of the relationship." The mother's complaint in this Court, as in the Full Court, was not just that the evidence before the primary judge fell short of establishing that she and the father were in fact living together at the time that the child was born, but also that their relationship at that time was not that of "de facto partners". Because a "de facto partner" in the NZ Act is necessarily a partner in a "de facto relationship", the provisions of s 29A of the Interpretation Act afford some indication of the type of relationship which the New Zealand Parliament had in contemplation when, in s 17(3)(b) of the NZ Act, it made that status a relevant criterion. It is significant that s 29A(3) directs attention, in determining whether a de facto partnership existed, to the purpose of the law expressed in ss 17(1) and 17(3)(b) and the circumstances of the relationship in question. In any event, the expression "de facto partner" has now moved into common parlance in Australia. Permissible judicial notice affirms that New Zealand society is sufficiently similar to our own to allow Australian understandings of that expression to be applied, in a general sense, to the meaning of that phrase in the NZ Act. Conclusion on the NZ legislation: The general rule, established by s 17(1) of the NZ Act, is that a father and mother are to be joint guardians of their child. That is the principle endorsed by the New Zealand Parliament in a statutory provision that was in force at the time of K's removal to Australia and at the time the present proceedings were heard and decided. It follows that upholding the mother's claim to be K's "sole guardian" requires the application of the exception in s 17(3) of the NZ Act. Neither the primary judge nor the Full Court was convinced that the exception in s 17(3) was applicable in this case. Differences in the Full Court Evidence of de facto relationship: The majority in the Full Court accepted that it was necessary first to establish precisely the rights which the father had under New Zealand law at the time of K's removal, and then to resolve the question of whether such rights amounted to "rights of custody" for the purposes 99 (2007) 211 FLR 357 at 391 [187]. Kirby Having examined the foregoing provisions of the Regulations (and as far as relevant the Convention), as well as the statutory provisions applicable in New Zealand, the majority concluded that there was "just" sufficient evidence to support a finding that "at the time of K's birth the mother was living with the father as 'a de facto partner'"100. They therefore accepted that both parents were K's "guardians" at the time of his removal from New Zealand. As such, they both had the right to determine K's place of residence. The father thus had "rights of custody" at the relevant time. This rendered the mother's unilateral act of removal "wrongful". The orders of the trial judge could thus be sustained on this basis. In her dissenting reasons, Finn J called particular attention to the limitations of the evidence of the father as to the character of his relationship with the mother "at the time the child was born". Her Honour laid emphasis on her conclusion that "it fell to the [State] Central Authority to put before [the primary judge] the necessary evidence to establish the existence of a de facto relationship"101. In the opinion of Finn J, the Authority had failed to do so102. Notice of contention point: In the Full Court, the issue now raised on the notice of contention was also put in the alternative by the State Central Authority103. Having reviewed the case law, the majority concluded that, if it could be shown that the father had a right to veto K's removal from New Zealand under the law of that jurisdiction, then such removal was in breach of "rights of custody" and was therefore "wrongful". However, their Honours then turned to the question of whether a relevant right of veto arose pursuant to the father's "guardianship" of K. In light of their conclusion on that matter, they did not need to consider the argument that the father had a right of veto independent of such "guardianship". 100 (2007) 211 FLR 357 at 396 [217]. The majority noted that the primary judge had apparently found that the father and mother were joint guardians on the basis of "cohabitation" at the time of K's birth. This did not reflect the relevant legal criterion. However, as the proceedings had been conducted on the papers, the majority considered that it was open to them to substitute their own finding on this issue. See (2007) 211 FLR 357 at 394 [207]-[209]. 101 (2007) 211 FLR 357 at 367 [42]. 102 (2007) 211 FLR 357 at 367 [42]. 103 (2007) 211 FLR 357 at 375 [97]-[98]. Kirby In her reasons, Finn J accepted that the "right to determine the place of residence" of a child would include a "right of veto"104. However, her Honour did not accept that the terms of the consent order, made by the New Zealand Family Court in December 2000 and still in force, "gave the father the right to determine the child's place of residence or to veto a decision concerning that matter (on the assumption … that he was not a guardian of the child)"105. In particular, Finn J was of the opinion that the expert evidence on New Zealand law, provided in an affidavit of the father's solicitor, fell short of establishing the existence of the propounded "veto". The removal was wrongful as in breach of guardianship rights Sufficiency of the evidence: As noted above, the mother's grounds of appeal in this Court focused on the suggested inadequacies of the evidence accepted below to support the conclusion that, under New Zealand law, the father was a joint guardian of K, and thus entitled, in law, to determine K's place of residence, evidencing rights of custody. The evidence that was before the Family Court included the father's assertion of his guardianship rights, jointly with the mother. The history of the earlier proceedings before the New Zealand courts, and other evidence in the proceedings, demonstrated the continuous significance to the father of his relationship with K. Both before the New Zealand courts and in these proceedings in Australia, the father made it plain that he asserted such rights not merely for the enjoyment of personal contact with K but also to ensure that K would "discover his Maori heritage". In his second affidavit, the father adverted to this issue and gave emphasis to its importance for him. This is a particular feature of the present case that a New Zealand court would ordinarily be better able to evaluate, on tested evidence, than an Australian court. During argument before this Court, the possible need for sensitivity to this question by the Family Court of Australia was properly conceded for the mother106. Onus and burden of proof: A question immediately arises as to which party before the Family Court bore the evidentiary onus of establishing that s 17(3)(b) of the NZ Act was, or was not, engaged. For the mother, it was argued that the issue only arose so far as the State Central Authority was attempting to prove a breach of the father's "rights of 104 (2007) 211 FLR 357 at 368 [45]. 105 (2007) 211 FLR 357 at 368 [47]. 106 [2007] HCATrans 795 at 27 [1171]-[1180]. Kirby custody" in relation to K. If the father wished to prove such "rights of custody", by reason of his status under New Zealand law as a joint guardian of K, it was for him to prove that he possessed such status. Effectively, this meant that the father, by proper evidence and argument, had to exclude the conclusion that the mother was "the sole guardian of the child" pursuant to s 17(3) of the NZ Act. The mother further submitted that the proceedings in the Family Court comprised a "civil proceeding" and were thus subject to s 140 of the Evidence Act 1995 (Cth) ("the Evidence Act"). By that section, relevantly, the court "must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities". Several considerations are identified in the Evidence Act as matters that the court may take into account in deciding whether it is so satisfied. These include "the nature of the subject-matter of the proceeding"107. Here, that subject matter is not exclusively an inter partes civil proceeding between private individuals. It is a proceeding ostensibly brought to uphold the high purposes of the Convention and to ensure that Australia conforms to its obligations under international law. By ensuring the prompt return of a child wrongfully removed and by upholding the rights of custody and access under the law of another Contracting State, Australia gains the benefits of "reciprocity and mutual respect" between convention countries108, of which New Zealand is one. In support of her argument about the onus of proof, the mother could point to the fact that reg 16(1)(c) of the Regulations is expressed in language that appears to recognise that the applicant Central Authority must establish the element of wrongfulness required to secure a return order109. The State Central Authority did not contest that it bore the general legal obligation to satisfy the Family Court that K's removal from New Zealand to Australia was wrongful, in the sense that it breached rights of custody enjoyed by the father under the law of New Zealand. However, the Authority submitted that the primary rule established by s 17(1) of the NZ Act established the prima facie position under New Zealand law, being that both the father and the mother were joint guardians of K. In this respect, the NZ Act reflected an advance in New Zealand comparable to similar developments encouraging shared parental responsibility under Australian law110. It expressed an important legislative 107 Evidence Act, s 140(2)(b). 108 Regulations, reg 1A. See also Convention, Art 1. 109 See above these reasons at [146]. 110 See eg the Act, s 65DAC. Kirby purpose of ensuring that, in the usual case, both parents would be involved in the privileges and responsibilities of the guardianship of their child. According to this argument, if an exception to this general rule of joint guardianship were to be proved in a particular case (at least where the other parent contested the exception and was willing to accept the duties of joint guardian), the evidentiary or forensic onus of demonstrating the application of the exception had to be borne by the party asserting it. There are arguments both ways on the locus of the evidentiary burden of demonstrating the consequence of s 17(3) of the NZ Act or its inapplicability. Having regard to the overall purposes of the NZ Act, as declared in s 3, and its embrace of a presumption of joint guardianship signified in s 17(1), it seems appropriate to require a mother, who claims exceptionally to be the "sole guardian of [a] child", to prove a legal entitlement to that effect111. In particular, this is so where the mother's object in claiming sole guardianship is to preclude the engagement of the Regulations before an Australian court, with their object of committing such decisions, by prompt determination112, to the courts or authorities of the country of habitual residence from which the child was removed. To some extent it is invidious to expect an Australian court to elucidate the way in which a New Zealand court, faced with the present question, would assign the burden of persuasion. It is possible to put this issue to one side in this appeal because, alike with the majority in the Full Court, it is my view that (assuming that the relevant evidentiary burden was borne by the State Central Authority) sufficient evidence was adduced to sustain the decision and orders of the Full Court. No error has been demonstrated to this Court that would warrant reversing that Court's decision. Deficiencies of the evidence: I acknowledge that the available evidence addressed to the relevant questions was not entirely satisfactory. There was almost no evidence from the father illuminating, in proper detail, the nature of his relationship with the mother "at the time the child was born"113. It must be 111 Although the locus of the general legal onus is fixed by the terms of the Regulations, it is well established that the factual or forensic onus may shift on particular issues: Richard Walter Pty Ltd v Commissioner of Taxation (1996) 67 FCR 243 at 245-246, 259; Raftland Pty Ltd v Commissioner of Taxation (2006) 227 ALR 598 at 616 [81]. 112 See eg Regulations, reg 15(2); cf Convention, Arts 1a ("prompt return"), 2 ("most expeditious procedures available"). 113 NZ Act, s 17(3)(b). Kirby remembered, however, that the father was not, as such, a party to the proceedings. It was left to the State Central Authority to advance the claim asserted by the NZ Central Authority on behalf of the father for a return order in respect of K. For this reason, it is difficult to apply to the present circumstances the ordinary expectations of adversarial litigation, viz that inferences may be drawn adverse to a party in the best position to call a witness who could have given direct evidence when that party has refrained from tendering that evidence or asking crucial questions114. It is reasonable for the mother to suggest that it would have been a "light burden" upon the State Central Authority to have procured more elaborate evidence from the father than it did115. It was all but conceded in argument that, especially once the mother had filed her second affidavit, the State Central Authority should have procured additional evidence to illuminate the extent and character of the "relationship" between the father and the mother at the time the child was born. As the Full Court majority stated, if the father had deposed that he was living "as a de facto partner" of the mother at the relevant time, such evidence would arguably have involved the assertion of a conclusion of law, liable to be excluded for that reason116. But it would have been open to him to give and tender evidence as to relevant features of the relationship and his perceptions about its character. Had the Authority adduced such evidence, much less might have been left to judicial inference. I therefore agree with Gummow, Heydon and Crennan JJ ("the joint reasons") that both the State Central Authority, and perhaps the Family Court, could have taken steps to supplement the factual record117. In the result, however, it is arguable that their failure to do so was more disadvantageous to the father than it was to the mother. The mother was afforded an ample chance to respond to the father's claim that she had lived with him in a de facto relationship. The contradictions that emerged in the evidence which she gave were of her own making. The father, on the other hand, had no practical scope for responding to the mother's ultimate denial of the existence of such a relationship, given that the relevant affidavit was filed immediately before the hearing118. 114 cf Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419. 115 cf DP (2001) 206 CLR 401 at 456 [187]. 116 (2007) 211 FLR 357 at 394 [206]. 117 Joint reasons at [44]. 118 cf joint reasons at [108]. Kirby Also unsatisfactory was expert evidence tendered by the State Central Authority concerning the content and operation of New Zealand law on de facto partnerships at the relevant time. The affidavit of the father's solicitor, which addressed these matters, was defective. It was neither entirely independent nor complete. But it was the only such evidence available. The evidence of a de facto partnership was adequate: Notwithstanding these deficiencies, which the primary judge and the majority in the Full Court acknowledged, no error has ultimately been shown to warrant reversal by this Court of the conclusion of the Full Court that, as a matter of fact, a relationship between the father and mother at the time of the child's birth was proved and that its character was shown to be that of a de facto partnership. Several factors help to sustain this conclusion. Concurrent findings of fact: There was explicit evidence from the father that he lived together with the mother at the time of K's birth. This provided a foundation for the conclusion that the parents in fact lived together at the time identified as material by s 17(3) of the NZ Act. Acting within his powers, the trial judge accepted that evidence. The Full Court, exercising its own powers of fact-finding in an appeal by way of rehearing, affirmed such acceptance. The Authority thus has the benefit of concurrent findings of fact on this point119. For this Court now to take the exceptional course of giving effect to a contrary conclusion, it would have to identify error. Simply reaching a different conclusion of its own is insufficient. The facility of appeal would be undermined, and much instability produced, if appellate courts substituted their own factual conclusions for those of trial courts without the necessity of demonstrated error. Whilst some of these considerations have less significance in the present proceedings, because all of the evidence was received in written form with no oral testimony or cross-examination, the point of principle remains. Special caution in disturbing factual conclusions reached below is required in this Court because the constitutional process of appeal has been classified as that of a strict appeal120. In essence, this rule derives from the special responsibilities of this Court as a final national and constitutional tribunal concerned with correcting established error and deciding appeals, not, as such, conducting or reconducting trials. 119 cf New South Wales v Fahy (2007) 81 ALJR 1021 at 1026 [8], 1052 [153], 1056 [172]; 236 ALR 406 at 409, 445, 449; [2007] HCA 20; Roads and Traffic Authority (NSW) v Dederer (2007) 81 ALJR 1773 at 1777 [5], 1804-1805 [163]-[166], 1827 [293]; 238 ALR 761 at 764, 800-801, 831; [2007] HCA 42. 120 Eastman v The Queen (2000) 203 CLR 1 at 13 [18], 24 [68], 54 [164], 63 [190]; cf at 82 [249], 123 [369]; [2000] HCA 29. See also Mickelberg v The Queen (1989) 167 CLR 259; [1989] HCA 35. Kirby Evidence of the mother: The mother's express contradiction of the father's evidence of cohabitation at the time of K's birth – and in particular her express denial, on the eve of the hearing, that their relationship was that of "de facto partners" and her explicit assertion that K was "conceived from [a] brief encounter with [the father]" – obliged the judges below to decide whose evidence was to be preferred. Clearly, it was open to the primary judge, having regard to all of the evidence, to prefer the father's version to that of the mother. Finn J recognised that the primary judge121: "was entitled for the reasons which he gave, to prefer the evidence of the father to that of the mother at least in relation to the issue of whether the parties were living together when the child was born. Indeed he might well have added that the mother's own evidence was inconsistent." Once the fact of living together at the time made relevant by s 17(3) of the NZ Act was established (effectively by unanimous conclusions of the judges below), the characterisation of the relationship so proved must be determined on that footing. If it is accepted that the father and the mother were living together at the time of the child's birth, the mother's later evidence to the opposite effect must be rejected. Essentially, this is because it was inconsistent with what she had originally said. Inescapably, an inference arises that such inconsistency was the result of the mother's belated discovery of the legal significance of the facts, not appreciated when the focus of her attention was on resisting a return order on other bases. In this Court, the mother complained of a failure on the part of the courts below to particularise the "inconsistencies" alleged to compromise her evidence. However, there was a clear and obvious contradiction between the mother's first and second affidavits. The first affidavit carried an implication that the mother was living with the father both before and after the birth of K. In this Court, counsel for the mother attempted to argue that the relevant passage from the first affidavit (extracted above) could have referred to the period of intermittent cohabitation described in the second affidavit alone. Although this might be true in a technical or linguistic sense, a number of factors tell against it as a reasonable interpretation: The mother's reference to what she described as "our house" implies a more permanent and substantial domestic arrangement than that described in the second affidavit; 121 (2007) 211 FLR 357 at 366 [34]. Kirby The manner of expression of the mother's claim that she "moved out" of "our house" and "went to live with [her] parents" two months after the birth of K is difficult to reconcile with her later assertion that she was, in effect, "living" with them even while spending significant periods with the father on a trial basis; The mother asserted that "[t]his is why I moved out" of "our house", and the word "this" seems to refer to all of the preceding material in the paragraph, which encompassed periods both before and after the birth of K; and The mother herself made no attempt to reconcile the arrangements described in her second affidavit with what she had said in her first affidavit. There was no cross-referencing of events as between the two. The mother's submission in this regard also failed to take into account the fact that the father had made a direct assertion of cohabitation at the time of K's birth122. This being the case, the mother's failure to contradict it in her first affidavit, if it was indeed false as she later alleged, would have been puzzling. That she declined to do so, and indeed adduced evidence which was, on its face, consistent and reconcilable with the fact of cohabitation, strengthens the inference that the mother's allegations of abuse were premised on a factual matrix in which the parents were cohabiting at the time of the birth of K. If the mother's evidence on the central issue concerning the fact of living together with the father is rejected as "inconsistent", the question arises: why should her evidence be accepted as it related to the character of their relationship? If she would give unreliable evidence as to the fact and existence of cohabitation at the relevant time, might she not be equally liable to give incorrect evidence about the character and features of her relationship with the father? Confirmatory evidence There are several objective in support: considerations that tend to support the inference that a de facto partnership subsisted between the father and the mother at the time of K's birth. None is conclusive. But together, such indications call into question the mother's suggestion, in her second affidavit, that K was conceived as a result of no more than a chance event resulting from an isolated sexual encounter. 122 As was remarked in the course of oral argument, that assertion, given its shortness, "rather [gave] the impression that at the time the application was prepared … it was not thought that there was likely to be a serious issue about this question": [2007] HCATrans 795 at 42 [1869]-[1871]. See also reasons of Gleeson CJ at [6]. Kirby K's name, which incorporates the father's surname and includes a Maori middle name, has some significance. It is apparent that, as the father deposed, he had a significant role in naming his son. This is not easy to reconcile with the mother's evidence in her second affidavit, the implication of which is that, at the time of K's birth, the father was no more than a peripheral figure. The mother's affidavit evidence indicates that K continues to be known by his full birth name. Moreover, the descriptions in the mother's first affidavit of alleged abuse, suffered whilst she was pregnant with and later breastfeeding K, appear to reflect a troubled but ongoing domestic relationship coinciding with the birth. The reference to the visits of strangers to what is described as "our house" is not only apparently inconsistent with the later denial of a relationship at about the time of the birth, but is also difficult to reconcile with the rejection of the existence of a de facto partnership. A very common feature of such partnerships is that the partners live together in a shared house which they describe as their own. The mother's complaints that "the phone was disconnected, power shut off, there was no food" and that her parents' visits were "restricted", reinforce the suggestion of an ongoing domestic relationship of this character. In addition, as was noted, the mother's first affidavit "seems [to indicate that] the mother was looking to the father for financial support and considered she had some entitlement to information about his financial affairs, albeit she was aggrieved about his conduct in that regard"123. Father's sustained assertion of rights: The State Central Authority relied on the father's long course of conduct following the birth of K to support his evidence as to the original existence of a de facto partnership. The affidavits and other documents before this Court make it clear that the father made dogged efforts, in the courts and otherwise, to maintain an ongoing relationship with K, at times, it would seem, in the face of obstructiveness on the part of the mother in this regard. The father deposed that he felt that it was important to establish links between K and his paternal relatives and their Maori traditions. The father's insistence on preserving a connection with his son tends to support the supposition that the son was the outcome of something more than the passing encounter that the mother described. Approach of the Full Court: The mother complained about the overall approach of the majority in the Full Court to the question of establishing the existence of a de facto partnership at the time of K's birth. Specifically, she objected to the majority's statement that "it would seem appropriate to set a relatively low threshold when determining whether the parents of a child were 123 (2007) 211 FLR 357 at 395 [211]. Kirby living in a de facto relationship"124. This complaint is connected with the question of whether the mother bore the burden of establishing the engagement of s 17(3) of the NZ Act. The impugned statement in the majority's reasons was said to follow from "the purpose of the legislation". Reflecting the object of the New Zealand Parliament, as expressed in s 17(1) of the NZ Act, the majority of the Full Court indicated that the approach they favoured "would ensure that the child has both natural parents as guardians". Their Honours pointed out that125: "This would be consistent with the modern acceptance of the benefits children obtain from having both parents involved in their lives, regardless of whether the parents were married or not. This more contemporary approach can be seen in the New Zealand legislation itself, which has extended guardianship rights to all fathers of ex nuptial children whose name appears on their child's birth certificate." This conclusion also reflects the modern tendency of Australian family law in this respect. In effect (at least in countries like Australia and New Zealand which share many social features in common), the law is adjusting to well- recognised features of contemporary human relationships, and specifically to accommodate the growing incidence of de facto partnerships without marriage to which children are born. Technically, the approach favoured by the majority draws support from the statement in s 17(1) of the NZ Act of the general rule of joint guardianship in New Zealand and the recognition that the sole guardian mother is an exception ("unless"). The mother's complaint about the approach of the majority of the Full Court is therefore unfounded. Further complaints of the mother: In this Court, the mother pressed complaints also made in the Full Court about the degree of attention paid to particular items of evidence said to support her claim that she was not living with the father at the time of K's birth. First, the mother claimed that insufficient emphasis had been placed on the evidence of what was described as a "hospital tag", which was annexed to the mother's second affidavit. The front of that tag appears to contain data relating to K, including the date ("20.9.96") and time of his birth. On the rear of the tag is affixed a computer-generated label containing the mother's name, her parents' address, and the date "29.10.96". The significance of this latter date is unclear. In her second affidavit, the mother averred that the tag "confirmed" that, on 29 October 1996, her place of residence was her parents' house. However, in this Court, it was argued for the mother that the tag comprised "at least prima facie 124 (2007) 211 FLR 357 at 396 [219]. 125 (2007) 211 FLR 357 at 396 [219]. Kirby evidence that the mother lived at her parents' address at the time the child was born" (emphasis added). Of itself, however, the tag is conclusive of nothing. The majority of the Full Court were correct to observe that126: "The address on the nametag might have been the mother's address at the time of the child's birth, but there could also have been some other explanation. Furthermore, no explanation was provided as to why the date shown on the tag was more than a month after the date of birth of the baby." Secondly, the mother complained about the failure of the majority in the Full Court to give proper weight to the affidavit of LG, filed on the same date as the mother's second affidavit127. LG deposed that the mother had lived at her parents' house at the time of K's birth, and that she had visited the mother there. She also stated that she was "not aware that [the mother] had lived with [the father] at any time". However, as the majority in the Full Court pointed out, LG acknowledged that she was a long-term friend of the mother. In addition, her recollection of visiting the mother at her parents' house could have related to the period after she "moved out" of the father's house, not long after the birth of K128. The majority in the Full Court were fully justified in attributing limited weight to LG's evidence. Conclusion: no error is shown: The result is that the Full Court majority were correct (and it was certainly available to them) to prefer the version of events given by the mother herself before she was aware of the legal implications of that version. To the mother's complaint that to attribute falsehood to her without cross-examination involved procedural unfairness, there is an obvious answer. The criteria for this element of the State Central Authority's case were to be derived, substantially, from provisions of a public law of New Zealand. The need for prompt consideration of an application such as that founding these proceedings is expressly recognised both in the Convention and by the Regulations129. Whilst reg 15(2) acknowledges that the priority to be given to such applications is such as "will ensure that the application is dealt with as quickly as a proper consideration of each matter relating to the application 126 (2007) 211 FLR 357 at 395 [215]. 127 See joint reasons at [106]. 128 (2007) 211 FLR 357 at 395 [216]. 129 Convention, Arts 1a ("prompt"), 2 ("most expeditious"), 7 ("prompt"), 9 ("without delay"), 12 ("forthwith"). See also Regulations, reg 13(3) ("as soon as practicable"), 15(2) ("as quickly as a proper consideration … allows"), 15(4) ("42 days"), 15(4)(b) ("as soon as practicable"). Kirby allows"130 and it is clear that particular care (and some delay) may be necessary where a return order is resisted on the basis of a "grave risk [of] physical or psychological harm"131, the overall scheme of the Convention and Regulations places a premium upon the prompt return of a child wrongfully removed. If proceedings such as these were typically, or even regularly, to expand into fully fledged contests amounting to contested custody suits, this would operate to defeat the purposes of the Convention. It would reward abductors. It would impose very serious burdens on the parent or guardian left in the country of habitual residence. And it would effectively shift the locus of decision- making to the country of resort. But as reg 1A(2)(b) of the Regulations makes clear: "[T]he appropriate forum for resolving disputes between parents relating to a child's care, welfare and development is ordinarily the child's country of habitual residence". In evaluating whether this Court should intervene in this appeal to correct allegedly erroneous fact-finding in the Family Court of Australia, it is appropriate that we should perform our functions in a way supportive of the stated purposes of the Regulations. Those regulations clearly envisage expeditious proceedings based on economical evidence. They do so in the knowledge that it will then be left to the courts (or other decision-makers) in the country of the child's habitual residence to resolve the substantive contest according to local law which, necessarily, such decision-makers are likely to know much better than we. Result: Full Court's orders sustained: The result of this analysis is that no error has been demonstrated in the majority's reasons in the Full Court to warrant disturbance by this Court of the Full Court's orders. Whether or not the mother bore an evidentiary or forensic burden of establishing that the guardianship rights of the father fell to be determined under s 17(3) of the NZ Act rather than s 17(1), the evidence favoured (and certainly supported) the conclusion reached by the trial judge and by the majority in the Full Court. Because of the unanimous finding of the Full Court that it was open to the trial judge to find that the father and mother were living together at the time of K's birth, the first element of s 17(3) was clearly satisfied. As to the second element, it was open to the majority, in an appeal by way of rehearing, to conclude that their relationship bore the character of a de facto partnership. The 130 Regulations, reg 15(2). 131 Regulations, reg 16(3)(b). Kirby mother's change of her evidence between the first and second affidavits sustains the majority's preference for the mother's initial characterisation of the relationship with the father. The evidence, and especially the mother's reference to "strangers" visiting "our house", supports the inference drawn by the judges that a de facto partnership existed at that time. Once this point is reached, the guardianship rights of the father are to be determined by the primary rule stated in s 17(1) of the NZ Act and not the exceptional rule stated in s 17(3)(b). The mother and the father were therefore joint guardians of their child, K. On that basis, the father was entitled to decide, jointly with the mother, questions concerning K's place of residence. The mother did not contest that a finding to this effect would render inescapable the conclusion that the father enjoyed "rights of custody" in relation to K. It follows that the mother's unilateral removal of K from New Zealand was in breach of the father's rights of custody. The removal was therefore wrongful. The Full Court was right to affirm the return order made by the primary judge. This Court should dismiss the appeal from the Full Court's orders. The removal was also wrongful as in breach of the NZ court order Terms of the NZ court order: The alternative issue, raised by the State Central Authority's notice of contention, can be dealt with more briefly. I am prepared to consider it because of the conceded imperfections in the direct evidence relating to the appeal issue, the availability of different judicial responses to that evidence, and the importance of the matters of principle argued on the contention, not least for the future welfare of K. Also relevant, in this regard, is the essentially public character of proceedings under the Regulations, which are designed to give effect to Australia's national obligations under the Convention. The focus of the contention point was the NZ court order dated 4 December 2000 and still in force132. The precise terms of that order are extracted in the joint reasons133. The NZ court order was always at the forefront of the father's complaint. It was specifically referred to as the first item in the application by the State Central Authority to found the father's "rights of custody". That application stated: 132 See above these reasons at [142]. 133 Joint reasons at [75]. Kirby "[The father] has an access order made by the Family Court at Auckland in his favour which provides that the child be in his father's care every second weekend." The application also asserted that the close relationship between the father and the child had been protected by the NZ court order and would be renewed if compliance with the terms of that order were restored. The father also referred to the NZ court order in his first affidavit, to which the order was annexure A. The order, made by the Family Court of New Zealand, is expressed to replace an earlier "custody access order". It sets out a detailed regime by which K was to be "in his father's care every second weekend [and] half the school holidays". "At all other times" he was to be "in his mother's care." On the face of things, therefore, the mother and the father were to enjoy intermittent custody ("care") of K at nominated and successive times, as defined in the order. According to the record, the order was entered by consent of the mother and the father. The mother referred to it, and the fact of her consent, in her second affidavit, to which the order was annexed. With respect, I cannot agree with the suggestion that doubt might have attended the state of her knowledge about the order at the point when she left New Zealand with K134. Upon one view, the foregoing facts serve to reinforce the conclusion, already reached, that the mother and father acted for many years as K's joint "guardians". However, by its notice of contention, the State Central Authority submits that, if the father had a right to object to the removal of K from New Zealand, because of the NZ court order read with other New Zealand law, such removal would additionally be wrongful under the Regulations. On this footing, so the State Central Authority argued, the Full Court should have decided that, as a fact, the father had a right to object to K's removal from New Zealand, which right (a "right of veto") had the effect of rendering K's removal from New Zealand wrongful. Distinguishing custody and access: The mother submitted that the Regulations drew a distinction, reflected in the Convention, between breach of rights of custody and breach of rights of access or visitation. This may be so. However, in each case, the classification of such rights depends on all of the circumstances. Here, the intermittent arrangement, under the NZ court order which expressed the father's rights, envisaged quite extensive periods at weekends and on holidays where, of necessity, the father would enjoy undisputed 134 cf joint reasons at [83]. Kirby custody of K whilst the child was in his exclusive care, and the right during such times to decide K's place of residence. The definition of "rights of custody" in reg 4 of the Regulations recognises that it is sufficient that such "custody" exists "in relation to" the child. It is not confined to custody "of" or "over" the child. Moreover, reg 4(2) makes it clear that "rights of custody" include "rights relating to the care of the person of the child". This the father certainly enjoyed at the times identified in the NZ court order. During the identified times, the father indisputably had the "right to determine the place of residence of the child". Moreover, that right is not the primary criterion for the type of "rights of custody" that engage the Regulations. The Regulations135 (and the Convention136) recognise that "rights of custody" may arise by operation of law, judicial decision or agreement. Given particularly the specificity of the NZ court order relating to commitment of K to his father's care over weekends, the inference is inescapable that it was intended that the order would be complied with within New Zealand. Save for exceptional occasions where the parents agreed between themselves, or where leave was so provided by the New Zealand court, the child was to remain in New Zealand where, alone, the terms of the NZ court order could be fulfilled. The mother's removal of K from New Zealand, and his retention thereafter in Australia, deprived the father of his rights under the NZ court order. Effecting that removal without any leave of the New Zealand court, and obviously against the father's wishes, was a breach of rights under that order. The order gave the father exclusive rights of "care" during the nominated periods. Moreover, it impliedly gave the father a right to veto the mother's unilateral alteration of the child's place of residence from New Zealand to Australia where, necessarily, the NZ court order could not be fulfilled according to its tenor. Rights of custody by court order: As the beneficiary of the NZ court order, the father therefore had "rights of custody" of the kind referred to in reg 4(2) of the Regulations. The right under a court order to refuse consent to removal (in effect, a "right of veto" over a change of residence to another country) has been recognised in courts of high authority as amounting to "rights of custody" within the meaning of Art 5 of the Convention, and hence within the terms of reg 4(2)137. 135 Regulations, reg 4(3). 136 Convention, Art 3. 137 C v C (Abduction: Rights of Custody) [1989] 1 WLR 654 at 663 per Lord Donaldson of Lymington MR; [1989] 2 All ER 465 at 473; In re D [2007] 1 AC 619 at 626 [9]-[10] per Lord Hope of Craighead, 635 [37] per Baroness Hale of Richmond. Kirby In In re D (A Child) (Abduction: Rights of Custody)138, Lord Hope of Craighead explained why this was so. As his Lordship pointed out, the words "rights of custody" are used in the context of the Convention to "define the circumstances in which the removal or retention of a child is to be considered wrongful – 'wrongful' because the Convention proceeds on the assumption that welfare issues are best dealt with in the state where the child is habitually resident"139. His Lordship went on140: "A right to object to the child's removal to another country is as much a right of custody, for [Convention] purposes, as a right to determine where the child is to live within the country of its residence." This analysis is clearly correct. In giving effect to the Regulations, designed to fulfil Australia's obligations under the Convention, there are strong reasons why this Court should adopt the same construction – in particular where it represents an interpretation designed to fulfil the purposes of an international treaty addressed to a major international problem rendered more urgent by the advances in the modern means of travel141. Result: the removal was "wrongful": The foregoing reasoning does not produce a surprising result. The record shows that, over many years, the father was vigilant to assert and protect his "care" rights in the New Zealand courts. The mother's sudden removal of K from New Zealand, and her retention of him in Australia, breached the father's rights as stated in the NZ court order, to which each of the parents had agreed. Effectively, the removal of K to Australia rendered those rights nugatory. Such rights are "rights of custody" both on their face and by their operation. It follows that the mother's breach of the father's rights was also, on this basis, "wrongful". Separately, it sustains the decision and orders of the Full Court. Conclusion and importance of the Convention Return to New Zealand courts: It is important to recognise that all that is involved in the determination made by the Full Court is that K should be returned to New Zealand, which is accepted to have been his place of "habitual residence" 139 [2007] 1 AC 619 at 626 [9]. 140 [2007] 1 AC 619 at 626 [10]. 141 cf (2007) 211 FLR 357 at 388 [166]. See also Povey v Qantas Airways Ltd (2005) 223 CLR 189 at 202 [25], 246 [191]; [2005] HCA 33. Kirby before he was unilaterally removed to Australia by his mother. It would then be for the independent courts of that country, on the basis of properly tested evidence, to adjudicate the competing claims of the father and mother in respect of parenting, guardianship, care, custody and access in relation to the child. No one is suggesting "dumping" the child on the courts of New Zealand as "another country's problem"142. What the Convention and Regulations envisage is that the child should be returned, following orderly consideration by the local courts, to the New Zealand courts. Those courts were earlier seised of the issues and are best placed to resolve them. The patriotic language of the United States courts, cited in the joint reasons, does not reflect the obligations stated in the Regulations or the law applicable in this country. Nor is it a fair description of what has happened in these proceedings or what the father seeks. Reservations that might sometimes, exceptionally, arise about returning a child for decision-making in the courts or other bodies of convention countries143 can have no application whatever in the case of the courts of New Zealand. Indeed, the "Maori heritage" of the father and of K arguably reinforces the conclusion that, once "grave harm" and other such grounds for refusing a return order are put aside, as here they must be, the Regulations ought to be given their intended effect. The verb used in the material regulation is imperative ("must")144. The proceedings in Australia have already long delayed the return of K to New Zealand in conformity with the father's custody rights and the NZ court order. Further delay should cease. The importance of the Convention: Within the international community, specifically within knowledgeable legal circles, concern has been expressed about the non-ratification of the Convention by some states145 and, where it is ratified, the effective reopening of the merits of custody disputes by foreign courts in proceedings brought to vindicate the Convention. In DP146, I attempted to explain that "[u]nless Australian courts, including this Court, uphold the spirit and the letter of the Convention as it is rendered part 142 cf joint reasons at [50]. 143 cf In re M (Children) (Abduction: Rights of Custody) [2007] 3 WLR 975 (a case concerning return of children from the United Kingdom to Zimbabwe). 144 Regulations, reg 16(1). 145 See Ong, "Parental Child Abduction in Singapore: The Experience of a Non- Convention Country", (2007) 21 International Journal of Law, Policy and the Family 220. 146 (2001) 206 CLR 401 at 449 [155]. Kirby of Australian law by the Regulations, a large international enterprise of great importance for the welfare of children generally will be frustrated in the case of this country". Unfortunately, in not a single case in which the Convention and Regulations have come before this Court has the Court upheld a decision of the Full Court of the Family Court of Australia ordering the return of an abducted child. This Court corrected a slip in De L v Director-General, NSW Department of Community Services147. It required reconsideration by the Full Court of the Family Court. But in JLM v Director-General NSW Department of Community Services148, in the DP case149 and now in the present appeal, the Court has been divided. On each occasion, Gleeson CJ and I have favoured affirming the decisions of the Full Court. However, a majority has found error and set aside the Full Court's orders for return of the child to the country of habitual residence. In the result, the objective of the Convention has been defeated or delayed. Australian courts have assumed a fact-finding role which, in my view, the Convention, and the Regulations, commit to the courts of the country from which the child was taken. With all respect to those of a different view, it is important for judicial attitudes to be adjusted in such cases or the Convention (ratified by Australia for high national and international purposes) will lose much of its efficacy so far as the courts of this country are concerned. In the three cases mentioned, it is my opinion that the approach and orders of the Full Court of the Family Court were correct. But Australian judges in the courts below will read and draw inferences from this Court's majority opinions, which have uniformly been to the contrary effect. At least in De L, DP and JLM, the orders of this Court left open the compliance by Australian authorities with the letter and spirit of the Convention. They did so by recommitting the ultimate decision to the Family Court150. In the present appeal, the result of the majority's orders is that even this will not occur. The specialist Family Court of Australia will be deprived of the function of discharging its duties in respect of the Convention and Regulations, taking into account the legal errors said to have occurred. The invocation of the Convention 147 (1996) 187 CLR 640; [1996] HCA 5. 148 (2001) 206 CLR 401; [2001] HCA 39. 149 (2001) 206 CLR 401. 150 De L (1996) 187 CLR 640 at 662-663, 689-690; DP (2001) 206 CLR 401 at 424 [68]; JLM (2001) 206 CLR 401 at 427 [81]. Kirby by the father and the New Zealand Central Authority, in the case of Australia, will simply be terminated. I do not agree with this outcome. When mutuality between convention countries breaks down, the Convention's arrangements are likely to be defeated. Abduction is rewarded. The ultimate victims are the children. Orders The appeal should be dismissed with costs. |
HIGH COURT OF AUSTRALIA INSIGHT VACATIONS PTY LTD T/AS INSIGHT VACATIONS APPELLANT AND STEPHANIE YOUNG RESPONDENT Insight Vacations Pty Ltd v Young [2011] HCA 16 11 May 2011 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation J E Sexton SC with D I Talintyre for the appellant (instructed by Lee & Lyons Lawyers) M J Joseph SC with A P L Naylor for the respondent (instructed by Gerard Malouf & Partners) Intervener M G Sexton SC, Solicitor-General for the State of New South Wales with H El Hage intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Insight Vacations Pty Ltd v Young Trade practices – Conditions and warranties in consumer transactions – Implied warranties – Limitation or preclusion of liability for breach of implied warranty – Section 74(1) of Trade Practices Act 1974 (Cth) ("TPA") provided that in every contract for supply by corporation of services there was an implied warranty that services will be rendered with due care and skill – Section 74(2A) of TPA provided that, where implied warranty breached and law of State was proper law of contract, that State law applied to limit or preclude liability for breach of implied warranty in same way as for breach of another term of contract – Section 5N(1) of Civil Liability Act 2002 (NSW) ("Civil Liability Act") provided that term of contract for supply of recreation services may exclude, restrict or modify liability for breach of implied warranty – Appellant and respondent entered contract for supply by appellant to respondent of tourism services in Europe – Proper law of contract was law of New South Wales – Contract contained clause exempting appellant from liability for claims arising from accident where passenger occupied motor coach seat fitted with safety belt if safety belt not being worn – While travelling by coach respondent left seat to retrieve item from overhead shelf – Coach braked suddenly causing injury to respondent – Respondent claimed damages for breach of implied warranty by appellant – Whether s 74(2A) of TPA picked up and applied State laws as surrogate federal laws – Whether s 74(2A) of TPA picked up and applied s 5N of Civil Liability Act – Whether s 5N a law that applies to limit or preclude liability for breach of contract. Negligence – Civil Liability Act – Whether provision of transport services in the course of tourism constitutes "recreation services" for purposes of s 5N. Statutes – Acts of parliament – Interpretation – Geographical limitation on legislative power of State parliament – Whether s 5N of Civil Liability Act subject to geographical limitation – Whether, if picked up by s 74(2A), s 5N applied to contract for supply of recreation services where supply occurred wholly outside New South Wales. Contracts – General contractual principles – Construction and interpretation of particular contracts – Exemption from liability – Whether appellant could rely on exemption clause in contract as answer to respondent's claim. Words and phrases – "applies to limit or preclude liability", "contract for the supply of recreation services", "geographical limitation", "recreational activity". Civil Liability Act 2002 (NSW), ss 5A, 5J, 5K, 5N. Interpretation Act 1987 (NSW), s 12(1)(b). Trade Practices Act 1974 (Cth), ss 68, 74(1), 74(2A). FRENCH CJ, GUMMOW, HAYNE, KIEFEL AND BELL JJ. The respondent (Mrs Young) decided to go to Europe for a holiday with her husband. In February 2005, she bought a European tour package from the appellant (Insight Vacations Pty Ltd –"Insight"). In October 2005, Mrs Young and her husband joined the tour in London. While travelling by coach from Prague to Budapest, Mrs Young got out of her seat to get something from a bag she had stowed in the overhead luggage shelf. The coach braked suddenly; Mrs Young fell backwards and suffered injury. After returning to Australia, Mrs Young sued Insight in the Local Court of New South Wales. She alleged that by force of s 74(1) of the Trade Practices Act 1974 (Cth) ("the TPA")1 it was an implied term of her contract with Insight that the services Insight supplied would be rendered with due care and skill, that Insight had not done that, and that as a result she had suffered injury. The contract Mrs Young had made with Insight provided that it was to be governed by the law of New South Wales. The contract contained an exemption clause providing that: "Where the passenger occupies a motorcoach seat fitted with a safety belt, neither the Operators nor their agents or co-operating organisations will be liable for any injury, illness or death or for any damages or claims whatsoever arising from any accident or incident, if the safety belt is not being worn at the time of such accident or incident." Insight relied on that exemption clause as an answer to Mrs Young's claim. Insight asserted that it could rely on the exemption clause because, first, its supply of the service of transportation by coach was a supply of "recreation services" within the meaning of s 5N of the Civil Liability Act 2002 (NSW) ("the Civil Liability Act") and second, s 5N of the Civil Liability Act was picked up and applied, as a surrogate federal law, by operation of s 74(2A) of the TPA, with the consequence that the exemption clause could be, and was, given effect. 1 Section 74(1) provided, at the times relevant to this matter: "In every contract for the supply by a corporation in the course of a business of services to a consumer there is an implied warranty that the services will be rendered with due care and skill and that any materials supplied in connexion with those services will be reasonably fit for the purpose for which they are supplied." Bell For reasons that are not now material, Mrs Young's claim was heard in the District Court of New South Wales (Rolfe DCJ)2. Mrs Young succeeded in her claim and judgment was entered in her favour for $22,371 with costs. Insight's appeal to the Court of Appeal of the Supreme Court of New South Wales (Spigelman CJ, Basten JA and Sackville AJA) against the quantum of damages awarded at trial was allowed by all members of the Court, and the damages reduced, but by majority (Basten JA and Sackville AJA, Spigelman CJ dissenting) Insight's appeal against liability was dismissed3. By special leave, Insight appealed to this Court alleging that it should have had judgment against Insight's appeal should be dismissed. Issues and conclusions The issues that arose in the appeal can be identified as being: How does s 74(2A) of the TPA operate? Is it, as Insight submitted, a law which picks up and applies, as surrogate federal law, the State laws which meet the description given in that sub-section? If "yes" to 1, is s 5N of the Civil Liability Act a law which meets the description given in s 74(2A) of the TPA and is thus picked up and applied? If s 5N does meet the description given in s 74(2A), does it apply to a contract, such as that in issue in this case, for the supply of recreation services where the supply is to occur outside New South Wales? If s 5N of the Civil Liability Act is engaged, and if in consequence Insight may rely on its exemption clause, does that clause operate, on its proper construction, as an answer to Mrs Young's claim? These reasons will show that s 74(2A) of the TPA picks up and applies certain State laws as surrogate federal laws. Section 5N of the Civil Liability 2 Young v Insight Vacations Pty Ltd (2009) 8 DCLR (NSW) 369. Insight Vacations Pty Ltd v Young (2010) 268 ALR 570. Bell Act, however, is not a law of a kind picked up and applied by s 74(2A). Section 5N does not itself provide any exclusion, restriction or modification of liability. It permits parties to contract for the exclusion, restriction or modification of liability. That is reason enough to conclude that Insight's appeal should be dismissed. In any event, s 5N, had it been picked up and applied by s 74(2A), would not have engaged with the facts and circumstances of this case. Section 5N applies only to contracts for the supply of recreation services in New South Wales. Insight's contract with Mrs Young was to supply recreation services to her outside New South Wales. And in any event, on its true construction, the exemption clause did not apply to the events that happened. The exemption clause should be construed as engaged only when a passenger was seated, and as having no application when the passenger was standing or moving about the coach. Section 74(2A) of the TPA Section 74(2A) of the TPA was inserted in that Act by the Treasury (Cth)4 and (Professional Standards) Act 2004 Legislation Amendment commenced operation on 13 July 2004. Section 74(2A) provided: there is a breach of an implied warranty that exists because of this section in a contract made after the commencement of this subsection; and the law of a State or Territory is the proper law of the contract; the law of the State or Territory applies to limit or preclude liability for the breach, and recovery of that liability (if any), in the same way as it applies to limit or preclude liability, and recovery of a liability, for breach of another term of the contract." The conditions stated in pars (a) and (b) of s 74(2A) were, of course, met in this case. Mrs Young alleged, and the trial judge found, that there had been a breach of the warranty implied by operation of s 74(1) in her contract with Insight. The law of New South Wales was the proper law of that contract. s 3 and Sched 1, item 8A. Bell The consequence of satisfaction of those conditions was identified in s 74(2A) as being that a law of New South Wales would apply "to limit or preclude liability for the breach, and recovery of that liability ... in the same way as it applies to limit or preclude liability, and recovery of a liability, for breach of another term of the contract" if the State law was a law that met the description given in s 74(2A). That is, s 74(2A) picked up and applied, as a surrogate federal law, a relevant law of New South Wales. The law of New South Wales that was picked up and applied was a law of that State that "applies to limit or preclude liability ... for breach of another term of the contract" (a term of the contract other than the term implied by s 74(1)). The State law that applied to limit or preclude liability was then applied, by force of s 74(2A), to limit or preclude liability for breach of the term implied by s 74(1) in the same way as that law applied to limit or preclude liability for breach of another term of the contract. This being the way in which s 74(2A) operated, did it pick up and apply s 5N of the Civil Liability Act? To answer that question it is desirable to say a little about not only the Division of the Civil Liability Act of which s 5N forms a part, but also the Act as a whole. The Civil Liability Act and s 5N As is well known, the Civil Liability Act (and generally similar legislation of other States and Territories) was enacted in 2002 in response to the final report of the Ipp Committee5. The Civil Liability Act was taken to have commenced on 20 March 20026. Part 1A of the Act made provisions governing "any claim for damages for harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise"7. All claims of that kind were treated in the Act as if they were claims for the tort of negligence. Section 3A(2) of the Civil Liability Act provided that the Act (except for Pt 2, which deals with the fixing of damages that relate to the death of or injury to a person) "does not prevent the parties to a contract from making express provision for their rights, obligations and liabilities under the contract with 5 Australia, Review of the Law of Negligence: Final Report, September 2002. s 5A(1). Bell respect to any matter to which [the] Act applies and does not limit or otherwise affect the operation of any such express provision". Section 3A(3) provided that the provision just set out "extends to any provision of [the] Act even if the provision applies to liability in contract". The Civil Liability Act made no express provision for any extra-territorial operation8. It made no provision which dealt directly with whether the Act's provisions were to apply to claims for breach of a contract whose proper law was not the law of New South Wales or to other claims where the application of choice of law rules would result in the lex causae being a law other than that of New South Wales. It may be – it is not possible to be certain – that the unstated assumption of the provisions was that, because all kinds of claims, however based, were treated as if they were species of a claim for a tort of negligence, the Act would apply to cases in which New South Wales would be the lex causae because it was the lex loci delicti9. Or it may be that the unstated assumption was that the provisions would apply to any claim for negligence that was brought in any of the courts of New South Wales. It is neither possible nor profitable to explore those questions further. Division 5 of Pt 1A of the Civil Liability Act (ss 5J-5N), together with certain other provisions whose detail need not be noticed now, were introduced into the Act by the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW)10. The provisions of Div 5 of Pt 1A were directed to liability arising from a "recreational activity". The term "recreational activity" was defined in s 5K as including: any sport (whether or not the sport is an organised activity), and any pursuit or activity engaged in for enjoyment, relaxation or leisure, and any pursuit or activity engaged in at a place (such as a beach, park or other public open space) where people ordinarily engage in sport or in any pursuit or activity for enjoyment, relaxation or leisure." cf Trade Practices Act 1974 (Cth), s 5. John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503; [2000] HCA 36. 10 s 3 and Sched 1, item 1. Bell Section 5J(1) provided that Div 5 applied "only in respect of liability in negligence for harm to a person (the plaintiff) resulting from a recreational activity engaged in by the plaintiff". The term "negligence" was defined in s 5 as "failure to exercise reasonable care and skill". And because s 5A applied Pt 1A of the Act "to any claim for damages for harm resulting from negligence", no matter how the claim was framed, Div 5 could be engaged in respect of claims in contract. There may be some doubt whether travel by coach (or any other form of transport) readily falls within the definition of recreational activity. Resolving that question would depend upon whether being transported from one place to another, in this case by coach, was a pursuit or activity engaged in for enjoyment, relaxation or leisure or otherwise a "recreational activity". It is not necessary to decide in this case, however, whether the Cunard Line slogan "Getting there is half the fun" could apply to Mrs Young's coach trip, or if it did, whether that brought the coach trips Insight was to provide to her within the definition of "recreational activity". That issue, about what is a "recreational activity", need not be decided because s 5N of the Civil Liability Act made provision for the making of an agreement to exclude, restrict or modify any liability to which Div 5 of Pt 1A of the Civil Liability Act applied by reference to "recreation services": "services supplied to a person for the purposes of, in connection with or incidental to the pursuit by the person of any recreational activity"11. And of course the provision of transport services in the course of tourism would be the supply of services in connection with or incidental to the recreational activity of tourism as an "activity engaged in for enjoyment, relaxation or leisure". More particularly, s 5N(1) provided that: "Despite any other written or unwritten law, a term of a contract for the supply of recreation services may exclude, restrict or modify any liability to which [Div 5 of Pt 1A] applies that results from breach of an express or implied warranty that the services will be rendered with reasonable care and skill." 11 s 5N(4). Bell Section 5N(2) further provided that: "Nothing in the written law of New South Wales renders such a term of a contract void or unenforceable or authorises any court to refuse to enforce the term, to declare the term void or to vary the term." In its terms, then, s 5N permitted parties to a contract for recreation services to provide by their contract for an exclusion, restriction or modification of liability and was thus consonant with the general provision made by s 3A to the effect that the Act does not prevent parties to a contract making their own provisions about rights, obligations and liabilities under the contract. But s 5N did not itself work any such exclusion, restriction or modification of liability. Did s 74(2A) pick up s 5N? A contract for the supply of transport services to a tourist on holiday being a contract for services to be supplied in connection with or incidental to the pursuit by the tourist of what the Civil Liability Act identified as a recreational activity, would s 74(2A) of the TPA give effect to an exemption clause in that contract? There are two reasons for concluding that the exemption clause in Insight's contract with Mrs Young was not given effect by s 74(2A): one founded in Div 2 of Pt V of the TPA (ss 66-74), the other in s 5N of the Civil Liability Act. Section 74(2A) of the TPA hinged about the identification of a law of a State or Territory as one which, on being picked up and applied as a surrogate federal law, "applies to limit or preclude liability for the breach" of either the warranty about due care and skill implied by s 74(1) or the warranty about fitness for purpose implied by s 74(2). It provided that the relevant State or Territory law applies "in the same way as it [that is, the State or Territory law] applies to limit or preclude liability, and recovery of a liability, for breach of another term of the contract". This drafting may be contrasted with s 68A and s 68B of the TPA. Section 68A was inserted in the Act in 197712, several years before s 74(2A) was inserted; s 68B was inserted in 200213. 12 Trade Practices Amendment Act (No 2) 1977 (Cth), s 5. 13 Trade Practices Amendment (Liability for Recreational Services) Act 2002 (Cth), s 3 and Sched 1, item 1. Bell Both s 68A and s 68B (and s 74(2A)) are to be understood against the background provided by s 68 of the TPA. Section 68 provided, in effect, that any term of a contract that purports to exclude, restrict or modify the application of, the exercise of a right conferred by, or any liability for breach of a condition or warranty implied by any of the provisions of Div 2 of Pt V of the TPA, or is a provision that has that effect, is void. Sections 68A, 68B and 74(2A) qualified the general avoiding provisions made by s 68. More particularly, s 68A and s 68B qualified s 68 by excluding from its avoiding effect a term of a contract that meets the description given in the relevant provision. Thus s 68A(1) excluded from the general avoidance worked by s 68 a term of a contract for supply of certain kinds of goods or services that limits the liability for breach of a condition or warranty (other than the undertakings as to title, encumbrances and quiet possession implied by s 69) to liability to replace or repair goods (or pay for repair or replacement) or, in the case of services, to liability to supply the services again (or pay for supplying the services again). The exclusion worked by s 68A(1) was itself subject to the exception identified in s 68A(2) but that need not be examined. Section 68B qualified the general avoiding effect of s 68(1) in respect of a term of a contract (made after s 68B commenced operation) for the supply of "recreational services" by excluding from that general avoiding effect a term that excludes, restricts or modifies the application of s 74 in respect of death or personal injury. Section 68B(2) defined "recreational services". That definition differed from the definitions of "recreational activity" and "recreation services" in the Civil Liability Act and no party submitted that s 68B was engaged in this matter. For present purposes it is important to notice that both s 68A and s 68B dealt directly with a term of a contract (where the term meets certain criteria). By contrast, s 74(2A) dealt with a State or Territory law which satisfies relevant criteria. In these circumstances, s 74(2A) should not be construed as picking up and applying as a surrogate federal law a provision, such as s 5N of the Civil Liability Act, which in its terms does not limit or preclude liability for breach of contract. In terms, s 5N does no more than permit the parties to certain contracts to exclude, restrict or modify certain liabilities14 and limit the operation of any other part of the written law of New South Wales that would otherwise apply to 14 s 5N(1). Bell avoid or permit avoidance of such a term15. That is not a law of the kind described in s 74(2A) of the TPA. Section 68 therefore operated to render the exemption clause void in so far as the clause applied to the warranties implied by Did s 5N apply to this contract? As already indicated in these reasons, s 5N of the Civil Liability Act did not apply to the particular contract Mrs Young made with Insight. The reference in s 5N(1) to "a term of a contract for the supply of recreation services" should be read as subject to a geographical limitation to its application. Although the contract between Mrs Young and Insight was governed by the law of New South Wales it was to be performed wholly outside the State. Section 12(1)(b) of the Interpretation Act 1987 (NSW) ("the Interpretation Act") provided that: "In any Act or instrument: a reference to a locality, jurisdiction or other matter or thing is a reference to such a locality, jurisdiction or other matter or thing in and of New South Wales." This provision, which is, of course, subject to contrary intention16, may be reason enough to read s 5N as subject to a geographical limitation. Whether s 12(1)(b) has this consequence would require consideration of s 31(1) of the Interpretation Act and its provision that Acts are to "be construed as operating to the full extent of, but so as not to exceed, the legislative power" of the State Parliament. But as was explained by Kitto J in Kay's Leasing Corporation Pty Ltd v Fletcher17, the question of geographical limitation arises regardless of the engagement of a provision such as s 12(1)(b) of the Interpretation Act18. Section 12(1)(b) does not 15 s 5N(2). 16 Interpretation Act 1987 (NSW), s 5(2). 17 (1964) 116 CLR 124 at 142-144; [1964] HCA 79. 18 See also Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society (1934) 50 CLR 581 at 600 per Dixon J; [1934] HCA 3. Bell identify which of the several possible elements of s 5N is to be read as a "matter or thing in and of New South Wales". So, is it the reference to a "contract" in s 5N that is limited? Is the reference to a "contract" to be read as limited to contracts that are made in the State, or to contracts, wherever made, whose proper law is that of the State? Or is there some geographical limitation to be applied by reference to the compound notion of "a contract for the supply of recreation services"? That is, is s 5N limited to those supplies that are to be made in New South Wales? As Kitto J pointed out in Kay's Leasing19, it is necessary to reconcile the generality of the language used in a provision like s 5N with the geographical limitation to which the legislative power of a State parliament is subject. And that reconciliation must be undertaken upon a consideration of the context and the subject matter of the Act in question. In some cases, of which Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society20 is, perhaps, the pre-eminent example, the reconciliation is achieved by limiting the operation of the relevant provision to contracts whose proper law is that of the enacting State. But that is not the only form of geographical limitation that may be adopted and it may not be the form of limitation that an Act, on its proper construction, should be found to bear. As Kitto J pointed out in Kay's Leasing21: "Such cases [as the Wanganui-Rangitikei case] have dealt with legislation modifying or making void contractual rights and obligations of specified descriptions; but in each instance the modification or avoidance was enacted as an end in itself and not as a sanction for contravention of statutory requirements." (emphasis added) It could be presumed, in circumstances of the kind considered in the Wanganui-Rangitikei case, that the legislative intention was to affect rights and obligations the discharge of which was governed by the law of the enacting country (or State). And in such a case to construe the relevant Act as applying only to contracts whose proper law was the law of the enacting country or State would take proper account of the Act's context and subject matter. 19 (1964) 116 CLR 124 at 142. 20 (1934) 50 CLR 581. 21 (1964) 116 CLR 124 at 142. Bell The statutory provisions at issue in Kay's Leasing avoided an agreement for non-compliance with statutory requirements. To hold, in that case, that the provision was engaged only in respect of contracts whose proper law was that of the enacting State (New South Wales) would have permitted easy evasion of the reach of the avoiding provision (by the parties contracting for a different proper law)22. Accordingly, Kitto J concluded23 that the contracts to which the provisions in question in Kay's Leasing were directed should be understood as being contracts entered into in New South Wales regardless of what the parties chose to identify as the proper law of the contract. And in Akai Pty Ltd v People's Insurance Co Ltd24, the Court considered a provision of the Insurance Contracts Act 1984 (Cth) that sought to deal directly with the problem identified by Kitto J by taking, as its criterion of operation, the law that was, or absent express contractual provision to the contrary would be, the proper law of the contract. More recently, in Old UGC Inc v Industrial Relations Commission (NSW)25, this Court considered a question about the territorial reach of unfair contract provisions of the Industrial Relations Act 1996 (NSW). Six members of the Court held26 that because the central conception upon which the relevant provisions fastened was the performance of work in an industry, and the work in question in that case was performed within the jurisdiction, the fact that the relevant contract was not governed by the law of New South Wales was irrelevant and that no question of reading down the operation of the section according to territorial limitations arose. What geographical limitation is there to the operation of the Civil Liability Act? The central focus of the whole of Pt 1A of that Act is liability for negligence (an act or omission involving a failure to exercise reasonable care and 22 (1964) 116 CLR 124 at 143 per Kitto J. 23 (1964) 116 CLR 124 at 144; see also at 134-135 per Barwick CJ, McTiernan and 24 (1996) 188 CLR 418; [1996] HCA 39. 25 (2006) 225 CLR 274; [2006] HCA 24. 26 (2006) 225 CLR 274 at 278 [1] per Gleeson CJ, 282-283 [22]-[23] per Gummow, Hayne, Callinan and Crennan JJ, 292 [59] per Kirby J. Bell skill). As noted earlier, s 5A(1) provides that Pt 1A applies to any claim for damages for harm resulting from negligence, regardless of how the claim is framed. As also noted earlier, one natural geographical limitation that could be given to s 5A(1) is to read "any claim" as "any claim in the courts of New South Wales", leaving the applicability of the provisions of the Act in a claim brought in a court of another jurisdiction to the application of principles governing the choice of law27. Or, "any claim" could be read as "any claim where the law governing that claim is the law of New South Wales". It is not necessary in this case to decide whether those are the only available constructions or to choose between them. The relevant geographic limitation is to be identified in the provisions of Div 5 of Pt 1A. Unlike the statutory provisions in issue in the Wanganui-Rangitikei case, Div 5 of Pt 1A of the Civil Liability Act does not modify or make void contractual rights and obligations of specified descriptions. Unlike the provisions in issue in Kay's Leasing, Div 5 of Pt 1A does not seek to avoid any agreement for non-compliance with statutory requirements. Rather, Div 5 of Pt 1A, and s 5N in particular, is directed to limiting liability for negligence in relation to recreational activities, among other things by permitting parties to contracts to stipulate effectively for the exclusion, restriction or modification of any liability to which the Division applies that results from breach of an express or implied warranty that the services will be rendered with reasonable care and skill. In considering Div 5 of Pt 1A it is first to be recalled that s 5J(1) limits the application of the Division to "liability in negligence for harm to a person (the plaintiff) resulting from a recreational activity engaged in by the plaintiff". Some, but not all, elements of the definition of "recreational activity" are identified in s 5K by reference to where the activity occurs: "any pursuit or activity engaged in at a place (such as a beach, park or other public open space) where people ordinarily engage in" certain kinds of pursuit or activity. There is no reason to read those references to place as extending beyond places in New South Wales. Taken together, ss 5J(1) and 5K point decisively to reading s 5N as reaching all cases in which the contract in question (wherever it is made and by whatever law it is governed) is for the supply of recreation services in New South Wales. 27 Koop v Bebb (1951) 84 CLR 629; [1951] HCA 77. Bell That construction of the provision reads "contract for the supply of recreation services" as a compound expression. The relevant geographical limitation of the compound expression directs attention to the place of performance of the contract. Where are the relevant recreation services to be supplied? And once that reading is adopted, it follows that it is neither necessary nor appropriate to construe the sub-section as importing any other geographical limitation (or extension) of its operation. More particularly, if s 5N(1) is read, as it should be, as a provision which is hinged about the place of performance of the relevant contract, there is no satisfactory basis upon which the provision could be construed as including, in the class of contracts to which s 5N(1) applies, contracts that are to be performed outside New South Wales but whose governing law is the law of that State. Reading s 5N(1) as hinging on the place of performance of the contract best gives effect to the purposes and text of the provision when it is read in its statutory context. Although it is not necessary to decide the final question identified at the start of these reasons (about the proper construction of the exemption clause in the contract between Mrs Young and Insight), it is desirable to say something shortly about that matter. The exemption clause The text of the clause was set out earlier. It will be recalled that the first part of the clause read: "Where the passenger occupies a motorcoach seat fitted with a safety belt" (emphasis added). That element of the clause should be given its ordinary meaning28. It limits the times to which the clause applies to the times when the passenger occupies a seat. That is, it should be read as referring only to times when the passenger is seated, not to times when the passenger stands up to move around the coach or to retrieve some item from an overhead shelf or for some other reason. The contract of carriage did not require passengers to remain seated at all times while the coach was in motion. The provision of a lavatory at the rear of the coach shows that the operator accepted that a passenger could, and sometimes would, get out of his or her seat. 28 See, for example, Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at 188 [11]; [2001] HCA 70; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 581-582 [32], [36]; [2008] HCA 57; Public Trustee (Qld) v Fortress Credit Corporation (Aus) 11 Pty Ltd (2010) 241 CLR 286 at 294 [22]; [2010] HCA 29. Bell If the introductory words of the exemption clause had omitted the word "seat", it might have been possible to say that the exemption clause applied to any occasion when the passenger was aboard (or "occupie[d]") a motorcoach fitted with seat belts, regardless of whether and why the passenger got out of the seat. But that is not how the clause was cast. The words "occupies a motorcoach seat" should be understood as meaning sitting in the seat and able to wear the safety belt. Mrs Young was not sitting in her seat when she fell. The exemption clause did not apply. The appeal should be dismissed with costs. |
HIGH COURT OF AUSTRALIA Matter No S409/2011 JT INTERNATIONAL SA PLAINTIFF AND COMMONWEALTH OF AUSTRALIA DEFENDANT Matter No S389/2011 BRITISH AMERICAN TOBACCO AUSTRALASIA LIMITED & ORS PLAINTIFFS AND THE COMMONWEALTH OF AUSTRALIA DEFENDANT JT International SA v Commonwealth of Australia British American Tobacco Australasia Limited v The Commonwealth [2012] HCA 43 Date of Order: 15 August 2012 Date of Publication of Reasons: 5 October 2012 S409/2011 & S389/2011 ORDER Matter No S409/2011 The demurrer by the plaintiff to the defence of the defendant be overruled. Judgment be entered in the action for the defendant. The plaintiff pay the defendant's costs in this action, including the demurrer. Matter No S389/2011 The questions reserved on 28 February 2012 for determination by the Full Court under s 18 of the Judiciary Act 1903 (Cth) be answered as follows: Question 1 Apart from s 15 of the Tobacco Plain Packaging Act 2011 (Cth), would all or some of the provisions of the Tobacco Plain Packaging Act 2011 (Cth) result in an acquisition of any, and if so what, property of the plaintiffs or any of them otherwise than on just terms, of a kind to which s 51(xxxi) of the Constitution applies? Answer Question 2 Does the resolution of Question 1 require the judicial determination of any and if so what disputed facts following a trial? Answer Question 3 If the answer to Question 1 is "yes" are all or some, and if so which, provisions of the Tobacco Plain Packaging Act 2011 (Cth) in whole or in part beyond the legislative competence of the Parliament by reason of s 51(xxxi) of the Constitution? Answer Does not arise. Question 4 Are all or some, and if so which, provisions of the Tobacco Plain Packaging Act 2011 (Cth) in whole or in part beyond the legislative competence of the Parliament by reason of the matters raised in pars 10-12 of the statement of claim? Answer Question 5 What order should be made in relation to costs of the questions reserved? Answer The plaintiffs pay the defendant's costs. Representation G Griffith QC with G A Hill and C O H Parkinson for the plaintiff in S409/2011 (instructed by Johnson Winter & Slattery) A J Myers QC with M F Wheelahan SC, N J Owens and M J O'Meara for the plaintiffs in S389/2011 (instructed by Corrs Chambers Westgarth Lawyers) S J Gageler SC, Solicitor-General of the Commonwealth with R Merkel QC, S B Lloyd SC, J K Kirk SC, A M Mitchelmore and J S Cooke for the defendant in both matters (instructed by Australian Government Solicitor) Interveners W Sofronoff QC, Solicitor-General of the State of Queensland with G J D del Villar intervening on behalf of the Attorney-General of the State of Queensland in both matters (instructed by Crown Law (Qld)) M P Grant QC, Solicitor-General for the Northern Territory with R H Bruxner intervening on behalf of the Attorney-General for the Northern Territory in both matters (instructed by Solicitor-General for the Northern Territory) P J F Garrisson, Solicitor-General for the Australian Capital Territory with M A Perry QC intervening on behalf of the Attorney-General for the in both matters (instructed by ACT Australian Capital Territory Government Solicitor) A C Archibald QC with C P Young intervening on behalf of Philip Morris Limited in S389/2011 (instructed by Allens Arthur Robinson) B W Walker SC with C L Lenehan intervening on behalf of Van Nelle Tabak Nederland BV and Imperial Tobacco Australia Limited S389/2011 (instructed by King & Wood Mallesons) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS JT International SA v Commonwealth of Australia British American Tobacco Australasia Limited v The Commonwealth Constitutional law (Cth) – Legislative power – Section 51(xxxi) – Acquisition of property on just terms – Plaintiffs hold registered and unregistered trade marks and other intellectual property rights in relation to tobacco product packaging – Tobacco Plain Packaging Act 2011 (Cth) regulates appearance of tobacco product packaging and use of trade marks on such packaging – Whether to determine plaintiffs' appearance of tobacco products constitute "property" for purposes of s 51(xxxi) – Whether Act effects an acquisition of plaintiffs' property otherwise than on just terms. intellectual property rights, goodwill and rights Words and phrases – "acquisition of property", "intellectual property", "just terms", "trade marks". Constitution, s 51(xxxi). Tobacco Plain Packaging Act 2011 (Cth), ss 15, 18-27, 30-48. Competition and Consumer (Tobacco) Information Standard 2011 (Cth), ss 1.5, Tobacco Plain Packaging Regulations 2011 (Cth), Divs 2.1-2.4, 3.1. Introduction The Tobacco Plain Packaging Act 2011 (Cth) ("the TPP Act") imposes significant restrictions upon the colour, shape and finish of retail packaging for tobacco products. It prohibits the use of trade marks on such packaging, other than as permitted by the TPP Act, which allows the use of a brand, business or company name for the relevant tobacco product. Pre-existing regulatory requirements for health messages and graphic warnings remain in place and include, under a recent Information Standard, a requirement for the inclusion of the Quitline logo of the Victorian Anti-Cancer Council and a telephone number for the Quitline service. In two proceedings which were heard by this Court in April this year, the plaintiffs, tobacco companies JT International SA ("JTI") and members of the British America Tobacco Group ("BAT")1 argued that, subject to a reading down provision, the TPP Act effected an acquisition of their intellectual property rights and goodwill on other than just terms, contrary to s 51(xxxi) of the Constitution. On 15 August 2012 the Court made orders reflecting the rejection of the plaintiffs' contentions, by majority, on the basis that there had been no acquisition of the plaintiffs' property within the meaning of s 51(xxxi) of the Constitution. I publish my reasons for joining in those orders. The TPP Act The TPP Act regulates the retail packaging and appearance of tobacco products2. The Act is superimposed upon pre-existing regulatory requirements for health warnings and safety and information standards applied to tobacco products and their packaging. Its stated objectives include the improvement of public health by discouraging people from taking up smoking, encouraging people to give up smoking, discouraging people from relapsing if they have given it up, and reducing people's exposure to smoke from tobacco products3. 1 British American Tobacco Australasia Ltd, British American Tobacco (Investments) Ltd and British American Tobacco Australia Ltd together referred to as BAT. 2 A "tobacco product" is defined in s 4(1) as "processed tobacco, or any product that contains tobacco, that: (a) is manufactured to be used for smoking, sucking, chewing or snuffing; and (b) is not included in the Australian Register of Therapeutic Goods maintained under the Therapeutic Goods Act 1989." 3 TPP Act, s 3(1)(a). Substantive requirements for the physical features, colours and finish of retail packaging are imposed by ss 18 and 19 of the TPP Act and by the Tobacco Plain Packaging Regulations 2011 (Cth) ("the TPP Regulations") made under that Act. Embellishments on cigarette packs and cartons are proscribed4. Packs and cartons are to be rectangular5, have only a matt finish6, and bear on their surfaces the colour prescribed by the TPP Regulations7. Absent regulation, the colour of the package must be a drab dark brown8. The use of trade marks on retail packaging of tobacco products is prohibited other than as permitted by s 20(3) which provides: "The following may appear on the retail packaging of tobacco products: the brand, business or company name for the tobacco products, and any variant name for the tobacco products; the relevant legislative requirements; any other trade mark or mark permitted by the regulations." Section 26 imposes a similar conditional prohibition on the use of trade marks on tobacco products. The term "relevant legislative requirement" in s 20(3)(b) includes a health warning required by the Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 2004 (Cth) ("the TPCPI Regulations")9 or a safety or information standard made or declared under the Competition and Consumer Act 2010 (Cth) ("the CCA"). Brand, business, company and variant names for tobacco products which appear on retail packaging must comply with the TPP Regulations10. They must 4 TPP Act, s 18(1)(a). 5 TPP Act, s 18(2)(b)(i). 6 TPP Act, s 19(2)(a). 7 TPP Act, s 19(2)(b)(i). Regulation 2.2.1(2) of the TPP Regulations currently prescribes the colour Pantone 448C. 8 TPP Act, s 19(2)(b)(ii). 9 TPP Act, s 4(1). A "relevant legislative requirement" also includes a fire risk statement, a trade description and a measurement mark. 10 TPP Act, s 21(1). not obscure any "relevant legislative requirement" or appear other than once on any of the front, top and bottom outer surfaces of the pack11. The relevant prescriptive provisions of the TPP Act, ss 18 to 27, are declared by s 27A to have "no legal effect other than to specify requirements, and provide for regulations specifying requirements, for the purposes of the definition of tobacco product requirement". The term "tobacco product requirement" is a defined term which relevantly means a requirement specified in Pt 2 of Ch 2 or in the TPP Regulations made under that Part12. The registrability of trade marks and designs whose use is subject to constraints imposed by the TPP Act and the TPP Regulations is not to be prejudiced by those constraints. Neither the TPP Act nor the TPP Regulations deprive a trade mark of registrability for non-use, or because the use of the trade mark in relation to tobacco products would be contrary to law13. Neither the TPP Act nor the circumstance that a person cannot use a trade mark in relation to the retail packaging of tobacco products or on tobacco products is a circumstance making it reasonable or appropriate to refuse or revoke registration of the trade mark, to revoke acceptance of an application for registration, or to register the trade mark subject to conditions or limitations14. There is a somewhat less elaborate protection for registered designs under the Designs Act 2003 (Cth)15. It is an object of the TPP Act to give effect to obligations that Australia has as a party to the Convention on Tobacco Control16. The Act thereby relies upon the power of the Commonwealth Parliament to make laws with respect to external affairs. Part 3 of Ch 1 of the TPP Act entitled "Constitutional provisions" provides for the Act's additional operation in reliance upon the corporations power, the trade and commerce power, and the Territories' power. Section 15(1) provides for the non-application of the TPP Act to the extent (if any) that its operation would result in an acquisition of property from a person 11 TPP Act, s 21(2). The TPP Act also imposes requirements relating to wrappers, s 22; prohibits inserts and onserts, s 23; the use of noises or scents, s 24, and changes in appearance after sale, s 25. 12 TPP Act, s 4(1). 13 TPP Act, s 28. 14 TPP Act, s 28(3). 15 TPP Act, s 29. 16 TPP Act, s 3(1)(b). otherwise than on just terms17. Section 15(2) provides that if, apart from s 15, the TPP Act would result in such an acquisition of property because it would prevent the use of a trade mark or other sign on or in relation to retail packaging of tobacco products, the trade mark or sign may be so used. The validity of that subsection was challenged by BAT. It is sufficient to say that I agree with Gummow J18 that the challenge fails, s 15(2) being a valid severability provision akin to s 15A of the Acts Interpretation Act 1901 (Cth). Chapter 3 of the TPP Act creates offences and provides for civil penalties19. A summary of its terms appears in the judgment of Gummow J20. The TPP Regulations The TPP Regulations specify physical features of retail packaging of tobacco products21, including their dimensions22, their colour and finish23, and the permitted use of trade marks or marks24. The only permitted marks are origin marks, calibration marks, a measurement mark and trade description, a bar code, a fire risk statement, a locally made product statement and a name and address25. Division 2.4 provides for the appearance of names on retail packaging of cigarettes, and Div 2.5 for marks and tear strips on wrappers. Part 3 relates to the requirements for the appearance of tobacco products. The Tobacco Plain Packaging Amendment Regulation 2012 (No 1) (Cth) ("Amendment Regulations") provides that retail packaging of tobacco products may include an adhesive label bearing a health warning that complies with either 17 TPP Act, s 15(1). By s 15(3) specific examples of that non-application would allow a trade mark or other sign to be used in relation to retail packaging of tobacco products or on tobacco products despite any other provision of the Act. 18 Reasons of Gummow J at p 32 [97]-[99]. 19 TPP Act, ss 30-50. 20 Reasons of Gummow J at p 30 [90]. 21 TPP Regulations, Div 2.1. 22 TPP Regulations, reg 2.1.1. 23 TPP Regulations, Div 2.2. 24 TPP Regulations, Div 2.3. 25 TPP Regulations, reg 2.3.1. the TPCPI Regulations or the Competition and Consumer (Tobacco) Information Standard 2011 ("the Tobacco Information Standard")26. The Tobacco Information Standard The Tobacco Information Standard was made pursuant to the CCA27. It came into partial effect on 1 January 2012 and will apply to all tobacco products on and after 1 December 201228. Apart from the health warnings which it mandates, it will require the "Quitline" logo which consists of the registered trade mark, in respect of health education services, of the Anti-Cancer Council of Victoria comprising the word "Quitline" and the Quitline telephone number to overlay most graphics29. Pre-existing health warnings The placement of health warnings on cigarette packets is mandated by the TPCPI Regulations. Those Regulations were made under the Trade Practices Act 1974 (Cth), which has been replaced by the CCA. They predated the enactment of the TPP Act. Indeed such warnings have been required since the The TPCPI Regulations provide for "a system of warnings, explanatory messages and graphic images to increase consumer knowledge of health effects relating to smoking, to encourage the cessation of smoking and to discourage uptake or relapse."30 A package in which tobacco is sold at retail ("a retail package")31 and which is manufactured in Australia, or imported into Australia32, must be labelled in accordance with Pt 3 or Pt 4 of the TPCPI Regulations33. 26 Amendment Regulations, Sched 1 [15] inserting reg 2.6.1. 27 CCA, Sched 2, s 134. 28 Tobacco Information Standard, s 1.5. 29 Tobacco Information Standard, ss 1.3(6), 3.1(2), 4.1(2); subs (3) of each of ss 3.2- 3.8 and 4.2-4.8; subs (2) of each of ss 5.3-5.6; ss 9.4(3), 9.4(4). 30 TPCPI Regulations, reg 3A. 31 TPCPI Regulations, reg 6(1). 32 TPCPI Regulations, reg 4. Warning and explanatory messages and photographs and their layouts are prescribed34. The CCA also provides for safety standards35 and information standards36 required of tobacco products. The TPCPI Regulations and the safety and information standards made or declared under the CCA prevail to the extent of any inconsistency with the TPP Act37. That paramountcy does not change the legal effect of those regulations and standards. It does no more than preclude any operation of the TPP Act which is inconsistent with them. The JTI proceedings By a writ of summons and statement of claim filed in this Court on 15 December 2011 naming the Commonwealth of Australia as defendant, JTI sought a declaration, relying upon s 15 of the TPP Act, that the TPP Act does not apply and has no operation in its application to trade marks and get-up used on tobacco products sold by JTI. In the alternative, JTI sought a declaration that the TPP Act is invalid in its application to the trade marks and the get-up. It was not in dispute that JTI is the registered owner or exclusive licensee of registered trade marks which it is entitled to use in the retail packaging and appearance of the Camel brand of cigarettes and the Old Holborn brand of handrolling tobacco ("the tobacco products") currently sold in Australia. JTI said that, until the commencement of ss 17-27A and ss 30-48 of the TPP Act, it would have the right to determine the appearance of these tobacco products and the form and appearance of at least 70 per cent of the front and at least 10 per cent of the back of the packaging of the tobacco products. JTI alleged that its tobacco products used distinctive trade dress and get- up, including arrangements of words, colours, designs, logos, lettering and markings which distinguish them from other tobacco products. It claimed to 33 The TPCI Regulations, Sched 1, sets out the requirements for labelling for the purpose of Pt 3 relating to retail packaging manufactured or imported before 1 March 2006. Schedule 2 sets out the requirements for labelling for the purpose of Pt 4 relating to retail packaging manufactured or imported after 1 March 2006. 34 TPCPI Regulations, Scheds 1 and 2. 35 CCA, Sched 2, s 104. 36 CCA, Sched 2, s 134. 37 TPP Act, s 10. have rights of use of this "Get-up" capable of being enforced by an action for passing off or for misleading or deceptive conduct. JTI asserted that its rights in the trade marks and their get-up are "property" for the purposes of s 51(xxxi) of the Constitution. It claimed that the provisions of the TPP Act constituted an acquisition of its property otherwise than on just terms and, but for s 15, would be wholly invalid and of no effect. The Commonwealth admitted that the trade mark was property but denied that characterisation with respect to the get-up and rights said to be associated with it. It pleaded that both the trade mark rights and the get-up rights were, in any event, in particular, under Commonwealth laws of the kind in the TPP Act. The Commonwealth denied that any of the matters alleged in JTI's statement of claim established that the TPP Act effected or would effect an acquisition of property otherwise than on just terms to which s 51(xxxi) applied. susceptible regulation including, The Commonwealth pleaded that the consumption of JTI's tobacco products and the tobacco products of other manufacturers, importers and distributers is harmful to the public and to the public interest38. The Commonwealth also asserted the existence of "a rational and/or cogent basis" for concluding that the plain packaging of tobacco products would reduce their appeal to members of the public and increase the effectiveness of health warnings on the retail packaging of the products39. It was also asserted that such packaging would also reduce the ability of the retail packaging of tobacco products to mislead members of the public about the harmful effects of smoking. The JTI demurrer In its reply to the defence, JTI demurred on the following grounds: Its trade marks and the get-up constitute "property" within s 51(xxxi) of the Constitution. The TPP Act would, apart from s 15, result in an acquisition of that property within s 51(xxxi) of the Constitution. That acquisition would be otherwise than on just terms. 38 A contention said to be supported by factual allegations set out in Sched A to the defence. The Commonwealth referred to, inter alia, addiction, mechanisms that brought about addiction, and diseases said to be derived from tobacco use. 39 A contention said to be supported by various papers, studies, reports and other documents set out in Sched C to the defence. Factual matters alleged in various parts of the defence were irrelevant to the constitutional validity of the TPP Act. JTI sought judgment by way of declaration if the demurrer were upheld. In the event that the demurrer were overruled, it sought to have the matter remitted for trial and further orders. The BAT proceedings BAT commenced proceedings against the Commonwealth by a writ of summons issued out of this Court on 1 December 2011. They claimed a declaration that the TPP Act would not apply to their tobacco products and packaging and, alternatively, a declaration that the TPP Act is invalid. In its statement of claim, BAT identified a number of categories of property rights which may be paraphrased as follows: Registered and unregistered trade marks which it is entitled to use for tobacco products and the packaging of tobacco products in Australia and to authorise others to carry out such acts. Copyright in artistic and literary works which it is entitled to reproduce for tobacco products and the packaging of tobacco products. (c) Distinctive trade dress and get-up for tobacco products which use the trade marks and/or reproduce the copyright works. Substantial reputation and goodwill arising from the use in Australia by British American Tobacco Australia Ltd of the trade marks, the copyright works and/or the get-up in conjunction with tobacco products and the packaging of tobacco products. (e) A design registered under the Designs Act 2003 (Cth). Two patents registered pursuant to the Patents Act 1990 (Cth).40 Packaging rights: to manufacture, import, sell and use tobacco products and packaging of tobacco products in such shape or design as BAT may choose; and 40 The design and patents are said to be owned by the second plaintiff, British American Tobacco (Investments) Ltd. to print or to use on the tobacco products and packaging of tobacco products such trade marks or copyright works or designs or patents or messaging as BAT might choose. (h) Goodwill attaching to the exploitation in Australia of the packaging rights. Intellectual property licence rights held by British American Tobacco Australia Ltd in relation to the use of the trade marks in Australia, reproduction and publication of the copyright works, use of the get-up, and to manufacture and sell packaging embodying the design and/or exploiting one of the patents. The registered trade marks took the form of words, package get-up and colour used in relation to the Winfield brand of cigarettes. The unregistered marks were of the same kind. The literary and artistic works were embodied in the text and colour of Winfield cigarette packs. The registered design related to the features of shape and configuration of a ribbed pack for cigarettes. The patents related to inventions claimed for the way in which cigarettes are sealed within a pack and the provision of increased internal surface area which could be utilised for printing information or graphics. BAT alleged that the provisions of the TPP Act would, but for the operation of s 15 of that Act result in an acquisition of BAT's property comprising the trade marks, the copyright works, the get-up, the licensing goodwill, the design, the patents, the packaging rights, the packaging goodwill and the intellectual property licence rights otherwise than on just terms. It thereby alleged that, by reason of s 15, the provisions of the TPP Act do not apply to and have no operation with respect to BAT's tobacco products and packaging of tobacco products. In the alternative, BAT asserted that the TPP Act is invalid as conferring legislative power on the judicial branch of government by reason of the fact that the extent to which conduct is rendered criminal by the TPP Act is determined by the extent to which s 51(xxxi) of the Constitution would, but for s 15 of the TPP Act, be engaged. It further alleged that the TPP Act is invalid because it does not provide for a rule of conduct or a declaration as to power, right or duty and also because its purported enactment thereby did not involve an exercise of the power to make "laws" conferred by the Constitution upon the Commonwealth Parliament. The reserved questions On 27 February 2012, Gummow J reserved questions in the BAT proceedings under s 18 of the Judiciary Act 1903 (Cth) for consideration by the Full Court. The questions were: "(1) Apart from s 15 of the TPP Act, would all or some of the provisions of the TPP Act result in an acquisition of any, and if so what, property of the plaintiffs or any of them otherwise than on just terms, of a kind to which s 51(xxxi) of the Constitution applies? (2) Does the judicial determination of any and if so what disputed facts following a trial? resolution of question require the If the answer to question (1) is "yes" are all or some, and if so which, provisions of the TPP Act in whole or in part beyond the legislative competence of the Parliament by reason of s 51(xxxi) of the Constitution? (4) Are all or some, and if so which, provisions of the TPP Act in whole or in part beyond the legislative competence of the Parliament by reason of the matters raised in paragraphs 10-12 of the statement of claim? (5) What order should be made in relation to costs of the Questions Reserved?" The affected rights JTI and BAT contended that the TPP Act would effect an acquisition of their property on other than just terms contrary to the guarantee provided by s 51(xxxi) of the Constitution. The categories of property rights said to be affected appear from the pleadings. In the case of JTI, they are its registered trade marks and get-up. In the case of BAT, they are its registered and unregistered trade marks, copyright, get-up, licensing goodwill, design, patents, packaging rights, packaging goodwill and intellectual property licensing rights. Section 51(xxxi) confers upon the Commonwealth Parliament the power to make laws with respect to: "[t]he acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws". It uses the term "property" which appears in a number of places in the Constitution41. As used in s 51(xxxi) it has long been construed broadly by this Court42. It extends to property rights created by statute although the terms of such statutes and the nature of the property rights which they create require 41 Constitution, ss 51(xxxi), 85, 98, 104 and 114. 42 Wurridjal v The Commonwealth (2009) 237 CLR 309 at 359-360 [87]-[89] per French CJ and cases there cited; [2009] HCA 2. examination to determine whether and to what extent that property attracts the protection of s 51(xxxi). As the plurality cautioned in Attorney-General (NT) v Chaffey43, further analysis is imperative where the asserted "property" has no existence apart from statute44. There are and always have been purposive elements reflecting public policy considerations which inform the statutory creation of intellectual property rights. The public policy dimensions of trade mark legislation and the contending interests which such dimensions accommodate were referred to in Campomar Sociedad, Limitada v Nike International Ltd45. The observation in that case that Australian trade marks law has "manifested from time to time a varying accommodation of commercial and the consuming public's interests"46 has application with varying degrees of intensity to other intellectual property rights created by statute. Intellectual property laws create property rights. They are also instrumental in character. As Peter Drahos wrote in 1996, their proper interpretation does not depend upon "diffuse moral notions about the need to protect pre-legal expectations based on the exercise of labour and the creation of value."47 The statutory purpose, reflected in the character of such rights and in the conditions informing their creation, may be relevant to the question whether and in what circumstances restriction or regulation of their enjoyment by a law of the Commonwealth amounts to acquisition of property for the purposes of s 51(xxxi) of the Constitution. That is not to say that such rights are, on account of their instrumental character, inherently susceptible to variation and, on that account, not within the protection of s 51(xxxi)48. In Chaffey the plurality said49: 43 (2007) 231 CLR 651; [2007] HCA 34. 44 (2007) 231 CLR 651 at 664 [23] per Gleeson CJ, Gummow, Hayne and 45 (2000) 202 CLR 45 at 65-68 [42]-[49]; [2000] HCA 12. 46 (2000) 202 CLR 45 at 65 [42]. 47 Drahos, A Philosophy of Intellectual Property, (1996) at 220, see also at 203. 48 The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 16-17 [16] per Brennan CJ, 38 [86] and 56-57 [145]-[146] per McHugh J, 73-74 [198] per Gummow J; [1998] HCA 8; Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 634-635 per Gummow J, Toohey J relevantly concurring at 560 and Gaudron J at 561; [1997] HCA 38; Health Insurance Commission v Peverill (1994) 179 CLR 226 at 237 per Mason CJ, Deane and Gaudron JJ, 243-244 per Brennan J, 256 per Toohey J; [1994] HCA 8. "a law reducing the content of subsisting statutory exclusive rights, such as those of copyright and patent owners, would attract the operation of s 51(xxxi)." (footnote omitted) On the other hand, that statement is not to be taken as support for the proposition that the extinguishment or restriction of a statutory exclusive right, without more, would constitute an acquisition for the purpose of s 51(xxxi). That statement was made in a context of a rejection of the broad proposition that the statutory extinguishment of statutory rights is excluded from the scope of s 51(xxxi)50. The question whether there has been an acquisition of all or any of the plaintiffs' asserted property rights directs attention to their source and nature and the consequences of the restrictions imposed by the TPP Act upon their use or enjoyment. The property said to have been the subject of acquisition under the TPP Act comprises a mixture of statutory and associated or derivative non- statutory rights. It is useful to make brief generic reference to them. At common law, the property interest associated with a trade mark was derived from the goodwill of the business which used it51. However, the rights conferred by successive Commonwealth statutes on the holders of registered trade marks have always been "a species of property of the person whom the statute describes as its registered proprietor"52. Those rights are the exclusive rights to use the trade mark and to authorise other persons to use the trade mark in relation to the goods and/or services in respect of which the trade mark is registered53. They are capable of assignment and transmission and attract 49 (2007) 231 CLR 651 at 664 [24] per Gleeson CJ, Gummow, Hayne and Crennan JJ, citing The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 70-71 [182]-[187] per Gummow J. 50 See also the reference in the plurality judgment in Chaffey at 663 [21] to the Industrial Relations Act case (1996) 187 CLR 416 at 559; [1996] HCA 56 requiring some consequential benefit or financial gain before extinguishment of a cause of action could be characterised as an acquisition. 51 AG Spalding & Bros v AW Gamage Ltd (1915) 32 RPC 273 at 284 per Lord Parker; Erven Warnink Besloten Vennootschap v J Townsend & Sons (Hull) Ltd [1979] AC 731 at 741 per Lord Diplock; Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 366-367 per Gummow J; French J agreeing at 377. 52 Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 68 [48], quoting with approval Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 34 per Windeyer J; [1968] HCA 50. See also Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 477-478 per Stephen, Mason, Aickin and Wilson JJ; [1980] HCA 32. 53 Trade Marks Act 1995 (Cth), s 20. equities which "may be enforced in the like manner as in respect of any other personal property."54 Their existence is conditioned upon satisfaction of requirements for registration. They can cease to exist by operation of statutory mechanisms such as rectification, removal from the register, or failure to renew55. As pointed out in the 5th edition of Shanahan's Australian Law of Trade Marks and Passing Off56: "the property in a statutory trade mark is not permanent." Registered designs are a species of personal property, capable of assignment and transmission by operation of law57. The registered owner of a registered design has a number of exclusive rights relating to the making, importation, sale and use of products embodying the design and the right to authorise another to do any of those things58. The rationale for the statutory protection of registered designs has been variously stated. Professor Ricketson observed in 198459: "The principal object of the registered designs system is to give protection, through the grant of a monopoly right, to the visual form of articles which are commercially mass-produced. Concern with questions of design and appearances has had a long history, as it has been seen for many hundreds of years that good design is an integral part of the manufacture and marketing of all kinds of useful articles." The Patents Act 1990 (Cth) provides that a patent gives the patentee the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention60. Those exclusive rights are "personal property and are capable of assignment and of devolution by law."61 54 Trade Marks Act 1905 (Cth), ss 49(3), 58-60; Trade Marks Act 1955 (Cth), ss 57 and 82; Trade Marks Act 1995 (Cth), s 21. 55 Trade Marks Act 1995 (Cth), ss 85-87, 92; Designs Act 2003 (Cth), ss 51, 52, 65, 66, 120; Patents Act 1990 (Cth), ss 82, 85, 101, 101F, 101J, 134, 137, 138. 56 Shanahan's Australian Law of Trade Marks and Passing Off, 5th ed, (2012) at 78. 57 Designs Act 1906 (Cth), s 16; Designs Act 2003 (Cth), s 10. 58 Designs Act 1906 (Cth), ss 12 and 15; Designs Act 2003 (Cth), s 10. 59 Ricketson, The Law of Intellectual Property, (1984) at 445. 60 Patents Act 1990 (Cth), s 13(1). 61 Patents Act 1990 (Cth), s 13(2). The origin of patents for inventions can be traced back to the Statute of Monopolies of 162362, declaring all monopolies void, subject to the exception in s 6 of that Statute that: "any letters patents and grants of privilege for the ... making of any manner of new manufactures within this realm, to the true and first inventor and inventors of such manufactures, which others at the time of making such letters patents and grants shall not use". That provision still forms part of the definition of "patentable invention" in the Patents Act 1990 (Cth)63. Its purpose was succinctly stated by Cornish, "the terms of the section make it plain that an act of economic policy was intended: the objectives were the encouragement of industry, employment and growth, rather than justice to the 'inventor' for his intellectual percipience." Copyright is defined by reference to exclusive rights of, inter alia, reproduction and publication of works and subject matter other than works. It is classified in the Copyright Act as "personal property" which is transmissible by "assignment, by will and by devolution by operation of law."65 Registered trade marks, designs, patents and copyright in works and other subject matter give rise to, or constitute, exclusive rights which are property to which s 51(xxxi) of the Constitution can apply. They are all rights which are created by statute in order to serve public purposes. They differ in their histories, their character and the statutory schemes which make provision for them. It is important in that context to bear in mind the adoption by this Court in Campomar66 of the statement by Dixon J in Victoria Park Racing and Recreation Grounds Co Ltd v Taylor67 that: 62 21 Jac 1 c 3. 63 Patents Act 1990 (Cth), s 18. 64 Cornish, Llewellyn and Aplin, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 7th ed (2010) at 125. 65 Copyright Act 1968 (Cth), s 196. 66 (2000) 202 CLR 45 at 54 [4]. 67 (1937) 58 CLR 479 at 509; [1937] HCA 45. "the exclusive right to invention, trade marks, designs, trade name and reputation are dealt with in English law as special heads of protected interests and not under a wide generalisation." It is a common feature of the statutory rights asserted in these proceedings that they are negative in character. As Laddie, Prescott and Vitoria observed68: "Intellectual property is ... a purely negative right, and this concept is very important. Thus, if someone owns the copyright in a film he can stop others from showing it in public but it does not in the least follow that he has the positive right to show it himself." In Pacific Film Laboratories Pty Ltd v Federal Commissioner of Taxation69, Windeyer J spoke of the essential nature of a copyright: "It is not a right in an existing physical thing. It is a negative right, as it has been called, a power to prevent the making of a physical thing by copying." To similar effect, in relation to patents, was the observation of Lord Herschell LC in Steers v Rogers70, quoted with approval by the plurality in The Grain Pool of Western Australia v The Commonwealth71: "The truth is that letters patent do not give the patentee any right to use the invention — they do not confer upon him a right to manufacture according to his invention. That is a right which he would have equally effectually if there were no letters patent at all; only in that case all the world would equally have the right. What the letters patent confer is the right to exclude others from manufacturing in a particular way, and using a particular invention." The Commonwealth submitted that the property rights associated with the registered trade marks, design, patents and copyright asserted by JTI and BAT 68 Laddie, Prescott and Vitoria, The Modern Law of Copyright and Designs, 4th ed (2011), vol 1 at 3 [1.1]. 69 (1970) 121 CLR 154 at 167; [1970] HCA 36. 70 [1893] AC 232 at 235. 71 (2000) 202 CLR 479 at 513-514 [84]; [2000] HCA 14. See also Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 220 per Brennan J; [1982] HCA 44 cited in The Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 514 fn 158. involve "a statutory assurance of exclusive use, not a positive right or authority to use." On that basis the imposition of restrictions on their use would take nothing away from the rights granted. Therefore, it was submitted, no property had been taken by the TPP Act. BAT stigmatised that argument as formalistic, observing that rights of exclusion are of the essence of all proprietary rights72. Plainly, not all property rights are defined only by rights of exclusion. In law the term "property" generally refers to "a legal relationship with a thing"73 and in many cases is helpfully described as "a bundle of rights"74. However, BAT correctly submitted that rights to exclude others from using property have no substance if all use of the property is prohibited. The Commonwealth's submission points to a characteristic of the plaintiffs' asserted rights which may be relevant in determining, inter alia, whether or not they can be said to have been the subject of acquisition in terms of any benefit that could be said to have accrued to the Commonwealth. That consideration does not involve an acceptance of the proposition that rights were not taken in the sense that JTI and BAT were deprived of their ability to enjoy the fruits of their statutory monopolies. BAT complained of acquisition of its goodwill. The concept of goodwill as property, and its characterisation as property or a proprietary right, arise in different contexts, discussed at length in the joint judgment in Federal Commissioner of Taxation v Murry75. As their Honours pointed out76: "Goodwill is correctly identified as property, therefore, because it is the legal right or privilege to conduct a business in substantially the same manner and by substantially the same means that have attracted custom to it." (footnote omitted) 72 Yanner v Eaton (1999) 201 CLR 351 at 365-366 [17]-[18] per Gleeson CJ, Gaudron, Kirby and Hayne JJ; [1999] HCA 53, citing Gray, "Property in Thin Air", (1991) 50 Cambridge Law Journal 252 at 299. 73 Yanner v Eaton (1999) 201 CLR 351 at 365-366 [17] per Gleeson CJ, Gaudron, 74 Telstra Corporation Ltd v The Commonwealth (2008) 234 CLR 210 at 230-231 [44]; [2008] HCA 7. See also White v Director of Public Prosecutions (WA) (2011) 243 CLR 478 at 485 [10] per French CJ, Crennan and Bell JJ; [2011] HCA 20; Yanner v Eaton (1999) 201 CLR 351 at 365-366 [17] per Gleeson CJ, Gaudron, 75 (1998) 193 CLR 605; [1998] HCA 42. 76 (1998) 193 CLR 605 at 615 [23] per Gaudron, McHugh, Gummow and Hayne JJ. Goodwill is derived from the use of the assets and other elements or attributes of a business. It may have different aspects or components corresponding to its sources. Goodwill derived from the use of a trade mark, registered or unregistered, or from a particular get-up, may be protected by an action for passing off. Lockhart J observed in Conagra Inc v McCain Foods (Aust) Pty Ltd77: "It is now beyond argument that the plaintiff's right which the law of passing off protects is a proprietary right in the goodwill or reputation of his business likely to be injured by the defendant's conduct." That cause of action serves the purpose, which is its "underlying rationale", of preventing commercial dishonesty78. It has rightly been said that "[t]here is no 'property' in the accepted sense of the word in a get-up"79 . The rights associated with a particular get-up, which may also be viewed as a species of common law trade mark, are the rights to protect goodwill by passing off actions or the statutory cause of action for misleading or deceptive conduct where another has made unauthorised use of the get-up in a way which satisfies the relevant criteria for liability. The get-up rights asserted by JTI and BAT and the other non-statutory rights are, like their statutory equivalents, exclusive rights which are negative in character and support protective actions against the invasion of goodwill. Whether there is an acquisition of property Section 51(xxxi) embodies a constitutional guarantee of just terms "and is to be given the liberal construction appropriate to such a constitutional provision."80 Broad constructions of "property" and "acquisition" were linked by 77 (1992) 33 FCR 302 at 340. 78 (1992) 33 FCR 302 at 308. 79 Reckitt & Colman Products Ltd v Borden Inc (1990) 1 WLR 491 at 505 per Lord Oliver of Aylmerton; [1990] 1 All ER 873 at 885. 80 Clunies-Ross v The Commonwealth (1984) 155 CLR 193 at 201-202 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ; [1984] HCA 65; see also Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 509 per Mason CJ, Brennan, Deane and Gaudron JJ; [1993] HCA 10; Minister for the Army v Dalziel (1944) 68 CLR 261 at 276 per Latham CJ; [1944] HCA 4; The Commonwealth v New South Wales (1923) 33 CLR 1 at 20-21 per Knox CJ and Starke J; [1923] HCA 34. Dixon J in the Bank Nationalisation case81. Section 51(xxxi) was said to extend to "innominate and anomalous interests" and to include "the assumption and indefinite continuance of exclusive possession and control for the purpose of the Commonwealth of any subject of property."82 There is, however, an important distinction between a taking of property and its acquisition. Taking involves deprivation of property seen from the perspective of its owner. Acquisition involves receipt of something seen from the perspective of the acquirer83. Acquisition is therefore not made out by mere extinguishment of rights. In an observation quoted and approved by the majority in Australian Tape Manufacturers Association Ltd v The Commonwealth84, Mason J said in the Tasmanian Dam case85: "To bring the constitutional provision into play it is not enough that legislation adversely affects or terminates a pre-existing right that an owner enjoys in relation to his property; there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be." Importantly, the interest or benefit accruing to the Commonwealth or another person must be proprietary in character. On no view can it be said that the Commonwealth as a polity or by any authority or instrumentality, has acquired any benefit of a proprietary character by reason of the operation of the TPP Act on the plaintiffs' property rights. In this respect I agree with the reasons of Gummow J86 and the reasons of Hayne and Bell JJ87. It may also be observed that the negative character of the plaintiffs' property rights leaves something of a logical gap between the restrictions on their enjoyment and the accrual of any benefit to the Commonwealth or any other 81 Bank of NSW v The Commonwealth (1948) 76 CLR 1; [1948] HCA 7. 82 (1948) 76 CLR 1 at 349. 83 Georgiadis v Australian Overseas Telecommunications Corporation (1994) 179 CLR 297 at 304-305 per Mason CJ, Deane and Gaudron JJ, 315 per Dawson J, 320-321 per Toohey J; [1994] HCA 6. 84 (1993) 176 CLR 480 at 499-500 per Mason CJ, Brennan, Deane and Gaudron JJ. 85 The Commonwealth v Tasmania (1983) 158 CLR 1 at 145; [1983] HCA 21. 86 Reasons of Gummow J at pp 48-52 [144]-[154]. 87 Reasons of Hayne and Bell JJ at p 59-62 [180]-[189]. person. Unlike the Newcrest case88, there is no expansion in rights, interests, or benefits accruing to the Commonwealth that corresponds to or bears any relationship to the restrictions imposed on the use of the plaintiffs' intellectual property rights. The fact that the restrictions and prohibitions imposed by the TPP Act create the "space" for the application of Commonwealth regulatory requirements as to the textual and graphical content of tobacco product packages does not constitute such an accrual. Rather, it reflects a serious judgment that the public purposes to be advanced and the public benefits to be derived from the regulatory scheme outweigh those public purposes and public benefits which underpin the statutory intellectual property rights and the common law rights enjoyed by the plaintiffs. The scheme does that without effecting an acquisition. In summary, the TPP Act is part of a legislative scheme which places controls on the way in which tobacco products can be marketed. While the imposition of those controls may be said to constitute a taking in the sense that the plaintiffs' enjoyment of their intellectual property rights and related rights is restricted, the corresponding imposition of controls on the packaging and presentation of tobacco products does not involve the accrual of a benefit of a proprietary character to the Commonwealth which would constitute an acquisition. That conclusion is fatal to the case of both JTI and BAT. Conclusion For these reasons, I joined in the orders made by the Court on 15 August 88 Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513. GUMMOW J. These cases in the original jurisdiction of the Court present challenges by the plaintiffs to the validity of the Tobacco Plain Packaging Act 2011 (Cth) ("the Packaging Act"). The plaintiffs invoke the restraint upon legislative power found in s 51(xxxi) of the Constitution. For the reasons which follow the challenges should fail and I joined in the orders pronounced on 15 August 2012. That failure illustrates the propositions that s 51(xxxi) gives protection against acquisition of property without just terms but "not to the general commercial and economic position occupied by traders"89 and that to treat this commercial and economic position as if it had a distinct proprietary character would be to repeat what in Truax v Corrigan90 Holmes J identified in a similar context as the fallacy of "delusive exactness". His Honour said: "Delusive exactness is a source of fallacy throughout the law. By calling a business 'property' you make it seem like land, and lead up to the conclusion that a statute cannot substantially cut down the advantages of ownership existing before the statute was passed. An established business no doubt may have pecuniary value and commonly is protected by law against various unjustified injuries. But you cannot give it definiteness of contour by calling it a thing." Previous federal legislation Tobacco advertising is controlled by the Tobacco Advertising Prohibition Act 1992 (Cth), but s 9(2) thereof provides that words, signs or symbols that appear on a tobacco product or its packaging do not constitute a tobacco advertisement. However, the Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 200491 ("the 2004 Regulations"), made under the Trade Practices Act 1974 (Cth), require that a prescribed graphic health warning must cover at least thirty percent of the front surface of tobacco packaging and ninety percent of the back surface92. 89 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 270 per Dixon J; [1949] HCA 44. 90 257 US 312 at 342 (1921). 91 Regulation SR 2004, No 264. 92 Regulation 35(1), Sched 2, Div 2.1.1, Item 102A. In respect of tobacco products to be supplied after 30 November 2012, the Competition and Consumer (Tobacco) Information Standard 2011 ("the 2011 Regulations"), made under the Competition and Consumer Act 2010 (Cth)93, will require that a prescribed graphic health warning must cover at least seventy-five percent of the front of the packet94, and at least ninety percent of the back outer surface95. The prescribed health warnings include an invitation to call the "Quitline" service; the "Quitline" logo with the number "13 7848" is the registered trade mark, in respect of health educational services, of the Anti-Cancer Council of Victoria. Section 10 of the Packaging Act provides that the 2004 Regulations and the 2011 Regulations prevail to the extent of any inconsistency with the Packaging Act. No challenge is made in these proceedings to the validity of the 2004 Regulations or the 2011 Regulations. What primarily is at stake is the utilisation of the remaining space on the front of tobacco packages for the display of trade marks and product get-up without the restraints imposed by the Packaging Act. The parties In matter No S409 of 2011 ("the JTI Matter") the plaintiff, JT International SA ("JTI"), is incorporated in Switzerland. JTI is the registered owner of one trade mark and exclusive licensee of four trade marks, all registered under the Trade Marks Act 1995 (Cth) ("the TMA"). The registrations are in respect of tobacco products falling within class 34 of the international trade mark classification96. Registered trade marks numbers 339477 and 348139 have respective priority dates in 1979 and in 198097. The earlier registration comprises "Camel" 93 Section 134 of Sched 2. 94 2011 Regulations, Section 9.13(1). 95 2011 Regulations, Sections 9.19, 9.20. 96 World Intellectual Property Organisation, International Classification of Goods and Services for the Purposes of the Registration of Marks (Nice Classification), Pt 1, 10th ed (2011). 97 Section 232 of the TMA repealed the Trade Marks Act 1955 (Cth), but s 233 rendered all marks registered in Part A or Part B of the old register, registered trade marks for the purposes of the TMA. in fancy script and the latter "Camel" in plain script. Registered trade marks numbers 1276704 and 1351189 have later priority dates respectively in 2008 and 2010. The first of these trade marks uses the representation of "Camel" in fancy script, the subject of the 1979 registration, together with additional graphic material including a desert scene with a camel, palm trees and a pyramid. The most recent registration is a drawing of a camel in silhouette. JTI is exclusive licensee of these four trade marks. JTI is registered owner of the remaining registration, number 1007693, which has a priority date in 2004, and comprises the words "Old Holborn" displayed upon what appears to be fancy packaging in the shape of a tobacco pouch. Tobacco products are distributed and sold in Australia in packaging featuring the registered trade marks and the brand names "Camel" and "Old Holborn". the In the second matter, No S389 of 2011 ("the BAT Matter"), the first plaintiff, British American Tobacco Australasia Limited ("BAT Australasia"), is a trading corporation, incorporated under the Corporations Act 2001 (Cth) ("the Corporations Act"); second plaintiff, British American Tobacco (Investments) Limited ("BAT Investments"), is incorporated under the laws of England and Wales; the third plaintiff, British American Tobacco Australia Limited ("BATA"), is a wholly owned subsidiary of BAT Australasia and is a trading corporation, incorporated under the Corporations Act. BATA carries on the business of manufacturing or importing and of marketing, selling, distributing and displaying packets of cigarettes under the "Winfield" brand and the "Dunhill" brand. Since July 2010 BATA has sold in Australia hundreds of millions of packets of Winfield cigarettes and tens of millions of packets of Dunhill cigarettes. BAT Australasia is the registered owner under the TMA of trade marks numbers 270845, 752287, 917043 and 1326870 ("the BAT Trade Marks"). All feature the brand name "Winfield" with additional material and are registered in class 34. The registration of the second and third of these trade marks bears endorsements as to colour. The trade marks were first registered respectively in 1973, 1998, 2002 and 2009. The BAT Matter also involves other species of intellectual property. It is accepted by the Commonwealth that BAT Australasia is the owner of original artistic works pursuant to the Copyright Act 1968 (Cth) ("the Copyright Act") comprising the material (excluding health warnings) on the packaging for the products marketed as "Winfield Optimum Night", "Winfield Blue", "Winfield Red", "Winfield Silver" and "Winfield Gold" ("the BAT Copyrights"). BAT Investments is the owner of registered design number 323481 under the provisions of the Designs Act 2003 (Cth) ("the Designs Act"). The design ("the BAT Design") is registered with lodgment date of 31 October 2008, in respect of a "ribbed pack". The newness and distinctiveness of the design is said to reside in the features of shape and configuration of a ribbed pack illustrated in the representations accompanying the registration. BAT Investments also is grantee of Patent No 2001258572 under the Patents Act 1990 (Cth) ("the Patents Act") for an invention titled "Smoking article packaging" ("the BAT Patent") which claims a method of re-sealing the contents in that packaging. The Dunhill branded cigarettes referred to above were sold in packaging which utilised the BAT Patent and applied the BAT Design. The plaintiffs in both the JTI Matter and the BAT Matter assert common law rights of goodwill in the get-up of their products in addition to their statutory rights. The JTI Matter JTI complains of the effect upon these trade mark registrations of the Packaging Act and of the Tobacco Plain Packaging Regulations 2011 ("the Packaging Regulations") made under the Packaging Act. JTI contends that the effect is, under pain of offence and civil penalty provisions contained in the Packaging Act, to require the elimination of all distinguishing features of its tobacco packaging and to permit, on the area of packaging remaining after the health warnings, the use only of the brand or business name or variant name (eg "Camel") in small plain font98 against a background in a drab colour known as Pantone 448C99. JTI seeks declaratory relief that in its application to the JTI registered trade marks the Packaging Act (and thus the Packaging Regulations made thereunder100) is invalid. JTI also complains of the effect of the Packaging Act upon what it claims are its common law rights in the get-up of its products. To the defence, in which the Commonwealth pleads that s 51(xxxi) is not engaged with respect to the Packaging Act, JTI pleads and demurs101, and its demurrer is set down before the Full Court. On the hearing of the demurrer there were interventions by Queensland, the Northern Territory and the Australian Capital Territory. Each intervener supported the submissions by the Commonwealth as to the absence of any "acquisition" as required by s 51(xxxi). 98 Regulation 2.4.1. 99 Regulation 2.2.1(2). 100 Wotton v Queensland (2012) 86 ALJR 246 at 252-253 [22]-[23]; 285 ALR 1 at 8; [2012] HCA 2. 101 As permitted by r 27.07.4 of the High Court Rules 2004. The BAT Matter By order of a Justice of this Court made on 28 February 2012 questions have been reserved for determination by the Full Court in the BAT Matter pursuant to s 18 of the Judiciary Act 1903 (Cth). The effect of Qu (1) is to ask whether all or some of the provisions of the Packaging Act result in an acquisition otherwise than on just terms of the BAT trade marks and the BAT Copyrights, the BAT Design and the BAT Patent, and the common law rights of BAT Australasia and of BATA. Question (2) asks whether the resolution of Qu (1) requires the determination at trial of any disputed facts. Question (3) assumes an affirmative answer to Qu (1). Question (4) raises the validity of s 15 of the Packaging Act; the text of s 15 is set out later in these reasons102. There were interventions in the BAT Matter by Philip Morris Ltd ("Philip Morris") and by Van Nelle Tabak Nederland BV and Imperial Tobacco Australia Ltd (together "Van Nelle") in support of the plaintiffs and interventions in support of the Commonwealth by the Northern Territory and the Australian Capital Territory. The demurrer in the JTI Matter and the questions reserved in the BAT Matter were heard consecutively. It is convenient to begin with some consideration of the relevant intellectual property legislation, beginning with the trade mark legislation. The TMA The issues which are presented in these cases respecting the "taking" and "acquisition" of proprietary interests are to be approached with an appreciation that trade mark legislation, in general, does not confer a "statutory monopoly" in any crude sense. Rather, the legislation represents an accommodation between the interests of traders, in the use of trade marks in developing the goodwill of their businesses and turning this to account by licensing arrangements, and the interests of consumers, in recognising trade marks as a badge of origin of goods or services and avoiding deception or confusion as to that origin103. 103 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 65-66 [42]; [2000] HCA 12; Health World Ltd v Shin-Sun Australia Pty Ltd (2010) 240 CLR 590 at 599 [29]; [2010] HCA 13; Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 348-349; Mattel Inc v 3894207 Canada Inc [2006] 1 SCR 772 at 780, 788. The term "trade mark" is defined in s 17 of the TMA as a "sign"104 which is used or intended to be used to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person. A trade mark must be capable of graphic representation (s 40). The Registrar is obliged by s 68 to register a trade mark which is accepted for registration and in respect of which there has been no successful opposition. A trade mark may be registered with limitations as to colour, in respect of the whole or part of the trade mark. Examples are the "Winfield" registration numbers 752287 and 917043. To the extent that a trade mark is registered without limitations of the exclusive right of use as to colour, the trade mark is taken to be registered for all colours (s 70). Section 21 states that a registered trade mark "is personal property" and that equities in respect of it "may be enforced in the same way as equities in respect of any other personal property". It is important to note that a registered trade mark may be assigned or transmitted, with or without the associated goodwill and for all or some only of the goods or services for which it is registered (s 106). From the date of registration (s 20(3)), the registered owner is given by s 20(1) "the exclusive rights" (a) to use the trade mark and (b) to authorise others to do so, in relation to the goods or services in respect of which the trade mark is registered (emphasis added). Use by an authorised user is taken for the purposes of the Act to be a use by the owner (s 7(3)). The exclusive right of use in respect of the goods or services for which there is a registration is given effect and extended by the infringement provision in s 120. Under the chapeau "When is a registered trade mark infringed?", s 120 gives three distinct answers. The first appears in sub-s (1), the second in sub-s (2), and the third in sub-ss (3) and (4). Section 120, excluding the appended Notes, reads: "(1) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered. (2) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to: 104 The term "sign" includes any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent, or any combination thereof (s 6(1)). goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or services that are closely related to registered goods; or services of the same description as that of services (registered services) in respect of which the trade mark is registered; or goods that are closely related to registered services. However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion. (3) A person infringes a registered trade mark if: the trade mark is well known in Australia; and the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to: goods (unrelated goods) that are not of the same description as that of the goods in respect of which the trade mark is registered (registered goods) or are not closely related to services in respect of which the trade mark is registered (registered services); or services (unrelated services) that are not of the same description as that of the registered services or are not closely related to registered goods; and because the trade mark is well known, the sign would be likely to be taken as indicating a connection between the unrelated goods or services and the registered owner of the trade mark; and for that reason, the interests of the registered owner are likely to be adversely affected. In deciding, for the purposes of paragraph (3)(a), whether a trade mark is well known in Australia, one must take account of the extent to which the trade mark is known within the relevant sector of the public, whether as a result of the promotion of the trade mark or for any other reason." (emphasis in original) The remedies for infringement include an injunction and damages or an account of profits (s 126). An authorised user who brings an infringement action must join the registered owner as a defendant (s 26(2)). Regulations made under the Act may provide that a specified sign is not to be used as a trade mark or as part of a trade mark; but the regulations may not affect an already registered trade mark (s 18). A trade mark is subject to removal from the Register for non-use, as provided in Pt 9 (ss 92-105). In particular, s 92(4)(b) specifies a non-use period of three years ending one month before the filing of the application for removal. Part 8, Div 2 (ss 85-90) provides for rectification of the Register by curial order if a ground in s 87 or s 88 is made out. These grounds include the loss of distinctiveness after registration whereby the trade mark becomes the "generic" description or name of an article, substance or service (s 87) and the presence of circumstances at the time of the rectification application which made the use of the trade mark likely to deceive or cause confusion (s 88). Threshold propositions In oral submissions the Queensland Solicitor-General submitted, essentially with the support of the Commonwealth Solicitor-General, that, (i) absent some prohibitions elsewhere in the common law or in statute, there was at common law a freedom to use any word or device in association with the provision of goods or services, (ii) that common law freedom was not proprietary in nature, (iii) it was this common law freedom of traders, whether the plaintiffs or others, which the Packaging Act restricted, (iv) the "exclusive" rights of a registered owner identified in s 20(1) of the TMA, to use and to authorise use, were directed to the imposition in favour of the registered owner of a duty or obligation upon others, thereby restricting what otherwise was their freedom of use, (v) it was this right to exclude which constituted the personal property in a registered trade mark spoken of in s 21 of the TMA, (vi) the Packaging Act in no way impinged upon the rights of exclusion of others conferred by the TMA upon registered owners. These propositions may be accepted, but, as will appear105, are not decisive of the operation of s 51(xxxi) in the JTI Matter and the BAT Matter. It also is true, as another threshold proposition, that while the TMA facilitates the exploitation of registered trade marks in trade and commerce, trade mark registration systems ordinarily do not confer a liberty to use the trade mark, free from what may be restraints found in other statutes or in the general law. The point was made with respect to the Trade Marks Act 1955 (Cth) by Deane J in New South Wales Dairy Corp v Murray Goulburn Co-op Co Ltd106 where he referred to: "the availability of ordinary criminal or civil procedures to prevent dishonesty, fraud and passing-off and by the fact that registration of a trade mark does not ordinarily constitute a licence for what would otherwise be unlawful conduct: see, eg, Lyle and Kinahan Ltd's Application107; Van Zeller v Mason, Cattley & Co108; and note the narrowness of the trade mark exception in s 51(3)(c) of the Trade Practices Act 1974 (Cth)". In particular, the TMA does not immunise the use of a registered trade mark from the law of passing-off. Rather, s 230 makes special provision on the subject. The use of a registered trade mark may be enjoined at the suit of a third party who makes out a case of passing-off; however, damages may not be awarded if the defendant was unaware of the plaintiff's common law rights and had no reasonable means of finding this out when the defendant began its activity and this activity ceased immediately upon the defendant becoming so aware. But while all these threshold propositions should be accepted, they do not foreclose submissions that there has been a sufficient degeneration of property rights brought about by the Packaging Act to engage s 51(xxxi). Rather, the threshold propositions do not cover the relevant field of property rights. The rights given to registered trade mark owners to assign their marks with or without goodwill, to license authorised users, and to bring proceedings against other parties for infringement may be of great commercial value. So also the generation of goodwill derived from the distinctiveness of the registered trade mark which flows from its use. It will be necessary shortly to return to these matters109. 106 (1990) 171 CLR 363 at 396-397; [1990] HCA 60. See, further, Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 67 [45]; Shanahan's Australian Law of Trade Marks and Passing Off, 5th ed (2012) at 107 (1907) 24 RPC 249 at 262. 108 (1907) 25 RPC 37 at 41. The Copyright Act, the Designs Act and the Patents Act Much the same may be said of the other items of statutory intellectual property relied upon in the BAT Matter. Copyright is "personal property" which is transmissible by assignment as provided in the Copyright Act and by will and by devolution by operation of law (s 196)110. Section 31(1)(b) of the Copyright Act specifies that copyright in relation to an artistic work is the exclusive right "(i) to reproduce the work in a material form; (ii) to publish the work; (iii) to communicate the work to the public". The effect of s 13(2) is that exclusive right includes the authorisation of another to do the acts specified in s 31(1)(b). It is an infringement of the copyright in an artistic work, without the licence of the owner of the copyright, to do any of these acts in Australia or to authorise the doing of any of these acts in Australia (s 36(1)). The Designs Act confers upon the registered owner of a registered design the "exclusive right" during the term of the registration, among other things, to make a product which embodies the design and to use such a product in any way for the purposes of any trade or business, and to authorise any person to engage in those activities (s 10(1)). These exclusive rights are "personal property" which are capable of assignment and devolution by will and by operation of law (s 10(2)). It is an infringement of a registered design, without the licence or authority of the registered owner, to engage in any activity in respect of which exclusive rights are conferred by s 10 (s 71). There are provisions for compulsory licences (s 90) and the revocation of registration after grant of a compulsory licence (s 92). Section 13(1) of the Patents Act confers upon the patentee the "exclusive rights" to exploit the invention and to authorise that exploitation. These exclusive rights are "personal property" which are capable of assignment and of devolution by law (s 13(2)). The term "exploit" is defined as follows in Sched 1: "exploit, in relation to an invention, includes: (a) where the invention is a product – make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or 110 The phrase "devolution by operation of law" refers to the legal consequences flowing from an involuntary act such as intestacy, insolvency and bankruptcy: O'Brien v Komesaroff (1982) 150 CLR 310 at 320-321; [1982] HCA 33. (b) where the invention is a method or process – use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use." Chapter 11, Pt 1 (ss 117-123) makes detailed provisions for infringement. Chapter 12 (ss 133-140) provides for compulsory licences and revocation if the reasonable requirements of the public with respect to the invention are not satisfied. Conclusions respecting intellectual property legislation The upshot that (a) while the Commonwealth and supporting interveners are correct in their submissions that it would be wrong to approach the issues arising under s 51(xxxi) of the Constitution on the footing that registration under the TMA or the Designs Act, a grant under the Patents Act, or the subsistence of copyright, confers some unconstrained right to exploit those items of intellectual property or an immunity from the operation of regulatory laws, (b) that is not sufficient to dispose of the case presented for the application of s 51(xxxi). The Packaging Act The central provisions of the Packaging Act should now be indicated, with some reference thereafter to provisions thereof which deal with the intersection between that statute and the TMA and the Designs Act. Chapter 3, Pt 2, Div 1 (ss 31-36) of the Packaging Act creates a range of offences, with attached criminal and civil penalties. These offences include those for selling or supplying "tobacco products" in retail packaging which does not comply with a "tobacco product requirement" (s 31), purchasing such products other than for personal use (s 32), packaging such products for retail sale (s 33), manufacturing non-compliant retail packaging of tobacco products (s 34) and manufacturing tobacco products that are so packaged (s 35). Part 2, Div 2 (ss 37-39) creates offences with attached criminal and civil penalties for selling or supplying "tobacco products" which do not comply with a "tobacco product requirement" (s 37), purchasing such products other than for personal use (s 38), and manufacturing such products (s 39). While Pt 2 of Ch 3 fixes upon "a person", Pt 3 of Ch 3 fixes upon the activities of "constitutional corporations"111 but otherwise follows the scheme of the offences in Pt 2. 111 This term means a corporation to which s 51(xx) of the Constitution applies The term "tobacco product" is defined in s 4(1) so as to include processed tobacco and products of a non-therapeutic nature which are manufactured to be used for smoking, sucking, chewing or snuffing. It includes cigarettes. The expression "tobacco product requirement" is central to the formulation of the offences created by Ch 3. The definition of that expression in s 4(1) refers principally to requirements which are specified in Ch 2, Pt 2 (ss 18-29) or prescribed by the Packaging Regulations, which have been made under Ch 2, Pt 2. Accordingly, I now turn to Ch 2, Pt 2. Section 18(1)(a) requires the outer surfaces of retail packaging not to have any decorative ridges, embossing, bulges or other irregularities of shape or texture. This would, it may be accepted, deny the application of the BAT Design. Regulation 2.1.1 of the Packaging Regulations requires that a cigarette pack not contain an opening, other than a fliptop lid, that can be re-closed or re-sealed after the opening is first opened. This, it may be accepted, denies the exploitation of the BAT Patent by the patentee or any licensee, as well as by an infringer. No "trade mark" and no "mark" may appear anywhere on a "tobacco product" other than as permitted by the Packaging Regulations (s 26). The term "trade mark" is not defined and may be taken as including registered and common law trade marks. On the other hand, "mark" is defined in s 4(1) very widely so as to include "any line, letters, numbers, symbol, graphic or image". With respect to the appearance of trade marks upon retail packaging, the brand, business or company name for the tobacco products and any other trade mark permitted by the Packaging Regulations may appear, but otherwise no trade mark may appear (s 20(1), (3))112. No trade mark may appear on any wrapper (which must be plastic or otherwise transparent), other than as permitted by the Packaging Regulations (s 22). In the absence of other colour prescription by the Packaging Regulations, all outer and inner surfaces of the retail packaging of tobacco products, and both sides of any lining of a cigarette pack, must have a matt finish and be "drab dark brown", save for health warnings, requirements of other relevant legislation, and the brand, business or company name for the tobacco product (s 19). Section 42(b) of the TMA requires rejection of an application if the use of the trade mark "would be contrary to law"; but s 28(2) of the Packaging Act stipulates that for the purposes of s 42(b) of the TMA the Packaging Act does not render the use of a trade mark contrary to law. Further, s 28(3) of the Packaging Act provides that the operation of that statute does not make it reasonable or 112 Section 20(3)(b) permits the appearance of "the relevant legislative requirements"; that term is so defined in s 4(1) as to include, in particular, the requirements of the 2004 Regulations and the 2011 Regulations. appropriate not to register a trade mark, to impose conditions or limitations upon registration or to revoke its registration. Section 29 of the Packaging Act provides that failure to utilise a registered design as a result of complying with the Packaging Act does not provide a basis for a compulsory licence under s 90 of the Designs Act or for revocation under Section 15(2) of the Packaging Act is a distinct and important provision. It states that: "if, apart from this section, this Act would result in [an acquisition of property from a person otherwise than on just terms] because it would prevent the use of a trade mark or other sign on or in relation to the retail packaging of tobacco products, or on tobacco products, then despite any other provision of this Act, the trade mark or sign may be used on or in relation to the retail packaging of tobacco products, or on tobacco products, subject to any requirements that may be prescribed in the regulations for the purposes of this subsection." Section 15(3) confirms the continued operation of any tobacco product requirement that does not result in such an acquisition. The plaintiffs in the BAT Matter challenge the validity of s 15(2). It is undoubtedly accurate to say that the Parliament may not confer upon courts exercising federal jurisdiction a choice as to the content of the law to be applied in adjudicating a "matter", if the result of doing so is that the Parliament has not made a law supported by a head of legislative power113. But s 15(2) is not of that character. Section 15(2) is a severability provision of a specific application but of the same genus as that of which s 15A of the Acts Interpretation Act 1901 (Cth) is another member. To apply s 15(2) would not be to "read up" the Packaging Act in the impermissible manner discussed in Pape v Federal Commissioner of Taxation114. The issue on the demurrer and the questions reserved The issue then posed by the demurrer and the leading questions reserved, in effect, is whether the tobacco product requirements of the Packaging Act do not amount to an "acquisition" of the property of the plaintiffs so that s 15(2) is 113 Western Australia v The Commonwealth (1995) 183 CLR 373 at 486; [1995] HCA 47; Momcilovic v The Queen (2011) 85 ALJR 957 at 1013 [169]; 280 ALR 221 at 280; [2011] HCA 34. 114 (2009) 238 CLR 1 at 93-94 [248]-[251]; [2009] HCA 23. not engaged. This presents two questions. The first is whether there is a "taking" or "deprivation" of the property of the plaintiffs and, if so, the second question is whether the Packaging Act effects an "acquisition" of property otherwise than on just terms as proscribed by s 51(xxxi) of the Constitution. The distinction between the two questions appears from the pithy statement of Gibbs CJ, Wilson, Brennan, Deane and Dawson JJ115 to the effect that rights of property may be extinguished without being acquired. The submissions of the plaintiffs, in some instances directly, and in others with more subtlety, sought to displace or diminish the importance of that second question. That attempt was contrary to established authority in this Court. For the reasons which follow, there is sufficient impairment, at least of the statutory intellectual property of the plaintiffs, to amount to a "taking", but there is no acquisition of any property. The result is the plaintiffs' cases for invalidity fail. Section 51(xxxi) of the Constitution and statutory entitlements In Wurridjal v The Commonwealth116 Crennan J said of s 51(xxxi): "It can be significant that rights which are diminished by subsequent legislation are statutory entitlements. Where a right which has no existence apart from statute is one that, of its nature, is susceptible to modification, legislation which effects a modification of that right is not necessarily legislation with respect to an acquisition of property within the meaning of s 51(xxxi)117. It does not follow, however, that all rights which owe their existence to statute are ones which, of their nature, are susceptible to modification118, as the contingency of subsequent legislative 115 R v Ludeke; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 653; [1985] HCA 84. 116 (2009) 237 CLR 309 at 439-440 [363]-[364]; [2009] HCA 2. See also Attorney-General (NT) v Chaffey (2007) 231 CLR 651 at 664 [23]-[25]; [2007] HCA 34. 117 Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 305-306 per Mason CJ, Deane and Gaudron JJ; [1994] HCA 6; Health Insurance Commission v Peverill (1994) 179 CLR 226 at 237 per Mason CJ, Deane and Gaudron JJ; [1994] HCA 8. 118 The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 16-17 [16] per Brennan CJ; [1998] HCA 8. modification or extinguishment does not automatically remove a statutory right from the scope of s 51(xxxi)119. Putting to one side statutory rights which replace existing general law rights120, the extent to which a right created by statute may be modified by subsequent legislation without amounting to an acquisition of property under s 51(xxxi) must depend upon the nature of the right created by statute. It may be evident in the express terms of the statute that the right is subject to subsequent statutory variation121. It may be clear from the scope of the rights conferred by the statute that what appears to be a new impingement on the rights was in fact always a limitation inherent in those rights122. The statutory right may also be a part of a scheme of statutory entitlements which will inevitably require modification over time123." It should be accepted that while the registered trade marks owe their legal character to their registration under the TMA, rather than to the general law, it would be an error to proceed on the footing that because some valuable rights conferred by statute, such as fishing licences124 and petroleum exploration licences125, have been held to fall outside the constitutional criterion of "property", no right sourced in federal law may fall within it. Such licences as those just mentioned commonly are granted so as to lift a statutory prohibition imposed upon engagement in the activity in question and the grant is expressly made subject to the terms of the statutory regime as they stand from time to time. That is not the case with the various species of 119 Attorney-General (NT) v Chaffey (2007) 231 CLR 651 at 664 [23]-[25] per Gleeson CJ, Gummow, Hayne and Crennan JJ, approved in Telstra Corporation Ltd v The Commonwealth (2008) 234 CLR 210 at 232 [49] per Gleeson CJ, Gummow, Kirby, Hayne, Heydon, Crennan and Kiefel JJ; [2008] HCA 7. 120 Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 305-306 per Mason CJ, Deane and Gaudron JJ. 121 Attorney-General (NT) v Chaffey Commonwealth v WMC Resources Ltd (1998) 194 CLR 1. (2007) 231 CLR 651; see also The 122 Telstra Corporation Ltd v The Commonwealth (2008) 234 CLR 210. 123 Health Insurance Commission v Peverill (1994) 179 CLR 226. 124 Bienke v Minister for Primary Industries and Energy (1996) 63 FCR 567. 125 The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1. "intellectual property" within the description in s 51(xviii) of the Constitution, namely copyrights, patents of inventions and designs and trade marks. It is true that upon grounds specified in the relevant statutes patents and designs may be revoked and trade mark registrations may be expunged from the register. But even at general law, an estate or interest in land or other property may be defeasible upon the operation of a condition subsequent in the grant, without losing its proprietary nature. In the end, one cannot gainsay two statements by Windeyer J. The first, in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd126, is that "although the proposition may involve one's conception of the nature of property, it can hardly be said that a registered trade mark is not a species of property of the person whom the statute describes as its registered [owner], and which it permits him to assign" (emphasis added). The second, in Pacific Film Laboratories Pty Ltd v Federal Commissioner of Taxation127, is that the essential nature of copyright is "a negative right ... a power to prevent the making of a physical thing by copying" rather than "a right in an existing physical thing". Hence, copyright is "properly called an incorporeal right"128. Subsequently, in Australian Tape Manufacturers Association Ltd v The Commonwealth129, Dawson and Toohey JJ said there could be no doubt "that copyright constitutes property within the scope of s 51(xxxi)". The same may be said of patents and registered designs. It also should be accepted that at general law the goodwill attached to the business of the plaintiff by reason of the exploitation of trade marks and associated get-up answers the description of property. In Federal Commissioner of Taxation v Murry130 it was said in the joint reasons: "From the viewpoint of the proprietors of a business and subsequent purchasers, goodwill is an asset of the business131 because it is 126 (1968) 122 CLR 25 at 34; [1968] HCA 50. See also Attorney-General for NSW v Brewery Employes Union of NSW ("the Union Label Case") (1908) 6 CLR 469 at 512-513 per Griffith CJ; [1908] HCA 94; Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 68 [48] per curiam. 127 (1970) 121 CLR 154 at 167; [1970] HCA 36. 128 (1970) 121 CLR 154 at 169 per Windeyer J. 129 (1993) 176 CLR 480 at 527; [1993] HCA 10. 130 (1998) 193 CLR 605 at 615 [23]; [1998] HCA 42. See also Manitoba Fisheries Ltd v The Queen [1979] 1 SCR 101 at 107-108. 131 Bacchus Marsh Concentrated Milk Co Ltd (In liq) v Joseph Nathan & Co Ltd (1919) 26 CLR 410 at 438; [1919] HCA 18. the valuable right or privilege to use the other assets of the business as a business to produce income. It is the right or privilege to make use of all that constitutes 'the attractive force which brings in custom'[132]. Goodwill is correctly identified as property133, therefore, because it is the legal right or privilege to conduct a business in substantially the same manner and by substantially the same means that have attracted custom to it. It is a right or privilege that is inseparable from the conduct of the business134." And, as Windeyer J emphasised in Colbeam Palmer135 , protection of property is the foundation in equity of the passing-off action. Further, it is well established that such an action may protect the goodwill derived from slogans and visual images which build up an association with the business of the plaintiff136. However, it should be borne in mind that all these items of "property" are, as Higgins J put it137, "artificial products of society", not "physical objects" the boundaries of each class of which "are fixed by external nature"; more precisely, as Isaacs J emphasised with respect to trade marks, these are not affirmative rights like the property in goods and are not rights "in gross, or in the abstract"138. These considerations direct further attention to the identification of those rights which constitute the property in question in these cases. This is an essential first step in the identification of that of which there has been a 132 Inland Revenue Commissioners v Muller & Co's Margarine Ltd [1901] AC 217 133 Potter v Commissioners of Inland Revenue (1854) 10 Ex 147 at 159 [156 ER 392 at 396]; Muller [1901] AC 217 at 223; Bacchus Marsh Concentrated Milk (1919) 26 CLR 410 at 438; Bollinger v Costa Brava Wine Co Ltd [1960] Ch 262 at 275. 134 Smale v Graves (1850) 3 De G & Sm 706 [64 ER 670]; Wedderburn v Wedderburn (1856) 22 Beav 84 at 104 [52 ER 1039 at 1047]; Smith v Everett (1859) 27 Beav 446 [54 ER 175]; Robertson v Quiddington (1860) 28 Beav 529 [54 ER 469]; Hall v Barrows (1863) 4 De G J & S 150 [46 ER 873]; Muller [1901] AC 217 at 224; Federal Commissioner of Taxation v Just Jeans Pty Ltd (1987) 16 FCR 110. 135 (1968) 122 CLR 25 at 33-34. See also Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 499 [35]; [2000] HCA 14. 136 ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 366. 137 Union Label Case (1908) 6 CLR 469 at 611. 138 Henry Clay & Bock & Co Ltd v Eddy (1915) 19 CLR 641 at 655; [1915] HCA 33. deprivation or "taking". It is convenient first to say something respecting the position in the United States. The Fifth Amendment Reference was made in the submissions of various parties and interveners to decisions of the United States Supreme Court upon the "taking" clause of the Fifth Amendment. Both in this provision and in s 51(xxxi) the term "property" is used with respect to the group of rights inhering in ownership and, as the Supreme Court put it, not in any "vulgar and untechnical sense"139. In this Court, it has been emphasised that "to characterise something as a proprietary right ... is not to say that it has all the indicia of other things called proprietary rights" and that "the protection given to property rights varies with the nature of the right"140; this understanding of the general law has influenced the interpretation of s 51(xxxi). Perhaps it was with this similarity of approach in mind that in 1941 Dixon J said in Andrews v Howell141: "The source of s 51(xxxi) is to be found in the fifth amendment of the Constitution of the United States, which qualifies the power of the United States to expropriate property by requiring that it should be done on payment of fair compensation." However, it has been apparent for some time that with respect to "taking" and "acquisition" some important distinctions are to be observed between the United States and Australian Constitutions. As early as 1944, McTiernan J, after referring to several decisions of the United States Supreme Court, said that the differences between the two constitutional provisions "would suggest a need for caution in the application of the American decisions regarding the power of eminent domain and the safeguards upon its exercise"142. Nine distinctions were 139 United States v General Motors Corporation 323 US 373 at 377-378 (1945). 140 Zhu v Treasurer of New South Wales (2004) 218 CLR 530 at 577 [135] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ; [2004] HCA 56. 141 (1941) 65 CLR 255 at 282; [1941] HCA 20. Thereafter, in Grace Brothers Pty Ltd v The Commonwealth (1946) 72 CLR 269 at 290; [1946] HCA 11, Dixon J said that the phrase "on just terms" was "of course, reminiscent of the Fifth Amendment". 142 Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 295; [1944] HCA 4. drawn in Smith Kline & French Laboratories (Aust) Ltd v Department of Community Services and Health143. The Fifth Amendment, which also applies to the States by the medium of the Fourteenth Amendment guarantee against the deprivation of property without due process of law144, is expressed in the form of a negative145, appears with the due process clause, and speaks of private property being "taken" for "public use". On the other hand, s 51(xxxi) is directed to the Parliament and speaks of "acquisition" for any "purpose" in respect of which there is federal legislative power. "Acquisition" is a term which indicates, as Gibbs J put it in Trade Practices Commission v Tooth & Co Ltd146, "not every compulsory divesting of property is an acquisition within s 51(xxxi)". It should be emphasised that under the Fifth Amendment, even if just compensation be made, the "taking" must be for "public use", that is to say for "the public good, the public necessity or the public utility"147. In Kelo v City of New London148, the Supreme Court ruled that the federal judiciary should not make an independent judgment as to whether a taking of private property is for a "public use"; rather, the question is whether the government authority, federal, State or local, can make a rational argument that the taking resulted in a "public benefit". 143 (1990) 22 FCR 73 at 116-117. 144 PruneYard Shopping Center v Robins 447 US 74 at 82 (1980). Before the introduction of the Fourteenth Amendment, it had been decided by Marshall CJ, as a matter "not of much difficulty", that the Fifth Amendment was a constraint solely upon the Government of the United States: Barron v Baltimore 32 US 243 at 247 (1833); cf Durham Holdings Pty Ltd v New South Wales (2001) 205 CLR 399 at 410 [13]-[14]; [2001] HCA 7. 145 Thereby assuming there is an inherent or implied legislative power to take private property for public use: Worthing v Rowell and Muston Pty Ltd (1970) 123 CLR 89 at 99-100; [1970] HCA 19. 146 (1979) 142 CLR 397 at 408; [1979] HCA 47. 147 Rotunda and Nowak, Treatise on Constitutional Law, 4th ed (2007), vol 2, §15.13. 148 545 US 469 at 480-489 (2005). See also, with respect to the provision in the Constitution of Bermuda respecting freedom from "deprivation of property without compensation", in Grape Bay Ltd v the statements by Lord Hoffmann Attorney-General of Bermuda [2000] 1 WLR 574 at 585. The effect of the United States decisions is to accept that the "taking" clause may be engaged without what the decisions in this Court would classify as an "acquisition". However, the greater scope this gives to the Fifth Amendment has been tempered by a doctrine permitting "regulation" which does not amount to a "taking"149; "regulation" will amount to a "taking" if the regulatory actions in question are "functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his domain"150. Reference was made in several submissions to the characterisation of the Packaging Act as a law of "trade regulation" as determinative or at least indicative of the placement of the law outside the application of s 51(xxxi). However, to adopt this course would be to provide a false frame of reference. The caution given by Mason J in Trade Practices Commission v Tooth & Co Ltd151 should be borne in mind. His Honour there said: "It is one thing to say that a law which is merely regulatory and does not provide for the acquisition of title to property is not a law with respect to acquisition of property." in The Commonwealth v Tasmania (The Tasmanian Dam Case)152 also are relevant here: "In the United States, where the Fifth Amendment directed that private property should not be 'taken' without just compensation, the 'designed to bar Supreme Court construed the provision as one Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole': Armstrong v United States153. If this Court were to construe s 51(xxxi) so that its limitation applies to laws which regulate or restrict use and enjoyment of proprietary rights but which do not provide for the acquisition of such rights, it would be necessary to identify a touchstone for applying the limitation to some regulatory laws and not to others. The 149 Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 413-415 150 Lingle v Chevron USA Inc 544 US 528 at 539 (2005). 151 (1979) 142 CLR 397 at 428. 152 (1983) 158 CLR 1 at 247-248; [1983] HCA 21. 153 364 US 40 at 49 (1960). experience of the Supreme Court of the United States was frankly stated in Penn Central Transportation Co v New York City154: '... this Court, quite simply, has been unable to develop any "set formula" for determining when "justice and fairness" require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons.'" "In this Court, the limitation in par (xxxi) has not been thought hitherto to apply to a regulatory law that did not effect an acquisition of property. In Tooth's Case, the distinction between a law that provides for an acquisition of property and a law that does not was clearly drawn." His Honour then repeated the passage from the reasons of Mason J in Tooth which has been set out above. Also in the Tasmanian Dam Case155, Mason J, in a passage later approved by Dawson J156, said: "The emphasis in s 51(xxxi) is not on a 'taking' of private property but on the acquisition of property for purposes of the Commonwealth. To bring the constitutional provision into play it is not enough that legislation adversely affects or terminates a pre-existing right that an owner enjoys in relation to his property; there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be." (emphasis in original) Substance and degree – three leading decisions Whether the law in question sufficiently impairs the group of rights inhering in the property in question as to amount to an involuntary taking of that property, presents questions of substance and degree, rather than merely of form. That this is so is well settled by authority beginning at least with the reasons of Dixon J in Bank of New South Wales v The Commonwealth ("the Banking 154 438 US 104 at 124 (1978). 155 (1983) 158 CLR 1 at 145. 156 Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 315. Case")157. However, the consequence is that close attention is required to the terms in which the various cases applying that reasoning were decided. Expressions of conclusion in one case as to the deprivation of property, and, if so, the existence of an acquisition of property, do not necessarily provide a sufficient guide to the outcome in later disputes. In that regard something should be said respecting three cases upon the development of doctrine from which submissions in the present matters sought to draw support. They are Minister of State for the Army v Dalziel158, the Banking Case159 and the Tasmanian Dam Case160, with reference to the reasons of The respondent in Dalziel occupied, as a weekly tenant of Bank of New South Wales, vacant land in the Sydney central business district upon which he conducted a parking station. In pursuance of authority conferred by regulations made under the National Security Act 1939 (Cth) the Minister took possession of that land for defence use purposes as fully "as if" the Minister held an unencumbered fee simple, and for a period not to extend more than six months after war hostilities ceased. The Minister unsuccessfully submitted that Dalziel retained his weekly tenancy and the Bank its fee simple in the land, and that there had been no taking of any recognised estate or interest in the land, and therefore there had been no "acquisition"161. Latham CJ, although in dissent, did indicate that as applied to land the term "property" in s 51(xxxi) may mean both the physical subject matter in relation to which exist rights of ownership, including a range of uses, and those rights of ownership themselves162. 157 (1948) 76 CLR 1 at 349-350; [1948] HCA 7. See also Clunies-Ross v The Commonwealth (1984) 155 CLR 193 at 201-202; [1984] HCA 65. 158 (1944) 68 CLR 261. 159 (1948) 76 CLR 1. 160 (1983) 158 CLR 1. 161 (1944) 68 CLR 261 at 265. 162 (1944) 68 CLR 261 at 276. The present matters before the Court concern intellectual property which has no physical subject matter, unlike a parcel of land or a chattel163. However, although disavowed, some of the submissions by the plaintiffs and supporting interveners sought to objectify the intellectual property, particularly the registered trade marks, by attributing a character distinct from the bundle of rights given by the statutes in question. Perhaps to overcome this difficulty, counsel drew attention to the cardboard boxes upon the packaging of which the Packaging Act operates. Like a parcel of land, there might be postulated many uses of that physical subject matter, and thus a range of restraints or "regulation" of that subject matter. However, as counsel for Van Nelle correctly accepted, the only use to be postulated of the packaging was as a cigarette container. To focus upon the cardboard boxes as the subject of the proprietary rights of the plaintiffs would be to present a case both unreal and synthetic164. In Dalziel, Starke J said that, whilst what was conferred upon the Commonwealth was neither ownership nor any estate in the land, the right of temporary possession was to be classified "under the denomination of jura in re aliena [a right in the thing of another], and so a right of property, the subject of acquisition"165. On the other hand, Rich J concluded that "the Minister has seized and taken away from Dalziel everything that made his weekly tenancy worth having, and has left him with the empty husk of tenancy"166. Likewise, Williams J emphasised that the Commonwealth had divested Dalziel of that exclusive possession which was "of the very essence of the proprietary interest conferred [by his tenancy]"167. It is with an appreciation of the unsuccessful submission put by the Minister in Dalziel and of the somewhat divergent approaches in the reasoning of the Court in that case, that there should be read the synthesis attempted by Dixon J in the Banking Case168. In particular, the phrase "innominate and anomalous interests" used there may accommodate the classification by Starke J of the right to possession conferred upon the Commonwealth as jura in re aliena. 163 cf the passage in Truax v Corrigan 257 US 312 at 342 (1921) set out above at [47]. 164 cf British Medical Association v The Commonwealth (1949) 79 CLR 201 at 271 per 165 (1944) 68 CLR 261 at 290. 166 (1944) 68 CLR 261 at 286. 167 (1944) 68 CLR 261 at 305. 168 (1948) 76 CLR 1 at 349. "I take [Dalziel] to mean that s 51(xxxi) is not to be confined pedantically to the taking of title by the Commonwealth to some specific estate or interest in land recognized at law or in equity and to some specific form of property in a chattel or chose in action similarly recognized, but that it extends to innominate and anomalous interests and includes the assumption and indefinite continuance of exclusive possession and control for the purposes of the Commonwealth of any subject of property." (emphasis added) The provisions of Divs 2 and 3 of Pt IV of the Banking Act 1947 (Cth) were held by Dixon J effectively to deprive the private banks of the substance and reality of proprietorship of their assets and undertaking and the shareholders of the substance and reality of proprietorship of their shares, and to place this beneficial enjoyment and control in the hands of agents of the Commonwealth. What distinguished this conclusion from that in Dalziel was that it was reached not directly as in Dalziel, but indirectly by reference to the circuitous devices constituted by the interconnected plan which his Honour saw laid out in Divs 2 and 3 of Pt IV of the statute. The phrase "possession and control" was used by Dixon J to identify the substance of the property of which the banks and their shareholders had been stripped in favour of the Commonwealth169; it was not used to indicate that s 51(xxxi) was engaged by a "taking" which yielded no more than some measure of control of the use of that which had been taken. Yet that is how some of the submissions by the present plaintiffs assume the remarks of Dixon J are to be understood. It is, however, apparent that in the Tasmanian Dam Case170, Deane J considered that the absence of a material benefit to the Commonwealth of a proprietary nature, at least in that case, did not avoid the conclusion that there had been an acquisition of property for the purposes of the Commonwealth. His Honour went on to support that doctrinal conclusion on two grounds171. One ground was that because "property" in s 51(xxxi) includes the "innominate and anomalous interests" to which Dixon J had referred in the Banking Case172, there was no reason in principle why "a corresponding benefit under a legislative scheme cannot, in an appropriate case, be regarded as property". However, as indicated above, Dixon J used this expression with 169 (1948) 76 CLR 1 at 349. 170 (1983) 158 CLR 1 at 286. 171 (1983) 158 CLR 1 at 286-287. 172 Deane J had set out this passage earlier in his reasons: (1983) 158 CLR 1 reference to the rejection in Dalziel of the submission that what had to be taken was some specific estate or interest in land recognised at law or in equity, and in the Banking Case what had been taken from the banks and the shareholders and placed in the hands of the agents of the Commonwealth was the substance of proprietary interests. The other ground which Deane J advanced in the Tasmanian Dam Case was by way of analogy expressed as follows173: "The benefit of a restrictive covenant, which prohibits the doing of certain acts without consent and which ensures that the burdened land remains in a state which the person entitled to enforce the covenant desires to have preserved for purposes of his own, can constitute a valuable asset. It is incorporeal but it is, nonetheless, property." However, restrictive covenants are not imposed in gross but must "touch and concern", that is to say benefit or enhance the value of, the land of the covenantee174. There is a binary relationship between the two parcels of land, one bearing the burden and the other receiving the benefit175. The proposition that there need be no corresponding benefit of a proprietary nature which, with some hesitation, Deane J accepted in the Tasmanian Dam Case, was not adopted in that case by any other member of the Court. Other passages in his Honour's reasons176 have been referred to in later cases177, but in support of the proposition that to enliven s 51(xxxi) there must be the derivation of an identifiable and measurable advantage of a proprietary nature. Nevertheless, to varying degrees, the plaintiffs in the present cases and supporting interveners sought to rely upon what Deane J had said, at least as a means of supporting the sufficiency of an attenuated connection between the operation of the Packaging Act and the derivation of a benefit to the Commonwealth. But, as indicated above, that reasoning in the Tasmanian Dam Case was not soundly based. 173 (1983) 158 CLR 1 at 286-287. 174 Zetland (Marquess of) v Driver [1939] Ch 1 at 8-9. 175 Megarry and Wade, The Law of Real Property, 8th ed (2012) at [32-036]. 176 (1983) 158 CLR 1 at 282-283. 177 For example, in Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 634 n 374; [1997] HCA 38. Subsequent decisions A comparison between several decisions given after the Tasmanian Dam Case was drawn by Gaudron and Gummow JJ in a passage in Smith v ANL Ltd178. On the one hand, their Honours noted: [v Australian and Overseas in Newcrest Mining "The legislation which was invalid in its application to the plaintiff in Georgiadis Telecommunications Corporation179] denied his right to recover damages for non-economic loss and deprived him of his entitlement to full recovery of economic loss180, [even though it] did not extinguish the whole of the rights comprising his common law cause of action. The law which was successfully challenged (WA) Ltd v The Commonwealth181 did not terms extinguish Newcrest's mining tenements and the Kakadu National Park extended only 1,000 m beneath the surface. Nevertheless there was an effective sterilisation of the rights constituting the property in question, the mining tenements. On the surface and to the depth of 1,000 m, s 10(1A) of the National Parks and Wildlife Conservation Amendment Act 1987 (Cth) forbade the carrying out of operations for the recovery of minerals. As a legal and practical matter, the vesting in the Commonwealth of the minerals to that depth and the vesting of the surface and the balance of the relevant segments of the subterranean land in the Director of National Parks and Wildlife denied to Newcrest the exercise of its rights under the mining tenements." The passage in ANL continued: "On the other hand, the degree of impairment of the bundle of rights constituting the property in question may be insufficient to attract the operation of s 51(xxxi). For example, the prohibition imposed under the legislation upheld in Waterhouse v Minister for the Arts and Territories182 upon the export of the applicant's painting left him free to retain, enjoy, display or otherwise make use of the painting. He was free to sell, mortgage or otherwise turn the painting to his advantage, subject to 178 (2000) 204 CLR 493 at 505-506 [22]-[23]; [2000] HCA 58. 179 (1994) 179 CLR 297. 180 See the discussion of the plaintiff's case by Toohey J in Georgiadis (1994) 179 CLR 297 at 318. 181 (1997) 190 CLR 513 at 560, 561, 635, 638. 182 (1993) 43 FCR 175. the requirement of an export permit if the owner or any other person desired to take it out of Australia. The legislation considered in British Medical Association v The Commonwealth183, and held invalid on other grounds, today perhaps would be thought to be nearer the line of invalidity. In British Medical Association, Dixon J was of the opinion that there was no involuntary taking of property from chemists without just compensation. The chemists were legally free to supply pharmaceuticals or not, as they pleased, in a situation where, if a sale were made at other than a price fixed by the Commonwealth, there would be little or no other trade for them in that commodity." In Australian Tape Manufacturers Association Ltd v The Commonwealth184, the Court unanimously upheld the validity of a law which provided that copyright in a published sound recording was not infringed by the making on private premises of a copy of the recording on blank tape for the private and domestic use of the maker. This result was reached on the basis that, although the law reduced the content of the exclusive rights given to copyright owners, there was no "acquisition of property". As Dawson and Toohey JJ put it185, there was no acquisition of property by the conferral of a freedom generally to do something which previously constituted an infringement of the proprietary right of another. On the other hand, the defendant tortfeasor considered in Georgiadis was, pro tanto, relieved of liability. Further, the sterilisation of the mining tenements in Newcrest augmented the title of the Commonwealth and the Director to the land in question. These two cases illustrate the proposition that the modification or deprivation of the proprietary rights of one party may yield to another party a countervailing benefit or advantage of a proprietary nature. Conclusions as to "taking" As noted above, the TMA, like other trade mark legislation, does not confer on registered owners or authorised users a liberty to use registered trade marks free from restraints found in other statutes186. Nevertheless, the power of exclusion which is conferred by the TMA, the Patents Act, the Copyright Act and the Designs Act does carry with it the right to relax that exclusivity in favour of 183 (1949) 79 CLR 201. 184 (1993) 176 CLR 480. See also Smith v ANL Ltd (2000) 204 CLR 493 185 (1993) 176 CLR 480 at 527. licensees and assignees of the intellectual property in question, who on their part undertake obligations to the licensor or assignor. Those rights of the intellectual property owner may properly be regarded as proprietary in nature for the purposes of s 51(xxxi) of the Constitution. The rights mentioned in respect of registered trade marks are in substance, if not in form, denuded of their value and thus of their utility by the imposition of the regime under the Packaging Act. Section 28 of the Packaging Act goes to some lengths to preserve registrations against attack under the TMA by reason of non-use necessitated for compliance with the Packaging Act. Nevertheless, whilst the registration, like the weekly tenancy of Mr Dalziel, may remain, it is impaired in the manner just described. In Mattel Inc v 3894207 Canada Inc187 Binnie J said that registered trade marks operated "as a kind of shortcut to get consumers to where they want to go, and in that way perform a key function in a market economy". The system established by the Packaging Act is designed to give the opposite effect to trade mark use, namely by encouraging consumers to turn away from tobacco products even if that otherwise is where they would "want to go". This is achieved by the contraction of device trade marks to the bare brand name and the required appearance of brand names, including those separately registered as word marks, in small print against a background of unattractive colour. A licensee or assignee, at peril otherwise of contravening the offence provisions in Ch 3 of the Packaging Act, would be enabled to exercise a licence or enjoy the assignment only in this constrained manner. The result is that while the trade marks remain on the face of the register, their value and utility for assignment and licensing is very substantially impaired. The situation is even more drastic as regards the BAT Copyrights, the BAT Patent and the BAT Design at stake in the BAT Matter. Use of the artistic works on retail packaging of tobacco products is denied by the operation of s 20(3) of the Packaging Act. Use of the BAT Design would conflict with s 18(1) of the Packaging Act and exploitation of the BAT Patent would conflict with reg 2.1.1(2) of the Packaging Regulations. The circumstances just described are sufficient to render the operation of the Packaging Act a "taking" of these items of intellectual property. The situation respecting goodwill associated with the get-up of the packaging of tobacco products requires further consideration. This is because, unlike the statutory species of intellectual property just described, the common law restricts the exploitation of goodwill by its assignment. At common law the 187 [2006] 1 SCR 772 at 788. goodwill would be assignable only in conjunction with the goodwill of the business in respect of which the get-up was used188. The underlying reason for the common law taking this attitude to assignments of goodwill is the loss of distinctiveness leading to the likelihood of deception of consumers as to the origin of goods. This reasoning may also apply to licensing of common law marks189. It is unnecessary to pursue further the question of whether the rights adhering to common law goodwill do not extend to rights of assignment or licensing and thereby deny subject matter for any deprivation by the Packaging Act sufficient to engage s 51(xxxi). This is because, in any event, there has been no acquisition of any interests of a proprietary nature by the Commonwealth or any other party by reason of the regime established by the Packaging Act. Conclusions as to "acquisition" In the Tasmanian Dam Case190, Mason J said of the federal legislation there under challenge: "In terms of its potential for use, the property is sterilized, in much the same way as a park which is dedicated to public purposes or vested in trustees for public purposes, subject, of course, to such use or development as may attract the consent of the Minister. In this sense, the property is 'dedicated' or devoted to uses, ie, protection and conservation which, by virtue of Australia's adoption of the Convention and the legislation, have become purposes of the Commonwealth. However, what is important in the present context is that neither the Commonwealth nor anyone else acquires by virtue of the legislation a proprietary interest of any kind in the property. The power of the Minister to refuse consent under the section is merely a power of veto. He cannot positively 188 Lacteosote Ltd v Alberman [1927] 2 Ch 117 at 130; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 100-101, 144-145; [1984] HCA 64; ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 189 Bowden Wire Ltd v Bowden Brake Co Ltd (No 1) (1913) 30 RPC 580, Bowden Wire Ltd v Bowden Brake Co Ltd (1914) 31 RPC 385; Need v J H Coles Pty Ltd (1931) 46 CLR 470 at 479, 486-488; [1931] HCA 55; J H Coles Pty Ltd v Need (1933) 49 CLR 499 at 505-506; [1934] AC 82 at 89 (PC); Apand Pty Ltd v Kettle Chip Co Pty Ltd (1994) 52 FCR 474 at 484-486; New South Wales Dairy Corp v Murray Goulburn Co-op Co Ltd (1990) 171 CLR 363 at 422-423; Shanahan's Australian Law of Trade Marks and Passing Off, 5th ed (2012) at [80.1505]. 190 (1983) 158 CLR 1 at 145-146. See also at 181-182 per Murphy J. authorize the doing of acts on the property. As the State remains in all respects the owner the consent of the Minister does not overcome or override an absence of consent by the State in its capacity as owner." "Unless proprietary rights are acquired, par (xxxi) is immaterial to the validity of the impugned Commonwealth measures. Though the Act conferred a power upon the Minister to consent to the doing of acts which were otherwise prohibited on or in relation to land, that power was not a proprietary right." These statements exemplify the application of the established doctrine of the Court respecting s 51(xxxi). The objects of the Packaging Act stated in par (a) of s 3(1) include the improvement in public health by discouraging people from using tobacco products and from relapsing if they have stopped such use, and by reducing exposure to smoke from tobacco products. Parliament desires to contribute to achievement of those objects by regulating the retail packaging and appearance of tobacco products to reduce their appeal to consumers, increasing the effectiveness of health warnings thereon and reducing the ability of retail packaging to mislead consumers about the harmful effects of using tobacco products (s 3(2)). Another object stated in s 3(1) is the giving of effect to certain obligations upon Australia as a party to the WHO Framework Convention on Tobacco Control, done at Geneva on 21 May 2003192 ("the Convention"). JTI submits (i) there can be an "acquisition" within s 51(xxxi) which is not proprietary in nature and (ii) the pursuit of the legislative purposes in s 3 of the Packaging Act confers the requisite advantage upon the Commonwealth to satisfy the requirement of an "acquisition". Proposition (i) should be rejected as inconsistent with the authorities discussed above. As to (ii), pursuit of the legislative objectives stated in s 3 of the Packaging Act does not yield a benefit or advantage to the Commonwealth which is proprietary in nature. No doubt the implementation in municipal law of a treaty obligation of sufficient specificity193 may be a "purpose in respect of which the Parliament has 191 (1983) 158 CLR 1 at 248. See, further, ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 180 [84], 203 [153]; [2009] HCA 51. 192 [2005] Australian Treaty Series 7. 193 Victoria v The Commonwealth (1996) 187 CLR 416 at 486; [1996] HCA 56. power to may make laws" within the meaning of s 51(xxxi). However, the reasoning and outcome in the Tasmanian Dam Case indicates, as is apparent from the passage in the reasons of Mason J set out above, that the mere discharge by the Commonwealth of a treaty obligation itself is insufficient to provide an "acquisition" by the Commonwealth. JTI also points to the benefit to the Commonwealth in expected reduction in public expenditure on health care. But, as the Northern Territory correctly emphasised in its submissions, the realisation of such an expectation is conjectural. So also is any suggested enhancement of goodwill attached to the Quitline logo already appearing in the health warnings on the packaging of the plaintiffs' products. These outcomes would depend upon a complex interaction of regulatory, social and market forces comparable to that interaction considered and rejected as insufficient in Bienke v Minister for Primary Industries and Energy194. In its submissions Philip Morris contended that it was sufficient that there has been obtained no more than some identifiable benefit or advantage, which, while not of a proprietary character, is at least a benefit or advantage "relating to the ownership or use of property" (emphasis added). For this proposition Philip Morris relied upon the use of such words by Deane and Gaudron JJ in Mutual Pools & Staff Pty Ltd v The Commonwealth195. Philip Morris then submitted that the Packaging Act conferred such a benefit on the Commonwealth because the statutory regime "controlled" the exploitation of the trade marks on the packaging even though the Commonwealth itself did not exploit the trade marks; it was sufficient that the control related to the use of the trade marks. Counsel for the plaintiffs in the BAT Matter submitted to similar effect. However, as Hayne and Bell JJ explain in passages in their reasons with which I agree196, to characterise as "control" by "the Commonwealth" compliance with federal law which prescribes what can and cannot appear on the retail packaging of tobacco products diverts attention from a fundamental question presented by s 51(xxxi) of the Constitution. Compliance with the federal law does not create a relationship between "the Commonwealth" and the packaging which is proprietary in nature. Moreover, the major premise which Philip Morris sought to derive from the passage in the reasons of Deane and Gaudron JJ in Mutual Pools is not soundly based upon it. 194 (1996) 63 FCR 567 at 567-568. 195 (1994) 179 CLR 155 at 185; [1994] HCA 9. The passage in their Honours' reasons in Mutual Pools reads197: "Nonetheless, the fact remains that s 51(xxxi) is directed to 'acquisition' as distinct from deprivation. The extinguishment, modification or deprivation of rights in relation to property does not of itself constitute an acquisition of property198. For there to be an 'acquisition of property', there must be an obtaining of at least some identifiable benefit or advantage relating to the ownership or use of property. On the other hand, it is possible to envisage circumstances in which an extinguishment, modification or deprivation of the proprietary rights of one person would involve an acquisition of property by another by reason of some identifiable and measurable countervailing benefit or advantage accruing to that other person as a result199." Deane and Gaudron JJ were distinguishing two species of benefit, each sufficient for an "acquisition". The first would be exemplified by the acquisition of land by a resuming authority, where what was taken was received by the authority. The second would be exemplified by cases of a countervailing benefit or advantage of a proprietary nature. An example is the benefit or advantage to the obligee of an extinguished or modified chose in action, as in Georgiadis200 and ANL201. In the latter case, Gleeson CJ said that the combined legal effect of the two statutory provisions in question was that "the appellant's pre-existing common law right was modified; and a corresponding benefit was conferred on the respondent"202. 197 (1994) 179 CLR 155 at 185. 198 See British Medical Association v The Commonwealth (1949) 79 CLR 201 at 270-271 per Dixon J; the Tasmanian Dam Case (1983) 158 CLR 1 at 145-146 per Mason J, 181-182 per Murphy J, 247-248 per Brennan J, 283 per Deane J; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 528 per Dawson and Toohey JJ. It is relevant to note that the Privy Council has also, in the context of interpreting the Malaysian Constitution, drawn a distinction between deprivations and acquisitions: Government of Malaysia v Selangor Pilot Association [1978] AC 337 at 347-348. 199 See, generally, the Tasmanian Dam Case (1983) 158 CLR 1 at 283-284. 200 (1994) 179 CLR 297. 201 (2000) 204 CLR 493. 202 (2000) 204 CLR 493 at 500 [7]. That is the sense in which the passage in the reasons of Deane and Gaudron JJ in Mutual Pools was understood by French CJ, Gummow and Crennan JJ in ICM Agriculture Pty Ltd v The Commonwealth203. The outcome In oral submissions the Commonwealth placed at the forefront of its arguments first that no "property" had been "taken" and, secondly, that in any event there had been no "acquisition" of "property". The upshot is that the Commonwealth should succeed on the second of these grounds. That makes it unnecessary to rule upon two further and related submissions by the Commonwealth. The first is that there is no contextual, structural or historical reason to treat every transfer of property as an acquisition to which s 51(xxxi) applies where the transfer is "incidental to regulation in the public interest". The second proposition is that s 51(xxxi) has no operation where the acquisition of property without compensation "is no more than a necessary consequence or incident of a restriction on a commercial trading activity ... reasonably necessary to prevent or reduce harm caused by that trading activity to members of the public or public health". These submissions bring to mind remarks by Brandeis J in his dissenting reasons in Pennsylvania Coal Company v Mahon204: "Every restriction upon the use of property imposed in the exercise of the police power deprives the owner of some right theretofore enjoyed, and is, in that sense, an abridgment by the State of rights in property without making compensation. But restriction imposed to protect the public health, safety or morals from dangers threatened is not a taking." It is sufficient for present purposes to say that propositions of the width of those put by the Commonwealth have not so far been endorsed by decisions of this Court and that whether such propositions should be accepted would require most careful consideration on an appropriate occasion. 203 (2009) 240 CLR 140 at 179-180 [82]-[84]. 204 260 US 393 at 417 (1922). See also as to this aspect of the "police power" what was said for the Court by Brennan J in Andrus v Allard 444 US 51 at 67-68 (1979) and the differing views expressed respectively by Stevens J (for the majority) and Rehnquist CJ (for the minority) in Keystone Bituminous Coal Association v DeBenedictis 480 US 470 at 485-493, 512-513 (1987). Orders The demurrer by JTI to the defence by the Commonwealth should be overruled. There should be judgment in the action for the Commonwealth. JTI should pay the costs of the Commonwealth of this action, including the demurrer. On the questions reserved in the BAT Matter205, Questions (1) and (2) should be answered "No"; Qu (3) should be answered "Does not arise"; Qu (4) should be answered "No"; Qu (5) deals with costs and should be answered "By the plaintiffs". 161 HAYNE AND BELL JJ. The facts and circumstances which give rise to these two proceedings and the relevant provisions of the Tobacco Plain Packaging Act 2011 (Cth) ("the TPP Act") are set out in the reasons of other members of the Court and need not be repeated. We agree that orders should be made in these matters in the form proposed by Gummow J. It is as well to identify the central elements of the case advanced by the plaintiffs and other tobacco companies that intervened in the proceedings and the principles that must be applied. When that is done, it is evident that the determinative question is shortly stated and readily answered. The TPP Act seeks to reduce the sales of tobacco products. It prohibits the use of the intellectual property (copyright, designs, patents and trade marks) that the tobacco companies would otherwise use to help sell their products. The tobacco companies say that, if the TPP Act operates according to its terms, it will reduce their sales and that their businesses will therefore be less valuable. They also say that the TPP Act will adversely affect the value of their intellectual property, which could have been turned to account by assignment or licence. Doing so after the TPP Act comes into force will bring, if anything, a very greatly reduced price. The tobacco companies' central complaint in these proceedings is that the TPP Act prohibits them from using their intellectual property in or on their retail packaging in the way in which they have used it, and would wish to continue to use it, to promote the sale of their products. They say that it follows that the TPP Act will take their property. On the face of it, that proposition seems hard to deny, but its accuracy need not be examined. It need not be examined because the relevant constitutional question is whether there has been an acquisition of property, not whether there has been a taking. Even assuming that the TPP Act effects a "taking", these reasons will show that there is no acquisition. Fundamental principles As was most recently pointed out in Wurridjal v The Commonwealth206, the relationship between constitutional provisions which forbid or restrain some legislative course and others which appear to permit that course without restraint is a subject of importance beyond s 51(xxxi)207. It is important to recognise that 206 (2009) 237 CLR 309 at 384 [176]; [2009] HCA 2. 207 See, for example, Bourke v State Bank of New South Wales (1990) 170 CLR 276 at 285; [1990] HCA 29 with respect to s 51(xiii); New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 127 [219]-[220]; [2006] HCA 52. the principles associated with s 51(xxxi) give particular effect to wider considerations. Hence, as Dixon CJ said in Attorney-General (Cth) v Schmidt208: "The decisions of this Court show that if par (xxxi) had been absent from the Constitution many of the paragraphs of s 51, either alone or with the aid of par (xxxix), would have been interpreted as extending to legislation for the acquisition of land or other property for use in carrying out or giving effect to legislation enacted under such powers. The same decisions, however, show that in the presence in s 51 of par (xxxi) those paragraphs should not be so interpreted but should be read as depending for the acquisition of property for such a purpose upon the legislative power conferred by par (xxxi) subject, as it is, to the condition that the acquisition must be on just terms. ... [W]hen you have, as you do in par (xxxi), an express power, subject to a safeguard, restriction or qualification, to legislate on a particular subject or to a particular effect, it is in accordance with the soundest principles of interpretation to treat that as inconsistent with any construction of other powers conferred in the context which would mean that they included the same subject or produced the same effect and so authorized the same kind of legislation but without the safeguard, restriction or qualification." (emphasis added) Of course, the caveat entered209 by Dixon CJ is important: "it is necessary to take care against an application of this doctrine to the various powers contained in s 51 in a too sweeping and undiscriminating way". But the present cases do not depend upon any refinement to the general proposition that was identified in Schmidt. Rather, they turn upon the observation that the relevant constitutional inquiry is whether the impugned law is a law with respect to the acquisition of property from any person. To adopt the metaphor of abstraction210 often used in connection with s 51(xxxi), it is a legislative power with respect to the acquisition of property which is abstracted from other heads of legislative power. Section 51(xxxi) does not abstract any more widely or differently expressed power. In particular, to persist with the metaphor, there is no abstraction of legislative power the exercise of which can be said to have some deleterious effect on the worth of a business, or to "take" or "extinguish" the property of some person, unless there is an 208 (1961) 105 CLR 361 at 371-372; [1961] HCA 21. 209 (1961) 105 CLR 361 at 372. 210 See, for example, Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 445 per Aickin J; [1979] HCA 47; see also Wurridjal v The Commonwealth (2009) 237 CLR 309 at 387 [186]. "acquisition" of property. It is for this reason that it has been said211 that s 51(xxxi) does not give protection to "the general commercial and economic position occupied by traders". Given the centrality of the concept of "acquisition" to the operation of s 51(xxxi) and to the disposition of the present matters, it is useful to repeat some fundamental propositions about this head of power. It is well established that s 51(xxxi) is concerned with matters of substance rather than form and that "acquisition" and "property" are to be construed liberally212. It is equally well established213 that "acquisition" is to be understood as a "compound" conception, namely "acquisition-on-just-terms". But allowing, as one must, ample meaning to "acquisition" and "property" in s 51(xxxi), there remains a bedrock principle. There can be no acquisition of property without "the Commonwealth or another acquir[ing] an interest in property, however slight or insubstantial it may be"214. Giving a liberal construction to "acquisition" and "property" does not, and must not, erode the bedrock established by the text of s 51(xxxi): there must be an acquisition of property. The arguments advanced by the tobacco companies sought to depart from this bedrock principle and to justify the departure as no more than adherence to "liberal" construction. In particular, they submitted that decisions and statements 211 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 270 per Dixon J; [1949] HCA 44. 212 Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 276 per Latham CJ, 284-286 per Rich J; [1944] HCA 4; Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349-350 per Dixon J; [1948] HCA 7; Attorney-General (Cth) v Schmidt (1961) 105 CLR 361 at 370-372 per Dixon CJ; Clunies-Ross v The Commonwealth (1984) 155 CLR 193 at 201-202 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ; [1984] HCA 65; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 303-305 per Mason CJ, Deane and Gaudron JJ; [1994] HCA 6; The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 49 [128] per McHugh J; [1998] HCA 8; Telstra Corporation Ltd v The Commonwealth (2008) 234 CLR 210 at 230 [43] per Gleeson CJ, Gummow, Kirby, Hayne, Heydon, Crennan and Kiefel JJ; [2008] HCA 7. 213 See, for example, Grace Brothers Pty Ltd v The Commonwealth (1946) 72 CLR 269 at 290 per Dixon J; [1946] HCA 11. 214 The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 145 per Mason J; [1983] HCA 21. of this Court had extended or overtaken the principle. They said that there need be no acquisition of "property", or of a benefit or advantage of a proprietary nature, to engage s 51(xxxi). But that submission must run aground on the bedrock that has been identified. A liberal construction of s 51(xxxi) cannot set the provision free from its text or the principle that the text establishes. A liberal construction cannot and does not go as far as the tobacco companies asserted, which would treat any benefit or advantage as a sufficient definition of the constitutional reference to "property". Something more must be said about the decisions to which the tobacco companies referred in support of their arguments. Particular emphasis was given to statements made in The Commonwealth v Tasmania (The Tasmanian Dam Case)215 and Mutual Pools & Staff Pty Ltd v The Commonwealth216. In The Tasmanian Dam Case Deane J made two statements of present relevance. First, he said217 that where the Commonwealth or another obtains "an identifiable and measurable advantage ... it is possible that an acquisition for the purposes of s 51(xxxi) is involved". Second, he decided218, albeit with some hesitation, that the absence of a material benefit of a proprietary nature did not conclude whether there had been an acquisition of property in that case. The latter opinion was a dissenting view. It is a proposition that has not since been adopted or applied. The proposition does not accord with the constitutional text or with accepted principle. It should not be adopted. And having regard to what has been earlier identified as the bedrock for consideration of s 51(xxxi), the reference made by Deane J to "an identifiable and measurable advantage" must be understood as an advantage of a proprietary nature. Likewise, the observations made219 by Deane and Gaudron JJ in Mutual Pools, that a person must obtain "at least some identifiable benefit or advantage relating to the ownership or use of property" (emphasis added) and that there must be "some identifiable and measurable countervailing benefit or advantage", must be understood in the same way. None of these statements from either case sweeps away the requirement that there be an acquisition of property. 215 (1983) 158 CLR 1. 216 (1994) 179 CLR 155; [1994] HCA 9. 217 (1983) 158 CLR 1 at 283. 218 (1993) 158 CLR 1 at 286-287. 219 (1994) 179 CLR 155 at 185. Cases like Minister of State for the Army v Dalziel220, and those which have followed, show that in considering whether there has been an acquisition of property within s 51(xxxi) the focus of attention must fall upon identification of a legal interest in, or legal relation with, some subject matter. In Dalziel the impugned provisions gave the Commonwealth possession of land to the exclusion of a weekly tenant. In Bank of NSW v The Commonwealth221 the impugned provisions gave the Commonwealth control of a banking company to the exclusion of its shareholders by giving the Commonwealth control over the In Georgiadis v Australian and Overseas bank's board of directors. Telecommunications Corporation222 a right of action (a property right) was taken away and, as a result, the party otherwise liable to action obtained a defence to the claim akin to a release from liability. In Newcrest Mining (WA) Ltd v The Commonwealth223 a right the Commonwealth was extinguished and, as a result, the Commonwealth's interest in the land was freed from the previously existing right to mine. to mine minerals from land vested It may not be possible, and it is certainly not appropriate, to attempt to chart the boundaries of what is meant in s 51(xxxi) by "property". It is important, however, to notice that it has long been recognised224 that "property" is used sometimes to indicate the tangible or intangible object to which legal rights or privileges relate, and sometimes to denote the legal interest, or aggregate of legal relations, pertaining to that object. The way in which the tobacco companies formulated their arguments – by focusing upon what was said to be the "use" or "control" of retail packaging by the Commonwealth to convey its health messages – directs attention to whether the Commonwealth, by reason of the TPP Act, acquires any legal interest in or legal relation with the packaging that is an interest or relation the law would label as "property". 220 (1944) 68 CLR 261. 221 (1948) 76 CLR 1. 222 (1994) 179 CLR 297. 223 (1997) 190 CLR 513; [1997] HCA 38. 224 Hohfeld, "Some Fundamental Legal Conceptions as Applied in Judicial Reasoning", (1913) 23 Yale Law Journal 16 at 21-22; see also Yanner v Eaton (1999) 201 CLR 351 at 365-366 [17]-[18], 388-389 [85]-[86]; [1999] HCA 53. The tobacco companies' arguments The tobacco companies expressed their arguments in several different ways. The largest submission was that s 51(xxxi) could be, and here was, engaged even though no "property" was acquired. JT International SA expressly adopted this position, submitting that the achievement of any or all of the evident purposes of the TPP Act (reducing expenditure on health care, improving the effectiveness of health warnings, and meeting international obligations) was sufficient to engage s 51(xxxi). The submissions of the other tobacco companies may well be understood as embracing this argument. For the fundamental reasons already given, the argument must be rejected. All the tobacco companies further submitted, however, that the benefit or advantage that the Commonwealth obtains from the tobacco companies' compliance with the TPP Act falls within what this Court's decisions recognise to be "property" for the purposes of s 51(xxxi). All these arguments sought to assert, in one way or another, that the TPP Act takes the tobacco companies' intellectual property and gives the Commonwealth an "identifiable and measurable countervailing benefit or advantage". The "benefit or advantage" was described in various ways: "use" or "control" of the (surface of) tobacco packaging; free advertising space; "control" over what appears on retail packaging and thus "control" over the "exploitation" of that packaging; the removal from packaging of what the Commonwealth wanted removed and its replacement by what the Commonwealth wanted put there. Though variously expressed, the different formulations had common ground. They identified the object in which the Commonwealth was said to have property as the physical packaging in which the tobacco companies sell their products, and each form of the submissions hinged on the notions of "the Commonwealth" obtaining the "use" of, or "control" over, that packaging. These submissions must be considered against the fundamental principles explained earlier. Does the Commonwealth obtain a benefit or advantage that is proprietary in nature? Does the Commonwealth acquire "property" in the packaging? The tobacco companies' submissions direct attention to the relationship between the Commonwealth, as the putative acquirer, and the object, in these cases the tangible object, in which it is said that the Commonwealth has obtained a proprietary interest. It is therefore necessary to examine in more detail how it was said that the Commonwealth gained the "use" of, or "control" over, the packaging in which tobacco products are sold. Though variously expressed, the tobacco companies submitted that the TPP Act gives the Commonwealth the use of, or control over, tobacco packaging because the Commonwealth or the TPP Act (the submissions did not clearly identify which) required certain things to be done or not done on the packaging. But the requirements of the TPP Act are no different in kind from any legislation that requires labels that warn against the use or misuse of a product, or tell the reader who to call or what to do if there has been a dangerous use of a product. Legislation that requires warning labels to be placed on products, even warning labels as extensive as those required by the TPP Act, effects no acquisition of property. When the seller or the maker of a product puts a warning on the packaging, the seller or maker cannot "exploit" that part of the packaging by putting something else where the warning appears. And as the tobacco companies pointed out, the TPP Act greatly restricts, even eliminates, their ability to use their packaging as they would wish. In the terms the tobacco companies used, they cannot exploit their packaging. But contrary to the central proposition that underpinned these arguments, no-one other than the tobacco company that is making or selling the product obtains any use of or control over the packaging. The tobacco companies use the packaging to sell the product; they own the packaging; they decide what the packaging will look like. Of course their choice about appearance is determined by the need to obey the law. But no-one other than the tobacco company makes the decision to sell and to sell in accordance with law. By prescribing what can and cannot appear on retail packaging the TPP Act affects that packaging and those who produce and sell the tobacco products. But to characterise this effect as "control" diverts attention from the fundamental question: does the TPP Act give the Commonwealth a legal interest in the packaging or create a legal relation between the Commonwealth and the packaging that the law describes as "property"? Compliance with the TPP Act creates no proprietary interest. The submissions about "use" of, or "control" over, retail packaging to disseminate or promote the Commonwealth's health "message" recognised that what will appear on retail packaging of tobacco products will convey information (a "message") to those who see the packaging. But the submissions then assumed (wrongly) that the author or sponsor of that "message" can be personified as "the Commonwealth". It cannot. Like "the Crown"225, "the Commonwealth" is a term that can be used in different senses. It is greatly to be doubted that the tobacco companies sought to 225 Sue v Hill (1999) 199 CLR 462 at 497-503 [83]-[94]; [1999] HCA 30. use the term as a reference to the body politic. If they did, it was not, and could not be, suggested that the TPP Act led to any enhancement to the property of the body politic of the kind that occurs, for example, when a right to mine minerals from land vested in the Commonwealth is extinguished226. In oral argument, the British American Tobacco plaintiffs submitted that it was the Executive Government of the Commonwealth that obtains a benefit or advantage because the TPP Act provides227 power to make regulations prescribing additional requirements in relation to retail packaging. And more generally, it may be that the tobacco companies' submissions about the Commonwealth obtaining the use of, or control over, retail packaging were to be understood as using "the Commonwealth" to refer to "the Government" in the sense of "the executive as distinct from the legislative branch of government, represented by the Ministry and the administrative bureaucracy which attends to its business"228. But neither the more particular submission of the British American Tobacco plaintiffs nor any more general submission that the TPP Act confers a benefit or advantage on the Commonwealth can be accepted. the Executive Government of Whatever the sense in which the tobacco companies intended to use the term, "the Commonwealth" has no message which is conveyed by whatever appears on retail packaging that conforms to the requirements of the TPP Act. The packaging takes the form and bears the information required by the TPP Act. It is the legislation which requires that to be so. The TPP Act neither permits nor requires the Commonwealth to use the The Commonwealth makes no public packaging as advertising space. announcement promoting or advertising anything. The packaging will convey messages to those who see it warning against using, or continuing to use, the product contained within the packaging. Statutory requirements for warning labels on goods will presumably always be intended to achieve some benefit: usually the avoidance of or reduction in harm. But the benefit or advantage that results from the tobacco companies complying with the TPP Act is not proprietary. The Commonwealth acquires no property as a result of their compliance with the TPP Act. 226 Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513. See also The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1. 228 Sue v Hill (1999) 199 CLR 462 at 499 [87]. Conclusion The TPP Act is not a law by which the Commonwealth acquires any "interest in property, however slight or insubstantial it may be"229. The TPP Act is not a law with respect to the acquisition of property. It is therefore not necessary to consider the Commonwealth's attempt to articulate a principle which would set legislation effecting an acquisition of property otherwise than on just terms beyond the reach of s 51(xxxi) on the ground that the legislation is a reasonable regulation of some activity for the greater good of society. The arguments advanced by the tobacco companies are answered by the logically anterior conclusion that the TPP Act effects no acquisition of property. One further point should be made. It is unsurprising that much of the argument in the present cases, as in other recent cases about s 51(xxxi), proceeded by taking statements made in earlier decisions and fusing them into a proposition from which it was said to follow that there was or was not an acquisition of property without just terms. It must be emphasised, however, that it would be wrong to take what has been said in earlier decisions, or in these reasons, and divorce the statement from the context in which it appears. Above all, it must be recognised that it is the constitutional text and the cardinal principles that emerge from that text to which attention must always be given. the that the present cases, tobacco companies argued the Commonwealth acquired the use of, or control over, the retail packaging in which tobacco will be sold to convey health messages. Framing the argument in that way necessarily drew attention to an understanding of property that places in the foreground the identification of the interest in the tangible or intangible object in question and the legal relation which should be described as "property" between that object and the person alleged to have acquired "property". Other cases, perhaps many other cases, may require the same kind of analysis. But there may be cases in which an analysis of that kind will not be helpful. It is the constitutional text and the fundamental principles based on that text which must guide consideration of the issue. 229 The Tasmanian Dam Case (1983) 158 CLR 1 at 145 per Mason J. 192 HEYDON J. There is no doubt that a law which affects subsisting exclusive intellectual property rights can attract s 51(xxxi) of the Constitution230. The issue is whether the laws impugned in these proceedings affect rights of that kind in a manner which does attract s 51(xxxi)231. The rights in question are intellectual property rights and rights over chattels, namely cigarette packets and cigarettes. The rights are owned by certain tobacco companies ("the proprietors"). In approaching s 51(xxxi) it is necessary to remember three matters. One is its extreme importance232. Another is the width with which it is to be construed233. The third is the importance of preventing an "effective deprivation … of the reality of proprietorship" evading s 51(xxxi) by a "circuitous device to acquire indirectly the substance of a proprietary interest without at once providing … just terms"234. The question to be applied to the impugned legislation can be put thus235: "None of the provisions … is expressed in direct language as effecting an acquisition of any property. However, the question is whether, even if not formally, the [proprietors] effectively have been deprived of 'the reality of proprietorship' by the indirect acquisition, through the collective operation of the [impugned provisions], of 'the substance of a proprietary interest'." 230 Attorney-General (NT) v Chaffey (2007) 231 CLR 651 at 664 [24]; [2007] HCA 231 The background to these proceedings and the text of the relevant legislation is set out in other judgments. There are three impugned laws. One is the Tobacco Plain Packaging Act 2011 (Cth) ("the TPP Act"). The second is the Tobacco Plain Packaging Regulations 2011 (Cth) ("the Regulations"). The third is the Competition and Consumer (Tobacco) Information Standard 2011 ("the Standard"). 232 ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 207-212 [175]-[184]; [2009] HCA 51. 233 ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 212-217 234 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349 per Dixon J; [1948] HCA 7. See also Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 407 per Gibbs CJ; [1979] HCA 47; The Commonwealth v Tasmania ('Tasmanian Dam Case') (1983) 158 CLR 1 at 283 per Deane J; [1983] HCA 21. 235 Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 633 per Gummow J; [1997] HCA 38. In view of the enormous amounts of money which would probably be needed to provide just terms, the possibility of evasion in relation to the impugned legislation cannot be ruled out. The structure of that legislation is very strongly motivated by an altruistic desire to improve public health – or rather the health of Australian residents, as distinct from foreigners, for the legislation sees it as satisfactory to let exporters purvey lies and death to them. But improving (local) public health is not the fundamental concern of the impugned legislation. Its fundamental concern is to avoid paying money to those who will be damaged if that desire to improve (local) public health is gratified in the manner which the legislation envisages. Section 15(1) of the TPP Act provides: "This Act does not apply to the extent (if any) that its operation would result in an acquisition of property from a person otherwise than on just terms." There is no provision for just terms in the TPP Act. Thus, faced with a choice between protecting local public health at the price of compensating the proprietors and not protecting local public health at all, the legislature chose the latter course. Acquisition: some authorities In Smith v ANL Ltd, Callinan J argued, not implausibly, that the distinctions between interfering with rights and acquiring rights, and between taking rights and acquiring rights, were not of significance236. The decision of the present cases does not require a journey of that distance. In the Tasmanian Dam Case, Deane J stated that an acquisition for s 51(xxxi) purposes could arise where the effect of a legislative prohibition or regulation "is to confer upon the Commonwealth or another an identifiable and measurable advantage or is akin to applying the property, either totally or partially, for a purpose of the Commonwealth"237. (emphasis added) Earlier, Deane J had quoted238 Dixon J's statement in Bank of NSW v The Commonwealth that s 51 (xxxi)239: 236 (2000) 204 CLR 493 at 546 [166]-[167]; [2000] HCA 58. See also Commonwealth v Western Australia (1999) 196 CLR 392 at 488 [283] per Callinan J; [1999] HCA 237 Tasmanian Dam Case (1983) 158 CLR 1 at 283. 238 Tasmanian Dam Case (1983) 158 CLR 1 at 282-283. 239 (1948) 76 CLR 1 at 349. "is not to be confined pedantically to the taking of title … to some specific estate or interest in land recognized at law or in equity … but … extends to innominate and anomalous interests and includes the assumption and indefinite continuance of exclusive possession and control for the purposes of the Commonwealth of any subject of property." (emphasis added) Deane J also stated that Dixon J had been "at pains to emphasize that the Constitution did not permit the Parliament to achieve by indirect or devious means what s 51 did not allow to be done directly."240 His Honour gave a key example241: "if the Parliament were to make a law prohibiting any presence upon land within a radius of 1 kilometre of any point on the boundary of a particular defence establishment and thereby obtain the benefit of a buffer zone, there would … be an effective confiscation or acquisition of the benefit of use of the land in its unoccupied state notwithstanding that neither the owner nor the Commonwealth possessed any right to go upon or actively to use the land affected." In due course, Deane J reached the following conclusion242: "the Commonwealth has, under Commonwealth Act and Regulations, obtained the benefit of a prohibition, which the Commonwealth alone can lift, of the doing of the specified acts upon the H.E.C. land. The range of the prohibited acts is such that the practical effect of the benefit obtained by the Commonwealth is that the Commonwealth can ensure, by proceedings for penalties and injunctive relief if necessary, that the land remains in the condition which the Commonwealth, for its own purposes, desires to have conserved. In these circumstances, the obtaining by the Commonwealth of the benefit acquired under the Regulations is properly to be seen as a purported acquisition of property for a purpose in respect of which the Parliament has power to make laws. The 'property' purportedly acquired consists of the benefit of the prohibition of the exercise of the rights of use and development of the land which would be involved in the doing of any of the specified acts." (emphasis added) 240 Tasmanian Dam Case (1983) 158 CLR 1 at 283, referring to Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 350. 241 (1983) 158 CLR 1 at 283-284. 242 Tasmanian Dam Case (1983) 158 CLR 1 at 287. Deane J's reasoning in the Tasmanian Dam Case does not stand alone. Parts of it have been quoted with approval243. Parts of it have been referred to with approval244. And parts of it have also been approved without specific acknowledgment. Thus in Smith v ANL Ltd245, Callinan J referred to Mason J's statement in the Tasmanian Dam Case that s 51(xxxi) depends on "an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be."246 Callinan J described this as "the narrow view"247. Mason J had quoted and adopted a passage from Dixon J's reasoning in Bank of NSW v The Commonwealth248. Callinan J said249: "I do not myself discern in that passage from the judgment of Dixon J any express, or indeed implied, support for the narrow view which Mason J took of the provision in the Tasmanian Dam Case, or, for the attachment of any great significance to any distinction between a taking or an acquisition, whether perceived or actual." His Honour also said250: "in my respectful opinion, in the Tasmanian Dam Case, it is easy to see that the Commonwealth really did acquire something, and that was a thing 243 Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 315-316 per Dawson J (in relation to "effective acquisition"); [1994] HCA 6; Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 96 [246] per Kirby J; [1998] HCA 8; The Commonwealth v Western Australia (1999) 196 CLR 392 at 488-489 [283] per Callinan J; Airservices Australia v Canadian Airlines (1999) 202 CLR 133 at 245 [326] per McHugh J; [1999] HCA 62; ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 232 [225]. 244 Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 634 n 374 per Gummow J; The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 35 [77] n 123 per Gaudron J; Smith v ANL Ltd (2000) 204 CLR 493 at 542 [157] 245 (2000) 204 CLR 493 at 545 [164]. 246 (1983) 158 CLR 1 at 145. 247 Smith v ANL Ltd (2000) 204 CLR 493 at 546 [166]. 248 (1948) 76 CLR 1 at 349. 249 Smith v ANL Ltd (2000) 204 CLR 493 at 546 [166]. 250 Smith v ANL Ltd (2000) 204 CLR 493 at 546 [166]. of immense value, the right to control virtually absolutely the use to which the area in question would be put." The Commonwealth drew attention to passages in various cases which it contended were adverse to the proprietors' interests in this regard251. Not all of those passages were directed to the precise point. The Commonwealth did not show that the point was in controversy in any of those cases. What Deane J said in the Tasmanian Dam Case has not only been approved, it has not hitherto been explicitly overruled. A passage to the same effect as the reasons of Deane J in the Tasmanian Dam Case appears in the reasons of Deane and Gaudron JJ in Mutual Pools & Staff Pty Ltd v The Commonwealth252. "For there to be an 'acquisition of property', there must be an obtaining of at least some identifiable benefit or advantage relating to the ownership or use of property. On the other hand, it is possible to envisage circumstances in which an extinguishment, modification or deprivation of the proprietary rights of one person would involve an acquisition of property by another by reason of some identifiable and measurable countervailing benefit or advantage accruing to that other person as a result." (emphasis added and footnote omitted) That passage concluded in a footnote reference to the passages from Deane J's judgment in the Tasmanian Dam Case quoted above. It was quoted with approval by three Justices in ICM Agriculture Pty Ltd v The Commonwealth253. The concluding sentence was also quoted with approval by another Justice in the ICM Agriculture case254. It has been referred to with approval in other cases255. 251 R v Ludeke; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 653; [1985] HCA 84; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 499-500, 527 and 528; [1993] HCA 10; ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 145, 179 [81], 180 [84], 196 [132], 202- 203 [152]-[153] and 215 [190] (there was no argument on this point: see n 324). 252 (1994) 179 CLR 155 at 185; [1994] HCA 9. 253 (2009) 240 CLR 140 at 179-180 [82] per French CJ, Gummow and Crennan JJ. 254 (2009) 240 CLR 140 at 233 [228]. 255 Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 35 [77] n 123 per Gaudron J; Phonographic Performance Co of Australia v Commonwealth (2012) 86 ALJR 335 at 352 [109] n 75; 286 ALR 61 at 83 per Crennan and Kiefel JJ. Callinan J employed reasoning similar to that of Deane J when he summarised the judgment of Mason CJ, Deane and Gaudron JJ in Georgiadis v Australian and Overseas Telecommunications Corporation256 as saying257: "that an acquisition of property may occur if the acquirer receive[s], as a result of what has been done, a direct benefit. The expression, 'direct benefit' I would take to be capable of embracing advantages or benefits extending beyond and not necessarily of a proprietary kind in any conventional sense as understood by property lawyers." Further, this Court has accepted that it does not matter that what a property owner has lost does not correspond precisely with what the Commonwealth or another person gains258. The authorities support the proposition that it is not necessary for the Commonwealth or some other person to acquire an interest in property for s 51(xxxi) to apply. It is only necessary to show that the Commonwealth or some other person has obtained some identifiable benefit or advantage relating to the ownership or use of property. Property rights For some time legislation has affected the trading position of the proprietors. Over the years, their capacity to advertise has been cut. In the period before the time when the impugned legislation was enacted, only the packets in which cigarettes were sold, and the cigarettes themselves, could serve this purpose. Even during that period, there was legislative control over what could, and what had to, appear on those packets. But the proprietors did retain some property rights before the impugned legislation was enacted. Each proprietor which owned registered trade marks had the exclusive right to use its trade marks, and to authorise other persons to use them, in relation to tobacco products (Trade Marks Act 1995 (Cth), s 20). Each trade mark was personal property (s 21(1)). Each trade mark owner could deal with its mark as the absolute owner (s 22). Equities in relation to each trade mark could be enforced against the registered owner except to the prejudice of a purchaser in 256 (1994) 179 CLR 297 at 305. 257 Smith v ANL Ltd (2000) 204 CLR 493 at 548 [173]. 258 Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 304-305; Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 634. good faith for value (s 22(3)). Each trade mark owner could authorise others to use its mark (s 26). Each proprietor which owned copyright had property rights. Copyright is personal property, transmissible by assignment, by will and by devolution by operation of law (Copyright Act 1968 (Cth), s 196). Copyright is the exclusive right to carry out various acts in relation to works (s 31). The proprietor which owned a registered design had property rights. Its rights in the registered design were exclusive (Designs Act 2003 (Cth), s 10(1)). The rights were personal property, capable of assignment and of devolution by will or by operation of law (ss 10(2) and 11). Each proprietor which owned patents had property rights – exclusive rights to exploit the invention and to authorise others to do so (Patents Act 1990 (Cth), s 13(1)). These rights were personal property, capable of assignment and devolution by law (s 13(2)). All these property rights could be employed by the proprietors on their cigarette packets – not on all the external surfaces, because there already existed legislation requiring that part of the surfaces be used for health warnings, but on some areas of them. Some of these property rights could be employed on the surfaces of the cigarette themselves. And the proprietors were at liberty to develop, and did develop, common law rights in marks and get-up in relation to those areas. Those rights were in certain circumstances assignable. They could be utilised on the cigarette packets and the cigarettes. For those reasons, the proprietors had property within the meaning of s 51(xxxi) – which protects "property" in its broadest sense259. The Commonwealth submitted that the intellectual property legislation gave no positive rights to use, only a right to exclude others. The relevant legislation is not expressed in that way. For example, s 20(1)(a) of the Trade Marks Act provides that the registered owner of a trade mark has rights "to use the trade mark". And a right to exclude others from use is not of value unless the owner of the right can engage in use. The Commonwealth submitted that the proprietors' rights were not "property" which could be acquired for s 51(xxxi) purposes because they were inherently susceptible to modification or extinguishment – at least in the interests of (local) public health. To this there are four short answers. First, the Commonwealth admitted in its defences that the trade marks, registered design 259 ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 214-215 and patent of one proprietor, and the trade marks of another, were "property" within the meaning of s 51(xxxi). Secondly, the fact that the rights in question affect the public interest, and have often been regulated in the public interest, does not establish that they are not property. Thirdly, there is much authority against the Commonwealth's submission260. Fourthly, all common law rules, and all statutes in a field over which the Commonwealth has legislative power, are capable of being modified or extinguished by a Commonwealth statute. Yet not all common law and statutory rights are viewed as inherently susceptible to modification or extinguishment. The submission did not offer any test for distinguishing between what was inherently susceptible and what was not. The Commonwealth also submitted that the impugned legislation could not "take" any property in any tobacco products or their retail packaging to be manufactured and sold after the legislation commenced. That was said to be because That submission must fail. Section 51(xxxi) extends to a law which applies to property as it is acquired from time to time in the future. the products did not yet exist. Finally, the Commonwealth submitted that there was no property in the goodwill generated by the get-up of tobacco products because it was only the product of the proprietors' freedom to trade, and s 51(xxxi) does not protect the general commercial position of traders. However, once trading activity has generated goodwill in get-up sufficiently for it to be protected by injunction, it does not depend merely on freedom to trade. Rather, it depends on the propensity of customers to return in future – goodwill. The images and marks which constitute get-up help maintain that propensity, and incapacity to use them damages goodwill. The effect of the legislation Though the TPP Act left formal ownership of the proprietors' property with them, it deprived them of control of their property, and of the benefits of control. The TPP Act gave that control and the benefits of that control to the Commonwealth. 260 Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 527 per Dawson and Toohey JJ; Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 602 per Gummow J; The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 29 [53] per Toohey J and 70-71 [182]-[185] per Gummow J; Attorney-General (NT) v Chaffey (2007) 231 CLR 651 at 664 [24] per Gleeson CJ, Gummow, Hayne and Crennan JJ; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 362 [93] per French CJ; [2009] HCA 2. The effect of the impugned legislation is that, by s 26(1) of the TPP Act and reg 3.1.1(1) of the Regulations, the owners of tobacco trade marks can no longer use them or any part of them on their cigarette packaging or their cigarettes, save to the extent that use of the "brand, business or company name" permitted by s 20(3)(a) is a "word" mark or part of a mark. Thus each trade mark owner has lost its exclusive right to use its marks. Use of registered designs is impossible by reason of s 18 of the TPP Act. Use of patented devices in relation to the opening of packets is impossible by reason of reg 2.1.1(2) of the Regulations. Use of copyright material and common law rights in marks and get- up is disrupted. By s 19 of the TPP Act and reg 2.2.1(2) of the Regulations, apart from the "brand, business or company name", nothing is to appear on cigarette packets except legislatively mandated content and a drab colour known as Pantone 448C. By reason of s 9.13 of the Standard, the proprietors are obliged to place a legislatively mandated health warning statement and an accompanying graphic over at least 75 per cent of the total area of the front outer surface of their packs. And by reason of s 9.19 of the Standard, the proprietors are obliged to place a legislatively mandated health warning statement, a graphic and an explanatory message over at least 90 per cent of the total area of the back outer surface of their packs. These obligations are much more burdensome than those imposed by the previous statutory regime. The Commonwealth argued that there was no total prohibition on the use of the marks. Apart from any packaging of goods intended for export and the use of brand, business or company names, communications with the tobacco industry, in business communications, in or on buildings and on wholesale packaging. But in reality the area for the most valuable use of the marks is removed: connection with retail customers as they purchase and use tobacco products. the marks could be used Acquisition Was there any relevant acquisition by the Commonwealth? The Commonwealth submitted: "None of the statutory rights tobacco companies claim will be taken from them by the TPP Act … involve any positive right to use, free from other legal restrictions, or at all. The imposition of new restrictions on use by the owners of the rights takes nothing away from the rights granted. No pre-existing right of property has been diminished. No property has been taken." Of this submission, counsel for British American Tobacco said that he did not want to descend into hyperbole. He did not. Nor, indeed, did he get into a state of high dudgeon. But he said: "every one of those sentences is utterly wrong." He was right to do so. As he submitted, each of the property rights pleaded by the proprietors was rendered useless for all practical purposes. Each property right conferred included a right of use by the owner. As a matter of form, the legislation had not deprived the proprietors of their proprietorship. But in substance it had deprived them of everything that made the property worth having. For all practical purposes, the proprietors had lost the right to assign or licence any trade marks, registered designs, patents, copyright and get-up protectable at common law that they owned. No-one would pay anything for these things. Under the TPP Act, any assignee or licensee is forbidden to use them on pain of criminal and civil penalties (ss 31-48). So far as the proprietors retain their rights as owners of intellectual property to exclude others from its use, those rights are hollow. No third party could use the property without being exposed to criminal and civil penalties unless it used only a "brand, business or company name" which was a word mark or part of a word mark. That unlikely event would leave the relevant proprietor with only vestigial rights to control use by third parties. Finally, the TPP Act, by prohibiting the use of the intellectual property on the cigarette packets, denies to the proprietors the use of the last valuable place on which their intellectual property could lawfully be used. Many cigarettes being fungible goods, the only areas of competition between rival manufacturers lie in price and advertising. Before the impugned legislation, the only way the proprietors could advertise was to use their cigarette packets and their cigarettes as places on which to display their intellectual property. After the impugned legislation, they could not even do that. The legislature therefore brought about "an effective sterilisation of the rights constituting the property in question."261 This new legislative regime left space on cigarette packets and cigarettes available. The proprietors did not have to waste time wondering what that now vacated space could be used for. The legislation selected that space for the compulsory display of health warnings and the Quitline trade mark. In that way, the legislation caused the Commonwealth to acquire the use of the space on the proprietors' cigarette packets for its own purposes. The life of a cigarette packet before it is purchased from a retailer is no doubt a short one. For the whole of that life, the TPP Act gives the Commonwealth exclusive use of the space on a chattel owned by a proprietor. This is more than the destruction of a substantial range of property rights. The legislation deprives the proprietors of their statutory and common law intellectual property rights and their rights to use the surfaces of their own chattels. It gives new, related rights to the Commonwealth. One is the right to command how what survived of the intellectual property ("the brand, business or company name") should be used. Another is the right to command how the surfaces of the proprietors' chattels should be employed. The 261 Newcrest Mining (WA) v The Commonwealth (1997) 190 CLR 513 at 635 per proprietors called this conscripting, commandeering or dominating the space. To put it more neutrally, these new rights are rights of control. The Commonwealth's new rights of control are rights closely connected with the proprietors' now-defunct property rights. Before the impugned legislation, each proprietor had the right to apply its registered trade marks to its goods in the course of trade. Each proprietor had the right to sell those goods in get-up of its choice in the course of trade. The Commonwealth acquired the right to have the cigarette packets of each proprietor presented in the course of trade in the get-up of its choice. That get-up shows very little of the proprietor's intellectual property. Instead, it shows health warnings and the Quitline logo and message. The colour and shape of the packet and the font size to be employed on it are specified in the legislation. Of the proprietor's intellectual property, only its "brand, business or company name" remains. The rights the Commonwealth acquired substantially correspond with those the proprietors lost. A newly acquired right arose in the Commonwealth to command the publication of messages it desires to have sent, without charge, to the public. If property is "a legally endorsed concentration of power over things and resources"262, key elements in that concentration have been moved from the proprietors to the Commonwealth. Those elements are identifiable benefits or advantages relating to the ownership or use of property. The destruction of the proprietors' rights by prohibition is integral to the Commonwealth's command to employ health warnings. The command could not rationally have been issued without the destructive prohibition. Hence the Commonwealth could not have obtained the advantage it gained from the command without the prohibition. Thus the legislation ensured that some of the proprietors' property was destroyed and some applied totally for a purpose of the Commonwealth. It is convenient to return to the four-sentence submission of the Commonwealth set out earlier263. The first sentence stated that the proprietors had no positive right to use their rights free from other legal restrictions. But they did if those legal restrictions contravened s 51(xxxi). 262 Telstra Corporation Ltd v The Commonwealth (2008) 234 CLR 210 at 230-231 per Gleeson CJ, Gummow, Kirby, Hayne, Heydon, Crennan and Kiefel JJ; [2008] HCA 7, quoting Gray, "Property in Thin Air", (1991) 50 Cambridge Law Journal 263 See above at [216]. The second sentence asserted that the imposition of new restrictions on use took away nothing proprietary. But the restrictions left the proprietors with no rights in relation to the retail sale of packets of cigarettes except the right to use their "brand, business or company name". The third sentence stated that no pre-existing right of property had been diminished. But all the proprietors' intellectual property had been rendered completely worthless, and the right to use the space on the packets had disappeared. The fourth sentence asserted that no property had been taken. But a central element of proprietorship, control, had been taken and employed by the Commonwealth as a step in the fulfilment of its own purposes. The Commonwealth legislation prohibited the presence on the cigarette packets and cigarettes of the proprietors' trade marks. By analogy with Deane J's example in the Tasmanian Dam Case264, this gave the Commonwealth the benefit of that space, free of the offending marks. On Deane J's view, this would have been an "effective confiscation or acquisition" of the space even if the Commonwealth had no right actively to use it265. But in the impugned legislation the Commonwealth went further. The impugned legislation compels the presence on the packets of the Commonwealth's and Quitline's messages. The prohibitions on the proprietors thus confer on the Commonwealth and another (ie Quitline) an "identifiable and measurable advantage" relating to the ownership or use of property within the meaning of Deane J's words266. In effect, the Commonwealth has said to the proprietors through the TPP Act: "You have been controlling your intellectual property and your chattels with a view to making profits in your businesses; I want to stop you using the intellectual property in very large measure, and command you as to how you are to use what is left of your property, not with a view to making profits in your businesses, but with a view to damaging them by making the products you sell unattractive; I will therefore take over control of your intellectual property and chattels from you." That control is a measurable and identifiable advantage relating to the ownership or use of property. It enlivens the s 51(xxxi) guarantee. The Commonwealth argued that it had not acquired property. Rather, it had attempted to reduce the appeal of tobacco products. It had attempted to increase the effectiveness of health warnings, thereby reducing the potential for 264 Tasmanian Dam Case (1983) 158 CLR 1 at 283-284. 265 Tasmanian Dam Case (1983) 158 CLR 1 at 284. 266 Tasmanian Dam Case (1983) 158 CLR 1 at 283. to Australia's to give effect international obligations. retail packaging to mislead and improving (local) public health. And it had attempted The Commonwealth submitted that the benefits it derived from those attempts were not benefits in the nature of property. The problem is that acquisition is not prevented from being acquisition merely by reason of its purposes. Here the Commonwealth's purposes were achieved by nullifying many of the proprietary rights of the proprietors and passing to the Commonwealth the corresponding benefits and advantages relating to the ownership or use of property – particularly control over the appearance of the cigarettes and their packaging. That control was as intense and ample as that which the proprietors had formerly enjoyed. The Commonwealth also relied on the gratuitous character of the Quitline services as negating the proposition that an acquisition occurred. However, the nature of Quitline's services is beside the point. It does not affect the question whether Quitline only got into a position to advertise those gratuitous services on cigarette packets because of an acquisition. Finally, the Commonwealth submitted that: "it is an 'acceptable explanation or justification' placing an acquisition of property without compensation outside the scope of s 51(xxxi) if the acquisition of property without compensation is no more than a necessary consequence or incident of a restriction on a commercial trading activity where that restriction is reasonably necessary to prevent or reduce harm caused by that trading activity to members of the public or public health." The Commonwealth said that any acquisition here was "no more than consequential or incidental to the legislative indication of a compelling public interest by narrowly tailored legislative means". If this were correct, s 51(xxxi) would have a quite narrow operation. Rights of private property would be much more at risk at the hands of the Commonwealth Parliament. The elements of the postulated test are so vague that it would very often be satisfied. Yet if the test is sound, why should it not be wider? If the stated principle is correct, why should it be limited to harm to members of the public or to public health? Why should it not apply to all of the worthy goals which the Commonwealth legislature has constitutional power to further in the public interest? The existence of a regulatory goal is not decisive of the question whether the pursuit of that goal involves a s 51(xxxi) acquisition. "The guarantee contained in s 51(xxxi) is there to protect private property. It prevents individual citizens, without adequate expropriation of the property of compensation, even where such expropriation may be intended to serve a wider public interest."267 There is no general principle of Australian constitutional law that legislation which infringes a constitutional limitation on power will be valid so long as it is reasonably appropriate and adapted to a legitimate end within power. There are tests of that kind which operate in quite circumscribed areas. No good reason has been demonstrated to widen those areas. In particular, there is nothing in the language of s 51(xxxi) which supports the test advocated. And since the inquiry into what is "reasonably necessary" is a legislative activity, not a judicial one, it is highly unlikely to be required or permitted by implication in a Constitution, which, like ours, provides for a separation of legislative and judicial power. There are authorities holding that some laws are outside s 51(xxxi) – laws relating to fines, penalties, taxes, forfeitures, the condemnation of prize, the seizure of enemy alien property, the enforcement of statutory liens, and bankruptcy. But those exceptions exist because the requirement to provide "just terms" is not congruent with those types of law. "To place [a law imposing a penalty for breach of a rule of conduct] within the s 51(xxxi) category would be to annihilate the penalty … and thus to weaken, if not destroy, the normative effect of the prescription of the rule of conduct."268 There is no incongruity of that kind between the impugned legislation and s 51(xxxi). And it has never been suggested that the examples of "incongruity" turn on inquiries into what is reasonably necessary, or on proportionality analysis. There is no authority supporting the use of proportionality analysis in applying s 51(xxxi). Further, the Commonwealth's proposed test depends on drawing a difficult distinction between acquisitions which are central or principal aspects of a legislative scheme and those which are merely consequential or incidental. Whatever the merits of that course, the acquisition here is not incidental: it is the fundamental means by which the TPP Act operates and seeks to achieve its goals. Just terms In Commonwealth v Huon Transport Pty Ltd, Rich J said269: 267 Smith v ANL Ltd (2000) 204 CLR 493 at 501 [9] per Gleeson CJ. 268 Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270 at 278 per Brennan J; [1994] HCA 10. 269 (1945) 70 CLR 293 at 306-307; [1945] HCA 5. "When a person is deprived of property, no terms can be regarded as just which do not provide for payment to him of the value of the property as at date of expropriation, together with the amount of any damage sustained by him by reason of the expropriation, over and above the loss of the value of the property taken. The amount so ascertained is no more than the just equivalent of the property of which he has been deprived." The Commonwealth submitted that this did not represent the modern doctrine of this Court. But it cited no authoritative repudiation of it. The TPP Act makes no provision for compensation of any kind. Hence there are no just terms. The Commonwealth submitted that the TPP Act did provide "just terms" in the form of "fair dealing" as between the "tobacco companies and the Australian nation representing the Australian community put at risk by their products." Even assuming the correctness of the numerous "constitutional facts" on which the Commonwealth relied in relation to smoking, this submission must be rejected. The Commonwealth put its submission as follows: "For the Australian nation representing the Australian community to be required to compensate tobacco companies for the loss resulting from no longer being able to continue in the harmful use of their property goes beyond the requirements of any reasonable notion of fairness. That conclusion is reinforced by the profound incongruity involved in the provision of compensation to those who would benefit from continuing to engage in the harmful trading activity that would continue to be permitted but for the TPP Act." In assessing the submission, it must be remembered that the legislation does not criminalise the sale of tobacco products. The parties accepted that tobacco products cause harm. It is more controversial whether reducing the use of intellectual property on the packaging of tobacco products will reduce that harm. Even accepting that it will, the submission must fail. Most expropriating legislation is designed in good faith to strike a balance between competing social interests with a view to solving particular problems. It is revolutionary to suggest that the Commonwealth is relieved of its obligation to provide just terms in the form of compensation merely because the legislation under which it acquires property is fair in the sense assumed by the submission. The primary authority on which the Commonwealth relied270 was directed not to substitutes for compensation, but to criteria relevant to the calculation of compensation. In 270 Nelungaloo Pty Ltd v The Commonwealth (1947) 75 CLR 495 at 569; [1947] HCA 58; Nelungaloo Pty Ltd v The Commonwealth (1952) 85 CLR 545 at 600; [1952] HCA 11. Georgiadis v Australian and Overseas Telecommunications Corporation271, "In determining the issue of just terms, the Court does not attempt a balancing of the interests of the dispossessed owner against the interests of the community at large. The purpose of the guarantee of just terms is to ensure that the owners of property compulsorily acquired by government presumably in the interests of the community at large are not required to sacrifice their property for less than its worth. Unless it be shown that what is gained is full compensation for what is lost, the terms cannot be found to be just." That passage has been approved by Gleeson CJ272. It is the furtherance of the public interest which moves the legislature to enact legislation acquiring property, thereby creating the occasion for an inquiry into whether "just terms" have been provided. But the furtherance of the public interest is not a reason to deny just compensation to the property owner. To hold otherwise is significantly to weaken the effectiveness of s 51(xxxi) as a constitutional guarantee. The Commonwealth's submission must therefore be rejected. Section 15 of the TPP Act The Commonwealth contended that if, contrary to all its submissions, there had been an acquisition otherwise than on just terms, the TPP Act would not apply pursuant to s 15(1) of that Act273. However, if the whole TPP Act apart from s 15(1) would result in an acquisition otherwise than on just terms, the whole Act fails, and s 15(1) would result in the whole of it not applying. The whole TPP Act apart from s 15(1) is in truth invalid because its central provisions collide with s 51(xxxi). This litigation is not an appropriate vehicle in which to decide whether legislation in the form of s 15(1) would have been valid if only parts of the TPP Act had been invalid. Conclusion In 1979, in Trade Practices Commission v Tooth & Co Ltd, Mason J said274: 271 (1994) 179 CLR 297 at 310-311. 272 Smith v ANL Ltd (2000) 204 CLR 493 at 501 [8]. 273 See above at [193]. 274 (1979) 142 CLR 397 at 427. "We were invited by the Solicitor-General to hold that a law whose effect is to provide for the acquisition of property is not a law with respect to the acquisition of property when it also happens to be a regulatory law which prohibits and penalizes obnoxious or undesirable trade practices by corporations. The argument accompanying this invitation was rather elusive." Mason J rejected the argument. It did not prevail. Yet it was repeated in these cases in relation to "obnoxious or undesirable" tobacco advertising practices. In 1993, in Georgiadis v Australian and Overseas Telecommunications Corporation, another Solicitor-General submitted that the expression "just terms" is an expression which "extends to what is fair, taking into account the interests of the community."275 That submission did not prevail either. It was specifically rejected by Brennan J276. Yet it was repeated in these cases. These are just minor examples of a common characteristic of s 51(xxxi) litigation – that the Commonwealth repeats arguments it has advanced in earlier cases over many years, despite their failure, and often their repeated failure. After a "great" constitutional case, the tumult and the shouting dies. The captains and the kings depart. Or at least the captains do; the Queen in Parliament remains forever. Solicitors-General go. New Solicitors-General come. This world is transitory. But some things never change. The flame of the Commonwealth's hatred for that beneficial constitutional guarantee, s 51(xxxi), may flicker, but it will not die. That is why it is eternally important to ensure that that flame does not start a destructive blaze. Orders In JT International SA v Commonwealth of Australia, there should have been an order declaring that the Tobacco Plain Packaging Act 2011 (Cth) is invalid (apart from s 15, as to which it is unnecessary to decide) and an order that the defendant should pay the plaintiff's costs. In British American Tobacco Australia Ltd v Commonwealth of Australia, the questions reserved should have been answered: Yes. 275 (1994) 179 CLR 297 at 301. 276 See above at [236]. All except s 15 (as to which it is unnecessary to decide). All. The defendant should pay the plaintiffs' costs. Crennan CRENNAN J. The issues in these two proceedings, the relevant facts, and the relevant provisions of the Tobacco Plain Packaging Act 2011 (Cth) ("the Packaging Act") and the Tobacco Plain Packaging Regulations 2011 (Cth) ("the Regulations")277 can be found in other reasons, obviating the need to set out those matters except as necessary to inform these reasons. The plaintiffs challenge the Packaging Act principally on the basis that its operation will effect an acquisition of their property otherwise than on just terms, contrary to s 51(xxxi) of the Constitution. It will be determined in these reasons that their respective challenges fail. I agree with the orders on the demurrer and with the answers to the reserved questions proposed by Gummow J. Accordingly, I joined in the orders pronounced on 15 August 2012. The details of the two proceedings, the plaintiffs (each one a constitutional corporation) and the interveners are set out in the reasons of Gummow J and are adopted here. His Honour also sets out the particulars of the plaintiffs' claims to property said to fall within the meaning of s 51(xxxi)278, including those claims based on the statutory species of property protected under the Trade Marks Act 1995 (Cth) ("the Trade Marks Act"), the Copyright Act 1968 (Cth) ("the Copyright Act"), the Designs Act 2003 (Cth) ("the Designs Act") and the Patents Act 1990 (Cth) ("the Patents Act"), which I do not need to repeat. Those particulars show that a preponderance of the registered trade marks relied upon as part of the plaintiffs' challenge to the Packaging Act are composite trade marks279 consisting of the brand name "Winfield" (in the BAT proceedings) and the brand names "Camel" and "Old Holborn" (in the JTI proceedings), together with other non-verbal graphic material. In the JTI proceedings, two of the four registered trade marks relied upon consisted of the brand name "Camel" alone, one of which was in fancy script. In the BAT proceedings, no claim under the Trade Marks Act was made in relation to the brand name "Dunhill", although that brand name has been used in the trade in tobacco products together with the subject matter of the registered design and patent referred to in those proceedings. All product get-up was associated with trade marks, or brand names, and included colours, logos, devices and fancy lettering or markings. The original artistic work in which copyright was claimed in the BAT proceedings appeared to be applied in product get-up. 277 Amended by the Tobacco Plain Packaging Amendment Regulation 2012 (No 1) (Cth). 278 Reasons of Gummow J at [54]-[61]. 279 Composite trade marks are distinguishable from trade marks consisting of a word or brand name simpliciter. Crennan The legislative context of the Packaging Act is of particular importance because the provisions refer to the Trade Marks Act and to Commonwealth legislation concerning the product information to be placed on the retail packaging of tobacco products. The Commerce (Trade Descriptions) Act 1905 (Cth) is also mentioned280. Relevantly, the Trade Marks Act provides that a registered owner of a trade mark has an exclusive right to use the trade mark281, an exclusive right to authorise other persons to use the trade mark282, a right to obtain relief in respect of infringement283, and a right to assign a trade mark with or without the goodwill of the business concerned in the relevant goods284. The exclusive right to use the mark is a negative right to exclude others from using it. A positive right to obtain registration on the satisfaction of certain conditions285 is "essentially ancillary"286 to the negative right. Section 17 defines a trade mark: "A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person." A "sign" is defined in s 6(1) as including: "the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent." (emphasis added) It can be noted that the Packaging Act relevantly restricts the use of trade marks and brand names287. Section 21 of the Trade Marks Act is also important. It provides: 280 Packaging Act, s 4(1), in the definition of "trade description". 281 Trade Marks Act, s 20(1)(a). 282 Trade Marks Act, s 20(1)(b). 283 Trade Marks Act, s 20(2) and Pt 12 (ss 120-130). 284 Trade Marks Act, Pt 10 (ss 106-111), particularly s 106(3). 285 Trade Marks Act, s 33. 286 Cornish, Llewelyn and Aplin, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 7th ed (2010) at 7 [1-04]. 287 Packaging Act, s 20(3); Regulations, Pt 2 Divs 2.3 and 2.4. Crennan "(1) A registered trade mark is personal property. Equities in respect of a registered trade mark may be enforced in the same way as equities in respect of any other personal property." Section 22(1) provides that a registered owner, subject only to any rights vested in another person, may deal with the trade mark as its absolute owner and give in good faith discharges for any consideration for that dealing. Other prior legislation which puts the Packaging Act in context has been dealt with in the reasons of Kiefel J288. This includes legislation at State and Territory level prohibiting or restricting the promotion of tobacco products at the point of retail sale289. Of particular importance is the Tobacco Advertising Prohibition Act 1992 (Cth). Section 15 of that Act prohibits tobacco advertisements, but s 9(2) provides that material that appears on the packaging of tobacco products or on the products themselves is not a tobacco advertisement. It is also necessary to note Commonwealth legislation covering product information standards. What material may appear on the packaging of tobacco products has been regulated by the Commonwealth Parliament with progressively greater stringency. Material required to be on tobacco product packaging includes health warnings (graphic images as well as text) and a reference to a "Quitline" telephone service and website. The relevant regulations – the Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 2004 (Cth) and the Competition and Consumer (Tobacco) Information Standard 2011 (Cth) ("the 2011 Information Standard") – are also dealt with in the reasons of Kiefel J290, rendering it sufficient to note here that the 2011 Information Standard (which will effectively apply on and after 1 December 2012) requires this legislatively mandated product information to cover 75% of the front of the packaging and 90% of the back of the packaging291. The Packaging Act The objects of the Packaging Act are to improve public health292 and to give effect to certain obligations that Australia has as a party to the World Health 288 Reasons of Kiefel J at [318]-[324]. 289 Reasons of Kiefel J at [320] n 427. 290 Reasons of Kiefel J at [322]-[324]. 291 Reasons of Kiefel J at [323]-[324]. 292 Packaging Act, s 3(1)(a). Crennan Organisation Framework Convention on Tobacco Control293, done at Geneva on 21 May 2003294. Improving public health encompasses discouraging people from taking up or resuming smoking or using tobacco products295, encouraging people to give up smoking or using tobacco products296, and reducing people's exposure to smoke from tobacco products297. The stated intention of the Commonwealth Parliament298 is to contribute to achieving these objects by regulating the retail packaging and appearance of tobacco products to reduce the appeal of such products to consumers, to increase the effectiveness of health warnings on the packaging of such products and to reduce the ability of the retail packaging of the products to mislead consumers about the harmful effects of smoking or using tobacco products. It is not in contest that smoking tobacco is a cause of serious and fatal diseases such as lung cancer, respiratory disease and heart disease and that the risk of contracting such diseases is reduced by quitting smoking. The use to which tobacco products are generally to be put after retail sale is smoking. The manufacture, distribution, offering for sale and selling of tobacco products in the course of both wholesale and retail trade in Australia is presently lawful. Part 2 of Ch 2 of the Packaging Act sets out "tobacco product requirements" which cover cigarettes299, and provides for regulations to specify further requirements300. Chapter 3 contains both civil and criminal penalties for enforcing these requirements301. Chapter 5 provides that civil sanctions are enforceable by the Secretary of the Department302. 293 Packaging Act, s 3(1)(b). 294 [2005] ATS 7. 295 Packaging Act, s 3(1)(a)(i) and (iii). 296 Packaging Act, s 3(1)(a)(ii). 297 Packaging Act, s 3(1)(a)(iv). 298 Packaging Act, s 3(2). 299 Packaging Act, s 4(1) defines "tobacco product" to include any product that contains tobacco. 300 Packaging Act, ss 18-26. 301 Packaging Act, ss 40-50. 302 Packaging Act, s 85. Crennan Briefly stated, the Packaging Act restricts the physical appearance of retail packaging for tobacco products by requirements as to finish and colour303 and a prohibition on any decorative features or embellishments304. Trade marks must not be used in the retail packaging of tobacco products, although brand and variant names for a tobacco product are permitted trade marks305, as are trade marks which distinguish the origin of tobacco products306. The appearance of a brand name on tobacco packaging, including packaging for cigarettes, is regulated as to position307, plane308, size, font and colour309, and frequency of appearance310. No trade mark may appear on tobacco products themselves or on wrappers for tobacco products other than as permitted by regulations311. Such are the restrictive conditions under which the plaintiffs may continue to apply their respective brand names "Winfield" and "Dunhill" and "Camel" and "Old Holborn" to the retail packaging of tobacco products. Product get-up, and associated goodwill, are also affected by those provisions. The only components of product get-up which may be applied to the retail packaging of tobacco products are "brand, business, company or variant name[s]"312. Certain valuable rights and interests of registered owners, authorised users and applicants for registration under the Trade Marks Act are not affected by the operation of the Packaging Act. For example, the right of a registered owner (or an authorised user) to seek relief for infringement of a registered trade mark pursuant to Pt 12313 of the Trade Marks Act is not disturbed. 303 Packaging Act, s 19. 304 Packaging Act, s 18. 305 Packaging Act, s 20(1), (2) and (3). 306 Packaging Act, s 20(3)(c); Regulations, reg 1.1.3, Pt 2 Div 2.3. 307 Packaging Act, s 21(2)(b)(i); Regulations, regs 2.4.3(2) and 2.4.4(2). 308 Packaging Act, s 21(3); Regulations, regs 2.4.3(2) and 2.4.4(2). 309 Packaging Act, s 21(1); Regulations, regs 2.4.1 and 2.4.2. 310 Packaging Act, s 21(2); Regulations, regs 2.4.3(1) and 2.4.4(2). 311 Packaging Act, ss 22(2)(b), 26(1); Regulations, Pt 2 Div 2.5, Pt 3. 312 Packaging Act, s 21. 313 Trade Marks Act, ss 120-127. Crennan Other rights of registered owners and applicants under the Trade Marks Act, the exercise of which might be in doubt as a result of the Packaging Act, are expressly preserved. The right of an applicant under s 68 of the Trade Marks Act to have a qualifying application registered, in the absence of opposition, is preserved by s 28(1) and (3)(c) of the Packaging Act. Section 28(2) provides that the Packaging Act does not have the effect that compliant use of a trade mark in relation to tobacco products would be "contrary to law", a characteristic which would result in the rejection of an application for registration under s 42(b) of the Trade Marks Act. Section 28(3) provides that the operation of the Packaging Act does not make it reasonable or appropriate for the Registrar of Trade Marks not to register a trade mark, or to register a trade mark subject to limitations or conditions, or to revoke either acceptance of an application for, or a registration of, a trade mark. Further, the registered design for a "ribbed package" and the patent granted in respect of an opening which can be resealed, both claimed in the BAT proceeding, cannot be respectively applied or exploited in retail tobacco packaging because of the prohibition on decorative embellishments on packaging and the prohibition on openings which can be resealed314. It should be noted that the ribbed packaging and the resealable opening, the subject of the registered design and patent in the BAT proceeding, were part of the product get-up of a cigarette package upon which the brand name "Dunhill" appeared. For that reason, submissions focused mainly on the plaintiffs' rights and interests under the Trade Marks Act and in product get-up as protected by the common law. That emphasis is reflected in these reasons. Section 15 of the Packaging Act deals with the scope of the operation of that Act having regard to s 51(xxxi), and s 15(2) (set out in other reasons) reverses the presumption that the Packaging Act is to operate as a whole: the legislative intention is to be taken to be that the enactment should be divisible so that any parts found to be constitutionally unobjectionable should be carried into to be constitutionally effect independently of those provisions found In essence, the plaintiffs have two complaints. The first is that, on commencement, the Packaging Act's restrictions will render them unable to exploit their claimed property, especially their trade marks and product get-up, in connection with the sale of cigarettes in any meaningful or substantive way. The second complaint is that the Packaging Act's restrictions have extinguished the 314 Packaging Act, s 18(1)(a); Regulations, reg 2.1.1(2). 315 See Bank of New South Wales v The Commonwealth ("the Banking Case") (1948) 76 CLR 1 at 371 per Dixon J; [1948] HCA 7. Crennan plaintiffs' proprietary rights as chattel owners to place whatever they wish on their cigarette packets and cigarettes. The plaintiffs' property Reflecting the longstanding liberal approach to the construction of s 51(xxxi)316, "a very great constitutional safeguard"317, "every species of valuable right and interest"318 including choses in action319, "innominate and 316 Minister of State for the Army v Dalziel ("Dalziel") (1944) 68 CLR 261 at 276 per Latham CJ, 284-285 per Rich J; [1944] HCA 4; Banking Case (1948) 76 CLR 1 at 349-350 per Dixon J; Attorney-General (Cth) v Schmidt (1961) 105 CLR 361 at 370-372 per Dixon CJ; [1961] HCA 21; Clunies-Ross v The Commonwealth (1984) 155 CLR 193 at 201-202 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ; [1984] HCA 65; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 509 per Mason CJ, Brennan, Deane and Gaudron JJ; [1993] HCA 10; Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 172-173 per Mason CJ, 184-185 per Deane and Gaudron JJ, 200 per Dawson and Toohey JJ; [1994] HCA 9; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 303-304 per Mason CJ, Deane and Gaudron JJ, 312 per Brennan J, 320 per Toohey J; [1994] HCA 6; The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 49 [128] per McHugh J; [1998] HCA 8; Telstra Corporation Ltd v The Commonwealth (2008) 234 CLR 210 at 230 [43]; [2008] HCA 7; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 360 [89] per French CJ; [2009] HCA 2. 317 Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 403 per Barwick CJ; [1979] HCA 47. 318 Dalziel (1944) 68 CLR 261 at 290 per Starke J; Banking Case (1948) 76 CLR 1 at 299 per Starke J; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 509 per Mason CJ, Brennan, Deane and Gaudron JJ; Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 184 per Deane and Gaudron JJ; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 303 per Mason CJ, Deane and Gaudron JJ; Victoria v The Commonwealth (Industrial Relations Act Case) (1996) 187 CLR 416 at 559 per Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ; [1996] HCA 56; Telstra Corporation Ltd v The Commonwealth (2008) 234 CLR 210 at 232 [49]. 319 Dalziel (1944) 68 CLR 261 at 290 per Starke J; Banking Case (1948) 76 CLR 1 at 349 per Dixon J; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 509 per Mason CJ, Brennan, Deane and Gaudron JJ; Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 172 per Mason CJ, 184 per Deane and Gaudron JJ, 194 per Dawson and Toohey JJ, 222 per McHugh J; Georgiadis v Australian and Overseas (Footnote continues on next page) Crennan anomalous interests"320, incorporeal interests and "'property' [which] has no existence apart from statute"321 is encompassed by the term "property" in s 51(xxxi). Following the liberal approach, the restriction of just terms applies to any indirect acquisition of "the substance of a proprietary interest"322. The plaintiffs described their species of property under the Trade Marks Act (and other intellectual property legislation) as incorporeal personal property, and identified their rights and interests in respect of that property as including the right to exclude others from enjoyment of that property (and the goodwill attached to it) and the right to turn the property to valuable account by licence or assignment323. That identification of valuable rights and interests for the purposes of the plaintiffs' challenge under s 51(xxxi) in no way trespassed on, or bypassed, the well-understood differences between excluding others from the enjoyment of incorporeal property and a property owner's rights of exclusion under the general law in respect of land and chattels, adverted to by Dixon J in Victoria Park Racing and Recreation Grounds Co Ltd v Taylor324. Telecommunications Corporation (1994) 179 CLR 297 at 303 per Mason CJ, Deane and Gaudron JJ, 312 per Brennan J, 325 per McHugh J; Smith v ANL Ltd (2000) 204 CLR 493 at 500 [7] per Gleeson CJ, 504 [20] per Gaudron and Gummow JJ, 524 [86] per Kirby J, 532 [117] per Hayne J, 542 [157] per Callinan J; [2000] HCA 58. 320 Banking Case (1948) 76 CLR 1 at 349 per Dixon J; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 303 per Mason CJ, Deane and Gaudron JJ. 321 Attorney-General (NT) v Chaffey (2007) 231 CLR 651 at 664 [23] per Gleeson CJ, Gummow, Hayne and Crennan JJ; [2007] HCA 34. 322 Banking Case (1948) 76 CLR 1 at 349 per Dixon J. 323 See Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 65-66 [42]; [2000] HCA 12. 324 (1937) 58 CLR 479 at 508-509; [1937] HCA 45. See also Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156 CLR 414 at 444-445 per Deane J; [1984] HCA 73. Crennan The plaintiffs accepted that the right to use a registered trade mark did not carry with it any immunity in relation to other legal obligations such as those in respect of passing off325 or copyright infringement or consumer protection. The Commonwealth admitted that the property which the plaintiffs claimed under the Trade Marks Act (and other intellectual property legislation) was property for the purposes of s 51(xxxi). A sound basis for those admissions can be found in the authorities326. However, in referring to the scope of s 21 of the Trade Marks Act, the Commonwealth (supported by Queensland, intervening) advanced a proposition that the imposition of new restrictions on registered owners of trade marks under the Packaging Act takes nothing from the rights and interests granted to a registered owner under the Trade Marks Act, and that therefore no property is taken for the purposes of s 51(xxxi). This led senior counsel for the plaintiffs in the BAT proceedings to describe the Commonwealth's admission in relation to the Trade Marks Act as illusory. It is convenient to say something briefly about the rights and interests of an owner of a registered trade mark. It was recognised by Windeyer J in Colbeam Palmer327 that the negative right of a registered owner of a trade mark to restrain infringement had its origin in the equitable jurisdiction to protect a form of property in a trade mark gained by use and reputation, a jurisdiction which was exercised before trade marks were recognised by statute. In every reiteration of trade marks legislation in Australia, it has been provided, in substance, that any equities in respect of a trade mark may be enforced in the same way as equities in respect of other 325 See New South Wales Dairy Corporation v Murray Goulburn Co-Operative Co Ltd (1990) 171 CLR 363 at 396-397 per Deane J; [1990] HCA 60. 326 Colbeam Palmer Ltd v Stock Affiliates Pty Ltd ("Colbeam Palmer") (1968) 122 CLR 25 at 34 per Windeyer J; [1968] HCA 50; Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 68 [48]. See also Pacific Film Laboratories Pty Ltd v Federal Commissioner of Taxation (1970) 121 CLR 154 at 165-166, 169 per Windeyer J; [1970] HCA 36; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 527 per Dawson and Toohey JJ; Burge v Swarbrick (2007) 232 CLR 336 at 344 [15]; [2007] HCA 17; Phonographic Performance Co of Australia Ltd v The Commonwealth (2012) 86 ALJR 335 at 352 [109] per Crennan and Kiefel JJ; 286 ALR 61 at 83-84; [2012] HCA 8. 327 (1968) 122 CLR 25 at 33-34. Crennan personal property328. In the earlier iterations this provision was coupled with a provision concerning a registered owner's right to assign a trade mark329. There is no such thing as a trade mark in gross. At common law a trade mark could not be assigned except with the goodwill of the business in respect of which it was used, because it was feared that to do otherwise would engender deception and confusion330. The Trade Marks Act 1905 (Cth) adopted the same restriction in respect of registered trade marks331. At that time, and subsequently, it was further thought that the licensing of a trade mark would inevitably invalidate the registration of a trade mark for the reason that licensing would cause deception and confusion332. Accordingly, there was no analogue in the Trade Marks Act 1905 to the authorised user provisions in the Trade Marks Act. Following legislation in the United Kingdom333, both of these restrictions were relaxed under the Trade Marks Act 1948 (Cth), which relaxation continued under the Trade Marks Act 1955 (Cth). The changes fundamentally affected the nature of a trade mark, which was previously thought inseparable from the business of origin and associated goodwill. Once the changes were made, the value of a trade mark included its power to attract consideration for an assignment without goodwill and, more importantly for present purposes, its power to attract royalties. Use of a trade mark is authorised only to the extent that the use is "under the control of the owner"334. Insufficient control by a licensor over the use of a trade mark might expose the registered owner to rectification or removal proceedings335, for which reason a licensor will usually impose conditions as to 328 Trade Marks Act 1905 (Cth), s 49(3); Trade Marks Act 1955 (Cth), s 57(2); Trade Marks Act, s 21(2). 329 Trade Marks Act 1905, s 49(1); Trade Marks Act 1955, s 57(1). 330 Mansell v Valley Printing Co [1908] 2 Ch 441 at 448 per Farwell LJ; cf Pinto v Badman (1891) 8 RPC 181. See also Henry Clay & Bock & Co Ltd v Eddy (1915) 19 CLR 641 at 655 per Isaacs J; [1915] HCA 33. 331 Trade Marks Act 1905, s 58. 332 Bowden Wire Ltd v Bowden Brake Co Ltd (1914) 31 RPC 385 at 392 per Earl Loreburn. 333 Trade Marks (Amendment) Act 1937 (UK); Trade Marks Act 1938 (UK). 334 Trade Marks Act, s 8(2). 335 See Trade Marks Act, Pt 8. Crennan use of the licensed trade mark. If the licensee is a manufacturer, those conditions may require maintenance of the quality of the goods to which the licensed trade mark is to be applied. In Colbeam Palmer, when considering infringement of a trade mark registered under the Trade Marks Act 1955, Windeyer J said336: "[I]t can hardly be said that a registered trade mark is not a species of property of the person whom the statute describes as its registered proprietor, and which it permits him to assign". Under the Trade Marks Act 1955, subject to certain restrictions which do not matter for present purposes, a registered owner of a trade mark could assign the trade mark with or without goodwill337 and license another to use the trade mark under a registered user system then in place338. Under the Trade Marks Act, the current authorised user provisions (which replaced the previous registered user system) allow parties freedom to set the terms of a trade mark licence without any scrutiny by the Registrar of Trade Marks, and the recording of a licence is voluntary339. The Copyright Act, the Designs Act and the Patents Act all provide for exclusive rights to use or exploit the incorporeal property with which they deal, together with exclusive rights to assign, or to authorise or license others to use or exploit, the property. Sections 20(2) and 21(2) of the Trade Marks Act refer to a registered owner's right to relief in respect of infringement, but the value of a registered owner's statutory property has always also included a right to assign (enlarged over time, as explained above), and presently includes the right to license as well. For the purposes of s 51(xxxi), the plaintiffs' intellectual property rights and interests constitute property capable of acquisition and attracting the requirement of just terms. Further, in the case of the plaintiffs' registered trade marks, the question of whether there has been an acquisition cannot be confined to the consideration that the Packaging Act preserves a registered owner's right to seek relief in respect of infringement. 336 (1968) 122 CLR 25 at 34. 337 Trade Marks Act 1955, s 82. 338 Trade Marks Act 1955, Pt IX (ss 73-81). 339 See Trade Marks Act, Pt 11 (ss 112-119). Crennan Was the plaintiffs' property acquired? Whether subsequent legislative prohibitions or restrictions on the use of incorporeal property created by statute will amount to an acquisition of property for the purposes of s 51(xxxi) must depend on the nature of the rights attaching to the incorporeal property, and whether, for the purposes of the Commonwealth, the prohibitions or restrictions: (a) give, or effectively give, the Commonwealth or another a right to use the incorporeal property wholly or partly to the exclusion of the owner; or (b) bestow some other identifiable benefit or advantage upon the Commonwealth or another which can be characterised as proprietary. In The Commonwealth v Tasmania (The Tasmanian Dam Case)340, when explaining the difference between a "taking" (the subject matter of the Fifth Amendment to the United States Constitution) and an "acquisition", with which s 51(xxxi) is concerned, Mason J said341: "The emphasis in s 51(xxxi) is not on a 'taking' of private property but on the acquisition of property for purposes of the Commonwealth. To bring the constitutional provision into play it is not enough that [the] legislation adversely affects or terminates a pre-existing right that an owner enjoys in relation to his property; there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be." (original emphasis) The enduring authority of this statement of principle has been confirmed by this Court on numerous occasions342, most recently in Wurridjal v The 340 (1983) 158 CLR 1; [1983] HCA 21. 341 (1983) 158 CLR 1 at 145. See also at 181-182 per Murphy J, 247 per Brennan J, 342 See Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 165 per Brennan J; [1992] HCA 45; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 499-500 per Mason CJ, Brennan, Deane and Gaudron JJ, 528 per Dawson and Toohey JJ; Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 172- 173 per Mason CJ, 185 per Deane and Gaudron JJ; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 304 per Mason CJ, Deane and Gaudron JJ, 315 per Dawson J; Health Insurance Commission v Peverill (1994) 179 CLR 226 at 248-249 per Dawson J; [1994] HCA 8; Newcrest Mining (WA) Ltd v The Commonwealth ("Newcrest") (1997) 190 CLR 513 at 573 per McHugh J; [1997] HCA 38; The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 35 [77] per Gaudron J. Crennan Commonwealth and ICM Agriculture Pty Ltd v The Commonwealth343. The provisions of the Packaging Act which affect the plaintiffs' property do not effect a transfer, to the Commonwealth or any other person, of the plaintiffs' rights in their trade marks, product get-up, or associated goodwill, rights (as chattel owners) to cigarette packets or cigarettes, or, in the BAT proceedings, rights in the copyright work, registered design or patent. The plaintiffs acknowledged that there was no formal deprivation of these rights but contended that they had been "in a real sense ... stripped of the possession and control"344 of their property. In Dalziel345, reg 54 of the National Security (General) Regulations (Cth) gave the Minister an exclusive right to possess and use land for an indefinite period, if expedient to do so, for wartime purposes. The regulation was used to exclude the tenant of certain vacant land in Sydney, Mr Dalziel, and was found to contravene s 51(xxxi)346. In the Banking Case347, provisions of the Banking Act 1947 (Cth) which authorised the Treasurer of the Commonwealth "to assume control of the business"348 of a private bank by appointing directors who were nominees of the Commonwealth were found to contravene s 51(xxxi) because, in the words of Dixon J, the scheme was "but a circuitous device to acquire indirectly the substance of a proprietary interest"349. In Newcrest350, proclamations made under provisions of the National Parks and Wildlife Conservation Act 1975 (Cth) were found to contravene s 51(xxxi). That Act prohibited mining in Kakadu National Park and vested Commonwealth interests in the Park, except for its interests in minerals, in the Director of National Parks and Wildlife. A proclamation under the Act which 343 Wurridjal v The Commonwealth (2009) 237 CLR 309 at 360-361 [90] per French CJ; ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 196 [132] per Hayne, Kiefel and Bell JJ, 215 [190] per Heydon J; [2009] HCA 51. 344 Banking Case (1948) 76 CLR 1 at 349 per Dixon J. 345 (1944) 68 CLR 261. 346 (1944) 68 CLR 261 at 284-287 per Rich J, 289-290 per Starke J, 295-296 per McTiernan J, 305 per Williams J. 347 (1948) 76 CLR 1. 348 (1948) 76 CLR 1 at 344 per Dixon J. 349 (1948) 76 CLR 1 at 349. See also Newcrest (1997) 190 CLR 513 at 595 per 350 (1997) 190 CLR 513. Crennan extended the area of the Park prevented Newcrest from exploiting mining tenements which it held in that area but effected no acquisition of Newcrest's leasehold interests or any proprietary interests Newcrest held in the minerals. Nevertheless, it was held that an acquisition of property occurred because the interests of the Director in the Park and the Commonwealth in the minerals were held thereafter free of Newcrest's rights to conduct mining operations and to mine the minerals. The substance and reality of proprietorship Employing the language made familiar in those well-known authorities, the plaintiffs described the effect on them of the Packaging Act as reducing their proprietary rights to a "husk"351, as taking the entire "substance"352 of those rights, as effectively "sterilising"353 them and stripping them of all their worth or value. Supported by the intervening tobacco interests, the plaintiffs further submitted that they were deprived of the "reality of proprietorship"354 in their property. In response, the Commonwealth contended that a diminution in the use or value of property is not the object of s 51(xxxi), since s 51(xxxi) is not concerned with the "general commercial and economic position occupied by traders"355. The restriction of "just terms" in s 51(xxxi) was said to be a protection against an acquisition of property in the sense of an expropriation or requisition of property356. Further, it was submitted that, even if the provisions of the Packaging Act might be characterised as a taking of the plaintiffs' pre-existing rights to use their property for advertising or promotional purposes, with a possible diminution in the value of the property, such a taking did not amount to an indirect acquisition of the plaintiffs' property. 351 Dalziel (1944) 68 CLR 261 at 286 per Rich J. 352 Banking Case (1948) 76 CLR 1 at 349 per Dixon J. See also Newcrest (1997) 190 CLR 513 at 595 per Gummow J. 353 Newcrest (1997) 190 CLR 513 at 635 per Gummow J. 354 Banking Case (1948) 76 CLR 1 at 349 per Dixon J. 355 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 270 per Dixon J; [1949] HCA 44. 356 See Health Insurance Commission v Peverill (1994) 179 CLR 226 at 235 per Mason CJ, Deane and Gaudron JJ. Crennan Some considerations of trade mark law and observations about the nature of composite trade marks support the Commonwealth's submissions and show that the plaintiffs' characterisation of the effect of the Packaging Act on their pre- existing rights was overstated. A trade mark is a sign used or intended to be used to distinguish a registered owner's goods in the course of trade357. An application for registration of a trade mark must be rejected if the trade mark is not capable of fulfilling the function of distinguishing the applicant's goods from those of others358. Composite marks, just as much as marks consisting of a word or brand name alone, are assessed for registration on their capacity to distinguish the registered owner's goods from those of others. Entitlement to registration does not depend on a trade mark's capacity to advertise goods or to promote sales. A registered trade mark which can no longer perform the function of distinguishing its owner's goods from those of another trader will be liable to rectification or removal. Furthermore, there are numerous grounds upon which an application for registration of a trade mark may be rejected, including that a trade mark used on the goods for which registration is sought would be likely to deceive or cause confusion359. There are also numerous legislative provisions bearing upon the use or registration of a trade mark360. Whilst the prime concern of the Trade Marks Act is with the capacity of a trade mark to distinguish the goods of the registered owner from those of another trader, trade marks undoubtedly perform other functions. For example, a trade mark can be an indicium of the quality of goods sold under or by reference to it and it may be accepted that distinctive marks can have a capacity to advertise, and therefore to promote, sales of products sold under or by reference to them. The advertising function of a trade mark is much more readily appreciated than it once was361, and that function may be of great commercial value. 357 Trade Marks Act, s 17. 358 Trade Marks Act, s 41(2). 359 Trade Marks Act, ss 39, 41 and 43. 360 See Shanahan's Australian Law of Trade Marks and Passing Off, 5th ed (2012) at 361 See Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 66 [43]; Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 348-349 per Gummow J. See also Kerly's Law of Trade Marks and Trade Names, 15th ed (2011) at 10-12 [2-016]-[2-019]. Crennan It became clear as argument advanced that what the plaintiffs most strenuously objected to was the taking or extinguishment of the advertising or promotional functions of their registered trade marks or product get-up, which functions were prohibited by the Packaging Act. It was said that, having regard to all the prior legislation restricting advertising of tobacco products, the percentage of the retail packaging surface to which the trade marks could be applied prior to the operation of the Packaging Act was the last space upon which the plaintiffs could advertise or promote their products, or offer them for sale in competition with other traders. The result of the prior legislative restrictions on advertising was said to be that the plaintiffs could only distinguish their products by what appears on the packaging for those products. It is important to note that in every composite trade mark claimed by the plaintiffs, an essential feature for the purposes of distinguishing goods from those of competitors appeared to be a brand name. To the extent that colours, chevrons, crests, shields and similar insignia might be in common use in the retail trade in tobacco products, such non-verbal components of a composite trade mark might be discounted362 in a comparison to determine the "deceptive similarity" of another mark, or where marks are compared side by side for the purposes of establishing their "substantial identity"363. The earliest of the registrations depended upon in the BAT proceedings is a registration of a composite mark including the word or brand name "Winfield" depicted in fancy script with a prominent "W"; it was originally registered in Part A of the Register under the provisions of the Trade Marks Act 1955 with a disclaimer of any exclusive right to use the letter "W". Part A was reserved for inherently distinctive marks or marks which had become distinctive through use364. Marks which were descriptive or which were, in their ordinary meaning, surnames or geographical names were not inherently distinctive365. A registration of a composite mark which included a word or brand name gave narrower protection for the purposes of comparison relevant to infringement or opposition proceedings than a registration of a word or brand name simpliciter. The adding of non-verbal devices or fancy lettering to a trade mark consisting of a word which was not inherently distinctive enhanced such a mark's prospects of registration in Part A of the Register. 362 Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 at 127 per 363 The Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 414-415 per Windeyer J; [1963] HCA 66. 364 Trade Marks Act 1955, s 24. 365 Trade Marks Act 1955, s 24(1)(d). Crennan Subject to exceptions in some jurisdictions for specialist tobacco retailers, legislation in each State and Territory now prohibits the display and advertising of tobacco products at retail premises366, except by way of signage prescribed by regulations367. Such restrictions have the effect that all traders in the retail tobacco trade depend on the verbal, aural and allusive features, and any inherent or acquired distinctiveness, of their brand names in order to distinguish their goods from those of others in the course of retail trade. It must be noted that registered trade marks which are composite marks containing no word or brand name cannot be applied to retail packaging under the provisions of the Packaging Act. Further, visual distinctions between brand names have been minimised by the provisions of the Packaging Act requiring packaging to appear generic. Nevertheless, the visual, verbal, aural and allusive distinctiveness, and any inherent or acquired distinctiveness, of a brand name can continue to affect retail consumers despite the physical restrictions on the appearance of brand names imposed by the Packaging Act. It was noted in the Agreed Facts in the BAT proceedings that, since July 2010, "hundreds of millions of packets of Winfield branded cigarettes" using the Winfield get-up and "tens of millions of packets of Dunhill branded cigarettes" using the patent and registered design have been sold in Australia. Although the plaintiffs wished to emphasise that the Packaging Act prohibits them from using their registered trade marks, as registered, on retail packaging, it was not suggested by the plaintiffs that their tobacco products were ordered by consumers in the retail trade without reference to their brand names; it was not suggested that relevant goodwill was not significantly attached to their brand names; and it was not suggested that the brand names in the composite marks, as registered, would be insignificant in any opposition or infringement proceedings under the Trade Marks Act or in any action for passing off. 366 See Public Health (Tobacco) Act 2008 (NSW), ss 9 and 16; Tobacco Act 1987 (Vic), s 6(2AA) and (3)(cab); Tobacco Products Regulation Act 1997 (SA), s 40; Tobacco and Other Smoking Products Act 1998 (Q), ss 26A-26HC; Tobacco Products Control Act 2006 (WA), ss 22 and 24; Public Health Act 1997 (Tas), ss 70 and 72; Tobacco Control Act (NT), ss 15, 18 and 20; Tobacco Act 1927 (ACT), ss 10, 20 and 23. 367 See Public Health (Tobacco) Regulation 2009 (NSW), cll 9 and 16; Tobacco Regulations 2007 (Vic), reg 5; Tobacco Products Regulations 2004 (SA), regs 9 and 10; Tobacco and Other Smoking Products Regulation 2010 (Q), s 3; Tobacco Products Control Regulations 2006 (WA), regs 33-47; Public Health (Tobacco Advertisements) Order 2012 (Tas); Tobacco Control Regulations (NT), reg 19. Crennan An action for passing off protects any goodwill and reputation in product get-up368. In a passing off action in respect of get-up, a plaintiff must show not only goodwill and reputation in the product get-up, but also a representation by a defendant to the public leading to actual deception or the probability of deception, and actual damage or the likelihood of damage369. If the features used in product get-up are in common use in a particular trade, a plaintiff may have difficulty in a passing off action in proving the distinctiveness of the get-up370. A brand name used in association with product get-up is likely to be a feature upon which customers rely, especially if the get-up combines features in common use in the trade with a distinctive brand name371. "Distinctiveness" does not mean eye-catching – the test for distinctiveness is the function the get-up actually serves, rather than how well it is adapted to serve it372. It was not suggested by the plaintiffs that the brand names associated with their product get-up would play a negligible role in any action for passing off. The "reality of proprietorship"373 of the plaintiffs as registered owners of composite trade marks is that, used alone, albeit in the manner restricted by the Packaging Act, the brand names "Winfield", "Dunhill", "Camel" and "Old Holborn" are capable of discharging the core function of a trade mark – distinguishing the registered owner's goods from those of another, thereby attracting and maintaining goodwill. Sections 20(3) and 28(1), (2) and (3)(c) of the Packaging Act provide that a use of a brand name, as restricted by the Packaging Act, is to be treated as use of a trade mark, as registered, or as use of a trade mark, the subject of an application for registration. Whilst potential assignees and licensees of registered trade marks may value, even highly, the advertising function of a trade mark, or associated product get-up, an exclusive 368 H P Bulmer Ltd v J Bollinger SA [1978] RPC 79; Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731; Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341; Harrods Ltd v Harrodian School Ltd [1996] RPC 697. 369 Cadbury-Schweppes Pty Ltd v The Pub Squash Co Ltd [1981] RPC 429; Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341 at 406 per Lord Oliver of Aylmerton. 370 Wadlow, The Law of Passing-Off, 4th ed (2011) at 725-730 [8-132]-[8-140]. 371 Imperial Group plc v Philip Morris Ltd [1984] RPC 293; Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341. 372 Wadlow, The Law of Passing-Off, 4th ed (2011) at 733-734 [8-145]. 373 Banking Case (1948) 76 CLR 1 at 349 per Dixon J; Newcrest (1997) 190 CLR 513 at 595, 633 per Gummow J. Crennan right to generate a volume of sales of goods by reference to a distinctive brand name is a valuable right. These considerations show that the plaintiffs are not in a position analogous to the tenant in Dalziel374, the company and shareholders in the Banking Case375, or the owner of mining tenements in Newcrest376. The complaint that the plaintiffs were deprived of the "substance" and "reality" of their proprietorship in their property because they could not use their registered trade marks as registered, or their associated product get-up, left out of account the significance of their ability to continue to use their brand names so as to distinguish their tobacco products, thereby continuing to generate custom and goodwill377. The restrictions in the Packaging Act may reduce the volume of the plaintiffs' sales of tobacco products in retail trade, the value of associated goodwill in the trade marks and associated businesses, and the value of rights to assign or license such marks. However, s 51(xxxi) is not directed to preserving the value of a commercial business378 or the value of an item of property379. Given the nature of the plaintiffs' pre-existing rights to use their property for advertising or promotional purposes, restricting or extinguishing those rights, with a possible consequential diminution in the value of the property or the associated businesses, did not constitute a taking amounting to an indirect acquisition. 374 (1944) 68 CLR 261. 375 (1948) 76 CLR 1. 376 (1997) 190 CLR 513. 377 See Federal Commissioner of Taxation v Murry (1998) 193 CLR 605; [1998] HCA 42. See also In the Matter of Trade Mark No 437,870 of John Sinclair Ltd (1932) 49 RPC 123. 378 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 270 per 379 The Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 72-73 [193]-[194] per Gummow J. See also ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 180 [84] per French CJ, Gummow and Crennan JJ, 201-202 [147] per Hayne, Kiefel and Bell JJ. Crennan Control The plaintiffs invoked the accepted principle that there does not need to be a precise correspondence between what has been taken or diminished and any benefit or advantage obtained by the Commonwealth or another380. It was contended that by "controlling" the plaintiffs' use of their intellectual property, especially their trade marks, and product get-up, through the operation of the provisions of the Packaging Act, the Commonwealth freed up the space on retail packaging previously available for the application of the plaintiffs' trade marks and associated get-up, and regulated what was to be placed in that space. This was described as an indirect acquisition of the right of the plaintiffs as owners of their property not to use that property or, alternatively, as an appropriation of the plaintiffs' "right" to control what material was placed on their chattels. In the Banking Case, Dixon J's references to control of an undertaking were references to the effect of the provisions under consideration, which gave the Commonwealth, "complete powers of nominee directors, agents of disposition and complete power to bind the company as to the recompense it will receive for its assets"381. What was said has no immediate application to the conception that a right of an owner of property includes a right not to use that property. In Telstra Corporation Ltd v The Commonwealth382, the Court said383: "[I]t is ... useful to recognise the different senses in which the word 'property' may be used in legal discourse. Some of those different uses of the word were identified in Yanner v Eaton384. In many cases, including at least some cases concerning s 51(xxxi)385, it may be helpful to speak of property as a 'bundle of rights'." 380 Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 305 per Mason CJ, Deane and Gaudron JJ; Newcrest (1997) 190 CLR 513 at 634 per Gummow J. 381 (1948) 76 CLR 1 at 348. 382 (2008) 234 CLR 210. 383 (2008) 234 CLR 210 at 230 [44]. 384 (1999) 201 CLR 351 at 365-367 [17]-[20] per Gleeson CJ, Gaudron, Kirby and Hayne JJ, 388-389 [85]-[86] per Gummow J; [1999] HCA 53. 385 Dalziel (1944) 68 CLR 261 at 285 per Rich J. Crennan It is in the context of the conception of property as a bundle of rights that an owner's rights "not to use" his property, or to extinguish his own legal interests, have been identified386. Useful as this idea is in many contexts387, it is an awkward and incongruous notion to apply to a registered owner's rights to a trade mark, or an owner's interest in product get-up. The Trade Marks Act requires an applicant for registration to use or intend to use or to have authorised or intend to authorise another to use a trade mark388, the concept of use being integral to the definition of a trade mark389. An exclusive right given by registration is the right "to use the trade mark"390 already explained above. Unlike rights granted under other intellectual property legislation for a limited term391, a registration of a trade mark is not limited in time; however, the registration is vulnerable to removal for non-use392. Similarly, an action at common law in respect of product get-up is available to the extent that the get-up has generated goodwill as a result of use. For those reasons, the argument that the provisions of the Packaging Act effected an indirect acquisition by the Commonwealth of the plaintiffs' right and entitlement not to use their property must be rejected as "unreal" in the sense used by Dixon J in British Medical Association v The Commonwealth393. The further submission that the plaintiffs have a right to place whatever they wish on their chattels, and that this right has been appropriated by the Commonwealth, must also be rejected. The plaintiffs' ability to place material on their packaging is and has for a long period been limited by law394. Legislative provisions requiring manufacturers or retailers to place on product packaging warnings to consumers of the dangers of incorrectly using or positively misusing 386 Hohfeld, "Some Fundamental Legal Conceptions as Applied in Judicial Reasoning", (1913) 23 Yale Law Journal 16 at 22, 23 and 45. 387 See, for example, Yanner v Eaton (1999) 201 CLR 351. 388 Trade Marks Act, s 27. 389 Trade Marks Act, s 17. 390 Trade Marks Act, s 20(1). 391 Copyright Act, ss 33, 34, 93-96, 180, 181, 195AM, 195ANA, 233 and 234; Designs Act, ss 46 and 47; Patents Act, ss 67 and 68. 392 Trade Marks Act, Pt 9 (ss 92-105). 393 (1949) 79 CLR 201 at 270. 394 See, for example, the Commerce (Trade Descriptions) Act 1905 (Cth). Crennan a product are commonplace395. In these cases, the warnings are in relation to the intended use of the tobacco products, namely smoking, the effect of which activity has been the subject of admissions by the plaintiffs, as recorded above. Any decision of the plaintiffs to continue to sell tobacco products in retail packaging which complies with more stringent product and information standards, directed to providing more prominent information about tobacco goods, does not involve any diminution in or extinguishment of any property. Benefit or advantage In a related submission, the plaintiffs contended that the Packaging Act's restrictions on the appearance of retail packaging for the purposes of achieving its objects (as set out in s 3), coupled with stricter requirements in relation to placing product information on the packaging, resulted in a benefit or advantage to the Commonwealth (and to a lesser extent to the owner of Quitline services or the Quitline trade mark) sufficient to trigger the requirement of just terms. The benefit was said to have been acquired "without any obligation to pay". To the extent that the greater prominence given to health warnings might not easily or readily be characterised as a benefit or advantage that was proprietary in nature, it was contended that, if a property right is extinguished and some identifiable benefit or advantage which is "relating to the ownership or use of property" is obtained396, there is no requirement that what is acquired should itself be proprietary in nature. In advancing this proposition, the plaintiffs relied on a view expressed with some hesitation by Deane J in the Tasmanian Dam Case397. Deane J 395 See, for example, Therapeutic Goods Act 1989 (Cth); Therapeutic Goods Order No 69 – General requirements for labels for medicines (Cth); Poisons Standard 2012 (Cth); Poisons and Therapeutic Goods Act 1966 (NSW); Drugs, Poisons and Controlled Substances Act 1981 (Vic); Controlled Substances Act 1984 (SA); Controlled Substances (Poisons) Regulations 2011 (SA); Health Act 1937 (Q); Health (Drugs and Poisons) Regulation 1996 (Q); Poisons Act 1964 (WA); Poisons Regulations 1965 (WA); Poisons Act 1971 (Tas); Poisons Regulations 2008 (Tas); Poisons and Dangerous Drugs Act (NT); Poisons and Dangerous Drugs Regulations (NT); Medicines, Poisons and Therapeutic Goods Act 2008 (ACT); Medicines, Poisons and Therapeutic Goods Regulation 2008 (ACT). See also Competition and Consumer Act 2010 (Cth) Sched 2, Pt 3-3 Div 1 and associated regulations and State and Territory legislation. 396 Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 185 per Deane and Gaudron JJ. See also ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 179-180 [82] per French CJ, Gummow and Crennan JJ. 397 (1983) 158 CLR 1 at 286. Crennan expressed this view in response to an argument by Tasmania that certain Commonwealth legislation effected an acquisition of Tasmania's property because the legislation prevented Tasmania from using its land for a variety of purposes without the consent of the Commonwealth. His Honour considered that it was possible that legislation could constitute "an effective confiscation" of a benefit of land ownership, notwithstanding that the Commonwealth acquired no corresponding rights in respect of the land398. His Honour went on to find that the restrictions on land use effected by the legislation in question were sufficiently comprehensive to resemble the effect of a restrictive covenant399. Accordingly, his Honour concluded that, although the Commonwealth did not take any material benefit of a proprietary nature under the legislation, it was enough for the purposes of s 51(xxxi) that the legislation brought about the position that the land was "effectively frozen", unless and until the relevant Commonwealth Minister consented to its development400. As pointed out in the reasons of others, this was, with great respect, a minority view in the case. His Honour's reasons have been referred to subsequently in the context of recognition that an acquisition for the purposes of s 51(xxxi) must be an acquisition of rights of a proprietary nature401. The principle articulated by Mason J in the Tasmanian Dam Case402, quoted above, remains authoritative. The plaintiffs relied, for similar purposes, on a statement in Mutual Pools & Staff Pty Ltd v The Commonwealth403 by Deane and Gaudron JJ, to the effect that it will be sufficient to demonstrate an acquisition of property if there is some benefit or advantage obtained "relating to the ownership or use of property"404. The plaintiffs also relied on a later statement in ICM Agriculture Pty Ltd v The Commonwealth405: 398 (1983) 158 CLR 1 at 284. 399 (1983) 158 CLR 1 at 286-287. 400 (1983) 158 CLR 1 at 286. 401 See, for example, Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 315-316 per Dawson J. See also Newcrest (1997) 190 CLR 513 at 634 n 374 per Gummow J. 402 (1983) 158 CLR 1 at 145. 403 (1994) 179 CLR 155. 404 (1994) 179 CLR 155 at 185. 405 (2009) 240 CLR 140 at 201-202 [147] per Hayne, Kiefel and Bell JJ. Crennan "[T]here can be no acquisition of property unless some identifiable and measurable advantage is derived by another from, or in consequence of, the replacement of the plaintiffs' licences or reduction of entitlements406. That is, another must acquire 'an interest in property, however slight or insubstantial it may be'407." (original emphasis) Reliance was placed only on the first sentence in that passage as supporting a proposition that what is acquired need not be of a proprietary nature. Read in context, neither statement represents any retreat from settled doctrine that an acquisition for the purposes of s 51(xxxi) requires that either the Commonwealth or another must acquire, for the purposes of the Commonwealth, "an interest in property, however slight or insubstantial it may be"408. The plaintiffs' submissions on this branch of their argument must also be rejected. For the reasons set out above, the Packaging Act restrictions, which effectively prohibit the plaintiffs from using their property for advertising or promotional purposes, while severe from a commercial viewpoint, do not operate so as to effect an acquisition of any proprietary right or interest by the Commonwealth, or by the owner of the Quitline services or trade mark. The Commonwealth made further submissions influenced by authorities concerning the Fifth Amendment to the Constitution of the United States. Those submissions were based on the proposition that an acquisition of property without compensation is outside the scope of s 51(xxxi) if that acquisition is no more than a necessary consequence or incident of a restriction on a commercial trading activity, where that restriction is reasonably necessary to prevent or reduce harm caused by that trading to members of the public or public health409. The conclusion reached above renders it unnecessary to further consider those submissions. 406 Newcrest (1997) 190 CLR 513 at 560 per Toohey J, 561 per Gaudron J, 634 per 407 Tasmanian Dam Case (1983) 158 CLR 1 at 145 per Mason J; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 500 per Mason CJ, Brennan, Deane and Gaudron JJ, 528 per Dawson and Toohey JJ. 408 Tasmanian Dam Case (1983) 158 CLR 1 at 145 per Mason J. 409 This statement of principle was said to accord with decisions of the Supreme Court of the United States in Mugler v Kansas 123 US 623 at 668 (1887); Pennsylvania Coal Co v Mahon 260 US 393 at 413, 417, 422 (1922); Kimball Laundry Co v United States 338 US 1 at 5 (1949); Goldblatt v Hempstead 369 US 590 at 592-593 (1961); Andrus v Allard 444 US 51 at 65-66 (1979); and Keystone Bituminous Coal Association v DeBenedictis 480 US 470 at 488-489, 491-492 (1986). 308 KIEFEL J. Chapter 2 of the Tobacco Plain Packaging Act 2011 (Cth) ("the Packaging Act") is entitled "Requirements for plain packaging and appearance of these tobacco products". requirements and the Tobacco Plain Packaging Regulations 2011 (Cth) ("the Packaging Regulations") are due to commence in operation on 1 October 2012410. The Packaging Act has as its objects411: With some presently irrelevant exceptions, to improve public health by: (iii) discouraging people from taking up smoking, or using tobacco products; and encouraging people to give up smoking, and to stop using tobacco products; and discouraging people who have given up smoking, or who have stopped using tobacco products, from relapsing; and reducing people's exposure to smoke from tobacco products; and to give effect to certain obligations that Australia has as a party to the Convention on Tobacco Control[412]." The intention of the Commonwealth Parliament is stated in s 3(2) to be: "to contribute to achieving the objects in subsection (1) by regulating the retail packaging and appearance of tobacco products in order to: reduce the appeal of tobacco products to consumers; and increase the effectiveness of health warnings on the retail packaging of tobacco products; and reduce the ability of the retail packaging of tobacco products to mislead consumers about the harmful effects of smoking or using tobacco products." 410 Tobacco Plain Packaging Act 2011 (Cth), s 2(1); Tobacco Plain Packaging Regulations 2011 (Cth), reg 1.1.2. 411 Tobacco Plain Packaging Act 2011, s 3(1). 412 WHO Framework Convention on Tobacco Control [2005] ATS 7. The objects of the Packaging Act are sought to be achieved by preventing constitutional corporations that distribute tobacco products, such as cigarettes, for retail sale from using marks, words, colours, designs or other distinctive features, which a consumer might associate with a particular brand of tobacco product, on the packaging of these products. The use of a brand name is restricted in its permissible size and appearance. It is to be placed upon a drab background in a specified position. The larger portion of the space on tobacco product packaging thus created will be taken up with information and warnings about the use of tobacco products, which are the subject of other legislative requirements. The prohibitions and restrictions of the Packaging Act and the Packaging Regulations are reinforced by provisions creating civil and criminal offences. British American Tobacco Australasia Limited ("BAT") is the owner of registered trade marks relating to "Winfield" tobacco products and the holder of copyright in artistic works used in the packaging of tobacco products sold under variations of the Winfield brand name. It also claims to be the owner of "distinctive trade dress and get-up", which is described as including "size, shape, arrangements of words, colours, decorations, designs, logos, lettering and markings for tobacco products" using its trade marks or copyright works. British American Tobacco (Investments) Limited ("BAT Investments") is the owner of a registered design relating to ribbing on a cigarette packet and a patent for a method of sealing the contents of a packet, which are applied to packaging for "Dunhill" branded products. British American Tobacco Australia Limited ("BATA") manufactures and/or imports, markets, sells, distributes and displays cigarettes in Australia under the Winfield and Dunhill brands. (These plaintiffs will sometimes be referred to compendiously as "the BAT plaintiffs" in these reasons.) The plaintiff in the other proceeding, JT International SA ("JTI"), is a company incorporated under the laws of Switzerland. Tobacco products are distributed for it in Australia under the brand names "Camel" and "Old Holborn". It is the exclusive licensee of four registered trade marks pertaining to the Camel brand and the owner of a trade mark pertaining to the Old Holborn brand413. JTI also claims to have rights of use in get-up. Section 51(xxxi) of the Constitution provides that the Commonwealth Parliament may make laws with respect to "the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws". There appears to have been little discussion of this provision in the Convention Debates. It was drafted to meet the concern that there might have been some uncertainty as to whether the 413 No distinction need be drawn in these reasons between the trade marks in respect of which JTI is the exclusive licensee and that in respect of which it is the owner. Commonwealth had legislative power to acquire property414. Nevertheless, s 51(xxxi) has been held to serve a dual purpose: to provide the Commonwealth with that power and to provide the individual or the State affected with protection against governmental interferences with their proprietary rights without proper recompense415. The words "for any purpose in respect of which the Parliament has power to make laws" limit the exercise of the power to "an implementation of a purpose within the field of Commonwealth legislative power."416 The plaintiffs in the two proceedings, and the companies which have been given leave to intervene in support of the BAT plaintiffs, did not dispute that the Packaging Act may be supported by heads of power such as s 51(i), (xviii), (xx) and (xxix). JTI conceded that the Packaging Act could be supported by the corporations power (s 51(xx)). However, each of the plaintiffs contended that the Packaging Act contravenes s 51(xxxi). Details of the proceedings between the plaintiffs and the Commonwealth are given in the judgment of Gummow J. JTI has demurred to the Commonwealth's defence and thereby put in issue whether its trade marks and get-up are "property" within the meaning of s 51(xxxi); whether the Packaging Act would effect an acquisition of that property417; and whether any acquisition would be otherwise than on just terms. The first of the questions reserved in the proceeding to which the BAT plaintiffs are party is, more generally, whether all or some of the provisions of the Packaging Act would418 result in an acquisition of their property other than on just terms. Restrictions on the promotion of tobacco products Many kinds of products have been subjected to regulation in order to prevent or reduce the likelihood of harm. The labelling required for medicines 414 Grace Brothers Pty Ltd v The Commonwealth (1946) 72 CLR 269 at 290-291 per Dixon J; [1946] HCA 11; Evans, "Property and the Drafting of the Australian Constitution", (2001) 29 Federal Law Review 121 at 128. 415 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349; [1948] HCA 7. 416 Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 169 per Mason CJ; [1994] HCA 9. 417 But for s 15 of the Tobacco Plain Packaging Act 2011, to which reference will be made later in these reasons. 418 Again, but for s 15 of the Tobacco Plain Packaging Act 2011. and poisonous substances419 comes immediately to mind. Labelling is also required for certain foods, to both protect and promote public health420. It may be thought that the pursuit of a purpose such as the prevention of harm or the protection of health is inherently unlikely to involve an acquisition of property, but objects should not be confused with the methods employed to attain them. A question that arises in cases concerning s 51(xxxi) which involve regulatory restrictions having severe effects is whether something more than the attainment of statutory objects results to the Commonwealth or another person as a result of the restrictions imposed. Answering this question necessitates an understanding of the impugned restrictions, viewed in the legislative framework in which they operate. In recent decades, there has been a progressive restriction of the promotion of tobacco products, which, although remaining legal to sell and use, have been recognised as seriously harmful to the health of those using them. The Commonwealth and the plaintiffs are agreed that one consequence of the level of restriction of advertising of tobacco products has been that the packaging of these products has become the main means of their promotion. In 1973, legislation commenced in each State and Territory requiring, for the first time, cigarette packets to be labelled with a health warning ("WARNING – SMOKING IS A HEALTH HAZARD")421. From 1987 each State and 419 See, for example, the Therapeutic Goods Order No 69 – General requirements for labels for medicines (commencing on 12 September 2001) and the Poisons Standard 2012, both made under the Therapeutic Goods Act 1989 (Cth). 420 See, for example, Food Standards Australia New Zealand Act 1991 (Cth), ss 3, 16(1)(d); Australia New Zealand Food Standards Code, Standard 1.2.1, Application of Labelling and Other Information Requirements. It may also be noted that Art 8(1) of the Agreement on Trade-Related Aspects of Intellectual Property Rights (1994) ("TRIPS") provides that members of the World Trade Organization "may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development", provided the measures are consistent with TRIPS. 421 Cigarettes (Labelling) Regulations 1973 (NSW), cl 4 (made under the Cigarettes (Labelling) Act 1972 (NSW)); Cigarette Package Labelling Regulations 1972 (Vic), reg 3; see also its successor, Health (Tobacco Packages) Regulations 1984 (Vic), reg 4(a) (both made under the Health Act 1958 (Vic)); Cigarettes (Labelling) Regulations (SA), reg 2 (made under the Cigarettes (Labelling) Act 1971 (SA)); The Food and Drug Regulations 1964 (Q), reg 79A (made at Queensland Government Gazette, G62, 7 April 1973); see also its successor, Therapeutic Goods (Footnote continues on next page) Territory replaced the existing requirements with a system of four rotating warnings ("SMOKING CAUSES LUNG CANCER", "SMOKING CAUSES HEART DISEASE", "SMOKING REDUCES YOUR FITNESS", and "SMOKING DAMAGES YOUR LUNGS") after which the words "Health Authority Warning" were required to appear 422. In the early 1970s, the Commonwealth legislated to require that a warning that smoking is a health hazard follow every cigarette advertisement on radio or television423. In 1976 the broadcasting of tobacco advertisements was prohibited424 and in 1990 the prohibition was extended to the print media425. and Other Drugs Regulations 1982 (Q), reg 9(1) (both made under the Health Act 1937 (Q)); Cigarettes (Labelling) Regulations (WA), reg 4 (made under the Health Act 1911 (WA)); Cigarettes (Labelling) Regulations 1973 (Tas), reg 3 (made under the Cigarettes (Labelling) Act 1972 (Tas)); Cigarette Containers (Labelling) Ordinance 1972 (NT), s 4(1); Cigarette Containers (Labelling) Ordinance 1972 (ACT), s 5(1). 422 Public Health Act 1902 (NSW), ss 75D-75E and item 2(1) of the Third Schedule (introduced by Public Health (Tobacco) Amendment Act 1986 (NSW), s 3 and Sched 1); see also its successor, Public Health Act 1991 (NSW), ss 55-56 and item 2(1) of Sched 2; Health (Tobacco Warning Labels) Regulations 1986 (Vic), regs 8-9 and item 1 of Sched 1 (made pursuant to the Health Act 1958); Tobacco Products Control Regulations 1987 (SA), reg 4(1) (made under the Tobacco Products Control Act 1986 (SA)); Therapeutic Goods and Other Drugs Regulations 1982 (Q), reg 9(1), as amended by the Therapeutic Goods and Other Drugs (Amendment) Regulations 1986 (Q), reg 3 (both made under the Health Act 1937); Tobacco (Warning Labels) Regulations 1987 (WA), regs 3-4 and item 1 of the Schedule (made under the Health Act 1911); Tobacco Products (Labelling) Regulations 1987 (Tas), reg 5(1) (made under the Tobacco Products (Labelling) Act 1987 (Tas)); see also Cigarettes (Labelling) Regulations 1985 (Tas), reg 4 (made under the Cigarettes (Labelling) Act 1972), which contained a slightly different form of words; Cigarette Containers (Labelling) Regulations 1987 (NT), reg 4(1) (made under the Cigarette Containers (Labelling) Act 1972 (NT) as amended by the Cigarette Containers (Labelling) Amendment Act 1986 (NT)); see also its successor, Tobacco 1992 (NT), reg 4(1) (made under the Tobacco Act 1992 (NT)); Tobacco Products (Health Warnings) Ordinance 1986 (ACT), s 4(1), which, instead of the warning "SMOKING REDUCES YOUR FITNESS", featured the warning "SMOKING IS ADDICTIVE". 423 Broadcasting and Television Act 1972 (Cth), s 3, inserting s 100A into the Broadcasting and Television Act 1942 (Cth). 424 Broadcasting and Television Amendment Act 1976 (Cth), s 5(a), inserting s 100(5A) into the Broadcasting and Television Act 1942. Legislation in the States and Territories has prohibited certain forms of the advertising of tobacco products since the 1980s426 and from the 1990s has prohibited or restricted the promotion of tobacco products at the point of retail sale, including by the display of such products427. The first regulation by the Commonwealth of the appearance of the packaging of tobacco products was effected by the Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 1994 (Cth) ("the 1994 Information Standard"), made under the Trade Practices Act 1974 (Cth). From 1 January 1995 (for tobacco manufactured in Australia) or 1 July 1995 (for tobacco imported into Australia)428, a retail package of tobacco was required to conform to a number of specific requirements. Principally, the package was required to contain a "warning message" (such as "SMOKING CAUSES LUNG CANCER", "SMOKING IS ADDICTIVE", "SMOKING KILLS", "SMOKING CAUSES HEART DISEASE", "SMOKING WHEN PREGNANT HARMS YOUR BABY", or "YOUR SMOKING CAN HARM OTHERS", followed by the words "Government Health Warning"), together with a "corresponding explanatory message" which elaborated upon the warning429. The format430 and 425 Smoking and Tobacco Products Advertisements (Prohibition) Act 1989 (Cth), s 5. This Act and the Broadcasting and Television Amendment Act 1976 were relevantly replaced by the Tobacco Advertising Prohibition Act 1992 (Cth): see Tobacco Advertising Prohibition Act 1992, Pt 3. 426 See, for example, Tobacco Act 1987 (Vic), s 6; Tobacco Products Control Act Amendment Act 1988 (SA), s 12; Tobacco (Amendment) Act 1990 (ACT), s 5; Tobacco Control Act 1990 (WA), s 5; Tobacco Advertising Prohibition Act 1991 (NSW), s 5; Public Health Act 1997 (Tas), s 70; Tobacco and Other Smoking Products (Prevention of Supply to Children) Amendment Act 2001 (Q), s 26; Tobacco Control Act 2002 (NT), s 15. 427 See, for example, Tobacco (Amendment) Act 1999 (ACT), s 5; Public Health Amendment (Tobacco) Act 2000 (Tas), s 12; Tobacco (Amendment) Act 2000 (Vic), ss 8-9; Tobacco and Other Smoking Products (Prevention of Supply to Children) Amendment Act 2001, s 26; Tobacco Control Act 2002 (NT), ss 20-27; Tobacco Products Variation Regulations 2011 (SA), reg 6 (made under the Tobacco Products Regulation Act 1997 (SA)); Tobacco Products Control Act 2006 (WA), ss 20-25; Public Health (Tobacco) Act 2008 (NSW), ss 9-11, 12-15. 428 See Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 1994 (Cth), reg 2, as amended by Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations (Amendment) 1994 (Cth), reg 2. 429 Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 1994, reg 7 and Sched 1. By way of example the corresponding explanatory message for "SMOKING IS ADDICTIVE" was "Nicotine, a drug in tobacco, (Footnote continues on next page) position431 of the messages, the area to be covered by the messages432 and their orientation433 were prescribed. Retail packages of cigarettes were also required to contain information about the amount of tar, nicotine and carbon monoxide in the smoke of each cigarette434. (Consumer Product The Trade Practices Information Standards) (Tobacco) Regulations 2004 (Cth) ("the 2004 Information Standard") repealed the 1994 Information Standard435 and put in place a more stringent regime regarding the packaging of cigarettes. The key provisions of the regime436 require, with some minor exceptions, that a package of cigarettes for retail sale be labelled with a "Warning message and corresponding graphic", which covers at least 30 per cent of the total area of the front face of the packet, and a "Warning message, corresponding graphic and corresponding explanatory message with Quitline logo and number", which covers at least 90 per cent of the total area of the back face437. The graphics depict adverse health effects, such as makes smokers feel they need to smoke. The more you smoke, the more your body will depend on getting nicotine and you may find yourself hooked. It may be difficult to give up smoking once you are hooked on nicotine. For more information, call 13 2130. Government Health Warning". 430 Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 1994, reg 9. 431 Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 1994, reg 10 and Sched 2. 432 Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 1994, reg 11. 433 Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 1994, reg 12. 434 Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 435 Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 2004 (Cth), reg 3. 436 Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 2004, regs 35, 35A. 437 Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 2004, Sched 2, Pt 2.1, Div 2.1.1. mouth and lung cancer, gangrene and loss of vision438. "Quitline" is a service available through various bodies in Australia that offers telephone counselling, free of charge, to persons wishing to cease the use of tobacco products. The Quitline logo consists of one or more registered trade marks owned by the Anti- Cancer Council of Victoria. The Competition and Consumer (Tobacco) Information Standard 2011 (Cth) ("the 2011 Information Standard"), made pursuant to the Competition and Consumer Act 2010 (Cth), came into force on 1 January 2012, though it in effect applies to tobacco products supplied after 30 November 2012439. It repeals the 2004 Information Standard440 and imposes even more stringent requirements relating to the labelling of tobacco products. Under the 2011 Information Standard a cigarette pack must contain: on its front, a "Warning Statement" and a "Graphic"; on its back, a "Warning Statement", a "Graphic" and an "Explanatory message"; and, on one of its sides, an "Information message"441. There are 14 combinations of warning statements, graphics, explanatory messages and information messages for cigarettes442. They are required to be rotated443. The messages and graphic accompanying each warning statement relate to the statement. For example444, the warning statement "SMOKING HARMS UNBORN BABIES" is to be accompanied by a graphic of an underweight baby; the explanatory message explains that smoking during pregnancy reduces blood flow in the placenta and limits the oxygen and nutrients that reach the growing baby; and the information message explains that tobacco smoke causes disease and early death in children and non-smoking adults. In each combination the explanatory message includes the Quitline phone number and the address for the "Quitnow" website, a website controlled by the Commonwealth containing information about the Quitline program and related 438 Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 2004, Sched 2, Pt 2.2, Div 2.2.1. 439 See Competition and Consumer (Tobacco) Information Standard 2011 (Cth), s 1.5. 440 Competition and Consumer (Tobacco) Information Standard 2011, s 1.7(a). 441 Competition and Consumer (Tobacco) Information Standard 2011, s 2.2(1), item 1. 442 Competition and Consumer (Tobacco) Information Standard 2011, Pts 3, 4. 443 Competition and Consumer (Tobacco) Information Standard 2011, s 9.5. 444 Competition and Consumer (Tobacco) Information Standard 2011, s 3.2. programs. The graphic on the back is required to include a partially transparent overlay of the Quitline logo445. The 2011 Information Standard requires that the warning statement and the graphic cover at least 75 per cent of the total area of the front outer surface of a cigarette pack446. The warning statement must appear at the top of the front outer surface, with the graphic immediately below it447. When the top of the front outer surface consists of a flip-top, the warning statement must cover the whole of the flip-top portion448. The warning statement, graphic and explanatory message on the back outer surface of a cigarette pack must cover at least 90 per cent of the total of the area449. The requirements of the Packaging Act Sections 18 to 27 of the Packaging Act specify requirements, and provide for the making of regulations specifying requirements, within the meaning of the term "tobacco product requirement" in s 4(1). Certain of the provisions of the Packaging Act, such as those concerned with the colour and finish of retail packaging of tobacco products450, and those dealing with the prohibition upon trade marks and other marks 451 appearing on 445 Competition and Consumer (Tobacco) Information Standard 2011, ss 1.3(6), 446 Competition and Consumer (Tobacco) Information Standard 2011, s 9.13(1)(a). 447 Competition and Consumer (Tobacco) Information Standard 2011, s 9.13(5). 448 Competition and Consumer (Tobacco) Information Standard 2011, s 9.13(3) and 449 Competition and Consumer (Tobacco) Information Standard 2011, s 9.19(1)(a). 450 Tobacco Plain Packaging Act 2011, s 19. 451 Section 4(1) of the Tobacco Plain Packaging Act 2011 provides that the term "mark": includes (without limitation) any line, letters, numbers, symbol, graphic or image; but (other than when referring to a trade mark) does not include a trade mark." packaging452, intersect with the 2004 or 2011 Information Standards. Others do not. For example, the requirements as to the physical features of the retail packaging of tobacco products453 do not depend for their effect upon those standards, nor does the prohibition on a trade mark or mark appearing anywhere on a tobacco product454. Paragraphs (a) and (c) of s 10 of the Packaging Act have the effect that the 2004 and 2011 Information Standards prevail to the extent of any inconsistency with the Packaging Act. Trade marks and marks may generally not be used on the retail packaging of tobacco products455. However, s 20(3) of the Packaging Act provides that the following may appear on the retail packaging of tobacco products: the brand, business or company name for the tobacco products, and any variant name for the tobacco products; the relevant legislative requirements[456]; any other trade mark or mark permitted by the regulations." Further, no trade mark or mark is to appear on a tobacco product itself, or on the wrapper of a product, other than as permitted by the Packaging Regulations457. The use of a brand, business or company name for tobacco products or any variant name is strictly regulated. It may only appear on the front, top and bottom outer surfaces of a cigarette pack458, much of which, as has been explained, must be covered by the statements, graphics and messages specified in the 2004 and 2011 Information Standards. Any brand, business or company name on the front outer surface of a cigarette pack must be in the centre of the 452 Tobacco Plain Packaging Act 2011, s 20. 453 Tobacco Plain Packaging Act 2011, s 18. 454 Tobacco Plain Packaging Act 2011, s 26. 455 Tobacco Plain Packaging Act 2011, s 20(1)-(2). 456 The term "relevant legislative requirement" means any of (a) a health warning; (b) a fire risk statement; (c) a trade description; or (d) a measurement mark: Tobacco Plain Packaging Act 2011, s 4(1). 457 Tobacco Plain Packaging Act 2011, ss 22(2)(b), 26(1). 458 Tobacco Plain Packaging Act 2011, s 21(2)(c). space remaining on that surface, beneath the "health warning"459, and appear horizontally below and in the same orientation as the health warning460. On any other face the brand, business or company name must appear horizontally and in the centre of the outer surface of the pack461. Any variant name must appear horizontally and immediately below and in the same orientation as the brand, business or company name462. Further, any brand, business, company or variant name must conform to requirements as to size, font and colour463. Packets are not permitted to have any decorative ridges, embossing, or other irregularities of shape or texture or other embellishments464. Packets must be made of rigid cardboard of rectangular shape with 90 degree angles465. Their outer surfaces must be a drab colour466. In summary, the Packaging Act prohibits the use of any trade mark or other distinctive feature on packaging and permits only a brand, business, company or variant name to be used to distinguish one tobacco product from another, and then only in small type on an inconspicuous background. The requirements of the 2004 and 2011 Information Standards are thereby reinforced in aid of the object of the Packaging Act, namely to actively dissuade persons from purchasing tobacco products. Chapter 3 of the Packaging Act provides for criminal and civil penalties for non-compliance with a "tobacco product requirement". The offence provisions are directed to constitutional corporations, persons engaging in 459 This term is defined in s 4(1) of the Tobacco Plain Packaging Act 2011 in terms which include the labelling requirements of the 2004 and 2011 Information Standards. 460 Tobacco Plain Packaging Act 2011, s 21(1), (3) (item 1 of the table). 461 Tobacco Plain Packaging Act 2011, s 21(3) (item 3 of the table). 462 Tobacco Plain Packaging Act 2011, s 21(3) (item 4 of the table). 463 Tobacco Plain Packaging Act 2011, s 21(1); Tobacco Plain Packaging Regulations 2011, reg 2.4.1. 464 Tobacco Plain Packaging Act 2011, s 18(1)(a). 465 Tobacco Plain Packaging Act 2011, ss 18(1)(a), (2)(a)-(b), 19(2); Tobacco Plain Packaging Regulations 2011, reg 2.2.1. 466 Pantone 448C: see Tobacco Plain Packaging Act 2011, s 19(1), (2)(b)(i); Tobacco Plain Packaging Regulations 2011, reg 2.2.1(2). constitutional trade or commerce, or persons engaging in conduct to the extent to which the conduct takes place in a Territory467. Section 15 of the Packaging Act assumes importance if the plaintiffs' argument, that s 51(xxxi) is infringed, succeeds. It provides (note omitted): "(1) This Act does not apply to the extent (if any) that its operation would result in an acquisition of property from a person otherwise than on just terms. In particular, if, apart from this section, this Act would result in such an acquisition of property because it would prevent the use of a trade mark or other sign on or in relation to the retail packaging of tobacco products, or on tobacco products, then despite any other provision of this Act, the trade mark or sign may be used on or in relation to the retail packaging of tobacco products, or on tobacco products, subject to any requirements that may be prescribed in the regulations for the purposes of this subsection. To avoid doubt, any tobacco product requirement (within the meaning of paragraph (a) or (b) of the definition of tobacco product requirement) that does not result in such an acquisition of property continues to apply in relation to: the retail packaging of tobacco products; and the appearance of tobacco products." In the event of infringement, questions would arise as to whether the Packaging Act was intended to operate fully and according to its terms or whether it is possible to remove the invalid part without affecting the operation of the balance of the Act468. The BAT plaintiffs say that the latter is not possible and that s 15 does not contain a standard or test which could be applied by the Court to limit the operation of the Packaging Act, with the result that the Court is asked to perform what is a legislative and not judicial function469. 467 Tobacco Plain Packaging Act 2011, s 14(2), (3), (5). 468 Pidoto v Victoria (1943) 68 CLR 87 at 108; [1943] HCA 37; see also Victoria v The Commonwealth (Industrial Relations Act Case) (1996) 187 CLR 416 at 502; [1996] HCA 56. 469 Pidoto v Victoria (1943) 68 CLR 87 at 109. The Commonwealth's additional contention The central question in the proceedings is whether the Packaging Act would result in an acquisition by the Commonwealth or any other person. The Commonwealth denies that this will occur, but its argument goes further. It contends that the Packaging Act is a law which, even if it has the effect of acquiring property, nevertheless stands outside s 51(xxxi). The argument the Commonwealth puts raises a number of questions. The Commonwealth argues that there may be discerned a general approach to the characterisation of a law which infringes a constitutional limitation by which a court "may inquire into the proportionality of the means adopted by the law to achieve the postulated purpose or object"470. It says that the guarantee of just terms in s 51(xxxi) "invokes essentially the same method of analysis that is brought to bear on other constitutional guarantees" and refers to cases involving s 92471, where the proportionality test of whether a legislative burden may be said to be reasonably necessary to the achievement of a legitimate, which is to say non-infringing, purpose is applied, and cases concerning the implied guarantee of freedom of political communication. In Rowe v Electoral Commissioner472 I discussed some of these cases and the proportionality test applied in them. The Commonwealth identifies a constitutional principle which is then said to apply. Stated shortly, it is that it is an acceptable justification for a law, such as will place it outside s 51(xxxi) and the requirement of just terms, that the acquisition of property is no more than a consequence or incident of a restriction on a commercial trading activity, where that restriction is reasonably necessary to prevent or reduce the harm that activity causes to public health. The first question that the Commonwealth's argument raises is whether the cases relied upon, as evidencing the "general approach" to characterisation, may be explained upon the basis of a proportionality test. It may be accepted that s 51(xxxi) does not apply to every law providing for the acquisition of 470 Cunliffe v The Commonwealth (1994) 182 CLR 272 at 324; [1994] HCA 44. 471 North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW (1975) 134 CLR 559 at 608; [1975] HCA 45, quoted in Betfair Pty Ltd v Western Australia (2008) 234 CLR 418 at 477 [102]; [2008] HCA 11; see also Betfair Pty Ltd v Racing New South Wales (2012) 86 ALJR 418 at 444 [136]; 286 ALR 221 at 255; [2012] HCA 472 (2010) 243 CLR 1 at 134-139 [436]-[455]; [2010] HCA 46. property473. However, it would not usually be said that a law providing for the sequestration of a bankrupt's property and the vesting of it in a trustee, an example often given of such a law474, is a law to which s 51(xxxi) applies because its measures are reasonably necessary for the purpose of adjusting the claims of creditors. Acquisition of the debtor's property might be said to be incidental to that purpose, indeed so much so that the law's provisions respecting property have no independent character475. It may also be incongruous to characterise laws providing for exactions in the nature of penalties and forfeitures as providing for acquisitions of property476. But in neither case does characterisation depend upon notions of proportionality. This observation raises the question whether the principle for which the Commonwealth contends in truth involves a test of proportionality. It bears little the resemblance constitutionally guaranteed freedoms, and s 51(xxxi) may not require such a test. tests of proportionality which are applied the A test of proportionality is necessary where a law purports to restrict constitutional freedoms, because although they cannot be regarded as absolute, the Constitution does not express the limits which may be placed upon them. Proportionality therefore tests the limits of legislative power. It proceeds upon an assumption that, given the existence of the freedom, the legislature could not intend to go further than is reasonably necessary in achieving the legitimate purpose of the law. Legislation which restricts a constitutionally guaranteed freedom within these bounds may therefore be said to be justified and not to infringe the freedom477. A test of proportionality necessarily looks to the measures employed, the level of the restriction they impose and the legislative purpose sought to be achieved, which is to say the proportion between means and ends. The test formulated by the Commonwealth would not undertake this analysis. It would merely say that an acquisition goes no further than reasonably necessary because it is incidental to its purpose of preventing public health. Most restrictions upon 473 Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 171 per 474 See Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 170 per Mason CJ, 188 per Deane and Gaudron JJ. 475 Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 171. 476 Theophanous v The Commonwealth (2006) 225 CLR 101 at 126 [60]; [2006] HCA 477 Wotton v Queensland (2012) 86 ALJR 246; 285 ALR 1; [2012] HCA 2. a freedom would qualify as incidental to a purpose, but they are not to be considered reasonably necessary on that account. To say that a restriction is "merely incidental" to a purpose is not a conclusion as to whether it goes too far in achieving its objects. It is to identify its connection to a purpose. It might then be considered how a true proportionality test might be applied to s 51(xxxi), by analogy with the process undertaken respecting the constitutionally guaranteed freedoms mentioned. First, it would be necessary to identify a freedom that is the subject of a constitutional guarantee. It might be said that s 51(xxxi) guarantees freedoms from acquisition other than on just terms, but this is to distort the notion of a constitutional freedom and detract from the true nature of the guarantee provided, which is directed to the provision of just terms478. Then there is an aspect of s 51(xxxi) which differs from s 92 and the freedom of political communication. Section 51(xxxi) contains its own limits and conditions. The requirement of just terms applies if the law is one which provides for the acquisition of property. That is the question to be addressed and it is not answered by a test of proportionality. The Commonwealth's argument therefore elides two questions: that as to proportionality and that as to the characterisation of a law as providing for the acquisition of property. On closer analysis, the Commonwealth's argument appears to rely simply upon the nature of the purpose pursued by the Packaging Act – the protection of public health – as justifying an infringement of s 51(xxxi) or setting the Packaging Act apart from it. This is borne out in part by the Commonwealth's reliance upon authority on the "takings clause" of the Fifth Amendment to the United States Constitution, which holds that a prohibition on the use of property which is declared by legislation to be injurious to the health, morals or safety of the community cannot be deemed a taking479. A more recent approach has been 478 Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 276, 284-285; [1944] HCA 4; Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349; Clunies-Ross v The Commonwealth (1984) 155 CLR 193 at 201-202; [1984] HCA 65; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 509; [1993] HCA 10; Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 184. 479 Mugler v Kansas 123 US 623 at 668-669 (1887); Pennsylvania Coal Co v Mahon 260 US 393 at 417 (1922). to examine the purposes and the magnitude or character of the burden imposed upon property rights480, which looks more like a test of (strict) proportionality481. More directly, the Commonwealth's argument brings to mind an article of the Treaty Establishing the European Economic Community482, by which prohibitions or restrictions on a freedom (relating to the movement of goods) may be justified, inter alia, on the ground of the protection of health. The article is strictly interpreted by the European Court of Justice so that a legislative measure may be justified only where the prohibition or restriction is reasonably necessary483. There is of course no similar provision in our Constitution. What the Commonwealth's argument may really come down to is a proposition that some legislative purposes might justify infringement of, or the treatment of a law as standing apart from and not subject to the requirements of, s 51(xxxi). This is a large proposition, but one that it is not necessary to consider further. The fundamental question which arises from the Commonwealth's argument is whether the Packaging Act is to be characterised as one for the acquisition of property. Logically, the first question to be considered in that regard is whether it would have the effect of acquiring property. The answer to that question is determinative of these proceedings. The plaintiffs' claims of property lost In the BAT plaintiffs' statement of claim, BAT claims that the Packaging Act effects an acquisition of its property comprising its trade marks, copyright works and get-up, and BAT Investments claims that the Packaging Act effects an acquisition of its property comprising its registered design and patent. BAT and BATA also claim that there is an acquisition of property comprising goodwill associated with their other rights. JTI claims, as the relevant property lost, the registered trade marks of which it is the registered owner or exclusive licensee and the get-up in respect of which it claims to have rights of use. 480 Palazzolo v Rhode Island 533 US 606 at 633-634 (2001); Lingle v Chevron USA Inc 544 US 528 at 542 (2005). 481 Rowe v Electoral Commissioner (2010) 243 CLR 1 at 141 [460]. 482 (1957) 298 UNTS 11, Art 36. See also Treaty Establishing the European Community, OJ C 321E of 29 December 2006, Art 30; Treaty on the Functioning of the European Union, OJ C 83 of 30 March 2010, Art 36. 483 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein ("the Cassis de Dijon Case") (Case 120/78) [1979] 1 ECR 649. Section 20(1) of the Trade Marks Act 1995 (Cth) ("the TMA") gives to the owner of a registered trade mark the exclusive right (a) to use the trade mark, and (b) to authorise others to do so, in relation to the goods or services in respect of which the trade mark is registered. Section 21 provides that a registered trade mark is personal property and that equities in respect of it may be enforced in the same way as equities in respect of other personal property. A trade mark may be assigned or transferred with or without goodwill and for all or some of the goods or services for which it is registered484. The TMA provides for when a trade mark may be said to be infringed485, thus supporting the owner's exclusive rights in the use and authorisation of the use of the mark. It also provides for remedies for infringement486. The Designs Act 2003 (Cth), the Patents Act 1990 (Cth) and the Copyright Act 1968 (Cth) provide, respectively, that a registered owner of a registered design, a patentee or an owner of copyright in an artistic work has the exclusive right to make a product embodying the design or to use such a product for trade or business487; to exploit an invention488; to reproduce the work489; to authorise others to do those things490; and to assign the property (which is personal property)491. Each of the Acts has provisions respecting infringement492. Plainly, therefore, each of the statutory intellectual property rights claimed by the plaintiffs is capable of transfer, assignment or licence. However, attention was directed in argument principally to the trade marks, no doubt because the prohibition upon their use has a greater impact upon the packaging of the plaintiffs' tobacco products. 484 Trade Marks Act 1995 (Cth), s 106. 485 Trade Marks Act 1995, s 120. 486 Trade Marks Act 1995, s 126. 487 Designs Act 2003 (Cth), s 10(1). 488 Patents Act 1990 (Cth), s 13(1). 489 Copyright Act 1968 (Cth), s 31(1)(b). 490 Designs Act 2003, s 10(1)(f); Patents Act 1990, s 13(1); Copyright Act 1968, 491 Designs Act 2003, s 10(2); Patents Act 1990, s 13(2); Copyright Act 1968, s 196. 492 Designs Act 2003, s 71; Patents Act 1990, ss 117-123; Copyright Act 1968, ss 36- Strictly speaking, the right subsisting in the owner of a trade mark is a negative and not a positive right. It is to be understood as a right to exclude others from using the mark493 and cannot be viewed as separate from the trade in connection with which it is used. It is for the protection of that trade in goods that property is recognised in a trade mark494. The use of a trade mark and get-up in packaging is also likely to contribute to the goodwill of a business which distributes and sells tobacco products. Although goodwill is notoriously difficult to define495, it may be said that central to the legal concept of goodwill is the attraction of custom496. Even if the modern view comprehends that anything which adds value to a business may be a source of goodwill497, it continues to be described as the force which brings in custom and which must emanate from a source or sources498. It was acknowledged in Federal Commissioner of Taxation v Murry499 that much goodwill may be derived from the use of trade marks, but it is not sensible to describe goodwill as composed of trade marks. It was said that it is more accurate to refer to goodwill as having sources than elements. There may be other sources of goodwill in the businesses of the BAT plaintiffs and JTI, including the method of operation of the business itself500, but this is not to deny 493 Henry Clay & Bock & Co Ltd v Eddy (1915) 19 CLR 641 at 655 per Isaacs J; [1915] HCA 33; Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 74-75 [65]; [2000] HCA 12. 494 Henry Clay & Bock & Co Ltd v Eddy (1915) 19 CLR 641 at 655. 495 Hepples v Federal Commissioner of Taxation (1992) 173 CLR 492 at 519; [1992] HCA 3. 496 Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 614 [20]; [1998] HCA 42. 497 Inland Revenue Commissioners v Muller & Co's Margarine Ltd [1901] AC 217 at 235 per Lord Lindley, quoted in Box v Commissioner of Taxation (1952) 86 CLR 387 at 396-397; [1952] HCA 61, and in Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 613 [16]. 498 Inland Revenue Commissioners v Muller & Co's Margarine Ltd [1901] AC 217 at 224 per Lord Macnaghten; Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 613 [17], 615-616 [23]-[24]. 499 (1998) 193 CLR 605 at 616 [24]. 500 Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 616 [25]. the importance of trade marks and get-up to the creation and maintenance of goodwill. Importantly for present purposes, goodwill is an attribute of a business, which is derived from using assets of a business or other sources within a business501. Whilst it has been recognised as property for so long that it cannot now be denied that it has that quality502, as property it is "inherently inseverable from the business to which it relates."503 The inability to use a registered trade mark may result in it being lost. A trade mark may be subject to removal from the register in the event of non-use504. No doubt with this in mind, sub-ss (1) and (4) of s 8 of the Packaging Act have the effect that an owner of a registered trade mark may not be subjected to an allegation of non-use of the mark arising by operation of the Packaging Act. This may be of little comfort to the plaintiffs. Whilst the Packaging Act is expressed not to render the use of a trade mark contrary to law for the purposes of s 42(b) of the TMA505, it does not permit its use on the packaging of tobacco products. As will be observed, the focus of the plaintiffs' arguments concerning acquisition shifted away from the property which they had identified in their pleadings as having been acquired. At the final point of their submissions, the property said to have been acquired was of quite a different nature. Whether acquisition A consideration of the practical and legal operation of the provisions of the Packaging Act is necessary where it is alleged that s 51(xxxi) has been infringed506. 501 Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 615 [24]. 502 Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 617 [30] fn 44. 503 Geraghty v Minter (1979) 142 CLR 177 at 193; [1979] HCA 42, quoted in Hepples v Federal Commissioner of Taxation (1992) 173 CLR 492 at 542 and Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 618 [30]. 504 See Trade Marks Act 1995, Pt 9. 505 Tobacco Plain Packaging Act 2011, s 28(2). Section 42(b) of the Trade Marks Act 1995 provides that an application for registration of a trade mark must be rejected if its use would be contrary to law. 506 Telstra Corporation Ltd v The Commonwealth (2008) 234 CLR 210 at 232 [49]; [2008] HCA 7. The Packaging Act prevents BAT Investments from using the ribbed design on its packets and its patented method of sealing. Whilst that design and patent and the plaintiffs' trade marks are capable of acquisition, they have not been transferred to the Commonwealth or any other person, nor has the Commonwealth or any other person acquired any interest in them. Ownership of the trade marks and other intellectual property remains with the plaintiffs, albeit subject to severe restrictions on use. JTI submitted that the words of Rich J in Minister of State for the Army v Dalziel507 are apposite and that it had been left with the "empty husk" of the rights in its trade marks. But it does not necessarily follow that there has been an acquisition within the meaning of s 51(xxxi). Much debate has been generated in the past concerning the distinction between the regulation of proprietary rights and the taking of property, by reference to the takings clause of the Fifth Amendment to the United States Constitution508. But that clause has not been regarded as the source of s 51(xxxi) and the jurisprudence concerning takings has not been applied as relevant to its operation509. Dixon J said in Grace Brothers Pty Ltd v The Commonwealth510 that s 51(xxxi) was provided as a specific power in the Constitution "not, like the Fifth Amendment, for the purpose of protecting the subject or citizen, but primarily the Commonwealth possessed a power compulsorily to acquire property, particularly from the States. The condition 'on just terms' was included to prevent arbitrary exercises of the power at the expense of a State or the subject." to make certain that The plaintiffs' arguments as to the effects upon the use of their property or the conduct of their businesses do not identify what is said to accrue to the Commonwealth or another. It may be accepted that some or much of the value of their intellectual property has been lost in Australia. A trade mark that cannot lawfully be used in connection with the goods to which it is relevant is unlikely to be readily assignable. The restriction on the use of the marks is likely to have effects upon the custom drawn to their businesses and upon their profits. 507 (1944) 68 CLR 261 at 286. 508 As observed by Stephen J in Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 414; [1979] HCA 47. 509 The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 144 per Mason J; [1983] HCA 21. Although, it is noted, Stephen J in Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 414-415 did consider that a passage from Corpus Juris Secundum, (1965), vol 29A, "Eminent Domain", §6 at 181-182, might be of guidance in the Australian context. 510 (1946) 72 CLR 269 at 290-291; but note earlier comments in Andrews v Howell (1941) 65 CLR 255 at 282; [1941] HCA 20. However, the mere restriction on a right of property or even its extinction does not necessarily mean that a proprietary right has been acquired by another511. The loss of trade or business does not spell acquisition. Although the protection afforded by s 51(xxxi) to the owner of property is wide, it is a protection directed to proprietary interests and not to the commercial position of traders512. There, in Dalziel. the decision The plaintiffs relied upon the Commonwealth did not take a transfer of the plaintiff's weekly tenancy in the property in which he conducted his business but, in the words of Rich J, it took "everything that made his weekly tenancy worth having"513. It was in this context that his Honour said that the plaintiff was left with "the empty husk" of his tenancy. His Honour's observation is understandable, for the Commonwealth seized the exclusive possession of the property for an indefinite period under the National Security (General) Regulations. It took all the rights of an owner in possession. This is not comparable with the position of the Commonwealth in this case. In the course of oral argument the plaintiffs shifted focus, to what was termed the appropriation by the Commonwealth of the space created on the packaging by the prohibitions and restrictions of the Packaging Act. Accepting that the prohibition of the use of property may not be sufficient to effect an acquisition, the BAT plaintiffs contended that the Commonwealth had gone further and taken control of the space itself. This assumption of control was said to be an indirect means of acquisition of the kind referred to by Dixon J in Bank of NSW v The Commonwealth ("the Bank Nationalisation Case")514. The control effected, combined with a denial of the plaintiffs' use, was said to result in a benefit to the Commonwealth. In the Bank Nationalisation Case, provision was made by the Banking Act 1947 (Cth) to enable the Treasurer of the Commonwealth to set in motion 511 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 270-271; [1949] HCA 44; The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 145, 181, 247, 283; R v Ludeke; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 653; [1985] HCA 84; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 528; Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 194. 512 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 270. 513 Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 286. 514 (1948) 76 CLR 1 at 349. machinery for the vesting of certain of the shares of the Bank of New South Wales (and other Australian private banks) in, and for replacing its directors with the nominees of, the Commonwealth Bank of Australia, which was then owned by the Commonwealth. The nominee directors were thereby provided with the entire conduct and management of the company, including the power to dispose of its business. As Dixon J observed, the legislation was aimed at enabling the Commonwealth Bank, by means of the nominees, to assume control of the business of the Bank of New South Wales, without invoking the power of compulsory acquisition515. The legislation in the Bank Nationalisation Case did not transfer the business of the Bank of New South Wales to the Commonwealth or to its agent, yet it placed the Treasurer, through the nominee directors, in a position to do just that and at the same time deprived that Bank's own board of any control of the business. The effect, whilst not formally stripping the Bank of possession and control, was to deprive the Bank and its shareholders of "the reality of proprietorship"516. The legislation was regarded as "a circuitous device to acquire indirectly the substance of a proprietary interest"517. The Court would not permit the provision of just terms guaranteed by s 51(xxxi) to be avoided in this way. The Bank Nationalisation Case is often referred to for what Dixon J said in relation to the notion of property for the purposes of s 51(xxxi)518, but it seems to me that considerations of what might constitute an acquisition for the purposes of s 51(xxxi) were important to his Honour's decision. His Honour's emphasis upon the degree of control taken of the business of the Bank may be understood in this light. But the Bank Nationalisation Case cannot be compared with the operation and effect of the Packaging Act. The control it effects is in the form of prohibitions and restrictions on the use of marks and other distinctive features of packaging. It is not control effected with the clear purpose of, and only one step removed from, completing an acquisition of all the incidents of ownership. The Commonwealth obtains no such rights. A closer analogy to the level of restriction placed upon the plaintiffs' use of the trade marks and other property is with restrictions which may be placed upon land for the purposes of town planning and other public purposes. Such restrictions, or even prohibitions, would not usually be said to result in an 515 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 344. 516 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349 per Dixon J. 517 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349 per Dixon J. 518 To which reference is made at [366] below. acquisition of land by a local authority. Even the sterilisation of land by regulation has not been said to have this effect519. The plaintiffs further submitted that whilst the Commonwealth may not have acquired a proprietary interest, it had nevertheless benefited from the effects of the Packaging Act. More particularly, they relied on what was said by Deane and Gaudron JJ in Mutual Pools & Staff Pty Ltd v The Commonwealth520, that for there to be an acquisition "there must be an obtaining of at least some identifiable benefit or advantage relating to the ownership or use of property."521 In my view, not too much should be read into their Honours' use of the words "relating to", as suggesting either that something less than an interest in the nature of property is necessary to be acquired for the purposes of s 51(xxxi), or that the "benefit or advantage" there spoken of need not have that quality. The statement followed upon their Honours' explanation that acquisition is required and that extinguishment, modification or deprivation is not sufficient. Their Honours had said that there must be an acquisition of property, a term which is to be understood broadly522. Moreover, in Georgiadis v Australian and Overseas Telecommunications Corporation523, which was delivered on the same day as Mutual Pools, their Honours joined in a judgment with Mason CJ, which cited with approval what his Honour had said of s 51(xxxi) in The Commonwealth v Tasmania (The Tasmanian Dam Case)524, namely that: "To bring the constitutional provision into play it is not enough that legislation adversely affects or terminates a pre-existing right that an owner enjoys in relation to his property; there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be." 519 The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 145-146 per Mason J, 181 per Murphy J; see also at 247-248 per Brennan J. 520 (1994) 179 CLR 155 at 185. 521 Deane J had earlier used the phrase "identifiable and measurable advantage" in The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 283. 522 Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 184- 523 (1994) 179 CLR 297 at 304; [1994] HCA 6. 524 (1983) 158 CLR 1 at 145. This is not to say that the notion of property, for the purposes of s 51(xxxi), is not very wide. It must be in order that the objects of the provision can be achieved and compensation be provided for the taking of a State's or a person's interests. The term "property" in s 51(xxxi) is "the most comprehensive term that can be used."525 Starke J said in Dalziel that for the purposes of s 51(xxxi), "property" extends to every valuable right or interest, including incorporeal rights526, and in the Bank Nationalisation Case, Dixon J took Dalziel to mean that the term extended to "innominate and anomalous interests and includes the assumption and indefinite continuance of exclusive possession and control"527. in mining It is not necessary that a benefit or advantage, in the nature of property, which is received by or accrues to the Commonwealth or any other person correspond with what has been lost by the person claiming that there has been an acquisition otherwise than on just terms. Newcrest Mining (WA) Ltd v The Commonwealth528 furnishes an example. There the mining company held The interests Commonwealth legislation in question prohibited the carrying on of operations for the recovery of minerals in Kakadu National Park, which came to cover the area of the mining leases. The advantages which accrued to the Commonwealth were the minerals freed from the rights of Newcrest to mine them, and the advantages which accrued to the Director of National Parks and Wildlife were the acquisition of the land freed from the rights of Newcrest to occupy it and conduct mining operations thereon529. in the Northern Territory. leases over land In the case at hand, the benefit or advantage ultimately identified by the plaintiffs was the Commonwealth's ability to pursue and perhaps achieve the objectives of the Packaging Act, which were set out at the commencement of these reasons. The control that the Commonwealth achieved over the space on the packaging, to which the plaintiffs referred, did not accrue to it a benefit or advantage other than the pursuit of its statutory objectives. The BAT plaintiffs' 525 The Commonwealth v New South Wales (1923) 33 CLR 1 at 20-21 per Knox CJ and Starke J; [1923] HCA 34, quoted in Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 509. 526 Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 290. 527 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349. 528 (1997) 190 CLR 513; [1997] HCA 38. 529 Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 634. argument that the Commonwealth was saved the cost of acquiring the space for its own advertising takes the matter no further. It would not have had to pay for such advertising in any event, given that it could require warnings of any size to be displayed on the packaging. It was also said that the Quitline service might be said to benefit from the provisions of the Packaging Act and the Packaging Regulations. It does not seem possible to identify a relevant benefit or advantage of a proprietary kind that has accrued to that service. Any increased promotion of the service, in part through the use of the Quitline marks, might result in its greater use, but this takes the argument no further than the possible attainment of the objects of the Packaging Act – to improve the health of present consumers of tobacco products by encouraging them to stop using these products. The objects of the Packaging Act include the improvement of public health by discouraging persons from using tobacco products. The Packaging Act seeks to achieve that object by further reducing the attractiveness of the packaging of the products and the recall of brand name and other distinctive marks. Whether that object will be largely achieved cannot presently be known. to achieve The Packaging Act and the Packaging Regulations, in conjunction with the 2004 and 2011 Information Standards, may be a rare form of regulation of the packaging of a harmful product, in that they require those distributing a product to place warnings on the product's packaging which might dissuade persons from using the product at all. However, the plaintiffs did not seek to argue that the measures were not appropriate the statutory objectives or disproportionate to them, or that the legislation was enacted for purposes other than those relating to public health. In the end result, their argument was only that the possible achievement of the statutory objectives of the Packaging Act was sufficient to amount to an acquisition for the purposes of s 51(xxxi). It is possible that there be a statutory objective of acquiring property, as there was in the Bank Nationalisation Case, but there is no such purpose evident in the present case. The central statutory object of the Packaging Act is to dissuade persons from using tobacco products. If that object were to be effective, the plaintiffs' businesses may be harmed, but the Commonwealth does not thereby acquire something in the nature of property itself. Orders As to the proceeding concerning the BAT plaintiffs, I agree with the answers to the questions reserved proposed by Gummow J, save that I would answer Question (4) "Unnecessary to answer". As to the proceeding concerning JTI, I agree with the orders proposed by |
HIGH COURT OF AUSTRALIA COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE APPELLANT AND QING ZHAO & ANOR RESPONDENTS Commissioner of the Australian Federal Police v Zhao [2015] HCA 5 12 February 2015 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Victoria Representation J T Gleeson SC, Solicitor-General of the Commonwealth with D J Neal SC and P Kulevski for the appellant (instructed by Australian Federal Police – Proceeds of Crime Litigation) T D Best for the respondents (instructed by Chiodo & Madafferi) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of the Australian Federal Police v Zhao Jurisdiction, practice and procedure – Adjournment, stay of proceedings or order restraining proceedings – Matters connected with conduct of defence – Where respondent charged with offence – Where appellant applied for forfeiture order under s 49 of the Proceeds of Crime Act 2002 (Cth) ("the Act") against property that is proceeds of crime – Whether forfeiture proceedings should be stayed until criminal proceedings are finalised – Whether refusal to stay forfeiture proceedings creates risk of prejudice in criminal proceedings – Whether respondent must state specific matters of prejudice before stay will be granted. Statutes – Interpretation – Forfeiture of proceeds of crime – Stay of forfeiture proceedings – Where appellant applied for forfeiture order under s 49 of the Act – Where issues in forfeiture proceedings and criminal proceedings are substantially identical – Whether forfeiture proceedings should ordinarily continue. Words and phrases – "prejudice". Proceeds of Crime Act 2002 (Cth), ss 39A, 49, 80, 266A, 319. the Commissioner of FRENCH CJ, HAYNE, KIEFEL, BELL AND KEANE JJ. Proceedings were brought by the Australian Federal Police ("the Commissioner") for the forfeiture of property of the respondents as proceeds of crime, at a time when charges were pending against the second respondent. The offence and the circumstances pertaining to it which are relevant to the forfeiture proceedings are substantially identical to what is in issue in the criminal proceedings. The second respondent's defence of the criminal proceedings may be affected if he is obliged to defend the forfeiture proceedings before his criminal trial is held. The question on this appeal is whether the Court of Appeal of the Supreme Court of Victoria applied a correct approach in deciding that the forfeiture proceedings should be stayed pending the finalisation of the criminal proceedings. Factual background On 2 July 2013 the second respondent, Xing Jin, was charged that between 8 February 2013 and 2 July 2013 he aided and abetted another, one Mae Ja Kim ("Kim"), to deal with money or property that was the proceeds of crime and was worth $100,000 or more, contrary to ss 11.2 and 400.4 of the Criminal Code (Cth). The substantive offence from which the proceeds are said to have been derived is living on the earnings of sex workers contrary to s 10 of the Sex Work Act 1994 (Vic). The second respondent has been committed to stand trial for the offence of dealing with the proceeds of crime. The first respondent, Qing Zhao, is the second respondent's wife. She has not been charged with any offence, but is registered as the proprietor of a residential property which is the family home of the respondents and is a subject of the forfeiture proceedings. On the same day as the second respondent was charged, the County Court of Victoria made an order under s 19 of the Proceeds of Crime Act 2002 (Cth) ("the POC Act"), restraining the disposition of the respondents' home, a residential unit registered in the second respondent's name, and a motor vehicle ("the Restrained Property"), on the ex parte application of the Commissioner. On 24 July 2013 the Commissioner filed an application under s 59 of the POC Act, for forfeiture of the Restrained Property pursuant to s 49 of that Act. In each of the proceedings brought for the restraining order and for an order for forfeiture, it is alleged that the property sought to be forfeited is the proceeds of the commission of the offence of dealing with proceeds of crime worth $100,000 or more, contrary to s 400.4(1) of the Criminal Code. The underlying offence from which the proceeds arise is living on the earnings of sex workers contrary to s 10 of the Sex Work Act. Hayne Bell The offence specified as the basis for the forfeiture proceedings is therefore the same as that to be prosecuted in the criminal proceedings, save that in the latter the offence is stated with respect to a particular period in 2013. This difference does not mean that the matters which will be gone into in the two proceedings will not be the same, or substantially the same. The issue in the two proceedings is identical. It concerns the second respondent's dealings with Kim. Those dealings include, but are not limited to, the financing of the second respondent's purchase of the residential unit in 2011, which is the focus of the forfeiture proceedings. The source of the evidence which was relied upon for the restraining order application argued by the Proceeds of Crime Litigation section of the Australian Federal Police ("the AFP"), and which was used by a criminal investigating officer of the AFP to prepare the Statement of Facts forming part of the criminal brief, which has been served upon the second respondent and other defendants charged, is information resulting from a police operation called "Operation Kitrino". At the time of the application by the respondents for a stay of the forfeiture proceedings, the Commissioner had not filed the evidence to be relied upon in those proceedings, but it may be taken that it will be substantially the same as that to be used in the criminal proceedings. It is alleged in each proceeding, by reference to the information gathered during Operation Kitrino, that Kim, who is the second respondent's aunt, heads a syndicate the membership of which includes the second respondent and his mother, Moon Ja Kim ("Moon"), who is Kim's sister. Moon lives in the residential unit which is part of the Restrained Property. In the proceedings for the restraining order an AFP officer said that she believes that Kim uses other people to hide her assets and money which are the proceeds of crime. She also said that the source of three substantial deposits made to a bank account in the name of the second respondent, which partly financed the purchase of the residential unit, were unknown. The officer did not believe that the mortgage repayments made by the second respondent with respect to the residential unit could be serviced from his legitimate income. The syndicate headed by Kim is alleged to receive income from unlicensed dealings with sex workers connected to certain brothels in Melbourne. The second respondent and one Zhe Fang ("Fang") are both licensed as approved managers of licensed brothels and are alleged to work together for the syndicate. It is alleged that they used their positions to manage the brothels on behalf of the syndicate and that the second respondent assisted the syndicate by overseeing the activities of the sex workers in the brothels, collecting money earned in the Hayne Bell brothels and providing it to Kim and, together with Fang, maintaining records for the syndicate which are false. The application for a stay of the forfeiture proceedings The respondents filed applications commencing proceedings for the exclusion of the two residential properties from the restraining order and from forfeiture, and for compensation ("the exclusion proceedings"). Thereafter, they made an application for a stay of the forfeiture proceedings and of the exclusion proceedings until the completion of the criminal proceedings against the second respondent. In his affidavit in support of that application, the second respondent said: "I am concerned that if I have to make a detailed affidavit or be cross-examined regarding the purchase of the Restrained Property and source of any relevant funds that there is a real risk that any such evidence will prejudice my criminal case." He also said: "In properly presenting my case for these proceedings I would be necessarily required to address these matters in any affidavit filed; however to do so would require me to give evidence as to the purchase of the Restrained Property or ownership of any bank accounts I hold and the source of any funds into those accounts. These matters are directly relevant to the criminal charges. If I am to depose to these matters in an affidavit in these proceedings I will, in effect, by [sic] waiving my right to silence. I do not wish to do so. I also note that the charges against me relate to the period 8 February 2013 to 2 July 2013. If the civil proceedings are not stayed I am also very concerned that I will be cross-examined about other matters such as the origin of particular funds and assets outside of this period and there is a real risk that this will prejudice my rights and that it may open up further investigation against me or others. If the civil matters are not stayed I will have to make a decision as to whether to waiver [sic] my privilege and right to silence. This would be at the expense of the civil proceedings." Hayne Bell The decision refusing the stay It was common ground in the hearing before Judge Lacava, in the County Court of Victoria, that the Court had power to stay the forfeiture proceedings and the exclusion proceedings1. His Honour refused the respondents' application, with costs. His Honour accepted the Commissioner's submission that the POC Act established a scheme separate from the criminal justice system for the forfeiture of property and that its clear intention is to progress, rather than delay, the forfeiture of property. His Honour considered that there were a number of provisions of the POC Act which point to the strength of that submission. Judge Lacava concluded that it would frustrate the clear intentions and purposes of the legislation to stay the forfeiture proceedings and the exclusion proceedings. the forfeiture proceedings or As to the concerns expressed by the second respondent in his affidavit, about the risk of prejudice to him in his criminal trial if he were to give evidence and be cross-examined the exclusion proceedings, his Honour considered that it was necessary for the second respondent to give specific evidence that demonstrates just what the prejudice would be before an order for a stay of the forfeiture proceedings and the exclusion proceedings was warranted. His Honour accepted the Commissioner's submission that a mere statement as to the existence of a criminal proceeding, in which a person's defence might be prejudiced, is not a sufficient basis on which to order a stay and that cogent evidence of the prejudice must be provided. This was said to follow from s 319 of the POC Act, which provides: "The fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) is not a ground on which a court may stay proceedings under this Act that are not criminal proceedings." In his Honour's view, the respondents were not prevented by the existence of parallel criminal proceedings from giving evidence that the Restrained Property was not acquired using the proceeds of crime and they were not compelled to give evidence in the forfeiture proceedings or the exclusion proceedings. If they chose to do so, and the second respondent gave evidence or 1 See Supreme Court Act 1986 (Vic), s 30; County Court Act 1958 (Vic), s 49. Hayne Bell was cross-examined and asked questions which might incriminate him, he could avail himself of the procedure provided for in s 128 of the Evidence Act 2008 (Vic). The Court of Appeal The Court of Appeal of the Supreme Court of Victoria (Nettle, Tate and Beach JJA) granted leave to appeal, allowed the appeal with costs, set aside the judgment and orders of the County Court and ordered that each of the proceedings in that Court be stayed until the hearing and determination of the criminal proceedings or further order2. Although the circumstances warranting a stay did not directly affect the first respondent, the Court considered that a stay should also be extended to the proceedings concerning the first respondent, in order to avoid a multiplicity of proceedings3. The Court of Appeal4 considered that the primary judge was wrong to conclude that there was not evidence of how the respondents giving evidence in the forfeiture proceedings could result in a real risk of prejudice to the second respondent in the criminal proceedings. That evidence was provided by the affidavit of the second respondent on the application for the stay. The Court of Appeal referred5, with approval, to a decision of the Court of Appeal of the Supreme Court of Queensland6, which concerned the application of s 319 of the POC Act where identical issues arose in forfeiture proceedings and in criminal proceedings. Regard was there had7 to the potential for advantage to be taken by prosecuting authorities of the evidence disclosed, and the high potential for the privilege against self-incrimination to be removed and the right 2 Zhao v Commissioner of the Australian Federal Police [2014] VSCA 137. 3 Zhao v Commissioner of the Australian Federal Police [2014] VSCA 137 at [67]. 4 Zhao v Commissioner of the Australian Federal Police [2014] VSCA 137 at [16]. 5 Zhao v Commissioner of the Australian Federal Police [2014] VSCA 137 at [28]. 6 Director of Public Prosecutions (Cth) v Jo (2007) 176 A Crim R 17. 7 Director of Public Prosecutions (Cth) v Jo (2007) 176 A Crim R 17 at 23 [17]- Hayne Bell to silence lost. Muir J in Queensland v O'Brien8 had said, "[w]hen one looks at this matter broadly, if the matter is stayed ... the respondent will suffer little in the way of prejudice but, on the other hand, if a stay is not granted, the potential prejudice to the applicant is quite grave." In the present matter, the Court of Appeal considered9 that if the proceedings were not stayed, the prosecution would be informed, in advance of the second respondent's trial, of his defence because he could not realistically defend the forfeiture proceedings without telegraphing his likely defence. The result would be that the prosecution would be advantaged in a manner which fundamentally alters its position vis-a-vis the second respondent and renders the trial unfair. The Court of Appeal observed10 that in Lee v The Queen11 ("Lee No 2"), this Court had ordered that a conviction be quashed where this result had occurred12. It is necessary to observe that the circumstances in Lee No 2 differ substantially from those of the present case. Lee No 2 involved the wrongful release of evidence, which had been obtained by the New South Wales Crime Commission under its coercive powers given to it by the New South Wales Crime Commission Act 1985 (NSW), to the Director of Public Prosecutions, which was pursuing charges against Lee. The question was whether the possession of that evidence by the prosecution caused a miscarriage of justice. This Court held13 that it did, because Lee had not had a trial for which our system of criminal justice provides, and which the New South Wales Crime Commission Act itself sought to protect, by a provision which, in effect, prohibited the release of such evidence. An important aspect of a criminal trial, which follows from a 8 Referred to in Director of Public Prosecutions (Cth) v Jo (2007) 176 A Crim R 17 at 23-24 [19]; see also Zhao v Commissioner of the Australian Federal Police [2014] VSCA 137 at [28]. 9 Zhao v Commissioner of the Australian Federal Police [2014] VSCA 137 at [59]- [60], see also [50]. 10 Zhao v Commissioner of the Australian Federal Police [2014] VSCA 137 at [51]. 11 (2014) 88 ALJR 656; 308 ALR 252; [2014] HCA 20. 12 Lee v The Queen (2014) 88 ALJR 656 at 666 [51]-[52]; 308 ALR 252 at 264-265. 13 Lee v The Queen (2014) 88 ALJR 656 at 664-665 [46]; 308 ALR 252 at 263. Hayne Bell fundamental principle of the common law, is that the prosecution is to prove the guilt of an accused person and cannot compel a person charged with a crime to assist in the discharge of its onus of proof14. It was in this context that it was said that Lee's trial was fundamentally affected because the position of the prosecution vis-a-vis the accused had been altered15. In this case the issue has arisen at an earlier point. The question is therefore whether the second respondent should be placed in a position where he must decide whether to prejudice his criminal trial or his defence of the forfeiture proceedings and his case in the exclusion proceedings. The Commissioner says that the scheme of the POC Act is that the forfeiture proceedings should continue. The POC Act The principal objects of the POC Act include depriving persons of the proceeds of, and benefits derived from, offences16 and to provide for restraining orders and confiscation orders17. Section 6 states that the POC Act establishes a scheme by which it seeks to achieve the objective of confiscation of the proceeds of crime. Section 7 refers to the procedures for confiscation, which are found in Ch 2. They include restraining orders and orders under which property is forfeited to the Commonwealth. The proceedings for such orders are civil in nature18. Sections 17 to 19 make provision for restraining orders. Section 17 provides that a court having jurisdiction under the POC Act must, on the application of a proceeds of crime authority19, order that property of a person who has been convicted of an indictable offence must not be disposed of or must be dealt with only in specified circumstances. If the person has been charged, or 14 Lee v The Queen (2014) 88 ALJR 656 at 662 [32]-[33]; 308 ALR 252 at 260. 15 Lee v The Queen (2014) 88 ALJR 656 at 666 [51]; 308 ALR 252 at 264. 16 Proceeds of Crime Act 2002 (Cth), s 5(a). 17 Proceeds of Crime Act 2002, s 5(g). 18 Proceeds of Crime Act 2002, s 315(1). 19 Defined to include the Commissioner: Proceeds of Crime Act 2002, s 338. Hayne Bell it is proposed that he or she be charged, with an indictable offence, the court must make the order if it is satisfied that an authorised officer suspects on reasonable grounds that the person committed the offence in question. Section 18 provides for the making of a restraining order where a person is suspected, on reasonable grounds, of having committed a serious offence. Section 19, under which the application for the restraining order was made in this case, is directed to property. A court must make a restraining order if there are reasonable grounds to suspect that the property is the proceeds of an indictable or other specified type of offence. Section 59 provides that a proceeds of crime authority may apply for a forfeiture order. Sections 47 to 49 provide for the circumstances in which such an order is to be made. Section 48 is the analogue to s 17 and provides that when a person is convicted of an indictable offence, a court must make a forfeiture order if satisfied that the property is the proceeds of one or more of those offences, or may make such an order if satisfied that the property is an instrument of one or more of the offences. Sections 47 and 49 respectively follow on from ss 18 and 19. It is a necessary condition for the making of a forfeiture order under either s 47 or s 49 that a restraining order has been made covering the property and has been in force for at least six months20. If this condition is satisfied, s 47 provides that a forfeiture order must be made where the court is satisfied that a person whose conduct formed the basis for the restraining order engaged in conduct constituting one or more serious offences. Section 49 is relevant to this case and provides for the making of a forfeiture order where the court is satisfied that the property in question is the proceeds of one or more indictable offences or an instrument of one or more serious offences. In determining whether to make a forfeiture order under s 49, the court is not required to find that a particular person committed any particular offence. An order can be based on a finding that some offence or other of the necessary kind was committed21. A forfeiture order may be refused in specified circumstances, 20 Proceeds of Crime Act 2002, s 47(1)(a), (b); s 49(1)(a), (b). 21 Proceeds of Crime Act 2002, s 49(2). Hayne Bell if it is in the public interest to do so22. This provision does not assume any importance in these proceedings. Section 80 was regarded by the primary judge as of some importance in the scheme of the POC Act. It provides that a forfeiture order made under s 47 or s 49 against a person in relation to an offence is not affected if the person, having been charged with an offence, is acquitted, or the person is convicted of the offence and the conviction is subsequently quashed. A person might effectively resist a forfeiture order made under s 47 or s 49 by obtaining an order revoking the restraining order23. Application may also be made under s 73 to exclude a specified interest in property from a forfeiture order. The application may be heard before or at the same time as the application for the forfeiture order or after such an order is made. In any case, as the Commissioner points out, the person will effectively be compelled to put on some evidence, at least where the Commissioner's evidence is sufficient for the making of the order sought. Section 73(1) requires, for an order for the exclusion of property to be made, that the court be satisfied that the property is neither the proceeds of unlawful activity nor an instrument of a serious offence on which the forfeiture order was, or would be, based. If the court orders a person to give evidence on the application, s 39A, in terms, abrogates the privilege against self-incrimination. The Court of Appeal considered it to be of some importance that the second respondent had not yet been required to give evidence in this case and therefore there had not yet been an abrogation of his privilege against self-incrimination24. Section 319, which is set out above, clearly contemplates that where criminal proceedings are brought with respect to an offence related to civil proceedings for restraining orders or forfeiture orders, an application for a stay may be brought. Its terms suggest that a person charged with an offence which is relevant to forfeiture or other civil proceedings brought under the POC Act must do more than point to the existence of criminal proceedings in order to obtain a stay of the civil proceedings. 22 Proceeds of Crime Act 2002, s 49(4). 23 Proceeds of Crime Act 2002, s 42. 24 Zhao v Commissioner of the Australian Federal Police [2014] VSCA 137 at [62]. Hayne Bell Two further aspects of the POC Act need to be mentioned. Chapter 3 contains provisions for orders for the examination of a person claiming an interest in property, or their spouse, when an exclusion order is sought. However, neither party identifies those provisions as relevant to the present matter. Section 266A of the POC Act has the effect that evidence given by the respondents in the forfeiture proceedings may be provided inter alia for the purpose of the prosecution of the charge against the second respondent, although it may not be admitted into evidence against him. The Commissioner submits that the section is indicative of a scheme in which it is expected persons will give evidence. If that is not the case, the section may be one factor in favour of the grant of a stay. The Commissioner's contentions The Commissioner is correct to observe that the POC Act, in the provisions it makes both for restraining orders and for forfeiture orders, contemplates that such orders may be made regardless of whether a person is charged with an offence having some connection with the forfeiture proceedings. It may also be accepted that the civil proceedings under the POC Act are separate and distinct from any criminal proceedings and it is possible that they may be conducted regardless of the criminal proceedings. They are unaffected by the outcome of criminal proceedings. So much is evident from s 80. It follows that the fact that criminal proceedings have been brought may generally be considered not to be an impediment to the continuation of the forfeiture proceedings. The assumptions upon which the POC Act is founded in this regard are not novel. They are reflected in s 319, but a provision of this kind is strictly unnecessary. Courts will not grant a stay of civil proceedings merely because related charges have been brought against a person and criminal proceedings are pending. More is required. To warrant a stay of the forfeiture proceedings, it must be apparent that the person whose property is in question is at risk of prejudice in the conduct of his or her defence in the criminal trial. Section 319 impliedly acknowledges what is in any case true: that the courts have the power to control their proceedings and to order a stay in an appropriate case. It will be appropriate to do so where the interests of justice require such an order. Section 319 is not expressed to refer specifically to a circumstance where the issues in the forfeiture proceedings and the criminal Hayne Bell proceedings are substantially identical. The POC Act does not presume to say what a court should do in such a circumstance. In aid of his argument that the POC Act may be taken to require that forfeiture proceedings continue regardless of whether criminal proceedings are pending, the Commissioner points to the position in which a person is inevitably put when an application for forfeiture is brought under s 47 or s 49. At least where the Commissioner has satisfied the evidentiary requirements of those provisions, so that the court could be satisfied that a serious offence of some kind has been committed or that the property in question is the proceeds or an instrument of crime, a person with an interest in the property will be faced with the choice of whether to defend the proceedings. This will invariably require that they provide evidence to counter that put forward by the Commissioner. In a sense, then, the POC Act puts the person to their election. So much may be accepted, but it does not follow that the POC Act may be taken to imply that every person in that position must proceed to make their choice, regardless of the risk of prejudice to their defence in the criminal trial. Whether the forfeiture proceedings continue is a matter for the court to consider in the interests of justice. The Commissioner accepts that it may be going too far to say that, in every case where the issues in the civil and criminal proceedings are identical, the forfeiture proceedings should proceed regardless of the effect that their continuance may have on the person's defence of the criminal proceedings. The Commissioner is then obliged to limit his submission to one that the POC Act implies that, ordinarily, the forfeiture proceedings should continue. But the Commissioner has not explained how the POC Act can be said to imply this and for what reason, other than achieving efficiency, it would be necessary to forfeiture proceedings that they be pursued with such urgency. It may be accepted that forfeiture proceedings should not be unduly delayed. No litigation should be delayed except for good cause, especially criminal proceedings. On the other hand nothing in the POC Act or in the nature of forfeiture proceedings under the Act suggests that they must proceed at all costs. It could hardly be said, from any point of view, that they are more important than criminal proceedings and should be given priority. Indeed, provisions of the POC Act point the other way. A proceeds of crime authority may apply ex parte for an order restraining the disposition of and dealings with property which will be the subject of an application for forfeiture, as the Commissioner did in this case. The evidentiary requirements for such an order are not onerous. The POC Act itself substantially reduces the risk that the Hayne Bell property may be lost, which may otherwise be a proper concern of the Commissioner. The scheme of the POC Act does not constrain the exercise of the court's discretion to grant a stay in the way for which the Commissioner contends. Whether a stay should have been granted The risk of prejudice to the second respondent if a stay is not granted in the forfeiture proceedings and the exclusion proceedings is plain. It is not necessary for the second respondent to say any more than he did on the application for a stay in order to identify that risk, given that the offences and the circumstances relevant to both proceedings are substantially identical. The Commissioner contends, as the primary judge had held, that it was necessary that the second respondent state the specific matters of prejudice before a stay could be contemplated. However, to require the second respondent to do so would be to make the risk of prejudice a reality by requiring him to reveal information about his defence, the very situation which an order for a stay seeks to avoid. Similarly, the Commissioner's contention that the court should defer making an order for a stay until the parties have exchanged their evidence is beside the point. The Commissioner suggests that protective orders could be made, which might maintain the confidentiality of evidence, and that evidence could be given in closed court. In the latter regard, the open court principle, to which the law adheres25, now finds expression in s 28 of the Open Courts Act 2013 (Vic). The rationale of the open court principle is that court proceedings should be subjected to public and professional scrutiny, and courts will not act contrary to the principle save in exceptional circumstances. Closing the court so that the Commissioner might progress forfeiture proceedings and receive the second respondent's evidence does not qualify as a proper reason for departing from the principle. 25 Scott v Scott [1913] AC 417 at 434, 435, 445, 447; Russell v Russell (1976) 134 CLR 495 at 532-533; [1976] HCA 23; Hogan v Hinch (2011) 243 CLR 506 at 530-535 [20]-[27]; [2011] HCA 4; Assistant Commissioner Condon v Pompano Pty Ltd (2013) 87 ALJR 458 at 463 [5], 477-478 [67]-[70]; 295 ALR 638 at 641, 659- 661; [2013] HCA 7. Hayne Bell During the course of argument, at a point when the power given by s 266A of the POC Act to disclose to a prosecutor evidence obtained by compulsion was mentioned, the Commissioner was at pains to reassure the Court that he does not contend that s 266A provides a licence to communicate information obtained in the civil proceedings to the prosecuting authorities. The Commissioner emphasised that the Proceeds of Crime Litigation section is not regarded as an arm of the prosecution, which appears to have been the perception of the New South Wales Crime Commission in Lee No 2. Regardless of the conduct in Lee No 2, it would not be correct to approach a matter such as this on the basis that a wrong would be committed. However, s 266A would not render the provision of the second respondent's evidence to the prosecution unlawful. Even if it could not be used as evidence against him, its possession by the prosecution might affect his defence. The Court of Appeal's view, that protective orders would not suffice to remove the risk of prejudice to the second respondent's defence, is clearly correct. The prospect that civil proceedings may prejudice a criminal trial and that such prejudice may require a stay of the civil proceedings is hardly novel. In some jurisdictions, procedures are provided for making an application for a stay in such circumstances26. The risk of prejudice in a case such as this is real. The second respondent can point to a risk of prejudice; the Commissioner cannot. So far as concerns the first respondent, the Court of Appeal was correct to identify as relevant that to permit the forfeiture proceedings to proceed against her would produce two sets of proceedings, rather than one. The principle of the common law that seeks to prevent a multiplicity of actions has a long history and cannot be ignored27. The principle is stated in the County Court Civil Procedure Rules 2008 (Vic)28. 26 For example, United Kingdom, Civil Procedure Rules, Practice Direction 23A, par 11A. 27 Colonial Sugar Refining Co Ltd v Attorney-General for the Commonwealth (1912) 15 CLR 182 at 193; [1912] HCA 94; Eastern Extension, Australasia and China Telegraph Co Ltd v Federal Commissioner of Taxation (1923) 33 CLR 426 at 441; [1923] HCA 62. 28 County Court Civil Procedure Rules 2008 (Vic), r 36.01(1)(c). Hayne Bell Conclusion and orders It may be accepted that criminal proceedings are not an impediment to civil proceedings under the POC Act, but it does not follow that it is intended that forfeiture proceedings brought under the POC Act will continue where to do so would put a respondent at risk of prejudice in his or her criminal trial. The interests of justice are not served by requiring the second respondent to defend the forfeiture proceedings or pursue the exclusion proceedings before his criminal proceedings are finalised, especially since the Commissioner will suffer no relevant prejudice from a delay in the continuation of the forfeiture proceedings. The appeal should be dismissed with costs. |
HIGH COURT OF AUSTRALIA JACEK GNYCH & ANOR APPELLANTS AND POLISH CLUB LIMITED RESPONDENT Gnych v Polish Club Limited [2015] HCA 23 17 June 2015 ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 17 October 2014 and orders 3, 4, 6 and 7 of the orders of that Court made on 16 September 2014 and, in their place, order that the appeal be dismissed with costs. Remit the matter to the Supreme Court of New South Wales for determination of the assessment of damages, if any, pursuant to the undertakings listed in order 4 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 6 November 2014. On appeal from the Supreme Court of New South Wales Representation G O'L Reynolds SC with G P Segal and M A Friedgut for the appellants (instructed by Drexler Litigation & Compensation Lawyers) P R Clay SC with J M McKelvey and A Isaacs for the respondent (instructed by Strathfield Law) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Gnych v Polish Club Limited Property – Leases – Section 92(1)(d) of Liquor Act 2007 (NSW) provides that licensee must not grant lease over certain parts of licensed premises without approval of Independent Liquor and Gaming Authority – Where lease granted in breach of s 92(1)(d) – Whether lease void and unenforceable. Contracts – Statutory illegality – Where lease granted in contravention of s 92(1)(d) of Liquor Act 2007 (NSW) – Where Liquor Act imposes statutory penalty for breach – Whether lease void and unenforceable. Liquor Act 2007 (NSW), s 92(1)(d). Retail Leases Act 1994 (NSW), ss 6A, 8(1), 16(1), 16(2). FRENCH CJ, KIEFEL, KEANE AND NETTLE JJ. Section 92(1) of the Liquor Act 2007 (NSW) ("the Liquor Act") provides: "A licensee or a related corporation of the licensee must not: lease or sublease any part of the licensed premises on which liquor is ordinarily sold or supplied for consumption on the premises or on which approved gaming machines are ordinarily kept, used or operated, or lease or sublease any other part of the licensed premises except with the approval of the Authority." The respondent ("the Club") leased part of its licensed premises to the appellants. Section 92(1)(c) of the Liquor Act did not apply in the circumstances because liquor was not sold or supplied on that part of the premises leased to the appellants, nor were gaming machines kept, used or operated on that part of the premises. But because the lease had not been approved by the Authority1, there was a contravention of s 92(1)(d). The issue in this appeal is whether, as the Club contends, its contravention of s 92(1)(d) of the Liquor Act rendered the lease void and unenforceable. For the reasons that follow, the Club's contention should be rejected. Factual background The Club is a registered club under the Registered Clubs Act 1976 (NSW) and the holder of a club licence under the provisions of Div 3 of Pt 3 of the Liquor Act. The Club's licence pertains to a building of two floors with a rooftop cocktail hall ("the premises"). The ground floor comprises the entry to the premises and, relevantly, a storage area and staff toilets. The first floor contains male and female toilets, and a bar where liquor can be purchased. The first floor also contains a restaurant with a capacity of approximately 50 seats and an adjoining kitchen and office ("the restaurant area"). Adjoining the restaurant is 1 The Authority is the Independent Liquor and Gaming Authority ("the Authority"), constituted under the Gaming and Liquor Administration Act 2007 (NSW): Liquor Act, s 4(1). Nettle an area referred to as the mirror hall ("the mirror hall") with a capacity of approximately 80 seats, which is accessed from the restaurant by way of a moveable wall. By letter to the Club dated 3 August 2011, the appellants offered to run a restaurant in the restaurant area and organise functions on the premises. The Club responded with a counter-proposal in the form of a lengthy document, stipulating that the appellants were to be engaged as the exclusive contractors for catering services to the Club. In response, the appellants, by their solicitors, sent the Club a "term sheet" proposing the terms of a lease agreement with respect to the restaurant area and the downstairs storage area. The lease was proposed to be for two years with two two-year options, at a rent of $500 per week payable monthly, beginning with an initial rent-free period and five months payable at a reduced rate. The appellants proposed not to occupy the bar on the first floor but to operate their own cash register at the bar. Restaurant patrons could order drinks in the bar area and take them back to the tables, and the appellants were to be entitled to 10 per cent of those takings. The appellants also proposed to renovate the restaurant. On the term sheet, under the heading "Licence Agreement", it was stated that the appellants would have "use of [the] small hall area adjacent to the restaurant on Frid/Sat/Sun", referring to the mirror hall. The Club resolved to accept the terms proposed by the appellants, but it appears this resolution was not communicated to the appellants. Nevertheless, renovations commenced in December 2011 and were completed in March 2012. On 29 March 2012, the appellants' solicitors sent the Club a draft lease in registrable form together with a licence agreement for the mirror hall. On 31 March 2012, the appellants held a "grand opening" for the restaurant, and commenced regular trading. In May 2012, the Club engaged solicitors. Negotiations ensued about the terms of the lease, but no written agreement was ever finalised. The Retail Leases Act Section 3 of the Retail Leases Act 1994 (NSW) ("the Retail Leases Act") defines "retail shop lease" or "lease" to mean: "any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop: (a) whether or not the right is a right of exclusive occupation, and Nettle (b) whether the agreement is express or implied, and (c) whether the agreement is oral or in writing, or partly oral and partly in writing." A restaurant is within the s 3 definition of "retail shop". Section 8(1) of the Retail Leases Act provides that a retail shop lease is taken to have been entered into when a person enters into possession of a retail shop as lessee or begins to pay rent as lessee under the lease, whichever happens first. Section 16(1) of the Retail Leases Act provides that "[t]he term for which a retail shop lease is entered into ... must not be less than 5 years." Section 16(2) provides that the term of a retail lease will be extended by the amount of time necessary for compliance with s 16(1). Section 6A(1) of the Retail Leases Act provides relevantly that the Act does not apply to a lease of a retail shop for a term of less than six months. But s 6A(2) and (4) together provide that s 16(1) and (2) may apply to a lease where the lessee has been in possession of a retail shop without interruption for more than one year, and the lessee notifies the lessor in writing that the lessee elects to have the benefit of s 16. The appellants took advantage of these provisions. They entered into possession of the restaurant area on 31 March 2012. On 2 August 2013, the appellants gave the Club the notice required by s 6A(4). That notice was effective to fix the term of the lease by s 16 of the Retail Leases Act as five years from 31 March 2012. The dispute between the parties Although the restaurant operated successfully, relations between the appellants and the Club deteriorated. On 7 July 2013, the Club's solicitors sent the appellants' solicitors a letter outlining a number of grievances, stating the Club's decision to terminate the relationship, and requesting that the appellants vacate the premises. By reply letter, the appellants disputed the allegations made by the Club and sought a mediated meeting with the then President of the Club to try and resolve the issues between the parties. There was no response to this letter. On 2 August 2013, the Club's solicitors wrote to the appellants' solicitors, stating that s 92(1) of the Liquor Act overrides any rights the appellants may otherwise have under the Retail Leases Act, with the effect that the appellants had no lease over the restaurant area. Nettle On 5 August 2013, the Club excluded the appellants from the restaurant area. The proceedings in the Supreme Court of New South Wales The appellants commenced proceedings in the Equity Division of the Supreme Court of New South Wales, seeking a declaration that they have a leasehold interest in the restaurant area for a five-year period commencing on 31 March 2012, pursuant to ss 8 and 16 of the Retail Leases Act. The primary judge (Ball J) noted2 that the restaurant area was a "retail shop" as defined in s 3 of the Retail Leases Act, and held3 that the appellants: "obtained a leasehold interest in the restaurant, kitchen, office, storeroom and toilet. It seems clear that they had exclusive possession of those areas; and that the intention of the parties was that their right of occupation amounted to a lease." The Club contended that the lease for five years, which came into existence upon the appellants' election to take the benefit of s 16 of the Retail Leases Act, was, and remained, in breach of the Liquor Act and was therefore void and unenforceable. The primary judge held4 that the lease was granted in breach of s 92(1)(d) of the Liquor Act because the restaurant area is "part of the licensed premises", but that the breach did not affect the appellants' leasehold interest. His Honour noted5 that the appellants' claim did not depend on any illegality: they were simply asserting that a lease arose from the conduct of the parties and by operation of s 16(1) of the Retail Leases Act. His Honour said6 that: "In those circumstances, there is no reason why [the appellants] should not be entitled to a declaration concerning the existence of a lease and an 2 Gnych v Polish Club Ltd (2013) 17 BPR 32,897 at 32,904-32,905 [33]. 3 Gnych v Polish Club Ltd (2013) 17 BPR 32,897 at 32,907 [48]. 4 Gnych v Polish Club Ltd (2013) 17 BPR 32,897 at 32,907 [45]. 5 Gnych v Polish Club Ltd (2013) 17 BPR 32,897 at 32,907-32,908 [48]. 6 Gnych v Polish Club Ltd (2013) 17 BPR 32,897 at 32,908 [48]. Nettle injunction restraining the club from interfering with their rights of exclusive possession". As to the mirror hall, the primary judge held7 that "there can be no suggestion that the rights [the appellants] had in relation to the [mirror hall] amounted to a lease" under the general law which might contravene s 92(1)(d) of the Liquor Act, and so no question of illegality arose with respect to that part of the premises. The appellants' licence to use that area on certain occasions was said to fall "within the definition of 'lease' under s 16 of the [Retail Leases Act]"8, so that the appellants had the benefit of the minimum five-year term provided for in that section in respect of the mirror hall as well. The primary judge held9 that the appellants were not entitled to a declaration of a leasehold interest in the mirror hall, but that they were entitled to an order for specific performance of an agreement to license the area to them for five years commencing on 31 March 2012. The Court of Appeal The Court of Appeal of New South Wales (Meagher and Leeming JJA and Tobias AJA) allowed the Club's appeal10. The Court of Appeal (Tobias AJA, with whom Meagher and Leeming JJA agreed) was disposed to accept that a "lease" for the purposes of the Retail Leases Act, which did not confer a right of exclusive possession on the lessee, "would not qualify as a lease under the general law" and so would not engage s 92(1)(d) of the Liquor Act11. But because the appellants had conceded12 that "there was at least an implied agreement between the parties that the [appellants] would have exclusive possession of the restaurant area", it was held that a lease under the general law had been created. The Court of Appeal accepted that "the 7 Gnych v Polish Club Ltd (2013) 17 BPR 32,897 at 32,908 [49]. 8 Gnych v Polish Club Ltd (2013) 17 BPR 32,897 at 32,908 [49]. 9 Gnych v Polish Club Ltd (2013) 17 BPR 32,897 at 32,909 [53]. 10 Polish Club Ltd v Gnych (2014) 86 NSWLR 650. 11 Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 669-670 [75], [78]. 12 Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 670 [76]. Nettle parties seem to have agreed the rent … [and] [b]y virtue of s 16(1) of the [Retail Leases Act] the term of the [appellants'] exclusive occupation was five years from 31 March 2012."13 The circumstance that the duration of the lease was dependent upon the operation of the Retail Leases Act did not prevent the conclusion that a lease had been granted so as to attract the operation of s 92(1)(d) of the Liquor Act14. The Court of Appeal held15 that the purpose of s 92 of the Liquor Act is to ensure that licensees do not enter into arrangements with others whereby the regulation of the use of licensed premises under the Liquor Act might be compromised. It was said that the grant of exclusive possession to a person other than the licensee "cannot serve the purpose or policy of the statute and, in particular, the overarching responsibility of the licensee to personally supervise and manage the conduct of the business of the licensed premises."16 This view of the purpose and policy of the Liquor Act required17 the conclusion that any lease caught by s 92(1)(d) is not to be enforced by the courts. The Court of Appeal set aside18 the orders of the primary judge with respect to the restaurant area. As to the mirror hall, the Court of Appeal set aside19 the declaration and order on the basis that, absent an enforceable lease of the restaurant area, there was no utility in maintaining the primary judge's orders in that regard. The appeal to this Court On 13 March 2015, Hayne and Nettle JJ granted the appellants special leave to appeal to this Court. 13 Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 670 [76]. 14 Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 670 [77]-[78]. 15 Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 669 [73], 670 [79]. 16 Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 670 [79]. 17 Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 670-671 [81]. 18 Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 670-671 [81]. 19 Polish Club Ltd v Gnych (No 2) (2014) 17 BPR 33,435 at 33,437 [10]. Nettle The parties' arguments in this Court One argument advanced by the appellants in their written submissions, but not pressed in oral argument, was that the Court of Appeal erred in concluding that they had a lease under the general law. It was argued that the lease was created by the Retail Leases Act by virtue of the parties' conduct and the operation of ss 8 and 16, and that s 92(1)(d) of the Liquor Act did not apply to a lease created by statute. The Club took issue with this argument, contending that the Retail Leases Act merely regulated the terms of a lease created by agreement between the parties. The Club argued that the mere fact that a statutory provision has the effect of implying terms into an agreement for a lease does not create a new lease pursuant to statute. In oral argument, counsel for the appellants was content to accept that there was a breach of s 92(1)(d) of the Liquor Act and to focus upon the contention that the Court of Appeal misunderstood the effect of that provision. It may therefore be accepted that the Court of Appeal was right to hold20 that, even though there was no concluded agreement between the parties as to the duration of the appellants' occupation of the restaurant area, a lease under the general law was created by the Club's admitting them into possession of that area on the terms contained in the term sheet. By virtue of s 127 of the Conveyancing Act 1919 (NSW)21, the lease was initially terminable by either party by one month's notice in writing, expiring at any time22. On 31 March 2013, when the appellants had been in possession of the restaurant area without interruption for one year, s 6A(2) and (4) of the Retail Leases Act made available to the appellants the right to elect to have the benefit of s 16 of that Act. On 2 August 20 Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 670 [76]-[77]. 21 Section 127(1) provides: "No tenancy from year to year shall, after the commencement of this Act, be implied by payment of rent; if there is a tenancy, and no agreement as to its duration, then such tenancy shall be deemed to be a tenancy determinable at the will of either of the parties by one month's notice in writing expiring at any time." 22 Burnham v Carroll Musgrove Theatres Ltd (1928) 41 CLR 540 at 565-566; [1928] HCA 31; Chan v Cresdon Pty Ltd (1989) 168 CLR 242 at 249; [1989] HCA 63. Nettle 2013, the appellants gave notice of that election, by virtue of which the duration of the lease was fixed at a total period of five years. The principal argument advanced by the appellants in this Court was that the contravention of s 92(1)(d) of the Liquor Act was the failure of the Club to have a lease approved by the Authority before allowing the appellants into possession of part of the licensed premises. It was argued that to hold the lease agreement to be void and unenforceable would prejudice the appellants without furthering the objects of the Liquor Act. The Club advanced no good answer to this argument. Illegality: general principles In Equuscorp Pty Ltd v Haxton23, French CJ, Crennan and Kiefel JJ explained that an agreement may be unenforceable for statutory illegality in three categories of case, where: the making of the agreement or the doing of an act essential to its formation is expressly prohibited absolutely or conditionally by the statute; the making of the agreement is impliedly prohibited by statute. A particular case of an implied prohibition arises where the agreement is to do an act the doing of which is prohibited by the statute; (iii) the agreement is not expressly or impliedly prohibited by a statute but is treated by the courts as unenforceable because it is a 'contract associated with or in the furtherance of illegal purposes'. In the third category of case, the court acts to uphold the policy of the law, which may make the agreement unenforceable. That policy does not impose the sanction of unenforceability on every agreement associated with or made in furtherance of illegal purposes. The court must discern from the scope and purpose of the relevant statute 'whether the legislative purpose will be fulfilled without regarding the contract or the trust as void and unenforceable'." (footnotes omitted) There was some vacillation on the part of the appellants as to whether their argument included an invitation to the Court to deal with the present case as 23 (2012) 246 CLR 498 at 513 [23]; [2012] HCA 7. Nettle a case in the first or third category. In the end, little turns on this point because the consequence of illegality is a matter of statutory construction whatever category of illegality is involved. In this regard, in Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd24, Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ cited with approval the observation by Mason J in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd25 that: "the question whether a contract prohibited by statute is void is, like the associated question whether the statute prohibits the contract, a question of statutory construction". Their Honours went on to state26 that whether a statute which: "contains a unilateral prohibition on entry into a contract … is void … depends upon the mischief which the statute is designed to prevent, its language, scope and purpose, the consequences for the innocent party, and any other relevant considerations. Ultimately, the question is one of statutory construction." That statement was, in turn, cited with approval by Gummow ACJ, Kirby, Hayne, Crennan and Kiefel JJ in Master Education Services Pty Ltd v Ketchell27. Accordingly, the scope of the prohibition in s 92(1)(d) of the Liquor Act and the consequences of a contravention of the prohibition are to be determined by the language of s 92(1)(d) of the Liquor Act construed in the context of the Liquor Act as a whole28. 24 (2007) 232 CLR 1 at 29 [45]; [2007] HCA 38. 25 (1978) 139 CLR 410 at 423; [1978] HCA 42. 26 (2007) 232 CLR 1 at 29 [46]. 27 (2008) 236 CLR 101 at 107 [11]; [2008] HCA 38. 28 Australian Broadcasting Corporation v Redmore Pty Ltd (1989) 166 CLR 454 at 457, 462; [1989] HCA 15. Nettle The scope of the prohibition in s 92(1)(d) of the Liquor Act The scope of the prohibition in s 92(1)(d) of the Liquor Act can be understood only by reference to the legal characteristics of a lease. In Progressive Mailing House Pty Ltd v Tabali Pty Ltd29, Deane J described a lease as possessing a "duality of character … [being] both an executory contract and an executed demise." In this conception, a lease is a "[bundle] of rights and duties which together can be identified as [a] species of property" the origins of which lie in the contract between lessor and lessee30. In terms of the dual character of a lease described by Deane J, s 92(1)(d) is not directed at the bundle of rights and duties under the contract between lessor and lessee; rather, it is directed squarely at the conduct of the licensee/lessor in executing a demise of part of licensed premises. In Chelsea Investments Pty Ltd v Federal Commissioner of Taxation31, "A lease strictly means a species of conveyance, the grant of a right to the exclusive possession of land for a term less than that which the grantor has. But by a usage that is apparently metonymical in origin the word 'lease' can describe not only the grant but that which is granted, namely the term." Section 92(1)(d) is concerned with the act of the licensee: it proscribes the grant by the licensee rather than that which is granted. It does not, in terms, proscribe the performance by the parties of their obligations under the relationship created by the grant. The Club, in pressing for a more expansive view of the scope of the proscription in s 92(1)(d), in which the rights of the parties to the lease are sterilised, did not shrink from the unattractive result that, on this view, contractual arrangements freely entered into by a licensee would be automatically sterilised, at the licensee's instigation, by the licensee's reliance on its own breach of the statute to the detriment of the lessee. 29 (1985) 157 CLR 17 at 51; [1985] HCA 14. 30 Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers Appointed) (In liq) (2013) 251 CLR 592 at 604 [40], 610-611 [61]-[65]; [2013] HCA 51. 31 (1966) 115 CLR 1 at 8; [1966] HCA 15. Nettle As a matter of legislative construction, the likelihood of adverse consequences for the "innocent party" to a bargain has been recognised as a consideration which tends against the attribution of an intention to avoid the bargain to the legislature32. That consideration is consistent with the general disinclination on the part of the courts to allow a party to a contract to take advantage of its own wrongdoing33. There may be cases where the legislation which creates the illegality is sufficiently clear as to overcome that disinclination; but it is hardly surprising that the courts are not astute to ascribe such an intention to the legislature where it is not made manifest by the statutory language34. And in the present case, this unattractive aspect of the Club's argument is compounded by the circumstance that, as its counsel acknowledged, the Club was obliged to take steps to seek the approval of the Authority for the grant of the lease and did not do so35. The breach of s 92(1)(d) on which the Club sought to rely was a breach by the Club which gave rise to an offence that was complete at the moment when the Club allowed the appellants into exclusive possession. The subsequent observance by both parties of the terms of the lease was not prohibited and did not give rise to any continuing offence. This understanding of the limited scope of the prohibition in s 92(1)(d) is confirmed by a consideration of the consequences of a breach of the provision. Consequences of a breach of s 92(1)(d) of the Liquor Act It is not the case that the only way in which legal effect can be given to s 92(1)(d) is by the sterilisation of leases granted in contravention of the 32 Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2007) 232 CLR 1 at 29 [46]. 33 New Zealand Shipping Co v Société des Ateliers et Chantiers de France [1919] AC 1 at 8, 9; Cheall v Association of Professional Executive Clerical and Computer Staff [1983] 2 AC 180 at 188-189; Alghussein Establishment v Eton College [1988] 1 WLR 587 at 595; [1991] 1 All ER 267 at 274. 34 Orr v Ford (1989) 167 CLR 316 at 323, 326-327, 333-334; [1989] HCA 4. 35 Mackay v Dick (1881) 6 App Cas 251 at 263; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 605-606; [1979] HCA 51; Commonwealth Bank of Australia v Barker (2014) 88 ALJR 814 at 822 [25]; 312 ALR 356 at 365; [2014] HCA 32. Nettle prohibition. Section 92(1) imposes a penalty upon breach. In Yango36, Mason J said: "There is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished". This observation was cited with approval by Brennan CJ, Dawson and Toohey JJ in Byrne v Australian Airlines Ltd37 in the course of their Honours' expression of support for the proposition that a statute which prohibits the doing of an act under a penalty does not necessarily sterilise a legal relationship associated with that act. In this case, the imposition of a penalty upon the Club by reason of its grant is not the only consequence of the Club's contravention of s 92(1)(d). The crucial step in the reasoning of the Court of Appeal in relation to the consequence of the Club's breach of s 92(1)(d) was explained in the following passage38: "Notwithstanding that a breach of s 92(1)(d) gives rise to an offence on the part of the licensee (in this case the Club) and notwithstanding that the prohibition contained in that provision can be overcome by the obtaining of approval from the Authority, nevertheless … any sanction short of the prohibited lease being rendered unenforceable and void would frustrate the implementation of the legislative purpose inherent in the statutory prohibition. In this respect it is noteworthy that the prohibition only applies to a lease or sublease which, by definition as it were, entitles the lessee or sublessee to exclusive possession and, therefore, the right to exclude the licensee (or its manager) from the leased or subleased premises. That cannot serve the purpose or policy of the statute and, in particular, the overarching responsibility of the licensee to personally supervise and manage the conduct of the business of the licensed premises." The Court of Appeal erred in its conclusion that the policy or purposes of the Act could not be served by any sanction short of holding the lease void. 36 (1978) 139 CLR 410 at 429. 37 (1995) 185 CLR 410 at 428; [1995] HCA 24. 38 Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 670 [79]. Nettle There are two separate but related flaws in the analysis reflected in the passage cited. First, s 92(1)(d) expressly postulates a lease of part of a licensed premises. Given that the right of exclusive possession is the hallmark of a lease39, s 92(1)(d) necessarily contemplates the vesting of exclusive possession of part of a licensed premises in a person other than the licensee. Accordingly, the vesting of exclusive possession of part of licensed premises in a person other than a licensee cannot be said to be contrary to the purpose and policy of the statute: the statute contemplates that precisely that state of affairs may be brought about by a grant by the licensee. True it is that a grant may lawfully be made only with the approval of the Authority, but the circumstance that s 92(1)(d) acknowledges that a person other than the licensee may enjoy exclusive possession is inconsistent with the Court of Appeal's understanding of the purpose and policy of the Act in this respect. The second flaw in this aspect of the reasoning of the Court of Appeal lies in the failure to recognise the important role assigned by the Liquor Act to the Authority in relation to the supervision and management of licensed premises. That role is inconsistent with the view that the regime established by the Liquor Act for the control of licensed premises requires that a contravention by a licensee of s 92(1)(d) automatically renders the lease which is granted void and unenforceable. Under s 139 of the Liquor Act, a complaint to the Authority may be made against a licensee by, among others, the Secretary of the Department, on the ground that the licensee has failed to comply with a requirement of the Act in relation to the licence or the licensed premises40. Under s 141(2), the Authority, if satisfied that the ground is made out, may cancel or suspend the licence. It may also decide to take no action in relation to the licence. A contravention of s 92(1)(d) of the Act thus gives rise to the possibility that the liquor licence might be cancelled, but cancellation is not automatic. Whether or not the licence should be cancelled is a matter for the Authority. The discharge by the Authority of its responsibility might lead to a decision that there should be no change in the status quo in relation to the licence. In that event, the appellants as lessees might continue their occupation of the leased part of the premises. If the Authority were to cancel the Club's 39 Radaich v Smith (1959) 101 CLR 209 at 222; [1959] HCA 45. 40 Liquor Act, s 139(3)(d). Nettle licence, then a question would arise as to whether the lease was terminated by frustration or terminable by the appellants by reason of the Club's inability to make licensed premises available under the lease. On the other hand, the Authority might conclude that the appellants were fit and proper persons to be in charge of the part of the premises dedicated to the restaurant, which might lead it to decide not to cancel the Club's licence notwithstanding its breach of s 92(1)(d), in which case the Club's breach of the Liquor Act would have no consequences for the continuation of the lease. The conclusion that a breach of s 92(1)(d) automatically avoids the lease would pre-empt the effect of the Authority's decision in this regard. That outcome would not be consistent with the supervisory role entrusted to the Authority by the Liquor Act. Finally, it is distinctly possible that, in a case where the Authority has granted its approval to a lease of part of the licensed premises, the lessee may later cause the licensee to fail to observe the requirements of the Liquor Act relating to the licence or the licensed premises. It may be accepted that such a lessee should not have the power to exclude the licensee from the leased part of the licensed premises. The Act does not provide that the lease shall be void and unenforceable in those circumstances. It deals with that possibility by arming the Authority with the regulatory powers already referred to. Accepting that the policy of the section is to guard against the possibility that a lessee may exclude the licensee from the leased part of the licensed premises in such circumstances, there is no more reason to suppose that the Act necessitates avoidance of a lease entered into without approval than that it necessitates avoidance of a lease entered into with approval. Conclusion The offence created by s 92(1)(d) was committed by the Club when the Club granted the appellants possession of the restaurant area. That offence was committed at that time, once and for all, because the approval of the Authority to the lease had not then been obtained. The continuation of the lease was not a continuing offence. One consequence of the contravention was that the Club was liable to a fine; but that was not the only consequence. The Club's breach of the Act also meant that the Authority was empowered to cancel the Club's licence should it decide to do so. It might do so, but it might not. Whether the licence should be cancelled is a matter for the Authority. The Authority might decide that the licence should be permitted to stand if it does not regard the current arrangements between the parties as unacceptable insofar as the public interest in the due observance of the standards required by the Liquor Act is concerned. If the Authority were to make such a determination, there Nettle would be no reason connected with the licence why the lease should not continue. Orders The appeal should be allowed. The following orders should be made: Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 17 October 2014 and orders 3, 4, 6 and 7 of the orders of that Court made on 16 September 2014 and, in their place, order that the appeal be dismissed with costs. Remit the matter to the Supreme Court of New South Wales for determination of the assessment of damages, if any, pursuant to the undertakings listed in order 4 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 6 November 2014. GAGELER J. This appeal was argued on the assumption that an agreement unenforceable for statutory illegality is an agreement the making, or some step in the making, of which was expressly prohibited by statute, was impliedly prohibited by statute, or was otherwise associated with or in furtherance of a purpose made illegal by statute. Mr and Mrs Gnych suggested that their case might be analysed by reference to the first or perhaps the third of those categories; the Club suggested that it might also be analysed by reference to the second. Useful as that tripartite classification might sometimes be41, it is not a comprehensive description of agreements unenforceable for statutory illegality. To shoehorn a given agreement into one of its categories is to adopt an incomplete mode of analysis. An agreement which is prohibited by statute is not necessarily an agreement which is unenforceable for statutory illegality, and may itself be an agreement which is associated with or in furtherance of a purpose made illegal by statute. There is some utility in laying out in broad terms the analytical framework within which the enforceability or unenforceability of such an agreement is determined. Making an agreement in breach of an express or implied statutory prohibition can have either of two differently sourced consequences for the legal enforcement of the agreement which has come to exist in fact. One is a statutory consequence, the nature and extent of which turns entirely on the construction of the statute imposing the prohibition or of some other statute. The other is a common law (or equitable) consequence, limited to withholding (or imposing conditions on) the grant of a remedy to enforce the agreement at the suit of one or more parties, the application of which turns on considerations of public policy. The distinction between those differently sourced consequences, although fundamental, has not always been recognised in the case law. The nature and extent of any statutory consequence of breach of a statutory prohibition on making, or on some step in making, an agreement is a question of statutory construction which is distinct from the question of statutory construction which determines the scope of that prohibition (if the prohibition is express) or the existence and scope of that prohibition (if the prohibition is implied). A statutory consequence of making an agreement in breach of an express statutory prohibition is sometimes set out in exhaustive terms in the statutory text. Almost inevitably in the case of an implied prohibition, and 41 Eg Miller v Miller (2011) 242 CLR 446 at 458 [26]; [2011] HCA 9; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 513 [23]; [2012] HCA 7. sometimes in the case of an express prohibition, the statutory consequence is left in whole or in part to statutory implication. Judicial determination of a statutory consequence left to statutory implication has become more sophisticated as statutory regulation has become more sophisticated and more pervasive. What was once a strong presumption of statutory interpretation that a purported agreement made in breach of a statutory prohibition "is not only illegal, but void because illegal, unless the statute indicates a contrary intention"42 has, since Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd43, given way to an acceptance that "[t]he question whether a statute, on its proper construction, intends to vitiate a contract made in breach of its provisions, is one which must be determined in accordance with the ordinary principles that govern the construction of statutes"44. An implied statutory consequence determined in accordance with the ordinary principles of statutory construction – if a statutory consequence is implied at all – need not always go so far as to render an agreement made in breach of an express or implied statutory prohibition "void" or "vitiated" or "nullified" or "invalid", in the sense of being "devoid of legal consequences"45. There is no reason why an implied statutory consequence cannot stop short of rendering an agreement made in breach of a particular statutory prohibition wholly unenforceable by all parties in all circumstances. An implied statutory consequence might be limited, for example, to rendering an agreement unenforceable by a contravening party in the occurrence or non-occurrence of particular events. 42 Bassin v Standen (1945) 46 SR (NSW) 16 at 18, endorsed in Bradshaw v Gilbert's (Australasian) Agency (Vic) Pty Ltd (1952) 86 CLR 209 at 218-219; [1952] HCA 58. 43 (1978) 139 CLR 410; [1978] HCA 42. 44 Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 413; accord at 423, 436; contra at 430. See also Australian Broadcasting Corporation v Redmore Pty Ltd (1989) 166 CLR 454 at 457; [1989] HCA 15; contra at 461-462. 45 Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 432 at 458-459; [1969] HCA 4. The contemporary position is therefore that46: "There is no universal rule that can be applied to the construction of statutes in order to determine whether the effect of a failure to comply with a provision of a particular statute is to render a category of contracts (or an individual contract) to which that provision applied invalid or unenforceable. Each statute has to be considered as a whole and as a separate entity." The considerations which bear on determination of an implied statutory consequence of making an agreement in breach of a statutory prohibition are similar to, and can overlap with, the considerations which bear on determination of the implied statutory consequence of doing an act in breach of a condition which regulates the exercise of a statutory power47. Here, as there, cases decided in other statutory contexts can assist in illustrating considerations which have proved to be significant, but reference to the outcomes of those cases can at best provide analogical guidance. Here, as there, the legislative intention to be discerned in a particular statutory context "often reflects a contestable judgment"48. Reference to the range of considerations which have been identified as significant in other statutory contexts is nevertheless important to ensuring consistency in the approach taken in the application of ordinary principles of statutory construction and, in turn, to maximising the predictability of the judgment that must be made in a novel statutory context. Amongst the most prominent and recurring of the considerations which have been recognised as bearing on the determination of the implied statutory consequences of making an agreement in breach of a statutory prohibition are: the statutory object of the particular prohibition; any positive effect of implying or not implying some further particular statutory consequence on fulfilment of the identified statutory object; any negative effect of implying or not implying that further statutory consequence on the legitimate interests of one or more parties to the agreement 46 Tonkin v Cooma-Monaro Shire Council (2006) 145 LGERA 48 at 59 [65]. 47 Eg Australian Broadcasting Corporation v Redmore Pty Ltd (1989) 166 CLR 454 48 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 389 [91]; [1998] HCA 28. or of third parties; and the extent to which the statute imposing the prohibition expressly addresses the consequences of its breach49. The last of those considerations is often decisive, and is of particular importance in relation to a prohibition imposed as part of a complex statutory scheme. It is now understood that, within "a framework of legislation that makes elaborate provision not only for the creation of norms of conduct but also for the consequences that are to follow from the contravention of those norms", "[i]t is not readily to be supposed that the consequences of contravention are to be determined by resort to principles hinging upon inferences about legislative intention or the imputed intentions of contracting parties"50. Where a statute expressly or impliedly denies legal operation to an agreement, it is the statute itself which operates to render that agreement incapable of enforcement at common law. An agreement which is not denied legal operation by statutory force may still be unenforceable at the insistence of one or both parties by operation of the common law by reference to considerations of public policy. The cases in which that might occur, however, must now be closely confined. It is important to identify the considerations of public policy that might be in play in such cases. Although other considerations might arise in some circumstances, two overlapping considerations have generally been recognised in the decided cases to predominate51. One of those considerations has long been identified in terms that a person ought not to be permitted by law to base a cause of action on an immoral or illegal act52. The other, more focussed, consideration has been identified in terms that a person ought not to be assisted by law to benefit from an immoral or illegal act53. That other consideration is reflected in what has been described as "the more specific rule that the court will not enforce 49 Cf Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2007) 232 CLR 1 at 29 [45]-[46]; [2007] HCA 38; Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 101 at 107 [11]; [2008] HCA 38. 50 SST Consulting Services Pty Ltd v Rieson (2006) 225 CLR 516 at 527 [30]; [2006] HCA 31. See also Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 51 Cf Enonchong, Illegal Transactions, (1998) at 14; Farnsworth, Farnsworth on Contracts, (1990), vol 2 at 2. 52 Holman v Johnson (1775) 1 Cowp 341 at 343 [98 ER 1120 at 1121]. 53 Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 428, quoting Beresford v Royal Insurance Co [1938] AC 586 at 598-599. the contract at the suit of a party who has entered into a contract with the object of committing an illegal act"54. "Notions of public policy", as Dixon J put it, "are not fixed but vary according to the state and development of society and conditions of life in a community."55 No consideration of public policy is immutable. Each must accommodate not only societal conditions but also statutory context. In any consideration of public policy at common law (or in equity), "the central policy consideration at stake is the coherence of the law"56. The consideration of public policy that a person ought not to be permitted by law to found a cause of action on an immoral or illegal act is the product of an earlier age. The broader consideration of public policy is now rarely recognised by the common law to have application in relation to illegality which arises under a modern regulatory statute. That is the import of the observation by Mason J in Yango that "[t]here is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished"57. It is not the function of the common law to seek to improve on a regulatory scheme by supplementing the statutory sanctions for its breach. If a statute itself does not operate to deny legal operation to an agreement made in breach of one of its prohibitions, or to render that agreement unenforceable by reason of that breach, the coherence of the law is best served by a court respecting and enforcing that legislative choice. But the other consideration of public policy – that a person ought not to be assisted by law to benefit from an immoral or illegal act – can have application where the first does not. That is the import of the further observation by Mason J in Yango that "there could be a case where the facts disclose that the plaintiff stands to gain by enforcement of rights gained through an illegal activity far more than the prescribed penalty"58. 54 Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 55 Stevens v Keogh (1946) 72 CLR 1 at 28; [1946] HCA 16. 56 Miller v Miller (2011) 242 CLR 446 at 454 [15]; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 513 [23]. 57 (1978) 139 CLR 410 at 429. 58 (1978) 139 CLR 410 at 429. A court examining the application of that consideration of public policy to the enforcement of an agreement made in breach of a statutory prohibition will examine the intention of a person in entering into the agreement and in seeking to enforce the agreement. The court will recognise that, "whilst persons who deliberately set out to break the law cannot expect to be aided by a court, it is a different matter when the law is unwittingly broken"59. The court will weigh the consequences of withholding a remedy to enforce the agreement in light of the objects or policies which the statute seeks to advance and the means which the statute has adopted to achieve that end. Ordinarily, it would be open to the court to conclude that withholding a common law remedy from a person whose intention was, and remained, to flout the statute was justified by reference to the narrower consideration of public policy only if the consequence of withholding the remedy could be determined by the court to be both proportionate to the seriousness of the illegality and not incongruous with the statutory scheme60. The moulding of an equitable remedy, if sought, might involve other considerations and permit of greater flexibility61. That consideration of public policy might have arisen here had Mr and Mrs Gnych been knowingly concerned in the breach by the Club of s 92(1)(d) of the Liquor Act. In the absence of Mr and Mrs Gnych having been knowingly concerned in the Club's breach or of any other circumstance suggesting wrongdoing on their part, however, no question arises of the common law (or of equity) operating, by reference to considerations of public policy, to withhold (or to impose conditions on) the declaratory relief which Mr and Mrs Gnych sought and which they were successful in obtaining at first instance. For those reasons, I agree with the joint reasons for judgment that the outcome of the appeal turns wholly on the determination, as a question of construction, of the statutory consequences of breach of s 92(1)(d) of the Liquor Act. I also agree with the conclusion reached in the joint reasons for judgment on that question. The different conclusion reached by the Court of Appeal on that question of construction was reached by reasoning which took as its starting point the identification of the purpose of s 92(1)(d)'s prohibition (on the grant of exclusive possession of part of licensed premises without the consent of the Authority) as being primarily to operate in aid, relevantly, of the requirement of s 91(1) of the 59 Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 221; [1997] HCA 17. See also Nelson v Nelson (1995) 184 CLR 538 at 604; [1995] HCA 25. 60 Nelson v Nelson (1995) 184 CLR 538 at 612-613; Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 229-230, 249-250. 61 Eg Nelson v Nelson (1995) 184 CLR 538 at 571-572, 617-618. Liquor Act that the manager of the licensed premises be "responsible at all times for the personal supervision and management of the conduct of the business of the licensed premises under the licence"62. I agree with that identification of the relationship between s 92(1)(d) and s 91(1). The Court of Appeal was persuaded that the primary statutory purpose of the prohibition as so identified would not be realised if a grant of exclusive possession of part of licensed premises could be made without the consent of the Authority in breach of that statutory prohibition and yet still be legally enforceable. The Court of Appeal noted that the grant might, for example, be to a lessee who might not be a fit and proper person or who might seek to exclude the manager from that part of the premises or to interfere with the discharge of the statutory responsibility of the manager63. There is, in my opinion, much to be said for the reasoning adopted by the Court of Appeal and for the conclusion which it reached. The Liquor Act has amongst its objects the regulation of the sale and consumption of liquor, with a view to encouraging responsible attitudes and to minimising harm associated with misuse64. The requirement of s 91(1) for the continuous personal supervision of licensed premises is an integral part of the statutory structure put in place to achieve those objects. The prohibition in s 92(1)(d) enhances the efficacy of that requirement. Given the evident public interest protected by the licensing regime of which those sections form part, I find it difficult to place much emphasis on the potential for implied statutory nullification of a lease as a result of a breach of s 92(1)(d) to cause hardship to an innocent lessee. A potential lessee of a part of licensed premises is not within the class of persons sought to be protected by the licensing regime65. Any potential lessee could reasonably be expected to be aware at least of the existence of a licensing regime and to have the means of becoming aware of its details before entering into any agreement for lease. There are, however, two indicia of legislative intention which tend against the conclusion reached by the Court of Appeal. The first is the express reference in the statement of objects in the Liquor Act to the regulatory system it facilitates being "flexible and practical" with "minimal formality and technicality"66. It has 62 Section 91(1)(b). See Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 669 [72]. 63 Polish Club Ltd v Gnych (2014) 86 NSWLR 650 at 669 [72], 670 [79]. 64 Section 3(1)(a), (2)(a) and (b). 65 Cf Nelson v Nelson (1995) 184 CLR 538 at 604-605. 66 Section 3(1)(b). not been suggested that s 91(1) could be rendered more efficacious, or that the objects of the Liquor Act could be enhanced, if a lease granted in breach of the prohibition in s 92(1)(d) was merely to be unenforceable by one or other of the parties to it. It would only be possible under a blunt and drastic rule that all leases made in breach of s 92(1)(d) be devoid of all legal operation in all circumstances that the contrary outcome could be explained as having meaningful effect within the statutory scheme. The result is formal, technical and inflexible. The second is the extensive range of discretionary powers expressly conferred on the Authority, through which the Authority remains capable of acting to ensure encouragement of responsible attitudes and minimisation of harm associated with the misuse of liquor, even if a grant of exclusive possession of part of licensed premises were to be made without the consent of the Authority. Those powers include taking administrative action to vary the boundaries of the licensed premises67, or to cancel or suspend the licence or impose a condition on the licence68. They also include commencing proceedings against the licensee which are capable of resulting in similar measures being imposed by a court in addition to the monetary penalty prescribed for breach of the prohibition in s 92(1)(d)69. In light of those powers, I do not think implication of a further statutory consequence of nullification of the purported lease to be warranted. In my opinion, within a legislative regime which places emphasis on the minimisation of formality and technicality, the statutory consequences of breach of the prohibition in s 92(1)(d) of the Liquor Act (in addition to the monetary penalty prescribed for its breach) are best seen to lie in exposing a lessee to the exercise of the extensive express discretionary powers of the Authority. I therefore agree with the orders proposed in the joint reasons for judgment. 67 Section 94(2) and (5). 68 Section 141(2)(a), (b) and (e). 69 Sections 145, 146 and 148. |
HIGH COURT OF AUSTRALIA TANIA SINGH AN INFANT BY HER NEXT FRIEND MALKIT SINGH PLAINTIFF AND COMMONWEALTH OF AUSTRALIA & ANOR DEFENDANTS Singh v Commonwealth of Australia [2004] HCA 43 9 September 2004 ORDER Questions in the case stated answered as follows: Is the plaintiff an alien within the meaning of s 51(xix) of the Constitution? Yes. If the answer to (1) is "No", is s 198 of the Migration Act 1958 (Cth) capable of valid application to the plaintiff? Does not arise. By whom should the costs of the case stated to the Full Court of this Court be borne? The plaintiff. Representation: B Levet with R B O'Hair and B C Boss for the plaintiff (instructed by Bharati Solicitors) D M J Bennett QC, Solicitor-General of the Commonwealth with K Rubenstein and C J Horan for the defendants (instructed by Australian Government Solicitor) Intervener: J Basten QC with J R Clarke intervening on behalf of Applicant A269/2003 (instructed by Jeremy Moore & Associates) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Singh v Commonwealth of Australia Constitutional law (Cth) – Legislative powers of the Parliament – Power to make laws with respect to naturalization and aliens – Meaning of "aliens" – Plaintiff born in Australia to non-citizen parents – Infant plaintiff not a citizen under the Australian Citizenship Act 1948 (Cth) – Plaintiff's parents citizens of India – Whether plaintiff an alien under s 51(xix) of the Constitution. Constitutional law (Cth) – Interpretation – Interpretive theories – Significance of historical context in constitutional interpretation – Use of Convention Debates. Constitutional law (Cth) – Legislative powers of the Parliament – Whether Migration Act 1958 (Cth), s 198 validly authorises the removal of a non-alien from Australia because that person is a non-citizen under the Australian Citizenship Act 1948 (Cth). Words and phrases – "alien". Constitution, s 51(xix). Migration Act 1958 (Cth), ss 196, 198. Australian Citizenship Act 1948 (Cth), ss 10(2), 14. GLEESON CJ. The primary issue in this case is whether the plaintiff is an alien within the meaning of s 51(xix) of the Constitution. The proceedings challenge the validity of s 198 of the Migration Act 1958 (Cth), which provides for the removal of unlawful non-citizens (defined, in effect, to mean non-citizens who do not have permission to be or remain in Australia), in its application to the plaintiff. The plaintiff is a non-citizen. She has no substantive visa. Her parents, who are both citizens of India, entered Australia without visas in 1997. The plaintiff was born in Australia in 1998. She is a citizen of India, by descent. The Commonwealth contends that s 198, in its application to the plaintiff, is a valid law made pursuant to the power conferred upon Parliament by s 51(xix) of the Constitution, that is, the power to make laws with respect to "naturalization and aliens". The plaintiff's case is that, notwithstanding her Indian citizenship, and her lack of Australian citizenship, by virtue of the fact that she was born (albeit to non-citizens) in Australia, she is not an alien, and it is beyond the legislative competence of the Parliament to treat her as such. The argument is about the meaning of s 51(xix). To be more precise, the question is whether, in s 51(xix), "aliens" necessarily excludes persons born in Australia, subject to certain presently irrelevant exceptions such as children of foreign diplomats, or of members of visiting armed forces. It is unnecessary to make further reference to such exceptions. I have previously stated my view that, subject to a qualification, Parliament, under pars (xix) and (xxvii) of s 51, has the power to determine the legal basis by reference to which Australia deals with matters of nationality and immigration, to create and define the concept of Australian citizenship, to prescribe the conditions on which such citizenship may be acquired and lost, and to link citizenship with the right of abode1. In that regard, Brennan, Deane and Dawson JJ said in Chu Kheng Lim v Minister for Immigration2, that the effect of Australia's emergence as a fully independent sovereign nation with its own distinct citizenship was that alien in s 51(xix) of the Constitution had become synonymous with non-citizen. The qualification is that Parliament cannot, simply by giving its own definition of "alien", expand the power under s 51(xix) to include persons who could not possibly answer the description of "aliens" in the Constitution3. Within the class of persons who could answer that description, 1 Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 173 [31]. (1992) 176 CLR 1 at 25, referring to Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 183-184. cf Pochi v Macphee (1982) 151 CLR 101 at 109. Parliament can determine to whom it will be applied, and with what consequences. Alienage is a status, and, subject to the qualification just mentioned, Parliament can decide who will be treated as having that status for the purposes of Australian law and, subject to any other relevant constitutional constraints, what that status will entail. Everyone agrees that the term "aliens" does not mean whatever Parliament wants it to mean. Equally clearly, it does not mean whatever a court, or a judge, wants it to mean. When a judicial decision is made in the course of judicial review of legislative action, for the purpose of determining constitutional validity, it is made by reference to a standard other than current public opinion. In a representative democracy, the will of Parliament is the most authentic and legitimate expression of public opinion. It may be imperfect, but it is through the political process, culminating in legislative action, that public policy is formed and imposed. It is not the role of the judiciary to give effect to an understanding of public opinion in opposition to the will of Parliament. When a law enacted by Parliament, which represents, or purports to represent, current community values, is declared unconstitutional and invalid, the judicial arm of government is imposing a restraint upon the power of a democratically elected legislature by reference to a written instrument, the Constitution. The source of the restraint is the legal effect of the instrument; not the will of the judiciary. The legal effect of the instrument is determined by the meaning of the text. It is in the nature of law that rules laid down in the past, whether the past be recent or distant, bind conduct in the future4. It is in the nature of a written, federal Constitution that a division of governmental power, necessarily involving limitations upon such power, agreed upon in the past, binds future governments. That the terms of the agreement were to have that future operation is a matter relevant to an understanding of their meaning, but the role of a court is to understand and apply the meaning of the terms, not to alter the agreement. Respect for the constitutional settlement is the primary obligation of a constitutional court. The source of this Court's power is the Constitution itself. There is no other. The role of the Court stems from the meaning and effect of the terms of that instrument. The stream of judicial review cannot rise above its source. The power of judicial review, which is inherent in the structure of a federal union, was treated as axiomatic by the framers of the Australian Constitution5. The decision in Marbury v Madison6 was 100 years old when this 4 Goldsworthy, "Originalism in Constitutional Interpretation", (1997) 25 Federal Law Review 1 at 27. 5 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 262 per Court was established. Furthermore, as Alfred Deakin reminded Parliament when the Bill for an Act to establish this Court was being debated, the legislatures in the Australian colonies were all of limited power, and colonial courts were accustomed to declaring those limits7. The historical context is critical to the existence of a power of judicial review. The legitimacy of judicial review depends upon adhering to a technique of deciding the meaning, and therefore the legal effect, of the Constitution that is consistent with the nature of the power being exercised. Judicial review of the validity of legislative action by reference to the Constitution is conducted upon the hypothesis that the terms, express and implied, of a written instrument, brought into existence more than a century ago, bind present and future parliaments, and courts. That instrument cannot be amended by Parliament, or by a simple majority of Australian voters, or by a court. Its meaning controls the exercise of governmental power. In some respects that meaning is clear. In some respects it is contestable. What the Constitution does not say may be as significant as what it says. On any view, it is a legal instrument written in the past that controls the exercise of power in the present, and (subject to the possibility of amendment in accordance with its own terms) in the future. Meaning Writing extra-judicially in 19958, Priestley JA, of the New South Wales Court of Appeal, noted that the purpose for which courts seek to discover the meaning of a text is different from the purpose of, for example, a literary critic, or an historian. He said: "Courts have to decide the meaning of texts in a way that will affect the property or civil rights of the parties before the court directly, and which may have an effect on the property or civil rights of many parties not before the court ... Courts, unlike literary critics, are not usually in a position to start afresh, even if so disposed, every time the meaning of a particular text is being considered. No doubt every successive reader of both a literary and a legal text will come to it with a somewhat different perception of its possible meaning than anyone had before; the literary interpreter can take advantage of the fact that the meaning of a text can be approached as 7 Australia, House of Representatives, Parliamentary Debates (Hansard), 18 March 8 Priestley, "Judges as Story Tellers", paper delivered at the Law and Literature Association Conference, San Francisco, October 1995. never closed; the legal interpreter is constrained when ... an authoritative meaning for legal purposes has previously been seen in the text."9 He referred to what F W Maitland said, comparing lawyers and historians10: "The lawyer must be orthodox otherwise he is no lawyer; an orthodox history seems to me a contradiction in terms." The Australian Constitution contains many terms that have a legal meaning, and that are naturally understood and applied by courts with reference to their legal meaning. To confine attention to s 51, they include bounties, insurance, bills of exchange, promissory notes, bankruptcy, insolvency, copyrights, patents of inventions and designs, trade marks, naturalization, aliens, corporations, trading corporations, marriage, divorce, matrimonial causes, custody and guardianship of infants, service and execution of process, and conciliation and arbitration. The concepts which those terms signify, in the context of the Constitution, can only be identified by reference to legal usage and understanding. Thus, when a dispute arose as to whether an incorporated local government authority that sold electrical appliances was a "trading corporation" within the meaning of s 51(xx), the question was not resolved by consulting a dictionary, and looking up the meaning of the noun "corporation", and the verb "to trade". This Court held that, although the authority in question was a corporation, and although it traded, it was not a trading corporation11. In reaching that conclusion, the Court looked to the history of the development of corporations law, and noted that, at and around the time of Federation, legal authorities treated trading corporations and municipal corporations as entities of a different kind12. The relevance of contemporary legal usage was that it formed part of the context in which the expression "trading corporations" was adopted, and an understanding of the context was necessary to a conclusion about the constitutional meaning of the expression. Furthermore, as Gaudron and Gummow JJ said in Re Refugee Tribunal; Ex parte Aala13, some expressions 9 See also, Easterbrook, "Abstraction and Authority", (1992) 59 University of Chicago Law Review 349 at 362. 10 Maitland, "Why the History of English Law is not written", in Fisher (ed), The Collected Papers of Frederic William Maitland, (1911) vol 1 at 491. 11 R v Trade Practices Tribunal; Ex parte St George County Council (1974) 130 CLR 12 (1974) 130 CLR 533 at 552 per Menzies J. 13 (2000) 204 CLR 82 at 93 [24]. used in the Constitution, such as "a writ ... of prohibition", or "patents of inventions", have no meaning other than as technical legal expressions. A knowledge of the law, including legal history, is indispensable to an appreciation of their essential characteristics. When a word is used to signify a concept, the process involves both inclusion and exclusion. The argument for the plaintiff in this case amounts to the proposition that the meaning of "aliens" in s 51(xix) excludes someone who was born in Australia, regardless of other circumstances and characteristics such as those which apply to the plaintiff. The plaintiff contends that it is an essential characteristic of aliens referred to in s 51(xix) that they were born outside Australia. If that is right, then the power conferred upon the Parliament by s 51(xix) is restricted by that limitation upon the meaning of "aliens". People born in Australia are excluded from the concept, and legislation about such people is not supported by the power to make laws with respect to naturalization and aliens. Meaning and context Meaning is always influenced, and sometimes controlled, by context. The context might include time, place, and any other circumstance that could rationally assist understanding of meaning. I referred above to the meaning of "aliens" in s 51(xix). That is a brief description of the immediate context in which "aliens" appears, but the context is much wider than that. It includes the whole of the instrument, its nature and purpose, the time when it was written and came into legal effect, other facts and circumstances, including the state of the law, within the knowledge or contemplation of the framers and legislators who prepared the Constitution or secured its enactment, and developments, over time, in the national and international context in which the instrument is to be applied. Reference was made earlier to what was said in Chu Kheng Lim about such developments affecting s 51(xix). Another example is Sue v Hill14. In Jago v District Court (NSW)15 it was necessary to apply Magna Carta and the Habeas Corpus Act 1679 (UK), 31 Car II c 2 for the purpose of deciding whether there existed, in New South Wales in 1988, a right to a speedy trial. Both in the Court of Appeal of New South Wales, and in this Court, there was a detailed examination of the meaning of the texts by reference to wider contextual factors, including, of course, history. The words of Magna Carta and the Habeas Corpus Act were read through modern eyes, but modern eyes were not blind to their historical context. 14 (1999) 199 CLR 462. 15 (1988) 12 NSWLR 558; (1989) 168 CLR 23. Many examples could be given of the Court's reliance upon the historical context in which the Constitution was written as an aid to its interpretation. Two provisions that have given rise to notorious difficulties of interpretation are ss 90 and 92. The leading authorities which state the current jurisprudence in relation to both provisions rely strongly on history. In Ha v New South Wales16, Brennan CJ, McHugh, Gummow and Kirby JJ said that "it is necessary to see the provisions of ss 90 and 93 in the context of Ch IV of the Constitution and to understand the operation which Ch IV was designed to have at the time of Federation". They referred17 to the review by Dixon J in Matthews v Chicory Marketing Board (Vict)18 of the history of the word "excise" in order to consider whether, according to any established meaning, "an essential part of its connotation is, or at any time was," such as to exclude taxes of a certain kind. They also considered whether there was any common use of the term "excise" in the Convention Debates which might illuminate its meaning19. The dissenting members of the Court, Dawson, Toohey and Gaudron JJ, similarly examined the historical context, although they drew different conclusions from it. In an earlier decision on s 90, Hematite Petroleum Pty Ltd v Victoria20, Deane J laid much emphasis upon the European, as well as the colonial, experience prior to Federation, which, he said, formed the context in which the framers of the Constitution saw the relationship between duties of customs and excise. In Cole v Whitfield21, in which the Court reconsidered a long line of conflicting interpretations of s 92, extensive reference was made to the history of s 92. It will be necessary to return to what was said in that case as to the utility of such reference. Consideration of the history of the Constitution is not for rhetorical purposes, invoking the past when it is convenient, and ignoring it when it is inconvenient, but for the purpose of understanding its meaning, which is related intimately to context. Sometimes the problem of meaning lies, not in understanding the concept that a particular word or expression signifies, but in understanding the relationship between a number of concepts referred to in the Constitution. A well-known difficulty exists in the relationship between s 122, which confers 16 (1997) 189 CLR 465 at 491. 17 (1997) 189 CLR 465 at 493. 18 (1938) 60 CLR 263 at 299. 19 (1997) 189 CLR 465 at 493. 20 (1983) 151 CLR 599 at 661. 21 (1988) 165 CLR 360. upon the Parliament a general power to make laws for the government of territories (which includes a power to set up territorial courts), and Ch III, which deals with the Judicature. Not all aspects of that relationship have been finally worked out. An important aid to deciding what the Constitution means on this matter is an understanding of the disparate nature of territories with which the realities of government and administration must cope, including what was in the contemplation of the founders as to the variety of circumstances governing external and internal territories in the future. One consideration of special importance to the meaning of a constitutional instrument is its general nature and purpose: an instrument of government, expressed in broad and general terms, designed to speak to a future that, as the founders well understood, was in many respects beyond their capacity to foresee. In his speech on the Judiciary Bill, Alfred Deakin said22: "[The] Constitution was drawn, and inevitably so, on large and simple lines, and its provisions were embodied in general language, because it was felt to be an instrument not to be lightly altered, and indeed incapable of being readily altered; and, at the same time, was designed to remain in force for more years than any of us can foretell, and to apply under circumstances probably differing most widely from the expectations now cherished by any of us. Consequently, drawn as it of necessity was on simple and large lines, it opens an immense field for exact definition and interpretation." He also said23: "... our written Constitution, large and elastic as it is, is necessarily limited by the ideas and circumstances which obtained in the year 1900. It was necessarily precise in parts, as well as vague in other parts. That Constitution remains verbally unalterable except by the process of amendment. ... But the nation lives, grows, and expands. Its circumstances change, its needs alter, and its problems present themselves with new faces. The organ of the national life which preserving the union is yet able from time to time to transfuse into it the fresh blood of the living present, is the Judiciary the High Court of Australia or Supreme Court in the United States. It is as one of the organs of Government which enables the Constitution to grow and to be adapted to the changeful 22 Australia, House of Representatives, Parliamentary Debates (Hansard), 18 March 23 Australia, House of Representatives, Parliamentary Debates (Hansard), 18 March necessities and circumstances of generation after generation that the High Court operates. Amendments achieve direct and sweeping changes, but the court moves by gradual, often indirect, cautious, well considered steps, that enable the past to join the future, without undue collision and strife in the present." There is no inconsistency between Alfred Deakin's statement that the written Constitution is necessarily limited by the ideas and circumstances which obtained in the year 1900, and his statement that it is capable of responding to changing circumstances and necessities. He distinguished between interpretation and amendment. The ideas and circumstances of 1900 influenced what the Constitution says, and what it does not say. They form part of the context in which the meaning of the written words is to be understood. Changing times, and new problems, may require the Court to explore the potential inherent in the meaning of the words, applying established techniques of legal interpretation. Meaning, intention and purpose Acknowledging that "[i]ntention of the Legislature" is a "very slippery phrase"24, courts, and Parliament itself, refer to "intention" or "intent" in stating rules and principles of statutory interpretation. For example, a principle of interpretation, referred to by this Court in several recent judgments, is that courts do not impute to the legislature an intention to abrogate or curtail fundamental rights or freedoms unless such an intention is clearly manifested by unmistakable and unambiguous language25. The Acts Interpretation Act 1901 (Cth) sets out various rules of interpretation of statutes which apply "unless the contrary intention appears"26. Questions of statutory interpretation are commonly formulated, and answered, by reference to legislative intention. For example, where a statute imposes a duty, the question whether a breach of the duty will give rise to an action for damages at the suit of an injured victim "depends upon the intention to be extracted from the statute when read as a whole, having regard to its general scope and purview as well as to its particular provisions"27. In 24 Salomon v Salomon & Co [1897] AC 22 at 38 per Lord Watson. 25 eg Coco v The Queen (1994) 179 CLR 427 at 437; Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 492 [30]. 26 eg Acts Interpretation Act 1901 (Cth) ss 2(1), 4, 5, 8, 10, 10A, 15, 15B, 16, 16A, 16B, 16C, 17, 17AA, 18, 18A, 19A, 20, 21, 22, 23, 25, 25B, 25C, 25E, 26, 27, 28, 27 Martin v Western District of the Australasian Coal and Shale Employees' Federation Workers' Industrial Union of Australia (Mining Department) (1934) 34 SR (NSW) 593 at 596 per Jordan CJ, citing Pasmore v Oswaldtwistle Urban Council [1898] AC 387 at 394. Sovar v Henry Lane Pty Ltd28, Kitto J warned that the intention that such a private right shall exist is not conjured up by judges to give effect to their own ideas of policy, and then imputed to Parliament. "The legitimate endeavour of the courts is to determine what inference really arises, on a balance of considerations, from the nature, scope and terms of the statute, including the nature of the evil against which it is directed, the nature of the conduct prescribed, the pre-existing state of the law, and, generally, the whole range of circumstances relevant upon a question of statutory interpretation ... . It is not a question of the actual intention of the legislators, but of the proper inference to be perceived upon a consideration of the document in the light of all its surrounding circumstances." In Wilson v Anderson29, I sought to explain the objectivity of the concept of intention, comparing the position with respect to construction of a contract, and stressing that the exercise is not formal or literalistic but demands consideration of background, purpose and object, surrounding circumstances, and other matters which throw light on the meaning of unclear language. The danger to be avoided in references to legislative intention is that they might suggest an exercise in psychoanalysis of individuals involved in the legislative process; the value of references to legislative intention is that they express the constitutional relationship between courts and the legislature. As Kitto J said, references to intention must not divert attention from the text, for it is through the meaning of the text, understood in the light of background, purpose and object, and surrounding circumstances, that the legislature expresses its intention, and it is from the text, read in that light, that intention is inferred. The words "intention", "contemplation", "purpose", and "design" are used routinely by courts in relation to the meaning of legislation. They are orthodox and legitimate terms of legal analysis, provided their objectivity is not overlooked. Principles of purposive construction, and the provisions of the Acts Interpretation Act, dictate that regard be paid to purpose and object. Section 15AA of the Acts Interpretation Act provides that, in the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object. Section 15AB permits consideration of extrinsic material in the interpretation of an Act "if [the] material ... is capable of assisting in the ascertainment of the meaning of [a] provision", in order to confirm that the meaning is the ordinary meaning conveyed by the text "taking into account its context in the Act and the purpose or object underlying the Act", or to resolve ambiguity or obscurity, or to determine the meaning of a provision when the ordinary meaning of the text leads to manifest absurdity or unreasonableness. A 28 (1967) 116 CLR 397 at 405. 29 (2002) 213 CLR 401 at 417-419 [7]-[10]. non-exhaustive list of potentially available extrinsic materials, including parliamentary records, is set out in s 15AB(2). That brings me to the Convention Debates, there being no reason to doubt that interpretative principles of the same kind as those set out in s 15AB are also relevant to the Constitution, making due allowance for the nature of the Constitution as an instrument of government and not an ordinary statute. The Convention Debates The public record of the Convention Debates is evidence of what some people, involved in the framing of the Constitution, said about various drafts of the instrument. It is a partial record of the drafting history of most of the provisions of the Constitution. It reveals what some people understood, knew, intended about the proposed instrument, and the believed, thought, or circumstances surrounding some of the events involved in its preparation. For the reasons already given, what the record shows about the subjective beliefs or intentions of some people may be interesting but, of itself, is not a relevant fact. Many people, in Australia and the United Kingdom, were involved, directly or indirectly, in decisions about the form of the Constitution. Not all of them participated in the Convention Debates. Furthermore, as at all gatherings of lawyers or politicians, those who had the most to say were not necessarily the best informed or the most influential. A search for the collective, subjective intention of the framers of the Constitution would be impossible, and the individual subjective intention of any one of them, if it could be established, would not be relevant, because it would not advance any legitimate process of reasoning to a conclusion about the meaning of the text. Nevertheless, the drafting history of the Constitution, including the record of the Convention Debates, may be capable of throwing light on the meaning of a provision. Whether this will be so depends upon the nature of the problem of interpretation that arises, the nature of the information that is gained from the drafting history, and the relevance of that information to the solution of the problem. Whether information is capable of assisting in the rational solution, by a legitimate process of reasoning, of a problem about the meaning of the text, depends upon the nature of the problem, and the nature of the information. An example is given in Cheng v The Queen30. In the course of a debate, on 4 March 1898, there was an exchange between Mr Barton and Mr Isaacs concerning the drafting of what is now s 80, relating to trial by jury. The exchange was helpful in the resolution of the question considered in Cheng, not because it revealed what Mr Isaacs and Mr Barton believed the clause meant, (their belief was a legally irrelevant fact), but because it threw light on the purpose and object of the provision, a matter of importance to the process of 30 (2000) 203 CLR 248 at 269. legal interpretation. What was involved was a commonplace exercise in purposive construction. The record of what occurred was regarded, as long ago as 190131, as capable of assisting the ascertainment of the meaning of s 80. Earlier inhibitions about taking advantage of that assistance have now been abandoned. Reference to the record may be made, not for the purpose of seeking the subjective intention of people involved in the drafting, "but for the purpose of identifying the contemporary meaning of language used, the subject to which that language was directed and the nature and objectives of the movement towards federation"32. The reference, in Cole v Whitfield33, to "identifying the contemporary meaning of language used", that is, its meaning at the time of the Convention Debates, directs attention to the historical context in which language, the subject of a problem of interpretation, was used. For the reasons already given, an understanding of that context is often a valuable, and sometimes necessary, aid to deciding meaning. To deny the relevance of the contemporary meaning of the language used in 1900 would not only be contrary to what was said in Cole v Whitfield, it would be contrary to one of the most elementary principles of legal interpretation, which is that a text must be understood in its context. It is useful to consider the question that arises in the present case by reference to the interpretative approach taken in Cheatle v The Queen34. Cheatle v The Queen Cheatle was a unanimous decision of the Court. The reasons were given in a joint judgment of Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. The background to the case was that, at the time (1993), the States of South Australia, Western Australia and Tasmania, and the Northern Territory, like the United Kingdom, had legislation providing for the taking of majority verdicts in criminal trials. By contrast, in New South Wales, Queensland and, at the time, Victoria, jury verdicts at criminal trials were required to be unanimous. (Since then, Victoria has legislated for majority verdicts.) Section 80 of the Constitution requires the trial on indictment of an offence against any law of the Commonwealth to be by jury. Under ss 68 and 79 of the Judiciary Act 1903 (Cth), federal offences are frequently dealt with by State courts, following State procedures. The appellants were tried in South 31 Quick and Garran, The Annotated Constitution of the Australian Commonwealth 32 Cole v Whitfield (1988) 165 CLR 360 at 385. 33 (1988) 165 CLR 360. 34 (1993) 177 CLR 541. Australia for an offence against a law of the Commonwealth. They were convicted following a majority verdict of a jury. This Court upheld their submission that, by virtue of s 80 of the Constitution, the convictions were nullities. The requirement of s 80 was that the trial "shall be by jury": no more, and no less. The appellants were tried, before a judge and jury, according to the practice and procedure then current in South Australia, and in a number of other comparable jurisdictions. It is now the procedure current in most Australian jurisdictions. If, in 1993, and without reference to the Constitution, one were to ask, as an abstract question, whether trial by jury could include provision for majority verdicts, the answer would have been yes. If, today, one were to ask the same question, relating it to modern practice in Australian jurisdictions, the answer would be the same. Indeed, if progress were equated with change, the progressive view would surely be that the practice of trial by jury can accommodate majority verdicts. That is the modern trend, and there has been pressure for change even in those jurisdictions that retain a requirement for unanimity. If the words "trial on indictment ... shall be by jury" were taken out of their context, including their historical context, and considered solely in the light of current community values as reflected in legislation, it is difficult to see how the words could be understood as denying the possibility of majority verdicts. Why the values reflected in the legislation of, say, New South Wales and Queensland, would prevail over those reflected in the legislation of Victoria and South Australia, is not apparent. To make that the test, however, would involve a cardinal error, as this Court held. There is a further difficulty to be addressed. Trial by jury is a procedure that has evolved, and continues to evolve. Some aspects of jury trial that applied in the nineteenth century, such as property qualifications of jurors or exclusion of women, no longer apply. No one supposes that s 80 requires that, in the case of persons charged with federal offences, jury trial must have all the characteristics of jury trial in 1900. The procedure is not frozen as at that date. Yet one aspect of the procedure, unanimity, was held to be immutable. In reaching that conclusion, the Court took account of three considerations: history; principle; and judicial authority. Those factors were taken into account in deciding whether "the requirement of unanimity is an essential feature of the institution of trial by jury adopted by s 80"35. To describe the requirement of unanimity as "an essential feature" of the procedure of trial by jury referred to in s 80 is to say that the meaning of "trial by jury" in that context excludes the possibility of majority verdicts. It is obvious that the meaning of trial by jury in other contexts does not, in 2004, exclude that possibility; and it did not exclude that possibility in 1993. Yet it did so, and continues to do so, in the context of s 80. As to history, the Court said36: 35 (1993) 177 CLR 541 at 554. 36 (1993) 177 CLR 541 at 552. "It follows ... that the history of criminal trial by jury in England and in this country up until the time of Federation establishes that, in 1900, it was an essential feature of the institution that an accused person could not be convicted otherwise than by the agreement or consensus of all the jurors. It is well settled that the interpretation of a constitution such as ours is necessarily influenced by the fact that its provisions are framed in the language of the English common law, and are to be read in the light of the common law's history. In the context of the history of criminal trial by jury, one would assume that s 80's directive that the trial to which it refers must be by jury was intended to encompass that requirement of unanimity." I have already explained the sense in which the word "intended" is used in this context. It is not a solecism. It is a common term of judicial exposition, but not to be misunderstood as a reference to the mental processes of some individual, or individuals. Similarly, the emphasis on the context of legal history is orthodox. As to principle, the Court said that "the common law's insistence upon unanimity reflects a fundamental thesis of our criminal law, namely, that a person accused of a crime should be given the benefit of any reasonable doubt"37. As to authority, the Court's examination of judicial decision-making in Australia and comparable jurisdictions reflects a consideration noted above, which is that legal interpretation of a text occurs as part of a process in which consistency and respect for authority play a significant role. Unconstrained by the past, the Court in 1993 would have been obliged to acknowledge that, according to current Australian legal practice, which varied between jurisdictions, trial by jury might or might not require unanimity, and that the possibility of majority verdicts was not excluded from the concept of jury trial. The reasoning in Cheatle is inconsistent with a theory of constitutional interpretation that denies the importance of historical context. Recognition of the importance of context in the interpretation of a text that was written a century ago is not inconsistent with the role of the Constitution as a dynamic instrument of government. It is no more than an application of orthodox legal principle. If the plaintiff is right in this case, then, just as "trial by jury" in s 80 excludes a procedure that allows for majority verdicts, so "aliens" in s 51(xix) excludes people born in Australia. The plaintiff's case The argument for the plaintiff depends largely upon the proposition that the legal and historical context at the time of the drafting of the Constitution 37 (1993) 177 CLR 541 at 553. supports such a meaning. The argument fails, not in the major premise as to the relevance of the legal and historical context, but in the minor premise. The context, properly understood, does not support the conclusion for which the plaintiff contends. Rather, it supports the opposite conclusion. In 1900, the major legal systems of the Western world adopted different approaches to the concept of alienage, and to correlative concepts of citizenship or allegiance. Broadly, the two leading theories were one which attached controlling importance to descent, and one which attached controlling importance to place of birth. The common law of England adhered to the second theory, but by 1900 the United Kingdom Parliament had intervened to modify the common law in significant respects. The questions of nationality, allegiance and alienage were matters on which there were changing and developing policies, and which were seen as appropriate for parliamentary resolution. The complex racial circumstances that resulted from Imperial expansion complicated the issues even further. The reasons of Gummow, Hayne and Heydon JJ demonstrate that, in the case of someone such as the plaintiff, an Indian citizen, born in Australia of Indian citizens, there was in 1900 no established legal requirement that she be excluded from the class of aliens. At the least, it was a matter appropriate to be dealt with by legislation. In Grain Pool of Western Australia v Commonwealth38 the joint judgment, referring to "cross-currents and uncertainties" in the law relating to patents and registered designs at the time of Federation, said "it plainly is within the head of power in s 51(xviii) to resolve them". It seems to me that, given the legal context in which the Constitution was written, it is equally plain that it was within the head of power given by s 51(xix) for Parliament to decide whether a person such as the plaintiff should be treated as an alien. To state the position negatively, the legal context does not support or require a conclusion that "aliens" in s 51(xix) excludes the plaintiff. It was argued that the record of the Constitutional Debates concerning a failed proposal to include in what is now s 51 a power to make laws with respect to Commonwealth citizenship in some way supports the plaintiff. The first thing to be noted is that there were two alternative, and inconsistent, proposals. In 1898, the chief proponent of the inclusion of a citizenship power, Dr Quick, said that he wanted to see either a definition of citizenship in the Bill or a power conferred on the Parliament to define citizenship39. The debate that followed related to both alternatives. A number of speakers raised various objections. 38 (2000) 202 CLR 479 at 501. 39 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1751. Some regarded a definition of citizenship as unnecessary40. Some saw the proposal as cutting across the concept of state citizenship41. Mr Isaacs thought that "all the attempts to define citizenship will land us in innumerable difficulties"42. He expressed concern that the proposed amendment might deprive Parliament of the power of excluding people of certain specified races "who happened to be British subjects"43. The subject of race was of great concern to the framers, and their views on that matter were quite different from those which now prevail. To put the point at its lowest, a purpose of limiting Parliament's power to legislate for exclusion is not apparent. It is impossible to discern in the record of the Convention Debates any specific reason for the rejection of Dr Quick's ambiguous proposal. The discussion throws no light on the purpose or object of s 51(xix), except to the extent that it suggests that a broad, rather than a narrow, power with respect to aliens was in contemplation. Conclusions and Orders The argument for the plaintiff has not been made out. She is a citizen of a foreign state, the child of foreign citizens and, although born in Australia, she is an alien. The first question in the case stated should be answered, "Yes". The second question does not arise. The third question should be answered, "The plaintiff". 40 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 3 March 1898 at 1782. 41 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1764. 42 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 3 March 1898 at 1797. 43 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 3 March 1898 at 1788. McHugh 34 McHUGH J. Is a child born in Australia an alien simply because the child's parents are aliens? That is the principal issue in these proceedings, brought on behalf of Ms Tania Singh, who was born in Australia but whose parents are "aliens" within the meaning of s 51(xix) of the Constitution. For her, the answer to this question is of momentous importance. If it is answered in the affirmative, the Minister for Immigration and Multicultural and Indigenous Affairs may proceed with her intention to deport her. Further, Ms Singh would have no legal or constitutional right to enter Australia in the future. Entry would be subject to the discretion of the Minister. In my opinion, a person born in Australia is not, never has been and, without a constitutional amendment, never could be an alien unless that person falls within one of three categories. None of those categories applies to Ms Singh. Over 200 years ago, Sir William Blackstone said44 that "[t]he children of aliens, born here in England, are, generally speaking, natural-born subjects, and entitled to all the privileges of such." Eight years after the colonies of Australia federated, Griffith CJ, Barton, O'Connor, Isaacs and Higgins JJ made the same comment about a person born in this country in a case where the father was a Chinese alien45. Ms Singh is a natural born "subject of the Queen" of Australia for the purpose of s 117 of the Constitution and, unlike an alien, entitled to its protection. If she is a natural born subject of the Queen of Australia, I do not see how anyone could find that she is an alien for the purpose of the Constitution. Furthermore, subject to presently irrelevant exceptions, birth in Australia made her a member of the Australian community and one of "the people of the Commonwealth" to whom the Constitution refers. The Minister has no power to deport Ms Singh. She is not an alien. The Minister has no power to act as if Ms Singh were not a member of the Australian community. Section 51(xix) of the Constitution empowers the Parliament of the Commonwealth to make laws with respect to "aliens". By necessary implication or assumption, that grant of power recognises that an alien is a person who can be identified by reference to some criterion or criteria that exists or exist independently of any law of the Parliament or indeed of the Constitution itself. It is a corollary of that implication or assumption that the Parliament of the Commonwealth cannot itself define who is an alien. Thus, s 51(xix) implies or assumes that an alien can be defined – but not by the Parliament. It must follow, then, that that paragraph also implies or assumes that, when the Constitution was enacted in 1900, the term had a meaning that would 44 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 361-362. 45 Potter v Minahan (1908) 7 CLR 277 at 287, 289 per Griffith CJ, 294 per Barton J, 304-305 per O'Connor J, 308 per Isaacs J, 320 per Higgins J. McHugh be understood objectively by the Australian people. The persons who fall within or outside that meaning may change over the years. Australia's evolving independence from the United Kingdom, its steps towards becoming a sovereign nation, the acceptance of the divisibility of the Crown and the evolution of the Crown from an Imperial to a national office have led to changes in the denotation of the term "aliens". Hence, a person born in the United Kingdom who is resident in Australia may now be regarded as an alien in Australia for constitutional purposes even though such a person would not have been regarded as an alien in 1900. It may even be that experience of political or social developments has given or may give insights that lead later generations of Australians to define the constitutional term "aliens" itself in a way that does not fully accord with its perceived meaning in 1900. But if the persons who fall within the denotation of the term change or the connotation of the term changes, it will be because of events that occur independently of laws made by the Parliament. To deny that proposition is to deny the binding effect – indeed the legitimacy – of the Constitution itself. In the Australian colonies in 1900, the essential meaning – the connotation – of the term "alien" was a person who did not owe permanent allegiance to the Crown. And, subject to three exceptions, in 1900 and now, birth in Australia, irrespective of parentage, gave and still gives rise to an obligation of permanent allegiance to the sovereign of Australia. Even if it is permissible in 2004 to give the constitutional term "aliens" a meaning different from that which it had in 1900 – itself a contestable proposition – the Commonwealth has referred to no circumstance external to the Constitution which demonstrates that the essential meaning of the term in 1900 no longer applies. Indeed, even under a "progressivist" theory of constitutional interpretation, it is hard to conceive of the essential meaning of a constitutional term being entirely displaced and another meaning substituted for it46. Under the law of India at the time of her birth, Ms Singh acquired Indian citizenship at birth because her parents are Indian citizens. However, it is of no relevance in determining the meaning of the constitutional term "aliens" that, under the law of another country, a person, born in this country, may be a citizen of, and owe obligations of allegiance to the sovereign of, the foreign country. Equally irrelevant to determining the meaning of "aliens" in s 51(xix) are concepts of nationality and citizenship. Discussion of those concepts in this 46 In 1900, for example, "marriage" in s 51(xxi) of the Constitution meant a voluntary union for life between a man and a woman to the exclusion of others. By reason of changing circumstances, it may now extend to a voluntary and permanent union between two people. But irrespective of changing circumstances, it is impossible to accept that a voluntary union for life between a man and a woman to the exclusion of others could be outside the term "marriage". McHugh constitutional context merely invites error. What was, and is now, central to the meaning of the constitutional term "aliens" is the existence of an obligation of permanent allegiance to our sovereign – once the Queen of the United Kingdom but now, according to the doctrine of this Court, the Queen of Australia. Because the Commonwealth contends that Ms Singh is an alien – and therefore within the operation of s 51(xix) – it must show that upon her birth, she came under no obligation of permanent allegiance to the Queen of Australia. Not only has the Commonwealth failed to show that that is the case, it has not attempted to, nor could it, do so. The unanswerable logic of Ms Singh's claim that she is not an alien can be seen in the following polysyllogism47: An alien is a person who does not owe permanent allegiance to the Queen of Australia. A person who is born in Australia owes an obligation of permanent allegiance to the Queen of Australia. Therefore, a person born in Australia is not an alien. Ms Singh was born in Australia. Therefore, Ms Singh is not an alien. The Commonwealth cannot defend its claim that Ms Singh is an alien unless it can successfully attack the validity of the premise in the prosyllogism48. The Commonwealth cannot succeed without demonstrating at least one of two propositions: first, that it is erroneous to say that an alien is a person who does not owe permanent allegiance to the Queen of Australia; and, second, that it is erroneous to say that a person who is born in Australia owes an obligation of permanent allegiance to the Queen of Australia until it is voluntarily abandoned. Statement of the case Tania Singh was born in Mildura, Victoria, on 5 February 1998 and has remained in Australia ever since. Ms Singh's parents are Indian citizens. In April 1997, they arrived in Australia with Ms Singh's brother. In July 1997, 47 A polysyllogism consists of two or more syllogisms in which the conclusion of one is the premise of the next. 48 A prosyllogism is the syllogism that leads to the conclusion that forms the premise of the succeeding syllogism which is called an episyllogism. McHugh Ms Singh's father lodged an application for a protection visa. The Minister refused the application. In July 2003, Ms Singh, by her next friend, filed a writ of summons in this Court seeking, among other relief, a declaration that she had acquired Australian citizenship by birth. She also sought declarations that s 10(2) of the Australian Citizenship Act 1948 (Cth) ("the Citizenship Act") was invalid and that s 198 of the Migration Act 1958 (Cth) ("the Migration Act") was incapable of being validly applied to her. Section 198 provides for the removal from Australia of "unlawful non-citizens", that is, non-citizens who do not hold a visa that is in effect. If s 10(2) of the Citizenship Act validly applies to Ms Singh, she is not an Australian citizen because neither of her parents is an Australian citizen or a permanent resident of Australia. Subsequently, Kirby J stated a Case for the consideration of the Full Court of this Court. The first question in the Case is: "Is [Ms Singh] an alien within the meaning of s 51(xix) of the Constitution?" The second question is: "If the answer to 1 is 'No', is s 198 of the [Migration Act] capable of valid application to [Ms Singh]?" The third question is: "By whom should the costs of the case stated to the Full Court of this Honorable Court be borne?" The relevant constitutional and legislative provisions The Constitution confers no specific power on the Federal Parliament to make laws with respect to citizenship. This omission did not occur because the delegates at the Constitutional Conventions failed to consider the issue. On the contrary, they debated whether the Parliament of the Commonwealth should have the power to define citizenship. At the Melbourne Convention in 1898, Dr John Quick proposed that the Constitution should confer power on the Parliament to make laws with respect to citizenship49. But the delegates rejected the proposal. Mr Richard O'Connor QC said50: "It appears to me quite clear, as regards the right of any person from the outside to become a member of the Commonwealth, that the power to regulate immigration and emigration, and the power to deal with aliens, give the right to define who shall be citizens, as coming from the outside world." (emphasis added) 49 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1752. 50 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1754. McHugh Mr O'Connor's reference to immigration and emigration and aliens was a reference to what became ss 51(xix) and (xxvii) of the Constitution. Those paragraphs provide: "51. The Parliament shall ... have power to make laws ... with respect to: (xix) naturalization and aliens; (xxvii) immigration and emigration". Acting under the naturalisation and aliens power and, according to the argument of the defendants, an implied nationhood power, the Federal Parliament has enacted the Citizenship Act. Section 10 of that Act declares: "(1) Subject to this section, a person born in Australia after the commencement of this Act shall be an Australian citizen. Subject to subsection (3), a person born in Australia after the commencement of the Australian Citizenship Amendment Act 1986 [(Cth)] shall be an Australian citizen by virtue of that birth if and only if: a parent of the person was, at the time of the person's birth, an Australian citizen or a permanent resident; or the person has, the period of 10 years commencing on the day on which the person was born, been ordinarily resident in Australia. throughout Subject to subsection (5), a person shall not be an Australian citizen by virtue of this section if, at the time of the person's birth, a parent of the person was an enemy alien and the birth occurred in a place then under occupation by the enemy. Subsection (3) does not apply in relation to a person if, at the time of the person's birth, a parent of the person: (a) was an Australian citizen or a permanent resident; and (b) was not an enemy alien. (6) A reference in this section to a permanent resident does not include a reference to a person who is, for the purposes of the Migration Act 1958, an exempt non-citizen." McHugh Under the Migration Act, a person in Australia who is not a citizen and who does not hold a visa that is in effect is an "unlawful non-citizen"51. Under s 198 of that Act, an officer must remove such a person "as soon as reasonably practicable". If Ms Singh is an unlawful non-citizen within the meaning of the Migration Act, the Minister and her officers have a duty to remove her from Australia. Whether they can do so depends on whether the Parliament of the Commonwealth has the constitutional power to declare that a person, born in this country, is an unlawful non-citizen and to order the removal from Australia of such a person. In my opinion, neither the aliens power under s 51(xix) of the Constitution nor any other legislative power of the Commonwealth permits either step to be taken. The defendants contend that the Parliament has a wide power to make laws "with respect to" "aliens". That contention is correct. But its limits are found in the constitutional term "aliens". A corollary of the implication that the power to make laws with respect to "aliens" necessarily assumes that the status of alienage can be identified objectively, that is, without reference to any federal law or to the Constitution, is that the Federal Parliament cannot itself define who is an alien52. Section 51(xix) therefore assumes that in 1900 the term "aliens" had an objective meaning that was understood by the Australian people. In that respect, the constitutional term "aliens" is like the constitutional term "marriage". It is for this Court and other courts exercising the judicial power of the Commonwealth to define the term. To hold that the Parliament of the Commonwealth can treat a child, born in Australia, as an alien can be justified only by resort to the erroneous view that somehow in some way Parliament has power to define the constitutional term "aliens". Acting under the aliens power, the Parliament can say that persons who are aliens are not aliens for the purpose of federal law. But it cannot say that they are not aliens for the purpose of the Constitution any more than it can say that people who are not aliens are aliens. Further, Parliament can say that aliens are to have the same rights and privileges as natural born Australians. Indeed, it can make any law "with respect to" "aliens". It is for the courts exercising the judicial power of the Commonwealth, however, to determine who is an alien for the purpose of the Constitution. The fallacy that runs throughout the submissions of the Commonwealth in this case is the notion that the Parliament can define the term "aliens" by picking and choosing among various jurisprudential theories concerning the indicia of nationality and alienage. 51 Sections 13 and 14. 52 cf Dixon J in Australian National Airways Pty Ltd v The Commonwealth (1945) 71 CLR 29 at 81, speaking of the trade and commerce power in s 51(i) of the Constitution: "The subject of the power is, therefore, treated as a recognized phenomenon of national life existing independently of the Commonwealth." McHugh What, then, is the meaning of the term "aliens" in s 51(xix) and how is it to be ascertained? Constitutional interpretation General issues pertaining to constitutional interpretation There is no consensus as to any single approach to the interpretation of the Constitution. Commentators on the constitutional jurisprudence of this Court claim that all the methodologies that it has used are subject to criticism53. Current High Court jurisprudence on constitutional interpretation favours some form of textualism54. The basic premise of a textualist approach is that the text has ultimate primacy, although history and extrinsic materials may be relevant to explain the meaning of the text. Because the Constitution is contained in a statute of the Imperial Parliament and the people of the Commonwealth have agreed to be governed under the Constitution, it seems obvious that the best guides to its interpretation are the general rules of statutory interpretation55. The fundamental rule of statutory interpretation is that the meaning of an enactment is the meaning that its makers intended. Intention in the context of statutory interpretation is "an obvious fiction"56. But it is "a useful judicial construct because the judge is required to make the choices that best express the statutory text's meaning."57 In 53 See, eg, Selway, "Methodologies of Constitutional Interpretation in the High Court of Australia", (2003) 14 Public Law Review 234 at 250. 54 Selway, "Methodologies of Constitutional Interpretation in the High Court of Australia", (2003) 14 Public Law Review 234 at 239; Kenny, "The High Court on Constitutional Law: The 2002 Term", (2003) 26 University of New South Wales Law Journal 210 at 214, 222. 55 Tasmania v The Commonwealth and Victoria (1904) 1 CLR 329 at 358-360 per O'Connor J; McGinty v Western Australia (1996) 186 CLR 140 at 230 per McHugh J; Eastman v The Queen (2000) 203 CLR 1 at 41-42 [134] per McHugh J; Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 426 [106] per McHugh J. 56 Popkin, Statutes in Court: The History and Theory of Statutory Interpretation, 57 Popkin, Statutes in Court: The History and Theory of Statutory Interpretation, McHugh the case of the Constitution, the intention is that of those who framed it58. Their intention is determined objectively. Their subjective beliefs and assumptions as to its meaning are irrelevant59. In applying the rules of statutory construction to the Constitution, Justices of this Court have always taken into account that it is no ordinary statute60. They have recognised that it is an instrument difficult to amend, designed for the ages and intended as the blueprint for governing a federation consisting of a central and six regional governments as well as a number of territories. The makers of the Constitution and the people of the Australian colonies who approved the Constitution laid down a blueprint for the government of the nation for the indefinite future, subject to the power of the people to consent to its amendment under s 128 of the Constitution. The Constitution must be interpreted with that fundamental premise in mind. Because that is so, its provisions must not be interpreted pedantically or narrowly61. They must be interpreted flexibly and purposively and, subject to the text and structure, in the manner best fitted to the contemporary needs of a federal system62. Many provisions of the Constitution are framed in terms wide enough to allow this to be done. Dixon J recognised 58 Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 549 [35], 551 [40] per McHugh J; Eastman (2000) 203 CLR 1 at 41-44 [134]-[140] per McHugh J; Re Patterson (2001) 207 CLR 391 at 426 [107] per McHugh J. 59 Re Wakim (1999) 198 CLR 511 at 549 [35], 550 [38], 551 [40] per McHugh J; Eastman (2000) 203 CLR 1 at 45-47 [145]-[147] per McHugh J. 60 Attorney-General (NSW) v Brewery Employes Union of NSW (1908) 6 CLR 469 at 611-612 per Higgins J; Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 367-368 per O'Connor J; McGinty (1996) 186 CLR 140 at 230-231 per McHugh J. 61 Australian National Airways Pty Ltd (1945) 71 CLR 29 at 85 per Dixon J. 62 Re Patterson (2001) 207 CLR 391 at 426 [109] per McHugh J, citing Jumbunna Coal Mine NL (1908) 6 CLR 309 at 367-368 per O'Connor J; R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225-226; R v Coldham; Ex parte Australian Social Welfare Union (1983) 153 CLR 297 at 314; The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 127-128 per Mason J; McGinty (1996) 186 CLR 140 at 230-231 per McHugh J. See also The Commonwealth v Kreglinger & Fernau Ltd and Bardsley (1926) 37 CLR 393 at 413 per Isaacs J; Abebe v The Commonwealth (1999) 197 CLR 510 at 531 [41] per Gleeson CJ and McHugh J, 581 [203] per Kirby J; Re Wakim (1999) 198 CLR 511 at 550 [39] per McHugh J; Eastman (2000) 203 CLR 1 at 42-43 [135] per McHugh J. McHugh this in Australian National Airways Pty Ltd v The Commonwealth when he said that63: "[I]t is a Constitution we are interpreting, an instrument of government meant to endure and conferring powers expressed in general propositions wide enough to changing to be capable of flexible application circumstances." At an earlier stage in the history of the federation, Isaacs J also recognised this point in The Commonwealth v Kreglinger & Fernau Ltd and Bardsley, when he said64 that the Constitution was "made, not for a single occasion, but for the continued life and progress of the community". So far as the text and structure allows, the Constitution should be interpreted so as to achieve a rational and efficient system of government. Although considerations of practicality are not and cannot be determinative65, they may be taken into account in some circumstances66. As Cardozo J once said67, while consequences cannot alter the meaning of legislative provisions, they may help to fix their meaning. In interpreting the Constitution, historical and other materials often throw light on its meaning. They can be considered, for example, in order to identify the mischief to which the words of the Constitution were directed, to identify the purpose of the relevant constitutional concept or to determine the specialised meaning of constitutional terms68. Latham CJ once pointed out that the Commonwealth was not born into a vacuum69. Behind its making was a body of 63 (1945) 71 CLR 29 at 81. 64 (1926) 37 CLR 393 at 413. 65 Re Wakim (1999) 198 CLR 511 at 540 [2] per Gleeson CJ, 554 [49] per McHugh J, 569 [94], 579-580 [121], 581-582 [126] per Gummow and Hayne JJ. 66 Abebe (1999) 197 CLR 510 at 531-532 [41]-[44] per Gleeson CJ and McHugh J; Sue v Hill (1999) 199 CLR 462 at 489 [56] per Gleeson CJ, Gummow and Hayne JJ; Re Governor, Goulburn Correctional Centre; Ex parte Eastman (1999) 200 CLR 322 at 332 [9] per Gleeson CJ, McHugh and Callinan JJ. 67 In re Rouss 116 NE 782 at 785 (1917). 68 Cheng v The Queen (2000) 203 CLR 248 at 292 [129], 294-295 [140]-[142] per McHugh J; see also Cole v Whitfield (1988) 165 CLR 360 in relation to the meaning of the word "free" and Ha v New South Wales (1997) 189 CLR 465 in relation to the meaning of the word "excise". 69 In re Foreman & Sons Pty Ltd; Uther v Federal Commissioner of Taxation (1947) 74 CLR 508 at 521. McHugh constitutional conventions and common law rules and principles that governed the relationship of the Crown and the people of the Australian colonies and gave content to the Constitution's language. In addition, many constitutional words and phrases are legal terms of art with a rich pre-federation history of which the framers would have been aware. Further, as I pointed out in Theophanous v Herald & Weekly Times Ltd70: "The true meaning of a legal text almost always depends on a background of concepts, principles, practices, facts, rights and duties which the authors of the text took for granted or understood, without conscious advertence, by reason of their common language or culture." A most striking example of background throwing light on the meaning of a constitutional provision is the decision in Cole v Whitfield71. In Cole, the Court used history to read down the words in s 92 of the Constitution that "trade ... among the States ... shall be absolutely free" to cover cases only where interstate trade was burdened by laws that were discriminatory in a protectionist sense. In a line of cases dealing with "trial ... by jury" in s 80 of the Constitution72, the Court used history to look for the "essential" characteristics of a jury as they were understood at common law in 1900. The Court identified these essential features by considering the historical evolution of juries in the United Kingdom and Australia before and around 1900 and the purpose of the relevant section of the Constitution. The Court then considered these "essential" aspects in their historical context. When those who framed the Constitution included the term "aliens", they did so against a background of British and colonial history that, for at least six centuries, had regarded an alien as a person who did not owe permanent allegiance to the Crown. The makers of our Constitution enacted s 51(xix) knowing that the principle that a person who did not owe permanent allegiance to the Crown was an alien was an entrenched rule of the common law, a rule as central to the unwritten constitution of the United Kingdom and its colonies as could be found. They also knew that, upon birth in any part of the Crown's dominions, the new born child immediately owed permanent allegiance to the Crown and was entitled to claim a reciprocal duty of protection on the part of the Crown, unless the child fell into one of three categories to which I shall later refer. In 1900, no-one in Australia who knew anything about the subject would 70 (1994) 182 CLR 104 at 196. 71 (1988) 165 CLR 360. 72 See, eg, Cheatle v The Queen (1993) 177 CLR 541; Brownlee v The Queen (2001) 207 CLR 278. McHugh think for a moment that a person, born in any part of the Crown's dominions, was an alien unless the child fell into one of the three categories. It is a mistake to think that in 1900 an alien was simply a person who was not a British subject. In the then structure of the Empire, a person who was not a British subject was an alien. Nevertheless, "non-British subject" was not the "essential meaning" of the term "alien" in 1900. If it were, the term would have that meaning until amended under s 128 of the Constitution. Most Australians would now be aliens. It is more accurate to say that in 1900 an alien was a person who was not a "subject of the Queen"73. The essence of the term "alien" was the lack of permanent allegiance to the Crown. While the Crown remained indivisible, a British subject was outside the denotation of the term "alien". However, when the Crown divided, so to speak, the denotation of the term "subject of the Queen" changed. As a result, British subjects no longer owed permanent allegiance to the Queen of Australia and became "aliens" in Australia. Against this background, the inevitable conclusion is that in s 51(xix) of the Constitution the term "aliens" means persons who do not owe permanent allegiance to the Queen of Australia. It is only a half-truth to say that an alien is a person who owes permanent or even temporary allegiance to another country. Indeed, in the case of a stateless person, it is not even a half-truth. The meaning of "aliens" in the Constitution does not turn on whether under the law of another country the person in question owes a duty of allegiance to that country. It turns on whether that person owes a duty of permanent allegiance to the Queen of Australia. The history of the concepts of aliens and alienage in England and Australia shows why this is so. To that history, I now turn. Historical development of the concepts of "aliens" and "alienage" Historically, the term "alien" has denoted the legal status of a person in relation to the sovereign of a body politic. As a matter of etymology, the English word "alien" derives from the Latin alienus through Old French. It means "belonging to another person or place". In Anglo-Australian law, the concept of "alien" is inextricably linked with the concept of the "subject" under English common law. Origins of "alienage" in English common law English common law traditionally distinguished between "natural born subjects", "alien subjects" and "aliens". Under the English common law, all persons within the dominions of the monarch were either "natural born subjects" or "alien subjects". A subject was literally a person subjected to the dominion or 73 cf Constitution, s 117. McHugh laws of the monarch. An alien was a person outside the dominions of the monarch who was not a "natural born subject". The status of subjects of the Crown and aliens derives from English medieval common law and the feudal system74. Feudalism was based on concepts of territory and person. Under the feudal system, all rights and duties were "bound up with and dependent upon the holding of land, and there [was] a personal tie of fealty between the tenant [or vassal] and his lord."75 Fundamental to the concept of the "subject" in the common law was the English feudal notion of allegiance. Ideas of territory and person were behind the doctrine of allegiance. Sir William Blackstone described the twin concepts underlying the doctrine of allegiance as "land" or "territory" and personal "fealty"76. During the medieval period, all persons within the King's dominions owed a duty of allegiance to the King. Fealty was the feudal obligation of fidelity and obedience that was owed by a vassal to his or her lord together with the reciprocal duty of protection and guardianship which the lord owed to the vassal77. As Sir William Holdsworth noted, the doctrine of allegiance "has its roots in the feudal idea of a personal duty of fealty to the lord from whom land is held"78. In his Commentaries on the Laws of England, Sir William Blackstone described allegiance as "the tie, or ligamen, which binds the subject to the king, in return for that protection which the king affords the subject."79 The common law recognised the sovereign as the supreme feudal lord of the people as well as the land. Subjects owed the King the same duties of fidelity and obedience as vassals owed to their lord, for the King was their sovereign lord. "Allegiance" referred to the obligations owed by subjects to the King; "fealty" referred to the obligations owed by vassals to their lord. (The ideas of territory and person were modified in order to apply to the relationship between the King and his subjects, because this relationship was not based on tenure.) 74 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 354. 75 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 73. 76 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 354-355. 77 Salmond, "Citizenship and Allegiance", (1902) 18 Law Quarterly Review 49 at 50; Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 72. 78 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 72. 79 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 354. McHugh Subjects were ad fidem regis ("in the faith of the king")80. In early feudal times the territorial element was the more important element of allegiance. English common law distinguished between natural born subjects and alien subjects according to the nature of the allegiance owed by each. Sir William Blackstone observed that the principle of allegiance was the distinguishing feature between natural born subjects, alien subjects and aliens. "Natural-born subjects are such as are born within the dominions of the crown of England, that is, within the ligeance, or as it is generally called, the allegiance of the king; and aliens, such as are born out of it." Natural born subjects owed a permanent and personal allegiance to the sovereign, while alien subjects owed a local, temporary allegiance82. During the medieval period, the allegiance of a natural born subject was regarded as personal, permanent and absolute. In other words, "the tie of allegiance [was] indissoluble, and ... the status of the subject [was] permanent."83 In Storie's Case84 and later in Calvin's Case85, the common law courts held that the status of a natural born subject was indelible. Sir William Blackstone also distinguished between the different types of allegiance owed by natural born subjects and alien subjects, "the one natural, the other local; the former being also perpetual, the latter temporary."86 "Natural allegiance", he declared, "is such as is due from all men born within the king's dominions immediately upon their birth", because the sovereign's reciprocal obligations of protection arose immediately upon such persons' birth and during their infancy, when they were "incapable of protecting themselves"87. In addition, natural allegiance could not be divested without the concurrence of the 80 Salmond, "Citizenship and Allegiance", (1902) 18 Law Quarterly Review 49 at 50. 81 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 354. 82 Salmond, "Citizenship and Allegiance", (1902) 18 Law Quarterly Review 49 at 50. 83 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 78. 84 (1571) 3 Dyer 300b [73 ER 675]. 85 (1608) 7 Co Rep 1a [77 ER 377]. 86 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 357. 87 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 357. McHugh sovereign to whom such allegiance was due88. Local allegiance owed by alien subjects, on the other hand89: "is such as is due from an alien, or stranger born, for so long time as he continues within the king's dominion and protection: and it ceases, the instant such stranger transfers himself from this kingdom to another." By the end of the 13th century, the settled principle of English law was that all persons born on English soil, regardless of parentage, owed allegiance to and were therefore subjects of the King90. The issue of the status of persons born outside the territory belonging to the King was raised in the 17th year of the reign of Edward III in 1343. The question was laid before the Lords as to whether the King's sons born outside the realm could inherit. The Lords replied unanimously that there was no doubt that the King's sons could inherit, wherever born, but that with regard to children of other persons there were great difficulties in deciding the question91. The matter was then brought jointly before the Lords and Commons, who concurred in the opinion previously given by the Lords92. Statute 25 Edw III stat 193 was subsequently passed in 1351 to the effect that: "all Children Inheritors ... born without the Ligeance of the King, whose Fathers and Mothers at the Time of their Birth be and shall be at the Faith and Ligeance of the King of England, shall have and enjoy the same Benefits and Advantages, to have and bear the Inheritance within the same Ligeance, as the other Inheritors aforesaid in Time to come". 88 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 358. 89 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 358. 90 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 75, citing Pollock and Maitland, The History of English Law Before the Time of Edward I, (1895), vol 1 at 446; Rotuli Parliamentorum, vol 1 at 44. 91 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109], Appendix 1 at 6. 92 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109], Appendix 1 at 6, citing Rotuli Parliamentorum, vol 2 at 139. 93 This statute was previously given as 25 Edw III stat 2. McHugh In 1368, the Parliament declared that persons born within any territory belonging to the King were natural born subjects94. The concept of the "subject of the King" was also extended to include the children of English parents born in foreign countries, as well as any child born within the King's territories95. Viewed together, the decision of the Lords and Commons in 1343, the 1351 statute and the 1368 declaration by Parliament effectively settled the rules as to the acquisition of the status of subject by birth. Birth within the sovereign's territories while those territories were under the sovereign's control was the common law test for determining whether a person was a natural born subject96. The status could also be acquired by statute. A person born within the sovereign's territories was regarded as a "natural born" subject; a person who was not a "natural born" subject could become a "natural" subject by statute. Accordingly, an alien subject was a person within the sovereign's dominions who was neither a natural born subject nor a person who had become a natural subject by statute. And an alien was a person who was not within the sovereign's dominions who was neither a natural born subject nor a person who had become a natural subject by statute. Restatement of the law in Calvin's Case By the end of the 16th century, it was accepted that under the common law a person's formal legal status was determined by the nature of the allegiance that person owed to the sovereign and by the place of his or her birth. In 1608, the judges who heard Calvin's Case in the Exchequer Chamber restated and explained the common law rules97. The judges considered the problem of the status of the "postnati", that is, persons born after the accession of James VI of Scotland to the English throne as James I of England. The case turned on whether a person born in Scotland after the accession of James I to the English throne in 1603 was a natural born subject of James I who enjoyed the rights accruing to natural born subjects, including the right to hold land in England. The defendants had disseised Calvin of lands that Calvin held in Haggerston and Bishopsgate, claiming that he was an alien born in Scotland and as an alien was not entitled to hold land in England. 94 Statute 42 Edw III c 10. At the time the King had substantial continental possessions. 95 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 75-76. 96 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 72; Pryles, Australian Citizenship Law, (1981) at 14. 97 (1608) 7 Co Rep 1a [77 ER 377]. McHugh Coke CJ and all the judges, except Walmesley and Foster JJ, held that persons born in Scotland after the accession of James I to the English throne were natural born subjects of James I. This conclusion flowed from the territorial and the personal view of the tie of allegiance. Coke CJ applied the common law rule that a person cannot be a natural born subject unless the place of his or her birth, at the time of his or her birth, was within the King's dominions. He said98: "There be regularly (unless it be in special cases) three incidents to a subject born. 1. That the parents be under the actual obedience of the King. 2. That the place of his birth be within the King's dominion. And, 3. The time of his birth is chiefly to be considered; for he cannot be a subject born of one kingdom that was born under the ligeance of a King of another kingdom, albeit afterwards one kingdom descend to the King of the other." Coke CJ explained that the requirement of "actual obedience" refers to birth within the sovereign's dominions at the time when the sovereign is in "actual possession" of that territory99. He cited France as an example: although the King of England had absolute right to the kingdom of France, persons born in France were not natural born subjects of the King of England if the King was not in actual possession of France at the time of their birth. The requirement that the place of birth be within the King's dominions refers to the place of birth within the sovereign's territories being under the actual control (dominion) of the sovereign at the time of birth. Coke CJ noted that "any place within the King's dominions without obedience can never produce a natural subject."100 Thus, if any part of the sovereign's dominions ceased to be within the sovereign's possession – for example, if a castle was overrun by enemy aliens – any children born within that territory during the time when that territory was outside the sovereign's possession was not a natural born subject. Coke CJ noted that the time of birth "is of the essence of a subject born" and that a person "cannot be a subject to the King of England, unless at the time of his birth he was under the ligeance and obedience of the King."101 Calvin's Case also recognised two exceptions to the common law rule that a person acquired the status of a natural born subject at birth, if the place of the person's birth, at the time of the person's birth, was under the actual dominion of 98 Calvin's Case (1608) 7 Co Rep 1a at 18a [77 ER 377 at 399]. 99 Calvin's Case (1608) 7 Co Rep 1a at 18a [77 ER 377 at 399]. 100 Calvin's Case (1608) 7 Co Rep 1a at 18a [77 ER 377 at 399]. 101 Calvin's Case (1608) 7 Co Rep 1a at 18b [77 ER 377 at 399]. McHugh the sovereign. The first exception was that the children of the King's ambassadors and their English wives were recognised as natural born subjects, notwithstanding that they were born outside the sovereign's dominions102. The second exception was that the children of enemy aliens born within the sovereign's territory were not regarded as natural born subjects, if at the time of birth the territory in which the child was born was not under the King's ligeance or obedience103. Calvin's Case also emphasised that allegiance was a personal bond between the King and the subject. The bond was not between the King in his capacity as a "corporation sole" because this concept existed only in English law. The bond was between the subject and the natural person of the King. All persons within the King's dominions recognised the natural person of the King, regardless of whether their law (eg, Scottish or Welsh law) recognised the political entity of the King104. The effects of the decision in Calvin's Case were significant. The first and most important effect was that the case laid down a general common law rule for the acquisition of the status of a natural born subject, a rule that applied to all persons born within the King's dominions. Thus, the decision secured a uniformity of status for natural born subjects. The second effect of the decision was that it laid down definite rules for the acquisition of the status of a natural born subject. In this context, Sir William Blackstone later observed105 that "[t]he children of aliens, born here in England, are, generally speaking, natural-born subjects, and entitled to all the privileges of such." The third effect of the decision was that it accepted that the status of the subject was "indelible" and that, if the King lost any of his territories, persons born in those territories while those territories were within the King's possession retained their status as natural born subjects of the King106. Sir Matthew Hale accepted this third principle107, 102 Calvin's Case (1608) 7 Co Rep 1a at 18a per Coke CJ [77 ER 377 at 399]. 103 Calvin's Case (1608) 7 Co Rep 1a at 18a-18b per Coke CJ [77 ER 377 at 399]. 104 Calvin's Case (1608) 7 Co Rep 1a at 10a-10b per Coke CJ [77 ER 377 at 388-389]; see also Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 80-82. 105 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 361-362. 106 Calvin's Case (1608) 7 Co Rep 1a at 27b per Coke CJ [77 ER 377 at 409]. See also Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 84-85. 107 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 86, citing Hale, The History of the Pleas of the Crown, (1736), vol 1 at 68. McHugh and it was applied in Aeneas Macdonald's Case108 in 1747. The court of the King's Bench in that case stated109: "It is not in the power of any private subject to shake off his allegiance, and to transfer it to a foreign prince. Nor is it in the power of any foreign prince … to dissolve the bond of allegiance between that subject and the crown." The common law rule that the status of the subject was "indelible" persisted in the United Kingdom, albeit with a number of exceptions110, until altered by the Naturalization Act 1870 (UK). Effect of historical and political developments since Calvin's Case Political changes in the 18th century gave rise to modifications in the common law doctrine of alienage. After the unification of the English and Scottish thrones, for example, the notion of a natural born British subject gained currency in place of the term "natural born subject". The former term appeared in Art IV of the Union with Scotland Act 1706 (6 Anne c 11), which ensured trade and navigation rights to "all the subjects of the United Kingdom of Great Britain". A significant change also occurred with the loss of the United States colonies. That loss gave rise to a change in the doctrine of the indelibility of the subject. In Doe d Thomas v Acklam111, the King's Bench held that the rule of the indelibility of the subject had no application in circumstances where a colony seceded, as had occurred with the United States colonies. Doe d Thomas v Acklam concerned an action in ejectment brought by an heiress. The woman was born in the United States after those colonies became independent. The woman's father was born in the United States before independence and continued to reside in the United States after independence. The Court dismissed the woman's action, holding that the father was an alien at the time of the woman's birth112 and 108 (1747) 18 S T 858. 109 Aeneas Macdonald's Case (1747) 18 S T 858 at 859. 110 See, eg, Doe d Thomas v Acklam (1824) 2 B and C 779 [107 ER 572]; Doe d Auchmuty v Mulcaster (1826) 5 B and C 771 [108 ER 287]. 111 (1824) 2 B and C 779 [107 ER 572]. See also Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 87. 112 Abbott CJ, delivering the judgment of the Court, held that parents who continued to reside in the United States ceased to be natural born subjects on 3 September 1783, when Great Britain recognised the independence of the United States colonies (Footnote continues on next page) McHugh that, consequently, the woman was also an alien. The Court regarded the election of the parents to continue residing in the United States as an election to become citizens of the United States and to shed allegiance to the Crown of Great Britain. Under the English law of the time, aliens could not own property in England. Abbott CJ said that the woman's father113: "had ceased to be a subject of the Crown of Great Britain, and became an alien thereto, before the birth of his daughter, and, consequently, that she is also an alien, and incapable of inheriting land in England". The decision of the Court turned on the interpretation of the treaty of peace of 3 September 1783 between Great Britain and the United States. If there had been no treaty, those persons born in the United States before independence would have continued to be natural born subjects after independence and the decision would have been different. In Doe d Auchmuty v Mulcaster114, the King's Bench appeared to accept that, but for the provisions of a treaty (or, presumably, some other formal act of recognition by a sovereign), natural born British subjects would have continued to be British subjects. Doe d Auchmuty v Mulcaster concerned an action for ejectment brought by the heirs of Robert Auchmuty. Auchmuty was born in the United States before independence and, as a loyalist, was evacuated to England at the time of independence in 1783. He later returned to the United States, where his children, the heirs, were born. Abbott CJ, Bayley and Holroyd JJ held that Auchmuty retained his status as a natural born British subject after independence. Accordingly, under the terms of the British Nationality Act 1730 (UK) (4 Geo II c 21), his children were entitled to the privileges of natural born British subjects of the King of Great Britain, which included the right to inherit land. In re Stepney Election Petition; Isaacson v Durant115 concerned the entitlement to vote in parliamentary elections of persons who were born in Hanover and who were living in England, but were not naturalised British subjects, at the time when Queen Victoria ascended the throne of Great Britain but not Hanover. Such persons were born when William IV was simultaneously the King of Hanover and the King of Great Britain and Ireland. The Queen's Bench Division held that a Hanoverian, who by birth was a British subject while under a Doe d Thomas v Acklam (1824) 2 B and C 779 at 797-798 [107 ER 572 at 579]. treaty of peace between Great Britain and the United States: 113 Doe d Thomas v Acklam (1824) 2 B and C 779 at 798 [107 ER 572 at 579]. 114 (1826) 5 B & C 771 at 775 per Bayley J [108 ER 287 at 289]. 115 (1886) 17 QBD 54. McHugh William IV held both the Crowns of Great Britain and Hanover, had become an alien when Queen Victoria ascended the throne of Great Britain but not Hanover. "The Hanoverian by birth who had needed no naturalization in the lifetime of William IV needed it when the Hanoverian heir and successor of that monarch was no longer the sovereign of these islands. He owed allegiance to William IV and his heirs and successors according to law, and as a Hanoverian he owed it on the death of William IV to the Duke of Cumberland, who was, according to Hanoverian law, the heir and successor of his brother, and ascended the throne as King Ernest in due course of law. He became an alien because the sovereign to whom his allegiance was due was a foreign sovereign; and the person to whom his allegiance had been due was dead leaving an heir. The Crowns had by accident been united in one person, but when the union of the Crowns came to an end the union of allegiance ceased too; and the allegiance which had been due to the King of Hanover, who was also King of the United Kingdom, was never at any time due to the Queen of the United Kingdom, who was not and who could not be by law Queen of Hanover." The decision established the rule that a natural born subject becomes an alien when the sovereign ceases to have dominion over the territory in which the person resides. Lord Coleridge CJ said that statements to the contrary in Calvin's Case were "dicta only"117. After considering the British Nationality Act 1730 and the British Nationality Act 1772 (UK) (13 Geo III c 21), Lord Coleridge CJ also said that, as the statutes referred to the Crown and not the sovereign, allegiance was due to the King in his politic, and not in his personal, capacity118. This was a further development in the law since Calvin's Case. Fundamental to the decision in that case – that those born after the accession of James I to the English throne were "natural born subjects" of the King of England – was the conclusion that the tie of allegiance is a tie between the individual and the person of the sovereign, not between the individual and the political entity that is the sovereign. 116 Isaacson v Durant (1886) 17 QBD 54 at 59-60. 117 Isaacson v Durant (1886) 17 QBD 54 at 64. 118 Isaacson v Durant (1886) 17 QBD 54 at 65-66. McHugh The common law rules in the late 19th century By the late 19th century, international law recognised two well-established rules for acquiring nationality by birth: jus soli119 and jus sanguinis120. Jus soli, which emphasised place of birth, was favoured in the United Kingdom, the United States, Spain and many Latin American countries. Jus sanguinis, which emphasised the father's nationality, was favoured by most European states, such as France, Prussia and Austria-Hungary, particularly after the French Revolution, when France adopted the jus sanguinis rule in the Code Napoléon. However, no nation relied exclusively on one of these principles to determine who was a natural born subject121. In the United Kingdom, the common law never recognised the principle of jus sanguinis as such. Instead, from time to time, statutes were enacted to equate certain blood relatives with natural born subjects122. Thus, legislation was needed to confer the status and privileges of a natural born British subject on the children of natural born subjects and, later, the grandchildren of natural born subjects who were born outside the kingdom. The British Nationality Act 1730 was directed at the children of natural born subjects and provided that: "all children born out of the ligeance of the crown of England, or of Great Britain, or which shall hereafter be born out of such ligeance, whose fathers were or shall be natural-born subjects of the crown of England, or of Great Britain, at the time of the birth of such children respectively, … are hereby declared to be natural-born subjects of the crown of Great Britain". 119 The Butterworths Australian Legal Dictionary, (1997) at 654 defines jus soli to mean: "a right acquired by virtue of the soil or place of birth. Under this right, the nationality of a person is determined by the place of birth rather than parentage. Nationality is conferred by the state in which the birth takes place." 120 The Butterworths Australian Legal Dictionary, (1997) at 654 defines jus sanguinis to mean a "right of blood. A right acquired by virtue of lineage. Under this right, the nationality of a person is determined by the nationality of their parents, irrespective of the place of birth." 121 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at viii, Appendix 1. 122 See, eg, Statute 25 Edw III stat 1. McHugh The British Nationality Act 1772 provided that all persons whose fathers by the British Nationality Act 1730 were entitled to the rights of natural born subjects were declared to be natural born subjects123. These statutes were needed to make permanent the allegiance of persons who were aliens at common law. When the concept of the natural born subject was expanded by statute to include persons born outside the dominions of the sovereign, it might result in a person having the status of a natural born subject of two sovereigns. In his Commentaries, Sir William Blackstone briefly adverted to the situation of a person who becomes subject to two sovereigns, but did not consider how such a problem should be resolved124. In Doe d Thomas v Acklam, Abbott CJ also mentioned the difficulties that arose when a person was a citizen of one country and a subject of another. However, he did not proffer any solution to the problem125. The legislative developments during the 18th and 19th centuries that expanded the circumstances in which the status of the natural born subject could be acquired showed that, as in other areas of the common law, its rules concerning aliens were not flexible enough to cope with some needs in a changing world. Sir William Holdsworth observed that the common law rules had "become quite unsuited to the new political and economic conditions of the day."126 He thought that the common law rules were "too restrictive in respect both to the acquisition and to the loss of the status of a subject."127 Two principal problems had emerged128: Conflicting claims to allegiance resulted from the rule that all persons born in territory within the allegiance of the Crown were British subjects when other states claimed allegiance through parentage. 123 See Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109], Appendix 1 at 6-7. 124 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 358. 125 Doe d Thomas v Acklam (1824) 2 B and C 779 at 797-798 [107 ER 572 at 579]. 126 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 88-89. See also Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at v. 127 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 89. 128 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 89. McHugh The doctrine of the indelibility of the subject gave rise to serious international complications, as had occurred with the secession of the United States colonies and the issue whether people born in the colonies before or after secession remained or were British subjects. Moreover, the common law did not appear capable of developing in a way that would resolve these problems and remain doctrinally coherent. The Royal Commission into naturalisation and allegiance In England, a Royal Commission to inquire into the laws of naturalisation and allegiance was established on 21 May 1868. The Commissioners accepted that the common law rule was that those born within the dominions of the British Crown were natural born British subjects, that upon birth they came under a duty of allegiance to the Crown and that their allegiance was indelible129. However, the Commissioners thought that the common law did not recognise those born of British parents outside the dominions of the British Crown as natural born British subjects130. In their Report, the Commissioners said131: "There are two classes of persons who by our law are deemed to be natural-born British subjects:- Those who are such from the fact of their having been born within the dominion of the British Crown; Those who, though born out of the dominion of the British Crown, are by various general Acts of Parliament declared to be natural- born British subjects. The allegiance of a natural-born British subject is regarded by the Common Law as indelible." The Commissioners noted that, while the common law rule "is open to some theoretical and some practical objections", it has "solid advantages"132. 129 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at v. 130 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at v. 131 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at v. 132 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at viii. McHugh The Commissioners stated their belief that "of the children of foreign parents, born within the dominions of the Crown, a large majority would, if they were called upon to choose, elect British nationality."133 The Commissioners concluded that "[t]he balance of convenience, therefore, is in favour of treating them as British subjects unless they disclaim that character"134. However, the Commissioners formed the view that the common law rule of the indelibility of the subject "is neither reasonable nor convenient."135 Although the Commissioners did not favour the abandonment of the rule altogether, they recommended that "it ought not to be, as it now is, absolute and unbending."136 Rather, they proposed that137: "In the case of children of foreign parentage, it [the common law rule] should operate only where a foreign nationality has not been chosen. Where such a choice has been made, it should give way." The Commissioners made the following recommendations in respect of persons born within the dominions of the Crown138: "(a) All persons born within the dominions of the Crown should be regarded by British law as British subjects by birth, except children born of alien fathers and registered as aliens. Provision should be made for enabling children, born within the dominions of the Crown, of alien fathers, to be registered as aliens; and children so registered should be thenceforth regarded as aliens. The child, if not so registered on his birth or during his minority by 133 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at viii. 134 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at viii. 135 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at v. 136 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at viii. 137 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at viii. 138 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at ix. McHugh his father or guardian, should be permitted to register himself as an alien at any time before he has exercised or claimed any right or privilege as a British subject. If the father, being an alien when the child was born, becomes during the child's minority naturalized as a British subject, the child, though registered as an alien, should follow the condition of the father." from some those While dissented some Commissioners the recommendations, none disputed the existence and content of the common law rule that, subject to the three established exceptions outlined further below, birth within the Crown's dominions made a person a natural born subject of the Crown and, accordingly, such a person was not an alien. Nor did the dissentients dispute the continuing effect of the common law rules concerning the acquisition of nationality by birth. The dissentients were, however, uniformly critical of the operation of report, W Vernon Harcourt stated that "the rule of determining nationality by locality of birth was of purely feudal origin" and had been discarded by European countries after the French Revolution140. He described the "inconveniences" of the common law rule and stated that "the rule is wholly indefensible in principle."141 He noted that under the rule nationality is derived by the accidental situation of the mother and that a child may become a subject of a country in which its father not only never made his home, but which he never even entered142. Harcourt also observed that under the law of "all modern nations" the child's nationality is determined by the father's143. in his dissenting For example, rules139. The recommendations of the Royal Commission were enacted in the Naturalization Act 1870 (UK). That Act purported to ameliorate the effects of 139 See, eg, Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at xi-xii (dissenting report of Bramwell and Bernard), xiii (dissenting report of Harcourt). 140 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at xiii (dissenting report of Harcourt). 141 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at xiii (dissenting report of Harcourt). 142 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at xiii (dissenting report of Harcourt). 143 Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109] at xiii (dissenting report of Harcourt). McHugh the common law rule of the indelibility of the status of the natural born subject. The Act permitted natural born British subjects who at birth were subjects of a foreign state by the law of that state and persons born outside the dominions of the Crown to a father who was a British subject to make a declaration of alienage144. In addition, British subjects who had become naturalised in a foreign state were permitted to renounce their allegiance to the British Crown145. Restatement of the common law rules in 1900 In 1896 Albert Venn Dicey, who with F W Maitland was the leading constitutional lawyer of the time, stated the rules for the acquisition of British "nationality" at birth as follows146: 'British subject' means any person who owes permanent allegiance to the Crown. 'Natural-born British subject' means a British subject who has become a British subject at the moment of his birth. 'Naturalized British subject' means any British subject who is not a natural-born British subject. 'Alien' means any person who is not a British subject." (footnotes omitted) Dicey did not identify the "alien subject" as a sub-group of "alien", although he recognised a category of alien who, because he or she was within British dominions, owed "temporary" allegiance to the Crown147. Such an alien could be distinguished from a "British subject" who owed "permanent" allegiance to the Crown. Dicey referred to the basic dichotomy between "British subject" and "alien", saying148: "Every natural person is either a British subject 144 Naturalization Act 1870 (UK), s 4. 145 Naturalization Act 1870 (UK), s 6. 146 Dicey, A Digest of the Law of England with Reference to the Conflict of Laws, 147 Dicey, A Digest of the Law of England with Reference to the Conflict of Laws, 148 Dicey, A Digest of the Law of England with Reference to the Conflict of Laws, McHugh or an alien." He identified the "leading principle of English law on the subject of British nationality"149 as the rule that, subject to certain exceptions150: "[A]ny person who (whatever nationality of his parents) is born within the British dominions, is a natural-born British subject. … Nationality under this Rule is independent of descent. The child of aliens, if born within any country subject to the Crown, is a natural-born British subject." In Dicey's view, the theoretical basis for the rule depended on the birth of a person within territory that at the time was under the control and protection of a particular sovereign151. Dicey listed two exceptions to the common law rule that British nationality was acquired by birth within the dominions of the Crown152: Any person whose father was an enemy alien and who was born within a part of the British dominions that at the time of the person's birth was in hostile occupation was an alien. Any person born within British dominions whose father was an alien and, at the time of the person's birth, was an ambassador or other diplomatic agent accredited to the Crown by the sovereign of a foreign state was an alien. The common law also recognised a third exception, namely, that a child of a foreign sovereign born within British dominions was an alien153. Accordingly, in 1900, when the Constitution was enacted, British law did not recognise the concept of "citizen": it recognised only the concepts of "natural born British subject", "alien subject" and "alien". The "naturalised British 149 Dicey, A Digest of the Law of England with Reference to the Conflict of Laws, 150 Dicey, A Digest of the Law of England with Reference to the Conflict of Laws, 151 Dicey, A Digest of the Law of England with Reference to the Conflict of Laws, 152 Dicey, A Digest of the Law of England with Reference to the Conflict of Laws, 153 See Jones, British Nationality Law and Practice, (1947) at 34-35; Pryles, Australian Citizenship Law, (1981) at 14. McHugh subject" was a statutory creation. Persons within British dominions were either "natural born subjects" or "alien subjects", as both persons were subject to the power, laws and jurisdiction of the Crown154. The concept of the "natural born subject" was also recognised by the Australian colonies in the mid-19th century in domestic naturalisation legislation155. And, as I have indicated, the natural born subject owed from birth permanent allegiance to the Crown. In turn, the Crown owed duties of protection to the subject. The natural born British subject acquired British nationality by birth within the dominions of the British Crown. The alien acquired it by legislation. Nevertheless, both the "natural born British subject" and the "naturalised British subject" owed obligations of permanent allegiance to the British Crown and were differentiated from aliens. In Shaw v Minister for Immigration and Multicultural Affairs, Gleeson CJ, Gummow and Hayne JJ said that156: "It may be that there never was a single nationality law throughout the British Empire." However, Sir John Salmond asserted that157: "The British empire, like the Roman, is a congeries of different countries, the populations of which live under different laws; but, unlike the case of Rome [which recognised local as well as Imperial citizenship], there is but one citizenship throughout the length and breadth of the dominions of the Crown. No man is a subject of England, or of Scotland, or of Victoria, or of Quebec. He is a subject of the British empire in its unity, or else he is an alien." As Sir John Salmond noted, each of the colonies had its own regime for the naturalisation of aliens, which extended only within the jurisdiction – essentially the territory – of that colony. Thus, a person could be a "naturalised British subject" in one part of the British Empire – in South Australia, for example – but an alien in Victoria158. Nevertheless, such modifications to the 154 Salmond, "Citizenship and Allegiance", (1902) 18 Law Quarterly Review 49 at 49. 155 See, eg, The Aliens Statute 1865 (Vic) (28 Vict No 256); Great Britain, Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, (1869) [4109], Appendix 1 at 13. 156 (2003) 78 ALJR 203 at 207 [20]; 203 ALR 143 at 148, citing Potter (1908) 7 CLR 277 at 304-305 per O'Connor J; Re Patterson (2001) 207 CLR 391 at 439-440 [146]-[147] per Gummow and Hayne JJ; Parry, Nationality and Citizenship Laws of the Commonwealth and of the Republic of Ireland, (1957) at 82. 157 Salmond, "Citizenship and Allegiance", (1902) 18 Law Quarterly Review 49 at 58. 158 Salmond, "Citizenship and Allegiance", (1902) 18 Law Quarterly Review 49 at 58. McHugh status of aliens were entirely statutory: the underlying common law rules pertaining to the acquisition of the status of a natural born subject by birth within British dominions remained consistent throughout the British Empire. Thus, the irresistible conclusion is that in 1900, those who made the Constitution understood that at common law, a person born within the dominions of the British Crown was a "natural born British subject" who owed permanent allegiance to the British Crown and was not an alien. They would have understood that general proposition to have three exceptions: Any person whose father was an enemy alien and who was born within a part of the British dominions that at the time of the person's birth was in hostile occupation was an alien. Any person born within British dominions whose father was an alien and, at the time of the person's birth, was an ambassador or other diplomatic agent accredited to the Crown by the sovereign of a foreign state was an alien. A child of a foreign sovereign born within British dominions was an alien. It would have been inconceivable to the makers of the Constitution and the people of Australia generally that a person born within the dominions of the Crown could be an alien unless the person fell within one of the three exceptions to the basic rule. In addition, because a person born in Australia was a subject of the Queen, that person was a member of the Australian community. The Convention Debates and the "aliens power" The Constitution eschews any reference to "citizenship". Indeed, the Constitution contains only two references to the word "citizen". Section 44(i) provides that a person is incapable of being chosen as a member of Parliament if he or she: "is under any acknowledgment of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or a citizen of a foreign power". The Convention Debates demonstrate that the failure to confer on the Federal Parliament the power to make laws with respect to "citizenship" was a conscious decision of the delegates. The makers resolved to leave the legal concept of the Australian citizen undefined. Dr John Quick sought to include a definition of Australian citizenship McHugh when he argued that the Commonwealth should have the power over Commonwealth citizenship159. He had earlier said160: "We ought either to place in the forefront of this Constitution an express definition of citizenship of the Commonwealth, or empower the Federal Parliament to determine how federal citizenship shall be acquired, what shall be its qualifications, its rights, and its privileges, and how the status may hereafter be lost." His "approximate" definition of citizenship was161: "[A]ll persons resident in the Commonwealth, being natural-born or naturalized subjects of the Queen, and not under any disability imposed by the Federal Parliament, should be citizens of the Commonwealth." Mr Isaac Isaacs opposed the proposal, fearing that all attempts to define citizenship would land them in "innumerable difficulties"162. Mr Josiah Symon also opposed the proposal. He regarded citizenship as a "birthright" – acquired by birth in a State – which should not be handed over to any government. His fear was that, by placing such a power in the hands of the Commonwealth, the Parliament could legislate to deprive a person of his or her citizenship163. One of the problems confronting the makers of the Constitution was the issue of categorisation, in particular, the effect of defining "citizen" as a "subject of the Queen". Under the common law, "subject of the Queen" included all "natural born subjects" born in any part of the British Empire. This included colonies such as Hong Kong. Some delegates were concerned not only that Chinese people from Hong Kong would be treated differently from those born in other parts of China, but also that they would be able to claim citizenship of the 159 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 3 March 1898 at 1788. 160 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1752. 161 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1752. 162 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 3 March 1898 at 1797. 163 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1763-1764. McHugh Commonwealth164. Dr John Cockburn, a South Australian delegate, emphasised165: "We desire always to deal with Asiatics on broad lines, whether they are subjects of the Queen or not; and in South Australia, and, I believe, other colonies, those lines of distinction are obliterated." Accordingly, the legislative power of the Commonwealth in s 51(xix) was confined to the making of laws with respect to "naturalization and aliens". The Convention Debates suggest that the paragraph was enacted because delegates feared that, if the Parliament had power to legislate with respect to citizenship, it could exercise the power to deprive a person of his or her citizenship, a concept that was treated as identical with "subject of the Queen", that is to say, a person born within the dominions of the Queen or a person who had been naturalised under a law of a colony. The Constitution refers variously to "subject of the Queen", "subject", and "citizen" in ss 117, 44(i) and 34(ii). Section 117, which deals with discrimination against interstate residents, refers to a "subject of the Queen, resident in any State". Section 44 refers to persons who are "incapable of being chosen or of sitting as a senator or a member of the House of Representatives." Section 44(i) describes one category as any person who "is under any acknowledgment of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or a citizen of a foreign power". Section 34(ii) addresses the qualifications for membership of the House of Representatives. To be eligible a person: "must be a subject of the Queen, either natural-born or for at least five years naturalized under a law of the United Kingdom, or of a Colony which has become or becomes a State, or of the Commonwealth, or of a State." Plainly, the Constitution did not see such persons as aliens, although they could not be chosen or sit if they fell within s 44(i). In addition, s 25 provides that: "For the purposes of [s 24], if by the law of any State all persons of any race are disqualified from voting at elections for the more numerous House of the Parliament of the State, then, in reckoning the number of the 164 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 3 March 1898 at 1788-1797. 165 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 3 March 1898 at 1797. McHugh people of the State or of the Commonwealth, persons of that race resident in that State shall not be counted." Thus, s 25 contemplates that a person can be a natural born subject but not entitled to some of the rights of "political membership" of the body politic. Early High Court authority on the "aliens power" Early cases in which this Court considered the issue of the composition of the Australian body politic turned on the immigration power. However, some of the early decisions also referred to the aliens power and the status of persons born within Australia. In Potter v Minahan166, a case which concerned the immigration power, Mr James Minahan was born in Australia, an illegitimate child of a white mother and a Chinese father. He left Australia with his father at the age of five, and then returned when he was 31. This Court held that he was not an immigrant and so was not subject to the Immigration Restriction Act 1901 (Cth). Griffith CJ held167 that on these facts, Minahan acquired "a British nationality" at birth as a matter of law. His Honour said168: "[A]nterior, both in order of thought and in order of time, to the concepts of nationality and domicil is another, upon which both are founded, and which is, I think, an elementary part of the concept of human society, namely, the division of human beings into communities. From this it follows that every person becomes at birth a member of the community into which he is born, and is entitled to remain in it until excluded by some competent authority. It follows also that every human being (unless outlawed) is a member of some community, and is entitled to regard the part of the earth occupied by that community as a place to which he may resort when he thinks fit. In the case of Musgrove v Chun Teeong Toy it was held that an alien (though an alien friend) has no legal right to enter a country of which he is not a national. Yet, unless he is outlawed from human society, he must be entitled to enter some community. So, by process of exclusion, we ascertain at least one part of the world to which every human being, not an outlaw, can claim the right of entry when he thinks fit. At birth he is, in general, entitled to remain in the place where he is born. (There may be some exceptions based upon artificial rules of territoriality.) If his parents are then domiciled in some other place, he 166 (1908) 7 CLR 277. 167 Potter (1908) 7 CLR 277 at 287. 168 Potter (1908) 7 CLR 277 at 289. McHugh perhaps acquires a right to go to and remain in that place. But, until the right to remain in or return to his place of birth is lost, it must continue, and he is entitled to regard himself as a member of the community which occupies that place. These principles are self-evident, and do not need the support of authority." (emphasis added, footnote omitted) Barton J referred to "Australian-born subjects of the King"169 and found that Minahan170: "is a natural-born British subject by virtue of his birth within the British Dominions. That fact is independent of the question of his legitimacy, and is as much a fact as if his father had been, say, a citizen of the United States, and had duly married Winifred Minahan in Australia. There is not a tittle of evidence of the respondent's having endeavoured or even intended to divest himself of that nationality." (reference omitted) O'Connor J stated as a general principle of law171: "[E]very person born within the British Dominions is a British subject and owes allegiance to the British Empire and obedience to its laws. Correlatively he is entitled to the benefit and protection of those laws". (emphasis added) O'Connor J also considered the concept of "national allegiance". In 1908 the divisibility of the British Crown was not recognised; hence, Australia was not regarded as a nation with a "sovereign nationality". His Honour held172 that the "principle which regulates rights as between the British Empire and its subjects must be applied in determining the relations of the Australian community to its members." Accordingly, he found that173: "A person born in Australia, and by reason of that fact a British subject owing allegiance to the Empire, becomes by reason of the same fact a member of the Australian community under obligation to obey its laws, and correlatively entitled to all the rights and benefits which membership of the community involves, amongst which is a right to depart from and 169 Potter (1908) 7 CLR 277 at 294. 170 Potter (1908) 7 CLR 277 at 293. 171 Potter (1908) 7 CLR 277 at 304-305. 172 Potter (1908) 7 CLR 277 at 305. 173 Potter (1908) 7 CLR 277 at 305. McHugh re-enter Australia as he pleases without let or hindrance unless some [constitutionally valid] law of the Australian community has in that respect decreed the contrary." Isaacs J dissented. His Honour accepted that birth in Australia created a tie of allegiance to the King. Nevertheless, he said174: "The fact that a person was born in Australia, constitutes him a British subject, but as allegiance is only the tie which binds him to the King ... birth in Australia creates precisely the same tie of allegiance and confers the same common law right of entry to all parts of the King's Dominions, no more and no less, as birth in any other part of the Empire." His Honour held175 further that "no claim to exemption from the Commonwealth power of legislation in respect of immigration could arise by reason of the mere fact of birth on Australian soil." He said176: "The ultimate fact to be reached as a test whether a given person is an immigrant or not is whether he is or is not at that time a constituent part of the community known as the Australian people. Nationality and domicil are not the tests; they are evidentiary facts of more or less weight in the circumstances, but they are not the ultimate or decisive considerations." Higgins J also dissented, although he accepted that Minahan was "a British subject, for he was born in British territory"177. His Honour said178: "It is urged that there is an Australian species of British nationality; that a man born in Australia is an 'appendage to the soil'; that when a man goes back to the land of his birth he is not 'immigrating' etc. I cannot find any foundation for these contentions. Throughout the British Empire there is one King, one allegiance, one citizenship. I use this last word, not in the Roman or in the American sense, but only because there is no suitable abstract noun corresponding to the word 'subject' (natural-born or 174 Potter (1908) 7 CLR 277 at 308. 175 Potter (1908) 7 CLR 277 at 308. 176 Potter (1908) 7 CLR 277 at 308. 177 Potter (1908) 7 CLR 277 at 320. 178 Potter (1908) 7 CLR 277 at 320-321. McHugh naturalized). Even when England and Scotland were distinct kingdoms under one King, from 1603 to 1707, there was no distinction recognized between English and Scottish citizenship. There was not one local allegiance for the subjects of England, and another local allegiance for the subjects of Scotland. All the King's subjects are members of one great society, bound by the one tie of allegiance to the one Sovereign, even as children hanging on to the ropes of a New Zealand swing. The top of the pole is the point of union: Calvin's Case. The fact of birth on British soil made the respondent a British subject, owing allegiance and entitled to protection; but that is all." (footnote omitted) These passages show that the first five Justices of this Court – all of whom can fairly be said to have been present at the creation of the Constitution – accepted that a person who was born in Australia came under an obligation of permanent allegiance to the King that made him or her a subject of the King and a member of the Australian community. They also accepted that a person who was a natural born subject of the King could not be an alien. In Donohoe v Wong Sau179, this Court followed the dissenting judgments of Isaacs and Higgins JJ in Potter. Donohoe also concerned the immigration power. The Court held that, in some circumstances, a natural born British subject could enter Australia as an immigrant and therefore be subject to federal laws made under the immigration power. Isaacs J said that, when Ms Lucy Wong Sau entered the Commonwealth, she was not "a member of this community. She was not Australian in point of language, bringing-up, education, sentiment, marriage, or of any of those indicia which go to establish Australian nationality."180 The decision in Donohoe was treated as one of fact and that decision does not affect the dicta in Potter concerning the acquisition of British nationality. Nor does it affect the statements in Potter that upon birth in Australia Minahan owed permanent allegiance to the sovereign of Australia. In Meyer v Poynton181, Starke J rejected the naturalisation power did not extend to depriving a naturalised person of citizenship. His Honour stated182: the argument that "It is said that depriving a person of citizenship so acquired [by naturalisation under statute] is not a law relating to naturalization. I am 179 (1925) 36 CLR 404. 180 Donohoe (1925) 36 CLR 404 at 408. 181 (1920) 27 CLR 436. 182 Meyer (1920) 27 CLR 436 at 441. McHugh quite unable to agree with the contention … [I]f the power given by the Naturalization Act [1903 (Cth)] to admit to Australian citizenship is within the power to make laws with respect to naturalization, so must authority to withdraw that citizenship on specified conditions be also within that power." Starke J's conclusion supports the argument that the power in s 51(xix) includes a power to determine legal status183. Thus, it permits the Parliament to determine the process and circumstances in which an alien may become naturalised and, conversely, the process and circumstances in which a naturalised alien may be denaturalised. However, Starke J in Meyer did not consider the question whether the power extends to the "denaturalisation" of a "natural born subject". Recent High Court authority on the "aliens power" In recent years, this Court has considered the scope of the aliens power in the context of the deportation of non-citizens and the changed relationship between Australia and England. Pochi v Macphee184 and Nolan v Minister for Immigration and Ethnic Affairs185 concerned persons born in Italy and the United Kingdom respectively, who had not taken out Australian citizenship. They were about to be deported under the Migration Act. They sought to prevent their deportation by arguing that s 12 of the Migration Act which purported to authorise their deportation was invalid as beyond the legislative power of the Federal Parliament. In Pochi the plaintiff argued that the provision was invalid because it applied to some persons who were British subjects. In Nolan the plaintiff, who was a British subject, argued that he was not an "alien" for constitutional purposes. The Court held in each case that the plaintiff was an alien to whom the Migration Act validly applied. In Pochi, Gibbs CJ considered the history of the status of British subjects, explaining that at the time of federation, "the status of British subjects was governed mainly by the common law, which applied in both England and the Australian colonies with some immaterial statutory modifications."186 He stated the formulation in Sir William Blackstone's Commentaries as the common law 183 See Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 171 [24] per Gleeson CJ. 184 (1982) 151 CLR 101. 185 (1988) 165 CLR 178. 186 (1982) 151 CLR 101 at 107. McHugh rule187. His Honour rejected the argument that English law governed the question, saying188: "If English law governed the question who are aliens within s 51(xix), almost all Australian citizens, born in Australia, would in future be aliens within that provision. The absurdity of such a result would be manifest." Accordingly, a British subject under the law of the United Kingdom could be an alien within s 51(xix). Gibbs CJ said that "the Parliament can ... treat as an alien any person who was born outside Australia, whose parents were not Australians, and who has not been naturalized as an Australian."189 Gibbs CJ also said that the Parliament could not expand the power under s 51(xix) to include persons "who could not possibly answer the description of 'aliens' in the ordinary understanding of the word."190 With respect, however, this statement provides no assistance in determining the meaning of the constitutional term "aliens". To apply this statement, one has to know what is "the ordinary understanding of the word" before one can say that particular persons "could not possibly answer the description of 'aliens' in the ordinary understanding of the word." That is to say, one must have a definition of "aliens". The majority in Nolan191 accepted the definition of an alien given by Gibbs CJ in Pochi, that is, an alien is "any person who was born outside Australia, whose parents were not Australians, and who has not been naturalized as an Australian." Whether or not the statement of Gibbs CJ in Pochi was an obiter dictum, in Nolan it was the ratio decidendi of the decision. Mason CJ, Wilson, Brennan, Deane, Dawson and Toohey JJ agreed that at federation, the term "aliens" certainly did not extend to British subjects. In a joint judgment their Honours stated192: 187 Pochi (1982) 151 CLR 101 at 107-108, citing Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 10 at 354 and Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 599. 188 Pochi (1982) 151 CLR 101 at 109. 189 Pochi (1982) 151 CLR 101 at 109-110. 190 Pochi (1982) 151 CLR 101 at 109. 191 (1988) 165 CLR 178 at 185 per Mason CJ, Wilson, Brennan, Deane, Dawson and 192 Nolan (1988) 165 CLR 178 at 183. McHugh "The word could not … properly have been used in 1900 to identify the status of a British subject vis-à-vis one of the Australian or other colonies of the British Empire for the reason that those colonies were not, at that time, independent nations with a distinct citizenship of their own. At that time, no subject of the British Crown was an alien within any part of the British Empire." However, their Honours observed that following the creation of separate Australian citizenship by the Nationality and Citizenship Act 1948 (Cth)193: "The fact that a person who was born neither in Australia nor of Australian parents and who had not become a citizen of this country was a British subject or a subject of the Queen by reason of his birth in another country could no longer be seen as having the effect, so far as this country is concerned, of precluding his classification as an 'alien'." (emphasis added) Their Honours referred to developments that "necessarily produced different reference points for the application of the word 'alien'."194 They identified these developments as the emergence of Australia as an independent nation, the acceptance of the divisibility of the Crown (implicit in the development of the Commonwealth as an association of independent nations) and the creation of a distinct Australian citizenship195. They said that the meaning of the word "alien" had not "altered" but that196: "Inevitably, the practical designation of the word altered so that, while its abstract meaning remained constant, it encompassed persons who were not citizens of this country even though they might be British subjects or subjects of the Queen by reason of their citizenship of some other nation. We would add that, to the extent that there would otherwise be inconsistency in the use of the words 'subject of the Queen' in the Constitution, it should be resolved by treating those words as referring, in a modern context, to a subject of the Queen in right of Australia". 193 Nolan (1988) 165 CLR 178 at 184. The Nationality and Citizenship Act was subsequently renamed the Australian Citizenship Act 1948 (Cth). 194 Nolan (1988) 165 CLR 178 at 186. 195 Nolan (1988) 165 CLR 178 at 185-186. 196 Nolan (1988) 165 CLR 178 at 186. McHugh Subsequently, Toohey J in Cunliffe v The Commonwealth, after referring to Nolan, said that197: "[A]n alien can generally be defined as a person born out of Australia of parents who were not Australian citizens and who has not been naturalized under Australian law or a person who has ceased to be a citizen by an act or process of denaturalization. Thus the terms 'non- citizen' and 'alien' are synonymous." (emphasis added, footnote omitted) While the terms "alien" and "non-citizen" may be synonymous in some contexts, this does not mean that a "non-citizen" for the purposes of the Migration Act is an "alien" within the constitutional meaning of the term. More recently, the Court considered the scope of the aliens power in Re Patterson; Ex parte Taylor198, Re Minister for Immigration and Multicultural Affairs; Ex parte Te199 and Shaw200. In Re Patterson, the Court considered the status of a person born in the United Kingdom. Gleeson CJ adopted the definition of alien expressed by the Court in Nolan and accepted that "Parliament cannot, by some artificial process of definition, ascribe the status of alienage to whomsoever it pleases"201. Gaudron J repeated the definition of alien she had articulated in Nolan, namely, that an alien is "a person who is not a member of the community which constitutes the body politic of the nation state from whose perspective the question of alien status is to be determined."202 Her Honour noted that a person "is not necessarily excluded from membership of the Australian community by reason of his or her being a citizen of a foreign power."203 In Te, Gleeson CJ said that "[f]rom the beginning", the aliens power "has been understood as a wide power, equipping the Parliament with the capacity to decide, on behalf of the Australian community, who will be admitted to formal 197 (1994) 182 CLR 272 at 375. 198 (2001) 207 CLR 391. 199 (2002) 212 CLR 162. 200 (2003) 78 ALJR 203; 203 ALR 143. 201 Re Patterson (2001) 207 CLR 391 at 400 [7]. 202 Re Patterson (2001) 207 CLR 391 at 407 [33], citing Nolan (1988) 165 CLR 178 at 203 Re Patterson (2001) 207 CLR 391 at 407 [34]. McHugh membership of that community."204 As alienage is a legal status, the power conferred by s 51(xix), subject to one qualification, "includes a power to determine legal status."205 Accordingly206: "Parliament has the power to determine the legal basis by reference to which Australia deals with matters of nationality and immigration, to create and define the concept of Australian citizenship, to prescribe the conditions on which such citizenship may be acquired and lost, and to link citizenship with the right of abode." His Honour said that the qualification, explained by Gibbs CJ in Pochi, was that207: "Parliament cannot, simply by giving its own definition of 'alien', expand the power under s 51(xix) to include persons who could not possibly answer the description of 'aliens' in the ordinary understanding of the word." These statements have to be read in the light of the facts of Te and cannot be regarded as throwing light on whether the Parliament has the power to legislate for the deportation of persons born in Australia. Moreover, there are very considerable difficulties in finding in s 51(xix) of the Constitution a general power to deal with matters of nationality or to create and define the citizenship of all persons in Australia. As Professor Cheryl Saunders has written208: "The source of Commonwealth power to legislate for citizenship is not entirely clear, although it would be likely to be found in the power over 'Naturalisation and aliens' (s 51(xix))." The power in s 51(xix) is concerned with aliens and their naturalisation. Naturalisation is the process by which one undertakes allegiance to a new sovereign and, often enough, sheds allegiance to another sovereign. Historically, naturalisation for the purpose of s 51(xix) meant naturalisation as a subject of the 204 (2002) 212 CLR 162 at 171 [24]. 205 Te (2002) 212 CLR 162 at 171 [24] per Gleeson CJ. 206 Te (2002) 212 CLR 162 at 173 [31] per Gleeson CJ. 207 Te (2002) 212 CLR 162 at 173 [31], citing Pochi (1982) 151 CLR 101 at 109 per 208 Saunders, "Citizenship under the Commonwealth Constitution", 3(3) Constitutional Centenary 6 at 6. McHugh Queen. Even if the power now extends to making laws concerning nationality and citizenship, it could only extend to persons who were or had been aliens. Nothing in Shaw, the most recent case concerning aliens, throws any light on the issue in the present case. The decision merely applied the law laid down in Nolan. The Court was not required to consider the constitutional status of persons born in Australia. Gleeson CJ, Gummow and Hayne JJ said in Shaw that209: "The understanding of the expression 'subject of the Queen', and the light which that understanding casts on the ambit of the aliens power … with its implicit reference to notions of sovereignty, must recognise that at least by 1948 the subjects of the Queen to which reference was made were subjects of the monarch in right of Australia, not subjects of the monarch in right of the UK. Once it be decided that the text of the Constitution contemplates changes in the political and constitutional relationship between the United Kingdom and Australia, it is impossible to read the legislative power with respect to 'aliens' as subject to some implicit restriction protective from its reach those who are not Australian citizens but who entered Australia as citizens of the UK and colonies under the [British Nationality Act 1948 (UK)]. It was unnecessary to reach that conclusion in Re Patterson; Ex parte Taylor, but it should now be reached." (footnote omitted) Conclusion: Ms Singh is not liable to deportation The term "aliens" in s 51(xix) denotes the legal status of alienage. "Naturalization and aliens" in s 51(xix) refers to a process (naturalisation and denaturalisation) and a legal status (alienage). By the late 19th century, international law recognised two well-established rules for acquiring nationality by birth: jus soli and jus sanguinis. But those terms provide no more assistance in interpreting s 51(xix) of the Constitution than do the citizenship provisions of the Fourteenth Amendment of the United States Constitution. Both terms are irrelevant. In determining the meaning of the term "aliens" in s 51(xix), the term jus sanguinis in particular is no more helpful than the definition of the continental jury would be in determining the meaning of "jury" in s 80 of the Constitution. The terms jus soli and jus sanguinis would be relevant only if the term "aliens" had no meaning in the Anglo-Australian world in 1900 or since and Parliament itself could define the term. For the reasons that I have given, 209 (2003) 78 ALJR 203 at 208-209 [20]-[27]; 203 ALR 143 at 148-150. McHugh Parliament cannot define the constitutional term "aliens". As a result, the issues here are: 1. What did "alien" mean when the Constitution was enacted? Has its meaning, as opposed to its application, changed? 3. Whether or not its meaning has changed, is a person born in Australia an alien because her parents are aliens? In 1900, as I have indicated, the common understanding of the term "alien" in the United Kingdom and Australia was that it described a person who did not owe the permanent allegiance to the Crown that was the obligation of a natural born or naturalised British subject. Subject to the three exceptions I have outlined earlier, a natural born British subject was a person born within the dominions of the Crown which were under the actual control of the Crown. Thus, under the law of the United Kingdom and Australia in 1900, an alien was a person who did not owe permanent allegiance to the Queen because he or she was not a "subject of the Queen". Upon entering Australia, a person who was not born within the dominions of the Crown owed the Crown a temporary or local allegiance by virtue of being within Australia. Such a person was not a "subject of the Queen" but an "alien subject". And, except for stateless persons, that person – the alien – would have owed permanent allegiance to another sovereign or country. In 1900, then, it was inconceivable in the Anglo-Australian world that a person, born in Australia, could be an alien unless that person came within one of the three exceptions to the rule. In Potter, this Court accepted that every person born within Australia was a subject of the King and owed permanent allegiance to the King. As a corollary, that person was also entitled to the benefit and protection of the King. Further, as the joint judgment of the Court in Nolan accepted, the meaning of the constitutional term "aliens" has not changed since federation, although persons who were once outside its application are now within it. This change in the application of the term is the result of a number of significant developments since federation. They include: the gradual emergence of Australia as an independent, sovereign nation (which arguably culminated with the passage of the Australia Acts 1986 (Cth) and (UK)); the acceptance of the divisibility of the Crown (implicit in the development of the Commonwealth as an association of independent nations); McHugh the creation of a distinct Australian citizenship commencing in 1948 with the passage of the Nationality and Citizenship Act and the British Nationality Act 1948 (UK); and the acceptance by this Court that the phrase "subject of the Queen" in the Constitution no longer means "subject of the Queen of the United Kingdom" but "subject of the Queen of Australia". Ms Kim Rubenstein has correctly characterised210 these changes in the application of the term "aliens" as changes in its denotation. Hence, while the meaning (or connotation) of "aliens" has remained constant, the classes of persons falling within that meaning have changed. As Windeyer J noted in Ex parte Professional Engineers' Association211: "Law is to be accommodated to changing facts. It is not to be changed as language changes." Rightly or wrongly, this Court took the bold step in Nolan of holding that, in light of the developments described above, a natural born British subject (that is, a person born in the United Kingdom) may be regarded as an alien in Australia for constitutional purposes. However, cases such as Nolan, Re Patterson and Shaw concerned persons born in the United Kingdom who had not become naturalised as Australian citizens. Once it is accepted that after 1948 such persons were the subjects of a foreign power and not subjects of the Queen of Australia, those decisions are not open to criticism. But they do not address the position of persons born in Australia of alien parents. Such persons are subjects of the Queen of Australia. They are qualified to stand for the House of Representatives unless they fall within the terms of s 44(i) of the Constitution. By force of s 117 of the Constitution, while resident in any State, they cannot be subjected "in any other State to any disability or discrimination which would not be equally applicable to [them] if [they] were a subject of the Queen resident in such other State." Upon birth, like the children of native born Australian parents, they come under an obligation of permanent allegiance to the Queen of Australia and a duty to obey the law, including the law of treason. Moreover, because they are "subjects of the Queen", they are members of the Australian community and among "the people of the Commonwealth". The "essential meaning" of the term "aliens" in 1900 and now does not include a person born in Australia who owes permanent allegiance to the Queen of Australia. For that reason, Ms Singh is not an alien. 210 Rubenstein, "Citizenship and the Centenary – Inclusion and Exclusion in 20th Century Australia", (2000) 24 Melbourne University Law Review 576 at 601, citing Zines, The High Court and the Constitution, 4th ed (1997) at 21. 211 (1959) 107 CLR 208 at 267. McHugh The Constitution avoids references to "citizenship" in relation to the powers of the Commonwealth. This was a deliberate omission of those who made the Constitution. That omission and the discussion at the 1898 Convention lead to the irresistible conclusion that the Constitution does not confer on the Parliament of the Commonwealth a broad power concerning citizenship and nationality. Instead, the Constitution has given the Parliament of the Commonwealth a limited specific power to control the entry of persons into Australia and to regulate the rights and privileges of aliens in Australia. However, the so-called implied nationhood power212 seems extensive enough to give the Parliament some modest power over citizenship and nationality generally. It must be implicit in the Constitution that the Parliament of the nation can define who are the citizens or nationals of the Commonwealth and, subject to the Constitution, prescribe what conditions must exist for citizenship. It is a matter that is the concern of the Commonwealth rather than the States. The "external affairs" power (s 51(xxix)) is another potential source of power for federal laws concerning citizenship and nationality. In 1937, Australia ratified the Convention on Certain Questions Relating to the Conflict of Nationality Laws213. Article 1 of that Convention declared that it was "for each State to determine under its own law who are its nationals." It is unnecessary in this case to determine whether Australia's accession to the Convention authorises the Citizenship Act or part of it. Whatever the source of that Act may be, it cannot be forgotten that those who made the Constitution refused to give the Commonwealth powers concerning citizenship, because they feared that the Commonwealth could deprive a person of the citizenship that was acquired by birth in a State. In addition, assuming that the implied nationhood power extends to making laws concerning citizenship or that the external affairs power is the source of such laws, those powers cannot extend to removing the citizenship or nationality that arises from being born in Australia. As O'Connor J pointed out in Potter, birth within Australia makes a person a member of the Australian community who comes under an obligation to obey its laws and is correlatively entitled to all the rights and benefits which membership of the community involves. The implied nationhood power cannot be used to deprive a person of his or her membership of the Australian community acquired by birth214. 212 See Victoria v The Commonwealth and Hayden ("the AAP Case") (1975) 134 CLR 338; Davis v The Commonwealth (1988) 166 CLR 79. 213 Opened for signature 12 April 1930, 179 LNTS 89 (entered into force 1 July 1937; entered into force for Australia 8 February 1938). 214 cf Wynes, Legislative, Executive and Judicial Powers in Australia, 5th ed (1976) at 303 fn 54; United States v Wong Kim Ark 169 US 649 (1898). McHugh Many would argue that the makers of the Constitution erred in failing to give the Parliament of the Commonwealth specific powers over citizenship and nationality. One reason is that during the 20th and 21st centuries, the movement of people between nations has increased significantly. Some of this movement has resulted from voluntary migration; some of it is a result of conflict or persecution. Developments in aviation have also facilitated the international movement of people. Australia has experienced several waves of immigration. Australia also has obligations under the Convention relating to the Status of Refugees215. The increased movement of people and populations has exacerbated perceived problems in the rules governing the acquisition of nationality by birth, particularly where those rules are based on principles of jus soli. Many nations have adopted the principles of jus sanguinis (or some variation thereof) as the basic rule governing the acquisition of nationality by birth. Even the United Kingdom has departed from the principles of jus soli in a number of significant respects (see, eg, British Nationality Act 1981 (UK), under which a person born within the United Kingdom of alien parents does not automatically acquire British citizenship at birth). There is also an increasingly sophisticated and nuanced discourse in relation to the concept of Australian "citizenship" and what it means to be a member of the Australian community. A plenary power over citizenship and nationality seems a necessity for any national government. No doubt the makers of the Constitution would respond to criticism of their omission to give the Parliament a citizenship power by arguing that the Parliament has all the power it needs to deal with relevant issues of citizenship. They would say that, subject to the well-known exceptions, all persons born in this country are members of the Australian community and constitutional "citizens" and that the naturalisation power authorises the Parliament to make laws about the citizenship status of aliens. The Citizenship Act seeks to deal with some of the changes that have occurred since 1900. Whether all or most of it is within the power of the Parliament is not relevant in the present case. Only the application of s 10 of that Act to Ms Singh is in issue. The first difficulty that faces the Commonwealth in respect of that section is that it deals with citizenship, a subject that is not within any head of federal legislative power conferred by the Constitution. The second difficulty is that s 10(2) declares that a person born in Australia after the commencement of the Australian Citizenship Amendment Act 1986: 215 Opened for signature 28 July 1951, 189 UNTS 150 (entered into force 22 April McHugh "shall be an Australian citizen by virtue of that birth if and only if: a parent of the person was, at the time of the person's birth, an Australian citizen or a permanent resident; or the person has, throughout the period of 10 years commencing on the day on which the person was born, been ordinarily resident in Australia." Thus, in so far as s 10 applies to a person like Ms Singh who is not an alien, it seeks to deprive her of her membership of the Australian community and her constitutional citizenship. It is beyond the power of the Parliament to do so. In Nolan, Gaudron J said, correctly in my opinion216: "As the transformation from non-alien to alien requires some relevant change in the relationship between the individual and the community, it is not, in my view, open to the Parliament to effect that transformation by simply redefining the criterion for admission to membership of the community constituting the body politic of Australia." Similarly, none of the naturalisation power, the implied nationhood power or the external affairs power empowers the Parliament to deprive a non-alien of her constitutional citizenship by an enactment such as s 10. It follows that Ms Singh is not an "unlawful non-citizen" for the purpose of the Migration Act and that an officer has no power under s 198 of that Act to remove her from Australia. Even if, contrary to my view, the Parliament could constitutionally enact a law that defined or described a person such as Ms Singh as a non-citizen, she could not be removed from this country. None of the aliens power, the immigration power, the external affairs power or any other power enables the Parliament to deport from this country a person who was born here and who remains a member of the Australian community. 216 (1988) 165 CLR 178 at 193. McHugh Orders The questions in the Case Stated should be answered: The defendants. 142 GUMMOW, HAYNE AND HEYDON JJ. The plaintiff was born in Australia in February 1998. Her parents then were, and now are, citizens of India. Both the plaintiff's parents were born in 1969 at Delhi. Neither of her parents is an Australian citizen; neither is a permanent resident of Australia. Each came to Australia in 1997. It was common ground that the plaintiff is a citizen of India by descent from her parents. Because neither of her parents is an Australian citizen or a permanent resident the plaintiff is not an Australian citizen217. Section 198 of the Migration Act 1958 (Cth) provides for the removal from Australia of those non-citizens who do not hold a visa that is in effect. The Migration Act refers to such persons as "unlawful non-citizens"218. A Justice has stated a case for the consideration of a Full Court under s 18 of the Judiciary Act 1903 (Cth). As amended, the case stated raises three questions. The first question – "Is the plaintiff an alien within the meaning of s 51(xix) of the Constitution?" – should be answered, "Yes". As a citizen of India the plaintiff has obligations, "owes allegiance", to a nation other than Australia. She is, therefore, a person within the class referred to in s 51(xix) as "aliens". As will be apparent from what has just been said, the plaintiff does not fall into that class simply because her parents do so. In view of the answer to the first question, the second question – "If the answer to 1 is 'No', is s 198 of the Migration Act 1958 (Cth) capable of valid application to the plaintiff?" – does not arise. The third question – "By whom should the costs of the case stated to the Full Court of this Honourable Court be borne?" – should be answered: "The plaintiff". "Aliens" – the competing contentions The plaintiff submitted that, at the time of federation, "aliens" had an accepted and fixed legal meaning which, subject to two immaterial exceptions, excluded from its embrace any person born in Australia. (The two exceptions concerned children of foreign diplomats and children of occupying armies.) This, the plaintiff submitted, was the meaning which the common law of England had attributed to the word "alien" since as long ago as Calvin's Case219 and it was not within the powers of the federal Parliament to give any new or different 217 Australian Citizenship Act 1948 (Cth), s 10(2). 218 Migration Act 1958 (Cth), s 14. 219 (1608) 7 Co Rep 1a [77 ER 377]. content to that term. That is, the plaintiff contended not just that, in 1901, it was possible to decide who, under British law as it then stood, was or was not an alien. The plaintiff contended that the word "aliens" had a meaning which was fixed by the common law as expressed in Calvin's Case and that that "common law meaning" fixed the outer limits to the power given to the Parliament by s 51(xix). By contrast, the defendants contended that the power under s 51(xix) permitted the Parliament to prescribe the criteria to be applied in deciding who is an alien. It will be necessary to consider whether, as the plaintiff contended, "aliens" had a legal meaning at the time of federation fixed by the decision in Calvin's Case. To do that it will be necessary to examine some aspects of the history of the law of alienage. That examination requires attention to some questions of terminology lest the answer to the question presented in this matter be assumed by the definition given to terms used – particularly the expression used to refer to those who are not aliens. Some questions of terminology Within the text of the Constitution the expressions "people of the Commonwealth" (s 24) and "a subject of the Queen" (s 117) might be seen as providing antonyms of "alien". The expression in s 44(i) of the Constitution "Any person who: is under any acknowledgment of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or a citizen of a foreign power" might be thought to provide a compendious expression synonymous with "alien". But to adopt either the expression "people of the Commonwealth" or the expression "a subject of the Queen" as an antonym of alien necessarily forecloses the exploration of some questions about the proper construction of s 51(xix). Likewise, to adopt the lengthy description given in s 44(i) of those who owe obligations to foreign powers as providing a synonym for the term may also foreclose relevant inquiries. Accordingly, it will be convenient, at some points in the consideration of the arguments advanced in the present matter, to refer to those who fall outside the class embraced by the constitutional word "aliens" simply as "non-aliens". Moreover, it will be necessary to keep at the forefront of consideration that any question about the operation of the Australian Citizenship Act 1948 (Cth), and the application of the statutory term "Australian citizen", is not a question which arises in this case. Likewise, although it will be necessary to make reference to the identification of those who, for international purposes, are to be treated as the "nationals" of a particular nation, the use of terms like "national", "citizen", or "subject", should not distract attention from the central issue about the meaning of the word "aliens". Constitutional interpretation The defendants (the Commonwealth and the Minister for Immigration and Multicultural and Indigenous Affairs) submitted that the power to make laws with respect to naturalization and aliens confers on the Parliament power to make laws determining to whom is attributed the status of alien. That power was said not to be unqualified. It was said that "while this Court may determine the 'outer boundaries' of the word 'aliens' in accordance with the Constitution,220 the Parliament may enact laws to define 'aliens' within the penumbra of the 'ordinary understanding' of the word". The reference to the "ordinary understanding of the word" was an allusion to what Gibbs CJ said in Pochi v Macphee221: "Clearly the Parliament cannot, simply by giving its own definition of 'alien', expand the power under s 51(xix) to include persons who could not possibly answer the description of 'aliens' in the ordinary understanding of the word." It may be doubted whether metaphorical references to the "penumbra" of the meaning of a constitutional expression or, as it was put in oral argument, the "core" meaning of a constitutional expression, can be of great assistance in any task of constitutional interpretation. The questions about the construction of the Constitution, which fall for decision in this Court, require particular answers to particular questions arising in a live controversy between parties. The task of the Court is not to describe the metes and bounds of any particular constitutional provision; it is to quell a particular controversy by deciding whether, in the circumstances presented in the matter, the relevant constitutional provisions do or do not have the consequence for which a party contends. 220 Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 205 [159] per Kirby J. 221 (1982) 151 CLR 101 at 109. It is nonetheless important to emphasise the point made by Fullagar J in Australian Communist Party v The Commonwealth ("the Communist Party Case")222 by reference to the metaphor that a stream cannot rise higher than its source. As his Honour said223: "A power to make laws with respect to lighthouses does not authorize the making of a law with respect to anything which is, in the opinion of the law-maker, a lighthouse." To adapt that dictum to the present case, a power to make laws with respect to aliens does not authorise the making of a law with respect to any person who, in the opinion of the Parliament, is an alien. That Parliament has made a law which a party or intervener asserts to be a law with respect to aliens presents the constitutional question for resolution; it does not provide an answer. These reasons seek to demonstrate that a central characteristic of the status of "alien" is, and always has been, owing obligations to a sovereign power other than the sovereign power in question. The plaintiff has that characteristic. The problem to which Gibbs CJ adverted in Pochi224 and Fullagar J adverted in the Communist Party Case225 does not arise and s 198 of the Migration Act can be supported in its operation with respect to the plaintiff as a law with respect to naturalization and aliens. As was pointed out in the joint reasons in Grain Pool of Western Australia v Commonwealth226, the general principles which are to be applied to determine whether a law is with respect to a head of legislative power are well settled. For present purposes, it is enough to draw attention to two of those well-settled principles. First, the constitutional text is to be construed "with all the generality which the words used admit"227. Secondly, as was pointed out as long ago as 222 (1951) 83 CLR 1 at 258. 223 (1951) 83 CLR 1 at 258. 224 (1982) 151 CLR 101 at 109. 225 (1951) 83 CLR 1 at 258. 226 (2000) 202 CLR 479 at 492 [16] per Gleeson CJ, Gaudron, McHugh, Gummow, 227 R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225. Amalgamated Society of Engineers v Adelaide Steamship Co Ltd ("the Engineers Case")228, once the true meaning of a legislative power is ascertained, it is not to be further limited by the fear of its abuse. As the Court has said on a number of occasions, the meaning of a power given by s 51 is "not to be given any meaning narrowed by an apprehension of extreme examples and distorting possibilities of its application in some future law"229. Next, the plaintiff's argument, that at federation "aliens" had a known and fixed legal meaning, which excluded persons in the plaintiff's position, invites attention the principles governing constitutional interpretation. to another aspect of The plaintiff's contention that "aliens" had a fixed legal meaning at federation assumed not only that this meaning was to be ascertained by reference to the common law but also that the meaning, once ascertained, defined the outer limits of the power of the Parliament. These reasons will seek to demonstrate that, at federation, "aliens" did not have a fixed legal meaning ascertained by reference to the common law. What had been the common law at the time of Calvin's Case had been overtaken by statute and by subsequent developments of legal thought in England and in Europe. It is as well, however, to go on to say something further about the second of the assumptions just identified – that a meaning ascertained in the way for which the plaintiff contended defined the outer limits of the constitutional power. To say of a constitutional expression, like "aliens", that its content is "immutable" invites controversy which may be more remarkable for its heat than for the light shed on the underlying issue. The relevant question is not whether the meaning of "aliens" is immutable, it is whether, as a matter of construction, the law now in question (here s 198 of the Migration Act) can be supported in its operation with respect to the plaintiff as a law with respect to naturalization and aliens. 228 (1920) 28 CLR 129 at 151. 229 Shaw v Minister for Immigration and Multicultural Affairs (2003) 78 ALJR 203 at 210 [32] per Gleeson CJ, Gummow and Hayne JJ; 203 ALR 143 at 151. See also Kartinyeri v Commonwealth (1998) 195 CLR 337 at 380-381 [87]-[88] per Gummow and Hayne JJ; Egan v Willis (1998) 195 CLR 424 at 505 [160] per Kirby J; Grain Pool of Western Australia v Commonwealth (2000) 202 CLR 479 at 492 [16] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ. In undertaking that question of construction, to identify the meaning conveyed, at the time of federation, by the words used in the Constitution is more than a matter of historical interest230. It is an essential step in the task of construction. That is not to say, however, that seeking an understanding of the meaning of a constitutional expression like "aliens", when used at the time of federation, permits or requires searching for the subjective intention of the framers. It does not. Metaphorical references to "the founders' intention" are as apt to mislead in the constitutional context as are references to the intentions of the legislature when construing a statute231 or references to the intentions of the parties to a contract232 when considering its construction. Rather, the question is one of construing the relevant constitutional provisions. That task of construction cannot be undertaken without knowing what particular constitutional expressions meant, and how words were used, at the time of federation. But the task does not end with the results of that inquiry. Always, the Constitution is to be construed bearing steadily in mind that it is an instrument of government intended to endure233. Numerous cases decided by this Court reveal that constitutional expressions may have a different operation 50 or 100 years after federation from the operation they would have had in 1901. Sue v Hill234, and its consideration of whether Great Britain is now to be regarded as a foreign power, and Grain Pool of Western Australia v Commonwealth, with its discussion of whether legislation concerning the grant of plant variety rights was a law with respect to copyrights, patents of invention and designs and trademarks, are but two recent examples. 230 Kirby, "Constitutional Interpretation and Original Intent: A Form of Ancestor Worship?", (2000) 24 Melbourne University Law Review 1 at 14. 231 Mills v Meeking (1990) 169 CLR 214 at 234 per Dawson J; Corporate Affairs Commission (NSW) v Yuill (1991) 172 CLR 319 at 339 per Gaudron J; Salomon v Salomon & Co [1897] AC 22 at 38 per Lord Watson. 232 Masters v Cameron (1954) 91 CLR 353 at 362; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 233 Australian National Airways Pty Ltd v The Commonwealth (1945) 71 CLR 29 at 81 234 (1999) 199 CLR 462. It may be that tools like the distinction between connotation and denotation235 or the distinction between concepts and conceptions236 are thought to be useful in understanding or explaining decisions like Sue v Hill. There is at least a risk, however, that using such tools directs attention to their content and to their utility rather than to the analytical task they are being used to undertake. For present purposes, all that need be noted are two related points. First, to require the identification of the historical meaning of constitutional terms does not confine the operation of the Constitution to the applications which those who wrote it may have had in mind. To confine it in that way would be to fall into the error of seeking the subjective intention of the founders. Secondly, the identification of the historical meaning of a constitutional term like "aliens" is not complete if all that is done is to give a list of the particular circumstances to which the word was applied at federation. Yet that is essentially what the plaintiff's contention requires. "Aliens" at common law – allegiance It is convenient to begin consideration of the plaintiff's contention that, at federation, "aliens" had a fixed legal meaning by reference to Quick and Garran. They commenced their commentary on the term "aliens", when used in s 51(xix), by saying237: "In English law an alien may be variously defined as a person who owes allegiance to a foreign State, who is born out of the jurisdiction of the Queen, or who is not a British subject. The rule of the common law is that every person born out of the British Dominions is an alien, and that every person born within British Dominions is a British subject. This is known as the jus soli or the territorial test of nationality, which is contrasted with the jus sanguinis or the parentage test of nationality." Two aspects of that comment may be noted: the reference to "allegiance" and the contrast between "alien" and "British subject". 235 R v Commonwealth Conciliation and Arbitration Commission; Ex parte Professional Engineers' Association (1959) 107 CLR 208 at 267 per Windeyer J. 236 Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 552 [43] per McHugh J. 237 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, The feudal notion of allegiance has played a significant part in the development of English law respecting aliens. Holdsworth wrote of the appearance in England in the course of the thirteenth century of what were the beginnings of "the modern rules of the common law, which define the persons who are to be accounted as British subjects"238. As the common law stood before the accession of King James VI of Scotland to the throne of England, "all persons born on English soil, no matter what their parentage, owed allegiance to, and were therefore subjects of the king"239. As Holdsworth said240: "[I]t is the duty of allegiance, owed by the subject to the crown, which differentiates the subject from the alien. This doctrine has its roots in the feudal idea of a personal duty of fealty to the lord from whom land is held; and, though it has necessarily developed with the development of the position of the king, its origin in this idea has coloured the whole modern law on this topic." However, as was emphasised in Re Minister for Immigration and Multicultural Affairs; Ex parte Te241, care is required in treating what Holdsworth wrote of the position in England centuries ago respecting allegiance to the Crown as supplying in modern times a sufficient and adequate discrimen between subjects or citizens and aliens. For example, reference is made later in these reasons to the uses of the term "allegiance" and variations such as "temporary and local allegiance" in describing the status of classes of aliens who are not subjects. Using the concept "allegiance" to distinguish between British subjects and aliens invites attention to what is meant by "allegiance" in this context. Pointing to its root in the feudal idea of a personal duty of fealty to a lord from whom land is held does little to identify the content of the term. Plainly it is a term which connotes duty or obligation, but what exactly are the duties or obligations embraced by the word? These duties or obligations, whatever their content, are said to be due to the Crown in the "politic" not the "personal capacity" of the sovereign242. Sometimes they are spoken of as being duties or obligations of 238 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 72. 239 A History of English Law, 3rd ed (1944), vol 9 at 75. 240 A History of English Law, 3rd ed (1944), vol 9 at 72. 241 (2002) 212 CLR 162 at 196-199 [121]-[129] per Gummow J. 242 In re Stepney Election Petition; Isaacson v Durant (1886) 17 QBD 54 at 65-66 per Lord Coleridge CJ; United States v Wong Kim Ark 169 US 649 at 663 (1898) per Gray J; Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 465-466 [224] per (Footnote continues on next page) "fidelity"243 or "loyalty"244 but again those words reveal little about the content of the duties or obligations. What is clear is that the obligations of a non-alien who owes allegiance are more than the obligation to obey the law. A resident alien, being bound to obey the law, is said to owe "local and temporary" allegiance to the monarch but that implies, of course, that the non-alien (or subject) owes larger duties and obligations than the alien. The content of those duties or obligations is not spelled out. That may be because "allegiance" and "loyalty" are terms that point to a political or social relationship yet in this context are being used to describe a legal status. Moreover, the relationship between sovereign power and the person who is a non-alien (that is, in Australia, the relationship between Crown and non-alien) is mutual. The Crown owes obligations to the non-alien. But again those obligations are described only in abstract terms like a "duty of protection"245. Their content is not spelled out, although it may very well be that these obligations find expression in Australia's exercise of its right, but not duty, in international law to protect its nationals246, and even, perhaps, in what the Court said247 was "[t]he right of the Australian citizen to enter the country [which] is not qualified by any law imposing a need to obtain a licence or 'clearance' from the Executive". Further, the relationship between the Crown and a resident alien is also mutual and is not necessarily limited to such time as the alien remains in Australia. "The protection of the laws of Australia which is the counterpart of a local allegiance due from a resident alien" may continue despite departure from Australia248. Gummow and Hayne JJ; Te (2002) 212 CLR 162 at 196-197 [122]-[123] per 243 Carlisle v United States 83 US 147 at 154 (1872) per Field J. 244 cf Joyce v Director of Public Prosecutions [1946] AC 347. 245 Glanville Williams, "The Correlation of Allegiance and Protection", (1948) 10 Cambridge Law Journal 54. 246 Oppenheim's International Law, 9th ed (1992), vol 1 at 934. 247 Air Caledonie International v The Commonwealth (1988) 165 CLR 462 at 469. 248 Te (2002) 212 CLR 162 at 198 [126]-[128] per Gummow J. The second of the points to be noted about Quick and Garran's commentary on "aliens" is the contrast drawn between "aliens" and "British subjects". Aliens and subjects – a definitional dichotomy It was indicated in Shaw v Minister for Immigration and Multicultural Affairs249 that the dichotomy drawn, in many writings, between "aliens" and "subjects", or "British subjects", is definitional. As Dicey wrote, in 1896, in the first edition of A Digest of the Law of England with reference to the Conflict of Laws250, "'Alien' means any person who is not a British subject". This was a definition which Quick and Garran adopted251. Further, the distinction drawn between the two terms, by reference to the nature or extent of "allegiance" owed, was again a definitional distinction. The British subject owed "permanent allegiance" to the Crown; the alien, if resident within the Kingdom, owed, at most, no more than "local and temporary allegiance" to the Crown. Dicey defined "British subject" as "any person who owes permanent allegiance to the Crown"252. He then divided British subjects into "natural-born" British subjects and "naturalized" British subjects, the former being those who became a British subject at the moment of birth. But again, these are all definitions. None reveals the principle or principles used to establish the taxonomy adopted. No doubt, the definition and classifications adopted by Dicey, and by Quick and Garran, can be traced at least to Calvin's Case. The decision in Calvin's Case concerned the status of those born in Scotland after the Crown of England descended to King James VI of Scotland. At the time, the Kingdoms were separate yet it was held that Calvin, born in the Kingdom of Scotland, was not an alien in England. Two aspects of the reasoning in Calvin's Case are 249 (2003) 78 ALJR 203 at 206 [11] per Gleeson CJ, Gummow and Hayne JJ; 203 ALR 143 at 146. 251 The Annotated Constitution of the Australian Commonwealth, (1901) at 599. 252 A Digest of the Law of England with reference to the Conflict of Laws, (1896) at notable. First, the determinative question was seen253 as requiring a choice between mutually exclusive alternatives: "Every man is either alienigena, an alien born, or subditus, a subject born. Every alien is either a friend that is in league, &c. or an enemy that is in open war, &c. Every alien enemy is either pro tempore, temporary for a time, or perpetuus, perpetual, or specialiter permissus, permitted especially. Every subject is either natus, born, or datus, given or made". Secondly, the answer given was understood254 as depending upon natural law: "Whatsoever is due by the law or constitution of man, may be altered: but natural ligeance or obedience of the subject to the sovereign cannot be altered; ergo natural ligeance or obedience to the sovereign is not due by the law or constitution of man. Again, whatsoever is due by the law of nature, cannot be altered: but ligeance and obedience of the subject to the sovereign is due by the law of nature; ergo it cannot be altered." (emphasis added) The plaintiff contended that the conclusions reached in Calvin's Case confined the meaning to be given to the word "aliens" in s 51(xix). There is no doubt that after Calvin's Case, at common law, subject to exceptions for children of foreign diplomats and children of occupying armies, any person born within the British Dominions (whatever the nationality of that person's parents) was a natural-born British subject. And at common law the allegiance of a natural-born British subject was regarded as permanent or "indelible"255. Statutory modifications Both before and after Calvin's Case there had been many statutes declaring persons born out of the dominion of the British Crown to be 253 (1608) 7 Co Rep 1a at 17a [77 ER 377 at 397]. 254 (1608) 7 Co Rep 1a at 25a [77 ER 377 at 407]. 255 "Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance (1869)", in Reports from Commissioners, (1868-1869), vol 14, 607 natural-born British subjects256. But until the enactment of the Naturalization Act 1870 (UK) (33 Vict c 14), enacted in consequence of the 1869 Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance, no provision had been made for the severing of the connection of a British subject established by birth within the Crown's dominions. It is important to notice the reasons given by the Royal Commission for recommending the enactment of such a law. Having noted that the allegiance of a natural-born those indelible, British subject was regarded by Commissioners who joined in the report of the majority went on to say257: the common law as "We are of opinion that this doctrine of the Common Law is neither reasonable nor convenient. It is at variance with those principles on which the rights and duties of a subject should be deemed to rest; it conflicts with that freedom of action which is now recognized as most conducive to the general good as well as to individual happiness and prosperity; and it is especially inconsistent with the practice of a State which allows to its subjects absolute freedom of emigration. It is inexpedient that British law should maintain in theory, or should by foreign nations be supposed to maintain in practice, any obligations which it cannot enforce and ought not to enforce if it could; and it is unfit that a country should remain subject to claims for protection on the part of persons who, so far as in them lies, have severed their connexion with it." (emphasis added) Enacting legislation extending the classes of persons entitled to the benefits and subject to the obligations of being a British subject was, and is, consistent with identifying birth within the dominions of the Crown as generally sufficient both to qualify for the status of British subject and to deny identification as an alien. But the statutory modification of the law made by the Naturalization Act 1870 was radically different. It abandoned the principle that being a natural-born British subject was an indelible status. Further, it abandoned that principle because the common law doctrine was "at variance with those principles on which the rights and duties of a subject should be deemed to rest". That is, the change made to the law denied the validity of the natural law justification given in Calvin's Case for the consequences said to follow from birth within the dominions of the Crown. 256 See, for example, 25 Edw III Stat 2; 7 Ann c 5; 10 Ann c 5; 4 Geo II c 21; 13 Geo III c 21; Naturalization Act 1844 (UK) (7 & 8 Vict c 66); Naturalization Act 1847 (UK) (10 & 11 Vict c 83). 257 Reports from Commissioners, (1868-1869), vol 14, 607 at 611. The Naturalization Act 1870 was later understood258 as not introducing a new or a revived system of Imperial naturalization. Section 16 of the Act expressly saved "[a]ll laws, statutes, and ordinances which may be duly made by the legislature of any British possession for imparting to any person the privileges ... of naturalization, to be enjoyed ... within the limits of such possession ...". Questions of Imperial naturalization were examined at the Colonial Conference of 1902 and again at the Imperial Conferences of 1907 and 1911259. The deliberations at these Conferences culminated in the British Nationality and Status of Aliens Act 1914 (Imp). The operation in a self-governing dominion of Pt II of that Act, which concerned naturalization, depended upon the enactment of legislation by the dominion260. The legislative and other consequences of that Act in Australia were discussed in Re Patterson; Ex parte Taylor261 and Shaw262. For present purposes, two points are important. First, the subjects of naturalization, indelibility of allegiance, nationality and alienage were matters of lively controversy in Britain during the latter part of the 19th century. Secondly, and no less importantly, that led to legislative change. (It is not necessary to stay to examine whether, as Sir Francis Piggott later wrote263, "the Act of 1870 was, by common consent, the worst drafted piece of legislation that had ever found its way on to the Statute Book".) Due account of the existence of this controversy, and of developments in British statutory law on the subject, must be taken in considering the meaning to be given to "aliens" in s 51(xix). Both the existence of the controversy, and the 258 Report of the Inter-Departmental Committee, (1901) Cmd 723, par 26; Parry, Nationality and Citizenship Laws of the Commonwealth and of the Republic of Ireland, (1957) at 80-81. 259 Parry, Nationality and Citizenship Laws of the Commonwealth and of the Republic of Ireland, (1957) at 82. 260 British Nationality and Status of Aliens Act 1914 (Imp), s 9. 261 (2001) 207 CLR 391 at 440 [148] per Gummow and Hayne JJ. 262 (2003) 78 ALJR 203 at 207-208 [20] per Gleeson CJ, Gummow and Hayne JJ; 203 ALR 143 at 148. 263 Piggott, "The 'Ligeance of the King' A study of Nationality and Naturalization", in The Nineteenth Century and After, (October 1915), vol 78 (No 464) 729 at 732. developments in British statutory law, at the very least tend to deny that in 1901 there was an accepted fixed legal meaning to the term derived from the common law as understood in Calvin's Case. Moreover, in attempting to identify how the word "aliens" was understood at the time of federation, it would be wrong to confine attention to Britain. The subjects of nationality, naturalization and related matters were subjects of lively consideration throughout Europe during the 19th century. It is necessary, therefore, to say something more about some developments in other legal systems which occurred during the 19th century. Citizenship by descent Until the beginning of the 19th century citizenship by birth within the country, regardless of descent, appears to have been the general rule in Europe264. The Code Napoléon of 1803 provided in Art 3 of the Civil Code that the laws governing the status and capacity of persons should govern Frenchmen even though residing in foreign countries. Article 10 provided: "Tout enfant né d'un Français en pays étranger est Français." Hall described265 what happened thereafter as being that: "[M]ost civilised states, either in remodelling their system of law upon the lines of the Code Napoleon, or by special laws, have since adopted the principle simply, or with modifications giving a power of choice to the child, or else, while keeping to the ancient rule in principle, have offered the means of avoiding its effects." Thus, by the turn of the 20th century, instead of the rule of country of birth, the rule of descent or blood had become the leading principle in Europe. That is, a rule which was "the natural outcome of the intimate connexion in feudalism between the individual and the soil upon which he lived"266 (but which had survived the ideas with which it was originally connected) was supplanted by, or at least supplemented by, the rule that a child's nationality should follow the nationality of its parents. And, as the Naturalization Act 1870 revealed, Britain was not immune from these changes. That different states applied different rules in deciding those who were its citizens was important to the conclusions reached by the Royal Commission in 264 Hall, A Treatise on International Law, 4th ed (1895) at 234; United States v Wong Kim Ark 169 US 649 at 666 (1898). 265 Hall, A Treatise on International Law, 4th ed (1895) at 235. 266 Hall, A Treatise on International Law, 4th ed (1895) at 234. 1869. Dual or double allegiance is not a phenomenon only of the 20th century. The problems presented by dual allegiance lay at the heart of Sir Alexander Cockburn's book on nationality267. As that author said in the introduction to his work268: "It seems to be admitted on all hands that the law of England respecting nationality, with reference to the circumstances under which the status of a subject arises, or may be acquired, or, on the other hand, may be put off, together with the law relating to the disabilities of aliens, requires to be considered with a view to its alteration and amendment. The conflict between the law of England and that of so many of the leading nations of the world as to the origin of nationality, and the inconvenience to which such conflict may give rise, as well as the inconsistency of our rule as to the immutability of allegiance, at a time when emigration from this country to America is annually taking place on so large a scale, are now so sensibly felt, that an alteration of the law has become inevitable." (emphasis added) One of the chief features taken into account in formulating the recommendations of the Royal Commissioners was the attempt "to diminish the number of cases in which one who by British law is a British subject is regarded by foreign law as a foreign subject or citizen, and to obviate, as far as possible, the difficulties and inconveniences arising from such a double allegiance"269. To that end, the Commission recommended that efforts should be made to procure suitable reciprocal arrangements with other countries. But, as history was later to reveal, apart from the so-called "Bancroft Treaties"270 made between the United States and some German States in 1868, between the United States and the United Kingdom in 1870, and thereafter between the United States and some other European and American powers, that hope went largely unfulfilled. The treaty between the United States and the United Kingdom resolved some issues which had contributed to the outbreak of war between those nations in 1812 – issues like the pressing into the Royal Navy of naturalized citizens of the United 267 Cockburn, Nationality: or the Law Relating to Subjects and Aliens, considered with a view to future legislation, (1869) ("Cockburn on Nationality"). 268 Cockburn on Nationality at 3. 269 Reports from Commissioners, (1868-1869), vol 14, 607 at 617. 270 Weis, Nationality and Statelessness in International Law, (1956) at 135-137. States who were natural-born British subjects271. But the wider problems of dual or multiple nationality remained unresolved. By the time of federation, it was well recognised that "[m]ore than one state may claim the allegiance of the same individual, and a man whom English Courts treat as a British subject may, by French Courts, be treated as a French citizen"272. As Dicey went on to point out273: "An alien, further, who has, under the Naturalization Act, 1870, acquired a certificate of naturalization 'shall not, when within the limits of the foreign state of which he was a subject previously to obtaining his certificate of naturalization, be deemed to be a British subject unless he has ceased to be a subject of that state in pursuance of the laws thereof, or in pursuance of a treaty to that effect.'274 Hence a person naturalized under the Naturalization Act, 1870, may under some circumstances be held, even by English Courts, to be an alien." (emphasis added) Be this as it may, the understanding of the term "alien" at the time of federation must take account of these developments. In particular, it must take account of the existence of different, and competing, views about how aliens were to be identified. As Hall wrote in 1895275: "The persons as to whose nationality no room for difference of opinion exists are in the main those who have been born within a state territory of parents belonging to the community, and whose connexion with their state has not been severed through any act done by it or by themselves. ... The persons as to whose nationality a difference of legal theory is possible are children born of the subjects of one power within the territory of another, illegitimate children born of a foreign mother, foreign women 271 Cockburn on Nationality at 70-81. 272 Dicey, A Digest of the Law of England with reference to the Conflict of Laws, 273 A Digest of the Law of England with reference to the Conflict of Laws, (1896) at 274 Naturalization Act 1870, s 7. 275 Hall, A Treatise on International Law, 4th ed (1895) at 234. who have married a subject of the state, and persons adopted into the state community by naturalisation, or losing their nationality by emigration, and the children of such persons born before naturalisation or loss of nationality." (emphasis added) Further, account must be taken of the British legislative response to these questions. It is, therefore, to be noticed that the Naturalization Act 1870 permitted a natural-born British subject who, at the time of birth, "became under the law of any foreign state a subject of such state, and [was] still such subject, ... if of full age and not under any disability, [to] make a declaration of alienage"276. It further provided for British subjects to renounce allegiance to the Crown by voluntarily becoming naturalized in a foreign state277. No doubt it is also necessary to have regard to the position in the United States. "Aliens" and the United States Section 8 of Art 1 of the United States Constitution gave the Congress power "[t]o establish an uniform Rule of Naturalization". Section 1 of the 14th Amendment (which was ratified in July 1868) provided, among other things, that: "All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside." But for the deviation of the Dred Scott Case278 concerning the citizenship of a freed slave, and the treatment of native Americans as subject to a separate sovereignty279, the United States Supreme Court consistently applied the rule of territorial birthright citizenship280: "Nothing is better settled at the common law, than the doctrine, that the children, even of aliens, born in a country, while the parents are resident 276 Naturalization Act 1870 (UK) (33 Vict c 14), s 4. 277 Naturalization Act 1870, s 6. 278 Dred Scott v Sandford 60 US 393 (1856). 279 Cherokee Nation v Georgia 30 US 1 (1831). 280 Inglis v Sailor's Snug Harbour 28 US 99 at 164 (1830). there under the protection of the government, and owning a temporary allegiance thereto, are subjects by birth." The 14th Amendment entrenched this rule, although native Americans were still regarded as not subject to the jurisdiction of the United States. (Native Americans were brought within the rule of territorial birthright citizenship by the Citizenship Act of 1924281.) Subject to this exception, and the exception of the children of foreign diplomats, it is clear that, since the 14th Amendment, children born in the United States are citizens of the United States regardless of the nationality or citizenship or their parents. Thus, in 1898, the Supreme Court held in United States v Wong Kim Ark282 that a child born in the United States, of parents of Chinese descent who, at the time of the child's birth, were subjects of the Emperor of China but then resided in the United States, became at the time of his birth a citizen of the United States. Although Gray J convincingly demonstrated in Wong Kim Ark that the rule of so-called birthright citizenship adopted in the 14th Amendment not only was consistent with, but also was derived from, the common law rules developed in England, the conclusion reached in that and other later American cases concerning nationality must ultimately depend upon the proper construction of the particular constitutional provision engaged – s 1 of the 14th Amendment. For that reason there is no advantage to be gained from tracing the American law in any greater detail. For present purposes, what is significant is that the Australian Constitution contains no provision equivalent to s 1 of the 14th Amendment and contains no reference to citizenship except the references in s 44(i) to citizens of foreign powers. What the history demonstrates The word "aliens" may have had a fixed legal meaning in the 17th century. (Even then the legislature had altered the rules about alienage in some respects.) By the end of the 19th century the word did not bear the meaning it did at the time of Calvin's Case. There had been numerous legislative interventions in the subject. But there was one feature about the use of the word that was constant: it was that the alien "belonged to another". Often that was expressed by reference to the concept of allegiance and often it was expressed in terms that, by their definitions, assumed that the world could be divided into two groups. Either one was a British subject or one was an "alien". And those 281 8 USC § 1401 (b) (1988). groups were defined by reference to the nature of the allegiance they owed. During the 19th century, large numbers of persons emigrated from the British Isles to America and from Europe to the British Isles and America. During the latter half of that century legal thought in Britain and Europe grappled with the consequences of these movements. What may once have been the common law understanding of alienage yielded to these new circumstances. "Aliens", even if it had once had a fixed legal meaning, did not bear such a meaning by the end of the 19th century. But what did remain unaltered was that "aliens" included those who owed allegiance to another sovereign power, or who, having no nationality, owed no allegiance to any sovereign power. The absence of a citizenship power The plaintiff placed some emphasis on the specific rejection at the Australasian Federal Convention of a proposal to give the Federal Parliament power to make laws with respect to citizenship. At the Third Session of the Convention held in Melbourne in 1898, Dr Quick proposed that the federal Parliament be given power to make laws with respect to "Commonwealth citizenship"283. The proposal failed. When asked, in the course of debate, to define citizenship, Dr Quick said284 that "a reasonably approximate definition would be ... to the effect that all persons resident in the Commonwealth, being natural-born or naturalized subjects of the Queen, and not under any disability imposed by the Federal Parliament, should be citizens of the Commonwealth". Debate at the Convention focused upon the ambit of the proposed power. As the plaintiff pointed out in argument in the present matter, statements were made in debate by, for example, Mr Symon (later Sir Josiah Symon)285 and Mr O'Connor (later O'Connor J)286, which can be read as suggesting that they opposed the proposal on the basis that the federal Parliament should not have power to determine who is a citizen of Australia. Read as a whole, however, the debate about the proposal demonstrates the difficulty of distilling from debate a 283 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1750. 284 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1752. 285 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1768. 286 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1753-1755. single proposition, or even series of propositions, as the reason or reasons which underpinned the ultimate rejection of the proposal. Some speakers287 opposed the proposal because it might empower the federal Parliament not only to define who is a citizen, but also to define the rights attaching to citizenship in ways amplifying the reach of powers otherwise to be conferred on the federal Parliament. Mr Barton288 also emphasised the importance to be attached to the status of subject of the Queen suggesting, in effect, that the injection of a new concept of "citizenship" was unnecessary. In the end, little is to be gained from the Convention Debates on this proposal except for the obvious fact that it was considered and rejected. It is, in these circumstances, unnecessary to examine the principles which are to be applied in deciding the use to which statements in the Convention Debates may properly be put289. That is not to say, however, that the absence of an express power with respect to citizenship is not significant. If the plaintiff is right in submitting that any person born in Australia (other than the child of a foreign diplomat or occupying force) cannot fall within the expression "alien" when used in s 51(xix), there is a considerable fetter on the power of the federal Parliament to identify those who are to be treated, whether for domestic or international purposes, as nationals of Australia. It must be noted that the powers to make laws with respect to immigration and emigration, and with respect to external affairs, may well be engaged in various ways in connexion with that general subject. So, for example, enacting a law to give effect to a treaty dealing with the subject of dual nationality would, on its face, appear to be a law with respect to external affairs. And it may be argued that a law providing for the removal of the dependent children of persons not permitted to immigrate to Australia is a valid law with respect to immigration. These questions need not be resolved now. Whatever may be the outcome of debate about the validity of laws alleged to depend upon other powers given to the federal Parliament, it is central to the plaintiff's argument that the constitutional word "aliens" has a meaning which cannot include a person born within Australia. If that is the proper construction 287 For example, Mr Barton, Official Record of the Debates of the Australasian Federal Convention, (Melbourne) 2 March 1898 at 1765. 288 Official Record of the Debates of the Australasian Federal Convention, (Melbourne) 2 March 1898 at 1765-1766. 289 Cole v Whitfield (1988) 165 CLR 360 at 385. of "aliens" the result would be that, through the exercise of the naturalization aspect of the power conferred by s 51(xix), the class of persons born outside Australia who otherwise would be aliens can be altered or reduced by valid federal legislation, but the class of non-aliens contains an irreducible core. Understood in that way, the naturalization and aliens power would provide a one-way street: empowering legislation permitting persons to become non-aliens but not empowering legislation that would affect the status of a person born in Australia, regardless of that person's ties to other sovereign powers. Laws with respect to "naturalization and aliens" These reasons have hitherto focused on the meaning to be given to the word "aliens". It is necessary to recall, however, that the power is to make laws with respect to "naturalization and aliens". The power to make laws with respect to naturalization plainly extends to making a law prescribing the circumstances in which, and the procedures by which, an alien ceases to hold that status and becomes "naturalized". Argument in the present matter proceeded on the footing that the power also extends to making a law identifying the circumstances in which, and the procedures by which, a person who is not an alien may sever the ties of allegiance to Australia. (We leave aside any examination of what assumptions may be implicit in describing that as renouncing citizenship, renouncing allegiance, or ceasing to be a national of Australia.) Given the state of British law at the time of federation, and in particular the provisions of the Naturalization Act 1870 permitting renunciation of allegiance290, it would be surprising if the power with respect to naturalization and aliens did not extend this far. But, if the power extends to regulating renunciation of allegiance, the power extends, at least in this respect, to altering the criteria which are to determine whether the necessary connexion between the individual and (to personify the concept) the Crown exists. Yet it is central to the plaintiff's case that, at least in the case of a person born in Australia, this criterion of connexion is to be unalterable. That is, it is central to the plaintiff's case that the status flowing from birth within Australia cannot be altered except at the will of the individual, but then only if and to the extent that the Parliament permits the individual to take that step. This understanding of the power treats the subject-matter (whether it is described as alienage, nationality, or citizenship) as a status describing a bilateral relationship (between sovereign power and individual) which is a status alterable 290 Naturalization Act 1870, ss 3, 4 and 6. only by the unilateral act of the person whose status is in issue. That one-sided understanding of the power sits uncomfortably with any notion of allegiance that is bilateral. In particular, it is a view of the power that presents great difficulty in accommodating political changes like the changes in the relationship between the United Kingdom and Australia since federation, or the changes in relationship between Australia and what now is the Independent State of Papua New Guinea. "Aliens" – conclusions The plaintiff alleges that because a person in her circumstances would have fallen outside the class identified by British law in 1901 as "aliens" the federal Parliament has no power, under the naturalization and aliens power, to make a law, the application of which to the plaintiff depends, as s 198 of the Migration Act does in its operation with respect to "non-citizens", upon her parents not being natural-born or naturalized citizens of Australia. Identification of membership of the class described as "aliens" in 1901 depended in Britain not only upon common law rules, but also upon the application of particular statutory modifications of those rules. To say, then, as the plaintiff does, that "aliens" is a word that had an accepted and fixed legal meaning in 1901 would be accurate only if it were to be understood as saying no more than that resort to the then applicable law in Britain would have revealed whether or not an individual fell within the reach of that term. To understand the constitutional reference to "aliens" as confined to those who, in 1901, by then existing British law, would have been treated by a British court as an alien would be to confine the meaning of the word too narrowly. It would be to give meaning to the word by listing those to whom it could then have been applied rather than by identifying the characteristics of the legal status to which the word refers. The central characteristic of that status is, and always has been, owing obligations ("allegiance") to a sovereign power other than the sovereign power in question (here Australia). That definition of the status of alienage focuses on what it is that gives a person the status: owing obligations to another sovereign power. It does not seek to define the status, as the plaintiff sought to submit, by pointing to what is said to take a person outside its reach. That owing obligations to a sovereign power other than Australia is the central characteristic of what is meant by "aliens" can be illustrated by reference to the law that had developed about enemy aliens. For most, if not all, practical purposes, by 1900 friendly aliens were "treated in reference to civil rights as if they were British subjects"291. The position with enemy aliens was different. An enemy alien not present in Britain and under the protection and by permission of the Crown had no civil rights or privileges292 and could maintain no real or personal action in the courts293. In 1802 it was held294 that whether a person was barred from maintaining a suit on the ground of being an enemy alien depended upon that person's place of residence or business, not upon whether the person was a natural-born subject of the Crown. This rule invited attention to the obligations that the person owed as a result of residing and doing business in the country concerned. As Lord Lindley later said295, "when considering questions arising with an alien enemy, it is not the nationality of a person, but his place of business during war that is important"296. Just as an alien friend resident in Britain owed a temporary and local allegiance to the Crown, so too the British subject, voluntarily resident in the territory of a nation at war with Britain, came under obligations to the country of residence of a kind sufficient to classify that person as an enemy alien. Those obligations were voluntarily assumed by choosing to reside in the enemy territory. The obligations which friendly aliens owe to their respective sovereign powers may not be assumed voluntarily. But what is important, as the case of the British subject voluntarily resident in an enemy State reveals, is that each owes obligations (allegiance) to another sovereign power. Owing allegiance (even temporary and local allegiance) to a sovereign power other than the Crown brought the person within the concept of alienage. The previous decisions of the Court do not require the conclusion that those born within Australia who, having foreign nationality by descent, owe 291 Porter v Freudenberg; Kreglinger v S Samuel & Rosenfeld; In re Merten's Patents [1915] 1 KB 857 at 869; Bradley v The Commonwealth (1973) 128 CLR 557 at 582 per Barwick CJ and Gibbs J. 292 Blackstone, Commentaries on the Laws of England, (1765), vol 1, c 10 at 360-361. 293 In re Merten's Patents [1915] 1 KB 857 at 869-874. 294 M'Connell v Hector (1802) 3 Bos & Pul 113 [127 ER 61]. 295 Janson v Driefontein Consolidated Mines Ltd [1902] AC 484 at 505. 296 See also Wells v Williams (1697) 1 Ld Raym 282 [91 ER 1086]; The "Jonge Klassina" (1804) 5 C Rob 297 at 302-303 [165 ER 782 at 784]; In re Merten's Patents [1915] 1 KB 857 at 868-869. obligations to a sovereign power other than Australia are beyond the reach of the naturalization and aliens power. Observations in Potter v Minahan297, a case ultimately about the meaning of "immigrant" in a statute, concerning the consequences of birth in Australia were not directed to the present problem, and took no account of the question whether the defendant owed allegiance to any foreign power298. In Pochi299, Gibbs CJ said that Parliament could "treat as an alien any person who was born outside Australia, whose parents were not Australians, and who has not been naturalized as an Australian". Mr Pochi met all three of these conditions. It would be wrong, however, to take what was said by Gibbs CJ as necessarily treating a person born in Australia as beyond the reach of the aliens power. That question did not arise and was not decided in Pochi. Nor has the question arisen since. Thus, although references may be found, for example, in Patterson300 to "[b]irth within the sovereign's territories [being] the criterion by which the common law distinguished the subject of the sovereign from the alien" it is to be recalled that Patterson, Te301 and Shaw302 all concerned the status of persons born outside Australia. The status of those born within Australia did not fall for decision in those cases. Rather, the meaning of "aliens" was conveniently described in the joint reasons of six members of the Court in Nolan v Minister for Immigration and Ethnic Affairs303 where it was said that "alien" "[u]sed as a descriptive word to describe a person's lack of relationship with a country ... means, as a matter of ordinary language, 'nothing more than a citizen or subject of a foreign state'304". It was common ground that the plaintiff is a citizen of India. She is, therefore, a 297 (1908) 7 CLR 277. 298 The same is true of the dictum of the Privy Council in Cunningham v Tomey Homma [1903] AC 151 at 156 that a child of Japanese parentage born in Vancouver was a natural-born subject of the King. 299 (1982) 151 CLR 101 at 109-110. 300 (2001) 207 CLR 391 at 432 [125]. 301 (2002) 212 CLR 162. 302 (2003) 78 ALJR 203; 203 ALR 143. 303 (1988) 165 CLR 178 at 183. 304 Milne v Huber 17 Fed Cas 403 at 406 (1843). citizen of a foreign state. She is a person within the naturalization and aliens power. Conclusion and Orders For these reasons the first question reserved for the consideration of the Full Court should be answered, "Yes". The second question should be answered, "Does not arise". The plaintiff should bear the costs of the case stated and the third question should be answered accordingly. Kirby 207 KIRBY J. Is a person, born in Australia to parents, neither of whom is an Australian citizen, an "alien" within s 51(xix) of the Constitution, or otherwise liable under the Constitution and federal law to be removed from Australia? This is the central question presented by a case stated for the opinion of the Full Court. The proceeding represents the latest in a series of cases that have addressed the power of ministerial deportation affecting foreign nationals305 and long-term residents who are also subjects of the Queen306. The point of distinction in the present case is that the proposed deportee was born in Australia. Does this fact prevent involuntary removal? The facts Tania Singh ("the plaintiff")307 was born in Mildura, Victoria, on 5 February 1998. She has remained in Australia continuously since her birth. Each of her parents was born in 1969 in India. Her brother was also born in India, in 1994. The parents and brother are citizens of India. By Indian law applicable at the time of her birth, the plaintiff appears to have been entitled, automatically, to Indian citizenship by descent308. The case was argued on the basis that the plaintiff was, and is, a citizen of India. However, this is far from clear. In December 2003, the Citizenship Act 1955 (India) was amended by The Citizenship (Amendment) Act 2003 (India). The amending Act was notified in the Gazette of India in January 2004309 (before the hearing of this matter), but it is not clear whether the amendment has yet been brought into force. The amendments provide that a person, such as the plaintiff, who is "born outside India", where either parent is a citizen of India, is a citizen only if their "birth is registered at an Indian consulate"310. This amendment was not referred to in argument by either of the parties. This Court does not know its precise effect, or whether there is any question as to its validity. 305 Pochi v Macphee (1982) 151 CLR 101; Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162. 306 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178; Re Patterson; Ex parte Taylor (2001) 207 CLR 391; Shaw v Minister for Immigration and Multicultural Affairs (2003) 78 ALJR 203; 203 ALR 143. 307 Suing by her father as her next friend. The proceedings were formerly named S441/2003. By consent the title was amended: Singh v The Commonwealth [2004] HCATrans 005 at 315-367. 308 Citizenship Act 1955 (India), s 4 (as it was in 1998). 309 [2004] AIR (Acts) 7. 310 The Citizenship (Amendment) Act 2003 (India), s 4(1). Kirby However, aware of the content of the amending Act, this Court cannot say unequivocally that the plaintiff is a citizen of India: owing allegiance to that country. The case must be answered on the basis that the plaintiff's status in Australian law is to be determined against the probability that she is not necessarily entitled to other citizenship in default of prompt registration of her birth with, or the exercise of administrative power by, officials of the country of the nationality of her parents. The plaintiff's parents and her brother entered Australia in April 1997 on Business (Short Stay) visas. They have not departed since their arrival. Upon the expiry of the Business visas in July 1997, the plaintiff's father lodged an application for a protection visa311, claiming refugee status for himself and his family. Proceedings challenging the Minister's adverse determinations of that application were commenced in this Court and remitted to the Federal Court of Australia, where those proceedings remain pending. The plaintiff has now commenced her own proceedings in this Court, relying on her status as a person born in Australia, to resist any risk of removal from Australia under the Migration Act 1958 (Cth)312 ("the Migration Act"). The legislation Before the passage of the Nationality and Citizenship Act 1948 (Cth), later renamed the Citizenship Act 1948 (Cth) ("the Citizenship Act"), the concept of nationality within Australia was substantially subsumed, so far as the law was concerned, in that generally operating throughout the British Empire313. Australians were identified as having the status of "British subject"314. Following 311 Under the Migration Act 1958 (Cth), s 36(2). 313 By the Citizenship Act 1969 (Cth), s 1(3). See Rubenstein, Australian Citizenship Law in Context, (2002) at Ch 3. 314 See Naturalization Act 1903 (Cth), ss 3, 8; Nationality Act 1920 (Cth), ss 5(1), 6. Some distinctions were drawn between British subjects who were permanent residents of Australia and those only temporarily in the Commonwealth; cf Rubenstein, Australian Citizenship Law in Context, (2002) at 10, 79. In 1901, the word "citizen" was commonly, but not invariably, used to describe nationality status in republics with "subject" used for equivalent status in monarchical polities. The notion of allegiance was common: United States v Wong Kim Ark 169 US 649 at 663-664 (1898) per Gray J (for the Court); cf Anson, The Law and Custom of the Constitution, 3rd ed (1907), vol 2 at 239. Kirby the introduction of the statutory concept of citizenship315, the status of "British subject" was retained until 1 May 1987, alongside that of "Australian citizen"316. The Citizenship Act from 1948 provided that a person born in Australia was an Australian citizen, provided that his or her father (later "parent") was not a foreign diplomat or enemy alien, in the latter case where the birth occurred in a place at the time under occupation by the enemy317. These notions had particular meanings318. In substance, the original scheme of the Citizenship Act was designed to reflect the common law. In 1986, the Citizenship Act was changed to introduce one of the provisions, the validity of which as it affected the plaintiff was initially challenged in these proceedings. Section 10 of the Citizenship Act was amended to provide that a person born in Australia after 20 August 1986 became an Australian citizen by virtue of such birth if, and only if, a parent of the person was at the time of the person's birth an Australian citizen or permanent resident319 or "the person has, throughout the period of 10 years commencing on the day on which the person was born, been ordinarily resident in Australia"320. The change to the Citizenship Act removed the former statutory exception in the case of a child of foreign diplomats321. However, the exception for a child of an enemy alien was maintained322. Special provision exists in relation to a child found abandoned in Australia323 and for a child born in Australia to persons who are stateless324. There is no other special provision for a child who is stateless 315 Citizenship Act, Pt III. 316 The references to "British subject" were removed by the Australian Citizenship Amendment Act 1984 (Cth), amending the Citizenship Act 1948 (Cth), Pt II. See Re Patterson (2001) 207 CLR 391 at 442-443 [152]-[153]. 317 Citizenship Act, s 10(2)(a). 318 The definition of "Australia", by reference to external and other territories; of "foreign diplomat", by reference to various identified envoys; and of "enemy alien", by reference to descent and the period of hostilities. 319 Permanent residence is defined by the Citizenship Act, s 5A. See also s 5(3)(e). 320 Citizenship Act, s 10(2)(b). 321 Now subject to the general requirements of the Citizenship Act, s 10(2). 322 In terms of ss 10(3) and 10(5). 323 Citizenship Act, s 5(3)(b). 324 Citizenship Act, s 23D. Kirby according to the municipal law of the country of the nationality of her parents and according to Australian law. By s 198 of the Migration Act, provision is made for the removal from Australia "as soon as reasonably practicable" of an "unlawful non-citizen". Clearly, this provision is intended to be read with the provisions of the Citizenship Act defining who is a "citizen" of Australia. In terms of the latter, the plaintiff is not an Australian citizen despite her birth in Australia. This is so because she does not satisfy either of the additional conditions of citizenship stated in the Citizenship Act, s 10(2). Although it appeared that, pending the resolution of the parents' proceedings in the courts, the plaintiff may have been entitled to a "visa" preventing her deportation as an "unlawful non-citizen", the plaintiff defensively sought protection against the possibility of involuntary removal. She sought clarification of her status. In argument, her counsel accepted that she was not a "citizen" of Australia within that statutory concept as defined by the Citizenship Act325. However, he contended that neither was she an "alien". As such, whether as a "subject of the Queen"326 or simply as a non-"alien" within the Constitution, born in Australia, she was not liable to be removed from the country involuntarily. Whatever the Citizenship Act or the Migration Act provided, the plaintiff claimed protection by appeal to a higher law, namely the Constitution, and the limited powers that it affords to the Federal Parliament to enact a law for the removal from the Commonwealth of a person like herself. The plaintiff's only experience of a country, since her birth, has been of Australia. Initially, I inclined to the view that she was not an "alien" in terms of the Constitution and could not be made so involuntarily (nor otherwise rendered liable to deportation) pursuant to valid federal law. However, ultimately, I have reached the opposite conclusion. I will explain the arguments upon which the plaintiff relied, for they are not without persuasive force. But I will then explain the more persuasive reasons that bring me to the contrary result. The plaintiff's arguments Constitutional text and citizenship: The starting point for the plaintiff's arguments was that the Constitution contains no express authority to make laws with respect to citizenship, and specifically for depriving nationality (called "citizenship") from a "natural born" Australian, that is, someone born on Australian soil. 325 Singh [2004] HCATrans 005 at 399-411. 326 cf Constitution, s 117. Kirby The word "citizen" appears in the Constitution. It does so by way of contrast to "subject"327 and apparently by way of contrast to the stated obligation that every member of the House of Representatives328 and the Senate329 was obliged to be "a subject of the Queen, either natural-born or for at least five years naturalized under a law of the United Kingdom, or of a Colony which has become or becomes a State, or of the Commonwealth, or of a State"330. This latter provision, together with a protection expressed for the rights of residents in different States in terms of their position as a "subject of the Queen"331, both still in force, make it clear that the nationality status, and the only such status, envisaged at the time the Constitution was made, was that of British subject. Considerations of history and politics at that time confirm this view. According to the plaintiff, even if this interpretation of the Constitution seems old-fashioned, or anomalous to modern eyes (or to eyes fixed on the present federal statute book)332, it was the only such status provided in the Constitution. On this argument, no invocation of other legislative powers, dealing in general terms with other subject matters, nor of the incidental power afforded by or under the Constitution333, could permit the taking away of the one form of nationality for which the Constitution makes express provision. Even if it seemed anomalous to some, it was the duty of the Court to give effect to it, for its source was the express provision of the constitutional text. Alteration of that text was not the province of the Court but of the electors in accordance with the provisions of the Constitution governing formal amendment334. Birthright and the Constitution: The plaintiff elaborated this idea by reference to what she said was the "core" concept of nationality accepted in the common law at the time the Australian Constitution was adopted and long 327 Constitution, s 44(i). See Sue v Hill (1999) 199 CLR 462. 328 Constitution, s 34(ii). 329 Constitution, s 16. 330 Constitution, s 34(ii). 331 Constitution, s 117. 332 The Citizenship Act abolished the status of "British subject" in respect of Australian citizens with effect from 1 May 1987. See above fn 316. 333 Constitution, s 51(xxxix). 334 Constitution, s 128. Kirby before335. This was nationality by birthright ("jus soli", literally "right of the soil"). As Professor Pryles puts it336: "[T]he common law accepted as the general basis of allegiance that of the jus soli (the place of birth) rather than the jus sanguinis (the allegiance of the parents)." The classic common law rule regarding "natural-born subjects" of the English King was stated by Sir Edward Coke CJ in Calvin's Case337: "There be regularly … three incidents to a subject born. 1. That the parents be under the actual obedience of the King. 2. That the place of his birth be within the King's dominion. And, 3. The time of his birth is chiefly to be considered; for he cannot be a subject born of one kingdom that was born under the ligeance of a King of another kingdom …". This principle, which had its "roots in the feudal idea of a personal duty of fealty" owed by a tenant to his lord338 was, according to the plaintiff, deeply embedded in the law of the Australian Constitution, both at its origin and since339. It reflected Holdsworth's dictum340: "[A]ll persons born on English soil, no matter what their parentage, owed allegiance to, and were therefore subjects of the king." 335 Singh [2004] HCATrans 005 at 1044-1059, 1250-1256, 1474-1477. 336 Pryles, Australian Citizenship Law, (1981) at 14; see also Re Patterson (2001) 207 CLR 391 at 440 [148]. 337 (1608) 7 Co Rep 1a at 18a [77 ER 377 at 399]. Cited in Nolan (1988) 165 CLR 178 at 189 per Gaudron J; Re Patterson (2001) 207 CLR 391 at 429-430 [116] per McHugh J, 481-482 [273] of my own reasons; Te (2002) 212 CLR 162 at 180 [57] per Gaudron J, 196 [121] per Gummow J; Shaw (2003) 78 ALJR 203 at 213 [54]; 203 ALR 143 at 155-156. See Broom, Constitutional Law Viewed in Relation to the Common Law and Exemplified by the Cases (1866) at 42. 338 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 72; Lesa v Attorney-General [1982] 1 NZLR 165 at 174-175 (PC). See Nolan (1988) 165 CLR 178 at 189; Re Patterson (2001) 207 CLR 391 at 428-429 [114]-[115]. 339 Singh [2004] HCATrans 005 at 998-1059, 1250-1256. 340 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 75. Kirby This was not simply local obedience, of a transient kind attaching to those temporarily within the Crown's dominions341. Such temporary allegiance was to be distinguished from that with which this case was concerned. According to the plaintiff, the constitutional text made it clear that nationality contained an enduring notion of allegiance to the monarch. When the Australian Constitution referred to the matter, it did so reflecting the long-established rule of the common law. Other countries might since have changed their law of nationality, but, according to the plaintiff, the text of the Australian Constitution demanded continued fidelity to the principle of nationality as a birthright. Constitutional role of the Crown: In support of this view of nationality, in the text of the Australian Constitution, the plaintiff pointed to the centrality of the role of the Crown (concededly now personified in the role of the Queen as Queen of Australia) throughout the text of the Constitution. From the opening words of the Preamble declaring the Commonwealth to be a federal polity "under the Crown" to the scheduled oath and affirmation of officers appearing at the end of the text (providing for a promise to be "faithful and bear true allegiance" to the monarch) the Constitution reflects a conception of constitutional monarchy. Such a system might be changed in constitutional ways. But whilst it endures, so the plaintiff submitted, it preserves the reciprocal the the Queen of Australia and relationship between Commonwealth who owe her allegiance. Whatever changes statutes may introduce, the Constitution, according to this argument, remained grounded in a traditional view of Australian nationality based on the idea of personal allegiance to the monarch as provided in the Constitution. the people of To those who complained about the feudal history lying at the heart of this birthright idea, the plaintiff simply pointed to the character of the Constitution. Until the text was validly changed, she argued, it was binding on "the courts, judges, and people of every State and of every part of the Commonwealth"342. The birthright principle, according to the plaintiff, was subject to well-settled exceptions recognised in the common law at the time of the Constitution's making343. These extended to a child born in the Crown's dominions to a foreign 341 Wong Kim Ark 169 US 649 at 693 (1898) per Gray J (for the Court); cf Joyce v Director of Public Prosecutions [1946] AC 347 at 366. For discussion of the history of the Fourteenth Amendment to the Constitution of the United States 1787, see Drimmer, "The Nephews of Uncle Sam: The History, Evolution, and Application of Birthright Citizenship in the United States", (1995) 9 Georgetown Immigration Law Journal 667. 342 Constitution, covering cl 5. 343 Potter v Minahan (1908) 7 CLR 277 at 320-321 per Higgins J. Kirby monarch; to an accredited diplomat; or to an enemy alien344. Furthermore, it was subject to the extensions established by imperial statutes before 1901, including the recognition by statute, enacted as early as 1351, of the nationality of children born abroad to English parents who were entitled to be considered as subjects from birth, despite being born outside the kingdom345. Save for these few exceptions, well established when the Constitution was made and reflected in its textual references to "subject of the Queen", the plaintiff would admit to no power in the Parliament to alter such "core" constitutional notions. They were part of the fixed connotation of the idea of Australian nationality. No meaning could be given to any other constitutional word, such as "alien", that contradicted that connotation346. To attempt, by statute, to vary the meaning of "alien" from its essential connotation would be to attempt to change the "bedrock of principle" upon which the Constitution was founded347. Convention debates: To strengthen these arguments, the plaintiff invoked the course of the debates at the Constitutional Conventions which substantially determined the text of the Constitution endorsed at the pre-Federation referenda348. 344 The exceptions in relation to the children of foreign monarchs and diplomats is consistent with the principles of international law. See eg Convention on Certain Questions Relating to the Conflict of Nationality Laws, signed at The Hague on 12 April 1930, Art 12. 345 25 Edw III Stat 2 (1351), referred to in Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 75-76. This position was confirmed by 7 Anne c 5 (1708), 10 Anne c 5 (1710) and 4 George II c 21 (1730), described in Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 87-88. 346 cf Street v Queensland Bar Association (1989) 168 CLR 461 at 537-538 per 347 cf Australian Parliament, We are Australian – The Constitution and Deportation of Australian-born Children, Research Paper No 3, (2003-04) ("Parliamentary Research Paper") at 5. See also Re Patterson (2001) 207 CLR 391 at 429 [115] per McHugh J, 440 [148] per Gummow and Hayne JJ. 348 The plaintiff relied on Cole v Whitfield (1988) 165 CLR 360 at 385 to support reference to the Constitutional Debates: Singh [2004] HCATrans 005 at 501-568, 689-711. The use to which the debates were put, and their meaning and content, was contested by the Commonwealth: Singh [2004] HCATrans 006 at 4848-4888; cf McGrath, "Today's High Court and the Convention Debates", (2001) 13 Upholding the Australian Constitution: Proceedings of the Thirteenth Conference of the Samuel Griffith Society 1 at 7. Kirby At the third session of the Conventions (Melbourne, 1898) Dr John Quick argued that the Constitution should349: "[E]ither place in the forefront of [the] Constitution an express definition of citizenship of the Commonwealth, or empower the Federal Parliament to determine how citizenship shall be acquired, what shall be its qualifications, its rights and its privileges, and how the status may hereafter be lost." However, this proposal was rejected by the delegates. One of the reasons for the rejection was the suggestion that a power to legislate with respect to citizenship might lead to the power to deprive a natural-born subject of citizenship350. Mr Josiah Symon declared that it would "hand over our birthright as citizens"351. In this way, the notion of "birthright" was, according to the plaintiff, entrenched in the conception of nationality adopted by the Constitution. To this extent, the plaintiff argued that the history of its drafting confirmed the inferences to be drawn from the language of its text. Any change belonged not to the Parliament or to courts but to the people of the Commonwealth as electors. Aliens and statutory citizens: The plaintiff acknowledged that the Citizenship Act had made particular provisions in relation to the status of citizenship. However, lacking an express constitutional source, this status was "entirely statutory"352. Although there were judicial suggestions of a dichotomy between citizenship and alienage353, the plaintiff submitted that such suggestions were fundamentally inconsistent with the constitutional text. She pointed to numerous observations of the Court to the effect that the Parliament could not declare anyone it wished to be an "alien"354. By this logic, the Parliament could 349 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1751-1752. 350 Rubenstein, Australian Citizenship Law in Context, (2002) at 30; Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 351 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1764. 352 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 54 per Gaudron J. 353 Re Patterson (2001) 207 CLR 391 at 481-483 [273]-[276]. 354 Pochi (1982) 151 CLR 101 at 109-110; Shaw (2003) 78 ALJR 203 at 205-206 [9], 220 [94]; 203 ALR 143 at 145, 166. Kirby not, by adopting a statutory definition of citizenship, and attaching powers of deportation to those not conforming, take away rights that attached by the Constitution to the status of non-"alien" or a "subject of the Queen". It was thus possible, according to the plaintiff, that somewhere between persons who were, and were not, citizens according to statute, lay an intermediate category of non-citizen non-aliens. This possibility was inherent in the deliberate omission from the Constitution of a provision to empower the Parliament to make laws on citizenship. It might be hoped that the clarification of the meaning of "alien" (and hence of the status of non-aliens) would lead promptly to federal legislation to regularise this intermediate class. But if it did not, it would remain for this Court to defend non-aliens from exclusion from the polity of the Commonwealth and from ministerial deportation only because they were, in terms of statute, "non-citizens". Judicial references to birth: In proof of the deeply entrenched notion of a "birthright", deriving from birth on Australian soil, the plaintiff pointed to numerous judicial observations about the constitutional idea of alienage in terms excluding persons born in Australia355. It was conceded that these references were not essential to the decisions then in question. In none of the cases was the person concerned born in Australia. The problem now presenting was therefore not specifically addressed. Nevertheless, the plaintiff submitted that the idea of "birthright" ran very deep in the nationality notions of English-speaking democracies. At least it did so in settler societies. Thus, to this day, in the United States of America356, Canada357 and New Zealand358, birth on the soil of each country remains sufficient to attract the local right of citizenship or nationality. Although since 1981, this has been changed by statute in the United Kingdom359, along lines not 355 Cunliffe v The Commonwealth (1994) 182 CLR 272 at 375 per Toohey J. See Shaw (2003) 78 ALJR 203 at 205 [7] per Gleeson CJ, Gummow and Hayne JJ; 203 ALR 143 at 145; cf Re Patterson (2001) 207 CLR 391 at 429 [115], 440 [148]. 356 Constitution of the United States 1787, Fourteenth Amendment, s 1. 357 Constitution Act 1867 (Can), s 91(25). See Cunningham v Tomey Homma [1903] AC 151 at 156-157; Citizenship Act 1985 (Can), s 3(1)(a). 358 cf Citizenship Act 1977 (NZ), s 6(1). It should be noted that the Identity (Citizenship and Travel Documents) Bill was introduced into the New Zealand Parliament on 17 June 2004, and amendment to relevant sections of the Citizenship Act 1977 (NZ) has been foreshadowed by the Government. 359 British Nationality Act 1981 (UK), s 1. Kirby dissimilar to those now appearing in the Citizenship Act, s 10(2), the plaintiff asserted that such change was irrelevant. Although the United Kingdom was subject to the obligations of the European Convention for the Protection of Human Rights and Fundamental Freedoms360 and now to the Human Rights Act 1998 (UK), its Parliament was not subject to a written constitution reflecting notions of nationality formed in earlier times. It could change such notions as it pleased whereas, so the plaintiff said, the Federal Parliament in Australia could not. For a change to be effected in Australia, the plaintiff argued, it was necessary to contemplate formal constitutional amendment such as has recently been adopted in the Republic of Ireland to abolish express birthright entitlements361 formerly appearing362. Practical considerations: The plaintiff denied that the arguments that she advanced, defensive of her status, caused any significant practical problem for the operation of the Australian Constitution. Her counsel submitted that the fact that at her birth, by Indian law, she enjoyed the status of a citizen of India was irrelevant. By inference, if the amendments to the Citizenship Act 1955 (India) are in force, the same argument would apply to any present right of the plaintiff to Indian citizenship by registration of her birth or by the exercise of administrative discretion. According to the plaintiff, it remained for this Court to determine whether she had rights to Australian nationality in accordance with Australia's Constitution and laws. Such rights could not be governed by, nor could they depend upon, the law of India. The earlier approach of international law generally unfavourable to dual nationality363 had, in any case, lately given way to numerous instances of dual citizenship. This movement is now reflected in both Australian and Indian citizenship legislation364. 360 Signed at Rome on 4 November 1950 (as amended). 361 A referendum to amend The Constitution of Ireland 1937, art 9, was held on 11 June 2004. See Twenty-seventh Amendment of the Constitution Act 2004 (Ireland), 362 The Constitution of Ireland 1937, art 2. 363 Donner, The Regulation of Nationality in International Law, 2nd ed (1994) at 18-19; Tiburcio, The Human Rights of Aliens under International and Comparative Law (2001) at 9-11. 364 The Australian Citizenship Legislation Amendment Act 2002 (Cth), the relevant sections having effect from 4 April 2002, repealed the former s 17 of the Citizenship Act, dealing with the loss of citizenship on acquisition of another nationality. The Citizenship (Amendment) Act 2003 (India), if and when in force, amends the Citizenship Act 1955 (India) to permit dual nationality. See generally Donner, The Regulation of Nationality in International Law, 2nd ed (1994) at Kirby The plaintiff conceded that the mere fact that she might have rights as a non-"alien" to nationality or other status in Australia would not assure her parents of a right to remain in this country365. Although the plaintiff's rights as a non- alien, who could not be deported involuntarily, would require consideration by officials deciding whether or not to deport her parents366, the latter's legal entitlements were separate from her own. Even if, as a matter of practicality, the plaintiff departed with her parents and brother (if, as aliens, they were removed from Australia during her minority), her constitutional "birthright" might later be claimed if she were to seek to return to Australia. The plaintiff urged the consideration of her case in accordance with her rights conforming to the Constitution, separate from those of her parents. She was entitled to point to the fact that the number of individuals in her position was hardly a flood. An official report in 1986, commenting on the amendment to s 10(2) of the Citizenship Act proposed at the time, suggested that the number affected was extremely small367. Dangers of statutory definition: The plaintiff also pointed to what she said was the danger of opening up departures from the birthright nationality of persons born on Australian soil. She referred, fairly, to the sorry history of the deprivation of nationality rights in a number of countries in recent, and not so recent, years368. Once the Parliament was afforded the power to provide for the deportation ("removal") of persons born in Australia, it was impossible, according to the plaintiff, to draw an incontestable line that would prevent others, universally hitherto regarded as Australians, from being defined out of Australian nationality by legislation and subjected to the risk of removal. Like concerns have been voiced in this Court in Re Patterson; Ex parte Taylor369, Re Minister 365 Kioa v West (1985) 159 CLR 550 at 604. 366 Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 304-305. See Parliamentary Research Paper at 7. 367 Parliamentary Research Paper at 7, citing Australia, Human Rights Commission, The Human Rights of Australian-born Children whose Parents are Deported, Report No 18, (1986) at 3: "[T]he risk can be over-stated. [The Commission] considers the suggestion that 'the floodgates' might be opened is without foundation … Allowing all of these persons to stay … would hardly constitute a trickle, let alone a flood". 368 Dred Scott v Sandford 60 US 393 (1856); Co-operative Committee on Japanese Canadians v Attorney-General for Canada [1947] AC 87; cf Korematsu v United States 323 US 214 (1944). 369 (2001) 207 CLR 391 at 491-492 [301]-[304]. Kirby for Immigration and Multicultural Affairs; Ex parte Te370 and Shaw v Minister for Immigration and Multicultural Affairs371. The plaintiff rejected assurances given for the Commonwealth suggesting that children born in Australia, one of whose parents was an Australian citizen, could not possibly be "removed" by valid legislation against their will372. She submitted that the history of ethnic prejudice in many countries necessitated an attitude of high vigilance to any interpretation of the Constitution that would enlarge governmental powers of expulsion by redefining notions of citizenship, alienage and nationality. Maintenance of the principle accepted at the time when the Constitution was made, defensive of nationality as "birthright", was the one stable and certain means of preventing legislative and administrative misuse of the power of expulsion373. On this footing alone, the plaintiff argued, a heavy burden of justifying a change in the constitutional notion of alienage rested on those who propounded it. The plaintiff also submitted that an instance of the arbitrariness of statutory definitions was already to be seen in the adoption of the criteria expressed for citizenship in s 10(2) of the Citizenship Act. If the Parliament could provide, alternatively, that one parent of a person born in Australia must be an Australian citizen or permanent resident374, it could, by amendment, provide that additionally a parent, or both parents or grandparents and possibly great- grandparents had themselves to have been Australian citizens. Similarly, if the Parliament could provide, alternatively, that a person claiming citizenship, although born in Australia, must have been "ordinarily resident" in the country throughout a period of ten years, it could abolish that alternative. It could increase the precondition of lawful residence from ten years to twenty, fifty or even more years and narrow still further the notion of "ordinarily resident". According to the plaintiff, these were the dangers of shifting from the bedrock constitutional notion of Australian nationality by birthright and permitting the Parliament, contrary to the decision of the delegates at the Conventions when the Constitution was adopted, to substitute its views of nationality that might reflect passing prejudices not present in the objective common law doctrine of birthright reflected in the constitutional text. 370 (2002) 212 CLR 162 at 217-218 [200]-[202]. 371 (2003) 78 ALJR 203 at 221 [97]-[98]; 203 ALR 143 at 167-168. 372 This was argued by the Commonwealth. 373 Robtelmes v Brenan (1906) 4 CLR 395 at 403-406. See Wynes, Legislative, Executive and Judicial Powers in Australia, 5th ed (1976) at 302-304. 374 Citizenship Act, s 10(2)(a). Kirby I acknowledge the power of the plaintiff's arguments. I also confess to sympathy for the plaintiff's plight as a young girl who was born in Australia and who has been educated here and has known no other country. If I were a legislator, I would not favour a law depriving her of Australian nationality and providing for her involuntary removal. However, my function is to give meaning to constitutional concepts. I must do so in a way that is consistent with my notion of how the Constitution must be interpreted when it refers to a word such as "aliens". For me, that word, like every other word in the Constitution, is not frozen in whatever meaning it may have had in 1901. Thus, for me, this case is primarily about the proper approach to constitutional construction. The parliamentary power over "aliens" Approach to constitutional interpretation: The starting point for resolving the primary issue in this case is the approach that should be taken to construing the legislative powers afforded to the Federal Parliament by the Constitution, primarily the power to make laws with respect to "aliens". For the reasons explained by all members of this Court in Grain Pool of WA v The Commonwealth375, it is inconsistent with the function of constitutional interpretation to give the text "the same meaning and intent with which [the Constitution] spoke when it came from the hands of its framers, and was voted on and adopted by the people"376. Those were the words of Taney CJ in the unfortunate decision of the Supreme Court of the United States in Dred Scott v Sandford377 which concerned the citizenship of people in the United States originally of African descent. From its earliest days378, and throughout its history379, this Court has ordinarily observed380 a different approach. It is one that recognises that, of its 375 (2000) 202 CLR 479 at 492-496 [16]-[23], 511-513 [76]-[79], 522-525 [110]- 376 Dred Scott 60 US 393 at 426 (1856). 378 Jumbunna Coal Mine, NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 367-368 per O'Connor J. 379 R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225; Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 599-600 [185]-[186]. Kirby nature, a national constitution must operate "indefinitely, and from age to age, [affording] authority to the Federal Parliament to make laws responding to different times and changing needs"381. Regard may certainly be had to the framers' intentions, as in affording legislative power with respect to "naturalization and aliens"382. However, whilst the task of interpretation remains anchored to the text of the Constitution, the ambit of the power is not limited by the wishes, expectations or imagination of the framers. They did not intend, nor did they enjoy the power, to impose their wishes and understanding of the text upon later generations of Australians383. in explaining contested questions of Intention interpretation. It is an objective, not subjective concept384. is a fiction often used In elucidating its meaning, different judges of this Court have made different use of the understandings of the framers and of the constitutional text, viewed from the perspective of 1901385. All accept that these are relevant considerations. None pretends that they are the only relevant factors. No clearer instance of the capacity of the constitutional text to accommodate radical changes in the world, and in the nation, can be seen than in Sue v Hill386. There can be little doubt that, at the Conventions and in 1901, the reference in the Constitution387 to the disqualification from election to the Federal Parliament of "a subject or a citizen … of a foreign power" would not have been understood to include disqualification of a subject or citizen of the United Kingdom. Quite the contrary. Yet by 1999 this Court concluded that it did. Such had been the change of the world to which the Constitution speaks and in which its text must now operate and be understood. 380 cf Attorney-General for NSW v Brewery Employés Union of NSW (1908) 6 CLR 381 Grain Pool (2000) 202 CLR 479 at 523 [111]; cf at 492 [16]. 382 Constitution, s 51(xix). 383 Re Wakim (1999) 198 CLR 511 at 599-602 [186]-[192]; cf Clark, Studies in Australian Constitutional Law (1901 ed, 1997 reprint) at 21. 384 See Al-Kateb v Godwin [2004] HCA 37 at [167]. 385 See Grain Pool (2000) 202 CLR 479 at 511-512 [78], 520 [104], 522 [110]. 386 (1999) 199 CLR 462. 387 s 44(i). Kirby It follows that the legislative power afforded to the Parliament to make laws with respect to "aliens" is capable of application to a larger, contemporary, condition of things beyond what might have been the generally accepted meaning of the word at the time of Federation. Observance of a consistency of approach requires that this Court construe this power with all the generality that the words used in the Constitution admit, as those words are understood today388. This does not mean that the meaning of the word is wholly open-ended. Or that the meaning is entirely a matter for the Parliament to determine. The ultimate responsibility of expounding the meaning of a constitutional word belongs to this Court. However, the notion that the meaning of such a word or phrase is fixed forever by reference to understandings that existed in 1901 is not the accepted constitutional doctrine in Australia. Dual theories available: Once the foregoing approach is adopted it must be acknowledged that, even in 1901, there were two major legal theories concerning the legal status of "aliens", in the sense of "belonging to" another place or person389. The birthright or jus soli theory was traditional at that time in common law countries. However, in countries of the civil law tradition, the derived that nationality or membership of a nation passed by descent390. Given the existence of these two legal systems, vying for acceptance amongst the nations of the world in 1901, it is unconvincing to suggest that the Federal Parliament in Australia was forever to be limited to the approach of birthright. jus sanguinis ("right of blood") usually recognised Why could the Parliament not adopt, wholly or in part, elements of the alternative legal approach to the issue of alienage accepted by many legal systems of the world? After all, each approach was an endeavour to identify the feature of a relationship between the individual and a nation on the basis of which loyalty and membership could generally be imputed and demanded391. Further, the common law rule of birthright had already admitted its own exceptions, namely for the children of a foreign monarch, diplomats and enemy aliens. Why, of its nature, could more exceptions never develop around the notion of "aliens"? From medieval times, the English Parliament provided 388 Grain Pool (2000) 202 CLR 479 at 492 [16]. 389 Nolan (1988) 165 CLR 178 at 183; Re Patterson (2001) 207 CLR 391 at 428-429 [114] per McHugh J; Te (2002) 212 CLR 162 at 185 [81], 205 [159]. 390 Brownlie, Principles of Public International Law, 6th ed (2003) at 378. 391 Dicey, A Digest of the Law of England with Reference to the Conflict of Laws (1896) at 173-177, cited in Wong Kim Ark 169 US 649 at 655-658 (1898). Kirby particular derogations from birthright in favour of the principle of descent. Why, as a matter of constitutional principle, should further exceptions be forbidden to the Australian Parliament392? Why should it be forbidden in the absence of a clear indication that such was the purpose of those who made the Constitution and designed its basic notions393? In the nineteenth century, in the United Kingdom, enquiries had been launched relating to the need to modify the birthright rule394. If this was in the contemplation of the generation that adopted the Constitution, why did the use of the word "aliens" forbid any further movement if later generations were convinced that movement was warranted? Within limits set by the unchanging, essential elements of the word "aliens", it has been conventional in our constitutional law to acknowledge a large power on the part of the Parliament to give meaning to the language of the Constitution, subject always to consideration by the courts, which, in this respect, have the last say395. Changes in operation: One functional reason for avoiding a rigid approach to the meaning of a word like "aliens" lies in changing perceptions of what the word means and changing circumstances in which the word must operate. Alienage is a status. Of their nature, notions of status tend to change over time, especially in periods of rapid social evolution such as the last century 392 As with respect to "local allegiance". See Te (2002) 212 CLR 162 at 173 [28]-[29], 215 [192]; Shaw (2003) 78 ALJR 203 at 209 [29]; 203 ALR 143 at 150. 393 As was originally provided in The Constitution of Ireland 1937, providing for Irish nationality as a birthright of all born in the island of Ireland. Or as was enacted in the law of Israel as the Law of Return 1950 (Israel) providing (in art 1) that "Every Jew has the right to come to [Israel] as an oleh". See NAGV v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 202 ALR 1 at 5 [15]. 394 "Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance (1869)", in Reports from Commissioners, (1868-1869), vol 14, 607. Following this report, the Naturalization Act 1870 (UK) (33 Vict c 14) was enacted under which natural-born subjects who at birth were subjects of a foreign state were allowed to make a "declaration of alienage". See Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 88-90 explaining that the common law rules were found inconvenient in the latter part of the 19th century, it becoming evident "that conflicting claims to allegiance resulted from the rule that all persons born on territory within the allegiance of the crown, no matter what their parentage, were British subjects". 395 Re Patterson (2001) 207 CLR 391 at 409-410 [41]-[43]. See also Te (2002) 212 CLR 162 at 179 [54]-[55]. Kirby witnessed. The global circumstances of alienage have also changed. The word must respond to the disappearance from the Australian context of the British Empire. It must respond to the advent of aviation and other modes of rapid transport that make possible, in ways unthinkable in 1901, adventitious arrivals of parents, with confinement and birth arranged within the receiving country. The word should also be capable of adapting to the circumstances involving large scale global immigration and contested claims of asylum that have replaced the British settler migration to Australia of earlier times. Because the Constitution, of its function and character, adapts to such changes396, there is no reason why the word "aliens" should not be capable of responding to such new circumstances. There is every reason why it should397. International law: International law has long recognised, and still recognises, the right of each nation state to determine its own nationality laws and principles. As a general rule, questions of nationality fall within the domestic jurisdiction of each nation state398. Consequently, international law recognises nationality by birthright, by descent and by variants of the two systems. the Commonwealth would involve no relevant inconsistency with international law399. Further, since international law permits dual nationality400, it would not the Constitution urged by interpretation of Thus, the 396 Bonser v La Macchia (1969) 122 CLR 177 at 227 per Windeyer J. 397 There were a number of additional reasons, apart from the preservation of birthright, why the framers chose not to include a legislative power over citizenship: Rubenstein, "Citizenship and the Constitutional Convention Debates: A Mere Legal Inference", (1997) 25 Federal Law Review 295. See also reasons of Gleeson CJ at [31]; reasons of Gummow, Hayne and Heydon JJ at [191]-[192]. 398 Brownlie, Principles of Public International Law, 6th ed (2003) at 373. See also Wong Kim Ark 169 US 649 at 667-668 (1898) per Gray J (for the Court); Nationality Decrees Issued in Tunis and Morocco (Advisory Opinion) (1923) Permanent Court of International Justice 6, Series B, No 4 at 24. 399 For the role of international law in the interpretation of Australian legislation, and of the Australian Constitution, see Behrooz v Secretary of the Department of Immigration and Multicultural and Indigenous Affairs [2004] HCA 36 at [125]-[127]; Al-Kateb [2004] HCA 37 at [152], [167]-[191] of my reasons, compare [62]-[73] of McHugh J's reasons. 400 Case Concerning the Barcelona Traction, Light and Power Company (Belgium v Spain) (1970) International Court of Justice 3 at 51, 130, 199-200; Tiburcio, The Human Rights of Aliens under International and Comparative Law (2001) at 9-10; Donner, The Regulation of Nationality in International Law, 2nd ed (1994) at 245. Kirby contravene international law for Australia's legislation to lead to the possibility that a person may become capable of obtaining nationality in two states. Because the Constitution must operate in the environment of international law, and because the general notion of alienage adapts to that environment, it would be astonishing if, without clearer language, Australia's constitutional power to enact federal legislation with respect to "aliens", as broadly defined, were closed off and confined, in this respect, to specific nineteenth century notions that have been altered in several countries where they previously prevailed401. The United States model: This last point is also reinforced by recalling that the Constitutional Conventions that drafted the provision including the legislative power with respect to "aliens" had before them a model, and a text, that could have been adopted to provide the nationality rights of "natural-born" Australians but was not. By the Fourteenth Amendment to the United States Constitution402, it is expressly provided that "[a]ll persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside". That provision was adopted in the United States of America in 1868. Although there was specific debate in the Australian Conventions of the 1890s about notions of nationality and citizenship, the Australian Constitution did not enshrine concepts similar to those then so recently adopted in the United States. Instead, it left the legal regulation of alienage (and of its counterpart, Australian nationality) to the Federal Parliament armed with relevant legislative powers expressed in terms of great generality. Deliberately, it omitted an express guarantee similar to that adopted in the United States. It would be contrary to the normal canons of constitutional interpretation, for this Court now to insert an equivalent guarantee as implicit in the word "aliens" which the Founders refrained from expressing. The Crown in the Constitution: In response to the suggestion that the role of the Crown in the Constitution necessarily endorsed a type of feudal notion of 401 eg the United Kingdom, the Republic of Ireland and India. 402 The Fourteenth Amendment not only defined citizenship in the United States but also gave aliens constitutional rights in the United States because the due process and equal protection clauses apply not only to citizens but to all persons. Note that the Citizenship Act, ss 10B, 10C and 11 impose conditions that limit the entitlement of a child born outside Australia to citizenship by descent. The validity of these provisions was not in question in this case. Kirby allegiance, subservience and duty implicit in the approach of birthright to nationality403, there are many answers. From the start, the relationship with the Crown in Australia has been a comparatively light burden, if burden at all. It was freely adopted and retained in the Constitution. It has adapted in its Antipodean environment to the needs of this country404. The adaptation of the Constitution to the practical and statutory change in the position of the Queen as Queen of Australia has been recognised in many cases405. These cases, in turn, demonstrate the capacity of the Constitution to move with international and national realities406. Constitutional notions of membership of the Australian community, and of who constitute the "people of the Commonwealth", have kept pace with these changes407. It is unrealistic, indeed highly artificial, to conceive of such membership today in feudal terms. The constitutional text does not require it. Legal principle and historical independence deny it. By parity of reasoning, the word "aliens" adapts as the counterpart to modern notions of Australian nationality. These changes permit enlargement of the federal power to make laws with respect to "aliens" beyond that which would generally have been accepted at the time the Constitution came into force. Consistency with recent decisions: It is also desirable that the decision of this Court in this case should take into account, and conform to, the course of recent decisions concerned with the "aliens" power. A minority of this Court favoured a view that a residual category existed of non-citizen, non-alien British subject408. That view has not prevailed. Yet even within the minority view409, it 403 cf Re Patterson (2001) 207 CLR 391 at 429 [115] per McHugh J. 404 Street v Queensland Bar Association (1989) 168 CLR 461 at 525, 541, 553-554; Nolan (1988) 165 CLR 178 at 186; DJL v Central Authority (2000) 201 CLR 226 at 278 [135]; Re Patterson (2001) 207 CLR 391 at 467 [229]; Shaw (2003) 78 ALJR 203 at 209 [30]; 203 ALR 143 at 150-151. 405 eg Sue v Hill (1999) 199 CLR 462 at 498-500 [84]-[88]; Street (1989) 168 CLR 461 at 525 per Deane J; Nolan (1988) 165 CLR 178 at 185-186; Re Patterson (2001) 207 CLR 391 at 467 [229]. 406 Re Patterson (2001) 207 CLR 391 at 466 [226] per Gummow and Hayne JJ. 407 cf Speech by Sir Gerard Brennan on his swearing in as Chief Justice (1995) 183 CLR ix at ix-x. 408 Re Patterson (2001) 207 CLR 391; Shaw (2003) 78 ALJR 203; 203 ALR 143. Kirby was accepted that, by 1986, the position of British subjects, accepted by the minority as Australian nationals without the need of citizenship, had become anomalous and must be taken to have terminated. The majority regarded the termination as happening decades earlier. On both views, by a given time, non- citizens in Australia were treated as "aliens" although they might be "subjects of the Queen" in some other dominion of the Crown. The recognition of this change in the notion of alienage is only consistent with an acceptance of the fact that the ambit of the word "aliens" was not closed at the time of Federation. It was not a word devoid of meaning. But neither was its meaning fixed by what the word would have meant to lawyers, or the laity, in 1901 or even 1980. Addressing as it does a status, defined by reference to the relationship between the Australian people and each other as well as with the people of the rest of the world, it is inevitable that geo-political, technological and other developments will have an impact on the contemporary understanding of the meaning of "aliens" and that appreciation of the meaning of that word will change over time. Dealing with abuse: Given recent history in many parts of the world, the dangers of a misuse of a legislative power over "aliens", referred to by the plaintiff, cannot be lightly dismissed. Nor can concessions made for the Commonwealth in the present case410 necessarily be taken as binding future governments or parliaments. Recent decisions show how the Executive Government sometimes presses forward extensions of its powers, expanding past exceptions into new and controversial constitutional doctrine411. Whilst it is true that Australian constitutional interpretation cannot take place in an environment in which horrible and extreme instances are imagined to frighten the decision-maker412, it is obviously useful to test propounded interpretations against their possible consequences413. Normally, if the consequences may be seriously inimical to freedom, that interpretation will not 409 See Shaw (2003) 78 ALJR 203 at 212 [48], 224-225 [117], 230 [154]; cf at 209- 210 [27]-[32], 235 [190]; 203 ALR 143 at 154, 172, 180, cf at 150-151, 187. See also Re Patterson (2001) 207 CLR 391 at 410 [44] per Gaudron J. 410 See above at [240]. 411 cf Re Colonel Aird; Ex parte Alpert [2004] HCA 44 at [74], [130]-[137], 412 Shaw (2003) 78 ALJR 203 at 210 [32]; 203 ALR 143 at 151. 413 cf Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 414-417 [159]-[165]. Kirby be imputed to the Constitution of the Commonwealth of Australia. At least, this will not happen unless the language is very clear414. Should some future Parliament attempt to push the "aliens" power into extreme instances, so as to deem a person born in Australia an "alien" despite parental or grand-parental links of descent and residence, this Court can be trusted to draw the necessary constitutional line. Doing so is inherent in the task of constitutional interpretation. To avoid such dangers, it is not necessary to embrace a rigid, and now outmoded, meaning of a contested constitutional word. If the present case is taken as an instance, the operation of the provisions of s 10(2) on the plaintiff cannot be viewed as "extreme", whether tested against developments of alienage in our own law or in the law of other nations as recognised by international law. Even if, as is theoretically possible, Australian law in combination with the nationality law of a child's parents left a child born in Australia a stateless person, this is an incident of the intersection of the two legal systems. It cannot limit or restrict the Australian head of legislative power, nor control its meaning. It might be a consideration affecting the right of removal415 and the exercise of the powers of the Minister under the Migration Act. But it cannot impose an artificial construction on the Australian Constitution. To hold otherwise would be to subject this country's basic law to the chance provisions of the statute laws of other countries. That is obviously an unacceptable proposition. The plaintiff's birth in Australia was an incident of her parents' resort to this country with her older brother. If the applicant's parents can establish an entitlement to a protection visa, that visa will extend to the plaintiff416. If they cannot, it is open to the Parliament to provide by statute, in effect, that her desire for Australian nationality under the Constitution must take its place with that of other would-be migrants. By our Constitution, she enjoys no separate Australian nationality, whether as a "subject of the Queen" or otherwise. Like any other temporary member of the community, she owes local allegiance whilst in 414 See Australian Communist Party v The Commonwealth ("the Communist Party Case") (1951) 83 CLR 1 at 258; Pochi v Macphee (1982) 151 CLR 101 at 109, cited by Gummow, Hayne and Heydon JJ at [151]. 415 cf Al-Kateb [2004] HCA 37 at [80], [144]-[145]. 416 See Chen Shi Hai v Minister for Immigration and Multicultural Affairs (2000) 201 CLR 293 at 319-320 [81]. Kirby Australia417. However, at this time, the Citizenship Act denies her Australian citizenship. That provision of the Citizenship Act is valid; based on the aliens power. In consequence, the Migration Act may make provision for her removal as an alien "non-citizen". Conclusions and orders Conclusions: The laws are valid: Because, in the plaintiff's case, the impugned provisions of the Citizenship Act and Migration Act are sustained by the Federal Parliament's legislative power to make laws with respect to her status as an alien, her claim for relief in this Court fails. In light of the conclusion that the challenged laws are constitutionally valid on the basis of the aliens power, it is unnecessary to consider the other heads of power upon which the Commonwealth additionally or alternatively relied418. During the hearing, the Court gave leave to Mazhar Mehdi Bakhtiari to intervene in the plaintiff's proceedings. His counsel was heard to support and elaborate the argument advanced by the plaintiff. Necessarily, upon the issues common to the intervener's case in this Court and that of the plaintiff, the same result must follow upon the resolution of the common constitutional questions. However, as Mr Bakhtiari had additional arguments to support his claim for relief, the disposal of his proceedings must await any separate and later determination of his case. Answers to questions: The reformulated questions in the case stated should be answered in the way proposed by Gleeson CJ419. 417 Te (2002) 212 CLR 162 at 173 [28]-[29]; 215 [192]; Shaw (2003) 78 ALJR 203 at 209 [29]; 203 ALR 143 at 150. 418 The Commonwealth relied, in addition, upon the immigration power, the external affairs power and the "implied nationhood" power. 419 Reasons of Gleeson CJ at [33]. Callinan CALLINAN J. The substantial issue which this case stated raises is whether the defendants may remove from Australia a person born in this country to unlawful entrants. Facts The plaintiff's parents were both born in Delhi, India, in 1969. Her brother, who is 10 years of age, was also born in Delhi. They are Indian citizens who entered and have remained in Australia since 22 April 1997. The plaintiff was born in Australia on 5 February 1998 and has remained in this country with her parents and brother since that date. On 9 July 1997, the plaintiff's father lodged an application for a protection visa with the Department of Immigration and Multicultural Affairs, as it then was. The plaintiff's mother and brother were included in the application. On 26 November 1997, a delegate of the second defendant Minister refused the application. The plaintiff's father sought a review by the Refugee Review Tribunal ("Tribunal") of the delegate's decision. On 20 August 1998, the Tribunal affirmed the delegate's decision. On 24 April 2001, the plaintiff's father, mother and brother were joined as represented applicant parties to proceedings titled Lie v Refugee Review Tribunal and Ors and numbered S89 of 1999 ("the representative proceedings"), which were then pending in this Court. On 29 May 2003, the plaintiff's father, mother and brother commenced proceedings in this Court pursuant to s 75(v) of the Constitution, seeking prerogative relief in respect of the Tribunal's decision. Pursuant to orders made by a Justice of this Court on 25 November 2002, the representative proceedings were remitted instanter to the Federal Court of Australia. They have not yet been resolved. The plaintiff is a citizen of India by descent pursuant to s 4 of the Citizenship Act 1955 (India) which provided, at the time of her birth, that a person born outside of India on or after the commencement of the Citizenship (Amendment) Act 1992 (India) shall be a citizen of India if either of his or her parents is a citizen of India at the time of birth420. In December 2003, the 420 Section 3 of the Citizenship Act 1955 (India) provided that every person born in India on or after 26 January 1950 but before the commencement of the Citizenship (Amendment) Act 1986 (India) shall be a citizen of India by birth (except where the person's father is a foreign diplomat or an enemy alien). A person born in India on or after the commencement of the Citizenship (Amendment) Act 1986 is only a (Footnote continues on next page) Callinan Citizenship Act 1955 was amended by the Citizenship (Amendment) Act 2003 (India). As a result, the plaintiff's Indian citizenship may be lost if her parents do not register her birth at an Indian consulate within one year of the commencement of the Citizenship (Amendment) Act 2003421. Questions Reserved Questions were reserved for the consideration of the Full Court of this Court in respect of the plaintiff as follows: Did the plaintiff acquire Australian citizenship by birth on 5 February 1998 in Australia and has she retained Australian citizenship since that date? Alternatively to 1, did the plaintiff acquire Australian nationality as a "subject of the Queen" by birth in Australia on 5 February 1998 and has she retained such Australian nationality since that date? In the light of the answers to 1 and 2, is s 10(2) of the Australian Citizenship Act 1948 (Cth) a valid law of the Commonwealth? In the light of the answers to 1 and 2, is s 198 of the Migration Act 1958 (Cth) capable of valid application to the Plaintiff? By whom should the costs of the case stated to the Full Court of this Court be borne? During argument it became apparent that the questions as framed did not identify the matters truly in issue, and that a reformulation of them was necessary. After reformulation by a Justice of this Court, the questions became as follows: Is the plaintiff an alien within the meaning of s 51(xix) of the Constitution? If the answer to 1 is "No", is s 198 of the Migration Act 1958 (Cth) capable of valid application to the plaintiff? citizen of India by birth where either of the person's parents is a citizen of India at the time of his or her birth. 421 At the time of writing, it is unclear whether the Citizenship (Amendment) Act 2003 (India) has commenced operation. Callinan By whom should the costs of the case stated to the Full Court of this Honourable Court be borne? Australian Citizenship Act 1948 (Cth) The plaintiff is not a citizen within the meaning of s 10 of the Australian Citizenship Act 1948 (Cth) (the "Citizenship Act") which provides as follows: "Citizenship by birth Subject to this section, a person born in Australia after the commencement of this Act shall be an Australian citizen. Subject to subsection (3), a person born in Australia after the commencement of the Australian Citizenship Amendment Act 1986 shall be an Australian citizen by virtue of that birth if and only if: a parent of the person was, at the time of the person's birth, an Australian citizen or a permanent resident; the person has, throughout the period of 10 years commencing on the day on which the person was born, been ordinarily resident in Australia. Subject to subsection (5), a person shall not be an Australian citizen by virtue of this section if, at the time of the person's birth, a parent of the person was an enemy alien and the birth occurred in a place then under occupation by the enemy. Subsection (3) does not apply in relation to a person if, at the time of the person's birth, a parent of the person: (a) was an Australian citizen or a permanent resident; and (b) was not an enemy alien. (6) A reference in this section to a permanent resident does not include a reference to a person who is, for the purposes of the Migration Act 1958, an exempt non-citizen." The plaintiff's submissions The substance of the plaintiff's submissions is that although she is not a "citizen" within the meaning of s 10 of the Citizenship Act, she is nonetheless a national of this country and not an alien for the purpose of s 51(xix) of the Callinan Constitution422 because she was born in Australia. Further, even though her parents are non-citizens, and unlawful entrants423 who have failed to establish their entitlement to the status of refugee and are therefore liable to be removed from Australia pursuant to legislation enacted under the immigration or the alien power, or a combination of these, she is not an alien because alienage is inconsistent with her Australian birth. I will return to these propositions but it is necessary first to deal with a preliminary point raised by the defendants. The Federal Conventions The plaintiff sought to rely upon some of the speeches made and a resolution passed during the Federal Convention in 1898 in Melbourne424. One of the delegates, Dr John Quick, proposed that the Federal Parliament be given an express power with respect to the grant or removal of a status of citizenship. He said425: 422 Section 51(xix) provides: "51. The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: (xix) naturalization and aliens". 423 Sections 4 and 42 of the Migration Act 1958 (Cth) require a non-citizen to hold a visa in order to travel to Australia, and s 36 allows the grant of a protection visa to those who have entered Australia without a visa and subsequently establish that they are refugees to whom Australia owes obligations of protection. Section 42 provides: "(1) Subject to subsections (2), (2A) and (3), a non-citizen must not travel to Australia without a visa that is in effect." Section 36 provides for the grant of protection visas to persons owed protection because of a well-founded fear of persecution according to the Convention relating to the Status of Refugees of 1951 as amended by the Refugees Protocol. 424 See Prince, We are Australian – The Constitution and Deportation of Australian- born Children, Department of the Parliamentary Library Research Paper No 3 425 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1752. Callinan "We ought either to place in the forefront of this Constitution an express definition of citizenship of the Commonwealth, or empower the Federal Parliament to determine how federal citizenship shall be acquired, what shall be its qualifications, its rights, and its privileges, and how the status may hereafter be lost." The majority of the delegates were, however, of a different opinion. They were concerned that a federal government might abuse such a power to disenfranchise residents of particular States. A South Australian delegate, Mr Josiah Symon, observed that426: "At the very root of the proposed Union is the invitation to the citizens of the states to join the Federation, and to obtain, as their reward, citizenship of the Commonwealth. ... [W]hat this Convention is asked to do is to hand over to the Federal Parliament the power, whether exercised or not, of taking away from us that citizenship in the Commonwealth which we acquire by joining the Union." Similarly, another delegate, later a senator and a justice of this Court, Mr Richard O'Connor said in opposing the conferral of such a power427: "As you have power to prevent any person from entering any part of the Commonwealth, you have also the power to prevent any person from becoming a member of the Commonwealth community. ... It appears to me quite clear, as regards the right of any person from the outside to become a member of the Commonwealth, that the power to regulate immigration and emigration, and the power to deal with aliens, give the right to define who shall be citizens, as coming from the outside world." Dr Quick's proposal to confer power on the Federal Parliament to enact laws in relation to citizenship was defeated in a vote of a committee at the Melbourne session of the Convention by 21 to 15 on 2 March 1898, and accordingly no relevant express power was included in the Constitution428. 426 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1768. 427 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1753 and 1754. 428 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1768. Callinan The defendants object to the reception of this material. The objection should be dismissed. There is no doubt that the common law and the founders' understanding of it heavily informed the language of the Constitution. So too of course did history and contemporary perceptions of mischiefs429 to be dealt with and objectives to be attained. The Court is not only, in my opinion, entitled, but also obliged, to have regard to the Convention debates when, as is often the case, recourse to them is relevant and informative430. The debates are certainly relevant and informative here. It is also the case, as the plaintiff submitted in argument, that the material sought to be relied upon satisfies the requirements stated by this Court in Cole v Whitfield431: "Reference to the [Convention debates] may be made, not for the purpose of substituting for the meaning of the words used [in the Constitution] the scope and effect – .if such could [objectively] be established – which the founding fathers subjectively intended the section to have, but for the purpose of identifying the contemporary meaning of language used, the subject to which that language was directed and the nature and objectives of the movement towards federation from which the compact of the Constitution finally emerged." There are compelling reasons why recourse to the debates is permissible and will usually be helpful. Courts and judges may speak of the changing meaning of language but in practice substantive linguistic change occurs very slowly, particularly in legal phraseology. When change does occur, it generally tends to relate to popular culture rather than to the expression of fundamental ideas, philosophies, principles and legal concepts. Judges should in my opinion be especially vigilant to recognise and eschew what is in substance a constitutional change under a false rubric of a perceived change in the meaning of a word, or an expression used in the Constitution. That power, to effect a Constitutional change, resides exclusively in the Australian people pursuant to s 128 of the Constitution and is not to be usurped by either the courts or the Parliament. In any event, I am not by any means persuaded that an actual change in the meaning of a word or a phrase, if and when it occurs, can justify a 429 Mischief in the legal sense, for example problems to be solved and hardships to be ameliorated. 430 There is probably no legal significance in the anomaly that s 15AB of the Acts Interpretation Act 1901 (Cth) would allow recourse to explanatory memoranda and second reading speeches, yet the defendants' submissions would deny it to the foundational constitutional materials. 431 (1988) 165 CLR 360 at 385. Callinan departure from its meaning at the time of Federation. The constitutional conservatism of the Australian people reflected in the failure of so many referenda432 cannot justify a supposed antidote of judicial "progressivism". This is not to say that adherence to 19th century meanings which have become archaic will always be obligatory. But it is to say that instruments, including constitutional ones are still basically to be construed by reference to the Examination of the intentions of their makers objectively ascertained. circumstances which formed the background to the making of the Constitution assists in this examination. In my opinion Convention materials showing what the founders deliberately discarded may be especially illuminating in the same way as evidence of what parties to a contract deliberately excluded negates the implication of a term of a contract to the effect of what was excluded433. This approach is not inconsistent with recent authority of this Court, an example of which is Cheatle v The Queen434. There, recourse to legal history resulted in the attribution to the words "trial by jury" used in s 80 of the Constitution, a similar meaning to the one they bore in 1900 immediately before Federation435. It is true that an identical meaning might not have been able to be given to those words, for example, trial by [a] jury [as constituted in 1900] that is, [entirely by men], but the substance and the essence of the concept of trial by jury remain unchanged. The decision of this Court in Grain Pool of Western Australia v The Commonwealth436 compels no different an approach. The special nature of the property rights with which the Court was concerned there, intellectual property, involving as it does innovation and its potential utility to humankind, necessarily looks to, and accepts, indeed embraces change, not so much in meaning as in scope. It would have been antithetical to this special nature to confine what was patentable, and therefore within the meaning of the term "patent" in the Constitution to the intellectual and prophetic horizons of 1900. Indeed it would have been absurd to do so and courts strive, in construing instruments, to avoid absurdities. 432 Since 1901, 44 proposals have been put to the Australian people and only eight have succeeded: see Blackshield & Williams, Australian Constitutional Law and Theory, 3rd ed, (2002) at 1301. 433 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 346 per Mason J. 434 (1993) 177 CLR 541. 435 (1993) 177 CLR 541 at 552. 436 (2000) 202 CLR 479. Callinan Meaning of "aliens" at common law It is relevant therefore to refer to the common and statutory law with respect to aliens before and at the time of Federation, the latter providing some indication at least of the extent to which the common law was seen to be in need of modification. People born within the monarch's dominions were, by virtue of their birth, British subjects437. This was so because they owed allegiance to the sovereign, a concept which had its roots in the feudal law of personal fealty owed by a tenant to his lord438. Legal history is all one way as to this. Holdsworth put it in these terms439: "[a]ll persons born on English soil, no matter what their parentage, owed allegiance to, and were therefore subjects of the king." In Calvin's Case440, Sir Edward Coke pronounced that a person born in Scotland after the Crown of England had descended to King James VI of Scotland was a natural-born subject and not an alien in England, and was therefore not disabled from bringing real or personal actions for lands within "There be regularly … three incidents to a subject born. 1. That the parents be under the actual obedience of the King. 2. That the place of his birth be within the King's dominion. And, 3. The time of his birth is chiefly to be considered; for he cannot be a subject born of one kingdom that was born under the ligeance of a King of another kingdom, albeit afterwards one kingdom descend to the King of the other." 437 See, for example, Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 428-429 [114]-[115] per McHugh J, 440 [148]-[149] per Gummow and Hayne JJ, 481-482 438 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 72; see also Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 189 where Gaudron J said: "For the purposes of the early common law of England alien status was identified as absence of allegiance to the Crown ... Allegiance to the Crown became synonymous with being a British subject." 439 Holdsworth, A History of English Law, 3rd ed (1944), vol 9 at 75. 440 (1608) 7 Co Rep 1a [77 ER 377]. 441 (1608) 7 Co Rep 1a at 18a [77 ER 377 at 399]. Callinan Pollock and Maitland said442: "As regards the definition of the two great classes of men which have to be distinguished from each other, the main rule is very simple. The place of birth is all-important. A child born within any territory that is subject to the king of England is a natural-born subject of the king of England, and is no alien in England. On the other hand, with some exceptions, every child born elsewhere is an alien, no matter the nationality of its parents. The full extent of the first half of this rule was settled in 1608 by the famous decision in Calvin's case: a child born in Scotland after the moment when King James the Sixth became King James the First is no alien in England. The decision was one which pleased the king and displeased many of his subjects; but no other judgment could have been given, unless many precedents derived from times when our kings had large territories on the continent of Europe had been disregarded." Blackstone states that443: "The first and most obvious division of the people is into aliens and natural-born subjects. Natural-born subjects are such as are born within the dominions of the crown of England; that is, within the ligeance, or as it is generally called, the allegiance of the king: and aliens, such as are born out of it. Allegiance is the tie, or ligamen, which binds the subject to the king, in return for that protection which the king affords the subject. The thing itself, or substantial part of it, is founded in reason and the nature of government; the name and the form are derived to us from our Gothic ancestors. Allegiance, both express and implied, is however distinguished by the law into two sorts or species, the one natural, the other local; the former being also perpetual, the latter temporary. Natural allegiance is such as is due from all men born within the king's dominions immediately upon their birth. For, immediately upon their birth, they are under the king's protection; at a time too, when (during their infancy) they are incapable of protecting themselves. Natural allegiance is therefore a debt of gratitude; which cannot be forfeited, cancelled, or altered, by any 442 The History of English Law, 2nd ed (1952), vol 1 at 458 (footnote omitted). 443 Blackstone, Commentaries on the Laws of England, 5th ed (1773), vol 1 at 366, 369-370 and 373 (footnotes omitted) (original emphasis). Callinan change of time, place, or circumstance, nor by any thing but the united concurrence of the legislature. An Englishman who removes to France, or to China, owes the same allegiance to the king of England there as at home, and twenty years hence as well as now. When I say, that an alien is one who is born out of the king's dominions, or allegiance, this also must be understood with some restrictions. The common law indeed stood absolutely so; with only a very few exceptions: so that a particular act of parliament became necessary after the restoration, 'for the naturalization of children of his majesty's English subjects, born in foreign countries during the late troubles'. And this maxim of the law proceeded upon a general principle, that every man owes natural allegiance where he is born, and cannot owe two such allegiances, or serve two masters, at once. Yet the children of the king's embassadors born abroad were always held to be natural subjects: for as the father, though in a foreign country, owes not even a local allegiance to the prince to whom he is sent; so, with regard to the son also, he was held (by a kind of postliminium) to be born under the king of England's allegiance, represented by his father, the embassador. To encourage also foreign commerce, it was enacted by statute 25 Edw III st 2 that all children born abroad, provided both their parents were at the time of the birth in allegiance to the king, and the mother had passed the seas by her husband's consent, might inherit as if born in England: and accordingly it hath been so adjudged in behalf of merchants. But by several more modern statutes these restrictions are still farther taken off: so that all children, born out of the king's ligeance, whose fathers were natural-born subjects, are now natural-born subjects themselves, to all intents and purposes, without any exception: unless their said fathers were attainted, or banished beyond sea, for high treason; or were then in the service of a prince at enmity with Great Britain." Accordingly, the common law accepted the place of birth (jus soli) as the basis of allegiance, rather than the nationality of the parents (jus sanguinis). The common law was however supplemented by Parliament as appears from the passage quoted above from Blackstone's Commentaries on the Laws of England. There were only two exceptions however to the common law rule: children born in the monarch's dominions of foreign ambassadors, and children born in such places to members of invading armies or enemy aliens444. 444 As Sir Edward Coke said in Calvin's Case: "any place within the King's dominions without obedience can never produce a natural subject" (1608) 7 Co Rep 1a at 18a [77 ER 377 at 399]. Callinan The other side of the coin is, as stated by Gleeson CJ in Re Minister for Immigration and Multicultural Affairs; Ex parte Te445 birth outside Australia will generally mean that the person born is, and will be treated as, an alien for most purposes446. In 1869 the Royal Commission for Inquiring into the Laws of Naturalization and Allegiance made a report to both Houses of Parliament in which the Commissioners said this447: "There are two classes of person who by our law are deemed to be natural-born British subjects: Those who are such from the fact of their having been born within the dominion of the British Crown; Those who, though born out of the dominion of the British Crown, are by various general Acts of Parliament declared to be natural- born British subjects. The allegiance of a natural-born British subject is regarded by the Common Law as indelible." The Commission gave careful consideration to the need or otherwise for change. This relevantly was their conclusion448: "The rule which impresses on persons born within Your Majesty's dominions the character of British subjects is open to some theoretical and some practical objections, of the force of which we are aware. But it has, on the other hand, solid advantages. It selects as the test a fact readily 445 (2002) 212 CLR 162 at 170 [18]. 446 To similar, but not identical effect, see 179 [54] per Gaudron J and 206 [162] per Kirby J, relying on the common law position as set out in Blackstone's Commentaries on the Laws of England. Hayne J at 219-220 [210] also referred to place of birth as one of the two features which determine the status of alienage. 447 "Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance (1869)", in Reports from Commissioners, (1868-1869), vol 14, 607 448 "Report of the Royal Commissioners for Inquiring into the Laws of Naturalization and Allegiance (1869)", in Reports from Commissioners, (1868-1869), vol 14, 607 Callinan proveable; and this, in questions of nationality and allegiance, is a point of material consequence. It prevents troublesome questions in cases, (numerous in some parts of the British empire,) where the father's nationality is uncertain; and it has the effect of obliterating speedily and effectually disabilities of race, the existence of which within any community is generally an evil, though to some extent a necessary evil. Lastly, we believe that of the children of foreign parents, born within the dominions of the Crown, a large majority would, if they were called upon to choose, elect British nationality. The balance of convenience, therefore, is in favour of treating them as British subjects unless they disclaim that character, rather than of treating them as aliens unless they claim it. The former course is, of the two, the less likely to inflict needless trouble and disappoint natural expectations. We do not therefore recommend the abandonment of this rule of the common law, but we are clearly of opinion that it ought not to be, as it now is, absolute and unbending. In the case of children of foreign parentage, it should operate only where a foreign nationality has not been chosen. Where such a choice has been made, it should give way. As to the second class, – persons of British parentage born abroad, – we think it expedient that the Statutes now in force should be repealed, in order to introduce some limitations and place the law on a clearer and more satisfactory basis. Birth abroad is often merely accidental, while of those British subjects who go to reside in foreign countries a great number certainly prize British nationality for themselves, and wish that it should be enjoyed by their children. The law, as it stands, concedes this benefit to their children born abroad; and we do not recommend that it should be withdrawn; but we think that the transmission of British nationality in families settled abroad should be limited to the first generation." It may safely be accepted that this was the contemporary legal position with which the founders were familiar. It may also be accepted that the scope of the term "alien" can be affected by changes in the identity of the sovereign and the boundaries of the sovereign's territory. This is to give effect to the reality that allegiance can no longer be owed, and protection afforded without sovereign power to command the former and to provide the latter. The meaning of the word, however, has not altered449. It cannot be modified by Parliament to include persons "who could not possibly answer the description of 'aliens' in the ordinary understanding of the word"450. 449 Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 185. 450 Pochi v Macphee (1982) 151 CLR 101 at 109 per Gibbs CJ. Callinan As Gibbs CJ observed in Pochi v Macphee451, in relation to s 12 of the Migration Act 1958 (Cth) ("Migration Act"), as it then was, if the word "alien" did include some persons who were not aliens, it should be given a distributive operation, so as to apply only to those to whom it could validly apply. Mr Basten QC who appeared in this appeal for a person given leave to intervene, submitted that the reference to the meaning of "alien" to which I have referred was not made inaccurately or incautiously. The language used reflects established principle in other common law jurisdictions, Great Britain452, the United States453 and Canada. Observations in a Canadian case, Cunningham v Tomey Homma454, by the Privy Council to the effect that a Provincial enactment denying the franchise to a person of Japanese descent did not necessarily have anything to do with naturalization or alienage are relevant here. The Lord Chancellor said455: "A child of Japanese parentage born in Vancouver City is a natural-born subject of the King, and would be equally excluded from the possession of the franchise." Citizenship "Citizen" is a term of no particular constitutional significance. It appears twice in the Constitution, in s 44(i) only, but it is not used in such a way as to affect the plaintiff's case adversely. Indeed the usage in the section is not inconsistent with it. It is concerned with the right to be a parliamentarian, and not to reside in, or to be a national of Australia. Section 44 relevantly provides: "Disqualification 44. Any person who: 451 (1982) 151 CLR 101 at 110. 452 See Joyce v Director of Public Prosecutions [1946] AC 347 at 366, cited with approval in Re Minister for Immigration & Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 198 [126] per Gummow J. 453 United States v Wong Kim Ark 169 US 649 at 693 (1898), referred to in Re Minister for Immigration & Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 197 [124] per Gummow J. 455 [1903] AC 151 at 156. See The British North America Act 1867 (UK), s 91(25) the head of power being identical to that identified in s 51(xix) of our Constitution. Callinan is under any acknowledgment of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or a citizen of a foreign power; shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives." By using the language of "allegiance, obedience, or adherence" the founders can again be seen to have had in mind the old common law concepts of allegiance owed, in the case of republics, by citizens, and, in the case of monarchies, by subjects. It is also significant that they used the word "acknowledgment" which suggests that a natural born subject could, by a voluntary act, come to owe allegiance or obedience, or to adhere to a foreign power. The reference to subjection to, or citizenship of, or the rights or privileges of, a foreign power must be to those according to Australian domestic law. It cannot be that by the mere legislative act of a foreign power, an Australian national could be deprived of the right of representation, or other rights enjoyed by a natural born Australian. It is also significant that the word "citizen" is not used in reference to an Australian, or for that matter, a British subject, but is used in relation to citizens or subjects of a foreign power in s 44. On no view does that section provide any head of power to legislate with respect to Australian citizenship. The concept of an Australian citizenship is therefore a statutory and not a constitutional one, as Gaudron J said in Chu Kheng Lim v Minister for Immigration456: "Citizenship, so far as this country is concerned, is a concept which is entirely statutory, originating as recently as 1948 with the enactment of what was then styled the Nationality and Citizenship Act 1948 (Cth). It is a concept which is and can be pressed into service for a number of constitutional purposes, to Commonwealth elections and, as this case shows, for the purpose of legislating with respect to aliens pursuant to s 51(xix) of the Constitution. … [The concept of citizenship] cannot control the meaning of 'alien' in s 51(xix) of the Constitution." including with respect A similar observation was made by Kirby J in Shaw v Minister for Immigration and Multicultural Affairs 457: 456 (1992) 176 CLR 1 at 54 (footnote omitted). 457 (2003) 78 ALJR 203 at 220 [94]; 203 ALR 143 at 166. Callinan "[B]ecause 'aliens' is a constitutional word, it cannot have any meaning that the Federal Parliament may choose to give it." Parliament cannot define the scope of alienage for constitutional purposes. It was because of the risk that a power to define it presented, that the proposal of Dr Quick that the Constitution refer to and define "citizenship" foundered, and provoked the spirited opposition of Mr O'Connor458 and Mr Symon459 which carried the day. It is necessary to say something about some of the defendants' other submissions. Correctly, they accept that Australian citizenship is a statutory concept460, first established by the Nationality and Citizenship Act 1948 (Cth), and that there is no constitutional entitlement to "citizenship". The conclusion which they seek to draw from that however does not follow, that a person born in Australia will only become an Australian citizen by virtue of a statute conferring that status, if, as the defendants contend, only citizens [by statute] can have a status other than of alien. The argument is circular. It assumes, wrongly, that there is a constitutional power to define the constitutional term "alien" by an enactment, the effect of which, according to the defendants, is to define a "citizen" and to provide that a person who is not a citizen must in consequence be an alien. The Court's task of finding the meaning of s 51(xix) cannot be constrained by a legislative construct of the Parliament, the obverse of which, it is contended, is to supply it. The fact that the acquisition of Australian citizenship has statutory consequences under several Commonwealth enactments461 is not to the point. 458 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1753 and 1755. 459 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 2 March 1898 at 1762, 1763, 1764 and 1768. 460 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 54 per Gaudron J; Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 179 [53] per Gaudron J; Shaw v Minister for Immigration and Multicultural Affairs (2003) 78 ALJR 203 at 217-218 [79] per Kirby J; 203 ALR 461 The right to vote in Federal elections is restricted to Australian citizens and those British subjects enrolled on the electoral roll before 26 January 1984: Commonwealth Electoral Act 1918 (Cth), s 93. Although no longer a pre-condition of employment, significant weight is still placed on Australian citizenship as a criterion for employment in the Australian Public Service: Public Service Act 1999 (Cth), s 6. Callinan The defendants' next submission is substantially correct, that the statutory conferral of citizenship does not give rise to any direct rights or entitlements under the Constitution462. Nor can it however, define by exclusion, who is an alien. A person who is not an alien cannot possibly be enacted to be one, and cannot be treated by, or pursuant to an enactment for any purpose as if he or she is one. It is not possible to give "citizen" a constitutional meaning except under and as required by s 44. Citizenship is not otherwise a term of necessarily fixed meaning. It may include more than one category of people. As Mr Symon pointed out during the Melbourne Convention463: "… the expression 'citizen' does not mean only persons exercising the franchise; it includes infants and lunatics, if you like. Every one who is recognised as an inhabitant, and is under the laws, is a citizen." There are other statements made by Mr Symon and Mr O'Connor464 indicating an awareness and the possibility of different kinds of citizenship: that there was, for example, a difference between a status of citizenship conferred or recognized by statute, and a more general and traditional notion of citizenship embracing a "resident, inhabitant or person". "Alien" or "non-alien" in any sense in which either term is used calls into question a matter of status. In Shaw v Minister for Immigration and Multicultural Affairs, I said and would repeat465: "Courts have long been reluctant to alter the status of a person without a compelling reason to do so." 462 Note however that the guarantee contained in s 117 of the Constitution is applicable in relation to a "subject of the Queen" (see also s 34). This provision is now taken to refer to a subject of the Queen in right of Australia (that is, the sovereign in her "Australian politic capacity"), which for practical purposes may encompass any Australian citizen. 463 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 3 March 1898 at 1794. 464 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 3 March 1898 at 1796. 465 (2003) 78 ALJR 203 at 229-230 [148]; 203 ALR 143 at 179. Callinan This traditional reluctance of courts to interfere with status is itself a factor to be weighed in favor of the plaintiff in resolving ambiguity in the meaning of "alien". The defendants argued that because the Indian enactment466 to which earlier reference has been made conferred Indian citizenship on the plaintiff, she was under allegiance to the foreign state of India and was therefore an alien according to all historical understandings of alienage, and that any allegiance owed by the plaintiff to Australia was no more than a local allegiance467. It is unnecessary to explore further the extent to which a foreign statute conferring citizenship could possibly operate to deprive a person born in this country of the rights due to him or her arising out of that birth, and in particular to affect the meaning and application of the Australian Constitution. Nor is it necessary to explore the effect, or the binding nature of a foreign statute with respect to an infant born and living abroad who has not reached an age of understanding and adulthood enabling her to acknowledge or renounce the citizenship which a foreign power has purported to confer upon her. In the meantime, as a person born in this country, as Sir Edward Coke in Calvin's Case pointed out, the plaintiff is entitled as of right to be regarded as a national of it, and in substance as a citizen of it, albeit not as a citizen for the purposes of the Citizenship Act to the extent that that Act is valid. And there seems to me to be no reason why the plaintiff should not continue to have that right unless and until she renounces it or makes an acknowledgment inconsistent with it. Implied nationhood power The defendants also sought to rely upon an "implied nationhood" power, to make laws relating to matters arising out of the existence of the Commonwealth and its status as a federal government, specifically to make laws with respect to nationality and citizenship468. The defendants submitted that it is 466 Citizenship Act 1955 (India). 467 cf Re Minister for Immigration and Multicultural Affairs; Ex parte Te (2002) 212 CLR 162 at 226 [221] where I said: "Blackstone explains the difference between natural allegiance due from birth of a person born within the king's dominion, and local allegiance. A person owing the former cannot unilaterally renounce allegiance: it is intrinsic and primitive and requires for its divestment, 'the concurrent act of that prince to whom it was first due.'" (Commentaries on the Laws of England, 15th ed (1809) bk 1, c 10 at 369-371). 468 The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at Callinan a necessary incident of sovereignty that a nation be able to determine who are its citizens and that such a power may be deduced from "the establishment and nature of the Commonwealth as a national polity"469. No implication of nationhood or otherwise can validly contradict, or allow the definition by enactment of, an express constitutional term such as "alien". I would reject this submission. For similar reasons it is unnecessary to explore the significance and constitutional relevance of dual citizenship, the right to assert and hold which apparently arises out of the repeal of s 17 of the Citizenship Act on 4 April 2002 which provided as follows: "Loss of citizenship on acquisition of another nationality 17 (1) A person, being an Australian citizen who has attained the age of 18 years, who does any act or thing – the sole or dominant purpose of which; and the effect of which, is to acquire the nationality or citizenship of a foreign country, shall, upon that acquisition, cease to be an Australian citizen. Subsection (1) does not apply in relation to an act of marriage." Immigration power I was for a time impressed by a written submission of the defendants which was given little attention in oral argument, that the power to make laws with respect to immigration extends to laws dealing with the status of a child of unlawful immigrants who is born in Australia. The defendants submitted that, in so far as the power applies to the children of immigrants, s 10(2) of the Citizenship Act is a law with respect to immigration within the meaning of s 51(xxvii) of the Constitution, and similarly, in so far as s 198 of the Migration Act which I will set out, applies to immigrants, it is a law with respect to immigration within the meaning of s 51(xxvii) of the Constitution. 469 The defendants sought in this regard to rely on Davis v The Commonwealth (1988) 166 CLR 79 at 93, 95 per Mason CJ, Deane and Gaudron JJ. Callinan "198 Removal from Australia of unlawful non-citizens (1) An officer must remove as soon as reasonably practicable an unlawful non-citizen who asks the Minister, in writing, to be so removed. (1A) In the case of an unlawful non-citizen who has been brought to Australia under section 198B for a temporary purpose, an officer must remove the person as soon as reasonably practicable after the person no longer needs to be in Australia for that purpose (whether or not the purpose has been achieved). (2) An officer must remove as soon as reasonably practicable an unlawful non-citizen: (a) who is covered by subparagraph 193(1)(a)(i), (ii) or (iii) or paragraph 193(1)(b), (c) or (d); and (b) who has not subsequently been immigration cleared; and (c) who either: has not made a valid application for a substantive visa that can be granted when the applicant is in the migration zone; or has made a valid application for a substantive visa, that can be granted when the applicant is in the migration zone, that has been finally determined. (2A) An officer must remove as soon as reasonably practicable an unlawful non-citizen if: the non-citizen 193(1)(a)(iv); and covered by subparagraph since the Minister's decision (the original decision) referred to in subparagraph 193(1)(a)(iv), the non- citizen has not made a valid application for a substantive visa that can be granted when the non- citizen is in the migration zone; and in a case where the non-citizen has been invited, in to make section accordance with Callinan representations to the Minister about revocation of the original decision – either: the non-citizen has not made representations in accordance with the invitation and the period for making representations has ended; or the non-citizen has made representations in accordance with the Minister has decided not to revoke the original decision. invitation and the The fact that an unlawful non-citizen is eligible to apply for a substantive visa that can be granted when the applicant is in the migration zone but has not done so does not prevent the application of subsection (2) or (2A) to him or her. (5) An officer must remove as soon as reasonably practicable an unlawful non-citizen if the non-citizen: is a detainee; and (b) was entitled to apply for a visa in accordance with section 195, to apply under section 137K for revocation of the cancellation of a visa, or both, but did neither. (6) An officer must remove as soon as reasonably practicable an unlawful non-citizen if: the non-citizen is a detainee; and the non-citizen made a valid application for a substantive visa that can be granted when the applicant is in the migration zone; and one of the following applies: the grant of the visa has been refused and the application has been finally determined; (iii) the visa cannot be granted; and the non-citizen has not made another valid application for a substantive visa that can be granted when the applicant is in the migration zone. Callinan (7) An officer must remove as soon as reasonably practicable an unlawful non-citizen if: the non-citizen is a detainee; and Subdivision AI of Division 3 of this Part applies to the non-citizen; and either: the non-citizen has not been immigration cleared; or the non-citizen has not made a valid application for a substantive visa that can be granted when the applicant is in the migration zone; and either: the Minister has not given a notice under paragraph 91F(1)(a) to the non-citizen; or the Minister has given such a notice but the period mentioned in that paragraph has ended and the non-citizen has not, during that period, made a valid application for a substantive visa that can be granted when the applicant is in the migration zone. (8) An officer must remove as soon as reasonably practicable an unlawful non-citizen if: the non-citizen is a detainee; and Subdivision AJ of Division 3 of this Part applies to the non-citizen; and either: the Minister has not given a notice under subsection 91L(1) to the non-citizen; or the Minister has given such a notice but the period mentioned in that subsection has ended and the non-citizen has not, during that period, made a valid application for a substantive visa Callinan that can be granted when the applicant is in the migration zone. (9) An officer must remove as soon as reasonably practicable an unlawful non-citizen if: the non-citizen is a detainee; and Subdivision AK of Division 3 of this Part applies to the non-citizen; and either: the non-citizen has not been immigration cleared; or the non-citizen has not made a valid application for a substantive visa that can be granted when the applicant is in the migration zone; and either: the Minister has not given a notice under subsection 91Q(1) to the non-citizen; or the Minister has given such a notice but the period mentioned in that subsection has ended and the non-citizen has not, during that period, made a valid application for a substantive visa that can be granted when the applicant is in the migration zone. (10) For the purposes of subsections (6) to (9), a valid application under section 137K for revocation of the cancellation of a visa is treated as though it were a valid application for a substantive visa that can be granted when the applicant is in the migration zone." I was not ultimately however persuaded by it. Although alienage and migration, and more particularly the consequences of each are related, they are different concepts. The plaintiff is in no sense an immigrant. Those, and the other matters which I have held to be decisive in concluding that the plaintiff is not an alien, ultimately also conclude this argument against the defendants. In view of these conclusions, it is unnecessary to consider any of the other arguments advanced. Callinan Conclusion I return to the defendants' principal submission that the constitutional meaning of "alien" includes persons who are born in Australia of non-Australian citizens. I would reject it, in summary, for these reasons. It does not matter that the plaintiff is not a citizen within the meaning of the Citizenship Act. The conclusion that I have reached accords with the view that prevailed at the Federal Convention in 1898. It gives rise to a clear and certain rule. That rule has existed for hundreds of years. It is consistent with the assumptions implicit in s 44 of the Constitution. It is a true reflection of the legal concept of alienage at the time of Federation. It is not inconsistent with any majority holdings of this Court. It falls squarely within the language of Gibbs CJ in Pochi v Macphee470, and McHugh J in Re Patterson; Ex parte Taylor471. Because status is involved the Court should not give "alien" any extended meaning. To classify the plaintiff as an alien would be to give the word an extended meaning. No "evolutionary process" or supposed change in the language of the Constitution could, or does require a different outcome. To the extent, if any, that, absent citizenship as conferred or recognized by the Citizenship Act, a person born in Australia as this plaintiff was, is precluded by s 23C of that Act from asserting Australian nationality, the section would be invalid in its operation in relation to her. I turn now to the reformulated questions. Is the plaintiff an alien within the meaning of s 51(xix) of the Constitution? If the answer to 1 is "No", is s 198 of the Migration Act 1958 (Cth) capable of valid application to the plaintiff? By whom should the costs of the case stated to the Full Court of this Honourable Court be borne? The defendants. 470 (1982) 151 CLR 101 at 109-110. 471 (2001) 207 CLR 391 at 429 [115]. |
HIGH COURT OF AUSTRALIA PGA AND THE QUEEN APPELLANT RESPONDENT PGA v The Queen [2012] HCA 21 30 May 2012 ORDER Appeal dismissed. On appeal from the Supreme Court of South Australia Representation D M J Bennett QC with P F Muscat SC and A L Tokley for the appellant (instructed by Legal Services Commission (SA)) M G Hinton QC, Solicitor-General for the State of South Australia with K G Lesses for the respondent and intervening on behalf of the Attorney-General for the State of South Australia (instructed by Director of Public Prosecutions S J Gageler SC, Solicitor-General of the Commonwealth with G A Hill intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) J D McKenna SC with G J D del Villar intervening on behalf of the Attorney- General of the State of Queensland (instructed by Crown Law (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS PGA v The Queen Criminal law – Rape – Husband's immunity from prosecution for rape of wife – Presumption of consent to intercourse by wife in marriage – Appellant charged in 2010 with two counts of rape contrary to s 48 of Criminal Law Consolidation Act 1935 (SA) – Alleged rapes committed in 1963 against then spouse – Legislative amendments enabled institution of proceedings despite lapse of time – Elements of offence of rape in 1963 supplied by common law – Whether in 1963 common law of Australia presumed consent by wife in marriage. Precedent – Judicial method – Development of common law – Whether presumption of consent by wife in marriage was part of common law of Australia – Whether statement of common law in R v L (1991) 174 CLR 379 applied to events alleged to have occurred in 1963. Words and phrases – "common law", "marital exemption", "marital immunity", "presumption of consent", "rape", "retrospective application". Criminal Law Consolidation Act 1935 (SA), s 48. Matrimonial Causes Act 1857 (UK) (20 & 21 Vict c 85). FRENCH CJ, GUMMOW, HAYNE, CRENNAN AND KIEFEL JJ. The appellant and his wife, the complainant, were lawfully married in South Australia on 1 September 1962. At the relevant times in 1963 they remained lawfully married and were cohabiting in South Australia as husband and wife at the house of her parents; there were in force no legal orders or undertakings of any kind which affected their matrimonial relationship. The charges On 5 July 2010, by information of the Director of Public Prosecutions of South Australia, the appellant was charged for trial in the District Court of South Australia with two counts of carnal knowledge, with four counts of assault occasioning actual bodily harm and, what is immediately relevant for this appeal, with two counts of rape (counts 3 and 5) contrary to s 48 of the Criminal Law Consolidation Act 1935 (SA) ("the CLC Act"). The particulars of count 3 were that between 22 March 1963 and 25 March 1963, at Largs Bay in South Australia, the appellant had vaginal sexual intercourse with his wife without her consent. The particulars of count 5 were that on or about 14 April 1963, also at Largs Bay, the appellant had vaginal sexual intercourse with his wife without her consent. The issue before the Court is whether the appellant is correct in his contention that, as a matter of the common law, upon their marriage in 1962 his wife had given her consent to sexual intercourse and thereafter could not retract her consent, at least while they remained lawfully married, with the result that he could not be guilty of raping her as charged by counts 3 and 5. The proposition of law upon which the appellant relies has its source in a statement in extra-judicial writings of Sir Matthew Hale, Chief Justice of the Court of King's Bench (1671-1676), which were first published in 1736 as The History of the Pleas of the Crown. The statement by Hale is more fully set out later in these reasons1, but is encapsulated in the bald proposition that a husband cannot be guilty of a rape he commits upon his wife. It was repeated in East's work A Treatise of the Pleas of the Crown, published in 18032; by Chitty in his A Practical Treatise on the Criminal Law, published in 18163; and by Russell in A 2 Volume 1, Ch 10, §8. 3 Volume 3 at 811. Crennan Treatise on Crimes and Misdemeanors, the first edition of which was published in 18194. In each case the proposition was further repeated in later 19th century editions. What, however, was lacking in all these standard texts was any statement and analysis of reasoning which might have supported the statement by Hale and its continued acceptance. Given this state of affairs, it is perhaps not surprising that the Canadian Criminal Code of 1892 (s 266) and the Criminal Code of Queensland of 1899 (s 347), in defining the crime of rape, included the phrase "not his wife"5. The provisions in the Queensland Code, and those of Western Australia and Tasmania, were to be amended in 1989, 1985 and 1987 respectively6. The attempted abstraction and statement of doctrine in provisions of a code by means of propositions which do not represent generalised deductions from particular instances in the case law occasions difficulty when the common law later is shown to be to different effect7. Justice Holmes, in his essay "Codes, and the Arrangement of the Law"8, wrote: "New cases will arise which will elude the most carefully constructed formula. The common law, proceeding, as we have pointed out, by a series of successive approximations – by a continual reconciliation of cases – is prepared for this, and simply modifies the form of its rule. But what will the court do with a code? If the code is truly law, the court is confined to a verbal construction of the rule as expressed, and must decide the case wrong. If the court, on the other hand, is at liberty to decide ex 4 Volume 1, Bk 2, Ch 6, §1. 5 By 1984 over 40 of the United States retained statute laws conferring some form of marital exemption for rape: People v Liberta 474 NE 2d 567 at 572-573 (1984). However, in that case the New York provision was held invalid as denying the the United States equal protection required by Constitution. the 14th Amendment 6 See R v L (1991) 174 CLR 379 at 402; [1991] HCA 48. 7 See Murray v The Queen (2002) 211 CLR 193 at 206-207 [40]; [2002] HCA 26; Director of Public Prosecutions (NT) v WJI (2004) 219 CLR 43 at 53-54 [30]-[31]; [2004] HCA 47. (1870) 5 American Law Review 1, reprinted in Novick (ed), The Collected Works of Justice Holmes, (1995), vol 1, 212 at 213. Crennan ratione legis, – that is, if it may take into account that the code is only intended to declare the judicial rule, and has done so defectively, and may then go on and supply the defect, – the code is not law, but a mere text-book recommended by the government as containing all at present known on the subject." Indeed, in 1888, among the 13 judges sitting in the Court for Crown Cases Reserved, on the case stated in R v Clarence9 with respect to charges of "unlawfully and maliciously inflicting grievous bodily harm" and "assault occasioning actual bodily harm", contrary to s 20 and s 47 respectively of the Offences against the Person Act 1861 (UK)10 ("the 1861 UK Act"), differing views had been expressed as to whether the consent of the wife to intercourse with her husband had been vitiated by his failure to disclose to her that he was suffering from a contagious venereal disease. Thereafter, in the annotation to s 48 of the 1861 UK Act which appeared in Halsbury's Statutes of England, published in 192911, it was said: "It is said that a husband cannot be guilty of rape upon his wife as a principal in the first degree". (emphasis added) The 28th edition of Archbold's Pleading, Evidence & Practice in Criminal Cases, published in 1931, four years before the enactment of the CLC Act, cited Hale for the proposition expressed as: "It is a general proposition that a husband cannot be guilty of a rape upon his wife ... but it would seem that the proposition does not necessarily extend to every possible case"12. In the intervening period there appears to have been no reported case in England in which a husband had been prosecuted for the rape of his wife during their (1888) 22 QBD 23. 10 24 & 25 Vict c 100. 11 Volume 4 at 615. 13 See R v R [1992] 1 AC 599 at 614. Crennan As it stood in 1963, s 48 of the CLC Act stated: "Any person convicted of rape shall be guilty of felony, and liable to be imprisoned for life, and may be whipped." It is accepted that the elements of the offence of rape identified in s 48 were supplied by the common law. Section 4 of the CLC Act had wholly repealed The Criminal Law Consolidation Act 1876 (SA). As amended by s 13 and the Schedule to the Criminal Law Amendment Act 1925 (SA), s 60 of the 1876 statute had read: "Whosoever shall be convicted of the crime of rape shall be guilty of felony, and, being convicted thereof, shall be liable to be imprisoned for life, with hard labor, and may be whipped."14 The scheme of the legislation in South Australia, in its various forms, was to classify the offence of rape as a felony and to specify the range of punishments upon conviction. This followed the pattern in s 48 of the 1861 UK Act. The legislative emphasis upon the classification of the crime and the punishments which might be inflicted, leaving the elements of the crime itself to the common law, reflected past fluctuations in the statute law. Shortly after the enactment of the 1861 UK Act, there appeared in the 5th edition (1877) of Russell's work, A Treatise on Crimes and Misdemeanors15, the following: "This offence formerly was, for many years, justly visited with capital punishment; but it does not appear to have been regarded as equally heinous at all periods of our Constitution. Anciently, indeed, it appears to have been treated as a felony, and, consequently, punishable with death; but this was afterwards thought too hard; and, in its stead, another severe but not capital punishment was inflicted by William the Conqueror, namely, castration and loss of eyes, which continued till after Bracton wrote, in the reign of Henry III. The punishment for rape was still further mitigated, in the reign of Edward I, by the statute of Westm 1, c 13, which reduced the offence to a trespass, and subjected the party to 14 The Criminal Law Amendment Act 1925 (SA) omitted the words "or any term not less than four years". 15 Volume 1 at 858 (footnote omitted). Crennan two years' imprisonment, and a fine at the King's will. This lenity, however, is said to have been productive of terrible consequences; and it was, therefore, found necessary, in about ten years afterwards, and in the same reign, again to make the offence of forcible rape a felony, by the statute of Westm 2, c 34. The punishment was still further enhanced by the 18 Eliz c 7, s 1." The lapse of time Something should be said respecting the legal significance of the length of time between the alleged conduct in 1963 and the institution of proceedings in 2010. As the CLC Act stood in 1963, it included s 76a16. The effect of s 76a was that in respect of offences, including an offence against s 48, no information was to be laid more than three years after the commission of the offence. Section 76a was repealed by the Criminal Law Consolidation Act Amendment Act 1985 (SA). However, in R v Pinder17 it was held that the repeal of s 76a did not authorise the laying of an information which would deprive a person of immunity already acquired before the repeal of s 76a. The response of the legislature was to reverse the effect of this decision by the enactment of s 72A of the CLC Act by the Criminal Law Consolidation (Abolition of Time Limit for Prosecution of Certain Sexual Offences) Amendment Act 2003 (SA). The result was that a person, such as the appellant, who had acquired immunity by reason of the operation of the repealed s 76a had lost that immunity and could now be prosecuted. Changes have been made to the elements of the offence of rape, beginning with the Criminal Law Consolidation Act Amendment Act 1976 (SA), but it has not been submitted that these changes to the elements of the offence apply retrospectively. The permanent stay application On 6 July 2010 Herriman DCJ gave reasons for dismissing an application by the appellant for a permanent stay of proceedings. His Honour's reasons included the following passage: 16 This had been added by the Criminal Law Consolidation Act Amendment Act 1952 17 (1989) 155 LSJS 65. Crennan "The complainant's evidence is that in 1960 and 1961, when she was 15 or 16, the accused was in a relationship with her and she says that at that time they were living in her parents' house, albeit that he slept in a separate room. They were ultimately married in September 1962, when she was 17, but she says that before that age she had sexual intercourse with him on two occasions. Those two occasions represent counts 1 and 2 on the information. The parties then lived as husband and wife in her parents' house until mid-1963, when they went to their own premises. They separated in The complainant says that on two occasions, in March and April 1963, which she relates to times immediately before and soon after the birth of their first child, the accused had forcible sexual intercourse with her against her will. She says that she did not, at any time during the marriage, complain of carnal knowledge or, indeed, of that forced sexual intercourse. The time for laying of any such charges was then within three years of the act, so that the time for laying a complaint with respect to the carnal knowledge counts expired in about 1964 and, with respect to rape, in about 1966. Those time limits were not abolished until the year 2003. More importantly, there was, and, indeed, there remains, a real question as to whether in 1963 an offence of rape in marriage, as it is commonly called, was then part of the common law of this State." His Honour went on to stay the trial pending the statement for the Full Court of the Supreme Court of South Australia of a case under s 350(2)(b) of the CLC Act. This dealt with the argument of the appellant that at the time of the alleged offences in 1963, he could not, as a matter of law, have committed the crime of rape upon his wife. What was said in 1991 by four of the five members of this Court in R v L18 has been treated by the parties in the present litigation at least as having the result that by 1991 it was no longer the common law in Australia that by 18 (1991) 174 CLR 379 at 390 per Mason CJ, Deane and Toohey JJ, 405 per Crennan marriage a wife gave irrevocable consent to sexual intercourse with her husband. Herriman DCJ saw the outstanding issue for determination as being "was the offence of rape by one lawful spouse of another ... an offence known to the law of South Australia as at 1963?". A question to this effect was stated for consideration by the Full Court19. The Court (Doyle CJ and White J; Gray J dissenting) ordered that the question be answered as follows: "The defendant is liable at law to be found guilty of the offences of rape charged in count 3 and count 5 of the Information, notwithstanding that at the time of the alleged offence he was married to the alleged victim and was cohabiting with her, the marriage giving rise to no presumption of consent on her part to intercourse with her husband, and giving rise to no irrebuttable presumption to that effect." Gray J was of the contrary opinion and would have answered the question in the negative and applied the presumption of irrevocable consent. The appeal to this Court By special leave the appellant appeals to this Court seeking an order setting aside the answer given by Doyle CJ and White J. By Notice of Contention the respondent submits that, regardless of what follows from the decision in R v L20, the answer by Doyle CJ and White J, the majority in the Full Court, is to be supported on the basis that: (a) "the supposed marital exemption to the offence of rape ... was never part of the common law of Australia"; or (b) "if it ever was part of the common law of Australia, it ceased to be so as at the date of the commission of the offences in this matter". For the reasons which follow, if the "marital exemption" ever was part of the common law of Australia, it had ceased to be so by the time of the enactment in 1935 of s 48 of the CLC Act and thus before the date of the commission of the alleged offences charged as count 3 and count 5. It follows that the appeal must be dismissed. That conclusion does not involve any retrospective variation or modification by this Court of a settled rule of the common law. At the time of 19 (2010) 109 SASR 1. The Full Court sat as the Court of Criminal Appeal: see Lipohar v The Queen (1999) 200 CLR 485 at 504 [41]; [1999] HCA 65. 20 (1991) 174 CLR 379. Crennan the commission of the alleged offence the common law rule for which the appellant contends did not exist. The term "the common law" The references above to "the common law" and "the common law of Australia" require further analysis before consideration of the immediate issue concerning the crime of rape upon which this appeal turns. In his contribution under the heading "common law" in The New Oxford Companion to Law21, Professor A W B Simpson distinguishes five senses in which that term is used. The primary sense is that body of non-statutory law which was common throughout the realm and so applicable to all, rather than local or personal in its application. An example of such local or personal laws is the customary mining laws which had applied in various localities in England22. The second sense of the term is institutional, to identify the body of law administered in England by the three royal courts of justice, the King's Bench, Common Pleas and Exchequer, until the third quarter of the 19th century. The third sense is a corollary of the second, the expression "the common law" differentiating the law administered by those courts from the principles of equity administered in the Court of Chancery (and, one should add, from the law applied in the ecclesiastical courts until 1857 and the law applied in courts of admiralty). In that regard, Sir George Jessel MR emphasised in In re Hallett's Estate23 that, while the rules of the common law were "supposed to have been established from time immemorial", those of equity had been invented, altered, improved, and refined by the Chancellors from time to time, and he instanced "the separate use of [ie trust for] a married woman". With the development since the second half of the 19th century of appellate structures governing all species of primary decisions, judicial reasoning has tended not to invoke time immemorial and rather to follow the course which had been taken by the Chancellors in expounding legal principle. 21 Cane and Conaghan (eds), The New Oxford Companion to Law, (2008) at 164-166. 22 See TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576 at 587 [30]-[31]; [2010] HCA 49. 23 (1879) 13 Ch D 696 at 710. Crennan The fourth and fifth senses of "common law" identified by Professor Simpson are as follows: "The term 'common law' came, in a fourth sense, to have the connotation of law based on cases, or law evolved through adjudication in particular cases, as opposed to law derived from the analysis and exposition of authoritative texts. Indeed sometimes 'common law' is more or less synonymous with the expression 'case law'. Since the common law was developed by the judges, interacting with barristers engaged in litigation, the expression 'common law' came, in a related fifth sense, to mean law made by judges." This draws attention to a difficulty in the appellant's reliance in this case upon a principle of the common law based upon a statement in a text published in 1736, many years after the death of the author, without citation of prior authority and lacking subsequent exposition in cases where it has been repeated. In that regard, observations by six members of the Court in the Native Title Act Case24 are significant. Their Honours noted that the term "common law" might be understood not only as a body of law created and defined by the courts in the past, but also as a body of law the content of which, having been declared by the courts at a particular time, might be developed thereafter and be declared to be different. Writing at the time of the establishment of this Court, and when he was Professor of Law at the University of Adelaide, Sir John Salmond said25: "The statement that a precedent gains in authority with age must be read subject to an important qualification. Up to a certain point a human being grows in strength as he grows in age; but this is true only within narrow limits. So with the authority of judicial decisions. A moderate 24 Western Australia v The Commonwealth (1995) 183 CLR 373 at 484-486; [1995] HCA 47. 25 Salmond, "The Theory of Judicial Precedents", (1900) 16 Law Quarterly Review 376 at 383. See also Holmes, "Codes, and the Arrangement of the Law", (1870) 5 American Law Review 1, reprinted in Novick (ed), The Collected Works of Justice Holmes, (1995), vol 1, 212 at 212-213. Crennan lapse of time will give added vigour to a precedent, but after a still longer time the opposite effect may be produced, not indeed directly, but indirectly through the accidental conflict of the ancient and perhaps partially forgotten principle with later decisions. Without having been expressly overruled or intentionally departed from, it may become in course of time no longer really consistent with the course of judicial decision. In this way the tooth of time will eat away an ancient precedent, and gradually deprive it of all authority and validity. The law becomes animated by a different spirit and assumes a different course, and the older decisions become obsolete and inoperative." The term "the common law of Australia" Finally, in his treatment of "common law", Professor Simpson refers to the expansion of British imperial power and the creation of "a common law world". The common law was received in the Province of South Australia with effect 19 February 1836, but despite the differing dates of the reception of the common law in the Australian colonies, the common law was not disintegrated into six separate bodies of law; further, what was received included the method of the common law, which in Australia involved judicial determination of particular parts of the English common law which were inapplicable to local conditions26. The "common law" which was received did not include the jurisdiction with respect to matrimonial causes (including suits for declarations of nullity of marriage, judicial separation (a mensa et thoro) and restitution of conjugal rights) which in England was exercised by the ecclesiastical courts. This exclusion appears to have been a deliberate decision by the Imperial authorities27. Further, unlike the situation in England, in the Australian colonies there was to be no 26 Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 at 466-467; [1995] HCA 44; Lipohar v The Queen (1999) 200 CLR 485 at 508-509 [54]-[55]; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 557-558 [99]-[101], 559-560 [104], 588-589 [193]-[196]; [2001] HCA 29; R v Gardener and Yeurs (1829) NSW Sel Cas (Dowling) 108; Ex parte The Rev George King (1861) 2 Legge 1307; Campbell v Kerr (1886) 12 VLR 384. 27 Castles, An Australian Legal History, (1982) at 140-142; Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 242. Crennan established religion28. The Anglican church was expressly enjoined from exercising any authority or jurisdiction in matrimonial causes29. The result was that the jurisdiction with respect to matrimonial causes, as well as divorce, which has been exercised by the colonial and State courts always has been derived from local statute law, not received "common law". Further, in Skelton v Collins30, Windeyer J said of the reception in the Australian colonies of the doctrines and principles of the common law: "To suppose that this was a body of rules waiting always to be declared and applied may be for some people satisfying as an abstract theory. But it is simply not true in fact. It overlooks the creative element in the work of courts. It would mean for example, that the principle of Donoghue v Stevenson31, decided in the House of Lords in 1932 by a majority of three to two, became law in Sydney Cove on 26th January 1788 or was in 1828 made part of the law of New South Wales by 9 Geo IV c 83, s 25. In a system based, as ours is, on case law and precedent there is both an inductive and a deductive element in judicial reasoning, especially in a court of final appeal for a particular realm or territory." Inductive and deductive reasoning This creative element of both inductive and deductive reasoning in the work of the courts in Australia includes the taking of such steps as those identified by Sir Owen Dixon in his address "Concerning Judicial Method"32. In his words, these are: (i) extending "the application of accepted principles to new 28 Wylde v Attorney-General (NSW) (at the Relation of Ashelford) (1948) 78 CLR 224 at 257, 275-276, 285-286, 298; [1948] HCA 39; Scandrett v Dowling (1992) 27 NSWLR 483 at 534-541; Shaw, The Story of Australia, (1955) at 98-100. 29 Wylde v Attorney-General (NSW) (at the Relation of Ashelford) (1948) 78 CLR 224 at 284-285; Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 242. 30 (1966) 115 CLR 94 at 134; [1966] HCA 14. 32 (1956) 29 Australian Law Journal 468 at 472. Crennan cases"; (ii) reasoning "from the more fundamental of settled legal principles to new conclusions"; and (iii) deciding "that a category is not closed against unforseen instances which in reason might be subsumed thereunder". To these steps may be added one which is determinative of the present appeal. It is that where the reason or "foundation"33 of a rule of the common law depends upon another rule which, by reason of statutory intervention or a shift in the case law, is no longer maintained, the first rule has become no more than a legal fiction and is not to be maintained. An example is provided by a division of opinion in Brown v Holloway34 and Edwards v Porter35 respectively between this Court and the House of Lords, as to the consequences of the Married Women's Property Act 1882 (UK) ("the 1882 UK Act") and its Queensland counterpart36. Of those cases, it was said in Thompson v Australian Capital Television Pty Ltd37: "The issue [in Edwards v Porter] concerned the effect of the provision in [the 1882 UK Act] that married women were to be capable of suing or being sued as if each were a feme sole, the immediate issue being whether a husband remained liable at common law with his wife for a tort committed by her during joint coverture. In this Court it had previously been decided by Griffith CJ, O'Connor and Isaacs JJ that the liability of the husband was gone38. At common law the wife had been liable for her own torts but there was no way in which that liability could be enforced save by an action against her in which her spouse was joined as a party. The joinder of the husband was necessary only because the liability of the wife could not be made effective without his joinder as a party. The 33 See the statement by Lord Penzance in Holmes v Simmons (1868) LR 1 P & D 523 34 (1909) 10 CLR 89; [1909] HCA 79. 36 Married Women's Property Act 1890 (Q). 37 (1996) 186 CLR 574 at 614-615; [1996] HCA 38. See also at 584-585, 591. 38 Brown v Holloway (1909) 10 CLR 89. Crennan legislation39 removed that procedural disability and therefore the reason which had rendered the husband a necessary party. In Edwards v Porter, without consideration of the reasoning of this Court in Brown v Holloway, their Lordships divided 3:2 in favour of a decision that, notwithstanding the legislation, the husband remained liable to suit with his wife for her torts40. One of the minority, Viscount Cave 'The whole reason and justification for joining a husband in an action against his wife for her post-nuptial tort has therefore disappeared; and it would seem to follow, upon the principle "cessante ratione cessat lex," that he is no longer a necessary or proper party to such an action.'" It is with this reasoning in mind that there is to be understood the earlier statement by Dawson J in R v L42 that: "whatever may have been the position in the past, the institution of marriage in its present form provides no foundation for a presumption which has the effect of denying that consent to intercourse in marriage can, expressly or impliedly, be withdrawn. There being no longer any foundation for the presumption, it becomes nothing more than a fiction which forms no part of the common law." 39 In Brown v Holloway, the Married Women's Property Act 1890 (Q). [See also Married Women's Property Act 1883 (Tas), Married Women's Property Act 1883-4 (SA), Married Women's Property Act 1884 (Vic), Married Women's Property Act 1892 (WA), Married Women's Property Act 1893 (NSW).] 40 Later, in Ford v Ford (1947) 73 CLR 524 at 528; [1947] HCA 7, Latham CJ expressed the opinion that, in accordance with the then prevailing doctrine in Piro v W Foster & Co Ltd (1943) 68 CLR 313; [1943] HCA 32, this Court would follow the House of Lords at the expense of its own earlier decision. In any event, legislation in all States and Territories ensured that married status has no effect on the rights and liabilities of a woman in tort: Balkin and Davis, Law of Torts, 2nd ed (1996) at 836. 41 Edwards v Porter [1925] AC 1 at 10. 42 (1991) 174 CLR 379 at 405. Crennan That statement points the way to the resolution of this appeal. The common law crime of rape The point should first be made that, the issue of irrevocable consent by a wife apart, the common law with respect to the crime of rape did not remain static. Sir Edward Coke in The First Part of the Institutes of the Laws of England early in the 17th century wrote43: "'Rape.' Raptus is, when a man hath carnall knowledge of a woman by force and against her will." In 1957 in their joint reasons in Papadimitropoulos v The Queen44, Dixon CJ, McTiernan, Webb, Kitto and Taylor JJ referred to Australian decisions given in 1915, 1919 and 1947 when stating: "The modern history of the crime of rape shows a tendency to extend the application of the constituent elements of the offence. The 'violenter et felonice rapuit' of the old Latin indictment is now satisfied although there be no use of force: R v Bourke45. The 'contra voluntatem suam' requires only a negative absence of consent; (as to the need of the man's being aware of the absence of consent, see R v Lambert 46). The 'violenter et felonice carnaliter cognovit' is established if there has been some degree of penetration although slight, and no more force has been used than is required to effect it: R v Bourke47; R v Burles48." 43 (1628), Section 190. 44 (1957) 98 CLR 249 at 255; [1957] HCA 74. 45 [1915] VLR 289. 46 [1919] VLR 205 at 213. 47 [1915] VLR 289. 48 [1947] VLR 392. Crennan Their Honours added49: "To return to the central point; rape is carnal knowledge of a woman without her consent: carnal knowledge is the physical fact of penetration; it is the consent to that which is in question; such a consent demands a perception as to what is about to take place, as to the identity of the man and the character of what he is doing. But once the consent is comprehending and actual the inducing causes cannot destroy its reality and leave the man guilty of rape." The reference in Papadimitropoulos to "[t]he modern history of the crime of rape" may be seen as foreshadowing two points with respect to the development of the common law made by Dixon CJ shortly thereafter. In Commissioner for Railways (NSW) v Scott50 Dixon CJ spoke of the gradual growth of the legal system by proceeding by reasoning from accepted notions about remedies and rights to the evolution of rules "to govern new or changed situations to which an ever developing social order gives rise"; he went on to observe that "[t]he resources of the law for superseding or avoiding the obsolescent have for the most part proved sufficient". It is upon that sufficiency that the respondent relies in this appeal. The statement by Hale What now follows in these reasons emphasises that some care is required when visiting what Professor Glanville Williams described as "the museum of the English criminal law"51. The relevant passage in The History of the Pleas of the Crown appears in Ch 58, headed "Concerning felonies by act of parliament, and first concerning rape". The importance of statutory intervention in this respect may be seen from the passage from Russell's treatise set out earlier in these reasons52. 49 (1957) 98 CLR 249 at 261. 50 (1959) 102 CLR 392 at 399-400; [1959] HCA 29. 51 Williams, "The Legal Unity of Husband and Wife", (1947) 10 Modern Law Review Crennan Hale referred to the statement by Bracton that it was a good exception to an appeal (ie formal accusation) of rape that the parties were living in amicable concubinage, adding "and the reason was, because that unlawful cohabitation carried a presumption in law, that it was not against her will". Hale went on to say: "But this is no exception at this day[. I]t may be an evidence of an assent, but it is not necessary that it should be so, for the woman may forsake that unlawful course of life." (emphasis added) This is followed by the critical statement: "But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." (emphasis added) Several points may be made immediately. First, it is apparent from Hale's treatment of Bracton's view in the 13th century of concubinage that he did not regard what had been said in past times as necessarily expressing the common law "at this day" four centuries later. Secondly, Hale gave, as the reason for the proposition that a husband cannot be guilty of a rape upon his wife, the nature in law of the matrimonial relationship. But, in that regard, it was well settled that marriage was constituted by the present consent of the parties expressed under such circumstances as the law required, but without the requirement for consummation to complete the marriage53. Further, as explained later in these reasons54, the ecclesiastical courts did not enforce any duty of sexual intercourse between husband and wife. Thirdly, Hale did not explain the character in law of the proposition respecting rape in marriage, whether it stated an element of the offence, a defence, or an immunity. Nor did Hale refer to any prior cases which might be 53 Dalrymple v Dalrymple (1811) 2 Hag Con 54 at 62-63 [161 ER 665 at 668-669]; R v Millis (1844) 10 Cl & F 534 at 719 [8 ER 844 at 913]. Crennan said to illustrate and support the proposition. From the immediately preceding treatment by Hale of Bracton it is apparent that the proposition is more than a bar to the reception of evidence by the wife or a statement of her absolute testimonial incompetence in this respect. This is further apparent from what immediately follows in Hale's text. This is a treatment of what had been decided at the trial of Lord Audley before the House of Lords in 163155 as follows: "A the husband of B intends to prostitute her to a rape by C against her will, and C accordingly doth ravish her, A being present, and assisting to this rape: in this case these points were resolved, 1. That this was a rape in C notwithstanding the husband assisted in it, for tho in marriage she hath given up her body to her husband, she is not to be by him prostituted to another. 2. That the husband being present, aiding and assisting, is also guilty as a principal in rape, and therefore, altho the wife cannot have an appeal of rape against her husband, yet he is indictable for it at the king's suit as a principal. 3. That in this case the wife may be a witness against her husband, and accordingly she was admitted, and A and C were both executed." It should be added that in the 19th century, it was held in the Supreme Judicial Court of Massachusetts56 that there should be no arrest of judgment on the ground that the indictment had not alleged that the complainant was not the wife of any of those charged with raping her. The relevant passage from Hale had been cited, but Bigelow J responded57: "Such an averment has never been deemed essential in indictments for rape, either in this country or in England. The precedents contain no such allegation. See authorities before cited. A husband may be guilty at common law as principal in the second degree of a rape on his wife by assisting another man to commit a rape upon her; Lord Audley's case, 3 Howell's State Trials, 401; and under our statutes he would be liable to be punished in the same manner as the principal felon. Rev Sts c 133, §1. An indictment charging him as principal would therefore be valid. 55 The Trial of Lord Audley (1631) 3 St Tr 401. 56 Commonwealth v Fogerty 74 Mass 489 (1857). 57 74 Mass 489 at 491 (1857). Crennan Of course, it would always be competent for a party indicted to show, in defence of a charge of rape alleged to be actually committed by himself, that the woman on whom it was charged to have been committed was his wife. But it is not necessary to negative the fact in the indictment." Thus it will be seen that whatever its character in law, Hale's proposition was not framed in absolute terms, given his treatment of Lord Audley's Case. But what is important for the present appeal is further consideration of the reason given by Hale, which was based in an understanding of the law of matrimonial status in the second half of the 17th century when he wrote. Matrimonial status and its incidents in England In the period in which Hale wrote, and until the significant legislative changes in the course of the 19th century, each of the three jurisdictions in England represented by the courts of common law, the courts of equity and the ecclesiastical courts, had distinct roles in matters affecting matrimonial status58. The law applied in the common law courts had absorbed much canon law learning and it defined basic concepts such as legitimacy, procedural rights at law between spouses, and the duties and responsibilities of husbands, including their rights and duties in respect of the contracts and torts of their wives. Marriage had important consequences in property law, for establishing and securing inheritance of legal estates in land. In such contexts a court of common law would determine whether there had been a marriage. The common law also provided forms of action such as breach of promise to marry, criminal conversation by adulterers and seduction of daughters. As already observed59 by reference to the statement of Sir George Jessel MR in In re Hallett's Estate60, equity intervened in a notable fashion by means of the trust to reserve separate property for a wife after her marriage. In his lecture entitled "Of Husband and Wife", Chancellor Kent, after referring to the incompetency at common law of a married woman to deal with her property 58 See the discussion by Professor Cornish in The Oxford History of the Laws of England, (2010), vol 13 at 724-726. 60 (1879) 13 Ch D 696 at 710. Crennan as a feme sole61, went on to contrast the position in equity and described the procedural consequences as follows62: "The wife being enabled in equity to act upon property in the hands of her trustees, she is treated in that court as having interests and obligations distinct from those of her husband. She may institute a suit, by her next friend, against him, and she may obtain an order to defend separately suits against her; and when compelled to sue her husband in equity, the court may order him to make her a reasonable allowance in money to carry on the suit." The provision in the 1882 UK Act and in the corresponding colonial married women's property legislation63 that a married woman was capable of acquiring, holding and disposing of any real or personal property as her separate property, as if she were a feme sole, "without the intervention of any trustee", represented a triumph in statutory form of the principles of equity64. However, it was not until 1862, with the decision of Lord Westbury LC in Hunt v Hunt65, that the Court of Chancery enforced a negative covenant in a deed of separation not to sue in the ecclesiastical courts (or after 1857 in the Divorce Court) for restitution of conjugal rights. Ecclesiastical courts in England had limited powers to order separation of spouses but could not order the dissolution of marriage. This required a statute. Hale wrote in a period in which Parliamentary intervention was beginning. In 1669 a private Act was granted to Lord de Roos, and in 1692 to the Duke of Norfolk; only five such divorces were granted before 1714, but between 1800 and 1850 there were 9066. (Divorce by private Act of the legislature was to be 61 Kent, Commentaries on American Law, (1827), vol 2, 109 at 136. 62 Kent, Commentaries on American Law, (1827), vol 2, 109 at 137. 63 See fn 39. 64 Yerkey v Jones (1939) 63 CLR 649 at 675-676; [1939] HCA 3. 65 (1862) 4 De G F & J 221 [45 ER 1168]; see also Fielding v Fielding [1921] NZLR 66 Sir Francis Jeune, "Divorce", Encyclopaedia Britannica, 10th ed (1902), vol 27, Crennan attempted in 1853 in New South Wales, but the Instructions issued to colonial governors required that any Bill dealing with divorce be reserved for the Queen's pleasure67 and the Royal Assent was only given to the Bill after some delay68.) However, it should be noted that in Scotland since the 16th century, provision had been made for judicial grant of divorce on grounds of adultery of either spouse or malicious desertion for at least four years69. Given the significant settlement of Scots immigrants in the Australian colonies, this element of their inheritance should not be overlooked in understanding the development of Australian institutions70. In 1891, the English Court of Appeal held that habeas corpus would issue to free a wife confined by her husband in his house in order to enforce restitution of conjugal rights71. In R v L72 Brennan J said: "The ecclesiastical courts made decrees for the restitution of conjugal rights but the decree commanded a general resumption of cohabitation and did not purport to compel a spouse to do or abstain from doing particular acts in performance of a connubial obligation73. The legal significance of connubial obligations was to be found in the making of decrees based on breaches of those obligations. Breaches were established only by proof of conduct that was a gross infringement of a connubial right or by proof of a 67 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 68 Bennett, A History of the Supreme Court of New South Wales, (1974) at 144-145. 69 Walker, A Legal History of Scotland, (2001), vol 6 at 658, 661. 70 See generally, McPherson, "Scots Law in the Colonies", [1995] Juridical Review 191. 71 R v Jackson [1891] 1 QB 671. 72 (1991) 174 CLR 379 at 393. 73 Hunt v Hunt (1943) 62 WN (NSW) 129. Crennan continuous failure to perform a connubial obligation in satisfaction of the corresponding connubial right of the other spouse. The courts exercising jurisdiction in matrimonial causes recognized the mutual rights of husband and wife relating to sexual intercourse and, in granting or withholding their decrees, ascertained whether either party had wilfully and persistently refused to accord the right of sexual intercourse to the other party. From the days of the ecclesiastical courts, however, it was accepted that no mandatory order to compel sexual intercourse would be made." In 1933, when describing the nature and incidents of a decree for restitution of conjugal rights under the jurisdiction conferred by Pt III (ss 6-11) of the Matrimonial Causes Act 1899 (NSW), Dixon J observed in Bartlett v Bartlett74 that, so long as this remedy was retained, it must be treated as a process imposing an obligation, the performance or non-performance of which is ascertainable, and he added75: "On the one hand, it is clear that the obligation requires cohabitation, a physical dwelling together. On the other hand, it is clear that it does not require the resumption of sexual intercourse. It cannot, in fact, and in principle ought not to be understood as attempting to, control motives, feelings, emotions, sentiment or states of mind. Its operation must be limited to overt acts and conduct. ... Perhaps, all that can be said is that the decree of restitution requires the spouse against whom it is directed again to dwell with the other spouse in outward acceptance of the relationship, to act as if they were husband and wife maintaining a matrimonial home and to commence no course of conduct intended to cause a separation." Evatt J set out76 a passage from the reasons of Salmond J in Fielding v Fielding77 in which, with reference to the jurisdiction conferred by s 7 of the Divorce and Matrimonial Causes Act 1908 (NZ) for the issue of decrees for restitution of conjugal rights, Salmond J had said: 74 (1933) 50 CLR 3 at 15-16; [1933] HCA 53. 75 (1933) 50 CLR 3 at 16. 76 (1933) 50 CLR 3 at 18. 77 [1921] NZLR 1069 at 1071. Crennan "The Ecclesiastical Courts [in England] never professed or attempted by means of decrees for restitution of conjugal rights, and imprisonment for disobedience to such decrees, to enforce any duty of sexual intercourse between husband and wife. The basis of such a decree was the wrongful refusal of matrimonial cohabitation. The duty enforced was merely the duty of husband and wife to live together under the same roof in the normal relationship of husband and wife, but without reference to the question of intercourse." The divorce legislation The passage of the Matrimonial Causes Act 1857 (UK)78 ("the 1857 UK Act") later was described by Dicey as "a triumph of individualistic liberalism and of common justice"79. But it was the culmination of many years of agitation. Of the delay, Professor Cornish writes80: "It is less easy to explain why, given the long availability of judicial divorce in Scotland and its spread to other Protestant countries, the step did not come earlier. Jeremy Bentham, for instance, had been an advocate of fully consensual divorce, but subject to time delays for reflection and a bar on the re-marriage of a guilty party." (footnote omitted) The 1857 UK Act terminated the jurisdiction of the ecclesiastical courts in matrimonial matters (s 2) and vested that jurisdiction in the new Court for Divorce and Matrimonial Causes (s 6), but the Court was to act on the principles and rules which had been applied by the ecclesiastical courts (s 22). A decree dissolving marriage might be pronounced on a petition by the husband alleging adultery by the wife, and on a wife's petition, alleging adultery coupled with desertion for at least two years and without reasonable excuse, or alleging adultery with aggravated circumstances including "such Cruelty as without Adultery would have entitled her to a Divorce à Mensâ et Thoro" (ss 27 and 31). 78 20 & 21 Vict c 85. 79 Lectures on the Relation between Law and Public Opinion in England during the Nineteenth Century, 2nd ed (1914) at 347. 80 The Oxford History of the Laws of England, (2010), vol 13 at 781. Crennan In 1858 the Secretary of State for the Colonies conveyed to all colonial governors and legislatures the wish of the Imperial Government that steps be taken to introduce, "as nearly as the circumstances of the Colony will admit", the provisions of the 1857 UK Act81. The colonies acted accordingly, but at different paces: Matrimonial Causes Act 1858 (SA), Matrimonial Causes Act 1860 (Tas), Matrimonial Causes Act 1861 (Vic), Matrimonial Causes Act 1863 (WA), Matrimonial Causes Act 1865 (Q), Matrimonial Causes Act 1873 (NSW). This legislation did not need to abolish in the colonies the non-existent jurisdiction of ecclesiastical courts. Rather, it conferred jurisdiction in matrimonial causes on the Supreme Courts. The differential treatment in the 1857 UK Act between the grounds of divorce available to husbands and wives was carried into the initial colonial legislation. But there followed attempts by New South Wales and Victoria to assimilate and expand the grounds for divorce; the Governor's Instructions required these Bills to be reserved for the Royal Assent on advice of the Imperial Government and, initially, in circumstances of considerable controversy in the colonies, the Royal Pressure for reform of legislation respecting divorce was, however, maintained, particularly in the more populous colonies of New South Wales and Victoria83, and eventually succeeded. In Victoria The Divorce Act 1889 provided extended grounds for divorce84. Advocates of the women's movement in New South Wales were able to press for further liberalisation of the laws, despite the opposition of the churches85. The Divorce Amendment and Extension Act 1892 81 The Despatch by Lord Stanley to the Governor of New South Wales for presentation to both Houses of the Parliament is reproduced in Votes and Proceedings of the Parliament of New South Wales 1859-1860, vol 4 at 1169. 82 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 83 See the account given by Finlay, To Have But Not to Hold, (2005), Ch 3. 84 Which included adultery, desertion for a period of three years and upwards, habitual drunkenness, habitual cruelty to a wife, conviction for attempt to murder a wife, conviction for having assaulted a wife with intent to cause grievous bodily harm, or repeated assaults on a wife: The Divorce Act 1889 (Vic), s 11. 85 Grimshaw et al, Creating a Nation, (1994) at 172. Crennan (NSW) was expressed in terms similar to those of the Victorian Act. The extended grounds gave colonial women greater access to divorce than their contemporaries in the United Kingdom. Conclusions What was the immediate significance of these 19th century legislative measures for the continued vitality of the reasoning upon which Hale in the 17th century had based his proposition respecting "rape in marriage"? In answering that question it is convenient first to repeat what was said by the Supreme Court of New Jersey in State v Smith86 as follows: "We believe that Hale's statements concerning the common law of spousal rape derived from the nature of marriage at a particular time in history. Hale stated the rule in terms of an implied matrimonial consent to intercourse which the wife could not retract. This reasoning may have been persuasive during Hale's time, when marriages were effectively permanent, ending only by death or an act of Parliament87. Since the matrimonial vow itself was not retractable, Hale may have believed that neither was the implied consent to conjugal rights. Consequently, he stated the rule in absolute terms, as if it were applicable without exception to all marriage relationships. In the years since Hale's formulation of the rule, attitudes towards the permanency of marriage have changed and divorce has become far easier to obtain. The rule, formulated under vastly different conditions, need not prevail when those conditions have changed." To that may be added the statement in that case88: "If a wife can exercise a legal right to separate from her husband and eventually terminate the marriage 'contract', may she not also revoke a 'term' of that contract, namely, consent to intercourse?" 86 426 A 2d 38 at 42 (1981). 87 Clark, The Law of Domestic Relations in the United States, (1968) at 280-282. 88 426 A 2d 38 at 44 (1981). Crennan In similar vein is the statement made from the New South Wales Supreme Court bench by Sir William Windeyer in 1886, in which he regretted that while the State regarded marriage as a civil contract and in this case the contract had been destroyed by the husband "having done his best to degrade you", by reason of the then limited grounds of divorce then available to her in New South Wales, she had no redress89. Insofar as Hale's proposition respecting the nature of the matrimonial contract was derived from an understanding of the principles applied by the ecclesiastical courts, the following may be said. First, as Lord Brougham observed in R v Millis90: "[Marriage] was always deemed to be a contract executed without any part performance; so that the maxim was undisputed, and it was peremptory, 'Consensus, non concubitus, facit nuptias vel matrimonium.'" Secondly, with respect to the exercise of their jurisdiction in suits for restitution of conjugal rights, the ecclesiastical courts did not accept that the exercise of the mutual rights of spouses was to be an occasion of abuse and degradation. The following further remarks of Brennan J in R v L91 are in point: "To acknowledge a connubial obligation not to refuse sexual intercourse wilfully and persistently is to acknowledge that the giving of consent to acts of sexual intercourse is necessary to perform the obligation. It would have been inconsistent with such an obligation to hold that, on marriage, a wife's general consent to acts of sexual intercourse has been given once and for all. If no further consent was required on the part of a wife, how could there be a wilful and persistent refusal of sexual intercourse by her? The ecclesiastical courts never embraced the notion of a general consent to sexual intercourse given once and for all on marriage by either spouse." Thirdly, and in any event, in the Australian colonies jurisdiction with respect to matrimonial causes was not part of the general inheritance of the Supreme 89 Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 248. 90 (1844) 10 Cl & F 534 at 719 [8 ER 844 at 913]. 91 (1991) 174 CLR 379 at 396. Crennan Courts. They received such jurisdiction only by local statute in the second half of the 19th century. That legislation, as interpreted in the period before the enactment of the CLC Act in 1935, did not require, for compliance with a decree for restitution of conjugal rights, more than matrimonial cohabitation; in particular the duty of matrimonial intercourse was one of imperfect legal obligation because it could not be compelled by curial decree92. Finally, although Hale did not expressly rely upon it, his proposition respecting irrevocable consent could not have retained support from any common law concept that the wife had no legal personality distinct from that of her husband. This was never wholly accepted by the Court of Chancery, given the development there of the trust. The references earlier in these reasons to the significance of the married women's property legislation93 indicate that, by statute, the attitudes of the equity jurisdiction were given effect in the latter part of the 19th century to a significant degree throughout the legal system in England and the Australian colonies. To that may be added the significance of the conferral by the Commonwealth Franchise Act 1902 (Cth) of the universal adult franchise94. It has been said that the gaining of suffrage for women in South Australia in 1894 was critical to the national suffrage movement95. At the turn of the 20th century, suffragists in England were looking to what had been achieved in Australia96. An English suffragist, Dame Millicent Garrett Fawcett, writing in 1911 when women in England had not yet been granted suffrage, observed that97: 92 Bartlett v Bartlett (1933) 50 CLR 3 at 12, 15, 18. 94 See Roach v Electoral Commissioner (2007) 233 CLR 162 at 195-196 [70]-[71]; [2007] HCA 43. 95 Oldfield, Woman Suffrage in Australia, (1992) at 213 (Western Australia followed in 1899 through the passage of the Constitution Acts Amendment Act 1899 (WA)). 96 See for example Zimmern, Women's Suffrage in Many Lands, (1909) at 160; Fawcett, Women's Suffrage: A Short History of a Great Movement, (1911) at 59. 97 Fawcett, Women's Suffrage: A Short History of a Great Movement, (1911) at 59. Crennan "In the Commonwealth of Australia almost the first Act of the first Parliament was the enfranchisement of women. The national feeling of Australia had been stimulated and the sense of national responsibility deepened by the events which led to the Federation of the Independent States of the Australian Continent." By 1930 Isaacs J was able to say that98: "women are admitted to the capacity of commercial and professional life in most of its branches, that they are received on equal terms with men as voters and legislators, that they act judicially, can hold property, may sue and be sued alone". By the time of the enactment in 1935 of the CLC Act, if not earlier (a matter which it is unnecessary to decide here), in Australia local statute law had removed any basis for continued acceptance of Hale's proposition as part of the English common law received in the Australian colonies. Thus, at all times relevant to this appeal, and contrary to Hale's proposition, at common law a husband could be guilty of a rape committed by him upon his lawful wife. Lawful marriage to a complainant provided neither a defence to, nor an immunity from, a prosecution for rape. To reach that conclusion it is unnecessary to rely in general terms upon judicial perceptions today of changes in social circumstances and attitudes which had occurred in this country by 1935, even if it were an appropriate exercise of legal technique to do so. The conclusion follows from the changes made by the statute law, as then interpreted by the courts, including this Court, before the enactment of the CLC Act. Order The appeal should be dismissed. 98 Wright v Cedzich (1930) 43 CLR 493 at 505; [1930] HCA 4. HEYDON J. The events giving rise to this appeal allegedly took place in 1963. At that time it was universally thought in Australia that a husband could not be convicted of having sexual intercourse with his wife without her consent save where a court order operated or where there were other exceptional circumstances. This immunity from conviction was thought to exist because Sir Matthew Hale, who died in 1676, had asserted its existence in The History of the Pleas of the Crown, published in 1736. The reason he assigned was that on marriage wives irrevocably consented to sexual intercourse with their husbands99. Below the immunity will be called "the immunity" or "Hale's proposition". By what warrant did the State of South Australia seek in 2010 to prosecute the appellant for allegedly having sexual intercourse with his wife without her consent more than 47 years earlier? A sufficient answer to that question would be: "It had none, for the reasons that Bell J powerfully states." However, in deference to the arguments put by South Australia, a fuller answer should be given. One matter must be put aside, though the appellant may wish to rely on it at a later stage in these proceedings. This appeal is not directly concerned with any oppressiveness that results from the delay in prosecution. But that tardiness does support the appellant's submission that in 1963 there was no crime of rape for which he could be charged. One primary explanation which South Australia gave to the District Court for its delay was that the immunity created considerable doubt as to whether the appellant was liable for rape. Yet prosecutors have to demonstrate with clarity that the crimes they charge exist. South Australia tells the District Court that the appellant's liability was thought doubtful. It tells this Court that it is certain. South Australia's stance in the District Court is inconsistent with its dogmatic and absolute submissions in this Court. The first of its submissions in this Court was that the immunity never existed100. The second, alternative, submission was that even if the immunity had existed at one time, it had ceased to exist at some indeterminate time before South Australia put only those two submissions. It did not put a third submission – that even if the immunity existed and even if it had not ceased to exist up to now, it should be abolished now. That was a course which the 99 See below at [172]. 100 The first submission is discussed below at [71]-[113]. 101 The second submission is discussed below at [114]-[161]. English courts took in 1991102. It is a course which would raise issues different in some respects from those discussed below. South Australia's first submission: the detailed contentions South Australia's first submission was that it had never been the law, in England or in Australia, that a husband was immune from prosecution for having sexual intercourse with his wife without her consent. The Commonwealth supported that submission. It was based on a number of contentions. The first group of contentions centred on the following points. Hale's work was published 60 years after he died. The relevant part had not been revised before his death. Hale had not supported his statement with any reference to authority. Standing alone his proposition would not constitute the common law. At best it reflected "his view of a custom in 17th century England." As Blackstone asserted, "judicial decisions are the principal and most authoritative evidence, that can be given, of the existence of such a custom as shall form a part of the common law."103 A second group of contentions concerned ecclesiastical law. In the ecclesiastical courts there was no support for Hale's proposition. In ecclesiastical law each spouse had a right to sexual intercourse, but it was only to be exercised reasonably and by consent. This undermined the foundation of Hale's proposition. It revealed him to be mistaken in thinking that the wife's consent was irrevocable. It caused his proposition to be affected by "frailty". South Australia then turned to the history of Hale's proposition after he had enunciated it. It relied on Lord Lowry's very extreme statement that "Hale's doctrine had not been given the stamp of legislative, judicial, governmental and academic recognition."104 So far as "academic recognition" was concerned, South Australia submitted that the only statement of support for the immunity in absolute terms was that of Hale, and that there was no support for it in Blackstone. So far as "judicial … recognition" was concerned, South Australia submitted that Hale's proposition "was never authoritatively declared as part of the common law in Australia." It also submitted that no case had Hale's 102 R v R [1992] 1 AC 599. 103 Commentaries on the Laws of England, (1765), bk 1 at 69. 104 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. proposition as its ratio decidendi. There were only dicta and assumptions that the proposition existed. In some of the cases stating the dicta or resting on the assumptions Hale's proposition was cut down. There were also dicta to the contrary. Hale's proposition was further said to be inconsistent with some authorities. South Australia did not advance detailed submissions about any lack of "legislative" and "governmental" recognition. Perhaps it is hard to say much in support of negative propositions. However, there is a lot to be said against those two. Finally, South Australia submitted that the immunity was completely outdated and offensive to human dignity. It is convenient to deal with South Australia's first submission under the following headings. Defects in Hale's statement of the immunity It is immaterial that Hale's work was published 60 years after his death, that the reference to the immunity appears in a part of it which Hale had not revised, and that he stated no elaborate reasons justifying the immunity. Hale's work is capable of being an accurate account of the law of his day despite these things. There is no reason to suppose that, had he revised the relevant part of his work, he would have considered it desirable to change it. South Australia is not alone in complaining about Hale's failure to cite authorities105. But it is anachronistic to do so. The modern approach to precedent was only struggling to be born in Hale's day106. Hale himself said107: "the decision of courts of justice, though by virtue of the laws of this realm they do bind, as a law between the parties thereto, as to the particular case in question, till reversed by error or attaint; yet they do not 105 Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 878-883. The first maker of this criticism appears to have been Field J in R v Clarence (1888) 22 QBD 23 at 57. 106 Williams, "Early-modern judges and the practice of precedent", in Brand and Getzler (eds), Judges and Judging in the History of the Common Law and Civil Law: From Antiquity to Modern Times, (2012) 51. 107 The History of the Common Law of England, 6th ed (1820) at 89-90 (emphasis in original). make a law, properly so called; – for that only the king and parliament can do; yet they have a great weight and authority in expounding, declaring, and publishing what the law of this kingdom is; especially when such decisions hold a consonancy and congruity with resolutions and decisions of former times. And though such decisions are less than a law, yet they are a greater evidence thereof than the opinion of any private persons, AS SUCH, whatsoever". Hale's work often does not contain the dense citation of authorities characteristic of modern books. Indeed, many parts of it refer to only a few authorities. That is so of the passages in which he discusses the crime of rape. Hale did not cite direct authority for the immunity, or for his justification of the immunity. Whether there were in fact "authorities" of any kind to be cited on the present point is a matter which a 21st century court cannot easily deal with. It would need the assistance of close research into the question by modern legal historians with high expertise108. Subject to that matter, Hale did point out that there was authority for other propositions that he asserted. Those propositions were not inconsistent with the immunity. To some extent they supported it109. In view of Hale's high reputation for research into the criminal litigation of his day110, it seems likely that in practice husbands were not prosecuted for raping their wives, so that there were no authorities to cite. Even nowadays, a proposition can be correct though no precedent supports it. Ethical and tactical considerations prevent counsel from arguing what they perceive to be the unarguable. There are some propositions which seem too clear to the profession to be contradicted by argument. Propositions of that kind are widely accepted as good law. Subject to the research difficulties referred to in the previous paragraph, a lack of support from earlier authors such as Coke is, as Bell J explains, not significant and does not reveal Hale to be wrong111. Windeyer J once said: "an accepted rule of law is not to be overthrown by showing that history would not support it"112. None of the defects which 108 Australian Crime Commission v Stoddart (2011) 86 ALJR 66 at 81 [70]; 282 ALR 620 at 637; [2011] HCA 47. 109 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 153-156. See also below at [208]. 110 See below at [209]. 111 See below at [200]. 112 Commissioner for Railways (NSW) v Scott (1959) 102 CLR 392 at 447; [1959] HCA 29. supposedly existed in Hale's statement of the immunity prevented it from being an accepted rule of law. Hale and ecclesiastical law South Australia's appeal to ecclesiastical law encounters two difficulties. The first is that while the civil law of marriage was a matter for the ecclesiastical courts, the criminal law was a matter for the common law courts. Thinking in the ecclesiastical courts does not necessarily vitiate an account of the criminal law as administered in the common law courts. The second difficulty is that ecclesiastical law in the 17th century is another field not to be entered without expert assistance. In R v L113 Brennan J wrote at some length about ecclesiastical law. But the sources to which he referred were largely modern. None were contemporary with or earlier than Hale. Lord Lane CJ in R v R114 and Mason CJ, Deane and Toohey JJ in R v L115 pointed out that in Popkin v Popkin116 Sir William Scott (later Lord Stowell) stated: "The husband has a right to the person of his wife, but not if her health is endangered." Mason CJ, Deane and Toohey JJ commented that this showed that "even in the ecclesiastical courts, the obligation to consent to intercourse was not asserted in unqualified terms." If so, it also shows that Hale's proposition was not completely wrong. On the other hand, Brennan J did not think that Sir William Scott's statement showed that a husband had "a right to the person of his wife" without consent117. The submissions of the parties in this appeal did not take the matter further than Brennan J's researches took it. The parties did not cite any expert material throwing light on ecclesiastical law in or before Hale's time. For that reason, it is imprudent to examine it. 113 (1991) 174 CLR 379 at 391-402; [1991] HCA 48. 114 [1992] 1 AC 599 at 604. 115 (1991) 174 CLR 379 at 389. 116 (1794) 1 Hagg Ecc 765n [162 ER 745 at 747]. 117 R v L (1991) 174 CLR 379 at 398. Post-Hale writers South Australia submits that there is no statement of support for Hale's proposition except Hale himself, and that Hale's proposition has received no "academic recognition". That submission is extremely ambitious. It is also utterly incorrect. It is true that Hale's proposition is neither confirmed nor denied by Blackstone or Hawkins. Blackstone was writing at a considerable level of generality about much wider issues than those Hale wrote about. Whether or not it is right to describe Hawkins as "a somewhat second-rate institutional writer"118, it was not open to him to take up Hale's proposition in the first edition of his treatise. It appeared in 1716. Hale's work was not published until 1736. South Australia echoes the Crown's complaint to the House of Lords in R v R119 that the first writer to refer to the immunity after Hale was East in 1803. That is, however, less than 70 years after History of the Pleas of the Crown was published in 1736. In truth, Hale has enjoyed a great reputation. Lord Denning called him "the great Chief Justice Sir Matthew Hale"120. Hale's proposition garnered massive support from professional writers after 1803, and, as academic like too. lawyers emerged, Glanville Williams121, Smith and Hogan122 and Cross and Jones123 acknowledged the correctness of Hale's proposition. Like others who have attacked courts that relied on Hale's proposition124, South Australia failed to grapple with this uncomfortable point. Leading modern writers them from 118 Seaborne Davies, "The House of Lords and the Criminal Law", (1961) 6 Journal of the Society of Public Teachers of Law 104 at 110. 119 [1992] 1 AC 599 at 614. 120 Sykes v Director of Public Prosecutions [1962] AC 528 at 558. 121 Textbook of Criminal Law, 2nd ed (1983) at 236; "The problem of domestic rape", (1991) 141 New Law Journal 205 and 246. 122 Criminal Law, 6th ed (1988) at 430-432 (and all earlier editions). 123 Card (ed), Cross and Jones: Introduction to Criminal Law, 9th ed (1980) at 177 [9.2] (and all earlier editions). 124 For example, Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 One source of law is "informed professional opinion"125. Where there is little authority on a question of law, the opinions of specialist writers, particularly their concurrent opinions, are very important in revealing, and indeed in establishing, the law. That is particularly true of books written by practitioners. But it has force in relation to well-respected academic writers as well126. As Lord Reid said: "Communis error facit jus may seem a paradox but it is a fact."127 Owen J put the matter with trenchant simplicity in relation to the first edition of Archbold in 1822. It said128: "A husband … cannot be guilty of a rape upon his wife." Owen J said129: "It seems to me that the consequences of that statement is this: if he was right, then practitioners would follow what he said. Equally, however, if he was wrong, practitioners would follow what he said." Hale's proposition in the courts South Australia relied on Lord Lowry's statement that Hale's proposition had not been "given the stamp of … judicial … recognition."130 South Australia greatly exaggerated the extent to which the authorities cast doubt on the immunity before 1991, when the House of Lords decided it should be abolished131, and four members of this Court said that it had ceased to represent the law132. An illustration is provided by South Australia's submission in relation to R v Clarence: 125 Jones v Secretary of State for Social Services [1972] AC 944 at 1026 per Lord Simon of Glaisdale. 126 Australian Crime Commission v Stoddart (2011) 86 ALJR 66 at 84-98 [90]-[138]; 282 ALR 620 at 641-660. 127 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 25. 128 Archbold, A Summary of the Law Relative to Pleading and Evidence in Criminal Cases, (1822) at 259. 129 R v R – (rape: marital exemption) [1991] 1 All ER 747 at 748. 130 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 131 R v R [1992] 1 AC 599. 132 R v L (1991) 174 CLR 379 at 390 and 405. "The exemption was first the subject of judicial comment in R v Clarence.133 In R v Clarence, seven of the thirteen judges declined to comment on the issue;134 of the six judges who did, two of them reiterated and confirmed the marital rape proposition,135 three of them questioned or qualified it,136 and another briefly adverted to it without engaging in it.137 The comments of the judges in R v Clarence were obiter dicta, however, taken as a whole they indicate that even as at 1888 there existed no settled view." It is true that the few things said about Hale's proposition in R v Clarence were dicta. The submission is otherwise very misleading. It suggests that only A L Smith J and Pollock B favoured Hale's proposition. In fact the position is as follows. Stephen J supported Hale's proposition138. The following seven judges concurred: A L Smith J139, Mathew J140, Grantham J141, Manisty J142, Wills J146, Huddleston B143, Pollock B144 and Lord Coleridge CJ145. 133 (1888) 22 QBD 23. 134 Lord Coleridge CJ, Huddleston B, Grantham, Manisty and Mathew JJ (quashing the conviction); Charles and Day JJ (dissenting because upholding the conviction). 135 A L Smith J and Pollock B (quashing the conviction). 136 Wills J (quashing the conviction) and Hawkins and Field JJ (dissenting because upholding the conviction). 137 Stephen J (quashing the conviction). 138 R v Clarence (1888) 22 QBD 23 at 46. 139 R v Clarence (1888) 22 QBD 23 at 37. 140 R v Clarence (1888) 22 QBD 23 at 38. 141 R v Clarence (1888) 22 QBD 23 at 46. 142 R v Clarence (1888) 22 QBD 23 at 55. 143 R v Clarence (1888) 22 QBD 23 at 56. 144 R v Clarence (1888) 22 QBD 23 at 61-62 and 63-64. 145 R v Clarence (1888) 22 QBD 23 at 66. 146 R v Clarence (1888) 22 QBD 23 at 33. Hawkins J147 and Field J148 each stated or left open the possibility that in some circumstances a husband could be convicted of raping his wife. But at least the latter two judges plainly thought that Hale's proposition was correct in some circumstances. Day J concurred with Hawkins J149. Charles J concurred with Field J150. its operation South Australia correctly submitted that English trial judges assumed that Hale's proposition was correct, but qualified in special circumstances. Examples of special circumstances included where there was a court non-cohabitation order151, or a decree nisi of divorce had effectively terminated the marriage152, or the husband had given an undertaking to the court not to molest the wife153, or there was an injunction restraining the husband from molesting or having sexual intercourse with the wife154, or there was an injunction and a deed of separation (even though the injunction had expired)155. The outer limit of these exceptions was unilateral withdrawal from cohabitation coupled with a clear indication that the wife's consent to sexual intercourse was On one view, each of the courts that reached these decisions was attempting to achieve justice by tailoring the absolute nature of Hale's proposition to the circumstances before it. Even if the wife could be said to have 147 R v Clarence (1888) 22 QBD 23 at 51. 148 R v Clarence (1888) 22 QBD 23 at 57-58. 149 R v Clarence (1888) 22 QBD 23 at 55. 150 R v Clarence (1888) 22 QBD 23 at 61. 151 R v Clarke [1949] 2 All ER 448. The judge was Byrne J, of whom Owen J said in R v R – (rape: marital exemption) [1991] 1 All ER 747 at 749: "Those who appeared before him will know that he was a judge of the highest repute. As a criminal lawyer, there were not many to excel him in his day." In R v Miller [1954] 2 QB 282 at 289 Lynskey J concurred with R v Clarke. 152 R v O'Brien [1974] 3 All ER 663. 153 R v Steele (1976) 65 Cr App R 22. 154 R v Steele (1976) 65 Cr App R 22 at 25; R v McMinn [1982] VR 53. 155 R v Roberts [1986] Crim LR 188. 156 R v R – (rape: marital exemption) [1991] 1 All ER 747 at 754. given consent by marriage, in those cases it had been withdrawn as a matter of practical reality either because the wife had successfully invoked court process or because the spouses had reached a formal agreement negating consent. Another view is that these cases travel down a road "potholed with ever greater illogicalities"; produce "a gaggle of technical and anomalous distinctions" and "absurdity"; and lack any "relationship to the real world."157 But even if this latter view is correct, it is adverse to South Australia's position. The cases show the enduring toughness of Hale's proposition in legal thought. To destroy Hale's proposition might eliminate formal anomalies and technicalities. But it was a course which many judges found unattractive. Instead they turned their minds to devising narrow exceptions. In two of the cases just referred to, the correctness of Hale's proposition, in the absence of special circumstances, was specifically acknowledged by quotation158. In another, Hale's proposition was thought to be correct at common law though not necessarily satisfactory159. And in R v Miller160, where the prosecution failed to prove any special circumstance and could point to no more than the wife having petitioned for divorce, Hale's proposition was applied. R v Miller renders false South Australia's submission that "no binding precedent can be found where [Hale's] principle represented the ratio decidendi." Contrary to that submission, R v Miller was an "authoritative declaration of the common law on the matter." R v Miller also demonstrates that McGarvie J was wrong to say in R v McMinn161: "There does not seem to have been any recent case in which it was considered whether [Hale's proposition] remains part of the common law." R v Miller was a binding precedent in England until 1991. A second case which applied Hale's proposition is R v J – (rape: marital exemption)162. There are numerous cases, including Australian cases, in which courts have assumed Hale's proposition to be correct at common law163. One is R v 157 Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 880-882. 158 R v Clarke [1949] 2 All ER 448 at 448; R v Steele (1976) 65 Cr App R 22 at 24. 159 R v McMinn [1982] VR 53 at 55, 57-59 and 61. 160 [1954] 2 QB 282, criticised by Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 882-883. 161 [1982] VR 53 at 61. 162 [1991] 1 All ER 759. 163 R v Brown (1975) 10 SASR 139 at 141 and 153; R v Cogan [1976] QB 217 at 223; R v Wozniak (1977) 16 SASR 67 at 71; R v Sherrin (No 2) (1979) 21 SASR 250 at 252; R v C (1981) 3 A Crim R 146 at 148-150; R v Caswell [1984] Crim LR 111; (Footnote continues on next page) Kowalski164, in which the English Court of Appeal described Hale's proposition as "clear, well-settled and ancient law". Another is R v Bellchambers165, in which Neasey and Everett JJ said that Hale's proposition "still expresses the common it as "archaic, unjust and they criticised discriminatory"166. A third is Brennan J's statement in R v L167: law", even though "Irrespective of the validity of Hale's reason for declaring that a husband could not be guilty as a principal in the first degree of rape of his wife, it appears that a substantive rule of the common law was established by his declaration." That statement followed more than 10 pages denouncing Hale's reasoning. Thus these last two cases, too, reveal the enduring toughness of Hale's proposition in legal thought. South Australia proffered three authorities that, in its submission, reveal that contrary to Hale's proposition, there was no irrebuttable presumption that on marriage the wife irrevocably consented to sexual intercourse with her husband. In R v Lister168, it was held that while it was lawful for a husband to restrain his wife's liberty where she was making "an undue use" of it, either by "squandering away the husband's estate, or going into lewd company", he could not do so where he had entered into a deed of separation with his wife. In R v Jackson169, the English Court of Appeal held that where a wife refused to live with her husband, he was not entitled to deprive her of liberty by kidnapping her and confining her to his house, even though he had obtained a decree for restitution R v Henry unreported, 14 March 1990 per Auld J: see R v J – (rape: marital exemption) [1991] 1 All ER 759 at 762-763 and Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 97-108; R v Shaw [1991] Crim LR 301; Question of Law Reserved on Acquittal (No 1 of 1993) (1993) 59 SASR 214 at 164 (1987) 86 Cr App R 339 at 341. 165 (1982) 7 A Crim R 463 at 465. 166 (1982) 7 A Crim R 463 at 466. 167 (1991) 174 CLR 379 at 402. 168 (1721) 1 Strange 478 [93 ER 645 at 646]. of conjugal rights. In R v Reid170, that Court held that matrimonial status conferred no immunity on a husband who kidnapped his wife. These cases do not support South Australia's submission. They do not proceed on the basis that on marriage there was a presumption that the wife consented to having her liberty restrained and that she could rebut that presumption by withdrawing her consent. Indeed, in R v Reid171 the Court said of the doctrine in R v Miller that it was "impossible to stretch that doctrine to the extent of saying that on marriage a wife impliedly consents to being taken away by her husband using force or threats of force from the place where she is living." Accordingly, these cases are not inconsistent with Hale's proposition. In 1991, the English Court of Appeal and the House of Lords overturned Hale's proposition172. But it is notable that they did not accept the Crown's submission that "Hale's statement was never the law"173. The rulings of those Courts had retrospective consequences. But they did not hold that Hale's proposition had never been the law. They did not hold that the judgments which had decided, said or assumed that it was correct were wrong at the time they were handed down. Lord Lane CJ said in the Court of Appeal that Hale's proposition had been "accepted as an enduring principle of the common law."174 And the House of Lords altered the law because social conditions had changed quite recently. Hale's proposition was seen as reflecting the society of his day, and its rejection was seen as reflecting the different form which modern society had recently taken175. On that reasoning, Hale's proposition was good law in South Australia in 1963 – a matter relevant to rejection of South Australia's second submission176. 171 [1973] QB 299 at 302. 172 R v R [1992] 1 AC 599. 173 R v R [1992] 1 AC 599 at 602. 174 R v R [1992] 1 AC 599 at 604. 175 R v R [1992] 1 AC 599 at 616. 176 See below at [121]-[161]. Governmental recognition South Australia also relied on Lord Lowry's statement that Hale's proposition "had not been given the stamp of … governmental … recognition."177 That submission too must be rejected. Hale's proposition has received indirect governmental recognition – by the Executive – in two ways. One form of governmental recognition took place in a report of the Criminal Law and Penal Methods Reform Committee of South Australia published in 1976. That report acknowledged that Hale's proposition represented the common law178. It recommended that the immunity be abolished where the event charged took place while the parties were living separately179. There are several other reports before and after the South Australian report also resting on the view that Hale's proposition represented the common law180. Another form of governmental recognition has taken place. Not only in South Australia but in many other places, the authorities did not prosecute charges against husbands accused of raping their wives. This Court was not told of any prosecutions having been brought in England between Hale's time and 1949. In the second half of the 20th century, as exceptions developed to Hale's proposition, there were attempts to prosecute husbands, not for non-consensual 177 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 178 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 13 [6.2]: see below at [174]. 179 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 15 [6.2.1]. 180 For example, Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 17-18 [2.56]-[2.57]; Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 9-12 [2.8]-[2.10]; American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 271-275, 341-346 and American Law Institute, Model Penal Code: Official Draft and Explanatory Notes, (1985), §213.1(1). The greatest example of this kind, which is not modern but does come from a time when, according to South Australia, legislative changes were being made which would mean that Hale's proposition "crumbled to dust", is the Royal Commission commenting on Stephen's Draft Code: see below at [219]. Sir Rupert Cross thought that Stephen had "one of the highest places" among the makers of English criminal law: "The Making of English Criminal Law: (6) Sir James Fitzjames Stephen", [1978] Criminal Law Review 652 at 661. sexual intercourse with their wives, but for crimes committed in connection with that conduct, such as assault or false imprisonment. So far as these crimes were distinct from sexual intercourse without consent, the prosecutions rested on sound legal thinking, though they were at peril of failing if there were difficulties in establishing that the husband's conduct had gone beyond sexual intercourse without consent181. What the prosecution assumes about the law is not decisive as to what the law is. But it is some guide to the thinking of experienced criminal lawyers. That thinking can be highly persuasive as to what the law is. Legislative recognition Finally, South Australia relied on Lord Lowry's statement that Hale's proposition "had not been given the stamp of legislative … recognition."182 That submission must also be rejected. Some forms of "legislative recognition" are of limited materiality. A statute expressly adopting Hale's proposition in South Australia would have superseded the common law. A statute expressly adopting it outside South Australia would have had slight relevance only to what the common law was in South Australia. Statutes rejecting it would have had little relevance to the position at common law unless they reflected a consistent legislative view of what the public interest demanded183. But there is South Australian legislation recognising Hale's proposition in the sense that it did not interfere with it when there was an occasion to do so. The South Australian Parliament did not adopt the recommendation of the Criminal Law and Penal Methods Reform Committee of South Australia to abolish the immunity when husband and wife were living separately. Instead two provisions relevant to the common law were enacted. First, s 73(3) of the Criminal Law Consolidation Act 1935 (SA) was introduced, removing any presumption that consent to sexual intercourse flowed from marriage. Secondly, s 73(5) was introduced: it prevented a spouse from being convicted not only of rape but also of indecent assault, attempted rape or indecent assault, and assault with intent to commit rape or indecent assault, unless the alleged offence was accompanied by various forms of aggravated conduct184. In substance it 181 See, for example, R v Henry unreported, 14 March 1990 per Auld J, set out in Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 97-108. 182 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 183 Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 61-63 [23]-[28]; [1999] HCA 67. 184 See below at [175]. overlapped with the common law position precluding convictions of husbands for the conduct of sexual intercourse with their wives without consent. Thus the South Australian Parliament assumed that the immunity existed at common law, and left it in existence. It appears to have gone further in creating an immunity without any common law counterpart for non-aggravated forms of the crimes other than rape to which s 73(5) referred. That state of affairs continued until "Legislative recognition" in places other than South Australia assuming that the immunity existed at common law is relevant to the content of South Australian law – particularly Australian legislation, since there is a single common law in Australia. There are three points to be made. First, in the Code States (Queensland, Tasmania and Western Australia), the definition of rape excluded sexual intercourse by a husband with his wife. The relevant statutes assumed the correctness of Hale's proposition186. Secondly, the numerous changes in State and Territory legislation in the 1970s and 1980s indicated an assumption by each legislature (and by each Executive, which had a large measure of control over what draft legislation was introduced) that Hale's proposition was sound at common law. If not, it would not have been necessary to abolish or qualify it187. Thirdly, Canadian188 and New Zealand189 legislation assumed the correctness of Hale's proposition. An anachronistic and offensive proposition? There are no doubt many criticisms to be made of Hale's proposition if it is to be applied in the circumstances of 2012. But these criticisms do not show that his proposition was necessarily anachronistic or offensive in 17th century circumstances. That would depend on historical analysis which the parties' submissions did not perform. The criticisms therefore do not demonstrate that Hale's proposition was wrong from the outset. They are, however, appropriate arguments to consider when deciding whether Hale's proposition ought to be abandoned. It is a question which legislatures answered affirmatively from the 1980s on. It is not a question which South Australia places before this Court. Whether they are appropriate arguments to consider when deciding whether 185 See below at [176]. 186 See below at [176] n 298. 187 See below at [176]. See also Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26 at 35. 188 See below at [221]. 189 See below at [233]. Hale's proposition dropped out of the law at some point before 1963 is a question which relates to South Australia's second submission. South Australia's first submission rejected It was inherent in South Australia's first submission that all the writers, all the judges, all the government officials, all the law reformers, all the public servants advising Ministers, all the prosecution authorities and all the legislatures who wrote or acted on the assumption that Hale's proposition was the law were wrong. South Australia explicitly adopted a statement to this effect in the Full Court of the Supreme Court of South Australia190. I flatly disagree. South Australia's second submission On the assumption that Hale's proposition was correct for some time after he stated it, South Australia put various contentions denying its applicability in South Australia contended that before 1963 the law had changed so as to nullify Hale's proposition, even though no case had stated this before 1991. This is an unusual invocation of the judicial process. South Australia's contention is different from a contention that this Court should now declare Hale's proposition to be wrong, and do so with effect retrospective to 1963. This latter course presents in an overt form the considerable difficulties which cluster around the making of retrospective changes to the criminal law. South Australia did not choose to tackle these difficulties head on. It did not suggest that this Court should now change the law. Rather, it submitted that the dicta of four Justices in R v L191 recognised that Hale's proposition had ceased to be the law at some time before 1991. South Australia submitted that this time was a time before 1963. In fact, nothing in R v L suggests that the demise of Hale's proposition took place at any specific time before 1991, such as 1963. South Australia's thesis that R v L bound the Full Court of the Supreme Court of South Australia to reach this conclusion must be rejected. South Australia relied on the following arguments as indications that Hale's proposition had ceased to be the law before 1963. South Australia submitted that in R v Jackson192 the denial of the husband's right to use physical coercion on his wife suggested that the immunity 190 R v P, GA (2010) 109 SASR 1 at 9 [43]. 191 (1991) 174 CLR 379 at 390 and 405. 192 [1891] 1 QB 671: see above at [101]. had disappeared from the law. But it does not follow that a husband lost the immunity where he had not employed physical coercion against his wife. South Australia also submitted that Hale's proposition was based on the doctrine of coverture – that the legal status of a wife is assimilated with that of her husband. And it submitted that by the turn of the 20th century the law had come to acknowledge the rights of married women as independent of their husbands' rights. In effect, it submitted that so many inroads had been made on the doctrine of coverture that it could no longer support Hale's proposition. This submission has the drawback that Hale did not base his proposition on the doctrine of coverture. However, the developments on which South Australia relied could be used, and to a degree were used, to support an argument that by the mid-20th century the rights and privileges of married women in Australia were inconsistent with any theory that on marriage wives gave their husbands irrevocable consent to sexual intercourse. South Australia advanced detailed submissions on the capacity of wives, gained by statute, to own property, to sue and be sued, to vote, to have custody of children, and to compel payment of and be compelled to pay child maintenance. It also relied on the termination by statute of discrimination between husbands and wives in relation to the grounds of divorce. In that way South Australia advances an argument for permitting the appellant to be prosecuted now for conduct which allegedly occurred in 1963. Whether it should be accepted depends on four matters. One is whether in fact the changes in the rights and privileges of wives by 1963 were, to use the words of South Australia's written submissions, "entirely inconsistent with the principle that a wife gave irrevocable consent to sexual intercourse with her husband upon marriage." A second concerns the need for certainty in the criminal law. A third concerns whether South Australia's argument could, in a practical sense, work a retrospective change in criminal law. A fourth is whether the task being undertaken is appropriate for the courts as distinct from the legislature. It is convenient to deal with these points in order. Is there inconsistency between the modern rights and privileges of wives and the immunity of husbands for rape? Bell J gives convincing reasons for answering this question in the negative193. Some ideas which tend to render Hale's proposition anachronistic can be discerned in 19th and early 20th century legislation. But the crucial triggers that would push Hale's proposition into disfavour arose in the 1970s. Before that decade there had been some questioning by lawyers of the stated 193 See below at [224]-[248]. justification for Hale's proposition. In that decade questioning began to grow about whether the proposition should be abolished by the legislature. The questioning grew as public concern about the law of rape in general and marital rape in particular began to rise. Law reform agencies began to examine numerous problems in detail. Legislative changes of different kinds were introduced. One trigger was the controversial decision in R v Morgan194 that a mistaken but honest belief that the victim had consented to intercourse was a defence to a rape charge, whether or not that belief was reasonable. R v Morgan was decided on 30 April 1975, seven months before the then Attorney-General for the State of South Australia requested the Criminal Law and Penal Methods Reform Committee of South Australia to report on the law relating to rape and other sexual offences. It was the very first topic the Committee dealt with195. Another trigger concerned whether warnings about the desirability of finding corroboration for the evidence of those complaining that they had been raped rested on unsatisfactory stereotyping. Another trigger was discontent about the rules relating to the cross-examination of complainants about their sexual histories. There were many other issues about which debates began to widen and intensify in those years. The immunity was only one of them. Further, the reasons underlying the legislation which has altered the status of wives over the last 150 years are not necessarily inconsistent with the immunity. To describe Hale's proposition as creating a presumption which no longer has any foundation, and as a fiction not forming part of the common law196, overlooks the fact that a common law rule can rest on a fiction, particularly when the rule in question develops a new and non-fictitious basis. As Lord Sumner observed197: "an established rule does not become questionable merely because different conjectural justifications of it have been offered, or because none is forthcoming that is not fanciful." A fortiori, an established rule does not become questionable merely because a justification which appealed to the minds of lawyers more than 300 years ago has ceased to have appeal now. In Australia, the controversy has been resolved. The resolution lies in abolition of the immunity. Abolition came by degrees. It also came from legislatures. In England, on the other hand, the first decision to abolish the immunity was made by a judge – Simon Brown J, in 1990198. Rougier J, sitting alone, at once refused 195 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 2-8 [2]. 196 R v L (1991) 174 CLR 379 at 405. 197 Admiralty Commissioners v SS Amerika [1917] AC 38 at 56. 198 R v C – (rape: marital exemption) [1991] 1 All ER 755. This was a controversial decision. to follow it199. Then the immunity was abolished by the Court of Appeal and the House of Lords in R v R in 1991. The House of Lords decision has been supported on the ground that Hale's proposition was one which "nobody defended on the merits."200 That, however, is not true201. It is true to say, though, that R v R was based, as Lord Lowry later said, "on a very widely accepted modern view of marital rape"202. But the fact that an idea is very widely accepted does not mean that an inference from it automatically becomes a rule of law. The fact that a rule of law is disliked does not mean that it has ceased to be the law. The fact that a rule of law favourable to the accused is disliked does not mean that the courts rather than the legislature should abolish it. Indeed, after the English courts abolished the immunity, Parliament did as well203, once the matter had been considered by the Law Commission204. And the fact that very many people have disliked a rule of law favourable to the accused for a long time does not mean that it has ceased to be the law at some time in the past. The Permanent Court of International Justice said, in a somewhat different context, in Consistency of Certain Danzig 199 R v J – (rape: marital exemption) [1991] 1 All ER 759. 200 Spencer, "Criminal Law", in Blom-Cooper, Dickson and Drewry (eds), The Judicial House of Lords 1876-2009, (2009) 594 at 604. 201 See Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 258-259; Howard, Australian Criminal Law, (1965) at 146; Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 14 [6.2]; American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 345; Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 21 [2.69]. As late as 15 February 1991, just before the Court of Appeal decision of 14 March 1991 and the House of Lords decision of 23 October 1991 abolishing the immunity, Glanville Williams contended in "The problem of domestic rape", (1991) 141 New Law Journal 205 and 246, that husbands who had non-consensual intercourse with their wives should not be guilty of rape, but should be liable to prosecution for a new statutory crime. 202 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 203 Criminal Justice and Public Order Act 1994 (UK), s 142, inserting a new s 1 of the Sexual Offences Act 1956 (UK). 204 Law Commission, Criminal Law: Rape within Marriage, Law Com No 205, Legislative Decrees with the Constitution of the Free City205, "[s]ound popular feeling is a very elusive standard." And mere popular feeling, however widespread, is a very unsafe standard to apply in relation to claims that common law rules have fallen into desuetude. Professor Robertson has contrasted R v R with C (A Minor) v Director of Public Prosecutions, in which the House of Lords declined to alter the common law rule that there is a rebuttable presumption that a child aged between 10 and 14 is doli incapax206. He correctly noted that the speeches in R v R contained "almost no argument", only "a bald statement"207. He argued that R v R rested on "the assumption, though it is an untested one, that there is wide consensus in the general public on the question of marital rape."208 He also argued that Lord Lowry's attempt to reconcile a change in the criminal law in R v R with a decision not to change it in C (A Minor) v Director of Public Prosecutions was "specious"209. He said210: "The abolition of the rule on rape, though occasioned by a rape where the man and wife were separated, would in fact apply inside an ongoing marriage. It is sociologically extremely unlikely that this view would command anything like as much support amongst the mass public as would a rule that allowed the conviction of thirteen-year-old auto-thieves. The fact that there had been several cases where judges had attempted to convict husbands for rape is on par with the attempt by the Divisional Court to change the doli incapax rule, where there was extensive quotation from judges who had wanted to but were dutiful to precedent. What is true is that liberal elite opinion was uniform in the rape context, and largely missing in the criminal capacity case. Asked how to square the two results, one Law Lord who had been a member of the bench in C but not in R v R threw his hands in the air and admitted he could not imagine how they squared it. Another though, who had heard C, indicated that his 205 Advisory Opinion, (1935) PCIJ (Ser A/B) No 65 at 53 per Sir Cecil Hurst (President), Judge Guerrero (Vice-President) and Judges Rolin-Jaequemyns, Fromageot, de Bustamante, Altamira, Urrutia, van Eysinga and Wang. 207 Judicial Discretion in the House of Lords, (1998) at 119. 208 Judicial Discretion in the House of Lords, (1998) at 120. 209 Judicial Discretion in the House of Lords, (1998) at 121. 210 Judicial Discretion in the House of Lords, (1998) at 121. decision was prompted by a desire to force the Government's hand and make it legislate." (emphasis in original) The task of assessing public opinion, or even the full range of legal opinion, whether now or in the past, is not an enterprise that is easy for courts to carry out. "The court does not, and cannot, carry out investigations or enquiries with a view to ascertaining whether particular common law rules … command popular assent."211 The question is not whether the view which the House of Lords stated in R v R about the general public's opinion is correct. The point is that if the general public's opinion is a relevant criterion, it is a criterion for the legislature to consider, not the courts212. Certainty in the criminal law Those who seek to foster the rule of law prize certainty. Ordinarily, certainty in the common law is assisted by the doctrine of precedent. Normally, a common law rule is supported by authorities. If an intermediate or ultimate appellate court decides to change the rule, it overrules the authorities and its decision creates a new binding authority. South Australia's submission is not that Hale's proposition be rejected, so that this Court's decision would be a new binding authority with retrospective effect. Instead South Australia submits that at some time which is not clearly specified, Hale's proposition ceased to be the law. At some time in the past that which had a solid existence is said to have dissolved into nothingness. In State Government Insurance Commission v Trigwell213, Gibbs J said: "Although the rules of the common law develop as conditions change, a settled rule is not abrogated because the conditions in which it was formulated no longer exist. It is now fashionable to criticize the rule in Searle v Wallbank[214] as anachronistic, inconsistent with principle and unsuitable to modern conditions, but it is by no means obvious that it would be a reasonable and just course simply to abolish the rule. The 211 State Government Insurance Commission v Trigwell (1979) 142 CLR 617 at 633 per Mason J; [1979] HCA 40. 212 See below at [128]-[129] and [146]-[150] for other arguments favouring legislative change in the criminal law over judicial change. 213 (1979) 142 CLR 617 at 627. See also Mason J at 633 (otherwise than in "a simple or clear case"). question whether the rule should be altered, and if so how, is clearly one for the legislatures concerned rather than for the courts." A fortiori, it does not follow from anachronism that a rule simply dissolves without any court ruling at the time it dissolved, leaving its dissolution to be detected by a court many years or decades later. To the extent that they may be changed retrospectively, uncertainty is inherent in common law rules. But the standard technique is to make the change in a particular case. It is announced as having happened at the time of that case. Even though it operates retrospectively, that retrospective operation tends to affect only quite recent conduct. That was so in R v R and other cases following it: the conduct charged took place only a short time before the law changed. At least in non-criminal fields, if the change is the result of altering "the law's direction of travel by a few degrees" as distinct from setting "it off in a different direction"215, no great harm may follow. Assuming it is permissible for the courts to change the substantive criminal law, R v R is an example of the standard technique. It relied on quite recent changes in the status of married women. It did not purport to announce that a change had taken place many years ago, by reason of changes in status even earlier. South Australia's urging of the latter course engenders much more uncertainty. It invites Bentham's reproach216: "Nebuchadnezzar put men to death for not finding a meaning for his dreams: but the dreams were at least dreamt first, and duly notified. English judges put men to death very coolly for not having been able to interpret their dreams, and that before they were so much as dreamt." Retrospective change in the criminal law and the appropriate institutions to effectuate it South Australia's arguments involve a retrospective change in the criminal law. Indeed, they willingly embrace it. They involve the proposition that conduct no-one saw as attracting criminal liability in 1963 in fact attracted that liability because an historical investigation in 2010-2012 is said to reveal that changes in legal and social conditions at some unspecified time before 1963 caused the conduct to become criminal. And this proposition involves a very serious crime. Rape in 1963 was punishable by life imprisonment and whipping217. 215 Bingham, "The Rule of Law", (2007) 66 Cambridge Law Journal 67 at 71. 216 Bowring (ed), The Works of Jeremy Bentham, (1843), vol IV at 315. 217 See below at [170]. The law's aversion to the judicial creation of crimes. In those circumstances, though it may be trite to do so, it is desirable to recall the law's aversion to the judicial creation or extension of crimes. In the early 17th century Bacon put the central difficulty in a retroactive criminal law thus in Aphorism 8 of his treatise De Augmentis218: "Certainty is so essential to law, that law cannot even be just without it. 'For if the trumpet give an uncertain sound, who shall prepare himself to the battle?'219 So if the law give an uncertain sound, who shall prepare to obey it? It ought therefore to warn before it strikes." And Aphorism 39 read in part220: "Let there be no authority to shed blood; nor let sentence be pronounced in any court upon capital cases, except according to a known and certain law. … Nor should a man be deprived of his life, who did not first know that he was risking it." Hobbes stated in 1651221: "harm inflicted for a fact done before there was a law that forbade it, is not punishment, but an act of hostility: for before the law, there is no transgression of the law". Hence, said Hobbes in 1681222: "A Law is the Command of him, or them that have the Soveraign Power, given to those that be his or their Subjects, declaring Publickly, and plainly what every of them may do, and what they must forbear to do." "The citizen must be able to ascertain beforehand how he stands with regard to the criminal law; otherwise to punish him for breach of that law is purposeless cruelty. Punishment in all its forms is a loss of rights or advantages consequent on a breach of law. When it loses this quality it 218 Spedding, Ellis and Heath (eds), The Works of Francis Bacon, (1877), vol V at 90. 219 1 Corinth. xiv. 8. 220 Spedding, Ellis and Heath (eds), The Works of Francis Bacon, (1877), vol V at 95. 221 Leviathan, reprinted by George Routledge and Sons, 2nd ed (1886) at 143. 222 A Dialogue Between a Philosopher and a Student of the Common Laws of England, Cropsey (ed) (1971) at 71. 223 Criminal Law: The General Part, 2nd ed (1961) at 575. degenerates into an arbitrary act of violence that can produce nothing but bad social effects." Stephen J stated in R v Price224: "the great leading rule of criminal law is that nothing is a crime unless it is plainly forbidden by law." Hence Hayek saw it as crucial to the rule of law that "the coercive power of the state … be used only in cases defined in advance by the law and in such a way that it can be foreseen how it will be used."225 Finally, as Harris said, retroactivity in criminal law is "pointless … because of the brutal absurdity of today commanding someone to do something yesterday."226 South Australia submitted, however, that the change it favoured "does not create a new offence, it merely removes a protection, arguably, formerly held by husbands." It submitted that there was no inhibition against judicial legislation which fell short of creating a new offence. South Australia relied on the following statement by the English Court of Appeal in R v R about the judicial abolition of the immunity227: "The remaining and no less difficult question is whether … this is an area where the court should step aside to leave the matter to the Parliamentary process. This is not the creation of a new offence, it is the removal of a common law fiction which has become anachronistic and offensive and we consider that it is our duty having reached that conclusion to act upon it." With respect to both South Australia and the English Court of Appeal, this is captious. The substantive effect of South Australia's argument is to expose persons to a risk of criminal prosecution for conduct which was not believed to be criminal at the time it was carried out. That is true even though South Australia sees this reasoning as doing nothing more pernicious than removing an anachronistic and offensive fiction. Sir John Smith said, correctly, "it is not clear that there is a difference in principle" between the judicial creation of a new 224 (1884) 12 QBD 247 at 256. 225 The Road to Serfdom, (1944) at 62. See generally Juratowitch, Retroactivity and the Common Law, (2008) at 43-65, 127-138 and 183-197. 226 Harris, Legal Philosophies, 2nd ed (1997) at 146. 227 R v R [1992] 1 AC 599 at 611 per Lord Lane CJ, Sir Stephen Brown P, Watkins, offence in Shaw v Director of Public Prosecutions228 and the judicial abolition of the immunity229. Zecevic v Director of Public Prosecutions (Vict). South Australia also relied on the following statement of Deane J (dissenting) in Zecevic v Director of Public Prosecutions (Vict)230: "There may be circumstances in which an ultimate appellate court is justified in overruling a previous decision of its own with the consequence that what had previously been accepted as a defence to a charge of murder is no longer, and never was, such a defence". This was a somewhat selective quotation. There are three reasons why it does not support South Australia's case. First, Deane J gave as an illustration the case of R v Shivpuri. In that case the House of Lords departed from earlier authority in order to state the true construction of a statute231. That is a very different matter from changing the common law. There are more difficulties in courts continuing to apply an erroneous construction of a statute than continuing to apply the received common law. The courts are masters of the common law, but servants of statutes. Further, the case in question was a special one. The change in construction did not cut down any "liberty" the accused had enjoyed. On the earlier and rejected construction, the accused was free to attempt to commit a crime if circumstances unknown to him made it impossible to do so. On the later and favoured construction, an attempt to commit the crime in those circumstances was criminal. The freedom arising under the earlier construction was a strange type of freedom. It was not a freedom which persons in the accused's position could be said to have been able to rely on: the relevant circumstances were unknown to them. Thus, as Juratowitch says232: "The absence of sensible reliance or liberty considerations in the case meant that the prohibition on criminal retroactivity was, without 228 [1962] AC 220: see below at [144]-[152]. 229 Commentary on R v C [1991] Crim LR 60 at 63. See also Sir John Smith's commentary on R v R [1991] Crim LR 475 at 478. 230 (1987) 162 CLR 645 at 677; [1987] HCA 26. 232 Retroactivity and the Common Law, (2008) at 195. diminishing the strength of that prohibition in general, eminently susceptible to being justifiably overcome in Shivpuri." Secondly, Deane J gave very detailed reasons for not applying his tentative observation to the case before him in Zecevic v Director of Public Prosecutions (Vict). They do not support South Australia's argument. Thirdly, Deane J made it plain that the undesirability of retroactive changes in criminal law adverse to the accused applies as much to abolishing defences as it does to creating new offences. Thus he said233: "It is simply wrong that an accused may be adjudged not guilty or guilty of murder according to the chance of whether his trial is completed before or after this Court has abolished a defence which, under the law which the Court itself had definitively settled at the time the offence was committed, reduced the offence from murder to manslaughter." He called this "a macabre lottery". The macabre character of the lottery is heightened in this case. Those who have caused the prosecution to be brought have allowed 47 years to pass before charging the appellant. Another problem with South Australia's argument is that it invites retrospective judicial legislation which collides with legal structures created by parliamentary legislation. Thus Brennan J, the only Justice in R v L not to state that Hale's proposition had ceased to exist, succinctly and correctly said234: "a mere judicial repeal of the [exception] would extend the liability for conviction of the crime of rape to cases which would be excluded from liability for conviction by s 73(5) of the Criminal Law Consolidation Act."235 Brennan J's point was that s 73(5) permitted convictions for rape in the aggravated circumstances stated in the sub-section, but otherwise preserved the common law "exception" from liability. To "repeal" the common law "exception" would expose husbands to a greater risk of prosecution for acts carried out before s 73(5) was enacted in 1976 than after it. Section 73(5) did not apply retrospectively. The greater exposure of husbands to risk of prosecution would depart significantly from the legislative scheme. It would mean that in 233 (1987) 162 CLR 645 at 677-678 (citation omitted). 234 R v L (1991) 174 CLR 379 at 402. The text has "section" instead of "exception", but this is an error. 235 See below at [175]. 1976 Parliament narrowed the scope of a husband's liability for sexual offences committed against his wife, rather than expanded it. And yet the seeming function of the legislation was to expand liability, not narrow it. Professional attitudes in 1963-1965. The retrospectivity involved in South Australia's arguments is highlighted by considering the following question. What would actually have happened if, instead of the appellant being charged with rape in 2010, he had been charged immediately after the second of the alleged offences had occurred in April 1963? the law "the is what judge says Lord Reid said: Mr Justice Holmes, as is well known, remarked that the bad man "does want to know what the Massachusetts or English courts are likely to do in fact. I am much of his mind. The prophecies of what the courts will do in fact, and nothing more pretentious, are what I mean by the law."237 No doubt it is often unrealistic to assume that people take account of the criminal law in deciding what conduct to engage in238. It is probably particularly unrealistic in relation to violent sexual crimes. However, people should be able to know, by recourse to a competent lawyer, what the legal consequences of a proposed course of action are before embarking on it239. What would a bad man in South Australia have learned if he had asked for a prophecy as to what the South Australian courts, and this Court, would be likely to say in the years 1963 to 1965, for example, if he had been charged in April 1963 with raping his wife in March and April and he had challenged the validity of the indictment or appealed against a conviction? There were at that time seven judges in the Supreme Court of South Australia. The Chief Justice was Sir Mellis Napier, in his 40th year of service on that Court. The senior puisne judge was Sir Herbert Mayo, in his 22nd year of service. Next in seniority came Sir Reginald Roderic St Clair Chamberlain: universally known as "Joe", he did not share the impulsiveness or the radicalism 236 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 22. 237 Holmes, "The Path of the Law", (1897) 10 Harvard Law Review 457 at 461. 238 Rodger, "A Time for Everything under the Law: Some Reflections on Retrospectivity", (2005) 121 Law Quarterly Review 57 at 68. Cf Williams, Criminal Law: The General Part, 2nd ed (1961) at 601-603. 239 See Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591 at 638; Fothergill v Monarch Airlines Ltd [1981] AC 251 at 279; and R v Rimmington [2006] 1 AC 459 at 480-482 [33]. of his namesake. The other judges were Justices Millhouse, Travers, Hogarth and Bright. This Court comprised Chief Justice Dixon and Justices McTiernan, Kitto, Taylor, Menzies, Windeyer and Owen. It is hard to see where a majority of two was to be found in the Supreme Court of South Australia in favour of the view that Hale's proposition never was, or had ceased to be, the law in South Australia. It is equally hard to see where a majority of three or four in favour of that view was to be found in this Court. Indeed, it is hard to find even one vote for that proposition. This is not simply a crass piece of legal "realism". It does not rest on the personal idiosyncrasies of the individual judges. The probabilities were strongly against either majority because of the particular ideas of the time. They were universal ideas among the Australian judiciary. To overturn Hale's proposition, or to deny that it ever had been the law, or to hold that it had earlier dissolved into nothingness, was to widen the criminal law. It was a legal commonplace in the middle of the 20th century that it was wrong for judges "to declare new offences": that "should be the business of the legislature." So spoke Lord Goddard CJ, Sellers and Havers JJ in 1953, in R v Newland240. They also stated that it was wrong for241: "the judges to declare new crimes and enable them to hold anything which they considered prejudicial to the community to be a misdemeanor. However beneficial that might have been in days when Parliament met seldom or at least only at long intervals it surely is now the province of the legislature and not of the judiciary to create new criminal offences." And in Director of Public Prosecutions v Withers, in 1974, Lord Simon of Glaisdale said242 that it was an "undoubted [principle] of law" that "it is not open to the courts nowadays either to create new offences or so to widen existing offences as to make punishable conduct of a type hitherto not subject to punishment". The same view would prevent any judicial widening of so extremely serious a crime as rape. That view was well-entrenched among judges, practising lawyers and academic lawyers. Contemporary reaction to two surprising decisions of the House of Lords in 1960 and 1961 demonstrates how well-entrenched it was. Director of Public Prosecutions v Smith. The first was a murder case, Director of Public Prosecutions v Smith. The trial judge (Donovan J) directed a 240 [1954] 1 QB 158 at 165. 241 [1954] 1 QB 158 at 167. 242 [1975] AC 842 at 863. jury that if the accused, in doing what he did, must as a reasonable man have contemplated that serious harm was likely to occur to the victim, he was guilty of murder – whether or not the accused actually had that contemplation. The Court of Criminal Appeal (Byrne, Sachs and Winn JJ) allowed Smith's appeal and substituted for the verdict of capital murder a verdict of manslaughter. On 28 July 1960, the House of Lords (Viscount Kilmuir LC, Lords Goddard, Tucker, Denning and Parker of Waddington) allowed a prosecution appeal and restored the conviction for capital murder. Viscount Kilmuir LC said that an accused person who was accountable for his actions and who carried out an unlawful and voluntary act was guilty of murder if the ordinary reasonable man would, in all the circumstances of the case, have contemplated grievous bodily harm as the natural and probable result of that act243. Shaw v Director of Public Prosecutions. The second case was decided on 4 May 1961. The House of Lords (Viscount Simonds, Lords Tucker, Morris of Borth-y-Gest and Hodson; Lord Reid dissenting) held in Shaw v Director of Public Prosecutions that the courts could create new crimes. Viscount Simonds said that the courts had: "a residual power, where no statute has yet intervened to supersede the common law, to superintend those offences which are prejudicial to the public welfare. Such occasions will be rare, for Parliament has not been slow to legislate when attention has been sufficiently aroused. But gaps remain and will always remain since no one can foresee every way in which the wickedness of man may disrupt the order of society."244 Lord Reid, whose reputation, still high, was extremely high in the early 1960s, dissented. He quoted with approval the second passage from R v Newland set out above245. He said246: "the courts cannot now create a new offence". Contemporary reactions to Shaw v Director of Public Prosecutions. Shaw v Director of Public Prosecutions attracted heavy criticism247. Probably for that 243 [1961] AC 290 at 327. 244 [1962] AC 220 at 268. 245 [1962] AC 220 at 274-275. 246 [1962] AC 220 at 276. 247 For example, Hall Williams, "The Ladies' Directory and Criminal Conspiracy: The Judge as Custos Morum", (1961) 24 Modern Law Review 626; Smith, "Commentary", [1961] Criminal Law Review 470; Seaborne Davies, "The House of Lords and the Criminal Law", (1961) 6 Journal of the Society of Public Teachers (Footnote continues on next page) reason, the principle it enunciated has since been narrowed 248. The modern English view corresponds with Lord Reid's. Thus Lord Bingham of Cornhill said249: "there now exists no power in the courts to create new criminal offences". An example of the contemporary reaction to Shaw v Director of Public Prosecutions is what P J Fitzgerald, a prominent Anglo-Irish criminal lawyer, wrote in 1962250: "Few cases in recent years have been quite so disturbing as this. The resuscitation of the judicial power to create crimes runs counter to two cardinal principles of free and democratic government." Fitzgerald put the first as follows251: "[T]he idea of the rule of law … is based on the demand that the citizen should be ruled by laws and not by the whims of men. In the sphere of criminal law this idea has become crystallized as … a principle according to which only breaches of existing criminal law should be punishable. The justification of this principle, which has been adopted as an actual rule in some legal systems, though not in the English legal system, is that the citizen should be able to know beforehand what conduct is permitted and what forbidden; for only in this way can he order his affairs with certainty and avoid coming into conflict with the law. It is this demand for certainty with regard to the provisions of the criminal law that militates against retrospective criminal legislation. When Parliament creates a new crime, it almost invariably legislates for the future only. This, however, is just what the courts cannot do. Our legal system is such that a court can of Law 104; Turpin, "Criminal Law – Conspiracy to Corrupt Public Morals", [1961] Cambridge Law Journal 144. 248 Director of Public Prosecutions v Bhagwan [1972] AC 60 at 80; Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions [1973] AC 435; Director of Public Prosecutions v Withers [1975] AC 842. 249 R v Jones (Margaret) [2007] 1 AC 136 at 161-162 [28]; see also at 171 [61] per Lord Hoffmann and 179-180 [102] per Lord Mance. 250 Criminal Law and Punishment, (1962) at 9. 251 Criminal Law and Punishment, (1962) at 9-10. The passage from Bentham to which Fitzgerald refers is from "Truth versus Ashhurst", in Bowring (ed), The Works of Jeremy Bentham, (1843), vol V at 235. It is conveniently set out in R v Rimmington [2006] 1 AC 459 at 480 [33]. only decide a point of law which arises in some actual case before the court, and consequently the court's decision always relates back to the facts of this case, facts which of course precede the decision. If, therefore, a court manufactures a new crime, it thereby determines after the event that the defendant's conduct, which at the time of commission was not prohibited by law, is a criminal offence. To countenance this type of retrospective criminal legislation means that certainty and consequently freedom are at an end. Bentham long ago pointed out that when the judges make law like this, they are treating the citizen as a man treats his dog, hitting him every time he does something to which the master takes exception. Animals and young children can only be trained in this way. Sane and adult members of a free society, however, are entitled to demand first to be told what conduct is forbidden so that they may choose whether or not to keep within the law." Fitzgerald put the second objection to "the creation of new offences by the courts" thus252: "Even suppose that a court could decide that the kind of act which the defendant had done would in future, though not in the instant case, constitute a crime, there is still the objection that this type of proceeding is not consonant with democratic government. If Parliament creates a new crime, the citizens whose liberty is thereby restricted have the consolation that this was done by their elected representatives whom they chose to perform this sort of activity, and whom in due course they may re-elect or reject. The judges, on the other hand, are appointed by the Crown, virtually irremovable and in practice accountable to no one. That such a body should have the power to decree that certain acts shall constitute crimes is totally incompatible with the notion of democracy." In similar vein, Lord Reid said that judicial legislation should be avoided when "public opinion is sharply divided on any question"253. The development of the criminal law raises questions which often sharply divide public opinion. Lord Reid employed arguments similar to those of Fitzgerald in Shaw v Director of Public Prosecutions254. And twice in R v Newland255, the Court of 252 Criminal Law and Punishment, (1962) at 10. 253 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 23. See also Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions [1973] AC 435 at 489. 254 [1962] AC 220 at 275. 255 [1954] 1 QB 158 at 165 and 167. Criminal Appeal referred to Sir James Fitzjames Stephen's statement of related arguments 70 years earlier256: "it is hardly probable that any attempt would be made to exercise [a power of declaring new offences] at the present day; and any such attempt would be received with great opposition, and would place the bench in an invidious position. … In times when legislation was scanty, [that power was] necessary. That the law in its earlier stages should be developed by judicial decisions from a few vague generalities was natural and inevitable. But a new state of things has come into existence. On the one hand, the courts have done their work; they have developed the law. On the other hand, parliament is regular in its sittings and active in its labours; and if the protection of society requires the enactment of additional penal laws, parliament will soon supply them. If parliament is not disposed to provide punishments for acts which are upon any ground objectionable or dangerous, the presumption is that they belong to that class of misconduct which it is not desirable to punish. Besides, there is every reason to believe that the criminal law is, and for a considerable time has been, sufficiently developed to provide all the protection for the public peace and for the property and persons of individuals which they are likely to require under almost any circumstances which can be imagined; and this is an additional reason why its further development ought to be left in the hands of parliament." Lord Diplock used similar reasoning in Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions257 to advocate a retreat from Shaw v Director of Public Prosecutions. The views of a scholar who received his legal education in Adelaide shortly before the appellant allegedly committed the conduct charged are representative of how lawyers thought at that time and in that place258: "the administration, or working-out, of the criminal law's prohibitions is permeated by rules and principles of procedural fairness ('due process of law') and substantive fairness (desert, proportionality), which very substantially modify the pursuit of the goal of eliminating or diminishing the undesired forms of conduct: such principles as nulla poena sine lege 256 A History of the Criminal Law of England, (1883), vol III at 359-360. 257 [1973] AC 435 at 473-474. See also Lord Simon of Glaisdale at 489. 258 Finnis, Natural Law and Natural Rights, (1980) at 261-262. (and rather precise leges, at that), and the principles which outlaw retroactive proscription of conduct (at the known cost of letting some dubious characters slip through the net), and restrain the process of investigation, interrogation, and trial (even at the expense of that terror which a Lenin knows is necessary for attaining definite social goals)." (emphasis in original) Ideas of this kind, though perhaps less congenial to the mentalities of recent decades, were very familiar to Australian judges in the early 1960s. They universally assented to those ideas. Contemporary reactions to Director of Public Prosecutions v Smith. Director of Public Prosecutions v Smith, too, attracted immediate criticism. In Australia it was rightly seen as an extension of the law of murder. Shortly before his death, Sir Wilfred Fullagar, then a Justice of this Court, entered Sir Owen Dixon's chambers and observed: "Well, Dixon, they're hanging men for manslaughter in England now."259 The doctrine stated in Director of Public Prosecutions v Smith was soon abolished by statute in England260. Glanville Williams called it "the most criticised judgment ever to be delivered by an English court."261 Lord Reid called it a "disaster"262. Dixon CJ, in his 35th year on the High Court and nearing the end of his eighth decade, levelled the most damaging criticism of all at it in Parker v The Queen. Judgment was delivered on 24 May 1963. That was at or shortly before the time the present appellant could have had the question of his immunity from prosecution for allegedly raping his wife in March and April 1963 considered by the courts, had the complainant, the police, the prosecuting authorities, and the courts moved expeditiously. Dixon CJ delivered a dissenting judgment. But it concluded with a passage263 with which all other members of the Court (Taylor, Menzies, Windeyer and Owen JJ) agreed264. In reading that passage, it must be remembered that up to 1963 it had been the High Court's 259 Ayres, Owen Dixon, (2003) at 276. 260 Criminal Justice Act 1967, s 8. 261 Textbook of Criminal Law, 2nd ed (1983) at 81. See also Williams, "Constructive Malice Revived", (1960) 23 Modern Law Review 605. 262 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 29. 263 (1963) 111 CLR 610 at 632; [1963] HCA 14. 264 (1963) 111 CLR 610 at 633. practice to follow decisions of the House of Lords265. It had also been the Court's practice to pay great respect to the decisions of the English Court of Appeal266, and decisions of English High Court judges. That was so even though no appeal lay from any Australian court to those Courts. "In Stapleton v The Queen267 we said: 'The introduction of the maxim or statement that a man is presumed to intend the reasonable consequences of his act is seldom helpful and always dangerous'268. That was some years before the decision in Director of Public Prosecutions v Smith269, which seems only too unfortunately to confirm the observation. I say too unfortunately for I think it forces a critical situation in our (Dominion) relation to the judicial authority as precedents of decisions in England. Hitherto I have thought that we ought to follow decisions of the House of Lords, at the expense of our own opinions and cases decided here, but having carefully studied Smith's Case270 I think that we cannot adhere to that view or policy. There are propositions laid down in the judgment which I believe to be misconceived and wrong. They are fundamental and they are propositions which I could never bring myself to accept." Dixon CJ then said that Smith's case "should not be used as authority in Australia at all." Those were terrible words. They were brooding, sombre and unusually passionate. In them the aged Chief Justice revealed that at the end of his career he had plumbed the depths of an intolerable nightmare. His reaction shows the Court being provoked by a retrospective judicial expansion of criminal liability in England into a determination to preserve crucial common law principles in Australia, not applaud or foster their destruction. This Court had changed its own rules of stare decisis in order to preserve Australian law. Those rules are 265 Piro v W Foster & Co Ltd (1943) 68 CLR 313 at 320; [1943] HCA 32. See also Wright v Wright (1948) 77 CLR 191 at 210; [1948] HCA 33. There Dixon J said that diversity was "an evil", and that the "avoidance [of diversity] is more desirable than a preservation here of what we regard as sounder principle." 266 Waghorn v Waghorn (1942) 65 CLR 289 at 292; [1942] HCA 1. 267 (1952) 86 CLR 358; [1952] HCA 56. 268 (1952) 86 CLR 358 at 365. fundamental to the judicial method. The change was very substantial. Though the High Court continued to be bound by Privy Council decisions, on most points of law there was much more authority from the House of Lords and the English Court of Appeal than the Privy Council. For those reasons Parker v The Queen astonished the Australian legal profession. But its repudiation of the thinking underlying Director of Public Prosecutions v Smith accorded with the ideas of the Australian legal profession. What would the courts have done in 1963-1965? Had the appellant been charged with rape in April 1963, the immediate background to any claim by him of immunity from prosecution would have included the following elements. There was a continuing furore in which Lord Reid's dissent in Shaw v Director of Public Prosecutions was receiving overwhelming favour. There had been an explicit repudiation of English authority for the first time in Australian history271 in part because of its retrospective expansion of criminal liability. There was universal acceptance in the Australian judiciary of conceptions of the kind stated by Stephen, Lord Reid and Fitzgerald. They were conceptions ultimately rooted in the common understanding of the rule of law272. Recourse to the principal English works on criminal law which were available in 1963273 or soon to be published274 would have revealed that Hale's proposition as reflected in recent authorities was stated as the law. The same was true of Australian works 271 However, there had been a premonitory sign in Commissioner for Railways (NSW) v Cardy (1960) 104 CLR 274 at 285; [1960] HCA 45. 272 See Finnis, Natural Law and Natural Rights, (1980) at 270 (proposition (i)). 273 Fitzwalter Butler and Garsia (eds), Archbold: Pleading, Evidence & Practice in Criminal Cases, 35th ed (1962) at 1150 [2880]; Halsbury's Laws of England, 3rd ed (1955), vol 10 at 746 [1437]; Sturge (ed), Stephen's Digest of the Criminal Law (Indictable Offences), 9th ed (1950) at 263 (which includes the footnote Stephen had amended in the 4th ed (1887), the last he published in his lifetime): see below at [218]; Turner (ed), Russell on Crime, 11th ed (1958), vol 1 at 791; Turner (ed), Kenny's Outlines of Criminal Law, 18th ed (1962) at 192; Cross and Jones, An Introduction to Criminal Law, 4th ed (1959) at 76 and 160; Palmer and Palmer (eds), Harris's Criminal Law, 20th ed (1960) at 244. 274 Cross and Jones, An Introduction to Criminal Law, 5th ed (1964) at 79; Smith and Hogan, Criminal Law, (1965) at 290-292. available in 1963275 or shortly thereafter276. This Court was not taken to any works stating that Hale's proposition was not the law. The leading English and Australian academic lawyers specialising in criminal law – Professor Glanville Williams, Sir Rupert Cross, Sir John Smith, Professor Hogan, Professor Howard, Professor Brett, Professor Waller and Professor Morris – were agreed that the immunity existed. No Australian case denied Hale's proposition. A handful of English cases had qualified it, but only to a small degree277. Against that background, four questions arise. What prospect was there that the South Australian courts or the High Court would accede to an attempt by South Australia to effect a judicial extension, retrospectively, of criminal liability? What prospect was there that they would rule that the immunity had never existed? What prospect was there that they would accede to a submission that though the immunity had existed for a long time, it had disappeared some decades earlier? What prospect was there that they would accede to a submission that though the immunity had existed up to 1963, it should be abolished (necessarily with retrospective effect)? To each of those four questions the answer must be: "None". That answer is supported by the fact that once they came to consider the problem, neither the Australian nor the English courts wavered, until 1991, from the view asserted and assumed until then that Hale's proposition was substantially correct278. is necessary, with respect, emphatically to reject the statement that "in 1963, a respectable challenge to Sir Matthew Hale's opinion could have been mounted."279 To believe that is to believe that history can be rewritten in complete defiance of all contemporary evidence. It contradicts the reasoning of the House of Lords in R v R280. Foreseeability. South Australia did not rely on an argument which appealed to the European Court of Human Rights. But it is convenient to mention it. That Court held that the United Kingdom was not in contravention of 275 Weigall and McKay (eds), Hamilton and Addison: Criminal Law and Procedure, 6th ed (1956) at 88; Bourke, Sonenberg and Blomme, Criminal Law, (1959) at 43. See also Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247. 276 Brett and Waller, Cases and Materials in Criminal Law, 2nd ed (1965) at 300; Howard, Australian Criminal Law, (1965) at 145-147. 277 See above at [97]-[98]. 278 See above at [94]-[100]. 279 R v P, GA (2010) 109 SASR 1 at 13 [66] per Doyle CJ. 280 [1992] 1 AC 599: see above at [103]. Art 7 of the European Convention on Human Rights by reason of the decision in R v R because the abolition of the immunity was reasonably foreseeable281. This is a highly questionable justification for retrospective judicial change in the criminal law. But even if it is an arguable justification, it cannot apply here. It may be one thing to hold that it was reasonably foreseeable in 1990 that the immunity might be abolished in 1991. But in 1963 it was not reasonably foreseeable that if the matter came to court there would be an immediate abolition of the immunity by judicial means282. The significance of R v L. South Australia submitted that statements in R v L supported its second submission283. But it accepted that they were unnecessary to the decision in that case, and hence were dicta only. They were dicta about an aspect of the common law – a presumed incapacity to withdraw consent – which had been abolished by statute in every Australian jurisdiction. Further, they were dicta which said only that Hale's proposition was not in 1991 part of the common law of Australia. They said nothing in terms about what the position was in 1963. For the Court in this appeal the question is whether, as a matter of ratio decidendi, not obiter dicta, South Australia's second submission should be recognised as correct. An annihilatingly powerful reason for not recognising it is that it criminalises conduct which, if it took place, was lawful at the time it took place. Conclusion on South Australia's second submission. A decision by the legislature of South Australia after 1963 to enact a law retrospectively providing that the immunity was abolished with effect from a date before 1963 would have been subject to criticism from many quarters. That would have been significant, not because the critics would have been numerous, but because their criticisms would have been most trenchant284. South Australia's submission that the same result is to be achieved by a judicial decision to that effect is open to even greater criticism. The position of the judiciary in this respect is not superior to that of the legislature. For those reasons South Australia's second submission must be rejected. 281 SW v United Kingdom (1995) 21 EHRR 363 at 402 [43/41]. 282 Cf R v C [2004] 1 WLR 2098; [2004] 3 All ER 1, dealing with conduct in 1970 – a case exemplifying to a very marked degree the fallacy known to personal injury lawyers of finding foreseeability solely on the basis of hindsight. 283 (1991) 174 CLR 379 at 390 per Mason CJ, Deane and Toohey JJ and 405 per 284 See Walker, The Rule of Law, (1988) at 315-324. Issues which need not be resolved The appellant contended that a common law rule should be created by this Court to the effect that when there is a judicial change to the common law it only operates prospectively, not retrospectively. This would involve overruling prior authority285. That contention would only become a live issue if the common law as stated by Hale were held to have changed in the past (as South Australia submitted) or were to be changed now (as South Australia did not submit). It is not correct to arrive at either holding. Hence the need to consider the contention does not arise. Orders The appeal should be allowed. For the answer to the question of law given by the majority in the Full Court of the Supreme Court of South Australia there should be substituted the answer: "No". 285 Ha v New South Wales (1997) 189 CLR 465 at 503-504; [1997] HCA 34. Bell BELL J. In 2010, an Information was filed in the District Court of South Australia, charging the appellant with offences including two counts of rape. The complainant in each count was his then wife, GP, with whom he was living at the time. The offences of rape are alleged to have occurred in March and April 1963. It cannot be sensibly suggested that the appellant would have been prosecuted for those offences, had the allegations come to the attention of the authorities in 1963. This is because at that time it was understood that the crime of rape could not be committed by a husband against his wife with whom he was living ("the immunity"). A husband was amenable under the criminal law for any other offence of violence committed against his wife. The imposition of criminal liability on a person for an act or omission to which criminal liability did not attach at the date the act was done or omitted to be done is contrary to fundamental principle286. It is said that the prosecution of the appellant today for his conduct in 1963 does not offend that principle because the immunity has never formed part of the common law of Australia or, if it did, it had ceased to do so sometime before 1963. The first of these alternatives rests on demonstrating either the absence of an authoritative source for the immunity or that in R v L287 this Court declared the common law in terms that denied its existence. For the reasons that follow, neither of those propositions should be accepted. Nor should this Court now hold that, on some date before 1963, a settled rule of the common law affecting liability for a serious criminal offence ceased to exist. Procedural history The appellant was due to stand trial in the District Court of South Australia (Herriman DCJ) on 5 July 2010. On 29 June 2010, he applied to quash the counts in the Information charging him with rape contrary to s 48 of the Criminal Law Consolidation Act 1935 (SA) ("the CLC Act"). Herriman DCJ stated a case reserving a question of law for the determination of the Full Court of the Supreme Court of South Australia288. His Honour set out the following facts: each count charged an act of non-consensual penile-vaginal sexual intercourse with GP; GP and the appellant were married and cohabiting as husband and wife at the date of each alleged offence; and no legal orders or undertakings of any kind affected the marital relationship on those dates. The question of law that his Honour reserved is: 286 Nullum crimen sine lege; nulla poena sine lege (no crime or punishment without law). See Dicey, Introduction to the Study of the Law of the Constitution, 10th ed 287 (1991) 174 CLR 379; [1991] HCA 48. 288 CLC Act, s 350(2)(b). Bell "Was the offence of rape by one lawful spouse of another, in the circumstances as outlined above, an offence known to the law of South Australia as at 1963?" The Full Court, by majority (Doyle CJ and White J, Gray J dissenting), answered the question289 in this way290: "The defendant is liable at law to be found guilty of the offences of rape charged in count 3 and count 5 of the information, notwithstanding that at the time of the alleged offence he was married to the alleged victim and was cohabiting with her, the marriage giving rise to no presumption of consent on her part to intercourse with her husband, and giving rise to no irrebuttable presumption to that effect." By special leave, the appellant appeals to this Court against the answer given by the majority in the Full Court. The law of rape in South Australia Before turning to the Full Court's reasons, some reference should be made to the history of the law governing liability for rape in South Australia and to the decision in R v L. In 1963, the punishment for the offence of rape was provided by s 48 of the CLC Act: "Any person convicted of rape shall be guilty of felony, and liable to be imprisoned for life, and may be whipped." The elements of the offence of rape were supplied by the common law. The understanding that a husband could not be guilty as a principal in the first degree of the rape of his wife is traced to the statement of Sir Matthew Hale in The History of the Pleas of the Crown291: 289 Doyle CJ (White J concurring) restated the question as "whether Mr P can, as a matter of law, properly be convicted of count 3 and count 5 in the circumstances outlined": R v P, GA (2010) 109 SASR 1 at 4 [6]. 290 R v P, GA (2010) 109 SASR 1 at 19 [93] per Doyle CJ, 45 [174] per White J. 291 (1736), vol 1, c 58 at 629. Bell "But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." There does not appear to have been a single case in which a husband had been prosecuted for the rape of his wife with whom he was living in any common law jurisdiction at the date of the conduct with which the appellant is charged. By that date, as will appear, the justification for the immunity may have come to rest more upon the notion that the criminal law ought not to intrude into the marital bedroom, than upon the fiction of the wife's irrevocable consent. By the 1970s, the idea that there could be any justification for conferring immunity on a husband for the rape of his wife was the subject of critical academic attention and pressure for reform of the law292. South Australia was the first of the Australian jurisdictions to respond to the call for reform of the law of rape. In December 1975, the Attorney-General appointed a Committee of persons distinguished for their knowledge of the criminal law to report on the law relating to sexual offences293. The Committee was chaired by Justice Roma Mitchell of the Supreme Court of South Australia. The Committee submitted its Report to the Attorney-General in March 1976294. The Report contained a summary of the law stating that a husband could not be 292 The Women's Electoral Lobby was formed in 1972. See s 2 of its "Draft Bill and Other Recommendations on Sexual Offences (Superseding Draft Bill of August 1977; plus addenda of July 1978)", in Scutt (ed), Rape Law Reform, (1980) 265 at 268. See also Scutt, "Consent in Rape: The Problem of the Marriage Contract", (1977) 3 Monash University Law Review 255; Buddin, "Revision of Sexual Offences Legislation: A Code for New South Wales?", (1977) 2 University of New South Wales Law Journal 117 at 128-130; Sallmann and Chappell, Rape Law Reform in South Australia: A Study of the Background to the Reforms of 1975 and 1976 and of their Subsequent Impact, Adelaide Law Review Research Paper No 3, (1982) at v, 1-4, 10, 19-23. See, further, LeGrand, "Rape and Rape Laws: Sexism in Society and Law", (1973) 61 California Law Review 919; Brownmiller, Against Our Will: Men, Women and Rape, (1975); Geis, "Lord Hale, Witches, and Rape", (1978) 5 British Journal of Law and Society 26. 293 The other members of the Committee were Professor Howard, Hearn Professor of Law at Melbourne University and the author of the leading text on the criminal law in Australia, and Mr David Biles, the Assistant Director (Research) at the Australian Institute of Criminology. Mr Warren Brent Fisse, then Reader in Law at the University of Adelaide, was engaged as a consultant to the Committee. 294 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976). Bell guilty as a principal in the first degree of the rape of his wife. The Committee noted judicial development of the law in England allowing an exception to the immunity in the case of a wife who had obtained an order for separation relieving her from the obligation to cohabit with her husband295. It recommended that the immunity should be confined such that a husband should be liable to conviction for the rape of his wife whenever the act constituting the rape was committed while the two were living apart and not under the same roof296. Following receipt of the Committee's Report, the South Australian Parliament amended the CLC Act297 by introducing s 48(1), which stated the elements of the offence of rape, and s 73, which relevantly provided: "(3) No person shall, by reason only of the fact that he is married to some other person, be presumed to have consented to sexual intercourse with that other person. (5) Notwithstanding the foregoing provisions of this section, a person shall not be convicted of rape or indecent assault upon his spouse, or an attempt to commit, or assault with intent to commit, rape or indecent assault upon his spouse (except as an accessory) unless the alleged offence consisted of, was preceded or accompanied by, or was associated with – assault occasioning actual bodily harm, or threat of such an assault, upon the spouse; an act of gross indecency, or threat of such an act, against the spouse; 295 In R v Clarke [1949] 2 All ER 448, Byrne J held that, although as a general proposition of law a husband could not be guilty of rape of his wife, there was an exception where the wife was living separately and with the protection of a court order. The exception was recognised but did not apply in the circumstances in R v Miller [1954] 2 QB 282 (see fn 339 below) and it was extended in R v O'Brien [1974] 3 All ER 663. See Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 296 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 15 [6.2.1]. 297 Criminal Law Consolidation Act Amendment Act 1976 (SA). Bell an act calculated seriously and substantially to humiliate the spouse, or threat of such an act; or threat of the commission of a criminal act against any person." In the period following the South Australian reforms, the parliaments of each of the States and Territories enacted legislation with the evident intention of modifying or abolishing the immunity. This process of reform was completed by December 1991, when R v L was decided. In the Code States, this was achieved by removing the words "not his wife" from the definition of the offence298. In the Northern Territory, it was achieved by enacting the Criminal Code (NT) in terms that did not limit rape to an offence outside marriage299. In the Australian Capital Territory and New South Wales, it was done by enacting that the fact of marriage was no bar to conviction for the offence300. In Victoria and South Australia, any presumption of spousal consent to sexual intercourse on marriage was, in terms, abolished301. South Australia was alone in providing a limited immunity for 298 The Acts Amendment (Sexual Assaults) Act 1985 (WA) repealed s 325 of the Criminal Code (WA) and introduced s 324D, which provided that "[a]ny person who sexually penetrates another person without the consent of that person is guilty of a crime". The Criminal Code Amendment (Sexual Offences) Act 1987 (Tas) substituted a new s 185(1) of the Criminal Code (Tas), providing that "[a]ny person who has sexual intercourse with another person without that person's consent is guilty of a crime". The Criminal Code, Evidence Act and other Acts Amendment Act 1989 (Q) repealed s 347 of the Criminal Code (Q) and substituted a provision defining rape as "carnal knowledge of a female without her consent". 299 Criminal Code Act 1983 (NT), incorporating the Criminal Code (NT), s 192(1). 300 The Crimes (Sexual Assault) Amendment Act 1981 (NSW) inserted s 61A(4) into the Crimes Act 1900 (NSW), which provided that the fact that a person is married to a person on whom an offence of sexual assault is alleged to have been committed is no bar to conviction for that offence. The Crimes (Amendment) Ordinance (No 5) 1985 (ACT) inserted s 92R into the Crimes Act 1900 (NSW), as it applied to the ACT, which provided that the fact that a person is married to a person upon whom an offence of sexual intercourse without consent contrary to s 92D is alleged to have been committed shall be no bar to the conviction of the first-mentioned person for the offence. 301 In Victoria, the Crimes (Amendment) Act 1985 (Vic) substituted for s 62(2) of the Crimes Act 1958 (Vic) a new sub-section providing that the existence of a marriage does not constitute, or raise any presumption of, consent by a person to a sexual penetration or indecent assault by another person. Bell husbands in the case of non-aggravated offences. Further amendments introduced into the CLC Act in 1992 removed this partial immunity302. In R v L, the validity of s 73(3) of the CLC Act was challenged on the ground of inconsistency with Commonwealth law. The claimed inconsistency was with s 114(2) of the Family Law Act 1975 (Cth), which conferred power on the Family Court of Australia to make an order relieving a party to a marriage from any obligation to perform marital services or to render conjugal rights. The Court held that there was no direct or indirect inconsistency between the State and Commonwealth laws303. Resolution of the issue presented in R v L did not require consideration of proof of the offence of rape under the common law. Among the submissions advanced on L's behalf was that s 114(2) of the Commonwealth statute preserved the common law inability of a wife to withhold her consent to sexual intercourse with her husband. In their joint reasons, Mason CJ, Deane and Toohey JJ said that, "if it was ever the common law that by marriage a wife gave irrevocable consent to sexual intercourse by her husband, it is no longer the common law"304. This statement was prominent in the respondent's submissions before the Full Court and on this appeal. The Full Court Doyle CJ, writing for the majority in the Full Court, answered the reserved question on the footing that it was likely that Hale's statement of the immunity would have been accepted as a correct statement of the common law of Australia in 1963305. Nonetheless, his Honour said the Full Court should apply the considered statement of this Court that any presumption of irrevocable consent to sexual intercourse no longer formed part of the common law306. His Honour encapsulated the operation of the declaratory theory of the common law in the following statement307: 302 Criminal Law Consolidation (Rape) Amendment Act 1992 (SA). 303 R v L (1991) 174 CLR 379 at 385. 304 R v L (1991) 174 CLR 379 at 390. 305 R v P, GA (2010) 109 SASR 1 at 13 [66]. 306 R v P, GA (2010) 109 SASR 1 at 4 [8], 17 [82]. 307 R v P, GA (2010) 109 SASR 1 at 4 [9]. Bell "Mr P is charged with offences against the then s 48 of the [CLC Act]. In 1963 the elements of that offence were determined by the common law. Today, those elements are determined by the common law as stated by the majority in R v L." Gray J dissented. His Honour considered that the majority in R v L had not declared the common law with respect to liability for rape308. He reviewed the history and concluded that the appellant could not have been convicted of the rape of GP in 1963309. His Honour would have answered the reserved question in the negative310. Developments in Scotland and England Before returning to the decision in R v L, reference should be made to judicial development of the law relating to the immunity in Scotland and England. In S v HM Advocate311, an accused was indicted in the High Court of Justiciary in Scotland for the rape of his wife, with whom he was cohabiting. He challenged the count, contending that no crime known to the law of Scotland had been committed. The motion was dismissed and the dismissal upheld on appeal. Lord Justice-General Emslie, giving the judgment of the Court, noted that there was no authority holding that a cohabiting husband could be convicted of the rape of his wife312. His Lordship considered the state of English law to be sufficiently summarised in Glanville Williams' Textbook of Criminal Law313: 308 R v P, GA (2010) 109 SASR 1 at 36 [146], 37 [148]. The reference to the majority in the context is to the joint reasons of Mason CJ, Deane and Toohey JJ and the 309 R v P, GA (2010) 109 SASR 1 at 29 [132]. 310 R v P, GA (2010) 109 SASR 1 at 45 [173]. 311 1989 SLT 469. 312 S v HM Advocate 1989 SLT 469 at 471. There had been cases in Scotland following Clarke (see fn 295 above) that allowed the conviction of a man for the rape of his wife where they were separated: HM Advocate v Duffy 1983 SLT 7; HM Advocate v Paxton 1985 SLT 96. 313 S v HM Advocate 1989 SLT 469 at 472, citing Williams, Textbook of Criminal Law, 2nd ed (1983) at 236. Bell "A husband is legally incapable of perpetrating rape upon his wife unless the parties are judicially separated, or (probably) separated by consent, or unless the court has issued an injunction forbidding the husband to interfere with his wife, or the husband has given an undertaking to the court in order to avoid the issue of the injunction." Lord Emslie referred with approval to Glanville Williams' views on the justification for the immunity314: "The reason traditionally given for the general rule is the totally unconvincing one that the wife's consent is given on marriage, and she cannot revoke it. It would be an understatement to say that this authentic example of male chauvinism fails to accord with current opinion as to the rights of husbands." The immunity in the law of Scotland was traced to the unequivocal statement of it by Baron Hume315, which, in turn, drew on Hale. The Court accepted that Hume's statement of the law may have been correct in the 18th and early 19th centuries. However, the application of the rule in the late 20th century depended on the reasons justifying it and it was said that irrevocable consent, "if it ever was a good reason, no longer applies today"316. In 1985, in R v Roberts, the Criminal Division of the Court of Appeal of England and Wales said317: "In our judgment the law is now quite plain on this topic [marital rape]. The status of marriage involves that the woman has given her consent to her husband having intercourse with her during the subsistence of the marriage. She cannot unilaterally withdraw it." 314 S v HM Advocate 1989 SLT 469 at 473-474, citing Williams, Textbook of Criminal Law, 2nd ed (1983) at 237. 315 S v HM Advocate 1989 SLT 469 at 472, citing Hume, Commentaries on the Law of Scotland Respecting Crimes, (1797), vol 1, and subsequent editions published in 1819 and 1829, and the fourth edition edited by Bell in 1844. Also cited were Burnett, Criminal Law of Scotland, (1811) and Macdonald, A Practical Treatise on the Criminal Law of Scotland, 5th ed (1948) at 119. 316 S v HM Advocate 1989 SLT 469 at 473. 317 [1986] Crim LR 188, (Transcript: Marten Walsh Cherer). Bell The decision in Roberts followed Steele318 and allowed that a husband might be convicted of the rape of his wife in circumstances in which he and she had, by mutual agreement or court order, effectively put an end to the wife's fictional consent. The enactment of s 1(1)(a) of the Sexual Offences (Amendment) Act 1976 (UK), which defined rape in terms incorporating the expression "unlawful sexual intercourse", led to conflicting decisions at the trial court level319 as to the ability to judicially develop further exceptions to the immunity. The perceived difficulty was occasioned by the recognition that the word "unlawful" in this context had always been understood to refer to sexual intercourse outside marriage320. The Court of Appeal addressed this controversy in R v R321. The accused had been convicted of the attempted rape of his wife committed on an occasion in 1989 when the two were living separately. The wife had informed the accused of her intention to petition for divorce but had not commenced proceedings before the date of the offence. Lord Lane CJ, giving the judgment of the Court, said322: "It seems to us that where the common law rule no longer even remotely represents what is the true position of a wife in present day society, the duty of the court is to take steps to alter the rule if it can legitimately do so in the light of any relevant Parliamentary enactment." It was held that the word "unlawful" in the definition was surplusage. "We take the view that the time has now arrived when the law should declare that a rapist remains a rapist subject to the criminal law, irrespective of his relationship with his victim." 318 (1976) 65 Cr App R 22. 319 R v R [1991] 1 All ER 747; R v C [1991] 1 All ER 755; R v J [1991] 1 All ER 759. 320 R v Chapman [1959] 1 QB 100 at 105. 321 R v R [1992] 1 AC 599. 322 R v R [1992] 1 AC 599 at 610. 323 R v R [1992] 1 AC 599 at 611. Bell The House of Lords affirmed the decision. Lord Keith of Kinkel (with whom the other members of the House agreed) observed324: "It may be taken that [Hale's dictum] was generally regarded as an accurate statement of the common law of England. The common law is, however, capable of evolving in the light of changing social, economic and cultural developments. Hale's proposition reflected the state of affairs in these respects at the time it was enunciated. Since then the status of women, and particularly of married women, has changed out of all recognition in various ways which are very familiar and upon which it is unnecessary to go into detail." The European Court of Human Rights dismissed an application in respect of the decision in R v R325, holding that the accused's conviction did not violate Art 7(1) of the European Convention on Human Rights326. The decision had continued a perceptible line of authority dismantling the immunity327 and the development of the law "had reached a stage where judicial recognition of the absence of immunity had become a reasonably foreseeable development of the law"328. The courts in S v HM Advocate and R v R declared the common law of Scotland, England and Wales, taking into account changes in the conditions of 324 R v R [1992] 1 AC 599 at 616. 325 SW v United Kingdom (1995) 21 EHRR 363. 326 Article 7 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1950) provides: "1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed. 2. This article shall not prejudice the trial and punishment of any person for any act or omission which, at the time when it was committed, was criminal according to the general principles of law recognised by civilised nations." 327 SW v United Kingdom (1995) 21 EHRR 363 at 402. 328 SW v United Kingdom (1995) 21 EHRR 363 at 402. Bell society. In this respect, Lord Keith adopted the following statement from S v HM Advocate329: "By the second half of the 20th century, however, the status of women, and the status of a married woman, in our law have changed quite dramatically." The decisions in S v HM Advocate and R v R necessarily operated with retrospective effect. In each case, the conduct giving rise to the charge was alleged to have occurred not long before the date of the decision. That was important to the reasoning of the European Court of Human Rights in dismissing the application in R v R. One issue raised by this appeal that was not present in S v HM Advocate or R v R concerns the imposition of criminal liability in consequence of developing the law to take account of changed social conditions, for conduct that may have occurred before those changes took place. Prospective overruling and R v L the The Attorneys-General for South Australia, Queensland and Commonwealth intervened to address a constitutional issue raised by the appellant's third ground of appeal. This ground asserts that, if the common law was capable of further development following the 1976 amendments to the CLC Act, it should only be developed on a prospective basis. The submission was argued by reference to the decision of the House of Lords in In re Spectrum Plus Ltd (in liquidation)330. It was said in that case that the flexibility inherent in the English legal system permits the prospective overruling of a previous decision in a case in which it would otherwise produce gravely unfair and disruptive consequences for past transactions or events331. However, it has been held that a constitutional limitation on the exercise of judicial power does not permit this Court flexibility of that kind332. In their joint reasons in R v L, Mason CJ, Deane and Toohey JJ discussed the content of conjugal rights in the law of marriage, rejecting the submission that the doctrine imposes a continuing obligation on the part of a spouse to 329 R v R [1992] 1 AC 599 at 617, citing S v HM Advocate 1989 SLT 469 at 473. 331 In re Spectrum Plus Ltd (in liquidation) [2005] 2 AC 680 at 699 [40] per Lord Nicholls of Birkenhead. 332 Ha v New South Wales (1997) 189 CLR 465 at 504 per Brennan CJ, McHugh, Gummow and Kirby JJ; [1997] HCA 34. Bell to sexual intercourse as a legal consequence of marriage333. consent Their Honours noted Lord Lane CJ's statement in R v R that "there can be little doubt that what [Hale] wrote was an accurate expression of the common law as it then stood"334. They went on to say335: "Without endeavouring to resolve the development of the common law in this regard, it is appropriate for this Court to reject the existence of such a rule as now part of the common law of Australia. … The notion is out of keeping also with recent changes in the criminal law of this country made by statute, which draw no distinction between a wife and other women in defining the offence of rape. It is unnecessary for the Court to do more than to say that, if it was ever the common law that by marriage a wife gave irrevocable consent to sexual intercourse by her husband, it is no longer the common law." (emphasis added; citations omitted) It was unnecessary for the Court to "resolve the development of the common law" because, as their Honours observed, the law had been changed by statute. There was no jurisdiction in Australia in which a presumption of spousal consent to sexual intercourse had any bearing on a person's liability for rape336. The answer to the question of law reserved by Herriman DCJ requires consideration of an issue that was not addressed by the joint reasons or the reasons of Dawson J in R v L, which is the liability under the common law of a cohabiting husband for the rape of his wife. Did the immunity form part of the received common law? The laws and statutes of England applicable to the Province of South Australia were received on 19 February 1836. The relevant history and principles are explained by Mason J in State Government Insurance Commission v Trigwell337. It is not in question that, if Hale's statement of the immunity was a 333 R v L (1991) 174 CLR 379 at 387. 334 R v L (1991) 174 CLR 379 at 389, citing R v R [1992] 1 AC 599 at 603-604. 335 R v L (1991) 174 CLR 379 at 389-390. 336 See above at [176]. 337 (1979) 142 CLR 617 at 634-635; [1979] HCA 40. As explained, s 3 of Act No 9 of 1872 (SA) re-enacted s 1 of Ordinance No 2 of 1843 (SA). Section 3 of the 1872 Act declared that: "In all questions as to the applicability of any laws or statutes of England to the Province of South Australia, the said Province shall be deemed to (Footnote continues on next page) Bell rule of the common law in 1836, it was part of the laws of England received in South Australia338. In light of the history leading to the enactment of s 73(3) and (5) of the CLC Act, there can be little doubt that the common law of Australia was understood as embodying a rule that a husband was not amenable to conviction for the rape of his wife. It is also evident that, by 1976, the justification for that immunity was not perceived to depend upon the concept of irrevocable consent that presumption while maintaining the immunity save for offences committed in circumstances of aggravation. the Parliament of South Australia abolished intercourse, since As will appear, the Parliament of South Australia was not alone in acting upon acceptance that a husband was immune under the common law for the rape of his wife. Nonetheless, it is said that, correctly understood, the common law has never conferred the immunity. This is because Hale did not cite any authority for it and there is no binding judicial decision confirming its existence339. These criticisms will be addressed in turn. have been established on the twenty-eighth day of December, one thousand eight hundred and thirty-six." A modified version of this declaration was enacted in s 48 of the Acts Interpretation Act 1915 (SA). That section was repealed by s 26 of the Acts Interpretation Act Amendment Act 1983 (SA), with the effect that the date of settlement of the Province of South Australia is now taken to be 19 February 1836, on which date letters patent were issued defining its borders. See Lipohar v The Queen (1999) 200 CLR 485 at 508 [54]; [1999] HCA 65, citing South Australia v Victoria (1911) 12 CLR 667 at 676-677; [1911] HCA 17. 338 See R v Brown (1975) 10 SASR 139 at 153; R v Wozniak and Pendry (1977) 16 SASR 67 at 71; Question of Law (No 1 of 1993) (1993) 59 SASR 214 at 230; Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 13 [6.2]. 339 The only decision turning directly on the immunity appears to be R v Miller [1954] 2 QB 282. In that case, the accused was tried for the rape of his wife. The prosecution was brought after the decision in Clarke (see fn 295 above). The Crown relied on the evidence that the wife had been living separately at the time of the incident and had petitioned for divorce. Lynskey J held that the presentation of the petition for dissolution of the marriage did not have any effect in law upon the existing marriage and, accordingly, that the accused had no case to answer on the count charging rape: at 290. Bell An authoritative statement of the law of rape before Hale? It would be foolish to attempt to state the elements of liability for the offence of rape in the period before Hale. Holdsworth gives an account of the development of the offence in general terms, observing that Bracton would have confined the offence to violent intercourse with a virgin340. At the time of the writings attributed to Glanvill, rape was a plea of the Crown, which could be prosecuted by private appeal or on the presentation of the jury341. It appears that, in the early period, most prosecutions were by private appeal and that an appeal could be compromised by the marriage of the victim to her assailant342. There is evidence that, before the time of Hale, it was a good defence to an appeal of rape to say that the woman was one's concubine343. Holdsworth saw the essentials of the offence of rape as having been defined sometime after the Statute of Westminster II c 34, which made all rapes punishable as felonies344. The statute was passed in 1285 in the reign of Edward I. The only authority cited in Holdsworth for the statement of the essentials of the offence is Hale345. The explanation for this gap of some 400 340 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316, citing Bracton f 148. The most severe punishment, it seems, was reserved for the rape of a virgin, but elsewhere Bracton refers to punishment for the forcible ravishment of various categories of women: Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 414-415. 341 Hall (ed), The treatise on the laws and customs of the realm of England commonly called Glanvill, (1965) at 3, 175-176; Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. 342 Hall (ed), The treatise on the laws and customs of the realm of England commonly called Glanvill, (1965) at 176; Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 417-418; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212; Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. 343 Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 416; Dalton, The Country Justice, (1690), c 160 at 392; Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 41 at 108. 344 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. The Statute of Westminster II c 34 and its predecessor, the Statute of Westminster I c 13, also dealing with the punishment for rape, were both repealed by the Offences against the Person Act 1828 (UK) (9 Geo 4 c 31). 345 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. Bell years may lie in Professor Baker's account of the development of the criminal law. In the period up to the mid-16th century, the common law comprised the "common learning" found, not only in the yearbooks, but in the oral tradition of the Inns of Court346. It was the latter that shaped the criminal law. Few criminal cases were decided in the courts at Westminster and only a small number of criminal cases "trickled into the year books"347. Much of the record of the criminal law is found in the notes made by readers348 and these, it would seem, contain little discussion of rape349. Professor Baker says that the most visible result of the body of experience of the courts disposing of criminal cases is to be found in the treatises of Crompton, Dalton and Hale, all of whom drew heavily on rulings made at gaol deliveries350. It was their selection, rather than the rulings at large, which he suggests influenced the future development of the law351. The authority of the Pleas of the Crown Hale's statement was of a negative condition of liability for rape. This circumstance tends to explain the absence of prosecutions of husbands for the offence. Consideration of whether Hale's statement of the immunity came to acquire the status of a rule of law (if it was not one in 1736) requires some account of the standing of the Pleas of the Crown among common lawyers. Sir Matthew Hale held office as Chief Baron of the Exchequer and Chief Justice of the King's Bench successively in the years 1660 to 1676. He died in 1676, leaving instructions in his will prohibiting the publication of any work 346 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 486. See also at 469: "[I]t was the settled learning of the inns of court, referred to in the 1490s as the 'old learning of the court', or the 'common learning in moots'. Common learning, by its nature, did not require chapter and verse to support it. It was what the whole system of exercises was implicitly calculated to transmit, to test, and to teach" (citations omitted). 347 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 471. 348 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 529. 349 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 562. In fn 92, Baker notes that the Statute of Westminster II c 34 was glossed "very briefly". 350 Baker, "The Refinement of English Criminal Jurisprudence, 1500-1848", in The Legal Profession and the Common Law: Historical Essays, (1986) 303 at 313. 351 Baker, "The Refinement of English Criminal Jurisprudence, 1500-1848", in The Legal Profession and the Common Law: Historical Essays, (1986) 303 at 313. Bell other than that which he had permitted to be published in his lifetime. At the time of his death, he was writing the Pleas of the Crown, which he had planned as a work in three volumes352. Only the first volume was completed. Four years after his death, the House of Commons ordered that it be printed. However, it was not until 1736 that the first edition appeared under the editorship of Sollom Emlyn, barrister of Lincoln's Inn. Sir William Blackstone acknowledged his debt to Hale353 and drew on the Pleas of the Crown in his account of felonies in the Commentaries. Sir James Fitzjames Stephen accorded the composition of the Pleas of the Crown an important place in the evolution of the criminal law in the 17th century354. It was, in his estimate, a work "of the highest authority", demonstrating both "a depth of thought and a comprehensiveness of design" that put it in "quite a different category" from Coke's Institutes355. Important principles of criminal responsibility were hardly noticed before Hale356. Stephen saw the definition of many crimes as settled in the period that separates Coke from Blackstone, and Hale and Foster as having contributed more than any other writers to that development357. Maitland said of Hale that "none had a wider or deeper knowledge of the materials; he was perhaps the last great English lawyer who habitually studied records; he studied them pen in hand and to good purpose". He was, in Maitland's estimate, "the most eminent lawyer and judge of his time"358. Holdsworth accounted Hale "the greatest historian of English law before 352 Yale, Hale as a Legal Historian, (1976) at 8; Holdsworth, "Sir Matthew Hale", (1923) 39 Law Quarterly Review 402 at 419. The second volume was intended to deal with non-capital crimes and the third with franchises and liberties. 353 Blackstone, An Analysis of the Laws of England, 3rd ed (1758) at vii. 354 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 211. 355 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 211. Stephen was not uncritical in his treatment of the Pleas of the Crown. He described the weight of technical detail in the chapters dealing with procedure as almost unreadable except by a very determined student: at 212. 356 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 212. 357 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 219. 358 Maitland, "The Materials for English Legal History", in Fisher (ed), The Collected Papers of Frederic William Maitland, (1911), vol 2, 1 at 5. Bell Maitland"359. He considered the Pleas of the Crown to have been left in the best state of any of Hale's works that had not been published at the date of his death360. Holdsworth, like Stephen, regarded the treatise highly361: "It was a branch of the law which could not then be adequately described without a very complete knowledge of the history of the law; and, partly because it contained very ancient ideas and rules, partly because it had been added to and in many details modified by a variety of statutes, it greatly needed systematic Coke and Crompton had summarized it, in a somewhat unsystematic form. Hale, because he was both a competent historian, a competent jurist, and a competent lawyer did the work which they endeavoured to do infinitely better. Ever since its first publication it has been a book of the highest authority." (citations omitted) treatment. Holdsworth saw Coke as standing midway between the medieval and the modern law, and Hale as "the first of our great modern common lawyers"362. The analysis of the offence in the Pleas of the Crown Hale described the offence of rape as "the carnal knowledge of any woman above the age of ten years against her will, and of a woman-child under the age of ten years with or against her will"363. Hale acknowledged Coke for this statement364, but proceeded to a much more detailed analysis of proof of the offence. He discussed additional elements (any degree of penetration was sufficient and it was not necessary to prove emission of semen); accessorial liability for the offence; liability in the case of infants under 14 years; liability in the case of consenting females under 12 years; and consent obtained by threat of 359 Holdsworth, "Sir Matthew Hale", (1923) 39 Law Quarterly Review 402 at 402. 360 (1923) 39 Law Quarterly Review 402 at 419-420. 361 (1923) 39 Law Quarterly Review 402 at 420. 362 (1923) 39 Law Quarterly Review 402 at 425. 363 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. 364 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. The fourth edition of the Third Part of Coke's Institutes, published in 1669, in fact described the offence of rape as "the unlawfull and carnal knowledge and abuse of any woman above the age of ten years against her will, or of a woman-child under the age of ten years with her will, or against her will" (emphasis added): The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 11 at 60. Bell violence, among other matters. He also gave a deal of attention to the older law concerning appeals of rape, including the concubinage exception365. The account of the husband's immunity follows discussion of the latter. The relevant passage is set out below366: "It appears by Bracton ubi supra, that in an appeal of rape it was a good exception, quod ante diem & annum contentas in appello habuit eam ut concubinam & amicam, & inde ponit se super patriam, and the reason was, because that unlawful cohabitation carried a presumption in law, that it was not against her will. But this is no exception at this day, it may be an evidence of an assent, but it is not necessary that it should be so, for the woman may forsake that unlawful course of life. But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." Writing of the criticism that Hale had conjured up the immunity without authority, one commentator has observed that it might be thought incongruous that the law allowed an exception in the case of de facto relationships (for which there is clear evidence before Hale's time) but not de jure relationships367. The writer suggests that Hale lacked authority, not for the existence of the immunity, but for confining it to marriage368. It should be noticed that Hale said the concubinage exception was no longer good law because of the recognition that a 365 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. 366 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628-629. 367 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 154, citing Dalton, Countrey Justice, (1619) at 256; R v Lord Audley (1631) 3 St Tr 401 368 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 155. Professor Lanham identifies two extra-judicial supports for the existence of the immunity in Hale's time. Hale referred to Isabel Butler v William Pull, introducing the case by explaining that if A forces B to marry him and then has carnal knowledge of her against her will, he cannot be found guilty of rape during the subsistence of the voidable marriage; and Statute 6 R 2 stat 1 c 6, giving a husband a right of appeal where his wife had consented to a rape by a third party after the fact. Bell woman may forsake her unlawful way of life. This was stated by way of contrast to sexual intercourse within marriage, which was seen as lawful369. Hale had a commanding knowledge of the work of the courts administering criminal justice370. It may safely be taken that husbands were not prosecuted for rape of their wives in the period before the publication of his treatise. Given the subordinate status of married women under the law, this may not surprise371. Among the few benefits that the law conferred on the married woman was to immunise her from prosecution for a crime committed by her in her husband's presence372. The presumption of the law was that she was bound to obey her husband's command. This is not an idea that readily accommodates the prosecution of the husband for an act of non-consensual sexual intercourse with his wife. Hale is the source for locating the immunity in contract. It is a rationale that is consistent with Blackstone's treatment of the relations between husband and wife at law. The latter's celebrated account of the nature and effect of 369 See extract from Coke at fn 364 above. Similarly, Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 41 at 108 described rape, relevantly, as an offence "in having unlawful and carnal Knowledge of a Woman" (emphasis added). 370 See Yale, Hale as a Legal Historian, (1976) for an account of Hale's record-searching and collecting from 1630, and his extensive knowledge of King's 371 Williams, "The Legal Unity of Husband and Wife", (1947) 10 Modern Law Review 16 at 29; Easteal, "Rape in marriage: Has the licence lapsed?", in Easteal (ed), Balancing the Scales: Rape, Law Reform and Australian Culture, (1998) 107 at 372 Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 1 at 2; Hale, The History of the Pleas of the Crown, (1736), vol 1, c 7 at 44-48; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 2 at 29; J W C Turner, Russell on Crime, 12th ed (1964), vol 1 at 94-95. The presumption did not extend to treason or murder: Hale, The History of the Pleas of the Crown, (1736), vol 1, c 7 at 45. It has been abolished in all Australian jurisdictions: Crimes Act 1900 (NSW), Sched 3, cl 4(1) (originally s 407A(1)); Criminal Code (Q), s 32 (omitted in 1997); CLC Act, s 328A; Criminal Code (Tas), s 20(2); Crimes Act 1958 (Vic), s 336(1); Criminal Code (WA), s 32 (omitted in 2003); Crimes Act 1900 (ACT), s 289. It is not included in the defence of duress in the Criminal Code (NT), s 40. However, an affirmative defence of marital coercion has been retained in South Australia and Victoria: CLC Act, s 328A; Crimes Act 1958 (Vic), s 336. Bell coverture373 was prefaced by the statement: "[o]ur law considers marriage in no other light than as a civil contract"374. While "[t]he holiness of the matrimonial state" (emphasis in original) was a matter for the ecclesiastical courts, Blackstone emphasised that the temporal courts treated marriage like all other contracts, asking whether the parties were willing and able to contract375. It is an analysis which has been seen as a civilised advance on the medieval concept of the husband's natural and God-given power over his wife376. Professor Stretton suggests that, for Blackstone, the fundamental point was that married women consented to their modified legal status by their agreement to marriage377: "It was therefore the logic of contract that justified married women's particular treatment at law. However, it was a narrow concept of consent that ended abruptly at the church door, with no room for renegotiation during marriage and virtually no effective ability to escape the legal effects of marriage through separation or divorce." Blackstone's treatment of rape was largely taken from Hale378. He did not refer to the immunity, but it is evident that Hale's statement of it was not controversial. Blackstone drew attention to those occasions on which Hale's account of the law departed from the views of other writers. In Blackstone's analysis of the offence of rape, there was one such occasion. He noted that Hale considered that carnal knowledge of a girl aged under 12 years was rape regardless of consent, but that the law had in general been held only to extend to the carnal knowledge of a girl aged under 10 years379. 373 "By marriage, the husband and wife are one person in law: that is, the very being or legal existence of the woman is suspended during the marriage, or at least is incorporated and consolidated into that of the husband: under whose wing, protection, and cover, she performs every thing": Commentaries on the Laws of England, (1765), bk 1, c 15 at 430 (emphasis in original). 374 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 375 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 376 Stretton, "Coverture and Unity of Person in Blackstone's Commentaries", in Prest (ed), Blackstone and his Commentaries, (2009) 111 at 120-121. 377 Stretton, "Coverture and Unity of Person in Blackstone's Commentaries", in Prest (ed), Blackstone and his Commentaries, (2009) 111 at 123, citing Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 378 Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 211-215. 379 Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212. Bell The operation of the immunity Hale's statement of the law may be analysed in either of two ways. First, that the offence comprises two elements: (i) carnal knowledge of a female (involving some degree of penetration); (ii) without her consent. On this analysis the immunity arises by the operation of an irrebuttable presumption of law. The alternative analysis is that the first element of the offence requires proof of the "unlawful" carnal knowledge of a female and that "unlawful" in this context means outside marriage380. The latter view accords with the treatment of the offence by text-writers, including Coke and Hawkins writing before the publication of Hale's treatise381. It is the analysis adopted by the Supreme Court of South Australia in those cases in which consideration has been given to the question. Bray CJ, discussing the elements of the offence in R v Brown382, considered that they were as stated in the 37th edition of Archbold: "Rape consists in having unlawful sexual intercourse with a woman without her consent by force, fear or fraud"383. The word "unlawful" was thought by Bray CJ to exclude intercourse between spouses384. Wells J appears to have been of the same view385. King CJ in R v Sherrin (No 2) also considered proof of the unlawfulness of the act of intercourse to have undoubtedly been an element of the offence at common law386. The resolution of the reserved question does not turn on whether the rule of law traced to Hale requires proof of the unlawfulness of the intercourse as an element, or is an irrebuttable presumption of consent. The latter, while "disguised in the language of adjective rules"387, is in truth a substantive rule of 380 R v Chapman [1959] 1 QB 100. 381 See fnn 364 and 369 above. 382 (1975) 10 SASR 139. 383 Butler and Garsia, Archbold: Pleading, Evidence & Practice in Criminal Cases, 37th ed (1969) at [2872], citing East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 434 and Hale, The History of the Pleas of the Crown, (1736), vol 1 at 627 et seq (emphasis added). 384 R v Brown (1975) 10 SASR 139 at 141. 385 R v Brown (1975) 10 SASR 139 at 153. 386 (1979) 21 SASR 250 at 252. 387 J W C Turner, Kenny's Outlines of Criminal Law, 19th ed (1966) at 455 [490]. Bell law. A husband could not be convicted as principal in the first degree for the rape of his wife on either analysis. At issue is the existence of the immunity, not whether the reason given for it is flawed or has, over time, ceased to provide a principled basis for it. A number of common law rules of liability for criminal offences have their origins in discredited ideas. The definition of the offence of murder stated by Coke388, and thereafter accepted as an authoritative statement of the elements of the offence389, required that the death of the deceased take place within a year and a day of the act causing death. The reason for the rule is suggested to be the limitations of medieval medical knowledge390. If that is the reason, it must be said that the rule survived long after its justification ceased. The rule has since been abolished by statute391. In the same category is the presumption that a boy under 14 years of age is physically incapable of sexual intercourse. This, too, is traced to the statement of the law in the Pleas of the Crown392. The presumption is patently absurd. Nonetheless, it was accepted as a rule of law precluding the 388 Coke, The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 7 at 389 Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 31 at 79; Hale, The History of the Pleas of the Crown, (1736), vol 1, c 33 at 426; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 14 at 197-198; East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 214, 343; Halsbury's Laws of England, 2nd ed, vol 9 at 428. See also R v Dyson [1908] 2 KB 454; R v Evans & Gardiner (No 2) [1976] VR 523. 390 Coke, The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 7 at 53. See also Rogers v Tennessee 532 US 451 at 463 (2001); Fisse (ed), Howard's Criminal Law, 5th ed (1990) at 31; Waller and Williams, Criminal Law, 11th ed 391 Crimes Act 1900 (NSW), s 17A; CLC Act, s 18; Crimes Act 1958 (Vic), s 9AA; Crimes Act 1900 (ACT), s 11. The rule has been removed in the Code States: Penalties and Sentences Act 1992 (Q) (as enacted), s 207, Schedule, item 7 under the heading "Criminal Code"; Criminal Code Amendment (Year and a Day Rule Repeal) Act 1993 (Tas); Criminal Law Amendment Act 1991 (WA), s 6. It never formed part of the Criminal Code (NT). 392 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 630 (mispaginated in the original as 730): "An infant under the age of fourteen years is presumed by law unable to commit a rape, and therefore it seems cannot be guilty of it, and tho in other felonies malitia supplet aetatem in some cases as hath been shewn, yet it seems as to this fact the law presumes him impotent, as well as wanting discretion." Bell conviction of boys for rape393 until it was abolished by statute394. It was sufficient for Lord Coleridge CJ in R v Waite to observe that the rule had been "clearly laid down by Lord Hale" and, on that authority, judges had "refused to receive evidence to shew that a particular prisoner was in fact capable of committing the offence"395. Hale's statement of the immunity was taken as an authoritative statement of the law by all the leading text-writers396. 393 See, eg, R v Eldershaw (1828) 3 Car & P 396 [172 ER 472]; R v Waite [1892] 2 QB 600; R v Williams [1893] 1 QB 320. See also Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212; Roscoe, A Digest of the Law of Evidence in Criminal Cases, 2nd ed (1840) at 797; Williams, Criminal Law: The General Part, 2nd ed (1961) at 821. 394 Crimes Act 1900 (NSW), s 61S (originally s 61A(2)); CLC Act, s 73(2); Crimes Act 1958 (Vic), s 62(1); Crimes Act 1900 (ACT), s 68; Sexual Offences Act 1993 (UK), s 1. The presumption has been removed in the Code States: Criminal Code, Evidence Act and other Acts Amendment Act 1989 (Q), s 9; Criminal Code Amendment (Sexual Offences) Act 1987 (Tas), s 5; Acts Amendment (Sexual Assaults) Act 1985 (WA), s 4. It never formed part of the Criminal Code (NT). 395 R v Waite [1892] 2 QB 600 at 601. See also R v Young [1923] SASR 35; R v Packer [1932] VLR 225. 396 East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 446; Burnett, A Treatise on Various Branches of the Criminal Law of Scotland, (1811) at 102; Chitty, A Practical Treatise on the Criminal Law, (1816), vol 3 at 811; Russell, A Treatise on Crimes and Misdemeanors, (1819), vol 1, bk 3, c 6 at 802; Archbold, A Summary of the Law Relative to Pleading and Evidence in Criminal Cases, (1822) at 259; Alison, Principles of the Criminal Law of Scotland, (1832) at 215; Roscoe, A Digest of the Law of Evidence in Criminal Cases, (1835) at 708; Hume, Commentaries on the Law of Scotland, Respecting Crimes, (1844), vol 1, c 7 at 306; Macdonald, A Practical Treatise on the Criminal Law of Scotland, (1867) at 194; Stephen, A Digest of the Criminal Law (Crimes and Punishments), 4th ed (1887), c 29 at 194; Halsbury, The Laws of England, 1st ed, vol 9, par 1236; Sturge, Stephen's Digest of the Criminal Law (Indictable Offences), 9th ed (1950) at 263; Halsbury's Laws of England, 3rd ed, vol 10, par 1437; Butler and Garsia, Archbold: Pleading, Evidence & Practice in Criminal Cases, 35th ed (1962) at 1150; J W C Turner, Russell on Crime, 12th ed (1964), vol 1 at 708; Howard, Australian Criminal Law, (1965) at 135, 145-147. Bell R v Clarence The first judicial consideration of the immunity was in R v Clarence397. A bench of 13 judges was constituted to consider the question of whether the transmission of gonorrhoea by husband to wife in an act of consensual sexual intercourse could amount to the malicious infliction of grievous bodily harm. Wills, Field and Hawkins JJ each left open that circumstances may exist in which a husband could be liable for the rape of his wife. Wills J doubted that "between married persons rape is impossible"398. Field J thought that there may be cases in which a husband could be convicted of a crime arising out of forcibly imposing sexual intercourse on his wife; he did not say whether for rape or some other offence399. Hawkins J accepted that, by the marriage contract, a wife confers on her husband "an irrevocable privilege to have sexual intercourse with her during such time as the ordinary relations created by such contract subsist between them" and that a husband could not be convicted of a rape committed by him upon the person of his wife400. However, a husband was not at liberty to endanger his wife's health and cause her grievous bodily harm by the exercise of "the marital privilege" at a time when he was suffering from venereal disease and when the natural consequence of sexual intercourse would be the communication of that disease to her401. He explained the principles in this way402: "Rape consists in a man having sexual intercourse with a woman without her consent, and the marital privilege being equivalent to consent given once for all at the time of marriage, it follows that the mere act of sexual communion is lawful; but there is a wide difference between a simple act of communion which is lawful, and an act of communion combined with infectious contagion endangering health and causing harm, which is unlawful. … The wife submits to her husband's embraces because at the time of marriage she gave him an irrevocable right to her person. The intercourse which takes place between husband and wife after marriage is not by virtue of any special consent on her part, but is mere submission to an 397 (1888) 22 QBD 23. 398 R v Clarence (1888) 22 QBD 23 at 33. 399 R v Clarence (1888) 22 QBD 23 at 57. 400 R v Clarence (1888) 22 QBD 23 at 51. 401 R v Clarence (1888) 22 QBD 23 at 51. 402 R v Clarence (1888) 22 QBD 23 at 51, 54. Bell obligation imposed upon her by law. Consent is immaterial." (emphasis in original) Pollock B said403: "The husband's connection with his wife is not only lawful, but it is in accordance with the ordinary condition of married life. It is done in pursuance of the marital contract and of the status which was created by marriage, and the wife as to the connection itself is in a different position from any other woman, for she has no right or power to refuse her consent." Consideration of the immunity in Clarence appears to have been prompted by a submission based on a footnote in Stephen's Digest of the Criminal Law. The law in the first edition of the Digest was stated, relevantly, in this way404: "Rape is the act of having carnal knowledge of a woman without her conscious permission ... Provided that: – (1) A husband [it is said] cannot commit rape upon his wife by carnally knowing her himself, but he may do so if he aids another person to have carnal knowledge of her." The footnote relevantly said405: "Hale's reason is that the wife's consent at marriage is irrevocable. Surely, however, the consent is confined to the decent and proper use of marital rights. If a man used violence to his wife under circumstances in which decency or her own health or safety required or justified her in refusing her consent, I think he might be convicted of rape, notwithstanding Lord Hale's dictum. He gives no authority for it, but makes the remark only by way of introduction to the qualification contained in the latter part of clause (1), for which Lord Castlehaven's Case (3 St Tr 402) is an authority." 403 R v Clarence (1888) 22 QBD 23 at 63-64. 404 Stephen, A Digest of the Criminal Law (Crimes and Punishments), (1877), c 29 at 405 Stephen, A Digest of the Criminal Law (Crimes and Punishments), (1877), c 29 at Bell Stephen J gave the leading judgment in Clarence406. He used the occasion to draw attention to the alteration of the footnote, removing the suggestion that a man might in certain circumstances be indicted for the rape of his wife, in the most recent edition of his text407. Stephen was a great master of the criminal law408. An account of his draft criminal code and the subsequent Commission appointed to report upon it is contained in the joint reasons in Darkan v The Queen409. To the extent that the Draft Code appended to the Report of the Commissioners differed from Stephen's original draft, the differences were noted in the Report. The provisions dealing with offences against the person were said to correspond (as did the provisions in Stephen's original draft) with the Offences against the Person Act 1861 (UK)410, "supplemented by a reduction to writing of the common law doctrines and definitions"411. The Offences against the Person Act 1861 (UK) prescribed the punishment for rape but left the definition of the offence to the common law. It is apparent that the definition of rape in the Draft Code was understood by its authors412 to be a statement of the common law. Relevantly, the offence was defined as "the act of a man having carnal knowledge without her consent of a female who is not his wife"413. The Criminal Code Indictable Offences Bill 1878 (UK), on which the Commissioners' draft was based, and which defined rape in the same terms, had been circulated to the Judges, Chairmen and Deputy Chairmen of Quarter Sessions, Recorders and "many members of the bar and 406 A L Smith, Mathew and Grantham JJ, Huddleston B and Lord Coleridge CJ concurred. 407 R v Clarence (1888) 22 QBD 23 at 46. See Stephen, A Digest of the Criminal Law (Crimes and Punishments), 4th ed (1887), c 29 at 194 fn 4. 408 Radzinowicz, Sir James Fitzjames Stephen, 1829-1894, Selden Society Lecture, 409 (2006) 227 CLR 373 at 385-386 [33]-[36]; [2006] HCA 34. 410 24 & 25 Vict c 100, s 48. 411 Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 22. 412 Lord Blackburn, Mr Justice Barry, Lord-Justice Lush and Sir James Fitzjames Stephen. 413 Section 207 of the Draft Code, Appendix to the Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 107. Bell other gentlemen having practical experience in the administration of the criminal law"414 in England and Ireland with the invitation to comment on it. The absence of any suggestion in the Commissioners' Report that the offence of rape was to be modified under the Code is eloquent of the acceptance by those engaged in the administration of the criminal law in England and Ireland at the time that the offence could not be committed by a husband against his wife415. Sir Samuel Griffith drew on the English Draft Code in preparing his draft criminal code for Queensland416. In the latter, the offence of rape was defined, relevantly, as the "carnal knowledge of a woman, not his wife"417. The marginal notes reveal that Sir Samuel Griffith considered this definition to be a statement of the common law. In Canada, before the enactment of the Criminal Code in 1892, the offence of rape, while punishable as a felony under legislation modelled on the Offences against the Person Act 1861 (UK), depended upon the common law for its elements of proof. It is apparent that the understanding in that jurisdiction was that the offence could not be committed by a husband against his wife418. The Criminal Code defined rape as involving the "carnal knowledge of a woman who is not his wife"419. It does not appear that this was thought to involve any departure from the existing law. The absence of binding decision The absence of a binding decision does not mean that a rule stated in authoritative texts and accepted and acted upon by the legal profession over many years may not acquire status as law. The point is made by Sir John Smith 414 Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 5. 415 See Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 25. 416 Griffith, Draft of a Code of Criminal Law, (1897) at iv. 417 Griffith, Draft of a Code of Criminal Law, (1897), s 353 at 135. 418 Taschereau, The Criminal Statute Law of the Dominion of Canada, 2nd ed (1888) 419 Criminal Code 1892 (Can), s 266. Bell in his commentary on R v C420, by reference to Foakes v Beer421. In the latter case, the House of Lords held itself bound to follow a rule stated by Coke to have been laid down in Pinnel's Case422 in 1602, although their Lordships disliked it and there was no decision in which it had been applied. As the Earl of Selborne LC put it423: "The doctrine itself, as laid down by Sir Edward Coke, may have been criticised, as questionable in principle, by some persons whose opinions are entitled to respect, but it has never been judicially overruled; on the contrary I think it has always, since the sixteenth century, been accepted as law. If so, I cannot think that your Lordships would do right, if you were now to reverse, as erroneous, a judgment of the Court of Appeal, proceeding upon a doctrine which has been accepted as part of the law of England for 280 years." Brennan J, the only Justice in R v L to consider proof of the offence of rape under the common law, considered the elements to have been fixed by Hale's statement of them424. The evidence in favour of that conclusion is compelling. Has the immunity ceased to exist? It was submitted that legal and social changes to the status of married women had produced the result that the immunity had ceased to be a rule of law on a date before the subject events. There were differing views about when that change to the law occurred, a circumstance which tends to highlight a difficulty with accepting the underlying premise. The respondent and the Attorney- General for South Australia contended that the foundation for the immunity had "crumbled to dust" as at the "early to mid twentieth century". The Attorney- General of circumstances had occurred "by the end of the 19th century". Reference was made to the enactment of the Married Women's Property Acts; the amendment of matrimonial causes statutes removing the "double-standard" relating to adultery as a ground for dissolution of marriage; and, more generally, the extension of the the Commonwealth contended the relevant change that 420 [1991] Crim LR 62. 421 (1884) 9 App Cas 605. 422 (1602) 5 Co Rep 117a [77 ER 237]. 423 Foakes v Beer (1884) 9 App Cas 605 at 612. See also at 622-623 per Lord Blackburn, 623-624 per Lord Watson, 629-630 per Lord FitzGerald. 424 R v L (1991) 174 CLR 379 at 399. Bell franchise to women, as combining to produce a state of affairs that was inconsistent with the continued existence of the immunity. These submissions were maintained in the face of a good deal of evidence to the contrary. The one case relied on to support the submissions was R v Jackson425. In that case, Lord Halsbury LC rejected the proposition that the relation of husband and wife gave the husband "complete dominion over the wife's person"426. The holding that an order for restitution of conjugal rights did not confer on the husband a right to imprison his wife is a tenuous basis for concluding that the husband was now amenable to prosecution for having sexual intercourse with his wife without her consent. In the first edition of Halsbury, published in 1909, almost 20 years after the decision in Jackson, the law was stated as being that "[a] man cannot be guilty as a principal in the first degree of a rape upon his wife, for the wife is unable to retract the consent to cohabitation which is a part of the contract of In Tasmania, the Married Women's Property Act was enacted in 1882. Women had been granted the franchise for both federal and State parliamentary elections by 1904428. The Matrimonial Causes Act 1860 (Tas) was amended in 1919 to remove the double-standard with respect to adultery429. Nonetheless, when the Parliament enacted the Criminal Code for Tasmania in 1924, a quarter of a century after the enactment of the Queensland Criminal Code, the crime of 426 [1891] 1 QB 671 at 679. 427 Halsbury, The Laws of England, 1st ed, vol 9, par 1236. The second edition, under the editorship of Viscount Hailsham, published in 1933, stated the law in the same terms: vol 9, par 815. It was not until after Clarke (see fn 295 above), which provided a limited exception to the immunity in the case of a wife living separately under the protection of a court order, that the third edition, under the editorship of Viscount Simons, published in 1955, stated the rule in qualified terms: "[a] man cannot, as a general rule, be guilty as a principal in the first degree of a rape upon his wife" (vol 10, par 1437). 428 Commonwealth Franchise Act 1902 (Cth); Constitution Amendment Act 1903 (Tas). 429 Matrimonial Causes Amendment Act 1919 (Tas) (Royal Assent proclaimed on 17 May 1920). Bell rape was defined in the same way as under the latter430. The significant changes in the legal status of married women which had occurred by 1924 do not appear to have been viewed at the time as inconsistent with the immunity. In the same year, the House of Lords delivered judgment in G v G431. That was an appeal from the dismissal of an application for a decree of nullity of marriage brought by a husband on the ground of his wife's impotency. The appellant and his wife were married in 1913 and the evidence of their relations spanned the period from that date to 1921. The wife had evinced an hysterical reluctance to engage in sexual intercourse. The question for the court was whether this psychological obstacle to consummation amounted to incapacity, as distinct from the mere wilful refusal of conjugal rights. The court below had doubted that the husband's repeated attempts at intercourse had exhibited "a sufficient virility"432. It was in this context that Lord Dunedin observed433: "It is indeed permissible to wish that some gentle violence had been employed; if there had been it would either have resulted in success or would have precipitated a crisis so decided as to have made our task a comparatively easy one." His Lordship considered the husband's account "as to why he did not use a little more force than he did" to have been an acceptable explanation434 and the appeal was allowed. The speeches in G v G speak to another age. The decision in that case is closer to the date of the acts charged against the appellant than was the hearing of this appeal. More than a decade after the events giving rise to this appeal, in 1975, Lawton LJ, giving the judgment of the English Court of Appeal in R v Cogan, proceeded upon acceptance that it was a legal impossibility for a man to rape his wife during cohabitation435. The accused bore accessorial liability for the rape of his wife by another. In the following year, Geoffrey Lane LJ extended the exception to the immunity to allow the conviction of a husband for the rape of his 430 Criminal Code (Tas), s 185 (as enacted). Relevantly, rape was defined as involving "carnal knowledge of a female not his wife". 432 G v G [1924] AC 349 at 357. 433 G v G [1924] AC 349 at 357. 434 G v G [1924] AC 349 at 358. 435 R v Cogan [1976] QB 217 at 223. Bell wife where he had given an undertaking not to molest her436. Of present significance is his Lordship's view that, "[a]s a general principle, there is no doubt that a husband cannot be guilty of rape upon his wife"437. The undertaking given in lieu of an injunction operated in that case to eliminate the wife's matrimonial consent to intercourse. A convenient account of the law in England as it was understood in December 1983 is contained in the Report of the Criminal Law Revision Committee, which had been asked to review the law relating to, and penalties for, sexual offences438: "In defining rape the Sexual Offences (Amendment) Act 1976 uses the term 'unlawful sexual intercourse'. What is 'unlawful' is left to the common law. The general rule is that sexual intercourse is 'unlawful' if it occurs outside marriage. Sexual intercourse between husband and wife is not 'unlawful' except in a fairly narrow class of cases, which can be broadly described as cases where the parties have separated and their separation has been acknowledged by a court." The existence of the immunity was also accepted in decisions of Australian courts delivered after 1963. Reference has been made earlier in these reasons to decisions of the South Australian Supreme Court439. In New South Wales, Victoria and Tasmania, the English line of authority allowing an exception to the immunity in the case of a wife living separately and under the protection of a court order was adopted440. In R v McMinn, Starke ACJ observed441: "There can be no doubt that for centuries the law in England (and in Australia) has been that a man cannot rape his wife. That this principle of law is out of tune with modern thinking has been recognized in Victoria 436 Steele (1976) 65 Cr App R 22. 437 Steele (1976) 65 Cr App R 22 at 24. 438 Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 17-18 [2.57]. 439 See above at [212]. 440 C (1981) 3 A Crim R 146; R v McMinn [1982] VR 53; Bellchambers (1982) 7 A Crim R 463. 441 [1982] VR 53 at 55. Bell by the Crimes (Sexual Offences) Act 1980 and there are similar Acts in other States." In New Zealand, a statute enacted in 1961 provided that no man could be convicted of rape of his wife unless, at the time of the intercourse, there was in force a decree nisi of divorce or nullity and the parties had not resumed cohabitation, or there was in force a decree of judicial separation or a separation order442. An amendment to the statute in 1981 maintained the immunity, save in cases where the husband and wife were living separately443. This restricted immunity was not removed until 1986444. The Model Penal Code, first published by the American Law Institute in 1962, relevantly provided that "[a] male who has sexual intercourse with a female not his wife is guilty of rape"445. In the revised commentary, published in 1980, this "traditional limitation" of the offence was maintained446. The proposition that by the mid-20th century or earlier the immunity had fallen into desuetude as the result of changes in the conditions of society is without support. In this country, as in other common law countries, the continued existence of the immunity does not appear to have been seen as inconsistent with the recognition of the equal status of married women. There is the curious spectacle in this appeal of the respondent and the Attorney-General for South Australia contending that the maintenance of the immunity by the mid- 20th century was inconsistent with the rights and privileges of married women, notwithstanding that as late as 1976 the Parliament of South Australia chose to preserve it447. 442 Crimes Act 1961 (NZ), s 128(3). 443 Family Proceedings Act 1980 (NZ), First Schedule. 444 Crimes Amendment Act (No 3) 1985 (NZ), s 2. 445 American Law Institute, Model Penal Code: Official Draft and Explanatory Notes, 446 American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 271-275, 341-346. The Comment notes that the rule existed at common law, prevailed at the time the Model Penal Code was drafted and "has been continued in most revised penal laws": at 341. 447 The original Bill introduced into Parliament, which purported to abolish the immunity completely, was rejected by the House of Assembly: Sallmann and Chappell, Rape Law Reform in South Australia: A Study of the Background to the Reforms of 1975 and 1976 and of their Subsequent Impact, Adelaide Law Review Research Paper No 3, (1982) at 20-21, 30-31. Bell By the mid-20th century, the notion that the immunity depended on the wife's irrevocable consent to intercourse may no longer have been seen as the justification for it. However, this is not to accept that the immunity had "crumbled to dust". The contemporary evidence suggests that the immunity was a recognised and accepted feature of the law of rape, albeit that the rationale supporting it may have changed. In 1954, Norval Morris and A L Turner, both then senior lecturers in law at the University of Melbourne, writing of the law respecting marital rape, were critical of irrevocable consent as the justification for the immunity448. They went on to discuss the "special position" of a married couple in law and in fact and to say449: "Intercourse then is a privilege at least and perhaps a right and a duty inherent in the matrimonial state, accepted as such by husband and wife. In the vast majority of cases the enjoyment of this privilege will simply represent the fulfilment of the natural desires of the parties and in these cases there will be no problem of refusal. There will however be some cases where, the adjustment of the parties not being so happy, the wife may consistently repel her husband's advances. If the wife is adamant in her refusal the husband must choose between letting his wife's will prevail, thus wrecking the marriage, and acting without her consent. It would be intolerable if he were to be conditioned in his course of action by the threat of criminal proceedings for rape." The leading Australian text on the criminal law published in 1965 praised the decision in R v Clarke450, which allowed an exception to the immunity; however, the author went on to observe451: "[A] husband should not walk in the shadow of the law of rape in trying to regulate his sexual relationships with his wife. If a marriage runs into difficulty, the criminal law should not give to either party to the marriage 448 Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 258. 449 Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 259. 450 [1949] 2 All ER 448. See fn 295 above. 451 Howard, Australian Criminal Law, (1965) at 146. Bell the power to visit more misery upon the other than is unavoidable in the nature of things." The Mitchell Committee explained its reasons for proposing to confine the immunity in this way452: "The view that the consent to sexual intercourse given upon marriage cannot be revoked during the subsistence of the marriage is not in accord with modern thinking. In this community today it is anachronistic to suggest that a wife is bound to submit to intercourse with her husband whenever he wishes it irrespective of her own wishes. Nevertheless it is only in exceptional circumstances that the criminal law should invade the bedroom. To allow a prosecution for rape by a husband upon his wife with whom he is cohabiting might put a dangerous weapon into the hands of the vindictive wife and an additional strain upon the matrimonial relationship. The wife who is subjected to force in the husband's pursuit of sexual intercourse needs, in the first instance, the protection of the family law to enable her to leave her husband and live in peace apart from him, and not the protection of the criminal law. If she has already left him and is living apart from him and not under the same roof when he forces her to have sexual intercourse with him without her consent, then we can see no reason why he should not be liable to prosecution for rape." (emphasis added) The views expressed by the Mitchell Committee were in line with those expressed by the authors of the revised commentaries to the US Model Penal Code in 1980453 and by the English Criminal Law Revision Committee in 452 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 14 [6.2]. 453 American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 345: "The problem with abandoning the immunity ... is that the law of rape, if applied to spouses, would thrust the prospect of criminal sanctions into the ongoing process of adjustment in the marital relationship." 454 Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 21 [2.69]. Explaining the majority view, which was not to remove the immunity, the Committee said: "Some of us consider that the criminal law should keep out of marital relationships between cohabiting partners – especially the marriage bed – except where injury arises, when there are other offences which can be charged." Bell In R v C, the English Court of Appeal set out the advice that an imagined solicitor might have given a husband who inquired as to the legality of marital rape in 1970455. This was in the context of a submission respecting the foreseeability of further development of the law in light of decisions which had allowed exceptions to the immunity. The Commonwealth Attorney-General submitted that the hypothesised advice applied with equal force in this case. The determination of the issue raised by this appeal does not depend upon consideration of foreseeability of change to the law. Nonetheless, the opinions of the academic lawyers and the members of law reform committees set out above may suggest that the solicitor in R v C was a man in advance of his times. There is a more fundamental difficulty with the submission that the Court should hold that a substantive rule of law affecting liability for a serious criminal offence has simply disappeared because of a perception that changed conditions of society no longer provided a justification for it. The powerful reasons against an ultimate court of appeal varying or modifying a settled rule or principle of the common law456 apply with particular force to a variation or modification which has the effect of extending criminal liability. It is for the parliament to determine that a rule of exemption from criminal liability is no longer suited to the needs of the community. The respondent and the Attorney-General for South Australia submitted that it is the responsibility of this Court to modify the law to avoid the "unjust" operation of a rule of immunity respecting criminal liability457. The submission is singular, given that there is no jurisdiction in Australia in which the common law governs a husband's liability for the rape of his wife. No occasion arises to modify the law to make it "an effective instrument of doing justice according to contemporary standards in contemporary conditions"458. The law of marital rape in each Australian jurisdiction has been brought into line with contemporary 455 R v C [2004] 1 WLR 2098 at 2103-2104 [19]; [2004] 3 All ER 1 at 6-7. 456 State Government Insurance Commission v Trigwell (1979) 142 CLR 617 at 633 per Mason J (Stephen and Aickin JJ agreeing); Zecevic v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 664 per Wilson, Dawson and Toohey JJ, 677-678 per Deane J; [1987] HCA 26; Lamb v Cotogno (1987) 164 CLR 1 at 11 per Mason CJ, Brennan, Deane, Dawson and Gaudron JJ; [1987] HCA 457 The respondent's Notice of Contention asserts that, "if [the immunity] ever was part of the common law of Australia, it ceased to be so as at the date of the commission of the offences in this matter". 458 O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 267 per Brennan J; [1991] HCA 14. Bell standards. Any statement of the common law respecting the liability of a husband for the rape of his wife with whom he was living could only apply to offences alleged to have been committed before the enactment of the statutory reforms. The declaration of the law for which the respondent contends carries with it that the parliaments of the States and Territories legislated over the course of the last century459 upon a wrong understanding of the law. That understanding was reflected in the Code States in the way in which the offence of rape was defined. In those States, the position remains that a husband is not liable to be convicted for the rape of his wife before the date on which the words "not his wife" were removed from the Criminal Code. In the jurisdictions which preserved the common law, the declaration would make it possible to reach back beyond the date on which statutory reforms were effected and attach liability to conduct occurring not less than a quarter of a century ago. In South Australia, it would be possible to successfully prosecute a man for the rape of his wife in the years up to 1976. In the more recent past, the same man would enjoy an immunity for the same conduct460. That is because the 1976 amendments enacted by the South Australian Parliament with the evident intention of limiting the immunity would now be seen to have conferred it. The fact that the parliaments of every Australian jurisdiction enacted legislation upon the understanding that the immunity was a rule of the common law provides some evidence that it was; and is a good reason for this Court not to now declare it to be otherwise. The rule of law holds that a person may be punished for a breach of the law and for nothing else461. It is abhorrent to impose criminal liability on a person for an act or omission which, at the time it was done or omitted to be done, did not subject the person to criminal punishment. Underlying the principle is the idea that the law should be known and accessible, so that those who are subject to it may conduct themselves with a view to avoiding criminal punishment if they choose462. However, its application does not turn on consideration of whether a person might be expected to have acted differently had he or she known that the proposed conduct was prohibited. Deane J's 459 In the case of Queensland, since 1899. 460 The immunity conferred by s 73(5) of the CLC Act was in force between 9 December 1976 and 16 April 1992. 461 See fn 286 above. See also Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 609-611 per Deane J, 687-688 per Toohey J; [1991] HCA 32; Williams, Criminal Law: The General Part, 2nd ed (1961) at 575-576. 462 Blackstone, Commentaries on the Laws of England, (1765), bk 1 at 45-46. Bell dissenting reasons in Zecevic v Director of Public Prosecutions (Vict) explain why that is so463: "The vice of such a retrospective abolition of a defence to a charge of murder lies not in the prospect of injustice to some imaginary killer who has killed on the basis that his crime will be reduced from murder to manslaughter in the event that he was found to have been acting excessively in self-defence. It lies in the fundamental injustice of inequality under the law which is unavoidable when the administration of the criminal law is reduced to a macabre lottery by what the late Professor Stone described as flagrant violation of the 'well-established judicial policies of the criminal law in favorem libertatis, and against ex post facto punishment'464." The departure from the statement of the elements of self-defence in Viro v The Queen465, sanctioned by the majority in Zecevic, was undertaken in circumstances in which it was considered unlikely to occasion injustice and in which it was acknowledged that the endeavour to state the "defence" by reference to the onus had proved unworkable466. Nothing in the judgments in Zecevic affords support for the acceptance of the respondent's contention that this Court should restate the common law with the effect of extending criminal liability to a class of persons previously exempt from that liability. The common law was demeaning to women in its provision of the immunity. It is no answer to that recognition to permit the conviction of the appellant for an act for which he was not liable to criminal punishment at the date of its commission. For these reasons I would allow the appeal, set aside the answer to the question of law given by the majority in the Full Court and, in lieu thereof, answer that question "no". 463 (1987) 162 CLR 645 at 677-678. 464 Precedent and Law, (1985) at 190. 465 (1978) 141 CLR 88 at 146-147; [1978] HCA 9. 466 Zecevic v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 664 per Wilson, Dawson and Toohey JJ. Bell |
HIGH COURT OF AUSTRALIA AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPELLANT AND CHANNEL SEVEN BRISBANE PTY LIMITED & ORS RESPONDENTS Australian Competition and Consumer Commission v Channel Seven Brisbane Pty Limited [2009] HCA 19 30 April 2009 ORDER Appeal allowed with costs. Set aside the orders made by the Full Court of the Federal Court on 23 June 2008 and in their place order that the appeal to that Court be dismissed with costs. On appeal from the Federal Court of Australia Representation S J Gageler SC, Solicitor-General of the Commonwealth of Australia with S T White SC and J S Gleeson for the appellant (instructed by Australian Government Solicitor) T E F Hughes QC with A S Bell SC and P Zappia for the respondents (instructed by Freehills) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Australian Competition and Consumer Commission v Channel Seven Brisbane Pty Limited Trade Practices – Consumer protection – Misleading or deceptive conduct – Where Trade Practices Act 1974 (Cth), s 65A provides exemption from liability in respect of prescribed publication of matter by prescribed information provider – Exception to exemption in respect of publication in connection with supply, possible supply or promotion of supply or use of goods or services – Application of exception where publication made pursuant to contract, arrangement or understanding with person who supplies goods or services "of that kind" – Meaning of phrase "of that kind" in context of provision – Whether exception applies only where contract, arrangement or understanding relates to specific representations made in publication of matter. Statutory Interpretation – Use of demonstrative adjective "that" – Determining referent of phrase "of that kind" – Relevance of textual proximity or sequential order – Whether alternative paragraphs in sub-section to be read distributively or as single sentence – Relevance of statutory intention – Extent of assistance from extrinsic materials. Words and phrases – "advertisement", "contract, arrangement or understanding", "goods or services of that kind". Trade Practices Act 1974 (Cth), ss 52, 65A. FRENCH CJ AND KIEFEL J Introduction Section 52(1) of the Trade Practices Act 1974 (Cth) ("the TPA") provides: "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." Actions brought under the section alleging misleading or deceptive news media stories in the late 1970s and early 1980s1 led to the creation, in 1984, of a statutory exemption for "prescribed information providers". The exemption was created by the enactment of s 65A. An identical provision limiting the scope of the prohibition on misleading or deceptive conduct in relation to financial services is to be found in the Australian Securities and Investments Commission Act 2001 (Cth)2. Similar provisions appear in the Fair Trading Acts of the various States and Territories3. The present appeal concerns an exception to the exemption. The exception relates to the publication of matter pursuant to a contract, arrangement or understanding between the party publishing the matter and a supplier of goods or services. The proceedings which have led to this appeal arise out of two episodes of the Today Tonight program broadcast by the respondents in October 2003 and January 2004. Each respondent is a licensed broadcaster, a member of the Channel Seven network, and a subsidiary of Seven Network Ltd. The broadcasts were about a business offering training for women in the arts of property investment. It was promoted and conducted by Dymphna Boholt and Sandra Forster under the title "Wildly Wealthy Women Millionaire 1 Universal Telecasters (Qld) Ltd v Guthrie (1978) 18 ALR 531; Universal Telecasters (Qld) Ltd v Ainsworth Consolidated Industries Ltd (1983) 78 FLR 16; Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82; Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1983) 47 ALR 497. 2 Section 12DA of the Australian Securities and Investment Commission Act 2001 (Cth) renders unlawful, in the language of s 52, conduct in relation to financial services which is misleading or deceptive or is likely to mislead or deceive. Section 12DN is in similar terms to s 65A. 3 Fair Trading Act 1987 (NSW), s 60; Fair Trading Act 1987 (SA), s 74; Fair Trading Act 1987 (WA), s 63; Fair Trading Act 1989 (Qld), s 51; Fair Trading Act 1990 (Tas), s 28; Consumer Affairs and Fair Trading Act (NT), s 60; Fair Trading Act 1992 (ACT), s 31. Section 32 of the Fair Trading Act 1999 (Vic) differs materially from s 65A of the TPA. Mentoring Program". According to the broadcasts, Ms Boholt and Ms Forster were offering, for a fee of almost $3,000 per person for a nine month program, to teach women how to become wealthy through investments in real estate. On 26 September 2005, the appellant, the Australian Competition and Consumer Commission, commenced proceedings against the four respondents, their holding company Seven Network Ltd, the two women and a company called Universal Prosperity Pty Ltd ("Universal") controlled by Ms Forster. The appellant alleged contraventions of s 52 of the TPA by all of them except Seven Network Ltd4. It claimed, inter alia, that, by their broadcasts about the Wildly Wealthy Women mentoring program on Today Tonight, the respondents had made representations about the benefits of the services offered by Ms Boholt and Ms Forster and that those representations were misleading or deceptive. Declaratory and injunctive relief and non-punitive orders under s 86C(1) of the TPA were sought. The application came on for trial before Bennett J in the Federal Court. On 5 October 2007, her Honour gave judgment in favour of the appellant5. There had been no allegation and no evidence presented that the holding company, Seven Network Ltd, had published any matter or engaged in misleading or deceptive conduct. Her Honour granted injunctive and declaratory relief against the respondent broadcasters and ordered that they pay three quarters of the appellant's costs of the proceedings. Ms Boholt, Ms Forster and Universal had previously agreed with the appellant on forms of order to dispose of the proceedings as against them. Ms Boholt and Ms Forster provided affidavit evidence for use by the appellant in its case against the respondents. Bennett J held that s 65A of the TPA did not provide a defence. The respondents' conduct fell within an exception to the exemption from liability provided by the section. This was on the basis that the broadcasts had been made pursuant to an arrangement between the respondents and the two women and related to services provided by the women. The respondents appealed to the Full Court of the Federal Court. On 23 June 2008, the Full Court (Sundberg, Jacobson and Lander JJ) allowed the 4 Seven Network Ltd was joined on the basis that it had entered into the relevant contract, arrangement or understanding: Australian Competition and Consumer Commission v Seven Network Ltd (2007) 244 ALR 343 at 345 [5]. (2007) 244 ALR 343. appeal and set aside the declaratory and injunctive relief awarded by Bennett J6 on the basis that the exception to the exemption provided by s 65A did not apply to the conduct of the respondents. The respondents' conduct therefore fell within the exemption and their defence was made out. On 14 November 2008, the appellant was granted special leave to appeal to this Court from that part of the judgment of the Full Court which held that the exemption from liability for contravention of s 52 of the TPA, contained in s 65A(1) of that Act, applied to the conduct of the respondents. For the reasons that follow, the appeal should be allowed. The exemption conferred by s 65A does not apply to situations in which a media outlet, pursuant to an arrangement with a supplier of goods or services, publishes and, by adoption or otherwise, makes representations of a misleading or deceptive character in relation to goods or services of that kind. That is the present case. Statutory framework Section 52 of the TPA is followed by a number of other provisions of Pt V of that Act relating to false or misleading representations and conduct. The exemption provided by s 65A applies to s 52 and those associated provisions. Section 65A is in the following terms: "(1) Nothing in section 52, 53, 53A, 55, 55A or 59 applies to a prescribed publication of matter by a prescribed information provider, other than: a publication of matter in connection with: the supply or possible supply of goods or services; (iii) the sale or grant, or possible sale or grant, of interests in land; the promotion by any means of the supply or use of goods or services; or the promotion by any means of the sale or grant of interests in land; where: 6 Channel Seven Brisbane Pty Ltd v Australian Competition and Consumer Commission (2008) 249 ALR 97. the goods or services were relevant goods or services, or the interests in land were relevant interests in land, as the case may be, in relation to the prescribed information provider; or the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with: a person who supplies goods or services of that kind, or who sells or grants interests in land, being interests of that kind; or a body corporate that is related to a body corporate that supplies goods or services of that kind, or that sells or grants interests in land, being interests of that kind; or a publication of an advertisement. For the purposes of this section, a publication by a prescribed information provider is a prescribed publication if: in any case – the publication was made by the prescribed information provider in the course of carrying on a business of providing information; or in the case of a person who is a prescribed information provider by virtue of paragraph (a), (b) or (c) of the definition of prescribed information provider in subsection (3) (whether or not the person is also a prescribed information provider by virtue of another operation of that definition) – the publication was by way of a radio or television broadcast by the prescribed information provider. In this section: prescribed information provider means a person who carries on a business of providing information and, without limiting the generality of the foregoing, includes: the holder of a licence granted under the Broadcasting Services Act 1992; and a person who is the provider of a broadcasting service under a class licence under that Act; and the holder of a licence continued in force by subsection 5(1) of the Broadcasting Services (Transitional Provisions and Consequential Amendments) Act 1992; and the Australian Broadcasting Corporation; and the Special Broadcasting Service Corporation. relevant goods or services, in relation to a prescribed information provider, means goods or services of a kind supplied by the the prescribed prescribed information provider is a body corporate, by a body corporate that is related to the prescribed information provider. information provider or, where relevant interests in land, in relation to a prescribed information provider, means interests in land, being interests of a kind sold or granted by the prescribed information provider or, where the prescribed information provider is a body corporate, by a body corporate that is related to the prescribed information provider." The exception to the exemption with which this appeal is concerned is that defined by s 65A(1)(a)(i) and (iii) read with s 65A(1)(a)(vi)(A). Factual background Between September 2003 and March 2004, Rachael Bermingham carried on business offering marketing services to other businesses, advising them on how they could identify prospective clients and get their products to those clients. In October 2003, Ms Boholt and Ms Forster had set up a business which they were operating or proposed to operate under the name "Wildly Wealthy Women". Ms Forster was, at the time, the sole director and shareholder of Universal. Universal had a registered website associated with the domain name www.wildlywealthywomen.com. Ms Bermingham was approached by Ms Forster in October 2003 asking her to arrange for media exposure for the Wildly Wealthy Women mentoring program. Ms Bermingham would receive a commission for every woman that signed up to the program. Ms Forster told her that her main aim was to get a program like A Current Affair, Today Tonight or Sunrise to cover the story and ideally to run a series of stories following the women they mentored and their journey over a nine month period. Ms Bermingham agreed to represent the business on that basis. Shortly after 9 October 2003, Ms Bermingham contacted Mr Howard Gipps who was then the producer of Today Tonight. At that time and at all material times, each of the television companies broadcast a television program entitled "Today Tonight" on each week night. They had a number of telephone the conversations between 9 October and 20 October 2003. conversations Ms Bermingham set out a proposal for stories about the Wildly Wealthy Women mentoring program to be broadcast on Today Tonight. The substance of her proposal was contained in an email she sent to Mr Gipps on 20 October 2003. In that email she said: During "Based on our few talks, here is an outline of what we would like to be included in the agreement; October – Initial story on the founders Sandy & Dypmhna [sic] regarding their own stories … November – A story on some women who have signed up for the program … February/March 2004 – A story on the women at their first Wildly Wealthy Women Wicked Weekend … April/May 2004 – Another story of the women buying property, at auctions, renovating, walking the pavements searching for property etc … August 2004 – Who's leading the way – how many properties have been acquired … November 2004 – Graduation – who is our star Millionaire – how their life has changed etc etc. We love your suggestions Howard & would be happy if you were to confirm this proposal. We will be finalising our agreements with the TV to move onto our other press tomorrow Media engagements …" to enable us Mr Gipps replied to the email on the same day saying, inter alia: "all of that is fine and agreed … looks like a total of 6 stories". Ms Bermingham prepared a draft letter for Mr Gipps to sign as confirmation that they would be doing six stories on Wildly Wealthy Women along the lines set out in the email. The letter concluded: "Today Tonight confirm these stories will be done at the suggested periods you have advised as above. The story content may change to evolve with the success & stories of the women participating." A signed version of the letter was returned to Ms Bermingham, who sent a copy of it to Ms Forster. Ms Bermingham then called Mr Gipps and thanked him for sending through the confirmation. She said they had been in talks with A Current Affair but as he had confirmed that Today Tonight would run a series of stories, the women wanted to go with him. Mr Gipps said that Today Tonight would require exclusive rights to the story if that were the case. Ms Bermingham replied: "Yes, Today Tonight can have the exclusive to the story based on your proposal until November 2004." After receiving the signed copy Ms Bermingham did not offer rights to the story to any other Australian television outlet. There was no discussion between the parties about any payment either from or to the Seven Network for the publicity given to the Wildly Wealthy Women program. The misleading or deceptive representations The transcripts of the two segments of the Today Tonight program broadcast in October 2003 and January 2004 were set out in the judgment of the primary judge. It is not necessary to refer to them in detail here. The nature and content of the broadcasts and the statements made by the compere and reporter in each of them were sufficient, as the Full Court held, to support her Honour's finding that a number of representations, which were misleading or deceptive, were made by the respondents. Three such representations, each based on a statement made by the reporter, were found to have arisen out of the first broadcast7. They were8: (i) Ms Boholt owned in excess of 60 properties. (ii) Ms Forster had purchased over $1 million worth of property using none of her own money. (iii) Ms Forster was a millionaire. A fourth representation, arriving out of a statement made by the program's compere, was found to have been made by the respondents in the second (2007) 244 ALR 343 at 351 [32]. (2007) 244 ALR 343 at 346 [8]. (2007) 244 ALR 343 at 354 [45]. "the women had made millions of dollars through investing in property". The respondents argued that, in the first broadcast, the compere had made a disclaimer about the truth of the claims made by the two women by saying11: "we'll see if the two ladies behind the program can live up to their promises over the next 12 months". And12: "Too good to be true? Well we'll be following the scheme's progress to let you know." The trial judge said13: "Viewing the first episode as a whole, the Seven licensees embraced and advanced the proposition that Ms Boholt and Ms Forster were millionaires and had achieved that status through investing in property. Those propositions were adopted and stated as fact by the reporter. In context, what was 'put up for examination' by the compere was whether others could achieve millionaire status by participation in the mentoring program. There was no suggestion by the compere, express or implicit, that the women's status as millionaires or as owners of property was questioned or would be examined or investigated in subsequent programs. There was no suggestion that the truth of those matters, as asserted by the reporter, would be the subject of further inquiry or should be the subject of such inquiry. As a matter of overall impression, the scepticism injected by the compere does not overcome the strength of the representations made by the reporter. The disclaimer did not detract from the Wildly Wealthy Women representations. When the first episode is viewed as a whole, the ordinary and reasonable viewer would consider those representations to have been made by the Seven licensees." 10 (2007) 244 ALR 343 at 354 [45], 352 at [38]. 11 (2007) 244 ALR 343 at 346 [8]. 12 (2007) 244 ALR 343 at 346 [8]. 13 (2007) 244 ALR 343 at 351 [30]-[31]. Her Honour also rejected an argument by the respondents that the compere had effectively entered a disclaimer in the second episode14. Ms Forster swore an affidavit in the proceedings setting out her assets. Her evidence was not challenged. As at 31 October 2003 her assets did not exceed $65,000 before taking into account liabilities of at least $8,000. As at 30 January 2004, they did not exceed $115,000 before taking into account liabilities of at least $8,000. Ms Boholt swore an affidavit, also unchallenged, in which she said, inter alia, that as at 31 October 2003 she "did not own over 60 properties". The primary judge found that each of the four representations made by the respondents was misleading and deceptive15. The Full Court, in findings not under challenge in this appeal, said16: "We are not persuaded that there was not sufficient evidence for her Honour to make the findings which she did in relation to the Wildly Wealthy Women representations. In our opinion, having regard to the words used by the reporter in the first program and the words used by the compere in the second program, her Honour was entitled to find, notwithstanding the words which were said to amount to disclaimer in both programs, that the representations were made by the appellants. Having found that the representations were made, it is clear beyond doubt that her Honour was entitled to find that the representations were false and that, subject to one other matter which we will now address, the conduct in making those representations was misleading or deceptive pursuant to s 52 of the Act." That "other matter" was the s 65A defence. The primary judge found that it did not apply because the respondents' conduct fell within the exception defined by sub-pars (i), (iii) and (vi) of s 65A(1)(a). The Full Court found that the exception to the exemption did not apply. It did so on the basis that the only goods or services covered by the exception were "relevant goods or services", ie goods or services of a kind supplied by the prescribed information provider itself. Grounds of appeal The grounds of appeal against the decision of the Full Court are: 14 (2007) 244 ALR 343 at 354 [42]-[45]. 15 (2007) 244 ALR 343 at 355 [52] and [54], 356 [58]-[59]. 16 (2008) 249 ALR 97 at 102 [20]-[21]. The Full Court erred in holding that, by reason of the operation of section 65A(1) of the Trade Practices Act 1974, section 52 of that Act did not apply to the conduct of the Respondents. The Full Court erred in holding that the reference to 'goods or services of that kind' in section 65A(1)(a)(vi)(A) was a reference to goods or services of a kind supplied by the prescribed information provider as used in the expression 'relevant goods or services' in section 65A(1)(a)(v) which, in turn, is defined in section 65A(3). The Full Court erred in failing to hold that, on the proper construction of section 65A(1)(a)(vi)(A) of the Trade Practices Act 1974, the reference to 'goods or services of that kind' was a reference section 65A(1)(a)(i), being the goods or services the subject matter of the publication referred to in s 65A(1)(a)." services referred goods the Notice of Contention The respondents filed a notice of contention seeking to uphold the judgment of the Full Court on the following ground: "For the exception to the exemption contained in s 65A(1)(vi) of the Trade Practices Act (1974) (Cth) to apply, the 'contract, arrangement or understanding' 'pursuant to' which the subject publication was made must be a 'contract, arrangement or understanding' to publish the misleading or deceptive matter that resulted in the contravention of s 52; and, as the Appellant concedes, there was no such 'contract, arrangement or understanding'." The questions for decision on the s 65A defence It was not in dispute before the primary judge nor in this Court that: Each of the respondents was a "prescribed information provider" as defined in s 65A(3). The broadcasts were "prescribed publications" of matter as defined in s 65A(2). The publications were of matter in connection with the supply or possible supply of goods or services or promotion of that supply within s 65A(1)(a)(i) and (iii). The goods or services the subject of the publication were not "relevant goods or services". On that basis the exception defined by sub-pars (i) and (iii), read with sub-par (v) of s 65A(1)(a), had no application. The condition in s 65A(1)(a)(vi)(B) had no application. It was not argued that the broadcasts constituted an advertisement. There was therefore no contention that the exception defined by s 65A(1)(b) applied. The following questions arise for decision in determining whether the contested exception to the s 65A exemption applied to the broadcasts in issue: Did the conduct of the respondents, found to be misleading or deceptive, constitute a publication of matter in connection with the supply or possible supply of goods or services or the promotion by any means of the supply or use of goods or services17? – The answer to that question is in the affirmative and was not in dispute. (ii) Was the publication made pursuant to a contract, arrangement or understanding within the meaning of sub-par (vi)18? – This question is raised by the respondents' notice of contention. (iii) If "yes", was the contract, arrangement or understanding made with a person who supplies goods or services19? – The answer to this question was in the affirmative and was not in dispute. Ms Boholt and Ms Forster were supplying training services. The next two questions are the primary constructional questions upon which this appeal turns: (iv) Do the goods or services referred to in s 65A(1)(a)(vi) as "goods or services of that kind" mean goods or services of the kind the subject of the publication referred to in s 65A(1)(a)(i) and (iii)? or (v) Do they mean only goods or services of the same kind as the "relevant goods or services" mentioned in s 65A(1)(a)(v)? 17 TPA s 65A(1)(a)(i) and (iii). 18 TPA s 65A(1)(a)(vi). 19 TPA s 65A(1)(a)(vi)(A). The first construction, proposed in question (iv), yields a wider exception to the exemption than the second, proposed in question (v). The first was that adopted by the primary judge20. The second was that adopted by the Full Court21. If the first construction be correct, then a prescribed information provider is not protected by s 65A when publishing matter in connection with the supply of goods or services of any kind where the publication is made on behalf of, or pursuant to a contract, arrangement or understanding with, a person who supplies goods or services of that kind. If the second construction be correct, the prescribed information provider will be protected in such a case unless the goods or services are "relevant goods or services", that is to say goods or services of a kind supplied by that prescribed information provider or a related body corporate22. The construction of s 65A It is not necessary to set out in detail the background to the enactment of s 65A23. In order to understand the purpose of the provision it is useful to refer to a passage from the Second Reading Speech for the Bill which became the Statute Law (Miscellaneous Provisions) Act (No 2) 1984 (Cth) by which s 65A was introduced into the TPA. In the Second Reading Speech it was said, inter alia24: "The Government recognises the need to maintain a vigorous free press, as well as an effective and enforceable Trade Practices Act. In doing so, the Government recognises that, whilst the problem may have been highlighted by a defamation action, similar considerations apply in respect of action for negligent mis-statement and actions for injurious falsehood. The Government also recognises that the difficulties in this area are experienced not only by the main newspaper, magazine and television publishers, but also by a wide range of other people who provide information. 20 (2007) 244 ALR 343 at 365 [92] and [94]. 21 (2008) 249 ALR 97 at 108 [53]. 22 TPA s 65A(3). 23 For a description of that background see Advanced Hair Studio Pty Ltd v TVW Enterprises Ltd (1987) 18 FCR 1 at 6-11. 24 Australia, Senate, Parliamentary Debates (Hansard), 16 October 1984 at 1710. New section 65A will operate to exempt the media (and other persons who engage in businesses of providing information) from the operation of those provisions of Division 1 of Part V of the Trade Practices Act which could inhibit activities relating to the provision of news and other information." The exemption was limited and the relevant limit was25: "The exemption is not available, however, in respect of a publication of information relating to goods, services or land of a kind supplied by the information provider, or relating to goods, services or land where the publication is made pursuant to a contract, arrangement or understanding with a body corporate related to a body corporate that supplies such goods, services or land. These provisions ensure that information providers are not exempt from the consumer protection provisions of the Trade Practices Act in respect of the provision of information where they have what might be regarded as a commercial interest in the content of the information. In such cases, information providers must take the same responsibility for the accuracy of information as any other person who publishes information in trade or commerce. This can occur, for example, where a newspaper has agreed to publish a 'news' item about a product in exchange for the product supplier taking out paid advertising in that publication." The Explanatory Memorandum in relation to s 65A(1)(a) stated: "Proposed paragraph 65A(1)(a) provides that the exemption does not operate in relation to publication in connection with the supply or promotion of relevant interests in land, relevant goods or services or where publication is pursuant to a contract, arrangement or understanding with the supplier, or a related body corporate, of lands, goods or services." The extract from the Second Reading Speech defines the purpose of the exemption and of the relevant exception to it. It is based in part upon a misreading of s 65A which would have the exception apply only in respect of goods or services supplied by a body corporate or related body corporate. The Minister used the term "such goods or services" in a way that might be taken to have referred to goods or services of a kind supplied by the information provider or to goods or services the subject of publication pursuant to a contract, arrangement or understanding. The extract from the Explanatory Memorandum moves without explanation between a general reference to "relevant goods or services" and "goods or services" generally. These features of the Second Reading Speech and the Explanatory Memorandum mean that they are of little 25 Australia, Senate, Parliamentary Debates (Hansard), 16 October 1984 at 1710. assistance in the construction of s 65A save to the extent that they identify its purpose. The respondents supported the Full Court's construction of s 65A by reference to textual and contextual considerations and the purpose of the section. In substance the respondents' propositions were: The only goods or services referred to as a class in s 65A are the "relevant goods or services" in relation to a particular information provider. The "goods or services of that kind" referred to in s 65A(1)(a)(vi) can therefore only refer to relevant goods or services in relation to a prescribed information provider. The proximity of the term "goods or services of that kind" in s 65A(1)(a)(vi) to the term "relevant goods or services" in the immediately preceding sub-paragraph suggests that the term in sub-par (vi) refers to the "relevant goods or services" in sub-par (v). (iii) Sub-paragraphs (v) and (vi) are alternatives which should be read in their context as referring to the same kind of goods or services. If the expression "goods or services of that kind" in sub-par (vi) refers to any third person's goods or services the subject of the publication, the reference in s 65A(1)(b) to an "advertisement" would be otiose. Any advertisement would meet the description in sub-par (vi) because it would entail the publication of matter in connection with any goods or services pursuant to a contract, arrangement or understanding with a person who supplies those goods or services. The Minister's Second Reading Speech referred to publication being made "pursuant to a contract, arrangement or understanding". The Minister made it plain through his use of the words "such goods, services or land" that the type of goods covered by the sub-section were goods of the kind supplied by the prescribed information provider. (vi) The Second Reading Speech indicates that the exemption was intended to have a broad operation in relation to the media and other information providers. There is no basis for suggesting that the policy of promoting a "vigorous free press" was to be subordinated to consumer protection concerns. (vii) The construction adopted by the primary judge would inhibit activities relating to the provision of news and other information by the media and other information providers. It could inhibit media from entering into arrangements or understandings including non-commercial arrangements or understandings for the purpose of publishing information about the supply of goods or services. Notwithstanding the above arguments the construction adopted by the primary judge and propounded by the appellant is to be preferred to that adopted by the Full Court and propounded by the respondents. The first constructional argument, that the reference to "goods or services of that kind" in sub-par (vi) can only refer back to "relevant goods or services" in sub-par (v), depends upon "relevant goods or services" being the only goods or services capable of designation as a class and therefore as goods of a particular kind. That premise is wrong. The designation "goods or services of that kind" used in sub-par (vi) can logically be applied to the goods or services the subject of the published matter referred to in sub-pars (i) and (iii). Those sub-paragraphs define a class of goods or services by reference to the fact that they were the subject of the published matter. The second and third construction arguments rely upon the proximity of sub-pars (v) and (vi) and the fact that they are disjunctive. These considerations do not support the respondents' construction. At best they are neutral. Sub- paragraphs (i) to (iv) define classes of publication not covered by the exemption if the conditions either of sub-pars (v) or (vi) are met. These are two different kinds of condition, the first being that the publication concerns relevant goods or services, the second depending upon the existence of a relationship between the information provider and a supplier of the goods or services the subject of the publications and action pursuant to that relationship. The fourth argument was that the appellant's construction rendered the exception in respect of advertisements in s 65A(1)(b) otiose. The argument is answered by considering the way in which the exceptions are arranged in the section. The exceptions to the s 65A exemption cover a hierarchy of related and overlapping categories of publication which are entirely consistent with the purpose of the provision. Those categories were described, in broad terms, in the submissions for the appellant as: Self promotion – s 65A(1)(a)(v). Third party promotion – s 65A(1)(a)(vi). Advertisement – s 65A(1)(b). There are some categories of promotion of third party goods or services by a broadcaster which would fall squarely within the concept of an advertisement within the meaning of par (b). But it is not to be supposed that that exception, which was not relied upon at any stage in these proceedings, would cover the field of the promotion of third party goods and services. Nor is it to be supposed that the class of publication defined by the word "advertisement" and the kind of third party promotion covered by sub-par (vi) are mutually exclusive. The ordinary English meaning of "advertisement" according to the Australian Oxford Dictionary is26: "A public notice or announcement, especially one advertising goods or services in newspapers, on posters, or in broadcasts." The Macquarie Dictionary includes, in its similar definition, "a commercial film on television"27. The word "advertorial" which appears to have entered ordinary usage is defined in the Australian Oxford Dictionary as "an advertisement in the style of editorial comment"28 and in the Macquarie Dictionary as29: "a media piece that looks like a news or feature article but which is written and paid for by an advertiser". The interpretation of "advertisement" may conceivably cover some kinds of broadcast which also fall within the description of advertorial. Its relevant ordinary meaning is nevertheless relatively narrow. It does not extend to every publication of matter, pursuant to some contract, arrangement or understanding, in connection with the supply of goods or services. The fifth argument relies upon the Minister's Second Reading Speech and his use of the term "such goods [or] services" in it. Given the infelicities referred to earlier, neither the Second Reading Speech nor the Explanatory Memorandum are of particular assistance in choosing between competing constructions on textual grounds. The assistance they do accord is largely related to an understanding of the purpose of s 65A and its exceptions. The purpose of the exemption in s 65A, which was the subject of the sixth and seventh arguments made by the respondents, was to maintain a vigorous free press as well as to maintain an effective and enforceable TPA. That purpose is served by releasing newspapers and electronic media proprietors, inter alia, from undesirable inhibitions on the provision, by them, of news, information, opinion 26 The Australian Oxford Dictionary, 2nd ed (2004) at 18. 27 The accessed http://www.macquariedictionary.com.au on 24 March 2009. Dictionary, Macquarie 28 The Australian Oxford Dictionary, 2nd ed (2004) at 18. 29 The accessed http://www.macquariedictionary.com.au on 24 March 2009. Dictionary, Macquarie online online and comment. Consistently with that purpose information providers are free as part of the function of an independent free press to praise or criticise the providers of goods or services and the quality of what they provide. Where, however, the information provider publishes matter in connection with goods or services which it itself provides, or publishes an advertisement for its own or someone else's goods or services, the rationale of maintaining a free and vigorous press does not require its exemption from the prohibition of misleading or deceptive conduct. The same is true where the information provider promotes the goods or services of a third party pursuant to a contract, arrangement or understanding with that party. It would be true also of publications critical of goods or services provided by competitors of the information provider or of a third party with whom the information provider has a contract, arrangement or understanding. The rationale for limits upon the exemption should be understood in the light of conditions that must be satisfied before an information provider is liable in respect of misleading or deceptive representations made by a third party and published by the information provider. The publication, by an information provider, of third party statements about goods or services, does not, without more, amount to the adoption or making of those statements by the information provider30. Consistently with the legislative purpose enunciated in the Second Reading Speech, there is a clear rationale, derived from the purpose of the TPA itself, for not confining the exceptions to the exemption under s 65A to advertisements and to publications about goods or services of a kind provided by the information provider. There will no doubt be factual circumstances in which the application of s 65A will not be without difficulty. Nevertheless, text, context and purpose favour the construction adopted by the primary judge, rather than that adopted by the Full Court. This leaves for consideration the point raised by the notice of contention. It was not argued by the respondents that there was not a contract, arrangement or understanding between them and the two women operating the Wildly Wealthy Women Millionaire Mentoring Program. The point in contention is whether the contract, arrangement or understanding must relate to the specific representations made in the publication or whether it suffices that the publication is made pursuant to the terms of the contract, arrangement or understanding. The primary judge found that it was sufficient that the arrangement extend only to the 30 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 605 [38]-[40]; [2004] HCA 60. content of the publication in a general sense31. The respondents contended that this formulation was too nebulous. It would drive a "coach and horse" through the exemption. They argued that the contract, arrangement or understanding must relate to the actual content of the relevant publication or broadcast. The exception to the exemption would apply where the contract, arrangement or understanding covered the script or text of the publication or broadcast and the script or text was found to have been misleading or deceptive. The primary judge found against the construction advanced by the respondents and made the following points: Section 65A(1)(a) is directed to the "publication of matter" and not the publication of particular statements or representations. The publication may be made "pursuant to" a contract, arrangement or understanding. This does not require that the contract, arrangement or understanding descend to the detail of the content of the publication. The coverage by sub-par (vi) of publications made "on behalf of" third party suppliers of goods or services also contra-indicates a limitation on the nature of the relevant contract, arrangement or understanding to the particular content of the publication. While s 65A(1)(a) is concerned with the "matter" the subject of the publication, sub-par (vi) concerns its source and not its subject. An arrangement or understanding ordinarily involves an element of reciprocal commitment even though it may not be legally enforceable. It involves more than a mere hope or expectation that each party will act in accordance with its terms32. It is not necessary to consider the limits of the term 31 (2007) 244 ALR 343 at 362 [80]. 32 Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (2007) 160 FCR 321 at 334-335 [35]-[37]; Apco Service Stations Pty Ltd v Australian Competition and Consumer Commission (2005) 159 FCR 452 at 464 [46]; Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at 257-258 [79]; Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd (2000) 169 ALR 344; Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 at 230-231; Trade Practices Commission v Email Ltd (1980) 31 ALR 53 at 56; Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 26 ALR 609 at 629; Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 5 ALR 465 at 469- here because there is no dispute that the respondents did have an arrangement or understanding with the two women. The question is whether it was the kind of arrangement or understanding with which sub-par (vi) is concerned. The collocation "on behalf of, or pursuant to a contract, arrangement or understanding with …" is directed to the relationship between the publisher of matter and the supplier of goods or services to which the published matter relates. The respondents' construction places a gloss and a limitation upon the language of sub-par (vi) which Parliament did not see fit to place upon it. The content of the so-called "arrangement or understanding" is not defined save that it must necessarily relate to the publication of matter in connection with goods or services. The relevant publication must be made "pursuant to" it. This does not convey any requirement that the particular text published must be specified in the contract, arrangement or understanding. The respondents contended that the exception to the exemption as construed by the primary judge would destroy the exemption. This was on the basis that anybody who was interviewed by television, radio or other media does so because they agree to do so. So all voluntary interviewees are party to a contract, arrangement or understanding. This was something of a "straw man" argument. Sub-paragraph (vi) is concerned with contracts, arrangements or understandings between information providers and the suppliers of goods or services. The information provider that publishes matter in connection with the supply of goods or services, and engages in misleading or deceptive conduct in so doing by the adoption or making of misrepresentations, is the party affected by this exception. This case was well within the purposes of the exception. Other cases may require consideration of the range of arrangements or understandings that fall within it. The primary judge was correct in her construction. Conclusion For the preceding reasons the appeal should be allowed, the orders made by the Full Court of the Federal Court set aside and the orders made by the primary judge restored. The respondents in this appeal should pay the appellant's costs of the appeal in the Full Court and in this Court. GUMMOW J. The facts and the course of the litigation are explained in the reasons of the Chief Justice and Kiefel J, which should be read with what follows. Section 65A of the Trade Practices Act 1974 (Cth) is so drawn as to compress within a fairly short text numerous interactions between various integers or elements specified in the section. That interaction produces various combinations in which those integers operate conjunctively and disjunctively. When any particular set of facts is said to engage the section it becomes necessary first to identify which one or more of those combinations is relied upon to attract the section. If this step is taken with the present appeal, much of the uncertainty said to attend the application of s 65A in this case does not appear. The consequence is that the appellant ("the ACCC") should succeed, the appeal should be allowed and consequential orders made as proposed by the Chief Justice and Kiefel J. Section 65A excludes what otherwise could be contravention of the norms of conduct proscribed by various provisions in Pt V, Div I of the Act. These are ss 52, 53, 53A, 55, 55A and 59. The contraventions alleged by the ACCC against the respondents ("Channel Seven") were of s 52. This states: "52 Misleading or deceptive conduct (1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1)." The contraventions by Channel Seven were said to have occurred by the making of two television broadcasts, being episodes of the Today Tonight program which went to air in October 2003 and January 2004. The central issue in this Court is whether the exclusion of s 52 otherwise effected by s 65A did not apply by reason of either of two operations of s 65A. Each of these, by the use in them of the words "other than", is said by the ACCC to deny what otherwise would be the exclusion by s 65A of the application of s 52, to the broadcasts by Channel Seven. Channel Seven submitted that the construction of s 65A for which the ACCC contends should be examined with particular caution because acceptance of it would inhibit and not advance the position of a free and vigorous press. However, following the decision of Toohey J in Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd33, it has become well established that, for the broadcasts in question here to give rise to contraventions of s 52 by Channel Seven, it was necessary at least for some "endorsement" or "adoption" of what was represented on the programs by the relevant third parties, Ms Forster and Ms Boholt. The point, with particular reference to s 53 of the Act (which deals with certain false or misleading representations), was made as follows by French J in Gardam v George Wills & Co Ltd34: "The innocent carriage of a false representation from one person to another in circumstances where the carrier is and is seen to be a mere conduit, does not involve him in making that representation. ... When, however, a representation is conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as adopting it, then he makes that representation. It will be a question of fact in each case". The evidence demonstrated that with respect to the alleged contraventions of s 52 by Channel Seven, in relation to the status and achievements of Ms Forster and Ms Boholt, there was at least the necessary endorsement or adoption. The transcript of the broadcast of 31 October 2003 contains the following: "REPORTER: Through shrewd investment in real estate the pair [Ms Forster and Ms Boholt] have become millionaires, their secrets to be revealed in a mentoring program called 'Wildly Wealthy Women'. REPORTER: Sandy [Forster], a former surf wear designer is now a prosperity coach teaching women how to think like millionaires. In eight months she's bought more than $1 million worth of property with no money whatsoever. REPORTER: She [Ms Boholt] now owns more than 60 properties all around Australia." (emphasis added) The fact was, as affirmed in a declaration made by the primary judge, Ms Boholt did not own in excess of 60 properties at the time the representation was made, Ms Forster was not a millionaire, and Ms Forster had not purchased over 33 (1985) 58 ALR 549 at 586-587. 34 (1988) 82 ALR 415 at 427. $1 million worth of property using none of her own money. The primary judge also made a declaration with respect to the broadcast on 30 January 2004 to the effect that the statement in the transcript: "COMPERE: The women you're about to meet have made millions of dollars ..." represented that Ms Forster had made millions of dollars through investing in property whereas in fact at this time she had not made millions of dollars through investing in property. Hence the importance for Channel Seven to make out what it pleaded was the complete answer to the allegations by the ACCC of contravention of s 52, namely that s 65A of the Act operated in favour of Channel Seven. It is convenient now to set out the text of s 65A(1). The chapeau to s 65A reads: "Application of provisions of Division providers." to prescribed information The text of s 65A(1) states: "(1) Nothing in section 52, 53, 53A, 55, 55A or 59 applies to a prescribed publication of matter by a prescribed information provider, other than: a publication of matter in connection with: the supply or possible supply of goods or services; (iii) the sale or grant, or possible sale or grant, of interests in land; the promotion by any means of the supply or use of goods or services; or the promotion by any means of the sale or grant of interests in land; where: the goods or services were relevant goods or services, or the interests in land were relevant interests in land, as the case may be, in relation to the prescribed information provider; or the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with: a person who supplies goods or services of that kind, or who sells or grants interests in land, being interests of that kind; or a body corporate that is related to a body corporate that supplies goods or services of that kind, or that sells or grants interests in land, being interests of that kind; or a publication of an advertisement." (emphasis added) It is apparent that par (a) of s 65A(1) has many different operations, each of which triggers an exception to what otherwise is the relief given by the opening words of the sub-section from, in this case, s 52. This comes about because par (a) operates such that either sub-pars (i), (ii), (iii) or (iv) must be satisfied along with either (v), (vi)(A) or (vi)(B). Once the sub-section is disentangled and its numerous operations are separated the operation of the exceptions becomes clear. There are twelve exceptions produced from the different combinations in par (a) of s 65A(1). For convenience, these may be set out as follows: a publication of a matter in connection with the supply or possible supply of goods or services where the goods or services were relevant goods or services in relation to the prescribed information provider; [(a)(i) + (v)] a publication of a matter in connection with the supply or possible supply of goods or services where the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with a person who supplies goods or service of that kind; [(a)(i) + (vi)(A)] a publication of a matter in connection with the supply or possible supply of goods or services where the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with a body corporate that is a related body corporate that supplies goods or services of that kind; [(a)(i) + (vi)(B)] a publication of a matter in connection with the sale or grant, or possible sale or grant, of interests in land where the interests in land were relevant interests in land in relation to the prescribed information provider; [(a)(ii) + (v)] a publication of a matter in connection with the sale or grant, or possible sale or grant, of interests in land where the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with a person who sells or grants interests in land, being interests of that kind; [(a)(ii) + (vi)(A)] a publication of a matter in connection with the sale or grant, or possible sale or grant, of interests in land where the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with a body corporate that is related to a body corporate that sells or grants interests in land, being interests of that kind; [(a)(ii) + (vi)(B)] a publication of a matter in connection with the promotion by any means of the supply or use of goods or services where the goods or services were relevant goods or services in relation to the prescribed information provider; [(a)(iii) + (v)] a publication of a matter in connection with the promotion by any means of the supply or use of goods or services where the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with a person who supplies goods or service of that kind; [(a)(iii) + (vi)(A)] a publication of a matter in connection with the promotion by any means of the supply or use of goods or services where the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with a body corporate that is a related body corporate that supplies goods or services of that kind; [(a)(iii) + (vi)(B)] (10) a publication of a matter in connection with the promotion by any means of the sale or grant of interests in land where the interests in land were relevant interests in land in relation to the prescribed information provider; [(a)(iv) + (v)] (11) a publication of a matter in connection with the promotion by any means of the sale or grant of interests in land where the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with a person who sells or grants interests in land, being interests of that kind; [(a)(iv) + (vi)(A)] (12) a publication of a matter in connection with the promotion by any means of the sale or grant of interests in land where the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with a body corporate that is related to a body corporate that sells or grants interests in land, being interests of that kind; [(a)(iv) + (vi)(B)] This case is concerned with the exceptions numbered (2) and (8) which are emphasised in the above list. Once the exceptions are read in this way it becomes apparent that, contrary to the construction of the Full Court, the phrase "of that kind" refers to the goods or services which are the subject of the publication. This is consistent with the conclusion of the primary judge and with the case presented in this Court by the ACCC. Textual considerations The arguments put against this construction by Channel Seven are that it is inconsistent with "textual considerations" and with the purpose of the legislation. In their reasons, the Chief Justice and Kiefel J list the propositions advanced by Channel Seven35. They are numbered (i) to (vii). They may be briefly restated as follows: The only other kind of goods or services identified in s 65A(1) is the "relevant goods or services" identified in sub-par (a)(v) and defined in s 65A(3). Thus, the reference to "goods or services of that kind" in sub-par (a)(vi)(A) must be a reference to those "relevant goods or services", not those of Ms Forster and Ms Boholt. (ii) The textual proximity of the two phrases, "goods or services of that kind" in sub-par (a)(vi) and "relevant goods or services" in sub-par (a)(v), indicates that the first of these two phrases identifies the second. (iii) Sub-paragraphs (v) and (vi) are expressed disjunctively, but each refers to the same kind of goods or services. (iv) Full effect should be given to par (b) of s 65A(1), dealing with the publication of an advertisement; par (b) would be otiose if the phrase "goods or services of that kind" in sub-par (a)(vi) identifies those of any third person being the subject of the publication. (v) The Second Reading Speech supports the construction advanced by Channel Seven. 35 See [34]. (vi) The promotion of a "vigorous free press" is not to be subordinated to the concerns of consumer protection. (vii) The ACCC construction, accepted by the primary judge, would inhibit arrangements between information providers and third parties for the publication of information about the supply of goods or services. Propositions (i) to (iv) deal with what may be called "textual considerations". Propositions (v) and (vi), which deal with the Second Reading Speech, are addressed below. Proposition (vii), the alleged impact upon the interests of a free press has been addressed earlier in these reasons. Proposition (i) is incorrect. The goods and services in ss 65A(1)(a)(i) and (iii) will naturally be of a kind. Furthermore, once the exceptions are disentangled it becomes clear that the reference, in s 65A(1)(a)(vi)(A), to "of that kind" is a reference to the kind of goods or services in ss 65A(1)(a)(i) or (iii). Channel Seven submit, in proposition (ii), that the textual proximity of the phrases "goods or services of that kind" and "relevant goods or services" indicates that they refer to the same goods or services. Further, they argue, in proposition (iii), that as sub-pars (a)(v) and (a)(vi) are disjunctives they should be read as referring to the same kind of goods or services. If these propositions were to be accepted the Parliament could not, as it has done with s 65A, effectively abbreviate a large number of exceptions by listing the relevant integers as sets of disjunctives without risking the qualification of the terms of one integer by the terms of the other integers. Reference should be made to the definition of "relevant goods or services" in s 65A(3). This reads: "relevant goods or services, in relation to a prescribed information provider, means goods or services of a kind supplied by the prescribed information provider or, where the prescribed information provider is a body corporate, by a body corporate that is related to the prescribed information provider." (emphasis added) During the hearing before this Court the suggestion was made that the similarity between the words "goods or services of that kind", used in s 65A(1)(a)(vi), and the words "goods or services of a kind", used in the definition of "relevant goods or services" in s 65A(3), suggests that the goods in s 65A(1)(a)(vi) are to be read as "relevant goods or services". The defined expression appears in sub-par (v) not sub-par (vi), and (v) and (vi) are expressed disjunctively. The presence of the definition in s 65A(3) supplies no textual support to break the link which, for this appeal, appears between sub-par (vi) and sub-pars (i) and (iii). The fourth submission by Channel Seven should not be accepted. It is true that the exceptions provided by ss 65A(1)(a)(vi)(A) and 65A(1)(b) overlap, upon the construction accepted by the primary judge, but they also apply to discrete publications. Further, as was noted by French J in Bond v Barry36, the limits of the wide application of s 65A are formed by the exceptions provided by ss 65A(1)(a) and (b). The exceptions operate to confine the application of the general exemption introduced by s 65A rather than to exclude discrete publications from its application. Thus, the exceptions do not necessarily operate discretely. Purpose of the section Channel Seven submits that the construction of Bennett J is inconsistent with the intention of the legislature. This intention, they submit, is "unusually clear" from the Minister's Second Reading Speech37: "The exemption is not available, however, in respect of a publication of information relating to goods, services or land of a kind supplied by the information provider, or relating to goods, services or land where the publication is made pursuant to a contract, arrangement or understanding with a body corporate related to a body corporate that supplies such goods, services or land. These provisions ensure that information providers are not exempt from the consumer protection provisions of [the Act] in respect of the provision of information where they have what might be regarded as a commercial interest in the content of the information." (emphasis given by counsel for Channel Seven) Channel Seven submitted that it is clear from the use of the term "such goods", that the type of goods covered by sub-par (a)(vi) are goods of the kind supplied by the prescribed information provider. Yet the Second Reading Speech is no more than a summary of the section and fails to deal directly with sub-par (a)(vi)(A). Further, the replacement of the words "of that kind", used in the sub-paragraph, with the words "such goods" only repeats the controversy at hand, namely, the identity of the goods in question. There is no indication that the Minister's reference to "such goods" is to goods of the kind supplied by the prescribed information provider rather than to those goods which are the subject of the publication. 36 [2007] ATPR §42-187 at 48,069 [34]. This judgment was affirmed on appeal to the Full Court of the Federal Court of Australia: Bond v Barry (2008) 249 ALR 110. 37 Australia, Senate, Parliamentary Debates (Hansard), 16 October 1984 at 1710. The Minister also states that the exceptions operate where the information provider has "what might be regarded as a commercial interest" in the content of the information. This statement appears to be an attempt to summarise the effect of the complex legal relationship that exists between provisions s 65A(1)(a)(i) to (vi), and s 65A(1)(b). The summary risks over-simplification. Given this legal complexity, care should be taken in looking to the Second Reading Speech to answer intricate questions of construction which arise in this case. Notice of contention I would agree with the reasons of the Chief Justice and Kiefel J with respect to the Notice of Contention. Orders I agree with the orders proposed by the Chief Justice and Kiefel J. Hayne HAYNE J. I agree with French CJ and Kiefel J that the appeal should be allowed and consequential orders made in the form proposed. The disposition of the appeal turns principally upon the proper construction of s 65A(1) of the Trade Practices Act 1974 (Cth). The text of s 65A is set out in the joint reasons. Section 65A(1) begins by providing that nothing in certain specified sections of the Act "applies to a prescribed publication of matter by a prescribed information provider, other than" the several kinds of publication identified in pars (a) and (b) of the sub-section. The immediate question in the case was whether the publication in issue was one of those excepted kinds of publication. In particular, was there "a publication of matter in connection with ... the supply or possible supply ... [or] the promotion ... of the supply ... of ... services" where "the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with ... a person who supplies ... services of that kind"? When the question for consideration is identified in that way, there is no ambiguity in the applicable provisions of s 65A(1). The contract arrangement or understanding must be with a person who supplies services of the kind that are the subject of the publication. The expression "services of that kind" points back to the services which are the subject of the publication. Section 65A(1) is drafted as a single sentence of nearly 200 words. But that sentence is divided and subdivided into paragraphs and sub-paragraphs which, for the most part, are to operate disjunctively. When account is taken of those disjunctions, s 65A(1) can have more than a dozen distinct operations, even if no distinction is drawn between the supply or possible supply of goods and the supply or possible supply of services. When construing s 65A(1) account must be taken of these disjunctive operations of the provision. Ordinarily, the attribution intended by the demonstrative adjective "that" is determined by proximity. But where, as here, there are distinct operations of the provision, the relevant proximity is identified by consideration of so much of the sub-section as is relevant to the case at hand. It is not identified by treating the sub-section as a single sentence in which "goods or services of that kind" always refers back to the goods or services which were identified in the immediately preceding paragraph of the sub-section. this case, the words "of s 65A(1)(a)(vi)(A) (a person who supplies goods or services of that kind) fell to be applied in a case in which it was alleged that there was a publication of matter in connection with "the supply or possible supply [or the promotion of the supply] of goods or services". Read in that way there is no ambiguity or difficulty in understanding the "goods or services of that kind" as referring back that kind", where they appear Hayne to the goods or services in connection with the supply, possible supply, or promotion of which there was a publication of matter. HEYDON J. The Commission complained that s 52 of the Trade Practices Act 1974 (Cth) ("the Act") had been contravened by certain conduct of the respondents (Channel Seven Brisbane Pty Ltd, Channel Seven Sydney Pty Ltd, Channel Seven Melbourne Pty Ltd and Channel Seven Perth Pty Ltd). The conduct in question was broadcasting two episodes of a current affairs television programme known as Today Tonight. Those episodes reported on what was called the "Wildly Wealthy Women Millionaire Mentoring Program" ("the Mentoring Programme"). The Mentoring Programme envisaged the provision of instruction to women over a nine month period on how to formulate and implement successful property investment strategies. In return for the provision of this service, the participants would each pay $2,995. Dymphna Boholt and Sandra Forster, who had conceived the idea of the Mentoring Programme, asked Rachael Bermingham to organise publicity for the Mentoring Programme. In particular, on about 9 October 2003 Sandra Forster asked Rachael Bermingham "to get a program like … [Today Tonight] … to cover the story for us and ideally run a series of stories following the women we mentor and their journey within the 9 months". In due course, on 20 October 2003 the Executive Producer of Today Tonight in Brisbane consented to broadcast six "stories" on the Mentoring Programme. The first two of these "stories" were the episodes about which the Commission complains. They were broadcast on 31 October 2003 and 30 January 2004 respectively. The Commission's contention that these episodes contravened s 52 was upheld by the Federal Court of Australia (Bennett J). On the strength of an unchallenged affidavit by Dymphna Boholt, the trial judge held that in the first episode the respondents made a misleading and deceptive representation that Dymphna Boholt owned in excess of 60 properties38. The trial judge also found, on the strength of an unchallenged affidavit by Sandra Forster, that in the first episode the respondents made misleading and deceptive representations that she had purchased over $1 million worth of property and was a millionaire. And the trial judge found that in the second episode the respondents made a misleading and deceptive representation that Sandra Forster had made millions investing in property. These conclusions are not now in controversy, and no fresh demonstration of their validity is now called for. However, the learned Solicitor-General of the Commonwealth, who appeared for the Commission, did take the Court through parts of the broadcasts. That process certainly revealed the broadcasts as tasteless, as vulgar, as pandering to the basest of human desires, and as highly likely to achieve both popular and critical acclaim. 38 Australian Competition and Consumer Commission v Seven Network Ltd (2007) 244 ALR 343. What is controversial the the respondents' conduct did not fall within an immunity from s 52 conferred by s 65A. That conclusion led her to grant declaratory and injunctive relief. The Full Federal Court (Sundberg, Jacobson and Lander JJ), however, allowed an appeal. They held that the trial judge's construction of s 65A was erroneous and that it did afford the respondents immunity from s 5239. judge's conclusion trial that The Commission's appeal against the Full Court's orders should be dismissed with costs for the following reasons. The terms of s 65A Background. Soon after s 52 was enacted in 1974, applicants began to contend not only that untrue defamatory statements were actionable at common law by reason of the tort of defamation, but also that they attracted relief by way of damages under s 82 of the Act for contravention of s 5240. Some applicants viewed reliance on s 52 and s 82 as offering attractions over actions in defamation. One class comprised applicants who preferred non-jury trial but who could only sue in defamation in a jurisdiction which offered jury trial. Another class comprised applicants who wished to bypass the numerous common law and statutory defences available in defamation proceedings. Numerous actions for damages under s 82 in relation to s 52 allegations have succeeded even though the conduct in question was defamatory. Various arguments that s 52 on its true construction did not permit this have been rejected, both in the relatively distant past and quite recently. One is that s 52 is to be read down in the light of "the doctrine of freedom of speech, which incorporates the freedom of the press"41. Another is that s 52 is not to be construed so as to disrupt so well-established and finely balanced a body of law as defamation42. Yet another 39 Channel Seven Brisbane Pty Ltd v Australian Competition and Consumer Commission (2008) 249 ALR 97. 40 Section 82(1) of the Act now provides: "Subject to subsection (1AAA), a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention." Section 52 is a provision of Pt V. 41 Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 86. 42 TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd (2008) 71 NSWLR 323 at 339 [77]. is that s 52 is not to be construed as applying where the publication complained of, though defamatory, was true and in the public interest43. By at least 1984 the availability of s 52/s 82 proceedings as a means of bypassing the law of defamation had become clear44. The breadth of s 52 from this point of view caused "major newspaper proprietors" to seek exemption from its operation, and from the operation of similar sections in Pt V Div 1 of the Act45. In late 1984, s 65A was enacted as a result. In the spring of 1984 the government introduced a provision which became s 65A. The Minister's Second Reading Speech stated46: "New section 65A will operate to exempt the media (and other persons who engage in businesses of providing information) from the operation of those provisions of Division 1 of Part V of the [Act] which could inhibit activities relating to the provision of news and other information." The terms of s 65A. The structure of s 65A is as follows47. The opening words of s 65A(1) grant an immunity by providing: "Nothing in section 52, 53, 53A, 55, 55A or 59 applies to a prescribed publication of matter by a prescribed information provider other than …". Section 65A then creates two groups of exceptions to that immunity, one in s 65A(1)(a) and one in s 65A(1)(b). 43 TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd (2008) 71 NSWLR 323 at 339-341 44 Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1983) 47 ALR 497; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82. 45 Australia, The Trade Practices Act – Proposals for Change, Green Paper, February 1984 at [70]. The other sections were s 53 (which deals with certain false or misleading representations about goods or services), s 53A (which deals with certain false representations and misleading or offensive conduct in relation to land), s 55 (which deals with certain conduct liable to mislead the public in relation to goods), s 55A (which deals with certain conduct liable to mislead the public in relation to services) and s 59 (which deals with certain other false or misleading representations about business activities). These are the sections from which s 65A now provides immunity. 46 Australia, Senate, Parliamentary Debates (Hansard), 16 October 1984 at 1710. 47 Section 65A is set out above at [10] and [60]. It is not in controversy that the respondents are "prescribed information providers". That is because they hold licences under the Broadcasting Services Act 1992 (Cth)48. Nor is it in controversy that the two episodes complained of were "prescribed publications of matter". That is because they fell within the meaning of "prescribed publication" in s 65A(2)(b): the publication was "by way of a … television broadcast" by the respondents, who were prescribed information providers by virtue of par (a) of the definition of "prescribed information provider", namely as holders of licences under the Broadcasting Services Act49. The first group of exceptions to the immunity granted by the opening words of s 65A(1) is found in s 65A(1)(a). The second group of exceptions to the immunity granted by the opening words of s 65A(1) comprises the publication of advertisements: s 65A(1)(b). The Commission did not allege that this had application in the present case. The narrow range of controversy It is clear that if the Commission is to establish that the respondents are outside the immunity granted by the opening words of s 65A(1), it must satisfy two conditions. The first necessary condition is that one of sub-pars (i)-(iv) applies to the respondents. The second necessary condition is that one of sub-pars (v) or (vi) also applies to the respondents. It was common ground that the Commission established the first of these two necessary conditions. The broadcast episodes were within s 65A(1)(a)(i). That is because they constituted a publication of matter in connection with the supply or possible supply of services (namely the services to be supplied by Dymphna Boholt and Sandra Forster under the Mentoring Programme). The broadcast episodes were also within s 65A(1)(a)(iii). That is because they constituted a publication of matter in connection with the promotion of the supply of services (namely the services to be supplied by Dymphna Boholt and Sandra Forster under the Mentoring Programme). What of the second of the two necessary conditions? It was common ground that the Commission could not establish it by invoking s 65A(1)(a)(v). That is because the services were not supplied by the respondents50. It is also 48 See the definition of "prescribed information provider" in s 65A(3) set out above at 49 See s 65A(2), set out above at [10]. 50 See the definitions of "relevant goods or services" and "relevant interests in land" in s 65A(3), set out above at [10]; see also at [67]. common ground that the Commission could not establish it by invoking s 65A(1)(a)(vi)(B). That is because no related body corporate was involved. That left s 65A(1)(a)(vi)(A) as the sole avenue by which the Commission could establish the second necessary condition. The reasoning of the trial judge The respondents' submission was that s 65A(1)(a)(v) deprives a prescribed information provider of immunity in relation to a publication of matter promoting its own goods or services or interests in land or (by reason of the definition of "relevant goods or services" and "relevant interests in land") those of a related body corporate; that s 65A(1)(a)(vi) deprives it of immunity in relation to a publication of matter on behalf of, or pursuant to a contract, arrangement or understanding with, a third party or a related body corporate who supplies the prescribed information provider's goods or services or interests in land or those of a related body corporate; and that s 65A(1)(b) deprives a prescribed information provider of immunity from publishing an advertisement for the products of others. Inherent in this submission was a submission that the words in s 65A(1)(a)(vi) "of that kind" in relation to services referred not to the services mentioned in s 65A(1)(a)(i) and (iii), but to those mentioned in s 65A(1)(a)(v) – the "relevant … services", ie those supplied by the prescribed information provider. The trial judge disagreed with that submission51. The trial judge held that s 65A(1)(a)(vi)(A) was satisfied on the basis that the respondents broadcast the episodes pursuant to their contract, arrangement or understanding with Dymphna Boholt and Sandra Forster made on 20 October 200352. On this basis Dymphna Boholt and Sandra Forster supplied services "of that kind" because the trial judge considered that those words referred to the services mentioned in s 65A(1)(a)(i) or (iii). The reasoning of the Full Court The Full Court, on the other hand, preferred the construction advocated by the respondents. The Full Court considered that s 65A(1)(a)(vi)(A) could only have been satisfied if the respondents had broadcast the episodes pursuant to a 51 Australian Competition and Consumer Commission v Seven Network Ltd (2007) 244 ALR 343 at 365 [92]-[94]. 52 Australian Competition and Consumer Commission v Seven Network Ltd (2007) 244 ALR 343 at 367 [106]. contract, arrangement or understanding with a person who supplied "relevant … services" of the type referred to in s 65A(1)(a)(v)53. The submissions of the parties The submissions of the parties each adopted the broad approach of defending those aspects of the reasoning in the courts below which favoured their interests, with some elaboration. In general it is convenient to proceed by examining the Commission's attacks on the reasoning of the Full Court in the light of the respondents' defence of it. Unhelpful matters Before that procedure is commenced, however, at the outset it must be said that there were some materials referred to by the parties which do not assist in construing s 65A. Section 2. Section 2 of the Act provides: "The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection." The Commission submitted that this supported its construction. The submission relied on s 15AA(1) of the Acts Interpretation Act 1901 (Cth) which provides: "In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object." But the submission did not answer the question: how does one assess the purpose or object underlying s 52 in relation to the purpose or object underlying s 65A? Further, s 2 is a curious provision. If "Australians" in s 2 is meant to denote "Australian citizens", so that the Act, unlike s 75(v) of the Constitution, has as its object the benefiting of a narrower class than all the persons present in Australia within the Queen's peace, s 2 has an application which is narrow, discriminatory and unworkable. If, on the other hand, "Australians" in s 2 is meant to refer to all persons present in Australia, s 2 ignores the extraterritorial reach of the Act, pursuant to s 5, on the many persons who are Australian citizens or permanent or other residents of Australia who are not at any particular 53 Channel Seven Brisbane Pty Ltd v Australian Competition and Consumer Commission (2008) 249 ALR 97 at 107-108 [47]-[57]. moment present in Australia. But, in any event, the language of s 2 is far too broad and vague to assist in arriving at the correct construction of a provision having the detailed and precise wording of s 65A. Construction to give the fullest relief. A similar appeal was made by the Commission to a principle that Pt V of the Act should be construed "so as to give the fullest relief which the fair meaning of its language will allow"54. That principle may be accepted, but it casts no specific light on the question of what the fair meaning of s 65A actually is. Explanatory Memorandum. the Commission, what is said in the Explanatory Memorandum is far too compressed and brief to assist; indeed, its terms do not suggest that its author had in mind the present problem55. to a submission of Contrary The Minister's Second Reading Speech. Both the Commission and the respondents relied on the following statement by the Minister in the Second Reading Speech56: "The Government recognises the need to maintain a [vigorous] free press, as well as an effective and enforceable [Act]." These words are too vague to indicate what the precise construction of the words "of that kind" in s 65A(1)(a)(vi) is. Although the trial judge said that the point at issue in these proceedings "is not directly addressed" in that Speech57, when the Minister turned to discussion of the circumstances in which the exemption conferred by the opening words of s 65A(1) did not exist, he said this58: "The exemption is not available, however, in respect of a publication of information relating to goods, services or land of a kind supplied by the 54 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 621 [97] per McHugh J (dissenting); [2004] HCA 60, approving Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 503 per 55 Australia, Senate, Statute Law (Miscellaneous Provisions) Bill (No 2) 1984, Explanatory Memorandum at 64. 56 Australia, Senate, Parliamentary Debates (Hansard), 16 October 1984 at 1710. 57 Australian Competition and Consumer Commission v Seven Network Ltd (2007) 244 ALR 343 at 363 [88]. 58 Australia, Senate, Parliamentary Debates (Hansard), 16 October 1984 at 1710. information provider, or relating to goods, services or land where the publication is made pursuant to a contract, arrangement or understanding with a body corporate related to a body corporate that supplies such goods, services or land." (emphasis added) The first part of that sentence summarises s 65A(1)(a)(v). The second part of that sentence refers to s 65A(1)(a)(vi)(A) and (B), and though it telescopes those provisions, it affords room for the respondents to submit that it made plain the meaning of "goods or services of that kind" in s 65A(1)(a)(vi)(A) for the purposes permitted by s 15AB(1) of the Acts Interpretation Act. They submitted that the Minister's use of the words "such goods, services or land" in referring to what he called "goods, services or land of a kind supplied by the information provider" reveals that the legislative words "of that kind" refer to the kind comprised by "relevant goods or services" and "relevant interests in land". The Commission accepted that, if the quoted sentence were to be construed in isolation, on one available construction it supported the respondents. But the Commission submitted that it should not be construed in isolation. It relied on another part of the Second Reading Speech59. The Minister said60: "These provisions ensure that information providers are not exempt from the consumer protection provisions of the [Act] in respect of the provision of information where they have what might be regarded as a commercial interest in the content of the information. In such cases, information providers must take the same responsibility for the accuracy of information as any other person who publishes information in trade or commerce. This can occur, for example, where a newspaper has agreed to publish a 'news' item about a product in exchange for the product supplier taking out paid advertising in that publication." Although the Commission denied that the information provider was required to have a "commercial interest in the content of the information" – an issue which can be put on one side – it did contend that the example given by the Minister supported its construction. However, publication of a "news" item about a product in return for consideration is publication of an advertisement about the product: s 65A(1)(b) provides that the publication of an advertisement is outside the immunity given by the opening words of s 65A(1). If the Minister was speaking of s 65A(1)(b), what he said is thus both correct and not contradictory of the respondents' construction. The Commission submitted that there was no 59 At least on the appeal: on the special leave application counsel then appearing for the Commission twice said, correctly, that nothing could be derived from the Second Reading Speech. 60 Australia, Senate, Parliamentary Debates (Hansard), 16 October 1984 at 1710. reason to suppose that the Minister was speaking of s 65A(1)(b), and that he was actually speaking of s 65A(1)(a). In truth, these debates between the parties lead nowhere valuable. The Second Reading Speech is quite inconclusive. The Speech was directed to the Statute Law (Miscellaneous Provisions) Bill (No 2) 1984. That Bill, when enacted, amended, as its title hinted, many disparate pieces of legislation apart from the Act – 68 in all. It amended two parts of the Act. So far as s 65A is concerned, the Speech offers a very brief account of a complex provision. The version of the Second Reading Speech delivered to the House of Representatives contained a garbled and jumbled passage in relation to s 65A(1)(a)(vi)61. The Solicitor-General submitted that the standard of Second Reading Speeches in 1984 fell below that attained now. However that may be, the perfunctory, rushed and highly compressed treatment of s 65A gives no confidence that it can usefully be relied on for the present purpose. Prior authorities. The respondents relied on statements in various decisions of the Federal Court of Australia which were consistent with their preferred construction. The Commission was correct to submit that none of these decisions concern the construction of s 65A(1)(a)(vi) – a submission which is equally correct in relation to a case relied on by the trial judge62. Policy and purposes. Both sides appealed to "policy" criteria and legislative purposes, some of them supposedly "clear", but these were actually too uncertain to be of assistance. Criminal character of the conduct exempted by s 65A. The Commission briefly allied itself with the proposition that issues to do with the construction of 61 The sentence appearing in the Senate Speech quoted above beginning "The exemption is not available" appears in the following terms in the House of Representatives Speech: "The exemption is not available, however, in respect of publication of information relating to goods, services or land of a kind supplied by the information relating to goods, services or land where the publication is made pursuant to a contract, arrangement or understanding with a person who supplies goods, services or land of that kind or with a body corporate related to a body corporate that supplies such goods, services or land." Australia, House of Representatives, Parliamentary Debates 13 September 1984 at 1296. (Hansard), 62 Sun Earth Homes Pty Ltd v Australian Broadcasting Corporation (1993) 45 FCR 265. The trial judge referred to this case at Australian Competition and Consumer Commission v Seven Network Ltd (2007) 244 ALR 343 at 363 [86]. s 65A had considerable significance, since there were many equivalents of it in other Commonwealth legislation and in State and Territory legislation modelled on Pt V Div 1 of the Act. The significance is even wider than that. Although the parties, correctly, did not develop any submissions around the following point, any conduct falling within s 65A, unless it is no more than a breach of s 52, is likely to be a criminal offence. One of the provisions from which s 65A gives immunity is s 52. The prohibition in s 52 is not backed by a criminal sanction. But the other provisions from which s 65A gives immunity – ss 53, 53A, 55, 55A and 59 – all have counterparts creating prohibitions backed by criminal sanctions. They are found in Pt VC Div 2, and are ss 75AZC, 75AZD, 75AZH, 75AZI and 75AZM respectively. Contraventions of ss 75AZC, 75AZD, 75AZI and 75AZM are liable to a fine of 10,000 penalty units. Contraventions of s 75AZH are liable to a fine of 2,000 penalty units. An immunity from these provisions in the same terms as s 65A is provided by s 75AZR. Defendants to charges that the criminal provisions have been contravened who wish to rely on s 75AZR bear an evidential burden of establishing the necessary facts, pursuant to s 13.3(3) of the Criminal Code (Cth). Since the language of s 65A and s 75AZR is identical, whatever meaning is given to s 65A must be given to s 75AZR. If the immunity given by s 65A in relation to attempts to obtain civil remedies for breaches of ss 53, 53A, 55, 55A or 59 is narrow, it will be equally narrow in relation to attempts to get criminal punishments for breaches of ss 75AZC, 75AZD, 75AZH, 75AZI and 75AZM. However, the rule – perhaps a rule of last resort – that if the language of a penal statute is ambiguous or doubtful, the ambiguity or doubt may be resolved in favour of the subject63, has no application here. There is a controversy between the parties as to the construction of s 65A, but the section is not so ambiguous or doubtful as to preclude, after analysis of the statutory language, selection between the competing meanings. Thus, however much it may be an unusually desperate tactic of last resort, there is no alternative but to seek to ascertain the meaning of s 65A by examining its actual words, technical and unpalatable though they may be. Textual considerations This being an appeal against orders of the Full Court, it is desirable to begin by considering what the reasoning was which the Full Court saw as justifying the orders, and by examining the Commission's complaints about that reasoning. The key part of the Full Court's reasoning begins with two interlinked 63 Beckwith v The Queen (1976) 135 CLR 569 at 576; [1976] HCA 55. 64 Channel Seven Brisbane Pty Ltd v Australian Competition and Consumer Commission (2008) 249 ALR 97 at 107 [49]-[50]. "[T]he expression [in s 65A(1)(a)(vi)(A)] is 'goods or services of that kind'. That means there must be a reference earlier in the section to goods or services of a kind. That follows from the use of the word 'that', which qualifies the kind of goods or services. It must be referring to some earlier mentioned goods or services. … in the whole of s 65A there is only one reference to goods or services of a kind, and that is in relation to the kind of goods or services referred to in the 'relevant goods or services'. There is no 'kind' of goods or services in s 65A(1)(a)[(i)-(iv)]." The Full Court also said65: "[P]lacita (v) and (vi) of s 65A(1)(a) are alternatives, only one of which needs to be established to cause the exception to operate upon the exemption. In those circumstances, alternatives must be read contextually and, in particular, in their context with each other. In those circumstances, where both of the placita refer to goods or services and when the alternative to the first proposition talks of goods or services of that kind, the alternative must be addressing the kind of goods or services mentioned in the first proposition." The Commission criticised the reasoning set out in the first of these quotations from the Full Court's reasons for judgment. It submitted that the reasoning "ignores the opening words of s 65A(1)(a)(vi) which make clear that the kind of goods or services referred to are those which constitute the subject matter of the publication". This is not convincing. Although the goods or services referred to in s 65A(1)(a)(i) which are involved in a particular case, for example, can no doubt be classified into part of a "kind", there is no reference in terms to any particular "kind". And the opening words of s 65A(1)(a)(vi) do not refer in terms to any particular "kind" of goods or services. The opening words refer only to the "publication" of matter which has a connection with "goods or services" or "interests in land". It is true that this reference, like the opening words of s 65A(1)(a)(v), which speak of "goods or services" and "interests in land", refers back to the "goods or services" mentioned in s 65A(1)(a)(i) and (iii), and the "interests in land" mentioned in s 65A(1)(a)(ii) and (iv). But the words in both phrases as used in s 65A(1)(a)(i)-(iv) are entirely general and unqualified: they refer to any goods or services, and any interests in land. The process of cutting down their generality, and imposing some qualification on it, is a function served by the language of s 65A(1)(a)(v)-(vi). That follows from the structure of 65 Channel Seven Brisbane Pty Ltd v Australian Competition and Consumer Commission (2008) 249 ALR 97 at 108 [51]. the sub-paragraphs, and the use of the word "where" on its own line immediately before those sub-paragraphs. That linguistic structure also negates an attack which the Commission made on the reasoning in the second quotation from the Full Court's reasons for judgment66. The Commission's attack was that the reasoning: "ignores the context in which the second alternative [sub-par (vi)] is to be read. The second alternative is prefaced by the use of the words 'the publication' and therefore directs the reader to s 65A(1)(a) and the goods or services referred to in sub-paragraphs (i) and (iii)." While it is true that the words "the publication" refer back to sub-pars (i)-(iv) of s 65A(1)(a), they appear in a portion of par (a) commencing with the word "where", the plain effect of which is to limit the breadth of the expression "a publication of matter" in the first line of s 65A(1)(a). There is no doubt that s 65A(1)(a)(v) identifies a specific "kind" of "goods or services", and a specific "kind" of "interests in land". Each specific "kind" respectively comprises those which are "relevant goods or services" and "relevant interests in land" within the definitions of those phrases in s 65A(3)67. Those definitions themselves turn on the notion of "kinds". There is thus a linkage between the two "kinds" referred to in s 65A(1)(a)(vi) and the two "kinds" referred to in the definitions of "relevant goods or services" and "relevant interests in land": indeed those definitions are the only parts of s 65A that refer in terms to a "kind". The class of narrower items cut out from the broad categories in s 65A(1)(a)(i)-(iv) falls into two groups numbered "(v)" and "(vi)" in s 65A(1)(a). The two groups are alternatives. It is the natural reading of the phrase "of that kind" in the second group to treat it as referring to the first group: the two groups are not only contextually linked as establishing qualifications on the breadth of the "goods or services" referred to in s 65A(1)(a)(i) and (iii), and hence on the breadth of the words "a publication of matter", but the second is immediately consecutive to the first. The usage of "that" in sub-par (vi) is usage of the word as a demonstrative adjective. The Oxford English Dictionary gives as the first meaning of the word "that" when used as a demonstrative adjective: 66 See [111] above. 67 The definitions are set out above at [10]; see also at [67]. "The simple demonstrative used (as adjective in concord with a sb.), to indicate a thing or person either as being actually pointed out or present, or as having just been mentioned and being thus mentally pointed out."68 Before the "kinds" mentioned in sub-par (vi), the only "kinds" in s 65A(1) that have been actually pointed out or have just been mentioned are the kinds referred to in sub-par (v) and defined in s 65A(3). In this respect the trial judge's reasoning, which the Commission adopted, is open, with respect, to criticism. She said69: "(v) and (vi) are alternatives: if (vi) is read in the absence of (v), 'goods or services of that kind' would refer to the goods or services of the kind to be supplied, described in para (a)." Even if that were true, it does not follow that sub-par (vi) has the same meaning once a court takes into account, as it must, the existence of sub-par (v) and reads it alongside sub-par (vi). There is a further relevant textual argument advanced by the Full Court70: "If a construction is given to s 65A(1)(a)(vi)(A) and (B) so that it applies to any goods or services of any kind, then placita (v) and (vi) cease to be alternatives that govern the placita in (i)-(iv). Indeed, they would speak to quite different circumstances. [Placitum] (v) would be concerned with goods and services only of the kind provided by the broadcaster in the case of a licensee of a radio or television station, while (vi) would be concerned with any goods or services of any kind. If [placitum] (vi) were to be given that construction, there would be no need for [placitum] (v). Viewed in that way, s 65A(1)(a)(vi) complements s 65A(1)(a)(v) so that if a prescribed information provider has made a publication in connection with the supply or possible supply of goods or services, the exemption will be lost if the goods or services were of a kind supplied by the prescribed information provider or the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with, a person 68 Simpson and Weiner (eds), The Oxford English Dictionary, 2nd ed (1989), vol 17 69 Australian Competition and Consumer Commission v Seven Network Ltd (2007) 244 ALR 343 at 364 [89]. 70 Channel Seven Brisbane Pty Ltd v Australian Competition and Consumer Commission (2008) 249 ALR 97 at 108 [54]-[56]. who supplies goods or services of a kind supplied by the prescribed information provider. In other words, the purpose of s 65A(1)(a)(vi) is to extend the exception to not only include the publication of matter in connection with the supply or possible supply of goods or services by the prescribed information provider itself, but also goods or services of the kind supplied by the prescribed information provider but, in fact, supplied by some other person on its behalf or pursuant to a contract, arrangement or understanding with that other person." These points are forceful. The Commission contended that on this approach sub-par (vi) was "little more than a gloss on [sub-par] (v)". Sub-paragraph (vi) does not gloss sub-par (v); it widens it. The fact that sub-par (vi) may not widen sub-par (v) much does not establish that the construction is wrong. An argument from clarity. One of the trial judge's reasons for preferring the Commission's construction was that if71: "para (a) were intended to refer to goods or services and interests in land that were of the 'relevant' kind only, the [drafting] could have made that clear within subparas (a)(i)-(iv) or in (vi)." The Full Court met that contention in the following words72: "[T]he drafter could not use the defined term 'relevant goods and services' in s 65A(3), 65A(1)(a)(vi)(A) or (B) because, as defined, 'relevant goods or services' only applies to a prescribed information provider and s 65A(1)(a)(vi)(A) and (B) are directed to persons and corporations who may not be prescribed information providers. So the drafter has used the expression 'goods and services of that kind' referring to the goods or services in the definition which is incorporated in s 65A(1)(a)(v)." That is a compelling specific answer to the trial judge's point. The elaboration and convolution of the drafting in s 65A, which flow, paradoxically, from its compression, are perhaps to be deplored. But analysts who take advantage of the hindsight conferred by the opportunity to reflect in detail on legislative language in the context of a particular problem can often see that a different form of words 71 Australian Competition and Consumer Commission v Seven Network Ltd (2007) 244 ALR 343 at 364 [89]. 72 Channel Seven Brisbane Pty Ltd v Australian Competition and Consumer Commission (2008) 249 ALR 97 at 108 [52]. might have been clearer. That circumstance is often inconclusive. That is so here. A gap? The Commission submitted that a factor pointing against the correctness of the respondents' construction was that, if it were correct, there would be "subtle forms of conduct (and myriad others like them)" which would be immune from s 52 and the other relevant provisions of the Act. This would arise, according to the Commission, because these subtle forms of conduct would not the respondents' construction would leave the promotion of goods and services of a person other than the prescribed information provider within the immunity, and not removed from the immunity by s 65A(1)(b). That would create what the trial judge described as a "gap" in cases73: "advertisements" within the meaning of s 65A(1)(b), and "where the publication concerned the sale or supply of commercial subject-matter but was made on behalf of the third person or pursuant to an agreement that could not be described as 'an advertisement'." The Commission gave three examples. One was the example employed by the Minister in his Second Reading Speech. Another was the adoption by a radio broadcaster as programme content of a press release issued by a supplier of goods or services, in circumstances where the supplier sponsored the programme (rather than contracting for placement of specific advertisements) and where there was an understanding that the supplier's press releases would receive air time. Another example was a publication concerning a complaint about or criticism of goods or services made pursuant to an arrangement or understanding with a competitor of the supplier of the goods or services criticised, in exchange for the competitor taking out paid advertising; the publication would occur not merely in order to provide news or information, but to fulfil the terms of the arrangement or understanding. Problems of this kind would have to be decided from case to case as they arise. As indicated above, the first example – that given by the Minister – probably is an advertisement. Even if to some minds the other examples are less clear, they do not so plainly fall outside the category of advertisements as to suggest the respondents' construction. Nor is the statutory language so ambiguous or obscure that the possibility that the examples may not be advertisements compels a different construction. inconvenience absurdity practical extreme 73 Australian Competition and Consumer Commission v Seven Network Ltd (2007) 244 ALR 343 at 365 [91]. A new textual point That disposes of the principal attacks made by the Commission on the Full Court's reasoning. But the course of oral argument in this Court suggested a new approach – new in the sense that it had not been examined by either the parties at any stage or by the courts below. It was an approach which the Commission speedily adopted. The new approach rests on treating s 65A not as creating an immunity from liability subject to two exceptions, but as creating an immunity from liability subject to quite a large number of exceptions. Thus s 65A(1)(a) together. creates an exception when sub-pars read Section 65A(1)(a) creates a second exception when sub-par (i) and sub-par (vi)(A) are read together. Section 65A(1)(a) creates a third exception when sub-par (i) and sub-par (vi)(B) are read together – and so on. The force of this analysis is that it tends to weaken one of the respondents' key points – the demonstrative adjective analysis resting on the proximity of the words "of that kind" in sub-par (vi) to the words "relevant goods or services" and "relevant interests in land" in sub-par (v). On that analysis, which breaks s 65A up into quite a number of provisions of differential operation, the proximity of sub-pars (v) and (vi) becomes much less significant. (i) and (v) are With all respect to those minds which are attracted to this new point, the construction of the Full Court remains preferable. Section 65A(1) is a single sentence. Although it is a complex sentence, although it has to be read several times, and although it may have taken a very long time to write, it does not take long to read. And it does not take long to read the balance of s 65A. Section 65A is not like an entire statute, in which different provisions may have to be read distributively. Nor is there any explicit indication (as there is in s 6 of the Act) that it is to be construed in the light of a distributive reading, as distinct from being applied in that way when the particular circumstances call for it. It is true that when s 65A is applied to particular sets of circumstances, only some parts of the language may need to be examined in order to assess whether conduct claimed to fall within it does fall within it. But in other cases the application of those parts of the language may not be clear because their meaning is unclear. Assessment of their meaning may depend on construing the sentence as a whole. Construing this particular sentence as a whole would, in my opinion, entail reading it as a unified piece of prose rather than reading it in its potential individual applications. When s 65A is read through, the lack of any explicit reference to "kind" before that conception appears in sub-par (v), read with the definitions in s 65A(3), suggests that the words "of that kind" in sub-par (vi) refer back to sub-par (v). Orders For those reasons the construction adopted by the Full Court was correct. So was its decision to allow the appeal from the trial judge. It is therefore unnecessary to consider the respondents' notice of contention. The appeal to this Court should be dismissed with costs. |
HIGH COURT OF AUSTRALIA TEC DESERT PTY LTD & ANOR APPELLANTS AND COMMISSIONER OF STATE REVENUE RESPONDENT TEC Desert Pty Ltd v Commissioner of State Revenue [2010] HCA 49 15 December 2010 ORDER Appeal allowed with costs. Set aside the order of the Court of Appeal of the Supreme Court of Western Australia made on 15 January 2010 and, in place thereof, order that the appeal to that Court be dismissed with costs. Within 28 days of the date of this order, or such further period as this Court may allow by order made within that 28-day period, the parties may file agreed short minutes of appropriate further orders as indicated in the reasons of this Court; and, in default of such agreement, the matter be remitted to the Court of Appeal. On appeal from the Supreme Court of Western Australia Representation J W De Wijn QC with B Dharmananda for the appellants (instructed by G T W Tannin SC with B P King for the respondent (instructed by State Solicitor for Western Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS TEC Desert Pty Ltd v Commissioner of State Revenue Stamp duties – Conveyance on sale – Interest in land – Sale Agreement provided for sale to appellants of chattels of WMC Resources Ltd ("WMC") – Sale Agreement required WMC to grant appellants, for a fee, licences to use "Fixtures" – "Fixtures" defined in Sale Agreement as items "affixed to land, and an estate or interest in which is therefore an estate or interest in land" – Most WMC assets on land subject of WMC mining tenements – Whether Sale Agreement transferred interest in land – Whether interest in items affixed to land subject of mining tenements interest in land – Whether such items "Fixtures". Real property – Mining tenements – Mining plant – Whether interest of holder of mining tenement interest in land – Whether interest in mining plant, affixed to land, interest in land – Relevance of general law concerning fixtures. Stamp duties – Conveyance on sale – Interest in land – Some WMC assets on WMC freehold land – On termination of licences, appellants required to acquire WMC's right, title and interest in "Fixtures" – WMC warranted it had title to "Fixtures" notwithstanding their affixation to freehold – Whether obligation to acquire "Fixtures" on WMC freehold effected transfer of interest in land – Nature of title to "Fixtures" dealt with under licences – Whether appellants' obligation to rehabilitate land, or negative covenant preventing WMC assigning freehold without assignee being bound by licences, created interests in land. Words and phrases – "fixture", "mining lease", "mining plant". Mining Act 1904 (WA), ss 108(3), 273. Mining Act 1978 (WA), s 114. Stamp Act 1921 (WA), ss 19(a), 63(1), 70(2). FRENCH CJ, GUMMOW, HEYDON, CRENNAN AND KIEFEL JJ. On 24 July 2000 the respondent ("the Commissioner"), pursuant to the Stamp Act 1921 (WA) ("the Stamp Act"), assessed to duty of $9,140,280.25 a written agreement ("the Sale Agreement") dated 27 November 1998. The date for the application of the Stamp Act is 24 July 2000. The parties to the Sale Agreement included the vendor, WMC Resources Ltd ("WMC"), and the purchasers, the first appellant ("TEC") and the second appellant ("AGL") as partners carrying on business under the name "Southern Cross Energy". The Sale Agreement The Sale Agreement was styled "WMC Power Assets Sale Agreement". In broad terms the Sale Agreement provided for the divestment by WMC, in favour of TEC and AGL, of its responsibility for the generation of power for the running of its mining operations in Western Australia. The expansion of the Australian mining industry in recent decades has been marked by significant expenditure on infrastructure required for the exploitation of mineral resources1. Assets of WMC which were chattels or other personal property (defined as "Sale Assets") were to be sold for a purchase price of $190,363,990. Assets classified as "Fixtures" (a defined term) were to be the subject of licence agreements with aggregate fees of $39,836,010 for the 15-year licence term should WMC require prepayment on completion of the sale. This sum of $39,836,010 corresponded with the total value given to the Fixtures in the "Asset Register" identified in the Sale Agreement. The primary judge (Simmonds J) outlined as follows the subject matter of the Sale Agreement2: "WMC had two power generation systems [the Northern System and the Southern System] for the purposes of the Sale Agreement, each comprising power generation stations and, depending on the system, generators. In addition, for both systems, there were electrical wires and 1 See BHP Billiton Iron Ore Pty Ltd v National Competition Council (2008) 236 CLR 145; [2008] HCA 45; Menghetti, "Mining", in Davison, Hirst and Macintyre (eds), The Oxford Companion to Australian History, rev ed (2001) 434 at 435. 2 TEC Desert Pty Ltd v Commissioner of State Revenue (2006) 65 ATR 499 at 503 Crennan associated transmission and distribution plant and equipment connecting the power stations and generators to certain named operations, and, depending on the system, to a smelter, a village or a township or townships. There was also further personal property associated with these systems forming part of them for the purposes of the Sale Agreement. For the most part the assets comprising the two systems were on lands the subject of various mining tenements, although one power generation station and certain items of the transmission and distribution ... sort were on lands held in freehold by WMC, and there were some assets on land in respect of which it was not clear that WMC had any tenure. Under the Sale Agreement, [TEC and AGL] acquired certain assets among those comprising the system, and provision was made for [them] to acquire the right to use the remaining assets in situ. For the latter purpose a series of nine licences, each under a Licence Agreement ..., patterned on a form provided for in [Sched 8 to] the Sale Agreement, were granted by WMC in January 1999. These were assessed to stamp duty. No appeal was taken before me against those assessments." Clause 2.1 of the Sale Agreement stated: "Subject to the terms and conditions of this Agreement, [WMC] will sell and [TEC and AGL] will buy, on the Completion Date, all of [WMC's] respective right, title and interest in and to the Sale Assets as at the Completion Date, free from any Encumbrance, for the Purchase Price." Clause 5.2 required the execution of licences in the form of the draft specified in Sched 8 to the Sale Agreement. Completion took place on 29 January 1999 and by that date WMC had granted TEC and AGL nine separate licences generally in the form of Sched 8 ("the Licence Agreements"). The Supreme Court and the Court of Appeal Section 33 of the Stamp Act provided for an appeal to the Supreme Court of Western Australia against the decision of the Commissioner on an objection to an assessment. If the Supreme Court determined that the assessment was in error it was required by s 33(4) to assess the duty chargeable and order the Commissioner either to refund any excess of duty which had been paid or to reassess the instrument if it had been charged with insufficient duty. Access to the Supreme Court has since been replaced by the right to apply for review by the Crennan State Administrative Tribunal3, but the previous system continues to apply to the present litigation. In the Supreme Court, the primary judge rejected the basis of assessment by the Commissioner and decided that the assets sold under the Sale Agreement were restricted to personal property and did not include an estate or interest in land4. Accordingly, his Honour determined that the duty chargeable upon the Sale Agreement was nil and so allowed the appeal by TEC and AGL against the assessment. An appeal from the decision of Simmonds J by the Commissioner to the Court of Appeal (Wheeler, McLure and Newnes JJA)5 was successful. Indeed, the Court of Appeal held that insufficient duty had been assessed and under s 33(4)(b) directed reassessment by the Commissioner. It did so on the footing that duty should be assessed not only on the total value of the Sale Assets but also on the $39,836,010 attributable to the Fixtures the subject of the Licence Agreements, giving a total dutiable value of $229,492,659. By special leave, TEC and AGL appeal to this Court. For the reasons which follow, the appeal should be allowed. The relevant charging provisions The expression "conveyance on sale" in Pt IIIB of the Stamp Act includes every instrument whereby any estate or interest in any property on the sale thereof "is transferred to or vested in the purchaser" (s 63(1)). Section 74(1) charges with the same ad valorem duty as is imposed upon a conveyance on sale every contract for the sale of any estate or interest in any property. Section 16(1) imposes the duties specified in the Second Schedule to the Stamp Act. Item 4 thereof deals with conveyances or transfers on sale of property and identifies the purchaser as the person liable to pay the ad valorem duty. However, s 16(2) provides for the exemptions from duty which are specified in the Third Schedule. 3 Taxation Administration Act 2003 (WA), s 40(1) as amended by State Administrative Tribunal (Conferral of Jurisdiction) Amendment and Repeal Act 2004 (WA), s 1174. (2006) 65 ATR 499 at 544 [300]. 5 Commissioner of State Revenue v TEC Desert Pty Ltd [2009] WASCA 128. Supplementary reasons were given for the orders made by the Court of Appeal: [2009] WASCA 128 (S). Crennan The relevant effect of Item 2(7c) in the Third Schedule is to exempt the conveyance or transfer of any estate or interest in "goods, wares or merchandise". This phrase includes all tangible movables6. However, where s 70(2) applies, the exemption is denied. Section 70(2) states: "If an instrument – transfers, or is or includes an agreement to transfer, or evidences the transfer of, a chattel and land; and is chargeable with duty in respect of the land, the instrument is chargeable with duty in respect of the unencumbered value of the land plus the unencumbered value of the chattel." The term "chattel" in s 70(2) includes an estate or interest therein and the term "transfer" includes convey and vest (s 70(1)). The term "land" in s 70(2) includes "an estate or interest in land". As will appear, and as the Commissioner accepts, the Sale Assets the subject of the Sale Agreement did not include any freehold land or any mining tenements held by WMC. These it retained. The relevant facts are not in dispute. The controversy concerns the construction of the Sale Agreement and the operation of the relevant legislation. The assessment was made by the Commissioner on the footing that items of plant and equipment which were dealt with by the Sale Agreement were, with some exceptions, fixtures in the technical sense of that term, with the result that the Sale Agreement was an agreement for the sale of an interest in realty, rather than in personalty, and so was not exempted by Item 2(7c) of the Third Schedule. Accordingly, the Commissioner treated the Sale Agreement as an agreement for the sale of property which consisted in whole or in part of land or an interest in land. In Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd7, Mason CJ referred to "the common law rule" that an instrument should be 6 North Shore Gas Co Ltd v Commissioner of Stamp Duties (NSW) (1940) 63 CLR 52 at 67 per Dixon J; [1940] HCA 7. (1989) 167 CLR 1 at 10-11; [1989] HCA 19. Crennan stamped for its leading and principal object; that stamp covered everything accessory to that object so that merely accessory or ancillary provisions to the principal transaction did not attract additional duty. Section 19(a) of the Stamp Act supplements the common law rule by dealing with the case of an instrument which has more than one principal object8. The statute does so by providing for an instrument containing or relating to "several distinct matters" to be "separately and distinctly charged" with duty in respect of each matter as if it were in a separate instrument. Questions of impression and degree are necessarily involved, but the Sale Agreement is not an instance of the type of "composite instrument"9 to which s 19(a) is addressed. The Commissioner correctly submits that the leading and principal object of the Sale Agreement was the disposition by WMC of its power and transmission assets to TEC and AGL. The power and transmission assets were disposed of as to the Sale Assets on the completion date, and as to the Fixtures by the mechanism in the Licence Agreements. Terminology In NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation10, Dixon CJ, Williams and Taylor JJ observed that the meaning of the words "mine", "mining" and "minerals" is "by no means fixed and is readily controlled by context and subject matter". Further, of terms such as "real property", "lease" and "fixture" it should be emphasised that, not only does each bear a technical meaning in the general law, but also when they appear in statutory regimes creating rights and imposing obligations it is not to be assumed that they are used simply and exclusively in the sense understood by the general law. Thus in Western Australia v Ward11 Gleeson CJ, Gaudron, Gummow and Hayne JJ, with reference to an earlier statement by Toohey J12, treated the term "mining lease" as an example of 8 Commissioner of State Taxation v Balcatta Nominees Pty Ltd [1981] WAR 7 at 12. 9 Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1 at 12. 10 (1956) 94 CLR 509 at 522; [1956] HCA 80. 11 (2002) 213 CLR 1 at 158 [287]; [2002] HCA 28. 12 Wik Peoples v Queensland (1996) 187 CLR 1 at 117; [1996] HCA 40. Crennan looseness of terminology and said that the rights and obligations of the holder of an interest so described in particular legislation would not necessarily be determined simply by application of the nomenclature "lease". Earlier, in Commissioner of Main Roads v North Shore Gas Co Ltd13, Barwick CJ, McTiernan, Kitto and Taylor JJ, when considering the particular statutory right of the respondent to lay and maintain gas pipes, remarked: "[W]hy should it be assumed that the exercise of a specific statutory right to lay and maintain pipes, as in the present case, operates to vest in the donee of the power an interest in the land in which the pipes have been laid? The conclusion that it does seems to us to result from a lawyer's inherent tendency to assimilate such a right to some category known to the common law." The WMC mining tenements The Northern System supplied power for the conduct by WMC of its operations at Leinster, Mount Keith and Agnew, and the Southern System for its operations at Kambalda and Kalgoorlie. There were power stations at four of those locations, Agnew being the exception. The Kalgoorlie power station was situated on freehold land of which WMC was the registered proprietor under the provisions of the Transfer of Land Act 1893 (WA) ("the Transfer of Land Act"). In respect of an emergency supply line to the Kambalda nickel smelter, WMC had statutory rights under the Energy Corporations (Powers) Act 1979 (WA)14 over land part of which was held under freehold title. It will be sufficient hereafter to deal specifically with the position of the Kalgoorlie power station. The Leinster and Kambalda power stations were situated on land the subject of mineral leases held by WMC under the Mining Act 1904 (WA) ("the 1904 Act"). The Mt Keith power station was on land the subject of a mining lease held by WMC under the Mining Act 1978 (WA) ("the 1978 Act")15. 13 (1967) 120 CLR 118 at 127; [1967] HCA 41. 14 Renamed the Energy Operators (Powers) Act 1979 (WA) by Gas Corporation (Business Disposal) Act 1999 (WA), s 78. 15 The 1904 Act was repealed by s 3(1) of the 1978 Act. Crennan Mineral leases granted under the 1904 Act are deemed by the 1978 Act16 to be mining leases granted under the 1978 Act but subject generally to the terms and conditions of the grant under the 1904 Act that are not inconsistent with the 1978 Act. These WMC mining tenements were in respect of land otherwise largely the subject of pastoral leases. Pastoral leases are a creature of statute or regulation and confer a limited entitlement to use Crown land; the relevant legislation in Western Australia received detailed consideration in Ward17. The case before the primary judge and the Court of Appeal had been run on the footing that if the Commissioner could not succeed in respect of the power generation facilities, the Commissioner could not succeed in respect of the transmission facilities. Accordingly, in this Court, the primary focus of argument was upon the stamp duty assessment with respect to the power stations, and, in particular, to those items attached to the land the subject of the WMC mining tenements. In the Court of Appeal, McLure JA recorded that the case had been conducted "on the basis that a mining tenement gives rise to an interest in the land the subject of the tenement"; a corollary appears to have been that WMC was in a position analogous to a tenant of freehold land, so that the items classed in the Sale Agreement as "Fixtures" were to be treated as if they were a tenant's fixtures at common law. These were assumptions or concessions of law, not fact, upon matters of legal principle which are of general public importance. In their written submissions in this Court, TEC and AGL appeared to depart from these assumptions or concessions and to focus upon the provisions of the 1978 Act rather than the general law. That became further apparent as oral argument proceeded. The general proposition respecting the conduct of appeals is that the substantial issues between the parties are to be settled at trial18. Nevertheless, save for any special provision for costs of the litigation, TEC and AGL should not be held to concessions or assumptions upon legal issues of general public importance concerning the operation of the Stamp Act and the mining legislation 16 Section 4; Second Sched, cl 2(1). 17 (2002) 213 CLR 1 at 117-131 [157]-[196]. 18 D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 17-18 [35]; [2005] HCA 12. Crennan of Western Australia19. The position taken by the Commissioner in oral argument was to seek to uphold the decision of the Court of Appeal by all legitimate means. No special costs order protective of the Commissioner should be made. It is appropriate to turn immediately to consideration of the false basis on which the case has been conducted in the courts below, beginning with the law respecting fixtures. Fixtures Much of the reasoning of the Court of Appeal turned upon the application of fundamental principles respecting the character of realty attributed to chattels affixed to land, particularly by tenants. The written submissions on the appeal to this Court responded to that reasoning. Accordingly, some statement of basic principle is appropriate. In the seventh edition of Megarry and Wade's The Law of Real Property, the following appears20: "The meaning of 'real property' in law extends to a great deal more than 'land' in everyday speech. It comprises, for instance, incorporeal hereditaments; and it includes certain physical objects which are treated as part of the land itself. The general rule is 'quicquid plantatur solo, solo cedit' ('whatever is attached to the soil becomes part of it'). Thus if a building is erected on land and objects are permanently attached to the building, then the soil, the building and the objects affixed to it are all in law 'land,' i.e. they are real property, not chattels. They will become the property of the owner of the land, unless otherwise granted or conveyed." 19 cf NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at 113-114 [60]-[61]; [2004] HCA 48; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 553 [11]; [2008] HCA 4; R & R Fazzolari Pty Ltd v Parramatta City Council (2009) 237 CLR 603 at 634 [108]; [2009] HCA 12. 20 (2008) at 1066 [23-001] (footnotes omitted). Crennan To this may be added the statements by Conti J in National Australia Bank Ltd v Blacker21. There, with reference to a number of decisions, including that of Walsh J in Anthony v The Commonwealth22, he said23: "There is a variety of general principles which should be considered in assessing whether an item of personal property has become attached to land in a manner designed to achieve a specific objective or a variety of objectives, such as to become a part of the realty and therefore, a fixture. Whether an item has become a fixture depends essentially upon the objective intention with which the item was put in place. The two considerations which are commonly regarded as relevant to determining the intention with which an item has been fixed to the land are first, the degree of annexation, and secondly, the object of annexation." As noted above, in the Court of Appeal, reliance by analogy was placed upon the law respecting "tenant's fixtures". That law concerns the rights of persons who have limited interests, such as life interests and leases for a term, or their personal representatives, to sever and remove from the land what admittedly are fixtures in the sense of the term as just discussed. Unless and until that right of severance and removal is exercised, the fixtures form part of the realty24. Upon this aspect of the subject, it is said in Megarry and Wade25: "Prima facie, all fixtures attached by the tenant are 'landlord's fixtures', i.e. must be left for the landlord at the end of the lease. But important exceptions to this rule have arisen, and fixtures which can be removed under these exceptions are known as 'tenant's fixtures'. This expression must not be allowed to obscure the fact that the legal title to the fixture is in the landlord until the tenant chooses to exercise his power and sever it. 21 (2000) 104 FCR 288 at 293-294 [10]-[12]. 22 (1973) 47 ALJR 83 at 89. 23 (2000) 104 FCR 288 at 293 [10]. 24 North Shore Gas Co Ltd v Commissioner of Stamp Duties (NSW) (1940) 63 CLR 52 at 68-69 per Dixon J. 25 The Law of Real Property, 7th ed (2008) at 1072 [23-010] (footnotes omitted); cf D'Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317. Crennan The tenant may do so only during the tenancy or (except in cases of forfeiture or surrender) within such reasonable time thereafter as may properly be attributed to his lawful possession qua tenant." The case for the Commissioner depends in large measure upon the proposition that items affixed to land the subject of mining tenements held by WMC under the 1904 Act and the 1978 Act took the character of realty owned by WMC because that was the character of the mining tenements. But, as explained below, that was not the character of the mining tenements nor, accordingly, was it the character of those affixed items. Further, the 1904 Act and the 1978 Act provided their own regime for the removal of items of mining plant upon expiry of mining tenements; this renders inapt any analogy with the general law principles respecting tenant's fixtures. The treatment of mining plant and mining tenements by the common law and statute Speaking of the 1904 Act, and more generally of the scheme of mining legislation in Australia, in Adamson v Hayes26 Barwick CJ explained that it was by the mechanism provided by the statute "rather than by the creation of any actual estate or interest in the land"27 that the holder of a mining tenement was provided with the security adequate for the furtherance of the mining activity. Stephen J added that "no interest in land is involved in any ordinary sense of that term"28. This treatment of mining tenements in the Australian statutory system had been foreshadowed by the law in England. The general position under the common law in England with respect to the grant by a freeholder of a licence to work a mine was described by Page Wood V-C in London and North-Western Railway Co v Ackroyd29 as follows: 26 (1973) 130 CLR 276 at 288-289; [1973] HCA 6. 27 (1973) 130 CLR 276 at 289. 28 (1973) 130 CLR 276 at 312. 29 (1862) 31 LJ (NS) Eq 588 at 591. See also Norway v Rowe (1812) 19 Ves 144 at 158 per Lord Eldon LC [34 ER 472 at 477]; Roberts v Davey (1833) 4 B & Ad 664 at 672 per Littledale J [110 ER 606 at 609]; Bainbridge and Brown, The Law of Mines and Minerals, 5th ed (1900) at 280. Crennan "[A] licence to work a mine is only a licence to get the minerals, and when you have got them, you have done all you have a right to do, and you have no interest in the land." There also had been some anticipation of the Australian legislation in the treatment of mining tenements by the customary law in parts of England. In Wake v Hall30, which concerned the special statutory recognition by the High Peak Mining Customs and Mineral Courts Act 1851 (UK)31 of the ancient customs for the working of a lead mine in the King's Field in the Duchy of Lancaster, Lord FitzGerald concluded32: "In my humble opinion, the machinery and buildings never ceased to be the property of the miners and removable by them, both are treated together as forming mineral property – property of the miners in the nature of personalty, and there seems no pretence for the contention that the right to remove them had been abandoned." The result in Wake v Hall was that the miners were entitled to pull down and remove machinery and buildings they had placed upon the land for mining purposes without trespassing upon the appellants' land. The customary law with respect to tin mining in Cornwall was considered in Ivimey v Stocker33, where Lord Cranworth LC said: "The estate or interest of tinbounders is of an anomalous character. They have a mere chattel, passing to executors, not to heirs, and they lose all their interest if they cease to work the mine. Their title is not derived from the owner of the land, though they are bound to make him a render dependent on the quantity of ore raised." 30 (1883) 8 App Cas 195. 31 14 & 15 Vict c 94. 32 (1883) 8 App Cas 195 at 216. See also North Shore Gas Co Ltd v Commissioner of Stamp Duties (NSW) (1940) 63 CLR 52 at 68-69 per Dixon J. 33 (1866) LR 1 Ch App 396 at 404. Crennan The distinction between the position of executors and heirs was significant because under the law at that time in England, personal property vested in the executor from the moment of death of the testator, while real property passed, in the case of intestacy, directly to the heir at law34. Section 273 of the 1904 Act fortified the conclusion reached in Adamson by requiring all mining tenements and shares and interests therein to be taken in law to be "chattel interests". In Adamson this Court held35 that this expression identified the mining tenements as personal property and not as chattels real. Section 273 had a forerunner in s 18 of the Mining Act 1874 (NSW), which had stated that any right, title or interest acquired or created under that statute was to be deemed and taken in law to be "a chattel interest"; that term was held to render the mining tenements personalty36. These provisions reflected the treatment at general law, as noted above, of a mining lease as a sale of the minerals extracted rather than as a demise of the land from which they were taken37. Section 108(3) of the 1904 Act empowered the Minister to direct the removal and sale of plant, machinery, engines and tools found on or within the land the subject of a forfeited or void lease; in respect of leases surrendered or abandoned, or leases expiring by effluxion of time, provision for removal appears to have been left to the requirements of regulations made under s 306. The provisions of the 1978 Act with respect to mining leases received detailed consideration in the joint reasons in Ward38. The grant thereunder of 34 Helmore, The Law of Real Property in New South Wales, 2nd ed (1966) 35 (1973) 130 CLR 276 at 289, 294-295, 296, 300-302. 36 Williams v Robinson (1891) 12 NSWR (Eq) 34 at 39-40, 40-41. With respect to miners' rights, s 5 of the Mining Statute 1865 (Vic) and s 5 of the Mines Act 1890 (Vic) had classified them as chattel interests. Section 41 of the Mining Act 1893 (SA) provided that "[e]very claim shall be personal property", "claim" being defined in s 4 as any area held under a miner's right or business licence. 37 Wade v New South Wales Rutile Mining Co Pty Ltd (1969) 121 CLR 177 at 192-193; [1969] HCA 28. 38 (2002) 213 CLR 1 at 157-162 [282]-[296]. Crennan exclusive possession for mining purposes is directed at preventing others from carrying out mining and related activities on the relevant land39. Section 85 of the 1978 Act describes the authorities conferred by a mining lease as exclusive rights for mining purposes in relation to the land in respect of which the mining lease was granted, and confers ownership of all minerals lawfully mined from that land, subject to the Act and any conditions to which the mining lease is subject. Mining leases under the 1978 Act commonly contain conditions requiring removal of all buildings and structures from the site at the completion of operations under the mining lease40. Further, s 114 makes detailed provision where a mining tenement expires or is surrendered or forfeited for the removal by the holder of the mining tenement, or in default thereof at the direction of the Minister, of "mining plant". This term is defined as "any building, plant, machinery, equipment, tools or any other property of any kind whether affixed to land or not so affixed" (s 114(1)) (emphasis added). Section 114 thus operates upon the statutory assumption that what is "mining plant" is not determined by the general law respecting the affixture of chattels to the freehold, of which they then became part and to which the general law respecting removal of tenant's fixtures applies. Section 119 of the 1978 Act provides that mining tenements may be sold or disposed of and be the subject of legal and equitable interests, but requires that dispositions thereof be effected by a signed written instrument. The 1904 Act (s 306(14)) authorised the making of regulations providing for the transfer, assignment and sub-leasing of mining tenements under that statute. In Ward41 reference was made to the many examples of the exercise by courts of equity of their jurisdiction to protect the enjoyment by the plaintiff of rights which were conferred by or under statute, but were not necessarily proprietary in character, whether as personalty or realty. Thus, the exercise of equitable jurisdiction with respect to mining tenements is not necessarily indicative of the character of those tenements as interests in realty rather than as personalty. 39 Western Australia v Ward (2002) 213 CLR 1 at 165 [308]. 40 Western Australia v Ward (2002) 213 CLR 1 at 161-162 [295]. 41 (2002) 213 CLR 1 at 160 [291]. Crennan Conclusions respecting items attached to land the subject of WMC mining tenements The Sale Agreement identified (cl 2.1) the subject matter of the sale as "all of [WMC's] respective right, title and interest in and to the Sale Assets". It defined (cl 1.1) the Sale Assets to mean so much of a list of assets (including specified power stations, generators and transmission systems) as were not "Fixtures". The term "Power System Assets" was defined (cl 1.1) as the Sale Assets and all Fixtures and improvements to the land the subject of the Licence Agreements. The parties proceeded on the basis (cl 3.2(a)) that: all of the Power System Assets which are a chattel, chose in action or other personal property are to be sold outright to [TEC and AGL] under this Agreement; and all of the Power System Assets which comprise Fixtures are not to be sold to [TEC and AGL] under this Agreement, but are to be treated the Licence Agreements." Improvements under as Licensor's Upon completion, the ownership of the Sale Assets passed to TEC and AGL, but it was only the risk of all Fixtures which passed to TEC and AGL (cl 5.3). It follows from the statements of principle set out earlier in these reasons that items affixed to land do not become, merely because of their affixation, "fixtures" in the technical sense42. WMC warranted (sub-par (ii) of cl 8.1(c)) that, with respect to Fixtures on land not being freehold land owned by WMC but land the subject of mining tenements, WMC had such rights as were conferred by the 1904 Act and the 1978 Act. Further, in cl 1.1 of the Sale Agreement the term "Fixture" was carefully defined43. This was as "an item of property affixed to land, and an estate or interest in which is therefore an estate or interest in land" (emphasis added). The presence of the conjunction "and" is important. The definition was not apt to catch items which were "mining plant" within the meaning of s 114 of 42 See also Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 at 712-713; Lees & Leech Pty Ltd v Commissioner of Taxation (1997) 73 FCR 136 at 148. 43 cf Akiba v Queensland (No 2) (2010) 270 ALR 564 at 768-769 [876]-[877]. Crennan the 1978 Act and which, given the nature of a mining lease as personal property, were not fixtures which thereby would have assumed the character for the purposes of the Stamp Act of an estate or interest in land. The result was that these items were not Fixtures and were not excluded from the Sale Assets. As chattels, for the purposes of the Stamp Act, they attracted the exemption provided by Item 2(7c) of the Third Schedule, unless s 70(2) applied because the Sale Agreement also included an agreement to convey or vest an estate or interest in land. If s 70(2) applied, the exemption in favour of chattels would be lost. Accordingly, unless s 70(2) applies, the appeal must succeed with respect to the items affixed to land the subject of the WMC mining tenements. The Fixtures on WMC freehold land – the Kalgoorlie power station In Commissioner of State Revenue (Vict) v Pioneer Concrete (Vic) Pty Ltd44 it was said in the joint reasons: "By an exception, a transferor excludes some part of that which is transferred, so that it remains with the transferor. It does not pass to the transferee. A reservation is of something newly created and involves a re-grant of something that did not previously exist." In the present case, the Sale Agreement was so drafted as to except from the Sale Assets any interest of WMC in the Fixtures; these were to be made the subject of licences by WMC to TEC and AGL. WMC, on or before completion, was required to execute the Licence Agreements (cl 5.2(b)(i)) in the form set out in Sched 8. To that end, in sub-par (i) of cl 8.1(c), WMC warranted to TEC and AGL that it had "title as the owner" of those Fixtures on freehold land owned by WMC, "notwithstanding the affixation". With respect to the Kalgoorlie power station, the licence provided (cl 3.1) for the grant by WMC to TEC and AGL of a licence of the area the subject of the power station site and of the Power System Assets which were Fixtures, for 15 years from the date of completion of the Sale Agreement. The position of 44 (2002) 209 CLR 651 at 665 [40]; [2002] HCA 43. Crennan TEC and AGL during the term of the licence was protected by a negative covenant given by WMC in cl 8.2. This obliged WMC not to assign its interest in any of the licence area until such time as the assignee covenanted with TEC and AGL to be bound from the date of the assignment by all the terms and conditions of the licence. Upon expiration of the term of the licence or earlier termination of the licence, TEC and AGL were obliged by cl 10 to cease using the licensed area and to rehabilitate it. The effect of cl 16.4 of the licence agreement for the Kalgoorlie power station (numbered cl 17.5 in Sched 8), when read with the definitions in cl 1.1, was that, with some exceptions, on termination of the licence for any reason, TEC and AGL were obliged to acquire the right, title and interest of WMC in (i) the Fixtures on freehold land owned by WMC and (ii) such rights as were conferred by the 1904 Act and the 1978 Act in the case of Fixtures on land not owned by WMC. With respect to (ii), the rights, titles and interests of WMC, as explained above, were dependent upon and derivative of the mining tenements held by WMC, which were of the nature of personalty, not realty. An agreement to acquire them could not attract stamp duty as an agreement for the sale of an estate or interest in land. What of (i)? If there had been prepayment of the licence fees, WMC was obliged by cl 16.4(a)(i) to repay that portion attributable to the post-termination period, and TEC and AGL were obliged to pay, as consideration for the acquisition from WMC, the amount otherwise repayable by WMC. Where no prepayment had been made, TEC and AGL were obliged to pay the then present value of the licence fees for the balance of the term (cl 16.4(a)(ii)). The title which TEC and AGL were obliged by cl 16.4 to acquire on termination of the Kalgoorlie power station licence was that identified in the warranty by WMC in sub-par (i) of cl 8.1(c) of the Sale Agreement. The warranty was that WMC had title to the Fixtures "as the owner thereof notwithstanding the affixation" to the freehold. The warranty provided an agreed hypothesis or convention upon which WMC and TEC and AGL conducted their reciprocal affairs, in particular, for the operation of the pro forma licence in Crennan Sched 845. The agreed assumption that WMC had a distinct title to the relevant Fixtures as chattels, notwithstanding their affixation to the WMC freehold, provided consideration for the payments by TEC and AGL which were identified in cl 16.4 (cl 17.5 in the form of licence in Sched 8). This in turn was reflected in the structure of the purchase price in cl 3.2 of the Sale Agreement. The Commissioner submitted that the Kalgoorlie licence obligations flowing from the Sale Agreement with respect to WMC freehold Fixtures rendered the Sale Agreement an agreement for sale of an estate or interest in land. Reference has been made above to the negative covenant given by WMC in cl 8.2 with respect to covenants by any assignee and to the obligation to rehabilitate the site imposed upon TEC and AGL by cl 10. The obligation of rehabilitation imposed upon TEC and AGL might attract a mandatory injunction at the suit of WMC. The negative covenant by WMC in cl 8.2 might in an appropriate case be enforced by injunction at the suit of TEC and AGL. But these remedies would be in aid of contractual stipulations, not any estate or interest in land. Those stipulations did not qualify the registered title of WMC under the Transfer of Land Act, being, at best, nothing more than personal equities of the kind recognised in the authorities upon the operation of the Torrens System46. Accordingly, the Sale Agreement did not include an agreement by WMC to vest in TEC and AGL an estate or interest in the freehold land the site of the Kalgoorlie power station, within the meaning of s 70(2) of the Stamp Act. There is thus no footing for the application of s 70(2) to any estates or interests in chattels so as to deny the exemption otherwise attracted by Item 2(7c) of the Third Schedule to the Stamp Act. These conclusions make it unnecessary to consider the efficacy at law and in equity of a sale by the owner of the freehold of land, but with retention of title to unsevered fixtures, or a sale of the unsevered fixtures with retention of the rest of the land47. 45 See Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 244-245; [1986] HCA 14. 46 Bahr v Nicolay [No 2] (1988) 164 CLR 604 at 613, 637-638, 653-654; [1988] HCA 16. 47 The unsettled state of authority is considered in Butt, Land Law, 6th ed (2010) Crennan Order The appeal should be allowed with costs. The order of the Court of Appeal of the Supreme Court of Western Australia dated 15 January 2010 should be set aside and in place thereof the appeal to that Court should be dismissed with costs. In their written submissions TEC and AGL in this Court also seek orders for the refund of moneys paid by them to the Commissioner and for the payment of interest. Within 28 days of the date of this Court's order, or such longer period as the Court may provide by order made within that period, the parties should bring in agreed short minutes of appropriate further orders; in the absence of that agreement, the matter should be remitted to the Court of Appeal for disposition consistently with these reasons. |
HIGH COURT OF AUSTRALIA AND MEGAN L PERCY APPELLANT RESPONDENT Fox v Percy [2003] HCA 22 30 April 2003 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: P Menzies QC with C R Burge for the appellant (instructed by Beston Macken McManis) J D Hislop QC with P J Nolan for the respondent (instructed by Sparke Helmore) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Fox v Percy Appeal – Rehearing – Review of findings of fact based on trial judge's assessment of credibility of witnesses – Whether findings inconsistent with incontrovertibly established facts – Power of appellate court to set aside findings. Appeal – Issue not raised at trial – Where argued that expert report based on matters not proved or supported by the evidence – Whether re-examination of facts by appellate court appropriate. Appeal – Rehearing – Substitution of judgment of appellate court for that of trial judge – Whether re-trial an appropriate remedy. Supreme Court Act 1970 (NSW), s 75A. GLEESON CJ, GUMMOW AND KIRBY JJ. This is an appeal from a judgment of the Court of Appeal of the Supreme Court of New South Wales1. The issue in the appeal is whether that Court erred in reversing a judgment of the District Court of New South Wales. By that judgment, the primary judge (Herron DCJ) resolved a factual conflict at trial in favour of the appellant. A subsidiary question arises in the appeal as to whether, if the Court of Appeal was justified in upholding the appeal, the correct order for it to make was for a new trial, rather than the entry of judgment in favour of the respondent. The background facts Ms Barbara Fox (the appellant) was injured on 11 April 1992 when a horse she was riding came into collision with a Volkswagen Kombi Van driven by Ms Megan Percy (the respondent). The appellant claimed damages for negligence in respect of the respondent's driving of the motor vehicle. The crucial factual contest at the trial was whether the respondent's motor vehicle was on the correct, or incorrect, side of the road at the time of impact. Both the appellant and the respondent gave evidence that, at that time, they were on the correct side of the road. They could not both be right. The appellant's entitlement to damages depended upon the primary judge's accepting her version of the events leading to the collision. The appellant was seriously injured as a result of the collision. The trial in the District Court did not take place until November 1999. It was heard over four days in Moruya, New South Wales. A number of facts, as accepted by the primary judge, were not disputed. The collision occurred on a narrow, unsealed, country road that was about seven metres wide. The respondent was driving her vehicle in a westerly direction, travelling downhill. At the point immediately prior to the collision there was an almost, but not completely, blind left-hand turn. The appellant was proceeding on a large half draught horse in an easterly direction. Immediately behind her, also on a large horse, was a companion, Mr Christopher Murdoch. The head of his horse was close to the near-side rump of the horse that the appellant was riding. Immediately before the collision, the horses were proceeding at about seven kilometres per hour. There was some dispute about the speed of the respondent's vehicle. However, the exact speed is immaterial. The primary judge accepted that it was not excessive to the circumstances2. 1 Percy v Fox [2001] NSWCA 100. 2 Barbara Fox v Megan Percy, unreported, District Court of New South Wales (Herron DCJ), 5 November 1999 ("Reasons of the primary judge") at 9. Kirby The impact between the van and the appellant's horse happened when they came upon each other as the van turned the corner in the road. The collision was unexpected to the parties. The point of impact between the van and the appellant's horse was roughly head-on. Because that horse, and Mr Murdoch's horse immediately behind it, were both large and heavy, their combined weight approximated that of the respondent's vehicle. The application of the brakes by the respondent together with the impact brought the Kombi Van to a sudden halt. Both horses were forced backwards. The appellant's horse became entangled in the Kombi Van. Subsequently, that horse released itself; but it had suffered fatal wounds and after taking a couple of steps it fell over dead. The appellant was thrown onto the roadway landing at a point immediately in front of the respondent's stationary vehicle. Soon after the collision, an ambulance and the police were summoned to the scene. The ambulance attendants arrived and, as the primary judge recorded, they stated that, when they arrived, the stationary Kombi Van was on its correct side of the road3. The police officer who arrived (Constable Peter Volf) interviewed the appellant, Mr Murdoch and the respondent. He noticed, and recorded in a sketch in his notebook, that the respondent's vehicle was on its correct side of the road and that there were 10 metres of skid marks immediately behind it. Those skid marks suggested to Constable Volf "that the vehicle had at all material times … been on its correct side of the road"4. This discovery caused the constable to say to the appellant: "It looks like you were in the wrong"5. Both the constable and the respondent detected the presence of alcohol in the appellant6. This too was noted in the police record. The appellant declined to sign her statement in the police notebook, causing the constable to record that she had "refused to co-operate with Police in enquiries". In evidence, the appellant explained that she was interviewed whilst being helped into the ambulance and felt that the police officer was antagonistic towards her. Later, at the Bega Hospital to which the appellant was conveyed, a blood sample was taken from her. It revealed that, at the time the blood was exacted, the appellant had 0.122 grams of alcohol per 100 millilitres of blood. The primary judge concluded that there was "no doubt that this amount of alcohol in her blood would have affected 3 Reasons of the primary judge at 9-10. 4 Reasons of the primary judge at 3. 5 Reasons of the primary judge at 14. 6 Reasons of the primary judge at 14. Kirby her"7. However, he also concluded that, if indeed she had been on her correct side of the road, her consumption of alcohol was irrelevant to the cause of the collision8. The appellant was a person who had a great deal of experience with horses, virtually from her childhood9. She was comfortable with the horse she was riding. She had acquired it a year earlier and had frequently ridden it. She was also very familiar with the road on which the collision had occurred. In her evidence, she adhered to her statement that she had been on the correct side of the road at the moment of impact. In her testimony, the respondent also adhered to her version of events. The primary judge was obliged to resolve this conflict of evidence. The reasons of the primary judge The primary judge accepted the police record, and in particular the discovery of the skid marks shown immediately behind the Kombi Van, wholly within the respondent's correct side of the road. However, his Honour concluded that there had been some animosity on the part of Constable Volf towards the appellant which, he felt, had "colour[ed] his investigation of the situation"10. In support of this conclusion, he instanced the fact that the officer had noted the clothing of the appellant, that she was "abusive towards police" and that she had tattoos on the right cheek and smelt of alcohol11. However, the printed form concerning "information to be obtained by police", accompanying the police notebook, records that a note should be taken of clothing and of "any distinguishing features" of persons interviewed. At the trial, the appellant called Ms Christine Dzikowski as a witness. She had come upon the scene of the collision not long after the impact. She was adamant that, when she arrived, the Kombi Van was on its incorrect side of the road. However, the primary judge, whilst accepting that Ms Dzikowski gave honest evidence, also accepted that at its final point of rest, the vehicle was on its 7 Reasons of the primary judge at 17. 8 Reasons of the primary judge at 19-20. 9 Reasons of the primary judge at 19. 10 Reasons of the primary judge at 16. 11 Reasons of the primary judge at 15. Kirby correct side of the notional centreline of the road. He ascribed Ms Dzikowski's mistake to the very long delay between the events and the trial12. The judge recognised that the accepted position of the vehicle and the skid marks behind it constituted strong evidence against the appellant's version of events. Nevertheless, he concluded that the probabilities were that the collision had occurred when the respondent was driving on her incorrect side of the road. He said13: "I come to the conclusion … that despite the skid marks that the accident occurred on the plaintiff's correct side of the road; and of course in that I do not accept the defendant herself that the accident had happened on her correct side of the road." In support of this conclusion the primary judge's reasons nominate three considerations. The first was his acceptance of the appellant's testimony (and thus the rejection of the respondent's). The second was his acceptance of the confirmatory testimony of Mr Murdoch. Thirdly, the judge said that he accepted the evidence contained in expert reports of Mr John Tindall, a traffic engineer. Mr Tindall had been engaged by the appellant. He made two written reports. These were admitted into evidence and Mr Tindall gave no oral evidence. No reference was made to the skid marks in his first report. The record of the skid marks was only subsequently brought to his attention. So far as Mr Murdoch was concerned, the judge accepted his evidence that, following the impact, his horse had been forced down an embankment which fell away from the road on the side on which the appellant and Mr Murdoch claimed they were proceeding. In his Honour's view this showed "that the probabilities are that his horse was juxtaposed to the horse ridden by the plaintiff in the way in which both he and the plaintiff say it was"14. So far as the expert reports were concerned, the primary judge preferred Mr Tindall's opinion to that of the expert called for the respondent. He accepted as correct Mr Tindall's assumptions about the movement of the vehicle and horses after impact. This led him to say15: 12 Reasons of the primary judge at 13. 13 Reasons of the primary judge at 16. 14 Reasons of the primary judge at 20. 15 Reasons of the primary judge at 12. Kirby "I think that the probabilities are that the vehicle ended up on its correct side of the road for the reasons which Mr Tindall advances". It was on this footing that the primary judge entered judgment in favour of the appellant, awarding her substantial damages. The respondent appealed. The decision of the Court of Appeal In the Court of Appeal, the judges divided. Fitzgerald JA rejected the appeal. He was critical of the growing practice of using experts in what he saw as basically a simple trial function. He acknowledged that rational minds could reasonably differ in analysis of the evidence16. However, having regard to the constraints upon interference in the trial judge's factual conclusions, including the "assessment of the credibility and reliability of the witnesses", he rejected the argument that the trial had not been properly and competently concluded17. The reasons of the majority in the Court of Appeal were given by Beazley JA (with whom Handley JA concurred). Her Honour analysed the foregoing evidence and the conclusions of the primary judge. She acknowledged the advantages which the primary judge had in observing witnesses and making findings of credit in favour of the appellant and Mr Murdoch and against the respondent. She referred to the series of decisions of this Court that restrict appellate interference in conclusions that are based on such findings18. Nevertheless, Beazley JA decided that the evidence of the police officer concerning the skid marks on the respondent's correct side of the road fell into the category of the evidence"19. As the primary judge had accepted the testimony about the skid inconsistent facts "incontrovertibly established by 16 Percy v Fox [2001] NSWCA 100 at [82]. 17 [2001] NSWCA 100 at [83]-[84]. 18 [2001] NSWCA 100 at [64] referring to Abalos v Australian Postal Commission (1990) 171 CLR 167; Devries v Australian National Railways Commission (1993) 177 CLR 472; State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306; 160 ALR 588 ("SRA"). 19 [2001] NSWCA 100 at [71]. See Devries (1993) 177 CLR 472 at 479 per Brennan, Gaudron and McHugh JJ; Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842 at 844; 62 ALR 53 at 57. In Canada, the Supreme Court has re-examined the principles of appellate review of factual conclusions made by a trial judge, emphasising a single standard of "palpable and overriding error" for (Footnote continues on next page) Kirby marks, and as they were in any case illustrated in the police notebook, her Honour concluded that the oral evidence of the appellant and Mr Murdoch did not suffice to sustain the final opinion that the primary judge had reached. She therefore regarded the primary judge's "core finding" as being based upon his acceptance of Mr Tindall's first report20. She pointed out that the appellant's counsel had disclaimed reliance on the opinion stated by Mr Tindall that the collision with the horse had occurred "anywhere along the 10 metres that the van skidded"21. She also drew attention to other defects in Mr Tindall's reports, the lack of proved evidence to sustain some of his assumptions and the fact that he had not been called to give oral evidence. On the basis of this last consideration, Beazley JA was of the opinion that Mr Tindall's evidence was unprotected by any principle restricting appellate review22. The Court of Appeal was in as good a position as the primary judge to evaluate the worth of Mr Tindall's written evidence. It is clear that, for the majority in the Court of Appeal, the crucial fact was the 10 metre skid marks that were unexplained, or insufficiently explained, to warrant a conclusion adverse to the respondent's version of events. On this basis the judgment in favour of the appellant was set aside and judgment entered for the respondent. Now, by special leave, the appellant appeals to this Court. The powers and functions of the Court of Appeal Appeal is not, as such, a common law procedure. It is a creature of statute23. In Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd24, both findings and inferences of fact: Housen v Nikolaisen (2002) 211 DLR (4th) 20 [2001] NSWCA 100 at [65]. 21 [2001] NSWCA 100 at [66]. 22 [2001] NSWCA 100 at [69]. 23 Attorney-General v Sillem (1864) 10 HLC 704 at 720-721 [11 ER 1200 at 1207- 1208]; South Australian Land Mortgage and Agency Co Ltd v The King (1922) 30 CLR 523 at 552-553; CDJ v VAJ (1998) 197 CLR 172 at 196-197 [91]-[95], 230 [184]; SRA (1999) 73 ALJR 306 at 322 [72]; 160 ALR 588 at 609; DJL v Central Authority (2000) 201 CLR 226 at 245-246 [40]; Allesch v Maunz (2000) 203 CLR 24 (1976) 135 CLR 616 at 619-622. See also Eastman v The Queen (2000) 203 CLR Kirby Mason J distinguished between (i) an appeal stricto sensu, where the issue is whether the judgment below was right on the material before the trial court; (ii) an appeal by rehearing on the evidence before the trial court; (iii) an appeal by way of rehearing on that evidence supplemented by such further evidence as the appellate court admits under a statutory power to do so; and (iv) an appeal by way of a hearing de novo. There are different meanings to be attached to the word "rehearing"25. The distinction between an appeal by way of rehearing and a hearing de novo was further considered in Allesch v Maunz26. Which of the meanings is that borne by the term "appeal", or whether there is some other meaning, is, in the absence of an express statement in the particular provision, a matter of statutory construction in each case. In New South Wales a right of appeal from a judgment of the District Court lies to the Supreme Court pursuant to the District Court Act 1973 (NSW), s 127(1). In the present case such appeal lay as of right27. Within the Supreme Court such an appeal is assigned to the Court of Appeal28. The character and features of the appeal are governed by the Supreme Court Act 1970 (NSW). Section 75A of that Act provides, relevantly: "(5) Where the decision or other matter under appeal has been given after a hearing, the appeal shall be by way of rehearing. The Court shall have the powers and duties of the court … from whom the appeal is brought, including powers and duties concerning: the drawing of inferences and the making of findings of fact, and the assessment of damages and other money sums. The Court may receive further evidence. 25 Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 26 (2000) 203 CLR 172 at 180-181 [23], 187 [44]. 27 District Court Act 1973 (NSW), s 127(3). See also s 127(2)(c)(i). 28 Supreme Court Act 1970 (NSW), ss 48(1)(a)(iv) and 48(2)(f). Kirby (8) Notwithstanding subsection (7), where the appeal is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds. (10) The Court may make any finding or assessment, give any judgment, make any order or give any direction which ought to have been given or made or which the nature of the case requires." The nature of the "rehearing" provided in these and like provisions has been described in many cases. To some extent, its character is indicated by the provisions of the sub-sections quoted. The "rehearing" does not involve a completely fresh hearing by the appellate court of all the evidence. That court proceeds on the basis of the record and any fresh evidence that, exceptionally, it admits. No such fresh evidence was admitted in the present appeal. The foregoing procedure shapes the requirements, and limitations, of such an appeal. On the one hand, the appellate court is obliged to "give the judgment which in its opinion ought to have been given in the first instance"29. On the other, it must, of necessity, observe the "natural limitations" that exist in the case of any appellate court proceeding wholly or substantially on the record30. These limitations include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses' credibility and of the "feeling" of a case which an appellate court, reading the transcript, cannot always fully share31. Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the 29 Dearman v Dearman (1908) 7 CLR 549 at 561. The Court there was concerned with s 82 of the Matrimonial Causes Act 1899 (NSW) which provided that "on appeal every decree or order may be reversed or varied as the Full Court thinks proper": see (1908) 7 CLR 549 at 558. 30 Dearman v Dearman (1908) 7 CLR 549 at 561. See also Scott v Pauly (1917) 24 CLR 274 at 278-281. 31 Maynard v West Midlands Regional Health Authority [1984] 1 WLR 634 at 637; [1985] 1 All ER 635 at 637 per Lord Scarman with reference to Joyce v Yeomans [1981] 1 WLR 549 at 556; [1981] 2 All ER 21 at 26. See also Chambers v Jobling (1986) 7 NSWLR 1 at 25. Kirby entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole32. Nevertheless, mistakes, including serious mistakes, can occur at trial in the comprehension, recollection and evaluation of evidence. In part, it was to prevent and cure the miscarriages of justice that can arise from such mistakes that, in the nineteenth century, the general facility of appeal was introduced in England, and later in its colonies33. Some time after this development came the gradual reduction in the number, and even the elimination, of civil trials by jury and the increase in trials by judge alone at the end of which the judge, who is subject to appeal, is obliged to give reasons for the decision34. Such reasons are, at once, necessitated by the right of appeal and enhance its utility. Care must be exercised in applying to appellate review of the reasoned decisions of judges, sitting without juries, all of the judicial remarks made concerning the proper approach of appellate courts to appeals against judgments giving effect to jury verdicts35. A jury gives no reasons and this necessitates assumptions that are not appropriate to, and need modification for, appellate review of a judge's detailed reasons. Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge's reasons. Appellate courts are not excused from the task of "weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should 32 SRA (1999) 73 ALJR 306 at 330 [89]-[91]; 160 ALR 588 at 619-620 citing Lend Lease Development Pty Ltd v Zemlicka (1985) 3 NSWLR 207 at 209-210; Jones v The Queen (1997) 191 CLR 439 at 466-467. 33 Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616 at 619-620; SRA (1999) 73 ALJR 306 at 322-325 [72]-[80]; 160 ALR 588 at 34 Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 666-667 citing Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 257-258, 35 eg Hocking v Bell (1945) 71 CLR 430; (1947) 75 CLR 125 at 131-132; cf Naxakis v Western General Hospital (1999) 197 CLR 269 at 271-272 [2], 274-275 Kirby make due allowance in this respect"36. In Warren v Coombes37, the majority of this Court reiterated the rule that: "[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it." As this Court there said, that approach was "not only sound in law, but beneficial in … operation"38. After Warren v Coombes, a series of cases was decided in which this Court reiterated its earlier statements concerning the need for appellate respect for the advantages of trial judges, and especially where their decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not. Three important decisions in this regard were Jones v Hyde39, Abalos v Australian Postal Commission40 and Devries v Australian National Railways Commission41. This trilogy of cases did not constitute a departure from established doctrine. The decisions were simply a reminder of the limits under which appellate judges typically operate when compared with trial judges. The continuing application of the corrective expressed in the trilogy of cases was not questioned in this appeal. The cases mentioned remain the instruction of this Court to appellate decision-making throughout Australia. 36 Dearman v Dearman (1908) 7 CLR 549 at 564 citing The Glannibanta (1876) 1 PD 283 at 287. 37 (1979) 142 CLR 531 at 551. 38 (1979) 142 CLR 531 at 551. See also Taylor v Johnson (1983) 151 CLR 422 at 426; Jovanovic v Rossi (1985) 58 ALR 519 at 522; cf Moran v McMahon (1985) 3 NSWLR 700 at 715-716 per Priestley JA. 39 (1989) 63 ALJR 349 at 351-352; 85 ALR 23 at 27-28. 40 (1990) 171 CLR 167 at 179. 41 (1993) 177 CLR 472 at 479, 482-483. Kirby However, that instruction did not, and could not, derogate from the obligation of courts of appeal, in accordance with legislation such as the Supreme Court Act applicable in this case, to perform the appellate function as established by Parliament. Such courts must conduct the appeal by way of rehearing. If, making proper allowance for the advantages of the trial judge, they conclude that an error has been shown, they are authorised, and obliged, to discharge their appellate duties in accordance with the statute. Over more than a century, this Court, and courts like it, have given instruction on how to resolve the dichotomy between the foregoing appellate obligations and appellate restraint. From time to time, by reference to considerations particular to each case, different emphasis appears in such reasons42. However, the mere fact that a trial judge necessarily reached a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by a court of appeal of the functions imposed on it by statute. In particular cases incontrovertible facts or uncontested testimony will demonstrate that the trial judge's conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings43. the rare, cases, although That this is so is demonstrated in several recent decisions of this Court44. In some, quite fall short of being "incontrovertible", an appellate conclusion may be reached that the decision at trial is "glaringly improbable"45 or "contrary to compelling inferences" in the case46. In such circumstances, the appellate court is not relieved of its statutory functions by the fact that the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses. In such a case, making all due allowances for the advantages available to the trial judge, the appellate court must "not shrink from giving effect to" its own facts 42 See discussion in SRA (1999) 73 ALJR 306 at 321 [61]-[64], 325-331 [81]-[93], 337-338 [132]-[137]; 160 ALR 588 at 606-607, 613-622, 629-630. 43 eg Voulis v Kozary (1975) 180 CLR 177; SRA (1999) 73 ALJR 306; 160 ALR 588; cf Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 44 eg Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599 at 603 [15]-[16]. See also SRA (1999) 73 ALJR 306; 160 ALR 588. 45 Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842 at 844; 62 ALR 53 at 57. 46 Chambers v Jobling (1986) 7 NSWLR 1 at 10. Kirby conclusion. Finality in litigation is highly desirable. Litigation beyond a trial is costly and usually upsetting. But in every appeal by way of rehearing, a judgment of the appellate court is required both on the facts and the law. It is not forbidden (nor in the face of the statutory requirement could it be) by ritual incantation about witness credibility, nor by judicial reference to the desirability of finality in litigation or reminders of the general advantages of the trial over the appellate process. It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses47. Thus, in 1924 Atkin LJ observed in Société d'Avances Commerciales (Société Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana")48: "… I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour." Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances49. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical. 47 eg Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 at 348 per Samuels JA. 48 (1924) 20 Ll L Rep 140 at 152. See also Coghlan v Cumberland [1898] 1 Ch 704 49 See material cited by Samuels JA in Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 at 348 and noted in SRA (1999) 73 ALJR 306 at 329 [88]; 160 ALR 588 at 617-618. Kirby The Court of Appeal made no error With these established principles in mind, we now turn to the issue presented by this appeal. Under the Constitution, the appeal to this Court is in the nature of a strict appeal50. Our sole duty in this case is to determine whether error has been shown on the part of the Court of Appeal. This Court is not engaged in a rehearing. As such, it is not this Court's task to decide where the truth lay as between the competing versions of the collision given by the parties. Nevertheless, in considering the supposed error of the Court of Appeal, it is necessary to understand how, respectively, the primary judge came to his conclusion and the Court of Appeal felt authorised to reverse it. The Court of Appeal was obviously aware of the principles, established by this Court, controlling the performance of its appellate function. Both Beazley JA (for the majority) and Fitzgerald JA (in dissent) referred to the applicable principles and the governing authorities. In particular, Beazley JA referred to the most recent, and detailed, analysis of the considerations to be weighed as expressed in this Court's decision in State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq)51. There, this Court reversed a decision of the New South Wales Court of Appeal which had felt itself precluded from disturbing the decision of the primary judge that, it considered, rested on that judge's evaluation of the credibility of witnesses. This Court unanimously concluded that the Court of Appeal was not so precluded but was obliged, by the proof of objective documentary evidence, to give attention to all of the evidence of the case. In the present case, the majority in the Court of Appeal did not repeat the error identified in SRA. Here, the incontrovertible evidence was not, as such, found in a series of documentary records. However, it was illustrated in an uncontested, contemporary document that verified the police evidence which the primary judge accepted as truthful. This was the evidence, shown in the notebook of Constable Volf, recording that, at the collision scene, he had observed 10 metre skid marks on the road immediately behind the point at which the respondent's vehicle had come to a halt and wholly within the respondent's correct side of the road. 50 Eastman v The Queen (2000) 203 CLR 1 at 12-13 [16]-[17], 24 [68], 35 [111]- 51 (1999) 73 ALJR 306; 160 ALR 588. Kirby If this objective evidence correctly recorded the trajectory of the respondent's vehicle to the point at which it stopped, it afforded evidence that confirmed the respondent's version of the events immediately prior to the collision and contradicted the evidence of the appellant and Mr Murdoch. There were other uncontested facts that tended to support the respondent's version of events. Thus the ambulance attendants confirmed the location of the vehicle in keeping with the respondent's version and contrary to the evidence of Ms Dzikowski. Constable Volf's statement to the appellant was also consistent with his immediate assessment, which the skid marks appeared to demand. Had Constable Volf reached the opposite conclusion, he would probably have been bound to charge the respondent with a driving offence. As the trial judge pointed out, the level of alcohol in the appellant's blood was not causative of the collision at the moment of impact. However, it was an objective fact. It could have explained how the appellant allowed her horse to proceed, uncontrolled, onto the incorrect side of the roadway. The respondent said that she was driving in second gear because of the steep fall of the road. Having regard to the fact that the bend in the road was to the left, any natural inclination on the part of a descending driver would probably have been to the left, not to the right-hand side where the road fell away. On the other hand, horses ascending the steep incline might, if uncontrolled, have had a tendency to cut the bend, veering to the right- hand side of the road where the respondent said the horses were. In the end, it was not logic and the assessments of probable behaviour in the circumstances that persuaded the majority of the Court of Appeal52. Such considerations might not alone have warranted disturbance of the primary judge's conclusion. It was the objective fact of the skid marks which, to the close of the trial, remained unexplained, or insufficiently explained, by the appellant. The only explanations offered by the appellant in that regard were, as Beazley JA pointed out, unconvincing. The direction of the skid marks, shown in the police sketch as virtually straight behind the respondent's vehicle, contradicted the only hypothesis offered to this Court to support the final resting place of the vehicle and the appellant. This was that, immediately following the collision, the respondent had corrected the position of her vehicle and returned it to the correct side of the road. If this were the explanation, the skid marks would have shown the angle suggested by such a corrective manoeuvre. They did not. It could not be accepted that the respondent delayed in applying the brakes causing the skid marks until after she was safely on her correct side. In the agony of the moment, there was no time to think of such things. The skid marks 52 Percy v Fox [2001] NSWCA 100 at [71]. Kirby showed objectively the direction of the respondent's vehicle from the application of the brakes to the place of rest at the point of the collision with the appellant's horse. Alike with Beazley JA, we regard the skid marks as an incontestable fact that rebuts the claim of negligence propounded by the appellant. Clearly, it was open to the Court of Appeal, conducting the rehearing, to reach that conclusion. Once it did so, that Court was bound to give effect to its opinion. The reasons of Beazley JA, disposing of the contrary arguments are also convincing. The evidence of Mr Murdoch, a friend of the appellant, is inconsistent with the skid marks. Against his oral testimony, the objective facts speak volumes, even disregarding the matters brought out in cross-examination of him. The suggestion that Mr Murdoch's horse took him over the embankment and then returned to the road is not, as the primary judge thought, decisive. It is also dependent on the accuracy of Mr Murdoch's recall. In any case, the road was comparatively narrow, the horse would have been extremely frightened and, following the collision, its independent movement could, indeed, have taken it over the side of the embankment. So far as the evidence of the expert, Mr Tindall, was concerned, it was no more than a written report containing an opinion formed upon a brief which apparently had given to Mr Tindall an incomplete account of the primary evidence. Once the significance of the skid marks was appreciated, it was open to the Court of Appeal to prefer the inferences that it drew from that objective fact to the opinions stated in a report that was, in any case, somewhat partisan in its expression. Therefore, the appellant had to rely before this Court on the advantages that the primary judge enjoyed in seeing the parties, and Mr Murdoch, give their evidence and in preferring the evidence of the appellant and Mr Murdoch to that of the respondent. The Court of Appeal was bound to make due allowance (as it did) for such advantages. The trial judge sat through four days of trial before giving his decision. He did so at a time when the impression made by the witnesses was still clearly in his mind53. The Court of Appeal was bound to afford respect to the endeavour of the judge to give the correct and lawful conclusion to the puzzle presented to him. Clearly, the Court of Appeal was right to reject the respondent's belated suggestion of bias, which should not, in our view, have been made. No doubt, the Court of Appeal also took into account the unexpressed considerations that went into the judge's conclusion. No judicial reasons can ever state all of the pertinent factors54; nor can they express every 53 Reasons of the primary judge at 1. 54 Biogen Inc v Medeva Plc [1997] RPC 1 at 45 per Lord Hoffmann. Kirby feature of the evidence that causes a decision-maker to prefer one factual conclusion over another. Nevertheless, in our view, within the stated principles, the majority in the Court of Appeal did not err in giving effect to the conclusion that they reached. The skid marks on the respondent's correct side of the road were incontrovertibly established. Their position, length, direction and terminus are inconsistent with the appellant's version of events. Having come to that decision, the majority in the Court of Appeal were correct to give effect to their conclusion and to set aside the judgment in the appellant's favour. In our view, the appeal should be dismissed. The alternative possibility of a new trial This conclusion relieves us of considering the alternative case that the respondent propounded. This was that, at the least, this Court would conclude that the primary judge's reasons were so unsatisfactory as to require a retrial. Whilst adhering to her contention that the judgment in her favour should be restored, the appellant embraced the proposal of a retrial as preferable to the judgment for the respondent entered by the Court of Appeal. To conclude that the Court of Appeal was not warranted in substituting a judgment for the respondent is, in our view, inconsistent with the right and duty of that Court to discharge the appellate function in accordance with the legislation governing it. A principal purpose of providing for an appeal by way of "rehearing" is to ensure, within the appellate process, finality of litigation, correctly decided55. It is unlikely that, in a second trial, the present parties would alter significantly the testimony that they have severally given or that the other witnesses would change theirs. As the primary judge correctly observed during the cross-examination of Constable Volf (by the time of the trial a sergeant of police), the possibility of his having any independent recollection of events that took place seven years earlier, was negligible. His evidence was, and would remain, that recorded in the notebook entry made immediately after the collision and in particular his sketch of the accident scene. In a new trial, that record, and the features of the skid mark, would be unchanged. 55 The power of the Court of Appeal to enter judgment for a party on an appeal by way of rehearing derives from s 75A(1) of the Supreme Court Act 1970 (NSW). Particular provisions appear with respect to a new trial because of subsequent matters (s 106) and the entry of substituted verdicts in certain circumstances (s 107). These provisions were not applicable to the present appeal. Kirby All that stands in favour of a retrial is that it would permit another judge to re-evaluate the truthfulness of the witnesses. But that judge too would have to do so in the context of the objective evidence of the skid marks. All that would be gained would be the prospect of a reserved decision, with the benefit of transcript that was not available to the primary judge at the first hearing, and reasons that would address more convincingly the reconciliation of the oral testimony with the objective, contemporaneous record. The Court of Appeal felt able to conclude the matter for itself. In doing so, in an unremarkable case, it did what is very commonly done, and properly done, in discharging the duty of deciding an appeal by way of rehearing. In our view, it was correct to do so within the powers that it enjoyed. We see no reason for this Court to substitute an order for a new trial. We would regard such an order as futile in the state of the evidence. The retrial of this matter, more than 10 years after the collision, could involve no improvement in the memory of any witness. In the end, the same factual analysis would be required. The self- interested recollections of the appellant, and those of her friend Mr Murdoch, could not overcome the objective evidence that so strongly favoured the respondent's version of events. At the least, it was open to the Court of Appeal to reach that conclusion. There being no error, this Court should not interfere. Order The appeal should be dismissed with costs. McHugh 48 McHUGH J. The question in this appeal is whether certain evidence, particularly the existence of skid marks on the respondent's side of the road, made "glaringly improbable"56, or incontrovertibly denied, the appellant's case that she was on her correct side of the road when struck by a van driven by the respondent. Unless it did, the Court of Appeal of the Supreme Court of New South Wales erred in setting aside the appellant's verdict, which was based on the trial judge's acceptance of the evidence of the appellant, one of her witnesses and written reports prepared by her traffic expert. In my opinion, this was one of those rare cases where the trial judge's finding that the skid marks were on the respondent's correct side of the road could not rationally be reconciled with the testimony of the appellant and her witness. Because that was so, and because the expert's reports were based on an incomplete account of the material facts, the Court of Appeal did not err in setting aside the appellant's verdict and entering a verdict for the respondent. Statement of the case The appellant, Barbara Fox, sued the respondent, Megan Percy, in the District Court of New South Wales for damages for negligence as the result of a collision between a van driven by Ms Percy and a horse ridden by Ms Fox. Herron DCJ, sitting without a jury, tried the action in the District Court at Moruya. After a four day hearing, his Honour found that the collision had occurred because of Ms Percy's negligence in being on her incorrect side of the road57. He awarded Ms Fox substantial damages. The Court of Appeal (Handley and Beazley JJA, Fitzgerald JA dissenting) upheld an appeal by Ms Percy against the finding of negligence58. The majority found that, although Herron DCJ had accepted the evidence of Ms Fox and her witness, their evidence was inconsistent with the presence of skid marks – a fact incontrovertibly established by the evidence and the finding of the trial judge. They also found that reports prepared by an expert, that supported Ms Fox's evidence, were based on assumptions not proved in evidence. Their Honours entered a verdict in favour of Ms Percy. Subsequently, this Court granted special leave to appeal against that order of the Court of Appeal. 56 Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842 at 844; 62 ALR 53 at 57. 57 Unreported, 5 November 1999. 58 [2001] NSWCA 100. McHugh The evidence and the trial judge's findings Ms Fox was seriously injured on 11 April 1992, when the horse that she was riding collided with a Kombi van being driven in the opposite direction by Ms Percy. The collision occurred shortly after dusk on a blind bend on an unsurfaced country road that was about seven metres wide. Immediately before the collision, Ms Fox and her partner, Mr Christopher Murdoch, were riding in an easterly direction up an incline in the road towards the blind bend. Ms Fox was riding a large half-draught horse. Mr Murdoch was riding behind her on a smaller, but still large, horse. They were travelling at about seven kilometres per hour. Both Ms Fox and Mr Murdoch had drunk alcohol earlier in the day. At the hospital, several hours later, Ms Fox had a blood alcohol content of 0.122 grams of alcohol per 100 millilitres of blood59. The trial judge found that, because of the nature of the accident, her level of intoxication was of little consequence60. Ms Fox testified that she was riding on her correct side of the road, on the left-hand side of the "middle rut" of the road. She said that her horse was "trotting"61. Ms Fox gave evidence that Mr Murdoch was "just at her rear" on her left side, and that it was still light when the accident occurred. She claimed that, when Sergeant Volf (who was a Constable at the time of the accident) arrived, he accused her of being on the wrong side of the road62. She said that her horse 59 The police officer's notebook contained the note: "Black dress, red stockings, abusive towards Police. Tattoo's right cheek, breath smelt of stale rum, intoxicating liquor, appeared moderately affected by alcohol refused to co-operate with Police in enquiries". 60 The trial judge made the following comments about Ms Fox's level of intoxication: "The fact is however that accepting the plaintiff as I do, there would not have been any hope of avoiding the accident, that is by moving the horse, in the few seconds which must have been involved in the collision itself. It would not matter if a president of the Temperance League was riding the horse Bright in this situation". 61 She had previously told police that her horse was at a canter, but the trial judge found that this would not make much difference to the horse's speed, travelling, as it was, up an incline. 62 The trial judge found that there was some "animosity emanating" from the police officer toward Ms Fox and Mr Murdoch because they adopted "an alternative lifestyle". McHugh "wasn't sideswiped and [her] thrown" but that she had fallen directly in front of the vehicle. She said that, when the van came around the corner, she had no time to respond. She also said that there was no braking, no dust and no skid marks. Mr Murdoch testified that he was riding directly behind Ms Fox on her left hand side, nearly a metre from the edge of the road. He said that Ms Fox's horse was two metres from the edge. In describing the collision, Mr Murdoch said that the Kombi van suddenly appeared, ran into Ms Fox's horse and pushed Ms Fox and her horse back onto his horse. He said that he was thrown over the edge of the embankment and that his horse flipped over him and landed on its feet. The horse jumped back up onto the road and pulled Mr Murdoch with it. Mr Murdoch gave evidence that, at this point, he saw Ms Fox's horse attached to the upper part of the roof of the Kombi and Ms Fox fall in front of the stationary Kombi63. The horse then stepped away from the van and died on the road. Mr Murdoch said that there were no skid marks. Mr Murdoch claimed that he observed "sideway drift marks" on the road, but these were beside, not behind, the van. He also claimed that he stepped out measurements as to the final location of the van, but his statement, as recorded in the police officer's notebook, made no mention of these measurements or the drift marks. In evidence, Mr Murdoch said that the statement in the police officer's notebook was inadequate. He claimed that he had pointed this out to the officer at the time64. In evidence, Sergeant Volf said that he observed and "stepped out" 10 metres of skid marks behind the Kombi. He sketched the location of the Kombi, the skid marks and the dead horse in his notebook. This drawing has the Kombi "straight on" on the correct side of the road with the skid marks directly behind it. Herron DCJ accepted his evidence that the skid marks were on the correct side of the road. His Honour rejected the evidence of another witness (Ms Christine Dzikowski) that the Kombi van came to rest on the wrong side of the road. Ambulance officers attending the scene also testified that the van was on its correct side of the road when they arrived. Sergeant Volf thought the skid marks suggested "that the vehicle had at all material times ... been on its correct side of the road". He said to Ms Fox, "It looks like you were in the wrong". Ms Percy claimed that she was driving on the correct side of the road and that, as the light was dim, she had her headlights on. She said that when she saw the horse she applied the brake and the clutch. The vehicle slid a little, collided with the horse and then came to a stop. 63 Ms Percy denied that the horse was ever attached to the Kombi van. 64 Sergeant Volf did not recall Mr Murdoch complaining about his statement in the police notebook. McHugh Both parties retained experts who provided reports on the accident. Although the reports were tendered as evidence, neither expert testified at the trial. Mr Tindall was Ms Fox's expert. In his first report, prepared before he became aware of the 10 metre skid marks, he gave the following explanation of the collision: "[Ms Percy's] vehicle could have slid outwards slightly towards the end of the curve, collided with the horses and rebounded slightly back to her left. She could also have steered more to the left when a collision appeared imminent. [Ms Fox's] body could have been carried an unknown distance on the front of the Kombi and fallen in front of it just before it stopped65. It is my opinion that the probability that [Ms Fox] and her horse were on their correct side of the road was significantly greater than the converse probability." In a subsequent report, after Mr Tindall became aware of the skid marks, he concluded: "The collision with the horse may have occurred anywhere along the ten metres while the van skidded or indeed before the skids, but it was most likely during the skids. Since the impact was relatively severe the impact was more likely to be in the early part of the skids. It was then that the position of the van was most important. … I caution against precise argument about the ability to locate the transverse position of the van relative to the centre of the road, at the impact point." The trial judge accepted that Sergeant Volf had correctly observed the 10 metre skid marks on Ms Percy's correct side of the road. He also accepted that the vehicle ended up on Ms Percy's correct side of the road. However, despite this, the trial judge concluded that the accident occurred when Ms Percy was driving on the wrong side of the road and that the Kombi ended up on the correct side of the road for the reasons advanced by Mr Tindall: "I come to the conclusion, however, that despite the skid marks that the accident occurred on [Ms Fox's] correct side of the road, and of course in that I do not accept [Ms Percy] … that the accident had happened on her correct side of the road." 65 Although, it should be noted that there was no evidence that Ms Fox's body ever came in contact with the Kombi. McHugh The Court of Appeal Beazley JA (with whom Handley JA agreed) noted that the trial judge's ultimate finding was based on acceptance of Mr Tindall's first report on the accident66. Her Honour identified a number of shortcomings with the report which the trial judge did not deal with in his reasons – most notably that the expert's report was based on several matters which were either not proved or not supported by the evidence. Accordingly, Beazley JA found that the trial judge erred in his acceptance of Mr Tindall's report. Her Honour said: "Mr Tindall's report was based on several matters which were either not proved in or not suggested by the evidence. To the extent that he accepted there were skid marks and made allowance for that in his report, he did so in a way contrary to the evidence. The only evidence of the skid marks was that they were on the correct side of the road. Mr Tindall opined they ended up on the right side of the road. There is a fundamental difference between the two. There were the other difficulties with his reports to which I have referred. In the circumstances, I consider the trial judge erred in his acceptance of [Mr] Tindall's explanation of the accident." Beazley JA went on to say: "It follows that, in my opinion, the evidence of [Ms Fox] and [Mr] Murdoch that [Ms Fox] was on the correct side of the road when the accident happened should not have been accepted by the trial judge. I have referred to the protection their evidence, would, in normal circumstances have under the Abalos67 principle. That protection is lost where 'the trial judge ... has acted on evidence … "inconsistent with facts incontrovertibly established by the evidence"'68 ... In my opinion, Sergeant 66 The trial judge had said: "I think that in the circumstances the fact of the matter is that Mr Tindall was correct in the assumptions he made … I think that I would accept Mr Tindall and I think that the probabilities are that the vehicle ended up on its correct side of the road for the reasons which Mr Tindall advances." 67 Abalos v Australian Postal Commission (1990) 171 CLR 167. 68 Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479 per Brennan, Gaudron and McHugh JJ. McHugh Volf's evidence of the skid marks on the correct side of the road falls into that category."69 Fitzgerald JA, in dissent, held that the trial judge's conclusion was properly open to him. His Honour said: "There was nothing in contest at the trial other than factual issues in respect of which there was conflicting evidence necessitating an assessment of the credibility and reliability of the witnesses as well as consideration of substantially undisputed facts concerning what was observed after the collision. In determining those issues, his Honour had to take into account that the evidence of the parties and [Ms Fox's] companion was almost certainly affected by the trauma of the collision, the imprecision with which ordinary people describe such events and the possibility that the evidence of most witnesses probably involved some reconstruction after a period of years." Ultimately, Ms Percy failed to persuade Fitzgerald JA that the trial judge did not carry out his task properly. His Honour was satisfied that the trial judge's conclusions were properly open to him. The scope of appellate review where the trial judge accepts the evidence of a witness Whether an appellate court should intervene in a decision of a trial judge who has made findings based on the credibility or demeanour of a witness is governed by the principles stated in Abalos v Australian Postal Commission. In "[W]here a trial judge has made a finding of fact contrary to the evidence of a witness but has made no reference to that evidence, an appellate court cannot act on that evidence to reverse the finding unless it is satisfied 'that any advantage enjoyed by the trial judge by reason of having seen and 69 In relation to the evidence of Mr Murdoch, Beazley JA stated: "I add in passing, that a reading of the transcript of [Mr] Murdoch's evidence presents an unconvincing picture. That would not have been sufficient to displace his Honour's acceptance of it. However, with respect to his Honour, it is not possible to rationalise his Honour's acceptance of [Mr] Murdoch's evidence when it is in direct conflict with Sergeant Volf's." 70 (1990) 171 CLR 167 at 178, 179. McHugh heard the witnesses, could not be sufficient to explain or justify the trial judge's conclusion'71. [W]hen a trial judge resolves a conflict of evidence between witnesses, the subtle influence of demeanour on his or her determination cannot be overlooked." Mason CJ, Deane, Dawson and Gaudron JJ, the other members of the Court, agreed with my judgment. Abalos was applied in Devries v Australian National Railways Commission where Brennan and Gaudron JJ and I said72: "More than once in recent years, this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against – even strongly against – that finding of fact73. If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge 'has failed to use or has palpably misused his advantage'74 or has acted on evidence which was 'inconsistent with facts incontrovertibly established by the evidence' or which was 'glaringly improbable'75." There was nothing novel about these statements. They derived from principles in decisions of this Court and the House of Lords stretching over the best part of a century. Dearman v Dearman76 was one of the first cases in which this Court had to consider the powers of an appellate court to review findings of fact by a trial judge. In Dearman, the Court restored the trial judge's findings and verdict, which had been set aside by the Full Court of the Supreme Court of New South Wales. The judgment of Isaacs J contains a valuable passage that shows why 71 Watt or Thomas v Thomas [1947] AC 484 at 488. 72 (1993) 177 CLR 472 at 479. 73 See Brunskill (1985) 59 ALJR 842; 62 ALR 53; Jones v Hyde (1989) 63 ALJR 349; 85 ALR 23; Abalos (1990) 171 CLR 167. 74 SS Hontestroom v SS Sagaporack [1927] AC 37 at 47. 75 Brunskill (1985) 59 ALJR 842 at 844; 62 ALR 53 at 57. 76 (1908) 7 CLR 549. McHugh appellate courts must be wary of setting aside the findings of trial judges where demeanour may have played a part in making those findings, despite the appellate court's duty to make its own findings. His Honour said77: "So that the position is clearly laid down by the very highest authority that the primary duty, and in fact the whole duty, of every Court of Appeal is to give the judgment which in its opinion ought to have been given in the first instance. But there are natural limitations, that is to say, in some cases, where the evidence below is solely upon written documents, if for instance it is upon affidavit as it used to be in the old Court of Chancery, the appellate Court is in as good a position as the primary Judge to say what ought to have been the decision; but where viva voce evidence is taken there is a large amount of material upon which the primary Judge acts that is altogether outside the reach of the appellate tribunal. The mere words used by the witnesses when they appear in cold type may have a very different meaning and effect from that which they have when spoken in the witness box. A look, a gesture, a tone or emphasis, a hesitation or an undue or unusual alacrity in giving evidence, will often lead a Judge to find a signification in words actually used by a witness that cannot be attributed to them as they appear in the mere reproduction in type. And therefore some of the material, and it may be, according to the nature of the particular case, some of the most important material, unrecorded material but yet most valuable in helping the Judge very materially in coming to his decision, is utterly beyond the reach of the Court of Appeal. So far as their judgment may depend upon these circumstances they are not in a position to reverse the conclusion which has been arrived at by the primary tribunal. Now it may be that in some cases the effect of what I call the unrecorded material is very small, indeed insignificant, and utterly outweighed by other circumstances. It may be, on the other hand, that it guides, and necessarily guides, the tribunal to the proper conclusion. If that is the case, as I have said before, the Court of Appeal cannot say that the conclusion is wrong without disregarding the material which it knows must have been existent before the tribunal below, and is necessary to a just conclusion." (emphasis added) By 1953, the views expressed by Isaacs J in Dearman were regarded as settled – at all events Dixon CJ and Kitto J appear to have thought so in Paterson v Paterson78 when they referred to the judgment of Isaacs J without criticism and with apparent approval. 77 (1908) 7 CLR 549 at 561-562. 78 (1953) 89 CLR 212 at 220. McHugh The principles that Isaacs J expounded were developed in England shortly after legislation introduced the statutory right of appeal in civil cases concerned with findings of trial judges in the High Court of Justice79. They were developed to guide the exercise of the powers of appellate courts where the trial judge had accepted the evidence of a witness although other evidence contradicted it. In developing these principles, the appellate courts were guided by the decisions80 of the Privy Council on questions of fact in admiralty cases. Such appeals had existed since 183381. Significantly, the principles of appellate review were developed in respect of appellate powers of review conferred by legislation whose scope was no less extensive than that of s 75A of the Supreme Court Act 1970 (NSW). It is erroneous to think that anything in Devries effectively elevates "the decision of a judge sitting alone to the level of a verdict of a jury"82. Juries give no reasons. Because that is so, appellate courts must act on the basis that the jury took that view of the evidence that was reasonably open to them and is consistent with their verdict. Nevertheless, in some cases no reasonable view of the evidence can support the verdict. In those cases the appellate court may intervene to set aside the verdict. But judges give reasons. Consequently, their factual findings are exposed and can be analysed and evaluated. This makes it easier to set aside a judge's finding of fact than it is to set aside a jury's verdict. Nothing in London Bank of Australia Ltd v Kendall83 is inconsistent with Devries. Indeed the reasoning of the Court in Kendall is entirely in accord with the principles expounded in Abalos and Devries. Significantly, Isaacs and Rich JJ, who gave the judgment of the Court in Kendall (with which Gavan Duffy J agreed), cited passages from Ruddy v Toronto Eastern Railway84 and Dominion Trust Co v New York Life Insurance Co85, both decisions of the 79 The Glannibanta (1876) 1 PD 283 at 287-288; Coghlan v Cumberland [1898] 1 Ch D 704 at 705; Montgomerie & Co Ltd v Wallace-James [1904] AC 73 at 75. 80 The "Julia" (1860) 14 Moo 210 [15 ER 284] and "The Alice" (1868) LR 2 PC 245. 81 The Judicial Committee Act 1833 (UK) 3 & 4 Will IV c 41, s 2; cf Paterson v Paterson (1953) 89 CLR 212 at 219. 82 Reasons of Callinan J at [148]. 83 (1920) 28 CLR 401. 84 (1917) 86 LJ PC 95. McHugh Judicial Committee. In Ruddy, Lord Buckmaster, delivering the judgment of the Board, had said86: "From such a judgment an appeal is always open, both upon fact and law. But upon questions of fact an Appeal Court will not interfere with the decision of the Judge who has seen the witnesses and has been able, with the impression thus formed fresh in his mind, to decide between their contending evidence, unless there is some good and special reason to throw doubt upon the soundness of his conclusions." In Dominion Trust87, the Judicial Committee cited a passage from Montgomerie & Co Ltd v Wallace-James – a judgment of the House of Lords – where Lord Halsbury had said88: "[W]here a question of fact has been decided by a tribunal which has seen and heard the witnesses, the greatest weight ought to be attached to the finding of such a tribunal. It has had the opportunity of observing the demeanour of the witnesses and judging of their veracity and accuracy in a way that no appellate tribunal can have. But where no question arises as to truthfulness, and where the question is as to the proper inferences to be drawn from truthful evidence, then the original tribunal is in no better position to decide than the judges of an appellate Court." (emphasis added) Earlier in its Advice in Dominion Trust, the Judicial Committee had pointed out89: "that there must be discrimination as to what is the class of evidence being dealt with: whether the result arrived at depends on the view taken of conflicting testimony, or depends upon the inferences to be drawn from facts as to which there is no controversy." In Kendall, Isaacs and Rich JJ applied these principles – the principles enshrined in Abalos and Devries – when they said90: 86 (1917) 86 LJ PC 95 at 96. 87 [1919] AC 254 at 257-258. 88 [1904] AC 73 at 75. 89 [1919] AC 254 at 257. 90 (1920) 28 CLR 401 at 409. McHugh "So far as the conclusions depend on materials such as demeanour, which the learned primary Judge alone could have access to, we cannot say he was wrong. So far as the materials he possessed are equally before us, we are bound to form and express our own opinion." The House of Lords continued to apply these principles throughout the 20th century. Lord Sumner's speech in SS Hontestroom v SS Sagaporack proved highly influential. His Lordship said91: "Watching the witnesses in the box and not merely perusing the shorthand notes, listening to what they say without any previous preparation of an adverse kind, free from the prepossessions which an opening by counsel occasions, a judge in the Admiralty Court watches the case as it is built up by the witnesses themselves. He reads their faces, not a shorthand note. He weighs their value as he goes along." Later in his speech, Lord Sumner said92: "What then is the real effect on the hearing in a Court of Appeal of the fact that the trial judge saw and heard the witnesses? I think it has been somewhat lost sight of. Of course, there is jurisdiction to retry the case on the shorthand note, including in such retrial the appreciation of the relative values of the witnesses, for the appeal is made a rehearing by rules which have the force of statute ... It is not, however, a mere matter of discretion to remember and take account of this fact; it is a matter of justice and of judicial obligation. None the less, not to have seen the witnesses puts appellate judges in a permanent position of disadvantage as against the trial judge, and, unless it can be shown that he has failed to use or has palpably misused his advantage, the higher Court ought not to take the responsibility of reversing conclusions so arrived at, merely on the result of their own comparisons and criticisms of the witnesses and of their own view of the probabilities of the case. The course of the trial and the whole substance of the judgment must be looked at, and the matter does not depend on the question whether a witness has been cross- examined to credit or has been pronounced by the judge in terms to be unworthy of it. If his estimate of the man forms any substantial part of his reasons for his judgment the trial judge's conclusions of fact should, as I understand the decisions, be let alone." Subsequent decisions – including decisions of this Court – have frequently affirmed Lord Sumner's statement that, because an appellate court has not seen 91 [1927] AC 37 at 46. 92 [1927] AC 37 at 47. McHugh the witnesses, it should reverse a trial judge's finding, depending on the trial judge's estimate of the witnesses, only when the judge has "failed to use or has palpably misused his advantage". In Powell v Streatham Manor Nursing Home93, Lord Wright said that "the latest and fullest statement of the relevant principles is now to be found in the opinion of Lord Sumner (which was the opinion of the House) in Hontestroom". In Powell, the House of Lords unanimously restored the verdict of a trial judge who had decided the case on issues of credibility. Viscount Sankey expressly noted that the "appeal is by way of rehearing"94 as did Lord Wright95. Similarly, Lord Macmillan noted96 that "the Court of Appeal and this House have a duty to exercise their jurisdiction as tribunals of appeal on fact as well as on law". But they held that the advantage that the trial judge had in seeing the witnesses prevented them from affirming the Court of Appeal's decision to reverse the trial judge's verdict. In Watt or Thomas v Watt97, the House of Lords again unanimously restored a trial judge's verdict, based on credibility, which the Second Division of the Court of Session had reversed. Lord Thankerton said98: "I. Where a question of fact has been tried by a judge without a jury, and there is no question of misdirection of himself by the judge, an appellate court which is disposed to come to a different conclusion on the printed evidence, should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial judge's conclusion; II. The appellate court may take the view that, without having seen or heard the witnesses, it is not in a position to come to any satisfactory conclusion on the printed evidence; III. The appellate court, either because the reasons given by the trial judge are not satisfactory, or because it unmistakably so appears from the evidence, may be satisfied that he has not taken proper advantage of his having seen and heard the witnesses, and the matter will then become at large for the appellate court." 93 [1935] AC 243 at 264. 94 [1935] AC 243 at 249. 95 [1935] AC 243 at 263. 96 [1935] AC 243 at 256. 98 [1947] AC 484 at 487-488. McHugh Lord Simonds expressly concurred99 "in the three propositions stated by ... In Paterson, Dixon CJ and Kitto J examined the authorities on the role of an appellate court at considerable length. They cited, with evident approval, most of the above passage from Lord Sumner's speech in Hontestroom and the three propositions formulated by Lord Thankerton in Watt. They also cited with evident approval the judgment of Isaacs J in Dearman. Dixon CJ and Kitto J applied these principles to uphold the findings of the trial judge in that case. Their Honours said100: "When the rules, which are formulated in the foregoing cases with such variety of detailed expression but with such identity of substance, are applied to the present case they lead almost inevitably to the conclusion that this Court must abide by the finding of Barry J, that is unless it is vitiated by the erroneous admission of the evidence to which the respondent and co-respondent objected. The learned judge's estimate of the respondent and co-respondent was of first importance. His assessment not only of the general credibility of the witnesses for the petitioner but of the reliability of their detailed observation could hardly but be decisive. These are matters in which his opinion could not be reversed by a court of appeal notwithstanding its undoubted jurisdiction to re-examine the whole case." One might have thought that, after Paterson, so settled were the principles by which an appellate court interferes with a trial judge's findings of fact, based on demeanour, that the issue would never again trouble this Court. But the tendency of intermediate appellate courts to perceive erroneous findings of fact from merely reading the notes of evidence appears to be so strong that several times in recent years this Court has had to intervene to restore the verdicts of trial judges and once again restate the principles. In Brunskill v Sovereign Marine & General Insurance Co Ltd, Gibbs CJ, Wilson, Brennan, Deane and Dawson JJ restored a trial judge's verdict, even though the judge "did not expressly say that his decision was based on the view which he had formed of Mr Wardrop's credibility"101. Their Honours thought that a passage in the judgment showed the trial judge had in fact based his 99 [1947] AC 484 at 491. 100 (1953) 89 CLR 212 at 224. 101 (1985) 59 ALJR 842 at 844; 62 ALR 53 at 57. McHugh finding on credibility. In restoring the judgment, their Honours cited most of the passage from Hontestroom that I have already cited. Their Honours said102: "The question that then arises is whether the decision of the learned trial judge can be seen to be clearly wrong on grounds which do not depend merely on credibility; for example, on the ground that the evidence which was accepted was inconsistent with established facts or was glaringly improbable." Their Honours held that no such ground existed. In Abalos, this Court was again forced to intervene and restore a trial judge's finding of negligence which was plainly based on the impression that the judge had of witnesses in the case. In Dawson v Westpac Banking Corporation103, the majority of the Court (Mason CJ, Deane J and myself) again criticised the departure by an appellate court from the principles set down in cases such as Brunskill. Mason CJ said104: "Such a vague statement could not sustain the Court of Appeal's reversal of Bryson J's finding, especially when account is taken of his Honour's extremely adverse view of the credibility of Mr Smith as a witness. In this respect the Court of Appeal failed to respect the established principle that an appellate court should not depart from a finding of fact made by a tribunal of fact which is based on the demeanour or credibility of witnesses unless the finding of fact is inconsistent with admitted or proved facts or is 'glaringly improbable.'" Finally, in Devries, this Court again had to intervene to restore a finding of negligence based on the trial judge's acceptance of the evidence of the plaintiff as to the circumstances in which his injury occurred. In doing so, Brennan and Gaudron JJ and I, in a joint judgment, simply applied the principles that final appellate courts in England and Australia had applied for nearly a century. In fact, the ratio decidendi of Devries was based on statements contained in Hontestroom in the House of Lords in 1926 and in Brunskill in this Court in 1985. There was nothing new about the case. 102 (1985) 59 ALJR 842 at 844; 62 ALR 53 at 57. 103 (1991) 66 ALJR 94; 104 ALR 295. 104 (1991) 66 ALJR 94 at 99; 104 ALR 295 at 304. McHugh There is nothing in Warren v Coombes105 that is inconsistent with Abalos or Devries. Warren decided106 only that "whether the facts found do or do not give rise to the inference that a party was negligent" is not a matter that "should be treated as peculiarly within the province of the trial judge". In earlier cases107, Barwick CJ and Windeyer J had suggested that the findings of trial judges were entitled to special deference, even when the findings were based on inferences drawn from facts found or admitted. Warren denied that proposition. In a joint judgment, Gibbs ACJ, Jacobs and Murphy JJ said108: "Shortly expressed, the established principles are, we think, that in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge." (emphasis added) Thus, Warren was concerned with the approach of an appellate court in drawing inferences from facts admitted or found by the trial judge. Abalos and Devries were concerned with the approach of an appellate court where the trial judge had made a finding as the result of accepting the oral evidence of a witness that other evidence contradicted. The distinction between the two classes of case is fundamental and almost always decisive. It was recognised by this Court in Brunskill109 where the Court said: "The authorities have made clear the distinction which exists between an appeal on a question of fact which depends upon a view taken of conflicting testimony, and an appeal which depends on inferences from uncontroverted facts." In support of the first class of case, the Court cited much of the passage in Hontestroom that I have already set out. Significantly, the Court also cited – 105 (1979) 142 CLR 531. 106 (1979) 142 CLR 531 at 552. 107 Whiteley Muir & Zwanenberg Ltd v Kerr (1966) 39 ALJR 505; Da Costa v Cockburn Salvage & Trading Pty Ltd (1970) 124 CLR 192; Edwards v Noble (1971) 125 CLR 296. 108 (1979) 142 CLR 531 at 551. 109 (1985) 59 ALJR 842 at 844; 62 ALR 53 at 56. McHugh apparently in support of the first class of case – a passage in Warren110 that cites the same passage in Hontestroom. The issues in Abalos and Devries were quite different from that in Warren. That was why Warren was not cited in the judgments in Abalos or Devries – it was irrelevant to the issues that had to be determined in those cases. It is a serious mistake to think that anything said in Abalos or Devries necessarily prevents an appellate court from reversing a trial judge's finding when it is based, expressly or inferentially, on demeanour. Those cases recognise – in accordance with a long line of authority – that it may be done. But there must be something that points decisively and not merely persuasively to error on the part of the trial judge in acting on his or her impressions of the witness or witnesses. Recently in State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq)111, for example, this Court held that undisputed and documentary evidence was so convincing that no reliance on the demeanour of witnesses could rebut it. Legal doctrine is most likely to command the respect of the profession and, consequently, the public which the profession serves when it evolves by processes of induction and deduction from the experience of decided cases and the application of established legal principles to cover new situations. To now reject the doctrines to which Abalos and Devries give effect would be a revolutionary, not an evolutionary step. A revolutionary change of legal doctrine is a step that should be taken only if compelled by social necessity. It may become obvious, for example, that a particular legal doctrine has taken a wrong turning with the result that it now produces undesirable or unsatisfactory consequences. If so, it may be legitimate – perhaps necessary – for an ultimate appellate court to take the revolutionary step of abandoning that doctrine and substituting a new doctrine based on an earlier stage of the law's development. In other cases, new social situations may arise that indicate that a current legal doctrine needs substantial amendment or abandonment. If it became routine for appellate courts to have access to a film or videotape of the trial, for example, it would probably be necessary to abandon the present rules of appellate review concerning demeanour. But nothing has occurred that would justify abandoning the current doctrines of appellate review, doctrines that have remained unchanged for over a century. The nature of the materials that appellate courts act on remain the same 110 (1979) 142 CLR 531 at 537. 111 (1999) 73 ALJR 306; 160 ALR 588. McHugh as they were in the last quarter of the 19th century when the principles of appellate review were formulated and developed. No persuasive research suggests that the interests of justice would be better served if appellate courts decided appeals on the printed record without regard to the advantage that the trial judge has in seeing and hearing the witnesses. No social necessity has arisen that would justify the revolutionary step of jettisoning doctrines that have served Anglo-Australian law well for more than a century. Nor do those who criticise those doctrines attempt to formulate practical rules as substitutes. Without workable rules to replace the time-honoured rules, appellate courts would be set adrift without guidance. In law as in other fields, it pays to remember the dictum of O W Holmes, Sr that "[r]evolutions do not follow precedents nor furnish them"112. The Court of Appeal correctly set aside the verdict of the trial judge The judgment of Beazley JA shows that her Honour was well aware that findings of fact, based on credibility or demeanour, can only be reversed by an appellate court in exceptional cases. As her Honour recognised, findings based, expressly or inferentially, on the credibility of Ms Fox and Mr Murdoch could not be overturned merely because the evidence of Ms Percy seemed more persuasive than their evidence. Standing against the evidence of Ms Fox and Mr Murdoch, however, were the following facts, accepted by the trial judge: The 10 metre skid marks being on Ms Percy's correct side of the road. The Kombi van ending up on the correct side of the road. The Kombi van being parallel to the roadway. Ms Fox coming to rest in front of the Kombi van. No matter how unimpressive a witness Ms Percy appeared to be, these incontrovertible facts powerfully confirmed her testimony that she was on her correct side of the road. Conversely, no matter how impressive as witnesses Ms Fox and Mr Murdoch appeared to be, their testimony could not be accepted unless there was a rational explanation of these incontrovertible facts that was consistent with their testimony. The presence of the skid marks and the resting place of the van, in particular, pointed irresistibly to Ms Fox being on her incorrect side of the road. 112 White, Justice Oliver Wendell Holmes, (1993) at 46. McHugh Ms Fox relied on the evidence of Mr Tindall to give an explanation that would rebut the damning inference that arose from the skid marks and the resting place of the van. And the trial judge accepted his explanation as to how the case for Ms Fox could be reconciled with the skid marks. As I have indicated, however, Beazley JA found, correctly in my opinion, that Mr Tindall's reports were flawed and that the trial judge did not deal with those flaws in his reasons. Because Mr Tindall did not give evidence, the Court of Appeal was in as good a position as the trial judge to assess the value of his reports. Once Mr Tindall's theory of the collision was rejected, the evidence accepted by Herron DCJ made the version of events given by Ms Fox and Mr Murdoch glaringly improbable. In my opinion, the Court of Appeal correctly held that the finding of negligence could not stand. Was a re-examination of the facts by the Court of Appeal inappropriate? In addition to arguing that the Court of Appeal had no right to interfere with the trial judge's findings, Ms Fox asserts that a re-examination of the facts by the Court of Appeal was inappropriate because no argument was raised at the trial that the state of the evidence prevented Herron DCJ from accepting Ms Fox's evidence. The issue is whether Ms Percy should have been permitted to raise issues on appeal about deficiencies in the evidence presented by Ms Fox if these issues were not raised at the trial. In this regard, Fitzgerald JA (in dissent) noted: "Much of the 28 page written submission and approximately 2½ hour oral address by counsel for [Ms Percy] in this Court consisted of his lengthy criticisms of [Ms Fox's] accident analyst's views. Those criticisms extended not only to the expert's conclusion and reasoning but also attacked the factual assumptions upon which he proceeded. Counsel who represented the parties in this Court were different from those who appeared at trial. We do not know what, if any, arguments were addressed to the trial judge by the counsel who then appeared for [Ms Percy] in addition to those which appeared in [Ms Percy's] expert's report but we were advised by [Ms Percy's] counsel not to concern ourselves with such 'ivory tower' considerations. The fallacy in such an approach is manifest. For example, [Ms Fox's] expert's reports made it plain that he relied upon information with which he had been supplied by identified persons in specified statements, reports, statutory declarations, sketches etc. His reports were tendered without objection subject to the tender also of those documents on which he had relied which [Ms Percy's] then counsel required to be tendered. That was done. It appears that the documents required by [Ms Percy] at trial did not McHugh include the sources of [Ms Fox's] expert's information. It is impermissible for [Ms Percy] to adopt a different attitude in this Court from that adopted at trial by asserting that [Ms Fox's] expert's opinion was based on assumptions of which there was no evidence. After four days of evidence and addresses by counsel then appearing for the parties which no doubt dealt with the strengths and weaknesses of the respective expert reports, the trial judge, after only a brief adjournment, delivered a judgment in which he preferred the evidence of [Ms Fox] and her companion and her expert's opinion. Although this is an appeal by way of re-hearing in the sense in which that term is used in this context, there are significant constraints on this Court's power to interfere with the trial judge's factual conclusions, especially credibility findings." (emphasis added) This point has caused me some concern. If the validity of Mr Tindall's reports depended on assumptions that were accepted at the trial, I do not think that the Court of Appeal could enter a verdict for Ms Percy. Indeed, it might be doubted whether it could set aside the verdict of Herron DCJ. As Fitzgerald JA noted, counsel for Ms Percy did not require the tender of the sources of Mr Tindall's information. However, I do not think this is a case that is comparable with one where a new point is taken on appeal that could have been cured by evidence at the trial, if objection had been taken. In so far as the majority of the Court of Appeal rejected Mr Tindall's reports because they were based on assumptions that were not in evidence, those particular assumptions were based on "facts" that were contrary to the evidence. Indeed, Ms Fox's counsel abandoned one – or at all events, part of one – of these assumptions in the Court of Appeal. Mr Tindall doubted that the skid marks were wholly on Ms Percy's correct side of the road. The trial judge's finding was that they were. Moreover, in so far as Mr Tindall's opinion depended on the horse being pushed back 10 metres, it flies in the face of the position of the van, the skid marks and the position of Mr Murdoch's horse. As Fitzgerald JA also noted, both sides tendered expert reports that were the subject of debate about their strengths and weaknesses. An assessment of the detail of the trial judge's findings was necessary for the Court of Appeal to determine whether there were facts incontrovertibly established, that were inconsistent with the trial judge's findings. This exercise necessarily required the Court of Appeal to consider thoroughly the evidence before the trial judge, including Mr Tindall's reports. Should the appropriate remedy be a re-trial? Another issue is whether the Court of Appeal should have ordered a re- trial. The majority of the Court of Appeal, by way of rehearing, determined McHugh Ms Fox's case after a thorough investigation of the evidence that was before the trial judge. Their Honours concluded that Ms Percy was driving her Kombi van on her correct side of the road. This is not a situation where a substantial amount of evidence supporting Ms Fox's claims has not been dealt with in a satisfactory way113. A new trial is not warranted in the present case. Order The appeal should be dismissed. 113 As was the case in State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 73 ALJR 306; 160 ALR 588, where there was a mass of documentary material supporting the appellant's claims which had to be dealt with in the judge's reasons in some satisfactory way before the appellant's claim could properly be dismissed as unproved (per Kirby J at [94]). In addition, the parties in that case had proceeded on the basis that if the appeal was successful then there must be a retrial (per Callinan J at [155]). Callinan Insufficient attention to two matters has necessitated consideration of this running down case at two appellate levels. The first is the reception by the trial judge of, and reliance by him upon a body of evidence in part at least misdescribed as expert evidence. The second is the failure by the trial judge to give effect to matters incontrovertibly established by objective evidence which contradicted the appellant's evidence and the so-called expert evidence. Facts The only substantive factual question which the trial judge had to answer in this case on the issue of liability was whether a horse that the appellant was riding, or a Kombi van with which it collided, was on the wrong side of the road immediately before and at the time of the collision. For some time before dusk on 11 April 1992 the appellant had been drinking mixed rum drinks. Her claim was that she had consumed three only of these before setting off on her heavy, part-draught horse, accompanied by her companion Mr Murdoch who was riding a somewhat lighter horse beside, and slightly behind her. The appellant had eaten no food since breakfast that day. It is unclear whether at the relevant time she was trotting or cantering her horse. She and Mr Murdoch were proceeding in an easterly direction in the country on a curving gravel road up an incline. Both the appellant and Mr Murdoch claimed to be to the left of the centre of the road. The respondent was driving a Kombi van towards them from the opposite direction. The appellant said that the respondent's van came around the curve and continued on the wrong side of the road at a speed of about 60 to 70 kilometres per hour before it came into collision with her and her horse. She suffered disabling and painful injuries that necessitated her admission to hospital. The respondent's version was that the appellant was "charging up the road" on the former's side of it. A sample of the appellant's breath was taken from her some hours after the accident when she was in hospital. By then she had a blood alcohol reading of 0.122 grams of alcohol per 100 millilitres of blood. A pharmacologist was of the opinion that the amount of alcohol likely to have been in the appellant's bloodstream at the time of the accident was between 0.178 and 0.179 grams per 100 millilitres of blood. An investigating police officer observed skid marks about 10 metres long on the respondent's correct side of the road leading up to the stationary van which itself was on its correct side of the road. The respondent said that she first saw the appellant's horse when she was coming around the corner on the bend. The van was in second gear and "fully on the left hand side of the road". She could not say how far in front of her the horse was. She said that the [natural] light was quite dim and that she had turned Callinan on the lights of her vehicle. When she saw the appellant's horse she slammed one foot on the brake and the other on the clutch. "The car slid a little and that's when we collided". She said in evidence that she was travelling at a slow speed. She agreed that she told a police officer that her speed was 10-15 kilometres per hour, but that she had informed an investigator on another occasion that it was 40-50 kilometres per hour. She conceded that it was possible she was travelling at the higher speed but that her better estimate was the former. The respondent maintained that her van was on the correct side of the road throughout. The trial The appellant sued in the District Court of New South Wales for damages for personal injuries. Each party retained expert traffic engineers. Mr Tindall was engaged by the appellant. He gave no oral evidence but made two written reports which were admitted into evidence. In the first, dated 21 October 1993, in reliance in large part upon what the appellant and Mr Murdoch had told him, he described the accident in this way: "The Kombi van struck [the appellant's] horse on the right front quarter. [The appellant's] horse was pushed backwards and to the left where it struck Murdoch's horse which fell over a bank. [The appellant] fell off her horse onto the front of the Kombi van." He continued: "Both horses had been moving forwards at about 8 km/h and they were both pushed backwards by the impact. Such an impact could reduce the speed of the Kombi by a significant amount … Further the impact occurred between the right front of the Kombi and the right front of the horse. Therefore there would be some rebound or deflection of the Kombi to its left after impact and the horses were deflected in the opposite direction." He referred to the damage to the van, the weight ratios in the first impact between the appellant's horse and the van, the weight ratios in the second impact (when the appellant's horse was pushed back on to Mr Murdoch's horse), and the fact that the speed of the van was greater than the speed of the horse. He went on to say: "[This] … indicate[s] that the relative speed at impact was greater than 40km/h and the speed of the Kombi after impact was greater than 20km/h. The Kombi would then take some metres to stop and with the deflection derived ... it would most likely reach its correct side of the road before stopping." Callinan It followed, he wrote, that the appellant's statement that she and Mr Murdoch were on their correct side of the road "was reasonable", and continued: "That [the respondent's] vehicle was found stationary on her correct side of the road is insufficient proof that [her van was driven on the correct side of the road]." Mr Tindall then purported to reconstruct the events immediately before and at the time of the impact in this way: "[The respondent's] vehicle could have slid outwards slightly towards the end of the curve, collided with the horses and rebounded slightly back to her left. She could also have steered more to the left when a collision appeared imminent. [The appellant's] body could have been carried an unknown distance on the front of the Kombi and fallen in front of it just before it stopped. … It is my opinion that the probability that [the appellant] and her horse were on their correct side of the road was significantly greater than the converse probability." The trial judge (Herron DCJ) relied on Mr Tindall's opinion. He said: "I think that in the circumstances the fact of the matter is that Mr Tindall was correct in the assumptions he made … I think that I would accept Mr Tindall and I think that the probabilities are that the vehicle ended up on its correct side of the road for the reasons which Mr Tindall advances." Although he accepted that the investigating police officer Volf had observed and measured 10 metres of skid marks on the correct side of the road his Honour was critical of him: "[T]here was prejudice which was emanating from the way in which these people presented themselves so far as the sergeant was concerned … and that to some extent must colour his investigation of the situation." His Honour, apart however from noting what he thought to be an omission by the police officer to record the matter to which I next refer, did not demonstrate in his reasons how any apparent prejudice on the part of the officer could have influenced his objective observations after his arrival at the scene of the collision, or his recording of the respective versions of the accident in his notes of it. The trial judge accepted that Mr Murdoch had paced the distance from the side of the road to the Kombi van notwithstanding that there was no entry in the policeman's notebook to that effect. His Honour adopted an explanation advanced by Mr Murdoch for the presence of the van on its correct side of the Callinan road, that somehow the combined weight of the horses and riders had forced it there. His Honour found for the appellant on liability: "I come to the conclusion, however, that despite the skid marks, that the accident occurred on the [appellant's] correct side of the road and of course in that I do not accept the [respondent] … that the accident had happened on her correct side of the road." He then assessed damages and gave judgment for the appellant in a substantial sum of money. Court of Appeal Beazley JA (with whom Handley JA agreed; Fitzgerald JA in dissent) in the Court of Appeal was critical of Mr Tindall's report in several respects. Her Honour said: "First, there was no evidence that the [appellant's] body ever came into contact with the Kombi. [The trial judge] made no such finding and the only inference to be drawn from the evidence is that she did not. The evidence was that the horse hit the Kombi and the [appellant] fell off the horse in front of the van." No reference was made by Mr Tindall to the skid marks of which apparently he was in ignorance. Nor did he advert to the respondent's claim that she had engaged second gear before the collision. There was no evidence that the appellant's horse "was pushed … to the left where it struck Murdoch's horse". Mr Murdoch's evidence was that the appellant's horse was "pushed … back into … my horse" and that he was deflected to the left. He did not say how far back the appellant's horse was pushed, but, as his and the appellant's evidence was that Mr Murdoch's horse's head was at the rump of the appellant's horse, it could not have been very far. Another criticism of Mr Tindall is that he purported to express opinions far beyond his asserted expertise, of a speculative kind going directly to the issue itself114, of little or no probative value, and objectively simply not credible. Two 114 See Naxakis v West General Hospital (1999) 197 CLR 269 at 306 [110] per Callinan J, and corresponding footnote 137. See also s 80 of the Evidence Act 1995 (NSW) which now permits the reception of expert evidence going to the issue. Here no reference was apparently made by the parties to the section or to the question whether such evidence could and should have been received. Callinan excerpts in which he purports to express opinions about the intelligence and propensities of both riders and horses are in point: "Assuming a reasonable expectation of other traffic on the road it would seem very unlikely that riders of horses would guide or allow their horses to walk on the wrong side of the road, anywhere, but particularly approaching a blind curve. Further, horses are not without some intelligence and can learn from experience or repetition that they should keep to one side of the road. Therefore there was some probability that without guidance from the riders the horses would automatically stay together and to one side of the road. Horses, like cyclists must be allowed some 'wobble' ie some latitude in their path. Motorists must share some responsibility for not frightening horses by driving close to them wherever they are. In a different way motorists have to aim their vehicle from some distance away (eg 50 m) so as to avoid a hazard ahead by at least one metre. A car can be moved one metre laterally more quickly than a horse." Beazley JA was critical of the second report prepared in September 1999 by Mr Tindall, after the presence of the skid marks had been drawn to his attention. In an attempt to accommodate this information, argumentatively and in exculpation of the appellant, he wrote : "It is noted that the police officer(s) reported a skid length of ten metres – a nicely rounded figure! One wonders if it was actually measured? How precisely were the start and ends located, some time after the event? And how was the centre of the gravel road identified for the purpose of stating that the skids were commencing and continuing wholly on [the respondent's] side of the roadway? While I accept the police evidence I caution against precise dependence on the facts. … I challenge that the police officer was able to be certain that the skids were wholly on [the respondent's] correct side of the road, without measurements, because there was no marked centre line. It is accepted that the ends of the skids near where the van stopped were on its correct side of the road because enough witnesses seem to agree with that fact." Some further comments were also almost entirely argumentative and made no evidential contribution to the debate: "The collision with the horse may have occurred anywhere along the ten metres while the van skidded or indeed before the skids, but it was most likely during the skids. Since the impact was relatively severe the impact was more likely to be in the early part of the skids. It was then that the Callinan position of the van was most important. To reiterate I caution against precise argument about the ability to locate the transverse position of the van relative to the centre of the road, at the impact point." After justifiably criticizing Mr Tindall's reports Beazley JA said this: "His Honour's finding, in part, was reached by accepting the evidence of the [appellant] and Murdoch over the evidence of the [respondent]. To that extent, it might be said that his Honour made findings of credit in favour of the [appellant] and Murdoch and against the [respondent]. That gives those findings prima facie protection from appellate interference on the principles enunciated by the High Court in Abalos v Australian Postal Commission115; Devries v Australian National Railways Commission116 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq)117." Her Honour went on to say that the trial judge's "core finding" was based upon Mr Tindall's first report and that he made no attempt to deal with the shortcomings in both reports to which reference has been made. She then identified some further problems in accepting Mr Tindall's evidence. "If the [appellant] was correct as to where she ended up on the roadway, and if she and Murdoch are to be accepted as to where they were on the roadway prior to the collision, and Murdoch is accepted as to where the front of the Kombi ended up after the collision, the [appellant] would have been flung some 3 metres from her horse. None of the evidence suggests that was the case. In [Mr Tindall's] first report, he had the [appellant's] horse being deflected to the left and the van to the right. In his final report he indicated the horse was pushed backwards up to 10 metres before the Kombi came to a stop and the [appellant] fell to the ground. It is difficult to see how the two propositions can sit together." Having found that the trial judge had erred, her Honour said this: 115 (1990) 171 CLR 167. 116 (1993) 177 CLR 472. 117 (1999) 73 ALJR 306; 160 ALR 588. Callinan "It follows that, in my opinion, the evidence of the [appellant] and Murdoch that the [appellant] was on the correct side of the road when the accident happened should not have been accepted by the trial judge. I have referred to the protection their evidence, would, in normal circumstances have under the Abalos118 principle. That protection is lost where 'the trial judge ... has acted on evidence ... "inconsistent with facts incontrovertibly established by the evidence '": Devries119. In my opinion, Sergeant Volf's evidence of the skid marks on the correct side of the road falls into that category. I add in passing, that a reading of the transcript of Murdoch's evidence presents an unconvincing picture. That would not have been sufficient to displace his Honour's acceptance of it. However, with respect to his Honour, it is not possible to rationalise his Honour's acceptance of Murdoch's evidence when it is in direct conflict with Sergeant Volf's. There is nothing in Tindall's report which stood independently of the evidence as it should have been found. As this trial was very much fought as to who was on the correct side of the road, the conclusion which I have reached means that the appeal should be allowed with costs and there should be substituted for his Honour's verdict a verdict for the [respondent]." The appeal to this Court The appellant seeks to persuade this Court that the Court of Appeal wrongly intervened to reverse findings of fact based on an issue of credibility in respect of which the trial judge had the advantage of seeing and hearing the witnesses: that despite the objective evidence of the skid marks and the position at which the van came to a standstill, it is too much to say that it was incontrovertibly established that the respondent was on the correct side of the road at the time of the collision. In this connexion it is important to appreciate that both parties were content to accept that the statement from Devries quoted by Beazley JA correctly stated the law with respect to the role of a court of appeal in reviewing findings of fact, and that no attempt was made to argue that such an emphatically high test was not consistent with sub-ss 75A(6) and (10) of the Supreme Court Act 1970 (NSW) ("the Act") or other authority of this Court. There is no doubt however that Mr Tindall's statements could provide no proper basis for any reliable finding of fact. Not only was it flawed in the respects to which reference has been made, but it also suffered from the deficiency of acceptance of matters stated by the appellant and Mr Murdoch 118 Abalos v Australian Postal Commission (1990) 171 CLR 167. 119 Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479 per Brennan, Gaudron and McHugh JJ. Callinan which were either not proved, or were shown to be highly improbable, such as the latter's conclusion that the appellant's horse became attached to the roof of the van on impact; and that the appellant's horse was forced back into his horse causing it to move to the left thereby indicating that the van was moving to the left after first impact and not to the right. In submissions to this Court the respondent described the appellant's and Mr Murdoch's accounts of the accident as "glaringly improbable". Features which compound improbability are, for example: the appellant's contradictory claims as to whether her horse was trotting or cantering; and, the likelihood that her judgment would almost certainly have been impaired by the consumption of a very large amount of alcohol, in all likelihood, a great deal more alcohol than she claimed to have consumed. It is difficult to see why the trial judge, having said that there was no doubt that the amount of alcohol in the appellant's blood would have affected her, and that expert evidence was not required to tell him that this was so, would nonetheless so readily accept the appellant's account of the collision without qualification. The test on appeal that Beazley JA applied was one of the three tests stated by Brennan, Gaudron and McHugh JJ in Devries120: "If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge 'has failed to use or has palpably misused his advantage'121 or has acted on evidence which was 'inconsistent with facts incontrovertibly established by the evidence' or which was 'glaringly improbable'122." A number of observations may be made about those tests but before doing so I should refer to four earlier cases in this Court. The first is an appeal in a divorce case, Dearman v Dearman123. There Griffith CJ said that where there has been a conflict of evidence, the Court of Appeal cannot reverse the judgment of a judge at first instance who has had the advantage of hearing the witnesses unless the appellate court "sees that the decision is manifestly wrong"124 120 (1993) 177 CLR 472 at 479. 121 SS Hontestroom v SS Sagaporack [1927] AC 37 at 47. 122 Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842 at 844; 62 ALR 53 at 57. 123 (1908) 7 CLR 549. 124 (1908) 7 CLR 549 at 553. Callinan (emphasis added). In the same passage his Honour went on to distinguish between the verdict of a jury and of a judge to the former of which much greater weight should be accorded. He also said that in a case in which there has been conflicting evidence and a finding against the party upon whom the onus lay, it will be an almost hopeless task for that party to persuade a Court of Appeal that a different finding should have been made. His Honour also went on to cite with approval125 a statement by Brett LJ in Robertson v Robertson126 in which his Lordship had stated the "rule" as being that the decision at first instance should stand unless the appellate court could "see that the Judge in the Court below was wrong"127 (emphasis added). Barton J agreed with the Chief Justice but added some words of his own128. In doing so, he cited some observations of Lindley MR, Rigby and Collins LJJ in Coghlan v Cumberland129: "...the appeal from the judge is not governed by the rules applicable to new trials after a trial and verdict by a jury. Even where, as in this case, the appeal turns on a question of fact, the Court of Appeal has to bear in mind that its duty is to rehear the case, and the Court must reconsider the materials before the judge with such other materials as it may have decided to admit. The Court must then make up its own mind, not disregarding the judgment appealed from, but carefully weighing and considering it; and not shrinking from overruling it if on full consideration the Court comes to the conclusion that the judgment is wrong. When, as often happens, much turns on the relative credibility of witnesses who have been examined and cross-examined before the judge, the Court is sensible of the great advantage he has had in seeing and hearing them. It is often very difficult to estimate correctly the relative credibility of witnesses from written depositions; and when the question arises which witness is to be believed rather than another, and that question turns on manner and demeanour, the Court of Appeal always is, and must be, guided by the impression made on the judge who saw the witnesses. But there may obviously be other circumstances, quite apart from manner and demeanour, which may shew whether a statement is credible or not; and these circumstances may warrant the Court in differing from the judge, even on a question of fact turning on the credibility of witnesses whom the Court has not seen." (emphasis added) 125 (1908) 7 CLR 549 at 554. 127 (1881) 6 P 119 at 124. 128 (1908) 7 CLR 549 at 557. 129 (1898) 1 Ch 704 at 704-705. Callinan Isaacs J was the only judge in Dearman to state the rule in extreme terms by, saying that, in a case of viva voce evidence, a finding in respect of it "is altogether outside the reach of the appellate tribunal."130 And with the greatest of respect to his Honour, I doubt whether many cases will truly turn, as he also contended, on a mere "gesture, a tone or emphasis, a hesitation or an undue or unusual alacrity in giving evidence"131. Higgins J, the other judge in Dearman, said no more than that he was "glad to find that there is no difference as to the legal principle applicable between this Court and the Full Court [of New South Wales]."132 The second of the cases is London Bank of Australia Ltd v Kendall133. There, Isaacs and Rich JJ in language as apt today as it was then, again distinguished between a verdict of a jury and a decision of a judge sitting alone and emphasized the overriding obligation of an appellate court to do its duty to a statutory appellant by determining for itself the true effect of the evidence134: "[w]here the law says that the Court, and not a jury, is to determine the facts, and also says that an appellate Court can be asked to reconsider them, and therefore should reconsider them, it is the duty of the appellate tribunal (and it is the statutory right of the litigant who invokes it to require of it the performance of that duty) to determine for itself the true effect of the evidence so far as the circumstances enable it to deal with the evidence as it appeared in the Court of first instance." The third of the cases is Warren v Coombes135, an appeal from the Court of Appeal of New South Wales. It was a case which was concerned with the drawing of inferences but its relevance here is that in it Gibbs ACJ, Jacobs and Murphy JJ discussed and expressly applied s 75(A) of the Act. Their Honours said136: 130 (1908) 7 CLR 549 at 561. 131 (1908) 7 CLR 549 at 561. 132 (1908) 7 CLR 549 at 565. 133 (1920) 28 CLR 401. 134 (1920) 28 CLR 401 at 407. 135 (1979) 142 CLR 531. 136 (1979) 142 CLR 531 at 537. Callinan "We are concerned, of course, with an appellate tribunal to which there is an appeal by way of rehearing ... and which has the powers and duties of the court from which the appeal is brought, including those of drawing inferences and making findings of fact... In other words the Court of Appeal is in the same position as the Court of Appeal in England and the Full Courts of the Supreme Courts of the other States. The appeal, although by way of rehearing, is conducted on the transcript of the evidence taken at the trial, and the witnesses are not called to give their evidence afresh, but the appeal is a general appeal and is not limited, for example, to questions of law." (emphasis added) Although Aickin J (with whom Stephen J agreed) was of a different opinion from the majority as to the result of the appeal, he expressed no view on the correct approach to an appeal on a question of fact. His Honour thought it inappropriate to do so because he did not think that the matter had been investigated or fully argued by the parties. Consideration was again given by this Court to the obligations of the Court of Appeal of New South Wales in reviewing findings of fact in the fourth of the cases, Abalos137. The leading judgment was given by McHugh J with whom Mason CJ, Deane, Dawson and Gaudron JJ agreed. It is relevant to note that the trial judge there whose decision was reversed by the Court of Appeal had enjoyed the advantage, not only of seeing and hearing the witnesses but also of some in-court demonstrations138, a matter which McHugh J apparently thought to be of some significance. His Honour's statement of principle in the following passage was formulated no doubt on the basis of the particular facts, and advantages of the trial judge in that case139: "Consequently, where a trial judge has made a finding of fact contrary to the evidence of a witness but has made no reference to that evidence, an appellate court cannot act on that evidence to reverse the finding unless it is satisfied 'that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial judge's conclusion'140." 137 (1990) 171 CLR 167. 138 (1990) 171 CLR 167 at 178. 139 (1990) 171 CLR 167 at 178. 140 Watt or Thomas v Thomas [1947] AC 484 at 488. Callinan No reference was made in the reasons for judgment to s 75A of the Act, to Dearman, to Kendall, or to Coombes, although the last was cited in argument. Devries, upon which the parties focused in this case was an essentially factual appeal from the Full Court of the Supreme Court of South Australia. Neither counsel nor any of the Justices of the Court who were divided as to the proper principle to be applied, referred to Dearman, Kendall or to Coombes. And once again no reference was made to the statutory provisions governing the appeal, s 50 of the Supreme Court Act 1935 (SA) which draws no distinction between appeals on questions of law and questions of fact.141 In Devries, Deane and Dawson JJ would have preferred a test simply of wrongness which is consistent with what was said in Kendall. They certainly did not embrace the extended test that appealed to Isaacs J in Dearman. Their Honours referred to the fact that the appeal was by way of rehearing. They also acknowledged that the trial judge enjoyed advantages denied to an appellate court but emphasized the risk of overstating those advantages. They said142: "An appellate court which is entrusted with jurisdiction to entertain an appeal by way of rehearing from the decision of a trial judge on questions of fact must set aside a challenged finding of fact made by the trial judge which is shown to be wrong. When such a finding is wholly or partly based on the trial judge's assessment of the trustworthiness of witnesses who have given oral testimony, allowance must be made for the advantage which the trial judge has enjoyed in seeing and hearing the witnesses give their evidence. The 'value and importance' of that advantage 'will vary according to the class of case, and, ... [the circumstances of] the individual case'143. If the challenged finding is affected by identified error of principle or demonstrated mistake or misapprehension about relevant facts, the advantage may, depending on the circumstances, be of little significance or even irrelevant. If the finding is unaffected by such error or mistake, it will be necessary for the appellate court to assess the extent to which it was based on the trial judge's conclusions about the credibility of witnesses and the extent to which those conclusions were themselves based on observation of the witnesses as they gave their evidence as distinct from a consideration of the content of their evidence. Judges are increasingly aware of their own limitations and of the fact that, in a courtroom, the habitual liar may be 141 (1993) 177 CLR 472. 142 (1993) 177 CLR 472 at 479. 143 Watt or Thomas v Thomas [1947] AC 484 at 488 per Lord Thankerton. Callinan confident and plausible, and the conscientious truthful witness may be hesitant and uncertain. In that context, it is relevant to note that the cases in which findings of fact and assessments of credibility are, to a significant extent, based on observation of demeanour have possibly become, if they have not always been, the exception rather than the rule. Indeed, as Kirby ACJ pointed out in Galea v Galea144, in many cases today, judges at first instance expressly 'disclaim the resolution of factual disputes by reference to witness demeanour'. However, this does not deny that in many cases a trial judge's observation of the demeanour of witnesses as they give their evidence legitimately plays a significant and even decisive part in assessing credibility and in making factual findings. Indeed, as will be seen, the present was such a case." With respect I also doubt very much whether the practice and learning of the highly specialized Admiralty Courts provide a safe foundation for such a high test as Devries propounds. The "Julia"145 was an appeal from the High Court of Admiralty of England constituted by the Right Hon Dr Lushington assisted by Trinity Masters, of whom the Right Hon Lord Kingsdown speaking for their Lordships said146: "But in these cases of appeal from the Admiralty Court, when the question is one of seamanship, where it is necessary to determine, not only what was done or omitted, but what would be the effect of what was done or omitted, and how far, under the circumstances, the course pursued was proper or improper, their Lordships can have but slender means of forming an opinion for themselves, and certainly cannot have better means of forming an opinion than the Judge of the Admiralty Court. They do not speak with reference to the distinguished person who now fills, and has so long filled, that office, though it would be impossible to imagine a stronger example of the truth of the remark; but any Judge who sits from day to day on such cases must necessarily acquire a knowledge and experience to which ordinary members of this Board cannot pretend. They must in such cases act entirely upon the advice of the Nautical Assessors, who form no part of the Court, whose opinion they can regard only as they might regard the advice of any nautical men out of Court. If they reverse in such cases, they must upon the authority of their Assessors overrule the judgment of the Trinity Masters, who form a part of the Court below, and they must do this without any certain means of knowing the comparative weight which is due to the two authorities, and without 144 (1990) 19 NSWLR 263 at 266. 145 The "Julia" (1860) 14 Moo 210 [15 ER 284]. 146 (1860) 14 Moo 210 at 236-237 [15 ER 284 at 293-294]. Callinan hearing what reasons might be assigned by the Trinity Masters, if they were present, to justify the conclusion at which they have arrived." It is also significant that his Lordship was at pains to distinguish Admiralty cases from common law cases with a jury, and in particular from judgments in equity, with which judgments in New South Wales may now, for the purposes of an appeal under s 75A of the Act, be relevantly equated147: "In a Court of Law, if the Judges are dissatisfied with a verdict as against the weight of evidence, they can send the case before another jury. In the Court of Chancery, when the Court of Appeal reverses the judgment of the inferior Court on the result of evidence, the Judges of the Appellate Court are as capable as the Judge below (and, indeed, are presumed to be more capable) of forming an opinion for themselves, as to the proof of facts and as to the inferences to be drawn from them." (emphasis added) The subsequent admiralty case, The "Alice" and the "Princess Alice"148 did no more than apply The "Julia", and provides no basis for the same rules to apply to appeals in jurisdictions other than Admiralty. Perhaps the special features of Admiralty cases to which the Right Hon. Lord Kingsdown had referred in The "Julia" had been overlooked by the time that the Hontestroom149 came to be decided but I doubt it. Rather the remarks of Lord Sumner in Hontestroom150 should be taken as applying in the Admiralty context only, the context with which the Court was there concerned. Statements made by appellate judges about findings of fact by trial judges repeatedly emphasize the advantages attaching to an opportunity to hear and see witnesses. They tend to understate or even overlook that appellate courts enjoy advantages as well: for example, the collective knowledge and experience of no fewer than three judges armed with an organized and complete record of the proceedings, and the opportunity to take an independent overview of the proceedings below, in a different atmosphere from, and a less urgent setting than the trial.151 147 (1860) 14 Moo 210 at 236 [15 ER 284 at 293]. 148 (1868) LR 2 PC 245. 149 SS Hontestroom v SS Sagaporack [1927] AC 37. 150 [1927] AC 37 at 47 per Lord Sumner. 151 cf discussion of credibility findings by Kirby J in State Rail Authority (New South Wales) v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306 at 332 [93]; 160 ALR 588 at 621. Callinan With respect, I therefore entertain grave doubts whether the statement of principle of the majority in Devries represents the law in relation to factual appeals by way of rehearing, and pursuant to statutory provisions such as s 75A of the Act and like provisions in other States for several reasons. Neither Kendall, Coombes nor the relevant enactment was referred to in the reasons. The treatment of findings of facts in issue with the very high degree of sanctity that appellate courts have from time to time since the inception of statutory rights of appeal finds no warrant in the language of the relevant statutes themselves. That treatment is questionable not only by reference to the words of the statute but also having regard to the fact that there are other enactments152 which do confer rights of appeal on points or issues of law only, thereby clearly distinguishing between, and providing for different consequences to attach to, errors of fact and errors of law. Perhaps judges in earlier times were unduly defensive, particularly in jurisdictions in which trial judges from time to time also sat as appellate judges in rotation. Perhaps it was inevitably seen as being financially and otherwise practically inexpedient, indeed almost impossible to allow full factual appeals to proceed on a wholesale basis. Speculation as to that will achieve no purpose. It is to the words of the Act that I will now turn. Section 75A of the Act imposes positive duties upon the State appellate court, the performance of which is in no way conditioned by judge-made rules stated in very different language, and to a substantially different effect from the plain meaning of the section which, by sub-ss 6 and 10 imposes affirmative duties on the Court of Appeal, including to do what the nature of the case requires. Section 75A provides: "75A Appeal Subject to subsections (2) and (3), this section applies to an appeal to the Court and to an appeal in proceedings in the Court. This section does not apply to so much of an appeal as relates to a claim in the appeal: for a new trial on a cause of action for debt, damages or other money or for possession of land, or for detention of goods, or 152 See for example Land and Environment Court Act 1979 (NSW), s 57; Compensation Court Act 1984 (NSW), s 32; Medical Practice Act 1992 (NSW), Callinan for the setting aside of a verdict, finding, assessment or judgment on a cause of action of any of those kinds, being an appeal arising out of: a trial with a jury in the Court, or a trial: with or without a jury in an action commenced before the commencement of section 4 of the District Court (Amendment) Act 1975, or (ii) with a jury in an action commenced after the commencement of that section, in the District Court. This section does not apply to an appeal to the Court under the Justices Act 1902 or to proceedings in the Court on a stated case. This section has effect subject to any Act. (5) Where the decision or other matter under appeal has been given after a hearing, the appeal shall be by way of rehearing. The Court shall have the powers and duties of the court, body or other person from whom the appeal is brought, including powers and duties concerning: amendment, the drawing of inferences and the making of findings of fact, and the assessment of damages and other money sums. The Court may receive further evidence. (8) Notwithstanding subsection (7), where the appeal is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds. Subsection (8) does not apply to evidence concerning matters occurring after the trial or hearing. Callinan (10) The Court may make any finding or assessment, give any judgment, make any order or give any direction which ought to have been given or made or which the nature of the case requires." By the Act, the Court of Appeal was armed with all of the ample powers and duties of an appellate court under the Equity Act 1901 (NSW) (ss 81-89), and in particular the duty to rehear the case pursuant to s 82 which might even, for example, permit the Court to undertake a review in exceptional circumstances153. To impose the test stated in Devries is, I think, to do what was said to be impermissible as long ago as 1920154, to elevate as a practical matter, the decision of a judge sitting alone to the level of a verdict of a jury. This is so even though judges are bound to give reasons155 and those reasons are required to be able to withstand scrutiny. The value of that scrutiny will be much reduced if a statement in the reasons that the demeanour of a witness has been determinative of the first instance decision, is effectively taken to be conclusive of the outcome of an appeal by way of rehearing. The vast majority of the cases tried in this country are tried by judges sitting alone and depend upon their facts rather than upon the application of complex legal principles. To impose an unduly high barrier, and not one sanctioned by the enactment conferring the right of appeal would be to deny recourse by litigants to what the Parliament of the State has said they should have. Judges are fallible on issues of fact as well as of law; sometimes they are obliged to work under a great deal of pressure, and sometimes they are denied a timely transcript. In the days when rights of appeal were first enacted, notes and transcripts were much less complete and reliable than they now are. And today courts of first instance, in some jurisdictions at least, rely heavily on written statements, certainly of the evidence in chief, the oral adducing of which might on occasions have been as, or even more revealing than, evidence adduced from an honest but inarticulate or nervous witness in cross-examination. Occasional errors of fact are bound to be made. No litigant should be expected to accept with equanimity that his or her right of appeal to an intermediate court is of much less utility because it goes to a factual error that can be explained away by a judge-made rule, than an appeal on a question of law: or that although the trial judge was wrong on the facts, there was no incontrovertible fact against which the judge's error could be measured. This Court recently heard an appeal which provided an insight into the disposition of one New South Wales judge at least with respect to his task of deciding a 153 Attorney-General v Wheeler (1944) 45 SR(NSW) 321. 154 London Bank of Australia Ltd v Kendall (1920) 28 CLR 401. 155 Pettitt v Dunkley [1971] 1 NSWLR 376. Callinan personal injuries case. During the course of an application to dispense with a jury to which one party was entitled, and had requisitioned, he said156: "I'll tell you straight out, I would do away with all civil juries in the State, instantly and retrospectively. I think it leads to, quite frankly, perfectly obvious miscarriages of justice in these Courts every week, every single week ... I've been astounded here in the last six weeks calling this list, how many plaintiffs seek juries. I think it's prima facie evidence of professional negligence myself, for a plaintiff to seek a jury." Demeanour based judgments in favour of plaintiffs following remarks of that kind are hardly likely to inspire confidence in persons wishing to defend claims against them. The test stated in Devries, in my respectful opinion, appears to go beyond some at least of the previous authorities in this Court. If faithful obedience henceforth to the statutory language might be seen as a departure from some other previous authorities of this Court, there would not be anything especially novel about that. This Court has made such departures in recent times on a number of occasions: examples are Burnie Port Authority v General Jones Pty Ltd157, Trident General Insurance Co Ltd v McNiece Bros Pty Ltd158, David Securities Pty Ltd v Commonwealth Bank of Australia159, Mabo v Queensland [No 2]160, Wilson v The Queen161, R v L162, Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission163 and Brodie v Singleton Shire Council164. A test of "glaring improbability", "incontrovertible error" or "palpable misuse of an advantage" is not what the Act requires or all relevant previous decisions hold. Such a test pays, I am inclined to think, altogether too much deference to a trial judge's view of the facts and advantages, 156 Quoted in Gerlach v Clifton Bricks Pty Ltd (2002) 76 ALJR 828 at 832 [22] per Kirby and Callinan JJ; (2002) 188 ALR 353 at 359. 157 (1994) 179 CLR 520. 158 (1988) 165 CLR 107. 159 (1992) 175 CLR 353. 160 (1992) 175 CLR 1. 161 (1992) 174 CLR 313. 162 (1991) 174 CLR 379. 163 (2002) 77 ALJR 40; 192 ALR 561. 164 (2001) 206 CLR 512. Callinan both actual and supposed. This is not to deny, however, that deference should be paid to first instance findings of credit. It is simply to prefer a test of wrongness, and to be guided by, rather than bound by findings on credit, or on the basis of demeanour. I return to the facts of this case. Here Mr Tindall was described by counsel for the appellant as an "accident reconstruction expert". That is an ambitious claim. Three things may be said about the evidence in this case and running down cases generally. Rarely in my opinion will such evidence have very much, or any, utility. Usually it will be based upon accounts, often subjective and partisan accounts, of events occurring very rapidly and involving estimates of time, space, speed and distance made by people unused to the making of such estimates. Minor, and even unintended but inevitable discrepancies in relation to any of these are capable of distorting the opinions of the experts who depend on them. It is also open to question whether variables in relation to surfaces, weather, and the tyres, weight and mechanical capacities of the vehicles involved can ever be suitably accounted for so as to provide any sound basis for the expression of an opinion of any value to a court. The engagement of experts in running down cases, other than in exceptional circumstances, is not a practice to be encouraged. The second matter is the reception, apparently without question, of the whole of the contents of the expert reports in this case. Some of the deficiencies to which reference has already been made would require that, either in law, or in the proper exercise of a discretion, much of them should have been rejected. In the long run the undiscriminating tender of inadmissible, unreliable or valueless evidence, the acquiescence in its tender by counsel on the other side, and its reception into evidence, will prolong and increase the costs of trials165. It will increase the margin for judicial error as occurred here, and will also lead to uncertainties and difficulties in courts of appeal. No court is bound to accept evidence of no probative value and evidence of slight probative value will rarely provide a foundation for any confident finding of fact, particularly if strong contrary evidence is available. The third matter to which reference should be made is that touched upon by Beazley JA in the Court of Appeal, the adversarial stance taken by Mr Tindall. This is very much to be regretted. It also might have been basis enough for the rejection of his evidence. What was said in the tenth edition of Phipson on Evidence and earlier editions before enactment of the Civil Evidence 165 Evidence Act 1995 (NSW): ss 135 and 136 confer very wide discretionary powers of rejection of evidence on courts. Callinan Act 1972 (UK) , and notwithstanding the enactment of the Evidence Act 1995 (NSW) remains relevant166: "Value of Expert Evidence. The testimony of experts is often considered to be of slight value, since they are proverbially, though perhaps unwittingly, biased in favour of the side which calls them, as well as over- ready to regard harmless facts as confirmation of pre-conceived theories; moreover, support or opposition to given hypotheses can generally be multiplied at will.167" There is an additional difficulty, of reconciling the three tests stated in Devries. For myself, a test of glaring improbability does not raise quite as high a threshold as inconsistency with an incontrovertible fact, or indeed of palpable misuse of an advantage. Experience tells that in human affairs there are many controvertible assertions, and, matters of science and mathematics apart, real disputation as to which facts may be and which may not be incontrovertible. The question remains however as to how this Court should dispose of this appeal. The question of the correctness of the test agreed upon as the appropriate one was simply not argued or explored here. The appeal in the Court of Appeal was conducted on the footing that the correct test was of inconsistency with incontrovertible facts in accordance with one of the formulations of the majority in Devries. The parties having invited the Court of Appeal to deal with the appeal on that basis it would not be fair for this Court to apply a different test now. The trial judge was on any view shown to be in error, particularly in his misplaced reliance upon Mr Tindall. There were three props for the trial judge's decision. Each was essential to it. One was Mr Tindall's evidence, the remaining two, the appellant's evidence (itself suspect by reason of her inevitably reduced capacity to observe and recount what had happened by reason of her earlier intake of alcohol), and Mr Murdoch's evidence, it also containing a number of improbabilities. The first of the props has clearly been displaced. Great doubt attaches to the soundness of the others. The high test posed by Devries has been satisfied. The skid mark and the position of the respondent's car after the accident were incontrovertible facts inconsistent with the appellant's factual claims. 166 Phipson on Evidence, 10th ed (1963) at 481 §1286. 167 In re Dyce Sombre (1849) 1 Mac & G 116 at 128 per Lord Cottenham [41 ER 1207 at 1212]; The Tracey Peerage (1838, 1843) 10 C & F 154 at 191 per Lord Campbell [8 ER 700 at 715]; Lord Abinger v Ashton (1873) LR 17 Eq 358 at 373-374 per Jessel MR. Callinan I would dismiss the appeal and join in the orders proposed by the other members of the Court. |
HIGH COURT OF AUSTRALIA Matter No S36/2018 MINISTER FOR IMMIGRATION AND BORDER PROTECTION APPELLANT AND SZMTA & ANOR Matter No M75/2018 CQZ15 AND RESPONDENTS APPELLANT MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR RESPONDENTS Matter No S135/2018 BEG15 AND APPELLANT MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR RESPONDENTS Minister for Immigration and Border Protection v SZMTA CQZ15 v Minister for Immigration and Border Protection BEG15 v Minister for Immigration and Border Protection [2019] HCA 3 13 February 2019 S36/2018, M75/2018 & S135/2018 ORDER Matter No S36/2018 Appeal allowed. Set aside the orders made by the Federal Court of Australia on 5 September 2017 and, in their place, order that the appeal to that Court from the Federal Circuit Court of Australia be dismissed with costs. The first respondent pay the appellant's costs of the appeal to this Court. Matter No M75/2018 Appeal dismissed with costs. Application for special leave to cross-appeal dismissed with costs. Matter No S135/2018 Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation G R Kennett SC with R S Francois for the appellant in S36/2018 (instructed by Clayton Utz Lawyers) S E J Prince with S Blount and P W Bodisco for the first respondent in S36/2018 (instructed by Shelly Legal) L G De Ferrari SC with C L Symons for the appellant in M75/2018 (instructed by Victoria Legal Aid) G R Kennett SC with B D Kaplan for the first respondent in M75/2018 (instructed by Australian Government Solicitor) S E J Prince for the appellant in S135/2018 (instructed by Michaela Byers, Solicitor) G R Kennett SC with B D Kaplan for the first respondent in S135/2018 (instructed by Australian Government Solicitor) Submitting appearance for the second respondent in all matters Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration and Border Protection v SZMTA CQZ15 v Minister for Immigration and Border Protection BEG15 v Minister for Immigration and Border Protection Immigration – Refugees – Administrative Appeals Tribunal – Refugee Review Tribunal – Review by Tribunal under Pt 7 of Migration Act 1958 (Cth) – Where visa applicants sought review by Tribunal of decisions by delegates of Minister for Immigration and Border Protection to refuse visas – Where Secretary of Department of Immigration and Border Protection gave Tribunal documents considered relevant to Tribunal's review – Where Secretary or officer of Department purported to notify Tribunal that s 438 of Act applied to information contained in provided documents – Where s 438 applies if either of two preconditions concerning confidentiality or public interest in non-disclosure of documents or information met – Where s 438(3) conferred discretions on Tribunal, upon notification that s 438 applies to document or information, to have regard to matter in document or to information and to disclose such matter or information to applicant for review – Where fact of notification not disclosed to visa applicants during Tribunal's review – Where notifications incorrect and invalid – Whether procedural fairness required Tribunal to disclose fact of notification to visa applicants – Whether incorrect and invalid notification resulted in denial of procedural fairness. Administrative law – Judicial review – Jurisdictional error – Procedural fairness – Materiality – Where denial of procedural fairness occurred – Whether denial constitutes jurisdictional error if and only if denial was material in that denial deprived applicant for review of possibility of successful outcome – Whether Tribunal's review affected by jurisdictional error. Words and phrases – "disclosure", "discretion to refuse relief", "document or information", "fact of notification", "incorrect and invalid notification", "jurisdictional error", "material", "onus of proof", "possibility of a successful outcome", "practical injustice", "procedural fairness", "s 438 certificate". Migration Act 1958 (Cth), Pt 7. BELL, GAGELER AND KEANE JJ. Three appeals from judgments of the Federal Court of Australia, each on appeal from a judgment of the Federal Circuit Court of Australia, raise issues concerning the effect on a review by the Administrative Appeals Tribunal under Pt 7 of the Migration Act 1958 (Cth) ("the Act") of a notification to the Tribunal from the Secretary of the Department of Immigration and Border Protection that s 438 of the Act applies in relation to a document or information. Two of the judgments under appeal, CQZ151 and BEG152, were delivered on the same day by a Full Court constituted by Kenny, Tracey and Griffiths JJ. The other judgment under appeal, SZMTA3, was delivered two months earlier by White J exercising alone the appellate jurisdiction of the Federal Court. The Full Court was correct to take the view that the fact of notification triggers an obligation of procedural fairness on the part of the Tribunal to disclose the fact of notification to the applicant for review. Breach of that obligation of procedural fairness constitutes jurisdictional error on the part of the Tribunal if, and only if, the breach is material. The breach is material if it operates to deny the applicant an opportunity to give evidence or make arguments to the Tribunal and thereby to deprive the applicant of the possibility of a successful outcome. The Full Court was also correct to take the view that an incorrect notification results in jurisdictional error if, and only if, the incorrect notification is material, again in the sense that it operates to deprive the applicant of the possibility of a successful outcome. Where materiality is put in issue in an application for judicial review of a decision of the Tribunal, it is a question of fact in respect of which the applicant for judicial review bears the onus of proof. The Full Court was correct to hold in CQZ15 that evidence of the content of notified information can be relevant to the determination of materiality and can on that basis be admissible in such an application. The Full Court was also correct to find on the evidence adduced in BEG15 that the undisclosed and incorrect notification in that case was immaterial. The undisclosed and incorrect notification in SZMTA was similarly immaterial and did not result in jurisdictional error. 1 Minister for Immigration and Border Protection v CQZ15 (2017) 253 FCR 1. 2 BEG15 v Minister for Immigration and Border Protection (2017) 253 FCR 36. 3 SZMTA v Minister for Immigration and Border Protection (2017) 255 FCR 215. Bell To explain those conclusions, it is necessary to commence by surveying the general scheme of Pt 7 of the Act and by noting the statutory consequences for the operation of that scheme which result from the Secretary correctly notifying the Tribunal that s 438 applies in relation to a document or information. Next, it is appropriate to explain at the level of principle why the fact of notification triggers an obligation of procedural fairness on the part of the Tribunal to disclose the fact of notification, why an incorrect notification results in jurisdictional error if the incorrect notification is found to be material, and how materiality is to be determined. Finally, in light of those explanations of principle, it is appropriate to turn to the circumstances of the individual cases. The general scheme of Pt 7 Part 7 of the Act makes provision for review by the Tribunal, in its Migration and Refugee Division, of certain decisions of a delegate of the Minister for Immigration and Border Protection to refuse or to cancel a protection visa4. Making a valid application for review of a delegate's decision enlivens an overarching duty on the part of the Tribunal to review the decision under s 414. Performance of that duty is completed on the Tribunal making a valid decision of its own5, ordinarily either to affirm the delegate's decision6 or to set the delegate's decision aside and substitute a new decision7. Making a valid application for review also enlivens a procedural obligation on the part of the Secretary under s 418(3) to give to the Registrar of the Tribunal all documents in the Secretary's possession or control that are considered by the Secretary to be relevant to the review. The documents need not be confined to those considered by the Secretary to relate specifically to the issues arising in the review and can include, for example, "a reference library of background country information"8. The documents given to the Registrar are 4 Section 411(1)(c) and (d) of the Act. 5 Section 415(1) and (2) of the Act. 6 Section 415(2)(a) of the Act. 7 Section 415(2)(d) of the Act. 8 Muin v Refugee Review Tribunal (2002) 76 ALJR 966 at 974 [24]; 190 ALR 601 at 609; [2002] HCA 30. Bell then available to be taken into account by the Tribunal if and to the extent that the Tribunal itself considers them to be relevant to the review. In performing its overarching duty to review the decision of the delegate, the Tribunal "is not bound by technicalities, legal forms or rules of evidence"9 and is exhorted, as distinct from compelled10, to "act according to substantial justice and the merits of the case"11. Performance of the overarching duty is nevertheless conditioned on material observance of obligations imposed by Pt 7, some of which are expressed, some of which are implicit in the statutory scheme, and some of which are implied through the operation of common law principles of interpretation12. Amongst the procedural obligations to be observed by the Tribunal in the conduct of the review are those expressly imposed on the Tribunal by provisions within Div 4 of Pt 7. Those procedural obligations include an obligation imposed by s 425 to invite the applicant to a hearing "to give evidence and present arguments relating to the issues arising in relation to the decision under review". Those procedural obligations also include obligations imposed by ss 424AA and 424A to give the applicant "clear particulars of any information that the Tribunal considers would be the reason, or a part of the reason, for affirming the decision that is under review". The Tribunal is not obliged by those or other provisions to provide to the applicant all of the information which the Tribunal might ultimately take into account in making its decision on the review13, much less all of the information contained within the documents given by the Secretary to the Registrar under s 418(3). 9 Section 420 of the Act. 10 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 628 [49]-[50], 642-644 [108]-[109], 664-668 [176]-[179]; [1999] HCA 21; Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 372 [96]; [2013] HCA 18. 11 Section 420 of the Act. 12 Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 at 666 [97]; [2012] HCA 31. 13 SZBYR v Minister for Immigration and Citizenship (2007) 81 ALJR 1190 at 1195- 1196 [17]; 235 ALR 609 at 615; [2007] HCA 26. See also Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 92 ALJR 481 at 485 [9]; 353 ALR 600 at 604; [2018] HCA 16. Bell Amongst the obligations to be observed by the Tribunal in the conduct of the review which are implied through the operation of common law principles of interpretation, however, is an obligation to act reasonably in considering and exercising procedural powers expressly conferred on the Tribunal by other provisions within Div 4 of Pt 714. Those procedural powers of the Tribunal include a power conferred by s 427(1)(c) to "give information to the applicant", which is expressed to be subject to ss 438 and 440, as well as powers conferred by s 427(1)(a) to "take evidence on oath or affirmation" and by s 427(1)(d) to "require the Secretary to arrange for the making of any investigation, or any medical examination, that the Tribunal thinks necessary with respect to the review, and to give to the Tribunal a report of that investigation or examination". In addition, the applicant for review has an entitlement under s 423 to give to the Registrar, for transmission to the Tribunal, "a statutory declaration in relation to any matter of fact that the applicant wishes the Tribunal to consider" as well as "written arguments relating to the issues arising in relation to the decision under review". That entitlement is sufficiently broad to encompass an entitlement to make written arguments about how the Tribunal should exercise any one or more of its procedural powers for the purpose of determining the issues arising in relation to the decision under review. Amongst the obligations to be observed by the Tribunal in the conduct of the review which are implicit in the scheme of Pt 7 is the obligation to reconsider the merits of the decision under review "in light of the information, evidence and arguments which are relevant to the application and which are provided to it or which it obtains for itself"15. That obligation is fundamental to the nature of the review for which Pt 7 provides. Whilst it is for the Tribunal to assess the relevance of, and the weight to be attributed to, any item of evidence, the Federal Court has properly recognised that the Tribunal would fail to perform its duty of review if it failed to take account of cogent evidence providing substantial support to the applicant's case16, including any such evidence contained in a document or report provided to it by the Secretary, in the same way that the Tribunal would fail to perform that duty if it failed to take account of a 14 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 351-352 15 Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 236 FCR 593 at 604 [44]. 16 Minister for Immigration and Citizenship v SZRKT (2013) 212 FCR 99 at 130-131 Bell substantial and clearly articulated argument advanced by the applicant in support of that case17. The Tribunal's decision on completion of the review is ordinarily required by s 430 to be recorded in a written statement18 which, amongst other things, "sets out the reasons for the decision"19, "sets out the findings on any material questions of fact"20, and "refers to the evidence or any other material on which the findings of fact were based"21. The section "entitles a court to infer that any matter not mentioned in the s 430 statement was not considered by the Tribunal to be material"22. The operation of s 438 Together with s 437, s 438 operates against the background of the general obligation of the Secretary under s 418(3) to give to the Registrar of the Tribunal all documents in the Secretary's possession or control that are considered by the Secretary to be relevant to the review and the general obligation of the Secretary under s 427(1)(d) to investigate and report where so requested by the Tribunal. Section 437 creates an exception to those obligations. It prohibits the Secretary from giving a document or information to the Tribunal if the Minister certifies in writing that the disclosure of any matter contained in the document or of the information would be contrary to the public interest. Certification by the Minister can be for either of two reasons. One, set out in para (a) of s 437, is that disclosure "would prejudice the security, defence or international relations of Australia". The other, set out in para (b) of s 437, is that disclosure "would involve the disclosure of deliberations or decisions of the Cabinet or of a committee of the Cabinet". 17 Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088 at 1092 [24]-[25]; 197 ALR 389 at 394; [2003] HCA 26. 18 Section 430(1)(a) of the Act. 19 Section 430(1)(b) of the Act. 20 Section 430(1)(c) of the Act. 21 Section 430(1)(d) of the Act. 22 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 346 [69]; [2001] HCA 30. Bell Unlike s 437, s 438 is expressed not to prohibit the Secretary from giving information or a document to the Tribunal, but rather to impose a procedural duty on the Secretary and confer procedural powers on the Tribunal in the event of the Secretary giving the Tribunal information or a document to which the section applies. Section 438 provides: "(1) This section applies to a document or information if: the Minister has certified, in writing, that the disclosure of any matter contained in the document, or the disclosure of the information, would be contrary to the public interest for any reason specified in the certificate (other than a reason set out in paragraph 437(a) or (b)) that could form the basis for a claim by the Crown in right of the Commonwealth in a the judicial proceeding document, or the information, should not be disclosed; or the matter contained that the document, the matter contained in the document, or the information was given to the Minister, or to an officer of the Department, in confidence. If, in compliance with a requirement of or under this Act, the Secretary gives to the Tribunal a document or information to which this section applies, the Secretary: (a) must notify the Tribunal in writing that this section applies in relation to the document or information; and (b) may give the Tribunal any written advice that the Secretary thinks relevant about the significance of the document or information. If the Tribunal is given a document or information and is notified that this section applies in relation to it, the Tribunal: (a) may, for the purpose of the exercise of its powers, have regard to any matter contained in the document, or to the information; and (b) may, if the Tribunal thinks it appropriate to do so having regard to any advice given by the Secretary under subsection (2), disclose any matter contained in the document, or the information, to the applicant. Bell If the Tribunal discloses any matter to the applicant, under subsection (3), the Tribunal must give a direction under section 440 in relation to the information." Section 438, it will be observed, operates at the level of a particular document or particular information. Whether or not the section applies in respect of a particular document or particular information depends on whether one or other of the preconditions set out in either s 438(1)(a) or s 438(1)(b) is met in respect of that document or information. Whether or not such a precondition is met in respect of a document or information is in turn a question of jurisdictional fact as to which the Secretary and the Tribunal must each in practice form a view in order to attempt to comply with the section but which can be authoritatively determined only by a court (subject to appeal), including by the Federal Circuit Court on judicial review of a decision of the Tribunal. The precondition in s 438(1)(a) is met if the Minister, acting within the bounds of reasonableness and on a correct understanding of the law, has certified that the disclosure of any matter contained in the document, or the disclosure of the information, would be contrary to the public interest for a reason specified in the certificate. The reason so specified must be a reason (other than a reason which would permit certification under s 437) that could form the basis for a claim by the Executive Government of the Commonwealth in a court proceeding that the matter contained in the document, or the information, should not be disclosed. Where no ground of privilege or statutory immunity from disclosure is engaged, the reason specified in the certificate must therefore be a reason capable of grounding a claim for public interest immunity from disclosure at common law or under s 130 of the Evidence Act 1995 (Cth). The precondition in s 438(1)(b) is met if the document, the matter contained in the document, or the information in question was given to the Minister, or to an officer of the Department, in confidence. The circumstances in which the document, matter or information was given need not be such as would give rise to an equitable obligation on the part of the recipient to keep the document, matter or information confidential23. If one or other of those preconditions is met in relation to a document or information, including in relation to a document or part of a document which the Secretary has provided to the Registrar in fulfilment of the general obligation 23 Compare para (c) of the definition of "non-disclosable information" in s 5(1) of the Act, considered in Minister for Immigration and Citizenship v Kumar (2009) 238 CLR 448 at 454-455 [17]-[21]; [2009] HCA 10. Bell under s 418(3), the Secretary has a power and a duty under s 438(2)(a) to notify the Tribunal in writing that the section applies in relation to the document or information, coupled with a power under s 438(2)(b) to give the Tribunal such written advice as the Secretary might think relevant about the significance of the document or information. Being notified by the Secretary that a document or information is a document or information to which s 438 applies then has consequences for how the document or information can be dealt with by the Tribunal if the notified document or information is in fact a document or information to which the section applies. First, the Tribunal has a discretion under s 438(3)(a) to have regard to the information or to any matter contained in the document for the purpose of exercising its powers, including for the purpose of making a decision on the review. Implicit in the conferral of that discretion is that the Tribunal has no power to have regard to the information or to any matter contained in the document for the purpose of making a decision on the review unless the discretion is affirmatively exercised. Second, the Tribunal has a discretion under s 438(3)(b), after taking account of such advice as the Secretary may have given to the Tribunal under s 438(2)(b), to disclose to the applicant the information or any matter contained in the document. Implicit in the conferral of that discretion and in the hierarchy of provisions within Pt 7 is that the Tribunal has no power under s 427(1)(c) and no obligation under s 424AA, s 424A or s 425 to disclose to the applicant the information or any matter contained in the document unless the discretion is affirmatively exercised. No doubt, the discretion under s 438(3)(b) must be exercised within the bounds of reasonableness and the obligations imposed by ss 424AA, 424A and 425, where engaged, must be performed to the maximum extent permitted by the reasonable exercise of that discretion. If the Tribunal exercises the discretion under s 438(3)(b) to disclose to the applicant the information or any matter, s 438(4) operates to require the Tribunal to give a direction under s 440. Section 440, to which reference is also made in s 427(1)(c), confers power on the Tribunal to give a direction that evidence or information or the contents of a document given to the Tribunal not be published or otherwise disclosed, either generally or except in a particular manner and to particular persons, if the Tribunal is satisfied that the non-publication or non- Bell disclosure is in the public interest24. Contravention of such a direction is an offence25. Section 440(2)(a) makes clear that giving a direction under s 440 does not "excuse the Tribunal from its obligations" under s 430. Neither the application of s 438 to a document or information nor the making of an order under s 440 in relation to that document or information relieves the Tribunal of its general obligation under s 430 to provide a statement of the reasons for its decision setting out its findings on material questions of fact and referring to the evidence or any other material on which the findings of fact were based. However, there appears to be no reason why a direction under s 440 cannot direct non-disclosure or non-publication of the whole or some part of a statement of reasons or of evidence or information or the contents of any other document, to the extent that such evidence, information or the contents of a document are referred to in a statement of reasons. Procedural fairness The Minister concedes that the consequences for a review under Pt 7 of the Secretary notifying the Tribunal that s 438 applies in relation to a document or information are sufficient for the common law to imply an obligation of procedural fairness on the part of the Tribunal to disclose the fact of notification to the applicant for review unless such an obligation is specifically excluded by the statutory scheme. The concession is rightly made. For completeness it is to be recorded that, contrary to an argument of the appellant in CQZ15, a notification to the Tribunal from the Secretary that s 438 of the Act applies in relation to a document or information is not itself "information" which the Tribunal is empowered and, acting reasonably, obliged to give to the applicant under s 427(1)(c). The term "information" in the context of Div 4 cannot sensibly be read as extending beyond knowledge of facts or circumstances relating to material or documentation of an evidentiary nature26. The reason why the Minister's concession is correct is that procedural fairness ordinarily requires that an applicant for an exercise of administrative 24 Section 440(1) of the Act. 25 Section 440(3) of the Act. 26 See SZBYR v Minister for Immigration and Citizenship (2007) 81 ALJR 1190 at 1196 [18]; 235 ALR 609 at 616, citing VAF v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 236 FCR 549 at 555 [24]. Bell power have an opportunity to tailor the presentation of evidence and the making of submissions to the procedure to be adopted by the decision-maker. Accordingly, procedural fairness ordinarily requires that an applicant be apprised of an event which results in an alteration to the procedural context in which an opportunity to present evidence and make submissions is routinely afforded27. A notification by the Secretary to the Tribunal that a document or information given by the Secretary to the Tribunal is a document or information to which s 438 applies is an event which alters the procedural context within which the Tribunal's duty of review is to be conducted. If valid, the notification erects a procedural impediment to the otherwise unfettered ability of the Tribunal to take into account the document or information if the Tribunal considers it to be relevant to an issue to be determined in the review, constrains the power of the Tribunal under s 427(1)(c), and truncates the specific obligations of the Tribunal under ss 424AA, 424A and 425. The very fact of notification also changes the context in which the entitlement of the applicant under s 423 – to give the Tribunal a written statement in relation to any matter of fact that the applicant wishes the Tribunal to consider and written arguments relating to the issues arising in relation to the decision under review – falls to be exercised. The entitlement under s 423 extends to allowing the applicant to present a legal or factual argument in writing either to contest the assertion of the Secretary that s 438 applies to a document or information, or to argue for a favourable exercise of one or both of the discretions conferred by s 438(3). This entitlement, at least in those specific applications, is capable of meaningful exercise only if the applicant is aware of the fact of a notification having been given to the Tribunal. The submission of the Minister, made in a notice of contention in BEG15 and in a summons seeking special leave to cross-appeal in CQZ15, is that an obligation of procedural fairness on the part of the Tribunal to disclose the fact of notification is excluded by the requirement of s 422B(2) that, in so far as s 438 relates to Div 4 of Pt 7, s 438 must be taken to be an exhaustive statement of the requirements of procedural fairness in relation to the matter with which that section deals. To evaluate that submission, it is necessary to consider s 422B as a whole. 27 Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326 at 339 [43]-[44], 343-344 [62]-[67]; [2015] HCA 40. Bell Appearing at the commencement of Div 4 of Pt 7, s 422B provides: "(1) This Division is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with. Sections 416, 437 and 438 and Division 7A, in so far as they relate to this Division, are taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters they deal with. In applying this Division, the Tribunal must act in a way that is fair and just." Importantly, s 422B is not framed in a way that excludes procedural fairness, which it refers to as "the natural justice hearing rule"28, from the conduct of the review. Rather, the section is framed in a way that is consistent with the implication of an obligation to afford procedural fairness through the operation of a common law principle of interpretation as a condition of the performance by the Tribunal of its duty to conduct the review. The section is also framed in a way which recognises that the precise content of that obligation to afford procedural fairness depends on "the particular statutory framework"29. By providing that specified provisions and groups of provisions are taken to be an exhaustive statement of the requirements of procedural fairness in relation to the "matters" with which they deal, s 422B(1) and s 422B(2) operate to ensure that compliance by the Tribunal with the procedures prescribed by those specified provisions and groups of provisions constitutes compliance with the obligation of the Tribunal to afford procedural fairness in so far as each provision gives specific content to that obligation. The "matters" to which the sub-sections refer are the discrete subject-matters of the provisions. The discrete subject-matter of each provision is indicated by, but not limited to, the terms of each provision30. 28 cf Kioa v West (1985) 159 CLR 550 at 585; [1985] HCA 81. 29 Kioa v West (1985) 159 CLR 550 at 584, quoting Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation (1963) 113 CLR 475 at 504; [1963] HCA 41. 30 Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 267 [41]- [42], 279-280 [78]; [2010] HCA 23. Bell Section 422B(3) reinforces this operation of s 422B(1) and s 422B(2), and complements the general exhortation to the Tribunal to act according to substantial justice and the merits of the case, by requiring the Tribunal's performance of the procedural obligations imposed on it by Div 4 and the Tribunal's exercise of the procedural powers conferred on it by Div 4 to be informed by the same considerations of fairness and justice as those that inform the common law's implication into the statutory scheme of the Tribunal's overall obligation to afford procedural fairness. The design of the sub-section in that way guards against "rigidity" in the application of procedures themselves designed to facilitate partial compliance with the overall obligation of the Tribunal to afford procedural fairness31. Section 422B(2) requires s 416 (the subject-matter of which is the ability of the Tribunal to have regard to information considered and findings made in earlier proceedings), each provision of Div 7A (the subject-matter of which is the manner of giving and receiving documents) and ss 437 and 438 to be treated as an exhaustive statement of the Tribunal's obligation to afford procedural fairness in so far as the subject-matter of those provisions relates to the conduct of the Tribunal's review under Div 4. But in so far as the subject-matter of s 438 relates to the conduct of the Tribunal's review under Div 4, that subject-matter is confined to how the Tribunal is to treat documents and information to which s 438 applies. The section's subject-matter does not extend to the prescription of any consequences, for procedural fairness, of the Secretary providing a notification to the Tribunal under the section. In other words, s 438 is not self- referential. The Minister's submission is for that reason to be rejected. Because procedural fairness requires disclosure of the fact of notification, non-disclosure of the fact of notification constitutes, without more, a breach of the Tribunal's implied obligation of procedural fairness. For such a breach to constitute jurisdictional error on the part of the Tribunal, however, the breach must give rise to a "practical injustice"32: the breach must result in a denial of an 31 cf SAAP v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 294 at 337 [137]; [2005] HCA 24. See Australia, Senate, Migration Amendment (Review Provisions) Bill 2006, Explanatory Memorandum 32 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 14 [37]; [2003] HCA 6. Bell opportunity to make submissions and that denial must be material to the Tribunal's decision33. Incorrect notification If neither of the preconditions in s 438(1) is met in relation to a document or information, the section has no application to that document or information. The Secretary has no duty and no authority under s 438(2)(a) to notify the Tribunal that s 438 applies in relation to it. And the Tribunal has no need and no authority to exercise either of the powers conferred by s 438(3) in relation to it. Thus, an incorrect notification by the Secretary that s 438 applies in relation to a document or information is invalid: the notification is a purported exercise of statutory authority that is devoid of legal effect in relation to that document or information. There is no dispute between the parties that an incorrect, and therefore invalid, notification by the Secretary that s 438 applies in relation to a document or information can give rise to jurisdictional error in the conduct of a review. There is also no dispute between the parties that it is the applicant for judicial review of the decision of the Tribunal who bears the onus of proving that a jurisdictional error has occurred34. There is a dispute between the parties as to what the applicant for judicial review must prove to establish jurisdictional error. The applicant parties (the appellants in CQZ15 and BEG15 and the first respondent in SZMTA) submit that an invalid notification is sufficient of itself to render the conduct of the review unauthorised. They rely alternatively on the reasoning in MZAFZ v Minister for Immigration and Border Protection35 to submit that the Tribunal can in each case be assumed to have acted on the invalid notification in a manner that is contrary to law. The Minister submits jurisdictional error only if the notification causes the Tribunal to fail to comply with some distinct obligation imposed on the Tribunal. Examples might be invalid notification gives rise that an 33 Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326 at 34 Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 616 [67], 623 [91]-[92]; [2011] HCA 1. 35 (2016) 243 FCR 1 at 11 [40]-[44], 15 [65]. Bell where the notification causes the Tribunal to fail to take account of some item of evidence of such significance that the Tribunal is obliged to take it into account, or to fail to give the applicant adequate particulars of information that the Tribunal considers would be the reason, or a part of the reason, for affirming the decision under review, as required by s 424AA or s 424A. None of these submissions can be accepted. The Secretary's provision of an incorrect, and therefore invalid, notification that s 438 applies in relation to a document or information amounts, without more, to an unauthorised act in breach of a limitation within the statutory procedures which condition the performance of the overarching duty of the Tribunal to conduct a review36. Applying the principle of construction recently explained in Hossain v Minister for Immigration and Border Protection37, however, the Act is not to be interpreted to deny legal force to a decision made on a review in the conduct of which there has been a breach of that limitation unless that breach is material. Materiality Materiality, whether of a breach of procedural fairness in the case of an undisclosed notification or of a breach of an inviolable limitation governing the conduct of the review in the case of an incorrect and invalid notification, is thus in each case essential to the existence of jurisdictional error. A breach is material to a decision only if compliance could realistically have resulted in a different decision. Where materiality is in issue in an application for judicial review, and except in a case where the decision made was the only decision legally available to be made, the question of the materiality of the breach is an ordinary question of fact in respect of which the applicant bears the onus of proof. Like any ordinary question of fact, it is to be determined by inferences drawn from evidence adduced on the application. The drawing of inferences can be assisted by reference to what can be expected to occur in the course of the regular administration of the Act. Although it is open to the Tribunal to form and act on its own view as to whether a precondition to the application of s 438 is met, the Tribunal can be expected in the ordinary course to treat a notification by the Secretary that the section applies as a sufficient basis for accepting that the section does in fact apply to a 36 cf Wei v Minister for Immigration and Border Protection (2015) 257 CLR 22 at 32-33 [23]-[24], 35 [32]-[33]; [2015] HCA 51. 37 (2018) 92 ALJR 780 at 788 [29]-[31]; 359 ALR 1 at 9; [2018] HCA 34. Bell document or information to which the notification refers. Treating the section as applicable to a document or information, the Tribunal can then be expected in the ordinary course to leave that document or information out of account in reaching its decision in the absence of the Tribunal giving active consideration to an exercise of discretion under s 438(3). Absent some contrary indication in the statement of the Tribunal's reasons for decision or elsewhere in the evidence, a court on judicial review of a decision of the Tribunal can therefore be justified in inferring that the Tribunal paid no regard to the notified document or information in reaching its decision. In the case of an invalid notification, where the court on judicial review of a decision of the Tribunal can infer that the Tribunal left the notified document or notified information out of account in reaching its decision, the question that still remains is whether there is a realistic possibility that the Tribunal's decision could have been different if it had taken the document or information into account. The court must be careful not to intrude into the fact-finding function of the Tribunal. Yet the court must be alive to the potential for a document or information, objectively evaluated, to have been of such marginal significance to the issues which arose in the review that the Tribunal's failure to take it into account could not realistically have affected the result. Where non-disclosure of a notification has resulted in a denial of procedural fairness, the similar question that remains for the court on judicial review of a decision of the Tribunal is whether there is a realistic possibility that the Tribunal's decision could have been different if the notification had been disclosed so as to allow the applicant a full opportunity to make submissions. Whilst "[i]t is no easy task for a court ... to satisfy itself that what appears on its face to have been a denial of natural justice could have had no bearing on the outcome"38, the task is not impossible39 and can be done in these appeals. In order to inform curial determination both of how the Tribunal in fact acted in relation to the notified document or notified information and of whether its decision could realistically have been different if the relevant breach had not occurred, evidence of the content of the document or information is relevant and admissible. 38 Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145; [1986] HCA 54. 39 cf Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 122 [104], 128 [122]; [2000] HCA 57. Bell Against the background of those principles, the particular circumstances of the three appeals can now be addressed. CQZ15 The appellant, a citizen of Iran, applied for a protection visa which was refused by an officer of the Department acting as a delegate of the Minister. On the same day, another officer of the Department acting as a delegate of the Minister purported to issue a certificate under s 438(1)(a) stating that disclosure of specified information contained in specified parts of the departmental file would be contrary to the public interest. The appellant applied to the Tribunal for review of the first delegate's decision to refuse the visa, following which the Secretary under s 418(3) gave to the Registrar the documents in the Secretary's possession or control considered by the Secretary to be relevant to the review. Subsequently, yet another officer of the Department, acting as a delegate of the Secretary, notified the Tribunal that s 438(1)(b) applied in relation to certain information contained in the documents which had been provided. Not apparent from the appellate record, but of no moment, is the extent if at all to which that information had been the subject of the prior purported certification under s 438(1)(a). Neither the certificate nor the notification was disclosed to the appellant. The Tribunal affirmed the decision of the delegate, following which the appellant applied to the Federal Circuit Court for judicial review of the decision of the Tribunal on grounds which were amended shortly after the decision in MZAFZ to include invalidity of the certificate and want of procedural fairness on the part of the Tribunal in failing to disclose the fact of the certificate and the fact of the notification. The Minister conceded that the certificate was invalid but sought to argue that the notification was valid, and that the information which was the subject of the certificate and the information which was the subject of the notification had no bearing and could have had no bearing on the Tribunal's decision. To support that argument, the Minister sought to tender an affidavit exhibiting the documents which had been the subject of the certificate and the notification. The Federal Circuit Court rejected the tender40. The Federal Circuit Court went on to hold that the invalidity and non-disclosure had resulted in 40 CQZ15 v Minister for Immigration and Border Protection (2016) 315 FLR 127 at Bell jurisdictional error and to make orders in the nature of certiorari and mandamus directed to the Tribunal41. The Full Court of the Federal Court allowed an appeal by the Minister, set aside the orders of the Federal Circuit Court and remitted the matter for redetermination by the Federal Circuit Court, holding that the evidence sought to be adduced by the Minister was at least potentially admissible as relevant to a determination by the Federal Circuit Court of the materiality of the denial of procedural fairness constituted by the failure to disclose the fact of notification42. For reasons already elaborated, the Full Court was correct to so hold. Contrary to the argument of the appellant, the result is not in tension with the earlier decision of a differently constituted Full Court of the Federal Court in Minister for Immigration and Border Protection v Singh43. There, for reasons broadly consistent with those stated in these reasons for judgment in relation to notification under s 438, notification under s 375A was held to enliven an obligation of procedural fairness on the part of the Tribunal to disclose the fact of notification to the applicant for review under Pt 5 of the Act. Conspicuously, no issue of materiality was raised in that case. The Full Court recorded the absence of any submission that the information subject to the certificate was irrelevant to the issues in the review and was careful to add that "[s]uch a submission would have required, for its assessment, that the Court examine the material [for] itself"44. BEG15 The appellant, a Sri Lankan national, applied for a protection visa which was refused by a delegate of the Minister. The appellant applied to the Refugee Review Tribunal (before its amalgamation with the Administrative Appeals Tribunal) for review of the decision of the delegate. After a hearing, the Tribunal affirmed the decision of the delegate. An application by the appellant to the Federal Circuit Court for judicial review of that initial decision of the Tribunal 41 CQZ15 v Minister for Immigration and Border Protection [2017] FCCA 130 at 42 Minister for Immigration and Border Protection v CQZ15 (2017) 253 FCR 1 at 18- 43 (2016) 244 FCR 305. 44 (2016) 244 FCR 305 at 310 [16]. Bell resulted in it being quashed by an order in the nature of certiorari made by consent. The Tribunal, differently constituted, after another hearing, again affirmed the decision of the delegate. On an application by the appellant to the Federal Circuit Court for judicial review of that further decision of the Tribunal, the Minister drew to the attention of that Court the existence of a certificate which had been purportedly issued by a delegate of the Minister under s 438(1)(a) in the period between the quashing of the initial decision and the conduct of the second hearing. The certificate had been notified to the Tribunal in purported compliance with s 438(2)(a) but had not been disclosed to the appellant. The Minister conceded that the certificate was invalid, from which it followed that the notification was also invalid. The certificate covered three documents on the departmental file, all of which were in evidence before the Federal Circuit Court. All three documents related to the disposition of the application for judicial review of the initial decision of the Tribunal. The first document recorded that the consent order had been made after a review by the Department of the decision record, confirmed by advice from counsel, revealed "a probable error of law". The second document briefly summarised the initial decision of the Tribunal and went on to explain that the Tribunal in the initial decision had "failed to apply the correct test for complementary protection". The third document noted that the subject-matter of the review would in consequence be referred to the Tribunal for reconsideration. The Federal Circuit Court dismissed the application for judicial review of the further decision of the Tribunal, finding that the information in the documents covered by the certificate was largely known to the appellant, was not relevant to the decision to be made by the Tribunal, had not in fact been taken into account by the Tribunal and could have made no difference to the outcome of the review45. The Full Court of the Federal Court found the decision of the Federal Circuit Court to contain no appealable error46. That conclusion was correct. Apart from making arguments at the level of principle which have already been addressed, the appellant draws attention to a sentence within the summary of the initial decision of the Tribunal contained in the second of the documents which stated that the Tribunal in the initial decision did not accept the appellant's 45 BEG15 v Minister for Immigration and Border Protection (2016) 315 FLR 196 at 46 BEG15 v Minister for Immigration and Border Protection (2017) 253 FCR 36 at 44 Bell claims "[i]n light of inconsistent evidence"47. The appellant seeks to characterise the statement as in the nature of a confidential submission to the Tribunal by an officer of the Department, adverse to the appellant's credit and capable of influencing the Tribunal in its further decision, to which in fairness he ought to have been given an opportunity to respond. The appellant seeks to draw an analogy to the facts in Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs, where jurisdictional error was found to have resulted from non-disclosure of an unsolicited letter containing an allegation that the applicant had committed murder in his country of origin, in circumstances where the Tribunal's statement of reasons for affirming the delegate's decision to refuse to grant the applicant a protection visa indicated that the Tribunal had read the letter and chose to give "no weight" to the allegation48. That characterisation cannot be accepted and the analogy is inapt. The statement was no more than a short accurate description of the Tribunal's reasons for the initial decision which were already known to the appellant and which, under s 416 when read with s 422B(2), were available to be taken into account by the Tribunal in reaching the further decision without notice to the appellant and without thereby breaching an obligation of procedural fairness49. The task of the Tribunal as differently constituted was obviously to make an independent assessment of the merits of the appellant's claims, including by reference to its own independent assessment of his credit, and there is no basis for considering that the Tribunal was, or was susceptible of being, influenced in that assessment by anything that had gone before. The Tribunal's reasons for the subsequent decision refer to the existence of the initial decision as an historical fact and to the fact of it having been quashed, but contain nothing to suggest that the Tribunal in reaching that further decision had relevant regard to the reasons for the initial decision. SZMTA The first respondent, a citizen of Bangladesh, made an application for a protection visa which was refused by a delegate of the Minister in a decision which was affirmed by the Refugee Review Tribunal. After the Act was amended to provide for a protection visa to be granted on complementary 47 See BEG15 v Minister for Immigration and Border Protection (2016) 315 FLR 196 48 (2005) 225 CLR 88 at 92 [5], 96-98 [18]-[21], 99 [27]; [2005] HCA 72. 49 MZZZW v Minister for Immigration and Border Protection (2015) 234 FCR 154 at Bell protection grounds50, the first respondent exercised a judicially recognised entitlement under the Act51 to make a second application for a protection visa. The second application was refused by another delegate of the Minister in a decision which was affirmed by the Administrative Appeals Tribunal. An application by the first respondent for judicial review of the decision of the Administrative Appeals Tribunal was dismissed by the Federal Circuit Court52. The first respondent then appealed to the Federal Court which was constituted for the purpose of the appeal by White J alone. Not raised before the Federal Circuit Court, but permitted to be raised by an amended notice of appeal before the Federal Court, was the effect on the Tribunal's decision of a notification purportedly made under s 438 of the Act53. It was common ground that the Tribunal had not disclosed the fact of the notification to the first respondent. The evidence before the Federal Court nevertheless established that the first respondent had previously been provided with copies of all of the documents the subject of the notification in response to a request under the Freedom of Information Act 1982 (Cth)54. White J found that "[t]he notification was defective because it purported to apply to at least some documents and information which could not reasonably be regarded as having been given to the Minister or to an officer of the Department 'in confidence'" so as to meet the precondition in s 438(1)(b)55. His Honour did not specify the documents and information to which the finding related but indicated that they included "documents which may have assisted the [first respondent], for example, [a] letter of support ... from the [first respondent's] colleague [and] documents containing summaries of the [first respondent's] claims"56. Nor did his Honour reach a firm conclusion about the legal 50 Migration Amendment (Complementary Protection) Act 2011 (Cth). 51 SZGIZ v Minister for Immigration and Citizenship (2013) 212 FCR 235 at 245 52 SZMTA v Minister for Immigration & Border Protection [2016] FCCA 1329. 53 SZMTA v Minister for Immigration and Border Protection (2017) 255 FCR 215 at 54 (2017) 255 FCR 215 at 224 [42]. 55 (2017) 255 FCR 215 at 226 [54]. 56 (2017) 255 FCR 215 at 227 [59]. Bell consequences of the finding, stating that it was not necessary to decide whether the notification was invalid and that it was sufficient to act on the basis that the notification was at least "misleading"57. Noting that jurisdictional error was "not to be determined by reference only to whether the [first respondent] had the opportunity to make submissions about the matters in the identified documents which were adverse to him", his Honour speculated as to how the Tribunal "may" have treated information in the identified documents in reaching the decision under review and ultimately found jurisdictional error by virtue of "the prospect that, by reason of the presence of the delegate's notification, the Tribunal did not have regard to information in the identified documents which may have assisted the [first respondent]"58. His Honour's approach was erroneous in four respects. First, his Honour failed to find on the evidence before the Court whether, and if so what, documents and information covered by the certificate had in fact not been given to the Minister or to an officer of the Department in confidence. Second, his Honour failed to hold that the notification was invalid in its application to documents and information which had not in fact been given in confidence. Third, his Honour failed to make a finding as to whether the Tribunal had in fact failed to take such documents and information into account in reaching its decision. Finally, in the event of finding that the Tribunal had failed to take such documents and information into account, his Honour erred in not going on to determine whether the Tribunal's decision could have been different if the Tribunal had taken the documents and information into account. Treating the finding that the notification applied to at least some documents and information which could not reasonably be regarded as documents and information which met the precondition in s 438(1)(b) as encompassing a finding that those documents and that information did not meet the precondition, the legal consequence was that those documents and that information were not documents and information to which s 438 applied and that the notification was invalid in its application to them. In the absence of any reference to the documents or information in the Tribunal's statement of reasons, the appropriate inference to be drawn is that the Tribunal accepted on the basis of the notification that s 438 applied to the documents and information and accordingly took no account of the documents or information in reaching its decision. Having regard to the contents of the documents before the Tribunal, 57 (2017) 255 FCR 215 at 226 [54], 227 [59]. 58 (2017) 255 FCR 215 at 227 [60]. Bell however, the appropriate further inference to be drawn was that taking them into account could not realistically have made any difference to the Tribunal's decision. To illustrate that conclusion, it is sufficient to refer to the letter of support to which his Honour made reference and which was the focus of submissions in this appeal. The significance of the Tribunal's failure to take the letter into account is to be evaluated in the context of the Tribunal's rejection on credibility grounds of the factual basis of the first respondent's central claim to fear harm, were he to return to Bangladesh, by reason of having been an active member of the Buddhist community. The Tribunal's statement of reasons explained in detail, with reference to his evidence given at the hearing before it, why it could not accept critical elements of his story of having experienced violence and discrimination. The Tribunal went on to record in its statement of reasons that it had formed its adverse view of the first respondent's credibility taking into account a considerable number of documents and letters of support for him including from senior identified members of the Buddhist community in Australia. The Tribunal explained that it had given those documents little weight in assessing the first respondent's credibility because of their generality and because it was clear that none of the writers had witnessed any of the specific incidents which the first respondent claimed to have occurred. The particular letter of support which it can be inferred was not taken into account by the Tribunal by reason of the notification was of the same nature: it was a single- paragraph letter to a Senator from a member of the Buddhist community in Australia referring generally to the adverse treatment of religious minorities in Bangladesh and urging "on the grounds of humanity and compassion" that the first respondent and his family be given "asylum in Australia". It is simply not realistic to conclude that yet another communication of that nature could have made any difference to the Tribunal's evaluation of the first respondent's credibility. To the extent that the first respondent seeks to support the conclusion of jurisdictional error on the basis that non-disclosure of the fact of notification was in breach of the Tribunal's obligation of procedural fairness, the same answer applies. Accepting that the breach denied the first respondent an opportunity to make submissions on the validity of the notification and to present his evidence and make submissions in the knowledge that the documents and information which were the subject of the notification might not be taken into account by the Tribunal, the critical fact remains that the documents and information were of such marginal significance that the denial could not realistically have made any difference to the result. Bell Orders In CQZ15 the appeal is to be dismissed with costs and the application for special leave to cross-appeal is also to be dismissed with costs. In BEG15 the appeal is to be dismissed with costs. In SZMTA the appeal is to be allowed with costs, the orders of the Federal Court are to be set aside and, in their place, the appeal to that Court from the Federal Circuit Court is to be dismissed with costs. NettleJ NETTLE AND GORDON JJ. These appeals concern the review by a Tribunal, under Pt 7 of the Migration Act 1958 (Cth)59, of a refusal to grant a protection visa where a notification was issued, or purportedly issued, under s 438(2) of the Migration Act by the Secretary of the Department of Immigration and Border Protection to the Tribunal, and neither the existence of the notification, its contents, nor the documents covered by the notification, were disclosed to the applicant for review. In those circumstances, what is "required in order to ensure that the decision is made fairly in the circumstances having regard to the legal framework within which the decision is to be made"60? The legal framework is to be found in Pt 7 of the Migration Act. Section 43861 confers discretions on the Tribunal, in the context of a review under Pt 7 of the Migration Act, in relation to a document or information given to the Tribunal to which the section applies, to "have regard to any matter contained in the document, or to the information"62 and to "disclose any matter contained in the document, or the information, to the applicant"63. Relevantly, s 438 applies to a document or information only if one of two pre-conditions is met: first, if the Minister "has certified, in writing, that the disclosure of any matter contained in the document, or the disclosure of the information, would be contrary to the public interest for any reason specified in the certificate ... that could form the basis for a claim by the Crown in right of the Commonwealth in a judicial proceeding that the matter contained in the document, or the information, should not be disclosed"64 or, second, if the document, the matter contained in the 59 Where a distinction must be made in these reasons between versions of the Migration Act, dates will be provided. For BEG15, the applicable version of the Act is that compiled 18 April 2015. For CQZ15 and SZMTA, the applicable version of the Act is that compiled 1 July 2015. 60 Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326 at 335 [30]; [2015] HCA 40. 61 Inserted into the Migration Act by the Migration Reform Act 1992 (Cth) as part of a suite of reforms to the migration legislation: Australia, House of Representatives, Migration Reform Bill 1992, Explanatory Memorandum at 2 [1]-[5]. 62 Migration Act, s 438(3)(a). 63 Migration Act, s 438(3)(b). 64 Migration Act, s 438(1)(a). NettleJ document, or the information "was given to the Minister, or to an officer of the Department, in confidence"65. Here, the Secretary's provision of an incorrect, and therefore invalid, notification that s 438 applied to a document or information, without more, amounted to an unauthorised act in breach of a limitation within the statutory procedures which conditioned the performance of the overarching duty of the Tribunal to conduct a review. As was said in Minister for Immigration and Border Protection v WZARH66: "Where ... the procedure adopted by an administrator can be shown itself to have failed to afford a fair opportunity to be heard, a denial of procedural fairness is established by nothing more than that failure, and the granting of curial relief is justified unless it can be shown that the failure did not deprive the person of the possibility of a successful outcome. The practical injustice in such a case lies in the denial of an opportunity which in fairness ought to have been given." (citation omitted) (emphasis added) As will be explained later in these reasons, that was the position here. The procedure adopted by the decision-maker, the Tribunal, failed to afford each applicant a fair opportunity to be heard. As the Full Court of the Federal Court of Australia correctly concluded in BEG15 v Minister for Immigration and Border Protection67 and Minister for Immigration and Border Protection v CQZ1568, notification under s 438(2) triggers an obligation of procedural fairness on the part of the Tribunal to disclose the fact of the notification to the applicant. A breach of that obligation of procedural fairness constitutes jurisdictional error. There is then the question of whether the court should exercise its discretion to refuse relief because the breach of obligation did not deprive the person of the possibility of a successful outcome. In BEG15 and SZMTA, relief would have been futile because the contents of the undisclosed and incorrect notification did not deprive the person of the possibility of a successful outcome. In CQZ15, the position is different. The Full Court were correct to 65 Migration Act, s 438(1)(b). 66 (2015) 256 CLR 326 at 342-343 [60]. 67 (2017) 253 FCR 36. 68 (2017) 253 FCR 1. NettleJ hold69 that evidence of the documents subject to a s 438 certificate may be relevant for the purpose of establishing that, if there were a denial of procedural fairness, the Court should nonetheless have refused relief in the exercise of its discretion. First, however, it is necessary to say something more about the nature of jurisdictional error and, then, why the Tribunal's failure to inform an applicant that it has received notification that s 438 applies in relation to a document or information, without more, constitutes a jurisdictional error. Jurisdictional error The categories of jurisdictional error are not closed70. Jurisdictional error by a statutory decision-maker includes identifying a wrong issue; asking the wrong question; ignoring relevant material; relying on irrelevant material; in some cases, making an erroneous finding or reaching a mistaken conclusion; and failing to observe some applicable requirement of procedural fairness71. As McHugh, Gummow and Hayne JJ said in Minister for Immigration and Multicultural Affairs v Yusuf72: "What is important, however, is that identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law. Further, doing so results in the decision-maker exceeding the authority or powers given by the relevant statute. In other words, if an error of those types is made, the decision-maker did not have authority to make the decision that was made; he or she did not have jurisdiction to make it." (emphasis added) In the context of the exercise of statutory powers, the question is whether the decision-maker has exercised, or not exceeded, the jurisdiction conferred by 69 CQZ15 (2017) 253 FCR 1 at 18-19 [87]. 70 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 351 [82]; [2001] HCA 30; Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 573 [71], 574 [73]; [2010] HCA 1. 71 Craig v South Australia (1995) 184 CLR 163 at 179; [1995] HCA 58; Kirk (2010) 239 CLR 531 at 572 [67]; Hossain v Minister for Immigration and Border Protection (2018) 92 ALJR 780 at 795-796 [70]-[72]; 359 ALR 1 at 19; [2018] HCA 34. 72 (2001) 206 CLR 323 at 351 [82]. NettleJ the statute. This is because the central premise of jurisdictional error is as articulated by Brennan J in Attorney-General (NSW) v Quin73: "The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone. The consequence is that the scope of judicial review must be defined not in terms of the protection of individual interests but in terms of the extent of power and the legality of its exercise." (emphasis added) The question, and the answer, as to whether jurisdictional error is made out is thus to be found in the statute74. It is by construing the statute that conferred the power, so as to understand the limits of the power, that it is possible to determine whether a decision-maker has made an error, and whether any error is jurisdictional75. Of course, that process of construction does not occur in a vacuum but is shaped by reference to principles and traditions of the common law. But for present purposes it is unnecessary to enter the debate as to whether the rules underpinning grounds of review are better understood as statutory implications or as arising from the common law76. A finding of 73 (1990) 170 CLR 1 at 35-36; [1990] HCA 21. 74 See Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 372-375 [34]-[41], 389-391 [92]-[93]; [1998] HCA 28; Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 152-154 [43]-[44]; [2000] HCA 5; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 140 [160]; [2000] HCA 57. See also Gageler, "The Legitimate Scope of Judicial Review" (2001) 21 Australian Bar Review 279 at 287; Selway, "The Principle Behind Common Law Judicial Review of Administrative Action – The Search Continues" (2002) 30 Federal Law Review 217 at 227. 75 See Project Blue Sky (1998) 194 CLR 355 at 372-373 [34], quoting Morton v Union Steamship Co of New Zealand Ltd (1951) 83 CLR 402 at 410; [1951] HCA 42; Hossain (2018) 92 ALJR 780 at 794-795 [66]-[67]; 359 ALR 1 at 18 [66]-[67]. See also Kioa v West (1985) 159 CLR 550 at 609, 614; [1985] HCA 81. 76 See Gageler, "The Underpinnings of Judicial Review of Administrative Action: Common Law or Constitution?" (2000) 28 Federal Law Review 303 at 305-306, (Footnote continues on next page) NettleJ jurisdictional error is a conclusion that the decision-maker has failed to comply with an essential pre-condition to, or limit on, the valid exercise of the particular statutory power. It reflects a distinction between acts unauthorised by law, and acts that are authorised77. What then are the consequences of a finding that a decision is affected by jurisdictional error? The decision is properly to be regarded as no decision at all78. However, after jurisdictional error has been established, there are two possible further enquiries. The first is whether, as a matter of statutory construction, a purported decision affected by jurisdictional error may be treated as having had some legal effect until set aside79. That, again, is an exercise in statutory construction. The question is whether the decision, although infected with error, has some legal consequence. The legal and factual consequences of the decision, if any, will depend upon the statute. That issue does not arise in these appeals. The second is whether to exercise the residual discretion to refuse relief, after jurisdictional error has been established, if no useful result could ensue80. The residual discretion to refuse relief entails a different and separate exercise from the identification of jurisdictional error. It looks to the utility of another hearing81, although it is not confined to being "forward-looking". These two enquiries should not be confused with the anterior issue of whether breaches of a provision of a statute, expressly or impliedly, are to be 312-313. See also Gageler, "The Legitimate Scope of Judicial Review" (2001) 21 Australian Bar Review 279 at 287. 77 See Selway, "The Principle Behind Common Law Judicial Review of Administrative Action – The Search Continues" (2002) 30 Federal Law Review 78 Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 614-615 [51], 616 [53]; [2002] HCA 11. See also Craig (1995) 184 CLR 163 at 179, quoted in Kirk (2010) 239 CLR 531 at 572 [67]. 79 See Bhardwaj (2002) 209 CLR 597 at 614 [50]. 80 See Hossain (2018) 92 ALJR 780 at 796 [74]; 359 ALR 1 at 20, quoting R v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd (1949) 78 CLR 389 at 400; [1949] HCA 33. See also Hossain (2018) 92 ALJR 780 at 790 [43]; 359 ALR 1 at 11-12. 81 Hossain (2018) 92 ALJR 780 at 790 [43], 796 [74]; 359 ALR 1 at 11-12, 20. NettleJ treated as depriving the decision-maker of power82 − or, put in different terms, asking whether it "was a purpose of the legislation that an act done in breach of the provision should be invalid"83. The division in approach between finding whether the jurisdictional error, and, separately, considering consequences that flow from a finding of jurisdictional error, is important. there was As the plurality explained in Plaintiff S157/2002 v The Commonwealth84: "The reservation to this Court by the Constitution of the jurisdiction in all matters in which the named constitutional writs or an injunction are sought against an officer of the Commonwealth is a means of assuring to all people affected that officers of the Commonwealth obey the law and neither exceed nor neglect any jurisdiction which the law confers on them. The centrality, and protective purpose, of the jurisdiction of this Court in that regard places significant barriers in the way of legislative attempts (by privative clauses or otherwise) to impair judicial review of administrative action. Such jurisdiction exists to maintain the federal compact by ensuring that propounded laws are constitutionally valid and ministerial or other official action lawful and within jurisdiction. In any written constitution, where there are disputes over such matters, there must be an authoritative decision-maker. Under the Constitution of the Commonwealth the ultimate decision-maker in all matters where there is a contest, is this Court. The Court must be obedient to its constitutional function." (emphasis added) That passage recognises that people affected directly or indirectly by administrative decisions must know where they stand85. A statutory power is to be exercised under, and according to, the terms of the statute. If the power is exercised in excess of jurisdiction, the invalidity cannot be unwound or cured by a court exercising its discretion to refuse to grant relief. The question of whether jurisdictional error is made out, and the separate question of what consequences flow from a finding of jurisdictional error, are and must remain distinct; because ultimately they are governed by different enquiries and imperatives. In particular, in relation to jurisdictional error, decision-makers and those affected by the decisions of decision-makers are entitled to expect that decisions 82 Hossain (2018) 92 ALJR 780 at 794 [67]; 359 ALR 1 at 18. 83 Project Blue Sky (1998) 194 CLR 355 at 390 [93]. 84 (2003) 211 CLR 476 at 513-514 [104]; [2003] HCA 2. 85 Bhardwaj (2002) 209 CLR 597 at 603 [8]. NettleJ will be valid and enforceable under and according to the statute and not under a statute subject to some margin of error or principle of construction described as "materiality". As just explained, jurisdictional error involves a distinction between acts authorised by law and acts that are not authorised by law. And this distinction requires working out what acts the relevant law authorises. That is a question of statutory construction. Certainly, courts make assumptions in relation to statutory power. Courts assume, for example, that Parliament intends that statutory powers be exercised subject to certain implied requirements, including that of procedural fairness86. Further, courts accept that Parliament intends that some acts done in breach of certain statutory provisions should not result in invalidity87. But acknowledging and accepting those assumptions does not mean that the exercise of statutory powers in accordance with the laws which underpin them is subject to some general implied requirement of "materiality". Parliament cannot be taken to intend that a decision-maker need only comply with laws to the extent that failure to comply would not bring about a different result. Any such conception would be contrary to the notion, central to the conceptual foundations of judicial review, that everyone (including a decision-maker) is bound by the law88. The only place for that kind of analysis (about the materiality of the error to the applicant) is in the exercise of the court's discretion whether to grant relief after jurisdictional error is made out. Further, whilst the concept of "materiality" has been a focus in certain decisions in England89, the approach there must be understood against a backdrop 86 See Kioa (1985) 159 CLR 550 at 609, 612. 87 See Project Blue Sky (1998) 194 CLR 355 at 388-389 [92]. 88 See Quin (1990) 170 CLR 1 at 35: "The essential warrant for judicial intervention is the declaration and enforcing of the law affecting the extent and exercise of power: that is the characteristic duty of the judicature as the third branch of government." 89 See, eg, Glynn v Keele University [1971] 1 WLR 487; [1971] 2 All ER 89; Malloch v Aberdeen Corporation [1971] 1 WLR 1578 at 1582, 1594-1595, 1600; [1971] 2 All ER 1278 at 1283, 1293-1294, 1298; Cheall v Association of Professional Executive Clerical and Computer Staff [1983] 2 AC 180; cf R v Chief Constable of the Thames Valley Police; Ex parte Cotton [1990] IRLR 344 at 350, 351; Aronson, Groves and Weeks, Judicial Review of Administrative Action and Government Liability, 6th ed (2017) at 484 [7.380]. See also Hossain (2018) 92 ALJR 780 at 793-794 [65]; 359 ALR 1 at 17, citing R (Kambadzi) v Secretary of State for the Home Department [2011] 1 WLR 1299 at 1314 [31], [33], 1325 [69]; [2011] 4 All ER 975 at 993, 1004, R (Lumba) v Secretary of State for the Home Department (Footnote continues on next page) NettleJ where the distinction between jurisdictional and non-jurisdictional error has been reduced to a "vanishing point"90. It would be wholly inappropriate to import such a concept into this country, where the distinction between jurisdictional error and non-jurisdictional error is the essence of judicial review. Making materiality of error a criterion of jurisdictional error should be rejected for two further reasons. First, it would impose the onus of establishing "materiality" on the applicant. That is reason in itself to reject it. As noted above, a finding of jurisdictional error means that the decision is to be regarded as a nullity. Thereafter, it is for the decision-maker, if seeking to have the court exercise its discretion to refuse to grant the relief that would otherwise follow, to establish that the relief would be futile in the applicant's circumstances. To shift the onus of proof of materiality to the applicant would put in doubt the fundamental principle that a statutory power is to be exercised under, and according to, the terms of the statute. To repeat, a person affected by a decision made by an exercise of statutory power is entitled to apply for a decision and have a decision made by a decision-maker under, and in accordance with, the terms of the statute, not the terms of the statute subject to some level of materiality that the person is obliged to identify after the decision has been made. The playing field is set by the statute, not the decision-maker or the court on review. Of course, an applicant must demonstrate that there was error and that the error was jurisdictional. For any claim of denial of procedural fairness, an applicant must demonstrate that the impugned procedure deprived them of a fair opportunity to be heard91. But that involves demonstrating that there was a purported exercise of some statutory power (of which the exercise is conditioned by obligations of procedural fairness) that was not within power and that it was adverse to the applicant. The concern is to ascertain whether the decision was within power. If the decision was not within power, then it is invalid92. It cannot [2012] 1 AC 245 at 275 [68], 312 [207] and R (Cart) v Upper Tribunal [2012] 1 AC 663 at 702 [110]. 90 Hossain (2018) 92 ALJR 780 at 793-794 [65]; 359 ALR 1 at 17, citing Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147, R v Hull University Visitor; Ex parte Page [1993] AC 682 at 701-702 and R (Cart) v Upper Tribunal [2012] 1 AC 663 at 683 [39], 702 [110]. 91 WZARH (2015) 256 CLR 326 at 342-343 [60]. See also Ex parte Aala (2000) 204 CLR 82 at 122 [103]-[104]. 92 Project Blue Sky (1998) 194 CLR 355 at 372-373 [34]-[36]. NettleJ be a little bit invalid or a little bit beyond power. There is only one answer – yes or no. Second, to shift the onus of proof would fundamentally change the nature of judicial review. Instead of a court concluding that an act or omission constitutes an error going to jurisdiction – meaning that the decision is invalid and that relief should be granted subject to the exercise of the court's discretion to refuse relief – it would become a form of merits review where jurisdictional error is found only if the breach is material to the applicant for review because it has denied that applicant the possibility of a successful outcome. That would have very large consequences for courts of review. Part 7 of the Migration Act Part 7 of the Migration Act provided, in the case of BEG15, for the review of "RRT-reviewable decisions" by the Refugee Review Tribunal (as it then was)93, and provided (and continues to provide), in the cases of CQZ15 and SZMTA, for the review of "Part 7 reviewable decisions" by the Administrative Appeals Tribunal94. Part 7-reviewable decisions include decisions to refuse or to cancel a protection visa95. Once a valid application for review96 is made, the Tribunal must review the decision97. The Registrar of the Tribunal must give the Secretary written notice of the application98. The Secretary then has ten working days to give to the Registrar a statement about the decision under review that sets out the findings of fact made by the person who made the decision, refers to the evidence on which those findings were based and gives reasons for the decision99. The Secretary must also, "as soon as is practicable after being notified of the application", give to the Registrar "each other document ... that is in the 93 Migration Act compiled 18 April 2015, s 411. 94 Migration Act compiled 1 July 2015, s 411. 95 Migration Act, s 411(1)(c)-(d). 96 Migration Act, s 412. 97 Migration Act, s 414(1). 98 Migration Act, s 418(1). 99 Migration Act, s 418(2). NettleJ Secretary's possession or control and is considered by the Secretary to be relevant to the review of the decision"100. The way the Tribunal is to operate is addressed in Div 3 of Pt 7. The Tribunal is to pursue an objective of providing a mechanism of review that is "fair, just, economical, informal and quick"101. It is not bound by technicalities, legal forms or rules of evidence102. It "must act according to substantial justice and the merits of the case"103. The way the Tribunal is to operate is the product of the interaction between the three branches of government established by the Constitution104: as a matter of statutory construction, the common law usually will imply a condition that a power conferred by a statute on the executive branch be exercised with procedural fairness to those whose interests may be adversely affected by the exercise of that power105. Here, the conduct of a review under Pt 7 is addressed in Div 4. The Tribunal must invite an applicant to appear before it to give evidence and present arguments relating to the issues arising in relation to the decision under 100 Migration Act, s 418(3). See also Muin v Refugee Review Tribunal (2002) 76 ALJR 966 at 973 [18]-[20], 985-988 [100]-[112]; 190 ALR 601 at 608-609, 626-629; [2002] HCA 30. 101 s 420(1) of the Migration Act compiled 18 April 2015. Section 420(1) was deleted by the Tribunals Amalgamation Act 2015 (Cth), with effect from 1 July 2015. The objective remains applicable to the Tribunal as a result of the substitution of a new s 2A to the Administrative Appeals Tribunal Act 1975 (Cth). See also Australia, Senate, Tribunals Amalgamation Bill 2014, Explanatory Memorandum 102 s 420(2)(a) of the Migration Act compiled 18 April 2015; s 420(a) of the Migration Act compiled 1 July 2015. 103 s 420(2)(b) of the Migration Act compiled 18 April 2015; s 420(b) of the Migration Act compiled 1 July 2015. See Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 628 [49]-[50], 642-644 [108]-[109], 664-668 [176]-[179]; [1999] HCA 21; Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 372 [96]; [2013] HCA 18. 104 Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 at 666 [97]; [2012] HCA 31, citing Zheng v Cai (2009) 239 CLR 446 at 455-456 [28]; [2009] HCA 52. 105 Plaintiff S10/2011 (2012) 246 CLR 636 at 666 [97], citing Ex parte Aala (2000) 204 CLR 82 at 100-101 [39]-[41]. NettleJ review106. That obligation sets the boundaries of the playing field. The phrase "the issues arising in relation to the decision under review" is central to the operation of Pt 7. An applicant is entitled to know of, and therefore be in a position to respond to, the issues arising in relation to the decision under review. An applicant is entitled to know what is in play. Otherwise it is difficult to see how a Tribunal could be said to be pursuing an objective of providing a mechanism of review that is fair and just107. Consistent with, and building on, the premise that an applicant is entitled to know of the issues arising in relation to the decision under review, other provisions in Pt 7 expressly provide for notification to the applicant of, and for the applicant to respond to, those issues. First, the applicant for review is entitled to give to the Registrar a statutory declaration in relation to any matter of fact that the applicant wishes the Tribunal to consider and written arguments relating to the issues arising in relation to the decision under review108. Second, the Tribunal must: give an applicant "clear particulars of any information that the Tribunal considers would be the reason, or a part of the reason, for affirming the decision that is under review"; ensure so far as is reasonably practicable that the applicant understands why it is relevant to the review and the consequences of it being relied on in affirming the decision that is under review; and invite the applicant to comment on or respond to it109. Of course, that obligation does not extend to providing an applicant with all of the information which the Tribunal might ultimately take into account in making its decision on the review110. And the obligation does not arise if the Tribunal considers that it should decide the review in the applicant's favour on the basis of the material before it111. 106 Migration Act, s 425(1). 107 Migration Act, s 422B(3). 108 Migration Act, s 423(1). 109 Migration Act, s 424A(1). 110 See SZBYR v Minister for Immigration and Citizenship (2007) 81 ALJR 1190 at 1195-1196 [15]-[17]; 235 ALR 609 at 615; [2007] HCA 26. See also Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 92 ALJR 481 at 485 [9]; 353 ALR 600 at 604; [2018] HCA 16. 111 Migration Act, s 425(2)(a). See also Migration Act, s 425(2)(b)-(c). NettleJ Third, for the purpose of the review, the Tribunal may take sworn evidence112, summon a person to appear before the Tribunal113, "require the Secretary to arrange for the making of any investigation, or any medical examination, that the Tribunal thinks necessary with respect to the review, and to give to the Tribunal a report of that investigation or examination"114 and, subject to ss 438 and 440, give information to the applicant and to the Secretary115. Fourth, the Tribunal in the conduct of the review must consider the merits of the decision under review "in light of the information, evidence and arguments which are relevant to the application and which are provided to it or which it obtains for itself"116. Fifth, the Tribunal in the conduct of the review must take account of any substantial, clearly articulated argument advanced by an applicant in support of their case117. Sixth, the Tribunal is required to make a written statement that, among other things, sets out the decision on the review, the reasons for the decision, and the findings on any material questions of fact, and refers to the evidence or any other material on which the findings of fact were based118. And if a matter is not mentioned by the Tribunal in that written statement, a court is entitled to infer that the matter was not considered by the Tribunal to be material119. 112 Migration Act, s 427(1)(a). 113 Migration Act, s 427(3)(a). 114 Migration Act, s 427(1)(d). 115 Migration Act, s 427(1)(c). 116 Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 236 FCR 593 at 604 [44]. 117 Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088 at 1092 [24]-[25]; 197 ALR 389 at 394; [2003] HCA 26. 118 Migration Act, s 430(1). 119 Yusuf (2001) 206 CLR 323 at 346 [69], citing Repatriation Commission v O'Brien (1985) 155 CLR 422 at 446; [1985] HCA 10 and Sullivan v Department of Transport (1978) 20 ALR 323 at 348-349, 353. NettleJ That list is not exhaustive but it is sufficient to set the scene for the proper construction of the Tribunal's powers, "subject to sections 438 and 440, [to] give information to the applicant …"120. Division 7 of Pt 7 is relevantly headed "Miscellaneous". Section 437 contains a prohibition: in spite of anything else in the Migration Act, the Secretary must not give to the Tribunal a document or information if the Minister certifies in writing that the disclosure of any matter contained in the document, or the disclosure of the information, would be contrary to the public interest because it would prejudice the security, defence or international relations of Australia or because it would involve the disclosure of deliberations or decisions of the Cabinet or a committee of the Cabinet. The Tribunal does not know of the Minister's certificate and does not know of, or see, the document or information the subject of the certificate. Section 438, with which these appeals are concerned, does not contain a prohibition. It provides: "(1) This section applies to a document or information if: the Minister has certified, in writing, that the disclosure of any matter contained in the document, or the disclosure of the information, would be contrary to the public interest for any reason specified in the certificate (other than a reason set out in paragraph 437(a) or (b)) that could form the basis for a claim by the Crown in right of the Commonwealth in a the judicial proceeding document, or the information, should not be disclosed; or the matter contained that the document, the matter contained in the document, or the information was given to the Minister, or to an officer of the Department, in confidence. If, in compliance with a requirement of or under this Act, the Secretary gives to the Tribunal a document or information to which this section applies, the Secretary: (a) must notify the Tribunal in writing that this section applies in relation to the document or information; and 120 Migration Act, s 427(1)(c). NettleJ (b) may give the Tribunal any written advice that the Secretary thinks relevant about the significance of the document or information. If the Tribunal is given a document or information and is notified that this section applies in relation to it, the Tribunal: (a) may, for the purpose of the exercise of its powers, have regard to any matter contained in the document, or to the information; and (b) may, if the Tribunal thinks it appropriate to do so having regard to any advice given by the Secretary under subsection (2), disclose any matter contained in the document, or the information, to the applicant. the Tribunal discloses any matter the applicant, under subsection (3), the Tribunal must give a direction under section 440 in relation to the information." Section 440(1), to which reference is made in s 427(1)(c), confers power on the Tribunal to give a written direction that evidence, information or the contents of any document given to the Tribunal should not be published or otherwise disclosed except in a particular manner and to particular persons if the Tribunal is satisfied that the non-publication or non-disclosure is in the public interest. A direction under s 440(1) does not excuse the Tribunal from its obligation under s 430 to provide a written statement of its reasons121. In aggregate, those provisions inform the proper construction of s 438. As has been noticed, the section applies to a document, a matter contained in a document or information in two specified circumstances. The first is if the Minister has certified in writing that the disclosure of any matter contained in the document, or the disclosure of the information, would be contrary to the public interest for a reason specified in the certificate122. The Minister must act within the bounds of reasonableness and according to law123. The reason specified in 121 Migration Act, s 440(2)(a). 122 Migration Act, s 438(1)(a). 123 See Li (2013) 249 CLR 332 at 363 [65]-[66]; Plaintiff M174/2016 (2018) 92 ALJR 481 at 487-488 [21]; 353 ALR 600 at 607. See also Eshetu (1999) 197 CLR 611 at 652 [133], quoting R v Connell; Ex parte The Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 430; [1944] HCA 42. NettleJ the certificate must be one (other than a reason set out in s 437) that could form the basis of a claim by the Crown in right of the Commonwealth in a judicial proceeding that the matter contained in the document, or the information, should not be disclosed124. It was common ground that the reason must be capable of grounding a claim for public interest immunity from disclosure at common law. the document, The second specified circumstance the matter contained in the document, or the information was given to the Minister, or to an officer of the Department, in confidence125. If the Secretary gives to the Tribunal a document or information which is the subject of written certification under s 438(1)(a) or to which 438(1)(b) applies, then s 438(2) provides that the Secretary must notify the Tribunal that s 438 applies in relation to the document or information and may give to the Tribunal any written advice that the Secretary thinks relevant about the significance of the document or information. As is evident, s 438 sits alongside and operates in conjunction with the Secretary's obligation under s 418(3) to give to the Registrar of the Tribunal any document or part of a document that is in the Secretary's possession or control and is considered by the Secretary to be relevant to the review of the decision. Once the Tribunal has been given a document or part of a document (which, under s 418, the Secretary must have considered was relevant to the review), or information, by the Secretary, and notification that s 438 applies to the document or information, s 438(3) provides that the Tribunal is to deal with that document or information in a particular way. The Tribunal may have regard to any matter contained in the document or to the information and the Tribunal may, after taking into account any advice given by the Secretary under s 438(2), disclose any matter contained in the document, or the information, to the applicant126. Both discretions must be exercised within the bounds of reasonableness and consistently with the obligations imposed on the Tribunal by ss 424A and 425. In relation to the second discretion – disclosure to the applicant of the matter contained in the document, or the information – s 438(4) requires the Tribunal to give a direction under s 440. Where the Secretary notifies the Tribunal that s 438 applies to a document or information, the common law implies an obligation of procedural fairness on the Tribunal to disclose the fact of the notification to the applicant for review. That obligation of disclosure arises because a notification under s 438 is an essential aspect of the playing field. The notification must be disclosed so that an 124 Migration Act, s 438(1)(a). 125 Migration Act, s 438(1)(b). 126 Migration Act, s 438(3). NettleJ applicant seeking the exercise of an administrative power has an opportunity to choose, as the applicant may, to give evidence and present arguments relating to the issues arising in relation to the decision under review. It is impossible for an applicant to do so if the issues are not disclosed. Put in different terms, procedural fairness requires that an applicant be told of an event which alters the procedural context in which the review is to be conducted. As Bell, Gageler and Keane JJ observe, a notification by the Secretary under s 438 alters that procedural context127. Lest that be doubted, it may be tested this way: had the notification been disclosed at the outset, it would be difficult to conclude that an applicant had not been given a reasonable opportunity to be heard128. The extent to which the applicant would seek an opportunity to be heard is limited to issues arising in relation to the decision under review. On being told of the notification, those issues might include seeking to contest the basis of the Secretary's notification to the Tribunal that s 438 applies to a document or information; submitting that the Tribunal should exercise one or both of the discretions conferred by s 438(3); and subject to the contents of the notification, seeking to obtain access to the information through, for example, an application under the Freedom of Information Act 1982 (Cth). Procedural fairness requires disclosure of the fact of notification by the Secretary. Non-disclosure of the fact of notification constitutes a breach of the Tribunal's implied obligation of procedural fairness. It is an unauthorised act in breach of a statutory procedure which conditions the performance of the duty of the Tribunal to conduct a review in the manner outlined above. A breach of that obligation of procedural fairness constitutes jurisdictional error. An incorrect and therefore invalid notification by the Secretary that s 438 applies in relation to a document or information also gives rise to jurisdictional error in the conduct of a review. Appeals The facts and procedural history are set out in the judgment of Bell, Gageler and Keane JJ and need not be repeated. CQZ15 Written certification was made by the Minister under s 438(1)(a). Written notification was given by the Secretary to the Tribunal under s 438(2) in 127 Reasons of Bell, Gageler and Keane JJ at [29]-[30]. 128 WZARH (2015) 256 CLR 326 at 343-344 [62]-[67]. NettleJ relation to s 438(1)(b). Neither the certification nor the notification was disclosed to CQZ15. The Tribunal affirmed the decision of the delegate to refuse to grant a protection visa to CQZ15. CQZ15 sought review of the Tribunal's decision in the Federal Circuit Court. CQZ15 asserted that the certificate was invalid and that there was a want of procedural fairness because the Tribunal failed to disclose the fact of the certificate and the fact of the notification. The Minister conceded the certificate was invalid. The Minister contended the notification was valid and that the information which was the subject of both the certificate and the notification had no bearing and could have had no bearing on the Tribunal's decision. In the Federal Circuit Court, the Minister unsuccessfully sought to tender an affidavit exhibiting the documents the subject of the certification and the notification. The Court held that the failure to disclose the certificate and the notification resulted in jurisdictional error, set aside the the Tribunal for decision of determination according to law. the Tribunal, and remitted the matter The Full Court of the Federal Court allowed the Minister's appeal, set aside the orders of the Federal Circuit Court and remitted the matter for redetermination by the Federal Circuit Court. The Federal Circuit Court was correct that the failure to disclose the certificate and notification resulted in jurisdictional error. However, as the Full Court found, the evidence sought to be adduced by the Minister was at least potentially admissible as relevant to whether the Court should, in the exercise of its discretion, refuse relief. That is the issue to be considered and determined by the Federal Circuit Court. BEG15 The decision of the delegate to refuse BEG15 a protection visa was affirmed on two separate occasions by two differently constituted Tribunals. On the hearing of the second application for review to the Federal Circuit Court, the Minister disclosed the existence of a certificate purportedly issued by a delegate of the Minister under s 438(1)(a). The certificate had been issued after the initial decision was quashed but before the second hearing was conducted. The certificate had been notified to the Tribunal under s 438(2)(a) but not disclosed to BEG15. The Minister conceded that the certificate and the notification were invalid. The invalid certificate and the non-disclosure of the fact of the notification resulted in jurisdictional error. But as the Federal Circuit Court found, that error made no difference to the outcome of the review. The information in the documents covered by the certificate was largely known to BEG15, was not relevant to the decision to be made by the Tribunal and had not been taken into account by the Tribunal. Thus, relief was rightly refused. The Full Court of the NettleJ Federal Court correctly found that the decision of the Federal Circuit Court contained no appealable error. SZMTA The first respondent, SZMTA, applied for judicial review of a decision of the Tribunal to affirm the decision of a delegate of the Minister to refuse SZMTA's application for a protection visa. The application was dismissed by the Federal Circuit Court. On appeal to the Federal Court, SZMTA was permitted to raise that the Tribunal had not disclosed the fact of a notification purportedly made under s 438(1)(b) and s 438(2). The Tribunal had failed to comply with an essential pre-condition to or limit on the valid exercise of the particular statutory power. The non-disclosure of the notification resulted in jurisdictional error. The Tribunal did not refer to the notification, or the documents or information the subject of the notification, in its reasons. There was no dispute that the notification was not disclosed to SZMTA and that the Tribunal had not disclosed the documents the subject of the notification to SZMTA. However, the documents were in SZMTA's possession as a result of a prior freedom of information request. The question is whether the orders of the Federal Court should be set aside on the basis that, because the documents underlying the notification were already in SZMTA's possession, disclosure of the fact of the notification would not have deprived SZMTA of the possibility of a successful outcome on remittal to the Tribunal. The appeal by the Minister should be allowed. The documents covered by the notification, and thus the information in those documents, were known to and in the possession of SZMTA at the time that the matter was considered by the Tribunal. There is no reference in the Tribunal's reasons for decision to the notification or the documents and information the subject of the notification, and there is no reason to suppose that the Tribunal took them into account129. To the contrary, the Tribunal's reasons show clearly that its analysis was in no way affected by them. In those circumstances, the failure of disclosure could not have deprived SZMTA of the possibility of a successful outcome on remittal to the Tribunal, and thus it is appropriate that relief should be refused in the exercise of discretion. 129 cf MZZZW v Minister for Immigration and Border Protection (2015) 234 FCR 154 |
HIGH COURT OF AUSTRALIA APPELLANTS AND RESPONDENTS Hearne v Street [2008] HCA 36 6 August 2008 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation D F Jackson QC with T G R Parker SC for the appellants (instructed by Clayton Utz) T A Alexis SC with P M Sibtain for the respondents (instructed by Wise Legal) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Hearne v Street Courts – Appeal – Jurisdiction – Supreme Court of New South Wales (Court of Appeal) – Civil and criminal contempt of court – Character of contempt charged – Whether civil or criminal – Whether appeal to Court of Appeal precluded by findings and orders of primary judge acquitting alleged contemnors. Contempt of court – Where implied undertaking by corporate litigant not to use documents prepared by another party otherwise than for purpose of proceedings in which they were prepared – Whether appellants as servants and agents of corporate litigant bound by obligation – Meaning of "implied undertaking" – Whether knowledge of implied undertaking required or whether knowledge of facts generating an obligation imposed by law sufficient. Contempt of court – Supreme Court Act 1970 (NSW), s 101(6) – Whether breach of implied undertaking civil or criminal contempt – Whether statement of charge precluded appeal to New South Wales Court of Appeal. Contempt of court – Disclosure of documents filed in but not yet received in evidence by court – Whether implied undertaking attached to documents that they would not be disclosed to third parties without leave of court – Where documents disclosed to Minister, a member of Parliament, and staff whether such disclosure protected by law of Parliament – Whether such disclosure protected by public interest defence based upon right of communication with Parliament – Whether such questions should or could be decided by Court on basis of grounds of appeal and in face of disclaimer by alleged contemnors. Contempt of court – Implied undertaking not to disclose documents filed in court until received in evidence – Whether implied undertaking now a substantive rule of common law – Whether applicable law should be re-expressed – Whether such questions should or could be decided. Parliament – State Parliament (NSW) – Privileges of – Contempt of – Whether provision of documents to Minister, a member of Parliament, within privileges of Parliament or public interest defence based thereon – Whether such questions could or should be decided in light of record and arguments of parties. Words and phrases – "implied undertaking". Supreme Court Act 1970 (NSW), s 101(6). Supreme Court Rules 1970 (NSW), Pt 55 r 7. GLEESON CJ. The parties to this appeal agreed that it raised two issues for decision. The issues were said to arise "where documents prepared for legal proceedings have been served upon another party to those proceedings, and the party so served is treated as having undertaken to the court not to use the documents otherwise than for the purpose of the proceedings." The documents in question in the appeal were treated as being in the same position, legally, as documents produced pursuant to an order for discovery. It was accepted that they were the subject of what is often described as an "implied undertaking" not to use them for a purpose other than the conduct of the legal proceedings in question1. Upon that basis, the issues were formulated as follows: [W]hether a servant or agent of such a party into whose hands the documents come, and who is aware that the documents were prepared for legal proceedings, is to be liable as if he or she had personally given such an undertaking; and [I]f so, is a wilful but not contumacious breach of that undertaking by that servant or agent a 'criminal contempt' for the purposes of s 101(6) of the Supreme Court Act 1970 (NSW)." The second issue goes to jurisdiction. It turns upon the meaning and effect of s 101(5) and (6) of the Supreme Court Act. Those provisions came into effect in 1997. The evident purpose of sub-s (6) was to reflect, in the area of contempt, the general reluctance of the law to permit prosecution appeals against acquittals in criminal proceedings2. The distinction between civil and criminal contempt is in some respects unsatisfactory, but the Supreme Court Act adopts the distinction for jurisdictional purposes, and therefore it must be applied. The question is whether, on the true construction of s 101 of the Act, the present case falls on the civil or the criminal side of the line. I agree with Hayne, Heydon and Crennan JJ, for the reasons they give, that this is a case of civil contempt, and that the second issue should be decided in favour of the respondents3. As to the first issue, I agree with Hayne, Heydon and Crennan JJ that the "implied undertaking" is now better understood as a substantive legal obligation. I also agree that a servant or agent of a party, in the position described in the formulation of the first issue, is directly bound by such an obligation, and is not merely potentially liable as an accessory to a breach by the party. In view of the role of the appellants in the conduct of the matter of which the legal proceedings 1 Harman v Secretary of State for the Home Department [1983] 1 AC 280. 2 See R v Hillier (2007) 228 CLR 618; [2007] HCA 13. 3 See also Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 310 per Lord Scarman. formed an essential part, there is no difficulty in categorising them as agents of Luna Park Sydney Pty Ltd, as the statement of the first issue assumes. Because of the terms in which the first issue is expressed, it is unnecessary to decide how far beyond the class of persons consisting of servants or agents of a party the legal obligation extends; or the scope of the concept of use of a document for purposes other than the conduct of the legal proceedings in which the party is involved. Both questions could cause difficulties in other cases, but they do not arise in this case. Compulsory pre-trial exchange or disclosure of materials, such as witness statements and experts' reports, is now extensive. The rationale sometimes given for the obligation concerning discovered documents (it is the condition upon which a court compels disclosure of private documents) may not always be applicable to witness statements or experts' reports. There may be little or nothing about them that is private. This, in turn, is connected with the scope of the potential liability of strangers to the litigation into whose hands such materials may come. In this case, however, the appellants were no strangers to the litigation. The issue, as framed, assumes that they were agents of a party, that they were aware that the documents were prepared for legal proceedings, and that the documents were subject to the rule against use other than for purposes of the proceedings. This case does not raise a question whether, in the events that occurred, the documents were used for a collateral purpose, or whether the particular use to which they were put (political lobbying) involved any special considerations. I agree that the first issue also should be decided in favour of the respondents, and that the appeal should be dismissed with costs. Kirby KIRBY J. This appeal arises from a judgment of the Court of Appeal of the Supreme Court of New South Wales4. That Court, by majority5, allowed an appeal from orders of Gzell J in the Supreme Court6. It set aside his Honour's orders and substituted orders adjudging Mr Peter Hearne and Mr David Tierney ("the appellants") guilty of contempt of court. That finding was based on the first charge brought against each of the appellants in statements of charge filed by the respondents, Ms Joan Street and others ("the residents"). The Court of Appeal made consequential orders remitting the residents' notices of motion to Gzell J for hearing as to penalty. By special leave, the appellants have appealed to this Court. The facts and legislation The facts: The factual background to the dispute between the companies with which the appellants are associated and the residents is explained in the reasons of Hayne, Heydon and Crennan JJ ("the joint reasons"). The explanation is expressed in terms that I accept7. Those reasons describe the residents' original initiation of proceedings in the Supreme Court of New South Wales claiming relief for the tort of nuisance against Luna Park Sydney Pty Ltd and Metro Edgley Pty Ltd, companies concerned in the operation of Luna Park ("the Park"). This is an amusement park situated on the north shore of Sydney Harbour not far from, and almost opposite to, the central business district of the city. The record reveals that, whilst the nuisance proceedings were on foot, each of the appellants took steps to furnish certain documents to the Minister for Tourism, Sport and Recreation ("the Minister") or her staff. These documents included part of an affidavit sworn by one of the residents and filed, but not yet tendered or read, in the proceedings in the Supreme Court; as well as part of an acoustic report that had been filed on the residents' behalf. A further document detailed what one of the appellants suggested were "ridiculous complaints" that had been submitted to the Park. These documents were said to illustrate the need for new legislation to shield the Park and its operators from proceedings for noise nuisance lest such proceedings drive the Park to closure8. Self-evidently, any such closure would diminish the revenues to the government derived from the 4 Street v Hearne [2007] NSWCA 113. Ipp JA and Basten JA; Handley AJA dissenting. 6 Street v Luna Park Sydney Pty Ltd [2006] NSWSC 624. Joint reasons at [64]-[69]. Joint reasons at [70]-[74]. Kirby Park and put in serious question the future of the Park as a popular amusement facility for tourists and other patrons. By inference, neither of the appellants, at least initially, regarded their conduct in providing the documents to the Minister and others as wrongful or unlawful. The provision of this material seemingly had its desired effect. As explained in the joint reasons9, the Minister promptly introduced into Parliament the Luna Park Site Amendment (Noise Control) Bill 2005 (NSW). In the space of a week, the Bill had passed both Houses and received the Royal Assent. The resulting Act commenced operation with effect retrospective to a few days prior to the commencement of the residents' proceedings in the Supreme Court. This forced the residents to reframe their proceedings10. They also sought, and obtained, an order for interrogatories directed to Luna Park Sydney Pty Ltd. Ultimately, they filed notices of motion and statements of charge against the appellants, initiating the proceedings that have now found their way to this Court11. The legislation: The reasons and conclusions of the primary judge and of the Court of Appeal are explained in the joint reasons12. The critical legislative provisions are s 101(5) and (6) of the Supreme Court Act 1970 (NSW) ("the Supreme Court Act"). Those sub-sections were inserted a decade before these proceedings commenced by the Courts Legislation Amendment Act 1996 (NSW). They provide: "(5) An appeal lies to the Court of Appeal from any judgment or order of the Court in a Division in any proceedings that relate to contempt (whether civil or criminal) of the Court or of any other court. Subsection (5) does not confer on any person a right to appeal from a judgment or order of the Court in a Division in any proceedings that relate to criminal contempt, being a judgment or order by which the person charged with contempt is found not to have committed contempt." Joint reasons at [75]. 10 Joint reasons at [76]. 11 Joint reasons at [81]. 12 Joint reasons at [89]-[94]. Kirby Explaining the relevant amendments to the Supreme Court Act, the then Attorney-General (the Hon J W Shaw) said13: "There is a common law principle that there is no right of appeal from an acquittal in criminal proceedings. However, section 5A(2) of the Criminal Appeal Act provides for the Crown to seek a review of a question of law in criminal proceedings resulting in an acquittal on the basis that the determination on appeal does not reverse the acquittal. This bill makes the same provisions in respect of proceedings for criminal contempt … This provision will apply to criminal contempt matters only and it will not affect or limit the existing rights of the parties in civil contempt proceedings to an appeal." Questions and issues in the appeal Two questions and two issues are raised by the appeal: The parliamentary privilege question: Given the use made of the court documents which grounds the charges of contempt of court, was the residents' motion to have the appellants dealt with for contempt itself an arguable contempt of the New South Wales Parliament? Would such a contempt or interference in the legislative process of Parliament preclude, on public policy grounds, a finding that the appellants had committed contempt of court as charged? Given the course of the proceedings and the state of the record, ought such questions to be decided by this Court in disposing of the present appeal? The re-expression of contempt law question: Should this Court re-express the law of contempt of court to reflect more current attitudes to public access to information in the possession of the Judicature, as a branch of government? Should such re-expression abandon, or qualify, the legal principles that inhibit the revelation of documents prepared for use in litigation, filed in court and disclosed before such documents are received in evidence at a trial? Is such re-expression open to this Court in these proceedings? Would such re-expression result in the defeat of the charges brought against the appellants? The implied undertaking issue: If the conventional or traditional understanding of the law of contempt of court is to prevail, was the conduct of the appellants capable of constituting contempt of court, as the Court of Appeal determined? In particular, were the majority of the Court 13 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 17 October 1996 at 4969. Kirby of Appeal correct to hold that the appellants were liable for contempt of court, despite not themselves being bound by the implied personal undertakings of the parties to the underlying action14? The competency of the appeal issue: Having regard to s 101(5) and (6) of the Supreme Court Act, did an appeal lie to the Court of Appeal against the primary judge's order dismissing the residents' motions for the appellants to be dealt with for contempt of court? In particular, did the proceedings before the primary judge constitute "proceedings that relate to criminal contempt"15 for the purposes of s 101(6)? Civil contempt: the appeal was competent A threshold jurisdictional question: Following the dismissal of each of the notices of motion by the primary judge, the residents successfully appealed to the Court of Appeal. However, the appellants now challenge the entitlement of the residents to appeal as they did. They contend that the motions decided by the primary judge were brought in proceedings that "relate[d] to criminal contempt" and that they were not therefore liable to be exposed to double jeopardy in such proceedings, having been acquitted thereon by the primary judge. further proceedings As all parties recognised, the issue of the competency of the residents' appeal to the Court of Appeal raised a question of jurisdiction. It involved the judge's permissibility of determination. It is conventional for courts to deal with matters of jurisdiction at an initial stage, for, without jurisdiction, other issues fall away16. If there is no jurisdiction, a court normally has no business entering into arguments about any substantive or procedural questions, except perhaps the consequential disposition of costs. the primary following 14 cf [2007] NSWCA 113 at [199] per Handley AJA. 15 [2007] NSWCA 113 at [82] per Ipp JA, [130] per Basten JA; cf at [167] per Handley AJA. 16 Federated Amalgamated Government Railway and Tramway Service Association v New South Wales Railway Traffic Employés Association (1906) 4 CLR 488 at 495; [1906] HCA 94; Federated Engine-Drivers and Firemen's Association of Australasia v Broken Hill Proprietary Co Ltd (1911) 12 CLR 398 at 415; [1911] HCA 31; Cockle v Isaksen (1957) 99 CLR 155 at 161; [1957] HCA 85; Clyne v NSW Bar Association (1960) 104 CLR 186 at 205; [1960] HCA 40; Re Carmody; Ex parte Glennan (2000) 74 ALJR 1148 at 1151 [13]; 173 ALR 145 at 149; [2000] HCA 37. Kirby Thus, as the judges in the Court of Appeal recognised17, the objection to the competency of the appeal, whilst requiring some attention to the evidence and a proper understanding of the factual background to the proceedings, raised a threshold or primary question to be resolved before all others. What I have called the fourth issue should therefore be dealt with first. Was the residents' appeal to the Court of Appeal competent? It was not so if the judgment or order of the primary judge was given in "proceedings that relate to criminal contempt". There is no doubt that, in the terms of s 101(6) of the Supreme Court Act, the primary judge found that each of the appellants had not committed "contempt" as charged. As the division of opinions in the Court of Appeal demonstrates, the answer to this question is not clear cut18. The theoretical bases for maintaining a distinction between civil and criminal contempt have been described in this Court as "unsatisfactory"19. It is a distinction that occasions "very great difficulty"20 and consequential uncertainty in the law. Statutory entrenchment of a dichotomy: Nonetheless, as the joint reasons point out, any suggestion that all proceedings for contempt should now be classified as criminal in nature must, in New South Wales at least, be rejected in light of the express recognition by the State Parliament of a continuing distinction between civil and criminal contempt. The Supreme Court Act the accurate provides classification of proceedings as relating to one or the other category21. So such categories must be accepted as part of the law of New South Wales. that particular appellate consequences flow from 17 [2007] NSWCA 113 at [16]-[82] per Ipp JA, [124]-[130] per Basten JA, [145]- [178] per Handley AJA. 18 cf Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 106-109; [1986] HCA 46; Witham v Holloway (1995) 183 CLR 525 at 534; [1995] HCA 3. 19 Mudginberri (1986) 161 CLR 98 at 107. 20 Mudginberri (1986) 161 CLR 98 at 108. 21 Joint reasons at [130]-[132]. I do not pause to consider the consequences of such legislation for the postulate in the Judiciary Act 1903 (Cth), s 80 that there is a "common law in Australia" or the holdings of this Court that there is but one such common law: Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 563-564; [1997] HCA 25. Kirby When this is recognised, the traditional question must be confronted: were the contempt proceedings here essentially punitive (in which case they will be classified as "criminal"), or were they remedial or coercive (in which case they will be classified as "civil")? In this case, relevant to the classification, as it seems to me, is the relief sought by the residents on their notices of motion; the fact that their motions were filed as interlocutory to the principal (civil) proceedings then current before the Supreme Court; and the apparent concern of the residents that, unless the appellants were dealt with for contempt, they might repeat their contemptuous conduct in the future. Without pretending that the issue is beyond argument, I agree with the conclusion in the joint reasons that the better view of such evidence as is available on the record is that the residents' contempt proceedings were remedial or coercive in nature. The proceedings were thus to be classified as relating to civil contempt. An appeal against the primary judge's determination that such contempt had not been committed was not, therefore, prohibited by s 101(6) of the Supreme Court Act. Instead, an appeal lay to the Court of Appeal in accordance with s 101(5) of that Act. The majority in the Court of Appeal were correct to so decide. Consequential questions: This conclusion necessitates consideration of the content, or substance, of the law of civil contempt, and the consequences of its application in the present case. However, as the joint reasons demonstrate, that law, as conventionally understood, lacks conceptual coherence and is replete with uncertainties, inadequacies and fictions. It calls out for re-expression or reform. Despite proposals for legislative change22, such reform has thus far failed to materialise. In the result, I consider it necessary to examine two questions that appear to be presented by this matter but which do not arise on the grounds of appeal, and which were, in fact, disclaimed by the appellants during argument. Issues and non-issues: the scope of the appeal Approach: competing principles: At this point I must address certain the judicial function, derived ultimately from principles affecting the Constitution. Arguably, they arise in this appeal. This Court is here engaged in determining an appeal from a judgment of the Supreme Court of a State. Such an appeal has been described as a strict 22 Australian Law Reform Commission, Contempt, Report No 35, (1987). Kirby appeal23. In such an appeal, this Court decides whether or not error has been shown in the decision of the court below. In the nature of things, that consideration ordinarily focuses attention on the issues decided in that court, in turn, reflecting the controversies which the parties brought to that court for its resolution. Notwithstanding opinions to the contrary24, this Court has held that it may enlarge the issues on appeal, in exceptional circumstances, beyond the controversies decided earlier. Normally, however, it is for the parties to define the ambit of their dispute. This is conventionally done by the pleadings, and by the manner in which the hearing is conducted. In respect of an appeal, the grounds of appeal contained in the notice of appeal, unless varied or departed from by agreement or conduct, define the issues for decision. This Court has repeatedly said that it will not provide advisory opinions; nor will it decide theoretical questions or points no longer in real controversy25. What, then, is to happen where, in an appeal, it appears to a judge of this Court that the parties have ignored an important constitutional impediment that appears to arise; have overlooked an important legal argument; have agreed to confine their submissions in an artificial, needless or erroneous way; or have made assumptions about the state of the governing law that the judge is disinclined to accept? Sometimes, where a constitutional difficulty presents, the judge, giving due notice, may decline to accept a shared assumption of the parties, out of a recognition of the special duty of the Justices of this Court to uphold the Constitution, whatever the parties choose to argue in a particular case26. Sometimes, where to consider such issues would inflict a procedural unfairness on a party, the judge may swallow any doubts and proceed to deal with the issues in the way in which the parties present them. Sometimes the judge will do so for the practical reason that, in the absence of submissions and effective assistance from the parties, it would be dangerous or even impossible for the judge, 23 See Mickelberg v The Queen (1989) 167 CLR 259; [1989] HCA 35. 24 Gipp v The Queen (1998) 194 CLR 106 at 126-129 [57]-[65] per McHugh and Hayne JJ; [1998] HCA 21; cf Crampton v The Queen (2000) 206 CLR 161 at 173 [20], 203 [113]; [2000] HCA 60. 25 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265; [1921] HCA 20; Abebe v The Commonwealth (1999) 197 CLR 510 at 570 [164]; [1999] HCA 14; White v Director of Military Prosecutions (2007) 231 CLR 570 at 614-615 [118], 619 [134]; [2007] HCA 29. 26 Roberts v Bass (2002) 212 CLR 1 at 54 [143]; [2002] HCA 57. Kirby unaided, to embark upon a consideration of a question that is of apparent concern. Two underlying questions: In the present appeal, there are two questions that are of concern to me. The first is what I have called the parliamentary privilege question. The second is what I have called the re-expression of contempt law question. Each of these questions was clearly raised during oral argument in this appeal. The first was raised in questions addressed by me to the appellants' counsel. In answer to those questions, counsel made it clear that the appellants were not advancing any argument based on the law of Parliament or on any public policy principle of parliamentary privilege to the effect that the actions of the appellants were not such as to attract the law of contempt of court27. Nor were the appellants seeking to contend that any enforcement of the law of contempt of court would, in these proceedings, contravene the common law of Parliament by entering what is properly Parliament's domain28. Specifically, the appellants disclaimed any reliance on the observations of Handley AJA in the Court of Appeal on these issues29. Thus, the appellants' counsel made it plain that they were content to argue the appeal within the conventional legal paradigm. This was so despite the admitted fiction involved in attributing an "implied undertaking" to the appellants, and grounding their legal liability for contempt upon breach of such an "undertaking"30. Unlike an express undertaking, an implied undertaking is not identified and its ambit is not defined in open court. It might not actually be known to the person later held in law to be bound by the imputed "undertaking" and guilty of contempt of court for that reason. Various factors that might favour reconsideration of this branch of the common law were put to counsel. However, the need for re-expression of the law relevant to these proceedings was not accepted. In part, this was doubtless because of the manner in which the proceedings were developed and the issues refined below, and the limitations of the grounds of appeal upon which special leave had been provided by the special leave panel. 27 [2008] HCATrans 195 at 32 [1331]-[1337]. 28 [2008] HCATrans 195 at 32 [1344]-[1347]. 29 [2008] HCATrans 195 at 32 [1339]-[1342]. 30 See eg [2008] HCATrans 195 at 5 [116]-[124], 6 [138]-[145], 7 [211]-[223], 12 Kirby The foregoing is not intended as a criticism of the appellants or their legal representatives. Instead, it is mentioned to illustrate the difficulties that face a judge, asked to grapple with two important issues of legal principle upon the basis of assumptions, and arguments, that leave the judge dissatisfied about the footing upon which those issues are to be decided. To indicate why I feel uneasy about being asked to decide this appeal on the basis argued, I will identify the source of my unease and why the questions thus raised are legally important and relevant. Non-issues: the parliamentary privilege question A potential issue: In his dissenting reasons in the Court of Appeal, Handley AJA remarked that even if, contrary to his own opinion, the residents' appeal against the orders of the primary judge were competent, and the appellants were in fact bound by an implied undertaking, he would still have been of the view that there existed31: "a real question as to whether the transmission of documents covered by the undertaking to a Government Minister for parliamentary purposes was a breach of the undertaking. Would a Minister who knowingly used documents covered by the undertaking be guilty of contempt of court? I am inclined to think that proceedings against the Minister for contempt of court would be a contempt of the Parliament. It is even possible that these proceedings are a contempt of the Parliament." "The point was not taken but I would not have been prepared to make a finding of contempt based on disclosures to the Minister and her staff without hearing proper argument on the point after notice to the Attorney General." After citing authority to support the proposition that "unsolicited disclosures to the Minister and her staff became connected with proceedings in Parliament when the Minister used them to promote the Act"33, Handley AJA concluded34: 31 [2007] NSWCA 113 at [205]. 32 [2007] NSWCA 113 at [206]. 33 [2007] NSWCA 113 at [207] citing Rivlin v Bilainkin [1953] 1 QB 485 at 488 and Rowley v O'Chee [2000] 1 Qd R 207 at 220-221. 34 [2007] NSWCA 113 at [208]. Kirby "Unless such uses are protected by Parliamentary privilege or by an exception in the implied undertaking such as that recognised for the use of the material in criminal proceedings35, the Australian Government [S]olicitor and the State Crown [S]olicitor could not advise their Governments that pending proceedings had demonstrated the need for legislation. I would need to be persuaded that the implied undertaking could have that operation." Courts and lawyers are understandably vigilant to defend and uphold their own privileges. However, they sometimes need to be reminded of the equal requirement to defend and uphold the privileges of Parliament36. In this respect, I share the concerns which Handley AJA expressed in the above passages. The privileges of Parliament, including of a State Parliament in the Commonwealth of Australia, do not exist for the benefit of parliamentarians and their staff and officials alone, or even primarily. In this respect they resemble what the common law called "legal professional privilege" and which the Uniform Evidence Acts (Pt 3.10, Div 1) more accurately describe as "client legal privilege". Parliamentary privilege exists for the benefit of the people who are governed by laws made by the Parliament concerned. Indeed, the privileges of a Parliament are closely inter-connected with the historical privileges of the people. In Mann v O'Neill, I remarked37: "The right of an individual in our form of society to petition government is certainly an important right. It is long recognised in our legal system. As Burger CJ pointed out in the Supreme Court of the United States38, the historical roots of the legal entitlement to petition the organs of government for redress antedate the express provisions of the right of petition in the First Amendment to the United States Constitution and reach back to English constitutional law: 'In 1689, the Bill of Rights exacted of William and Mary stated: '[I]t is the Right of the Subjects to petition the King.' 1 Wm & Mary, Sess 2, ch 2. This idea reappeared in the Colonies when the 35 Rank Film Distributors Ltd v Video Information Centre [1982] AC 380 at 442, 447. 36 See eg Egan v Willis (1998) 195 CLR 424 at 496-506 [142]-[162]; [1998] HCA 71; Sue v Hill (1999) 199 CLR 462 at 557-558 [250]-[251]; [1999] HCA 30; Re Reid; Ex parte Bienstein (2001) 182 ALR 473 at 478-479 [23]-[27]; [2001] HCA 54. 37 (1997) 191 CLR 204 at 265-266; [1997] HCA 28. 38 McDonald v Smith 472 US 479 at 482-483 (1985). Kirby Stamp Act Congress of 1765 included a right to petition the King and Parliament in its Declaration of Rights and Grievances. … And the Declarations of Rights enacted by many state conventions contained a right to petition for redress of grievances. See, eg, Pennsylvania Declaration of Rights (1776).' In Halsbury's Laws of England39 it is explained that the provision of the first section of the Bill of Rights of 1688 was found to be necessary because of the Seven Bishops' Trial40. That was one of the causes of the revolutionary expulsion of King James II from the Kingdom. Thus, for a long time, the right of petition has been part of the law and was received into Australia on settlement. In Harrison v Bush41 Lord Campbell CJ explained: 'In this land of law and liberty, all who are aggrieved may seek redress; and the alleged misconduct of any who are clothed with public authority may be brought to the notice of those who have the power and the duty to inquire into it, and to take steps which may prevent the repetition of it.' Although originally expressed as being the right of the subject to petition the Sovereign, in modern Australian circumstances, it may be accepted that the right extends to an entitlement of anyone to petition the Parliament and the Executive Government for redress." I see no reason for the right of "petition", referred to in Mann, to be confined to the formulation of grievances in any particular way or manifested in any specific form of engrossment. There are numerous reasons why that right might extend, in contemporary Australian circumstances, to the type of conduct in which the appellants engaged in the present case. After all, the most that they were found to have done was to provide documents that had been supplied by the residents themselves; presumably drafted with their personal input and approved (if not actually drawn up) by the lawyers advising them; made available to the registry of a public court of law; and repeatedly declared by the lawyers representing the residents to be documents, produced in accordance with court 39 4th ed, vol 8, par 923. Exceptions existed for "tumultuous petitioning". See also Handley, "Petitioning Parliament", (1993) 21 Federal Law Review 290 at 291. 40 (1688) 12 St Tr 183 [see now O'Donoghue v Ireland (2008) 82 ALJR 680 at 711 [178]; 244 ALR 404 at 443; [2008] HCA 14]. 41 (1855) 5 El & Bl 344 at 349 [119 ER 509 at 512]. Kirby directions, containing "the evidence these witnesses would be giving at the hearing of the proceedings"42. I would reject the suggestion (if that were intended43) that the important right to petition Parliament and the Executive Government is a relic of the previously undemocratic franchise in England. Any such suggestion would be patently incorrect given the important ongoing parliamentary practice with respect to formal petitions. It would also display an excessive faith in intermittent elections and a naïve want of awareness of the manner in which electoral democracy actually operates in contemporary Australia. Reasonably arguable questions: In such circumstances, it is certainly arguable, in my view, that the use of such documents by a "petitioner" to government and Parliament, in support of that person's proposals for legislation protective of that person's interests against what are suggested to be unjustifiable demands and litigation, attracts the protection of the law and privileges of Parliament. It might do so upon one or other of the alternative bases identified by Handley AJA, namely: (1) that it is legally impermissible to proceed with a motion charging in respect of communications of the kind that occurred in the present case because any such process would itself constitute a contempt of Parliament and of the parliamentary process44; or (2) that a public interest defence might arguably arise in respect of the privilege attaching to a petition to Parliament or to communications with a Minister and the Minister's staff and officials designed to secure parliamentary redress45. This is what appears to have happened as a result of the communications. Those communications led directly and quickly to the enactment of the Luna Park Site Amendment (Noise Control) Act 2005 (NSW). the appellants with contempt of court Conclusion: adherence to record: It follows that, along with Handley AJA, I regard the foregoing considerations as strongly arguable in these proceedings to rebut, or provide a defence to, the charges of contempt of court filed against the appellants. Nevertheless, I am forced in this appeal to deal differently with the issues presented to this Court, the appellants having declined to argue the points raised by Handley AJA. I do so despite having repeatedly raised the questions during argument before this Court, the appellants having just as repeatedly declined to seek leave to enlarge the grounds of (and thus the issues in) the appeal. 42 See joint reasons at [78], [87]. 43 cf joint reasons at [85]. 44 [2007] NSWCA 113 at [205]. 45 [2007] NSWCA 113 at [208]. Kirby Non-issues: fundamental re-expression of contempt law A need for re-expression? The joint reasons also demonstrate the historical origins of the "implied undertaking" in respect of documents filed in court but not yet tendered or read in evidence; the uncertainty of the language of "implied undertakings"; the controversy as to the identification of the persons imputed to be bound by any such "undertakings"; and the coalescence of opinion to the effect that the so-called "implied undertaking" of non-disclosure should now be viewed as, in truth, an obligation imposed by the law on those subject to Upon this basis, it is arguable that there is a need for a fundamental reconceptualisation of the relevant legal categories and the re-expression of the common law in less fictitious and artificial language. On the face of things (and in default of legislation), the time appears ripe for a "root and branch" re- expression of the governing law. Such revisions are not unknown in this Court with its special, national responsibility for declaring and, where necessary, re- expressing the common law applicable throughout Australia47. The re-expression of the applicable common law would not, in all probability, have been open to an intermediate appellate court, still less to a trial judge grappling with a case such as the present. At least arguably, a long line of authority in Australia and in England has treated documents generated for use in a future trial before a court as subject to an "implied undertaking". Arguably, such authority could only be displaced by Parliament or by a re-expression of the relevant common law legal doctrine by this Court48. Nevertheless, when special leave to appeal to this Court is granted in a case of this kind, it is necessary for the parties, and their advisers, to consider whether it is appropriate and desirable to advocate a re-expression of the law, such as this Court can undertake in the discharge of its function as the ultimate repository of the common law of Australia. 46 Joint reasons at [102], [105]-[108], [120], [128]. 47 See eg Papatonakis v Australian Telecommunications Commission (1985) 156 CLR 7; [1985] HCA 3; McKinney v The Queen (1991) 171 CLR 468; [1991] HCA 6; Mabo v Queensland [No 2] (1992) 175 CLR 1; [1992] HCA 23; Brodie v Singleton Shire Council (2001) 206 CLR 512; [2001] HCA 29. 48 See Akins v Abigroup Ltd (1998) 43 NSWLR 539 at 548 citing Ravenor Overseas Inc v Readhead (1998) 72 ALJR 671 at 672 [3]; 152 ALR 416 at 416; [1998] HCA 17; cf Nguyen v Nguyen (1990) 169 CLR 245 at 269; [1990] HCA 9 and Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 418 [58]; [1998] HCA 48. Kirby In the event, as I have noted, the appellants declined to press for any such fundamental re-expression of the common law. They were content to argue their appeal by reference to the conventional, and traditional, concept of an "implied undertaking". This was so notwithstanding that, as they were themselves forced to acknowledge, there has been a recognition, in England and elsewhere (including to some extent in the Court of Appeal in this case), that the fiction of an "implied undertaking" is looking rather threadbare. Arguably, this is why courts today recognise and express the governing law in terms of what it "in reality"49 obliges. Support for previous approach: Once again, I am left unconvinced that the arguments of the parties necessarily reflect an approach to the common law of contempt that this Court should continue to uphold and enforce. Of course, I recognise that there are arguments supporting the retention of the "implied undertaking" concept, or at least of a substantive prohibition on the release of documents such as those in question in this appeal. For example: Materials prepared for use in court may sometimes be provided under legal compulsion and are deserving of protection on that basis; Such materials may occasionally disclose private, confidential or secret information in respect of which the disclosing party might wish to seek protection at the trial from the court concerned; The material is not, as such, evidence in court until formally received, and some such material might be excluded by the court as irrelevant, objectionable, unfairly prejudicial or otherwise inadmissible; and Judicial supervision of the admission of evidence in a trial affords protection not only to those providing the evidence and to the parties to the proceedings, but also to third parties and the public, whose interests might be affected adversely by the privileged publication, and consequent republication, of the evidence. Support for re-expression: As against these considerations, there are many that favour the re-expression of the governing common law in a fundamental way: 49 Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 at 764-765; [1991] 3 All ER 878 at 885-886 approved in Mahon v Rahn [1998] QB 424 at 431- 432, 454. See joint reasons at [108]. Kirby The growing willingness of courts, in Australia and elsewhere, to drop the fiction of "implied undertakings" suggests that the process of re- expression has already begun; The rule to which that fiction gives rise is burdensome on free expression in contemporary Australian society, and is arguably too absolute; The arguable need to limit the disclosure of documents prepared for use in court may not justify the strict prohibitions hitherto enforced, which may reflect outdated attitudes to the disclosure of information in official hands; the subject documents was arguably In the circumstances of the present case, a relevantly total embargo on the use of inappropriate or disproportionate given that the documents were prepared by the residents themselves; were apparently drafted by lawyers, who had inferentially provided full and competent legal advice; and were repeatedly stated to encapsulate the evidence to be given by the residents in the trial; and their The rapid expansion in recent decades of obligations to prepare and file evidence and argument in written form has significantly altered the environment in which the issue of contempt of court, and other issues, arise for decision in litigation. Arguably, a more nuanced rule to govern the use of such written materials needs to be fashioned by this Court if the law is to be adapted to this shift. Conclusion: confinement of appeal: I do not endeavour to resolve these considerations and arguments. I mention some of them to indicate why I regard it as seriously unsatisfactory to be obliged to consider, and decide, this appeal on the basis of decisional law which, virtually without exception, has been developed in the context of a fiction of "implied undertakings"50. Especially so where the conventional or traditional approach to the law in question derives from English authority starting in the middle of the nineteenth century, without any significant or fresh consideration by this Court of what the common law of Australia is, or should be, in a case where (as here) a decision on the point is essential for dispositive orders which are coercive and potentially most burdensome on the appellants. This is not a case where the matter to be determined arises under the Constitution. In such cases, there are special reasons why this Court may feel 50 See joint reasons at [105] citing Williams v Prince of Wales Life &c Co (1857) 23 Beav 338 at 340 [53 ER 133 at 133] and Reynolds v Godlee (1858) 4 K & J 88 at 92 [70 ER 37 at 39]. Kirby obliged to decide a point that it can fairly address, whatever the parties proffer by way of argument51. In this appeal, there can be no doubt that both parties were on notice of the first of the foregoing issues, given that it was discussed by Handley AJA in the Court of Appeal. The second of the issues was clearly raised during argument of the appeal. Notwithstanding the unsatisfactoriness of the issues that are left for resolution, I am constrained in deciding the appeal to proceed as the appellants insist, and to address the issues presented in the form in which they have been tendered. The resulting issue, conclusion and orders Resulting issue: The remaining substantive issue is therefore whether the "implied undertaking", now to be viewed as imposed by a rule of law52, given to the Supreme Court by the corporate parties (with which the appellants were associated) extends to the appellants themselves. Did such "undertakings" forbid the disclosure of the relevant documents by the appellants to third parties, without prior leave of the Supreme Court, such that the disclosure amounted to contempt of court? Within the assumptions that are inherent in the way the issue is thus framed, and without going beyond the submissions that are addressed by the parties to that issue, I agree in the conclusions that the joint reasons have expressed, and for the same reasons53. Because I also agree with their Honours that the residents' appeal to the Court of Appeal was competent, it follows that I am brought to the outcome that contempt of court on the part of the appellants, as charged, has been proved. I have taken pains to explain my hesitations in reaching that conclusion, given the two points that I have identified but which the appellants omitted, or declined, to argue. It is an unpleasant thing for a judge to be required to reach a conclusion upon a legal basis about which the judge has serious reservations. That is the position I am now in. I have therefore explained my reservations in the hope that, by mentioning them, it may ultimately encourage future attention to their merits. These questions should not be allowed "forever to pass under the 51 cf Roberts (2002) 212 CLR 1 at 54 [143]. 52 Prudential Assurance [1991] 1 WLR 756 at 764-765; [1991] 3 All ER 878 at 885- 886; see joint reasons at [108]. 53 Joint reasons at [105]-[129]. Kirby radar"54 simply because parties, presumably due to perceptions of private forensic advantage, choose not to argue them. Order: appeal dismissed: Putting my reservations aside, and deciding this appeal on the issues pleaded and on the traditional or conventional basis, as this Court was asked to do, I agree with the joint reasons that the appeal should be dismissed with costs. 54 Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2007) 81 ALJR 1622 at 1652 [135]; 237 ALR 512 at 550; [2007] HCA 38. HAYNE, HEYDON AND CRENNAN JJ. Where a corporate litigant is bound by an "implied undertaking" not to use affidavits or witness statements served by another party on it otherwise than for the purpose of the proceedings in which they were prepared, in what circumstances can servants and agents of the litigant who use the affidavits or witness statements in that way be liable for contempt of court? One issue in this appeal is whether either or both of the appellants was bound by such an implied undertaking. The respondents ("the residents") filed a notice of motion and statement of charge against the first appellant alleging the commission of contempt of court. They filed a similar notice of motion and statement of charge against the second appellant. The Supreme Court of New South Wales (Gzell J) dismissed those notices of motion and statements of charge with costs55. The Court of Appeal of the Supreme Court of New South Wales by majority (Ipp and Basten JJA; Handley AJA dissenting) allowed appeals by the residents with costs56. The Court of Appeal made orders adjudging each appellant to be guilty of the contempt of court alleged in the first charge appearing in the statement of charge against him, and remitted the notices of motion for hearing as to penalty and costs of the hearing at first instance. The appeal against these orders should be dismissed for the following reasons. Factual background The origins of the proceedings. Luna Park was opened in 1935 and has since operated as an amusement park. It is located on the north side of Sydney Harbour, just west of the Sydney Harbour Bridge. It is adjacent to densely populated residential areas. For a period before April 2004 it had been closed. When it reopened, persons living nearby became dissatisfied with various types of noise emanating from Luna Park – music, loud speaker announcements, mechanical noise and the screams and shrieks of patrons using the rides offered. These dissatisfied neighbours include the residents. On 5 April 2005 the residents57 commenced proceedings in the Equity Division of the Supreme Court of New South Wales by filing a summons and 15 affidavits in support. The 55 Street v Luna Park Sydney Pty Ltd [2006] NSWSC 624. 56 Street v Hearne [2007] NSWCA 113. 57 The proceedings began with four residents. Four more were added later. In particular, Mrs Hesse was joined as fifth plaintiff on 1 July 2005. initiating process complained about the tort of nuisance arising from the noise. On 6 April 2005, the documents were served on the first defendant, Luna Park Sydney Pty Ltd, the lessee and operator of Luna Park. The second defendant is Metro Edgley Pty Ltd. It owned 50 percent of the shares in Luna Park Sydney Pty Ltd. Metro on George Pty Ltd, a company of which the first appellant, Mr Hearne, was director and 50 percent shareholder, owned 34 percent of the shares in Luna Park Sydney Pty Ltd. The appellants. The first appellant was the managing director and chief executive officer of Luna Park Sydney Pty Ltd. He was selected by that company as the appropriate person to swear an affidavit verifying certain answers to interrogatories which are the source of the present appeal. The second appellant, Mr Tierney, was employed as development manager of, and strategic "advisor" to, Multiplex Developments Australia Pty Ltd. He was a director of the ultimate holding company of that company, Multiplex Ltd, which was also the ultimate holding company of Metro Edgley Pty Ltd. Like the first appellant, Mr Hearne, Mr Tierney acted on behalf of the two defendants in dealing with the New South Wales State Government in overtures to be described below. It was Mr Hearne and Mr Tierney who gave the instructions to the solicitors for Luna Park Sydney Pty Ltd which formed the basis for the explanations they offered on 9 March 200658 for two admitted contempts of court that the company committed on 25 July 2005 and 13 October 200559. The orders for affidavits and experts' reports. On the day the summons was returnable, 15 April 2005, White J made orders for the filing of further affidavits and experts' reports to be used in the proceedings. The Daily Telegraph article. On 18 April 2005 the Daily Telegraph, a mass circulation newspaper, published an article under the headline: "The NUMBY* files". The asterisk directed attention to the statement "*NUMBY: Not Under My Balcony. The city cousin of the NIMBY (Not in My Backyard)". Below the headline appeared the words: "Why Luna Park's neighbours aren't smiling". Below appeared a photograph of six unsmiling neighbours (including two of the residents). The article then said: "Well-heeled residents battling Luna Park have made some quirky, if not bizarre, claims". The article proper opened: 58 See below at [79]. 59 See below at [70] and [74]. "DISRUPTED violin lessons, entrapped Chinese herbal medicine fumes and smoking daughters have been cited by residents as reasons why Luna Park should shut down rides. The Daily Telegraph has seen several affidavits filed in the Supreme Court by Milsons Point residents against the amusement park, which re-opened in April last year. Here is a summary of some of the residents' affidavits, which make interesting reading. The court is likely to decide in July whether to grant the residents' injunction order to close down five rides. Luna Park says this order, if granted, could cause it major financial pain." As Ipp JA said, the article went on to refer, "in fairly disparaging terms, to allegations made by local residents about the noise from Luna Park and how it interfered with their lives." The aftermath of the Daily Telegraph article. On 19 April 2005 the solicitors for the residents complained that Luna Park Sydney Pty Ltd had released affidavits filed on behalf of the residents to the Daily Telegraph. That letter requested an undertaking not to release any unread affidavits to the media or any other person not properly connected to the proceedings. On 20 April 2005 the solicitors for Luna Park Sydney Pty Ltd replied. Their letter contained an unreserved apology from Luna Park Sydney Pty Ltd for releasing affidavits to the media. It also provided the undertaking sought, which extended to directors of Luna Park Sydney Pty Ltd acting in that capacity. The response to the orders of 15 April 2005. Among the material filed in response to White J's orders of 15 April 2005 was a "noise impact assessment report" dated 26 May 2005 by Dr Renzo Tonin, an acoustic expert, and an affidavit dated 30 June 2005 sworn by Mrs Hesse. On 1 July 2005 Young CJ in Eq listed the proceedings for a 10 day trial commencing on 31 October 2005. The report was served on Luna Park Sydney Pty Ltd on 27 May 2005, and Mrs Hesse's affidavit was served on that company on or about 4 July 2005. The overtures of the appellants to the State Government. In the period 25 July 2005 to 18 October 2005, Mr Hearne, Mr Tierney and Mr Gold (described as "an agent employed by" Luna Park Sydney Pty Ltd) had some dealings with the Minister for Tourism, Sport and Recreation and four people in her office; with a person in the office of the Minister for Planning; and with two officers of the Premier's Department. Two key communications took place on 25 July 2005. One of them was a request from Mr Hearne to the Minister for Tourism, Sport and Recreation to consider introducing legislation which would amend the Luna Park Site Act 1990 (NSW) so as to ensure that the operations of Luna Park would be protected against the complaints which were the subject of the noise nuisance proceedings, and any future complaints about the emission of noise from Luna Park. The other was an email from Mr Hearne to a person in the office of the Minister for Tourism, Sport and Recreation, a copy of which was transmitted to Mr Tierney. That email said: "Please find attached the following: List of some of the more spurious noise complaints; copy of article in Telegraph of 18th April 2005; copy of section of affidavit of one of the plaintiffs and their acoustic report commenting on the mechanical noise of the Ranger ride after we had reduced the noise by 9dB(A) ie 50%". the reduction of The "section of affidavit of one of the plaintiffs" was one and one half pages of Mrs Hesse's affidavit. The section of the acoustic report was one page of Dr Tonin's report. Each had handwritten annotations indicating their nature. On 11 August 2005 an email was sent on behalf of Mr Tierney to an officer of the Luna Park Reserve Trust, from whom Luna Park Sydney Pty Ltd leased Luna Park, enclosing some "Luna Park Briefing Notes". One of the enclosed documents, "Briefing to the Luna Park Reserve Trust", analysed threats to the "viability" of Luna Park on "three scenarios", described thus: Luna Park loses the court case. Luna Park wins the court case. Current detrimental impacts pending the Court hearing." The document made numerous references to the proceedings, and appeared in the following passage to contemplate legislation nullifying them: "Retrospectivity is required to prevent the court in the current case awarding damages as a result of any noise impacts the court determines in the last 18 months of trading. It also prevents future damages claims from other residents taking action." On 11 October 2005 the New South Wales State Government announced that it would be introducing the Luna Park Site Amendment (Noise Control) Bill. On the same day a Media Release quoted Mr Hearne as congratulating the government on that course, which he described as an "initiative to save Luna Park which has been under serious threat from the vexatious court action brought by a few well-heeled residents and a property developer". He said: "Notwithstanding this decisive action, it is a day of mixed emotions for us given that the vocal minority have been appeased by this compromise." The Media Release said that the "legislation would be backdated to 30 March 2004, the eve of the Park's official re-opening", but also said that the legislation "is not retrospective". On 13 October 2005 Mr Tierney sent an email and attachments to Paul O'Grady of the office of the Minister for Tourism, Sport and Recreation. The attachments were the 25 July 2005 email and its attachments. Mr Tierney said the attachments could be "used as good 'rhetorical' or debating" material in the Legislative Assembly. Mr Tierney said that that material included "some of the more ridiculous complaints" received. He also said that it included "some key lines" from the affidavit of one of the residents, but said that this could not be quoted "as it could be in contempt of court". The Luna Park Site Amendment (Noise Control) Bill 2005 (NSW), which had been introduced into Parliament on 12 October 2005, passed through both Houses by 18 October 2005, and was given Royal Assent on 19 October 2005. It was retrospective to 30 March 2004, when Luna Park had reopened. Thus the efforts of Mr Hearne and Mr Tierney, commencing with Mr Hearne's request to the Minister for Tourism, Sport and Recreation on 25 July 2005, had eventually borne fruit. The effect of the legislation on the proceedings. The enactment of the Bill prevented the residents from succeeding in the proceedings as they were then framed. On 20 October 2005 Brereton J, the trial judge in the proceedings, vacated the hearing dates for the trial, fixed to commence on 31 October 2005. The residents abandoned their claims based on noise nuisance, but amended their claim so as to allege breaches of the Trade Practices Act 1974 (Cth) and the Crown Lands Act 1989 (NSW). The interrogatories. On 14 December 2005 Brereton J ordered Luna Park Sydney Pty Ltd to answer some interrogatories about the dealings between that company and the State Government. He did so on the application of the residents. They wished to seek an order for the costs thrown away by reason of what they saw as the tardiness with which the dealings between Luna Park Sydney Pty Ltd and the State Government were revealed to them – only in the press releases from the State Government and Luna Park Sydney Pty Ltd on 11 October 2005 announcing the impending introduction of the Luna Park Site Amendment (Noise Control) Bill. The interrogatories were directed to the email of 25 July 2005, among other things. On 5 January 2006 the answers were provided. Those answers, although obtained in this adventitious way, exposed much of the factual material relied upon before the primary judge in the contempt application. The solicitors' correspondence. On 2 March 2006 the solicitors for the residents wrote a letter to the solicitors for the defendants in the proceedings. It began: "We are instructed to write to you in relation to certain conduct of Mr P Hearne, as a director of the First Defendant and Mr D Tierney, as a director of the ultimate holding company of the Second Defendant, assuming that your firm acts for them. If our assumption is incorrect, would you kindly let us know, so that we may write to them directly." The letter then pointed out that Mrs Hesse's affidavit and Dr Tonin's report "had been served on you in accordance with Court directions and contained the evidence these witnesses would be giving at the hearing of the proceedings." It then alleged that the publication of the extracts from Dr Tonin's report and Mrs Hesse's affidavit in the 25 July 2005 email to the Minister for Tourism, Sport and Recreation was "in breach of the implied undertaking not to use [them] for any purpose not directly connected with the conduct of the proceedings and a contempt of Court." On 9 March 2006 the solicitors for Luna Park Sydney Pty Ltd responded on behalf of that company. The letter said that the solicitors did not have instructions to act on behalf of Mr Hearne or Mr Tierney in their individual capacities. The letter said that "Mr Hearne and Mr Tierney were under the impression that only the public dissemination of the affidavits would amount to contempt. This is why Mr Tierney said in his e-mail that the affidavits could not be quoted." The letter admitted that the 25 July 2005 email: "was a breach of our client's undertaking to the Court to use those affidavits solely for the purposes of the proceedings. We have explained to Mr Tierney and Mr Hearne that their impression was mistaken and any dissemination, whether public or not, of material produced on discovery or served in accordance with the Court's directions which is not in the public domain is contempt. Our client unreservedly apologises for any such contempt it may have committed." On 10 March 2006 the solicitors for the residents said: "It is no answer for another party to extend an apology for the conduct and then expect us not to proceed against Mr Hearne and/or Mr Tierney on the basis of that third party apology. Our clients have instructed us to proceed against Mr Hearne and Mr Tierney despite the apology from your firm on behalf of Luna Park Sydney Pty Limited." On 15 March 2006 the notice of motion and statement of charge against each appellant was filed in the proceedings, conformably with the Supreme Court Rules 1970, Pt 55 r 7. According to a letter of 21 April 2006 from the solicitors for Luna Park Sydney Pty Ltd, also written on behalf of Messrs Hearne and Tierney, on 20 March 2006 counsel for Luna Park Sydney Pty Ltd "made a full apology" to Brereton J on its behalf "for any contempt that may have been committed." Issues not in controversy The appellants accepted that when a part of Mrs Hesse's affidavit and a part of Dr Tonin's report were transmitted by Mr Hearne to the Minister on 25 July 2005, and by Mr Tierney to the Minister on 13 October 2005, Mr Hearne and Mr Tierney caused Luna Park Sydney Pty Ltd, by their actions as its servants or agents, to breach its "implied undertaking" to the court not to use those materials otherwise than for the purposes of the proceedings. Further, they did not challenge the conclusion of the Court of Appeal, which was well-grounded in the evidence, that Mr Hearne and Mr Tierney each knew that the affidavit and the report had been produced in the course of the noise nuisance proceedings. In addition, it was not argued that the use of the affidavit and the report to advance the cause of the defendants on the political front, in negotiations with the State Government to procure the introduction of favourable legislation, was incapable of being contempt of court. Nor was it argued that the appellants' conduct was prevented from being contempt by reason of any principle of parliamentary privilege. It was not suggested by any party that the conduct in which the appellants engaged was a contemporary example of a "right of petition" to Parliament60. That is not 60 See reasons of Kirby J at [41]-[43]. surprising since the right to petition Parliament was a corollary of an undemocratic franchise. Finally, no argument took place on the question of what exceptions to the rule forbidding disclosure exist – for example, in relation to the disclosure of criminal conduct. The charge Only one charge is now persisted in against each appellant. That charge "[T]hat by his conduct as particularised below he breached the implied undertaking to the Court not to use affidavits or expert reports served on behalf of the Plaintiffs, in whole or in part, or the information contained in them, for any purpose not directly connected with the conduct of the proceedings and is thereby guilty of contempt of this Honourable Court." In the case of Mr Hearne, particular (a) alleged that he was managing director of the first defendant. Particular (b) alleged: "By the First Defendant's participation in the proceedings, Mr Hearne gave an implied undertaking to the Court not to use affidavits or expert reports served on behalf of the Plaintiffs, in whole or in part, or the information contained in them, for any purpose not directly connected with the conduct of the proceedings." Particular (c) alleged that pursuant to court directions, the plaintiffs served on the first defendant Mrs Hesse's affidavit and Dr Tonin's report, and alleged that those documents contained the evidence which Mrs Hesse and Dr Tonin would be giving at the hearing of the proceedings. Particular (e) recited Mr Hearne's oral request of the Minister on 25 July 2005, and particular (f) alleged that Mr Hearne transmitted the email of 25 July 2005, with its three attachments. Particular (h) alleged that by transmitting extracts from Mrs Hesse's affidavit and Dr Tonin's report, Mr Hearne was using them "for a purpose not directly connected with the conduct of the proceedings, namely to support the request particularised in paragraph (e) hereof." Particular (i) alleged, further or in the alternative, that by transmitting the Daily Telegraph article, "Mr Hearne republished the contents of the Plaintiffs' affidavits referred to in the said article and used those affidavits for a purpose not directly connected with the conduct of the proceedings namely to support the request particularised in paragraph ... (e) hereof."61 The material particulars to the charge against Mr Tierney were similar. Proceedings before the primary judge The appellants did not give evidence before the primary judge. Indeed, apart from documentary exhibits, the only evidence before him was an affidavit of a solicitor acting for the residents, who was cross-examined. The primary judge held that the forwarding by Mr Hearne of part of Mrs Hesse's affidavit on 25 July 2005 was a breach of an "implied undertaking" given by Luna Park Sydney Pty Ltd. But he held that, contrary to particular (b) of the charge, neither Mr Hearne nor Mr Tierney had given any undertaking to the court. He also held that neither Mr Hearne nor Mr Tierney had any "knowledge of the implied undertaking given by" Luna Park Sydney Pty Ltd and its solicitors. He said that he was not satisfied that Mr Hearne knew "the documents had been discovered" (ie generated for use in legal proceedings), although he was satisfied Mr Tierney did. He said that that knowledge was not particularised as an element of the charge against either Mr Hearne or Mr Tierney. The reasoning of Ipp JA and Basten JA There were two issues before the Court of Appeal. The first issue before the Court of Appeal was whether the "implied undertaking" was binding on Messrs Hearne and Tierney. Ipp JA held that the "implied undertaking" was not an undertaking of a voluntary kind, but an obligation imposed by that Messrs Hearne and Tierney did not dispute that Mrs Hesse's affidavit and Dr Tonin's report were subject to that obligation. He held that the obligation applies to all persons into whose hands the documents to which it applies come, if they know that they were obtained "by way of discovery or other compulsory court process." He denied that Mr Hearne and Mr Tierney had to know of the "implied undertaking". The residents "only had to prove [knowledge of] the facts that law in particular circumstances. He said 61 The primary judge rejected that allegation. Since the matter was apparently not debated in the Court of Appeal, and was not debated in this Court, the detail and correctness of his reasoning need not be considered. gave rise to the obligation imposed on Mr Hearne and Mr Tierney by law."62 He was satisfied that each knew that the proceedings were pending, and that the documents had been produced in accordance with the court's processes63. Basten JA, after adding some remarks, agreed with Ipp JA64. The second issue was whether an appeal against a dismissal of contempt charges was competent. That issue arose from the terms of s 101(5) and (6) of the Supreme Court Act 1970 (NSW): "(5) An appeal lies to the Court of Appeal from any judgment or order of the Court in a Division in any proceedings that relate to contempt (whether civil or criminal) of the Court or of any other court. Subsection (5) does not confer on any person a right to appeal from a judgment or order of the Court in a Division in any proceedings that relate to criminal contempt, being a judgment or order by which the person charged with contempt is found not to have committed contempt." Ipp JA held that the residents' "allegations [were] of breaches of an implied undertaking that were wilful but not contumacious in the broad sense – and were merely casual, accidental or unintentional". Hence the contempts alleged were prima facie civil. He concluded that that prima facie conclusion had not been rebutted. In particular he held that the residents' purposes were not punitive, and 62 Since it was common ground that Mr Hearne and Mr Tierney had that knowledge, it was not necessary for the parties to debate whether forms of notice other than knowledge would suffice. 63 The ground of appeal directed to this reasoning was: "The Court of Appeal erred in holding that as a consequence of the participation by Luna Park Sydney Pty Limited in the proceedings, the First and Second Appellants gave implied personal undertakings not to use, otherwise than for the purposes of the proceedings, affidavits that had been filed in Court." That is not what the Court of Appeal in fact held. 64 The appellants contended that in some respects Basten JA's reasoning differed from that of Ipp JA. It is unnecessary to examine the extent and significance of any differences. that two important purposes could still be achieved in taking steps to deter breach of the "implied undertaking" in future. One was that the residents "are entitled to protect their privacy by seeking orders that would deter Mr Hearne and Mr Tierney from acting in the same way again." The other was: "[P]ublic opinion about the noise may, at any time, become capable of affecting the interests of those who operate Luna Park. As has been seen in the past, the [residents'] documents that are subject to the implied undertaking are capable of being used to influence public opinion against those who complain about the noise levels at Luna Park." Ipp JA also found that: "[T]here is a reasonable possibility that, should circumstances change, and should it be to [the] advantage of [Mr Hearne and Mr Tierney] to disclose the materials subject to the implied undertaking again, they may do so." Basten JA, after some brief observations, agreed with Ipp JA on this issue also. Handley AJA disagreed with the majority on both issues. In relation to whether Mr Hearne and Mr Tierney were bound by the "implied undertaking", he held that it only bound the person who gave it and that person's solicitor or industrial advocate; in particular it did not bind servants or agents of the person who gave it. In relation to the competency of the appeal, he considered that the proceedings were not "remedial or coercive"65 in the interests of the residents, but punitive, and hence criminal. The extent of the "implied undertaking" Before turning to the appellants' submissions in relation to the extent and enforceability of the "implied undertaking", it is desirable to set out some background legal principles which were not in controversy. Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise66, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given 65 See Witham v Holloway (1995) 183 CLR 525 at 532 per Brennan, Deane, Toohey and Gaudron JJ; [1995] HCA 3. 66 Bourns Inc v Raychem Corp [1999] 1 All ER 908 at 916 [19]; affd [1999] 3 All ER unless it is received into evidence. The types of material disclosed to which this principle applies include documents inspected after discovery67, answers to interrogatories68, documents produced on subpoena69, documents produced for the purposes of taxation of costs70, documents produced pursuant to a direction from an arbitrator71, documents seized pursuant to an Anton Piller order72, witness statements served pursuant to a judicial direction73 and affidavits74. The appellants did not dispute the existence of this principle, and in particular did not dispute its potential application to the affidavit of Mrs Hesse and the witness It is common to speak of the relevant obligation as flowing from an "implied undertaking"75. It may be noted that the general law protection is often buttressed by protection from rules of court. Thus until 15 August 2005, the New South Wales Supreme Court Rules 1970, Pt 65 r 7, prevented strangers to litigation from having access to documents or things on the court file without the leave of the 67 Riddick v Thames Board Mills Ltd [1977] QB 881; Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 32-33; [1995] HCA 19. 68 Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 at 510-511; Ainsworth v Hanrahan (1991) 25 NSWLR 155. 69 Eltran Pty Ltd v Westpac Banking Corporation (1990) 25 FCR 322. 70 Bourns Inc v Raychem Corp [1999] 3 All ER 154 at 169-170. 71 Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 33, 39, 46-47 and 72 Cobra Golf Inc v Rata [1996] FSR 819. 73 Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509; Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 223; State Bank of South Australia v Smoothdale (No 2) Ltd (1995) 64 SASR 224 at 229. 74 Medway v Doublelock Ltd [1978] 1 WLR 710; [1978] 1 All ER 1261; Re Addstone Pty Ltd (in liq); Ex parte Macks (1998) 30 ACSR 156. 75 Eg, Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 304, 309, 319, 320 and 321; Crest Homes Plc v Marks [1987] AC 829 at 853. Court: see also Practice Note No 9776. From 1 March 2006, Practice Note SC Gen 2 prescribed procedures in relation to access to Supreme Court files. The most important paragraphs are: "6. Access to material in any proceedings is restricted to parties, except with the leave of the Court. Access will normally be granted to non-parties in respect of: pleadings and judgments in proceedings that have been concluded, except in so far as an order has been made that they or portions of them be kept confidential; documents that record what was said or done in open court; material that was admitted into evidence; and information that would have been heard or seen by any person present in open court, unless the Judge or registrar dealing with the application considers that the material or portions of it should be kept confidential. Access to other material will not be allowed unless a registrar or Judge is satisfied that exceptional circumstances exist." The appellants' arguments The appellants argued that the case propounded in each statement of charge was that (i) each appellant had given an implied undertaking to the court (particular (b) of Mr Hearne's case and particular (d) of Mr Tierney's) and (ii) each had "breached the implied undertaking". The appellants stressed that the statements of charge did not allege that Luna Park Sydney Pty Ltd had breached an implied undertaking given by it and did not allege that they had been party to any such breach. The appellants argued that an implied undertaking to the court is equivalent to an injunction granted by the court. The undertaking creates an obligation on the person who gave it (just as the injunction creates an obligation on the person against whom it is granted). The relevant obligation is on that person, not that person's servants or agents77. The servants and agents are 76 (1998) 43 NSWLR 1. 77 Citing Marengo v Daily Sketch and Sunday Graphic Ltd [1948] 1 All ER 406 at only liable if they knowingly assist the person bound to breach the undertaking78. Hence in order to convict the servant or agent of contempt, it would be necessary to establish that the servant or agent had knowledge of "all of the material facts going to make up the contempt"79. It would be necessary to establish that the servant or agent had knowledge of the fact that the undertaking had been given or the injunction granted, and hence that the conduct had been forbidden by the court80. These submissions contradicted the majority view in the Court of Appeal, which was that the "implied undertaking" reflected an obligation imposed by the general law in particular circumstances, and that the residents did not have to prove that Mr Hearne and Mr Tierney knew of the implied undertaking – only that they knew the facts that generated the obligation imposed by the general law. The appellants criticised that conclusion on particular grounds to be examined below; however, it is convenient at this point to deal with certain problems of principle facing the appellants' submissions. The appellants' arguments: problems in principle There are two propositions which are damaging to the appellants' arguments. The first is that to call the obligation of the litigant who has received material generated by litigious processes one which arises from an "implied undertaking" is misleading unless it is understood that in truth it is an obligation of law arising from circumstances in which the material was generated and received. The second is that that obligation would be of very limited protection if it were only personal to the litigant, which is why it is often said to be extended also to a litigant's solicitor, industrial advocate or barrister, and also to third 78 Citing Seaward v Paterson [1897] 1 Ch 545 at 554-556. 79 Citing Hamilton v Whitehead (1988) 166 CLR 121 at 128; [1988] HCA 65. 80 Citing Ronson Products Ltd v Ronson Furniture Ltd [1966] Ch 603 at 617. Although it is not necessary for the decision of this appeal to say this, to avoid doubt it should be recorded that the appellants' submission that contempt of court cannot be proved against a person who has not complied with an injunction (or an express undertaking to the court) unless it is shown that that person appreciated the unlawfulness of non-compliance is quite incorrect. parties like a shorthand writer or court officer. For that reason the authorities recognise a broader principle by which persons who, knowing that material was generated in legal proceedings, use it for purposes other than those of the proceedings are in contempt of court. Each of these propositions will be examined in turn. "Implied undertaking" is an obligation of substantive law Originally the restriction on the use of documents generated by litigious processes depended on an express undertaking81. Then in Williams v The Prince of Wales Life, &c, Co82, Sir John Romilly MR, while requiring an express undertaking, put the matter in terms of legal rights: "[I]t is not the right of a Plaintiff, who has obtained access to the Defendants' papers, to make them public." The following year the protection was not said to rest on an express undertaking, but on a "rule" that "where documents have been produced in obedience to an order of this Court, the Court has a right to say to the person who has obtained their production: 'Those documents shall never be used by you except under the authority of the Court'"83. In Alterskye v Scott84, although Jenkins J referred to a concession by counsel that his client obtained discovery on an "implied undertaking", in the operative part of his reasoning he did not analyse the matter in terms of "undertaking", either express or implied, but in terms of an "implied obligation not to make an improper use of the documents." And other judges have preferred to the language of "implied undertaking" the 81 Richardson v Hastings (1844) 7 Beav 354 [49 ER 1102]; Hopkinson v Lord Burghley (1867) LR 2 Ch App 447. 82 (1857) 23 Beav 338 at 340 [53 ER 133]. 83 Reynolds v Godlee (1858) 4 K & J 88 at 92 [70 ER 37 at 39] per Sir William Page Wood V-C. 84 [1948] 1 All ER 469 at 470-471. Cf the reading given to the case in Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd [1975] QB 613 at 618; Riddick v Thames Board Mills Ltd [1977] QB 881 at 896; Ainsworth v Hanrahan (1991) 25 NSWLR 155 at 163. words "implied obligation"85 or "obligation"86 or "duty"87. Another formula is that the party obtaining discovery is "taken to undertake to the court that the documents obtained on discovery will not be used for any purpose other than the action in which they are produced"88. In Harman v Secretary of State for the Home Department89 Lords Simon of Glaisdale and Scarman, who accepted the general rule of limited use but disagreed with the majority about applying it to documents read in open court, said: "Imposed by law the obligation is formulated as arising from an undertaking exacted by the court from the party and his solicitor to whom the documents are disclosed. It is the condition upon which discovery is ordered." (emphasis added) Lord Denning MR in Riddick v Thames Board Mills Ltd90 said: "A party who seeks discovery of documents gets it on condition that he will make use of them only for the purpose of that action, and no other purpose." (emphasis added) The fact that the role of the word "undertaking" is merely to indicate the way in which an "obligation" which is "imposed by law" as a "condition" of discovery binds the disclosee highlights the substantive nature of the obligation. There is nothing voluntary about the "undertaking". 85 Riddick v Thames Board Mills Ltd [1977] QB 881 at 901 per Stephenson LJ; Home Office v Harman [1981] QB 534 at 541 and 545 per Park J and 563-564 per 86 Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 312 per Lords Simon of Glaisdale and Scarman; State Bank of South Australia v Smoothdale (No 2) Ltd (1995) 64 SASR 224 at 229 per King CJ; Akins v Abigroup Ltd (1998) 43 NSWLR 539 at 548 per Mason P. 87 Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 302 per Lord Diplock and 314 per Lords Simon of Glaisdale and Scarman. 88 Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 at 38 per 89 [1983] 1 AC 280 at 313. 90 [1977] QB 881 at 896. "The implied undertaking not to make collateral use of documents disclosed on discovery arises automatically as an incident of the discovery process. It is in no sense implied as a result of dealings between the parties. The discloser may well not have thought of the implications of giving discovery and the disclosee may well not have turned his mind to the matter of what use he can make of the documents outside the action. Had he thought of it, he might well have wanted full freedom to do what he liked with the material, particularly if his own discovery is non-existent or very limited. So the obligation is not to be likened to a term implied in a contract between the parties to the litigation. On the contrary, it is an obligation to the court, not the other party, which is implied. It is for that reason that its breach is treated as contempt. The obligation is imposed as a matter of law."91 The expression "implied undertaking" is thus merely a formula through which the law ensures that there is not placed upon litigants, who in giving discovery are suffering "a very serious invasion of the privacy and confidentiality of [their] affairs", any burden which is "harsher or more oppressive ... than is strictly required for the purpose of securing that justice is done."92 To that statement by Lord Keith of Kinkel of the purpose of the "implied undertaking" may be added others. In Riddick v Thames Board Mills Ltd93 Lord Denning MR said: "Compulsion [to disclose on discovery] is an invasion of a private right to keep one's documents to oneself. The public interest in privacy and confidence demands that this compulsion should not be pressed further than the course of justice requires. The courts should, therefore, not allow the other party – or anyone else – to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice." In Harman v Secretary of State for the Home Department94 Lord Diplock said: "The use of discovery involves an inroad, in the interests of achieving justice, upon the right of the individual to keep his own documents to himself; it is an inroad that calls for safeguards against abuse, and these 91 Bourns Inc v Raychem Corp [1999] 1 All ER 908 at 915 [16] per Laddie J. 92 Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 308. 93 [1977] QB 881 at 896. 94 [1983] 1 AC 280 at 300. the English legal system provides ... through its rules about abuse of process and contempt of court." In Watkins v A J Wright (Electrical) Ltd95 Blackburne J said: "In my judgment, a serious inroad into [the safeguards referred to by Lord Diplock] and, therefore, into the utility of the discovery process in the just disposal of civil litigation would occur if it were open to a litigant (or his solicitor) to enjoy the fruits of discovery provided by the other side, but avoid the risk of committal for contempt for acting in breach of the countervailing implied obligation on the ground that he was unaware of the existence of the undertaking. I take the view that it does not lie in the mouth of a person to plead ignorance of the legal consequences of the discovery process." To speak in terms of "undertaking" serves: "a useful purpose in that it confirms that the obligation is one which is owed to the court for the benefit of the parties, not one which is owed simply to the parties; likewise, it is an obligation which the court has the right to control and can modify or release a party from. It is an obligation which arises from legal process and therefore is within the control of the court, gives rise to direct sanctions which the court may impose (viz contempt of court) and can be relieved or modified by an order of the court."96 Staughton LJ said: "[A]lthough described as an implied undertaking it is a rule which neither party can unilaterally disclaim."97 The importance with which the courts have viewed the obligation under discussion is indicated by the fact that although it can be released or modified by the court, that dispensing power is not freely exercised, and will only be exercised where special circumstances appear98. 95 [1996] 3 All ER 31 at 42. 96 Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 at 764-765 per Hobhouse J; [1991] 3 All ER 878 at 885. 97 Mahon v Rahn [1998] QB 424 at 453. 98 Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 37. "Circumstances under which that relaxation would be allowed without the consent of the serving party are hard to visualise, particularly where there was any risk that the statement might be used directly or indirectly to the prejudice of the serving party."99 Hence Hobhouse J100 was correct to conclude: "The expression of the obligation as an implied undertaking given to the court derives from the historical origin of the principle. It is now in reality a legal obligation which arises by operation of law by virtue of the circumstances under which the relevant person obtained the documents or information." Third party obligations The primary person bound by the relevant obligation is the litigant who receives documents or information from the other side pursuant to litigious processes. The implied undertaking also binds others to whom documents and information are given. For example, expert witnesses, who are not parties, commonly receive such documents and information and are bound by the obligation. It is likely that, in the future, documents and information will be provided to persons funding litigation, who will likewise be bound by the obligation. In Harman v Secretary of State for the Home Department the person in contempt was the party's solicitor101. In Hamersley Iron Pty Ltd v Lovell102 it was the party's industrial advocate. In Watkins v A J Wright (Electrical) Ltd103 it was a person who was not qualified as a solicitor in the forum, but engaged in day-to-day conduct of the litigation. Laddie J thought "it would be just as much a contempt of court for, say, a shorthand writer or court usher to disclose discovery documents outside the action as it would be for one of the parties to do 99 Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 at 775 per Hobhouse J; [1991] 3 All ER 878 at 895. 100 Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 at 764; [1991] 3 All ER 878 at 885, approved in Mahon v Rahn [1998] QB 424 at 454 per Staughton LJ. 101 [1983] 1 AC 280 at 300. 102 (1998) 19 WAR 316. 103 [1996] 3 All ER 31 at 43. so."104 In both England and Australia, these instances have been broadened into a wider and coherent principle. Thus Hobhouse J said: "[A]ny person who knowingly ... does acts which are inconsistent with the undertaking is himself in contempt and liable to sanctions"105. In Watkins v A J Wright (Electrical) Ltd106 "I cannot accept the submission that ignorance of the implied undertaking provides a person with a defence to proceedings for contempt arising out of his breach of the implied undertaking. As is well known, the implied undertaking arises by implication of law on the giving of discovery in the course of a civil action where discovery is required to be given." He also rejected a submission that third parties could not be bound by the obligations created by the "implied undertaking". He said107: "I see no basis for confining the scope of the undertaking to those who are parties to the action, to whom discovery has been given, and to the solicitor or solicitors on the record." As noted above, he held that a person engaged in day-to-day conduct of litigation on behalf of a litigant was bound – an expression not irrelevant to Messrs Hearne and Tierney, who were certainly engaged in day-to-day conduct of a struggle which included but was wider than litigation, and included an attempt to nullify the litigation by legislative means. Turning to Australian authorities, in Esso Australia Resources Ltd v Plowman108, Mason CJ (with whom Dawson and McHugh JJ agreed) said: "It would be inequitable if a party were compelled by court process to produce private documents for the purposes of the litigation yet be exposed to publication of them for other purposes. No doubt the implied obligation must yield to inconsistent statutory provisions and to the requirements of curial process in other litigation, eg discovery and 104 Bourns Inc v Raychem Corp [1999] 1 All ER 908 at 916 [18]. 105 Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 at 765; [1991] 3 All ER 878 at 886. 106 [1996] 3 All ER 31 at 41. 107 [1996] 3 All ER 31 at 43. 108 (1995) 183 CLR 10 at 33. inspection, but that circumstance is not a reason for denying the existence of the implied obligation." In Hamersley Iron Pty Ltd v Lovell109 Anderson J (Pidgeon and Ipp JJ concurring) said: "The implied undertaking is binding upon anyone into whose hands the discovered documents come, if he knows that they were obtained by way of discovery". And Ryan J said in Spalla v St George Motor Finance Ltd110: "To be effective, the undertaking must bind the litigant by whom it is given and his or her privies." If this principle did not exist, the "implied undertaking" or obligation on the litigant would be of little value because it could be evaded easily. That is why Lord Denning MR said in Riddick v Thames Board Mills Ltd111: "The courts should ... not allow the other party – or anyone else – to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice."112 And in the same case113 Stephenson LJ also said: "[I]t is important to the public and in the public interest that the protection should be enforced against anybody who makes improper use of it." Use with knowledge of the circumstances would be improper use. There is no support in the authorities for the idea that knowledge of anything more than the origins of the material in legal proceedings need be established. In particular, there is no support for the idea that knowledge of the "implied undertaking" and its consequences should be proved, for that would be to require proof of knowledge of the law, and generally ignorance of the law does not prevent liability arising. 109 (1998) 19 WAR 316 at 334-335. 110 (2004) 209 ALR 703 at 717 [40]. 111 [1977] QB 881 at 896. 112 Does the failure of Lord Denning MR to refer to notice indicate that it is not necessary? In the present case the question does not matter. There was notice, and the residents did not contend that there could be liability without notice: indeed they submitted that knowledge that the documents were obtained by compulsory court process was necessary. 113 [1977] QB 881 at 902. The two principles just discussed114 are inherent in the substance of, and largely consistent with the detail of, the reasoning of the Court of Appeal majority. If they are sound, the appellants' contentions must fail. It is convenient now to deal with certain specific criticisms which the appellants made of the majority reasoning and of those principles. Change from voluntary undertaking to obligation imposed by law The appellants submitted: "The majority did not explain how and when the nature of the obligation changed from one voluntarily undertaken by a litigant to one imposed as a matter of law." When did the change take place? No later than 1948, the year of Jenkins J's judgment in Alterskye v Scott115; it has been repeatedly evidenced since then116. How did the change take place? Through the tendency of judges increasingly to regard the language of "implied undertaking" as unrealistic, and on balance unmeritorious. Express undertakings in place of implied The appellants submitted that the majority approach did not sit comfortably with the fact that an express undertaking may be given in place of an implied undertaking. They did not say why not. The point of insisting on an express undertaking, commonly employed in relation to documents which it is particularly desired to keep secret, is to bring explicitly home to the minds of those giving it how important it is that the documents only be used for the purpose of proceedings. It does not follow that the obligation in question does not exist in more routine cases without the need for an express undertaking. If the appellants' stance were sound, it would be necessary for litigants, in order to obtain protection partially, but not completely, as effective as that given by the approach urged by the residents, to seek express undertakings to the court from all servants and agents of a party, from all potential lay and expert witnesses, and from all other persons into whose hands documents generated in the proceedings may come. At present this happens in exceptional cases for particular reasons. If it were necessary for that general practice to develop, it would be extremely cumbersome, and extremely wasteful of time, energy and money. 115 [1948] 1 All ER 469. 116 See above at [105]-[106]. Implied undertaking expressly modified by court The appellants submitted that the majority approach did not sit comfortably with the fact that an implied undertaking may be expressly modified by the court. Again, they did not say why not. Modification is not common. While legal obligations are not usually modified by courts to suit the interests of particular parties, it can happen, for example under companies and trustee legislation. Differing degrees of knowledge The appellants submitted that there is no reason in principle why the degree of knowledge necessary to sustain a prosecution of a third party for contempt of an undertaking in connection with the production of documents to the court should depend on whether the undertaking was given expressly or by implication. The relevant reason of principle is that while liability in relation to an express undertaking relates to the giving of that undertaking at a particular time and in particular precise terms, varying from case to case, which third parties have very limited means of finding out about, liability in relation to an "implied undertaking" arises in uniform terms in all cases where documents are produced to the court. A key objective factual integer, knowledge of which is necessary to prove liability, is in one case the terms of the express undertaking, in the other the events giving rise to the "implied undertaking" or legal obligation. Is the Court of Appeal majority's approach harsh? The appellants submitted that the majority approach was harsh, in that it meant that any person into whose hands discovered documents came and who used them for purposes extraneous to the proceedings could be guilty of contempt on proof only of knowledge on the part of that person that the documents originated in legal proceedings, even if that person had "no idea of the legal significance of that fact". But a person who behaved in that way in relation to documents the subject of an express undertaking could be liable for contempt, even though that person was equally ignorant of the legal significance of the express undertaking. Is the approach of the Court of Appeal majority necessary? One theme of the reasoning employed by the majority of the Court of Appeal was that it was necessary to hold third parties, who had knowledge that material had been generated in connection with legal proceedings and who used that material for purposes beyond those of the proceedings, in contempt of court. It was necessary because without that control there was a risk that information generated in connection with court procedures would be wrongly used. The appellants contended that the Court of Appeal overstated that risk. First, it was said that adequate sanctions could always be imposed directly on the litigant: but this was of little avail in this very case, where even though Luna Park Sydney Pty Ltd committed an admitted contempt of court by handing affidavits over to the Daily Telegraph in April 2005 and undertook not to repeat it, its managing director, Mr Hearne, committed a further contempt in July, and Mr Tierney did so in October. Secondly, it was said that individual servants or agents of a corporate litigant in breach of the "implied undertaking" could be made subject to personal sanctions if they knew of the obligations on the corporate litigant created by the "implied undertaking". But this begs two questions – one, whether it is legally necessary to make those obligations known, and, secondly, whether they could be made known sufficiently commonly to create protection. Thirdly, it was said that an individual receiving material the subject of the "implied undertaking" could be restrained from using it by injunction. That is less advantageous than enforcing the "implied undertaking" without instituting an additional set of proceedings. The fact is that because in reality the "implied undertaking" is an obligation imposed as a matter of law, it would be very hard to prove knowledge of that matter of law against lay persons. The narrower the avenue of liability against third parties, the weaker the incentive for litigants to give full discovery and to provide all relevant evidence. "The interests of the proper administration of justice require that there should be no disincentive to full and frank discovery"117 – or to full employment of all of the court's procedures directed to accurate fact finding in litigation. The appellants submitted that the principle advocated by the residents and adopted by the majority of the Court of Appeal was unnecessary for another reason. They submitted that adequate protection could be obtained, where litigants were in breach of the "implied undertaking", by proceedings for contempt against the servants or agents of those litigants who had knowingly assisted them to breach the undertaking. If the appellants are right in submitting, as they did, that it was necessary to prove knowledge of the "undertaking" and conscious adversion to the unlawfulness of the conduct, as distinct from proving only knowledge of the origin of the relevant information in litigation, the protection is very narrow. Even if they are not right about that (and they are not), the protection does not extend to control the behaviour of persons who are not servants or agents of the litigants. 117 Riddick v Thames Board Mills Ltd [1977] QB 881 at 912 per Waller LJ. Appellants' criticisms of the authorities Status of Distillers' case. The appellants criticised the reliance by the Court of Appeal majority, and by the Full Court of the Supreme Court of Western Australia in Hamersley Iron Pty Ltd v Lovell118, on what Talbot J said in Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd119: "Those who disclose documents on discovery are entitled to the protection of the court against any use of the documents otherwise than in the action in which they are disclosed. ... [T]his protection can be extended to prevent the use of the documents by any person into whose hands they come unless it be directly connected with the action in which they are produced." One point the appellants made was that the judges criticised had relied on what Talbot J said "without adverting to the fact that" the proceedings before Talbot J were not contempt proceedings. Instead they were proceedings seeking an interlocutory injunction against an apprehended publication by a newspaper of documents disclosed on discovery to certain persons claiming to be the victims of torts, which had been handed over to the newspaper by an expert adviser to the victims. Another was that by the time the injunction was sought the newspaper "had been put on notice of their origin in discovery and the obligation to use them only for the purposes of the proceedings" (emphasis added). It may be accepted that the appellants have demonstrated that what Talbot J said was obiter dicta. But the appellants did not demonstrate that what Talbot J said in injunction proceedings was wrong when applied in the field of contempt. Nor is there any force in the emphasised words just quoted, given that 16 months after the newspaper undertook not to use any of the discovered documents, it terminated the undertaking. Status of Hamersley case. The appellants also argued that what was said in Hamersley Iron Pty Ltd v Lovell120 was open to criticism because "it was not argued on the facts that [the defendant] was unaware of the implied undertaking in relation to discovered documents". This may make what Anderson J said dicta: it does not show those dicta to be incorrect. 118 (1998) 19 WAR 316 at 334-335. 119 [1975] QB 613 at 621. 120 (1998) 19 WAR 316: at [110] above. Status of Lord Roskill's opinion in Harman's case. The appellants argued that in Harman v Secretary of State for the Home Department the only Law Lord to have treated the "implied undertaking" as extending beyond the litigant and the litigant's solicitor was Lord Roskill, who spoke of the undertaking as arising on the part of "the solicitors and other agents" of the parties121. The appellants criticised Blackburne J in Watkins v A J Wright (Electrical) Ltd122 for relying "upon the dictum of Lord Roskill ... without noting its limitations" – ie, that Harman's case concerned a solicitor only. The appellants also said that while in Watkins' case the person bound by the "implied undertaking" was not a solicitor admitted in England, he was admitted in Scotland and was acting as a solicitor. Finally, they said that Blackburne J's decision "was ... only a first instance decision and as such of limited persuasive value". First, the circumstance that Harman's case concerned a solicitor only is a sufficient explanation for why the Law Lords other than Lord Roskill did not deal with persons other than solicitors. Secondly, while that circumstance shows that Lord Roskill's remark was only a dictum, it does not reveal it to be untrue. Thirdly, the same is true in relation to Blackburne J's opinion so far as it extends beyond the facts before him – a Scottish solicitor not admitted in the forum who had taken upon himself "the day-to-day conduct of the litigation". Fourthly, the status of a decision of a court in an appellate hierarchy does not affect its persuasiveness – only its binding quality. Whilst it was not necessarily always so123 the current position is that no English decision is binding on Australian courts. On the other hand, irrespective of the position of an English court in the English appellate hierarchy, its decision can be persuasive for Australian courts. The reasoning on which Blackburne J's opinion about third party liability rests is highly persuasive. The opinion was expressed to rest not only on Lord Roskill's dictum, but also on the "underlying rationale for the existence of the implied undertaking"124 and the inutility of the contrary view. 121 [1983] 1 AC 280 at 320. Lord Diplock at 304, Lord Keith of Kinkel at 309 and Lords Simon of Glaisdale and Scarman at 312-313 spoke only of an implied undertaking by the party or his solicitor. 122 [1996] 3 All ER 31 at 43. 123 Cook v Cook (1986) 162 CLR 376 at 390; [1986] HCA 73. 124 Watkins v A J Wright (Electrical) Ltd [1996] 3 All ER 31 at 43. The terms of the statements of charge Putting aside the terms of the statements of charge, it is clear that the Court of Appeal majority were correct to conclude that Mr Hearne and Mr Tierney had each committed contempt of court by using material for purposes other than the legal proceedings in which that material was generated and served on interests connected with them where they knew that that was the origin of the material. However, the appellants argued that the terms of the statements of charge precluded the allowing of the appeal to the Court of Appeal. It was submitted that contrary to the particulars (particular (b) for Mr Hearne and particular (d) for Mr Tierney), neither appellant had given an implied undertaking to the court. That being the only "implied undertaking" referred to, the allegation in the main body of the charge that each appellant "breached the implied undertaking" had to fail. There was no allegation that the appellants were guilty of contempt in procuring a breach of the relevant obligation by Luna Park Sydney Pty Ltd. Hence, it was submitted, the Court of Appeal should have dismissed the appeal. Leaving aside the particulars, if the words "implied undertaking" at the start of each charge are read as referring to an obligation imposed by law binding on the appellants, not to use affidavits or expert reports served on behalf of the residents for purposes other than the proceedings, it was correct to allege that each appellant breached that obligation. The statement of charge does not allege a knowing breach, but the evidence showed clearly that each breach was a knowing breach, and the appellants do not contest the Court of Appeal's findings to that effect. In short, the case proved was narrower than the case alleged. The case proved is a case falling within the rules for establishing contempt of court. The case alleged was not. It was open to the appellants to have the case alleged struck out. There are indications that the appellants pursued this course, but on what grounds is not clear. Nor is it clear why that course failed. The case alleged having proceeded to a primary hearing and an appeal, it was incumbent on the appellants to demonstrate why the case of contempt which has been proved does not justly sustain the orders of the Court of Appeal. In particular, it was incumbent on them to demonstrate why there should be a stricter degree of accuracy in charging contempts of court than in charging conventional crimes. This they did not do. It was said that some additional evidence might have been called that was germane to the issue of knowledge, and that different decisions about whether to call the appellants might have been made had the form of the charges been different. But the possession by the appellants of the only knowledge which was relevant – knowledge that the affidavit and statement were supplied by the residents in legal proceedings – was incontrovertible, and no other potential evidence relevant to liability (as distinct from whether the appeal to the Court of Appeal was competent) was pointed to. Was the appeal to the Court of Appeal competent? The parties supplied very detailed submissions about the meaning, correctness and application of the authorities on the distinction between civil and criminal contempt. In particular, there was a division between the parties about whether the following statements by Ipp JA were correct: "(c) Generally, however (and I understand this to mean prima facie), a breach of an injunctive order or an undertaking that is wilful but not contumacious in the broad sense – and is not merely casual, accidental or unintentional – is regarded as a civil contempt (this being the traditional distinction between civil and criminal contempt which still has significance). The fact that the application for an order that contempt has been committed is made within the main action, and not by a stranger to the suit, would tend to show that the contempt is civil in nature." The present appeal does not present an appropriate occasion either to deal with the appellants' attacks on these passages or to deal with all the other issues of law raised. It is necessary, however, first to put aside a suggestion by the appellants that all proceedings for contempt "must realistically be seen as criminal in nature". The quoted words125 were used to support a conclusion by this Court that all charges of contempt must be proved beyond reasonable doubt126. The reaching of that conclusion eliminates one possible difference between civil and criminal contempt. It does not affect the question of appellate rights. Section 101(6) assumes that there is a difference, in relation to appellate rights, between civil and criminal contempts. A legislative assumption about the general law can be ignored on the ground that it is wrong, but the conclusion that it is wrong is not lightly to be reached. The appellants accepted that in relation to rights to appeal against the dismissal of contempt proceedings the distinction remained. 125 From Hinch v Attorney-General (Vict) (1987) 164 CLR 15 at 49; [1987] HCA 56. 126 Witham v Holloway (1995) 183 CLR 525 at 534. The precise words in Hinch v Attorney-General (Vict) (1987) 164 CLR 15 at 49 were actually: "must realistically be seen as essentially criminal in nature" (emphasis added). In the end the appellants departed from any suggestion that all contempts were criminal by supporting the dissenting opinion of Handley AJA that the question whether an appeal lay to the Court of Appeal from the dismissal of proceedings for contempt depended on whether "it clearly appears that the proceedings are remedial or coercive in nature" as distinct from being punitive127. The distinction between that which is remedial or coercive on the one hand and that which is punitive on the other corresponds with the distinction between seeking to ensure compliance with the relevant obligation and seeking to punish for past breaches of it. It is a distinction to be applied, as the parties agreed, bearing in mind the need to approach the application of the person seeking the remedies for contempt by reference to its substantial character, not to merely formal or incidental features128. On the facts, Handley AJA considered that the purpose was not remedial or coercive, but punitive. On the other hand, the analysis of the facts made by the majority led them to the opposite view129. In approaching the task of characterisation, neither majority nor minority were assisted by any direct evidence from either the residents or the appellants. The better view is that of the majority, in the light of the history as the residents must have perceived it. That history was as follows. First, Luna Park Sydney Pty Ltd had, no more than 12 days after the institution of the noise nuisance proceedings on 5 April 2005, given at least some of the affidavits on which the residents were relying to the Daily Telegraph, which employed them to publish a rather derisive article. Within one day of that 127 Witham v Holloway (1995) 183 CLR 525 at 532 per Brennan, Deane, Toohey and 128 In the latter category may be placed the form of relief sought in the notices of motion – an adjudication that each appellant was in contempt, such further or other orders as the court thought fit, and costs. On the one hand, that leaves open the possibility of very serious sanctions like imprisonment; on the other hand, the orders were in a form common in civil proceedings, and included the possibility of injunctions against future breaches. The question of whether claims for relief in contempt proceedings should normally be more specific is an important one, but it can be put on one side in the present case. 129 A question was raised whether the only relevant time for assessing the character of the proceedings is at the time of their commencement, or whether findings of fact by the primary judge are also relevant. It is not a question which need be answered in this case. article, the solicitors for the residents had asked Luna Park Sydney Pty Ltd for, and by the next day, 20 April 2005, had obtained, an unreserved apology, and an undertaking not to release unread affidavits to any person not properly connected with the proceedings. That undertaking extended to directors of Luna Park Sydney Pty Ltd acting in that capacity. Secondly, it is common ground that on 25 July 2005 and 13 October 2005 Luna Park Sydney Pty Ltd breached that undertaking, and those breaches were caused by Mr Hearne and Mr Tierney130. They were clandestine. They only came to the residents' attention by chance. Contempt proceedings could reasonably be seen as having a deterrent purpose not achieved by the undertaking of 20 April 2005. Thirdly, although, when pressed for an explanation of the conduct of Mr Hearne and Mr Tierney, the solicitors for Luna Park Sydney Pty Ltd offered an apology for the company, they offered no apology on behalf of Mr Hearne and Mr Tierney. In addition, the apology offered for the company was qualified: it extended only to "any such contempt it may have committed."131 The apology offered to Brereton J on 20 March 2006 was similarly qualified132. Indeed, there was no direct response on behalf of Mr Hearne and Mr Tierney at all, although Mr Hearne, as the managing director of Luna Park Sydney Pty Ltd, must have been cognisant of the problem and, with Mr Tierney, in a position to enlist the aid of the solicitors for the company, as they later did. While there was a response from solicitors who said they were not acting for Mr Hearne and Mr Tierney, there was no direct response from those gentlemen to the correspondence. There was no response before Brereton J on 20 March 2006. Thus there was no denial, no explanation, no admission of error, no apology and no undertaking to avoid repetition. In due course, by 21 April 2006, the solicitors for Luna Park Sydney Pty Ltd were acting for Mr Hearne and Mr Tierney, but although a letter written on that date recorded Luna Park Sydney Pty Ltd's apology to Brereton J, it did not convey any apology or undertaking on behalf of Mr Hearne or Mr Tierney. A similar point made by Ipp JA was said by the appellants to be "unfair": it was submitted that the apologies were in those qualified terms "because there was uncertainty as to what material had passed into the public domain". Perhaps that is so, although there is no testimonial evidence of it or any direct assertion of it by Mr Hearne or Mr Tierney or by 130 See [83] above. 131 See [79] above. 132 Above at [82]. anyone acting on their behalf. The residents were entitled, on the strength of the correspondence as it stood, to infer that they were being treated somewhat evasively by the appellants. That is an inference or perception which might yield to contrary evidence from those who had given the instructions on the basis of which the solicitors for Luna Park Sydney Pty Ltd wrote the letters, but so far there has been none. The appellants in this Court complained that, before the contempt proceedings were communicate with the appellants personally". The letter of 2 March 2006 was an attempt to communicate with the appellants personally through a solicitor; and if the appellants had anything to communicate to the residents it would have been very easy for them to do so, since it could hardly be supposed that Mr Hearne and Mr Tierney were not aware of the letters from the solicitors for the residents, and the replies. The appellants also submitted: instituted, "no attempt had been made "If the respondents' purpose was only to obtain assurances that the undertaking would not be breached in future, pursuing just Mr Hearne and Mr Tierney personally would not necessarily achieve that purpose, as assurances from them would not cover other servants or agents of [Luna Park Sydney Pty Ltd]". Leaving aside a possible inference that this reveals an intention on the part of other servants or agents of Luna Park Sydney Pty Ltd to follow in the footsteps of Messrs Hearne and Tierney, in all the circumstances it hardly lies in the mouths of the appellants to be criticising the forensic tactics of the residents, and drawing inferences adverse to the residents from a supposed lack of sense in those tactics. Fourthly, the residents had, and continue to have, a legitimate interest in relation to the use of documents being generated for the purposes of the main proceedings, which at the time when the contempt proceedings were instituted remained on foot. That legitimate interest is an interest in protecting the privacy of the affidavits and statements they provided or procured others to provide. When Mr Hearne and Mr Tierney caused Luna Park Sydney Pty Ltd to breach its undertaking of 20 April 2005 they did so by deploying affidavits and statements made by or at the instance of the residents to denigrate their complaints about noise from Luna Park, and by deploying a newspaper article making derisive use of some of those affidavits. Of course the consequence of filing and serving affidavits and statements in legal proceedings is that one day their contents might become open to the public when read in open court. But it was not illegitimate to seek to ensure that before that time the defendants, Luna Park Sydney Pty Ltd and Metro Edgley Pty Ltd, and persons acting in their interests, did not abuse their access to the documents in employing them for a purpose outside the proceedings. Fifthly, there was a real possibility at the time when the contempt proceedings were instituted that, unless the residents had success in those proceedings, Luna Park Sydney Pty Ltd, Metro Edgley Pty Ltd and those acting for those companies would again breach the obligations arising either from the express undertaking of 20 April 2005 or from the "implied undertaking" consequential on the provision of the affidavits and statements. That is because although the use of those materials in furtherance of the goal of obtaining legislative immunity from the noise nuisance proceedings had succeeded, the proceedings were continuing in another form. Underlying the residents' prosecution of the proceedings in the new form was their aim to reduce the noise from Luna Park to what they saw as compatible with enjoyment of their residences and protection of the value of those residences. Underlying the defence of those proceedings no doubt was the aim of Luna Park Sydney Pty Ltd and Metro Edgley Pty Ltd of ensuring that as much noise was emitted as was necessary for the profitable operation of Luna Park. The attitude of the local council is relevant to both those conflicting aims. The attitudes of local government institutions can be affected by public opinion as much as the attitudes of State Government institutions. Public opinion can be affected by the use of the residents' affidavits and statements. Two attempts have already been made to affect public opinion by that means. Two attempts have been made to affect State Government institutions by that means. When the contempt proceedings began, there was no reason to suppose that similar attempts might not be made in future. Handley AJA reasoned that after the various contempts committed by Luna Park Sydney Pty Ltd in 2005, and the admissions and apologies in its solicitors' letters of 20 April 2005 and 9 March 2006, any further breaches by that company would in all probability attract severe punishment, which "was likely to cause financial loss to the company and its owners apart from the risks the [appellants] would face personally under the principles in Seaward v Paterson[133]. These were powerful deterrents against any further breaches of the undertakings." There were similar risks after 20 April 2005, but they did not deter the breaches of 25 July 2005 and 13 October 2005. Sixthly, it cannot be inferred from the fact that the residents applied for contempts of court to be dealt with rather than seeking an injunction against repetition of those contempts that the proceedings were punitive. Their notices of motion left open the possibility of seeking injunctions after the facts were found. For those factual reasons, which correspond largely with those advanced by the majority in the Court of Appeal, their conclusion that the proceedings were not punitive, and hence were civil, was correct. Orders The appeal should be dismissed with costs. |
HIGH COURT OF AUSTRALIA THE QUEEN AND APPELLANT RESPONDENT The Queen v GW [2016] HCA 6 2 March 2016 ORDER Appeal allowed. Set aside orders 1 to 3 of the Court of Appeal of the Supreme Court of the Australian Capital Territory made on 24 April 2015. Remit the proceeding to the Court of Appeal for consequential orders with respect to sentence. On appeal from the Supreme Court of the Australian Capital Territory Representation J White SC with N S Drumgold for the appellant (instructed by Director of Public Prosecutions (ACT)) S J Odgers SC with B K Baker for the respondent (instructed by Kamy Saeedi Law) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS The Queen v GW Criminal law – Evidence – Unsworn evidence – Where respondent convicted following trial in Supreme Court of the Australian Capital Territory of commission of act of indecency in presence of daughter, R – Where R six years old when giving evidence – Where R's evidence received unsworn under s 13(3) of Uniform Evidence legislation – Where ex tempore reasons of pre-trial judge suggested reversal of presumption of competence to give sworn evidence – Where respondent agreed to be bound by pre-trial judge's ruling under s 13(3) – Whether pre-trial judge failed to apply s 13 – Whether open to pre-trial judge to be satisfied s 13(3) test met – Whether R's unsworn evidence wrongly admitted. Criminal law – Evidence – Jury directions – Where audiovisual recording of child witness' unsworn evidence tendered at trial – Where respondent requested trial judge direct jury that evidence unsworn – Whether Uniform Evidence legislation required direction – Whether common law required direction to avoid perceptible risk of miscarriage of justice – Whether adequate directions given. Words and phrases – "competence", "evidence of a kind that may be unreliable", "evidence of children", "obligation to give truthful evidence", "perceptible risk of a miscarriage of justice", "presumption of competence", "reliability", "sworn evidence", "unsworn evidence". Crimes Act 1900 (ACT), s 61(1). Evidence Act 2011 (ACT), ss 12, 13, 21, 165, 165A, Sched 1. Evidence (Miscellaneous Provisions) Act 1991 (ACT), s 70. FRENCH CJ, BELL, GAGELER, KEANE AND NETTLE JJ. The respondent was convicted following a trial in the Supreme Court of the Australian Capital Territory of the commission of an act of indecency in the presence of R, his daughter, R being a person under the age of 10 years1. The offence is alleged to have occurred between 29 March 2012 and 2 April 2012. R was five years old at the time. R's evidence was taken at a pre-trial hearing before Burns J on 6 August 2013. Following a voir dire hearing, Burns J determined that R's evidence should be received unsworn. The recording of R's unsworn evidence was tendered at the respondent's trial, which commenced on 21 March 2014 before Penfold J and a jury. The respondent appealed on seven grounds against his conviction to the Court of Appeal of the Supreme Court of the Australian Capital Territory (Murrell CJ, Refshauge and Ross JJ). Relevantly, the respondent's third ground of appeal contended that Burns J did not apply the presumption of competence to give sworn evidence in determining that R's evidence should be given unsworn. His fourth ground complained that the trial judge failed to direct the jury concerning the significance of the fact that R's evidence was unsworn. The determination of these grounds required consideration of the provisions of the Uniform Evidence legislation governing the competence of witnesses and warnings about reliability. The Court of Appeal upheld both grounds and dismissed the remaining five grounds of appeal. In determining the fourth ground, the Court of Appeal held that the trial judge was required to instruct the jury on the difference between sworn and unsworn evidence and to instruct the jury to take that difference into account in assessing the reliability of R's unsworn evidence2. The 1 The indictment charged the respondent with six offences involving the commission of an act of indecency upon or in the presence of a person aged under 10 years contrary to s 61(1) of the Crimes Act 1900 (ACT). Three counts charged offences against R and the remaining three counts charged offences against the respondent's other daughter, H, who was three years old at the time. All of the offences were alleged to have occurred in the period between 29 March 2012 and 2 April 2012. The respondent was acquitted of counts five and six. The jury was unable to agree on counts one, two and four. 2 GW v The Queen [2015] ACTCA 15 at [103]. Bell Nettle appeal was allowed, the respondent's conviction was set aside and a new trial ordered. On 16 October 2015, Bell and Gageler JJ granted special leave to appeal on grounds which challenge the Court of Appeal's determination of each of the respondent's successful grounds. The respondent filed a notice of contention challenging the Court of Appeal's dismissal of his seventh ground. That contention was abandoned before the hearing of the appeal. Before turning to the reasons of the Court of Appeal, it is convenient to outline the scheme for taking the evidence of child complainants on the trial on indictment of an offence against the law of the Australian Capital Territory and to refer to the provisions of the Evidence Act 2011 (ACT) ("the Evidence Act") governing the competence of witnesses. The latter discussion requires brief reference to the history of legislative provision for the reception of the unsworn evidence of children in proceedings in the ACT. The statutory scheme for taking the evidence of a child complainant The Evidence (Miscellaneous Provisions) Act 1991 (ACT) ("the EMP Act") provides that an audiovisual recording of a child answering questions asked by a prescribed person, in the course of the investigation of an alleged sexual offence, may be played at the trial of a person charged with the offence and admitted as the child's evidence in chief3. The balance of a child prosecution witness' evidence in a sexual offence proceeding may be given at a pre-trial hearing4, which hearing need not be conducted by the judicial officer who presides at the trial5. Evidence taken at the pre-trial hearing must be audiovisually recorded and the recording must be played at the trial6. R was interviewed by officers of the Australian Federal Police on 13 September 2012 ("the interview"). An audiovisual recording of the interview was tendered as R's evidence in chief at the pre-trial hearing. The audiovisual 3 EMP Act, ss 40E(1), 40F(1)(b). 4 EMP Act, s 40Q. 5 EMP Act, s 40R(4). 6 EMP Act, s 40S. Bell Nettle recording of the pre-trial hearing, together with the recording of the interview, were played at the trial and constituted R's evidence. Competence to give evidence Before the enactment of the Evidence Act 1995 ("the Commonwealth Act"), courts in the ACT were empowered to receive the unsworn evidence of a child who had not attained the age of 14 years without any formality. This was subject to the court explaining, or causing it to be explained, to the child that he or she was required to tell truthfully what he or she knew about the matter to which the evidence related7. From its commencement until the commencement of the substantive provisions of the Evidence Act in 2012, the Commonwealth Act governed the determination of the competence of witnesses to give sworn and unsworn evidence in proceedings in the ACT8. (Cth) As enacted, s 13(1) of the Commonwealth Act provided that a person who was incapable of understanding that, in giving evidence, he or she was under an obligation to give truthful evidence was not competent to give sworn evidence. Where a person was not competent to give sworn evidence under s 13(1), the Commonwealth Act, as enacted, imposed three conditions on competence to give unsworn evidence: (a) the court was satisfied that the person understood the difference between the truth and a lie; (b) the court had told the person that it was important to tell the truth; and (c) the person had indicated, by appropriate response when asked, that the person would not tell lies in the proceedings9. A decade after the enactment of the Commonwealth Act, the Australian Law Reform Commission, the New South Wales Law Reform Commission and the Victorian Law Reform Commission (collectively, "the Commissions") conducted a joint review of the operation of the Uniform Evidence legislation10. That review addressed the subtlety of the distinction between the test of competence to give sworn evidence – capacity to understand the obligation to give truthful evidence – and the test of competence to give unsworn evidence – 7 Evidence Act 1971 (ACT), s 64. 8 Commonwealth Act, as enacted, s 8(4); Evidence Regulations 1995 (Cth), reg 4. 9 Commonwealth Act, s 13(2)(a)-(c). 10 Australian Law Reform Commission, Uniform Evidence Law, Report No 102, Bell Nettle satisfaction that a person understands the difference between the truth and a lie11. In their joint report the Commissions recommended the introduction of a test of general competence to give evidence based upon basic comprehension and communication skills12. In the case of unsworn evidence, the Commissions proposed removing the requirement of satisfaction that the person understand the difference between the truth and a lie and the requirement that the person indicate that he or she will not tell lies13. It was said to be inconsistent to impose either requirement on a person who had been found to lack the capacity to understand the obligation to give truthful evidence14. Amendments to the Commonwealth Act introduced in 2008 ("the 2008 amendments") gave effect to the Commissions' recommendations in these respects. Section 13 was repealed and re-enacted in its present form15. In 2011, s 13 of the Commonwealth Act was enacted in almost identical terms in the Evidence Act: "13 Competence—lack of capacity (1) A person is not competent to give evidence about a fact if, for any reason (including a mental, intellectual or physical disability)— the person does not have the capacity to understand a question about the fact; or 11 Australian Law Reform Commission, Uniform Evidence Law, Report No 102, 12 Australian Law Reform Commission, Uniform Evidence Law, Report No 102, 13 Australian Law Reform Commission, Uniform Evidence Law, Report No 102, 14 Australian Law Reform Commission, Uniform Evidence Law, Report No 102, 15 Evidence Amendment Act 2008 (Cth), Sched 1 item 3. Bell Nettle the person does not have the capacity to give an answer that can be understood to a question about the fact; and that incapacity cannot be overcome. (2) A person who, because of subsection (1), is not competent to give evidence about a fact may be competent to give evidence about other facts. (3) A person who is competent to give evidence about a fact is not competent to give sworn evidence about the fact if the person does not have the capacity to understand that, in giving evidence, the person is under an obligation to give truthful evidence. (4) A person who is not competent to give sworn evidence about a fact may, subject to subsection (5), be competent to give unsworn evidence about the fact. (5) A person who, because of subsection (3), is not competent to give sworn evidence is competent to give unsworn evidence if the court has told the person that— it is important to tell the truth; and the person may be asked questions that the person does not know, or cannot remember, the answer to, and that the person should tell the court if this happens; and the person may be asked questions that suggest certain statements are true or untrue and that the person should agree with the statements that the person believes are true and should feel no pressure to agree with statements that the person believes are untrue. It is presumed, unless the contrary is proved, that a person is not incompetent because of this section. Bell Nettle For the purpose of deciding a question arising under this section, the court may inform itself as it thinks fit, including by obtaining information from a person who has relevant specialised knowledge based on the person's training, study or experience." It will be observed that competence to give evidence about a fact is confined to the person's capacity to understand a question about the fact and to give an intelligible answer to the question. It is only competence to give sworn evidence that requires the person to have the capacity to understand that, in giving evidence, he or she is under an obligation to give truthful evidence. The s 13(6) presumption applies to both competence to give evidence and competence to give sworn evidence. In either case, the presumption will be displaced where the court is satisfied on the balance of probabilities of the contrary16. Where the presumption of competence to give sworn evidence is displaced, a person who is competent to give evidence about a fact may give unsworn evidence about the fact provided that the court has told the person the things set out in s 13(5). The pre-trial hearing R was aged six years and five months at the date of the pre-trial hearing. There was no issue as to R's capacity to understand questions about the facts of the alleged offence and to give intelligible answers to those questions. Accordingly, there was no issue as to R's competence to give evidence. There was an issue as to R's competence to give sworn evidence. The issue was raised by the prosecutor, who informed the Court: "[T]he child is six years old. I've spoken to her. I don't believe she can give sworn evidence. She doesn't understand what a Bible or affirmation is. It seems to me that the procedure is set out in 13(5) of the Evidence Act. When I spoke to her before she understood the importance of telling the truth." Defence counsel did not demur to the proposal that the Court should follow the procedure set out in s 13(5) and take R's evidence unsworn. Nonetheless, Burns J declined to adopt that course, informing counsel that "[i]t seems to me that I need to go through the process in subsection (3) of section 13 16 Evidence Act, s 142. Bell Nettle before we get to subsection (5)". R was called and questioned by Burns J. After some preliminary questions, the examination continued: "Now, you'll be asked to tell us the truth about what happened to you in the past. What do you understand to be the truth about what happened to you in the past? (No audible reply) Now, I'll ask it another way. How long have you been at your school? I don't know. Right. Did you come to the court today in a car or in a bus? In a car. All right [sic]. So if I was to say to you, you came to court today in a bus would that be true or not true? Not true. And do you understand that today in giving evidence you have to only tell us the truth? You have to tell us things that really happened, you understand that? Yes. Things that you saw and you heard. You understand that? Yes." At the conclusion of the examination, the transcript records the following exchange: "HIS HONOUR: Gentlemen, despite the fact that the witness has indicated that she understands that – at least understands the difference between the truth and what is not the truth, and says that she understands that she has an obligation to tell the truth today, I think that it is probably better to proceed under subsection (5). At the present time, because of the difficulty in truly gauging the level of her understanding and her age, I am not satisfied that she has the capacity to understand that in giving evidence today she has an obligation to give truthful evidence. So I Bell Nettle propose to proceed under subsection (5) of section 13. Do you want to be heard in relation to that, [defence counsel]? [DEFENCE COUNSEL]: No, your Honour." (emphasis added) R was recalled and Burns J informed her of each of the matters of which he was required to inform her under s 13(5). R's evidence was then taken unsworn. A party dissatisfied with a ruling made at a pre-trial hearing may appeal by leave to the Court of Appeal17. The respondent did not apply for leave to appeal from Burns J's decision to take R's evidence unsworn. At a directions hearing before Murrell CJ, the respondent agreed to be bound by the rulings made by Burns J at the pre-trial hearing. The trial At the trial, defence counsel objected to the admission of R's evidence on the ground that the pre-condition for the reception of R's evidence unsworn – the court's satisfaction that R did not have the capacity to understand that in giving evidence she was under an obligation to give truthful evidence ("the requisite capacity") – had not been established. In counsel's submission, Burns J was merely left unsatisfied that R possessed the requisite capacity. It was submitted that, in circumstances in which the presumption of capacity to give sworn evidence was not displaced, s 21 of the Evidence Act required that R take an oath or make an affirmation before giving evidence. Penfold J considered that, absent good reason for not seeking leave to challenge a pre-trial ruling, a party should not be permitted to re-argue the ruling at trial. Her Honour concluded that the interests of justice were not offended by holding the parties to their agreement not to challenge Burns J's pre-trial ruling. The audiovisual recording of R's unsworn evidence at the pre-trial hearing was played to the jury. The recording did not include the voir dire examination or Burns J's instruction to R of the s 13(5) matters. The Court of Appeal As earlier noted, a ground of appeal in the Court of Appeal contended that R's unsworn evidence should not have been admitted. The Court of Appeal 17 Supreme Court Act 1933 (ACT), s 37E(4). Bell Nettle An analysis of Burns J's remarks, which prompted acknowledged that, in determining the question of R's competence to give sworn evidence, Burns J had been entitled to inform himself in "the manner that he saw fit"18. Their Honours noted that it had been open to Burns J to take into account matters such as R's answers to, and manner of answering, the questions asked of her; that she was six years old; the prosecutor's indication that she did not understand the oath or affirmation; and that defence counsel, having seen the examination, conceded that it was appropriate that her evidence be given unsworn19. this last-mentioned concession, led the Court of Appeal to conclude that his Honour had reversed the statutory test: Burns J said he was "not satisfied that [R] has the [requisite] capacity" (Court of Appeal's emphasis) when s 13(3) required satisfaction that R did not have that capacity20. The Court of Appeal inferred that Burns J wrongly treated competence to give unsworn evidence as the "default" position under the Evidence Act21. The assumed failure to apply s 13 meant that the respondent's trial had not been conducted according to law22, a conclusion that the Court of Appeal said required that the appeal be allowed and the The Court of Appeal acknowledged that Burns J's reasons for this apparently uncontentious determination were delivered ex tempore and may not have been articulated with the same felicity as considered reasons resolving a contentious question24. Their Honours went on to observe that compliance with s 13, in determining competence to give unsworn evidence, cannot be waived25. 18 GW v The Queen [2015] ACTCA 15 at [79], referring to s 13(8) of the Evidence Act. 19 GW v The Queen [2015] ACTCA 15 at [79]. 20 GW v The Queen [2015] ACTCA 15 at [80]. 21 GW v The Queen [2015] ACTCA 15 at [80]. See Evidence Act, s 190. 22 GW v The Queen [2015] ACTCA 15 at [84]. 23 GW v The Queen [2015] ACTCA 15 at [131]. 24 GW v The Queen [2015] ACTCA 15 at [81]. 25 GW v The Queen [2015] ACTCA 15 at [81], [82]. Bell Nettle Each proposition may be accepted. However, acceptance of the latter does not reduce the force of the former. Submissions in this Court Reduced to its essentials, the appellant's case is that the Court of Appeal erred by drawing from brief, ex tempore remarks that Burns J did not comply with s 13. The appellant says that it is evident that his Honour was mindful of the presumption of competence to give sworn evidence and satisfied that it had been displaced. The respondent's argument embraces the Court of Appeal's analysis; it is evident from his reasons that Burns J was not satisfied one way or the other of whether R possessed the requisite capacity. Moreover, the respondent observes that at no stage in the course of the hearing did Burns J correctly state the s 13(3) test. In his submission, it was well open to the Court of Appeal to infer that his Honour was under the misapprehension that unsworn evidence was the "default" position because the material suggested that R had the requisite capacity. R's affirmative answer to the question of whether she understood that, in giving evidence, she had to tell the truth is suggested by the respondent to amount in effect to an acknowledgment of her understanding that she was under an obligation to do so. Correctly understood, the prosecutor's submission is suggested to have supported that conclusion. This is because R's want of understanding of the Bible or an affirmation was "utterly irrelevant" to the question while the prosecutor's opinion that R understood the importance of telling the truth was "almost identical to the criterion" (of competence in s 13(3)). The respondent submits that it is questionable that it was open to Burns J to be satisfied affirmatively to the contrary. Consideration Turning to the respondent's last submission first, "obligation" in s 13(3) is to be understood in its ordinary, grammatical meaning as the condition of being morally or legally bound – in this case, to give truthful evidence26. A child may agree that he or she understands that he or she is to tell the truth without having any understanding of what it is to give evidence in a court proceeding, much less of the concept of being morally or legally bound to give truthful evidence. 26 The New Shorter Oxford English Dictionary, (1993), vol 2 at 1966, "obligation", sense 3. Bell Nettle Contrary to the respondent's submission, R's affirmative answer to the question "[a]nd do you understand that today in giving evidence you have to only tell us the truth? You have to tell us things that really happened, you understand that?" is not to be understood as necessarily conveying that R had the capacity to understand that, in giving evidence, she was under such an obligation. There are many ways to explore whether a child understands what it means to give evidence in a court and the concept of being morally or legally bound to be truthful in so doing. Here, it would seem the prosecutor questioned R about her understanding of swearing an oath on the Bible or making an affirmation. Her lack of understanding of either was not determinative but it was not irrelevant to the formation of the opinion that she did not possess the capacity to understand the obligation. The suggestion that it may not have been open to Burns J to be satisfied that R, a six-year-old child, lacked that capacity is unsustainable. It was necessary for Burns J to be affirmatively satisfied that R did not have the requisite capacity before instructing her pursuant to s 13(5) and admitting her evidence unsworn. At the end of the examination of R, Burns J expressed his provisional conclusion, subject to any submission by defence counsel, in terms that he was not satisfied that R had the requisite capacity. In the absence of controversy over the indication of the intention to proceed under s 13(5), Burns J was not required to, and did not, give further reasons for the determination. Whether it is correct to conclude that Burns J was not satisfied that R lacked the requisite capacity, and that his Honour treated the reception of R's unsworn evidence as the "default" position under the Evidence Act, does not turn on analysis of his remarks alone. It requires consideration of the whole of the circumstances. The Court of Appeal acknowledged that Burns J was aware of the requirements of ss 13(3) and 13(5)27. Their Honours went on to say28: "His Honour expressly referred to both, and to the distinction between the importance of telling the truth (which relates to whether a witness is competent to give unsworn evidence) and understanding the meaning of the obligation to give truthful evidence when under oath (which goes beyond the importance that ordinarily attaches to telling the truth)." 27 GW v The Queen [2015] ACTCA 15 at [78]. 28 GW v The Queen [2015] ACTCA 15 at [78]. Bell Nettle The explanations in parentheses are the Court of Appeal's analysis of the distinction between competence to give unsworn evidence and competence to give sworn evidence. It is an analysis that harks back to the reception of unsworn evidence under the Commonwealth Act before the 2008 amendments. As earlier explained, s 13 does not condition the admission of unsworn evidence on an understanding of the importance of telling the truth. In determining the inference to be drawn from Burns J's remarks at the conclusion of the examination, it is necessary to appreciate that the only purpose of the examination was to assess R's competence to give sworn evidence about a fact. Neither party submitted that R was competent to give sworn evidence. Nonetheless, Burns J insisted that it was necessary to "go through the process in subsection (3) of section 13" before considering taking R's evidence unsworn. This might be thought to allay any concern that his Honour was under a misapprehension that the "default" position was to take R's evidence unsworn. His Honour's conclusion was not based solely on the "difficulty in truly gauging the level of [R's] understanding"29. It took into account that R was a six-year-old child. In the circumstances, the failure to express the conclusion in the terms of the statute did not support a finding30 that Burns J was not satisfied on the balance of probabilities that R lacked the requisite capacity. Limitations on the nature of warnings or other information concerning the evidence of children Before turning to the appellant's second ground of appeal in this Court, it is apposite to note s 165 of the Evidence Act and other provisions of ACT law which limit the nature of warnings or information which a judge may give to a jury with respect to the evidence of a child. Section 165 of the Evidence Act applies to evidence of a kind that may be unreliable. Section 165(1) non-exhaustively sets out seven categories of evidence of that kind. Unsworn evidence is not one of them. Section 165(2) requires the judge, on the request of a party, to warn the jury that evidence of such a kind may be unreliable and to tell the jury about matters that may cause the evidence to be unreliable, warning the jury of the need for caution in deciding 29 cf GW v The Queen [2015] ACTCA 15 at [80]. 30 GW v The Queen [2015] ACTCA 15 at [84]. Bell Nettle whether to accept the evidence and the weight to be given to it. The judge need not give such a direction if there are good reasons not to do so31. Sub-sections (6) and (7) of s 165 of the Evidence Act operate to preclude a judge from warning or telling a jury, in proceedings in which a child gives evidence, that the reliability of the child's evidence may be affected by the age of the child. Any warning or information in relation to that matter may only be given in accordance with s 165A(2) and (3)32. Sections 165(6) and (7) and 165A reflect the 2008 amendments to the Commonwealth Act33. Section 165A(1) of the Evidence Act precludes warning or suggesting to the jury that children as a class are unreliable witnesses, or that the evidence of children as a class is inherently less credible or reliable or requires more careful scrutiny than the evidence of adults; or giving a warning or suggestion about the unreliability of a particular child's evidence solely on account of the child's age. Section 165A(2) provides that sub-s (1) does not prevent the judge, at the request of a party, from telling the jury that the evidence of the particular child may be unreliable and the reasons why it may be unreliable and warning or telling the jury about the need for caution in deciding whether to accept the evidence of the particular child and the weight to be given to it. Such a direction may only be given if the court is satisfied that there are circumstances, other than solely the age of the child, particular to the child that affect the reliability of the child's evidence warranting the giving of the warning or information34. Section 165A(3) provides that the section does not affect any other power of a judge to give a warning or to inform the jury. Section 70 of the EMP Act provides that, if evidence is given by a child in a sexual offence proceeding35, the judge must not give the jury any warning or 31 Evidence Act, s 165(3). 32 Evidence Act, s 165(7). 33 Evidence Amendment Act 2008 (Cth), Sched 1 items 71, 72. 34 Evidence Act, s 165A(2). 35 Section 70 is in Div 4.6 of the EMP Act, which governs directions and warnings to juries in sexual offence proceedings. A sexual offence proceeding for the purposes of Div 4.6 is a proceeding for a sexual offence before a jury: EMP Act, s 68(2). Bell Nettle suggestion to the effect that the law regards children to be an unreliable class of witnesses. The trial – adequacy of directions At the respondent's trial, before R's evidence was played to the jury, defence counsel asked Penfold J to direct the jury that the evidence was unsworn because R did not have the capacity to understand the obligation to give truthful evidence. In the course of developing the submission, counsel put that the circumstance that R's evidence was unsworn would "probably at least require a [s] 165 warning" because evidence from those incapable of understanding the obligation to give truthful evidence constituted a class of potentially unreliable evidence. Penfold J declined to give the direction sought. After the close of the evidence and before final addresses, counsel renewed his application for a direction that R's evidence was unsworn "because it was found that she didn't comprehend the obligation to tell the truth". Counsel stated that he had "no difficulty with your Honour saying that does not necessarily make [R] less reliable". As the application was developed, counsel again made reference to s 165 of the Evidence Act. However, the submission did not amount to a request under s 165(2) for a warning that R's evidence may be unreliable. Penfold J declined to give the direction sought. The Court of Appeal – adequacy of directions In the Court of Appeal, the respondent's ground of appeal uninformatively contended that Penfold J erred "in failing properly to direct the jury regarding the unsworn evidence of [R]". His principal contention on the hearing of that appeal was that there was a legal requirement to warn the jury that R's evidence may be unreliable because it was unsworn. That requirement was sourced in s 165 because unsworn evidence was submitted to be "evidence of a kind that may be unreliable". Alternatively, it was sourced in the common law and arose from the fact that "unsworn evidence was a matter bearing on the reliability of the witness which, in the absence of a direction, the jury may not fully appreciate"36. The latter submission relied on the rule of practice explained in Bromley v The Queen37. The respondent's fall-back position in the Court of Appeal was that the law required Penfold J to explain to the jury the differences between sworn and 36 GW v The Queen [2015] ACTCA 15 at [87]. 37 (1986) 161 CLR 315; [1986] HCA 49. Bell Nettle unsworn evidence and to direct the jury to consider those differences when assessing R's evidence38. This was the direction which was sought at trial. It is the direction which the respondent contends in this Court that the law required and which, correctly understood, the Court of Appeal held should have been given. The Court of Appeal did not consider it "manifest" that a s 165 warning had been required39. The Court observed that, had defence counsel pursued a request for a s 165(2) warning, it would have been necessary to consider whether R's evidence was "of a kind that may be unreliable" and, if it was, the terms of the warning or whether there were "good reasons" for not giving a warning40. The Court of Appeal turned to consider whether, apart from s 165, "the jury should have been told about the differences between sworn and unsworn evidence"41. The Court of Appeal had earlier discerned from ss 12, 13(3), (4) and (6) and 21 that it is the policy of the Evidence Act to give "primacy" to sworn evidence42. Two reasons were identified for the adoption of that policy: the solemnity that attaches to the taking of an oath or the making of an affirmation and the fact that failure to adhere to the oath or affirmation may result in significant sanctions43. The Court of Appeal identified the object of the policy as the maintenance of the integrity of the judicial process and the promotion of truthful evidence in court proceedings44. 38 GW v The Queen [2015] ACTCA 15 at [87]. 39 GW v The Queen [2015] ACTCA 15 at [99]. 40 GW v The Queen [2015] ACTCA 15 at [99]. 41 GW v The Queen [2015] ACTCA 15 at [100]. 42 GW v The Queen [2015] ACTCA 15 at [76]. 43 GW v The Queen [2015] ACTCA 15 at [76], [102]. 44 GW v The Queen [2015] ACTCA 15 at [102]. Bell Nettle The Court of Appeal concluded45: "R was the key witness in the prosecution case. The most fundamental and most difficult task that the jury had to undertake was to assess the reliability of [R's] evidence. With a view to bolstering the reliability of evidence given in courts, the Evidence Act gives primacy to sworn evidence and makes it clear that unsworn evidence is acceptable only from a witness who is not competent to give sworn evidence. In those circumstances, it was important for the jury to understand the difference between sworn and unsworn evidence and take that difference into account when assessing the reliability of R's evidence." (emphasis added) As will appear, the respondent submits that the direction which the Court of Appeal held should have been given is not a direction that R's evidence may be unreliable. That submission requires consideration of the basis for, and content of, a direction to take the differences between sworn evidence and unsworn evidence into account in assessing the reliability of unsworn evidence, if it is accepted that the direction is not required because the evidence may be unreliable. Before turning to that question, it is necessary to consider the premise for the Court of Appeal's conclusion that the direction was required because the Evidence Act gives primacy to sworn evidence as a "bolster" to the reliability of evidence given in courts. Section 12 provides that every person is competent to give evidence subject to any other provision of the Evidence Act. Section 13 makes other provision in sub-ss (1) and (2). Section 13 distinguishes competence to give sworn evidence from competence to give unsworn evidence (sub-ss (3) and (4)). Competence to give sworn evidence is presumed, subject to the contrary being proved (sub-s (6)). This presumption is the only respect in which the Evidence Act may be said to give "primacy" to sworn evidence; the evidence of a competent witness will be given sworn unless the presumption is displaced. Where the presumption applies, s 21(1) requires a witness in a proceeding to take an oath or make an affirmation before giving evidence. The form of the oath and the affirmation are set out in Sched 1 to the Evidence Act. In each case, the person undertakes that the evidence to be given "will be the truth, the whole truth and nothing but the truth". An oath requires the person to give that undertaking by swearing to do so by Almighty God or the god recognised by the person's 45 GW v The Queen [2015] ACTCA 15 at [103]. Bell Nettle religion46. An affirmation requires the person to give that undertaking by a solemn and sincere declaration to do so. Section 21(5) provides that an affirmation has the same effect for all purposes as an oath. Where the presumption of competence to give sworn evidence is displaced, s 21(2) relieves the witness of the requirement to take an oath or make an affirmation. In either case, the evidence of the witness is before the court. The assessment of the reliability of the evidence is for the trier of fact. Sections 12, 13(3), (4) and (6) and 21 do not support a conclusion that the Evidence Act accords primacy to sworn evidence as a bolster to the reliability of evidence. The Court of Appeal found the discussion of the directions relating to unsworn evidence by the Full Court of the Supreme Court of South Australia in R v Lomman instructive in light of the perceived "primacy" of sworn evidence in the Evidence Act47. Their Honours referred with approval to Kourakis CJ's statement48: "The element which disentitles a person from testifying in solemn form is an insufficient understanding of the critical importance of giving truthful testimony in maintaining the integrity of the trial process and ensuring the just administration of the law"; and Sulan J's statement49: "What is important is that the judge direct the jury that the taking of an oath or affirmation requires an understanding that the person is accepting the solemnity of the taking of an oath or affirmation, both morally and legally, and if the person fails to comply with that obligation the consequence may be that sanctions will follow." The influence of these statements is evident in the Court of Appeal's analysis of the reason a direction was required at the respondent's trial and the 46 Evidence Act, Sched 1. 47 GW v The Queen [2015] ACTCA 15 at [101], [102]. 48 GW v The Queen [2015] ACTCA 15 at [101], citing R v Lomman (2014) 119 SASR 463 at 465 [5]. 49 GW v The Queen [2015] ACTCA 15 at [101], citing R v Lomman (2014) 119 SASR 463 at 476-477 [42]. Bell Nettle content of that direction. However, the Full Court of the Supreme Court of South Australia was not discussing a common law requirement to direct a jury of the difference between sworn evidence and unsworn evidence. The discussion in R v Lomman concerned s 9(4) of the Evidence Act 1929 (SA) ("the South Australian Act"), which, when unsworn evidence is given in a criminal trial, requires the judge to "explain to the jury the reason the evidence is unsworn" and, if requested to do so, to "warn the jury of the need for caution in determining whether to accept the evidence and the weight to be given to it". The South Australian Act has made provision concerning the weight to be given to unsworn evidence since before the enactment of the Uniform Evidence legislation50. Section 9(4) in substantially its present form predates the 2008 amendments to the Commonwealth Act51. The Court of Appeal acknowledged that there is no equivalent to s 9(4) in ACT law but went on to draw the inference that the Evidence Act accords "primacy" to sworn evidence to secure the same object of promoting reliability52. The choice in the Uniform Evidence legislation not to enact a provision along the lines of s 9(4) of the South Australian Act is one indicator against that conclusion. Another is the choice not to include unsworn evidence as a category of potentially unreliable evidence under s 165(1). The appellant is correct in submitting that the Evidence Act is neutral in its treatment of the weight that may be accorded to evidence whether it is sworn or unsworn. The appellant submits that the effect of a direction to take into account the difference between unsworn evidence and sworn evidence in assessing the reliability of the unsworn evidence of a child who is a key prosecution witness is to undermine the policy informing ss 165(6) and (7) and 165A (and s 70 of the EMP Act). The respondent counters that the statutory prohibitions are directed to warnings or information concerning the evidence of children whereas the direction formulated by the Court of Appeal concerns unsworn evidence. Moreover, the respondent submits that the Court of Appeal did not find that R's evidence was "of a kind that may be unreliable" within s 165, nor did the Court of Appeal hold that it had been necessary to warn the jury of the need for caution 50 Section 13 of the South Australian Act, as made, dealt with the weight and credibility to be given to unsworn evidence given under s 9 by Aboriginals and s 12 by children. 51 Evidence (Miscellaneous) Amendment Act 1999 (SA), s 5. 52 GW v The Queen [2015] ACTCA 15 at [101]. Bell Nettle in deciding whether to accept R's evidence. The respondent argues that too much significance should not be placed on the words "assessing the reliability of R's evidence" in the Court of Appeal's statement53 because any assessment of the evidence of a witness involves consideration of reliability. In the respondent's submission, none of the provisions limiting what may be said to a jury about the evidence of children prohibit a direction of the kind proposed by the Court of Appeal. The Court of Appeal held that the judge was required to direct the jury to take into account that R's unsworn evidence lacked the solemnity that attaches to sworn evidence, and was not subject to penal sanction in the event it was intentionally false, in assessing its reliability. This was required because R was a key witness in the prosecution case. The direction concerns the fact that the evidence is unsworn and not that the witness is a child. This is not to overlook that the great majority of witnesses who are competent to give evidence, but not competent to give sworn evidence, will be children. The ability to give an intelligible account of an event will often precede the capacity to understand what it means to give evidence and the obligation to give truthful evidence. Nor is it to overlook that in the prosecution of a sexual offence alleged to have been committed against a child, often the child will be the key witness in the prosecution case. Assuming that the direction which the Court of Appeal said should have been given is not contrary to a statutory prohibition, it remains to identify why the omission to give the direction involved legal error. Consideration – adequacy of directions The respondent locates the requirement in the common law principle enunciated in Bromley v The Queen54, Crofts v The Queen55 and Longman v The Queen56. In his written outline, the respondent suggests that the principle may be distilled as a requirement for "jury directions where the jury may fail to take into account a consideration that is material to the assessment of evidence". The circumstance that a key prosecution witness lacks the capacity to give sworn evidence is said to be such a consideration. The respondent submits that an 53 GW v The Queen [2015] ACTCA 15 at [103]. 54 (1986) 161 CLR 315. 55 (1996) 186 CLR 427 at 451; [1996] HCA 22. 56 (1989) 168 CLR 79 at 86; [1989] HCA 60. Bell Nettle appropriate direction, that is consistent with the Court of Appeal's holding, would inform the jury of three things: that (a) a person who gives unsworn evidence does not make a formal promise to tell the truth, the whole truth and nothing but the truth; (b) a person may only give unsworn evidence if that person does not have the capacity to understand that, in giving evidence, the person is under an obligation to give truthful evidence; and (c) a person giving unsworn evidence is not subject to the sanction which may apply for failure to adhere to the oath or affirmation. The proposed direction addresses the absence of the solemnity that attaches to sworn evidence in (a) and the absence of penal sanction in (c). To these differences between sworn and unsworn evidence is added a third item of information: the statutory condition for the admission of unsworn evidence. Missing from the respondent's proposed direction is what the judge is to tell the jury about how these three items of information are to be taken into account in assessing the unsworn evidence. That omission is not usefully advanced by the submission that unspecified "jury directions" are required where the jury may fail to appreciate a consideration that is material to the assessment of evidence. The requirement of the common law explained in Bromley, Crofts and Longman is to warn the jury whenever a warning is necessary in order to avoid a perceptible risk of a miscarriage of justice57. A perceptible risk of that kind arises when there is a feature of the evidence which may adversely affect its reliability and which may not be evident to a lay jury58. The risk is perceptible to the court because judicial experience has shown that evidence of this description may be unreliable. Subject to any statutory prohibition, where there is a feature of that kind the fair trial of the accused requires the judge to draw it to the jury's attention, explain how it may affect the reliability of the evidence and warn the jury of the need for caution in deciding whether to accept it and the weight to be given to it. 57 Bromley v The Queen (1986) 161 CLR 315 at 319 per Gibbs CJ (Mason and Wilson JJ agreeing at 322, Dawson J agreeing at 326), 323-325 per Brennan J; Crofts v The Queen (1996) 186 CLR 427 at 435 per Dawson J, 446 per Toohey, Gaudron, Gummow and Kirby JJ; Longman v The Queen (1989) 168 CLR 79 at 86 per Brennan, Dawson and Toohey JJ. 58 Longman v The Queen (1989) 168 CLR 79 at 86 per Brennan, Dawson and Toohey JJ, citing Bromley v The Queen (1986) 161 CLR 315 at 319 per Gibbs CJ (Mason and Wilson JJ agreeing at 322, Dawson J agreeing at 326), 323-325 per Brennan J; and citing Carr v The Queen (1988) 165 CLR 314 at 330 per Brennan J; [1988] HCA 47. Bell Nettle At the respondent's trial, the jury observed witnesses giving evidence on oath or affirmation as the case may be and may be taken to have heard those witnesses undertake to tell the truth, the whole truth and nothing but the truth. By contrast, the jury did not see R take an oath or make an affirmation before giving her evidence. It strains credulity to suggest that in order to avoid the risk of a miscarriage of justice it was necessary to instruct the jury that R's evidence had been received without the solemnity of an oath or affirmation or the possibility of sanction should it be intentionally false. It might be thought unlikely that it would occur to jurors to think a six-year-old child was at risk of prosecution for perjury regardless of whether the child's evidence was taken on oath or otherwise. The respondent contends that implicit in the Court of Appeal's reasons is the necessity to inform the jury not only of the difference between sworn and unsworn evidence but of the reason that evidence is given unsworn. At least in the case of a key prosecution witness, it is argued that the jury must be informed that the evidence is only admitted unsworn because the witness does not have the capacity to understand that, in giving evidence, he or she is under an obligation to give truthful evidence. The respondent points out that the suggested direction is a proposition of law. He disavows any need to inform the jury of the judge's factual finding made in its absence59. This submission does not explain how instruction on the legal condition for the admission of unsworn evidence (by way of distinction from sworn evidence) might be material to the jury's assessment of the evidence. The contention must be that its materiality derives from the circumstance that a witness who lacks the capacity to understand that in giving evidence he or she is required to give truthful evidence is, or may be, less reliable than a witness who possesses that capacity. The correctness of the contention does not call for consideration. Relevantly, on this analysis the information is material not because the law imposes the condition but because, as a matter of fact, the witness meets it. Yet as the respondent's submission appears to accept, Penfold J cannot be said to have erred by failing to inform the jury of a factual finding made by the judge on the balance of probabilities in the jury's absence. 59 Under s 189 of the Evidence Act, factual questions relevant to the determination of competency to give evidence are to be determined in the absence of the jury unless the court otherwise orders. Bell Nettle The Court of Appeal was right to say that the most difficult task that the jury had to undertake was the assessment of the reliability of R's evidence60. As a matter of practical reality, neither the fact that R did not take an oath or make an affirmation before giving her evidence, nor that she was not subject to the sanctions that may apply to the failure to adhere to the oath or affirmation, was material to the assessment of whether R's evidence was truthful and reliable such that the jury could accept and act upon it. The jury was directed of the need to examine R's evidence "very carefully" before being satisfied that it could "safely act on [R's] evidence to the high standard required in a criminal trial". That instruction was repeated in the course of a "Murray direction"61. The further direction which the Court of Appeal held Penfold J had been required to give is likely to have been understood as conveying that even if the jury were satisfied of R's truthfulness and reliability to the criminal standard her evidence was nonetheless to be accorded less weight than sworn evidence. The Evidence Act does not treat unsworn evidence as of a kind that may be unreliable. Had a direction been requested under s 165(2), there was no requirement to warn the jury that R's evidence may be unreliable because it was unsworn. Nor was there a requirement under the common law to warn the jury of the need for caution in accepting R's evidence and in assessing the weight to be given to it because it was unsworn. Nor was there a requirement under common law, falling short of a warning of that kind, to direct the jury to take into account the differences between sworn and unsworn evidence in assessing the reliability of R's evidence. It is possible that different considerations would apply where a witness other than a young child is capable of giving evidence about a fact but incapable of giving sworn evidence because the witness does not have the capacity to understand that, in giving evidence about the fact, he or she would be under an obligation to give truthful evidence. Depending on the circumstances, it might prove necessary or desirable to give some further form of direction. But, for the present, that need not be decided. 60 GW v The Queen [2015] ACTCA 15 at [103]. 61 R v Murray (1987) 11 NSWLR 12 at 19 per Lee J. This appeal does not raise consideration of the relationship between s 69 of the EMP Act and the application of a Murray direction; cf Ewen v The Queen [2015] NSWCCA 117. Bell Nettle Orders The appeal must be allowed and the orders of the Court of Appeal set aside. In the ordinary course, in addition to setting aside the orders of the Court of Appeal, a further order would be made dismissing the appeal to the Court of Appeal, thereby restoring the respondent's conviction. However, the appellant submitted that in the event the appeal succeeded the matter should be remitted to the Court of Appeal for consequential orders with respect to sentence. On 14 July 2014, the respondent was sentenced to two years' imprisonment, to be served by way of three months' periodic detention commencing on 18 July 201462. The balance of the sentence was suspended upon the respondent entering into a good behaviour order for two years. On 23 July 2014, Refshauge J stayed the execution of the sentence pending the determination of the respondent's appeal to the Court of Appeal. In these circumstances, there should be the following orders: Appeal allowed. Set aside orders 1 to 3 of the Court of Appeal made on 24 April 2015 and remit the proceeding to the Court of Appeal. 62 Section 11 of the Crimes (Sentencing) Act 2005 (ACT) provides that a court may order that a sentence of imprisonment be served by periodic detention. Sub-section (3) was amended by the Crimes (Sentencing) Amendment Act 2014 (ACT). It provides that the periodic detention, if ordered, must end before 1 July 2016. |
HIGH COURT OF AUSTRALIA UBS AG AND APPELLANT SCOTT FRANCIS TYNE AS TRUSTEE OF THE ARGOT TRUST RESPONDENT UBS AG v Tyne [2018] HCA 45 17 October 2018 ORDER Appeal allowed with costs. Set aside the orders made by the Full Court of the Federal Court of Australia on 20 January 2017 and, in their place, order that: the appeal to the Full Court is dismissed; and the appellants in the Full Court are to pay the respondent's costs of the appeal to that Court. On appeal from the Federal Court of Australia Representation J Stoljar SC with L T Livingston for the appellant (instructed by King & Wood Mallesons) G O'L Reynolds SC with D P Hume for the respondent (instructed by Russells) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS UBS AG v Tyne Practice and procedure – Permanent stay of proceedings – Abuse of process – Where respondent (in personal capacity) was controlling mind of former trustee and related company – Where respondent (in personal capacity), former trustee and related company commenced proceedings in Supreme Court of New South Wales – Where respondent (in personal capacity) and former trustee discontinued as parties in Supreme Court proceedings – Where Supreme Court proceedings permanently stayed – Where respondent (as trustee) pursued substantially same claims in Federal Court of Australia – Where primary judge permanently stayed proceedings for abuse of process – Whether on appeal Full Court erred in finding no abuse of process and setting aside permanent stay – Whether Full Court failed to consider overarching purpose of conduct of civil litigation. litigation", "discontinue", "final determination", "just Words and phrases – "abuse of process", "administration of justice", "conduct of resolution", civil "overarching purpose of the conduct of civil litigation", "permanent stay", "related parties", "unconditional discontinuance", "unjustifiably oppressive". Federal Court of Australia Act 1976 (Cth), ss 23, 37M, 37N. Federal Court Rules 2011 (Cth), r 26.14. Uniform Civil Procedure Rules 2005 (NSW), rr 12.3(1), 12.4. KIEFEL CJ, BELL AND KEANE JJ. This appeal is concerned with the power to permanently stay proceedings as an abuse of the process of the court. The varied circumstances in which the use of the court's processes will amount to an abuse, notwithstanding that the use is consistent with the literal application of its rules, do not lend themselves to exhaustive statement. Either of two conditions enlivens the power: where the use of the court's procedures occasions unjustifiable oppression to a party, or where the use serves to bring the administration of justice into disrepute1. The issue in this appeal is whether one or both of those conditions is met in circumstances in which the factual merits of the underlying claim have not been determined and any delay in prosecuting the claim has not made its fair trial impossible. Procedural history Scott Francis Tyne, in his capacity as trustee of the Argot Trust ("the Trust"), and his wife, Clare Marks2, commenced proceedings against UBS AG ("UBS") in the Federal Court of Australia ("the Federal Court"), claiming damages and equitable compensation arising out of advice and representations made by UBS to Mr Tyne and, "through him", to certain "Tyne Related Entities". The latter include the former trustee of the Trust, ACN 074 971 109 Pty Limited ("ACN 074"), and an investment company incorporated in Jersey, Telesto Investments Limited ("Telesto"). At all material times, Mr Tyne was the controlling mind of ACN 074 (in its capacity as trustee of the Trust) and Telesto. The Trust is a family trust of which Mr Tyne, his wife and their children are the sole beneficiaries. The Trust's claimed loss arises in connection with the pledge of its assets to secure Telesto's liabilities under credit facilities extended by UBS. ACN 074 (in its capacity as trustee of the Trust), Telesto and Mr Tyne, in his personal capacity, had earlier brought proceedings in the Equity Division of the Supreme Court of New South Wales ("the SCNSW proceedings") arising out of the same facts and making essentially the same claims as are made on behalf 1 Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536 per Lord Diplock; Walton v Gardiner (1993) 177 CLR 378 at 393 per Mason CJ, Deane and Dawson JJ; [1993] HCA 77; Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at 519 [25] per French CJ, Bell, Gageler and Keane JJ; [2015] HCA 28. 2 On 11 June 2014, Ms Marks became a bankrupt on the making of a sequestration order. Her trustee did not elect to continue the proceedings on behalf of the bankrupt estate. On 15 December 2017, by consent, an order was made that Ms Marks cease to be a party to the proceedings in this Court. Bell of the Trust in these proceedings. Mr Tyne and the Trust discontinued their claims in the SCNSW proceedings, leaving Telesto as the sole plaintiff. The SCNSW proceedings were permanently stayed on the ground that Telesto was seeking to re-litigate causes of action which in substance had been determined in proceedings in the High Court of Singapore, and which had given rise to a res judicata estoppel. UBS applied to have the present proceedings stayed on grounds which include that they are an abuse of the process of the Federal Court. The primary judge held that the Trust could, and should, have brought its claims in the SCNSW proceedings and that it had failed to give a proper explanation of why it had not done so3. His Honour permanently stayed the proceedings under s 23 of the Federal Court of Australia Act 1976 (Cth) ("the FCA"). On appeal to the Full Court of the Federal Court, the majority (Jagot and Farrell JJ) held that it had not been open to the primary judge to find that the proceedings are an abuse of process4. The conclusion took into account that the Trust's claims have not been decided on their merits5. Dowsett J, in dissent, did not consider that circumstance to be determinative. His Honour inferred that Mr Tyne had identified some forensic advantage to himself and/or the Trust in discontinuing the Trust's claims in the SCNSW proceedings with a view to renewing them in the event the Telesto claim was unsuccessful. The effect of that decision, his Honour said, was to delay the resolution of the dispute between the Trust and UBS by a significant period of time, to increase the costs incurred by UBS, and otherwise to vex UBS. In the circumstances, Dowsett J considered that to allow the proceedings to remain on foot would inflict manifest unfairness on UBS and bring the administration of justice into disrepute6. On 15 September 2017, Bell and Keane JJ granted UBS special leave to appeal. By its first ground, UBS contends the Full Court majority erred essentially for the reasons given by Dowsett J. Those reasons call in aid the "overarching purpose" of the conduct of civil litigation in the Federal Court7: to law as quickly, facilitate just resolution of disputes according the 3 Tyne v UBS AG (No 3) (2016) 236 FCR 1 at 60-61 [421]-[424]. 4 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 379-380 [108]. 5 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 374 [90]. 6 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 353 [23]. 7 FCA, s 37M. Bell inexpensively and efficiently as possible. UBS submits that this purpose is not given effect by allowing one or more of a number of plaintiffs, controlled by the same individual, to discontinue proceedings, stand back and allow those proceedings to continue to final determination, then, depending on the outcome of the earlier proceedings and without proper explanation, to commence fresh proceedings raising the same substratum of facts and, in substance, the same claims against the same defendant. Whether conduct of this description rises to the level of an abuse of the processes of the court is a determination that requires consideration of all the circumstances. As Lord Bingham of Cornhill explained, that consideration requires the court to make8: "a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not." For the reasons to be given, taking into account the public and private interests involved, the primary judge was correct to stay this proceeding as an abuse of the processes of the Federal Court. The conclusion makes it unnecessary to address UBS's second ground of appeal. The appeal must be allowed and, in place of the Full Court's order, the appeal to that Court must be dismissed. The factual background In about 2007, Telesto opened an investment account with UBS, through which certain credit facilities were extended to it. Under the terms and conditions of the account the facilities were governed by the law of the country in which the account was booked. Telesto's account was "booked in Singapore" and Telesto unconditionally submitted to the non-exclusive jurisdiction of the courts of Singapore. The Trust's claims in the SCNSW proceedings and in these proceedings are founded on allegations that UBS gave negligent advice and/or that UBS engaged in misleading or deceptive conduct (or conduct that was likely to Johnson v Gore Wood & Co [2002] 2 AC 1 at 31. Bell mislead or deceive), in relation to financial services, in the representations made by its officers to Mr Tyne, and, through Mr Tyne, to Telesto and ACN 074 (in its capacity as trustee of the Trust) ("the Trust's TPA claims"). The representations are alleged to have induced Telesto to acquire and retain bonds issued by financial institutions in Kazakhstan, the Bank Turan-Alem and Astana Finance ("the Bonds"), which ultimately proved to be worthless. In September 2008, the value of collateral provided by Telesto under the facilities declined. UBS issued a margin call requiring Telesto to provide additional collateral or to reduce the amount owed under the facilities. At Telesto's and Mr Tyne's request, UBS agreed not to sell the collateral and not to make further margin calls on terms that were contained in a letter dated 14 December 2009. The letter was counter-signed by Telesto on 31 December 2009 ("the Standstill Agreement"). Under the Standstill Agreement, Telesto undertook to have ACN 074 (in its capacity as trustee of the Trust) enter into a letter of undertaking in favour of UBS. On 28 January 2010, ACN 074 (in its capacity as trustee of the Trust) executed the letter of undertaking. On 15 October 2010, UBS purported the Standstill Agreement. On the same day, UBS commenced proceedings 801 of 2010 in the High Court of Singapore ("the Singapore 801 proceedings") against Telesto, as principal debtor, and Mr Tyne, who had personally guaranteed Telesto's liabilities to UBS, alleging that Telesto's account with UBS was in default. terminate On 2 November 2010, Telesto, Mr Tyne in his personal capacity and ACN 074 (in its capacity as trustee of the Trust) commenced the SCNSW proceedings. In those proceedings, it was claimed that UBS did not have authority to purchase the Bonds on Telesto's behalf. Alternatively, it was claimed that Telesto purchased the Bonds in reliance on UBS's negligent advice and/or on representations made by UBS about the nature and quality of the Bonds, which constituted misleading or deceptive conduct in contravention of Commonwealth and State law. The Trust pleaded that it had entered into sureties on Telesto's behalf in continuing reliance on UBS's negligent advice and misleading or deceptive conduct. It sought to be released from those sureties, or the award of damages or compensation. Telesto also claimed equitable compensation for breach of fiduciary duty owed by UBS to it arising from UBS's alleged acceptance of an engagement to advise the Government of Kazakhstan on a re-structuring of the Kazakh banking industry. The Trust makes a like claim to equitable compensation in these proceedings. On 11 November 2010, UBS commenced proceedings in the High Court of Singapore to restrain the plaintiffs in the SCNSW proceedings from prosecuting those proceedings ("the Singapore anti-suit proceedings"). Relief was sought against ACN 074 (in its capacity as trustee of their claims Bell the Trust) notwithstanding that it was not a party to the Singapore 801 proceedings. On 9 December 2010, on UBS's application, consent orders were made temporarily staying the SCNSW proceedings pending the determination of the Singapore anti-suit proceedings. On 21 December 2010, Telesto applied in the High Court of Singapore for a stay of the Singapore 801 proceedings in favour of continuation of the SCNSW proceedings on the ground of forum non conveniens. On 10 January 2011, Mr Tyne applied in the High Court of Singapore seeking like orders. On 11 February 2011, the Singapore anti-suit proceedings and Telesto's and Mr Tyne's applications for stays were heard in the High Court of Singapore. On 21 February 2011, an Assistant Registrar made orders restraining Telesto, Mr Tyne in his personal capacity and ACN 074 (in its capacity as trustee of the Trust) from continuing to prosecute their claims in the SCNSW proceedings or in other proceedings in Australia or anywhere else in the world in relation to the subject matter of the Singapore 801 proceedings. Telesto's and Mr Tyne's stay applications were dismissed. On 16 May 2011, Chong J in the High Court of Singapore heard appeals from the grant of the anti-suit injunction and from the dismissal of Telesto's and Mr Tyne's applications to stay the Singapore 801 proceedings. The appeals were conducted as hearings de novo. Counsel appearing for Telesto, Mr Tyne and ACN 074 (in its capacity as trustee of the Trust) conceded that their claims based on misleading or deceptive conduct could be mounted as a defence in the Singapore 801 proceedings. Counsel maintained, however, that the prospect of the favourable resolution of these claims was enhanced in the SCNSW proceedings under Commonwealth and State legislation. The appeals were dismissed. An application for leave to appeal from Chong J's orders was dismissed following the failure of Telesto, Mr Tyne and ACN 074 (in its capacity as trustee of the Trust) to appear on the day fixed for the hearing of the application. By the time Chong J's judgment was delivered, UBS had realised the collateral securing Telesto's liability under the terms and conditions of the account and had applied the proceeds to reduce the liability to nil. UBS's claims in the Singapore 801 proceedings were confined to claims for declaratory relief and for costs on the indemnity basis. On 24 October 2011, UBS applied in the SCNSW proceedings for a permanent stay of proceedings. The application was heard by Ward J on Bell 21 November 2011. In a judgment delivered on 7 February 20129, Ward J held that as the Singapore 801 proceedings were now confined to UBS's claims for declaratory relief and indemnity costs, it was not evident that there would be overlap between the two proceedings. Her Honour observed that the extent of any overlap would depend upon the course taken by "the Telesto parties" with respect to the defence of those proceedings. Her Honour determined that the appropriate relief was to temporarily stay the SCNSW proceedings. On 21 February 2012, Ward J heard submissions on the form of the orders to reflect her earlier judgment. In written submissions filed on behalf of Telesto, Mr Tyne and ACN 074 (in its capacity as trustee of the Trust), it was foreshadowed that the latter two parties would discontinue their claims, that Telesto would not defend the Singapore 801 proceedings, and that it would abandon all claims in the SCNSW proceedings save for its TPA and breach of fiduciary duty claims. Subject to UBS prosecuting the Singapore 801 proceedings expeditiously, Ward J ordered that the SCNSW proceedings be stayed pending their final determination. Notwithstanding the temporary stay, Ward J gave leave, so far as necessary, to the plaintiffs to file and serve an amended summons and amended commercial list statement. On 6 March 2012, Telesto filed a further amended summons and further amended commercial list statement pursuant to Ward J's orders. Mr Tyne and ACN 074 (in its capacity as trustee of the Trust) were no longer named as plaintiffs in the amended pleadings. By the amended pleadings, Telesto abandoned its claim that the Bonds had been purchased on its behalf without authority but maintained its TPA claims, its claims for certain declaratory relief and its claim for equitable compensation. On 27 July 2012, Lai J heard the Singapore 801 proceedings. There was no appearance by Telesto or Mr Tyne. Following a hearing on the merits, Lai J made a number of declarations including that by reason of events of default the Standstill Agreement was terminated and Telesto and Mr Tyne were liable to UBS for a liquidated sum and interest. On 6 September 2012, UBS filed a motion in the SCNSW proceedings seeking the permanent stay or dismissal of the proceedings on the ground that Lai J's judgment gave rise to a res judicata or issue estoppel. On 10 September 2012, Telesto filed an application to discharge the temporary stay ordered by Ward J. Both applications were heard by Sackar J on 23 November 2012. On 9 Telesto Investments Ltd v UBS AG (2012) 262 FLR 119. Bell the hearing each party adduced expert evidence on the law of Singapore. Following the hearing his Honour entertained further submissions in writing. On 9 May 2013, his Honour delivered judgment10. Relevantly, his Honour found that the facts underlying each of Telesto's principal claims occurred before the execution of the Standstill Agreement and that Lai J's finding – that all the rights and liabilities arising as the result of those facts were the subject of a compromise or settlement agreement that should not be set aside – "included everything which Telesto pleaded against UBS in the [SCNSW proceedings]"11. His Honour held that the Singapore 801 proceedings, as a matter of substance, "covered" the causes of action in the SCNSW proceedings such that Lai J's judgment created a res judicata12. The SCNSW proceedings were permanently stayed. No appeal was brought from his Honour's decision. On 9 January 2014, Mr Tyne became the trustee of the Trust. Four days later, in that capacity, Mr Tyne commenced the present proceedings. This was some 23 months after the grant of leave to file the amended pleadings in the SCNSW proceedings by which ACN 074, the former trustee, ceased to be a plaintiff in those proceedings. The amended statement of claim filed by Mr Tyne in his capacity as trustee of the Trust pleads: (i) essentially the same representations as to the nature and quality of the Bonds as were relied upon in the SCNSW proceedings; (ii) Mr Tyne's reliance upon those representations in arranging for ACN 074 (in its capacity as trustee of the Trust) to acquiesce in the pledge by Telesto of certain securities and the loan by the Trust of securities to Telesto which were pledged by Telesto as additional collateral; and (iii) that, had UBS advised Mr Tyne of certain undisclosed matters with respect to the stability of Kazakh financial institutions, he would not have caused ACN 074 (in its capacity as trustee of the Trust) to loan the securities to Telesto or acquiesce in them being pledged on its behalf. As the result of the Bonds losing their value, Telesto is said to have been unable to return the "lent securities" to the Trust or to pay the Trust their benchmark value. The Trust claims damages both for contraventions of Commonwealth and State law proscribing misleading or deceptive conduct in the provision of financial services and in negligence, and claims equitable compensation for breach of fiduciary duty arising out of the circumstances to which earlier reference has been made. 10 Telesto Investments Ltd v UBS AG (2013) 94 ACSR 29. 11 Telesto Investments Ltd v UBS AG (2013) 94 ACSR 29 at 65 [199]. 12 Telesto Investments Ltd v UBS AG (2013) 94 ACSR 29 at 65 [201]. Bell The primary judge's analysis UBS's application to permanently stay the present proceedings was brought on grounds of abuse of process, Anshun estoppel13, res judicata, or issue estoppel, which were variously asserted to arise from the Singapore 801 proceedings, the Singapore anti-suit proceedings and the SCNSW proceedings. The primary judge rejected UBS's arguments on res judicata and estoppel. His Honour's focus with respect to the argument on abuse of process was on the SCNSW proceedings. His Honour found that the essential facts and circumstances relied upon as UBS's conduct in the SCNSW proceedings are reflected in the pleading of UBS's conduct in these proceedings and the essential allegations are the same as the allegations in the SCNSW proceedings14. There is no challenge to that finding. His Honour did not accept that ACN 074 (in its capacity as trustee of the Trust) should have been joined in the Singapore 801 proceedings as a cross- claimant because prosecution of the Trust's TPA claims in Singapore would have subjected it to significant juridical disadvantage. There was, however, no juridical disadvantage to the prosecution of the Trust's claims in the SCNSW proceedings. While the trustee was not privy in interest with Telesto (or Mr Tyne), his Honour observed that as the controlling mind of ACN 074 (in its capacity as trustee of the Trust) Mr Tyne made the decision to cause it to discontinue its participation as a plaintiff in the SCNSW proceedings. His Honour said that the Trust did not have an unqualified "right" to a trial of its claims on the merits; the Trust had a right to an opportunity to have its claims determined on the merits and it had chosen not to exercise that opportunity. His Honour concluded that the Trust's claims could and should have been brought in the SCNSW proceedings and that no "proper explanation" had been given for the failure to do so. His Honour considered that the conduct of the SCNSW proceedings was suggestive of the Trust's claims having been held back with a view to them being brought in another court if the outcome of the SCNSW proceedings was adverse to Telesto. The bringing of these proceedings, his Honour said, raised substantial, complex questions of fact and law with which UBS has been vexed, and amounted to an abuse of the processes of the Federal Court. 13 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 14 Tyne v UBS AG (No 3) (2016) 236 FCR 1 at 26 [185]. Bell The Full Court's analysis The Full Court majority took into account that Ward J had not imposed conditions on the grant of leave to file the amended pleadings by which the Trust's claim was discontinued. Their Honours also accepted for the purpose of the analysis that if the Trust's claims had been prosecuted in the SCNSW proceedings, UBS may have chosen not to proceed with the application for a permanent stay before Sackar J. Nonetheless, UBS had the benefit of the permanent stay of Telesto's claims and was now being required to do what otherwise it would have had to do in 2013, namely admit or defend the Trust's claims15. "We are unable to accept these circumstances as involving any material unfairness to, or oppression of, UBS. The fact that the primary judge must be inferred to have reached a contrary view indicates error. Again, if it is necessary to identify the error with precision it is either that the primary judge did not consider the unfairness to or oppression of UBS that was involved in the particular circumstances of this case, or that it was not open on the facts as found to characterise the circumstances as involving an abuse of process by the Argot Trust in bringing this proceeding." Dowsett J, in dissent, considered that focus on the "right" of a litigant to discontinue and later commence fresh proceedings is out of keeping with the conduct of modern litigation, consistently with the overarching purpose stated in s 37M(1) of the FCA17. His Honour inferred that Mr Tyne had identified some forensic advantage to himself and/or the Trust in discontinuing the SCNSW proceedings. The effect had been to delay the resolution of the dispute between the Trust and UBS in circumstances in which all of the claims arising out of the allegations as to UBS's conduct could have been resolved in 201318. His Honour considered that to permit the Trust's claims to go forward would visit manifest unfairness on UBS by reason of the significant delay in resolving the dispute, increased costs, and the inconvenience of having to deal 15 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 380 [108]. 16 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 380 [108]. 17 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 352 [20]. 18 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 353 [23]. Bell with the matter again after lengthy litigation19. His Honour assessed that these considerations would themselves be likely to bring the administration of justice into disrepute, particularly if the conduct of the Trust's claims were thought to bespeak a general attitude of tolerance by the courts20. Section 37M of the FCA The determination of whether the bringing or continuance of proceedings is an abuse of the process of the court must take into account the procedural law administered by the court whose processes are engaged21. Relevantly in this respect, s 37M of the FCA provides: "(1) The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes: according to law; and as quickly, inexpensively and efficiently as possible. (2) Without limiting the generality of subsection (1), the overarching purpose includes the following objectives: the just determination of all proceedings before the Court; the efficient use of the judicial and administrative resources available for the purposes of the Court; the efficient disposal of the Court's overall caseload; the disposal of all proceedings in a timely manner; the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute." 19 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 351 [14], 353 [23]. 20 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 356 [32]. 21 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 280 [65] per Gleeson CJ, Gummow, Hayne and Crennan JJ; [2006] HCA 27. Bell The submissions UBS submits that the Full Court majority reasoned that because the Trust's claims have not been determined on their factual merits it was not open to the primary judge to find that their prosecution is an abuse of process. It argues that in this respect their Honours imposed a wrong limitation on the breadth and flexibility of the doctrine as it is articulated in Tomlinson v Ramsey Food Processing Pty Ltd22 and Timbercorp Finance Pty Ltd (In liq) v Collins23. It submits that the approach of the Full Court majority fails to give weight to the oppression occasioned by repeated attempts at re-litigation by closely related parties of substantially the same claims based upon a common substratum of facts. UBS embraces Dowsett J's conclusion, that statements in older authorities dealing with the doctrine of abuse of process are to be read in light of the enactment of the "overarching purpose" in s 37M of the FCA and its analogues24. The submissions made by Mr Tyne, in his capacity as trustee of the Trust, for convenience will be described as those of the Trust. The Trust submits that putting cases of inordinate delay to one side, the authorities are against acceptance of the proposition that proceedings may be stayed as an abuse of process notwithstanding that they have not been determined on their merits. In any event, the Trust submits that the Full Court majority did not rest their conclusion on the circumstance that there has been no hearing of the merits of its claim alone; their Honours separately identified error in the primary judge's failure to identify the unfairness to, or oppression of, UBS occasioned by the conduct of the Trust's claims. While the Trust acknowledges the relevance of the policy reflected in s 37M of the FCA to an inquiry into whether proceedings are an abuse, it lays stress on the object of the policy being "the just resolution of disputes … according to law"25. And the Trust submits that the principle of finality – 22 (2015) 256 CLR 507 at 518-519 [25]-[26] per French CJ, Bell, Gageler and 23 (2016) 259 CLR 212 at 240 [69] per French CJ, Kiefel, Keane and Nettle JJ; [2016] HCA 44. 24 Civil Procedure Act 2005 (NSW), s 56(1); Uniform Civil Procedure Rules 1999 (Q), r 5; Civil Procedure Act 2010 (Vic), s 7(1); Supreme Court Civil Rules 2006 (SA), r 3; Court Procedures Act 2004 (ACT), s 5A. 25 FCA, s 37M(1)(a); see also s 37M(2)(a). Bell "controversies, once resolved, are not to be reopened"26 – is not engaged where the issues between the parties have not been decided. More generally, it cautions against open-textured arguments the administration of justice. That confidence, it submits, rests ultimately on the availability of courts and tribunals to which citizens may resort for the determination of their disputes. invoking public confidence The just resolution of the dispute The timely, cost effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute27. These wider interests are reflected in s 37M(2) of the FCA. As the joint reasons in Aon Risk Services Australia Ltd v Australian National University explain, the "just resolution" of a dispute is to be understood in light of the purposes and objectives of provisions such as s 37M of the FCA. Integral to a "just resolution" is the minimisation of delay and expense28. These considerations inform the rejection in Aon of the claimed "right" of a party to amend its pleading at a late stage in the litigation in order to raise an arguable claim. The point is made that a party has a right to bring proceedings but that choices are made respecting what claims are made and how they are framed. Their Honours speak of the just resolution of the dispute in terms of the parties having a sufficient opportunity to identify the issues that they seek to agitate29. The respondent's argument in Aon, that the proposed amendment to raise the fresh claim was a necessary amendment to avoid multiple actions, did not avail. As their Honours observe, if reasonable 26 D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 17 [34], 20 [45]; [2005] HCA 12 (emphasis added). 27 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 266 [14] per Gleeson CJ, Gummow, Hayne and Crennan JJ citing Ridgeway v The Queen (1995) 184 CLR 19 at 74-75 per Gaudron J; [1995] HCA 66; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 212 [95] per Gummow, Hayne, Crennan, Kiefel and Bell JJ; [2009] HCA 27. 28 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 213 [98] per Gummow, Hayne, Crennan, Kiefel and Bell JJ. 29 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 217 [112] per Gummow, Hayne, Crennan, Kiefel and Bell JJ. Bell diligence would have led to the bringing of the claim in the existing proceedings, any further proceeding might be met by a stay on Anshun grounds30. In separate reasons in Aon, French CJ holds that the institution of fresh proceedings by the Australian National University, raising the claim which could have been raised earlier in the existing proceedings, might be an abuse of process. His Honour observes that abuse of process principles may be invoked to prevent attempts to litigate a claim that should have been litigated in earlier proceedings as well as attempts to re-litigate a claim that has been determined31. His Honour points to Reichel v Magrath as a longstanding example of a re-litigation case that was decided on the ground of abuse of process and not on the grounds of res judicata or issue estoppel32. Batistatos v Roads and Traffic Authority (NSW)33 makes clear that the just resolution of a controversy may be the permanent stay of the proceeding notwithstanding that the plaintiff is not at fault and that the merits of his or her claim have not been decided. As the joint reasons explain34: "The plaintiff certainly has a 'right' to institute a proceeding. But the defendant also has 'rights'. One is to plead in defence an available limitation defence. Another distinct 'right' is to seek the exercise of the power of the court to stay its processes in certain circumstances. On its 30 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 209-210 [86] per Gummow, Hayne, Crennan, Kiefel and Bell JJ citing Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 602 per Gibbs CJ, Mason and Aickin JJ. 31 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 32 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 193 [33] citing (1889) 14 App Cas 665, and at fn (106) noting the suggestion that the case could have been dealt with on the ground of res judicata: Handley, Spencer Bower, Turner and Handley on the Doctrine of Res Judicata, 3rd ed (1996) at 121 [231], 252 [445]; Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198 at 202 [16] per Handley JA. 33 (2006) 226 CLR 256. 34 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 280 [63] per Gleeson CJ, Gummow, Hayne and Crennan JJ. Bell part, the court has an obligation owed to both sides to quell their controversy according to law." The abuse of process in Batistatos lay in the very great delay in the commencement of the proceedings on behalf of the incompetent plaintiff; a delay which made the fair trial of his claim impossible. That is not this case. The appeal is to be determined upon acceptance that the Trust's claims are arguable, that UBS has not been called upon to defend them, and that the delay has not made their fair trial impossible. The claimed abuse lies in invoking the processes of the Federal Court to litigate claims that could and should have been litigated in Batistatos was concerned with litigation that was commenced before the enactment of s 56(1) of the Civil Procedure Act 2005 (NSW) ("the CPA"), which is in similar terms to s 37M(1) of the FCA. Nonetheless their Honours had regard to the wider scope given to the principles of abuse of process in England under r 1.1 of the Civil Procedure Rules 1998 (UK), on which s 56(1) of the CPA and s 37M(1) of the FCA are broadly modelled36. Their Honours instance the decision of the Court of Appeal in Securum Finance Ltd v Ashton as exemplifying that wider scope37. In that case Chadwick LJ explains the approach of the English courts in this way38: "The position, now, is that the court must address the application to strike out the second action with the overriding objective of the Civil Procedure Rules in mind – and must consider whether the claimant's wish to have 'a second bite at the cherry' outweighs the need to allot its own limited resources to other cases." This is not to say that in England or here the circumstance that a claim could have been raised in earlier proceedings makes the raising of it in later proceedings an abuse of process39. It is to recognise that in some circumstances 35 Tyne v UBS AG (No 3) (2016) 236 FCR 1 at 59 [416], 60 [422], 61 [424]. 36 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 281 [68] per Gleeson CJ, Gummow, Hayne and Crennan JJ. 37 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 281 [68] per Gleeson CJ, Gummow, Hayne and Crennan JJ referring to [2001] Ch 291. 38 Securum Finance Ltd v Ashton [2001] Ch 291 at 309 [34]. 39 Johnson v Gore Wood & Co [2002] 2 AC 1 at 31 per Lord Bingham of Cornhill. Bell the bringing of a claim which should have been litigated in an earlier proceeding will be an abuse and that that may be so notwithstanding that the later proceeding is not precluded by an estoppel. So much is made plain in Tomlinson40: "[I]t has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel." (footnotes omitted) The circumstance that the Trust's claim has not been heard on its merits, and that a fair trial may still be had, cannot be determinative of whether the proceeding is unjustifiably oppressive to UBS or whether its continuance would bring the administration of justice into disrepute. The courts must be astute to protect litigants and the system of justice itself against abuse of process. It is to hark back to a time before this Court's decisions in Aon and Tomlinson and the enactment of s 37M of the FCA to expect that the courts will indulge parties who engage in tactical manoeuvring that impedes the "just, quick and efficient" resolution of litigation. To insist, for example, on "inexcusable delay" as a precondition of the exercise of the power to stay proceedings as an abuse of process is to fail to appreciate that any substantial delay is apt to occasion an increase in the cost of justice and a decrease in the quality of justice. And other litigants are left in the queue awaiting justice. Further, there is no reason why the courts should tolerate attempts to manipulate other parties and the courts themselves by the deployment, by a single directing mind and will, of different legal entities under common control for such a purpose. The concern is as to whether the processes of the court are being abused. Given that this is the central concern, the circumstance that the abuse is effected by the use of multiple entities orchestrated by a single mind and will is no reason to tolerate it. Nor does the undue vexation which a stay of proceedings is concerned to prevent arise only when proceedings in respect of the same issue have been concluded by a judgment on the merits. Serial proceedings discontinued prior to 40 (2015) 256 CLR 507 at 519 [26] per French CJ, Bell, Gageler and Keane JJ. Bell judgment would be an obvious example of an abuse of process. The pursuit of substantially the same claim by serial proceedings conducted by different entities under common control is no less obviously an abuse of process. Unconditional discontinuance The unconditional discontinuance of the Trust's claims in the SCNSW proceedings is central to the Trust's submissions, which draw attention to the rules of the Supreme Court of New South Wales and the Federal Court that in each case provide that discontinuance of proceedings is no bar to bringing fresh proceedings for the same relief41. In light of the rules, the Trust questions that it could ever amount to an abuse of process for a plaintiff to recommence proceedings having been granted unconditional leave to discontinue an earlier proceeding. The Trust points out that, if discontinuance of its claim was perceived to be oppressive or unfair, it was open to UBS to apply to have the grant of leave conditioned on no further proceedings being brought in respect of the claim. As to the interests of the administration of justice, the Trust submits that the rules are structured so as to make it incumbent upon the judge hearing the application for discontinuance to deal with the question of future proceedings; Ward J is to be taken to have considered that it was consistent with the overriding purpose under s 56 of the CPA to grant unconditional leave to discontinue its claims. The submission directs attention to how the application was developed before her Honour. No formal application under the Uniform Civil Procedure Rules 2005 (NSW) to discontinue Mr Tyne's or the Trust's claims was brought. In written submissions filed in advance of the hearing, the Telesto parties foreshadowed their intention to seek leave to file an amended pleading discontinuing the claims of Mr Tyne and ACN 074 (in its capacity as trustee of the Trust) and confining the claims made by Telesto. UBS opposed the grant of leave to file the amended pleading. In written submissions, UBS contended the application should be made formally and supported by evidence. Counsel for the Telesto parties responded to this submission by observing "[w]e can do that if that's pedantically required" and by inviting the Court to grant the leave sought without further formality as the amended pleading would enable UBS "to see precisely what the issues are that we wish to litigate". 41 Uniform Civil Procedure Rules 2005 (NSW), r 12.3(1); Federal Court Rules 2011 (Cth), r 26.14. Bell Counsel submitted that the proceedings "could then proceed just, quick and efficiently which is what we are actually working towards". Following these submissions, Ward J commented to counsel for UBS "[i]t seems to me it is not in your client's interests to discourage [Mr Tyne and ACN 074] from discontinuing the proceedings". Counsel for UBS agreed and did not further press the objection to leave. In granting leave to file the amended pleading discontinuing the claims made by the Trust and Mr Tyne, Ward J is to be taken to have accepted counsel's submission that the amendment would identify the issues which the Tyne-related parties wished to litigate against UBS, and thus advance the just, quick and efficient resolution of the dispute between those parties and UBS. Where discontinuance of proceedings brings the proceedings to an end, the later commencement of fresh proceedings may work no unfairness to the defendant. Here, the discontinuance of the Trust's claim did not bring the SCNSW proceedings to an end. Those proceedings were prosecuted to a final determination on the issues before the Court by a plaintiff controlled by Mr Tyne to recover the loss that the Trust claims as its loss in these proceedings. Mr Tyne provided an explanation for the decision not to maintain the Trust's claim in the SCNSW proceedings. The primary judge considered that it was not a "proper" explanation. To explain that finding it is necessary to refer to Mr Tyne's affidavit. Mr Tyne stated that the discontinuance of the Trust's claim in the SCNSW proceedings was precipitated by the fact that Telesto's liabilities to UBS under the facilities had been extinguished, expunging any secondary liability of the Trust. As the primary judge and Dowsett J noted, the account provides no explanation of why the Trust's claim, for recovery of the value of the securities which were loaned to Telesto and pledged as security for the funds advanced to Telesto, was not pursued in the SCNSW proceedings. The explanation for that decision is found in the further "observations" Mr Tyne made concerning the SCNSW proceedings. Mr Tyne assessed that "in dollar terms" this proceeding was likely to be of lesser value than Telesto's claim in the SCNSW proceedings. Had Telesto "been made whole" in the SCNSW proceedings, Mr Tyne said, it was very likely that that outcome would have obviated the need for this proceeding. Mr Tyne considered that the concurrent prosecution of Telesto's and the Trust's claims would have been more burdensome and expensive than prosecuting Telesto's claims in that the Trust would be required to prove all of the matters that Telesto was required to prove in its case and additionally the Trust would have to prove the provenance of the "lent securities". Bell Mr Tyne perceived a forensic advantage to the Tyne-related parties in holding back the Trust's claim. This was a decision that, were Telesto's claim to be stayed, would lead to duplication of resources and increased cost, and would delay the resolution of the dispute between the Tyne-related parties and UBS. Hiving off the Trust's claim, with a view to bringing it in another court after the determination of the SCNSW proceedings, was the antithesis of the discharge of the duty imposed on parties to civil litigation in the Supreme Court of New South Wales42 and in the Federal Court43. That duty is to conduct the proceedings in a way that is consistent with the overriding/overarching purpose. It may be accepted that, under r 12.3(1) of the Uniform Civil Procedure Rules 2005 (NSW), the discontinuance of proceedings does not operate as a release of the claims made by the discontinuing party. But that does not mean that discontinuance is irrelevant when the discontinuing party seeks by new proceedings to pursue a discontinued claim. Nor does the possibility that a party might have sought the protection of conditions upon discontinuance, but did not, mean that the disruption and extra costs incurred by that party when confronted by new proceedings is not relevant to whether an abuse of process is being perpetrated. An abuse of process is no less an abuse because the party adversely affected might have, by greater diligence in its own interests, prevented the abuse. Nor does the circumstance that r 12.4 provides for a discretion to stay proceedings until the costs of another party of discontinued proceedings are paid by the discontinuing party mean that the circumstances of, and after, discontinuance are irrelevant to whether the commencement of fresh proceedings constitutes an abuse of process. The whole of the dispute between the Tyne-related parties and UBS arising out of UBS's conduct in connection with Telesto's investment in the Bonds was before the Supreme Court of New South Wales. No question of res judicata or issue estoppel arising from the Singapore 801 proceedings precluded the determination of the factual merits of the Trust's claim in the Supreme Court of New South Wales. Contrary to the way the matter was put to Ward J before UBS withdrew its opposition to the filing of the amended pleading, the issues that the Tyne-related parties wished to litigate against UBS always included the Trust's claims. It is an open question whether UBS would have pursued an application for a permanent stay of the Telesto claim in circumstances in which any stay would not have served to avoid the trial of the common factual issues raised by the Trust's claim. The time to have the trial of 42 CPA, s 56(3). 43 FCA, s 37N(1). Bell the factual allegations underlying Telesto's and the Trust's claims was in the SCNSW proceedings. The fact that UBS is a large commercial corporation does not deny that permitting the Trust's claim to proceed will subject it to unjustifiable oppression44. That oppression is found not only in the significant delay in the resolution of the dispute and the inevitability of increased costs to UBS. At its core is the vexation of being required to deal again with claims that should have been resolved in the SCNSW proceedings. The fact that UBS has not been required to admit or defend the Trust's claim does not lessen that vexation. Between December 2010 and May 2013, when the SCNSW proceedings were finally determined, UBS was engaged in litigation with a party controlled by Mr Tyne, arising out of its alleged dealings with Mr Tyne in respect of the loss that is claimed by the Trust in these proceedings. On the final determination of the SCNSW proceedings, it was reasonable for UBS to order its affairs upon the understanding that the dispute between it and Mr Tyne, and the entities that he controlled, arising out of those dealings was at an end. For the Federal Court to lend its procedures to the staged conduct of what is factually the one dispute prosecuted by related parties under common control with the attendant duplication of court resources, delay, expense and vexation, as Dowsett J found, is likely to give rise to the perception that the administration of justice is inefficient, careless of costs and profligate in its application of public moneys45. The primary judge was right to permanently stay the proceedings as an abuse of the processes of the Federal Court. Orders For these reasons there should be the following orders: Appeal allowed with costs. Set aside the orders made by the Full Court of the Federal Court of Australia on 20 January 2017 and, in their place, order that: the appeal to the Full Court is dismissed; and 44 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 552 per McHugh J; [1996] HCA 25; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 214 [101] per Gummow, Hayne, Crennan, 45 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 351 [17]. Bell the appellants in the Full Court are to pay the respondent's costs of the appeal to that Court. The appeal should be allowed and the permanent stay should be reinstated for the reasons given by Kiefel CJ, Bell and Keane JJ. In view of the appeal having given rise to a close division of opinion in the Federal Court and in this Court on an important question of practice and procedure, I add the following reasons of my own. The framework for analysis is that established by the reasoning of the joint judgment in Tomlinson v Ramsey Food Processing Pty Ltd46. The doctrine of abuse of process, in its application to the assertion of rights or the raising of issues in successive proceedings, was there explained to be informed in part by considerations of finality and fairness similar to those which inform the doctrine of estoppel but to be inherently broader and more flexible than that doctrine47. By way of illustration, the joint judgment in Tomlinson observed that making a claim or raising an issue which ought reasonably to have been made or raised for determination in an earlier proceeding can constitute an abuse of process where the party seeking to make the claim or raise the issue was neither a party nor the privy of a party to the earlier proceeding and therefore could not be precluded by an estoppel48. Reference was made in that regard to Johnson v Gore Wood & Co49, as explained in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd50. Johnson is for present purposes instructive. The important statement of principle there made by Lord Bingham of Cornhill is best understood by reference to the factual context in which the principle came to be stated and applied. Mr Johnson was the principal shareholder and controlling mind of a number of companies engaged in property development. Mr Johnson and one of those companies retained solicitors to act in relation to a particular development. The company subsequently brought a negligence action against the solicitors. Mr Johnson decided for financial reasons not to bring a personal negligence action against the solicitors at the same time, but notified the solicitors before the trial of the company's action of his intention to do so in due course. The company's action was settled during the course of the trial on terms which made sense only on the basis that the company and the solicitors were acting on the common assumption that Mr Johnson remained likely to bring a personal 46 (2015) 256 CLR 507; [2015] HCA 28. 47 (2015) 256 CLR 507 at 518-519 [24]-[25]. 48 (2015) 256 CLR 507 at 519 [26]. negligence action which could be separately tried or settled. Mr Johnson in fact commenced his foreshadowed personal negligence action against the solicitors some months after the settlement. Four and a half years later, after pleadings had closed, witness statements had been exchanged and the action had been fixed for trial, the solicitors notified Mr Johnson for the first time of their intention to apply to have the action struck out as an abuse of process. The application was refused at first instance. That decision at first instance was reversed on appeal but ultimately reinstated on further appeal to the House of Lords. As Lord Sumption JSC subsequently explained in Virgin51, the fact that Mr Johnson and his company were separate entities whose privity of interest (although conceded) was doubtful even under English law meant that the focus of the House of Lords in Johnson was inevitably on abuse of process rather than estoppel. Lord Bingham in Johnson explained the application of the doctrine of abuse of process to the bringing of successive proceedings in terms consistent with the later reasoning of the joint judgment in Tomlinson. He identified as the "underlying public interest" that "there should be finality in litigation and that a party should not be twice vexed in the same matter". That public interest, he observed, was "reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole"52. Lord Bingham then said this53: "The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party." 51 [2014] AC 160 at 185 [25]. 52 [2002] 2 AC 1 at 31. 53 [2002] 2 AC 1 at 31. "It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits- based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim." Lord Bingham's acknowledgement that an abuse of process might be established by nothing more than the bringing of a claim in later proceedings which "should" have been brought in earlier proceedings demonstrates the substantial overlap between abuse of process and the form of estoppel recognised in Port of Melbourne Authority v Anshun Pty Ltd55. His Lordship's rejection, as "too dogmatic", of the equation of what "should" have been done in earlier proceedings with what "could" have been done in those earlier proceedings accords with the observation in Anshun that Lord Kilbrandon went "too far"56 when he spoke in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd57 of it becoming "an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings". Lord Bingham's emphasis on the need for a "merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case" correspondingly encompasses, without necessarily being exhausted by, the enquiry mandated by the reasoning in Anshun (as a step in determining the existence of an estoppel) as to whether the claim sought to be brought in the later proceedings was so relevant to the subject matter of the 54 [2002] 2 AC 1 at 31. 55 (1981) 147 CLR 589; [1981] HCA 45. 56 (1981) 147 CLR 589 at 601-602. 57 [1975] AC 581 at 590. earlier proceedings that it would have been unreasonable not then to have brought the claim so as to have allowed all relevant issues to have been determined in the one proceeding58. The ultimate judgment to be made is in each case normative. Finally, and for present purposes no less importantly, Lord Bingham's reference to the need for the requisite normative judgment to take account of "the public and private interests involved" underscores that the question of whether the claim sought to be brought in the later proceedings "should" have been brought in the earlier proceedings cannot be determined solely by reference to interests of the parties to the action. There is a public interest in the timely and efficient administration of civil justice. The importance of that public interest has only increased in the years since Lord Bingham spoke. Dowsett J sought to capture that public interest when he referred in dissent in the decision under appeal to the abusive character of litigious conduct which, if permitted, would lead "the right-thinking person" to perceive the system for the administration of civil justice to be "inefficient, careless about the incurrence of cost by the parties, and profligate in the application of public moneys"59. His Honour's anthropomorphic allusion was evidently drawn from the frequently quoted description of the power to prevent an abuse of process in terms of an "inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people"60. Although undoubtedly capable of application in circumstances in which use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute, the doctrine of abuse of process has repeatedly been recognised to be insusceptible of a formulation which would confine it to closed categories61. In the context of the application of the doctrine to the bringing of successive proceedings, consistently with the analysis of Lord Bingham, I think it better in weighing the private and public interests 58 (1981) 147 CLR 589 at 602. 59 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 351 [17]. 60 Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536. See eg Walton v Gardiner (1993) 177 CLR 378 at 393; [1993] HCA 77. 61 Eg Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 262 [1], 265 [9]; [2006] HCA 27; Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at 518-519 [25]. involved to eschew the extremes of private "oppression" and of public "disrepute". The relevant public interest is ordinarily appropriately identified in more general and less emotive terms as the timely and efficient administration of civil justice. The conclusion of the primary judge that Mr Tyne's bringing of the Trust's claims against UBS in the Federal Court proceedings was an abuse of process was expressed in terms borrowed directly from the language of Lord Bingham. His Honour expressed himself satisfied that those claims "should have been raised in the SCNSW proceedings if they were to be raised at all"62. That conclusion was based on four key considerations. The first was that Mr Tyne was at all times the controlling mind both of the trustee of the Trust and of Telesto. The second was that the Trust's claims against UBS raised complex questions of fact and law which arose out of the same substratum of facts as those on which Telesto had relied to pursue its claim in the SCNSW proceedings. The third was that there was no juridical disadvantage to the trustee advancing those claims in the SCNSW proceedings. The fourth was that there was "no proper explanation of why it chose not to do so"63. The majority of the Full Court correctly recognised that the primary judge's conclusion attracted the standard of appellate review articulated in House v The King64, requiring, "in substance, identification of an error of principle or a material error of fact, or, if no specific error can be identified, demonstration that the decision is 'unreasonable or plainly unjust'"65. Applying that standard, the majority identified two errors on the part of the primary judge. One was a failure to consider the lack of any unfairness to or oppression of UBS in that UBS would be defending in the Federal Court proceedings what it would have had to defend had the trustee brought the same claims in the SCNSW proceedings. The other, couched in the alternative, was that it was not open on the facts found to characterise the circumstances as involving an abuse of process66. In my opinion, the majority of the Full Court took too narrow an approach to the application of the doctrine of abuse of process to the bringing of successive 62 Tyne v UBS AG (No 3) (2016) 236 FCR 1 at 61 [424]. 63 (2016) 236 FCR 1 at 59-61 [413]-[424]. 64 (1936) 55 CLR 499; [1936] HCA 40. 65 (2017) 250 FCR 341 at 362 [54], quoting Ghosh v Ninemsn Pty Ltd (2015) 90 NSWLR 595 at 601 [37]. See Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 264 [7]. 66 (2017) 250 FCR 341 at 380 [108]. proceedings in the importance which the majority placed on what the majority chose to characterise as lack of unfairness or oppression to UBS. It was not necessary for the effect of the Federal Court proceedings on UBS to rise to the level connoted by language such as "unfairness" or "oppression". Rather, UBS's private interest was sufficiently engaged by UBS being compelled by the coercive authority of the Federal Court to respond to a process designed to vindicate a claim which should have been brought in the SCNSW proceedings, which UBS had already gone to the time and expense of bringing to completion. With that private interest was to be weighed the public interest in the timely and efficient resolution of claims within the integrated Australian legal system of which the Supreme Court and the Federal Court each form part. I cannot agree with the view of the majority of the Full Court that it was not open on the facts found by the primary judge to characterise the circumstances as involving an abuse of process. Although the possibility of the trustee of the Trust pursuing the claims of the Trust in later proceedings remained legally open once the trustee had withdrawn from the SCNSW proceedings, there was no intimation to UBS that the trustee was likely to do so. In contrast to the circumstances in Johnson, this is not a case in which earlier proceedings were brought to completion against the background of a communicated likelihood of later proceedings being commenced. The first three of the considerations on which the primary judge relied were in my opinion sufficient to justify his Honour's conclusion that bringing the Trust's claims against UBS in the Federal Court proceedings was an abuse of process in the absence of Mr Tyne giving an explanation which justified his conduct as not unduly impacting on the interest of UBS and as not inconsistent with the timely and efficient resolution of the totality of the claims which the entities under his control sought to bring. His Honour was not satisfied that such an explanation had been given. The hearing of the appeal to this Court was hijacked by a contention put forcefully at the forefront of the submissions made orally on behalf of Mr Tyne that discontinuance of the trustee's claims in the SCNSW proceedings constituted no bar to the trustee bringing the same claims in other proceedings. The contention was plainly correct, but beside the point. The primary judge's conclusion that bringing the Trust's claim against UBS in the Federal Court proceedings constituted an abuse of process was based neither in whole nor in part on the consideration that the trustee's claims had been brought in the SCNSW proceedings and had been discontinued. The conclusion was based on the very different assessment that the trustee's claims should have been pursued in the SCNSW proceedings, to which Telesto remained a party, if they were to be pursued at all. Potentially of more significance to the outcome of the appeal were submissions made on behalf of Mr Tyne challenging the primary judge's conclusion that Mr Tyne had given no proper explanation of why the trustee's claims had not been pursued in the SCNSW proceedings. The submissions pointed to the explanation given by Mr Tyne in an affidavit which was read before the primary judge and on which Mr Tyne was not challenged in cross- examination. The affidavit explains why Mr Tyne considered it in the interests of the Trust not to pursue the claims of the Trust concurrently with those of Telesto. Mr Tyne's reasons, in short, were: that Telesto's success in the SCNSW proceedings would have seen the Trust made whole, thereby obviating the need for the trustee's claims to have been pursued at all; that pursuit of the trustee's claims would have been forensically burdensome, requiring the trustee to prove everything that Telesto needed to prove and more; that pursuit of these claims would have been expensive and time-consuming; and that he was unable to predict on the basis of previous case law that Telesto's claims in the SCNSW proceedings would be permanently stayed by reference to the outcome of the Singapore 801 proceedings. Gauged solely by reference to the interests of the Trust, Mr Tyne's explanation of why the trustee's claims had not been pursued in the SCNSW proceedings was not unreasonable. Having regard to the interests of UBS and the public interest in the timely and efficient administration of civil justice, however, I cannot regard it as providing an explanation as to why it was reasonable for the claims of the Trust to have been held in abeyance rather than to have been brought in the SCNSW proceedings so as to have allowed all relevant issues to have been determined in those proceedings. Were it shown in the context of the SCNSW proceedings to have been consistent with the timely and efficient resolution of the overall matter in dispute for Telesto's claims to have been pursued separately and in advance of those of the trustee, that could have been achieved by appropriate case management orders which could have resulted in the trustee being bound by findings of fact and determinations of law common to both sets of claims. And UBS's application for a permanent stay of Telesto's claims, had it proceeded, would have proceeded on the basis apparent to the parties and the Supreme Court that success on the application would have left the pending claims of the Trust unresolved. What was not reasonable having regard to the totality of the private and public interests involved was for Mr Tyne to take it upon himself to hold the claims of the Trust in abeyance with a view to pursuing them in separate proceedings if it turned out that Telesto's claims were for some reason not successful. The primary judge's conclusion that Mr Tyne had given no proper explanation of why the trustee's claims had not been pursued in the SCNSW proceedings was, in my opinion, not only open but correct. Nettle Edelman NETTLE AND EDELMAN JJ. Many of the facts of this matter sufficiently appear from the judgment of Kiefel CJ, Bell and Keane JJ and need not be repeated. The issue is whether, in circumstances where the previous trustee of the Argot Trust had discontinued its involvement as plaintiff in proceedings in the Supreme Court of New South Wales ("the Supreme Court proceedings"), it was an abuse of process for the respondent, Scott Francis Tyne, having been substituted for the previous trustee, and thus in his capacity as trustee of the Argot Trust ("the Trustee"), then to institute fresh proceedings in the Federal Court of Australia ("the Federal Court proceedings") alleging the same or substantially the same claims as the previous trustee had alleged in the Supreme Court proceedings but which were not determined before the previous trustee discontinued its participation in those proceedings, without any conditions on the discontinuance. More specifically, should the Trustee's action in commencing the Federal Court proceedings following the previous trustee's discontinuance of its involvement in the Supreme Court proceedings be seen as "unjustifiably oppressive" to the appellant, UBS AG ("UBS"), or as "bring[ing] the administration of justice into disrepute"67? Kiefel CJ, Bell and Keane JJ conclude that it should be and Gageler J, writing separately, reaches the same result. With respect, we disagree. Basis and effect of the previous trustee's discontinuance Determination of whether the Trustee's institution of the Federal Court proceedings should be seen as unjustifiably oppressive to UBS or as bringing the administration of justice into disrepute invites attention, first, to the basis on which the previous trustee discontinued its involvement in the Supreme Court proceedings and the legal effect of its discontinuance. In substance, the previous trustee discontinued its involvement in the Supreme Court proceedings, without objection from UBS, with leave of the Court pursuant to r 12.1 of the Uniform Civil Procedure Rules 2005 (NSW). Rule 12.1 relevantly provides for the discontinuance of civil proceedings in the Supreme Court of New South Wales as follows: "Discontinuance of proceedings The plaintiff in any proceedings may, by filing a notice of discontinuance, discontinue the proceedings, either as to all claims for relief or as to all claims for relief so far as they concern a particular defendant: 67 See Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at 518-519 [25] per French CJ, Bell, Gageler and Keane JJ; [2015] HCA 28. Nettle Edelman (a) with the consent of each other active party in the proceedings, or (b) with the leave of the court. (2) A notice of discontinuance: (a) must bear a certificate by the plaintiff, or by his or her solicitor, to the effect that the plaintiff does not represent any other person, and except where it is filed with the leave of the court, must be accompanied by a notice from each party whose consent is required by subrule (1) to the effect that the party consents to the proceedings being discontinued the notice of discontinuance. in accordance with If any such consent is given on terms, those terms are to be incorporated in the notice of consent." (emphasis added) Rule 12.3 provides that the effect of discontinuance is as follows: "Effect of discontinuance A discontinuance of proceedings with respect to a plaintiff's claim for relief does not prevent the plaintiff from claiming the same relief in fresh proceedings. Subrule (1) is subject to the terms of any consent to the discontinuance or of any leave to discontinue." (emphasis added) Rule 12.4 provides that where a plaintiff discontinues proceedings and commences fresh proceedings for the same or substantially the same cause of action as that on which the discontinued proceedings were commenced, the fresh proceedings may be stayed to secure the costs of the discontinued proceedings: "Stay of further proceedings to secure costs of discontinued proceedings as a consequence of the discontinuance of proceedings, a plaintiff is liable to pay the costs of another party in relation to those proceedings, and Nettle Edelman before payment of the costs, the plaintiff commences further proceedings against that other party on the same or substantially the same cause of action as that on which the former proceedings were commenced, the court may stay the further proceedings until those costs are paid and may make such consequential orders as it thinks fit." There are three aspects of those rules that warrant specific mention. First, r 12.1 expressly provides that a proceeding may be discontinued with consent on terms, and r 12.3 expressly provides that, if consent is given on terms, the discontinuance is subject to those terms. As has been noticed, in this case the Supreme Court proceedings were discontinued, without objection, without the imposition of terms. Secondly, r 12.3 expressly provides that a discontinuance of proceedings with respect to a plaintiff's claim does not prevent the plaintiff from claiming the same relief in fresh proceedings (subject, of course, to any terms of consent to the contrary). long been recognised, an order for discontinuance does not amount to a release of claims68. As the Court of Appeal of England and Wales recently observed in Spicer v Tuli69, with respect to the comparable provisions of Pt 38 of the Civil Procedure Rules 1998 (UK): Consequently, as has "If an action is discontinued rather than dismissed, it is clear that a second action may be brought even if it arises out of the same facts as the discontinued action". Thirdly, r 12.4 expressly contemplates the possibility of a plaintiff who has discontinued proceedings commencing further proceedings for the same or substantially the same cause of action as that on which the discontinued proceedings were commenced, and the rule provides for the grant of a stay only 68 See Owners of Cargo of the "Kronprinz" v Owners of the "Kronprinz" (The "Ardandhu") (1887) 12 App Cas 256 at 259-260 per Lord Halsbury LC, 260-261 per Lord Bramwell, 262 per Lord Herschell, 263 per Lord Macnaghten. See also Castanho v Brown & Root (UK) Ltd [1981] AC 557 at 572-574, 577 per Lord Scarman (Lord Wilberforce, Lord Diplock, Lord Keith of Kinkel and Lord Bridge of Harwich agreeing at 569, 577); Botany Municipal Council v Secretary, Department of the Arts (1992) 34 FCR 412 at 414-415; SZFOG v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 88 ALD 69 [2012] 1 WLR 3088 at 3091 [2] per Lewison LJ (Toulson LJ and Lord Neuberger of Abbotsbury MR agreeing at 3097 [23], [24]). Nettle Edelman until and unless there have been paid any outstanding costs orders in relation to the discontinued proceedings. Here, UBS did not object to the previous trustee discontinuing its involvement in the Supreme Court proceedings and did not seek any condition on the grant of leave to discontinue or the imposition of any terms to the effect that the previous trustee or any subsequent trustee undertake or agree not to bring fresh proceedings for the same or substantially the same claims. those circumstances, why subsequent commencement of the Federal Court proceedings be seen as unjustifiably oppressive to UBS or as bringing the administration of justice into disrepute? the Trustee's should UBS not twice or otherwise unduly vexed Counsel for UBS invoked the primary judge's reasoning that, the previous trustee having discontinued its claims in the Supreme Court proceedings, the Trustee's conduct in later bringing the Federal Court proceedings was an abuse of process because the Trustee's claims raised substantial complex questions of fact and law with which UBS had been vexed before. stay of immediately after the proceedings almost That is not the case. UBS was not vexed with those questions of fact and law in the Supreme Court proceedings. To the contrary, UBS obtained a their temporary commencement, which enured until after the determination of proceedings in the High Court of the Republic of Singapore between UBS as plaintiff and Mr Tyne in his personal capacity and Telesto Investments Limited ("Telesto") as defendants ("the Singapore proceedings"), and thence a permanent stay of the Supreme Court proceedings on the basis of what had been decided in the Singapore proceedings. Nor was UBS vexed with such questions of fact and law in the Singapore proceedings. The Trustee was not a party to the Singapore proceedings and, although Telesto was a party, it played no part in the proceedings. Consequently, as counsel for UBS acknowledged in this Court, the Federal Court proceedings would be the first occasion on which UBS would have to deal with the Trustee's claims. Counsel for UBS contended that the fact that there has been no prior adjudication of the Trustee's claims, including its claims under the federal and State legislation corresponding to the Trade Practices Act 1974 (Cth) ("the TPA"70), was immaterial because, as was held by a majority of this Court in 70 Subsequent references to the TPA should be taken as referring to the TPA itself and the corresponding federal and State legislation (including, relevantly, the (Footnote continues on next page) Nettle Edelman Walton v Gardiner71 and a majority of this Court in Batistatos v Roads and Traffic Authority (NSW)72, a proceeding can be stayed as an abuse of process despite the claim therein not having been previously adjudicated. But, as will be elucidated later in these reasons, Walton was a case where the fresh proceedings were stayed solely because they were substantially the same as earlier proceedings which had been stayed on the basis of "appalling" and "inexcusable" delay productive of significant prejudice to the defendants73. Similarly, Batistatos was a case which involved a 29 year delay resulting in a practical inability to reach a decision based on any real understanding of the facts, and a practical impossibility of giving the defendants any real opportunity to participate in a hearing, to contest the facts or, if it should be right to do so, to admit liability on an informed basis74. It was solely because of the almost three decade lapse of time that the majority concluded that a fair trial was not possible and stayed the proceedings as an abuse of process. That is not this case. Here, the delay was relatively insignificant and there was no suggestion that UBS would be compromised by delay in its defence of the Trustee's claims. No material delay, additional costs or inconvenience Counsel for UBS next embraced Dowsett J's dissenting observation in the Full Court of the Federal Court that75: "the manifest unfairness to UBS lies in the delay of the final resolution of the matter for a period of, probably, three or more years, the inevitable the additional costs which have been, or will be incurred and Australian Securities and Investments Commission Act 2001 (Cth), Corporations Act 2001 (Cth), Fair Trading Act 1987 (NSW) and Fair Trading Act 1989 (Q)). 71 (1993) 177 CLR 378; [1993] HCA 77. 72 (2006) 226 CLR 256; [2006] HCA 27. 73 See Walton v Gardiner (1993) 177 CLR 378 at 385, 389, 398-399 per Mason CJ, Deane and Dawson JJ (Brennan J and Toohey J dissenting at 413-414, 417, 74 See Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 277-278 [54], 281-282 [69]-[71] per Gleeson CJ, Gummow, Hayne and Crennan JJ (Kirby J, Callinan J and Heydon J dissenting at 306 [170], 325-326 [233]-[234], 75 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 355-356 [32]. Nettle Edelman inconvenience of having to deal with the matter again, after lengthy litigation." (emphasis added) That is not correct either. The previous trustee's conduct in discontinuing its involvement in the Supreme Court proceedings and the Trustee's later institution of the Federal Court proceedings did not result in a delay of three or more years. The Supreme Court proceedings were instituted on 2 November 2010. On 21 February 2011, UBS obtained from the Singapore High Court an anti-suit injunction restraining Telesto, Mr Tyne in his personal capacity and the previous trustee from prosecuting the Supreme Court proceedings, and thereafter UBS successfully resisted an appeal against the grant of the anti-suit injunction and, later, an application for leave to appeal the orders dismissing the appeal. Then, before any further step was or could be taken in the Supreme Court proceedings, UBS applied by notice of motion dated 24 October 2011 for a permanent stay of the Supreme Court proceedings on four grounds: the continued prosecution of the proceedings would be in defiance of the anti-suit injunction granted by the Singapore High Court; an issue estoppel arose as a result of the forum conveniens judgment awarded in favour of UBS in the Singapore proceedings; it was an abuse of process to seek to relitigate in the Supreme Court proceedings the forum non conveniens issues which had already been determined in Singapore; and the Supreme Court proceedings would be vexatious and oppressive having regard to the controversy as a whole. On 7 February 2012, Ward J rejected76 the application for a permanent stay but granted a temporary stay of the proceedings pending the outcome of UBS' claim in the Singapore proceedings. On 6 March 2012, the previous trustee and Mr Tyne in his personal capacity discontinued their participation in the Supreme Court proceedings, with the result that Telesto became the sole remaining plaintiff in the proceedings. Thereafter, the Singapore proceedings continued undefended until, on 27 July 2012, ex tempore final judgment was delivered in favour of UBS. Soon after, by notice of motion dated 6 September 2012, UBS applied for a permanent stay or dismissal of the Supreme Court proceedings on grounds that Telesto's claims were barred by cause of action estoppel, issue estoppel or Anshun estoppel or, alternatively, as an abuse of process. Telesto replied with a notice of motion dated 10 September 2012 for an order that the temporary stay granted by Ward J be lifted. On 9 May 2013, Sackar J gave judgment77 in which his Honour held that Telesto's claims were barred either by cause of action 76 See Telesto Investments Ltd v UBS AG (2012) 262 FLR 119. 77 See Telesto Investments Ltd v UBS AG (2013) 94 ACSR 29 at 60 [170], 65 [201], Nettle Edelman estoppel or issue estoppel, but that, if that had not been the case, Telesto's claims would not have been barred by Anshun estoppel or as an abuse of process because there were sound forensic reasons for Telesto to choose to conduct its claims in the Supreme Court proceedings. Had Telesto been permitted to conduct its claims in the Supreme Court proceedings, it would have had a significant juridical advantage by reason of ss 52 and 51A of the TPA and the various remedies available thereunder. In Singapore, it would not. Only eight months later, on 13 January 2014, the Trustee commenced the Federal Court proceedings. Of course, in one sense the final resolution of the Trustee's claims was delayed by "three or more years". But that was not caused by Telesto or the previous trustee or the Trustee. A loss of approximately two and a half years was the result of UBS preventing the claims being heard and determined in the Supreme Court proceedings. Nothing could be done in the Supreme Court proceedings as long as the temporary stay enured or, therefore, until Sackar J gave judgment on UBS' permanent stay application on 9 May 2013. The maximum delay caused by the previous trustee's discontinuance of its participation in the Supreme Court proceedings was the eight months that separated the handing down of Sackar J's judgment on 9 May 2013 and the institution of the Federal Court proceedings on 13 January 2014. Nor would the Federal Court proceedings require UBS to incur "inevitable additional costs ... and the inconvenience of having to deal with the matter again". Such was UBS' success in staying the Supreme Court proceedings, in effect in limine, that even now UBS has never had to face either Telesto's or the Trustee's claims under the TPA. No change of position in reliance on discontinuance Counsel for UBS submitted, albeit only faintly, that, if the previous trustee had not first discontinued its participation in the Supreme Court proceedings, UBS might not have made an application for a stay of the proceedings. Thus, it was contended, one consequence of the previous trustee's discontinuance of its participation in the Supreme Court proceedings was that UBS incurred the substantial costs of the permanent stay application which UBS may not otherwise have incurred. Those submissions are unconvincing. There is no evidence that UBS would not have persisted with its stay application if the previous trustee had not discontinued its involvement in the Supreme Court proceedings, and, objectively, there is every reason to suppose that UBS would have persisted – arguing, just as it later argued before the primary judge in the Federal Court proceedings, that the previous trustee was as much barred as Telesto by res judicata, issue estoppel and Anshun estoppel, or by the doctrine of abuse of process, as a result of the Singapore proceedings. Further, even if it be assumed for the sake of argument Nettle Edelman that UBS might not have sought a permanent stay as against Telesto (and, to repeat, there is no reason to make that assumption), UBS has not thereby been prejudiced. As the majority of the Full Court of the Federal Court rightly observed78, as a consequence of UBS' stay application, UBS has the benefit of the permanent stay as against Telesto and it is in no worse position as against the Trustee than it would have been had the previous trustee persisted in its claim in the Supreme Court proceedings. Right-thinking person would not regard Federal Court proceedings as abuse of process Counsel for UBS invoked Dowsett J's dissenting reasoning that the Federal Court proceedings should be regarded as an abuse of process because a "right-thinking person" would think them to be so. According to Dowsett J79: in a particular case, given "The right-thinking person would be aware that some or all of these the considerations might not apply circumstances of that case. However, in general, where previous proceedings have been discontinued, similar proceedings subsequently commenced, the right-thinking person would infer that there had been a loss of time, an increase in costs, some degree of repetition of process and undue vexation to the other party. Such a person would likely perceive that if the administration of justice allows such conduct, without any explanation, it is inefficient, careless about the incurrence of cost by the parties, and profligate in the application of public moneys. and [I]f the [previous trustee] considered that it had a good claim, and did not intend to abandon it, then it should have taken it to judgment in [the Supreme Court] proceedings. There is no suggestion that anything happened unexpectedly thereafter, leading the [previous trustee] to change its mind about its claim, or its intention to prosecute it. I infer that Mr Tyne identified some forensic advantage to himself and/or the [previous trustee] in discontinuing the Supreme Court proceedings. The effect was to delay the resolution of the dispute between the [previous trustee] and UBS by a significant period of time, to increase the costs incurred by UBS in resolving the differences arising out of the relevant transactions and otherwise to vex UBS. To allow the [Trustee's] current 78 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 379-380 [108] per Jagot and 79 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 351 [17], 353 [23]. Nettle Edelman proceedings to remain on foot is, in the circumstances, to inflict manifest unfairness upon UBS. Such unfairness is, itself, likely to bring the administration of justice into disrepute, as would the waste of public resources inevitably associated with the duplication of proceedings. On appeal, Mr Tyne invited the Court to speculate about the reason for the the Supreme Court discontinuance by proceedings. I see no reason for going beyond such evidence as is before this Court." the [previous trustee] of With respect, that is not convincing either. Whether or not a "right-thinking person" would question the administration of justice if it permitted a party to cause loss of time, increased costs, repetition of process and undue vexation of another party, neither the previous trustee nor the Trustee has been guilty of any of those infractions. Compared to the loss of time of approximately two and a half years caused by UBS' applications for stays of the Supreme Court proceedings, the loss of the further eight months caused by the previous trustee's discontinuance is effectively de minimis, particularly given that there is no suggestion that the eight months has in any respect compromised UBS' ability to defend the Trustee's claims. The only "increase in costs" that counsel for UBS was able precisely to identify was the costs of the permanent stay application before Sackar J. But those costs were not imposed on UBS by the previous trustee or the Trustee or, for that matter, by Telesto. UBS voluntarily incurred them in its very considerable efforts to avoid facing Telesto's claims. Nor has there been any material repetition of process. As has been observed, the Supreme Court proceedings were shut down in limine as a result of UBS' application for a stay, with the consequence that UBS has until now not even had to plead to Telesto's or the Trustee's claims. Further, as has been noticed, UBS has not been twice or otherwise unduly vexed. Until now, it has successfully avoided having to face Telesto's claims, including those under the TPA, and the Trustee's claims, by the device of procuring a permanent stay of proceedings in one of the only jurisdictions in which those claims might effectively have been prosecuted. Contrary to Dowsett J's reasoning and the submissions of counsel for UBS, it is not the case either that there is no explanation for why the previous trustee discontinued its involvement in the Supreme Court proceedings or that the Full Court of the Federal Court was left "to speculate" as to the reasons for its doing so. The reasons were set down in an affidavit affirmed by Mr Tyne in support of the Trustee's opposition to UBS' application for a stay of the Federal Court proceedings, which was read and received, apparently unchallenged and without objection. They included that Telesto's claims were considered to be worth more in dollar terms than the previous trustee's claims, with the result that, if Telesto had succeeded in its claims in the Supreme Court proceedings, it would have had sufficient assets to meet its obligations to UBS and that that would have Nettle Edelman avoided the need for the previous trustee to pursue its claims. Mr Tyne also considered that the previous trustee's claims would have been more burdensome to establish than Telesto's claims, as the former required detailed examination of more than 1000 pages of account statements which was unnecessary in the Telesto suit. Further, as Mr Tyne deposed, Telesto and the previous trustee were in difficult financial circumstances, and prosecution of the previous trustee's claims would have been more time consuming, and so, more expensive, than prosecution of Telesto's claims alone. And critically, Mr Tyne deposed that he expected that Sackar J would not permanently stay Telesto's claims because no other Australian judge had previously declined jurisdiction in "a TPA style of claim" in the absence of an exclusive foreign jurisdiction clause, and, having researched the law, Mr Tyne believed that a non-exclusive jurisdiction clause of the kind which applied in this case would not be regarded as sufficient reason to decline jurisdiction. In short, the previous trustee, being short of funds and with a reasonable expectation that Telesto's claims (including under the TPA) would be allowed to proceed to judgment, resolved to discontinue its participation in the Supreme Court proceedings and wait and see whether Telesto's claims would be allowed to proceed to judgment in those proceedings. If they were allowed to proceed, the previous trustee's claims could be abandoned, and if they were not allowed to proceed, there would be good reason for the Trustee to begin again. A "right-thinking person" would not look askance at such a decision. She or he would think it to be common sense. Discontinuance not inconsistent with s 37M of Federal Court of Australia Act 1976 (Cth) Counsel for UBS also made much of the importance of s 37M of the Federal Court of Australia Act 1976 (Cth) and the "overarching purpose" which it prescribes of facilitating the resolution of disputes as "quickly, inexpensively and efficiently as possible"80. He contended that the overarching purpose could not be achieved: "by allowing a circumstance in which one or more of a number of plaintiffs, all controlled by the same individual, is permitted to discontinue proceedings, then to stand back and allow those proceedings to continue to a final judicial determination and then, depending on the outcome of those first proceedings and without any explanation, commence fresh proceedings raising the same facts." 80 Federal Court of Australia Act 1976 (Cth), s 37M(1)(b). Nettle Edelman Generally speaking, that might be so, although, as the decision of the House of Lords in Johnson v Gore Wood & Co81, mentioned later in these reasons, assists us to understand, it is not invariably the case. For present purposes, however, it is beside the point. The previous trustee did not stand back and allow the Supreme Court proceedings to proceed to a "final judicial determination". It stood back after the proceedings had been temporarily stayed to see whether they would be permanently stayed, with the reasonable expectation that they would not be permanently stayed, and thus that it would not be necessary to prosecute the previous trustee's claims. As has been observed, that was not an unreasonable course to adopt in the circumstances of this case. And it was not inconsistent with the statutory shibboleth of making litigation as quick, inexpensive and efficient as possible. As Mr Tyne deposed, he was looking to limit the boundaries of the litigation. Federal Court proceedings not otherwise abuse of process Counsel for UBS embraced Dowsett J's dissenting conclusion that the Federal Court proceedings amounted to an abuse of process in circumstances where the previous trustee could have participated in the Supreme Court proceedings but chose not to do so82. Apparently, that aspect of his Honour's reasoning was informed by the majority's obiter dictum observation in Tomlinson v Ramsey Food Processing Pty Ltd83 that: "it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel." (footnote omitted) That dictum, however, ought not to be taken to mean that just because a claim could have been but was not made in an earlier proceeding it is an abuse of process to advance it in a subsequent proceeding. Whether there is an abuse of process in such a case depends on the circumstances of the case. As was observed by the House of Lords in Johnson84, the question is whether in all the 82 See Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 353 [23], 355-356 [32]. 83 (2015) 256 CLR 507 at 519 [26] per French CJ, Bell, Gageler and Keane JJ. 84 [2002] 2 AC 1 at 30-31, 34 per Lord Bingham of Cornhill (Lord Goff of Chieveley, Lord Cooke of Thorndon and Lord Hutton agreeing at 38, 42, 50), 58-60 per Lord Millett. Nettle Edelman circumstances a party should be seen as misusing or abusing the process of the court by failing to make a claim in an earlier proceeding or, as here, discontinuing a claim in an earlier proceeding with a view possibly to bringing that claim again in a subsequent fresh proceeding when and if matters do not turn out as expected. Lord Bingham of Cornhill (with whom Lord Goff of Chieveley, Lord Cooke of Thorndon and Lord Hutton agreed) reasoned85 thus: "It is ... wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before." Granted, as the majority observed in Tomlinson, there are circumstances in which making a claim or raising an issue previously made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in the earlier proceeding, may constitute an abuse of process despite not being barred by estoppel. Their Honours instanced Walton86, Reichel v Magrath87 and Coffey v Secretary, Department of Social Security88. But the circumstances of those cases were very different from this case. Walton concerned earlier proceedings wherein the Court of Appeal of the Supreme Court of New South Wales ordered89 that disciplinary proceedings instituted in 1986 against two registered medical practitioners in relation to events occurring in 1973, 1976 and 1977 be stayed because of the long delay in instituting the proceedings after the relevant facts had become known. That delay was found to be "appalling" and "inexcusable" and such as significantly to prejudice the medical practitioners in the defence of the complaints. On that 85 [2002] 2 AC 1 at 31. 86 (1993) 177 CLR 378. 87 (1889) 14 App Cas 665. 88 (1999) 86 FCR 434. 89 See Herron v McGregor (1986) 6 NSWLR 246 at 265-271 per McHugh JA (Street CJ and Priestley JA agreeing at 248). Nettle Edelman basis, it was held that the continuation of the proceedings would be so unfairly and unjustly oppressive for the medical practitioners as to constitute an abuse of process. An application for special leave to appeal to this Court was refused on the basis that the matters which the Court of Appeal had been required to take into account involved questions of fact and degree which it would not be appropriate for this Court to consider90. Concurrent proceedings against another registered medical practitioner were stayed as a result of the Court of Appeal's decision91. In 1991, after a subsequent Royal Commission in which findings were made bearing upon the propriety of the conduct of a number of medical practitioners, including the three practitioners mentioned in relation to the earlier proceedings, further disciplinary proceedings were instituted against the medical practitioners concerning events commencing in 1970, 1972 and 1973 and ending in 197892. The further proceedings differed from the earlier proceedings only to the extent that the earlier proceedings had focussed on the two medical practitioners' treatment with deep sleep therapy and electric shock therapy of a few designated patients, while the further proceedings were cast in terms of more general allegations of malpractice arising out of the same pattern of professional conduct. A majority of the Court of Appeal held93 that the further proceedings should be stayed. On appeal to this Court, it was held94 that no error was shown in the Court of Appeal's reasoning. It was the result of a weighing process which involved a subjective balancing of the various factors and considerations supporting or militating against a conclusion that a continuation of the disciplinary proceedings would be so unfairly and unjustifiably oppressive of the practitioners as to constitute an abuse of the available disciplinary processes. Walton was an extreme case. 90 Walton v Gardiner (1993) 177 CLR 378 at 390-391 per Mason CJ, Deane and 91 Walton v Gardiner (1993) 177 CLR 378 at 385 per Mason CJ, Deane and 92 Walton v Gardiner (1993) 177 CLR 378 at 382, 386, 388-389 per Mason CJ, 93 Gill v Walton (1991) 25 NSWLR 190 at 202 per Gleeson CJ, 206-208 per Kirby P (Mahoney JA dissenting at 209). 94 See Walton v Gardiner (1993) 177 CLR 378 at 398-399 per Mason CJ, Deane and Dawson JJ (Brennan J and Toohey J dissenting at 413-414, 417, 421-422). Nettle Edelman Reichel, which was cited in Walton95, was also an extreme case. Reichel, who had ceased to be the vicar of a benefice, failed in an action against the bishop and patrons of the benefice for a declaration that he remained the vicar. In a subsequent proceeding brought by the newly appointed vicar of the benefice, Magrath, for a declaration of due appointment and for an injunction to restrain Reichel from depriving him of the use and occupation of the vicarage, Reichel pleaded by way of defence the same claim to be the vicar that had been rejected in his earlier proceeding against the bishop and patrons of the benefice. The House of Lords struck out96 the defence as an abuse of process on the basis that it would be a scandal to the administration of justice if a claim having been disposed of in one proceeding could be set up again by the same party in another proceeding. The ratio of the case was that it was an abuse of process for a claimant to attempt to raise a claim in a fresh proceeding where that claim had already been determined adversely to the claimant in a previous proceeding to which she or he was party. Coffey was in material respects like Reichel in that it concerned an abuse of process the result of a claimant seeking to advance a claim which had already been determined adversely to the claimant in previous proceedings. Specifically, Coffey claimed an entitlement to withheld social security benefits which was rejected. The rejection was then thrice reviewed and determined adversely to him in three separate reviews of his social security entitlements under a comprehensive multi-level process for review of decisions under Ch 6 of the Social Security Act 1991 (Cth). In those circumstances, the Full Court of the Federal Court of Australia held97 that it was an abuse of process for Coffey later to bring common law proceedings for recovery of what he claimed to be the underpayment of his social security entitlements. As the Court observed, to allow Coffey to relitigate what had already been determined in the multi-level review process which Coffey had pursued to its completion would be to permit curial process to be employed in a manner unfair to a defendant who had already been thrice vexed with and thrice defeated the same claim in the earlier review proceedings. In sum, Walton was a case where the fresh disciplinary proceedings were stayed because they were in substance substantially the same as the earlier 95 (1993) 177 CLR 378 at 393 per Mason CJ, Deane and Dawson JJ. 96 See Reichel v Magrath (1889) 14 App Cas 665 at 668 per Lord Halsbury LC, (Lord Fitzgerald and 668 per Lord Watson, 669 per Lord Herschell Lord Macnaghten agreeing at 668, 669). 97 See Coffey v Secretary, Department of Social Security (1999) 86 FCR 434 Nettle Edelman proceedings which had been stayed by reason of "appalling" and "inexcusable" delay productive of significant prejudice to the medical practitioners in the defence of the complaints. And Reichel and Coffey were cases where the fresh proceedings were stayed as an abuse of process because the claims sought to be advanced in the fresh proceedings were claims which had been previously litigated to judgment, at least once, by the same claimant. By contrast here, the delay has not been "appalling" or "inexcusable". And, as has been observed, there is no evidence or other reason to suppose that such delay as there has been would significantly prejudice UBS in the defence of the Trustee's claims. Further, the Trustee's claims, including those under the TPA, have not been determined in any previous proceedings. Nor have Telesto's claims under the TPA been determined in any other proceedings. UBS prevented such claims from being litigated in the Supreme Court proceedings by having those proceedings stayed. Relevantly, all that has happened is that the previous trustee made its claims in the Supreme Court proceedings and then discontinued its involvement in those proceedings even before UBS filed a defence. One case not mentioned by the majority in Tomlinson but which arguably comes closer to the present case is the decision of the Court of Appeal of England and Wales in Talbot v Berkshire County Council98. The case concerned a personal injury action arising from a motor vehicle accident in which the plaintiff and Talbot, the driver of the vehicle, sustained serious injuries. Talbot had been a defendant in the action and in that capacity was apportioned two- thirds of the blame and obtained judgment in the interest of his insurer for a one- third contribution from subsequently brought a separate proceeding in his own interest against the Berkshire County Council to recover damages for his own injuries, the primary judge held that Talbot was not estopped from bringing the proceeding but that it was nonetheless statute-barred. An appeal to the Court of Appeal was dismissed by Stuart-Smith LJ99 on the basis that, because Talbot had not deployed his full case in the earlier proceeding, the subsequent proceeding was estopped by reason of the principle expounded by Wigram V-C in Henderson v Henderson100; and by Mann LJ (with whom Nourse LJ agreed)101 on the basis that the claim was barred by cause of action estoppel "in the wide sense identified by Wigram V-C" in Henderson and also by reason of the "Kilbrandon principle", enunciated by the Berkshire County Council. 99 See Talbot v Berkshire County Council [1994] QB 290 at 297-300. 100 (1843) 3 Hare 100 at 114-115 [67 ER 313 at 319]. 101 See Talbot v Berkshire County Council [1994] QB 290 at 300-301. Nettle Edelman Lord Kilbrandon in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd102, that a proceeding should be dismissed as an abuse of process if it raises matters that could and therefore should have been litigated in earlier proceedings. Talbot should not be followed. As was observed in Port of Melbourne Authority v Anshun Pty Ltd103, Henderson did not hold that it is an abuse of process for a claimant to fail to deploy her or his full case in an earlier proceeding. It held that a claim which was within the pleadings in an earlier action and was not brought forward for adjudication was barred by estoppel per rem judicatam. In Talbot, the cause of action for personal injuries was different from the cause of action, and therefore outside the pleadings, in the earlier proceeding. Equally, the so-called "Kilbrandon principle" from Yat Tung proceeded from the Privy Council's misconception of what had been determined in Henderson. As was later recognised by the House of Lords in Johnson, it is not the case that, just because a claim could have been litigated in earlier proceedings, it should have been. The crucial question is whether, in all the circumstances, a party is misusing or abusing the process of the court. And the determination of that question calls for a "broad merits-based approach" of which one relevant factor is reasonable diligence104. This Court had earlier come to a similar conclusion in Anshun, to the effect that the question of whether a claim that could have been made in an earlier proceeding can be brought in a subsequent fresh proceeding turns on whether the failure to advance it in the earlier proceeding was unreasonable. There the plurality held105 that there will be no estoppel in relation to a fresh proceeding unless the matter relied upon in the fresh proceeding was so relevant 102 [1975] AC 581 at 590. 103 (1981) 147 CLR 589 at 601-603 per Gibbs CJ, Mason and Aickin JJ, 614 per Brennan J (Murphy J not deciding at 605); [1981] HCA 45. See also Handley, "A Closer Look at Henderson v Henderson", Law Quarterly Review 397 at 402. 104 See Handley, "A Closer Look at Henderson v Henderson", (2002) 118 Law Quarterly Review 397 at 407. See also Johnson v Gore Wood & Co [2002] 2 AC 1 at 31, 33-34 per Lord Bingham of Cornhill (Lord Goff of Chieveley, Lord Cooke of Thorndon and Lord Hutton agreeing at 38, 42, 50), 60 per Lord Millett. 105 See Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 602-603 per Gibbs CJ, Mason and Aickin JJ. See also Timbercorp Finance Pty Ltd (In liq) v Collins (2016) 259 CLR 212 at 229 [27] per French CJ, Kiefel, Keane and Nettle JJ, 245 [97] per Gordon J; [2016] HCA 44. Nettle Edelman to the subject matter of the earlier proceeding that it was unreasonable not to rely upon it in the earlier proceeding. And, generally speaking, it is not unreasonable not to rely on a matter in an earlier proceeding unless, having regard to the nature of the claim in the earlier proceeding, it would be expected that the party seeking to rely on the matter in the new proceeding would have raised the matter in the earlier proceeding and thereby enabled the relevant issues to be determined at that time. Further, as was observed in Anshun, it is necessary to bear in mind that there are a variety of reasons why a party may justifiably refrain from litigating an issue in an earlier proceeding yet wish to litigate the issue in another proceeding, including expense, importance of the particular issue, and motives extraneous to the litigation106. And here, as has been seen, the previous trustee had good reason for discontinuing its involvement in the Supreme Court proceedings. Of course, as the majority observed in Tomlinson107, it is because the doctrine of abuse of process is an inherently broader and more flexible doctrine than estoppel that it is available to relieve against injustice to a party or impairment to the system of administration of justice and so to provide the basis for staying a claim that may not be barred by cause of action, issue or Anshun estoppel. It will be recalled that their Honours instanced Walton, Reichel and Coffey as exemplifying circumstances where, because so much time had gone by since the earlier proceedings in which the claim could have been but was not advanced, or because the claim had already been determined adversely to the claimant in earlier proceedings (albeit not necessarily directly as against the putative defendant), it would be unjustifiably oppressive to the putative defendant or otherwise bring the administration of justice into disrepute to allow the claim to proceed. To those examples may be added the circumstance of where a claim is an abuse of process because it is brought for a collateral purpose108. But where, as here, the delay since the earlier proceedings in which the claims could have been prosecuted has not been inordinate or inexcusable, there has been no previous determination of the Trustee's claims, the prosecution of the claims would not be unjustifiably oppressive to UBS, and the claims are not brought for a collateral purpose or otherwise in circumstances or in a manner 106 See and compare Ako v Rothschild Asset Management Ltd [2002] ICR 899 at 907-909 [34], [41] per Dyson LJ (Jonathan Parker LJ agreeing at 909 [42]). 107 (2015) 256 CLR 507 at 518-519 [25] per French CJ, Bell, Gageler and Keane JJ. 108 See for example Williams v Spautz (1992) 174 CLR 509 at 518-521 per Mason CJ, Dawson, Toohey and McHugh JJ (Gaudron J relevantly agreeing at 552-553), 532 per Brennan J (Deane J dissenting at 546-551); [1992] HCA 34. Nettle Edelman which would bring the administration of justice into disrepute, the only issue is whether it was unreasonable of the previous trustee not to prosecute the claims to judgment in the earlier proceedings. In effect, that means whether the claims are barred by Anshun estoppel, and, for the reasons already given, and as was held by the primary judge109, they are not. Judicial restraint This appeal was conducted on the assumption that the principles of judicial restraint described in House v The King110 apply to an appeal from a decision concerning whether an abuse of process has occurred111. On that assumption, our conclusion, like that of the majority of the Full Court of the Federal Court, is that the primary judge's reasoning involved errors of principle that necessitate reconsideration of whether an abuse of process occurred. Thus, for present purposes, it is unnecessary to consider whether questions of abuse of process should be conceived of as subject to a level of judicial restraint where comparable questions, such as, for instance, procedural fairness and abuse of powers, are not112. Conclusion and orders The majority of the Full Court of the Federal Court was right to hold that it was not an abuse of process for the Trustee to institute the Federal Court proceedings after the previous trustee had discontinued its participation in the Supreme Court proceedings. The appeal to this Court should be dismissed with costs. 109 See Tyne v UBS AG (No 3) (2016) 236 FCR 1 at 57 [399], 59 [411]. 110 (1936) 55 CLR 499 at 505 per Dixon, Evatt and McTiernan JJ; [1936] HCA 40. 111 See Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 264 [7] per Gleeson CJ, Gummow, Hayne and Crennan JJ; cf at 321-322 [223] per Callinan J, 326 [238] per Heydon J. 112 See Minister for Immigration and Border Protection v SZVFW (2018) 92 ALJR 713 at 721 [18] per Kiefel CJ, 727 [49], 728-729 [55]-[56] per Gageler J, 733-734 [85]-[87] per Nettle and Gordon JJ, 741-742 [145], 744 [154]-[155] per Edelman J; 357 ALR 408 at 412, 421, 422-423, 429, 440, 443-444; [2018] HCA 30. See also Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536 per Lord Diplock. 125 GORDON J. This appeal raises important issues about the way in which litigation is conducted in the 21st century. Over the last 20 years, there has been a "culture shift"113 in the conduct of civil litigation. The legal system has faced, and continues to face, great challenges in providing appropriate mechanisms for the resolution of civil disputes. Cost and delay are long-standing challenges. The courts and the wider legal profession have an obligation to face and meet these and other challenges. Failure to respond creates (or at least exacerbates) hardship for litigants and potentially results in long-term risks to the development, if not the maintenance, of the rule of law. The power to grant a stay of proceedings exists to enable a court to "protect itself from abuse of its process thereby safeguarding the administration of justice"114. The doctrine of abuse of process is not limited to defined and closed categories of conduct115. It is capable of being applied to "any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute"116. If a proceeding would amount to an abuse of jurisdiction, or would clearly inflict unnecessary injustice upon the opposite party, the proceeding should be stayed or dismissed117. Or, put another way, where "the processes and procedures of the court, which exist to administer justice with fairness and 113 See, eg, Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd [1998] 1 WLR 1426 at 1436; [1998] 2 All ER 181 at 191; Securum Finance Ltd v Ashton [2001] Ch 291 at 306-309 [28]-[34]; Bank of New Zealand v Savril Contractors Ltd [2005] 2 NZLR 475 at 496 [85]-[87], 500 [99]; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 217 [112]-[113]; [2009] HCA 27. 114 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 266 [12]; [2006] HCA 27 quoted in Rozenblit v Vainer (2018) 92 ALJR 600 at 612 [65]; 356 ALR 26 at 41; [2018] HCA 23. 115 Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at 518-519 [25]; [2015] HCA 28 citing Batistatos (2006) 226 CLR 256 at 262 [1], 265 [9]; see also at 267 [14]. See also Rozenblit (2018) 92 ALJR 600 at 611 [63] fn 68 and the authorities cited therein; 356 ALR 26 at 40. 116 Tomlinson (2015) 256 CLR 507 at 518-519 [25] citing PNJ v The Queen (2009) 83 ALJR 384 at 385-386 [3]; 252 ALR 612 at 613; [2009] HCA 6. See also Walton v Gardiner (1993) 177 CLR 378 at 392-393; [1993] HCA 77. 117 Batistatos (2006) 226 CLR 256 at 277 [53], 281 [71] citing Cox v Journeaux [No 2] (1935) 52 CLR 713 at 720; [1935] HCA 48. See also Rozenblit (2018) 92 ALJR 600 at 611-612 [63], 612 [66]-[67], 616 [97]; 356 ALR 26 at 40-41, 41, 46. impartiality, may be converted into instruments of injustice or unfairness"118, a proceeding should be stayed or dismissed. But the fact that a proceeding is discontinued and then a second proceeding, raising the same factual or legal matters, is commenced is not prima facie evidence of abuse of process. Nor is the fact that a proceeding raising particular legal claims is filed, and possibly determined, and then a subsequent proceeding is filed raising a separate claim arising out of the same or similar factual matters, prima facie evidence of abuse of process. It is now trite that courts and participants in civil proceedings must, in terms, "facilitate the just resolution of disputes: (a) according to law; and (b) as quickly, inexpensively and efficiently as possible"119. But that obligation, like the doctrine of abuse of process, must take into account and deal with the facts and circumstances of the particular proceedings and the identity and conduct of the particular participants. These proceedings, and related proceedings, have a complex litigation history120 which began in Singapore in 2010 when UBS AG ("UBS") sought recovery from Telesto Investments Ltd ("Telesto"), and Mr Tyne as guarantor, to Telesto of monies owing under credit facilities UBS had provided ("the Singapore Proceedings"121). Thereafter, Mr Tyne (in his personal capacity), Telesto, and the trustee of the Argot Trust (then ACN 074 971 109 Pty Ltd) commenced proceedings in the Supreme Court of New South Wales against UBS ("the NSW Proceedings"). After the NSW Proceedings were temporarily stayed as a consequence of the Singapore Proceedings, Mr Tyne (in his personal capacity) and the trustee of the Argot Trust discontinued their involvement in the NSW Proceedings, without any conditions being imposed on the discontinuance, by filing amended 118 Walton (1993) 177 CLR 378 at 393. 119 s 37M(1) of the Federal Court of Australia Act 1976 (Cth). See also s 56 of the Civil Procedure Act 2005 (NSW); s 7 of the Civil Procedure Act 2010 (Vic); r 3 of the Supreme Court Civil Rules 2006 (SA); r 5 of the Uniform Civil Procedure Rules 1999 (Q); r 4B of the Rules of the Supreme Court 1971 (WA); r 414A of the Supreme Court Rules 2000 (Tas); s 5A of the Court Procedures Act 2004 (ACT). 120 I gratefully adopt the facts and procedural history set out in the reasons of the other judges. 121 There were two proceedings in Singapore, which I refer to collectively as the Singapore Proceedings: the proceedings for the recovery of funds ("the Singapore 801 Proceedings") and a subsequent anti-suit application brought by UBS. pleadings pursuant to leave granted by Ward J, leaving Telesto as the remaining plaintiff. In May 2013, the NSW Proceedings were permanently stayed as a consequence of the Singapore Proceedings. Eight months later, in January 2014, Mr Tyne, having by then been appointed as the trustee of the Argot Trust, commenced proceedings in the Federal Court of Australia against UBS in relation to the credit facilities ("the Federal Court Proceedings"). The trustee of the Argot Trust alleges that UBS gave negligent advice, or engaged in misleading or deceptive conduct contrary to legislation corresponding to the Trade Practices Act 1974 (Cth). The trustee of the Argot Trust also alleges that UBS breached fiduciary duties owed to the trustee and that the allegedly misleading conduct of UBS induced Mr Tyne and, through him, the trustee of the Argot Trust to take steps to their detriment. After the Federal Court Proceedings were filed, UBS applied to have those proceedings dismissed or permanently stayed on four grounds: abuse of process; Anshun estoppel122; res judicata; or issue estoppel, each arising from the claims advanced and orders made in the Singapore Proceedings and, or alternatively, the NSW Proceedings. The primary judge granted the interlocutory application and permanently stayed the Federal Court Proceedings on the ground that those proceedings were an abuse of process. This was the only basis for the order, his Honour having concluded that no res judicata, Anshun estoppel or issue estoppel arose. On appeal, a majority of the Full Court of the Federal Court found that there was no abuse of process that could justify permanently staying the Federal Court Proceedings. I agree. There is no duplication of proceedings. The principle of finality is not engaged. UBS has never had to meet, or plead to, the claims the trustee of the Argot Trust raises in the Federal Court Proceedings, including under legislation corresponding to the Trade Practices Act. UBS has not been "twice vexed". Not only were Mr Tyne (in his personal capacity) and the trustee of the Argot Trust permitted under the Uniform Civil Procedure Rules 2005 (NSW) to discontinue their involvement in the NSW Proceedings but the unchallenged reasons given by Mr Tyne for the discontinuance and then, after the NSW Proceedings were permanently stayed, for filing the Federal Court Proceedings do not provide a basis for a finding of abuse of process in relation to the Federal Court Proceedings. The appeal should be dismissed. 122 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45. Abuse of process: principles The onus of satisfying the court that a proceeding is an abuse of process is "a heavy one"123. Although the power to grant a permanent stay is one to be exercised "only in the most exceptional circumstances"124, the exercise of the power can be justified by considerations which may include finality125, fairness126, and the maintenance of public confidence in the administration of justice127. This appeal is concerned with an alleged attempt to raise or re-litigate issues that were said to have been the subject of earlier proceedings. Where a party attempts to raise issues in successive proceedings, that conduct may be assessed as an abuse of process if it is contrary to the principle of finality128: that is, that "controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances"129. This fundamental principle protects "parties to litigation from attempts to re-agitate what has been decided"130. Where there are attempts to raise substantially similar claims in successive proceedings, the doctrine of abuse of process overlaps with the doctrine of estoppel. The raising of issues in successive proceedings can be simultaneously the subject of an estoppel which has arisen as a consequence of the earlier, 123 Williams v Spautz (1992) 174 CLR 509 at 529; [1992] HCA 34 quoting Goldsmith v Sperrings Ltd [1977] 1 WLR 478 at 498; [1977] 2 All ER 566 at 582. 124 Williams (1992) 174 CLR 509 at 529 citing Jago v District Court (NSW) (1989) 168 CLR 23 at 34; [1989] HCA 46. 125 Tomlinson (2015) 256 CLR 507 at 518 [24]. See also Aon (2009) 239 CLR 175 at 194 [34] citing Johnson v Gore Wood & Co [2002] 2 AC 1 at 31. 126 Walton (1993) 177 CLR 378 at 393; Tomlinson (2015) 256 CLR 507 at 518 [24]. See also Rozenblit (2018) 92 ALJR 600 at 612 [66]; 356 ALR 26 at 41. 127 Batistatos (2006) 226 CLR 256 at 267 [14]. See generally Walton (1993) 177 CLR 378 at 393-394 and the authorities cited therein. 128 Tomlinson (2015) 256 CLR 507 at 518 [24]. See also Aon (2009) 239 CLR 175 at 194 [34] citing Johnson [2002] 2 AC 1 at 31. 129 Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1 at 21 [34]; [2016] HCA 16 quoting D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 20-21 [45]; [2005] HCA 12. 130 Achurch v The Queen (2014) 253 CLR 141 at 153 [15]; [2014] HCA 10. final judgment, and conduct which constitutes an abuse of process131. However, such issues may also be considered an abuse of process circumstances where they do not give rise to an estoppel because the doctrine of abuse of process is "inherently broader and more flexible than estoppel"132. By way of example, estoppel would not preclude a person who was neither a party nor the privy of a party to earlier proceedings from raising similar or related claims in successive proceedings, whereas abuse of process might in appropriate circumstances. Not only is there the overlap with estoppel, but the principles relevant to the exercise of power to stay a proceeding as an abuse of process need to be interpreted and applied in light of the overarching purpose set out in s 37M of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act"). Section 37M provides that the overarching purpose of "the civil practice and procedure provisions" just resolution of disputes: (a) according to law; and (b) as quickly, inexpensively and efficiently as possible"133. to "facilitate the No abuse of process UBS's primary complaint in this Court is that the majority of the Full Court erred in finding that the Federal Court Proceedings were not an abuse of process. Three interrelated factors are said to support that complaint: first, the delay, increased costs, vexation to UBS and waste of public resources arising from dealing with the same matter twice; second, the fact that the delay, cost, vexation and waste would cause the administration of justice to fall into disrepute; and, third, that the majority failed to have regard to the overarching purpose in s 37M of the Federal Court Act. No duplication Before considering the issue of delay or cost, it is necessary to address the premise on which the UBS submissions are based: that the Federal Court Proceedings are, in effect, a duplication of earlier proceedings. UBS contends that the Federal Court Proceedings raise "in substance the same factual matters" as those alleged in the NSW Proceedings. The trustee of the Argot Trust accepts that the "factual matrix" in the Singapore 801 131 Tomlinson (2015) 256 CLR 507 at 518 [24]. 132 Tomlinson (2015) 256 CLR 507 at 518 [25]. See also Timbercorp Finance Pty Ltd (In liq) v Collins (2016) 259 CLR 212 at 240 [69]; [2016] HCA 44. 133 s 37M(1) of the Federal Court Act. Proceedings might be "substantially similar to that which was asserted in the [NSW Proceedings] and … the Federal Court [P]roceedings". However, the trustee of the Argot Trust contends that "there is no foundation for any contention that the juridical and legal matrix in which those facts fall to be assessed is substantially similar (or even similar at all)". The trustee's contention should be accepted. UBS has not been "twice vexed". None of the issues pleaded in the Federal Court Proceedings has ever been the subject of a decision on the merits. Indeed, none of the allegations has ever been responded to by UBS by way of a pleaded defence. In the Singapore Proceedings, no relief was sought against the trustee of the Argot Trust, it was never a party, and no relief was ordered or granted against it. Moreover, the significant advantages to that trustee of claims under the Trade Practices Act were not available in Singapore. The principle of finality is not engaged. In the NSW Proceedings, there were no findings about the fact or substance of Telesto's claims other than that they were barred by reason of the doctrine of res judicata. And there were certainly no findings in respect of the claims of Mr Tyne and the trustee of the Argot Trust under the Trade Practices Act: they discontinued as parties to those proceedings, as they were authorised to do under the Uniform Civil Procedure Rules and without conditions being imposed on the discontinuance. UBS contends that the lack of a decision on the merits was not conclusive. UBS points to this Court's decisions in Walton v Gardiner134 and Batistatos v Roads and Traffic Authority (NSW)135 as supporting the proposition that a proceeding can be stayed as an abuse of process despite the proceeding addressing a claim that has not previously been adjudicated. I agree with Nettle and Edelman JJ, for the reasons their Honours give, that this contention must be rejected. Having removed the premise on which the UBS submissions are based, it is necessary to consider whether cost, vexation and delay, and the alleged effect on the administration of justice to which UBS points, nonetheless would support a finding of abuse of process. 134 (1993) 177 CLR 378. 135 (2006) 226 CLR 256. No issue of cost, vexation or delay I agree with Nettle and Edelman JJ, for the reasons their Honours give, that none of these considerations, individually or collectively, would support a finding of abuse of process. The first two considerations – cost and vexation – may be put to one side. In the NSW Proceedings, UBS has had the benefit of a stay as against Telesto and, as a result, UBS has never faced Telesto's claims under the Trade Practices Act. No less significantly, UBS has never faced the claims of the trustee of the Argot Trust under the Trade Practices Act or otherwise; it cannot be said that UBS would be required to face these allegations again. As for the alleged delay, there were eight months between the granting of the permanent stay of the NSW Proceedings and the trustee of the Argot Trust commencing the Federal Court Proceedings. In the circumstances, that period is not so long as to constitute an abuse of process. No effect on the administration of justice UBS contends that "the combination of delay, increased costs, vexation and waste of public resources" would lead to the administration of justice falling into disrepute and that the majority of the Full Court failed to have regard to the risk that continuation of the proceedings would have that effect on the administration of justice. The administration of justice may be brought into disrepute, in such a way as to amount to an abuse of process136, if the public perception is that the legal system is unfair, inefficient, ineffective, expensive (both for the parties and in terms of the use of public monies) or contrary to the rule of law. Permitting a proceeding to continue in such circumstances might suggest tolerance of behaviour that is contrary to the just, efficient and timely resolution of disputes, including attempts to re-litigate questions already resolved. But, in this case, the majority of the Full Court did not consider UBS's position to be so severely affected by the continuation of the proceedings as to amount to the kind of exceptional circumstance137 necessary to establish an abuse of process warranting the grant of a permanent stay. Their Honours concluded 136 Tomlinson (2015) 256 CLR 507 at 518-519 [25] citing PNJ (2009) 83 ALJR 384 at 385-386 [3]; 252 ALR 612 at 613. See also Walton (1993) 177 CLR 378 at 137 Williams (1992) 174 CLR 509 at 529 citing Jago (1989) 168 CLR 23 at 34. that in all of the circumstances of the case, there was no material unfairness to, or unjustified oppression of138, UBS. That conclusion, with which I agree, was unsurprising. It was unsurprising not only because the Uniform Civil Procedure Rules permitted Mr Tyne and the trustee of the Argot Trust to discontinue their involvement in the NSW Proceedings, but because of the unchallenged sworn evidence given by Mr Tyne as to what occurred in relation to the NSW Proceedings and the reasons why he and the trustee of the Argot Trust discontinued their involvement in those proceedings. In his evidence, Mr Tyne explained that the decision to discontinue the consent of UBS, involvement the NSW Proceedings, with was "precipitated" by the following facts and matters: the total liabilities which had been owing by Telesto under the credit facilities, recovery of which had been sought the Singapore extinguished, Proceedings, "thereby expunging any secondary liability that could accrue" to the trustee of the Argot Trust or to Mr Tyne; been wholly discharged and had in dollar terms, the NSW Proceedings would likely prove to be of lesser value to the trustee than the value of the case that Telesto sought to prosecute because Telesto had lost the securities advanced to it by the trustee, as well as other cash and securities. As a result, if Telesto had been "made whole" through the NSW Proceedings, Telesto would very likely have had assets sufficient to meet its obligations to the trustee, obviating the requirement for the Federal Court Proceedings; in terms of the elements to be established and the evidence required to establish them, the Federal Court Proceedings are more burdensome than the case Telesto sought to make in the NSW Proceedings. In particular, the trustee of the Argot Trust has to prove everything that Telesto would have been obliged to prove as well as the provenance of the securities that trustee lent to Telesto. That last aspect, a significant exercise requiring the detailed examination of more than one thousand pages of account statements, was not necessary in the NSW Proceedings; the concurrent prosecution of the Telesto action and the action on behalf of the trustee of the Argot Trust would have been more time consuming and more expensive than the prosecution of the Telesto action on its own. 138 See Tomlinson (2015) 256 CLR 507 at 519 [25] citing PNJ (2009) 83 ALJR 384 at 385-386 [3]; 252 ALR 612 at 613. See also Walton (1993) 177 CLR 378 at Given the financial circumstances of Mr Tyne, Telesto, and the Argot Trust, Mr Tyne was looking to limit the boundaries of the litigation; it was not at all predictable (and so not unreasonable to fail to predict) that Sackar J would permanently stay the NSW Proceedings when, in doing so, he "became the first Australian judge to decline jurisdiction over [a claim under the Trade Practices Act], absent an exclusive foreign jurisdiction or arbitration clause". The view held by Mr Tyne at the time, founded on his own research, was that a non-exclusive jurisdiction clause would not provide a basis for an Australian court to refuse jurisdiction over Telesto's trade practices claim where that claim could not be litigated in Singapore. As noted, that evidence was unchallenged. It was never contended by UBS that the facts and matters referred to and relied upon were factually or legally inaccurate in any respect. In those circumstances, it cannot be said that the "staged conduct" of these proceedings was wrong or the circumstances so exceptional139 that a permanent stay of the proceedings can be justified by reference to considerations of finality140, fairness141, or the maintenance of public confidence in the administration of justice142. In the circumstances of the current appeal, that last statement needs further unpacking. Where it can properly be said that a claim "should have been raised in the earlier proceedings"143, were it to be raised at all, that conclusion may lead to a finding that the later proceedings are an abuse of process. But that is not this case. As the majority of the Full Court observed, if Mr Tyne and the trustee of the Argot Trust had continued their claims in the NSW Proceedings, UBS would have been required to admit or defend those claims144. That is the position in which UBS now finds itself. 139 Williams (1992) 174 CLR 509 at 529 citing Jago (1989) 168 CLR 23 at 34. 140 Tomlinson (2015) 256 CLR 507 at 518 [24]. See also Aon (2009) 239 CLR 175 at 194 [34] citing Johnson [2002] 2 AC 1 at 31. 141 Walton (1993) 177 CLR 378 at 393; Tomlinson (2015) 256 CLR 507 at 518 [24]. See also Rozenblit (2018) 92 ALJR 600 at 612 [66]; 356 ALR 26 at 41. 142 Batistatos (2006) 226 CLR 256 at 267 [14]. See generally Walton (1993) 177 CLR 378 at 393-394 and the authorities cited therein. 143 Johnson [2002] 2 AC 1 at 31. 144 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 379 [107]. And it is not the case that the trustee of the Argot Trust has unreasonably held its claims in abeyance. The trustee provided an explanation for its conduct and that explanation was not unreasonable. After the NSW Proceedings were temporarily stayed, the trustee of the Argot Trust discontinued its involvement in the NSW Proceedings. It did so, at least in part, because if the principal claimant's claim, that of Telesto, had been successful, the claim by the trustee would have been unnecessary. Indeed, the claim by the trustee would have been not only unnecessary but arguably not maintainable and potentially in breach of trustees' duties because, without damage, there can be no action for misleading or deceptive conduct under the Trade Practices Act145. And then, once Telesto was unsuccessful in the NSW Proceedings (as it was once the NSW Proceedings were permanently stayed), the trustee had an obligation to consider and determine what action the trustee should take to seek recovery of the property of the trust. The step taken was to institute the Federal Court Proceedings. It is clear from Mr Tyne's evidence that he expected the NSW Proceedings to proceed to judgment and believed that the outcome in those proceedings would sufficiently deal with any outstanding liability to the trustee of the Argot Trust; Mr Tyne did not expect a permanent stay. The other party – UBS – is a sophisticated and well-resourced litigant. UBS ultimately took no objection to Telesto filing an amended pleading in the NSW Proceedings which removed Mr Tyne and the trustee of the Argot Trust as parties to those proceedings. It did not seek the imposition of any conditions on the discontinuance. UBS could have done so, but it did not. The fact that UBS believed that neither Mr Tyne, nor the trustee of the Argot Trust, continued to assert any rights against it does not detract from the conclusion reached. As in any litigation, each participant had a view of the merits of the various claims. That one or more of the participants was wrong in their view is not prima facie evidence of abuse of process. More is required. Having regard to the facts and circumstances – including the identity of the particular participants – the Federal Court Proceedings should not be stayed or dismissed for abuse of process. Full Court's approach not contrary to s 37M UBS further contends that the approach taken by the majority of the Full Court was inconsistent with the overarching purpose of the civil procedure 145 By the combined effect of ss 52 and 82 of the Trade Practices Act: see generally Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 at 286; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525; [1992] HCA 55; Travel Compensation Fund v Tambree (2005) 224 CLR 627 at 639 [30]; [2005] HCA 69. provisions set out in s 37M of the Federal Court Act and observes that the authorities on which the majority relied did not refer to s 37M. That contention should be rejected. Section 37N of the Federal Court Act imposes a duty on parties to civil proceedings to act consistently with the overarching purpose set out in s 37M – to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible – as well as imposing an obligation on the parties' lawyers to assist the parties to comply with that obligation. As has been recently observed by members of this Court in the context of similar obligations applicable this kind of overarching purpose does not displace the need for a court to safeguard the administration of justice in the context of ordering a stay for abuse of process146. in Victorian courts, to proceedings Vexation, oppression and unfairness, by their very nature, encompass considerations of delay, cost and inefficiency which are antithetical to the overarching purpose. And considerations of vexation, oppression, unfairness and delay were central to the majority's conclusion that the Federal Court Proceedings were not an abuse of process. The fact that the authorities to which the majority had regard did not consider s 37M is not, and cannot be, determinative. Moreover, despite the importance of the considerations and the obligations which s 37M identifies (and they are important), those considerations and obligations are directed at facilitating the just resolution of disputes according to law "as quickly, inexpensively and efficiently as possible"147. It cannot be said that, in the circumstances of this appeal, there is any vexation, oppression or unfairness visited on UBS that would warrant the Federal Court Proceedings being permanently stayed. "Relevance" of the Singapore Proceedings In its second ground of appeal in this Court, UBS identifies three alleged errors in relation to the treatment of the Singapore Proceedings by the majority of the Full Court. Those alleged errors are said to be the majority's conclusions that: the primary judge's reasons for deciding that the Federal Court Proceedings constituted an abuse of process did not include the Singapore Proceedings; 146 See Rozenblit (2018) 92 ALJR 600 at 614 [76]; 356 ALR 26 at 43. 147 s 37M(1)(b) of the Federal Court Act. it was "not open" to UBS to rely upon the Singapore Proceedings in the appeal without having filed a notice of contention before the primary judge; and the existence and outcome of the Singapore Proceedings "could not found any claim that the current proceedings ... constituted an abuse of process". That challenge centres on the following paragraph of the majority's reasons148: "We do not agree with UBS that the primary judge gave weight to the Singapore proceedings in deciding that the current proceeding constituted an abuse of process. In our view, the primary judge's reasons for deciding that the current proceeding constituted an abuse of process are confined to the circumstances of the proceedings in the Supreme Court of New South Wales. UBS did not file a notice of contention. Accordingly, it was not open to UBS to rely on the Singapore proceedings as a relevant matter to support the decision of the primary judge. In any event, we consider it clear from the primary judge's reasons that the existence and outcome of the Singapore proceedings which were taken by UBS against Mr Tyne and Telesto could not found any claim that the current proceedings by Mr Tyne as the trustee of the Argot Trust … constituted an abuse of process." UBS's challenge to this part of the majority's reasons should be rejected. Although the Singapore 801 judge expressly referred Proceedings149, it is clear from the terms of his Honour's reasons that these were passing references to, rather than reliance on, the Singapore Proceedings. the primary The appropriate approach to assessing the effect of the Singapore Proceedings was their effect on the NSW Proceedings. As already stated, the trustee of the Argot Trust was not a party to the Singapore Proceedings. If the Singapore Proceedings had affected the ability of the trustee to litigate its claims through the NSW Proceedings (had it remained a party), there would have been a finding of res judicata, preventing the trustee of the Argot Trust from bringing the Federal Court Proceedings. However, that was not the majority's conclusion. Their Honours considered that if the trustee had continued its claims 148 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 362 [53]. 149 See Tyne v UBS AG (No 3) (2016) 236 FCR 1 at 60 [418], [422]. in the NSW Proceedings, "UBS would have been required to admit or defend those claims"150 – the position in which UBS now finds itself. That is not to say that in every case where there is alleged duplication of issues, but no finding of res judicata or estoppel, a finding of abuse of process will be foreclosed: for reasons already explained, that is not the law. But, on the facts of this appeal, that would have been the consequence. The corollary is that there is no basis on which the Singapore Proceedings could have been used to found a conclusion of an abuse of process. There is simply no factual basis for such an allegation, and the majority of the Full Court was correct to reach that conclusion. For those reasons, the appeal should be dismissed with costs. 150 Tyne v UBS AG (No 2) (2017) 250 FCR 341 at 379 [107]. |
HIGH COURT OF AUSTRALIA APPLICANT AND TELSTRA SUPER PTY LTD RESPONDENT Finch v Telstra Super Pty Ltd [2010] HCA 36 20 October 2010 ORDER Special leave to appeal granted. Leave to file proposed amended draft notice of appeal granted. 3. Proposed amended draft notice of appeal treated as filed in the appeal and appeal treated as instituted and heard instanter and allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of Victoria made on 23 December 2009 and 23 February 2010, and in their place order that the appeal to that Court from the order of Byrne J made on 28 November 2008 be dismissed with costs. On appeal from the Supreme Court of Victoria Representation J P Brett with M C Wall for the applicant (instructed by Arnold Thomas & Becker) A G Uren QC with R J Harris for the respondent (instructed by Freehills) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Finch v Telstra Super Pty Ltd Superannuation – Construction of superannuation trust deed – Applicant applied for total and permanent invalidity ("TPI") benefit under superannuation trust deed – Definition of TPI required continuous absence from "all active Work" for six months – Whether "all active Work" limited to work for employer responsible for superannuation fund ("Telstra") – Whether period of absence assessed at date applicant left Telstra or date of trustee's determination. Trusts – Superannuation – Review of decisions of trustees of superannuation trusts – Trustee required to determine whether applicant was "unlikely ever to engage in any gainful Work" – Whether Karger v Paul [1984] VR 161 applies to superannuation trusts – Whether trustee's decision discretionary – Whether trustee gave genuine consideration to application – Whether trustee failed to comply with duties to make inquiries. Practice and procedure – Whether Court should remit matter to trustee – Whether trustee incapable of forming opinion satisfactorily – Whether only one decision open. Words and phrases – "all active work", "genuine consideration", "total and permanent invalidity". Superannuation Industry (Supervision) Act 1993 (Cth), ss 3, 52. Superannuation (Resolution of Complaints) Act 1993 (Cth), s 14. FRENCH CJ, GUMMOW, HEYDON, CRENNAN AND BELL JJ. The parties to this application for special leave to appeal are in controversy about the construction of a superannuation trust deed and the legal principles affecting control of decisions by its trustee. The applicant, Alan Michael Finch, is a beneficiary of the trust. The orders of which he complains are orders of the Court of Appeal of the Supreme Court of Victoria (Buchanan and Redlich JJA and Hansen AJA)1 allowing an appeal from orders of Byrne J which were in the applicant's favour2. The application was argued as on an appeal. The factual background The applicant was born male. He was initially known as "Alan Finch". For some years before 1988 the applicant lived as a female under the name "Helen Finch". In 1988, at the age of 21, the applicant underwent surgery to change gender from male to female. On 1 October 1992 the applicant began employment under the name "Helen Finch" with Telstra Corporation Ltd ("Telstra"). The surgery turned out to have been extremely unsatisfactory in the sense that the applicant became very distressed about the move to female gender. On 30 September 1996 the applicant took sick leave from Telstra. In October 1996 the applicant reassumed a male personality, name and dress. He underwent surgery to reverse the gender change as far as possible. He became severely depressed, suffered from adjustment disorder and was sensitive about his appearance. On 24 March 1997 he returned to work with Telstra as "Alan Finch". On 23 January 1998 he left the employment of Telstra. From 22 February 1999 until 26 March 1999 he worked for Foxtel: during that time he took two weeks' sick leave. From 29 November 1999 until 16 May 2000 he worked part-time for Qantas: during that time he took over two weeks' sick leave. The procedural background In consequence of his employment with Telstra, the applicant was a member of a superannuation fund, the Telstra Superannuation Scheme ("the Scheme"). The Scheme is regulated by a Trust Deed ("the Deed"). For more than 10 years, since 19 May 2000, the applicant has been seeking a benefit under 1 Telstra Super Pty Ltd v Finch [2009] VSCA 318. 2 Finch v Telstra Super Pty Ltd [2008] VSC 481; Finch v Telstra Super Pty Ltd (No 2) [2008] VSC 527. Crennan Bell cl 2.3.3 of the Deed – the benefit payable for total and permanent invalidity3. The respondent, Telstra Super Pty Ltd, is the trustee of the Scheme ("the Trustee"). On 21 March 2002 the relevant committee of the Trustee made what was called in the courts below the "first determination". It rejected the applicant's claim for a total and permanent invalidity benefit. On 10 September 2002 the applicant requested a reassessment by the Trustee. On 20 March 2003, the relevant committee again dismissed the applicant's claim in the "second determination". The applicant challenged the two determinations denying his claims in the Supreme Court of Victoria. The trial judge in the Supreme Court of Victoria, Byrne J, remitted the matter to the Trustee. He did so because he set both determinations aside on the basis that the second replaced the first, and the second was flawed. The flaw arose because the Trustee had failed to comply with its obligations to give genuine consideration to one question posed by the applicant's second application. The question was whether the applicant was unlikely ever to engage in gainful work. The applicant had relied on strong medical opinion in his favour to demonstrate that he was unlikely ever again to engage in gainful work. On the other hand, the applicant had worked since the reverse gender procedures – for some months with Telstra, and thereafter for one month with Foxtel and for five months with Qantas. The Trustee relied on these periods of work to show that the applicant was likely to engage in employment in the future. Byrne J considered that, in view of the strength of the medical opinion in favour of the applicant, the Trustee ought to have made further inquiry into three matters. One comprised the circumstances of the applicant's last months with Telstra. The second comprised the circumstances of his employment thereafter with Foxtel and Qantas. The third was a statement by the applicant to the Chief Executive Officer of the Trustee that his employment with Qantas was "a real job"4. 3 That clause is set out below at [7]. 4 Finch v Telstra Super Pty Ltd [2008] VSC 481 at [45]-[53]. Crennan Bell The Court of Appeal's decision The Court of Appeal of the Supreme Court of Victoria allowed the Trustee's appeal, set aside Byrne J's orders and ordered judgment for the Trustee with costs. The Court of Appeal held that the applicant's claim did not fall within cl 2.3.3 of the Deed because he did not satisfy a condition stated in the definition of "Total and Permanent Invalidity". The condition was that the applicant be absent from active work for at least six months. In its view, which differed from that of Byrne J, the condition had to be satisfied as at the date when the applicant ceased to work for Telstra, and the necessary absence from work was absence from work at Telstra: it did not suffice that there had been six months' absence by the date of the Trustee's determination5. The question whether the Trustee had given genuine consideration to the unlikelihood of the applicant working therefore did not arise. Nevertheless, the Court of Appeal expressed disagreement with Byrne J's conclusion in that respect6. Both issues arise in this Court. It is convenient to start with the first issue. The construction of the Deed The key provisions. Division 2 of the Deed dealt with contributions and benefits, and Pt 2.3 dealt with benefits. Part 2.3 of the Deed set out five types of benefit: Retirement benefits, Death benefits, Total and Permanent Invalidity benefits, Redundancy benefits and Withdrawal benefits. Clause 2.3.3 dealt with Total and Permanent Invalidity benefits. The material part of it provided: "if a Member ceases to be an Employee during a period of Division 2 Membership because of Total and Permanent Invalidity, there is payable to the Member from the Fund a lump sum benefit of an amount equal to the benefit which would have been payable under clause 2.3.2 if the Member had died on the date on which the Member ceased to be an Employee or any other date agreed between the Trustee and the Principal Employer [Telstra] from time to time either generally or in any particular case." Clause 2.3.2 set out a formula for determining benefits which rested on, inter alia, the Member's final average salary and the years yet to elapse between the 5 Telstra Super Pty Ltd v Finch [2009] VSCA 318 at [58]-[63]. 6 Telstra Super Pty Ltd v Finch [2009] VSCA 318 at [65]-[78]. Crennan Bell cessation of employment and attainment of the age of 60. It was common ground that the applicant was a Division 2 Member. The dispute between the parties centres on the definition of "Total and Permanent Invalidity" in cl 2.1.2. The material part was as follows: "'Total and Permanent Invalidity' means, in relation to a Member, disablement as a result of which – unless otherwise agreed between the Trustee and the Principal Employer from time to time either generally or in any particular case, the Member has been continuously absent from all active Work for a period of at least six months and has been required by the Employer [in the applicant's case, Telstra] to participate in a Rehabilitation Programme; and in the opinion of the Trustee after consideration of any information, evidence and advice provided to the Trustee by the Employer and any other information, evidence and advice the Trustee may consider relevant, the Member has ceased to be an Employee and is unlikely ever to engage in any gainful Work for which the Member is for the time being reasonably qualified by education, training or experience". Below, these paragraphs will be called "limb (a)" and "limb (b)". "Work" was defined in cl 1.1.1 as meaning "engagement in any business, trade, profession, vocation, calling, occupation or employment." There was no dispute about the applicant's satisfaction of the Rehabilitation Programme requirement in limb (a). The dispute was whether the applicant satisfied the requirement in limb (a) of having been continuously absent from "all active Work" for six months. The applicant's position. The applicant contended that the requirement in limb (a) that he must have been continuously absent from "all active Work" for a period of at least six months was satisfied by absence from work for six months by the time of the Trustee's determinations. If that were the correct construction, the applicant met the requirement, because he had not worked after 16 May 2000, more than six months before either of the Trustee's determinations. At the time it made its determinations, the Trustee did not take issue with this construction. That is, the Trustee did not dispute that the applicant satisfied limb (a), but declined to form the opinion called for by limb (b). The Trustee's position. However, in the Supreme Court the Trustee contended that the requirement of six months' absence from work had to be Crennan Bell satisfied by the time the applicant left Telstra's employment on 23 January 1998. He had not engaged in active work between 30 September 1996 and 24 March 1997, and for some periods between 24 March 1997 and 23 January 1998, but none of these periods was a continuous absence from work for six months – although the first period was only six days short of that figure. This was a different argument from that which the Court of Appeal relied on. The Court of Appeal required the six months' absence to be absence from work at Telstra, whereas the Trustee accepted that the six months' absence could be absence from work for Telstra or anyone else, so long as that absence existed before the Member left Telstra. The Court of Appeal's reasoning. The Court of Appeal reached its conclusion in part for a reason which it expressed thus7: "there may be cases where a Member is required to do (and does) a rehabilitation program before their [sic] absence period reaches six months, and then after the rehabilitation program he or she ceases to be an employee in circumstances where the total absence was less than six months. In these circumstances, the Member would satisfy the second requirement of [limb (a)] but not the first, as the absence from Telstra was less than six months. That is to say, the second requirement does not depend on fulfilment of the first requirement, but it does presuppose that the Member has been absent from work at Telstra, and in that regard points to the expression 'active Work' meaning work at Telstra." This reasoning was not supported by the Trustee in this Court. But in any event all that the reasoning establishes is that limb (a) required events to take place while the Member was employed by Telstra which caused Telstra to require the Member to participate in a Rehabilitation Programme. The reasoning does not establish that the six months' absence from "all active Work" must be from work at Telstra or must be before the Member ceases work at Telstra. At most it establishes only that some of the period of six months may have passed before the Member left Telstra. Arguments for the applicant's construction. The following textual indications favour the applicant's construction. 7 Telstra Super Pty Ltd v Finch [2009] VSCA 318 at [59]. Crennan Bell First, limb (a) does not explicitly state that the absence from "all active Work" for six months be six months' absence from work with Telstra or from work while employed by Telstra. In this respect there is a contrast with other provisions in the Deed, which use the expression "absent from active employment with the Employer". Secondly, the definition of "Work" – a word which is only used in the definition of "Total and Permanent Invalidity" in Divs 2 and 3 – is quite unlimited by reference to work for or while in the employment of any particular employer. When used in limb (b), "Work" plainly means work for any employer or in any business, trade, profession, vocation, calling or occupation; that points against "Work" in limb (a) being limited to work for, or before leaving the employment of, Telstra. Thirdly, the definition of "Total and Permanent Invalidity" may be said to create four requirements: continuous absence of the Member from "all active Work" for at least six months; a requirement by the Employer that the Member participate in a Rehabilitation Programme; a requirement that the Trustee form the opinion that the Member has ceased to be an Employee; and a requirement that the Trustee form the opinion that the Member is unlikely ever to engage in "gainful Work". the Member continues The opinion of the Trustee described in limb (b) cannot always be formed eo instanti with the cessation of the employment. Requirement (b) (i) cannot be satisfied while to be an Employee of Telstra. Requirement (b) (ii) is capable of being satisfied after the Member has ceased to work for Telstra and is unlikely to be satisfied earlier, because the Trustee has to receive the claim, consider the claim, form the relevant opinion and calculate the payment. The process of consideration is not necessarily speedy, because the Trustee has to consider "information, evidence and advice" – not only that provided by Telstra but also any other material in that category which the Trustee considers relevant. These are indications inconsistent with the contention that requirement (a)(i) can only be satisfied by the Member being continuously absent from work with, or while in the employment of, Telstra for six months. Crennan Bell Fourthly, the Trustee's construction leads to potential results which are so unjust as to suggest an error in the reasoning that led to them. One is that a Member on a short-term contract who suffered a catastrophic disablement within six months of the end of the contract would not satisfy the definition. A second is that a Member who suffered a disabling condition and resigned within six months in order to obtain access to accumulated benefits would also be disqualified from fulfilling the definition. A third is that an employer could terminate a disabled Member's employment prior to the expiration of the six months and avoid payment of a Total and Permanent Invalidity benefit. The Court of Appeal8 met the first of these results, and the Trustee met the first and second of them, by contending that the Trustee and Telstra could agree to waive the requirement for six months' absence from Work while employed by Telstra. The Trustee submitted in this Court that in this case the Trustee and Telstra did not consider whether to waive the requirement because once the Trustee had decided limb (b) was not satisfied, there was no point in considering the application of limb (a), since the discretion it provided for would not have availed the applicant even if it had been considered. That was not, however, the order in which the officer advising the relevant committee of the Trustee approached the issues: he acted on the applicant's approach to the construction of limb (a) before recommending against the Trustee forming the limb (b) opinion. And the injustice in the outcomes cannot be overcome by relying on the existence of a discretionary power. That is so for two reasons. The first is that it would be strongly against the interests of Telstra to exercise it. It is against those interests because any exercise of the power in favour of a Member will reduce the available trust funds. The Scheme is relevantly a defined benefit scheme (in which each Member gets the benefit defined whatever the state of the trust investments), as opposed to an accumulation scheme (in which each Member's benefit rises or falls with the prosperity of the trust investments). Telstra bore the risk of adverse investment performance, was entitled to surplus (cl 1.15.1), had power to make further contributions (cl 5.3.1) and had to face the industrial relations consequences of under funding. To waive the requirement of six months' absence would increase the risk that Telstra would have to make further contributions to the Scheme. The second reason why the discretionary power of Telstra to agree with the Trustee to waive the requirement of six months' absence cannot be relied on turns on cl 1.24.2. It provided that "in the exercise, non-exercise or partial 8 Telstra Super Pty Ltd v Finch [2009] VSCA 318 at [60]. Crennan Bell exercise of each Power exercisable by it under this Deed, [Telstra] … has an absolute and uncontrolled discretion and is not subject to any fiduciary or like duty, obligation or standard." "Power" was defined as meaning "a power, right, discretion or authority of any nature and howsoever arising (including without limitation a power which a person has a duty to exercise and a power of approval)". It follows that whatever duties might lie on the Trustee in relation to its power to agree with Telstra, for most practical purposes a decision of Telstra not to make an agreement with the Trustee will be uncontrollable. It is therefore necessary to express disagreement with the Court of Appeal's statement9: "The mere fact that the [Trustee] might, in some cases, not agree to waive the absence period, does not mean that the construction proposed by the [Trustee] leads to absurd or illogical results." In any event, the problem lies with Telstra more than it does with the Trustee. Fifthly, the crucial question in relation to "Total and Permanent Invalidity" is whether the condition of the Member is such that, in the opinion of the Trustee, the Member is unlikely ever to engage in any "gainful Work" – that is, whether the Member is in that sense a total and permanent invalid. The words "because of" in cl 2.3.3 require that condition to be the cause of the Member's cessation of employment. The same requirement flows from the words "disablement as a result of which" in the definition of "Total and Permanent Invalidity" read with the reference in limb (b) to ceasing to be an Employee. The condition must also cause the Member to be continuously absent from work for six months. But one key guide to whether the Member has in fact suffered a "disablement" with these consequences is the fact of continuous absence from work for six months. It is not important to the utility of that guide whether the absence was entirely from work for one employer or another. The applicant was entitled to say to the Trustee: "The vital issues are whether I am unlikely ever to engage in any gainful Work, and whether I have ceased to be an Employee 'because of' that fact. It can now be seen that the reason why I ceased to be a Telstra Employee was a state of affairs making it unlikely that I will ever engage in any gainful Work again. What matters is that that state of affairs arose while I was a Telstra Employee. It does not matter that the symptoms of that state of affairs emerged more clearly after I left Telstra's employment. And it does not matter that I was not continuously absent from active Work for six months before I left Telstra's employment, so long as I was absent for 9 Telstra Super Pty Ltd v Finch [2009] VSCA 318 at [60]. Crennan Bell that period at some time before the Trustee was called on to arrive at its opinion." The construction advocated by the applicant is sound, and the Trustee's opposing arguments did not demonstrate the contrary. The arguments put by the Trustee. What were the Trustee's arguments? Leaving aside various contextual aspects of the Deed on which the Trustee relied which were not decisive pointers for or against either side's position, the Trustee's arguments may be grouped as follows. The Trustee submitted that because the five types of benefit provided pursuant to Pt 2.3 of the Deed are mutually exclusive, it is important to know at the time when employment ceases what particular benefit is obtainable. The difficulty in the submission is that the definition of "Total and Permanent Invalidity" does not permit a conclusion to be reached at the time when employment ceases. That is so for two reasons. One reason is that, as the applicant submitted, Total and Permanent Invalidity benefits are not payable as at the date of the cessation of employment. As discussed above10, they are only payable after the Trustee has received the claim, considered it, formed the relevant opinion and calculated the payment. The other reason is that one matter about which the Trustee must form an opinion is whether "the Member has ceased to be an Employee" – an opinion which cannot always be formed eo instanti with cessation of the employment. The Trustee further submitted that on the applicant's construction, it would be possible for a Member to cease to be an Employee because of a broken leg, for example, to recover from that condition quickly, to work for another employer, and then, 10 years later, to become totally and permanently incapacitated. The Trustee submitted that this led to an absurd result: the sum payable under cl 2.3.3 would run from the date when employment with Telstra ceased, not the date of total and permanent incapacity, with the result that the Member would obtain not only his salary for the 10 year period but also Total and Permanent Invalidity benefits for the 10 years in which he had earned that salary. The flaw in this argument, as the applicant submitted, is its far-fetched nature. To be disabled within the definition of "Total and Permanent Invalidity" it is necessary to cease work because of a disablement that causes the Member to have to stay away from work for six months continuously, that involves the Crennan Bell requirement to participate in a Rehabilitation Programme, and that leads to the opinion that the Member is unlikely ever to work again. A broken leg is very unlikely to have these consequences, and it is difficult to imagine a condition with these consequences which would allow a Member to work for 10 years in the interim. The Trustee also relied on the decision of McLelland J in Rapa v Patience. The trust deed under consideration there defined "Total and Permanent Disablement" to mean, inter alia, "absence from the service of the Employer through illness or injury for six consecutive months". Very briefly but correctly, McLelland J said that that expression "suggests a continuation of the relationship of employer and employee for the period of such absence."11 The Trustee submitted that that clause "is not dissimilar to the present one". But in truth, as the applicant submitted, that decision was distinguishable. As discussed above12, limb (a) did not explicitly provide that the absence had to be "from the service of the Employer". An argument of the Trustee which was much stressed was as follows. "It is impossible to cease to be an Employee because of Total and Permanent Invalidity, if one of the ingredients of Total and Permanent Invalidity is that there has been six months absence from work, but there has not been that six months absence at the time of the cessation" (emphasis by the Trustee). The fallacy in the submission is that it pays no attention to the fact that, as discussed above13, a judgment by the Trustee about whether to form the opinion referred to in limb (b) of the definition need not and often cannot be made at the time when the Member ceases to be an Employee. It can be said that a Member has ceased to be an Employee "because of Total and Permanent Invalidity" if, looking back, one can see that at the date when the Member ceased to be an Employee, the reason was a condition of disablement defined in terms of the definition of "Total and Permanent Invalidity", even though at that date it could not be perceived that every element of that condition had been satisfied. The fallacy in the Trustee's submission is observable from another passage in which it was advanced: "use of the expression 'as a result of' in the definition of 'Total and Permanent Invalidity' evinces the intention of the settlor that 'disablement' does not reach the 11 Unreported, Supreme Court of New South Wales, 4 April 1985 at 10-11. 12 See at [12]. Crennan Bell level of total and permanent invalidity unless and until the requirements of (inter alia) [limb] (a) are satisfied". What are the other things referred to by the words "inter alia" which are to be satisfied? Only the things mentioned in limb (b). Yet the first part of limb (b) – the Trustee's formation of an opinion that the Member had ceased to be an Employee – will often not be satisfied until that time has passed. On the Trustee's submission, a Member would not be able to cease work because of Total and Permanent Invalidity unless, in the opinion of the Trustee, the Member had already ceased to be an Employee. Acceptance of the Trustee's submission would mean that there could never be a valid claim under cl 2.3.3, which is absurd. For those reasons, limb (a) of the definition of "Total and Permanent Invalidity" did not require the applicant to be continuously absent from "all active Work" for six months before leaving Telstra's employment. The applicant's absences from work after he left Telstra's employment enabled him to satisfy that part of limb (a). Conclusion. The applicant did cease to be an Employee during a period of Division 2 Membership. He did so because of what can now be seen to be disablement which caused him to be continuously absent from "active Work". To require that the absence from "active Work" for six months take place before the Member ceased to be an Employee is to read words into the clause unnecessarily. It may be true that the causal relationship between the disablement and the absence cannot be established until after the Member ceases to be an Employee, but it does not follow that it did not exist before that time. A period of absence from work after ceasing to be an Employee simply assists in demonstrating that the connection between the disablement and the cessation of work actually existed. Special rules of construction. The applicant advanced arguments to the effect that the approach to the construction of the Deed should be "practical and purposive, rather than detached and literal", so as to give it a "reasonable and practical effect"14. Even on the questionable assumption that in this context there 14 Citing In re Courage Group's Pension Schemes [1987] 1 WLR 495 at 505; [1987] 1 All ER 528 at 537, followed in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587 at 1610; [1991] 2 All ER 513 at 537; Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 602; Collins v AMP Superannuation Ltd (1997) 75 FCR 565 at 580; Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd (2002) 174 FLR 1 at 54-57 [215]-[216]. Crennan Bell can be different approaches, it is not necessary to resort to this aid to the construction of the Deed. The applicant also submitted that the Trustee's construction was "arguably ambiguous" and that the Deed should be construed contra proferentem. There is no need to invoke that aid to construction either. Controlling the Trustee Karger v Paul principles. The Court of Appeal treated the decision of the Trustee to form or not form an opinion under limb (b) of the definition of "Total and Permanent Invalidity" as a "discretionary decision". The Court of Appeal said15: "The Court has power to set aside the discretionary decision of a trustee if the relevant discretion was not exercised by the trustee in good faith, upon real and genuine consideration, and in accordance with the purposes for which the discretion was conferred. However, the mere fact that a trustee makes an error as to a fact or some other matter or does not make all inquiries that may have been open to be made is not sufficient reason for the Court to set aside a determination that was made in good faith, upon real and genuine consideration, and for a proper purpose." The Court of Appeal cited the decision of McGarvie J in Karger v Paul16. In that case a testatrix left all her property to her husband for life and conferred a power on the trustees "in their absolute and unfettered discretion and upon the request of my said husband to pay or transfer the whole or part of the capital of my said estate to" the husband. The will then created a remainder after the husband's death in favour of the testatrix's cousin. The cousin challenged a decision by the trustees to transfer all the capital to the husband. McGarvie J held that the case concerned a "discretionary decision", and so did most of the well-known cases A discretionary decision? In Dwyer v Calco Timbers Pty Ltd17 the Court emphasised that while the term "discretion" is used in the description or characterisation of varied acts or omissions in the law, the term may be an inadequate description of an inquiry which requires the identification and 15 Telstra Super Pty Ltd v Finch [2009] VSCA 318 at [65] (reference omitted). 17 (2008) 234 CLR 124 at 138-139 [37]-[40]; [2008] HCA 13. Crennan Bell evaluation of factual matters. The present is not a case involving a "discretion". The Trustee had to consider whether to reach two opinions. One was whether a Member had ceased to be an Employee. That is scarcely a discretionary decision. It is no more discretionary than the decision of a judge in conventional litigation about whether a contract of employment has come to an end. The second opinion was whether the Member was unlikely ever to engage in "gainful Work". In the forming of an opinion on that subject there are no doubt factors to be examined which are difficult to weigh, impressions to be formed, and judgments to be made, but the field is quite different from fields in which the competing claims of potential candidates for bounty are compared. The Trustee was trustee of a trust. It had a duty to distribute to those who fell within the definition of "Total and Permanent Invalidity" and a duty not to distribute to those who did not. That affected its role in relation to the forming of its opinion under limb (b). Forming that opinion was not a matter of discretionary power to think one thing or the other; it was an ingredient in the performance of a trust duty. That duty was owed to the Members, including the applicant. The applicant was not the object of a discretionary power of appointment. He was the beneficiary of a trust, and although the precise form and quantum of his beneficial interest was contingent on particular events, he did have a beneficial interest. That conclusion is supported by various aspects of the context. First, there is the factual context. The history of Telstra – by which the telephone services provided by colonial governments were taken over by the Commonwealth, and run first by a Commonwealth government department, then by a quasi-autonomous body corporate subject to Ministerial direction, then by a company limited by shares wholly owned by the Commonwealth, and thereafter by that company but with the shares owned by the public and the Future Fund – is discussed elsewhere18. The applicant began employment with Telstra while it was wholly owned by the Commonwealth. By the time he left it was partly owned by the public. The Scheme was instituted in 1990, before Telstra was incorporated and before Telstra succeeded the then Principal Employer, the Australian Telecommunications Corporation. Amendments to the Deed since that time have reflected the advent of Telstra in 1991. At all stages Telstra and its predecessors have been very large employers of labour. 18 Telstra Corporation Ltd v The Commonwealth (2008) 234 CLR 210 at 220-223 [9]-[20]; [2008] HCA 7. Crennan Bell Another aspect of the factual context is that the Deed is dealing with the superannuation of employees. For some people, superannuation is their greatest asset apart from their houses; for others it is even more valuable. Different criteria might be thought to apply to the operation of a superannuation fund from those which apply to discretionary decisions made by a trustee holding a power of appointment under a non-superannuation trust19. Employer superannuation is part of the remuneration of employees. Membership of the employee superannuation fund may be compulsory. Superannuation, unsurprisingly, is a matter of trade union interest. The question of superannuation entitlements may form the subject of an industrial dispute within the meaning of s 51(xxxv) of the Constitution20. Superannuation is not a matter of mere bounty, or potential enjoyment of another's benefaction. It is something for which, in large measure, employees have exchanged value – their work and their contributions. It is "deferred pay"21. These are propositions which are not falsified by arguments advanced by the Trustee to the effect that the Death and Total and Permanent Invalidity benefits under the Deed involve in part an element of bounty. Superannuation is a method of attracting labour22. The legitimate expectations which beneficiaries of superannuation funds have that decisions about benefit will be soundly taken are thus high. So is the general public importance of them being sound. A further factor is the public significance of superannuation. The federal government has attempted to reduce outflows by reducing the dependence of retired persons on the old-age pension funded out of general revenue. The taxation concessions now provided pursuant to Pt 3-30 of the Income Tax Assessment Act 1997 (Cth) are designed to encourage citizens to make provision for their retirement by investing in superannuation and to encourage their 19 See Walker, "Some Trust Principles in the Pensions Context", in Oakley (ed), Trends in Contemporary Trust Law, (1996) 123; Hayton, "Pension Trusts and Traditional Trusts: Drastically Different Species of Trusts", (2005) 69 Conveyancer 229. 20 Re Amalgamated Metal Workers Union; Ex parte Shell Co of Australia Ltd (1992) 174 CLR 345 at 356; [1992] HCA 38. 21 Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at 1407. 22 Re Manufacturing Grocers' Employees Federation of Australia; Ex parte Australian Chamber of Manufactures (1986) 160 CLR 341 at 355; [1986] HCA 23. Crennan Bell employers to create superannuation funds in their favour. The Parliament also has required employers to contribute a certain percentage of the employee's salary for these purposes23. Partly as a result, large amounts of assets are administered by the trustees of superannuation funds. lengthy Because of the potentially time periods over which superannuation savings are accumulated, it was natural, and it is now in many instances mandatory, for a trust mechanism to be employed. These funds have increasingly come under detailed statutory regulation. The government considers that the taxation advantages of superannuation should not be enjoyed unless superannuation funds are operating efficiently and lawfully. For that reason it has, by procuring the enactment of the Superannuation Industry (Supervision) Act 1993 (Cth) ("the Supervision Act") and regulations made under it, imposed quite rigorous regulatory standards. The Deed reflects the enactment of that legislation. Section 3(1) of that Act provides: "The object of this Act is to make provision for the prudent management of certain superannuation funds, approved deposit funds and pooled superannuation trusts and for their supervision by [the Australian [the Australian Securities and Prudential Regulation Authority], Investments Commission] and the Commissioner of Taxation." And s 3(2) provides: "The basis for supervision is that those funds and trusts are subject to regulation under the Commonwealth's powers with respect to corporations or pensions (for example, because the trustee is a corporation). In return, the supervised funds and trusts may become eligible for concessional taxation treatment." Thus the public significance of superannuation and the close attention paid to it through statutory regulation support the conclusion that the decisions of superannuation trustees are not likely to be largely immunised from judicial control without clear contrary language in the relevant trust document24. 23 Superannuation Guarantee (Administration) Act 1992 (Cth), Pt 3 (ss 16-32). The terms "employer" and "employee" are defined in s 12. 24 The Trustee submitted, in effect, that the language existed here. It submitted that it had "an absolute and uncontrolled discretion" in relation to its "Powers" (cl 1.4.1) and that its role in considering whether to reach a limb (b) opinion was a "Power". (Footnote continues on next page) Crennan Bell Decisions like those which the Trustee made in this case are not discretionary decisions in the sense used in Karger v Paul. Those reasons also suggest, though the contrary was apparently not put to it, that the Court of Appeal was wrong to approach the present controversy as if the principles stated in Karger v Paul, developed in and appropriate to other fields, were applicable in the present field without any qualification. But the question how far those principles should be qualified may be postponed for a time25. The crucial question. The crucial question is whether the Court of Appeal's reasons for rejecting Byrne J's conclusion that the Trustee had conducted insufficient inquiries, applying the Karger v Paul test, are sound. It is crucial because if the applicant establishes that the answer is that they are not sound in the light of the Karger v Paul test, he will be successful, and he can do no better by urging the development and application of a more generous test26. The role of the reasons. The problems that arise in cases where trustees do not give reasons for a conclusion to which they have come are not present here. The advice given to the relevant committee of the Trustee was given in writing. The deliberations of the committee were recorded in detailed minutes. And the Trustee gave reasons through one of its officers (the Manager Insured Benefits) when that officer informed the applicant's solicitors of the Trustee's first determination, ie its decision not to reach the opinion described in limb (b). He said: "The Trustee noted that at the date he ceased employment with Telstra, [the applicant] had completed a rehabilitation program and was considered capable of performing his normal duties without restriction. The Trustee also noted [the applicant] had been the successful applicant for a position with Telstra Mobilenet based at Collingwood Victoria, however he had "Power" was defined as meaning "a power, right, discretion or authority of any nature". That submission must be rejected. 25 See below at [57]-[66]. 26 The applicant's proposed amended draft notice of appeal contains a number of grounds which are both ambitious and vague, but ground 2.4(c) sufficiently relies on the correctness of Byrne J's approach. Crennan Bell accepted an offer of redundancy instead of taking up that position. It was therefore the opinion of the Trustee that [the applicant] had the capacity for gainful work as at the date he ceased employment with Telstra. The Trustee also noted that [the applicant] had worked since ceasing employment with Telstra. It was the opinion of the Trustee that the work [the applicant] had done was gainful work for which he was qualified and this had demonstrated that [the applicant] had the capacity to engage in gainful work both at the date he ceased employment and thereafter." The second determination did not add to the reasons given in that letter to the applicant's solicitors. Matters troubling Byrne J. Although Byrne J found for the applicant in one respect, he was troubled in other ways. He expressed unease about, but did not decide, whether the Trustee had addressed the correct question in that it had inquired whether the applicant was not "capable" of work or lacked the "capacity" for work; it had not inquired in terms whether he was "unlikely ever to engage" in work27. Byrne J expressed "a feeling of profound discomfort"28 about the fact that the committee, if the minutes of its meeting on 20 March 2003 are fair, do little more than repeat the reasons stated in the minutes of the committee meeting held on 21 March 2002 which led to the first determination. The minutes of the 20 March 2003 meeting did additionally record the following: "The Chief Executive Officer of [the Trustee] informed the Committee that he had a telephone conversation on 27 February 2003 at the instigation of [the applicant]. [The Chief Executive Officer] informed the Committee that, during the conversation, [the applicant] volunteered the statement that his employment with Qantas had been a real job." 27 Finch v Telstra Super Pty Ltd [2008] VSC 481 at [28]. 28 Finch v Telstra Super Pty Ltd [2008] VSC 481 at [41]. Crennan Bell Byrne J explained the source of his discomfort thus29: "There is nothing to suggest that the trustee undertook any consideration of the contention made by [the applicant] that the work at Foxtel and Qantas was a failed rehabilitation effort. There is no reason to reject these uncontradicted assertions made by and on behalf of [the applicant]. Nothing, that is, except the fact of his employment with Foxtel and Qantas and the volunteered statement to [the Chief Executive Officer] that the Qantas employment was a real job." As will be seen, this statement of the Chief Executive Officer was important to the aspect of Byrne J's reasoning on which he found for the applicant30. However, Byrne J, applying a test stated in Telstra Super Pty Ltd v Flegeltaub31 that "a court may infer a breach of duty if the decision is one which no reasonable trustee could make on the material which was before it", which he called a "severe test", found himself "unable to conclude that a reasonable trustee could not have rejected" the applicant's claims32. It is not necessary to examine the applicant's arguments in relation to those matters. It is sufficient to consider the reasoning of Byrne J on the one point on which the applicant succeeded. Byrne J's reasoning in favour of the applicant. Byrne J held that the Trustee failed to decide the question of what opinion it should reach "in good faith and to give genuine consideration to it."33 He said the Trustee34: "viewed the question as, in effect, a contest between the opinions of the doctors and the actual observed experience of [the applicant] in the workplace with Telstra and thereafter. The difficulty which I have with 29 Finch v Telstra Super Pty Ltd [2008] VSC 481 at [41]. 30 See at [48]-[49] below. 31 (2000) 2 VR 276 at 284 [26]. 32 Finch v Telstra Super Pty Ltd [2008] VSC 481 at [44]. 33 Finch v Telstra Super Pty Ltd [2008] VSC 481 at [45]. 34 Finch v Telstra Super Pty Ltd [2008] VSC 481 at [46]. Crennan Bell the determinations is that the [Trustee] appeared to be very ready to accept the evidence as to the claimant's work experience without any or very much inquiry as to its true nature and to reject the very strong evidence of the doctors to the contrary." When Byrne J used the words "good faith", he was not suggesting that the Trustee was acting in bad faith. Indeed he later acquitted it of "mala fides" in terms35. Byrne J meant only that the Trustee had failed to give the matter "genuine" consideration in that it had failed to pursue sufficient inquiries. The Trustee advanced a submission in this Court which contended that Byrne J had misunderstood the Karger v Paul test in relation to "good faith and genuine consideration". Read as a whole, Byrne J's reasoning reveals that criticism to be ill-founded. Byrne J held that the Trustee failed in its duty to make inquiries in three ways. First failure: the last months with Telstra. The first failure was that the Trustee made no inquiry about the last months of the applicant's employment with Telstra. "[The Trustee] did not even have a record of [the applicant's] absences from work or the reasons for them – information which it had sought and obtained from Foxtel and Qantas. Against the bald statements of the managers, the [Trustee] might have weighed the harrowing account of the insecure man in an environment which he may well have seen as hostile, in a work situation where his secure and relatively prestigious job had been downgraded and had become insecure. … [The Trustee] ought … [to] have made some further inquiry of these matters which [the applicant] said led him to decide not to continue working within the Telstra organisation." 35 Finch v Telstra Super Pty Ltd (No 2) [2008] VSC 527 at [9]. 36 Finch v Telstra Super Pty Ltd [2008] VSC 481 at [47]. Crennan Bell Second failure: the employment with Foxtel and Qantas. The second failure was described thus37: "It is true that, on its face, the ability of [the applicant] to hold a job for a month with Foxtel and for five months with Qantas was powerful evidence against his being unlikely ever to engage in gainful work. But in this case, [the applicant] had marshalled a body of material to suggest that his work was merely a rehabilitative effort on his part to return to the workforce. If this was accepted, this requirement of the definition of [Total and Permanent Invalidity] would be satisfied. The evaluation of this material is, of course, for the [Trustee]. But what troubles me, again, is the readiness of the [Trustee] to put it aside and to prefer a conclusion that this employment, which in each case had failed, demonstrated that [the applicant] was not unlikely to engage in employment in the future. The [Trustee] had before it the 'real job' statement volunteered to [the Chief Executive Officer of the Trustee] and the information from Qantas that [the applicant] performed his duties adequately and had a good command of the skills and expertise required. It may be that such information was not inconsistent with the views of the doctors that he did have the ability to perform his work but that his psychological fragility rendered him unable to exercise these abilities in the workplace. It seems to me that a [Trustee], acting in good faith and approaching its task with an open mind so that a genuine consideration should be given to the claim, would have made further inquiry to determine the accuracy of the assessments of this work experience offered on behalf of [the applicant]." Third failure: the "real job" conversation. The third failure arose from the fact that the Trustee placed weight on the statement which its Chief Executive Officer told the committee at its 20 March 2003 meeting had been made to him by the applicant in a telephone call allegedly initiated by the applicant. Byrne J found it a little surprising that the applicant made the call, and more surprising that the Chief Executive Officer would have spoken to him. He continued38: "But it seems he did. In the course of this conversation [the applicant] volunteered that his employment with Qantas was 'a real job'. Why he should have volunteered this is unclear. It was a question which [the 37 Finch v Telstra Super Pty Ltd [2008] VSC 481 at [48]. 38 Finch v Telstra Super Pty Ltd [2008] VSC 481 at [51]. Crennan Bell Chief Executive Officer] would have been very interested in because the principal matter at issue at that time was whether this employment was a rehabilitation attempt or a real job. Nothing is known as to what, if anything, [the Chief Executive Officer] told his co-directors about the circumstances of this conversation, the context of the volunteered statement or his interpretation of it." "The information provided to the board by [the Chief Executive Officer] has … another dimension which causes me further disquiet. As recorded, it seemed to be the only material before the [Trustee] which directly impugns [the applicant's] case that his employment should be seen as rehabilitation. I express no view, of course, as to the accuracy of this remarkable conversation as reported in the minutes. I know nothing of the context in which the information was volunteered. I do not know what is to be understood by the expression 'a real job'. It appears to have been a significant factor in determining whether [the applicant's] work at Qantas should be seen as an indication that he had secured gainful employment in the sense required by the definition of [Total and Permanent Invalidity]. In these circumstances, [the Chief Executive Officer] played the role of witness and that of participant in the evaluation and interpretation of his own evidence. … This important piece of information, however, was not communicated to [the applicant] or his legal [advisers] for their response. If this had been done and he denied making the statement, the position of the directors would have been very delicate indeed. How would [the Chief Executive Officer] be expected the circumstances? Would his co-directors be expected to reject his account of the conversation or his interpretation of it? It is not for me to enter into this arena. It is sufficient that I say, as I do, that a fair-minded trustee seeking to give genuine consideration to a [Total and Permanent Invalidity] benefit claim ought to have investigated this information further, at least by inviting comment from [the applicant]." to cast his vote The Trustee did not mount any direct attack on the reasoning of Byrne J in the above respects. It supported the Court of Appeal's reasoning. 39 Finch v Telstra Super Pty Ltd [2008] VSC 481 at [52]. Crennan Bell The Court of Appeal's reasoning: the "first failure". The Court of Appeal dealt with the trial judge's conclusions about the Trustee's "first failure" by saying that further inquiries as to the circumstances of the applicant's last months of employment at Telstra would have relevance which was only "limited" and "minimal"40. The Court of Appeal appeared to think that the sole question on which Byrne J concentrated was whether the applicant had been "mistreated" at Telstra. That is not so: he was concerned with the applicant's health generally, and his possible reaction to the environment as hostile, whether or not it actually was hostile. The "harrowing account" to which Byrne J referred was contained in the applicant's initial application for a Total and Permanent Invalidity benefit, and constituted an element in the histories which the applicant gave his doctors. The "harrowing account" and the medical opinions based on it appear to have had considerable, not limited or minimal, relevance. The Court of Appeal attributed to Byrne J the proposition that the Trustee merely adopted the "bald assertion" of the Telstra managers that the applicant was not a total and permanent invalid in April 199741. Byrne J did not say that; but in any event the internal Telstra material to which he referred, which came from persons who admitted they were "not medically qualified" and disclaimed knowledge of the applicant's "current medical status", was wanting in detail compared to the information which the applicant supplied. The Court of Appeal did not demonstrate error in Byrne J's conclusion that the Trustee should have pursued further inquiries about the last months of the applicant's employment with Telstra. The Court of Appeal's reasoning: the "second failure". The Court of Appeal did not deal with that part of Byrne J's reasoning which supported his conclusion about the Trustee's "second failure". The Court of Appeal's reasoning: the "third failure". In relation to the "third failure", the Court of Appeal said that the "real job" statement did not detract from the applicant's case, and hence there was no reason why the Trustee should have sought the applicant's comment about it42. To this there are two answers. 40 Telstra Super Pty Ltd v Finch [2009] VSCA 318 at [76]. 41 Telstra Super Pty Ltd v Finch [2009] VSCA 318 at [77]. 42 Telstra Super Pty Ltd v Finch [2009] VSCA 318 at [75]. Crennan Bell First, the "real job" statement was regarded as important. It can only have been regarded as important because it detracted from the applicant's case. The conclusion that it was regarded as important flows from the following circumstances. It was recorded in the minutes of the committee meeting held on 20 March 2003 as additional information that had come to hand since the first determination on 21 March 2002. The letter of 4 April 2003 to the applicant's solicitors stated that the Trustee had had before it, inter alia, information made available since 21 March 2002, and that the Trustee had reached its second determination having "considered all the information". Further, in the recommendation of the Manager Insured Benefits that the applicant's request for reconsideration be rejected, which was before the committee at its meeting on 20 March 2003, there is a passage rejecting the applicant's claim that the Foxtel and Qantas employments were only rehabilitative: it was likely that the "real job" conversation was seen as supportive of that rejection. If the person who drafted the minutes and the Manager Insured Benefits (who made the recommendation and sent the letter) thought it right to express themselves in this way, it is hard to avoid the conclusion that the "real job" statement detracted from the applicant's case in the view of those responsible for the Trustee's decision. Secondly, although the Trustee in this Court relied on the fact that counsel for the applicant below took the position that there was no conflict between the "real job" statement and other material before the Trustee, counsel for the Trustee had submitted the contrary to the trial judge. Prima facie that contrary submission has force. Byrne J's opinion on that subject is therefore soundly based. It must be concluded that the Court of Appeal's attacks on Byrne J's reasoning fail. His opinion that the Trustee did not comply with a duty of inquiry stands. The status of Karger v Paul Earlier the question how far the principles in Karger v Paul should be qualified was postponed43. It was a question of some controversy between the parties. 43 See [37] above. Crennan Bell The applicant argued that the Court should hold that the principles stated in the Karger v Paul line of cases do not apply to superannuation trusts, at least in relation to substantial matters like claims to total and permanent invalidity benefits. Among the reasons which emerged in the course of the argument for this conclusion were the following. First, the context in which Karger v Paul principles grew up is one in which settlors donated assets on trusts and selected trustees to administer those trusts. Usually the beneficiaries were few. Usually the beneficiaries were volunteers. Without the protection given by Karger v Paul principles it might be difficult to attract people to hold the gratuitous office of trustee. In contrast, trustees of superannuation funds are typically corporations holding vast assets which they seek to administer in professional fashion under tight statutory regulation. The members are not volunteers or objects of bounty. Both employers and members contribute to the fund, sometimes pursuant to the contracts of employment, and, now, pursuant to statute law. Significant numbers of judges have therefore questioned the application of the Karger v Paul principles to superannuation funds. The applicant submitted that those judges who had applied Karger v Paul principles in the superannuation trust area had been wrong to do so. Secondly, s 52(1) and s 52(2)(b) of the Supervision Act provide that where the superannuation trust rules do not contain a covenant by the trustee to the following effect, the rules will be taken to contain it: "to exercise, in relation to all matters affecting the entity, the same degree of care, skill and diligence as an ordinary prudent person would exercise in dealing with property of another for whom the person felt morally bound to provide". Thirdly, superannuation funds are not in truth discretionary trusts. Fourthly, s 14(2) of the Superannuation (Resolution of Complaints) Act 1993 (Cth) ("the Complaints Act") gives rights to members to complain to the Superannuation Complaints Tribunal about decisions of superannuation trustees which are unfair or unreasonable. The Tribunal may affirm the decision, may remit or vary it, or may set it aside and substitute a new decision (s 37(3)); there is an "appeal" to the Federal Court of Australia on a question of law (s 46(1)). Here the applicant was out of time in complying with the time limit fixed by s 14 for making a complaint to the Tribunal: in such cases the general law should be modified so as to conform to the statute. The Karger v Paul principles are too narrow and too difficult to satisfy in relation to superannuation trusts, and do not adequately protect the important interests of beneficiaries in having the decisions of trustees properly controlled. The applicant therefore submitted that the Court Crennan Bell should hold that the decision of a superannuation fund trustee should be set aside if it were not "fair and reasonable". The Trustee disputed these submissions. Among other things, it said that not all superannuation funds are matters of bargain, without any element of bounty. It was said that a vast bulk of authority assumed or said that Karger v Paul principles applied to superannuation funds. The Complaints Act was said not to help the applicant, because it changed the existing law, but did not reflect the type of broad legislative change to which the general law should accommodate itself44. It was said to be wrong to change the general law so as to confer the rights given by that Act without the accompanying limitations like time limits. The Trustee said that those who created superannuation trusts had deliberately adopted the trust model, with its accompanying conferral on trustees of a considerable area within which their decisions are unreviewable. Something should be said in passing about the authorities referred to by the Trustee as applying Karger v Paul principles to superannuation funds. Some of the decisions preceded the Supervision Act45. In some no point was taken that Karger v Paul principles did not apply46. In most it would have been difficult for the relevant court to depart from the assumptions of judges in other cases. Others, described by the Trustee as being cases where Karger v Paul principles were applied, not to discretionary decisions, but to decisions turning on matters of fact and judgment, and hence to decisions similar to the limb (b) opinion in this case, were wrongly so described47. However, save in one respect, it is not necessary further to evaluate the merits of the competing contentions about how far Karger v Paul principles were applicable and whether other principles should be adopted. That is because it is sufficient for the resolution of the present case to hold that Byrne J's reasoning in favour of the applicant is sound and the Court of Appeal's criticisms of it are 44 Citing Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 63 [26]-[28]; [1999] HCA 67. 45 For example, Rapa v Patience unreported, Supreme Court of New South Wales, 4 April 1985 at 11-12 per McLelland J. 46 For example, Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 99-100 [7]; [1999] HCA 28; Edge v Pensions Ombudsman [2000] Ch 602. 47 For example, Re Beloved Wilkes's Charity (1851) 3 Mac & G 440 [42 ER 330]. Crennan Bell unsuccessful. To offer answers to wider questions which might arise in disputes different from the present where it is not necessary to do so would have an unsettling effect on the law which may not be beneficial. Byrne J's reasoning is, however, reinforced by one qualification to Karger v Paul principles in the present context. There is no doubt that under Karger v Paul principles, particularly as they have been applied to superannuation funds, the decision of a trustee may be reviewable for want of "properly informed consideration"48. If the consideration is not properly informed, it is not genuine. The duty of trustees properly to inform themselves is more intense in superannuation trusts in the form of the Deed than in trusts of the Karger v Paul type. It is extremely important to the beneficiaries of superannuation trusts that where they are entitled to benefits, those benefits be paid. Here, for example, the applicant was claiming a Total and Permanent Invalidity benefit to support himself for the rest of his life. His claim depended on the formation of an opinion by the Trustee about the likelihood that he would ever engage in "gainful Work": that was not a mere discretionary decision. In the Deed there was a power to take into account "information, evidence and advice the Trustee may consider relevant", and that power was coupled with a duty to do so. It would be bizarre if knowingly to exclude relevant information from consideration were not a breach of duty. And failure to seek relevant information in order to resolve conflicting bodies of material, as here, is also a breach of duty. The Scheme is a strict trust. A beneficiary is entitled as of right to a benefit provided the beneficiary satisfies any necessary condition of the benefit. Whether or not it will be decided hereafter that, consistently with s 14 of the Complaints Act, the duty of a trustee in forming an opinion of the present type is a duty to form a fair and reasonable opinion, or even a duty to form a correct opinion, there is because of the importance of the opinion and its place in the Scheme a high duty on the Trustee to make inquiries for "information, evidence and advice" which the Trustee may consider relevant. The existence of that duty in a more intense form than exists under Karger v Paul principles in their standard application is further support for the correctness of Byrne J's decision. Relief The only controversial aspect of the relief concerns a submission of the applicant to Byrne J, repeated in this Court, that if his other arguments 48 Kerr v British Leyland (Staff) Trustees Ltd [2001] WTLR 1071 at 1079; Stannard v Fisons Pension Trust Ltd [1992] IRLR 27 at 31. Crennan Bell succeeded, the matter should not be remitted to the Trustee for determination, but that the Court should make its own determination standing in the shoes of the Trustee in the light of the material before the Trustee at the time of the second determination. In particular, the Court should do this if it thought that on the present materials there was only one decision open. The applicant argued that the Court could not be confident that the Trustee could fairly and objectively assess the applicant's claim on its merits, given the history of events, the fact that the Trustee had argued "vehemently" against the applicant's case in the courts and the failure of the Trustee to comply with its obligations of genuine consideration. On the other hand, the Trustee submitted that the Deed committed the questions arising in limb (b) of the definition of "Total and Permanent Invalidity" to the opinion of the Trustee, not the Court. It would only be appropriate not to remit the matter to the Trustee if it were to be concluded that the Trustee was incapable of approaching the task of forming its opinion satisfactorily. The Trustee was correct in submitting that that conclusion should not be drawn. As Byrne J said, the Trustee had done no more than fail to observe due process by giving genuine consideration: there was no mala fides. Further, it cannot be said that a conclusion in the applicant's favour on limb (b) is the only possible conclusion. In those circumstances, regrettable though the further delays are, the matter must be remitted to the Trustee. Orders The orders are: Special leave to appeal granted. Leave to file proposed amended draft notice of appeal granted. Proposed amended draft notice of appeal treated as filed in the appeal and appeal treated as instituted and heard instanter and allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of Victoria made on 23 December 2009 and 23 February 2010, and in their place order that the appeal to that Court from the order of Byrne J made on 28 November 2008 be dismissed with costs. |
HIGH COURT OF AUSTRALIA ASCIANO SERVICES PTY LTD APPELLANT AND CHIEF COMMISSIONER OF STATE REVENUE RESPONDENT Asciano Services Pty Ltd v Chief Commissioner of State Revenue [2008] HCA 46 25 September 2008 Appeal dismissed with costs. ORDER On appeal from the Supreme Court of New South Wales Representation S J Gageler SC with J O Hmelnitsky for the appellant (instructed by Clayton Utz Lawyers) A H Slater QC with R L Seiden for the respondent (instructed by Crown Solicitor for New South Wales) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Asciano Services Pty Ltd v Chief Commissioner of State Revenue Taxes and duties – Duty payable on lease instrument – Lease defined as agreement "by which" a right to use land is conferred on or acquired by a person – Appellant entered into rail access agreement with Rail Access Corporation giving appellant access rights to rail lines and rail infrastructure facilities – Statute provided party to access agreement with right to access land in or on which rail infrastructure facilities situated – Whether access agreement dutiable as agreement "by which" a right to use land is conferred on or acquired by a person – Whether statute imposing duty refers to source of rights to use land or directs attention to what is received by grantee – Interrelationship between statute conferring right to access land and access agreement. Taxes and duties – Duty payable on lease instrument – Whether rail lines and rail infrastructure facilities themselves land in which grantee under access agreement acquired rights. Statutes – Construction – Statute vests rail lines and rail infrastructure facilities in grantor and land in or on which rail lines and rail infrastructure facilities lie in another statutory body – Whether grantor under access agreement able to grant rights to access land owned by other body. Statutes – Construction – Relevance of general law principles of property to rights with respect to land created by statute for statutory purposes. Words and phrases – "by which", "conferred on or acquired by", "right to use land". Duties Act 1997 (NSW), ss 164, 164A(b), 166(1)(a). Transport Administration Act 1988 (NSW), Sched 6A, cl 5(1). GUMMOW, KIRBY, HAYNE, CRENNAN AND KIEFEL JJ. Chapter 5 of the Duties Act 1997 (NSW) ("the Duties Act") in force at the relevant time charged duty on a "lease instrument"1. A lease was defined in s 164A(a)2 of the Act to mean a lease or an agreement for a lease of land in New South Wales. Paragraph (b) of the section extended the notion of a lease, for the purposes of the imposition of duty, to: "an agreement (such as a licence) by which a right to use land in New South Wales at any time and for any purpose is conferred on or acquired by a person (who is taken, for the purposes of this Chapter, to be a lessee of the land)" (emphasis added)3. On 1 July 1996 a Rail Access Agreement ("the Agreement") was entered into between National Rail Corporation Limited and Rail Access Corporation ("RAC"). National Rail was subsequently called Pacific National (ACT) Limited and was referred to by this name in the proceedings below. In these reasons it will continue to be so referred to, as a party to the Agreement, although it is now called Asciano Services Pty Ltd, the appellant in these proceedings. Subsequent to the Agreement the Rail Infrastructure Corporation was constituted as the amalgamation of RAC and Rail Services Australia4. The Agreement was expressed to grant to Pacific National "Access Rights" to railway lines and associated rail infrastructure facilities which formed part of the New South Wales rail network and were owned by RAC. The 1 Duties Act, s 164. The duty charged by the Chapter has been abolished, on and from 1 January 2008: Duties Amendment (Abolition of State Taxes) Act 2006 (NSW), s 3, Sched 1, item 17. 2 Sections 163 and 164 were renumbered as ss 164 and 164A on 10 November 2004 by the Duties Amendment (Land Rich) Act 2004 (NSW), s 3, Sched 1, item 5. 3 Paragraph (c) deals with a franchise arrangement, which is not relevant to this matter. 4 Transport Administration Act 1988 (NSW), s 19C, Sched 7, cl 89, inserted by Transport Administration Amendment (Rail Management) Act 2000 (NSW), s 3, Sched 2.1, items 10 and 42. Kirby Hayne Crennan Transport Administration Act 1988 (NSW) ("the TA Act")5 provided for access to rail infrastructure facilities, by a person who was a party to an access agreement, even if such facilities were situated in or on land which was owned by the State Rail Authority ("SRA")6. The Chief Commissioner of State Revenue for New South Wales assessed Pacific National as liable to duty on the Agreement7 in the sum of $567,283.85 plus interest thereon, that sum having been assessed on payments made by Pacific National, totalling $162,080,764.20, between 1 July 2000 and 31 December 2003 by way of access charges under the Agreement. An objection to that assessment was disallowed and Pacific National sought a review of that decision in the Supreme Court of New South Wales8. Gzell J ordered that the assessment be revoked9. The Court of Appeal of that Court (Hodgson, Ipp and Basten JJA) allowed an appeal from his Honour's orders and ordered that the summons be dismissed with costs10. The question arising in the appeal to this Court is whether the Agreement is an agreement by which a right to use land is conferred on or acquired by Pacific National. Determination of that question requires the identification of how, and by what means, such a right arises, there being no dispute that the use of land is involved in Pacific National's use of the rail infrastructure facilities for the purpose of its freight operations. The appellant contends that no such right was granted by RAC pursuant to the Agreement; that the nature of the right is statutory; and that its sole source is the TA Act. 5 Unless otherwise noted, references to the TA Act are to the Act as it stood at 1 July 1996. Subsequent amendments to the provisions referred to do not bear upon the question on the appeal. 6 TA Act, Sched 6A, cl 5(1). 7 Under s 8(1) of the Taxation Administration Act 1996 (NSW). 8 Taxation Administration Act, s 97. 9 Pacific National v Chief Commissioner of State Revenue [2007] NSWSC 332. 10 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325. Kirby Hayne Crennan The rail legislation, access regime and the Agreement The Agreement is to be understood in the setting of the legislation in New South Wales concerned with the commercial use of railway infrastructure. The TA Act constituted SRA11. In addition to its operation of railway passenger services12, its functions included the construction of stations, passenger service facilities and rolling stock maintenance facilities and the acquisition and development of land13. The Transport Administration Amendment (Rail Corporatisation and Restructuring) Act 1996 (NSW) amended the TA Act, in implementing the Competition Principles Agreement reached between the Commonwealth, the States and the Territories concerning the structural reform of public monopolies and the introduction of competition into the market. RAC was established14 and the NSW Rail Access Regime created15. The principal functions of RAC were stated, in s 19E(2) of the TA Act, to be: to hold, manage and establish rail infrastructure facilities on behalf of the State; and to provide persons with access as rail operators to the NSW rail network". In carrying out its functions and in providing that access, RAC was required to act in a manner consistent with the NSW Rail Access Regime16 in its pricing policies, timetabling and other systems. The "NSW rail network" was defined to mean "the railway lines vested in or owned by [RAC] (including passing loops and turnouts from those lines and 12 s 5(1) and (2) and s 4A(1). 13 s 8(1)(a) and (c), s 90(1). 14 TA Act, s 19C. 15 s 19B. 16 s 19E(3), (5). Kirby Hayne Crennan loops and associated rail infrastructure facilities that are so vested or owned)"17. "Rail infrastructure facilities"18 were defined as a term which: includes railway track, associated track structures, over track structures, cuttings, drainage works, track support earthworks and fences, tunnels, bridges, level crossings, service roads, signalling systems, train control systems, communication systems, overhead power supply systems, power and communication cables, and associated works, buildings, plant, machinery and equipment, and does not include any stations, platforms, rolling stock maintenance facilities, office buildings or housing, freight centres or depots, private sidings and spur lines connected to premises not vested in or owned by [RAC]". The powers of RAC relating to rail infrastructure facilities and land were contained in Sched 6A to the TA Act19. The provisions of that Schedule, which assume importance on the appeal, recognised that SRA owned land and buildings but that the rail infrastructure facilities were owned by RAC. Clause 2(1) of Sched 6A provided that: "RAC is the owner of all rail infrastructure facilities installed in or on land, in or on rivers and other waterways and in or on the beds of rivers and waterways by RAC and of all rail infrastructure facilities vested in or transferred to RAC (whether or not the place on which the facilities are situated is owned by RAC)". 17 s 19A(1). 18 s 19A(1). 19 s 19F. Kirby Hayne Crennan RAC had the power to acquire land20 and the Minister could direct that SRA's assets be transferred to a Rail Corporation21, but there is no evidence of such actions. The parties agreed the following facts before the primary judge22: "The parties agreed that at all relevant times the NSW rail network was owned by or vested in [RAC], that the NSW rail network was attached to, rested upon or was supported by the surface of the land and at all material times the owner of the fee simple in that supporting land was not [RAC]. With respect to this last concession, the Chief Commissioner reserved the right to argue that the effect of the Transport Administration Act 1988, Sch 6A, cl 2 was to vest an interest in a stratum of the supporting land in [RAC]." Further, argument has proceeded upon the basis that RAC's rail infrastructure facilities, in the main, rested upon or were embedded in SRA's land23. Schedule 6A, cl 2(2) provided that RAC could, subject to the Act, carry out inspections and works such as the replacement, repair, maintenance, alteration, improvement or extension of any of its rail infrastructure facilities that were situated on SRA land or on or in an SRA building. By cl 3(1) RAC could enter upon and occupy SRA land or buildings for the purpose of its functions. To this end RAC could authorise its officers or employees to issue certificates of authority for the purposes of entry24. Provision was made, in Sched 6A, for RAC to compensate SRA in the event of SRA suffering any damage to its buildings or structures on the land, caused by the exercise of RAC's functions25. In turn, cl 8 provided that SRA's 20 Sched 6A, cl 13(1). 21 Section 19J; "Rail Corporation" was defined to mean RAC or Freight Rail Corporation: s 3(1). 22 Pacific National v Chief Commissioner of State Revenue [2007] NSWSC 332 at 23 And see Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [7] per Hodgson JA. 24 Sched 6A, cl 4. Kirby Hayne Crennan land and buildings, in or upon which rail infrastructure facilities were installed, were taken to be subject to a covenant in favour of RAC, pursuant to which SRA was required to ensure that the facilities were not destroyed or damaged or their operation affected. Any person who destroyed, damaged or interfered with RAC's rail infrastructure facilities was liable to compensate RAC26. "NSW Rail Access Regime" was defined in s 19B of the TA Act as an access regime established by the Minister and approved by the Premier for the purpose of implementing the Competition Principles Agreement in respect of third party access to the NSW rail network by persons as rail operators, including the use of facilities that were vested in or owned by RAC. The NSW Rail Access Regime27 repeated the statutory definitions of "NSW rail network" and "rail infrastructure facilities". "Access" was defined to mean access to the NSW rail network by rail operators, including the use of the rail infrastructure facilities listed in Sched 1, Table 1 (the railway track owned by RAC) together with the benefit of signalling, communications and other ancillary services provided by RAC by means of the rail infrastructure facilities listed in Sched 1, Table 2 (those facilities (excluding railway track) owned, controlled or operated by RAC). The reference to "rail operations" included the movement of rolling stock on the NSW rail network. The recitals to the Agreement stated that RAC is the owner of, or has vested in it, the NSW rail network; and that it agreed to grant access to Pacific National, which agreed to accept those access rights subject to the terms of the Agreement. Clause 2.4(a) provided that "[RAC] grants to [Pacific National] the Access Rights on the terms of this Agreement". Clause 2.4(b) stated that the rights so granted were non-exclusive contractual rights and further described the rights by reference to a Train Specification scheduled to the Agreement. The Dictionary to the Agreement defined "Access Rights" as rights of access to or usage of the "NSW Rail Network". That network and the rail infrastructure facilities were defined in the same way as in the TA Act. Access charges payable by Pacific National were provided for in cl 2.6 and Sched C. At this point it is necessary to return to Sched 6A of the TA Act, in which cl 5 provided: 27 Dated 21 August 1996: New South Wales Government Gazette, No 97, 23 August Kirby Hayne Crennan "(1) A person who is a party to an access agreement is authorised to have access to the rail infrastructure facilities to which the access agreement relates, even if the facilities are situated in or on SRA land, if access is exercised in accordance with and as permitted by the access agreement. (2) A person to whom this clause applies does not require a certificate of authority under this Schedule to enter the SRA land concerned. In this clause, access agreement means an agreement, entered into by RAC pursuant to the NSW Rail Access Regime, that permits a person to operate rolling stock on the NSW rail network." The decision of the primary judge and of the Court of Appeal Before Gzell J, Pacific National submitted that all RAC had power to do, and all it did under the Agreement, was to confer on a party to an access agreement the right to use the physical items that comprise the NSW rail network. Insofar as that use involved the use of the space occupied by those items, the right of use was not conferred or acquired under the Agreement, but by or under the TA Act, Sched 6A, cl 5(1). The Duties Act defined "land" to include a stratum. The Chief Commissioner argued that the railway track comprised the surface of the land on which the ballast, sleepers and rails were laid; and the cuttings, drainage works, track support earthworks, tunnels, bridges, track crossings, service roads and buildings, referred to in the definition of "rail infrastructure facilities", were land. Pacific National was entitled to use tracks over the surface of the land on which the infrastructure facilities were constructed and to use the facilities embedded in the stratum, which were vested in RAC, by reason of the Agreement. Section 164A(b) did not require the right of a user to arise solely from the Agreement. The word "by" invoked some causal connection. Without the Agreement Pacific National would have no right of access to the ambient land under the TA Act, Sched 6A, cl 5(1). Kirby Hayne Crennan Gzell J rejected the Chief Commissioner's argument28. His Honour referred to Commissioner of Main Roads v North Shore Gas Co Ltd29 and Newcastle-under-Lyme Corporation v Wolstanton Ltd30 which, he said, did not recognise the rights in utilities affixed to or embedded in soil as comprising land or amounting to an interest in land. The right was a special one, to occupy some part of the land in a limited way31. In his Honour's view, the purpose and effect of the TA Act was to vest ownership of all rail infrastructure facilities in RAC, regardless of whether it owned the land to which they were affixed or in which they were embedded32. The vesting of the facilities in RAC carried with it no interest in land and it had no legal right to grant a right to use land for the purposes of the definition of the term "lease" in s 164A(b) of the Duties Act33. If RAC had an interest in that land it would have the power to grant access to it and Sched 6A, cl 5(1) would be superfluous34. The Chief Commissioner argued before his Honour that a right to use land arose, for the purposes of the Duties Act, from the Agreement in conjunction with Sched 6A, cl 5(1) of the TA Act. However, in Gzell J's view, s 164A(b) of the Duties Act was directed to the legal source of the right to use the land and Sched 6A, cl 5(1) was that legal source35, not the Agreement. This is the principal focus of the arguments on the appeal. 28 Pacific National v Chief Commissioner of State Revenue [2007] NSWSC 332 at 29 (1967) 120 CLR 118; [1967] HCA 41. 31 Pacific National v Chief Commissioner of State Revenue [2007] NSWSC 332 at 32 Pacific National v Chief Commissioner of State Revenue [2007] NSWSC 332 at 33 Pacific National v Chief Commissioner of State Revenue [2007] NSWSC 332 at 34 Pacific National v Chief Commissioner of State Revenue [2007] NSWSC 332 at 35 Pacific National v Chief Commissioner of State Revenue [2007] NSWSC 332 at Kirby Hayne Crennan In the Court of Appeal, Hodgson JA considered that some of the rail infrastructure facilities could be regarded as having the character of land and others could not36. More important to his Honour's reasons was what might be drawn from North Shore Gas Co. It did not establish that the space occupied by the pipes was not land, in his Honour's view, and the reasons of Windeyer J in that case37 made plain that it was38. The right to use the rail infrastructure facilities in situ carried with it a right to use the space they occupy, the land39. RAC was given the power by the TA Act to deal with that land by granting such rights. The fact that that power arose by statute did not mean that the rights were not conferred on or acquired by Pacific National "by" the Agreement, within the meaning of s 164A(b) of the Duties Act40. Ipp JA agreed41 and added that, by reason of Sched 6A, cl 5(1) of the TA Act, the legal effect of the Agreement was to authorise Pacific National to have access to, and thereby use, the SRA land42. The Agreement may not confer such a right but its legal effect was such that Pacific National acquired it43. 36 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [26]-[29]. 37 (1967) 120 CLR 118 at 131-134. 38 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [24]. 39 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [30]. 40 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [32]-[33]. 41 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [49]. 42 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [43]. 43 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [45]-[48]. Kirby Hayne Crennan Basten JA did not consider that North Shore Gas Co, and its predecessor44, provided an answer to the question on the appeal. Rather, his Honour considered that the better approach was to identify the nature of the power or interest conferred by the statute on RAC as a statutory authority. It should not be assumed that the legal consequences of the statutory scheme were analogous to those flowing from interests recognised by the general law, his Honour said45. There could be no doubt, in his Honour's view, that RAC, having ownership of all rail infrastructure facilities, had a right of occupation of land, not only for the purpose of holding and maintaining the facilities but also to allow for their use by rolling stock46. It was not necessary to determine the extent of RAC's interest and whether it amounted to an interest in land47. It followed from the contractual licence provided by the Agreement that Pacific National had a right to use land for the purposes of s 164A(b) of the Duties Act48. Basten JA did not accept that the TA Act was the source of Pacific National's right to use land. Schedule 6A, cl 5(1) did not confer such a right, in his Honour's opinion. Whilst the rights acquired by Pacific National were defined and limited both by principles of the general law and by statute, it was the Agreement which provided the power to exercise the right, the scope of which was defined, in part, by statute49. 44 North Shore Gas Co Ltd v Commissioner of Stamp Duties (NSW) (1940) 63 CLR 45 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [68]. 46 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [72]. 47 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [78]. 48 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [78]. 49 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [81]-[82]. Kirby Hayne Crennan The Duties Act The references to statutory and contractual provisions for access should not divert attention from the provisions of the Duties Act, which are central to the appeal. The obvious purpose of the Act was to create and charge a number of duties and this is stated in s 3. It did so by identifying transactions – those concerning particular property – as subject to duty50 and nominating the hiring of goods51 and the payment of premiums on insurance policies52 as attracting duty. It charged duty on certain instruments, such as leases53 and mortgages54. Section 164 stated that Ch 5 "charges duty on a lease instrument, being an instrument that evidences or effects a lease (as defined in section 164A)". "Lease" was defined by s 164A(b) in such a way as to include an agreement which confers a right to use land at any time and for any purpose. The right may be non-exclusive. This would not be considered to amount to a lease or an agreement for a lease in the strict sense under the general law55. The definition required that the agreement confer upon a person the right to use land, or that the person acquire the right to use land by the agreement. The connection between the instrument in question and the right is created by the words "by which". They replace the word "whereby" in the previous Act56, but mean the same thing. Duty was said to be chargeable on a lease instrument, as so defined, by s 165. Duty was charged on the cost of the instrument, which s 166(1)(a) explained to be "the rent payable during the term of the lease or in advance of the lease and any amount paid or payable for the right to use land under the lease". 54 Ch 7; see also Ch 10 (miscellaneous duties). 55 Mena House Ltd v Commissioner of Stamp Duties (1964) 64 SR (NSW) 290 at 293 56 Stamp Duties Act 1920 (NSW), s 76. Kirby Hayne Crennan Paragraph (a) of s 166(1) picks up both elements in pars (a) and (b) of the definition of "lease" in s 164A. In particular, the expression "any amount paid or payable for the right to use land" must be taken to apply to the sums paid under an agreement of the kind referred to in s 164A(b). RAC's rail infrastructure facilities and its rights with respect to land On this appeal the Chief Commissioner placed little reliance upon the characterisation of the list of things comprising the rail infrastructure facilities as land, and upon the right of use of those facilities, given by the Agreement, as extending to the land in which they are embedded. The Chief Commissioner said that members of the Court of Appeal had accepted, but did not rest their decision upon, the proposition that some of the rail infrastructure facilities were inherently land. The appellant submitted that, in any event, nothing was to be gained from a consideration of RAC's rights to use land upon or in which the facilities were constructed or embedded, by reference to principles relevant to land under the general law. This point was made by Basten JA, by reference to North Shore Gas Co57. It is clearly correct. North Shore Gas Co concerned the resumption of certain public streets, beneath which gas mains and pipes had been laid by the gas company, exercising statutory powers and functions. The gas company's claim for compensation failed because the pipes were held not to be land and its rights in them not an interest in land within the meaning of the statute authorising resumption and requiring the payment of compensation. It was said that, at its highest, the exercise of the right to lay pipes conferred a right to occupy some part of the land "in a very limited and special way"58. This would appear to be a reference to a right of occupation for statutory purposes. Relevantly, for present purposes, their "[W]hy should it be assumed that the exercise of a specific statutory right to lay and maintain pipes, as in the present case, operates to vest in the donee of the power an interest in the land in which the pipes have been 57 Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325 at [64]. 58 (1967) 120 CLR 118 at 127 per Barwick CJ, McTiernan, Kitto and Taylor JJ. 59 (1967) 120 CLR 118 at 127 per Barwick CJ, McTiernan, Kitto and Taylor JJ. Kirby Hayne Crennan laid? The conclusion that it does seems to us to result from a lawyer's inherent tendency to assimilate such a right to some category known to the common law. It is, of course, a very special right." Their Honours went on to refer to Newcastle-under-Lyme Corporation v Wolstanton Ltd60, where Evershed J said that no greater rights or interests should be taken as conferred upon the undertakers of a statutory right or duty than are necessary for the fulfilment of the object of the statute. Whilst it was competent for Parliament to confer or create interests in land, the absence of a reference in the statute to incidents normally associated with them suggested that the creation of such interests was not intended61. Windeyer J in North Shore Gas Co considered that it was futile to attempt to classify and describe the gas company's rights with respect to the pipes according to the traditional categories and terminology of the law of real property62. Acknowledging that Parliament can confer rights and call them what it pleases63, his Honour said64: "But it need not give them any name. If it does not, there is no need for lawyers to insist on finding an old name for them, when they are in fact (His Honour went on to adopt what Evershed J had said in Newcastle-under- Lyme Corporation.) The property owned and vested in RAC, and the rights it has with respect to land in connection with its functions, were provided by the TA Act. The Act disclosed no intention that the vesting of the rail infrastructure facilities in RAC was to carry with it rights or legal consequences other than those identified in the scheme of the Act. That scheme provided for RAC's ownership of the facilities, 61 [1947] Ch 92 at 103-104. 62 (1967) 120 CLR 118 at 131. 63 Referring to Taff Vale Railway v Cardiff Railway [1917] 1 Ch 299 at 317 per 64 (1967) 120 CLR 118 at 133. Kirby Hayne Crennan some of which, under the general law, might have been classified as fixtures and therefore part of the land to which they were attached or in which they were embedded. It is a distinct and separate feature of the scheme that SRA may, as here, be the owner of the lands on or in which the facilities are constructed or embedded. It was on account of SRA's ownership of that land, that it was necessary that statutory authority be provided, which permitted RAC to use the land in connection with its functions. The listing of the various facilities in the definition of "rail infrastructure facilities" does not indicate that they were to be held by RAC as land, even if some might have the characteristics of land. They merely constituted part of the railway network which vested in it. Their identification was necessary to show the extent of the infrastructure spoken of, to distinguish it from the land ownership of SRA, and to nominate the subjects of the protective provisions of Sched 6A, cl 8. The functions and powers of RAC extended to the provision of access to the rail network to others. They did not extend to the giving of interests in the land of SRA. The TA Act made provision for access to and consequential use of that land by others. RAC's rights to use that land were stated to be for purposes connected with the rail infrastructure facilities referred to in Sched 6A, cl 2. The certificates of authority its authorised officers or employees could give to other persons, to enter and occupy SRA land, were limited to these purposes65. Pacific National's right to access and use land When RAC granted access rights, to the rail network and rail infrastructure facilities, it was not conferring an interest in land. It did not hold such an interest under the provisions of the TA Act by reason of its ownership of the facilities. Pacific National did acquire a right to use SRA's land because it was a party to an access agreement. Schedule 6A, cl 5(1) provided that such a person "is authorised" to have access to the rail infrastructure facilities to which the access agreement relates "even if the facilities are situated in or on SRA land", so long as access is exercised "in accordance with and as permitted by the access agreement". Central to the appellant's argument on the appeal is its contention, following the reasoning of Gzell J, that the legal source of the right to use land, in association with the use of the rail lines and rail infrastructure facilities, was Sched 6A, cl 5(1) of the TA Act. It puts the making of an access agreement as a 65 Sched 6A, cll 3 and 4. Kirby Hayne Crennan pre-condition to the statutory conferral of the right or authority to access and use the land. By this means the appellant sought to distinguish the agreement to which s 164A(b) referred, which was one "by which" the right to use land was conferred or acquired. It follows, from its submissions, that something more than some causal connection was required between the access agreement and the right. The right must be sourced in the access agreement. The appellant's argument places an the access agreement, as the source of the right to use land, which the words of s 164A(b) and Ch 5 of the Duties Act do not bear out. The provision refers to an agreement, which it calls a lease, by which a right to use land is conferred on or acquired by the lessee. Like the definition in Chief Commissioner of Stamp Duties (NSW) v Buckle66, the provision67: importance upon "directs attention not to that which moved from the conveyor but to that which was received or acquired by the conveyee by reason of transfer to, vesting in or accrual to that person". The appellant also submitted that the Chapter can be seen to be concerned with the agreement as the source of the right because s 166(1)(a) provides that the amount paid or payable for the right to use land "under the lease" is to be taken into account in assessing duty. These words again draw attention to the agreement, it was submitted, as did the statutory provision considered in Federal Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd68. There a provision of the Income Tax Assessment Act 1936 (Cth), concerned with capital gains on assets, provided that where an asset was acquired or disposed of under a contract, the asset should be taken to have been acquired or disposed of at the time of the making of the contract69. It was held that the words "under a contract" direct attention to the source of the obligation which was performed by the transfer of assets which constituted the relevant disposal70. 66 (1998) 192 CLR 226; [1998] HCA 4. 67 (1998) 192 CLR 226 at 240 [32] per Brennan CJ, Toohey, Gaudron, McHugh and 68 (2000) 201 CLR 520; [2000] HCA 35. 69 Income Tax Assessment Act, s 160U(3). 70 (2000) 201 CLR 520 at 537 per Gleeson CJ, Gaudron, McHugh and Hayne JJ. Kirby Hayne Crennan And in Chan v Cresdon Pty Ltd71 it was said that the word "under" appearing in a covenant to pay rent "under this lease" referred to an obligation created by, in accordance with, pursuant to or under the authority of the lease72. Section 164A(b) does not refer to rights acquired under a lease; it refers to an agreement having the effect that ("by which") a right to use land is conferred on or acquired by a person. The reference in s 166(1)(a) is to the amount paid or payable, which is for the right and which obligation to pay arises "under the lease". The provision is not concerned with the definition of a lease, but with how duty is to be assessed upon it, by reference to amounts payable under it. It is neither necessary nor appropriate to resort to the language of causation to construe the meaning and effect of the words "by which" appearing in s 164A(b). The provision is best explained by the construction given in Buckle to s 65 of the Stamp Duties Act 1920 (NSW). That section defined a "conveyance" to include a transfer, lease and other instruments and every decree or order of a court "whereby any property in New South Wales is transferred to or vested in or accrues to any person". It was said that, in its ordinary meaning, "whereby" "identifies the means by which or owing to which a certain result or effect is obtained"73. "[B]y which" in s 164A(b) has the same meaning. Neither Sched 6A, cl 5(1) of the TA Act nor cl 2.4(a) of the Agreement was, by itself, effective to create the right in question. Neither had a legal consequence, considered separately. Clause 5(1) recognised that a party to an access agreement had the right ("is authorised") to have access to, and therefore the use of, the facilities and SRA land. It did not itself confer that right, nor did it confer power on RAC to grant such a right by agreement. It provided an authority which could be availed of, if an agreement for access with RAC to the rail infrastructure facilities were made. The phrase "in accordance with and as permitted by the access agreement" in cl 5(1) recognises that the agreement may allow the rail operator to take up the access rights referred to in cl 5 and may 71 (1989) 168 CLR 242; [1989] HCA 63. 72 (1989) 168 CLR 242 at 249 per Mason CJ, Brennan, Deane and McHugh JJ. 73 (1998) 192 CLR 226 at 240 [32] per Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ; see also Commissioner of Stamp Duties v Permanent Trustee Co Ltd (Trustee for Anzareno Dal Bon and Silvanio Dal Bon) (1987) 9 NSWLR 719 at 727 per Kirby P, 729 per Priestley JA. Kirby Hayne Crennan condition or otherwise limit them. The statute provided the authorisation to access and use the infrastructure and SRA land. It intended RAC to determine, by the access agreement, whether, and the extent to which, those rights could be availed of. It is not correct to describe the operation of Sched 6A, cl 5(1) as conferring a power or giving a statutory right. Any right of access, capable of enforcement as such, did not come into existence until there was a rail operator who was a party to an access agreement and that agreement gave permission to use the rail infrastructure facilities. It was at that point, and by means of the Agreement, that the right vested in Pacific National. Conclusion: the Agreement is dutiable It is not correct to describe Sched 6A, cl 5(1) of the TA Act as the "legal source" of the right to use land. A concentration upon the authority there provided diverts attention from the question on the appeal which arises under s 164A(b) of the Duties Act, namely whether the Agreement was an agreement by which the right was acquired. Clearly it was. Pacific National had no such right prior to its entry into the Agreement. It was the making of the Agreement, and the grant of permission under it, "by which" Pacific National acquired the right provided in Sched 6A, cl 5(1). Orders The conclusion reached by the Court of Appeal was correct. The appeal should be dismissed with costs. |
HIGH COURT OF AUSTRALIA APPELLANTS AND QSR LIMITED & ANOR RESPONDENTS Batterham v QSR Limited [2006] HCA 23 18 May 2006 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: R C Kenzie QC with M J Kimber SC for the appellants (instructed by Turner D E Grieve QC with J M Miller for the first respondent (instructed by Pryor Tzannes & Wallis) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Batterham v QSR Limited Industrial law (NSW) – Industrial Relations Commission – Jurisdiction – Power given to the Commission by s 106(1) of the Industrial Relations Act 1996 (NSW) to declare wholly or partly void, or to vary, any contract whereby a person performs work in any industry if the contract is an unfair contract – Option to acquire shares in company pursuant to an option deed – Option deed made as part reward to option holder as promoter of company – Application to the option deed unfair, harsh, and Commission for orders declaring unconscionable and contrary to the public interest, and orders varying the deed – Whether the option deed was a contract or arrangement according to which the first appellant performed work in any industry – Relevance of the fact that the work performed pre-dated the option deed. Industrial law (NSW) – Industrial Relations Commission – Writ of prohibition sought to restrain the Commission from exercising jurisdiction – Entitlement of the Commission to determine its own jurisdiction in first instance. Prerogative writs – Prohibition – Excess of jurisdiction – Industrial Relations Commission (NSW) – Whether writ lies in the circumstances – Commission in Court Session a superior court of record of limited jurisdiction equivalent in status to the Supreme Court – Whether application for prohibition premature – Likelihood or danger of order being made in excess of jurisdiction – Relevance of privative provision purporting to exclude issue of writ – Relevance of specialist subject-matter of disputes before the Commission. Statutes – Privative clause – Industrial Relations Commission (NSW) – Whether privative provision applicable – Relevance of interlocutory decision of the Commission dismissing a motion by the respondent for pre-emptive relief. Statutes – Construction – Interpretation – Remedial statute – Purposive approach to construction – Objects of statute. Statutes – Construction – Interpretation – Composite phrase incorporating technical words – Extrinsic matters – Legislative history – Relevance of Parliament's purpose of successive re-enactment in increasingly ample terms. Words and phrases – "any contract whereby a person performs work in any industry", "any related condition or collateral arrangement", "arrangement", "decision or purported decision", "industry". Industrial Relations Act 1996 (NSW), ss 105-109A, 152, 179. Supreme Court Act 1970 (NSW), s 48. GLEESON CJ, GUMMOW, HAYNE, CALLINAN AND CRENNAN JJ. In November 1999, QSR Ltd ("QSR") sought to raise capital to acquire the business and property interests of 41 KFC, or Kentucky Fried Chicken, stores in New South Wales from Tricon Global Restaurants Inc, the owner of the KFC brand. QSR's directors included the first appellant (Mr Peter James Batterham), Mr Steven Gillard and Mr Anthony Veale. Messrs Batterham, Gillard and Veale were the promoters of QSR. The prospectus issued by QSR for its raising capital, by a public issue of shares, disclosed that the directors of QSR (including the three promoters) had been issued options at $0.01 each, exercisable at $0.50 between 15 February 2003 and 15 March 2003, to acquire shares in the company. The exercise of options was said to be conditional upon QSR meeting predefined performance criteria for the period up to 31 December 2002. In the prospectus those criteria were said to be that the company achieved the earnings per share, and the dividends per share, that had been forecast in the prospectus (forecasts for the financial years ending 30 June 2000 and 30 June 2001) and that the company achieved earnings, before interest, taxation, depreciation and amortisation (EBITDA) of at least 18 per cent of equity subscribed plus debt for the calendar years 2000, 2001 and 2002. In the case of Mr Batterham, the terms on which options were issued were recorded in a deed made between QSR and Woodglint Pty Ltd ("Woodglint") and dated 2 November 1999 (the day before QSR lodged its prospectus). The deed described the second condition for exercise of the options as achieving EBITDA in each of the calendar years 2000, 2001 and 2002 of 18 per cent of Average Funds Invested. The expression "Average Funds Invested" was defined in the deed, in respect of a calendar year, as "the average daily balance of Funds Invested during that calendar year". Woodglint is alleged to have been trustee of a trust called the Batterham Retirement Trust. The second appellant (Maylord Equity Management Pty Ltd – "Maylord") is alleged to have replaced Woodglint as trustee of that trust in about September 2002. As a director of QSR, Mr Batterham undertook various work for the company. He was involved in what was described as "the preparatory work necessary to achieve the public offering of equity" in QSR. He alleges that he established corporate systems for the use of QSR. For seven months between December 1999 and July 2000 Mr Batterham did some work for QSR in relation to its property holdings. In February 2000, he and two other directors who had been appointed after the capital raising (Mr Peter Copulos and Mr Stephen Crennan Copulos) formed a property sub-committee of the board and were each paid for these duties. By January 2000 interests associated with Peter and Stephen Copulos had significant shareholdings in QSR. By late 2001 or early 2002 they controlled the board. In April 2002, Mr Batterham resigned as a director of QSR. He contends that he was forced to resign. QSR achieved EBITDA between 1 January 2000 and 31 December 2002 which, on average, exceeded 18 per cent of Average Funds Invested per annum. Its first two years were very successful; 2002 was less so. In 2002 it achieved EBITDA of 16.2 per cent. Thus, although QSR achieved an average EBITDA of 18 per cent of funds invested over the three year period from 2000 to 2002, it did not achieve EBITDA of 18 per cent in each of those three critical years. Mr Batterham points to what he says is a disconformity between what was said in the prospectus about the option deed and the provision, in the option deed, that the stated level of return be achieved in each of the three nominated years. He has not, however, mounted any case for rectification of the option deed. Instead, he applied to the Industrial Relations Commission of New South Wales ("the Commission") under s 106 of the Industrial Relations Act 1996 (NSW) ("the Act") alleging that the option deed is unfair, harsh or unconscionable, or is contrary to the public interest. Mr Batterham's trust company, Maylord, was named as first applicant. Mr Batterham and Maylord sought orders declaring the option deed to be unfair, harsh, unconscionable and contrary to the public interest and varying the deed. In addition, they sought orders that the contract, arrangement, condition, or collateral arrangement between Mr Batterham and QSR whereby the former performed work for QSR in an industry "including but not limited to the the property provision of management and administrative services sub-committee of the Board" of QSR was unfair, harsh and unconscionable in that it permitted QSR to terminate the arrangement without reasonable notice or payment in lieu of reasonable notice. A further order was sought that the contract, arrangement, condition, or collateral arrangement be varied to include a term requiring 12 months' notice of termination. QSR applied to the Commission for orders dismissing the proceedings for want of jurisdiction. This application was treated, in the Commission, as a "strike-out motion", and the parties argued it on the basis that the principles to be Crennan applied were those stated by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW)1 as applying to the summary determination of proceedings. Peterson J refused to dismiss the proceedings, holding2 that QSR had "not established in the overwhelming way necessary at an interlocutory stage that the summons is beyond the reach of the jurisdiction of the Commission". QSR then applied to the Court of Appeal of New South Wales for prohibition directed to the Commission, and certiorari removing the proceedings pending in the Commission into the Court of Appeal for the purpose of dismissing the proceedings. QSR also sought a declaration that s 179 of the Act (the privative clause) is invalid. By majority, the Court of Appeal (Mason P and Handley JA; Spigelman CJ dissenting) ordered3 that the Commission be prohibited from hearing and determining the proceedings instituted in the Commission in respect of the option deed "except insofar as those proceedings may be based on a contract [or] arrangement whereby the person performed work in an industry which came into existence after the incorporation of [QSR] and before the execution of the Option Deed". Although argument was directed to the question raised about the validity of the privative clause, no order was made about that issue. Mr Batterham and Maylord, by special leave, now appeal to this Court. QSR did not cross-appeal seeking some wider form of order than that made by the Court of Appeal. No question about the validity of the privative provision was argued. The appeal by Mr Batterham and Maylord was heard at the same time as the appeals in Fish v Solution 6 Holdings Ltd4 and Old UGC, Inc v Industrial Relations Commission of New South Wales in Court Session5. The relevant provisions of the Act, and their history, are set out in the reasons given in Fish v Solution 6 Holdings Ltd. Those matters need not be (1964) 112 CLR 125 at 129. 2 Maylord Equity Management Pty Ltd v QSR Ltd [2003] NSWIRComm 366 at [39]. 3 QSR Ltd v Industrial Relations Commission of New South Wales (2004) 208 ALR [2006] HCA 22. [2006] HCA 24. Crennan repeated here. As explained in Fish v Solution 6 Holdings Ltd6, to decide whether the Commission had jurisdiction to make the orders which the appellants seek, it is necessary first to identify whether Mr Batterham performs (or in this case, did perform) work in any industry. (It was not argued that anything turns on the fact that Mr Batterham was no longer performing the relevant work when he applied to the Commission.) Having identified the work that Mr Batterham performed, the next inquiry is what was the contract or arrangement (and any related condition or collateral arrangement) according to which (or in fulfilment of which, or in consequence of which) that work was performed? It is only that contract or arrangement which the Commission may declare void or vary. It not being submitted that the Court of Appeal should have made a wider form of order than it did, the particular question that arises in the appeal to this Court is whether the option deed was a contract or arrangement according to which Mr Batterham performed work in any industry. In the Commission, in the Court of Appeal, and again in this Court, the appellants accepted that the option deed was not an agreement whereby Mr Batterham had performed work in an industry. Rather, their submission, both here and below, was that the option deed "constituted either part of the remuneration for work performed under a relevant contract or arrangement or was collateral to an arrangement for the performance of work". The second part of that submission (that the option deed was collateral to an arrangement for the performance of work) is an argument that depended upon first identifying whether contractual stipulations (or other arrangements) can be described as related, or collateral, one to another. Then, so long as one or more of those stipulations or arrangements concerns the performance of work in an industry, the submission asserts that the Commission has jurisdiction to avoid or vary any element of the related stipulations or arrangements. For the reasons given in Fish v Solution 6 Holdings Ltd, that inverts the proper order of inquiry about the application of s 106. This aspect of the appellants' submissions should be rejected. The first part of the appellants' argument (that the option deed constituted part of the remuneration for work performed under a relevant contract or arrangement) requires more detailed examination. It will be recalled that the critical statutory phrase is "any contract whereby a person performs work". The [2006] HCA 22 at [18]. Crennan work to which the appellants point in this case was the work the promoters, and Mr Batterham in particular, performed in first negotiating, and then carrying into effect, the transaction by which QSR acquired the KFC stores. That work was said to include the work of promoting, incorporating, and raising capital for, QSR, as well as the work of negotiating the contract with the vendor, and once the purchase agreement had been completed, working as a director of QSR. The appellants submitted that it was arguable that some or all of that work was performed under an overall arrangement in which the option deed formed part of the remuneration for the work that was performed. In the Court of Appeal this contention was understood as requiring identification of the parties to the arrangement and then, because the hypothesised arrangement was one for the promotion of the venture (and QSR in particular), as requiring consideration of whether QSR could be treated as party to, or adopting the benefit of, an arrangement that was made before it was incorporated. Handley JA (with whose reasons Mason P agreed) considered7 that the option deed could only be within the jurisdiction of the Commission "if it formed part of some earlier, informal, arrangement of the requisite character to which [QSR] was a party" (emphasis added). His Honour concluded8 that before QSR was incorporated "[i]t was not in any sense 'an actor'". Following its incorporation QSR accepted the benefit of the work that had been done before incorporation "but any contract or arrangement to this effect was not one whereby a person performed the pre-incorporation work"9. By contrast, Spigelman CJ considered10 that this analysis of the matter was one which had not sufficiently been raised in argument to allow the Court of Appeal to act on it in granting relief. In this Court it was not submitted that any separate question arises about whether the analysis which the majority of the Court of Appeal adopted had been sufficiently raised in argument in that Court to allow that Court to act on it. Rather, the burden of the appellants' argument was directed to two principal propositions. First, it was said that the proceedings in the Court of Appeal called into question the decision of Peterson J, contrary to the privative provisions of (2004) 208 ALR 368 at 380 [64]. (2004) 208 ALR 368 at 380 [66]. (2004) 208 ALR 368 at 380 [66]. 10 (2004) 208 ALR 368 at 378-379 [51], [53]. Crennan s 179 of the Act. Secondly, it was submitted that the Court of Appeal had not only misunderstood the breadth of the appellants' case, it had made a number of particular errors in dealing with the appellants' contentions. It is convenient to defer consideration of the issues presented by the privative provisions of s 179 and to focus first upon what the appellants contended to have been the relevant contract which founded the jurisdiction of the Commission to make orders varying the option deed. The appellants directed particular attention to par [74] of the reasons of Handley JA. That paragraph read: "Although the summons in the commission seems to rely on a contract or arrangement for the performance of work which pre-dated the formation of the company, [counsel for Mr Batterham and Maylord] did not attempt to support a case of that width. Instead he relied on a contract or arrangement which came into existence after incorporation under which the company took the benefit of the pre-incorporation work." that the breadth of this misunderstood The appellants contended their submissions to the Court of Appeal. Given what was said by Handley JA about QSR having accepted the benefit of work done before incorporation but that any contract or arrangement to that effect was not one whereby a person performed the pre-incorporation work, it may well be doubted that the reasons, when read as a whole, betray a misunderstanding of the kind asserted. It is, however, not necessary to explore that question further. Rather, attention must be directed to the appellants' contention that they should have been permitted to seek to establish, in the proceedings in the Commission, either or both of two propositions. The first of those propositions was that, before QSR was incorporated, parties, other than QSR, had made an arrangement for the performance of work which included the incorporation of QSR and the work later done for QSR. The second was that, upon its incorporation, QSR either became a party to the arrangement or thereafter took the benefit of the arrangement. Each of these propositions fastened upon three facts. First, Mr Batterham performed work promoting the company, negotiating the purchase contract, arranging finance and then serving as a director. Second, the option deed was of benefit to Mr Batterham. Third, he obtained that benefit because he was a promoter of the venture and of QSR. But the relevant question presented by s 106 is not to be answered by doing no more than pointing to the performance of work and the obtaining of a benefit that is in some way connected to the performance of the work. Rather, for the reasons given in Fish v Solution 6 Holdings Ltd, the critical questions are what is the work a person Crennan performs in an industry and what is the contract whereby the person performs that work? The option deed makes no explicit reference to the performance of work (whether for or in connection with QSR or its business dealings). Nonetheless, the option deed may be seen as part of a common form of arrangement for promoting a company. And it may be seen as a benefit given in return, or as the appellants would have it, remuneration, for the work of promotion. As Professor L C B Gower, writing nearly 30 years ago11, pointed out: "A promoter is not entitled to recover any remuneration for his services from the company unless there is a valid contract, enabling him to do so, between him and the company … Until the company is formed it cannot enter into a valid contract12. … The reward may take many forms. … [One] is for the promoter to be given an option to subscribe for shares at a particular price (eg par) within a specified time. If the shares have meanwhile gone to a premium this will obviously be a most valuable right; it is a perfectly legal arrangement13, but particulars of the option have to be given in any prospectus …" For present purposes, however, there are two features of such an arrangement that are of particular importance. First, the agreement for performance of pre-incorporation work cannot be made with the company that is to be incorporated. No doubt that is why the submission now under consideration accepted that the arrangement asserted was, in the first instance, an arrangement to which QSR was not a party. Thus, when, as here, the agreement conferring a benefit on the promoter (the option deed) is made after incorporation, it is an agreement that is made as recompense for work that has already been done. But because the work has already been done, the agreement conferring the benefit cannot be described as a contract, or an arrangement, 11 Gower's Principles of Modern Company Law, 4th ed (1979) at 332-334. 12 Kelner v Baxter (1866) LR 2 CP 174; Natal Land Co v Pauline Colliery Syndicate [1904] AC 120. Nor can it ratify a preliminary contract purporting to be made on its behalf. It must enter into a new contract and this ought to be under seal since the consideration rendered by the promoter will be past. 13 Hilder v Dexter [1902] AC 474. Crennan whereby a person performs work in an industry. The work that was done was not done according to, or in fulfilment of, or in consequence of, that agreement. And as noted earlier the appellants have at all times accepted that the option deed was not an agreement whereby Mr Batterham performed work in an industry. The second point to be made is that the option deed was tied in no respect to the later performance of work. The grant of the options was complete upon the execution of the deed. Whether Mr Batterham thereafter did any work for, or retained any connection with, QSR was irrelevant to the grant of the options or their exercise. The work that was done after the execution of the option deed could not be said to be done according to, or in consequence of, or in fulfilment of, the option deed. What then follows is that it is apparent that this method of putting the appellants' argument again depends on first relating contracts and arrangements one to another and then asking whether any of the terms or provisions of the related arrangements provide for the performance of work. And it is also apparent that the appellants' reference to the option deed as "remuneration" for work done under an arrangement first made between parties other than QSR, but to or of which QSR either later became a party or took the benefit, is a restatement of the argument that the Commission's jurisdiction extends to any and every contractual stipulation or other arrangement that can be described as related or collateral to a contract for the performance of work in an industry. By describing the option deed as "remuneration" for work done the appellants seek to connect the option deed with the performance of that work. But for the reasons given earlier, neither the work that was done before the option deed was made, nor the work that was done after it was made, was done according to, in fulfilment of, or in consequence of, that agreement. This second way in which the appellants put their argument should be rejected. It is necessary then to deal with the arguments about the operation of the privative provisions of s 179 of the Act and to begin by setting out its text. Section 179, at the times relevant to this matter, provided: "(1) Subject to the exercise of a right of appeal to a Full Bench of the Commission conferred by this or any other Act or law, a decision or purported decision of the Commission (however constituted): is final, and (b) may not be appealed against, reviewed, quashed or called in question by any court or tribunal (whether on an issue of fact, law, jurisdiction or otherwise). Crennan (2) A judgment or order that, but for this section, might be given or made in order to grant a relief or remedy (whether by order in the nature of prohibition, certiorari or mandamus, by injunction or declaration or otherwise) may not be given or made in relation to a decision or purported decision of the Commission, however constituted. To avoid doubt, this section extends to any decision or purported decision of the Commission, including an award or order of the Commission." Questions about the operation of the privative provisions of s 179 of the Act in this case are to be approached from some established principles. Section 179 is not to be interpreted "as meaning to set at large"14 the court or tribunal to which it relates. Rather, because the Act limits the jurisdiction of the Commission, but also contains the privative provisions of s 179, an attempt must be made to reconcile what appear to be conflicting legislative provisions15. Thus the meaning and application of s 179 must be ascertained from its terms16 set in the context of the Act as a whole. Next it is important to recognise that a privative clause will have no work to do if the decision in question was a decision made according to law. The hypothesis for consideration is that the decision in question is infirm in some respect. It therefore follows that the reference in s 179 to "purported" decisions of the Commission is properly seen as inserted for more abundant caution. As was pointed out in O'Toole v Charles David Pty Ltd17, in relation to the then provisions of s 60 of the Conciliation and Arbitration Act 1904 (Cth), an "award", on the true construction of that provision, referred to at least some purported awards18. Were it otherwise s 60 would have been essentially 14 R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 614-615; Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 499-500 [56]. 15 Hickman (1945) 70 CLR 598 at 616; Plaintiff S157/2002 (2003) 211 CLR 476 at 16 Plaintiff S157/2002 (2003) 211 CLR 476 at 501 [60]. 17 (1991) 171 CLR 232 at 285-286. 18 See also Australian Coal and Shale Employees Federation v Aberfield Coal Mining Co Ltd (1942) 66 CLR 161 at 182. Crennan nugatory. Reference in s 179 to "purported" decisions of the Commission makes explicit what would otherwise have been the necessary reading of the provision. In the present matter, however, it is not necessary to pursue further the resolution of the tension between the limitations on the Commission's jurisdiction and the provisions of s 179. The appellants contend that QSR's application to the Court of Appeal for prohibition called in question the decision of Peterson J dismissing QSR's application for summary termination of the proceedings in the Commission. They submitted that the application for prohibition constituted, or amounted to, an attack on the reasoning and basis of the decision of Peterson J and, in that sense, called the decision into question. That analysis of the matter should not be accepted. Peterson J did not decide that the proceedings were, or were not, within the Commission's jurisdiction. The only decision made was that the proceedings instituted in the Commission had not been shown to be unarguably beyond jurisdiction. There is a real and radical difference between deciding that a point is arguable and deciding the point. All that Peterson J decided was the former. To hold, as the Court of Appeal did, that some, but not all, of the claims made in those proceedings were beyond jurisdiction did not question the decision of Peterson J or the reasoning that supported it. Whether the words "decision or purported decision" in s 179(1) extend to the steps in reasoning that support the outcome at which the Commission arrives in an application is a question that would require close consideration of the reconciliation between s 179 and those provisions of the Act that limit the Commission's jurisdiction. At first sight there seems no reason to give "decision or purported decision" a meaning that would encompass steps in reasoning. This, however, is not a question that needs to be resolved. It is enough to say that in this case there was no "decision or purported decision" of the Commission, "whether on an issue of fact, law, jurisdiction or otherwise", that was called in question by the proceedings in the Court of Appeal. Rather, in the light of this Court's decision in R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd19, the Court of Appeal was right to grant the relief it did, and right to grant that relief when it did. As was pointed out in the Melbourne Stevedoring Case20, prohibition is not a writ of course but "it is a writ which goes as of right when the prosecutor is directly affected by the course pursued by a tribunal to which the writ lies and the prosecutor shows 19 (1953) 88 CLR 100. 20 (1953) 88 CLR 100 at 118-119. Crennan satisfactorily that the tribunal is about to act to his detriment in excess of its authority". And again, as pointed out in the Melbourne Stevedoring Case21, the privative clause shows that to defer the grant of the remedy until the Commission decides whether it has jurisdiction, if QSR is otherwise entitled to it, "may and perhaps must operate to the prejudice" of QSR. Proceedings in the Commission having taken the course they had, there was a real likelihood of an order being made in excess of the Commission's jurisdiction. And that being so, the Court of Appeal was right to grant the relief it did. For these reasons the appeal to this Court should be dismissed with costs. The considerations mentioned in our reasons in Fish v Solution 6 Holdings Ltd about the Industrial Relations Amendment Act 2005 (NSW) apply equally in this case to so much of the proceedings instituted in the Commission as was the subject of the Court of Appeal's order prohibiting the Commission from their further hearing and determination. 21 (1953) 88 CLR 100 at 119. Kirby KIRBY J. This is an appeal from orders of the New South Wales Court of Appeal22. It is one of three matters heard by this Court to be decided at the same time23. The appeals present common points. Each of the cases concerns the meaning and application of s 106 of the Industrial Relations Act 1996 (NSW) ("the IR Act"). Each relates to the jurisdiction and powers of the Industrial Relations Commission of New South Wales ("the Commission") under that provision. Each raises a question as to the issue by the Court of Appeal of a writ in the nature of prohibition, addressed to the Commission, in relation to the continued hearing and determination of proceedings commenced before it. However, whilst the Court of Appeal accepted as applicable in the present case the principles expounded by it in Fish24, decided on the same day, there were two significant differences from that case. The first difference was that, unlike Fish, the proceedings in the present case challenging the jurisdiction of the Commission had been argued before, and decided by, a judicial member of the Commission (Peterson J)25. His Honour exercised the powers of the Commission in Court Session as it was then described26. He dismissed with costs the application for pre-emptory relief. That order contemplated that the Commission would proceed to exercise its jurisdiction and powers in this case. His Honour recognised that the conclusion expressed by him on the summons might not survive a full hearing "in the light of the evidence ultimately adduced". The ultimate conclusion, he declared, "remains open"27. 22 QSR Ltd v Industrial Relations Commission of New South Wales (2004) 208 ALR 23 Fish v Solution 6 Holdings Ltd [2006] HCA 22; Old UGC, Inc v Industrial Relations Commission of New South Wales in Court Session [2006] HCA 24. 24 Solution 6 Holdings Ltd v Industrial Relations Commission of New South Wales (2004) 60 NSWLR 558. 25 Maylord Equity Management Pty Ltd v QSR Ltd [2003] NSWIRComm 366. 26 The Commission in Court Session has since been re-named, once again, as the Industrial Court of New South Wales: Industrial Relations Amendment Act 2005 (NSW), s 3, Sched 1, cl 4. 27 [2003] NSWIRComm 366 at [39]. Kirby Secondly, in this case, unlike Fish, the Court of Appeal was divided. The majority reasons, supporting the Commission, were given by Handley JA (with whom Mason P agreed). However, Spigelman CJ dissented. He concluded that questions as to the jurisdiction of the Commission should be left to be decided within the Commission. He would have dismissed the proceedings in the Court of Appeal. the order for prohibition directed Spigelman CJ's reasons for reaching his conclusion were, essentially, three-fold. First, he concluded that there were certain questions, relevant to the jurisdiction of the Commission, that had not earlier been broached by either party, which should first be decided by the Commission. One was whether the conduct of a person as a promoter of a company could satisfy the concept of "work in an industry" in the context of the IR Act28. Secondly, he expressed doubt that the argument upon which the application for prohibition succeeded in the Court of Appeal had been the subject of submissions to that Court29. Thirdly, and most importantly, he was affected by the identification of the legal principles concerning s 106 of the IR Act, expressed in the reasons of Peterson J in the Commission, upon which (he thought) evidence would be necessary and eventually determinative. Such principles concerned30 the extent to which a company, not originally a party to an "arrangement" whereby a person performed work in any industry, might later become such a party or, although not a party to the original arrangement, might yet be the subject of orders against it made under the IR Act. The first and second reasons expressed by Spigelman CJ played little part in the argument before this Court. However, the third reason was critical and is decisive. Both for the proper application of the privative provision in the IR Act31 and for the observance of the correct relationship between the Court of Appeal and the Commission, the approach adopted by Spigelman CJ was the correct one. It should be confirmed by this Court. The hearing in the Commission should proceed. To allow that to happen, this Court must uphold the appeal. 28 (2004) 208 ALR 368 at 377-378 [41]-[44]. 29 (2004) 208 ALR 368 at 378 [51]. 30 Cf Maylord Equity Management [2003] NSWIRComm 366 at [31] cited (2004) 208 ALR 368 at 379 [54]. 31 Section 179. Kirby The facts The background facts: The general background facts are stated in the reasons of Gleeson CJ, Gummow, Hayne, Callinan and Crennan JJ ("the joint reasons")32. For the most part, it is sufficient to refer to the activities of the first appellant, Mr Peter Batterham, and the first respondent, QSR Limited ("QSR"). The Commission, the second respondent, submitted to the orders of this Court. In late 1998, Mr Batterham discovered that Tricon Global Restaurants Inc ("Tricon"), the owner of the KFC and Pizza Hut brands in Australia, desired to sell its business and property interests in forty-one KFC stores in New South Wales and to grant the purchaser a long-term franchise agreement with the right to operate a business utilising the KFC brand name. Mr Batterham and a colleague, Mr Steven Gillard, negotiated heads of agreement with Tricon to purchase the stores. The two men then involved Mr Anthony Veale in the acquisition proposal. in property syndication. Mr Veale had extensive experience The three promoters engaged lawyers and other advisers to provide advice about the suitable means to be utilised both to purchase and operate the restaurants. The promoters incurred expenses. They agreed amongst themselves to share these expenses in the event that the deal did not proceed. QSR was then established as the corporate vehicle to carry the negotiations forward. The three promoters became the foundation shareholders and directors of QSR. They undertook substantial work to make the project a reality. Through QSR, they raised approximately $40 million to finance the deal. The promoters' option deed: The promoters agreed that they should be remunerated for the work that they had undertaken before the incorporation of QSR. They were also to be remunerated for work done on behalf of QSR in bringing the deal to fruition. They were to be remunerated further for work that they would undertake for QSR on an ongoing basis as agreed prior to the issue of a prospectus on 3 November 1999. An understanding was reached amongst them whereby QSR would pay directors' fees and charges. Details of the proposed remuneration and commitments of QSR were duly published in the prospectus. Tricon insisted, and Mr Batterham agreed, that QSR could not approve the resignation, replacement or removal of any of the three promoters, except as required by law, without its prior written approval. Moreover, in so far as Mr Batterham's agreed remuneration was in the form of options in QSR, his entitlements were set out in an Option Deed. This deed was executed by Mr Batterham and QSR on 2 November 1999, the day before the prospectus was 32 Joint reasons at [1]-[12]. Kirby issued. Mr Batterham thereafter continued to work for QSR until, in April 2002, he was allegedly forced to resign. The dispute between Mr Batterham and QSR arose after interests hostile to Mr Batterham gained control of QSR and progressively marginalised him from its affairs33. It was at this point that a provision in the Option Deed, containing the "trigger" for the right of Mr Batterham's trust company, now Maylord Equity Management Pty Ltd ("Maylord"), to take up options of great value in QSR, became crucial to his entitlements. The provision in question concerned a "performance benchmark"34. The right to take up options was dependent upon the achievement by QSR of earnings (before interest, tax, depreciation and amortisation) of at least 18% on equity in the ensuing three calendar years. In the event, an average return of over 18% for the three years, and well over 18% in the first two years (2000 and 2001), was achieved. However, in 2002, the return on equity was 16.2%. QSR therefore contended that the condition precedent to enliven the right to take up the options had not been met. It was this dispute that led Mr Batterham and Maylord to commence proceedings in the Commission for relief against the suggested "unfairness" of the foregoing arrangements. Mr Batterham and Maylord submitted that the Commission had jurisdiction under s 106 of the IR Act to provide relief against QSR. The parties' arguments: For Mr Batterham and Maylord it was argued that, although the Option Deed did not per se constitute a contract within s 106, it either represented part of the remuneration for work performed under a relevant contract or arrangement or was collateral to an arrangement whereby work was to be performed in an industry. Moreover, QSR had secured the benefit of Mr Batterham's work prior to, and after, its formation and had sought to take unfair advantage of a provision in the Option Deed which related directly to his remuneration for such work. QSR, on the other hand, portrayed the work performed, and the benefits under the Option Deed, as separate from the earlier contract or arrangement. QSR suggested that Mr Batterham's employment had been terminated by agreement and that complaints about the Option Deed were no more than arguments about a business deal that had proved disappointing in the circumstances. 33 (2004) 208 ALR 368 at 373 [17]. 34 (2004) 208 ALR 368 at 371 [12]. Kirby The application to the Commission The objection to jurisdiction: QSR did not delay in contesting the jurisdiction of the Commission. No sooner had the initiating documents been filed for Mr Batterham and Maylord but QSR lodged a notice of motion for pre- emptory relief against the proceedings. Both in the Commission, and later in the Court of Appeal, QSR indicated that it was content to accept as true the facts stated in Mr Batterham's originating process and verifying affidavit. Mr Batterham resisted QSR's objection to the jurisdiction of the Commission. He argued that the unwritten contract of employment and the Option Deed amounted together to an "arrangement" whereby work was performed in an industry in New South Wales, including the promotion and establishment of the KFC acquisition and the subsequent work performed, once the deal was agreed, as a director of QSR and otherwise. Mr Batterham also submitted that the remuneration for his work under the "contract or arrangement" was the grant of options to Maylord, together with the payment of directors' fees and the issue of shares. In the alternative, he argued that the grant of options, as part of his remuneration, was a "collateral arrangement or a condition" related to the "arrangement" for the performance by him of work. He contended that the "arrangement" in question included the incorporation of QSR as the vehicle to obtain the benefit of the acquisition of the KFC stores and that, upon such incorporation, QSR became a party to that "arrangement", took advantage of it and was thus susceptible to orders of the Commission directed to it, addressed specifically to the provisions of the Option Deed complained of as "unfair". QSR advanced many arguments to contest the jurisdiction of the Commission35. In particular, QSR disputed any unfairness of the "contract or arrangement" relied upon; distinguished the work performed by Mr Batterham as a promoter of the "deal" before formation of QSR and as a director thereafter; divided the alleged "work" into these two distinct phases; and contended that the Option Deed referred, and referred only, to the earlier phase as promoter and thus could not, before QSR was formed, result in any legal liability in that company in respect of which relief could be thereafter given under s 106 of the IR Act. Rejection by the Commission: In his reasons for dismissing the application for pre-emptory relief, Peterson J referred to decisional authority both as to the ambit of s 106 (and its predecessors) and as to the approach to be applied to such an interlocutory claim for relief terminating the proceedings36. In 35 See (2004) 208 ALR 368 at 376-377 [34]-[40]. 36 [2003] NSWIRComm 366 at [5]-[6] referring to General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 per Barwick CJ; Nagle (t/a W D and J L Nagle & Sons) v Tilburg (1993) 51 IR 8 at 10-12. Kirby the course of his reasons, Peterson J referred to some observations of my own in the Court of Appeal of New South Wales, to which I adhere37: "[A preliminary hearing is] sensible ... where a party has a substantial threshold argument which, if it succeeds, will knock out the claim and save the costs and inconvenience that attend a protracted hearing of proceedings on the merits. But, as with any threshold relief of this kind, it must be conserved to a clear case where it is plain that the invocation of the jurisdiction impugned is wholly misconceived or, upon analysis, lacks an arguable legal foundation. Necessarily, refusal of relief at the threshold will not finally determine that jurisdiction exists for any order which the Commission might make between the parties. This is because, to secure relief, the claimants must demonstrate that no order could be made which would be within jurisdiction. This burden … is a heavy one". Applying the foregoing authorities, as the parties had invited him to do, Peterson J rejected the challenge to jurisdiction at that stage. He set the matter down for trial. Invocation of the Court of Appeal: It was then that QSR invoked the supervisory jurisdiction of the Supreme Court and secured from the majority of the Court of Appeal the order in the nature of a writ of prohibition, directed to the Commission, that is now in contest in the appeal to this Court. The issues The appeal raises two procedural issues, and one substantive issue. They are as follows: The privative clause issue: Did the Court of Appeal err, the jurisdiction and powers of the Commission having been invoked, in calling into question a decision of the Commission on a matter within the Commission's jurisdiction? Did doing this constitute a breach of, or failure to comply with, s 179 of the IR Act so that, on that ground, it was legally erroneous? The comity and restraint issue: Whatever the strict requirements of s 179 of the IR Act, did the Court of Appeal err in its approach to the entitlement of the Commission in Court Session to determine its own jurisdiction and, having regard to the applicable principles of restraint, did 37 [2003] NSWIRComm 366 at [6] citing Nagle (1993) 51 IR 8 at 10-11 applying Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443 at 446-447. Kirby it err in affording relief when it did, before the Commission had heard and finally determined the application before it? The substantive rights issue: Assuming that there is no impediment to the Court of Appeal's orders on either of the foregoing grounds, did the Court of Appeal err in providing the relief it did, having regard to whether the case before the Commission was reasonably arguable? Was that case clear in fact and in law to the degree that warranted intervention by the Court of Appeal in advance of a concluded hearing and decision of the Commission about its jurisdiction and powers? The privative provision of s 179 was applicable The terms of s 179: From the creation of an industrial jurisdiction in New South Wales, the State Parliament has provided, in successively more stringent terms, privative provisions designed to limit (it could not entirely prevent38) the provision of prerogative relief (or relief of that nature) addressed by the Supreme Court of the State to the industrial tribunal. The history of such provisions is helpfully collected by Spigelman CJ in his reasons in the Fish case39. That history is mentioned in Fish in this Court40. Whereas the form of the privative provision contained in s 301(1) of the Industrial Relations Act 1991 (NSW) ("the 1991 Act") afforded finality to decisions of the then Industrial Court, the section expressly preserved the operation of s 48 of the Supreme Court Act 1970 (NSW)41. When, by the IR Act, in 1996, the Industrial Court was abolished and a Commission reinstated, this limited reservation of the powers of the Supreme Court was removed. At the relevant time, s 179 provided42: 38 Baxter v New South Wales Clickers' Association (1909) 10 CLR 114 at 131 per Griffith CJ; R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 614- 617; Church of Scientology v Woodward (1982) 154 CLR 25 at 55-56; Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 484 [10]-[11], 499-501 39 Solution 6 Holdings (2004) 60 NSWLR 558 at 583-584 [101]. 40 [2006] HCA 22 at [136]. 41 See 1991 Act, s 301(3). 42 Section 179 was amended after the orders of the Court of Appeal were made in the present case by the Industrial Relations Amendment Act 2005 (NSW), s 3, Sched 1, cl 5: see Fish [2006] HCA 22 at [45] per Gleeson CJ, Gummow, Hayne, Callinan and Crennan JJ and my own reasons at [90] fn 74. I am content to assume that the (Footnote continues on next page) Kirby "179 Finality of decisions Subject to the exercise of a right of appeal to a Full Bench of the Commission conferred by this or any other Act or law, a decision or purported decision of the Commission (however constituted): is final, and (b) may not be appealed against, reviewed, quashed or called in question by any court or tribunal (whether on an issue of fact, law, jurisdiction or otherwise). (2) A judgment or order that, but for this section, might be given or made in order to grant a relief or remedy (whether by order the nature of prohibition, certiorari or mandamus, by injunction or declaration or otherwise) may not be given or made in relation to a decision or purported decision of the Commission, however constituted. To avoid doubt, this section extends to any decision or purported decision of the Commission, including an award or order of the Commission." The validity of s 179: In the proceedings before the Court of Appeal in the present case, QSR originally contended that s 179 was invalid, as beyond the legislative powers of the New South Wales Parliament. Notices in respect of a constitutional issue were duly given43. The State Attorney-General intervened before the Court of Appeal to support the constitutional validity of the section. In the result, QSR did not press its constitutional objection. The Court of Appeal did not rule on it. The point was not revived in this Court. It can be ignored in deciding this appeal. The breadth of s 179: The extremely broad ambit of s 179 is apparent from its terms. It is concerned to protect not only a "decision" but also a "purported decision" of the Commission. It is not confined to the Commission in its then judicial manifestation (the Court Session). It is addressed to the Commission "however constituted". The prohibition is not only against "appeal". It extends to the review of such "decisions" of the Commission. But it also amendments do not affect the disposition of the appeal. The contrary conclusion is unnecessary to the outcome that I favour. 43 (2004) 208 ALR 368 at 369 [3]. Kirby extends to calling any such decisions "in question". It goes further to forbid the making of a judgment or orders in the nature of prohibition, certiorari, mandamus, injunction, declaration or otherwise, which might, but for the section, have been made or given, relevantly by the Court of Appeal. The section extends to any order of the Commission. It thus extends to the decision of Peterson J in the present case, exercising the jurisdiction of the Court Session. Specifically, it applies to his Honour's order dismissing QSR's interlocutory objection to the jurisdiction of the Commission. Manifestly, decisions and purported decisions on "jurisdiction" are within s 179(1)(b). Whilst, under s 48 of the Supreme Court Act, actions in the Supreme Court seeking orders to prohibit a "specified tribunal" from proceeding in any matter before it are assigned to the Court of Appeal, and whilst "the Industrial Relations Commission or a member of that Commission" are included in the "specified tribunals" so affected44, this provision is no more than an intra-mural identification of venue. It is not a grant of jurisdiction or power to the Supreme Court, inconsistent with s 179 of the IR Act. The broadest prohibition in s 179(1)(b) is that forbidding a court from calling in question any "decision or purported decision" of the Commission. The breadth of such language has been noted many times. Like terms appeared in s 29(3)(a) of the Industrial Relations Act 1967 of Malaysia, ousting the jurisdiction of the Malaysian High Court to issue writs of certiorari to the Industrial Court of that country. Such provisions have a long history in the relations between industrial tribunals and the general courts. They are common throughout the Commonwealth of Nations. In South East Asia Fire Bricks Sdn Bhd v Non-Metallic Mineral Products Manufacturing Employees Union, dealing with s 29(3)(a) of the Industrial Relations Act 1967 (Malaysia), Lord Fraser of Tullybelton, delivering the judgment of the Privy Council, observed45: "[T]he final words 'quashed or called in question in any court of law' seem to their Lordships to be clearly directed to certiorari. 'Quashed' is the word ordinarily used to describe the result of an order of certiorari, and it is not commonly used in connection with other forms of procedure (except in the quite different sense of quashing a sentence after conviction on a criminal charge). If 'quashed' were for some reason not enough, the expression 'called in question in any court of law' is in their Lordships' opinion amply wide enough to include certiorari procedure. Accordingly they are of opinion that paragraph (a) does oust certiorari at least to some extent." 44 Supreme Court Act 1970 (NSW), s 48(1)(a)(ii). 45 [1981] AC 363 at 370. Kirby In the present proceedings, the relief claimed in, and granted by, the Court of Appeal was a writ in the nature of the writ of prohibition. However, the point concerning the phrase "called in question" remains good. The IR Act deliberately uses wide language. Against the background of this history in New South Wales law and like laws in other countries, the interdiction is designed to discourage any interfering inclination on the part of a general appellate court. To the extent that the provision is valid, and cannot be confined by legitimate techniques of statutory construction, it is the duty of courts to give it effect. There will lie outside such prohibitions cases involving fundamental affronts to jurisdiction, such that what has occurred does not answer to the statutory expression "decision or purported decision" or "award or order"46. However, the present is not such a case. Section 179 is attracted: Because of the procedures followed in this case, s 179 of the IR Act was enlivened. In the Court of Appeal, Handley JA accepted that Peterson J had given a "decision" of the Commission within the terms of s 179(1)47. That was a correct holding. I would reject submissions to the contrary, on the alleged grounds that Peterson J's decision was not a "decision" within s 179(1) because it was procedural in nature and merely a decision to defer a "decision". In this, I agree in the reasons given by Heydon J48. Being a "decision", Peterson J's "order" was liable, once made, to an application to a Full Bench of the Commission in Court Session for leave to appeal. Instead of taking that course, which was the regular one contemplated by the IR Act49, QSR invoked the suggested powers of the Court of Appeal. But those powers lie outside the system of industrial tribunals, specifically the Commission. On the face of things, at least, this involved proceeding to the Court of Appeal to "call in question" the decision of the Commission given by The essential issue raised, and argued, before the Court of Appeal was relevantly the same as that before Peterson J. So much is disclosed by a comparison of that Court's reasons with those of Peterson J. If this is so, the challenge in the Court of Appeal was effectively an attempt to exercise a right of "appeal" contrary to the line of appeal expressly provided by Parliament. If it did 46 Cf Plaintiff S157/2002 (2003) 211 CLR 476 at 513-514 [103]-[104] with particular reference to the Constitution, s 75(v). In this conclusion I disagree with the opinion of Heydon J at [108]. 47 (2004) 208 ALR 368 at 383 [85]. 48 Reasons of Heydon J at [107]. 49 IR Act, s 179(1). Kirby not literally seek "review" of the decision of Peterson J, as such, it certainly called that decision "in question". It did so by challenging it on the core conclusion to which it gave effect. This was that, on the facts common at this stage to the proceeding both in the Commission and the Court of Appeal, a reasonably arguable case of jurisdiction in the Commission had been shown. Peterson J decided that it had. The majority of the Court of Appeal decided that it had not. By going over the same ground and reaching their contrary conclusion, the majority in the Court of Appeal "called in question" Peterson J's "decision" and "order". If any new points were raised in the Court of Appeal, the scheme of the IR Act, contemplated by the terms of s 179(1), is that any such points should be advanced on appeal, by leave, to the Full Bench of the Commission in Court Session, not to the Court of Appeal. An erroneous intervention: In his reasons, Handley JA50, for the majority, concluded that no barrier to the intervention of the Court of Appeal was presented by s 179 of the IR Act. The joint reasons in this Court appear to endorse his Honour's approach51. I disagree. Handley JA advanced two reasons as to why s 179 did not apply. Neither of these is convincing: The first suggested reason was that the decision of the Commission was interlocutory and thus did not create any res judicata or issue estoppel52. There is nothing in s 179 that draws any such distinction. Decisions and purported decisions, as well as awards and orders, referred to in the section, may be interlocutory as well as final. The section still applies. The suggested gloss, exempting interlocutory decisions and orders, would be perverse and confusing, given the uncertainty that can sometimes arise over such classifications. There is no reason for this Court to lend support to such a modification of the statute. It was then suggested that the fact that the Court of Appeal "after fuller argument" concluded that the Commission's jurisdiction did not extend to any relevant contract or arrangement would not "call in question" the interlocutory decision53. However, the place for "fuller argument", 50 (2004) 208 ALR 368 at 383 [87]. 51 Joint reasons at [27]-[28]. 52 (2004) 208 ALR 368 at 383 [87]. 53 (2004) 208 ALR 368 at 383 [87]. Kirby contemplated by s 179 (in its language, history and purpose), was not the Court of Appeal. It was either in the Commission when it conducted the hearing, or in the Full Bench of the Commission in Court Session, as the IR Act provides54. The very mischief addressed by s 179 is the conduct of "fuller argument" in a court of general jurisdiction, separate from the industrial tribunal which Parliament has entrusted with jurisdiction under s 106 of the IR Act, including decisions as to whether it has jurisdiction in the particular case or not. In so far as Handley JA's reasoning contained a suggestion that the Court of Appeal's position was effectively no different from that of the Commission at a final hearing, that suggestion was incorrect. In a final hearing of the proceeding in the Commission all the evidence that the parties considered relevant would be tendered; the admissibility of that evidence would be decided by the judicial member of the Commission hearing the case; and findings and rulings would be made by that judicial member, who could also make orders to give effect to such conclusions. In the event, the Court of Appeal was obliged to reach its decision on materials more abbreviated than those available in a final hearing before the Commission. That is a procedure which, even when legally permissible, is reserved to very clear cases. By reaching a different conclusion on the jurisdiction question, the Court of Appeal did not suggest any identified error on the part of Peterson J. It simply substituted its own opinion on the same substantive issues, using effectively identical material and reaching its conclusion in a like pre- emptory process. The only suggested advantage of the Court of Appeal was "fuller argument". However, that does not authorise circumvention of s 179(1) of the IR Act and the legislative policy that it expresses. Secondly, Handley JA appeared to consider that the course adopted by the majority was sustained by this Court's approach in R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd55. Although the joint reasons in this Court endorse that conclusion56, in my view it is erroneous57. Melbourne Stevedoring involved a challenge to an inquiry held by a delegate of the Stevedoring Industry Board, otherwise than as authorised by its legislation, to consider the fitness of an employer to be registered under federal law. Instead, the Board imposed a sanction on an employer 54 IR Act, ss 188, 190A, 191. 55 (1953) 88 CLR 100 at 118. 56 Joint reasons at [28]. 57 Cf reasons of Heydon J at [109]. Kirby to enforce a policy of the Board. This was a completely erroneous conception of the Board's jurisdiction and powers. The error was fundamental to the exercise of the power and pervasive in the case. There was no similar fundamental error in the perception by Peterson J of the jurisdiction of the Commission based on the Option Deed. Even if there were, it was not for the Court of Appeal to call into question here his Honour's decision that the jurisdiction of the Commission sufficiently existed. And even if, in some way, the Court of Appeal was authorised to ignore and bypass the decision of Peterson J in the Commission, the supposed error of classifying the deed for the purposes of s 106 of the IR Act was not of the character of the error described in Melbourne Stevedoring. It is essential to the concept of jurisdictional error (sometimes supported in federal matters as inherent in the nature and purpose of the writs afforded by the Constitution58) that tribunals afforded jurisdiction by Parliament must be respected by the courts. They must normally be allowed to determine, at least in the first instance, whether they have jurisdiction and, whilst acting within it, to exercise that jurisdiction without external judicial interference. The restraints that ordinarily operate in federal jurisdiction are reinforced in a case of the present kind by the privative provisions of s 179 of the IR Act. Conclusion: breach of s 179: It follows that the relief ordered by the Court of Appeal, and the reasons of the Court explaining that relief on the basis of the lack of jurisdiction in the Tribunal, necessarily "called in question" the "decision" of Peterson J that jurisdiction arguably existed. Such relief foreclosed the enacted line of appeal within the Commission. It involved the intrusion of the Court of Appeal into the regular exercise by the Commission of its own powers. Such interference was forbidden by s 179 of the IR Act. So long as they are constitutionally valid, the provisions of that section must be given effect by the courts. In the end, no argument of constitutional invalidity was pressed. It follows that the correct approach was the one taken by Spigelman CJ. It was to leave the jurisdictional issue to be decided in the Commission59. Cases of the kind presented by Mr Batterham and Maylord are typically highly fact- specific. In the face of the privative provisions of s 179, it would be very rare indeed that the Court of Appeal would be entitled to issue process in the nature of prohibition to the Commission. This was not such a case. 58 Constitution, s 75(v). 59 (2004) 208 ALR 368 at 379 [55]. Kirby Principles of comity and restraint deny intervention Applicable comity and restraint: Apart from s 179 of the IR Act, there are additional, and reinforcing, principles that argue, on discretionary grounds, against the intervention decided by the majority of the Court of Appeal, now confirmed by the majority in this Court. It is important to start the consideration of this issue with a reminder that proceedings for orders under s 106 of the IR Act were assigned to the Commission in Court Session60. By s 152 of the IR Act, specific provision was made by the Parliament of New South Wales concerning the status of that body: "152 Commission in Court Session superior court of record The Commission in Court Session is established by this Act as a superior court of record. For the purposes of Part 9 of the Constitution Act 1902, the Commission in Court Session is a court of equivalent status to the Supreme Court and the Land and Environment Court, and is of higher status than the courts referred to in section 52(2)(b) and (c) of that Act." In furtherance of s 152 of the IR Act, the New South Wales Parliament amended the Constitution Act 1902 of the State61, to extend Pt 9 to members of the Commission in Court Session. This provision ensured that the appointment of all judges of the former Industrial Court, created by the 1991 Act but abolished by the IR Act, would become members of the Commission in Court The members of the Commission in Court Session, all of whom were, by rank and designation, State judges, enjoyed the same status as judges of the Supreme Court. More importantly, the Commission in Court Session was established as a constitutional institution of New South Wales and, by law, enjoyed a status equivalent to that of the Supreme Court. It did not have the history of the Supreme Court, travelling back as that Court does to the early days of the colony. Nor was it mentioned in the federal Constitution, as the Supreme 60 IR Act, s 153(1)(c). 61 IR Act, Sched 5. 62 IR Act, Sched 4, Pt 4. Kirby Court of the State is63. But the Commission in Court Session had its own extended lineage, dating back to the Industrial Arbitration Act 1901 (NSW). In the provision by the Court of Appeal of writs, prerogative in nature, directed to the Commission (at least in respect of proceedings in Court Session) the design of the institutions of the State, lawfully enacted by the Parliament of the State, demanded an approach that involved comity as between both courts and restraint in any intrusion of one upon the other. The terms of s 179 represented no more than a traditional mechanism (albeit expressed in unusually emphatic terms) reflecting the expectations of this parity of statutory status. Comity as between judicial institutions of equivalent status is not merely a formula for courtesy. It has an institutional purpose. Writing of judicial comity in Hicks v Minister for Immigration and Multicultural and Indigenous Affairs64, French J observed, in words that I would endorse: "The injunction to judicial comity does not merely advance mutual politeness as between judges of the same or co-ordinate jurisdictions. It tends also to uphold the authority of the courts and confidence in the law by the value it places upon consistency in judicial decision-making and mutual respect between judges." To similar effect are the words of Brennan J in this Court in Attorney- General (Cth) v Finch [No 2]65. And as McHugh J suggested in Re Tyler; Ex parte Foley66, uniformity and regularity in the making of judicial decisions is a matter of great importance to the administration of the law. Absent such an approach, confidence in the administration of justice might dissolve or be impaired. The feeling that, where Parliament has provided a venue for the determination of the unusual and expansive jurisdiction afforded by s 106 of the IR Act, the jurisdiction, once invoked, will be allowed to take its ordinary course, is an understandable one. The notion that those with deep pockets can contest the jurisdiction and then, despite the privative clause, secure intervention by the Court of Appeal or this Court, is one liable to be disturbing to informed observers67. 63 Constitution, s 73(ii). 64 [2003] FCA 757 at [76] (appeal dismissed (2004) 138 FCR 475). 65 (1984) 155 CLR 107 at 120-121. 66 (1994) 181 CLR 18 at 39. 67 The extent of the determination of the Parliament of New South Wales to discourage and repel such interventions can be seen in the still more emphatic language of s 179 of the IR Act following the amendments introduced by the Industrial Relations Amendment Act 2005 (NSW), s 3, Sched 1, cl 5. Kirby The foregoing conclusion is especially applicable where the outcome of the intervention is to deprive a person of the right normal to a litigant in this country, even when unprotected by a provision such as s 179 of the IR Act, namely to be entitled to present all of the facts of an arguable claim and to secure a decision on that claim by a qualified and independent court or tribunal with the jurisdiction and powers to apply the law to the facts and to provide reasons for its outcome68. A litigant would be entitled to feel especially disturbed where, as here, a challenge to jurisdiction has been rejected by the body designated by Parliament as having the exclusive jurisdiction and power to decide such a claim. Against the long history in Australia and elsewhere of statutory limits on the intrusion of the general courts into the jurisdiction and power of industrial tribunals, and the suspicion that such intrusion has sometimes favoured commercial interests over claimants before industrial tribunals, the intervention by the Court of Appeal merely adds to legitimate feelings of resentment69. The rule of law relies on obedience to the law by courts and tribunals and the attention of those bodies, as the law provides, to the justice of the individual case. Industrial v commercial arrangements: In the present proceedings, as in Fish70, I infer that part of the willingness of the Court of Appeal to circumvent the provisions of s 179 of the IR Act, and to provide relief in advance of a final hearing, findings and orders of the Commission as determined on the merits, derives from a belief that "commercial contracts", of the kind illustrated by the Option Deed, ought not properly to be before a specialised tribunal, the colour and flavour of whose jurisdiction is normally "industrial" in the traditional sense71. To the extent that any such attitude affected the approach to the present and like cases, it must, in my opinion, be eradicated. It is incompatible with the status of the Commission in Court Session (now once again the Industrial Court) and of its judges. It is inconsistent with the wide definition of "industry" and the 68 See Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 565-566 [138] applying E (A Minor) v Dorset County Council [1995] 2 AC 633 at 694 per Sir Thomas Bingham MR. 69 Judicial comity in this context is an antithesis of judicial chauvinism: see Hicks [2003] FCA 757 at [76] per French J quoted above at [73]. 70 [2006] HCA 22 at [143]; cf Mitchforce Pty Ltd v Starkey (No 2) (2003) 130 IR 378 71 See, eg, Mitchforce (2003) 130 IR 378 at 386 [22]. Kirby large powers over "unfair contracts" provided by the IR Act72. It is not consonant with the language and purpose of s 179 of that Act. It destabilises the affected institutions73. Moreover, the separation of the Option Deed and other arrangements, evidenced in the present case, is not compatible with legislation addressed, as s 106 of the IR Act is, to relief against contemporary unfair employment contracts. Such contracts are bound, increasingly, to involve agreements that, for taxation or other purposes, include collateral, supplementary, later and related conditions and "arrangements". The IR Act recognises this in its terms74. So does the past authority of this Court75. The Court of Appeal should have done likewise. The imposition of an artificial exclusion of "commercial contracts", for whatever reason, is impermissible as a matter of legal construction. It is an invitation to the very kind of contractual subterfuge against which this Court earlier, and correctly, set its face. The correct approach: The Court of Appeal has sometimes adopted the correct approach to the foregoing questions. However, the majority decision did not do so in this case. The approach of Spigelman CJ correctly reflects, and gives effect to, the applicable principle of restraint that, quite apart from s 179 of the IR Act, should govern the issue of orders in the nature of prohibition to the Commission in Court Session76. Such restraint used to be the approach of the Court of Appeal in such matters77. It was so even before the enactment of s 179, 72 IR Act, s 7 (definition of "industry"), ss 105, 106. 73 Cf Mitchforce (2003) 130 IR 378 at 436 [212]-[213]. 74 IR Act, s 105 in reference to the definition of "contract" which means "any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument". See also s 106(2) referring to "variation of the contract"; s 106(3) referring to variation "from some other time"; s 106(4) referring to a "series of contracts"; and s 106(5) referring to wide powers to make orders for the payment of money, including against non-parties. 75 Brown v Rezitis (1970) 127 CLR 157 at 164; Stevenson v Barham (1977) 136 CLR 76 (2004) 208 ALR 368 at 379 [55]. See also the references to the "principle of restraint" and to relevant cases in Solution 6 Holdings (2004) 60 NSWLR 558 at 77 See, eg, Maltais v Industrial Commission (NSW) (1986) 14 IR 367 at 368. Kirby the expansion of its terms and the development of a culture of pre-emptive The proper approach is that expressed by Giles JA in the Court of Appeal in a more recent case in the present series. In Alliance Motor Auctions Pty Ltd v Industrial Relations Commission (NSW)79, Giles JA, giving the principal reasons of the Court of Appeal for refusing prohibition to the Commission for want of jurisdiction to hear and determine a claim under s 106 of the IR Act, said80: "It does not seem to me that that would be an appropriate course to adopt. First, it is not the function of this Court to supervise the parsing of proceedings in the Commission into aspects within the jurisdiction of the Commission and aspects not within its jurisdiction, a task which in any event could not readily be undertaken … Secondly, because the proceedings in the Commission must begin with a finding of what the contract was, and if it be found that the contract was as asserted by the claimants there is ready opportunity for the fullest exercise of jurisdiction. It therefore does not seem to me that the task can be carried out at all, because it cannot be said that there are aspects of any significance which are clearly outside the Commission's jurisdiction. Thirdly, and most important, I repeat that I do not accept that the Commission will not recognise, if the position so arises, that there is some particular aspect of the proceedings before it which exceeds its jurisdiction, and act accordingly." The approach by Giles JA is the legally correct approach to applications of the present kind. Spigelman CJ was right to adopt it in these proceedings. The majority of the Court of Appeal erred in deciding to intervene. Following Peterson J's decision and order, the Court of Appeal should have responded to the present case in the way expressed by Giles JA in Alliance Motor Auctions and for the same reasons. This Court makes a serious error in taking, and endorsing, the opposite approach. The substantive arguments for prohibition fail The residual question: the foregoing impediments of s 179 of the IR Act and the principles of institutional comity could be lawfully circumvented, should the appeal to this Court nonetheless be Assuming, however, that 78 Ballam v Higgins (1986) 17 IR 131; cf Mitchforce (2003) 130 IR 378 at 436 [213] 80 (2005) 146 IR 99 at 104 [23]. Kirby dismissed because any appeal by QSR to the Full Bench of the Commission in Court Session was ultimately bound to succeed? The joint reasons in this Court find no error in the approach of the majority of the Court of Appeal to the claim brought by Mr Batterham and Maylord81. In part, the approach of the joint reasons rests on the applicability to claims for relief under s 106 of the IR Act of the law governing the liability of corporations, once formed, for the performance by promoters of their agreed pre- incorporation functions82. The joint reasons are also influenced by the form of the Option Deed with QSR and the view that any work done by Mr Batterham, after the execution of that deed, could not be said to be done according to the deed and hence that the deed was not a contract "whereby" work was performed in an industry83. Much of the reasoning that leads to these conclusions is similar to that expressed in the joint reasons in Fish84. I adhere to the views that I expressed in that appeal. The approach taken in the joint reasons has many flaws, as explained in Fish. Above all, it amounts to a narrowing of the application of the deliberately broad language of s 106 for reasons that I regard as unpersuasive and contrary to Parliament's purpose and a turning away from the past authority of this Court. I will not repeat what I said in Fish. I incorporate it by reference. Even if, however, a narrower view were taken of the meaning and application of s 106 of the IR Act than that formerly adopted with respect to like statutory language by this Court and by the Privy Council85, basic questions would remain as to whether, in the facts of the present case, the Court of Appeal was correct to apply such narrower test and to reach the conclusion that the claim of Mr Batterham and Maylord to enlist the jurisdiction of the Commission, is not reasonably arguable so far as it related to the Option Deed. Only such a firm conclusion would have warranted the provision of the relief granted to QSR in terms of the Court of Appeal's order. 81 Joint reasons at [20]-[23]. 82 Joint reasons at [22]. 83 Joint reasons at [23]. 84 [2006] HCA 22 at [36]-[43]. 85 In Caltex Oil (Australia) Pty Ltd v Feenan [1981] 1 NSWLR 169 at 173; [1981] 1 WLR 1003 at 1009, the Privy Council said that the word "whereby", in the context of a contract or arrangement, "bears its ordinary meaning of 'in consequence of which' or 'in fulfilment of which'". Kirby There are several reasons why the majority in the Court of Appeal were wrong to find that it was not reasonably arguable that the Commission enjoyed the jurisdiction to determine the claims for relief brought by Mr Batterham and Maylord. Their finding involved a misunderstanding of the nature of the claim brought. It entailed legal errors in analysis. And it resulted in an order which, at the very least, was premature and therefore inappropriate. I will explain these errors in turn. Misunderstanding of the claim: So far as the misunderstanding of the claim brought by Mr Batterham and Maylord is concerned, the reasons of the majority in the Court of Appeal suggest a belief on Handley JA's part that the claim was narrower than in fact it was86. Contrary to Handley JA's description of the claim, Mr Batterham and Maylord were clearly attempting to support a case relying on an "arrangement" for the performance of work pre-dating the formation of QSR. So much appears in the submission of counsel, recorded elsewhere in the reasons of Handley JA87. Moreover, Mr Batterham and Maylord were also advancing the case that the "arrangement" involved QSR taking the benefit not only of pre-incorporation work but also post-incorporation work in an industry. This fact had been noticed by Peterson J in his reasons88, in turn actually extracted in Handley JA's reasons89. It is against this background, of the misunderstanding of the ambit of the claim advanced by Mr Batterham and Maylord, that the majority in the Court of Appeal proceeded to a misapplication of the word "whereby" in s 106(1) of the IR Act. They suggested that it was essential that there be a temporal operation obliging any "contract or arrangement" relied on to pre-date the relevant work before any order could be made under the section against QSR90. With all respect, this suggestion involves an incorrect application of the IR Act. Mr Batterham and Maylord argued that the Option Deed was "collateral" to the "arrangement" for the performance of work. This argument was disposed of by the majority in the Court of Appeal on the mistaken basis that the case as to what constituted the "arrangement" was somehow circumscribed or confined by the date of QSR's incorporation91. Because of these mistakes, the majority in the 86 (2004) 208 ALR 368 at 381 [74]. 87 (2004) 208 ALR 368 at 381 [72]. 88 [2003] NSWIRComm 366 at [25]. 89 (2004) 208 ALR 368 at 381 [70]. 90 (2004) 208 ALR 368 at 382 [75]. 91 (2004) 208 ALR 368 at 382 [77]. Kirby Court of Appeal deprived Mr Batterham and Maylord of the opportunity, by their evidence, to establish the existence of an "arrangement" within the IR Act, which included the incorporation of QSR and which, although an "arrangement" made before incorporation, continued to exist after such incorporation. Legal errors in the analysis: The fundamental flaw in the foregoing reasoning is that it departs from past elaborations of an "arrangement" where that word is used in s 105 of the IR Act and its predecessors. "Arrangement" has repeatedly been given a broad meaning, when appearing in statutes designed (as the IR Act here is) to cast a wide net of operation92. Against the deliberate use in the IR Act of a word that may conventionally apply to conduct having no legal consequences, the approach of the Court of Appeal was seriously constricted. When the relationship between entitlements under the Option Deed and both the pre- and post-incorporation work of Mr Batterham is kept in mind, it is strongly arguable that this was precisely the kind of "arrangement" to which ss 105 and 106 of the IR Act were addressed. To impose a strict temporal sequence, as favoured by the majority in the Court of Appeal, is contrary to the statutory language. It is also contrary to the purpose of the facility afforded by these provisions, being to permit the Commission to look in a sensible way at any related and collateral "arrangements"93. The strict temporal sequence is now endorsed by the joint reasons in this Court. That conclusion constricts the capacity of s 106 to afford remedies against unfair employment contracts as the broad language adopted by Parliament intended. It inflicts a needless wound on the IR Act's remedial provisions. To the present time, the case law of this Court and of the Privy Council concerning the meaning of the word "whereby" in the context of provisions such as s 106 of the IR Act (in relation to a "contract" or "arrangement") consistently holds that the claimant must show that work in any industry is performed "in consequence of" or "in fulfilment of" the "contract" or "arrangement". The use of the word "arrangement" in the legislation gives emphasis to the contemplation of two features. The first is that the "arrangement" might not be a contract in the legal sense. Indeed, it might be an agreement or set of actions that would have no legal consequences at all94. Secondly, the word "arrangement" contemplates 92 (2004) 208 ALR 368 at 378 [47]; Jaques v Federal Commissioner of Taxation (1924) 34 CLR 328 at 359; Bell v Federal Commissioner of Taxation (1953) 87 CLR 548 at 573; Newton v Federal Commissioner of Taxation (1958) 98 CLR 1 at 8-9; [1958] AC 450 at 465-466 (PC); Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd (2000) 169 ALR 344 at 359-360 93 Fish [2006] HCA 22 at [84]-[88]. 94 Fish [2006] HCA 22 at [87]. Kirby something more fluid and uncertain than a "contract" enforceable at law95. It envisages the integration of related conditions and collateral terms, including some agreed at a time later than the formal contract, but which must be taken into account if the "arrangement" is to be understood in its entirety96. Attempts to impose upon such statutory language rigidities, formalities and a strict time sequence are not only inconsistent with the words chosen. They are incompatible with the achievement of the purposes of the novel remedies provided in the IR Act. There is yet a further legal error in this approach. The Commission has been given power to make orders against parties to the proceedings who may not have been parties to the contracts or arrangements whereby work was performed. This has obviously been done to permit orders to be made against persons and corporations that have benefited from the work performed under such contracts or arrangements, although not ultimately parties to them. Such a facility was essential to respond to the dangers inherent in "clever" legal drafting. The ambit of the power was explained in Brown v Rezitis97. It is conditioned only on the requirement that the order must be made "in connection with" a contract or arrangement. There is no other jurisdictional precondition98. "Connection" is not limited to legally enforceable contractual connection. It is a basic error to so suppose. It follows that Handley JA was in error in introducing a temporal requirement as a precondition to recovery in respect of the "pre-incorporation work" relying on the conjunction "whereby" to carry that burden. There is no such temporal requirement in the IR Act. In fact, the Act distinguishes between the existence of the "contract" or "arrangement" whereby a person performs work and the provision of relief. By the settled authority of this Court, that relief can be granted, in terms of the legislation, against non-parties to the contract or arrangement. It can be granted in an "arrangement" where no legal obligation whatever existed. This is why, in his reasons rejecting the challenge to the jurisdiction of the Commission, Peterson J correctly said99: 95 Fish [2006] HCA 22 at [87]. 96 Fish [2006] HCA 22 at [84], [87]. 97 (1970) 127 CLR 157 at 163. 98 Hoffman v Industrial Commission (NSW) (1990) 33 IR 139 at 142. 99 [2003] NSWIRComm 366 at [31]. Kirby "While it is apparently true that (at least some of) this work was performed before QSR came into existence, I am not persuaded at this stage that QSR could not have become a party to the arrangement and accepted some burden thereunder or, alternatively could not be made a party to the proceedings, even if not a party to the arrangement, if it may be shown that QSR took the, or some, benefit under it." This was the essential consideration that also led Spigelman CJ to conclude that Mr Batterham and Maylord should have their day in court, with the determination of their claim made by the Commission in the normal manner. Conclusion: premature intervention: Against the background of the misunderstanding of the claim brought by Mr Batterham and Maylord and the misapplication of the applicable law, as long accepted, stated by this Court and reinforced by re-enactment in terms of ss 105 and 106 of the IR Act100, it could not be said that Mr Batterham and Maylord had no reasonable prospect of persuading the Commission to find the existence of an arrangement, as described, and to find that it was one, viewed globally, whereby Mr Batterham performed work in an industry, as defined. Nor could it be said that there was no real prospect of the making of orders against QSR, to the extent that it was shown that the "arrangement" proved was, or became, an unfair contract which justified avoidance or variation, with the payment of money as the justice of the circumstances of the case warranted101. The termination of the hearing in the Commission, based on the contention that the Option Deed was not part of the overall "arrangement" with QSR, was erroneous. On this ground too, the appeal must be allowed. The narrow approach to the IR Act adopted by the Court of Appeal, and now endorsed by the majority of this Court, will simply reaffirm the view of those who enacted ss 105 and 106 of the IR Act. It will confirm a belief that the general courts are hostile to the Commission and the remedial provisions of the IR Act and that the jurisdiction and powers of the Commission must be still further protected to ensure that the purposes of those sections are achieved and achieved in the Commission102. 100 Fish [2006] HCA 22 at [124]-[131]. 101 IR Act, ss 105, 106(5). 102 As occurred after the hearing and orders of the Court of Appeal in this case: Industrial Relations Amendment Act 2005 (NSW). Kirby Orders The appeal should be allowed with costs. The orders of the Court of Appeal of the Supreme Court of New South Wales should be set aside. In place of those orders, the application to the Court of Appeal should be dismissed with costs. 101 HEYDON J. The appeal should be allowed, the orders of the Court of Appeal should be set aside, and in lieu of those orders, the application to the Court of Appeal should be dismissed. The first respondent should pay the appellants' costs in both this Court and the Court of Appeal. The relevant legislation and background circumstances are set out in other judgments. Section 179 The reason why the appeal should be allowed is that s 179 of the Industrial Relations Act 1996 (NSW) operated to prevent the Court of Appeal making an order prohibiting the Industrial Relations Commission of New South Wales from continuing to hear the proceedings instituted by the appellants' summons. The following arguments for the proposition that s 179 does not apply need to be considered. No decision. The first respondent filed a notice of motion in the Industrial Relations Commission of New South Wales seeking dismissal of the appellants' summons "for want of jurisdiction". It agreed103 with the appellants that the relevant legal principles to be applied were those stated by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW)104. Peterson J dismissed the notice of motion because he considered that the first respondent had "not established in the overwhelming way necessary at an interlocutory stage that the summons is beyond the reach of the jurisdiction of the Commission." He also said: "Whether that remains so in the light of the evidence ultimately adduced remains open."105 He therefore dismissed the notice of motion with costs. The Court of Appeal held that while Peterson J did not decide that the Commission had jurisdiction, he did make a decision when he dismissed the first respondent's notice of motion for summary dismissal106. The majority judgment in this Court states that Peterson J made a decision that the proceedings instituted 103 Maylord Equity Management Pty Ltd v QSR Ltd [2003] NSWIRComm 366 at [5]. 104 (1964) 112 CLR 125 at 129. 105 Maylord Equity Management Pty Ltd v QSR Ltd [2003] NSWIRComm 366 at [39]. 106 QSR Ltd v Industrial Relations Commission of New South Wales (2004) 208 ALR 368 at 383 [85] per Handley JA (Mason P concurring). in the Commission had not been shown to be unarguably beyond jurisdiction107. Contrary to its position in the Court of Appeal, where the first respondent more than once described Peterson J as having made a "decision", in this Court, without relying on a notice of contention, the first respondent challenged the proposition that Peterson J had made a decision. The basis of the challenge was that to defer a decision is not to make a decision. However, it is possible to make particular decisions in the course of concluding that another decision should be deferred. That is what Peterson J did. Each of the conclusions that Peterson J made a decision is correct. Indeed, as the Court of Appeal recognised, he made another decision as well – that the proceedings should go to trial108. That decision was called into question by the Court of Appeal's decision that they should not go to trial. Procedural decisions outside s 179? The first respondent also submitted that even if Peterson J had made a decision, it was outside s 179 because it was merely procedural, and s 179 is directed to decisions on matters of substance. There is nothing in s 179(1) and (2) to suggest that a procedural decision is of necessity outside those sub-sections, and that is a conclusion supported by s 179(3)109. In any event, the rejection of a notice of motion seeking summary dismissal on the ground of want of jurisdiction was not, in this case, merely procedural. It rested on matters of substance. The Melbourne Stevedoring Case. The majority in this Court110, and apparently the majority in the Court of Appeal111, considered that the reasoning in R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd112 prevents s 179 from being applicable. Kirby J has accepted a submission of the appellants distinguishing that case on the ground that the delegate there made a "fundamental error" as to jurisdiction, while any error by 108 QSR Ltd v Industrial Relations Commission of New South Wales (2004) 208 ALR 368 at 383 [87] per Handley JA (Mason P concurring). 109 Solution 6 Holdings Ltd v Industrial Relations Commission of New South Wales (2004) 60 NSWLR 558 at 588 [122] per Spigelman CJ (Mason P and Handley JA concurring). 111 QSR Ltd v Industrial Relations Commission of New South Wales (2004) 208 ALR 368 at 383-384 [89] per Handley JA (Mason P concurring). 112 (1953) 88 CLR 100 at 118-119. Peterson J was not fundamental113. However, nothing in the language of s 179(1) and (2) supports a distinction between fundamental and other errors, and s 179(3) points against it. The case is, however, distinguishable on another ground: s 179 is much wider than the privative provision in the Melbourne Stevedoring Case (s 52 of the Stevedoring Industry Act 1949 (Cth)). Section 52 protected an "order" and a "direction", but nothing else. Section 179 protects "a decision or purported decision", and here Peterson J made a decision. On the basis of the first respondent's summons the Court of Appeal made an order that the Industrial Relations Commission be prohibited from hearing and determining certain aspects of the proceedings. That order could only be made by reviewing or calling into question Peterson J's decision that the first respondent had not established to the appropriate standard that the appellants' summons in the Industrial Relations Commission was outside its jurisdiction. The Court of Appeal did call the decision into question by directly challenging the correctness of the reasoning leading to that conclusion and the orders Peterson J made as a result of reaching it. And Peterson J's interlocutory decision that the case should go to trial was called into question by the Court of Appeal's decision that the case should not proceed further. Absence of res judicata and issue estoppel. The majority of the Court of Appeal drew attention to the fact that Peterson J dismissed the notice of motion because the first respondent had failed to discharge the heavy burden created by General Steel Industries Inc v Commissioner for Railways (NSW)114. The majority continued115: "An interlocutory decision of this kind does not pre-judge the final decision or create any res judicata or issue estoppel. A final decision in the commission that it lacked jurisdiction in whole or in part would not call in question the interlocutory decision that the case should go to trial. The position is no different here. The fact that this court, after fuller argument, might conclude that the commission's jurisdiction does not extend to any contract or arrangement which pre-dated the incorporation of the [first respondent] would not call into question the interlocutory 114 (1964) 112 CLR 125. 115 QSR Ltd v Industrial Relations Commission of New South Wales (2004) 208 ALR 368 at 383 [87] per Handley JA (Mason P concurring). is possible, and even The first two sentences are correct. But it is not correct to say that the Industrial Relations Commission, after a trial, reaching a conclusion that there was no jurisdiction, was in the same position as the Court of Appeal, before a trial, granting prohibition against the proceedings on the ground that there was no jurisdiction. The materials before the Court of Appeal were a little fuller, but not significantly fuller, than those before Peterson J; at a trial in the Industrial Relations Commission acknowledged, that they would have been more extensive. Whether or not the argument before the Court of Appeal was fuller than it was before Peterson J is unclear. It does seem that more cases were cited in argument in the Court of Appeal. Before oral argument took place in front of Peterson J, the parties each filed written submissions. After oral argument, they filed further written submissions. There is nothing to suggest that Peterson J restricted either written or oral argument in any way. But whether or not argument was fuller in the Court of Appeal than before Peterson J, the Court of Appeal's order did "call in question the interlocutory decision that the case should go to trial" because in substance it reversed it. Hence, s 179 applied. Other issues In view of the conclusion that s 179 applied, it is not necessary to deal with the other issues debated. |
HIGH COURT OF AUSTRALIA COMMISSIONER OF MAIN ROADS APPELLANT AND RESPONDENT Commissioner of Main Roads v Jones [2005] HCA 27 20 May 2005 Amended Order made 25 May 2005 AMENDED ORDER Appeal allowed. Appellant to pay the costs of the respondent of the appeal. Set aside orders 1 to 4 of the Full Court of the Supreme Court of Western Australia made on 20 November 2002 and in their place order that the appeal to that Court be dismissed. On appeal from the Supreme Court of Western Australia Representation: B W Walker SC with G R Hancy for the appellant (instructed by Corser and Corser) D F Jackson QC with K J Bradford for the respondent (instructed by Bradford & Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Main Roads v Jones Negligence – Standard of care – Breach – Respondent driver injured after car collided with wild horse on highway – Appellant a body corporate upon which care, control and management of highways was conferred – Whether appellant should have been aware of attraction of animals to water sources near accident site and exercised power to reduce speed limit and to erect warning sign. Courts – Appeals – Whether Full Court of the Supreme Court of Western Australia justified in overturning findings of trial judge on danger posed by animals straying on highway. Negligence – Causation – Whether, if speed limit reduced or warning sign erected, respondent's injuries would have been prevented. Practice – Discovery – Material discovered by appellant between trial and appeal – Whether availability at trial would have warranted different result. GLEESON CJ. The facts are set out in the reasons for judgment of Callinan J. The respondent sued the appellant for damages for negligence. The respondent suffered serious personal injury when a car he was driving collided with a horse on a stretch of unfenced road on the Great Northern Highway about 6 km south of Turkey Creek in Western Australia. The principal allegations of breach of duty of care on the part of the appellant were failure to erect road signs in the locality warning of the danger of animals on the highway, and failure to impose in the locality a speed limit lower than the general limit of 110 km per hour. The extent of "the locality" was rather imprecise. The argument concentrated on that part of the highway extending for a distance of about two or three kilometres either side of the point of impact. The trial judge rejected both allegations, holding that a reasonable response by the highway authority to the danger constituted by straying animals did not require either of those steps. The trial judge also found for the appellant on the issue of causation, holding that the conduct of the appellant before the accident showed that he would not have slowed down or driven more cautiously even if there had been a warning sign, or a reduced speed limit. Both of those findings were reversed, by majority, in the Full Court of the Supreme Court of Western Australia. The question before this Court is whether the Full Court was justified in reversing the trial judge's findings. As to the issue of negligence, a central, and in my view persuasive, aspect of the reasoning of the trial judge was that the evidence did not justify a conclusion that the risk of animals straying onto the road in the place where the collision occurred was materially different from the risk that extended over hundreds of kilometres of the highway. Murray J, who dissented in the Full Court, said1: "[T]he [respondent's] case failed because he was unable to establish any unusual concentration of wild animals in the area where the accident occurred. The risk was not materially different from that which applied at any number of places over the whole area traversed by the highway between Kununurra and Halls Creek. There was no particular requirement, therefore, for a reduction in the speed limit or a sign or signs in some way warning of the possibility that wild animals would be encountered on the road. The findings to that effect by the trial judge were well warranted by a body of evidence which his Honour was entitled to accept and rely upon." The difference of opinion between the majority in the Full Court, on the one hand, and Murray J and the trial judge, on the other, was largely concerned Jones v Commissioner of Main Roads (WA) 2002 37 MVR 451 at 460-461 [51]. with the proper inferences to be drawn from a body of evidence about the comparative risks of straying animals along the Great Northern Highway, and at particular locations. In this respect, the case provides another example of the danger involved in considering warnings without making due allowance for the distorting effect of litigious hindsight. The matter was discussed in Rosenberg v Percival2. When a foreseeable risk has eventuated, and harm has resulted, the particular risk naturally becomes the focus of special attention. Yet, if it was only one risk among many, there may have been no reason, at the time of the allegedly tortious conduct, to single it out. The Great Northern Highway extends, unfenced, for long distances, through cattle stations. The respondent knew that, all along the highway, there was a risk of colliding with animals. His case was not that there should have been a warning sign, or a reduced speed limit, covering the entire length of the road. His case was that there should have been such a sign, and a reduced speed limit, covering the place where the collision occurred. Yet the evidence accepted by the trial judge showed that there was nothing so unusual about that locality as to warrant the measures for which the respondent contended. In my view the trial judge's conclusion on the issue of breach of duty should not have been disturbed. There was, however, a substantial basis for the difference of opinion. It related to the significance of the evidence of a number of local residents as to their appreciation of the risk in the locality. If the present appeal had turned only upon this first issue, it would have been necessary to deal with that evidence in more detail. However, on the issue of causation, the outcome is more clear-cut, and turns upon facts that can be stated shortly. The evidence showed that the respondent's average speed, over a distance of more than 200 km before the collision, was between 135 km and 140 km per hour. The road was not entirely straight and clear. There were places where the respondent would have been forced to reduce speed. To achieve that average, his maximum speed must have been significantly greater than 140 km per hour. He drove through Turkey Creek, a settlement only 6 km from the place of the accident, where the speed limit was 90 km per hour, at such a high speed that he attracted local attention. The trial judge accepted the evidence of a witness who estimated the respondent's speed through Turkey Creek at about 140 km per hour. The trial judge said: (2001) 205 CLR 434 at 441-442 [16]. "Having regard to the [respondent's] knowledge of the risks of travel at night, he would not have heeded warning signs had they been erected; nor would he have decreased his speed to a safe speed had the speed limit been reduced – this is illustrated by his travelling at a dangerously fast speed through Turkey Creek where the speed limit was 90 km/h and at a dangerously fast speed in the vicinity of two narrow bridges upon a two lane highway with cattle grids." The respondent, by reason of his injuries, was unable to give evidence. In reversing the finding of the trial judge on the causation issue, the majority of the Full Court relied upon evidence of the respondent's wife, who was not in the car when the collision occurred, and of a passenger, who was asleep. They both said that it was the respondent's usual practice, when driving, to adapt his speed to warning signs. The finding of the trial judge was not based on the respondent's credibility. It was based on objective evidence of the conduct of the respondent in the course of the journey in question and, in particular, over the period immediately before the collision. The trial judge was satisfied, on the evidence, that the respondent was aware of the danger constituted by animals, both wild and domestic, along the whole length of the road on which he travelled at very high (and legally excessive) speed. He did not slow down on account of the danger to people at Turkey Creek. He ignored a sign reducing the speed limit. In fact, he appears to have ignored speed limits altogether. The likelihood that he would have responded to another sign reached a few minutes after he passed through Turkey Creek seems remote. The trial judge heard the evidence of the respondent's wife, and the passenger, and did not regard it as of sufficient weight or cogency to displace the inference clearly available from the objective evidence of the respondent's behaviour on the occasion in question. The Full Court was not justified in substituting its own view for that of the trial judge on the point. The reversal of the finding on causation was unwarranted. I agree with what is said by Callinan J concerning the new evidence. I would allow the appeal, set aside orders 1 to 4 of the orders of the Full Court, and order that the appeal to the Full Court be dismissed. In accordance with the undertakings given at the time of the grant of Special Leave to Appeal, the appellant must pay the costs of the appeal to this Court. McHugh 13 McHUGH J. In my opinion this appeal should be allowed. The respondent, Lloyd Russell Jones, suffered serious injuries on the night of 11 May 1992 when his car collided with a horse that had strayed onto the Great Northern Highway in the Kimberley district of Western Australia. The accident occurred between Mabel Spring Creek and Rocky Creek, two creeks over which the Highway passes. The accident site was 5.8km south of the town of Turkey Creek, situated 194km south of Kununurra. Mr Jones sued the appellant, the Commissioner of Main Roads, for damages for negligence in the District Court of Western Australia alleging that the Commissioner had breached the duty of care that he admittedly owed to Mr Jones. Mr Jones' Further Re-Amended Statement of Claim alleged that, within 500 metres of the accident site – at Rocky Creek and at the junction of Rocky Creek and Turkey Creek – were watering holes and that about 1.5 to 2km from that site was a water bore. It also alleged that the watering holes and bore were likely to attract wild animals including horses. Mr Jones claimed that the Commissioner had breached his duty by failing to exercise his power to reduce the speed limit applicable "in the area where the collision occurred" to 80km/h. The speed limit that applied in that area was 110km/h. Mr Jones also alleged that the Commissioner had breached his duty by failing to erect signs warning motorists of the hazards created by animals in that area of the Great Northern Highway. The trial judge, Charters DCJ, rejected Mr Jones' claim for damages3, but, by majority, the Full Court of the Supreme Court of Western Australia allowed Mr Jones' appeal against that decision4. The Full Court found that the Commissioner had been negligent and that Mr Jones' contributory negligence was 50 per cent responsible for his injuries. The trial judge found that there was "a significant danger of encountering animals at night on the road throughout the station or cattle country in the Kimberley region". His Honour said that there was always a prospect of encountering wild animals, such as horses, donkeys and kangaroos. His Honour found that Mr Jones was aware of the danger posed to motorists by animals straying onto the Highway in the area where the accident occurred. The learned trial judge also found that the speed at which Mr Jones was travelling had averaged between 135 and 140km/h and that he had driven through Turkey Creek at a speed of about 140km/h. His Honour also held that the evidence did not establish the risk of injury from straying animals was greater upon the section of the highway between Kununurra and Halls Creek, which was 358km south of Kununurra, than upon other parts of the Highway. His Honour said that there Jones v Commissioner of Main Roads (1998) 20 SR (WA) 117. Jones v Commissioner of Main Roads (WA) (2002) 37 MVR 451. McHugh was no particular propensity for animals to approach the section of the Highway in question. Accordingly, his Honour found: "Signs warning of animals in the area were not warranted having regard to the overall character of the highway and likely presence of animals over a very large area. [Mr Jones] failed to take reasonable care for his own safety by driving at a most dangerous speed at night and by that failure caused his injury. As a matter of ordinary commonsense his negligence was the sole real cause of the accident. Having regard to [his] knowledge of the risks of travel at night, he would not have heeded warning signs had they been erected; nor would he have decreased his speed to a safe speed had the speed limit been reduced – this is illustrated by his travelling at a dangerously fast speed through Turkey Creek where the speed limit was 90km/h and at a dangerously fast speed in the vicinity of two narrow bridges upon a two lane highway with cattle grids." These findings inevitably led the learned trial judge to reject Mr Jones' claim for damages. However, a majority of the Full Court found5 "that there was a need, throughout the length of the road between Kununurra and Halls Creek, to place signs, warning of the danger of straying animals, on those parts of the road (including that in which the accident occurred) in which animals were more frequently to be found." The majority also found that the Commissioner "should have imposed lower speed limits in those areas where the danger was most acute."6 The majority judges also rejected the trial judge's finding on causation. Steytler J, with whose judgment Malcolm CJ agreed, said7: "As to the issue of causation, I find myself, with due respect, entirely unable to accept the proposition, accepted by the trial judge, that merely because [Mr Jones] had previously travelled in the Kimberley region, including the area between Kununurra and Halls Creek, he would have been aware of the extent of the risks posed by straying animals. He was, no doubt, aware of the risk of straying animals. He had previously driven in the area, and in the Kimberleys generally, and his attempts to hire a four-wheel-drive vehicle demonstrated his concerns in this respect. However, there was nothing to suggest that he knew which areas along his (2003) 37 MVR 451 at 470. (2003) 37 MVR 451 at 471. (2003) 37 MVR 451 at 471. McHugh chosen route were particularly dangerous. He had, on the available evidence, only limited experience of this particular stretch of road and it seems to me to be improbable that he would, in the absence of any warning signs or even a reduced speed limit, have known of the particular danger presented by straying animals in the Rocky Creek and Mabel Spring Creek area." Steytler J found it "to be probable that, had there been a warning sign as to the particular danger presented by straying animals in the area around Mabel Spring Creek and Rocky Creek, [Mr Jones] would have slowed down, to some extent at least."8 It is unnecessary for me to determine whether the Full Court was justified in overturning the trial judge's findings concerning the dangers arising from animals straying onto the Highway in the area between Mabel Spring Creek and Rocky Creek. That is because, in my opinion, even if warning signs were needed in that area and even if the speed limit should have been reduced to about 80km/h, Mr Jones failed to prove that their presence would have prevented his accident or reduced his injuries. that Mr Jones The evidence established a high probability that, for much of the 200 kilometres the accident, his speed travelled before significantly exceeded the speed limit of 110km/h. Indeed, the evidence did more than indicate that his average speed was somewhere between 135 and 140km/h. Given the winding nature of parts of the Highway, to have achieved an average speed of 135-140km/h over that distance, he must have travelled at times at speeds in excess of 140km/h. Moreover, the evidence established that he was travelling at a high speed – 50km/h in excess of the speed limit – shortly before the accident. Turkey Creek is 5.8km from the accident site. The speed limit at Turkey Creek was 90km/h. Yet Mr Jones went through Turkey Creek at a speed of about 140km/h according to a witness whose evidence the trial judge accepted. With great respect to the majority judges in the Full Court, it seems fanciful to suppose that a speed sign of 80km/h in the area before the accident site would have caused Mr Jones to reduce his speed to any significant extent. He had probably disregarded the speed limits for the whole or almost the whole of his journey and he had travelled at a speed more than 50 per cent in excess of a 90km/h sign less than three minutes before the accident. Nothing in the evidence accepted by the trial judge suggests that Mr Jones would have reduced his speed because of an 80km/h sign in the Mabel Spring Creek-Rocky Creek area. The trial judge made his finding concerning causation despite the evidence of Mr Jones' wife and his passenger that he was a careful driver who took notice of (2003) 37 MVR 451 at 473. McHugh road signs. Given the evidence of Mr Jones' speed through Turkey Creek and the entire journey, rejection of their evidence was inevitable, assuming that it was admissible as evidence of habit. A more difficult question is whether the accident could have been avoided if, as the Full Court found, the Commissioner breached his duty by not erecting signs between Kununurra and Halls Creek warning of the danger of straying animals. Mr Jones' case on this aspect of causation depends on whether it is reasonable to draw the inference that the presence of such signs would have reinforced the need to obey the speed limits or alternatively would have caused him to keep a better lookout. The view that a warning sign would have induced Mr Jones to keep a better lookout is easily dismissed. There was no evidence that he was not keeping a proper lookout. It would be speculation – not inference – to conclude that the presence of signs would have induced him to keep a better lookout than he did. The majority judges in the Full Court thought that warning signs would have caused Mr Jones to slow down with the result that he would have had a better chance of avoiding the collision and of suffering less severe injuries. "In all of these circumstances, it seems to me to be probable that, had there been a warning sign as to the particular danger presented by straying animals in the area around Mabel Spring Creek and Rocky Creek, [Mr Jones] would have slowed down, to some extent at least. It also seems to me to be probable (although some speculation is required) that his failure to do so contributed to the accident which occurred or added to its severity". The reinforcement claim, however, faced formidable difficulties. First, the evidence did not reveal the circumstances in which the accident occurred. Whether the collision with the horse would have been avoided if Mr Jones had been travelling at 80km/h can only be a matter of speculation. Secondly, the trial judge accepted the evidence of an expert on road planning and traffic control that the effectiveness of warning signs can be maintained only "where the road environment is likely to present a hazard which is outside the probable driver expectation." The Australian Standards concerning road signs also accepts that a multiplicity of such signs undermines their influence on drivers. A proliferation of warning signs between Kununurra and Halls Creek would probably have had little effect on drivers generally and Mr Jones in particular, given his disregard of (2003) 37 MVR 451 at 473. McHugh speed limit signs for 200km between Kununurra and the accident site. Thirdly, Mr Jones knew that, in driving along this Highway, he ran the risk of colliding with domestic and feral animals straying onto the Highway. That risk was present, to his knowledge, throughout the entire section of the journey from Kununurra to Halls Creek. Yet his average speed throughout the journey was between 135 and 140km/h, well in excess of the speed limit. Once the trial judge declined to accept the evidence of Mr Jones' wife and his passenger concerning his response to road signs, nothing in the evidence justified the Full Court in refusing to accept the inferences flowing from his cavalier disregard of the speed limits governing his journey. It may or may not have been open to the trial judge to make a positive finding that Mr Jones would not have been influenced by a straying animal warning sign or obeyed an 80km/h sign. But however that may be, it was not open to the Full Court to find that he would have acted in accordance with either of such signs. This was not a case where the only evidence concerning causation was that the defendant had breached his duty of care and that the injury that occurred was within the scope of the risk of injury arising from the breach of duty10. In such cases, it is always open to the tribunal of fact to find a causal connection between the breach and the injury even though the exact cause of the injury or conduct of the plaintiff is unknown11. In this case, however, the evidence showed that Mr Jones travelled at speeds throughout his journey that were well above the speed limit of 110km/h even though he was aware of the danger of animals straying onto the Highway. It also showed that less than three minutes before the collision he had travelled through Turkey Creek at 140km/h although a sign erected on the outskirts of the town proclaimed a 90km/h speed limit. Far from the accepted evidence proving that Mr Jones would have slowed down if he had seen 80km/h speed limits and straying animal warning signs, it tends to suggests that they would not have influenced his conduct. What he did in relation to traffic signs during his journey was the best evidence of what he might have done if additional or different signs were present during the journey. And his flagrant and persistent breaches of the traffic speed signs that did exist indicate that an 80km/h speed sign and an animal warning sign would have made no difference to his driving as he approached the accident site. Even if the accident would have been avoided or the severity of Mr Jones' injuries reduced by erecting an 80km/h sign in the accident area, the evidence does not support a finding that he would have driven at 80km/h or at a lesser speed than he did. With great respect to the majority judges in the Full Court, they were not entitled to reverse the findings of the learned trial judge concerning the causation issue. 10 cf Chappel v Hart (1998) 195 CLR 232 at 244 [27]; Naxakis v Western General Hospital (1999) 197 CLR 269 at 279 [32], 312 [128]. 11 cf Hamilton v Nuroof (WA) Pty Ltd (1956) 96 CLR 18 at 24, 27. McHugh Mr Jones also relied on new evidence that was tendered in the Full Court. However, once the finding of the trial judge on the causation issue is accepted, the new evidence on which Mr Jones relied could make no difference to the result of the case. It goes to the issue of breach, not the issue of causation. Order The appeal must be allowed. Orders 1 to 4 of the orders of the Full Court of the Supreme Court of Western Australia allowing the appeal to that Court must be set aside and in their place order that the appeal to that Court be dismissed. In accordance with the undertakings that were given at the time of the grant of special leave to appeal, the appellant is to pay the respondent's costs of this appeal. GUMMOW AND HAYNE JJ. At about 5.30 pm on 11 May 1992, the respondent, Mr Jones, with a passenger, Mr Stewart, left Kununurra in the Kimberley district of Western Australia to travel south to Halls Creek along the Great Northern Highway ("the Highway"). The respondent was driving a hired sedan motor vehicle. At about 7.00 pm, while the passenger was asleep, the car collided with a wild horse which had strayed onto the Highway. The respondent was 57 years old. He suffered severe head injuries and never recovered total consciousness. The respondent's claim for damages in negligence was brought by his wife as his next friend. The action was tried in the District Court of Western Australia (Charters DCJ sitting without a jury)12. His Honour dismissed the action. However, an appeal to the Full Court of the Supreme Court of Western Australia (Malcolm CJ and Steytler J; Murray J dissenting) was successful13. By majority, the decision of the District Court was set aside and an order was made that the appellant was liable to the respondent for 50 per cent of the damages he sustained; in the absence of agreement as to the quantum of damages, the matter was to be returned to the District Court for assessment14. Against that decision, the defendant in the action, the Commissioner of Main Roads ("the Commissioner") appeals to this Court seeking reinstatement of the outcome in the District Court. It is convenient first to say something respecting the statutory powers and functions of the Commissioner. The Commissioner is constituted as a body corporate by s 9 of the Main Roads Act 1930 (WA) ("the Roads Act"). At the relevant time, the Roads Act (s 15(2)) conferred upon the Commissioner the care, control and management of land over which a highway or main road was declared. Further, s 16(1) empowered the Commissioner to do all things necessary for or incidental to the proper management of all highways and main roads in Western Australia. Further provision was made by regulations titled the Road Traffic Code 1975 (WA) ("the Code"). This authorised the Commissioner to erect, establish or display traffic signs and traffic control signs (reg 301(1)). Persons contravening the direction of the inscription on a traffic sign committed an offence (reg 304). The Code also prescribed a general speed limit throughout Western Australia of 110 kms per hour (reg 1001). 12 Jones v Commissioner of Main Roads (1998) 20 SR (WA) 117. 13 Jones v Commissioner of Main Roads (WA) (2002) 37 MVR 451. 14 (2002) 37 MVR 451 at 473. The Highway began as a dirt track constructed in the 1880s by station owners running bullock teams and was used by those participating in the gold rush in the Halls Creek area in about 1885. With financial assistance under the Western Australia Grant (Beef Cattle Roads) Act 1961 (Cth), the Highway was graded and gravelled and, in 1972, it was sealed. At the time of the accident, the Highway was a dual sealed carriageway. Halls Creek is 358 kms south of Kununurra. Turkey Creek, where there is a roadhouse and a signed speed restriction of 90 kms per hour, is 194 kms south of Kununurra. The accident site was 5.8 kms south of Turkey Creek. A speed derestriction sign appeared at the southern exit of Turkey Creek. The result was to restore the general State limit of 110 kms per hour. The accident site was between Mabel Spring Creek and Rocky Creek. The Highway is carried over these creeks (or creek beds) by one-lane bridges; there are signs before each bridge indicating "Narrow bridge, one lane" and "No overtaking or passing". There were signs warning of stock crossing or straying onto the Highway at Rosie's Yard and Tikalara Bore, respectively well north and south of the accident site. Given the starting time of the trip, the time of the accident and the distance travelled, the trial judge, whilst not confident that the times could be said with great accuracy, found that the speed at which the vehicle was travelling was somewhere between 135 and 140 kms per hour as an average. His Honour also found that the respondent had driven through Turkey Creek at a very high speed, probably about 140 kms per hour, despite the signed speed restriction of 90 kms per hour. This was not a case which turned upon the state of the Highway. The accident occurred because the vehicle came into collision with a wild horse which appears to have run onto the road coincidentally at the time when the vehicle was passing. The collision caused the respondent to lose control of the vehicle so that it left the road and struck a tree 20 to 30 metres south on the left side of the road. The relevant duty imposed by the law upon the Commissioner was one to take reasonable care for the safety of the respondent as a user of the Highway. The relevant powers of the Commissioner were those dealing not with the construction and maintenance of the Highway but with the creation and maintenance of appropriate signs where necessary for the guidance and protection of road users, including the imposition of particular speed limits. Consistently with the decision in Brodie v Singleton Shire Council15, it is not an issue that a statutory body, such as the Commissioner, may come under a common law duty of care in relation to the exercise or failure to exercise its powers and functions. In submissions to this Court, the Commissioner did not dispute the existence of a duty of care. This obliged the Commissioner to take reasonable care that its exercise or failure to exercise its powers and functions did not create a foreseeable risk of harm to road users, including the respondent. Where the state of a highway or main road created such a risk, the Commissioner was obliged to take reasonable steps to alleviate the danger. But what was reasonable in this case? On that subject, the following was said in the joint judgment in Brodie16: "The perception of the response by the authority calls for, to adapt the statement by Mason J in Wyong Shire Council v Shirt17, a consideration of various matters; in particular, the magnitude of the risk and the degree of probability that it will occur, the expense, difficulty and inconvenience to the authority in taking the steps described above to alleviate the danger, and any other competing or conflicting responsibility or commitments of the authority. The duty does not extend to ensuring the safety of road users in all circumstances. In the application of principle, much thus will turn upon the facts and circumstances disclosed by the evidence in each particular case." Counsel for the Commissioner emphasised the propositions in these last two sentences as particularly important for the present appeal. Counsel also emphasised the "localised" nature of the response pleaded by the respondent as that which ought to have been given by the Commissioner. A fundamental problem with the case for the respondent has been its reliance upon broadly expressed evidence. The statement of claim in its final form alleged the presence of watering holes in Rocky Creek and at the junction of Rocky Creek and Turkey Creek, being located within 500 metres from the accident site, and the existence of a bore known as Six Mile Bore, located some 1.5 to 2 kms south-east from the site. The respondent pleaded that the Commissioner should have been aware of the attraction of wild animals, including horses, to the watering holes and bore. 15 (2001) 206 CLR 512 at 577 [150], 605 [243]. 16 (2001) 206 CLR 512 at 577-578 [151] (footnote omitted). 17 (1980) 146 CLR 40 at 47-48. The respondent did not complain of a failure to take measures to stop animals straying onto the Highway, for example by fencing off the road from the surrounding countryside. Rather, the contention was that the hazard was such as to call for the exercise by the Commissioner of its powers to reduce the speed limit and require some form of warning sign or signs to warn motorists of the nature of the hazard; the wording of those signs was not specified. The respondent pleaded that the Commissioner had failed to take any measures to reduce the speed limit "in the area where the collision occurred" below the general State limit of 110 kms per hour, and that the Commissioner had failed to erect and to display warning signs "in the area where the collision occurred" so as to warn motorists of the hazard created by animals on the Highway. The trial judge made findings that (i) throughout the Kununurra region there was a significant danger of encountering wild animals, including wild horses, donkeys and kangaroos, on the road at night; (ii) this was true of the whole stretch of the Highway between Kununurra and Halls Creek; (iii) but in 1992 there was no unusual concentration of animals at any particular section of the Highway between Kununurra and Halls Creek; (iv) the reported accident statistics for the Highway from Kunuurra to the accident site did not show a greater rate of accidents in the area of the two creeks, Mabel Spring Creek and Rocky Creek, than encountered in any other area; for the area of the two creeks, there were two reported accidents with horses in the years 1985 to 1992, in 1987 and 1992; (v) pictorial signs for straying stock on the Highway between Mabel Spring Creek and Rocky Creek were not warranted given the presence of the risk of straying animals along the whole of the Highway; and (vi) the introduction of local speed limits in areas of perceived concentration of animals with a propensity to stray onto the Highway would have been impractical. His Honour also found that, in May 1992, the creeks in the Kununurra region, of which there were hundreds, contained water and there was no logical reason why the Turkey Creek area should have attracted more animals than elsewhere on the Highway. In 1992, an average of 252 vehicles per day travelled the Highway between Kununurra and Halls Creek. In a period of more than seven years before 11 May 1992, 50 accidents were reported along that length of the Highway as having involved animals; 14 of these required admission of persons to hospital or other provision of medical treatment. From the judgment of the District Court, an appeal lay to the Full Court of the Supreme Court, as from the Supreme Court itself18. The Rules of the Supreme Court (WA) provide (O 63 r 10(2)): 18 District Court of Western Australia Act 1969 (WA), s 79. "The Full Court shall have power to draw inferences of fact and to give any judgment, and make any order which ought to have been made, and to make such further or other order as the case may require." In essence, the Commissioner's case is that the trial judge correctly applied the law to facts properly found by him, and there was no occasion for intervention by the Full Court. That submission should be accepted and, subject to consideration of a further or fresh evidence submission, it follows that the appeal to this Court should be allowed. In his judgment for the Full Court majority, Steytler J was impressed by the "local" evidence from nine witnesses, from which his Honour concluded that there was "overwhelming support for the proposition that the road from Kununurra to Halls Creek was, in 1992, a dangerous stretch of road as a consequence of the threat of straying animals"19. That, however, is not a contentious proposition. It is not the case pleaded by the respondent which was, as has been indicated, concerned with steps which should have been taken in the exercise of the Commissioner's powers with respect to a particular locality "in the area where the collision occurred". His Honour referred to the preference given by the trial judge to the statistical evidence over what had been said by the local "What that statistical information established, in my opinion, was that the whole of the road between Kununurra and Halls Creek presented a particular danger. What the evidence of the local inhabitants established was that that danger was at its most acute, as I have said, in areas such as Mabel Spring Creek and Rocky Creek in which water and good food were to be found." (emphasis added) In the appeal to this Court, detailed reference was made to the statistical materials and the evidence of the local inhabitants. If regard be had to all the material on which the parties placed their respective emphases, the conclusion to be drawn must be to the same effect as that stated by Murray J in his dissenting judgment in the Full Court. Murray J said of the trial judge21: "In my view, his Honour was right to note that the anecdotal evidence represented the perception of those witnesses who gave it, but as evidence that the place where the accident occurred was a place of any 19 (2002) 37 MVR 451 at 470. 20 (2002) 37 MVR 451 at 470. 21 (2002) 37 MVR 451 at 460. unusual danger, the evidence presented the difficulty that it was subjective, imprecise, expressed in terms of descriptive conclusions about the degree of danger and the notoriety of the road, and it was lacking in its capacity to provide hard evidence of primary fact. It was not supported by the statistical evidence. As to that, however, the trial judge noted the rendered shortcomings of statistical incomplete once it is appreciated that accidents may have happened which were not reported to the [Commissioner]. information which must be ... [I]t was well open to the trial judge to take the view ... that there was insufficient evidence to support a conclusion that the place where the accident occurred was a place which presented any substantially greater danger of collision with animals on the road than other places on the [Highway] between Kununurra and Halls Creek. ... [C]onsideration of the question of breach of the [Commissioner's] duty of care had to be approached upon the basis that the danger at the place where the accident happened was not materially different in kind or degree from many other places along the [Highway]." With respect to the absence of measures to reduce the speed limit in the area where the collision occurred (being a failure pleaded by the respondent), "So far as I can tell, the evidence did not address the question of what speed limit ought to be prescribed, having regard to such relevant considerations." These included the capacity of the driver of average skill and competence to drive a vehicle of a common kind with reasonable safety, having regard to the state of the road and driving conditions and hazards likely to be encountered. In this Court, counsel for the Commissioner urged acceptance of the conclusions expressed in the dissenting judgment in the Full Court that there had been no occasion to interfere with the findings of the trial judge. Counsel's submissions as to the cogency of the reasons given by Murray J should be accepted. Counsel for the Commissioner went on to allege deficiencies in the expression by Steytler J of what should have been drawn from the evidence as to breach of duty. The critical passages in the reasoning of Steytler J appear as follows in pars 105 and 106 of his Honour's reasons23: 22 (2002) 37 MVR 451 at 461. 23 (2002) 37 MVR 451 at 470-471. "The evidence, taken in its entirety, seems to me quite plainly to have established that there was a need, throughout the length of the road between Kununurra and Halls Creek, to place signs, warning of the danger of straying animals, on those parts of the road (including that in which the accident occurred) in which animals were more frequently to be found. It would, in my opinion, have been a relatively simple matter for the [Commissioner], which was well aware of the risk of straying animals, to have made inquiries in the area in order to determine which locations were the areas of highest risk and to have placed signs accordingly. In my opinion it should have done so. Indeed, Mr Holdsworth [an expert engineer called by the Commissioner] himself acknowledged that local knowledge 'most definitely' had a role to play in considering what safeguards should be implemented by the [Commissioner]. It seems to me, also, that the [Commissioner] should have imposed lower speed limits in those areas where the danger was most acute. On the evidence of the local residents, a speed limit of 110 km per hour was far too high in the area between Rocky Creek and Mabel Spring Creek and one of 80 km per hour should, in my opinion, have been imposed in that area. The fact that some motorists might have ignored that speed limit does not, in my opinion, absolve the [Commissioner] of the need to impose it." (emphasis added) With respect to the first paragraph, what is missing from the use of comparative and superlative terms is an identification of any yardstick. Counsel for the Commissioner correctly stressed that the significance attached to the failure by the Commissioner to impose lower speed limits did not allow for the counter- productive effect of placing too many signs. The trial judge had accepted the evidence of Mr Holdsworth that "[t]he effectiveness of warning signs in instances where they are important can only be maintained if the use of warning signs is limited to instances where the road environment is likely to present a hazard which is outside the probable driver expectation." Mr Holdsworth also had agreed that "there is a high probability that a motorist could encounter an animal anywhere on the highway between Kununurra and Halls Creek" and that "the dangers associated with large animals and the road would be obvious". Steytler J's view also depended upon what was said to be the evidence of local residents that the standard speed limit was far too high in the area between Mabel Spring Creek and Rocky Creek, a matter, however, both contentious and expressive of opinions not always fully reasoned. Likewise the reference in par 105 of Steytler J's reasons to those parts of the Highway in which animals were more frequently to be found and to the areas of highest risk could be turned to account in the respondent's case only by attributing to the particular locality of the accident site the characteristic of a high risk area. That can be done only by overturning the findings of the trial judge. The Commissioner has made out the case in this Court that there was no occasion for the Full Court to interfere with the conclusions reached by the trial In the interval between the adjudication at the trial and the hearing by the Full Court, the Commissioner gave discovery of documents which ought to have been, but which had not been, discovered at trial. The majority of the Full Court did not have to consider the matter, but Murray J did so and concluded that the material did not support an application for a new trial25. The respondent reagitated the question in this Court. We agree with what has been said in the reasons of Callinan J upon this question. The appeal should be allowed. Consequential orders should be made as 24 cf Hoyts Pty Ltd v Burns (2003) 77 ALJR 1934 at 1939 [24]-[27]; 201 ALR 470 at 25 (2003) 37 MVR 451 at 455. Callinan CALLINAN J. Western Australia is a vast and sparsely populated State. The provision and maintenance of roads to service remote communities must be an onerous and expensive task. One such road is the Great Northern Highway which extends for more than 1,430 kilometres. The stretch of it with which this appeal is concerned lies between Kununurra and Halls Creek, and consists, for the most part, of an unfenced, sealed dual carriageway, generally level and fairly straight. It passes through country in which there are waterholes that attract wild horses and other animals. On 11 May 1992 the respondent approached and drove through the area at an average speed of 135 kilometres per hour despite that the maximum speed permitted anywhere in Western Australia26 was 110 kilometres per hour The appellant, who has responsibility for the highway27, had not erected signs warning that wild animals might stray onto it. A horse did, at about 7:00 pm. The respondent's vehicle collided with it. He suffered serious injuries in consequence. Is the appellant liable to the respondent for damages for negligence? A District Court judge thought not. An intermediate appeal Court, the Full Court of the Supreme Court of Western Australia thought that it was. The question which this Court has to decide is, who was correct? The trial The only issue tried in the District Court of Western Australia was of liability28. If the respondent were to establish it, a further hearing for an assessment of damages would be necessary. In his particulars of negligence the respondent put what was fundamentally the same case, in several ways: In the knowledge that wild animals were attracted to and near the highway by the presence of nearby watering holes, failed to take any or any adequate steps to warn motorists of the hazard thereby created; Failed to erect warning signs to warn motorists of the hazard created by animals straying onto the highway in that area; Failed to erect speed limit signs to prescribe a speed which was safe in the area in the circumstances; 26 See r 1001(1) of the Road Traffic Code (WA). 27 at the relevant time, see: Main Roads Act 1930 (WA), ss 14, 15, 16 and 19. 28 Jones v Commissioner of Main Roads (1998) 20 SR(WA) 117. Callinan In designing and constructing the highway to take a path close by the watering holes, failed to take any or any adequate steps to protect motorists from the risks thereby created; (5) On sealing the highway in or about 1972 and subsequently, failed to take into account the increased risk to road users posed by the combination of animals on and near the highway and the increased motor vehicle speeds associated with the sealed highway; and Failed at any time to make enquiries in the locality as to areas of extraordinary animal hazards." In addition to denying negligence and asserting that the respondent's driving, at the excessive speed that he did, most dangerously, as the trial judge held, was the sole cause of the collision, the appellant contended that if there were a negligent failure on its part to erect warning signs, that failure should be characterised as non-feasance for which it was not liable. The respondent was an experienced traveller in the area. Carcasses of kangaroos, donkeys, dingos and horses were all occasionally on the highway. The frequency with which cattle were lost there was a matter on which the witnesses differed. The dangers and risks of travelling are greatly increased at night when visibility is limited and animals move around: this is particularly so at about 6:00 pm, that is, at dusk. The number of accidents involving animals between 6:00 and 8:00 pm exceeded the total number of accidents during the remaining 22 hours. One witness said that 50 animals were lost in collisions on the highway annually. Statistics showed that between 1985 and 1992, 50 accidents involving animals had been reported between Kununurra and Halls Creek. The respondent and the appellant were both aware of the danger to motorists of animals, feral and domesticated on the Highway in the area where the accident occurred. It could hardly be otherwise. The evidence, decaying carcasses, on the roadside, was there for all to see. The Australian Standards relating to signs recognise that a multiplicity of warning signs tends to diminish sensitivity to them. The trial judge (Charters DCJ) made this finding: "I find that there is a significant danger of encountering animals at night on the road throughout the station or cattle country in the Kimberley region – within and outside station country there is always the prospect of encountering wild animals such as wild horses, donkeys and kangaroos. There is no evidence to lead me to believe that the risk is greater upon that part of the highway between Kununurra and Halls Creek, where there is Callinan certainly the danger at night of encountering cattle and wild animals. There was a lesser risk during the day." Other relevant findings of his Honour were as follows: "There was no particular propensity for animals to approach the section of the highway between the two creeks in question ... Apart from concentrations at bores such as Tikalara Bore and Rosie's Yard there was no unusual concentration of animals at any particular section of the highway between Kununurra and Halls Creek in 1992. Signs warning of animals in the area were not warranted having regard to the overall character of the highway and likely presence of animals over a very large area. The [respondent] failed to take reasonable care for his own safety by driving at a most dangerous speed at night and by that failure caused his injury. As a matter of ordinary commonsense his negligence was the sole real cause of the accident. Having regard to the [respondent's] knowledge of the risks of travel at night, he would not have heeded warning signs had they been erected; nor would he have decreased his speed to a safe speed had the speed limit been reduced – this is illustrated by his travelling at a dangerously fast speed through Turkey Creek where the speed limit was 90km/h and at a dangerously fast speed in the vicinity of two narrow bridges upon a two lane highway with cattle grids. The [respondent] claims the speed limit should have been reduced to about 80km/h. Bearing in mind the distances to be travelled in that region, the variability of the risk depending on the hour of travel and perhaps on the season and the overall character of this station country, a reduction of the speed limit over the whole stretch from Kununurra to Halls Creek would not have been observed and for that reason would have been neither practicable nor desirable. Local speed limits in areas of perceived particular concentrations of animals with a propensity to stray on the highway would also have been neither practicable nor desirable." That was sufficient for the trial judge to conclude that the respondent's action should fail. He would also have exculpated the appellant upon the other Callinan basis pleaded, that an omission, if any, to erect warning signs, was non-feasance for which the appellant could not, in the circumstances, be liable29. The appeal to the Full Court of the Supreme Court of Western Australia The respondent's appeal to the Full Court succeeded (Malcolm CJ and Steytler J, Murray J dissenting) to the extent that the respondent was held to be entitled to 50 per cent of the damages he suffered30. One of the respondent's grounds was that fresh evidence which, had it been available at the trial, would have given him a significant chance of winning his case, had been only belatedly discovered by the appellant. Steytler J (with whom Malcolm CJ agreed), after reviewing the evidence said this: "When regard is had to all of this evidence, even putting to one side the fresh evidence proposed to be relied upon by the [respondent], it seems to me that it provides overwhelming support for the proposition that the road from Kununurra to Halls Creek was, in 1992, a dangerous stretch of road as a consequence of the threat of straying animals. The evidence also established, conclusively in my opinion, that the danger was at its greatest in areas such as those around Mabel Spring Creek and Rocky Creek, where animals wandered nearby and where water and good food were to be found. In my respectful opinion, it was not open to the trial judge to dismiss all of this evidence ... as merely representing the 'perception' of those who gave it and to prefer the 'statistical information ... embracing the whole of the area between Kununurra and Halls Creek'. What that statistical information established, in my opinion, was that the whole of the road between Kununurra and Halls Creek presented a particular danger. What the evidence of the local inhabitants established was that that danger was at its most acute, as I have said, in areas such as Mabel Spring Creek and Rocky Creek in which water and good food were to be found. The evidence, taken in its entirety, seems to me quite plainly to have established that there was a need, throughout the length of the road between Kununurra and Halls Creek, to place signs, warning of the danger of straying animals, on those parts of the road (including that in which the accident occurred) in which animals were more frequently to be found. It 29 The case was decided before the decision of this Court in Brodie v Singleton Shire Council (2001) 206 CLR 512. 30 Jones v Commissioner of Main Roads (WA) (2002) 37 MVR 451 at 470-471 [103], Callinan would, in my opinion, have been a relatively simple matter for the department, which was well aware of the risk of straying animals, to have made inquiries in the area in order to determine which locations were the areas of highest risk and to have placed signs accordingly. In my opinion it should have done so. Indeed, Mr Holdsworth himself acknowledged that local knowledge 'most definitely' had a role to play in considering what safeguards should be implemented by the department. It seems to me, also, that the [appellant] should have imposed lower speed limits in those areas where the danger was most acute. On the evidence of the local residents, a speed limit of 110 km per hour was far too high in the area between Rocky Creek and Mabel Spring Creek and one of 80 km per hour should, in my opinion, have been imposed in that area. The fact that some motorists might have ignored that speed limit does not, in my opinion, absolve the [appellant] of the need to impose it. As to the issue of causation, I find myself, with due respect, entirely unable to accept the proposition, accepted by the trial judge, that merely because the [respondent] had previously travelled in the Kimberley region, including the area between Kununurra and Halls Creek, he would have been aware of the extent of the risk posed by straying animals. He was, no doubt, aware of the risk of straying animals. He had previously driven in the area, and in the Kimberleys generally, and his attempts to hire a four-wheel-drive vehicle demonstrated his concerns in this respect. However, there was nothing to suggest that he knew which areas along his chosen route were particularly dangerous. He had, on the available evidence, only limited experience of this particular stretch of road and it seems to me to be improbable that he would, in the absence of any warning signs or even a reduced speed limit, have known of the particular danger presented by straying animals in the Rocky Creek and Mabel Spring Creek area. From the respondent's point of view, on the other hand, the danger was one which ought readily to have become apparent to the department in the course of one or more of its 'audits' (which should, in my opinion, have encompassed the making of reasonable inquiries) and, as I have said, one which should have been addressed by appropriate warning signs and a reduced speed limit." His Honour then considered the question whether the respondent would have heeded a warning sign and a sign indicating a reduced speed limit, had both been there. In that consideration his Honour was influenced by some remarks of Kirby J in Romeo v Conservation Commission of the Northern Territory31 and Gaudron J in Bennett v Minister for Community Welfare32. The former were no 31 (1998) 192 CLR 431 at 482 [134]. 32 (1992) 176 CLR 408 at 420. Callinan more than to the effect that, absent direct evidence from a plaintiff regarding his likely response, it is for the court to decide whether any suggested protective measures would have been effective to prevent the damage. The latter of the remarks effectively invited courts to reason cause from effect. This Steytler J was prepared to do and did, even though to do so was in part at least, as his Honour acknowledged, to speculate. He was not prepared however to hold the appellant solely responsible for the accident. His Honour said33: "In all of these circumstances, it seems to me to be probable that, had there been a warning sign as to the particular danger presented by straying animals in the area around Mabel Spring Creek and Rocky Creek, the [respondent] would have slowed down, to some extent at least. It also seems to me to be probable (although some speculation is required) that his failure to do so contributed to the accident which occurred or added to its severity ... Had the [respondent] driven more slowly, he would have had more time to attempt to avoid the collision. Also, it is reasonable to infer that an impact at a slower speed would have resulted in the [respondent] suffering less severe injuries." In dissent, Murray J observed that the anecdotal material was imprecise, and expressed in terms of subjective conclusions about the degree of danger, and the notoriety of it, on the relevant stretch of road, and fell short of hard evidence of primary fact. Accordingly, in his opinion, it was open to the trial judge to take the view that he did, that there was insufficient evidence to support a conclusion that the place where the accident occurred, was a place of substantially greater danger of collision with animals than other sections of the highway between Kununurra and Halls Creek. On the appeal, the respondent also sought to have the Full Court receive in evidence a bundle of relevant documents which was not discovered by the appellant before the trial as and when it should have been. Only Murray J found it necessary to deal with the application. It was his opinion that some of the documents added nothing to the evidence adduced at the time. Many did not relate to the length of the highway in question. Others contained statements by the appellant's officers that great care was required in locating signs. In short, in his Honour's opinion, the documents could and would have made no difference to the result. 33 Jones v Commissioner of Main Roads (WA) (2002) 37 MVR 451 at 473 [112] (footnotes omitted). Callinan The appeal to this Court Section 79 of the District Court of Western Australia Act 1969 (WA) provides as follows: "79 Appeal to the Full Court (1) A party to an action or matter who is dissatisfied with – a final judgment, may appeal from that judgment to the Full Court constituted under the Supreme Court Act 1935; a judgment that is not a final judgment or an order remitting any action or matter from one court to another, may by leave of the Supreme Court or a Judge thereof, appeal to such Full Court, notwithstanding that the action or matter to which the final judgment or judgment relates may have been brought in the Court by consent as provided in this Act. (1a) Notwithstanding anything in this section, an appeal to the Full Court constituted under the Supreme Court Act 1935 in respect of a judgment, order or determination in proceedings in the Court under the Commercial Arbitration Act 1985 may be made only by leave of the Supreme Court, or a Judge thereof. (2) An appeal under this section shall be made in the same way as an appeal from a judgment or order of the Supreme Court or a Judge thereof, may be made to the Full Court, and in all respects the practice and procedure of the Full Court in the appeal shall be the same as though the appeal were an appeal to the Full Court from a judgment or order of the Supreme Court or a Judge thereof. The Full Court has jurisdiction to hear and determine the appeal accordingly. (4) Nothing in this section authorises a party to appeal to the Full Court against a decision of the Court — given upon a question as to the value of any real or personal property for the purpose of determining the jurisdiction of the Court under this Act; or on the ground that the proceedings might or should have been taken at any other place where the Court was sitting." Callinan Section 58(1)(a) of the Supreme Court Act 1935 (WA) is as follows: "(1) Subject as otherwise provided in this Act and to the Rules of Court, the Full Court shall have and shall be deemed since the coming into operation of this Act always to have had jurisdiction to hear and determine – applications for a new trial or rehearing of any cause or matter, or to set aside or vary any verdict, finding or judgment found given or made in any cause or matter tried or heard by a Judge or before a Judge and jury." The very ample, indeed generally unconfined powers of the Full Court are stated in O 63 r 10(2) of the Rules of the Supreme Court (WA) which is as follows: "(2) The Full Court shall have power to draw inferences of fact and to give any judgment, and make any order which ought to have been made, and to make such further or other order as the case may require." The provisions that I have set out are in different language from the provisions regulating appeals to the Court of Appeal of New South Wales, but they do not dictate any different an approach to appeals from the latter which was considered by this Court in Fox v Percy34: "... mistakes, including serious mistakes, can occur at trial in the comprehension, recollection and evaluation of evidence. In part, it was to prevent and cure the miscarriages of justice that can arise from such mistakes that, in the nineteenth century, the general facility of appeal was introduced in England, and later in its colonies. Some time after this development came the gradual reduction in the number, and even the elimination, of civil trials by jury and the increase in trials by judge alone at the end of which the judge, who is subject to appeal, is obliged to give reasons for the decision. Such reasons are, at once, necessitated by the right of appeal and enhance its utility. Care must be exercised in applying to appellate review of the reasoned decisions of judges, sitting without juries, all of the judicial remarks made concerning the proper approach of appellate courts to appeals against judgments giving effect to jury verdicts. A jury gives no reasons and this necessitates assumptions that are not appropriate to, and need modification for, appellate review of a judge's detailed reasons. 34 (2003) 214 CLR 118 at 126-127 [24]-[25] per Gleeson CJ, Gummow and Kirby JJ. Callinan Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge's reasons. Appellate courts are not excused from the task of 'weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect'. In Warren v Coombes35 the majority of this Court reiterated the rule that: '[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it.' As this Court there said, that approach was 'not only sound in law, but beneficial in … operation'". In the same case I sought to make these points36: "Section 75A of the [Supreme Court Act 1970 (NSW)] imposes positive duties upon the State appellate court, the performance of which is in no way conditioned by judge-made rules stated in very different language, and to a substantially different effect from the plain meaning of the section which, by sub-ss (6) and (10) imposes affirmative duties on the Court of Appeal, including to do what the nature of the case requires." I do not discern the majority in the Full Court or Murray J, to have attempted to do otherwise than conduct an appropriate review on the appeal to that Court. The majority in several ways however erred in that undertaking. Their review of the facts was incomplete in some highly relevant respects. Some inferences which they drew were not reasonably open. And their reasoning from effect or result to cause, was simplistic and flawed. The burden that they held that the appellant should have assumed, but did not discharge, of conducting an "audit" of accidents was not a burden which the appellant was obliged to assume either under the Main Roads Act 1930 (WA) regulating its 35 (1979) 142 CLR 531 at 551. 36 Fox v Percy (2003) 214 CLR 118 at 164 [146]. Callinan powers and duties or otherwise. In any event, the inference that the majority drew, that an audit would have demonstrated such a number of accidents of the same or a similar kind as to oblige the appellant to erect signs, was not reasonably open. The majority in the Full Court approached the matter as if the appellant were the creator of the danger that caused the respondent’s injury37. A duty of care may of course, indeed often does, arise even in cases in which a defendant has not been the author of a hazard, but different considerations will apply if that is not the case. Ordinarily, and absent particular circumstances, for example, the existence of a statutory duty38, an allurement to children39, the existence of a special relationship such as employer and employee40, or occupier and entrant41, a court will be less ready to find a defendant who has not created the danger liable for it42. The construction and maintenance of the highway along the great length that it extends, did not create the danger presented by straying animals. The majority did prefer imprecise anecdotal evidence of witnesses called by the respondent to statistical evidence to which the respondent was privy. In this respect I do not overlook the material, including the manual in the belated discovery of which Its proposals and the appellant was delinquent. recommendations were not adopted, nor indeed could they, as a practical matter, have been, along the length of the highway. It was apparent in the approach of the majority that they thought that even if the appellant was not obliged to conduct an audit, he should at least have inquired of local users of the highway of the number and kinds of accidents that they believed to have occurred, and to have acted on their estimations rather than on the official information in his possession. That was not something that the appellant was bound to do. 37 Commissioner for Railways (NSW) v Cardy (1960) 104 CLR 274 at 284-286. 38 Waugh v Kippen (1986) 160 CLR 156. 39 Munnings v Hydro-Electric Commission (1971) 125 CLR 1 at 13 per Menzies J, 21 per Windeyer J; Latham v Johnson [1913] 1 KB 398; Bates v Stone Parish [1954] 1 WLR 1249; [1954] 3 All ER 38, cf Dyer v Ilfracombe Urban District Council [1956] 1 WLR 218; [1956] 1 All ER 581. 40 Betts v Whittingslowe (1945) 71 CLR 637. 41 See Voli v Inglewood Shire Council (1963) 110 CLR 74. 42 Graham Barclay Oysters v Ryan (2002) 211 CLR 540 at 575-576 [81] per McHugh J; Cole v South Tweed Heads Rugby League Football Club (2004) 78 ALJR 933 at 944 [56] per Gummow and Hayne JJ; 207 ALR 52 at 65. Callinan The truth is that the risk that animals would stray onto the highway, the types of animals that would do so, where they would stray, and their behaviour when they did, depended upon the weather, the time of year, the time of day, and any propensities peculiar to them. These variables would necessarily complicate the making of decisions where signs should be placed, and the contents of them. Logically, the fact that these variables existed would require the appellant to shift the signs from time to time, a requirement that in the circumstances of the length and location of this long highway, and the terrain through which it passed, would be unreasonable. The alternative, that more signs should have been erected and kept in place at all times, overlooks, as did the majority in the Full Court, that a multiplicity of warning signs would detract from their effectiveness. An allied problem is that the majority did not say what any warning sign should contain or depict. Having regard again to the variables to which I have referred, the contents of the signs might themselves have to vary, as otherwise they might be irrelevant, or indeed perhaps even misleading on different occasions and in different places. This was not a case in which cause could be inferred from the result, that is the collision. In the dictum of Gaudron J in Bennett43, upon which Steytler J relied, there is reference to a statement by Dixon J in Betts v Whittingslowe44, a case of breach of statutory duty, to the effect that the breach coupled with the fact of an accident of the kind that might thereby be caused, is enough to justify an inference that in fact the accident occurred owing to the breach. But contained within that statement is the important qualification of an "absence of any sufficient reason to the contrary." In my opinion in this case there were sufficient, indeed overwhelming reasons to the contrary. The most important is that the appellant's speed averaged at least 135 kilometres per hour throughout his journey. Self evidently he must have either ignored or overlooked speed limit signs which were in place, and the overall State speed limit in order to achieve that average speed. As an experienced traveller in the area, a matter to which the majority in the Full Court accorded no relevant and sufficient weight, he chose to maintain that average speed through country and on a highway over which he must have known animals both domestic and feral strayed. The majority made a further error: in preferring and giving almost conclusive weight to the evidence of the respondent's wife, and his passenger who was asleep at the time of the accident, that the respondent was a careful 43 (1992) 176 CLR 408 at 420. 44 (1945) 71 CLR 637 at 649. Callinan driver responsive to road signs, in the teeth of the inexorable arithmetic of the distance that he travelled over the time elapsed. The admissibility of the wife's and passenger's evidence was not the subject of any objection, but assuming it to be admissible little probative value could possibly be attached to it in the circumstances. In Rosenberg v Percival45 I counselled against too ready an acceptance of a plaintiff's evidence, given after the event, that had she been informed of a risk, even a slight one, subsequently realized, she would have elected not to take it46. Unfortunately the respondent in this case could give no useful evidence of any kind as to what he would have done in relation to signage because of the serious and disabling injuries that he suffered. But his inability to do so could provide no warrant for the drawing of an inference that he would have heeded a warning sign or signs in the light of the other, compelling evidence and inferences to the contrary to which I have referred. Fresh evidence The appellant submits that the view of Murray J in the Full Court that the "fresh evidence" could not justify a new trial is correct. It is surprising that an arm of a State government should have failed, as the appellant here did, to make proper discovery. Governments and their emanations should be model litigants. The failure to discover does not mean however that the respondent is entitled to succeed but it does mean that the material in question should be carefully scrutinized to see whether its availability at trial could have made a difference. Unfortunately for the respondent I do not think it would have for these reasons. The relevant parts of it are principally concerned with the dangers presented by straying stock and the potential for liability of their owners on that account, rather than the straying of feral creatures. A manual compiled within the appellant's department – it is not clear whether it is a draft only – recommends the erection of signs to warn of the presence of stock, "where straying stock [are] known to present a significantly greater hazard than is normal for remote areas or where subsequent to an application from the owner of a pastoral property a thorough investigation ... shows that any particular section of road nominated by the owner does present a significantly greater hazard than normal." The materials suggested the erection of signs where warranted at intervals of 20 to 30 kilometres. The material did not disclose that the relevant stretch of road was one on which the percentage of accidents involving straying animals was high. Signs warning of stock crossings can be misleading by implying that the stock are being controlled. A sign of such a type would be inappropriate in the 45 (2001) 205 CLR 434. 46 (2001) 205 CLR 434 at 504-505 [221]. Callinan relevant region. Signs depicting the possible presence of wild animals are almost unknown in Western Australia. "Locals know to be careful". The appellant was alive to the need to maintain the credibility of warning signs. The responsible minister reported to a local progress association in May 1987 in these terms: "Cattle are evident on many roads in the north of the State but it is important that warning signs only be installed where a hazard is considerably greater than would normally be expected. The credibility of such signing can only be maintained if cattle are frequently sighted near the signs. The widespread indiscriminate use of the signs would detract from their value as a warning device. There is also a problem where the placing of signs on one road may lead motorists to believe that other unsigned roads are hazard free." I would hold accordingly, as Murray J did that the undiscovered evidence and any expert commentary that might have been obtained upon it, were not of such a kind or quality as to warrant any different a result. The cause of the collision was the respondent's grossly excessive speed. The respondent's determined flouting of speed limits throughout his journey meant that the presence or absence of signs in the vicinity of the place of the accident could have no bearing on the outcome of this case. The decision of the trial judge and of Murray J in dissent are correct. The appeal must be upheld. In accordance with the undertaking of the appellant given on the application for special leave to appeal to this Court, the order for costs made by the Full Court should not be disturbed and the appellant should pay the respondent's costs of the appeal to this Court. I would make these orders: Appeal allowed. The respondent's action should be dismissed and the orders of the District Court of Western Australia should be restored. The appellant should pay the respondent's costs of the appeal to this Court. |
HIGH COURT OF AUSTRALIA A SOLICITOR AND APPELLANT THE COUNCIL OF THE LAW SOCIETY OF NEW SOUTH WALES RESPONDENT A Solicitor v The Council of the Law Society of New South Wales [2004] HCA 1 4 February 2004 ORDER 1. Appeal allowed in part. 2. Set aside declarations 1(a) and 2, and the order that the name of the appellant be removed from the Roll of Practitioners, made on 12 March 2002 by the Court of Appeal of the Supreme Court of New South Wales. On appeal from the Supreme Court of New South Wales Representation: P L G Brereton SC for the appellant (instructed by the appellant) J E Griffiths SC with N J Beaumont for the respondent (instructed by R J Collins, Law Society of New South Wales) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS A Solicitor v The Council of the Law Society of New South Wales Legal practitioners – Solicitors – Jurisdiction of the Supreme Court with respect to the discipline of legal practitioners – Declaration of professional misconduct in circumstances where person convicted of sexual offences – Declaration of professional misconduct in circumstances where person failed to disclose fact of conviction of offence but where conviction ultimately set aside on appeal – Duty of candour to professional association – Distinction between professional misconduct and purely personal misconduct – Removal from Roll of Practitioners on basis that person not a fit and proper person to be a legal practitioner – Relevance of rehabilitation and character – Relevance of findings of professional misconduct to question of whether fit and proper person. Words and phrases – "inherent power or jurisdiction of the Supreme Court with respect to the discipline of legal practitioners", "professional misconduct", "fit and proper person to be a legal practitioner". Legal Profession Act 1987 (NSW), ss 127, 171M. GLEESON CJ, McHUGH, GUMMOW, KIRBY AND CALLINAN JJ. This is an appeal by a solicitor against a decision of the Court of Appeal of New South Wales1 making declarations that he was guilty of professional misconduct in two respects, and that he is not a fit and proper person to be a legal practitioner of the Supreme Court of New South Wales, and ordering that his name be removed from the Roll of Legal Practitioners. The appellant's name, and the names of members of his family, were not stated in the reasons for judgment of the Court of Appeal to ensure compliance with s 11 of the Children (Criminal Proceedings) Act 1987 (NSW). This requirement arises from the nature of the offences referred to in the declarations, and the ages of the victims. It is appropriate for this Court to follow the same course and no party suggested otherwise. Disciplinary jurisdiction of the Supreme Court The appellant was born in 1962 and admitted as a solicitor of the Supreme Court in 1987. This was before the commencement of the Legal Profession Act 1987 (NSW) ("the Act"), which in turn was amended by the Legal Profession Reform Act 1993 (NSW) ("the 1993 Act"). The 1993 Act introduced the term "legal practitioner" and the provision in the Act (s 17) stating that "[p]ersons cannot be admitted or enrolled as barristers or solicitors", that "[a]ny inherent power or jurisdiction of the Supreme Court to admit barristers and solicitors (or legal practitioners) is revoked", and that the Charter of Justice2 "remains revoked ... in so far as it relates to the admission of barristers, advocates, proctors, solicitors and attorneys". However those changes did not affect what in s 171M was identified as "[t]he inherent power or jurisdiction of the Supreme Court with respect to the discipline of legal practitioners". It is that "inherent power or jurisdiction" which was exercised in the present case. The expression "inherent jurisdiction" usually is used with reference to the authority of the common law courts at Westminster which was conferred on the Supreme Court by s 2 of 4 Geo IV c 963. However, detailed and specific provision with respect to the legal profession in New South Wales was 1 The Council of the Law Society of New South Wales v A Solicitor [2002] NSWCA Issued under 4 Geo IV c 96 (1823). 3 Grassby v The Queen (1989) 168 CLR 1 at 16-17. McHugh Kirby Callinan made by cl X of the Charter of Justice. Among other things, cl X authorised the Supreme Court to admit "fit and proper Persons to appear and act as Barristers, Advocates, Proctors, Attorneys and Solicitors". A power of removal or suspension was incidental to that of admission4. The declarations made by the Court of Appeal were in the following terms: [The appellant] is guilty of professional misconduct in that: the [appellant] engaged in conduct for which he was, on 20 February 1998, convicted by the Sutherland Local Court of four counts of aggravated indecent assault on [a] person under the age of 16 years contrary to s 61M of the Crimes Act 1900 (NSW); prior to serving his affidavit sworn on 31 August 2001 in these proceedings the [appellant] failed to disclose to the [respondent] that he had been convicted on 7 November 2000 of further charges of aggravated indecent assault on a person under the age of 16 years contrary to s 61M of the Crimes Act 1900 (NSW) notwithstanding that at the time of that conviction the [appellant] was aware that the [respondent] was actively considering whether disciplinary action should be taken against the [appellant] in respect of previous similar convictions as set out in the [respondent's] letter dated 9 October 2000. in the light of the matters in Paragraph 1 above the [appellant] is not a fit and proper person to be a Legal Practitioner of the Supreme Court of New South Wales." The order removing the appellant's name from the roll followed those declarations. By the time the matter came before the Court of Appeal, the convictions referred to in declaration 1(b) had been quashed as a result of a successful appeal, In re Davis (1947) 48 SR (NSW) 33 at 35-36; affd (1947) 75 CLR 409 at 414, 419, McHugh Kirby Callinan but, as the form of the declaration indicates, the essence of that aspect of the complaint of professional misconduct was failure to disclose, rather than the conduct giving rise to the convictions. There was a procedural complication, in that the respondent originally instituted a complaint against the appellant under Pt 10 Div 3 of the Act, but, because of a failure to comply with s 171J of the Act, the Administrative Decisions Tribunal, Legal Services Division, ("the Tribunal"), decided it had no jurisdiction. The respondent then invoked the inherent jurisdiction of the Supreme Court of New South Wales referred to in s 171M of the Act. It should also be mentioned that, in the Court of Appeal, the respondent alleged an additional matter of professional misconduct on the part of the appellant. The Court of Appeal decided that aspect of the case in favour of the appellant, and it has played no part in the proceedings in this Court. History and background of professional discipline Part 2 of the Act deals with "Admission of legal practitioners". It empowers the Supreme Court to admit and enrol, as a legal practitioner, a person approved by the Legal Practitioners Admission Board as a suitable candidate for admission (s 4). A candidate must not be admitted as a legal practitioner unless the Admission Board is satisfied that he or she is of good fame and character (s 11). A legal practitioner is, on and from admission, an officer of the Supreme Court (s 5). The Supreme Court Rules 1970 (NSW) require a person, upon admission, to sign the Roll of Legal Practitioners in the Court (Pt 65C, r 2(2)). The Act stipulates that a legal practitioner must not practise without being the holder of a current practising certificate (s 25(1)). The Council of the Law Society of New South Wales ("the Council"), the present respondent, may grant a practising certificate to a legal practitioner authorising that person to practise as a solicitor and barrister (s 28(1)). The Administrative Decisions Tribunal5, on complaint by bodies including the Council (s 167(1)), may make certain orders, including removal from the roll of legal practitioners, if the legal practitioner is guilty of "professional misconduct". That term (and the distinct expression "unsatisfactory professional conduct") are defined in s 127. The Legal Practitioners Act 1898 (NSW) ("the 1898 Act") was repealed by the Act with effect from 1 January 1988. In its original form, the 1898 Act 5 Established by the Administrative Decisions Tribunal Act 1997 (NSW). McHugh Kirby Callinan conferred no such disciplinary powers as those now found in Pt 10 upon any professional or other body outside the Supreme Court. Such provision was first made by the changes effected by the Legal Practitioners (Amendment) Act 1935 (NSW). Thereafter, Pt X of the 1898 Act (ss 75-81) conferred such powers upon The Statutory Committee of the Incorporated Law Institute of New South Wales with respect to "charge[s] and question[s] as to the professional misconduct". However, s 79 stated: "Nothing in this Act contained shall prejudice, diminish, or affect the jurisdiction, powers and authorities which are exercisable by the Court over solicitors." This was described by Wallace P, with whom Jacobs and Asprey JJA agreed, in Re an Application by a Solicitor6, as a provision "specially preserving the inherent jurisdiction of [the Supreme Court] as an overriding jurisdiction in connexion with the discipline and control of its officers in proper cases". The same jurisdiction is preserved in the current Act. Part 10 of the Act (which includes ss 127 and 167 to which reference has been made) deals with "Complaints and Discipline". It sets up a scheme with the objects of redressing consumer complaints of users of legal services, ensuring compliance by practitioners with the necessary standards of honesty, competence and diligence, and maintaining at a sufficiently high level the ethical and practice standards of the legal profession (s 123). The statutory procedures for making, and dealing with, complaints of professional misconduct and unsatisfactory professional conduct, which, as indicated above, are both defined expressions, were examined in Barwick v Law Society of New South Wales7. The definition of "professional misconduct" in s 127(1) states that for the purposes of Pt 10, it includes, among other matters: unsatisfactory professional conduct, where the conduct is such that it involves a substantial or consistent failure to reach reasonable standards of competence and diligence, or [1966] 1 NSWR 42 at 42. See also Clyne v NSW Bar Association (1960) 104 CLR 186 at 189; Weaver v Law Society of New South Wales (1979) 142 CLR 201 at 207 (2000) 74 ALJR 419; 169 ALR 236. McHugh Kirby Callinan conduct (whether consisting of an act or omission) occurring otherwise than in connection with the practice of law which, if established, would justify a finding that a legal practitioner is not of good fame and character or is not a fit and proper person to remain on the roll of legal practitioners." The expression "unsatisfactory professional conduct" is defined in s 127(2) for the purposes of Pt 10 as including: "conduct (whether consisting of an act or omission) occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent legal practitioner." The Tribunal, if satisfied that a legal practitioner is guilty of professional misconduct, may order that the name of the practitioner be removed from the roll of legal practitioners (s 171C). Division 10 of Pt 10 contains the following provision: (1) The inherent power or jurisdiction of the Supreme Court with respect to the discipline of legal practitioners is not affected by anything in this Part or Part 2. (2) That inherent power or jurisdiction extends to interstate legal practitioners and locally registered foreign lawyers." As Griffith CJ pointed out in Southern Law Society v Westbrook8, the question that arises when the power of the Supreme Court is invoked in a case such as the present is not one of punishment, but "whether the Court is justified in holding out the [appellant] as a fit and proper person to be entrusted with the duties and responsibilities of a solicitor". The appellant is the Supreme Court's officer, his name is on the Supreme Court's roll of legal practitioners, and s 171M of the Act preserves the Supreme Court's jurisdiction in connexion with the discipline and control of its officers. A similar jurisdiction is preserved in other States9. The expression "professional misconduct" was not defined in Pt X of the 1898 Act but by the time of its inclusion in 1935 had a legislative pedigree in (1910) 10 CLR 609 at 612. eg Queensland Law Society Incorporated v Smith [2001] 1 Qd R 649; Law Society of South Australia v Rodda (2002) 83 SASR 541. McHugh Kirby Callinan England. This included s 13 of the Solicitors Act 1888 (UK). Of that statute, Lord Wright said in Myers v Elman10: "[T]here was established the Disciplinary Committee appointed by the Master of the Rolls from members or past members of the Council of the Law Society. This Committee was charged with the duty of investigating complaints against solicitors and reporting their decision to the Court, which could then, if so minded, strike the solicitor off the Roll or suspend him. It was not until 1919 that by the Solicitors Act of that year, the Disciplinary Committee was itself given power to strike off the Roll or to suspend or to order payment of costs by the solicitor subject to an appeal to the Court. But the jurisdiction of the Master of the Rolls and any judge of the High Court over solicitors was expressly preserved, as it now is by s 5, sub-s 1 of the Solicitors Act, 1932." Section 13 of the 1888 statute used the term "misconduct" which was construed in In re A Solicitor; Ex parte Law Society11 by adopting what had been said by the Court of Appeal in Allinson v General Council of Medical Education and Registration12 concerning the phrase "infamous conduct in any professional respect" in the powers conferred upon the English medical professional body by s 29 of the Medical Act 1858 (UK). Questions of "professional misconduct" also arose somewhat indirectly. The dispute in Myers v Elman13 arose from an application to a trial judge, after verdict, that the solicitor for the defendants pay the plaintiff's costs on the ground of his professional misconduct of the proceedings. This, as Dawson J pointed out in Knight v F P Special Assets Ltd14, appears to be a summary jurisdiction which rests upon the duty of the court to supervise the conduct of its solicitors. In New South Wales, the consideration of alleged "professional misconduct" entered the reasoning of the decisions of the Supreme Court not 10 [1940] AC 282 at 317-318. 11 [1912] 1 KB 302 at 311-312. 12 [1894] 1 QB 750. See Re Veron; Ex parte Law Society of New South Wales (1966) 84 WN (NSW) (Pt 1) 136 at 142-143. 14 (1992) 174 CLR 178 at 199. See also per McHugh J at 213. McHugh Kirby Callinan only where the statutory powers of professional bodies which used or referred to the expression were in issue, but where the Court was exercising its implied authority, stemming from cl X of the Charter of Justice, and the critical criterion was that of a "fit and proper person" to remain on the roll. In an appropriate case, where there is utility in so doing15, the Supreme Court may make a declaration of professional misconduct either with or without an order removing the name of a practitioner from the roll. However, given the particular meaning now given that expression by the definition of "professional misconduct" in s 127(1) of the Act, some care may be necessary to indicate the sense in which the term is being used. A declaration that certain conduct constitutes professional misconduct may be of importance for the information of others16. Furthermore, it may be relevant to future proceedings for removal, or In Myers v Elman18, Lord Wright readmission, of distinguished conduct by a solicitor of litigation in a fashion amounting to professional misconduct which was not of so serious a character as to justify suspension or striking off from the Roll. Thus not all cases of professional misconduct justify or require a conclusion that the name of a practitioner should be removed from the roll19. Where an order for removal from the roll is contemplated, the ultimate issue is whether the practitioner is shown not to be a fit and proper person to be a legal practitioner of the Supreme Court upon whose roll the practitioner's name presently appears20. the practitioner17. 15 See the remarks of Priestley JA in Prothonotary of the Supreme Court of New South Wales v Costello [1984] 3 NSWLR 201 at 211. 16 eg Re Veron; Ex parte Law Society of New South Wales (1966) 84 WN (NSW) (Pt 1), 136; New South Wales Bar Association v Cummins (2001) 52 NSWLR 279. 17 Bridges v Law Society of New South Wales [1983] 2 NSWLR 361 at 362. 18 [1940] AC 282 at 318. 19 eg Prothonotary of the Supreme Court of New South Wales v Costello [1984] 3 NSWLR 201. 20 Ziems v The Prothonotary of the Supreme Court of NSW (1957) 97 CLR 279 at McHugh Kirby Callinan The decision in Ziems' case Where a practitioner appeals to this Court from an order of the Supreme Court removing him or her from the roll of practitioners, two potentially countervailing considerations arise. They were referred to by Fullagar J in Ziems v The Prothonotary of the Supreme Court of NSW21, who said: "[T]he appellant challenges what is not merely an exercise of discretion by the Supreme Court, but an exercise of discretion in a matter which is in a special sense the province of the Supreme Court as the highest court of New South Wales. It relates to the right of a man to practise in that court and in other courts of New South Wales over which that court exercises a supervisory jurisdiction in certain ways. On the other hand, the possibly disastrous consequences of disbarment to the individual concerned [are such that] a court to which an appeal comes as of right is bound to examine the whole position with meticulous care." The present appeal required special leave, but the appellant has already obtained that leave. As his counsel pointed out, the Court of Appeal was exercising its jurisdiction at first instance. This is the appellant's one opportunity for appellate review of an adverse decision. The case of Ziems provides an example of the need to examine "the whole position". There, a barrister had been convicted of manslaughter, and sentenced to imprisonment for two years. The Supreme Court concluded that the conviction and sentence constituted grounds in themselves for disbarring the appellant22. This Court declined to adopt that view, and considered the facts and circumstances of the case. It was a case where the particularity with which the facts were approached was important to a conclusion as to the barrister's fitness. He had been found guilty of unlawful homicide (in the form of manslaughter) and sentenced to imprisonment. Even when his offence was described with a little more detail, his position was not improved. He had been responsible for the death of a person while driving under the influence of alcohol. Yet, when the circumstances of the case were exposed, the picture changed materially. The appellant, while drinking at a hotel, had been attacked and beaten. He was 21 (1957) 97 CLR 279 at 287-288. 22 (1957) 97 CLR 279 at 283. McHugh Kirby Callinan seriously injured. A sergeant of police advised him to go quickly to hospital. The appellant asked the sergeant to drive him, but the sergeant went away leaving the appellant without assistance. The appellant then set out to drive himself to hospital, and, in the course of the journey, was involved in a fatal collision. The appellant was still in prison when his case was before this Court23. The order of the Supreme Court disbarring the appellant was set aside, and an order was made that he be suspended from practice during the remainder of his term of imprisonment. In Ziems, the conduct of the practitioner which resulted in his conviction and prison sentence had nothing to do with his practice as a barrister. Fullagar J said24: "Personal misconduct, as distinct from professional misconduct, may no doubt be a ground for disbarring, because it may show that the person guilty of it is not a fit and proper person to practise as a barrister ... But the whole approach of a court to a case of personal misconduct must surely be very different from its approach to a case of professional misconduct. Generally speaking, the latter must have a much more direct bearing on the question of a man's fitness to practise than the former." The present case was conducted on the basis that the definition of "professional misconduct" in s 127 of the Act did not apply, because the proceedings were brought in the inherent, not the statutory, jurisdiction. The dividing line between personal misconduct and professional misconduct is often unclear. Professional misconduct does not simply mean misconduct by a professional person. At the same time, even though conduct is not engaged in directly in the course of professional practice, it may be so connected to such practice as to amount to professional misconduct25. Furthermore, even where it does not involve professional misconduct, a person's behaviour may demonstrate qualities of a kind that require a conclusion that a person is not a fit and proper 23 (1957) 97 CLR 279 at 290. 24 (1957) 97 CLR 279 at 290. 25 eg New South Wales Bar Association v Cummins (2001) 52 NSWLR 279 at 291 McHugh Kirby Callinan person to practise26. And there may be an additional dimension to be considered. It was explained by Kitto J in Ziems27: "It is not difficult to see in some forms of conduct, or in convictions of some kinds of offences, instant demonstration of unfitness for the Bar. Conduct may show a defect of character incompatible with membership of a self-respecting profession; or, short of that, it may show unfitness to be joined with the Bench and the Bar in the daily co-operation which the satisfactory working of the courts demands. A conviction may of its own force carry such a stigma that judges and members of the profession may be expected to find it too much for their self-respect to share with the person convicted the kind and degree of association which membership of the Bar entails. But it will be generally agreed that there are many kinds of conduct deserving of disapproval, and many kinds of convictions of breaches of the law, which do not spell unfitness for the Bar; and to draw the dividing line is by no means always an easy task." Professional misconduct may not necessarily require a conclusion of unfitness to practise, and removal from the roll. In that regard, it is to be remembered that fitness is to be decided at the time of the hearing. The misconduct, whether or not it amounts to professional misconduct, may have occurred years earlier. At the same time, personal misconduct, even if it does not amount to professional misconduct, may demonstrate unfitness, and require an order of removal. The statutory definition in s 127 involves both concepts, and, where it applies, must be given effect according to its terms. However, when the Supreme Court is exercising its inherent jurisdiction, it has the capacity to determine, and act on the basis of, unfitness, where appropriate, without any need to stretch the concept of professional misconduct beyond conduct having some real and substantial connexion with professional practice. In a statutory context where the power of removal depends upon a finding of professional misconduct, it may be appropriate to give the expression a wider meaning, similar to that in s 12728. There is no such necessity in the present case. The facts of the conduct referred to in declaration 1(a) exemplify the difficulty of which Kitto J spoke in Ziems. They also exemplify the importance 26 eg In re Davis (1947) 75 CLR 409. 27 (1957) 97 CLR 279 at 298. 28 cf Roylance v General Medical Council (No 2) [2000] 1 AC 311. McHugh Kirby Callinan that may attach to a consideration of the detailed subjective and objective circumstances of offending behaviour. The complaints against the appellant In early 1997, the appellant had been involved for some years in a relationship with a woman, B, to whom he is now married. She had four children, including two daughters aged 12 and 10 respectively. As has been noted, the appellant was admitted as a solicitor in 1987. He also had a promising career with the Australian Army Reserve. In 1990, he was promoted to the rank of Captain. In 1992, he left his employment as a solicitor, and served with the Royal Marines Reserve in the United Kingdom. He returned to Australia in 1993, and took employment as a solicitor, while continuing his active involvement in the Reserve. In August 1993, he met B. He had regular contact with B's children and often stayed overnight at her home. In 1996, he was graded in the Reserve for promotion to Major. In February 1997, he suffered two major personal setbacks. He and a number of other employees were made redundant by the solicitors for whom they worked. His father was diagnosed with mesothelioma. The appellant suffered depression, and also physical exhaustion resulting from extended hours of work which he took on as an instructor in Army special forces training. This was when he committed the four offences of indecent assault on two of B's daughters. The circumstance of aggravation of the offences was the age of the children. The offences occurred in late April and early May 1997. They involved removing the children's clothing, rubbing on the back, buttocks and stomach, and on one occasion touching a victim on the outside of the vagina. Complaint about two of the matters was made by the children. The appellant admitted the offences, and also told the police of two other offences involving the same children. He sought professional help from a psychiatrist. In February 1998, the four charges came before a Local Court. The appellant pleaded guilty and was sentenced to three months imprisonment. He appealed to the District Court against the severity of the sentence. In May 1998, Judge Luland allowed the appeal, quashed the sentence, and in lieu deferred passing sentence in each case on condition that the appellant entered into a recognizance to be of good behaviour for three years. The judge said: "The factual circumstances are that he had a relationship with the two victims' mother during the period of the offences and indeed continues to have a relationship with her. McHugh Kirby Callinan At the time of the offences ... I accept that his life was greatly disturbed by factors of employment being taken from him, due to a redundancy, and perhaps more stressing a very difficult period where his father was dying from a very awful disease. [The appellant] is 36 years of age and a solicitor by profession. In normal circumstances one would say a person whose character would [be] expected to be exceptionally high, and he would be well aware of the seriousness of conduct such as that which he has committed. Now that is easily said of course but one does not know the frailty of human beings, particularly when they go through very stressful periods in their life. This conduct that he engaged in seems quite obviously totally out of character for the appellant. The assaults upon the children were not in my view the most serious examples of indecent assaults that one unfortunately sees all too often in these courts. They were in the main incidences [sic] of him pulling the children's pants down when they were in their bedroom. With the exception of one offence where he placed his hand on the stomach area of one of the children and his finger touched her vagina. To the police he recognised the seriousness of his conduct and readily accepted it. He also, perhaps understandably was unable to understand himself why he did what he did and that again is probably part and parcel of it being so out of character, because all of the evidence before me is that he is otherwise a very reputable person, and has always been considered so by the children's mother, her parents and also her children. The effect of his offending was readily admitted by him and indeed he brought two offences to light himself with the police officers, two of those for which he is now before the Court. He had pleaded guilty, and pleaded guilty from the first opportunity. Those matters in themselves show true contrition but what I believe shows even greater contrition and understanding by him, is his conduct after the events themselves, that is his ready involvement with counselling and assistance from Professor McConaghy [Professor Neil McConaghy, a specialist psychiatrist]. He has not denied the matters at any time. He has accepted the matters, and more so he has done all he can to place himself in a position where he ensures it does not happen again, that is to gain an understanding or attempt to gain an understanding of how and why this all happened. McHugh Kirby Callinan He obviously is forgiven by the children's mother, she is here today in support of him, as is her father. There is material before me where the children themselves seem to have suffered no psychological harm, although one readily says that recognising that sometimes events such as this in children's lives does have a belated impact upon them in time to come. One never knows what is likely in that regard and one cannot overlook the possibility of it, but on present material before me, the children do not seem to be psychologically disadvantaged as a result of this. In fact they, I'm told and I accept, want the continuance of [the appellant] in their life as the father figure that he was before this all occurred. Everybody seems to be supportive of him. The counsellors are supportive of him, the psychiatrists are supportive of him, and more importantly the family itself, who are after all the victims of this crime, continue to be supportive of him. Those subjective elements of this offence weigh very heavily in my mind that it is an exceptional case. I do take account of what is said by the Court of Criminal Appeal of course, as I must, that normally offences such as these, would carry and should carry a custodial sentence, but my hands are not completely tied in that regard and I do consider this to be one of those exceptional cases. It is not that [the appellant] is going unpunished. I accept that a punishment has already flowed in the sense that he's lost what was no doubt a very important part of his life, his involvement in the Army Reserve, that he no doubt put a lot of time and effort into to build up a career in that reserve. He has now lost that as a result of this matter. He of course carries the shame of his conduct and he has to carry that shame with him in the eyes of those upon whom he committed the offence. He will have to overcome that as best he can but they want him in their lives, and he wants to be in their lives, but it will be in his mind at all times that he has had to appear before this Court in respect of these matters. I do regard the offences as isolated, even though there were four offences. I regard them to be isolated offences, and I accept Professor McConaghy when he suggested there is a great likelihood that such behaviour would never occur again." McHugh Kirby Callinan In April 2000, the appellant married B, who has supported him at all stages of the present proceedings. Before the Court of Appeal, there was evidence of Professor McConaghy who treated the appellant, monthly, from June 1997. He said the appellant "has developed full awareness of the situations which led to his inappropriate behaviour and in view of his contrition and the stability of his personality I consider the risk of his re-offending to be minimal". There was also a report from the founder director of the Child Abuse Protection Centre who said that she regarded the appellant as a man of basically good character who was not a future risk. Three barristers and a solicitor gave character evidence in support of the appellant. One of the referees, who had distinguished service in the Army Reserve, and retired with the rank of Major-General, and who had also worked with the appellant in the legal profession, described him as a person who acted with probity, professionalism and honesty, and said that he would have no hesitation in working with him in the future. None of that evidence was challenged. In July 1998, the Council of the Law Society resolved to institute disciplinary proceedings against the appellant under Pt 10 of the Act, based on his four convictions for indecent assault. Reference has already been made to the fact that, ultimately, those proceedings came to an end because, as a result of a procedural deficiency, the Tribunal found that its jurisdiction had not been properly invoked. That happened in October 2000. In the meantime, there occurred the succession of events giving rise to declaration 1(b). In May 2000, one of the victims of the 1997 offences made further allegations of a similar nature against the appellant, who had recently married her mother. The appellant denied the allegations. The charges against him were heard in a Local Court on 23, 25 and 26 October 2000. On 7 November 2000, he was convicted and sentenced to imprisonment for two years. He appealed to the District Court. His appeal was heard in April 2001. Judge Tupman upheld the appeal. She quashed the convictions and sentences. The appellant has at all times maintained that the charges were false. The Tribunal's decision that it had no jurisdiction to deal with the respondent's proceedings against the appellant was given on 9 October 2000. At the time, the new indecent assault charges were pending. On the same day, the respondent wrote to the appellant referring to the four convictions for the 1997 offences, indicating that it was considering further action and seeking any submissions he wanted to make. There was an exchange of correspondence. On 7 November, the appellant was convicted on the new charges, and sentenced. He McHugh Kirby Callinan appealed. On 15 November 2000 the respondent wrote to the appellant again indicating that it was considering further action based on the 1997 conduct. On 17 and 21 November 2000, the appellant wrote to the respondent seeking to convince the respondent that it should not take such action. In that correspondence the appellant did not mention the new charges against him, or his convictions and sentence. On 3 April 2001, the convictions and sentences were quashed. On 24 May 2001, the respondent, still not aware of the new criminal proceedings, or the successful appeal, commenced proceedings in the Supreme Court under s 171M of the Act alleging that the 1997 conduct was professional misconduct, and seeking the removal of the appellant's name from the roll of legal practitioners. In August 2001, the appellant filed an affidavit in the Supreme Court proceedings in which he referred to the charges of 2000, and the successful appeal. The respondent then added a further charge of professional misconduct, being the failure of the appellant, in the correspondence of October- November 2000, to disclose the further charges and convictions. Although those convictions were ultimately set aside, the failure to disclose them was said to be a breach of the appellant's duty of candour to his professional association. The findings of the Court of Appeal The Court of Appeal found that this further allegation of professional misconduct was made out. That finding was correct, although the consequences that should follow will require further consideration. In October and November 2000, the appellant was engaged in correspondence with the respondent as to the course it should take in relation to his professional status. Although the specific focus of that correspondence was the conduct of the appellant in 1997, and although the respondent, being unaware of the new allegations, did not ask any questions about them, the appellant's professional obligations to the Law Society required him to disclose facts that were material to the respondent's decision as to what, if any, action to take against him. Giles JA was right to observe that the appellant "succumbed to the temptation of keeping from [the respondent] something clearly relevant to its decisions because he feared that disclosure would be against his interests." It is no excuse that he believed in his own innocence, and that his convictions were ultimately quashed. Frankness required the disclosure of the convictions and sentence, even if he regarded them as unjust, and hoped (or even expected) that they would be overturned on appeal. Furthermore, the appellant's duty of candour in his dealings with the Law Society was a professional duty, and its breach was McHugh Kirby Callinan professional misconduct29. It was proper that it should be declared to be such. The appeal against declaration 1(b) must fail. The finding of professional misconduct recorded in declaration 1(a) is, however, open to more serious challenge. In argument in this Court, and, apparently, in the Court of Appeal, it was common ground that the definition of professional misconduct in s 127 of the Act did not directly bear upon the proceedings because it was the inherent jurisdiction of the Supreme Court, not the special statutory scheme for dealing with complaints and discipline, that was invoked. The Court of Appeal did not base its reasoning on the application of s 127. As the Court of Appeal recognised, a finding that the appellant had been guilty of professional misconduct in 1997 did not necessarily require a conclusion that he was unfit to practise in 2002. Nor did a finding that he was unfit to practise, and that his name should be removed from the roll of legal practitioners, necessarily depend upon a characterisation of his conduct in 1997 as professional misconduct. These were related, but distinct, issues, and in considering the application of the respondent for an order that the appellant's name be removed from the roll, the ultimate issue for the Court of Appeal to consider was the appellant's fitness to remain a legal practitioner. Even so, the respondent pressed for a declaration that the appellant's 1997 conduct constituted professional misconduct, and the Court of Appeal addressed that issue. The conduct of the appellant in committing the acts of indecency towards the two complainants in 1997 did not occur in the course of the practice of his profession, and it had no connexion with such practice. What it demonstrated as to his fitness to practise law, and to remain a member of the legal profession, was something to be considered in the context of the ultimate issue. However, the Court of Appeal found it to be professional misconduct, and not merely personal misconduct relevant to a decision as to his fitness. that Sheller JA, with whom Mason P and Giles JA agreed, said professional misconduct "may extend beyond acts closely connected with actual practice, even though not occurring in the course of such practice, to conduct outside the course of practice which manifests the presence or absence of qualities which are incompatible with, or essential for, the conduct of practice". He took this from some observations of Spigelman CJ in New South Wales Bar 29 In Weaver v Law Society of New South Wales (1979) 142 CLR 201 this Court upheld a declaration that a solicitor who gave false evidence in the course of disciplinary proceedings was guilty of professional misconduct. McHugh Kirby Callinan Association v Cummins30, a case in which the Court of Appeal rightly held that the conduct in question was closely related to a barrister's professional activities, involving non-compliance with revenue laws affecting the earnings from those activities. The conclusion, in Cummins, that the conduct of the barrister amounted to professional misconduct involved no departure from the proper meaning of the expression. However, as was observed in Ziems, there is a real distinction between professional misconduct, and purely personal misconduct on the part of a professional, although there are cases in which the distinction may be difficult to apply. The particular aspect of the appellant's conduct in 1997 which appeared to Sheller JA to manifest "qualities of character which were incompatible with the conduct of legal practice" was that "the conduct constituted a most serious breach of trust on the [appellant's] part given the paternal like role he had with the victims". It is true that the conduct involved a form of breach of trust, being the trust reposed in the appellant by the mother of the children (who later forgave, and married, him) and the children themselves. However, the nature of the trust, and the circumstances of the breach, were so remote from anything to do with professional practice that the characterisation of the appellant's personal misconduct as professional misconduct was erroneous. Declaration 1(a) should be set aside. That conclusion, however, leaves open the principal question which the Court of Appeal had to consider, which was whether the 1997 misconduct, either alone or in combination with the professional misconduct the subject of declaration 1(b), demonstrated that, in March 2002 (the date of the Court of Appeal's decision) the appellant was not a fit and proper person to be a legal practitioner. It was declaration 2 that was the foundation of the order for the removal from the roll of the appellant's name. That declaration was expressed to be made "in the light of" declarations 1(a) and (b). A conclusion that declaration 1(a) was made in error requires this Court to reconsider the finding expressed in declaration 2. In that connexion, it is important to note that the Court of Appeal, correctly, had regard to the combined significance of the 1997 misconduct and the October-November 2000 breach of the appellant's duty of candour towards the Law Society. This Court should take the same approach. The reasons for judgment of Sheller JA set out in full detail the objective and subjective circumstances of the appellant's conduct in 1997 and October- 30 (2001) 52 NSWLR 279 at 289 [56]. McHugh Kirby Callinan November 2000, his evidence in chief and in cross-examination at the hearing before the Court of Appeal, the expert medical evidence, and the evidence of the character witnesses who supported the appellant. Most of this material was uncontested. While Sheller JA set out the reasons given by Judge Luland for imposing a non-custodial sentence in respect of the 1997 offences, in one important respect his appreciation of the situation differed from that of the sentencing judge. Judge Luland treated the four offences as "isolated". By that, he evidently meant that, although there were four offending acts, they represented one brief and uncharacteristic episode of behaviour, explained by the unusual pressures that bore upon the appellant at the time. Sheller JA said this "is not the case of an isolated offence followed by the taking of steps to ensure it would not be repeated". The subjective evidence as Of course, the Court of Appeal was not bound by the views of the sentencing judge, but that description of the offences appears unduly severe. Furthermore, it related to a significant matter, that is to say, the appellant's rehabilitation. That rehabilitation was at the centre of the reasoning of Judge Luland, and was, in turn, important to the question of fitness to practise the appellant's character and rehabilitation, the exceptional circumstances in which the 1997 offences were committed, and the appellant's efforts to obtain professional advice and assistance, formed part of the basis upon which counsel for the appellant sought to distinguish the case from Law Society of South Australia v Rodda31, a case in which the Supreme Court of South Australia found unfitness on the part of a solicitor convicted of sexual offences. These cases turn upon a close consideration of their own facts, but the Court of Appeal in the present case appears to have given insufficient weight to the isolated nature of the 1997 offences, and the powerful subjective case made on behalf of the appellant. The Court of Appeal was right to treat very seriously the breach of the duty of candour involved in the conduct the subject of declaration 1(b). Even so, the circumstances in which it occurred were extraordinary. Making full allowance for the need to consider the combined effect of the 1997 conduct and the conduct the subject of declaration 1(b), it should not be concluded that it had been shown that, at the time of the decision of the Court of Appeal in March 2002, the appellant was unfit to practise. Declaration 2 should be set aside. 31 (2002) 83 SASR 541. McHugh Kirby Callinan Conclusion and orders In the result, that leaves standing the finding of professional misconduct in declaration 1(b), and the facts of the 1997 conduct. The parties joined in submitting that, if this Court were to disagree in a significant respect with the Court of Appeal, it should not remit the matter to the Court of Appeal, but should, as was done in Ziems32, form, and give effect to, its own view as to the appellant's present fitness in considering what consequential orders to make. By reason by the events of 1997, the appellant resigned from the Army Reserve, and has not renewed his practising certificate since the 1998-1999 year. In effect, he has been unable to practise for more than five years. It would have been appropriate for the Court of Appeal to make an order for his suspension, but an appropriate order would not have extended beyond the present time. The Court of Appeal made an order for costs against the appellant, and that should stand. In those circumstances, no further sanction is required. The appeal should be allowed in part. Declarations 1(a) and 2 made by the Court of Appeal, and the order that the name of the appellant be removed from the Roll of Legal Practitioners should be set aside. There should be no order as to the costs of this appeal. 32 (1957) 97 CLR 279 at 297, 300, 308-309. |
Subsets and Splits